Privi Speciality Chemicals Ltd (NSE: PRIVISCL) Q2 2025 Earnings Call dated Oct. 25, 2024
Corporate Participants:
Ashwini Shah — Company Secretary and Compliance Officer
Mahesh Babani — Chairman and Managing Director
Narayan Iyer — Chief Financial Officer
R S Rajan — President
Analysts:
Sudhir Bheda — Analyst
Deepan Sankara Narayanan — Analyst
Mulesh Savla — Analyst
Nikhil — Analyst
Vineeth Lambu — Analyst
Rohit Nagraj — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Privi Speciality Chemicals Limited Q2 FY ’25 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. [Operator Instructions].
I now hand the conference over to the management team for their opening remarks. Thank you, and over to you.
Ashwini Shah — Company Secretary and Compliance Officer
Thank you, Rio. Good evening, everyone. I’m Ashwini Shah, Company Secretary and Compliance Officer of Privi Speciality Chemicals Limited. Thank you for joining us on the call.
On this call, I’m joined by Mr. Mahesh Babani, our Chairman and Managing Director; Mr. R.S. Rajan, President; Mr. Narayan Iyer, Chief Financial Officer; Mr. Sanjeev Patil, Vice President, Strategy; and SGA, our Investor Relations Advisors.
I hope that everyone is able to review our financial results and investor presentation, which were uploaded to the stock exchange and company’s website. Mr. Mahesh Babani, our visionary Chairman will provide a quick overview on the company and recent developments and post that Mr. Narayan Iyer, our CFO will take you through the operational and financial highlights.
I would now request Mr. Mahesh Babani to give his opening remarks and an overview on the company. Over to you, sir.
Mahesh Babani — Chairman and Managing Director
Thank you, Ashwini, and good evening to all. We are delighted to inform you that the company, your company has registered the best ever quarterly performance registering a 16% revenue growth on year-on-year basis crossing the INR500 crore mark for the first time. We have also registered our profitability achieved for the quarter in the PAT margins is being INR45 crores on a consolidated basis.
Over the past six quarters, our performance has consistently improved, driven by steadily increasing demand, improved operational efficiencies and a better product mix, resulting in 21-plus EBITDA margins. Key products of all our company are optimal capacity, but we are surely augmenting the capacities further. Augmenting means, you know we are trying to increase capacities within the same infrastructure a little bit of capex and trying to maximize the benefits for the company.
Looking ahead, we have formulated a robust growth strategy focused on improved product mix, operational efficiencies and touching new products to capture upcoming opportunities. Throughout this journey, our commitment to sustainability remains firm. We also keep in our growth plan, our customers mind for sure and visit them regularly to see what growth opportunities are there.
On this occasion, I would like to thank you, thank all my employees and staff members for their grit and commitment shown over the years and achieving this feat. I would like to thank the leadership team as well for building a strong foundation and elevating the scale and size to global level.
On this forum, I would like to highlight that in today’s lifestyle, consumers are increasingly focused on products that bring more value in their day-to-day life. A conscious effort is being made by our customers on continuous basis to ensure that the end customers who use soap, detergents and other uses are better attractive [Phonetic] experience.
About your company, just to reiterate, we are India’s largest, one of the leading manufacturers of aroma chemicals and worldwide turning to the world’s largest fragrance houses and fast moving consumer goods and many MNCs. We have been trusted partner and family supplier of all bulk aroma chemicals globally. We produce over 70 aroma chemicals that are blended into fragrances consumed by us in day-to-day products. All our customers are in sync with what we are doing on a regular basis.
Our manufacturing capabilities include seven state-of-the-art integrated manufacturing units in Mahad, Maharashtra and Gujarat, Jhagadia with a total manufacturing capacity of about 50,000 tons almost. We are fully backward integrating utilized waste generated from the pulp mill specifically, CST. We are the only company in the developing world, one out of the four globally that possess this technology and logistical capacities to source these waste products.
We have achieved, about three years. I would like to update you, we have achieved a significant milestone with the commissioning of a new greenfield project in partnership with Givaudan SA to manufacture complex ingredients. We aim to manufacture a broad portfolio of value-added products with a progressive ramp up in the activities over the next two years. This collaboration with Givaudan underscores our expertise in delivering high quality complex products and further strengthens our position in the flavor and fragrance industry. It also highlights our ability to invest in custom-built facilities tailored to make several customer needs. We have also acquired additional vehicle [Phonetic] land parcels existing to our new sites which we already own so make it more safer and better operations.
We have continued, we have outlined several strategies for robust growth over the next five years and are ready to implement them confidently in the coming years. These strategies include increasing production in our newly installed capacity, refining our product mix, enhancing operational efficiencies. These initiatives not only enhance value for consumers, but also ensure a long-term benefit.
Now I would like to hand over to Narayan for operational and financial highlights. Narayan, please. Thank you.
Narayan Iyer — Chief Financial Officer
Thank you, sir. Thank you, Mahesh bhai, and good evening to all my investors, shareholders, bankers and all attended this call. What a great comeback by Privi. I should really appreciate the efforts of one and all in Privi, and all of you shareholders and all who have been supporting with us. [Foreign Speech]. And I hope it resonates with you, all of you also.
So yes, we have created history Mahesh bhai. As you rightly stated, it’s a record quarter, a good performance and a comeback, which all in Privi the management, whether it’s Mahesh bhai, Mr. Rao, Mr. Rajan, myself, Ashwini, all have been trying to tell the investors that we are on right track. And it’s only a matter of time that you will see the true potential what Privi can do.
Giving you the snapshot of the Q2 financial year ’24, ’24 highlights. We have registered the highest ever total income of INR537 crores in the quarter with a growth of about 16% on a year-on-year basis. The EBITDA numbers that we have achieved for this quarter is about INR115 crores, which itself is a growth of about 19% on a year-on-year basis. EBITDA margins stood at 21.3% for this quarter. Our profit after tax for the quarter was about INR45 crores, as against INR30 crores in last year same quarter around.
The exports to domestic contribution is 63% and 37%, which is led by predominantly the European front. Total volumes for this quarter, once again is a record and a history created at 11,504 metric tons, as against previous years 8,643 metric tons that we had cloaked about in fact.
And giving a little bit more flair though already uploaded on the website on our presentation, the segment-wise breakup of our revenue on the key elements, Pinene contributed about 55%; Musk and Speciality is contributing about 23% of the total revenue; Citral based aroma chemicals contribute about 11%; and Phenol is about 7%; 4% coming from value added products.
So giving a little bit more highlights with regard to the first six months performance, if I have to talk about. The total income achieved by us in the first six months is once again a record INR1,004 crores, which is a 14% growth on year-on-year basis. EBITDA achieved for the first six months is about INR212 crores, which once again a 35% year, increase over the previous year margins.
Margins stood at 21.1% in this first half, as against 17.9% in the previous year. PAT for the period was INR76 crores, as against INR35 crores in the previous year. Experts contribute about 64% led by Europe and North America. And of course India is also the contributor of about 36% of our revenue. The total volumes which we have achieved in the first six months is about 22,176 metric ton, as against 16,183 achieved by us in the previous year.
With this, you know, I would put my numbers address and would want the floor to be open for question-and-answers. All yours the moderator.
Questions and Answers:
Operator
Sure. Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from Sudhir Bheda from Bheda Family Office. Please go ahead.
Sudhir Bheda
Yeah. Good afternoon. And first of all, I would like to extend my hearty congratulations to the entire Privi team and also visionary Chairman, Mahesh bhai for giving outstanding results all time high revenue and EBITDA.
Mahesh Babani
Thank you, Sudhir bhai.
Sudhir Bheda
Sir my questions are, we have seen a good increase in the EBITDA margin, Q-on-Q and Y-on-Y as well. So what are the reason for improvement in the EBITDA margin? And is it sustainable going forward?
Mahesh Babani
I’m sure this is sustainable in coming years. In fact, it would only improve from here on. The increase is also because we augmented our capacities. Our efficiencies and our capacities have been augmented. So this will, this trend will continue in coming times, coming years.
Sudhir Bheda
How do you see the second half panning out?
Mahesh Babani
So, if you see the past 10 years record, our first half is always between 40% to 45% and second half is between 55% to 100%. So our first, second half is always 20% higher than the first half. So you should expect better results in the second half.
Sudhir Bheda
With the sustainable margin, right?
Mahesh Babani
Yes, yes. Surely sustainable. And we have an order book position also to serve that.
Sudhir Bheda
Good. Great. And sir, what is a little bit of longer reason like say next, next financial year as well as next couple of years, how do you see your company growing?
Mahesh Babani
See —
Sudhir Bheda
Levers for growth?
Mahesh Babani
The levers for growth is, of course, we keep on adding new products, new specialties and augmenting our capacity that’s our specialty. You know to, how to produce more within the same infrastructure by making continuous plants. The same products are being made on continuous basis.
Second level of growth is also, you know, the consumption is increasing substantially now. As you know, now all our customers demand is much higher than, if you see all our customers balance sheets, they are 10% higher. All of our customers increase their turnover by 10%, and that is splurging on to us because we are one of the key and important suppliers to them. Therefore, I see this trend continues and I feel this company is here. We maintain the like you see a CAGR is almost 19% for last 20 years. And we’ll be able to maintain this or improve this further in the next few years. That’s our, I mean, that’s our way of life to be honest.
Sudhir Bheda
And what is the addressable market? If you see that big market is growing at 10%. So what is the addressable market for us worldwide, I’m talking?
Mahesh Babani
See worldwide, Brazil, India is growing significantly. India, if I show you a classic example, the women power has improved so much. Women power has improved so much in India. And actually the women generally is consuming more perfumes, more cosmetics, more deodorants. So that demand comes from India and Brazil, Indonesia. These are the places where the demand is coming from.
And also incidentally, we are in, you know, the notes of Amber and Woody are favorites of the, becoming favorites of the world, because they bring value for money to the customers. And in the Middle East also the demand is increasing. So, fortunately the Oriental notes and the Woody notes, we have that particular capabilities and products in the company. So that demand is going to continue.
Secondly also we see, you know, in the COVID demand did increase and it’s increasing because people are now getting used to, you know, more hygiene things and more cleanliness and like floor washes or you know, Dettol, everybody has improved their lifestyle. So that’s bringing the demand on the table, and it keeps indirectly it comes to us.
Sudhir Bheda
Can you put the number to addressable market, total size of the market of our products, worldwide?
Mahesh Babani
I cannot, I would say aroma chemicals and aroma, it could be between $6 billion and $8 billion. I think, so. I cannot put a number because there’s no, it could be in that range.
Sudhir Bheda
And last question from my side. We saw that volume is grown by 33% in Q2, over last year Q2.
Mahesh Babani
Yeah.
Sudhir Bheda
But our turnover has grown only like 16%, 17%. So are we seeing the pricing pressure in the product? So how do we look at? How do we analyze that phenomenon?
Mahesh Babani
Sure. I’ll tell you, when we took, what you see is, what we did last year. So last year the markets were at, the raw materials were at all time low. And fortunately we also took a contract at all-time low. And so the prices were probably historically low last year. And this year it is correcting itself. And I can only tell you few, four of this year there will be a much higher, higher prices because we take yearly contracts and we take our raw materials also yearly. So that doesn’t affect our margins. But because of the lower margins, lower prices of raw materials and lower prices of finished goods, that’s why the value was lower. But this has taken a significant change.
So what we do is 60% of our businesses about contract, 60% to 65%. But we make a conscious effort to do that. 60% to 70% is the max we go. So generally 60% to 70% is a lower. Today also 60% to 70% of our business is almost at contract and at lower prices. And the balance 30%, 40% is at maybe 20% higher prices. So, all this will culminate to better things in the last quarter and next year onwards. And we see already significant demand, in fact, we also signed with contracts where we signed back to back raw materials. We signed contract for year ’25 already with one customer, two customers, three customers, about 33%, 30% of our important products have also been accommodated along with lack of our raw materials for next year.
Sudhir Bheda
Okay. Thank you. Thanks for giving me the opportunity.
Mahesh Babani
Thank you. Thank you.
Operator
Thank you. The next question is from Deepan Sankara Narayanan from TrustLine Holdings Private Limited. Please go ahead.
Deepan Sankara Narayanan
Good evening, everyone, and thanks a lot for the opportunity, and congratulations for great set of numbers. So firstly from my side, so very happy to see 7% Q-on-Q growth in realization. So how do we see the pricing improving from current level? And also our current realizations are 25% lower than peak, peak realization reported in ’22, ’23. So, and in product-wise how, how big the realization difference we have seen?
Mahesh Babani
So I’ll request Narayan to answer this, because I only keep ’25 in mind. I’ll tell Narayan to talk about historic numbers.
Narayan Iyer
Okay. Hi. Good evening. So a good observation. Definitely as Mahesh bhai mentioned earlier to Mr. Sudhir Bheda that we see that there is a slight increase in the spot prices in this quarter, which is what is also the observation that you have done that in this Q2 our realization on a per kg basis has gone up. So that’s very correct.
Now to specifically answer about the other question that our overall per kg prices have come down as compared to the peak, what we achieved in ’22, ’23. That was also answered by Mahesh bhai, stating that for the yearly contracts, for the year 2024, these contracts were entered somewhere around October, November, December of 2023, because the MNC [Phonetic] is the global players, they all have the calendar year as their year. So we need to freeze upon the prices at that time, in fact. So the prices were low then because the raw material prices have come down. And that is why you will see that compared to the previous year, the average realization is low.
Deepan Sankara Narayanan
Okay, okay. And in terms of utilization per se, overall this quarter we are almost reaching around 90%, 95% per company. And how is the utilization for Galaxmusk, Prionyl and Camphor? And what kind of capacity increase we are looking forward for Galaxmusk?
Narayan Iyer
As we mentioned and also put it across on our website, we are almost nearing the optimal capacity. But yes, these are new products where we are close to about 75%, 80%, 85% of the capacities that we have installed. There is scope for improvement here. And there is a continuous augmentation of various processes that we do about, which Mahesh bhai also mentioned, which improves the efficiency, yield and the capacity of output to come above by doing a little bit of modifications to our existing setup. And we feel that this will go above. The coming years, yes, Galaxmusk, Prionyl will be at its peak capacities and you should see better volumes going ahead in the next couple of quarters also in that.
Deepan Sankara Narayanan
Okay. So what kind of capex we have planned for this year and next year? And what kind of repayment plan for debt? And are we expecting debt to EBITDA to fall below two times this year?
Narayan Iyer
There are certain capexes, which we have outlined long-term, short-term. So immediate short-term is as Mr. Mahesh Babani mentioned in his earlier inaugural address, we are looking at possibly building up capacities of some of our key products on the Pinene space, which is our strength. So we will, because that is increasing and we would definitely like to keep pace with the market on the capacity so that we continue to maintain our status of a number one player on all our Dihydro Myrcenols, AmberFleurs, Pine oils and seeing the way that Galaxmusk is also performing, rather outperforming our expectations, in fact. We may possibly also look at increasing its capacity in due course of time. So this is on our, on a continuous basis of our main products.
There are certain long-term capexes that we are thinking about of introducing new products and all, which we will announce it at an appropriate time when we know that we have the resources and the capabilities exactly to launch such products. We will come back to all the investors stating the exact time when we are expecting it to launch them, in fact. Thank you.
Deepan Sankara Narayanan
Any [Technical Issues] we can, we can put up for capex and debt repayments, sir?
Narayan Iyer
Come again, Deepan.
Deepan Sankara Narayanan
Any, any specific number we, we can put up for capex and debt repayments for this thing?
Narayan Iyer
Debt repayment, anyway, the term loan repayment is happening as per its schedule. And you know that goes around because whatever capexes we have done using bank money there are certain repayment obligations and you would have seen even in our current financials. We have repaid all the bank obligation. Broadly about, what we are talking about on the overall capex required for this increase could be in the next one year for all these items, about INR200 crores, INR250 crores or so, in fact.
Deepan Sankara Narayanan
Okay. That’s helpful.
Narayan Iyer
Thank you.
Operator
Thank you. [Operator Instructions]. The next question is from Mulesh Savla from Shah & Savla. Please go ahead.
Mulesh Savla
Thanks for taking my question and heartiest congratulations on record quarter performance. Sir, can you throw a little more light on the JV plant that has been started in the recent past. What can be the expected top line, how the margin profiles will be? And is that plant fungible that we can produce any items? Or it is restricted to a few specific products only?
Mahesh Babani
Yeah. So, thank you for that question. The first thing is that we should be proud that as Indians Global Fortune 500 giant has relied on us to be their technology partners with Privi having 51% and they having 49%. And they have specialty products which they have been manufacturing for nearly 80 years. They have transferred those products to India and it is going to be manufactured in the JV plant. There are going to be 42 such specialty products, which are going to be manufactured.
And as far as the products are concerned that is going to be exclusively supplied to Jeevanan [Phonetic], and in that we are expecting an EBITDA margin of 24%, which is something which should keep us going. And they have already, before the project was even launched, they have already, before it rolled out they have asked for expansion of a land bank, which we have already procured. So we see on a top line the turnover going from 150 crores and doubling up during the coming years with the capacity enhancement and expansion.
Mulesh Savla
So ideally with the existing capacity we can do turn off around INR150 crore?
Mahesh Babani
Yeah. Because they are super specialty products. So, it’s more of the low volume, but high value.
Mulesh Savla
Great, great, great. And I think, and yeah, that’s all. That’s all from my side. Thank you so much, and wish you seasons greetings also in advance. Thank you.
Mahesh Babani
Thank you. I would also tell you Mr. Savla, that you know this is my gut feeling that this is only a try and test case. There will be many such projects coming up. Not only from this customer, other customers who have trust in us. I, at least see, one or two more tie ups like this in next two years, three years.
Mulesh Savla
Oh, that’s very nice to hear. Wish you all the very best for that. Thank you.
Operator
Thank you. [Operator Instructions]. The next question is from Nikhil from Perpetual Capital. Please go ahead.
Nikhil
Yeah, hi. Thank you for the opportunity, and congrats on a great set of result again. My first question is, so how are the contracts looking for next year? I think the pricing environment was slightly on the weaker side last year. Now that Mahesh ji has already mentioned that pricing is improving. Does that also result in higher gross profit per ton from next year?
Narayan Iyer
Hi, Nikhil. This is Narayan here. Yeah, so we also expect that gross margin to improve a lot. It is too early as of now to really mention how the contracts will pan out. There is a major event happening early next month IFAT [Phonetic], which is like a conclave for all the flavor and fragrance company. I feel we will really come to know how it is going to pan out. But as we really see that prices have already started moving up. We expect better times to happen around.
Yeah, Mahesh bhai, you wanted to add something?
Mahesh Babani
I think it will be in few words it’s going to be much better than this year.
Narayan Iyer
Yeah, so that’s what cautiously optimistic I was trying to say about that. Definitely it will be a little better than what it has been on the contracts of the previous year.
Nikhil
My next question is also, you know, in the last few quarters you all have been mentioning that the incremental focus is on higher margin products and value added products. But the gross profit per tonne has sort of stabilized around 2 lakh per tonne for the last three, four years. How should we look at that incrementally?
Mahesh Babani
Nikhil, good question. In fact I had answered it in the previous quarter. The thing is that there have been price vagaries happening in the last few years where prices have been on the realization of the finished goods have been coming down. So because we did this augmentation, because we went into this value added products and all our margins at the gross level has improved or sustained. When you talk about gross margin you only take the RMC as a trend whereas when we do above we take a complete scenario of the factory expenditure which gets panned out over a higher volume when we are doing above.
And that is why you are seen in the final EBITDA margin level and at the pack level we have really improved what we were about three years ago or four years ago to what we have been now giving. And in this current year, the last six quarters which we also shared it with you all, we have been 20% plus on the margin trend. So this would not have been possible had the value added products not come in. Also the yield improvements, what we have taken into consideration been also giving a better yield to it. And I have Sanjeev, our strategy here also want to ship in an add or something.
So what happens is, you know, the value added products, the volume really smaller because they are high value products. So therefore sometimes this volume can be misleading because I may be selling something which is costing $55. Even if I sell let’s say 20 tonnes, that is much better than selling. Something costing around $2, you know, 100 tons of that. That’s how, that’s how the volume sometimes can be mistaken. But what you see is the gross margin that we make and that’s how the high value products add to the margins.
Nikhil
Right, right. So now with the approval of, you know, U.S. FDA for camphor, how should we see your camphor business going forward? And what can be the difference in realization for pharma and non-pharma grade here?
Mahesh Babani
See, to be [Indecipherable] it’s a listing of a product in the U.S. FDA which means that my camphor is not an end by product [Phonetic]. Okay. It’s only an ingredient which can be used in making formulation. Definitely the realization will be better as compared to what we do on the industrial front. So it’s time we talk about. Because there are certain processes that every pharma company will be taking for evaluation and final orders to come about. Broadly what we see is that the realization should be anywhere between 25% to 40% higher than what we normally sell in the industry and [Indecipherable].
Nikhil
Right, right. One question is also any update on the acquisition that was announced couple of months ago. How is that progressing and when do you expect to conclude that.
Mahesh Babani
The bankers will inform you at the appropriate time when we are ready for it.
Nikhil
Okay. Okay, last question from me. So as per my channel checks, you know, prionyl, is yet to take off at a, you know, reasonable capacity utilization. I think last I asked this question last year as well. I think Rajanji had mentioned that you are working on a greener process for the product. So how is that taking shape?
Mahesh Babani
We’ll ask Rajan to answer that.
R S Rajan
Yeah, yeah. So I’m happy to say that that process has seen success. So now we are going to again augment the capacity and whatever we are producing is already presold and as far as the capacity is concerned it is going to go up four folds to almost 150 tonnes per annum. And we are absolutely on track on this product which is considered the holy grail of aroma chemicals.
Nikhil
Yeah, sure. Thank you, thank you and all the best.
Mahesh Babani
Thank you, Nikhil.
Operator
Thank you. Next question is from Vineeth Lambu from HSBC Asset Management. Please go ahead.
Vineeth Lambu
Hi sir. Most of the questions are answered but I have some few questions. What would be the peak production capacity which can be utilized and what would be the revenue potential of that capacity if I may know.
Mahesh Babani
So the peak capacity that is somewhere between 48,000 to 50,000 metric tons and we can generate a revenue of about close to INR2,500 to INR2,700 crores.
Vineeth Lambu
So what are the capacity utilization 70% or 80%?
Mahesh Babani
Currently it is about 80% or so.
Vineeth Lambu
So any future capex plan apart from the JV which we have recently done?
Mahesh Babani
Yeah, so just now excited about that you know for all the existing set of our products, the key bread and butter products we have a capex lined out of about INR200 crores — INR200 crores to INR250 odd crores or so which will increase the capacities of all our major products. And we also have a long term plan for introducing a lot of high-end specialty chemicals and dream project and all for which we are anyway in the process of raising up money and you know go ahead.
Vineeth Lambu
So this capex plan would be over spread over years or like next years or next year itself.
Mahesh Babani
It is spread over 18 months to 24 months period or so broadly.
Vineeth Lambu
Okay. And any guidance for the next like not next year but FY ’26 revenue guidance and margin guidance if you, if you can give. I know most of the orders, most of the…
R S Rajan
The voice outlook is very positive.
Vineeth Lambu
Okay, any margin guidance in the — in the range.
Mahesh Babani
Positive means everything comes in there.
R S Rajan
Positive volume is everything.
Vineeth Lambu
Okay, thank you.
Operator
Thank you. Next question is from Rohit Nagraj from Centrum Broking Limited. Please go ahead.
Rohit Nagraj
Yeah, thanks for the opportunity and congrats on a pretty good set of numbers. So first question is the Givaudan project. It is completely for the Givaudan as a client or customer. So barring any key issues what would be the timeline for the peak — peak revenues attending? Will it be over a period of 12 months or so? And second question allied to that is that we have recently started the plant and probably we also would have started the commercial activities. So are there any teaching troubles that we have faced in the last couple of weeks after starting the plant. Thank you.
Mahesh Babani
The positive point is that we are off to a very good start. And for us to fructify the optimization of these products which are specialty products it will take about two years. And since Givaudan is one of our big customers we are indeed grateful and it’s a privilege to be trusted by them to do a specialty project with them as a JV. So everything is going in the right direction and there is no hiccup. It is moving absolutely in the right direction. And everybody including our JV partners who visited us for the inauguration are very happy with the progress that is being made. Good for Privi, good for India, good for all of us.
Rohit Nagraj
Sure. Just a allied question. The facility is completely dedicated for Givaudan or we will be able to produce products for maybe other customers.
Narayan Iyer
The entire JV is based on exclusivity which is being manufactured for them and there is a guaranteed EBITDA margin in that and we will continue to supply to them on an exclusive basis.
Rohit Nagraj
Sure, that’s helpful. My second question is on the R&D front. So Mahesh sir mentioned that similar to what Givaudan has given us in terms of the product and projects there could be a couple of more projects which also may rectify over a period of time. So are we already working with those clients and what are the capabilities that we are building from an R&D perspective to probably scale up ourselves and cater to these clients? Thank you.
Mahesh Babani
That’s a very good question. All we can say at this point of time given the proprietary discussions is pretty immature to make any announcements. But I can only tell you since the world has seen the fructification of this JV, definitely there are possibilities which are very, very positive for the coming future.
Rohit Nagraj
And if you can just elaborate a little bit on the R&D strength capabilities it would give us flavor in terms of how it has changed since we started working on the JV. Thank you.
Mahesh Babani
So we, we, we — I would really boast over here that we have a great R&D team. We have almost 91 people working around the clock. So I think for a company which is few thousand crore 91 is a very good resource to have and very good teamwork. And we do from any given time 10 products are being worked on simultaneously in the lab and at least five to six on new products. On 10 products on 33% of the revenues go for intensification of capacities, 32% of the people concentrate on new products and 33% for [Indecipherable] and new — new specialities. So almost 91 people working around the clock. That’s a good report for that company.
R S Rajan
And to add to that, you know Privi has always been focused on R&D. It’s not that it is because Givaudan has come over or given us this. Givaudan gave this 42 products to us seeing our R&D capability and the capability that Privi can deliver rate as you know as these. Both these R&D setups are at [Indecipherable] more than 20 year old and the one in Navi Mumbai is about 17 year old. Both R&D facilities have been recognized by DSIR so which means that we are having the highest of standards. And it’s our visionary Chairman’s idea of you know having a strong robust R and D which he nurtures, which he passionate, is passionate about and oversees the entire operation. And that’s how you’ve seen Privi really evolve into a company from a two product to a 72 plus product with 42 products now for the JV and another 20 odd in the pipeline.
Rohit Nagraj
Sure. That was really helpful. Thanks a lot and all the best. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Manan Maglani [Phonetic] from KamayaKya Wealth Management. Please go ahead.
Unidentified Participant
Hi sir. Thanks for the opportunity and congratulations on the good setup members. My first question was regarding the capex. So, September balance sheet frequency [Phonetic] there is a number of 233 coverage [Phonetic] of CWIP. So is it related to buying capex that you mentioned in the call earlier?
Narayan Iyer
Okay. Hi Kamal. Hi, Manan, [Phonetic]. This is Narayan here. The basically it is the you know almost more than two-third close to about INR160 crores of the INR233 crores that pertains to the pregame CWIP because it has not been put to use. So that’s why it is lying in capital work in progress. The so called inauguration happened in the month of October and now the water trials and everything is going about. So the major, major amount was on account of bridges and the balance what you see is the regular capexes and one or two new products in preview which in the process of getting capitalized in this quarter or so which includes [Indecipherable]what Rajan talked about and also the AmberFleur extreme in fact.
Unidentified Participant
Okay, and what are the capacity utilization for camphor and Prionyl?
Narayan Iyer
We are almost at 80% of the capacities that we are having about. Just answered in the earlier question regarding.
Unidentified Participant
Okay. And even we are you know at a [Indecipherable]. Do you see 20% volume growth for next 15 to 18 months?
Narayan Iyer
Yeah, definitely.
Unidentified Participant
Okay, so I mean you already answered this, but just to clarify, so gross margin of 45% that can go beyond that number. Let’s not put the number, but it can go beyond this.
Narayan Iyer
So what you’re saying is the RMC gross margin. Yeah, we, I think it should improve a little bit otherwise, you know, we can maintain at this level.
Unidentified Participant
Okay, correct. In earlier concall, you mentioned that the capacity of 48,000 metric ton which we are having currently, it’s supposed to grow, 60,000 metric tons. So with this time capacity, will we reach to this number?
Mahesh Babani
See, it’s a combination of various factors. Last time around also we mentioned that we will be increasing and bringing in new products. So it’s a combination of various things. One, definitely some of our existing products we are looking at. Two, with the QIP money that we are looking to raise and introduce some new products with all that is what we had stated that we will reach about 60,000 metric tons or so. So we are in the process. First thing is to augment and improve and increase the capacities of our existing products. And that’s what we are focusing currently.
Unidentified Participant
So is there any timeline decided for QID [Phonetic]?
Mahesh Babani
You know, we will be in a position to answer through our bankers at the appropriate time.
Unidentified Participant
Fair enough. And in the current quarter the expense seems to increase a much higher rate, around 50%. Any particular reason?
Mahesh Babani
If you basically see the volume has increased in this quarter and the other expenses forms the selling and distribution expenses with higher volume of sale happening around, you also end up having that much of units being exported. So freight expenses has also gone up and the Israel dispute has also slightly increased the freight expenses which I believe is a uniform truth, universal truth to all exporters.
Unidentified Participant
Okay.
Mahesh Babani
Otherwise, all other expenses are under control infact.
Unidentified Participant
Okay, can you explain a little bit about the new products like Indomerane or Florovane.
Mahesh Babani
Oh yeah. Indomerane is one specialty product. It’s an side chain of Galaxmusk where it is a six-step reaction. And fortunately for us, we developed it from a very special catalyst and we had some lower cost advantages in this. I think in this year we are within this year we expand this capacity significantly and we intend becoming one of the largest manufacturers of Indomerane in the world. Probably one of the largest for sure, if not the largest. And Indomerane also happens to be one raw material for a specialty product which we are developing, which we have launched in the market in the last few months and we are taking some market feedback on that. It’s a product of about $300 plus and we hope to be very successful in this. This is also an oriental note which goes into products like [Indecipherable] like I said.
So this is very interesting product. Indomerane is going to be our star product and we are hoping to be, I told you, in short one of the largest while Florovane is a lower value product. Indomerane is a range of above $55 or so, Indomerane is about $10. It is a sidechain from our rest of our product. So this also very interesting in margins but value is not so high. And we are also putting up capex for this during this year and we will see the benefit of this in next financial year. Okay, perfect.
Unidentified Participant
In my last question regarding Privi [Indecipherable] so there are two units, correct. So what are the gross margins for both the units.
Mahesh Babani
Similar, similar. All I can say.
Unidentified Participant
Can you quantify that?
Mahesh Babani
You see a Privi balance sheet and you, you quantify that. You don’t ask me to make forward looking statements. It’s very sensitive time, you know to make statements about something futuristic. But we’ll be in a similar range of products. Only I can say we are building a like — we are CSC — we are building a new building block called [Indecipherable] which is first time in the country.
Unidentified Participant
Okay. And do we expect this in next six months or so?
Mahesh Babani
Maybe, maybe it may take a little longer, maybe next year or maybe it’s yet on. I would not say some premises we are on, you know, negotiating with our auditors. Maybe this year, maybe next year, maybe a year up [Phonetic]. But within next two, three years for sure. At the appropriate time you will be announcing it as stated You will come to get the exact news from our bankers. And it’s my humble request to all shareholders, all investors and all people wanting to ask questions to please currently restrict your questions on to Privi Specialty Chemical Ltd and its subsidiaries only and not to any acquisitions or something because if at all and as and when the acquisition and you know, take off mergers happen, we will be announcing it. So as a prudent governance policy, I also would expect my investors to restrict the questions towards Privi and its subsidiaries. Thank you so much.
Unidentified Participant
Thank you so much. I wish you all the best.
Operator
Thank you. [Operator Instructions] The next question is from Puneet Jagdish Kabra [Phonetic] from Omayo Advisors. Please go ahead.
Unidentified Participant
Yeah, hi. Congratulations on your numbers. The first question I had is we got the approval on Camphor for U.S. FDA. So two questions here. One is domestically do we have any competition in terms of somebody else being U.S. FDA approved for cancer. And second is who would our key competitors be in this space? Would it be China? Would it be, you know, any other geography that serves this market right now?
Narayan Iyer
Yeah. Good evening Sujit [Phonetic]. There are a few Indian companies who have also registered as a key pharma ingredient in the U.S. FDA space. And we also are the latest to join on the bandwagon. And China of late years have been competing with all the — India is the largest camphor manufacturing — manufacturers in fact. So China seeing the demand that India can generate on camphor has also the last few years been really putting in a lot of camphor and post-Covid innovations have also led in that camphor could be used in various other ways. So that’s why you see a surge in the camphor production.
Unidentified Participant
Okay, can you share some outlook on camphor prices specifically because when you look at the reduce the data that I look at the prices seem to be trending up. So what are the, what are the main factors that one should be considering when it comes to camphor prices in terms of demand supply? Something that you can throw some more light on.
Mahesh Babani
I only can tell you that we are confident of supplying camphor to this region of the world of India and we are confident it’s a huge market. We are confident of the capacities that we have. We have some customers who take all this quantity and balance. When we are talking about U.S. FDA we are talking about several important customers who have asked us to do that because they need this for their operations in the pharma sector. So about 33% of our capacity is going to be exported balance I think in Maharashtra, Gujarat, and MP we can sell it. So the overall market, I don’t know maybe 20,000 or 30,000 tons and maximum market is in India. So that’s all I can comment. It doesn’t — it is an important product for us because we have some other things which will announce based on camphor in coming years which is under development. So I cannot make commitment on that.
Unidentified Participant
Any view that you can share on camphor price outlook for the next couple of quarters.
Mahesh Babani
Honestly speaking I — it’s, it’s. It’s something — it changes almost every month. Sometimes it’s high, sometimes it’s low, sometimes high season, low season. So every time it’s a price I cannot, I don’t know, maybe 450, sometimes 500, sometimes 415. We fortunately have a secure raw material for this so I don’t monitor it so closely.
Unidentified Participant
Okay. Okay. The next question I had was on the Givaudan JV. I think we said that we will be able to do about 24% EBITDA margin. Is that part of the contractual agreement? As in it’s more like a margin cost plus kind of a model where we are secured of our EBITDA margin.
Mahesh Babani
I’m telling you it’s confidential. At the moment it’s confidential because we are only — we have a visibility of next year’s plan which is INR100 crores. And this is our reading on — in between the lines. It can be increased or decreased. That’s in the sometimes the dollar, sometimes the raw materials, it will be in the range I would say in the range our expectations is our dream to have. And we so far have always succeeded in dreaming. Right? So it will be in this range, you know, plus minus 2% to 3% year there. But anything north of 20 is a great EBITDA margin for a chemical company. Let me tell you that anything great of anything north of 20 EBITDA margins is very good for any manufacturing company. And we’ll always maintain that in coming times.
And you also should appreciate the fact that Givaudan is our large customer. Having a strategy tie up and a JV to manufacture for them is also a great, it’s a great initiative, a great step to take about so that we maintain on the main company’s business also with them and in a position to manufacture the so called high specialized chemicals for them also. So it’s a two in one win-win situation for all of us in preview and for the country too as Rajan put it across.
Unidentified Participant
Third question was I heard Babani sir talk about this JV1. You know, as people see it working can lead to more opportunities with other customers. Does that not create a conflict of interest?
Narayan Iyer
No, not at all. Because we will not necessarily have a JV but we’ll have a strategic alliance to that effect on a different side, it won’t necessarily mean JV but it will be more our experiences will also have a strategic alignment, not necessarily JV, but similar arrangements that said.
Mahesh Babani
There also there will be exclusivity, there will be confidentiality agreements, all that sort of stuff. So it’s not that it’s going to open.
Operator
Thank you very much. Due to time constraints, we’ll have to take that as the last question. I would now like to hand the conference back to the management team for closing comments.
Ashwini Shah
Thank you everyone for joining this call today. As you walk and leave through each day aromas of Privi touch your life with fragrance that create memories and bring back nostalgia. We maintain our pace without compromising in our value and constantly challenge ourselves. Serve our partners and customers. Thank you everyone for joining us in this earning call. We appreciate your time and interest shown in our company. In case of queries, you can get in touch with us or SGA, our investor relations advisor. We look forward to meeting all of you over the next call. I wish you all happy Diwali and prosperous New Year from Privi Family. Thank you.
Mahesh Babani
Mahesh Babani
God bless. Thank you.
Operator
[Operator Closing Remarks]