Privi Speciality Chemicals Ltd (PRIVISCL) Q4 FY22 Earnings Concall Transcript

Privi Speciality Chemicals Ltd  (NSE:PRIVISCL) Q4 FY22 Earnings Concall dated May. 06, 2022

Corporate Participants:

Saurabh Kapadia — Research Analyst

Narayan Iyer — Chief Financial Officer

Analysts:

Manish Gupta — Solidarity — Analyst

Prateek Singhania — SageOne Investment — Analyst

Deepan Shankar — Trustline PMS. — Analyst

Zubeyr Singh — Mondrian Investment Partners — Analyst

Chintan Patel — Satco Capital Market — Analyst

Riju Dalvi — — Analyst

Chintan Modi — Haitong Securities — Analyst

Manish Jain — Moneylife Advisory Services — Analyst

Meet Vora — Axis Capital — Analyst

Aman Vij — Astute Investment Management — Analyst

Aashish Upganlawar — InvesQ Investment Advisors — Analyst

Anirudh Shetty — Solidarity Investment Managers — Analyst

Praful Lall — BPS — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Privi Speciality Chemicals Limited 4Q FY ’22 Conference Call hosted by Asian Markets Securities Private Limited. 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 date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ from such expectations, projections, etc., whether expressed or implied. Participants are requested to exercise caution while referring to such statements and remarks.

[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Saurabh Kapadia from Asian Market Securities Private Limited. Thank you, and over to you, sir.

Saurabh Kapadia — Research Analyst

Thank you. Good evening, everyone. On behalf of Asian Market Securities, I would like to welcome you all for 4Q FY ’22 earnings conference call of Privi Speciality Chemicals Limited. From the management, we have with us Mr Narayan Iyer, Chief Financial Officer of the company. We shall start the call with opening remarks from the management and then we will move to Q&A session.

I now hand over the call to Mr Iyer for his opening remarks. Over to you, sir.

Narayan Iyer — Chief Financial Officer

Good evening. This is Narayan Iyer, the finance head from Privi group and a warm welcome to all our investors and all participants on this call. To give a brief with regards to the performance of Privi on the year that’s gone by, that is the year ’21-’22. We’ve been able to have consolidated sales of about INR1,402 crores prima facie everything comes from the Aroma chemical space and the volume that we achieved in this year was about 29,432 metric tons. This in comparison to the earlier year where we were able to do a sales of about INR1,276 crores. The volume was about 29,337 metric tons. So volume wise, we have hardly grown about 0.32% as compared to last year and value wise by about 9.81%.

And then just as a reminder to most investors though everyone is aware, we lost almost about a month’s sale due to the flood at Mahad where the factory and our operations were closed for more than 3 to 3.5 days. So that’s a segment, wherein we lost some of the volumes. And second, because of the ongoing pandemic and the Government of India and especially Maharashtra Government and to some extent, Gujarat Government had also banned the use of oxygen supplies to industries due to which most of my capex, there has been a delay in completion and hence in the financial results that have been uploaded yesterday, both at the stock exchanges as well as on my website, you will see that there is a huge amount of CWIP, that is capital work in progress still lying around because the date of completion for our 2 main large projects, which consists of camphor [Phonetic] at Unit 2 in Mahad and the galaxomas [Phonetic]

Project at Unit 6 in Jhagadia, Gujarat are still to be completed. We expect both the projects to be completed positively by this quarter and some revenue — some sales to start from July ’22 onwards.

Broadly the turnover and sales has been more or less with what we thought about that we will be able to achieve, except that we faltered on completion of the projects and profit-wise also we would have been much better off than what is appearing today to you of about INR131.36 crores prior to the exceptional item and INR136.65 crores of post-exceptional items and exceptional item is nothing but the insurance money that we were able to get in this quarter from the insurance settlement.

But to the fact that there were 2 main increase in our input costs, which actually to some extent derailed our profitability statement. 1. The freight expenses which as most of you are aware are continuing to be on the rise and there has been no control, availability of vessels and containers and ISO tanks has been a big, big, big challenge for us and I think it is more so for most of the exporters, as well as importers. If I had to do a like-to-like comparison between what the expenditure or what the cost was in ’20-’21 and what it was in ’21-’22, the company has almost lost on account of the higher prices of the freight expenses, both for exports, as well as imports, an amount of INR50 crores was spent higher and due to the coal expenses going up, we almost ended up paying close to about INR20 crores to INR22 crores higher on the coal front. So, had this been on more like an apple-to-apple comparison between last year and this year, our profitability could have been possibly better and so this is on the P&L that I would like to give an opening comment or an opening remark.

Second remark on the balance sheet before I hand it over to you all, don’t get perturbed by the inventory level, which is high. There are two counts on which inventory has gone up. 1. The delay in completion of the 3 projects Prionil, camphor and Galaxy mask [Phonetic], which as per schedule got something to happen between October to January, which is still not yet happened with regard to camphor and Galaxy mask and Prionil has just started. We — being imported items that is the lead times, so some of the inventory has got piled up on account of these 2 products also.

Second because of the continued freight problems, there is a long gestation time of the vessels coming in and vessels going out. Sometimes, most of the vessels are offloaded in transshipment basis and everything, and hence you will see in my financials GIT number, goods in transit, both on account of the raw material imports which we import worldwide and as well as the GIT on account of the finished goods or the sales, these numbers have also gone up thereby pushing up our inventory level in this year on March ’22 to as high as INR562 crores or so.

So — however we are confident that with the starting of the 2 projects camphor and Galaxy mask where some of the inventory have got piled up, we will be in a better position to utilize this and by December and more so by March ’23, you will see that previous inventory will be back to where it used to be on the factory front of about 2.5 months and on GDIT because — now GIT is something that I’ll have to leave it especially when we are complying with Ind AS norms. So that may continue to be in the range of about 30-odd days or so. So inventory level will remain at about a 105 to 110 days and due to this higher inventory and also that the working capital cycle getting a little bit strained because of the circular — circulation of money within the system globally as most of the global economies are finding a little bit of recessionary trend and inflationary trend in fact basically, we find that money is hard to come about. And due to which by borrowings on the working capital front has also gone up in comparison to the previous year because it’s all lying within the system, within the inventory, within the payables, within the receivables, etc.

As far as the term loans is concerned, term loans was something, which was approved and which was indicated to all the investors as well as to the Board and to the shareholders because it was mainly on account of completion of the 3 ambitious projects that Privi had embarked and so those money have been utilized for such capex in fact.

Don’t worry, there is a good potential entry as we go into ’22-’23 with these projects to be completed. Yes, we are a little cautiously optimistic in this year, mainly because of the continuing pandemic situation, the war still not giving any sort of trend of being completed or near completion because we still really don’t know which way the war situation is going to pan about and many of the economies like U.S., Japan, they are all already into high inflation, Argentina as an economy is really come down and we do have some concerns on the Latin American markets also apart from Argentina. So keeping all that into the account, Privi as a company are cautiously optimistic in this year.

The reason of being cautiously optimistic as we are optimistic because till the time mankind would like to continue to have a bath and like to smell good and keep washing clothes, as you all are aware, 90% of my products that we manufacture are used in this segment in fact. So that’s why we always feel that our products, the main products on the pine space and some on the phenol space is to some extent recessionary proof. Yeah, the specialty Chemicals is something which tries when there is always a feel good factor around the global economy and we expect this trend to reverse, maybe in about 3 to 6 months’ time.

So on that opening remark, I hand it over to the investors and to Saurabh from AMSEC to take the meeting ahead.

Saurabh Kapadia — Research Analyst

Thank you very much, sir.

Narayan Iyer — Chief Financial Officer

Yeah.

Questions and Answers:

Operator

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Ladies and gentlemen, we will wait for a moment, while the question queue assembles. We have the first question from the line of Manish Gupta from Solidarity. Kindly proceed.

Manish Gupta — Solidarity — Analyst

Thank you for the opportunity, Sir. I had 3 questions. My first question is that you talked about the pressure on raw material prices and freight and coal. I’d like to understand, sir what are the dynamics of your business? [Indecipherable] that the speed increase you have seen in input prices and logistics costs, over time, can you pass these on to customers to protect your margin or is this something that you will have to bear? That’s my first question.

Narayan Iyer — Chief Financial Officer

Okay. You want to reply to your first question.

Manish Gupta — Solidarity — Analyst

Well, I can give you all three or whatever works for you.

Narayan Iyer — Chief Financial Officer

Fine. So as far as the freight is concerned and the steel prices that’s going around in fact, when the freight prices on the inputs is concerned in fact, that means when I’m importing raw material and my basic imports are the pine based raw material and all these pine based raw material we buy at ex-works basis which means the entire freight and freight logistics is borne by Privi and not by the supplier. So this keeps changing on consignment to consignment basis off late because no one is ready to enter into long-term contracts on the freight expenses. As far as the exports is concerned or my sales is concerned, once again where we used to have long term contracts of 6 months or one year with most of the freight forwarders and the logistics company, we find that the last one year starting from January ’21 onwards, most of these companies have not agreeing to a long-term contract or to a fix price because they themselves are not aware, as to what could be the logistic cost or what could be the expenses that a company who is owning the vessels are going to charge to them.

However, when we entered into annual contracts with — for our global customers, last year, as well as in the current year, we find that our prices are fixed, even for the freight. Previous year, none of the customers were ready to give us the increase in the freight expenses though we went back and we had suggested about this logistic expenses being very, very high. This year when we entered into contracts in the month of October, November, December based on whatever was the freight than available in the market, the rate on which we added about 5% to 7% thinking that this would be the top and beyond that, it will not happen. We find that after the month of November and December and more so starting from February and March with the war coming in and subsequently China and Shanghai and all these being under lockdown, the freight expenses still continue to be on the rise. And in such a situation, it is very, very difficult for us to get back to the customers, especially those customers where we have — having an annual contracts or a 6 monthly contracts that these customers will not come back to us and allow us that extra freight expenditure. So it will be difficult for us though, we will try our best whenever the half yearly contracts or the annual contracts get renewed or is in the position of renewals, we do get freight expenses a little bit from the customers, in fact.

Manish Gupta — Solidarity — Analyst

Okay. So my second question is… Yeah, sorry. You were saying, sir.

Narayan Iyer — Chief Financial Officer

No, no, nothing. I hope I have been able to clarify on the freight. That’s what I wanted to ask you in face.

Manish Gupta — Solidarity — Analyst

Yes, yes. So what I take away paraphrasing what you are saying, my understanding is you’re saying that a portion of the inflation in freight you can perhaps recover with a time lag. That’s what I hear you saying.

Narayan Iyer — Chief Financial Officer

Absolutely.

Manish Gupta — Solidarity — Analyst

Okay. Fine. My next question, sir. Is that — we’ve been doing a lot of work in biotech and we have a pilot plant and all that. Based on what you know at present and of course, these things are still evolving. By when do you think, sir that that we can commercialize our first biotech product?

Narayan Iyer — Chief Financial Officer

Well, with the way in which it is progressing and as you know, biotechnology is something that you can see our success today or you can see success, maybe 3 to 5 years or no success also, but having seen the trend and the research and at the mini-skilled pilot and now in the main pilot, we expect these things to give us a positive output and we should be ready to start commercializing thereafter, after getting the results and the yields somewhere from ’24-’25 onwards.

Manish Gupta — Solidarity — Analyst

So are you saying sir that we should see first revenue of this in fiscal year ’24- ’25?

Narayan Iyer — Chief Financial Officer

The revenue may come about in ’25-’26. I’m saying that we will have to commercialize this in ’24-’25. Now we are at the pilot scale, so once the pilot at 1,000 kilos level gets succeeded or at 100 kilo level of output gets succeed that’s when we then try to commercialize such biotechnology products for which we may require some capex amount and post receiving the capex amount, it takes about a year to 15 months to set up any capex in the Aroma Chemicals space, whether it is a synthetic aroma chemical or a natural biotechnology aroma chemicals and that’s the reason that I said that we could probably see commercialization happening in ’24-’25 and the first bit of revenue coming from ’25-’26.

Manish Gupta — Solidarity — Analyst

Great sir. And my last question, sir. In the last call, I think you published a very nice presentation about all the products that you were working on and how those would give you your revenue over the next couple of years and I think you mentioned that the target was roughly INR50,000 crores in 3 years and then INR5,000 crores after that. So what I wanted to understand sir that do we have development right now which will get us from INR3,000 crores to INR5,000 crores or these are products that we will identify or are these products already in development, which is why you have the confidence that these products will take you from INR3,000 crores to INR5000 crores, new products?

Narayan Iyer — Chief Financial Officer

Okay. We do have about 3 or 4 such products, which is in the pipeline, which will help us and entail us to take from INR3000 crores to INR5000 crores and some of the other products are being developed. A few products, we are looking from the biotechnology space also that could add to the bandwagon in fact, and at the research level currently, our company is working almost in 8 different products. So if the research succeeds on these 8 products, all in the main space and main segment of the aroma chemicals, we then take it up to the pilot level and post pilot is something that we will be going into other commercial plan. So seeing our trend of the past and how we’ve been increasing our basket of products, as you know Privi from about a couple of products, way back — log back ago about 25 years ago, today we are almost at 74 different products of aroma chemicals that we are selling. We do expect and — keeping that same trend getting about 3-4, 3-4 new, new products in most of the years. It can all click in one year or it clicks in about equal tandem, but confidence is definitely there that the R&D team really strives well to ensure that we get newer products and as well as ensure that the yield and process improvement on the existing products also happened about which helps us safeguarding our margins as it has done in this quarter as well as the quarter earlier, because if you would see that most of our raw material prices, there has been a spike; however previous margin on the RM to the sales, we continue to be at the same level of about 59.6% to 60%. You will not see any change though the input costs have gone up. It’s only on account of the yield and the R&D inputs, which helped us safeguard our margins in this year. So to keep it easy, yes, we have products in the pipeline and we expect these products definitely to help Privi move from the INR3,000 crores what we expect to do in about next 3 years to keep a vision and make us move steadfast towards the INR5,000 crore mark.

Manish Gupta — Solidarity — Analyst

Okay. Sir, I had a few other questions, but I’ll come back in the queue to give my colleagues.

Saurabh Kapadia — Research Analyst

Sure, Manish. Thank you very much.

Operator

Thank you. [Operator Instructions] Please give us a moment. The next question is from the line of Prateek Singhania from Sage one investment. Kindly proceed.

Prateek Singhania — SageOne Investment — Analyst

Hi, sir. Thank you for allowing me to ask questions. Sir, my first question is with respect to the growth for this current quarter. So we grew by around 7% Y-o-Y and this was a function of realization growth. So is it right to conclude that there was no volume growth in this quarter?

Narayan Iyer — Chief Financial Officer

That’s correct. That’s correct. This quarter we’ve done a volume of about 7,600 metric tons.

Prateek Singhania — SageOne Investment — Analyst

Okay. And sir, like for FY ’23, what kind of volume growth would you guide in terms of the overall business, given the new capacities are coming up?

Narayan Iyer — Chief Financial Officer

Broadly, we expect on the volume front to go up by about close to 15,000 — 15% to 18% growth on the volume, which means I’m talking that from the 29,432 tons that we have achieved, we may inch towards 35,000 ton mark in fact.

Prateek Singhania — SageOne Investment — Analyst

Okay. And sir, given the spike in raw material prices, so like April, end of Q1. So basically, when we were speaking say after the Russia and Ukraine war that, what is the status. So it was sounding as if Q1 would be much painful as compared to Q4, so can we — like do we expect this gross margin to have a dent in Q1 given the current trend in April?

Narayan Iyer — Chief Financial Officer

Q1, there may not be so much of a dent, reason being most of the pine based material that we procure has a very long gestation time of sailing. So it takes about 3 months to 4- 4.5 months. By the time it is dispatched and it is actually coming to the factory and then from the factory, it gets consumed in the production process. So you may see a partially getting dent in this quarter, because the higher prices of CST which comes about from the dispatches that start happening from 1st January, most of the raw materials prices have gone up. All that will start getting affected into my financials more so from May end onwards. There could be partially a dent, but most of the dent will start rolling from the second quarter and we hope that in the spot market and the second quarter price revision, we will be in a better position to offset the increase in the raw material prices in fact.

Prateek Singhania — SageOne Investment — Analyst

Okay. And sir, whatever contracts are coming for renegotiation as of now, all those contracts, are you trying to do a contract or you’re trying to sell now more of on a spot market basis so that most of this freight cost and everything gets settled in that sense?

Narayan Iyer — Chief Financial Officer

Prateek, no. We doubly continue to be in that 65% to 70% of contractual sales and balance 30% to 35% is something which is well in the spot market, because we don’t want contingencies to be kept on our volumes also because if the spot there is — suddenly there is no demand, we will be out of business. So we continue with our 65-35 pattern of contract to spot in fact.

Prateek Singhania — SageOne Investment — Analyst

Yes sir, because see logistics and freight costs and all this input cost, many other companies have also faced similar issues, but many of them because of their contract is in such a manner or the price hikes in such a manner that they’ve been able to protect the margin given we are into such a niche chemistry, wherein we make and N minus 6, N minus 8, and in some chemicals up to N minus 10, N minus 14 as well, right. So given that we expect the company to at least — if not maintain, at least to have a lesser dent onto the EBITDA margin. So all this factors like freight costs, obviously, input is — input freight is not in your control, but whatever is freight towards the output, al least over there like you can have some kind of a formula or a pricing which is fair to the client as well as our Company.

Narayan Iyer — Chief Financial Officer

Prateek, noted the concerns. We’ll see how best we could manage the customers and the customers contracts keeping your inputs, what you are giving in fact.

Prateek Singhania — SageOne Investment — Analyst

Sure sir. Thank you so much for allowing me.

Narayan Iyer — Chief Financial Officer

Yeah.

Operator

Thank you. [Operator Instructions] The next question from the line of Deepan Shankar from Trustline PMS. Kindly proceed.

Deepan Shankar — Trustline PMS. — Analyst

Good evening, sir, and thanks a lot for the opportunity. So firstly, wanted to understand, so during the last call, we have discussed about price increase to be taken up during Q4. So what is the quantum of price increase and has that been fully incorporated during Q4 or some effect to be visible in Q1 also?

Narayan Iyer — Chief Financial Officer

Okay. No, all my multinational companies where we entered into contract that’s on the calendar year-basis and all such contracts, which has started from 1st January, 2012, the sale prices that we are doing on the contractual quantities and volumes with higher prices and these higher prices range between 5% to 8% depending on the segment and the product that each of these customers have looking at and it also differs from customer to customer. And it depends on the volume of offtake from each of the customers. That’s why if you see — if you do an analysis and I had done some analysis, because a few investors had also send me some mail asking for the analytical thing. There has been prima facie an increase in the price to the extent of 6% on the sales that we had done in this quarter as compared to what average price that we were doing for the first 9 months or so. So it means that the increase in the sale price has also helped us in order to augment some of the higher cost of the inputs, where we were able to offtake it giving better prices in fact from the customers.

Deepan Shankar — Trustline PMS. — Analyst

Okay. Okay. And secondly, so are we seeing more disruptions in terms of CST supply and is the prices now being stable or it is still on the rising mode?

Narayan Iyer — Chief Financial Officer

So CST prices mostly are all contracted and there is a back-to-back contract in the sense because the CST suppliers basically — the CST for them is a byproduct. It is not their main product and for them, it is a hazardous chemical where they do not want it to be stored too long within the paper mills where this is actually coming out of the paper pulp crushing process in fact. So their main concern is to ensure that it comes out of the process and it goes out of their factory at the earliest. Prices for all the CST that we have entered into contracts, they are more or less firm. It doesn’t change every month or every 2 months, but it is definitely in place for the 6 months or 1 year, the prices remain fixed, but yeah, as we keep going in for newer contracts because of CST contracts are not fixed, that it will only be happening on 1st of January or 1st of April or 1st of July. It happens depending on the tender floated by most of this paper mills to various CST consumers across the globe. So this can start anytime. It can start in May, it can start in July. So we keep bidding for these contracts and at the time of bidding the contract is when we know what the current CST prices looks like in the market and accordingly we bid basically based on the market conditions then in fact.

As far as CST disruption is concerned, now the Caspian Sea, or the sea — on the Scandinavian countries is opened for movement of the goods apart from the essential goods, which we happened to see in one of the few investors when I had some investor meet. So, now it is opened, we feel that the so-called CST flowing from the Scandinavian countries to India, that situation could improve. Having said that, all this is anyway appearing in my goods in transit. So we as in Privi, have not been really affected because of the war as we have good amount of inventory of the CST both from the Scandinavian countries as well as some U.S. and Canada.

Deepan Shankar — Trustline PMS. — Analyst

Okay. Okay. Okay. So lastly, sir. This increase is expected in the CST prices. So mostly it will — we will see the impact from Q2 to Q3?

Narayan Iyer — Chief Financial Officer

That’s correct. Q2 and Q3. Yeah.

Deepan Shankar — Trustline PMS. — Analyst

Okay. Okay. Sure sir. Thanks a lot and all the best.

Narayan Iyer — Chief Financial Officer

Welcome Shankar.

Operator

Thank you. The next question is from the line of Zaveri from Mondrian and Investment Partners. Kindly proceed.

Zubeyr Singh — Mondrian Investment Partners — Analyst

Thank you. Am I audible?

Operator

Yes, sir, not very clear. Could you just speak some few words.

Zubeyr Singh — Mondrian Investment Partners — Analyst

Yeah. Can you hear me?

Operator

Yes. Kindly proceed.

Narayan Iyer — Chief Financial Officer

Better.

Zubeyr Singh — Mondrian Investment Partners — Analyst

Thank you. Thank you, Mr Narayan. Couple of questions from my side, streamed in line with the other participants on the cost part. So it seems like one of the contract price.

Narayan Iyer — Chief Financial Officer

Zubeyr, I think your voice is echoing. So your words are getting a little overlapped.

Operator

Yes, it is muffled actually.

Narayan Iyer — Chief Financial Officer

So it’s not very — it is very, very muffled. So I’m not able to understand your question at all, Zubeyr.

Zubeyr Singh — Mondrian Investment Partners — Analyst

Okay. Let me try to try again. Am I audible now?

Narayan Iyer — Chief Financial Officer

Much better. Maybe you will have to possibly speak a little bit more slowly so that your words doesn’t get muffled, I believe so in fact.

Zubeyr Singh — Mondrian Investment Partners — Analyst

Yeah, sure. Couple of questions from my side. On the cost part.

Narayan Iyer — Chief Financial Officer

Yeah.

Zubeyr Singh — Mondrian Investment Partners — Analyst

I understand that the contract renewed [Indecipherable] but as we said the inventory essentially CST can be bought given period and obviously during the year we can see the freight and energy expenses going up as well. So dealing from you, there is no potential to increase prices, you have to wait for 9 to 12 months or ate least 9 months before there is cost passed to your customers. Will that be the correct implication?

Narayan Iyer — Chief Financial Officer

Zubeyr, no. I am not being able to understand your questions, Zubeyr. Honestly I have not been able to understand your question.

Operator

Zubeyr sir, are you using your handset?

Zubeyr Singh — Mondrian Investment Partners — Analyst

Yes. I am using my handset.

Operator

Not through a speaker phone, right?

Zubeyr Singh — Mondrian Investment Partners — Analyst

Yeah. Not through a speaker phone.

Narayan Iyer — Chief Financial Officer

Because your voice still continues to muffled. Zubeyr, if you don’t mind, could you possibly send me an email so that I may be in a position to answer your question.

Zubeyr Singh — Mondrian Investment Partners — Analyst

Yeah. [Indecipherable]

Narayan Iyer — Chief Financial Officer

Yeah.

Zubeyr Singh — Mondrian Investment Partners — Analyst

Yeah, that’s what. Thank you.

Narayan Iyer — Chief Financial Officer

Yeah. Thanks, Zubeyr. Thank you. We request participants to kindly restrict your questions to 2 per participant. The next question is from the line of Chintan Patel from Satco Capital Market Limited. Kindly proceed.

Chintan Patel — Satco Capital Market — Analyst

Yes, sir. Thank you for the opportunity. Sir, our topline declined by 4.5% on a sequential basis. What is the reason behind of the subdued top line numbers?

Narayan Iyer — Chief Financial Officer

It’s a decline, you are saying over last year.

Chintan Patel — Satco Capital Market — Analyst

On a sequential basis, on a quarter-over-quarter in Q4 FY ’22.

Narayan Iyer — Chief Financial Officer

Okay, because that’s — you are talking about Q3 and Q4, is that what you’re trying to tell me?

Chintan Patel — Satco Capital Market — Analyst

Yes.

Narayan Iyer — Chief Financial Officer

That’s basically because post the war getting declared, most of the Europeans have really not been taking in the volumes and spot market also, it became a little bit wait and watch sort of a situation. And as you are aware that Latin American economy is really getting worst day in day out, so it was also a conscious decision on our part not to supply too much of materials to the Latin American markets especially Argentina as an economy as all of you are aware, as completely bankrupt and is really on the verge of a huge inflation. So — and we found that even the Europeans who normally taken extra volumes during the this period, there has been a dip as far as basically on account of after the war coming in, we find that their offtake in the month of March has been much lower. So these are some of the reasons for the last quarter sales coming down.

And one more reason is that the company has migrated from an Oracle system to an SAP system. So, in the month of March, the last 5-6 days, we actually closed the system a little earlier for smooth migration from Oracle to an SAP. So that could also possibly have led to the reduction in the overall sales from Q3 to the Q4.

Chintan Patel — Satco Capital Market — Analyst

Okay. And the second question on the finance cost, our finance costs sort of from INR186 crores in Q4 FY ’21 to INR8.3 crores in Q4 FY ’22. So how it will move going forward? How it will look like going forward?

Narayan Iyer — Chief Financial Officer

Well, the finance cost going forward will look into this sort of an average only, reason because our utilization on the working capital front has jumped up from about INR200 odd crores as on March ’21 to close to about INR450 crores, which is what we had also envisaged and captured on a steady state of going concern basis business in fact.

And secondly, a part of the term loan, which has got capitalized or which is getting capitalized that will also come into the interest cost expenditure once the 2 main products Galaxymask and camphor, the capex amount which is lying in the CWIP, that gets capitalized in this quarter. So the entire term loan interest will also start coming and hitting it into my P&L. So you could possibly see overall finance cost starting from ’22-’23 as a year in the range of around INR55 odd crores or so.

Chintan Patel — Satco Capital Market — Analyst

In the next year, sir?

Narayan Iyer — Chief Financial Officer

Which next year?

Chintan Patel — Satco Capital Market — Analyst

Should it come at ’24 going forward like next couple of years?

Narayan Iyer — Chief Financial Officer

Well, it’s too early for me to say anything, but maybe I’ll have a better answer or come — be better prepared in about 3 to 6 months time once our existing projects also starts sweating in, in fact. Yeah. If everything goes the way that we’re thinking about, you would see interest and finance costs coming down from ’23-’24 onwards in fact.

Chintan Patel — Satco Capital Market — Analyst

Okay. On the sir — the last question is on the regulatory front.

Narayan Iyer — Chief Financial Officer

Of what?

Chintan Patel — Satco Capital Market — Analyst

This small amount of pollution goes, can you close some show-cause notice on a pollution — from the pollution board, Maharashtra Pollution Board.

Narayan Iyer — Chief Financial Officer

That is normal routine matter which is happening. I don’t know how this media people made it into a big issue. Honestly speaking in fact, so we have already addressed it and we have responded to the said notice that we have received in fact. So it’s absolutely a day-to-day routine FIR in fact.

Chintan Patel — Satco Capital Market — Analyst

Okay.

Narayan Iyer — Chief Financial Officer

It’s not as serious as made by the media channels in fact.

Chintan Patel — Satco Capital Market — Analyst

Okay. Thank you, sir.

Narayan Iyer — Chief Financial Officer

You’re welcome.

Operator

Thank you. Yeah, the next question from the line of Riju Dalvi, an Individual Investor. Kindly proceed.

Riju Dalvi — — Analyst

Yeah, thanks for the opportunity, sir. Just 2 bookkeeping questions. First one is that like if you can share the breakup of volume data for Q4 as early as the entire FY ’22 year?

Narayan Iyer — Chief Financial Officer

Breakup in what terms you want to know, sir?

Riju Dalvi — — Analyst

Volume, sales volume.

Narayan Iyer — Chief Financial Officer

So volume for the year for INR1,402 crores of sales that we’ve done. That volume is 29,432 metric tons. And for Q4 prima facie, it is 7,599 metric tons culminating to a sale of about INR374 crores, what you see in fact.

Riju Dalvi — — Analyst

Sir, my question was like can you please break it up by segment that is in pine, citral, and phenol and and all?

Narayan Iyer — Chief Financial Officer

We can possibly do that also. And it will come in our annual report. We normally give that in our space and segment. So it should come in very soon. The annual report should also come, but broadly, if my memory serves me right, the pine will of the said 29,432, pine should be somewhere close to 22,000 tons, So that’s my main forte and phenol could be about 4.500 tons. So these 2 is broad that I can talk about, should be — this is the main strength of Privi we have. Final details, maybe if there is a mail sent by you, then I could give you the exact numbers on that.

Riju Dalvi — — Analyst

Got it, sir. Got it. Thank you. And sir, the other question was that like could you please confirm that we are talking about INR3000 crores kind of topline by FY ’25. Given this scenario, like what kind of situation, then supply chain issues, then we have some projects that got delayed. So how do we still aiming to achieve INR3000 crore kind of top line by ’25?

Narayan Iyer — Chief Financial Officer

We continue to do so. We — as I said, we are cautiously optimistic and the vision of INR3,000 crores continues to be so in fact. So we will be working on that part and our zeal, passion is to ensure that Privi reaches INR3,000 crores at the earliest. ’24-’25 is what our dream is, what our Chairman, Mr. Mahesh Bhavnani had also mentioned in the AGM address. Yeah. If the situation is really going to be bad, if not ’24-’25, maybe ’25-’26, but achieving INR3,000 crores is something, which will happen for sure in fact.

Riju Dalvi — — Analyst

Okay, great sir. And sir, one more thing, like you had shared earlier that Q4 FY ’22 volume data and can you please share the Q4 FY ’21 volume data?

Narayan Iyer — Chief Financial Officer

I do not have often. Sorry sir, in fact. I’ll have to get back into some of the investor presentation, but should be more or less the same or maybe a little bit lower than what we have done now.

Riju Dalvi — — Analyst

Will be consistent, right?

Narayan Iyer — Chief Financial Officer

Yeah, more or less consistent only in fact because even if you see in the quarterly results that’s been published in fact, so we did a sale of about INR3,465 crores or something of that sort in the quarter in March ’21. So if that is so and with the prices being a little lower at that time as compared to this quarter, it should be more or less same. More or less same, I’ll say that. It will not be a big sea change.

Riju Dalvi — — Analyst

Got it, got it. And sir, one more thing, just wanted to confirm. It will be like earlier in the other call, you had said that due to the Russia and Ukraine conflict, we might have into raw material supplying or sourcing.

Narayan Iyer — Chief Financial Officer

Sorry, Riju, could you clarify once again what you asking?

Riju Dalvi — — Analyst

Yeah. So, earlier you said that due to Russia and Ukraine conflict, our raw material sourcing might get impacted if that continues for month and this is actually continuing more than a month, so how are this situation that you’re facing right now and what would be the main issue maybe in a quarter later as you said that 90 days kind of in transit that you have for raw material sourcing.

Narayan Iyer — Chief Financial Officer

Okay. Riju, what I had stated about a month or month and a half ago was at that time, the entire Baltic Sea region or the Caspian Sea, as it is also known as where the Scandinavian countries have ports, whether it’s Stockholm or Helsinki or Norway, Poland and Russia also sharing a part of that sea, that time the entire see and entire ports were shut for other than essential services. Now what I happened to tell you a few moments ago, was that the port operations in these regions have started thereby allowing the CST which comes from all this Scandinavian countries namely Finland, Denmark, Sweden, Poland, all these countries are now started. We have been able to get the ships and get the materials from these countries from where we have contracts on the paper mills and everything of that sort. So that CST have started coming in. The availability of vessels remains to be a challenge, but at the price we are still able to get those CST into our country, but as you know that from these countries to reach into India, there is always a gestation period or a gestation time and that time is something that it was to reach Privi or Privi’s site at hard and hence, we have developed a huge storage capacities, wherein we stock this CST as a raw material front. The only region from where we find, now it could be a little problematic from some other mills in Russia and Ukraine. So we are doing our best to ensure that we try to get more and more contracts from other countries which includes U.S. and Canada apart from the 6 other countries in Scandinavia and we also trying to source GTO from Southeast Asia and Brazil, Chile, Colombia and all these countries in fact. So definitely we will — we’ll have enough of CST stock to ensure that our production volumes with regard to the pine based materials, we do not falter or we do not have a position of not having inventory or not having CST to manufacture the finished goods.

Riju Dalvi — — Analyst

Got it, Sir. Got it. Thank you for the detailed explanation and best of luck for future growth.

Narayan Iyer — Chief Financial Officer

Thank you, Riju.

Operator

Thank you. The next question is from the line of Chintan Modi from Haitong Securities. Kindly proceed.

Chintan Modi — Haitong Securities — Analyst

Yeah, hi, sir. Thank you for the opportunity. Sir, first question is with respect to the sales. Obviously last year was a little eventful year, but on a normalized basis, is there any seasonality on a quarter-to-quarter basis in sales?

Narayan Iyer — Chief Financial Officer

No.

Chintan Modi — Haitong Securities — Analyst

Okay. So when we talk of about say 15% to 18% volume growth plus maybe 5-6% of price increase, so about 20% to 80% kind of value growth that we might be seeing next year and near-term pressures is continuing. Do you think that this large part of the growth will be recovered maybe in second half of FY ’23?

Narayan Iyer — Chief Financial Officer

That’s correct. Because this large part of this growth in this year is going to come from the 3 new products where we have set up a capacity of close to 10,000 tons and this is all going to start rolling in from July onwards. So I will say even if we start selling something in the spot in July and August and September, the production starts about, definitely in the main season, which is the Diwali season out here and to some extent New Year for the Western countries, definitely there could be some spot happening around there and 6 months of window on the new products will also entail me to participate in — with some other customers who have quarterly contractual arrangements. So I’ll be in a better position to participate in this quarterly contracts and more so the confidence stems from that, we will be in a position to bid for in the month of October, November for the annual contracts of ’23. So the large players or the biggies who believe in annual contracts, we will be able to service them in the fourth quarter. So you will definitely see a spurt happening in my revenue on the fourth quarter for the year ’22-’23.

Chintan Modi — Haitong Securities — Analyst

Okay, got it. And within export sales, can you just give us a broad breakup of which are the key regions and what kind of contribution in revenue they do?

Narayan Iyer — Chief Financial Officer

About 32% comes from Europe. When I say Europe, it is all the European countries. In fact, leaving as said now UK. UK assets only contributes about a couple of percentage or so. The US and LATAM markets if I have to segregate between North and South of the 18% or 19% of my revenue coming and about 12% comes from the North American continent, about 6% to 7% comes from the South American continent, 30% of revenue comes from India and balance from Southeast Asia and little bit from the Middle East, in fact.

Chintan Modi — Haitong Securities — Analyst

Okay. Large part of the revenue comes from Europe basically.

Narayan Iyer — Chief Financial Officer

Absolutely.

Chintan Modi — Haitong Securities — Analyst

And we understand that most of the European companies whose manufacturing bases are in Europe are definitely facing a huge pressure in terms of energy as well as availability of gas.

Narayan Iyer — Chief Financial Officer

Correct.

Chintan Modi — Haitong Securities — Analyst

So you believe that this demand impact could be much more prolonged for us, going more than beyond 2 quarters also? Is it possible because I think this is based on some of the commentaries that I get from other chemical companies also?

Narayan Iyer — Chief Financial Officer

Yeah. If there is no — the stalemate continues with regard to the Ukraine and Russia war, it could happen that these European countries will definitely face huge shortage of gas and most of the gas are being supplied by Russia majorly and to some extent by Ukraine also to these countries. So yes, it’s a difficult position to be in, whether it is a European or a company like us, who caters to the European markets in fact.

Chintan Modi — Haitong Securities — Analyst

Sure sir. Just one last question.

Operator

Mr. Modi, I’m sorry to interrupt, sir.

Narayan Iyer — Chief Financial Officer

No, let him be given a last question in fact. Chintan, go ahead.

Operator

Sure.

Chintan Modi — Haitong Securities — Analyst

Thanks a lot, sir. So on — if you look at this quarter’s gross margin, we have seen an expansion on a quarter-on-quarter basis and obviously because of freight cost and energy cost. On the EBITDA side, we are flat at 12.6%. For next year, sir, any guidance that you would like to give for EBITDA margins percentage wise?

Narayan Iyer — Chief Financial Officer

Okay. Now this is standard answer that I keep giving to all the investors in all the investor call. I know investors and me as a CFO, we disagree on that. I will once again reiterate that the other income in the books of Privi are close to about INR32.5 odd crores or INR32 crores, what you see is prima facie on account of the timing differences and the exchange rate differences with regard to the purchases that happens on a particular day and the date at which we make the payment as well as same is the case with regard to the sales also that we follow the customs rate booking whether it is the — for the imports, where as all of you are aware that customs rate when we do a purchase is always about a rupee higher than the interbank rate as on that particular day. And when we talk about our sales, our sales customs rate is one rupee lower as compared to the interbank rate. So due to which, what do you see here a culmination of about INR25 crores to INR30 crores every year, every year in fact. It’s nothing but actual Privi’s revenue coming from the working capital operations. So I still maintain that my EBITDA level normalizing this forex gain, what you all are seeing. Yeah, it is actually not forex, it’s an operations money, which is actually coming to my books. My EBITDA margin in this year is about 15.8 odd percent or so, we — definitely will go up. May not be immediately in the next 2 quarters or so, but if situation stabilizes going forward, what we have — all allow me in maintaining that Privi’s steady state of EBITDA numbers should be between 17.5% to 19.5%. So this could be the range in which we will be operating going forward also.

Chintan Modi — Haitong Securities — Analyst

Thanks for that, sir. But my question was little different. Just if you allow me.

Narayan Iyer — Chief Financial Officer

Yeah, Chintan.

Chintan Modi — Haitong Securities — Analyst

Sir, the price increases that we have taken is for large part of the business is largely locked for the next one year broadly.

Narayan Iyer — Chief Financial Officer

That’s right.

Chintan Modi — Haitong Securities — Analyst

And this quarter we had benefit in terms of low cost inventory also and that will come as reverse in next couple of quarters. So and that hit and basically assuming that the freight cost and the energy cost will continue to remain at these levels at least for say next 2 quarters.

Narayan Iyer — Chief Financial Officer

Correct.

Chintan Modi — Haitong Securities — Analyst

You think that on — despite the sales increase on EBITDA level, absolute EBITDA level, there could be a growth or it will remain largely flat compared to FY ’22?

Narayan Iyer — Chief Financial Officer

It could remain a little flattish.

Chintan Modi — Haitong Securities — Analyst

Okay. Okay, so then probably there…

Narayan Iyer — Chief Financial Officer

Probably. there could be a debt too.

Chintan Modi — Haitong Securities — Analyst

Okay, so then probably the bottom line would be clearly a dip because we’ll have depreciation, higher depreciation because of commissioning of capex, interest cost would be higher compared to current levels because of higher debt also.

Narayan Iyer — Chief Financial Officer

That’s right.

Chintan Modi — Haitong Securities — Analyst

Okay, got it, sir. Thanks a lot for that, sir.

Narayan Iyer — Chief Financial Officer

Thank you, Chintan.

Operator

Thank you. Participants are requested to restrict your questions to one per participant. The next question is from the line of Manish Jain from Moneylife Advisory Services. Kindly proceed. Hello, Mr Manish Jain. Your line is unmuted.

Manish Jain — Moneylife Advisory Services — Analyst

Hello, am I audible?

Operator

Yes.

Narayan Iyer — Chief Financial Officer

Yes, Manish.

Manish Jain — Moneylife Advisory Services — Analyst

Yeah, thank you for the opportunity. Sir, my question is what is the capex guidance for the next two years? And secondly, what is the delay in completion of ongoing capex and when do you expect the current capex to come on stream?

Narayan Iyer — Chief Financial Officer

The current capex, we expect it to capitalize in this Q1 of ’22-’23 and we should be able to see some revenue coming from Q2, a better sense of revenue will come from Q3 and a large part of the revenue on these new capex will start coming from Q4, as I’ve been telling that we will be in a better position to sell most of the volume when we enter into long-term contracts with our major customers. Plans for fresh capex, currently we are working out formulating a strategy because Privi always believed in growth. So there are chances that we may take a pause for about 6 months or 9 months, see how this new capex get panned out and based on that we take a call to get into the next capex more which is definitely our dream project menthol and which entails a huge amount of capex and for which Privi’s Board has approved and enabling resolution that we could prima facie go to the market and raise some equity for the next set of capex expansions and also to possibly improve its overall balance sheet and reduce the debt from its spokes in fact. So we also understand that as a parameter. So we will start working on those lines now that the Board has approved and then given us an enabling resolution to come out to the market and possibly see what sort of various fundraising measures are available on the equity front and accordingly we get back to the Board and come to the shareholders with a final concrete proposal as to what we want to do and what sort of fundraising we will be doing.

Manish Jain — Moneylife Advisory Services — Analyst

Okay. Thank you and all the best.

Narayan Iyer — Chief Financial Officer

Thanks, Manish.

Operator

Thank you. you have the next question from the line of Meet Vora from Axis Capital. Kindly proceed.

Meet Vora — Axis Capital — Analyst

Yeah, hi, sir. Thanks for the opportunity. Sir, just wanted to clarify on this fund raise that we have just approved. We might be waiting for 6 to 9 months. So what kind of estimated capex or the fund raise that we are doing and what is the estimated timeline for this coming into the market for this capex because as we are waiting for 6 to 9 months, so this will be rolling out in FY ’23, FY ’24 or how do we pan it out?

Narayan Iyer — Chief Financial Officer

Meet, too early for me to give you a concrete answer. Yeah, but knowing the equity markets and how it functions and the process that is involved, including approvals to be taken from the Board, the shareholders as well as the stock exchanges and appointment of an investment bank and all that and that process is as good as running an IPO. You can feel that it could take a period of 6 to 9 months’ time. So — and as I said, it is also time for us to see that the INR500 odd plus crores of capex that we spend the money on the existing and what we capitalize about a couple of months ago. That capex also starts giving me the return and as such giving me profits. So it gives me that more — that much more confidence to come to the market and to raise the money in fact because it’s always better to raise the money when the company is really doing well and all past capex’s is our actually sweating in full flow in fact. So I’ll definitely revert back to all the shareholders as and when something comes concretely, but it is now — time for me to start doing the homework, meet a lot of people and get into some sort of a table which gives me a clarity as to what sort of fund raise and what cost and what price, everything gets evolved in fact.

Meet Vora — Axis Capital — Analyst

Sure sir. Understood. And…

Operator

Sorry to interrupt, Mr. Vora, but due to time constraints, we’ll be taking only one question per participant.

Meet Vora — Axis Capital — Analyst

Sure.

Operator

Thank you. The next question is from the line of Aman Vij from Astute Investment Management. Kindly proceed.

Aman Vij — Astute Investment Management — Analyst

Good evening. My question is regarding what kind of volume do you think we can achieve in FY ’23 in camphor and Galaxymax, camphor and Prionil respectively, as well as if you can briefly talk about the demand supply scenario in camphor?

Narayan Iyer — Chief Financial Officer

What we are budgeting in to sell of the say 10,000 tons of all volumes put together. For the first year, we have been very, very, very cautious of — just about putting into my budget or the business plan once again, approved by the Board yesterday, a number of only about 20% of the volume that is 2000 tons is what we are proposing that we could sell though it could be higher off it in fact. So this is the additional tonnage that may come from the new products in the year ’22-’23. As far as the camphor demand is concerned, Camphor demand has really increase because of this ongoing pandemic, not just in India because India used to have — use camphor a lot for religious functions and religious purposes, but now the entire world is also using this as an measure to keep COVID at bay or something of that sort. Apart from which of course the pharmaceutical applications and industrial applications continues to be so. Camphor is growing and the market for camphor is growing almost about 8% to 10% in the last couple of years. We expect this growth to be maintained going forward also in the next couple of years and that’s the reason that we have also set about camphor of almost close to 5,000 tons.

Aman Vij — Astute Investment Management — Analyst

So if you can split 2000 into camphor and Galaxymax little bit from my side?

Narayan Iyer — Chief Financial Officer

Almost equal. I’ll say that.

Aman Vij — Astute Investment Management — Analyst

Okay.

Narayan Iyer — Chief Financial Officer

It could be about 1200 and 800 or so broadly.

Aman Vij — Astute Investment Management — Analyst

1200 towards mask or camphor?

Narayan Iyer — Chief Financial Officer

1200 towards mask and 800 towards camphor.

Aman Vij — Astute Investment Management — Analyst

Sure sir. That’s it from my side. Thank you.

Operator

Thank you. The next question is from the line of Aashish Upganlawar from InvesQ Investment Advisors. Kindly proceed.

Aashish Upganlawar — InvesQ Investment Advisors — Analyst

Yeah, part of my question was answered, but I believe you haven’t finalized the equity quantum that you would be like into go to market for raising. Is it right?

Narayan Iyer — Chief Financial Officer

Correct.

Aashish Upganlawar — InvesQ Investment Advisors — Analyst

Okay. But ballpark, sir, any idea that you can give, I mean you know your requirement for the next 1 year probably?

Narayan Iyer — Chief Financial Officer

It’s not just as a requirement of 1 year, maybe it is a requirement for 3 to 5 years. So it all — as I said, there are a lot of parameters to be evolved or to be understood before I could say that this is the amount that I’m looking at or something if I have to.

Aashish Upganlawar — InvesQ Investment Advisors — Analyst

Okay.

Narayan Iyer — Chief Financial Officer

Very difficult to estimate, but it could be less than or equal to 10% to 12% of the equity dilution. That’s something that I can talk about.

Aashish Upganlawar — InvesQ Investment Advisors — Analyst

Understood. Yeah. And one more thing, I mean in the initial remarks I missed on the disruption. Probably, you said that you lost some part of the production, because of some issues. Was it relating to last quarter Q4 or is it?

Narayan Iyer — Chief Financial Officer

No, no, no, it was related to the flood. There was a flood in the entire Konkan region and Mahad, our entire factories was. Yeah. So our factories were affected because of the flood waters coming in.

Aashish Upganlawar — InvesQ Investment Advisors — Analyst

I’m aware of that.

Narayan Iyer — Chief Financial Officer

Yeah. That was what I was trying to say. So what numbers you see is more like an 11-month numbers and the net 12 month volumes.

Aashish Upganlawar — InvesQ Investment Advisors — Analyst

Okay. But this quarter is normalized, I mean there is nothing to…

Narayan Iyer — Chief Financial Officer

More or less, yes. Normalized. Yeah.

Aashish Upganlawar — InvesQ Investment Advisors — Analyst

Sure. Thank you.

Narayan Iyer — Chief Financial Officer

Welcome.

Operator

Thank you. The next question is from the line of Anirudh Shetty from Solidarity Investment Managers. Kindly proceed.

Anirudh Shetty — Solidarity Investment Managers — Analyst

Yes, thank you for taking my question. It was around the debt level, sir. So I understand that this year, the net to — net debt to EBITDA would be slightly elevated because our debt has gone up so, and our EBITDA is reduced, but if you look at 2023, where do we see our net debt in absolute levels and net debt to EBITDA is settling at?

Narayan Iyer — Chief Financial Officer

It could come down because we expect revenues from the new products, as I was just trying to talk about. And there is — as the revenues improve and we start getting margins from the new products in addition to the full capacity sale of our existing products. We expect the overall debt as we also have some repayments of the term loans that we had availed in the past, it should come to a level of almost equal to the equity, because for the very first time that in previous history also, the debt to equity has gone above 1, are you talking about debt-EBITDA or debt-equity?

Anirudh Shetty — Solidarity Investment Managers — Analyst

So I was looking at debt to EBITDA.

Narayan Iyer — Chief Financial Officer

Debt to EBITDA will come down in the coming year, because our — we expect better EBITDA margins to come about. The revenues to grow almost about 25% on what we have been able to achieve, broad numbers I can talk about. So when those sales starts coming into the revenue front and into our financials, the EBITDA improves and debt will remain more or less same or it could reduce, as I said because of better churning of the inventory and managing the debtor cycles also. You could see from the high level of 3.82 that it is as on March of ’22. It will come to a sub-3 level by March, ’23.

Anirudh Shetty — Solidarity Investment Managers — Analyst

Got it. And cost of borrowings, I saw was around 4.7% for 2022 if I just take the cash financing costs and I take the average borrowings of ’22 and ’21. Just wanted to understand what is the breakup of this as business seems quite low. So I was wondering to understand are we getting any kind of low cost debt in the mix?

Narayan Iyer — Chief Financial Officer

See we’re an export house. So prima facie, a huge amount of borrowings are from the foreign currency money and foreign currency, interest rates are lower than what it is on the INR front in fact. And even as far as the INR front is concerned, we got very good rates for most of the banks, a very, very competitive rates in fact because banks are happy with the overall way in which we also have been maintaining our relationship with them, have been servicing all their debt obligations on time without any failure. So that’s the reason that they don’t mind giving us loans at very, very competitive prices because my rating is also pretty good in fact.

Anirudh Shetty — Solidarity Investment Managers — Analyst

Got it. Okay. Thank you for taking my questions.

Narayan Iyer — Chief Financial Officer

Thanks, Anirudh.

Operator

Thank you, ladies and gentlemen. The management would take one last question. The next question is from the line of Praful from BPS. Kindly proceed.

Praful Lall — BPS — Analyst

Yeah. Thank you sir, for taking my question. So my question is around the fixed assets like the capacity we have currently and our aspiration target of INR3,000 crores in 3 years time. So the question is that, if I look at the current fixed assets, including the work in progress, it’s around INR1100 crores odd and if fixed asset turns like typical range between 2x and 2.2x, so if I assume the same asset turn, it will take us to around like INR2200 crores to 2,400 crores. So my question is like is that — does that mean that there will be some additional capex to reach that INR3000 crores target in coming years?

Narayan Iyer — Chief Financial Officer

Yeah, possibly, there will be a little bit of capex on some of the existing products, our main products in the pine space for us to reach the INR3,000 crore mark. However having said that, the — what you’re looking at 1100 days more like WTI basis written down value gross block, whereas when we look at that asset to turnover ratio, we look at our gross block in fact. My gross block is somewhere closer to the INR1400 crore market in fact.

Praful Lall — BPS — Analyst

Okay, got it, sir. Thank you very much.

Narayan Iyer — Chief Financial Officer

Yeah.

Operator

Thank you, ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.

Narayan Iyer — Chief Financial Officer

Yeah, thank you. So just as a parting remark, ’21-’22 has been a year of, I could say, stabilization and maintaining our volumes in the market in the tough times that we have been, first and foremost the pandemic continuing and in India, it was the second wave that started about from April onwards. Then we had a flood and subsequently we had another wave of the Omicron pandemic from December onwards. But we’re been able to maintain and sustain that on slot and finally by year-end, we had the war, which is still lying loom and looming over us and not to forget the problems of China and increase in the raw material front and the coal front and freight prices remaining to be high, Privi continues its zeal on performance and we’ve been able to post a very decent performance in this stuffing– in this tough times also, and we hope going forward with the 3 new products that we want to start selling and the capex almost getting completed and projects being put to use on this year-end. We –Privi will be in a much better strength to perform to the best of the investors liking and we will be strong, and we will continue and look at the vision of achieving INR3,000 crores very soon in the next 3-3.5 years in fact.

On that front, thank you very much. Have a great day and be safe. God bless.

Operator

Thank you, sir. Ladies and gentlemen, on behalf of Asian Market Securities Private Limited, that concludes this conference. [Operator Closing Remarks]

Narayan Iyer — Chief Financial Officer

Thank you.