Rossari Biotech Ltd (NSE:ROSSARI) Q2 FY23 Earnings Concall dated Nov. 07, 2022
Corporate Participants:
Anoop Poojari — Client Manager
Edward Menezes — Executive Chairman and Co-Founder
Sunil Chari — Managing Director and Co-Founder
Ketan Sablok — Group Chief Financial Officer
Manasi Nisal — Chief Financial Officer
Analysts:
Nitin Tiwari — YES SECURITIES — Analyst
Ankur Periwal — Axis Capital — Analyst
Sumeeth — IDFC — Analyst
Siddharth Purohit — InvesQ Investment — Analyst
Rohit Nagraj — Centrum Broking — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Rossari Biotech Limited Earnings Conference Call. [Operator Instructions]
I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you. And, over to you sir.
Anoop Poojari — Client Manager
Thank you. Good morning everyone, and thank you for joining us on Rossari Biotech Limited Q2 and H1 FY ’23 Earnings Conference Call. We have with us Mr. Edward Menezes. Promoters and Executive Chairman; Mr. Sunil Chari, Promoters and Managing Director; Mr. Ketan Sablok, Group Chief Financial Officer; Ms. Manasi Nisal, Chief Financial Officer of the company. We will begin the call with opening remarks from the management, following which we’ll have the forum open for a question-and-answer session.
Before we start, I would like to point out that some statements made in today’s call maybe forward-looking in nature and a disclaimer to this effect has been included in the earnings presentation shared with you earlier.
I would now like to invite Mr. Edward Menezes to make his opening remarks.
Edward Menezes — Executive Chairman and Co-Founder
Thank you Mr. Anoop. Good morning everyone, and thank you for joining us on our Q2 and in H1 FY ’23 Earnings Call to discuss the operating and financial performance for the quarter. I hope you all had the opportunity to go through our results presentation, which provides details of our operation and financial performance. We have reported a steady performance in our key business segments during the quarter in a volatile operating environment. And our acquired companies, namely Unitop and Tristar, also had performed consistently well during the quarter.
On a consolidated basis, our total revenue from operations stood at INR425.4 crores in Q2 and INR860.1 crores in H1. In-spite of the challenging macroeconomic environment and subdued global demand, we have maintained our margins on a Q-on-Q basis. We are now witnessing some price stability on the raw-material front that should help maintain our margins through the second-half of the year. As, some of you are aware, the company already has a capable R&D setup. With the acquisitions over the past year, we have further enhanced the Group’s R&D capabilities and we have been extremely complementary in nature.
While we remained within our four core chemistries of acrylics, surfactants, enzymes and silicones, the combined know-how of the R&D teams has successfully developed new green products targeted in our core HPPC, Textile Chemicals, and Animal Health and Nutrition segments, which is new segments of agri, water treatment, etc. This bodes very well for the company’s diversification strategy with core chemistries and future growth outlook. Overall, our long-term endeavor is to consolidate our market position as the preferred provider of intelligent and sustainable solutions in the chemical industry.
As we look-ahead, we foresee an of growth opportunities across all our business segments. We remain well-poised to cater to these growth prospects on the back of our diversified product portfolio, strong in our ability, increasing customer-base and agile manufacturing establishments. Our teams are now actively seeking out and pursuing numerous business opportunities that should enable us to renew our growth trajectory in the future.
With this, I would like to conclude my address, and I now hand the call over to Mr. Chari for his comments.
Sunil Chari — Managing Director and Co-Founder
Thank you, very good morning, and warm namaste to everyone. Demand in HPPC, Textile Speciality Chemicals segments remained stable on quarter-on-quarter basis. AHN segment registered an uptick on the back of improved volume offtake in the quarter. While the operating environment remained challenging during the quarter, we believe we have never created the situation well to report steady results. Our customer engagement for eco-friendly replacement for legacy and polluting products remain healthy.
Consorted efforts by our R&D team to launch new products have resulted in a robust pipeline of innovative products in our core, as well as new segments that we have been nurturing over the past few years, we hope to capitalize on this efforts going forward. During the quarter we successfully acquired an additional 15% stake in Unitop and 8% in TriStar, taking our holding to 80% and 84% respectively. As Edward ji already pointed out, we have various synergies in the R&D department, in addition the acquisitions has assisted us to enter new segments like oil and gas and agri and strengthen our presence in the existing high-potential HPPC segment.
And the volatile raw material environment, it has also helped us to have a backward integration to a certain extent. Overall, we have added tremendous value to Rossari and we are pleased with acquisitions and the seamless integration executed by our team. The markets continue to be challenging given the global geopolitical situation and the perceptible recession. We are working internally to face these difficult time and are confident of maintaining our margins throughout the year.
With the strong balance sheet, robust R&D capabilities, adequate manufacturing capability and a diversified product portfolio, we are well-poised to capitalize on the upcoming opportunities in intense speciality chemical industry.
On that note, I would now request Ketan ji to share his perspectives.
Ketan Sablok — Group Chief Financial Officer
Thank you Mr. Chari and to everyone. This quarter we reported, Mr. Chari said, a steady performance across all our business lines. On the profitability front, after a sharp pickup volatility in raw material, we are now seeing some kind of price stability coming into the market. This has helped us maintain our margin profile. Gross margins during the first half have improved by 357 bps and [Technical Issues] was stable at about 13.3%, in-line with the large player.
Currently we are witnessing signs of stabilization of key input prices, as well as on the supply chain front. However, it is still very difficult for us, even now to take long-term calls, given the macroeconomic situation and the integral people situation globally. We still feel that there is more pain for some more time now and organizations like Rossari which have very strong fundamentals and financials are much better placed to withstand these challenges. We continue to believe that in a normalized operating environment along with many of our cost optimization initiatives, we should be able to improve [Technical Issues] overall margin is going ahead. Our objective still continues to be to get back to our EBITDA margins of 14% to 15%.
Our acquisitions are integrating well, as well as growing in their businesses. Their effective integration is helping us successfully during this challenging year. Also our strong working capital management has also supported performance during the quarter. Overall, the company’s operating and [Technical Issues] position remains healthy. And given a normalization on the overall macroeconomic front-end of the RM situation, we expect to deliver consistent performance across all our business verticals going-forward.
I think that’s more or less from my end now. I’ll ask Manasi to take you through the financials for the quarter and half year.
Manasi Nisal — Chief Financial Officer
Thank you Ketan, sir. Good morning, everyone. Let me provide you with a brief overview of the financial performance for the quarter ended September 30, 2022. On a consolidated basis, revenues came in at INR25.4 crore as against four INR434.7 crores in Q1 FY ’23 on a consolidated basis, revenues from operations stood at INR240.9 crore, compared to INR233.7 crores in Q1 FY ’23, sorry on a standalone basis. Revenues from HPPC stood at INR303.9 crores, contributing to 71% of revenues, followed by Textile business at INR91.4 crore, contributing 22%, AHN at INR30.2 crore, contributing 7% to total revenues.
On the profitability front, EBITDA stood at INR56.6 crores as against INR57.7 crore in Q1 FY ’23. PAT during the quarter stood at INR23.9 crore as against INR28.7 crore in Q1 FY ’23. Depreciation was higher at INR15 crore, owing to amortization of fair valuation on account of consolidation of subsidiaries. Interest cost during the quarter was higher at INR8.2 crore, partly due to increase in borrowings, and partly due to Ind AS accounting of purchase price allocation vision. This is an optional charge which will be accounted for till 100% of the shares of the subsidiaries are acquired. As mentioned earlier, we have acquired an additional 15% and 8% in Unitop and TriStar respectively [Technical Issues] quarter. These acquisition have been through an internal accruals and liquidation of investments in our books.
On that note, I come to the end of my opening remarks and would request the moderator to open the forum for any questions you may have. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]
The first question is from the line of Nitin Tiwari from YES SECURITIES. Please go-ahead.
Nitin Tiwari — YES SECURITIES — Analyst
Hi, sir, good morning, thanks for the opportunity. Sir, my first question is related to our HPPC segment. So we’ve seen a revenue drop no a sequential basis, so is this related to price or is this largely, like, a combination of price and volume, if you can throw some light on that? And like related to that point only, so like on the standalone basis, our revenues have more or less been steady, so that means that our subsidiaries have faultered somewhere in terms of revenue contribution? That would be my first question.
Sunil Chari — Managing Director and Co-Founder
Yes, Tiwari ji, good morning. On volume basis, we have grown on a consolidated basis in HPPC to also, but the price have fallen, the raw-material prices have fallen, so consequently SG prices have fallen, but I think we have nearly 7%, 8% growth on volumes in HPPC on a consolidated basis.
Nitin Tiwari — YES SECURITIES — Analyst
So basically their drop is mostly price linked, so sir, to correlate to that point, so on a standalone basis our revenues has gone steady, but so does that mean that when Unitop and Tristar have not contributed as much to revenue as in the previous quarter, is that the right view?
Sunil Chari — Managing Director and Co-Founder
Mr. Tiwari, if you see for the subsidiary, last quarter was the — for Unitop, it was the key season four agro, so — and we have even indicated this at the last quarter that the sales for the agro products of Unitop has been higher in-quarter one. We’ve seen some stabilization in that in-quarter two and that is what has impacted the slightly lower sales quarter-on-quarter on a consolidated basis, but overall if you see, the profit just about 1% or 2% on the top-line on a consolidated basis.
Nitin Tiwari — YES SECURITIES — Analyst
So sir, can we have that number of revenue from [Indecipherable] or in Unitop for the previous and for this quarter as well?
Sunil Chari — Managing Director and Co-Founder
We do not disclose that on a quarterly basis, on the annualized accounts then we’ll show you all the numbers.
Nitin Tiwari — YES SECURITIES — Analyst
Right, sir. And sir, secondly on the — in the previous call we had discussed making a number of new product opportunities which are being evaluated which will be a combination of the capabilities that we have across our entities, so any update on that, like how, where we stand-in terms of product development and time-to-market etc., if you can throw some light on that?
Edward Menezes — Executive Chairman and Co-Founder
So Tiwari ji, this is Edward here. As you well know, the macroeconomic situation led to demand shrinking in the international market. And supply-chain side has improved after COVID and all other issues have reduced. Now this led to a rapid correction in raw-material prices and customers put on hold many purchases except critical raw materials. Rossari saw this coming and hence what we did is, we had as a proactive means approved a lot of surfactants that Unitop manufactured in the market — manufactured, which were not selling the Rossari earlier.
So that is a very proactive way in which we capitalize on the synergy between Unitop and Rossari. So a substantial amount of surfactants that Rossari — which was not purchasing from Unitop, we started purchasing from Unitop. Apart from that, using the Rossari marketing strength and distributors — distribution strength, a large number of new products were introduced to the customer of Rossari, so that is another big cross-selling opportunity that we utilized or to pick-up sales in this quarter.
Then there were a few products that were being developed for regenerated cellulose basically and a joint development between Unitop and Rossari, led to the first orders for these additives in the regenerated cellulose market manufacturing. Similarly spin finishes, where a large component is — are the EOs and the EOPOs that are manufactured by Unitop, these spin finishes for primary, as well as secondary finishes were introduced successfully in the last quarter in Polyester POY, FDY, as well as in polypropylene as well.
We also did a lot of work on the novel coating polymer for technical Textile. And these also were successfully trialled in the last quarter and we have got the first bulk orders for these products as well. So if you look at the synergy, I have a big list of products that we’ve already done — already introduced in the market because of the synergy between the three companies that we had acquired in the last year. So, all-in all, we are well on-track to take the best and — to make the best of the opportunities of the synergy between these companies.
Nitin Tiwari — YES SECURITIES — Analyst
Sure, sir. That’s very helpful, sir. Thanks for the detailed answers. So as Chari ji mentioned, that in this quarter we had roughly a growth of about 7%, 8% on the volume front, so would it be fair to assume that the second half would be much stronger in terms of — at least the volume growth as compared to the first half and then the revenue trajectory would also be strong, would that be a fair assessment?
Sunil Chari — Managing Director and Co-Founder
See, Tiwari, as all of us talked about in our opening remarks, given the overall situation globally, we are seeing a lot of headwinds in the global market divested. Looking at a perceptible recession coming in. So for us to give a guidance on exactly how the second half is going to be is a little bit of challenge as of now. We would be happy if the — the second-half we are able to replicate what we’ve done in H1 with slight growth of 5% to 10%, I think that’s what we are looking at. It’s a — as I said, this is a pain which is there, but we’ll have to see how best we can navigate during these times. As Edward sir said, we have a lot of new products and new opportunities, which we hope will help us through these times, but it’s little difficult currently to — because of very strong guidance on how, but our effort on the margin front will be — definitely will be to maintain these or even improve these margins going-forward. So better to sell high-margin products, I think that’s what the key is for the organization now and that’s how we are looking at it, at least for the second half.
Nitin Tiwari — YES SECURITIES — Analyst
Great, sir, thanks a lot. I’ll get back in the queue, sir.
Operator
Thank you. [Operator Instructions] The. Next question is from the line of Ankur Periwal from Axis Capital. Please go-ahead.
Ankur Periwal — Axis Capital — Analyst
Yes, hi sir, thanks for the opportunity. First question on the standalone business, so we have been seeing slightly lackluster result there for quite some quarters now. Your sense in terms of which are the weak links and how are we trying to address that?
Sunil Chari — Managing Director and Co-Founder
Ankur ji, namaste, this is Chari here. I think on the standalone basis we have done quite well, compare even to the last quarter, we have grown — the unwinding of raw-material prices, falling of FG prices. In terms of volumes also we have grown in-spite of the macroeconomic conditions which are there. Of course the supply-chain volatility has decreased substantially, but the price volatility is there. So, the inventory if you bring it INR100, when you — by the time it reaches there, the raw-material prices have changed. So these all things taking into consideration, we still have done quite well in all the three segments.
The textile business, as you know, the exports have suffered for all the textile customers, but we still have been able to nearly retain both on the volume front, the raw — the per kilo prices have come down a little, cotton prices have been very, very volatile, it went up to more than INR1 lakh now a candy now, it has come down to INR60,000, INR70,000, so spinning mills are not producing yarn and of course yarn is not coming for fabric production and processing. Exports markets have been closed. The European markets have been very slow in the last two, three months. But I think we have — our teams have done quite well in terms of performance. If you see, the volumes has grown, gross margins have grown. So. I think given — looking at all this, I think it is a good performance.
Ankur Periwal — Axis Capital — Analyst
Sure sir, Chari ji, my question was more sort of on a Y-on-Y basis. I take your point in terms of gross margin improving even on a Y-on-Y basis, but just one clarification, you earlier mentioned 6% — 7% to 8% sort of a volume growth, is that a Q-on-Q growth or a year-on year growth?
Sunil Chari — Managing Director and Co-Founder
Q1-Q2 growth, because the year-on-year was not comparable, the second quarter of the last year was — the pipeline was empty, if you remembered my comments and calls during the earnings call, first quarter of last year we had huge COVID and we had a lot of issues with even supply-chain, and second-quarter we had lot of raw materials and we did not take advantage of the situation and supplied to our customers, the acquisition compared price, higher volumes and big customers we supplied, you could refer to my earnings calls that time. And we have been able — we took advantage of the pipeline which was empty and funding we were able to produce, so it was an abnormal quarter which we had always even in the second-quarter of last year earnings call, we had said that it was an abnormal call.
But if you see quarter-on-quarter, even the standalone, we have been able to grow, in-spite of the finished goods pricing coming down, we have been able to grow even Rossari on a standalone basis. The margins has grown also in — EBITDA margins also has grown.
Ankur Periwal — Axis Capital — Analyst
Sure sir, and how will be the volumetric growth, let’s say, in both the subsidiaries Tristar and Unitop, not Q-on-Q, because you have mentioned the agri business being slightly heavy there, but it’s on a Y-on-Y basis?
Sunil Chari — Managing Director and Co-Founder
Y-on-Y, this is — now if you see our subsidiaries last year were not really part of our —
Ankur Periwal — Axis Capital — Analyst
Correct, which is where I was checking that number. So you will have those financials with you?
Sunil Chari — Managing Director and Co-Founder
Yes, but, I can still give you an headup, I think we’ve seen a significant growth in both Unitop and Tristar on a H1-to-H1 basis. So if you see the H1 now and H1 performance of both the subsidiaries prior to our acquisitions, I think we had almost overall on the top line, almost 40%, 45% growth in both of them.
Ankur Periwal — Axis Capital — Analyst
Ketan bhai, on the volume terms how this will plays out?
Ketan Sablok — Group Chief Financial Officer
As I said, I do not have the exact volumetric numbers of both these fundings for the last H1, but I’m sure the growth will be a mix of both volume and pricing, because the 40%, 45% growth will have a mix of a substantial increase in volume. We are seeing that quite evidently with Rossari coming into the picture, I think we are actually witnessing a huge growth in both these — these companies through our efforts and the whole synergy exercise that we’ve carried out.
Sunil Chari — Managing Director and Co-Founder
Ankur ji, to add to Ketan sir comments, all the acquisitions have done exceedingly well. We have been done — we have been able to do integrate very well, we have had no surprises in all the acquisitions. Unitop of course is outstanding, the amount of growth which has happened, both on profitability and also on volume and value growth, so we are very, very happy that it has been one year since we acquired. Many in the markets were worried, even we were not sure we are doing two acquisitions and which are substantial size and we have been able to turn-around integrate very, very well.
Ankur Periwal — Axis Capital — Analyst
Sure, sir. Where I was coming from was, even if I probably take the seasonality part into the numbers for Q1, we were roughly around INR170 crores — INR160 crores, INR170 crores revenue on a quarterly basis, this quarter we are INR180 crores, INR185 crores. So trying to see if the distribution-led sort of synergies between the three companies. Is that benefit already there in Q2 numbers or probably there could be further upside here, which could drive the growth for the company?
Ketan Sablok — Group Chief Financial Officer
Yes. So, I think you’re right, if you see the H1 numbers, a lot of these synergy numbers have come in the consolidated numbers that we’ve reported.
Ankur Periwal — Axis Capital — Analyst
Sure, okay. And secondly on the margins front, while — again, comparing H2 last year and now, broadly the margins are intact for the — for Unitop and Tristar put together. On the standalone basis, while we are seeing year-on year improvement on the gross margins, obviously we are still lower than what we were let’s say, in FY ’21. Trying to understand, is this a new normal here, because of maybe absolute RM price pass-through and hence the percentage terms numbers are coming down or should one expect these numbers to go to 30%, 35% range over a period of time?
Ketan Sablok — Group Chief Financial Officer
Ankur, currently I think we should go with these numbers at least for the next few quarter.
Ankur Periwal — Axis Capital — Analyst
Sorry, Ketan, my question was more on a two-three year perspective, I understand near-term volatility and hence probably limited expansion there, but, let’s say from a two-three year perspective, should this, 26%, 27% gross margin go to a 30%, 35% or should we remain at these numbers?
Ketan Sablok — Group Chief Financial Officer
No, no. So, given a longer perspective, I think a two to three year horizon, we will definitely go back to the 30%, 35% kind of margin on a consolidated basis. There are a lot of initiatives that we have already started undertaking, I think these are little more long-term some of them Edward sir spoke about sometime back, but I think on a longer-term basis we will definitely go back to our 30%, 35% kind of gross margins.
Ankur Periwal — Axis Capital — Analyst
Sure, sir. And a last if I may, on the working capital side, while on a year-on year basis we have maintained it pretty well. But if I go back, we used to be 45, 50 days working capital, even in the first half we are seeing a dip in payables, as well as receivable days. So what should be a steady-state number one could factor there?
Ketan Sablok — Group Chief Financial Officer
I think on a consolidated basis between 70 to 75 days should be an idle working capital cycle for them.
Ankur Periwal — Axis Capital — Analyst
Okay.
Ketan Sablok — Group Chief Financial Officer
While we had, as you rightly said, a few years back we were at, about 45, 50 kind of days, but I think currently the way the business is growing, and the way some of the subsidiary cycles worked, we are targeting internally above around, between 70 to 75 days kind of a working capital side. So that’s what you can consider.
Ankur Periwal — Axis Capital — Analyst
Sure. Okay. That’s helpful. That’s it from my side, thank you and all the best.
Operator
Thank you. The next question is from the line of Sumeeth [Phonetic] from IDFC. Please go-ahead.
Sumeeth — IDFC — Analyst
Hi sir, good morning. I have a question on the balance sheet side, sir, the interest expense seems to have gone up this quarter, so Ketan bhai, if you can just explain a little bit here and what should be the outlook, let’s say, next balance sheet date, which is March? Is this extra boring because of the –?
Manasi Nisal — Chief Financial Officer
So actually the [Indecipherable] expenses has gone up marginally, because we have taken debts in Rossari Biotech, but majorly it is because of the Ind AS accounting of our purchase price accounting of our subsidiaries, so that impact is higher, I mean out of total interest expense of INR8 crore in the quarter, around 65% to 70% is because of the Ind AS accounting entries. So that Ind AS accounting entries will be there for next one year till the time 100% acquisition is done. It is basically a marginal entry, it is not a cash-flow.
Sumeeth — IDFC — Analyst
Okay, okay. And just on the raw material side, I think you touched on the initial comments, but can you please explain, let’s say, I mean to what extend — Chari ji mentioned that raw material prices are stabilized, but to what extent it was stabilized? I mean, are you able to take a longer-term inventory call, because the stability now is in-place or you are still avoiding taking slightly longer-term inventory on the books? So, just some more insights on that.
Sunil Chari — Managing Director and Co-Founder
Yes, Sumeeth ji, I’m Chari here. The supply chain has stabilized, but the prices are not stabilized yet, There is still huge volatility in the prices. There’s also — where we see prices going up and down because of the demand supply gap and because also, if there is something which is important by the traders, the traders are not taking position, so long-term we cannot take any positions. And if you see our inventory levels compared to the last quarter, it has gone down from INR120 crores to INR111 crores. So we have been very conscious on taking any long positions in any raw material in the past quarter and we will be conservative in any inventory positions for this quarter as well.
Sumeeth — IDFC — Analyst
Okay, okay. And sir, some guidance on the margin, I think initially you said, you should be able to reach 14%, 15%, is that what I heard correctly or if you can just repeat on that, on the EBITDA margin?
Ketan Sablok — Group Chief Financial Officer
On the margin front, what we had said was, over a longer period of time we aim to get back to our 15% odd kind of margins. But in the immediate future, for the next few quarters, I think we — as I said, it’s becoming difficult for us to give you an exact guidance, but we should be able to maintain the margins we have seen in the first half.
Sumeeth — IDFC — Analyst
Okay and just one more question on the acquisition which is Unitop and Tristar, so some developments that you can share as to, let’s say, any new customers, new geographies, new products in the Europe or Europe plus one strategy, it’s regarding you have been able to make inroads into some of those early negotiations or early contract? Some qualitative inputs on these two acquisitions please.
Sunil Chari — Managing Director and Co-Founder
Sumeeth ji, Unitop is focused on the agro business, they are leaders in agro surfactants and they’re doing quite well in the spheres. The production facilities are very good and market demand is very good. We are trying to focus on exports for the Agro business, but also the domestic business we are trying to grow. Unitop has been a good — very, very good acquisition for us in terms of EBITDA and what we paid-for it and having no surprise, no governance issues. So we are very pleased after one year of acquisition, both companies seem to have grown 60%, 70% on year-to-year basis on — in terms of top line, volume growth also has happened, we do not have exact figures, because there was no comparative figures for last year, but we think we have grown both in terms of volume and value.
Tristar also, if you see, the last quarter it is doing well, but Tristar’s major exports are Europe and Europe is affected, so we see some subdued demand from Europe for Tristar. The Tristar main is into Personal Care additives and Personal Care additives in the Europe market is slow. We had a basis — so we see some slowdown in the European market. The — as both the subsidiaries had big proportion of exports and we see some slowdown in U.S., also besides the big slowdown in Europe, we are not able to give you a guidance on what happens.
But in terms of being happy, we are extremely happy with Unitop and both TriStar, they have done very, very well in terms of what we expected and what we have done, we are very happy. The teams at both the company’s we have been able to integrate well, the finance and the procurement we have been able to integrate well. Cross-selling synergies, we are still focusing, working, taking trials and Edward Ji, just mentioned now that SAP is something which we are implementing in Rossari, so SAP, I would request Ketan sir to give a feedback on SAP.
Ketan Sablok — Group Chief Financial Officer
So as — our process of integration, there are a lot of steps which we took post the acquisition of these two companies. And on the digital front and the IT front, the first step we took was to integrate the softwares across all the entities and that’s when we decided to get into SAP, now SAP is in the process of implementation across all the companies in the group. So, I think going forward with this, the ERP coming out of stream with SAP HANA, I think the veracity of information, data, as well as some of the decisions in terms of our products, their margins and our strategy, I think we’ll have much more better data as well as we are going to take much more informed decisions on our strategy going forward. So SAP is one of the activities that we’ve undertaken across the group.
Sumeeth — IDFC — Analyst
And sir, amongst the smaller segments, which is textiles or Animal Health, and the annual report mentioned about setting up a new line of for polyester chemistry at Dahej, so some update on that. And secondly on the Animal Health side, I know it’s a small business right now, but can you talk a bit about slightly the longer-term developments here that you’re doing. I think this was about 200 products with some 40 distributor, so how are those banks doing and just some update over there from a longer-term perspective?
Sunil Chari — Managing Director and Co-Founder
So Sumeeth ji, as we had mentioned in our previous call, there were two, three lines of businesses that we were pursuing and basically also using the synergy between the acquired companies. So, one of them was sizing, sizing in the textile industry, both for polyester as well as cotton, now this has taken-up — taken off nicely, so we have already established the polyester resin sizing for water jet looms already and this business has taken off. Apart from that, we have recently introduced a few acrylic based sizes for polyester and one of the large polyester manufacturers has approved our product and the first orders have gone out. So in the sizing, we are very happy with what is happening. Apart from sizing, like the acquisition of Romakk, the new technology of silicone polymers also was acquired and as you know in finishing of textiles, as well as in agro, a lot of silicone polymers have been used.
So, we have been able to very successfully substitute or very successfully replaced imported items of silicone polymers which we used in textile finishing. So the newer technology which we call as the block silicones, silicones have been now indigenized and manufactured both at Romakk, as well as we have expanded the facility at Dahej. So Dahej has the bigger facility now setup to manufacture these silicone polymers. There is a breakthrough also in the silicone polymer for agro, so in agro a lot of silicone polymers are used for spreading or super spreading and wetting and we’ve successfully made the first batches for the silicones silicone polymers and got them approved at a few large users and we are sure that this will culminate into business in the next year.
We’ve also applied our R&D for coating in technical textiles. So in technical textiles also we have got approvals for these coating chemicals, as well as we expanded our footprint in water treatment chemicals. Earlier we had not used the opportunity to use our synergy between the textile chemicals, as well as the water treatment chemicals, but now what we’ve done is, the textile chemicals has taken over a part of the sales of the water treatment chemicals and we’ve been able to successfully crack some huge textiles central effluent treatment plants and introduced a range of [Indecipherable].
Apart from that, we also — like the last time I said from special polymers for pharma coating, which have already been developed and we were happy to inform that approval for the manufacturing of these coatings at Dahej have been received and shortly we will commence manufacture of these pharma coatings. We are also focusing on green surfactants and one of the surfactants that we’re focusing are on the glycolipids and R&D work has started in this area and these products — these green surfactants will now help us to get into certain Personal Care as Personal Care ingredients and help us in the formulations for animal health, as well as Home Care, especially laundry detergent and shampoos in our Pet Care.
We also in the process of reintroducing the grinding aids and dispersants, both in the ceramic and the cement industry. In the animal health front, we have recently commissioned a granulation facility to introduce a range of new products for Animal Health, as well as we are in the planning to put in resources for premix, that is the vitamin premix in Animal Health, which is a very large portion of our business. So all-in all, most of our initiatives that we’ve taken in R&D have either been successfully deployed in the last quarter or are on the verge of deployment in the bulk.
Sumeeth — IDFC — Analyst
Sure sir, this is very helpful. Thanks a lot sir, I’ll come back in the queue. Okay, sir, thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Nitin Tiwari from YES SECURITIES. Please go-ahead.
Nitin Tiwari — YES SECURITIES — Analyst
Thanks for the opportunity again, sir. Sir, my question is related to the synergy that you highlighted with respect to Unitop and Tristar. So, if you can just elaborate a little bit in terms of whether that messy has been in terms of utilization of the plant or in terms of supply chain, so how have we been able to grow the revenue by about 50%, 60% that you indicated on a Y-o-Y basis, so what has basically led to that sort of a growth, so if you can just help us understand that a little bit?
Sunil Chari — Managing Director and Co-Founder
So the cross-selling, as Ketan sir said, has — we have been able to implement in the last few quarters in our subsidiaries. We had connections with lot of our customers who are using surfactants and so we helped our subsidiaries to grow business and those customers — and that is the reason, the more business came into subsidiaries than Rossari, because we wanted the business to happening directly, but we have now positioned Rossari as a non-agro single-point company for the future and we are slowly building up sales from Rossari for all the subsidiary products also. The in-house consumption also, we’ve been able to give to the subsidiaries and so we are buying a lot of raw materials which are buying up from outside from our subsidiaries now. In terms of also a joint working between the three subsidiaries, the teams and our good R&D teams and the consultants and the production teams at the three facilities have combined and worked as one team in four projects and this four projects could do well in the future.
As Edward said, regarding silicon surfactants, so we had three themes from Romakk, from Tristar, from Rossari, and also from Unitop working together for phenoxypropanol, again our marketing teams, Rossari marketing teams and the Tristar manufacturing and the Unitop manufacturing team worked in one synergy. Similarly once most silicone surfactants, the Romakk and Tristar and Unitop teams are working well, what we also got in the subsidiaries was excellent production base in terms of machinery with very, very good-quality of machinery, but also good amount of skilled manpower. And this, we were able to use and help them catalyze the growth. If you see Unitop and Tristar, their average growth was 10%, 20% in the past few years, but we have been able to grow well just because we are able to get into all the customers and the goodwill of Rossari and our connections to the customers help the subsidiaries grow.
Nitin Tiwari — YES SECURITIES — Analyst
So basically we can sum it up like, in fact that some long-term, the production was shifted from Rossari to Unitop and Tristar, because you mentioned that as far as like Rossari is concerned, we are trying to develop it as a non-agro entity. So did the utilization levels at Unitop and Tristar increased materially between last year and now?
Sunil Chari — Managing Director and Co-Founder
Yes definitely, the volume growth, as Ketan sir said, we’ve had volume growth at both the subsidiaries compared the last year.
Nitin Tiwari — YES SECURITIES — Analyst
Great sir. This is very helpful sir. And secondly sir, if you can just help us understand the utilization levels currently that we have in our facilities across Rossari, Unitop and Tristar and then like, I’ll just add some of the question like, so basically on the interest cost front, like you’ve just indicated that because of Ind AS treatment, the interest costs have gone up. So if you can just elaborate that point a little bit, as well like how that effect has come into place?
Sunil Chari — Managing Director and Co-Founder
So, on the capacity utilization, I think we were at similar levels like the first quarter, so about 50%, 55% across all our entities. And your second was on the interest costs. So interest cost was basically — these acquisitions that we had done, the — so there is a liability which we had created in the books for the balance amount of money which we have to pay for the balance acquisition percentage. And for us that liability, they discounted as per Ind AS and a discounting charge in terms of interest is booked in the P&L. So that’s the interest charge, which is coming in.
Also the — along with that interest charge, we also do — on the amount that we paid for the acquisitions, we do PPA allocation based on which it is an amortization that happens, which again is part is a P&L challenge, which again comes under the head of depreciation. So if you see current year and last year, you will see a significant charge, both in the depreciation front, as well as on the interest charge, that the interest charge will happen till the time we do the complete 100% acquisition of both the companies and the liability in terms of the balance share holding that’s discharged.
Operator
Thank you. The next question is from the line of Siddharth Purohit from InvesQ Investment. Please go ahead.
Siddharth Purohit — InvesQ Investment — Analyst
Hello, sir. Sir, in the last couple of months, we had taken some price hike. But now that probably the macro industry is not in favor of most of the like large players. So are you facing some issues or maybe are you seeing some sort of price hold back or is that a concern going ahead? There is certainly a lot of other industries are not in a position to book a price hike, that is one thing. And secondly, how has the key raw material prices behave during the beginning of this quarter?
Sunil Chari — Managing Director and Co-Founder
I’m Chari here. If you see our EBITDA, INR114 crores of EBITDA in the first half. This has been our highest ever EBITDA ever in the history of Rossari on a consolidated basis. But Ketan sir or Manasi ji has said that depreciations are notional or interest notional [Foreign Speech]. So we have done very well in terms of getting higher amounts of margin from the customers.
So what we believe is, we have been able — we have been brave. We have been able to pass on price hikes to the customers, So — but what happens is now, the price per kilo of a finished product is falling, because the raw material prices are falling. So we are confident on the amount of margin, but selling value might look lesser. But we are focused that we will continue to grow or maintain the existing EBITDA margins. Looking at the macroeconomic situation, we don’t see any pressure on margins that way because we understood now and we are understood by our customers. As we said in the past calls, when the price increase substantially, we did not increase the amount of margin, but we maintained our margins. And so that is how we are seeing gradually improvement in margins across Rossari.
In terms of business, of course, as you said, the Europe business looks weaker for Tristar this quarter, but in Unitop and Rossarri, the business seems to be stable in spite of all these headwinds.
Operator
Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go-ahead.
Rohit Nagraj — Centrum Broking — Analyst
Yes, thanks for the opportunity. Sir. Last quarter we had indicated that for FY ’23 our guidance for EBITDA would be INR250 crores. You have already done about INR114 crores and PAT of about INR150 crores and we will relook at the numbers for Q2. So do we still maintain the same guidance or we want to probably revise it based on Q2 or 1H numbers? Thank you.
Ketan Sablok — Group Chief Financial Officer
Yes. So Rohit, you’re right, we had said that we’ll come back on these numbers post our Q2. Now, given the way the business is shaping up and as during the call, we have discussed about globally, how the markets are shaping up and the demand profile. I think on the margin front, as I — we have already indicated, we expect to end the year in similar kind of margin percentage. On the top line, we should be closer to that INR2,000 crore number which we had indicated. So it should be between INR1,800 crores to INR2,000 crores, so that’s what we are foreseeing now. H1, we’ve already done about INR850 crores, INR860 crores.
So if you simply double that, we’ll be closer to that INR1,800 crores, but these are the estimates as of now and our aim will of course definitely be to surpass this numbers, but currently the way we see it, on the margin front, we should be in similar kind of margin range of between 12% to 14% and on the top line, we should be between INR1,800 crores, INR1,900 crores kind of and run rate for this year at least.
Rohit Nagraj — Centrum Broking — Analyst
Right, right. Got it. Sir, second question is in terms of the exports opportunity. So after Tristar and Unitop acquisitions, are there any positives which Rossari standalone has witnessed, because we have seen that cross selling has been happening across our companies, but anything particularly on the export front and there the opportunity could be sizable over the next, say 2, 3 years? Thank you.
Sunil Chari — Managing Director and Co-Founder
So for Tristar, we see [Indecipherable] and now it will be Rossari by the time this — the personal — this is a good coordination and cross synergies between 3 companies, Rossari, Unitop and Tristar, and this could be a good volume growth for us in the future. Agro surfactants and surfactants as a category, we think that will be substantially uptick. If the export markets improve, we could see substantially uptick in this. Silicones for agro application could be something also see a very good market in the future. So we continue to focus on our core chemistries of enzyme, silicone, acrylics and surfactants and continue to see how we can make our customers more competitive, either in terms of value, in terms of sustainability, in terms of green chemistry, reducing the load for VOD, COD, TDS. We see a very, very good future definitely.
Rohit Nagraj — Centrum Broking — Analyst
Right sir, got it. Thanks a lot and best of luck, sir. Thank you, Rohit. Thank you.
Operator
Thank you. [Operator Instructions] As there are no further questions. I now hand the conference over to the management for closing comments. Over to you.
Edward Menezes — Executive Chairman and Co-Founder
Thank you, everyone. I am sure we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our team or CDR India. Thank you once again for taking the time to join us on this call. Bye-bye, have a good day.
Operator
[Operator Closing Remarks]