Rossari Biotech Ltd (ROSSARI) Q3 FY23 Earnings Concall Transcript

Rossari Biotech Ltd (NSE:ROSSARI) Q3 FY23 Earnings Concall dated Feb. 06, 2023.

Corporate Participants:

Aisha Shah — Investor Relations

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:

Sanjesh Jain — ICICI Securities — Analyst

Rohit Nagraj — Centrum Broking — Analyst

Palak Shah — Infina Finance — Analyst

Mahesh Vyas — UTI Mutual Fund — Analyst

Harsh Shah — Nuvama Wealth Research — Analyst

Aman Shah — Jeetay Investments — Analyst

Ashit Kothi — Individual Investor — 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 Ms. Aisha Shah from CDR India. Thank you and over to you.

Aisha Shah — Investor Relations

Good afternoon, everyone, and thank you for joining us on Rossari Biotech Q3 and Nine Months FY ’23 Earnings Conference Call. We have with us Mr. Edward Menezes, Promoter and Executive Chairman; Mr. Sunil Chari, Promoter and Managing Director; Mr. Ketan Sablok, Group Chief Financial Officer; and Ms. Manasi Nisal, Chief Financial Officer.

We will begin the call with opening remarks from the management, following which we 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 may be forward-looking in nature and a disclaimer to this effect has been included in the earnings presentation shared with you earlier.

I would like to invite Mr. Edward Menezes to make his opening remarks. Thank you and over to you, Sir.

Edward Menezes — Executive Chairman and Co-Founder

So, thank you Aisha. Good evening, everyone, and thank you for joining us on our Q3 and Nine Month 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 operational and financial performance. We have reported a stable performance during the quarter despite the ongoing challenging operating environment. All our standalone segments including HPPC, textile, and AHN have reported a stable performance. However, our subsidiaries witnessed a slowdown due to subdued demand, leading to lower consolidated sales during the quarter.

During the quarter, we were able to improve our margin performance both on a Q-o-Q and on a Y-o-Y basis, as a result of moderating raw-material prices. Our focus continued on prioritizing products with better margins, which has resulted in improved profitability. As the market begins to stabilize, we should see improved performance moving forward.

The company has been committed to the development of green and sustainable chemicals since its inception. This focus on sustainability is part of the company’s identity, and we have invested in R&D to create a range of eco-friendly products over the year. Given the global shift towards environmentally-friendly solutions, we hope to capitalize on our investments as well as help create a healthier and more sustainable future.

With this, I would like to conclude my address, and I now hand it over to Mr. Chari for his comments.

Sunil Chari — Managing Director and Co-Founder

Thank you, Edward ji, Good evening, and a warm namaste to everyone. Q3 remained a challenging quarter for us with our subsidiaries facing some slowdown. At a standalone level, we have maintained our revenues, while improving our margin performance. As the operating environment stabilizes, we believe we are well equipped to pursue high-growth opportunities given our comprehensive product offerings, flexible capacities and R&D capabilities.

Additionally, our acquisitions have expanded our presence in the new regions and product categories, further broadening our growth horizon. Our commitment to R&D has been instrumental in establishing Rossari as a leading specialty chemicals manufacturer, providing intelligent and sustainable solutions. With a proven track record of developing innovative and tailored chemical solutions for customers across multiple industries, we aim to expand our customer-base in our existing segments while also exploring new industries such as water treatment papers, ceramic and cement. Our recent launches in these industries have received favorable responses, and we are optimistic about achieving growth in these segments in the coming year.

The specialty chemicals industry in India is poised for subsequent significant growth in the coming years, driven by factors such as increasing demand for specialized chemicals in various End-User industries, and a shift towards sustainable solutions. Despite the industry facing some near-term headwinds, the long-term outlook remains positive and intact.

The Indian government support for the growth of the domestic specialty chemical sector is also a positive factor. In the long run, we believe that the specialty chemicals industry in India presents a bright future and offers promising [Indecipherable] for growth.

On this note, I would now request Ketan sir to share his perspective.

Ketan Sablok — Group Chief Financial Officer

Thank you, Chari sir, and good evening, everyone. Rossari performed steadily during this quarter on a standalone level, despite the pressures we experienced in previous quarters. Our subsidiaries witnessed a slowdown in Q3 due to decreased demand, which resulted in lower sales on a consolidated basis. However, I’m happy to say that post acquisition on a nine-month basis, both our subsidiaries have done exceptionally well both in terms of topline as well as the margins. We have been able to synergize the business between the group companies very well, be it in operations, sales, R&D and new business development. The impact of this will further be visible over the next few years.

We continue to focus on expanding our high-margin product portfolio. This was evident in our improved gross margins and EBITDA over the last few quarters. Our gross margins have improved to reach 30% in Q3 FY ’23 compared to 25% in Q3 FY ’22. The improvement is visible in the standalone business also, with the gross margin moving up from 22% in Q3 FY ’22 to 29% in Q3 FY ’23.

Furthermore, our EBITDA margins also improved to reach 14% [Indecipherable] Q3 FY ’22. So, the uptick in margins is clearly visible both in the standalone and the consolidated business.

Rossari’s financial position continues to remain robust. A solid balance sheet, positive cash flows and other inherent strengths will enable the company to continue its growth trajectory in the coming quarters.

Overall, we remain confident in our ability to deliver long-term value to our stakeholders through our focus on profitability, innovation and growth.

That’s all from my side. I would now request Manasi to take you quickly through the financials for the quarter and nine months, and then we will open the forum for the Q&A. Thank you.

Manasi Nisal — Chief Financial Officer

Thank you, Ketan, sir. Good evening, everyone. Let me provide you with a brief overview of the financial performance for the quarter ended December 31, 2023.

On a consolidated basis, revenues came in at INR389 crores as against INR428 crores in Q3 FY ’22. On a standalone basis, revenue from operations stood at INR237 crores compared to INR268 crores in Q3 FY ’22.

Revenues from HPPC stood at INR271 crores, contributing to 69.7% of revenue, followed by textile business at INR89.5 crores, contributing to 23%, and AHN at INR28.6 crores, contributing to 7.3% of total revenues on a consolidated basis.

On a standalone basis, EBITDA stood at INR32 crores as against INR28 crores in Q2 FY ’23. PAT during the quarter stood at INR17.5 crores as against INR15.4 crores in Q2 FY ’23. On a consolidated basis, EBITDA stood at INR54.2 crores as against INR56.5 crores in Q2 FY ’23. PAT during the quarter stood at INR25.7 crores as against INR23.9 crores in Q2 FY ’23.

On that note, I come to the end of my opening remarks, and would request the moderator to open the forum for any questions that you may have. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have a first question from the line of Sanjesh from ICICI Securities. Please go-ahead.

Sanjesh Jain — ICICI Securities — Analyst

Good afternoon, sir. Thanks for taking my question. I’ve got few of them. Hopefully I don’t exceed the time, but starting with the revenue side, can you explain us the standalone revenue go on lower base? It has been flattish and Q3 is generally a stronger quarter. And annualized Q3 number, we are still significantly lower than what we did in FY ’22. And then in the same context, can you help us understand what was the volume growth, because I know that the prices have been falling because of the softening of raw material prices, so it doesn’t give the right picture. So, to understand it better, two things, can you help us understand the volume, and second, I also request — I know you don’t give the subsegmental number, but can you just broadly help us understand how our ingredient private label, Buzil and Performance Chemical are doing in the standalone? That’s my first question.

Ketan Sablok — Group Chief Financial Officer

Yes. Sanjesh, see, on the standalone business, we’ve been stagnant on the quarter-on-quarter performance. I think the one segment that has seen some headwind is the Textile Chemical division. We have seen a little low down on the textile sector, and that’s impacting the TSC business a lot. So that’s one of the reasons why we’re not seeing a real growth coming on the standalone. Secondly, on the HPPC, we’ve been able to maintain our run rate on the stand-alone business, even though we had some headwinds in with at least one of the customers, but we’ve been able to cover that to a larger extent with some new customer additions, especially one key [Indecipherable] that we’ve added in the last quarter. I think that’s helping us play out quite well, and I think has covered this business loss which we’ve had. I think going forward, in the next couple of quarters, we should be in a position to negate this loss on an entirety.

AHN, we have seen good growth year-on-year, almost 20% growth that we have seen Q-on-Q has beaten [Indecipherable], but we expect the momentum in this division to continue, and we are expecting Q4 in AHN to be stronger. And then going forward into the next year, we expect this business to grow significantly, at least anything between 30% to 35% kind of growth we are expecting in the AHN. Though it’s a small base business, but it’s a high value and high margin business for us. So that’s on the standalone. So, if you have anything else, on standalone [Speech Overlap].

Sanjesh Jain — ICICI Securities — Analyst

Follow up, Ketan, can you help us on the quarter-on-quarter volume growth because I think prices have softened. So, the stable revenue is not the right picture, right? That’s number one. Number two, the customer we spoke about where there is a headwind, is it completely 0 or there is more impact which may likely come in the next quarter?

Ketan Sablok — Group Chief Financial Officer

Can you come on the second part again? I missed out, Sanjesh.

Sanjesh Jain — ICICI Securities — Analyst

Second part is on the one customer…

Ketan Sablok — Group Chief Financial Officer

Sanjesh, you have to be a little louder, please.

Sanjesh Jain — ICICI Securities — Analyst

Am I good now?

Ketan Sablok — Group Chief Financial Officer

Now it’s better.

Sanjesh Jain — ICICI Securities — Analyst

Okay. Just on the one customer where we spoke about a headwind in terms of the run rate, which has hurt the standalone business. Is that customer entirely 0 or there is some more revenues to be knocked off from the base which need to be recouped with the new customer? How should we see that?

Ketan Sablok — Group Chief Financial Officer

No. The run rate with that customer now is completely 0.

Sanjesh Jain — ICICI Securities — Analyst

It is 0, so that headwind is no more going into the next quarter, right?

Ketan Sablok — Group Chief Financial Officer

Yes, no, no.

Sanjesh Jain — ICICI Securities — Analyst

Okay. And in terms of volume growth in the standalone?

Ketan Sablok — Group Chief Financial Officer

I think some amount of volume growth has been there. HPPC, as I said, the volume has been — we’ve been able to cover up most of the volume, which we lost out because of this customer. But otherwise, we have not seen any volume growth. Textile is largely quarter-on-quarter, I think is mostly impacted due to softening of prices because RM prices has kept coming down.

Sanjesh Jain — ICICI Securities — Analyst

Got it. Got it. Second, on the subsidiary part of the business where we have declined 18% from a seasonally weak quarter, which was in Q2. In general, agrochemical per se is doing fantastic if you look at agrochemical companies’ number. There, at least, it doesn’t show like there is a headwind from the industry perspective. Can you help us understand why Rossari has had a very muted quarter this quarter?

Sunil Chari — Managing Director and Co-Founder

Historically, Sanjesh Ji, [Foreign Speech]. Historically, agro season is strong in the first two quarters for last 30 years for Unitop. So, the third quarter is always a little weak, third and fourth quarters are weak for Unitop. If you see quarter-on-quarter, year-on-year…

Sanjesh Jain — ICICI Securities — Analyst

[Speech Overlap] based on a Y-o-Y basis…

Sunil Chari — Managing Director and Co-Founder

Quarter three of last year, Unitop has done very well in spite of RM prices falling and FG prices falling.

Sanjesh Jain — ICICI Securities — Analyst

No. Sir, basically, my question was that even on a Y-o-Y basis, it’s down 5%, while if you look at the industry growth, it’s…

Sunil Chari — Managing Director and Co-Founder

Yeah, because the raw material prices have fallen substantially, I think more than 15% finished good prices have fallen. So, we’ve done well as compared to…

Sanjesh Jain — ICICI Securities — Analyst

Volume growth cap? If you can help us on that, in the subsidiary business?

Ketan Sablok — Group Chief Financial Officer

Subsidiary business, quarter-on-quarter, Sanjesh, as Chari said, Unitop volumes and Tristar volumes have been slightly impacted, one, because Unitop, the agro season is generally in the first half. We expect that to now pick up from mid-feb onwards. In Tristar, we’ve seen headwinds in our exports to Europe and probably also to Russia. And that — there was a slowdown around November and December in these exports. Late December, the exports have picked up again, and I think in this quarter, we should see Tristar coming back to its quarterly run rate. So, these two have impacted our overall subsidiary volumes.

Sanjesh Jain — ICICI Securities — Analyst

Got it, got it. A follow-up on the guidance. We guided that in FY ’23, we will achieve INR20 billion of revenue and the INR2.5 billion of EBITDA. In current context, it looks like slightly challenging. Are we updating on the guidance? And how should one look at FY ’24 in that context?

Ketan Sablok — Group Chief Financial Officer

Yeah. So given the [Indecipherable] second half has panned out, I don’t think we are going to hit that number of INR6,000 crores. Going by the current run rate, I think we should be further to about INR1,650 crores, INR1,700 crores around that number. So, around INR1,700 crores topline, we should be closing this year.

Sanjesh Jain — ICICI Securities — Analyst

And EBITDA, sir?

Ketan Sablok — Group Chief Financial Officer

Yeah. EBITDA, we should be at about INR220 crores to INR230 crores kind of an EBITDA we should be able to do.

Sanjesh Jain — ICICI Securities — Analyst

And anything you want to talk about FY ’24 now that the base is also favorable? Is it fair to assume that next year we should be doing upwards of 20% in terms of revenue and EBITDA?

Ketan Sablok — Group Chief Financial Officer

Yeah, so we are looking at FY’24 to at least in another 15% to 20% kind of a growth. On the. And with margin for. Therefore, we are looking at it now. Yeah. So, we are looking at FY ’24 to at least give us a 15% to 20% and of growth on the topline and with better margin growth. That’s how we’re looking at it now.

Sanjesh Jain — ICICI Securities — Analyst

Now that the raw material prices have corrected, the base effect is not there, we should be partially moving towards the 17%, 18% EBITDA margin, which we were doing earlier in the next one, two years. That is fairly possible right now?

Ketan Sablok — Group Chief Financial Officer

I cannot say that for the next year. But yes, we are moving towards that. If you see our numbers are slowly improving, so over the next two years, we should get back to our 16%, 17% kind of levels, we should be there.

Sanjesh Jain — ICICI Securities — Analyst

Got it, got it. Thanks, Ketan Ji and Chari Ji for all the answers, and surplus for the coming quarters.

Ketan Sablok — Group Chief Financial Officer

Thank you, Sanjesh.

Sunil Chari — Managing Director and Co-Founder

Welcome, Sanjesh.

Operator

Thank you. [Operator Instructions] We have a question from the line of Rohit Nagraj from Centrum Broking. Please go ahead.

Rohit Nagraj — Centrum Broking — Analyst

Yeah, thanks for the opportunity and good afternoon, sir. Sir, first question is again on the subsidiaries front. So is there any element of inventory destocking at customers end, that has impacted our volumes, and probably this phenomenon can continue for a quarter, couple of quarters and which may have further impact on the volumes? Thank you.

Ketan Sablok — Group Chief Financial Officer

Yeah. So, I think it is visible in Tristar, where we saw some slowdown on the export in this quarter. So that’s the — what we understand was a phenomenon of destocking, which is happening in the customer. But we expect that to get normalized at least by mid of this quarter. So, we should be doing a little better in Tristar in Q4.

Rohit Nagraj — Centrum Broking — Analyst

And for Unitop, any comments?

Ketan Sablok — Group Chief Financial Officer

Unitop, we are not seeing anything on this. In fact, our non-agro business in Unitop has done pretty well. So, we are quite happy with that. We have seen a good growth in the non-agro part of the business.

Rohit Nagraj — Centrum Broking — Analyst

That’s right. Got it. Sir, second question is on the textile specialty. So, in the last three, four quarters, we have seen that there have been multiple headwinds because of which this particular segment has not done well. Any green shoots that we are seeing from the demand perspective? Are the segment now picking up and probably in a quarter couple of quarters, things will start looking substantially better?

Sunil Chari — Managing Director and Co-Founder

Namaste Rohit ji, I am Chari here. Textile industry, we are seeing still some slowdown in this quarter, and indications are that from May, June onwards again, demand should pick up very well. This year, the domestic demand was good, but the export demand was muted for all good exporters, which you can see in the results of the textile companies also. We feel — we have seen exports picking up for Rossari for the textiles, and we think the next financial year, we should do better than this year.

Rohit Nagraj — Centrum Broking — Analyst

Right, sir. Got it, thanks a lot for answering all the questions and best of luck. I’ll come back in the queue. Thank you.

Sunil Chari — Managing Director and Co-Founder

Thank you, Rohit ji.

Operator

Thank you. [Operator Instructions] As there are no more questions, I now hand the conference over to the management for closing comments. Over to you. I’m sorry, there is one question. Should I go ahead sir?

Ketan Sablok — Group Chief Financial Officer

Yeah, yes, yes.

Operator

We have a question from Palak Shah from Infina Finance. Please go-ahead.

Palak Shah — Infina Finance — Analyst

Hi sir, thank you taking my question. So just incrementally, we’ve been discussing for the last two quarters that we are now focusing more on higher-margin business. In that context, when you look at a new order or new chemistry, what’s the benchmark margins that you actually focus on?

Edward Menezes — Executive Chairman and Co-Founder

So, good afternoon Mr. Palak. I’m Edward here. So, all our new projects are always targeted to 20% EBITDA. Now, of course, this depends on the market and the competition. But most of the projects that we have started, they would be at least 30% plus gross margins and about 18% to 20% EBITDA. That is how we look at our new projects. However, having said that, we have a few [Indecipherable] firstly like a green surfactant or the silicone-based wetting agents that we’ve developed recently as well as some of the products in spin finish, and in our production of esters, etc., there the margins will be higher. And very cautiously, we have taken a decision to promote the Animal Health and Nutrition business. which we believe can grow much faster than the other segments. And historically, the gross margins in this business is upwards of 50%. So, we are looking at promoting Animal Health and Nutrition products very aggressively in the coming quarters and focusing on a few products which are coming up newly.

Palak Shah — Infina Finance — Analyst

Got it. And just, sir, secondly, given that you are seeing volumes have relatively been stable, but what you have lost is purely because of pricing. So, what would be our current capacity utilization across plants or close segments? And would you be requiring to put up more capacity over the next two to three years, depending on your projection of the revenue growth and volume growth?

Ketan Sablok — Group Chief Financial Officer

So, currently, our capacity utilization this year has been around — average of about 55 odd percent. So, we have enough headroom now in our facilities, both in Rossari as well as in our two subsidiaries. And I think immediately over the next couple of years, we do not plan to put in any large capex for any kind of an expansion. We have enough room within our current infrastructure to almost to double up the turnover. So, currently, no plans of any further expansions.

Palak Shah — Infina Finance — Analyst

Got it. Thank you. Thank you so much for this and all the very best.

Ketan Sablok — Group Chief Financial Officer

Thank you.

Operator

Thank you. [Operator Instructions] We have a question from the line of Mahesh Vyas from UTI Mutual Fund. Please go ahead.

Mahesh Vyas — UTI Mutual Fund — Analyst

Yeah, thank you, sir, good evening. Sir, where do you think — how you think on your AHM business and HPPC business over the three years down the line, and the second question is on, do you see any major challenge in our Textiles and chemistry business?

Sunil Chari — Managing Director and Co-Founder

So, we are expecting the HPPC business to double in three years, three to four years, and AHN to definitely double in three years or more. In two years, Ketan, [Foreign Speech] AHN business. Textiles business, we are expecting to double in four to five years. So, what is our plan until now, we are on track, except for the Ukraine war, we have something down the subsidiaries. But I think in three to four years, we should double sales what we have now.

Mahesh Vyas — UTI Mutual Fund — Analyst

Sure, sir, thanks. And what is the capacity utilization across the levels? All three segments?

Ketan Sablok — Group Chief Financial Officer

Currently, as I said, we are at about 55% kind of capacity utilization.

Mahesh Vyas — UTI Mutual Fund — Analyst

Okay, okay, sure, sure. Thank you.

Operator

Thank you. Mr. Vyas. [Operator Instructions] We have a question from the line of Harsh Shah from Nuvama Wealth Research. Please go ahead.

Harsh Shah — Nuvama Wealth Research — Analyst

Yeah, thank you for the opportunity. Sir, my question is on the HPPC segment. So, in the investor presentation, you mentioned that the de-growth in HPPC was majorly attributable to the de-growth in the subsidiaries. So, sir, can you quantify how much — so how much was the de-growth on a standalone basis and how much of it was in subsidiary level?

Edward Menezes — Executive Chairman and Co-Founder

Sorry, what was your last question? Was how much was…

Harsh Shah — Nuvama Wealth Research — Analyst

So, can you quantify how much de-growth was attributable to the subsidiary and how much de-growth was attributable on the standalone level?

Ketan Sablok — Group Chief Financial Officer

So, majorly, the de-growth that has happened is on the subsidiary front. So the — what was that, the 9% kind of de-growth that we’ve seen in this quarter over Q2 majorly is because of the lower demand in the agro part and the lower offtake from the exports of Tristar. So, these two have been the major causes for this drop.

Harsh Shah — Nuvama Wealth Research — Analyst

All right, all right, thanks so much.

Operator

Thank you. [Operator Instructions] We have a question from the line of Rohit Nagraj from Centrum Broking. Please go ahead.

Rohit Nagraj — Centrum Broking — Analyst

Yeah. Thanks for the follow up. Sir, in terms of integration, the integration of the two subsidiaries, is it completely done now? And are we able to accrue any benefits from the same? Thank you.

Ketan Sablok — Group Chief Financial Officer

So, I think I touched upon this in my opening remarks. If you see the performance of the two subsidiaries, we have done exceptionally well on a year-on-year YTD basis. And I think much of this could happen because of Rossari coming into the picture and a lot of the synergistic lands which we had put in are slowly visible. So be it in our operations, production, activities, R&D, even on the business development and the sales front, I think the teams are working very cohesively in building the Rossari brand across all the three companies. I think more of this [Foreign Speech] we’re seeing an improvement on this. And I think going forward, you will see these assets playing out further in the next few quarters and few years. So, I think most of it itself — it is a developmental activity and we keep seeing this improvement going forward.

Sunil Chari — Managing Director and Co-Founder

For example, in certain product ranges like the spin finish, so the synergy happened between Unitop and Rossari. Then for the regenerated cellulose additive, again Unitop and Rossari. If you look at silicone wetter, so the silicone wetter was a combination between all the three companies — Tristar, Unitop and Rossari. So, you see for many product ranges, the synergy has played out very well. And apart from that, the non-agro business has been really stimulated by the presence of Rossari and their network in both India as well as in the export market. So, from the product synergy part of it, we’ve done extremely well. And of course, our HR and finance and other departments, there was complete integration in the first six to eight months itself.

Rohit Nagraj — Centrum Broking — Analyst

Right sir, Thank you. Sir, just on the housekeeping question. In terms of maintenance capex on a consolidated basis, what would be the number for FY ’23 and FY ’24? And during nine months, what would be the exports percentage? Thank you.

Ketan Sablok — Group Chief Financial Officer

Nine months export?

Rohit Nagraj — Centrum Broking — Analyst

Yeah, exports as a percentage of sales on a consolidated basis.

Ketan Sablok — Group Chief Financial Officer

On a consolidated basis, our exports about 25%, 26% — 25% in nine months.

Sunil Chari — Managing Director and Co-Founder

24%.

Ketan Sablok — Group Chief Financial Officer

24%, yeah, and our capex spend, I think during this would be about…

Manasi Nisal — Chief Financial Officer

Consolidated will INR5 crores.

Ketan Sablok — Group Chief Financial Officer

About INR5 crores to INR10 crores, not much.

Rohit Nagraj — Centrum Broking — Analyst

And next year also a similar run rate would be there because our capacities are still…

Ketan Sablok — Group Chief Financial Officer

We have to do some small projects here and there. So overall, we’re don’t expect to spend more than INR30 crores, INR40 crores kind of number.

Edward Menezes — Executive Chairman and Co-Founder

And we may do some small projects, although. We don’t expect to spend more than INR30 crores, INR40 crores kind of number.

Rohit Nagraj — Centrum Broking — Analyst

Sure, sure. Thanks a lot, and best of luck, sir.

Operator

Thank you. [Operator Instructions] We have a question from the line of Aman Shah from Jeetay Investments. Please go ahead.

Aman Shah — Jeetay Investments — Analyst

Hello, thank you for the opportunity, sir. So, my question is on volume growth. I just missed. What was the volume growth on a year-on-year basis in subsidiary and alone in this quarter?

Ketan Sablok — Group Chief Financial Officer

So, I think we’ve already talked about this earlier. The fall in revenue that you are seeing in consolidated is, most of it is due to the fall in subsidiary volumes. So that 9% odd falling in the consolidated revenue, most of it is attributable to the volume de-growth.

Aman Shah — Jeetay Investments — Analyst

Okay. But because prices have dropped, so should we — like the volume de-growth also is similar to value de-growth on an overall basis?

Ketan Sablok — Group Chief Financial Officer

Yeah. So, some part of the raw material price we are seeing that’s more visible in the standalone revenue, where more than the volume, the fall slightly has happened because of the price corrections that we have done. But not in the subsidiaries, that’s not the case.

Aman Shah — Jeetay Investments — Analyst

Okay, okay. Sir, from next year, we are giving like a 15%, 20% should be the revenue growth and with better margins. And so how should we look at the margin level? Like this year, we are giving a guidance of 13% that we will close for full year EBITDA, considering INR220 crores is what you said. So should we — and 16% to 17% is what we think will happen over a two-year period as we embark on the high-profitability products. From next year, should we work with the 14%, 15% margin? Would you think that’s a fair assessment?

Ketan Sablok — Group Chief Financial Officer

Yes, as an assessment, you can do that. But as I said, we will be moving towards, say, 16%. I don’t want to give you a number. But the movement will be from 13% to 17% over the next two years.

Aman Shah — Jeetay Investments — Analyst

Okay, okay. Sir, the targets in subsidiaries part, we have total breakup on the consolidated shares between HPPC, Textile and AHN business. In subsidiaries, most of it is the part of HPPC?

Ketan Sablok — Group Chief Financial Officer

Yes, yes.

Aman Shah — Jeetay Investments — Analyst

Okay, okay. So, sir, my next question is on competition, we always say that we don’t compete directly with our vendors, we actually take product from our vendor and improve on the products to make it customized for our customers. Who exactly is our class of competitors that I want to understand. Is it like the consumer, customer itself does all these things at its own and that we actually give that service to the customer, because if we are not competing at our vendors, and I don’t know much of who can be our direct competitor, except on the Textile part. If you can help me understand who are a class of competitors? Whether the work that the client itself is doing that we are actually helping him do that work?

Sunil Chari — Managing Director and Co-Founder

Aman ji, namaste, I’m Chari here. So in terms of competition, if you see Animal Health and Nutrition, we have Kemin, Cargill, Novus, Alltech, Jubilant, Zydus Cadila, Vetis, these are the kind of competitors we face in Animal Health and Nutrition. In the HPPC segment, we used to — we always have given that [Indecipherable] BSF, Croda, Solway, these are the kind of competitors as well as the ones we face. And in Textiles, we have again multinationals like Archroma, Huntsman, Croda, Fiesta and [Indecipherable]. Basically, we go for premium niche products, and we try to give value-based solutions where we try to reduce either the process cost or the process time or make their process more sustainable in terms of reducing TDS or VOD or COD. All in all, making the customers more sustainable is a focus for us, either in terms of green chemistry or in terms of cost.

Aman Shah — Jeetay Investments — Analyst

Okay, okay. And basically, also, if I can understand, I think agility and giving the product solution at the very fast pace is on a sustainable basis is also one of our advantages. That would be right way to put against all these competitors.

Edward Menezes — Executive Chairman and Co-Founder

Yes, that is true, because that is the backbone, formulation and giving customer a customized solution with our center of excellence at IIT Powai. That is one of the key differentiators that Rossari has with its competition, and the speed with which and the flexibility with which our teams are keen to work, that also differentiates Rossari. So if you ask somebody in the market, then you will notice that Rossari can really deliver solutions and products to the market much faster than most of our competitors.

Aman Shah — Jeetay Investments — Analyst

So okay, all right, thank you so much.

Operator

Thank you. [Operator Instructions] We have a question from the line of Ashit Kothi, an Individual Investor. Please go-ahead.

Ashit Kothi — Individual Investor — Analyst

Good evening, sir, just a follow up to the earlier question on competition. If we have to say that top two competitors in each segment, top two competitors to the company?

Sunil Chari — Managing Director and Co-Founder

What we believe as we are — one of the speakers or the ones who have questioned said that we don’t compete. But companies supplying similar kind of products, the top ones, which I mentioned. So, like in terms of acrylic agents or surfactants, companies like BSF, Solway, Croda, Dow, these are some very, very good ones who we consider as competitors. People who copy us, we don’t consider them as our competitors. So, Textiles, again, Archroma, Huntsman, Croda, these are companies we admire. In terms of Animal Nutrition, Kemin, Alltech, Novus, these are three companies we admire.

Ashit Kothi — Individual Investor — Analyst

And on what — and on what criteria we beat them?

Sunil Chari — Managing Director and Co-Founder

What criteria? What did you say, sir?

Ashit Kothi — Individual Investor — Analyst

In which criteria we beat them?

Sunil Chari — Managing Director and Co-Founder

We focus on giving value-added formulations, which can reduce the process time or process cost or make them more sustainable. For example, there’s a product used in detergents. Can we reduce the cost of the detergents or give better cleaning property, better shine to the clothes make it more greener, more sustainable detergent, that would be the way we work in our R&D lab at IIT Powai. And that is what has held us reach at this stage in our complete growth cycle.

Ashit Kothi — Individual Investor — Analyst

And we are 0 effluent in all our plants?

Sunil Chari — Managing Director and Co-Founder

No, we have — as a company, our focus is always on products which produces 0 effluent, but we have to wash — because as a specialty chemical company, we have more than 5,000 products on our range. So, when we change over from one product to another, definitely, there is washing and the washing has to be treated. So, we have commissions at Dahej for the requisite treatments.

Ashit Kothi — Individual Investor — Analyst

But then discharge — we don’t discharge at all?

Sunil Chari — Managing Director and Co-Founder

At Dahej, only we have discharge permission. So, it means that our water consumption is more change — product change, our water consumption would be always higher, and we cannot be 0 — I mean, say 0% in terms of water consumption. That is all whatever water we consume, we recycle, we reuse, so that we are net zero on whatever.

Edward Menezes — Executive Chairman and Co-Founder

So, we are a very green company, as you said, majority of the products do not generate any effluent. If you see our chemistry sir, we are doing enzymes, silicone, acrylic and surfactant. So, these four chemistries are very, very good and green chemistries in terms of comparison. We don’t do any hazardous processes like chlorination, nitration, halogenation, or aminations in a big way. So, our processes to have more epoxylation, propoxylation, polymerization and distillation, and effluent is not generated mostly in this.

Ashit Kothi — Individual Investor — Analyst

So, we can say our products are green products and we can get on carbon credits in this case?

Sunil Chari — Managing Director and Co-Founder

Yeah, yeah. So, we do that. We have a calculation for earning carbon credits.

Ashit Kothi — Individual Investor — Analyst

And how much of earning contribution over a period of next five years, carbon credit can become a part of our profitability?

Ketan Sablok — Group Chief Financial Officer

No, I don’t think that’s anything major.

Ashit Kothi — Individual Investor — Analyst

Not major.

Ketan Sablok — Group Chief Financial Officer

No, it is not major.

Ashit Kothi — Individual Investor — Analyst

Right sir, thanks a lot.

Ketan Sablok — Group Chief Financial Officer

Thank you.

Operator

Thank you. As there are no more questions, I now hand the conference over to the management for closing comments. Over to you sir.

Edward Menezes — Executive Chairman and Co-Founder

Thank you, everyone, for your patient hearing. I hope 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, and have a nice day.

Operator

[Operator Closing Remarks]