Styrenix Performance Materials Ltd (NSE: STYRENIX) Q2 2025 Earnings Call dated Nov. 08, 2024
Corporate Participants:
Bhupesh P. Porwal — Chief Financial Officer
Rahul R. Agrawal — Managing Director
Chintan Doshi — Company Secretary & Compliance Officer
Analysts:
Nirali Gopani — Analyst
Pooja Doshi — Analyst
Aditya Khetan — Analyst
Pritesh — Analyst
Ranveer Singh — Analyst
Meet Parekh — Analyst
Chirag Shah — Analyst
Rohit Ohri — Analyst
Marut Shah — Analyst
Krunal Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Styrenix Performance Materials Limited Conference Call. We have with us today from the management of Styrenix Performance Materials Limited, Mr. Rahul Agrawal, Managing Director; Mr. Bhupesh P. Porwal, Chief Financial Officer; and Mr. Chintan Doshi, Manager, Legal and Company Secretary.
As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. Further, on behalf of the management of the company, we would also like to remind the participants that this call is being conducted subject to and in line with the disclaimer mentioned in the investor presentation as is available on the stock exchanges.
I now hand the conference over to Mr. Bhupesh P. Porwal. Thank you, and over to you, sir.
Bhupesh P. Porwal — Chief Financial Officer
Ladies and gentlemen, namaste, everyone. I am pleased to welcome you to our Q2 and half year ended September ’24 conference call. As we reflect on our performance in fiscal year 2025, I am delighted to announce that we have witnessed a robust demand of our products in H1 FY ’25, marking a significant growth trend.
We have also completed debottlenecking activity at Dahej in end of September ’24, increasing the capacity of PS from 66 kt to 100 kt. We are pleased to inform that with a minor capital expenditure, we have significantly augmented our PS capacities. We plan to complete debottlenecking of ABS in second half of this financial year.
Our focus on sustainability and cost optimization is continuously aimed to maximize business value. In Dahej, we have successfully converted our fuel source from natural gas to renewable fuel source for achieving our sustainability targets and better cost optimization at the end of September ’24. We are on track to carry out similar changes in our other plants as well. Our expansion plan is going as per schedule. We will update you on this more once further details are available.
Coming on to our financial performance. Q2 FY ’25 highlights. Sales volume for Q2 was 42 kt versus 48 kt in Q1 FY ’25. That is it has dropped by 13.5% and by 7.3% compared to Q2 FY ’24. This is mainly because of shutdown taken at Dahej plant for debottlenecking.
Revenue stood at INR653 crores in Q2 FY ’25 versus INR699 crores in Q1 F’25. That is decreased by 6% and increased by 10.3% compared to Q2 FY ’24, which was INR595 crores. PBDIT stood at INR105 crores, that is 15.9% which is better by 2.8% compared to Q1 FY ’25 and better by 1.5% compared to Q2 FY ’24. PAT stood at INR70 crores, that is 10.6%, which is better by 1.9% compared to Q1 FY ’25 and better by 1.2% compared to Q2 FY ’24.
Coming to half yearly FY ’25 highlights. Sales volume for H1 FY ’25 stood at 90.1 kt versus 84.7 kt in H1 FY ’24, that is it has increased by 6.5%. Revenue stood at INR1,352 crores versus INR1,139 crores, that is increased by 19% compared to H1 FY ’25. PBDIT stood at INR197.4 crores, that is 14.5% better — which is — that is 14.5%, which is better by 2.4% compared to H1 FY ’24.
PAT stood at INR131.3 crores, that is 9.6%, which is better by 1.9% compared to H1 FY ’24. Q2 FY ’25 saw a better price realization. We expect Q3 to be average based on historical industry trends.
This is all about highlights for the quarter and half year, and now we may proceed to answer the questions you may have. Thank you.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Nirali Gopani from Unique PMS. Please go ahead.
Nirali Gopani
Hi. Thanks for the opportunity. So, Rahul, since the last few quarters, you’ve been clearly emphasizing on improving the product mix to enhance overall profitability. And this quarter results reflects that change. So can you elaborate like how has the product mix changed over the last few quarters?
Rahul R. Agrawal
Yeah. Hi. Nirali, is that all? Or do you have anything else to ask as well? If you can ask all your questions together, I can answer accordingly.
Nirali Gopani
Then I’ll do that. And also wanted to know that how has the raw material price behaved? Like does this quarter have any special one-off when it comes to raw materials, any inventory gain? And lastly, you had mentioned on the last call that we will update on our capex number after the engineering studies. And so any update on that side? Yeah, that’s it.
Rahul R. Agrawal
Okay. Thanks, Nirali, for your questions. With regards to product mix change, this is a continuous process. We are continually looking at product mix improvements that we can do. However, as far as this particular quarter is concerned, there is not anything significantly different. Yes, there is a product mix, which is reflecting certain realization that we see in this quarter. But it is not of a significant nature per se. I mean there is a specific trend and that trend and that trajectory is in the manner which we have projected and we are working towards.
As far as raw material changes are concerned, raw material changes have not been, again, very significant. If you look at the three key raw materials which we use, styrene monomer, butadiene, and acrylonitrile, there have been — if I look at quarter-on-quarter, raw material prices have not changed too much. Butadiene prices did increase if I look at year-on-year.
Similarly, acrylonitrile prices have remained — acrylonitrile and styrene prices have largely remained stable. However, as far as raw material changes are concerned, that has not impacted us significantly because we have been able to pass on those increases to our customers, as is reflected in our realizations. There is no significant inventory gain or loss in this quarter as well that we see.
With regards to the capex numbers, there is engineering studies which are almost closing. We have some idea of how the capex will be and what kind of expansion we will be able to achieve with that. However, we are in the process of ascertaining the same and ensuring that we have, with the right information, and we are sure of it before we release that information into the public domain, which we plan to do in a short period. But as Mr. Bhupesh has already highlighted, we are on track to meet our expansion schedule as earlier indicated.
Nirali Gopani
Sir, just one follow-up if you can allow. So Rahul, then what would you attribute to this improved profitability to and plus that on a lower volume. If you can help me understand that, sir.
Rahul R. Agrawal
So Nirali, there have been some movements in freight as well. I think in the earlier quarter, I had mentioned that in the next quarter, there might be some changes in freight. We saw some price movements on account of international freight, particularly for the first month, which was in July. However, that normalized in August and September. So there is some impact of that. There is some impact, of course, of product mix as well. And finally, there is also an impact of certain better price realizations on account of optimization at our end for those specific products. So it’s really a combination of all these different factors which have resulted in the numbers that you see for the specific quarter.
Nirali Gopani
And we can assume that this will be sustainable, given all the efforts that we are taking in the similar direction.
Rahul R. Agrawal
As you have seen, and I’ve emphasized in earlier calls as well, one has to look at our annual performance because quarter-on-quarter, there are changes because of these different markets that we cater to. There are certain markets for which demands are not necessarily entirely even across the year. But on an annualized basis, we get a truer picture. So I think if you look at it from that perspective, we are definitely on the right trajectory, and it would be sensible, I think it would behoove us to do that kind of an analysis instead of quarter-on-quarter.
Nirali Gopani
Perfect. Thank you so much.
Rahul R. Agrawal
Thank you.
Operator
Thank you. The next question is from the line of Pooja Doshi, who is an individual investor. Please go ahead.
Pooja Doshi
Yeah. Hi. Thanks for taking my question. So I wanted to know what was our current OEM/non-OEM mix — target mix? And any new client addition that you want to talk about in the OEM space? That’s the first question.
The second is, can you just give a few examples of value-added grades that you are planning to develop? What would be the margin profile versus traditional products? And how do you see the mix changing?
The third would be what is the purpose behind setting up a subsidiary in UAE, if you could just broadly talk about it. Yeah, those are the three questions.
Rahul R. Agrawal
Okay. Thanks, Pooja. I mean, as you know, we’re engaged in two lines of business. One is what we call ABS and SAN and the other one is polystyrene. Our OEM percentage in the ABS SAN mix has been always a little bit higher than 50%. And we are tracking the same. We have seen incremental increases only in the OEM percentage.
As far as polystyrene is concerned, our OEM sales were much lower historically. That has increased. So if it was less than 25%, we are seeing increases going up to 30% or higher than 30% and there is an ongoing effort to increase that further.
In terms of value-added grades, we have launched two new brands, as we have indicated in our investor presentation, one is STYROLOY and ASALAC. STYROLOY is a blend of PC/ABS, nylon/ABS and other products. And in the case of ASALAC, it’s ASA, which is a weatherable product, which has applications, again, in automotive and other industries. So these grades have come into the fold.
Today, the percentage of these grades sold in the overall product mix is still small. But we have seen a fantastic response from all our customers and a very fast rate of adoption and qualification across all key customer segments. So we do see growth there to be quite good.
But the order of magnitude today is probably a few hundred tonnes, which we expect to increase significantly quarter-on-quarter. And I think the next year is when we will see the full effect of all these additional products that we are adding into the mix.
Even in the existing product lines, we have started with more FR products in the case of ABS, HIPS, pre-colored in the case of HIPS, all these are also continuously adding to our overall product mix. It’s hard to quantify exactly what that percentage is today. But definitely, that’s a trend in which we see a higher percentage of value-added products in the mix.
As far as the UAE subsidiary is concerned, as you are aware, we are largely focused on the domestic market in India. And as we expand capacities, we do believe we would look for opportunities internationally. And we do understand and believe that UAE will be the right place for us to carry out our international activities as the base. Hence, that’s the logic of setting up the subsidiary over there to carry out business in the near and medium-term future for Styrenix at a global level.
Pooja Doshi
Okay. Understood. Sir, I just have two more questions. You said that you will update us on the capex plan of that INR650 crores. Just wanted to know if you have any idea about the asset turns at this moment? And how do you plan on funding the capex? And with this huge capex, is there any change in our payout policy? Yeah, like those two are the other two questions.
Rahul R. Agrawal
So like I said, the engineering studies for at least part of the INR650 crores is nearing completion. And we have some sense of what will be the capex required and when would the expansion timeline be frozen. However, we are ascertaining that and being sure of all our numbers before we release it into the public domain. So that will be forthcoming soon.
I think the payout policy or whatever, as I’ve mentioned in the past, is all a function of how best those resources of the company can be utilized. If we do believe that the expansion can be brought forward and funds are required for the same, then the funds would be demarcated towards that purpose. However, if we believe that it is going to be prolonged, then the funds may be distributed as per — as would be the management decision at that time.
So I think we will take that decision into advisement at the right time. However, there will be some kind of information which shall be forthcoming from our end vis-a-vis once we have complete clarity on all our numbers with regards to capex and the expansion plan.
Pooja Doshi
Sure. And do we hold on to our 15%, 20% volume growth guidance and INR18 to INR20 EBITDA per kg guidance for FY ’25? Or is there a change?
Rahul R. Agrawal
We have never given any guidance on rupees per kg. These are all in numbers which have been inferred or implied based on our discussion and investor calls. And we do not also even now give any such guidance. However, as far as volume growth is concerned, we have given some indications of how our capacities would grow over here and our volumes will follow along with those capacities, and we are maintaining the same guidance currently.
Pooja Doshi
All right. Thanks. That’s it from my side. All the best.
Rahul R. Agrawal
Thank you.
Operator
Thank you. The next question is from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Aditya Khetan
Thank you for the opportunity. Sir, my first question is on to the ABS and polystyrene. Sir, this quarter, we had debottlenecked the capacity. So any such broad numbers you can give on to the top line, how much top line would be added from the PS? And what is the time line when we can achieve the peak utilization over there? And similarly for the ABS, what would be the expected top line and how much time we will achieve the peak level?
Rahul R. Agrawal
So typically, Aditya, we have had a revenue split of between 65%, 70% to about 30% between ABS and PS in the — historically. You can assume that as a basis. In terms of polystyrene, we have completed our debottlenecking exercise, as was mentioned in the opening remarks by the CFO. So on our earlier realized volume, maximum volume of about 65,000 tonnes, we believe that our enhanced capacity after debottlenecking would be to the tune of 100,000 tonnes. This is, of course, on an annualized basis. We have completed the debottlenecking by end of September. And we are gradually now ramping up to realize that entire capacity.
We do believe that the next financial year, we would have the benefit of the entire capacity, which is — which should — which would be 100,000 tonnes. To that effect, in this year, you would have to assume a number between 65,000 and 100,000 considering that the debottlecking has happened in the half — after half part of the year.
With regards to ABS, also, I think we have given some idea of what would be our production numbers. So I think you have to assume that we are on track to reach those numbers. And top line of both ABS and PS as per the earlier revenue splits can be extrapolated to get those numbers.
Aditya Khetan
Okay. Sir, any broad figures, if you can help? So this 40,000 tonnes of polystyrene can add somewhere around INR400 crores to INR450 crores to the top line?
Rahul R. Agrawal
Yeah, that would be a fair estimation. Of course, as you know, that the pricing of polystyrene or ABS for that matter tracks with raw material pricing, which can be volatile as we have seen historically. But assuming current pricing of RM, that would be a fair estimation to make.
Aditya Khetan
Got it. Sir, my second question is on the raw material side. Sir, on a sequential basis, in most of the — like we had seen that the raw material prices have been slightly up. But sir, in our case, there has been a benefit in terms of the lower raw material prices or there is some inventory gain benefit that has been clearly seen.
Any idea, sir, you can give this boost in EBITDA on a sequential basis and on a per kilo basis also when we calculate the growth on EBITDA, so we are standing at the highest level. How this is like — is this related to the better product mix or higher the OEM contribution or there is some inventory gain benefit, which is there?
Rahul R. Agrawal
Like I’ve already mentioned, there is no significant inventory gain in this last quarter. It is on all account of the two or three factors, which I’ve mentioned. One is, of course, OEM, non-OEM, there is also product mix factor, which may or may not be related to OEM or non-OEM. Certain additional value-added grades being added into the product mix.
There is, of course, certain better price realizations on account of certain freight-related movement, which was in the earlier part of the quarter, which, of course, normalized in the last two months of the last quarter as well. So all these factors have played a role in achieving the numbers that we have in the last quarter, as I mentioned and explained earlier.
Aditya Khetan
Yeah. Just a follow-up on to this. So sir, is there any idea — so where are we — so from where are we — so taking the raw material, acrylonitrile, styrene and butadiene?
Rahul R. Agrawal
So a lot of this information is easily available. Styrene comes from — again, styrene and acrylonitrile are largely imported into the country. Acrylonitrile, of course, there is now some domestic production as well. Butadiene is largely or completely sourced locally. And the manufacturers for this is well known. So that information can be found easily online.
Aditya Khetan
Okay. Sir, just one point to clarify here. Sir, what we’ve heard from some of the other companies that the butadiene prices in India is much higher as compared to the European market by around 15% to 20%. So that should have led to some higher raw material prices really in our product basket also. Any idea, sir, like how this has been — in our case, like how this has been so versus the other company?
Rahul R. Agrawal
I’m sorry, are you mentioning that butadiene prices are higher in India or lower in India? I’m not clear. Can you repeat that?
Aditya Khetan
The butadiene prices are higher in India by around 20% as compared to the European market. So players who are taking butadiene locally are at a disadvantage, and their raw material price basket is a bit high. So naturally, so margins should have been declined. So that’s what I want to clarify. So that has not been in our case. So I wanted to know, so what has been the reason for that.
Rahul R. Agrawal
So there can be price volatility month-on-month. But as you know that all the three key raw materials are fairly large commodities, with a fair amount of elasticity in pricing globally. So there would never be such massive arbitrages on a prolonged basis between any two specific regions globally.
So I don’t know if you are referring to a specific month. But on a medium- to long-term basis, this kind of price differential does not exist between butadiene or any other raw material or commodity material that we use. So we don’t see any real gap on a sustained basis between our pricing as well as pricing for companies across the world.
Aditya Khetan
Got it. Thank you, sir. Thank you. That’s it.
Operator
Thank you. The next question is from the line of Pritesh from Lucky Securities. Please go ahead.
Pritesh
Yeah. Hi. Can you hear me?
Rahul R. Agrawal
Yes, Pritesh. Go ahead.
Pritesh
Yeah. Sir, on your comments about the profitability change for the quarter, you mentioned that there was no RM, right? There was no product — significant product mix change. So is it fair to assume that the last part of the GP change is because of a better price realization that you realized in the quarter and which in turn was way too higher pricing because of the freight issues and where the finished goods usually come from Southeast Asia?
Rahul R. Agrawal
Do you have any other questions, Pritesh, or that’s it?
Pritesh
Yeah. So I would like to know then what is the sustainability of these prices as of now. What are the prices?
My second question is the natural gas benefit, conversion of natural gas to renewable, is implemented in the September quarter at one of the Dahej plants. It is fair to assume that the benefits of it will now flow incrementally? And when will — and Dahej is basically a polystyrene plant. So when will the benefits of your project get implemented in your ABS plant? And when will the benefits accrue on these two areas?
And my third question is, in the next four quarters or 12 months, what is the ABS capacity that you will bring on production, the newer brownfield capacity?
Rahul R. Agrawal
Anything else, Pritesh? Or that’s it?
Pritesh
No, sir, as of now —
Rahul R. Agrawal
Okay. As far as the last quarter is concerned, I did mention that there are, of course, product mix changes which do happen naturally between quarter and quarter. And this is not necessarily a trend per se, but we do see some product mix changes, which did take place.
There was, of course, also higher price realizations, as you have correctly seen. And some of it is also attributed not only to product mix change but also to the freight movements. But, of course, this was largely restricted to the first month of the quarter, which then quickly normalized in the subsequent two months of the quarter.
The third part is, of course, we have also done, like I mentioned, some optimization in our own formulations of products and pricing. So in terms of costing, that has also improved, which has also led to better price realizations.
I think overall, in terms of sustainability, I think, again, I mentioned looking at it quarter-on-quarter, it can be a little misleading. So it’s better to look at an annualized level. And annualized, we do see changes or movements which can happen in a quarter or two in any given year on account of freight or any other reason.
But on an annualized basis, we are, again, kind of in a trend which is in line with the direction that we are working with in terms of cost rationalization, in terms of better operating leverage on account of capacity being built, better product mix. So I think a lot of that is being seen in the quarter. And I think that is how I would look at it.
As far as natural gas and renewable is concerned, you’re right, it has been done very recently. So some benefits would accrue incrementally, but the real full year benefit we will see in the next financial year. We are also doing things gradually. As you know, these are all continuous product plants and highly sensitive to process conditions, which can be affected on account of process parameters, on account of fuel or what kind of fuel we use in terms of temperatures and such things.
So this has to be done in a gradual manner, which is — which will not affect product quality output or safety in any way. So this all has to be taken into account. And we will be doing this gradually, and you will see the full benefit of the same in the next financial year. As far as — but you will see some benefits in the following quarters as well.
In case of ABS, again, we did some exercise where we outsourced team in one of our plants, and this has been mentioned in one of the investor presentations much earlier on and that has led to a significant benefit on an annualized basis already for us.
As far as our other plants are concerned, we are looking to change again to renewable and that would happen in the next few months. Again, realistically, we will see the benefit of those kind of changes in cost rationalization in the next financial year. But we would see potentially some benefit in the next quarter, but it’s a little bit early to be sure of that, depending on when that project is completed.
As far as ABS capacities are concerned, whether it is debottlenecking or brownfield, I think this has been elaborated in the earlier investor presentations, and all we can say we are either in line or well ahead of schedule to compete the same.
Pritesh
So my question was on ABS, how much in the next 12 months, you will get capacity addition from this current 100,000?
Rahul R. Agrawal
So I think we have mentioned that, this is an incremental process. So again, hard to quantify at this stage, but on an annualized basis, we’ll be in line with what we have mentioned in our investor presentation.
Pritesh
Okay. On my — that natural — the renewable energy question. So Dahej was the first plant where you have implemented it, right? The other plants, the implementation will come now and the benefits will flow in thereafter, right?
Rahul R. Agrawal
Yeah. So I mean there are a few things which we have done with regards to fuel. In the case of Nandesari, which is where we make rubber, we changed and we outsource team now over there, which we have explained in our earlier investor presentation, which has led to significant savings for us already because that team also uses renewable sources of energy already, but it’s outsourced.
Given the land requirements in Nandesari and how to best optimize the same, this is what we decided as a management to do. So that benefit started accruing, in fact, as of January of this year itself.
In the case of Dahej is where we have obviously installed our own system. And we will see — we are starting to see some benefits now. And again, full benefits we’ll see next year.
Pritesh
In Moxi, that’s the main, the ABS —
Rahul R. Agrawal
So Moxi is a compounding facility. They don’t use really any fuel. Fuel would be used more in Katol where the SAN production takes place.
Pritesh
So in Katol when will — even Katol has gone through or it will go through the renewable change?
Rahul R. Agrawal
Next few months is when we are anticipating to complete that.
Pritesh
Okay. That will be completed in the next few months. Okay. And just one question on my first question on the profitability part. I understand your answer. Is it fair to assume that the more sustainable profitability at the GP level based on whatever changes that happened between quarter one and quarter two will be somewhere midway between quarter one and quarter two GP.
Rahul R. Agrawal
Hard to quantify at this stage, Pritesh. I would not hazard a guess. But I think when you look at year-on-year and you look at specific quarters, we do know that specific quarters behave in a certain way due to certain product mix, which is driven by demand in those specific industries, in those specific quarters. That is why it is better to compare it year-on-year. And on an annualized basis, as long as we’re able to see the overall benefits in the organization based on the steps the management is taking, then we know what we are doing, we are on the right track.
Pritesh
Okay. Okay. But directionally, we will see GP improvement on a year-on-year basis and we will see opex reduction as well via the conversion to renewable, right? These both things have to play out eventually, right?
Rahul R. Agrawal
Right. So I mean, like I said, the three so-called pillars of our strategy remain the same. One is we do cost rationalization measures through different means. We try to get better operating leverage with higher capacities, buildup and utilization. And finally, obviously, better product mix. And that strategy is still exactly what we are following today and we do see benefits of the same on an annualized basis for sure.
Pritesh
You had given a 2 lakh volume guidance earlier in your quarters for FY ’25. Is that guidance intact considering what volume number you’ve done for H1?
Rahul R. Agrawal
So 2 lakh is what we’ve given on production. And I think, like I said, our sales volume would follow that and would probably — we will be in line with whatever we have said in terms of growth for this year.
Pritesh
Okay. Thank you very much, and all the best to you, sir.
Rahul R. Agrawal
Thank you.
Operator
[Operator Instructions] The next question is from the line of Ranveer Singh from Yashvi Securities. Please go ahead.
Ranveer Singh
Yeah. Hi, Rahul ji. How are you?
Rahul R. Agrawal
Very good. Tell me.
Ranveer Singh
I had a couple of questions. I’ll ask all of them at once. So question number one was, Rahul ji, do crude oil prices impact our raw material prices. That’s question number one.
Question number two is how are contracts with a customer decided. Say, for example, is it something like, we sign a contract with them to say that we’ll supply you XXX tonnes for the next few months at a certain price? Or is it like on a made-to-order basis? And are we able to pass on raw material price changes to customers efficiently?
And question number three is, recently, we are witnessing that there is a slowdown in the auto sector. So does this also impact our sales? These are the three questions, Rahul ji.
Rahul R. Agrawal
Okay. Thanks, Ranveer. So as far as crude oil is concerned, crude oil, of course, has an impact on a lot of the basic chemicals. So crude oil has a very strong correlation with, say, for instance, benzene. Now benzene is one of the key raw materials for styrene monomer. However, what we have seen is while crude oil and benzene have correlated or tracked quite predictably, the correlation between benzene and styrene has not necessarily been elastic in that sense.
So I think the supply chain dynamics of our raw materials has been slightly different from that of crude oil. So while crude oil, on a very, very long-term basis, would have a fairly strong correlation, many times on specific quarters or specific years, we may not see that stronger correlation depending on the demand/supply scenario of our key raw materials. And that is a case we have seen in recent past as well.
However, I think this kind of flows into your next question, that while this is important, this is not 100% relevant as far as our pricing and our margins are concerned because a lot of our contracts are dependent on publication pricing of key raw materials.
And the contracts with many of our customers are decided vis-a-vis formulations — vis-a-vis formula pricing, and these formulas are derived from commodity pricing, which is published and transparently available. So we are able to effectively pass on is what your question was what increases or decreases that we see in our raw materials to our final customers as well. This is for bulk of the business. Of course, there is some business where it is open as well.
In terms of auto slowdown, actually, we do supply into two wheelers, four wheelers, commercial vehicles, the entire segment. We, in fact, have a large presence in EVs as well. So if I look at the entire breadth of the auto industry that we supply to, our demand has still been quite good. We may have seen slowdown in certain pockets as you rightly know. However, in other pockets, the demand has been quite good. So for us, it is all been even, and we have still seen a decent growth in our numbers.
Ranveer Singh
Okay. Rahul ji, can I ask a follow up?
Rahul R. Agrawal
Yeah.
Ranveer Singh
So, finally, like, where my question came from is like I saw that crude oil prices slashed by 25% from, say, July, August, September, these three months. So going forward, can there be any pressures on our margins?
Rahul R. Agrawal
I think I answered that question in the previous answer that crude oil prices may or may not have an impact, first of all, on our raw materials. And again, our raw materials determine our pricing of our finished products.
In the case of where we have contracts, anyways, it is fixed vis-a-vis formula. So it really doesn’t have any impact on absolute margins. Percentage margin, of course, will vary based on pricing movements. But in terms of absolute contributions, I think we are still well protected in spite of, say, movements in crude oil pricing.
Ranveer Singh
Okay. Thank you, Rahul ji. Best of luck, and congratulations on a great set of numbers. Thank you.
Rahul R. Agrawal
Thank you, Ranveer.
Operator
Thank you. The next question is from the line of Meet Parekh, who is an individual investor. Please go ahead.
Meet Parekh
Thank you for the opportunity. Hi, sir. I had a question related to the working capital changes. This year, for the first half, we had almost INR210 crores of increase attributed to INR123 crores from inventories and INR78 crores from trade receivables. So I understand that our business is expanding, it’s a new chapter. We are growing. But I would — still if you could throw some light on to this rise in inventory? Obviously, revenues are increasing, but it is slightly more in proportion to that. So if you could throw some light on that? Thank you.
Bhupesh P. Porwal
Yeah. So I’m Bhupesh here. So Meet, you are very correct. So inventories and trade receivables have increased, so as trade payables have also increased, yeah. So somewhere compensating on the inventory is part of that, yeah. So receivables have increased because of particular rates, which has gone higher. So the volume — in comparison to the last quarter, the receivables are higher.
Inventories, yeah, some of the inventories we have kept intentionally high because of some of the other debottlenecking exercises going on, so that in future, we don’t lose the sales. Like in September, we had the polystyrene also debottlenecking exercise. We are soon going to start the rubber debottlenecking exercise also.
The second reason for inventories is that sometimes it happens at the end of the quarter or end of the month, you get some of the vessels coming together instead of coming in fragmentation. So that’s the reason inventories were higher. So maybe it is a temporary effect. At the end of the year, we see a more normalized inventories at the end of the year.
Meet Parekh
Thank you. That was helpful. Thank you.
Operator
Thank you. The next question is from the line of Chirag Shah from Dalal & Broacha. Please go ahead.
Chirag Shah
Yeah. Hi. Can you hear me?
Rahul R. Agrawal
Yeah.
Chirag Shah
Yeah. First of all, congratulations on a great set of numbers. Okay. Sir, I had two questions. One was, of course, a repeat question. And of course, sir, the first question is, sir, we are doing this fuel mix change across all of our plants.
And I believe in one of our calls earlier, we had said that, that should contribute around INR2 to INR3 per kilo kind of efficiency — productivity gains. So do we still believe that will happen? That is the first question.
And the second question, yeah, a lot of participants have actually asked it, and of course, you’ve also answered it. But I think what most participants want to know is, we have seen a significant jump in this quarter’s profitability per tonne, means the EBITDA per tonne has moved. We were always in the range of INR15,000 to INR18,000 per tonne kind of EBITDA, which has now moved to around INR25,000.
So yes, we understand there are a lot of one-offs. Maybe there are some structural changes as well. But where does it settle? Does it settle — you said that, okay, let’s look at Y-o-Y business, don’t look it on a sequential basis. But where does this settle?
Does it settle on the upper side of, say, around INR18,000-odd per tonne? Or does it settle structurally at a higher level because of the product mix change or operating leverage? And so just I think maybe some better sense will definitely help us.
Rahul R. Agrawal
Yeah, Chirag. So with regards to fuel, I don’t believe we have given any specific guidance of INR2 to INR3 per kg. We might have explained how fuel cost works in terms of calorific value and the cost of producing steam, which varies based on fuel type. So I think we still believe that to be the case.
Of course, all of those numbers are dependent on what is the cost of natural gas versus what is the cost of renewable fuel. We still believe there is a strong business case in terms of the delta between the two costs. And of course, that’s measured as per unit of calorific value that we are able to generate from each of those fuel sources. So that indeed holds true, and we will see benefit.
Again, it’s a little difficult to quantify the exact benefit in terms of rupees per kg in the final product or for that matter in price per steam. And I think we’ll be in a better position to do that once we have an annualized saving that we are able to demonstrate.
So I think we have been able to demonstrate that for one of our plants, like I mentioned for our rubber plant and we have got significant savings over there in the fuel — in the steam costs that we are consuming. And we will see similar, if not higher, savings in the case of our other plants where we are conducting the same kind of process improvement as well. The other benefit, of course, this also gives us is it moves us from using fossil fuels or nonrenewable into renewable, which helps in meeting our sustainability targets. As you know, this is becoming increasingly important, not only for us, but for all our key stakeholders, including our customers. And this is a very positive change for us in that direction.
And net-net, there is cost saving and sustainability which is more demonstrating a big positive for the company. But in terms of exact quantification, we’ll see that going forward. There will be some incremental changes in the quarter, but next year, we’ll see the full effect.
As far as EBITDA per tonne —
Chirag Shah
You believe that — sorry, but you believe there will be — that there is a case for substantial savings?
Rahul R. Agrawal
Yeah. Thanks. With regards to product mix, yes, there is a product mix which has been — which has changed in this specific quarter. And quarter-on-quarter, we do see changes in product mix, which does affect our EBITDA per tonne. It’s very difficult to say exactly what that is going to be. That’s why I always say it is better to look at on an annualized basis, where there is less noise in terms of specific factors impacting a monthly or quarterly EBITDA. On an annualized basis, we get a much better picture of overall product sales of different product categories that we supply.
All we can do is in terms of management strategy is to move towards a better product mix and better operating leverage, both which will contribute to better realizations. And that is the case we have seen ever since we have taken over management control in November ’22 and we are continuing to demonstrate the same.
Chirag Shah
Yeah. Absolutely, that’s 100%. No, thank you. I think so — yeah. Thanks. Thank you for the answer, and all the best. Yeah. Thank you.
Rahul R. Agrawal
Thank you.
Operator
Thank you. The next question is from the line of Rohit Ohri from Progressive Shares PMS. Please go ahead.
Rohit Ohri
Thank you. Hi, Rahul. A couple of questions. The first one being, can you take us through the progress of Toyo Engineering for this expansion of 150 KTPA at Dahej for the HIPS line? By when will that be ready? And what is the money that you’ve deployed? And what sort of returns should we expect going forward? And are these margin accretive or some value-added products that you are looking at? Thank you.
Rahul R. Agrawal
Thanks, Rohit. So we awarded the contract to Toyo only recently. This I think we’ve mentioned also in our statement that this is almost kind of a six to seven-month type of an engineering study, which has to be carried out. The value of the engineering contract also has been mentioned.
Now at the end of the engineering study, we do anticipate to be able to augment our HIPS capacities. So currently, we do believe that we will be able to effectively more than double the HIPS capacity that we have. There is certain debottlenecking which is going on in our existing HIPS capacity, which should ideally augment our existing HIPS capacity by around 30% to 50%.
And when we look at a new HIPS line for which we have awarded the engineering contract to Toyo, we do anticipate to have a new HIPS line with that augmented capacity, if not higher than that. That, of course, is also within the scope of the engineering study to what extent we can augment given the kind of engineering design and process philosophy we have with the existing HIPS production.
We do believe that this project based on a very initial estimation would be value accretive. However, this will all depend on — once we have the engineering study carried out, we would know exactly what the capex amount would be and when that could be completed and exactly what the capacity would be. So these are, of course, very key variables to determine exactly the return on that investment.
And in the absence of those key variables available, it is hard to give a number to you in this call as of now. It is just our management kind of estimation that, that would be the case on the basis of which we have taken management approval or Board approval to start the engineering study itself.
Rohit Ohri
Okay. Rahul, can you take us through the global demand, the strengths, weakness or maybe some discounting that we see in PS, HIPS or maybe GPPS prices because of the entire volatility that is happening in the system as of now?
Rahul R. Agrawal
So global demand, I’m not sure in terms of how entirely relevant it is for the Indian market. There is, of course, a knock-on effect when there is a huge supply overhang or supply constraint globally in India. However, this does not translate to 100% impact on how we conduct our business in India.
There are specific OEM specific contracts, which require local players, which require local production, which also require customized grades, right, which is also something we are looking to do in all the products that we are doing, whether it’s ABS or polystyrene, including HIPS, for that matter. So these all are somewhat insulated from what happens at the global level.
We are very much focused on, first, trying to meet the requirements of our domestic customers before we venture outside. So I think we are still on track to do that. And we do believe that whatever we have seen in the past few quarters has already considered — or past few years for that matter, since we’ve taken over management control, we do see that whatever global impact could happen on the Indian market has already happened or is happening as we speak.
So there is not much that is going to necessarily change in that context going forward. So we can keep that same set of parameters as relevant in terms of impact to the Indian market. And within that kind of environment, we are able to achieve what we are looking to do.
Rohit Ohri
Are we sort of anticipating any sort of seasonality effect which generally comes in the month of December with certain peak volumes or something of that sort?
Rahul R. Agrawal
I think we will see all those things. I think year-on-year, like I said, there is seasonality demand, which happens for specific sectors, there are kind of peaks and troughs associated with different customer segments that we cater to. And I think that will continue to remain. However, the height of the peak or the depth of the trough may change. So that, of course, would impact exactly what those volumes will be for that quarter.
Rohit Ohri
I know you spoke about crude oil and formula-based pricing. My question is that how frequently or how — what sort of a periodic resets do we see? Or how many months it takes to pass on the prices to the customers?
Rahul R. Agrawal
So many times, it does happen that the change may happen. Most of the times, rather, it will happen that the change happens in the month itself. There is no real lag in terms of pricing which we have in terms of RM and our customers. However, there could be fewer instances where there are quarterly pricing involved where we could see a quarter lag. But by and large, in terms of the contracts we have, it’s a monthly pricing.
Rohit Ohri
And can you share your views or your estimates related to the competition or maybe the import pressure, which comes on SPML due to Southeast Asian countries like Taiwan, South Korea, Thailand, maybe Malaysia? Have you been able to get some market share from there? Have we increased our market share in these geographies?
Rahul R. Agrawal
So I think on a steady-state basis, if I look at it during INEOS’ management time, we were doing close to 46,000 tonnes, 47,000 tonnes of PS. Last year, as you know, we did about 65,000 tonnes. And this year, we are projecting to do higher. I think we are on track to meet that kind of volumes. I think you have a sense of what the overall growth in the market is, so we are definitely taking some market share in that form. And like I said, the competitive pressures that we have seen since we have management control is the same and is likely to remain the same. So in the face of that, we have not seen any challenge in being able to acquire market share with increasing production output.
Rohit Ohri
Okay. That’s quite encouraging. Last question. Bhupesh ji, can you take us through this contingencies which are rising from central GST and central excise, which was somewhere around INR98.11 lakh. Have we already provided for this? Or should we be seeing some exceptional item going forward in the second half?
Bhupesh P. Porwal
Yeah. So when there are contingencies, it means we have a firm legal aspects on it, these cases will be coming in our favor. It means we’ve not provided for it. That’s the reason they are contingent liabilities. And if we see between previous year and this year also, the contingencies have been reduced drastically because a few of the cases have came in our favor, and we are hopeful the others will also fall in line with what has happened in the past, yeah, as and when cases comes.
Rahul R. Agrawal
Okay. Bhupesh ji, Rahul, thanks for answering my question. Thanks a lot. All the very best for your future. Thanks a lot.
Bhupesh P. Porwal
Yeah.
Operator
Thank you. The next question is from the line of Marut Shah, who is an individual investor. Please go ahead.
Marut Shah
Hello. Am I audible?
Rahul R. Agrawal
Yeah, you’re audible. Go ahead.
Marut Shah
Yeah. Sir, I wanted to know about the overall ABS market. I’m actually new to your company. So I wanted to understand how much is the capacity — current capacity of ABS in India? And how much is the overall demand? And what percentage is we do and what percentage is currently imported?
Rahul R. Agrawal
So the ABS demand as of last year, I can give you numbers, was about 320,000 tonnes. Out of which last year, we did close to around 85,000 to 90,000 tonnes. And this year, we are projected to do a little over 100,000 tonnes of ABS. So this is what we are doing in terms of our whole market share. The competition, I think, publishes their numbers, so you can check them on their website. And the balance would be, of course, imported into the country.
Marut Shah
Okay. I see some capacity additions on some of our competitors. And — so will that have any impact on our volumes, like our market share?
Rahul R. Agrawal
So close to 50% or higher numbers are still currently being imported into the country. So I think given the time lines of expansions which are coming in by us and our competitors, we do believe that the market will be large enough to absorb most of the volumes, which would be produced domestically.
We also believe that the consumers domestically would prefer to buy from our domestic suppliers. So a lot of the market gains for all domestic production will come at the cost of or expense of imports, which are currently happening into the country. So we do believe that while there might be short and medium-term kind of situations which may put some pressures, from a longer-term perspective, we do see all the incremental capacity additions being comparably consumed by the Indian market.
Marut Shah
Okay. Thank you very much.
Operator
Thank you. The next question is from the line of Krunal Shah from ENAM Investments. Please go ahead.
Krunal Shah
Hello. I have two questions. One is on the debottlenecking polystyrene that we had in Q2. Can you just share your assessment of the lost sales in PS because of that in Q2? And the second question is in terms of the value-added STYROLOY and ASALAC. You said the run rate is like 200 tonnes. So just a clarification I wanted, is it like a quarterly run rate or the annual run rate is 200 tonnes. That’s it. Thank you.
Rahul R. Agrawal
Yeah. Thanks for your question, Krunal. So in terms of the loss sales, I think we have lost about 3,500 tonnes to 4,000 tonnes of lost production and probably some of it also sales as far as polystyrene is concerned on account of the shutdown we had to take to augment the overall capacity of polystyrene. In terms of STYROLOY and ASALAC, we are doing up to now close to 100 tonnes a month. And I think this number, of course, is on a — because it’s still a low base, we have seen a significant growth month-on-month, which will kind of be a significant addition to our overall product mix in the next financial year.
Krunal Shah
Got it. Thank you so much.
Rahul R. Agrawal
Sure.
Operator
Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Chintan Doshi for the closing comments.
Chintan Doshi
Thank you. Thank you investors community for joining the call and showing interest in our company, and we will look forward to answer you in the next quarter at suitable time. Thank you.
Operator
[Operator Closing Remarks]