Tatva Chintan Pharma Chem Limited (NSE: TATVA) Q2 2025 Earnings Call dated Oct. 25, 2024
Corporate Participants:
Dinesh Sodani — General Manager, Finance & Accounts
Ajesh Pillai — Investor Relations Officer
Unidentified Speaker
Chintan Shah — Managing Director
Ashok Bothra — Chief Financial Officer
Analysts:
Sanjesh Jain — Analyst
Atul Patel — Analyst
Chintan Patel — Analyst
Nirali Gopani — Analyst
Rohit Nagraj — Analyst
Krishnan Parwani — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Tatva Chintan Pharma Chem Limited Q2 FY ’25 and H1 FY ’25 Results Conference Call hosted by ICICI Securities. [Operator Instructions]
I now hand the conference over to Mr. Sanjesh Jain. Thank you. And over to you, sir.
Sanjesh Jain — Analyst
Thanks, Nikita. Good evening, everyone. Thank you for joining on for Tatva Chintan Pharma Chem Limited Q2 FY ’25 results conference call. We have the Tatva Chintan management on the call, represented by Mr. Chintan Shah, Managing Director; Mr. Ashok Bothra, Chief Financial Officer; Mr. Ajesh Pillai, Investor Relations.
I would like to invite Mr. Dinesh Sodani, General Manager, Finance, to initiate with his opening remarks, post which we will have a Q&A session. Over to you, Dineshji.
Dinesh Sodani — General Manager, Finance & Accounts
Thank you, Sanjeshji. Good evening, everyone. On behalf of the management, I am pleased to welcome all of you to Tatva Chintan earnings call to discuss financial results for the quarter ended September 2024. Please note that a copy of all the earnings call related disclosures is available on both the stock exchanges, that is NSE and BSE. Any statement made or discussed during this call, which reflect our outlook for the future or which could be construed as a forward-looking statement, must be reviewed in conjunction with the risks that the company faces. A detailed disclaimer in this regard has been included in the investor presentation that has been shared on both the stock exchanges, that is NSE and BSE.
Now I will hand over the call to our Investor Relations Officer, Mr. Ajesh Pillai, for his opening remarks. Over to you, Ajeshji.
Ajesh Pillai — Investor Relations Officer
Thank you, Dineshji. Good evening, everyone, and a warm welcome to the quarter two earnings call of the Tatva Chintan Pharma Chem Limited. It is my privilege to present our financial results, which we trust you have reviewed in detail through the investor presentation available on the stock exchanges.
Allow me to provide a comprehensive analysis of our performance this quarter. In quarter two, our revenue from operations stood at INR835 million, reflecting a 14% decline year-on-year and a 21% decline quarter-on-quarter. The EBITDA for the quarter was INR56 million, representing a significant 72% drop year-on-year and a 56% decline quarter-on-quarter.
Looking at our product segments, our Phase Transfer Catalyst generated INR275 million in revenue, which shows an 8% decline quarter-on-quarter, but a 19% growth year-on-year. The Structure Directing Agents, SDA, segment reported INR271 million in revenue, marking a 23% decline quarter-on-quarter and 37% drop year-on-year. In Electrolyte Salts segment, we recorded revenue of INR13 million, reflecting a 5% decline quarter-on-quarter, but an 8% [Technical Issue]
Operator
Hello? Sir, due to network issue, your voice is not audible.
Unidentified Speaker
I think you’ll have to reconnect them.
Operator
Ladies and gentlemen, please wait a minute while we reconnect to the management. Ladies and gentlemen, we have with us management. Thank you. And over to you, sir.
Ajesh Pillai — Investor Relations Officer
Nikita, you mute me. Can you please unmute the management?
Unidentified Speaker
Sanjeshji, I think there’s some error with the chorus only, because — hello?
Operator
Ladies and gentlemen, wait a minute, I will connect the management. [Technical Issue] Ladies and gentlemen, we have with us management. Please go ahead.
Ajesh Pillai — Investor Relations Officer
Good evening, everyone, and a warm welcome to the quarter two earnings calls of Tatva Chintan Pharma Chem Limited. It is my privilege to present our financial results, which we trust you have reviewed in detail through the investor presentation available on the stock exchanges.
Allow me to provide a comprehensive analysis of our performance this quarter. In quarter two, our revenue from operations stood at INR835 million, reflecting a 14% decline year-on-year and 21% decline quarter-on-quarter. The EBITDA for the quarter was INR56 million, representing 72% drop year-on-year and a 56% decline quarter-on-quarter.
Looking at our product segments, our Phase Transfer Catalyst generated INR275 million in revenue, which shows an 8% decline quarter-on-quarter, but a 19% growth year-on-year. The Structure Directing Agents, that is SDA, segment reported INR271 million in revenue, marking a 23% decline quarter-on-quarter and a 37% drop year-on-year. In the Electrolyte Salts segment, we recorded revenue of INR13 million, reflecting a 5% decline quarter-on-quarter, but an 8% growth year-on-year. Lastly, the Pharma & Agro Intermediates and Specialty Chemicals segment achieved INR272 million in revenue, showing a 30% decline quarter-on-quarter and a 5% decline year-on-year.
With this overview of our financials, I would now like to hand over the call to our respected Managing Director, who will share some deeper insights into our business outlook and strategic initiatives. Thank you. And over to you, sir.
Chintan Shah — Managing Director
Good evening, everyone. I hope you all are looking-forward to the upcoming Diwali festival and eagerly looking-forward to your holidays. Wishing you all a joyful and safe Diwali in advance.
Before we dive into the festivities, let me take a few moments of yours to present our business outlook and update you on some of the recent developments. The specialty chemical industry continues to face challenges across major end user sectors. These challenges are arising largely from weaker global demand and increased competition from Chinese supplies.
Owing to geopolitical issues, the long transit times is also hurting the industry. But among these challenges, we also see some positives, like ongoing reduction in freight rates, destocking by customers is nearly ending and bottoming of key raw materials prices is visible. We foresee the trend of weaker demand will continue through Q3 as customers are cautious about the inventory levels towards the end of their financial year. We anticipate gradual uptick in demand from Q4 and global demands to improve over the coming quarters.
Despite the current challenges, I continue to remain genuinely optimistic. We have multiple products under commercialization which will lead to a strong growth. At Tatva Chintan, we are confident in our ability to navigate these tough times with resilience, while continuing to nurture and strengthen our relationships with existing customers and also bringing in new products and new customers on board.
Allow me to provide an overview of developments in each segment of our business. Phase Transfer Catalyst. The business of PTCs continue to remain stable. During the quarter under review, we have got a large volume product opportunity with a new customer. We have completed the development of this new product in R&D. And as we speak today, the piloting of the product is ongoing. This is for a new application having ultimate end use in electronics industry. We anticipate the commercialization of this opportunity to happen in calendar year 2026.
SDAs. Weakening of demand of heavy duty commercial vehicles is impacting demands of SDAs. Such reduction in demand can be evident from the fact that in the month of September, sales of commercial vehicles in China were down by about 22% year-on-year. The corresponding figures for U.S. were down by 9% from a year ago. Sales of trucks in EU dropped by about 5% as compared to the previous year. The market anticipates a turnaround in commercial vehicle sales by early to mid-2025. The commercial supplies to the new customers have begun slowly. Tatva has done a phenomenal job in successfully bringing these new customers on board. With upcoming implementation of Euro 7 norms and anticipated recovery in commercial vehicle sales, we are supremely confident of the growth segment — of a strong growth in this segment.
Electrolyte Salts. Our customer for electrolytes for energy storage devices is in the process of stabilizing their newly established product line. The demand from the customer is anticipated to show significant growth from early 2025. The qualification process with the customer engaged in creating batteries for hybrid vehicles is advancing remarkably well. This encouraging trend suggests a strong alignment between our product and the customer’s requirements. The customer is gradually increasing the quantity of material required for their ongoing validation process and the anticipated onset of commercialization is from second half of 2025. With this anticipated commercialization of both the businesses, we expect the Electrolyte segment to start reflecting as a reasonable part of the overall revenue from next fiscal year. The development work on high purity electrolytes for the zinc battery is also progressing well. These opportunities give us the confidence that we are building a good portfolio of products having strong growth potential within this segment.
PASC. We have successfully executed the first commercial order of one of the pharma intermediates. The approval of second and third product is also progressing very smoothly. We will see gradual uptick in demand in 2025 and getting into full scale demand in 2026. The sample of fourth intermediate, the new opportunity, the fourth intermediate, is now analytically approved by the customer. The piloting of this multi-stage chemistry product is scheduled to begin post-Diwali about mid-November and to complete in early January.
I am happy to inform that we received first commercial order for the first agro intermediate to be supplied in Q4. The approval of another two intermediates is also progressing well. And we expect formal approval within Q3 or latest by very early Q4. With the growth — with the expected commercialization of these agro intermediates, we expect a strong revenue growth from these products. Our ability to maintain strong relationships with these customers and address their needs through technological and cost effective innovations provides us new development opportunities even during these challenging times.
The trial of monoglyme is running smoothly on the new pilot CFC equipment. With confidence in its performance and the safety measures implemented, we have now placed an order for plant scale equipment to ensure smooth production of this product at a larger scale. The anticipated installation and commercialization of production will begin by the end of calendar year 2025.
Regarding products with applications in polymers, we have successfully completed plant trials for one product using electrolysis technology. The outcome of this product is meeting the stringent quality requirements of the end use customer. Plant trial for the second product in this segment will begin post-Diwali. Both these products are expected to commercialize within next fiscal year.
Flame Retardants. Finally, we have some news to share on this segment. One of our large customers has finally agreed to a flexible pricing mechanism and placed the first order with us to undertake commercial scale plant approval trials. We expect to ship out this order in Q3. With four products from this segment already in our portfolio, we are confident that we are well positioned to capitalize on opportunities once market conditions improve.
Moving ahead, the work of new distillation plant has been completed. Further, the new plan to increase the production capacity now has been approved by the management, post structure design approvals, we expect to break the ground of this new plant by end of November.
Our success in using electrolysis and continuous flow chemistry has generated a keen interest in the target market which is getting us new interesting development projects. We have built a healthy pipeline of products in R&D which will provide commendable and consistent growth over years to come. We have a robust pipeline of products across various stages, like R&D, pilot level, plant scale and those under approval with customer or recently already approved. These products are poised to generate additional revenue beyond the company’s current turnover.
The recent approvals we have received from various customers highlight the trust they place in us and our capabilities. These endorsements are a testament to our team’s hard work and dedication and they provide us with a solid foundation to build upon as we navigate through these turbulent times. Our commitment to a customer-centric approach, combined with our dedication to innovation, positions us well for strong growth. We remain steadfast in our principles, ensuring that growth of our investors and stakeholders is prioritized as we navigate this period and beyond. Once again, I wish each one of you a very Happy Diwali and prosperous New Year.
Now let me hand over the proceedings to our CFO, Mr. Ashok Bothra. Thank you, all.
Ashok Bothra — Chief Financial Officer
Thank you, sir, and good evening to everyone present on our call today.
The financial highlights for the current quarter Q2 FY ’25 versus Q2 FY ’24 are as below. Revenue from operations of INR835 million versus INR967 million in Q2 FY ’24. EBITDA of INR56 million versus INR202 million in Q2 FY ’24. EBITDA margin decreased by 14% to 6.7% due to increase in COGS and other expenses by 12.6% and 1.6% Y-o-Y respectively. There is a loss of around INR7 million versus INR78 million profit in Q2 FY ’24. PAT margin was negative at 0.8% versus 8% in the same period previous year. During Q2 FY ’25, exports stood at INR508 million, contributing 60% of the revenue. The major countries include USA, U.K., China, Germany, Japan and South Africa.
The financial highlights for the current half year H1 FY ’25 versus H1 FY ’24 are as below. Revenue from operations are at INR1,890 million versus INR2,110 million in H1 FY ’24. EBITDA of INR182 million versus INR416 million in H1 FY ’24. EBITDA margin decreased by 10% to 9.6% in H1 FY ’25 due to increase in COGS and other expenses by 7.6% and 1.8% respectively. PAT of INR45 million versus INR173 million in H1 FY ’24. PAT margins were at 2.4% versus 8.2% in same period previous year.
That concludes an update on the financial highlights of the company. I shall now request the moderator to open the floor for question and answer session.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Atul [Phonetic] from ICICI Prudential AMC. Please go ahead.
Atul Patel
Hello. Hi, sir. Thanks for the opportunity. So basically, sir, just wanted to get your sense in terms of operations, various segments, etc. You have been seeing continuous decline. So just based on your interaction, how worse can things get from here? Like even from your — do you think things get materially worse in Q3 or do you think there is no further scope of any material deterioration in terms of operation?
Chintan Shah
Let me just first clarify a couple of things. Number one, the revenue which looks at about INR83.4 million, which earlier in the previous quarter was INR105 million, this INR83.4 million is actually — see basically what has happened, our goods in transit, which were in previous quarter, so quarter ending in June, which was at about INR7.1 crores has actually gone to goods in transit is currently at INR17.53 crores.
Basically as you are aware that the transit times have increased drastically because of this route issue, Red Sea issue. So the longer transit times to U.S. and to Europe is hurting. So basically, typically speaking, three weeks transit time has on an average increased if we compare an average between these two routes which is impacting this change. So ideally, we have an additional material worth about INR10.5 crores, which is on transit on the way to the customer. So now this has not been accounted in our sales as we have not yet invoiced it to the customer. So ideally speaking, we have executed orders worth about INR93 crores, INR94 crores. So technically speaking, the drop in revenue is not so drastic as it looks on these numbers.
Also, if you see the cost of materials consumed has actually from the earlier which was at about 54% levels I believe, has come down to a range of between about 50% to 51% levels. So the consumption of the high value inventory is now nearing an end. So we are seeing the improvement and coming back to better margin levels as we proceed from here.
As you ask, how bad it looks going further? I would say, it looks more or less similar in these numbers for the Q3 as we expect. And then as I said in my call, from Q4 onwards, we have commercialization of the new products beginning gradually. So Q4 onwards, we see an uptick to the sales. So Q3 would be more or less similar to the numbers what we look here or maybe little better than this. And so I feel this is the end of what worst we can see is what we are standing at as of now and now we are absolutely optimistic of scaling from here.
Also, we see two large products on the agro intermediate size which are under commercial — which are under validation with the customer as of today. We expect them to start commercially probably by February, March or latest by Q1 of next financial year. So this is going to put in a strong growth in terms of revenue numbers when this thing starts getting commercialized because these are very large opportunities. So potentially six opportunities in terms of Agro & Pharma Intermediates and two opportunities on the new polymer products. You see commercialization of all these products beginning from January until June is all these things getting into commercialization. So I think we are leaving the worst times behind us as of today and moving forward into the positive territory from here, definitely from December onwards. So from Q4 onwards.
Atul Patel
And these are, sir, export opportunities or…
Chintan Shah
Yeah. No, these are all export opportunities. All export opportunities. So the polymer products, what we have, they also have potentially a very good market in India. But currently, the customers with which we are focusing is primarily on the export market.
Atul Patel
Sure. And just on SDAs, like you had last call helped us understand that there would be some uptick in Q3 followed by Q4. But anything that went wrong, like in SDAs, we saw decline instead of a moderate growth kind of scenario?
Chintan Shah
I mean, it could have been nearly at par had we good access to the raw material availability. So that is one small part which still continues to hurt us because of, what you call it, shortage in a typical raw material which is a kind of a byproduct for an agro product. So because of the agro market being down, so the production of this byproduct is also down, resulting in poor supply situations, which is causing certain sales still into a delay mode. But honestly speaking, I would say that demand has actually shrink with a sharp shrink in the volumes of heavy vehicles. So the businesses of trucks globally has shown a sharp decline, which is leading to this kind of a shrinkage in the demands for the EV [Phonetic] where we have the main demand.
Now as I had said in my earlier calls, if I remember correctly, we have also onboarded two good customers having applications on the petrochemical side. So we are kind of trying to balance this temporary phenomena of loss in terms of volumes on the vehicle applications getting balanced by the petrochemical side. But of course, it is irreplaceable because the sales of SDAs on the vehicle application is much larger compared to that on the petro side.
Now going forward, we have — as I said, we have already onboarded very large three interesting customers. We are strongly footed into our existing customers. So we have now a good portfolio of customers on hand to cater to. And with upcoming Euro 7 application, which potentially should start commercializing, it is already into a commercialization phase slowly, but it should show a real strong foothold of Euro 7 application beginning from nearing mid to end of 2025 as it goes actually applicable from 1 January, 2027.
So we see that this is also kind of potentially by Q3, end of Q3, then we should see a systematic uptick in terms of volumes coming in. And I’m absolutely sure, there is not a single percentage point of doubt that this sector will show phenomenal growth in coming years. There is no doubt about that.
Atul Patel
Sure, sir. Thank you.
Chintan Shah
Thank you.
Operator
Thank you. The next question is from the line of Chintan Patel from Abans Investment Managers. Please go ahead.
Chintan Patel
Thanks for the opportunity, sir. Sir, in the previous interaction, you have guided the top-line growth around 20%, 25% for the year. So what would be your revised guidance? Are you — you are stick with your guidance?
Chintan Shah
So the numbers what reflects in H1 should potentially reflect or slightly better in H2. So there is definitely a downward revision in terms of revenue numbers for this current year. But this should get compensated definitely in the next financial year considering the market conditions remain same. But still we will have a lot of new revenue pipelines coming in. So considering that market continues to remain so bad, still we are adding a lot of new products into commercialization. So this will suffice and definitely fulfill the gap that we see in terms of growth. So this new product will pitch in and give you a decent growth in the next fiscal year.
Chintan Patel
Okay. And sir, regarding this SDA, so how is the price realization trend and our [Indecipherable]. In last quarter, you have said that it is a bottom level. So…
Chintan Shah
Yeah. So now the prices have very much stabilized and practically not only on the raw material for SDAs, but generally speaking, most of the raw materials have kind of stabilized or I would say right now they are stable at the bottom level. So my strong belief is there is no going down further from here. The only way it can go is move up. So they are really at unrealistically low levels as of today, beating probably records of last 20 years. And there is no further possibilities of any further reduction, it has to go up from here.
Chintan Patel
Okay, understood. And for the new distillation plant, what kind of the capex required?
Chintan Shah
The estimated capex is about INR104 crores, INR105 crores. So we were planning at INR70 crores. But then we went into utilize the maximum available plot area so that we don’t have to end up into a next phase of construction because this is the last plot available on this site, on the existing Dahej site. So we went up with whatever maximum is possible. And this leads to a roughly about capex on this particular plant about INR105 crores.
Chintan Patel
INR105 crores, okay. And the last one, just need a clarification. The trial is ongoing on a monoglyme and this monoglyme will commercialize end of the calendar year ’25. That is right?
Chintan Shah
Correct, right. Right now we are successfully piloting at a 10 kg catalyst level. We have our equipment for 100 kg catalyst level ready except for one cooling system is missing which is expected to be delivered roughly in beginning of January. So as soon as we receive this cooling system, from 10 kg catalyst scale, we have moved to the 100 kg catalyst scale. And we have already placed order for our final equipment with 1,000 kg catalyst capacity. So that we expect somewhere by about June of next year and then commercialization of that equipment.
Chintan Patel
And what is the market size for the monoglyme?
Chintan Shah
So the equipment which we are installing will have a capability to produce roughly about 2,000 metric tons. So this is valued at about — roughly at about $4 a kg.
Chintan Patel
Okay, okay. And what is the market size globally?
Chintan Shah
I estimate roughly at about 15,000 to — 12,000 to 15,000 metric tons a year.
Chintan Patel
Okay, okay.
Chintan Shah
So this is multiple application areas. One is into the pharmaceutical application where it is being used as a solvent and it also has applications into your batteries, so lithium batteries, where it is used as a catalyst — sorry, as a blending solvent within the electrolyte system.
Chintan Patel
Okay, understood. And sir, several players are now set-upping in their electrolyte plants or electrolyte salts. How do you see the industry in the electrolyte salts? And how the competition is shaping out in this industry?
Chintan Shah
So most of the announcement what we hear as coming in from the Indian players are all involved with the lithium battery. So the place where we are involved is definitely absolutely nowhere close to the lithium battery application. We are into the super capacitor batteries and the zinc battery application. So here we don’t see any competition in both of these two segments within India. We have two prominent competitors coming in from China. And we are the only player coming in from India. So practically speaking, three large suppliers where we are one of them.
Chintan Patel
Okay. Understood, understood. Okay. Thank you, sir.
Chintan Shah
Thank you.
Operator
Thank you. The next question is from the line of Nirali Gopani from Unique PMS. Please go ahead.
Nirali Gopani
Yeah, hi. Thanks for the opportunity. Chintan, sir, just one clarification on the numbers that you gave. So if I adjust for the goods in transit of worth of INR10 crores for the quarter, then ideally we are at a very good margin for the quarter. Is that understanding right?
Chintan Shah
Basically, we have additional goods in transit compared to previous quarter at INR10.5 crores the cost of this material. So the cost of production of this material is already being reflected in these numbers. So estimating, let us say, it is holding the similar cost of material consumed at about 51%, then technically we are looking at an additional EBITDA of about INR5.25 crores.
Nirali Gopani
The question that I’m asking is that we have recorded the cost for the goods in transit, which are month of additional…
Chintan Shah
Yes, yes.
Nirali Gopani
So I just have to add that much to the revenue and I don’t have to add anything to the cost, right?
Chintan Shah
Not only the revenue, cost of material has — because this material right now is on our book technically as an inventory as finished goods. So basically, it inflates the inventory. So it has consumed all the costs. So raw material cost is still not consumed. So theoretically, if it is INR10 crores of goods in transit, we are looking at INR5 crores yet to be booked into books as profit.
Nirali Gopani
Okay, okay.
Chintan Shah
Rough number.
Nirali Gopani
Yeah, yeah. No, that is fine. And second on this SDA part. So the fall that we have seen Y-o-Y and Q-o-Q is basically all volume decline and no price decline or there is a further price decline also?
Chintan Shah
No, no, now prices have absolutely stabilized. And honestly speaking, I don’t see any further potential of any further price declines. There should be an uptick from here because absolutely these prices are unrealistically low. So unbelievably low pricing of raw materials which doesn’t even justify — potentially doesn’t even justify their raw material cost, because as you know, one of the key SDA, for that we have backward integrated to even go to produce the raw material to give a security of supply to the customer. And that is how we onboarded one of the largest customer this year with this argument. So we know what is the cost of production. And we feel there is no sense in making this product, it is available cheaper. Compared to our raw material cost, it is available much cheaper if we import the product. So that is the situation.
Nirali Gopani
Right. And the capex number that you gave was of INR100 crores. So that would be incurred in this year or that is for the plant which is going to be operational in the month of October, like in the current month?
Chintan Shah
So we are breaking ground for this plant. So we will start construction post Diwali and this will become operational after one year, so November of next year. November of 2025.
Nirali Gopani
Okay, okay. That’s it from my side.
Chintan Shah
So basically we are gearing up for — so we have this two large agro products in their qualification. And currently, we can only make certain volumes so that we will continue to make in our existing facilities in next financial year. But the potential of that product is even further higher. So that is the reason why we are starting to build this plant considering the size and the volume of [Indecipherable]
Nirali Gopani
Right, right. And according to you, if the revenue picks up in the, say, fourth quarter, we should see some margin improvement going ahead?
Chintan Shah
Fourth quarter will not be a very strong improvement in terms of revenue, but definitely from Q1 it will. So fourth quarter — ending of fourth quarter, we should see some commercialization of this product and of course a smoother or a regular commercialization, if you say, a full quarter reflection of this new product should be visible in Q1 of next year.
Nirali Gopani
Okay. Fair enough. Yes, that’s it for my side. Thank you.
Operator
Thank you. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Sanjesh Jain
Good evening, sir.
Chintan Shah
Good evening.
Sanjesh Jain
Thanks for taking my questions. First, just wanted to understand, last two years has been where we have struggled and we haven’t seen any material commercialization of the new products or any material addition to the revenue from the new product. Now we are very confident that CY ’25 will be first year where we will see commercialization and hence the revenue growth and we are also committing the capex. Even In the previous cycle, we committed another INR250 crores of capex. The results haven’t been any heartening for last one and a half year. What gives you confidence that the things will turn around very sharply in CY ’25?
Chintan Shah
Sanjeshji, see, typically we are talking of eight products successfully done on R&D scale, successfully run on pilot scale, approved by the customer. Most of these products, I believe about five products already run on plant scale approved by the customer, two products produced at plant scale under approval with the customer and two products currently running success — so approved by at pilot scale, but running successfully on plant and now going to be delivered to customer for approval. So none of the things are like ifs and buts. So most of the things are either already approved at the plant scale or they are approved at pilot scale and under evaluation of the plant scale material or currently being produced at our plant scale.
So considering the quantum that we are looking at as forecasted. Of course, I can understand considering the agro market as of today. There could be a potential up and down in terms of volumes what the customer commit, may be 20%, 30% lower than that may end up. But eventually, this is the kind of volumes we are looking at simultaneous commercialization of seven to eight different products in different segments, pharma, agro and polymer. So we will need the space to produce, otherwise this doesn’t at all make any sense if we are not able to fulfill the customers. And each of these products is coming in with something or the other which is having its own specialty in terms of technology. So it is very important for us to even demonstrate the capabilities going on a commercial scale with these products and these new technologies.
Sanjesh Jain
Fair enough. Was it also mean that we overestimated the approval process or we didn’t realize it will take longer than what we thought in terms of bringing this product because we have been talking about this product now for almost 18 months. And we also commercialized this entire new plant in Dahej in the month of April, which is already nine months into the operation. Were we — did we go wrong in the timing estimates of the products?
Chintan Shah
We didn’t go wrong in timing estimate of the product. Where we got wrong is we could not estimate that the markets would go into such a direction. And unfortunately, for us, I’m not just talking generally about the chemical industry, I’m particularly in particular talking about purpose income. So if you see from where we theoretically generate maximum revenues, from which segments, one is the automotive segment from which we have our SDA revenue coming in. We have the agro segment from where we have a lot of revenues coming from the — for the Phase Transfer Catalyst as well as for the PASC segment. And the third potential of large revenue is our business with the polymer customer.
And unfortunately, in last two years, all these three segments have been performing really, I would say — I mean, on the global market, Indian markets have performed little differently, but on global scale or the large innovators, I would say, because we are working — our customer base is mainly the large customers, large MNC companies. And these have been definitely struggling in terms of — see real competition from the Chinese supplies is not directly a competition with Tatva Chintan. But these Chinese supplies competition is actually directly with our customers and they have been struggling a bit in certain products and demand and which has hurt us in last two years.
So it is not that we have gone or estimated wrong, but the kind of market that has evolved in last two years. And predominantly, we see that automotive, agro and polymers all three have suffered in last one and a half, two years. And that is what is abnormally showing a deep deflection on our numbers for growth as well.
Sanjesh Jain
Got it. Got it. Now the follow-up on the new products what we have spoken about. First on the agro side, three products and pharma side three products, have we received the POs? And if so, what is the opportunity you see immediately and for next three years?
Chintan Shah
Immediate opportunity if we talk in this financial, it is not really big because these are just onset of one pharma product we have executed order of roughly I believe about INR8 crores and we expect INR6 crores to 8 crores revenue coming from that potentially in the first quarter as well. In terms of agro, the first product which is commercializing and we have to make surprise in Q1 — Q4, so January to March quarter. So that is roughly at about — can you give me a calculator? So it is roughly at about INR8 crores, INR7.5 crores to INR8 crores of execution happening in the Q4 of this fiscal year.
But if you say composite what we looked at three pharma and three agro products put together having revenue close to about, I would say, close to at the lower tail estimate between INR80 crores to INR100 crores in terms of revenue for next fiscal and potentially doubling that between INR200 crores to INR250 crores of revenue potential going in the next financial year, so FY ’27. So this is the size of opportunity which we are looking at which the customers are committing. Let us see how things evolve from here. But I am pretty confident this has to move on.
These are existing products for the customer where we are bringing in value to them in terms of putting this product through new technologies or bringing cost benefits to them by using a different technology than the conventional one. So it’s a win-win situation for us as well as for the customer. So there is no way — things perform well if the products perform well on this plant and get validated there is no reason why customers should not buy from us.
Sanjesh Jain
Got it. And when you say this INR80 crores to INR100 crores next financial year and INR200 crores to INR250 crores, you are talking about all the pharma and agro put together?
Chintan Shah
And now I am trying to be very conservative. The way we have been talking and things have been evolving in last few quarters, I am trying to be very conservative in what I am saying.
Sanjesh Jain
Got it. Got it. And on the last question on the electrolyte side, you mentioned that your customer is stabilizing the plant. So how does that segment which has been subscale for us, how is it turning in next fiscal year?
Chintan Shah
So we have already started — initiated commercial discussion with this customer. And we expect to conclude this probably during Diwali time or potentially by mid of November they shall get concluded. And this is definitely a very exciting opportunity for us. The product we have been supplying on smaller scales when they are using different technology in production and now they are advancing their production capability. So with this, the volume what their demand is going up significantly higher. So we estimate a few million dollars in terms of revenue coming from this segment. $2 million to $5 million in terms of revenue we expect to come from this segment.
Sanjesh Jain
Got it. Got it. And our cost base should not grow exponentially, right, because the plant is fully commercial? So a significant portion of the gross profit should move to EBITDA and PBT?
Chintan Shah
Exactly. So basically, if you see the numbers of this quarter, so I would say — I mean, this is a very negligible EBITDA, I would say. But this is — theoretically at this revenue numbers, we are consuming all the cost. So anything going up from here. So we don’t require more manpower to handle this. we don’t require additional power to go on from here. Everything is running smoothly at this cost level. So except for the direct cost in terms of freight or packaging besides the raw material. So theoretically, when you are increasing the revenue from here, you are directly hitting the EBITDA numbers.
Sanjesh Jain
Got it. Got it. Great. Chintan Bhai, thanks for answering all those questions patiently, and best of luck for the coming quarters.
Chintan Shah
Thank you.
Operator
The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead.
Rohit Nagraj
Thanks for the opportunity. So first question is, for the current set of products that we are manufacturing, what would be the overall size of the market and what is our market share? And based on your understanding, what could be the growth rate? And second alike question to that is, the new products which are currently in pipeline and which will get commercialized over the next maybe two, three quarters, what is the potential size of that market and what is the market share that we are targeting in a particular timeframe? Thank you.
Chintan Shah
In terms of segments, if we say, we can define this — the question only for three segments, which is Phase Transfer Catalyst, where we believe we in terms of export market, we handle roughly about 25% to 30% of the volumes. So that is the market size what we foresee.
In terms of SDAs, we typically are at about 12% to 15% in terms of market share, probably between 15%, 16% is my estimation. So there are no definitive numbers by which I can very strongly say, but this is a very fair estimation based on our market information or market intelligence. So we are at roughly about 15%. The market size is nearly 7 times of what we are catering to. And this market size is going to even grow, get bigger by nearly 50% once the Euro 7 kicks in. So we still have a very decent opportunity of growth in this segment.
And in terms of electrolytes for super capacitors and the zinc batteries or the energy storage devices, practically, we are hardly selling anything. So all these are into conceptual stage. And now one of our key customer is commercializing with very immediate effect it’s going into commercialization. And we are already expecting few million dollars in terms of revenue coming from one single customer on this. And this customer is expecting — what they are forecasting. I’m not sure whether how far they will perform or not. But the estimated — what they are estimating in front of us is 4 times of today’s number within next four years. So something which is not absorbable, but these are the kind of forecasts that they are giving in. So that is the market potential coming in from the energy storage system. And this I’m talking for one single customer. We are already working with another customer where our product is now fully up to. But still commercialization is not visible. Probably by end of 2025 what I am expecting some things to start to move in that area.
And in terms of super capacitors, now these things are into commercialization phase. So our key customer, the largest customer with which we are working right now is having this application into automotive battery. So it’s kind of a ancillary battery along with the lithium battery for the electric vehicle. So see the concept how it works is the super capacitor batteries get recharged when you apply brakes and then this recharge continuously being recharged batteries, constantly deliver energy to the lithium battery so as to back-up the number of hours for which it can operate efficiently. So increasing the life of lithium battery, not increasing the life, but increasing the performance of the lithium battery is actually the function of the super capacitor battery. So that is how the hybrid concept is coming in.
Now if you know, there are also certain concepts of hybrid car where they say you don’t have to connect it to power. So these are auto-chargeable hybrid vehicles is what is the new concept coming in. So it is nothing but having an application for super capacitor battery where the kinetic energy generated during the brake-in keeps on charging the other battery, whether it be your lead battery or whether it be your lithium battery or any form of battery. It keeps on recharging the battery continuously. So now this is a very interesting application. I don’t have — honestly, I don’t have the potential numbers. Again, what the customers forecast is very difficult to digest. But this is again running into few million dollars of opportunity for us from this single customer in this particular application.
Now in talking in terms of pharma or agro intermediate, we are looking at one or two potential customers of particular product which we have developed for them. I mean, it’s a generally available product, but we have developed using either electrolytic technology or developing our own catalyst to run the continuous progress. And looking at this potential, as I said, we are looking at an opportunity between INR2 crores to INR300 crores in terms of revenue. And this we are looking at only one or two customers for each of the products. The market is wide open, applications are really big and these are very commonly being used agrochemicals produced by number of players now because a lot of them have already been off patented. So there’s a large market potential to cater to. But right now, we are only focusing and working and getting validated for particular customers which are already our existing customers for different other products.
Polymers is where — as you know, we have catalyst for polymerization as a part of our PASC business. Then we have this different segment which we call as brominated flame retardant where we work with again the polymer customers. And now we have these new products in the polymers, a different type of catalyst for the polymers. And this is again a very big segment running into few thousand tons. But we don’t — right now we are just focusing at 500 to 1,000 tons in terms of volumes to cater to. So this is again another product area where you can see a very large demand potential. But that’s not what we are forecasting or that’s not what we are focusing right now on. Right now we are just working with one particular customer asking for few hundred tons of this product and then this is replicable and reproducible for other customers as well.
Rohit Nagraj
Sure. Thanks for the elaborated answer. So second question is the upcoming capex that you talked about. Once this particular leg of capex is done, what is the next cycle of capex that will start picking? I mean, just to understand whether this capex will be sufficient for the next two, three years before we go on for the next leg of capex?
Chintan Shah
No, no. So this capex is being done at our existing site at Dahej SEZ. And we have another piece of land exactly similar in terms of size of our Dahej plot. So this is in a normal tariff area. So it’s not in an SEZ, but it’s in a domestic tariff area, but within the Dahej industrial area. So this is where we intend to — so we have already started doing master planning and designing activities for that plot. So as we see the markets to improve and as this commercialization we see a success is setting in, I’m pretty sure we are going to run out of capacity within next one, one and a half years even from the new capEx what we are intending to. So we will not wait for things to turn around. Potentially within next six to eight months, we would have to open up the construction for the new site as well. And that is where we are looking at a capex of about INR200 crores to begin with as a part development of the project of the land.
Rohit Nagraj
That’s helpful. Thanks a lot, and that’s all.
Operator
Thank you. The next question is from the line of Krishnan Parwani from JM Finance. Please go ahead.
Krishnan Parwani
Thank you for the opportunity. Just one clarification from my side. I think you mentioned that the flame retardants category is seeing good traction from the customer. So what has changed given we see that the bromine prices continue to remain subdued? That’s part one of the question. And the second part is, from where would you procure bromine? Would you be procuring domestically or would you be importing the same? Thank you.
Chintan Shah
Krishnan, we have been — so this is our first target customer with which we have been talking since last two, three years. And it’s a very large global multinational customer based in Europe. So that is where we are going to cater to the demands. So finally, after a lot of convincing, they agreed on a cost plus basis. So we have fixed up a pricing mechanism irrespective of where the market price is, because realistically speaking, today the level at which the market prices is, it is absolutely an unrealistic, unviable option to even think of producing these items. It is so low.
So considering the raw material prices, it is absolutely unviable to even think of producing this flame retardants right now. But what we have now been successful in negotiating with this customer is on a cost plus basis. So this is the price of X raw material, this is the price of bromine and then this is my conversion cost and margin on which we will sell. So as the pricing changes plus or minus, the price of the product keeps on changing. So that is how we intended always to do it that way because of the fluctuations and the situation or a severe drastic competition or drop in prices.
And now finally, after two, three years, customer has agreed to induct us as — potentially I feel what has changed, I feel is the geopolitical situation within the Israel area, Israel-Jordan area, which is actually the key producer of bromine and brominated flame retardant production is highest within that geography probably. This is just my assumption. I am not sure whether that is really impacting which has pushed the customer to talk to us. But eventually, after so many years, we have been successful in convincing the customer to go on a cost plus basis.
Krishnan Parwani
Okay. Because I think…
Chintan Shah
So we don’t intend to make abnormally high profit margins. If the markets turn around, things may look differently. But this is a much safer way to start commercialization, at least to start commercialization of BI.
Krishnan Parwani
So the margins would be lower than the current company margins probably or how would that be?
Chintan Shah
These are like more similar or little. So this would be definitely a lesser margin even than the PTC, but not too bad. Considering the plant is getting occupied, your overheads are being absorbed. So this is definitely a doable thing.
Krishnan Parwani
Okay. And I think — sorry, just one clarification on the point that you mentioned that probably Israel-Jordan situation is helping us. But I think one of the bromine producers, they mentioned that they have not seen any benefit from that situation in Israel. So I was just wondering, where is the disconnect or what are we missing here?
Chintan Shah
So I’m just — I said I’m just assuming. Logically I think that could be a matter of concern for the customer. Whether it has really not impacted the market, that may be true, but probably that has impacted the psychology, the way the customer thinks. So potentially that is the reason why they might have come to us that we have access to bromine in India, we can produce it in India and we can export it to Europe. Not having any kind of a traction between the conflicted area.
Krishnan Parwani
No worries, sir. This is helpful. Thank you so much, and wish you a very Happy Diwali.
Chintan Shah
Thank you. Same to you.
Operator
Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Ashok Bothra sir for closing comment. Please go ahead, sir.
Ashok Bothra
Thank you. On behalf of management of Tatva Chintan, thank you for joining us on our earnings call today. We hope we have been able to majority of your queries. You may reach out to Mr. Ajesh Pillai or our Investor Relations partners, E&Y, for any further queries that you may have and they would connect with you offline. Once again, on behalf of Tatva family, we wish Happy Diwali to all of you. Thank you, Mr. Sanjesh Jain for hosting our call. Thank you.
Operator
[Operator Closing Remarks]