Yasho Industries Limited (BSE:541167) Q4 FY23 Earnings Concall dated May. 03, 2023.
Corporate Participants:
Parag Jhaveri — Managing Director & Chief Executive Officer
Yayesh Jhaveri — Whole Time Director & CFO
Analysts:
Nachiket Kale — Investor Relations, Orient Capital
Keshav Kumar — RakSan Investors — Analyst
Asha Batri — Omkara Capital Advisors — Analyst
Anupam Agarwal — Lucky Investment Managers — Analyst
Mitul Mehta — Lucky Investment Managers — Analyst
Manish Gupta — Solidarity — Analyst
Manan Shah — Moneybee Investment Advisor — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q4 and FY ’23 Earnings Conference Call of Yasho Industries Limited organized by Orient Capital.
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.
I now hand the conference over to Mr. Nachiket Kale from Orient Capital. Thank you and over to you.
Nachiket Kale — Investor Relations, Orient Capital
Hi. Good evening, everyone. Thanks for connecting to Yasho Industries Q4 and FY ’23 business concall. Today we have with us from the Management, Mr. Parag Jhaveri, Managing Director and CEO; Mr. Yayesh Jhaveri, Whole Time Director; and Mr. Deepak Kaku, CFO.
Before we proceed with the call, I’d like to give a small disclaimer that the conference call may contain some forward-looking statements, which are based on the beliefs, opinions, and expectations of the Company as on date. A detailed disclaimer has also been given in the Company’s Investor presentation. I hope everyone had a chance to go through it, which has been uploaded on the Stock Exchange today.
I would now like to hand over the call to the Management. Over to you, sir.
Parag Jhaveri — Managing Director & Chief Executive Officer
Good evening, everybody. I would like to extend a cordial welcome on behalf of Yasho Industries Limited to everyone for joining us on our call today. I hope everyone had an opportunity to go through the financial results and investor presentation, which have been uploaded on Stock Exchange and on our Company’s website.
Let me give you a quick overview of the chemical industry and the potential it offers to us. Also, the current situation is uncertain. The underlying strength of the Indian economy have remained robust. However, it’s a challenging global environment. The long-term prospect remains positive, recent unpredictable across have — altered the overall business approach and many major multinationals company now seek more dependable and sustainable partners, such as Yasho to ensure uninterrupted operations.
We remain committed to holding the highest standard quality while consistent styling for progress. We are proud to have solved as our prostate supplier for over two decades, having an establishable presence in more than 50 countries across the global, including Europe, America, Middle East, and Asia.
Our overall sales contribute over 66% of our revenue, which is a testament of our unwavering commitment of excellence. Our unwavering focus on industrial chemicals has promising results. And we formally believe that this sector holds significant potential for our business to meet the demand of our valued customers. We will continue to prioritize research and development, aiming to create cutting-edge products of the highest quality.
Regarding our official performance, we are proud to report that we have been operating at nearly filled capacity. But in the last quarter, it has been a little bit down benefiting from a positive product mix. Our existing and the prospective customers have demonstrated an increase in our offering, giving us confidence in our ability to grow the business while keeping our medium to long-term objective insight.
Overall, we are optimist about our business trajectory and we are accepted about the future pursuit of our Company. We remain committed to create long-term value for stakeholders and look forward to continuing growth in the coming years.
As mentioned previously, we have made a significant investment in the Greenfield project in Pakhajan, Dahej to expand our capacity in industrial chemicals aimed at satisfying increasing customer demand. This expansion will add approximately 17,000 metric tons per annum for multiple capacity to saw various industries.
We have incurred a total capex of around INR180 crores up to March ’23. Moving forward, we intend to focus on a few products from our existing portfolio. Following this expansion, we can accomplish total capacity will be approximately 29,000 to 30,000 metric tons per annum. Our success in capturing market share in value and in chemicals have been major contributor to our growth and profitability in recenters.
We attribute this accomplishment to our ongoing dedication to announcing our technical capabilities and R&D efforts.
I will stop here and now I am happy to take off the questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Keshav from RakSan Investors. Please go ahead.
Keshav Kumar — RakSan Investors — Analyst
Hi, good evening, sir. Sir, what are the expected utilization at Pakhajan for FY ’25 and ’26, and how long to go to full scale?
Parag Jhaveri — Managing Director & Chief Executive Officer
Sir, we are expecting for ’25, about 65% utilization. We hope that we can achieve that and FY ’26, which will be achieved 85% to 90% utilization.
Keshav Kumar — RakSan Investors — Analyst
Okay. And sir, so whatever capacities we are adding for these, we wouldn’t require much business development efforts, right? This would be for predicated demand by our existing clients, right?
Parag Jhaveri — Managing Director & Chief Executive Officer
Yes. To an extent, that’s correct. The customer has shown a keen interest for the product, but we have to produce in the plant and then we have to do the revalidation. So if once you change the manufacturing location, it has to revalidate.
Keshav Kumar — RakSan Investors — Analyst
Okay. But the demand is already there?
Parag Jhaveri — Managing Director & Chief Executive Officer
Yes.
Keshav Kumar — RakSan Investors — Analyst
Okay. So sir, are you getting any further requests to scale beyond Phase 1?
Parag Jhaveri — Managing Director & Chief Executive Officer
We are not looking into that. Our first focus is to start this production first, stimulate it, and then we’ll think about it. It’s too early to talk about that.
Keshav Kumar — RakSan Investors — Analyst
Okay. But the subsequent scale-ups will be in the same Pakhajan facility because we have a piece of land over there, right?
Parag Jhaveri — Managing Director & Chief Executive Officer
Absolutely. As you know, we have 42 acre land. We are only consuming about 50% of the land today. So we will be having a 50% additional land to go for the future expansion.
Keshav Kumar — RakSan Investors — Analyst
Okay. So sir, just lastly, so the asset turns forecast is about 1.5x. So…
Parag Jhaveri — Managing Director & Chief Executive Officer
For the Pakhajan, yes, that is a 1.5 purely. It is a Greenfield project and approximately INR180 crores that is spent for the land and land building development of the site. Also, a couple of infrastructures have been created looking into the full project. We cannot do the partial, like actual treatment plant or the utility block. So the additional INR50 crores to INR60 crores has gone there. So effectively only, we are spending about INR150 crores on the plant and machinery.
Keshav Kumar — RakSan Investors — Analyst
Okay. So any subsequent scale-ups will be in line with the current asset turns we have?
Parag Jhaveri — Managing Director & Chief Executive Officer
Yes.
Keshav Kumar — RakSan Investors — Analyst
Okay. All right, sir. That’s all for me. Thank you, sir.
Parag Jhaveri — Managing Director & Chief Executive Officer
Thank you, Keshav.
Operator
Thank you. [Operator Instructions] We have our next question from the line of Asha Batri [Phonetic] from Omkara Capital Advisors. Please go ahead.
Asha Batri — Omkara Capital Advisors — Analyst
Sir, I wanted to ask why is the cash flow low this year? Even last year, it was low.
Parag Jhaveri — Managing Director & Chief Executive Officer
What do you mean by low, Asha? Hello? Hello?
Operator
Ms. Asha, you’re unmuted. Please speak. We are unable to hear you. I’m sorry. She has kept the call on hold. [Operator Instructions] We have our next question from the line of Anupam Agarwal from Lucky Investment Managers. Please go ahead.
Anupam Agarwal — Lucky Investment Managers — Analyst
Hi, sir. Good afternoon, and congratulations on good numbers. Sir, firstly wanted to ask you, if for the quarter and for the year, can you help us with the volume growth that happened?
Parag Jhaveri — Managing Director & Chief Executive Officer
Well, for ’23, we have — in a volume, there was a deep in the volume, about 9.5%. Volume deep was there compared to the last year. And when compared to ’22, compared to ’22, ’23, there was a deep of volume of 9.5%.
Anupam Agarwal — Lucky Investment Managers — Analyst
This is for the full year. Full year, we’ve grown at 10% volume deposed minus 10%?
Parag Jhaveri — Managing Director & Chief Executive Officer
We’ve grown by almost 10% in the value terms. We’ve grown by about 10% in volume. This could be achieved because of the better product mix. What we have investigate and the — we put into action our plan very quickly. Once we realize the certain products are slowing down, we move to some different products. Hello?
Operator
We’ll move on to the next question from the line of Mitul Mehta from Lucky Investment Managers. Please go ahead.
Mitul Mehta — Lucky Investment Managers — Analyst
Good evening, Parag Bhai. Congratulations on a very good operating results.
Parag Jhaveri — Managing Director & Chief Executive Officer
Thank you, Mitul.
Mitul Mehta — Lucky Investment Managers — Analyst
Are you Parag, right?
Parag Jhaveri — Managing Director & Chief Executive Officer
Yeah.
Mitul Mehta — Lucky Investment Managers — Analyst
Congratulations on a very good operating number, sir.
Parag Jhaveri — Managing Director & Chief Executive Officer
Thank you, Mitul Bhai.
Mitul Mehta — Lucky Investment Managers — Analyst
Understanding about the loop market and the opportunity it provides to us for the next two to three years in terms of the product pipeline. So each of these products, if you can share how big is the addressable opportunity value-wise or volume-wise, and which are the companies who will be sort of competing as not in the — if not in the Western world, in the — in Asia, particularly China, are there any comparable companies? So can you just elaborate on this part?
Parag Jhaveri — Managing Director & Chief Executive Officer
Okay. We are getting into the — as you know that our expansion is more focused for the industrial segment that is lubricant, rubber, and specialty segment. The addressable market for the Yasho’s product are in the value terms of about 10 million — 10 billion to 12 billion for the lubricant, about 5 billion to 6 billion for the rubber, and about 0.5 billion for specialty.
We have a number of product which has a potential of a couple of 1,000 metric tons, and we are just coming for a fraction of that. So there’s a huge potential. A couple of places we got initial approval. Now they’re waiting for our plan to start. Till that they don’t onboard because they are large customers and they will be onboard only once we give a product from a new plant.
Operator
Mr. Mehta, does that answer your question?
Mitul Mehta — Lucky Investment Managers — Analyst
Can I ask one more question?
Operator
Please go ahead.
Mitul Mehta — Lucky Investment Managers — Analyst
Yeah. Sir, can you hear me?
Parag Jhaveri — Managing Director & Chief Executive Officer
Yes, sir.
Mitul Mehta — Lucky Investment Managers — Analyst
So once you start your new plant, Dahej, what kind of product mix are you looking at between lube, rubber chemical and specialty chemicals? Will it be most used towards lube? And just to understand the scale, you said that the opportunity is very large for the lube market. Each of these products, can they be as high as 10,000 metric tons, 15,000 metric tons? I mean, is that the kind of scale are you looking at?
Parag Jhaveri — Managing Director & Chief Executive Officer
Yes. I think we are looking into that kind of sophistication. We have a fairly large product. I think a couple of product has the potential for more than 100,000 to 200,000 requirement. And we are just coming with a small capacity here as to test it. And then once we get approval, we’ll expand further.
Mitul Mehta — Lucky Investment Managers — Analyst
How much time does it take for you to get the approval for these products?
Parag Jhaveri — Managing Director & Chief Executive Officer
We already got a couple of — see, we — lot of places we already approved in your supply. We have the product. But once you change the logo, the manufacturing site, we need to revalidate it. It don’t go for an exchange we approved, but it do take a time, three to four months. So that’s we are not giving any guidance for this year or real — the operational income from Pakhajan, we are only considering whatever we grow will grow in Vapi.
Because we know that the — once we start the commercial from Pakhajan, we need to submit the sample, get approval, customs will come and audit the plant. So we intend to complete all this process from November ’23 to latest by our March ’24. And the sales sample will happen from ’24 onwards.
Mitul Mehta — Lucky Investment Managers — Analyst
We expect some output in Q4 of this year, or we should be only budgeting next year?
Parag Jhaveri — Managing Director & Chief Executive Officer
I think we should budget only for next year, not this year. This year, what will happen will become volatile for us, not only for us, but for everybody. Real revenue starts from ’24, ’25.
Mitul Mehta — Lucky Investment Managers — Analyst
Once we scale up the Phase 1 capacity, our next round would be largely Brownfield. So in that case, what sort of investment would you then incur on the Brownfield for the next phase? Just to get some ballpark understanding. I know it’s a little early, but just to understand the capital intensity of your business.
Parag Jhaveri — Managing Director & Chief Executive Officer
Well, see, the number one in the — currently in a Greenfield, we are almost committed to INR250 crores for a land building development, creating infrastructure necessary to take care for those entire projects. That is [indecipherable] plant is taken care not only for the tourist needs, but the need what we might have after five years. Because as for the end of the clearance, whatever we saw, we have to create an infrastructure for that.
So that utility blocks, everything has been created to take care of the future needs. So the going forward, I can say that if I put another INR150 crores, INR200 crores, so we can have a big turnaround on that.
Mitul Mehta — Lucky Investment Managers — Analyst
You’re saying INR150 crores for the similar capacity. So let’s say Phase 1, 17. So if you want to put up another 17,000 tons, you will need about INR150 crores.
Parag Jhaveri — Managing Director & Chief Executive Officer
I’m not sure on that. So it’ll be too early to get into that mode. But we’ll be getting that one only by the beginning of ’25 once we see that the capacities are really renting up the way we anticipated. So any decision on Phase 2 will be taken only by somewhere in ’25. Looking at the numbers and how do — how do we look?
Mitul Mehta — Lucky Investment Managers — Analyst
Parag Bhai, thank you very much, and wish you all the best.
Parag Jhaveri — Managing Director & Chief Executive Officer
Thank you very much.
Operator
Thank you. We have our next question from the line of Asha from Omkara. Please go ahead.
Asha Batri — Omkara Capital Advisors — Analyst
Sorry, sir. So the question is why is the cash flow low this year? By I mean that meant is why is the cash flow cum operation to EBITDA convergence only INR35 crores were — of INR111 crores of EBITDA was converted?
Parag Jhaveri — Managing Director & Chief Executive Officer
Well, you know that the last two quarter we had a challenge. We had lots of high inventory line we thought. So we need to get off with that and still we are holding reasonably high inventory as compared to our usual standard in this March month. Mainly because a lot of our customers in the Western world has postponed orders or — postponed or canceled orders. And we are producing the specialty chemicals.
We cannot dictate our terms. But when we are buying the raw material, we are buying as a commodity and we don’t have a choice, but to another contract, what we assigned it, and then what we have communicated. it. So we have more inventory, also the high-cost inventory. So as we were able to pass all the cost before two years or before 18 months to customer and the price goes up, the same speed we also [indecipherable] pass on the price drop and when you have a price drop or when you have a deflection, not inflationary pressure, so your cost of the selling price goes down, but your incoming volume was intact, but still despite all this happened, we could maintain our overall margin on our profitability.
Asha Batri — Omkara Capital Advisors — Analyst
Okay. Got it. Thank you.
Operator
Thank you. We have our next question from the line of Keshav from RakSan Investors. Please go ahead.
Keshav Kumar — RakSan Investors — Analyst
Yeah, sir. So with the Pakhajan, we set our plan is to scale the already logged-in products to higher quantities. So are we forcing any improvement in the working capital cycle as our cost basket would consolidate with fewer molecules driving a higher scale?
Parag Jhaveri — Managing Director & Chief Executive Officer
I don’t think we will be able to achieve that. But I know this year, we’re a little stretched due to the high inventory line with us. We will be comfortable at about 110 to 120 days for working capital cycle.
Keshav Kumar — RakSan Investors — Analyst
Sir, I mean, after Pakhajan kicks in, so FY ’25, ’26?
Parag Jhaveri — Managing Director & Chief Executive Officer
We do expect little stretching because now we are going to deal with the much larger customers and they have their fixed payment and we can alter that. When we work with smaller customers, we can dictate. When we are working with a larger organization, we dictate the terms. We don’t. Okay, sir. So that’s a little — it is also the reality here.
Keshav Kumar — RakSan Investors — Analyst
Okay. So that’s why we are guiding for little higher margins, right, to compensate for that?
Parag Jhaveri — Managing Director & Chief Executive Officer
Absolutely.
Keshav Kumar — RakSan Investors — Analyst
Okay. Sir, lastly, whatever growth is seen in the last few years, who are we taking the market share from? So are these broadly the Chinese place because these products are mature at the same time sticky?
Parag Jhaveri — Managing Director & Chief Executive Officer
Well, that’s too difficult answer from whom we get the market. What we are happy that we are able to consolidate our position. We could win the trust or trust over our competitors from our customers that we are a reliable partner and that’s why they are buying a more quantity from us.
Keshav Kumar — RakSan Investors — Analyst
Okay, sir. But are macro shifts also at play here? I mean, the Chinese supply transiting to us.
Parag Jhaveri — Managing Director & Chief Executive Officer
To some extent, not to a great extent. That is mainly for North America. When you talk about the rest of the world, it’s not the fix.
Keshav Kumar — RakSan Investors — Analyst
Okay. All right, sir. That’s all for me, sir. Thank you, and all the best.
Parag Jhaveri — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. [Operator Instructions] We have our next question from the line of Manish Gupta from Solidarity. Please go ahead.
Manish Gupta — Solidarity — Analyst
Parag Bhai, two questions. Firstly, is my understanding correct that the industrial chemicals is higher gross margin than the consumer chemical?
Parag Jhaveri — Managing Director & Chief Executive Officer
Yes, that’s right.
Manish Gupta — Solidarity — Analyst
So we’ve had a decline in revenue in Q4 of this year, this big Q4 of last year, but you also mentioned that there was a product mix change. So my first question is, does the gross margin on a percentage basis seems almost similar between Q4 last year and Q4 this year?
Parag Jhaveri — Managing Director & Chief Executive Officer
Yes, that’s true. Despite we could — with the deflation pressure, skip completion, and the subdued demand, we could able to maintain the margin. The last year, there was a lot of infrastructure pressure, which was giving us a chance to charge higher to customers because of the supplier concern. So what I can claim on that is that we could better manage the macro management at the customer level, at the product level to maintain our growth, Manish Bhai.
Operator
Thank you. [Operator Instructions] We have our question from the line of Anupam Agarwal from Lucky Investment Managers. Please go ahead.
Anupam Agarwal — Lucky Investment Managers — Analyst
Yeah, sorry, sir. I lost you there earlier. My question was for the quarter we’ve declined top line by 17% on a YoY basis. Was that completely because of volume deep?
Parag Jhaveri — Managing Director & Chief Executive Officer
Yes. Volume deep and also on a selling price drop, there were two things. Volume drop was there and also the selling price. What we are selling earlier today is over — top line is reduced almost 20%. The same day, it is reduced by that purchase cost also 10%.
Anupam Agarwal — Lucky Investment Managers — Analyst
So what was the call — if you can — if you’re able to quantify that, sir, can you break that up between price and volume?
Parag Jhaveri — Managing Director & Chief Executive Officer
Not to great extent, but volume was dropped by about 16%, 17% and the top line was dropped by about 20%.
Anupam Agarwal — Lucky Investment Managers — Analyst
All right. And for the year, you mentioned volume deep was about 10% for the full year?
Parag Jhaveri — Managing Director & Chief Executive Officer
Yeah, it was.
Anupam Agarwal — Lucky Investment Managers — Analyst
All right. Sir, FY ’24, what do you think what are you looking at in terms of growth? I mean, because the capacity is going to be coming Q4. On growth, what are we looking at this year? Or is it largely just going to exchange?
Parag Jhaveri — Managing Director & Chief Executive Officer
Well, two things. Number one, what we increase from 11,000 to 12,500, the full capacity, just taking in now, plants are getting stabilized. So from 11,000, we will be now able to operate at 12,500. We will try our best to utilize the full capacity. If that will happen and in marketing-wise, we are expecting a growth of about 10% minimum site.
Anupam Agarwal — Lucky Investment Managers — Analyst
This 11,000 to 12,500 incremental 1,500 is what product category, what customer…
Parag Jhaveri — Managing Director & Chief Executive Officer
It’ll mean to the industrial segment.
Anupam Agarwal — Lucky Investment Managers — Analyst
Industrial segment. Largely for export or domestic market?
Parag Jhaveri — Managing Director & Chief Executive Officer
Both.
Anupam Agarwal — Lucky Investment Managers — Analyst
Both. All right. One of my questions, sir, was on other expense line item for the quarter, just about INR20 crores versus INR33 crores last year. If you can just help this clarification, is there some sort of one-off cost?
Parag Jhaveri — Managing Director & Chief Executive Officer
Sir, the major cost was freight, the export freight, what we are exporting? Last year the freight cost was very high. Now the cost is normalized. So the major saving has come from there. Second saving was a little bit into the different product mix, what have helped us and some corrections taken place in the process site, which cost some cost.
Anupam Agarwal — Lucky Investment Managers — Analyst
Right. Understood. Thirdly, sir, my question is on your slide number 16. You’ve mentioned about product A, B, C, and D, where you’ve given sort of market potential, revenue potential for those products. If you can help us understand in detail or some clarity about what kind of products are these, are these the market where only the products that we are looking at is what the potential is like or is it like the global potential sort of?
Parag Jhaveri — Managing Director & Chief Executive Officer
No. This is what the product — what we are looking at it. This is global. This is a global demand of this four, five products have got a demand and what we are expecting to grow in this segment.
Anupam Agarwal — Lucky Investment Managers — Analyst
All right. Sir, these products are already in R&D or we’ve already corrected the customer demand? Sorry?
Parag Jhaveri — Managing Director & Chief Executive Officer
Already are producing and selling.
Anupam Agarwal — Lucky Investment Managers — Analyst
All right. All right. Understood. That’s all from my side. Thank you, and wish you all the best, sir.
Parag Jhaveri — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. We have our next question from the line of Manish Gupta from Solidarity. Please go ahead.
Manish Gupta — Solidarity — Analyst
Sorry, my line got disconnected earlier. I was trying to understand why the gross margin in percentage terms in Q4 of this year and Q4 of last year was roughly the same despite our product mix improving.
Parag Jhaveri — Managing Director & Chief Executive Officer
Very clearly, Manish, well, we had a couple of raw materials, which was lying at high cost. And we have to sell the product at a market price. We cannot ask the same high price when the market is sliding or market is contracting. Okay? So we have to make some balance at there and by [indecipherable] margin with the product mix, what we intend to do is a more capsular other than sitting on its production in a warehouse. So the — we took us a side that less sell the product with lesser margin, run the plant, whatever maximum capacity we can run it. So in order — we don’t lose all. Once you lose the market, you lose forever.
Manish Gupta — Solidarity — Analyst
Very clear. And my second question is in other expenses, on a full year basis of say about INR113 crores, what of this is variable, and what of this is fixed?
Parag Jhaveri — Managing Director & Chief Executive Officer
Fixed is what you call — see now, the wage is fixed.
Yayesh Jhaveri — Whole Time Director & CFO
So roughly around 60% would be variable and approximately 40% would be fixed.
Manish Gupta — Solidarity — Analyst
60% — and do you classify power costs in variable or fixed?
Yayesh Jhaveri — Whole Time Director & CFO
Variable.
Manish Gupta — Solidarity — Analyst
Okay. And is it possible for you to just breakout? Out of the INR113 crores, how much was freight?
Parag Jhaveri — Managing Director & Chief Executive Officer
One second.
Yayesh Jhaveri — Whole Time Director & CFO
You’ll give me…
Parag Jhaveri — Managing Director & Chief Executive Officer
We can come back to you on this.
Yayesh Jhaveri — Whole Time Director & CFO
Yeah. We will take it offline. No problem.
Parag Jhaveri — Managing Director & Chief Executive Officer
Thank you.
Manish Gupta — Solidarity — Analyst
Thank you.
Operator
Thank you. [Operator Instructions] We have our question from the line of Manan Shah from Moneybee Investment Advisor. Please go ahead.
Manan Shah — Moneybee Investment Advisor — Analyst
Yeah, hi. Thanks for the opportunity. My question was again to the Slide 16 where you’ve mentioned the four products, product A, B, C, D. But in the current revenue column, you’ve mentioned revenue only for product B. But you earlier hinted that we are manufacturing all of these products currently. So just wanted a clarification over there.
Parag Jhaveri — Managing Director & Chief Executive Officer
That was to media people, that has just started in the last year only, so the product has just started rolling out. So it’s not significant value, current revenue there from this product. So we put this as not available, but already the production started in the sales has the comments on this product. But as you know that the customer take time to ramp up the opex. That’s the reason.
Manan Shah — Moneybee Investment Advisor — Analyst
Understood. But this production that we would be doing for these products, they would be at a lab scale or a commercial scale. I mean, whether we have been able to stabilize the process on a commercial level is what I’m trying to understand.
Parag Jhaveri — Managing Director & Chief Executive Officer
It’s on commercial scale.
Manan Shah — Moneybee Investment Advisor — Analyst
Okay. And we’ve given very tall targets for these products. So wanted to understand, I mean, this revenue or this market share that we are expecting to get from these products. This would be — I mean, you’ll be taking away market from the current players or this is a new market that we are targeting. And what sort of stickiness is there in these products? I mean, how easy would it be for us to get this sort of revenue and market for these products?
Parag Jhaveri — Managing Director & Chief Executive Officer
Number one, we need to have the capability and capacity to do that — to achieve this target. So we don’t have full capability and the capacity to purchase this revenue [indecipherable] number one. Number two, we don’t see the challenges too much as we are going to take somebody shares. Also, the lubricant market is growing by 3% to 5% globally because of the change of the norms, which has spoken in the last couple of calls that the phenomenal reasons government forcing people to use a more cleaner fuels, more efficient lubricants, and less emissions. So those are the reasons the growth is 3% to 5% what we expect.
Also in India, because of make in India concept, a lot of people were getting a product from outside. They’ve been forced to make a product within India and to buy a local product, and that is going to help us to grow the business.
Manan Shah — Moneybee Investment Advisor — Analyst
Okay. So largely, we’ll be focusing on the domestic market for these products?
Parag Jhaveri — Managing Director & Chief Executive Officer
I didn’t say that. I said secondly that is also the — one of the reasons for make in India. But the [indecipherable] will distinct 30/70 or 60/40 as for domestic.
Manan Shah — Moneybee Investment Advisor — Analyst
Right. But is there any sort of stickiness that is there in these products? I mean, is it easy for the customer to switch or is there a need for the customer to switch?
Parag Jhaveri — Managing Director & Chief Executive Officer
Well, there are two reasons. As I said, the make in India, that means the people who are bringing the product from outside they have to buy locally, number one. Number two, there was a lot of disturbance happened in the last two years for everybody looking for an alternate supply chain. So we are very well fitting with that alternate supply chain. Number three, once you are in unless and until you make a mistake, you are there forever for this chemistry. People have a one or two source, approved source. You become a third one or maybe second one or fourth one. Depend on the scale of the Company.
Manan Shah — Moneybee Investment Advisor — Analyst
Okay. And globally, how many suppliers would be there for these products on an average? Like would there be two or three suppliers only or there are many players in these products?
Parag Jhaveri — Managing Director & Chief Executive Officer
Depend on the product to product. Some products only two or three. Some products maybe seven, eight, or maybe 10.
Manan Shah — Moneybee Investment Advisor — Analyst
Okay, sure. Thanks. I’ll get back in the queue.
Parag Jhaveri — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Management for closing comments.
Parag Jhaveri — Managing Director & Chief Executive Officer
It was for one hour, right?
Operator
Yes, sir.
Parag Jhaveri — Managing Director & Chief Executive Officer
That was from 5:00 PM to 6:00 PM. Nachiket?
Operator
One moment.
Nachiket Kale — Investor Relations, Orient Capital
Sir, we have reached the end of question queue. So we could proceed [indecipherable]
Parag Jhaveri — Managing Director & Chief Executive Officer
Sorry?
Nachiket Kale — Investor Relations, Orient Capital
We have reached the end of question queue. We just got one question, but we can take that-
Parag Jhaveri — Managing Director & Chief Executive Officer
The time is up or the conference is up?
Nachiket Kale — Investor Relations, Orient Capital
Sorry.
Yayesh Jhaveri — Whole Time Director & CFO
Nachiket, is the time is up or the questions are exhausted?
Nachiket Kale — Investor Relations, Orient Capital
The questions were almost exhausted. We just got one more person in the queue, so Yayesh Ji, please take that question, then we can close.
Parag Jhaveri — Managing Director & Chief Executive Officer
Sure.
Operator
We have a question for Mr. Keshav. Please go ahead, sir.
Keshav Kumar — RakSan Investors — Analyst
Yeah, thank you, sir. Sir, so last couple of years we had done ROCs on EBITDA of about 30%, and for the Pakhajan facility at 20% margin and working capital going above 120 days. So this INR400 crores capex for the initial 17,000 tons will be falling in the range of 22%, 23%, 24% on EBITDA ROC basis. So is there a margin upside a possibility of margins expanding, I mean, from 20% on this 17,000 tons itself or will ROC unlocking happen when we subsequently scale?
Parag Jhaveri — Managing Director & Chief Executive Officer
See the major — as I stated in the past that our industrial segment use better margins. So we expect a margin to improvise from current margin of 17.5%, 18% to go up to 19.5% to 20% margins. So that will help us with our better cash flow.
Keshav Kumar — RakSan Investors — Analyst
Sir, I meant that on 20% margin. So if we are spending INR400 crores and we are getting INR600 crores?
Parag Jhaveri — Managing Director & Chief Executive Officer
We are talking about the gross-something-level margin. I’m not talking about the Pakhajan. Because when we go back to the drawing — going forward, it’ll be only one result, not the unit-wise result, Keshav.
Keshav Kumar — RakSan Investors — Analyst
Right. Understood.
Parag Jhaveri — Managing Director & Chief Executive Officer
Maybe in the company, I’m not looking at the Pakhajan. I’m looking at the Yasho overall.
Keshav Kumar — RakSan Investors — Analyst
Okay. Got it, sir. Got it. That’s clear. Thank you.
Operator
Thank you. I will now like to hand over the call to Mr. Nachiket Kale from Orient Capital. Please go ahead.
Nachiket Kale — Investor Relations, Orient Capital
Thanks to the management for sharing their time on the call today. And thank you for all the participants for joining the call. And Orient Capital is the Investor Relations Advisor to Yasho Industries. For any queries, please feel free to connect with us. Thank you, everyone.
Operator
[Operator Closing Remarks]