How is the overall raw material pricing trend shaping up because in the last 10 to 15 days, we have seen a bit of correction in the raw material prices? How is it impacting your business and what does it do to your pricing?
Currently, there is a lot of volatility in raw material prices. We have two segments – one is agrochemicals and pigments. In pigments, our raw materials are mainly linked to crude. So, with volatility in crude prices, prices of the raw materials are also getting impacted and when there is a reduction in gas price also, urea price also gets impacted.
The final product prices are also being adjusted accordingly. We are not getting into any long-term contracts for our finished products and so on a 1.5-2-month basis, we are finalising our prices. In the case of agrochemicals, again there is price volatility. We are seeing some softening in finished goods prices and in line with that, these raw material prices are also coming down. We are seeing some downward trends but it depends on product to product basis, depending upon the demand-supply.
It always depends upon demand-supply of the product. Last year was a bumper year for all organics, agrochemical companies. Will this be a normalised year?
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On an annual basis, we can say normalised but in the short term, there are hiccups. When there is an increasing trend, there is a lag. The finished goods prices always take lead but on an annual basis, we will see the normalisation.
What is your capex plan? I understand you are likely to double your capacity when it comes to the Dahej plant and you are looking at further expansion as well. Could you talk to us about what is the capex plan for the next 12 to 18 months?
We are expanding in both the divisions. Our multipurpose plant in agro division where we are spending Rs 350 crore plus. We are expecting to commission it in early Q3 of this financial year. In the case of pigment division, our first phase of expansion in titanium dioxide capacity will be in late Q3 of this financial year. We will be spending around Rs 275 crore in the first phase and Rs 325 crore in the second phase and double the titanium dioxide capacity and that will get commissioned in Q3 of next financial year FY24.
You had earlier stated that by 2025 you are looking at a top line of Rs 4,500 crore and the EBITDA is likely to be around Rs 765 crore and this compares to around Rs 2,500 crore run rate last year and a PAT figure of around Rs 170 crore. How confident are you of achieving that target?
We are very optimistic on our businesses and the way the plans are getting executed, depending upon how quickly we are able to stabilise our operations, we are sure that by 2025 we are definitely going to cross that Rs 4,500 crore top line.
What about exports? What role will exports play in this entire strategy of the company? What is it at the moment and where do you see that scaling up to?
Currently, in both the segments, our exports are 80% plus. Going forward, in the agro region, I think this ratio will continue and though we are coming up with new molecules which are high value, those will have a market in both domestic as well as in exports.
The agro division will account for 75-80% exports. In the case of pigments, currently, in phthalocyanine pigment, our exports are 80% plus but titanium dioxide is an import substitute and this will be purely serving the domestic market initially. But going forward, we will also start exporting it once we double the capacity and take expansion further. But in the pigment region, it will be 50:50. So overall, it should be around 50:50.