JUBLINGREA — earnings call

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Prepared remarks

Moderator · Conference Operator

Ladies and gentlemen, good day, and welcome to Jubilant Ingrevia Limited Earnings Conference Call for the Third Quarter and 9 months ended December 31, 2022.

As a reminder, all participant lines will be in the listen-only mode and anyone who wishes to ask a questions may enter ‘*’ and 1 on their touchtone phone, to remove yourself from the question queue you may enter ‘ *’ and 2.

Should you need assistance during the conference call, please signal an operator by pressing ‘*’ then 0 on your touchtone phone.

Please note that this conference is being recorded.

I now hand the conference over to Mr. Pavleen Singh Taneja, Director, Investor Relations, Jubilant Ingrevia Limited.

Thank you, and over to you, sir.

Pavleen Taneja

Thank you, Tanvi.

Good evening everyone.

Thank you for being with us on our

Questions and answers

Moderator · Conference Operator

The first question is from the line of Tarang Agrawal from Old Bridge Capital.

Tarang Agrawal

Three questions from me.

One, if you could give us the volume growth across each of your segments for this quarter.

Second, in the press release, I noticed that there's a comment around Specialty Chemicals' garnering a lot of traction in the agrochemicals segment.

So if you could give us some sense on what proportion of Specialty Chemicals business was from agro customers for 9-month FY '23, and what was this number for 9-month FY '22.

And the last question is on power and fuel.

You alluded to cost softening, so how should we look at it going forward for Q4 and probably subsequently from Q1 next year onwards?

Rajesh Srivastava

So Tarang, on your first question of volume growth, as you can see that the volume growth has come clearly from Specialty Chemicals business and in Nutrition and Health Solutions business, we have informed that there is a degrowth in volume both year-on-year as well as quarter-on-quarter.

In Chemical Intermediates, the volume degrowth overall basis, but on acetic anhydride, we have grown in volume.

Other than the Nutrition & Health Solutions business, the volume consistently is growing in Specialty Chemicals as well as acetic anhydride since Nutrition and Health Solutions business, niacinamide situation has not improved, we are not in a position to grow volume.

On agrochemical business is close to 40% of our Specialty Chemicals business.

This is almost same in quarter-on-quarter as well as year-on-year basis.

On power and fuel, regarding this Q2, we have seen little bit softening of coal prices of import and there is a slight benefit.

But in Q4, we are expecting a little more benefit because of two reasons.

One is, the coal prices are also coming down in import, as well as we have now got some clearance of our contracted coal with road transportation.

So there will be some benefit of cost of FSA.

Tarang Agrawal

Sir, just one question for volume growth.

I was actually looking at numbers, specifically for each of the segments.

Rajesh Srivastava

Yes, I explained to you that in Specialty Chemicals, we have grown both quarter-on- quarter as well as year-on-year in volume.

In Nutrition and Health Solutions, we have not grown, particularly on niacinamide, though we have grown in vitamin B4 choline chloride.

On acetic anhydride, we have grown in volume both quarter-on-quarter as well as year-on-year.

But ethyl acetate is not a focus product.

We sell only when we get sufficient margin, and that's where you see the reduction in volume.

We have not sold much.

Moderator · Conference Operator

The next question is from the line of Nitesh Dhoot from Prabhudas Lilladher.

Nitesh Dhoot

So my first question is on the Specialty Chemicals.

There is a sequential revenue decline in Q3. what is that on account of?

Is there a sequential volume decline or a price decline?

What exactly it is?

Rajesh Srivastava

The revenue decline on sequential basis is purely on product mix.

We have almost 60 to 70 products in our Specialty Chemicals segment, in some quarter, a product mix, gives you little bit of lower revenue, but that doesn't mean that volume has not grown.

So as I said, volume has grown.

But there is a product mix change, which changes the price realization, but does not changes the EBITDA and volume.

Nitesh Dhoot

On the domestic sales for Specialty Chemicals, that has declined from INR 197 crores to around INR 164 crores. are we facing any pressure in the domestic market?

What would be the status of our Diketene derivatives plant there?

What will be the utilization currently?

Rajesh Srivastava

Yes.

So you are very right.

In current situation, we are facing a very low demand in Diketene derivative, now, we can see a positive traction happening in Diketene derivative this quarter.

Last quarter, we have seen Diketene demand being lower, but that's an opportunity for us to grow our revenue in domestic market through Diketene, which we can see in this as well as with other products.

Nitesh Dhoot

And sir, on the EBITDA. if you see there is a sequential increase in the Specialty Chemicals EBITDA and the margins have come up to 18.6%, and this is despite the coal availability not easing.

How did we manage to increase the margins in the Specialty Chemicals segment, can you give some color?

Rajesh Srivastava

Yes. the increase in EBITDA has come from volume.

Secondly, we also mentioned in the last call that though we are not in a position to do anything on coal cost, but we are definitely working with customer to pass on the cost to our customers.

And somewhat, we are successful to partially pass on that cost increase, and therefore, the EBITDA margin improving.

Going forward, both, we will see the softening of coal prices as well as the realization, which we have now taken the price increase on which customer will give us better result in future.

Nitesh Dhoot

Sure.

Sir, just one clarification.

So if I remember in our previous discussion, imported coal price movements are generally a pass-through, it is the difference between the FSA coal price and the imported coal price, which is in a way a benefit for us.

And if the FSAs availability is not easing, so does it really have any benefit for us?

I mean, the imported coal prices going down?

Rajesh Srivastava

Yes. as we have been saying that our contracted coal issue is only at our one site, which is Gajraula, and all other sites are based on imported coal.

Now in Gajraula also, we partially have imported coal.

So the impact in the Gajraula products is there.

But I also mentioned that we are in a position to partially pass on the cost increase, even in Gajraula for our contracted coal.

And therefore, you see the EBITDA improvements in Specialty Chemicals.

Nitesh Dhoot

Sure, Sir, next is on the energy efficiency projects that you have highlighted in the presentation and the debottlenecking projects.

What kind of margin benefit that we can expect from this?

What will be the quantum of investments going into these energy efficiency projects?

Rajesh Srivastava

So honestly speaking, there is not large investment in these projects.

These are mostly business excellence projects.

These projects are actually in the four segments.

One, wherever our cost of generation of power today is higher with our own generation versus grid like in Gajraula, we are opening up to the grid, which will give us savings.

Number two, we are going to improve efficiency of operation through the digital intervention.

So we are taking a very major program of digitalization in all our energy production that will give us the benefit.

And third, we are also working on how to minimize the consumption side in the product.

So combining all these excellent initiatives we are gradually, phase wise, going to get benefit of these programs, apart from going green in solar, which is the fourth initiative, which we are talking about in energy savings.

These four initiatives in business we have planned which is going to be in phased manner.

Some of the initiatives will start giving results in couple of quarters and some initiatives might take longer time because we need to make investments and take the benefits later.

Nitesh Dhoot

Sure.

But I mean, can this be quantified in terms of like 100 to 200 basis points of margin improvement in the Chemicals business or maybe, if you can just highlight that?

Rajesh Srivastava

Yes.

Once the entire program is implemented, then this is going to be a significant benefit.

Unfortunately, I am not in a position to give any number because we are still working with our partners to put down these numbers on a hard basis.

Maybe after couple of quarters, I will be in a position to give some indication of numbers.

But I can assure you this is going to be a significant improvement in our overall profitability if we are in a position to implement all these initiatives.

Nitesh Dhoot

Right -- sorry if I'm repeating.

But I mean on the FSA, we had earlier expected that from January onwards, the availability will ease, but it doesn't seem that much of benefit has started coming in.

What is our view there?

Do we see this in a quarter's time or what exactly are you envisaging over there?

Rajesh Srivastava

So based on our discussion with various agencies, we don't see this FSA to be 100% clear in next couple of quarters.

But having said, I am pleased to inform you that from Q4, we are now allowed to take contractual coal at the contractual price from road transportation.

We are going to get benefit in our cost but not 100% benefit.

This quarter onwards, you will see the benefit in our cost, in our coal in Gajraula.

But as per our information from various sources, we don't see the full FSA benefit coming to us neither in this quarter nor in next quarter unless there is a very huge production of coal and availability.

Actually, the major issue is happening, in availability of rail transportation.

Government is also working very aggressively to make the rail available for the industry.

If they are successful to do it in next 2 to 3 months, probably we'll get the benefit.

But at least I don't see in next 3 to 4 months.

I think major relief has happened because we have got this clearance to get our contractual coal with road transport.

So that's the benefit we will start getting from this quarter onwards.

Nitesh Dhoot

Sure.

So in that case, would it be fair to assume 18.5%, 19% kind of sustainable margins for Specialty Chemicals?

Would that be a fair understanding, till the time the energy efficiency projects don't come up fully, so would that be a fair understanding?

Rajesh Srivastava

Nitesh, this is the discussion we had also 3 months before, you see margins are improving.

The reason is we are not stopping our realization, we are trying to recover the cost increase from our customer, from the products we can recover ourselves.

I don't make any commitment on the margins that it will not improve because it will all depend that if we can realize better pricing in our product, we can meet all the volumes projections, probably we should be improving.

Moderator · Conference Operator

I'm sorry to interrupt you, Mr. Nitesh Dhoot, If you have any follow-up questions, we request to please come back in the queue.

Next question is from the line of Rohan Gupta from Nuvama.

Rohan Gupta

Sir, first question is on your Nutrition & Health Solutions business.

So we understand that there is a high inventory scenario, but I think that the impact on revenue is slightly less than what impact we have seen on the profitability or segment EBIT, which has come down to drastically to INR 5 crores, while Nutrition & Health Solutions have seen some revenue improvement on Q-on-Q basis.

So is there any inventory losses we have booked?

Or it's a just a cleaning up the inventory at a lower prices which is impacting the profitability or the overall realization itself has come down?

So what is the reason for such a sharp fall on EBITDA or EBIT on the Nutrition & Health Solutions?

Rajesh Srivastava

Last quarter, when we started, the pricing was not as bad as what we saw at the end of the last quarter.

So therefore, the margins of last quarter are better.

Having said your observation on revenue increase is correct.

So this quarter, we have sold a little higher volume of Niacinamide.

The reason that we are getting our customers' requirement, wherever we are selling on a positive contribution, we want to take the orders.

And some improvements in volume in this quarter has happened.

In Q4, we still estimate that our situation of volumes would be better as well as in this quarter, we are estimating price should also improve because last quarter, there were multiple problems. #1, the swine flu and avian flu in US and Europe.

The lesser impact was also from China consumption was much lower because China had big restrictions because of COVID.

The China is getting opened up last month and the China demand is improving and which is actually making the whole nutraceutical segment a little bit positive, even though the flu situation has not improved.

It was lower in Q3, but we see Q4 becoming little better than Q2, that's what we estimate.

Rohan Gupta

So sir, unlike Specialty Chemicals, are there any cost increase we are trying to pass it on?

Nutrition & Health Solutions business is seeing a steadier margin pressure and the prices are still significantly lower than what it used to be.

Just wanted to understand that how Nutrition & Health Solutions business pricing works with the end customer?

And how you decide on the margin strength, it is just completely driven by the demand supply scenario?

Or you see there is some cost-plus element there?

Rajesh Srivastava

So Rohan, good question.

So our Nutrition and Health Solutions segment, we have 70% of our revenue of Nutrition and Health Solutions segment coming from animal feed industry, and 30% comes from Food and Cosmetics and others.

70% animal feed is impacting our volume and revenue because of demand.

It is demand and supply situation.

But our efforts for future is to reduce this dependency on animal feed of Nutrition and Health Solutions business to more Food and Cosmetics, so that we can balance out, This kind of impact does not come in revenue and profitability.

Currently, it's demand and supply situation, which impacts our volume as well as profitability.

Moderator · Conference Operator

I am sorry to interrupt, sir.

Maybe if I could request you to please come back in the queue.

The next question is from the line of Siddharth Gadekar from Equirus Securities.

Siddharth Gadekar

So just wanted some color in terms of we had announced a long-term contract for CDMO of INR 270 crores over 3 years.

What is the status of that project?

Rajesh Srivastava

We are servicing that contract.

The volumes of that contract will start increasing from this quarter end onwards.

And the new capacity of GMP which we are building up, for that contract.

And in fact, the overall CDMO traction, is not only with that contract also with other products as well, and are showing a positive result.

We are expected to see a better performance of our GMP facility which we are building up, will be ready in the next couple of months' time.

So that is on track, and we are servicing it on time.

Siddharth Gadekar

So basically, FY '24, we can see the entire INR 90 crores coming in from that project?

Rajesh Srivastava

So you are saying that FY '23 annual revenue, yes, it should come full, because that's the capacity we are building up, correct.

Siddharth Gadekar

Okay.

Got it.

Sir, and secondly, now in terms of Diketene, what kind of capacity utilization can we expect in FY '24 and FY'25?

Rajesh Srivastava

For FY '24, with our current estimates, we are planning to utilize to 70% to 75% of capacity.

Siddharth Gadekar

And the non-GMP plants also will be at similar levels in FY '24, they will take time to ramp up?

Rajesh Srivastava

Yes.

As of now, it looks like that.

But never know, if demand improves, we can even utilize better.

Siddharth Gadekar

Sir, the last question, in the Nutrition and Health Solutions segment, have we changed any capex because we are looking at some cosmetic-grade vitamin B3 as well, which was not there before.

Is this something new that we have announced?

Rajesh Srivastava

Yes, very right.

And that's what I mentioned to Rohan also that in Nutrition and Health Solutions segment, our endeavor is to improve our presence in non-animal feed segment more.

And therefore, we are bringing up more capacity of cosmetic grades.

In my last 3 quarter statements, I have been saying that our focus on food and cosmetic is increasing, and we are getting a very positive traction.

Our demand situation of cosmetics and food has improved, and we are adding capacity there.

So that we will actually make announcement very soon about the new capacity investment.

Above that, we also have plans on vitamin B4, which we currently have in animal feed segment.

We are also going to have vitamin B4 for Food segment.

Once we are ready, we will have a shift in our 70:30 ratio to close to 50:50 ratio of animal feed and food and cosmetic segment.

So you are very right.

You have correctly assessed it.

We have additionally made the investment plan for the nutraceutical segment because that is going to give us much more sustainability and resilience to our profitability and revenue going forward.

Moderator · Conference Operator

The next question is from the line of Dhruv Muchhal from HDFC Mutual Fund.

Dhruv Muchhal

Sir, the question probably is a bit repetition of the earlier question.

If you can probably share the volume numbers for the Specialty Chemicals segment for this quarter and the 9 months.

The reason I'm asking is also because for the 9 months, it seems you have grown about 40% - 50%.

And I'm just trying to understand, does this largely volume-driven, does this pose any limitation in terms of the base business growth for the forthcoming years?

Because I'm just trying to understand, are we probably filled up for the producing capacity that we have with this kind of volume growth?

Rajesh Srivastava

Yes, your assessment is correct.

It is the overall Specialty Chemicals, including the pyridine volume.

There is a increased volume of pyridine, and pyridine derivatives and therefore, you see the significant improvement in volumes of Specialty Chemicals.

Now on your point whether it will have an impact going forward, we don't see that because the overall volume scenario of pyridine and pyridine derivative is still, it stands strong.

We have a huge capacity upgrading in plant, as we already stated earlier, and we are still utilizing about 70% - 75%, not more.

We still have capacity. if the demand comes, we will be in a position to take it up more.

Prakash Bisht

So just to add on to what Rajesh sir is saying, in the capex plan also, you would see that one debottlenecking for pyridine,that will also add to the capacity.

Dhruv Muchhal

Okay.

I was coming to that.

Great, sir.

So at current after the 9 months volume growth, which I believe could be probably 20% the pyridine capacity will be 70%, 75% utilized?

Rajesh Srivastava

Yes, correct.

And remember, this overall volume growth is from existing products as well as from new products.

So we announced capex, which you see in our presentation, we have continuously debottlenecking capex and capital investment which happens regularly, which normally we don't announce.

Because we keep doing it based on the customer demand of our existing products.

Dhruv Muchhal

Sure, sir two quick questions, as your two cGMP plants, one cGMP, non-cGMP both are coming in the next quarter.

So wanted to get some better understanding in terms of the visibility of ramp-up.

Probably one often sees in the industry that they have contracts in hand based on which the ramp-up visibility is there.

So just wanted to get your sense also in terms of the visibility for the ramp-up of these capacities.

I mean do you have contracts?

Or are these established products? are the products already developed so that you only have to market it once the capacities are ready?

Just trying to understand to get a better visibility on the ramp-up sir?

Rajesh Srivastava

I've already stated in the last question that the cGMP plant, which we are building up is based on our new demand and new orders, which we have already got it.

There was actually additional traction and therefore, we took little bit more expansion of the existing facility.

There is a delay of about 1 or 2 months.

Hence, the utilization of cGMP plant is going to be in a very good situation, as we stated earlier.

The first year, will see a utilization of more than 70% of cGMP plant.

And the same is true for non cGMP plant because cGMP is utilized for the more value-added products and non- cGMP is utilized for the early derivatives and intermediates.

Both plants are going to be utilized as per plan.

We have a strong order situation.

As soon as the plant will come next year, we will have a good traction of utilization close to 70% to 75%.

In next 2 to 3 years we will reach close to 85% - 90%.

Moderator · Conference Operator

Sorry to interrupt you, sir.

If I could request you to please come back in the queue.

We'll move to the next question from the line of Rahul Veera from Abakkus Asset Managers.

Rahul Veera Sir, a very interesting comment that you've given in the presentation that FY '23 year will largely be similar to the past 3 quarters.

Sir, given the improvement in coal costs plus the ramp-up in the CDMO, I mean, shouldn't there be a very sharp improvement sequentially?

I understand you have mentioned that it's going to be very marginal in terms of coal cost improvement, but I still believe there could be a much better opportunity, right?

Rajesh Srivastava

As I said, in coal cost, it is a marginal improvement.

Also, I stated that nutraceutical business, we don't see much improvement.

In Specialty Chemicals there is improvement.

So when I say it will be in line with last 3 quarters, I don't know what you understand, but I'm not saying that we'll be significantly higher or better than what we have been doing in last few quarters.

Rahul Veera Okay, Fair point.

And sir, the incremental capex that we have given from INR 2,000 crores to INR 2,275 crores now in the presentation, this is largely going towards the debottlenecking only?

No. it's about three things.

One is debottlenecking, secondly that we are adding a new capital plan for nutraceutical vitamin B4 for food business, about INR 100 crores increase in nutraceutical segment and debottlenecking.

Third, we are also having the R&D expansion because of our good CDMO traction.

So we are having some R&D investment plan, which we have highlighted in increased investment plan.

Of course, debottlenecking is part of that.

Moderator · Conference Operator

The next question is from the line of Pranav Tendulkar from Rare Enterprises.

Pranav Tendulkar

Sir, I just wanted to ask two questions.

About Diketene plant, have we started commercial sales?

And has the production quality been accepted by general market?

And if it is, then what is the 100% utilization revenue potential for this plant at current price?

Also second question is that, if the rake availability improves and government, allows railway rakes, then how much of the saving could be done in the energy costs?

Rajesh Srivastava

So three questions.

I think number one question was on your nutraceutical, I believe.

Can you just repeat your first question?

Pavleen Taneja

Sir, the first question is the quality of Diketene, then capacity utilization and quality of Diketene.

Rajesh Srivastava

We have told you that we have already started selling the Diketene.

But unfortunately, because of the lower demand, we were not in a position to utilize the plant.

But now we see the demand is improving, and therefore, we are very confident that next year, we should be in a position to utilize, about 75% to 80% or 70% to 75% of the capacity.

Now second question on your FSA coal.

Now if after the road transportation, which we have just got cleared, if we convert that to total FSA coal on a quarter basis, I think we should be in a position to add about about INR 15 crores to INR 20 crores of EBITDA further, if that happens.

Prakash Bisht

That's right.

Pranav Tendulkar Right.

So in current Diketene plant, revenue potential is how much?

Rajesh Srivastava

So we have a capacity of 8,000 tons.

It's difficult to give a price commitment.

There are three products, and each of these products are ranging from a price of INR 150 to INR 200 or sometimes it is more.

Based on that 8,000 tons capacity, you can calculate the revenue.

But it also depends that which product maximize your revenue and profitability.

Pranav Tendulkar Right.

So $100, $150 per ton?

No, this is INR.

We had been saying, that the Phase 2 of Diketene is much awaited because this capacity of ours is not for 100% sales, this is for our forward integration of building blocks.

We have built up to make value-added products, which I have been talking all the time.

Phase 2 investments will come very soon.

The realization from the existing capacity as well as new capacity is going to be higher, and that's our endeavor not to sell this 8,000 tons only as a commodity or bulk volume.

This is beginning to launch as a building block and then add the value-added product which we will bring up very soon, in the Phase 2.

Moderator · Conference Operator

The next question is from the line of Harsh Shah from Dimensional Securities.

Harsh Shah

Just revisiting your capex guidance, the first time when we had announced the capex in FY '22, the business outlook looked quite stable, we used to make 16% to 18% kind of margins, even better.

But now today, where we stand, with the Europe slowing down, the prices of many of our commodities have eroded quite a bit and demand is sort of struggling, so how confident are you about the expectations with the revenue guidance that you had given for FY'27, that it will come through, because the business dynamics have changed quite a bit over the last 1.5 years?

Rajesh Srivastava

So from where we are seeing, I'm sure you're also seeing the same angle, what we have said for FY'27 is still standing true, and all the investments which we have planned has no change.

What is changing is mostly short term, which we have been talking.

Number one, Nutrition and Health Solutions business of vitamin B3 is not long term.

This is the first time in last 2 decades, I know this business, this kind of flu has never extended to 2 or 3 quarters.

But nevertheless, it is not going to long last.

This is one.

Secondly, this energy cost. we are taking lot of initiative apart from getting the government coal contract.

I don't see this is longer term.

This is going to be sort terms.

We will be behind it.

Beyond this, I don't see anything which is currently in problem, except for the global situation of demand.

Now the global situation of demand, as we all know, India as far as chemicals is concerned, is definitely on a very high demand.

So even though the global recession will happen, Indian companies in chemicals will keep doing good because there is a huge shift which is happening of demand from China to India.

We have still not served the entire volume of China.

We are still in single digits of percentage which we can take from China.

We have a huge opportunity.

So I don't see the future as dim as you are trying to explain.

Moderator · Conference Operator

The next question is from the line of Romil Jain from Electrum PMS.

Romil Jain

I just want to understand a little bit on fluorination.

So I think we are doing some capex on that.

So can we know where we are standing right now in terms of our capabilities and whether the capex has started.

When do we expect to commission, maybe some details on that?

And second question is on the Life Sciences Chemicals.

Are we seeing some rebound in prices and maybe Q3 was more of a bottom kind of a quarter there?

Rajesh Srivastava

On fluorination, as you can see in our presentation, we have still not committed the capex.

The products which we talked about is still under development and scale-up.

We hope that next year, will be bringing up that capex.

And that time, I will announce to you.

On your question on Chemical Intermediates, as I stated, acetic anhydride, our volumes are growing.

The reason for growth is that overall demand is increasing, but there is no additional capacity, which are being available globally.

And in Europe, our competitors are not in a position to produce in full volume because cost has gone up.

So I see continued positive traction of acetic anhydride demand.

And as you know, we are having the new plant coming up, next quarter, we are very positive about utilization of that plant also in future because of these reasons.

Romil Jain

Okay.

Sir, just one question on food-grade acetic acid.

So I think that was the plant that we had started.

I'd like to know what the utilization is?

If you can just point out what kind of revenue are we generating and what broad margins?

Do we expect more capacity expansion there, because I think that was a very positive development that was there?

So any insights on that?

Rajesh Srivastava

On food-grade acetic acid, we are under the regulatory approval process.

We are going to start the commercial supplies from end of this quarter, and we see a good traction of demand from our international customers.

So actually, the realization of revenue of food-grade acetic acid, we will see in next financial year because of several regulatory approval process, as well as the FSSAI approval, etcetera, it took about 5 to 6 months' time.

We are going to in next 1 or 2 months.

Next financial year, you will see the revenue realization of food-grade acetic acid.

Moderator · Conference Operator

The next question is from the line of Sunil Kothari from Unique PMS.

Sunil Kothari

Sir, because of this road transportation we've chosen for this transporting coal, will it save INR 15 crores, INR 20 crores per quarter?

Will it be effective from current quarter or next quarter?

Rajesh Srivastava

No. I think you noted wrongly that from the road, if you get 100% rail transportation, we will have additional benefit of INR 15 crores from the earlier quarter, now when we got road transportation, there is a benefit of about INR 10 crores to INR 12 crores, which we should accrue.

Sunil Kothari

That is per quarter, right?

Rajesh Srivastava

Per quarter, you're right

Sunil Kothari

Okay.

Sir, and second question is, we said that we got little bit ease off in coal prices in current quarter, if you take a percentage of the revenue that has gone up from 14% to 15% the cost, power and fuel costs.

Why it has happened, if you can a little bit explain?

Rajesh Srivastava

No, because softening is happening only end of the last quarter.

What you will see is this quarter impact, not in Q3. Q3 from beginning, it has been very high.

It has just happened in the month of January, let's say, end of December when the softening of prices have happened.

So you have not seen the impact of that in the last quarter.

Sunil Kothari

Okay.

So both the benefit of road transportation and softening of price, both can materialize in the current quarter and onwards?

Rajesh Srivastava

But remember that any reduction in coal price imported, customers are also smart, they will ask for a pass on.

As we take increase in pass on, they will also ask reduction in pass-on.

So please don't just calculate in mathematics and highlight out.

Sunil Kothari

Sir, our other expense on top line of same INR 3,600 crores approximate for 9 months, has gone up from INR 336 crores to INR 432 crores, almost INR 100 crores, almost 30%, 35% increase.

What is the reason for this, other expenses, I'm talking about?

Prakash Bisht

So Sunil ji, so if you take on the quarters, other expenses...

Sunil Kothari

No, sir, I want to understand for 9 months.

Because quarterly, I understand there is some specific reason.

But if you take 9 months, it is INR 336 crores, from INR 336 crores it has moved INR 432 crores.

Prakash Bisht

For 9 months, Sunil ji, primarily the reason for increase in other expenses is, a, the freight and forwarding cost has increased; and then it's partially also due to the processing charges and the warehousing charges and repair and maintenance.

So these are the 4-5 reasons on account of which the overall other expenses has increased.

Sunil Kothari

Yes.

But it is, sub-segments from the same revenue, we have spent INR 100 crores more.

That is why I'm just trying to understand.

This is we are getting control on any cost or it is going out of control?

Rajesh Srivastava

No, don't worry about control of cost, Let me explain you, last year 9 months, all other costs were based on the volumes which we have sold.

The transportation costs, travel costs, repair and maintenance costs, everything is going up because our capacity utilization is going up, our new plants are coming up.

So all that is going to increase our expenses.

But at the same time, you are very right, we are in full control and we have plans to improve efficiencies all over, and this is a continuous exercise.

So there are some costs, which this year has gone up like travel etcetera, which is usual because we are back to our normal situation of FY '22.

Sunil Kothari

Sir, my last question is...

Prakash Bisht

Sunil, just to give you a perspective, because I think you are seeing the revenue number as the same.

But our volumes have increased, it is just that prices of Chemical Intermediates segment has come down, that is why you see the revenue at the same level.

So volume of business has already increased.

So the expenses are in relation to the volume of business.

So perhaps you are just seeing the same level of revenue, hopefully, you're feeling the expenses are...

Sunil Kothari

You're absolutely correct.

Absolutely correct.

My request will be, so many people were asking about the volume growth.

I think on a 64-page PowerPoint presentation, what is the volume growth quarter-on-quarter or year-on-year.

I think I'm observing that people are asking about volume growth and we are not able to provide those exact precise numbers.

I request, please make it a practice that we should announce or we should announce that we are not going to talk anything about volume.

So please follow one practice that is my request.

And sir, my last question to Rajesh ji, sir, basically what we're talking about is we'll be improving our Specialty Chemicals and Nutrition and Health Solutions business to 65% over the next 3, 4 years, and that will give us far better margin and very respectable ROE and ROCE.

But looking at this Nutrition and Health Solutions segment situation currently, and I understand this is the first time in this two decade, so are you, comfortable and confident about whatever your thought process and your observation or your strategy to achieve some respectable margin over the next 2, 3 years?

Rajesh Srivastava

So you're asking about revenue or you're asking about margin?

Sunil Kothari

No, sir, margin.

Because we are saying that Nutrition and Health Solutions business and Specialty Chemicals will become a major part of our revenue, and that's why we'll be having a very respectable margin.

Rajesh Srivastava

What I can only tell you, of course, it's very difficult to see the future, but it is very easy to make a strategy for future.

So what we have done, we have made a very strong strategy.

And I'm very confident that all the strategy we have prepared, we are going on track.

Having said so, need to realize that there are certain situations which are beyond our control like today, we have.

Now you may ask that, last year you said this, but you did not see this.

The question is, this can happen either side.

So if FY '23 was fantastic year, nobody asked questions.

But FY '23 is a tough year, so obviously you have right to ask questions.

If this kind of situation happens, it's beyond control.

But having said so, what we can do best is, we are trying.

If you see our intent, our energy cost is going up, we have a huge plan to bring down overall energy cost.

That should give us resilience of any such trouble which we can face in future.

So we are continuously changing our strategy to see whatever we are getting short-term impact whether that can be minimized and that's what our intent is.

That's what anybody can do the best.

So having said so, I'm very confident that the strategy we have a place should realize the way we are looking at it.

And I want to answer that on volume.

I think you must appreciate the kind of declaration we give as a Jubilant Ingrevia is much more than anyone else.

What we definitely not want to give, you must appreciate Jubilant Ingrevia, which is your company, we have leadership position in many products.

And if we start giving volumes number of our product wise, you must appreciate globally, we are faced with many competitors.

I hope you will appreciate, we will not have to land up in a situation, so please, please respect our declaration.

And on a different side, if we discuss, I can even talk to you what kind of volume growth we are talking.

But on a call like this, if you ask me to give you volume growth product-wise, I think it is too much to ask.

You must appreciate the kind of presentation details we had given, you saw all the other companies, whether you get this kind of detail.

So please appreciate that.

Moderator · Conference Operator

Thank you.

Ladies and gentlemen, that was the last question for today.

I would now like to hand the conference over to Mr. Prakash Bisht for closing comments.

Prakash Bisht

We thank you all for joining this call today.

We hope we have been able to answer your queries.

For further clarification, we would request you contact our Investor Relations team.

Thank you once again for your interest in Jubilant Ingrevia Limited.

We also wish everyone a very happy and prosperous new year.

Rajesh Srivastava

Thank you, everyone.

Thanks a lot.

Moderator · Conference Operator

Thank you.

Ladies and gentlemen, that concludes this conference.

Thank you for joining us, and you may now disconnect your lines.

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