Rossari Biotech Limited (ROSSARI) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Rosari Biotech Ltd. Q2 and H1 FY27 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and may involve risks and uncertainties that are difficult to predict. 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. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Edward Maniz's Promoter and Executive Chairman, Rosari Biotech Ltd. Thank you and over to you, sir.

Thank you and good evening and a very warm welcome to all of you joining us for the Q2 and H1 FY27 earnings call of Rosari Biotech Ltd. We are pleased to have you on this call to discuss our operational and financial performance. I am joined today by Mr. Sunil Chari, Promoter and Managing Director, and Mr. Ketan Sablop, Group Chief Financial Officer, and the SGA team, our Investor Relations Advisor. I hope you had the opportunity to go through our financial results and investor presentation, which are available on the stock exchanges as well as our company's website. We concluded the first half of FY27 on a very strong note. The Q2 FY27 revenue grew by 19% year-on-year to Rs.698 crore and EBITDA grew by 21% year-on-year to Rs.87 crore, marking our highest ever quarterly revenue and EBITDA. The growth was broad-based, with all three of our business divisions contributing. The external environment during the quarter continued to remain dynamic. Raw material prices stayed volatile. The ongoing geopolitical situation in the Middle East kept pressure on freight and logistics, and customers across several end-user industries remained cautious in their buying behavior. Despite these handwinds, we delivered a gross margin of 31.6% and EBITDA margin of 12.5% in Q2 FY27. Innovation remains central to our long-term strategy. Our new Rosari Global Research and Innovation Center at Navi Mumbai is steadily ramping up and is helping us shorten the journey from idea to commercial scale. Having launched over 70 new products in FY26, our pipeline continues to strengthen with a sharper focus on intelligent, sustainable, and application-led chemistry such as biosurfactions, personal care, ingredients, pharma recipients, agro-cumulations, and solutions for the oil and gas industry. Looking ahead, our priorities for the remainder of FY27 are clear. Drive optimum utilization of the capacities we have built. Accelerate the commercialization of new products and further improve operational efficiency. Supported by strong R&D capabilities and a healthy balance sheet, we remain confident of delivering sustainable and profitable growth in medium to long term. With this, I now invite Mr. Sumi Chari to share his perspective on the business performance and our strategic priorities.

Thank you, Edward, sir, and a warm namaste to everyone. The first stop of financial year 2627 has been a period of steady execution for Rosali. In each of the last two quarters, we have delivered revenue of close to 700 crores, We have achieved this scale up despite raw material volatility, geopolitical uncertainty, and a cautious demand environment, and it reflects the strength of our diversified portfolio, our long-standing customer relationships, and the focus execution by our teams. We remain committed to continuing discussion and engagement with our customers to deliver tailored solutions according to business requirements. During the first half of FY27, HVPC, Textile Specialty Chemicals and Animals and Nutrition grew by 24%, 24% and 19% respectively. This growth has been driven by a higher share of value added products and by increasing our Our new blending facility in Thailand is ramping up steadily. It is helping us serve customers I am pleased to share an important update on our Saudi Arabia initiative. The board has approved the leaving of land to Rosari International Limited Company of a wholly owned subsidiary for setting up a greenfield manufacturing facility in the Kingdom of Saudi Arabia. This builds on the in-principle approval granted by the board earlier and is a key stepping Thank you. And we are actively working on various cost optimization measures to improve them. Our strategic initiatives like monetization of non-core assets, rationalization of lower margin businesses, and improvement in product mix are progressing in the right direction. We will continue to sharpen our focus on the core B2B business, and we expect this initiative to start reflecting in our overall performance over the medium term. Overall, we remain very confident about our prospects, our scale, improving capacity utilization, a strong product pipeline, and an expanding international presence are the building blocks of a more scalable and resilient Rosari. Our priorities remain centered on disciplined execution, margin improvement, and stronger returns on our existing S base. Thank you once again for your continued support, and I now invite Kedanji to take you through the financial highlights.

Thank you, Mr. Chari, and good evening, everyone. Let me take you through the financial highlights for the quarter and for the half-year ended 30th September 2026. For the quarter end rate FY27, our revenue from operations stood at 697.6 crores, which was a growth of 19% YOY over 586.1 crore in Q2 FY26. This part is our highest ever quarterly revenue. Gross profit also grew by 19% to 220.3 crores and by 6.7% on a quarter-on-quarter basis. Gross margin stood at 31.6% in line with the Q2 FY26 and around 200 basis points higher than 29.6% we reported in quarter 1. This sequential improvement was driven by a better product mix. The EBITDA grew by 21% by of Y2 to 87 crores, our highest ever quarterly EBITDA. The EBITDA margin stood at 12.5% compared to 12.3% in Q2 FY26 and 11.6% in Q1 FY27, an improvement of 91 basis points sequentially. Employee costs grew by 15% YOY and other expenses by 19%, reflecting our continued investment in people, new geographies, the Thailand facility, and our newly set up R&D center. Profit after tax grew by 5.5% YOY and 11% Q1Q to Rs. 38.9 crores, and the diluted EPS for the quarter Coming to the divisional performance, the HPPC revenue grew by 18% to 541.9 crores in Q2F527, and by 20% to 1095.1 crores in H1F527. The growth was led by value-added products in personal care, agro-suffectants, adjuvants, and other oil and gas solutions. On the other hand, constrained ethylene oxide availability continued to limit ethoxylate volume, and cautious customer ordering kept HPVC revenues broadly stable on a sequential basis. In the textile-chemical side, the revenue grew by 26%, YOY to 120.8 crores in Q2 FY27, and by 24% to 26.9 crores in H1 FY27. Sequentially, textile specialties grew by around 14%. This was driven by our export markets, including Bangladesh, Southeast Asia, Turkey, and Latin America, and also contributions from our Thailand facility. The new fiber chemical division and a higher share of silicon-based and sustainable auxiliaries added to these higher revenues. The animal health and nutrition revenue grew by 11% worldwide to Rs. 34.8 crores in Q2FY27. For H1FY27, AHN grew by 19% to 72.8 crores. The growth was supported by the vitamin premix plant, trace minerals, and our enzyme and probiotic portfolio. On the core B2B and institutional B2C business, excluding the institutional and B2C business, our core B2B business delivered a revenue of 619.9 crores in quarter 2 F527, registering a growth of 21% YOY. The core B2B EBITDA also grew by 15% YOY to 87.2 crores and an EBITDA margin of 14.1%, compared to 14.8% in Q2 of FY26 and 13.5% in Q1 FY27. The YOY moderation in margin reflects the raw material and freight environment and our ongoing investment in seeding some new businesses and geographies. Our institutional and B2C business reported a revenue of 77.7 crore in quarter two, a growth of 3% YOY. More importantly, profitability improved significantly. This business reported a positive EBITDA of 0.2 crores compared with an EBITDA loss of 3.7 crores in Q2F526. This improvement reflects our calibrated steps on portfolio rationalization, product mix, and cost discipline. We will continue to focus on improving the quality of revenues across these segments. On the balance sheet side, our balance sheet remains healthy with strong liquidity and comfortable leverage. Gross borrowings reduced by around 46 crores during the first half to 361.8 crores. Net debt stood at 221 crores compared to 248 crores in June 26 and 281 crores in March 26. Our net debt to equity ratio stood at 0.16. Working capital days saw significant improvement and reached 86 days in Q2 FY27 from 97 days at the end of FY26. Our priorities going forward remain optimum asset utilization, operating leverage, and a better product mix, along with working capital efficiency and strong cash flows. Together with a prudent approach to capital allocation, they should further strengthen the balance sheet. That's all from my side. We can now open the floor for questions.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Maitri Shah with Safaya Capital. Please go ahead.

Yeah, hello. Good afternoon. My order?

Yes, ma'am.

Yeah, yeah. Just a couple of questions from my side. Firstly, this quarter we've seen exports contributing close to 31%, and this proportion has been increasing quarter on quarter. Where do you see the contribution coming from? What are the drivers' segment that are driving this growth coming in from the export side? And maybe two years from now, how do you see the proportion from this business kind of increasing and ramping up?

Yeah, thank you, Maitri. We have been able to accelerate our export revenues now for the last few quarters. This quarter was especially a very strong quarter for us on the export side. Primarily, the exports were driven both in the HPPC and in the textile segments. So with textile, we've been talking for some time now of the highland facility coming in. I think that also played a good role this time for the textile exports to grow. And within that, we've also looked at a lot of new geography, especially in Southeast Asia, in the African continent, and now we've also looked at new areas in the Latin American space. So that is helping the textile register a good growth on the export side. Parallelly, the HPPC continues to show a strong export push. In fact, in this growth that we've seen of almost 34% in the export revenue YOY, so almost 35% quarter-on-quarter, the major contributors are HBPC and the textile business. And I think going forward, as you asked, we expect this trend to continue. While we may not see, I cannot really not tell you about this kind of growth coming every quarter, but definitely our target is that exports should slowly become a larger portion of our overall revenue. We've already hit 27%, if you see, on an H1 basis. This quarter, we were at 31% of our overall revenue. So, our first target, I think, by the end of this year, should be that at least 30% plus of our revenue should come from export, and we've been working towards that, and I think now the numbers are quite visible in this quarter, at least.

Thank you. That is great to hear. And on the HPPC side, on the export business, are we seeing growth coming in from more higher value products, like the oil and gas contributing more? And what sort of margin differential you are seeing on the export sales and on the sales in the domestic market?

Hello, this is Sunil Chari. Good evening. As you see, our export and our B2B EBITDA margins are increasing every quarter now. And this quarter, our EBITDA margins for the B2B business are 14.1%. And the focus has been on a very prudent product mix where higher margin products are being sold in the export but also in the domestic market. We have had a rationalization by tail cutting. Tail cutting means, you know, with the bottom 5% of the products who have released margins are cut off from the tail and we stop producing or selling those products. And this focus on product optimization has helped us, you know, get better cross margins and also better margins. I do not have, you know, the exact details of what is sold in the last quarter in terms of products, but the higher gross margins and higher EBITDA is proof of the same.

Got it. And we also mentioned we've taken a lot of portfolio rationalization on the B2C and institutional business, and currently we're at kind of EBITDA break-even margins. So going forward to the next two quarters, do you expect this business to turn a bit a bit of positive? Also, what plans do we have for the B2C business? We were planning on kind of having a sale of that business. So just some color on that as well.

Yeah, so this quarter, I think after many quarters, we saw this B2C business breaking in. I think we've done a lot of portfolio rationalization, a lot of the low margin products. We've not really gone ahead in a very big way to promote. That's also visible in the fact that the P2C revenue has not grown to a large extent. Our aim now is to make this business profitable, even if there is, you know, so two-pronged approach we are doing. One, as I said, we are looking at higher margin products in this, as well as some sort of a cost restructuring, cost optimization activities, which are also being started internally.

So our aim is that at least in the next two

quarters, at least H2 should also be an EBITDA positive H second half for us. And overall, on a year, full year basis, we should at least break even

in this business because the first quarter we had a loss.

On our plans for this business, we still are on that plan of, you know, moving out of this B2C business. We'll do that as we had, you know, I said last time also at an appropriate time and at an appropriate value. So till Until that, you know, we reached that point, I think our aim is that we should still run this business on a positive note, and that's what we are doing.

But our overall plan still

remains to move out of the non-core businesses that we have.

Got it, got it. And just lastly, on the oil and gas business that we have in the HBC segment, any outlook you have? Where are the sales coming from? Which regions are we targeting? Are we targeting the U.S. as well? Because I think the oil and gas kind of segment is growing a lot over there right now. So, yeah, just some color on the oil and gas business in the specialty camp, yeah.

So, as you know, we have been talking about the oil and gas business. Primarily, our focus is now the India market and the Middle Eastern market, but also Kazakhstan, Turkmenistan, Uzbekistan, on those belts. In the U.S., we have, you know, distributors who sell into the oil and gas industry, but we do not have exact figures on segment-wise on what they are selling into. But where we sell, you know, it is basically India, Middle East, and the East European part.

Got it. Thank you, sir. I'll join back in with you.

Thank you.

The next question comes from the line of Gagan Dixit with MK Global. Please go ahead.

Yeah, thanks. Thanks for taking my question, sir. First, my question is about the capacity ramp-up. So, around 50,000 tonne of a new approximation in the age capacity is not built, sir. So, what utilization do you expect in FY28 and FY29, and what peak revenue does that support, or is it the same four times as a turnover still holds, sir?

So, as we have said earlier, the peak utilization will happen about two years post this asset coming into commissioning. So, probably we'll have the peak utilization targets by end of FY28, and we still stick to the target of, you know, 3x of the capex value to be the peak sales revenue.

And sir, is it a constraint in the EU supply or consumer demand for that currently? And how much is the additional clean oxide that is secured from the Reliance extension, sir?

Namaste. This is Sumil Chari. Last quarter, we had a constraint on EU supply from our supplier, which is Reliance. We are hoping that this quarter, we should not have the EU constraints. The new expansion will come up in two, three quarters, and as soon as it comes, we should get a higher relocation than the current ones. We do not have any confirmation from reliance on how much quantity will be allotted to us.

And, sir, about the margin, Nick, sir, so if you ice up over the next one or two years, what is the share of the revenue? Do you expect from the value-added business lines like pharma, oil, gas, personal ingredients versus the commodity to oxylates, and what are the typical margin premium these carriers, these new businesses?

See, as you would have seen in our earnings presentation which we uploaded, we have got the X-E-PAC registration for our unit of plant, and this allows our surfactants, which are X-E-PMs in the pharma industry, to be exposed. The pharma approach takes six months to two years depending on the customer, geography, and gradually ramping up the pharma exports. Last year it was about 50 crores. We had pharma exports and this year we are confident that we'll have a very good growth in the pharma segment. Our exports in Parma also is picking up every quarter, and we see Parma, food, aroma as new lines where we want to focus on higher margin products. So going forward, we would continue to focus on higher gross margin products than lower margins for all new products which we are launching.

And sir, my final question is about the cash allocation, sir. So, over the next two to three years, how much will the free cash will be split between the debt reduction and Saudi Arabia? Because I think debt-free also removes significant amount of annual interest. So, that's something, how you want to go with it, sir?

So, again, our first priority now with the cash flow would be to reduce the debt. That's what we've been doing in the last two quarters. And I think now with most of the capex spend done, we'll have some more spends in this year, but not to the extent that we've already done. And then going forward, our capex spend in India will be significantly low. And most of it will be in KSA once the project, etc., is finalized. And we also hope that by that time, we will have some of these non-core businesses also sold. So, we expect that a lot of these cash flows will come in both from exiting the non-core business and the cash generated from the current operations. Firstly, we'll go into debt reduction and parallelly, depending on how the Saudi project timelines come in, we will also put in money there. Of course, Saudi project will have equity and a mix of debt also, but that we will work that out once, you know, we have more understanding of the kind of the size of the CapEx and the timelines. But yeah, currently, all cash flows will go into debt reduction.

Yeah, yeah. That's best for my answer. Thanks for the elaborate answer, sir. Thanks.

Thank you. The next question comes from the line of Nitesh Doot with Anand Rati Institutional Equity. Please go ahead.

Hi, team. Good evening. So, my first question is on the core B2B EBITDA margin that was at about 14.1% versus 14.8% year on year. And that's even on a 21% revenue growth. The 20 dips console margin improvement, you know, came entirely from the institutional or the B2C swing. You know, so without that swing, the console margin would have been about 11.9%, if I'm not wrong. You know, could you please give some color on what compressed the core margin here on the ground, And then how to get back above, you know, 15% there.

You should be sure.

No, I have not understood your arithmetic on Nittish. Can you just repeat your question?

So, year on year, sir, if we look at the core, in the core of the margin, that's at about 14.1% versus 14.8%, right? And the console 20-bit improvement that is coming through is largely because of the B2C swing that came about, where you ended positive on your B2C, on the institutional business. So without that swing, the console margin would have been 11.9%. Am I clear? Hello.

See, without the B2C business, our EBITDA margins are at 14.1%, right?

No, I'm talking about the console margin would have been lower. In any case, I mean, the question is that, you know, what has compressed, you know, the core margin year on year, despite the revenue growth, you know, that we see, and, you know, what steps are we taking or, you know, What is our outlook on how to get it back above the 15% indicated numbers?

So, see, I really have not understood your working, so maybe we can connect later. But on the EBITDA margins, if you see, we are down from 14.8% to 14.1%. See, the expenses on freight have significantly impacted in the current year. Even though our exports have grown significantly, the freight costs have almost double, tripled over what they were in the first off of last year or due to last year. That has significantly impacted our EBITDA margin. I think as we start, and also apart from this, raw material prices, especially prices of some of our core raw materials like phenol and all have gone up significantly over what they were last year. While we have been able to pass on most of these increases, the freight element still remains a challenge for us, and not all customers are really ready to absorb the entire freight increase, so there is an understanding of how much we will absorb, how much we will be able to pass on. But overall, we are, I think, still working on this freight element. But otherwise, I think the business, in terms of growth, in terms of volumes, has shown a significant improvement over what we had done last year.

Does that answer your question, Ditesh?

Yeah, yeah. Okay. So, yeah. So, can you also help us with the volume growth for Q2 segment-wise?

Yeah, so, see, we don't give this split specifically, but most of the growth that we have seen has all come out of volume because a lot of the prices have, you know, kind of softened with the raw material prices. In the early part of Q2 had come down, so we had to also reduce prices of some of our products. So this growth that we have seen in the second quarter, most of it is a volume-driven growth.

All right. And so just one last model on the H&M bit, there the growth rates have come off. So is it like a seasonal or customer-specific thing, or if you could just help clarify that?

Yeah, that is true. Generally, the second quarter is the weakest for the HN division. The third and fourth quarters will peak. So, even with the low season, we have done pretty well, clocking about 27 odd crores. The next two quarters are going to be the peak season for Animal Head.

Okay, okay. Sir, just one last if I may, sorry. Sir, can you help us with the blended utilization numbers on the photo heat capacity and specifically for the H1-2 and, you know, unit of phase 1 to ethoxylation?

Yes, so on a blended level, the capacity utilizations are at about close to 60%. The new ethoxylation facility that has come up earlier this year, or late last year, I would say, is currently at about 30% utilization. We are slowly ramping that up. So, hopefully, we expect by the next year, with the reliance capacity also coming in and the flows of EO also increasing by probably Q2 or Q3 of next year, we should have a healthy utilization of the new ethylocity.

All right, thank you so much and wish you the best for the coming quarters.

Thank you. The next question comes from the line of Hemkesh, Qatar, with Green Portfolio. Please go ahead.

Hello, sir. Thank you for taking my question. So, my first question was regarding the new plant, upcoming plant in Saudi Arabia. Is there any timeline that the management is targeting that by this particular financial year we are targeting to start commercial operations or they are still in the like outline phase so there is no set timeline for this?

Yeah, so for the KSA project, if you see, we are doing, you know, taking, you know, a step-by-step approach. We had first taken an approval from the board to, you know, start exploring the initiatives of Saudi. So, we did that, you know, for the last 8-12 months, and we zeroed down on the strategy for Saudi in terms of the plan, the area, the potential feedstock supplies, etc. And we've been talking to all the relevant authorities there in terms of the process approval and how we can take the project forward. And now in this quarter, we have taken again an in-principle approval from the board for leasing out land in KSA for the project. So, there, currently, a piece of parcel of land was offered to us, and we've decided to go ahead and lease it, and probably we'll do some initial activities like fencing, boundary wall, etc. in the next few months. And parallely, we are, as I said, in discussions with potential suppliers of feedstock and parallely internally working also on the overall product, the capex, the market size, both domestic market in KSA and the export markets in GCC. So, those activities are parallelly going on. So, once we have the entire blueprint on PEPO and the financial for the project done, we will go back to the board to seek approval for the next step to go ahead, and that's when we will be able to give a little more color and light in terms of the timelines, the cost, And, you know, what exactly we are going to do in KSA. So, as of now, whatever we've done, we've talked about it, the land, etc. The next steps, once they get warmed up, we'll come back and talk about that.

Okay.

Hopefully, some of these developments will happen over the next 8 to 12 months.

Understood, sir. Thank you. And sir, next question was regarding the core B2B business. We have seen steady margins of like around 14% for this business for last, I would say, two, two and a half years now. And in the earlier call, also, you mentioned that the aroma business and parma business you are targeting and ramping up as they, you know, offer higher gross margins for you. So, in the core B2B business, what kind of margins are you expecting going forward like FY27, FY28, and FY29?

So, yeah. So, I think as we have talked about in this quarter, the initiatives of Pharma, we are now, you know, taking that up, taking it forward. We have this audit, which we have cleared. Now, these things, especially these businesses in pharma, etc., as Mr. Chari said, takes a little time in terms of approval and all. So, we are in that process. Hopefully, we will get the approvals now going

over the next couple of quarters.

And then, yes, as I said, as these segments like Pharma, Roma, you know, start becoming a significant part of the overall business, we should see steady cross-margin improvement, you know, going forward. I think we are still a couple of quarters away from seeing some, you know, significant contributions from these businesses, but, yeah, we are already on line to, you know, expand the scope that we have in both pharma and the Arama space.

And so you talked about audits. Were these audits customer-related or certifications from regulatory bodies?

Regulatory, we explained that, you know, we already have the approval, the registration, which does not require frequent customer audits. But customers do stability studies in pharma. And in overseas, you know, customers, the time taken is more also in MNC customers in India, the time taken is more for stability studies. So, for example, if it is a cup syrup where polythylene glycol 400 will go, or a laxative where polythylene glycol 3350 will go. So, they will make samples, you know, do stability studies, do some trials, and then go slowly. So, ramp up in pharma is always slow, but it is steady and doesn't go back. So, once you get it to the customer, the customer does not throw you out fast. Price and all are not the key criteria for changeover in a pharma side of XBPN.

Understood, sir. So, safe to assume that pharma and basically the capacity expansion of ethoxylate are the two growth drivers until the KSA plant comes, right?

Yes.

Okay. Thank you. Thank you so much.

The next question comes from the line of Rohit Nagaraj with 361 Capital. Please go ahead.

Thanks for the opportunity and congrats on good set of numbers.

The first question is, probably I missed a comment on equivalent oxide. So, how are we placed in terms of incremental equivalent oxide availability? And when is it that they

are now likely to...

I'm sorry? To interrupt, Rohit, you're not audible. Your voice is breaking. Could you please change your location and ask your question on the handset mode, please, in case if you're using hands-free?

Yeah, I'm just... Hello. Yeah, am I audible now?

Yes, please go ahead.

Thanks. So the first question is in terms of EO availability for our incremental intoxication capacity. So, how are we placed for that? And what is the latest timeline that is suggested by Reliance in terms of the newer project commissioning from their side? Thank you.

Yeah, so we are expecting in the first quarter of financial year, next financial year, for the Reliance expansion to kick in. And we should get higher amount of EO allocation from the first quarter. And, yeah, thank you.

Yeah, and in the time, how are we secured in terms of the incremental availability of EO for our volume growth?

At this moment, there is no confirmation on what is the incremental quantities, and hopefully in the next, you know, couple of months, we should get a confirmation.

Got it, sir. Second question is on the exports front. So, which particular user segments we have seen that the growth on the HPC part is coming? And is it only driven from HPC or there is textile chemicals which have also taken some part in terms of the exports growth?

Thank you.

We saw broad-based growth in the export side. Within the HPPC, I think personal care was one of the key drivers, if you compare with on a bio-wide basis. And then also some of the new segments like oil and gas also saw some traction in this quarter. And yeah, it was not only HPPC, the export numbers in textiles was also pretty strong in this quarter. So, Q1Q, if you see, almost the textile export revenue grew by about 50% which was quite heartening because these were the efforts we've been taking over the last few quarters in terms of seeding some of these new geographies like Latin America and And Southeast Asia, some of the African countries also. So some traction we saw in this quarter. And also the Thailand setup which we have put, that has also started playing a role in moving up these exports, especially in textile. So yeah, so majorly HPPC, which continues to be the main driver, but also textile has shown a significant improvement in the export side.

Thanks. I'll just squeeze in the last one.

In terms of the current CAPEX projects, which are in CWIP and in progress, so what are the projects and when these projects are likely to get completed? The context is that once I think these projects are completed, our focus will shift to the KSA investment. So, from that context, I just wanted to know how much KPEX is remaining, which

is currently under progress, and across what verticals.

Yeah, so I think most of these projects will close at the end of this year, the current plan is. And going forward, I think over the next year, at least we will not have any significant capex spend. And then we will, of course, look at KSA, which will be the new area. On this On this capex side, we are, some of the expense will happen on the pharma business, the aroma, where we've, in both these phases, we've done some piloting, so we'll start now setting up some more higher capacity setups, so that will, some of them are in CWIP and some more Spends will happen. And also we are doing some new initiatives on the hydrogenation side. So that will also come up during this year. So yeah, so these are basically some of the new initiatives that are going to come up. And hopefully most of these will happen during this year itself. So we should not have any major spillover going into the next year. Sir, thanks for answering all the questions and all the best, sir.

Thank you.

Thank you. The next question comes from the line of Sakeet Kapoor with Kapoor Company. Please go ahead. Yes, sir. Moshkar, sir, thank you for the opportunity.

Hope I'm audible. Yeah, yeah, thank you. Sir, yes, sir. Just in continuation to the earlier participant, the capital work in progress is, I think, so closer to 150 crores. So, what kind of capacity augmentation would be pencilling in post the commissioning of the same or the capacity of the same towards the end of the year?

So, I think we'll have another about between 50 to 70, 75 crores of spend that will happen in the second half. And then I think nothing beyond that.

Sir, my question was, we have the closing balance of closer to, I think, so 150 crore as on 30th September. 156 crore. So, post-commissioning or the capitalization of the same, what would be the additional capacity added or where are we going to add the capacity? And then, as you mentioned, that we will be spending another 75, so we will be having closer to 225 for this year as a whole? Please correct me there on the numbers.

Yeah, so it will be on the spend side, it will be about 50 crores. Yeah, so total capitalization will be to that extent. And these are, as I said, some of the new initiatives that we are doing. So we'll have spends on the pharma side, on the aroma chemicals. There are projects we are doing on hydrogenation. And there are some expansions or which we are doing in the biosurfactant space also. So that's a new initiative that we spent a good amount last year also, and we've seen some good results. And we are now again planning to do an expansion on that front also. So those will happen across all these segments.

That point is correct, sir. But can you give a number on the volume side, or any understanding on the same, sir?

No, currently, I will not be able to give you any volumes. Let these projects come on stream, then we'll share these numbers.

Okay. So, when we look at our H1 EBITDA, I think that is around, that is 167 crore, and the top line at 1,420% growth over the last year. So, taking into account the initiatives and the type of inroads that we have in terms of the newer products or the higher margin products getting the higher share, what should the likelihood of H2 shaping up in terms of the EBITDA margin trajectory, sir? Any color you can share with us?

Yeah, so I think this year we will be at similar kind of EBITDA of around 12% plus minus. That is what for this year is our take. And as I said, some of these initiatives are still work in progress. We are getting approvals, audits, etc. We are seeding the market, talking to customers. So, much of this is a future expectation. So, probably next year, we should start seeing improvements in the EBITDA percentage. But this year, I think we would still stick to our 12% around that EBITDA for the year end.

And on the revenue growth, sir, this 20% may, yeah.

Yeah, so revenue, see, when we started of the year, we had said that we do about, similar to the run rate we had done last year, we've done much better than that, but given the The current geopolitical situation, the significant issues we are seeing in terms of market demand and the logistics, etc., I think it's very difficult for me to hazard a guess what would happen in the second half, but I think our initial assessment of 12-14%, I think we should do a mid-team, between mid-team to a little higher.

Okay, so what H1 was in terms of previous H1, that kind of growth looks susceptible for the H2. That understanding is correct, taking into account the current scenario.

Yeah, hopefully.

Right, sir. And, sir, one small observation, when we represent our results, they are in the millions, And whereas, when we put forward our investor presentation, they are in crores. So, we can opt for one of the same for displaying the same. I think that would suffice an understanding also because of the same, having two different ways of expressing the same numbers. And secondly, you can see that in millions, we are reporting in results, We are doing this presentation. So kindly offer one that will give this similarity. And sir, when we read your commentary and the thought process, it is quite evident that the strategic levers which you have given about margin expansion, that is, firstly, the portfolio rationalization, then shifting to the high margin part and asset fitting with the calendar capex, This should all gather steam going ahead also. Although the environment may be dicey and quite susceptible because of the RM issue, I think we are on a strong track to at least replicate what we did in terms of the revenue profile for H1. Even that understanding is correct going ahead for us?

See, we are working hard and we are very, very happy to see our positive cash flow of 131 crores in the first half, reduction in debtor days, reduction in stock, and also reduction in net debt from 280 crores to 220 crores, making the BRPL business positive. We are working very hard and we are very happy with the last two quarters results. But what is happening is in the global market, the situation is changing so rapidly. We are not able to know whether we will be able to ship our shipments through Babal Mandev or through Hormoz or the insurance and the price are going up, the containers are not available, the isotope tanks are not available. Customers are very, very much worried. So, the global situation is now the Middle East is in a bitter turmoil. All this, when you see to it, we are not able to hazard a guess because of so much uncertainty. In our internal budgets, we are very positive and very bullish. But we do not want to hazard any guess, give anything, which after six months, the investors will say, We will do our best, you know, as we have done in the past.

And lastly, about the plant visit, can investors or the analyst community look forward to visit our facility and get some further understanding going ahead? I think that's a feasible term.

Yeah, yeah, SGA will organize. I am already in discussion with them. So, we will do that pretty soon.

Okay, sir. And I will join the queue, sir, and congratulations, sir, for the very steady and improved set of numbers. I think so, the number speaks for them, themselves. Only a small pointer, as you told about the reduction in debt, what is the current maturity that is needed to be repaid, or what should be the likelihood to exit the year in terms of our closing debt numbers? Any color you can share on that?

Sir, these are all mostly working capital debts. So, this will be a moving number. I said that all the working capital debts, probably by mid of next year, we should become debt-free on that. So, as of now, I still hold on to that number of money. And the long-term borrowing, sir? Long-term borrowing will take its trajectory. If we have good cash flows, we will pay off earlier also. But on the other debts, probably by next year, mid of next year, we should be debt-free.

The next question comes from the line of Saurabh Jain with Sequent Investments. Please go ahead. Saurabh, please go ahead with your question.

No, my question is already asked.

Thank you. The next question comes from the line of Madhur Rati with Countersilical Investments. Please go ahead.

So, thank you for the opportunity, sir. I wanted to understand the working capital improvement that we have seen during this H1. So, is this sustainable or was this more driven by customers giving us better priority in a raw material shortage scenario?

No, no. This was, I think, two sustained efforts which we have done during this year in terms of rationalizing inventory, improving our collection cycle. So that's the result of this 10-day improvement that you're seeing in the net working capital position. I think this is a good position we have. I have always said that, you know, we should, our aim is to be in that 90-day kind of a net working capital position. So, I think we are pretty much on that, even lower than that. We are at about 87 days in September. Hopefully, in March also, we will be within this range of 87 to 90 days.

Got it. And also, coming up to our ROC, sir, our ROC used to be upwards of 20-25% a few years back, but that has moved to low teens right now. And we are also going to do, and sir, we've spoken about that we have moved into value-added products. We have acquired unit of between that, but our gross margin profile hasn't changed and our ROC profile has declined. So, how should I look at this metric going forward? And so, a sub-question would be, we will be doing a greenfield CAPEX in Saudi Arabia, so what kind of ROC or payback profile do we expect for any, this or any new CAPEX that we will be doing going forward?

Yeah, so ROC, I think you will see ROCs start improving once all the capex spends that we have done in the last two years, the capacity utilizations start improving in that. And we've always maintained that the initial sped that has happened for a couple of years, we'll see a little bit of a surprised number in the ROC. But as these plants start delivering products and the products we start selling, these are all good margin products. So we'll see the ROC improvements coming in. Improvement of working capital, reduction of debt, these are all part of that whole process of ROC improvement. So, we are on track on that, and hopefully, we'll see these playing out in the ROC numbers probably in the next year. You'll see the upward trajectory. In terms of our spends in KSA, as I said earlier, we will come back to you with all the details of the capex, the returns, the products, etc. at a suitable time when we have internally finalized the entire project plan. Currently, it's only the land that we have taken on lease.

Sir, I understand that operating leverage will help us improve the ROC profile, but sir, our gross margin profile has stayed the same even with us acquiring Unitop in the meantime. We've moved to value-added products, but still our gross margin profile is stagnant. So, why is it not reflecting gross margin profile at least?

See, when we acquired Unitop, the gross margin of Unitop was always much lower than the gross margin of Rosari. The expenses in Unitop were lower, and that is why the EBITDA also of Unitop when we acquired was in the range of 12-13%, the EBITDA of Trisha was in the range of 10-11%. We have been able to improve these businesses. When we acquired the business, we were, you know, not doing any ethoxylation in-house, so we were buying ethoxylates at a credit of 90 days. And now, we have to buy all the raw materials for ethoxylation in advance, like, for example, EO is purchased in advance, hydroxychloroquine, loral alcohol, non-in-phenol phenol, tradisyl alcohol, cetosol alcohol. These are all coming, you know, from the Holyo route or the petrochemical route, and these are advanced. And that is why our working capital cycle increased. But now, you know, with our focus, the working capital size is now being compressed. And as I said, that we would, you know, be below 90 days, hopefully, even in the next, just in the second half. So, we have not worsened when we combined 2021, you know, figures of gross margins of unit of TriStar and Hulsari. We are much better than what we were at the end of 2021.

Got it. Sir, that was from mind.

Thank you so much.

Thank you. Ladies and gentlemen, due to time constraints, we will take that as the last question for today. I would now like to hand the conference over to the management for the closing remarks.

Thank you, everyone, for joining the call today. I hope we have been able to answer all your questions. For any further queries, you can get in touch with our team or strategic growth advisors or investor relations advisors. Thank you once again for taking the time to join us on this call and have a good day.

Thank you, sir. Ladies and gentlemen, on behalf of Rosari Biotech Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.