Earnings Call Transcript - XNSE:VISHNU 2026-11-06

Operator

Ladies and gentlemen, good day, and welcome to Vishnu Chemicals LinkedIn Q2FY27 Conference Call hosted by MK Global Financial Services LinkedIn. As a reminder, all participant lines will be in the listen volume mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then be on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dagan Dikshit, M.K. Global Financial Services Limited. Thank you, and over to you, sir.

Dagan Dikshit, Analyst — Emkay Global Financial Services Limited

Yeah, good afternoon, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Sitar Cherukuri, Joint MD, and Mr. Hanmat Bhansali, VP Finance and Strategy. I shall now hand over the call to the management for the opening remarks. Over to you, sir.

Sitar Cherukuri, Analyst — Joint MD

Good afternoon, everyone, and welcome to second quarter earning conference called FY27. We are pleased to report another quarter of steady performance, building on momentum established during the first quarter and reflecting the resilience of our business amid a challenging global operating environment. During the quarter, our consolidated operating revenue grew by approximately 7% Y-on-Y basis to 430 crores. While EBITDA increased by 10% and profit after tax grew by 8% on a year-on-year basis. First half of FY27, we delivered revenue growth of over 15% accompanied by similar growth in profit rate. Geopolitical situation, particularly in West Asia, continues to impact international shipping and freight market. During the quarter gone by, our shipping and forwarding expense increased to 8.8% of operating revenue compared to 5.9% in the preceding quarter of this financial year. We have been able to sustain our operating margins despite continued pressure from elevated logistics costs. And uncertainty in the end user market. Our ability to serve both domestic and international market also provides us with greater flexibility in responding to changing market dynamics. Coming to our individual chemistries, in our home business, we continue to focus on improving our product mix through a shift towards higher value added speciality derivatives. This remains an important part of our long-term strategy, enabling us to strengthen our competitive positioning and improve margin profile in the coming years. We are also pleased to share an important strategic development in our chromium business. During the quarter, we entered into a joint venture agreement with DCX Chrome France to establish a manufacturing facility for high-purity chrome metal in Vishakapatna with a proposed annual capacity of 6,000 metric tons of chrome metal. This initiative represents a significant step in our strategy of moving further up the value chain and expanding it into specialized home products. Our barium business continues to remain an important and stable contributor to our operation, and we continue to achieve solid cash flow generations. We remain focused on strengthening its cost competitiveness through operational efficiencies and further backward integration, And also looking at other value order products. Which can be used in the MLCC and other battery applications in the related chemistry. In Strontium, we continue to focus on scaled-up operations, expanding market opportunities, and improving contributions from this business. Strontium carbonate will progressively strengthen our diversified scarcity chemical portfolio. Alongside these initiatives, we remain committed to improving our energy efficiency. And reduce our dependency on conventional power sources. We plan to add approximately 20 megawatts of solar power capacity, which will increase our solar power generation capacity to nearly six times from current levels. Our diversified product portfolio balance geography revenue mix, increased focus on value-added chemistries, and ongoing investment in... Forward integrations provide us with multiple avenues for future growth. With that, I will now hand over to Mr. Hanuman to take you through our financial performance for quarter in a greater detail.

Sitar Cherukuri, Analyst — Joint MD

Thank you. Over to you. Thank you and good afternoon, everyone.

Hanmat Bhansali, Other

Let me now take you through the consolidated financial highlights of Vishnu Chemicals Limited for Q2FI27. The company reported steady year-on-year growth in Q2FI27, supported by higher revenues, improved operating profitability, and growth in domestic sales. On a consolidated basis, the company reported operating revenues of 429.53 crores in Q2FY27 compared to 401.15 crores in Q2FY26, representing a growth of 7.1% on a Y-on-Y basis. Gross profit for the quarters stood at 207.79 crores compared to 172.8 crores in Corresponding quarter last year. A growth of 20.3% on a Y&Y basis. The consolidated EBITDA stood at 64 crores in Q2FI27 compared to 58.2 crores in Q2FI26. A growth of 10% on a Y&Y basis. EBITDA margin of the company stood at 14.9% in Q2FI27 compared to 14.5% in the corresponding quarter last year. Profit after tax for the quarter stood at 35.57 crores compared to 32.88 crores in the corresponding quarter last year, reflecting a growth of 8.2% on a Y&Y basis. The pack margin of the company in Q2FI27 stood at 8.3%. On a half-yearly basis, the company reported operating revenues of 862.3 crores in H1 F527 compared to 748.06 crores in H1 F526, delivering a growth of 15.4% on a Y-on-Y basis. The consolidated EBITDA. Stood at 129.49 crores in H1 FI27 compared to 113.92 crores in H1 FI26, a growth of 13.7% on a Y&Y basis. The EBITDA margin of the company in the first half of FI27 stood at 15% compared to 15.23% in H1 last year. The profit, the profit after tax in H1FI27 stood at 75.21 crores compared to 65.11 crores in H1FI26, a growth of 15.5% on a Y&Y basis. Fat margin of the company in H1FI27 stood at 8.7%, which is similar to H1FI26 last year. As of 30th September 2026, the company's consolidated debt to equity stood at 0.67 times, while debt to EBITDA stood at 2.8 times. We are also pleased to highlight the recent upgrade in the company's credit rating with ITRA assigning an A stable rating to our long-term banking facilities compared with earlier A- rating by CARE. This represents an important milestone in our financial journey and reinforces our commitment to prudential financial management. The company maintained a well-diversified geographical revenue mix with domestic sales contributing 58% and exports accounting for the remaining 42% of consolidated sales. The company's balanced domestic and export sales mix provides a natural hedge against rising international freight and logistic costs, helping to partially mitigate their impact on overall profitability. With this, I conclude my remarks, and we can now open the floor for Q&A session. Thank you.

Operator

Thank you very much. We will now begin the question-answer session. Anyone who wishes to ask the question may press star and 1 on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset for asking a question. Ladies and gentlemen, we will wait for a moment while the question is assembled. We have first question from the line of Sagar Jethwani from Philippe Capital PMS. Please go ahead.

Sagar Jethwani, Analyst — Philippe Capital PMS

Yeah, thanks for the opportunity. Our export sales is down on a YOY basis. Because of the supply chain disruptions, have we lost any sales during the quarter? And also, if you could quantify the amount.

Sitar Cherukuri, Analyst — Joint MD

Good afternoon. Well, yeah, logistics, particularly towards the west, which is America and Europe, has remained a challenge, but it's slowly, I mean, subsiding, and we are witnessing some improvement in this quarter, and hopefully by quarter four, it should come back to the levels where it should be, particularly for our base, I mean, for your question related to So where our impact is coming from, mainly on the base cargo for our leather business, where the freight plays approximately 20-25% on the overall selling price. That's where we have seen the volume drop. Otherwise, other value-added products like chrome oxide, chromic acid, and dichromate, and even barium chemicals, you know, we were not impacted.

Sagar Jethwani, Analyst — Philippe Capital PMS

So, what was the lost sales during the quarter, and is it the permanent loss, or will we be seeing the recovery in Q3, some of the spillover that we can potentially see?

Sitar Cherukuri, Analyst — Joint MD

Definitely, I would say Q4 will be, you know, more realistic than Q3, because typically customers look at, you know, five to six months of a contract. And we remain very positive. And in fact, we see, I mean, it actually helped globally to increase the actually absolute selling prices as well. So, I think we are expecting the volumes for this particular business to come back in quarter four.

Sagar Jethwani, Analyst — Philippe Capital PMS

And what was the value loss?

Sitar Cherukuri, Analyst — Joint MD

Value loss, I would say, would be 20, 30 crores a quarter. 30 crores, 25, 30 crores a quarter.

Sagar Jethwani, Analyst — Philippe Capital PMS

Understood. And as far as the historical trends, Q1Q margins in both Chrome and Barium businesses both have been volatile. So what's the optimum margins that we can expect going in future? Can there be a consistency be maintained considering also the fact that we have been backward integrating these businesses? So what's your thoughts on the margins consistency?

Sitar Cherukuri, Analyst — Joint MD

We remain optimistic in spite of current challenges related to logistics and general market conditions. We are expecting especially the U.S. market to improve by Q4 early next year. So the volume growth, we are seeing good volume growth coming during this year, and we remain more positive in terms of, you know, gaining more customers, increasing the volume in the existing customer in that part of the world. And it's also value-assertive that way.

Sagar Jethwani, Analyst — Philippe Capital PMS

So you expect some directional improvement in the margins. Is that understanding correct?

Sitar Cherukuri, Analyst — Joint MD

Yeah, I mean, yes, we expect a directional improvement in the margins. And also the change in the product mix, which we are, I mean, envisaged, is also going in the right direction. We are going to focus more on our oxide business and acid business for the next year. And for especially oxide business, we have a clear purchase order from our partner in Europe. So that's definitely going to add to the revenue and give us a lot more visibility. Chromic acid, especially in India with the infrastructure growth and the automobile industry outperforming is also we are seeing a steady growth. And we continue to have 60 to 70 percent market share. The domestic market remains resident. Export, I think, with the product mix change, it's definitely going to improve both the top line as well as the gross margins moving forward. The backward inflation, we are expecting the Cromore to start coming and to see the benefits in the quarter four of this year. I think it's very much in line. So I think all the factors put in together, I think we are definitely expecting a better next year. And targeting 18 to 19% EBITDA margins for next year.

Sagar Jethwani, Analyst — Philippe Capital PMS

Good to hear that. And just recently, we have, you know, shut the plant in Visac. That's a temporary plant closure that I'm talking about with effect from 20th October. Has the plant started? Is the forward integration complete now? Will there be any potential loss due to this temporary shutdown? Or we were ready with some inventory in advance that was maintained accordingly?

Sitar Cherukuri, Analyst — Joint MD

Well, I mean, there is no business loss, which means that, you know, we have enough inventories, both of starting as well as value-added products. So there won't be any business loss per se. And, you know, we had a… We have a strong cyclone, actually two cyclones in that part of, I mean, that part of Andhra Pradesh. So we thought it's better to take a planned maintenance and do the connection to complete our ongoing CAPEX, and it actually worked out quite well, and we are planning to restart day after tomorrow.

Sagar Jethwani, Analyst — Philippe Capital PMS

And, you know, on this UAE-based subsidiary, we are winding up. So, what's the cause for that, you know, winding up the subsidiary?

Dave Mehta, Analyst — Unix DMS

When are we incurring it?

Hanmat Bhansali, Other

It's not very significant, let me put it that way.

Sagar Jethwani, Analyst — Philippe Capital PMS

Okay. And this JV with DCS Chrome, when can we start expecting the revenue flows? Have we engaged in the client? What's the timeline for sample supplies? Some thoughts on that would be helpful again.

Sitar Cherukuri, Analyst — Joint MD

I think we've already started shipping to their facility in France. So, we do have a clear purchase order for next few quarters. The product is already approved. This is to their facility, which is an established facility in France. And about our project, I think we are targeting Q4 of next financial year to start the first phase of production in under the relation of chrome metal.

Sagar Jethwani, Analyst — Philippe Capital PMS

And last bit on the CapEx, this year and next year, what are the CapEx plans?

Operator

Mr. Sagar, Mr. Sagar, sorry for the interruption. Please join in the queue for the more questions.

Sagar Jethwani, Analyst — Philippe Capital PMS

Yeah, sure. Thank you.

Operator

Thank you. We have next question from the line of Nirali Gupani from Unix PMS. Please go ahead.

Nirali Gupani, Analyst — Unix PMS

Yeah, hi. Thanks for the opportunity. My first question is on the stontium part. So, last quarter, we had mentioned that, you know, it contributed roughly 25 crores of revenue and the profitability is not what we would have expected. So, it is stabilized now and what was the contribution for this quarter?

Hanmat Bhansali, Other

Good afternoon, Mr. Niraji. I request you to repeat your question.

Nirali Gupani, Analyst — Unix PMS

My question is on strontium carbonate. The last quarter, it contributed roughly 25 crores of revenue, but the profitability is not what we would have expected. So, how has it changed this quarter? If you can give out some numbers, how much did it contribute and the margins?

Hanmat Bhansali, Other

Um, I won't be able to share the revenues of the strontium carbonate business as of now, but the numbers were very much similar to last quarter. The positive thing is that we have started getting major approvals from customers in India. Some of them who were completely relying on imports for the requirement of strontium carbonate. So that is a positive that we take from here. We are quite optimistic about this product, that in the quarters to come, it will start contributing at a higher level to our overall consolidated figures.

Nirali Gupani, Analyst — Unix PMS

Okay. So, but by when do we expect it to reach this 25% of EBITDA margin by next year?

Hanmat Bhansali, Other

We have not given a guidance on the EBITDA margin for strontium carbonate, but yes, on a capacity utilization, we expect it to reach its optimum level of 70% by next year.

Nirali Gupani, Analyst — Unix PMS

Okay. Okay. And the barium part of the business will continue with this EBITDA, right? There is no change there. We don't expect any change on that side.

Hanmat Bhansali, Other

See, the Barium business is doing reasonably well because over there we have completed both the backward as well as the forward integration. So, at a gross plot of close to about 375 crores, we are seeing EBITDA, which is quite, you know, we have already recovered the payback of significant amount of gross plot that we invested in Barium business. So, on the EBITDA margin front, you know, it all depends on a lot of factors, including some of them which are not in our control, like the macro factors. So, we are expecting that the margins to sustain, provided, you know, the markets remain stable.

Nirali Gupani, Analyst — Unix PMS

Fair enough. And do we plan to do any KPIs on the barium side and what is the capacity utilization there currently?

Hanmat Bhansali, Other

The capacity utilization is close to about 70%. And right now, there are no other plans of CAPEX in Varian business.

Nirali Gupani, Analyst — Unix PMS

Okay. And the logistics cost, which was, you know, you had guided in the last quarter, which was expected to reach about 20% of the revenue. Have you been able to pass some of it? And how do we see that, you know, over the next two quarters now?

Hanmat Bhansali, Other

Good question, and quite correct. Our overall logistic cost as a percentage of export sales was about 20.9% in the current quarter, that is Q2FI27, compared to 10.7% of the export sales on a console basis in Q1FI27. So, there has been an increase, but we have balanced it out by focusing more on domestic market in Q2, and that's where you have seen that our overall contribution from domestic market is 58% in Q2 FI27 compared to 45% in Q1 FI27.

Nirali Gupani, Analyst — Unix PMS

Okay. Yeah, fair enough. That's it from my side. Thank you.

Operator

We have next question from the line of Kausha Sharma from Uninox Capital Venture Private Implated. Please go ahead.

Kaushal Sharma, Analyst — Equinox Capital Venture Private Limited

Hi, sir. Very good afternoon and audible. Yes. So the question is on your program that you have just announced the JV with one of the partners. So could you tell me what kind of amount has you invested in this so far and could you explain some unit economics in terms of EBITDA margin, CAPEX and asset term and overall industry, overall time of this particular segment of this market?

Sitar Cherukuri, Analyst — Joint MD

I can share you part of the information, which is not confidential, I mean, about the product. So we are going to manufacture chromium metal and related grids, which is going into aerospace, as well as defense and nuclear power industry. It's also used in welding electrodes. Currently, there is no manufacturer for chromium metal in India. And most of the requirement in India is met through imports. So this is a very attractive proposal. Hello?

Kaushal Sharma, Analyst — Equinox Capital Venture Private Limited

Hello, yes. And so what kind of EBITDA margin can we expect from this in certain India?

Sitar Cherukuri, Analyst — Joint MD

Right now, we won't be able to give any guidance on that because, again, it's a very volume-driven thing, I can say, that since it's a higher value-added product, I think the gross margin to EBITDA, there is not a significant delta, which means that we are looking at upwards of 20% EBITDA margin in this particular business.

Kaushal Sharma, Analyst — Equinox Capital Venture Private Limited

Given the value of the product. Can you highlight on the industries like what kind of demand in

Darshil Zaveri, Analyst — Crown Capital

India and overall world and what are the key geographical mix in the world

Kaushal Sharma, Analyst — Equinox Capital Venture Private Limited

with this product?

Sitar Cherukuri, Analyst — Joint MD

As per the latest statistics, for the last two years, I think there's been about 17 to 1800 tons of imports of chrome metal into India and it's growing close to 12 to 13 percent year on year basis. So, yeah, I mean, we would say around 2,000 tons of demand in India. But I think what, I think along with that, Vatna, what we are targeting is 60 to 70 percent of the production will be exported.

Kaushal Sharma, Analyst — Equinox Capital Venture Private Limited

60 to 70 percent. And currently, it is more or less coming from the China?

Sitar Cherukuri, Analyst — Joint MD

It's coming from Europe. It's coming from China.

Sitar Cherukuri, Analyst — Joint MD

Okay.

Kaushal Sharma, Analyst — Equinox Capital Venture Private Limited

Thank you very much for answering.

Operator

Thank you. We have next question from the line of Sihil Shah from Samiksha Capital. Please go ahead.

Sihil Shah, Analyst — Samikshar Capital

Hello. Yeah, good morning. Have a good afternoon.

Operator

Hello. Hello, Mr. Seel. Seel, you lined in the elevator, please respond.

Sihil Shah, Analyst — Samikshar Capital

Hello, am I audible?

Operator

Yes, sir, you are audible.

Operator

Yes.

Operator

Mr. Shah, your line is breaking. Come in range, please, to speed.

Sihil Shah, Analyst — Samikshar Capital

Yeah, and now it should be audible. Am I good? Yeah, better.

Sitar Cherukuri, Analyst — Joint MD

Please go ahead.

Sihil Shah, Analyst — Samikshar Capital

Yeah, so my question is on cash flow. So our inventory and receivable fees have increased. If I compare with the last year first half and even the full year. So if you can help us understand the reason behind that.

Hanmat Bhansali, Other

Mr. Sheel, I request you to repeat your question, please.

Sihil Shah, Analyst — Samikshar Capital

Yeah, just a minute. I hope now I'm clear.

Operator

Yes, please.

Sihil Shah, Analyst — Samikshar Capital

Yeah. So inventory and receivable days, my question is on that. So that has increased if I compare them with the first half last year and even for the full year. So if you can help us understand the driver behind that.

Hanmat Bhansali, Other

Thank you so much for your question. The change in inventory days is predominantly because of macro environment, the higher logistic cost and uncertainty due to geopolitical situation globally. At the same time, our receivable days has remained quite similar to what it was last year. At this point of time, it's not gone up significantly. It was a 62 days last year in as of September 30th, 2025 has gone up to about 72, 73 days now. But this situation will subside over a period of time because we don't think this environment is going to last. So, in the short to medium term, we expect that the overall situation will stabilize, at least from where it is, what we have seen in Q2, and that also will reflect in the numbers going forward.

Sihil Shah, Analyst — Samikshar Capital

Understood. And if you can give us on a KPEX side, so we have done a significant amount of KPEX in the first half. So, what is the guidance for the full year and next year as well?

Hanmat Bhansali, Other

Yes, one second.

Sitar Cherukuri, Analyst — Joint MD

Our total capex outlay is around 520 crores, and so far, we have incurred close to 190 crores, and that's already reflecting in our balance sheet in the form of increase in debt, partly, and partly, and partly, and partly, and partly, and partly, it's coming from our contribution, as well. So, yeah, next year? We have 300 crores of capex plan.

Sihil Shah, Analyst — Samikshar Capital

Okay, and what about next year, 28?

Sitar Cherukuri, Analyst — Joint MD

Yeah. So, next 12 months, you're going to spend 300 crores.

Sihil Shah, Analyst — Samikshar Capital

Okay, understood. And if you can help me, give me some numbers on utilization. I think you talked about barium, but what about chromium side?

Sitar Cherukuri, Analyst — Joint MD

Yeah, we are over 75%, and similarly in barium as well.

Sihil Shah, Analyst — Samikshar Capital

And we were looking to add some capacity on the chrome side. I think by 10,000, not done. So what is the status there?

Sitar Cherukuri, Analyst — Joint MD

Yeah, mostly we are looking at the capacity addition in the value-added products like chromic acid and chrome oxide cream. And our sodium dichromate capacity expansion has already completed. So we are at 90,000 tons.

Sihil Shah, Analyst — Samikshar Capital

Okay, Andash. Thank you so much.

Operator

Thank you. We have next question from the line of Prasad Vanere from Union FM. Please go ahead. Mr. Prasad, your land transmitter, please respond. Mr. Prasad.

Prasad Vanere, Analyst — Union MF

Hello.

Operator

Yes, sir, please go ahead with your question.

Prasad Vanere, Analyst — Union MF

Am I audible?

Operator

Yes, sir, you are audible. Can you speak louder?

Prasad Vanere, Analyst — Union MF

Yeah, yeah. So, am I audible now?

Operator

Yes, sir, you are audible.

Prasad Vanere, Analyst — Union MF

So, Siddharth, there are two questions from my end. Firstly, on the existing business, on the BDM side, if you see...

Sitar Cherukuri, Analyst — Joint MD

Mr. Prasad, you are not audible.

Prasad Vanere, Analyst — Union MF

Okay. Am I audible now?

Sitar Cherukuri, Analyst — Joint MD

No, sir.

Prasad Vanere, Analyst — Union MF

I'll join back the team.

Operator

I'll follow. Thank you. Sure. Thank you.

Sitar Cherukuri, Analyst — Joint MD

Thank you.

Operator

We have next question from the line of Mr. Praveen Gala from Mahivyara, TMC LLP. Please go ahead.

Praveen Gala, Analyst — Mahivyara TMC LLP

Hello. I am audible.

Sitar Cherukuri, Analyst — Joint MD

Yes, good afternoon, sir.

Praveen Gala, Analyst — Mahivyara TMC LLP

Good afternoon. Thank you for the opportunity. So my first question comes for overall capex cost and capacity. Maybe we are looking to build up for each product. Maybe by metric terms, if you can give us some idea on that, maybe a peak turnover or a capacity realization, which we can expect.

Sitar Cherukuri, Analyst — Joint MD

Sorry, your voice is not audible.

Praveen Gala, Analyst — Mahivyara TMC LLP

Hello. Yeah. Is it audible now?

Sitar Cherukuri, Analyst — Joint MD

Yeah, better.

Praveen Gala, Analyst — Mahivyara TMC LLP

Yeah. So my first question is overall capex cost and capacity built up for each product, maybe by metric ton and the realization which peak turnover, which we can expect. If you can just throw some light on that.

Hanmat Bhansali, Other

Good afternoon, Mr. Byron. Thank you for your question. On the chromium metal joint venture, as stated earlier, we are setting up a capacity of 6,000 tons of high-purity chrome metal. The plant is going to come up as a greenfield expansion in Vishakapatna. I won't be able to share the exact realization too early at this stage, but globally, if you see the index of chrome metal, it trades at close to about 10 point, say approximately 10.1 to 10.5 dollars per kg, which is approximately 1,000 rupees per kg. On the dimethyl sulfoxide plant, which is expected to commence operations, In Q1 of FY28, we are setting up a capacity of 10,000 tons per annum and On strontium chemicals, we have already set up a capacity of about 12,000 tons per annum, and next year, we are targeting utilization of 70% in our second year of operations. On chromium chemicals, further we are adding speciality derivatives like chromoxide, green, chromic acid, which will be approximately. 30,000 tons in total. So, chromoxide green will be approximately 20,000 tons of incremental capacity and chromic acid will be about 5 to 6,000 tons of incremental capacity. So, this is our overall mix of expansion in terms of volumes.

Praveen Gala, Analyst — Mahivyara TMC LLP

Right. Thank you. Just to understand, on a better understanding, are the products sold at spot rates or on a long-term contract specifically for the aerospace, and what are the margins we are looking out in that segment?

Sitar Cherukuri, Analyst — Joint MD

We will be a tire-to kind of a supplier to the aerospace, as well as the defense industry, I would say. Mainly, this is used particularly as an anti-corrosive agent to prevent any high thermal stability issues in the engine as well as the propeller. Just to give you an idea, around 220 kgs of foam metal is used in an Airbus 320 engine. I mean, just to give you a perspective on where and how much it is used. Yeah. In terms of margin profile, again, it's too early, and it will be very much volume-driven. We've run through the business plan along with our partner. I think gross margins as well as equitable margins, even at a... 60% operating level are looking very prominent.

Praveen Gala, Analyst — Mahivyara TMC LLP

That's great to hear. Sir, any plans for future expansion into electrolytic chromium metal, maybe from aluminothermic electrolytic process?

Sitar Cherukuri, Analyst — Joint MD

Electrolytic chromium metal, well, I mean, as you know, we starting off with air melt grade, okay, from air melt grade also by going through vacuum furnace. We can produce a quality of product which is similar to electrolytic chrome metal. The reason why we choose an aluminothermic process is more energy efficient, whereas electrolytic process is very high on energy. Through this process and one step forward, which we will take probably year two years down, we can achieve the same electrolytic metal quality through aluminothermic process.

Praveen Gala, Analyst — Mahivyara TMC LLP

So one more question, how volatility on the prices front for our products we are seeing with the current scenario and maybe the going forward?

Sitar Cherukuri, Analyst — Joint MD

We are witnessing more volatility related to the sea freight, especially since we are, you know, all the Asian bound exporters, including India, China. And Vietnam and all of the Far East countries are experiencing higher sea rates towards the right. That's the current challenge. In terms of end-user market, especially in India, it remains quite resilient. Europe remains relatively... And even the factoring in that, you know, we'll be shipping more from oxide to our, you know, partner in Europe in the coming months. So our share of oxide and I mean, outside India, Europe will be contributing larger share to our revenue. US is also remains promising. We have... We have achieved some good customer wins over the last few quarters and having a good visibility from our marketing team for the coming quarter. The volatility, I think it's more to do with the raw material, like, you know, energy-related costs, which has impacted in the quarter gone by, as well as one of the key raw materials like sulfuric acid and sulfur. Also, there has been a significant impact, has impacted our market. I think we see more volatility when it comes to raw material and energy costs rather than the end-user market and the price again.

Operator

Sir, participant says left the queue. We take the next question from the line of Amkul Aroda from Sagun Capital. Please go ahead.

Amkul Aroda, Analyst — Shagun Capital

Yeah, hi. So, thanks for the opportunity. Most of my questions have been answered. I have just one question on the progress of South Africa or mine.

Sitar Cherukuri, Analyst — Joint MD

If you could just share some light on that. Good afternoon, Mr. Anukul.

Hanmat Bhansali, Other

In South Africa, we continue to work as guided towards operational readiness for our processing plant. We are already taking a lot of measures towards commissioning it at the earliest possible, and with teams from India, South Africa, and UK working on it. And there is due emphasis on operational CXT, reliability, and consistency of the output that comes from the processing plant. The mining operations has already started, and we are seeing some very good output. So once the processing plant begins, we are targeting to ship the material in a quarter to India.

Sitar Cherukuri, Analyst — Joint MD

Okay, sir.

Hanmat Bhansali, Other

So, any timeline by which quarter or by which year should we expect by next year, FY28, or by when should we expect this? Yeah. So, next year will be a year where we will see significant contribution from the operations in South Africa. And we would like to start commencing the shipment from South Africa to India from next quarter onwards, that is Q4 onwards.

Amkul Aroda, Analyst — Shagun Capital

Okay. Got it, sir. Thank you so much, sir. Thank you. Thank you.

Operator

We have next question from the line of Mr. Darshi Zaveri from Crown Capital. Please go ahead.

Darshil Zaveri, Analyst — Crown Capital

Thank you so much for taking my question, sir. Firstly, congratulations on a decent set of numbers in a challenging environment. Sir, I just wanted to understand in terms of H2 outlaw in revenue, how do you see it as because we've lost some export sales, but that might bounce back. So what would your full year revenue target be, sir?

Hanmat Bhansali, Other

Good afternoon. Thank you so much for your question. More than the loss of sales, it is a diversion. We have a very balanced market mix in both domestic as well as export market. So in certain quarters, you will see export outperforming the domestic and vice versa. In the Hapeli, Details that we shared at the beginning of this call, our company has already reported a growth of 15.4% on a Y-on-Y basis compared to last year, and we will continue to work on the same metrics and deliver a strong overall annual performance in FI 27.

Darshil Zaveri, Analyst — Crown Capital

Yeah, fair enough, sir. But because growth and moderate is slightly in Q2, so I just want to understand, will Q3 also have some moderation and pickup from Q4, or do we see Q3 as a normalized quarter, sir?

Hanmat Bhansali, Other

It's very early for us to comment on the numbers.

Darshil Zaveri, Analyst — Crown Capital

I don't know if that number is just a, you know, qualitative statement from you, like is it traditionally, or if it's been a month since Q3, so it's just, are things like Q2 or are they normalizing, if it's just a track also helps?

Hanmat Bhansali, Other

Yeah, it is, it seems to be on a positive trend compared to Q2. And, you know, we hope that the next two months are more productive than the quarters on buy.

Darshil Zaveri, Analyst — Crown Capital

That's helpful, sir. And, sir, I just wondered, I think earlier in the call, you mentioned F528, 18% to 19% of the big time. I'm sorry, was that for the consolidated business or for a specific segment, sir?

Hanmat Bhansali, Other

In the earlier call.

Darshil Zaveri, Analyst — Crown Capital

No, earlier today in the call, I think, we were mentioning 18% to 19% EBITDA in FY28. I don't know if I heard it correctly or not.

Hanmat Bhansali, Other

FY28, yes, next year.

Darshil Zaveri, Analyst — Crown Capital

So that's consolidated on a 6%. Yeah.

Hanmat Bhansali, Other

Yeah. So for the first half of this year, we have delivered a 15% EBITDA margin. And if you see, nearly 3% increased has been there in the logistics cost. On a quarterly basis. So, we expect that to subside in the quarters to follow. That will help us inch back to about 17% to 18% in the year to follow.

Darshil Zaveri, Analyst — Crown Capital

And we'll get some benefit from our backward integration, right? So, that will also help.

Hanmat Bhansali, Other

A combination of both backward integration and forward integration due to a change in product mix that will overall improve our margins.

Darshil Zaveri, Analyst — Crown Capital

Oh, okay. That's great. That's it from my side. Thank you so much, sir.

Operator

Thank you.

Sitar Cherukuri, Analyst — Joint MD

Thank you.

Operator

We have next question from the line of mehectality from LGT. Please go ahead.

Mehectality, Analyst — LGT

Hi sir, thank you for the opportunity. So just wanted to understand you said that mining will start, will be there by Q4. So is there any reason for further delay by a quarter or so?

Sitar Cherukuri, Analyst — Joint MD

Well, I mean, we remain very positive. I think the mining is happening quite well. We are seeing good output. We are in the final phase of, you know, commissioning the beneficiation plant and getting the write-up. Okay, so beneficiation is still the bottleneck? We don't see a reason for it to go beyond the waterfall.

Mehectality, Analyst — LGT

Okay, and you just mentioned that you are expecting the 3% margin to 18% in Q4, and 3% would be from logistics, but given the backward integration.

Sitar Cherukuri, Analyst — Joint MD

So, that was a guidance for next financial year, not Q4.

Mehectality, Analyst — LGT

Yeah, I am asking about next financial year for FY28. So you said that 15% and 3% logistics cost should inch back. But given that we are backward integrating, shouldn't the margin expansion be much more than the expectations?

Sitar Cherukuri, Analyst — Joint MD

It should be, because we have also product launch happening next financial year, which is dimethyl ferroxide, and also with the change in product mix, you know, the revenues on a standalone basis will also improve.

Mehectality, Analyst — LGT

Yes, that's why I was asking that.

Sitar Cherukuri, Analyst — Joint MD

It should be about 20.

Mehectality, Analyst — LGT

Sorry. Okay. No, so that's why I was asking that given that forward integration will be there, the backward integration is shaping up, so Strontium will be having a good utilization. So it should be more than 19-20% is what I was asking.

Sitar Cherukuri, Analyst — Joint MD

It is very much possible. I mean, again, we like to be cautiously optimistic. And it could be, I mean, our target, I think what was on the horizon is 20% on a consolidated basis. We might as well achieve that. You know, we remain very positive and optimistic that, you know, if things fall in place, through more output, I mean, meeting at 80 to 90% of our requirement, DMSO stabilizing within a quarter or so. A very interesting product, again, an import replacement story, and also oxide plants coming up and improved shipments to Europe, all falling, you know, putting all into, you know, if everything falls in place, yeah, I mean, could be close to even 20%. Okay, understood. Thank you.

Operator

Thank you. We have next question from the line of Dave Mehta from Unix DMS. Please go ahead.

Dave Mehta, Analyst — Unix DMS

Yes, sir. So, I just wanted to ask for our DMSO business, what could be the EBITDA margin and in what period of time do we look at utilization of, let's say, 70-75%? Any timelines on that?

Sitar Cherukuri, Analyst — Joint MD

I mean, for Vishnu Chemical, this is our first venture into organic chemistry. We remain very excited. And we're expecting, you know, two to three months of stabilization should be enough. And for product approval also will be parallelly happening. I think in the first year, we are targeting close to 60 to 60 percent, 50 to 60 percent of operating level. I think ideal, because, you know, even the customer approvals have to fall in place during that period.

Dave Mehta, Analyst — Unix DMS

Okay, the margins will be similar to Barium, 25%.

Sitar Cherukuri, Analyst — Joint MD

I mean, this is not the right, I won't be able to come in, like I said, at a 50-60% operating level, then we have to wait and see how things pan out. Probably, this time next year, I'll be in a better position to give you a visibility on how things are moving.

Dave Mehta, Analyst — Unix DMS

Got it, but upwards of 20% is what we target, right, for this particular product?

Sitar Cherukuri, Analyst — Joint MD

One of the key raw material is coming from our barium plant. Oh, okay. And the other products, you know, I think the gross margins, again, when we run through the business plan, and when we see the raw material cost is only 35-40%. So, I think at the gross margin level, it's looking very promising. Again, at what volumes the economy of scale will define our EBITDA margin.

Dave Mehta, Analyst — Unix DMS

Got it, and there's two more questions. One is, you mentioned that 524 crores of CAPEX was the spent. Is the total spent, out of which 190-odd crores were?

Sitar Cherukuri, Analyst — Joint MD

520 crores, 190 crores is spent, and we have about another 330 crores to be spent. Got it.

Dave Mehta, Analyst — Unix DMS

So, how are we going to fund that? Are we going to take more debt? And what will be the peak debt level for our company?

Sitar Cherukuri, Analyst — Joint MD

So, our current debt level is at 717 crores, including working capital, and it will be close to 800, 820 crores. You will see this capitalized over the next year, and rest is coming from internal acquitals.

Dave Mehta, Analyst — Unix DMS

Okay, so our peak debt will be 800 to 820 crores is what you are implying, right? That's right. Okay, and this 520-odd crores of CAPEX includes your DMSO, chrome metal, chrome oxide, green, and chromic acid. Anything else apart from this?

Sitar Cherukuri, Analyst — Joint MD

It's not including chrome metal. Chrome metal is it, I mean, it's including DMSO, chrome oxide. And it's not including chrome metal because that's a separate company and it's 50-50 gauge.

Dave Mehta, Analyst — Unix DMS

Okay. So, if you can just give a broad bifurcation of these 520 crores.

Sitar Cherukuri, Analyst — Joint MD

Just wanted to understand. About 250 crores for DMSO and 220 crores for oxide

Dave Mehta, Analyst — Unix DMS

expansion. Okay. Uh, no fair, that answers.

Operator

Thank you. That was the last question from the participants. I now hand conference over to management for closing comments. Over to you, sir.

Sitar Cherukuri, Analyst — Joint MD

Thank you, everyone, for taking out today.

Hanmat Bhansali, Other

In conclusion, kindly note that our results have been uploaded on the exchanges and the company's website. The investor presentation and press release will follow. If you have any further questions, please feel free to reach out to us on investors at the rate vishnuchemitors.com. On behalf of Vishnu Chemitors Limited, we wish you all a very happy Deepavali. Please take care of yourself and your dear ones. Thank you so much for your valuable time.

Operator

Thank you. Participants on behalf of Mkly Global Financial Services. That concludes this conference. Thank you for joining us and you will have additional questions. Thank you.