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Ladies and gentlemen, good day and welcome to the Transpek Industry Limited Business Update Call.
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 the conference call, please signal an operator by pressing ‘*’ then ‘0’ on your touchtone phone. Please note this call is being recorded.
Please note this conference call may contain forward looking statements about the company which are based on the belief, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict.
I now hand the conference over to Mr. Bimal Mehta, Managing Director, Transpek Industry Limited. Thank you and over to you, sir.
Thank you. Good evening, everyone. On behalf of Transpek Industry Limited, we extend a warm welcome to all participants joining our business call today. On this call, I am joined by our Chief Financial Officer – Mr. Pratik Shah; our Company Secretary – Mr. Alak Vyas and SGA, our Investment Relations Advisors.
First, we will start with industry overview and followed by the financial highlights and then we will open the floor for question and answer session. Participants who are new to the company, please note that given the nature of our business, performance of the company must be assessed on an annual basis rather than quarterly basis.
As you are aware, the Indian and global chemical industry has faced multiple challenges over past few years. Demand and consumption in major global markets, particularly China and Europe, have continued to struggle, impacting the performance of many companies. Additionally, the volatility in chemical prices have added to the challenges. Despite this, your company has reported a sustained performance for the nine months of the Financial Year 2025.
Over the last 6 decades, we have achieved expertise in manufacturing and handling chlorine and sulfur-based chemicals, and have developed chemicals like Thionyl Chloride, various Acid Chlorides and Alkyl Chloride indigenously. We take great pride in the fact that all our products are manufactured in-house using technology developed by our dedicated R&D team. Our strength lies in handling these chemicals, which require significant expertise at site due to their hazardous nature. We are also a very
Page 3 of 15 sustainability focused organization and well received by our customers and certification bodies for our practices.
Over the years, we have also developed a very strong relationship with clients and suppliers and built a solid reputation for quality output adhering to all global protocols, practices and standards. In terms of infrastructure spent, we have a multipurpose manufacturing facility at the village, Ekalbara, Vadodara, with a production capacity of 66,000 metric tons per annum, of which about 34,000 metric tons per annum is for products to be sold and rest is used for captive purposes. This year, we have written off about Rs. 6.9 crores for discarding of obsolete equipment from our oldest Acid Chloride plant on site as these items were no longer usable. However, there is no reduction in capacity because a replacement plant has already been commissioned.
Our products find applications in various industries like plasticizers, polymers, pharmaceuticals, agrochemicals, dyes and pigments. Polymer continues to be the highest contributor with more than 58% for the 9 months of Financial Year 2025. As a part of our diversification strategy, we have identified few new products which can find its applications in polymers as well as other markets. We typically start with pilot scale to understand the product and scalability. This approach allows us to optimize production processes, evaluate market demand and ensure seamless integration into our existing operations before scaling up to full commercial production.
We have often been asked about our cautious approach to capital expenditure, either in terms of Greenfield or Brownfield. As we have stated in the past, we deploy funds only when there is clear demand visibility to ensure effective deployment. As part of our growth strategy, we have actively explored multiple inorganic opportunities in different chemistry value chains. In past 2-3 years, we have actively evaluated a few opportunities aligned with our ethos and offer meaningful value addition to our customers. However, we have not yet found the right one, so we have not decided on any of the inorganic potential opportunities.
As stated earlier, the overall growth in the chemical industry has remained soft and Transpek, of course, cannot be an exception. However, at the same time, your company has reported a meaningful revenue growth despite facing challenges like aggressive pricing, stiff competition, and slow demand in the export market for certain products.
Page 4 of 15 Total revenue for nine months of the Financial Year 2025 stood at Rs. 505.6 crores, about 12% growth on year-on-year basis.
Revenue contribution from Polymer stood at 58%, followed by Pharma with 10%, and Specialty with 19%. Revenue contribution from International Business stood at 86%, where rest 14% business comes from domestic market. North America continues to dominate the region-wise pie with more than 62% contribution. EBITDA for the 9 months Financial Year 2025 stood at Rs. 90.3 crores or 7.6% growth on year-on-year basis excluding exceptional item of Rs. 6.9 crores on loss of discarding of items of property plant and equipment from an old plant. This being one-time charge.
EBITDA margins for 9 months Financial Year 2025 stood at 17.9%, which is about 70 basis points lower than 9 months Financial Year 2024. Profit after tax for 9 months in Financial Year 2025 stood at Rs. 29.5 crores at 10.4% lower on year-on-year basis. We remain a very low debt company with a strong balance sheet. There has been a request for NSE listing. We have already initiated the process. Most of the work has already been done. NSE has asked for some additional documents, which we are in the process of preparing and submitting. Once completed, we believe that we should be getting NSE registration very soon.
With this, I conclude the speech, and now we open the floor for question and answers.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press ‘*’ and ‘1’ on their touchtone telephone. If you wish to remove yourself from the question queue, you may press * and 2.
Participants are requested to use handsets while asking a question, and we request you to restrict to 2 questions at a time, please. You may join back the queue for follow-up questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We will take our first question from the line of Nirav Jimudia from Anvil Wealth. Please go ahead.
Yes, good afternoon, sir. Yes, I have a few questions to ask. So first one is on our specialty chemicals. So when we see our segmental breakup and when we compare FY24 with this 9 months, I think our run-rate has improved quite a bit in terms of the quarterly sales. So I think in FY24, it was Rs. 82 crores and now we are already at a run rate of Rs. 30-35 crores. So is it because of the fact that the demand for these products have gone up, whereby we were putting the effort from last so many years and this has now started yielding the fruits? Or is it because of the fact that some of the
Page 5 of 15 newer products have been introduced in this segment and because of which we are seeing the growth?
No, actually new products have not yet been introduced. There is still some work is going on. But it is largely due to little better demand that we are seeing in specific couple of products. And basically, the end-use application of the customer is seeing also higher demand. And therefore, you are seeing these better numbers. And we expect that this will continue for some time because customer has already indicated reasonable visibility in terms of what they are looking at.
So the visibility is up till next year also?
Overall. I mean not going into specific products, but overall, our structure, the demand structure is expected to remain very similar. At least we may not see any phenomenal growth, but we are not also expecting any major dip or reduction or anything like that.
And sir when we see our other products like polymer and pharma and compared with specialty, is it safe to assume that the specialty business has a higher margin because one of the statement in your presentation also mentioned that polymer or the acid chloride business is facing some challenges in terms of the competitive environment.
So is it safe to assume that this business gives us a better margin than the polymer and the pharma side?
Not really. I mean, in polymer also, there are reasonably good margin products, and there are also normal margin products. So it's a kind of mix and match. For example, in case of polymers, as you are already aware, there are certain products where we have a formula-driven pricing. So margin remains constant. And it's a reasonably good margin that is there. And on the other hand, in couple of other products, we could, I mean, I am not talking polymers, but something else, where we could play between lower material cost and better market price.
So just to reconfirm, the specialty chemical business does not work on a cost-plus basis and it is entirely on the market dynamics in terms of the pricing? Yes.
Yes, got it. Sir, second question is on the diversification part which you have mentioned in your presentation from Acid Chloride. So, I think we are not present in the Alkyl Chloride segment where the other players are there. So, if it is like that way,
Page 6 of 15 if you can share your views in terms of the addressable market here for alkyl chlorides on what sort of CAPEX would be required if we want to go into that segment?
No, I think let me just clarify. When you look at Acid Chlorides and Alkyl Chlorides, they are largely similar products, similar category products. Only difference is that in case of acid chlorides, we use acid as the base and we do the chlorination with Thionyl Chloride. And in case of Alkyl Chloride, we use alcohol and we do the chlorination with Thionyl Chloride. So Alkyl Chlorides are part of our product profile. Currently, of course, there are not many products which we can call pure Alkyl Chlorides in that sense. When we say diversification, we are talking about products which are either acid or alkyl chloride plus. So you take acid or alkyl chloride and you make some other product out of that by some value addition or totally entirely a different product where chlorination doesn't feature. So for example there is one product which requires nitration chemistry. Okay so when we say diversification, we are largely talking about non-acid, non-alkyl chloride.
Sir, when we interacted last time during conference call, you mentioned that our target is to get 30%-35% of our business from the higher margin products where the margin typically are between 20% to 23% as compared to the 16-20% band here. So if you can share your thoughts here, where are we currently or in terms of some sort of revenue what we are currently getting from these products and over next 1 or 2 years how do you see this business taking forward?
Right now, we are working on three products of that category. Of course, there are more products. When I say working on three products, these products are like we are already at a stage where customers are evaluating the samples that we have given. And with one customer, we believe, because their end user or end customer is expected to approve their product by end of March. So we believe that that product will start to gradually go on stream for us around April or May and it will be a very small quantity to start with. But eventually it will see a significant revenue coming from that one particular product. And it will be of course, a little higher value adding also in terms of margins and in terms of overall price. Another product that is being evaluated by another customer that I think is going to take some more time, which I would say probably around August or September we should get a clear idea because the validation in that particular product’s case takes much longer time because it has to be done on field so they use our product then they will make something else that something else will be put into something and that will be used for field test. It is not expected to be clear whether our product is finally approved or not by September. In case of third product at lab level, our product has been approved. Customer has indicated that they
Page 7 of 15 would probably start buying small quantities from June onwards. We believe that next year is going to be kind of a starting point for these two, three products. It may not give any significant revenue within next 8-10 months, but it will be beginning of something which can eventually lead to a good volume and good margin.
Just a continuation of my existing question only, so just a last clarification that when you mentioned that it is a substantial product in terms of the number first product you mentioned about. So substantial meaning can it reach a revenue of Rs. 80 to Rs. 100 crores whenever it is ramped up? Yes.
Thank you so much and wish you all the best.
Thank you. We'll take our next question from the line of Ishan Thakkar from Fort Capital. Please go ahead.
Hello. Thank you for the opportunity. So I have a couple of questions. So one is on the non-acid chloride space. So we have already started supplying non-acid chloride products to our end user customer, right?
No non-acid chloride products right now are being supplied on a commercial scale.
Whatever we are giving is more like testing the samples and either sample may be of small quantity or sample may be of product lot may be 1, 2 tons or something like that.
But commercial supplies are yet to start. In response to the previous question, next year we will see some of these products getting into commercial production on a gradual basis.
And which end user industry, that products?
Two, three. I mean, one is, of course, polymer. Another one is battery chemical, rather 2 battery chemicals.
Okay, and that is for the domestic or export also?
One is for export, one is for domestic manufacturer who is then ultimately going to export its final product. We will supply to a local manufacturer and then they will use it to make something else and then they will export outside.
Okay, fine, thank you. I will join the queue.
Page 8 of 15 Thank you. We'll take our next question from the line of Pratik Kothari from Unique PMS. Please go ahead. Yes, sir, good afternoon, Bimal bhai. Good afternoon.
Yes, sir, one on acid chloride. I mean, you did touch upon the non-acid chloride and the potential there, but I believe last year we had launched a few new acid chloride products. So if you can highlight the ramp up which has happened there and the demand or the acceptance?
So, two acid chlorides have come into manufacturing. One is right now gradually ramping up. That's going to US customer and I think they have taken two lots. And almost their evaluation, I mean, when I say evaluation, commercial level evaluation is almost over. So we believe that it is going to now ramp up. Another acid chloride, which is going to one of the South American country, and that is helping us in two ways. One is, of course, adding one product, as well as adding one country, and basically diversifying or rather reducing concentration on US only, significant concentration on US. So I think that should probably around next year see good reasonable volumes. Right now, just to give an add-on to this information, most of the customers are very cautious in building up inventories. So even though they may have indicated that, okay, this is going to be the order sequence or order pipeline, the quantity remains same, but the timing kind of increases because sometimes they don't want to build inventory if their products and schedule gets changed. In earlier times, when there was not so much uncertainty, most of the customers were very happy to build inventories. So we have to also align with them in terms of our overall supplies.
But as I said, I feel that, or I believe that it is going to be next year when we will see some pick up in this couple of acid chlorides.
Is it fair to assume that, I mean, this 4-5 new products, two in acid, three non-acid, we would be starting with one customer, but then we can kind of map out to either other geography or other customers?
So right now, see, what we are doing is that we added a couple of customers in Eurasia, two customers in South America. Of course, some of them are existing products. We are working with almost 4-5 customers in Japan, talking to one more customer again in one of the South American country and at the same time working with couple of domestic customers for some more products. So overall about 6-7 new customers and
Page 9 of 15 different geographies, even more than that, almost 8-9 more customers and couple of 2-3 new geographies we are looking at.
Right. And at today's price and the capacity which we have, I mean, just to reconfirm, about Rs. 900 crores is what we can do on the installed base currently? Yes.
And sir last on the long-term DuPont order, I mean, how long was that? Because it's been, I think, 6-7 years since we have signed that. So is that up for renewal or?
No, it's a 10-year contract. So whatever needs to be done is yet not ready. I mean, it is not ripe enough for discussion on extension or anything. Probably about 1-1.5 years’ time, the discussion will start on renewal. Currently, their demand is steady, nothing significant in terms of drop or increase. As you may have seen, DuPont's results were pretty good so they are doing reasonably well in their own businesses and overall, we are very clear that we, at least we should be able to sustain what right now they are buying.
Mr. Pratik, can I request you to join back the queue, please, as we have other participants waiting for their turn. Okay.
Thank you. We'll take the next question from the line of Richa from Equitymaster. Please go ahead.
Thank you for the opportunity. Sir, my question is, please help us with the utilization levels at present, volumes and utilization level?
Sorry, you are talking about current utilization level, right? Yes, capacity utilization. About 65%.
Okay. And sir, if I understood it right, with this customer supply arrangement that you have, you're confident of maintaining at least the same quantum of supplies. I mean, the entire talk about renewal is not that it will go away, right? It’s at least the current quantum will sustain when it is due for renewal?
Page 10 of 15 What I just mentioned is that for the remaining period that is out of this agreement, we do not see any major change in terms of demand or supply. Of course, the real estimate can only be done for one year in today’s time. One year is also a pretty long time looking to the volatility and uncertainties. But we believe that largely we will maintain what we are supplying until this current contract ends. Naturally there will be discussion on renewal of contract, how the renewal will happen, what will happen, that right now we do not have any understanding or any information.
Sir, under Trump's regime a lot of tariffs are likely to be imposed. So does that affect our business in any way as well?
So now the point is that what the new administration in US will do, as of now, there is no clarity. So far, of course, there has not been any imposition of any tariff on the chemicals or pharmaceuticals and all other products. What our understanding is that the tariffs may come in commodity products like what we have seen in steel or in pharmaceuticals where we have significant exports and many US companies are importing. Generally the tariff would be on those products where companies from outside of US are competing with the companies in US. So far as our products are concerned, we have no, I mean to the best of our knowledge, there is no significant producer of the products that we are exporting to US. So we will see, currently we are not expecting any tariff. If the tariff comes, then naturally it will require negotiation with customers, maybe sacrificing something from our side, sacrificing from their side, we don't know. But there can be many ways of sorting out that problem. But we have run some scenarios. And all these scenarios, whatever scenarios that we have internally run, they all look manageable in terms of sustaining our business in US.
Okay and sir I think in the earlier course you had also mentioned about some kind of perhaps that you were looking for some kind of inorganic growth opportunity? So any kind of any update on that?
So we have looked at few potentials. Some of them were good but highly overpriced because when we were looking, at that time the multiplier was generally very high in industry and some of them were that we looked at were not fitting into our ethos or in our value system in terms of environment management and sustainability practices and all that. So, far we have not yet zeroed onto any anything which would appeal to us from all aspects.
And sir, what is it that we are looking for in terms of geography and chemistry or end user industry? If you could just give some kind of idea.
Page 11 of 15 In what way? For what purpose?
For acquisitions. Any specific chemistry that you are looking for?
That is a very strategic subject. I would not be able to right now give some information on that.
Okay, I will come back in the queue. Thank you.
Thank you. Ladies and gentlemen, before we take the next question, we'd like to remind participants to press ‘*’ and ‘1’ to ask a question. We'll take our next question from the line of Hitesh Randhwa from Quest Capital. Please go ahead.
My question is just a continuation on the tariff part. I can't recollect, I think we do face competition from Chinese companies in the US as well, right? So do you think that the imposition of tariffs can benefit us in some way? So hypothetically Chinese players get applied more tariffs and then we benefit from that. Is that possible? Or do you expect Chinese companies would still be able to compete with us and that wouldn't benefit us?
Not significantly because for example, two of our important customers in the US are buying almost 90%-95% of their requirement from us. So whatever is left in terms of buying from possibly Chinese companies, it is very small, very small. There is not much benefit that we expect coming to us out of any tariffs that may be imposed.
Okay. I know that you did speak about diversification to say kind of other geographies, etc. as well. So, and I know that a lot of that discussion is still in the nascent stages.
But again, from a tariff point of view, what do you think say kind of it? If the tariffs are applied, then do you think that, okay, kind of we start facing more severe competition in those geographies that we are going to get into from Chinese players and does that affect our plans, prospects, any view on that, other geographies?
See, actually what some of our customers that we have been interacting with are already buying from Chinese suppliers and they are very keen to get out of that. For whatever, I mean we don't know what their reasons are but there are, there can be various reasons. So in many, many cases we are actually going to or we are expected to replace their Chinese suppliers. Of course they are looking for pricing that would match their expectations because they are buying at current, I mean, whatever current prices they are buying. But so far as Transpek is concerned, we are even able to export to China, just not compete with Chinese suppliers elsewhere, but we are also exporting
Page 12 of 15 to China, competing with local suppliers in China. So since customer is supporting us because they want to shift. We believe that we should be able to gradually, penetrate those markets. Naturally, countries like for example, when you look at Japan as business practices in Japan, they take a very long time to make decisions. But once they make decision, naturally they will largely wait for life. It's like that. So we will see, I mean we are looking at all these possibilities.
Right. And sir, as far as our new products are concerned, pardon me if this question may sound a bit naive, but specifically the ones that are in the non-acid chloride products, so kind of we would need to come up with new facilities for that or our current infrastructure and capacities can be utilized in some way?
It is a combination of both. Some of the current facilities can be converted and utilized to take those products and that would help us in the initial period when initial volumes the ramp up is slowly happening and initial volumes are not very large. Once that happens, then we will have to look for adding capacity either within the factory or within the current facility if permissions are allowed or we will have to look for something outside either inorganic or organic or even looking at the job work potential or contract manufacturing potential. We do have some potentials already so we can utilize those also.
And sir, talking about our new initiatives, the new non chloride as well as the new acid chloride products as well. I am not talking about immediate quarters, but conservatively speaking, saying what is the potential revenue that these products can generate maybe in another two years’ time. You can be conservative on that front. So that's fine. But I am just trying to get some visibility on how much these new products can generate?
If everything goes right, then about 3-4 products when you put together in another 2 years’ time, at the completion of 2 years, it would be annually anywhere between Rs. 150 crores-Rs. 200 crores.
Okay. And with what kind of margins, sir?
It would be around EBITDA margins of 20% roughly.
Okay. And sir, the last question, any views on maybe how FY26 might shape up? Any kind of guidance on FY26 and what kind of growth we might be looking at?
Page 13 of 15 We should be largely in the same range as we are this year, maybe about 10% growth.
Nothing significant as we see today. Naturally, lot of developments are happening so something significant comes up where we already have capabilities then naturally these things can change but current visibility is like this.
And on margin front you are saying we should be able to maintain current margins?
Yes, largely current margins should be possible to be maintained.
Okay. Thanks very much, sir. I will come back in the queue.
Thank you. We will take our next question from the line of Amit Asija from HG Hawa. Please go ahead.
Good afternoon, sir. Thank you for the opportunity. Sir, Dow Chemicals has launched Kevlar EXO, an upgraded version of Kevlar with enhanced properties. Like do this have, like because of the innovative development like do we see some improvement in volumes or margins? And also connected to this is like, the contract with them comes up for renewal. Any update on that, sir?
So basically, DuPont has developed this new Kevlar, which is, of course, whatever information we have, we have limited information, but it is about 30%-35% better than the current Kevlar. And it should find some application in even more mission-critical areas. I think it should go on commercial production, large scale commercial production by January 2026. Right now, I think they are taking trials. They should be starting some volumes but significant volumes will start from January 2026. What we understand is that there will definitely be a little more demand for the raw material that we are supplying when you consider from a percentage input in the Kevlar versus the new Kevlar. So we will have to see whether the new Kevlar will be in replacement, part replacement of the current Kevlar or it will be an additional volume that we are not sure. But even if it's a replacement then also we will see little more demand, I mean not significantly more but little more demand for the product that we are supplying currently because we have been given to understand that there will be little more consumption per unit of production of our raw material that we are supplying.
So, the volume will increase, the margins will also remain the same?
Page 14 of 15 Not margins because the product is same. Product doesn't change. What we supply doesn't change.
Sir, any Indian clients recently who have added like say Aarti Pharmalabs or something like that? Sorry?
Any Indian recent clients have you added or are you developing for?
So yes, we have two more, two new Indian customers.
Thank you. We'll take our next question from the line of Pratik Kothari from Unique PMS. Please go ahead.
Yes, thank you again. Sir, one on the enhanced capacity expansion or the new CAPEX.
I mean, we are at about Rs. 700 crores run rate revenue. We expect to grow a bit next year. We also have these new products coming in. I mean, what has to happen or what is it that you have to see before we go out and maybe put up a new plant or add capacity?
So as I mentioned that once we have this few new products that we are working on, they go on stream and we build a kind of critical mass in terms of volume maybe in another one and a half two years. At that time, we should be starting to look for new capacities, whether within the factory if we get permission or outside of the factory.
So in the meantime, while we are ramping this up or taking it up to a critical mass, then is it that we will be replacing our current product mix to cater to this new product?
No, because we already have, as I mentioned, we are separating it about 65% capacity utilization. So we already have roughly about 30-35% capacity available. Some of them can be utilized for this new product. If we have some acid chlorides which are more than what we are right now doing coming to us, then we do have job worker facilities where we can transfer those acid chlorides to be done. So just because we convert these facilities for new products it is not going to negatively impact any acid chloride opportunities that would come. Secondly, the facilities that we already have right now, if we are able to significantly utilize that for the spare capacity for the new products, so naturally we will see a little better value addition because in general whatever new products we have selected have higher revenue per unit. So unless we
Page 15 of 15 see a ramp up, a proper ramp up, there is no point in deploying significant capital into additional facilities.
And this ramp up is basically, that we are waiting for is for this new 4-5-7 products that we are coming out with? Yes. How they will ramp up basically.
Yes, correct. Okay, great. Thank you and all the best, sir.
Thank you. We'll take our next question from the line of Rohit Mehta, an Individual Investor. Please go ahead.
Can you throw some timeline about this NSE listing, because last year you mentioned that most of the procedures are over?
We believe that it should be done by April end By April end? Yes. Okay. Thank you, sir.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to Mr. Bimal Mehta for closing comments. Over to you, sir.
Thank you. Thank you, everyone, for joining us today on this Earnings Call. We appreciate your interest and time in the company. If you have any further queries, please contact SGA or Investor Relations Advisors. Thank you.
On behalf of Transpek Industry Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.