Ladies and gentlemen, good afternoon, and welcome to the Q4 FY '25 Earnings Call of 20 Microns Limited. My name is Muthukumar, and I represent Wisdom IR. We are privileged to have with us today key members of the company's management team: Mr. Atil Parikh, CEO and MD; Mr. Nihad Baluch, Group CFO; and Mr. Pranit Shah, Finance Controller. Before we begin, I'd like to remind everyone that today's call is being recorded. The audiovisual recording of this session will soon be made available on the company's official website.
Additionally, a detailed transcript of the call will also be published on the website shortly after the call concludes. [Operator Instructions] To set the stage, allow me to provide an important cautionary note regarding our discussion today. Some of the matters covered in this call may include forward-looking statements concerning the company's market opportunities and business prospects. These statements are subject to risks and uncertainties that could cause actual outcomes to differ materially from those expressed or implied. Please note that the company is not liable for any actions taken based on such statements. With that, I'd like to hand over the proceedings to Mr. Nihad Baluch, Group CFO of 20 Microns Limited. Over to you, Mr. Baluch.
Thank you, Mr. Muthu. Good evening, everyone. Thank you for being here. I'm Nihad Baluch, Group CFO of 20 Microns Limited, and I'm excited to present our deliverables on our strategic objective of financial year '25. I trust you have downloaded the presentation from the link. We have achieved a significant milestone in our company's growth trajectory, recording annual revenue of INR 9,127 million in the previous year '25. This achievement reflects the successful execution of our strategic initiatives, including onboarding of the new clients, expansion of our product portfolio and strengthening our distribution network.
Let me share you a glimpse of our today's presentation. This complies about consolidated financial results of quarter 4, business update, company's background and the financial trend. Trust me, these are not merely just numbers. These numbers reflect a year of dedication, trust and teamwork of our employees, customers, vendors and the stakeholders at large. Together, we have built a strong and more financially sound business in this year.
Let me share you a quick indices of our quarter for the financial results FY '25. Revenue growth in quarter 4 of FY '25 has advanced by 6% over quarter 3 of FY '25 and quarter 4 of '24. If we speak about the annual revenue growth, it is 7.4%, which showcase our sted growth range. Our EBITDA margins of quarter 4 for financial '25 is improvised by 12.7% than 12.2% of quarter 3 for the financial year '25 and respectively, 12.5% of quarter 4 of '25. The bottom line augmented to 6.7% in quarter 4 of '25 against 6% of quarter 3 for the financial '25 and eventually 6.4% of Q4 financial '24. Here is a summary which you can go for the indices in detail.
Let me take you -- the contribution that has taken the company along these years. A brief short about our company, what we do. We are a vintage company for almost 38 years in this industry. Our diversified product portfolio encompasses a wide range of nonmetallic industrial minerals such as calcium carbonate, talc, kaolin, mica, quartz, dolomite, natural red oxide along with other specialty chemicals and functional additives, which are including mineral-based fertilizer and construction chemicals and many more.
We have a robust infrastructure and a state-of-art of manufacturing facilities and warehouses across India, which are located majorly in Gujarat, Rajasthan, Tamil Nadu and Andhra Pradesh. We also have a captive mine in India with a reserve of around 170 million tonnes. We are spread across 65 countries and more than 2,200 clients from a wide range of sectors. I'll just brief you about my business segmentation and performance, how [Technical Issue] has always been prevalent contributor with 48% of revenue share, followed by polymers, which have accounted for 25% of the revenue and which has been followed by rubber, paper, ceramics and other applications, ranging from 5% to 9%.
Meanwhile, exports contributed 13% to the total revenue, which is again [ towards an ] expectation that [ remain ] to 13% to 15% range. On our -- our financial strategy is very simple and clear. You may refer our previous trends. We look for a profitable growth. We are focused on expanding our market presence while ensuring every revenue contributes to our bottom line. Therefore, calculated decisions are takeaway of our revenue growth by 17% despite challenges from market and geopolitical scenario. Enhancing our operational excellence is always our core objective. In high pressure from the raw material imports, freight cost and ForEx volatility, we continue to maintain our EBITDA margins to 12.8% in financial year '25 without compromising our quality and innovation.
This has also enabled us to broadly stabilize our performance ratios. We believe in capital allocation. We allocate capital strategically prioritizing reinvestment in high return opportunities first, while maintaining a strong balance sheet and considering shareholder returns. The approach enabled us, our successful Malaysian acquisition and also sustained to declare dividends at 25%. In financial year '25, despite external headwinds, we delivered consistent margins, executed a key international acquisition and upheld stakeholders' return. I would like to thank you once again for your continued trust and partnership and further, I would like to call Atil sir to join me and further give a brief about the entire financial year. Atil sir.
Hi, everybody. I think -- thank you, Nihad, for taking us through the investor presentation, which is now available online that you can download, which is there since yesterday. And now we can open the question-and-answer session through the moderator, please.
[Operator Instructions] So there is one question that has come in the chat box, which I'll just read it out to you, just one second. This come from person, Mr. Arjun. His question is that the subsidiary we are acquiring, how much do we already own? And what are we paying to acquire the remainder. I repeat the question. The subsidiary we are acquiring, how much do we already own? And what are we paying to acquire the remainder from Mr. Arjun?
So currently, the step-down subsidiary that you might be referring to, which is a step-down subsidiary of 20 Microns and a subsidiary of 20 Microns Malaysia, which we recently acquired GTLQ and IQ. So in IQ, we have 100% ownership of the company. And in GTLQ, we have about 90% ownership of the company and 10% is with the minor stakeholders and the process is ongoing to get the remaining shares post discussion which the strategy that we want to implement in the Malaysian subsidiary.
Okay. I'm also unmuting Arjun, I think for a follow-up question. Arjun, you can ask the question.
Okay. So one more question. I just wanted to understand some of our competitive advantages against some of our competitors and who might our competitors be because the products that we do, we're basically adding value to commodity products, right? So just to understand -- but our margins have been very consistent, which is great. So I just wanted to understand a little bit more about the business in general, if you could help me out.
Yes. So if we look at the competitive scenario, if you're looking at the competition from a listed space, we do not have many or any listed players listed on the Indian stock Exchange. Now when we look at the global scenario, we do have competition coming in from the world's largest industrial mineral manufacturers who are very big on scale compared to 20 Microns. And we see them as competitors on a global platform. But when it comes to India, we have a lot of regional competitors and each mineral that we discuss about, it will have different competition in the landscape. So it will not be a similar competitor, which will be across different minerals that 20 Microns is into. So that's how it's kind of different from what you would look at.
And I would not like to name anyone as of now because they're not in the listed space and they are privately owned family entities. But we could always -- you can always write back to us and we can mention it to you or we could discuss it on one-on-one if required in the future.
Sure. That helps a lot. Also, I think the subsidiary question that I had written in the chat box. So do we have an amount that we have spent to acquire the remainder or...
It will go at the similar amount, which we have already paid at the similar share value, which is there currently that we've already paid to them and which is under discussion. So we will be doing it in the same fashion.
But you haven't disclosed any of that...
Yes, we will disclose it sooner when the amount gets finalized.
All right.
But it would not exceed a significant value than what we currently have negotiated.
So the next question is from Divya. She's also put up a few -- a couple of questions on the chat box. I will read out one of the -- few of the questions.
I think if you can unmute would be more easy to...
I will just check. Is Divya on the line? Would you like to ask the questions over the audio itself. So I think I will just read out the question at the moment. She's not on the event. Yes, she's not -- probably doesn't want to be part of the audio. So first question is, what can be the revenue that we are expecting from value-added niche segment for the next 2 to 3 years?
So typically, 18% to 20% growth rate is what we usually go with looking at the current market trends even in the value-added segments and the approvals of the products which take quite longer in the value-added segment compared to the traditional segments that we usually are in. So we usually work around 18% to 20% year-on-year margin. So that is -- sorry, your revenue that we usually target. So that's what we look at in the next 2 to 3 years that you can estimate it to be.
Okay. And just a follow-up, one other question is, as our borrowings has increased from INR 121 crores to INR 165 crores in FY '25 and our CapEx is based on internal accrual what is the utilization of additional borrowing?
I think Mr. Nihad, would you like to answer that question?
Yes. Broadly, it is the working capital for which we have used, and it has increased...
Okay. So basically, it's not any long-term or those kind of borrowings that have increased the overall scenario. It's basically the working capital because of the additional inventory that we're trying to build in the organization. So that is the reason that the working capital addition is required to be a part of that operation.
Okay. So one more question from Adarsh has come. So his question is that can you please share any guidance for FY '25, '26 for top line and the bottom line?
As you might have seen or heard some of my earlier statements in the last few years is that we traditionally look at a 15% to 18% growth year-on-year. And this is something that we are also looking at in this financial year because the trends are quite vague. We still don't have much confidence on how the different markets that we serve are going to shape up, considering the economic situations, considering the global situations, which are creating an impact on the supply chains. So -- and the paint sector, which is also undergoing a lot of stress along with the other industries. So keeping a 15% to 18% target of growth is something that we are really looking at. And hopefully, we should be on track with that considering the external conditions also.
So Adarsh's a follow-up question is that what margin expansion we expect -- we can expect after we start extracting from the Malaysian mine?
It's too early to say right now because we haven't yet started the mining operations. We would start it somewhere in the next 2 months where we would actually get to understand what kind of ore would be useful for us in different parts of the process and the supply chain, what would be a part of it. So it will be too early to comment on it as to how much we are going to be adding in terms of the margin space. But yes, we would be gaining more in terms of the dependency that we earlier had on external suppliers. That dependency is now gone, and we will be mining as per our own requirements for the production processes that we have across India and abroad.
And so based on that, we will be kind of working around selecting the right kind of ore for our own processes and kind of selling the non-required ore to external industries which need that kind of material. So I think it will be too early to comment on the margin space right now.
[Operator Instructions] The next question is from [ Parth ]. His question is that what is different between Malaysian and Vietnam calcium carbonate?
There's a lot of difference in terms of the purity. There's a lot of difference in terms of the brightness. There's a difference in terms of the end use where only some industries can use a Malaysian calcium carbonate due to the typical properties it carries versus a Vietnamese calcium carbonate versus Indian calcium carbonate versus an Egyptian calcium carbonate. So there are various properties which people look at, the industries look at, and we have to serve those industries through that particular ore itself.
And second, I think related is that how big the paint segment can be big and its growth perhaps in the context of the -- how the industry is seeing a transformation. So if you could give a perspective on that.
So it's -- I would say there's a lot of I would say, a lot of activities happening in the paint industry for sure, you might be hearing it from the media and from various different sources, which are confirming a lot of news and bringing it out to the people. But it's too early right now to comment on certain big players which have already entered into the industry last year and to see where they move up to and kind of shake up the industry because there's a lot of room for everyone to come in.
Now who is going to eat up whose revenue and market share is something which is yet to be seen. But 20 Microns, if you look at it from a supplier's perspective to the paint industry, we are very well ready with serving the industry. However it shapes up in terms of the growth. We definitely anticipate a lot of growth only post -- once all this conditioning is complete within the industry. So post that, we will able to gauge how the industry is going to move ahead. But yes, if we compare ourselves to the world, we are yet at a very low per capita consumption of paint compared to the Western world. So we do see a lot of urbanization, a lot of consumption, a lot of repainting, which will happen, which will kind of increase the demand of paints in the coming years.
[ Mehak ] has couple of questions. I am just unmuting her. Mehak you can ask you questions.
[indiscernible] congratulations on the results first of all. I had come across that you are opening a new plant for the Dorfner JV of the quartz [indiscernible] so what is the kind of capacity that we will be willing in that plant and what kind of revenues are we expecting in the future.
No, we have not yet. We have not announced any of that JV for the new plant with Dorfner. We have recently started the operations of a new JV with Sievert. So we have 2 different JVs. So with Dorfner, it's a marketing JV, which is about a 3.5-year-old joint venture, which is purely based on no production only marketing-based products sales, whereas the Sievert JV, which we recently just inaugurated last month -- sorry, this month. And that probably is regarding the construction chemicals business, which we are going to be looking into where we are starting with tile adhesives. It's just the first phase that we have started with, and then we will be going in with liquid construction chemicals in the second phase for the same.
I have another question. You have also committed some CapEx for the 20 Microns Nano Subsidiary. So like -- what is the kind of capacity expansion that you have done for that plant?
So we'll be investing about INR 15 crores to INR 18 crores of CapEx in 20 Microns Nano Minerals Limited, where we are putting up a calcination facility for the rubber industry and we will also be catering to some specialized paint grades for the specialized grades of kaolin's that we will be doing in the nano with a different kind of technology that we'll be using there. So that is the kind of CapEx we have incurred in 20 Microns Nano as of now.
And sir, what were the revenue numbers of Nano for last year and this year?
So '24, '25 we closed Nano at INR 104 crores.
And sir, what were the revenues last year for the full year?
Last year, '23-'24, we were at, I think, INR 88 crores.
So there was a follow-up question from Dhivya. Two questions. So I'm putting the first one. Inventory this year has jumped more than 40%. Any particular reason for that?
Yes. So there are many reasons for the same. The supply chain-related situation is kind of playing a very important role in the raw materials for 20 Microns and 20 Microns Nano Minerals Limited. So we are quite dependent on imported raw materials for -- which account to about 36% to 37% of our total raw material that we use. And when you are dependent on imports, you have to build up on inventory because there's dependency on the freight factor, there's dependency on the availability of the vessels. We have moved towards bulk shipments to retain the freight cost or to lower the freight cost to an extent.
So we need to build up the inventory in India because just-in-time doesn't work for these kind of minerals. And due to that and when you look at the jump in the turnover, that kind of an inventory buildup was required. And so that was one of the reasons that you see a huge jump in the inventory.
Okay. And also, what is your ideal product mix from plastic and rubber segment in the coming years? This is also a question from Dhivya.
So traditionally, when you look at the regular minerals, calcium carbonate and talc hold the maximum product portfolio for our regular 20 Micron products. But when you look at 20 Microns Nano, we have a range of different waxes. We have activators. We have delaminated kaolins for the rubber industry. Then we have zinc oxide partial replacement products. We have micronized waxes. Then we have processing aids and then we have desicants, calcium oxide desicants. We have flame retardants like we have aluminum trihydrogen, we have magnesium hydroxide. So there are quite a lot of products that we do for the plastics and rubber industry, and we see a lot of opportunity in the coming years for these 2 industries in terms of the value-added minerals. And that is the reason that our focus has been primarily on these right now and developing more products for these 2 industries.
Okay. So next question is a follow-up from Arjun. Arjun would you like to unmute yourself and ask your question or should I read it from the chat box. I have unmuted you. Can you just ask the question. Okay, I will just ask the question. So what according to the management are our competitive advantages over our competitors and how sticky are our clients when it comes to picking a supplier. You mentioned global organized competitors are there, but most of our business happens in India. So do we see a lot of sticky customers [indiscernible].
Sorry, you need to repeat the question...
I will repeat the question. What according to the management are our competitive advantages over our competitors? And how sticky are our clients when it comes to picking a supplier? You mentioned global organized competitors are there, but most of our business happens in India. So do we see a lot of sticky customers? Or is the churning going to be high?
See, every product that 20 Microns does, as I mentioned to you, we have a very different competitive scenario. So when it comes to stickiness of the customers, the customers have different policies when they look at suppliers. So sometimes if we have a whole huge basket of different products that we offer to our customers, they would like to work with 20 Microns, and that is one of our competitive advantage is the basket of products that we carry all the way from 20 Microns to 20 Microns Nano Minerals.
We have a variety of products that we offer to the same industry. So that gives them a very heavy lineage of working with us. Secondly, all our customers know 20 Microns as a very innovative company, a very company which is highly focused on research and development and many of them have already visited us and they know the strength that we carry in terms of the R&D facilities that we have and the product application centers that we have at our Vadodara location and the quality of people that we have recruited to innovate these kind of products for the industries. So they know that strength very much, and they work very closely with us in terms of product development and in terms of any import substitute that they would be probably buying and they want to replace it with an Indian-made product, then they definitely feel that 20 Microns is something that they can -- they could -- we could assist them with.
And so that is one of the areas where we also hold a lot of strength and competitive advantage. And also, we are very well located in terms of infrastructure. So we have 9 manufacturing locations. We have 15 warehouses and distribution sites across the country in India. And we also have international subsidiaries from where we cater to some of the Indian clients also. So keeping all these infrastructure-related geographies into mind and the workforce that we carry at all these locations, which are very close to the customer locations when it comes to service. So all these play a very, very important role in terms of competitive advantage and where we have an edge over our competition when it comes to non-carbonate products because in carbonate, definitely, we see a lot of competition from the international and the domestic competitors. But it's a volume game, and it's a huge -- there's room for everybody. So whenever we have the basket to offer calcium carbonate is always a part of it. So that's how we are kind of very well placed in the marketplace.
Next question is from Adarsh. Adarsh, I have unmuted you if you can ask the question.
So my question is related to the recent recognition which we have got -- I think we have got some certificate from DSIR that is Government of India institution. So what are the material or monetary benefits we expect from this recognition.
So apart from the credibility part, which we already had DSIR certification earlier and we have renewed this. We also import a lot of instruments, a very, very expensive instruments considering the R&D facilities that we have, as I mentioned to you earlier right now. So it definitely adds some benefits to getting discounts or rebates from the government when it comes to buying these kind of machineries. Secondly, the credibility part is there where we can -- our customers consider us more -- considering the product application centers that I discussed about and the R&D facilities that we have.
It holds a significant value when it gets recognized by the government because the government has approved these labs based on what we do. And when it gets endorsed by them, I think it adds more value to what we do as a company in terms of the innovation and in terms of the products that we manufacture so that is one of the areas why we have gone into this recognition.
Okay. The last question on the chat box. We have received this from Mehak. The question is, if we have so much cash with us, then why are we borrowing? So if you could give your perspective on that.
Nihad or Pranit you may choose to answer this.
If we have so much cash with us, then why are we borrowing? Question from Mehak.
Yes, that's what I'm asking Mr. Nihad to...
So ideally, if you see our cash flows, it doesn't mean that we have our cash and we spend it overall in CapEx [indiscernible]. So if you go through the budgets, you will see that there is [ 979 ], which is the cash accruals from my consolidated balance sheet. But again, if you have to strengthen your revenues, if you know the futuristic demand and to cultivate it, it's, obviously you need certain cash in hand amounting to which certain borrowings are also required. So that is the reason we have -- and again, we are very much vigilant in our investment and borrowing strategy. So we are very much calculated and we have done a [ calculated step towards that ] following coming years of my CapEx as well as my working capital investment.
So we would like to keep the reserves for the CapEx rather than spend it on the working capital because that's something that's going to add more value to the overall product value chain compared to the borrowings that we do for the working capital. So I think that's -- and this year onwards, we will be investing quite a lot in the CapEx to generate better capacities and acquisition of more mines. So that is going to add more to the value chain overall in [indiscernible]
There are no more questions. So if a participant would like to ask further questions, they could raise their hand or put the questions in the chat box for management to answer. We'll wait for another 2 minutes. We would like to reiterate that the -- today's call was recorded. The audiovisual recording of this session will be made available on the website soon. Also, we will be uploading the transcript of the call on the website shortly. If you have any questions, please put up the questions on the chat box or raise your hand. So we don't have questions. Thank you so much, everyone, for joining this session. It was a pleasure hosting the event. And if you would like to access the recording, please wait for a day. It will be uploaded on the website. Thank you, management. Thank you, everyone, for joining this call.
Thank you, everyone.
