Ladies and gentlemen, good day, and welcome to EPL Limited Q4 FY 2024 Earnings C onference Call, hosted by Systematix Institutional Equities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Tholiya from Systematix Institutional Equities. Thank you, and over to you, sir. Yeah. Thanks, Neeraj. Good evening, everyone. On behalf of Systematix Institutional Equities, I would like to welcome all the participants who logged in for this conference call of EPL Limited to understand and discuss the fourth quarter and financial year FY 2024 results. From the management side, we have Mr. Anand Kripalu, MD and Global CEO, Mr. M. R. Ramasamy, COO, Mr. Deepak Goyal, CFO, Mr. Srihari K. Rao, President, AMESA Region, and Mr. Omkar Ghangurde, Head, Legal, CS, and Compliance Officer. At the outset, I would like to thank the management for giving us the opportunity to host this conference call. I would like to now invite Mr. Anand Kripalu to give his opening remarks. Thank you, and over to you, sir. Thank you very much, Pratik, and hello, everyone, and welcome to the Q4 and FY 2024 Earnings Call. We had a strong quarter amidst the challenging global landscape marked by economic uncertainties, supply chain disruptions, and geopolitical tensions. Our revenue for the quarter grew by 6.2%, EBITDA grew by a solid 16.5%, and adjusted PAT grew by 22%. I'm happy to report that we are firmly on track to achieve our target of double-digit revenue growth with 20% margin. Going deeper into the results, our underlying business registered robust growth, which was partially offset by negative pricing. Specifically, AMESA saw a revenue growth of 4.6%, EAP increased by 4.1%, the Americas surged by 15.9%, while Europe was at 2.4%. Our EBITDA margin stood strong at 18.5%, an improvement of 164 basis points versus Q4 last year. Our absolute EBITDA grew by 16.5%, marking the 6th consecutive quarter of robust double-digit EBITDA growth. Despite the impact of seasonality, our efforts ensured that our sequential margins were more or less in line. Adjusted PAT, excluding exceptional items and one-off tax refunds, grew by 22%. However, reported PAT declined by 73.5% due to one-time exceptional items of INR 605 million in Q4 FY 2024, and prior period tax refund of INR 165 million in the previous year, Q4. The details of the two exceptional items included in the quarter are, one, Egypt currency devaluation. Now, Egypt faced significant challenges in the past year, in fact, the past couple of years, leading to forex shortages. The Egyptian government managed to attract US dollar inflows through investment and aid, leading them to make the Egyptian pound a free float currency. This resulted in the Egyptian pound depreciating by approximately 60% against the US dollar, causing INR 465 million in one-off losses in our books on all US dollar payables. The underlying business in Egypt, however, remains strong with good profitability, and this one-time hit will not impact our long-term prospects in the country. The second exceptional item is Europe restructuring. We're actively addressing the lower margins in Europe, primarily stemming from high fixed costs. Our approach involves optimizing headcount at senior and operator levels and initiatives such as manufacturing capacity realignment. This is leading to a one-time impact of INR 140 million. These efforts are geared towards achieving mid-teens margins in the near future, with benefits expected to start accruing from this year itself. Our ROCE stood at 14.7%, a year-on-year increase of 148 basis points. Over the full year, our revenue grew by 6%, EBITDA grew by a solid 19.2%, and EBITDA margin expanded by a strong 202 basis points, and adjusted PAT grew by 28%. We saw a positive shift in the category mix. Personal care and beyond grew by 8.1% compared to 5% growth in oral care. Personal care and beyond now contributes to 47% of our total business. Overall, based on our performance in FY 2024, we are pleased to propose an increase, INR 2.32 per share. As you know, sustainability at EPL is a fundamental principle guiding every aspect of our business. In the past year, we have more than doubled our sustainable sales contribution to 21%. During this quarter, we received multiple awards, including Innovation Award by SIES SOP Star, Best Employers Award for 2023 by Kincentric, and the Best CSR Processes Award by the World HR Congress. Looking ahead, let me walk you through the key initiatives that we are focused on as a management team for both revenue growth and margin enhancement. First, on revenue, our continued emphasis on the beauty and cosmetics category remains strong, with active pursuit of smaller customers, supported by increased headcount dedicated to the staff. Our NeoSeam have entered the market and is steadily gaining traction across regions. Second, we will continue to leverage our competitive advantage in sustainable products to gain wallet share. And third, our Brazil greenfield project is on track. We have now fulfilled 100% demand of our anchor customer and have received orders from both other MNC as well as local customers. We remain very excited about the opportunities in this market. With all of these drivers moving in the right direction, the path to achieving double-digit growth is on track. Moving on to margins. Our margins are now in a solid position, demonstrated by a consistent progress over the past several quarters. We are firmly on track to deliver 20% margin through initiatives like Europe restructuring, mix improvement, active price management, and cost optimization. In summary, we are encouraged by the progress we've made and energized by the opportunities ahead. We are marching strongly towards our ambition of double-digit revenue growth with 20% margin. With that, we will open this up for questions. Shall we open the floor for questions? Yes, please do. Absolutely. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Ashvik Jain from ICICI Securities. Please go ahead. Hi, good evening, sir. This is Sanjesh Jain from ICICI Securities. Good evening. Good evening. I got few of the questions. First, on the EAP, sequentially, there was 11% dip in the revenue and a 25% dip in the EBITDA for this quarter in the EAP. Can you help us understand why there is such a sharp dip in the performance of EAP? Would you like to just complete your question so that we can respond to all of them together? Okay. Second is on the AMESA, particularly India. Even if I look at the standalone entity, the gross profit, which represent it probably more closer to the volume growth, negating the, pricing decline in the raw material, is still growing at best at mid-single digit. What's the challenge we are facing in India? India market should be, growing faster than the mid-single digit, probably. Are we losing market share? Is there a shift in the packaging from soft packaging to hard packaging? What's, what's the story in the India market? These are my first two questions. Sure. So the first one, as far as EAP is concerned, Q4 in EAP is always subdued relative to previous quarters because of Chinese New Year. And as you may know, the country actually shuts, not just our factories, but the customers and the country at large. Okay? So typically, Q4 is a subdued quarter, okay, and therefore, comparing it sequentially is probably not the right comparator. Now, having said that, the Q4 in FY 2023 was actually boosted because the market had just started opening up post-COVID, and therefore there was a surge of volume that happened. But I'd like to tell you that the underlying performance in EAP, and particularly China, is actually very solid. We are very confident about robust growth. The market is shifting aggressively towards beauty and cosmetics, which is margin accretive. We are being able to exploit export opportunities from China to other countries in East Asia Pacific, and therefore, actually we remain very confident, and I would hasten to say, almost bullish about our opportunities in China and East Asia Pacific. Now, as far as India is concerned, and India standalone, because Egypt has some challenges of currency and so on and so forth. You know, actually, our business in India is solid, and I can tell you, let alone losing market share, we have received orders from some customers, right? From whom we had actually very limited business and who are actually quite stubborn in terms of giving us business and growth opportunities. And we have received orders from some large customers, which will actually boost growth. So volume growth, right, remains solid, right? Even though we don't declare volume and don't really measure volume, but it remains solid. Actually, the outlook with some of the new opportunities coming our way is actually much stronger. I absolutely have no concern that we are losing share, right? I actually believe that growth, you know, as we look ahead, is going to be very, very solid as far as India is concerned. No, that's fair, Anand, but what happened in Q4? That's what you're talking is more outlook. I am more looking at what happened in Q4. That remains soft, right? Well, you see, like I told you, there has been negative pricing, and therefore, when you look at the revenue numbers- No, no, I'm looking at more gross profit, Anand, which negates that negative pricing impact. Just a moment. Sorry, you're commenting on India standalone or AMESA? No, no, I'm, I'm commenting on India standalone gross profit growth. All right. Let me. We'll get back to you on this answer, and we'll answer it in the call itself, okay? And just try and explain that a bit better to you. Mm-hmm. That's fine. I have a few more, if you allow. I think you'll have to ask the operator on how they're managing the queue, because I'm not managing the queue from here. But maybe you can go for one more now, and then the others, we try and do it later. Got it. On the Brazil, you, you are very confident now that we have met 100% demand of the anchor customer. How many new customers have we added? You, you did mention that we have won few MNC and local customers. How much, volume can they give vis-à-vis the existing anchor customer? Can we double that revenue, say, next year? And how fast can we turn around the Brazil so that it adds to the, EBITDA margin? So first of all, I'm not sure we need to turn around Brazil, because Brazil, as I mentioned earlier, is both growth and margin accretive to the mother business, okay? And it is already showing very strong positive EBITDA, okay? Even though we're not reporting the Brazil results separately. But, you know, I think we have to- Margin accretive is what we are telling, Anand, sir? Beg your pardon. In Q4, was it a margin accretive? Is what we are telling now? In Q4, Brazil is margin, EBITDA is margin accretive- Yes. to the total business. Yes, sir. Right? It is margin accretive to the total business. So EBITDA is strong, so there's no turnaround to be done as far as the EBITDA is concerned. Okay. Now, in terms of volume opportunity, so I can't give you the number of customers, but I can tell you that we have started receiving orders from both multinational and local, large multinationals who we deal with in other geographies, right? As well as some exciting local customers as well. I can tell you it has just started, right? The first orders have started coming in. I think the potential is significant. Now, whether you can double the volume of the business, I'm not going to comment on, right? Because I don't think we can go that far, but it will be significantly accretive to the base plan. Ladies and gentlemen, please stay connected. Participants, please stay connected. The line for the management dropped. Ladies and gentlemen, thank you for your patience. We have the line for the management being connected. Sir, you may continue. Yeah, apologies. I'm not sure where I dropped off, but basically, you know, I said, Brazil, as far as EBITDA is concerned, is margin accretive, right? So it's already margin accretive, right? Actually delivering very solid margins. So that's not our concern at all. I think the opportunity is the volume growth and customers beyond the anchor customer. The first orders have started coming in, both from multinationals as well as local customers. I think the potential is huge. Now, I'm not going to comment on whether it will double the base business and so on and so forth, but it will be significantly accretive to our growth. Now, a lot of this is built into our own internal plan, right? And we have monitored against that. But all I'll tell you is that with every passing month, the opportunities seem more and more exciting rather than the other way around, okay? So therefore, you know, we remain very excited about our investment in Brazil and what it will deliver for us as a business. Got it. Got it. Thanks for answering all those questions, and just look for the- Thank you. Thank you, and we come back to you on the other one, yeah? Thank you very much. Next question is from the line of Sameer Gupta from India Infoline. Please go ahead. Hi, good evening, and thanks for taking my question. Sir, firstly, my question is taking over from the previous participant, so maybe you can add this to the answer when you are answering his question as well, that AMESA, the EBITDA, there has been a decline for two consecutive quarters now. So in an environment where there is a commodity benefit, even if top line is depressed, EBITDA decline shouldn't happen. So just trying to get clarifications on what is going on in the last two quarters here. Maybe you can just answer this as well when you're answering the previous participant's question. No, no, we will absolutely do that. So let us get the answer properly, and then we will absolutely address that maybe. Do you have any other question right now? Yes, yes. Yes, yes, I do. I do. I just thought I'll- Please go ahead with that. So I have two, actually. So Americas, the margins, actually here, this quarter has seen very steady expansion and right now at 18% EBITDA margin. I haven't seen this kind of a high level in many quarters, so just trying to understand if there are any one-offs here or exceptional unsustainable factors, or, these are pretty much, you know, what it is, the margins right now. So just two points I want to make, that the Americas really constitutes, is constituted by four countries, right? So first is Brazil, which I've already answered, which is margin accretive to us globally. It is significantly margin accretive to the Americas numbers as well. So that's the first point. The second is, in terms of specific interventions, we have a program to significantly improve our U.S. margins, right? And it's a very detailed program, right? And we expect to see significant improvement in U.S. margins during the course of this year itself. So what you are seeing is not a flash in the pan, okay? It's part of a plan, right? And if anything, you should see it holding, if not further improving from this point. Great, sir. That is very, very clear. Secondly, on the CapEx part, first of all, if there are any guidance for the next few years, it will be great. And, in FY 2024 itself, we have spent around INR 3 crore on CapEx. I understand that the Brazil plant was mostly done in the previous year, so this kind of seems a little on the higher side. So, 10, more than 10% of sales this year. So just wanted your comments on the CapEx part. I will take that question. Yeah, I'll hand over to Deepak. Yeah. We have always maintained that our CapEx will be in line with our overall amortization at about INR 374 crore this year. The CapExes are slightly higher because of the Brazil spends. We spent about, I think, about INR 70-INR 75 crore additionally this year on Brazil because the plant was commercialized this year and then multiple deliveries and payments happened this year out. The base CapEx spent this year were slightly lower than the amortization that we have, and that is what we will continue doing in the next few years as well. Without M&A or a greenfield, our CapExes will be in line with our amortization, and that are sufficient to fund our both growth as well as maintenance CapExes. So the double-digit growth target that we talk about, our internal accruals, will be sufficient to fund for those CapExes. Great. Again, very, very clear. Just a follow-up here: Any greenfield you are expecting in the next two years? See, we are looking at the CapExes generally in a block of let's say two years, and hence, I think over a period of two years, the overall CapExes will be in line with the overall amortization. Now, because of phasing, within the quarters and within the years, there could be little bit of up and down, but otherwise, over a block of periods, it will be in line with the amortization, excluding M&A and greenfield, right? Fair enough. I'll, c ome back in the queue, and, yeah, look forward to the answer to the AMESA question. Thanks. Thank you. Thank you very much. Participants, you may press star and one to ask a question. Next question is from the line of Prateek from Shubhkam Ventures. Please go ahead. Hi, Anand. Am I audible? Yes, you are. Yeah. Thank you. You go ahead. Anand, congratulations on good set of numbers. I just have one question. So I have been closely tracking this recyclable tube volume, Anand, and, you know, I just wanted your thoughts, what it is actually bringing to us. I mean, it has, probably it has gone, you know, from 10% to 20%-21% this year, which is commendable. You know, margins, you have already iterated that, you know, strategically, it won't fetch better margins. So, I mean, if you can help us understand, how is it helping us, you know, if you can throw some numbers around it? So I don't have specific numbers other than the fact that, you know, that's the number of sustainable tubes that we have supplied. But I'll tell you, and you will see this play out, basically, through wallet share gain, right? Now, I'm not in a position to share specific customers, but there are already customers, right, with whom we have gained traction, gained share, because we are more ready than other people to supply recyclable tubes and sustainable tubes. So I think as this plays out fully, there has to be sustainable wallet share gain and therefore, sustainable volume that will come to us, right? So that is the fundamental premise on which is that. Once that happens, we will get benefits of scale, better utilization, and therefore better overall margins in the business. That is the way it's going. You know, so far, I think whatever we have said is broadly, I would say, on track in terms of whatever we have said, in terms of what we will achieve on sustainable tubes, right? And the philosophy of conversion without a premium price associated with it. I can tell you that by and large, around the world, we are leading the conversion in terms of number of sustainable tubes being supplied, right? And some of those gains that are coming will be permanent. So I'm not sure I've answered your question completely, but that's the philosophy, and we are seeing the gains beginning to come. And the one thing that I must say is that, you know, I said it in my opening comments, that, you know, negative pricing is subduing our revenue numbers that you all are seeing right now. Okay? Negative pricing has begun to unwind, and therefore, you've begun to see a slight positive blip in terms of our revenue numbers. This will now slowly start finishing off the negative price, right? As that turns into neutral or positive price, you will start seeing the positive trend in terms of our revenue growth numbers as well. Understood, Anand. Very helpful. So, this anticipation or rather, a target of double digit top line growth, that is a lot dependent upon this transition also. You know, because from 10% to 20%, we have gone. Top line growth this year is 6%. But you're saying in future, with this wallet share gain, this top line growth will be aided via this transition, and that's how the incremental growth will come. Is that understanding fair, Anand? Yes, and this will be one of the drivers. The other driver, of course, is our focus on beauty and cosmetics, right? Another driver is what Brazil is going to contribute. When you look at all this, with some, and add to it some positive price mix, right? That happens in the normal course, right, both on price and on mix, right? Right now, that's a negative. When you add these drivers of fundamental business with some positive price mix, all our modeling shows that it will take us clearly into the double digits soon. Believe we are closer to that than we were earlier, and we should be making progress with each passing quarter. Very helpful. Very helpful. Anand, just one if I may, you know, one more, if I may. So in last concalls, we had discussion around some volume numbers to be shown to, you know, the analysts in the investor community. Where, you know, there was some comment from the management side that it's practically not possible. I was just wondering, you know, if we can share some amount of raw material melted in a particular quarter, be it PET or, you know, if the most used raw material, which is, you know, melted and converted into tubes. Can there be something worked around that, Anand? If- Sorry, I'm just trying to understand. You want to understand our consumption cost of some key raw materials? Oh, no, not at all. So, you know, volume growth or rather volume number has never been, you know, discussed or disclosed in EPL presentations or call. And the reason then, reason given for that is that there are multiple, you know, size of tubes and, you know, the segment of tubes, category of tubes. So we are always devoid of volume understanding of the business, you know, how that is panning. So is it possible to help the investors and analysts with the amount of major, I mean, the volume of major raw material which is used in a particular quarters, consumed in a particular quarter? So I'll take that away, and we'll think about it internally, whether we can share the volume of key commodities that we are buying and using. Where, you know, honestly, I'm not sure. You know, I, if I don't provide more information that is relevant, I think we will just create more confusion about what's happening. I think, I still believe there is a very good reason why we are not sharing the volume numbers, because it's not reflective of strategy, right? However, the only thing I can tell you is, that if I were to look at our simple volume numbers, where I'm adding apples and oranges, so I'm adding laminated tubes, lipstick tubes, and beauty and cosmetic tubes and oral tubes and pharma tubes, that it is materially ahead of our revenue numbers, right? If I were to do an unsophisticated addition of different kinds of tubes, right, and call that volume for a moment, it will be ahead of our revenue numbers. And that's why I'm saying there is negative price mix. And the word mix is also operating. So one is price, and the other is mix as well, right? But the whole thing combined is negative, and therefore reducing our so-called volume numbers, right, by the negative price mix, resulting in the revenue that we are reporting. So at a- Understood, Arun. I respect this. Thank you. Thanks a lot, and, congrats. Good luck for future. Thank you. Should we take the Americas question now? Yeah, if you can take it, because I think some of the people have asked for that and the clarification. So, Deepak, over to you. Yeah. So, Americas, first of all, all the things that Arun said in the previous question, that the volume, or underlying business performance is robust. That is true for Americas as well. So the underlying business performance for Americas is robust. In the revenue, there is a negative, pricing impact, as well as mix. In the gross contribution, there's a negative mix impact which is coming in. Americas is also producer of laminates, and our laminate, when we sell it to the intercompany units, it is sold at a lower, gross contribution compared to our tubes. Now, when we look at the standalone financials, this laminate sale gets factored in. When we look at our consolidated numbers, this gets eliminated. However, for the purpose of the standalone financials, the gross contribution gets, kind of, has an impact of increased laminate sales. The EBITDA, which is negative this quarter, there were multiple one-off items which are, let's say, operating in nature, and hence we are not calling them out at a consolidated level. But within Americas, there were multiple one-off benefits which were factored in. This quarter is a more operating performance, which is resulting in a negative EBITDA performance. So if I were to, let's say, simplify it to a one sentence, robust business performance, revenue GC impacted by negative pricing and mix, EBITDA impacted by last year one-off items. We performance-wise, I think both Anand and I feel very confident about our performance in Americas as well as in India. Yeah, and just adding to that, we really do believe that some of the new businesses that have started coming to us will actually be a flip in our numbers, looking ahead. Okay, we can take the next question in the queue. Thank you very much. Participants, you may press star and one to ask a question. The next question is from the line of Akshat Khetan from Florintree Advisors. Please go ahead. Hi, sir. Thank you for taking my question. So I have just two questions. So, Akshat, sorry, we can't hear you. Can you speak through the handset, please? Your voice is coming muffled. Yeah, am I audible now? Sir, we can hear you, but it's not audible. It's not clear. Hello. Now can you hear me? Yeah. Thank you. Okay. Yeah, thank you. So if you look at the consolidated debt for FY 2024 compared to FY 2023, it has just increased by INR 35 crore. But if you look at the interest, so it has increased by INR 30 crore. So any, you know, color on this, why the interest cost has increased so much compared to debt? And are we planning any debt reduction going further? Because we don't have any greenfield CapEx plan. So any color on this, sir? Yeah. Deepak? Yeah. So first of all, the reason for higher interest is because of Brazil, primarily because of Brazil. Last year, same quarter, while we had debt for our Brazil greenfield, the interest was getting capitalized. The plant was commercialized in Q1 of FY 2024. This quarter, the entire interest is kind of coming in, and that's why the disparity between the debt and the interest cost number. On the debt reduction, again, we are generating healthy cash flow. However, we are also a healthy dividend-paying company. If you will look at this quarter, we have increased our dividend from past, let's say, many quarters of INR 2.15 to INR 2.30 already. We believe that rewarding our shareholders with healthy dividend is a critical part of our strategy. We will continue evaluating whether how to deploy cash, but fundamentally, the business will continue generating good amount of cash. Got it, sir. So just a follow-up: so, going further for FY 25, what can we expect as a interest cost in percentage terms? In percentage terms, I would say that our overall debt, unless we are kind of going for a M&A or for a greenfield, our interest cost would largely remain at a similar level, and then obviously there can be a little bit of up and down, but our interest cost will not be materially different. Got it, sir. Got it, sir. And just one last question: so in the presentation, we have mentioned that the Red Sea issue has increased our freight cost. So can you just give some color on this, like how does it affect us materially or it's just a small impact? Yeah. So, Red Sea has 2 impacts on our business. One is, let's say, in terms of inventory, the lead time, and we produce our laminates in India and China and then ship it across the world. The lead times have gone up, which means that our GIT on laminates have gone up. That is marginal impact on our inventory. Second is on the cost. While our freight costs have gone up, accordingly, pricing also kind of factors in this, this kind of freight, and those pricing have also gone up. So from a P&L point of view, there is a negligible impact. On the inventory, there is some impact. Got it, sir. Thank you. Thank you so much, and all the best for FY 25. Thank you. Thank you very much. Operator, you may press star and one to ask the question. Next question is from the line of A.C. Alagappan, individual investor. Please go ahead. Good evening, sir. Am I audible? Yes. Thank you for taking my question. In fact, I want to ask regarding the inaudible. As you answered the previous question, thank you very much for that. Then one more question is, which, what is the capacity utilization of Indian plant under compared to the other plants there? What is the capacity utilization of Indian plants compared to other plants? Yeah. Can you, can you produce more here and export instead of going for a greenfield plant? See, you are answering that, unless you go for a greenfield plant, because if you have got the capacity, I mean, can you do it from India itself, sir? Because the laminate and the- I'll just hand it to Mr. Ramasamy. He'll answer your question. The capacity utilization in India will always be higher, because there is a large set of distribution centers and large number of plants we have. So it will be comparatively higher compared to our other plants. That's one question. Exporting out of India, we do exports out of India, but tube in general, for a long distance, is actually you are shipping air. That's one constraint. The second constraint, most of the supply chain lead time b ecause everything is printed to order, right? So lead times are also another, most customers prefer a lead time, very short lead time of 15 days, 20 days. So it will also be another bottleneck, right? Having said that, there are customers who also wait for a longer lead time of 45, 50 days, because the export business will take about anywhere between 30-45 days. Wherever possible, we do export. It's not that we are not exporting. We do export, but that will be a very small percentage of the volume that we do in India. And just to- Can you give me absolute numbers, sir? Sorry? Sorry, sorry. Please go ahead. Can you give me absolute numbers? Which absolute number? The export volume? Not the export volume, capacity utilization. The fact is, capacity utilization, say, of some plant or any plant in India, what capacity is running there? See, capacity utilization, as Ramasamy has said, is high, right? So you've got to believe it will be in the, I would say, early 80s or something like that, if I were to give you a number. Okay? And this is an aggregate number across everybody. So there is still headroom for more production. Having said that, the business model, and I think it's important to just understand the business model in this business is, laminates are freight- friendly, therefore, they are produced centrally in India and in China and shipped all over the world. Tubes are freight unfriendly, and as Mr. Ramasamy said, you need agility by being close to the customer to be able to supply with shorter lead time. So tubing and printing is actually done in the last mile closest to the customer. So we ship globally where it is freight friendly, and we produce locally where it needs, where it is not freight friendly and needs to be close to the customer. So that's how this business model actually has been built, right? So the capacity utilization in India of tubing is less relevant. We of course import from India to Middle East. I think we even export to Middle East. We even export to places far away, like Australia and New Zealand, right? In some cases, customers want to buy that, and we do that. But it is not core to the strategy to do significant exports, let's say, from India, right, externally, because we have a large domestic market that we are servicing. But we have opportunities to export from other countries as well, right, as the case arises. So from Brazil, tomorrow, we may export tubes to adjacent countries like Argentina and so on and so forth. But that's how the business model works. Thank you. Thank you very much. Next question is from the line of Sumant Kumar from Motilal Oswal Financial Services. Please go ahead. Yeah. Hi, sir. This, my question is related to Europe. So there is a huge difference between EBIT and EBITDA of Europe as per the PPT. So what is that? The higher depreciation charges, and if it is there, what is the reason for that? Yeah. So, there was two large capitalization that happened in our Poland plant, in the beginning of this financial year, for which the depreciation has come in. It was not there last year, same quarter, and hence, there seems to be a difference between EBIT and EBITDA. How is this new capital allocation going to favor Europe growth? So Europe, I think, as we said, Europe right now, the focus is on fixing the margins. We have taken a significant restructure. So we have created a solid restructuring plan to improve Europe margins to mid-teens. We have also then taken a restructuring cost because the plan involves headcount optimization as well as manufacturing realignment. We are working on that. The new capitalization that we have done, those were, let's say, specific to the order that we have received, et cetera, and hence the utilization of those machines is on track. But the primary focus on Europe is on margin improvement, and we should see that happening over the next few quarters. Okay. Thank you so much. Thank you. Next question is from the line of Pooja, from Ace Lansdowne Investments. Please go ahead. Thanks for taking my question. My question is with regards to non-oral care segment, and in since we increase our focus in B&C, particularly, I wanted to understand, pharma has lagged in sales, from pharma has hovering around INR 330-INR 340 crore around at the annual range. So is there any specific reason this category is not scaling up? And since we are also increasing our headcount in B&C segment, any guidance on the growth in B&C segment here? So I'm just trying to understand your question fully. One question is to say, why is pharma not growing? And the second question, you could repeat. Yeah, and second question, with respect to B&C, growth, as we increase the focus and headcount over there, any particular number you could provide on that front, too? No. So, so both these remain priority sectors for us, and with even more focus on, personal care, right, beauty and cosmetics. As far as pharma is concerned, I can tell you there have been some significant unlocks. Pharma is a much longer process of conversion because of FDA and all kinds of other regulations, right? And intent, and products tend to be more invasive, and therefore require a lot more protocols before they convert. As far as beauty and cosmetics is concerned, you know, we have just started a couple of quarters ago to put extra resources in. And I can tell you that you will begin to see the, the blip because of the headcount, and therefore hunting down new customers, as well as our new SIM technology, which I mentioned in my opening comment, right? Because as part of our strategy, we have fully funded whatever is needed to be done to accelerate our beauty and cosmetics growth. And, the mix improvement that will come as a result of that, as well as the volume growth opportunity, will start playing out in the next few quarters. So, because that's our strategy. Understood, sir. As I understand, our customer base is pretty sticky. In case of pharma, what would be the conversion time to, you know, for any particular client, sir? It's usually a reset. Conversion time? H ow much time it takes to convert? To convert a customer who is currently, because most pharma customers, by the way, are in the real source of business, are customers who are in aluminum tubes. Okay? Now, we have a large share of people who are converting, but the conversion requires testing, and at the customer's end, significant change of packing and sealing machinery, right? So significant CapEx at that point. So I would say, I mean, I don't have a thumb rule, but the conversion, once we start a conversation with a pharma customer, at least a year, right, if not longer. Understood, sir. Thank you. Thank you. Thank you. Next question is from the line of Jenish Karia, from Antique Stock Broking. Please go ahead. Yes. Thank you for the opportunity. So can you just please elaborate again on the Europe restructuring that we have done with regards to manufacturing realignment and headcount allocation? So if you just throw some more light on it, and how do you plan to achieve, and by when the mid-teens margin that we are guiding for the Europe region? Please stay connected. The line for the management dropped. Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Jinesh, may I request you to go ahead with your question once again from the beginning, please. Yes, sure. So my question was with regards to the Europe restructuring. So if you could just throw some more light on what exact restructuring have been, what measures are, have been taken to boost the growth, and how soon do we plan to achieve the guided margin of mid-teens in the region? Yeah. So as we said, our objective is to get Europe to mid-teens margin. And as we said, you will start seeing the benefits of our restructuring start accruing this year itself. Okay? Now, we have, as you've seen, built in certain exceptional items into our cost base. These exceptional items will go to support three key initiatives that will help us to transform our margins in Europe. The first is people optimization, both at the management level and the operation level, and many of these have already been done. The second is manufacturing realignment, by moving some lines from higher cost German site to a more optimal Poland site. Some of this has already happened and some of this is underway. And the third is to create a center of excellence with respect to two areas: printing, so moving all printing of laminates from Germany and Poland, and creating a center of excellence in Poland for printing, and creating shared services wherever possible. So whether it's through finance or planning and other activities, creating a shared service center in Poland, which will give us economies of scale, and it will be housed in a lower cost country like Poland, rather than a higher cost country like Germany. So all these things put together, right, are well underway, and they will start, you will start seeing the benefit flowing this year itself. But as I've said, our objective is to consistently deliver mid-teens margins in Europe, right? And that will happen in the foreseeable future. Yeah, that's very helpful, sir. Thank you so much. Second is on the Americas region. As we see, Brazil has now been operational for 4-5 quarters, and the anchor customer commitment is also nearly fully completed. So what would be the rough utilization levels at the Brazil level? And secondly, do we see a growth moderation happening in Americas region going forward as the base impact of Brazil is already factored in? The utilization level, there are two aspects to this. One is that we have a contractual customer, the lead customer. We install capacity as per their demand. That is now being fully utilized. What we have also done is, we have also put in certain seed capacity for seeking other customers. That is now getting filled in. But see, the entire business is about the moment you see a growth, that you see a certain level of utilization, you put a next capacity, you are automatically add up. Capacity will never be a constraint. Demand drives the capacity, so we'll keep increasing. But we have now enough capacity to service a certain set of customers in Brazil. Can we expect Americas as a region, on a consolidated basis, growing at a high double-digit or mid-teens kind of a number in FY25? Sir, sir, double-digit is a core growth target, and, we are very certain that America will also grow double-digit. Yeah. So America as a region, definitely, right? And as I've said earlier, we are also, we have a program to improve our margins, specifically in the Americas, and specifically within the United States. So as Brazil ramps up and some of the interventions in the US pick up, America should deliver solid growth as well as solid margin improvement. Sure, that's helpful. So just last one, question. You mentioned the interest cost should maintain at a similar level. So you, you meant that INR 32 crore of interest cost that we have in fourth quarter, that will continue on a quarterly basis? Yeah. So the current, the cost, which has been, which is in this quarter, is the steady state cost. And, and that's the cost that is, that is likely to continue. There would be some up and down, some up and down, depending upon the phasing of cash and, and that's the loan, debt levels. But, the cost is representative of the steady state business cost that we have right now. Oh, sure, that's helpful. Thank you. All depends going. Thank you. Thank you. Next question is from the line of Shubham Sehgal from Securities Investment Management. Please go ahead. Hello, am I audible? Yeah. Yes, sir, you are. Yeah, yeah, I just want to ask one basic question for my understanding. So we are seeing that companies are moving towards the sustainable packaging, and even our volumes are at 20% right now, as we targeted. So I just wanted to understand the margins for our sustainable packaging, like, for example, EcoVadis, compared to normal tube. Are those, like, similar, in the similar range, or, like, how is it working? So, you know, the margins are greater than or equal to what they are for the regular packaging. So sustainable tubes margin will be greater than or equal to, what it is for the non-sustainable tubes. Now, this is a strategic choice, right? Because the reality is, if you try and charge a premium, chances are that you'll slow down the process of conversion, or you will lose wallet share in the conversion because somebody else will give it at a lower price. However, if you give it where you do not, present an obstacle to conversion, then the chances are you'll convert faster and gain wallet share during that conversion, and that has been our strategy. Okay, so like just for clarification again: So do we actually actively try to price our sustainable tubes higher wherever it is possible for us, or we do not do that? Sorry, the question is, do we try and price it higher wherever possible? Yeah. Like, do we do that or we don't do that? No, we absolutely try and convert aggressively, right? Now, the thing is that, you know, many companies have their own program of conversion, okay? So our job is to be ready. But there are many smaller companies where we are able to go and offer our solutions, right, and motivate them to start converting. So I suppose it's a combination of both. Okay. Okay, got it. So but, so, like, as you've already mentioned, that we have the capacity to offer it. So going forward, do you think that we could build on this, like, we could have a pricing power where we could, offer our tubes at a better margins? Like, we could get better margins out of our sustainable tubes, like, going forward. Do you think that kind of thing is possible or it won't happen? It could happen, but I would say it is more by default rather than by design. Strategically, right, we want to accelerate the process of conversion and gain volume share, wallet share during that conversion. In some cases, in many cases, you might be able to get better pricing as well, since you have first mover advantage in terms of your ability to supply, right? But, you know, that, like I said, is by default, rather than by design. Okay. That's all. That's it. Thank you, sir. Thank you, and, if you could take the last question. Sure, sir. We'll take the last question from the line of Mahek Shah from Prospero Tree. Please go ahead. Yes, sir. I have just one simple question. Sorry if I'm being repetitive. It's regarding Americas. So the margins have suddenly spiked up from around 2.5% to 9%. So are there any one-offs in that? And, is it sustainable, the margin? You're talking about the EBIT margin, right? 9%. Yes, sir. Yeah. No, so, Americas has had an organic quarter, so the margins are representative of the steady state business. We have improved our performance in Americas. Brazil, as you mentioned, also is accretive to Americas unit, and that also gets consolidated now, so the benefit's closing. We should. As we discussed, we are also putting in more efforts to kind of improve U.S. margins in particular. And as this margin, we should maintain and improve as we go forward. Sure thing. Thank you. That's all from my side. Thank you. Thank you very much. Thank you. I now hand the conference over to Mr. Pratik Tholiya for closing comments. Yeah, thanks, Chirag. On behalf of Systematix Institutional Equities, I'd like to thank the participants for logging in to this conference call, and once again, thanks to the management for giving us the opportunity. Sir, would you like to make any closing comments, please? No, that's it. Just want to thank everybody for logging in and continuing their support to EPL. Thank you so much. Thank you very much. On behalf of our Systematix Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.