Ladies and gentlemen, good day, and welcome to the Huhtamaki India Limited Q2 CY 2023 earnings call, hosted by ICICI Securities. 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 star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjesh Jain from ICICI Securities Limited. Thank you, and over to you, sir. Thanks, Yusuf. Good afternoon, everyone. Thank you for joining on Huhtamaki India Q2 CY 2023 results conference call. We have management on the call, represented by Mr. Dhananjay Salunkhe, Managing Director, Mr. Jagdish Agarwal, Executive Director and CFO. I would like to invite Mr. Dhananjay to initiate with opening remarks, post which we will have a Q&A session. Over to you, sir. Yeah. Thank you. Good afternoon, everyone joining on this call. Before we start our discussions and the presentation on the company's performance, let me start with our safe harbor statement that this information is basically what we are, you know, talking about, represents the current situation on the business, and that does not really, you know, give any indication of a future. Coming to the last quarter's performance, we continue to face a challenging environment externally, in terms of, you know, due to the food inflation, the unseasonal rains, and certain downturn in terms of consumption pattern. What we have observed in the personal care as well as in the beverage segment, challenges remain there from a volume point of view. At the same time, we continue to work towards creating a sustainable long-term and profitable growth prospect for Huhtamaki India. In line with the challenges in the market, our Q2 sales, net sales, it was lower than the previous year, same quarter, as well as the consecutive quarter of January to March. There is a marked improvement in bottom line in terms of EBIT, PBT, as well as the EPS improved the YoY basis. As compared to the Q1, there is a slight decline. At the same time, overall, the focus currently is to invest in the technology and the innovation which will help us to be a player who wanted to be a number one choice in terms of sustainable packaging. Clearly, looking at blueloop as one of the offering in the marketplace, which we will discuss, you know, during the call. At the end, continue to drive the business transformation, decide clearly on where to play in terms of our key segment, products, and categories, and how do we play to create a sustainable growth for Huhtamaki India. This is what is overall business situation. I would now hand it over to Mr. Jagdish Agarwal, our CFO and Executive Director, to take us through to financial review. Thank you so much. Thank you, Dhananjay. Good afternoon, everyone. To start with, I would like to say that it really gives us, at Huhtamaki, a great sense of satisfaction on continuing this call for the Q2 in a row, after a long lag in the past. This reflects upon the commitment of the company to engage into a continuous dialogue with all the stakeholders and the investor community. As regards to the Q2 of the half-year performance, while the volumes continued to remain under pressure in Q2, impacting the top line, the bottom line has shown remarkable improvement for both the Q2 and H1 YoY basis. This is a result of continued focus on operational efficiency and mix, and partly due to stabilizations in the input prices. In spite of the top line contraction, by around 22% YoY, coming to INR 6.06 billion in Q2, the EBITDA has actually increased by 4.4% in Q2, and the EBITDA for Q2 was INR 421 million. For our H1 2023, the top line has contracted by 16% year-over-year, to INR 12.5 billion. The EBITDA, instead of decreasing the sales, the EBITDA decreased only by 3.8%, and the EBITDA for H1 was INR 996 million. Our EBITDA, as a percentage of sales, has increased by 1%. Overall, the quality of business has improved in H1 and in the Q2. During the Q2, the Huhtamaki were relocating some of its smaller sites to our larger sites. This has been done with the objective of achieving economies of the scale, optimize production processes, and reduce overall operating costs. The expenses pertaining to the relocation is around INR 21.6 million, have been disclosed in financials as exceptional expenses for the Q2 2023. EBIT for the quarter was INR 305 million, and for the H1 was INR 725 million. It is significantly higher on YoY basis. Similarly, PBT for the quarter at INR 206 million, and for the H1 was INR 558 million, is substantially better on YoY basis. The improvement in EBIT and PBT is majorly driven by lower debt positions due to revaluation with useful life of the fixed assets, effective January 2023. Net profit after exceptional expenses and after tax for the quarter at INR 145 million, has improved to 2.4% of sales for the H1 of the year. Net profit has improved to INR 500 million, though driven by one-off reversals of accrual for uncertain tax provision in Q1. EPS for the quarter stands at INR 2.90 per share, again, substantially higher on YoY basis. For the half year, EPS stands at INR 6.89 per share. This is significantly higher on YoY basis. Moving on debt and liquidity position. Net debt has reduced by almost INR 1.64 billion YoY basis, as this reduction has helped improve overall liquidity of the company. Debt-equity ratio of 0.4 is almost consistent with the previous few quarters, and moving this range only. Debt to EBITDA ratio has increased to 7.6. Short-term borrowings are marginally reduced on account of repayments. Overall liquidity is strong, as we have a sizable credit lines, which were mostly unutilized at end of the quarter. Net operating overall cash position has improved marginally, though net cash flow position from operating activity has shown a substantial improvement. This has been achieved by improvement in the working capital, majorly on account of decrease in receivables, though partially offset by increasing in inventories or decreasing payables. On account of higher capital expenditure, free cash flow has been impacted to some extent. To sum up, I can say that financial position has stabilized in the last one year. Operating working capital has improved marginally due to decrease in receivables, overall health of the business is improving. The company has always remained committed to stakeholders, focused on technology-enabled innovation and operational performance, and realization of value for its products by engaging constantly with our customers. We believe this will help the company remain competitive in the long term, to drive responsible and profitable growth, while upholding highest standard of corporate governance. With that, I'll hand over to Dhanajay. ou, Jagdish. I think this is a good summary. Those who are on call, if you are referring to the investor presentation, which is uploaded on the site, and I am referring that presentation to get you through a very exciting information about our an upcoming project or upcoming innovation, which we have globally branded, and this is called blueloop. blueloop is our enterprise-wide sustainability brand, which is aligned with our 2030 strategy, which is basically to become a first-choice supplier in the sustainable packaging solutions, which will be basically driven by technology and our ambition in operational excellence. If you are able to refer those slides, I think I would be requesting everyone to refer slides, and I am on slide number 11 Because I would also like to every one of you to see also what we are talking about. What the Huhtamaki Global as well as India ambition is to move from a, you know, our packaging core or as a packaging converter to a solution provider. Basically, from a packaging converter, we want to add a capability in the phased way in terms of improving our offering in a packaging technology innovation and then to a packaging solution provider. That thereby, you know, increasing our value proposition where we were today and we want to be in 2030. In line with that, we have invested in the technology and innovation, and the project is upcoming, coming up well in our site located in Silvassa. What are we offering? We are offering through that project, the three different product streams, which are basically developed around four work streams. You know, from a very complex and non-recyclable packaging solutions, flexible packaging solutions, what we are trying to develop is basically a mono-material laminate, which are basically designed to recycle. There are four streams or four product works which we are offering through, which is one we call mono PP, which is like a single material. Second is mono PE, again, a single material, you know, mono, you know, from a paper solutions, PET. The projects which are basically driven from India are basically based on PP, based on PE, and based on PET. Whereas any solution required paper-based will be, you know, resourced from our, you know, overseas plant from Germany. With these propositions, what we are offering to the our esteemed customers are basically simple but effective mono material solutions, which also enables weight reduction, the carbon footprint reduction and enhancing the recyclability of the laminate. And those laminates have a clearly unique combination of proper, you know, features, which we call power of three, which is their ability to provide required protection, ability to get recycled, and then affordability. The affordability is very much important in the price-sensitive market, competitive market like India. Keeping those in mind, you know, our products coming out of this innovation guarantee the protection and their shelf life. There will be no compromise on the shelf life when customers start using it. It keeps the content, which will be packed by our end customers, hygienically safe and safe to use. Recyclability, which will be a important parameter for our customers to achieve even their sustainability agendas of 2025 and 2030. If you see what many of our customers, as well as consumer packaging good companies, have, you know, taken a pledge to move to the recyclable, you know, packaging by year 2025 to be year 2030, as well as regulation also is making the changes in line with the recyclability agenda. This is what we are offering, and we are really exciting that, you know, project is coming up very well. The trialing, which are happening in the customer place, is also progressing in a good pace. This is one on the offering on the innovation. The second part is on our business transformation, and in that, we made a good progress in last quarter. You know, as Jagdish indicated in his commentary, that these three sites you know, smaller sites on our PS label portfolio were kind of consolidated or moved to the larger site within India. Now we have a agile and a very focused approach in terms of servicing our customer, which has changed a bit in the last few years. Considering that in mind, we have initiated this optimization initiatives, in terms of improving our customer relevance, cost effectiveness to the end customer. This will definitely, start giving us some, you know, improvement in terms of our competitive offering to our end customers. This is what, we had to, you know, update. Now, with this, we kind of conclude our presentation part of it, and then we can, open this up for a question and answer. Thank you. Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Khush Gosrani from InCred Asset Management. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. Sir, I wanted to understand that over the last, 1.5 years, have we lost market share to our competitors, or have we vacated the market because it was at the lower end of the margin all, and we wanted to move towards the, our new sustainable product offering? Yeah, this is a good question. This is a, you know, three things are happening. One, of course, there are changes in the, you know, segment of takes, as, you know, indicated earlier, that we service primarily to the food, beverages, personal care, you know, businesses. There what we saw was, there is, you know, challenges in largely in the personal care and beverages because of the market conditions. That is one aspect. Second, as you indicated rightly, yes, we are in the process of reviewing our portfolio and the lower, you know, strata of the business, yes, we are taking a view on it. That is what you would see that the quality of business is improved over a period of time because we definitely are optimizing our portfolios. Which will help us in concentrating on the specific targeted markets and, you know, push for the competitive offering, you know, and then gain the share. Sure, sir. Today, how much of the contribution will be coming from the blueloop products, and by 2030, what are you envisaging, the contribution from blueloop? Yeah. Today, month on month, it varies, but at the same time, we are on an average, around 22%-25% blueloop products are serviced from currently. You asked the timeline is 2030, or? 2030, we are targeting around 60%-65% from the blueloop. In terms of margin differential between the current packaging and blueloop, what would be the differential, roughly? Yeah. It won't be right in terms of putting a number. Yes, this is a very much innovative offering and it would be, I would say, competitive in the marketplace from a customer point of view. At the same time, because it has been invested very well. If you see there are three or four features of this, they are simpler, they are giving the same effectiveness at the same time weight reduction. Overall, from a customer point of view, it would be still a competitive offering, while it would be a premium offering. Got it. Final question, any timelines that internally have been, you know, discussed for the land sale? Roughly, no time with the buyer. You have a definitive buyer in place, which is best for the exchange lease. Any timelines as to when things can get finalized? As you know, you know, we work in a landscape where on a March itself, we have already informed stock exchange and our teams are working on the things. We have a definitive, you know, party identified and the due diligence is in progress. You know, it's just like a, you know, the considering everything which need to be covered. Can't put a, you know, timeline to it. Okay. Thank you. I get that. Thank you. Thank you. The next question is from the line of Madanlal Jain from individual investor. Please go ahead. Hello. Yeah. Sir, sir. Sir, good afternoon. Good afternoon, Madanlal Jain. Sir, namaste, main sir ye cheez janna chahta hoon ki karib 8-9 saal pehle Huhtamaki main itne continuous acquisition hue aur itna vyaj bharke itna bada sale main changes aaya ki INR 1,000 crore ka turnover karne wali company dheere dheere INR 2,700 crore par pahuchi. Ye kabhi utne bade expansion ko kabhi bottom line main reflection nahi kar pai. pichhle 2-2.5 saal main to baar baar ek hi cheez sabke nazar main thi ki lag effect yani ki raw material BOPP ya jo bhi aap use karte the, uska prices badhte ja raha tha to aapne EBITDA main koi matlab kuch aapka dikhai nahi tha. Koi kuch khaas nahi tha. jo EBITDA INR 1,000 crore ke sale pe aapka aata tha, woh aaj INR 2,600 crore ke sale pe bhi usi EBITDA ko badi muskil se leke aate hain aur baar baar taarif bhi ki jati hai ki pichhle quarter se humne achcha kiya. Isi tarah se plant ko close karna aur matlab ek ko dusri jagah shift karna, in sab kharchon, in sab pareshaaniyon se ulajhte hue kabhi humari kabhi debt bhi nahi hua karti thi. Aaj hum debt pe baithte hain. Aise mahol ko bana ke aakhir hum kab tak is mahol se bahar aayenge? Aaj raw material price ek aisi jagah pe hai jahan pe aapko lag effect main benefit milna chahiye, woh bhi kahi dikhta nahi. Jab bhi is baar bhi aapka result aaya to maine dekha some headwinds. Ye matlab aakhir kab tak hum? matlab shareholder ko aap agar dekha jaye na return ke roop main to pichhle 8-9 saal main itna bhari uchal aaya ki is company ne aisa koi kaam nahi kiya. Yani ki kisi tarah se majboori se apne aap ko sambhal ke bahar aa rahi hai to ye kab tak chalega, sir? Sir, ye mera prashn thoda tough hai, parantu main is cheez ko every year watch karke mujhe samajh main nahi aata ki kisi quarter main to revolutionary change ka indication aayega ki yes, we are doing itna turnover hai to hamara EBITDA 12%. Sir, itna paisa laga ke itne acquisition karke. Sir, ye kaisa acquisition tha ki humne kabhi bhi investor ke liye kuch hum actually kar hi nahi paaye. Shayad agar main agar is prashn main koi baat agar reh gayi jyada to main uske liye kshama chahunga. Sir, ye jo humko jo payment aana hota hai woh always INR 600-650 itna bada payment kyun hamara outstanding hota hai hamesha? hamara sale hi INR 600 crore hai to hamara jo aana hai, payment woh hamesha INR 600-650 crore kyun hota hai sir? aisa kya business Huhtamaki karti hai ki woh kahi complete hi nahi kar pa rahi hai ki matlab bilkul bina profit, bahut reasonable profit ke saath hum kab tak isi tarah chalte rahenge. Sir, yahi prashn tha. Sir, thank you, sir. Haan, koi baat nahi Madan ji, jo aap jo bol rahe hai ki aapka jo question hai, tough hai, but aap puch sakte hai, usme koi do rai nahi hai. Dekhiye aapne jo baat kiya hai, like flexible packaging ka ek 10 saal ka hai to sahi maaine main agar dekha jaaye to 10 saal main ya 12 saal main bahut sare changes hue hai. Ek to flexible packaging industry main aap dekhenge agar 15 ya 20 saal pehle bahut sara packaging jo tha woh rigids main pack hota tha. Uske baad main kya ho gaya? There was a moment ki rigids to flexible conversion woh 15 saal se shuru jo hua tha. Uske karan har ek flexible packaging company jo tha, uske liye kuch na kuch har ek ke liye tha. Ab ye last 4 ya 5 saal main kya change hua hai? Competitive rivalry jyada badh gayi hai, ek hai. Dusra hai Huhtamaki bahut hi ambitious hai India main kyuki India main next billion consumer jo hai woh India se hai. Huhtamaki ka globally as well as hamara jo Huhtamaki India ka jo belief hai ki yes, India is the country which will grow and that is where we want to invest our money. That is where you can see that agar abhi bhi temporary hamare liye challenging tha 2-2.5 sal se. Yahi hum kar rahe hai ki hum kaise aage jaake usko long term success story banaye. तीसरी बात है जो कि बहुत सारा एक्विजिशन हुआ, ज्यादा क्लाइंट्स वगैरह थे तो GST के बाद में इंडिया is also becoming one market. उसको मध्य नजर रखते हुए हम अभी क्या कर रहे हैं कि हम भी वही सोच रहे हैं कि देखिए कि मार्केट लैंडस्केप चेंज हुआ है, कस्टमर का लैंडस्केप चेंज हुआ है और इंडिया का इंफ्रास्ट्रक्चर अभी improve होना शुरू हो गया तो you know, transit times reduce हो गया है तो इसको मध्य नजर रखते हुए हम कंसोलिडेट कर रहे हैं। यह कंसोलिडेशन जो है, जो कर रहे हैं, वो competitive बनाने के लिए है and कस्टमर का relevance बढ़ाने के लिए है। हमको उम्मीद है कि यह जब करते समय हमको definitely improvement मिलेगा और उसका आगे जाकर उसका definitely उसका फायदा होगा। आपने 2-3 पॉइंट और भी कनेक्ट किया है कि रॉ मटेरियल पैसे आगे अगर हमने आपने अभी सुना रहेगा कि जो blueloop है, उसमें हमारा बहुत बड़ा चेंज क्या होने वाला है कि हम हमारा फिल्म हम खुद बनाने वाले हैं। जो BOPP या ये जो रहता था, उनके लिए हमारे लिए बहुत ही important जो lag effect है, जो है वो अभी lag effect का impact बहुत ही कम होने वाला है। Last point आपने पूछा था कि receivable ज्यादा है। आपकी बात सही है, because अभी जो हम मार्केट सर्व करते हैं, डोमेस्टिक मार्केट में जो competitive rivalry है, हमारे जो competitor है, most of the competitor are on base है and उनके जो सिचुएशन है, funds है, I mean उनके compete करते हमको भी competitive रहना पड़ता है और हमारा 30% of our exports है तो उसमें exports का जो considering की, हमारे को 30-45 days transit के लिए लगता है तो यह मध्य नजर रखते वो हमारा आता है। At the same time effort तो है कंपनी का। How do we improve on the all aspect, our business be it topline be it cost, be it bottom line and at the end of the day the value to the shareholder and आप अगर देखोगे last three quarters में हम तीनों एक except for the volume। हम तीनों इस पर हमारा improvement चालू है and उम्मीद है कि यही चालू रहेगा। Jagdish ji, आपको कुछ add करना है? Dhananjay, I think you covered everything. I guess one thing I can add - I think for the same thing, what you say on India. The quality of business, model, if you look at like EBITDA margin, if you talk about the H1 of this year, we are trading around 8% EBITDA margin. I agree if you go fast, we used to had a good EBITDA margin and all. But again, if you look at 2021, and there were a lot of dips in 2021 and we are trying to conclude from 2021. So the performance of 2022 was better than 2021 and then look at the performance of 2023 is better than 2022. So we are in that trajectory. And whatever the things which is happening to the company when we talk about a sustainable innovations product or when you talk of a locations of smaller units are going to drive a long-term sustainable growth and competitiveness. सर, एक मात्र अगला प्रश्न पूछ सकता हूं, सर मैं। हां जी। सर, यह bottom line में sustainability जब तक अगर आप कोई भी सर Dhananjay ji और Jagdish ji, जिस तरह से आप नए आपने इस कंपनी की कमांड संभाली है, हम बहुत खुश हैं। आप आपके मतलब कार्य करने के तरीके से और investors के लिए जिस तरह से आप concall कर रहे हैं, तो मैं बहुत appreciate करूंगा कि शुरुआती में ही आपका अंदाज investors के लिए बहुत अच्छा है। सर, मेरी सिर्फ एक छोटी सी request है कि जब तक bottom line में sustainability के लिए कोई बहुत बड़ी मेहनत नहीं होगी, तब तक एक MNC का share Indian Stock Exchange में बहुत ही सस्ते दाम में इसी तरह रूल करता रहेगा। Trade करता रहेगा तो मेरी request होगी सर कि bottom line में आप आगे जाकर कोई sustainability का plan बनाइए। यह मेरी एक छोटी सी request होगी। सर, Thank you very much! जिस तरह से आपने जो रिप्लाई दिया है, मैं बहुत सेटिस्फाइड हूं सर। Thank you. आपका भी जो सुझाव है sustainability का, हम लेते हैं। आपको definitely उसके ऊपर भी कुछ मिलेगा। short term और long term करेंगे हम उसके ऊपर। Thank you. Thank you Madanlal Jain. Thank you sir. Thank you. Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company या नमस्कार साहब! धन्यवाद सर, आपका प्रश्नों का पूरे पूरी समीक्षा करके आपने काफी डिटेल में जवाब दिया। सर, शेयरहोल्डर के पॉइंट ऑफ व्यू से यदि आप इस विषय पर ध्यान दें, तो यह एकदम करेक्ट है कि करेंटली हमारे बिजनेस मॉडल में क्या key headwinds है, क्या change है? क्या bottleneck हैं, जिनके कारण से हम topline को profitable bottomline में कन्वर्ट नहीं कर पा रहे हैं और जैसे आपने यह अपना blueloop के बारे में विषय में बताया कि इससे हम मार्जिन इंप्रूवमेंट लाएंगे और एक नई टेक्नोलॉजी लाएंगे। bottomline में रिफ्लेक्ट करना बहुत जरूरी होता है। सर माय फर्स्ट क्वेश्चन वाज कि सर, व्हेन वी लुक एट Other Operating Revenue that constitute majority part of the PBT number. What does the Other Operating Revenue constitute? When I was looking at the cash flow part, sir, we find here and inventory provision of INR 116 million that is closer to INR 12 crore. If you could explain the reason of the same. What is the nature of it? Sir, lastly, sir, Dhananjay sir, now you have over a year in the organization, and sir, this is an MNC, so I think there will be a lot of checks and balances in running the organization. Sir, like for the last three years, sir, we have kept a continuous request in AGM that you should do a con call, give personal. Sir, I appreciate the senior team of you guys that you have paid attention to these aspects and you are also deliberating. Sir, you must keep this process continuous, regardless of how the response from the investors is. Otherwise, sir, this link should not break that after two quarters, three quarters, if you do not get the same response from investors or participation, then you drop the con call. Do not think like that. Plus investor presentation also, elaborate a little more that keeping into mind the competitive landscape, if it is explained a little more distinctly, then that will also be a little better. Otherwise, sir, currently, sir, from your presentation, it is clear that you are seeing more problems in your positioning. That means you are facing more hurdles, in the business. If you could dwell whether this understanding is correct, how things are shaping up? What are the key points or the key areas or concern areas which needs to be addressed so that this segment can start reporting sustainable, profitable numbers. Lastly, Sir, Dhananjay Sir, you mentioned that the technology we are bringing, which will have this backward integration process, Sir, please elaborate a little more on that, Sir, how, when we will face it? will face it? When is it coming to effect? 2030 is a long period, Sir, seven years down the line. If you could give us some more color on the same. Sure. You want to start? Maybe I can answer part of the question. First point you have asked Kapoor, is about what do we include into other operating revenue. In other operating revenue, there majorly is scrap sales, which is a by-product when we do our production, and it includes export benefits as well. Second point you had asked about inventory provision, that there's increase into the inventory provision. If we talk about inventory provision, this is roughly 2%-3% of our inventory, and we do follow a set of policies where we do aging-based provisions into the inventory. That's the process we follow as a good governance. Inventory provision, what we are talking about is that aging-based provision. These are the two questions you had from financial point of view, if I remember correctly. Yeah. Yeah. apart from the. Sorry, sir, inventory part, sir, come again, sir. I missed your last point, what you were explaining. Inventory provision is aging-based provision. You have a policy that, okay, certain materials are having a aging of, like, more than three months, six months, nine months. Every company have a policy around making a provision for that. This provision is on account of that inventory-based aging policy. Okay, I take it off then. Sir, after you. Okay. Thanks, Jagdish, for this. You also, you know, touch base on the hurdles and the technology what, and then why 2030? Let me start with the hurdles. Yes, we are in the process of, you know, innovating the products which are first to the market, and this mono material or recyclable project, which are basically with the barrier properties, which we are introducing in our laminates, are definitely first to the market through a mono material solution. Yes, customers are also taking time to evaluate those products because they also, pack their, you know, I would say, packaging, which is very sensitive, like, for example, food contact. There is a packaging which goes for a food. It undergoes a very long shelf life testing and so on. Similarly, for personal care and so on. The one of the hurdle, it is not hurdle, but it's a requirement from many customer is that they would like to test this product under severe situations, you know, shelf life testing and so on. That is one thing which we kind of see that, you know, is important to kind of hurdle or, the requirement to pass. The second one is, of course, if you see in India, regulatory environment is also changing. That is also, you know, changing at a pace, right? There are certain changes in the regulation, but also there are also some, you know, provisions given. Our end customers are also using that as a one of the important aspect of, you know, pushing our, you know, blueloop or this recyclable solution. More and more regulatory clarity comes in, I think customers also will push towards that direction. Lastly, our ambition is to achieve 65% of our sales through this innovation. But if you might miss that, already we are selling around 25, 22%-25% product through this technology, and it will be kind of improved over a period of years. Already we are doing, so it is not 2030. We are already right now doing, and it will be increased. The share of business from these innovative products will be increased now, year on year going forward. Sir, a small point on it. Then I'll join the queue. Firstly, sir, on the pricing front, what are the key differentiators? Since you are telling that it's a very hyper-competitive market, and even there are smaller players who are directly competing with you and are not into that regulatory framework, as have been the case with MNCs like you. How do we position ourselves with this blueloop product in terms of the pricing part and in acceptance? Does that ESG norms also give an extra edge towards going ahead with the acceptance, and the percentage from 25% to 65% would be on a faster level? From a pricing point of view, I think explained in the previous question itself, that see, these products are going to be simpler with mono material, and most of the time, it will be also coming up with a weight reduction. It will be from a customer point of view, they will be competitive. At the same time, we'll be able to justify our investments. That's the. On ESG, see, we are a company which is into manufacturing and servicing the packaging products. More and more our customer use these materials. For them, it will be a beneficial, no doubt, from a sustainability index. For us, of course, as a company, we also have our sustainability targets. There are two things: One is a sustainability and sustainable packaging products. We are into manufacturing and supplying of a sustainable packaging product, how do we do it? By sustainable way. That is what we also have a on all our sites, we have a you know, agenda to improve our you know, energy consumption, you know, reduce our wastages, sourcing our energy from renewable resources, water conservation, and reducing the transit times and then weight. These are the two different. Yes, we whatever work we are doing, we'll be helping the ESG for our customers, and we are also improving our operations to improve our you know, sustainability index. Right. Thank you for all the elaborate answers. In your note, you mentioned about three plants- Sorry to interrupt Mr. Saket. Yeah, join the queue. Please, I request you to please join the queue. Yeah, I will join the queue, sir. No worry. Thank you, sir. We have our next question from the line of Mr. Bharat Sheth from Quest Investment Advisors Private Limited. Please go ahead. Sir, thank you for the, your elaborate answer to the previous question. My question is that, this blueloop was, I mean, launched a couple of years back, we have been able to scale up to 20%-25% of our business, whereas in remaining six, seven years, we are just looking for 60%-65%. Why there is a slow pace, and what is the balance that 40%-35% will be a normal flexible packaging or if you can give little more color? Hello. I mean, you said probably the blueloop launch happened in May of 2023. The products which are, which are there, were in the market in two years, were produced through the existing, you know, processes, which are part of a blueloop project. The significant investments are being done in this year. That is why there will be, you know, acceleration in the, you know, progress. When you say this 20%-22%, the product constructions were different, so which were easy to convert. You know, the simpler structures, which don't need very high barrier properties, we were able to convert them to these blueloop structures. Now, what we are looking at to introduce the structures which are required high barrier, which is basically most likely will happen from the removal of the foil layers and so on. That is what we are investing heavily, and that is our proprietary technology, formulations and innovation, and which will have a slow rate of adaptation in the market. That is why if you see, right now we are at 22%-25%, and in next three to six years, five to six years, it will go to 65% because the complexity of the product, which we are going to convert, is going to increase, and that's why this timeline. How much of CapEx are we really making for this to achieve this 60%-65% of. This is our one of the plant which we are talking on Silvassa, which is WIP, when it's likely to commence? Second question, does this cover all the products that globally parent has into Indian market, or still there will be a more product may come up later on? I think, sir, when you talk about investments, I think we are making a significant investment. When we talk about India at this point of time, we are making big investments into Silvassa plant. When you talk about a product, India is going to have more or less one product likeambisame, the paper is that one probably. We are not moving that immediate basis, but yes, we do have resources to, you know, get supplied with material as well. In a next stage, yes, we are going to be almost all the product of blueloop, what blueloop is going. Even pharmaceutical product also is there for parent company. Have that we launched or we are in still, I mean, work in progress? That is a very exciting innovation happened in the parent company, this has been started, adopted by a couple of pharma companies in India. This is basically right now will be imported from our parent company and service from India. That's a very important innovation, which is patented, at this moment. In your initial remark, you said that, we will import from Germany. You are talking of that pharma product? Yes. Right. Okay. Overall, how much investment we really need to make in CapEx for to reach this INR 60-65 crore over a time, and this CapEx, which we are doing, at Silvassa, when that plant is likely to commission? The plant is going to operate the most likely end of Q3 or either in the Q4. Investments, when you talk about, we are going two stages, and as I said, that we are making a significant investment in Silvassa at this point of time, and I will think will evolve, things will change. I will when we talk about the 60%-65%, definitely that is going to need more investment. We are going to work out, and once we have a, you know, better perspective, we will come back on that. And, uh- Sorry to interrupt. Okay, thank you. Please rejoin the queue. Thank you. Mm-hmm. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference, please limit your questions to 2 per participant. Next question is from the line of Saurabh Patwa from Quest Investment Advisors Private Limited. Please go ahead. Thanks a lot for the, giving this opportunity, sir. Just wanted to have your thoughts into what's happening in, as you highlighted in the beginning, that you have been able to improve across margins. At the same time, since the fall in volumes, and realization is so sharp, it appears that your fixed cost absorption is getting impacted, and that is why your improvement in gross margin is not getting reflected in EBITDA. As you move ahead, and like as you mentioned, that you think Q3 or Q4, your monetization, et cetera, will start increasing. How do we plan to take the growth in big, gross margins to bottom line? Yeah, it's a good question, let me see. Essentially, what we did in last few quarters is just taking a very strong view in terms of where we want to play and how do we want to play. Now we are in process of identify clear categories where we want to play and really deep, you know, dive deeper, create, you know, excellence in what categories we want to focus on, then product focus and then certain key account focus. These all three put together will help us to kind of reverse it. As you rightly mentioned, yes, we definitely voluntarily, you know, cut down certain, you know, I would say, non- unprofitable businesses, which definitely have now availability of some free capacity, which we would definitely would like to, you know, use for our strategic, you know, intended products. We don't want to boil the ocean. We don't want to do everything, everywhere, and that's where now we have taken that, you know, smaller, fewer, bigger, but larger accounts, and that's where we will drive. We are confident that this strategy will help us to be very sharp in our, you know, with our customers, customer centricity, which will help us to also improve the customer relevance, their experiences, and by the way, creating a long-term partnership. Whatever has to be done, we have done now so far, and then now we are clearly focusing on the categories which we want to play, and that is where we will be also keeping on investing our resourcing in terms of account management, in terms of innovation, in terms of customer service, and so on. Is it fair to assume, let's say, your target to reach, like, 6%, kind of around 7.5%, kind of, EBIT margin on, like, say, maybe two years? Which was a very normal thing prior to COVID for you. Yeah. If you talk about our estimations, we have stated very clearly that we are targeting by 2030, 10% of EBIT margins. Definitely, you know, that's a, that's a journey, if you look at the margins which we have as in today, which give us a confidence that, yes, we are going all right things that should improve our margins. I'll, you know, don't quote the numbers, yes, we are, we are moving in the right direction, that's why I can say that. Okay. What is the kind of volume growth you expect over the next two years from the low base of 2022, maybe? What, you talk about a 6% EBIT margin. For the H1, you already had a 5.8% EBIT margins, for this year. No, actually, I was saying like 7.5, which was the prior normal. Anyways, I think the sustainable solution which we are talking about is definitely going to drive the growth for us. Mm-hmm. which is good. This is a long-term ambition and strategy for us. Right. Yeah. Right. Can I chip in one more question, if you allow? Go ahead. Yeah. In the beginning, you highlighted that of the four pillars of blueloop, one plant is coming up in Germany and from where you would import and India. Will the reverse also be true? Like anything which is, it will be made in India, if there is a requirement globally, will be exported? Yeah. And just- Thanks, thanks. You are sharp in, you know, observing that. Absolutely, it's true that we are investing in four locations. The paper-based solutions are specifically in only one or two locations, but other locations are having performance. This time what we have done is basically a very standard approach across Huhtamaki, and that is helping us from a, you know, having a good powers with our suppliers, of OEM suppliers, as well as the raw material suppliers. At the same time, technology adaptation of such a complex nature. We are also seeing this as a, you know, as a whole world, as a, you know, source of supply from all the four locations. It will be a country agnostic supply. Yes, India will be a source of supply for the countries of, you know, I would not want to limit it to, any country, but still it will be mostly like, you know, Middle East, Africa and Southwest Asia would be, you know, targeted countries and even in the Far East to Europe. Yes, it is. The reverse is true. Great. Thanks a lot, sir, and all the best. Thank you. Thank you. The next question is from the line of Akshat from Flute Aura. Please go ahead. Hi, thank you for taking my question. In your disclosure, there is given that company relocated three sites to existing labels. I just wanted to know that, has it caused any impact on our top line? My second question is on the interest side. I just wanted to ask how, why the interest is increasing and how do we see it, further? I mean, I don't see anything significant impact on our revenue, first of all. That's the one question you had asked. The second question you talked about interest cost. I think if you talk about interest cost, it's more or less flat over the quarters. Only in the Q2, we had certain interest obligations on account of ECB liability. That has been part of this. If we leave aside that, then more or less our interest is more or less flat. Okay. Okay. Thank you, sir. Thank you. Thank you. The next question is from the line of Vipul Kumar Shah from Sumangal Investments. Please go ahead. Hi, sir. Thanks for the opportunity. I think pre-COVID, we had a EBITDA margin of 10% plus as a norm. Now we are investing sizable money in this new technology. My question is, why our margin should not improve from here on? Okay. I mean, you're right. When we go back probably three, four years back, that might be true, but when we go back only three years back, 2021, we had an EBITDA margin, which was in the range of 4%. 2022, we had EBITDA margin that was in the range of 6%. When you talk today, probably our EBITDA margin is in the range of 8%. If you look at last three years, you know, there is improvement, the performance, in terms of, you know, bottom line. I mean, it takes time for to start that journey when you had such a huge dip in 2021, and then you have seen that there is a continuous progress in the right way, right direction. 7.8% or 7.9% is the EBITDA margin this year, probably is much better than what we had, and I think the company is doing all the right things that give us the confidence that things will improve. What is the cumulative expense you have done till date on this, blueloop project? You're talking of CapEx? Yeah. I said, and someone asked that question. We have done a significant amount of CapEx for that, and, I mean, it's still going on, so, I don't have a specific number, but yes, we are doing a significant CapEx. This is one of the big CapEx. We are committed to promote the sustainable solutions for the packaging. Sir, at least you can share what... till date, how much you have spent and how much is remaining to be spent. What is the problem with sharing that data? I cannot understand your reluctance. More or less, if you look at the CapEx schedules, is a part of our balance sheet, and if you look at the CapEx additions, which you are talking about, is mostly towards for blueloop. Okay. What is our net debt, and what is the average coupon rate which we are paying on that? Net debt, I mean, net debt is around INR 321 crores, very precise, for June ended, and the coupon rate is close to 8% overall. Okay. Thank you, sir. Okay. Thank you. Thank you. Next question is from the line of Aditya Khetan from SMIFS Institutional. Please go ahead. Yeah, thank you, sir, for the opportunity. My first question is, in on half yearly basis, we had witnessed a 15% dip in top line. This is largely led by the realization decline or volumes also have dipped on half yearly basis? This top line decline is kind of synonymous with the volume decline. As we discussed in the previous questions, you know, we took a review of our overall portfolio, and we are in the process of optimizing our portfolio. The large contribution came from that. After now that, you know, we have now the idea and strategy around where we want to play, what are the categories we want to focus and make those big. That is where we will be now investing our resources in terms of innovation, key accounts management, you know, value selling, and so on. That is where we are now. Just reconfirming, sir, some of the numbers. Sir, our total capacity is around 1.54 lakh tons? We normally do not monitor that in tonnages because there is always an effort on the reducing the plastic intensity, one. Second, you know, it, the tonnages vary largely because of the product mix. We don't normally track in tonnages. Sir, what was the utilization, at least if you can share, so last two quarters and for the current quarter? Y eah, yeah. Capacities right now are running at around 60% utilization. 60%-62% utilization in last quarter. Okay, this was the same run rate for the last two years also? No, not really. You know, the last, 2021 capacity utilization was higher, and even 2021, sorry, 2022, H1, the capacity utilization was almost in the range of 75%-80%. You know, that's where in the last quarter of last year we started reviewing, and that's where we are here. If you see the volume, the reduction in the volume, so that the capacity utilization then come down, in that ratio. Sir, one last question from my side. Sir, if we look at your mar- EBITDA margins for the last two years, it has been around 4%, 5%, 6%. Sir, con- since our business is mostly towards the MNC customers only, wherein the generally the raw material prices and, everything are a pass on only, we shouldn't have seen such a sharp dip into the EBITDA margin. It seems like so largely, have we lost some of the market share or the product mix itself from the MNCs have now changed, towards the regional or, the local customers? Has that happened, or what has led to this shift into this dip in margins for the last two years? Yeah. If you would have seen the, I think, you know, heard the answer before. Yes, in 2021 or 2022, there was a lag in terms of, you know, getting the pricing from the customer. That was impacting, 2021 largely. 2022, there was a definitely a change in the you know, approach. Now if you see today in H1, our EBITDA is ranging at around 8%. There is a, clearly improvement from around 6% of 2022 to you know, 8%, which is almost 2%. This is where we will be moving towards. The trend will be improving. Okay. What should be the sustainable figure, considering if the innovative products contribution, if that increases over the next two to three years to around 30%, 35%, these margins can range to around 10%-11%, at least? It's, it's very difficult to comment at this point of time, and I think it's premature also because we are just starting the study that we are starting the plot in this end of Q3 or maybe Q4. A lot of things will evolve. A lot of clarity will come. It's very, very difficult to quote any number at this point of time. Thanks for your question. Thank you. The next question is from the line of Mr. Sanjesh Jain from ICICI Securities. Please go ahead. Thank you. Thanks for taking my questions. First on the blueloop itself, I can understand that the user want to have the sustainable product, but I think the biggest challenge is how do you collect it, how do you segregate it? Is there any way which will be there, where the user can segregate, get that material, recycle it? What's happening on that side? I think logistical issue on that side is what probably is key for the success of sustainability. Yes, you are absolutely right and on spot. I think this is one of the, you know, area of collaborating with the ecosystem. See, when we are developing a product which is a recyclability friendly, ultimately the success lies at the ability of overall ecosystem to be get developed. In this regard, from a Huhtamaki, as a company point of view, what we did in last couple of years, we invested some with our Huhtamaki Foundation efforts in the recycling plant, so that we can showcase to the stakeholders that, you know, recycling is possible. I'm talking about the chemi- mechanical recycling. The plant is running, and we are able to showcase, and there is an interest in some of the customers. That's one. As you said rightly, that, you know, right now the products which are offered in the, to the customers are basically complex, right? You know, some are basically based on the PE, some are based on the polypropylene, some are based on, you know, combination of PE and PP, which is typically called polyolefin, and then some are MLP, which is multilayer plastic, which involves either layer of all these three, or additional layer of paper, or additional layer of a foil. Ultimately, what comes out as a collection mechanism is a multilayer plastics, and that is where the, you know, challenge comes in. As we are developing these recyclable friendly products and they gain the market, and they gain the, you know, economy scale, many customers adopt that's where the, you know, important adaptation will come. Like, as I can give example, like a PET bottle. Now, if you see in India, the recycling of a PET is a very established now process. Like, you know, there is a collection mechanisms, and then the recycling rate of the PET bottle is higher, or in case of, let's say, our milk sachet, right? Okay. That's another product which is very well collected. This will be journey. We are working with our customers. Even our customers are also working with some of the, you know, startup ecosystem. I don't want to name it here, but there are two, three startup ecosystem which are actually, you know, working in the area of recycling. Combination of, you know, supply... Innovative companies like us, Huhtamaki, the early adopters, like customers, our customers, and then the startup ecosystem, regulatory, you know... will help us to, you know, go there. It's a long journey. Yes, it has to start somewhere, right? Got it. Just one last question from my side. We are shifting three plants to a single location. That should give us a good cost saving. How much are we looking at cost saving because of the integration of the plant into a larger facility? See the plants, basically, we had a six PS label manufacturing plant, so we are not moving them in one location. Basically, one plant goes to other one. In the presentation, it is illustrated that, in a smaller plant, we are consolidated or moved to the larger plant in nearby vicinity, okay? That's what we did. Mm-hmm. We, from six plants, we have now moved to three plants. Which will be, which will give us, I would say, now the ability to scale up, you know, competitively. Whereas cost, I would say, I can only give a number is not important. It's like it's paying back within the year. That's the important point. It's not like a long-term investment. Whatever cost saving will be Whatever we, you know, spend for the consolidation is getting paid off within the less than a year. From there, it should add to the profitability, right? Yeah. Your fixed cost will come down. Running six plants and running three plants, the fixed cost at least will come down to three plant, right? Yes, yes. Okay, okay. That's it from my side. Thank you, and best of luck. Thank you. Thank you. Thank you very much. Ladies and gentlemen, we will take this as the last question from there. I would now like to hand the conference over to the management for the closing comments. Do you want to start, Jagdish? Yeah. Thanks for all the questions. I think, very good questions and very thoughtful questions. I think, in the last, I can say that the company is doing great in terms of trying to do things which is going to, you know, help us in the long term sustainability growth kind of mode. I'm sure that this call, which we started having a regular interactions, are also going to improve the engagement with the investors community. Thanks. Yeah. Thank you, everyone. This is from Dhananjay. See, I think interactions are very good. We are also getting some insights, what are the expectations, and also giving some suggestions and positive contributions. We will continue with this conversation, as Jagdish said, and looking forward to engage with you on an ongoing basis. Thank you very much, and all the best to all of you. Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.