Ladies and gentlemen, good day, and welcome to Navin Fluorine International Limited Q1 FY 25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need any 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. Bhavya Shah from Orient Capital. Thank you, and over to you, Mr. Shah. Mr. Anish Ganatra? Yeah. Yeah. Sorry. Mr. Anish Ganatra, Chief Financial Officer of Navin Fluorine International Limited. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinion, and expectations as of today. Actual results may differ materially. These statements are not the guarantees of the future performance and involve risks and uncertainties that are difficult to predict. A detailed safe harbor statement is given on page number two of investor presentation of the company, which has been uploaded on the stock exchange and company website. With this, I now hand over the call to Mr. Vishad Mafatlal for his opening remarks. Over to you, sir. Ladies and gentlemen, I would like to welcome you all to Q1 FY 2025 earnings call. I am joined by our Managing Director, Nitin Kulkarni, our CFO, Anish Bhai, and Payal Dave from Orient Capital, our investor relations advisor. I hope everyone got an opportunity to go through our financial results and investor presentation, which has been uploaded on the stock exchange as well as our company's website. Before I move on to discussing key business updates, let me introduce Nitin to you all. Nitin took charge as Managing Director of our company on June 24. Nitin brings over three decades of rich experience across the specialty chemicals value chain. He is a highly respected leader with a proven track record of driving growth, establishing new business verticals, embedding manufacturing excellence, and execution of large projects, both brownfield and greenfield. He is well-connected in the industry with strong and deep relationships across leading domestic and global majors. In his last role, Nitin was an Executive Director at OC Specialities for over a decade. Prior to that, he had worked with Navin Fluorine for a period of seven years, heading BD, where he was instrumental in establishing the specialty chemical business. He also worked with Aditya Birla Group of chemicals business, including Tanfac and HUL, Lakmé. We welcome Nitin to Navin, and we are sure that the company will scale new heights under his leadership. Moving on to discussion on business, our focus remains on achieving operational excellence, ensuring financial robustness, and executing our plans with discipline. We continue to make progress in diversifying our revenue streams, strengthening our partnerships, and building scalable platforms. These initiatives are foundational to our long-term sustainable growth and profitability. In the last quarter, despite adverse market conditions, we recorded a robust 7% year-on-year top-line growth. Revenue growth was underpinned by stable Orchid operations and strong sales of our new R-32 capacity. Agro demand continued to witness near-term headwinds, with global majors rationalizing inventory levels impacting our specialty business. In CDMO, our strategy to increase share of late commercial molecules is bearing results with increasing success with big pharma customers. We continue to believe second half of Navin Fluorine will be better than the first half, with improving margin trajectory. Let me also give you a quick update on the capacity expansion. Over the past year, we have launched several expansion projects, and I'm happy to report that all of them are advancing smoothly. Our agro specialty project, with a CapEx of INR 540 crore, is targeted to commence commercial production by September. As mentioned, we have secured firm orders for the dedicated capacity for financial year 2025. Our AHF project, involving an outlay of INR 450 crore and enhancing our HF capacity by 40,000 metric tons at Dahej, is on track to commence by end financial year 2025, early financial year 2026. This expansion will support the growing demand from emerging and new sectors. phase I of the approved INR 288 crore cGMP4 CapEx is underway, progressing to plan for commissioning by end of calendar year 2025. Additional R-32 CapEx of INR 84 crore to boost capacity by 4,500 tons, is on track for completion by February 2025. Given the high operating level of our existing R-32 capacity and with a solid pipeline of inquiry, additional capacities will be ramped up at a faster pace upon commissioning. the INR 30 crore CapEx for development of new capability in Surat, which is progressing as planned to be commissioned during quarter two, financial year 2025. Our existing partnerships with key global players continues to deepen, while we continue to make progress on expanding to newer partnerships, both in the product and service play. Before I end, let me once again assure you, our long-term view of our businesses remain intact, and we are well-positioned to secure growth opportunities. I would now like to request Nitin to discuss the operational highlights of the business. Thank you, Vishal Bhai. Good evening, everyone, and thank you for joining our call at this hour. It is still early days for me at Navin, though my initial impressions are extremely encouraging, and I believe that we have done reasonably well in this quarter in what is otherwise a challenging industry environment. While I continue to connect with employees, customers, and other key stakeholders, I am also clear that in the near term, and particularly in the coming quarter, a key priority will be to maximize capacity utilization, improve productivity, and drive efficiencies, while commissioning projects and developing growth opportunities. Let me start my discussions with segment-by-segment performance update. So to begin with, the HPP vertical. The revenue for this vertical increased from INR 169 crores in Q1 FY 2024 to INR 281 crores in Q1 FY 2025, which is 66% YoY growth. Good performance was a result of stable HFO operations and strong sales of new R-32 capacity. We are seeing heavy domestic and export order book for R-32. The pricing for this product is showing an uptick in the domestic market, and this reaffirms our decision to double our R-32 capacity, which will be operational by February 2025. Compared to Q4 FY 2024, R-22 prices are also showing signs of improvement in the export market. We have also seen an increase in volumes in the last quarter at our HFO plant in Dahej, reflecting both in the quarterly sales as well as in margins. Our HF, R-22, R-32, and HFO plants have operated at optimal capacity for another consecutive quarter. As far as spectrum of specialty vertical is concerned, the revenue for this vertical decreased from INR 230 crore in Q1 FY 2024 to INR 160 crore in Q1 FY 2025. This is 30% YoY decline. As anticipated, specialty chemical vertical got impacted due to inventory level rationalization by global agro majors, reflecting in delayed purchasing decisions. We continue to maintain that demand scenario should start to show recovery in second half of FY 2025. Irrespective of such, market conditions, during this quarter, we have continued to strengthen our product pipeline in specialty chemical vertical by leveraging on our newly established R&D center at Surat. We have added a new molecule at Surat for a global agro major, with a peak annual revenue potential around rupees 40-50 crore over a period of next three years. Complementing to this, we have also signed a couple of agreements for a patented agro product catering to the Japanese market, with an incremental annual revenue potential of INR 20-30 crores from calendar year 2025. In this coming quarter, a key priority remains to safely commission the new specialty CapEx, which is already in place. As far as CDMO vertical is concerned, the revenue of this vertical decreased from INR 92 crores in Q1 FY 2024 to INR 81 crores in Q1 FY 2025. There is a decline of 13% YoY in this particular segment. As we have mentioned in the past, this business cannot be analyzed on a quarterly basis, and our focus here is to improve order visibility, increase share of late-stage and commercial molecules, while deepening our relationships with big pharma biotech customers, and we are progressing well in this direction. In the last quarter, drug application of European big pharma player expanded in one of the therapeutic areas, leading to optimism on the initial peak annual revenue projection for the end drug. This is clearly a positive development for us. Apart from these three verticals, our R&D efforts on the performance advanced materials business continues to make progress, including co-development with leading global performance chemical majors catering to sunrise sectors like semiconductors. I think with this note, now I would like to hand over to Anish to brief you on financial performance in the Q1 quarter. Over to you, Anish. Thank you, Nitin. Good evening, all, and I welcome you all once again on the Navin's call. Moving on to the financial performance of the company in Q1 FY 2025. We reported revenues of approximately INR 524 crore in Q1 FY 2025, an increase of 7% year-over-year basis, largely led by an increase in revenue from our HPP division. Operating EBITDA for Q1 FY 2025 was approximately INR 100 crore, a drop of 12%. On a year-over-year basis, this reflects the exceptional gas pricing witnessed in Q1 last year. Lower specialty sales has also some impact from the lower CDMO mix in the overall revenue basket. Operating EBITDA margins stood at 19.2%, as against 23.3% in Q1 of FY 2024. We continue that trajectory on improving the margins from 15% in Q3 FY 2024, to 18.3% in Q4 FY 2024, to 19.2% in the current quarter, and remain on track to improve it gradually during the year. Profit after tax in Q1 FY 2025 stood at INR 51.2 crores, as against the INR 61.5 crores in Q1 FY 2024, a drop of 17%. This reflects higher depreciation costs associated with commissioning of new CapEx. We continue to ensure a tight financial framework while it's driving growth. In Q1 FY 2025, the business generated operating cash flow delivery of INR 107 crores, aided by a continuous effort in driving working capital down. Our net debt to equity ratio at the end of June 2024 stands at 0.38x, reflecting the strength of our balance sheet. That's all from my side. We can now open the lines for Q&A. Thank you very much. We will 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'll wait for a moment while the question queue assembles. We have our first question from the line of Sudarshan Padmanabhan from JM Financial. Please go ahead. Yeah, thank you for taking my question. So my question is, to dwell a little deeper on your earlier commentary on the agrochemical environment. So I mean, even if you are looking at the commentary by other players like Bayer, it looks like, you know, scenario continues to remain weak, especially the prices have been coming down. While it is heartening to see that, you know, we have been able to get, you know, products, you know, from Japanese customer and, you know, other products in place and going ahead with that CapEx. From the, you know, your investment and return on capital perspective, one is, with the prices, you know, going to the, probably the worst levels that we've seen in decades, is it, you know, impacting your ROCs in terms of what, you know, you would have initially thought of, versus what you, you know, are, you know, currently negotiating in terms of margins and ROC and prices? And with respect to this environment, one, how worse, you know, do you think it can further go, or do you think this is the bottom? And how are we, you know, tackling it in terms of our strategies? How are we, you know, looking at, us doing relatively better than we can back? All right. Thanks, Sudarshan. You've asked a couple of questions, so let me try and take them one by one. I mean, the first thing on the agrochemical sector itself, I mean, again, as you rightly pointed out, that the overall market is reflecting the industry scenario. And this is really a reflection of a couple of things happening here. You know, obviously, the higher for longer interest rates are affecting how much people hold as inventory, and everybody is trying to rationalize the inventory levels. Purchasing behaviors are also changing. Having said all of that, the fundamentals at the agrochemical level remain very, very strong in the crop protection business. You know, every farmer and every end user is ultimately very keen to increase their yield per acre and protect their yield per acre. So we don't see any fundamental shift in the industry dynamics. We see this more as the market stabilizing as it finishes off the destocking levels, establishing new inventory levels, and expect that the demand will start to gradually recover in the second half of the year. So that's the first question. Your point about the investment and return on capital is actually linked to that. So while we see these near-term headwinds, and we see the absolute EBIT numbers or EBITDA numbers, you know, coming down, but obviously, you know, we are trying to ensure, and we have shown that our EBITDA percentage margin is improving quarter on quarter, even in this environment. And we will continue with that journey, with the intent that ultimately the EBIT will start to reflect the better ROC that we had originally envisaged. And obviously, as the market recovers, you will start to see the ROC picture that we originally envisaged on the projects. Your question about. You had one more question on worse bottom. Can you please repeat that for me? Yeah. So what I'm trying to understand is, today when you are looking at, you know, products like glufosinate, the prices have come down so sharply that are we seeing a scenario where, you know, the, the prices, I mean, nobody is making money, or only the largest people are making money, the most vertically integrated, that it does not make sense to manufacture certain molecules, and then the prices are, you know, likely to kind of reverse? I mean, I'm just trying to figure out whether this is the bottom. Yeah. So see, I mean, again, you know, you've got to appreciate our portfolio on the agrochem side. A large part of our portfolio is in the innovator side, and to some extent, therefore, we remain insulated from the onslaught of the generics, okay? Now, again, you know, within that context, one has to remember that we continuously work with our customers to look at new ways and new routes, new chemistries to produce the same outcome more efficiently, more effectively, and thereby, help them remain competitive and also protect our EBITDA margins. That's just the dynamic nature of the business, and that will continue, frankly, you know? The environment that we are in, you know, it's obviously made it more imperative, and we continue to work with our customers on that front. Yeah, Nitin here. Just to add, you know, what Anish, you know, just briefed you. Can you hear me? Yeah, yes, sir. I can hear you. Yeah, yeah. So this is Nitin. So basically, just to add on, you know, what, Anish, you know, just briefed you, if you really look at, you know, our, customer base in, agro space, then these are, you know, the top five, you know, global innovative companies, and, you know, the Japanese organizations. And most of, you know, the, business relationships which we have with them, is based on the long-term, you know, supply contracts, where, you know, we, bind each other, with respect to, you know, the, cost structure, you know, based on, you know, our, understanding and mutual, you know, agreements. And, so what is happening, though, you know, the Chinese competition, is really, you know, going very aggressive, you know, in the price reduction. But at the same time, these global majors want to keep, you know, the alternate supply chain on, where, you know, they consider, you know, Navin, you know, in the fluorochemical as one of the partners. So the, the pricing structures, you know, which, you know, under which, you know, we have entered into understanding with them, it is not going to hit, you know, our, the bottom line, and it will reflect, you know, the same number, you know, when it comes to EBITDA, you know, which are, you know, happening currently at Q1 or, you know, the Q2 level, you know, which, you know, we are projecting. Sure, sir. One final question before I join the queue is, you know, of course, we are going to see some traction from the Fermion contract so, in the, you know, the next few quarters. But more interestingly, when I'm looking at, you know, the cGMP4 CapEx, as well as, you know, our outlook on this business, I mean, I'm, you know, not necessarily looking at the next two to three quarters, but the next two to three years. We are looking at a fair amount of excitingly large molecules going off patent, especially in the diabetes and, you know, weight loss area. Is there any kind of molecules that we are working with, which we can also benefit in this space? Sorry, your voice was a bit muffled. Can you please repeat the question on your molecule? What was the question, really? So, we are seeing, you know, one is on the biotech side, funding actual things have improved, and there are a fair amount of developments happening on the innovator side, as well as on the patent side, where the large diabetes drugs are going off patent and obesity drugs are going off patent. So on both the sides, I mean, are we seeing any kind of opportunity with the innovators that we can, you know, participate in some of these large increases? So we are working with innovators, and the molecules that we are working on, they are all late stage and commercial molecules. So they are not in the realm of going off patent or anything like that. I mean, as we've said on the slides, you know, that effectively, you know, our work at the moment, and just to give some example here, some color here, right? That we're talking of how our efforts on securing more business is becoming more widespread. You know, the work and the contract we've got with the U.K. major pharma, we have actually progressed that further, you know, from development to scale-up, now order being received. Similarly, on the Europe major, a pre-validation has been completed. Usually, this takes about six months before you get into the next stage of development, or the validation, which again, we expect to see ourselves securing that order. Similarly, in the U.S. major pharma example that we quoted there, we've completed the development work and a scale-up order has been received. I mean, the idea of showing this is showing the pipeline, showing the breadth of our business development efforts that is going on, and also our eventual target would be to end up with having one more MSA or a couple more MSA over the years, you know, to start showing that growth. But I agree with you that, you know, there is, you know, if you start looking at the next 2-3 years, it appears this is a very exciting opportunity for us, you know, in terms of growth. Thanks a lot for answering. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two questions per participant. Should you have a follow-up questions, we request you to rejoin the queue. We have our next question from the line of Keyur Pandya from ICICI Prudential Life Insurance. Please go ahead. Thank you for the opportunity. First question is on the overall industry and industry growth construct. So as of now, we are talking about destocking phenomenon, which is more of a supply side issue. Are we seeing any challenge on the end demand side, looking at sharp fall that we have seen in, say, global crop prices, or inverse, adverse weather conditions? So that is first question. Okay. So thanks, Keyur. I mean, see, fundamentally, we have to understand that what drives the demand in the, ag chem sector, you know, ultimately it is that we are catering to the crop protection business. Crop protection for an end user is directly proportional to their outcomes on yield per acre. You know, agriculture demand is growing, as everybody knows that. You know, the crop protection need will continue to grow. So fundamentally, at a construct level, nothing is changing there. This is a phenomena that we are going through. We are seeing how inventory levels were stocked up, you know, following COVID. Interest rates were high, so people are looking to bring the inventories down. You know, it's the same story playing out. As things play out, you know, the weather is playing its part in the game, you know, with changing crop patterns, et cetera. So what's happening out there is farmers are now actually looking to stock up things closer to the time of application, as opposed to buying it ahead of a season, you know? And all this starts playing its downstream effects, including deferred purchasing decisions, et cetera. So while it's a temporary thing, we and as we had already anticipated, if you refer to our discussions, even in the last call, we had said that FY 25 is going to be a story of two halves, first and second, right? The first half, we'd always said that ag chem delivery from our discussions with our customers, looks to start recovering in the second half, and that too, in a gradual fashion. I think it's playing out as anticipated, to be honest. Okay. Noted. Second question is on the INR 540 crore CapEx that we are commissioning in September 2024. If you can just throw more light on the product, and is it catering to the patented end product is patented or it is off patented? And any of these new projects, are they impacted by, I mean, oversupply from China and does more competitive prices being asked from your customers? So does the economic change for the new project? So the way this is constructed, Keyur, is that, you know, when we get into these arrangements, we ensure that the commercial arrangement protects our minimum sort of offtake, as also our economics. Okay? And that is the fundamental way how these contracts are constructed. Now, to answer your point, that particular molecule is actually a requirement for at least four large majors, you know, not just one. And it goes into multiple products, some generics and some patented as well. So it's a combination of everything. Like I said before, you know, the pressure from Chinese generics means that we will have to work closer with our customers in giving them value, and that is an ongoing conversation, and that's an ongoing business as usual thing, to be honest, you know? No business can sit here and take a pricing call for the next seven years and hold that constant, right? You will have to constantly work with your partners and, you know, find different ways, different R&D, and that's what we bring on the table. See, one of our thinking behind setting up a R&D center in Surat at a significant cost and setting it up as a world-class unit, was also to ensure that, one, we continue to build up pipelines, which we are doing, as also work with these customers on different synthesis, different routes, to deliver greater value while also delivering value to our bottom line. Sure. Noted. Just one last bookkeeping question. The interest cost that we have seen QoQ has seen a fall of INR 200-300 crore, and INR 200-203 crore. I mean, just mathematically looking at increased gross borrowing, interest costs probably should have gone up. So is there any abnormality or we should continue with this kind of quarterly run rate of interest cost? Thank you, and all the best. No. So, so again, so you're right, the interest cost has come down QoQ and year-on-year, certainly. I mean, that's partly because, you know, of the various efforts we've taken. So just to give you an example, as our cash position improves with greater focus on working capital, we're also borrowing less on an average on the working capital. So that, that helps you drive some growth on the, you know, some savings on the interest cost. Simultaneously, we also are working with our lenders to reduce the spread rate. So some of those also start featuring there because we are optimizing. As we continue to strengthen our balance sheet, we believe we can command better spread rates, and, and that's also playing out over there. The third thing you see is that, you know, you've got to remember that over the years, since last June, we've also funded a significant portion through intercompany borrowings, which do get interest paid, but then they get offset when you look at the consolidated numbers, because it's from one entity to another entity. And so, so there is a several factors here. To answer your question on run rate, obviously, as the new agrochem, you know, agro fluoro specialty plant comes on stream, the interest associated with those borrowings will start to see themselves featured in the P&L. Yep. So you should factor those kind of things as we progress. But otherwise, on where we are today, this is the runway, really. Noted, sir. Thanks a lot. All the best. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two per participant. Should you have follow-up questions, we request you to rejoin the queue. The next question is from the line of Chetan Thakare from ASK Investment Managers. Please go ahead. Good evening, sir. Good evening, Chetan. Yeah, hi. Sir, just one question on the Spec Chem business in particular. So last year, we had anyways witnessed fair degree of erosion on the base business, which was there in FY 2023, and new products had contributed to FY 2024 revenue. Going in that light, for FY 2025, what explains this dip in the first quarter, and how should we see that? With the expectation was at some stage, the base business also comes back and new products also start to contribute. So how should we look at the Spec Chem business in FY 2025 in particular, and 2026? So that's a good question, Chetan. I mean, if you look at what we are doing, one, again, I'm going to bring back to the R&D and the molecules we are introducing. I mean, if you look at the 2 molecules that we talked about, you know, one is already the agro molecule being added in Surat with the annual revenue potential of INR 40 crore-INR 50 crore that Nitin talked about. That's coming in Surat. The CapEx of INR 30 crore to a development of new capability again is coming in Surat, and that's going to be commissioned in the coming in this quarter itself, Q2, I mean. And again, that will start to show incrementally revenue from the following quarter onwards, right? So, while we are seeing that Surat assets are, you know, the, the assets in the base business, we continue to look at new molecules to replenish that. And obviously, you know, between Dahej and Surat, we optimize our MPP to make sure that depending on where a molecule can be made, more efficiently at the scale required, given that Dahej is a new asset, that molecule gets delivered to Dahej. And what, what we also then do is make sure that our utilization in Surat is continued with some of the new molecules that we develop. That's an ongoing journey. I mean, we don't look at this as NFIL and NFASL, just to clarify. You know, it's a consolidated asset that we optimize across both locations. Understood. Just to get a sense, so do we not expect the base business to come back in a meaningful manner in FY 2025, that would be a fair assessment, given what you're hearing from your customers at this point in time? So I think what you should see, and I'll probably say what I've said before, is that we should start to see some uptick in demand at the end of Q2, which again, we can probably give you an update at that point in time. But obviously, as that demand upticks, the uptick will go both in the base and our current, you know, and the new assets also being commissioned. But we are also, you know, to answer your point over there, in a meaningful sense, we should start to see the base grow also more, in the next year onwards, you know? That's the way I would hold it. Understood. Thank you so much for clarifying that. All the best. Thank you. Thank you. We have our next question from the line of Sanjesh Jain from ICICI Securities. Please go ahead. Yeah, good afternoon, sir. Sorry, in fact, good evening. Thanks for taking my question. I got first question on the NF AL side, which is Consol minus standalone. The revenues there have declined 28% quarter-on-quarter, where we have said that HFO production has optimized. What explains this sharp drop in sequential wide HFO, which is the larger CapEx among the three performing well? And also request to share the capacity utilization in the MPP plant, as well as dedicated agro plant. That's my first question. Yeah. Hi, Sanjesh. Hi, sir. See, NFIL, as you rightly said, we're seeing HFO at optimal performance. The decline you see is really the effects of the agchem conditions that we talked about. You know, again, over there, one has to remember that both, you know, within the MPP, we have contracts which are take or pay and committed contracts, and also in the dedicated plant, there's a take or pay contract. So some of those orders have come in this quarter, and to the extent those contracts relate to a delivery in a calendar year. So some of those will be deferred in the next quarter. So that's the way I would look at it. Utilization, again, to your point, I have mentioned this in the last sessions, Sanjesh. You know, we should look at utilization more from a point of view of these revenues achieved over a whole year, rather than one quarter to another quarter. Because, you know, in this environment, purchasing decisions are getting deferred to the point of, as you said, if the end user is talking of looking at deferring decisions closer to application, the entire channel inventory is also looking to defer decisions and minimize and optimize their inventories, yeah? So, so if you look at the, the full year position, I think we would still be at similar levels that we talked in the last call. which would be, you know, for MPP, I think this year you would see something like 70%-80% utilization. This year you would see probably 80% utilization as well, as we talked last, you know? Based on what we have in sight of our projections and the order book, yeah. Got it, got it. That's, that's fairly clear. An associate question there, again, is on gross profit margin. Revenue, I can understand. As you said, there is a pushback. There is also a 400 basis point gross profit margin decline on a standalone minus consolidated. Is that the change in the product mix also having an impact on the margins? So the gross margin, and you're saying standalone minus NFASL? Consolid minus, yeah, that is NFASL, NFASL. You're looking at NFASL, is it? Correct, correct. You're comparing the drop versus what? Last quarter. Last quarter. Okay, so on the last quarter, when you look at this, on the gross profit level in the last quarter, I see some of the things we will find will be related to both. So if I look at, you know, the NFASL, basically houses your rest business and the outcome business in the baseline, right? And CDMO business. CDMO revenues are lower. So you will see some of that getting played out on a year-on-year basis. And also, from a point of view of, if you compare year-on-year, I think you will see the stark differences, because Q1 of last year obviously had a huge amount of uptake from the gas price environment, right? If you look at the consolidated level, you will find that compared to the last quarter, we are actually having a higher margin gross profit. No, that's all because of the standalone. We had a higher contribution of, I think, domestic ref gas as well as the CDMO. But when I deduct it from consolidated minus standalone, what I get is NFAL, which is advanced science, NF, ASL. There is a drop of 400 basis points in the margin, which is in our subsidiary. There you will see because of the deferral of orders in the outcome, right? Because HFO is doing pretty well, so there are only two verticals over there. Correct. That will be obvious, yeah, and that leads to what you just said, Sanjesh, you know, that the purchasing behaviors are today what we see, you know, that customers are deferring purchasing to more closer to application. So that we see play out. Got it. But, but we haven't changed any pricing, whether it is HFO or AgChem or in the MPP. We haven't made any changes to the pricing? No, see, in HFO, our gross profit is pretty much passed through, right? If we have a certain cost increase, it gets passed through. And, you know, in the outcome, again, we haven't changed prices in that sense, so I don't see that as the reason. That, that is not the reason. That's fairly clear. Thanks for all the answers, and best of luck for the coming quarters. Thank you, Sanjesh. Thank you, sir. Thank you. We have our next question from the line of Madhav from Fidelity. Please, go ahead. Hi, good evening. Thank you so much for your time. First question is the specialty chemical business. The decline that we've seen, is it entirely attributable to inventory stocking, or have you seen any market share loss with our customers, given Chinese are more aggressive in the market, or any price erosion in any of our key products in specialty chemicals? So a large part of the impact in the spec chem is on volume side. Some amount you will see that on the pricing side, while we've not sort of, you know, as I said, you know, from us, when we look with the customer, we look more at our margins. And if we are able to protect our margins through different synthesis and routes, we do that. So some of that also is being played out. Have you had any market share change with any of our key customers for our key products? Sorry, you'll have to talk a little bit slow on my end. I missed the question. What, what are you saying? I was asking that, for our key products, which we are supplying to our, customers, has there been any change in market share? Like, have they, shifted sourcing to China because they are, like, sort of driving down the price? So have you seen any loss of market share? No, not, not for the key, I mean, for the key customers, like I said, because our philosophy has largely been contracting and holding, you know, with, with firm arrangements, we don't see that shift. Got it. We see more deferral of buying decisions, you know, than one product in it. Okay, cool. And the second question was on the R32 capacity, which came in the 5,000 tons, was that running at peak utilization in Q1? So if I just do, like, a simple math, like, 1,250 tons is what we probably saw, like, sort of peak capacity what we run it, or it runs differently based on the season? No, our R32 is more than the capacity. So we, we've had very solid and strong response in the market on R32. You know, in terms of us having sort of. I mean, it's ramped up to what we can do stocks. Got it, got it. And when did this start? Could you remind me, like, when did we start producing on the new R32 facility? It was in July last year. That's when we started. Of course, it took a couple of months to ramp up, but that's when we started. Got it. All right. Thank you. Thank you. We have our next question from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah, good evening, and thank you so much for taking my questions. Welcome to Mr. Kulkarni, and all the best. Thank you. Thanks a lot. So just two from my side. Anish, just one on the INR 540 crore ACM plant, which is about to get commissioned. So just sort of wondering what sort of capacity utilization we could expect maybe for fiscal 2025, this current year, and then you know, how much for next year from that plant? And number two, what would be incremental depreciation and finance cost attributable to that plant B, which will—I guess it will start hitting the financials from 2Q onwards, or will it be 3Q onwards? Please. Okay. So on the first question about the 550, you know, the utilization for this year, et cetera, as we've said before, Abhijit, the firm purchase order from customer for this year's capacity is already with us, you know? So that will start in September, and then slowly ramp up to the end of the year, right? That's what we are looking at, and our endeavor is to meet the firm customer order that we already have in place, for that. The strategy around that plant, as you know, half of it is dedicated and half of it is in own account. The one that is, you know, our approach for this year was always to meet the customer demand and carry through some qualifying campaigns, so that going into next year, we have those orders. Additionally, as I've also said before, that, at the customer's cost, we are also upgrading the flexibility of that plant to cater to additional molecules. Yeah. On the second question around depreciation and interest, you know, so obviously when it starts in September, we will start taking both the depreciation charge and the interest into the P&L. Interest, I would roughly take at about 8%, which is what we would look at in terms of what would go into the P&L, and depreciation over 10 years, roughly. Again, we'll look at the asset at the time when we capitalize it, that's the typical, charge we will take on. Sorry, Anish, I missed it. You said 10 years, is it? 20. 20, 20. 20 years. Okay, sorry. And the 8% will be on the entire CapEx amount of INR 540 crores? Yes. Finance. Yes. Yes, finance cost will come in. And again, of course, it will come in only for a month or as long as the plant is commissioned during this period. And then on a quarterly basis, from the following quarter, the whole thing will hit the P&L. Right. Right. And, we have orders in hand for the 50%, that is the dedicated portion. So that is what we should expect will run at full utilization this year? Yeah, because if you look at it, if the plant comes in September, then from September to March, the full plant is only available for 50% of the whole year, no? So, so it's actually the full capacity is, is what we actually have the orders for. The entire 100% of the plant is sold out as of now. It's not like- If you think of this year, so if you remember, half of that capacity was dedicated and half was to our own account. Now, given this molecule, we would always have to run qualification campaigns. So our original base case plan was that for the first year, we will run this plant to meet the dedicated capacity, which is exactly what will happen, which is half, right? So the plants aren't divided. It's not like I will run only half a plant to meet the demand. The capacity is divided, right? If the whole plant is running and I have orders for that capacity, in six months, my intent and endeavor will be to meet that order fully. Additionally, I would also want to do a couple of metric tons, 100 metric tons or so, to actually do qualification rounds, so that my order book for the following year gets secured. Understood. Very clear. Thank you so much. Yeah. Just the one other thing was on the hydrogen fluoride plant that's going to come up by end of the year, the AHF plant. Approximately how much would we expect to, you know, consume captively versus sell in the merchant market? Thank you. So the AHF plant is double our current capacity in Surat, as you know. So combined, we will have. I mean, again, I have to probably take you a little bit back here, because when our sort of HFO plant started in Dahej, and we started to utilize more AHF captively, we actually stood out of the captive market for some time because we were not-- we didn't have AHF. Since then, not only HFO is there, but we've now got two R32 plants, with the result that today, you know, we are actually waiting. We are short of AHF in some sense, right? Because as soon as our R32 plant comes in, again, we are gonna need more AHF. So a lot of the AHF capacity that's coming on board will start to get utilized internally. Originally, we would look at meeting the market demand to about, you know. So I'm just saying this because this is what our peak merchant sales were at one point in time, about 7,000-8,000 metric tons. So that's where we would go with the merchant sales. And then, of course, as Nitin has also alluded in his speech, about the work that's ongoing for the semicon side and the advanced materials, more downstream applications of that AHF will start coming through. But that will take some time, yeah, to mature. So again, you do an AHF plant in this business to stay in business, you know? Understood. Thank you so much, and all the best. Thank you. We have our next question from the line of Ankur Periwal from Axis Capital. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. First question on the Spectrum side. So the new projects that you know we have announced, Japan-based, you know, the customer INR 20-30 crore is incremental. The INR 40-50 crore revenue that we were talking of on the agro side, is it also incremental or is it a part of you know the earlier MPP that we had commissioned? No, this is incremental. Incremental. This is incremental. Sure. Okay. So, and, you know, how about the, the molecules that we were sort of, you know, commissioning on the Spec Chem side? If I recollect, there were four, you know, pharm-- Sorry, four agro and one pharma. Are all of that, all of them commissioned now, or, what is the status? No, so these molecules which are referring to the pipeline, see, our intent is always to do about 4-5 molecules each year. And roughly historically, we said it will be 3-4 in agro and one in pharma, but that doesn't mean that's how it plays out, right? As those molecules get done, those campaigns get delivered, some of them. And then again, it's a campaign nature. You might run a campaign this year, and something may come tomorrow. But the idea is to continuously provide the pipeline for your MPP plans to be utilized fully. And then if obviously it goes beyond the MPP side, the conversation on dedicated starts, yeah? Yeah So if you go through our presentation, you know, in the specialty chemical commentary, you will find, you know, the various initiatives and, you know, the incremental revenue, which we are going to get, you know, with these three molecules. Sure. Sir, my Anish and my, you know, question was more specific to the, the MPP that we had done, INR 235 crore CapEx, wherein we were doing four agro and one pharma. We had deferred one pharma, earlier. So has that product come back now, or is there any visibility on that? We are talking of the Dahej MPP? Dahej MPP, that's right. Dahej MPP. Correct, yeah. The INR 240 crore CapEx. There is Dahej MPP. We are currently doing, I think, about 4-5 molecules over there. You know, it with those molecules, some of them, like the one that we talked here, the Japanese market will actually be done from Dahej. So that INR 20 crore-INR 30 crore will come into Dahej, you know? So those agro molecules will come there. I don't think there is a the pharma molecule there, to be honest. I don't know where that has come up, but I don't think there is a pharma molecule there. Okay, fair enough. And, just lastly, on the HPP side, you did mention that, you know, R32 has been running probably ahead of capacity. Will be fair to say that from a volume perspective, both HPP and R32 would have hit the peak, give and take, in this quarter, Q1? I think from a capacity side, true. From a pricing side, not yet. And I think what we are seeing, as we said, the pricing side, we are seeing signs of recovery. And, you know, one has to remember that R-22, with the cut coming in, is expected to continue to see price rises in the export market. So that's going to become better. R-32 is already seeing price rises, even Q on Q, and we see that, that market firming up as well. Additionally, during the quarter itself, we've had, very strong, response from even the U.S. and Europe on our R-32 demand, and those demands are coming in at a price equivalent or better realization than India. So despite what one talks about, you know, the dumping and all that. Sure. Sure. That's helpful, sir. Thank you, and all the best. Yeah. Thank you. We have our next question from the line of Surya Patra from PhillipCapital. Please go ahead. Yeah, thanks for this opportunity, sir. Sir, my first question is on the CDMO business. In the recent quarter that we have seen, even domestic supply is also the kind of key contributing there. So what is the nature of this domestic CDMO business, sir? Yeah, Surya Patra, so thanks for the question. I mean, again, if you look at, so you know, the typical process of us getting registered with a large player takes time, right? And with the European CDMO, all our molecules under that MSA are likely to be registered. One has already been done. I think 2 more are expected later in the year. So until those registrations are completed, we are actually supplying that molecule to a domestic customer at the behest of the global major. It's part of the supply? It's part of the supply agreement. Okay. But that is only till our registration is completed, and then it moves on directly to export. So it's a temporary thing that you see there. Okay. Okay, fine. My second question was about this INR 540 crore project, which is going to be commissioned soon. Here you are, you have indicated that you have firm orders, obviously, but given the kind of situation, so that was the, that was the understanding since some time, but the market is not progressing the way it was expected because of the on account of, let's say, inventory rationalization continued and the Chinese aggression and all that. So given that, are we sure about the uptake that we'll be seeing for the firm order that is there, sir? Yeah, indeed. It's a firm, firm transferable order from a global major. And, again, it's a relationship we, we have, we closely work with. Nitin talks to them regularly, so does Rishabh Bhai, and there is absolutely full commitment behind that order. See, this is not a single product relationship, you know, with this global ag player. There is a basket of products, you know, which is more than, you know, four, five products, you know, we offer to them under, you know, certain, you know, agreements, and, you know, the commitments. So, you know, already, you know, this is a matured relationship, and this particular project is part of, you know, this relationship, you know, to have the robust supply chain. So all the understanding and, you know, the deliverables are intact, and there is no change, you know, in any, I will say, you know, conditions or, you know, the deliverables than, you know, what we have, you know, already, you know, agreed to. Everything is, you know, ahead in place. Okay. Just last one, sir, one clarification about the pricing trend for the, let's say, HFO. Whether there is any, any dent or any correction that you are witnessing, and the same would be the question about even your CDMO. Have you seen any kind of a price, price erosion kind of a trend for your existing products? Sorry, as far as HFO is concerned, you know, we are the pass- through, you know, understanding, you know, with the customer. So, Our margins are protected. Protected, completely. There is no sort of price conversation over there. Yeah, and CDMO. On the CDMO. On the CDMO front, again, you know, if you look at these, the scale of these molecules, you know, when you work with late-stage commercial and any of these molecules that are potentially blockbusters, the end product is more than $ billions, right? And the intermediate cost is a very small fraction of it. It's a service industry rather than a cost industry. You've got to make sure that you take the product, run the chemistry, and provide it in time, yeah? That's the main, main part of the business. Yes. the quality yeah, the quality and, you know, the on-time delivery Correct. you know, that is the key, rather than, you know, looking at, you know, some, you know, commercial benefits here and there. Yeah, this is very clear. Thank you. Thanks a lot. Thank you. Ladies and gentlemen, we request you to limit your questions to one question per participant, as management has to answer. We have our next question from the line of Vivek Rajamani from Morgan Stanley. Please go ahead. Hi, sir. Thank you so much for the presentation. I did have a question on the specialty side, but I think you answered that in a lot of detail. So just one question on CDMO. I know it's a bit tough to kind of, you know, give a number here, but given the extensive pipeline that you have, would it be possible to give a simplistic guide path in terms of how we should think about FY 2024 versus FY 2025 versus FY 2024, and maybe FY 2026 versus FY 2025? So FY 2025 will definitely be better than FY 2024. There is no sort of. As the quarters go past and as the order book visibility improves, our confidence in that is increasing. So there's no doubt about that. FY 2026, rather than say that, I would probably give you an indication that, you know, if all of this plays out in the way we are thinking, FY 2027, the $100 million aspiration should be with us. We should be there. So FY 2027 is where you think you'll hit your $100 million aspiration. Would that be fair? Yes. Yes. Correct. And there's a logic, right? That the extra capacity that we are putting on is coming on stream at the end of calendar year 2025. So that itself is coming in FY 2026. So year from there is what we are saying. That is a quite sizable capacity, you know, we are putting on the block. Sure, sir. That makes sense. Thank you so much for this and all the very best. Thank you. Thank you. Thank you. We have our next question from the line of Archit Joshi from B&K Securities. Please go ahead. Good day, gentlemen, and thanks for the opportunity and, congrats to Nitin Kulkarni's new role. One question on the INR 540 crore CapEx, we had a INR 600 crore sales guidance that we ventured a few quarters ago. Given the deterioration in prices that we have seen over the last few quarters, would that number still stay? And also, if you can give a margin guidance as to what we can expect that to be. Thank you. So the INR 540 crore CapEx, it will come on stream in September, which will be FY 2025, and peak revenues is still being targeted in two years. So we're still holding the FY 2027 for peak revenues. And I think we had said 1.1 or something like that in the peak revenues. That, that continues to be the case as we stand now. Our intent and endeavor is always to make sure that the return, which is the EBITDA margin out of the project, starts to deliver where we think it is. And in terms of guidance from that, I think, again, Yeah, I mean, see, one way to look at it is, you know, we've always been guiding an overall number that we see ourselves in at 24%-25% EBITDA, right? So that's, that's what one would hold on. But remember, these are all, snapshot, numbers that I'm telling you. They're true as I tell you, yeah? I think most things will move, yeah. There is a business dynamics around all of this. Sure, Amit. So the price deterioration has not impacted that, that, peak number that we were targeting. That was the only limited clarification I was seeking. No, like I said, we are also adding in the flexibility for a different molecule, so it's a combination of everything, but the drive will be to get to the peak revenue. Got it, thank you. Thanks for the clarification. All the best. Thank you. The next question is from the line of Rohit Nagaraj from Centrum Broking. Please go ahead. Yeah, thanks for the opportunity. So first question is in terms of the CDMO for both, I mean, for pharma and on the agrochemical side, under the specialty chemicals basket, what would be the geographical split in terms of Europe and US? And in the last couple of years after, you know, the COVID-related restrictions have been over in China, have we seen competition from Chinese, you know, people for the newer projects? Obviously, for the historical projects, they are already secured, but in terms of newer projects on both these segments. Thank you. So CDMO pharma, I mean, frankly, has got a lot of tailwinds just from the BioSecure Act, you know. I mean, if you look at what's happening, we are seeing increasing number of RFPs from global majors. Everybody is looking to de-risk their portfolio, and obviously India stands to benefit out of that. So, you know, we're not seeing. I mean, frankly, we are happy with the level of inquiries we are getting. Our aim is to convert more and more of those into orders, and then from orders to, you know, large orders, and then possibly some MSAs, yeah. That's the way we look at it. On the agro side, again, we have made some entry into the CDMO space there, too. The idea again is that while we work and as we have our R&D center in Surat, the idea will be to work closely with large innovators early in their product development stage, so that we can help them not only develop the molecule, but also test it at pilot and lab and pilot levels, and then eventually scale it commercially for us. Nitin, you want to add anything on that? No, no. He was talking about the geography, geography. So we are, you know, quite present in Europe, US, as well as, you know, he was talking about agro as well as pharma. So I think Japan, Europe and US, you know, these are, you know, the three regions where, you know, we are actively involved, you know, when it comes to CDMO, including agro as well as pharma. And we haven't seen, you know, any decline, you know, in the demand, you know, for the products, you know, which we are supplying to them, you know, from last, you know, more than 3-4 years, except, you know, the deferment of, you know, the volumes, when it comes to agro segment, because of the current market conditions. Sure. Just second reason in terms of CapEx. So current CapEx rates will get over by FY 25 end. What is the next leg of CapEx that we will need for maybe growth beyond, say, FY 27? When do we start working on that? Thank you so much. Yeah. So, so again, a good question. I mean, as we finish this FY 2025, we will be sort of actual CapEx outflow, which will be in the range of about INR 600-INR 650 crores. By the end of 2020, you know, somewhere by the end of-- by the middle of, middle of calendar year 2025, we will start to formulate some views on where the next growth of CapEx is. But what we are doing in the meantime is ensuring that our balance sheet strength, the conversion of EBITDA into cash flow, and, you know, our net debt to equity remains within the guidance that we've indicated, such that those CapExes are then pushed out. I mean, some glimpse has already been given in Nitin's conversation earlier, where we shared about the work that is being done in the performance material area. So all I can say is watch that space. Exactly. Thanks, thanks a lot for all the answers, and all the best, sir. Thank you. Thank you. Ladies and gentlemen, that would be the last question for today due to time constraint, and I would now like to hand the conference over to the management for closing comments. All right. I just want to take the opportunity to thank you all for taking the time out and joining the call today. Hope that we've been able to answer your queries adequately. And thank you, and good evening all. Good night. Take care. Thank you. Thank you. On behalf of Navin Fluorine International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.