Ladies and gentlemen, good day and welcome to Aarti Industries Limited First Quarter Fiscal Year 2023 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 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. Nishid Solanki from CDR India. Thank you, and over to you, sir. Thank you. Good afternoon, everyone, and thank you for joining us on Aarti Industries first quarter fiscal year 2023 earnings conference call. Today, we are joined by senior members of the management team, including Mr. Rajendra Gogri, Chairman and Managing Director, Mr. Rashesh Gogri, Vice Chairman and Managing Director, and Mr. Chetan Gandhi, Chief Financial Officer. We will commence the call with opening thoughts from Mr. Rajendra Gogri, who will take us through the performance, update on growth initiatives and outlook on the business. Post this, we shall open the forum for question and answer, where the management will be addressing to your queries. Just to share our standard disclaimer, some of the statements made on today's conference call could be forward-looking in nature and a disclaimer to this effect has been included in the results presentation that has been shared earlier and also uploaded on stock exchange website. I would now like to invite Mr. Rajendra Gogri to share his perspectives. Thank you, and over to you, sir. Yeah. Thank you. Good afternoon, everyone, and welcome to our first quarter fiscal year 2023 earnings conference call. Hope everyone is keeping safe and in good health. Our results documents have been shared earlier, and I trust you had opportunity to glance through them. We have commenced the new financial year on a positive note. The performance was resilient given the backdrop of challenging macroeconomic scenario marked by continued inflationary trend in key input costs, higher utility costs, as well as disruption in global supply chains arising due to conflict between Russia and Ukraine, uncertainty arising due to global inflation and fear of various economies going into recession. While we have navigated through some of these shocks, we witnessed demand slowdown from few end user industries like textile and FMCG. This moderation is largely on account of prolonged cost pressure across the manufacturing value chain and global recession fear. Having said that, we are actively monitoring the situation and our performance in the ensuing period will be aligned to this trend. Now let me share the key financial trends for first quarter fiscal year 2023. Our revenue grew by 45% year-over-year to INR 2,173 crores. EBITDA stood at INR 369 crores, higher by 18% year-over-year. Profit after tax came in at INR 189 crores, an increase of 15% over last year. Our revenue trajectory was steered by realization gains as well as the higher volume offtake for certain products. A substantial increase in the revenue was also on account of the robust pricing structure wherein the variation in input prices are passed on to the consumer as and when we said. We saw revenues coming in from the newer capacity added in the recent past, along with the incremental volume gains from existing capacities. This was further supported by planned ramp-up in respective units from the first and second long-term contract. We've been able to pass on the cost pressure linked to the raw material prices and utility to our customers, thereby protecting our absolute EBITDA. As you recall it, in first quarter fiscal year 2022, there was a shortfall key income of about INR 32 crores. Normalizing the first quarter fiscal year 2022 numbers for this shortfall income, the year-over-year EBITDA growth would be closer to 30%. During the quarter under review, we also witnessed mark-to-market impact on ECBs on account of steep depreciation of INR versus US dollars. This negatively impacted our PBT performance to the tune of INR 30 crores. Excluding this impact, the performance would have been even better. Our utilization level across plants continues to improve, resulting in better profitability at the company level. We have built a strong integrated business model through well-diversified product portfolio and consistent focus on R&D capabilities. I believe this along with our deep connection with the customers will drive sustained growth and profitability going forward as well. I will now move to segment-wide performance overview. In first quarter fiscal year 2023, revenue from specialty chemical business stood at INR 1,766 crore. It grew 44% over 1,200 we reported in the same quarter of last financial year. EBIT improved by 8% to INR 250 crores. Normalizing the impact of other income during the last year, the first quarter fiscal year 2022 of INR 32 crores, the absolute EBIT growth will be about 25%. In addition to favorable pass-through of elevated input and utility costs to the customer, the performance was bolstered by improved product mix with high contribution of value-added products at 74%. Moving to update on production details for first quarter fiscal year 2023. Production of nitrochlorobenzene was at 20,515 metric tons. Similarly, for hydrogenated products, production stood at 3,295 metric tons per month. For nitrotoluene, the production for first quarter fiscal year 2023 stood at 5,252 metric tons. As was the case until last quarter, the quarter also we witnessed some impact on our business due to short supply of key raw material nitric acid. We have been working closely with the vendors to maximize our requirement. We had witnessed the situation eased in June 2022. As you are aware, in the last quarter we are informed that we are already tied up with technology partner for setting up a unit for concentrating nitric acid from dilute nitric acid with a capacity of close to 225 to 250 TPD. Currently, we are working on a long-term comprehensive strategy to mitigate this risk. Let me now share updates on our expansion projects. We have started seeing volume ramp-up from the facility linked to first long-term contract and expect to reach high utilization level of 70% to 80% by next year. With respect to the second long-term contract where we commenced commercial manufacturing in the previous quarter, utilization level have been progressively increasing. This capacity will see a ramp-up as planned and expected to reach 80%+ utilization level by fiscal year 2024. Other capacity project initiative with respect to third long-term contract at Jagadia, then NCB expansion at Vapi, etc., are underway and expected to be commissioned in the forthcoming quarter. This will start contributing to our revenues from fiscal year 2024. Since substantial part of the fixed cost would be built in by fiscal year 2023, we don't expect major increase in the fixed cost in fiscal year 2024, and the volume ramp-up as envisaged in fiscal year 2024 will significantly lead to increase in EBITDA. Now moving your attention to pharma business. In first quarter fiscal year 2023, we reported revenue of INR 4,107 crore, higher by 48% as compared to INR 276 crore in first quarter fiscal year 2022. EBIT stood at INR 76 crore, an increase of 46% year-over-year. Performance was driven by continued high demand for key products, leading to better volume trajectory from generic pharma companies and fencing business. While a major part of the elevated input and utility costs were passed on to the customer, in some cases the same had to be absorbed. In a significant development, in month of June, the audit by USFDA was conducted at our Dombivli API unit. They have raised two points under Form 483, which we are confident of addressing the same and getting an EIR soon. With that happening, the Dombivli unit will become the third USFDA-approved facility for us, while the other two, the API unit at Tarapur and the intermediate unit at Vapi has been FDA-approved by USFDA since last 10-plus years. We have commissioned the new API block at USFDA-approved API facility at Tarapur in early second quarter. We are witnessing a positive demand scenario in pharma intermediates, lending strong visibility to the business. Our performance going forward will be anchored by incremental gains from newly introduced products, higher capacity for the steady lineup of existing products, and exciting pipeline of upcoming approvals in cardiovascular, antidiabetic, antihypertensive, oncology, and corticosteroid segment. For the quarter under review, we entered a CapEx of INR 100 to 200 crores and are on track for our planned expansion initiative for fiscal year 2023 and fiscal year 2024. Over the next two years, fiscal year 2023 and 2024, we'll be investing close to INR 3,000 crores in capacity addition and augmentation to support our growth plan. Our emphasis on innovation and R&D-led projects where we have 40-plus products for specialty chemicals and 50-plus products for pharma in the pipeline will help propel our performance and achieve the stated guidance by fiscal year 2027. Before I conclude, let me share other key important development. With respect to the proposed demerger proposal of the pharma business to Aarti Pharmalabs Limited, the hearing at NCLT were concluded on 1 August 2022. We expect the order to be issued soon and will take up the necessary action items for making the demerger effective immediately. Overall, we are very well poised to deliver buoyant performance in the forthcoming year. Superior execution capabilities, combined with the ongoing scale-up and introduction of new chemical value chain like chlorotoluenes will define our growth trajectory. This is in addition to positive tailwinds arising from the shift in global supply chain towards India. All in all, we are excited and will focus on demonstrating sustained growth in revenues and profitability, thereby creating value for all stakeholders. That concludes my initial thoughts and will now request the moderator to open the floor for the Q&A session. Thank you. 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 will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Surya Narayan from PhillipCapital. Please go ahead. Yeah. Congratulations on the good set of numbers. Just a couple of questions. First of all is that, about the second, multi-year supply contract. Just wanted to understand, what is the level of, ramp-up that we have witnessed. We have also mentioned that for that particular project, by 2024 it would be around 80% kind of utilization. That means, in the first year, whether it would be like, something like 40%, 50% kind of utilization level once you consider of the annualized INR 500 crore revenue. Yeah, first year will be around that level. Overall, the way it is structured, even the top line may be less, but at the EBITDA level, there'll not be much impact linked to the capacity utilization. My understanding was that, so since this second contract was supposed to be a low margin supply contract. With the ramp-up that we are seeing in the first quarter, whether there is any impact in the sequential 100- basis point kind of a weakness in the gross margin, what we are witnessing. Is it because of that, or it is, it has not ramped up to that level to influence the margin of the overall business? No, the margin, gross margin is mainly because of the raw material increase. Even, you know, quarter-on-quarter, also the raw material has substantially increased. The benzene has, also gone from INR 77 to 94. Mm-hmm. Sulfur from INR 27 to 37. Mm-hmm. The main reason, on the gross margin level, because of the core raw material increases. Okay. Sir, second question is that this quarter suddenly that we are witnessing a sharp jump in the export share. Let's say in the previous quarter it was below 40%, and it has jumped to 46%. This is after a kind of a long many quarters that has we are seeing a kind of change in the export mix. Whether it is because of the pricing scenario which is better in the export market, that is why we have tweaked our supply situation here to take the advantage or it is a sustainable one now. What has led to this kind of swing, sir? Yes. This second contract is for 100% export, so that leads to the increase in export. Overall, you know, we are always trying to see which market you know which is better realization. It also depends on the product mix and market mix. In general, we see that, you know, export in the range of 40% to 50% will remain. Okay. Just one further clarification on the second contract, sir. Whether the current utilization level would be around 40% or so. That should be fair assumption for the quarter one. Yeah, I think. Third question is on the futuristic project, what we have heard that around 90% odd projects are which are there in the pipeline currently under development, and those are likely to bring in margin profile of something like 25% to 30% beyond 2024. Here I'm just trying to understand whether these projects products are customized products. That is why, because we know that our business is to some extent in terms of margin, it can be volatile because of the commodity pricing. We are confident about those new product opportunities and saying that it definitely the margin profile could be beyond 25%, up to 30%. That means either those products are like customized products and hence the clarity about profitability is assured. Basically, commodity prices will always impact. In general, if a similar commodity, this raw material prices, they will be more value added. Currently we are, you know, at a 70% to 30% kind of a range, you know, 74% to 26%. Chloro toluene range will have almost 90% value-added products and only about 10% maybe the chloro toluene itself. Further value addition, whatever now we are planning, for our normal nitrochlorobenzene, nitrotoluene, DCB chain will be all value-added products. I think our baseline products capacity we have already expanded. Any further, going forward, all the new capacity or existing value chain, will be all value-added. We are already a host of... [crosstalk] Sorry to interrupt you. Sir, your voice is breaking. Yeah. You need to reconnect your line, sir. Participants, please stay connected while we get Mr. Gogri back on the line. Participants, thank you for your patience. You have the line for Mr. Gogri reconnected. Sir, you may go ahead. Basically, entire chlorotoluene chain and all, there will be significant portion of will be high value added and we'll be adding, you know, additional four, five, six chemistries over the base chemistry of chlorination. None of the project is currently tied up with some other customer or something like that, sir. No, it will be so many different products for so many different end users as well as customers. It's a full basket of products with a very different end use in the pharma as well as in agro. Mm-hmm. We will have some import substitution as well as, you know, customer pool because there is no other Indian source. We are quite well mapped up the market. It is not linked to a single product, single customer situation. Okay. Just last question on the pharma announce separation, the pharma segment. See whether how that impact the outlook, long-term outlook guidance that we have given. Yeah, I think pharma itself also will grow. As we had announced, we have taken up a new land in near Dahej in Atali. We'll be setting up a new greenfield site in pharma. Mm-hmm. USFDA we have already commissioned in this second quarter at our Tarapur plant. We see a sizable growth will continue to be in pharma also in addition to the chemicals which the products I already discussed just now. Both the segment will see a substantial growth. Mm-hmm. Yeah, sir. In fact in last few quarter let's say, or generally, pharma although it is a share wise it is smaller, but profitability wise it is better than specialty in the recent times that we have observed. With the separation, do you think there will be some pressure in the interim period before the specialty picking up and the, you know, long-term supply contracts are ramping up and protecting the profitability. Till that time, there is some challenge. Should we consider that? No. Actually, fiscal year 2024, as I mentioned in the speech, that, you know, most of the fixed cost will be covered in fiscal year 2023, which guidance what we have given. The fiscal year 2024 will be mainly of a ramp-up, so the gross profits virtually will translate to EBITDA. In chemical segment, we expect a substantial jump in EBITDA in fiscal year 2024 and 2025. The new project will start kicking in from fiscal year 2025 onwards. Sure. Yeah. Thank you. Thank you for taking all my questions. Thank you. Next question is from the line of Rohan Gupta from Edelweiss. Please go ahead. Yeah. Hi, Hi, sir. Good evening, and thanks for the opportunity. A couple of questions. First is on our product number one, where you have said that you are seeing a significant improvement in utilization level. Just can you give some more numbers in terms of are we planning to sell this intermediate for this product, I mean, for there in the international market? Are we still selling in the open market, or we have been able to get into some long-term contract with the intermediate with the other players? Yeah. We have already started production of product intermediates and supplier qualification material to various customers. It will not be linked to one customer. We'll be supplying to various both domestic as well as export customers of that product. We are in discussion of potential long-term contract also for that, but that is just not totally finalized. Sir, any idea you can share in terms of utilization level of this product in the current quarter? Current quarter is, it's very less actually. It'll be more around 25% or so. Overall, this year we see 30% to 40% and the second half maybe around 50%. Next year, 70% to 80%. That's how we are looking at that. At 50% in terms of margin profile of this product will be in line with our chemical business margin or it will be much lower than that? Overall it will be a value-added products. I think margin will be also of a similar type, yeah. Similar mean, in line with the company's business? Yeah. Even at 50% utilization. On a gross margin reservation. Okay. Sir, second question is, though we have seen the current quarter performance in terms of absolute EBITDA growth of roughly 70% to 80%, pretty decent, given the challenging environment. Last quarter, if I remember that, I think you were guiding for maybe a single-digit kind of growth in terms of profit or bottom-line growth there, given the lower utilization of the new plant, new commissioned plants. Do you see that the guidance remains intact or there is a possibility that you like to guide for a higher number at the bottom line for the current year? Yeah. Overall, if you do the annualization of the first quarter, I think we have more than 30% growth in EBITDA compared to the last year. Looking at you know some challenges on the demand side also on the high side and all. We'd not like to change the guidance at this level. Maybe after second quarter, we'll look at overall situation and see whether to change the guidance. Okay. The weakness which you mentioned in the business is more important in the opening remarks. You talked about the textiles and FMCG. Are there any other sectors also facing any challenges? What I understand as far as the domestic market is concerned, more or less these products are import replacement. By the global market, I think a large part of agro and pharma remains intact. Just wanted to understand that, though the global economy may be shaking and some countries may be impacted by the high inflation, but as far as our business is concerned, and also the benefit which we are probably enjoying from China Plus One and all, do you see that this weak environment is really affecting us, or it's affecting in general in larger economy? No. Globally, as you rightly mentioned, large part of our main business is in domestic. Export even more on engineering polymers, agro and pharma side. There we are not seeing much impact on the demand side. Sir, one last question from my side. We come back into some of the building blocks which we are in chlorotoluene business and also in taurine. We were supplying some part of this and some products to some of the players based out of Europe and primarily in Germany. Do you see that this recent energy crisis in the European market have impacted some of our order intake or some customers have started giving some indication in terms of slowdown in order? No, no. Because the people who buy a product from us, you know, they are moving on a further value additions, where the energy input to value addition is significantly less. We have not got any feedback that, you know, there'll be impact on demand from their side, because of that. Okay, sir. That's it from my side. Thank you. Thank you. The next question is from the line of Aditya Khetan from SMIFS Institution. Please go ahead. Yeah, thank you for the opportunity, sir. My first question is, continuing with the earlier participant question onto the end user segment like textiles and FMCG which are recently slowed down. How much percentage these two sectors would be contributing to our end user industries and how are you seeing that the things are turning up today? Normally now our sales to this segment within the range of, you know, in between 10% to 20%. That's when we continuously try to rejiggle the product portfolio a particular segment is down by going into the other segment, or other market, in general. Okay. Sir, like in this quarter, so most of the FMCG companies like the HUL and Nestlé, they have witnessed a good volume growth. Where are you feeling that pain in FMCG now? No, in general, that side, you know, we are seeing some pigment, you know, also. We should be then going into both housing as well as in FMCG side, some slowdown in that section. Okay. Sir, onto the pharma intermediates. The Dombivli unit which you have mentioned, which sort of pharma intermediate are you manufacturing over there? Like the intermediates or formulations. The third new plant are of generally similar margins as compared to your current product profile? Yeah. The Dombivali plant is actually manufacturing pharma intermediate, regulatory starting materials required for the API. We are supporting the generic players in India and abroad from that side. The audit was triggered based on our DMF, secondary DMF that we had filed for a particular intermediate. There are a host of intermediates which we manufacture in that site, which are going for the regulatory as a regulatory starting material for different API. Overall, the pharma capacity, pharma intermediate capacity of this site is limited because this site is actually attached to our R&D and lot of low volume, high value products are being manufactured there. Okay. This would be of the similar margin profile as compared to our current product profile into pharma? Yeah, margin profile will be better actually, yeah. Because these are low volume, high value products that are being manufactured here. Okay. The volume and value as such is smaller, so it may not have a significant impact to the overall EBITDA percentage. Okay. Onto the volume ramp-up which you are saying in this quarter, so that has been primarily led by the first and second contract. Apart from this, our core business growth would be flattish, right? Since we are operating at peak utilization levels. Yeah, I know some like nitrotoluene volumes have been better, but the p-Phenylenediamine volume is down. Some impact on product mix continuously happens because of the nitric acid. Yeah. Sir, p-Phenylenediamine volumes for the quarter you haven't mentioned, right, in your initial commentary. Yeah. Chetan, you have the number, right? Yeah. The p-Phenylenediamine volumes were around 370 tons per month. 370 tons. Okay. Thank you, sir. Thank you. The next question is from the line of Abhijeet Akela from Kotak Securities. Please go ahead. Yeah. Good evening and thank you, sir. Just a couple of clarifications. One is it possible to break out the volume growth in first quarter out of the total revenue growth? Basically, you know, 25%+ has come from the raw material side. Maybe around 15% to 20% will come from the volume growth. Got it. Thank you. Also, just capacity of the first long-term contract, sir, for, you know, the 2,5-dichlorophenol. If you could please just tell us how much capacity we have set up right now. Capacity was set up for about 9,600 tons. Okay, great. Yeah. That's all, sir. Thank you so much. Thank you. Next question is from the line of Pooja Shah from Convergence Advisors. Please go ahead. Hello. I have just a basic question. What, in the growth estimate we are estimating a turnover of like, let's say fiscal year 2021 growth is like, we are estimating of 2.5x of fiscal year 2021 and a PAT of 3x. After all this CapEx has been done in fiscal year 2024 and all this, that we will start generating, utilization from our CapEx, why doesn't we seem to use. Like, we are not getting an operating leverage. Like, it's a similar line of EBITDA and that also the growth has been similar on turnover and trending. Could you just touch upon that? That would be a great thing for me. Yeah, no, this leverage will come in this fiscal year 2024 numbers based on the ramp-up of our current plans for which, you know, the projects have been commissioned or will be commissioned in this year. Whereas the new site of fluorotoluenes and all, you know, there'll be a totally new greenfield site on that. So that will have a, you know, totally separate impact of leverage as volumes get ramped up. So there'll be a. Because they're totally new sites. So, and new greenfield sites. Okay. Sir, for the new CapEx which we are incurring, so what can be the asset turn we are expecting in that term? In that, you know, asset turn will be lower, maybe more towards within 1% to 1.5% because they are more value-added products. Okay, sir. Okay. Thanks for answering. Thank you, sir. Thank you. Next question is on the line of Rohit Nagraj from Centrum Broking. Please go ahead. Yeah. Thanks for the opportunity, and congrats on a good set of numbers. Just one clarification in terms of the potential revenues from the new contracts in fiscal year 2024. Based on the commentary of, say, 80%+ utilization for the first two contracts, and then the third contract will also start sometime during this quarter. In fiscal year 2024, can we expect close to about, say, INR 800 to 1,000 crore of incremental revenues together from all these three contracts? Yeah. Those are numbers that come. Right. Apart from this, there will be organic growth for the other projects which are where we are continuously investing based on the requirement and demand for capacity expansions, correct? Correct. Yeah. Great. Sir, the second question on the nitric acid, the concentrated nitric acid project. Where are we currently, and when do we expect that this project probably will come to fruition, given that we have faced this challenge from the past, maybe three or four quarters? Yeah. This, you know, we already placed the order with the technology supplier, and right now it is in a detailed engineering phase, and construction will start shortly. We are planning to commission in fiscal year 2024, by around fourth quarter of fiscal year 2024, this concentration plant. Right. Great. Just one last question. After these three long-term contracts, we have not seen any long-term similar kind of contracts. Is there any kind of apprehension from the global players due to the volatility in the market, or probably we are awaiting that our projects the CapEx comes to commissioning and then probably we'll go in for some long-term arrangements? Any view on this? No, we have been having contracts, you know, four, five, seven years earlier also, and certain contract getting rolled over four, five times. These are larger ones, you know, which are getting into public domain. We see the potential of these larger ones also, going forward. Right. Thank you so much. Larger tenure and, yeah. Right. Great. Thank you so much, and best of luck, sir. Thank you very much. Participants, you may press star and one to ask a question. The next question is from the line of Trilok from Dymon Asia. Please go ahead. Yeah. Hi. Actually in the initial remarks, I wanted to, you know, clarify. You said the revenue growth projection must be 40% to 45%. Understanding of, you know, volume growth could be in the mid-single-digit or higher state. Is that correct, or maybe I'm missing something? 50% contributed by the raw material price increase. Volume growth will be in the range of 15% to 20%. Okay. When you said, you know, with respect to, you know, slowdown witnessing two, three sectors in domestic market, are you not, you know, seeing similar trends in the export markets, or you think that's still holding up well so far? Yeah. Export market is generally not that much impacted. Is the slowdown like similar to the last, you know, I mean, we have seen the last three, four cycles, or it's like quite different this time around? If you could just comment on that's it. No, dyestuff sector really you might have seen in the news also. There is a more significant slowdown in Indian dyestuff market. It is very, very severe. But hopefully things should start getting better in next few months. Next few months you think, right? Yeah. Because the cotton price also were very high. Now cotton price are low. Sure. That was a single digit for you as a contribution, correct? In general terms. Yes. Okay. Thank you very much. Congratulations. Thank you. The next question is from the line of Akul Broachwala from IIFL Securities. Please go ahead. Yeah. Thank you so much for the opportunity. I just wanted to check whether you're sticking to your original EBITDA guidance of single-digit growth this year or would it be much better as compared to your earlier guidance? No, as of now we are not revising the guidance. Maybe we will see. Understood. Secondly, like, how are we seeing the gross debt trending going forward? I mean, what would be the peak debt-to-equity ratio that you would be looking at? Well, net debt-to-equity ratio we'll have to see, you know, how the actual entire nitric acid scenario pans out. If we have to go for a substantial investment in nitric acid plant, then the debt will move higher. Because we'll be continuing with our other ongoing expansion. It'll depend on that. In general, you know, our target will be between, you know, around 0.7% to 1% on our side. For this nitric acid, how much CapEx do we anticipate at the moment? Currently is around 150 tons to 200 tons for concentration plant. If you go for a weak nitric acid plant, we are just evaluating the project cost for that. That can be, you know, any, additional maybe INR 500 crore plus. Okay, understood. The way I understand it is, earlier, you were alluding to the fact that you will import WNA and then probably process it into CNA. Probably we are also evaluating to set up WNA as a part of... [crosstalk] Yeah. Sourcing. That, yeah, that is also under evaluation. That's what we had mentioned in the last call also, that we are now evaluating a comprehensive nitric acid strategy, whether to go for our own WNA plant also or not. If we decide to do that, then an additional INR 5 crore plus CapEx will roll in. Understood. Okay, thank you so much. Thank you. Next question is from the line of Gaurav Shah from Harshad Gandhi Securities. Please go ahead. Thanks. Thanks a lot for the opportunity. My question is on the growth estimate you shared on your slide 23 of your presentation. So in the current presentation you have mentioned the growth estimate in terms of EBITDA multiple, while on the last quarter presentation it was mentioned in the EBIT terms. Any particular reason for the change? No, in general, I think what we see that, you know, most of the analysts and all, they talk more of EBITDA than EBIT. So that is the reason that it was shown. You had mentioned the absolute amount, like 1.72x, if you talk about fiscal year 2024, you kept the numbers same. Yes. It will change the valuation. That will... [crosstalk] No, the benchmark number goes on changing. The original EBITDA and EBIT number were also, the fiscal year 2021 also will be different. As a multiple, we are maintaining similar number. Okay. Are you sure? Because earlier you mentioned an EBITDA multiple of 1.72x, for example, for fiscal year 2024. Now you are mentioning in terms of EBITDA, so valuation will change accordingly. again, the baseline also will be EBITDA, not EBIT. EBITDA itself, Okay. Yeah, understood. Yeah. Okay. I just wanted to clarify that. Yeah. Okay. Thanks a lot. Okay, bye. Thank you. The next question is from the line of Meet Vora from Axis Capital. Please go ahead. Yeah, hi sir. Thanks for the opportunity. Just wanted to understand a bit more on what issues that you are facing on the nitric side. Is it the availability issue? Is it a pricing issue? Is it that the supplier is not able to ramp up their capacity? Because we are saying that we'll commission our capacity by fiscal year 2024. Is it that for the next two years we'll still be facing this issue of nitric acid? Yeah. Nitric acid, overall, capacity in India is little bit short currently. The demand is going to grow. That's why we have to, you know, for a long-term strategy, we are putting up that plant which we have already announced. On a medium-term basis, second half, we see that some capacity in India will come up for nitric acid. In fiscal year 2024, we don't see any significant shortages of nitric acid. Sure. For the next two years, nitric acid still remains to be an issue for us, right? fiscal year 2023, the second half can still be an issue. Once the new capacity in India by other manufacturers. Mm-hmm. Come into second half of fiscal year 2023, we don't see much impact coming in in fiscal year 2024. By that time we'll have our own concentration plant also. Beyond fiscal year 2024, I think it will not be an issue also. Sure, sir. Secondly, what percentage of our total spec chem revenue will be the nitrotoluene change? Nitrotoluene change you are saying? Yeah. Yeah, that number we'll have to take out. We have to pull out that number. It will not be readily available. We'll pull it out and send it across separately. Sure. Thanks. That's all from my side. Thank you so much and best of luck. Thank you. Next question is from the line of Nitin Agarwal from DAM Capital Advisors. Please go ahead. Thanks for taking my question. Sir, on the concentrated weak nitric acid plant, what factor will make you go for it versus not just staying with just a concentration plant? Yeah, we'll see the overall, you know, how the economics is working out on that, you know. Availability of, you know, long-term availability of WNA and what kind of pricing. Whether or not to start from ammonia to WNA itself will make more sense. That, you know, we are trying to weigh between the two. Because WNA to CNA will definitely ensure the supply security. The cost-wise, you know, once you have ammonia-based, you know, then you are on a par with everybody on ammonia-based. That differentiation, we are just trying to see what will be the best long-term strategy. Okay, sir. For the WNA, you will have to backward integrate to ammonia also, or ammonia is what you compete with. Ammonia is very big globally traded. That is an advantage. If you are ammonia-based, you know, then it is a global price. Whereas WNA is an intermediate which can go short, long and can have more volatility pricing. If you are totally backward integrated, then you are, you know, online with everybody because everybody has to source ammonia at the global prices. Right, sir. Just this plant, assuming you go ahead with it, would be what, entirely for the captive consumption, or you look to become a, you know, to do a third-party supplier of WNA also? No, no. It's basically the economic size of the plant is needed. We'll be putting about 500 TPD plant. Out of that, you know, 70% to 80% will be captive consumption initially. Going forward, maybe as our demand goes up, it will become 100% captive. It will not be much for merchants. Got it, sir. Just secondly, on the first long-term contract, you know, you've talked about in the presentation that the first and second both will be about 70% to 80% to 70% utilization. Around 70% of the peak by fiscal year 2024 end. Specifically, in that, how is the contract one shaping up in terms of supplies? Whom are you supplying to, and what kind of visibility is there on it? Yeah, we are supplying to various domestic as well as export customers for that. Lot of qualification quantities have been given in the first quarter. We'll see a ramp-up in second half of those quantities. The plant continues to be dedicated for the same old individual only? Yes. Yes. Yes. Yes. Okay. Thank you. Thank you. Next question is from the line of Vishnu Kumar from Spark Capital. Please go ahead. Thanks for your time. On your growth projects, which you've already mentioned about anywhere about INR 3,000 to 3,500 crore between chemicals and pharma. Considering the current year CapEx of INR 1,500 crore, wanted to understand broadly how many projects you have firmed up and construction is likely to start next six months. How many projects will take some more time to kind of take a final form decision in terms of CapEx in, let's say, in fiscal year 2024. If you could give, again, a broad guidance of the CapEx, how much has been firmed up, how much you still need to take a call and this, just to give us an idea on this. Yes. We'll start construction of few process blocks in this fiscal year 2024 itself. Like multipurpose plant and some of the other process blocks. If you say basically from September to this October to next June, these nine months, virtually most of the expansion plants will go under construction. That is a typical construction cycle. We start from October to June. Because July, August, September has heavy rains in general. Going forward, you know, from October onwards, we will have construction of various process blocks which are at a different level of detail engineering and basic engineering. The entire INR 2,500 to 3,000 crores worth projects for chemicals will somewhere between October to June, you will have most of these projects, at least some work will be done and then we start construction will happen. Is that the right understanding? Yes. Yes. Yes. Got it, sir. This year will be INR 1,500 crores CapEx, and next year, can we take it that will be another INR 1,500 crores of CapEx? Yes. Since two years combined, we have put 3,000. Because this year may be going a little bit up and down, depending on how much it happens. Over the combined two years we are looking at 3,000. Okay. Got it, sir. Second question is that, wanted to understand the impact of prices. I mean, crude has also come down from INR 115, INR 120 to 95. The previous quarter it went up sharply. Just wanted to understand because you have almost 2.5 months of inventory days. What could have been the inventory gain, if any, and on the reversal also, should we expect anything in second quarter? Broadly, if you could touch upon this. Actually, part of this inventory gain or loss gets negated by, you know, some of these contracts or businesses are lagging in the pricing, you know. The prices get passed into the next quarter to the customer. That kind of balances each other out in general. The contractual volumes, my understanding was not very high, if I'm not too wrong. No, no. We have a lot of business which are linked to the raw material rollover kind of. Mm-hmm. Internationally. Mainly international. Within India also some, like, two to three months. The average pricing you're saying will be based on an average of one to two months based on which you will charge to the customers. That will take care of this. For exports, you know, lots of these businesses are like that. Exports it does generally average two to three months. That takes place. Domestic generally is on a month-to-month basis, sometimes maybe one to two months. Understood, sir. Finally, just on the CapEx bit, how much have we spent till now out of INR 1,005? This year, this first quarter was about INR 2 lakh. About INR 2 lakh, of course. Okay, thanks for all of this, sir. Thank you. The next question is from the line of Ranjit from Apple Securities. Please go ahead. Yeah. Hi, sir. Thank you for taking my question. First wanted a bit of clarification. In the presentation you have mentioned that there is impact on the PBT due to forex. If you can give a bit more details on that. Was it largely on the foreign debt or was also a part of that, would be under the debt part? It is majorly on the foreign currency debt. That's where it is. It's largely the finance cost. Yeah, it's added to the finance cost. Okay, thank you. Second again, coming to the nitric acid thing. Whether you're also finding it a bit more difficult to source the weak nitric acid globally? How is the demand supply dynamics on the nitric acid globally? In India you have said that the demand has been growing and capacities are not coming up. How the situations are globally and more so on the back of these high energy projects, your ammonia and the nitric acid. Globally also, generally we see the kind of volume what we will need, the availability will not be an issue. The at global level, the amount requirement are around 225 to 250 TPD. There are some volumes we can source domestically also. We don't see availability of the weak nitric acid as a challenge overall. How much it probably takes to set up a 500 TPD plant for nitric acid? Pardon? The cost that would be the CapEx for a 500 TPD plant of the nitric acid. It'll be INR 500-plus CapEx for a new weak nitric acid plant from ammonia. That's the current estimate. Everything is getting now fine-tuned on that, you know, and we are evaluating whether to go ahead with that. I take it it's INR 500,000 crore. Yes. Okay. Thank you. Thank you. Next question is from the line of Pankaj Singh from Firstline. Please go ahead. Sir, first of all, thank you for giving me this opportunity and I congratulate you for the decent number that you have posted. First of all, I just want to understand that in the first quarter fiscal year 2023... [crosstalk] Pankaj, sorry to interrupt you. Your voice is breaking. Can I request you to come in a better reception area? Hello sir, am I audible now? Yes, you are. Sir, at first I just want to understand that in this quarter one, fiscal year 2023, that we have paid a GST of around INR 200-odd crores. The last quarter we have paid GST around INR 262.18 crores. Even though the gross revenue increased, would have paid more GST or on the sales? Pankaj, sorry we lost your audio. Can I request you to repeat your question once again? Sir, in the first quarter of this quarter, that we have paid a GST. Pankaj, I get it, I understood your question. The point was that we do have export transactions and in export there are two ways of dispatches when the factory movements are happening. One is with payment of GST and another is without payment of GST under bond. We had some shipment which has happened under bond in this quarter, and that is where that GST component was lower. It's more like in terms of balancing the GST balances which has accrued, and try and optimize the same. Okay, sir. Next is, are there expected capacity touch levels for this whole year and then for the 2024 also? Yeah, the capacity utilization will be, you know, for different plant will be different. Like nitrochlorobenzenes virtually we are running at almost 100% capacity. Nitrotoluenes, we are at 70%+. It will be all, you know, individual plant based, and these new projects are on ramp up, which we already discussed. Okay. Thank you. Ladies and gentlemen, that was our last question. I now hand the conference over to the management for closing comments. Thank you everyone for taking out the time to join us on our first quarter fiscal year 2023 earnings conference call. Hope we have addressed all your questions. If you have any further questions, please feel free to contact our investor relations team, and we will address them. Stay safe, and we look forward to connecting with you, all of you again in the next quarter. Thank you once again. Thank you very much. On behalf of Aarti Industries Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.