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, Mr. Solanki. Thank you. Good afternoon, everyone, and thank you for joining us on Aarti Industries Q3 FY24 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 overview, progress on growth plans, and outlook on the business. Post this, we shall open the forum for question and answer, where the management will be addressing queries of the participants. Just to share a standard disclaimer: certain statements that may be made in today's conference call may be forward-looking in nature, and a disclaimer to the system has been included in the results presentation that has been shared earlier and uploaded on the stock exchange listing. I would now invite Mr. Rajendra Gogri to share his perspective. Thank you, and over to you, sir. Thank you. Good afternoon and warm welcome to everyone joining the call today. We are gathered here to delve more into Q3 FY24 earnings of Aarti Industries, and I'll guide you through the performance, provide updates on growth initiative, and outline our strategy. I'm delighted to share that our concerted efforts have translated into robust results, reflected in about 15% sequential improvement in EBITDA in Q3 FY24. This was possible despite persistent external challenges, despite ongoing headwinds such as inventory destocking, high interest rates globally, recessionary pressure in key developed markets, and China dumping. We effectively navigated to report a beat above our performance thanks to the strength of our portfolio and enduring partnership with our long-standing customers. I would like to compliment our team for promptly applying their market insights, allowing us to dynamically manage the product mix based on evolving demand. As highlighted in the previous call, we are observing a rebound in demand for various products catering to the discretionary applications such as dyes, pigments, additives, polymers, and more. But it is still early, and we remain optimistic about a complete recovery as we progress further. The non-discretionary segment, primarily driven by agrochemicals and pharmaceuticals, still seems soft as major customers are managing lean inventory due to high carrying costs and moderated demand. That being said, we are witnessing steady demand for select products within the non-discretionary space and are actively engaged with key customers to offer batch value. Even so, we anticipate a return to more widespread demand normalization in the next one or two quarters. And in alignment with this, we continue our dialogue with customers to fulfill their long-term requirements. Now, let me cover the key performance highlights. Our consolidated revenue increased by 18% to INR. 1,889 crores in Q3 FY24 over previous quarter Q2 FY24. Consolidated EBITDA, including other incomes, grew by 15% on a QoQ basis to INR 268 crores in Q3 FY24. Margin in EBITDA was driven by increased volumes while maintaining stable pricing for products and also included an element of operating leverage gains achieved through stabilized fixed costs. Profit after tax stood at INR 124 crores in Q3 FY24, higher by 36% over previous quarter Q2 FY24. I will now cover some of the major business developments. In December 2023, we entered into a long-term supply contract with a global agrochemical major for a niche agrochemical intermediate with a revenue potential of over INR 3,000 crores over a period of 9 years. This agrochemical intermediate serves as a crucial input component for a widely used herbicide, and the global market for this herbicide remains large and growing steadily. More importantly, it is an integral component of Aarti's existing integrated product portfolio, and our current CAPEX plans are well aligned to meet this order requirement. This order will start contributing our performance from the current fiscal, and we anticipate an EBITDA margin of about 20% based on the stable raw material prices. Our application with this prominent customer has been robust, and we aim to foster this relationship further to expand within the high-value agrochemical sector. In another major development, we secured a four-year supply contract worth over INR 6,000 crore with a multinational conglomerate for a niche specialty chemical. This product is also included in our diversified product portfolio, and we have been supplying this product to the same customer for the past few years with consistent annual increase in volume. No additional CAPEX is anticipated for this product as our existing CAPEX is structured to manage this incremental requirement. Demand for this product has been growing continuously. We anticipate doubling volumes in calendar year 2024 versus that of calendar year 2023 with this customer. The strong demand is based on the newer application, which has been evolving over the last few years. We expect that the margin in this case would be about 15%-17% at constant prices. In short, both these contracts are testimony to our ability to convert short-term or spot business into a medium to long-term contract with substantial increase in volume. It also speaks volumes about our manufacturing excellence, strong and deep customer engagement, and a robust track record of handling multiple complex chemistries. We are more than happy that businesses come through in such a challenging macro environment, which underscores our commitment to transforming relationships into sustainable long-term opportunities. Let me now turn your attention to the production details for Q3 FY24. Production of nitrochlorobenzene stood at 19,580 metric tons as compared to 18,199 metric tons in Q3 of last year and 19,014 metric tons in Q2 FY24. For hydrogenation, this came at 3,644 tons per month, over 2,995 tons per month in the same period last year, and 3,136 tons per month in Q2 FY24. For nitrotoluene, the production of Q3 FY24 stood at 6,951 metric tons, as against 7,528 metric tons in Q3 of FY23 and 7,560 metric tons in Q2 FY24. Moving your focus towards updates on key projects, all the other projects, including capacity increase of NCB and nitrotoluene and introduction of chlorotoluene value chains, among others, are progressing well and will start commencing in a phased manner from FY2025 onwards. We entered a CAPEX of about INR 860 crores in nine months FY2024 to fund our expansion project and remain on track to collectively deploy INR 2,500-INR 3,000 crores between FY2024 and FY2025 to expand our manufacturing expertise and venture into newer high-potential chemistries to accelerate our performance trajectory. We had earlier guided for our EBITDA to be about INR 950-INR 1,000 crores for FY2024. While we are witnessing revival of business across various discretionary applications, there is still some more pain and time for recovery to be visible in the agro and pharma sector. Further current macro challenges across the Red Sea have resulted in a sharp increase in freight costs and container availability. Our arrangement with customers enables us to pass on most of this impact to the customer with a timeline. In line with this, current performance and visibility available, we expect to close this year with an annual EBITDA closer to INR 1,000 crore. We further expect our FY25 EBITDA to be in the range of INR 1,450-INR 1,700 crore. Let me now conclude by saying that India is favorably positioned within the global chemical industry given its cost competency, improving manufacturing and R&D infrastructure, supportive policies, and strong domestic demand. In addition, evolving geopolitical risks would prompt a global company to shift a portion of their manufacturing requirement to India. As an integrated player, we'll continue to reap the benefits that remain a global partner of choice for specialty chemicals and intermediates. With this, I now request the moderator to open the forum for a 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 touchscreen 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 your question. Ladies and gentlemen, we'll 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 Vivek Rajamani from Morgan Stanley. Please go ahead. Hi, sir. Thank you so much for the presentation. Two questions from my side. The first question was, given the demand recovery that you're witnessing, can you talk about your sales mix in terms of, you know, whether your reliance on non-regular markets is reducing? If you could give a sense of, you know, where the share of your non-regular markets were, say, last year to where it is today. Thank you. Yeah. You know, as demand is recovering in our regular market quarter-on-quarter, our share of non-regular market is decreasing. We do not have an absolute percentage here. But in general, you know, as the regular market is improving, the non-regular market share is decreasing. Sure, sir. And the second question I had was, in the presentation, you've mentioned that, you've seen an improvement in pricing trends. Would it be possible to give a sense of how much pricing improvement you've seen, relative to the graph which, I guess, was in the first half of this year? And, you know, which segments are driving this pricing improvement? Basically, as some of the products where the demand are revising, you know, we are also seeing potential of some increase in pricing. So, it will be, you know, across all the segments, you know, whether it's agro or on discretionary side also. But it becomes more of a product-specific. But in general, you know, we see that as the demand has recovered, some pricing improvements are also taking place. Sure. So just one clarification. Would it be possible to give any kind of percentage number just for a sense in terms of this improvement? Not really on a, you know, percentage basis. It will be difficult. Sure, sir. Thank you so much. Thank you. Next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead. Yeah. Thanks for the opportunity, and congrats on a good set of numbers. Happy to see that the guidance remains intact for FY25. So first question, again, on the demand front. So, if you could just give us an understanding of which geography the discretionary demand has been good and which geography the non-discretionary demand has been good or languishing, just to get a perspective how individual geographies are doing domestic as well as the other, you know, US or Europe or rest of the world. Thank you. Actually, in geography, the way our product mix are there and our end products. So the product which we export to, say, U.S., Europe, or Japan, the finished good products, what they make, whether it's agrochemical or engineering polymers, they are exported worldwide, in that sense. So even though the consumption happens in a particular continent, the finished products are sold all over. But in general, U.S. is seeing a better if you just want to specify, the U.S. is seeing a better recovery in volumes. Right. Any sense on the domestic market, India for both the segments? Yeah, domestic because we have a lot of indirect export also when we sell to domestic. So purely a domestic market, I think, is a very steady, as such. Sure. That's helpful. Okay. Second question is on the two contracts. So given that it's a 9-year contract and 4-year contract, how do we see the revenue? Will it be linear? And even from the EBITDA perspective, whether from first year of operation, I mean, right from FY2025, we'll get the EBITDA of 20% and 50% respectively for both the contracts? Thank you. Yeah. Now, the second contract is very linear, basically. So it will be INR 1,500 crore, coming in in the calendar year 2024, itself. And whereas the first contract, which was INR 3,000 crore, over a 9-year period, we expect, you know, ramp up in FY24 and FY25. And FY26 should become more of a normal year because as we are expanding the plant, we should be basically getting ready in the first half of FY25. So around INR 300 crore will come in FY25 for the first contract. But then it should become INR 350 crore+ from FY26 onwards. Sure. Just one last clarification from Chetan Gandhi. In terms of the tax, Oh, sorry. Can you speak a little louder, please? Yeah. Is it better? Yeah. Yeah. One last clarification from Chetan Gandhi in terms of the tax which has been negative for the first nine months. How do we see it for FY24 and FY25? Average tax rate. Thank you. So, in FY24, the tax would be negative. We got, this some of these assets which are getting commercialized and the IT depreciation is higher than the book depreciation, which is where the tax rates are going to be. I mean, they're not going to be in tax liability. The deposit asset will be going to come in. FY25, I expect this to be in the range of around 15%-17%. Fair enough. That's all from my side. Best of luck, and thank you. Thank you. Next question is from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead. Yeah. Thank you, sir, for the opportunity. So just a couple of questions. Sir, first question is on the gross margins. So this quarter, we had witnessed that on sequential basis, our top line has been robust. But, sir, despite this jump in revenue, raw materials has also gone up, very high. So this has led to compression in our gross margins. I believe it is the lowest of the last eight quarters. So when we look at the prices of benzene, toluene, maleic anhydride, aniline, on sequential basis, there hasn't been any jump. So what is the reason for this huge dip in margins? Actually, you know, generally, we have been always telling, telling that gross margin or EBITDA margin is a number which is not a very appropriate number for comparing. And, as far as the volume of raw material price, the benzene has seen an increase of about INR 10 from INR 70 to INR 80. But in general, you know, this gross margin as a percentage will depend also on the product mix. So as the product mix changes, the gross margin also will have some variability. So important thing all for us always will be, you know, basically the gross profit, then the expenses, and the EBITDA on an absolute number-wise how it is moving. So on an absolute basis, there is a growth both in gross profit as well as in EBITDA. Yeah. If, sir, the gross is shifting, so that means the product mix is changing towards the lower side or towards the lower product so towards the value chain? Basically, you know, that's specified. It may not be that simple. You know, basically, the product mix where it is changing and how the raw material price of those products are there, you know, that will determine. So I think, you know, as a gross margin, we never even evaluate, in our business model. You know, basically, it is always, you know, gross profit per kg, for a particular product. So that is the major, criteria. Got it, sir. Got it, sir. Onto the two large contracts which we have signed recently, so, sir, my understanding is that these two projects will not add any revenue or EBITDA. It just increases the visibility over the longer term. Is this understanding correct, sir? Yeah, because this was already part of our existing CapEx program and whatever we had guided. If you remember, in the first half, we had guided for FY25 INR 1,450 crores-INR 1,600 crores. But now we are guiding INR 1,450 crores-INR 1,700 crores. So that because it shows a more stronger visibility with signing of the contract. So in a way, you are right. It gives more solidity on the visibility. Got it. Got it. Sir, my last question, sir. In our presentation, we have mentioned that we have started to see demand recovery into dyes, pigments, and polymers. And the agrochemicals and pharma segment that continue to underperform. So, any outlook, sir, into the agrochemical side because most of the agrochem companies have reported very weak numbers for this quarter, also like, so supplying to some of them. So any outlook from them which you are witnessing, any change in outlook, from the coming quarter that demand is improving or any sort of any guidance? It's a very actually agrochemical becomes very, very molecule-specific. Like some products, virtually we didn't see any impact at all. And some products, there was a impact, and now it is on a recovery. And some products, the sudden impact has come because something which they buy on a annually in a 3-month. Last year, they were bought in, say, January to April. And when it comes to January to April, calendar year 2024, the demand goes down sharply. So this agrochemical demand impact is becoming a very molecule-specific. And some of them where there was no pain in the last year, suddenly because they are buying only for a few months in a year, it suddenly also crops up. But in general, I think most of the agrochemical company itself have been saying that, you know, I think calendar year FY 2024, at least a couple of quarters for them as a basket, will have an impact. And some impact of that will be on us also. So we'll see this sector to underperform? And can this have a bearing impact on our margins like, so it can remain into the similar range for a longer period of time? Sure. But part of that, you know, because we have a wide range of end use and all. So, part of that is covered in our guidance also. Some softness in agro. Okay, sir. Thank you, sir. Yeah. Thank you. Next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah. Good afternoon, sir. Thank you so much for the opportunity. The two new contracts we've announced, would it be possible to just help us with the, you know, revenues we are making from those in FY24 just so that we know how much is incremental coming in, you know, from next year onwards? So, you know, second contract, which was about INR 1,500 crores, the revenue in this, FY23 will be more, you know, around, I think, INR 900 crores or something on a financial year basis. Calendar year, it was doubling. But, financial year basis, FY24 to FY25, it will be kind of a jump from around INR 900 crores to INR 1,500 crores. And, the second contract, the FY24 sales will be, below INR 200 crores. The first contract, sorry, that, INR 3,000 crores over a 9-year period. Understood. You said that the, you know, the agrochemical contract will ramp up gradually, right? So FY25, we expect, if you could please just share that number again. How much do we expect in FY25 and then 26? FY25 near INR 300 crore. FY26 so onward, it will be INR 350 crore at the full ramp-up phase. Got it, sir. Thank you. The other one was just on, so of this EBITDA guidance that we have now, INR 1,450 crore-INR 1,700 crore for next year, how much has already been tied up after all these based on the contracts we have in hand, and how much is still left to be tied up over the remainder of, you know, the year? So basically, you know, this overall, if you see, our contractual business will be with these two contracts; it will be more about, you know, maybe 30%-40%. And the rest will be also is like a semi-contractual where, you know, the customers have been buying for years. And there is a good visibility in general for those also. So there, you know, some of them, they are buying for on quarter-on-quarter basis, quarterly pricing and all that. So we are in touch with those also. And the kind of visibility on volumes, the range what we are getting from them, that will helping us in, you know, looking at what are the kind of volumes we will see in FY25. Okay, sir. Just, two last things from me. One is, for the ethylation and nitrotoluene capacities that are coming up. Would the primary end-use industry be agrochemicals itself, or does it go into other end uses as well? Ethylation is basically an agrochemical driven mostly. Whereas the Nitrotoluene, part of that will go into this ethylation. And other component, Nitrotoluene, is a para-nitrotoluene, which has a more wider end-use profile. Right. The final thing is just on the Chlorotoluene project, any sense of the timeline for commissioning, following which how long it will take to get customer approvals, especially depending on how much we are targeting to sell in the export markets, and therefore how much revenue can we expect from Chlorotoluene in FY26 once, you know, the pro capacities are up? So basically, commissioning will be happening in FY26. There will be a commissioning year. Most of these products, a lot of these products will be import substitutes within India. And also for export, you know, they are not, you know, very near to the end where, you know, it will take a lot of time for qualification. So we don't see much overall on a product mix basis and not much delay on qualification. So FY26, I think the contribution, because it being a commissioning year, will be, you know, difficult to really quantify. FY27 onwards, we'll see a sizable EBITDA coming from this Chlorotoluene range. Got it, sir. Thank you so much, and all the best. Thank you. Next question is from the line of Rohan Gupta from Nuvama. Please go ahead. Yeah. Hi, sir. Good evening, and thanks for the opportunity. Sir, first question is, on the clarification on our contract too. So you mentioned that definitely we don't need to incur further CAPEX. And the revenue, we can extract is roughly INR 1,500 crores. So that should directly add to the bottom line with the incremental EBITDA. The question is, sir, that the 15%-17%, 15% kind of margin we are guiding in, this product, with your EBITDA guidance of roughly even at the higher end of INR 1,700 crores, for full year FY25, sir, if you do just do some, back-of-the-envelope calculations, on capex of this product, we are looking in EBITDA margin of close to 20%, significant improvement from the current year. So is that something we are looking for, that kind of margins, in FY25 to achieve the guidance which we are talking about at the higher end of 1,700? Yeah. You know, that's what we have been highlighting for a year or so because the operational operating leverage will kick in. And conversion of gross profit to EBITDA will be high. And that will let the constant raw material prices our EBITDA as a percentage also progressively should go up, you know. So, it will move towards, you know, towards 18%-20% range when if you hit INR 1,700 crore, yes. Okay. So you are assuming that even with the constant price of raw material, we can hit to 19%-20% kind of EBITDA margins. However, in the current quarter, sir, itself, your EBITDA margins were quite muted at 15%, sir. Yeah. I think basically, the whatever the gross profit which we expect to be added next year, it's going to be virtually translating into EBITDA. Okay. Sir, second question is on some volume clarification on we have seen a sequential strong recovery in the current quarter. However, the volume numbers, sir, which you shared that, except that probably in Hydrogenation, NCB and Nitrotoluene volume doesn't seem to show such any sharp improvement on sequential basis Q on Q. So it is that the recovery is more or the sequential growth is more driven by the pricing scenario? Well, we have got a lot of other specialty products also. So, the volumes have been growing in other products, which are more value-added and kind of, yes. Okay. Sir, just one more question. I'll come back in queue. Sir, once again, coming back on the contract too, sir, particularly the reason for compromising on margins at EBITDA at 15%-17% when we converted this contract into long term, is that any pressure from the customers to get in this kind of margins and compromise on the profitability to have the continuous supply, or it was our decision only that we wanted to have some long-term visibility, and that's why we have compromised on margins? No, I don't know. There is no compromise on margins. I think there is some confusion on that. Sir, 15%-17% versus the rest of the business, you are looking at 19%-20%, which means, sir, on this product, we are making a lower margin than the other part of the business or other. At the time when we move to 1,700 at that time, and, as a composite, you know, it will hit that, you know, basically. If we are hitting around INR 9,000 crore turnover, you'll be hitting a. I'm sure that 15%-17% is not the range on which we want to do the business, right? You have always been highlighting that your long-term margin should be 20% upward. So definitely, on this such a large product with a INR 1,500 crore contributing roughly 15%-18% of our revenue, we must have, we have compromised on the margin, isn't it? No, no. This margin can become 22 also and can become 12 also if the raw material price is increased, sir. So generally, though, if this margin emphasis is not in our criteria in general, you know. So this basically per kg and per kg per and raw material levels, sir, these are the numbers, basically we have. So if the raw material goes down, you know, this will show 20+, you know, the same product. Okay. Sir, with the INR 1,500 crore turnover, the asset which we'll be using for this plant, a very ballpark number so we can get some asset turnover idea on this product? that I will not have immediate any data available on that. Okay. Sir, thank you, Sir. I'll come back in queue for the follow-up question. Thank you. Next question is from the line of Chetan Gupta from ASK Investment Managers. Please go ahead. Good evening, sir. Just one question is on how do you see debt playing out over the next year, in terms of how where do you see gross debt ending at the end of FY25? So, assuming today raw material prices remain at the current levels, I believe the FY25 debt to be in the range of INR 3,500 to INR 3,700, INR 3,800 crore on stock. You're expecting some release from working capital then? Yeah. That should be happening. But let's, let's wait and see what happens on the raw material prices, sir. Sir, just to get the CAPEX guidance, right, FY25, we are talking about INR 2,500 crore-INR 3,000 crore. No, no. It is for 2024 and 2025, two years put together. So this year, we will be somewhere between INR 1,200 crores-INR 1,300 crores. And the balance of that will be for FY25. Understood, sir. I think that clarifies. Thank you so much. All the best. Thank you. Next question is from the line of Priyank Chheda from Vallum Capital Advisors. Please go ahead. Sir, my question is on assets. What are the asset turnovers at the current prices for the Chlorotoluene project that you are putting? And the total capacity of 42,000 is equally divided among nitro and para-toluene, or are there any other products within the Chlorotoluene basket that we are going to manufacture? So the 40,000 is a base chemical, ortho- and para-chlorotoluene. And overall, as a chlorotoluene combined, you know, we have asset turn around 1-1.2. Around 1.2 will be the asset turn for chlorotoluene range of product. Okay. Okay. How much of that would be getting imported within the product valuated products that you are making and since it's an import substitution, what would be the size that are getting imported in India which we are looking to replace? The import of those products, you know, around, you know, INR 1,500 crore range, is the import which is taking place. You mean that INR 1,500 crores worth of Chlorotoluene, based Chlorotoluene are getting imported? Yeah. Not Chlorotoluene-based, the entire value-added products. There are a lot of intermediates for, you know, statins and all. There's a lot of products. What would be the ASP? Would be around INR 200-INR 250 per kilo? No. That will be difficult, you know, to just get that number. What would be the realization that we would be looking towards the whole basket? No. Specifically, per kg, we have not done any, you know, on a weighted basis, any specific number. Okay, and it's INR 1,500 crore of CAPEX that we are dedicating towards this 42,000 tons? The entire range, yes. Yeah. Yeah. Awesome. Awesome. Thank you. Thank you. Next question is from the line of Surya Patra from PhillipCapital. Please go ahead. Yeah. Thank you, sir. Thanks for this opportunity. My first question is on the sequential improvement on the revenues that what we have seen, and simultaneously the kind of sequential pressure that we have witnessed in the gross margin front. So is it fair to believe, sir, is it indicating that the pricing in the pricing pressure scenario is very active at this juncture, and that's why even though we would have seen some kind of volume growth sequentially, consistently over the last couple of quarters, but the pricing pressure is playing a role, and that's why the kind of impact on the gross margin front that we have seen? Well, I already answered in earlier question. It is, you know, the gross margin will also depend on what is the product mix in the overall fields. So that determines, and the raw material prices. Like benzene had increased from INR 70 to INR 80 in this quarter. So overall, we are not seeing any significant increase in pricing pressure. Okay. Generally, there is a kind of understanding, so, this whether it would be China-related, oil supply situation or, it is a subdued demand situation which is ultimately, have created a kind of, suppressed pricing situation. And, it's expected to remain so for relatively in the mid- to short-term to medium-term kind of situation or period. So do you believe, so, sir? Yeah. Basically, as the overall demand improvement takes place globally, I think this pricing pressure should ease out. So I think, as the product-specific product-to-product demand starts recovering, then we expect the pricing also, margin improvement also taking place. Okay. And simultaneously, sir, just an extended view on this only. See, this quarter, we have seen sequential as well as YOY. The export growth is really robust. And if I just relate that with the margin performance, the gross margin, so even in the export market, the pricing is really soft. No, I have the same answer, you know. It's a product-to-product, you know. So margin as a percentage will not be a good indicator for to linking as overall even or to any specific market. Okay. Fine, sir. So just one number clarity, sir. This PDA volume number whether you have saved, sir? No, right? Yeah. Just a bit of the numbers. Yeah. Okay. In the meanwhile, I'll just ask a couple more things. See, this freight cost scenario what we have discussed, because of the Red Sea situation, is it delaying, and is it creating a kind of extended working capital situation also along with the kind of cost inflation? Is it impacting in any manner to our gross margin, or either in terms of cost or in terms of our revenue relation? Yeah. Basically, the Red Sea scenario is creating some issue with the supplies to Europe and U.S. Basically, the pricing of the containers have definitely moved up, and, you know, we will have a quarter lag or in some cases, a month lag to push these prices up with the customers. But I think customers are concentrated, and they understand the situation. They have cooperated with us. But one thing that you asked about this overall, I think the shipping time is increasing definitely, and, you know, it will have some impact. But I think our overall revenue mix, 30% would be what it is going to these markets where we will 25%-30% of the export. So it may not have too much impact on the working capital as such. And generally, the credits are from the BL date. So anyway, we will get the BL date in time. So yeah, it may not have as much impact. Okay. And just one more question on this first contract, so this four-year contract. Sir, you have indicated that it is, in the FY23, it was kind of a INR 750 crore kind of supply that we have been doing and potentially reach INR 900-odd crore. So, is it fair to believe, sir, this is the largest customer in terms of concentration? Yes. It will become the largest customer. Okay. And is it relating to any downstream of MMA or something else? So that we will not be able to specify as of now. Okay, sir. And, You said you wanted the PDA volume, right? The Q3 PDA volume was 481 tons per month. Okay. Okay, just last, on this point, on this, this thing only, sir, the first contract. See, we possibly would be although we have been advocating that the margin is not a criteria, but, just my view is that, see, current situation would be such where, possibly our margin is somewhere in the range of 15%-17%, for the company as a whole. But, if situation improves and, subsequently, the pricing scenario improves, costing situation kind of stabilizes, then generally, the margin profile of the businesses as a whole for the company itself is likely to see an improvement. So is it not fair to believe that situa same situation that we will see even for this contract? Yeah. Basically, you know, this contract, we are already structured. So that kind of gets fixed. But in general, I think if the pricing improves, both the gross margin as well as EBITDA margin will have positive impact. Sure. Okay. Okay. Yeah. Thank you, sir. See you all. Bye-bye. Thank you. Next question is from the line of Archit Joshi from B&K Securities. Please go ahead. Hi, sir. Good evening, and thanks for the opportunity. Sir, I was just going through the volume numbers that you have shared for this quarter and maybe for the last maybe 8-12 quarters. Especially in NCB, I can see that if I've got the numbers right, our volumes have ranged between close to 18,000-19,000 tons, in a ballpark range, for a meaningfully higher amount of time even after adding the chlorination complex of late. So does that mean that our base business, which is predominantly the Chlorobenzene and the NCB chain, that has been grossly underutilized till now? Does that also mean that the base business has a far better potential to grow, even beyond FY25 or FY26? The 70 we had increased the capacity from 75,000 to 108,000. So, Right. So that is getting ramped up. So currently, we are nearly 80,000. And some of the volume pressures are also coming on these products also. So as the volume product pressure eases, and we are also going to add some more downstream products also in this range, we will see a better utilization coming in this. So in a way, you are right that you know some of the volume growth will come in this products. Got it, sir. Sir, just delving into the same, Nitrochlorobenzene capacity, I think a large part of our chlorination complex was also dedicated towards 2,5-DCP, which was a dicamba intermediate. And now that it is not being used to the best of its capacity, would that mean that there will be, you know, divergence of this capacity towards the existing product portfolio that we have which can potentially trigger growth maybe in FY25, FY26? Yeah. Dichlorobenzene portfolio, this dicamba-related outlet was not a very huge outlet because it goes in a lot of other volume PPS polymers and air fresheners and some other products also. So we should be, you know, able to utilize that, that should not be an issue, as far as the dichlorobenzene itself is concerned. Understood, sir. Sir, would my assumption be right towards, you know, the Chlorobenzene and the nitrochlorobenzene having more salience towards dyes, pigments as a application area, which has not been doing well as evident as it is in the last maybe two or three years and which is the reason why our utilization and production numbers have been quite stagnated? And once we see a pickup on that front, we will see volume growth coming in from the base business as well? Yeah. Nitrochloro is more, again, it's a mix. Nitrochloro, like, you know, one of the big products is paracetamol, you know, so which is a classical big pharma also. So nitrochloro has a less agro exposure, but the pharmaceutical, PN paracetamol is an exposure other than dyes, pigments. Same way in dichlorobenzene, we have a discretionary, like, you know, air fresheners and polymers, and then agro, on diuron propanil or those kind of products. So it's a mix, on dichlorobenzene. So most of this, these are base products. So we'll have an end-use profile in all the sectors. I said discretionary somewhere in some place, it may be 30, 40. Other places, it may be 56. But it will be always a spread. All the three, nitrochloro, dichloro, nitrotoluene, is more of a widespread, whereas chlorotoluene is more on agro and pharma with new products which will come in. But it's nothing to do with dyes and pigments doing underperforming, which has resulted in a lower volume, right? It's just a widespread effect. Yeah. Also, we have dyes and pigment component also in nitrochlorobenzene as well as also in some small portion dichlorobenzene also. So that impact, obviously, comes from this. Understood, sir. Thank you. Thanks. Appreciate your answers. Thank you. Thank you. Next question is from the line of Sabyasachi Mukerji from Bajaj Finserv. Please go ahead. Yeah. Hi. Thanks for the opportunity. So my question is on the gross margins or rather the gross profit per kg that you mentioned that better to not look at the margins per se but the absolute gross profit number and the gross profit per kg. Now, if I look at the volume numbers that you have, you know, told us and do a small math that, you know, gross profit per kg, quarter-on-quarter, sequentially, it has remained flat. So essentially, what it boils down to is that our volumes have increased by 5% quarter-on-quarter from Q2 to Q3, while the absolute gross profit has also grown by 5%, which means the gross profit per kg has remained flat. Is my understanding correct, sir? Yeah. Typically, that's what we have been saying, that gross profit per kg is a much better indicator, and that tends to show more stability. No, so a follow-up to this is that, you know, if I look at historical levels, our gross profit per kg has been, you know, whatever we are doing right now, it is almost 20%-25% lower than what we used to do, historically. So, you know, going ahead, we, we should see improvement in this number as well. Yeah. But per kg, on a composite basis, I don't know from where the number is coming in because we have so many products, you know, products which is like sulfuric acid, which is less than INR 5, with some, agro-. Sir, I'm doing a basic map of what the volume numbers you have said across Nitrochlorobenzene, hydrogenation, and dividing that number, metric ton number, with the gross profit, that we have done. Yeah. Yeah. I understand that, but I think that it's not a simplistic scenario because we have a lot of value-added products. A lot of these nitrochlorobenzene are captively consumed or nitrotoluene are captively consumed into value-added products. So that simple map, I think, will not work to, you know, to really gain so many insights. I mean, so I, you know, a better way to understand, probably, the realization is going up. So my question is basically, if I look at the revenue numbers, it has grown 19% quarter-on-quarter. But, you know, somehow, the product mix is such that probably the, you know, gross profit has not grown at a similar pace. My question is that, you know, if going ahead, you know, do we see improvement in the, you know, gross profit number as well so that that flows down to the EBITDA number as the other OpEx remains very similar in the next year? Yes. Yes. That's what I've been telling, basically, the absolute gross profit, will increase. It will be a substantial translation to EBITDA which will happen in, as it has been happening, in this quarter and also will happen in, FY25. Sir, last clarification here. So absolute gross profit will increase because of volumes increasing or also at, you know, at kg level also, it will improve? I mean, how do you look at it? Yeah. Yeah. I think both, you know. There'll be. We expect substantial volume increase also in a lot of products. And also, as we mentioned earlier in some of the question, as the volume pressure eases, the pricing pressure also will ease. So some of the products will. We are expecting that per kg also improvement will take place. It will be a mix of both, you know. Somewhere where there is Chinese issues and all those volume pressure which is hitting the margin, this gross profit per kg, we'll see some improvement there also. And but substantial improvement or growth for our absolute gross profit will be more driven by volume. What kind of volume growth are we targeting for FY25 over FY24? Yeah. On a composite basis, you know, around 20%-25% range, we can say. 20%-25%. Okay. Okay. Got it, sir. Thank you. That's all from my side. All the best. Thank you. Next question is from the line of Ankur Periwal from Axis Capital. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity and congratulations for the sequential improvement here. My first question on the volume side, I'm looking more on a nine-monthly basis rather than this specific quarter. On a composite basis, what sort of a growth we would have seen, you know, across the portfolio? I do not understand. The entire nine months compared to what? Last year or last year? Last year. Yeah. Yeah. Yeah. Nine months. So I'm not looking at Q3 versus last Q3. So let's say YTD this year, financial year 2024, nine months versus nine months last year. Overall, I think there is a volume growth is there. But again, it's some of the product has grown, and some of the product has seen some volume pressures, so. Okay. So but on an overall basis? On a composite, there is a growth, I would say, on the volume side. Fair enough. And from a, you know, product mix perspective, any feedback or any traction that you can share on, let's say, nitrotoluene as a product chain or other value-added products? Or Or the rebound is largely more on the lower margin products, what we are seeing? Yeah. Rebound, you know, wherever there is a impact, those products will go on like, you know, nitrotoluene has been slower in the last couple of quarters because that's more dominated on agro. So, that's where we have seen some pressure on the nitrotoluene volume. So it's all specific end-use-wise, recovery on the volumes, and corresponding margin will happen. Yeah, sir. I appreciate because, you know, as you rightly mentioned, discretionary has seen some rebound versus, agro and pharma has not. I was just curious whether, you know, the value-added portions over there have got some sales to do or it is the basic or the relatively lower margin products which have seen more, a sharper rebound within those end-user applications. Yeah. It will become same. You know, where the end-use is where we are selling value-added, then there'll be value-added impact, will come, so that, you know because if the people are not changing the product, they are buying value-added products, and they buy continue to buy the value-added product. They are buying base products. They continue to buy base products. When there is so slowdown, you know, it impacts both. Sure, sir. Fair enough. Secondly, from a, you know, a new product approval or let's say new client addition or a geography addition, any comments there? What we would have seen, you know, this quarter or slightly, you know, even earlier quarters as well? So overall, you know, because the product, new product additions are not that many in that sense. So it is not like, you know, new geography or, new customer addition, in general. This is existing customers and geography. And a lot of new products, actually, which we are adding are also mainly for those customers, in that sense. Okay, sir, we do have, you know, the earlier portion of the long-term contracts there. Your comments, anything, whether they are also seeing a similar pressure that we saw in the, you know, the other businesses or there the pressure is relatively better and the revenue ramp-up is better? The four-year contract that we? Yeah. Yeah. Yeah. Yes. No, there, I think, that particular product end-use, we are not seeing any such volume pressure. Okay. And with you, you did towards, you know, the discretionary growing and non-discretionary slower. How will be that mix right now, you know, among the key, let's say, end-user applications if you can share? So it's more towards discretionary currently around 16%, and non-discretionary, you know, around 14. How will this number be, let's say, last quarter or last year? More towards 50/50. Okay. Fair enough. And, sir, lastly, you did mention that, you know, the CapEx plan remains intact, INR 2.5-3,000 crore over the next two-year window. And we said also we are doing around 1,200-1,300. How much of this will be revenue-generating or there is some bit of backward integration because, you know, your comments are also there in terms of site development of Jhagadia. So just trying to see, you know, how much of this is going into backward integration or, let's say, infra development versus the pure revenue-generating one. Yeah. Jhagadia, when, you know, you visit it, the entire new greenfield site is going to come up. And, other sites of our major current Jhagadia site and Vapi site and all will be virtually completing our expansion in virtually in calendar year 2024, most of the projects, yeah. If I got you right, the expansion across all the projects will be completed in CY 2024 itself? The calendar year 2024, you know, all over this existing site zone one, two, and three, what we have been seeing, like, you know, Vapi, current Jhagadia site, Dahej and all, that we expect to be completed. And then, from calendar year 2025 onwards or FY 2026 onwards, the commissioning will be mainly coming in, that new Jhagadia site. Okay. Fair enough. Sir, last question if I may. From an overall, you know, given the two projects, and you mentioned we do not need to spend incremental, you know, capacity addition or a CAPEX for these, how much more can the current, you know, existing capacity absorb, I mean, excluding the newer site? Or let's say, you know, in other terms, what is the current capacity utilization at the existing site? As we mentioned, around 20%-25% volume growth next year we are expecting FY 2025. And then further, I think, there'll be still headroom for another, you know, 10%-15% volume growth in this zone, 1, 2, 3 assets. Okay. That's great, sir. That's very helpful. Thank you and all the best. Thank you. Next question is from the line of Meet Vora from Emkay Global. Please go ahead. Hi, sir. Thanks for taking my question. So we have guided for INR 1,000 crores EBITDA for FY 2024. That means, again, we'll see sequential improvement in EBITDA to the tune of around INR 280-300 crores in Q4. So this will, you know, again, be a result of recovery in discretionary spends that we have been highlighting. So my question was, do we further see improvement in Q1, Q2 of FY 2025 as well in discretionary spends, before we start seeing improvement in agro and pharma demand? Yeah, basically. Discretionary will further improve. And I think the agro also should start improving quarter-on-quarter. So even in FY 2025 also, progressively from Q4 of FY 2024, the Q1, FY 2025 should be better, and then Q2 should be better like that. Understood. Understood, sir. Secondly, on chlorotoluene, while we have been, we have highlighted that, we are seeing an INR 1,500 crore import substitution opportunity, can we just guide on our revenue target that at least we are targeting and EBITDA margin expectations and total CAPEX spend on this chain? This will be more value-added. EBITDA will be more towards 25%-30% in that product range. any rough target of revenue that we have decided internally or we are targeting or CAPEX spend that you can elevate? About INR 2,000 crore+, I think, should be the revenue. Okay. We are also looking at export opportunity in this chain broadly? Yes. Sure. Okay. Thanks. That's all from me. Thank you very much. As there are no further questions, I will now hand the conference over to the management for closing comments. Sir, would you like to make any closing comments? Yes. Thank you, everyone, for taking out the time to join us on our Q3 FY 2024 earnings conference call. Hope we have addressed your queries. If you have any further queries, please feel free to contact our investor relations team, and we will address them. We'll look forward to connecting with 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. Thank you.