Ladies and gentlemen, good day and welcome to the Advanced Enzyme Technologies Limited Q1 FY23 earnings conference call. As a reminder, all participant lines will be in listen-only mode. 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. Ronak Saraf. Thank you, and over to you, sir. Thank you, Tanvi. Good evening, everyone. Welcome to the Advanced Enzymes first quarter 2023 earnings conference call. I am Ronak Saraf, the Manager, Investor Relations here at Advanced Enzymes. We hope you all have gone through our financials, press release and the presentation, which has been posted in the investor relations section of our website. We have with us Mr. Vasant Rathi, Chairman, Mr. Mukund Kabra, Wholetime Director, and Mr. Beni Prasad Rauka, Chief Financial Officer. Today, the management will discuss the performance and business highlights, update on strategies and respond to any questions that you may have. As is usual, for ease of discussion, we will look at the consolidated financials. Before we proceed, I would request you all to please read the forward-looking statement contained in the presentation. During our call, we may make forward-looking statements regarding our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risk and uncertainty, our actual performance and results may differ materially from our forward-looking statements. Without any further ado, we shall commence this call. Over to you, Mr. Rathi. Sir, thank you, Ronak. Good evening, everyone. I really appreciate you all for taking out your valuable time and welcome you all to the conference call for the quarter ended 30th June 2022. Please continue to follow necessary precautions and stay safe and healthy, although it appears that COVID-19 we have left far behind. I know COVID-19 is not over. You know that also. Hopefully, there will be less or no interference of this deadly disease which is affecting everybody globally. I will try to keep my remarks short so that you all will get some time to ask Q&A. To begin with, as you all know, going through the numbers, that it is a very rough start, tough start for 2023, 2022-2023, with ongoing disruptions in the business environment due to COVID-19 and geopolitical scenarios. As you know, the inflation is hitting sky-high all over the globe. Europe has never seen this kind of inflation in last 40 years. Same is with the U.S. The raw material prices and logistic costs remain largely elevated, and supply chain issues which were ongoing from last couple of quarters still hit hard. We firmly believe that most of the hurdles are transitory in nature and rather than structural, and hopefully the situation may start easing out from quarter two or mostly from quarter three. Moving on to the results update. On revenue decline, we have a revenue decline by almost 12% year-on-year to INR 1,211 million in quarter one FY 2023, as against INR 1,370 million in quarter one FY 2022. Our EBITDA declined by 51% year-on-year to INR 309 million, while PAT declined by 56% year-on-year to INR 176 million during this quarter. During quarter one, our EBITDA margin stood at 26%, while PAT margin stood at 15% during the quarter. As I previously mentioned, the impact in the margin is because of the inflated input cost, increased cost in salaries and other areas. We have tried to optimize and manage to insulate the margins to the extent possible. Talking about the division-wide performances. The Human Nutrition segment contributed 67% of the revenue. It registering a decline of 10% to INR 807 million in quarter one of FY 2023. The Animal Nutrition segment contributed 13% to the revenue of quarter one. It has shown an improvement and delivered a growth of about 11% to INR 156 million in quarter one FY 2023. The Bioprocessing segment contributed 15% to the revenue. It underperformed by almost 10% during this quarter, accounting for INR 183 million in quarter one. In this segment, food business de-grew by 14% to INR 147 million on year-over-year basis. The non-food business grew by 13% and stood at INR 37 million during this quarter. The Specialized Manufacturing segment contributed 5% to the revenue of INR 65 million during the quarter, a decline of 52% on a year-over-year basis. With this, I will now hand over the call to Rauka. He will walk you through the financials and key subsidiary numbers. Thank you, sir. Thank you very much, sir. Good evening, everyone. I hope you all are in good health. Let me walk you through the company's financials for the first quarter of FY 2023. Vasant Rathi has already briefed you all about the year-on-year performance. I would further extend it and give a brief on Q-on-Q performance. The revenue is decreased by INR 106 million from INR 1,317 million to INR 1,211 million. The EBITDA is decreased by INR 94 million from INR 403 million to INR 309 million. Profit before tax is decreased by INR 103 million from INR 340 million to INR 237 million. PAT is decreased by INR 77 million from INR 253 million to INR 170 million. The EBITDA is decreased mainly on account of, you know, as Vasant has already mentioned, the input cost has gone up and therefore, you know, there are some expenses which continue to be like, you know, higher in terms of power and fuel cost has gone up, and that has resulted into lower gross contribution. In addition to this, there was impact of, you know, sales mix of the products. That has, like, you know, created a negative impact of about INR 62 million or so. Increase in the payroll costs as compared to last quarter because of the annual increments which are given in the month of April. In addition to that, some other expenses, which has also gone up by some amount of about INR 11 million, that is because of some mark-to-market losses and also some incremental cost on account of consulting. All this put together has, you know, there's an increase of about INR 94 million in other expenses. Therefore, the EBITDA, which was 31% in quarter four of last year, it has come down to 26% in this quarter. Now, I would like to talk about the financial numbers of our subsidiary company. A couple of subsidiary numbers which we generally share with the investors and our analysts is our performance of our subsidiary, Evoxx. Evoxx numbers stood at INR 69 million in this quarter with an EBITDA of INR 18 million and PAT of about INR 8 million as compared to INR 62 million of top line and negative EBITDA of INR 10 million and PAT of INR 21 million negative in last year's Q1. Overall, Evoxx has given very positive numbers this quarter as compared to Q4 also and as compared to Q1 of last year. JC Biotech revenue stood at INR 146 million, with an EBITDA of INR 19 million and PAT of INR 7 million, as compared to about INR 123 million of top line, EBITDA of INR 31 million, and INR 14 million was the PAT during first quarter of last year. Again, here, we could see that the EBITDA is lower because of higher RM, raw material, and higher power and fuel cost, and also the higher tariff of electricity by the state government. The SciTech sales stood at INR 66 million as compared to INR 135 million of last year. PAT is, I mean, negative this quarter by INR 14 million as compared to INR 18 million of positive PAT last year first quarter. SciTech has reported a loss during this quarter because of the lower sales in this particular quarter. The largest product, which is our anti-inflammatory enzyme, the sales stood at INR 279 million as compared to INR 245 million last year, first quarter. We could see that, in this particular, I mean, you know, enzyme, we have a higher sales as compared to Q1 of last year and as compared to last quarter also. From INR 245 million, it was INR 247 million to INR 279 million this quarter. Our top ten customer contributed about 28% in this quarter as compared to 29% in Q4 of last year and 28% in FY 2022. Our B2C segment has contributed a sale of about in $1 million as compared to $1.14 million during the same period last year. Our R&D expenditure is up from INR 53 million to INR 70 million. Overall, I'm sorry. The R&D expenditure is about INR 70 million in the quarter one as compared to INR 53 million, which was about 4.4% last year, and this year it is about 5.10%. Overall, this is from my side and now we shall open the floor for question and answer. 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, to ask a question you may enter star and one. We will wait for a moment while the question queue assembles. The first question is from the line of Vaibhav Badjatya from Honesty and Integrity Investment. Please go ahead. Yeah. Hi there. Thanks for providing the opportunity. So if I looked at the full year FY 2021 numbers versus FY 2022 numbers, in other expenses, apart from, you know, power and fuel and travel cost, which is obviously going up, there's a huge jump in sales promotion and legal charges. If you can just explain what has happened in FY 2022, which is seeing this increase, and I think it has been continuing this quarter as well. If you can highlight why the sales promotion and legal charges are going up substantially. FY 2021, you know, it was kind of a year when we have seen unprecedented lockdown throughout the globe. Sales promotion expenses were low. FY 2022, we have exhibited in many shows, and because of that, you know, sales promotion and exhibition expenses, everything has gone up. Mm. Vaibhav, the second part which is happening in sales promotion is travel cost has gone up exponentially, as probably you are aware of. All right. Everything in the travel-related expenses are going up and after two long years, this is the time to meet all the customers again, 2-3 years, which was lost contact loss. There is going to be a sales and promotion expenses have gone up and they will continue to go up for the time being. Right. Yeah. What about legal and professional charges, which has gone up from INR 11.5 crore to INR 15.5 crore in FY 2022? Legal and professional, when we call it, comprises of even, you know, the consulting charges. Of course, that includes some kind of, you know, outsourcing of some of the technical services and, some kind of studies which we get from outside. Those expenses are, you know, part of legal and professional expenses. That has gone up because, you know, you spend more on, number one, on technical studies and research and development. Apart from that also, couple of like, you know, legal advices and legal, wherever matters are there, where we need to really, get the expert's opinion or we need to hire the experts. Those are like, you know, the reasons of increase in the legal and professional expenses. Okay. Legal expenses will trim down as we move on into this year. They will be lower. This quarter it was on the higher side. Okay. Just secondly, if you can just comment on competition, you know, in which products we are facing competition from Advanced Vital and ZYMS. If you can just broadly comment on that would be helpful. There is no area where we are really directly competing with Advanced Vital and ZYMS. Okay, that's it from my side. I will come back in the question queue. Thank you. Thank you. Participants, if you have any questions, please enter star and one. Ladies and gentlemen, if you wish to ask any questions, please enter star and one. We have a follow-up question from Vaibhav Badjatya from Honesty and Integrity Investment. Please go ahead. Yeah. Thanks for providing the follow-up. I just wanted to give time to others. That's why I kind of stopped earlier. In terms of margins, you know, we have seen even gross margins contracting as compared to FY 2021, as it is contracting in FY 2022. It is continuing. Is it because of the absolute fall in the realization in some of our products, or is it because the RM cost, raw material cost has increased, and we have not been able to pass it through? Vaibhav, it's both. You know? Okay. RM cost is up, and it is going to be a slow process to pass on. It's a tough competitive market. Mm-hmm. You said that it's both. In terms of realization, contraction and increase in RM costs. In which areas the realizations are reducing? In which segments or in which product areas the realizations are reducing in absolute terms? Overall, you see that nutritional market, people have plenty of inventories. There is overall costs going up for them, so they are looking at reducing their cost in other areas, and that comes into the ingredients or supply side of the raw material. There is a lot of pressure on keeping the cost or cutting the cost while the expenses are going up. Mm-hmm. Now, there is going to be readjustment in the market, for next couple of quarters. Okay? Mm-hmm. There will be pass-on costs will happen. Again, because the supplies were coming from in U.S. market at least, I don't know much about Indian market, but lot of material was coming from China and China's impact is tremendous. The supplies are in short supply. Mm-hmm. Shipment cost is ridiculously high. Overall, just to maintain the customers and customer relations and supply chain, we ended up supplying it at any given. Because these guys are paying too much money for the packaging, filling, all of the other areas. Everybody's looking to see how they can reduce their cost or reduce their inventories. Mm-hmm. Got it. Yeah. Understood. Thank you. That's it from my side. Thank you, Vaibhav. Thank you. Participants, if you wish to ask any questions, please enter star and one. Ladies and gentlemen, to ask a question, please enter star and one. We have a question from the line of Ketan [guess], individual investor. Please go ahead. Yeah. Thank you for the opportunity. My question is, you know, in terms of, we've been facing revenue pressure for some time. Our growth has reduced in the last couple of years. What are we doing to increase the growth? What are the, you know, areas that we are targeting? I know there's a lot of information in the investor presentation, but I'd like to hear, you know, when do we start seeing growth in our revenues from here on? Ketan, good question. Some of the areas which were out of our control, a couple of things which are happening in the global scene, I hope that they are now, you know, hopefully settled shortly. It's not completely. That being the factor and global scene, don't know what happens with another crisis or may not be a crisis in the future. Considering they are out of our hands, I believe that we should be in a couple of quarters able to see the sustainable growth. Are we seeing uptick in the demand, you know, going forward? Because from Q1, it didn't seem so. Are you seeing an uptick in the demand? As you know, we are in three different segments, right? We see some great opportunities also and growth prospects in other markets. Okay. One last question is, you know, if you could throw some more light on the work that we are doing with some pharmaceutical companies in the area of APIs. I know there is some trials probably or some work that we are doing to get our products approved with them. If you could throw some light on that area, you know, what's the status and what is our outlook? When do we expect to get some revenues in these areas? That will be great. Thank you so much. We are progressing well, Vaibhav. The API market is like developing the complete completion of the R&D and pilots and then moving into the molecule. There is an enormous opportunity we see as we go forward. We are very, I will not say satisfied, but we are very, very pleased with the progress which is happening in that one. Is it possible that, I mean? Sorry. Sorry to cut you. There is a great deal of opportunity. No, no. It's okay. We are the leading suppliers in this marketplace. Okay. I just want to ask one follow-up question on that. Can we expect to get increased orders in the remaining nine months of this year from this specific segment? It will start, Ketan. It will start gradually. We expect some more products to be commercialized this year. Okay. Thank you so much. Thank you. Thank you. Ladies and gentlemen, if you wish to ask any questions, please enter star and one. The next question is from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Yeah, good evening, sir. I hope I'm audible. Yes. Yes, yes. Yeah. Sir, if I look at your segmental sales, Specialized Manufacturing has had a sharp drop this quarter. If I look at it from a geographical composition, Europe and others have had a severe drop. If you could help us understand, you know, both segmentally and geographically, what happened? Your question is in geography, which segment, you said? Geographically, Europe and others are down very sharply. Europe is down 36.5%, and what you classify as others is down to virtually INR 0.7 crore from INR 6.9 crores? Gagan, like, this Europe business, these orders are not all the time, like, divided into the quarter-wise. Sometimes it's on a higher side, sometimes it's on a lower side. That doesn't mean that this is happening as far as the geographical is considered. As far as the specialty business of SciTech, what is happening out there is, again, the inventories. There was like a lot of sales of effervescent tablets for the COVID-related products which they were making. For example, vitamin C and paracetamol and other things. But right now they are struggling with a lot of inventories at the customer end, so a lot of orders are on hold. I think this is again an inventory-related phenomena, and probably this is a quarter where we really saw the real drop in the SciTech sales. Okay. I mean, if I again look at your sales, you know, from a longer term horizon, even past three years, your sales CAGR would have been, you know, 8%. In a normalized world where, you know, these sort of transitory issues which have had a deep impact in the shorter run, you know, if one assumes that they come back to normal. In such a scenario, you know, what is the sales growth potential for the company? We understand that in the current scenario, you're getting impacted by extraneous factors. In a normalized scenario, what is the baseline growth, you know, which your business with its pipeline of new products and existing products and customers is capable of? Well, thank you for clarifying that. Like, as you said, in last couple of years, very abnormal years. If we can keep that aside, and as I said in the beginning, if we don't have any other further disruptions globally which are not under our control, we are targeting to be growing 15%-20% a year. Okay. If you could, you know, I appreciate that, you know, you've given us that number at least, you know, which helps us understand where you are headed. If you could also, you know, elaborate a little more and give us some idea, you know, on the roadmap and how you expect to achieve that? What goes into being able to reach that aspiration? Glad to hear that. See, there are three segments which we have clarified to you, right? One is bioprocessing, and there were questions on that, and we already clarified that growth we see is very sustainable and continue because everybody is trying to find alternatives. API growth will be there in India. Everybody is trying to get away from China supply, and there is a great deal of prospect to grow substantially beyond 15%-20%. The second market segment which we are in, food processing area, and we see several products approvals. It takes time to get approval and yearly contracts. So we are doing extremely well on that particular front on R&D, et cetera, and we see a substantial growth in that segment also. Third one is animal feed area where we are seeing. We have placed a lot of various different key things in the global marketplace. We have signed an agreement with Sumitomo Chemical Japan, Japanese subsidiary in USA as an exclusive marketing sales company. Similarly, several other areas are moving forward on that particular front and you will see a substantial growth. Human nutrition, we are also looking at B2C market growing considerably than the current place. As far as B2B market, we think it will continue to grow also after the initial inventory hurdles because U.S. is still strongly growing. And there is anti-inflammatory. Inflation. Inflation process, you know, is still on, but we feel that we have a good chance of excellent chance of growing. There will be pressure on margins, I can tell you that. Okay. Again, you know, as we sort of passed through on the sales aspects, likewise on margins, again, you know, in a normalized world, with you know, your prospects in fermentation, APIs, in food processing and so on, would the margin trajectory be still lower than what it was in the past? It's been dropping over the last two-three years. Then again, you know, there's a lot of contribution to that drop from issues which are not of a permanent nature. There might be others which are of a permanent nature. Hence my attempt to understand, you know, in a normalized world, what should be sustainable margin trajectory for this business? Well, we are going to keep our margins, at least try to keep our margins above 40%. Those are our area. Okay. We are very mindful. At the same time, we are very aggressive in future investment and increasing our R&D expenditures will grow up considerably. It is a research-driven company, and we are putting a lot of things into the future growth. A lot of investment will be there on that particular area. We are also developing and spending more into expanding the market segments. There will be a pressure initially when you're trying to develop the market, you have to spend a lot of money on the sales and promotions, which you will see quite a lot, and also human development. These are some of the things, challenges management always face when they are growing and before the growth. They are also part of our company story. Right. What should be a reasonable timeline to expect, you know, over which you can, you know, these efforts that you're putting in start bearing fruit? Is it going to be one year? Is it going to be two years before, you know, the consequences of these efforts start showing up? How should we think about that? Some of the efforts you will see quite soon, you know. Exactly all the efforts will come, everything will pay off. I hope I can get some crystal ball, but, what we see is very, very positive trend. Okay? To answer that, I can say that some of the effect will start after one or two quarters. Okay. In a couple of quarters, some of your efforts will show up in top line growth. In the numbers. In the numbers. Yeah. You will also at the same time you see how, this cost, we are going to spend a lot of money into various different areas I just said. Yeah. I mean, when you say, you know, sales and promotion in R&D are going to remain elevated, as a percentage of sales, you pointed out that R&D cost is at 5.1% for the quarter. Is it going to remain in this trajectory all through the year, or is it going to rise still further from 5.1%? I think it will rise. Our idea is somewhere around 8%. Okay. You're saying that over the quarters in this year, as you move from the first quarter down to the fourth quarter, and as you exit out of the year, we should be expecting 8% R&D to sales? Not really. Not 7%-8%. It's like, a longer-term goal. This year it will be in the similar range, maybe 5%-7%, in between 5%-7%. Okay. That means you It's a gradual thing. It doesn't happen like it's going to jump instantaneously because of budgetary constraints. Right. A lot of other things comes in R&D. No, I get your point, sir. I understand that over a period of time you want to increase R&D to sales by almost three percentage points. While, you know, while it is understandable that that is required for the business to grow, should it then not mean that a baseline margin trajectory, you know, would probably be lower than 40%? Unless, of course, you know, that R&D starts to give you return on investment in a short timeframe. Beni, do you wanna? Yeah, well, there will be, you know, some kind of a pressure of course, as you mentioned, because, you know, when you spend more on R&D from 3%- 5%, so 3% has to come, you know, through your incremental revenues. Yeah. The good part of our business is, you know, once we cross the threshold, and after that, you know, most of the time we have seen our margins are really, you know, pretty decent. We should be in a position to maintain our like, you know, the EBITDA margin, which we have been talking about of, say, 40% or so. Yes, on quarter-to-quarter, suppose my R&D in a particular quarter is 8%, probably, you know, the EBITDA margin could be 37%. Overall, if we really look at it will be in the same range, you know. Right. I get that, sir. When we are talking of this margin, what, you know, at what juncture or what timeframe, you know, do we get to that margin? Because currently we are below that. I'll explain you. What happens is, you are right, absolutely. I mean, you know, everyone wants to have a good margin. Of course, we are also working for that. The sales mix of, you know, our sometimes, you know, that also creates this kind of a situation, you know. For a quarter, some of the products sale is, you know, higher, so you get a better EBITDA margins. That's what I'm saying. Overall, when you look at the entire year, I mean, you know, it gives you a fair idea, yes, in what range we are going to be. are you saying that in spite of what we've seen in the first quarter this year, which could have had an adverse sales mix, if we think of the full year FY 2023, we can get close to that number of 40% for the full year? Or I mean, you know, we have another nine months to go. We are like, you know, that's what is like, you know, of course, we will try to see that, you know. We go close to at least the margin which we have last year at least. Are you saying that when you exit, the exit margin will be 40%? Or are you saying that the aggregate for the full year could come close to 40%? I just want to ensure that I'm not, you know, interpreting you wrong. Yeah, I'm saying that the aggregate EBITDA margin could be- For the full year. Close to the last year, FY 2022. That will be somewhere, you know, at the end of the year, FY2023. Okay. You're saying you'll reach FY 2022 margins in Q4, but for the full year margins, FY 2023 will be substantially lower than FY 2022? Is that it? That's one. That one. That is what is one quarter which we are discussing. We have three more quarters. Let's see an average. You know, we should be able to reach to that margin. Well, actually, you will see that there will be an improvement definitely then. Okay. That's heartening to know. Also, sir, you know, there's a pretty substantial fuel ethanol blending program mandate by the Indian government. I presume, you know, it's an enzymatic hydrolysis process which goes into fuel blending also. Do you supply enzymes for those processes, or do you foresee that as a reasonable opportunity to pursue? Well, we tried with couple of big refineries. Some of the product has gone. Mm-hmm. Honestly, this is not our actual area. We are an actual supplier. We are waiting for the next move as the feedback and other things will come up. Okay. From a working capital standpoint, you know, not necessarily only Advanced Enzymes, but everybody, because they are building up inventories, due to the supply chain issues, you know, or receivables are lengthening. It's been a common feature across most companies. How should we think of working capital for you both, you know, in the shorter timeframe for the year and, you know, in maybe a longer timeframe of three to five years? Maybe, it will be in the range of 110-120 days. That is the kind of a working capital cycle for us. Okay. This is sustainable both in the shorter and the longer timeframe as well? Yeah. Right, sir. Thanks for taking my questions. I'll get back in the queue. Thank you. Thank you. Thank you. You've covered almost many of them. Thank you. The next question is, a follow-up from Vaibhav Badjatya from Honesty and Integrity Investment. Please go ahead. Yeah, thanks. Thanks a lot. I guess it's Saturday, that's why I'm fortunate to get too many follow-ups. In terms of, you know, I understand that we are facing all this, cost pressures. In last to last phone call, you know, we asked management as to why we are not able to pass on the cost in terms of higher prices. It was mentioned that this is because of increased competitive intensity. I just wanted to understand which are these players who have entered into the market and creating competition for the current scenario? It's a high margin area now. Everybody is trying to enter into it. You will see that there are a lot of major players also is going to jump into it, into international markets. Mm-hmm. Yeah, it's understandable that. I think given the nature of business, you know, enzyme development process itself is quite long. Sudden increase in competition is unexpected. That's why I just wanted to understand. It's not a competition. What a sudden- What happens, like, if you try to increase the prices, all the people want to reduce their prices because they do have an impact on the other side. They will go to whoever two, three suppliers are there, they will try to work on this, and then you may lose the business because it's a competitive world, right? Mm. The ingredients is the area where you can see that they can cut down the cost. They cannot cut down the cost in traveling, they cannot cut down the cost in the packaging. This is the area where everyone wants to cut down the cost. Lastly on the cash that we have, you know, so we continue to build up cash. I understand that there will be some investments that we will do. But even accounting for that investment, we'll continue to have a very good amount of cash generation, given the profitability is reasonably good even at this declined level. What are your thoughts on capital allocation in terms of distributing the dividend to the shareholders or in any other way moving that cash out of the company in any form? Two answers for you. One is we are already increasing the dividends this year by 10%-11% compared to last year. Our company is constantly increasing the dividend year after year. The second is obviously deploying the cash. When the capital cost is going up globally, we see the chances of possible targets for us may increase quite a bit. Okay. Mm-hmm. We see that is an opportunity for the companies like us who have no issues of the capital. Okay, got it. That's it from my end. Thank you. Thank you. Thank you. We have a follow-up question from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Yeah. Thanks for taking the follow-up question. I said two questions. One, the other operating expenses are up quite sharply for the quarter. I think in the beginning you did give some sort of explanation there. But if you could sort of break that specific cost head down and give us some more or a little more elaborate understanding of how much has come from the legal and professional? And how much has come from increased sales and promotion? Also is this quarterly rate of INR 35 crore under that cost head a sustainable feature for the year. Beni? Sir, your question is about the increase in expenses? Yes. Right. That is, with regard to. The other- Other expenses, right? Yeah. If I look at other expenses of Q1 of this year as compared to Q4 of last year. Q- on- Q, I mean, the expenses is up by only INR 11 million. Right. Yeah. Year-over-year. It's not substantial in the sense No, sir, year-on-year, you see, there are two things. Yeah. Q-on-Q, your sales is down 8%, but still your other expenses are up. If you look at it year-on-year, your sales are down 12%, but your other expenses are up almost 40%. That's what I'm saying. The other expenses generally, you know, I mentioned earlier, you know, kind of, fixed expenses, you know, where you can't do much on it. That's the reason, you know, the sale has nothing to do with assets, with all these other expenses. There is another one area, like for example, power and fuel. If you look into the AP where our JC Biotech plant is there like, there was no power supply for some of the months, like 50% power supply, and then you had to run on the generator, right? If you really look at it, 60, 70, I think around INR 80 million is increased due to because of that. Now I'm giving you the perspective of Q-on-Q. Year-on-year. Last year, the other expenses was about INR 249 million. Yes. This year it is INR 349 million. Here you can see that there's increase of INR 100 million. Yeah. I'll give you some kind of a break up here. Yeah. Our professional, legal and professional expenses are up by INR 22 million. Power and fuel expenses are up by INR 20 million, and taxes are up by about INR 7 million. Lab expenses is up by INR 5 million and INR 10 million is roughly, you know, increase in our sales, promotions and travel expenses as compared to the Q1 of last year. That's how you know overall the increase in expenses. In addition to that, it also includes some mark-to-market, you know, valuation. That has also happened. Because of that, we have some kind of, you know, INR 33 million of like, you know, losses in that sense when you do the mark-to-market valuation. This is an exceptional item in that sense in this particular quarter. You think. This is not kind of, you know, affect fixed expenses. INR 33 million is mark-to-market, which is not. Yeah. there's another INR 18 million, which is because of the power shortages, which in AP, which have now been normalized. Right? INR 8 million. Sorry, not 18. Okay. Total is about INR 20 million. Still like he is saying INR 8 million for one particular company, which is our subsidiary, JC Biotech. Okay. In addition to that, INR 12 million is increase in case of Advanced Enzymes standalone numbers also. All put together is INR 20 million increase in power and fuels. Mm-hmm. Legal and professional, I've already explained INR 22 million. Mm-hmm. There's increase of INR 7 million in taxes, freight, and taxes. Mm-hmm. Lab expenses, travel and sales promotion expenses. I think that's what I have given you the breakup of it. Right. We could say that, you know, that INR 33 million and INR 8 million, so around INR 41 million odd is not necessarily a sustainable sort of increase. One could adjust that out to arrive at what is a more normalized number. Right. Right. Again, if I look at the trend of other expenses across quarters, first quarter tends to be the lowest and then it sorts of peaks into the fourth quarter, although the sales might not, you know, go in that same line. For example, FY 2020 sales across quarter- That's mainly because of CSR expenses. You know, generally what happens, the entire CSR expenses that is spent in the last, you know, I mean that was because of that. You know, you might have noticed last year that, you know, other expenses are up in last quarter. It's been the case right through the last three years. I'm saying that is that also a trend that will continue. For example, if I knock out INR 4 crore from INR 35 crore, so my normalized other expenses is INR 31 crore, but then it will keep on rising Q2, Q3 and Q4. Is that a correct? Yes. Inference? That will, to some extent, yes. Okay. All right. Right. I get that, sir. Yeah. On tax rates, how should we think of tax rates? Because I think your tax rates are, while they are stable, they're not in the 25% or 26% bracket. It is 25%-26% effective tax rate. Okay. All right. Thank you, sir. I'll get back in the queue. If there are more questions, I'll trouble you again. Bye. Thank you. Thank you. Thank you. That was the last question. I now hand the conference over to Mr. Ronak Saraf for closing comments. Thank you everyone for taking your valuable time for attending our earnings call. We will keep you posted for any further updates. I request you all to kindly send in your questions that may remain unanswered. An audio recording and the transcript of this call will be uploaded on our website in due course. Looking forward to host you all in the next quarter. Till then, stay healthy, stay safe. Thank you. Thank you. On behalf of Advanced Enzyme Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.