Ladies and gentlemen, good day and Welcome to the Advanced Enzyme Technologies Limited Q2 FY 2024 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. Ronak Saraf from Advanced Enzyme. Thank you, and over to you, sir. Thank you. Good evening, everyone. Welcome to Advanced Enzyme Technologies Q2 and H1 FY 2024 Earnings Conference Call. I am Ronak Saraf, the Manager, Investor Relations here at Advanced Enzyme. We hope you all have gone through our financial press release and the PPT, which has been posted in the investor relations section of our website. We have with us Mr. Mukund Kabra, Whole-time Director, Mr. Beni Prasad Rauka, Chief Financial Officer, and Mr. Parag Katariya, GM Finance. Today, the management will discuss the performance and business highlights, updates 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 like to draw your attention to 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 may involve risk and uncertainty, our actual performance and results may differ materially from our forward-looking statements. So without any further ado, we shall commence this call. Over to you, sir. Thank you, Ronak. First of all, let me wish everyone Happy Dhanteras and Happy Diwali! I really appreciate you all for taking out your valuable time on this Dhanteras, and I welcome you all to the conference call for the Q2 and half year ended 30th September 2023. I would like to begin the discussion with a quick brief on macroeconomic scenario that are likely to have intended or unintended impact on the business. The economic landscape remains volatile, plus the inflation across the globe continues to challenge economic stability in various parts of the globe. The geopolitical situation also could have some impact on crude prices, increased interest rates, and cautious spending by customer amidst global geopolitical tensions. Specialty chemical industry is experiencing a slowdown on account of the sluggish export demand in some of the geographies like US, Europe, and LATAM. Despite all of these uncertainties, the company's overall performance improved on year-on-year basis as well as on sequential basis. The growth is essentially driven by demand in domestic market and rest of the world market. Quarterly performance. Now, as far as the quarterly performance is concerned, we have achieved top line of INR 1,578 million, growth of 14% on a year-on-year basis and 7% on sequential basis in Q2. Our EBITDA stood at INR 513 million, grew by 29% on a year-on-year basis and 17% on sequential basis. We have witnessed a stellar growth of 34% in the bottom line on year-on-year basis, while on sequential basis, it grew by 20%. There is improvement on margin side, EBITDA margin stood at 33% and PAT margin stood at 22% during the Q2. Due to top-line improvement and input cost stabilization, margin has shown some improvement and is expected to be better going forward. Talking about the segment-wise performance. Human nutrition. The human nutrition segment outperformed during the quarter and remained highest contributor in the revenue pie at 67%. It grew by 13% on year-on-year basis and 7% on sequential basis. Pharma API and probiotics in domestic markets and nutrition in international markets primarily supported the numbers in human nutrition. Animal nutrition. Our animal nutrition business contributed 11% to the revenue in Q2. This segment remained flat on year-on-year basis, while it grew by 9% on sequential basis. Bioprocessing. Bioprocessing segment is continuing the growth trajectory with around 26% on year-on-year basis and 8% on sequential basis, contributing 15% to the revenue. The food business, t he part of food business grew by 43%, and, we have seen a 21% decline on non-food business on year-over-year basis. The specialized manufacturing segment contributed 7% and grew by 24% on year-over-year basis and 6% on sequential basis. We have recently got approval for two food dossiers filed with EFSA somewhere around in 2014. With this, I conclude my remarks and now hand over the call to the Rauka ji, and he will walk you through the financial and key subsidiary numbers. Over to you, Rauka ji. Thank you. Thank you very much, Mukund. Good evening, everyone. I hope you all are in good health, and wishing you all a very Happy Dhanteras and a Happy Diwali and prosperous new year. I am not keeping well, so I have my colleague, Parag. He will take you through the financials and key numbers of our subsidiary, as well as you know, the consolidated numbers. Thank you. Parag, over to you. Thank you, sir. Good evening, everyone. I will take you through the consolidated financials of our company for the Q2 ended 30th of September and for the H1 year of 2024. I will first speak about the year-on-year basis, that is Q2 FY 2024 vs Q2 FY 2023. Revenue increased by INR 191 million, that is 14% from INR 1,387 million to INR 1,473 million. Our EBITDA increased by INR 116 million, that is an increase of 29% from INR 397 million to INR 513 million. Our EBITDA was contributing 29% in the last quarter, the previous year quarter, and now it is contributing to 33% to our company. Our profit before tax has increased by INR 137 million, an increase of 40% from 342 million to INR 479 million. Our profit after tax has increased by INR 89 million, that is a 34% growth from 263 million to INR 352 million. Now I'll speak out about the quarter-on-quarter performance, that is a sequential basis. Our revenue increased by INR 105 million, that is a growth of 7% from 1,473 million to 1,578 million rupees. EBITDA increased by INR 73 million, that is an increase of 17% from 414 million rupees to INR 513 million in the current quarter. Our profit before tax has increased by INR 65 million, that is a growth of 16% from INR 414 million to INR 479 million in the current quarter. Our profit after tax has increased by INR 58 million, a jump of 20% from INR 294 million to INR 352 million in the current quarter. I'll now speak about the performance of our few subsidiaries. One of our subsidiaries is Zitech. Its half year numbers were, it had a sale of INR 308 million, as compared to last year's half year of INR 283 million, a 9% growth. Our EBITDA has degrew over there by 21%, and in the current half year, the EBITDA stands at INR 26 million, as compared to INR 33 million in the previous year. Our PAT has come down significantly. It has come down by 89%, and it is at INR 1 million in the current half year, as compared to INR 12 million in the previous year. Talking about our another subsidiary, that is Zitech. Our half year contributed a revenue of INR 200 million in this current half year, as compared to INR 148 million in the previous year's half, H1. Our EBITDA is INR 22 million in the current half year, as compared to a loss or a negative EBITDA of INR 5 million in the previous half year. Our profit after tax stood at INR 8 million in this H1 year, as compared to a loss that was prevalent in the previous year's half year, that is INR 22 million. Now, I will throw some light on our performance at Evox. Our revenue at Evox stood constant. It was 117 million in the H1 year of the previous year, and it is same at the current half year, that is INR 117 million. EBITDA, this time we are having a negative EBITDA in Evox, now minus INR 4 million, as compared to a positive EBITDA of INR 22 million in the previous H1 year. Our profit after tax stood at minus INR 16 million, as compared to INR 2 million in the last year's H1 year. Now, I will speak about our, the... We'll speak about our largest product, that is the anti-inflammatory enzyme. In this period, we sold INR 365 million worth of this product in this current quarter, as compared to previous quarter, that is Q1 of FY 2024, where we had sold INR 352 million worth of material. On a year-on-year basis, we had again sold INR 352 million worth of material of this product in the last year, September quarter. When we put across a picture for half year, in this half year, we have sold INR 716 million worth of product, and in the previous year, it was INR 631 million. From a percentage contribution to the entire revenue, our re... It contributed to 23% in the current half year, whereas the contribution was 24% in the last year's H1. Now, I will give you some highlights about our top ten customers... The top ten customers have contributed 27% to our total revenue in this current year, current H1 year, and it was almost similar, standing at 27% in the last year's H1 year. The top ten product has contributed 48% in the H1 year, and it has contributed 45% in the last year's H1 year. Now, about the B2C segment. The B2C segment has contributed $1.14 million as compared to $1.11 million during the same period in the previous year. Now, I'll throw some light on the research and development expenditure that we have spent during the half year. During the H1 of the year, we have spent INR 121 million in the current half year, as compared to the one hundred and twenty-one million that we spent in the last year. Whereas the CapEx in this current half year is INR 5 million, and in the last year's H1 year, we had spent INR 28 million as CapEx. So on a totality basis, when we see including the revenue expenditure and the CapEx, in the H1 year of this year, we have spent INR 126 million, as compared to INR 148 million in the previous year's H1 year. On a percentage basis, when we look at the total CapEx or total R&D spend that we have done as a percentage of our revenue, it stands at 3% during the period, and it was 4% during the last year. Now, I shall keep the Q&A session open for everyone. Thank you. Thank you very much, sir. Ladies and gentlemen, we will now begin with the Q&A 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 only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Thank you. We take our first question from the line of Jayram Gilani from Swan Investments. Please go ahead, sir. Hi, sir. Thanks a lot for this opportunity, and wishing you and the whole team a Happy Dhanteras and Happy Diwali! So I just have a few questions. So what was our capacity utilization for this quarter? So, Gilani, it's, like, very difficult to say about capacity utilization, but the capacity utilization has increased from the year, and we are seeing a, we are seeing a more capacity utilization as we are moving forward. So probably like, by the coming quarter ends, we should be reaching about 70%. Okay, sir, basically, like, since I just, I'm a bit new to the company, so please pardon me on this, but I just heard that we haven't spent a lot on CapEx this H1 of FY 2024. So what is the peak revenue that we can achieve from the current capacities? And what are our plans going forward as to which segment is going to be the focus area? So, as far as the capacity utilization is concerned, whenever we will reach to around 80%, we will start building up the further capacity, and that's where we stand all the time. Because establishing the capacity also requires about 1.5 years time, so that time we will have to utilize for that. As far as the H1 is concerned, like, we are, we are always very low on the CapEx. The CapEx, what, like Parag has mentioned, is more on the R&D front, basically. And, we expect about INR 10-15 crore, which is a maintenance CapEx every year, which we are spending for the last few years. Okay. Yes. What can be the peak revenue from the current capacities? It's difficult to say, but I would say like maybe INR 800 crore-INR 900 crore, somewhere around there, because it depends on the product mix, how it moves on. Got it, sir. So like, because the chemical market, like, the overall macroeconomic demand is low, but when do we see that our, we can return to our older margins levels of 40+? Because I see that we've been, like, we were in that range for quite a few years. We expect the margins to improve further as we move on into the coming quarters, but it's difficult to go above 40% as of now, in the near future. That is what we can foresee right now, but we expect to improve it further as we move on into the next and next quarter. Okay, sir. That's it from my side. Thanks a lot, sir, and wishing you a whole team Happy Diwali. Thank you. Happy Diwali to you as well. Thank you, sir. The next question is from the line of Mr. Abhishek Das from Nirmal Bang Equities. Please go ahead, sir. Yeah, hi. Thanks for the opportunity. Just, first one from my end is basically, sir, can you elaborate more on the approval for two dossiers that we have received, actually, which you guys have filed in 2014 on the foods front? Can you elaborate on the market opportunity there, and what sort of revenue should we expect, and from which year can you please throw some light on that? We filed somewhere around 14 days here in somewhere around in 2013, 14, and onwards. It's always taken a long time from the EFSA. We just recently, we got the 2 products, and I think, like, there is a little different linkages. I need to go through that. There is a, there is somewhat demand is there, but I need to really, look into it. I can't give you the quick answer right now. Sure. So, okay, so in terms of the products that got approved, I mean, the approval products, do you, do you know any ballpark number in terms of market size, currently in Europe for those products, similar products, let's say? There is a- From an industry perspective. -different areas, different areas, and those areas are very difficult to talk about. Some of them, the use, some of them are in the biocatalyst area, some of them are in the food area directly. But to achieve the EFSA that they were approved itself is a bigger achievement. In my mind, like, we can, we can like, going forward, we can like, even like, make this as a business case to get the other people's extra data as well, get them approved. So, the achieving the EFSA approval itself is a big step. How much is the market and what is the market is very difficult to say at this point of time. Sure. Okay, but considering the approval and also you said that by end of Q3, we'll be nearing to almost 70% utilization. So, is there any change in terms of CapEx for maybe if not 2024, but for FY 2025, 2026, do you see any acceleration in CapEx as compared to our old levels? We won't be needing a very high CapEx, even though we decide to go for the, for the expansion. Generally, we expect, like, somewhere around whenever we plan to do it, maybe 40, 50 years. Per year, right? No, not per year. For one or two years. One or two years. Okay a nd last one from my end, sir, can you share more light in terms of the demand outlook, especially on the human nutrition side? I mean, I believe that we are doing well in terms of animal nutrition consistently on a quarterly basis, but the kind of quarterly run rate we are at in terms of the nutrition segment in international markets. So can you throw more light, I mean, how we should look at this segment from next one or two years perspective, both on the revenue growth perspective, and also is there any challenges we are facing in terms of pricing because of the competitive intensity and stuff like that? So as you see, like, our domestic, domestic on the nutraceutical side has, like, improved. Of course, within domestic, there are a lot of different parts, which is like, pharma, I mean, like, API, the biocatalyst segment, the probiotic segments, all the segments started contributing somewhat. The H1 was like, as we were, like, talking from the last two, three quarters, that, like, the international, international human nutrition, particularly U.S., will slow down. And, this is the same case this quarter. But as we move on, like, from the coming quarters, we expect, like, U.S. to start also, like, contributing, and they should come back. And we're talking from last two, three quarters that we expected the H2 of this year, the U.S. has to pick up. We can see those signs at this point of time. But again, again, there is a there is a lot of, like, global global war, and all of those things are moving right now, and we don't know how it will impact or what it will impact. Given the normal circumstances, we expect a better growth from the international market as we move on. Okay. And, sorry, one last one. I, we have delivered some improvement in sequential basis as far as margins are concerned, and you have highlighted this earlier as well. But just one question, considering all these near-term challenges, do we see any further upside to this 32%-33% number, and or, or, or you think it will take some more time to get back to our old levels, let's say, 35%-40% range, maybe in 2025, 2026? We expect that we should improve from here onwards as we move on to the next quarter. As I was in the last few conferences and few investor calls, I already mentioned that as like the U.S. starts contributing towards this, we should have better margins, and we expect this should happen from this quarter onwards. So, we expect sequentially, we should get back to those levels, but it will take some time. Sure, sir. Thank you so much, and Happy Diwali to all of you. Thank you. Happy Diwali, Abhishek. Thank you, sir. We take the next question from the line of Aditya Shah from Vikram Advisory Services. Please go ahead. So my first question is about the market share that we currently have in the products we deal in India. And what is the vision that we have to have a particular market share in five years from now? That's my first question. Happy Diwali to you. First of all, like, we command good market size, and particularly the product segment where we are in India. We maintain more than 80% of the market share, and we will continue to do that, as far as this is concerned, but the growth areas, as we were like talking from the earlier, is going to come from the biocatalyst area, from the food area, from the animal food area, probiotic areas. If we really look into the all of these areas, those are growing, particularly the food area has contributed more than 43% in this quarter. And we are entering on all the segments. So broadly, if am I right in assuming that, wherever the market of, enzymes market or probiotics markets reaches in 5 years from now in India, we would at least command a market share of more than 50%-60%, right? In most of the areas we operate. Yes, most of the areas where we operate. Difficult to say on the probiotic side, because probiotic sides, we are very late, and there are a lot of players right now, so I won't comment on the probiotic side. But yes, on the enzymes front, yes. Okay. Sir, my next question is that today we see a lot of global majors who are already large in size merging themselves, like for example, Hansen and Novozymes, DSM already merged with Firmenich. So, and there's obviously AB Enzymes, which is Associated British Foods. So, how do we see competing with these global majors on a global level? Because today we have 50% of revenue coming, or 50, more than 50% revenue coming from rest of the world, right? So how do we see ourselves competing with them, and do we have a cost advantage versus them, or do we have a product quality advantage versus them? We compete with all of these people on the global layer where, like, we feel like we have a strength. The areas which we don't feel we are on the strength, we don't go and, like, conquer. So the strength comes from a lot of different areas, from like some of the product security, price comparative. We are not cheap producers, but we are like a quality producers, right? And we can compete with these guys on the global level. We are present, and we compete with them only in the areas where we feel comfortable. Right. So these mergers between these majors won't, is not really of much importance you feel today, for us? As of now, I don't feel like that is much of importance to us. In fact, like, we really look at it into their side. Their cost structure has gone out, and they'd, like, try to get into these kind of mergers to take some advantage. But as of now, we are confirmed we are okay. Right. So, regarding that, let's say for growth in the coming years, let's say 5, 10 years, whatever, do you see this business area as a enzymes and probiotics as a whole for growth, is it more possible towards organic growth or is it more, via acquisitions? So acquisition is going to be one of the strategy, but our major focus is always on the organic, and we always focus more on the organic. Right? Okay. Fine. That's it, sir. Thank you. If I have more questions, I'll come to thank you. Thank you, sir. Thank you. Thank you. Thank you, sir. We take the next question from the line of Gaurav Nigam from Tunga Investments. Please go ahead. Yeah, thank you. Thank you, sir, for taking my question. Sir, our first question on, can you just, in the human nutrition segment, can you, share the numbers of India pharma business and U.S. nutraceutical business, for the Q2 and, H1 on a YOY basis, sir? Sure, I'll do that. The pharma basis, pharma sales in India is INR 593 million in the current quarter, and on year-on-year basis, it was INR 440 million in the previous year. Whereas the international sales is INR 466 million in the current quarter. It was INR 499 million in the previous, year-on-year basis. So on totality basis, our revenue has increased by 1,000, is at INR 1,060 million in current quarter, and it was INR 939 million in the previous year, September quarter. That is how it is standing. Now, at the biotech level, in India it is INR 69 million sale in the current quarter. It was INR 5 million on year-on-year basis. The biocatalysis sale is at INR 77 million domestic in the current quarter. It was 66.65 million on year-on-year basis from September 2022, September 2022. Our pharma sale is at INR 447 million in domestic in the current quarter. It was INR 370 million on year-on-year basis on September 2022. And with respect to the international sales, our, probiotic, sorry, our pharma sale was INR 447 million in the current quarter, and it was INR 459 million in the previous, previous quarter, that is September 2022. Probiotic sale on international was 11 million in the... is 11 million in the current quarter. It was 14 million in September 2022 quarter. And biocatalysis, international sale is at INR 8 million in this quarter, whereas there was no significant sale in the last year's, September quarter. Got it, sir. This is, this is really helpful. Sir, one more question on the U.S., U.S. nutraceutical business. I think in the past few quarters you have been alluding to it, coming back up. I understand it is still taking time. I was just wanted to understand, what are the main reasons, which are still, taking some time for this segment to, to see the growth? Like last time, like we mentioned, like, overall, like the, there is a slowdown into the demand which is there. Mm-hmm. And we were like going into some innovative ideas and innovative products, and those take some time. So, as we were like, the best sharing time was about 5-7 months. And now, like as I was telling from the earlier also, now clearly we should start seeing those fruits from this quarter onwards. It should gradually start building up. Got it. Just a follow-up on this answer, sir. When we think about growth, is it the end market growth which is causing the problem? Or, we, like from a market share perspective, is there a decline in our market share in this U.S. nutraceutical, or it's only the end market which is causing this growth issue? I think it's the end market issues which is more there. On the demand side, basically the demand has gone down to some level. But as I was telling from the earlier also, like, we are improving with the, with the new segments which we launched, and with the innovative segments what we did. Mm-hmm. That is what I was saying, from this quarter onwards, we should have back on track in the international market. Got it, sir. Sir, one more question on the animal nutrition segment. We started seeing some spurt of growth in that market, but I think from last quarter and this quarter, it has been has kind of started muting. So is this like because animal nutrition is segment which is both India and non-India segment, right? So where is the which market we are seeing this kind of pressure, and what is our plan on for that segment, sir? The growth is mainly going to our focus and the growth is mainly going to come from the international market, which is there, and that growth is still there. The domestic market is little bit more under the pressure because of lot of different players and different things, which are there. So, we are working on the domestic market as well, because there is a price pressure also in the domestic market. International market is, we find that there are, like, its own challenges, which are there. For example, you go into the African market like Egypt and all of those areas, you see, like, there are a lot of payment problems are going on. So, we go to the Argentina and those areas, and you will find that there is no dollars available to supply. So we don't want to, like, deal into those areas at this point of time. And that is our, like, that growth we cannot really see right now, which we were, like, expecting to see, because we cannot, like, supply the material and then, like, wait for the payments or the... We don't want to create a bad debts. So those are the challenges at this point of time, and we'll see how the macroeconomics and the other areas looking too, as we move on. Got it, sir. Just a final question from my side, sir. When I look at the Asia ex India business, which segment do we operate here, sir, and like, which is it more like Southeast Asia? What is this segment which has suddenly started performing for us? Just wanted to get some flavor on this Asia ex India business. So it takes all the registration in other areas, right? So we are, like, trying to get the registration. It's a long process. And there are a lot of different players as well. So once you get registrations and other things into these areas, which we are working from last few years, you start getting some of the business and some of the market shares from the Asian areas. Yeah. Got it. But, which segment it would be? This would be human nutrition, animal nutrition or, like, industrial? Which segment- I'm talking about animal, animal nutrition. I think your question was more on animal nutrition on this side, right? No, I was more looking at the geographical segments of the entire Asia, that segment that you report. In that segment, that you can see a growth coming this quarter. So I was just wondering in, like, within that Asia geography that we talk about, what is the underlying business composition? Is it human nutrition, animal nutrition or industrials? Which segment is this largely catering to? It's more on the use. Actually, food, bioprocessed food. Mm-hmm. Okay. That bakery segment, sir. Yes. Okay. Understood, sir. Thank you. Thank you for taking and answering my question. Thank you, sir. Thank you. We take the next question from the line of Yash Tanna from IIFL PMA. Please go ahead, sir. Yeah. So, thank you for the opportunity. I'm slightly new to the company, so pardon me if, you know, the questions have been answered. So my first question is: If I look at the long-term trend, probably a three-year or five-year CAGR, on the U.S. front, we have been relatively flat. And I believe there were reasons for that, probably a loss of customer and then this slowdown. But the U.S. being probably one of the bigger markets globally and one of the bigger markets for us as well, how do we see growth in this segment coming in? And I think we have mentioned that that's a high profitability, high realization business as well. From a medium- to long-term perspective, probably a 3-5-year perspective, what are the new segments or what are the current existing segments, and how are we seeing growth in this side of the business? So as we, like, from the mentioning from the last time, like, we launched some of the innovative products, some of the innovative areas into the nutraceutical areas, and we see that those products should give us the growth as we are moving into this quarter. So we can see like some of the options, but, we need to wait and see to come out, like what will be the growth and what will be the percentage. As of now, it's very premature for me to comment on that. Right. And probably, I mean, I'm just wondering that the sort of growth that we have shown in other areas, probably India, and Asia or something, are we thinking that we can replicate that sort of a growth in U.S. as well? See, the U.S. market is different and Indian markets are different. In the Indian markets, we are not operating exactly into the blends area, but more into the API areas or the or the people who are making into the API segments, where we are supplying enzyme. So those are the like, typically, little bit different businesses and different dynamics play into those areas. Right? So, but we expect a better growth as we move forward into the U.S. market. That's all I can say right now. Got your point. And, on the other one, I think you answered to another participant, on the merger between the global players, and they are talking about, cross-selling opportunities, probably somewhere, where, you know, Novozymes is doing business, and, Hansen is not doing business, and vice versa. So, if, if we see, where they can cross-sell, between their clients, how are we planning to, you know, sort of combat this, you know, the pyramid of company that they will make, after the merger? I don't feel like there is any problem into these areas, because these areas, our presence was very negligible when like the Novozymes and the Christian Hansen were. The major competition which was there from the Novozymes was in the food areas. Christian Hansen, we really don't compete to many of the places at this point of time. So it really doesn't matter, like whether their businesses are merging or not merging. Sure, sir. Got it. Thank you for your effort. And one final question on the margins. I believe you mentioned that, you know, it might be a little difficult to go above the 40% mark, whereas in the previous few years' calls, we have said that our business is a business which can make margins above 40%, and you had given a range of 40%-48% in the previous calls. So I'm trying to understand what has changed there. Is it the pricing pressure from our clients, or is it something on the cost side that we are saying that now going above the 40% mark seems a little difficult? There are a lot of factors which are there. A few of them are like we already mentioned, like, the nutraceutical apps should be better as we move on. There are, like, certain other businesses which were being added up into the main competition, which were there earlier, like, like the specialty business or the other businesses which are on the very low margin side. So overall, the compromise is some, some kind of a margins when we talk about the, EBITDA versus like your top lines. It, it is difficult in the sense like, as of now, like, we just want to hold, but we'll be able to go when we will be able to go above 40% or something like that in the future. So, sir, you're essentially saying that the business mix has changed towards, towards sort of lower margin products, the overall business mix? Some of them are on the lower side, yes. You are right. I think. Yes, I take, for example, and it takes like some time, like, for the core business to really take care of those areas as well, to reach those goals. So, if one final question, if I may. So we said we didn't mention our capacity utilization, but we said that in the next probably coming few quarters or years, I didn't get that correctly, we'll reach about 70%. So what sort of cost advantage, I mean, what sort of a cost are fixed in nature versus variable in nature, where we'll be able to see, you know, some sort of operating leverage play out as our capacity utilization increase? I don't feel like too much of a difference is going to make as our, like, capacity is going to increase. Some of them will always improve. As you always see that if our, like, top line grows by one, then our bottom line goes up by 2.5 times. So those, those ratios are always there, and those, like, when the capacity utilization goes up, those ratios are always there. So those are the coverage what I can share. Sure. Thank you, sir, and best of luck, and happy Diwali to the whole team. Happy Diwali to you as well, Yash Tanna. Thank you. Thank you. Before we take the next question, a reminder to all the participants. If you wish to ask a question, you may press star and 1 on your touchtone telephone. We take the next question from the line of Umang Shah from Banyan Tree Advisors. Please go ahead, sir. Hi, sir. Am I audible? Yes, you may be. Yeah. Hi. So, sir, the largest product that we have, which is a pharma, Serratiopeptidase, right? So, sir, that's sold only in the Indian markets. And any reason why we do not export this product? We do export this product. It's- Please read it again. So what would be the breakup between exports and domestic? But the majority sale comes from the Indian market. We have also filed this product for the novel food. And we are expecting some clearance. Earlier, we used some selling to Europe as well. But the Europe sale has gone down because of the people are waiting for the novel food. There is a requirement of novel food. So we did file this product for the novel food, as well as we are filing this product into some of the bigger Asian markets. As of now, the export market sale is somewhat into the U.S., in the nutraceutical areas and other areas, which is on a lower side when we talk about in relation to the domestic sales. Is this product sold in the U.S. market also? Not directly as the API, but mostly like into the nutraceutical goods and other areas. Right, sir. And, sir, second question was, sir, the number of products that we have in our total, total number of products that we sell have more or less remained consistent over the years, right? So, sir, just wanted to understand how frequently do these products like what's the life of these products? What is the rejection date when you're trying to launch a new product, new, new product in the market? If you could give some insight on the same, it would be really useful. Sorry, can you please repeat, Umang Shah? It was very- So the number of products that we have are more or less consistent for many years now. So just wanted to understand, are we introducing new products in the market? And if yes, do they get rejected? So just wanted to understand the new product turnover that you have in the market. Sure. There are two types of new products which will go into the market. Few of them are the plants and the, and few of them are in the specialized enzymes which we make. The list what we mentioned, I haven't seen them recently, but I think, like, it was 68 plus or something like which we mentioned. And probably that is constant from some time. But it is not a constant. Actually, when we talk about plus, we think that, like, it's taken care. We haven't really updated the numbers. We do come up with the new products every quarter. There is a lot of R&D and lot of work is always going on, and every year, like, we are improving the product list by at least 8-10 products. Right, sir. Sir, and one final question was, we own, we own 60% of Advanced Bio-Agro, and who owns the remaining 40%? 40% is owned by Mr. O.P. Singh. Okay. And, like, how does the, how, like, how i s that person the founder, or how does this work? So, on the Indian market, like, all the sales that is being, like, monitored by the Mr. O.P. Singh, who is a veteran into the animal food area. Okay. Okay. So does he also participate in our business, or, is he the owner? I mean, is he someone does not participate? I didn't get you, Mohanji. I'm saying, is Mr. OP Singh actively involved in the business? Yeah, he's the managing director of the company, and he takes care of day-to-day affairs of the company, and he more focuses on sales and marketing. Got it. Thank you so much, sir. Thank you. Ladies and gentlemen, we take the next question from the line of Mr. Rohit from Progressive Shares. Please go ahead, sir. Hi, sir, a couple of questions. The first one, while we are expanding the enzyme libraries, what sort of opportunity do we see in biomass processing, saccharification, and bioethanol production? If you can take us through the opportunity in terms of INR million. Honestly, like, our major areas of focus were, like, food, biofertilizer, and, like, probiotic area. Of course, like, we are working on the saccharification areas. We are developing some of the enzymes right now. We are, like, looking into the market size, market potential, how do we take the, into the some of the geographies, if we can. And we are working into the, all of these areas. Bioethanol is still like a, for a longer distance. As of now, like, we are developing some of the components which may require. We are talking with a few bioethanol companies, but I cannot talk about what can be the business or not. If the businesses come, this will be additional, and that will be a good surprise. That, that is great to hear, sir. So we spoke about probiotics, and I know that this is still an untapped business for us, and there seem to be so a lot of opportunities. Can you take us through what role can ETL play in this? If you can share some numbers on that. Most of the probiotics, like, what we focused is, like, we believe to that the combination of probiotics and enzymes can be developed. So a lot of nutraceutical products that we developed is more like an a combination of that, probably into the some of the areas they really work very well together hand to hand, and that is going to be our major focus areas. Probably we may not be able to see into the individual numbers, because here when we talk about the probiotic number, those comes only into the, those comes only like when it is a kind of a single product sale, which is there. But, we see that there is a lot of opportunity in the combination of this, developing the new probiotics, which can, we can use it for our nutraceutical areas as well. Okay, sir, how many of these, combination molecules or enzymes or probiotics are currently in the pipeline? If you can share that. Oh, there are a lot of products which we sell into the nutraceutical product. Maybe more than 50%-60% of the products are with the combinations. Okay. So if you see the global probiotic is growing at around 7.5%, CAGR, and if you see the global enzyme market, it is growing at somewhere like 3.5%-5%, CAGR growth. Do you think that we will be growing slightly better than the industry rate, or do you think that we can grow at a rate much faster or maybe double the rate of the industry level? What I can say is we will do a significantly better with like what the numbers you are giving, 7.5% or 3%-5%. That's what I can say right now. Okay, sir. And, my last question is, if we, if we observe, the return ratios, they have been, declining from around 24, 25% ROCE to somewhere around 11% now. And, the ROE has also declined from 18% to somewhere like 9, 10%. So what sort of efforts are we putting, to kind of, revert back to these, ranges of 20-24% ROCE and, maybe like around 16, 18% ROE? So Beni is the right person to answer this. Beni? So the efforts are like, you know, one thing, as Mukund has already mentioned, you might have seen on quarter-on-quarter, we are progressing, we are improving our EBITDA margin. That is one. And apart from that, you know, we are sitting on a large scale, cash. So those funds, you know, we have to use over a period of time to see that, you know, we can get the kind of returns which, I mean, you know, you are comparing with the previous year numbers. So far, we are not able to get any kind of opportunity where, you know, we can invest that money. So, you know, we can expand our... maybe it is a kind of inorganic growth. So- Mm-hmm. We are working on that, and we are exploring a lot of such opportunities. Meanwhile, you might have also noticed that, you know, this year the company has given a very handsome dividend because Yes, sir. You know, we also understand this point. So accordingly, we are addressing all such issues, and hopefully in, you know, maybe, if, if not in couple of quarters, it may be taking a year or so, so where you will see a lot of improvement going forward. Sir, if you are looking at some sort of a soft diversification, will it be in the same core domain as us, or will it be looking at something else outside the- No, it's in the same domain only. It's our core business, so we will be always working on our, you know, core areas, which, as Mukund has already mentioned, it's like, you know, expanding our animal feed business, nutraceuticals, probiotics, biocatalyst business. So wherever we see any kind of, you know, opportunity where we could, definitely add a lot of value to our stakeholders, so we will definitely work on it, and we are already, you know, working on, such issues. Okay, sir. That's quite encouraging, sir. Thank you. Thanks a lot for answering my question. Thank you, sir. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one on your touchtone telephone. Participants, if you wish to join the question queue, you may press star and one on your touchtone telephone. We take the next question from the line of Shreyansh Gathani from SG Securities. Please go ahead, sir. Hi, Happy Dhanteras, happy Diwali, sir. I had a couple of questions. The first one was on the R&D spends. So in the last few quarters, we've been mentioning that you want to up the R&D spends as a percentage of revenue. So as revenues go up, you know, we're seeing, like, pretty much stagnation in terms of the R&D spends, even in terms of in rupee terms. So as a percentage, it's been going down. So just wanted to know if, you know, we should expect an increase in that area, or are you just looking at a similar level as the current spends? So Shreyans, Happy Diwali and happy Dhanteras. Thank you. Yeah, so when we talk about R&D spend to go up, really, like, we are expanding, we are coming up with the R&D center, which we are building up, in Nashik, and the construction and the capital work is going on. So some of the, some of the R&D spend is getting into the capital work right now, which we are spending. Once those R&D centers will be operational, probably, the, in terms of rupees or in terms of, like, absolute numbers, the R&D spend should go up. You are right, like, when we talk about on a, with the growth numbers, clearly those percentages may remain flat, but we need to see. Okay. Because the R&D center that you mentioned in Nashik, on the last conference you said, it's just starting construction, so that will take time to improve, right? Probably like, down 1.5 years down the line, it should start, like, operational, the first phase of it. It will take. It's a little longer project, maybe 4-5 years, when we will, like, develop the complete one, but we should see, some expenses will start going up from there... 1.5 years, somewhere around there. Okay. So until a year and a half, there'll be more capitalization than income at the expenditure side of it, right? Yes, that's correct. Okay. And my second question was on the capital CapEx for capacity expansion. So when you mentioned that it'll, it is around INR 40 crores-INR 50 crores, so how much in terms of percentage capacity would that shou- how, how should we look at that in terms of, you know, like, current capacity is certain amount? Like, how much would that contribute to in terms of additional capacity? So maybe look, we can look into 25%-30% increase with them. Okay. Okay. And, the last question, so if you could just, give, a small update on how the Veda brand is doing, in India? So Veda brand is, we want to look really, like, as we were, like, mentioning, like, we don't expect too much of a sale in the first one or two years, and we'll see how it works. At this point of time, it's like some of the demand is picked up. I don't have an exact number in front of me, but those numbers are really, not really significant. When we talk in the percentage terms, clearly it is better at 200, 300%, but in terms of, like, numbers, those are not really significant. Okay. So just if I may ask one more question, so that's on JC Biotech. So, you see the performance has degraded, you know, over the last in this quarter versus the previous year. So do we expect a certain improvement back on that front? We expect that as we move on into the further quarters, clearly it should improve. There are some kind of, I would say, repair and maintenance expenses, which are on the higher side into the last 2 quarters, which comes up 4 or 5 years based on something. So we expect as we move on, clearly it should improve. Okay. So the main margin deterioration mainly because of the repair and maintenance cost is what you're saying? Yes, in the last two quarters. Okay. So that is done now, or is it good? I think more or less it's done. Okay. Thank you. That's all from my end. Thank you. Thank you. Thank you. We take the next question from the line of Mr. Aditya Shah from Vikram Advisory Services. Please go ahead, sir. Thank you for the follow-up, sir. My first question in the follow-up is regarding the sales growth that we expect ourselves to achieve, CAGR in the next five years. The second question is regarding the ROE point that the previous participant pointed out. How do you view the goodwill that we carry about around INR 320 crores-INR 330 crores on our books? What is your view of carrying it versus writing it off? What is the ideal fixed asset turnover that we expect ourselves to achieve before we, you know, do some more organic growth? Beni? Yeah, I think, the question I, whatever I have understood so far, first thing I would like to address regarding the- Goodwill. The goodwill part of it. So goodwill, as of now, I mean, you know, there is no impairment. Mm-hmm. Going forward, you know, because every year the goodwill is to be tested, so- Mm-hmm -whatever, like, investment we have done in our subsidiaries, so we have to do the fair valuation of that. If there are some, you know, such indicators, so that will be like, you know, taken care going forward when we carry out that detailed exercise of- Mm-hmm -you know, impairment. So as of now, there is no such challenge as far as goodwill is concerned. And, the another question I might have missed. Fixed asset return, fixed asset. Oh, fixed asset turnover. What is the ideal fixed asset turnover that we expect ourselves to maintain or achieve? And once we, what is the targeted ratio before which we, you know, have to go for further CapEx? So, I mean, it is not turnover. I mean, as such, you know, directly linked with the kind of a turnover and fixed assets. As Mukund has mentioned, when we reach to a capacity level of, say, about 80%, that is the time, you know, we have to think about it. Yes, we might have to, you know, add some more capacity. So right now, I mean, you know, it, it is likely that we, whatever he has mentioned, it will be reviewed in the next year. As of now, the capacity utilization is not so much. And another point I think I would like to draw to your attention is when we improve our productivity, so it definitely again adds to our capacity. Right. I mean, you know, as we go forward, I think, we will be able to see that, you know. As such, there are no basically, you know, that the turnover is based on some kind of a investment in the fixed assets. But generally, I have seen it is likely, you know, about two times or unless until you do lot of trading, because it is capital-intensive company, I mean, you know, project as such. Right. But sir, in my observation, just a suggestion that we have observed is that usually when there are 100% subsidiaries of the parent company- Yeah. It makes absolutely no sense, you know, to carry on having the goodwill, because it always drags the ROE. So is there any value that we see in continuing with the goodwill on our books? Because I think the major goodwill that comes from is Advanced Enzymes USA, which is our 100% subsidiary. Correct. Absolutely right. So, what is the thought process behind carrying it? Because it is just dragging our ROE. If you bring it down by INR 300 crore, you just imagine the ROE just jumps up to 14%. No, I agree with you, but then, you know- Accounting standards. This is the requirement of accounting standards. Whenever we have acquired these companies, whatever value we have paid to acquire those businesses, you know, we have allocate certain amount. Agreed. So after doing that allocation, whatever is left out, that is to be booked as, you know, goodwill. So, Agreed. Yeah. I mean, if you write it off- Usually. So usually, usually in my experience, I'm just giving you a suggestion. You can have a board-level discussion. But usually when acquisition happens, obviously there is a goodwill part, but usually managements write it off because it makes no sense carrying it. I agree. It just drags down the ROE. I agree. Because it is your 100% subsidiary. Okay. Yeah, while acquiring it, you have a goodwill, fair? But after acquiring it and having the goodwill on the books sitting over there and dragging our ROE, it just makes no sense. I mean, you might be saying from your perspective, but, you know, we right now see it as, a- You can have a board-level discussion on this topic, sir. That's all I'm suggesting. Yeah, I know. But then we have to also look at, you know, whether as per the accounting standards, can we do such things? So that will be definitely, you know, another way of looking at it. So as of now, we don't see any kind of impairment. So impairment, if indicators are there, then that is the right time where, you know, one can take that call. Sure. Sure. No problem, sir. You can, you can think about it, what I am saying. And any other things or whatever you are- Yeah, yeah, yeah. The first question, sorry, I forgot, was the sales growth that we expect ourselves to achieve in the next five years, CAGR. CAGR? CAGR, yeah. Five years, sales growth. Yeah, I mean, that I think Mukund will be able to guide you. Okay. So we, we will be expecting in a double digit. I won't be able to give you the exact number as of now. O Okay, sir. Thank you. Thank you, sir. Ladies and gentlemen, that was the last question for the day. I would now like to 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, and happy Diwali. Safe Diwali to all. Thank you so much. Thank you. Thank you. Thank you. Happy Diwali to you. Bye-bye. 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.