Ladies and gentlemen, good day and welcome to the Aether Industries Limited Q1 FY 2023 earnings conference call hosted by HDFC Securities. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nilesh Ghuge from HDFC Securities. Thank you, and over to you, sir. Thank you, Michelle. Good evening all. On behalf of HDFC Securities, I welcome everyone to this Aether Industries conference call to discuss Q1 FY 2023 results. It is a pleasure of having with us the top management team from Aether Industries, represented by Dr. Aman Desai, Promoter and Whole-Time Director; Mr. Rohan Desai, Promoter and Whole-Time Director, Aether Industries; Mr. Faiz Nagariya, CFO; and Mr. Ravi Bhojani, Lead Investor Relations for Aether Industries. Without further ado, I will now hand over the floor to the management for making opening comments. Over to you, Ravi. Good evening everyone, and thank you, Nilesh, for the introduction. On July 25, 2022, our board has approved the results for first quarter FY 2023, which ended on June 30th, and we have released the results on the same on the stock exchange as well as updated on our website. Please note, this conference call is being recorded, and the transcript of the same will be made available on the website of Aether. Please also note that the audio of the conference call is copyright material of Aether Industries Limited and cannot be copied, rebroadcast, or attributed in press or media without specific and written consent of the company. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are predictions, predictions, or other estimates of a future event. These estimates reflect management's current expectations on future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual result to differ materially from what is expected or implied. Aether Industries or its officials does not undertake any obligation to publicly update any forward-looking statement, whether it is a result of a future event or otherwise. Now I hand over the call to Dr. Aman Desai to share the updates. Over to you, Dr. Aman. Thank you, Ravi. Good evening everybody. I hope everybody is doing well, and I'm very happy to connect with you, discuss the performance of our company for the first quarter of the fiscal year 2022-2023. Let me begin by sharing the ongoing expansions and the current near-future strategy of the company going forward, and then I'll request our CFO, Mr. Faiz Nagariya, to cover the financial highlights for the period under review. T hen finally, Mr. Rohan Desai will wrap up and talk on a very high level about Aether's business. I wanted to kind of touch base upon the various expansion activities that we have already talked about in the previous calls and that are going on aggressively on the R&D front and the pilot plant and the production front. T hese are on track and on plan. The third manufacturing facility is Site 3, which is the next Greenfield manufacturing facility, which we have talked about always and showed to many of you, is completed in the civil construction, and we have started installing the reactors in the facility. We are on track and on plan to finish this new Greenfield manufacturing facility and commission this facility by the end of this calendar year, December 2022. We expect to have revenues contribution from this new manufacturing facility in the fourth quarter of this fiscal year, that is January, February, March of 2023. As mentioned before also, we are launching five new products in the facility, which combined have a conservative market potential of about INR 1,200 crores imports into India, which can be proven by any simple data analysis of import data. The average selling price of these five new products will be higher than the current product basket that Aether has in the large-scale manufacturing business model. Also then looking at the demand of these products, which we are going to be manufacturing and launching for the first time in India, we are launching one of these products, one additional product of these five products in the current manufacturing facility on a limited scale to validate the process in the existing manufacturing facility at production scale so that when the new plant is commissioned, we hit the ground running in the production and we can immediately start the revenues from that particular product, which will be the first one in the Greenfield site. Very interesting and very recent development in the Site 3 manufacturing site is also that we are in advanced discussions to acquire a plot of land, which is about 2,500 square meters, which is right adjacent to Site 3. This is very interesting because this will be right adjacent to Site 3 and therefore will share all the utilities and share all the resources of Site 3, and we don't need to go into an additional Greenfield manufacturing site for the same. T his will immediately give us increased capacity from the Site 3 itself. In the Site 4, that we have also always talked about, documentation is well in process and we are kind of wrapping the documentation up, and we will be starting the civil work and the construction work in the Site 4, which will be the second Greenfield manufacturing site after the monsoons end. A ggressive and expansion plans on the production side, and we are on track and on plan. We have already finished a double expansion of the R&D, as we have already mentioned in previous calls, and that is fully commissioned and fully handed over, a nd we are in the process of finishing the triple expansion by the end of the next month. We'll be installing 55 new fume hoods in this expanded R&D facility, which if you compare to the 18 fume hoods that we had for the fiscal year 2022, it's a significant expansion in the R&D, and we are very confident on the pipeline of our various business models to fill up this R&D. In terms of the R&D expenditure, we continue to expend a significant amount of resources and money towards R&D. Our quarterly expense of R&D goes up to 6.92% revenue plus capital of R&D expenditure as a portion of the overall revenues. We are also aggressively hiring scientists and engineers, PhD levels, and master's levels in the R&D. We have also acquired a plot measuring 1,500 square meters, approximately near our R&D and pilot plant site for future expansions of the R&D and pilot plant as well. The pilot plant has already been expanded to 3x times with more than 100 reactors installed and fully commissioned now, and it's among the world's largest pilot plants. R&D, pilot plant production, aggressive expansion plans, and we are on track and on plan with all these expansion plans. The 16-megawatt solar power plant commissioning is complete, and we have started getting the power supply from this. This will help save us 50% of our electrical load, supply 50% of the electrical load from solar energy, and it will offset 24,000 tons of carbon dioxide per year. Our three business models continue to be robust, and we continue to equalize these three business models. Large-scale manufacturing has been the driver, and I've already mentioned the 5 new products we are launching in this current year in the new manufacturing Site 3 coming up. We also exhibited in Chemspec Europe in Germany and Chemicals America in Charleston, USA, in the last 2 months in this quarter. As predicted, in the post-pandemic era, we see now a tremendous influx of CRAMS opportunities already. This is already being evidenced by the reasonable growth in the CRAMS business model that we have in this quarter as compared to the last quarter or even the same quarter of last year. We continue to talk at the highest technical echelons of numerous multinational innovator companies across the industry spectrum, and this is a very promising space for us. Finally, the contract/exclusive manufacturing business model is also growing its share of the overall pie of our revenues, and we anticipate this to accelerate in the years to come. T his is a very high-level overview and update on our various expansions and strategies of the company. Now I'll hand over the call to Mr. Faiz Nagariya, our CFO, to give you the eventual highlights of the quarter one of FY 2023. Faiz Nagariya? Yeah. Thank you, Dr. Aman. Good evening all of you. I am glad to inform you all that we have achieved a total revenue of INR 166.16 crore for the Q1 of financial year 2023, reflecting a growth of 13% over the previous quarter, Q4 of financial year 2022, and 10% over the Q1 of financial year 2022. The sales revenue of the company increased by 9% from INR 147.5 crore in Q4 of financial year 2022 to INR 160.01 crore in Q1 of financial year 2023. The sales revenue of the company increased by 7% from INR 150.02 crore in Q1 of financial year 2022 to INR 160.01 crore in Q1 of financial year 2023. The average selling price of our products during the Q1 of financial year 2023 has been at the north side of that which was in financial year 2022. The company has been able to generate EBITDA of INR 48.61 crores in Q1 of financial year 2023 against INR 47.49 crores in Q1 of financial year 2022 and INR 42.22 crores in Q4 of financial year 2022, thereby showing an increase of 15% from Q4 of financial year 2022. EBITDA margin has been at 29.25% for Q1 of financial year 2023. The increase in revenues and EBITDA has allowed the company to capitalize on the PAT levels, which have increased by 18% from INR 26.02 crores in Q4 of financial year 2022 to INR 30.63 crores in Q1 of financial year 2023. We have capitalized assets worth INR 43 crores during the year, and we also have capital working progress of around 166.64 crores. The use of IPO funds is done for the capex for the Greenfield Project, repayment of loans from the banks, and various working capital requirements, which are as per the object clause which were defined in the prospectus. We have utilized the funds as per the object clause of the we utilized the funds as per the table as per the details provided below. We have used around INR 75 crore we have grown to INR 21 crore for our capex of the Greenfield Project 3, from which we have utilized INR 7.5 crore up to 30th June. Remaining funds of INR 13.5 crore have been used in this current month which is going on. Out of the INR 165 crore for the working capital requirement, we have drawn down INR 30 crore from the monitoring agency, and we have used all these INR 30 crore for the payments of raw materials and various other working capital requirements. The repayment of loan has already been done, and we had also informed you in the Q4 earnings call that we are a debt-free company as we speak, and today also we are a debt-free company. We are not utilizing any other term loans. We have no term loans pending in the company. Only the working capital requirement is required, and as per the object clause provided in the prospectus has been used. For the general corporate purposes, we have drawn down INR 56 crore, and these INR 56 crore have been used for various purposes like solar power and payments to various other utility payments and other things. Now I will request Mr. Rohan Desai to talk on a high-level overview of Aether's business. Thank you, Faiz, for the financial highlights, and we are committed to make these numbers look better in the quarters to come. Despite the various ongoing challenges like raw material costs and product volatility, increase in the utility costs like steam and energy costs, and lastly, the global geopolitical and economical situation, Aether is happy to announce that we have seen growth and upcoming demands in all the three business segments. We have also exhibited in Chemspec Europe and ChemOutsourcing USA in quarter one, as Aman suggested, which gave us a good idea of the upcoming growth and the opportunities for Aether. In the three independent business models in quarter one of financial year 2022 to 2023, we have seen 53% of our total top line coming from large-scale manufacturing, 12% comes out of contract research and manufacturing services, which also funnels into third and interesting business model, which is Contract/E xclusive manufacturing, which contributed to 33% of our total top line. Our endeavor is to achieve balance between large-scale manufacturing business model and CRAMS and contract manufacturing and/or exclusive manufacturing business model so that we are not dependent on any single business model. Our sales mix stands as pharma 50%, agrochemical 34%, materials science 4%, high-performance photography 7%, coating 4%, and others as 1%. Our exports stand at 69%, which includes export to SEZ and EOU units in India, and domestic sales stand at 31%. Exports outside the geography of India accounted for 38% of the total revenue from operations. Lastly, before we enter the Q&A mode, we at Aether would like to thank each and everyone who has been associated with Aether and have put your trust and confidence in us. We look forward to our interactions with you along the way and enjoying the journey together. Thank you. Back to you, Ravi. 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 touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Saurabh from Asian Markets Securities. Please go ahead. Yeah. Thank you for the opportunity. Sir, if you can give some color about the top four, top five molecules in terms of how the volume was in the Q1 and also realization for those molecules? All the molecules have, Saurabh, thank you for the question. All the molecules have grown considerably well. We would not like to disclose the molecules at the moment because these transcripts are available in the public knowledge, and our competition is with China, so we would not prefer doing this. We can do it on one-on-one basis if required be. Over the year-end, we will give you all the complete colors in the call of Q4. Okay. There was volume growth, right, for most of the molecules? Yes. The volume was growing. The contract exclusive manufacturing has grown tremendously, and also the contract research and manufacturing services have shown a good growth over this quarter. Okay. The five new molecules which you mentioned in your opening commentary so, have you launched all the five molecules, or are they still trial production is started or something? Yes. A ll the five molecules will be launched one after the other in the quarter four of this financial year, and it will be done in a matter of one month. A lso, as Aman suggested in this call, the first molecule is going to be launched in this quarter. One molecule in this quarter and the rest in Q4? Yes. One molecule is launched in a limited capacity just to complete the learning curve in the existing facility where we have an opportunity. Hence, we are launching it before time. Okay. N ow coming to the margin performance, so now we have seen a decline on YOY basis, also on QOQ basis. W as it attributable to the higher cost, and should we assume that now with the pass-on of the higher cost, we should see normalized margin from Q2 or Q3? Yeah. I'll take this question. Y ou are right that the reduction actually, there is no reduction in the margins from our perspective. But if you are comparing the margins because of the Q1 of FY 2022 and FY 2023, of course, at that time, the raw material pricing was quite low. A fter that, from quarter three of FY 2022, the pricing of the raw material started increasing. T hat increase is still being felt, and the raw material which we have used in this quarter, quarter first of 2023, the materials which were procured in the last quarter of 2022 were used. N ow what material we have purchased in this quarter are considerably at a lower price than what we had purchased in the last quarter. W e are definitely going to get these better margins in the next quarters because we'll be using the raw material which has been procured at a lower price. Okay. H ow is the utilization level? C an we further improve on the current quarter revenue unit for next two quarters till our Site 3 gets ready? Capacity utilization is around 70% for the first quarter for us. We have a lot of ample of opportunities to ramp it up, as we have told in the last call, so that we can go up to maximum 90% and 91% and keep 9%, 8% for our any kind of contingencies. We have room, and we would be ramping up these capacities. Okay. Thank you. Thank you. Reminder to all the participants to press star and one to ask a question. The next question is from the line of Girish Bakhru from OrbiMed. Please go ahead. Yeah. Thanks for the question. J ust on the molecule side, I know you're not disclosing the molecule-wide growth, but the top seven, is the contribution still same around 70%-75%, or has that changed in this quarter? Yeah. The contribution is the same, and the margin contribution is the same. For us, there is no change in this quarter. Overall, pharma, it's 50%. I was under the impression that pharma will eventually increase gradually in the mix. It has actually come down. If you could guide where the, let's say, the volatility is coming from in terms of the mix changing. Yes, Girish, you are right. But as you see, you're comparing it with the last year. There are three more quarters left for this year, and we will see the pharma being picked up because the five new launches are happening also in the last quarter. Also, we are launching one out of these five molecules in this current quarter. Hence, the pharma will take a lead in the next three quarters. But our endeavor is to have a balance of 50/50 between the CRAMS, contract research and manufacturing services, and exclusive manufacturing and large-scale manufacturing. That is the endeavor which we believe that the outcome will come to these desired levels in the next three years. In the exclusive manufacturing bits, if you can give more color, my understanding is that it's largely agrochem. Is there any pharma company in exclusive as well now? No. I t's majorly agrochem only on contract exclusive manufacturing. Also, we have oil and gas in contract exclusive manufacturing. M ajorly, agro is the base of contract exclusive manufacturing. Right. The f ive molecules that you announced, I mean, total pipeline over the next three years, what is it looking like if you could give some color there? Yeah. Five molecules which we are launching is in the current calendar year. Then the next calendar year, we have another set of molecules which we will be launching. We will be announcing that very soon. However, on the R&D side, we have 18 molecules in the pipeline, and that is what the pipeline looks like in the R&D. These are largely pharma, right? Pharma, agro, materials science, and oil and gas. Okay. Okay. All right. Thank you. I will the queue. Thanks. Thank you, Girish. Thank you. The next question is from the line of Rohit Sinha from Sunidhi Securities. Please go ahead. Yeah. Hi, sir. Thank you for taking my question. Congratulations for a good set of numbers. M y question would be on the business segment. I mean, out of these three segments, I don't know it would be not advisable to pinpoint the margins, but are these three business segments having a similar margin or have a different margin? G oing forward, when we are seeing that with this new CapEx coming up, how this new, I mean, after two years down the line, how these business segments' contribution would be look-alike in the overall revenue mix, and s ubsequently, definitely, how margin profile would be looking? Yeah, Rohit, thank you for the question. I could not hear half of your question, but I will try and answer it and correct me if I'm wrong or I'm going out of the way on this answer. T he three business segments are large-scale manufacturing, which is approximately having a margin of 28%-30% EBITDA margins. We have Contract/E xclusive manufacturing business model, which also has a similar margin, whereas contract research and manufacturing services, which is called CRAMS, has a 70% EBITDA margin for us. Looking to the new launches, the launches will be in the large-scale manufacturing business model, which will be in the north of 28% EBITDA margin. Okay. Okay. T he mix would be, I mean, this 50% large-scale and 33% CRAMS sorry, 12% CRAMS and 33% contract manufacturing. T hese would largely remain in the same line, or there would be some kind of skewness towards maybe CRAMS, what we'll be focusing going forward? No. Our objective is to equalize all these three business models. We'll be lucky if we can do it in this year. But our endeavor is to equalize it as fast as possible so that we have any of the business models individually. We are trying our best to do this, and we hope that we'll be able to achieve it in the future. Okay. Okay, sir. That's helpful. S econdly, when we say 50% as of now is our pharma contribution, so would it be possible to segregate between that as domestic and export also? I mean, out of that 50%, how much is export and how much is domestic? We do not have it handy right now, but we can connect on a separate call and give you the information. Okay. Okay. Then in export part, since 69% is export, so geography-wise, would it be possible to share the detail which region we have the maximum exposure as of now? Yeah. I'll take this. A ctually, this 69% also includes exports to SEZ units in India and deemed exports, which is also in the Indian territories, but they are considered exports. I f you see geography-wise, in India, it is only in India, it is only 43% and 57 sorry, 57% in India and 43% is pure exports. Okay. Okay. Okay. That is deemed export. Okay. Got it. Got it. Got it. S ir, ultimately, I mean, after all these CapExes coming into stream, by maybe 2024, 2025, what sort of revenue size will be targeting? We have on the Sites 1 and 2, we have achieved INR 600 crore topline last year, INR 590 crore of topline. I magine two more sites coming in with a production capacity of 6,000 tons. And imagine a 9,000 tons capacity coming up in the calendar year 2023 and calendar year 2024. I believe, Rohit, you can do the math yourself. We cannot give any future or forward-looking status. Got it. Got it. Got it. Got it. H ow quickly we can scale up to these capacities? I mean, utilization level, how much we can scale within maybe six months or a year, and when we can reach up to the peak utilization? The utilization of 50%-60% can be achieved in a matter of two years. 50%-60% in two years? Yes. Okay. Okay. And this 9,000 is the additional capacity, I mean, apart from 6,000? Yes. T otal, it would be 15,000, correct? Yes. Okay. Okay. That is from my side. I'll come back in. Thank you. Thank you. Thank you, Rohit. The next question is from the line of Kalpit Narvekar from Allianz Global Investors. Please go ahead. Hello, sir. Congratulations on the numbers, and thanks for taking my question. F irstly, on the mix change that happened this quarter on contract manufacturing, the higher versus, say, exclusive, right? C ould you share some color on whether there was some kind of degrowth in the large-scale in the exclusive sorry, in the large-scale manufacturing business, or was it just driven by very strong growth? Because you're saying that you didn't add any customers, right? Only agrochem were the customers. S ome color on that would be helpful. Yeah. T here's no degrowth, or there's no less growth in the large-scale manufacturing. The growth is going on as we are maybe manufacturing the products as per the orders we receive. We do not put in the inventories of finished goods more with us, only the raw material entry put on. T here is no degrowth in any of the sectors. Of course, CRAMS has gone up this time more, and that is good for us because it is a more margin-driving segment. T here is no degrowth in any of the segments. A s you have told, the new facilities coming up, it is going to be towards all the profile products are towards large-scale manufacturing. T hat will, again, ramp up the large-scale manufacturing, and it will end up with the highest revenue generator for this year also. Okay. M y second question was, are there any order wins or anything in the contract manufacturing piece? Any other? Can you repeat the question? Any order win from any large clients or anything, any updates on the order side? No. W e have not seen any order risks from large clients as of today. We are already in touch with all our customers on a regular basis, and we see no such thing happening at the moment. Okay. Could you explain the seasonality in the business? J ust to understand the utilizations during the year, which quarters do you usually see higher utilizations? Because QOQ, the utilizations came off versus last quarter, right, at 70%. I guess you were talking about maybe 77%-78% last quarter, right, if I'm not wrong? Yeah. Yeah. I t really depends on the composition of the products. I mean, so if you're making a high-value product, your capacity utilization will decrease in various ways. I t is very tough to predict capacity utilization on quarter-on-quarter basis and predict how it will happen in the next quarters to come. Okay. Thanks, sir. This is for you. Thanks. Thank you. A reminder to all the participants to press star and one to ask a question. The next question is from the line of Nitesh Dhoot from Prabhudas Lilladher. Please go ahead. Hello. Yes. You're audible. Please proceed. Yeah. Good evening, sir. A ctually, sir, my line got dropped off. I mean, my question is on capacity utilization for the first quarter. I'm not sure if you've already answered, but what was the capacity utilization? It's 70%. Okay. S ir, would it be fair to say that the contract manufacturing growth was led majorly by BFA, that is, Bifenthrin Alcohol, in this quarter? There are two products already mentioned in the contract manufacturing/exclusive manufacturing space, and both have led this growth. Sure. A lso, if large-scale manufacturing revenues have largely remained flattish sequentially as well as on a year-on-year basis, is there some demand sluggishness across key molecules? The pharma sector has shown quite a good volatility, but we were unaffected, and we remained on the stable position at the moment. We are already in touch with all our customers on a regular basis, and we do not see the struggle in the pharma space as of now for ETA. Okay. How do you see the rest of the year shaping up as far as large-scale manufacturing is concerned? We see the prices of all the commodities coming down for the next two or three quarters and stabilizing to the original level if possible. I mean, we would be lucky if it stabilized to the actual level. However, we see a good next three quarters per se in terms of the demand and in terms of the raw material pricing. Okay. Okay. Okay. Thank you so much, and all the best. Thank you. Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead. Hi. Good evening, and thanks for the opportunity. My first question is in terms of contracts. How are the contracts shaped up in terms of if there is a pricing volatility for a short period? Do we get compensated for the same, or whether we have to absorb it? Generally, what is the contract period for all our products? I mean, is it normally a six-monthly, yearly contract with some volume commitments and price reset on particular intervals? Thank you. Hi, Rohit. Yeah. G reat question. We have multiple types of contracts. We have multi-year contracts, which is price reset at every one-year interval. We have a yearly contract where we can go and discuss on the price on a quarterly basis if required be. T hen we have six-monthly and quarterly price agreements, which we have to adhere to. I f there are orders of three months to six months, we have to adhere to the price, and we cannot go and change the price. However, the inventory levels of four to five months are helping us to maintain that contract and deliver the material at the defined price. However, the contracts do not include the team cost or utility cost. It does not include commodity prices changes like caustic, soda lye, and flakes. W e have to take that kind of hit into our margins because there is no way out. Also, at certain places, if the contracts are in the local territory that is domestic and the material is being imported, you have to take a risk of the dollar versus Indian currency exchange rate. However, if it is an international contract, we can renegotiate the pricing based on the currency movements. Did I answer the question, Rohit? Sir, we have lost the line of Mr. Rohit. We'll move to the next question, which is from the line of Bhavya Gandhi. Please proceed. Yeah. Thank you so much for taking my question. Sir, if it's possible to answer, what would be the ROC of each business segment? Say, for example, large-scale, what sort of IRRs or ROC levels we generate for each segment? That is my first question. Y ou mentioned about the margins, 28%-30%, but on the ROC level. The ROC levels of the individual business segments will not be possible for us to get. I mean, we have not done that study, but we can do that and connect again with you on a separate call. However, this information is not readily available with us right now. Sure. Sir, on the data days, is it possible to throw some light for each business segment? How are the data days for each segment? No. Each segment, we do not set out segment-wise data because even there is overlapping of customers in various models. I t is not possible to give separate data in separate models. Okay. Fair enough. My last question would be regarding your R&D. Say, for example, you are bringing in new molecules. H ow do you assess which molecule to bring in? Is it based on is there a ready market available? Is it the size of the molecule? What are the factors that we sort of decide before entering into that molecule? Aman, can you take this up? Yeah. Basically, multiple factors are considered. For the large-scale manufacturers, we look at the import component first. There are various criteria for selection. The fact that nobody is making these products, that's one of the most important criteria we follow. The good fit for our competencies of chemistries and technologies. W e retain the eight by eight metrics of chemistry and technology competencies and try to remain within these competencies. There's an attractive pricing of the molecule on the basis of our techno-commercial evaluation. There's attractive volumes coming in. There's multiple customers of that molecule. T hese are some of the criteria for selection of molecules and products for the large-scale manufacturing business model. In the CRAMS and contract manufacturing business models, these identification of projects are client and customer-driven and guided. We usually engage with the customer in joint identification of appropriate targets in the pipeline and the launch molecules portfolio of the various customers that we work with. T hat's the very high-level idea of how we go about selecting these molecules. Hello? Hello. I have a question. Yeah. Can you hear me? Yes. Yeah. Sir, one more question. Last question is, we have 4,500 sq m land, right? I sn't it small in terms of size? Can you repeat that question? W e bought 2,500 square meter adjacent to our existing site. Isn't it small in terms of size? A re we planning some small CapEx? How is it like? Because 2,000... The current site is about 6,000 square meters, Site 2, which has a smaller production capacity as compared to the current production capacity that we have. From the perspective of the 6,000 square meter site, 2,500 square meters is a reasonable amount. You have to remember that all the utilities and all the resources will be shared in the same site. From that perspective, you're talking about one manufacturing block that can be fitted into that additional site by the sharing of all the resources and the utilities and the manpower and the waste treatment plants of the existing site. From that perspective, it's not a trivial purchase. Okay. Fair enough. S ir, do we look internally for CFO versus EBITDA? Because our cash flow from operation conversion is quite low. Mr. Gandhi, we cannot understand what you're speaking. You're speaking very close to the speaker. Okay. Now, can you hear me? Yes. Please go ahead. So sorry. D o we internally monitor cash flow from operations to EBITDA? Because that seems to be on the lower side. Yeah. You're right. We do monitor all the cash flows from operations also. In EBITDA, we have the cash flows worked out every month on a month basis. Y ou are right, it is low, but this is going to be changed after the IPO, which is issued, and the working capital cycle improving, be much in a better set than what is being seen in the last year and this current quarter also. Okay. Fair enough. What working capital cycle do we expect going forward? At least 120 days. 120 days. Thank you so much. Yeah. That's it from mine. Thank you. Thank you. The line of Mr. Rohit Nagraj has been connected now. Mr. Nagraj, please proceed with your question. Yeah. Am I audible? Yes. Yeah. Thank you. Yeah. I was asking about the second question. B eing with some of the trade shows, and we have our overseas business development people, so what is the sense that we are getting currently, given that in Europe, there are issues. In the U.S., there are some inflationary pressures? A cross the geographies, what is the sense we are getting from a new product development perspective and opportunities? Thank you. Aman, would you like to take it up? Yeah. Yes. I can take this question up. It's a great question, Mr. Nagraj. The problems that are happening in the U.S. and Europe are at a very macro level. At the micro level of our industry and the chemical industry, there is absolutely no difference that has been found. Rather, there is only positivity and optimism that has been found. In the post-pandemic era, the external research program, the external research work is getting started aggressively and with vengeance because it was all cooped up the last three years. F rom the European and the American shows, both of which we exhibited in, we had a tremendous inflow of opportunities. T hat has actually translated into proposed project proposals and activated projects, new projects on the CRAMS side, on a significant front. And so that all has actually happened. These tremendous influx of opportunities and promising meetings have actually translated into active projects that are currently going on right now in the CRAMS space with various innovators across the industry, some of which we have started relationships and projects for the first time, actually, in the last three months. F rom that perspective, it's been very promising. We are not seeing any negative impacts and any downward trends. Rather, it's quite contrary to that. Got it. This is really encouraging. Just one clarification. I n the press release, we mentioned that we are a member of UN Global Compact. W hat exactly is the advantage from this, and how is it different from the other certifications or something like a TfS or so? Thank you. Rohit, can you repeat the question? We lost you quite a bit. Sorry. Sorry. Is it better? Yeah. Yeah. I n our press release, we have mentioned that we are a member of UN Global Compact. H ow this particular membership is different from, say, TfS or other memberships, and does it help in terms of mentioning our capabilities in the overseas market? Thank you. Yeah. UN Global Compact is actually a platform wherein various companies are joining their hands, and they will be working towards the common goal of CSR, corporate governance, and various ESG initiatives. It is basically mostly towards the CSR activities wherein all the large corporates are joining hands, and the initiatives will be taken on a global level to do CSR activities. Okay. Thank you. Thanks a lot, and the best of luck. Thank you. Thank you, Rohit. Thank you. The next question is from the line of Ranjit from IIFL Securities Limited. Please go ahead. Yeah. Thank you. Hope I'm audible? Yes. You' re audible, sir. Yeah. I quickly wanted to get a sense whether it would be possible for us to share the large-scale CRAMS and exclusive manufacturing revenues for the first quarter of 2022. The reason I'm asking this is that we have said that our exports, including the SEZ sales, are up around 17% YOY. But when we look at the overall revenues, it is only up around 6%-7%. I t's clearly the domestic segment that seems to be a bit off-frame. W e just wanted to understand where and in which specific segments we've seen a bit of subdued sales. You're talking about Q1, right? Q1 of 2022. Yeah. Yeah. Q1 2022. That information, we have not separately worked out because it was not relevant to these Q1 numbers. That's why. Sure. I n that case, then just wanted to get, sorry. Sorry. Go ahead. Yeah. On a separate call, we can connect, and we can give you the details if you. Sure. We would be happy to connect. Just wanted to get a sense that since the release mentions that the exports are up almost 17%, and then the overall sales are just 6%-7%, if you can highlight in which specific segments on the domestic side, we have seen a bit of subduedness, and the outlook on the same, whether things have started to improve on that front. Thank you. Yes. The domestic sales sales, I told even in the beginning also that if you see a geography-wise breakup, sales into India and sales out of India, India sales is accounting for around 62%, and export is only 38%. I n the export sales, we are including DM export and SEZ sales, which are also part of India only. And domestic sales, we are definitely increasing. It's not that we are focusing more on the export market than export sales. It is mostly both are on a parallel side, if you see. I want to get a bit more clarity within domestic since we are also giving a bit of more bifurcation with pharma and agro. I t is the domestic pharma or domestic agro where we have seen a bit of subdued sales? Sure. We will definitely share this also in a separate call with you. Sure. Thank you. And the final question, we have shared an order book of INR 246 crore. W hat is an executable timeline for this particular order book? 246 crore are for this current year. We do not take any further years into consideration when we consider our order book because that's more of an indicative or futuristic order book. W hat we are looking at is the order book which is to be completed in this financial year, and w e are holding that approximately at INR 226 crore as of today. These are the fixed commitments that we would be able to execute during the year. There would be an addition to this order book because there would also be a spot sale that we keep on doing it. Yes. A bsolutely. E very month you add or every week you add orders onto this order book. I t's an ongoing process. I t's a never-ending story. Maybe in the next quarter also, it would be in the same range. Is there any difference between the order book margins and the ones which are excluding these order book margins, or the margins should largely be similar? Margins would largely be same. Sure, sir. Thank you. Thank you. The next question is from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Yeah. Good evening. I hope I'm audible. Can you speak loudly, please? Yeah. Is it better? Can you hear me now? Yes. Okay. M y first question is on the sales growth of 8.5, of around seven-odd percent reported for the quarter. How much have the sales volumes or tonnage grown, and how much has pricing contributed to sales growth? It is a mixture of tonnage. There's no, as we were mentioning in our speech also, I mean, the pitch also, that the average pricing of the products is at the same average selling prices which were there in the financial year 2022. I t's mostly growth driven by volumes. Okay. On the input prices, you indicated input prices remain elevated year-on-year comparison-wise. How high are the input prices compared to the first quarter of last year? If possible, could you give some idea on solvents and KSMs and utility prices separately, how high they are compared to the same quarter? Yes. L ast quarter, if you see our margins also, we have mentioned that the raw material costing was around 47%-48%, which has gone up to 55% in this quarter. T his is basically because of the raw material pricing which was increased, which was in the third and the fourth quarter of financial year 2022. The raw material is being used by us in this quarter for production. T hat is the major factor for the same. T he utility prices, of course, that also have increased due to the crude and oil also due to the dollar factor. T hose prices have not they have an impact, but that has been our impact on EBITDA. But the raw material pricing, we were able to pass it on to our customers. The major impact which you are seeing in the EBITDA levels is because of the utility pricing which has gone up. Okay. I n your pricing, in your contracts, as far as pricing is concerned, are you able to have price escalation clause for key starting materials? But are you also able to have price escalations for solvents and other inputs? No. W e are only having price escalation for key starting materials and major contributors. However, till today, we do not have all the molecules I mean, all the raw materials of the particular product written down with the CC ratios. Also, on all the contracts, these are our own molecules. W e do not deem fit that we will give all the CC ratios to the end customer because you are majorly giving all the recipe of a particular product to the customer, which we don't prefer to give. Okay. But solvents, by volume or by value, would constitute a significant portion of your input materials? Could you give some idea how much would solvents be as a portion of total RM cost for you? It really depends, but it can be in the range of 5%-10% of the total molecule selling price. T here are many factors. I mean, in the specialty chemical field, it's not A and B equal to C. It's many A, B, C, D, E, F, which makes it as a Z, basically. T here are a lot of products which contribute at various percentage levels, and all have seen an upward trend in the last few quarters. Right. Last quarter, you did indicate that OTB N prices are under pressure. I also understand that for NEP prices also sort of have come off. Is that information correct? A s of today. Both information is right. OTBN and is in pressure. However, NEP prices are not under pressure. Okay. Y ear-on-year, NEP prices sustain, but OTBN prices are lower? Yeah. Okay. F or the new capacities that will come on stream starting December of this year, at what utilization would you be breaking even on those? Breaking even? See, we should be able to break even at around 25% capacity utilization. That is for sure because whatever the initial productions will be there, by reaching 20%-25% utilization, we should be breaking even. Then only it will be profitable for us to carry on. Right. T he five molecules which you intend to introduce with the commissioning of the new plants, if you could give some idea to us around the competitive landscape, how many suppliers are there in those five molecules? Are they all from China? And therefore, also from a costing perspective or from a quality perspective, would you be having a USP? Yeah. I will take this question. Carbamazepine API, carbamazepine intermediate have competition from China only. There are two Chinese manufacturers who are manufacturing majorly out there whom we know of. Dolutegravir intermediate is again China, two manufacturers in China. Ambroxol, there is only one manufacturer in China at the moment. M ajorly, all these molecules have competition from China. Okay. But by and large, two suppliers on an average for each. Conservative, I mean, let's take maximum three suppliers of each product. What's the volume of these products in the Indian market, if you could give just a ballpark understanding of? Yes. Dolutegravir would be in the range of 150 tons per annum. This is for your intermediate. One second. I am talking, yeah? All the Intermediates. Yes. A ll the Intermediates combined together? No, no. I mean, for the Intermediates that you will be supplying, I'm asking for the addressable volume markets in. You want individually, or do you want combined? Individually. Yeah. Dolutegravir Intermediate would be 150 tons into India. Carbamazepine oxcarbazepine combined would be in the range of 2,000 tons. Ambroxol will be in the range of 180 tons. Okay. Great. Thank you, sir. That's all from my side. Thank you. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you, everyone, for joining the call. We hope that we have covered most of your questions. If you still have any further questions, please feel free to reach directly to us. Stay safe. Have a great day. Thank you. Thank you, everyone. Thank you. On behalf of HDFC Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your line.