Ladies and gentlemen, good day, and welcome to the Aether Industries Post Result 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nilesh Gogate from HDFC Securities. Thank you, and over to you, sir. Thank you, Sagar. Good afternoon, all. On behalf of HDFC Securities, I welcome everyone to this Aether Industries conference call to discuss the results for the quarter ended December 2023. From Aether Industries, we have with us today Dr. Aman Desai, Promoter and Whole-Time Director, Dr. Rohan Desai, Promoter and Whole-Time Director, Mr. Faiz Nagariya, Chief Financial Officer, and Ms. Shubhangi Desai, Executive IR. Without further ado, I will now hand over the floor to Ms. Shubhangi Desai to begin with the earnings call for 3Q FY 2024. Over to you, Shubhangi. Thank you, Nilesh. Good evening, everyone. Today on February 1, 2024, our board has approved the financial results for the third quarter, ended on December 31, 2023, and we have released the same in the stock exchanges as well as updated the same on our website. Please note that this conference call is being recorded and a transcript of the same will be made available on the website of Aether Industries Limited and exchanges. Please also note that the audio of the conference call is the copyright material of Aether Industries Limited and cannot be copied, rebroadcast, or distributed in sites or media without specific and written consent of the company. Let me draw your attention to the factors on this call. Our discussion will include certain forward-looking statements which are predictions, projections, or other estimates about future events. 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 results to differ materially from what is expressed or implied. Aether Industries Limited or its officials do not undertake any obligation to publicly update any forward-looking statements, whether as a result of future events or otherwise. Mr. Rohan Desai will begin by sharing Aether's business outlook, then Mr. Faiz Nagariya will cover the financial highlights for the period under review, and Dr. Aman Desai will share the ongoing expansions and strategy of the company going forward. Now, I shall hand over the call to Mr. Rohan Desai for his opening remarks. Over to you, Mr. Rohan. Good evening, everyone. Before I begin with the business performance, I would like to throw some light on the unfortunate event that affected us during this quarter. On November 29, 2023, a fire broke out in one of the plants of our manufacturing Site 2, which was brought under control. The reason for the accident at Site 2 was a 3,000-liter storage tank, which leaked from the bottom valve. Stored solvent started flowing, which had the flashpoint of -17 degrees centigrade, led to a vapor cloud formation. There was a moment of the vapor cloud formation internally in the intermediate GP plant 2 and nearby tanks in the same plant. Unknown ignition source resulted to vapor cloud explosion with fire and affected both plant and the tank farm areas. Total 11 fatalities have been registered and 23 people were injured in the unfortunate accident, who have now been discharged successfully. While the loss that we have incurred due to the fire is currently being assessed, we want to assert that we are fully covered with the loss of assets, stock, as well as loss of profit. The sales and the dispatch of material has remained unaffected as the orders were catered from our inventory, as well as most of our customers have remained upbeat and supportive towards us. Operations have resumed at our manufacturing unit two, that is, Site 2. We have received GPCB, that is, a Pollution Control Board, partial closure revocation order for the unaffected plant, and the plant has resumed normalcy, with continued efforts to raise our operations at maximum capacity. We strive to timely restart the affected plant with a highly compliant and safe manner. With respect to Aether's business model, we have seen 57% contribution of our total top line of last year coming from contract manufacturing business model segment. 37% from contracts with exclusive manufacturing as a result of renewal of the agrochemical contract, that is, agrochemical intermediate contract, about which I had mentioned in my remarks in Q2 of FY 2024 call. And 14%, which is coming from contracts with exclusive, contracts with product research and manufacturing services business model during the Q3 of financial year 2024. Our export revenues stood at 40%, and our domestic sales stood at 60%. Demand from our agrochemical customers is coming back on the backdrop of gradual reduction in the stocking positions at their end. We are currently seeing an increase in volume from our non-agrochemical products, as there is a demand from our customers. However, the intense competition by the Chinese competition, we have witnessed price erosion. We are currently witnessing price of our products stabilizing at the current levels. But the pipeline is robust, and all our customers are positive and looking forward towards coming back to normalcy in a short period of time. We are confident of showing a growth, growing trend in the next financial year onwards. With that, I would conclude, and I would request our CFO, Faiz Nagariya, to touch upon the financial highlights for the period under review. Faiz? Thank you, Rohan, and good evening, everybody. The total revenue of the company stood at INR 1,682 million in quarter three of financial year 2024, as against INR 2,705 million in quarter three of financial year 2023, resulting in EBITDA of INR 378 million in Q3 of financial year 2024, as against INR 507 million in Q3 of financial year 2023, a reduction of 26% in the company periods. EBITDA margins stood at 22% in Q3 of financial year 2024, as against 30% in Q3 of financial year 2023. Our PAT amounted to INR 191 million in Q3 of financial year 2024, as against INR 350 million in Q3 of financial year 2023, resulting in a reduction of 46% in the comparable periods. The profit margin stood at 8% in Q3 of financial year 2024, against 21% in Q3 of financial year 2023. The main reason for the reduction in the revenues is attributable to the current fire accident, where the production at our manufacturing facility two was stopped for a month. The revenue and other exceptional expenses related to the fire accident, like compensation to the families of the deceased, the penalty to the GPCB, medical treatment expenses of workers who are displaced, and increased insurance premium of our IR policy, resulting in the reduction in EBIT and PAT margins sequentially. One-time cost is approximately INR 70 million of the quarter. We would be having the effect of approximately INR 30 million on account of increase in insurance premium due to the fire accident in financial year 2024. Due to the fire accident at manufacturing facility two, new production could not be done in the entire December 2023. Now I would request Dr. Aman to share updates on Aether's ongoing expansion plans and schedule going forward. Thank you, Faiz, for the financial highlights. The well-being of our employees is of foremost importance to us, and I do want to start with expressing my most sincere condolences, solidarity and gratitude towards the employees and the victims of our recent fire accident. We have taken significant actions to ensure the best treatment to the victims, and we have extended lifelong support to the families of the injured and the deceased. Also, we have been extending complete and transparent cooperation with all the regulatory bodies. We have comprehensively undertaken detailed investigation and root cause analysis of the incident and the accident, and identified numerous immediate and ongoing, corrective and preventive actions, which will help us to ensure that such an accident will never, ever happen again in the future. Despite the various headwinds, the planning and execution of the project work of our greenfield at manufacturing Site 3++, Site 4. On Site 3+ and 3++ is ramping up, with execution of civil work, machinery and equipment being procured, along with all the regulatory approvals in place. These Site 3+ and 3++ are expected to commence operations in Q3 or Q4 of fiscal year 2025 as per plan. Progress on our upcoming Site 4 is also on the verge of completion, and is expected to be commissioned by February 2024, next month. This Site 4 will be initially dedicated entirely to contract exclusive manufacturing, and the initial construction and plant direction is going to align with our strategic agreement recently previously announced with a leading oil service company, services company in the U.S. As we had guided earlier as well, further structural expansion on Site 4 will be towards the recently announced commercialization agreement with Saudi Aramco Technologies Company on the novel Converge® polyol platform in the near future. It's planning towards Site 5 at Panoli, at full tilt as well, with a vision of a massive industrial estate with more than 16 production blocks, each production block being ground plus four structures with more than 500 reactors combined. As we had guided, the Site 5 will incorporate global best practices towards safety, sustainability, carbon neutrality, and renewable energy-based resources. During the quarter under review, we have announced the execution of a strategic agreement with a major global lithium-ion battery producer, thereby announcing our entry in the electrolyte additives and batteries space. We have been developing products in this field since a long time now, but we had decided to make it public only once we secured a substantial commercial contract with a global major, and this agreement captures this. Thereby, along with this, the commercialization of the sustainable Converge® polyols and multiple ongoing projects, as well as research at Aether, I can ascertain that we have established Aether as a premier India-based provider of sustainable and carbon-neutral chemistry solutions across the industry sector. We continue to make significant investments towards R&D. Our R&D expenses for the nine months of fiscal year 2024, see that INR 509 million, which is 10% of the total revenues for the nine months, fiscal year 2024. The strength of the R&D team for the same period stood at 277. Our major expansion project of the new pilot plant at the land that was procured on long lease is in full swing, nearing completion, with the installation of machinery and the final piping and commissioning going on. Needless to say, such aggressive expansion of R&D and pilot plant footprint, which are the workhorses of the CRAMS business model, is, as always, firmly backed by numerous inquiries and additional tie-ups, which I can learn from global innovators across the industry ecosystem and various contracts are in the pipeline for being executed. With that, thank you very much for your attention and time today, and back to you, Shubhangi. Thank you, Aman. We shall now request the moderator to open the forum for question and answer. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets only 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 Rohit Nagraj from Centrum Broking. Please go ahead. Thanks for the opportunity. So my first question is, what have been the immediate actions that we have taken after the unfortunate event? And any customer orders have happened after the event, and what's been the general feedback from our customers? Thank you. Yeah, so we have a comprehensive corrective and preventive action plan that has been identified, which includes significant changes in the already strong preventive maintenance program. In fact, it was a solvent leak, it was the root cause, and so we have added leak detection was already in place at various sections of the plant, including the plant as well as the main tank farm, but unfortunately not at this particular position in the. Yeah, and so we have now, you know, comprehensive sweeping detection policy and program in place. We have changed several codes that we are working by. We were quite proud of the safety systems that we had established at Aether, and this accident has shown that there's a clear gap and failure in the safety systems, because accidents will happen, but the safety system should prevent loss of life, and this has not happened in the accident. So this has clearly showed a gap in the systems that existed, and so we are doing a thorough review. We have initiated a full-scale HAZOP, Hazard and Operability Study, of all operations across all sites, and operations were restarted in every single site only after the commencement of a thorough HAZOP review. We have started, and we have already. You will see these announcements in the coming weeks, but we have also completed as well as initiated significant hierarchy changes during the technical departments, and so you will see this in the coming days. These are just a few of the numerous corrective and preventive action plans, which has been planned, as I mentioned before, in the previous, in the different meetings. There's a very detailed investigation analysis presentation and corrective and preventive action plan presentation also ready. So this is just a few of the things off my head. That is the answer to your first part of the question. The second part is the audits. So the leading quality services company that is currently in tie-up activity with us for Site 4. We have audited Site 2, which is the affected Site 2, in the recent weeks, and that which is the partially open Site 2 in the non-affected blocks. So they have re-audited the Site 2, successfully finished. All the compliance with audit is successfully finished as of today as well. And this is quite a major audit that has happened. We have detailed investigation reports to almost all of our key customers in all the business models, and these are presentations that go on for more than two hours on the very top of the accident. Our customers have showcased solidarity and support. Everybody wants to know what happened and why it happened, and what we are doing to ensure this never happens again. I think we have been successful in addressing that concern quite well with the very detailed work and presentation and corrective and preventive action plan that we have laid out. The audits orders have flowed in as per the regularly expected cadence. We have not seen a drop of the orders, and I think the the commentary by Rohan and Faiz have kind of has been good. So I think, yeah, that addresses all your questions, Rohit. Thanks. Thanks. Thanks for answering that comprehensive question and the detailed answers. A quick question on the EV battery-related contract front. So how does it complement our chemistries, the Otsuka technology that we've been working for a while on this? And is there any possibility of supplies of similar material to Indian manufacturers whenever their capacities come up? And just a little bit more in terms of when the commercial supply is expected, the overall potential from this particular product, whether it's a single product or multiple products, and particular application. Thank you. Yeah, thanks Rohit. Whenever anybody asks me about competencies, it's music to my ears, and I can pick up the next one hour talking about the competencies and the products that we have. But the electrolyte additives field is a very large field. The battery field is a very large field, and there are many, many, many components that go into a battery. There are many components that there are more than 12 components in an electrolyte formulation, and there are about 67 electrolyte additives that are used commonly and not as commonly. In that, there are many salts that are also present. And so we have been very clear in our approach. In all the molecules we have chosen, there has to be a competency, and so the molecules we have chosen are small organic molecules. They are electrolyte additives which have a good fit to our competencies. Some of them include methyl oxide chemistry, the, the THF, the coordination chemistry that we want to get into, and of course, Continuous Reaction Technology is being applied in all, every one of the electrolyte additives that we are going after, including catalysis, which is also a major competency for us. And so, yes, we have been very selective, and we have only picked a few of the electrolyte additives, which are small organic molecules, which are specific to our competencies. Where there will be a multi- and, and there are multiple. We have selected a few of them, and they're small organic molecules. So we have clearly been clear that we will not go after the salts, we will not go after the inorganic chemicals, because we are not a good competency fit. One, only two Indian manufacturers, of course, yes. This is not an exclusive client that we have. This is a very broad field with a very, very, very, very promising future and aggressive market projections of where these volumes and damages of these various molecules will end up. And there are several big Indian players who've already announced pipelines, but there are several global players who announced pipelines in the U.S. and Korea. And rest assured, we are reaching out and already talking with many of these global players as well as domestic Indian players. In terms of commercial supply and the initiation of the commercial supply thereof these molecules, we expect initial commercial volume, which would like to start off within this calendar year 2024, with significant volumes and production and commercial manufacturing starting in calendar year 2025. But we expect the initial commercialization trial of these validation orders, which should be in itself not a trivial quantity, to be done in 2024. Sure. Thank you Rohit. Maybe we can go to somebody else, and we can come back to you. Yeah. Thanks a lot for answering the question. Thank you. Thank you for answering. Thank you. Thank you. Participants may press star and one to join the question queue. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead. Yeah, good afternoon, sir. Thank you for taking my question. Can you hear me? Yes. Yeah, yeah. Thanks. Thank you, thank you very much for confirming that. First I will ask three the bookkeeping question, probably then go on more broader questions. This quarter, our gross profit margin is at 41%. Was there any loss of material also which has led to a drop in the margin in this quarter? That's number one. Number two, on the bookkeeping is that there has been a restatement in the cost line item for the last quarter, both employee costs and other expenses. Can you explain as what has led to the restatement of the historical number, which is the Q1 number? These are two bookkeeping question, and one probably I will suggest with us. So I'll take the second question first. The regrouping what happened is, in the last quarter, the declaration was erroneously shown in the employee cost, and so we had to change it to the other expenses. That is the thing which we have done. So we have brought it down in the other expenses to group it with the. and make it more comparable with other quarters. And for the first question, there is no. We have still not provided any loss of stock, because the assessment of loss is still going on. If you see the, if you see the financials, you will see the changes in inventories has dropped so significantly, because as in the comment also, Rohan said that we have all the goods from our goods inventories, and there was no production in the Site 2, which was contributing around 60-65% of our revenues. Production also was taking place more there. So the changes in inventory has gone down, which has resulted in to the gross margin going down. Going forward, as the production will increase, we will have the finished goods and semi-finished goods inventories coming back, which will be again back on to somewhere. Oh, now I get it. That's why the other expense is also down, because it's largely captured before the finished goods. Yes. Right, Faiz? Yes, yes. Yes. Got it, then that's very clear now. Rohan, on the competitive intensity, you did touch upon in your opening remarks that there is an increased competitive intensity from the Chinese. Can you allude more? Are we seeing. How is the competitive intensity in the product that we manufacture? Have we faced anything, any rising competitive intensity from Chinese, particularly in our pharma side of the business? So pro. We were, we are on majority of our products, we are the only source in India. Most of the competition comes out of China, 80% coming out of China, 10% from Japan, 10% from Europe. We are not seeing any increased sources coming from China or being added from China at this moment. However, because of the currency devaluation and the government incentives and tax benefits, which the Chinese competition is getting, they have become, they had become more approximately 20, 20%-30% from the start of the correction, and that is what we are seeing right now. So we are at the bottom out position at the moment. I don't see a further decline happening on the prices of our products. Got it. Got it. Second, on the agrochemical side of the business, this quarter we saw a sharp decline. This was more like pushing the inventory from the Q4, and hence, the recovery for next quarter will be higher, or we generally had a lower inventory, so lower sales in agrochemicals? There are two parts of it. One was price correction price. So you have to Q3 to Q3, or we are comparing Q2 to Q3? No, last year Q3 to this year Q3. Yeah, that is because of price correction. Then we are protecting three intermediates, out of which two intermediates have seen a drastic price correction, because of the Chinese competition entering into that space. And hence, the volumes are robust, on that basis, but the prices have been corrected significantly. Okay. So the drop in the M&A is largely because of pricing. We have held the volume market share, right? Yes. Volume market share we have. We have not changed in that position. So the change is significantly because of the price change. Got it. Got it. One last question from my side before I join back in the queue. Yes, sir. Process of commercializing Site 3++, Site 4 and Site 5, we are now planning. So what is the capacity we anticipate to add from all these three sites when they are fully commissioned three years down the line? It will be, three years down the line, we build a tremendous capacity, right? We are talking about thousands of tons of capacity and, and. Just from the gross block perspective, if you can help us understand, what is the gross block for each of these three sites? We share the excitement. The depending on the product that you choose, and depending on, for example, if this electrolyte pans out the way, the people all over the world claim it would pan out, then we're talking, you know, individual electrolyte would be literally thousands of tons of requirements. And so if you, if you want to convert all, just please find out the way we think it would, it could also be a very significant, volume and tonnage. And so it depends on the products, it depends on the number of specs on the product, and it depends on the specific product. In terms of the gross block, I think Faiz can help us. Yes, so the gross block for Site 3+, Site 3++ would be around INR 100 Cr. Currently, Site 5 first phase, which we are doing, the gross block is around 72, 75-55 Cr. Site 5, the first phase is around INR 500 Cr, and, fully, fully operational after five-six years down the line, it should be around INR 2,000-2,200 crore, approximately, on the final site. Fair enough. That's fair enough right there, and thanks for answering all my questions, and best of luck in the coming quarters. Thank you. Thank you. Thank you. Participants may press star and one to ask a question. The next question is from the line of Colin, who is an individual investor. Please go ahead. Yeah. Hi, team. Thank you for taking my question and, solidarity, sincere solidarity on the loss of, life and people, at your company. I have two questions. The first one is that, you know, in contract manufacturing, in the past, you have alluded to the fact that the margins in those businesses or in that, segment is similar to our large scale manufacturing. So I just wanted to understand, you know, from the, working capital side of it, how, is the working capital in the contract manufacturing business different from our large scale manufacturing? And a related question would be: Will this margin profile be any different, in case we are able to, get a, pharma, contract, right? Right now, if I'm not wrong, we have, I mean, we don't have a pharma contract under contract manufacturing, so will the margin profile be different? And just to understand, how should one look at the working capital intensity of contract manufacturing business? So, let me just differentiate our views in a way where we are saying that we are only making generic intermediates right now. We are not making a patentable products intermediate at this moment in contract manufacturing. When we do enter into that, which we will be there in a short period of time, the margins will improve drastically on contract manufacturing. Rohan, at this moment, contract exclusive manufacturing and our large scale manufacturing margins are almost in the similar line and only differentiated by 100 basis points. Great. Sure. On the working capital side of it? So the working capital cycle for the contract manufacturing, or an LSM is currently just similar because it is around 30 because these products are generic products, and we are supplying to, current customers, and we are giving them the same, credit terms which are giving to the customers. So working capital cycle currently is a similar for them. And as we move more and have more, specific or better products in this thing, we will be able to reduce the working capital cycle in this contract manufacturing. Okay. So, do I understand it correctly, both margins and working capital cycles will improve as we move from generic to slightly more specialized intermediary. Is that a fair summarization of the answers? Yes. Okay, thank you for that. The second question would be on this polyols contract, right? Can you help us understand where does this contract lie in your eight by eight matrix, right, in terms of chemistry and technology? And now that we have been successful in getting that contract, but how will it benefit in terms of expanding our eight by eight matrix or, you know, fortifying or strengthening some of the components of our eight by eight matrix if you can comment, especially for this polyol contract, that would be very helpful. Yeah, a great question again. Originally, the project started off with Aramco Technologies Company several years ago on building a key piece of operation in the overall process to make this polyols, and that was based on continuous reaction technology, which is number one in the eight by eight metrics on the technology side of the company. And so, continuous reaction technology is featured in the manufacturing of the Converge polyols, and in the chemistry side, it is catalysis and high pressure chemistry. And so these are the original fits in there, which are still present in the manufacturing of these Converge polyols, and it is, and they are a very good fit to our existing and very first R&D methods we built 10 years ago. What to add to in terms of additional competencies in the future will be a solid comprehensive understanding and expertise in the manufacturing of polyols, i.e., that business entry into the polymers, which is very exciting if you look at, if you look at all the potential that exists in the specialty polymers world, it is very exciting. And this kind of gives us a handholding segue into understanding this world and getting experience in the manufacturing of polymers. And so polymerization will be a new competency that we can add as a result of these polyols. Thanks. Great. Great. Just one last question, if I may. So can you give us some revenue visibility, of this contract? Because in the press release, which we had released back in June of 2023, we had mentioned that each product has a potential of around 1,300-odd metric tons per month. You know, so what is the, I mean, what could be, what should be the, starting revenue, and when should we start getting, and what could be the, you know, peak revenues from the contract? So, there's some confusion there. I think the 1,300 tons per month that we mentioned was the LOI done with the oil field services company, and that is a different contract and agreement and announcement as compared to the one with Technologies Company. I don't believe they were publicly speculated on the tonnage for the technologies company Converge polyols platform. And so that it's two different things. So to address the visibility on the revenues, I'm afraid that this is not common, we will not be able to provide any visibility towards the revenues or the tonnage in the future. Sorry. Not also on timeline, in terms of when should this revenue start hitting us in terms of P&L? So if you think about the 20- the oil field services, 1,300 tons per month that you mentioned, we fully expect a full or almost full contribution of that in the fiscal year 25, i.e., April, the quarter starting from April 2024. In three months from now, we expect to be getting contributions from Site 4, which is being designed for the commercialization of the contract with the oil services company, which is the LOI, mentioning 1,300 tons per month. And so with that, you know, this visibility is for sure the next fiscal year, the next quarter. And for the technologies company, the commercialization has already started in this quarter. It's smaller, it's a lot of significant, more of the middle yet, but commercialization and manufacturing have already started, and we hope it will pick up soon. Great. Thank you. Thank you. Thank you. The next question is on the line of Priyank Chheda from Vallum Capital. Please go ahead. Yeah. Hi, thanks for the opportunity. So my question is on the Site 3. So if you can help me, what is the utilization that we are running today? I reckon that we had spent around INR 200 crore, and we had reached around 30% in the first half. So what is the utilization over there? That's question number one. And follow up on that, Site 3+, we did plan to start the commercial commercialization. So if you can help me, when is that project coming up? Yeah. So we are currently at 32% capacity utilization of Site 3, and Site 3+, ++, and +++, both combined together, and the remaining part of the site will be commercialized by September 2024. By September 2024. And, over there also. Yeah, so September 2024, we'll start commercialization, and it will take three months to stabilize the plant. Got it. The capacity is roughly around 3,500 tons, of which we have sold INR 200 crore, am I correct? Yes. Got it. Now, my question, the second question is on Site 2. While we did have a very unfortunate incident, can you help me which impact in this site? I recall that we had two products that we were manufacturing for Otsuka, Japan. Has that been shifted to some other site, on Site 1 or somewhere, because that's not reflecting on the loss of sales, the quarter-on-quarter, where you're maintaining the quarter-on-quarter trajectory of sales. So has there been any loss of sales on Site 2, which could have got impacted and about the two products that we were manufacturing for Otsuka? So I would not like to get the products over here because this Otsuka competition available, and our Chinese competition could get this information very easily, Priyank. So I'm sorry to not give you that information on the particular products. But, talking about Otsuka, there are two products which we were already manufacturing it in our large scale manufacturing platform. And so we have joined and have a association with Otsuka on the existing products, which are manufactured in Site 2. And as we had good amount of stock lying with us, this was not affected. And secondly, we have got a partial revocation of Site 2 already. So this product which we are talking about, which is with regards to Otsuka, is already back online. All right. So to the key takeaway is that there was no loss of sales per se from the Site 2, right? That's the key message that you should give me. No, no. Obviously, there was a loss of sales, because the, two products were almost at, very nominal stock levels, so which we could not, produce for approximately two months. There was loss of sales which was there, and second was that we were not producing, for a period of the closure, which we had, received. And hence, we were selling out of the stock, basically, like material. So if you see the stock position, you will see that our stock positions have reduced drastically. And hence, it is not impacting much on the top line. However, it is impacted, on gross margins. So I understand. Would it be possible to quantify what our quantum of sales that we lost, which would get recompensated because we have got a partial revocation in the current quarter? Production should start and as and when the rectifications are done. So anything that you would like to quantify on loss of sales over two months? We have internal target, but we would not like to lead you to what was the public fit sales of Q3. We had certain internal targets which we cannot lead you to it. But, we lost a considerable amount of sales, let me tell you that. Got it. If you can help me with the realization per kilo, for Q3 or for nine months, it would be great. 1,514. That is 1,514, is the Q3 average realization per kilo. For nine months? Just calculate into. 1,570. Got it. Just a last question on Site 4, where the oil field contract lies, the commencement of the construction has started in July 2023. By when would it get commissioned? We will start commissioning next month in February. And so we are going quite aggressive on that site, and we are going to start commissioning in February, with expectations of some contributions in the next fiscal year. Sir, just to verify the realizations for this contract were at around $3-$4 per kilo, and that has remained stable, even in the current market scenario? Yes, yes. Yes, that remains stable. The current market scenario is going to not affect this contract. Got it. Thank you. Thank you, Priyank. Thank you. The next question is from the line of Siddharth Redkar from Nitinius. Please go ahead. Oh, hi, sir. I just wanted to understand that fundamentally anything has changed in the overall chemical or the specialty chemical business, like where we were sitting in 2022 when we were evaluating projects and where we are today, has anything changed or it is just a destocking that, I think? Nothing has changed in the macro part of the world. If you take a step back, when we were in the midst of COVID, we thought the world would end, but then if you take a step back and we realize that life is going on as normal. And so, so far, nothing has really changed. If you sit back and look at the global perspective, I've always maintained that this is a golden decade for the Indian chem industry. I believe this is a golden decade for the Indian chem, chem industry, and will remain so. But if you would like, go into micro address in this current day and day and month, China is extremely aggressive in their pricing and strategy. Destocking is happening, inventory levels are very high because of the COVID time closures and the inflation that and the stocking that happened all over the world, if you look at inventory is going even further. That is currently being aggressively destocked by China. And they are truly dumping in a very aggressive fashion. And so that's a current state of affairs. But if you take a step back and look at them, like, from a yearly perspective, I don't see any problems in all the tailwinds that were there in 2022, which will come back, I believe, in 2024, to an extent, fully in 2025. So initially, like, if we were estimating a ROC of 20 or 25% for the project, even up beyond the destocking, we should get there. That is okay at this timing or they could end up somewhere lower now in this section? And, for the ROC level in the mode where you're using lots of effects, which is coming up, which is certainly we will always. I was asking on a prudent basis, like, when we are evaluating a project on a certain ROC, and even beyond the destocking, should we get to that those levels or might be lower than what basis we were thinking? No, no, we should, we should get to those levels, then only the projects will. Hello? Yeah. Okay. Secondly, in terms of China, we are hearing that even now, China has been aggressively investing in the downstream and in the specialty, or complex products. How true is that, and how should we look at them as a competition, even in the complex chemistries and products? They are a formidable force, and they are the best in what they do in the spectrum space or the commodity space or the API or AI space. So we shouldn't discount China in any way possible, and we should consider this threat very seriously and take proper care that when we select the products which falls into our core competency, we should do our techno-commercial studies very, very, very, very properly and seriously, and it is what we do. In our product basket, if you want to understand, like, across the products that we are manufacturing, is it fair to assume that we will be one of the lowest cost producers in the world, that is why we are competitive even at these prices? We might be lowest cost producers in the world, but we are the only most... In the most of the products, we are the only manufacturers of this particular product in India. And that gives us a good advantage as compared to as compared to our competition in China, where we have a source which is reliable Indian source, which is reliable, auditable, and and holds up to the values of the business basically. Okay, so got it. So basically, I think the key takeaway is that beyond the destocking, maybe, like, one or two quarters down the line, we should see some gradual normalization, and CY 2025 is where we should be back to the normal levels. Is this a fair assumption? Yes. Okay, sir. Thank you very much. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. If you have a follow-up question, we request you rejoin the queue. The next question is from the line of Rohit Gori from Progressive Shares. Please go ahead. Hi, team. One or two questions, which is related to Novoloop and the circular plastic. If you can take us to what is the role that Aether will play over here, and what sort of an arrangement is done over here? Yeah, Rohit, thanks for that. It's a very interesting project that we have started in exclusive relationship with Novoloop in California. They have a very interesting and novel technology of degrading polymer waste into the crude monomers and upcycling them previous polymers. So it's kind of a circular economy, but even an upcycling economy. So, current arrangement is that it is the- they have a process in place which is basic engineering and in their labs, and Aether is the exclusive partner with which they are validating the process. One, scaling up the process. Two, into product, which is the current phase, and the current phase really works out. And three, then in the future, potentially partnering towards further stepping up the commercialization as well. The partnership is sound. We are aligned on the interest and the competencies, and it is a very interesting field. It's again, a new field for Aether. It is adding significantly to the basket of sustainable processes and products, and it is a big thing into diversity, moving away from the ag and the pharma part of our business, which is a strong focus for us. And so it's very interesting. So the current press release was more on the side of Novoloop, and so we kind of made a press release backing up on that. But, in fact, they were presenting in the World Economic Forum in Davos, this particular case study and their technology, and they wanted to secure a press release before that, and so we kind of helped them out in that. And then, it's very interesting where this will end up. Potentially go all the way towards commercialization. This pilot plant, is that which site from Aether's end? Site 1, the new pilot plant that we're building. We're building an entire, state-of-the-art, fully automated, manufacturing scale. Again, going back to the various questions on this call, core competencies and continuous reaction technology, CRT and depolymerization, which is very, very, very, very, very unique and very interesting technology that they have kind of, innovated on and they're going to bring to, commercial realization. Dr. Aman, please, if you can just take us through what sort of revenue potential do you see or what type of investments do you feel? Because it's a promising business and promising chemistry going forward. What type of competition is there or something on the market size or the margins profile I can understand? The market price, you could imagine the PPE waste that happens in the world is hundreds of thousands of tons. And there are quite a few companies in which we are working with. I cannot name them, but I'm working with one company as well in the U.S., on very similar field of upcycling and circular economy of polymers. And so it's a newly developing field, and we are only in partnership with the frontrunners of this field. And the market potential is tremendous. You know, every single plastic that we touch currently is going to waste. And you know, you throw in plastic, you throw in plastic polymers in the recycling bin at the airport. But actually, it's actually only about, 10%-15% of what is going into the recycle bin is actually recycled or upcycled. The rest of it is actually going to waste. And so I'm just looking at the Google number here, and Google, sustainable plastic waste management market in the world, and that's claiming to be $35 billion in 2021, and so 35 in 2029. And so that's, you know, it's, it's, it's, it's too early to say anything, but it's a very interesting field. We are working with all the major players right now. Novoloop is one of them that we have publicly announced, and, I think we are, working on this field as well in the coming future. And the, the potential is tremendous. We're talking about thousands of tons. As far as we know, you know, we are the only people in India doing this in partnership with such companies. Dr. Aman Desai, do you think that different kind of businesses will kind of keep a little bit on the margin profile, which is currently? It was earlier 28%, or you scaling up to 22, 23? The realization will be small, but the margins and EBITDA will be gradual and going up. And so we will not compromise as a business policy and as a fundamental methodology, philosophy of the company and the family. We will not compromise on the margin levels and the EBITDA levels as much as possible in the years going forward. The realizations might be small because the oil service, as the other speaker had mentioned previously, was INR 3,000 realization as compared to, you know, INR 1,500 of almost $80 of the current average realization that we have today. So we'll compromise on the realization because that depends on the field that we get in, but we will, as much as possible, try and not compromise on the margin for the metric. Okay. That's all my side. Thank you, Dr. Aman. Thanks a lot. Thank you. Sure. Thank you. The next question is from the line of Inderjeet Bhatia from HDFC Securities. Please go ahead. Yeah. Hi, Aman. Hi, Rohan. Hi, Faiz. Thanks for the opportunity. Hope all okay at the site now. Just couple of questions. One is on this, if you could just explain this margin. I think there was a comment by you, by Rohan, I think, that gross margins got impacted. If you could just explain the mechanics as to how exactly this played out. And second is, do we expect to kind of go back to our usual 20% net profit margins back, say, from quarter four or next year onwards? Yeah, so Inderjeet Bhatia. As Rohan said, we were able to achieve the sales in the third quarter, mainly because of the finished goods inventory, which we had for the materials which were required by the customers. And so finished goods inventories are all sold out, and you can see the change in the inventories into the finished goods has gone down drastically, and that has impacted the margins, because there is no production which has happened, only the sales has happened. The change in inventories, which was twenty-five million, sorry, INR 25 crore in the last quarter, it come down to INR 3 crore, which has impacted the margins—INR 25 crore, which would have been better number if the site was working properly in December month also. So that would have changed the numbers drastically. The main reason is that it is because of the finished goods which have been sold off, and the changes in has gone down a lot, and that reduced numbers in the sales. Okay. So we should be able- Regarding the margin? Yeah. Hello? We, yeah. Hello? Yeah, go ahead. Go ahead. Please go ahead. Yes, and regarding the profit margins, we definitely were banking on the 20% was our benchmark. That still remains the benchmark to grow from there gradually. We would definitely be willing to bring this back in quarter four, but from next year, of course, we should. That is the target again for us. Okay. Was there any among the other costs, is there any kind of a inventory-related cost or damages to inventory, damages to finished goods? Is any of that kind of cost also booked into the PNL this time around? No, no. Currently, we just could not have mentioned clearly that the loss assessment is going on. Currently, we have not taken any impact of assets or stocks or stock loss in this current quarter. Once the assessment is over and we are submitting the final claim to the insurance company with the accurate numbers, then only we will be taking the impact in the books of accounts. Sure. Typically, the turnaround time by insurance company to kind of clear damages would be six months? Yeah, it should be, it should be six months, but we would be, we have been providing the required information and data to them, so we should try that we are able to close this in within three to four months. Got it. Thank you. Best of luck. Thank you so much. Thank you. Ladies and gentlemen, 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 participating in the call. We hope that we have addressed majority of your questions. If you still have any further unanswered questions, then please feel free to reach out to us. Have a great day ahead. Thank you very much. Thank you. On behalf of HDFC Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.