Ladies and gentlemen, good day, and welcome to Apcotex Industries Limited, December 2023, Results discussion conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star, then Zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am. Good afternoon, everyone, and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the investor relations of Apcotex Industries Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the Q3 and nine months of the financial year 2024. Before we begin, a quick cautionary statement. Some of the statements made in today's con call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Abhiraj Choksey, Managing Director, and Mr. Sachin Karwa, Chief Financial Officer. Without any further delay, I request Mr. Sachin Karwa to start with his opening remarks. Thank you, and over to you, sir. Thank you, Purvangi. Good afternoon, everybody. It is a pleasure to welcome you all to the earnings conference call for the Q3 and nine months of financial year 2024. I hope you had an opportunity to review the financial statements and earnings presentation, which has been circulated and uploaded on the website and the stock exchange. Let me provide you with a brief overview of the financial performance for the Q3 ended 31 December 2023. The operating income for the Q3 was INR 357 crore, which grew by around 10% year-on-year due to increased volume year-on-year. This was in spite of challenging market conditions. This quarter, we had highest quarterly export volume growth of 98% year-on-year, led by nitrile latex, carpets, and construction. The EBITDA was reported at around INR 25 crore, which declined by 17% year-on-year, driven by lower margins in NBR, HNP paper. The EBITDA margin for the quarter stood at 9.88%. The net profit after tax was INR 11 crore, which increased by 46% year-on-year due to increased depreciation and interest costs from new expansion projects, and PAT margins were reported at 4.50%. Now, coming to the financial performance for the nine months ended for the financial year 2024. Revenue stood at INR 8.4 crore, representing a marginal 1% decline year-on-year. The operating EBITDA was INR 83 crore, which declined around 34% year-on-year, while margins stood at 10.16%. The PAT was reported at INR 39 crore, which declined by 61% year-on-year, representing PAT margin of 4.72%. For 9 months, volume growth was 26% year-on-year. Export volume grew by 107% year-on-year. The revenue growth was flat year-on-year due to changing product mix, decline in raw material prices, leading to lower realization of finished goods. With this, I open the floor to question and answer session. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and One on their touchtone telephone. If you wish to remove yourself from 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 Mr. Aditya Khetan from SMIFS Institutional Equities. Please go ahead. Yeah, thank you, sir, for the opportunity. Sir, my first question was onto the nitrile latex side. Sir, what was the utilization for this business in H1 as compared to this quarter, Q3? And secondly, sir, I was also looking at the prices of nitrile latex. They have again started to decline from October. So what is the current status, and how is the demand outlook globally? Thank you, Aditya, for your question. So, look, I think nitrile latex has been challenging, there's no question about it. Our first half, we were at about 25% capacity utilization. In Q3, it's gone up slightly to about 30%. It's definitely, you know, under what we would have liked. Q4, we expect it to be about maybe 35%-40%. I'm not sure exactly, but January looks good. Yeah, I mean, prices have declined, but so has raw material costs. Overall, there's not been much improvement in margin, which was, you know, given the current situation in the glove industry. But very recently, we are seeing a turn in the glove industry, I would say in the last one and a half months.... Where finally some of, you know, some of the old, sort of, some capacities have been shut down, so there's a better supply-demand balance in the glove industry. Now, that is still to translate in the latex industry, where there is still a supply-demand mismatch. China is sort of gone ahead and expanded during the COVID years for both gloves and latex capacity. So I think we, we are seeing after a long time, maybe after a year and a half, we are seeing a little bit of an uptick in prices as well as margins, as well as a little bit of pull from customers. So I would say that's where we are today. Okay. Sir, any specific reason why the prices have started declining from October, and now you are witnessing that is going up because of, of better demand supply? Two reasons. Well, the prices started declining, because the raw material costs were also declining, so we had to, you know, I think globally, all suppliers had to pass along that cost decrease. Now it's increasing, I would say in the last maybe five, six weeks, is because of, again, raw material prices strengthening, and I think supply-demand, at least it's too early to say, but at least in the last month, it seems a little bit more balanced. So both reasons why prices are going up now. Okay. Okay. Any specific reason for there was a more- Not enough time, you know. You're at least 3-6 months. You have to see what happens. Okay, got it. Sir, onto the NBR side, any specific reason there was a volume decline in NBR and HSR in this quarter? So for HSR is anyway a very small part of our business, so I mean while there was a volume decline slightly, I think for the whole year, you know, sometimes that does happen. So HSR, I'm not worried at all. NBR, yes, there were, I mean, significant imports that came in, and so there was again, the same supply-demand issue. So there was a supply-demand mismatch in India especially, but even in China and globally, as a result of which, volumes for us came down in the last quarter. Again, we are seeing a pretty smart uptick starting from January. So that quarter on quarter does happen. In fact, compared to Q2, the reason why our Q3 EBITDA is down is mainly because of NBR, NBR volumes and margins. So that quarter-on-quarter sometimes does happen, and I think hopefully, you know, this quarter should be a little better for NBR. Okay. And sir, these imports you mentioned, of NBR, so particularly from which, so geography we are witnessing huge imports in India? Look, the regular ones, you know, most I would say most of the imports come from Korea, so that continues. Okay. Sir, for the last- The data is available for everyone, so I'm sure you can look it up. Got it. Sir, for the last 2-3 quarters, we are mentioning in our investor presentation that paper sector is weak. But sir, when we look at the paper sector companies' commentary, they are not indicating that weakness. But you are mentioning that the paper segment is a laggard, and in this quarter also, you had mentioned that reason as one of the EBITDA decline. From a margin perspective, not from a volume perspective. So overall, as Sachin mentioned, for the first 9 months, we have seen 26% growth in volume. So as a company, our strategy has been to push volumes across all segments, including paper. So from a volume perspective, there is no problem, but again, because we have expanded capacity, our competitor has expanded capacity all in the last 1 year or 9-10 months, this has resulted in, you know, some kind of excess supply. As a result of it, margins are under pressure in the paper industry, not so much the volumes. So overall, as you said, paper industry is doing very well because raw material suppliers like us are being squeezed on margins. But in terms of, you know, volumes and their results, I think they're doing well. Okay. Sir, just one last question. Sir, earlier we used to share some guidance onto the top line and EBITDA. So what is our projection like for the next two years in terms of the revenue growth, EBITDA growth? And what could be the sustainable EBITDA per kilo for the next two years? So we actually, Aditya, we never give specific guidance for quarterly or yearly. We broadly talk or on EBITDA either. We broadly talk about where we see the company going and, you know, there are certain things that have gone really well for the company since our expansion. For example, our expansion in Taloja has gone exceedingly well, and for the new plant there, we are at 40% capacity utilization within the first nine months, which was better than what we expected, frankly. And over the next one year, you know, we hope to be closer to 70%-80% capacity utilization. Nitrile latex, honestly, capacity utilization is not that big a challenge. We can increase it overnight, but the margins are so low, it's really, you know, we don't want to sell at negative contribution levels. So our strategy has been, let's increase sales and breadth of customers wherever we are getting at least, you know, positive contribution. But EBITDA is, and, you know, at least the EBITDA breakeven, we don't want to go negative EBITDA as far as possible. So that's pulling it down. So overall, the, you know, the growth strategy continues. The Nitrile Latex has been a little bit of a downer, I'd say, I guess, for us, but the rest of the business is on track. And NBR margins go up and down, as we have mentioned many times in previous con calls, so that continues to happen. Sir, just a follow-up on this. So, sir, what is the breakeven prices of Nitrile Latex or the utilization wherein we should so we should start to see a positive contribution margin from this business? I'm sorry, I didn't understand the question. Well, are you asking me when? Sir, what would be the price range or you can say a price figure for nitrile latex or a utilization figure from which, exceeding that, so we should start to see a positive contribution margin? I would say, look, it's very hard. It's not about price, it's also linked to raw materials, right? So it's about contribution margins. We do need a certain contribution margin and a certain volume of capacity utilization. These are numbers we don't share outside. They're specific numbers that we'd like to keep to ourselves for now. So 40% today, so we are making money on that business or not? Where is that? Nitrile is at 30%, and we are not making money. Okay, got it. Thank you, sir. Thank you. Thank you. 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 question to two questions per participant. Should you have a follow-up question, we request to rejoin the queue. The next question is from the line of Tejash Pandya from B&K Securities. Please go ahead. Yeah. Good afternoon. First thing, I would like to give you an idea that profit margin reduced from 5.4% in September 2023 quarter to 4.3% in December 2023 quarter. Second point, considering nine months of 2022 and nine months of 2023, the finance cost increased from INR 1,403 lakhs to INR 44,807 lakhs, increase of 242%. Depreciation and amortization cost increased from INR 113 lakhs to INR 1,175 lakhs, an increase of 939%. Other expenses increased from INR 374 lakhs to INR 2,341 lakhs, an increase of 5.5%. Sir, during the nine months of '22 versus nine months of '23, there has been a slight decline of turnover. If the costs increase in this way without increasing in turnover, company may have a difficult financial problems. So how do you plan to maintain your profit margins? Yeah, as I was mentioning to the previous caller, certainly profit margins have been lower this year, EBITDA margins. Let's talk about EBITDA first. EBITDA margins have been lower this year in the first nine months compared to the last nine months. And the reasons I have just given, one is nitrile latex. The margins that we were expected are definitely not there. NBR margins have declined compared to the first nine months of last year. And we've also had a considerable amount of stock loss this year compared to last year for the first nine months. For, I would say that itself would make a difference of maybe 1.5%-2%, is only because of the stock loss this year compared to stock gain of last year. So there are various reasons. However, the silver lining is, look, our growth has been fantastic in terms of volumes. We've grown at 26% for the first nine months in terms of volumes. Yes, the revenue has not grown flat, but that's because of raw material prices. And our focus this year has been to grow volumes, and will continue to be for the next couple of quarters. And then hopefully, you know, the margins will also correct itself and come back for most of them, and we can go back to about, you know, 14, 15, 16% margins that were our targets. You know, that have been our targets. No, that is very good, sir. But this 14%-16% profit margin is, when do you expect it? Is this in near future, or it will take time? Difficult to predict, sir. Okay. Okay. Difficult to predict. I hope, you will, you all make effort so that profit margins are not lower, because that is the, as a shareholder, that is very important for us, profit margins. Your turnover, so that our dividend and all that does not decrease. Your dividend has decreased this time also. Earlier you, you gave an interim dividend of INR 3 per share. Now, this time here it is INR 2 per share. So no, I think interim dividend was INR 2 a share, and we have kept it at INR 2, so that has not decreased. I see. But the profits are decreased. That is, I hope... Okay, so if you don't want to give any timeline, but I hope you are working in that way that the profit margins are maintained at between 10%-14% or 15%. Certainly, and we have sort of taken up a lot of cost-cutting measures also, and investing some funds to reduce costs further. Good. So, hopefully, some of those investments will start accruing again next year, in the next financial year is what we hope. So could you throw some light why depreciation in nine months in of 2022 was INR 103.13 lakhs and increased to INR 11.75 crores? Have you discarded most of your machineries or why is this depreciation gone so high? Reason of some of the- It has gone high because we have, if you were following the last few con calls and you've been following the company, we had investments of over INR 200 crore that were capitalized in March, April of this year. Earlier, March, April 2023. So that, because of the capitalization, the depreciation as, for those projects has now hit the PNL in the year 2023, 2024. ... Suppose you have taken such a high depreciation for your capital expenditure, next year, will it be expected to remain this high or it will be reduced? The way depreciation works is that it, you know, once new projects are capitalized, obviously there's a one-time huge increase in depreciation, and then over time it keeps reducing. That means profit margins may likely to go up? Slowly, yeah. Same as interest. Thank you, sir, so much. Thank you. Thank you so much. The next question is from the line of Ankit Kanodia from Smart Sync Services. Please go ahead. Thank you for taking my question. Sir, in your presentation, you mentioned that highest quarterly export growth is led by nitrile latex, carpet and construction. Yeah. Is it possible to give any ballpark numbers as to percentage-wise how much it is due to nitrile latex and how much due to...? I don't have the numbers in front of me percentage-wise, but I would say nitrile and carpet have both grown by 100%, is what I recall. Sachin, would you have these numbers handy? Maybe we can give percentage numbers for this export. But it's been quite... It's pretty much proportional, right? From what I recall. Okay. Sachin, do you have these numbers segment-wise, export? Segment-wise, we have grown in carpet more than 100%. Industry-wise, sorry, not segment-wise. Industry-wise. Yeah, industry-wise. So carpet, we have grown more than 100%. Nitrile gloves also we have grown by almost 30%-40%. Then in case of tire cord, which we have grown by almost, you know, 100%+, and construction. Okay. Yeah. If I got it correctly, nitrile has the least growth among the three, right? No, I think for the first nine months, Sachin, I think there is some mistake. It's 100%. Nitrile quarter. We are looking at almost 100% growth for nitrile compared to last year's first nine months. I'm giving quarterly growth right now. Ah, maybe quarter. Yeah. Okay, got it. Yeah, nine months. In nine months we have grown more than 100%. Yeah, that's what I thought. Yeah. Okay, got it. So, as you mentioned in our earlier, I mean, to the answer to some of our earlier participants, where you said that we are not making any money on Nitrile Latex at the moment. And, if we continue to grow the volume in such a scenario and we continue like this, so how confident you are that the demand supply mix will get sorted in the coming quarters and we'll be back to profitable state? Look, you know, the nitrile market, of course. A lot of capacity has been created over, through COVID. Obviously, excess capacity, which is causing both gloves and Nitrile Latex margins to be quite suppressed. We believe that it's a growth industry. The industry is still growing at, you know, double digits, and some of these capacities are being rationalized. Some of these capacities are now not, no longer viable, so they've, you know, shut down. Some of the old players have shut down some of the old capacities. Some new players that came in have not been able to be financially viable, so they are shut down or postponing their projects or volumes. So, you know, I think in the long run, we still believe it's a great business. There are a few companies in the world that manufacture Nitrile Latex. The same companies have expanded over the last few, over the last couple of years, including us. So it will correct itself very... It's been hard to predict when it will happen. We are seeing some early signs now, finally, after a year and a half, as I mentioned to the previous caller, of some uptake in margins and pull from the market, which was not there for the last year and a half. So we'll have to wait and watch whether it's just a short-term phenomenon, but hopefully, you know, we'll know in the next three to six months. Sure. That was very helpful. So, if I get it correctly, is it fair to assume that we are not going to see the kind of margins in nitrile latex which we saw just after COVID in the year 2021 and 2022? Those were certainly unusually high margins. That's not gonna come back, and the project was never, you know, on. All our projections were based on pre-COVID margin levels. The problem is, even compared to pre-COVID margin levels, we are much, much lower. Right. We are hoping to go back to pre-COVID margin levels, in which case, you know, our, our returns on IRRs will be pretty good. Right. So currently, what the margins which we have right now, it is only because of NBR, right? This, because nitrile latex, you are saying that you are not making any margins, I mean, you are not making any profit as of now. What's your question? Whatever profit which we are getting right now, is it majorly contributed by NBR? No, no. As you know, we have seven or eight different ranges of products. One is nitrile latex, the other is NBR. The third is, you know, styrene butadiene latex for paper, carpet, construction, styrene acrylics for paper, carpet, construction and textiles. Vinyl pyridine latex for the tire industry, high styrene rubber for the footwear industry. So that way we're well-diversified. So obviously, the profits are coming from the other segments. In fact, NBR has also been challenging this year, this quarter, in terms of margins and volumes. Okay, one last question, regarding- Sir, I'm sorry to interrupt. I'm sorry to interrupt, sir. May we request that you return to the question queue for follow-up question, as there are several participants waiting for their turn? ... Sure, ma'am. No problem. Thank you. The next question is from the line of Jatin Chawla from RTL Investments. Please go ahead. Hello, sir. Jatin, sir, you're not audible. Hello. Can you hear me now? Yeah, we can, we can hear you, Jatin. Yeah. Okay, thanks. So my first question is that, on nitrile latex, in China, it seems was, smaller part of the industry or global, industry, capacity and demand before COVID. And post-COVID, China's share has gone up significantly, because of the large capacity expansions, that happened during the COVID phase. So does this kind of change the longer-term, dynamics for industry in your view? I think so. I think China is here to stay. You know, in the past, Malaysia, Thailand, had the majority of the share. They still do, but China has certainly taken over a large chunk of the share. But, I think, this—I mean, Malaysia still remains the number one glove producer, and from our point of view, you know, Apcotex is looking at a very small volume compared to the entire global volume of of nitrile latex consumption. So it, it does impact and we have also, you know, taken this as an opportunity, and we have actually made our first supply to China in the month of December. So we are looking at China as a market as well, because they are a net importer of nitrile latex, as of now. So we can look at opportunities in pockets in China as well, which we frankly had not done earlier. Got it. Got it. That's useful. The second question is on NBR. Now, you know, imports have continued to be challenged on and off in this segment. And as the world kind of moves towards EVs, it seems globally, you know, this extra capacity challenge will be there. How do we propose to offset this? Well, it's a little early to say. In fact, we have seen a very good growth in NBR for the India market overall, I would say, this year. When we look at the total market, it is actually grown within India. And for India, EVs or auto anyway, is a smaller component. 25%-30% of the total NBR consumption in India is auto. There are many other segments. China, of course, the large consumption is for auto, from what I understand. So it's a little early to say, I would say, but yes, that is definitely certainly a threat. And I think before it affects us, it will affect some of the larger players in Europe and East Asia, because we have a smaller capacity in any case. So as a result of which, you know, we are quite confident of hitting our volume sales, especially since India is a strategic market for NBR. In terms of margins, yes, in the long run, there can be some issues depending on how quickly electrification happens, but I think it'll automatically mean some supply adjustment automatically will happen at some point. Got it. Got it. If that happens, if there's a decline. But as I said, in India, we're seeing a growth. Yeah, I know my question was on global, right? Because if globally there is idle capacity, that will result in higher imports in India, they will want to push it, push forward. Will happen, yeah. Yeah. Yeah. And that's the reason why we have not yet, although we have the entire project plan and detailed engineering ready for the expansion of NBR plant, and it's not really a massive expansion, honestly, it's you know, expanding by another 70%-80%. We are just doing debottlenecking and carrying on for now, and we're able to still do that to some extent, even in this year. So, so we have not taken the decision on NBR for that exact reason. Understood. Understood. My last question is on exports. We are seeing very solid traction on that front. Mm. Are we benefiting at all from the fact that some of the European players are struggling and, once they kind of come back, you know, some of these export volumes might feel- Sir- Come under pressure. Sorry to interrupt, sir. May we request that you return to the question please? I'll answer the question, though, and then we can move on to the next caller. Sure, sir. I would say yes. I mean, look, European suppliers, I think the entire cost structure has changed in Europe. I don't think it is just the war, although people, you know, have been blaming the war for a while now, it's been two years. Europe, in Europe, manufacturing from every angle, whether it's CapEx, raw material costs, energy costs, labor costs, has significantly changed. So unless there is something that a European manufacturer brings to the table, which is, you know, highly premium over others, in our industry at least, I feel going forward, we'd see more and more, European manufacturers in chemicals becoming unviable. That's my view. I don't think it has anything to do temporarily with the war or anything of that sort. But certainly that's, that... We have benefited for two reasons. One is the external environment. Certainly, the energy prices have been higher because of the war. But even if that corrects, I think we have, we have taken strides in terms of our products, in terms of the specific products that we've developed for the carpet industry. For example, nitrile latex doesn't change. That's Southeast Asia, we're not competing against European suppliers. Even carpet, we are, we are somewhat competing with the European suppliers, but there is one other Asian supplier that we've competed with effectively as well. And in construction, we have, you know, very specific, niche products that we have, developed for the export industry or for the export market. So I think there are some things we have done internally, which, you know, which is very sticky, and certainly we have taken advantage of the external situation over the last couple of years. Got it. This is very useful. Thanks a lot. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two questions per participant only, as there are several participants waiting in the queue. Should you have a follow-up question, we request you to rejoin the queue. Our next question is from the line of Romil Jain from Electrum PMS. Please go ahead, sir. Hello, Romil Jain? Hello? Perhaps you can come back. Move on to the next caller. Okay. The next question is from the line of Mr. Aditya Khetan from SMIFS Institutional Equities. Please go ahead. Sir, thank you for the follow-up. Sir, on to the export side, so since the start of the nitrile latex business, we have started to see that our exports have gone up. Any rough figures or is it possible to share a ballpark figure of exports and domestic volumes? We talked... Yeah, I mean, I'll give you the percentages. We are at about, Sachin, for the... I mean, Sachin, you can correct me, but for the quarter, about 33% of our sales are from exports, right? Yes. For the first nine months, about 30%. Yes, 30%. Yeah. And volumes will be similar, I think, right, Sachin? Yes. So these, these numbers that you gave, these are the volume numbers. Oh, these are volume. Okay. Volume numbers. Value? Similar, right, no. So around 30-33% is broadly the export figure. Got it. Got it. Sir, on to the raw material side, so when we were looking at the price trend, so butadiene prices on quarter-on-quarter basis have seen a jump, whereas the styrene prices have declined. Is there any specific reason why these two are behaving, butadiene is going up and styrene is going down? First of all, I don't think butadiene has gone up in the between sort of September and December. I think it's gone down a little, if I'm not mistaken. But I mean, the bigger picture is, yeah, I mean, no one knows, right? Suddenly we are expecting it to go down, and it did go down for a while, and suddenly now in January we are seeing a huge uptick in butadiene prices. Look, every petrochemical, every monomer, has its own supply-demand dynamics, and it's very hard to predict, you know. Like, currently we are seeing styrene is also going up substantially because of couple of reasons. You know, maybe one large supplier is down or not supplying as much as they should, and suddenly there's a shortage in the market for a few weeks, so it suddenly goes up. So it's very, very hard to predict. So we have chosen not to look at long-term predictions for these monomers. We look at short-term, and we try and manage our short-term inventories and short-term requirements, and accordingly manage our buying. Thank you. The next question is from the line of Jagvir Singh from Clockvine Capital. Please go ahead. Hi. Sir, thanks for taking my question. Sir, some of my queries have been answered. So my first question is that, what percentage of consumption in China, in nitrile latex, happens through imports? I don't have the exact data, honestly. But I do know that a large percentage of manufacturing that happens in Japan and Korea is largely exported into Malaysia, and now, I believe, into China, but I do not have the exact data. Got it, sir. Got it. And sir, are the realization for nitrile latex in China lower than elsewhere, for, let's say, in Malaysia? I think if the freight component is higher, the pricing is about the same, if you look at the FOB pricing. But we have to, you know, provide them with sort of CIF pricing. So yeah, we have to adjust the FOB pricing for the higher freight component, but it's not significantly higher. So I would say it's maybe marginally lower as of now, and as I said, this is the first time we've done business in China in the month of December. We'll have to see how it plays out over the next few months and really, you know, also gain experience of doing business in China, because that's something that we never envisaged that we would do, and we didn't make efforts in the, you know, over the last couple of years since we've been building the business, because we thought there's enough, and there is. We frankly think there is enough volume between India, Sri Lanka, Southeast Asia, and... but we still do want to keep that option open and, and diversify ourselves to China if possible. I think over time, we'll see similar margins between China and Southeast Asia. Maybe marginally lower, but as I said, a little early to tell, and we, we still have to learn. Got it. So last question from my side, sir. So as you mentioned in the call earlier, that you have seen, better than expected utilization in your new capacity at Taloja. Yeah. For SBL latex product, I guess. So now, so now it seems like, you know, you'll soon reach, optimum capacity utilization maybe in the next one year or so. So any thoughts on expanding capacity in that segment? Yeah, yeah, absolutely. We've already started thinking about it. We actually initially thought we'd be okay for three years, but the way it's going, we maybe, you know, maybe by the end of financial year 25, we will hit max capacity there. So maybe a year before we thought we would. Of course, we still have to see how it plays out, but that's our current initial estimate, so we'll see how it plays out. But yeah, one option is, look, if the nitrile latex business doesn't improve, and we want to kind of convert some of that capacity by investing some more money in Valia, we have the EC in place, and we have all the permissions in place. All we need to do is invest a little bit and convert some of our, some of our capacity there into SBL latex. Little early to say, we do not want to do that because, you know, we are, we're committed to the nitrile latex business and, and perhaps growing it as well. So we don't want a knee-jerk reaction, but yeah, I mean, that's certainly an option to do more capacities in Valia. We also have the option of debottlenecking a little bit and trying to increase capacity to some extent in Taloja, which we are working on as well. I think over the next 6-9 months, you know, we'd have some clarity on those projects. Got it, sir. Thanks. That's all from my side. Thanks. Thank you. The next question is from the line of Farokh Pandole from Avista Fund Management LLP. Please go ahead. Yeah. Hi, Abhiraj. I just firstly wanted to ask if you could tell us a little bit about ApcoBuild and how that's doing and are the growth rate sustaining? I would think in this environment with real estate sort of picking up over the last 12, 18 months, definitely, you know, there should be... That should be a sort of good growth area for you. Yes, absolutely, and as I said, it's a much smaller, as we have always talked about it, it's a much smaller part of our business in terms of revenue, but we have seen double-digit growth for the last three, four, five years now. And even for the first 9 months of this year, overall, I think growth has been about 18%-20%, if I'm not mistaken. So yeah, we continue to expand geographies and, you know, increase product range as well. We've also expanded the team, adding a few more people. So that is going as per plan, yes. Excellent. Just a couple of clarifications. Wanted to ask about whether the anti-dumping duty is something that we are still pursuing? And also, secondly, unrelated to that, in the statement of results, you know, item number six, what exactly is the item that will not be reclassified to profit and loss? If you could just explain what that line is? Sorry, can you... So I'll just, I didn't understand your last question, but I'll just answer your first question on anti-dumping. So there are two things happening with anti-dumping. One is, us and, a lot of other companies who are in the same boat have filed, appeals, of course, or filed cases, and it's going through the high court system right now, Delhi High Court. Nonetheless, you know, we have also been advised to file new anti-dumping, petitions. We haven't taken a decision on whether to do it just yet, given what happened last time. We're not clear on, you know, the finance ministry has rejected it last time. We don't know if they'll reject it again. So right now there are some rumors that the finance ministry is accepting a majority of the cases. Suddenly there's been a rethinking. If that does happen, then we have to restart the process and redo it again from scratch, but then it'll take another 6-9 months. So that's where we are on anti-dumping. We're not relying on it, but it's something that we're watching and keeping a watch on it. Okay. Sorry, what was the item number six again? So, you know, in the profit and loss, there was, there's an item that will not be reclassified to the statement of profit and loss. Right. For this particular quarter, it was INR 7.5 crore. So I just wanted to know what that pertains to. So, so I'll answer to it, Abhiraj, this one? Yeah, go ahead, Sachin. This is nothing but, you know, an end-to-end profit that we make on investments that we have in the books. Right. Basically, these are long-term investments, and they don't get classified as profit, basically- Right ... through the P&L account. That's number one. And the second is also, basically, these are liabilities or long-term liabilities that, that have got a period exposure to it, you know, they get reclassified below into OCI, so they don't get classified in the P&L. Sure. Also, what is our net debt at this point? Sir, I'm sorry to interrupt. May I request that you return to the question? Let's, what's your last question? I'll answer it. Okay, sure. Thank you, sir. Sorry, what's your question, Farooq? What is our current net debt? Net debt, you mean long-term minus, cash? Investment, yeah. Yeah. I, you all know, minus investment? Yeah. Yes. So that would be around 70. 70 crore, but this includes working capital, lines as well, right? Including working capital and term loan. Yeah, both. Okay, got it. Thanks a lot, and all the best for the next quarter. Yeah. So just to, to reclarify, Farooq, we have about INR 125 crores of long-term debt, which we have taken for the projects. Against that, I think we have currently sort of investments in the books for about INR 110 crores. Right. The rest of it, maybe about, Sachin, what about INR 40, 40, 50 crores is working capital lines, right? Yeah, around 50. Yeah. Great. Thanks a lot. Thank you. Next question is from the line of Niyoshi Parekh from Native Capital. Please go ahead. Yeah, hi. Thanks for taking the question. The first one was, could you help with the mix of revenue between NBR, nitrile latex, and- ... HSR, et cetera? Yeah, great question. You know, that's one thing I'm glad you asked it, because that's one thing that significantly changed compared to last year. You know, earlier, our rubber business or solid polymer business was about 45%, and latex or liquid polymer was 55%. That's significantly changed this year because all the growth has happened on the liquid side, on the latex side. So now we're at about 65-35. So 65% latex, 35% rubber overall, in terms of percentage sales. In terms of breakup segment-wise, I would say, and, Sachin, these are broad numbers, but I think it's 25% is NBR and allied products, 10% is HSR. The remaining 65%, I would say, is fairly evenly split between, you know, all the other industries. So paper would be the largest, would... Actually, it's not. Now, paper and carpet are both quite, paper and construction are both equally large, about 15%-20%. Carpet and textile, we put together, is another 15%-20%, and nitrile latex would be another 15% or so. Maybe some specialties, 5%. So I hope that answers your question broadly. Yeah, it does. Very, I mean, very well diversified and split now, I would say. Right. No one industry or, you know, area is more than 25%. Right. Got it. Is it possible to put this in the presentation every time? It just helps to track. Sure, we. That's a good idea. Sachin, can we do this volume-wise or value-wise will be better? Volume, we will decide that. I think that's- Yeah. Fair request. Yeah. And the second question was on nitrile latex, right? You did give some color, but just from a supply-demand perspective, what do you think is the proportion of oversupply today? And you know, how much do you think is the time will take to actually get there? And is our cost of production very different from some of the larger players who are gonna supply and who are dominating the market? I don't have the exact numbers with me right now in terms of, in terms of supply, demand, sort of capacity utilization. Typically, we see that, you know, once any industry that, at least in B2B chemicals I can speak for, goes to about 80%-85% capacity utilization, anywhere beyond 75%-80% also, sort of margins become fair, and viable. Clearly, we are not at that with nitrile latex; it's probably under 70%, but certainly better than where we were six months ago. So, I would say we're getting there, but we're not at 75%-80%. So my best guess would be under 70%, somewhere between 65%-70%. But I don't have the exact numbers for you, because it's also dynamic, right? A lot of things change literally on a monthly basis. Like we just heard some, just a few weeks ago, one of our, one of the other suppliers of nitrile latex has shut down one line. I don't know when that's gonna come about, or when this happened, or when it'll, or whether it'll happen in a month or two. So there are all kinds of announcements made every month in such a dynamic market right now. So difficult to predict or difficult to know the exact data, but this is my best guess. What was your second question again? On the cost of our unit cost of production. Yeah, look, our unit cost of production at this stage is obviously higher because we're at very low capacity utilization. But as we go higher into capacity utilization, 50,000-80,000 tons, you know, obviously, we've done a cost curve working us against our competitors. Some of our competitors are significantly larger and will continue to be significantly larger, and have certain benefits that economies of scale do bring. But at the same time, in this kind of business, there is not a major advantage to economies of scale. We have also done a few things differently because we are, you know, in terms of our cost of CapEx is certainly per ton, would be the lowest, compared to our competitors. But in terms of, raw materials, we are quite competitive, I would say, so I don't think that has a major impact. Mostly, I would say yes, to some extent, some economies of scale on energy costs and all, they may be better off. Got it. The last one- We are fairly competitive, is what I would say. Got it. And the last one, NBR, what percentage goes to auto for us? Still, I think in the market, 25%-30%. Auto, 25% probably. Okay. Got it. Thank you so much. Yeah. Thank you. The next question is from the line of Krupal Maniar from Electrum PMS. Please go ahead. Hello, am I audible? Yes, go ahead. Yeah, thank you for the opportunity, sir. So what I wanted was just the utilization level and the volume growth separately for the latex division and the rubber division. Utilization. So first of all, we don't give volume. Volume growth, if you're asking for- Mm-hmm. Yeah. Most of the growth this year has come from, you know, our latex business, which is carpet, VP latex, nitrile, and, and construction is what-- which is what, Sachin mentioned earlier as well. So the volume growth this year, first nine months or even for the quarter, has all, whatever growth we've had is, is on the latex side. And capacity utilization, as I mentioned, since we have different plants, hard to say. For NBR, we are at 90% capacity utilization, for example. And for the other two, we are obviously at lower capacity utilization, which I mentioned earlier. ... on the margin side, the challenge that we are having right now in terms of realization, this is more prevalent on the NBR side, right, if I'm not wrong? NBR and Nitrile Latex. Yeah, yeah, nitrile and latex. You know, how is JAN progressing? I mean, do we see any incremental things there, or it is similar to the quarter? Yeah, I just said we're, we're seeing a better pull from the market, but it's a little bit recent, so we'll have to see. So JAN is better than what we expected, let me put it that way. On the NBR side, I mean, can we say that this is the worst that we are seeing in the last few years? Or, you know, how do you see that? So, I mean, we have certainly have had bad quarters in NBR. Look, calendar year or FY 2021, 2021, 2022 are very good for NBR, even going into 2023 for, to some extent, in 2022, 2023. But we certainly had poor quarters for NBR, mostly around margins. We have kept our volumes going, but mostly around margins, we've had poor, poorer quarters than these as well in the past. Okay, sir. Thanks. Thank you. Thank you. The next question is from the line of Nikhil from SiMPL. Please go ahead. Yeah, hi, good afternoon. Thanks for the opportunity. I hope I'm audible. Yes, thank you, Nikhil. Go ahead. Yeah. Abhiraj, on the three capacities you mentioned, NBR is at 90%, and on nitrile and latex, the utilizations are lower. One thing I wanted to understand, if we look at, at the capacity level, are those capacities breaking even, or some of these capacities are not breaking even? So would volume utilization, if the pricing does not improve, be a major play for us, for our margins to improve from what we are reporting as of now? I'm not sure if I understood your question. So what I'm trying to say is that, is the fixed cost for running these plants completely, like, covered at the current utilization levels? Or is it like the pricing has to improve for that cost to be covered? Nitrile latex, yes, pricing needs to be improved for the cost to be covered. For the other two, of course, we're doing much better than breakeven at an EBITDA level or even at a profitability level. Okay. Secondly, you mentioned that there are some green shoots you are looking at in January. Is it more on volume? Because see, in the chemical industry and for us also across all, you've mentioned that the thing which we are seeing of falling prices and lower volume offtake from the end customers. Now, when you are saying there are improvements, is it more on the volume offtake from customer or is it also followed up with pricing? So look, I mean, again, every company in the chemical industry can't be painted with the same brush, so to speak. We feel for Apcotex, for the first nine months, we've had volume growth of 26%, as we've already mentioned already. January, specifically, the uptick I was talking about was on nitrile latex and NBR. The rest of the business, which is, you know, styrene butadiene latex, styrene acrylic latex, VP latex and HSR is quite steady. There have been some... the only issue in that has been the paper, margins in the paper industry, which is about 15%-20% of our sale, overall sale. Their margins have definitely been, been suppressed. But where really, why the company's EBITDA margins have fallen to 10% is mainly because of NBR margins being low, volumes are fine, and Nitrile Latex, both volumes and margins being lower than what we expected. So Nitrile Latex is really what is pulling us down. And, for sure, there we need pricing to improve. Okay. And last question. See, we've done very well on the export side, and the volume recovery has been very strong in a market where things are not playing out. So is it like our focus was to cover the costs of operations and gain more and more volume shares in the market? So if you had to intuitively think, would our volume shares in the, at the industry level, increase significantly versus the other players? Yes, so then think about it two ways. One is, as far as domestic industry is concerned, we have grown with the industry. So you know, we already had high market share in most of the products that we are, in all the product ranges that we are in. So on the domestic side, we did not push too much in terms of market share. Where we have gained market share has all been in the export industry, export market, in different industries, whether it's like in the glove industry or carpet or construction. That's where we have gone and been aggressive. Our strategy this year has been to push volume, gain market share, increase the breadth of geographies and customers, and at some point, nitrile latex will turn. If it doesn't turn, we're making a plan B as we speak. NBR, we know quarter-on-quarter, goes through ups and downs. That's just the nature of the business and the commodity. Styrene Butadiene latex has been largely, largely stable. Styrene Butadiene latex and VP latex and the other businesses have been largely stable. That's where we are at in terms of strategy and execution. Okay, fine. Thanks, sir. Thank you. The next question is from the line of Shubham Upadhyay from the MicroCap Minute. Please go ahead. Hi, good afternoon, everyone. I'm Shubham Upadhyay from the MicroCap Minute. So most of my questions have been answered. So, one of my question, quick question is that, the export volume for the first nine months in FY 2024 as shown in a 107% growth year-on-year. So can you throw some light on the geographies of from which the maximum growth has come for the company, and whether these growth numbers are sustainable in the next nine months of the calendar year? Thank you. Yeah. Thank you. Well, always hard to sustain something like 100% growth for the next nine months. I think, because the new capacities came on stream in April, we will still see that growth for Q4. Whether Q1 will continue to have 100% growth after we've already grown in Q1 of this year, I'm not sure in terms of percentage. We'll continue to grow, of course, but I doubt it's 100%. In terms of geographies, again, well-diversified between Southeast Asia. As I said, we even did some business in China for nitrile latex. So a large chunk of the nitrile latex has been going to Sri Lanka, Malaysia, Thailand, Indonesia, China, and some of our carpets have been going to Saudi, Egypt, UAE. Construction is all over, sort of, all over these countries and some even. Turkey is another one that we've developed. Of course, you know, as I said, everything is dynamic. Now we are finding, we did a fantastic job in developing Turkey customers, but now because of the Red Sea issue, you know, freight is turning out to be a little bit of a downer there. So we hope we can be competitive there given the, the current freight through the Red Sea and availability of freight, honestly, availability of shipping liners. So, all these, it's, it's pretty well diversified. Sachin, correct me if I'm wrong, in terms of numbers. No. No, no, absolutely right. Any geography I missed? I just think. No, I don't think so. We missed anything. We have grown in, in major on these. Yeah. Okay. Okay, thank you. That, that answers my question. I will rejoin the queue. Thank you. The next question is from the line of Ankit Kanodia from Smart Sync Services. Please go ahead. Yeah. Thank you for allowing me a follow-up. Just a follow-up question on one of the previous questions which you answered. So as we mentioned that most of our capacity we have already put it up and no major CapEx coming up in the coming quarters. Is it fair to assume that asset turn which is slightly down compared to our long-term averages it should go up from here? So it's about three times last year and maybe about three times only into this year as well. Is it fair to assume we will be somewhere between four and five this year? Yeah, I mean, look, I don't know how you're calculating asset turn, but I assume it's on revenue. Or, you know, overall raw material prices have come down compared to last year. So if you would say that... I mean, if you're comparing the base year is 2020 to 2023, and if you compare- Absolutely. You know, the same raw material prices, you would have seen if the prices had been the same, then end finished goods prices would have been the same, asset turn would have been higher. Of course, asset turn should go up, right? As we continue to grow our revenues and volumes. Okay. Thank you. Thank you so much. Thank you. Thank you. Ladies and gentlemen, that was the last question of the day. I now hand the conference over to Mr. Sachin Karwa for closing comments. Thank you. Thank you, everyone, for joining the earnings call for Apcotex Industries. We look forward to have a better quarter, and we will keep on doing good. Till then, take care, and bye. On behalf of Apcotex Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.