Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY twenty-five earnings conference call of Apcotex Industries Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference, please signal for an operator by pressing star followed by zero on your touchtone telephones. Please note that this conference call is being recorded. I would now like to hand the conference over to Ms. Purvangi Jain, Valorem Advisors. Thank you, and over to you, ma'am. Good evening, 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 second quarter and first half of the financial year 2025. Before we begin, a quick cautionary statement. Some of the statements made in today's conf 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 belief 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. Now, I'd 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. Abhijit Joshi, Vice Chairman and Managing Director, and Mr. Sachin Karwa, Chief Financial Officer. Without any delay, I request Mr. Karwa to start with his opening remarks. Thank you, and over to you, sir. Thank you, Purvangi. Good evening, everyone. Good evening, everyone. It is a pleasure to welcome you all to the earnings conference call for the second quarter and first half of the financial year 2025. 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 exchanges. Let me provide you with a brief overview of financial performance for the second quarter and first half of the financial year ended 2025. The operating revenue for the quarter under review was INR 351 crore, which has grown by approximately 26% on a year-on-year basis. EBITDA for the quarter was INR 28 crore, which declined by approximately 13% on year-on-year basis. The EBITDA margin stood at 7.83%. The net profit was INR 11 crore, which declined by 28% on year-on-year basis, with PAT margin reported at 3.13%. In Q2 FY 2025, we witnessed highest ever quarterly volume and export volume, which grew by 12% and 31% year-on-year basis, respectively. Subsequently, we also achieved the highest quarterly revenue, driven by increased volume and product mix, with export revenue surging by 48% on year-on-year. EBITDA declined due to margin pressures in nitrile latex and paper range of products due to market dynamics and also higher ocean freight rates. For the first half of financial year 2025, the operating revenue increased by 23.5% on year on year to INR 68 crore. EBITDA for the period was INR 59 crore, which increased by 4% on year on year. EBITDA margins stood at 8.60%. Net profit for the first half was around INR 26 crore, which declined by 6% on year on year. For this period, we achieved the highest half-yearly volume and export volumes, which grew by 13% and 22% year on year, respectively. With this, I now open the floor for question and answer session. Thank you. Thank you very much, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question at this time may enter star followed by one on their touchtone telephones. If you wish to withdraw yourself from the question queue, you may enter star followed by two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aditya Khetan. Please go ahead, sir, from SMIFS. Please go ahead. Yeah, thank you, sir, for the opportunity. Sir, my first question is onto the NBR. We all know that, sir, that recently government, so you all have represented to, so to the government, onto the anti-dumping duty case. So when are we expecting the outcome of this? Yeah. Hi, Aditya. Good afternoon. Thanks for the question. So, you know, the case has just been initiated. Of course, we've been working at it for the last few months, you know, providing all the data. So the initiation is also an important part of the step, which means it's primarily they feel that we do have some sort of case, and therefore they've accepted and decided to go ahead with the investigation. From what I'm told, the investigation takes about nine months or so, give or take, you know, one or two months. So I would say anywhere between eight and 12 months for the final findings. Okay. Okay. And sir, so currently, NBR imports are high into India, which is why the margins are lower. So just want to know, our contribution on EBITDA from the NBR segment, are we able to achieve a positive EBITDA from this segment as of now? ...Yeah, yeah, for sure. I think all across the board, we have no segment except the nitrile latex or gloves, where margins are fairly EBITDA margins are reasonably positive. So there's no question about that. And in fact, NBR, compared to Q1 and even last year, the margins have already been sort of lower and depressed. But our contention is that the margins are not healthy enough to sustainably grow this business. And so what we have applied to the DGTR saying is that, "Look, we are okay competing, but if you know, we are expecting Indian manufacturers to compete effectively, then we need effective pricing mechanisms as well to have fair pricing in India." Right now, due to a couple of reasons, one is the China slowdown, a lot of you know, NBR from East Asia, especially Korea, is being dumped into India. And also because of the sanctions to Russia, now we're finding Russian NBR being dumped into India. So, you know, India has become an easy dumping ground where it's a large enough market and there are no local producer except for us. And therefore, our contention is that we want fair pricing in India as well. And therefore, you know, we feel that we have a strong case. We'll see how the next nine to 12 months go. It was, just to remind everyone, it was, we had earlier, you know, in 2020, DGTR had recommended a duty, but the Finance Ministry had not approved it, or not notified it. So we had gone into, into the courts along with many others, who are in the same boat. But now I think the strategy has changed and the entire industry has decided to reapply, and now there is a good understanding with the Finance Ministry as well. So, the idea is to now stop legal proceedings and restart, you know, the anti-dumping again. And on merit, I'm sure, you know, DGTR and the Finance Ministry will look at our case on merit and all other cases on merit. But it'll take about nine months from the time it initiated, which was last month. Got it. So, sir, any change of plan, like, so earlier we were looking to expanding, NBR segment. So any plans now, so we would be going ahead with the expansion which we had kept on hold? No, as of now, you know, the margins are still fairly suppressed. So we would want to see the outcome of this DGTR case or this anti-dumping case, and the findings and the quantum of anti-dumping, and then take a final call on, you know, how to, you know, what to do with this NBR. We're also waiting to see what happens with the market currently with the geopolitical situation with China and Russia, as I mentioned, that's an additional challenge that we've had. So we also want to see how that plays out. So yes, it is on hold right now. Got it. Okay. Sir, onto the nitrile latex, sir, is it possible to quantify the volumes or the utilization level during the quarter? And what is the outlook we are foreseeing? Are we witnessing a surge in prices as compared to last quarter? Because there could have been some inventory rationalization also. So all these factors are playing out, or you are still witnessing that nitrile latex is still struggling with that lower margins building? Yeah, I think, look, nitrile latex is still struggling with lower margins. But the reason was not, is, you know, for the last year and a half to two, it's been higher inventory costs or higher gloves inventory caused by, you know, during COVID and a lot of production happened. Now, that is definitely, sort of cleaned out, but the issue was higher, you know, capacities that have been created. In China, Malaysia, we, for example, have also entered in the last year and a half. So a lot of capacity of latex and gloves has been created. So that's being rationalized a little bit. The other small silver lining, and we'll have to see how it plays out, is the U.S. has recently imposed a 50% anti-dumping duty on gloves from China. So pre-COVID, you know, China was hardly 5%-7% market share. Now, they are up to 25% market share for gloves. And so they've created gloves and latex capacity to that extent, you know, very quickly. Now, with anti-dumping duty from the U.S., which is, you know, the largest market, maybe 50% of the gloves consumed are in the U.S., medical gloves consumed. So we'll have to see how that plays out. And that duty comes into effect from January 25, and that's going to be increased to 100% from January 26th. So the next 12 months should be interesting to see what happens. For us, you know, maybe that's maybe. I'm not sure how it'll play out, as I said, but our customers are all in South Asia and Southeast Asia, so obviously they will be benefited, we feel, by this anti-dumping duty. So overall, I think the supply-demand without China may be better for the industry in Southeast Asia and therefore for us. But we'll have to see how it plays out over the next few months, as I said, but margins will remain low. Capacity utilization currently is about 60-odd%, you know, approximately 60-plus minus%. We are running at that. We are only doing business where we are getting reasonable, you know, margins, at least somewhat positive. And so that continues, and now the issue is excess capacity. Okay. But sir, onto this anti-dumping duty, which you mentioned, so you don't foresee this as a risk, so China can dump their additional supplies into the rest of the Southeast Asian countries, wherein we are already, like, supplying to all the major players, so can this impact us in some of the export markets, except for the U.S., definitely, so U.S., I'm not sure how much exposure we are having in terms of growth? Nitrile is NBR, because NBR has anti-dumping. Nitrile latex, there's no anti-dumping duty. Two different products. Yeah, you said this- Rubber and nitrile latex, which goes for several rubber applications, and nitrile latex is only for glove applications. ...So this 50% anti-dumping duty U.S. has imposed, that is on gloves, right? On the final glove, yes. Okay. So that's what, sir, I was mentioning. So suppose we are exporting to other countries, so when China exports to other countries like, since U.S. has put an anti-dumping duty, so wouldn't our export competitiveness will go down into the glove segment? Why would you say that? Why? Because of, so China will dump their excess supply into the other countries, ex of US, wherein we are supplying. Exactly, that's why I said we have to see how that plays out, latex from China. But, you know, coming out, latex exports from China will be harder, because, one, their plants are little bit inland, so they have to take it to the port. Then the shipping freight rates from China to some of these countries like Southeast Asia. And I'm talking about latex exports, not gloves exports. You're right, gloves exports to other countries will increase, and that may be an issue. But for us, we are more interested in what happens with the latex. Okay. So latex is harder to export? Especially from China all the way to Southeast Asia and South Asia. So our freight rates are much lower than that. So therefore, I don't think our latex competitiveness will be affected, but we don't know. We'll have to see how it plays out. Okay. And, sir, just, sir, one last question on to the nitrile latex. Have we, has it contributed to positive EBITDA in this quarter since we had gone to 60% utilization level? It's a little bit negative EBITDA, but positive on the overall, you know, gross contribution. Okay. Thank you, sir. Thank you. That's it for me, sir. Thank you. Thank you. Participants, to ask a question, you may enter star followed by one. You're also requested to ask just two questions per participant, and you may go ahead and return to the queue. The next question is from the line of Jatin Chawla, RTL Investments. Please go ahead. Yeah, hi, good evening. Thanks for the opportunity. My first question is on, in your presentation, you mentioned pricing pressures on the carpet and paper range of products. So just wanted to get some more understanding on that. Is this, you know, linked to earlier our competitor had in India had increased capacity and there was some margin pressure, but it seems this quarter that margin pressure has increased for them. Just a comment on that. Yeah. So, sir, that's true. That's exactly the reason. And also the paper industry in the last three, four months is really not, from what we hear from our customers, not been doing so well as well in terms of overall revenue and volume. They are facing some dumping from China and all that. So there is pressure on the paper industry and the entire paper supply chain, including us. So, you know, we are buying some market share, and I mean, I would say that's the primary reason is, you know, including market increase in capacity by our Asian competitor. So carpet is a different region. You know, carpet, the large chunk was coming from exports, and that's really due to this Middle East war that's going on. And a lot of ships that were plying through the Red Sea have to now go around the Cape of Good Hope. So basically, shipping rates compared to exactly 12, I would say 12 months ago, 12 or 14 months ago, have increased multifold. And Q2 was really the highest that we have ever seen in some of these routes, like from India to Turkey, India to Egypt, even India to UAE, even though that, you know, you don't have to pass through the Red Sea for UAE. But overall, ships going through the UAE have reduced because they're all going around, you know now. So supply has dried up in terms of ships going through that area. So all the freight rates were at an all-time high. Only in the month of October, now we've seen, you know, seen it correcting, but it is still much higher than what it was about a year, year and a half ago. Like at least six or seven times higher even now, and it went up to, like, eight, ten times higher, you know, just last quarter. So that's the reason for carpet. And, you know, a lot of our contracts are CIF contracts, so we, you know, we have to honor them. While the pricing on raw materials, we can pass through, the pricing on freight is something, you know, that takes some time to renegotiate and pass through. As I said before, when prices are going up, whether it's raw materials or freight, we are generally able to pass it through with a timeline. So in the last quarter, we have seen a double whammy of ocean freight rates across the board, as well as raw material prices, you know, climbing as well. Both these are the reasons why carpet has been affected. Third reason is also, you know, one of our important monomers, butadiene, for the last few months, compared to Europe, has been much higher in Asia. So that's benefited our European competitors. It was exactly the other way around about two years ago, but now it's reversed that trend. So that's also helped them, the European competitors, a little bit, but the rest of our cost structure is so more from the freight and monomer point of view. That's why the carpet margins are down. But, you know, our strategy has been very clear that we're gonna push through with volumes as far as possible, even at lower margins. And as and when, you know, overall the external scenarios change, you know, we'll benefit from that. We did during the COVID years, post-COVID years, you know, 2021, 2022, benefited from a lot of the tailwinds. Now we are facing a lot of the headwinds that are together, not helped by the geopolitical tensions and situations, of course, now. Got it. Just a quick follow-up on this. You said, you know, the freight costs have to be borne as long... I'm assuming that is as long as the previous contracts are in place. So, what is the length of the contract that you do, and, you know, how much time does it take to kind of renegotiate these? I mean, as I said, we have monthly pricing. In that sense, we don't have contracts like long-term, committed contracts. We do have a certain understanding, you know, and now it's also a case of competitiveness. So for example, just to give, for Turkey and Egypt, if they are, the customers are importing from Europe, you know, the freight is much lower now than from India. So we will ask, or we are even now asking for higher rates, but we have to be competitive against European competitors. So I think that's likely to continue even into Q3. Got it. So you expect this margin pressure to continue on the carpet side also in 3Q as well? I think so. I think, as I said, the freight rates have come down by about 20%, I would say, in the last month. That will help certainly, but it's still much, much higher, as I said, you know, six, seven times higher compared to a year ago. Wow! Six, seven times? Yeah, in these routes. I mean, routes that used to be $500 now it's, you know, at Q2, were at, like, $3,500-$4,000 per container, just to give you an example. Now they've come down to $2,000-$2,500, so. So as a percentage of sales, in terms of percentage margin impact, what does that broadly come to? I think overall it's almost 1% impact on because of ocean freight this quarter for us. Right, Sachin? That's what we analyzed. Yes. Approximately 1%. Oh, 0.75%-1%? Yes. Yeah. Understood. Thank you. Thanks a lot. I'll get back to the team. Thank you. The next question is from the line of Rohit, from iThought PMS. Please go ahead. Hello, am I audible? Yes, sir. Hi, sir. So just wanted to understand, sir, I mean, from a top-line point of view, with the expanded capacity, what is the total, peak revenue possibility that you have now? I mean, I understand the prices are a bit low, but whatever they are at this point of time, can you just share what is the peak utilization in terms of revenue that you can- Done. Uh- Currently we are at a run rate, as you can see from our financials. We finished H1 at almost INR 700 crores. So we had a run rate of about INR 1,400 crores, right? Right. We think this, I mean, at the current prices and so on, we could, Sachin, add another 300-400 crores, 1,700-1,800 crores. Yeah. So total, we should be around 1800 to 1900, is right, right? Depending on the price range, 17-18, I would say. Maybe 19, if, yeah. Yeah. Got it. And this is at these levels, right? I mean, this is not factoring any improvement in realization that may happen at some point. At the current pricing level, the average pricing level for the first half. Got it. Also, I mean, this also does not include what you are also thinking of doing another debottlenecking of NBR in Valia, if I'm not wrong. This also does not- Sir, again, your voice is not very clear. No, I'm saying this was also, I mean, this also does not include the, another CapEx that you would- No, no, this is, this is just all the CapEx that has been already done. Right. Right. I mean, some minor things may be required, you know, some debottlenecking, a tank here or there, but nothing major. Right. Right. Right. And sir, are you quantifying the loss that you are seeing in nitrile latex at this point of time? We're not seeing a loss as such. It's not a loss. But yeah, I mean, yeah, I guess, EBITDA margins are, you know, zero to a little bit negative, I guess, right now currently. Between zero to 1% negative. Okay. So you're broadly breaking even at about 60% utilization there? Yeah. Got it. And, historically, I mean, I think you were articulating this two quarters back, that, I mean, typically in the last seven, eight years, or, or probably even before that, structurally, you've taken the business from below, like, high single digit margins to close to 14-15% margins. Obviously, right now we're going through a bad cycle. But, anything that has changed in the last two, three years in terms of or maybe last 12, 15 months in terms of competition or in terms of, you know, supply, et cetera, where you think that what you had talked about, 14-15% kind of margin is what you think your business can do. Has that changed, or you still hold on to those numbers? So look, I don't think, and I've always said this before as well, like, quarter on quarter, it's very hard to predict very consistent margins. This is the nature of our business. Having said that, obviously these kinds of margins of 8%, 9% or anything, you know, in the single digit is something that we would not have, we would never hope for, or we wouldn't think would happen. But unfortunately, because of, you know, three or four headwinds coming together, or, you know, three or four issues rather, and all put together, you know, as multiple headwinds, like as I mentioned, ocean freight, nitrile latex as well, that business continues to be difficult. Extra capacity in the Indian market for SB Latex. These are three main reasons I would say why margins are a little depressed. But I think in the long run, we are quite still, you know. The competitive intensity of the industry has not significantly changed as far as, so except for nitrile latex. Nitrile latex will come too, but the rest of it is the same, right? In NBR, we are the only manufacturer here in India. We're facing dumping for the last year and a half, mainly due to geopolitical reasons from China and Russia. And the other two, three things I don't want to repeat again. So I think once those things turn and the external environment is more in our favor, then, you know, things could look better. But in the short term, it's certainly, I mean, the most challenging environment that we have faced now in four years. The last time was COVID, right? Which was a little bit difficult when COVID initially hit in the Q4 of 2019-20. Right. Right. Correct. Got it. Okay, sir. Thank you very much. I, I'll get back with you. Thank you. Thank you. Participants, as a request, please limit your questions to two per participant. The next question is from the line of Jasdeep Walia from Clockvine Capital. Please go ahead. Hi, sir. Thanks for taking my question. Sir, how have the exports done in first half if we exclude nitrile latex? So primarily in the SB latex, how are the exports? How have exports progressed in first half? Look, overall, they continue to grow. Obviously, nitrile latex has been one of the reasons or drivers for growth, but I would say in terms of percentage, in when we say, how have exports progressed, I think we're... As I said, margins have been affected, but volumes we continue to push through. I don't have the exact data in terms of without nitrile latex, what it would have been, but I'm assuming that instead... Sachin, do you have that data? Maybe, what is our percentage of sales for H1? 32% or 34%? 32%, right? Sachin, are you on the call? Yes, yes, 32. 32%. Okay. And, how much would it have been without nitrile? Is that the question, Jasdeep? Yeah. My question is: How has SB latex exports grown in the first half of this year? We have that data, certainly. Got this quarter off. So we've grown by almost, you know, 16-17%. This is by volume? By value. By value, okay. And what would be approximate volume growth? I need to find out. I think maybe half that, because we're seeing volume growth and value growth up to 7-8% probably. This, I'm just guessing, but we'll come back to you, Jasdeep. Yeah. Got it. Got it. And how are SB latex margins right now, let's say, versus what the normalized margin which you used to see pre-COVID? So for textile, specialty and construction, I think they're similar compared to last year. Oh, pre-COVID, you're asking? Yeah. So I don't have the numbers pre-COVID, Jasdeep, but I can talk about the last year compared to this year. I know for a fact that construction, specialty, textiles, those are still good because they're more, you know, for very different reasons. But paper certainly has been more challenging this quarter, especially. I'm asking on the overall portfolio level, not separately, by segment. Just on the overall portfolio level, how are SB latex margins this year versus last year? Lower. Lower by about, on average, because of carpet and paper, that's probably about 15%-20% contribution margins. Okay, so they're lower by how much this year? Do you have that numbers, Sachin? We're venturing a guess, saying 15%-20% lower than last year, H1 of this year compared to H1 of last year for SB latex margins. We'll come back to you, but my guess is about 15%-20% lower. Yeah. Got it. And so, have you decided about, CapEx that you're going to, put in, let's say, next year, or in the second half of this year? Yeah, there's no CapEx, no major growth CapEx plans for this year. There is gonna be capital expenditure, but we are focusing more on the future. So we are building a new R&D building, for example. It won't be that much, but obviously, that's one CapEx that we are looking forward to. And then there's going to be more maintenance CapEx and debottlenecking CapEx, some small projects here and there. As far as major CapEx, you know, right now we have enough SB latex capacity for a year and a half. So we are looking at different options for building SB latex capacity, either in Taloja or in Valia or in a third location. So all those three are open. We'll take a call in the next three to four months, by the end of this year regarding that. We have to start that project by early next year. So SB latex is one part that we're definitely looking to expand. As far as nitrile latex for gloves is concerned, we are not going to expand currently, given the current market scenario, and NBR also is on hold. So we are looking at other inorganic options as well, and looking at newer, you know, new product lines that we could perhaps add value. Got it, sir. Thanks a lot. That's all from my side. Thank you, Jasdeep. Thank you. The next question is from the line of Manav Vijay, MV Investments. Please go ahead. Yes, thank you very much. Am I audible? Yeah, go ahead, Manav. Okay. Thank you. So first question is regarding the quarter on quarter. So our sales has grown by approximately 5%. If you can just help us understand that some of your customers in the Southeast Asia, for them, the pricing on the medical glove side, it has become at least constant, prices are no longer falling. So how is that translating to you in terms of your latex prices? Have they moved up on quarter on quarter, or are they still constant? They've moved up because raw material prices slightly moved up, but by and large, margins have not improved. More than the pricing, margins is the issue. The reason why margins have not improved, as I mentioned earlier, is just there's a lot of overcapacity. Some new capacity has come this year into Malaysia. You know, like us, the people that have started building are finishing their plants, so that's come up now between last year and this year. There's one plant in Malaysia that's recently come up. So as a result of which, there is pressure on the latex margins, but the glove industry is definitely doing much better than they were last year in Southeast Asia. Okay. I mean, they were making losses last year. Let me put it that way. Correct. They were making losses till last year, at least they are now in the green. So if you read some of their financial results, they're quite upbeat and positive now. Yes. So except I would say one player, almost everybody has turned into black now. Yes, exactly, exactly. And especially with this recent announcement of U.S. anti-dumping duty against China, I think, you know, that will play out over the next few months. From the glove industry at least, yeah. I don't know about the latex industry. Okay, okay. So my second question is regarding the three pain points, nitrile latex, paper, and carpet. Nitrile latex and carpet you have talked about, so you explained well. Sir, regarding the paper industry, some of the paper companies who have declared the results so far, numbers are not good. So they actually, there is pressure both on the raw material, the demand, as well as the pricing of the finished product. Now, so do you believe that this pressure can continue even in H2, which in turn will continue to put pressure even on our fresh product prices? Yeah, I think there is pressure in the entire supply chain in the paper industry currently. You know, when the market is bullish and there is good growth, then, you know, the supply chain benefits as well. Currently, it's the other way around, as you rightly have said, a lot of the paper companies have not done too well in the last quarter or so, and that's put pressure on us. Yeah, I mean, that looks like it's at least. I can't speak for H2, but at least in the next in Q3, that we expect the challenge to continue. Nothing is going to happen overnight. They are also, in some cases, facing dumping issues, and I'm sure the industry as a whole is working towards correcting that. Okay. So my last question is regarding, so, on a YOY basis, our sales have moved up around 25-26%, whereas our other expenses are down by approximately 5%. Now, within our other expenses, roughly 50% are basically variable cost, your power and your freight. These two are the major line items. And you have also mentioned that majority of the YOY growth is actually volume growth. So I just could not, so if you help me understand that if majority of the YOY growth is actually volume-led growth, then how your other expenses can come down by 5%? First of all, it's not entire majority volume-led growth. I would say it's partly volume-led growth, probably 50, 60, 50% or 60% is volume-led. The rest is due to pricing. I mean, product mix plus the cost of material that has gone up, which we have then passed along to as much as we could. Obviously, we have not passed it along enough now. But you see, other expenses, I don't have an answer. Sachin, would you know this answer to this question? Yeah. So if you remember, Abhijit, we have also done deep or we have done cost saving, you know, expenses. You know, basically, what we have done is we have also changed the power mix. So the power mix costs have come down in our case. Right. That is helping us to also, you know, reduce the cost. Majority of the cost, which is power and fuel, has come down compared to what it was in the last H1. So that has supported us. Yeah. Okay, then, Abhijit, if I'm correct. To answer your question, I think the issue, the main issue, and if I've understood what you're asking, is that while our revenue has gone up, our raw material costs have gone up by higher than our revenue, right? Okay. We've not been able to pass along the entire cost increase, and therefore, margins are down. Main issue is raw material costing versus pricing. Okay. No, so actually, my question was very simple, that actually on a YOY basis, your sales have moved up around 26%, and majority of that is led by the volumes. It's not- Whereas- Not majority. 50%. 50%. Whereas actually, our other expenses have actually come down by 5%, where I would say 50%-60% of the total cost comes from only two line items, which is power and freight. And these two line items are completely variable. So if your volumes moves up, these two costs also moves up. Manav, Abhijit, can I take this question? Yeah, please, please. Manav, you know, we understand that what you're trying to make a point to, but however, you know, the, the major thing is, you know, when we change the power mix, you know, we used to co-generate the power in the plant earlier, which we have now only, which we only use for boiler purposes, okay? We have moved on to grid because of, you know, because the power cost is much more lower than generating the power. So that has supported us in reducing the power cost. And I think Sachin is talking about only our Gujarat plant. So at least in Gujarat, that has been the case of reducing power cost. Yes, that's one factor for sure. Yeah. But sorry, just one thing is, I don't agree with the analysis, Manav, because other expenses besides power and freight, there are other expenses as well, right? That we have sort of controlled those and given the difficulty in margin. Just to give you an example, there could be repairs and maintenance, you know, painting and some of those kinds of costs, which we have definitely held back on given the more challenging environment. There are other ways to reduce costs as well. Sounds good. The last question, sir, I think last- Mr. Vijay, but could you return to the queue? Yes, I will. Thank you very much. This is Manav speaking. All right. Sure. Okay. So, sir, I think last quarter or maybe last discussion, I think you talked about putting up a solar capacity. Is there any, let's say, further steps that we have taken in that regard? Yes. I'm glad you asked. So yes, we will be. We just had a board meeting yesterday, and we've got approval in principle from the board to go ahead and explore, and we have sort of narrowed down. I think in the next three to six months, we will be investing in. I don't know, I would not say the next two years. I would say next one to two years. Eventually, the investment would happen over the next one to two years, but we'll start the project in the next three to six months over the next one to two years to invest in solar and wind. With the objective, obviously, one is savings, but the other is also we expect that our power consumption would be anywhere between 60% to 70% renewable. Our target is that within the next two to three years, 50, you know, around 60% power consumption to be through renewable sources, which today stands at under single digits, you know, maybe 5-6% total. Okay, perfect. This is helpful. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Shivani Maurya from Axis Securities. Please go ahead. We are not able to hear you. We are not able to hear you. Hello, am I audible? Yes, yes, you're audible now. Please go ahead. Yeah. Thank you for the opportunity. Sir, do we see any improvement in EBITDA margin from here? And what effort or measures is being taken by us to improve it? I'm sorry, there's a lot of breaking. I can't hear the question. I mean, I can hear her, but not clearly. Hello. Shivani, I can't hear you very well. Hello. Yeah. Shivani, are you using your handset? Audible? Yes, you are audible. Could you please speak up? Yeah. Sir, do we see an improvement in EBITDA margin from here onwards? And what effort or measures has been taken care of by us to improve it? And my second question is, we invested around INR 150-160 crore in Valia plant for glove project. So how it is progressing, and what is the capacity utilization for the same? Yeah, Shivani, I answered some of the questions earlier. So the nitrile latex, in terms of volume and revenue, is progressing reasonably well. We're at about 60% capacity utilization, but in terms of, in terms of margin, it's still been very challenging, a challenging environment. As far as EBITDA margin is concerned, as Sachin has mentioned, we have implemented some projects only in the last two, three months to try and improve, some cost-saving projects to improve our EBITDA margins. The other thing is external factors like sea, ocean freight and all, so are coming down right now, so that will help. And the third is, of course, focus more on, specialty products and really pushing those sales. And the fourth will be an anti-dumping duty on NBR. So on several fronts, well, whether it's cost savings or anti-dumping duties, focusing more on specialty products to improve overall product and margin profile, customers with better margins. So all that is, of course, part of it as well. But as of now, the external environment is such that overall capacity utilization for NBR and XSBR, as an industry, you know, there is enough capacity. So capacity utilizations are a little lower than what you would expect, but as we grow, you know, that changes. So every industry and every business goes through a cycle, and we feel like this is a more difficult cycle for our industry, and our business specifically. And I think it will turn, you know, at some point. We are quite hopeful that in the next couple of quarters, things should turn. Okay, and sir, one last question. What is the percentage to total sales contributed by nitrile latex? It's less than 15% currently. Okay. That's it from my end. Thank you, sir. Thank you. Thank you. The next question is from the line of Aditya Khetan from SMIFS Limited. Please go ahead. Yeah. Thank you, sir, for the follow-up. Sir, on to the raw material prices, you had mentioned that butadiene prices were a bit higher in Asia market as compared to the European players. So has that correction been happened right now? First point, and second, sir, I believe, so butadiene is only around 15%-20% of the total RM cost, whereas your 80% comes from the acrylonitrile and styrene. So how was the price trend, so during the quarter? And, we know that because of the crude prices having a good volatility today, so how well are we managing the prices, and, what is your outlook on the polymer margins? Can we maintain at this level, or we see some improvement in second half from here on? ... So first of all, to answer your question, butadiene is actually a much higher percentage than the 15-20% that you mentioned. For us as a company, I don't have the exact number. I don't know, Sachin, if you have it ready, but my guess would be that out of the total raw material cost, butadiene would be our number one spend at about maybe 30-40% of our total cost, 40% even. As far as Europe and Asia is concerned, it continues to be, Asia prices continue to be, you know, maybe 25% higher, 25-30% higher than Europe. Things are expected to turn, but the last six months we have seen this is the, this is the situation. But from all analyst reports, and I, you know, obviously we're not Butadiene manufacturers, so but we keep a track of what's going on. And it's, you know, typically these kind of arbitrage things correct over a period of a few months. So I think it should correct in this second half. Okay. And sir, what is the outlook on acrylonitrile and styrene? How was the prices during the quarter versus last quarter? I think they've all gone up a little bit compared to Q1, and certainly this first half has been a lot higher than the first half of last year. So quarter on quarter also, there's been a slight increase. Okay. Okay. Overall, on average, and I don't know each raw material specifically, but I think there's been a slight increase overall. Okay. And sir, we have not passed on all the costs to the end user industries, considering the weakness in demands from paper and carpet, which we can subsequently pass on in second half. We have not been able to. Okay, got it. Okay. Yeah, thank you, sir. Thank you. Thanks. Thank you. Thank you. Ladies and gentlemen, if you have any questions at this time, you may enter star followed by one on your touchtone telephones. The next question is from the line of Aditya from Securities Investment Management. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. So in the presentation, you have mentioned that revenue growth was partly because of volumes and partly because of product mix. Sir, so if you please elaborate, what kind of products have higher realization for us, which has contributed to higher revenue? Partly due to overall pricing going up also. Okay. Yeah. Yeah. I mean, costing, when cost goes up, then price also goes up, right? Q2 against Q2 of last year. Sorry, so what's your question? Yeah, so my question was, you mentioned that product mix has also improved, has also helped us improve our revenue. So what kind of products have higher realization, which has helped us to post a higher revenue growth? So NBR, for example, NBR, we have grown reasonably well in this quarter compared to Q2 of last year, or first half compared to last year. So NBR being a solid rubber product, the pricing is higher. I'm just talking about revenue, not margins. Then tyre cords, for example, is a, you know, for latex for tyre cords, we, so we make a latex called vinyl pyridine latex for the tyre cord industry. There, the pricing compared to SB latex is typically 30%-40% higher. There we've seen very good growth. And we have also invested in a new reactor for that, for that product. So, so that's another example. You know, in the construction industry, we have some specialty products for the oil application and some other application where we have seen good growth, where again, the pricing is at least 15%-20% higher compared to paper, carpet and nitrile latex and so on. That growth in those industries has helped to some extent in improving the revenue as well. I hope that answers your question. Understood, sir. And sir, now if I look at your exports, so majorly we are catering to the carpet industry. So, to the exports, do our exports majorly cater to distributors, or we are giving it to carpet manufacturers? So just to correct you, carpet is not an. I mean, obviously, carpet is an important export product, but nitrile latex, carpet and construction and tyre cords, all four. We have significant exports in all four. So, you know, 32% of our sales overall as a company is exports. So it's not just one segment that does this. And to answer your question, it's a combination of the two, direct as well as with the distributor. See, today we don't have any sales people outside for carpet, so we do work through distributors, and they work on two levels. One, they act like our sales agents, where we just pay them a commission and, you know, they take care of the sales relationship. Of course, our guys from India, also our sales and marketing team, we have a strong sales and marketing team based out of India, and they go visit once every few months. There is a relationship manager in charge of each customer. But day-to-day, like if you are in Egypt or Turkey, you know, some of our distributors have local offices. So that really helps with day-to-day relationships and day-to-day logistics that they help us with, and we give them a commission for that. In some cases where we don't want to take any payment risks and a smaller customer, then we supply to the distributor and where the distributor stocks it and then sells it, in turn. So I hope that answers your question. It's partly both, but in carpet, I would say a larger majority would be, direct and giving commission to the distributor. Understood. So my question was more majorly related to synthetic latex exports. And now for this segment, synthetic latex exports, now who would be the major players we would be competing against? So are these majorly European-based players or these are Chinese or Southeast Asian-based players? Mostly European. Okay. So because the export growth which we have witnessed in the- Latex for the carpet industry is European. Nitrile latex for, it's different for each. So for carpet and construction, it's all European competitors. For nitrile latex, it's Southeast Asian and East Asian competitors. Understood. Understood, sir. And so just last one question now. This, you mentioned that higher freight cost has impacted on margins, or part of the reason that has impacted margins. But when I look at your other expenses, those have come down on a year-to-year basis. So how have the higher freight- The freight has definitely gone up. The other expenses, as Sachin mentioned to one of the previous callers, is on account of, you know, other fixed costs that we have held back, or reduced. And a lot of times, the power cost in Valia, that is, really helped us as well. Next time we'll be more prepared in terms of, line item-wise, we'll tell you exactly how much, you know, percentage reduction in power, percentage increase in freight, and so on, especially since those two are the highest. Understood, sir. Sure, sir. Thank you, sir. For answering my question. Thank you. Thank you. The next question is from the line of Hemish Shah, who is an individual investor. Please go ahead. Hello. Can you hear me? Yes. Yeah. Go ahead, Hemish. Yeah. Yeah. Hi. So since, you know, I think, you know, we are facing three or four headwinds, you know, that we faced in Q2, do you, you know, really think that, in the last, like, over the last decade or so, this is, you know, you know, one of the, you know, worst phases, if not worst phases, I mean, you know, one of the most challenging, situations or times that you are facing, for the company? Yeah, I mean, look, I think COVID, nothing was more challenging than those four, five months of the first few months of the COVID period. But even pre-COVID, pre-2019-20, in FY 2019-20 was a challenging time. There, the major issue was NBR anti-dumping, I mean, NBR dumping, and we had filed anti-dumping, which didn't work out. And then, of course, two years, we had two reasonably good years in the middle, two to three good years. But I would say, yeah, this is definitely one challenging time. Look, every period is different, and the reasons are different. This time, I think it's partly geopolitical, partly it is post-COVID nitrile latex, which is a business we invested in, and that is, you know, pre-COVID. During COVID, you know, there were always very healthy margins. We still believe in the long run it's a good business to be in because it's growing at 10-12% a year, 10-15% a year. It's just that a lot of overcapacity has been created thanks to COVID. It would not have happened had it not been for COVID. People got very excited because of COVID. In our case, it was a natural progression. We were anyway going to invest. We had invested in this project, you know, started investing in 2018, 2019, developing this product. So, you know, so it's been a different set of challenges this time, but sure, it is one of the challenging periods. Having said that, you know, look, I've been with the company for almost 20 years now. We've gone through several challenging periods, some caused by external circumstances, some caused by internal circumstances. In this case, it's certainly mostly external circumstances that are causing this. Having said that, even with this, our company is very well positioned. We feel very happy with where we are, because we feel the competitive intensity of this industry is, it's still not changed significantly except in nitrile latex recently. But we still feel in the long run, it's a good business to be in. We don't need margins of 20, 30%, you know, EBITDA margins to have good ROC, and even 13-15% ROCs, and that's our main goal, right? To have margin of 13-15%, so ROCs around 25%. And if we can do that, I think we are in very good shape, and we continue to grow and we can have sustainable growth at those ROCs and EBITDA margins. Definitely, you know, the current scenario in the industry, this is for the entire industry, this is unsustainable, right? Because if all players in the industry are not making good margins, then, I mean, this has to change, right? Because then there's not going to be any CapEx, so right, demand and supply will balance out at some point of time, correct? Yeah. Yes, exactly. The question is when? Yeah, got it. So I mean- The next question is when, and it's tough to say. So as I said, and we have also created a business which is quite well diversified now. If you see from a geography standpoint, India is certainly one of our strategic markets, and it will continue to be, and that's where our real strength is. But we've still diversified 30%-35% of our sales into other markets. From an industry standpoint, compared to 10 years ago, we are in 8 different industries. You know, earlier we were only 3 or 4. So we have really grown in geography, in diversity. At the same time, we've kept our balance sheet clean. Today we have, you know, I think as on thirtieth September, we have probably around 210 crores or so. Sachin, correct me if I'm wrong, but about 200-220 crores of debt, all including long-term, short-term debt. Against that, we have about 120 crores of, you know, liquid investment. So, you know, we are a conservative company. We've grown with our internal accrual, with a little bit of debt, and you know, knowing full well that this business goes through cycles like these. You know, they go through cycles of low EBITDA margins. There can be some quarters that are very low, some quarters that are very high. And so we have to ensure that at quarters or periods like this, our financial ability to withstand this is there and not only withstand it, but also invest. So we're in fact putting money in solar. We'll be putting money in R&D. We'll be putting money in, you know, perhaps some growth projects as well over the next six to twelve months. So we feel pretty confident given our current debt equity ratios, EBITDA serviceability, serviceability ratios. And so we feel pretty good overall. How much would the volume growth be at the nitrile latex business compared to last? Compared to last year? I think compared H1 to H1, Sachin, would have been, what, 100% nitrile latex growth? Yeah. No, no, I'm saying excluding nitrile latex, other businesses, have they grown in volume in Q2? Oh, excluding nitrile. Yeah, sure, sure. There is growth in nitrile excluding... Yeah, of course, because nitrile existed as a small base, right? So overall, we have grown at about 12-13% volume as a company for H1. So I don't have the exact number, but I'm going to say about 7-8% is from other products. Sachin, do you have that? Okay. So we, we're protecting our margins, we are protecting our market share, right? Market share is increasing, and we have not given away any market share. Exactly right. We will not only protect it and grow it in some cases. Okay. Okay. Thank you. Thank you so much. All the best. Thank you. Sachin, anything to add to the last call? No, you're right. Perfect. Okay. Thank you. I would now like to hand the conference over to the management for closing comments. Thank you, investors, for joining our earnings call. We wish you and your family a happy and a safe Diwali. Thank you so much. Thank you. Happy Diwali to everyone. Thank you. On behalf of Apcotex Industries Limited, that concludes this conference call. Thank you all for joining us. Thank you. And you may disconnect your lines. Thank you.