Ladies and gentlemen, good day and welcome to Camlin Fine Sciences Limited Q3 FY 2022 earnings conference call hosted by Sunidhi Securities & Finance Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rohit Sinha from Sunidhi Securities & Finance. Thank you, and over to you, sir. Thank you. Good afternoon, everyone. On behalf of Sunidhi Securities, I welcome all participants to Q3 FY 2022 earnings conference call of Camlin Fine Sciences Limited. We would like to thank the management for giving us this opportunity to host this call. From the management of Camlin Fine, we have with us today, Mr. Ashish Dandekar, Chairman and Managing Director of Camlin Fine, and Mr. Nirmal Momaya, Managing Director, and Mr. Santosh Parab, the CFO of the company. Without further ado, I would like to hand over the floor to Mr. Ashish Dandekar for his opening remarks. After which, we will open the floor for Q&A round. Over to you, sir. Thank you. Thank you, Rohit. A warm welcome to you all, ladies and gentlemen, to this con call. As you can see from our published numbers, we are well on the way to the strategy that we embarked on about five, six years back, and we are solidly on the path. We have had some hiccups and some delays, but all of them are behind us now. As you can see, the numbers have started showing it. We are quite excited about the way forward. As is our usual practice, I will ensure that I hand over it to Santosh, who will give you the salient features, and then Nirmal is there to answer your queries. Thank you very much for being here. Santosh, over to you. Thanks, Ashish. Good afternoon, everybody. Of course, as Ashish said, it has been a tumultuous roller coaster ride, both on the numbers as well as on the environment here. The early part of the quarter was showing green shoots with pandemic slowing down, economies opening, inflationary trends in cost also stabilizing a bit. However, quarter, as you know, is ended with the fear of another viral wave, which by now seems to be ebbing. Rising costs again due to spike in the crude very recently and of course, the volatile situation in some of the countries in Europe. Despite this, we remain positive about the business. Of course, we say this with a word of caution. Without taking much time, I'll present the highlights of quarter three ending December 31, 2021. I guess you had an opportunity to look at the unaudited financial results as well as our presentation for the results, which we have uploaded on our site and also on stock exchanges. We are glad to inform that we have recorded the highest ever turnover in this quarter, both at standalone and consolidated level. Standalone was INR 200.22 crore, while the consolidated was INR 380.82 crore. Consolidated quarterly EBITDA, PAT and PBT for consolidated are also highest ever. Consolidated gross margin has improved by 166 basis points over last quarter. This is in spite of sustained higher raw material costs and also the logistics cost in this quarter. Consolidated operational EBITDA margin was at 14.5%, almost 700+ basis points improvement as compared to last quarter. In real terms, our consolidated operational EBITDA was at INR 55.17 crores as against INR 22.17 crore in the last quarter. The increase in margins was primarily fueled by impressive revenue growth across all product lines and stabilization of diphenol plant in Dahej. This is despite a one-time expenditure in the current quarter of INR 3.98 crore on account of reversal of the export benefit under MEIS scheme, which was withdrawn by the government in this quarter. Consolidated PAT has also improved from a loss of INR 3.88 crore in the last quarter to a high positive PAT of INR 27.15 crores in this quarter. At standalone, gross margins have improved by 295 basis points to 40.6%, while the operational EBITDA has also improved by 873 basis points to 11.6%. The standalone EBITDA in real terms was INR 23.13 crore, which is highest ever quarterly operational EBITDA. PAT turned positive to INR 12.38 crore from negative INR 10.15 crore in last quarter. Overall, for the nine months, the current PAT has recouped the last two quarters' loss and now it stands at INR 14 crore positive. Let me now update you on the status of the legal case against our partner of vanillin manufacturing subsidiary in China. As informed in the last quarter, the review petition was heard by the Supreme Court of China in the month of October 2021. We are awaiting the final order of the court, which seems to have been delayed due to the pandemic situation in Beijing and Shanghai. Though the timelines will not be determined as such at this moment, we are envisaging the receipt of order before the end of this financial year. The Chinese plant remains closed till then. Our CapEx program remains on track. The construction of ethyl vanillin, methyl vanillin at Dahej, as envisaged, would achieve mechanical completion by end of this financial year, that is March 2022. We are targeting attaining commercial production in and around June, July 2022. We are augmenting stock of catechol to brace for ethyl and methyl vanillin plant. We are confident of managing the working capital needs for the same without any additional external support. The positive impact of catechol will get reflected on commercial production of ethyl vanillin, methyl vanillin in FY 2023. Company is also continuing its mission on increasing value added downstream, which will fructify in the coming quarters. During the quarter, the company, as you know, which we have also declared, has completed the acquisition of the minority of the subsidiary in Mexico, Dresen Quimica. The company now holds 98.5% of the subsidiary. This will further strengthen the returns to the owners. The company also completed the acquisition of Alkyl Nitrones, whereby it has now become 80% subsidiary of the group. It is an exciting business opportunity, and we'll talk about it more and more in the future quarters. Discussions with Lockheed Martin are progressing well on the supply of proprietary chemicals for battery storage systems, with a view for commercial supply in FY 2024. We'll be sharing more information on it in coming quarters. As you have read in our financial statement, there is a note on National Green Tribunal. National Green Tribunal on January 24th, 2022, has revised the compensation levied for the environmental impact near the Tarapur MIDC from INR 15 crore to INR 17 crore. The revision is unfair and unlawful. We have initiated process for legal action against it. At this juncture, we do not foresee any cash flow out of the matter, and we are confident that this compensation order will be reversed. Now briefly on the operations of our subsidiary. CFS Europe, as you know, which manufactures Dyfonam, has posted a turnover of INR 87 crore during this quarter, which is after an annual maintenance shutdown of few days during this quarter. In spite of a shutdown for annual maintenance, which is a routine feature, we have posted INR 87 crore. CFS Mexico clocked the highest ever turnover of INR 91 crore in this quarter, and is expected to continue its impressive performance. CFS Brazil and CFS North America, with turnover of INR 22 crore and INR 13 crore respectively, are expected to improve their performance in the future quarter. Overall, the outlook remains positive in all verticals. Of course, in view of the continuing inflationary trend in crude prices, logistical costs should really not be a dampener. Lastly, we request you all to keep wearing mask, get vaccinated, and take care of your health. We'll now open the floor for questions. 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 your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Susmit Patodia from Motilal Oswal Asset Management. Please go ahead. Hi, sir. Congratulations on a great set of numbers. I wanted to, if you could, I mean, you probably have spoken about Lockheed Martin starting in FY 2024 for the first time. Just wanted to understand what would be the milestones leading up to that. This batch, the sample batch, the commencement of construction. Can you just help us understand that in more detail? The milestone really is Lockheed finalizing the first commercial orders with the customer. That's, as soon as those are done, the corresponding orders will be placed on us. This is in advance of the plant that they're setting up. These batches will be carried out or these supplies will be carried out from our existing facilities between Tarapur, Khopoli and Dahej. We expect the business to start from FY 2024. The 1,500 metric ton plant program should get finalized in the first half of this of the FY 2023 and to be commercialized by end of FY 2024. That's where we are as far as Lockheed is concerned. Sir, is it fair to say that you know, whatever trial batch you had sent that has now got approved and you are officially the partner? Yeah. We've always been actually. Since 2017, we've been that. Okay. Thank you so much, and all the best. Thanks. Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Surya Patra from PhillipCapital. Please go ahead. Yeah, thank you for this. Thank you for taking the question. Congratulations for the good set of numbers. I think we have delivered strong set of the best ever kind of revenue and profit this quarter. In terms of the margins, if you can share to the. If I see the trend, let's say the gross margins, which earlier used to be in the range of 40% or slightly better than that. In the last couple of quarter, we have seen it is in the range of 44% to 45% or 46%, in that range. Is it led by any one-off thing or in the prevailing kind of price challenges what we are seeing or it is because of the catechol issue that what we have been seeing possibly because there is no vanillin conversion to vanillin and hence the position of the catechol? Could you clarify here and how should we really look at the gross margin scenario going ahead, sir? Yeah, it's, you're right that the major impact has been because of catechol since we've not been converting it to vanillin which has impacted the gross margin. On the hydroquinone side, whatever the cost increases we faced in the last few quarters, we've been able to pass it on with a lag, and we expect and believe that that is something that we can continue to pass on. It's only the catechol which is impacting the margin. With vanillin plants now nearing completion, we are expecting that we should be back to the gross margin that we used to have at that point of time when our plant in China was functioning. The vanillin market yet remains very strong. The prices are extremely attractive at this point of time, and we expect our entry into the vanillin market during this financial year should give us the you know the improvement in margin, gross margin that we've seen in the years gone on. Okay. Whether the margin scenario should be meaningfully different than the historical trends is because why I'm saying this, obviously, this margin scenario for the conversion into vanillin, that was not great whenever the China operation was on. The vanillin pricing were also significantly lower. Considering the much superior pricing condition prevailing currently, and most probably possibly will be better only going ahead compared to the historical trend. Our this vanillin site, which is the integrated one, so that possibly will offer a meaningfully better margin compared to the earlier vanillin operation, means the earlier margin what the vanillin operation was offering, that is one. The full optimal utilization of the Dahej plant. Considering these two things, should we see a kind of meaningfully different number in terms of gross margins? I mean, yes, with a word of caution that yes, that it's subject to what the vanillin prices would settle down at. Currently, of course, they are historically $10 to $12, and now they are at almost three times that. We do expect that with our supply, the prices should stabilize and rationalize. Yes, our expectations, it would be much higher than what used to be, you know, in the past and the pricing that was there traditionally. The pricing would remain higher. Yes, that would impact positively the gross margin. Okay. Sir, can you update us about vanillin plant commissioning? Where are we currently, and what is the state of this setup progress, and when exactly that we are likely to see the commercial benefit out of it? Basically, our commercial production should start between June and July 2022. We expect the trial production to start sometime in April. You know, it takes a time to qualify the product with the customers from trial batches. Keeping that in mind, the time like that it takes to get those approvals, I think June-July is a fair estimate for commercial production to start. Hello? Hello. Yeah. The customer validation, when we mention, will that be a kind of a time-consuming one? It could be like a couple of quarters or a year kind of thing, or how would that be? It typically is a two, three months process. My next question is on the stake consolidation what you have achieved in the Griffin subsidiary. After that, what is your game plan for the blends operation? I think that was one of the greater contributor to the blends operation. Now you are almost like full owners there. Any thought on that side progressively? We continue to grow in those markets. We are expanding our reach in the Central America market, as well as Latin American markets, by opening new countries with our own sales network. We continue to focus on new product lines for both animal feed as well as for food. We expect that, you know, we continue to grow the blends business at, you know, the 25% a year, going forward. Okay. Just last one question, so you have been working on various things like the fermentation-based product. You have been talking about this emulsifier and new efforts also, new product basket that you have been talking about. Largely targeting the, you know, food and feed segments. Anything, any progress on that? And let's say, since these are like new initiatives possibly, at least three years down the line, what expectation that Hansol Korea has from Camlin? You know, on the food ingredients and feed ingredients, apart from the blend, we are working on several product lines and products which we are at different stages of development or commercialization, including our fermentation business and some other products. Our estimate is that going forward, you know, these food ingredients that we are in the process of executing in the next three years, we should be targeting at least a top line of between INR 250 core to INR 300 core. Will that offer a different margin profile or how is it? Here in this, the CapEx is much lower, so the asset turn will be much higher than what we have in our traditional diphenol and downstream businesses. We expect that a INR 30 crore to INR 40 crore kind of investment will give us a INR 300 crore to INR 400 crore kind of top line. CapEx will give us that kind of top line. These are asset light products, more on technical application and more on really the expertise that we have on our application side with our application laboratories and technical support staff. We kind of expect that the margins will be quite healthy in these products. Since it's not a very CapEx heavy business, the kind of returns it will give will be significantly better than what we have in our traditional chemical synthesis business. Okay. Okay. Sure. Thank you. Thank you. Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Dhruv Shah from Ambika Fincap Consultants. Please go ahead. Yeah. Hi. Congratulations on a really good set of numbers. I have one question on TBHQ. Your competitor commented yesterday that they are getting into this. Is the market large enough for both large players to exist or will that impact our sales? I mean, market is about 5,000 to 6,000 tons, between 5,000 and 6,000 tons globally, annual market. Our market share would be roughly about 4,000 tons out of that. For a new entrant to come, I mean, yeah, surely somebody can come. To be fully integrated with Hydroquinone and with the backward upstream also under our control, it's kind of difficult to remain very profitable for a newcomer who's buying Hydroquinone and doesn't have the upstream capacity. It always is challenging on the margin side because to buy merchant Hydroquinone and convert it to TBHQ, the margins are very limited in that. Okay. I just have one follow-up question on that. He even mentioned that HQ and catechol is easily available in the market. Is that so? And if so, what will be the spread between what we sell it and what if we buy it and resell it? Catechol is freely available because we are selling it in the market as we don't have vanillin. Once vanillin plant starts, catechol also will go into. Really, there are two big producers, Solvay and us, and we won't be selling and Solvay also will have a restricted amount of sales. Catechol end use is very limited. Any which ways, that's never an issue. It's hydroquinone. Hydroquinone is in short supply. It's very short right now, and we expect it to remain short for some period of time as you know, there are new markets that are opening up for hydroquinone consumption. Newer capacity for acrylates and acrylic acid that are coming up in countries like India, Asia, China, and other parts of the world, where the consumption of hydroquinone is going up. We expect the hydroquinone situation to be tight. Okay. That should help us, right? Even because we were considering downstream from HQ, but considering the spread in Asia itself, we might reconsider that. No, we will go with the downstream. Wherever there is an additional margin in the downstream, of course, we will continue to do that. Okay. Understood. Thank you so much. Thank you. Thank you. The next question is from the line of Ravi Mehta from Deep Financial Consultants. Please go ahead. Yeah. Hi. Thanks for the opportunity. Congrats on good set of numbers. Just one question on the trade sales have also grown substantially in this quarter. We are anyways a big market shareholder in this segment. How are we able to sell? Is it price-driven growth or some color on that? Well, see, basically it's the strength of our upstream of hydroquinone, because hydroquinone is short in the market. Since our capacity came in, you know, in time, we are able to, you know, gather and gain market share because our competitors don't really have access to enough hydroquinone. It's not price driven. We're not discounting any, which we're not undercutting anyone. It's purely because of the hydroquinone situation. The line for the participant dropped. We move on to the next participant. The next question is from the line of Hemant Shah. Please go ahead. Yeah. Thank you for the opportunity. In terms of key goalposts that you would, you know, want to benchmark in the current year, given that Dahej is stabilizing and more than stabilizing rather, what are the critical things we would want to. When does the Catechol get converted to aniline, and, you know, some of these other goalposts that you would want to achieve in the current year, if you can just outline those. vanillin is the biggest one for this year. We expect by June, July, we should be in commercial production for vanillin. That I would say is you know one of our main goalposts. We also have other products that in the food ingredient and feed ingredient space that I mentioned earlier. There are about five or six products which we will be launching in the very much immediate future. To scale those up to a certain level is a key goalpost for this year. Correct. Secondly, what would be the, you know, CapEx for next two years, within that, what would be our maintenance CapEx look like? I mean, once our vanillin is done, we're looking at about between, you know, I would say typically the CapEx would be between INR 60 crore to INR 100 crore, not more than that annually. Sorry, how much? INR 60 crore to INR 100 crore. Maximum would be INR 100 crore. It could be, you know, in the range of INR 60 crore to INR 80 crore. Okay. Overall, you know, with the CFSs also, you know, all the overseas also kind of coming back to their potential, what would be the critical thing we would be looking at least from those geographies? In North America and the one good breakthrough that we've got now is in the pet food market, which is what we were you know working towards for the last four years. Ultimately now finally we've actually been able to make a substantial breakthrough in that market. I think the next 12 to 24 months will be to gain market share in North America on the pet food segment. It's a substantially large market. It's almost the universe is almost close to $100 million. We have a long way to go in that. Of course, we're very small, but that's really something that we are gonna push for in North America. In Central America, which is Mexico and neighboring countries, we already are well established with most of the large consumers in whether it's in animal feed, whether it's poultry or swine. Also on the food side, we are well established. We are expanding our portfolio products into those customers as well as geographically we are getting into Ecuador, which is a big goalpost for us this year, which is one of the largest aqua markets, which is shrimp and you know, that segment of the market. That's gonna be a focus growth area for us. In Brazil it's the animal feed business where we've kind of restructured our team and now have strengthened our team in the animal feed market. The focus will be to launch and introduce all the products that we have in the animal feed portfolio in Mexico and India and you know actually take that to market in Brazil. These are largely our goalposts there. In India, we are also expanding our footprint on the animal feed side. We've got into the aqua feed market as well as establishing ourselves across the country on poultry and dairy. That's also a big focus area for us in this year. In the Asian markets, Southeast Asia, we are focusing on Vietnam and Malaysia and Thailand. These are the three markets that we are focusing on in the next 12 months, where we expect to make breakthroughs in the animal feed side. Yeah, broadly, this is the kind of thing for the next 12 months. Right. Two quick questions, if you can allow. First is, do you anticipate any further, you know, adverse impact from the environmental for our new Tarapur plant? No. There what we have done is we've actually reached a very advanced stage of getting into zero discharge. By end of the year or April 2022, we should be in a ZLD situation. Once we reach the ZLD, there is no risk of any environmental issues there. The order was supposed to be for the priority events rather than, you know, post facto. Yeah. All the priority events were covered by that order. In that sense, there's nothing beyond that which is. Okay. Worst comes to worst, there could be a INR 4 crore to INR 5 crore advance impact, just in case? Well, it's difficult to say, but I mean, we don't expect really because, you know, originally it was INR 5 crore. They went to Supreme Court, Supreme Court sent it back and they unilaterally increased it to INR 17 crore. It doesn't make sense. Anyways, we're working legally, you know, what we can do, but we don't anticipate a very substantial kind of event there. Sure. A couple you know, if one takes a few years ago and a few years in tandem, then our gross margins were much higher. In your opinion, in this current year, would we be closer to that? In terms of pass-through of raw materials, which has seen a lag for most of the chemical guys. No, I explained earlier about the catechol to vanillin, and then we will be back to that. Pass-through for hydroquinone, we've already done that, so it's only a question of now catechol. Once we have vanillin, we'll be able to actually come back to the margin as we were earlier. Right. Because there is still a substantial gap there. Yeah. Yeah. And here- Gross margin, yeah. Okay. Okay. Yeah. Thank you. All the very best and thank you for answering. Sure. Thank you very much. Participants, you may press star and one to ask a question. The next question is from the line of Amar Mourya from AlfAccurate Advisors. Please go ahead. Hi, sir. Thanks a lot for the opportunity. Sir, couple of questions from my side. Number one is, sir, as you indicated, like, you know, in North America, we got a good breakthrough. Basically wanted to understand, like, you know, we were talking about getting lot of new orders in North America, probably, you know, three, four quarters back. Is that the same kind of breakthrough or this is something new which we got lucky a bit? No, it's the same thing that we were expecting three, four quarters ago. Because of the pandemic, it all got shifted. Now with personal meetings have opened up and, you know, the U.S. is far more open than most parts of the world. That's where we are getting traction now. Okay. Let's say, sir, as you indicated that universe is very large and, you know, I'm sure we would have got a large client base, a large clientele out over there. What kind of a run rate we can see in next four quarters from where the U.S. today? We expect by the end of the fourth quarter, we should be in a situation where we will be above breakeven for sure. Let's say. Above breakeven? Yeah. Above breakeven, when you say above breakeven, that is in the fourth quarter of 2022, correct? Right. On a run rate. Okay. When will we really become profitable in U.S.? I think next year is our expectation, yeah. FY 2024 we should be making money there, yeah. FY 2024? Yeah. Basically, when you say that you've reached the breakeven in Q4, FY 2023 will just maintain the breakeven situation there or we'll make some profit also? No, FY 2023 I'm saying we'll be at breakeven and FY 2024. Okay. FY 2024 will be the profitable year. Yeah. for us? Yeah. Sir, ultimately, like, you know, U.S. is a large geography and we were targeting it for long period of time. Let's say, what would be the contribution of U.S. to the overall revenue in FY 2024? No, that will be not very large. The total revenue won't be very large. Okay. Okay. It will be probably 5% to 7%, not nothing more than that. Okay. Secondly, sir, about this China issue, like, you know, the plant I believe is still closed there. So what would be the solution for that? Will we be getting the opportunity to get those machines here in India? Or what we will do with that investment there? No, there we are converting that into another product called vanillin. We've already applied for environmental clearance, which will take in the next few months. It will come. Once that comes into force, order is passed and, you know, we can then convert it to that product which is a nice and again catechol-based product, market price being $25 to $30, so decent margin. That's the idea, is convert that facility into another downstream of catechol. Okay. We'll not be able to produce vanillin there. No, because the space is far more competitive, it's all integrated and, you know, we'd rather focus on the space for vanillin and, because that's where, you know, our maximum margins will be. We don't want a higher cost product to compete with our low-cost product. Sir, vanillin, just to understand, vanillin the total investment was around INR 250 crore, right? Or INR 150 crore? INR 250. 250. This will bring at least two times leverage ratio? Yeah. I mean, at today's prices of vanillin, it's really very huge. But even if it stabilizes at $20 and you're talking about 6,000 tons, we're talking about about INR 700 to INR 800, top line at peak. Okay. This will be a similar margin business like what company average kind of a margin or higher margin business? This will be slightly higher than what we have today at current costs and current prices of vanillin. I don't know what will happen to the price of vanillin, but if they remain where they are or what we expect it to be, it'll be better margin than what we have today. Okay. Sir, your plant of MEHQ, I mean, I believe it is ready and you were looking to do some expansion there as well. So any plans there? Right now, of MEHQ from hydroquinone, it is better to sell hydroquinone. You make a better margin selling hydroquinone than selling MEHQ. Okay. We're not converting it to MEHQ because it doesn't make sense. Alternatively, we can make MEHQ from an alternative route, which is from anisole. We are in the process of understanding whether we should go that route or should we see what happens to hydroquinone prices as we go along. It's something that we are working on. We've not yet firmed up exactly what we want to do. Okay. Thank you. Perfect, sir. I'll come back in queue. Thank you. Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Nirali Gopani from Unique Asset Management. Please go ahead. Hello, sir. Thank you for the opportunity. Also, my question is on the Lockheed Martin deal. So if I understand correct, we'll be supplying roughly 600 tons of material to them by December 2023, right? Yeah. This will be from all our existing capacity and will not need any further CapEx for this capacity at least. What kind of revenue can this capacity generate, the 600 tons? Difficult to say as of now because we are yet in the process of trying to finalize that, yeah. It won't be. It's not gonna be significant, in the scheme of things of what we are doing. Right. Just two quarters back, like in Q1, we were expecting vanillin capacity to generate INR 400 crores of revenue, and today we are saying INR 700 to INR 800. This is just based on the price volatile. No, that's at the peak. We said INR 400 would be at 70%, and at peak it will be INR 700. Okay. Will it take two years to achieve this optimal utilization? Yeah. Yeah, it will. Right. Also we had this EBITDA margin aspiration of 17% to 20%. Once the raw material issue is resolved, the freight costs normalize and vanillin comes into the picture, can we achieve that kind of margin? Yeah, that's right. Once the vanillin starts, we'll be in that range, yeah. Great. Any guidance that you would like to give for revenue growth over the next two, three years? Revenue growth, I mean, we'll add about INR 600 to INR 700 of vanillin. On the blend side, we will add about 20% to 25% annually. Some new products that we spoke about, the food ingredients, feed ingredients, we'll add in the next three years another at least INR 200 to INR 300. Put all of that together, we should be adding at least about INR 1,300 to INR 1,400 in the next three years. Perfect, sir. Thanks a lot, sir. Thank you. Thank you very much. The next question is from the line of Arpit Shah, Individual Investor. Please go ahead. Yeah, thank you for giving the opportunity, and congratulations for a very good set of numbers. I just have few, just two questions regarding the pricing with clients. Just want to know whether it's been done quarterly basis or yearly basis. It's all quarterly now. It's all quarterly basis? Yeah. Okay. Nobody is now doing any annual contracts just because of the way the market is. Okay. Just another question: do we directly deal with the clients or through distributors? What would the proportion between it? I would say, 70% of our business will be direct, 30% would be through distributors. Okay, 70% is direct and 30% is- 70% to 80%. A very small part of our business is distributor driven. Okay, sir. Thank you. That's it from my side. All the best. Thank you very much. Participants, you may press star and one to ask a question. The next question is from the line of Shivaji Mehta, Individual Investor. Please go ahead. Hi. Thank you for this opportunity. Just one question, which was with regard to one of the previous participants. You mentioned you want to add INR 1,400 in additional top line in the next three years. Just to confirm on the number, this will be about INR 2,500 by FY 2025. Is that right? Yeah. Right. That's all from my side. Thank you. Thank you. The next question is from the line of Amar Mourya from AlfAccurate Advisors. Please go ahead. Yes. Thanks a lot for the opportunity again. Just wanted to understand in this vanillin how you would be expecting. I believe vanillin will come in the first quarter, so what kind of utilization we can expect for the full year of FY 2023? Commercial production will come Q2. I think we probably of the total 2,000, I mean, we'd probably get nine months of. We should be doing about 2,000, around 2,000 to 2,400, that range. Okay. Yeah. Say at $20, if you take average, you know, $20, we're talking about $40 million to $50 million. Yeah. Okay. Kind of a 40% kind of utilization for the first year? Yeah. What would be the utilization for the after that? I believe by the time your trial and everything will be done with the client and all. No. Next year, we should take up our utilization to 80%, yeah. 80% utilization. Yeah. Okay. Sir, when you say that you are targeting INR 1,300 to INR 1,400 revenue, I believe you are counting INR 800 or INR 700 from the revenue. The remaining INR 500 to INR 600 is largely you are saying the blends, right? The petchem blends. Some new products that we are working on. Okay. Those are the natural ingredients, natural good products. Natural fermentation, other chemical products also, in the food ingredient and feed ingredient space. Okay. For that you have to do some investments also? That's why I said about INR 30 to INR 40 will be the CapEx and maybe more some other ancillary investment. Then that should give us a top-line opportunity for a top line of almost about INR 300. Yeah. Okay. Noted. Thank you, sir. Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Ravi Mehta from Deep Financial Consultants. Please go ahead. Yeah. Hi. Thanks for the follow-up. Just wanted to know that the four-week shutdown we took in Italy, so during such a ramp down and ramp up, are there yield disruptions or just wanted to understand whether the gross margins can be even better or it was just a normal thing. It's a normal annual shutdown. I mean, yeah, the yields do get. That's very little take, I mean, for a couple of days. It's not. It evens out over a period of days, you know. It won't really impact too much. Okay. Also another question I had was, this ethanol blending becoming a big thing in India. Are there any antioxidants or blends that can be addressed to this market or are we working towards this? No, not for ethanol. Ethanol does not require antioxidants. It's the biodiesel which requires antioxidants. So if it is vegetable oil based or animal fat based, those are the ones which require antioxidants. Ethanol on its own is a very stable product. So we don't see too much of a opportunity in, you know, in the ethanol blended fuels. Okay. One more question was on the utility cost. Most of the companies did see a big spike in Q3. Somehow you guys have managed it really well. Anything different we are doing or some long-term contracts or some benefit we are getting, if you can share? No, no. We also got hit by oil prices going up. Yeah. Probably I think you had levers of other cost rationalization because your costs were pretty stable. Stable. Yeah. Yeah, because power and fuel actually did go up in the quarter by almost, I think, INR 5 crore. Yeah, the other costs for me may have come down. Kind of These are sustainable cost rationalizations? Yeah. Hmm? Did these cost rationalization are sustainable, like, or it was just kind of one-off you tried doing it in this quarter? No, no. The last quarter there was, you know, because of the aberration, there were some costs which were, you know, there were some one-time costs and costs were bloated because of. Sure. You know, fixed costs being higher. That's why. Okay. Okay. Yeah, sure. Thanks. Thank you. The next question is from the line of Susmit from Motilal Oswal Asset Management. Please go ahead. Thanks for the opportunity again. Two small questions. One is on your debt. You know, now that your majority of the CapEx with Manthan will be done, is there a plan to go to become debt free in the next two, three years as well? Any thoughts on that? It's not really debt free, but of course we'll bring down the net debt for sure as we go along. Partly of course some conversions of IFC are expected and some repayments. Of course, we continue to repay. The idea is to reduce the debt as much as we can. There's no plan to make it debt free in the next quarter. Got it. It'll probably take a little longer. Okay. The second thing, this whole additional INR 1,200 to INR 1,300 of revenue, this does not include Lokit, correct? No, it does not include Lokit. Okay. Thank you. Thank you so much. Okay. Thank you. The next question is from the line of Rohit Sinha from Sunidhi Securities & Finance. Please go ahead. Thank you for taking the question. Sir, just wanted to understand, I mean, as you indicated that for China we'll be looking to convert it to make something different, new product would be there. So just wanted to understand two thing. One, after getting the, let's say, environmental clearance, what would be the timeline to do all those, conversion? And how much cost would be there overall, and possibly if you can quantify any kind of asset turn on that. Basically, the additional cost will not be substantial because it's the plant is more or less very similar to the vanillin facility. There'll be some bridging effects. It will not be significant. The time from the time we get approval to restart as well as the environment is clear, it's about three months to modify the plant and not more than that. Very small modifications are required. Okay. By when we can expect revenue contribution from that facility? Environmental clearance is about four months, is what we understand. Another three months. By the end of the year, we should be ready with the facility, yeah. Okay. By that time, would there be cost incurring in that facility? There is some small profit getting carried, yeah. It's very small. Sir, just wanted to understand two things on the subsidiary side. I mean, the refi is our exposure. As you are saying that the Ecuador is the next target for us. That would be on the top-line side, what would be the potential there maybe after getting into the market in some time? Secondly, how this Mexico growth you should be looking at going forward right now? Like I said, Ecuador comes under Mexico. So when we say Mexico, it doesn't mean only Mexico, it means all these countries around. That's where we are saying that the 20% to 25% growth in Mexico will be largely driven by countries like Ecuador and new product launches in the existing markets. I mean, we keep on exploring new region as well, and that would be bringing the growth in Asia. Possibly exploring new regions. Would there be any dent in our margin or it will remain in the same range over the Mexico facility? It will remain in the same similar range because there's no real investment. It's only sales people, so which is not so bad. Okay. That's it from my side. Thank you. Thank you very much. As there are no further questions, I now hand the conference over to the management for closing comments. Thank you very much, ladies and gentlemen, for participating in the call, and we look forward to interacting with you again in the next quarter results. Thank you, and be safe till then. Thank you very much. On behalf of Sunidhi Securities and Finance, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.