Ladies and gentlemen, good day, and welcome to Deepak Nitrite Limited Q1 FY 2025 earnings conference call, hosted by IIFL Securities Limited. I would like to clarify that certain statements made or discussed on this conference call today may be forward-looking in nature, and a disclaimer to this effect has been included in the investor communication shared with you earlier. The results documents have been shared with you earlier and have also been posted on the company's website. 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. Ranjit Cirumalla from IIFL Securities. Thank you, and over to you, sir. Thank you, Dale. Good afternoon, everyone, and thank you for joining us on Deepak Nitrite's Q1 FY 2025 earnings conference call. Today, we have with us Mr. Maulik Mehta, Executive Director, and Sanjay Upadhyay, Director of Finance and Group CFO, and Mr. Somsekhar Nanda, CFO of Deepak Nitrite Limited. We'll begin the call with the opening remarks from the management team, followed by an interactive Q&A session. To begin, Mr. Maulik Mehta will share views on the operating performance and the growth plans of the company, followed by Mr. Sanjay Upadhyay, who shall take us through the financial and segmental performance. I now invite Mr. Mehta to share his opening comments. Thank you, and over to you, sir. Good afternoon, everyone. Thank you for taking the time out to join us on our earnings call. As we step into FY 2024-2025, the global chemical industry continues to face substantial challenges. Customers remain cautious, and the inventory destocking by China is ongoing, sustaining the price pressure on realization. Despite these headwinds, Deepak Nitrite has again delivered a resilient quarterly performance and achieved significant year-on-year growth. We're beginning to see early indicators of increased volumes and improved customer sentiment. Even amidst persistent pricing pressure, we maintain our short-term guidance of meaningful recovery starting from later part of quarter three. In Q1, we reported strong double-digit growth in revenue and profitabilities on a YOY basis. This includes a 21% growth in total income and 36% growth in EBITDA and PBT on a consolidated basis. The revenue growth has been driven by a combination of factors, such as favorable pricing trends in Phenolics due to a strong demand backdrop, and this resulted in impressive year-on-year growth of 37%. The segment has benefited from sustained demand across various end-use applications, leading to healthy domestic requirements for phenol, acetone, and IPA. The highest quarterly sales volume of IPA further highlights the case for domestic demand. Proactive steps to penetrate new territories and grow businesses with new customers offset a weak demand environment in the traditional territories of Western, of the Western world, and this aided in an improvement in the product mix in the AI segment. While there was soft demand in agrochemicals, which is expected to recover later this year, contributions from sectors such as dyes, pigments, paper, and home care have seen some improvement. However, the potential impact of the ongoing crisis in Bangladesh is yet another black swan, whose short-term positive or negative effect is yet to be properly assessed. In the Advanced Intermediates segment, we witnessed volume improvement in performance product and fuel additives. We've also introduced a new optical brightener to meet specific market demands. Effective debottlenecking initiatives and market migration have allowed the company to maintain a generally high operating environment. EBITDA growth has been driven by the Phenolics business, which witnessed a significant improvement in realization, and this is in contrast to the Advanced Intermediates segment, where the pressure on realization has resulted in reduced EBITDA. Ongoing OpEx initiatives will accommodate higher volumes with a lower carbon footprint and increase efficiency in time for an anticipated upsurge in demand. This is also well recognized by key customers, who have set aggressive, science-based goals targets. Efficiency of our sulfuric acid concentration facility at Nandesari is implemented. We also commissioned the first industrial multi-fuel boiler in the chemical industry, which helps us in completely doing away with fossil fuels in one of our locations. Across the group, various initiatives for, you know, scoring, such as, TfS, have resulted in extremely high scores of 95+ in all of the audits that were carried out in the last year. Now, although global geopolitical issues remain volatile, the company's integrated model and India's stability and consumption push provide a significant bulwark to the company's growth fundamentals. Supportive government initiatives with large investment plans, as well as PLI and infrastructure spending, are creating a favorable environment, leading to expectations of double-digit recovery in industry. We're excited to be a part of this journey, and we have outlined expansion plans which will serve as key elements of our growth trajectory. We are moving forward with our four-year plan to enhance our capabilities and seize opportunities in both domestic and international markets, particularly in building blocks, intermediates, and spec chem. You're all aware, we have signed 2 MOUs with the government of Gujarat, which encompass an investment to the tune of about INR 14,000 crore towards the fulfillment of these objectives. Various projects entailing an outlay of around INR 2,000 crore are in the final stages of implementation, and these are being commissioned during the current financial year. They include MIBK and MIBC, nitric acid, enhanced nitration, hydrogenation, and specialty chemicals. Further, we're implementing world-scale capabilities of acetophenone, which will be used as a specialty chemical in the flavors and fragrances segment, and this will be manufactured from recovered by-product when we make phenol. This is under implementation and is likely to be commissioned in about 12 months. Our new R&D center in Vadodara is expected to complete in the end of the current financial year and will enhance our innovation capabilities and support our strategic growth projects. These advancements, coupled with our commitment to operational OpEx efficiency, position us well for continued success and growth. In our AGM that just concluded, the chairman updated that we expect to have licensing agreements in place by the end of the calendar year. With this, we look forward to embarking on the creation of a brand new chain of chemistry platforms to service India's ever-increasing demand for engineering application chemicals. This will marry our existing core competencies with new technologies that will allow us to grow in the specialty chemical segment in parallel to the commodity segment. The kind of integration that has been planned is expected to bring to India a model that has seen significant success and value creation in many other regions of the world. To conclude, FY 2024-2025 promises to be the start of another transformative journey for Deepak. With key projects advancing, improved customer sentiment, and the conclusion of the destocking cycle in China, we anticipate a higher demand and stronger product realizations by the year-end. Our strategic investments, including the new R&D center, along with our robust domestic market presence, position us well to take advantage of this positivity. I would now like to hand the call over to Mr. Sanjay Upadhyay, who will address this forum and take you through the financial performance and key updates during the period under review. Thank you, Maulik. Good afternoon, everyone, and thank you for joining us today on Deepak Nitrite earnings call. I'll walk you through the highlights of the financial results for the first quarter ended June 30th, 2024. Despite persistent challenges from FY 2023-2024 into FY 2024-2025, including abundant Chinese supplies, export slowdowns and cautious customer sentiment due to geopolitical tensions, Deepak Nitrite has maintained focus on long-term objectives. The company has made significant progress in strengthening its product portfolio by investing in backward and forward integration in manufacturing units. It has also made progress in strengthening its balance sheet, optimizing risk management, and advancing growth investments. It is important to note that on a consolidated basis, our Q1 FY 2025 performance has improved sequentially as well as year-over-year. In Q1 FY 2025, we achieved notable performance improvements, with maintained market share, revenue growth, and industry-leading returns. By leveraging our integrated business model, enhancing production yields, and exploring new markets, customers, and product needs, we have successfully navigated current conditions and achieved growth saving, driving stable performance amidst ongoing volatility. Coming to our financial performance in Q1 FY 2025 on a consolidated basis, revenues stood at INR 2,186 crores compared to INR 1,800 crores in Q1 FY 2024. EBITDA grew 36% to INR 58 crores in Q1 FY 2025 compared to INR 242 crores in Q1 FY 2024. Margins have improved by 2% during the quarter. The company's profitability was fueled by healthy operational performance and significant improvements in our sustainability initiatives. For domestic performance on a domestic front, our operating, on a consolidated level, the domestic business revenues stood at INR 1,786 crores in Q1 FY 2025, and export revenue came at INR 399 crores for the quarter. Coming to our insurance claim, following the fire incident in Andheri, we had submitted a claim of INR 127 crores, which was approved in full, with the concluding payment received during the quarter. We have now received 100% of our claim amount, which is a significant achievement. Now moving on to our segmental performance. In the Advanced Intermediate s segment, revenues came in at INR 716 crores in Q1 FY 2025, up 7% quarter-on-quarter and 1% year-on-year, while EBIT came in at INR 67 crores in the quarter under review, translating into a margin of 9% due to the current environment and challenging circumstances. Phenolics delivered an encouraging performance revenue growth at 37% year-on-year to INR 1,464 crore in Q1 FY 2025, as against INR 1,068 crore in Q1 FY 2024. DPL set a new record with quarterly IPA sales of 22,000 MT, showing, showcasing our dedication to market demand and encouraging performance. DPL's EBITDA expanded by 117%, reaching to INR 231 crore in Q1 FY 2025, compared to INR 107 crore in Q1 FY 2024. EBIT stood at INR 208 crore, higher by 137-point year-on-year, and EBIT margin was 13% for the quarter, for the quarter. Moving to our investments and CapEx plans, Maulik has just outlined some of the focus areas of our expansion plan, and they are being commissioned during the current financial year. These projects are being funded by a mix of debt and internal accrual. So the new project funding proposition is being worked out, and it will be shared with the group, as and when, at an appropriate time. Since we have very strong balance sheet and continuing cash generation of around INR 1,000 crores per annum and network position is around INR 5,000 crores, with the net debt negative, we are, we are holding a very healthy financial position. Further, I am pleased to share that ICRA has reaffirmed Deepak Chem Tech Limited's long-term rating at ICRA A A with stable outlook. These ratings underscore our solid financial position and optimistic perspective, which is important given the investment pipeline that we have prepared. With that, I will now request moderator to open the forum for question- and- answer session, please. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nirav Jimudia from Anvil Research. Please go ahead. Good afternoon, sir. Thanks for this opportunity. So I have two questions. So one, in the initial remarks, Maulik, sir, mentioned about the acetophenone, acetophenone recovery project, sir. If you can share your sir. If you can share your thought process with reference to that, like, is this a by-product along with our phenol production, or it's a purification of the AMS which comes along with our, phenol and acetophenone? And along with it, if you can also share that whether we are currently using acetophenone as a raw material for any of our production, with this recovery, our dependence for this raw material from the outside world will minimize. So, first of all, welcome, and thank you for starting us off with such a tough question. As I mentioned earlier, acetophenone will be manufactured using the same products which are generally considered as by-products during the process of manufacturing of phenol. I'm not commenting on which part of the manufacturing process that is. This will obviously be a significant value add, because they will be sold on spec to you know, to an industry which values a particular purity profile as a specialty chemical. Now, whether we are using it as a raw material, I will also not want to comment on that, because that is one of the ongoing projects between the group companies. But nonetheless, the major focus of this will be for market sale, the significant focus of this. Okay. It will be significantly value accretive compared to the current way in which the by-products are valued. Got it. So, let's say, if you can share something on whether this product is currently imported in India or there are some producers of this and we will be the second mover advantage in terms of this product. So if you can just share something on the market potential of this product, that would be very helpful, sir. It has a significant market potential in India, which is growing, but much more significant globally as well. So I think internationally, the requirement for this product is currently in excess of about 60,000-70,000 tons per year. And there is a large domestic volume as well, and there is a bias in existing situation, significant bias for imports. So we will be looking at participating in both parts, in the domestic market as well as in the export market. And as I mentioned earlier, we're talking about the feedstock being something which is much cheaper than what would be manufactured otherwise. So I think you can be rest assured that this has a strong business case, and we are eminently positioned to succeed in this product and the long-term business case. Absolutely, sir. And so you mentioned about one of the user industries being flavors and fragrances. Are there any other user industries also, where this product finds application, or the flavors and fragrances is the only industry where this product finds application? There's a vast number of applications. Flavors and fragrances, of course, is a large and growing segment, but it is also used as a solvent in many applications, including pharma and agrochemicals. Nowadays, agrochemicals is much maligned, but the demand pull for this particular product remains remarkably intact. Got it, sir. The second question is on the Advanced Intermediates. So I think we see from the Advanced Intermediates, has not done well in FY 2024, predominantly because of the user industry where it finds application. So if you can share your outlook for FY 2025 with respect to this product, because I think we have also launched the newer product in the OBA side. So if you can share your outlook on both of these products, that would be very nice. See, the problem with this segment, Performance Products, is that about two-thirds of the consumption of this product worldwide happens in a diluted fashion. So you have about 70% water and 30% of the active optical brightener. Now, when things are okay in terms of ocean freight, we are very, very competitive with anyone else. So if we are competing with a European manufacturer for a European customer, we're perfectly fine. Today, we are in a situation where ocean freight is so high that it leads to a decreased margin profile, because we have to compete with someone who is domestically catering their tankers. Now, nonetheless, we remain. So the last year, the margin profile, we won't look at it in isolation of DASDA or optical brightener. It is linked, because this is the large, I mean, this is the single largest consumption. The reason that we remain bullish about this product is because moving forward, the demand is growing, but only at one or two percentage points worldwide. That is in the face of international degrowth. And India especially, and also in South Asia, the growth expectation is so aggressive that it is actually covering up for and adding a percentage point or two to the world consumption. So in the last year, while the financial performance of Performance Products was not as good as we would like, it will become, in fact, today it, I mean, last year it was our competitive disadvantage. As this demand migrates towards South Asia, it becomes a competitive advantage, where suddenly you have the European and the American players completely outclassed in their competitiveness. At that point, the market is our home advantage. In both of these products, in the last year, we expanded our capacity by about 18%-20%, as well as improved our operational excellence, as well as improved our carbon and water footprint. All of these things have been well acknowledged by our customers as well. Since we are bullish about this moving forward, I would like to highlight that, like most mutual funds, past performance is not an indicator of the future. Correct. Correct. Correct. So, if I read you correctly, you mentioned that you have expanded the capacities in DASDA and OBA by close to 18%-20% in FY 2024. Is it correct, sir? Accurate, yes. Got it. Got it. We've done it, we've done it while reducing our energy footprint. Got it. Got it, sir. Thank you so much, and wish the entire team of Deepak Nitrite all the best. Thank you, Nirav. Thank you. This is a reminder to all the participants that you may press Star and One to ask a question. The next question is from the line of Vivek Rajamani from Morgan Stanley. Please go ahead. Hi, sir. Thank you for the presentation. First question was on the Advanced Intermediates. You spoke a lot about performance chemicals. So, in terms of the other two segments which make up Advanced Intermediates, could you give us some color in terms of how volumes have, you know, been behaving in this quarter? Because you mentioned you have seen some volume growth. So any color with respect to, you know, how volumes are versus a normalized level of, you know, I don't know, fiscal 2022 or 2023, any color with respect to that comparison would be super helpful. Okay. So first of all, hi. Now, since you've asked about volumes, I will answer about volumes, but also just to highlight that at the moment, as it was in the previous quarter and the quarter before, for the last three quarters, the price point, the realizations in the margins are generally less than what are normalized for Deepak's standalone AI business. Now, when it comes to volumes, agrochemicals as an industry is still going through a febrile environment. But as you would have seen from the you know, contextual con calls of many of these companies, they are maintaining you know, the same kind of guidance that they gave. So we do anticipate a slight improvement moving forward and a normalization maybe from the end of Q3 onwards. Volumes in a couple of products hence are depressed, but in most of the other products, volume recovery it seems to be well on its way. We have also taken certain steps to migrate our you know, customer base away from locations where they are seeing a general, sense of malaise or where ocean freight is playing a pivotal role in margin profiles. So while this is happening, across the board, I think, barring maybe two products, we have actually seen very, healthy levels of volume in our demand pool. So our wallet shares are intact and growing. The domestic market certainly seems to be on a high industrial activity mode, and we believe that moving forward, as some of these geopolitical uncertainties end, customers will be more bullish about booking long-term orders rather than, you know, shorter visibility orders like quarter on quarter. And that is the kind of general environment that Deepak Nitrite standalone has been used to operating in. But I'll hasten to say that there are, as I mentioned, a couple of segments, for example, agrochemicals, which are still soft. And as I mentioned earlier, the Bangladesh crisis has not yet been fully accounted for or assessed, because it is a significant player in the garment industry. So Vivek, to add to this, volume, overall, there's a growth of 5%. When Maulik is mentioning about the products which, where, there were some softness, that is our, those are export products, whereas domestic volumes are growing and domestic volumes are doing well. Though margins can be an, r ising pressure, of course, is there because of Our big neighbor next door. China. Yeah, because of China, destocking followed. Yeah. I mean, these are the reasons which we all know now, but, this is there, but there is no issue as on volume and such. Sure, sir. This is super helpful. Just one clarification on this. You mentioned 5%, that would be a year-on-year comparison for Advanced Intermediates, correct? Yes, yes. So this is what I said. As compared to Q4, not year on year. In the sense, not entirely. In higher by Q4. Okay, so, o kay, got it, sir. So sequential number. Thank you. And so the second question I had was actually just a couple of clarifications on the medium-term aspirations. I think you mentioned that in the AGM you've you know agreed to you know get the licensing agreements done by the end of the year. This is with respect to the specialty chemicals investment only, or with respect to the the entire line of new products that you're considering? Okay, I didn't understand. Can you repeat the question? You mentioned the- The MOUs and the expansion plans, not about the specialty and these, right? This is what our chairman mentioned. So, answering our, the chairman was mentioning about the polycarbonate, and he had actually shared his detailed planning, our further actions on that. And there he said that I've been mentioning this for the past couple of quarters. We are at a very advanced stage, and by, w e expect to finalize on technology by December, in the fourth quarter end. That's what he mentioned then. It has nothing to do with specialty chemical research. There are projects which are going, ongoing in our existing capacities, which are related to specialty chemicals, and which will go on stream by the Q3 end or Q4 beginning. Got it, sir. Just lastly from my side, before I rejoin the queue, would it be fair to say that for fiscal 2025, the focus of the management team would be on getting these INR 2,000 crore worth of projects you know up and running properly? The more meaningful execution of the other larger MOUs would really start to pick up pace in FY 2026, or do you think there is enough bandwidth to kind of you know keep you know executing the INR 2,000 crore as well as well as you know taking some significant steps on these larger MOUs over the course of this year? That's it from my side. The INR 2,000 crore CapEx could be, by and large, it will be over by fourth quarter end. Maybe there could be some overlap of one or one product by, say, April, May, but then, that will be over during that time. And we will be, we are, in the meanwhile, we are still progressing on the technology front and acquired land also, and those things are infrastructure relevant. These things are now going on, you know? So 2025 onwards, you'll find, 2025 onwards, you'll find our, our entire focus on the new projects, which chairman mentioned and the large projects. Plus, there could be some small projects also. I'm not saying no, but yes, focus will be on the larger projects. I'll just clarify on this point also, that, you know, when we are tying up technology, there is work that is done after the tie-up of technology, where you are fine-tuning the engineering plan and the project execution strategy. Right now, that is done by a separate team, and the actual project execution is done by a separate team. So while the execution team is, you know, it has its hands full executing the projects, which we have already announced, the INR 2,000 crore worth, which will by and large, be finished by the end of Q4, maybe with a little spillover, as Mr. Upadhyay mentioned. The engineering, the design, and the project strategy team will be busy working on the results of the technology tie-ups, which will take place between now and, say, December. So it will be, you know, this is part of a normal process. And then once the project execution team is done with the current project, it will then start piecemeal taking over charge of the actual execution of the one which we are, you know, it's a different department working on those right now. It will be a different department that works after the technology has been tied up, and then it will be a different department that is focused on the execution. So these are discrete stage gates for us. Sure, they're very clear. Thank you so much for the explanation, and all the very best. Thank you very much. Thank you. The next question is from the line of Dhara from ValueQuest. Please go ahead. Hi, good morning. Thank you for taking my question. I have this first question on getting some clarification on the CapEx done in the last two years, which is about INR 1,100 crores, INR 770 crores in FY 2024. If you can break the CapEx amount into how much would be backward integration projects and how much would be the revenue generating projects. If you can first help me with that? I think it's similar to the guidance that we have given earlier. This is a question that has been asked in calls. Generally, you can assume that the initial CapEx, as we have explained, has an aspect of it which is related to the purchase of land and the development of infrastructure. So there is an element of that also in the INR 2,000 crore, and the rest of it is split between about 60% going into upstream integration and 40% going into downstream, after subtracting the infrastructure and land CapExes. I'll also mention that even on when we consider that something is upstream, for example, chlorination as well as photochlorination, these are assets which are up-engineered to give a multipurpose multi-product application. So there will be available assets also for making new products. So there will be a level of fungibility, which gives us the opportunity to use it for upstream integration as well as for new customers and new applications. But you can assume that 2,000 minus land and infra, the remainder is about a 60/40. 60 inter upstream and 40 downstream. Okay? If you can provide us with the number of how much would be land and infrastructure of the 2,000? Around INR 300 crore-INR 350 crore. Okay. Right. So when we say land and infrastructure, infrastructure is actually a very wide-ranging group of assets, which includes things like boiler and steam generation, effluent treatment plants, et cetera, et cetera, as well as, you know, labs. It's so a lot of infrastructure that is required for safe and sustainable- Hello? Hello. Hello. Yes, sir, yes, ma'am. We have lost the management line. Kindly wait, we'll reconnect them shortly. Okay. Ladies and gentlemen, the management line has been reconnected. Over to you, sir. I hope that our answer was sufficient enough to give you some cover on the questions you asked. Yes, sir. I have a second question on the CapEx that is there for FY 2025 particularly, that is about INR 1,200 crore. If you could help me understand if this also includes the polycarbonate compounding project, and if you can provide a split between the different projects that are going to be planned with this INR 1,200 crore CapEx in 2025. Polycarbonate compounding is a separate project, not a part of, this 2025 or whatever we are saying. Mm-hmm. Up to R&D, and then next phase is polycarbonate compounding and the larger capacities. I'll just highlight that this polycarbonate compounding that we keep talking about is a pilot plant. The intent of a pilot plant, I mean, it is a 30,000-ton plant, which sounds like it should be a commercial plant. The main intent of this is to be extremely fungible and focused rather than only on a purely margin. It is critically focused on getting customer approvals for the products that we make at scale. So, like I said, it has a margin, but it is not to be looked at in an operational sense as a regular manufacturing asset. Mm. Sure. Thank you. Thank you. Thank you. The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. First question on the Advanced Intermediates, 5% Q-on-Q volume growth, you did diluted towards, you know, the continued slowdown in agchem industry. But would it be fair to say that barring agchem, all the other end user applications, dyes, pigments, textiles, detergents, et cetera, there will be a decent uptick there? They will be contributing to the positive volume growth? So, one thing is, as I've mentioned, we are yet to ascertain the potential impact of what is playing out in Bangladesh. And, you know, the textiles industry is the largest consumer of the dyes and pigments industry. Now, this may have a positive aspect to it. I mean, this is a, it's a social disaster, whichever way you look at it. But if I'm looking at it from the business sense, there is an opportunity depending on, s o we supply to the Indian peers of a lot of Bangladeshi companies. Nonetheless, the garment industry cannot really function if core parts of its supply chain are missing in action. So the effect of what's taking place right now is complex, and the right mature approach would be to ensure that we give a guidance once we are clear about whether the demand for our products is actually met with the availability of co-products that our customers will use. So, like, this is very, very early and other than agrochemicals, what we have said is that the market sentiment with regards to volume is positive. We do continue to see some level of destocking taking place from China, and that continues, but at least the market sentiment for buying is not weak. So that gives a general level of positivity. It has not yet resulted in a long-term confidence for customers who have been really going through a difficult time over the last couple of years. So they are also cautious in their buying behavior. They have shared that there are indications that the situation is coming slowly and steadily in a way which one would consider as normal operating environments. Sure. That, that's pretty elaborate, and thanks for that. Secondly, on the fine and specialty side, you know, we have been launching newer molecules, newer products there. So two parts to the question. One, you know, what is the progress there in terms of adding new molecules? Or probably, have we been able to add more clients, whether in India or abroad on the same bit? So yes, to both. There is progress on adding new products as well as new molecules. Many of these products that we have added to the basket, they do have an approval cycle. Some of them are in the agchem space, but not all of them. Some are into the advanced, polymer segment. So we are working and walking with our customers through their own validation cycles, which sometimes can be just a few months and sometimes can be up to a year. So we are supporting them. We are interacting with them on key improvement opportunities, on impurity profiles or on, other aspects. For example, things like, the overall, what do you call it, energy efficiency or where we are able to improve on our throughput. So these are processes which will result in business which is annualized, but not immediately. Sure. By this time next year, we should have a basket of at least four or five new products made at industrial scale, supplied on contractual agreement terms with key customers. Sure. I was about to ask that only, that what is the number of molecules you are launching in? Great. Just lastly, on the new R&D lab, you know, that is expected to commission end of this financial year. Will it be dedicatedly for the polycarbonate and the, and those, you know, value chain led products, or this will also be used to scale up, the AI part of the business? And how do you Only be for polycarbonate. While there is a very small formulation lab that will be part of this, the vast majority will be for chemical intermediates that will be used in the traditional industries that Deepak Nitrite standalone has been catering to. So it will also house various pilot plants, which will be able to scale it up from a lab kilo scale to, you know, several hundred kg scale, from where it is easy to extrapolate data for a commercial plant. So these will be varied chemistries and platforms that will be in place and will have very, very little overlap with polycarbonate compounding. That will be housed in its own dedicated facility. Sure. That's helpful. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Arun Prasath from Avendus Spark. Please go ahead. Thank you for the opportunity. Good afternoon, Maulik. My first question is on the phenol spreads. We have seen some last couple of months sharp uptick in the spreads. What is, according to you, driving the spreads? And is this sustainable, or is this maybe due to the planned shutdowns? So, a little bit details on this will be very helpful. So this is, as you all rightly summarized, phenol and acetone are commodity chemicals, and, spreads are dictated by a lot of things. So frankly, it could be linked to the, you know, the demand pressure that comes from its key raw materials of benzene and toluene. It could be because of India's robust demand. Just to highlight that there's a very interesting situation that takes place when you look at Deepak Phenolics and Deepak Nitrite. Where Deepak Nitrite suffers because of high ocean freight elements in its margin profile, this becomes an entry barrier, which is advantageous to Deepak Phenolics business, right? Where the same product, when it is transported over ocean freight, makes the landed import less competitive. So here, when we have a bias in the domestic application, we are able to take advantage of the freight. Whereas when we have an export bias, it starts to eat away into our margin profiles. So one thing that is there to be said is that India remains in a strong and enviable position when it comes to the consumption and demand for products that are made in the phenolic chain, which is phenol, acetone, and IPA. If you are looking at the numbers, then I must say that more than spreads, more important is how we are converting things into like Maulik was just mentioning on AMAs or acetophenone, or we are talking about IPA. You know, how efficiently and effectively you are using the facilities to generate more. You know, spread, spread can go up and down, but numbers, if you see, and the volumes what we are growing with debottlenecking or whatever we have done, that is contributing much more than what is actually happening to spread and this, you know? I think one must see in totality rather than just focusing on spread. Right. Right. Understood. Just, you know, global supply and demand, is it much more stable as compared to, say, what it was, last year in the phenol acetone chain? Is it, it's stable chain? It is for us, and secondly, we are India-specific, and we are definitely finding the demand is in India is intact and growing intact. All right. Secondly, on the licensing part, if you gave some details. Usually petrochemicals, in petrochemicals, the licensor are there for any product, there will be 2, 3 will be there, or 3, 4, depending upon the product. It usually doesn't take this much time, 'cause we announced our intent to enter downstream last year, somewhere around March, February, and we are saying by this December or March 2025, we'll be finalizing the licensor. Is this unusual delay, or is it something bigger, or is this because we are first time doing this, we are taking little bit more time in this? No. There is one point that you are a little bit mistaken on. The technology tie-up and the licenses are not for petrochemicals. They are for polycarbonates and methacrylate. So those do not have a very large pool of technology partners, you're correct on that, but that requires a far more intense study and discussion with various options. For example, when we are looking at polycarbonates, there are various routes. Some routes have more flexibility, some routes have less flexibility. Some routes have more flexibility and are more relevant for an Indian context, but come at a higher operating cost. And other routes may have more flexibility and more flexibility, but may have more provisions that we have to take for, you know, things like statutory compliances. So it is not a petrochemical license that is taking time. It did not take us time when we put up the phenol and acetone plant. It is the downstream, the polycarbonates and acrylates licenses. And rest assured, you know, whether it takes more time or less time is not relevant. What is far more relevant is that it takes, we take the right decision, because it is not about a couple of months here or there. We're going to be manufacturing this product for decades to come, and Indian demand is going to be robust enough to be able to absorb this kind of capacity we're putting in. We took a right decision, even though it took time, and it was with phenol. We will make sure that we take the right decision here, and frankly, we're at the tail end of it. So I think, maybe if you have some suggestions, we can take it offline into how we can speed up the process of identification and, confirmation of technology partners. One clarification, Maulik. My understanding is once you finalize the licensor, then basic engineering happens, and then detail engineering. Is it on a sequential basis? This will take approximately a couple, three to four quarters. Is this understanding right? So what you are saying, see, ultimately, I think if you heard our chairman's speech during annual, he said that we have put ourselves an end date. You know, what to when the production should start, because we have committed ourselves to the propylene supply also. So keeping all these things in mind, we are moving ahead. Now, let's not get into nitty-gritty of BPA. Things are going in parallel to answer your question. It's not that, because there are different teams working on different aspects of this. You know, so things are working, but then it's not only the one project. We are working on two, three projects simultaneously, which he was mentioning in his speech, and you must have heard that, that how we are progressing. So, but then sharpening these things will be more critical and important so that you get the better yields, you get the efficiency, you get the right technology partner and, and this. So those things are critical in such a large project, so we are working on that. Understood. Thank you very much, sir. All the best. Thank you. Thank you. The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah, good afternoon. Thank you so much. So, one question on the AI margins, which, you know, have been somewhat under pressure. So other than Performance Products, are there other parts of the segment as well that have seen, you know, any sort of pressure on margins, particularly maybe the fine and specialty chemicals? See, fine and specialty, we are mentioning, Abhijit, that if it is exported, yes, margins and the even the total demand also is down because of European base. And because of China, the destocking and the other segment is also impacted. So there is definitely volumes we are selling, but there is definitely a lower realization as compared to earlier years. That is for sure, and that is across the industry, what is going on. Understand. And, so Sanjay, have you also seen an increase in the number of competitors in the fine and specialty chemicals that we produce, or is that landscape still constant? I think there are co-producers. I don't know whether there are more co-producers. There is, I mean, the business landscape on those products remains more or less what it was. In what context you are asking, Abhijit? I mean, I mean, there is no change as such in that. Okay. Making it before, and they have stopped. There is someone else who's making it now, and they have started. So I, I won't say that there is an increase in the competition intensity. However, there has been, as Mr. Upadhyay also mentioned, demand uncertainty, and part of it is linked to the downstream channel material movement for customers, and part of it is linked to their own issues. But what we have done in the meanwhile is we have migrated a lot of that demand into other locations. So our material movement and production rates remain relatively high. We have significantly reduced, you know, single customer or single geography dependency. In the short term, this does come at a slight margin squeeze. There's no doubt about it. But the good thing is that our, you know, credibility with all the key customers remains intact. So when the situation improves, as it will invariably, at that time, we will have a broader base as well as, market penetration to, you know, have our choice of where to supply. Where, one thing I'll just also highlight, whatever we are making, especially in agrochemicals, the customers have repeatedly qualified our product as having the best, specification profile, purity profile. Now we focus on making sure that the business is running and the product quality and customer acceptance remains high. So to answer your question, Abhijit, specifically, there is no addition in the supplies or capacities as such, if you're asking in a sense, fine and specialty. Okay, okay. No, understood. That, that's helpful, sir. Yeah, that's it from me. Thank you so much, and all the best. Yeah. Thank you. Thank you. The next question is from the line of Rohan Gupta from Nuvama. Please go ahead. Hi, sir. Good evening, and thanks for the opportunity. Sir, first question is on this textile dependency in our business coming from Bangladesh. We were alarmed a little bit that there can be still some uncertainties coming from situation arising from Bangladesh. So what is the business share coming from textile business in our case? So to clarify, Rohan, it's such a recent event that it is not yet, you know, fully assessed by anybody. I mean, our team is also working hard on it. It can have a short-term positive, or it can have a short-term negative. In the medium term, I think that the business fundamentals remain intact. If it's a short-term positive, of course, we will be there to take advantage, and if it is a short-term negative, we will highlight it, as we see it unfolding. Now, our dependence on the textile industry is to the extent of saying that we supply some critical feedstock to the dyes and pigments industry. A large application of that is in the textile and garmenting industry. Right? So because, you know, what we are making are intermediates, they find a home in multiple. Take sodium nitrite, for example. It is of course used in the manufacturing of azo dyes and a lot of other dyes, but it is just as much used as, chemical and water treatment or oil and gas exploration or many others, like food additives and things like that. It is difficult to quantify. We don't have any direct, you know, correlation with the ongoing crisis in terms of our customer base. Our exposure directly to Bangladesh is so minuscule. But it's important for us to just be honest with our, you know, analysts and shareholders, that this is still an in-development situation. And it is possible that we will see how this unfolds over the next couple of weeks and get a better judgment in that time. Mm-hmm. Okay. So second question is, especially, the INR 14,000 crore kind of breakup, CapEx breakup, which you are talking about. If you have some clarity, I think that you are still in the middle of technology tie-up and signing on them. But if a clarification, you can give that, how much do you plan to invest further in phenol and BPA, polycarb? A remarkable amount of clarity on that front. So we've said that INR 14,000 crore ±, will be spent in putting up, you know, another phenol and acetone plant in, you know, downstream BPA and a downstream polycarbonate plant in about 200 KT of aniline. So we've literally clarified what we are making. We've clarified by when these things will be commissioned. Is there any further breakup that you are looking for? We never, as a practice, get into detailing out of investments into specialty chemicals, but these are the big-ticket items that, we have already announced and clarified, including the timeline. Mm-hmm, mm. Sir, you also just mentioned that in polycarb resin, though the project will be, I mean, it's a pilot project still, at a 30,000 tons as well. That is the compounding. Okay. Okay, so we're talking compounding plant, and that is still a fundable plant. So later on that, you see that the larger opportunities in putting a large scale compounding plant, so that you just still detailing that, how the project goes ahead? It is a pilot plant only. INR 14,000 crore that we have announced does not include a full large-scale compounding facility. That will be over and above this, and it will be invested in at the right time. This is a pilot facility, but in, in these product applications, the kind of capacity that you need, even for a pilot project, is between 20,000-30,000 tons. It is an extremely tangible asset, but this is kind of the viable size that the customers also need to validate. So you want to say, sir, if the validity is proven and the customer acceptance is there for our polycarb business, that itself will be completely different CapEx balancing on top of INR 14,000 crore CapEx plans right now? The compounding, yes. Not just the pilot compounding, but the large scale compounding. Yeah, large-scale compounding only. I'm talking about. In then Maulik says pilot compounding means it's a commercial plant, right? Yeah, yeah. It's a 30,000 tons a year plant. It's not just, it's not any misunderstanding on commercial and pilot. Pilot in the sense that this is the plant where we are, you know, field marketing, giving it to customer, customer acceptance, but it is a commercial plant. See, we were doing such things in phenol. We were importing and selling this one. We are here, it doesn't work, so we'll have to actually give them a compound, which their plant- Mm-hmm. In the separate industries and trying and establishing our market presence in the compounding business. So it's a full-scale commercial plant o f 30,000. Also, just to clarify, that the Sorry to interrupt. Please, rejoin the queue for further questions. Yeah, Maulik was just trying to answer my previous question only, I think. That this capacity, I mean, not the capacity, sorry. The country has already announced initiatives like PLI for engineering plastics, like, you know, things like mobile devices and EVs and, you know, automobiles and things like that. Now, all of these companies which have announced an intention to invest in India, they may be international companies, and there is a domestic value add component. So as they invest in their capacities in India to take advantage of the PLI, they will be using products supplied by Deepak for their DVA. Right now, this might be only to the extent of the validation process, but as those capacities and investments get commissioned. Once approved, we will also have to make sure that our compounding facility gets commissioned to be able to supply the kind of need that they have. So it is not necessary that the compounding investment for the large scale facility will happen only after 27. It may have to happen in line with the kind of investments that our potential customers will be making to take advantage of the PLIs. Fine, sir. Thank you very much. Yeah. Thank you. The next question is from the line of Krishan Parwani from JM Financial. Please go ahead. Yeah, hi, sir. Thanks for taking my question. Firstly, on clarification, I think you were mentioning 200 KTP of aniline. Did you mention capacity of BPA and polycarbonate as well? I'm sorry if I missed out on noting the same. No, we have not mentioned that. But I mean, you can, you can, stitch a couple of numbers together where we have announced, you know, that we have tied up for X volume of propylene. We will be, for example, doubling our Phenol capacity. And to that tune, you can assume that, you know, the downstream will have some level of market share, because, you know, even BPA is imported into India. And the rest of it will go downstream into the manufacturing of polycarbonate resins, most of which will go into the compounding, but some of which will also be sold into the market as resins, which are also currently imported. Noted, Maulik. So I think I've done that work in terms of 250 KTPA that you have tied up with Petronet. So I think this is that your phenol, I mean, production could be more like 500 KTPA. So would you be using some, let's say, 250 KTPA for your existing propylene requirement? Or because I think you are only mentioning phenol to be doubled, so that is 350 additional. So what is the phenol capacity? That's all the color that we have felt comfortable sharing right now. As we move forward, I'm sure that we will have more details to share. Fair enough. Fair enough. Fair enough. And, and- There are a few things that we would like to keep in our pocket. No worries, no worries. I can understand, because of the confidentiality. No, no worries. I understand. So in terms of, in terms of, I think, you know, Sanjay Sir was mentioning that, you have set up a hard deadline. So, can you please highlight the timelines at least, for, for this chain of projects, as in, would, polycarbonate would get set up first? Because I think in AGM, Deepak Sir also mentioned that it would be polycarbonate first and then probably this phenol and then doubling of phenol later. How would that be? Yeah, yeah. So timelines, he also mentioned about timelines. December 2027 is the date, maybe one quarter here and there maximum, but not beyond that. So that is the deadline. And, in terms of the order, I think, right now, we are, we have various options. It's all actually dependent highly on the interaction that we're having with our customers. So what needs to be done by when, while ensuring that there is feedstock security. Those are some of the strategic, options that we are studying intensely right now. I think, frankly, all of this will be, you know, clarified in significant detail in the forthcoming quarters. I'm sorry for- No, no, I understand. Much. We understand. So just some clarification in terms of the backward integration benefit of the new projects like fluorination and nitric acid. When could we see, let's say, in flowing that in the Advanced Intermediates margins? I think, you know, Q4 should be a good quarter with regards to many of these benefits being tangibly felt. There'll be a partial, you know, partial boost that we will get in our Q3, but one would assume that Q4 is, realistic, you know, clean quarter. Noted. And just one, if I may, on acetophenone, did you mention any production volume or you didn't? No, I just said it was scalable. Okay. Got it, sir. Thank you, and wish you all the best for coming quarters. Just to clarify, I said that the global demand is 60,000-70,000. This is the global demand. We will be putting up a world-scale plant. Yes, sir. The previous speaker has left the queue. Okay. Thank you. The next question is from the line of Tanya Kothari from AUM Capital Private Limited. Please go ahead. Good evening, sir, and I appreciate your detailed presentation. I have just a couple of questions. One is, the R&D spend in the last 10 years was around INR 125 crore, which is, around, 0.42% of your sales, in FY 2024. But the international companies generally spend around 9%-10% of their revenue on R&D. So why there is this, difference in the investment priority between, our company and the multinational counterparts? I can't answer for what the multinationals do. But, if I look at FY 2025, as I mentioned earlier, you will see that there is a significant investment made in R&D. And, generally speaking, we have intensified R&D spending over the last few years. Also, we do not really, you know, certain things that maybe other companies consider as R&D spending, like operational excellence initiatives and energy savings; they, you know, we classify them as just OpEx items. When you say 9%-10%, these are what one will consider as quote, unquote, "innovator companies," where they also invest in things like intellectual property protection. They also invest in, you know, developing various formulations, and we are their suppliers. So we make the key intermediates that go into their end products, which are then formulated. So their R&D considers a lot of things which are not part of our R&D platform. So I would just compare ourselves to other good chemical engineering manufacturing companies, you know, who are making Advanced Intermediates. Okay. And sir, we are coming up with a R&D facility in Savli, and it is going to primarily focus on specialty applications and life sciences. Now, how is this R&D facility going to enhance Deepak Nitrite's competitive advantage in the domestic as well as international market? So I look forward to inviting you and other analysts to our facility once it's commissioned, and I think that that will give you a strong and positive indication to that question. Okay. So, and the question is on the freight expenditure, sir. Could you just tell me how much was the freight expenditure during this quarter, June Q1? What is that? We are not getting your question. What is that you said? I said the freight expenses. Freight expenses. Because, actually, you know, a lot of times management has indicated that due to this global war and all, that same issue, we are facing some problems. So where does it come from? Like, what is the expenditure? Because I find just a 20% growth in the freight expenses. Tanya, we can give you the freight expenditure, but that is not going to help you, because some clients, there could be FOB costs, there could be CIF costs, there could be DDA costs. So I mean, there, there are different kinds of, b ut the fact remains that freight cost has gone up when you are supplying to external, particularly Europe and these customers. And we are becoming, as compared to others, Indian freight rate is higher. So even if your basic cost or ex-factory cost is same, landed cost of the product will be higher. So that is what Maulik was mentioning, freight. And so just by giving the freight number, you will not be able to appreciate this. I think one thing that I can tell you is that freight today is about 10%-15% higher than it was last year. But look at, just as an example, you have customer A in Europe, who is going to be bearing the cost of freight because say companies like Deepak or another one in India or another one in China are selling it on an FOB basis, right? Now, the customer in Europe has to essentially pay less for freight if the material is coming from China as compared to India. So it doesn't matter where the freight is booked, the competitiveness of Deepak's FOB product will suffer a margin erosion if compared against, say, a Chinese product of a similar manufacturer. The customer will then choose basis this, or may choose to actually buy and produce less because their downstream application is seeing a constrained margin. Okay. Thank you, sir. That's all from my side. Sure. Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question- and- answer session. I would now like to hand the conference over to the management for closing comments. Thank you all for joining this call. In case any further clarification is required, you can always write to our investor relations cell under Mr. Nanda. Thanks once again. Thank you. Thank you. On behalf of IIFL Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.