Ladies and gentlemen, good day, welcome to the Laxmi Organic Industries Limited Q4 FY 2023 earnings conference call hosted by Go India Advisors. 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 touch- tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Priya Sen from Go India Advisors. Thank you, and over to you. Thank you, Ryan. Good afternoon, everyone, and welcome to the Q4 and FY 2023 earnings call of Laxmi Organic Industries Limited. We have on the call Mr. Ravi Goenka, Chairman, Dr. Rajan Venkatesh, MD and CEO, Mr. Harsh Varadan Goenka, Executive Director Business Development and Strategy, and Ms. Tanushree Bagrodia, Chief Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request Mr. Ravi Goenka to take us through the financials and the business outlook, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir. Thank you, Priya. A very good afternoon, ladies and gentlemen. Thank you for joining us today for our earnings call for the last quarter and for the full year of 2023. At Laxmi, we have always promoted excellence and innovation to provide local and global customers with consistent quality and reliable delivery. FY 2023 has been a journey in that direction. We augmented our Acetyls and specialties product portfolios and enhanced exports. The diverse industry and customer base enabled effective countering of headwinds, especially the demand drop in Europe in Q2 of last fiscal. Our investment in health safety sustainability have continued through the year, reiterating that this aspect of our business will always get unflinching support. As we continue to build on our operations, we also continue to invest in our people and strengthening the company leadership. It gives me great pleasure to formally introduce to you our new Managing Director and CEO, Dr. Rajan Venkatesh. Dr. Rajan comes with nearly two decades of global experience in the chemical industry and has rich experience of working across functions from research to sales to marketing to finally leading more than a $1 billion business. His global experience across Europe, Asia, including India, is very relevant to Laxmi as our exports and customer centricity are accelerating. I'm convinced that he will take the baton from our outgoing CEO, Mr. Satej Nabar, and take Laxmi to new heights. I would also like to take this opportunity to thank Satej for all his contributions and efforts that have led to Laxmi's significant growth over the last three years. He has been a key part of the Laxmi family. We wish him all the very best in his future endeavors. I would now like to hand over to Dr. Rajan to address the call. Over to you, Rajan. Thank you, Ravi. Very good afternoon, good morning, good evening, depending on the time zone that you're dialing in from. Thrilled to be part of the Laxmi team and also to be engaging with you. As I now embark on this journey, I think what is very clear in my mind is whom am I accountable to? My accountability lies to five stakeholders. One, the investors, both the retail and the financial institutes. Two, the board of directors and the chairman that I report into. Three, the Laxmi team. Four, our customers. Five, and last but not the least, the societies that we operate in. In the last almost 45 days, I have been engaging very intensely with the Laxmi team. I have had a chance to visit our sites. I have met a few customers, and I am looking forward to meet many of the other customers. I am really impressed by what I see on the ground. I have visited our Mahad site, I have visited our upcoming Lote site, and this gives me a great deal of confidence for the vision that Laxmi has charted for itself. In my next steps, what I would focus on with the team are clearly sharpening our strategy, our right to win, operational excellence. This is a continuous journey, but we will further embark very strongly on this. Our EHS journey, we have been investing as Laxmi pretty extensively on an annual basis, and this will continue. Obviously, looking at improving digitization at every space of our business, leveraging innovation which is core to success, not today, but also looking ahead. Last but not the least, the people element. I'm really looking forward to engaging with you guys quarter-on-quarter as I embark on this journey. With that said, I would like to again thank the board of directors and the Chairman for entrusting me with this opportunity, I am looking forward. Back to you, Ravi. Thank you very much, Rajan. It's a pleasure to have you lead our company and take it to its potential in the next few years. I would now like to address the business performance for the last financial year. Our Acetyl Intermediate business portfolio saw strong volume resilience despite the demand volatility. Diversified industry presence from essentials to lifestyle to industrials enabled the same. Exports at about 40% of the sales were driven by a strong on-ground presence in Europe. The strong supply chain we have developed ensured efficiencies across the board. The company continues to be a market leader in India and a tier-one supplier in Europe, with customers continuing to rely on the product quality and timely delivery. Focusing on diversification and customer needs, we augmented the product portfolio in this segment with smart CapEx, and the same has already contributed to our sales in quarter four. Today, the Acetyls product portfolio comprises of more than a dozen products, and we remain committed to supporting our customers with reliable quality and timely supply of products they need to grow their businesses. Our specialty intermediate business with a focus on innovation, the company has made significant investments in R&D, which in the last financial year stood at more than 10% of PAT. This has enabled Laxmi to bring immense value to our customers. The company retains its market-leading position with a share of approximately 50% in diketene derivatives market in India and is regarded as a strong and reliable partner of quality products by global customers. The two new plants capitalized in financial year 2023 have further strengthened the company's leadership in the diketene derivatives and improved contribution margin significantly. Our exports in FY 2023 grew 30% with no single product contributing more than 10% to the top line. The trajectory of this growth and diversification is what we intend to maintain. Our fluoro intermediate section, the asset which we acquired from Miteni has now been successfully relocated to its new home in Maharashtra. The site will be commissioned in a phased manner over the course of this year, and we have successfully started phase I. This is a new and exciting platform for us. With every third pharma and agro intermediate needing a fluoro compound, our initial efforts are to ensure securing a strong foundation for this business. Over to the financials, I will ask, request Tanushree to discuss our performance in further detail. Thank you, sir. Talking about our Q4 FY 2022-2023 financial performance, the last quarter of FY 2023 was sequentially better for Laxmi Organic. Consolidated income at INR 737 crores was 12% higher versus the immediately preceding quarter. In the same period, the EBITDA at INR 64.5 crores at a consolidated level was 11% higher. Improvement in the profits came largely from the changed product mix. Ocean freight levels have normalized, with container availability also having significantly improved. Coal prices remained flat in Q4 FY 2023 versus Q3 FY 2023, all but much higher than the prices of FY 2022. Profit before tax for this period at INR 42.7 crores was 27% higher than the immediately preceding quarter, driven by the improved top line and product mix. Depreciation in the quarter increased in line with expectations. On the annual level, FY 2023 consolidated income of INR 2,809 crores was 9% lower than the previous year, driven by lower realizations. Year-on-year, volumes remained strong. The consolidated EBITDA of INR 256.6 crores was 33% lower than FY 2022. Power and fuel costs, driven by the steep increase in coal prices, which were up almost 40% year-on-year, was the primary driver of this EBITDA impact. This is further evidenced by the fact that despite a 9% drop in top line, gross profits remained flat year-on-year. PAT at INR 124.6 crores was 52% lower, driven by the drop in top line and EBITDA and a INR 24 crore increase in depreciation. The strength of the operations, however, was visible in the considerable improvement in cash flow from operations, which more than doubled from INR 121 crores in FY 2022 to INR 250 crores in FY 2023 at a consolidated level. Post-tax, the cash flow from operations stood at approximately INR 200 crores for the full year FY 2023. Consequently, the cash flow from operations to EBITDA ratio for FY 2023 stands at 97%, up from 29% in FY 2022. The working capital days improved by 20% despite a decrease in payable days. The overall financial position of the company remains strong, with improving cash flows and an unleveraged balance sheet. With this, I would like to hand over to Priya for the Q&A. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star 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. Take Dhaval. We take our first question from the line of Dhaval with Girik Capital. Please go ahead. Yeah. Am I audible? Hello? Yes, Dhaval, go ahead. Yeah, hi. Firstly, sir, our fluorine assets have been operationalized this quarter. If you could share some thoughts, you know, what was the revenue of fluorine in this quarter, and how do you see it over next two-year period? Hi, Dhaval. Hi. Good talking to you again. Harsh here. Hi. You know, Dhaval, as mentioned earlier as well, fluorine is gonna be a platform play. Like we have done in SI, the first year is spent a lot in establishing the base and the foundation strongly, and we've reiterated that earlier. Yes. We are very bullish about the potential of this platform and how it can change the orbit for Laxmi. While the first year will be primarily spent in establishing the operations, sampling out with all of the customers, revenues will start hitting and ramping up in the years to come. A lot of the new product investment has also already started, which we started a lot later in the SI journey. Okay. That's how I would really think about it. I think the SI journey and the growth of that is fairly clear, and we've made that available to you, those numbers available to you. Yes. Again, on the fluorine side, if you can just, you know, revisit our product pipeline. We would be focusing on what sort of products to start with? It'll be how will our product mix look? Sure. As we've said, we have not changed our initial hypothesis. We are starting with all of the products that Miteni would produce in this CapEx, let's call it that, where Miteni's assets produced a certain amount of products. Mm-hmm. Those are the products that these assets will continue to produce today, and we are seeing further opportunities of adjacencies which we will take up once the base is established strongly. Okay. Okay. Okay. Got it. On the, on the SI business, how is the growth rate looking like there? Any newer opportunities in terms of newer product application or some large new customers signed up, anything which increases our visibility there? What sort of revenue growth should we assume for the next three-year period in the SI side? If I mention all of those granular details, it'll be a little problem sometimes for us. What I can state is we have a leadership position in SI that we would like to grow. Growth will come in multiple ways, from new products and new markets, and we are looking at how we can grow that continuously and grow our leadership. You will see that happening in the SI. We have just managed to establish two large plants, as you're aware. Yes. Those are, those are stabilizing. I'd say one is stabilized, the other one's in that process of being stabilized. Yeah, we'll continue to do more of the same. New product pipeline remains strong. As Chairman mentioned, almost 10% of our PAT is invested into R&D. Yes. Yes. Yeah, so on that front, that number will, you'll keep investing a similar absolute amount of in the R&D, or will that percentage remain same? Uh-huh. No, R&D is expected to grow. I don't think we are targeting percentage, but our strength and infrastructure of R&D will continue to grow. And maybe since, you know, innovation as a chemist, close to my heart, and that's where I started my career with BASF, Mm-hmm. I think, you know, Ff you think about it logically, most products go through the S-curve, like we are all aware. We will obviously really try to focus on bringing in new products, new technologies based on the platforms that we are engaging with as we see certain of our products, you know, moving through that S-curve. R&D and innovation as a whole will continue to play a very important part. As Harsh said, we don't have a specific target. While that being said, we are also investing, we will continue to invest in that. Thank you very much, and good luck. Thank you. Thank you. Our next question comes from the line of CA Garvit Goyal with Anvis Research. Please go ahead. Hello. Good evening, sir. Am I audible? Yes. My question is particularly on the demand environment that's currently going on in the end industries. Like, we see last couple of quarters, top line is recovering, right? Can you spend some few minutes on the demand side, specifically in the end industries that we are targeting from our product portfolio? Yeah, okay. Rajan here, Garvit. I'll give a stab at it, but I hope you give me some discount since this is day 40 for me, with Laxmi. Let me start with broadly the industries that we are serving as Laxmi. Let me start with the agro part, and you certainly see it, in the results of our customers. We do see certain slight weakness, in the agro space, from the exports and also the domestic side, while the previous year, if you recollect, was very strong. Yeah. That's the agro part. I would say on the pharma space with obviously all the COVID things coming to an end, it has got dual effects. The demand is slightly ebbing. On the other side, you are also seeing a significant higher audits happening at our customer interfaces. That's something to be sort of on a watch-out. While on the elements on the CASE, that is the coatings, additives, sealants and elastomers, we continue to see demand, domestic demand being broadly positive, while exports, especially into Europe are being slightly softer. Hope that gives you a bit of a perspective. The essentials part of our portfolio that we serve is slightly weaker, but the other elements are reasonably positive when it comes down to domestic demand. How do you see situations changing in next few quarters, say next two to three quarters in those areas that you mentioned are currently weaknesses is there? I think if we were able to actually predict that to the last T, I think, you know, you would need a crystal ball. I would say we are in close contact with all our customers. We are seeking a clarity from them, depending on how also the macro element, you know, in Europe, how things are prevailing. You have the Green Deal coming up in Europe in a very big way. North America, the recessionary fears have not yet disappeared. I think we are closely watching, and I think it would be just too premature to say that we know for sure how the whole thing will pan out in the next three or four quarters. Harsh, if you want to add anything on that, please jump in. I think that's good, Rajan. Thank you. Okay. That's one. Second is, on the margin side. There is a little bit volatility in the margins, on a historical basis, if you see the numbers from 2020. How do you see margins shaping up from here in going forward in next few quarters? How do you see what will be the sustainable margins for us in the longer term? you know, you should actually look at both our segments in a way that the essentials basket has its own cyclicality and which we've experienced last year. Over the cycle, both of these businesses make us money. As our CapEx increase towards specialty businesses, you will see this becoming more and more stable. We are not giving guidance, but I hope this is able to help you arrive at a number. That's good, sir. Is there any guidance for top line for FY 2024? Sorry, we don't, we're not giving guidance to our financials right now. CFO, any comment on that? As a listed company, we don't give out a guidance at this point in time. Understood, sir. In fluorination segment, basically, can you tell me the industries that you are looking to target? I think, is it the new age verticals like solar industries, EVs, or the basic industries you are going to target like electrification and all these things? Yeah, happy to comment on that. Our primary applications from the FI business will be agro and pharma in the phase I. Then we have a large basket of industrials, which makes up flame retardants to composites to battery, some parts of battery, not the materials play, but other chemicals plays in that is what we are targeting. Understood, sir. That's it from my side. All the best to you for the future. Thank you. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star then one. Our next question comes from the line of Jatin Damania with Kotak Securities. Please go ahead. Thank you, sir, for the opportunity. Sir, we have two broad questions. One is on our diketenes, where we said we have a 50% market share. If I'm looking at the numbers, we are the diketenes account for almost 70% of our segmental revenue. If I'm looking in terms of margin, the segment is not giving the double-digit margin. As an analyst or as an industry, how shall one look at this particular segment going ahead in terms of the performance? Jatin, Tanushree here. Jatin, I'm not sure how you are calculating the margins to reach the conclusion. Very happy to speak to you offline separately. Mm-hmm. Then answer this question so that you can get a better understanding of the numbers that we are presenting. Sure, we can do that. Okay. Secondly, on the fluoro situation, I mean, definitely we'll be completing capacity in the three phases. Once all the phases are completed, what will be the revenue contribution of the fluoro into the overall revenue mix probably in next two to three years? Yeah. We've also released this information publicly, where we said the Miteni assets would do about EUR 25 million revenue when they were based in Italy. Depending on the product mix and the inflation, et cetera, et cetera, we'll be around that in the first phase. In the first phase. After the completio`n of the three phases? No- You can give some guidance in terms of the, I mean, growth trajectory in terms of the revenue and EBITDA? Sorry, let me clarify. By first phase, we are looking at fluoro as a platform. This phase of CapEx, what we have stated, will deliver that. We will obviously reinvest to grow this business exponentially. Okay. How much money that we are looking to reinvest back into the fluoro business? We will not give that number today. What we can state is that the addressable target market that we have is a lot larger than what these assets can serve. There are several adjacencies that are already part of our R&D pipeline that will require CapExes in large scale plants. We are looking at this business to establish it the way we have established SI, and we're excited by that. Tanushree, I mean, we have seen frequent changes in the top level management. I mean, what is the employee churn, and is it that as an industry, are we unable to retain the talent and talented employees at the top level, or how does it seem on that front? Jatin, Tanushree here. I think if you see, the company has had a fairly stable run of top management. You know, Of course, we've had Mr. Partha Roy Chowdhury, who left last year, but he retired. Satej was with the company for three years, and he's decided to move on to pursue his own other opportunities, right? Yes. From a top management point of view, if you look at the rest of the top management with the sales segment heads, they've all been with the company for a very long time. Okay. Right? The senior management's fairly stable. We also have a huge set of employees who've been with the company for various tenures, but all long, long period of tenure. The two changes that you're mentioning too are reason driven and with a fairly stable tenure. Sure. Thank you. Tanushree, I'll get back to you offline for the guided thing. Sure, Jatin. Get in touch with Go India, and they will put you in touch with us. Sure. Thank you. Thank you. Our next question comes from the line of Nitesh Datt with Prabhudas Lilladher Private Limited. Please go ahead. Yeah. Thank you for the opportunity. Dr. Rajan, great to have you on board at Laxmi Organic. My first question is on the CapEx side. Have you finalized our plans on the next round of CapEx for the Hageland that we acquired some time back? If you can give a color on the products and the chemistry that we would be looking at on that side, or will it be the existing products itself? Nitesh, as I've just come on board, the team has certainly. The investment in The H certainly has been done with a plan in mind, and the team has really worked out a business plan. I would like to also understand a certain level of granularity of that business plan, and that's why that's work in progress. We are happy to share with you a little more details, once time progresses and once we have clarity. I would say it would be certain of the portfolios would be building off the successes that we have. Then certainly we will be also augmenting others. That's what I would like to place on the table for now and seek your understanding. Sure, sure. What would be our CapEx outlay otherwise for FY 2024 as a company overall? Nitesh, we've always said that on a normal basis in any one year, we'll have around INR 300 crores of organic CapEx, and that yardstick remains unchanged. Sure. Okay. Coming on to the specialty intermediates side. What was the utilization of the first and the second long-term projects in Q4? We don't answer plant-wise utilization. Ballpark on the second long-term project particularly, sir. No. Nitesh, let me give it to you this way. Both products have good demands, and they are operating well. We are looking to ramp up the plant that got established later in this quarter furthermore. Nitesh, if I was just to once again reiterate, looking at capacity utilization may not be the best metric for this type of a business, right? The way we look at is, are we generating the same set of margins that we had expected in the same time frame? That's actually coming through. Okay. How is the, you know, if I just can ask you know, as to how have the SI revenues, X of the two long-term projects, you know, performed in FY 2023 overall, any ballpark growth number that you can, you know, you can give out there? What will be the outlook for these, you know, for the products for FY 2024? Nitesh, let me give you an answer in two parts, right? Look, when we are going downstream, you've got to appreciate that we've become consumers of products that we were selling ourselves, right? To that extent, you may not see an increase in the top line, but, you know, the changes in the bottom line and the contribution margin itself that we've put in our presentation are indicative of the contribution that has come from the new products that have that have come this year, right? The second is our volumes remain quite strong. If I look at without the two without the two new plants, we would have still been in a very, very healthy position. The idea of investing is always to keep going downstream. There you will continue to see a higher growth on the margin versus on the revenue. Sure. In that case, I mean, I was just trying to understand, you know, that, despite the 50%, you know, export contribution coming through, you know, for SI, and which would ideally imply a significant increase in the SI exports, sequentially as well. You know, so that would ideally have, you know, should have driven the blended EBITDA margins, you know, higher, which is not the case. I was just trying to, you know, understand as to how to, how to look at this. Nitesh, we are fairly agnostic to exports or domestic. Our supply chains and our customer supply chains keep on changing from one location to the other. I would not take that yardstick. Giving you all the number of exports is just to show that we're increasing our presence in, presence internationally. Nitesh, my request will be that, you know, just to help you understand the numbers a bit better, we connect offline so that, you know, we also have a clarity of how you are interpreting the numbers and that there's no skip between the lip and the cup. You know, please get in touch with Go India, and then we can circle back on this. Sure. I'll do that. Just one last question, if I can put it through. What should be the you know, what should be the effective tax rate that we should work with for FY 2024? I mean, should it be a full tax rate or, you know, do we have any benefits there? If you can answer that. Nitesh, we are, you know, as you will acknowledge, we are currently in the old tax regime. We are in the process of evaluating whether we should move to the new tax regime or currently stick with the old tax regime. You know, the worst-case scenario you may want to take is a 25% tax rate, which will be the full tax rate in the new tax regime. Sure. Thank you so much, and all the best. Thank you. Thank you. Thank you. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star then one. Our next question comes from the line of Ankur Periwal with Axis Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity, and welcome, Mr. Rajan. Good to hear from you. You know, starting with the specialty intermediate segment, correct me if I'm wrong, the export while, you know, they have shown a pretty strong growth, which to my mind will be partially driven by the new product launches as well. Domestic has seen some slowdown. Is it largely a discretionary, non-discretionary sort of, you know, thing because of the macro slowdown or, you know, how should one look at it? Ankur, I would look at it being choice-driven. We are choosing to supply certain markets over others, and therefore, that choice remains with Laxmi. Sure. The, the capacity remains fungible here in terms of which product you want to sort of, you know, produce here, depending upon the domestic or the export, you know, outlook. Yeah, exactly. As always mentioned, we are looking at product portfolio optimization constantly. Sure, sure. Okay. Second question, you know, and referring to your slide number 14, which is largely talking of specialty intermediates. There has been an optimization in the product mix, you know, on a base, on a scale of 100 from 88, we have gone to 108. If I look at slightly longer term, or even from a contribution margin perspective, the growth has been sharper. When I look at the EBITDA margins, numbers are largely flattish, give and take, you know, on EBITDA, this year, full year versus last year. The higher overheads here, are they largely sorry, logistics and coal, due to which the number looks bleak, and with cost normalization now, maybe the duration will be more upwards going ahead? If you can share some thoughts there. Yeah. Ankur, that's right. If you look at, if you were actually just to look at the gross profit, right? The gross profit on a year-on-year basis, despite a 10% lower revenue, actually remains flattish. The EBITDA this year in FY 2023 has been impacted in more than 50% because of the higher power and fuel costs. That is so much more than the freight costs. Of course, that's been a part of it. In particular, the coal costs. While the coal costs have come down, right? They still remain about 30%-35% higher than what they were in FY 2022. Till this starts to normalize, I think that, you know, the improvement, that's the improvement of the gross profit is not going to come down to the EBITDA. Sure. You know, on an annual basis, if I look at our SI business has grown at around 10%, 11% odd. There is a contribution from the new product here also. You know, my presumption here is there is an RM inflation. There will be a pricing increase as well. While at the same time we are commenting that on the volume front we are pretty much, you know, stable. I'm just trying to connect how should one look at it? Is there maybe a degrowth in the older products and the new product is compensating for it? Maybe if you can share some thoughts. That's by and large, just from what has been sold outside, that would be true, right? Because you've also become consumers of the product. By and large, if you look at the products that are being sold, what you're saying is correct. Sure. From a old product, if I could, you know, broadly classify it as old and new, old product, there is some slowdown, there is still a scope of growth or those products are optimized, as per you? No, absolutely, there remains a scope of growth. I think the choice is a choice that we make of what we want to sell. Ankur, broadly, you know, while we are giving the data of product mix and how many products, et cetera, base, I mean, rebased, we will constantly do this product portfolio optimization as we are driving this business more on margin. Sure. Sure, Harsh. Fair enough. Just on the fluorination side, you know, your earlier comment did suggest that probably, you know, year one of, you know, fluorination business, which is FY 2024, will be more focused on building the franchise, the product approvals getting in place, et cetera. From a ramp-up perspective, if you can highlight, you know, how are we looking at the timelines, let's say for the new product launches, the revenue ramp-up and, you know, which part of the segment, how is the customer feedback, you know, on the fluorination product side? No, perfect. I think customer feedback has been fairly robust. Ankur, nothing has changed over there. Customers are excited for us to get into existing products of Miteni as well as a lot of new products. There's traction and efforts going on on both sides, while our CapEx and our delivery and establishing of the plant on the baseline products remain solid. We are following our strategy clearly by stating that we want to set the foundation strong. All of the sampling and all our commercial products will happen in this year, and then you'll really get the ramp-up and the reinvestment into the adjacencies thereafter. Sure. When we say, for the product approvals, what sort of a timeframe are we looking at when we can see the commercial ramp-up of these products? Yeah. Customer approvals will be anywhere between three and six months, depending on the complexity of their own supply chains. Sure. And Harsh, lastly, if you can just remind, the revised CapEx number here and the asset turns that we were targeting. Ankur, we have already stated that we have not changed. We'll be around that 400 mark, and I've stated the revenue potential of the Miteni assets as well earlier on this call. Which is a EUR 25 million odd which will be done from the phase I. Correct. Okay. That's helpful. Thank you and all the best. Yeah. Thank you. Our next question comes from Chetan Thaker with ASK Investment Managers Limited. Please go ahead. Good evening, everyone. Hello. Hi. Hi, Chetan. Yeah, hi. I just wanted to check with you, particularly on the AI side, it appears, this was a weak quarter, from a profitability point of view. Is that assessment correct, that there was near negligible contribution on profits from AI for this quarter? I think generally, Chetan, the entire year was weak for AI. Mm-hmm. As you had the raw material prices slipping throughout the year, all the way till March, you've seen that in the Acetyl Intermediate segment, which was broadly expected. The subdued environment still continues in Q1 as well? That would be a fair assessment, that Q1, Q2 still look a tad bit difficult? as Rajan mentioned, Chetan, we are seeing headwinds in Agro and Pharma. Mm-hmm. where these segments are still Agro globally and Pharma specifically in India. The CASE segment, coatings, adhesives, sealants, elastomers are where we are seeing a stronger pickup. Consumer is still doing a little bit better, so anything upstream of consumer seems to be doing better. And can- Chetan, maybe just adding on to that. Obviously, we have also observed that, capacity in China, while existing demand in China is weaker, when we are looking into exports into Europe where demand is weaker, we are facing very strong competition from the Chinese who are positioning the price, the products at a much lower pricing. We are also being very cautious and conscious on our actions there. Understood. For the SI bit, the exit run rate that we've seen in terms of revenue, would it be fair to assume that ballpark this number can sustain through FY 2024 now that these plants have ramped up in this quarter? Yeah. That's a, that's a very fair assumption. Great. Just last bit on the borrowing limit extension that was seeked for INR 2,000 crores. Wanted to know if there is any clarity that you can provide on that. Chetan, that's an enabling resolution that we take year-on-year. Got it. Understood. FY, any meaningful contribution on revenues this year, or it'll be a year of stabilizing the plant sampling and all foundation being laid in FY 2024? From a revenue point of view, there might not be contribution, but the foundation is laid in 2024. That's right. That's right. Got it. Great. Thank you so much. All the best. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. Our next question comes from the line of Dhruv Muchhal with HDFC Mutual Fund. Please go ahead. Yes, thank you so much. Sir, the question was related to the SI business. In general, we are seeing that the RM prices for many of the products are declining. I'm not sure for your specific product. As probably you pass that on to your customers, do you think there will be an implication on revenue growth for the SI business next year? Also, can it, given the RM is declining, can it, also aid to the margins, or do you think the market conditions are not very favorable for that? Okay. Dhruv, Rajan. I heard two questions. RM prices, are they declining? I think it's a mixed bag in SI, where finally the, a large raw material called acetic acid has stabilized over the last two months. The specialties are you have some higher and some lower. The way we run the business of SI is more on margin, and we are able to pass that on with some amount of lag. Even our long-term contracts, we try to build that flexibility in. Maybe building on that, I think one, what I have been able to gleam out, the way we operate in Laxmi are really coming from the customer's perspective. These are enablers called customer interaction models. Our SI business is more a product process innovator, where we really create value with our customer, while our AI portfolio is looking at a lean and reliable supply model where we seek to actually supply our customers in a very, very reliable and predictable way, in a competitive price environment. That's something I hope you can take with you of how we are steering these businesses and how we will continue to steer these businesses. Sure. That's helpful. The only thing is I'm just trying to understand this better is, say if the RM declines, as they were increasing earlier, even if the percentage margin remains the same, given that you have to pass it on, some of the, probably some of the benefit, if not all, the absolute profit declines even if the percentage remains the same. I'm just trying to understand, is that a case or, you don't see that as a worry? Dhruv, that is really not a worry because it's not as straightforward as what you've put through, right? We are not really worried on that account at all. You know, if you want to have a more detailed discussion on this, happy to take a call offline. Sure, sure. The second thing was the CWIP. This CWIP that we see in FY 2023, is this primarily for the fluorine business or this includes something else? I thought the fluorine business was capitalized at the end of in 4Q. Okay, that was already capitalized in 4Q. No. Dhruv, as we've said, we will be commissioning the entire site in phases, right? The capitalization for the fluorine business is only done in part. What you are seeing in the consolidated CWIP today is, yes, a large part of it is the fluorine business. It also has some other capitalizations that are currently being done for unit one and unit two, and it also contains some of the building assets that we acquired in the Hageland acquisition. Okay. Okay. Got it. Lastly, a small thing. Your interest cost was, I think, negative this quarter. What could be driving that? This was an extra provision that we had taken for interest that actually didn't materialize and hence it got reversed. Okay. Against normal amount, there was an provision and hence the overall number is negative. The normalized number will be same, approximately same as 3Q, approx, is it? Yes. On the normal borrowing cost, actually, we've been very good. Our, borrowing cost has, on the working capital side, the increase in our borrowing cost been less than that of the repo rate. Okay. Okay. Got it. Thanks, thanks so much, Tanushree. Thanks. Thank you. Our next question comes from the line of Resham Jain with DSP Mutual Fund. Please go ahead. Yeah. Hi. Good evening team. I have two questions. First one is, out of the overall revenue in terms of user industry, agro will be what% in terms of our overall user industry across all the segments? Do you have any idea? We've given that data on slide 10 of our presentation, where we've said, 29% of our total, company revenue comes from agro. Okay, perfect. Sorry to, I didn't saw that. The second question is related to agro, whereby we are hearing across all the agro generic company, where as you mentioned, China is giving very tough competition. A lot of products they are selling below cost as well. Based on your past experience, are there any takeaways here in terms of how long this typically remains? We are hearing a lot of Indian companies have in some of the products, they have shut down their plant as well. Anything here which you want to share your thoughts on? Difficult to comment specifically on that because, as you can tell, the chemical industry is very diversified. Yes, in general, the agro industry globally is facing some headwinds right now. Okay. Understood. Okay. Thank you. That's it. Thank you, Resham. Thank you. Our next question comes from the line of Amar with AlfAccurate. Please go ahead. Yeah. Thanks a lot for the opportunity. Just one question on the roadmap which we had given primarily from the guidance perspective. Like, you know, we had, I think in FY 2025, we are targeting 50% AI and 50% SI versus earlier guidance of 55% and 45%. And despite that, our margin guidance still remains 15%. Like, you know, what we understand here is that SI is a largely a high-margin business. If your revenue shift is happening, ideally the margin should also increase, right? Amar, Tanushree here. Okay. For FY 2025, the estimate is a 50/50 split between AI and the specialty type businesses. Okay. It's a typo. It should not be SI, it should be SP. Mm-hmm. There we are taking a 15% margin. We are going to FY 2027, where we say AI will be 45 and SI will be 55, and the EBITDA margin will be at 16.5. Mm-hmm. When we do these projections, we are fairly conservative on the AI side. Of course, that's why the entire margin expansion that is coming is coming from the specialty type businesses. Okay. Okay. Meaning, like, you know what I understand, ma'am, like, you know, if I see the presentation of first half FY 2023, basically our revenue split was 65% AI and 45% was 35% was SI and 10% was FI. Obviously we classified everything as an SI. Basically it is divided 50-50. I'm saying the 5% shift from AI to SI, which is happening, despite that, you know, the margin remains 15%. Ideally I'm assuming that we would have been conservative even at that point of time, right? No, Amar... basically the 15% should have increased, right? Amar, I think, you know, let's do this correlation so that you understand the math offline. Mm-hmm. Because you are comparing the past presentation, which has a certain transition into the current numbers. Mm-hmm. Let's connect offline to explain that to you. Sure. Sure. Thanks a lot for that, ma'am. Secondly, like, you know, sir, in SI business, I believe we also have a fair enough dependence on the textile part of the business. Any, any upgrade on outlook, like, you know, what we are hearing is that now the outlook for textile is largely at the bottom, and from here on we should see some improvement. Should we see that should percolate into the SI business? As we won't be able to predict what's happening and when an uptick in a specific industry can happen. Mm-hmm. As Laxmi, we are serving several industries. Mm-hmm. We are not banking on one industry doing well. That's been our general approach, and that's been our portfolio so far. Mm-hmm. If some application that we serve, you'll always have that change happening throughout the cycle. Maybe just to augment onto that with our SI product portfolio, we are pretty diversified with the industry, like Harsh said, that we are serving, and we are also well hedged. To your point about textiles, it's not as if we have a very prominent exposure. Broadly, we are, I think with all the customers that we are serving, we are well hedged. Amar, you know, just again, if you look at slide 10 of the presentation that we've put in, you'll see that our reliance on per customer actually has come down significantly, right? Top 10 customers were 37% in FY 2021, went up to 41% in 2022, and then came down to about 34%. In no year has this number been more than 41%. Mm-hmm. Similarly, if you see the industry base is equally diversified, right? I don't think. The evidence of our diversification is that in this year, despite all the cycles that the business has seen, the top line is only down 9%. I think, we are a very, very de-risked and diversified business, so not really worried about any one sector. Okay. Okay. One last, if I can squeeze, ma'am? Like, you know, despite, like, you know, the muted kind of a specialty revenue growth, we had seen a improvement in profitability. Like, you know, you always indicated that last two CapExes which we did was largely more from the backward integration perspective. Largely we target three years kind of a payback. Is it fair to assume that from here on, despite, you know, the, let's say, revenue growth muted, the benefit of the backward integration would be seen in the profitability? Absolutely. I think it's evident even in this year. That's where you see that our contribution margin% increase even in Q4 has been substantial, right? Your statement's absolutely correct. Meaning like, you know, total CapEx which had gone for these two blocks was something around INR 135 crores, if I'm not wrong. We have capitalized over INR 250 crores in this fiscal towards increasing production and capacity. Okay. That would include- Across Unit 1 and across Unit 2, most of it has come in Unit 2. Okay. Which is. total INR 200 crore, right? You're saying INR 220. Yeah. It's in excess of INR 200 crores. Okay. Basically, I mean, bulk of this should come to the bottom line. That is what we should assume, right? You know, I don't know how you're looking at the numbers, Amar, but again, please get in touch with Go India, and we will answer this question more in detail for you. Yeah, ma'am. Sure, I'll get back. Sure. Thank you. Thanks a lot for the opportunity. Thank you. Our next question comes from the line of Rohit Nagaraj with Centrum Broking. Please go ahead. Yeah. Thanks for the opportunity. My question is on the fluorination business. Since we have started, and congratulations on starting of the plant, are we facing any initial teething issues and quality issues in terms of products? Rohit, this is a chemical plant. There will constantly be hiccups in a startup, which is expected and natural. That's what we are here for. That's what we are used to doing. I guess you're coming from the... I'm reading the question as, because it's fluorine and some new chemistry, is there a challenge? I think we are fairly well equipped with that. There are no large surprises because of the technology that we have imported. Right. Got it. Sir, a light question to that. You, you know, mentioned that probably the opportunity size is about $25 million. Given that we are talking about the opportunity size 10 years back with the products, which were, you know, growing or which were stabilized that time, what confidence does it give us that the customer will give, you know, incremental orders to us? What different is to offer to the customer than the existing supplier who is currently supplying these products to the customer? Thank you. Multiple reasons, Rohit. You're right where it's been five years since the Miteni plant has shut down, but Miteni in its life has produced over 100 products. We have selected products that the customers are genuinely seeking from us for various reasons of their own, and we are choosing to produce a certain basket where we see demand traction in. That is the first phase. The larger question is, we're in a very large market overall, and there are more opportunities than this asset can serve. Therefore, can we really transform this business over time? Right. Just one last clarification on the same. From an R&D perspective, which are the sub-segments that we are looking at from a product diversification perspective, given that the domestic incumbents are also trying to enter a lot of new areas from fluorination perspective? Thank you. R&D generally would go towards all three of our segments. It's not pertaining to one. But yes, SI and FI tend to be more chemistry driven in... We have a specialized basket of chemistries that are unique to us. Mixing those chemistries gives you a unique proposition for our customers, and those are the areas we play in. That remains similar for other players in India and for Laxmi. I was talking more from fluorination perspective, sir. Thank you. No, even from fluorination, we have got some unique things with the Miteni asset that no one was doing in India, which is why that's unique to Laxmi. Other, each of the fluorine players have their own strategy, sort of chalked out. Sure. Thanks for answering all the questions and best of luck, sir. Thank you, Rohit. Thank you. Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I would now like to hand the conference over to the management for closing comments. Thank you very much. It's a pleasure to be on the call with all our well-wishers and investors. With the inflation showing a neutral to a southward trend, a normal monsoon prediction, and the higher GST receipts, we do look forward to a higher traction in our businesses as well. Till our next call in end of July, beginning August, happy sunshine. Good luck. Thank you, sir. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us. You may now disconnect your lines.