Ladies and gentlemen, good day, and welcome to the Q4 FY24 earnings conference call of Oriental Carbon & Chemicals Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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 attached phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Akshat Goenka, Promoter and Joint Managing Director of Oriental Carbon & Chemicals Limited. Thank you, and over to you, sir. Good afternoon, and a very warm welcome to everyone. Along with me, I have Mr. Anurag Jain, CFO, and SGA, our investor relations advisors. We have uploaded our results and investor presentation for the quarter and full year ended 31 March 2024 on the stock exchanges and company website. Hope each one of you had a chance to go through the same. During the quarter gone by, the company has witnessed a revenue growth of 4% and PAT growth of 15%, despite several factors such as the global chemical inventory destocking, leading to depressed realizations and a slowdown in the global chemical space. Revenue for FY 2024 was lower due to a reduction in sales price on account of a reduction in input and freight costs for insoluble sulfur and acid, respectively. However, the company was able to maintain its margin. The company is witnessing a challenging global environment characterized by elevated inflation, lower demand, and realizations of chemicals globally. The demand in Europe, which is the second-largest market for our company, has been sluggish due to the macroeconomic and geopolitical environment, including the various conflicts. Excessive production capacities over demand is resulting in pressure on prices and margins globally. This is expected to continue until the balance is reached between capacity and demand. Due to imports in India being made at very low prices, the company has applied to the DGTR for the recommendation of anti-dumping duty on the import of insoluble sulfur from China and Japan. We are making the company stronger by prudent capital allocation as well as early repayments of debt. Last year, debt was reduced, and in April, further debt was paid back. As on date, our non-current long-term debt is INR 33 crores, and the current short-term borrowings, including current maturities, is INR 52 crores. Our liquid cash and investments is INR 63 crores. The position of the balance sheet is healthy. In the near future, CapEx will be restricted to maintenance and payback loans. I'm also happy to share that we've received approval from the Honorable NCLT for the demerger scheme. The order has been appealed in NCLAT on the limited point of appointed date. The case has been admitted, and we expect it to conclude soon. This milestone unlocks significant value within both the demerged and resulting companies, aligning with the unique risk-return profiles and cash flows. It enhances our flexibility in accessing capital and attracting partners and investors tailored to each business segment. Additionally, this move enables a sharper focus on individual growth strategies and expansion opportunities, ensuring optimized performance and value creation for our stakeholders. To conclude, I would like to say that we have experienced comparable industry downturns on multiple occasions, and our company is well positioned to handle this brief phase because of its balance sheet hygiene, strengthened competitive structure, ESG commitments, and customer prowess. The company will be among the fastest to improve capacity utilization and capital efficiency as soon as the demand recovery results in orders coming in, therefore boosting value for its stakeholders. With this, I would like to hand over the line to Mr. Anurag Jain to update you on the financial performance of the company. Thank you, Akshat. I will now take you all through the standalone financials of the company. As far as Q4 FY 2024 is concerned, total comes to INR 108 crores, and grew by 4% year-on-year. EBITDA stood at INR 27 crores, a growth of 7% year-on-year. EBITDA margins stood at 24.8% compared to 24.1% same time last year. Profit after tax stood at INR 13 crores, with a growth of 15% year-on-year. PAT margins stood at 12.3% versus 11.1% during Q4 FY 2023. Now, to give you a highlight on the year ended FY 2024, total income stood at INR 401 crores, at a growth of 14% year-on-year. EBITDA stood at INR 97 crore, at same level as previous year. EBITDA margins were 24.2% against 21% last year. profit after tax stood at INR 43 crore, down 2% over last year. With this, I would like to open the floor for questions and answers. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask question, may press star and one on the touchtone telephone... If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use the handset while asking the question. Ladies and gentlemen, we will wait for the moment while the question queue assembles. The first question is from the line of Aditya Khandelwal from Systematix Institutional Equities. Please go ahead. Yeah, thank you, sir, for the opportunity. Sir, when we look, so your performances in this quarter as compared to, so last quarter, so your top line, EBITDA, PAT, everything has improved. So sir, what has changed on sequential basis? So whether it is volumes which have gone up or realizations, or what has actually changed on quarter on quarter basis? As far as this quarter is concerned, the major change has come in volumes, with respect to previous year. The volume that we made this quarter were more, and that is reflected in our performance. Okay. So sir, onto the volume side, so that phase one capacity of 5,500 tons, at what utilization level that is operating? Just a ballpark figure, if you can help us understand. We do not look at capacity utilization on a line-by-line basis. It is the total capacity utilization that we look at. Currently, the capacity utilization would be around 70%. 70%. Okay. Okay. Sir, sir, so for the month of January, February, March, sir, we are witnessing that the export prices of insoluble sulfur have taken a dip. So, sir, so will this be reflected in, in the coming quarters, or we have taken that into our, so this quarter number? In this quarter, obviously, in some sense the dip is not there because it's related to other earlier contract. In some sense the dip is there, but in the current quarter, the whole impact will be there. Okay. Okay. So onto the, anti-dumping duty, sir, any update like, you had applied for ADD on China and Japan? Earlier, sir, we knew that so the, the import were primarily happening from, so from Flexsys only. So does China and Japan have now start to dump excess capacity in India? That is right. They have excess capacity, which they are dumping in India. And, therefore, there is an impact on pricing, and that is what has forced us to move for anti-dumping duty against them. In fact, even Flexsys has started dumping recently, and once it shows up in the data and gets proven, we will move against Flexsys also. Okay. Sir, by which quarter we are, so we are expecting this to normalize, so demand, supply globally and all these things, by which quarter or year we can say, so things will normalize? Currently, the gap in demand and supply globally is quite significant, and the growth in demand is still projected to be in the range of 3%-4%. So the normalization is not going to happen in the next at least two years. Okay. Sir, and any update onto the sulfur prices, sulfur and coating oil prices? So where are they moving right now? They are more or less stable right now. So as sulfur is concerned, it's stable with the negative outlook. And as far as oil is concerned, that is also stable. So currently, we are in the stable phase. Sir, just one last question. Sir, that phase two capacity expansion, any plans on that? So we will be looking to restart that? So that will depend on the capacity utilization. Once it crosses the threshold of, say, 85% or 90%, then we will start, you know, we will start the process of looking for expansion of phase two. Okay. Okay. Thank you, sir. Thank you. Thank you. The next question is from the line of Dhruv Bajaj from Smart Sync Services. Please go ahead. Sir, firstly, congratulations on a decent set of number. I wanted to understand more about the anti-dumping duty, because in recent time, recent times, finance ministry actually blocking approvals of anti-dumping duty despite the other ministry giving approvals. So, A, how big has been the impact of these imports on our realizations in domestic market? And, B, is our existing capacity sufficient enough to meet the domestic demands, given there are no major players in the domestic industry to cater to the demand? So, natural imports are a natural outcome, right? Or am I missing something? Our capacity, our capacity is far more than the total domestic demand. Okay. Okay, so, let me give you a ballpark figure. The total domestic demand will be between 20,000-22,000 tons per annum. Our capacity is 39,000 tons per annum. Okay. Secondly, when we talk about anti-dumping duty, it is not about blocking imports. It's about blocking dumping of material by exporters. So it's not about blocking imports altogether. ... Very good, sir. And sir, since our investment company will now house Duncan Engineering, so can you please provide us updates regarding the operations? As based on my reading, you have been successful in turning around the operation in the last few years by selling non-profitable businesses, among other. However, the scale of operations has remained stagnant at INR 60 crore-INR 70 crore in the past decade. So how do we plan on scaling this up? And some information about the new developments or any tailwinds surrounding the business would be really helpful. So there is work happening on various things and new product development, and the prospects are bright for Duncan Engineering. Okay, sir. Sir, post demerger, how are you planning to deal with our cash flow generation? As our borrowing currently stands at only INR 50 crore versus an annual cash flow generation of around INR 100 crore, and given the lack of investment opportunity in the core business in the near term, since we are operating at around 70% utilizations. Sir, can you please guide us regarding your strategy going forward, if possible? We will do whatever is in the best interest of the shareholders. Okay, sir. That's it from my side. Thank you. Thank you. A reminder to all participants, you may press star and one to ask questions. The next question is from the line of Ayush Agrawal from MAPL Value Investing Funds. Please go ahead. Good afternoon, sir. Thank you Thank you for the opportunity. So first question is on CPO prices. They have moved up from $1.6 to $2.5 above, because of the issue in Brazil. So looking on that, and how will it, how will that impact us? Sorry, can you, can you, please repeat your question? Sir, LNG prices and oil prices have moved up from $1.6 to $2.5 because of the issue in Brazil. Any comment on that, and how will that impact them? Which oil prices have moved up? CPO prices, palm cooking oil, CPO prices. No, these are not affecting the oil that we are buying. Sorry? This has no impact on impacting the oil that we are buying. Oh, this has no impact. Okay. All right. That's it from my side, sir. Thank you. Thank you. The next question is from the line of Karan Mehra from Mehta Investments. Please go ahead. Yeah. Thank you for the opportunity, sir. So a couple of questions from my end. If you can throw some light, like, when can we expect the demand scenario, demand-supply scenario in Europe to normalize? If you can throw some light here. It's very difficult to say how Europe will evolve, you know, from where it is, because there have been reductions in the production there, based on the economic slowdown, based on the new economic reality, as well as the geopolitical situation. How much of it comes back and when, it's very difficult to hazard a guess. But what we can see from the current market demand is that it, whatever they are buying, it has more or less stabilized. It's not going down further. That much we can say. Okay. We have seen good improvement in our margins, so congratulations on that front. But, if you can help us understand, like, what has been the major reason for this margin improvement, and, you know, what will be the sustainable margins going ahead? So if you look at it from a quarter basis, there has not been a significant, increase in margin. There has been a, there was a slight increase in margin, because of the raw material costs. But going forward, because of the reason of capacities and dumping, we do see margins to be in, in a little bit of pressure, as we, as we have indicated earlier also. So, in the current year, the margin per ton of product, we are expecting to be lower than it was in, in 2023, 2024. Understood. Sure, that answers my question. Thank you, and all the very best. Thank you. The next question is from the line of Rohit from SKP Securities. Please go ahead. Hello. Thank you for the opportunity. Am I audible? Yes. Yes. Yeah. So my first question is our dear China subsidiary is insoluble sulfur manufacturing capacity during the FY 2022, and has announced plans for further capital expenditures. How much of this in realizations can we expect as a result of this? How much you? Dip in realization, can we expect as a result? Sorry. Due to this expansion or the, with, their capacity expansion. As far as China is concerned, our belief is that the current price that they are selling at is already at a level which is very low. Until something happens to the raw material, the lowest price that they are selling at today, they do not have much more leeway to reduce it further. Okay. So, you are saying that there will not be a large impact on this? Yeah, because, you know, there are different levels of pricing, but the lowest price that we see them selling at globally is so low that we do not see much leeway of further reduction in that. Okay, got it. And then my second question is: How do you see the demand supply dynamics for insoluble sulfur in next 2-3 years? ...The gap between capacities, if you take the whole of China, in the capacity and the demand, is significant, and I do not see that being bridged in the next three years if we were to go by the generally believed figure of growth in demand of 3%-4%. Okay, so- Next 2-3 years in terms of pricing are going to be tough. Got it, sir. Got it. Okay, that's it from my side. Thank you, and all the best. Thank you. The next question from the line of Saravanan, an individual investor. Please go ahead. Hey, Anurag, and hey, Akshay. Hope you're doing well. So my first question... Hello? Yeah, can you hear me? No, no, please go ahead. Yeah. The first question is on the North American market expansion, right? So like, 3-4 quarters back, so we had a roadmap on the end market expansion on adding few OEMs. So just want to get an update on that. And also, like, so since the demand is sort of again, like, muted, right, due to the oversupply in the market. So in a typical case, like, how does the evolution happen in terms of the addressable market that's available today, keeping the European North American market? So that's question one. And question two is primarily on the buyback front. So earlier, I think the participant asked a question about, like, INR 100 crore of operating cash flows that are available, right? So now with the dividend and the free cash flows, with limited investment opportunities, is there a possibility to reduce the share capital by 3%? Maybe I think would love to get your thoughts on that. So to answer your first question, yes, our plans of America are in place. Unfortunately, last year, we could not get the market in America that we wanted, because of various reasons. Of course, one being that the producer in America is in a dominant position there, and therefore, we could not get the market that we wanted. But our resolve is firm. And as far as growth is concerned, obviously, we intend to take the normal growth of 3%-4% globally, but our growth should be more than that, because we are sitting in India, where the growth is expected to be anywhere between 8%-10%, for insoluble sulfur. So that way, our growth is going to be more, and yes, we have opportunities also in untapped geographies or manufacturers, which we intend to tap. Then sort of our growth should be more than the growth of the market globally. Got it. As far as your second question slash suggestion is concerned, as Mr. Akshat Goenka has already pointed out, that at the appropriate time, we will take the decision that is best for the investors and stakeholders. Got it. it. Got it. And the last question is mainly on the addressable market, right? Like, which I think you partly answered. Like, so today, our domestic, market share is, like, close to 60%, and the remaining is, like, sort of taken by other unorganized players, right? So from a global market share standpoint, again, like, so we are at 10% today. Now with oversupply, like, hanging in the ecosystem, like, like how much, you know, like, low-hanging fruits, like, can be, like, captured? Are there any other markets, outside? Obviously, US is one major market, but are there any other, like, markets that are, again, like, are poaching grounds that we are exploring today? As I said, you know, markets can be divided into geographic segments. One are geographical, and one is the big tire customers, right? And they have different plants in different locations. So we, when we talk about or when we look for expanding our footprint, so it's a, it's a mixture of both. We look at it from a geographic viewpoint of view, as well as from the point of view of the global manufacturers, where the addressable market can be increased by us. So it's going to be a mixture of these two things, which we feel will, you know, will help us fulfill our growth targets. Got it. Got it, got it. And the last question is primarily on the venture investment, Anurag. Like, so now today, like, globally, the private equity and venture capital flows sort of muted, right? So now, like, keeping the downturn in the private equity space, so like, is would this be a good time to, you know, like, explore some like good assets when the private assets are like, sort of not having hyperactive, hyperactivity? I didn't get your question, sorry. So the private equity and venture investing, like, it's sort of muted today, right? So now are you seeing good opportunities to deploy more capital on the private markets standpoint? ... Yeah, we keep doing that. We keep deploying capital year on year and finding opportunities, and we'll continue to do that. Okay, all right. Yeah, thank you so much. Thanks so much. Thank you. The next question is from the line of Madhur Rathi from Counter Cyclical Investments. Please go ahead. Hi. Thank you for the opportunity, sir. Sir, when we say that the next 2-3 years are going to be under pressure in terms of pricing, as well as there is an overcapacity, so till what level can we see our margins going down or the margin pressure on our books, from a 2-3 year perspective? See, currently, we are discussing about about 4%-5% reduction in margins from last year. That is our anticipation. In terms of per ton basis, not on per ton basis, not on a better basis. And we feel that this is something which could be sustainable. I mean, we do not feel that we might have to go lower than that. One of the reason, of course, is that we have applied for anti-dumping, and if that materializes, I think we will be able to sustain on that basis. We should be. What is our current per ton margin that we yield? Well, that is not something that I'm able to share. Okay. That's fine, sir. Sir, and on the general engineering side, sir, so in the demerged entity, do we have some kind of vision for this aspect of our company? Or, from the next, like, going forward, what is the outlook for this segment? Sorry, can you repeat the question? Sure. The general engineering or engineering segment of our books. Sir, so what is the outlook for this unit for the next 2-3 years when does that demerge into a different entity? I already mentioned earlier that we have a positive outlook, and we expect it to grow. Sir, if you could give us a little bit brief because, like, what kind of products or are we entering into new kind of process equipment or something? Because it will be better to get an understanding from your side. I suggest that you join the AGM that will be there for Duncan Engineering and read the annual report, and all your questions regarding Duncan will be answered in the AGM. Sure, sure, that will do. Thank you, and all the best. Thank you. The next question is from the line of Saurabh Mittal, an individual investor. Please go ahead. Thank you for the opportunity, sir. My first question is regarding the product. How is the product supplied to one customer is different from the product supplied to the other? Also, in the past annual reports, I have read that around 22% of the company's total sales is contributed from the value-added product. So what is the difference between this value-added product and the other part of the sales? Sorry, I didn't get your question. My question is regarding the product. How is the product supplied to one customer different from the product supplied to the other customers? No, that's not true. We supply similar products to all customers. Okay. And, what is the value addition in that product? Say, in the past annual reports, I have read around 22% of the company's sales come from value-added products. Yes, but now all products are same. That is in the past, where there were different products, but now the value-added products have become the standard. Okay. In the last con call, you said that the tire company can give you the business within six months, or if they want you, and if they don't want you, they won't give you the business even for the five years. Correct. So what are the characteristics that the tire companies are looking for in their suppliers? Quality, cost, reliability. Okay. My next question is, why there are only three or four players in the insoluble sulfur, which are globally recognized? You should ask that to the tire companies. Okay. Yeah, that, that was it from my side. Thank you very much, sir. Thank you very much. Thank you. The next question is from the line of Aditya Khetan from SMIFS Limited. Please go ahead. Yeah, thank you, sir, for the follow-up. Sir, is it possible to share the sulfuric acid revenues for this quarter and for full year and what is the utilization levels currently we are operating at? So, to answer your last question first, we are currently operating at full capacity utilization. As far as revenues are concerned, the realization for our sulfuric acid has come down by 50%, and that is because the price of raw material, average price of raw material, which is sulfur, has come down by 50% from last year, and that is why the price has come down for the sulfuric acid as well. Contribution has also come down. ... Okay, okay. Hi, sir, onto the European market, as you mentioned that, so there are still some ongoing pressures, which is like, so leading to subdued volume growth. Sir, any idea onto the total market size in Europe, and what is the, and what is our market penetration over there? Talking about Europe? Yes, sir, Europe. I will have to come back on the total market size. I don't have the figure available readily with me. Okay, okay. Sir, sir, you had mentioned that, so because, sir, you're mentioning that, so you're witnessing some margin pressure of around 4%-5% reduction in quarter 10 basis. But sir, you also mentioned that, sir, that the China prices have already like bottomed out, so they are, so near to or bottom levels, and there is no further scope wherein, like, so they can cut the prices. And if that is not factored in in your current numbers, we are anticipating that will come in this fiscal? Yes. Because some impact has come in the last quarter, and the full impact we are anticipating, and as Akshat has pointed out, the question was about China, and now Japan has also reduced prices, so that is the issue. Okay. Sir, any new capacities, so which are coming up, sir? We believe the, that Shikoku Chemicals capacities were set to come by this calendar year. Any updates are onto the capacity addition side globally? We don't have any other information of capacity addition other than the one that you just mentioned. Okay. Okay. Thank you, sir. Thank you. The next question is from the line of Dhruv Bajaj from Smart Sync Services. Please go ahead. Hi, just one question, that based on my understanding, majority of our revenues in insoluble sulfur space come from sales to tire companies. However, I was trying to see the application in other areas, so I could see that this particular product is also used in tires as well as footwear. So are we exploring options to increasing sales in other applications, or what's the plan? So the consumption of insoluble sulfur in these application is very, very less. Okay. We are using, there are people who use this, our product in this application as well. But they are mostly buying from our distributors and not directly from us because the quantity is very less. Got it, sir. And sir, will this appeal regarding change in appointed date with NCLT regarding the demerger process, will have any bearing on the demerger process, or do we expect that to complete in a timely manner only? And by when can we expect the completion? The only bearing it will have, since the scheme has already been approved, the only bearing it will have will be on the Appointed Date. That's all. Right. So we have asked them to keep the Appointed Date as per the scheme. That is, the Appointed Date will be the effective date. Okay. It will only be to the extent of the Appointed Date. Okay. And then, pardon my ignorance, but what effect will it have by changing the appointed date? Like, I was unable to understand the reason behind it. It's the date, so that is an internal matter. We would not like to get into it. No, understanding. Okay, sir, no issues. Thank you. Yeah. Thank you. The next question is from the line of Akshay Shah from Mehta Investments. Please go ahead. Sure. Thank you for the opportunity. I have two major questions regarding the North American market. One is, can you share a few challenges that you are facing in getting customer approvals from North America? This one. And the second is, when can we expect to overcome these challenges and penetrate the North American market? So the challenges are not on customer approval side, because we have been approved by most of the players that we have targeted there. The challenge is more commercial. As I pointed out in reply to an earlier question, the dominant supplier has a production base in U.S., and therefore, they are in a position to position their trade product in such a manner that it becomes difficult for some companies to get an external supplier in. So these are the challenges that we are facing. But otherwise, as far as approval is concerned, our product is approved in most of the targeted tire companies. Okay, sure. I understand. Thank you. And also, by when can we expect to penetrate the North American market, if we have any timelines in mind? Yes. So as I said, we have entered the North American market, and we are supplying to many customers there, though the quantities are not to the level that we would have desired them to be. But the penetration is there. Got it. Got it. Thank you. That's it from my end. Thank you. Thank you. That was the last question for the day. I now hand the conference over to the management for closing comments. Over to you, sir. I'd like to thank everyone for being part of this call. We hope we've answered your questions. If you need more information, please feel free to contact us or SGA, our investor relations advisors. Thank you. Thank you. On behalf of Oriental Carbon and Chemicals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.