Ladies and gentlemen, good day and welcome to PCBL Limited Q2 FY25 earnings conference call hosted by ICICI Securities. 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 Mr. Sanjesh Jain. Please. Thank you, and over to you, sir. Thanks, Nivedita. Good afternoon, everyone on the call. Thank you for joining on the PCBL Limited Q2 FY25 results conference call. We have PCBL management on the call, represented by Mr. Kaushik Roy, Managing Director, Mr. Raj Gupta, CFO, Mr. Saket Sah, Group Head, Investor Relations and ESG, Mr. Pankaj Kedia, Vice President, Investor Relations. I would like to invite Mr. Kaushik Roy to initiate the call with his opening remarks, post which we will have a Q&A session. Over to you, sir. Thank you so much. Very good day, ladies and gentlemen. Good afternoon, and a very, very warm welcome to all of you, and at the same time, I wish you all a very, very happy Diwali and prosperous New Year. I'll take you through some of the major highlights first for the quarter, and thereafter, we'll be happy to take questions. During the quarter, our consolidated sales volume, carbon black, increased by 14% year-on-year to 1.48 lakh tons, while consolidated revenue from operations increased by 45% to INR 2,163 crores on the back of better realization, higher sales volume, and revenue from recently acquired Aquapharm Chemicals. Consolidated EBITDA grew by about 53% year-on-year to INR 369 crores. EBIT stood at INR 164 crores, while PAT stood at INR 123 crores. Consolidated EBITDA per ton in carbon black business further increased to INR 21,324. Of the total carbon black sales volume, domestic sale was at 90,219 tons, while international sale was at 58,474 tons. Export sales volume registered a strong year-on-year growth of 22% in Q2 FY25. Now, let me move on to segmental performance. Tyre accounted for 82,383 tons. Performance Chemicals reported sales volume of 49,183 tons, while specialty sales volume were at 17,127 tons, which is again the highest ever in our history. We continue to expand our product portfolio and customer base. During this time, we also achieved the highest ever power generation and sales volume during the quarter. Power generation increased by 25% from 167 million units in Q2 FY24 to 209 million units during the quarter, with external sales volume of 126 million units as against 103 million units in Q2 FY24. PCBL's average realization stood at 3.56 per kilowatt-hour. Coming to six-monthly performance, during H1 FY25, consolidated revenue from operations increased by 52% year-on-year to 4,307 crores from 2,834 crores, which was H1 FY24. Sales volume increased 19% year-on-year to 302,610 metric tons in H1 FY25. The consolidated EBITDA for H1 FY25 was up 62% year-on-year to Rs 738 crores from H1 FY24, Rs 455 crores. Power generation and sales volume also increased by around 20% in the first half of the financial year. Let me now talk about Aquapharm Chemicals. Aquapharm Chemicals reported a steady performance during the quarter. Post the completion of the acquisition, we have been working on an integration process. The company is implementing various cost optimization and operational efficiency measures, which would result in better capacity utilization, leading to improvement in company's performance in coming quarters. In Q2 FY25, revenues stood at INR 362 crores, and EBITDA stood at INR 50 crores. The quarterly sales volume stood at 24,510 tons. The capacity utilization witnessed remained above 75% during the quarter. PCBL is amid an aggressive capacity expansion program in carbon black, water treatment, detergent, as well as oil and gas chemicals under Aquapharm. The company is working on strengthening its supply chain, improvement in product mix, and cost optimization initiatives. The long-term prospects of all the business segments look quite positive, and we believe there would be adequate business potential to sustain the growth momentum. At PCBL, research and innovation are important drivers of both technical advancement and business expansion. As communicated earlier, the company has made substantial investment in infrastructure, human capital, and streamlined processes. These investments have significantly bolstered PCBL's capabilities in new product development, customization, and applications, as well as process efficiency. The carbon black capacity of the company stood at 770,000 metric tons per annum. PCBL expects to commission the specialty project of 20,000 metric tons per annum in Mundra and 30,000 metric tons per annum greenfield expansion of carbon black facility in PCBL, Tamil Nadu, in Q3 FY25. The second phase of PCBL, Tamil Nadu, expansion of 60,000 metric tons per annum would take the total installed capacity to 880,000 metric tons per annum, with a green power capacity of 134 megawatts in FY26. Aquapharm Chemicals is implementing an expansion project of 38,000 metric tons per annum, which is likely to be commissioned by March 2025. We aim to reach 1 million tons capacity in carbon black by FY27-28. Possibly, we'll surpass this target as well. We are currently evaluating sites for proposed greenfield capacity. This would help us to significantly increase our global market share. Now, let me share some updates on our recent joint venture in the battery chemical space, specific to anode. PCBL has executed a JV agreement with Kinaltek Pty Ltd to form Advaita Chemical Limited for developing nanosilicon products to be used in anodes of lithium-ion batteries. PCBL holds 51% and Kinaltek Pty Ltd 49% in Advaita Chemical Limited. PCBL would infuse $44 million in Nanowave in multiple stages over the next two years for acquiring IPs, setting up a pilot plant, and thereafter, a commercial-scale manufacturing facility. Currently, Nanowave is setting up a pilot plant at PCBL's Palej site. The carbon black business continues to be on a strong growth trajectory and is well poised to capture the growth in the domestic and export market with new capacity additions, wide product suite, and a strong R&D capability. The company continues to invest in growth, innovation, and supply chain capabilities across the world. We expect significant growth in international sales volume to European markets. With planned capacity additions, PCBL plans to ramp up global sales volume from FY26. With this update, I'll conclude now and open the floor for your queries. Thank you so much. Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aditya from SMIFS Limited. Please go ahead, sir. Yeah, thank you, sir, for the opportunity. Sir, my first question is onto the expansion which we are doing of 30,000 tons by next quarter. So has the work at the site been completed fully as of now? Yes, Aditya, the project work is almost complete. We are awaiting consent to operate. We have already applied for it, and we expect commissioning soon. Okay. And, sir, in this plant, so it is an extension to our existing builds only, or we are so recently, we have also got some patented products into the carbon black space. So that new product we are planning to launch here, or it is an extension of the old product? We have three broad portfolios or business segments under PCBL. One is specialty, which requires completely different processes and reactor design. Rest all grades can be manufactured in this new facility. So other than specialty, specialty requires separate reactors. Currently, we have such reactors in Palej and Mundra. Rest all plants can manufacture all the other grades, including the ones which we recently patented. Okay. So my next question is onto the carbon black EBITDA per ton. So I believe, sir, for the last two, three quarters, we are maintaining that run rate of INR 21,000 per ton. So how sustainable do you see this number to be going ahead? Can there be like this can fall down to your original target of INR 18,000 per ton, which you were still alluding to one year back? Can that number be achieved, or do you think this is a sustainable number for now? The global business environment, even now, is extremely turbulent. Last quarter, we saw the freight rates moving up by almost 35%-40%. And the margins that you see for last quarter is in spite of that. We not only believe that these margins are sustainable. We believe there is fair level of cushion for us to go up on margins as our product mix changes, as our operating leverage improves. And we are still working on improving our manufacturing efficiency, so yields also have scope to improve. But suppose if the freight rates so compress or they come down, which we have started to witness on quarter on quarter, that freight rates are coming down. Still you will see that these spreads can maintain because so declining in freight rates would definitely impact the spread also of carbon black. In spite of this, you are factoring like this, so this number can be maintained. Aditya, when we sell in global markets, we have to compete with the local manufacturers. So when freight rates are high, our margins get compressed. So in a low freight scenario, the margins would tend to go up, not go down. Okay. I was actually mentioning, so when freight rates are high, so to pass on that impact, you generally keep the carbon black prices at a higher level just to pass on that incremental freight. So in that time, generally, the spread looks optically higher as compared to a normal business environment. But still, you are alluding to the fact that this number can be maintained. Yeah. I mean, when the cost of doing business comes down, generally, the margins expand, and that is true to our business also. Got it. Sir, onto the Aquapharm, I believe, sir, you were guiding earlier around 15%-20% volume growth. In this quarter, sir, we had witnessed only, you can say, flattish volumes only. Any specific reasons, sir, you can highlight for these flattish volumes? Aditya, there are a lot of stuff that we are doing in Aquapharm. We are primarily working on improving their cost structure, improving their operational efficiency, and improving their capacity utilization. But all these initiatives will take some time. So the real reflection of such measures will flow into the numbers maybe after two, three quarters. So current quarter, I mean, with all the global uncertainties which are there, plus the turbulence in global business conditions, last quarter was largely flat, but we expect this performance to improve maybe quarters going forward. Got it. Sir, one last question. Sir, outlook on the debt, what we are foreseeing, and in earlier call, sir, you mentioned that we are looking at around 2,000 crore of cash flow per annum. In half yearly, sir, we have made somewhere around 700-800 crore. Just want to know that so the 2,000 crore annual cash flow number can be maintained for the next two, three years, and how that will be utilized for repayment of debt and for the further CapEx? Aditya, when we spoke about cash flow, we spoke about how much cash we are going to generate over the next five years, and we did speak about INR 9,500-INR 10,000 crore of cash generation. But cash generation would increase every year with higher capacity, higher sales volume. So it will not be uniform across every year. So it will not be like INR 2,000 crore every year for the next five years. Okay. Got it. Right? But we will be generating enough cash flow which can support our growth plans as well as also help us reduce our debt. Okay. Sir, any debt figure you have in mind like for FY26, 27, what would that number look like? We are not looking at any absolute debt level, but we are not comfortable with our debt EBITDA beyond two. So we'll try and bring it down to that. Now, it might take a year more because we will not certainly compromise with our growth plans just because there is a little more debt on our books. But whatever surplus cash that we generate beyond our capital expenditure, that certainly we are going to utilize towards debt reduction. Got it. Thank you, sir. Thank you. Thanks for the update. I'll join back in a bit. Thank you. The next question is from the line of Radha from B&K Securities. Please go ahead. Hi, sir. Thank you for the opportunity. My first question was that in the carbon black business, according to a previous presentation given by the company, so I just wanted to understand the demand scenario. India is expected to create an incremental demand of 4.5 lakh tons in the next five years. The Europe rebalancing of supply chain is creating an incremental demand of 2.5 lakh tons. And global market ex-India, if we factor in a low single-digit growth rate, then that is creating around 300 lakh tons of demand in the next five years. From FY24 base, PCBL's target is to achieve another 4 lakh tons of volumes in the next five years. So from India, if we assume 33% market share in India, then we can get around 1.5 lakh tons from India out of the 4 lakh tons of incremental volumes that we want to do in the next five years. So for the balance, that is 4 minus 1.5, can you help us? Can you please help me how the roadmap is? How much from Europe rebalancing are you targeting, and how much from the remaining global market growth? Radha, we are not targeting any particular market for our growth aspiration. It's a fairly large market. It's a 15 million ton market already. And if you look at the global growth rate, long-term growth rate has been around 3.5%, which creates a large opportunity for and scope for further increasing volume. Now, a lot of countries which have large consumption are not adding capacity. So the opportunity for Asian manufacturers becomes very large. We are a global company. We don't depend on any single market. We don't even depend on India for that matter. If you look at our last three, four years' export volumes, these have increased from around 150,000 tons to 250,000 tons already. And there is a large market there. We have invested heavily in our supply chain ability in the last four, five years. Currently, we don't have capacity to cater to all this demand which is there in the market, but the demand is there. So whatever infrastructure we have already created that will support our growth plans, we are very confident that growing at 10%-11% volume CAGR in the next five years is not going to be much of a challenge for us. We just need to have capacity. Okay, sir. So just if you can give this Europe rebalancing of 2.5 lakh tons that Russia and China used to supply, so out of that, how much can we get? Radha, we are looking at all markets with equal, I mean, having equal possibility. So we are not focusing our growth plans on any particular geography. We will remain flexible. So wherever we see opportunity, and we are trying to create stronger presence on all markets where there is a potential. So Europe remains important for us, but this is obviously not going to be the only market. So putting a number to a market, I don't think that will be fair for us at this stage. Okay, sir. The second question is on the CapEx front. So in the last call, we had highlighted that to achieve INR 2,300 crore of EBITDA in carbon black business, we need around 1.4 million tons of capacity. So on a base of FY24, capacity of 7.7 lakh tons, we need to add another 6.3 lakh tons. So the CapEx per metric ton was also highlighted in the last call. So that I have taken at 65,000 per ton. So that gives us a CapEx of INR 4,500 crore only on the carbon black business. But in the call, it was highlighted that on carbon black, we'll be spending INR 2,500 crore, but I am getting INR 4,500 crore. So please help me where I'm going wrong or help me understand these numbers. Radha, I think the numbers are not correct. We did speak about 400,000 tons of additional capacity requirement. So if we grow at about 10%-11% every year, by 2029, we will require another 430,000 tons of capacity, which will involve a CapEx of about INR 2,500-INR 2,600 crore, and that's the number that we shared during last call. Okay, sir. So lastly, you spoke about the supply chain that we have created over the years. So exports have become a very big factor for PCBL. So currently, 40% of our carbon black sales are exported. So that has gone up from 30% in the last two years, and in ACPL, also 90% of sales are from global markets. So just wanted your thoughts a little bit about if you could speak on how the company has improved its supply chain in the global markets, both organically and inorganically. If you can tell us a bit of numbers in terms of how many distributors we have added in each region, where we are standing versus peers, and how we are trying to scale this up in the next five years. Radha, last six, seven years, we have been investing in supply chain bandwidth. Currently, we have seven global offices. We are going to get another one, I think, in a month's time. We'll have eight. We have our own warehouses, decanting stations, even R&D center outside India. I'm only talking about. Currently, there are 21 touch points, which include these warehousing facilities, decanting stations, and our offices in different parts of the globe. Additionally, we also have tie-ups with dealers and distributors. In all the geographies where we see large potential, we have our own office now. Only those I mean, the smaller geographies where it is more segmented sales that we are doing through dealers and distributors. Additionally, now with Aquapharm coming under our fold, they have almost equal number of touch points. So together, if you look at the entire supply chain, currently, we have more than 40 global supply chain points outside India. And we are, of course, I mean, going to strengthen it further going forward. As I said, we don't depend on India for our growth aspirations. The entire world is our marketplace. So we are going to further invest in supply chain capability going forward. Okay. Sir, just one last question. Please help us understand the products in Nanowave. So what is the USP of the products that we've been making in that compared to the peers? And will there or is there anyone in India having such capabilities, or will we be the only company having the sole advantage? Well, Radha, so in batteries, there are three important parts. One is anode, one is cathode, and one is the electrolyte. Cathode is where the reaction happens and the ions are generated, and ions are stored in the anode part of the battery. So anode plays an important role in battery capacity. So the higher the absorption capacity of anode, the bigger will be the capacity of the battery, and also the lower will be the charging time of the battery. Now, conventionally, anodes were made from graphite, and graphite has very limited absorption capacity. What we are going to produce under Nanowave will be an additive which, when mixed with graphite in anode, will increase its absorption power, ion absorption power, which will increase battery capacity and which will also reduce the charging time of the battery. Now, it's a breakthrough technology. Currently, while I would not say we are going to be the only manufacturer in this space, a lot of work is happening globally on different materials. We are working on silica. And currently, the material that we are going to manufacture is one of a kind. It's a, like I said, breakthrough technology. This material is very expensive globally. Currently, it is getting sold at $300 a kg. We believe that even if we sell it at $100 a kg two years from now, we are still going to get about 65% gross margin. That's the kind of potential on the profitability side, so this is it, Radha. If I've been able to answer your question. Yes, sir. Understood. I'll study more on it. Thanks and all the best. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your question to two per participant. If you have follow-up questions, please rejoin it. The next question is from the line of Kunal from Kitara Capital. Please go ahead. Sir, can you give me outlook for Aquapharm for the next three to five years, as in how to understand the business and how is the outlook for the business? And second, again, for battery chemical space, as I rightly understand, the revenue will start flowing from FY27 onwards. So do we have any visibility for that revenue? And like you said, 60% gross margin. So what cost advantage do we have? Is it the labor or the raw material? It is the process itself, Kunal. So I'll answer your second question first, and then I'll hand it over to our MD to answer the Aquapharm thing. Currently, the process of manufacturing is extremely power-intensive, and consequently, the cost itself is very high. We believe that we can produce it at one-fifth of the cost. So what this process will involve is conversion of natural silica or the regular silica into nanosilicon particles. Silica is one of the most abundantly available materials in the universe, and therefore, I mean, very cheap. And our process will not be as power-intensive, and therefore, we will have the cost advantage. Right? So that's on this thing. Now, on the profitability part, we are starting with a 2,000-ton capacity. Even at $100 a kg revenue, this 2,000-ton full capacity will generate an INR 2,000 crore top line. So that's kind of, and we believe that once this plant comes up, which should be in FY27, it will not take us more than a couple of years' time, two years' time to utilize full capacity. So by FY29, we should be doing at least INR 2,000 crore kind of revenue from this facility. On Aquapharm, long-term business plans, of course, we have, but what we are doing currently, I think that is more important for you to understand. I'll hand it over to Mr. Rohan if you want to say the story. On Aquapharm, there are two parts to it. One is the Indian portion, and the other one is the U.S. portion. Now, Indian portion, they're primarily there into water treatment and detergent application. And U.S. is more into the chemical for oil and natural gas production. Coming to India, within detergent and water treatment application, there are three categories of products. One is phosphonates, which is kind of the base and fundamental grade. One is polymers, and the third one is green chelates. Aquapharm currently is more focused on phosphonates, but going forward, our major focus will be on green chelates and polymers application for water treatment and detergent as well. The reason is polymers and green chelates both are more green products from the point of view of sustainability and will be the need of the future for the entire globe. So therefore, the focus will move more and more towards green chelates and polymers. And this will be driven primarily by the R&D coming out with newer products in both these categories, polymers as well as the green chelates. And we see a clear, very sharp growth opportunity in these two areas. While phosphonate will continue to hold our position as a leader, global leader, we'll continue to expand phosphonate as well. Coming to USA, which is primarily for oil and gas chemicals, this is primarily as of today for the U.S. market, but we are likely to expand beyond USA to European market as well. That is our desire. Current capacity is not fully utilized. We are going to add further capacity as soon as we feel the current capacity is getting consumed fully. So that is the plan going forward. We expect to invest roughly around anywhere between INR 600 crore to INR 700 crore over a period of next three to five years between Aquapharm and USA, Aquapharm India and USA. INR 600-700 crores of revenue? INR 600-700 crores of investment in CapEx over a period of next three to five years between India and USA. What should be asset turnover for the capex? What should be? The Asset Turnover Ratio. How much revenue should this CapEx generate? It should generate about, if you look at their current fixed asset block, they have about INR 400 crore of assets, which can generate about INR 2,000 crore of top line. We believe the ratio will be largely the same. Okay. And margin should be better or should be at a similar range? Historically, they have operated at about 20% plus margin, and with the new product launches, which are high margin, going to be high margin, we believe that we can improve it further. So FY29, we are targeting about 25% EBITDA margin from this business. Understood. Thank you so much. Okay. Thank you. Thank you. The next question is from the line of Sanjesh Jain. Please go ahead, sir. Yeah. Good afternoon, sir. Thanks for taking my question. First of all, I have to be very brief. I don't have a question on the bookkeeping that you shared. This quarter, there was a sharp drop in the expenses on the standalone side. Any particular reason? And this is despite these raw material costs being elevated. That's one. Number two, it appears that there is some compression in the gross profit margin at the Aquapharm level, and that's leading to it sequentially declining. Any particular thing happening in the Aquapharm, or is it general weakness in the entire market impacting us? I'll answer the other expenses part for Aquapharm. I'll explain. So our other expenses contain some of the variable expenses also. And volume this quarter was around 5,000 tons lower compared to last quarter. So there was a proportionate decrease there. Also, in the first quarter, there were some shutdowns that we had taken towards the end of first quarter. So there were some repair and maintenance-related expenses which were there, which obviously was not there in quarter two. So it was primarily on account of that. Coming to Aquapharm, I'll request Mr. Rohan to answer. Aquapharm, the decline what I've seen, actually, it has happened more from U.S. operation. The U.S. market, from the point of view of oil and gas sector, is going through a very, very rough patch in recent times, and the demand has come down substantially. That has put a lot of pressure on our capability utilization as well as on the margin. That is what was reflected in the number what we have seen. Our feeling is it will eventually recover in USA. That's also more reason we talked about just now that we'll be expanding in the European market for oil and gas chemicals as well. That is the reason we are expanding and we are going beyond because we don't want to put all the risk in the same all the eggs in the same basket. We want to kind of de-risk the whole thing, and therefore, we're looking at beyond the U.S. market to Europe. Very clear. Roy, just on the operating cost, INR 14.50 operating cost this quarter and for last many quarters, it seems we were hovering around INR 15 and INR 16. There is a genuine reduction in the cost. It's more of an operating leverage which is playing out here, or do you feel that we will again go back to INR 15 plus? So it is largely operating leverage. Plus, I mean, with all the investments that we have made in new business, we are also looking at the scope to reduce our cost wherever possible. But it is mostly the function of operating leverage. With higher capacity, we are getting that advantage. Very clear. Last question from my side on the battery chemical side. How has been the response as we started speaking to the battery OEMs, and are they excited with the scope of integrating silicon, graphite, and their battery? Anything on the market side will be really helpful. I think we are connected to talk. There are some developments. There's a lot of excitement in the market, and we are in discussion with some of the leading battery and auto makers. But at this point of time, we are really constrained to share those names because of the confidentiality agreement. But Jim, I think. No, no, no. I'm not looking at names. As in, have they started integrating it? Have they started looking or putting it in the batteries? Absolutely. Absolutely. It has already started. So that joint development and how to use it, what is to be done, etc., the discussions have already started. Sanjay, we are very confident that once we get the pilot plant, in a year's time, we will have approvals from most of the targeted consumers. Very good. That's clear. These are some of the global names. Unfortunately, we are constrained and not able to share with you at an appropriate time. We'll do that because these are all big global names from auto and battery. Very clear, sir. Very, very clear. That's loud and clear. Thank you. Thank you. Sanjay, what we will also do maybe at a later stage, we will arrange investor interaction with some of the scientists who are part of this project. I think that will provide you with more understanding on the technical part of it and the feasibility part of the project. He would love it. He would love it. Thank you very much. Thank you. The next question is from the line of Bharat Sheth from Quest Investment. Please go ahead, sir. Hi, Mr. Roy and Raj. Good afternoon. My first question is related to the carbon black. That when we are talking of 10%-11% chemical growth for next four, five years, within that, if you can give some color, how much will be the specialty growth and performance chemical? So the whole pie has the opportunity. So while specialty, we will be maintaining about 10,000 tons of volume addition every year, in the rest of the portfolio also, we are going to add similar kind of growth. So when we say 10-11%, this is both the pies are going to expand by the same. The only thing is that the base in specialty is smaller currently. So specialty will become almost double in the next four-five years' time, but this portfolio will increase by about 60-65%. So the volume is on the entire pie. The volume growth is on the entire pie. Okay, and performance chemicals side, if you can give a little more color, which I believe that has a little higher profitability than the tire grade. Is that fair understanding? Yes. That's more segmented market, and that is better margins, about 25% more compared to tire, which is bulk business for us. So that will continue to grow 10, 11, or there is a room to improve the growth in a percentage? Yeah. More or less, I think the share percentage between performance and tire grade segment will remain more or less similar. See, Bharat Sheth, tire and this performance chemicals market are pretty matured and a larger base. So what Raj talked about in 10-12, 10% plus will be naturally for these two segments will be around that. Whereas specialty since the base is a little smaller, the percentage terms, it will look larger. Great. It goes to look a little larger in percentage terms. But as you mentioned, every year we're adding 10,000. Like this year, we're going to close possibly around 60, 65 thousand. We'll be adding another 10,000. So number-wise, percentage number-wise, it'll be a little more. But look at the whole pie. The point here is that we'll be growing in all these three. Got it. All these three. Percentage, don't look at because that's not the right measurement. It depends on the base and the size, and specialty we are growing, it is a comparatively smaller base, so therefore, the percentage will look a little bigger. Understood, sir. Yes. Now, coming on to this Aquapharm, when we spoke about this INR 600-800 crore kind of a CapEx over five years, and where we are seeing that phosphonates and polymers as well as green chelates has a better profitability and better growth prospects. So can you just capital allocation, if you can give share some, how much that we are CapEx, we are going for this polymers and green chelates side? And some. So that can be. See, these are all part of our innovation, Bharath Ji. Now, the margin profile, even in the conventional business of Aquapharm, is good. So we are not saying that these are going to be exceptionally higher margin in this business. But then as a business, we have to constantly move up the value chain and keep the business relevant for the customers. So all the innovations which are happening is towards portfolio expansion and also cater to part of the market currently to which we are not catering. Okay. And last question, Raj, for you. Normally, when the oil price is low for carbon black, I mean, we have the working capital comes down substantially. So anticipating oil remain in $70-$75 range, broad range, how much saving that or additional cash flow can we generate from working capital? It's a very simple math. So throughput falls by 10%, our working capital requirement goes down by around 8%. So that's a very simple calculation. But then that's on assuming that we have the same turnover. We are expanding in terms of volume, and that will also reflect on our top line. So the savings in working capital will also depend on the overall turnover that we are generating from business. But yes, the capital efficiency will improve when crude comes down. Okay. Thanks and all the best, Raj. Thank you, sir. Thank you. The next question is from the line of Krishan from JM Financial. Please go ahead, sir. Yeah. Hi, sir. Thank you for taking my question issue. Very happy Diwali. Firstly, on Carbon Black, what was the reason for the sequential dip in overall sales volume, especially the exports? Krishan, will you please repeat your question? Okay. So am I audible now? Yeah, yeah. You were audible in my audio. I was asking on carbon black, what was the reason for the sequential dip in overall sales volumes, especially the exports? Your question is not clear to me. I'm asking what was the reason for sequential dip in overall sales volume of carbon black? Okay. Sequential dip in sales volume? Yeah, yeah. Okay. So typically, so Krishan, what happens, most of the tire companies, they take maintenance shutdowns during monsoon season in India. So that was one reason. And this is usual. I mean, every year you will see this happening. And also, last quarter, the availability of containers was a challenge. The freight rates also moved up because of that. So it also impacted our volumes in overseas markets. Okay. So basically, some of the volumes were affected due to the container availability and some due to, let's say, maintenance shutdowns. Is that correct? Yeah. And overall capacity utilization was still 94%. So we are operating at almost full capacity. Right? No. And you expect going forward kind of this coming back to, let's say, 154 KTPA and higher, or do you expect this to be in the similar range of 148, 149 KTPA? Yes. I mean, the idea is to utilize full capacity, and we know the scope is there in market. See, what is happening is now we are left with very little capacity cushion, and therefore we can't commit capacity to the new customers. Or even for the same customers, we can't commit more capacity to them, so we are awaiting new capacities to be available. And therefore, we are also speeding up our project work. So initially, we had given a timeline of fourth quarter for this 50,000 capacity. We kind of increased the pace of project work, and now we are targeting commissioning within this quarter, so that will also give us some more capacity cushion. But it takes time between capacity to come up and then getting requisite approvals from customers and being able to ramp that up, utilize that. But the idea is to have more capacity with us so that we can also get into more contract with our stable customers. Got it. Got it. That's fair. And secondly, I think Krishan mentioned that there was some roughness in the oilfield chemical side, so the utilization was lower. So what is the capacity utilization you are targeting in Aquapharm for this second half and in FY26? Second half, it will improve marginally. Currently, we are at about 75% on overall basis, India and USA all combined. We believe that by fourth quarter, we should reach around 82%-83%. We are targeting a little more, but we have more confidence level at that level. But the idea is to have full capacity utilization. I mean, this 75% or 80% or 85% is not acceptable in our system. There is a fairly large market, and all it takes is to spread out and identify opportunities where these are. So our target is to reach full capacity utilization. God willing, we will achieve that in the next few quarters, four, five quarters. Got it. Got it. Thank you so much for patiently answering my question. Wish you all the best for the coming quarter. Thanks. A happy Diwali. Thank you, sir. And same to you. Thank you. Thank you. The next question is from the line of Madhav from Fidelity Investments. Please go ahead, sir. Hi, good afternoon. Thank you so much for your time today. Hi, just had one question. Basically, if you could just share where we are in the carbon black demand supply cycle from a next three-year perspective. There was quite a lot of disruption which happened in Europe because of the Russian supply, and then China, obviously, had become cost uncompetitive in this space, so if you could just share some view from a three to five-year perspective where we are in. Thank you. We believe that now, see, China was dominant and prominent, and it will remain prominent because they have a large market, captive market only in their own country. They account for almost 35% of global carbon black consumption, so the carbon black companies in China, they will continue to produce and continue to sell, and when they produce, they will also have some surplus that they will want to sell outside their country. Now, so far as cost is concerned, their cost structure is not what it used to be 10 years back, and China's stance also is today that we will sell to outside China customers, but not at a price at which they expect, but at a price which Chinese companies want, so it has created kind of a level playing field. Having said that, not many companies in China are making money in this business. Therefore, possibly, they will consolidate further, and we will not see too much capacity coming up there. So the market size will remain more or less constant, or it will consolidate further. Russia is facing now sanctions from the entire Western European Union. That was where they used to sell their surplus capacity. Now they are selling this capacity elsewhere in the world, mostly in Asian countries. What will this situation do to them is this will kind of reduce their further investment in capacity. Globally, only Russia and China had advantage in terms of cost. China, because of scale and because of coal tar availability, and Russia because of its own crude. Now, if China is consolidating or not adding more capacity or not making money in this business, and Russia, again, is not making money in this business, and they are also kind of not adding capacity, the opportunity for the world becomes very large. Next three to five years, we are looking at with a lot of confidence that it will be a large opportunity for Indian manufacturers and a rapid growth phase for us. That's super. So is there any other country in the world where carbon black capacity is being added today? I think Indonesia, Malaysia used to add some small capacity earlier, but where is the supply really coming to service the incremental demand? Because, like you said, it's a 15 million ton market, and we might need 4 lakh tons maybe each year incrementally. So who is building the capacity today? Other than India today, in India and China, I mean, when we talk about Asia, most of the other countries are marginal in terms of capacity. So while small, small pieces of capacity will keep coming up because these markets are also growing in terms of their local demand. If you look at, say, Indonesia or Malaysia or Thailand, these geographies are, these economies are also growing at a rapid rate, almost the same growth rate at which India is growing. So they will have their incremental demand locally. Right? But in terms of catering to global demand, they don't have that level of surplus, or they're not even planning for that level of capacity addition. So Indian manufacturers will have an edge over their other Asian counterparts. Got it. Got it. Thank you, sir. Thanks, Madhav. Thank you. The next question is from the line of Krish from Electrum PMS. Please go ahead, sir. Hello. Am I audible Yes, you are. Go ahead, please. Thank you for the opportunity, sir. I just had one question. So what kind of growth in India and Aquapharm considering the CapEx, say, from FY26 once things are back to normal? What kind of top-line growth and sustainable EBITDA margins? Growth in terms of top line, we believe that we can grow at around 17-18% from FY26 onward. And our margin, we believe that from next year itself, we will have around 20% EBITDA margin, which will gradually improve more towards 25% by FY29. So we'll see annual increase. Okay. And sir, this last question. So we have seen export grow year on year by 22%. So can we assume that some contribution was due to increased sale in European region because of the Russian ban? Yes, of course. Our share of sales in European markets has gone up. In FY22, it was only about 3.5-4%. Currently, we are doing close to 21% in those markets, and the scope is much, much better. We are constrained by capacity. Okay, sir. That's great. Thank you. Thank you. Thank you. The next question is from the line of Aditya from SMIFS Limited. Please go ahead, sir. Yeah. Thank you, sir, for the follow-up. Sir, my question is onto the battery chemicals part. Sir, you had mentioned that so the battery chemicals business will generate around INR 2,000 crore of top line. Sir, what are the assumptions we are taking here in terms of the realization? We are considering $100 per kg realization, which is around one-third of the current market price of similar material. Okay, and sir, this is onto the capacity of 2,000 ton. Right? That's correct. Okay, and sir, similarly, how much would be the EBITDA margins? Like you have stated, so gross margins would be around 65%. It would be around 50%. It will be because it's a small capacity, we don't see any kind of elevated fixed overhead structure here. It will be a very lean structure. So around 55% should flow to EBITDA level. 55%? 50%. 5-0. Okay. So 50%. Okay. And sir, I believe so eventually, we are talking of around earlier, we were stating that this capacity was around 3,000 tons, sir. I believe in our earlier meeting, you had mentioned 3,000 tons. Now that size has been reduced to around, sir, 2,000 tons? No. We are saying that our first plant will be 2,000 tons. Of course, we'll have to add another plant of equal size. And therefore, by 2025-29, we should be doing around 2,000-2,500 tons at least. It can be even more. But the numbers that I'm sharing is for the first plant, first capacity which comes up. Got it. And from this pilot project only, we would be making around INR 400-500 crore of EBITDA? No, no, no, no, no. The pilot plant is much smaller, and this will be primarily used for sampling purpose. Okay. Sir, INR 2,000 crore of top line, so roughly 50%, so INR 1,000 crore of EBITDA for the JV and INR 500 crore for us for the pilot plant itself. No, no, no. Aditya, Aditya, you are confusing between the two. So we are initially setting up a pilot plant which should come up in next six, seven months' time. We will use that for sampling purpose. That is not meant for commercial purpose. Currently, we are also setting up a commercial plant of 2,000 tons, which should come up in FY27. And that plant, we will utilize for commercial sales. Okay. So this 2,000, sir, onto this, so the technology is we had already tied up with the technology. So what are the key challenges you see onto this? So if, suppose, we ramp up from 2,000 to around 10,000 tons, any sort of key challenges you foresee? The market is currently growing at about 25% CAGR. It's about 15,000-ton market for this material. Very few producers globally. No one is very sizable in this space. And the price of this material is currently prohibitive. As I said, $300 per kg, which kind of also restricts the growth potential. We bring down the price, the market, I mean, the growth can explode from the current level. We have seen that kind of movement happening in the EV space, and EV is not going to be the only industry which will create demand. The power saving requirement across countries that is increasing, and I think that will be one of the biggest contributors to demand for this materials. So currently, of course, we are focusing for the first plant and utilization thereof. But I think in this space, the opportunity is much, much larger. Got it. Sir, onto that 10,000 tons, suppose if we commercialize it by 2030, so we can assume some sort of 2,000 crore of incremental EBITDA only from this project? Yeah. So if we put up another 2,000 ton capacity at full capacity utilization level, it should be giving us the same level of bottom line. Okay. Sir, onto the Aquapharm, sir, is there any split between the value-added and the commoditized segment, like the phosphonates and the chelates, into the segmental basket? How does it fit into the commoditized and into the value-added side? Aditya, nothing is commoditized. I mean, this entire portfolio is a very high level of complex chemistry. What we are doing is we are trying to create more sustainable material with that. So that will be further moving up the value chain, but that doesn't make the existing portfolio or any part of the portfolio commodity. Okay. Right? And all the businesses, we'll have to constantly move up the value chain. Today, what is relevant, what is specialty tomorrow, tomorrow it might be treated as commodity as supply increases or as new technology comes in. The businesses will have to keep moving up the value chain, and with green chelates, polymers, these are all a step towards that direction. Got it. And sir, the backward integration into the yellow phosphorus, so when is the timeline we are planning to complete that? We are not doing backward integration into yellow phosphorus. yellow phosphorus is a mineral. Right? So it is mined. What we are doing is we are setting up a processing or filtering plant. Right, sir? I mean, what is it? That's exactly. We are going to source yellow phosphorus. We are trying to tie up with some of the minerals. And then that will process and make it usable for Aquapharm. That's the thought process. Okay. It's going to be from rock phosphate to yellow phosphorus through proper process. That is what we are looking at. So part of the process, we will be doing backward integration first. But it's in the minerals, so it is mined, so we can't get into mining. Got it. Okay, sir. Thank you. Thank you. The next question is from the line of Rohit from Centrum Broking. Please go ahead, sir. Yeah. Thanks for the opportunity. Sir, first question is on the battery chemical side, on the additives front. So you said that the pilot plant will be set up over the next six, seven months. So in terms of scale-up, would there be any challenges that we have faced in the initial lab setup from maybe kg to a few tens of kgs? And even when we set up a commercial plant, will there be any challenges that may come up, and that may probably change the dynamics of the costing and the margins? Thank you. Challenges will always be there because producing something at lab scale and at commercial level will have different issues. Controlling the chemistry at such larger scale, I mean, that will obviously pose some challenges. But having said that, at the lab level, when they increase the capacity or the reactor size from two liters to 20 liters, they got the same result. And therefore, we are very confident that we should be able to replicate the result at a much larger scale also. Also, the scientists who are involved here in this whole process and who will be engaged in this whole setting up of plant and also in the initial production process, they are of very high pedigree. One of them even got nominated for a Nobel Prize. So that kind of improves our confidence level further. And we have ran some close to. 1,200. 1,200 tests on the material in our own lab in Belgium and also in one of the external labs in Germany. The results were very encouraging. So that gives us confidence that we should be. Challenges will be there. I'm not saying that it's the same capacity producing at small and large scale. Sure. This is very helpful. Sir, second question is on Aquapharm. So there are predominantly three segments. What could be the breakup of contribution from each of these segments? And an allied question to that, you also mentioned that we want to go up the value chain and make more sustainable materials. So beyond these three segments or verticals, are we currently working on anything new which is in the pipeline and where it could be a promising new segment for us? Thank you. So I mean, the products that we are generating or producing under different segments, these are interchangeable, and these are being used in more than one industry. So like the phosphonate-based product that we are manufacturing, they also have usage in oil and gas. Right? So therefore, the margin profile remains more or less similar. I mean, there is not much difference at the gross margin level or, for that matter, at EBITDA level between the different segments to which Aquapharm products cater to. Coming to the second part of the question, Mr. Bhalotia. The revenue is pretty flat. Roughly between oil and gas chemicals and phosphonates, it is close to 85% between the two. The rest remains between green chelates and polymers. Now, talking about going up the value chain, now, as Raj mentioned a little while back, even phosphonates is also a highly engineered product. It is not a very simple product. It is not a commodity. Let us accept that reality. It is an engineered technical product. But the objective is to move towards green, sustainable product. That is what we are focusing on right now more through the route of polymers and green chelates. There are different grades within this overall vertical of polymers as well as green chelates. So, first, immediately for the next couple of years, we are looking at developing newer products in these two categories, polymers and green chelates. There is a lot of headroom to grow there because the market share of Aquapharm in these two particular segments is in single digits. We clearly see there is a lot of opportunity to grow across the globe. The immediate focus will be that. Okay? Sure. And thereafter, in parallel, we'll keep focusing on other opportunities. So we'll come back to you on that at an appropriate time. Sure. So this is helpful. Can I ask one more question? Yes, please. Yeah. So just on the Aquapharm front, given that there is a good amount of growth in these segments, plus the margins seem to be higher, just wanted your perspective on competition, maybe from outside, particularly from China or any other geographies that may come up in the future given the opportunity and probably the margin dynamics of the segment. Thank you. So, fine. Let them come up. What is the worry? We are equally efficient and capable. So we are not too worried about Chinese or any other players. So Aquapharm globally in phosphonate, they're number one, number two. And we have enough capability. So we are not too worried. Competition may come up. It is fine. Absolutely fine. This is very helpful.