Ladies and gentlemen, good day and welcome to PCBL Chemical Limited Q3 FY25 Results 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. Mohit Mishra from ICICI Securities. Thank you, and over to you, Mr. Mishra. You are not audible. Good evening, everyone. Good evening, everyone. Good evening, everyone. Good evening, everyone. Thank you for joining on PCBL Chemical Limited Q3 FY25 Results Conference Call. We have PCBL Chemical Management on call, represented by 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. Raj Gupta to initiate with opening remarks, post which we will have Q&A session. Over to you, sir. Thank you, Mohit. Good evening, my friends, and thank you for joining our learning call today. On behalf of the entire PCBL Chemical family, I would like to extend warm wishes for a very happy and prosperous new year. I'll start with some of the major highlights of the quarter, and then would be happy to take your questions. Over the last few years, we have diversified beyond carbon chemistry into new fields within the chemical sector. This growth, both organic and through strategic acquisitions and partnerships, has brought us to a pivotal moment. To mark this evolution, we have recently unveiled our new identity. We are now PCBL Chemical Limited. This name change reflects our broadened capabilities and our dedication to pioneering advanced solutions for our customers globally. Recently, the Andhra Pradesh government has allotted us 116 acres of land in Naidupeta, which would be used for our next greenfield expansion. This proposed site has proximity to major ports like Kattupalli, Krishnapatnam, Nellore, and Ennore, which would facilitate seamless movement of goods with high logistics cost efficiency. This would be our fifth manufacturing site and is crucial in our journey of crossing the benchmark of 1 million tons of capacity. During the quarter, our specialty line of 20,000 tons per annum capacity in Mundra was also commissioned, taking our total capacity to 790,000 tons per annum. Sustainability has been at the core of our decision-making. The company has been certified with International Sustainability and Carbon Certification PLUS, which is ISCC PLUS certification. It emphasizes the company's commitment towards responsible consumption and production, also circular economy and reduction of GHG emissions. On this front, we have recently launched a new grade named EcoGen 6000, which is based on recycled materials. Over the last few years, the company deepened its research commitment, comprising forward-looking investments in infrastructure, people, and processes, resulting in the empowerment of the company with proven capabilities in product applications, process efficiency, and product customization. Coming to the quarterly performance, PCBL continued with a steady performance in the challenging macro environment. During the quarter, our consolidated sales volume in carbon black business increased by over 5% year-on-year to 144,000 tons. This translates into a capacity utilization of over 90% during the quarter. Consolidated revenue from operations increased by 21% to INR 2,010 crore on the back of higher sales volume and also revenue from the newly acquired business of Aquapharm Chemicals. Consolidated EBITDA in the same period grew by around 15% to INR 328 crore, while EBITDA stood at INR 124 crore and PAT at INR 93 crore. EBITDA per ton in carbon black business stood at INR 19,868 per ton. Of the total carbon black sales volume, domestic sales volume stood at 84,369 tons, while international sales volume stood at 59,132 tons. Moving on to our segmental performance, Tire accounted for 86,886 tons. Performance Chemicals reported sales volume of 42,367 tons, while specialty sales volume was 14,247 tons. We continue to expand our product portfolio and customer reach. During the quarter, we have undertaken a major overhaul of our power unit in Durgapur plant, resulting in lower power generation. Power generation stood at 161 million units during the quarter, with an external sales volume of 94 million units. PCBL's average realization during this quarter stood at INR 3.5 per kilowatt-hour. Coming to the nine-month performance, consolidated revenue from operations increased by over 40% year-on-year to INR 6,317 crore from INR 4,491 crore during the same period last year. Sales volume increased around 15% year-on-year to 446,110 tons. The consolidated EBITDA for the nine months was up 44% to INR 1,067 crore, as against 742 crore during the first nine months of the previous year. Power generation also increased by 15% in this period to 563 million units. Aquapharm Chemicals reported a steady performance during the quarter. We are already seeing some improvement in the industry dynamics. Further improvement in cost and operational efficiencies and increased market penetration is going to support the company's financial performance going forward. We expect strong growth both in sales volume and in operating margins in the ensuing financial year. Aquapharm quarter three revenue stood at INR 328 crore, with an operational EBITDA of INR 51 crore. The quarterly sales volume stood at 23,000 tons. Capacity utilization remained above 70% during the quarter. At PCBL Chemical, we continue to work on portfolio expansion and capacity additions across business verticals, and we are increasing allocation of resources towards strengthening of our supply chain, improving the product mix, and also optimization of costs. The long-term prospect of all business segments remains positive, and we are on track to achieve our mid and long-term growth targets. The brownfield expansion of 30,000 tons in PCBL TN is completed, and we are currently awaiting consent to operate from the local pollution control board. We expect it in the next few weeks. Also, the second phase of expansion of 60,000 tons in Tamil Nadu and 12 megawatt green power is currently underway. We expect this capacity project work to be completed in the next three to four quarters' time. We have also started project work on one new specialty line, which would cater to application segments like conductive polymers and batteries. Aquafarm Chemicals' expansion project of 38,000 metric tons per annum are on track and likely to be commissioned by March 25. On the nanosilica project side, we have started placing orders for equipment for the pilot run and expect the commissioning to happen in the next few months' time. Tire industry growth outlook, both in India as well as at global industry level, continues to remain positive. In India, the investment in road infrastructure, steadily rising income levels, increasing urbanization rates, premiumization, and a grossly under-penetrated vehicle market have created significant long-term growth opportunities for the entire auto industry ecosystem. With our rapidly expanding product portfolio, market penetration, and strengthening supply chain and R&D capabilities, we have the potential to outpace auto and tire industry growth rate. We are geared up to leverage the emerging opportunities and remain on track to achieve our mid and long-term growth plans. Also, happy to share that our board of directors has declared an income dividend of 550%, that is INR 5.50 per equity share of face value of INR 1 each for the year ended 31st March 2025. With this, I conclude my opening remarks and open the floor for your questions. Thank you. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question comes from the line of Aditya Khetan with SMIFS Institutional Equities. Please go ahead. Yeah, thank you, sir, for the opportunity. I have a couple of questions. So first question, is there any particular reason for drop in the carbon black spreads on quarter-on-quarter basis? Is it related to general market weakness or the product mix of the company has deteriorated? And second question onto this, any further plans on the specialty carbon black? We have completed phase two, so are we planning to further expand? Any plans on that? I didn't hear your second question properly. Could you repeat that? So my second question was on to is there any further plans to expand the specialty grade carbon black? We have completed the 20,000 tons of phase two, so is there any newer plan on the table which has been outlined? Okay. So I'll answer your first question first. The drop in realization you asked, right, Aditya? Drop in realization is primarily on account of crude price movement. Crude prices came down by about $6 compared to the previous quarter, and you are aware that our principal raw material is a derivative of crude, which has an impact on our realization. So partly it is on account of crude prices, and also there has been a product mix change during the quarter, which has impacted the realization. Coming to the second question about the next specialty line, I was just talking about the new specialty line. So we have already started work on a new specialty line. It will come up in Palej, and here we are planning to manufacture premium grades for conductive plastics and batteries. Can you say the numbers? We can put how much tons and what is the CAPEX? Currently, it is under the designing phase. Give us a few more weeks' time. In three to four weeks' time, I'll come up with more details on this. Got it. Sir, my next question is onto the recent land allocation in Andhra Pradesh. I believe, sir, we are investing around INR 3,700 crore. So this would be largely to set up a carbon black plant only, like complete carbon black unit only. So sir, just if I may ask you, so what would be the capacity which we are outlining? Because I believe with this much of investment, we can add up around 6 lakh tons of additional carbon black capacity. So currently, somewhere around 8.5 plus 6, so we can reach to 1.4 million tons versus what we are seeing, that is around 1 million tons. Any thoughts on how much we could add? Aditya, the CapEx guidance that we shared during our earlier call was on a consolidated basis, which included all the business segments. So we had carbon black, which has performance, and which also had nanosilica. So when you are talking about the INR 3,700 crore number, then this includes all the CapEx which is planned for all these businesses. Coming to the current land allocation in Andhra, it's a large piece of land which can house roughly about 400,000-450,000 tons of carbon black capacity. But the capacity would come up in phases. So in the first phase, we expect to put up a 150,000-ton plant only. And on a similar size of plant, we spent roughly about INR 950-60 odd crores, I mean, the plant that we put up in TN. It will take about two to two and a half years' time for this plant to come up. Then in the second and third phase, eventually, we will add more capacity here. Okay. Sir, onto the Aquafarm, sir, on a sequential basis, we are seeing a good drop of almost around 13%-15% in volume. Sir, we had already guided for FY25 volume growth of 15%-20%. Is there a cut on that guidance, and what is the reason for this volume drop? Specialty chemicals, generally, I mean, this whole industry is facing a lot of headwinds in the form of CAPEX demand and also stiff competition from China. You will see it across all the specialty chemical businesses. It is not unique to Aquafarm. Those things are there. But what we are trying to do currently, I mean, it is only just about nine, 10 months into our acquisition. And what we are focusing now is one is on the cost and operational efficiency side, and the other is on the increased market penetration side. We are putting more feet on the ground. And with all these initiatives, we expect that going forward, I mean, gradually, over the next few quarters, we will be able to deliver better numbers. So it will be visible in our performance from here on. But current year, actually, it is because of strong headwinds in the industry. Okay. And sir, this weakness in the carbon black and the Aquafarm business, that could percolate in your Q4 numbers also? Sorry, what is your question? Sir, the weakness in carbon black spreads in the domestic market and Aquafarm business also remaining weak. So can we expect a similar sort of performance in the fourth quarter also? How do you see things to change particularly from which quarter? So we are not seeing any weakness in margins. We are not witnessing any weakness in margins. Even during the current quarter, it is primarily because of operating leverage and product mix. And Aquafarm, like I said, that we are expecting better performance going forward. So even quarter four should be a better quarter. As of now, that's how we see it. Okay. Sir, just one last question, if I may. Sir, any update on that Kinaltek JV? Sir, how far have we reached onto that part? And has the lab testing and sampling, so that has been successful, and we can take it to a large commercial scale also? Just wanted to know on this part. Yeah, that's our plan. Aditya, as part of that process, we are already participating in a lot of global battery chemical fairs, creating more visibility around the company. And simultaneously, the work on pilot plant is on. I mentioned that we have already started placing orders for project equipment. And in the next few months' time, once the plant is ready, then we will start placing samples with the targeted customers. It is on track. Sir, we have also transferred some two patents to the JV, what we have made. Any updates? What is that? Yeah. So we have had a tie-up with this Australian joint venture company. And all these patents, all the IPs, were developed by them. So as part of the joint venture arrangement, we got them to transfer these IPs into the joint venture company. Okay. Thank you, sir. Thank you. Thank you, Aditya. Thank you. Next question comes from the line of Khush Nahar with Electrum Portfolio Managers. Please go ahead. Sir, thank you for the opportunity. So my questions are more on the Aquafarm side. So number one, like you said, that there is some weakness in the U.S. industry. So could you elaborate a bit more? This recovery will be because of the recovery now, numbers will be because of company-specific reasons like new products, or it is more of industry recovery that we are betting on? And how much volume growth are we expecting once this recovery happens? Well, Khush, there are two, three things which we are kind of relying on. One, the raw material prices, which were gradually coming down last one and a half years, they have somewhere stabilized, right, which will therefore stop impacting our margins. And possibly, we'll see a U-turn from here, which kind of should have a positive impact on our margins. So that's on the margin side. Regarding the volume recovery, of course, I mean, industry now possibly has come to a point where we may not see further deterioration in the industry demand-supply dynamics. Possibly, we will see some recovery, but we are not depending on that. Like I said, we are putting more feet on the ground, and we are also trying to reduce our client concentration. So we are trying to create a broader base of clients and also creating more penetration in newer geographies. Of course, I mean, it is not going to happen in one quarter's time, but the reflection of all these initiatives would become more and more visible as we travel into quarters in the next year. All right, sir. Thank you for the detailed answer. And then the second question was more on the export side. So I think this quarter, our exports have grown lower. So what were the major reasons, and when can we expect a recovery in this? Our overall export volumes have gone up during the quarter. The last quarter. So 2.5% for this quarter volumes? Yeah, but I mean, despite all the macro headwinds that we are facing, there are geopolitical issues, there are trade relations, trade route disruption, and generally, there has been some kind of destocking during the last quarter. December typically is a balance sheet month for most of the overseas customers, and they tend to reduce inventory in their books to show better capital efficiency, right? Despite that, we have been able to clock better numbers. All right. Okay. So thank you. Thank you, Khush. Thank you. Next question comes from the line of Radha with B&K Securities. Please go ahead. Hi, sir. Thank you for the opportunity. Hello, all of us. Yeah, Radha. We can hear you. Yes, sir. Yes, sir. Thanks. So So my question was that Europe was importing around 4 lakh metric tons from Russia. So that has stopped after the ban. And additionally, there were more sanctions that were imposed from 2nd October on the Russian company Omsk Carbon, which had a plant capacity of 1.6 lakh tons in Belarus. So with respect to these two events, I wanted to understand that customers had started adding huge inventory in anticipation of the ban. So do you think this situation is normalizing now, or how long do you think this can continue? And when do you expect to witness sequential recovery in carbon black volumes? Year on year, if you look at our volumes, our volumes are still higher. But coming to a specific answer to your question, there has been some stocking, some stocking in Europe because of this restriction on import from Belarus and Russia. You're right. Currently, the customers appear to have a little elevated level of inventory. But despite that, our volumes in Europe and North America are going up. And that is because of our being able to add new clients, new customers in these geographies. I mentioned in our earlier calls also that till two, three years back, we were just doing about 4%-5% in Europe and another 2%-3% in North America. So in totality, we were doing about just 7%-8% of our total international volume in the eastern part of the world. In the last quarter, we have done close to about 35% of our volume in these geographies. That's the reason why our overall international sales have been going up. If you look at our international sales in the last 10 years' time, it has gone up by three times. There is, I mean, significant scope for us to move up from here once the stock levels again come back to the normalized levels. I mean, we are very hopeful. We are very confident that we should be able to do more business in the western world. Therefore, we are putting up so much CAPEX. Yes, sir. Just to follow up, how much do you think the inventory is lying with them as compared to what we consider normal? It is a very bulky material. And therefore, it is unlikely that anyone would be able to stock more than maybe a couple of months' stock at any point in time, even if that looks very high. So we expect the situation to be normal, close to normal now. Okay. So last quarter, maybe in Q2, it was slightly above normal. And now, do you expect the situation to have reached normal? Yeah. I think, I mean, the inventory should be in, and I mentioned that December typically is a quarter of balance sheet for them. So the capital efficiency is also at play there, I mean, that consideration. Sorry, sir. I could not hear you. December is a quarter of? I mean, for most of overseas customers, especially in the western part of the world, December is balance sheet quarter for them, and in order to show better capital efficiency, generally, there is a tendency to reduce working capital levels and therefore destocking. We don't see this trend to continue beyond this quarter. Okay, sir. And sir, I'm going to continue with this question. So this entire 4 lakh tons and this 1.6 lakh tons, roughly 5 to 6 lakh metric tons of demand that has been created in the European region. So now that this situation has been going on for two quarters, how do you think this demand has been distributed among which nations? So again, I mean, there will be participation from multiple manufacturers and countries. It is for the most efficient manufacturer to get the largest share, right? And we are, of course, going to be one of them. Our volumes have already increased. And PCBL, as a brand name, is very strong. I mean, it's a very strong brand name globally in this industry. Okay. Sir, second question was with regards to usually in this quarter or in this period, there are negotiations with customers regarding pricing on the carbon black front. So could you please share your thoughts regarding the pricing that we expect on carbon black for FY25? How is it expected to fare out when compared to the current prices? Negotiations mostly happen on the volumes because our pricing is also dependent on the movement in crude prices. So the level of realization would also depend on the behavior of crude prices going forward. But we got some new contracts also. And I think it will be reflecting in our volumes going forward. The pricing, we would expect in similar levels to current quarter, with respect to the new contracts? No, I am not commenting on pricing, Radha. Pricing could be anything because tomorrow, if crude goes up to $100, then realization would tend to go up. If it comes down from the current level, realization would come down because this industry operates largely on formula pricing. So typically, normally, when we participate in tenders, it is mostly for volumes and on the formula. Understood, sir. Sir, last question was with regards to ACPL. So just wanted to understand that as majority of the revenue in ACPL is coming from US, so wherein we are supplying these oil and gas chemicals, so what is our market share with respect to the oil and gas chemicals in the US market? And are there imports from China coming in the US? And with respect to the new government in the US, do you expect any changes in the supply chain? I couldn't hear it properly, but I think your question was what is our share of oil and gas industry, right? So we currently have just about a percentage of the market share. And oil and gas is a fairly large industry, and we have a very small share. Like I mentioned, that we had significant client concentration. We were not present in a number of geographies. Even within North America, mostly we were doing business in the USA. I mean, while Mexico and Canada also offer equally big opportunity. So now we are focusing on new geography and customer penetration. Sir, any comment on imports from China in the US market or any changes in supply chain you're expecting in that market? I would not talk much about how China is going to play their strategy or whether the U.S. is going to impose any tariffs on them. We rather are focusing on our own strategy. So even if we consider that it is going to remain a level playing field for all manufacturers across all countries, how can we increase our market share? And that's exactly where we are putting our energy. Sir, what drives the demand in these oil and gas chemicals in that market? Is there anything that we can track to understand how the situation is changing there? The market itself, the market size is very large, Radha. We just have about a percentage of the market share. So even if the market grows as 1 or 2%, historically, it has grown at about 1.5-2%. That's been the global annual growth rate. But even if it continues to grow at that rate, there is still such a long space for us to grow. Understood. Thanks for all of this. Thank you. Next question comes from the line of Jaynam Kelani with Swan Investments. Please go ahead. Hi, sir. Thanks for this opportunity. So I'm noticing the results that we've taken an impairment of INR 554 crores in Aquafarm Chemicals. And I feel that it's quite soon since our acquisition. So do we expect any further impairment in this company in the near future, or are we done for now? Right. So I'll just explain the background of this impairment. This impairment is not there in isolation. You will see that there is an equal amount of write-back of deferred-tax liability, right? So as such, I mean, the impact on our current quarter's financials is almost negligible. It's not there. Now, I'll just explain the background. When we acquired Aquafarm as part of the accounting requirement, some temporary assets and liabilities get created. So on one side, deferred-tax liability gets created. And then on the other hand, an equal amount of non-core goodwill also gets created. And when we merge these two entities, then all these temporary assets and liabilities get knocked off against each other. That's exactly what has happened. So there is no impact on the carrying amount of other assets in the books of Aquafarm or Advaya. And there is no reason for us to even think about any further impairment. So does it fair to assume that it is just because of the mismatch between the assets and liability and nothing related to the business performance? It is not because of mismatch in assets and liabilities. It is because of the accounting regulations around mergers and acquisitions, which is a normal adjustment which has happened, which would have happened in any similar kind of acquisition. And as I said, that this is not impacting the bottom line. Okay. And so my second question is that you mentioned earlier that usually December quarter is the quarter where we see a drop in volumes. But in the last four years, three years, we've witnessed gain in volume. So is that because currently we have high inventory levels? If you could just quantify what would be our inventory levels currently in days or in absolute figures, please? Okay. So first, I'll answer your first part of the question. You said that in the last three years, we have grown. So in isolation, there would not be any drop in volumes or destocking. It will also depend on demand-supply situations in the market. When customers see that they already have some level of stocking in their manufacturing facilities, they will tend to buy less, and they will try to reduce inventory, right? And if you track auto and tire commentary, you will see that the destocking is happening in the entire supply chain, which did not happen in the last two to three years. Last two to three years, the market remained buoyant. And therefore, even in December quarter also, the sales went up, right? Now, coming to the inventory position, typically what happens, see, if you look at our sales volume, right, when crude prices go up or down, and when customers want to destock, then only 3%-4% is what they can actually manage inventory reduction or increase because it's a bulky material. And if you look at our last quarter's volume and compare it with this quarter's volume, it's just about 3.5% that has the decrease in the volume. So it is not significant in terms of overall inventory accumulation. Okay, sir. Thank you. That's it from my side. Thanks, Jaynam. Thank you. Next question comes from the line of Prolin Nandu with Edelweiss Alternative Asset Advisors. Please go ahead. Yeah. Hi, Raj. A few questions, Raj, from my side. First of all, on the pricing negotiation, right, you mentioned that it's a formula-based kind of a negotiation. So are you alluding to that the formula has largely remained same? And can you repeat as to how, I mean, how were those negotiations on the volume part? Yeah. So we have to participate in tenders, which is so international market, the formula also changes, right? And we have to bid on both volumes and formula, right? Typically, the formula pricing takes care of, I mean, three things. I mean, formula pricing allows for variable cost pass-through, right? And so that is one part of the formula. And the second part of the formula is the margin over pass-through, beyond the pass-through part. Variable cost includes three things, which is raw material cost, the outward freight, and currency, if you are selling in any currency other than dollar. Raj, what I wanted to understand was that this EBITDA per ton range that we have been reporting, let's say, on a last four-quarter average basis, is that likely to continue going forward as well based on the negotiations that you had on the formula? Yeah. So like I said, that when we are bidding, we are bidding on pass-through of variable cost, and then there is also margin. But once we bid and once we freeze the formula, then our margins tend to remain same over a period of time during the quarter period. Okay. So that markup has not changed, right, versus last year is what I wanted to understand, right? I mean, on variable cost, the margins that you charge on the variable cost, that has not significantly changed, right, over the last negotiation? That should not change significantly. To some extent, because of product mix, it might go up and down. And then that will always have a positive bias, right, given that our share of product mix is tilting towards specialty, right? It does. But I mean, it also depends on demand-supply situation. So when we are bidding, we'll also have to keep that factor in mind. Sure. Sure. And coming to the slightly more medium-term to long-term outlook on export and maybe specifically on Europe and North American market, right? Now, what is happening is that there has been stocking which has taken place, and you called out that maybe this December quarter was weaker because of stocking. But going forward, when you think about probably the ban on Belarus capacity of Russian operators, so is there a positive outlook on volumes going forward, or do you see some risk that in case if there is some de-escalation in geopolitical matters, there could be some headwinds on volumes as well? How should one think about the medium-term outlook in export for Europe as well as the US? So mid to long term, we remain fairly bullish on the growth outlook of the industry and our ability to increase our market share. Now, all these events which are happening, the sanction on Russia or Belarus for that matter, we believe would going to be there for maybe a few quarters or a few years at most. And also, it is not that they will stop selling in global markets. If they are not able to sell in Europe, they will find their customers elsewhere, right? And if they don't sell to their regular customers, that means they are going to sell at a discount to other customers, which is, again, margin negative, right? So these assets don't give us any benefit other than maybe increase our market penetration to some extent. So we can, I mean, like in Europe, what happened earlier, it was very difficult for us to get access to those customers. The windows were not opening on me for so many years. And then suddenly, this issue in Eastern Europe happened, and all the customers, they were willing to buy from us. And once the relationship gets established, then it becomes kind of a long-term relationship. So that's the benefit what actually we are depending on. Nothing beyond that. Rest all is our quality of product, our quality of service, and our cost efficiencies to the pricing. Understood. And one question on Aquafarm, if I may, right? So in Aquafarm in Q3, you mentioned that there were some macro US-related kind of headwinds. Q4 onwards, things should be better. But again, there's an outlook on medium term, right, as to in terms of the profit numbers or operating profit numbers that we did on that before the acquisition. How soon should we be able to see those numbers there? My sense is I'll answer the second part of the question first. My sense is that by fourth quarter of next year, we should reach the run rate of how the business was performing a couple of years back, right? Coming to the first part of the question, we are seeing some recovery in the industry. The headwinds are not as strong. And additionally, we have also been able to add new customers, and we are also preparing to launch some newer grades in the market. And with the expansion of product portfolio and higher customer reach, we expect the volume and margin recovery. Sure. So by Q4, FY26, we should be tracking a run rate on revenue as well as margins of what we did in FY22. Is that correct? I would not comment on the revenue because, again, I mean, there is some kind of relation between the raw material prices and realization. But EBITDA, for sure, we are confident that we should be reaching about somewhere around at least INR 80-90 crore, if not more, the quarterly run rate. That's great. Thank you so much, Raj. I'll join back the queue. All the best. Thanks, Prolin. Thank you. Next question comes from the line of Krishan Parvani with JM Financial. Please go ahead. Yeah. Hi, sir. Thank you for taking my question. So firstly, on Carbon Black, just on the destocking bit, do we not work on a just-in-time model given high correlation with the crude? No. So the way we work, see, a good part of our volume still goes to tire customers, right, about 60%. And there, we kind of forecast our demand one quarter in advance. And basis that, we do our procurement and everything, our production planning and everything. But two things happened in last quarter. One, crude prices came down by about $5-$6. And the customers know that if they defer part of their procurement to the subsequent quarter, then formula price working, they will tend to get that material at a lower cost, right? And second, some of the overseas customers, because of balance sheet consideration, etc., they also do it just to show better capital efficiency on their books. Okay. Fair enough. And so given the current scenario, by when do we expect to achieve, let's say, 160, 170 KTPA kind of quarterly sales volume in Carbon Black business? My sense is that maybe by fourth quarter of next year, but for that, we would require our capacities to be ready because currently, we can only go up to maybe 156, 157 based on our current capacity, so these TN lines have to come up. Okay, so that means even though the volumes have been declining for the last two quarters, we will still continue with the capacity additions, correct? Yeah. We are currently operating even last quarter, we were at 90% capacity utilization. So we don't have any capacity cushion now, Krishan. We're very close to full capacity. Noted. Noted. Okay. And last bit on Carbon Black. So this lower part sales is by any chance accounted in the 20 rupees per kg EBITDA that you reported for Carbon Black, or is it not? Yeah. Operating leverage has cleared it, so. It is partly operating leverage and partly also the product mix. Okay. And secondly, on the Aquafarm, can you please give other income number for this quarter, previous, and 1Q25? Aquafarm doesn't have much other income. They just have about a crore a quarter, a crore a month. Two to three crore every quarter is what, yeah. Okay. So in that case, so last quarter, if I see depreciation, I think it was closer to 30-odd crores. I think this quarter, depreciation closer to 40-odd crores. So what's the jump on account of? Aquafarm depreciation has been almost kind of equal. I mean, one or two crore here and there. There's not been any significantly. I'm referring to, let's say, last quarter, INR 20 crore. We had reported EBIT in the press release, and this quarter is about INR 11 crore. And last quarter, in the presentation, we had EBITDA of INR 50 crore. And this quarter, we reported EBITDA of INR 51 crore. So I'm just deducting that. That's why I'm asking where's the disconnect? Yeah. Sorry. Will you please repeat your question? You're saying the difference between EBITDA and PBT? Difference between EBITDA and EBIT? No, it is same, I guess. Where did you get EBIT number? In your press release? Have you mentioned EBIT? No, we have not mentioned any EBIT number. We can have a disclosure number. You may have looked at the segmental numbers, but there are some adjustments also in that. We'll look at those numbers and explain it to you, Krishan. But the numbers are consistent. There has not been any change from last quarter. Okay. So depreciation is 30 crore or 40 crores? Yeah. It is more or less similar. No, there would not be a 10 crore difference in the depreciation. But also, what has happened is during the quarter, the merger has happened between the acquisition vehicle and Aquafarm. So some items might have got created because of this merger thing. Let us look into that, and we will revert on this to you. Okay and just last bit, if I may, in the absence of the amortization of the goodwill that is written off, let's say that is impaired, so I think amortization numbers should go down. That means EBIT number should look up, right, going forward? No, no, no, no, Krishan. So this impairment is of the non-core goodwill. Goodwill, in any case, was not getting impaired. Goodwill is kind of whatever goodwill is there on the books is going to remain there as long as our profit projections do not change, and we don't see any change in profit projections, right? So whatever exceptional items you see in this quarter's financial report, that is because of the merger. This is the merger accounting. And you will see that impairment is backed by an equal amount of deferred tax liability write- back. So as such, these transactions, exceptional transactions, are not impacting our current quarter or current year's profitability. So this is profit neutral, all these adjustments. Okay. No problem. Thank you so much for patiently answering my question. Wish you all the best. Thank you, Krishan. Thank you. Next question comes from the line of Parthiv Shah with Quest Investment Advisors. Please go ahead. Hi, Raj. Thanks for the opportunity. Hello. Thank you, Krishan. Yeah. So that European, I mean, Russian Carbon Black sent in India also. So can you give a little more color on that? Sir, would you please repeat your question? I couldn't hear you properly. Hello. Russian crude, I mean, Russian Carbon Black are also coming to India since they have discontinued to Europe. So some are going to China, and even India also are getting a lot of import from Russia. Is that happening, and how that is affecting domestic market? Yeah. So Russia, because they are not able to sell it in Europe, so they are selling it mostly in Asia now. And that is kind of impacting our margins. But mostly, they are selling in spot market to small users, consumers. None of the large tire companies are buying from Russia because tire companies are also exporters in global market. And if they buy directly from Russia, then it might attract some kind of sanction from the U.S. So I mean, in our earlier commentary also, we have been mentioning that this restriction on Russia is not only creating positive side or benefits for us, but it also has a negative side. It is also kind of impacting our margins. So in some of the customer segments, especially the smaller ones, our margins are getting impacted because of Russian imports. Is it possible to quantify something? It is not significant. So India, in any case, is importing just about 100,000 tons every year. And roughly currently, about 30% of that is from Russia. Okay. So it's not significant, but even to whatever extent if they are selling 1,500 or 2,000 tons on an average monthly, to that extent, there's some impact which we have to bear. Okay. And second thing on this, our export sales has increased. So can you quantify how much export is in dollar currency? Sorry, sir. You'll have to repeat your question again. How much export is in dollar currency? And how much? Our sales are almost 95% in dollar terms. Sorry? Even our sales is mostly in dollar terms. So about 95% of our international sales is contracted in dollar terms. Even when we are selling in Europe, our underlying contracts are in dollars. So a very small portion of our sales, 4%, 5% is in non-dollar terms. Okay. So do you think that in coming quarters, I mean, with the rupee depreciation, we will have some kind of a benefit on account of that? Sir, we are also importer. Most of our raw material also comes in dollar terms, right? The contracts are in dollars. So as such, we don't get benefit or get negatively impacted because of movement in currency as long as we keep our position hedged. And our policy is to keep our currency exposure fully hedged. Okay. And coming to the specialty side of the Carbon Black, so can you give a little more color how much new product has been added during these nine months and how many customers jumping up? Last year, we did a total sales volume of 57,000 tons, around that. And this year, we have visibility of somewhere around 63-64,000 tons on a full-year basis, right? So this is more or less in line with our earlier guidance to the market. And every year, we are adding newer lines. So last year, we added one line. And then recently, also, we launched, commissioned one more line. And with all these new lines, we are getting into newer application segments. So it is not only vertical volume growth for us. It is also expansion of portfolio, which we are achieving through these new lines. These new applications are more profitable or more value-accretive for us, or it is more or less? These are all we are actually moving up the value chain even in the specialty portfolio. So gradually, see, one year is not the right period to measure the improvement in contribution. But over the next three to four years' time, we expect decent margin growth in the segment. Okay. And any color, how much are net, I mean, borrowing vis-à-vis quarter Q2 to this quarter, gross borrowing and net borrowing? Our net borrowing has gone up roughly by about 98-odd crores in this quarter. So this is largely on account of what? If you can. This is largely on account of some extra inventory that got accumulated. Okay. Thank you, and all the best. Thank you. Thank you. Next question comes from the line of Nishant Gupta with Minerva Global Capital. Please go ahead. Hello. So thank you for the opportunity. So my first question is, what kind of a debt equity level we can see going forward since the finance cost is affecting the bottom line? Nishant, we have fairly high visibility around increase in our earnings. Year on year, profitability would go up. Last year, we had a debt EBITDA of about roughly 4.5. By this year end, we should be somewhere around 3.3, 3.4 and a year from now, we should be below 3 for sure. Now, where we are comfortable, we are not comfortable with long-term debt in our books. So over a period of time, once we are through with our expansion, we would bear debt. So in maybe next not in five years because next five years are going to be kind of growth period for us, significant growth we are going to achieve in these five years. So we'll do CAPEX, and there will also be some investments. But maybe over a period of next seven, eight years, you will see reduction in absolute debt also. Got it, sir. Thank you. So my next question is, sorry, if you clarified this on previous conference around the Nano-Silicon, the JV which we have done. So what kind of commercial operations commencement date we are kind of looking at, and what kind of market and revenue are we looking from that particular segment? Currently, we are putting up a pilot plant, which will be mostly for sampling. Once we stabilize the product in the pilot facility, then we are going to put up a proper commercial plant of 2,000 tons. Now, this 2,000 tons, based on our back-of-the-envelope calculation, should give us somewhere around INR 1,700-1,800 crore kind of a top line and roughly about INR 800-900 crore kind of a EBITDA. That's how we are seeing it. Okay. Got it, sir. And any tentative timeline by when this proper plant will be coming up? Our sense is by 2027, we should have this plant ready and running. And by maybe somewhere between 28 or 29, we should be able to fully utilize this capacity. Got it, sir. And the $44 million which you mentioned in the previous PPT, that would be sufficient to fund this power plant, the CAPEX for that, right? Yeah. So this is not CapEx-heavy. We expect to incur just about $20-$25 million on this capacity. Rest is mostly for our conventional business and Aquafarm. Got it, sir. Thank you, and all the best. Thanks, Nishant. Thank you. Next question comes from the line of Rajesh Jain with R K Capital. Please go ahead. Hello, sir. I have two questions. What will be the interest cost trajectory over the next four to eight quarters? Will the interest cost remain elevated such that the major part of the growth in revenue and EBITDA will be eaten up by the interest and even the employee cost? And when will the PAT growth start becoming visible? PAT growth will be visible from next year itself. Last year, we did not have this interest cost and also the amortization, so this is setting a new base, this year's expense structure, and in terms of absolute reduction in finance cost, the interest rates generally are coming down, and also, when we acquired Aquafarm, we also borrowed money for this acquisition, and acquisition money typically comes at a premium. It doesn't come at the normal cost. Now, gradually, I mean, that acquisition borrowing is getting repaid. While our overall borrowing may not go down, but we are utilizing our cash flows first to repay the acquisition debt, and consequently, the weighted average cost of borrowing would also come down. We expect overall borrowing cost to go down. My sense is that it should go down by at least 3%-4% in overall terms. Currently, we have about INR 120 crore quarterly run rate. Maybe we can see INR 5-7 crore kind of quarterly reduction going forward. That will be as soon as the next quarter or three, four quarters down the line? Next quarter also will have some reduction because there is some repayment which will start happening. So the first week actually, we have already started repaying, but a big chunk of repayment would happen in January. And therefore, that impact will be there. It may not be INR 5-6 crores in this quarter, but it will be there. I mean, you will be able to see that. And from first quarter of next year onward, gradually, you will see reduction in overall finance cost. Okay. And sir, are you seeing a noticeable slowdown in the European economy and the auto sector? And do you see the risk of an impact on your Carbon Black exports to Europe? Not really. Not really. Not really. So first of all, the commentary from tire and auto industry in Europe is not negative. Historically, they had been growing at about 1%-1.5%. And for calendar year 2025 also, their commentary remains similar to that. Both U.S. and Europe, the commentary is positive. It is not negative, first of all. Second, while our absolute volumes in Europe have gone up, but still, it is a very insignificant portion of their overall requirement. And it is unlikely that they are going to restore their relationship with Russian suppliers soon. So our share in European market is going to go up from the current level. Okay. And sir, in your EBITDA or in your PBT, how much impact do you see of the container freight rates increase due to the Red Sea and other issues? Actually, container freight rates have started softening since last quarter. There was a spike in second quarter, but for the last two, three months, we are seeing some downward trend. The situation is coming back to normalization. Okay, so you are hopeful of, I mean, returning to baseline or no impact, basically? If not baseline, at least, I mean, it will not remain as elevated as it was in July or August. Okay. And sir, to my first question, when you said that the PAT growth will start becoming visible year on year from next year, so next year, does it mean four quarters down the line? I mean, what exactly do you mean by next year? No, I'm saying, you see, what happened this year. Last year, we did not have borrowing, and consequently, our numbers, I mean, the difference between EBITDA and PBT was very small. But this year, because of acquisition borrowing coming in, interest and amortization is eating up into our EBITDA, and consequently, there's a huge gap between EBITDA and PBT, right? But it is setting a new base. The current year's performance has set a lower base, and on this base, next year onwards, from the first quarter itself, you will start seeing improving numbers. Okay. That is from the June quarter. It will make you. Yeah. Just to put it in perspective, if you look at our EBITDA, that has grown significantly from last year. Even in the first three quarters, our EBITDA has grown by over 40%. So overall, operational performance has gone up. But because interest and amortization has eaten into this profitability, therefore, bottom line reflection is lower. Okay. Okay. Nice, sir. Okay. That's all from my side. Thank you. Thank you. Thanks, Rajesh. Thank you. On behalf of PCBL Chemical Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.