Ladies and gentlemen, good day and welcome to the SRF Limited Q1 FY 2022 earnings conference call hosted by ICICI Securities Limited. 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 call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjesh Jain from ICICI Securities. Thank you and over to you, sir. Thanks, Arif. Good afternoon, everyone. Thank you for joining us on SRF's quarter one FY 2022 results conference call. Today we have with us Mr. Rahul Jain, President and Chief Financial Officer, SRF Limited. I would like to invite Ms. Nitika Dhawan, Head of Corporate Communications at SRF, to initiate the proceedings for SRF con call. Over to you, Nitika. Thank you. Good afternoon, everyone, and thank you for joining us on SRF Limited quarter one FY 2022 results conference call. We will begin this call with brief opening remarks from our President and CFO, Mr. Rahul Jain. Following which we will open the forum for an interactive question -and -answer session. Before we begin this call, I would like to point out that some statements made in this call may be forward-looking and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Mr. Jain to make the opening remarks. Thank you. Thank you, Nitika. Good afternoon, everyone, and I extend a warm welcome to you all, and thank you for joining us today on SRF's Q1 FY 2022 earnings conference call. I trust you, your family, and colleagues are in good health. I will initiate the call by briefly taking you through the key financial and operational highlights for the period under review. Following which we will open the forum to have a Q&A session. We're pleased to begin financial year 2022 on an excellent note, showcasing robust operational and financial performance despite short-term challenges owing to the lockdowns. The company worked on various countermeasures to address these challenges, and this enabled us to deliver a notable performance. In Q1 FY 2022, on a consolidated basis, revenue grew 75%, from INR 1,545 crore to INR 2,699 crore, and EBIT increased 102%, from INR 295 crore to INR 595 crore in Q1 FY 2022 when compared with corresponding period last year. Profit after tax came in at INR 395 crore in Q1 FY 2022, higher by 123% over Q1 FY 2021. As you all know, performance of Q1 FY 2021 was impacted due to large-scale disruption from the initial COVID-19 lockdown. It should be noted that despite the low base effect that was witnessed, we did achieve substantial volume increases and higher realization for several key products, resulting in a healthy all-round performance from all businesses. Q1 FY 2022 also had significant impacts of all-round increase in cost of export logistics, where export freight rates have witnessed large increases and with our export-focused business, we have seen a negative impact. Before I begin delving into the segmental performance, I am glad to share that the board of directors have approved an interim dividend of 120%, amounting to INR 12 per share. This will result in a cash outflow of approximately INR 71 crore. Let me now give you an overview of our segmental performance. During the first quarter of the fiscal year, our chemicals business demonstrated a healthy performance with revenues growing 58%, from INR 705 crore to INR 1,114 crore during Q1 FY 2022 over Q1 FY 2021. Within the chemical segment, our specialty chemicals business reported a positive performance driven by improved demand from global markets and increased volumes of key products. Our pipeline of new molecules remains robust, both in agrochemical space and the pharmaceutical space, so that we can serve our customers better as well as strengthen our overall engagement with them. While export freight costs have been a negative during the current quarter, we believe these will come down to more reasonable levels in the short term. Certain raw material costs have also witnessed a significant uptrend, which has led to an overall reduction in the current quarter margins, as you would have witnessed. In Q1, we introduced two new products and have a strong funnel of products that will drive our future growth. Our business will continue to focus on improving its sustainability parameters through various investments and process improvements. Happy to share that we have commissioned two dedicated facilities at Dahej, which will cater to the agrochemical segment. These facilities will help us tap into the thriving agrochemical market space across all our key markets. Similar investments, combined with increased efficiency and optimum capacity utilization, should enable us to provide operational efficiencies and achieve even superior outcomes in the future. SRF is focusing on expanding its product portfolio in the pharmaceutical sector. We remain positive on the agrochemical space and will be looking to tap into additional opportunities that we are currently focused on. Fluorochemicals business, SRF reported a healthy performance driven by higher sales volumes in the refrigerant segment from both domestic and export markets. Looking ahead, we expect the demand to grow further in the upcoming quarters. During the quarter, the segment witnessed an uptick in auto sales, which led to higher uptake of R-134a revenues. Introduced AHF Anhydrous Hydrogen Fluoride for industrial applications. Overall, I must mention that business was adversely impacted by lockdowns on account of second wave of COVID-19, which resulted in disruption of supply chains leading to a lower domestic offtake, and we did lose some volumes due to the same. Our timely countermeasures, however, reduced the impact to a certain extent. Prices of key refrigerants have witnessed an uptrend, and the same is likely to continue. Domestic markets have also started to look up and should be in better shape over the next few quarters. We have authorized a project worth INR 550 crores for the integrated expansion of fluorocarbon-based refrigerant facility at Dahej. This project is expected to be completed within the next 24 months. The plant is likely to be a swing plant between the HFCs and where we would be able to test and manage technology to manufacture various HFCs in the same facility, and also includes capacity for certain key raw materials for the chemicals business. Our technological capabilities, integrated capacities, distribution network, and production capabilities do provide us with a unique position in the industry, which we will continue to build on. The board has also approved installation of a 200 KV grid at a cost of INR 135 crore to meet the growing power requirements of the existing and future plants at Dahej. I am also proud to share that the chemical facility in Bhiwadi has received the State Safety Award 2021 by the Government of Rajasthan. This award exemplifies our company's commitment to safety, which is built on a strong safety culture, well-executed compliance procedures, and effective use of latest in safety technology. Coming on to our packaging films business. We continued to perform well despite impact of COVID-19 second wave on domestic markets. SRF was able to maintain uninterrupted delivery of all key raw materials, even while we were able to reduce some costs, resulting in uninterrupted production across all our facilities. SRF has established itself as a well-known player in the global packaging segment, which is a result of the business' full focus on scale, quality, R&D capabilities, and enhanced portfolio of value-added products. With our focus on increasing contribution from value-added products, we are happy to share that we have launched two new products in the category during the quarter. We also continue to focus on improving product quality and delivery to increase engagement with our multinational customers, boosting the mantra of easy to do business with. SRF has now presence in over 100 countries and offers a diverse range of specialty films. Our overseas businesses performed well during the quarter, owing to the commencement of the second BOPET line in Thailand. At the same time, our newly commissioned facility in Hungary ramped up its operations to capacity. The reemergence of COVID-19 in Thailand, Indonesia, Vietnam, and Malaysia, basically the Asian region, is also having an impact in these key markets for our Thai subsidiary and may have an impact in the short term. You may also be aware that there were riots in South Africa in July, and we had to shut down our plant for a few days to ensure safety of all our employees. This may also have a short-term impact on the South African subsidiary. As market leaders in this space, the focus on sustainability initiatives is our responsibility, and we continue to work towards innovating films that have a lower environmental footprint. Moving on to our technical textiles business. The business performed exceedingly well across nylon tire cord fabric, the belting fabric, and the polyester yarn segment. I would like to mention here that there have been structural changes as we have been able to renegotiate contracts with our key customers that have positively impacted our overall results. In addition, the customers' preference to buy from local suppliers like us aided overall growth. We are confident that we should continue to register such healthy performance in the upcoming quarters also. As we have mentioned in the past, the segment has always been a major cash flow generator for SRF, and we see this trend of free cash flow generation continuing at a much larger scale going forward. Lastly, in our other segment, the coated fabrics division continues to maintain market leadership both in terms of price and volumes, despite an overall sluggish market. This was facilitated by efficient sourcing strategy and excellent plant performance. The business continues to innovate and introduce new products in the market. In Q1 FY 2022, our laminated fabrics business segment maintained its leading position and performance was in line with expectations despite the demand being affected owing to the second wave of the COVID-19 pandemic. New products are currently being developed for the domestic market. Further, the anti-dumping duty on Chinese PVC flex film has also been extended until January 31, 2022. On the balance sheet front, our debt remained within acceptable levels, and no significant increases were witnessed on the overall debt profile. Working capital management remained robust, and we continue to monitor the same to ensure strong balance sheets. At SRF, we care deeply for the people and communities that we operate in, especially related to counter the COVID-19 pandemic. We have organized COVID-19 vaccination camps for the communities in Bharuch, Bhiwadi, and Gurugram. In addition, we have set up oxygen generation plant at K. K. Mehta Government Hospital in Amreli district of Gujarat, and Bhind district of Madhya Pradesh for community usage. The team of SRF Foundation was also involved in distribution of oxygen concentrators to government hospitals in Tamil Nadu, Madhya Pradesh, and Nadia district of West Bengal. In other initiatives, SRF Foundation launched the Atal Tinkering Labs program in collaboration with Capgemini India and NITI Aayog. We also conducted month-long digital summer camp with 5,304 students across 11 locations so that education doesn't stop because of the rural-urban digital divide. To conclude, we are confident of our future growth and the market potential that each of our businesses offers. SRF has established a reputable, multi-business entity that has enabled us to navigate with the volatile environments over the recent years. Our strategic innovations backed by solid R&D has benefited the company withstand external challenges. With strong infrastructure in place and outstanding R&D skills, we are confident in our ability to provide a healthy and sustainable performance that will enable us to create value for all our stakeholders in the future. On that note, I conclude my remarks and will be glad to discuss any questions, comments, or suggestions that you may have. I would now like to ask the moderator to open the line for Q&A session. Thank you very much. Thank you very much. We will now begin with the question -and -answer session. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rohit Nagraj from Emkay Global. Please go ahead. Yeah. Thanks for the opportunity and congrats on a good overall performance. First question relates to the raw materials. We have seen increase in raw materials for our chemical segment. We have seen that even the product prices we are trying to increase. How is the scenario looking like currently, and whether the price increases in refrigerants is just to pass on the increase in the raw material cost? Thank you. I think there is some confusion here, Rohit. The fact is that we have witnessed price increase across raw materials. Where we were also talking about the specialty chemical business. There has been some price increase in the fluorochemicals business also. However, that one is a bit less significant from a specialty chemical perspective when we compare the two. The other thing that you are saying in terms of a pass-through, I don't think it is. We've seen positive prices that have come through for the fluorochemicals business in terms of the gases. That's what I had indicated during the opening remarks also. We do believe that is a trend that is likely to continue in the future as well. I hope it answers your question. Yeah. Thanks for the clarification. The second question is on the new CapEx of INR 550 crores. Is this predominantly for captive consumption or is there any split between captive and external sales? From backward integration, which all are the areas where we'll be putting the money in? Thank you. Rohit, the plant is mostly for external sales. Let's say about 50% of it is a component, which is likely 40%-50% of it is a component, which are key raw materials to the products that we are looking to manufacture. That's how we are looking at it. Let's say when you are looking at it from a overall sales perspective, the overall cost of the facility, which is for external sales, will be around 40%, 50%. Thanks a lot. That answers the question and best of luck. Thank you. Thank you. The next question is from the line of Shalini Vasanta from DSP Mutual Fund. Please go ahead. Sir, good afternoon. What I'd like is the CapEx numbers for this year and next year total in terms of whatever you plan to spend on CapEx. That's the only question I have. This is Vivek Ramakrishnan, by the way. Thank you. My sense is that for this current year, the cash CapEx that we will do will be in the range of about 2,000 crores. For next year, given where our current CapEx plans are, I think the ones that are currently being under implementation, we will probably be in the range of 800-900 crores to 1,000 crores. Those that are currently under implementation, those that we have announced. Over and above that, on a modular basis, 500-600, 700 crores of CapEx on an annualized basis, we will keep announcing going forward as projects get finalized. So my sense is that 2,000 crores this year and between 1,600-1,800 crores for next year as well, on a consolidated basis. Yes, sir. Thank you. Good luck. Thank you. Thank you. The next question is from the line of Naushad Chaudhary from Systematix. Please go ahead. Hi. Thanks for the opportunity, and congrats to the management team on a good set of numbers. First thing, wanted to understand on the NTCF part, especially the major growth. Was it driven by end-user industry growth, or was it because of the market share gain? In previous quarters, we have mentioned that there was some global capacity consolidation in this part. This is my first question, and follow-up to that, if we can quantify what percent of global capacity would have been consolidated in NTCF. Let me try and answer the second question first, because I don't know the answer to that question. I will have to check and come back. That's a simpler answer. We will have to come back to you in terms of what capacities are got consolidated. We will do that. To answer the first question in terms of the shift in margin. When you look at it and compare it to quarter one last year, you would see a significant growth in volumes, given the fact that Q1 last year was completely inundated by the lockdowns that had happened across the country. There were forced lockdowns of plants. Plants took one and a half, two months to start up again. All of those things had happened. Therefore, the growth in volume is significant. However, even if you compare it to probably, let's say, last quarter, we have seen significant growth happening in volume. Like I said in the opening remarks as well, there has been a structural shift in the industry. We have told you that because some of these capacities in China had closed down and are looking to consolidate, prices of the products have gone up. The landed prices of imported products have gone up significantly, which has allowed us also to renegotiate our longer-term margins with our customers. That's probably the way things have happened here. I hope it explains it, Naushad. Yes. Would it be fair to assume it was largely because of the market share gain instead of end-user demand? If we can broadly quantify how much? The market share percentage has probably remained flat to, let's say, 100 basis points increase around. Most of the gain has actually come through price positives, which we believe is likely to continue at least in the short to medium term. Okay. Where do you see this 27% of EBIT margin in textile business getting settled? Percentages may be superfluous because a lot of it does depend on the capital outcome pass-through. Therefore, I may not be in a position to give you a percentage here. What I can tell you is that this looks like a more robust trend. It looks like that the prices that we have been able to negotiate with our customers are more longer, medium-term in nature, which should lead to slightly even better performance going forward. You plan any capacity expansion this product? Modular capacity expansions will keep going on, Naushad, but I won't put up a 2000 timeline at any point in time. Okay. Lastly, on the packaging side, sir, as we have been reading that there is a gradual shift in the packaging industry towards the circular model. Just wanted to understand what percentage of our total portfolio in the packaging films would be recyclable, and if it is needed, would it be easy for us to convert into recyclable products by adding some properties? Naushad, almost all of the packaging films that we do are recyclable. The problem is actually collection mechanism and reuse mechanism and implementation mechanism for us to be able to recycle it. We have the ability to recycle. Whenever there is an established way of collection usage comes through, we should be in a good position on that side as well. While there is a chat about moving to a circular model, it will take more time for it to get effective and propagated well. Currently, are we doing it? Any percentage of our sales. Sir, I think we need to let others also ask questions. Okay. I'll come back into it. Thank you, sir. Thank you. The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity, and congratulations for the good set of numbers. First question on the chemical business there. This INR 560 crore, I'm sorry, just a clarification there. Out of this INR 560 crore, you mentioned external sales will be roughly 40%-50% of that. What is the typical asset turn that we're looking at seeing there? Maybe I made a mistake at that point. I said the plant that we have put up, there will be about 40%, that will be for the captive 40% for captive use, which will be a key raw material for the product that we will be manufacturing in the fluorocarbon refrigerant. My apologies. Maybe I made a mistake. It is the other way around. Okay. 40% will be captive and the balance 50% will be largely addressing the export market. I said the market, not necessarily export. Okay, sure. It's a swing HFC plant, to be very frank about it, Ankur. Okay, sir. That's interesting. Okay. Sir, secondly, in the last quarter, we did mention on the CapEx side around INR 375 crore or INR 400 crore CapEx coming from the new plant, wherein we were not looking at fluorination, but also on the non-fluorination side. Joining that with the INR 2,000 crore CapEx that we are expecting for this financial year. Any thoughts on the specialty chemical side, on the growth side? It will be, given the new plant will be coming in FY 2023, and hence we can see a bigger delta there. Again, my sense is that you are asking a question about capital in specialty chemical business. Because what you seem to be believing is that this is not something that is important for some overall chemical business perspective. Let me tell you, we've completed a large amount of CapEx here very recently. The INR 258 crore CapEx has already been completed or on the verge of being completed. There will be future announcements that we make. We are probably also currently implementing CapExes, which are smaller in nature, but about, let's say, INR 250-200 crore for the current and the next year going forward as well. That's all in place. Hopefully, there will be newer projects that we will do. Going forward, more announcements on the specialty chemical side should be seen. Okay, sir. Thanks for the clarification there. Just one last on the packaging film side. The presentation does mention that expectedly more capacity is coming in on the side on BOPP and BOPET as well. Your sense on the, let's say, overall demand-supply scenario for both BOPP and PET. Are we seeing probably a short-term blip there in PET while PP may still continue to look better? Would that be a right? There are two or three lines on PP that are also coming in. One of them is actually our line only, which got recently commissioned. There are two other lines that are coming in, probably in Q2 and Q3 going forward. On PET side also we see two lines that should get commissioned very soon. The point to note is that it will create a short-term demand-supply imbalance. Growth still seems pretty robust. Therefore our belief is it should remain a bit short-term in nature rather than very long-term. Sure. Where I was coming from was, if you look historically, there has been volatility in the overall industry margins there, given the demand-supply mismatch. Now, because the demand is probably growing at a much stronger pace, this supply will create short-term blips, but longer-term trajectory remains intact. Will that be the right understanding? Mostly. The only change that I will do to your understanding is that if there are newer lines that keep coming in, the demand and supply imbalance could be a much larger one than what is currently visible. Thank you. Before we take the next question, in order that the management is able to address questions from all participants in the conference, we request participants to please limit your questions to two per participant. Should you have a follow-up question, we request you to rejoin the queue. We take the next question from the line of Arjun Khanna from Kotak Mutual Fund. Please go ahead. Thanks, Rahul, and congratulations for a good set of numbers. Just trying to understand the INR 550 crore CapEx on Ref-Gas a little further. It obviously creates an integrated complex. Just to understand, so while you did clarify that part of the input would be probably used in creating other HFCs, but essentially, what would be the output in metric tons that's saleable? Current configuration that we are thinking about, it should be in the range of 15,000-16,000 tons per annum from an HFC perspective. It is tweakable and changeable depending upon what configuration that we work with to a top of about 20,000 tons. Unfortunately, it is impossible to give you an exact number on the capacity because it really does have a lot of variables around everything. The fact is that if you are doing a certain type of product, you will have a lower capacity. You could be doing a certain product which has a lower settling time and therefore larger capacity. On the current configuration, this is 15,000, 16,000 tons. It can expand to 20,000 tons at an appropriate time, depending upon how we decarbonize it and how we are using that plant. To just understand this, so theoretically, we could produce R-32 or maybe 134 or 125, depending what's required. These are swing facilities or it's basically just one gas or other key components? It's a swing. Sure. Sir, just to understand this question further, in terms of for PTFE, we had talked of augmenting our F 22 capacity. Maybe if you could help me? Arjun, I lost. What were you saying? Talk of PTFE. When we had announced PTFE, we said to make PTFE, we may look at augmenting capacity. That obviously is different from this. Arjun, you broke off. I couldn't understand the question. For PTFE, our polymer business, which we have announced at CapEx before. We had talked of increasing our F 22 for making PTFE. That obviously is different from this. Is that a right understanding? Absolutely. That's a completely different project. Sure. For our polymer project, have we thought of maybe PVDF or FEP, PFA other polymers, or right now we are just looking at PTFE? Arjun, there are probably 10 other polymers that we can look at. As of now, the focus is PTFE. There is no, let's say, bar or need to go into multiple other polymers on fluorine or let's say, PEEK or multiple others that are there. Those can be looked at a certain point in time, but the focus now is PTFE, and we will look at first commercializing the plant and then ramping it up, and then looking at various other opportunities and products. Sure. When do you expect commercialization of the PTFE plant, sir? Is there any target date? November 2022. Perfect. Thank you, sir. Thank you. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead. Thank you, Rahul ji. Thanks for taking my question. Sorry, I'm sticking on that CapEx of INR 5.5 billion. We are saying that it's a swing capacity. It will also include R-134a, but we expect R-134a capacity expansion freezing sometime in the near future, right? It is not just R-134a, it is all HFCs, December 2023 for India. December 2023 for India, all HFCs will be freezed for any further expansion. Is that what you're talking about? For air conditioning or let's say that type of use. Like for R-22, you cannot increase capacity for refrigeration use. You can use it for raw material use or any other downstream use. Maybe there are some uses that we also develop over time, we don't know. You are right. It is for refrigerating purposes, yes. You will not be able to put up additional ones. This is in December 2023, and it includes all kind of HFCs, including R-32, R-125, all those capacities. Capacity of India is agreed in the Kigali Amendment. Okay. That means this capacity will help us to cater that demand in the future when it comes. Absolutely. It should be well within the December 2023 timeline. Yeah. It is safer than future demand. No, that's fair. Thank you. My second question is on the specialty chemical guidance, which we shared at the end of last quarter. With this robust performance in Q1, are we rethinking on that number in terms of upgrading, because this performance looks way better than probably our guidance. The new molecule addition, which we are talking, that also increases the outlook for us. Yes. There used to be a Pepsi ad that used to come in. It used to say, "Dil maange more." Right? Yes. That seems to be the case, right? I'm not commenting on it. We are sticking to the guidance that we have given, the 15%-20% increase in revenues of the specialty chemicals business. We are sticking to that guidance. Maybe next quarter when we have more visibility, we will come back to you. As of now, live with it. Got it. One last bit of question from my side before we go to others. We talked about ramping up of pharma in specialty chemicals. What gives us confidence, because we are now coming and telling we also have put a cGMP plant few years back, and we have been slowly scaling up, but now we look like we are much more confident in terms of molecules, in terms of market and all. How should we look at the mix and how should we look at the growth in pharma for us? Again, the point to note is we are about 10%-15% on pharma as of now. Intentionally, we want to grow the business. It will probably take us three, four years to get to a better scale. We want to get to a 25%-30% level over a medium-term period. What gives us more confidence and more visibility is the fact that we are running a couple of campaigns for pharma products. Those seem to be in very good shape. As Joe has come through, we will probably do much better on other pharma products also. It's something that we are very confident about. That's how it is working. Unfortunately, for confidentiality reasons, I cannot give you the names of the products. That's how it is. Sanjesh? Got it, sir. Thank you, and best wishes, sir. Thank you, Sanjesh. Thank you. The next question is from the line of Ritesh Gupta from Kotak. Please go ahead. Hi. Hi, sir. Thanks for taking my question. Am I audible? Yes, you are. Please go ahead. Just wanted to check on both fluorochemicals, I mean, refrigerant as well as on the packaging film capacity utilization. You have gone through, just before COVID-19, you had expanded R-134a capacity almost to about 25,000 tons, is what my understanding is. R-32 also got expanded. R-32 store before the COVID-19 was also expanded. Just want to get an update on when first quarter or let's say last few quarters, have you started selling most of those volumes? Have you reached the 80%-90% utilization there, or is it because of the COVID-19 situation, those volumes continue to remain or the utilization continues to remain under optimized? Let me answer the second question. Let me answer the first long one first. Yeah. What you're saying is right. The capacity utilization were better in Q4 relative to Q1. Given the fact that we are aware Q1 is typically the best of peak season for these fluorochemicals or these refrigerants. Given the fact that the country was in partial or multiple lockdowns that were happening across the country, we had no storage facility. We were probably lower by about 15% from our budgeted numbers in terms of what we would have planned to sell in the domestic market, maybe in the range of about 1,500-1,600 tons. We would have done better had there been less of a COVID impact. That's how it is structured. We were able to mitigate some of it by being able to sell more into export markets. There were some impacts in terms of availability of manpower also during the quarter, given that some of our people in the plants were getting hit by COVID as well. Multiple factors have played out. We are very confident that we will be able to ramp up all of these to full capacity in the very near future, given where there are orders and the traction that we see today. I hope that explains it, Ritesh. Please go ahead with the second one. Yeah, it does answer. When you look at the new capacity that is coming in in HFC, that's more of I'm just reaffirming what the management has been saying. This is largely to cater to the demand after 2023, before sunset. I mean, after the sunset kicks in. The plant is coming at the end of July. It's a 24-month project. Let's say by the end of Q2 FY 2024 is when the plant comes in. Again, I would say that there is an understanding of the plant that comes in. To be able to ramp it up to full capacity, it will take six, eight, 10 months to take it there. Therefore, what you are saying is also right, that it will meet the projected demand for the future. We've seen multiple heat waves that have swept across the world today, not just in India, but the Northern American continent. Europe is going through a heat wave. The need for refrigeration is seemingly growing at a rate that is faster today. Hopefully, we should be in a good position to cater to all of that need. Given the fact that the Chinese can't put up additional capacities for refrigerant, and the developed market also cannot. Got it, sir. On the packaging side, the two new line expansions that you had in Dahod and Halol, now as we speak in the quarter 1, they were fully utilized from a volume perspective at least? Yes. Okay. Just on the refrigerant mix, the export versus the domestic demand. Like, because it's a large market, let's say, once you put up a capacity, you are able to utilize the volume very quickly. There is a domestic market which grows at, let's say, 10%-12%. Is it that your margins in domestic are far better than, let's say, what your export margins are, and exports are more of a kind of a volume utilization play rather than heavy margin play? It really is a function of time, Ritesh. Generically, Indian prices will come to parity with export prices, right? Because we are a large Indian player, you will probably end up paying a price which is slightly lower than the parity price to be able to capture the market. Generally speaking, domestic margins should be better, but it really is a function of the time and the prices that are prevailing in the international markets. Thank you. Before we take the next question, a reminder to participants to please limit your questions to two per participant. The next question is from the line of Tarang from Old Bridge Capital. Please go ahead. Hello, sir. Good afternoon. Just one question. If you can give us a split of the INR 2,000 crore CapEx in terms of, I know the INR 550 crore and the INR 140 odd crore on power. That is also going to be deployed over maybe the next two years, right? If you could just give us a sense on the split of this INR 2,000 crore CapEx for FY 2022. My sense is around INR 1,000 crores-INR 1,100 crores on the chemical business. I think about INR 400 crores-INR 500 crores on the packaging film business. These are not just the line CapExes, but multiple other CapExes that are going on. Roughly about INR 200 crores of CapEx that we are budgeting today for those that will come up during the year. Some of the new ones that we have mentioned, we will start to incur money on those. Probably the balance will be technical textiles and balancing CapExes that we will do. Okay. This obviously the INR 1,100 crore of chemicals would be new capacities plus maintenance. Only INR 500 crore of packaging films will be new capacity, de-bottlenecking plus maintenance. Correct? I would say maintenance is separate. These are all ROI-denominated CapExes. This INR 2,000 crore is gross CapEx. Yes. Okay. Thank you, sir. Thank you, Tarang. Thank you. The next question is from the line of Abhijit Akella from IIFL Securities. Please go ahead. Yeah, good afternoon. Thank you, Rahul Jain. Just one clarification on the chemical segment. You talked about the higher raw material cost and the freight charges, which impacted margins this quarter, if I heard you correctly. Is it correct to sort of assume that this headwind could sort of fade away in coming quarters as we try to pass it on and as freight costs come down, so we should expect some margin improvement in chemicals going forward? You are right, Abhijit. Again, we believe that these are short-term in nature. Some of the commodity raw materials have gone through the roof because of the polar storm that had happened and multiple other things that created a supply shortage in the market. There is no shortage of capacities in the world. As more capacities come back online, prices should come down. Therefore, to a certain extent, we've not negotiated that with our customers. If this is more a continued phenomenon, there will be some negotiation that will have to happen with the customers on these items. Understood. That's great. Just the last quick one from me. On the packaging films business, you had talked about two new product introductions. If you could please shed some color on that could be helpful. Mostly value-added products are there of various size. I don't have a sense of the nature there. There may be a PCR versus a chemical recycling route, PCR PET, and some lap seal grade for BOPP. Those are the ones that got launched. There are multiple that we keep doing. Again, there may be small volumes today. They will grow up in volume over a period of time. Great. Thank you so much. Wish you all the best. Thank you, Abhijit. Thank you. The next question is from the line of Rohan Gupta from Edelweiss. Please go ahead. Hi sir, good evening. Rohan, I'm not able to hear you. Just you. Just pick up the handset, it will be great. Sir, is it better now? Slightly. Please go ahead, thanks. Okay. Sir, first question was on our chemical business. Almost on a similar revenues of Q4, sir, our EBIT margin in the chemical business was lower in the current quarter. I just wanted to understand, is there any raw material pricing pressure which is getting reflected in the margin, or it was just only some product mix change which led to this kind of margin drop in Q4? Rohan, it seems you have joined late. I have already answered it. Sir, sorry five weeks out on that, sir. I've already answered it. No intent to do it again. Okay, sir. Second question is on the packaging film business, sir, as we have keep on moving up in the value chain, as you have mentioned that the value-added share has been going up. Sir, if you can just give some sense that whenever we see that the packaging film business or the industry dynamics will change, there will be margin pressure across the industry. Will there be similar pressure? Will it be there in our value-added product basket also, or do you see that the margin profile in that value-added basket will remain same? What kind of margin you see there right now? Rohan, the value-added product basket is typically a delta over the base film margin. Now, whatever be the price of the base film will determine the margin of the plain or in BOPP films, whether it be 8 micron or the 12 micron, which is the base film. The delta may not change of the value-added products, but if the base price were to come down, the net margin that you can make will come down. Sir, but the delta we will continue to make, right? Suppose our base margin are 10%, and we are right now enjoying 12%. Even if the base margin goes to zero, we still will have a 12% type of margin difference, right? Let's not talk about the percentage. Let's say if the conversion margin is INR 100, this could be within a range of INR 125-INR 150 as the delta. If the base margin goes down to INR 70, the delta of that INR 25, INR 35 will remain. The gross margin will probably be INR 105, INR 120. That range. That's how it works rather than on a percentage basis. Fine, sir. That's very helpful. Sir, if you could only clarify that what will be the base margin, average base margin right now, and what kind of delta we are earning right now on a value added? That is something that I've never given out, and will going forward also not provide it. Okay, sir. Thank you very much for answering the question. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Right. Thank you. Good morning question. Sir, on the fluorochemical expansion that you mentioned, with the vertical integration that you're doing, backward integration that you're doing along with the project, sir, what is strengthening the business model and bring us what we don't have right now? Is this something today critical that we were not doing earlier? How it change equation for us getting into it? I'm probably unable to figure out the question. What you are probably asking is, how does it change the current scenario? Yes. Does it change our value chain any, it has meaningful layers, the vertical integration that you're going to do as far as expansion? What it only changes is that because it has given me a swing ability. Depending upon where market is, I will have the ability to then shift to a new Let's say, within the HFC thing, whatever HFC is needed, I'm able to then switch to it. That's what it changes. The value chain that we have talked about, be it from the chloromethane plant or the R-22 or the fluorination molecule or PCE, TCE, all of that remains well entrenched. The swing capability comes into only for this incremental project. Right now, in terms of the buying power, the portfolio is already there. We have already got a swing plant in our Bhiwadi location where we can change between R-32 to R-134a. That's already there. This one is probably an even better, larger plant. That was a relatively smaller plant between, let's say, 5,000-7,000 tons. This is a much larger plant in that sense. Swinging a much larger plant is probably more difficult. We now got the confidence that we will have the ability to do that as well. Got it. Secondly, on the business for this year, as you probably mentioned, again, was impacted by various sorts of lockdown in the domestic market and fluorochemicals. Unfortunately, if you could be a bit slow in your question, I would then be able to understand it better. Sure. Sorry. In terms of on the fluorochemical market, on the domestic side, you mentioned because of various kind of lockdowns during the quarter, there was an impact on the demand-supply. Is there a way to clarify, sir, versus your peak capacity that you could have operated at, how much or this sort of what capacity do you operate at during the quarter? Over the quarter, I think because of the pandemic, our current estimate is between 1,500 ton-1,600 ton is what we lost. Maybe from export, we made up 300, 400 tons. That's how it worked out. Okay. Thank you. Thank you. The next question is from the line of Vishnu Kumar from Spark Capital. Please go ahead. Thanks for the time, sir. You commented on the serious heatwaves across the globe impacting us on the Ref-Gas side. The same is kind of also got impacted from the agro, at some point, Brazil and U.S. are facing significant stress. Any indication from your suppliers in terms of off-take in the second half, either on the lower side or anything that you could highlight on this side? As of now, I don't see a negative around the agrochemical space. Our order book seems to be pretty robust. I would also say that even the specialty chemical business was kind of affected by the lockdown because of availability of manpower and some of our plant people not being able to make it, and therefore, for us to be able to operate the plant safely, there was a certain number of people that was always required. We were not able to operate it well in certain situations, and therefore, we did lose some volumes on that side as well. As of now, I don't seem to see a negative around the existing products. The campaigns that we are doing for new products are running very well. Hopefully, those will also provide better traction. The business is also to a certain extent seasonally linked to Q3 and Q4, where some of the export markets start demanding certain types of products in that season. Therefore, I don't see a current negative around, to be frank about it. That's the reason we have stuck to the guidance that we provided earlier. Got it, sir. Secondly, just on the margin, sir, between the two, if the RM costs continue to impact us in the forthcoming quarters as well, which segment is easier to pass on, or at least in the agro on the ref side, which is where you can't pass it on? If you could give some thoughts on it. Ref-Gas margin prices are typically linked to international prices. Right. Generally speaking, where the international prices of the raw material prices are much higher, we'll also kind of adjust to it. Therefore, while I necessarily may not have a singular ability to pass it on, the market does adjust the price to a certain extent. On the specialty chemical business, if this is a trend that continues for an even longer period, we will have to go back to the customer and renegotiate. That's the only way to do it. Just one, like, if I may squeeze, sir. We are seeing super normal demand of the auto across the world. Would it mean for next year, probably there could be a slight decline in the Ref-Gas demand from an export opportunity side? At every market, our auto demand is phenomenal. Should we say this year's Ref-Gas would probably be super normal and next year it should normalize? Any thoughts on that? I would only defer to it from an overall perspective, because most of the export demand that we also survey is let's say, more of the secondary market. I don't see the secondary market demand falling off. Okay, got it, sir. Thank you a lot. Thank you. Thank you. The next question is from Manish Gupta from Solidarity. Please go ahead. Sir, could you just explain how the pharma side of our business has developed? You did mention in your earlier comment that it's about 15% of your business, but would you comment on how it has developed over time, what challenges you faced, and whether the development is in line with your expected pace a few years ago? Just a little bit more color on the pharma side of your specialty chemicals business. Manish, I would say, if you talk to a customer, they would really like an open book pricing. In certain situations, you will have to look at what you can do, where are you looking at squeezing the costs, where are you looking at developing your position on the product, what is the kind of volume the customer is talking about, what is the kind of effort that you will need to make in your plants to be able to manufacture the product. Those will become, let's say, requirements for you to be able to give a price. Also what happens is that you know where the current product is being sourced from. If it is a more generic product in nature, and therefore you are then able to ascertain what's your cost of the product and price it appropriately. Wherever you are doing joint development with the customer, you are then able to talk to the customer in terms of what are the equated margins that you and the customer can work with, and therefore they decide on a more longer term price of the product. That's how it typically works in most situations, but there could be other situations as well, where the prices can be renegotiated either on a spot basis or on a contracted basis, depending upon what you're doing with your customers. Sir, I'm not clear. Is your point that our margin expectations are far higher than customers are willing to give us? From a new product perspective. Sir, sorry. I'm not clear. You're saying that we are expecting far better pricing than customers are willing to give. Is that right? No, I never said that, Manish. What I'm only saying is, we've covered the price appropriately. I'm sorry, sir. I'm not being able to understand your answer. Manish, let's do it separately rather than on this call, because there may be other people looking to ask questions. I'm happy to sit down with you and answer it separately in terms of how the product pricing gets done. Sure. I'll reach out to you separately. Thank you. Thank you. The next question is from the line of Vibha Batra from FairConnect. Please go ahead. Yes, thank you. My question is on your technical textile business, which has seen, I think, over 25% growth in top line and also very significant expansion in EBIT margins. Is it sustainable going forward? I think I did answer that earlier. I think there has been a structural change that we've been able to do in terms of the price negotiations with the customers. The overall, let's say, input prices of the product have gone up significantly. That does remain. Therefore, both from a volume perspective as well as pricing and margin perspective, we do believe that we are in good shape for at least the next 12 to 18 months. Okay. Thank you so much. Thank you. Thank you very much. We will take that as the last question. I would now like to hand the conference back to Mr. Rahul Jain for closing comments. Thank you, everyone. I hope we've been able to answer some of your questions, if not all of them. I wish that each one of you to continue to remain safe and healthy. If you have any further questions, we would be happy to be of assistance. We hope to have your valuable support on a continued basis as we move ahead. On behalf of the management, I once again thank you for taking the time to join us on this call. Thank you. Thank you very much. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.