Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY 2022 earnings conference call of SRF Limited, hosted by Kotak Institutional Equities. As a reminder, all participant lines will be in 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ritesh Gupta from Kotak Institutional Equities. Thank you, and over to you, sir. Thanks, Steve. Good afternoon, everyone. Thank you for joining us on SRF Limited Q2 and H1 FY 2022 results conference call. Today, we have with us Mr. Rahul Jain, President and CFO, SRF Limited. I would like to invite Miss Nitika Dhawan, Head of Corporate Communication at SRF, to initiate proceedings for results conference call. Thank you. Thanks, everyone. Over to you, Nitika. Good afternoon, everyone, and thank you for joining us on SRF Limited's Q2 and H1 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 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 will now request Mr. Jain to make his opening remarks. Good afternoon, everyone. I extend a warm welcome to all of you, and thank you for joining us today on SRF's Q2 and H1 FY 2022 earnings conference call. I trust you, your families, and colleagues are keeping safe and 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. SRF has delivered a healthy overall performance during the period under review, despite several operational challenges in the domestic and the international environment. The growth was fueled by a strong performance registered in the chemicals business and a steady improvement in our technical textiles and other business. During the quarter, on a consolidated basis, revenue grew by 35% to INR 2,843 crores. Earnings before interest and tax, EBIT, grew by 19% to INR 570 crore. Profit after tax came in at INR 383 crore in Q2 FY 2022, higher by 21% when compared with corresponding period last year. Coming to our segmental performance. In Q2 FY 2022, our chemicals business delivered a robust performance despite various COVID-19-linked challenges and continued disruptions in the supply chain. We reported a notable revenue growth of 28% at INR 1,126 crore over corresponding period last year. Within the chemical segment, the specialty chemicals business continues to register a healthy performance due to increase in sales in both exports and domestic markets. Overall performance was bolstered on account of increased demand of existing and new products. However, vagaries in the external environment remain a cause of concern. We have been sharing. As we have been sharing, we are facing adverse impact of rising costs of certain key raw materials, logistics issues, higher shipping costs and congestion at ports. I would like to highlight that there were some operational challenges during the quarter which resulted in temporary production loss at Dahej for one of our plants and its downstream products. However, we were able to bring the situation under control in good time. During the quarter, I am pleased to report that the board approved a debottlenecking project at Dahej for a CapEx of INR 27.5 crores, enhancing production capacity of a key product catering to the agrochemical industry. This is scheduled to be completed in around eight months. With the completion of this debottlenecking project, the production capacity of the products will increase, and the demand for the product remains robust. We remain confident of utilizing the increased capacity in due time. Such efforts, together with improved effectiveness and optimal capacity utilization, will equip us to deliver even better operational efficiencies and results in the future. In our fluorochemical business, SRF delivered a positive performance during the quarter, owing to higher sales volume in refrigerants, HFCs, and chloromethane, as well as enhanced realization despite the impact of the second COVID-19 wave in India. Furthermore, our pharma propellant, which is sold under the brand name Dymel HFA 134a/P, has witnessed significant increase in sales. In addition, our upcoming projects are well on track, although the CapEx costs are witnessing increases due to significant inflation in steel, cement, and other key materials. In our packaging films business, SRF reported an increase of 29% in its segment revenue, which stood at INR [1,000] crore during the quarter over corresponding period last year. SRF has established itself as a global leader in the packaging film industry. The business continues to be one of the largest exporters of BOPET films from India. We have witnessed improved traction from new capacities in Hungary and Thailand, and enhanced sales from value-added products further aided growth. SRF has also added some new products to its portfolio in the first half of the fiscal. Operating profit, however, declined by 27% over corresponding period last year, as BOPET film margins were under pressure. We've indicated in the past of a likelihood of such a scenario playing out. However, this was partially offset with a sustained demand of BOPP films. In addition, availability and price of key raw material was a cause of concern. I am happy to share that SRF's new BOPP film line at Rayong, Thailand, was commissioned during the quarter, making us a one-stop shop for specialty packaging film offerings to our key customers. As indicated in the past, there are a number of new lines expected to be commissioned in this and the next fiscal year. With focus on efficiency and improving demand scenario in the upcoming quarters, we believe that the business is well positioned to take advantage of the same in delivering an improved performance. Moving on to our technical textiles business segment. SRF reported an increase of 68% in its segment revenue at INR 558 crores in Q2 FY 2022. The business performed in line with expectations on account of improved sales volumes in the nylon tire cord fabric business, belting fabrics, and the polyester industrial yarn sectors. SRF continues to focus on increasing operational efficiency. Strong momentum was seen across the board in the domestic tire business, resulting in higher demand in the TCF sector. With the reopening of the mines, the belting fabric sector also saw a surge in demand. Serving the community has always been at the forefront of SRF's philosophy, and I am happy to share that we have been recognized for our community engagement initiatives. The technical textiles business at Gummidipoondii was awarded the Corona Warrior Award 2021 for their philanthropic efforts during COVID-19 induced lockdowns. TTB Gwalior, on the other hand, has been acknowledged for its flood relief efforts in Madhya Pradesh's Bhind District. Lastly, in our other segment, SRF registered a revenue increase of 52%, that's INR [4,086] crores in Q2 FY 2022 over corresponding period last year. In a challenging economic environment, both coated and laminated fabrics businesses did reasonably well. In the coated fabrics business, despite challenges in demand, SRF maintains its domestic market leadership as it is focused on value-added products, targeting new markets and efforts to enhance operational initiatives. In the laminated fabrics business, segment maintained its leading position, and the performance was in line with expectations despite several external challenges. Margins continued to remain under pressure due to the ongoing oversupply issue. Further, the anti-dumping duty on Chinese PVC flex film imports has also been extended in January 31, 2022. Coming on to our balance sheet. In FY 2022, SRF's sustained efforts towards interest optimization through better negotiation and excellent debt management led to reduction in interest costs by about INR 28 crore in H1 when compared to the corresponding period last year. As of September 2021, our net debt position was lower by about INR 180 crore when compared with March 2021, despite continued investments that we've been making in capital expenditures. SRF's prudent debt management strategy, along with excellent access to diverse sources of liquidity, continues to strengthen the liquidity position of the company. SRF Foundation, our CSR arm, continues to drive innovative initiatives in the education space. Happy to share that SRF won the Rotary CSR Award 2021 for exemplary work in basic education and literacy during the quarter. In conclusion, I would like to state that despite several domestic and international challenges, SRF has delivered a resilient performance, and we remain cautiously optimistic for our H2 FY 2022 performance. Our multi-business strategy, along with a strong infrastructure in place and outstanding R&D capabilities will help us in facing external uncertainties encountered by certain businesses. We are confident and will earnestly strive to deliver a superior performance and create value for all our stakeholders in the future. On that note, I conclude my remarks and would be glad to discuss to 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 the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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 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 good set of numbers, despite the challenging environment. Rahul sir, the first question is on the refrigerant demand outlook. Given the chip shortages and the challenges, how are we seeing the demand both in the domestic as well as, the exports market maybe over the next couple of quarters? Thank you. Rohit, what you're saying is right, that the domestic and even the international OEM segment is facing challenges in terms of, let's say, production of vehicles that we've seen over a period of time. I believe that is something that will continue for some time. It is something that can't go away very quickly. The point to make is that, let's say a majority of the sales will be ref gas sales. When we say ref gas sales, specifically here we look at is the R-134a gas sales that we do. I think there is a large amount that will get sold in the secondary market, which should actually keep us in good stead when we look at it from an overall market and demand scenario perspective. I do believe that the demand scenario for R-134a, both domestically and internationally, is a significant positive going forward. We believe we should be able to utilize all our available capacities for R-134a going forward as well. That's how we believe it will play out. All right. Thank you, sir. Sir, the second question is on the packaging film segment. We have seen a sharp drop on a quarter-over-quarter basis in margins. Is it possible to concur that the exit rate for margins were lower than what it is reported at around 17%? Incrementally, our focus will be to drive the growth predominantly through volumes as you explained that more capacities will come in, and that will certainly exert pressure on the margins. Thank you. I would not say that the exit rate is even lower than what has been reported from a quarter-on-quarter perspective. We do believe that there is and again, I think we've been saying this for some time now. Each time we say this, everyone comes back to us and says that you again said that there will be a, let's say, a lower margin or there will be a margin drop in the packaging film business. That was not happening for probably the last few quarters. As things have panned out, some of those new capacities have come in and have started to hit the market, and therefore some of the margin, let's say, drop has happened. I don't believe that it was purely an exit margin when you look at from a September perspective would have been lower. It would have been probably remained similar in the overall range. I also do believe that given where, let's say, the festive season is in India and what we are seeing from a demand perspective, there will be some positives that should develop during H2, and we should probably do a better job than what has been reported in Q2. Again, there is a seasonality also in the business in that sense, and that should play out as well. That would be my real comment, Rohit. Thank you so much, sir, and best of luck. Thank you. Thank you. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead. Thanks for taking my question, Rahul. Couple of questions. Sanjesh. Can you hear me? First on the ref gas side, we have been reading about the pricing going up as high as 70% in R-134a. Can you just explain us how are the prices in each of the ref gases we are seeing the scenario today? A related question is what kind of capacity utilization did we see in Q2? We are talking of a full capacity utilization in R-134a going forward. Just in that context, that would be helpful. Sanjesh, you are right when you say that the capacity utilization has gone up. There is, sorry, the price or let's say the trends in prices in the ref gas segment have been positive. And again, I am here talking about HFCs and not HCFCs. I'm not talking about 22s. I'm only talking of HFCs. This is essentially I think being fueled by a large demand that is coming out of the U.S. There is also some pent-up demand in the domestic market that is picking up. Therefore, the capacity utilizations also have been in good shape. Whatever production abilities we had as of end of September, all of that is being fully utilized. Like I said in the opening remarks as well, there were certain production challenges that we did face. We kind of sorted them out during Q2 also. When you look at it from a scenario perspective going forward, I think the scenario should be a positive one. Price trend seems to have stabilized and is only going up as of now. How and where will it end is something that nobody can say. Hopefully, it will remain a positive for us. Again, some of the price increase also is a function of the fact that some of the raw material prices have also shot up. While there is the price increase that has happened, there is also no denying the fact that fluorspar prices, logistics costs, dispatching the material to the customer, all of those have become even more costly. Differentially, I would say margin has gone up, but costs, let's say between sales price and costs, costs and sales price, both have gone up. Luckily, the net impact on margin is a positive one. Fair enough. When we say that in September we have utilized all the capacity, we are talking of all the three HFCs, R-32, R-125 and R-134, right? Yes, please. Yes. Yes. Thank you. Second question is on the fluoro specialty. Twofold. One, we have been talking about strong demand in domestic. This is, part probably a comment which has come in for the first time. The impression was that predominantly it's an export business. Can you just explain us the domestic part of this business for our understanding? It's a pharma agrochemical. This is on agrochemical. There are two products that were produced in our multipurpose plant, and those have been shipped out to our domestic customers. Some of these international players, Sanjesh, are also setting up their capacities in India for manufacture and sale of certain key agrochemicals. As of now, some of these products were batch processes which have been supplied to the customer. Therefore, the comment on domestic market was there. You're absolutely right when you say that it is an export-focused business as of now. Again, one of the key elements that we are also witnessing, Sanjesh, is that multiple, let's say customers of ours are now looking to tap into the Indian market as well on the agrochemical side. Again, even if that happens, and as and when that happens, I think it should be a positive for us given that we are doing a lot of chemistry work for some of these major customers. Got it. Basically, customer remains the same, just it's the geography which is changing. Is that the right- That's right. -understanding? That's right. Okay. On the guidance part, now that the first half has been strong because both the quarters we have made a very strong comment, are we looking at changing the guidance from 15%-20%? This is also to be understood from the fact that there will be price increases because of the RM pressure. I hope you- Let me stop you there, Sanjesh. Yeah. Because when we say 15%-20%, that is something that we specifically and always commented on the specialty chemicals business. I have always said that in the fluorochemical business, what you are going to witness is volume-led growth and capacity-led growth. No, no, I was talking about specialty itself, Rahulji. Right. Now that RM pressure [Foreign language], right? We have seen all the commodity prices going up. The RM pressure will also be witnessed in the fluoro specialty. On that backdrop, do you see an upside risk on the revenue for the fluoro specialty? [Foreign language]. Upside will always be positive right? Yeah, yeah. Got the point. I will say it this way, Sanjesh. Right. As of H2, sitting in H2, we are confident that we will achieve the 15%-20% number that we've talked about. Got it. I should really be talking about, let's say, the annualized number in December, post-December results. There are multiple challenges. There are multiple issues that are being faced. There are multiple logistical issues. There are multiple, let's say, issues with respect to being able to dispatch the material, availability of containers, port logistics. All of those are challenges today, right? Some of those have actually, let's say, end of September or early October, started to improve to a certain extent. If they do improve, I think we will do a good job. Let us stick to 15%-20% as of now. You will probably get some positive or, let's say, a better actualized picture in December. Got it. Bookkeeping question. I will not take more time. One on the power cost, other on the CapEx. How much of our power cost is gas and coal? Because that has seen a huge inflation, more so at the end of the quarter, so that cost will more be visible in the Q3. On the CapEx, we have been guiding about INR 18 billion kind of CapEx, INR 15 billion-INR 18 billion on that range. First half looks slightly underwhelming at INR 6.6. That means, is there- I didn't get the last one. I understood the power question. I didn't understand the second one. Power question is the gas prices and coal prices. Understand. I'll answer that. What was the second question? Second question is on the CapEx. CapEx. Okay. INR 15 billion-INR 18 billion guidance versus first half of only INR 6.6 billion. Let me just clarify this. Yes, what you're saying is absolutely right. Let's say when we look at our power cost, our power cost is largely because of the thermal power plants that we operate, as well as the cogen plants and all of these are cogen plants because of our chemical processes, where we need a lot of steam as well. There is no doubt, and that is something that has been visible even in our results, where between Q1 and Q2, our power cost has gone up significantly, let's say about INR 30 crores-32 crores. When I also look at it from a Q-on-Q perspective, the power cost has gone up by almost INR 70 crores-INR 80 crores. Yes, coal, and some of this is higher operations also, when I look at it from a [CPLY] perspective. When I look at it Q-on-Q, most of it is price variance. Some of this price variance should also be playing out during H2 as well, because again, coal prices have not really come down. They are on a trend up only. We will do mitigative measures. We will look at importing. We will do whatever is required to keep this under check. I think some of the understanding that has also developed over a period of time is the fact that the coal cost, or let's say costs have increased, and some of these have been passed on to the customers also. Again, like I said, costs have gone up, but the incremental margin seems to be a positive. The second question that you have asked was with respect to the CapEx. I think overall CapEx guideline has been in the range of about INR 2,000 crore. Probably again, the only element of change that has happened on that side, Sanjesh, is the inflation that has happened from a raw material or let's say key CapEx item perspective. Steel, cement, other key raw materials have all significantly seen inflation coming in. Some of these CapEx costs that we are currently incurring were probably based on a certain benchmark at the point in time they were conceptualized. Some of these costs are likely to go up. However, I don't see a change in the IRR for, let's say, majority of these CapExes. That still remains pretty robust. That would be my answer, Sanjesh. Thank you. Thank you, Rahulji. Thank you for all the questions, and Happy Diwali in advance. Thank you and same to you, Sanjesh. Thank you. A reminder to the participants, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. Should you have any follow-up, may we request you to rejoin the queue. The next question is from the line of Rohit Sinha from Sunidhi Securities. Please go ahead. Yeah, thank you for taking my question. So my first question is on the specialty chemicals side. As we have indicated in last quarter that some price revision in specialty chemicals segment is expected. Just wanted to know, was there any price revision happened or we would see something in the coming quarter as we are almost at the similar number as in Q1 FY 2022. Rohit, I'm unable to get the question. I don't really comment on prices of any of the products individually. The list of products that we probably about 60, 70. At any point in time, we are doing 15, 20 products, right? It is very difficult to be able to comment on price of certain products. That's one. Second, most of these products that we are doing are contracted in nature. Therefore, it is very difficult to pass on any increases of prices. Obviously, some of these do get renegotiated. Some get a positive response, some don't. When you play out the game, depending upon higher volumes for the future, depending on contracts for the future and in that manner, it's impossible to be able to comment on each product and its price variances as such. Okay, okay, fair enough. Secondly, just wanted to know the update on the chloromethane capacity addition which we have announced earlier. When we are expecting that to commission? Is there any delay or it's on track? When we did October 2022. Let me just double-check it for you. Okay, okay, sir. Thank you. Just one second. March 22, sorry, not October. My apology. Okay, March 22- Maybe slightly later, let's say a month or so here or there. Okay. Thank you. Just last question, from the packaging side only. Could you help us, with the additional depreciation in the segment during the first half for this, packaging segment, if at all it is possible? Just considering the supply issue and higher- Difficult to answer specific number on depreciation. Maybe you can connect with the team separately, and we will answer the depreciation question. Okay. Fair enough. Thank you. Thank you. The next question is from the line of Nilesh Ghuge from HDFC Securities. Please go ahead. Yeah. Good afternoon, sir. My question- Good afternoon. If you can speak closer to the handset, please. Yeah. Can you hear me now? Yes. My question is related to tax rate. If I look at the first half of FY 2022 compared to FY 2021, the tax rate has gone up. Any guidance on that front for FY 2022? Let me just try and answer it a bit differently. When you look at tax rate, don't look at a consolidated tax rate because it has a different, let's say, a weight of the entity that may be taxable or non-taxable. When you look at tax rate, you should look at standalone numbers. Again, when I look at it for September quarter corresponding period last year, we were at about 30.08%. For June ended, we were at 30.72%. For September quarter ended, we were at 30.9%. I don't see a very large, let's say, change in our tax positions. The only point to make is when you look at it on a consolidated perspective, there is a weight of the entity that is taxable or non-taxable. For example, Hungary today is completely non-taxable. If that entity is doing well, my tax rate is changing. Thailand is also non-taxable, but South Africa has a certain tax rate. It really does play the wait game. It's not possible to look at it on a consolidated perspective. Look at it from a standalone perspective and you will probably find stable numbers. Okay. Thanks. Thanks a lot, sir. Thanks for the explanation. Thank you. Thank you. The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead. Hi, sir. Thanks for the opportunity. First question on the specialty chemical side, especially on the margin front. You did allude to it towards, you know, the RM cost inflation, power cost rising, logistics was being higher. Obviously the benefit of pricing-led, you know, growth there in the ref gas side, it has aided the margins. Given the commentary that probably ref gas-led, you know, price inflation may remain here and gradually over the coming quarters we will be passing through these RM-led inflations. Your thoughts on the margin side. Should we consider H1 average at around 21 odd percent as a base case here? Things should, you know, be on an improving trend going ahead? Ankur, it's a difficult question to answer because all of these things play out on a product by product perspective. Let me try and say it from a product by product perspective or let's say ref gas, chloromethane and specialty chemicals, each being separate. There will be a positive from a ref gas perspective and specifically more on the HFC side. That is something as a trend we are seeing. We don't see a trend to abate. That seems to be a positive going forward. The prices of key raw materials are going up, but net-net we do see a margin accretion that will happen. That's one. On the specialty chemical side, again, utilizations of products and positives on that side should come through over a period of time, and we should get some positives on that side also. We've recently capitalized some of our new dedicated plants. Those seem to be playing out well. You've also seen a new capacity expansion that's been announced in one of our products. Sorry. In one of our products, which should take about seven to eight months to complete, which should also be a positive from an overall perspective, but that'll probably take more time. It's very difficult to say that this margin will remain here or will go up. It will really depend on each component of the business doing appropriately or playing out in a certain manner, so very difficult to comment. Sure, sir. Got the answer. Just one clarification. You know, when we say the pass-through of prices whenever the contract comes for a renewal, typically what should be a lag there, three to four months odd? Typically, contracts would be six to 12 months. It won't be three months. Okay. Okay, fair enough. Sir, second question on the. Just, let me complete. For those dedicated products, for those that are more campaigned, they are negotiated on the campaign basis only. That's right. Yeah. Okay. Sir, second question on the TTB side. Now, in the last call, we did mention, you know, the pricing-led benefits which had led to the sharp jump in margins. I thought that these, you know, margins will more or less remain stable or probably, you know, have a positive, above there. So Q -on -Q, while year-over-year we are still higher, but Q -on -Q there is a dip. Anything significant to read here? Ankur, I've always said this, that, don't look at margin as percentages in the technical textiles business. You will never get the right picture. What I've always said, and I'm repeating again, is the fact that when we look at it, most of the costs are passed through. The renegotiations on the price were on the delta, and those have come through, which is clearly visible when you look at Q-on-Q performance also, where, let's say, the INR 133 crore number in Q1 has remained similar to 133, right? If Caprolactam has gone up from 1,500-1,600 per ton to 2,200 per ton on an average, to that extent there will be the sales that will be higher and therefore you will witness a margin percentage drop. Sure, sure. That's helpful, sir. Lastly, if I may add, on the packaging side, you know, so I'm slightly confused here because, you know, one comment mentioned that there are new capacities coming over the next maybe nine to 12 months, and hence probably there will be some uptick. But at the same time we do mention that, you know, the downward trajectory is limited because there is some stability visible. Are we more or less guiding that these numbers may sustain for a few quarters before we see an uptick? Will that be a right read through? I would say it in the reverse, Ankur. What I said is there are new capacities that are adding this fiscal and some in the next fiscal. While the demand uptick is a positive, that should play out well for Q, let's say Q3 and Q4. Some of this will also, we will start to witness it as new capacities get added. While we are positive from a Q3, Q4 or H2 perspective, as new capacities will get added, some pressure will come back also. I think that was the intent of the comment. Maybe it was a bit vague. Okay. Fair enough, sir. That's helpful. Thank you and all the best. Thank you, Ankur. Thank you. The next question is from the line of Naushad Chaudhary from Systematix. Please go ahead. Hi, thanks for the opportunity. Just few clarifications, sir. Firstly, on the packaging business side, the correction in margin or the normalization in margin was purely because of the spread decline or were there some other factors which impacted this quarter margin which might not be there in the coming quarters? Let's say, this quarter we had BOPP first quarter of operation. The new capacity which we have added or any other cost which we had experienced in this quarter. Let's say it this way, Naushad, that I don't see any one times in the results that have been reported in Q2. All right. Secondly. One time which will lead to, let's say, which will not be there in the next quarter, which will push up the margin. I don't see that. What we can only say is that there is a positive demand traction that we are seeing, and that is something that will develop over the next quarter. Sure. As we are adding, you know, capacities in packaging business, this would lead to a volume growth. Would it be fair to assume in absolute terms, will we be able to maintain INR 750 crore-INR 800 crore of EBIT run rate going forward in the packaging business? Naushad, what I will say is that given all the capacities that we are currently working on, there is only one BOPP capacity in India that we are currently putting on. That capacity I think gets online in October 2022, somewhere around there. September, October 2022, or let's say Q2 of FY 2023. That's the only new capacity that is coming in. Yes, capacity-led growth will come in from that quarter onwards. Other than that, all the capacities that we are working on, other than probably BOPP in Thailand, which was commissioned in August, will see a volume-led growth. Other than that, all is operating at full capacity today. What will lead to growth and margin expansion, and probably is something that we are looking to work on, is to be able to, let's say, do more value-added products in the lines that have already been commissioned. BOPET in Thailand, BOPP in Thailand, and BOPET in Hungary. That should add to a positive going forward. Understood. Lastly, on the TTB business, as you just mentioned that quarterly run rate we are maintaining at INR 120 crore-INR 130 crore of EBIT. Would it be, do you think this number should be sustainable for us going forward? That would lead to around INR 500 crore of EBIT from technical textiles business annually. Again, I'm not here to comment on a singular number. I've given you the trend. I've given you the position that we are in. I am also telling you the fact that our capacity utilizations are well managed as of now. Hopefully, we should be able to do those similar capacity utilizations in H2. Whatever number comes, the number comes. I'm not willing to put 500 or 525 or 600 or for that matter, 400 around it. Not able to comment on singularly a number. Yeah, understood. Thank you so much, sir. Thank you. The next question is from the line of Abhijit Akella from IIFL Securities. Please go ahead. Yeah, thank you and good afternoon. Rahul-ji, we've seen some, you know, improvement in chemical segment margins this quarter on a sequential basis by about 230 basis points or so. Just wanted to understand if this is, you know, largely attributable to higher prices in refrigerants or it's coming from, you know, the specialty side as well. So essentially just trying to get a handle on, you know, whether we should expect further improvement of this base also in the refrigerant business. I would say, Abhijit, you have pointed it out well. The fact is that as of now, we believe that for H1 and for Q2 also, the positive is also on account of, let's say the positive margins that we've seen in the fluorochemicals business or the ref gas side overall. That seems to be continuing going forward. I would just like to kind of say this in a manner where whenever we've looked at our specialty chemical business, we've also seen a much larger positive in the specialty chemical business in H2 than compared to H1. There is some seasonality that has come through in the specialty chemical business. Given that H1 is now past, maybe there is a positive that can develop in the specialty chemical space also. The only warning here is that there are significant logistical challenges that are being faced. Availability of containers, availability of shipment, availability of vessels is currently a challenge. I can tell you that there were major materials that were on high seas from our perspective at the end of August, September. That seems to be a trend that is continuing. Hopefully, things will come out bit better going forward. Okay. Got it. Thank you. The other one was just on the CapEx guidance for this year. You've done about INR 660 crore in H1. Number one, is it possible to just give us a breakdown, you know, rough breakdown even segment-wise, how much is in chemicals, how much in packaging? Then second, since we are guiding to about INR 2,000 crore for the full year, it obviously implies- I don't have it all right in front of me. Maybe you can connect separately with the team and they can give you some more details or some more color on this. I don't have the numbers separately available immediately. I'm sorry. Okay. Sure. You know, out of this INR 2,000 crore guidance, I believe chemicals itself you were planning something like INR 1,000 or thereabouts, maybe a bit higher. Around [1,100 to 1,200]. Is that still on track despite a slightly slow 1H? I think so, absolutely. Okay, great. Thank you so much. Thank you. Thank you. The next question is from the line of Surya Patra from PhillipCapital. Please go ahead. Thanks for this opportunity. Just from the Dymel sales, can you give some sense as articulated long back that we had acquired- Sir, your voice is a bit muffled. Could you be closer to the speaker? Yes, sir. I was saying, the Dymel sales. See long back that we had acquired the brand and we have created enough capacity now which is on stream and stabilized also. Could you give some sense of how big this business is now currently of the total refrigerant gas business? Again, Surya, it was never intended to be a very large portion. It is also a very niche business. It is expected to be a niche business. We do almost, let's say, from a capacity perspective, our overall HFC capacity post all our current completion will be 50,000 tons, right? [Dymel] will remain 1,500-1,600 tons. It will remain niche. It will remain highly profitable, but it will remain a small portion. It will never become a INR 1,000 crore stream in that sense. Okay. That is because of the growth and that segment is very peculiar and healthy. I think that is why I was trying to have a sense. That is true. One of the key things that has also happened is that it was being used for certain therapeutic uses. One of the medicines that was being prescribed was through an inhaler, and therefore that is something that was growing and therefore the Dymel sales or let's say the propellant sales have witnessed significant increases. Because it is therapeutic, it is also likely to continue. Yes, sir. Sure. Second point is that the freight cost element, how big is that in the overall RM cost for any specific segment? Or on a blended basis, let's say for SRF, this freight cost, it is likely to prevail like this for at least a year or so. How, I mean, what is the kind of pressure that it can bring in or what is the pressure that you are currently seeing because of this? Is it a kind of very marginal element in the overall cost structure? No, no, it is not marginal at all. Whatever exports I do, freight is a very large element of it. Therefore, I don't think it is minor at all. The increases in freight costs have been phenomenal. Getting a 40-foot container and sending it from Thailand to the U.S. has become obnoxiously high. Look at the index on it and you will find the Baltic Dry Index and other indexes on the shipping side. You will find those indexes have gone up haywire. If you look at it, they have gone up three to four times. There is no way that anyone in the industry can be left insulated to the increase in freight costs. Freight costs will have an impact and are likely to continue to have an impact. The only positive that I've said earlier also is the fact that some of these have been well understood by the customers also, and we've been able to pass on some of these freight costs. In some situations which have been contracted with deliver duty paid or delivered to the customer warehouse, we've been unable to pass on. Those negotiations are going on and will continue deep into H2. Okay. There is a kind of a comfort of passing on to the customer so that way that is not visible that way on the margin front. Is that right, sir? That's right. These are contracted, Surya. Yeah. Okay. Just last question on the overall revenue mix. The chemical business, which has been consistently in the range of around 40%, around 45% of the total mix. Although the CapEx has been slightly heavy towards the chemical business, refrigerant as a system to put together. Over last few year, if I see the trends and it is around 45%, because the execution level at the packaging side was quite faster compared to the chemical side. That's why trend is skewed towards that. Let's say over three year down the line or five year down the line, what is the kind of ultimate revenue mix that we are expecting out of the chemical business? Surya, I would say it in a different manner. When we look at it, the overall revenue growth in specialty and chlorochemical, given the CapEx that we are incurring over the next, let's say, three to five years could range between INR 4,500 crore-INR 5,000 crore. When that is the number, you should be adding, let's say 1.25 times or, in some situations, let's say because there is an infra requirement here between 0.9-1.1 times in terms of revenue. Given that, be the situation, I think in a five-year timeframe, we should see about 60%-70% as chemicals. It will all depend on the capital allocation going forward. Okay. Yeah. Thank you, sir. Thanks. Thank you. The next question is from the line of Tarang Agrawal from Old Bridge Capital. Please go ahead. Hello, sir. Good evening. Hi, Tarang Agrawal. Hi. Just a couple of questions, sir. In your fluoro specialty business, you know, are customers open to absorbing the cost push? I mean, how are your conversations happening there? See, the fact of the matter, Tarang Agrawal, is that everyone knows logistics. Everyone knows those costs have gone up. Now, in some situations, the customers will be looking at. Again, these are negotiations that will keep going on, as I said, late into H2. Given the fact that there will be logistic challenges, there will be costs that you are incurring, you are also committed to be able to deliver to them the product that you're committed to. In some situations, you will meet the cost, given the fact that the margin positive that still comes through, even despite those costs is there, right? But you will negotiate it. I don't believe that there will be any customer who will not be willing to listen. The only point is you have contracted it. They will want to ensure that the contract is delivered. When you are looking to renegotiate the contract for the future, you will talk to them about the fact that you probably, let's say, done business at a loss than what was estimated at the time you were contracting it. Therefore, you will probably come to a better state for the future. Again, in some situations, you will actually end up saying, let's say, getting a larger share of their wallet or the pie to be able to deliver larger value, going forward. These are various types of negotiations that will happen. Can't be pinpointing around it. Are you witnessing raw material escalation in your specialty business, or it's largely a logistics issue? No. Logistic issues are actually cascading into raw material pricing also. Okay. Because of the availability and some of the raw materials not being available or being available at a certain price, which is much higher because of logistics. Issue is logistics, but raw material inflation is also being seen because of the fact that logistics have been high. Got it. Sir, to an earlier participant's question on CapEx, right? I was just wondering, I mean, the prices have just zoomed for basic commodities. I mean, you don't obviously seem to be recalibrating, but you passed a comment indicating that the IRRs won't change. Just a little flummoxed, the effect of- Well, because of the commodity inflation that has happened, I have said that it seems to be a net margin accretive position that has come to. So while there is commodity inflation, even on the, let's say, price of your finished product, you've seen some inflation happen. Therefore, IRR has not changed because there is a margin accretion that is happening. No, I mean, commodity prices are likely to, you know, you never know. These are the kind of things that you can't predict. Once you have a plant put up at an elevated steel or cement price, how much of negotiating power would you have when you are eventually pricing your goods to your customers? Because in the future, for all you know, the prices would probably trickle down from the current levels. It cuts both ways, Tarang Agrawal, to be very frank about it. There is without a doubt some inflation on cost that has happened in terms of when we are putting up the CapExes, and largely those CapExes that have been calibrated, let's say, two years prior to where we are sitting now. For example, PTFE for that matter. There will be, and again, when I look at it, when we were calibrating the CapEx at the point in time, prices of PTFE were at a certain level. They are 40% higher than what we were calibrating the CapEx at. Therefore, we are saying current prices, we don't see a negative IRR. You are absolutely right. If the prices fall, I have put up a CapEx at a higher rate, and therefore, there will be an impact most certainly. No doubt on that. Okay, no recalibration. I mean, you all are continuing with your plans, correct? Let's say I've incurred 50% of the cost. Now putting it on hold probably makes worse sense. Yeah. rather than going ahead with it. Opportunity cost, I understand. Thank you. Thank you. Thank you, sir. All the best. Thank you. The next question is from the line of Vishnu Kumar from Spark Capital. Please go ahead. Good evening, sir. Thanks for your time. Sir, if you could just. Can you speak a little louder, please? Yeah. Hope this is better, sir. Just if you could explain, sir, whether on the international market when you are exporting, whether all the global suppliers are present in the market, or there are some pockets where, let's say China or some other countries are not exporting that much, so we are finding a disproportionate pricing and volume benefit. Any thoughts on that? On the ref gas exports, sir. There are three or four large global manufacturers. The only good thing that I would say is the fact that not many are fully integrated in all three of the ref gases. And when I say ref gases, I really mean HFCs here. We are the only one, plus one other company in China that has all the three, has the integration to key raw materials for all the three, and therefore we are in good shape. But yes, in global tenders, mostly all the large players in the world are present. But I don't see any singular player at present across all three HFCs. No, my question was there any disruption from supplies from the other guys? That's the only question. Yeah. See, there have been anti-dumping duties that have been imposed in the U.S. for Chinese products, and those have already run. Got it. Sir, and just one more question on the ref gas. Where we are on the utilization on HFCs, and if you could just give us some color on how should we see the volumes, volume growth in the next two years in this particular segment? Exiting September, I think, almost everything was fully utilized in even R-125 and R-32 and R-134a. R-134a, there was a single train that was running as of now. We are looking to expand that out in the future, so there should be additional capacity that is available. R-32, we are enhancing the capacity. I think that's a CapEx that we are currently doing. That is probably by December or January next year, we will probably be adding about 2,500 tons of capacity on R-32. Once those ramp up, we will be in better shape. There is the 15,000 tons of capacity that we announced last quarter, which is probably a two-year project. Got it, sir. Next 12 months, we are more or less running at full capacity. We won't have much of a volume upside. Other than for the December one. Yeah, till December. Yeah. Got it. One final question, sir. You have seen this industry for quite a long time. In your best guess, how is this demand likely to be for ref gas, and are these margins kind of sustainable? Because we are seeing elevated pricing, on that also we are seeing elevated margins. In your best opinion, are we at the peak or, you think this will continue for the next two, three years? Some broad color on this. I would say that there seems to be a positive that is going on, at least for the next 12 months or so. Again, we've lived in times of very low prices for the last two years. This is the first time we have seen a positive on this that is panning out. We hope it can continue for a long time. Again, the way the industry is structured again, last year we saw a ton of, let's say, Chinese capacity coming in, given the Montreal Protocol restrictions. Some of those have come through, some of those will come through over a period of time. No new capacities are being added, so that's a positive. Worldwide, I don't think there can be additional capacity that will be added. There seems to be a positive traction in terms of the current prices remaining. But again, no inflated prices can remain for a very long period of time. They will correct. By that time, I think what we should have done as SRF and as a company is get our costs under better control and be able to manage our plants even better than what we do today. Operational efficiencies should kick in. One question, if I may. How often does your TBB contracts get renegotiated? You mentioned that, this, Annually. Annually, sir. Thank you. This one, at least, per ton number or should continue for the full financial year? The delta is probably what gets negotiated the most. Got it, sir. Thank you. Thank you. Ladies and gentlemen, we will take one last question from the line of Yogesh Patil from Reliance PMS. Please go ahead. Thanks for taking my question, sir. Sir, my question is related to, again, rising crude prices, which are at seven-year high. How much raw material prices are already passed on, and how much do you expect is needed to pass on to maintain the EBITDA margins close to 25% on overall level? Basically, in the last few days of second quarter FY 2022, we have seen the sudden jump in crude and other raw material costs. We want to know how long it will take or, how long it takes to pass on to consumer on each segment basis. If you could give us, ballpark numbers in terms of, days or months. That, that is the question from our side. Unfortunately, if I start answering that question, I'll take another hour to be able to answer it, because each product, each raw material will have a different dynamic that operates. It will have a different demand and supply situation that operates. For example, Caprolactam may have a different demand and supply situation while it is still a derivative of crude and benzene. PTA, MEG again will have a different demand and supply situation. While crude does have an impact, there is no direct correlation to crude in any of our key raw materials. There is some, let's say some of the key raw materials to the raw materials that we use are petrochemical-related, benzene, PTA and those types. I don't see a direct correlation. Let's say the beta of that one will be 0.7, rather than being at 1. That's how I would put it. It is impossible to answer how much time will it take for one month of crude price change to be able to or pass on to the customer. Pretty much impossible. Oh, thanks. Thanks. Thank you. Thank you. I now hand the conference over to the management for their closing comments. Over to you, sir. Thank you everyone for joining the call. We hope we have been able to answer some of your questions. Not all, probably. Happy to connect separately also and see if there are additional questions. Whatever is in the public domain, we will try and answer them. Thank you so much, everyone. Bye-bye. Thank you. Ladies and gentlemen, on behalf of Kotak Institutional Equities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.