Ladies and gentlemen, good day, and welcome to SRF Limited Q1 FY 2023 earnings conference call hosted by IIFL 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 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. Ranjit Cirumalla from IIFL Securities Limited. Thank you, and over to you, sir. Thank you, Faizan. Good afternoon, everyone. Thank you for joining us on SRF Limited's Q1 FY 2023 results conference call. Today we have with us Mr. Rahul Jain, President and CFO of the company. I would now like to invite Ms. Nitika Dhawan, Head of Corporate Communications at SRF, to initiate the proceedings of the results conference call. Thank you. Good afternoon, everyone, and thank you for joining us on SRF Limited's Q1 and FY 2023 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 his opening remarks. Thank you, Nitika. Good afternoon, everyone. I extend a warm welcome to you all, and thank you for joining us today on SRF's Q1 FY 2023 earnings conference call. I trust you, your families, and colleagues are doing well. I will initiate the call by briefly taking you through the key operational highlights for the period under review, following which we will open the forum to have a Q&A session. We are pleased to begin the fiscal year 2023 on a strong note despite the ongoing challenging macro environment landscape. We have delivered a healthy performance in all our segments, with our core chemicals business performing exceptionally well. During the quarter, gross operating revenue increased by 44% year-on-year to INR 3,895 crore. EBITDA grew by 52% year-on-year to INR 1,030 crore, translating to an EBITDA margin of 26%. Profit after tax came in at INR 608 crore, higher by 54% YOY. Overall, we believe it has been a stellar quarter for the company, and I am pleased to share that the Board of Directors has approved an interim dividend at 36%, amounting to INR 3.6 per share, which will result in a cash outflow of INR 107 crore. Moving on to our segmental performance. The chemical business, which comprises of specialty chemicals and fluorochemicals, registered a growth of 55% year-on-year to achieve revenues of INR 1,722 crore. Our specialty chemicals business did remarkably well, driven by robust demand for our flagship products and their derivatives. We continue to expand our product portfolio and in Q1 launched one new agro product that further augmented our offerings. On the cost front, we have focused on diversifying our raw material supplier base to reduce the risk of non-availability. This, combined with process optimization, resource utilization, and other sustainability initiatives, has enabled us to lay emphasis on further cost reduction as well as minimize the environmental cost of production. We are pleased to announce that we have successfully commissioned our state-of-the-art multipurpose production facility, NPP4, at Dahej. Initiatives are being undertaken to progressively ramp up production from this facility. Moreover, the board has approved a number of projects at the Dahej facility for a projected cost of INR 400 crore, including one, setting up of a new dedicated facility to produce 1,000 metric tons annually of an advanced agrochemical intermediate for INR 250 crore to meet the growing demand of the product in the future. Two, to expand the capacity of an intermediate product that finds application in both agrochemical and pharma intermediates and related feedstock of INR 72 crore. Three, in order to address the increasing demand of new and upcoming plants, two technical structures will be developed for various agrochemical products for INR 78 crore. As most of you are aware, the company is extremely bullish on the long-term prospects of the specialty chemical segment. Given few global tailwinds anticipated for the segment, we believe there would be adequate business potential to sustain the current CapEx run rate for the full year. The CapEx of INR 250 crore approved by the board yesterday will be completed in the next 8-10 months and showcases our capability to execute large CapExes in the business in a very short timeframe. Capability building in terms of new announcements of the structural CapEx will also lead to reduced time to market and crush the time taken to market some of our new products. The second CapEx of INR 72 crore approved by the board yesterday is for a product that's a key building block that finds application in both pharma and agro intermediates. The other capital expenditure announcements are a part of a medium-term strategy that involves capital expenditure in the range of INR 1,200 crore-INR 1,500 crore over the next 12-18 months on the back of traction that is visible, leading to conversion of some of the campaign products to two dedicated plants. Our fluorochemical segment registered solid results on the back of better realization and healthy volume trends witnessed across HFCs. Prices during the current quarter have significantly increased amid trade measures and global and local demand for key HFCs. We anticipate demand and pricing in the segment will continue to remain strong. Structurally, this business operates in a strong space, and our CapEx investments set to capitalize in the coming quarters. We are excited about the opportunities that this business presents. Moreover, HFC-134a/P, the pharma-grade gas that we produce, also performed notably well, and we were able to increase our market share at a global scale. Additionally, healthy contribution from chloromethane aided performance. We have had a strong Q1 for the current financial year. There is certainly some seasonality in the HFC space that does play out, and Q2 is generally weaker than Q1. The catalyst change for our R-125 plant is also scheduled in Q2. We do remain positive on the additional volumes from our chloromethane plant that is likely to be commissioned very soon, and the PTFE facility towards early Q3. This should aid the overall revenue growth for the year as a whole for the fluorochemicals business. U.S. market for HFCs remains strong and volumes of H2 are currently being contracted, which we remain very positive about. We've witnessed some increase in our power costs in the chemicals business, largely on account of increased prices of HSD and some grid power costs. Most of our fuel costs have remained elevated, given significant price inflation seen across the world. We do believe that some of these per unit costs will see reduction going forward as our new thermal plant, power plant gets commissioned and our initiatives around securing hybrid power for our Gujarat and other facilities comes through. Moving on to our packaging films business. The business reported an increase of 44% in its segment revenue, INR 1,496 crore, when compared with corresponding period last year. The business delivered healthy performance with significant contribution from BOPP segment and increased sales of value-added products. While we continue to focus on efficiency and cost-effective procurement, the BOPET films witnessed a slight slowdown in demand due to addition of some new lines, which impacted the overall margins. As I have stated in the past, we expect pressure on BOPP, BOPET margins going forward with several new clients being operationalized. BOPET films like are likely to witness inventory impact due to sharp drop in raw material prices, which I believe will be transitory. On the other hand, demand for BOPP films is likely to remain firm. All our plants are producing to capacity, except for our Hungary plant, which is impacted by high energy costs due to the current geopolitical situation in Eastern Europe. Our BOPP line in South Africa is also performing well. Our new BOPP film line at India is expected to be commissioned in Q2 FY 2023, and with our already established customer relationships, we are hoping for a vertical start of this line as well. We remain extremely optimistic of the medium to long-term outlook of the packaging films business and across cycle averages, EBITDA and ROCE profile remains very strong. SRF mantra of easy to do business with, which is essentially focused on building customer relationships and our global presence in over 100 countries should enable us to better navigate sectoral headwinds. As a market leader, the company is driving sustainability initiatives and is working towards innovating films that have lower environmental footprint. The technical textiles business reported an increase of 16% in its segment revenue to INR 571 crores during Q1 FY2023 over corresponding period last year. The business delivered steady performance led by increased export volumes in the nylon tire cord and belting fabric segment. However, domestic demand for some of our portfolio products was subdued. The business continues to actively focus on improving operational excellence and productivity parameters. The belting fabrics market is witnessing large opportunities. In this regard, I am pleased to share that the board has approved a project for capacity expansion and modernization of belting fabric operations at our Viralimalai plant from 1,100 metric tons per month to 1,800 metric tons per month at a projected cost of INR 162 crore. This will be spent over a period of next three years. The CapEx will further aid in enhancing our market share and provide a strong margin profile, which is sustainable in the medium to long term. Lastly, in our other segment, the coated fabric business witnessed normalized domestic demand after two years of the pandemic. With favorable monsoon and the commencement of events and outdoor activities, we expect domestic demand for the segment to remain solid. In our laminated fabrics division, SRF maintains its pricing and volume leadership, with the plant operating at full capacity during the quarter and reaching its highest quarterly sales record. The surplus supply scenario has had a negative impact on the realization in the segment. During the quarter, we also witnessed rupee depreciation against the US dollar of around 4.5%. This is the operator, sir. We are not able to hear you. Ladies and gentlemen, the line from Mr. Rahul Jain has got disconnected. Request you all to please stay online while we reconnect him. Thank you. Ladies and gentlemen, thank you for patiently waiting. The line from Mr. Rahul Jain has got reconnected. Thank you, and over to you, sir. Sorry about the disconnection. I was talking about the rupee depreciation against the U.S. dollar of around 4.5% that we witnessed during the quarter due to a volatile geopolitical situation. This led to a restatement of net U.S. dollar-denominated liabilities which created an exchange fluctuation loss of INR 32 crore, which is likely to be a one-time impact. Our profit and loss account and the balance sheet is highly dollarized. While large depreciation of the INR versus the dollar has a negative restatement impact, which is one time, we are probably happier in the long run with a weaker rupee. At SRF, we prioritize community engagement projects equally and work diligently to contribute to society. During the quarter, the SRF Foundation received appreciation from the Honorable Chief Minister of Madhya Pradesh, Shri Shivraj Singh Chouhan, for adoption of 108 Anganwadi across Bhopal, Bhind, and Dhar districts. During the quarter, we also distributed more than 170 tents to the flood-affected locations in Assam. I'm also happy to share that during the quarter, SRF was awarded the Best Business Family Business in the Giga category at the first-ever Moneycontrol India Family Business Awards 2021. Our progressive HR policy and culture has led to Fortune India magazine naming us as an employer of the future. We also received the Finance Transformation Initiative of the Year award at the C2FO program. To conclude, over the years, SRF has built a solid multi-business structure that enables us to withstand a dynamic and volatile environment. While few businesses may face challenge in the near term, we are confident that other businesses will exceed our expectations and enable us to drive overall growth of the company and create sustainable value for all stakeholders. On that note, I conclude my remarks and would 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 the 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. Reminder to the participants, anyone who wishes to ask a question may press star and one at this time. First question is from the line of Rohit Nagaraj from Centrum Broking. Please go ahead. Yeah. Good afternoon, and thanks for the opportunity. Congrats on Q1. First question is on the fluoro specialty business. Given that there have been issues in the European continent and even apart from that, the weather-related issues for the agrochemicals, are we seeing any kind of demand contraction for our business, and what is our view for FY 2023 in terms of if the issues persist for maybe a quarter, couple of quarters? Thank you. Thank you, Rohit, for your question. This is something that a lot of people have started to talk about in terms of demand slowing out from Europe, given their energy prices and where some of the positions have been created. Excuse me. I don't think as of now we've seen any contraction. We've not seen any of our customers looking to, let's say, cancel orders or think of delaying some of those orders. That's not happened. In fact, I would say that to a certain extent, when we look at it, given where Europe's positions are, I think it could also provide an outsourcing opportunity for companies like SRF going forward, where some of the, let's say, higher-end products that Europeans were still doing may want to get contracted out to good players like SRF. I think that could turn out as a positive. I don't think we've heard from any of our customers till date that there has been a negative that is prevailing or orders are being canceled. That's the position as of now. It's a dynamic and a developing situation. We'll see how it pans out and keep you updated. All right. This is very encouraging. Second question is on the R-gas pricing. We've seen over the last one year the prices have been increasing. In your view, the prices have still been increasing or they have stabilized at elevated levels? If they're still increasing, what would be the dynamic which will play out to, you know, stabilize those pricing environments? Thank you. Rohit, the prices for some of the ref gases, and it is not all across, I think there has been increase in prices of some of the ref gases. Most of the increases happened over the last year or so. Previous year, we had also told you that prices had come down very significantly, FY 2020 and 2021 is what we had seen that happening. Largely, I think prices are stable. We don't see any large headwinds in terms of significant reduction in prices. Also, this is typically there is a seasonality that plays out in the fluorochemical business given where hot months are. February to March typically are the highest playing out months for the HFC segment. There will be some seasonality that will come in, no doubt on that. You've also seen our presentation where we called out that R-125 catalyst change might take 15.15 days or so, which will have some impact on the R-125 production level. Again, I don't believe that is very, very significant. It should be a normal position, and it's a normal thing for a chemical plant to change some of the catalysts. Prices, we do believe remain firm. Domestic prices might come down a bit given where demand conditions will be. That's how it should play out for you. No, 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. Good afternoon, Rahul Jain. Good afternoon. Few questions. First on the agrochemical, you did answer a little bit in previous Q&A, but taking that forward, it cannot be strong through times where there are power price challenge in Europe and other places. How is your demand outlook for agrochemical? How are discussions with the customer? And now that we have commenced NPP4 and we have announced a very large project of total INR 2 billion in the intermediate, do you think there could be an upside risk to fluoro specialty revenue in FY 2023 and 2024 from what we have been guiding? Sanjesh, yes, there can be an upside, certainly. Our guidance of 20%+ is likely to play out, but it's a volatile environment, Sanjesh. Luckily, we have not seen any negative in terms of customer orders being canceled or there has been a dearth of demand for the products. All of that is playing out well. Some of our products are selling phenomenally well. We have seen significant growth in some of our flagship products when we compare them to previous year position. That's not happening. Yes, there has been some increase in costs. The costs have been slightly higher when we look at it from an overall perspective, from power and fuel, some of the raw material costs have been higher. There will be some contract renegotiation that will happen over a period of time, which will provide a positive twist to this. Again, new products, I think there is, we've clearly demonstrated it when we've increased our CapEx size. We've also told you that, over the next 12-18 months, the CapExes in this space could be in the range of INR 1,200-1,500 crores over the next 12-18 months. The INR 250 crore CapEx, the INR 72 crore CapEx, and the INR 78 crore CapEx are also capacity building CapExes that we are doing in the business, which will, let's say, crash the time to market for some of the products that we're looking to do. Significant traction developing. All seems positive as of now, Sanjesh. If I take this INR 1,500 crores of CapEx, and generally we do what? 1.5 times to 2 times asset turn, right? This gives us a clear runway for- Where is the INR 1,500 crore number coming from? Overall. So fi- Overall. So fifteen hundred is in... Okay, including R-gas, you're telling. No, no. When I'm saying INR 1,200 crore-INR 1,500 crore, that is over the next 12-18 months, out of which let's say INR 200 crore-INR 300 crore has been announced now. No, that's what I'm telling. Assuming we do this entire INR 1,500 crore in eighteen months, from there we have a runway for doubling the revenue, right? We were at INR 3,000 crore in FY 2022, and now we are doing a CapEx which can potentially help us grow by double. Would that be a fair assumption? Again, it's a tough one to answer, Sanjesh, but my sense is, when you are looking at this assumption, you are probably being slightly conservative given the fact that not everything is fully utilized today. Okay. On the thirty-one hundred crore- Double. On the double, so conservative, right? Yeah. Got it. Fair. On the R-gas side, you did mention in your opening remark of HFC contract for the futures we have locked in. Can you give us some color how long contracts these are and are these at the current prices? That is number one. What I was trying to refer to, Sanjesh, was the fact that typically the U.S. export contracts, which is typically October to March shipments, will get contracted today. What I was trying to refer to was the fact that we are contracting some of those at current prices. Okay. We are locking the prices as well as the volume. Correct. And- Typically, contracts are not very long-term. Fair. Rupee will also come to aid us there, right? Currency has also depreciated, which you rightly mentioned is a long-term benefit for the company, right? I think we are happier with a weaker rupee than a stronger rupee is what I would think is right. Got it. Sir, Sir, any color on the HFO now that we are close to the patent going off and that would give us further volume growth visibility in R-gas? Any update to share on HFO-1234yf side? I have only one-word answer. That is wait. Sorry, I couldn't get it. I said the answer to that is only one word, wait. Wait. Fine. We'll wait for the announcement. That's in progress, right? There is no further progress, to be very fair, frank in this. I had said this in the past as well. The position on that essentially is we are indicating that there are new developments that are happening in the space. There is new work that we are doing in terms of process optimization. All of that is going on. There will be an announcement at an appropriate point in time, not today at least. When is this patent getting expired for the innovator? You know it better than I do, Sanjesh. Thank you, sir. Thank you. Thank you very much for all the answer and best of luck for the future quarter. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Trilok from Dymon Asia. Please go ahead. Yeah, hi, good afternoon. Thanks. So, you know, one of the questions is with regards to the end product pricing, you know, or the demand. Have you sort of, you know, witnessing any, you know, kind of moderation demand, particularly agrochemical perspective I'm trying to understand? Second question is, you know, with regards to your comment on the, you know, chemical R-125, this catalyst change, is it a routine affair or is it, you know, that you have highlighted only this quarter it'll happen? To be very frank, I think the first question that you have, you've asked, I have actually replied to it, in both the earlier questions. We are not seeing a negative in terms of demand slowdown or product, approvals not coming through from our customers. All of that is in good shape. The second question that you had asked in terms of R-125, this is a normal process, typically a 3-4 year process that happens, where, some of the catalyst change in most of the chemical plants will happen. Normally, but yeah, I thought it was important to be able to tell everyone that there is something on that, of that sort, which is large from our perspective happening. You know, if you can also just comment with regards to the, you know, fluoro specialty, R-gas, you know, contracted volumes that you are highlighting, you know, which is already happening. This is what, a quarterly, you know, contract or is it a, say, you know, half yearly contract? No, no. The contracts are for a period. Like I said in the earlier comment, for October to December volumes, the contracting happens really now. We haven't seen any, you know, lower offtake volumes. Is it correct understanding? No, there is no lower offtakes. Okay, thank you very much. I'll come back in queue. Thank you. The next question is from the line of Naushad Chaudhary from Aditya Birla Sun Life Mutual Fund. Please go ahead. Hi. Thanks for the opportunity. Two questions, sir. Firstly, if you can, you know, touch upon on your expected additional chloromethane capacity and your greenfield PTFE. How do you see the capacity ramp up of these two projects, which is expected in 2023? Second question is how much capital so far we have deployed in fluoro specialty business, and of that, how much is unutilized? Naushad, the first question is with respect to the chloromethane capacity that is coming up. I hope it can get capitalized in the next 2-3 weeks. That's what we are looking at. My sense is that most of this is replacement of imports. There are various other companies that are setting it up, but the amount of imports that the country does today for both MDC and CTC, which are the largest products that come out of the chloromethane stable, is largely import substitution. I don't think there should be a problem selling. Obviously, there will be a time to capitalize and stabilize the plant. This is the largest chloromethane plant that we are now putting up. Typically, our plants have been in the 45,000-ton range. This is the largest one that we are putting up. There may be some timing in terms of stabilizing the plant, but I don't see that as a challenge as well. All of that should be in good shape. The second question that you asked was with respect to? I forgot. Total capital deployed to your fluoro specialty. PTFE again, I think is scheduled somewhere in October. Q3, early Q3 is when it is scheduled. Stabilization, getting some product approvals, I think typically the quantities that will be available for PTFE will be in Q4, and roughly about 5,000 tons of annualized capacity, so 1,200 tons available. Hopefully we should be able to get some volumes out of the PTFE in Q4. The third question that you had asked was with respect to the prices, right? No, no. Follow up on the first question itself. Within 1-1.5 years, we should see chloromethane to touch optimal utilization and PTFE should take time. Is this the correct understanding, sir? I think Chloromethane should be faster. PTFE might take, probably the amount of time that you are saying. Chloromethane should probably be 3-6 months. Okay. Second question was how much capital so far we have deployed in fluoro specialty business? My sense is that the overall capital employed for the specialty chemical business is roughly about INR 3,200 crore-INR 3,300 crore. Within the asset base, I think roughly about INR 2,500 crores of the fluoro chemicals is in the mix. Okay, that's it, sir. Thank you so much. Thank you. The next question is from the line of Jaron Du from BlackRock. Please go ahead. Oh, hi. Can you hear me? Yes. Thanks a lot. My first question is on the refrigerant and gas business. Can you- Can you be a bit louder, please? How about now? Much better. Thank you. Thank you for the presentations. My first question is on the refrigerant gas business. What is the price, say, in the United States, last year, and what is just maybe the current level in terms of, say, U.S. dollar per ton? Can you also kindly share with me the refrigerant gas sales, the breakdown, how much is to the U.S. and how much is sold domestically in India? It's a very difficult question to answer because there are multiple cuts of it that you are talking about, and not all HFCs are the same. Prices between R-32, R-125 and R-134a blend range between, let's say, from an export perspective, about INR 600 to 1,200, 1,300 rupees as well. R-125 mostly sold in the U.S. Between the domestic side of the chlorine of the HFC, we will probably be in the range of about 6,000 tons in overall position from an annualized perspective. While when we look at it from a domestic perspective, Q1 would probably be higher in the domestic side. That's how it should work out. Okay. Got it. Thanks a lot. That's it from me. Thank you. The next question is from the line of Chintan Modi from Haitong Securities. Please go ahead. Yeah, thank you for the opportunity. Sir, the CapEx that you have mentioned, this new investment pipeline, INR 1,200 crore-INR 1,500 crores, this does not include the Spec Chem CapEx which is already under progress, which is about, I think, INR 600-INR 700 odd crores. Is that right understanding? You are absolutely right, Chintan. This is a new initiative that we have taken. We believe that in the next 12-18 months, there will be more announcements that will come. This is just an indication to you that there is new CapEx in the business that will keep going on. Okay, got it. Secondly, sir, can you tell us, like, how has been the trend of EBITDA margins in specialty chemicals over last 3-4 years, whether it has been increasing or remained stable? The EBITDA margin as a percentage of the overall position, Chintan? Of Specialty Chemicals only. I know you don't declare the numbers, but, just if you can highlight the trend, like it has been improving or remained stable over the last three, four years. If you look at it from a three-year trend perspective, probably FY 2018, 2019, we saw probably a flattish position. FY 2020, 2021, 2022, I think all of those would have been a growing position. I don't have the numbers in front of me, so I can't give you an exact answer. My sense is that there is a positive trend in terms of margin percentage as well as overall number on the margin. Both have been a positive trend. Given the fact that last year we grew almost 30%, the year before it was about 60%, and the year before that almost 70%. I think given that as a position and just basically saying that we will be utilizing better fixed costs, the overall margin percentage should also have been higher. Okay. Got it. Sir, for once the PTFE plant commissions, what is the kind of margin there we can expect? I believe in last quarter things were looking quite optimistic. Given where current prices are, Chintan, I think I would say from what we have budgeted it at, from a normalized perspective, we are probably about 40% higher in terms of EBITDA margin. Gross margin should probably be in the range of 60%-65% at current prices. Sure. Got it. Just one last. In terms of refrigerant gas, you mentioned that you have visibility today for the March quarter or the December quarter? No, no, I did not say visibility for March quarter or December quarter. What I said is, to a certain extent, some of the current prices that we are at. We are contracting for H2 for the U.S. supplies. That's what I said. Okay. Sure. Got it, sir. Thanks a lot. Thank you, Chintan. Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead. Yeah. Hi, Rahul. My question is regarding chemical margin. You were talking about export, particularly U.S. You have contracts for the till March and currency depreciation. Giving both, and you were talking about a specialty chemical margin on the positive trajectory. All these three factors, can we assume the margin for the Q1 FY 2023 is likely to continue for next two to three quarters? Sumant, again, they don't look at it from a quarter-on-quarter perspective. I would typically tend to say that when you look at it from a year as a whole perspective or from a chemical business as a whole perspective, I would say let's say the last year margins were in, EBIT margins were in the range of about 26%-27%. Given where our current product profile is, given where prices are, on an annualized basis, we believe there could be a margin expansion that can happen. Margin expansion on FY 2022? On FY 2022 numbers versus FY 2023 numbers. Okay, sir. Thank you. Thank you. The next question is from the line of Amar Maurya from AlfAccurate Advisors. Please go ahead. Sir, thanks a lot for the opportunity. Couple of questions. Number one is, you indicated that R-gas, 15,000 metric ton capacity, when it is likely to commission? I think it is October 2023. I can check. Give me a second. I think that is it. Q1 FY 2023. Okay. Q1 FY 2023. Okay. FY 2024, sorry. Okay. Q1 FY 2024. Okay. FY 2023 Secondly, sir, what would be the current utilization of R-gas? Almost full. All of the gases are producing fully. Okay. Third, sir, I mean, given the heat waves, whatever we are seeing in Europe, is that R-gas demand in Europe also increased and is it somewhere positive for us? To be very frank, I think, as an overall trend, Amar, we will see some of these heat waves panning out across the globe. The first thing that these guys will have to do is set up more of air conditioning. Once that happens, it should be a positive overall from R-gas demand perspective. Nothing immediate. I mean, why I'm asking because Air conditioning No, no, sir. Secondly, sir, in terms of the agrochemicals, like, you know, if we hear all these agrochemical, global agrochemical companies, everybody is talking about a muted second half. In that context, like, you know, the kind of capacity lineup we are building up, I mean, are we confident that we'll be able to utilize all of our plant? I mean, any indication from the client side? Well, I think I answered it, more than once. Maybe you want to refer it back to the call. Okay. Fair enough, sir. Thank you. Thank you. Okay. The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. First question on the Spec Chem side. Now, you know, given the rise in raw material- How does we- Sorry. First question on the specialty chemical side, given the increase in RM prices, especially, you know, the power cost as well there, what are the time frames by when we are passing through this price, this rise in prices to the customers? Ankur, with respect to specifically on power cost, I think, we have started at some of our plants. We are in the process of implementation of, the new customer captive power plant in Gujarat. My sense is that it should again come up very, very soon in the next 2-3 weeks, it should be commercialized. And as soon as that happens, some of that power that we are doing or generating out of the DG will probably create a positive for us in terms of just the power cost around it. Obviously, coal price is roughly in the range of about INR 13,000 a ton. Hopefully, some of that price will also come down, and therefore cost of generation comes down on the captive side as well. We are also working on getting some additional hybrid power for phasing that through in our Gujarat plant, which will also add to some of the cost reduction on the power side. All of those should be positive. Again, we need to kind of take through some of those costs that are transitory in nature into our account. With respect to some of the key raw materials where prices have gone up, some of that will get renegotiated probably in the next 3-6 months as contracts come up for renewal. Sure. The RM inflation will be passed through, but the power cost inflation, we'll try to manage it at our end. Is that right or At the end of the day, that's how we should look at it. Sure. That's helpful. Secondly, on the growth outlook side, you did mention, you know, capacity expansion and, you know, some bit of smaller CapEx there for the agro intermediates, et cetera. We had earlier guided, you know, very strongly on the pharma intermediate side as well. Any thoughts there? Any comments? Again, to be frank, Ankur, there are new projects that are in the pipeline. Pharma typically will take longer than an agro product. We are fairly confident that within the next 6-12 months, there will be more announcements. Our PIP will get capitalized probably in the next six months or so. Again, we believe there are already products that we are looking to do on the pharma side in the PIP. Those will add traction on that side, Ankur. Sure, sir. Just last clarification here. The 15,000-ton plant, which is going to come in Q1 FY 2024, will be fair to assume that we'll be contracting this volume starting maybe, you know, let's say a couple of, maybe a quarter out, September, October or- You're talking about the HFC one? The HFC one, yes. No, no. The HFC is not a long-term contract business, Ankur. Most of it is done on spot basis. I don't think there is a need to contract that volume. We are fairly confident that given where market demand is, given where our plant positions are, given where our customer's future requirements are, we'll be able to sell it through. Okay. The other R-gas, I think the contract renegotiating from a volumetric perspective, will happen for H2 now in the coming months. Obviously, understand what was H2 volumes for specifically the U.S. market, which typically get contracted now. Okay. That's it for U.S. then. Fair enough. Great, sir. That's it from my side. Thanks for the clarification there. Thanks. Thank you. Thank you. The next question is from the line of Vivek Rajamani from Morgan Stanley. Please go ahead. Hi sir. Congratulations on a very good set of numbers. Just a little bit louder please. Hi, sir. Can you hear me now? Yes. Yeah. So just a couple of clarifications on some of your earlier answers. If you could just give some color on the operations. Like you said, you're running at almost full capacity on the R-gas side. If you could just share similar thoughts on the specialty and the packaging and how you're seeing this evolve over the next couple of quarters. Secondly, sir, on the topic on Europe, you obviously touched upon it a lot. You mentioned that this is possibly a longer term opportunity that's benefiting you guys and the Indian chemicals names. Any kind of CapEx that you could be thinking on putting through to kind of meet this opportunity, or it's very early days to talk about that right now? Thank you so much. The first question that you asked me, Vivek, is with respect to? The operations or utilization rates, any color that you can give, like you've shared for the packaging. Specialty chemical utilizations are pretty much full. On the packaging films side, we are selling everything that we can produce, except for Hungary, where energy costs have gone through the roof, and we are only producing to the extent we have the orders available at the right price. That's something that's happening in Hungary. Over a period of time, I think the geopolitical position in Eastern Europe will normalize. Whether it happens in the next six months, three months or a year, we don't know. Other than that, for the specialty chemical side also, I think almost all the capacities are full. When I say full, it's producing optimally. The NPP4 is a new plant that has come up. We are trying to see what best can be done in terms of utilizing that plant capacity at the fastest pace that is possible. That's something that's going on. I would also typically say that for specialty chemicals, the capacity utilization on an average, let's say on an overall basis remains at 75%, given that there are a lot of campaigns that run. So that's how it works out, Vivek. The second question was, Vivek? Just, sir, on the point on Europe that you said it could be beneficial for SRF and the industry. Just thinking, would you be considering any CapEx to meet that opportunity beyond the INR 1,200-INR 1,500 that you're currently planning? Too early to talk about it, Vivek. Again, I think, we've given fairly good indication in terms of the INR 1,200 crore-INR 1,500 crore CapEx. If that's something that's coming out of the European opportunity, we'll certainly look at it. Again, I think there is fair visibility for us to be able to commit to a INR 1,200 crore-INR 1,500 crore CapEx, and there are multiple opportunities. We look at the right one to be able to capitalize on and go through from a campaign to a dedicated plan. Got it, sir. Very helpful. All the best for the results. Thank you so much. Thank you. The next question is from the line of Abhijeet Akela from Kotak Securities. Please go ahead. Yeah. Good afternoon, Rahul Jain. Thank you so much. Just two questions from my side. First one on the CapEx. Last quarter, you had guided to about INR 2,500 crore-INR 2,700 crore for the overall company for fiscal 2023, within which chemicals was about INR 1,700 crore-INR 1,800 crore. In the context of this INR 1,200 crore-INR 1,500 crore number that you've announced today, how should we think about those previous numbers? Are those likely to get upgraded in any way? I think, Abhijeet, when you look at it for FY 2023, I think the CapEx guidance will have to go up. My sense is that during FY 2023, the total CapEx that we will probably end up doing will be more like INR 3,100 crore-INR 3,300 crore. I also believe that given even with that number, I don't see a very large deterioration in any of our financial metrics. I think all of them remain very, very healthy. Be it the EBITDA, debt to net worth, free cash flow, all of those remain very, very healthy. When you are looking at the INR 1,200 crore-INR 1,500 crore number, I think about INR 1,000 crore- INR 1,100 crore of that will probably start to get spent in FY 2024. Which therefore means that the visibility for the FY 2024 number, which I always talk about between INR 2,500 crore-INR 3,000 crore, is developing also, and that really creates that position. Understood, sir. Also just to clarify, within the INR 3,100 crore-INR 3,300 crore for this year, can we assume that the chemical segment will be about INR 2,300 crore-INR 2,500 crore? Yeah, that looks all right. Okay, understood. Just the second question I had was on the margin front. You know, packaging, we've alluded to certain headwinds, as well as inventory, you know, issues. I mean, how should we think about the margin trajectory, you know, in coming quarters for that segment? Then also just on chemicals, you know, would you expect, I mean- I think if you discount Q2, which is very clear that there are some inventory negatives that will come through. When I look at and also discount HFC because that will also be a function of the geopolitical play that is going on. My sense is overall margins will come down at least in the BOPET segment. We will be aided by the BOPP positive that will come through. Our endeavor will be to sell off all the material that we can produce. Don't shut down the line at any point in time. It will probably be coming out at slightly lower margins. On an overall basis, let's say my last year's number was roughly about 19.8%, and this quarter we are roughly in the range of about 19.7%. I don't see that going down to let's say a 10% number. I think we will remain fairly in the green. We will take countermeasures. We will look at our value-added product portfolio. We will look at our customer relationships to ramp up. Our overall number when we look at it from a year as a whole perspective, given that new capacity we are coming in, should also be in good shape. Okay, sir. That's really helpful actually. Just on the inventory side, I mean, any, you know, sort of sense you could provide us regarding how much of the quantum might be at risk out there for 2Q? I can't give you the exact number, Abhijeet, but my sense is that at any point in time, we would hold about 25,000-27,000 tons on inventory of PTA and that being the most key raw material. Look at where prices are, and you will know what the raw material impact could be. Inventory. Understood. That's great, sir. One final thing from my side. Just on refrigerant outlook, at this point everything is looking good. There have been some concerns that. Could you repeat, please? Yeah. Just on refrigerants, there have been some concerns about correction in refrigerant prices in China. Any signs that this might be spreading to the rest of the globe or, you know, you think the rest of the globe is pretty much insulated and prices remain firm across the refrigerant industry? I would typically look at it from two perspectives, the local market and the U.S. market. The Indian market will probably have some impact, but I think that's not because of the Chinese prices, probably more because of the local positions and the demand situation, demand and supply situation in the local market, given there is some seasonality around it. U.S. prices remain firm, strong. Trade barriers are still in place. My sense is that between R-125 and R-32, which have been recently import duty between November 2021 and February 2022, those don't go away. R-134a is, yes, under review, but R-32 is still under the ADD. The U.S. prices will remain strong, and to that extent, our ability to supply in the U.S. market remains pretty decent. Understood. Thank you so much, and wish you all the best, Sir. Thank you. Thank you. The next question is from the line of Prashant Sivadhanapu from Spark Capital. Please go ahead. Mr. Prashant, please go ahead with your question. Mr. Prashant, your line is in talk mode. Please go ahead with your question. As there is no response from the current participant, we'll move on to the next question. From the line of Nikhil Ahuja from Zurion Solutions. Please go ahead. Yeah, very good afternoon, Rahulji. My question is due to recession in Europe and America, how do you see the demand of the chemical business going forward? Again, Nikhil, I think we've given fair color on this in the earlier questions. We've not seen a negative in terms of whether there is low demand from our customers for our flagship products. In fact, some of those demand have only gone up. We also believe that it could provide a larger outsourcing opportunity going forward as well in the medium term. That's something that we will certainly look at. From the U.S. market perspective also, largely, I think the fluorochemical business or the R-gas are the ones that get supplied there, from a chemicals business perspective. Demand remains fair and strong, and prices also remain pretty significantly high. And again, I think stable to normalize prices have come through. That will remain as a trend going forward. Thank you, Rahulji. Best of luck for the coming quarters. I'm sorry. Could you repeat, please? I'm saying thank you for your answer, and best of luck for the coming quarters. Thank you. Thank you. The next question is from the line of Madhav Marda from Fidelity. Please go ahead. Yeah. Good afternoon. Thank you so much for your time. I think it's like really positive to hear like, you know, more CapEx guidance for the chemical segment and in general SRF investing for growth. I just wanted to understand that the increased CapEx guidance for chemicals, is it more a function of like China plus one or is it more outsourcing being done by our customers? Are they just looking to outsource more of their production? Like, what is driving up this CapEx for us? Sure. Madhav, again, to be very frank about it, I think we've told you multiple times that we have worked on multiple products. There have been multiple products that have been commercialized. We are seeing traction on some of those products. Customers are willing to enter into longer term contracts with us. Therefore, I think given where those positions are, we are fairly confident that some of these products could be large products for the future and therefore investing in them. Whether it is purely on China plus one or something else, I really don't know. The fact is that there is traction from the customer. There is developments that have happened, commercialized products, and some of those that are, let's say, campaign products becoming more of dedicated plants is the trend that we are seeing. I can tell you the product that you are talking about, the new CapEx that has been announced, is a fairly complex advanced agro intermediary. Therefore, I think it's a product of the future. We are very confident, and we are very hopeful that it can become an even larger product and a flagship product of ours. Understood. Thank you so much, sir. I wish you the best. Thank you. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Rahul Jain for closing comments. Thank you, everyone. I hope we've been able to answer, if not all, some of your questions. I wish that each one of you will 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 very much. Thank you. Ladies and gentlemen, on behalf of IIFL Securities Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.