Ladies and gentlemen, good day and welcome to SRF Limited fourth quarter FY 2023 earnings conference call hosted by IIFL Securities Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. Ranjit Cirumalla from IIFL Securities Limited. Thank you. Over to you, sir. Thank you, Zico. Good afternoon, everyone, and thank you for joining us today. We at IIFL Securities are pleased to host SRF Limited's Q4 and FY2023 results conference call. We have with us today Mr. Ashish Bharat Ram, Chairman and Managing Director, and Mr. Rahul Jain, President and CFO of SRF Limited. I would now like to invite Ms. Nitika Dhawan, Head of Corporate Communications at SRF, to initiate proceedings for the results call. Thank you, and over to you, ma'am. Good afternoon, everyone, and welcome to SRF Limited's Quarter four and FY 2023 results conference call. Joining us on the call today is our Chairman and Managing Director, Mr. Ashish Bharat Ram, and our President and CFO, Mr. Rahul Jain. We shall start today's call with our CMD's remarks on the company's performance in FY 2023 and the overall strategy, business outlook and growth plans in the future, after which the call will be opened for a Q&A with Mr. Jain. Please note that anything we say that refers to our outlook for the future is a forward-looking statement and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now invite our CMD, Mr. Bharat Ram, to make his presentation. Thank you, Nitika. Good afternoon to all of you. It is a great privilege to be able to share my thoughts on the business performance in the fiscal year gone by and the growth opportunities that lie ahead. Financial year 2023 has been a good year for the company. Our operating revenue increased by 20% to INR 14,870 crores. EBITDA grew by 18% to INR 3,708 crores, translating to an EBITDA margin of 25%. The company's profit after tax increased by 14% from INR 1,889 crores in financial year 2022 to INR 2,162 crores in financial year 2023. While our Packaging Films business and Technical Textiles businesses witnessed a drop in profits, the Chemicals business performed extremely well, which gives me notable cause for optimism. SRF's diversified business model continues to remain one of our key strengths. The opportunity ahead is significant, and our strategy along with our execution capabilities give us a clear edge in our chosen space. I think from the perspective of the capital markets, the quality of earnings has improved, and our Chemicals business is now contributing even more significantly to the overall performance of the company. Moving to my viewpoint on the future of each of our three market-leading businesses now. I'll begin with the Chemicals business. During fiscal year 2023, the Chemicals business grew around 41% and registered revenue of more than INR 7,400 crores, which is higher than our earlier guidance. Looking ahead, I'm fairly confident that we can continue to achieve a 20%+ growth in financial year 2024 as well. The return on capital employed for financial year 2022 and financial year 2023 were 25% and 32% respectively, which have been extremely healthy. Going forward, we believe that to keep growing this business at 20% top-line growth, the ROC levels may moderate a little bit from this level. We're seeing a strong traction from our customers, and our focus will be on expanding our product portfolio with new plants being scaled up at an even faster pace than before. As we speak, we have over INR 2,000 crores in capital work in progress at this stage, with seven plants coming up in the specialty Chemicals business and three plants in the F luorochemicals business in financial year 2024. We believe our CapEx intensity will remain strong going forward as well. More specifically, in the specialty Chemicals business, we will continue to capitalize on the growing demand for key products. We're expecting innovators to bring more complex and downstream products to the business, and we are currently working on a significant number of projects that provide future growth visibility. To address some of the future product requirements and to keep pace with the market opportunities, we have invested substantially in people, assets and capability building, and I expect approximately seven to eight active intermediates projects to fructify in the next couple of years. Our focus on the pharma vertical is to ramp up sales from our new intermediates plant in the near term. Subsequently, we would like to move into a contract development and manufacturing organization role in this segment. This could be through organic or inorganic means in the future. Coming to our F luorochemicals business. In the refrigerant gas segment, our focus will be on the domestic business in the first quarter and on the U.S. market in the next couple of quarters. The cool summer in India hasn't been good for us, but we expect this to be a temporary setback. We are also looking at building our exports into the Middle East from Q2. We may have a weak quarter in our refrigerant gas business in Q1, but are confident of making up lost ground later in the year. On the projects front, our PTFE plant got delayed as the commissioning engineers could not travel due to COVID-linked restrictions from China. With in-house talent and expertise, we are now going ahead with the commissioning ourselves and samples are being produced for the market. We see this actually as a positive step as it will only aid in talent development and experience building for all our future expansions in fluoropolymers. Our strategy on the next generation HFO gas has shaped up well, and we will share more on the project as soon as groundwork is complete. We expect to have globally competitive non-infringing processes in our portfolio by the time these plants come up. We've also started work on our next range of industrial chemicals. This will open up a new area of growth for us beyond the chloromethanes chain and could be linked to opportunities arising out of import substitution. On the infra side, we are in the process of signing an MoU for a parcel of land in close proximity to our existing site at Dahej, which will create huge synergies for us. Overall, I remain bullish on the Chemicals business and strongly believe that this is India's decade. While minor blips may hit the market, the sectoral story is very strong, especially at SRF, where we have built robust capabilities. Having said that, the global economic scenario is showing recessionary trends. We need to be careful of any unexpected bumps that can cause short-term demand blips. Over to the Packaging Films business now. The business continues to face strong headwinds, with margins plummeting to all-time lows in the fourth quarter of financial year 2023. As stated earlier, this has been on account of several new lines getting operationalized in both BOPET and BOPP film segments in India and overseas. While SRF has been able to run its plants at reasonable levels, a lot of capacity has already seen closures happening due to cash losses. As an industry leader and one of the bigger players in the packaging space, our forecast is for things to improve from here on, as many players are dealing under tremendous pressure. Our operations in Hungary suffered heavily last year due to exponential increases in energy costs. We have since seen some moderation in the energy index and are confident of a better performance this year. We have also debottlenecked the capacity in South Africa by 15%, which will give us some added benefits in the year ahead. For SRF, our strong relationships with our customers, which stems from our easy to do business with mantra and a focused concentration on VAP sales, has come to our rescue. The aluminium foil project is likely to start towards the end of Q2 in financial year 2024. We have increased our capabilities to manufacture thinner gauge foils as well as improved quality parameters, which has led to some increase in project costs. The IRR of the project remains healthy. With the aluminium foil project coming on stream, it will make SRF one of a handful of companies globally that provides three of the major substrates: BOPET, BOPP and aluminium foil. We believe that the ability to cross-sell all three will be unique to SRF. As demand pivots towards global suppliers with multi-location facilities and with our focus on operational efficiencies, cost reduction initiatives to mitigate volatility and our strong customer relationships, we remain cautiously optimistic about the prospects of this business. Moving to our Technical Textiles business, trends are showing a slight improvement in demand for Nylon Tyre Cord Fabric. This is based on our interactions with our customers, and we hope it is sustainable. Our focus will be on ramping up capacity utilization this year. In the future, we will build on the non-tire market in order to de-risk Technical T extiles business from NTCF. We expect the demand for belting f abrics to grow in the near future due to an increased government focus on infrastructural development. Sales of high-end VAPs and commercializing solid woven products will be our focus in the b elting f abric segment. The polyester i ndustrial y arn demand is expected to go up, with key drivers being geotextile and seat belts. Overall, this business will experience moderate growth. Core to our purpose is a need to uplift everyone, and we lay equal importance on community engagement initiatives and constantly strive to give back to society. With a focus on educational transformation in rural India, the SRF Foundation is working on the physical infrastructure growth, quality of academics, and school leadership development as focus areas. Presently, we have reached 382 government schools across 23 locations in 12 states, directly and indirectly by collaborating with like-minded partners. Providing quality education to over 150,000 students and training more than 2,500 teachers and headmasters. In conclusion, I believe that our Chemicals business will continue to do well and become a bigger part of the pie. In that sense, we are becoming more of a chemical company. Our Packaging Films business is expected to have a tough year, but we will find countermeasures as we go along. This is part and parcel of business cycles. Depreciation interest will both grow substantially because of the high capitalization of projects as a result of the elevated interest cycle that exists today. This is a reality that we will have to accept. If interest rates start falling towards the end of financial year 2024, we can expect to see the benefits of this next year. With a strong balance sheet, we will continue to invest aggressively in our Chemicals business and work towards capitalizing the many attractive growth opportunities we see in this business. Overall, we are optimistic about the future growth opportunities and of our capabilities to deliver a solid performance and drive returns for our shareholders. Thank you. Should we begin the Q&A session? Okay. 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 touch-t one 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. Our first question is from the line of Mr. Sanjesh Jain from ICICI Securities. Please go ahead. Thank you. Good afternoon, everyone, thanks for taking my question. I've got few of them, but I will restrict it for three. First one, the F luoro and S pecialty. It has been another phenomenal year, five years in a row, great show. What we are hearing in the market is, slightly a mixed trend. Innovators have maintained their positive outlook, while generic have seen a sharp dip in realization over 30%-40% in few products. We are also hearing some inventory build-up in America market as well. Can you share how is your discussion with the customers are progressing, particularly for a PO in 2023? I know you have given a 20% guidance that clearly states that we are looking a very healthy rate. Some more insight like whether you are looking at a same product growth or it is more driven by the new product addition that will be appreciated. Thank you. Thank you, Sanjesh, for the question. Again, we've discussed this internally. What you are saying may be right to a certain extent in terms of generic products that are coming from China being priced lower today, to a certain extent linked to the fact that there were COVID restrictions in China. Majority of our business, and we've discussed about this internally, is largely 80%-85% of the business is innovative. From a customer perspective, from a new product perspective, from the positioning with respect to all of the majority of our customers, we are not seeing any, let's say, demand reduction or demand burn that is starting to occur. In fact, like, our managing director pointed out, we are in fact looking at a position where we are capitalizing on new opportunities on the active ingredient sides that are coming in. Like he said, seven to eight AIs are the ones that we are looking at, which should get positioned over the next two years. That's how we are looking at it. Again, not seeing any negatives on that side because we are more linked to the innovators rather than being linked to, let's say generics. Hope that answers it, Sanjesh? Fair enough. Fair enough. This 20% guidance is for the Specialty Chemicals, right? Not for the Chemicals business entirely. Generally speaking, we give the guidance for the overall business is what MD had said. Yeah, when we look at it from an overall basis, 20% + is what we are expecting for Specialty as well. Got it. Fair enough. Second on the refrigerant gas, again, a very strong performance. Prices continue to remain firm and strong. Going into 2024, there is a 30% consumption cut, notified in the U.S., and India is adding another 30,000 metric ton in R22 including 15,000 by us. How should we see the realization and probably geographical mix may change in FY 2024 out of out of U.S. to more Middle East and other market, which MD sir has highlighted in his opening remark as well. How should one see this realization on the blended basis for SRF? Sanjesh, you are right that the U.S. will have a 30% cut in starting January 1, 2024.. Two or three things to understand here. The first thing is it's not just a consumption cut, it's a production cut also. Based on our calculations, we believe that the U.S. will remain a net importer of HFCs. It could be a change in mix, it could be a change in the positioning of HFCs. That could happen. Net-net, the U.S. still remains a net importer of HFCs, and therefore, that's a positive for us. When you look at it from a overall perspective in terms of the 30,000 ton, in terms of the 15,000 ton new plant of R-32 that is coming up for SRF, the way we've ramped it up is probably over the next 12 months to get to about 70% utilization and in the second year, probably get to about 100% utilization. We believe that there are markets for this available in the Middle East, which are already home markets for us, where we have a position that we can create. That's something that we are looking to do, Sanjesh. We are fairly confident of the fact that we should be able to ramp up our production of the new R-32 pretty soon with, let's say, in 12 months time post its initial commissioning, 12-18 months. Got it. Rahul, sir, just a small clarification. I thought that we have to sell that entire capacity in FY 2024 to get eligible for the quota for the baseline calculation. Is it? The baseline calculation from an India perspective are not production based. They are total consumption based. Within those consumption, what you are selling into the Indian market. Okay. That will not pressurize to sell this 100%- Again, Sanjesh, you have to understand, this is not just from a gas by gas perspective. It is a total GWP positioning there as well. Oh, yeah. Yeah. Yeah. Fair. Fair. Fair. Got that point. Last is on the fluoropolymer. There's a slight delay in PTFE, but if we look at Europe is slightly going stringent as far as the fluoro piece itself is concerned on the polymer side. Are we worried or do you think none of those regulations will have any negative impact on the fluoropolymer business which we are trying to build? How should we see this fluoropolymer business for us from an FY 2024 perspective? Will it be more of a qualification and stabilization period, and 2025 is the real right period for us to assess the performance? The first question, let me answer first in terms of listing of Europe. Now, fluoropolymers for various applications, be it from a solar application, battery application, or for that matter, other applications which are more generic in nature or industrial application, is still a need. While Europe has started to talk about the regulation around it in terms of certain types of surfactant-free positioning that they have to create, it is something that is still in the pipeline. It has not come through. The need for fluoropolymers doesn't go away. Our sense is that the market is large enough, the market is growing. We have a positive position in terms of the fluoropolymers that we have. We will start PTFE soon, and the three others that we have announced is a two-year project. We are fairly confident of our technology being PFOA-free. That's also something that's a positive for us. Hopefully, in the future, we can ramp that up at a significant pace. Thank you, Rahul Sir. Thank you very much for answering all the questions and best of luck for the coming quarter. Thank you, Sanjesh. Thank you. Our next question is from the line of Amar Maurya from AlfAccurate Advisors Private Limited. Please go ahead. Sir, thanks a lot for the opportunity. First question is on the Specialty Chemicals. I mean, you know, you said that 20% guidance is for the whole Chemicals business as well, right? That is what you're saying, or 20% guidance is for Specialty Chemicals? Don't drill into it too much, Amar. 20% for Specialty as well. 20%+ is what he said, and for 20%+ is what we are maintaining. You also know our track record, Amar, so be positive about it. No, that is what I'm asking, sir. Last time you guided 20% and you delivered 29% growth. Now this time you're talking about 20%+. Basically, going by the track record, like, you know, it should be like more than 30% growth this year as a whole. Okay, Amar, the way we look at it, when we look at giving you our positioning in terms of growth, what we essentially evaluate is what are the kind of positions that we are taking on certain products. What are the kind of opportunities that we are seeing? What are the market scaling that we have done? Let's say to a certain extent, what kind of orders do we already have on hand? Based on that, we calibrate that number and effectively give you a number. As time passes, as our quarters go by, we also get a better sense in terms of what is happening in the markets, which also then gives us the confidence to be able to tell you whether it will be higher or lower, right? That's how we calibrate it. My sense is, again, it's better to be able to give you a smaller number and then outperform rather than the other way around. I suppose you will agree with it. Secondly, sir, these new projects like, you know, seven these pharma products and three plants are likely to commission in second half of 2024 or in the first half of 2024? Which ones are you talking about, Amar? These new projects in Specialty Chemicals, something around INR 1,000 crore CapEx likely to commission in Specialty C hemicals. Let's say that will happen more in the second half of FY 2024 or in the first half of FY 2024? Some products that were announced earlier will get capitalized during Q2 and to a certain extent Q1 as well. Some products will get capitalized. Let's say majority, let's say 60%-70% will get capitalized in H2 only. Okay. Lastly, sir, in terms of the, like, Specialty C hemicals, overall Chemicals business profitability? Sorry, it was not clear, Amar. Could you repeat the question, please? I'm saying for the overall profitability of the Chemicals business, like this year, the profitability was largely driven by the refrigerant gas. Now we are talking about in Q1, refrigerant gas is going to be little weak. Are we confident on a full year basis we'll be able to maintain profitability for the overall C hemicals business related to the FY 2023? Okay. Amar, when you look at numbers, pure numbers, again, Q4 was a phenomenal quarter for the Chemicals business as a whole. Right. As we go ahead in time, we will see to a certain extent some moderation happening. Again, with a 20% growth, with ROCE at certain levels that we are seeing, minor moderation is okay. It is still at very healthy levels that we've got to. We are fairly confident of the new product positioning that we have created, both in the specialty c hemicals space as well as in the fluorochemicals space. Those should aid to volume growth and revenue growth. Hopefully, margin accretive as well. Okay. PTFE will come in third quarter? No, no. PTFE should commission by end of May, mid of June. Subsequently, there will be product that will come out. We'll have to go for approvals. Once that comes in, hopefully, Q3 and Q4 will start to see some revenue positives. This full year basis, at least you will reach some 30%-40% utilization in PTFE? If we get to 50% of available capacity in H2, we should be happy about it. Okay. Perfect, sir. Thank you. Best of luck for the future. Thank you. Thank you. Our next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead. Yeah. Thanks for the opportunity and congrats on, again, very strong set of numbers on the Chemicals business. First question is on the PFB segment. In the earlier remarks and presentation, we have mentioned that margins are pressure to continue in medium term. Will it be for the next couple of quarters or for FY24? Will that be also accompanied by any volume impact too? Thank you. Okay. Rohit, to be very frank about it's a generic statement. When we see new lines that have got added, when we've seen majority new capacities that have got added. If you've seen the presentation that was uploaded, we are also seeing significant stress in the market, where some of the capacities that have got added or lines might are starting to get delayed. There are positions that are getting created. Whether it will be over the next 2 quarters or 3 quarters, I really can't tell you. Over the medium term, maybe this year we should see some positives coming out of a very bad Q4. We should start to see some positives in this financial year, is what we believe will happen. Right. Will there be any volume impact? Okay. The overall realization, overall capacity utilization for SRF has been in the range of about 92%-95%. Right? We don't believe there will be a volume impact. There may be some minor volume impact that can come through. In fact, I would say with Hungary starting to perform better, our volume should actually be slightly higher only. Also to allude to the fact that our South Africa plant has got debottlenecked, probably after with a decrease of 10%-15% in terms of the overall capacity available. We should see a volume positive in terms of those. Sure. This is helpful. Second question is, in terms of volume growth for FY 2023 and for Q4, can you spell out generally across the segments what has been the volume growth? Okay. Very difficult to do in that sense, but let me just give you an overall guidance around it. From a F luorochemicals business perspective, certain volume growth would have happened given the fact that we've commissioned our chloromethanes plant, higher volumes from the chloromethanes plant. Have had higher volumes in HFC, so that's a positive. There would be certainly volume increase that is happening. On the Specialty Chemicals business, no doubt, new plants have got commissioned. New products have got, let's say, instituted in the market and that's why we believe there... I'm sure there is volume growth on that side. I can't give you exact numbers in terms of what's the% volume growth. Packaging film also, there we had a line that got commissioned over, I think in July or August of 2022. There is certainly volume increase on that side. Hungary would have been a negative volume compared to FY 2022. That's the overall sense of this. Technical Textiles, again, we have said that the demand has been weak and therefore we've kind of seen lower volumes on Technical Textiles, which should go improve going forward. Sure. Thanks a lot and best of luck, sir. Thank you. Thank you. Our next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead. Yes, sir. Can you discuss, talking about the agro globally, the higher inventory of agrochemical. Is there any impact in our business and you have assumed a 20% + growth of whatever the scenario currently in agrochemical industry? Again, I think somebody, Sanjesh had asked the question with respect to the generic play and the inventory positioning. I think the answer to that is similar, Sumant. We are not seeing any negative impact in terms of our overall volume. We believe a position with respect to AIs that is being created is a positive. We believe that the capital expenditure, seven plants that are currently under the works will be a positive going forward. That's how we would look at it, Sumant. Again, the inventory creation is probably more generic in nature, which is not the innovator side and therefore a positive for us. For the Chemicals margin, we have seen EBIT margin in FY 2023 is around 31.6%. Do you think what you are saying is a minor correction? Can we assume couple of percentage decline in margin or more? Again, again, Sumant, when I'm talking about some, let's say, moderation happening, I am probably talking more from a Q4 perspective rather than an annualized perspective. Okay. Okay. The last question is the CapEx side- Just let me complete, Sumant. On an overall basis, we are fairly confident that the margin profile should remain positive for us. Okay. We can assume 2024 will have a margin expansion YoY annually? Okay. Sumant, I'll leave that judgment best to yours. Okay. Sorry. Sumant, I'll leave that judgment to you whether what you want to consider as margins. I can only give you some guidance around it. Okay. What is the CapEx for FY 2024- 2025? As of now, we have roughly about INR 1,200 crores-INR 1,300 crores of overall projects that are on the ground for cash to be spent in FY 2024. Our sense is that on overall basis, we will get to about INR 2,500 crores in terms of cash spent on CapEx. Okay. Thank you so much. Thank you. Our next question is from the line of Vivek Ramakrishnan from DSP Mutual Fund. Please go ahead. Hi. As I was, my question was on going to be on CapEx only. Let me just turn it around. Given the fact that, you know, there are certain pockets where we are cautiously optimistic, would you look at pairing CapEx and you indeed managed the debt levels extremely well through the long and large CapEx cycle. What are the peak level of indebted debt that you see in the company going forward in the next one year? Again, when we look at this, Vivek, the position is that we don't look at, while we do look at the overall number on the debt, we are not looking at pairing the growth opportunities that we are seeing. If there is a growth opportunity that is significant, we will certainly invest. Given the fact that our overall net debt to EBITDA on the balance sheet side is still at 0.89 or so, right? With the CapEx cycle that we are running, we will probably get to a slightly higher number, but not very significantly different from where we are. It will, to my mind, certainly remain in the range of less than one for sure. We are happy to invest. Again, it's best to invest to a certain extent when the opportunity is presenting itself. I don't see us pairing our CapEx growth for managing the balance sheet. I think the balance sheet is in fairly good shape. That I agree, sir. All the best and all the best, sir. Thank you. Thank you. Our next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead. Good afternoon, Rahul. Thanks a lot for taking my questions. Just a few data points I was kind of hoping to get. One is on the Fluoro and S pecialty business. Would it be possible to share the revenues for the full year FY 2023 or at least the growth rate YoY? I am sure you would have asked that question. On the overall basis, my overall Chemicals business turnovers was roughly about INR 7,400 crores, give or take INR 10 crores here or there. Specialty Chemicals did about INR 4,200 crores this year, INR 3,200 crores was Fluorochemicals business. Got it. Thank you. That's helpful. Also, you know, the CMD re-referred to this dip in ROC potentially from, you know, 32% levels currently. Just sort of trying to get a sense of whether we should expect that to be driven by lower margins or is it just like increased CapEx, you know, which will take its own time to sort of translate into revenues. Again, see, the fact is that these ROCs are in fairly good shape when we look at it from an overall perspective in FY 2023 and as well as in FY 2022. The fact is that even if there is an opportunity to drive out some other new products which are, if not ROC negative, but will take more time in adding to the ROC positive, we are happy to do it. Again, this is like in Hindi called 'dil maange more'... Ab 32% hai toh 25% bhi hona chahiye ya? We are happy with 28%- 29% also. That's how it is structured. We are happy with ROCs in excess of 25%- 27% for new projects that come in. That's, that's how we look at it, Abhijit. Got it. Got it. Helpful. Just one last thing from me. There was also a mention of, you know, plans to foray into the contract manufacturing or CDMO space in pharma. And there was a mention that it could be through organic or inorganic means as well. I mean, if you could, you know, just share some more detail around the thought process out there. The way we are thinking about it, Abhijit, is that the PIP plants are starting to expand. In fact, to a certain extent, we believe, while if we want to populate the PIP plant completely, we can do that today itself. We are looking at, more complex products that add more value, products that are, margin accretive. Over a period of time, in order to be a large player in pharma, we will also have to look at, a contract development manufacturing system or setup to be created. Whether it gets created organically over a period of time, adding capabilities, adding assets, investing in people or through an acquisition, we are happy to look at both, is what he alluded to. Perfect, sir. Also just the South Africa addition, does it add 10%-1 5% to overall PFB volumes or is it basically- No, no, no, Abhijit, it adds to South Africa volume. 10%-15% debottlenecking to South Africa? Got it. Yes. Thank you so much. 3,500 tons a month? Yes, sir. Total monthly capacity goes to 3,500 tons. Got it. Thanks a lot. All the best, sir. Sorry, at 3,500 tons annually. Yes, understood. Thank you. Thank you. Our next question is from the line of Rohan Gupta from Nuvama. Please go ahead. Hi, sir. Good evening and thanks for the opportunity. Rohan, there's background noise. Could you come close to your phone? Sure, sir. Sir, I hope it is better, sir. Slightly. Sir, I was saying that on our PTFE plant which is going on stream in the second half you mentioned, how soon we can expect the PTFE value chain product portfolio to improve? I understand that initially we are definitely going to start on the commodity grade with a lower margin. How you see that the ramp-up in the product value chain we can achieve? Again, Rohan, I think, the way we look at it is to be able to ramp the plant up fully, initially. As the confidence with respect to the product comes through, as we get more approval coming through, we will move into more specialty grades. It's not an overnight position to be created. My sense is, as we take the PTFE journey, we will probably have to take 12 months to be able to start getting into more, let's say, specialty grades. First, we will ramp it up to 100% from 75%. Next year will be the focus. No, no. Don't look at it from a sequential perspective. Look at it from a perspective that let's say when we are getting to 50%- 60%, and if the customer demands more specialty grades, we are happy to work on it and be able to deliver that. It has to ramp up to a certain extent, existing product has to get approvals before we, let's say, ramp up very significantly on the specialty side. Okay. Sir, if I just read between the lines then, you are saying that still in FY, I mean, current year, we will definitely strive for growth. However, the headwinds are in packaging film where the scenario is still weak over next couple of quarters, and we are also guiding about pressure in the refrigerant gas pricing scenario. Only growth driver will be probably for the current year is Specialty Chemicals business, where we are confident about 25% growth, 20%+ growth. And on an absolute level, the confidence which you are bringing us is still a growth momentum to be maintained. It's just I'm not able to do the math that, how the profitability impact which will be there in two segments, large two segments in Packaging and refrigerant gas will be there. How we will be able to compensate from the other business, mainly Specialty, because we don't expect anything going to change materially in Technical Textiles? Rohan, to be very frank, I'm lost with the question. What is it that you're trying to ask? Sir, I'm saying that in your all your conversation, you're still guiding about that at the bottom line, at a EBITDA level, we are still looking growth on a absolute number compared to last year, I mean, FY 2023. Let me clarify. When we said 20% +, we were talking about Chemicals business. Okay? Packaging Films will hopefully grow from this level given South Africa addition and to a certain extent, Hungary coming back in terms of overall volume, which is what I had said earlier on the call as well. On the Technical Textiles business, I think we had alluded to it saying that we are seeing a positive trend in terms of demand from customers. Hopefully, that should pan out as well. That's how we are looking at it. When we said 20%, it was more reference to the Chemicals business rather than company as a whole. I hope that clarifies. Yes, sir, I understand, 20% also we're talking about on a revenue front, right? I'm looking more at the bottom line or at EBITDA level performance for the current year. There seems to be two big headwinds which we are going to face in the current year, which looks difficult to be get compensated from the Specialty C hemicals business improvement. I just needed some clarity, though we it's good to have ambitious target, aren't we looking a slightly moderation or a degrowth kind of scenario in FY 2024 with these two segment headwinds? That's what I just needed some clarity on that. Rohan, again, we've said that there may be some headwinds in Q1 for the Fluorochemicals business, given that there might be, it's not seemingly a very hot summer that we are seeing. It is also to be pointed out that we've also said that we believe it is temporary, and we will ramp, let's say in the course of Q2 and Q3, we will ramp up our Middle Eastern sales. We will ramp up our America, U.S. sales. All of that is a positive. I don't believe that there are very significant headwinds either in terms of price. From a full year basis, the reference when we made to Fluorochemicals price was more from the fact what we are seeing in terms of the weather panning out in Q1. Okay. It is more in Q1 rather than full year. Okay, now it's clear. Okay. Thank you, sir. Thank you so much. Thank you. Our 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 just had one question. When you said, we want to enter the pharma CDMO space and could look at an M&A, just wanted to understand what exactly, what kind of capabilities or what is it that you're looking at in the target when we're evaluating various opportunities? Is it like we're looking for a cGMP plant or is it some certain other capabilities? Just wanted to understand it further. To be very frank, Madhav, the way we are looking at is that we already have a cGMP plant. We already have a new PIP plant that has recently been commissioned. When we are looking at adding capabilities, obviously in due course of time, if there is a specific AI which is a large requirement, we will have to put up that plant. Like I said, we are happy to put up that investment to be able to capture that growth. Now, it could be a specific AI plant. It could also be to a certain situation where there are three products that are, that I'm manufacturing, which are going into a single AI. I might be just doing a forward integration of that as well. There are various permutations and combinations around it. Could this M&A also be for certain, like R&D capability or certain like chemistry capability of the target, as we look at pharma CDMO, or is it just more for the plant specific? No, no. It could be both ways. It could be capacity. It could also be to a certain extent R&D. It could also be providing a front. It could also be entry positioning into Europe. It could be multiple, let's say opportunities, and it will depend on the opportunity that it presents. Understood. Understood. Okay, thank you so much. Thank you. Our next question is from the line of Arjun Khanna from Kotak Mahindra Asset Management. Please go ahead. Thank you for the opportunity and congratulations on a good set of numbers. Just on this M&A activity, if you could just specify in sense, maybe more generic, are we looking at assets in India, outside India? Do we have a ballpark in terms of capital to be deployed for the same? Arjun, let me say it this way. We said it is, it could be both organic and inorganic. We've not laid out any specific capital for us to be able to go out looking. We will keep our eyes and ears open if there is an opportunity that presents itself. Again, it like I said, in answering to the previous question, it could be both on the capability side or the asset side. It's a bit too premature to be able to give you the details around it. I don't have details. We are saying that once, let's say, the pharma piece starts to ramp up, which we are already seeing, we will probably have to become a larger player in the segment through a CDMO. That's what we are thinking about. In a sense, just in, following through the thought process, are we looking at facilities in India or outside India? I am happy to do it both, Arjun. If you give me the opportunity to buy, send me a target and I will look at it. Be it in India or in Honolulu. Sure. The second question was on the refrigerant gas business. You've been highlighting the Dymel, the pharma propellant, doing well. When we purchased it, I understand, capacity was maybe 1,100 tons. Have we increased or expanded capacities there? If my, please correct me, this would not be impacted by the emissions cut that countries may have and this, given it's in the pharma grade could continue as long as there's demand? Let me answer the second question first. You're absolutely right. Pharma grade HFC-134a /P does not get impacted by it. That's kept separate because there is no known product that can be used in MDIs. That's the answer to the second question. In terms of the overall positioning on this, when can I look at it? The plant that we had set up was roughly about 2,000-2,200 tons. We can do 2,500 tons of Dymel. As of now, our total positioning around this is probably in the range of, say, about 1,100 tons. Sorry, about 1,400 tons that we are doing. The plant has enough ability to do more. Whenever there is more demand on it, we have the ability to debottleneck it to a certain extent. Sure. Very helpful. Just on a follow-up, in terms of pricing, so we see a lot of variance. Would this pricing be at a premium to standard refrigerant-grade HFC-134a? Could you just give us a sense at how much could that premium be? Thank you. In total, I think it is at a decent premium. The pricing premium on HFC-134a in this has ranged between $4 to $8-$10, depending upon market size and market environment. Sure. That's a premium over the HFC - 134a? Yeah. It will also depend on what pricing HFC-134a is selling at. Perfect. Sure. Thank you very much. Thank you. Our next question is from the line of Dhruv Muchhal from HDFC Mutual Fund. Please go ahead. Yeah. Thank you so much. You mentioned about seven to eight molecules or AIs you are looking. If you can give some more details. Are these agro? Are these pharma? What is probably the opportunity size, the overall opportunity size? What are you trying to capture? Are these contracted with your customers or, I mean, what kind of launches are these? We are talking about active intermediates. Clearly these are not pharma, these are agro. Okay. Okay. I will have to come back to you in terms of what is the total market size or the market opportunity on the overall agro. Overall, let's say AIs that we are talking about, I will have to do a market assessment of that and speak to business. We will come back to you on that. Sure. Sir, are these, I mean, contracted with your customers? These are generics, these are patented molecules. If you can give some more color there, please. They are largely patented products. We are talking to innovators only. The other question was, you said patented product, but contracted, no. These are in the process of getting contracted. Okay, got it. Do we have decent visibility that they will be commercialized over the next two years? Very good visibility? Very good visibility, yes. Sure, sir. The second question is, we have seen a good improvement in the Chemicals segment margins on a QoQ basis, which are already very, at a very healthy level. If you can give some more color, what's driving this, what's, you know, leading to this, and probably you also mentioned the assemble part is sustainable, some color, please. Again, I think to a certain extent, Specialty Chemicals has added a positive. Everyone has been saying that there has been a positive that has been added by the Fluorochemicals HFC sales. That's another positive. Those are the two key elements of the business, and that's where the positive is coming through. The delta and... Both margins during the financial year, both Specialty Chemicals as well as Fluorochemicals have expanded. Okay. Particularly in Q4, it's in the both the segments, both refrigerant gases and the specialty. QoQ also margins have probably expanded, but I'll have to just look at my numbers and come back to you. Okay, sir. Sure. Yes, sir, that's all. Thank you so much and all the best. Thanks. Thank you. Our next question is from the line of Vivek Rajamani from Morgan Stanley. Please go ahead. Hi, sir. Congratulations on a good set of numbers. A couple of questions from my end. You'd mentioned earlier that the utilization rate is at about 92%-95%. I'm just wondering if you could... No, I didn't catch it. Could you repeat, Vivek, please? Sure, sir. You'd mentioned earlier that your utilization rate was roughly in the range of 90%-95%, if I'm not mistaken. Could I just trouble you to give a sense of? That refers specifically to what I was talking about, Vivek. Sure, sure. Packaging Films. Could I just trouble you for the utilization rates in the other segments as well? Very difficult to be able to do that, Vivek, given Specialty Chemicals there is, it's practically impossible to give you utilization rate given the fact that we operate out of four multi-purpose plants, about 12- 13 dedicated plants. Let me also say it like this, dedicated plants are almost pretty much full. MPPs will always have spare capacity availability. Be it there are certain new products that we have commissioned over the last 12 months or so those will be in a ramp-up phase. From Fluorochemicals perspective, again, I think, let's say the HFCs have ranged between 75%-85%, and to 95% as overall capacity utilization. For chloromethanes, again, we had set up the plant probably in October of last year. That's in also to a certain extent in the phase of ramp-up. Other continued plants or the older plants are practically full in terms of utilization. On Technical T extiles, utilizations have been low, say about 75%-76% overall. Got it, sir. Really helpful. Just one clarification. Could I just check, what's the utilization rate at Hungary right now? Because you said it's gonna improve in FY 2024. Hungary it was about 65%. For the whole year, it was roughly about 69%- 70%. 69% as such. Okay. The exit was 65%. Okay, sir. Thank you so much. Just the last question from my end. On the Packaging Films side, just wanted to check if there was any one-off items in this quarter? No, there were no one-offs. This is just being the way business is. Even no inventory impact or stuff like that? It's just- Standard. Nothing big one to report separately, Vivek. Sure, sir. Thank you so much, and all the very best. Thank you. Thank you. Our next question is from the line of Surya Narayan Patra from PhillipCapital India Private Limited. Please go ahead. Yeah. Thank you for this opportunity, sir. First question is on the Specialty Chemicals business, right. You have launched six new products this year. Against that, we are talking about seven to eight new product launches over next two year. How should we see this, because you have already done that six products launch. This six of the current year is not the AIs. Okay. The way we are looking at it, these are six or seven or eight additional AIs that we are talking about. Our normal agro product launches, the pipeline is still pretty robust and those launches will happen. Okay. Okay. sir. We're kind of saying that there is a graduation positioning that is happening for us to start to getting into AIs. Okay. Which is probably more, let's say how should I say this? Cake in that sense. Okay. Sir, is it possible to get a sense, this what could be the share of AIs in the overall Specialty Chemicals, revenue-wise? In today's position, the only large AI that we do is R-32. I'll come back to you in terms of the overall, say about 12%-15% as the overall contribution within the specialty chemicals space. Okay. Okay. Sir, one interesting trend that in terms of margins. For the Chemical s business as a whole, if I see, in last three years, the margin has trended quite significantly upward. Say, let's say, in FY 2020-2021, the average EBIT margin was to a kind of 19%-20%, which has moved to 25% in 2022. In FY 2023, it is 31%. See, almost like a clear 5% kind of jump that we have witnessed. With the kind of improving product mix in the specialty and the qualitative price, I mean, volume as well as the price up move that in both the refrigerant gas as well as the specialty and the improving product mix in within specialty, considering this, what is the kind of sustainable margin trend that one should really think about, sir? Surya, if it would have been just a mathematical Excel sheet, we would all have been able to create it. Business is dynamic, right? It will- Yes. It will always have some volatility around. We do know that there are recessionary trends that are playing out, right? Again, I would say we are fairly confident of the margins that we've been able to deliver. There may be some, let's say, tempering of the margins when you look at purely the Q4 margin of the business to come through. Overall, again, like I said before, if we are happy to grow the business at 20% +, margins even if they temper a bit, it's okay. Okay. Okay. Just an extension to the Chemicals business. See, here when you said that you are looking at the CDMO opportunity, what is the thought process here, sir? See, are we restricting ourselves to the early intermediate so that there is no regulatory asset that would be required, or even we are thinking about regulatory asset addition also? No, no, you are confusing. CDMO is more on the on the pharma side. Yes. are we moving up to the API level so that the regulatory asset will be required, sir? Again, if there is a need to get a regulatory approval for any of the products which we start to manufacture, we'll get that ability as well, Surya. Why not? Okay. Okay. Okay. sir, so just two more questions. Let's get back to it tomorrow. Yeah. Okay. Sir, just two simple clarifications. One is that what is the average finance cost for the current year? One. Secondly, you had talked about the HFO gas opportunity after a long gap. How quickly that we can see that as in real revenue opportunity for us, sir? Again, when CMD talked about it, he was more referring to the fact that the opportunity that is presenting itself is something that we are working on. We will look to enhance that opportunity. We are working in our overall, let's say, positioning from a company-wide perspective, looking at non-infringing processes that will come in. That's what we are looking at. We are fairly confident that we will be able to ramp that up. Groundwork is already being done on around it. That's how we are looking at it, Surya. In terms of overall average cost, again, I think the way we need to look at it is that we've seen effective, let's say, benchmark rates, both globally and locally, move up more in H2 rather than in H1. On a closing rate basis, March 2023 annually was probably about 4.5%, 4.2% as the average cost on a consolidated basis, given various mix of products that we have. Sorry, it was probably in the range of... Sorry. 4.5% 4.5% for India. That's where it is. When we look at it from a futuristic perspective, we also see that there is now starting to talk about let's say revision in interest rates. The Fed starting to think about cutting of interest rates. Those stories will play out probably more during FY 2024. That's how it should work out. Thank you. Sorry to interrupt. Mr. Surya, may we request that you return to the question queue for follow-up questions, as there are several participants waiting for their turn. Thank you. Our next question is from the line of Dharmil Shah from Marcellus Investment Managers. Please go ahead. Hi, sir. Most of my questions have been answered. Just a follow-up question on the seven to eight AI projects that company is working on. Are these fluorine-based AIs or are these completely non-fluorine based? I didn't catch your question. Could you repeat, please? Yeah. The seven to eight AI projects that we are working on right now with the innovators, firstly, are these fluorine-based active ingredients or non-fluorine based? Again, I think what we've said, Dharmil, in the past also is that, our intent is to move up the value chain. Our intent is to move into complex products. Some of these products are actually, the AIs are actually products that integrate into some of the products that we are already doing. Right? That's how we are looking at moving up the value chain. Whether it is fluorine, non-fluorine, I don't think it matters as of now. Got it. Got it. These are the projects from our existing customers or these are new inquiries that company has got? Both in nature. Got it. Got it. Just lastly, on the similar lines, are these products seven to eight AI molecules, these are new for the innovators as well, or these are already developed products, but they are looking out for a manufacturing partner? I will have to check and come back to you. Got it. Thank you for taking my questions. Thank you. Our next question is from the line of Vishnu Kumar from Spark Capital. Please go ahead. Thanks for your time, sir. On the U.S. restriction that starts next year, when a similar event happened in the EU, we saw there was a really good spike in Europe imports, one year before the restriction started. What should we anticipate from our exports? Should we expect a spike in exports from refrigerant gas side, your part? See, again, Vishnu, we will have to look at it from a perspective where, what happens to the overall market, not just in FY 2024, but FY 2025, 2026, 2027 and onward. The 30% cut that comes in from January of 2024, will be a GWP equivalent cut that comes in for the next four years. Sorry, for the next five years that happened. Now, like I said earlier also, based on our calculations, we believe, that it is not just a consumption cut that is happening, it is also a production cut that is happening. U.S. is likely to remain a net importer only. Given that as a situation, the demand while the production is cut. The demand can't get cut immediately like that, right? The secondary market demand will remain, which will then lead to probably some price positive that should also come in. Also, what had happened during some of this is that there was the Chinese that were manufacturing significant amounts, and therefore setting that kind of dumping even at a very low price. Now, given that their quota regime requirement is completed by 2023, I think some of that sanity we should also return to the market. Sir, when you mean GWP, this R-134a and R-410, this has a higher GWP, and R-32 is probably something that, at least today from an export market. Yeah, R-32 is the lowest. R-32 is the lowest. R-134a can't take R-32, right? I mean, for replacement. R-134a is mobile application. Correct. Okay. R-134a is used in some blends which are used for, let's say, RAC applications. Got it. Also pricing sustainably in the last couple of years, the refrigerant gas pricing has been quite high. How long do you think this is going to sustain, and do you expect this once this post is cut next year also we believe that this? I can't comment on the price issue, but what I'm only saying is, generically, right? Demand is still rising. Regulatory environment is restricting the product. That is how the story plays out in all of these gases. That's how it should play out. I can't tell you how long the price will sustain. Market can be volatile. There could be certain market elements that play out. All of that can happen, Vishnu. Understood, sir. Finally, on Packaging Films business, at some point the demand should catch up on the excess supply. I mean, any internal assessment by next year, mid, or any expectation there? I'm not putting a date or a number to it, Vishnu. Again, there are new lines that are, that have been ordered. Some of them will get delayed, that's what we also mentioned over a period of time. There should be some. We are probably at the worst of the cycle. How long does it continue is very difficult to be able to say, but we are fairly confident and cautiously optimistic around it. Got it, sir. All the best. Thank you. Our next question is from the line of Krishan Parwani from JM Financial. Please go ahead. Yeah. Hi, Rahul. Thank you for the opportunity and congrats on the good set of numbers. Two questions from my side. When do you see this R-32 coming from a new plant? Would it be beginning of July 2023, or are you expecting any delays? Let's say the plant capitalization currently we believe should be July, June, July. Product and availability should be starting August, September. Okay. August, September. Okay, perfect. The other one is on, I understand that you don't give the profitability breakup of the Chemicals segments. However, kind of would it be possible to share the direction of the Fluoro and Specialty Chemicals profitability over, let's say, year-on-year and over last two to three years? Again, I can't give you percentages. What I can only tell you is that during FY 2023, what we've seen is margin expansion happen both on Specialty and in Fluoro. Okay. Over the last two to three years? I mean, direction, not the- Directionally also it's on an uptrend. Okay. Perfect. How do you see it going forward? The reason I'm asking going forward, because you are commercializing, let's say, many projects on the Specialty side. Would it be kind of, lower yields could result in lower margins for Fluoro and Specialty or not really? Vishnu, sorry, Krishan, like I said earlier, the way we are looking at it is that the 20% growth is probably what we are targeting, 20% + growth. If to a certain extent, there is some tapering on the margin front that happens, that's fine, given we are, let's say Q4 exit margins were. That's okay. Yeah. Okay. Got it. I was more checking from the year-on-year point of view. I mean, not Q4. Unfortunately, I can't give you any better color on this. Sorry. No, no. No worry. No worry. No worry. This is good enough. Thank you so much and all the best. Thank you. Due to time constraint, that was the last question of our question- and- answer session for today. I now hand the conference over to the management for closing comments. Thank you everyone for being on SRF's Q4 and FY 2023 call. I hope we have been able to answer all your questions. If you have any further questions, we would be happy to be of assistance. We hope to have your valuable support on a continued basis as we move ahead. On behalf of the management, I once again thank you for taking the time to join us on this call. Thank you. Thank you. On behalf of IIFL Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.