Ladies and gentlemen, good day, and welcome to the SRF Limited Q2 and H1 FY25 Results Conference Call, hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for 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. Ankur Periwal from Axis Capital Limited. Thank you, and over to you, sir. Thank you, Riddhi. Good afternoon, everyone, and thank you for joining us today. We at Axis Capital Limited are pleased to host SRF Limited's Q2 and H1 FY25 results conference call. We have with us today Mr. Rahul Jain, President and CFO of SRF Limited. I would now like to invite Ms. Nitika Dhawan, Head of Corporate Communication at SRF, to initiate the proceedings for the results call. Over to you, Nitika. Good afternoon, everyone, and thank you for joining us on SRF Limited's Quarter Two and H1 FY25 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 the 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, and good afternoon, everyone. I would like to extend a warm welcome to all of you, and thank you for joining us today for SRF's Q2 and H1 FY25 Earnings Conference Call. I trust that you have had the opportunity to go through our results and the presentation shared with you earlier. I will begin the call by briefly taking you through the key financial and operational highlights for the period under review, following which we will open the forum for a Q&A session. The company reported an expectedly weak quarter, primarily owing to the ongoing subdued environment in the chemicals business. The ongoing challenges have impacted our performance in chlorochemicals and specialty chemicals business during the quarter. However, we believe that the worst is now behind us, and we anticipate an improvement starting Q3, with a stronger finish expected in Q4. In Q2 FY25, our gross operating revenue stood at INR 3,424 crores, up 8% on a YoY basis, while EBIT came in at INR 417 crores, representing a 12% margin. Profit after tax was INR 201 crores. From an H1 perspective, our gross operating revenue stood at INR 6,888 crores, up by about 6%, and our profit after tax was INR 454 crores. Coming to our segmental performance, our chemicals business reported revenues of INR 1,358 crores, a decline of 5%. In our specialty chemical segment, the agrochemicals market continued to face a slowdown, impacting the business's overall performance. High inventory levels, due to subdued demand from agro customers, have led to rationalization and lower offtake. However, recent product launches have started gaining traction, and growth in new products provides strength to our overall output for the specialty chemicals business going forward. Our work on agrochemical intermediates is also proceeding as per plan, and the ongoing discussions with customers are positive and encouraging. During the first half of the year, we successfully launched three new agro products and three new pharma products. Innovators are increasingly partnering with us for more complex and downstream offerings, highlighting our R&D capabilities in delivering sophisticated solutions. Additionally, our sourcing efforts have yielded positive results, with the approval of various new raw materials and suppliers, further strengthening our supply chain and enhancing operational flexibility. Last year, we invested around INR 1,800 crores in commissioning several new plants. Our current focus is on ramping up production in FY25 and over FY26 as well, while also advancing environmental initiatives and automation to improve safety and efficiency of these facilities. Additionally, we will also prioritize debottlenecking and augmentation projects for key products to enhance production capacity. With an expectation of gradual recovery in demand during Q3, owing to a strong order book, we foresee a positive impact on performance in the second half of the year. In our chlorochemical business, refrigerant gases segment performed well in the domestic market, with an increase in overall volumes. We further increased our market share in both the room air conditioner, RAC, and the mobile air conditioner, MAC markets. However, margins in Q2 were under pressure due to lower export realization. We are optimistic about the second half, as we expect improving export volumes and realizations alongside the start of the domestic season. Additionally, pricing of certain key refrigerants are now witnessing stability and some uptrends, which should augur well for the future, while growing domestic demand further supporting the upward trend. Coming to the chloromethane segment, we are focusing on expanding our export portfolio for CMS as well. Pricing pressures due to current overcapacity situation still remain. Margins were lower than expected in the first half, however, we started to witness some improvement towards the end of Q2. Meanwhile, ETFE is witnessing healthy growth in the domestic market, with ongoing trials for free flow and fine cut grades progressing as planned. We are also preparing for commercial sales of fine cut products targeted at high-end application processors in export markets, which should start to witness some traction in Q4. Further, the board has approved a project to develop fourth-generation refrigerants, which are distinguished by their significantly lower global warming potential, GWP, and reduced carbon footprints. This CapEx, with an estimated investment of around INR 1,100 crore, is slated for completion in around thirty months. The project highlights SRF's leadership as one of the pioneering technology developers in global refrigerant space. As an Indian company, we take immense pride in this advanced and eco-friendly technology with a significantly lower carbon footprint and global warming potential developed in-house. Our robust in-house R&D capabilities, which have been integral to our success for over two decades, will enable us to leverage our proprietary processes and technologies to innovate and drive the development of these next-generation refrigerants under our own brand. The team is initially looking to target the global markets that are transitioning to these low GWP alternatives and post 2032, the Indian market as well. Turning to our packaging films business, we delivered a healthy revenue growth of 27% year-on-year in Q2 FY 2025, reaching INR 1,421 crore. EBIT margins improved slightly, supported by record production levels and sales of value-added products. Despite ongoing demand and supply imbalances, BOPET film margins in India showed slight improvement this quarter, contributing to enhanced results of packaging film business. In contrast, operations in Thailand continue to face challenges due to Chinese dumping. The BOPP film segment performed in line with our expectations. We have made significant progress in developing BOPP and BOPET VAPs, with seven new BOPET and eight new BOPP VAPs developed in the first half. Additionally, aluminum foil production has stabilized, supported by rising domestic volumes and sampling for exports. We expect ramp-up in H2 and the proposed imposition of antidumping duty on Chinese imports. Margins are expected to further enhance going forward. In terms of CapEx for this business, the board has approved the establishment of a new manufacturing facility for the BOPP/BOPE film line at Indore at our DTA-2 site. This project enables us to expand our existing BOPP substrates and VAP offerings, and explore the innovative olefin BOPP/ BOPE substrate. Furthermore, it aligns seamlessly with our sustainability goals as polyolefin substrates like BOPP and BOPE are recognized for their eco-friendliness, attributed to their mono-family advantage and recyclability. The estimated cost of this venture is around INR 435 crore, with operations expected to commence in approximately 25 months. In our technical textiles business, revenues continued to grow by 6% to INR 536 crore in the quarter, driven by steady contributions from nylon tire cord fabrics and polyester industrial yarn segments. However, margins for building fabrics were weak, resulting in moderate performance despite higher volumes. We maintained our focus on boosting higher margin VAP sales by strategically expanding into new geographies and commercializing eight new building fabric VAPs during the first half. Lastly, in our other segment, the coated fabrics business maintained its domestic market leadership in both volume and pricing. We achieved record domestic and VAP sales in the first half and expect stable performance going forward. Our goal is to enhance profitability by focusing on increased domestic volumes and expanding VAP in our new product offerings. In laminated fabrics, we sustained price leadership while operating at full capacity. Although the market remained oversupplied, putting pressures on margin, we successfully stabilized a new hot lamination machine. We expect demand pick-up in Q3, especially with the festive season, which should improve margins. Our finance costs have increased compared to previous year, leading to higher expenses in our P&L statement. However, with the global interest rate cycle starting to show some downward trends, we anticipate reduction in our borrowing costs in the near future. We remain committed to making strategic investments that align with our long-term growth objectives. Furthermore, I am glad to share that SRF has been honored with multiple prestigious awards at the sixth India Procurement Leadership Forum and Awards 2024, organized by the Institute of Supply Chain Management, ISCM. The company stood out in three categories: India Procurement Champion 2024, Best Approach to Managing Global Risk in Procurement, and Best End-to-End Alignment of Procurement with Supply Chain, reflecting our commitment to excellence in procurement practices. As we reflect on the second quarter and the first half of FY25, we are delighted to share with you the remarkable progress and impactful initiatives undertaken by SRF Social Wing, the SRF Foundation. Our commitment to fostering sustainable development and enhancing the quality of life in the communities we serve has been unwavering. From the inauguration of the digital bus in Bhopal, by Honorable Chief Minister of Madhya Pradesh, Dr. Mohan Yadav. Mohan Yadav to successful completion of basic electrician training program in Jhansi, MP. Our efforts continue to make a significant difference. Our projects in Kamrup, Assam, have also seen substantial progress with renovation of toilets, libraries, and boundary walls in five project schools, ensuring a better learning environment for the students. These initiatives, along with many others, have collectively benefited thousands of individuals across various locations, reinforcing our dedication to community development and empowerment. In conclusion, while some businesses have faced difficulties due to the global macro environment, we believe we have bottomed out, and we remain optimistic about our future performance. This optimism stems from our position as a globally recognized multi-business entity, which enables us to leverage technology and innovation across all our offerings to enhance performance. With our world-class infrastructure, qualified personnel, and exceptional R&D capabilities, we are well positioned to develop a pipeline of cutting-edge products across various segments. As the market situation improves, we are confident in our ability to deliver strong performance and create lasting value for all our stakeholders. On that note, I conclude my remarks, and we'll be glad to discuss any questions, comments, or suggestions that you may have. I would now like to ask the moderator to open the line for Q&A session. Thank you very much. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your 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. In order to ensure that the management is able to answer questions from all the participants in the conference, please limit your questions to two per participant. If you have a follow-up question, please rejoin the question queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nitesh Dhoot from Dolat Capital. Please go ahead. Yeah, hi, thanks for the opportunity. So my question is on the chemicals business, where in some key molecules there has been a sharp price erosion. We had earlier emphasized on improving cost structures and, you know, and volume growth to aid margins. With the recovery seen in the second half, along with, you know, the new molecules gaining traction, will we be able to make up for the margin erosion? Or, do you want to downward revise your EBIT margin outlook of 22-24%? Nitesh, thank you for that question. To be very frank about it, yes, to a certain extent, what we have seen is some of the key products or the legacy products that we have been doing well with, have had some impact of both price erosion as well as some volume positioning. Now, the volume positioning effectively stems from the inventory overhang that is continuing. I think, given where our order book for this is, we believe Q3 is going to be slightly better than what we have seen, while Q4 should probably take up much, much better volumes going forward as well. With respect to saying in, in terms of what, what's the guidance, I think given where the environment is, Nitesh, it is very difficult to be able to provide a good guidance around this. We are fairly hopeful of a much better performance in Q3 and a significantly better performance in Q4 as well. I would really leave it at that. As things change, there are some more positives that develop, we will come back to you. But giving guidance today is a bit tricky to my mind, and therefore, I would probably leave it at that. So that's how I would look at it. From a margin perspective, yes, you are right, that we have said that over a period of time, the margin should remain in the range of plus minus 2%-3% from our annual margin for FY24. I think we are still sticking to it, that is something that will continue to happen, and there should be some positive changes that we will start to see in, more towards Q4 FY 2025. So that's how it should pan out, Nitesh. Thank you, sir. My next question is on the CapEx. So, cash CapEx of around INR 600 crores has been done in H1, while the commercialization has been around INR 225 crores. You had given a CapEx range of INR 15-19 billion previously, and as I understand, that's the cash CapEx amount. So two parts to this question here. One is, you know, will we be within the range of the cash CapEx laid out? And second, how much shall we commercialize in FY 2025? So majority of these projects that are today running, I think, the total cash CapEx that we have had is about INR 650. Majority of these CapExes, I think the overall cash CapEx this year will probably range between INR 1,600 to INR 1,800 crores overall, is what we would probably end up with, including various other projects that are going on, so that's something that will happen. The only point to make is that, yes, the CapEx is slightly lower than what we had much initially expected. But that's fine, in our view, and therefore, we will continue to guide for the CapEx as things pan out. The new CapEx is on the fourth-gen gases and also the BOPP PE lines will probably are slightly more timed out. Those will probably be included in FY 2026-2027, most of the expenses in that sense. I hope that clarifies message. Yes, sir. Thank you so much, and all the best. Thank you. Thank you very much. The next question is from the line of Mohit Raghav from Centrum Broking. Please go ahead, sir. Yeah, thanks for the opportunity. So first question is on the refrigerant side. So we have, in our PPT, we have given a comment that in developed markets, especially U.S., we are experiencing declining HFC consumption. So, how will we be able to, you know, allocate those volumes to the developing markets? And if that particular market is declining, what is your perspective in terms of, pricing of the HFCs? Thank you. So again, Mohit, to be very frank about it, this is what was expected. As the cuts come through in the U.S. market, there will be lower volumes into the U.S. market. But you would have also seen the comments where we have said that the overall volumes in the domestic market have been high. I think that's a trend that will continue. There will be the HFC volumes that will probably be sold out into not just the Indian market, but the Middle East and let's say the Southeast Asian markets as well. I think that will continue to happen. I think that's something that we've said in the past as well, Mohit. From a pricing perspective, we are seeing some stability in pricing on key refrigerants. Hopefully, some of that trend can continue going forward as well, and some positive traction on that side. Right. Thanks. So second question again, dealing on the Specialty Chemicals front. Given that it is likely to be a gradual demand pickup in H2, when do we see the newer projects, you know, getting into optimal utilization? Will it be in FY twenty-six, or will it move to FY twenty-seven to counter impact the legacy molecules? Thank you. So when we say gradual demand pickup, I think we are fairly confident of the Q4 position, given where the order book is off, right? That is something that will pan out. As there are more sales that happen, we are sitting on a larger inventory position also as of now. I think that to that extent, some of those inventories will dilute out, start to dilute out in Q3 and go out towards Q4. From a new project perspective, I think within twelve months, there should be some more traction that we should start to see the capitalizations that have been done in FY 2025, and that's something that will pan out probably over the next, let's say, nine to twelve months, is what we believe. I think also to a certain extent, we are fairly happy about the fact that some of the new products that have started have already started to show some decent traction. So, in overall good shape, I would say, Mohit. Sure. Thanks a lot, and all the best. Thank you. Thank you very much. The next question is from the line of Sanjesh Jain, ICICI Securities. Please go ahead. Yeah, good afternoon, sir. Thanks for taking my questions. First, on the order book side, you said that Q4 order book now is showing a very healthy trend. So what kind of an order book are we looking at in terms of volume? I can understand realization being slightly tricky in this market. Purely from a volume perspective, does it show that Q4, we will again claim back that 20% kind of a YOY growth kind of a volume? Can you compare Q4 on Q4? Yes, Q4 on Q4. Again, like I said, Sanjesh, it is very difficult to be able to give you a number in terms of 20% or 25%. Right? What the way we would look at it and the way we would feel about it is that what we are seeing is large traction, much larger volumes. I would typically say you track the volume on specialty chemicals on a monthly basis. You know that volumes have still been decent. I think to a certain extent, pricing should also improve, and therefore the margin profile overall should also be higher, is what I would tend to think. In order to be able to tell you what kind of order book, very difficult again, Sanjesh. I can't tell you the exact volumes of product by product, because there are so many different products that we are doing today. It is a combination of about 35-40 products, so very difficult to be able to give you color on that, Sanjesh. No, no, that's fair. I was just looking at broader number now that you have planned for the production schedule and date. Does it appear that it could be the growth what we targeted earlier, at least Q4 exit trend will show that number? I mean, Sanjesh, I'm kind of... No, no, I'm not avoiding that question, to be very frank about it. Given the fact that whatever we have talked about, the environment has been much weaker than what we had initially anticipated. Right. So, I'm unable to give you a percentage number. It could be 20%, it could be 25%, it could be 15%. I really don't know, Sanjesh. What I can only tell you is that the traction is good, and overall Q4, we should be in much better shape than what we were in Q2. I think the worst from a Q2 perspective and from a specialty chemical business is probably behind us. That's fair. That's fair. On the AI side of it, we had a strong pipeline. Any more color you want to add, where is the pipeline? Have you started getting the approvals? Are there any more visibility on the commercialization? So there are a couple of products that have seen some traction. Again, the products are well approved, right? The only issue is when the customer looks to get their registration done and get their pipeline order. Given where the macro environment is, some of the customers are kind of delaying that out. From our side, we are pretty much in readiness on this. So, as soon as the commercial quantity start to show, you will probably start to see it earlier than what you and I do. Got it. Got it. One last question and probably a data point. I'm sorry to interrupt, Mr. Sanjesh, but can I please request you to return to the question queue for a follow-up question, as we have several participants waiting for their turn? No. Okay. Thank you. Thank you very much. Thank you very much. The next question is from the line of Vivek Rajamani from Morgan Stanley. Please go ahead. Hi, sir. Thank you so much for the presentation. So a couple of questions from me. In the previous call, you'd mentioned that some customers are willing to lock into medium-term contracts, but you were not agreeing because the pricing was not very favorable. Just wanted to understand how things work currently, if at the margin, the landscape has become a bit more favorable, or do you think you're becoming more and more accommodating to the pricing requirements of the consumers? To be very frank, again, Vivek, I don't think that situation has changed, right? It is also colloquial in the sense when we talk about the customer wanting to do certain medium-term contracts. This is something that strategically we have to look at, where we are positioned from a medium to long-term perspective. And again, within a quarter, those things really don't change, Vivek. Sure, sir. That's clear. And just a clarification, you know, on the Q4 order book. I understand that it, it's obviously much better than you know how things are. But just in terms of, you know, the conversations that you're having with the customer, what is your sense of, you know, how de-risk this order book could be? Or do you think that, you know, in terms of the actual offtake, things could still be very dynamic, depending on, you know, how things pan out, say, in Q3 and then eventually Q4? So, you're right to a certain extent, we have a fairly strong order book. But at the end of the day, it will get decided by the customer in terms of when he is looking to do the pickup, right? And again, we have quantities to a certain extent manufactured. We have certain things that are there on the shelf. We have inventory WIPs and FGs kind of catered out to. So all of that is in good shape, right? As the final commercial quantity or the final order dispatch orders start to come in, we will start to see more traction on this. Difficult to be able to say what's the percentage, but I would really say, let's say, the delta on this could probably be in the range of about 15%-20% in terms of what we are seeing today versus what it could pan out to be. It could be both sides. It It could be a positive as well as a negative. So I think that is something that will come through over only a period of time, where we will come to know of this. But yes, today it seems in pretty good shape, Vivek. Sure, sir, that's helpful. I'll rejoin the queue. Thank you so much, and all the very best. Thanks. Thank you very much. The next question is from the line of Praful Kumar from Dymon Asia. Please go ahead. Hi, am I audible? Yes, please. You are. Go ahead. Sir, just broadly, couple of things. In terms of U.S., sorry, I missed a part. In terms of pricing, how is the R-32 pricing in U.S. right now, in terms of the trend? Pricing is cracking a bit. Sorry, I'll just unmute you, sir, I think. The next question is from the line of Rajesh Srivastava from Tata. Please go ahead. Yeah. Hi, good afternoon. Am I audible? Yes, you are. Please go ahead. Sure. Thanks for taking my question, sir. Sir, just one question to ask. So when I go through your presentation, I think multiple places, almost in every segment, you are mentioning that, you know, you are seeing increased competition from China or the Chinese are getting aggressive or in India, we are seeing the cheaper imports from China. So, sir, given that context, what is giving you the confidence that things will improve going ahead? Because this to me looks like a more like a structural change which is happening. And this is not just specific to you across the chemical industry and we are seeing this. So can you just give us a color, like how do you get the confidence that this will improve going ahead? So thank you for your question, Rajesh. Again, when you look at it, the cheaper imports from China or the China competition, again, I think we have talked about that in two or three places. One, where we are looking at the packaging films business, more and more towards in Thailand. That's where we've talked about it. The second probably also is on the fluorochemical side, where some of the ref gas imports were on the high from China. So that's something that we have talked about. I think we've also talked about it in the specialty chemical space, more on the, let's say, certain older products that we have had, where we are now starting to see Chinese competition. Where our confidence comes from, and that's your precise question, Rajesh, is again, like I answered the last question, is the order book. Customers POs that are in hand for dispatches between Q3 and Q4 is something that is giving us that confidence. And I think that is essentially the position that we are taking on this. There are various customers that have talked to us about it. The second other, and the other element of this is that we are getting into more complex chemistries and more complex products as well. And traction on our, let's say, the product pipeline, not just for the current ones, but the new products that have been launched and much larger future product pipeline, is pretty much well in shape. That's why we are saying that we are pretty confident that we should be able to stay through this one as well. I hope that answers it, Rajesh. Sure, sure. Thanks. This is Rajesh from Tata Mutual Fund. Thanks. Okay, thank you Rajesh. Thank you very much. The next question is from the line of Ranveer Singh from Nuvama Wealth. Please go ahead. Yeah, thank you for taking my question. I'm Ranbir from Nuvama Wealth. Sir, I think partly, some, like, some of my queries has been addressed. So, just two clarification here. Whenever in three quarters in a row, we have been saying that inventory accumulation has been impacting the demand. So, that I wanted to understand in a better perspective. So inventory is accumulated at our client end due to Chinese competition or because China has dumped their products in the market, so that, you know, sales is not happening there, this is the reason? Or what we are saying that demand itself has contracted, and so the inventory is not getting liquidated. What's your scenario here? So, again, the good thing here, essentially, Ranbir, is that we don't see an overall end product demand contraction. The end product demand contraction has not happened. To a certain extent, it is because of the China position in terms of the raw materials. But also I think to a certain extent, given where interest rates are, given where customers are, and the customers have actually, to a certain extent, got used to very low interest rates and therefore very large inventory. Over the last, let's say, three or four quarters, or probably even earlier than that, you've seen where interest rates cycle down, and therefore, to that extent, some of the customers have really started to relook at their inventory positioning. The inventory positioning of certain products that used to be, let's say, two, seventy days, they have kind of cut down on those inventories very significantly. I think it is a combination of the two, to a certain extent, China, to a certain extent, interest rates, and to a certain extent, customers relooking at their supply chains. I think also to a certain extent, COVID has impacted this very significantly, where availability was becoming a problem. As that has kind of waned out, the fact is that the customers are now having the confidence that the inventory availability, let's say, within a thirty, sixty-day time frame, is fairly well available, and therefore, some of their existing inventories, they are looking to cut out. So I think it's a combination of all of those factors that is having the impact, rather than being able to point out one single factor here, Ranbir. Yeah, understood. So So when we see that pickup, maybe we can see going forward in second half. So what we are assuming here, that the demand will increase, or you say that we will capture more market share on other terms, like in pricing or, you know, competing with China. So that is what will drive or do you see that demand itself will grow? See, again, demand. I would say overall demand has not been impacted at the end product level. That still remains pretty robust in that sense. But again, because there was an inventory situation where at the customer end, we've seen some, let's say, orders getting delayed. I think that's the situation overall. Very difficult to be able to comment whether it's a pure demand situation or an end product situation. So that's something that we are currently getting a feel of from a market perspective. So that's happening, Ranbir. Okay. And another one, that we mentioned the three new agro products and three new pharma products we announced in H1. So what could have been the contribution of these new products? When we say we have launched or commercialized, these are products that have now gone to the customer. Samples have been approved, they've been put out from either a multipurpose plant or a very large plant that has gone out. As those tractions come through, it will start to see more traction going forward. It doesn't mean that there is a large contribution of some of these in the current quarter. No, but their peak revenue may be significant going forward in H2 or next year? Yes, but very difficult to be able to pinpoint that out. Fine. Fine. Thanks a lot, sir. That's it from my side. Thank you. Thank you. Thank you very much. The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah, hi, good afternoon. Thank you. How are you? Yeah, is this any better? Yes. Okay. For the first half of the year, could you help us with the Specialty Chemicals revenue growth, sir, if possible? Overall chemical business has been down by about 5%. Let's say chemical, specialty chemicals would have been lower by about 4-4.5%. That's the only thing that I can tell you. Okay. And with regard to the refrigerant realizations, this pressure on international prices, is it in any particular products, R-125 in particular, or is it more broad-based across the entire base? ... or R-125 certainly, but even on R-32 and R-134a, we have seen lower pricing internationally. Domestically, we are still in pretty decent shape, Abhijit. And again, we have to look at it from a medium-term perspective, as calendar 2024, 2025, 2026, where we want to develop and produce as much as possible, because those are the observation years from an India market perspective. So, I think I've mentioned this over a call earlier as well, that the focus is to ramp up as much as we can, because that will determine our future profitability also, Abhijit. Understood. Thank you, sir. All the best. Thank you. Thank you very much. The next question is on the line of Heenal Gada from UBS. Please go ahead. Hi, sir. Thanks for the opportunity. I just have two questions on the chemical business. First, I understand that our order book is strong enough for a probable recovery in the second half. In that regard, have you seen any initial uptick in volumes in the recent weeks? Like, if you could just give us some sense of how October has been panning out to date. And second, could you First, Heenal, and then you can probably ask the second question. To be very frank, what we have said is that we will see a gradual recovery. The first Q3, we will see some positives coming through, but the Q4 is where largely the dispatch and the revenue recognition will start to happen. So, don't kind of expect that immediately in first week of October or second week of October, we've seen a much larger uptick. Not happening, Heenal. Okay, sir, I understand. And so, and the second question, would you like to give any guidance on the Specialty Chemicals growth for FY 2025? I think we were earlier guiding for the double digit, but would there be any change that we would be calling out now? Heenal, again, I think I answered that question in a previous, as an answer to the previous question. I think the macro environment has remained very volatile, Heenal. Given the fact that, while we had expected some things to happen in Q1, Q2, we kind of continued the inventory rationalization, the position from the customer, and we've seen some deferment starting to happen, not starting, happen during and continued going forward. In the current macro environment, very difficult to be able to give you a revenue guidance. What we can assure you of is that the team is going all out in terms of making sure we are able to deliver the products to the customer. The customer traction is in decent shape. Order book is fine, but I really would probably, if you would want to hear it that way, I am unable to give you a guidance from an FY 2025 revenue perspective. I think we will have to see it, how overall revenues pan out and how the order book shapes up. Like I had answered in a previous question, I think there is a certain delta in terms of where the order book is, in terms of the pickup, but fairly confident that we should be able to manage it very well. Sure, sir. Thank you, and best of luck for the second half. Thank you. Thank you very much. The next question is from the line of Arjun Khanna from Kotak Mahindra Asset Management. Please go ahead. Thank you, sir, for taking the question. So the first question is on the HFO piece. So while we have announced INR 1,100 crore CapEx, could you help us with what is the tonnage output that we would get for the same? Have all the patent-related issues been resolved in the sense we understand they were process patent, so if you could talk about that. And lastly, which F, HFOs are we planning on producing? Okay. Arjun, unfortunately, all the questions that you have asked, I have no answer to. It is not that I don't know, the fact is that some of these things are best kept under VAPs, given where we are. What I can assure you of is that this is being done through our own technology. Second, the patent regime has been well taken care of. By the time we launch it, all of that will be well taken care of. The third is that the quantities are of a fairly decent size. It is not something that we are disclosing as of now, so we want to keep that under the VAPs as of now. So that's what we would look at. Again, there are two products that we are looking to do, but as of now, not disclosing the names of those. So unfortunately, you're gonna have to live with it. Sorry. Fair enough. Sir, the next question is on the second CapEx we announced, the BOPP, BOP. Given the current context where we are talking of a weak environment in packaging films, just wanted to understand from you why undertake such a large CapEx, given that margins are below long-term trends. Does it indicate that we expect demand to incrementally be much stronger than supply and the market being into balance over the next eighteen months to twenty-four months? To a certain extent you're right, Arjun. BOPP has not done very badly, and I think we've been saying that for a very long time. What we've seen is the demand-supply imbalance more prevail in the BOPET segment. BOPP has done pretty much all right. And again, I think two or three things that tie into this is the sustainability agenda on the aluminum side. The second being the fact that, for us to be able to continue to do more work on value-added products on the BOPP side, it is very important to have capacity to be able to do that. BOPP overall is three or four times the BOPET segment market also. Given their recyclability, given their VAPs are, I think it makes good sense for us to look at it. In any case, when you think about it from a, from an SRF perspective, we've actually fully utilized our BOPP capacity, and even to that extent, the BOPET capacity also. Historically also, whenever we set up capacity, we kind of set up in a situation where the overall market is fairly balanced. I think two or three key things: sustainability, straight, getting into PE, which is polyethylene, first time putting up a line, which is a hybrid line. All of those really tie up into the sustainability agenda and the VAP agenda for us as well. I think those are the key elements for announcing this CapEx. Sure, fair enough. So just to understand on the packaging bit, if you could just help me with the margins possibility on the aluminum side, because we talked of the ramp-up, but we haven't quite seen margins play out for the aluminum foil. So, are we yet in the ramp-up phase, and how would you look at the profitability performance? Yeah, I think the, from an aluminum foil perspective, what we are seeing is better, volumes, better domestic volumes. The sampling for the export volumes has also gone out. We are hoping that some of those will come back quickly to us, and we will start to do the export piece on the aluminum foil as well. The third element also is, essentially a domestic, anti-dumping duty that provisionally has already been announced, and hopefully within the next few months, there should be a duty that should get announced. I think all of that put together should, make sure that, Q4 should be a much better from, from an aluminum foil perspective also. Sure. Thank you, and wishing you all the best. Thank you, Arjun. Thank you very much. The next question is from the line of Rohan Gupta from Nomura. Please go ahead. Yeah, hi, sir. Good evening. So there are going on... Sir, second question is on another spec chem only, so last year, when the industry was definitely witnessing- Rohan, I missed your question. Could you repeat, please? Sir, am I loud and clear, sir? Slightly better, yes. Okay. Sir, I was asking that last year when the industry was witnessing a downturn in agrochemicals, our confidence was emerging, in terms of maintaining the margins and growth, because we were supposed to launch six to seven new AIs, which was going to contribute to the revenues. However, I think that quarter by quarter we have been seeing some spillover. So just wanted to check that, this new, AIs and the contribution to the revenues which were supposed to come, I mean, it has been delayed from the customer side. They have not been able to launch the final AIs from their end, or just only the industry dynamics are such that the overall inventory situation still remains. That's why the, our customers are not willing to put any material in the market. So, Rohan, again, when even we were talking about last year and API situation, we had said it will take 12-18 months for us to be able to start that API journey. I think we are in fairly good shape from an API perspective, customer perspective as well. It is just that to a certain extent, some of the customer registration processes have got delayed. Now, to that extent, I can't control those pieces, and therefore, that kind of some delay. But I don't think we are very off from the timing that we have talked about. Right, I think the impact that we are starting to feel in the specialty chemical business is more because of the fact that some of our, let's say, flagship products have seen certain Chinese impact. Now, we've also said that this in the past, that we are looking to be able to counterbalance that through our technological intervention. Some of them have already panned out, and some will pan out over the next six months or so. Right? So to that extent, there is largely a counterbalance on some of the older products that will come through. AI will also add to the growth ability and growth visibility going forward. I think that is the way it should pan out. And again, I don't think we are very off in terms of what we had committed earlier from an AI perspective. Rohan? Yes, sir. Sir, second question is on the margin front. So, I mean, the current quarter margins and in last quarter also, so in chemical business, I'm talking about, and from 21%-28% current quarter. So it is all because of the ref gas volatility or spec chem margins are also under pressure, and which is driving this margin lower? I would tend to say, to a certain extent, it is a combination of both. It is not just the spec chem margin, that has seen a decline, it is also the fluorochemicals margin. Sorry, fluorochemical margin have certainly seen a decline, but even in the specialty chemical side, the margin has been lower, like, say, 2.5%-3%. So it is not just the fluorochemicals or the ref gas margins. Okay. Sir, while giving me the earlier packaging answer, you mentioned that spec chem in first half, a very broad number, where the chemical business is down by roughly 5%. You mentioned spec chem is also not down by more than 3%-4%. So- Four to five is what I kind of said. So it is similar. It is not that there is a significantly larger decline in specialty chemicals or fluorochemicals. The decline in terms of overall revenues is kind of similar. Coming from both, it's coming from both ref gas as well as Spec chem in a similar range. Okay. Okay, thank you, sir. Thank you very much. Thank you very much. The next question is from the line of Archit Joshi from B&K Securities. Please go ahead. Hi, Rahul, sir. Thanks a lot for the opportunity. I have a couple of questions. First, on the refrigerant gases. Sir, your observations, if I can ask, on the global supply-demand landscape of the gases. Earlier, there were talks of some ref gas or arbitrage exports happening from the UAE, and recently you started seeing- ... some exports from some Mexican companies into the United States of R-134a. It seems that the Chinese companies have been able to find channels either through the Middle East or through south or southern part of the American continent. Do you think that this is something that will continue to dampen the supply-demand equilibrium and prices will continue to be under pressure? What would be your take on the entire ref gas regime that we are seeing right now? So, again, I think we've spoken about this in the past as well. The UAE or the Middle East capacity that we've spoken about, again, I have not seen very large exports coming out of that. There was some export data that showed up, but today there is not seemingly very large exports that go out from the UAE. I have not heard about the Mexican imports into the U.S. market. I will check that out. But to be very frank, if there is certain circumvention that is happening, or those things will keep playing out. I think what we can do to manage this is to be able to ensure that our customers and our market share in the U.S. continues to be maintained. I think that's the only piece that we can do. If we kind of find out certain things, maybe go out and intimate this to the authorities, is certainly what we will do. But I think it's better for us to say what we can do well, rather than what is the other piece that we can't control. So I think that's the way we look at it. I don't think there is a very large imbalanced situation today. HFC, certainly not. And again, over a period of time, as the cuts start to happen in the developed world, we will probably be to see more, let's say, better pricing on the HFC. So that's how it should play out, Archit. Sure, sir. So second one, if you can just help us explain the domestic salience of our specialty chemical business. Has that trended upwards? Are we seeing any traction compared to last year? So, see, again, when we think about specialty chemical business and the sales into the domestic market, I think largely they are at the behest of the global customer only, right? And therefore, when you think about it, three years ago versus today, say, where the sales were 90-95% export and balance 5% in the domestic market, the domestic sales are roughly, let's say, about 25-30% today, right? Because of that, there may be some domestic traction that is building up, but frankly speaking, I think it is at the behest of global customers only. So that's how it will continue to play out, Archit. Sure, sir. That clarifies a lot. Thank you, and all the best. Thank you very much. The next question is from the line of Krishan Parwani from JM Financial. Please go ahead. Yeah, hi, sir. Good afternoon. Two questions from myself. Firstly, a clarification on ref gas. I think you previously also mentioned that you want to maximize your ref gas utilization for the given quota. So when could we expect full utilization of ref gas capacity? Will it be by FY twenty-five end or CY twenty-five end? So, calendar 2025, certainly we should get to full capacity from an HFO perspective. No doubt on that, Krishan. Okay. I think capacity utilization even today is fairly decent shape. There are no two ways about it. While, let's say, it is probably in the range of 75%-80%, again, I think there will be more work that we need to do to be able to see what best mix we can get to. Noted. Yeah, got it. Secondly, on the pharma side, how is the picture? Do you see material improvement in FY25? Anything to do with jump in pharma sales? Because I think in the presentation you have also mentioned there are launch of new pharma intermediates. So how... so- Again, I think we are talking about non-actives in pharma. Yeah. As of now, we're talking about pharma intermediates, active pharma intermediates, more non-actives on that side, is what we are speaking about. Yes, certain traction is building, but like I said in the previous meeting and previous calls as well, I think it is a more story which is to be playing out over eighteen months, maybe twenty-four months, rather than a quarter on quarter story. I don't think it has been very significantly quarter on quarter. Some traction, yes, we need it, but not something that I want to kind of talk about. Got it, sir. sir. Okay. Thank you for answering my question, sir. Wish you all the best for the coming quarter. Thank you. Thank you very much. The next question is from the line of Bhaskar Chakraborty from Jefferies. Please go ahead. Thank you. I just wanted to know, Rahulji, you had researched that the seven active ingredients that you are working on, and three of them are very promising. Would any revenues accrue from- Could you repeat, please? I wanted to get your thoughts on whether any of the seven active ingredients that you are working on would contribute to revenues by end of FY 2025, as things stand right now? At least two to three, we will start to see some traction in FY 2025. But again, like I said in an answer to a previous question also, Bhaskar, it really does depend on the customer registrations, right? As they start to take calls on their registration, we will start to see traction. Unfortunately, there are these things are kind of out of my control, and therefore, we have to go with what the customer needs. ... Understand. And what is the current utilization of your PTFE plant? As of now, probably slightly low, but I think in the presentation also, we have talked about the fact that the free flow and fine cut in the domestic market are kind of doing all right. We have already sent out samples for the export. That's something that should start to see traction around Q4. AHF, which was kind of a constraint in this, has now probably come through. Probably very soon, we should start to get full quantity of AHF, that will also add to value here. So all of those, we'll probably see more visibility towards the end of Q3 and early Q4. So is it fair to say that we are likely to see a two to three X kind of jump from PTFE revenues over the next six months? Three X? PTFE. I think it's a journey, Bhaskar, rather than just a jump that we are thinking about. I think three key things have to pan out. One, customer approvals have to come through. Second, our production has to get in line with our capacity. And third, domestic plus export market taking shape and certain volume, certain pricing changes that we are expecting in the market to happen. I don't think there will be a 3X growth in PTFE revenues in six months time. That's not gonna happen. Understood. Thank you very much, sir. Thank you very much. The next question is from the line of Vishnu Kumar from Avendus Spark. Please go ahead. Thanks for the time, sir. On the HFO new plant, when do you expect the first commercial sales, by which year, if that is something that you can help? I think, Vishnu, we have said it clearly that there is about thirty months from now. So probably get to September of 2027. So FY 2028 is when commercial production probably starts. If not September, probably August of 2027, so FY 2028. Got it. And second, on the margins in the chemical business, like, how much of it would be negatively impacted because of our startup operations on PTFE? So our 18% would look like slightly better, I'm guessing, if we eliminate the PTFE startup, and low utilizations there. How much would that be? I think leverage has played out negatively here. When we think about it, the operating leverage probably is playing out negatively anywhere between 2%-2.5%. Right? Because plants have been capitalized, depreciation is there, and the depreciation is not fully used. There is a 2% negativity in terms of what margins you are seeing on paper. As those ramp up, some of that operating leverage will play out positively, Vishnu. Got it, sir. And the journey from here, say, if I remove this 20 to 24 are our medium-term guidance of chemical business, what has to change here, and in which segment you are a little bit more confident that over the next 12, 18 months, this chemical business, let's say, I mean, I'm removing the PTFE for now, so 20 going to 24, which segment will probably drive you back there? I'm unable to figure out this 2024. What are you talking about? I'm saying today we have about 18% in the chemical business. If since the negative operating leverage, if I remove off the 2%, then theoretically, the other business is giving you 20% EBIT margin. So the 20% EBIT margins, which you are currently doing, if it has to go to 23%-24% of a medium-term guidance, then which segment will drive this? And how confident are we of going back to the 24%-25% margin, in that range? I think it is a combination of both, both the specialty chemicals and the fluorochemicals. I think the confidence is not specifically on just specialty or fluoro. I think there are pricing improvements in fluoro that we are seeing. There are product offtakes that we are seeing. This is a seasonally weak quarter for the business also, and therefore, the seasonal adjustment that will start to happen will create the positive on the fluorochemical side. PTFE towards Q4, we should start to see better traction on that. So as a combination, all of those should pan out. Again, order book in the specialty chemical business, new products ramping up, and some of the old legacy products also starting to come back. It's a combination of all of those, rather than just either of the two. Got it, sir. Thank you. Thank you very much. The next question is from the line of Ranjit from IIFL Securities. Please go ahead. Yeah, hi there. Thanks for taking my question. In the presentation, we have mentioned that we are also debottlenecking the HF capacity. Is it to support our new HFO or, within the existing scheme of things, we are also planning some expansion? We have always said that the HFOs, the new plant that is coming up, that was a part of the R-32 CapEx. R-32 already has come up, the HF will also come up. It got a bit delayed, which has also kind of impacted our margins and our overall, let's say, ability to produce. But what I can tell you is that HFOs is now getting there. We are almost, let's say, doing some trial runs on it, getting some very encouraging results out of it. And therefore, hopefully, very soon, the HFOs bottleneck will probably get very short, pretty much sorted, Ranjit. Sure, sir. Thank you. And finally, on the, we also mentioned cost savings as one of the few key molecules where we are seeing the realization pressure. If you can also elaborate on how big that would be, whether it will be able to compensate the realization pressure, even a 30%-50% of that? I don't know what to say. To be very frank about it, the molecule that you're talking about, we've seen some of the, let's say, measures that we have taken up start to yield results, where my cost is lower. Again, there are various other projects going on, on that side. Probably over the next six months, some of those will also play out, and my costs to produce will probably be lower on the product that you're talking about. But it's a journey, Ranjit, rather than just a switch on, switch off. It is not a switch on, switch off, in any case. You're right, sir, but will you be able to at least have that vision, from the realization pressure that we are seeing? It's not a Excel sheet where we can plot a linear line, Ranjit. I think business will continue to have some volatility, but, what you can rest assured of, is that we will do all that is required from a, tech perspective, from a intervention perspective, from seeing where we can sell, get to new customers, new geographies, all of that we will continue to do, Ranjit. Sure, sir. Thank you. Thank you. Thank you very much. That was the last question. I would now like to hand the conference over to the management for closing comments. Thank you very much, everyone. I hope I have been able to answer all of 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.