Q2 20/21

Nov 12, 2020

Ladies and gentlemen, good day and welcome to EPL Limited, formerly known as Essel Propag Limited, Q2 FY 'twenty one Results Conference Call hosted by Systematics Institutional Liquities. As a reminder, all participants' lines will be in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note this conference is being recorded. I now hand the conference over to Mr. Ankit Gaur from Systematics Institutional Equities. Thank you, and over to you, sir. Thank you, Vikram. Good evening, everyone. On behalf of Systematics, I would like to welcome all to 2Q FY 2021 and 1H FY 2021 earnings call of VCF Limited. From the management side, we are joined by Mr. Sudhan Shwos, his CEO Mr. MR Ramakwani, who is our COO and Mr. Paraksha, who is our CFO. Along with it, we are also joined by Mr. Amit Jain, Head of Corporate Finance Mr. Suresh Sawaliah, Head Legal and Company Secretary and Mr. Deepak Gandhi with Regional White Business, Ameshya Region. Without taking much time, I would like to hand over call to Mr. Sudhan Choo for his for opening remarks, follow to which we can have Q and A session. Thank you, and over to you, Sudhanju. Thank you, Ankit. Good evening, everyone. On behalf of my colleagues at EPL Limited, first of all, a very happy Hunter to all of you. It's a special day. It's an auspicious day for all of us in India and it is also a very special day for us at EPL. It is one of the it is, as I was saying, a very special investor call because today I have the privilege on behalf of my colleagues to share with you 3 important pieces of news. So I think let me without further ado start with what we have to share with you. The first and foremost is as you already know, but I think I thought I will spend a couple of minutes on this is we are now EPS. The new name, EPL, is a simple, crisp and global name that is an effortless shorthand for what we always stood for, for our customers, for our clients, for our all our stakeholders, EPL. It is also our vehicle for a new purpose driven journey ahead, and you will continue to hear from us from time to time. It reflects a transition from high to higher. It's a company which is nearly 4 decades old, which has done very well, but has a desire to do even better. And this is our desire to shift gears on new way of growth, a growth that is suited for today, but more importantly, suited for tomorrow. Built in EPL, as you will see with our new time and with our logo, which is identical, but our colors now are deep blue and green is our commitment to sustainability, is our commitment to the future, is our commitment to the world that we would like all of us to live and we would like to play our small role in building that world. It is about shaping the future of packaging as we celebrate everything that's made us what we are today. And in that, we've summarized our tagline now, which is we call leading the pack. Our humble effort to understand packaging, lead packaging and hopefully do well as we move forward with that. So that, ladies and gentlemen, is the first announcement and I'm delighted to share it with you today. So we are now EPS. I think the second and arguably an equally important announcement on the auspicious day to day is our acquisition of Creative Stylopax. Creative, as you know, is a young organization, about a decade old, but has made a mark for itself in India. I think they have rapidly grown. They were founded by 2 young entrepreneurs, Bhavik Shah and Darshan Shah, very dynamic young individuals full of energy and enthusiasm. And we have decided to acquire Creative. Let me first give you a quick overview of Creative for some of you and then talk to you about how we are structuring this deal. So this company founded in 2012 by these 2 young entrepreneurs I talked about in FY 2020 delivered a revenue of INR1031 million, so INR1,000,000,000 with an adjusted EBITDA of INR305 million, giving them an EBITDA value of INR29.5 They have a manufacturing facility in Madhya Pradesh with an annual production of close to about 200,000,000 tubes. They do a lot of tubes in plastic. So I think their specialty is more plastic and decoration. And to that extent, it's a very complementary fit to what we do. The second interesting thing about this acquisition is that almost actually most of their business comes from Beauty and Cosmetics and the remaining part comes from pharma. So it would not be incorrect for me to say that their entire business comprises of beauty and cosmetics, about 85% to 90% and the balance 10% to 15% of pharma. So from our point of view, it is a perfect fit in our journey towards personal care and therefore further strengthening our portfolio. We also have a marquee client deal of customers, L'Oreal, Marico, Zyders, Himalaya, just to name a few. And I think it's a list which goes on. Many of them comment to us, but quite a few complementary. So with their listing, we are confident of taking our offering to these customers in a more in a way that will delight the customers even more as we go forward. Now on to the transaction. The transaction is basically we've acquired them an enterprise value of INR 2,590,000,000. So INR 2,599,000,000, so that's the transaction value at the enterprise value for Creative. And the deal structure is we will be purchasing INR 72.5 approximately 72.5 percent of their stake through cash and the balance 27.5 percent will be a share merger. So therefore 72.5% stake through cash and 27.5% stake through EPL shares to Creative Founders pursuant to the merger of Creative into EPL. So we've signed the SPA today. We've informed the markets and the authorities and it is indeed my pleasure to share with all of you that EPL 2.0 is now gearing to grow faster both organically but also through strategic and right acquisitions. And I think creative in that context is the first step in that direction. I'm also happy to share with you that creative founders, which is Bhavik Shah and Darshan Shah will become part of EPL's senior management team after transition and will play a very important role in the expansion of EPL's global business. Closing of the transaction, as you know, is conditional upon satisfaction of customary conditions and we expect the transaction to close early calendar 2021 but the merger to go through in about a year from now. So with that, that is about our transaction. And lastly, let me once again sign off with the strategic rationale for the transaction. So five key pieces, revenue growth if you were to look at revenue growth for Creative in the last 3 years has been 8.3%, revenue growth for EPL in the same period has been 6.2%. So it is revenue growth accretive. EBITDA margin for Creative is, as I shared with you, about 29.6%. Our margin in FY 2020 was 20.3%. So it is EBITDA margin accretive. We are confident of operational improvements as we go forward. We can already see synergies to the extent of INR 35,000,000 but I'm confident along with my colleagues, we should be able to do even better than that. It will continue to drive our Personal Care and therefore continue to balance our portfolio, something that I have spoken to many of you in my 1 on 1 conversations and also on this investor call. Already with these numbers, if I were to assimilate and aggregate these numbers and then share with you our contribution of Personal Care categories from 45% in FY 2020 will shift to about 47%. We also add plastic tube capacity in North India. And as many of you would know who follow our company as a sector that a lot of our customers are based in North India. So therefore, for us, it is also a strategically important geographic location. So very strong strategic rationale fit with our Beauty and Cosmetics and Personal Care ambitions, revenue and EBITDA growth, accretive, operational improvements which we can immediately see And finally, it will allow us to drive India with us and strategy where we continue our laser sharp focus on Lani Tubes, but we also have better and futuristic capacity for plastics as we build a double engine growth driver for our customers and are able to do and accelerate our growth in Beauty and Cosmetics. So that indeed, ladies and gentlemen, was our second announcement. And finally, to the one which we talk about every time, but indeed this is great news. As we've closed first half, let me share with you our numbers for first half and then thereafter with the quarter. So for first half FY 2021, we've delivered 11.1 percent growth from revenue from operations, delivering INR15.118 million in revenue, which is 11.1% growth on a similar period this year. This in our judgment in the times we are living in, in COVID pandemic is a performance we are all very proud of. In the same period, we've also delivered EBITDA growth of 20.1%. So we've delivered EBITDA of INR 316,000,000 INR 36,000,000 INH1 of FY 2021, which is a 20.1% growth. But equally and more importantly, it is that our EBITDA margin has also expanded to 20.7% from 19.2% in the previous period. So this is about 150 bps margin improvement in EBITDA. All of this translates to our PAS growth of 18.2%. We've delivered a PAS in first half profit after tax at consolidated EPL level at INR1.275 billion, which is a growth of 18.2%. And more importantly, our earnings per share now is at 4.44. We've crossed the 4 rupee mark on our earnings per share. While doing all this, with our ability to create to basically generate cash, our net debt continues to come down. Our net debt in H1 FY 2021 is INR 2,332,000,000,000 to INR 2,300,000,000, which is almost half of where we were in H1 FY 2020. All of this is leading to our return on capital employed at above 20%, well above 20%, actually 21.4% in H1 of 2021, and this is a BPS506 bps improvement over the same period last year. So we are very proud and happy to share these numbers with you today. If I was to continue with our mission And we've said, we want to deliver market leading revenue growth while we deliver capital efficient consistent earnings growth. So if you were to look at revenue growth, which I told you already 11.1 percent clearly tells us that we are leading the market in this space. But more importantly, our adjusted EBITDA has grown even better, which is at 23% growth at INR 3,000,000 to INR 45,000,000 and our adjusted EPS is better than what I just shared with you at INR 4.24. So that ladies and gentlemen is our performance for first half of the year. This performance basically has come with our growth up and continued good performance in quarter 2. So if you were to look at our quarter 2 numbers, despite all the issues, both on the growing pandemic as you know I think it is now going deeper into India. It has started affecting people in our plants. It's also across the world there is also top of second wave. So there is a lot of headwind which we are battling as we go forward. We've delivered revenue growth in quarter 2 of 5.4% with a number of INR 7,700,000,000 so INR 7703 million, which is a 5.4 percent growth in the quarter, which is just concluded. This is translated into an EBITDA growth of 9.5 percent with an EBITDA delivery of INR 1,670,000,000 and an EBITDA margin of INR21.7 billion. Now once again, our EBITDA margin has expanded by about 80 bps points over the previous period last year. So it was SEK20.9 billion last year, but our number is better this year at about 21.7%. So this is the performance of this quarter. And as I shared with you, our return on capital employed at the end of this quarter is at about 21.4%. Our PAS number on the face of it looks a little down over last year, but that is because of certain exceptional items in PAS repayments and adjustments across the globe, which were there. So it's suffice to say that our period to period growth impact apple to apple, if we were to take out all of these, would again be in double digits. I think it would be in mid teens. I think so that is our performance on this piece. Moving forward, if you were to look at how are we being able to deliver this, it is about our basically our approach, which I have always emphasized and we continue to remain. We are a disciplined, determined bunch of people. So basically it is our discipline, determination and creativity which is helping us deliver this. When I say discipline and determination, all 20 plants are operational despite all the hiccups our plants are working to near capacity and being able to service customers and delight customers, if I may say, day in, day out. At the same time, we continue to look at demand generation and look at newer avenues. You will remember I had talked about hand sanitizers last time. What we are very convinced of is that health and hygiene as a phenomenon is a sticky phenomena during COVID and post COVID. So Health and Hygiene as a consumer habit and diet of health and hygiene is sticky and is here to stay. And therefore, we are also now building additional categories of hand wash, tubes available in hand wash, moving forward hand creams. So hand sanitizers, hand creams and hand watch in some way go hand in hand if I could say. So we are quite confident of continuing to grow this. So this is new category. While we do this, we continue to service our customers, gain share of wallet wherever possible and also make new pipeline wins and competitive gains, which is what we have been working for over the past 12 to 18 months. So it's a combination of our effort of 12 to 18 months. In some cases, it is our ability to service the customers today and therefore be able to gain competitive share and finally, indeed our ability to build and launch new categories which comes into 4 and that has been responsible. At the same time, we are committed to basically employee wellness and this is one area which we continuously look at. A very senior team from our company constantly monitors this. We are committed to people's health, their safety and we will continue to remain steadfast on this journey because we believe with our employees' wellness and with their safety and their growth comes the growth of the company. And lastly, but equally and more importantly is that we have we continue to have war on costs, if I could use the word. We are basically managing costs and looking at every cost item. So we are and we want to manage it across each cost item, across function, across regions so that we basically progress on this journey. And our Project Phoenix, this Phase II of that, but in general, our warrant costs is something which will continue to happen and that is one of the area one of the reasons why you continue to see margin expansion in these tough times. And this is something which we remain committed to because we need this fuel. We need this fuel for stakeholders, for return to stakeholders, but equally and more importantly, we need this fuel for our growth. And we are committed to growth as we go forward. Very quickly, as I spoke to you already, we continue I think Health and Hygiene is a trend which we think will stick and we are continuing to do work in this space both on hand sanitizers but more importantly now on hand soaps and hand creams moving forward. Our focus on capital efficiency will remain. So we will be prudent on CapEx spend. This is a year in which in any case it's very difficult to deploy CapEx at the pace at which we would like to, but all I want to assure you is that we will put adequate capital where it is needed and for growth and that is something which we will continue to drive towards. Our growth basically our growth expansion EBITDA and growth impact leads to cap generation and leads to debt reduction in net debt. I talked about that it has already come to almost half of the period at this point in time and it now stands at INR 2,332,000,000. So I think that is something which we will continue to do. Return on capital employed will continue to grow. As you can see, over a period of last 4 odd years, we've expanded the return on capital employed by over 400 bps. So on an average at about 100 bps. And I think this is a journey which has got accelerated in the last 12 to 18 months. We are confident of being able to steadily build on this as we go forward. And finally, I want to talk about our ability because of all this to be able to deliver higher dividends to our shareholders. So if you look at in the last year, we had delivered a full year dividend of INR 3.3 per share, which was part of our interim and final dividend. Last year, in the second half or at the end of FY 2020, we had declared INR2.05 per share as our final dividend last year. We think that this is a rhythm we can sustain with the profit we are generating and therefore I'm happy to announce that even if actually for first half of FY 2021 we are declaring an interim dividend, the board has approved the dividend of 2.45 per share. And this is to let you know that this is the kind of rhythm you can expect as we go forward. So in last second half of FY 2020, which is the final dividend of FY 2020 was 2.05, interim dividend of FY 2021 is 2.05 and this is a number for you to keep at the back of your mind as a steady number which we shall try and work on. On our fundamental levers, in the interest of size, let me quickly glance through that. It is there with the investor presentation which is being put. So let me very, very quickly glance through that. We continue to progress on Personal Care that progress remains and you can see that and that is so FY FY 2021 is now at 47% versus 45% of FY 2020. There is continued growth across our regions. So I think that is good progress. At the same time, we remain focused on continuing to build our leadership on Oral Care and there we continue to deliver growth, h y FY 2021. We have h y FY 2021, we've already delivered a growth of 8.4% on our Oral Care business and this is something which we will continue to do. I'm very happy to announce to you that our focus on Europe is yielding results. Our performance in Europe is indeed very heartening both on top line growth but equally and more importantly on our margins. So what we've basically been indicating, our ability to now take these margins to mid teens is something which we are demonstrating in first half of twenty twenty one already. We are at about 14.8% and we are confident of being able to deliver that through the year and therefore continue to build on it as we go forward. This let me remind you is a very, very sharp progress from where we were almost about 2 years back. So I think you know so from about a 10% share we are already into mid teens. Lastly, I think I just wanted to touch upon our industry leadership in eco friendly solutions. Sustainability as I started out is indeed at the heart of what we will do as we go into the future. We've been developing a whole range of laminates and commensurate tubes. And we are basically focusing now we have as you would know, we basically called our original laminate Plaquina, but we now have a portfolio being developed around it. As I speak to you, we've already developed Plaquina Pro, which has also got qualified and is in testing and in some places commercialization as well. Platinum is already happening. We are also going to look at Latinas Clear. So as we go forward, we will continue to build a portfolio of sustainable solutions. And no surprise, we are getting a lot of traction and acceptability to our sustainable offerings by leading global customers and even leading global there. So I think overall, the acceptance of this offering is very encouraging. Our customers are as committed to sustainability as we are. So it is in one way a marriage of like minded organizations and that is really good news for us. And we will continue to build on this. We will continue to deliver on all three pillars on recycle, reduce, reuse. There is work happening on circular economy and PCR tubes as well. So we will continue to do that. There is work happening on Biomaterials. So there is a lot of work happening in this space and we will continue to drive that. Let me finally sign off with our focus on corporate social responsibility. We are basically defining our vision for corporate social responsibility. We are calling it greening lights. Our focus area will be, as I said, our EPL strategy will focus on sustainability and sustainable development. It will be built around 4 pillars of facilitating collaboration, meaningful impact in a microcosm and you will see this around some of our plants, forging strong stakeholder relations in order to be able to give get better multiplier effect of all our work which we do and catalyzing impact especially from the point of view of skilling and job creation. I'm happy to share with you that we are partnering with Samhita, a known social impact firm. Basically, they are working with us and they work with market companies in India. So we should be able to join them and with their help be able to join hands with others to build our corporate social responsibility agenda. It will be governed by the CSR Board Committee, but more importantly, it will also be managed by the CSR Governing Council with 5 FX members, senior members of our company. In our vision of Greening Life, we look at green communities, working on waste management programs in order to build and encourage communities to manage waste better and in moving forward facilitate circular economy. We are equally committed to self sustaining communities and we are therefore will work on skill development and entrepreneurship programs with local communities and financing them with a rather innovative returnable grant scheme. And finally, in time of COVID, we are also committed to all our health workers or people who've been helping us, all our COVID warriors, so to say, and we have already committed ourselves to donate about INR 1 crore or INR 10,000,000 towards PPE equipment through India Protector Alliance against dedicated to the cause of healthcare and sanitation workers. India Protector Alliance is an alliance of like minded organizations who are committed to this cause who come together and we are very much part of India Protector Alliance. So with that, with our commitment to greening life, but at the same time continuing to deliver sustained capital efficient, consistent growth and market leading revenue growth, I would like to sign off. Thank you very much. And I would also like to take this opportunity before we take the questions to wish all of you a very happy Diwali and a big festive season ahead. Stay safe, stay healthy. Thank you very much. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. We have our first question from the line of Harit Kapoor from Investec. Please go ahead. Yes. Hi, good evening team. Just had a few questions. The first question was on the acquisition, so congratulations for the same. Just wanted to get your sense on what attracted you to this asset the most? Is it the fact that you acquired new customers? Is it the people who led this organization? Or it's the capacity that you inherit on the plastic tubing side? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So it's a if I could answer this question, it's a combination of all. But as I was telling you, 1st and foremost, it fits into our strategic direction of building Beauty and Cosmetics and maybe wider Personal Care category continuing to drive that faster. And as I told you, this is a company that has entire business its entire business is in Beauty and Cosmetics and Pharma. So therefore, I think from that point of view it is a great fit and a strategic fit. Now the second thing is you are right, it has a strategic important strategic location in North India with capability in plastics, best in class modern decoration and tube building capability especially and with the customers based in North, it gives us that strategic advantage also and will allow us in future to reorganize and basically strengthen our play in plastic tubes even more with our own operations in the West and this operation now in the North. We will hopefully be able to build a stronger portfolio in plastics as well. So I think that is indeed the case. And as you rightly pointed out, we've got 2 young entrepreneurs, educated, capable, hungry and I think they will bring their energy and enterprise and will work with us closely and therefore be able to and therefore they're going to be part of the EPL team now and will be able to drive our EPL 2.2 agenda as we go forward. Understood, Sri Akshay. Just another question on the EPL the product the product category because my assumption was that laminate would be a higher margin business in plastics? So can you just help me understand that? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So I think it depends a lot on the category. So therefore you are right. So I think the category also depending on basically the capability which you derive. So I think which you basically or the kind of cubes that you make first of all as I told you we've spoken about that ad nauseam that beauty and cosmetics as a category has a higher ASP, the average selling price per 1,000 tubes and we've talked about that several times to the investors. So it plays out in this as well. So average selling price per 1,000 tubes is independent of the type of tube in that category. So therefore that is very simple. You can see we've talked about 2.5x, 3x that translates into better margin. Also the value which you add, so I think this is what has attracted us. So I think as Ram was doing due diligence on them, I think the capability which we are also acquiring is best in class, very modern facilities and therefore it's a combination of what you deliver to the customer, the quality of decoration, the quality of printing, the quality of tubes and also the category which they operate in, which helps them achieve this margin. Got it. My last question is on the Americas business. Could you just take us through what's really happened this quarter leading to the decline? Is it more led by some level of downstocking, etcetera? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So Americas business is first of all, it is a temporary phenomenon, I want to tell you. I think yes, the number you are seeing this quarter are the numbers in this quarter. But I must tell you, Americas as our business got very heart hit by what we call travel tubes or sampler tubes. And so just to put in perspective, roughly 25% of our business in that geography comes from travel tubes or sampler tubes. And with the COVID phenomena, this is a category which got very adversely affected as you would understand. And therefore, that is an area while the drop has been substantial, we've been able to cover it up through improvement in share of wallet with some customers through more premium cubes which we've done and we will continue to do with some of our leading global customers and through pipeline wins in some beauty customers and pharma customers. So the net impact is still adverse in this quarter. We are confident moving ahead in Americas, we will be able to deliver growth and you will see that quarter 3 onwards. I think so we are confident of that. So this is a very strong COVID headwind, if I could call, especially because of their overdependence at the geography on particularly on travel and sample tubes. Swanshu, a follow-up is that would Oral Care also have been impacted on account of the same reason in America, The sample I see? Yes, of course. Most of the travel tubes are oral care tubes. Got it. Got it. Got it. That's it for me. I'll come back to know. Wish you guys are very happy to manage. Yes, yes. Thank you. But all I wanted to assure you is that it is a blitz. It's a one time thing. We are very confident. We are already seeing it. We are very confident of a good Americas performance in forestry and thereafter. Thank you, sir. We have next question from the line of Sameer Gupta from India Infor Lion. Please go ahead. Hi, sir. Thanks for taking my question. Just a kind of follow-up only from the previous questions. So regarding the acquisition, sir, just wanted to understand. So we already have manufacturing capabilities in plastic tubes. Is it the geography we are getting and we were in there? And can you also elaborate on the synergies as to how we are going to derive $35,000,000 of synergies through this acquisition? Or was it a case of it was available at ATEC CV EBITDA and the valuation seemed pretty reasonable to acquire rather than go on an organic build in this category? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So I will answer a little bit of this and I will ask Ram to also talk you through this and maybe give you a bit of historic context for the future. But let me first again reiterate a few points because I think it's an important thing. See, first of all, for us, it is a strategic fit from the point of view of the categories they operate in, the customers they bring, the capability. So therefore, this is these are best in class modern plants both from tube making but more importantly from decoration capability point of view. And it is also got a strategic location in North, which is important. So I think you know so that is very, very clear. I think and also as we continue to drive our beauty and cosmetic agenda, what we are beginning to debate and also work on is that Beauty and Cosmetics in order to accelerate our Beauty and Cosmetics growth, it may be a good idea to drive it through twin engine, which is our laminate, which of course we are continuing to do great work on, 360 degree printing, all the work which we will do, but also and equally also through plastics because customers and certain brands have requirements which are very independent and unique and it is our ability to be able to offer solutions on both of them which will help us do that. And I think in that context, this helps us. And finally, it also augments our capacity. So while the capacity is there, but it will further augment our capacity and also in a strategically important location in North. And I'll hand over to Ram to talk you through this a little bit more. Sameet, good evening. So as we operate plastic tubes out of West, the North plan really helps us to meet North demand. We currently send it from this. This is one. As you know, we are heavily concentrated towards laminate tubes in India as well as globally. The capabilities over a period of time we built in laminate tubes to meet personal care markets and pharma markets is substantial. Many times we have explained to you our capability in terms of integration, our capabilities in terms of 3 presses, 0 defect programs. There are lots of capabilities we've built in India and globally on Lamitube. So over a period of time, because our efforts was trying to convert from bottles, from plastic tubes into Lamitube, but we did that correctly. But there will be always be a market which will continue to remain in plastics. So we thought this is an opportunity that we could have a relook at our strategy so that we could also concentrate on plastics in India even though we have plastic operations in India, this fits really well. That is one of the reasons that we acquired. This, as Suraju was explaining, they have a good asset base, which complements our asset bases. They have a good people and they have a very good in terms of decoration capabilities on plastic tubes, which will actually help us to further add. I think it's a good fit and we also have 2 energetic entrepreneurs with us as employees going forward. I think with our ability to optimize resources, bring in better productivity and things like that will get that business to improve by the margin, that 3.5 percent growth that you are what you are seeing as a synergy benefits probably will flow through quickly. Got it, sir. Just two follow ups on that, sir. So one is that the capacity that you are acquiring, what kind of sales can it do on a full capacity level? And what is our current plastic tube sales in India, including the acquisition? We don't actually segregate plastics and lany. Bharat is a personal care business. That's what that you will probably will be seeing. What you have seen is our personal care business also has grown in Q this year that we are already almost about 200 basis points higher than the last year. We will in the H1 of this year, and we'll continue to grow that. And this business, creative, is purely on beauty and cosmetics and pharma that will add up further. And so the capacity question, full capacity, what kind of revenues can this plant generate, the North India that you have just acquired? Currently, they are doing I think the report you might have seen it, they are doing about INR 300 and INR305 INR 5 crores business currently. But they have a good plan to grow. And our objective is to always grow in double digit. I think I'm sure that we will be able to do that. Let me rephrase the question, sir, again. What is the current capacity utilization of this plant which is fetching a 100 crores revenue? No, I think, thank you for asking this question in 3, 4 different ways. Suffice to say there is enough headroom. Unfortunately, we don't want to share the exact number of the moment. You could have said that. Finally, There is a lot of headroom. To just build on Ram's point, I think they currently do about 100, vertically crores as he said, 103, some INR 35,000,000 but there is a lot of headroom. There is a lot of headroom. Sir, can I squeeze in a second? Sir, I'm sorry to interrupt. We'd request you to please come back in the question queue. Thank you. Ladies and gentlemen, in the interest of time and fairness to all participants, please restrict questions to true participant. If you still have more questions, please join the queue afresh. We have next question from the line of Chirag Soudhika from DSP Mutual Fund. Please go ahead. Good evening. I just wanted to ask your debt trajectory. I just have one question. Your CapEx, so a lot of data on that, your CapEx is about SEK130 close a year. Is that the kind of CapEx that we expect for the next 2 years? Given this acquisition, your net debt has come down from, let's say INR 4.30 crores to INR 2.33 crores. How will it move over the next 1, 2 years? And as a company, when you look at net debt to EBITDA or any net debt number, what is the ratio that you look at? Thank you. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So very quickly, I will hand it over to Bharat to talk to you in some detail. But first of all, I do want to tell you, I don't know where you've got this 100 and 30 crores number because so I think there was only 1 year in which the number was that much. And I think it's incorrect to make 1 year as a trend. I think we've always maintained that our CapEx will be more in the vicinity of if I could use a number of close to about 200 or maybe a little bit more than that. We've said that depreciated value or our depreciation gives a clear indication of how much we may be deploying year on year. So I think that is a number to sort of look at. But with that, let me hand it over to Parag to more specifically address. First, let me just reiterate what Sunil Choo said in his opening comments. And he said that CapEx for growth is never going to be a barrier or a reason not to invest. And so I think your reference to INR 129 or INR130 crores is with respect to last year. Perhaps you are further sort of influenced by the fact that the CapEx so far is INR64 crores, and therefore, you are arriving at a conclusion that the CapEx level is INR130. We have said this several times before to various investors and investor calls that our CapEx can be and would be up to our annual depreciation, which is there in our consolidated financials of around INR 2 30 crores. So again, to reiterate, there is absolutely no reason to believe or think that CapEx is being controlled. CapEx is would be provided amply for our growth. And therefore, I would suggest not to assume that number of 130. And as Sudhakshu already said, the number is more towards 200 or thereabouts. Can I repeat your second question, please? So second so thank you for clarifying that. The second question is for the net debt that comes down from 4.31 to about 2.33 close. With this acquisition and CapEx, as a financial policy, how do you look at net debt? What is the number that you strive for? Because you are improving the numbers sequentially. How do you look at net debt to EBITDA? Is there a certain ratio that you get to guide us with? Look, at the end of the day, we need to the use of cash, the number one reason for cash is to plow back and grow the business, and that will never ever change. And it's keeping that in mind, which will actually determine what level of net debt we need to maintain. That's the best guidance that I can give you. Yes. And without sharing a number, I do want to let you know just to build on what Bharat said. As a Board and as management, we clearly have markers on net debt to EBITDA ratio. You are aware of it actually what our healthy financial ratio is. The good news is we are very well under it and therefore there is enough room for us to be able to grow and if need be borrow to grow. I think that's where we are. Absolutely. Thank you and happy to answer that to you and the families. Thank you and same to you. Thank you, sir. We have next question from the line of Trilok Agarwal from Pirlasan Life Insurance. Please go ahead. Yes, hi, good evening. Thanks for the opportunity. I have two questions. 1 on the I'm not sure whether you have covered this, but the reason for Pagju's America performance? And second, with regards to the acquisition, obviously, I heard on the previous participant when he was alluding to, you said it's a combination of a growth, the margins as well as clientele, market calendar that they bring to. But I just was wondering, given that you guys have enough sort of presence and enough bandwidth. So I was wondering, could you yourself have built this business? I'm not saying it's over 900 crores business, but what I mean just very curious to know what kind of thought process led to this acquisition? Yes. So see, Amit, good question and let me address both of them. So I think America we've talked about, but let me first quickly talk about America once more. See the point is that you are seeing a subdued performance in Americas in quarter 2, you know the last 7.4% decline in this quarter period to period. But I must tell you that once this is a one off, It's a blip. And also it's a blip because they have America our America portfolio has a very large component of travel and sample tubes for 1 or 2 marquee customers in U. S. And as you know, that has got very badly hit by COVID. So if I was to share that their contribution of that component is close to about almost 20%, 20 plus percent. So therefore, they are that has got really badly hit. And despite that, I think because of our nimbleness and agility, our ability to have share gain, wallet share gain with some of our beauty customers, our ability to do pipeline work and build the pipeline, we've delivered these numbers. And we are confident that in quarter 3, we should be able to deliver growth and then hopefully build it from there. So I think that is the question. So it's a very peculiar thing there. They have a very large component of travel. And as you know, travel has got very badly affected at least in the last couple of quarters during COVID. The second thing, which is basically on the rationale for the creative. I think the creative rationale I've explained this in quite some detail but I want to just again bring it, I think it's a good question. The very simple question to ask is build versus buy and the question you are asking is why won't you build it yourself. I think the point here is that in terms of the portfolio and strategic fit of this portfolio it's extremely high. I think it is exactly in the area of Beauty and Cosmetics and therefore dials up our Personal Care and Personal Care ambition which you heard us talk about subsequently. So then therefore it gets us back. Second thing is also in terms of capability in plastic and therefore within plastic, decoration and tube making and the strategic location in North are very powerful drivers for us to look at that. And in our due diligence, basically all we've done, I think that has really helped us. Because and finally, because the kind of customers they have and the kind of capabilities that they have built, they are able to get much more from a revenue per tube and revenue growth perspective and also margin per tube and EBITDA margin. So for our business, it is EBITDA margin accretive, it is revenue growth accretive, it's got strategic fit to our Beauty and Cosmetics, it's got a very well located strategically located plant in the north with best in class modern facility. And we think we've got it at a it's a good sweet deal for both the players and the entrepreneurs are keen to work and drive with their ATPL and that's why it's a cash plus share merger. So therefore, basically, they will be owners of EPL in that sense through the shares they will own and they are keen to participate in our journey as we go this forward. So the 5th we thought was very good. Conceptually speaking, I've always said this. See, when you look at any new acquisition, what is it that you look at? You look at new customer, new category, new geography and new technology. Technology is a little rare in our business but if you look at the other three, so this clearly brings new category as it strengthens the Beauty and Cosmetic categories, it brings in a few new customers or strengthens our position in many other. So it clearly ticks 2 boxes and it is in the existing geography it further strengthens our position in India. Understood. Thank you very much. And lastly, are you I mean, obviously, this is this could be in the future, but are you still are you guys still open so what I mean, are you open to any inorganic acquisitions going ahead as well? What's I mean, because I believe most of the portfolio fit, you already have it. So that's what I was trying to understand. Even in the past, you had it. So I just thought I'll give you this one. P. Vijay Kumar:] This is an ongoing process. We never give any guidance, but we can continuously explore opportunities. We are doing well by God's grace. So therefore, with a strong balance sheet and a good commitment. So whichever there is a whenever there is a good strategic fit and at the right price, we will be absolutely open to acquisitions. So our growth we are committed to growth, organic growth and if need be and at from time to time could be inorganic growth as well. Thank you very much. Thank you, sir. We have next question from the line of Varshit Shah from MK Global. Please go ahead. Hi, thanks for the opportunity and I think good traction performance as always expected. My question is slightly on the creative again and so if there is a course of the condition. What I understand on the quantification profile is that ECL is more pioneered in terms of a soup of offerings in laminated, but maybe probably we had some offering gaps in the plastic tubes and especially on the decorative side, which can give you a higher margin portfolio and specifically moved into your customer and which is something basically you're acquiring from this acquisition. I mean, all of them obviously are plus points, but probably it seems to me that this is a key pillar in the acquisition. And this probably then you can since ECL is a global company, you will be able to replicate it across the globe. Is that understanding correct? That's point number 1. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes, your understanding is correct. You are absolutely right. We get best in class modern classic facility. It allows us to play this segment even more powerfully as we go forward or even and you're absolutely right. They bring that to table. Moving forward, you're absolutely right. It may also become a launchpad for us to do things globally. Sure. And 2 things, I'll refer to this question, 2 questions in 1. If you see if you exclude the hand sanitizer or the hygiene segment, which are probably not there in the base quarter, that means the LifeSmart business side would have maybe declined because of the headwinds related to COVID-nineteen. And probably doesn't come back maybe in Q3 or Q4 onwards. Is that correct? And secondly, on margin, so whatever YY margin improvement we have seen, is that largely because of Phoenix 1 and Phoenix 2 get to flow into it? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So, let me answer both the questions. Think first of all, it's wrong to assume let me tell you I think hand sanitizers cube last time also I told you that our growth independent of hand sanitizers cubes in quarter 1 was a double digit growth. Our growth this time also which you are seeing 5.4% growth, our growth net of hand sanitizers is there is still a growth. So it is incorrect for you to say because there was a lot of pipeline filling in quarter 1 on hand sanitizers. So therefore the sales on hand sanitizers in quarter 2 is very different from the sales of hand sanitizers in quarter 1. That's point number 1. Point number 2 is that having said that, are we going to build the entire health and hygiene? Yes, we talked about that. We will look at hand soaps. There is work happening on that and we will start seeing that. So first answer to your question, despite COVID headwinds, have we delivered on growth on our business as usual without this hand sanitizers? The answer is yes. We have delivered that because hand sanitizers numbers are much lower in quarter 2 compared to quarter 1 because of the pipeline selling which had happened there. So that is the first question. The second question which you had, if you can just sort of regen my memory, this is the first one was this and the second one was on? Yes, on margin improvement. So what are the improvement you think? I mean, I think, I will basically, I've said this many times, cost consciousness is an intrinsic part of EBLP in DNA. A strategic well planned program, Phoenix, which are Phase 1, Phase 2 is continuously on and that gives fuel for growth. But at the same time, we continue to look at every line and we continue to look at multiple programs. Phoenix is one of the big programs, which we talk about and it's good to sort of bring you around that. But we look at multiple programs, all line items, all line items, I want to say that, across regions to be able to work on costs. And as I was saying, our war on cost will continue in times like this and in general because we need that ammunition to grow. Basically, we need that that becomes an for our growth in physically in the business and also to give better returns to stakeholders and shareholders. Sir, no, actually my question was very different. So my question was more like the improvement has largely been on account of Phoenix 1 and Phoenix 2 is yet to flow in, that's my only question in the margin. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] We had Phoenix 1, Phoenix 2, I'll also ask Ram to explain on that. I think my request to all of you is not to get too carried away by this. I think what we are committed to is actually a continuous steady improvement in our EBITDA. That is what we are committed to. Now if how that comes through are different things, Phoenix 1, Phoenix 2 in future some other programs, there will be programs which will help that. Some programs are not named, but they also help. So I think the point is that journey will continue. To very specifically answer your question on Phoenix 2, I think the programs on Phoenix 2 have already started. I will also ask Ram to elaborate a little bit more. So some of them may be built in, some more will come. So from a point of view, I think what we are committed to is to continuously look at the EBITDA margins we have and how do we deliver good EBITDA margins and inch up our EBITDA margins as we go forward. Ram, over to you. Since we are a global company, there are some natural opportunities comes in, right. There are something we do better in one region. We could benchmark. We could adapt. So the Phoenix is all about best practices in terms of production efficiencies, in terms of material usages, in terms of materials itself, all that we continue to look for and benchmark against our own units, against the market competitiveness of. So all these programs are ongoing programs. There will be enough opportunities. The COVID also has helped us in another term, right? That in the Q1, you all know that we never get enough number of people. So naturally, with the existing staff, since we were running all our plants, we have efficiently run and delivered the Q1 results. That has given us different kind of learning that we could do further optimization of our processes, which will better the output. So now that we are seeing it in Q2 and we'll see going forward. See, all in all, manufacturing is about look for every opportunity where you could improve, improve in terms of cost, improve in terms of customer delivery, improve in terms of product quality. All the 3, we are continuing to look into. Product quality will give product recognition in the market higher growth. Costs will give us better benefit in terms of improvement in margins. I think we are well set and it is partly becoming a culture of the organization. Is it answers your question, right? That's really helpful and thank you all the best. Thank you. Thank you, sir. Ladies and gentlemen, please switch to questions to participants. We have next question from the line of Ashwini Agarwal from Ashmore Investment Management. Please go ahead. Hi, congratulations. Pretty good set of numbers in a very difficult operating environment. Couple of questions relating to the acquisition. How much debt are you acquiring? And could you share the pro form a number of shares that will be issued as a result of this transaction? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So I think the acquisition would largely be funded through internal accruals. So that's all I can share with you at this point in time. And on the number of shares, I think basically we will be to give you an indicated number, it will be about 23,000,000. This is not an exact number, but that will be the number of shares approximately. Suranshu, my question was that how much debt is Creative carrying, which needs to be taken on? Yes. So, Suranshu, our number of shares, let me correct on the call, it is 2,300,000 not 23,000,000, I'm sorry, 2,300,000. But your question was on how much debt is Creative carrying? So what is the net debt in this? I think it is it may not be appropriate for me to share that at this moment. I think it is still so therefore but we will be able to share it with you at an appropriate time. Time. And you expect to close this by the end of Q4? Yes. In the best case scenario, we want to close it in end of yes, by Q4, early Q4. So basically, it's not sort of so we are signing today and we should hopefully be closing in about 45 days 45 to 60 days. The other question I had was a broader business outlook. I mean, we've seen a steady improvement in India over the last 3 months with September being quite strong based on other parameters that we're looking at. But your business tends to be a little bit more defensive because it's essential, it's oral care and so on. But are you also seeing an acceleration on a month on month basis? And how should we think about the quarters ahead in the 4 regions that you broadly break your business out into from a revenue perspective? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So I tell you, in this year now, now, again a very good question, but in a year like this, in COVID year, my request to all of you and to and good you asked this question is actually it is not as usual. So therefore to look at quarter on quarter both for our business and for the region, of course, we look because we report quarterly, you will look at it like that. But I think as we keep growing the year as the year goes by, we have to look at both cumulative and quarter on quarter. And if you look at that's the reason when I talked of our numbers this time, I first told you where we are on H1 because there is a bit of a there is a lot of dynamics happening in different regions, quarter 1, quarter 2, in quarter 3, quarter 4. So first the headline, we remain committed to delivering good growth even in these tough times in this year. So that is a given at a global level and that is a headline I want to first leave you with. Now how does this vary from geography to geography quarter to quarter? Let me just give you an example of India and you talked a bit about India as well and you talked about India when you talked about September. So India in quarter 1, we had a very hard lockdown in April and so therefore April was almost everything was shut And then May started opening up, June came to normal. So India was depressed, Amica was depressed in quarter 1. India has delivered very good quarter 2. I think you know, so with about a 7% plus growth in revenue and a 28% growth in EBITDA. I think that has happened in quarter yes, so and sequential growth of 20% as well. So I think you know Amica which is largely India I think delivered a very good performance. Now the thing which we are seeing is and you know with few customers but I'm taking the liberty of sharing with you is that the demand for tubes peaked in last 2, 3 months, you're absolutely right in September. But we are now seeing and so we suffered in India from a supply side in quarter 1. We are seeing headwinds from demand side in quarter 3, basically in India. So when I say I'm seeing headwinds, what I mean is that some of our key customers with demand is not there now. So therefore basically there is a reverse pressure at least on our category. Now is that because the demand is not there in the market, is that there is a bit of overstocking, understocking, So that phenomena needs to be peeled. So did we because we delivered actually indeed some of those customers delivered a fantastic August, September, July, August, September. So did they peak there? There is also a change which is happening in India in pack sizes especially in our category. So what is happening is because of this stocking up tendency, everybody is stocking up and partly because of the supply constraints in quarter 1, a lot of our customers tended to go for bigger size tubes, if I could say, in the respective category. And therefore, their volumes may be better, but our volumes are the tube volumes, right. So I think and therefore, our large pack sizes have done slightly better, but our small pack sizes may be different. So suffice to say that this dynamic is playing out differently in different regions at different times. COVID is also playing out very differently in different regions at different times. So Europe second wave is very strong as we speak. America numbers are still going up. India seems to be in a reasonably good position something let's see Diwali and the festival but I think so that is so our reading is that some demand headwinds will remain at least from what we've seen in India But our confidence is that we'll be able to navigate it through wallet share gains, through new pipeline wins and also with existing customers as much as possible. But we are seeing a mix of everything is what I could share with you. Okay. Thank you so much. All the best. Thank you. Thank you, sir. We have next question from the line of Vicky Panjabi from JM Financial. Please go ahead. Hi, sir. Thanks for taking my question. Just quickly on the acquisition again and again on the plastic tubes. My understanding was that globally we were pursuing a growth opportunity which is conversion of plastic tubes to laminated tubes. And now we are possibly looking at building a business, which has also stronger capabilities in the plastic tubes as well. Is there I mean, is there a change in that thought process earlier or is there something that I was missing in terms of my understanding? So let me tell you one thing. We will continue to remain laser focused on our laminated tube agenda. I think you know that is what we know very well that we will continue to drive. But if you look at our growth opportunities as we go forward, we've also said that our ambition in the next 5 years is to deliver double digit growth. We've also said that a lot of our growth have to come in Beauty and Cosmetics because that is where we need to do share expansion. And in light of all this, if we then look at the market and I think, Vicki, maybe you are aware, but maybe I'll take a minute to again look at that. If you look at the global market on tubes, it's about GBP 40,000,000,000 or maybe GBP 42,000,000,000. Of that, laminated tubes is half of the market. It is half of the market, which is between plastic tubes and some aluminum tubes. So even if we run very, very fast, we cannot convert that 50% of that market in a hurry. So our conversion agenda will continue. But I think if you look at especially again if you look at Beauty and Cosmetics as a category, which is about 14,000,000,000 cubes globally, I think a majority of that is in plastic globally at least. So I think you know and that is a phenomena which we have to recognize. So there is laminate in plastic there. And there is of course aluminum conversion opportunity in Pharma a lot more and a bit in Beauty and Cosmetics. So I think our conversion opportunities will continue, specifically aluminum to laminates and moving forward some aluminum to plastics as well. But in order to play beauty and cosmetics comprehensively, in order to win this market rapidly, we believe that we've got to play with a twin engine. We'll basically be able to do both, which is to laminated tubes and laminated tube conversion. But at the same time, for certain brands and certain customers on their very specific requirements, we should be able to deliver on plastic tubes as well. So I think that's our thinking. India is a good market where we have a very strong share in laminates. We have a share in plastics but could be better. So it is a good opportunity for us to test this hypothesis and to double down on this one. Sure. So would this also mean that we would look at international opportunities in plastic tubes and would that require different set of capabilities because internationally we will be competing with different players who could be well entrenched? See, you know about this industry and this business. I think scale is very important. So wherever we play, we need to play with scale. So I think in India, we are confident that we'll be able to get scale with what we've done between us and creative, which gives us sufficient scale and have to be able to play plastics really well in India. We'll have to review this and weigh this as we go forward and evolve. So absolutely cannot comment on that. Sure, sir. Thanks for that. Just last thing and this is just a minor clarification. You said that there will be 2,300,000 shares. Is that 2,300,000 shares be are we acquiring 2,300,000 shares or are we issuing 2,300,000 shares for the balance sheet? We are issuing 2,300,000 shares for the balance sheet. Okay. Sure. Thanks a lot. It's mainly 2,300,000 shares, not exactly 2,300,000, but the number will be sort of known to you. Sure. Thanks a lot. Thanks a lot for this. Thank you, sir. We have next question from the line of Sanjesh Jain from ICICI Securities. Please go ahead. Thank you and good evening. Couple of questions from my side. First on the acquisition, I was just doing a simple math. If I take up full capacity and divide it by that revenue, so it says INR 5 rupees a dividend of a realization. We have INR 3 rupees kind of a realization ballpark there. And we also said that we have a significant headroom in terms of expanding capacity. Are we talking of existing capacity or are we talking about optimizing and debottlenecking? How should we see the capacity for this 200,000,000 tube company which are acquiring? That's first. Second question again on the acquisition, what is the customer overlap we have for the 2 companies that is EPL and the Creative, which we are buying, is this adding significantly in terms of new customer to us? And how are we looking at it in terms of expanding the plastic? We will push we'll try to convince some of the customer to get into laminate or how should we see you leveraging this new customer base to expand your laminate business as well? And the third question, for next few years, where do you see your personal care contribution as an overall company? Earlier, we were talking about 50, 50, we are already at 47, I think that guidance doesn't remain any valid now. So just some thought there. Thank you. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes. So I'll also let me talk a bit to it and then I'll ask Ram to build on it also. But let me so first of all, to your first question, so are we so to answer to your first question without giving you numbers that there is enough headroom in the capacity available with them. But having said that and maybe Ram may talk a bit more to it as well, there is room for us to rationalize and reorganize in the way as we go in the fullness of time and therefore be able to extract a little bit more out of it. So I think it's both. It is available headroom as is and there is of course further room for reorganizing and therefore being able to do that. So that's on the first part on the capacity part. On the third question, if I remember right and the second question was between plastics and laminate. See, my point is that there are certain customers who require certain type of tubes. Now I think there are we can we will continue to convince them where we want to convince them and we think it's a win win for us and the customer and hopefully consumer. We will convince them on what is right and if that's right is laminate, it will be laminate. But if there are places where they need, especially on decoration, sometimes on shapes, imagery and maybe slightly more premiumness or smaller quantities, I think it may be it will allow us to play that better through our play in plastics as well. And I think third question, if you were to just rig me a rejig my, I think what was the third part you said to this one? What's your target for your first question? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So that's a good question. So I want to also say this, see the business we are in and I say I have said this to many of whom I have had a chance to interact 1 on 1. The business we are in is to continue to diversify our portfolio and make it richer. And by diversification of portfolio, it is diversification of category portfolio, which is what we call here slightly more simply personal care and oral care, but and it's also diversification of our geographic portfolio. Why are we winning in this year? We are winning because of our portfolio, geographic portfolio and category portfolio. So our journey is to continue to diversify this portfolio to grow it further in which we will continue to drive leadership in Oral Care, we will continue to strengthen Beauty and Cosmetics, we will continue to drive AURMA and we will build food and home as we go forward. We have to build a very diversified portfolio. That's what we are committed to. Now how the numbers stack up will in the way you are looking at it, it will cross 50, maybe it will cross 50. But I'm saying the point I'm making is we will continue to drive this portfolio to continue to diversify it and we will strengthen some of these other categories and that is the purpose. Simply put that was said as fifty-fifty in the past and as we drive this portfolio if that number will change it will change. But what we are committed to is to drive that portfolio, diversify it, make it more premium, make it more ASP and margin accretive. I think those are the journey we are on. And I'll ask Ram to add on a bit more on the on especially your first point and other points as well. Sanjay, this is a very interesting way of saying revenue divided like capacity to get an average sales price. See, there are 2 fundamental differences. Creative does only beauty and cosmetics. As we were always explaining to you, beauty and cosmetics are slightly higher priced, more higher priced in terms of an average sale price. In plastics, it's still higher, okay? There are 2 fundamental differences. Whereas we as EP2, as you rightly know, 47% of personal care and 53% of oral care. So we have a large portfolio of oral care. So that makes a difference in terms of an average sale price. This is the first question. In terms of a headroom, we'll always actually say that we will see, we are a leader, we have enough capacities, they have enough capacities. We will see and optimize. We'll bring in our efficiencies to that plant. And whatever we could do to improve their utilizations, we will continue to work on it. In terms of new customers, there are some customers will be an overlap. There will be some customers will be new. Both will add value to our businesses because we are most we being a market leader in India, we deal with most customers. Some of the customers are buying from them too. So there will be an overlap to that extent. There are some of them are exclusive to them, which will add new customers to us. Then in terms of our Personal Care, it's a very dynamic measurement, right? So we continue to grow in Oral Care. And if we get into a geographical area like Europe, we already have a very high amount of Personal Care. We are putting lot of efforts to grow in oral care in that region. Likewise, this also will change the dynamics. So in net, what we need to see is as we continue to grow in Personal Care, it improves our margin. That's our stated objective. So we stated 50,000,000,000 it could go to 52,000,000 it could go to 53,000,000 but it is not by keeping stagnant oral care. We will continue to grow oral care. There are some market higher amount of focus, some market is only an organic growth. So we will see how that how it goes. In terms of so thereby, we are moving average. 50% is not static. Oral is not going to be static also. That also you have to keep. Our focus is on both areas. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes. No, well said not, well said. I think that especially the Europe example is a great example. So it's about diversifying our portfolio. So therefore, you know and basically being able to diversify because each segment brings something to table. And when I've had 1 on 1 conversations with you in the interest of time, I won't get into that. But I think the point is there's a role to be played by each segment and we believe it's diverse portfolio, which is important. That's great. Thank you and best wishes. Thank you. Thank you. We have the last question from the line of Suman Kumar from Motilal Oswal Financial Services. Please go ahead. Yes. Hi, sir. So we have seen Europe business has shown double digit growth since 10 quarters. So can you talk about double digit growth, I'm talking about. So can you talk about how things are going to happen? What is the growth outlook for the Europe business? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Just repeat the question once more, please. I missed out, sir. So it's regarding Europe business continue to show a double digit growth over 10 quarters. So can you discuss more about the Europe business going forward? Is it going to maintain the momentum of double digit growth? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes. So Europe business, we are very excited about as I just shared with you when I was talking about that. You are right in the last 3 quarters we delivered double digit growth. Even in the immediate 2 quarters we've delivered strong double digit growth in Europe. See just to give on what Ram just mentioned, see the point is we see Europe opportunity slightly differently. We see the Europe opportunity from 2 points of view. 1, we can and should be able to get more steady oral business in Europe. There is potential and that those conversations are on. So that is one opportunity. So that gives us a big leg up in Europe and that will bring in more growth as well. Some of it is already in pipeline as I speak to you. So I think you'll also that gives us confidence that we will continue to grow in double digit. At the same time, we believe that there is continuous share gain opportunity in Europe. So therefore, we are also excited by the share gain opportunity in Beauty and Cosmetics and Pharma to some extent and I think that is the second area which is interesting. 3rd area, which is very interesting and I think where share gain we are very excited with is on our sustainability journey. So I think therefore, our ability to give robust sustainable solutions because Europe will be at the forefront of that journey. And hopefully, we will partner with customers and be able to deliver on that. And third thing we are excited about Europe is basically there is also a conversion opportunity. So conversion from rigid to plastic tubes and very classic example being on shampoos, on hair care, hair shampoo and hair conditioners. I think that is also an opportunity and West is a little bit ahead on that and Europe to that extent is a little bit ahead on that. So therefore, that is another opportunity. So there are clear opportunities in Europe which we have a very well detailed and planned out pipeline, which gives us confidence that our Europe growth journey will continue. You said for the acquisition, you will use internal accruals, but we are raising a 150 crore of non convertible debenture. What is the purpose of that? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So I'll ask Bharat to respond on that. I think the point is that this is yes, so Bharat will take that one. Yes. So we already have an entity of the figures on our books. And so therefore, that's something that we may think of refinancing. And at any point in time, we always seek approval from Board looking at the overall requirement of cash, which is that requirement is global with respect to so many other purposes. And you're linking that to acquisition, I don't think would be appropriate at all. Yes, absolutely. I think so therefore there are several things happening in different geographies and we are looking at different things. So I think it's part of our ongoing business. Okay. Last question, can you discuss about the key drivers of EAP? Key drivers of EAP, actually China. EAP, East Asia Pacific. So key drivers of EAP is, I think what we are really proud of our EAP business is that we are drivers of EAP is I think what we are really proud of our EAP business is that an innovation, their agility and their ability to look at particularly caps and closures and so basically to look at innovative designs in that space. I think what the team has done in this year especially is they have also adapted brilliantly to what they call in their own terminology new emerging brands. So what is happening in China is a phenomena of 2 twin phenomena. One phenomena is a shift between what is physical retail to e commerce or digital retail. And I think because of COVID, digital retail has actually grown there like it has grown in many parts of the world including India. So therefore that has spawned new brands as well with it and therefore they use the term new emerging brands. The second thing which is there for new emerging brands is like in many parts of the world particularly in beauty and cosmetics there are now more specialized niche new emerging brands that are coming up. And that is true in China, it's partly true in U. S, Europe, including India actually if you look at a little bit. So I think that is another place where they are playing well. So basically it's our agility and our ability to do this which gives us confidence in China as we build our portfolio with multinational customers which was our original stronghold. We also will continue to drive with local customers and local kings as my Chinese colleagues call them. And now basically these new emerging brands, many of them going through a new channel of e commerce. So we are confident of being able to drive EAP and more specifically China through some of these innovations. Yes. Thank you so much. Thank you. Thank you. Ladies and gentlemen, that was the last question. I'd now like to hand the conference over to Mr. Ankit Gaur from Systematics Institutional Equities for closing comments. Over to you, sir. Hi, thank you. Thank you, Sudanshu and my colleagues for taking our time. I would like to wish a happy Diwali to everyone at EPS. Subhanth, I would like to hand over call to you for any closing remarks. Thank you. [SPEAKER SRINIVASANTH MAHENDRA RAJAH:] No. Thank you very much for your interest. It's actually been a long call already. I know we are all we are in the festive season. So thank you for your support. And as you heard from us, we continue to remain committed to delivering superior results. Delighted to have shared all the news and the results with you. Thank you. And once again, happy Diwali and a happy festive season to all of you. Stay safe and stay healthy. Thank you very much. Ladies and gentlemen, on behalf of Systematics Institutional Equities, that concludes this conference call. Thank you for joining with us and you may now disconnect your lines.