Q1 20/21

Jul 30, 2020

Thank you, Raymond. On behalf of Antigas Stock Broking, I would like to welcome all the participants of the call of SFL Propex. From the management, we have Mr. Sudhan Shwad, MD and CEO Mr. Ebar Ramasamy, COO Mr. Paraksha, CFO and Mr. Abid Jain, Head, Corporate Finance Mr. Suresh Sawaliah, Head, Legal and Company Secretary Mr. Deepa Ganyu, Regional Vice President, AMESSA and Mr. Ashok Khoshe's Regional Finance Controller, AMESSA on the call. Without further ado, I would like to hand over the call to Mr. Wirth for opening remarks. Over to you, Mr. Wirth. Thank you, Manish. Good evening, ladies and gentlemen. Thank you for your time and thank you for joining this call. I hope you are safe. Your friends and family are staying safe and staying healthy. It is indeed my privilege and pleasure to share with you the quarter 1 FY 2021 results of SL ProVac. We have delivered a very good quarter. We've delivered a revenue growth of 17.7% with better product mix and operating leverage coupled with optimized costs and a very, very close watch on costs, we managed to grow the EBITDA at 35%. This 35% EBITDA growth translates into 19.8 percent EBITDA margin in Q1 FY 2021 and is a 260 bps improvement on EBITDA from previous period, same time previous year. Our PAT growth, excluding exceptional items, has grown is BPS113.6. So we more than doubled PAT in this period, increasing our earnings per share from INR0.90 to INR1.92. We managed to reduce our net debt from INR 511 crores to INR248.2 crores. So focus on capital efficiency yielding results has driven our return on capital employed from 15.7% in Q1 FY 2020 to now 19.9% in Q1 FY 2021. So it is a substantial 4.21 bps growth over the same period last year. Importantly, it's also sequentially a handsome growth in return on capital employed, which is now closer to 20% at 19.9%. If I was to describe our quarter to you in 2 words, I would use 2 important words, disciplined and determined. We've been disciplined to imagine boldly, to think of new vistas, to think of competitive gains in these tough times, and we've been determined to drive the performance with dedication, with execution day after day and with our plants and everyone across the world working tirelessly to deliver these results. If I was to talk about all our 20 plants have been operational. We proactively work to ensure that we have the best standard operating procedures. And I'm happy to share with you that in some cases, the SOPs used by us are being used as a role model for industries in and around in the cluster in which we operate. We've actually also worked on and I spoke to you briefly about this in the last investor call in May on launch of a new category of hand sanitizers. And I'm proud to share with you that we've made very good progress. We now have partnered with 50 brands, 50 plus brands actually across the world, both multinational brands and local brands, and are confident of delivering the pipeline, which we had spoken to you last time of 150,000,000 cubes. We've commercialized a large portion of it in quarter 1 itself. In management through all this period, what we've done is actually used 3 things: communication, very clear feedback mechanism and clearing the path. So if I could use so it was basically a practice committee constituted, which had all the senior members, many of them are around this call with you today, and we would do this regularly. So it's about communicating, it is about continuously getting feedback and clearing the path wherever necessary for our teams to be able to deliver. Our emphasis on cost management need not be underlined again. You are aware of the Project Phoenix we started last year. We are continuing that. The Phase 2 of Project Phoenix is now running very effectively across all our plants across the world. Overall, our liquidity management position is very strong as well with our gross cash position at INR 3,101,000,000 or INR 310 crores at the end of June 2020. The renewed focus on capital efficiency is leading to reduction in net debt and I think that is a phenomena we will continue to focus on this area as we continue to drive market leading revenue growth. So this is something which we will continue to do. At this moment now, let me allow me to take some time and talk to you through the 4 pillars we have emphasized on achieving our mission. And let me start with the 1st pillar and share the progress with you on quarter 1 FY 'twenty one for all these pillars. So let me first start with the first pillar, the accelerated growth in Personal Care. So if you look at it, in the last 10 years, we've delivered a CAGR of 15.9% in our Personal Care category, which include Beauty and Cosmetics, it includes Pharma, it includes parts of food and even home and art kind of categories, which are part of it. Slowly but surely, we've been opening new categories. The latest one to be opened in this space is hand sanitizers, which I spoke to you about, and we are pursuing some others as we go forward. So in this quarter, we delivered a 21.2% growth in this category. So after a CAGR of about 16% over the last 10 years up until FY 2020, This quarter has started well in this space as well with a growth of 21.2%. This has led to the contribution of this category now standing at 49% at the end of quarter 1 FY 2021. This is really happening. If you remember from the last call, we had gone to 45% in FY 2020 from 43% in FY 2019. So I'm delighted to share this number with you. Having said that, I think these are COVID times. So as we go through the year, we are committed to improving this number, the over 45% of FY 2020. 49% number of this quarter may or may not be the number we continue as we go forward. So our commitment to improving our product mix, to balancing and strengthening our portfolio and growing Personal Care is steadfast. As a matter of fact, I'm delighted with the number we've delivered in this quarter. But I'm equally conscious of pointing out to you that these are COVID times and some categories may have got affected a little bit more than the others. So therefore, I wouldn't take this quarter number as cast in stone. I think in terms of our progress on Personal Care across regions, I think it has been very good. I think we've grown very rapidly and in East Asia Pacific, China. China has seen a very strong V shape recovery. So overall performance in China has been very good, but at the same time, I think our Personal Care growth there has been stupendous. Against the 21% CAGR in the last 3 years in this category, we've delivered a growth of 90.8%, almost doubling this in this period. I think our growth in Americas has been about 30.6% in this quarter, ahead of the CAGR we've delivered in the previous 3 years. And in Europe, that growth has been 37.3%, again 19% CAGR which we delivered in the previous three quarters. So I think as you will hear more from me on Europe, Europe has delivered a very strong performance both on revenue, but more importantly on margin expansion. I think our growth in EMEA has been muted. But if you were to look at our growth versus some of the peak competitors and more importantly, some of the FMCG companies who declared their results in India and we've seen 3 or 4 results already coming out. I would say that we continue to motor and we will make progress as we go forward. So good progress on Personal Care, now contributing 49% in this quarter and accelerated growth across regions. I think the 2nd pillar is continued leadership in Oral Care. And I think on this pillar, again, you would remember that we've delivered a 10.1% CAGR through FY 'eleven to FY 'twenty, about 10 years CAGR of 10%. Even in this quarter, when I must say oral as a category has been under pressure on account of India particularly where we have a very strong presence in Oral Care, but also on travel tubes, on sample tubes where there is a large component of Oral Care in these categories. Despite that, we've managed to deliver a growth of 10.4% in quarter 1 FY 2021. So we are delighted with this. We continue to strengthen our position in Oral Care. We are basically you are aware, we are market leader across key markets. We are continuing to strengthen our long term relationship with customers. We are working through product and process innovation on sustainability and you will hear from me on that as well a little bit. We continue to remain agile. So our wallet share gains are growing with marquee customers and we've shown considerable resilience against COVID-nineteen impact in this category and across regions and I would like to single out where we've done a very, very good job in this place. I think the 3rd lever, which we've spoken to you earlier, which is an important pillar of our mission is improved performance in Europe. I'm absolutely delighted to share the performance which Europe has delivered. So first of all, the revenue growth of Europe in this quarter, which we spoke about, have been stupendous. We've delivered a revenue growth of over 30%. We spoke about that. It's been Personal Care growth of 37% and Oral Care growth of 19%. So strong growth in Europe. Because of the accelerated Personal Care growth, the percentage contribution of Personal Care in Europe has gone from 64% in FY 2020 in that geography to 70% in Q1 FY 2021. All our efforts which we've put in, in the last couple of years are now yielding results. We strengthened our front end organization. We've improved considerably our pipeline development process. Our investment in capabilities and flexibility and agility have really paid dividends in accelerated growth in Europe and particularly our ability to open new categories in these tough times. The other important feature is that while doing all of this, we managed to expand our margin. So at Q1 FY 2021, our margin stands at 15%. This is almost a 500 bps improvement over a year ago period, but it's also about 220 bps improvement against our FY 2020 number. So our journey on strong growth and EBITDA margin improvement in Europe is truly there and we are basically confident on building on this. So the Europe performance is indeed in these times being very, very heartening and this is a very, very strong green in terms of our pillars. Finally, I think on industry leadership in Eco Friendly Solutions, we've always talked about it. We are committed to sustainability and we are doing more and more work in this area. I must say, Platina, which is, has been fully recyclable laminate, is now successfully recognized by APR. We've also got Green Maple Leaf, which is in Personal Care, that has also been recognized by APR. Our E10 cubes, which are on reuse, are now being used by Oral Care, a global major. So we've also the hardening piece, which I wanted to share in this as a news in this period with you is that we've now commercialized many of these between Oral Care and Personal Care across geographies and across some large marquee customers. So I think with this, I think I would like to once again end on the two words I talked about, which is disciplined and determined. We are disciplined and we will bring in the power of disciplined creativity to find newer ways to grow. We are committed to grow and you would be I'm sure all of you around the table will appreciate the 17% growth we've already delivered in quarter 1 and we are well on our way to deliver a good year. We are determined to seize these opportunities with full determination one day at a time, one relationship at a time with resolve that is totally unmatched. So thank you ladies and gentlemen, disciplined and determined SL ProPak. Thank you very much. We will now begin the question and answer session. The first question is from the line of Tilok Agarwal from Birla Sun Life. Please go ahead. Yes, good evening, sir. RTS, congratulations on a wonderful quarter. And I must say, you guys, to the whole team, particularly to get this kind of execution in a very tough quarter is very commendable. A couple of questions I had. One is, if you could just share some thoughts on Asia Pacific, What drives what drove such strong revenue? And obviously, I would assume that margin I mean profitability is a function of cost leverage. If you can throw some light on that region? And also in context of Health and Hygiene, particularly in Asia and I'm sure you must have been seeing this trend across the world picking up. Do you see if you think the acceleration towards higher sales to sales will be much faster than we already been touched? So could I request you to repeat the second part of the question please for Yes. So I'm saying given the pandemic, the health and hygiene sort of categories across the world might be an acceleration in growth and adoption, correct? Yes. So in that context, do we see our sales to sales of Personal Care much faster than originally thought of internal plans? P. Vijay Kumar:] Yes. So I think let me quickly address the question and then open it up for Ram to comment on it further. So I think in terms of if you see our growth, you are absolutely right. These are really good growth. I think what has led to this growth is, I would say, 3 fundamental things. The first is a well balanced and a rich category portfolio. I think you know, so we've got a portfolio, which runs into different categories. And in times like this, it is very, very helpful. Majority of our portfolio is also at the stable end of the business, it's a stable business, a stable business as they say. So that is helpful absolutely without doubt. I think the second piece which has been very helpful in a time like this is our geographic spread and our presence across the world. And therefore, we've seen performance actually performance from across, but I think the severe lockdown which India saw in April May and I must say India has recovered really well in June. I think we've delivered double digit growth in India as well in June. But I think our geographic portfolio allowed us to balance these things and bring the growth out. And 3rd and most importantly is I think the management team and our agility and innovation. And I think what we demonstrated in this period specifically with the launch of hand sanitizers which we've spoken about and to be able to get 50 plus brands in the market in a period of 3 months I think is commendable. So I think those are the 3 key reasons for growth that we've delivered. We've continued to work on costs and I would ask Ram to comment a little bit more on it. So I won't let that let there be any duplication. Let me quickly go to the 3rd part of your question, which is on hygiene, health and hygiene. You are right, health and hygiene as a trend is a secular northward trend. It is a habit, which is what is called one of those sticky habits and is likely something which will continue in my opinion even after the pandemic is gone to some extent. And to that extent, you are right that I think it will allow us to accelerate and to participate in categories, some of the newer categories, which we've either opened up or which we will see opportunities in. So you are absolutely right. We will continue to motor in this zone as we go forward. Ram, if you would like to add on this one. Sir, before just one more question, if you can sorry, it's a follow-up with the first one itself. In Asia Pacific, again, just to get this clear, the growth is mainly a function of sales of Personal Care improving significantly this quarter? Or is that a meaningful client share or in case is there something else that we can read on this this in Asia Pacific, Ankur, particularly? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes. So in Asia Pacific as well, it's not see, I think there has been wallet share gain, which I think we should we will be there across. There has also been growth in Health and Hygiene, as you spoke about. I think at the same time, there has been growth in Oral Care. So I think, as I told you, for the world and even in Asia Pacific, so I think, therefore, we basically managed to grow each. So it's not one pillar that we are standing on. We've managed to grow this considerably. So I think and especially if you look at China or Asia Pacific, if you meant by Asia Pacific, China, I think we've seen a very healthy growth in oral care also. Ram, please continue. Yes. As we explained, we have seen a V shaped recovery in China, especially after the COVID, it hit them in the last quarter of the last financial year, right? So we saw that recovery quick, but we were continuously working on lot of brands, both in oral care as well as on personal care, especially hair care products. Those have taken up really well. So we have improved our balance adds with the existing customers. We have also added customers in that region. Similarly in Europe as well as in Americas. Unfortunately, India got fit in April. So you will see you would have seen a really muted growth in revenue in India, whereas others have grown then. So one good thing that as a company because of this Phoenix 1 and Phoenix 2 is our ability to control our expenses relation to the volume and the growth. So we are doing many projects. The projects are very structurally drawn in terms of usage of materials to reduce wastages, in terms of improved utilization of equipments and in terms of number of people that we employ across the enterprise. So everything has worked very well. That's why you see margins are growing too. Understood, sir. Thank you very much and wish you good luck. I'll come back in queue if I have further questions. Thank you. Thank you. Before we take the next question, we'd like to inform participants that in order that the management is able to address questions from all participants in the conference, please limit your questions to 2 per participant. Should you have a follow-up question, we request you to rejoin the queue. We take the next question from the line of Kishan Gupta from Citi Research. Please go ahead. Hello, Rakesh, this is Ed. Good evening. Congratulations on a great set of numbers, firstly. And I had two questions, sir. First is, what sort of interdependencies are there between the 4 segments? Yes. And do you want to say your second question also? All right, sir. And sir, you said that do not take these numbers in stone as far as Q1 is concerned. So can you give us a flavor without giving any sort of guidance, but if you can give us a flavor as to what sort of expectations do you have as management as the year progresses? Okay. Thank you. So I think first of all, let me tell you my comment on not to take it not to take these cast in stone was a very limited point on the 49% Personal Care because that we've been every year inching up and we are committed to inching that up. We have moved it from 43% to 45% in FY 2020. We are committed to moving that up further in FY 2021. I'm not sure the Q1 number will be fully representative of FY 2021. So that was the limited point actually on that one. We've delivered a very good quarter 1. We remain optimistic as we go forward. It is a tough environment, but we remain optimistic with the virtual cycle we've set in, in terms of wallet share gains, in terms of new category, which we've just opened up, in terms of the cost benefits and advantages, which should continue to flow through because that has become almost like a it's become habit and it's a good habit. So I think that discipline should continue. So therefore, we are seeing this, but it's a very tough environment, which I don't need to underline to all of you guys out here. So I think that's on your second question. On the first one, I think the interdependency on 4 segments, I think it's a very good question. I think, see, there is interdependency in actually many areas. So there is interdependencies or advantages you could call it or scale you could call it. It comes into play in basically weapons films and therefore our backward integration is very helpful. It's not that you prepare one film comes from one plate and another from another. That doesn't happen. There is a cost scale benefit which comes in manufacturing excellence and management of costs in that place. So there is interdependency to that stage, to that extent. And of course, there is interdependency from the point of view of customers because many customers play in many of these categories we are playing in. So therefore, you have a bigger share of wallet of the customer and your ability to therefore deliver better experience and a better service to that customer goes up. So I think you know so there is clearly advantages of that interdependency and the ability to play the word interdependency which you've used. But I'd like to call it a balanced and a strengthened and a strategic balanced and strengthening strong portfolio. All right, sir. Thank you so much for your time. And I'll come back in the queue for further questions. Thank you. Thank you very much. The next question is from Gauri Sharma from RoHA Asset Managers. Please go ahead. Yes. Hi, sir. Good evening. Congrats on a good set of numbers. I just had one question. Mainly it was on the 2 segments, Personal Care and Oral Care. So could you just give us the margins for those? And if you could just provide us with an idea about how Health and Hygiene is looking to be in the next few quarters? That would be really helpful. Thank you. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] We don't share margins at the individual category level. And therefore, it will not be appropriate for me to share that number with you. However, I will ask Parag Shah to comment on this one. On Health and Hygiene, Laurie, like some of your some person before you, I think the first gentleman asked, I think we think it is a category which will continue to grow. It's a sticky trend. So I think and that is good news and we are well positioned to basically take advantage or grow with this trend. Thank you, Sanju. You see our adjusted EBITDA was 20.3%, and the reported EBITDA is 19.8%. So if you look at the same margins in Q1 of last year, there was 17.2%. So clearly, there is a significant increase in the margins. Further, this improvement in margins has been across all our regions, particularly EAP, which has a margin of 27% Americas, 17% and Europe, which Suraj had mentioned earlier, 15%. So therefore, this improvement in margin is something that is driven by our growth both in Oral Care and in Personal Care. We did say that our Personal Care grew by 21.2%, Oral Care also grew by 10.4%. And we have explained earlier in our commentaries and calls that Personal Care ASPs are 1.5x to 3x the ASPs in Oral Care. And therefore, yes, product mix does help improve margins. So I hope that sort of answers your question. Yes. That does. Thank you very much. Thank you. The next question is from Farish Bantouki from IIFL. Please go ahead. Hi, good evening team. I have only one question. If this China growth, it's a stupendous growth of some 90% in the Personal Care division. If you can just break it up a little more granularly in terms of drivers, how much of it is completely new categories? How much is it existing categories, but new customers? How much is it cross selling to existing customers in new SKUs? And how much of it is wallet share increase? I mean, I don't expect exact numbers, but any kind of flavor that you can give on this would be helpful. And if you can do the same thing for the Europe top line growth also? That's it. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes. So suffice to say, you yourself partly answered your question, which is that it will be it is we do not share and it will be inappropriate for us to be able to give that kind of granularity here at this moment. But suffice to say, let me tell you what to try and give you a picture and therefore hopefully a little bit more color as to how things have been. So if you look at China, I think what we managed to do is we've managed to like across the world, we've opened up a new category. So yes, there is a new category in this growth, which is hand sanitizers. But let me also quickly add to you that the growth in China, net of that new category is also very high. Handsome. So I think therefore that's the first part. So therefore yes, there is a new category, but there is a very, very handsome growth in the existing categories as well. I think as Ram was speaking in response to an earlier question, we've added wallet share, we've added new customers, we've actually done innovations and we've opened up new tube types like tube in tube in this period. So I think there is a combination of everything which has gone in. I think broadly speaking the same is true for Europe. So yes, even in Europe's growth which you saw which are basically there is a new category and that new category is again there again it's hand sanitizers which is a new category. But even in Europe, what we've managed to do is to improve our wallet share with certain customers. We've managed to get new customers and I think it's the agility and our go to market, front end organization's ability to convert some of these things to basically first get to develop, get the business. And then our supply chain's ability now, which has become more agile and competitively more agile in a geography like Europe has managed to deliver this speed. So I think that's how it is. That's how I would respond to this. Just one clarification here, Suzan Shul, just wanted to understand if any of the sales this quarter in these two geographies are sort of due to bunching up of orders or any one off exceptional? Or would you say that the quarterly sales that we have clocked here is a sustainable number for the remaining quarters? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So I think good question again. There isn't any over bunching up of anything. So there is absolutely nothing of that sort. So it's not that there is basically anything of that has happened. But is there could there be a small impact in the in our global in our consolidated numbers and maybe even in these two geographies on a slight stocking up mentality which was there in COVID times? The answer is yes, but my sense is there is nothing overt there could be a little bit of it because that was the mentality which was there through and through from consumers to customers, to supply chain, to even manufacturers. So there is a little bit of that that may have happened But the trend is definitive and a lot of this is something which we can treat as something which is which we should be able to carry forward as we go forward. The next question is from the line of Sanjay Vimalakar from Canada Robeco Asset Management. Please go ahead. Yes. So thank you for the opportunity. Really commendable performance in the current situation. So one question from my side on the competitive intensity going ahead. Do you think the change in the current context, there will be change in the competitive intensity going ahead and we'll get much more opportunities to gain market share or wallet share going ahead and outlook on the competitive intensity would be correct? Thank you. So Sanjay, it's a good question, but I can tell you my broad understanding in this space. So yes, we believe that strong will get stronger. Packaging as an industry is a highly fragmented industry, very, very highly fragmented industry. So there would be opportunities for consolidation and there could be some consolidation as we go forward. If you this is a broad industry trend, I'm telling you. Now again, if you were to look at very specifically for SL Pro Pac, I think we've delivered really good results. We are strong. We've got a strong balance sheet. And I will be honest in saying that, yes, we are being approached. So there are targets which we could look at, but we will evaluate them for on merit and depending on what it is. And beyond this, I cannot say anything at this moment. But yes, from a secular trend, will there be a bit more consolidation with strong get stronger? I think the answer is yes. And hopefully, we should benefit from it. Okay. Thank you. Thank you. The next question is from the line of Ankit Merchant from Reliance Securities. Please go ahead. Hello. Congratulations on good set of numbers. Can you shed some light on the American market and how is that going to perform over the next few quarters? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Can you repeat the question? You meant Americas as a geography? Yes. Yes. Yes. Yes. So I'll say a few words, then I'll ask Ram to comment on this more as well. See, so Americas as a geography, it has also done well in this period. I think the period is quarter 1 FY 2021. But this the pandemic is everywhere. It is there in United States as well. And as a matter of fact, if you look at all of Americas, North and South put together, Brazil is also very severely affected as we can see from the numbers. So the impact is there. The impact is on certain subcategories, things like travel tubes, sampler tubes. But I think as we go forward, as a management, we are geared up to seeing where the opportunity is, as I was telling you, and to see how do we mitigate if there are any losses. So I think that's the way we will continue to drive that and I think there are opportunities as well which will open up. So and I think hand sanitizers in tube as a trend is slightly delayed in U. S, so it wasn't as pronounced as it was in other parts of the world. But I think there also it is slowly coming, it was more bottled there. So that is to some extent somewhat good news for us and we'll see as it goes forward. Ram, if I could request you to add more as well, please. Yes. In Americas, as we have seen, we have grown slightly better than normal CAGR in the last 3 years. But one this is in spite of certain sizes like travel packs and oral care are not picking up because of COVID reasons. But there are pipeline is very, very strong. We explained to you in last two quarters' call, we explained that we have won a large air treatment contract in U. S. That's getting ramping up. We will see as it goes along, that revenue will come in U. S. We are also creating lot of new customers, customer wins, which will start happening which has happened, but the actual execution will start happening as we go along. Yes, we feel very strong about Americas too. Sure. And just one question related to EAP. So we have seen a very strong EBITDA margin. So can we expect this to continue going ahead as well? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So you have seen a very good EBITDA margin. But like I was saying in the context of something else, I think this period is this last quarter is a little atypical. I would take that number. But one thing I wouldn't do if I was sitting in your shoes is to blindly pardon me for that word extrapolate that. So I think our growth is we will continue to strengthen our EBITDA margin. But I think in this period because of the mix some of the places the mix improvement on the margin may be accentuated. Just to put it in perspective, so if you would look at some of the areas where oral Care may have got affected a lot, You know that and Parag has spoken to it many times that our margins are much better in Personal Care compared to Oral Care. So I think if Oral Care got affected in certain geographies a little bit more and it's going to bounce back, then the mix effect may sort of yield a slightly different number. But I think the point is that, yes, the margin improvement is there. There will be strong margins going forward. Is that exactly the number I would extrapolate? I would. I think that's what I would keep saying for this. Sure. That's quite helpful. Thank you so much. Thank you. The next question is from the line of Saurabh Patra from HDFC Mutual Fund. Please go ahead. Hello, sir. Thanks for taking the question. I wanted to understand 2 things. One is, how much could we see in this EAP region specifically, the COVID virus has spread a quarter before. So is it possible that a part of a demand which we have seen now could be which could have been like would have been part of Q1 Q1 calendar year Q1? And the second question, which I wanted to know is, with the total pricing falling and like now stabilizing at a lower level than last year, HDPE prices, etcetera, have fallen. So how much of this has been passed on? I'm trying to understand the impact of the price reduction, if at all anything, has already been taken care? Or will we be seeing it in coming quarters? So let me take the first question and I will ask Ram and Parag to comment on the second one. I think on the first question on AB growth and I think there was a COVID in quarter 1 calendar or quarter 4 fiscal year. And is there a bit of carry forward of that into quarter 1 FY 2021 or quarter 2 fiscal? The answer is yes, there is a little bit of carry forward. It will be incorrect for me to say that there is no carry forward. That will be a wrong statement to make. But if you look at our revenue growth of 45.6% in quarter 1 FY 2021 in EAP, even if I was to take a little bit of that carry forward, I would be delivering maybe 70% of this growth still. I'm saying therefore even then it is a very, very robust growth to answer your question. So I think the growth is really robust. Yes indeed in 1 or 2 customers there could be and there is indeed a little bit of carry forward which is there. Understood. On the price, may I Ram, if you would comment and then Parag, if you could comment. The pass through is with a time lag. We have contractual customers. We pass the prices based on an agreement. Last quarter prices will be an effective prices used for this quarter, right? So that's natural. That keeps happening. But on the price front, crude oil prices are not directly correlatable linear due to polymer prices. Polymer prices will mostly depend upon also demand supply cap, right? Now because of COVID, there are many companies have scaled down their operations. Some plants have been taken first because the price has dropped so much and they don't have no margin. So most of the polymer there are a lot of supply side collections have already happened, and we see prices stable or growing. It's not dropping further on the polymer side. So that in any case, those price drops or price gains doesn't make an impact to SL Pro Pac because we are secured by our pricing strategy. Yes, I just wanted to understand like so my question was like I understand it comes with a lag and they would have a different demand and supply. So the only point which I wanted to understand about that, so if you see a year on year, so last year, this quarter and from now, there will be some change. I think there is a in STPS specifically, there is a bit of correction. So have we been able to already pass a part of it or is it still pending? Obviously, prices have been correcting every few months. So you would obviously would have been passing on a part of it. So the prices have already been passed on in Q1. Q1 prices, it's already passed on. The results are including that. And then see, because in yes So, Amit, just to add to what Ram said, you said this before that if you do an analysis of the prices and crude volatility over the past several years and you compare our margins in the same period, what you will find is that my margin remains in a very narrow band and is not really comparable with the volatility that one sees in crude prices. So I think that historical trend itself speaks for itself. True. And actually, finally, my question was not on the margin for NAC. It was largely on the realization part. So how could I I would want to build in my when I model my next year's growth or this year's growth? That was the only point which I wanted to understand. So I understand and I think your margin stability has been phenomenal actually in that sense. Yes. Thank you. Thank you. Thank you. The next question is from the line of Noshar Chaudhry from Systematics. Please go ahead. Hi, thanks for the opportunity and congrats on a very good set of numbers. Two questions I have on our am I audible sir? Yes. Two questions I have on our new product segment. If you can share, was there a meaningful contribution from our new products like Platina 250, GML and PCR in this quarter? And what is the size of opportunity you see in these kind of products? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes. So I think we started the journey. I'll also ask Ram to comment on this as I after me. So let me tell you on Sakena, what we've done is we've started the journey. We've begun commercializing it in many places. That is the number one. The second point important point is that this is a very important development for us. The reason I say it's a very important development is I think having sustainable solutions is a license to operate. And basically, therefore, to that extent, it's extremely critical. And in many places, it may allow us to get some amount of upgrading. But I think you need to understand the 2 in conjunction. I think it's a license to operate and it will definitely allow us some room as we go forward in certain areas to be able to up trade a little bit. Ravi, if you could build on this, please. Yes. With all the sustainable solutions, if you look at the market, if you look at many MNCs announcements, each one wants to be in that journey. Their product packaging should be converted into a recyclable material by so and so time, okay? This is a journey. The journey has just started. Our more important than at this point of time, more than the revenue, how our approval status of this product in the marketplace. So we are working with all MNCs. Our product is already APR certified. Probably, you know what is APR. APR is an association of plastic recyclers in U. S, which announced which test the product and say, this can go for a recyclable stream. That has been obtained for Platina. The recyclers is another association in Europe, which gives a similar kind of stamp for usage of saying your material is recyclable in Europe that we got it. So in India, BI standards are there. So in all the regions, this Platina is approved as a recyclable material. That's an important most important step. The second most important step is how this will behave with customers' brands, right? They need to do the stability to see their products are stable on that. We are in advanced stages with many customers. We have crossed the bridge in with some customers. So this is important. This is a journey, right? So this will happen as we go along. We'll see more and more revenue out of sustainable solutions. If we can talk something quantitatively on this, how much price differences are there in these kind of products versus the traditional products? And what is the timeline or how much time does it take for a customer to switch from the traditional teams to these kind of these activities? Fees? At this point, everything needs to evolve. At this point of time, globally, what will happen, you and me will buy a product because it is packaged on a sustainable packaging. Will we pay more? We'll pay slightly more, but we'll not pay hugely more, right? So the ability of a producer like us will be to find solutions which are cost competitive to the existing packaging systems. But having said that, there are challenges in terms of processability, there are challenges in terms of material costing. We continue to work. At this point of time, yes, it's slightly expensive. So therefore, there will be slightly margin will be slightly higher because it's not produced in an aggregated level. As you go along, we will see it will be better than the current products because everyone will not be able to produce such a solutions immediately, whereas matured products, duplication is easier, developed innovation products duplication is difficult, it will take time. So till that time that we will have our market growth in terms of revenue, that is more important than the margin because margin will automatically will come when the revenue growth happens. So we are well settled for that geography. Okay. Do you see this could be a sizable in next 3 to 4 years? Or would it take much more time than this? So the government says 2 years, some government says 3 years, some government says 4 years. I think it should start gradually. No one is going to wait for the deadline date. It will start happening gradually. Yes. I think just to build on what Ram said, I think these are timelines which have been defined and they are in public domain by certain governments. So I think to answer your question, this will gain momentum. And I think in 3 to 5 years' time, it will be of a certain meaningful proportion. Thank you. The next question is from Niman Shah from 1UP Financial. Please go ahead. Yes. Thank you for the opportunity. 2 or 3 things. I mean, is there a complete overall of your thinking in terms of because in terms of whatever innovation we do, competition normally catches up. And in terms of your renewable substrates, do you think this is a sustainable advantage for you till till such time competition catches up, number 1? Number 2, in your overall scheme of things, how would you want to really position yourself for a sustainable growth and these sustainable margins purely owing to the fact that most of the countries are now getting protective? So do you see a meaningful change in your strategy owing to that? So can you just answer these 2, please? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes. Thank you, Divan. I think in terms of innovation and Ram spoke about it, I think, in the previous answer or in one of the responses. See, basically, we are on a continuous innovation process. So I think let me tell you, as we've been speaking to you about Platina, and I think we managed to commercialize Platina, we ourselves have got the next avatar of Platina and the next avatar of Platina. It's called Platina DW and Platina Pro. And I think those are also coming in. So I think it's a continuous process. We are so treated like as a it's so we will continue to innovate, we will continue to remain ahead of the table. Would people catch up in some duration? The answer is yes. I think whether that will be that will vary from country to country in competitive intensity. But the good news is that we are we know this game very well. We are committed to sustainability and we will continue to stay ahead of the curve and have the 1st mover advantage. So if you look at Latina and Ram spoke to you about ABR, recyclasp and BIS, in my opinion, the only skin in or where to have all three approvals or all three. So therefore, that is so therefore, it shows that we are committed to this game, we are ahead and we have a 1st mover advantage. I think on the second question on the second question, if you could just remind me once again, I think it was about what sustainable Yes, countries are now productive. So do you think depending on the Look, I got it, I got it. See, as a company, our business model and I say this, we are a global company, but we are a global local company. We are global. So much of our manufacturing is done for that geography in that geography and a lot of it, to be honest with you. So therefore, in that sense, I think some of these developments which are there, we are watching these developments, but we believe and we are convinced that we have supply chain current supply chain solutions and possible supply chain solutions, which should help us navigate this very well. Great. And if I can just squeeze in one more. What would be your capital allocation policy given the margins are now much stable than yesteryear? And even growth seems to be kind of aligned, especially with the mix also turning favorable in favor of health care. So for every rupee or for every INR 100 rupee, whatever, How would you want to assign capital allocation? So what would be your usage going forward? So I will ask Bharat to comment on this as well. But let me quickly add to you this thing that, see, basically, we continue to remain committed to capital efficient consistent growth which we've spoken about that is our mission. So we will be basically utilizing capital very efficiently but ours is a capital intensive business. So will we be needing to invest where we need to will we be open to invest and investing where we need to invest? The answer is yes. So in a way, I cannot give a quantitative number to this, but what I'm saying is we will continue to invest efficiently and therefore and we would be ready to invest wherever it is needed. Bharat, if you want to add more to this. So one of the most important elements of our strategy has been articulated is about growth, whether it's accelerated personal care growth or it's about increasing wallet shares in Oral Care. And in order to grow, I think the company is very clear that capital would be allocated where required for growth. So that's a clear yes. What I would just simply like to clarify in detail is that when it comes to CapEx and expansion, you see our manufacturing process is essentially about making laminates, printing and tubing. And we are able to expand our capacities in a modular fashion. So based on my demand, we are able to allocate capital maybe in a printing line or a tubing line as required. I don't see any reason to put up new greenfield plants and therefore effectively saying that there is enough capital to ensure growth for the business, at the same time being prudent about it and therefore confident of delivering our mission of cap efficient consistent earnings growth. Just to interject here, Parag, thanks for that answer. Would you clarify, so suppose in a particular year or next 2 years, let's say, it's only organic growth, which is affected, let's say, 7%, 8%, 9% or whatever that figure is. In those 2 years, what do you mean you would be actively looking for acquisitions? Or would you enhance your payouts? Or how would you or suddenly, if you find too many acquisitions, then what money be used to acquire and possibly take a look at the inorganic side of it? How would you view this both these scenarios? So when it comes to inorganic growth, Sudanshu has already articulated earlier that it's something that we constantly evaluate as opportunities come our way. But there are 2 criteria, right? I mean, one is why would we want to acquire a business? We need to answer that very clearly for ourselves. And then the second point is it has to be at a right value or right price. So it is these 2. And very honestly, I mean, I think this is case to case. One can't have a more specific discipline. So clearly, we will evaluate. And if it's the right reasons and the right price, certainly, yes, there could be inorganic growth. In terms of funding for the inorganic growth, I think, again, it will be a case to case basis. But given our strong free cash flow generation and in terms of ability to fund such acquisitions, I think we would be able to do that. I don't see that as a challenge. We are not overly leveraged or anything like Thank you very much. We take the next question from the line of Varshit Shah from MK Global. Please go ahead. Thanks for the opportunity and congratulations on the management for converting this crisis into an opportunity. So there, you see such dynamic approach by companies. My question is around more kind of crystal gauge into FY 2022. And we have seen that the spike in demand on the back of sanitizer and other hygiene related products. If I were to just say that probably we could see this momentum in a couple of quarters ahead. But once this pandemic, let's say, cools off, let's say, a year from now, some of those demand will, of course, may will go away because of changes in behavior. But then that will also be compensated by some growth in other categories. So what I'm trying to ask is that do you see or at least maybe there is a reasonable possibility that 3, 4 quarters down the line, growth might face a challenge in terms of declining growth in sanitizer segment, which needs to be compensated by growing other segments. So that could set off sort of the growth for a couple of quarters in this transition phase? So that's my question 1. And then I'll follow back with question 2. Yes. Thank you for asking this question, Rakesh. Basically, I think this is a very often this is a very logical and a very obvious question to ask that you had a new category opening up and how would you perform if the category was not there. So let me answer first that part and then second I'll also pick up as to what happens if you go ahead in future. So first of all I can assure all of you around the table and I'm sharing this data with you that we've grown double digit without the new category as well. So therefore, we've delivered a 17% growth, but we've we believe if this category was not to exist, we would still have delivered a double digit growth in this quarter. So I think that should give you one clear indication on how things have panned out. The second thing I want to tell you is that as this category moves up and down a bit and settles out with certain level, and you're right, it will settle down at another level. I've been saying that we have to watch it for at least a year for us to see at what level this new category settles down. I must also tell you that in this period, there are certain categories which have got very adversely affected in certain geographies. So particularly if you look at India and arguably in some other geographies, beauty and cosmetics has got very adversely affected in the same period. So we have in this period lost a lot of that, which we believe is a pop. I don't think we've lost it forever. So therefore, I think that will come back again. So therefore, it's a mix of these that gives us confidence that we should be able to have a sustainable double digit growth or to aspire towards that to be able to deliver that. Sure. So that's helpful. Another question is just to follow-up on this. So you said you had double digit growth ex of the new categories. And if I were to adjust in constant currency terms, it should be high single digit. Is my assessment correct? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes, your assessment is correct because our growth is 17% or 17%, which we spoke about. Our constant currency growth is around 13.6%. So yes, so your assessment is absolutely correct. And just one question on the impairment which you have provided. So is there any such asset further which you think could be impaired? Or I think you that was probably the last one. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] That's a very good question. So let me first talk to you about Russia impairment a little bit. I think that's a question which may be of interest to everybody around the table. And then answer the second part of your question. So Russia and Televency, we've looked at Russia very closely over a period of time and we've assessed as to how should we be playing Russia. And I think if you look at Russia as a geography, I think we've in our assessment, there are some multinational players, which we could continue to play from elsewhere. So I think that we are very confident. We need not have presence in that place. So that's why we scaled this down a little bit in order to see how to cater to more the local companies in that space. So I think that's what we've done and that's what this impairment reflects. So it's our resizing and or rightsizing the opportunity and looking at a way to sort of you see this opportunity with a different lens and to be able to optimize this opportunity. I think as far as our presence in other geographies is concerned, it's pretty much there. So as you rightly said, we don't see anything immediately. But nothing you can't comment for something in the future. If something comes up, we may be interested in some places or we may like to reject the way we operate another place. So I think I wouldn't like to categorically say no, but you are absolutely right that we've got firm and friends positions in most places and we should continue to run them the way they are. Right. Because my understanding was that all these elements were already taken care of in Phase 1 of the project Scenic. So maybe this is a result of that, if I were to say, right, because you realigned your manufacturing operations and became more efficient. So yes and no. I'll ask also to comment on Phoenix each time. I want him to make it more clear to you. I think Fenix is a more comprehensive manufacturing excellence and cost saving opportunity across the country across the world. It's not necessarily a geographic portfolio exercise, which is an independent exercise. And I think so therefore, the 2 need not be directly linked in my opinion. And I think I'll ask also ask Ram to comment on this. I think Ram, if you would like to talk about Phoenix. Yes. Phoenix is absolutely the cost based on the way you do things, how effectively you can do things, the processes you have, how can you optimize the processes so that your resources utilizations are lower, all that. The consolidation of manufacturing sites and things like that needs to have a different level of understanding because these are products which cannot be shipped from one location to another location very easily. Customer buys it to his convenience where whichever is nearer. So those are the different types, right? So I share in time for over a period of time that we that unit for various reasons is a very difficult market even though it's a huge market. We were hoping to win large contracts, which has not been done in the last 4, 5 years. So we thought carrying it for a very long time is not right. So we thought of varying to the level needed at this point of time. But it's an interesting market. It's a huge market for cosmetics. There are a lot of going in, even though it's difficult to do business for every person. There's some you need a second skill set, which we thought we could acquire very quickly, which is not so, but we are looking at it. We will see how to what best we could do in Russia. Thank you very much. We'll take that as the last question. I'll now hand the conference back to Mr. Manish Mahwar for closing comments. Thank you, Raymond. On behalf of Antigistock Broking, I would like to thank the team of Aetel Protech for providing us an opportunity to hold the call. Mr. Subhanusho, would you like to make any closing comments, sir? No, thank you. I think I just wanted to thank you for the opportunity. Just wanted to take a minute to because there has been one set of questions which have come in, which perhaps somehow in different forms asked the question, is there any one off in this quarter? So I think there was also about the new category, about EAP and all that. So all I wanted to let people know is that irrespective of which way you look at it, it's a double digit revenue growth and it's a very robust bottom line growth. So I think that is one key message I wanted to leave you with, which we are very happy. And I think under these circumstances to be able to deliver double digit revenue growth and a strong EBITDA growth because of operating leverage and costs and mix improvement. I think it's something which we on behalf of the entire team, I'm very proud of. And I'd like to thank the team and thank you for your time. And I think we are very excited with the journey we are on. Thank you very much. Thank you very much.