Q1 24/25

Jul 31, 2024

Summary

Q1 FY25 revenue and earnings rose, with growth across major segments and biofuels gaining scale. Expansion, ethanol blending demand and specialty chemicals underpin the outlook, while input costs and financing costs remain key constraints.

Good evening, ladies and gentlemen. I am Palshia, moderator for the conference call. Welcome to India Glycols Limited Q1 FY 2025 earnings conference call hosted by Sunidhi Securities. As a reminder, all participants will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Start and then zero on your touchtone telephone. Please know that this conference is recorded. I would now like to hand over the floor to Rohit Sinha from Sunidhi Securities. Thank you, and over to you, sir. Good evening, everyone. Thank you for joining us on India Glycols Limited Q1 FY 2025 results conference call. I would like to thank the management for giving us this opportunity to host the call and congratulate them for good set of numbers. We are joined on this call with India Glycols management, represented by Mr. Rupark Sarswat, Chief Executive Officer, Mr. Anand Singhal, Chief Financial Officer, Mr. Rajesh Marwaha, Head Sales and Marketing, BSPC, Mr. S. K. Shukla, Head Liquor Business, and Mr. Ankur Jain, Head Legal and Company Secretary. I would like to invite Mr. Rupark Sarswat to initiate these proceedings with his opening remarks, after which we will have a Q&A session. Thank you, and over to you, sir. Yeah. A very good afternoon to everybody who has joined, and thank you for joining us. I, along with my colleagues, will give you a quick snapshot of how the quarter has been, and then we will take some questions. I will take you through financial highlights, a quick review of the segments, and a quick view of the financials as well. As you may have had an opportunity to look at, we have had a good quarter, I can say, especially I know over the last couple of years or perhaps more than that, we have been through a bit of a tight situation on the India Glycols front for all the reasons that we have discussed with you, for the several questions that we have answered. But it appears that broadly in terms of the strategy of the company, it has kind of worked for us, and it is also reflecting in the performance for the quarter as it also did in the performance for the last year. If you look at our gross revenue is up to INR 2,283 crores in the quarter, which is up 21%. On the net revenue front, which is net of excise, we plot the revenue of INR 969 crores, which is up 41%. Our EBITDA is up to INR 128, which is up 21%. Our gross margin is also up by 18%. Overall, I think a satisfying and a good growth quarter from our perspective. If you look at most ratios, they have moved in the right direction. Now, there are several things we will talk about. I think I would highlight here that one of the things which has driven our top line as well as, in addition to the bottom line, is the emerging biofuels business. Having said that, I think even in the chemicals space as well as potable space segments, we have seen good growth in top line as well as bottom line. Now you remember we have had several discussions where we have briefed you that our strategy to get into grain-based ethanol was kind of also expedited by the fact that imported ethanol prices were very high, which was something that happened after many years of stability. So that helps us to mitigate the prices, but it also provides us the opportunity to cater to the blending market that we are serving right now. More importantly, the imported ethanol price has softened, and therefore, all the grain-based ethanol that we are producing, we were able to channelize into the biofuel space. I will talk about what is happening in the biofuel and ethanol space, whilst many of you may be quite aware of it anyway. So, if I look at, again, one level, one layer below, our net revenue surged by 41%. For the chemicals business, now what we have also done is that till last quarter, we were reporting ethanol sales into the power fuel blending sector as a part of chemicals, but considering that it has become significant by itself, it is now reported as a separate segment. So you see that our chemicals business and basically specialities and performance chemicals business is 17% up year-on-year in terms of top line. The biofuels business on a quarter-to-quarter comparison has improved from INR 65 crores to INR 139 crores, which are good things indeed. The potable space business has also done very well to grow by 19.1% year-on-year. Our Ennature Biopharma business has also seen a modest, relatively speaking, a modest top line growth of 8%, and that is therefore also reflected in an EBITDA increase by 21.3% and an EBITDA margin, which is also better than the last few years, as you would see a steady trend at 13.2%. So in terms of some of the things that it was worth talking about, we have, over the last 2 and a half years, talked about our intent to invest in new value-added chemicals, starting from almost scratch from R&D pilot plant, commissioning one plant. We are nearly full with commissioning, and I think I can say that whilst it is a little early, as you know, speciality chemical businesses take time to build working with customers through partnerships and development work. Which is what makes them specialty chemicals. We have had a good start, and we are quite confident in terms of the foundation that we see has been built for the new value-added chemicals business. The other thing that we talked about, our joint venture has also seen significant recovery in margin, which is the joint venture with Clariant, which had also been under cost pressure for some time. Now you see why the joint venture top line has seen a nominal growth, but there has been quite a significant growth in terms of the EBITDA of gross margin, which is upwards of 35%. A lot of it is on account of the improved cost position and the ethylene oxide that we supply to them. That is one thing. Anand, I will give a bit of a segmental commentary, but could you highlight the financials? Thank you, Suj. Now for the Q1 2025 on consolidated basis, the gross revenue is INR 2,285 crores, which is up by 12% vis-a-vis the last quarter and 20% vis-a-vis the Q1 2024. The net turnover, the net revenue from operations is INR 969 crores, vis-a-vis INR 926 crores in the last quarter, which is up by 5%, and Q1 2024, it was INR 689, so up by 41%. PBT is INR 64.93, I will say INR 65 against INR 50 or INR 51 crores in the last quarter that ended on 31st March 2024, and Q1 2024, it was INR 58 crores. PAT is INR 60 crores against INR 42 crores in the last quarter and INR 51 crores in Q1 2024. For the current quarter on consolidated basis, the EPS is INR 19.5 vis-a-vis INR 13.63 in Q4 of the last year and INR 17 in Q1 2024. So this is what is the brief consolidated results. Okay. Thank you. Let me talk about our segments a little bit. If you look at our chemical segment, for example, we have seen an EBIT margin of 9.9%, and this is up from 3.362. EBITDA margin of 9.9%, the top line grows to 393. These numbers. So these are not growth numbers. For our potable spirits business, the numbers that I talked about, we saw a growth from INR 235 to INR 280 crores, which is 19% up and with a EBITDA margin of 17.5%. In the biofuels segment, our EBITDA margins, not only have we seen an increase in terms of the top line, which I mentioned, but also because of the improved structure of the cost, which is dependent on several things, which includes the cost of grain to us, the selling price of DDGS, and the sale price of ethanol. The overall margin position for biofuels has also improved from, which is EBIT margin position, from close to 5% to close to 8% now. In general, top highlights in terms of the segmental performance, I talked about the numbers. We see that to some extent our cost pressures have continued but despite that, we have seen improvement both in top line as well as bottom line, as well as percentage EBITDA margins. We continue to work on optimizing our costs, mainly by looking at how we can optimize our ethanol cost, energy cost, as well as processing cost. While you know the numbers for biofuels, since we have also separated it as a segment just now, I will give you a quick update on what is happening in this space. If you know from 2014, where India hardly did any blending. In 2019, 2020, we moved about 5% blending against a target of 5%. In 2021, the government had a target of 10%, and we moved to about 8.7% blending. In 2022, 2023, the government had a target of 12%, and as a country, we hit a target of 12%. In 2023, 2024, there is a target of 15% blending and the blending, the ratio was about 12.1%, but blending in May is 15.4%. So in short, what I am trying to say is that the blending program is on track, and we expect that the 2023, 2024 blending program will finish with about 14% blending. Now, we also have some assessment, I may not be precise here, in terms of the capacity that exists in the country for ethanol. And we feel that the blending program will move up from 15% to 17% to 20%. And it will be fair to assume that even by 2025, 2026, even if we do not do 20%, hopefully we will do, it will be fair to look at the track record and say that we will probably end up doing 18% plus blending. What this means is that if this level of blending has to happen, the country is still significantly short of ethanol capacity, which in some sense is a good news for the business. That we do not see overcapacity happening over the next few years. And considering that IGL has an advantage in terms of our cost structures, in terms of our brownfield sites, and also in terms of our synergies in Canal, I think it is good from an IGL perspective. And also, the government has supported its mandate by increasing the procurement price for ethanol, which stands at close to INR 64 for damaged food grain-based ethanol. Surplus rice FCI at INR 68.5. We see going forward an encouragement for people to also start using maize and the supporting price for that ethanol is also good by the government at one time is close to INR 71.86. So that, in general, I have shared this data with you to highlight that it appears that the blending program is on track, and we are confident that this part of the business over the foreseeable future will continue to remain an important driver for top line as well as bottom line for IGL as well as some other players who have made a head start in this business. So as far the potable spirits performance, we have seen a So our revenue as going to the metric growth is up 19.1%, and EBIT at INR 49 crores is up 14.2% with EBIT margin of 17.5%. Of course, we will look at some of the questions later on, but sales have been driven mainly by increase in capital sales in Uttarakhand, and we continue to maintain a big dominant position in Uttarakhand but also a dominant position in the U.P. market. In terms of our IMFL sales or the India Made Foreign Liquor sales, our sales have been driven with excellent growth in the U.P. market and also a relatively new area for us, which is our product approved in the paramilitary space. In Ennature Biopharma, which is a relatively smaller segment, which is plant-based extracts and nutraceuticals. We have seen a healthy top-line growth, but we have had, because of a number of reasons, cost pressures, particularly both on nicotine as well as triphosphates, which means that our margins have remained under pressure. However, we continue to look at, one, greater penetration of the regulated markets of U.S. and Europe. That needs significant amount of work, and we are in the process of working on that. And we continue to look at more value-added products in this area. So that is a quick snapshot of the quarter from my side. Mohit, we can take questions and respond to the specifics. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star and one on your telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and one again. Ladies and gentlemen, if you have any questions, please press star and one on your telephone keypad. First question comes from Bala Subramanian from Arihant Capital. Please go ahead. Good evening, sir. Congratulations for good set of numbers. My first question regarding this INR 1,160 crore allocation to oil companies. How much you are confident achieving those allocation contract by this year? Secondly, biofuel side, we can see 7.8% kind of margins. Can we see double-digit margins in coming quarters? These are my first questions. Yeah. In terms of the allocation, we have looked at the numbers, and we have seen that they give an allocation, these tax allocation number for what is known as ethanol supply year, which starts with another one. The tender allocation for us, for example, starting with November 2023, we have seen that there is somebody who is speaking. Can I request to please mute their mic? Yes. Yeah. We have seen that the actual orders that the oil companies place have been only slightly lower than the allocations that they are given. I do not have the exact numbers, but it has been 90%-95% of the allocation that has been given. Our estimate is that this kind of trend will continue, and while we may or may miss the allocation numbers slightly, but by and large, the kind of numbers broadly that we have given to you, we should be able to meet. It is not a contract as such, why it is an allocation that they gave. There are many factors like logistics, et cetera, based on the ability of the oil companies to be able to blend throughout the country. Sometimes the orders are a bit lower than allocation. Now, from your perspective, I had mentioned to you and I have given data for many years based on the target that the government had on percentage blending and the actuals that the country achieved. If you look at the last several years, more or less, we have tracked the target. Our projection is that compared to a target of 15% blending, we will do 14% this year. I think so by and large, the blending story is intact. Now, as far as gross margin is concerned, or the gross margin that we talked about, 7.8%, I think it is very difficult for me to speculate whether this will become better, because this is a function of several things. It is a function of grain prices, which have been high. It is a function of what we are able to do in terms of DDGS sales. I think DDGS as a source of protein, we are looking at newer ways of utilizing it. Not only are we looking at it, but the industry is looking at it. It is also a function of the price that the government gives on procurement of ethanol. I would imagine the right thing to assume would be that the government is committed for the blending program, and because the government is significantly involved in regulating it, regulating it means controlling it in some way, they will keep it profitable. But it is not a business where suddenly if the demand is high and the supply is low, you can fetch a huge amount of price. That is my overall take. Sukruti, would you like to add something on this? Because government is continuously insisting to promote the maize to better the profitability of the industry and the farmer both. So industry and associations are doing hard, and we have already started our maize farming in our own catchment area of Gorakhpur, and we are going to start from the Kashipur. We are expecting approximately 20%-25% would be the self-catchment area maize availability in 2025, 26. So certainly, we are focusing on the variety which would impact the ethanol yield, better yield. Second, the catchment area, in which we are focusing, we would like to ensure the back-to-back logistics so that the entire approximately 70%-80% maize which is grown by the farmer would be maize available to our industry. So the state government is also assisting us. As far as the raw material is concerned, in a couple of years, we hopefully very positive about the availability of the new maize crop, which is the most essential for the both land where the water availability is a challenge in part of U.P. and in some part of attached to our Kashipur plant, where the irrigation is a problem. You know that 40% less water is requirement of the maize crop. Looking to the all the scenario, the availability of maize for the industry could seems to be very comfortable in next 2 to 3 years. Got it, sir. My next question regarding the new, this commissioning of plant NSU, supposed to be complete by this quarter. So what kind of progress in those CapEx, and what kind of volumes we can expect in coming quarters? Sorry, can you please repeat the question? This NSU plant supposed to be complete in this quarter. And right now we are doing around 150 tons per month. And post these completions, what kind of ramp-up we can expect, what kind of additional revenue opportunities? Other CapEx plans also you can likely touch upon, like this grain-based distillery and bio-based ethanol CapEx progress. How much CapEx we spend in this quarter, Q1? I take the first one on new business. I think Sukruti and Anirudh will take the question on CapEx and bio-ethanol. Look, as I mentioned to you, we have had a good start in terms of our projects. This business is different from, say, a methanol business or a petrochemical business where you have a ready demand and you are able to then start integrating to it. It involves working with partners to customize, work on development projects. That for us has been a good story. Do not take this as a projection, but I think in the financial year, we are targeting to do INR 150 crore-INR 200 crore kind of top line through new value-added products. Which in my opinion, if we are able to do, is a very good start. You know, keep this in context compared to some other specialty chemicals businesses or our own business which was there, which after many, many years had reached levels of INR 600 crore-INR 700 crore. So in that context, for a specialty chemical business to start hitting INR 100 crore-INR 200 crore in the kind of first year after commissioning is, I think, a very healthy sign. But these are projects which are not only dependent on capacity, these are dependent on application know-how, technology development. The pipeline is robust, and we are working on it. Regarding the CapExes, which we are already in for the increase in the capacity in Kashipur from 400 KLPD to 500 KLPD, we hope that that CapEx will be completed in third quarter. As far as the CapEx which we have undertaken in Gorakhpur from 110 KLPD to 290 KLPD, I think that will also be completed in third quarter. Sorry. We will be able to start both the plants with adding the 50% of additional capacity with effect from the new ethanol year. Maybe November, second half or first week of December, which would be adding our 50% additional capacity. In respect of the expenditure on the CapEx in Q1 2025, we had spent around 60 crore INR on all the CapExes, whatever is going on right now, and hopefully will be capitalized once these are completed. Got it, sir. Sir, my last question regarding India's total- Can you join back the queue, sir? Fine, madam. Thank you. Thank you, sir. I request the participants to stick with two questions in the initial round and join back the queue for more questions. Next question comes from Imran Khan from Longbow India Capital. Please go ahead. Hi, thanks for the opportunity and good afternoon. I am fairly new to the company, so my questions would be a little fundamental and maybe repetitive, so please excuse me for this. First question is on the potable spirit business. I wanted to understand what raw material do you use for this business to make ENA? So, 100% grain-based ENA we use, which may be the broken rice, which unfit for the human consumption. Second, maize. We are consuming both the feedstock for the making of extra neutral alcohol. And sir, lately, where is the raw material basket tilting towards? Is it maize, or it is still substantially broken rice? Yes, certainly, maize is in India, which be more popular for using the making the ethanol from the last 13 to 14 months. So maize is very new. So mostly we are using the grain. Okay. This would be talking about the India Made Foreign Liquor. Yeah. India Made Foreign Liquor we make from the grain-based ethanol, and country liquor we make from the both grain base and the molasses base. Got it. The second question is on the biofuel business. So you reported EBIT margins for Q1 and Q1 for FY 2025 and 2024, but I was looking for the same margins for Q4 FY 2024, but I didn't find it. So can you please share that if it is possible? We will share separately. Would it be similar or there would be a marginal difference compared to Q1? I think we can share the numbers to you. But in fact, I had spoken about it earlier that our biofuel margins have actually improved slightly. But we can give you the specifics. We have the numbers. Okay. I will wait for that. May I can give you right now. Okay. For Q4 Financial Year 2024, the EBIT margin was 7.9%, while in the current quarter it is 7.82%. So what CEO is saying, it has improved. Right. Then in that case, you don't make biofuel from grain, is it? Because in Q4, I think the grain cost was very, very high and margins were a little lower for almost all the people. You haven't seen that thing at all? No, we are making 100% ethanol from the grain. And our margin would be operational efficiency and better sourcing. All these things will be dependent on the margin. Are you calling from Just wondering. Yeah, just to add to that. I mentioned to you, I think your previous, Bala had asked us a question or somebody had asked us a question Bala as to whether our margins in the biofuels business we see getting into double digits. When I responded, that is actually a function of many things. Grain price is one of the factors. There is also selling price of DDGS. There are energy costs and conversion costs. And more importantly, there is a procurement price which is decided by the government. So if you have seen an improvement in margins, it is on account of while grain have gone up, they have also come down a little bit. It is a function of a combined effect of these factors. Right. Completely understand. Just one last thing before I move to the queue. Can you call out the average grain cost for Q1 and Q4, if it is possible? I think, can we please add up? You want separate number or you want what is it running right now? He wants the average. If you would be able to share for rice and maize separately, that would be very helpful. I commit to you, we will share these numbers with you, if you want for previous year and this year and so on. Just document- Not previous year. Maybe last quarter and Q4 only, just two quarters. We will share with you. Because right now we are not having that handy. Okay. Send me the mail, I will get you these figures. All right. I will fall back in the queue. Thanks. Thank you. Thank you. Tell me who the next question is from. Thank you. Next question comes from Randeep Singh from Nuvama. Please go ahead. Thank you for taking my question, and congratulations for good number in this quarter. Sir, two questions I have. One related to industry dynamics around ethanol. Just wanted to understand that how much is required to meet that 20% blending. And of that, how much has already been supplied? What I see in the news, that roughly 401 crore liter has been supplied, and that constitutes 15.9% against targeted 20%. So they have reached 15.9% in June. So that translates into some 500 crore, 550 crore liters are required for 20% blending. So I think somewhere I'm not calculating. My calculation seems wrong. Just I wanted to understand, how much liters actually government need to meet the 20% blending? I will respond to this in terms of our assessment. I don't have some authentic source to quote you that this is the exact number. But our assessment based on percentages, and I think some sources which my colleagues would have looked at, is that the total demand for ethanol has risen at 5% blending. Obviously, the consumption also increases. So 5% is also increased number. From something like 170 crore liters in 2019-2020 to expected 725 crore liters in 2023-2024, which is at 14% to 15% blending. Now, this number is expected to go up to broadly 1,000 crore liters in 2024-2025. And in my assessment, if you do 18% blending rather than 20% blending, to about 1,100 crore liters, and you can proportionately increase if the blending goes up to 20%. Okay. So roughly, ballpark figure, I think 1,100 crore liter would be required. 1,100 crore, yes. Okay. Because our capacity in KLPD, what will be the annual capacity if you convert into liters? How much liters would that translate into if we have the expanded capacity would be roughly 1,000 KLPD, 1,095 KLPD. How does it translate on an annual basis? Approximately, we would be able to supply the next ethanol year, which will start from November or December, 25 to 26 crore liter. Okay. Normally we multiply because in case of molasses or sugar base, normally one season, half of the season, normally we take for calculating this annual capacity. In grain also, we calculate the same way or for grain it is that whole year we normally process to produce ethanol? Correct. Your question is very correct. Sugar season, it starts from November and ends by April or lately by May in a few places. But grain distillery would run around 350 days in a year. Sugar mills, whatever they will store the molasses after last crushing date, they again can be utilized in three to four months maximum, depending upon their storage capacity of molasses. You can say on an average, they are running around 260, 270 days, and grain-based roughly 340 to 350 days. Okay, fine. The last one, in Potable Spirit, how much cases we have sold in this quarter for IMFL and country liquor? For IMFL or for country liquor? Okay. What I will do, you send me the mail, I will give you the figure because right now we are not having the ready data. Okay? Okay. No issue. No issue. And last one. Okay. Thank you. Thank you, sir. I request the participants to restrict with two questions in the initial round and join back the queue for more questions. Next question comes from Saket Kapoor, from Kapoor & Co. Please go ahead. Namaskar, and thank you for this opportunity. Sir, when we look at the current quarter's performance, the finance cost is still hovering at around INR 35 crore plus. That means on comparative basis, wherever we compare within quarter-on-quarter or last year, this number is rising unabated. So if you could give us some color on what is our strategy in lowering our finance cost? Saket, finance cost has gone up only because of the reason that, term loan plus whatever CapEx we have done that has been funded by almost term loan. Apart from this, the overall rate of interest has gone up because every bank now has come giving a very good deposit rate. So mostly MCLR of all the banks has gone up. So that is hurting us and of course, we are planning to reduce the finance cost but in this year we are not hopeful for a drastic reduction of the finance cost. Maybe from next year onwards, maybe 2025, 2026, yes, the finance cost will start coming down. Okay. That will happen, sir, only when this capacity for both our distillery and biofuels kicks in. That will lead to improved margins and cash flow. That is when the repayment start. That should be the cycle we are referring to. That is the reason why there will be- That is true. But the finance cost only because we have almost done the INR 1,000 crores CapEx base. Yes, sir. loan ultimately capitalize interest. Yes, sir. Correct, sir. And, sir, current maturity? Maturity of what? Current maturity repayment due? Current year maturity including AGDC. And, sir, when we look at the Ennature Biopharma numbers also, I think so, last time also when our head of Biopharma spoke, he did allude to the fact that nicotine market and all. Sir, going ahead strategy current year? Or utilization levels or product mix parivartan? If you could just highlight how this segment is going to perform. I think we should have, yeah. Saket, Manish this side. Saket, the numbers which you are seeing right now for this first quarter could expected to remain same in the next quarter also. There could be a spike in the third quarter onwards because now we have started what we earlier told you, the standard nutraceuticals now and our facilities are being upgraded according to that. Shortly we are going to have US FDA and one CE audit over there to get the certification done. After that, we will be able to sold our branded nutraceuticals in the European and American markets. Otherwise, there are other three major products like high potency 25, which still are really under the pressure. But since we are getting the pole position in all of India by supplying the maximum high potency 25. The margins essentially have gone down, but in absolute terms, we are having that kind of profit over there. In nicotine, because of certain news which really came up, the prices are under pressure. But now with nicotine, we are having certain major tie-ups with the local bodies who are into this making of tobacco products in more refined format. We are going to supply the pure nicotine to them. That is going to be adding certain margin in our bottom line. Sir, just in understanding, how are you seeing that in giving the current market conditions, visibility? Because these are things which are dynamic also. But taking today's condition, how should we conclude? Because this is where the disappointment has been for the last year. Are you talking about only nutraceuticals? Only, yes. Only Ennature Biopharma. Yes, yes. You are right. The revenue would be more than whatever we have done in the last year. But certainly the margins are under pressure and will remain under pressure. We are just waiting to see the third quarter performance. Then, if that improves, there is a possibility that we could surpass the last year number. Otherwise, it will remain almost same. Right. Sir, I will join back in a few slides. You know, Saket, I was almost waiting for your question. Thanks. You see, as I had mentioned earlier, we are looking at two broad strategies in this space. One is penetration of the regulated markets through approvals, which is various standard, US FDA, et cetera, as Manish mentioned. Also getting into the branded nutraceutical space. As you would imagine, both of them are slightly time-consuming. We expect that some of this pressure will continue in the near term. There is a strategy that we are working on, which we briefly explained to you. Sir, if I may just add one more point. Given the parameters and the base which we have built for the first quarter, especially also the performance of the JV also, contribution has just doubled Q-on-Q. For this year, at least this should be a good showcase of what this year can translate because if we take all the variables into account. Can there will be a different picture that may appear going ahead? Sir, you know it. You track the company very well. We have said this, when we have been discussing, we have been explaining, I never predict numbers. We talk about macro trends in terms of what we are doing. Then we give that assessment, and I think you are well-positioned to make an assessment. Given the fact that, and my language, if you see, is a little inconsistent. We believe that ethanol prices imported have come down a little bit. If we are lucky, we will see some more reduction in the months to come, which will impact the overall business, including the JV business, in a good way. As of now, nobody can, especially in today's world, be an astrologer. But we believe that there are reasons to believe that the fundamentals of the business, which have led us to a healthy this quarter as well as last year, are not changing, and therefore these trends should continue. There is nothing which has happened suddenly because of which we have got a windfall. I think it is based on the broad strategy for the business. There is an element of macroeconomic dynamics which plays out sometimes, which we discussed with you. I do not see any major structural shifts happening there which as of now look to me to be pulling us down. Okay, sir. Thank you. I joined it. Thank you, Sanjeev. Thank you, Saket. Thank you. Next question comes from Tushar Vasuja from Yogija Capital. Please go ahead. Hello, am I audible? Yes. Yes. My first question is, what is your capacity for MEG and ethylene oxide, and what will be the utilization for FY 2024 and quarter one of this year? See, our capacity in terms of MEG equivalent for ethanol price are significantly higher than what we are producing right now. In fact, we have taken cost optimization actions to ramp down the plant that we are running to make sure that our costs are kept in control. From a growth perspective, that is not a concern at all. In the sense that, earlier we were the players in the MEG progressor market where we were selling large volumes. The dynamics have shifted, a lot of our business and possibility in MEG now comes from bio-waste energy. So, we don't have high capacity utilization numbers. I don't have the precise numbers with me right now. If you write to us, we will give it back. Our total capacity in terms of MEG equivalent, ethylene oxide, as well as MEG put together, is about 600 tons per day. Okay, sir. And sir, what is your capacity for producing nicotine, and what is the utilization right now? And what can be the peak revenue potential for the capacity as per current prices? Tushar, I don't have the precise number right now. If you could send an email to me, or our email ID, whatever has been given in the presentation, then we would reply to you. Okay, sir. So there's one more question. In your IP, you mentioned that after the Kashipur expansion, your ethanol capacity would be 500 KLPD, and your biofuel capacity would be 590 KLPD. So will you procure more ethanol domestically for producing biofuel, or how does that work? Can you please talk a bit about that? We have the in-house capacity to make the ethanol, as mentioned in the capacity for the Kashipur. We don't go to buy the ethanol locally. We have the in-house capacity. So biofuel, your ethanol would be only self-produced. Is that understanding correct? There are two things that you need to understand. When we talk about our total biofuel sales, we talk about total sales from two of our sites, Gorakhpur as well as Kashipur. I think there is some confusion there. The two need to be added up. Just to clarify, no imported ethanol can be sold into biofuel, and we don't do that. It is not allowed in the country to take RF from import and sell into biofuels. Okay, sir. I have a few more questions. I'll call back and let you for that. Thank you. Ladies and gentlemen, if you have any questions, please press star and one on your telephone keypad. Next question comes from Darshan Zaveri from Crown Capital. Please go ahead. Hello. Good evening, sir. Thank you so much for taking my question. A lot of my questions have already been answered. Hope I'm audible. Yes. Yeah. I just wanted to understand from, our Q1 numbers are very good. We hope to be able to sustain these numbers. Can the margins improve? Hello. I have answered this question. As much as you would like to have a precise answer, and I would like to have a precise answer, and I would like to have a better answer. I explained this answer just before, that the macro trends and what the business is doing strategically, we think is the right thing, and right now things are moving in the right positive direction. I think to answer your question, whether the numbers can improve? The answer is yes. Whether I can project that the numbers will be higher, I will explain. Okay. Fair enough, sir. Sorry for interrupting you. No worries about it, sir. Sir, just one small clarification. I think you were saying that with the new capacities around INR 150-INR 200 crores revenue we could see for this year, right? So for what part were you saying that, sir? Our new total CapEx will come online in Q2 and Q3, was it for that? See, what I mentioned was that there is something like INR 150-INR 200 crores of top line in this financial year that we are targeting to do based on new value-added products, which is specialty chemicals. Okay? Which is a different business compared to glycols or bio-ethanol, because the longer term strategy of the company is to also build a good value-added, sustainable, hopefully more profitable portfolio of businesses. That is one part of the CapEx. Our CapEx is in several areas. Our CapEx of specialty chemicals was lower, but our major CapEx has happened in grain-based expansion or ethanol expansion. So that is what it was about. It was only with respect to specialty chemicals that I gave that number. Okay. Fair enough, sir. Just wanted to understand in terms of the ramp-up for our grain-based plants. So what kind of utilization would we get in the start? What kind of extra revenue could we hope to achieve from those in the current year? As I told you that our capacity is supposed to be 50% additional from this year from the 1st of December. Accordingly, we hope our margin will be increased. Yeah, but it would take some time to ramp up. What kind of utilization will we be able to hit in maybe the Q4 quarter? Around, we can say 80%-85% capacity will be utilized. Okay. Fair enough, sir. Yeah. What I think is that we are quite confident. We base it on how we see the government improving the blending. Okay? Sure. We have kind of timed or phased our capacity. What we do is we apply for allocations. When we have allocations, then we try and tie up or couple our expansion plans based on allocations. I also explained in the beginning, somebody asked me a question that allocations are there, but how much can we lever? I said, "I cannot predict, but I have looked at the trend, and the actual pickup has more or less been 90 allocations, a slight percentage below." I expect broadly the trend to continue, and we are kind of mapping our capacities to follow the government's ramp-up. Oh, okay. Fair enough, sir. That's it from my side. Thank you so much, sir. Yeah. Thank you. I request the participants to just stick with two questions in the initial round and join back the queue for more questions. Next question comes from Manish Sadananda, an individual investor. Please go ahead. Yeah, thank you for taking my question. Am I audible? Yes. Yeah. The first question relates to the last conference call of the last Q4 2024. We were expecting the margin in the country liquor space to improve on three fold factors. One, the increase in the supply rate of quarts, pints, and nips, and second, increase in the volume, and third, the lowering of the packaging cost. But when we compare the EBIT with regards to the Q1 2024 available and Q1 2025, the margins have down slightly. So what factors have played out, exerted pressure on those margins? We are already in the first month of the Q2, and how are those factors playing in the current quarter? Country liquor margins were. See, the country liquor margin, we have increased already our volume around 15% as compared to Q1 of the last year. So certainly our overhead expenses reduced. The packaging prices you told were around hip of 10%-11% as compared to last Q1 price. Furthermore, since we have increased our capacity in the both the plants, Kashipur and Gorakhpur, so relatively our margins in the Kashipur plant little bit higher than the last Q1. So this is the reason as of now, the increasing the more profitability in the country liquor segment. How are these factors been playing in the second quarter and the first month? Do you see any improvement in the margin going down? No margin would remain same because mostly country liquor, all the raw material prices, basically feedstock prices is already fixed by the government. We don't think so any negative impact in the Q2. Okay. The second question is regarding the debt. I was going through the mca.gov.in website, and there were certain charges being created in the month of June and July. So to the tune of INR 165 crores from Exim Bank and two other banks. Are these the fresh borrowings or are the modification of the charges not taken over by the other? What is the rationale behind? That is the fresh borrowing money issue. Okay. These fresh borrowings, we are utilizing it for what CapExes are we utilizing that? For running CapExes as well as raising some funds for the working capital requirements. Okay. So our net debt as on date stands at what figure? And we were to get some money from Clariant. Have we got that? And what is the delay and when we look forward to receive that and reduce our debt? Our debt is around INR 1,000 crores right now. Regarding the money which is to be received from Clariant, that is still outstanding, and that will come by 31st March 2025. So this INR 1,000 crores that you mentioned includes the fresh borrowings of the working capital and that is being expected in the- It allows the debt as on date. That is what I am saying. It means that already includes the debt which we have already taken. Okay. Thank you so much. Thank you. Thank you. There are no further questions. Now I hand over the floor to management for closing comments. Yeah. Thank you very much for your time and as usual, good probing questions. It is good to be here with you all after a decent or rather good quarterly performance. We hope as much as you hope that we have a positive trend continuing for the business. We are here to make sure that we have the right strategy, we execute it well, and hopefully with your good wishes continued, we will continue to support our shareholders like always. Thank you very much on my behalf as well as my colleagues here who have been here on the call. Very much. Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using DiamondPass Conference Call Service. You may disconnect your lines now. Thank you and have a good day.