Q3 23/24

Feb 5, 2024

Summary

Q3 growth was broad-based, led by potable spirits and bio-based chemicals, while 9M EBITDA rose 45.6%. Ethanol allocation and new specialties offer growth potential, subject to supply, pricing and policy risks.

Good evening, ladies and gentlemen. I am Pelicia, moderator for the conference call. Welcome to India Glycols Limited Q3 FY 2024 earnings conference call. 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 * and then zero on your touch tone telephone. Please note that this conference is being recorded. I would now like to hand over the floor to Mr. Rohit Sinha from Sunidhi Securities Limited. Thank you, and over to you, sir. Thank you. Good evening, everyone. Thank you for joining us on India Glycols Limited Q3 FY 2024 results conference call. 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 of Sales and Marketing, Bio-based Specialty Chemicals, 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 this proceeding with his opening remarks, after which we will have a question and answer session. Thank you, and over to you, sir. Yeah. Good afternoon, everybody, and thank you for joining us for this investor presentation. As we normally do, I will take you through a quick update on the performance of IGL so far in this quarter and nine months, and my quick comments on that, and subsequently, we can take questions. As you would have seen, it was a strong overall performance with robust growth in revenue and profitability for IGL. Our gross turnover at INR 2,119 crores was up 39% for the quarter. As you know, there is a very high excise component in our gross turnover. Our net turnover of INR 904 crores was up 63% for the quarter. Similarly, EBITDA at INR 107 crores for the quarter is up 40.3%, and EBITDA margin at 11.8%. PAT at INR 42 crores, up 90%, and PAT margin at 2.6%, up 68 basis points. As I will talk about, we see a little later, all three segments for us, which we classify broadly as Glycols and bio-based specialties and some chemicals. It also includes- I'm sorry to interrupt you, sir. Yes, please. Sir, could you please speak a bit louder, sir? Okay. Is that any better? Yes, sir. Please go ahead, sir. Okay. I was saying that there has been a strong overall performance with robust growth in revenue and profitability in all three segments, delivering a strong double-digit revenue as well as profit growth. There has also been a strong margin growth in all the segments, particularly led by potable spirits for the quarter. If you look at the yearly performance, our gross turnover at INR 5,862 crores is up 70%. Our net turnover at INR 2,368 crores for 9 months is up 16.6% as compared to the same period last year. Our EBITDA at INR 319 crores is up 45.6%. Our EBITDA margin is at 13.3%, which is also up 260 basis points. Our PAT is also up 79% at INR 331 crores. On a 9 monthly basis also, there is a strong revenue and profitability growth, particularly led by good performance in potable spirits and bio-based chemicals and specialties. I also mentioned with a positive start in biofuel, which we expect to do better in the coming year as well. Amongst other things that we have spoken about, our actions to put in grain-based ethanol plants was timely and has helped us in mitigating the cost increases. We have also discontinued some low-margin domestic business, which has also helped the overall performance. If you look at business performance and drill down a little bit more, our gross revenue is up to 39%, net revenue of 68%, what I already said. For the chemicals segment, which will be BSPC, the net revenue grew by 87% in the quarter. For potable spirits, it grew by 30% in the quarter over the same quarter last year. For industrial and biopharma, it grew by 21.8%. Overall, EBITDA growth of 40.6%. If you look at it on a 9 monthly basis, it was supported by a strong growth, particularly in BSPC and potable spirit segments, which is 15.4% and 23% respectively. As I mentioned to you, we have benefited from our actions really, wherein the fact that we are putting grain-based ethanol plants has helped us mitigate cost increases, which have been very useful. Ethanol prices have continued to be high, but they have come down compared to the earlier very highs. I have broadly indicated to you that for a long period of time, imported ethanol prices have hovered around INR 35 or so. Before, during the COVID period, and the energy crisis and everything coupled together, they went up to even INR 60 plus a liter. They are significantly down, and we have been booking imported ethanol for future requirements, and we expect that those cost gains will start to come in Q1 onwards when we start to receive deliveries at those lower prices. What it also means is that the grain-based ethanol that we were using for in-house use is something that we can divert to biofuel and use in-house or imported ethanol for our chemical business. Another small because satisfying update from my side is that we have completed start commissioning of the new specialties unit, which is a relatively smaller investment, and we expect to commission the unit completely by around Q1 of the coming financial year. We are seeing a healthy pipeline and good commercialization of new products. I am sure in the quarters and years to come, you will see this business growing as well. As a part of our strategy to diversify into the biofuel space segment, as we have kind of reported in the media as well, we have got a biofuel supply allocation. I have mentioned order, but I think the correct word that should be here is allocation of, this is, 165,490 KL of ethanol, which is to be supplied between November 2023 and 2024. It has a potential revenue impact of roughly INR 1,100 crores for the year. We see this potentially as a growth area for us. Even for the joint venture, there has been a strong recovery in margins driven by reduction of material costs. For the quarter, the revenue for the joint venture is up 6%, and EBITDA is up 118%, essentially because the gap between ethoxide price of, say, competition, which is crude-based ethoxide sold in India, and ethoxide that we supply to the joint venture has reduced. We expect that this trend will continue in the subsequent quarters and hope to see further reductions. I will give a quick highlight by the three business segments. Talking about bio-based specialties and performance chemicals, our Q3 revenue at INR 609 crores is up 88%. I must add here that in this top line, there is a significant contribution of what we are selling to biofuels now as well. EBIT at INR 38 crores is up 26.5%. The 9-month revenue is at INR 1,618 crores, up by 15.4%. I may also mention that internally, we also look at businesses from a like-to-like perspective. Hello, sir. Hello. Dear participants, kindly stay connected while we connect the management team back on the call. I welcome back the management team. Please go ahead, sir. Yeah. Sorry about a slight disruption which happened because of the audio system. I was talking to you about bio-based specialties and performance chemicals, where I said that some contribution in top-line growth has also come from the biofuels that we are selling now. I must also add that we look at our business also on a like-to-like basis. If I look at the business on a like-to-like basis, taking away particularly the manufacturing segments, on a like-to-like basis within BSPC, our sales for the quarter are up by something like 15%, and for 9 months, they are up by something like 28%. That is more to say that whilst we have discontinued some non-profitable business, some of it is trading business, our core manufacturing business has seen a decent or a very good recovery and growth in the chemical space as well. As you know, we've developed a new biofuels portfolio, which we expect will continue to add to our top line and bottom line in the quarters and years to come. We have also focused on reducing some low-profit domestic business. Our focus for the years to come will also be the new value-added product or the new specialties unit, which is in the process of getting commissioned. In the quarters and years to come, we will start to see better numbers in this segment as well. In the potable spirits space, there has been a very good quarter for us, with revenues up 30% at INR 244 crores, and EBIT at INR 41 crores, up 49.9%. With a good EBIT margin of 17%, up 224 basis points, which is essentially on the back of improved portfolio as well as reduction in costs of ethanol packaging material, et cetera. Nine months revenues at INR 670 crores are up 20%. The sales essentially have been driven by categorical sales growth, which is excellent in Uttar Pradesh, and UP being a big market for us has seen good steady growth as well. IMFL or Indian Made Foreign Liquor growth has been led by sales expansion, mainly in the paramilitary segment, where our presence was relatively low, where we have expanded to 13 states, and also IMFL sales in Delhi, which have been significant contributors in driving the IMFL sales for this quarter as well. In-house manufacturing of ethanol has not only helped us in the BSPC segment, but also in the potable sales segment, both from a supply perspective as well as from a cost perspective. We've also been focusing on premiumization and improvement in the width of distribution, which is also yielding results, both in terms of top-line growth as well as quality of products. In Ennature Biopharma, we've registered a Q3 revenue of INR 51 crores, up 21.8%. EBIT of INR 12 crores, up 16.2%. Nine months revenues at INR 149 crores, and EBIT margin of 21.2%. We've had continued pressures, particularly on nicotine sales, because it's becoming a competitive market with more and more players. However, our efforts have been on building value-added pharma customers, which we believe will start to yield results in the times to come. Fortunately for us, our position on the raw material has been stronger, and there has been an upward trajectory in prices, but we have had our bookings, which has resulted in better margins for hyaluronidase and colchicine. Broadly, our focus also has continued to expand nutraceuticals in the key global markets. I will now hand over to my colleague, Mr Anand Singhal, to take you through the financials. Anything else you would like to add? We can take the questions. Okay. I think we will leave it for you to then ask us questions, then we can on financials or on the business. We can then take them at the beginning. 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 question, please press star and one on your telephone keypad. First question comes from Bala Subramanian from Aryan Capital Markets. Please go ahead. Good evening, sir. Congratulations for good set of numbers. Sir, on the earlier call, the guidance was around INR 3,500 crore top-line by end of this year. Is there any change in that guidance? We got recently an order of INR 1,164 crore. Is that fair to assume around INR 300 crore revenue per quarter from this order? We can expect because the order supply period is around November 2023 to October 2024. What is your view on that? Bala, two points. One is that we do not generally issue a specific guidance. There may have been some discussion. My broad expectation for the coming quarter and for the year is that we expect the current business performance and the environment to continue, and that should guide you towards the kind of results that we would expect. The other small correction I would like to make for the purpose of being precise is on biofuel. It is an allocation and not exactly an order. While we expect that this allocation will translate into supply, which is what these big oil companies usually do, I must mention that it is an allocation, and not a purchase order for that period. However, from an allocation perspective, obviously it is a contract, and it will be fair to assume that depending on the macroeconomic environment, depending on the policies of the government, and some other factors which sometimes may affect biofuel blending from time to time, this kind of top-line growth is something that we would like to potentially see from this allocation. Got it. Sir, from the second side, on the JV Clariant side, what would be the top-line and margin side? What kind of opportunities we have in this business? See, we have discussed this before. The joint venture actually caters to several consumer markets, which includes personal care, coatings and polymers, crop care, textile auxiliaries, largely based on the substrates and their. We did face some challenges last year, like we faced in our business because of raw material cost for bio-based materials going up. However, with the difference in price between crude and bio-based materials coming down, we expect that the joint venture will continue to grow with the end markets, which is what I have mentioned. But it is difficult for me to give you a precise guidance on how the performance will be. Obviously, the joint venture has been formed because these are growth areas in India as well as in the world. We also supply bio-based products which are considered greener. On the whole, if I have to, not call it a guidance, but see what's happening in future, I think with the cost of materials coming down or the delta between crude-based ethoxydiglycol and bio-based ethoxydiglycol that we supply, reducing and reducing further in the quarters to come, we should see a better performance from the joint venture, not only in the quarter which I just mentioned, but in the quarters to come. That is what we would expect. Given the volatility that we have seen, I would hesitate from giving a longer term guidance in terms of numbers, but qualitatively, the rationale for the business and the fundamentals of the business, I just mentioned to you, and we are optimistic about how the joint venture will do in the time to come. Got it, sir. Sir, on that chemical business side, whether the growth is majorly driven by volume growth, volume-based or price-based, if you go to fiber grade, segment-wise, which are the segments are doing good? If you could talk about demand environment on those segments. What are the things are shaping up overall global levels, especially in China, and how the competition is there. Okay. If you look at the chemical segment for us, the way we have covered it right now, it has biofuels, which I talked about. We are looking at new value-added chemicals, which we talked about. We have a small segment in biopolymers. We also have a segment in industrial gases, and we have segments in glycols and glycol ethers. Okay. There are several factors which- I am sorry to interrupt you, sir. Yes, please. Okay. He had asked me a question on chemicals. As I said, when we talk about chemicals, our big top lines will be driven by the biofuels business, will be driven by the glycols and glycol ethers business, mainly. Also, we have smaller segments, which is biopolymers and industrial gases, et cetera, within chemicals. We believe that particularly biofuels and new specialty chemicals, value-added chemicals, will drive growth in the near future, definitely. As you have seen, I have already given clarity on the biofuel segment in terms of bio-based ethanol, which goes for blending. We are just in the process of commissioning our new specialties unit, where we see that we have got a strong initial pipeline. But as you would realize, these are initial days for the business. I would rather have the numbers speak for them in the quarters, so that will continue to drive not only in the next year, but hopefully in the next few years. We are quite optimistic about it. We have done some good work, particularly in, say, the oil field segment, and we are looking at some other segments like biocides, fungicides, CarbonSmart products, et cetera. On the glycols front, bio-based glycols, we expect that we will see a steady increase in growth of bio-based glycols. There was some challenge, not mainly because of. Somebody is speaking. So there was initially some challenge because the prices of bio-based products had gone quite high. But we are seeing a slightly favorable shift as prices of bio-based ethanol are looking down. So we will continuously see steady growth there as well. On glycol ethers, we have faced some challenges. Okay, coming back to glycols. See, I would like to add a few things, that our glycols business, just about 5 years ago, I am talking about, was quite different from how it is today. It is because our bio-based glycols was largely being sold to one customer, which was Coca-Cola, and which was a high volume and largely one customer dependent. The good thing is that now we are engaging with 15-plus customers, which we are supplying in various parts of the world. And while some volumes may have come down, I think there are some people who are speaking in the app. I'm sorry, sir. Disturbance is from Bala Subramanian's line, sir. It got dropped. Shall we move to next question? Yes, please. Thank you. Thank you, sir. The next question comes from Saket Kapoor from Kapoor & Co. Please go ahead. I repeat. Question comes from Saket Kapoor from Kapoor & Co. Please go ahead. Hello. Hello. Hello. Yes, sir. Namaskar, sir, and thank you for this opportunity. Sir, I just missed some part of your remarks to the previous participant, so pardon me if I'm repetitive. Sir, firstly, taking into account the current scenario with respect to the raw materials, we may expect an increase in margin for our bio-based specialty and potable spirit going ahead. That is a good understanding? I think that's a fair expectation based on how we, at this point in time, see imported bio-based ethanol prices coming down. However, I may need to say that with caution as far as biofuels and potable spirits is concerned. The reason I am saying this, I am not so concerned about the top line. The reason I'm saying this is that the dynamics of the two is different. While for chemicals, we can use imported ethanol as well as ethanol produced within India, either by ourselves or purchased domestically by us. However, for potable spirits, we can only use ethanol which is produced in India. For biofuels, there is a predetermined price by the government from various feedstocks, be it C heavy molasses, B heavy molasses, cane juice, and damaged rice or FCI surplus rice and maize, et cetera. Which means that our profitability can get affected based on price movements of two or three things, which is the grain that we buy or the molasses that we buy, as well as sale price of one of the byproducts, DDGS, which is a protein, into the market. So while it is a reasonably fair assumption for bio-based chemicals, however, it is not something that I can exactly predict for potable spirits as well as for biofuels. Within potable spirits, there is a cost factor which involves cost of ethanol. Yes, this year it has benefited us because instead of buying, we have been producing grain-based ethanol. But grain-based ethanol costs can be variable in the future as well. But the larger focus in the potable spirits space for us is about expanding, one, to selected new markets and also improving our product mix. Shuklaji, is that fair? Does that answer your question, Saket? Yes, sir. I got the understanding. My next question was also pertaining to this policy framework pertaining to both our potable alcohol as well as bioethanol segment. In terms of, I think so for this sugar season, the levy molasses percentage has also been increased by the Uttar Pradesh government. How does that gel for us as a company in terms of the purchase of molasses as levy molasses percentage goes up? See, this is the good part in U.P. because government is giving the full security in the raw material availability of raw material as well as the price both to the manufacturer of potable liquor. This year also as compared to the last year when the reservation percentage was around 19%, now the government has increased from 19% to 26%. We assuming that next year would be the very comfortable year for the potable spirit manufacturers in U.P. as far as the raw material is concerned. We hoping that margin should be fair in the coming month from the potable spirit sector. Namaskar, Shuklaji. As you are translating, we have also got a price increase in the potable alcohol segment. That will add to our margins only going there since the cost is not going to go up. Yes, certainly. We are hoping that and now this year, new segment of the grain ethanol is government is added in 46 degree. We hoping that the coming years would be the more good month for just increasing our potable production for the grain in U.P. IMFL category in the 42.8 and 36 degree. These two steps is good for the industry. Okay. Sir, my question to Rupak sir. Sir, when we look at our numbers for the company sequentially, we find that for the bio-based specialty performance, and also for our potable alcohol, we see a dip in margin, sir. You were alluding to the fact that margins have improved year-on-year. Also, please correct me here. When we look at our September quarter performance with December quarter for both the segments, it is only the Ennature Biopharma wherein we have seen an expansion in margin. Both the other segments, there is a dip in margin. With the commensurate revenue, the margins have taken a hit. If you could explain the key reason why these two segments have not performed with the increase, why there is a reduction in margin? You mean in margin percentage? Correct, sir. On a top line of INR 508 crore for September quarter, for bio-based, we posted an EBIT of INR 40 crore. Whereas for this quarter, on a revenue base of INR 610 crore, the EBIT is INR 39 crore. Simultaneously for potable spirit also, INR 3,316 crore has INR 40 crore EBIT. Now it is INR 4,151 crore has INR 41 crore. So in both the segments, sir, we are seeing margin contraction. If you could explain this anomaly. As far as this quarter for bio-based chemicals is concerned, overall from the numbers we have told you for the business, all the margins are not only coming from Ennature Biopharma, that is a relatively lower contribution. If you see, there has been a margin expansion in BHPC at an EBIT level for this quarter from 30 to 38, and for nine months from 80 to 121. Right? Sir, continue. Our overall margin expansion, margin means overall absolute margin. In terms of percentages, let me just have a look. I have the numbers. In terms of percentages, there is a slight drop for the nine-month period for chemicals. It has also happened because of grain prices going up quite sharply. For the time being, there is a lag before the government acts to revise the prices, et cetera. Which also, as far as I understand, they have revised of course. That eroded some margins. That impacted the percentage margin for us. Okay. Lastly, sir, for Ennature Biopharma, in your presentation, you have articulated about nicotine sales continue to face pressures. You have also pointed out to strong raw material position and upward trajectory in thiocolchicoside and another word somebody you have used. If you could give us the trajectory of what the likelihood should be, because we are flat on the Ennature Biopharma for the nine months. This segment, how are we ending it, and for the next year, the base that is being formed, what growth we can expect from it, depending upon the business environment. Saket, Manish this side. As far as nutraceutical is concerned, first two quarter was in stress, no doubt. In third quarter, we have recovery, not only in margin but also in sales volume. The fourth quarter is going to remain same as third quarter or it could be more than the third quarter. We are going to end the whole of the year, as far as the nutraceutical is concerned, at par with the previous year at least, if not less. With respect to the next year guidelines, in nicotine, no doubt, it is under pressure as far as the export is concerned. We are now developing the nicotine derivatives, for which we have already bagged some very good orders from the local manufacturing of the tobacco related and the nicotine sachets related companies. I hope that nicotine will recover somewhere in the second quarter of the next year. Thiocolchicoside, right now the prices are very good and we are having a quite raw material already available with us in the higher margins with respect to the prevailing prices. I think the first two quarters would be same as the third and fourth quarter of this year. Sir, again, if we get the split between nicotine and thiocolchicoside out of this INR 50 crore, what should be the percentage or even for the nine months if you could give the split between the two. As far as thiocolchicoside, there is a very much price difference in that. Like thiocolchicoside is a very high-value item, like INR 4.25 lakhs per kg. On the other hand, nicotine is hardly INR 7,000 per kg. So the value comparison would not be there. As far as the EBITDA percentage is required to maintain the overall EBITDA, thiocolchicoside is certainly going to give some very good margin to us. Nicotine, we are trying to recover and trying to increase the margin by adding the new derivatives in the nicotine segment, not pure nicotine. Okay. Last point to Ashish Singhal is about the finance cost part. If we look at the number again for Q on Q also and I think year on year also, there is a significant increase from INR 26 crore to INR 32 crore. So Ashish, if you could give me, first of all our current debt numbers, what is our net debt as on December 31, and what has led to this increase in the finance cost? Saket, finance cost has increased because of the recent expansion for which we have raised some term loans. That is in our radar to reduce the finance cost, for which we are taking some measures. As far as the term loan is concerned, net term loan as of December 31, it is around INR 650 crore. INR 65 crore. Yes. And our working capital, sir? Working capital. Fund-based working capital is INR 350 crore and non-fund-based sanction limit is INR 850 crore. INR 850 crore. And sir, for the 9 months, what CapEx have we done? How much have we spent? Till 9 months, the total work in progress in our books is around INR 400 crores, INR 414 crores, and hopefully the CapEx for about INR 300 crores will be completed by March 31, which will be capitalized. The rest of the funds will be shown under CWIP, and this will capitalize in next year when the CapEx will be complete. Okay. If the time permits, just a small observation. We have found that this time Pragya Madam has chaired the meeting. Any particular reason, or we generally find Mr. Bhartia there. Anything to be mentioned? Succession planning or what could be Anything to read about it, sir? Don't make any speculation like that because you know that Mr. Bhartia was not well that time. Okay. His daughter chaired the meeting. It's that only. It's a normal. Normal thing. Okay. No, just you have noticed, we have not noticed that is the thing. Okay, sir. I wish him speedy recovery. Thank you. Thank you. Yeah. Thank you. Ladies and gentlemen, if you have any question, please press star and one on your telephone keypad. I repeat, ladies and gentlemen, if you have any question, please press star and one on your telephone keypad. Next question comes from Bala Muralikrishna from Oman Investment Advisors. Please go ahead. Hi, good evening. This is my first call. First of all, I would like to say that I have gone through annual report, and it is a very well-described product wise and category wise. This is one of the best annual report I came across. Regarding this distillery segment, I have few questions. As of now, we have around 340 KLPD capacity, and we are going to add 700 KLPD in the coming maybe three, four quarters. Is this right, sir? Right. Right now in Kashipur, we have 400 KLPD grain-based distillery, which we are further increasing to 500 KLPD. In Gorakhpur, we have 110 KLPD distillery, which is working right now, and adding 180 KLPD distillery more in Gorakhpur, which will be completed, say, in 2024, 2025. So what, sir, in recent exchange filings and in Kashipur, I think we are showing that existing capacity is 140 KLPD. That is biofuel, not distillery. Biofuel. Okay. I understand, sir. My question is regarding this biofuel only, yeah. Just one second. I think it will just be good to understand that we produce ethanol. This ethanol basically is produced using various feedstocks, which include grain and molasses, both at Kashipur as well as Gorakhpur. This ethanol is then used for potable spirits, biofuels, as well as potentially as an intermediate for chemicals. Right. This interlinkage, it is good to keep in mind, and sometimes if you understand that, we will be aligned in terms of our understanding. Okay, please go ahead. Yeah. Regarding this capacity additions, are we planning to sell all the ethanol to OMCs or do we have any plan to use for captive consumption also? Look, it is a dynamic situation for us where we evaluate what is the best mix for us to put it into potable spirits, which obviously gives us good returns per liter of ethanol, to use it as an intermediate for chemicals or to sell it into biofuel segment. The reason I am saying this is that, for example, when imported ethanol was very expensive, we diverted significant quantities of our grain-based ethanol produced in-house as an intermediate to the chemical segment. Now that imported ethanol prices are correcting, it makes sense for us to start importing ethanol for intermediate use in chemicals and divert higher quantities into biofuel. It is a combination of demand and allocation that we have got, the price of imported ethanol, the realization that we are getting in potable spirits. What we find is that given the scenario that I more or less see for the year ahead, based on how we see our businesses going, we will be able to place all our excess feedstock in terms of ethanol into the biofuels market. We should not have a problem in filling up our plants there. That is obviously based on allocation that the government has decided, making some assumptions with respect to grain availability, making some assumptions with respect to imported ethanol. We believe, going forward, for some time, we will be getting back to buying imported ethanol for chemicals and releasing more and more capacity of grain-based ethanol for biofuels, obviously after covering for our potable spirits. Okay, sir. Understood. Thanks for the explanation. Sir, regarding this, suppose 700 KLPD, normally 200 KLPD can contribute approximately INR 500 crores of revenue on an annual basis. The 700 KLPD can contribute around INR 1,700 crore of revenue with the EBIT margins of around 16%-18%, as I compared with our peers. I am working with them also. Is it the fair assumption, sir, in your case also? See, I have already indicated to you the biofuels part of the turnover. I also mentioned to you that it is not as straight a calculation for us to assess turnover for our case, because our ethanol can go into intermediate use, will go into potable spirit, where it will go as intermediate. Now, you are probably making an assumption for a plant which only produces ethanol and sells all the ethanol that it produces. Also, you may yourself need to check your numbers based on the cost, which can be very variable, in terms of margins. Which, as far as I understand, that is not the margin that industry is making on selling biofuels at this point in time. It was the case earlier, but not at this point in time. Okay, sir. Regarding the feedstock, sir, for these new capacities, which feedstock we are preferring, and are there any sourcings already happened like on long-term contracts for the feedstock, raw material? Can you please repeat your question? I am not very clear. Long-term agreement for feedstock supply. Yes. Okay. Regarding grain. I think you are asking about grain supply, no? Yes, yes. So as of now, government is not giving any sort of guarantee for long-term supply of grain. They are very curious, and they wanted to divert all the grain-based ethanol manufacturer to the maize-based raw material. For that, the different types of schemes, policies, are going to be amended by the central government for promotion of the cultivation of maize-based. We are also aggressively working on that. So, as of now, the distillery are free to take the grain from the open market without any support of the government. Hope this is clear. Yes, sir. So in this, sir, if we assume that there will be no FCI supply, FCI rice will not be resumed, then do we have any maize areas or planted to run the base on maize? Yes, certainly. The central government has already involved the methods for the procurement and supply of controlled base maize to the distilleries, but it will take another 2 to 3 years because it requires huge extension of the whole supply chain management. I am talking about the storage of corn. Right now it is not available. It will take certainly 2 to 3 years. But certainly industry has a better hope, and the government is giving the incentive for the supply of ethanol from the maize base. It will take another 18 to 20 months to get the sufficient corn in India. But certainly the corn will be the future. Okay, sir. Good. Understood. Lastly on CapEx, sir- I am sorry to interrupt you here. For this Borat tour. I request you to join back the queue, sir. Okay, fine. Thank you. 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 Prashant Shah from AM Investments. Please go ahead. Hi, sir. Just wanted to understand, in our JV with Clariant, what is our pricing strategy for selling ethylene oxide, whether it is cost plus basis or it's dynamic? It is not dynamic. I think the kind of agreement that we have, there is a nominal margin which has been built in, and it is done on that basis. Okay. It is a part of the agreement. Okay. And sir, recently we have commissioned this solar plant. So what type of savings can we expect on the energy cost? What was the question? Solar. Right. So, look, it is something where we are in agreement with ReNew Power for hybrid power, which is solar and wind power. It is something that initially was expected to start delivering power to us in a period of 2 years. I think there have also been certain policy changes, et cetera. So that is something that needs to be reviewed. However, the expectation at the point of the contract was what kind of basis? Early next year. Was that it will get started early next year, which is probably- 2025. 2025. It had a payback of close to four years. That is true. It had a payback of close to two to five years. I must add there that there is some ongoing discussion based on some policy changes. I am not in a position to completely update, neither have we built in those savings into any of our future projections as of now. Yes, we did announce that, and we are hopeful that that starts based on the original plan at the original terms. It is something that we are reviewing based on some policy changes and the way the supplying company is looking at it. Okay. Thank you. Thank you. Next question comes from Ram Mohan Rao, an individual investor. Please go ahead. Good afternoon. Can you hear me? Yeah. Okay. Thank you for that excellent set of numbers. I just wanted to check whether for potable branded alcohol, do you have any plan for expanding your network beyond U.P., Uttarakhand, and Delhi? Yeah. Certainly, we are seriously looking to expand our brands in CSD and Paramilitary and Rajasthan. So we are very keen, and we are looking sizable the increase in the next financial year. Okay. Thank you. Thank you. Ladies and gentlemen, if you have any question, please press star and one on your telephone keypad. Ladies and gentlemen, if you have any question, please press star and one on your telephone keypad. We have a follow-up question from Saket Kapoor, from Kapoor & Co. Please go ahead. Yes, sir. Ashis, as you mentioned that we are keenly looking to reduce our debt. I think that non-core assets we have already disposed of. Is it from the cash flow only or what steps are in the anvil, or if you could give us some understanding, what kind of debt reduction are we going to undertake going ahead? Saket, it is very difficult to give you the numbers right now out there. Only thing is, whatever we are planning that is in process, and most of the debt repayment will happen out of the cash flows. Okay. For the JV part, Clariant balance amount that we have received or how much is due from them? I think that number is around INR 90 crores, which will come in the current year. That will also be used for the debt reduction. Okay. By March 2024, we will be receiving the INR 90 crores. I am not aware whether they will give till March or 2024, 2025, but this year, yes, we will get them somehow. Okay, sir. Current maturities, sir, for us as of March. Are there any other dues we have to pay in terms of the borrowing? We have to pay in February and March. The total liability for term loan payment is around INR 45 crores. 45. That will go from the cash accrual. That will go out of the cash accrual. Okay. Lastly, Mr. Rupak, for the allocation part for ethanol, have we factored in our expanded capacity in terms of the ethanol allocation that we have got? Yes. Or if it- When we get an allocation, there is a commitment from us to supply. Right. We have factored in capacity that we have, and our assessment is that if that allocation is translated to us in terms of concrete orders, which we hope so, we should be able to supply, and that is why we spoke about further expansion we have required as well. Our expanded capacity will be fully utilized with this allocation for the period mentioned in terms of the deliverables. I think broadly well utilized. Obviously, it is a function of several factors, including whether we are diverting or whether we are not diverting to intermediate use. But we will be operating and utilizing your capacity for it. Correct. Okay, sir. Thank you for all the replies, and all the best to the team. If you have any more questions, you can call me after the con call. Yes, sir. Thank you very much. Thank you, sir. Yes. Thank you. Thank you. Next question comes from Rohit Sinha, from Sunidhi Securities. Please go ahead, sir. Yeah. Hi, sir. Thank you for taking my question. Just one clarification I would be looking at, in last call, we have announced this thing on the CapEx side that our capacity blend is ethanol-only, expanding from 300 KLPD to 400, and then further by another 100 KLPD. In six months. So this Gorakhpur addition is included in that, or this is a new one which we are talking? And with this biofuel thing for Kashipur, how we should see this as different as compared to this ethanol blending ethanol side? Rohit, Kashipur, we are making this capacity to 500, and Gorakhpur 180 is over and above that 500. Whatever cost you have taken from us, that doesn't include the cost of 180 KLPD distillery at Gorakhpur. Regarding the biofuel, there is not much investment. That is hardly INR 10 crore-INR 15 crore investment, which will be taken care by the company itself. Okay. One thing on this from this tender side, just to understand that how much incremental revenue we should be considering from this tender. Going forward, as this is, I think, a recurring base or tenderless thing, so that we will be participating again next year also, it will be a continuous process. How to make sure that this size will continue to us, or there will be only addition to this kind of tender size? Rohit, there are two questions that you've asked. One is future growth and how assured do we feel about that, and second is what is the top line this will deliver to us broadly. I think that's in my presentation as well, in terms, and I said that the contract is on allocation. We estimate potential revenue based on the allocation of close to INR 1,100 crore in the year is already mentioned. As far as the business going forward is concerned, I would say that in a business environment, obviously, there are certain uncertainties. But broadly, for us to understand whether we are in the right place and whether this is the right investment, I would like you to consider the following. The government has clearly articulated a plan to move up to close to 20% blending by 2025, and there was hardly any blending by 2014. The track record has been that the government has by and large, been able to meet its target. Your conference is being recorded. Okay. If you see, we have moved from nearly very little blending to close to 12% blending, and the government has met its blending target year on year. They would like to meet the blending target going forward to 20% and maybe even higher going forward, because there is a strategic objective. The strategic objective is to increase farm sector incomes, is to find a way out for sometimes excess grains, to reduce forex dependence, and dependence on oil for many other companies. That strategic objective stays. We can only say that so far the blending program has been on track, and by and large, some ups and downs notwithstanding, it should be on track in the years to come as well. That is what I would like to believe gives us an assurance that this is a good business to be in. Sometimes there may be some hiccups, sometimes there may be some issues with respect to raw material availability, price, et cetera. But the broad policy direction on this government is very clear. In fact, they have a proper paper on this in terms of what they want to do with the blending program. That I think there is no other way except to look at that to get an assurance that this is a business which should by and large, continue to grow. Okay. That's it from my side. Thank you and best of luck. Thank you. Next question comes from Makarand Tilot from Makarand Tilot Investments. Please go ahead. Good afternoon, sir. Hearty congratulations for excellent number and as well as excellent website upgradation displaying company's potential. Thank you very much. Yes. My question is, we have seen that this expansion of capacity of biofuel ethanol plant, the costs are meagerly INR 14 crore. But whether it will increase our profit margin in future? 14 crores, how you are calculating, Mr. Tilot? Investment required, they have written. That 14 crore is only for biofuel. For biofuel only. For biofuel it is 14 crore, but with this, our capacity is going to expand very much. Whether it will increase our margins also? See, I think we need to clarify here. There is a cost which goes in putting up the distillery, and there is some cost which goes into further processing of ethanol, if I am not wrong, to convert it into biofuel, which is increasing its purity. Right. When you look at evaluating a CapEx and its profitability, actually, this may be how we do our CapEx, but you have to take into account the entire cost. A lot of it is actually in the DC. Okay. Okay. I hope- Correct. Saroj explained. Yes. I got it now. The second question is that how much maize we are currently utilizing for producing ethanol? We have seen on Facebook that we are promoting maize cultivation in nearby districts also. Yes, we are aggressively to increase the cultivation in our catchment area. We have started this journey in November, and probably in the next month, I think March and February soon, we are putting our efforts to increase the maize production in our catchment area. We are very ahead and, hopefully, this year, next coming year, our catchment, we will develop around 50 to 100 acres, maize farming in our catchment area. Okay. Currently we are using, utilizing how much of capacity of bio-maize? Not much. I think most probably 1,000 to 1,015 tons in the last couple of months. Okay. Yeah. But when maize will be utilized more, for that purpose, do we need to have additional some cost for that? Not too much. Some cost may be required for the enzymes and nothing else, so it will be hardly INR 0.10, INR 0.15, but not much. But certainly, the output of DDGS will get more and prices of DDGS will reduce as compared to the rice DDGS. Okay. That means, whenever maize will be more available, our margin expansion will be more also. Correct? Correct. Okay, sir. Now the second point is, sir, in that you have written that NSU, there is a growth potential. Part commissioning is done. Can you elaborate more on that, sir? I have mentioned to you that part commissioning is done. We will have complete commissioning by Q1. We have a good pipeline. Commercial supplies have started, and we are already starting to do close to 150 metric tons of business per month. We have further, I would not say contracts, but we have got further business development done with a few customers, and largely they are in several spaces in the oil field chemical space. They are in the CarbonSmart space, and we expect that we will have significant volume coming from the new specialty unit in the next financial year definitely. Okay. You might be wondering why I am not giving you a number. In a new business, our approach has been kind of entrepreneurial. For a business where you are developing the initial pipeline, trying to get the initial contracts going. We are very happy with the pipeline. We are very happy with some of the order indications which have already come. For a plant which has relatively just been commissioned, starting to do 150 to 200 tons per month is a good start. As you can understand, for a new business, it is not an ethanol business or a cement business where you can say, "I have this much capacity. I will start sending that into the market. Correct. Once you have the plant, you start working, you start working with your customers, and you start having application and development projects. This is a business which has a gestation period, and every product is customized, and that is how you build this business. It is very different from biofuels. In biofuels, we have already told you capacity and what kind of potentially top-line we can expect. I can only tell you there is a good pipeline. I am happy with that. The fact that we are supplying 150, 200 tons per month is a good start for a new project with not that much investment. Fantastic. If it is customized, then whenever the orders will be fixed from the customer, you will get more orders in future also, correct? We are very much hoping so. Our salespeople obviously have internal targets. We obviously have internal numbers as to how we would like to see this year and next year panning out, but it is not something that I would like to go ahead and give a commitment here. I would rather have a set of numbers which will give you confidence and for you to see the growth. Correct. Sir, last question is that internationally, MEG prices are again increasing, correct? Yes. I know it. So whether it will also help us, bio-MEG? In a small way, yes. We are not so dependent on MEG prices. To some extent, yes. See, what happens is that our customers are already paying a significant premium for bio-MEG. Okay? Sometimes when they are using MEG, their green shift is affected if the crude-based MEG prices are much lower. If MEG prices or crude-based MEG prices goes up, the incentive for them to invest in greener products is higher. In that sense, yes. The bigger is the gap, the bigger is our challenge. Okay. In future, their offtake will also increase if the regular MEG price are increasing? I think the viability of our new businesses will be better, but it is very difficult for me to immediately start saying that you'll see volume pick up. I think we'll be better positioned, and hopefully it will translate into more sales. Thank you, sir. Thank you very much, and all the best to you. Within 2 years, we hope to see the company INR 5,000 crore mark on net basis. Great. Thank you. Thank you. There are no further questions. Now I hand over the floor to management for closing comments. Thank you, Rohit, and special thank you for Saket. Every time we are here, he does so much reading up on our company that he is more well-informed than many of us in terms of numbers. So Saket, thank you for taking that much interest. That is what I would like to note. I think it feels good if there are people who are taking that much interest in everything that is happening. And many of you do, not only in terms of what the company is doing, but I am also very impressed to see how you have a good idea of what is happening in the marketplace. I was thinking how much reading you do on the potable spirit space, how much you do on the biofuel space, on the blending space, international MEG prices, et cetera. Considering you are covering so many chemical companies, so it feels good to have your interest. It is also good that so many of you have come to attend our investor call. Some of you encourage us. Thank you for that. Some of you congratulate us and then ask us difficult questions. That is also fine. Hopefully, we have answered them. So with that, and on behalf of my colleagues here, I would like to thank you and wish you a good day and a good week ahead. Thank you. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha Nigam Limited. You may disconnect your lines now. Thank you and have a pleasant day.