Ladies and gentlemen, good day and welcome to Oriental Carbon and Chemicals Limited Q3 and Nine months FY 2022 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in listen-only mode. 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 star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Akshat Goenka, Promoter and Joint Managing Director. Thank you, and over to you, sir.
Good afternoon and a very warm welcome to everyone. Along with me, I have Mr. Anurag Jain, CFO, and SGA, our investor relations advisors. Before we begin, I hope you all and your families are safe and doing well in these unprecedented times. We have uploaded our results and investor presentation for the quarter and nine months ended 31st December 2021 on the stock exchanges and company website. Hope each one of you have had a chance to go through the same. After the second wave, there had been steady recovery in economic activities, supported by large vaccination drive in India with 1.5 billion shots by January 2022. Businesses started coming back to their normal levels.
However, the country witnessed a third wave of COVID with the onset of new Omicron variant, which has impacted some parts of the country and led to downtrend in demand across a few industries. Coming to the performance of the company, it was a challenging quarter with slowdown in demand in the domestic markets as well as international markets of Europe and Southeast Asia due to the impact of third wave and shortage of chips leading to reduction in vehicle production. Despite this, the company has recorded total income growth of 19% year-over-year for nine months FY 2022. Demand for Sulphuric acid has remained fairly stable during the third quarter.
Coming to the raw material front, the prices of our key raw materials and fuel have increased sharply due to inflationary trend and steep increase in commodity prices across the globe, and many other companies across sectors are facing the same issue. Further supply chain issues have led to increased expenses in terms of freight costs. High raw material prices along with freight costs have impacted our margins and profitability for the quarter. Our company is focused on improving its operational efficiencies on a regular basis and is taking every step to control costs. We will keep reviewing the situation and attempt to rationalize prices to cover the higher raw material costs depending on market environment. Freight cost for the quarter has increased by 125% over the September quarter of the year.
The raw material prices continue to increase even in the current quarter, negating any price increase which we were able to get. I'm happy to share that the company has commissioned its phase I of Insoluble Sulphur project with a capacity of 5,500 tons per annum at Dharuhera, Haryana on the 21st of December 2021. Our Sulphuric acid capacity has faced certain delays due to supplier issues and is expected to be commissioned by March 2022. The second phase of the expansion of Insoluble Sulphur shall be triggered based on the visibility of demand and market scenario. Our company has started a warehousing facility in the U.S. to be near to the market and prospective customers. This will enable the company to increase its market share in North America going forward. We intend to capture around 10%+ of market share in North America in the coming years.
The tire industry looks favorable with many tire manufacturers looking at capacity expansions over the next couple of years. Tire demand from the commercial vehicle industry has remained strong over the past few months on account of improved fleet utilization. We expect demand from replacement and export segment to be normalized, which should bode well for the tire industry. Our company believes in providing quality product, and in response to rising quality emphasis, the company works closely with customers to develop specialized products, widening its product range and strengthening its share of revenues derived from premium products. Our company possesses a deep proprietary insight into the manufacturing technology of Insoluble Sulphur that makes the company free from any kind of external dependence. We have established robust processes marked by high uptime, productivity and adaptability to different quality requirements.
To conclude, with the commissioning of our phase I of capacity expansion, we are optimistic of gaining new orders in the quarters to come. Outlook for the tire industry appears stable to moderately optimistic in light of the shift towards personal mobility and increased vehicle utilization. We are focused on our efforts to deliver sustainable and profitable long-term growth with our dominant position in the industry and proprietary manufacturing technology that we possess. The challenges of COVID-19 continue in India. However, we are cautiously optimistic of prospects of gaining customer orders on the back of long-standing relationships. Now I would like to hand over the line to Mr. Anurag Jain to update you on the financial performance of the company.
Thank you, Akshat. I will take you all through the standalone financials of the company. Total income for Q3 FY 2022 stood at INR 95.8 crores as compared to INR 109 crores in Q3 FY 2021. Stood at INR 100.9 crores in Q2 FY 2022. The revenues were impacted due to slowdown in demand in both domestic and international markets. EBITDA for Q3 FY 2022 stood at INR 19.7 crores as compared to INR 42.8 crores in Q3 FY 2021 and INR 24.3 crores in Q2 FY 2022. EBITDA margins for Q3 FY 2022 stood at 20.5%. Margins have been impacted due to sharp increase in raw material, fuel prices and freight costs.
Even though sales prices increase has been taken to meet the cost, prices of raw material have continued to increase. However, we are continuously taking measures to control costs and improve our efficiencies. Profit after tax for Q3 FY 2022 stood at INR 10.6 crores as compared to INR 28.4 crores in Q3 FY 2021 and stood at INR 12.6 crores in Q2 FY 2022. Our tax margins for Q3 FY 2022 stood at 11%. To quickly summarize the nine month numbers, total income for nine month FY 2022 stood at INR 283.1 crores as compared to INR 237.8 crores, a year-to-year growth of 19%. For nine months FY 2022, EBITDA stood at INR 66.8 crores as compared to INR 85.3 crores.
Margins for nine months stood at 23.6%. Profit after tax for nine months FY 2022 stood at INR 35.6 crores as compared to INR 50.2 crores. Margins for nine months stood at 12.6%. With this, I would like to open the floor for questions and answers.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aditya Khetan from SMIFS Limited. Please go ahead.
Yeah, thank you and thanks for the opportunity. My first question is on the revenue part. Revenue decline on YoY is primarily led by volumes or that is led by realizations?
Realization was revenue decline for the quarter ended December was primarily on account of volume.
On account of volumes?
Okay.
Sir, I know, sir, we don't share the utilization figure, but as a ballpark figure, what is the current capacity utilization figure as compared to the similar quarter in the last financial year? Just a ballpark figure, sir, to understand.
I can tell you that for nine months, our capacity utilization is around 80%.
80%. Okay. How much, sir, we can ramp- up this to around 90%-95% at peak levels?
Yes, it can be ramped- up to 100%.
Okay. Sir, second, on the 5,500 tons per annum expansion which we have completed, so how much is the revenue potential which we can generate from this?
The revenue potential would be around INR 70 crore for Insoluble Sulphur.
INR 70 crores. Sir, how much would be the revenue potential from Sulphuric acid?
See, Sulphuric acid revenue potential is a very tricky thing because, Sulphuric acid sells at raw material plus. Currently, the revenues are higher, but it may go down. I would say that it's between INR 25 crore-INR 35 crore.
Okay. If I add both these things, 70 + 30, that is somewhere around INR 100 crore-INR 110 crore. For phase one, we had done INR 150 crore CapEx. The asset utilization is quite low, like as compared to our history also wherein we had at least logged 0.9x-1x [asset turn]. That is quite below that also. How you see these things now shape- up?
See, the asset utilization normally for this kind of IS is low for IS. The reason that is low is the reason for which we require higher EBITDA margins. That is what justifies the higher EBITDA margin in short.
Okay. Sir, the third question now, since the second phase is put on hold, now how you see the growth triggers? What are the growth triggers like you see and how you see OCCL like for the next five years? Because apart from phase one, now phase II is also put on hold. Now what is next for the company which we-?
This is for Oriental Carbon, right?
The conference is now being recorded.
Raw material pricing since last quarter. I think you mentioned that we continue to see increases. Linked to that, when we are talking, what is the pricing environment, are we being able to pass through all cost increases? Which means raw material as well as freight or only part of it? Just some clarity on that.
What is happening is that, you know, we are getting raw material price increases equal to somewhat of raw material, but then raw material prices increases again. That is the situation we are facing. As far as freight is concerned, that is not being completely absorbed by the customers because you will have other suppliers in other geographical areas which will be supplying locally. They will not be impacted so much by freight. That is one component which is not being absorbed by the price increases completely.
Have our freight costs remained stable today as compared to third quarter? Or have they continued to increase?
They're stable. They are stable now.
Okay. That's it from my side. Thank you.
Thank you. Participants, if you have any questions, please enter star and one. The next question is from the line of Manan Jain, Individual Investor. Please go ahead.
Hello. Hi, good afternoon. I would like to discuss about the warehousing facility that you talked about in the opening remarks. Have we rented out this facility, or have we bought it in the U.S.?
No, it's a tie-up. It's not. We've not bought it.
Okay. It's a tie-up. How much inventory? It has been started. Have you started keeping inventory over there in the warehouse?
It depends from customer to customer. This is an infrastructure that has been set up so we can service the customers better. The amount of inventory and all will keep fluctuating.
Okay. I see. Okay. How much inventory do we initially plan on keeping there? Like, is there a plan or something?
Sorry? We can't hear you very well.
Can you hear me now?
No, no, not audible.
Am I audible now?
No.
Yes. Actually, we are able to hear this participant. Management members, we'll just connect you back. Just give me a moment.
I think the whole line has gone. There's some issue.
This is the operator. We have the line for management reconnected, so you may please proceed.
Yeah. We hear you.
Okay. Yeah. Am I audible now to you? Yeah.
Yes, you are.
Yeah. Okay. How much inventory do we plan on keeping in the warehousing facility in the initial phases? Like, is there any plan about that? Like we'll keep, for example, INR 10 crore or so worth of inventory over there.
No, sir. There is no fixed plan like that.
The new facility that you're setting up, the new CapEx plan. Our plan for getting sales in that plant is through North America primarily or through the Indian markets per se?
The important growth markets to fill up the new capacity.
Okay. My next question would be about the pricing renegotiation. Rates have become fairly stable for a while now. Have we been able to incorporate these trade costs and the raw material costs in our renegotiated prices with the customers in January as we were due for a renegotiation during January?
I think I've answered this. I have answered this question. To the previous participant. The answer remains the same. That we, though we did take some increases in raw material costs, due to raw material costs, but the raw material costs have further increased. Freight costs is something which cannot be totally passed on because there are competitors who are sitting in those geographical areas for whom freight cost is not a big component. That is something which we have had to absorb.
Understood. Okay. Understood. When do we expect the optimum capacity utilization for our phase I CapEx?
Probably next year.
All right. Would we reevaluate, you know, consider our phase two in the next year or this year itself?
No, we will keep re-reviewing that situation every few months. It'll be dynamic. You know, it can be done. It can be triggered sooner as well.
Oh, okay. Understood. What do you think about demand in general? Do you think it has, like, moved as far as. In general, will the demand be better going forward the next two-three years in Insoluble Sulphur as the market bottomed out or something?
I think so. I think the last two-three years have been very tough from a demand point of view. In 2019, we had the global auto slowdown. 2020 and 2021 were affected by COVID and chip shortage. As these things ease out, I think that the demand should only improve going forward.
Okay, great. I hope so too. Thank you very much. All the best.
Yeah. Thanks.
Thank you. The next question is from the line of Nikhil from SiMPL. Please go ahead.
Hello. Good afternoon. Am I audible?
Yes.
Yeah. Hi, thanks for the opportunity. Is there any new plant which is coming up, new capacity, anything which you are hearing, if it is?
No.
[crosstalk]
We do not have knowledge of any new plant coming up as of now.
Okay. With respect to this China Sunsine capacity, is it like completely absorbed in the Chinese market, or are you seeing any aggressive pricing on the export side also from there or how is the scenario playing out?
No, Chinese people are as they were. We are not seeing any additional aggression from them. Obviously, they are also hit by raw material, and they are trying to, in our opinion also, you know, pass on the raw material costs. There is no additional step- up that we are observing in the market as of now from China.
Okay. Sir, you mentioned that even in last quarter call, you had mentioned that the freight cost is basically hitting us and that is causing the pain on the margins. As a percentage, what would be freight cost for us? Like, is it like what was it earlier and what has it become now? Is it like from 2% it's almost 6%-7% of sales or?
No. Freight cost is for us because we are primarily exporters. The freight cost for us has traditionally been around 6.6%-7% traditionally.
Okay. In current trends, where it would be? Because you said we are absorbing a lot of the freight costs.
No. It's traditionally not in current trend.
Yeah. Currently it would be like +10%-+11%?
Yeah. Currently it would be around maybe 10% or thereabouts.
Okay.
For the quarter it has been in fact about 12.5%-13%. Yeah.
Okay. One last question, sir. This, you mentioned even in last quarter call and even this quarter call you mentioned that in markets like Europe, we have to absorb the freight cost because the capacities there or the competitors there don't have the burden of freight costs. What I'm trying to understand is, so is it like because the demand itself is also very bad, and the existing plants are able to sufficiently meet the demand, that's why we are not able to like push our volumes? Or how have you lost any market share on volumes in those markets?
See, we are supplying or catering to those plants that we have been supplying or catering to. We are asking them and getting increases for raw material and other things are concerned. As far as rate is concerned, you cannot be way out of the market. If tomorrow the price is, for example, in Europe is X, you cannot go to your tire customers and say, "Okay, you can buy from them, but mine will be X into two." Right? There has to be some semblance of price to maintain relationship with your long-term relationship with your tire companies.
Okay. This similar situation will hamper us even in U.S. market, right? When we are trying to gain volumes in the near term, probably.
Yeah, yeah. You're absolutely right. There is a similar situation in U.S. as well.
Okay, fine. Fine, I'll come back to that to you. Thanks.
Thank you. The next question is from the line of Umang Shah from Saras Capital AIS. Please go ahead.
Hi, sir. Thank you for the opportunity. Sir, if you could tell us, for what percentage of the revenues would you be a primary supplier to the tire company, and for what percentage would you be a secondary supplier?
I mean, most of it, more than 95% is to tire companies. Rather more than 97% is to tire companies.
I was asking, you know, in some cases, you would be the second supplier while the first supplier is the market leader. In which company and how much percentage would you be the first supplier?
Now, that is something which is difficult to say. I would say that, you know, if you look at my total sales.
Yeah.
Just give me a moment. More than two-third of the material that we supply are to the companies where we are primary suppliers.
Can you repeat the statement, sir?
About two-thirds of the material that we supply are to the companies where we are primary suppliers.
Oh, that is great to hear, sir. Sir, the second question was, sir, do you see any difference in the competitive behavior by each plant post their acquisition by One Rock?
No, I think they only closed the transaction in November, December, and we are yet to see any change in behavior in the market.
Right. Right, sir. This is very helpful. Sir, the last question is, the CCI today fined the bunch of tire companies for the behavior that they have had since quite some time. Do we as their suppliers get affected by it?
You mean us?
As in, like, this behavior has led to pricing pressure for you in the past. Just wanted to understand the historical context.
No, we would not like to comment on this matter, please.
No problem. Thank you so much.
Thank you. The next question is from the line of [Sridhar] from PhillipCapital. Please go ahead.
Yeah, good afternoon, sir. Thanks for the opportunity. My first question is, so by when we can expect, you know, our margins to get back to the original level of let's say 30%-31%?
We are hoping that once the freight rates normalize and the raw material prices, you know, they also come to normal levels, so then we can be hopeful of attaining our margins.
This will take another one or two quarters, sir, would you believe?
It's very early to say, you know, which exact quarter or which exact month these things will normalize at. I think we have analyzed our margins over the last five, six, seven, 10 years. We've been consistently achieving a certain number, and we are confident of going back to that number and in line with the long-term guidance that we've always shared of roughly 30% EBITDA margins. Whether it happens in six months from now, or it takes 12 months, or it happens in three months, I think it would just be conjecture at this stage. The overall story is still intact. We still maintain that 30% EBITDA margins are sustainable in our business in the long- term.
Okay. Sir, how much raw material costs have gone up in last few months or maybe year- to- date?
Just to add one more point, if you remember last year, our EBITDA margins were at some point even up to 40%.
Yes. Yes. Right.
At that point also we said that this is an aberration, let's stick to 30%. That average 30% story is still intact. Sorry, what was your question?
Sir, my question was, how much raw material costs have gone up in last few months or maybe year- to- date?
Anurag, want to come to this?
If you look at the raw material cost and you compare it with last year, it has gone up by about 60% from the same quarter last year.
Same quarter, okay. Q3 FY 2021 to Q3 FY 2022.
Yes.
Sir, how much we have passed on?
Now that is something. I mean, we have been talking with our customers. I would say that of the increase, we have been able to pass on about 60% of the increase in raw material cost. What happens is, you know, as I told you earlier also, that once you get an increase, then during the quarter the prices increase again. If you look at the quarterly numbers, that is the thing.
What is the lag impact? Is it one month or is it a quarter, on a quarterly basis?
Basically, quarter or six months is what our mostly cost-price contracts are.
Okay. What is the typical inventory days which you hold for raw material?
Sorry?
The inventory days, which you hold for raw materials.
Inventory days for raw material would be typically from 15 days to 30 days, depending on this thing. Currently, since the prices are increasing, we are running at a slightly higher inventory, but normally it would be around 15 days.
Okay. Sir, just last one thing. When you say that, you know, our, the first phase of the capacity expansion, we will be running at full capacity by next year. You mean for FY 2023 we will be running at full capacity or by, maybe by Q4 FY 2023 we would be running at full capacity?
What we mean is that, and we didn't say full capacity. The question was when will our capacity utilizations increase and improve to optimum levels?
Yes, yes.
That will happen in the calendar year 2023.
Okay, calendar year. Okay, okay. Got your point, sir. Thank you.
Thank you. The next question is from the line of Shikhar Mundra from Vivog Commercial. Please go ahead.
How much of Sulphuric Acid is like captively consumed out of the 88,000 metric tons?
88.
Nothing is captively consumed, all sold in the market.
What are the major raw materials which go into making the Insoluble Sulphur?
Basically the two major raw materials are sulphur and oil, coating oil.
What is the margin improvements which we are estimating due to saving on fixed costs once this new capacity comes on stream, like?
Sorry, please repeat your question.
Is there any margin improvement on saving on fixed costs once this new capacity comes on stream?
It's all baked into our long-term guidance of roughly 30% EBITDA.
Okay. All right. What's the revenue potential? I missed the part of the revenue potential of the new facilities.
See, revenue potential for the Insoluble Sulphur plant would be around INR 70 crore.
For the 5500 ?
Yes.
Is that it? Okay. Okay. All right. Thank you.
You're welcome.
Thank you. The next question is from the line of Umang Shah from Saras Capital AIS. Please go ahead.
Hi, sir. Thank you for taking my question. Again, sir, just one question. Of the total raw material cost, how much percentage would be sulphur and how much would be naphthenic oil?
We will rather not, you know, go into such details, please.
Oh, no problem. Any rough ballpark also would be helpful, but if you're not okay sharing it, that's okay.
Yeah. Normally I would say that, you know, my product consists of an average of 75% of a ton, out of a ton of 750 kg sulphur. That is the ballpark I think.
Oh, okay. No, that's great. That's very helpful.
That's no biggie.
Thank you.
Thank you. The next question is from the line of Samarth Singh from TPF Capital. Please go ahead.
Thanks for the follow-up. Just one question. Was there any cost in this quarter in the P&L for commissioning of the new capacity?
Commission, the cost for commissioning will always be capitalized, right? There is no such cost here.
All right. Thank you.
Thank you. The next question is from the line of Aditya Khetan from SMIFS Limited. Please go ahead.
Yeah. Thank you, sir, for the follow-up. Sir, my question is on the freight cost. Again, like, as said by sir, that freight cost in this quarter is around 12%-13%. Just wanted to understand. In this quarter, our EBITDA was INR 21 crores. Considering if I take the similar quarter of the last financial year, there is a difference of INR 6 crores in the freight cost. Suppose if I add 21 + 6 crores, if the freight cost is normalized, our actual EBITDA margins would have been around 26%-27%. Is this understanding correct, sir?
Correct.
Okay, sir, are we witnessing some normalization in freight cost or it is still at an elevated levels only?
What we have witnessed is some stabilization. They have stopped increasing and there has been marginal decreases in some sectors, but they are still at elevated levels.
Okay. For the coming quarter, so that would still remain at higher levels then. Okay. Sir.
For the coming quarter.
Okay. Sir, second question. Sir, you had said that so we are planning to capture 10% of the market share in North America. What is the market size in North America today? How are you also witnessing the China market also? That was also our focused market. If you can help us understand more here.
The North America market size is roughly 40,000 metric tons.
40,000 metric tons. Okay. 4,000 we are targeting in the next coming year. What is the current market share, sir, if you can?
We did not say coming year. This is our eventual plan to help us around the capacities.
Okay. What would be the current market share, sir, today?
I'd rather not share that exact figure.
Okay. Sir, how you look at the China market? That was also one of our focused markets. How is that shaping up now?
China market is not our focus area anymore.
Okay.
It's a competitive market, and especially after COVID, there is a lot of complications over there. We are focusing on other areas.
Okay. Sir, just one last question, sir. From where we are taking the coating oil and sulphur from?
We have refineries in North as well as in Gujarat. We are buying from, mainly buying from these refineries.
Okay.
Coating oil we have, international as well as domestic suppliers. There are people who are refining oil and then we have big refineries and then we have some international suppliers. A mix, mixture of that.
Okay. Sir, if you can share the split of coating oil, so how much we are taking from domestic and imports? Just a short idea of ballpark only, sir.
No, no idea.
From imports and from domestic.
All I can say is majority of the oil is from India. That is what I can tell you.
Okay. Thank you, sir. Okay.
Thank you. The next question is from the line of Manan Jain, Individual Investor. Please go ahead.
Hello. Thanks for the follow-up. I just wanted to confirm what is the expected incremental EBITDA from phase I CapEx?
I think, so EBITDA we are talking about in terms of percentage of turnover, and the guidance is that should, it would be 30% of the turnover. 30%.
Okay. On an overall level.
Yeah.
Okay. Okay. Thank you.
Thank you. The next question is from the line of Ajinkya Jadhav from Premium Brokers. Please go ahead.
Yeah, thanks for the opportunity. I have just one question. What is our R&D spend as a percentage of sales?
R&D spend as a percentage. I will get back to you with the numbers later. I don't have them in front of me just now.
Okay. Can you share anything on the chemistry and like, are we modifying the Insoluble Sulphur or like do we modify, do we innovate in terms of, you can say, specialty kind of a type of offering or is it the same product that we were offering for the last five, 10 years?
you know, we have R&D and process research, and improving the quality of our product is a continuous process which we are doing on a continuous level, and obviously year on year the product specifications keep on increasing.
Okay. Thank you, sir. That's it from my end.
Thank you. The next question is from the line of [Sridhar] from PhillipCapital. Please go ahead.
Yes, sir. Thanks for the follow-up, sir. Sir, do we have any long-term contract sourcing for the sulphur or coating oil?
No. These are, as you know, highly commoditized. Sulphur is a byproduct and so is oil, you know, so much dependent on other things that though we have quarterly contracts in coating oil, but for sulphur there are no contracts. It's always a spot buy.
We buy 100% coating oil under quarterly contract or we also buy some on the spot basis?
It's a mixture of both.
Pardon, sir?
It's a mixture of both.
Okay. Okay. Sir, you said that 75 kg of sulphur is required to produce 1 ton of Insoluble Sulphur, right? Am I right?
At an average. Let me clarify that.
Okay. Got your point. Sir, how is the current, you know, demand supply situation of Insoluble Sulphur globally?
Currently obviously, Insoluble Sulphur consumption is dependent on the tire companies and we are seeing some subdued demand because of the reasons mentioned earlier also, mainly COVID-related. There is some subdued demand as of now.
Okay. It is fairly balanced in terms of demand supply?
Sorry?
Is it a fairly balance between demand and supply or it's just that, you know, supply is much higher than the demand?
Supply is much higher than demand.
I would say supply is higher than demand, but it would be in the range of 80%-85%. That is how it is.
Okay. Thank you so much, sir.
Thank you. The next question is from the line of Shikhar Mundra from Vivog Commercial. Please go ahead.
Yeah, just a follow-up question on Sulphuric Acid, like, what's the revenue potential for the 88,000?
See 88,000, again, you know, this is what creates the confusion. 88,000 is the increased capacity, right?
Right.
Not the increase in capacity. That is the total capacity.
Yeah, total capacity. What's the revenue?
It is very hazardous to give a revenue potential on that because the prices vary very, very drastically.
Okay.
For Sulphuric acid. For example, INR 6,000 per metric ton to INR 10,000 per metric ton.
Okay.
Right? At lower end, 6,000 into 88,000, at higher end, 10,000 into 88,000.
All right. What's the CapEx you have put in for the incremental capacity of 46,000?
The CapEx is around INR 33 crores-INR 34 crores.
I was just trying to, you know, understand the ballpark return ratio for the Sulphuric acid plant because it's like a, but Sulphuric acid is basically a commodity. I was just wanting to understand the rationale, you know, behind expanding.
If you have followed the this thing, we are not putting Sulphuric acid for commercial reasons for selling it. It's because we get steam from it to be consumed in our IS plants. We had a Sulphur-Sulphuric acid plant which was catering to two lines of insoluble Sulphur. Now, since we are putting another two lines, we have put an additional Sulphuric acid plant from where we get steam for our Sulphuric acid plants, and that is where we get the payback.
Okay. Got it. Thank you.
Thank you. With this, I now hand the conference over to management for closing comments.
I take this opportunity to thank everyone for joining on the call. I hope we have been able to address all your queries. For any further information, kindly reach out to us or SGA, our investor relations advisors. Thank you once again.
Thank you. On behalf of Oriental Carbon & Chemicals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.