Q2 20/21

Nov 4, 2020

Ladies and gentlemen, good day, and welcome to Q2 and H1 FY 'twenty one Earnings Conference Call of Oriental Carbon and Chemicals Limited. This conference call may contain forward looking statements about the company, are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Please note that this conference is being recorded. I now hand the conference over to Mr. Akshay Goenka, Promoter and Joint Managing Director of Oriental Carbon and Chemicals Limited. Thank you, and over to you, Mr. Gwenka. Good morning, and a very warm welcome to everyone. Along with me, I have Mr. Anurag Jain, our CFO and SGA, our Investor Relations Advisers. I hope that all of you and your loved ones are keeping safe. Firstly, I would like to inform you that the Board of Directors has declared an interim dividend of Rs. 4 per equity share that is 40% of the face value. We have maintained the same dividend as same interim dividend as previous years. Coming to the performance of the company, post a subdued performance in quarter one FY 'twenty '1, we have seen a strong bounce back in our business trajectory in quarter two. This was on the back of normalization of replacement and OEM demand in domestic as well as international markets. I would like to update all of you that the operations at both the plants of the company have resumed with all the necessary precautions adopting to social distancing and other safety measures. Capacity utilization levels are seeing consistent and healthy improvement. Operational efficiency has been restored during the quarter after a dismal Q1. We have recorded an EBITDA growth of 19 year on year and PAT growth of 30% year on year in quarter two FY 'twenty one. Total income, however, has seen a 6% year on year reduction, mainly on account of reduction in asset volume and prices with higher proportion of domestic sales during this quarter. Further, we continue to maintain a robust balance sheet position with net cash on our books, which has helped us successfully navigate several economic cycles. The Indian automobile industry saw a gradual recovery in the quarter gone by. The recovery is likely to stay strong in anticipation of the festive demand and normalization of supply chains, strong sentiments from the urban market and preference of personal mobility. With another good monsoon and good harvest for the Rabi crop, the domestic rural economy is also expected to remain buoyant going ahead. We expect this momentum to sustain going ahead. However, the optimism is subject to any recurrence of COVID related shutdowns imposed by any government, be it in India or in export markets in the future. We also need to keep a close watch on demand once the festive season is over to see its sustainability. A brief update on our CapEx plan. Our expansion has faced delay due to suspension of civil and other work during the shutdown period on account of COVID-nineteen and availability of labor thereafter. The first phase of insoluble sulphur plant and sulphuric acid plant, which is expected to be commissioned by end of FY 'twenty one, would be delayed and expected to be commissioned by Q1 FY 'twenty two. OCCL has consistently evolved our technology standards over the last twenty five years by investment in professional research and equipment benchmarking with the best standards. We are on a strong footing to deliver sustainable and profitable long term growth with our dominant position in the industry being the only domestic player producing IS with a domestic market share of approximately 60% and approximately 10% to 12% of global market share and a marquee customer base. We will be focused on expanding our foothold in markets where we have low penetration over the coming years. Our efforts will continue in streamlining costs, eliminating wastage and reducing consumption of water in order to remain socially responsible and improve efficiency of operations. Now I would like to hand over the line to Mr. Anurag Jain to update you financial performance of the company. Thank you, Akshay. I would first take you all through the stand alone financials of the company. Total income for Q2 FY 'twenty one is INR 81.8 crores as compared to INR 87.5 crores in Q2 FY twenty twenty. Revenues have been impacted on account of lower realization in sulphuric asset on account of lower raw material cost and due to the product and due to the market distribution being more in the favor of domestic sales. Despite the challenging environment, we have been able to make good volumes. Total income for H1 FY 'twenty one is INR128.8 crores compared to INR182.8 crores in H1 FY 'twenty. EBITDA for Q2 FY twenty twenty one stood at Rs. 33.5 crores as compared to Rs. 28.1 crores in Q2 FY twenty twenty. Margins have improved on account of reduction in raw material prices and efficiencies achieved through cost control measures, which were undertaken. For H1 FY twenty twenty one, EBITDA stood at INR 42.5 crores as compared to INR 54.7 crores in H1 FY20. Margins for the half year stood at 33%, an improvement of three ten bps. Profit after tax for Q2 FY21 is INR20.4 crores as compared to INR 15.8 crores in Q2 FY twenty twenty year on year growth of 30%. Our PAT margins for the Q2 FY twenty twenty one have improved by six ninety bps to 24.9%. For H1 FY 'twenty one, PAT stood at INR 21.8 crores, margin for half year stood at 16.9%. With this, I would like to open the floor for question and answer. Thank you very much. We will now begin the question and answer session. The first question is from the line of Aditya Khetan from East India Securities. Sir, my first question is on the revenue front. Sir, I would like to know, you said that the revenue decline is mainly due to the decline in the asset volume. So on the insoluble sulphur, so can you share what is the volume decline or what would be the number of growth and de growth in this contract to Y o Y basis? So revenue has been impacted by a little bit of a volume decline in sulphuric acid as well as lower sales price without impacting the margins because of lower price of sulphur. And also because the product sales mix of sulphur was more skewed to the domestic sales in the current quarter vis a vis the previous quarter. So these are the major reasons for our revenue coming down. However, we do not comment on the volumes. But I would like to tell you that the insoluble sulphur volumes have been in the same range as they were in the previous quarter same year previous quarter. Okay. Sir, and second question is that gross margins have expanded quite sharply. Any particular reason like inventory gain or decline in raw material costs? So there are two reasons. One, of course, is that there has been there was a decline in raw material costs for Q1 and we were carrying inventories. After that, sulphur is again creeping up sulphur. But during the quarter, benefited from lower sulphur costs, number one. And number two, we also benefited from lower fixed costs. And sir, how much could be the savings in the fixed cost, if you can give a number? One moment, please. So if you just give me one moment, please. You can highlight that the savings in fixed cost is a recurring number, so we can expect this to flow in the next quarter also or this is just a one off for this quarter? No. So we have done a saving of about 2 crores in fixed cost vis a vis last year. And some of it, of course, is one off, but most of it will be something which we will expect to carry Okay. And just post lifting of the lockdown, how is the North American market demand shaping up now? North American market demand has come back. So as has European demand, we are currently seeing a lot of traction in our export markets. In fact, Asia was a bit of a laggard, but even there the traction has come back. But looking at the subsequent shutdowns, we are always on the watch if it will have any impact. But currently, have seen the traction coming back in all the export markets, particularly in Europe and also in America. Okay, sir. Okay. Thank you, sir. That's all from my side. I'll join back in the queue. Thank you. The next question is from the line of Swadhana Mukherjee from Edelweiss. Please go ahead. Yes. Good morning, Thank you for the opportunity. Couple of questions from my side. So firstly, on the profitability side, if I see the profitability of your Chemicals segment has improved quite a bit this quarter, even when comparing the margin levels for the last maybe four, five, six quarters. So you just mentioned that there is some fixed cost savings that has been there. Apart from that, is there any other factor in terms of, say, maybe higher realization or anything else that you may point out? Because overall, what I see in your cost structure apart from raw material costs have broadly remained similar also for some point of time. So if you can throw on some light on that. So of course, as I said earlier that there has been a saving on the raw material front for the quarter, mostly from sulphur. And obviously, there has been some fixed cost saving. There has been interest saving as well because of lesser interest rate and repayment of term loans. So these are the three major areas where we have got savings. Okay. And so in terms of realizations of insoluble sulphur that is how has the trend been say as compared to maybe Q4 or Q3? Think Q1 would not be a very pertinent comparison, right? International prices in rupee terms have remained more or less the same. Okay. Okay. All right. And utilization level, where are we? Are we would we be able to grow our volumes if there is more demand coming forward before the CapEx is commissioned? Yes, we will be able to do that. Okay. And any color you can throw on, sir, volume growth outlook, what you see maybe over the next one year? I cannot comment for the next one year, but we are looking at volume growth currently as it appears. We are looking at a volume growth for the next quarter. And that is primarily going to come from the domestic market? Both domestic as well as international. All right, sir. Thank you so much. That's all from my side. Thank you. The next question is from the line of Anubhav Rawat from Monarch Network. Please go ahead. Hello. Yes. Hi, good morning, sir. I hope everything is safe on your end. Just a couple of questions from my side. So sir, in third quarter FY twenty twenty, you had actually quantified the sales drop. So will you be able to give us a number as to by how much other sales are due to sulphuric acid and how much the insolvent sulphur? I didn't get your question. Can you repeat, please? Sir, can you quantify the sales drop this quarter? So like in third quarter FY 'twenty, you had quantified 15 it's It is that that is what we are saying that as far as volumes are concerned, our insoluble sulphur sales have been in the same range as the same quarter last year. Okay. And what about sulphuric acid sales? Has been lower because we had to take a shutdown of about twenty days on account some work which had to be done because of the expansion, which is happening there. Okay. So this around 6% of sales drop is mainly because of sulphuric acid, is it safe to assume? So yes, a significant part of it is because of sulphuric acid And the other part is because of the redistribution of sales this year this quarter, the domestic sale as a percentage of total sales has been more than the same quarter previous year. So that has also brought down because the delivered price in domestic market is a little bit lower than the international market because in industrial market our delivery costs are much higher And in Indian market, they are less. Okay, understood. Understood. And sir, secondly, I mean, we facing any pricing pressure in insoluble sulphur from any of our customers? I mean, have the realization gone down or is it same? Hello. So what is happening, hello? Yes, sir. Yes. So what is happening is of course there are people who are asking customers are asking generally for some price revision as is the case in all areas. And with some customers, we have a price contract, which a component of which has a component has a variable component exchange as well. So there, of course, it will automatically adjust for exchange. And overall, we are asking for some price increase where we are looking at our margins and reacting accordingly. Understood, understood, sir. And sir, for this Phase one expansion, could you give me a number on CapEx? I mean how much have we done and how much is remaining now? Since September, we have done approximately INR 75 crores and there is another INR 75 crores that has to be done for Phase one. Perfect, perfect, sir. And just one last question, then I'll come back in the queue. So in this quarter, did you see any additional deletion in other customers? Nothing specific to that would be immaterial. So I mean, would you say a status quo in this? Yes. Would say quarter two was more status quo. Okay, perfect. Thank you, sir. I'll come back in the queue. Thank you. Thank you. The next question is from the line of Subha Agarwal from Equitas Investment. Please go ahead. Good afternoon, gentlemen. Sir, my first question was regarding the investments. So in the annual report this year, various investments in Category II AIF and Category I AIF was done, Exponential, Paragon, Fireside Ventures, etcetera. So though amount not material, but I wanted to understand the thought process behind it and how are we looking to go ahead with this investment going forward? Do we want to increase the investment in such AIF? And if you can give us some So let me try and answer It's a bit of a complicated question to answer easily on a call. So yes, the amounts were in the annual report roughly INR10 crores odd, if I remember correctly. The committed amounts are higher. So these amounts are basically slowly paid out over the course of three, four years. Now the logic behind that is that we have an investment committee that is made, which comprises some external members as well as some internal members of the company. And we take judicious calls wherever we think that the risk weighted return is well in the company's favor. And even in this financial year, some small falls there and there have been taken where we strongly believe that the company and the shareholders. So sir, what would be the total amount committed and what is the total amount of investment that we are looking at in '20 The total amount committed, I think, is mentioned in the annual report. I don't have the figure off hand with me, but I think it would be close I mean, as of today, it would be close to INR 40 crores. I think in the annual report, it was around INR 30 crores. Then we would have maybe done further then because you see this time, these last six, seven months have provided unprecedented opportunity to swoop in and take advantage of certain special situations that may have arose. So we have been very, very, very judicious about it. And in terms of overall also if you see our network is roughly INR500 crores and our commitment so far has been just around 40 in that also which is payable over three to four years. So as of now, it's quite I would say immaterial in terms of the overall balance sheet of the company. And let us see how things pan out. So are this investment against identified companies or just in the fund and that will be invested accordingly going So I would say that the bigger ones are in funds as opposed to identified companies And then there will be certain very small investments in the range of INR50 lakhs, INR20 lakhs, INR1 crore roughly, which would make a portfolio of direct investments in specific companies. Understood. Understood. Sir, my second question was regarding exports. So you said in first quarter, it was more favored towards domestic market. So what was the proportion of export exactly, if you can give me the number? So let me clarify that. You see the way sales are booked is to do with the in co terms that they're sold at. So typically there is a lag between dispatch and booking of sales in the export market because in a lot of times the sale is actually booked when the goods reach there. Whereas in the domestic market, the sales can be booked much quicker. So I think that is what we were referring to when we spoke about So in that case in terms of dispatch, there is no changes no major change to report. So in that case, Q3 number will be much higher? No. In that case, I think the Q3 proportion should be okay. So you see because normally what happens is that Q1 the dispatches were less, so naturally the Q2 sales became less and less. Otherwise, it just carries on in a cycle Because Q1 dispatch was low, so that skewed the Q2 number a bit. But I think it should normalize, the mix and the ratio and also normalize Q3 onwards. Got it. Fair enough. And my third question was regarding CapEx. So you have informed that now the CapEx will be commissioned in Phase one CapEx by Q1 of FY twenty twenty two. So have are we seeing any cost overrun? And what is the total amount committed for Phase one? You have mentioned INR 150 crores out of INR $2.16 crores, that's right? That's correct. That's correct. That was our original estimate to do around INR 150 crores since in Phase one. And as of now, we don't emphasize any kind of cost overrun. Although this one point I should have made in my opening remarks and we'll give you a good opportunity to make it. So we have consistently said over the last two, three calls that we are looking at doing a big captive solar power scheme in Dharuveda. Unfortunately, the permission has not been granted to the developer who will want to supply that to us. So that has fallen through. So I thought it's important for everybody to know because we had said that we are going to do this. But only last month we heard that the development did not get permission to execute. This is very, very unfortunate. So that was also part of the project cost. Okay. So what was the megawatt of that and total project cost for that specific solar? It was around INR 2 crores, 2.5 crores, not much. Much. Half a megawatt. No, the megawatt was five megawatts. It was a five megawatt project where we would have participated in equity. So therefore the Okay. Got it. It. And typically in our CapEx, whenever we plan the CapEx, what is the kind of asset turn that we look at and the return ratios? So you cannot look at in just Phase one, you have to look at asset turn on the whole INR216 crores because majority of the work is being done in Phase one, whereas the tonnage that will come on screen is similar in both. In terms of returns, we had we have not worked out fresh returns in the last six months or the last nine months. But we had announced at the time of the project announcement that we were looking at roughly 20% return on capital on this project as a whole, including the different phases in which it would come in and the sales ramp up. It. One last question I had about the global demand and supply situation as of now. So do you see any additional capacity coming up in next two years? Apart from our capacity that is coming up, only one Chinese company had announced that their capacity will come out. Apart from that no, there is no further capacity that we are aware of. And So what would be that total tonnage? Total tonnage, the Chinese company said that they are coming out of 30,000 tons, which should be operational in the next six months or three months odd. And our CapEx is around 11,000, 12 thousand odd in Phase one, which will come in another six to nine months. Apart from that, we have not heard of any other capacity expansion happening. On the contrary, we have actually heard of some of our competitors reducing capacity by shutting some old plants. Okay. That would be Eastman and Chicaco, right? Yes, I don't want to make specific comments. You can Okay. No worries. Fair enough. I think that's it from my side. Thank you so much. Yes. Thank you. The next question is from the line of Shashank Kanodia from ICICI Securities. Please go ahead. Yes. Good afternoon, sir. A couple of questions from me. Sir, with Chinese capacity, will be at the same stage or will this supply instead of the sofa or will it be a tad lower grade? I couldn't understand your question clearly. Please can you repeat? Yes. So you mentioned that the 30,000 tonnes is the additional capacity we put in by the Chinese company, right? So normally in our case China is not a competition, right? They have produced low grade in Solvay server whereas we produce high grade. So this 30,000 tonnes you have a same grade that we produce or it's going to be a low grade carbon insolvency? This 30,000 tonnes is going to be similar to what we are currently producing. But you see, I mean, they are selling it. They are selling it in China and all that. And it could depending on what strategies people employ, it could create some overcapacity in the Chinese market. And that could have spillover effects in other geographies there. Right. And then secondly, you mentioned in the initial opening remarks that the insolvency of our volumes were flat on a Y and Y basis, right, in sum total? Sorry, I can't recall you very clearly. Opening remarks, you mentioned that the insolvency super volumes were flat on a Y o Y basis, right? So if you could break the volume between domestic and export in terms of just the growth numbers? Roughly so domestic in the quarter was in the range of 40% to 50% and the rest were export. Let me say, I'm talking about the growth numbers. No, I said that we said that the Q2 year on year was roughly the same. Right. As a sales tonnage, so roughly the same. So sir, what about the tonnage in domestic and export in terms of growth numbers? If you can help us understand. So I'm basically coming from the side that all See on volumes, we don't really comment so much. We have only given we tried to give you a flavor of how the realization was moving and what was the cause of it. Secondly, as Sheth has pointed out, the major reason for this quarter, the domestic sales being higher was because most of the sale, which was done in the export market was still in transit. So because it gets booked after a period of say fifteen days to forty days and that will be booked in the coming months. Sir, I'm basically coming from the fact that most of the tire companies are reporting volume growth, right? So our volume growth is in tandem with what they report, right? We have not lost market share per se. No, no, no. So our volume growth would be in tandem with what the tire companies are reporting, yes. Okay, okay. Secondly, on your raw material front, you mentioned that we had some low cost inventory, which benefited us this quarter, right? So last quarter, RM to sales were up to 30%, this quarter it's 17 Normally, a range of 25%, twenty six %. So going forward, do you see that we will be getting back to the 25%, twenty six % range or it can be tied No, I think it would go back to that kind of a percentage range. So in the first quarter, we had opening stock of higher cost inventory and we got the benefit in the second quarter of the lower cost inventory of opening stock because of the lower prices of sulfur in Q1. Right. So sir, there is no EBITDA margin, What will be your you have been maintaining it a long term guidance of roughly 25% to 28%, right? Right. The guidance remains the same or We would like to maintain the same guidance on a bit long term EBITDA margin. Okay. And sir, recently, the government has capped some incentives under the MAS export scheme, right? So just wanted to check, does it impact us or anything that we should bother about it? It will impact us because that is something that we had been booking in our profits for the last two years and including in the first six months of this year, we have booked it in our P and L, so that will stop. So that amount for roughly 2% of sales, export sales? Anurag, please help with that. So it's not 2% of export sales, as such is 2% of the FOB value of export sales. So it will be 1.7% of the export sales. Booking roughly INR 3 odd crores every year. That INR 3.7 crores in the last So yes, so then that quarter. So sir, have you been able to mitigate to any price increase for the international customers? No, no, no price increases. This will bring margin to some extent. Sorry, I couldn't hear that. Can you repeat the question? It could bring the margin to 2%, right, this loss of 34% odd crores? Yes. This would come from our side, this loss of INR34 odd crores. This will come from us. All right, good. Sir, that's all from the sector. Wish you all the best. Thank you. The next question is from the line of Kunal Mehta from Vallum Capital. And this is my first call for Oriental Carbon. Pardon me if my questions are a bit fundamental. Sir, I have three two, three questions. Just wanted to understand the current prospects a bit better. So this quarter, could you please help us understand the demand, the you mentioned that the volumes are stable. So could you help us understand that the split between what sort of business we're getting from replacement market and what sort of what is the sales to new OEMs? And is it any different from the trend which we have seen in the previous quarter, especially the previous quarter last year? If any qualitative trend would also be very helpful. That is you may refrain from not giving any numbers. It's fine. No, no. See, the thing is that we sell our insoluble sulphur to the tire companies. Now they sell the tires, whether they sell it in the replacement market or to the new car OEMs is something that is at their end. And we will not be directly knowing about it. But obviously, if you look at the trend of how the tires go, how much percentage go to replacement market and how much percentage go to OEMs that is roughly you can take it as a ballpark figure for our consumption also. Okay, understood. Understood. So and even historically this trend has been you mentioning that our trend that our shares too also would also be in the same trend as the market share of OEM I mean, the new tires and the replacement tires. That's the We sell it we sell our product to the tire companies, they make tires. Now whether where they choose to there are some companies which are better in the replacement market, there are companies which have more market share in the OEMs. So according to that so you think the industrial distribution that will be our distribution. Sure. Sure. And secondly, wanted to understand, was it how do you see the so this quarter, I think, across the whole entire auto chain, I mean, across the whole value chain, we've seen, I would say, good recovery because the inventory had to be built up for the Diwali season. And I know everybody is speaking or is that this some success would happen. And so just wanted to understand sir, how do you see your order book and operations at least for the next few coming quarters? I mean is there any visibility you have that this sort of volumes which you have seen in Q2 at least we could see it for the next two, three quarters? I mean that's the second question. So for Q3, our order book is looking very strong and we hope it will continue like this in Q4 and onwards. Regarding your specific question about whether this is pent up demand and how things happen January onwards, it's anybody's guess because I don't think even the auto companies, let alone the tire companies can answer that question. But yes, today if you ask, the order book looks robust. Sure. Just and the final question I have is that, so when I now we have this existing base business and now we are adding capacity that you do know of I think you mentioned that in two phases, I mean 110,000 in 350,000? I'm sorry, pardon me. INR 510,500 in the next two phases. So I mean as far as the Otto cycle is concerned, we are right now at almost near the I would say somewhere above the bottom. And so this capacity addition which you are which you have thought of, so I mean what is the I just want to understand the rationale behind this that do we expect that over the next four, five years, I mean there's this sort of capacity to I'm sure, of course, that is the plan. But how do you see the ramp up of this capacity? Because right now the recovery in autos is still I mean, not just in India, across the group, I mean people are guiding for at least two more years of auto down cycle. Mean so any views on this would be very helpful. How should we see the ramp up I mean for this capacity Phase one, Phase two? Let me put it this way. The situation is very dynamic, and it has to be looked at. So at the time when we started this expansion, that time it looked very robust, and we were very confident of how things would go. After that, as you know, last year 2019 was a big downturn for the auto industry and then COVID came. So naturally but we were already and thankfully, I may say right now, we've already committed to the project. So there was no question of stalling it or coming back. And now if you look ask me today, the situation looks quite robust and we feel confident that the Phase one that we are putting on could be ramped up in appropriate time. So it all depends on the situation. But if you ask me today, yes, we are confident of ramping it up in appropriate times. Sure. And does the CapEx I mean, sir, I think in a lot of this given the set of products given the main product focus that we have and which is a similar product where we have a huge market share globally and especially in India We have only approximately 10%, eleven %, twelve %. Okay, okay. So sir, does the CapEx cost of the plant give you an advantage? And if yes, it does give you an advantage, how much of an advantage could it be? I mean, so if you could say you could set up a facility for, say, something like INR $2.50 crores, given the capacity you're trying to add, I mean, what could be the CapEx for somebody in China and some other maybe, probably in The United States if somebody would have to add the similar sort of capacity? Any advantage do we have? I'm sure there would be some advantage because otherwise It would be difficult to comment on everybody's thing. But for example, China, Sunshine is a listed company and their figures are publicly available. So you can use that as a reference point. Apart from that, it depends on somebody setting up greenfield or brownfield that obviously has a big impact on the project costs. And then everybody has slightly different technologies with which they set things up and different parameters. Some people have higher engineering costs, some people have higher CapEx costs, some people have higher land costs. So it's very different. It's very difficult to say though. What I can say is that our cost structure of setting up capacities is very competitive. Got it, sir. Got it. Thank you very much for the comments. Thank you very much. Thank you. The next question is from the line of Pritesh Chera from Lucky Investments. Please go ahead. Sir, just a clarification on one of your comments. So some total the net capacity addition in the system will be how much? 30,000 is what Sunshine is adding, 11,000 is what we are adding and some players are shutting down. So some total capacity addition over the next two years will be what? Look, the figures of what is shutting down and how much would not be correct for me to give out like this because it's not some concrete information. But any educated guess that you want to share? No. And okay. So let's say this 41,000 ton capacity, which is getting added, what is it as a percentage of the current or let's say last year's demand? As a percentage of last year's demand, I think it should be in the range of 10% to 15%. Fifteen %, more like 15%. Okay. Of the total world demand, right? Yes. Or last year 20 Okay. And just another clarification, the INR $2.50 crore project that we are putting is for 11 Not INR $2.50 crores, not INR $2.50 crores, INR 2 15 crores. INR 15 crores, okay. So INR $2.15 crores will lead to INR 11,000 crores of capacity, right? Also it will also lead to 150 tons per day of sulfuric acid capacity. Okay. And the same site has the scope for brownfield or this is No. After this this is our last brownfield. After this all brownfield opportunities for us are over. Okay. This is a brownfield. Okay. Thank you very much sir. Thank you. The next question is from the line of Pankaj Pokhade from Axis Securities. Please go ahead. Thanks a lot for taking my questions. So just wanted to know what are the time lines for this additional capacities which we are building going on stream? So the first phase should go on stream in Q1 twenty one, twenty twenty two and the second phase would start immediately after that. So that should be towards the end of Q2 if everything goes as we are hoping that it will go now. Sir, missed it. Q1 twenty twenty two, right? Sorry? Q1 twenty twenty two or '20 The Q1 twenty twenty one, '20 '20 '2, I said. Q1 twenty two, right? April to June of FY twenty twenty one. That would be first phase of INR5500 right? And thereafter? Thereafter, if everything is like I mean, if everything is as it is now, then we would be starting for the next phase and it should be operational by the end of the year 2022. That is Q4 'twenty two? Yes. Roughly. Q3 'twenty two, sorry. Hello? Yes. That will be q three twenty two. Right? So that will be q three twenty two twenty three. Yeah. Okay. Thank you. The next question is from the line of Ritesh Gandhi from Discovery Capital. Hi, and congratulations on your numbers. Just had a question with regards to all the incremental capacity, which is coming online, including ours. Do we see potential actually pressure on pricing to actually fill up our incremental capacity? So currently, the capacities that we are adding are more focused towards the market where we have little presence or big players where we have little presence. So we do not foresee a very specific pricing pressure as such for these new quantities. Got it. And actually, like, kind of going into the rest of FY 2021, do we expect to be able to retain our EBITDA per mean ton on an absolute basis? I understand the revenues may go up and down based on the RM costs. So that is what our effort is that we retain our EBITDA on per metric basis on when you say EBITDA per metric ton, sorry, if you are talking about EBITDA per metric ton basis, then we would like to again reiterate our commitment, which is that on total, we would like our long term commitment is late 30%. Got it. And now wouldn't this actually slightly go up because the exchange rate should actually help us also in terms of EBITDA in terms of absolute as opposed to percentage because the percentage may not be accurate if we have to pass on raw material increases and decreases, right? So raw material increases and decreases are automatically passed on in some cases where we have long term contracts, formula based contracts. In other contracts, the pricing is more or less stable until there is a very substantial change in raw material costs and that then they are passed on on the date of revision, which are either on six monthly or quarterly basis. Got it. The approval process for our new plant, is it going to be in a fresh approval process or we would already have client approvals for? I think we would already have existing approvals because it's part of the same site. I don't think we will need fresh approvals. Got it. And the only last recommendation is, look, I mean, I appreciate and I'm sure you guys are excellent investors as well. But our only suggestion is that as opposed to being opportunistic with AIF investments, etcetera, I think it would just be helpful if you focus on the business and any incremental free cash flow is a return either through dividends or then just a buyback in your own stock as opposed to actually punting around is my own suggestion, but I'll leave that to you guys. No, fair enough. I think your point is well taken and appreciated. All right. Thanks and all the best. Thank you. The next question is from the line of Ronak Gupta from Clarion Enterprises. Please go ahead. Hi. Can you throw some light on your borrowings and your debt for the next one to two years? Are you looking to borrow more? So how are you going to be for the next twelve to twenty four months? So we are obviously we have a line of credit approved for the project, and we are going to utilize that line of credit. But at the same time, there would be some repayments. For the first half year, there were less repayments because of the moratorium that we had. So the total long term borrowing, which was INR109 crores last year that is on thirty first March twenty twenty, we expect it to go up to INR140 odd crores by the end of this year. And the year after that? And the year after that, it should not go up much because there will be repayments and of course that would set up any new loan that we take. And what about the short term borrowings? Short term borrowings are basically working capital that we use in terms of pre shipment credit and FBP. So we are not utilizing any CC limit per se as of now and we would continue our short term would continue in that line only. So that would basically increase as your capacity and your utilization increases? So yes, so that is right. So that would increase in line with our sales. But normally, we are only financing our export sales because that comes at a cheaper price in terms of foreign currency loans. So we are using the foreign bill purchase mechanism and PC mechanism for that. Okay. One more thing, as an investor and a shareholder in your company, really concerns me when you say you are investing directly into equities, into direct companies. So it's I mean, you've done that you've been doing that in the last few years also. But your balance sheet always shows up as a part of a fund as you are investing in a fund. So but that is still okay, but investing in equities really makes as a shareholder makes me uncomfortable. Just wanted to No, I'd to clarify two things here. Firstly, we have never invested in equities before or currently or have any plans to do so in future. This is I'm referring to public equities. And in the past also, have never invested in equities and that is the reason it has never shown up. Maybe I wasn't clear here. When I mentioned direct equity, I did not mean it to be in a public market. Basically, is kind of a fund itself, but sometimes in the structuring it shows up as direct and these are very small amounts. But please be rest assured, we have no intention of investing in public markets from the company either in the past or in the future or currently. Got it. Thank you. Thank you. The next question is from the line of Dhruv Muchal from HDFC Asset Management. Please go ahead. The line for the current participant has dropped. We move to the next question, which is from the line of Apurva Mehta from AM Investments. Mr. Mehta, your line is in top mode. You can go ahead, please. Yes, sir. Congrats on a good setup number. Just wanted to ask that are we still looking for solar power contracts because nowadays it's much cheaper than where people are looking for solar as an alternative power? No. We certainly we have already got rooftop solar and we are looking to see how we can do that more. Unfortunately, the Haryana government withdrew the captive power scheme. So it's more a regulatory issue as opposed to us. So because we had everything signed and at a very good rate. So it really depends on the regulatory environment how state to smoke But yes, we will certainly be on the lookout. And on the margin front, we should do well because of the currency gain, which is there because currently, the majority of our exports are on the European side, where the euro has marked the yield of almost 8% to 10%. So that is the right way to assume that our margins will be elevated levels for next two quarters at least? So first of all, our sale is more or less divided between dollars and euros. It's not that it's only Okay. It's very it's not very prudent to talk about margins based on currencies, because as I've already said that there are other things in play. Obviously, raw material cost also goes up if the rupee depreciates, though that is a smaller part of the total tt. But I would not like to discuss margins based on ForEx rates because of the and as I pointed out, there are some contracts, long term contracts, which are formulas. So it's a mixed bag. Are we hedging any currency hedges are there? We do hedging? Yes, we have a currency hedging policy, where we hedge 75% of our net exposure. So we have that and we are following that policy. A lot. A lot. Wish you both. You. Due to time constraints that was the last question. I would now like to hand the conference over to the management for closing comments. 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 get in touch with me or Mr. Goenka or Strategic Growth Advisors, our Investor Relation Advisors. Thank you once again. Thank you. On behalf of Oriental Carbon and Chemicals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.