Q4 22/23

May 12, 2023

Ladies and gentlemen, good day, and welcome to the Alkyl Amines Chemicals Limited Q4 FY23 earnings conference call, hosted by HDFC Securities. As a reminder, all participant lines 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 star and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nilesh Ghuge from HDFC Securities. Thank you, and over to you, Mr. Ghuge. Thank you, Tanvi. Good afternoon, all. On behalf of HDFC Securities, I welcome everyone to this Alkyl Amines conference call to discuss the results for the quarter ended March 2023 and full year FY23. It is a pleasure of having with us top management team from Alkyl Amines, represented by Mr. Kirat Patel, Executive Director, Mr. Chintamani Thatte, General Manager, Legal, and Company Secretary, and Ms. Kanchan Shinde, Chief Financial Officer, Alkyl Amines. Without further ado, I will now hand over the floor to the management for making opening comments. Over to you, sir. Thank you, Nilesh. This is Kirat Patel. Thank you everybody for joining us on this annual call after our annual results. The year has been, as we all know, a little peculiar because of the Ukraine war, which affected all the commodity prices, and there has been a lot of volatility in prices. Fortunately, over the period of the year, we have been able to maintain market share, increase our volume sales, and managed to at least stay on track as profitability is concerned. There have been, of course, in the marketplace between our main customer industries, some degree of volatility with pharma having some stress. The pricing on our inputs have been under stress. Fuel, for example, coal, has gone up considerably in the last year. Fortunately, it looks as if all that has now settled, and we look forward to a much stabler time in the coming year, which is 2023/2024. As far as our projects are concerned, the big project of ethylamines expansion, where we are planning to spend close to INR 400 crores, is almost ready for commissioning. It will probably be commissioned in the second quarter of this financial year. That is July to September sometime, and we will be on track. In the meantime, we have already commissioned one new product within the last year, diethyl ketone, which plant has stabilized now in production. With that, I will leave the floor open for questions, and we will try and answer to the best of our ability. Thank you. Nilesh, if you could open the floor for questions. 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 remove 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 Nirav Jimodia from Anvil Research. Please go ahead. Yeah. Good afternoon, team. Sir, I have two, three questions. Sir, if we see the amines chain, like from C1 to C6, like methyl, ethyl, propyl, and hexylamine up to. I think we are fairly stronger in the first three, like methyl, ethyl, and the isopropylamine. If you can take us through how we are placed in the other three amines, because I think we are the only player in India who is into this higher chain of amines. I was just checking our website where one of the key product in hexylamine is 2-ethylhexylamine. If you can walk us through how much of our current turnover is coming from these higher amines, and what is the size of these higher amines into India. Are they totally imported into India, or how is the situation being? Yes. Nirav, we are in the business of aliphatic amines, and as it happens, the market for the amines, the largest market is for the C1, which is methylamines. By far, the largest market. The second largest market is for ethylamines. Which is C2. And the third largest market is for isopropylamine. The C4, 5, 6, the ethyl/hexyl is mix of C6 and the butylamines are relatively smaller markets. Okay. In fact, in terms of turnover, I mean, part of our revenue. They would comprise less than 5% of our total revenue. So those are much smaller markets in India. Yes, we are the only manufacturers, and our competition is in imports from both China and Europe. And we do command, depending on the product, reasonably good market share, because since we happen to be the only manufacturers of these products here. Correct. You mentioned C4 to C6, total our revenue share is close to 5%, right? Or only C4 butylamines is 5%? No. All put together. There are three products in that. Correct. The new products, what we alluded last time, like five to six products, what we are going to launch over the next 10 to 15 months, one you recently mentioned DEK, which we have launched. Apart from this one product, the remaining products, does it qualify into this higher amines where probably we are the only producer in India and we can get some immediate input substitute volumes once we commission those capacities? No, the products which we mentioned in our last meeting that we are going to launch about five products over the next 24 months, of which six months have already gone. Yeah. One product was diethyl ketone, and that is not part of the amine family, and neither are the others part of the amine family. One or two are derivatives, and the others are specialties. Got it. Sir, the second question is, what we have seen recently is one of the key raw material, ammonia. The prices have corrected from close to $900 in December to $300 now. My question is, what sort of volume growth we are expecting for FY 2024, coupled with the fact that some of the raw material benefits could be passed on to the consumers because of some commodity nature of the business, but some we could retain on and which could help us to improve our per kg margin. If you can guide us in terms of how much out of this INR 1,700 crores of our business can have a scope of improvement in the per kg margins, and FY 2021 was a year when acetonitrile was doing very well and we reported very good numbers. Now with new products, ethylamines plant also getting commissioned, probably the contribution of acetonitrile would be coming down in the overall pie of our revenue. If you can help us explain in terms of the situation for FY 2024 and FY 2025, that could be helpful, sir. Yeah. In terms of volumes, the last year we had predicted we would do between 10% and 15%. Unfortunately, it has been at the lower level, at around 10%, the volume growth. Okay. We are expecting next year to be a little better because things have stabilized and our customers are being a little more optimistic. We hope to be able to do at the higher end of this 10% and 15% in volume growth. You are mentioning ammonia as a particular input. Yes, ammonia prices have come down, and it is one of our key, the top five inputs into our products, and it would help us. You must understand, where margins are concerned, it is not just the raw material prices going down, but it is also how the competition changes the finished goods prices. Because prices are set by competition. Correct. Margins are always following a sequence where raw material prices come down, then the finished good prices come down. When the raw material prices went up, the finished good prices went up because Correct we and our competitors are all in the same boat. Sooner or later, we have to come to reasonable margins. Correct. Yes, it is a good thing that not just ammonia, but even coal seems to have come down a bit. We are hoping that raw material prices have seen their peaks and will settle down. Correct. Because, sir, if we see probably some of the products are difficult to even import. Case in point is methylamine. So there we could retain some portion of the raw material cost benefits. Coupled with the fact that in the higher set of amines, where probably the competition is limited, we can retain the benefits of this raw material cost. Correct? Is it safe to assume that? No. The point remains that even in methylamines domestic, there is competition. Correct. So what affects us, affects our competitor, and he gets also equal benefit. So the market share struggle will remain. So it's not a one-way street that the prices come down and we can retain our. Okay, it happens in some peculiar circumstances, but it's not a general rule. Just a small follow-up to this, like you mentioned on the coal cost, but I think we use a lot of steam also. So if you can just help us explain what has been the cost initiatives on the operating cost side. Because on a quarterly basis, if we see the difference between our gross margins and the operating profit is close to INR 114 crores in terms of the operating cost. So I think this has come down sequentially by INR 6 crores on a higher top line. So probably some steam cost savings would have come or some benefits on the freight cost could have be sitting in this Q4 reduction in the operating cost. What are the cost initiatives which we have taken in FY 2022 or FY 2023 in terms of the CapEx which could help us to reduce the cost from FY 2024 on a permanent basis, be it steam or any other initiatives. If you can just highlight, sir. Yeah. What you are referring to is the item called other expenses in our results. Yeah. They have gone down. Well, they have gone up in the last year compared to the year before, and largely on account of coal. Okay. This coal, which used to be, the year before that, was about INR 5,000-INR 6,000 a tonne, went to about INR 10,000 a tonne, and last year it peaked at some INR 14,000, INR 15,000 maybe a tonne. Okay. It is coming down to about ₹11,000 a tonne. Obviously, it plays a very large role in the element called other expenses. The other large role is electricity. Electricity, for us, the rates at least have been stable. Part of the reason being that we have commissioned solar plants which supplies to Kurkumbh and Patalganga, which have started somewhere around about half the year, somewhere in August, September of last year. Okay. That has helped us reduce our electricity costs. Okay. Of course, the ongoing process of doing little projects to improve our energy utilization also helps. The per unit consumption also has come down, and all this has played a role in helping us save some costs in terms of fuel power. I hope that the prices of coal come down, then obviously the utility costs will come down. We do plan another solar plant in Gujarat for our Dahej plant, so some portion of electricity costs will also get reduced there. Okay. Sir, just to conclude, what we have seen the other expenditure in Q4, and based on the cost initiatives, what you just highlighted upon, based on 10%-15% of volume growth what we will achieve for FY 2024, this absolute amount of other expenditure could remain at this levels of Q4 only and won't go up substantially from here. Could be the right assumption, sir? Well, because the volumes will go up, obviously the absolute amount will go up. We do need more electricity, more steam when we produce more tonnage. Yeah. If the prices come down by a same amount, then obviously it will flatten out. Got it, sir. It depends on where the prices come. Got it. Thank you so much, sir, for answering the questions in detail, and all the best. Thank you. Thank you. The next question is from the line of Pujan Shah from Congruence Advisers. Please go ahead. Yeah. Hi, sir. One bookkeeping question. In capital work in progress, we are seeing INR 190 crores of appreciation from FY 2022. So is it about the ethylamines or we are planning something as well? Because fixed assets has also been increased. Can you just repeat the question? Yeah, sure. In our balance sheet, we can see the capital work in progress has increased by INR 190 crores. We are also seeing fixed assets increase somewhere or the other way. Is it about the only ethylamines or we have been proposed to some other expansion as well? There are other projects also apart from ethylamines, but capital work in progress of INR 352 crores, out of that, around 80% is of ethylamines. Also we have capitalized around INR 140 crores of project during the year. We will see that movement also. Okay. Could you just spell out 20% which are the product we have been using, like developing to? Of that INR 140 crores, the two bigger items is, one is the solar facility and the second was the diethyl ketone plant. And one hydrogen plant. One new hydrogen plant which we commissioned in June, July. These are the big items on the. Pressures or process improvements and all. Yeah. The others were small items. Okay. And sir, on overall basis, as previous question has been asked. Overall, if you say how much on the raw material basis from the peak has been corrected. Let's suppose it was 100 on the raw material, which was peak around. How much percent has been corrected till date and what are the estimations still about to get corrected in the coming quarters for the raw material side? Okay. I think predicting the coming quarter is not a good idea because I think these prices are a little volatile. But they have peaked and I think I would say about 10%. Yeah Overall, some have. There are a couple of like ethyl alcohol has become a little more expensive, while coal has come down. As a mix, I would say about 10%-15% drop from its highest peak. Okay. So still have to go. Sir, I just wanted to understand the C4 and C6 chain which we are talking about. Is that the thing that the market size is small or is that the thing that it's a very niche product or all this demand is being substituted by import? Could you just No, market size is small. These are butylamines, hexylamine, cyclohexyl, all these are very niche products in the sense the market sizes are small. Yes, imports are coming in and we are making. So it's not a very large market in India. They go into niche products. They are not very large products. Okay. Can you just spell out which industry is being used for all these products, for the imports? Cyclohexylamine goes into rubber chemicals. Rubber chemicals. There are niche uses for all these. Okay, got it. Thank you so much, sir. Thank you. Participants, if you wish to ask any questions, please enter star and one. The next question is from the line of Bhargav Buddhadev from Kotak Mutual Fund. Please go ahead. Yeah, good afternoon, team, and thank you for the opportunity. Sir, in the opening remarks, you alluded to the pharma industry sort of not doing that well last year. But if you look at our data points in the last two months, we are seeing some signs of double-digit growth sort of coming back. If you look at a few portfolios like respiratory, anti-infectives, vaccines, chronic, acute, et cetera, we are seeing almost 10%-12% growth being reported. Is it fair to say that, in turn, given you are the supplier, you are also seeing some sort of pickup in demand from the pharma sector? Yes. What I was alluding to was the last year up to March. We were referring to the year 2022-2023. But yes, going forward, as I mentioned, the pharma industry seems to be a little more optimistic that they have passed the stage of. They had, I think, overproduced during the COVID era, and then when normalcy came back, I think they had to destock. So obviously, production, because sales were about 2% or 3%, probably higher, but they had to destock. So in actual terms, their purchases of raw materials were less than the previous year. So now they're back to what you might call the normal curve, pre-COVID. Okay. It will not be the booming years of COVID, but at least better than the pre-COVID years. So I think, yes, you are right that the current numbers from the pharma industry look a little more optimistic, and therefore we are hoping that our growth rate will be on the higher end of the 10%-15%. Okay. Secondly, sir, in the environment where raw material prices have been coming off, we saw a sharp correction in ammonia happening in the last two, three months. But even acetic acid, et cetera, other raw materials have been coming off. In that scenario, why would have gross margins declined sequentially? I'm referring to Q4 versus the third quarter. No, I don't think the gross margins in the fourth quarter declined against the third quarter. In fact, it was about a couple of percentages point higher. It's not just the raw materials, it's also the finished good prices. For example, in the fourth quarter, we did face a little more competition from imports, mainly Chinese. Okay. It isn't a one-way street. It's just not the raw material prices, but it's also the finished goods prices you have to watch, because that's the differential which makes the margins. Okay. Lastly, sir, is it possible to share what has been the realization in acetonitrile now? You mean what is the current prices? Yes. Yeah, I think they are floating around INR 150 a kg. In terms of dollar prices, they are among the lowest we have seen for a long time. Okay. Is this primarily because of increase in supply or is demand issue over here? I think it's an increase in supply. Last year, the Chinese had a lot of issues, but now they've straightened it all out and they are coming back into the global market. Okay. So unlikely that prices may significantly improve from here on in the near term. Fair to say that? I don't know. Okay. It's very difficult to say whether the prices will. I think it may not go down too much because, as I said, it's the lowest it has been ever in terms of dollar terms. We don't need to worry about our domestic competitor adding capacity, right? We may not be servicing the same set of customers. In acetonitrile? Yes. We don't have significant competition domestically. Okay. As of now, there are people talking about it, but as of now, we don't have any significant competitor. Our main challenge is imports. Sure. Great, sir. Thank you for your answers, and all the very best. Thank you. Thank you. The next question is from the line of Archit Joshi from B&K Securities. Please go ahead. Hi, sir. Good afternoon, and thanks for the opportunity. Sir, just alluding to the same question asked by the previous participant. This is with respect to the product mixture. If I track the EBITDA margins of our company, maybe for the last 12, 16 quarters, we have been maintaining a very healthy EBITDA margin compared to our competitor. It used to be up by a healthy 400, 500 basis points until September 2021. Post which, if I just see, our EBITDA margins have been contracting, and our competitor's EBITDA margin have been improving or relatively have been kind of better off than us. Just taking the acetonitrile point, sir, will it be safe to assume that earlier because acetonitrile used to be a bigger contributor to our EBITDA, and now with the falling prices, the inferior product mix has caused this fall in EBITDA margin? Is there any other element as to why we are able to see this fall in our EBITDA margins? Yeah. Acetonitrile, you're right. The margins have narrowed, mainly because the finished good prices have narrowed. Of course, the acetic acid is now coming down. We are hoping that the acetonitrile margins will widen again. It is an important product for us. The other big product is ethylamine, where again, the alcohol prices have risen. However, the finished good prices have not risen because of competition, so those margins have dropped. These two are the main reasons why our margins have dropped a few basis points compared. Well, I don't know about the product mix of Balaji, but this is the reason why our margins have dropped. Sure, sir. You must understand. Yeah Overlap in about 40% of our businesses. The other businesses don't overlap, so we are not exactly like to like. Yes, I do appreciate that, sir. But when it comes to ethylamine, sir, other than acetonitrile, we have a far larger capacity than our competitor. Along with acetonitrile, ethylamine also has been kind of disappointing, which has weighed heavy on our EBITDA margin. Is that what you're saying, sir? Yes, these are the main two. There have been others, which some have done, a couple of products have done well, and some have not done so well. These are one of the two concerns. Both the products seem to be doing a little better now, but looking forward to better times. Understood, sir. I wish you all the best for that. Thank you. Thank you. The next question is from the line of Noel Ross from Union Asset Management. Please go ahead. Yes, can I be heard? Yes, please. Yes. Hi, sir. Thank you for the opportunity. I just had one question. Regarding the import substitution, number one, is the company looking at import substitution to some other products as well, replacing imports with our products? If so, what exactly is the opportunity size that we are looking at? I am sorry. I do not quite understand the question. You are asking whether our products are replacing imports into the country? Yes. Yes. That is across the board, I would say yes. Most of our products are replacing imports coming into the country because now competition is global. If we do not make the products, people will import it. Even if we make the products, people will still import it if it is cheaper. You have imports as a benchmark. Whether Europe, America, or China, they will be your competitors for all products, whatever you make. Whenever we even launch a new product in the country, we obviously check if there is a market. If there is a market in India, which means somebody is importing the product if we are going to be making it for the first time. Okay. That's going to happen, that it's import substituted market by and large. Yes, sometimes we have a situation where we've launched product where we are eating into domestic players. That can also happen. Okay, understood. But generally, if you were to look at the imports as a market size, what exactly would be the size that you're speaking of? It differs product to product. But I would say that in the products where, for example, ethylamine, there's hardly any import. 2% to 5%, maybe, not even that, of the market share. In acetonitrile, it would be the other extreme, where it would be almost 30%-40%. Okay. Product by product, it does vary. But I would say that an average of 10%-15% imports is probably there. You see, you must understand that the customers also export. When they export, they have what they call the advantage of duty-free imports. Sometimes we can match it by giving them prices which are equivalent in called index ports. But sometimes we cannot match those prices. There is always going to be some amount of imports coming into the country to the extent that our customers are exporting their products. Okay. Thank you. That is all from my end. Thank you. The next question from the line of Chandrakant Dhanuk from CD EquiSearch. Please go ahead. Hello. Good afternoon, sir, and thank you for taking my question. I wanted to know, why do you think the improvement in pharma industry will sustain? Second, what is your margin outlook for fiscal year 2024? Okay, I will answer the second question first. The margin outlook, we normally do not speculate on our future margins because it is very difficult. We only give a broad indication of volumes which we expect, because margins, as you know, have varied quite widely, and unexpectedly we do well, unexpectedly we do not do so well. I would not speculate on the margin at all. But we are always hopeful that given that the raw material prices seems to be coming down, we would get some advantage in that. What was the second part of the question? Sorry. Sir, why do you think our improvement in pharma industry will sustain? Well, the pharma industry has gone through a bit of a rough time. During the COVID period, they did produce a lot and exported, and then they had the normal times where they had to destock. Compared to that time, yes, it will be better than last year. And pharma, if you notice, the penetration in our country is fairly low of drugs. As a country, given the population, pharma is going to be a big provider of our medicines for a long time to come. They are still at a very nascent stage. I think only 15% of our population actually uses allopathic medicines. Okay. They are going to be there for some time to come, and maybe they will have some quarters in a year, but by and large, they are a very essential commodity. So in terms of volume, they will be there. Okay? They have their own kind of constraints of pricing and other things, and supply chain difficulties and other things. But by and large, the demand will always be there in India, and growing. Okay, sir. Thank you, sir. Thank you. The next question is from the line of Jaiveer Shekhawat from Ambit Capital. Please go ahead. Sure. Thank you a lot. Good afternoon, Mr. Patel. Good afternoon. Sir, first question is in terms of the acetonitrile capacity addition itself. We understand that even your domestic competitor will add about 15,000 tons per annum, and the combined capacity post that will be about over 50,000 tons per annum, as against the demand which is around 30,000 tons. How do we understand your strategy about trying to deal with that possible oversupply? We are already seeing the prices already having crashed down to about $2 per kg, or say three and a half. What will be your strategy there? Look, it is something like this. When we have competition coming up and there is always We have seen enough announcements over the last ten years of people coming into the acetonitrile market. As and when it comes up, we will face it. This has been among the lowest prices we have seen, and if we are able to sustain this margin, we will always have an edge over the newcomer, because our experience in making this product makes us far more efficient than the newcomer. He has to absorb his capital costs. Our capital costs have got absorbed by and large, and I am sure we will be able to compete with the best in the world. We have done it over the last ten years, and I do not see any reason why we will not be able to do it in the next ten. Sir, during FY 2022, we had commissioned that extra 18,000 tons per annum capacity. As of now, what will be the overall capacity utilization for the acetonitrile capacity, and what will be the share of export? We have two plants, the old plant and new plant, and the total capacity was between 28,000 to 30,000 tons per annum. We are at about 60%-65% utilization of the two plants. Are you also exporting anything? What would be the share of exports? We are. In fact, this particular year, one of the things that has happened is that our exports have increased quite a bit. We are now almost about 22%-23% of our sales is exports. Understood. Sir, on the new product that you mentioned, diethyl ketone, could you help us understand, say, the overall market size there is, and also your right to win over there and the margin profile as well for these products? Okay. The market size is growing, but it is not very large. We would be, I think, aiming at about 50%-60% market share over the next 18 months or so. Our capacity we are trying to establish and debottleneck over the next 18 months to make sure that we But it is just a couple of months since we have been in the market, so it is a bit early to say about the margins and all and how the market will react a bit. At the moment it is following the trend which we had predicted, but it is early days, so it is difficult to project that. But it is not a very large market in terms of tonnage or in terms of value. It could be kind of a 3%-5% of our turnover at best as you go along. Understood. Last question is that given that you largely have pass-through arrangement with your customers, what does ammonia pricing crashing by about 60%-70% mean for your realization? How should we think about that? We don't have any pass-through arrangement with our customers. It's just that because the competitor and us have the same kind of exposure to the raw materials because our technologies are similar, that we have to keep in line with the market, otherwise the competitor will eat your market share. It's not that we have an agreement with the customer, although the customer is sharp enough to realize what is going on in the market and how. But it's not necessary that we have an arrangement with the customer. It's just the market dynamics that play a role in determining the pricing. Sir, if I just want to understand if the competitor were to reset the prices down, how much should ammonia coming down by 60%-70% mean for your realization? What kind of impact? Because you also have other raw materials that you use which have largely been stable. Yeah. I would say we use, ammonia would be about maybe of all our raw materials, maybe about 20% cost-wise. If it comes down by this thing, we may save about 4% or 5% compared to last year. But of course, the finished good prices also move with that. Correct. It's not a one-way street. Understood. I mean, methanol, ethanol, ammonia, coal, and acetic acid are probably the biggest. Ammonia would be maybe 15%-20% of our raw material costs. Understood. Sir, lastly, any expansion plan beyond what we have already announced? Are you scouting for land for, say, methylamines capacity expansion as well? We have already said this earlier, that we are looking forward to. Because all the land in Dahej and Kurkumbh has now been allocated to these new products which we mentioned and the expansion plans which we have over the next 18 months to 24 months. We will need more land after that, and we have applied to GIDC in Gujarat for new land. The process is on, and hopefully we understand that by the middle of this year, some progress will be made in allocating some land to us, and we may have to then start making down payments. But it's at least 12 months in the future. But definitely, yes, you're right. We need more land for expansion, whether it is methylamines or any other expansion of our business. Sure. We will be using up all the land which we have in Kurkumbh, Dahej, and Patalganga with the projects which we already have in mind. Right. Sure. Thanks a lot, sir, and all the best. Thank you. Thank you. The next question is from the line of Chetan Thakkar from ASK Investment Managers. Please go ahead. Good morning, sir. Good morning. Just wanted to understand CapEx for 2024 and 2025 and the timelines of those coming on stream, the capacity increases over the next two years. Okay. The 2023, 2024 would be around INR 200 crores. This does not, of course, include the land which we just mentioned earlier, which is a little bit of a floating amount. We don't know when GIDC will allocate the land and all that. But the projects which we require in 2024 and 2025, between the two, it would be about INR 300 crores, 200 and 100 or whatever, 180 and 170 or something like that. Got it. And this will essentially, sir, add how much capacity in terms of volumes? Because some of these products are specialty products, so it will not be a volume driven, but it may be a value driven. As we mentioned earlier, given all these four, five products which we will be adding, including the diethyl ketone, which we have already commissioned. Over a 3- to 4-year period, they may comprise almost 15%-20% of our top line and perhaps hopefully a larger portion of the bottom line. Got it. So essentially, given what we have seen historically in terms of payback for us, this will be a shorter payback period because these are higher value-added and higher margin products. Yes. But capital wise also, two of them are fairly intensive. One or two are not that capital intensive. So return on capital employed, yes, we hope to maintain our good record and improve it. Got it. Sure, sir. In terms of the acetonitrile, it is fair to assume that the exit that we are seeing at Q4 is probably where it is in terms of pricing, and it should not get worse from here. I hope so because it's the lowest we have seen for some time. INR 2, as somebody has mentioned to us, pretty low. Sure, sir. Thank you so much for this. All the best. Thank you. Thank you. Participants, if you wish to ask any questions, please enter star and one. The next question is from the line of Poojan Shaw from Confluence Advisor. Please go ahead. Yeah, sir. Thanks for the follow-up. My question was on our finished products. Are we seeing as China has been reopening up, is there any over an inventorization which has been dumping out all over the world, that is why some of the finished good prices have been corrected? Or it has been not like that, what I am able to reading of? I think what you mentioned is what the market is saying, that there is a little bit of overhang of stocks with their cleaning up. Perhaps once that is done, some kind of sense or normalcy will return. Yes, because as we are listening to the pharma con calls, we have been getting that pharma has been very bullish on getting a volume of double-digit growth. At the same point, we are also getting expectation of touching of 15% growth. So are we being conservative, or because of this issue, we are being still a bit conservative on that part due to some of the pushing of some key products at lower cost? I think we are traditionally a conservative company, so predictions of the future are always a question mark. But yes, the pharma industry seems to be very optimistic. But if they deliver, we will be more than happy to match their requirements, to keep up. Okay, sir. Okay, got it. Thank you so much. Thank you. The next question is from the line of Nirav Jimodia from Anvil Research. Please go ahead. Thanks for the follow-up, sir. You mentioned that these new products could contribute 15%-20% of our overall sales. But in terms of absolute amount, if you can help us, because the CapEx, what you mentioned, is close to INR 250 crores for all these products put together. Over the next three, four years, how much could be the turnover which these products could achieve in terms of the absolute amount, if you can- Okay. This is off-the-cuff kind of numbers, but it will be between INR 500 crores and INR 600 crores. Okay. Once these products stabilize in the market. Of course, they will also grow as we grow. It would be at least that much turnover once they all come in line. Correct. Which will be about 15%-20% of our turnover at that time. Because the amines and derivatives business will also grow. Correct. So these products would be predominantly catering to which of the user industries? Most of the same user industries which we have been supplying to. Correct. Life sciences, largely. Correct. Sir, in terms of our overall turnover for FY 2023, if you can just break it down between the aliphatic amines, derivatives, and the specialty in terms of the revenue contribution. I don't think that has changed much from the past. It's about 50% amines and 20%-25% derivatives, and about 20%-25% specialties. Got it, sir. And sir, just a- The only thing that has slightly changed in percentage terms is the percentage of exports is higher than it was earlier compared to domestic. Got it, sir. And sir, like FY 2021 was the best year for us in terms of the operating performances from the last so many years. So let's hypothetically presume that if we want to achieve that sort of numbers, what sort of volume growth we need to do from the base level of FY 2023, keeping rest of the things constant, sir? What you're saying is that if we had to match the- Yeah profitability numbers of the year FY 2022, which is about INR 300 crores PAT, right? Yeah. Correct. A little less than INR 300 crores PAT. That was in FY 2021, sir. We have to do about 20%-25% volume growth, keeping the margins which are there now to meet that. Correct. And let's say same cost benefits do accrue to us in terms of the falling raw material prices. It will require much less volume. Absolutely. So keeping things constant as it is, we need to do a volume growth of 20%-25% to achieve this, right? Yeah. But of course, if the margin widens a bit, then we need to do only 15% to catch up. Got it, sir. Got it. Thanks a lot, sir, and all the best. Thank you. Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead. Yeah, thanks for the opportunity. Sorry, I joined a bit late, so I am not sure whether my question is answered earlier. What was the domestic and exports mix during FY 2023, and whether we faced any particular challenges for exports? Yeah. Okay. As I mentioned earlier, the exports has been between 22%-23% of the turnover, which was earlier a little under 20%. So we have grown, and at the beginning of the year, there were some challenges in freight costs. But now they have all settled down and availability of containers, everything all got sorted out. Now the challenges are more related to the growth of the economies abroad, Europe and America, which is mainly our market. Right. Thanks. Sir. Now, the second question is in terms of competition outside of India. Are we hearing any other players who are putting up capacities in any other geographies and in Asia? In the amines business? Right, sir. I don't think in our core business. There has been a lot of consolidation over the years. The existing, of course, we don't know much about China because that's a bit of a, and China is a very big player. So it could be happening in China, but I don't think in Europe or America there is any movement to expand much more. They will be doing their debottleneckings and all that, our competitors, whether it's BASF or Taminco or whatever. They will certainly be looking at going marginal increases in their productions. As you know, BASF had a little concern about production because of the gas issues with Russia. But they have seemed to overcome all that now. Right. But I think they would not be a direct competition for us because they are more into proprietary and further downstream in terms of specialty amines. Oh, no. BASF is the largest player in this field. Okay. In our products as well and in the proprietary products as well. Yes. Eastman and BASF are the biggest players in this field. Then, of course, the Chinese, there are a number of them. Okay, great. Thank you so much, sir, and best of luck. Thank you. As there are no further questions, I would now like to hand the conference over to management for closing comments. Okay. Thank you, everybody. I hope we have been able to answer most of your questions. As a concluding remark, I would say that we hope that we have got over the worst volatile period, and we are looking forward to now growth, especially because our customers, mainly in the pharma industry, seem to be so optimistic, and our raw material prices are stabilizing. Hopefully when we meet again, we will have good news to share. Thank you very much. Thank you very much. On behalf of HDFC Securities, I conclude this conference. Thank you for joining us. You may now disconnect your lines.