Q1 21/22

Jul 29, 2021

Ladies and gentlemen, good day and welcome to the conference call of Aptothex Industries Limited. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Sohrab, Balodim Advisors. Thank you, and over to you, sir. Thank you. Good evening, everyone, and a warm welcome to you all. My name is Anuj Sompal from Valorum Advisors. We represent the Investor Relations of Apotex Industries Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the Q1 of financial year 2022. Before we begin, I'd like to mention a short cautionary statement. Some of the statements made in today's earnings conference call may be forward looking in nature. Such forward looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs well as assumptions made by and information contained available to management. Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decisions. The purpose of today's earnings conference call is really to educate and bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management of AcoTEX Industries Limited participating with us in today's earnings call. We have with us Mr. Abhiraj Chokshi, Managing Director Mr. Sachin Karga, Chief Financial Officer and Mr. Anand Kumasi, Company Secretary. Without much delay, I request Mr. Anand Kumasi to give his opening remarks. Thank you, and over to you, sir. Thank you, Anush. Good evening and welcome everyone to this earnings conference call for the Q1 of FY 2022 under review. Along with me in today's earnings call, I have all the managing directors, Mr. Abhiraj Chokshi and Mr. Sachin Karwa, the Chief Financial Officer. I hope you had an opportunity to review the financial statements and the earnings presentation, Please have been circulated and uploaded on the website and the stock of stock exchanges. To brief you on the financial performance for the quarter, for the Q1 of FY 2022, The revenue from the operations was around INR 185 crores with operating EBITDA at INR29 crores with EBITDA margin at 15.82 percent, While the net positive was 22% close with flat margin at 11.83%. As you can see, the results are flattish as compared to the previous quarter account of slightly lower volume due to 2nd wave of COVID-nineteen and partial maintenance shutdown at Sarvajah plant during the month of June 2021. On the CapEx front, all these bottlenecks projects will be completed in Q2 of FY 2022, which will be due which will give an additional revenue of around INR 60 crores to INR 70 crores per annum Once completed, we have also obtained an initial environmental clearance in Q1 to start the construction for 2 new brownfield projects, 1 each at Vale at the Lohr plant. The total CapEx for these new projects are expected to be around INR 100 and 40 crores to INR 100 and 50 crores, which will be incurred over the next 4 quarters. On the anti dumping duty front, on the NBR for both the petition, after a thorough investigation, DGTR recommended an anti dumping duty, But the Ministry of Finance has decided not to notify the duty. As of now, no anti dumping duty exists for any of our imports into India. And lastly, the Telogyapoint 3 years agreement with the unionized workmen was amicably signed in this quarter. With this, I would like to open the call for question and answer. Ogg? Thank you. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. The first question is from the line of Ankit Kanodia from Smart Sync Services. Please go ahead. Thank you. So we have got an EBITDA margin of almost 16%. How confident are we that it can be sustained throughout the year Thank you, Ankit, for your question. Can you hear me? Yes, I can hear you. Okay. Yes. So thanks for your question. As we have been mentioning In previous con calls and I think you have been part of a few con calls, we have consciously We made an effort to increase our margins from sort of the low teens in fact 10%, 11% to almost the last now 3 to 4 quarters, we've consistently been doing somewhere between 14% to 16%. So we feel fairly confident that at least this 14% to 15% number is doable. We are at High capacity margins high capacity utilization, that's why it's helping. And therefore, we have been able to also improve our Product portfolio, product margins and manage our customer margin as well as product wise margins better. We feel fairly confident that Of course, there'll be a couple of quarters where we may see some ups and downs in our kind of business that does happen. But on average, I think that We're fairly confident of doing somewhere in the mid teens now. Okay. Thank you, sir. That helped. And before I move on to the next question, thank you for Sharing more details about Apco build in the annual report. That really helped. Thank you. Thank you. Yes. And the second question is about the antidumping duty. In the last also, we had a discussion wherein where we said that if that empty dumping duty does come, then we are very confident that we'll go ahead with the CapEx plan. Now that the Minister of Finance has put that on hold, so is it on hold or they're just they're not doing it at all? Ogg? No, they are as of now our information is that they are not they have not notified it. Ogg. And for one of the cases, there is also a notification that comes, they will not be for one of the petition, they will not be sort of implementing it. However, there are some legal processes that we have available with us, which we are evaluating whether to do it or not. For the last 6 months, there has been no and in fact since December 2020, there has been no antidumping duties in place in India for any import of NBR. As far as CapEx is concerned, the CapEx that has already been approved by the Board and which we are going ahead with both are Largely Latex project, which is one is in Valia, 110 crores CapEx and another one in Taloja, which will be somewhere between INR 30 to INR 35 crores, Which I think we've mentioned in our earnings presentation as well. So that we are going ahead with. As far as the NVR is concerned, anyway we are waiting for environmental clearance for that project. So we have some time to decide. The environmental clearance is expected Sometime next year, maybe by April of 2022, only after that we can go ahead with that project. So we have some time to decide. But you can go ahead with it because frankly in the last 6 months we have completed effectively, we have tightened our belts, we have Implemented a few things, reduced costs. And it's a question of where we want to allocate our capital. The NBR business According to us, it's still attractive and we will decide by next year. We have applied for the environmental clearance approval Thank you. That helped again. And regarding The export, which is doing really well for us today, so how much are we expecting as in I know you can't give any guidance, but Any ballpark direction as in can we see export doing even better throughout the year? So it's already 24% of that, if I got it correct. Yes, it is. This last quarter was 24%. There were two reasons though and frankly we don't it's not that we're doing exports for the sake of doing exports. One was, of course, we wanted to de risk out of India because something like what happened, lockdowns, we've seen a couple of times in the last year, India has gone through lockdown. So We were therefore able to quickly even in April May when we had this problem in India, we were able to quickly pivot and make sure we didn't lose sales and whether able to Sell more in the export market. Now that percentage may vary, maybe 20% next quarter if the domestic market picks up. It just depends. And Now they're quite comfortable with this kind of 20% to 25% exports. And even our exports market are largely in Southeast In the Middle East, right, that is our I would say 80% of our exports happen around that area. Now what we are seeing currently, for example, in the months of July and even August from what I heard, countries like Thailand and Malaysia have gone into a strict lockdown because the Delta variant has now erupted there, Which was the case in India 2, 3 months ago. So now it's happened there. So there some of our customers are shut. So the percentage of exports may vary. The only Thing that's important from our point of view is frankly that we have now the capability and we've built products, a team, Sales and relationships with customers that we can even we can go up to 24%, 25% we're able to do export Okay. Anything drastic change in Aptopil or it is still a minus portion of our revenue or we Do we expect something? Yes. We are in fact, this year, we have we expect to Earlier, we were around in and around the Mumbai Pune region, more around in Maharashtra. Now we've expanded to Gujarat, MP, Goa, we're trying a few other territories and seeing how it goes. So we expect while it will still be a small part of our business, We are seeding it. We continue to see that it's a good profitable business, but a much smaller part of it. Okay. One last question. EBITDA per tonne, are we near the peak right now? Or do we see more like From here as well, looking at the raw material prices and all. I know you don't share the exact number or the speaker, but directionally But frankly, we feel comfortable with these numbers. I don't know if it's at the peak or not, but yes, I mean the raw material prices are have been rising for the last few months, as you know. I'm not sure, difficult to say, but we feel confident that this kind of EBITDA numbers are possible going forward as well. Okay. Thank you. Thank you so much. Okay. I understand. Thank you, Ankit. Thank you very much. The next question is from the line of Manav Vijay from Deep Financial. Please go ahead. Yes. Thank you. Am I audible? Yes, you are all good, Mr. Vijay. Please go ahead. Thank you very much. Pratak, first of all, congrats on the great number. I have a couple of questions. First of all, on the X and B DataX, so last year when you started talking about the expansion, you started around 30,000 expansion, then somewhere you increased that to around 40,000 tonnes. And then in the latest AGM, you talked about a 60,000 tonne kind of I mean, expansion plan. So if you can just, first of all, explain as to I mean, what is the kind of expansion that we are looking at? What will be the CapEx and what kind of sales you expect to make from that project at the peak level? So as of now, the first phase in Valea is 50,000 tonnes of Latex. I don't think we have ever said 30,000 tons. It was always somewhere between 50,000 tons, 60,000 tons. So right now, as of now, we feel confident that we'll be able to do 50,000 tons. Once the Project is commissioned next year. Now it will be sometime in 2022. We will be able to make 50,000 tonnes required in the future. But initially, we are going to be investing around INR 110 crores for about 50,000 tonnes, which would be around INR 400 crores of revenue Under current with current prices, conservative levels. In Taloja, we are planning around the 30, 35 crore project, Again, to start off after the monsoons, construction after the monsoons, again, it will be ready by the middle of next year. That is a project that will Give us flexibility to make either 10,000 tons of XNB Latex or we can make other Latexes as well, the additional SBIC. So it will be a combination plant. Conservatively, again, that will be about, I think, around OG. 80 crores to 100 crores of revenue. So overall, we're looking at about 140 crores to 150 crores CapEx on these two projects besides maintenance CapEx and so on that would happen of course through the course of the year over the next 12 months, 12 to 13 months. And that would be about little less than INR 500 crores of revenue in top line. Sure. Abhiraj, one of the main, I would say, I would say achievement that you have mentioned in last couple of calls is that you have said That we want to stick to the time line. So you believe that this INR 150 crores or INR 140 crores of CapEx In next 12 months, without any kind of excellency, maybe, I mean, 1 month here and there is obviously beyond anybody's control, But 12 months is something 12, 13 months is something that you will be able to finish it off because since now you have the clearness in place And the speed at which you move is now up to you. So you believe that is doable? Yes, absolutely, it's doable. And we as you said, it's now, of course, it will be more in our control. You were waiting for some environmental approvals, which is what delayed it by a few months. But now immediately after the monsoon, we expect to start construction. We've already finished the detailed designing of the project. We are already manufacturing this product in reasonable quantities for the last 1 year now, or more than that. Even before COVID, we were doing it in smaller quantities, but now of course, we given what happened, we modified some of our reactors to make Hey, nice job, latex for gloves in the last one year. And we are fairly confident. We have everything in place, right. We have the technology. We have the customers. We have Plant capabilities, it's only about project execution. So as you said, 1 month here or there, unless some 3rd wave hits us badly and of course there are those kinds of challenges where some of our vendors like for example even in April May Whatever machines we had ordered, some of it got delayed because of the second wave when some of them were shut, especially in the north. So those barring those kinds of things, we feel fairly confident about our 1 year time line. Okay. You also mentioned Apart from the 50,000 tonnes in the Wadia plant, you will so you will have some space. So after this expansion, I believe that is a plot around 22, 23 acre and currently I think you are using some amount 7 to 8 acres. So post this expansion, How much space you will still have to do any future expansion apart from the NBI that you are planning? As of now, we are looking at this nitrilelatex project of 50,000 tonnes and as I said, we'll be able to add some more. So we'll have enough space maybe Increased capacity in the future by up to 50%. Exact numbers, I would only have to work out. I'll be able to tell you by end of next year. Ogg? But for NitroLE and then NBR, and yes, that's it. I think beyond that, I don't think we'll have more space. Okay. And for this INR 150 crores, so I believe you have around INR 18.90 crores of cash on books. So you would want to, let's say, raise some debt or you believe that the internal accrual plus, let's say, that you have the portfolio, All that is sufficient to fund this expansion? Yes. Frankly, we feel confident that the internal accruals and of If we use all the cash that we have on our books, then that's sufficient to fund the next 1 year. But we do plan to take on some debt at least, Because we do want to in our kind of business, we have seen in the last 10, 15 years, there have been cases where it's always good to have some cash on the books Because volatility in raw material prices, sometimes availability, sometimes what happened with COVID last year. So we would not Use up all the cash that we have on our books. So we would take that and as of now we are almost debt free. So we have the ability to raise some debt at least. Sure. And then last question from my side is that so I've been seeing you I mean guys for last almost 10 years. So In last 1, 1.5 years, you've added some people at the top level. So you believe that now the size of the business Has become so big that you need extra hands to take care of it? Yes, I mean, as the business grows, I'm sure you would agree that you need people at all levels and that's what we do as in when we think We require people we do as we recruit. Sure. Thank you and all the best. Thank you. Thank you. Next question is from the line of Manoj Sajpal from Avard Develops. Please go ahead. Hello. Yes, Mr. Sejpal. Good evening. Sorry to interrupt, Mr. Sejpal, We are not able to hear you. Can you speak a bit louder? Hello? Overall business is strong. Things are looking good. We don't give exact guidance on percentage, Kitna Barega. Overall, I can just say that business is looking okay. There are obviously challenges, as I mentioned earlier, Ravi. Currently, we have a very export markets, like lockdowns like Hi, Malaysia. So, we have some challenges there, but India market has picked up. Also, this is a monsoon season. So, a lot few of the markets Few of the industries that we are catering to like construction, carpet and paper, this is their sort of not their peak season. Those kinds of quarter on quarter challenges can happen, but overall, we're looking at overall nothing substantially changes in the business quarter on quarter. Okay. Thanks. Thank you. Thank you very much. Next question is from the line of Alicia Mahavala from Envision Capital. Please go ahead. Hi, sir. Good evening and thank you for taking my Sorry, Ms. Mahala, but may I request you to speak a bit louder? Sure. I hope this is audible. Yes, it's audible. Yes. Good evening, sir, and thank you for taking my questions. So firstly, I'd like to understand that for the kind of growth that we're witnessing, is this on volume growth? Or is it Some kind of value realization growth that we're witnessing? Compared to which period? Obviously, while I understand that Q1 is on a low pace, but in general for the last 1 year or the kind of growth that we've seen, Just wanted to understand that is it a volume growth or is it a realization growth or are we seeing a mix of maybe the volumes are going up, but maybe the realizations are correcting. Just want to get some kind of So if you see the last 1 year, then of course we've had mostly it's around volume growth. But if you see the last 1 quarter, yes, realizations have also gone up. It's a combination of realization and volume. For example, if you compare Q1 of this year, which is this quarter compared to the previous quarter, which is Q4 of last year, The top line is about the same. It's about flat, but frankly our volumes have been a little bit lower. Again, we don't give exact numbers, but I would say in the single digit percentage lower. And the main reason is because We had a long partial shutdown in our Taloja plant, which affected production and partly also because of the lockdowns in India That affected sales in some of our segments, some of our customers were shut in especially in the north for weeks, 3, 4 weeks Because of lot of COVID cases, obviously those kinds of things happened in Q1 that were not there in Q4. But by and large, if you were to compare A whole year, it's been largely volume growth driven. Got it. Thank you. So the other thing that I want to understand was that this Quarterly run rate of about INR 180 crores, INR 190 crores that we're doing, we can maintain this with our existing capacities or is there scope to improve this with the current capacities? Yes. So we have invested in the last 5, 6 months and we continue and I think that's also mentioned in the That's the presentation is that we have spent some amount for debottlenecking and which will increase capacity by About 10% to 15%, somewhere between 10% to 15%, which will obviously keep us going for the next 1 year. And after that, of course, these 2 new projects are coming up as well by next year. Sure. And the last question I have is For the downfield that you're doing that is expected in FY 'twenty three, you're expecting it to be utilized in about 2 odd years? Or in general, does it take longer to get utilized? Ogg? I mean, yes, I think that would be a A conservative assumption, but we obviously would like to do it quicker than that. It will take time as soon as it gets commissioned because a lot of our customers would Because even though it's in the same plant, it's a new plant, right? And so it's a new building, new reactors, so our customers would sort of slowly ramp up. I'm hoping we can do it in 6 months to 1 year, but certainly, definitely in 2 years we'll be able to ramp it up. Okay. Thank you, sir. Thank you very much. Next question is from the line of Sathyan Oggla from Profusion Capital. Please go ahead. Hi. You mentioned that raw material prices are inching up. Just wanted to get a sense of how much end product prices are moving as well so that is there likely to be A compression in margins in the near term or in expansion? And B, if you could shed some light on when The new brownfield expansion will be ready and how much they would contribute to the top line in FY 2023 And what is the full at full capacity top line contribution likely in FY 2024 current pricing? To answer your first question, we are in general, Our endeavor is always to pass along the pricing, the cost increase and by and large we've been successful. So even for example in Q1 compared to Q4, We were able to pass on the cost increase and in fact we may have done a little bit better than that. Therefore our EBITDA margins were Frankly, a little bit better than or around the same as Q4. Our EBITDA was around the same as Q4. As far as the project is concerned, we expect it to be sometime by the next call call I should have or more accurate number because we have recently received these approvals and our projects team is now reworking the entire timeline and schedule, but we It's expected to be sometime in the middle of next calendar year. So sometime in the middle of 2022 and as I was telling the previous caller that We'd want to ramp it up in less than 1 year. So it's very hard to exactly pinpoint what would be the revenue Extra generated only for FY 2023, but overall as I said, at full capacity with the new volume, we expect revenue of about INR 500 crores to be generated from the new CapEx. How much was that? At full capacity? INR 500 crores per year, Additional. By market price. Okay, great. Thank you. Thanks. Thank you very much. Next question is from the line of Abhishek Basumalik from Intelsense Capital. Please go ahead. Hi, thanks Taking my call, I just wanted to understand a little bit on the lay of the land for your latex glass space, Because I've been reading up a little bit and I find that there is a I was looking through LG Chemicals and Kumo and some of the other players in the space and they seem to be saying that there is a very large demand which is there. So basically wanted to understand also top class. So trying to understand What are your thoughts on the demand scenario? And what kind of volumes you're expecting say in the near term or the medium term? And especially when you're competing with other MNCs and what would be your competitive advantage if there is any? Yes. So one is that even pre COVID, we had identified this product Range way back in 20 sixteen-sixteen as something that was worth looking at because of two reasons. One is general, The level of hygiene going up in Asia, Nitrile Latex or Nitrile Glug Taking more of the market share from natural latex gloves because they have some inherent properties that are better than natural latex gloves. And the competitive Scenario or the competitive space being limited. There are a handful of players mostly in Asia that manufacture this product. So we had identified it 4, 5 years ago, it took us 2, 3 years to develop the product. We started selling, started building customer relationships and now we're at a stage where we're selling Reasonable quantities of this product for the last 1 year and then investing more into it. So overall, I would say, look, the space of nitrile gloves and latex pre COVID was obviously attractive. And now given what's happened with COVID, obviously, it's expected to be even more attractive for the next 1 or 2 years, given overall the hygiene levels and overall vaccination drives also, will be continuing for the next couple of years. We'll all need to get boosters at some point even after your first two shots and so on where also gloves are going to be used. So And Asian countries typically had much lower glove usage per capita, glove consumption per capita, which I think will also or we think All this makes it an attractive sort of segment to be in both for glove manufacturers as well as the raw materials for glove manufacturers. As far as Apkotex is, of course, we do have certain competitive advantages. The one is our capital. Sorry to interrupt before we get there. I mean, Could you quantify in some manner what kind of growth can be possible? What are the numbers look like or possibly what is the market size You're looking at something. I have one, I mean, I have all these numbers not with me at the current Immediately, number 1. Number 2, we don't share details of the market research that we have done because we believe that's proprietary. But having said that, Even pre COVID, the expectation was that this market would grow at 12% to 13% per annum. Obviously, the last year the growth has been phenomenal. That's not likely to continue that kind of growth, but at least 10% to 12% per annum is something that we see Easily growing over the next 5, 7 years. And given that even at 50,000, 60,000 tons that we plan to sell, Even up to 100,000 tons, it won't even be according to me, maybe 5% of the global markets for nitrilelatex. So we are not aiming towards a high market utilization or high market share, which of course some of these guys already like you mentioned a couple of peers In East Asia, they have larger plants than ours and they do have certain advantages in terms of economies of scale. But I believe we have certain advantages in the way we have developed the product we make it in terms of cost as well as some amount of quality parameters also where we think we're stronger than them. So we do have some advantage Competitive Advantages as well. Okay. Thank you. Thanks. Thank you. Thank you. Next question is from the line of Nikhil from Perpetual Investment Advisors. Please go ahead. Yes. Hi, Abhiraj. Congrats on a good quarter. So my question is about IOCL has announced Plans to build a styrene plant in Panitak, which might take a couple of years. And if we assume that another company plans to add a plant for acrylonitrile, We have all 3 monomers being produced in the country. So what is your opinion on how does this change the downstream industry? Does it open newer markets, I mean product market for newer products for us or will it only help in reduce our working capital and help with logistics cost And further increase the pace of import substitution? Yes. Absolutely, I think it's absolutely critical In terms of having certain some of these monomers, which I believe are critical building blocks, If a country wants to develop in industry, downstream industry, because more than the cost, I think the issue is when you have security of supplies and when you have strategic players strategic Supply of these products in the country, it's really give people like us a huge level of confidence to put in more investments Ogg? Downstream. Today, one of the things that we look at is these kinds of things, we are necessarily, as you said, having large inventories, more working capital, And they're still dependent on imports for a lot of things. So acrylonitrile you mentioned just a few months ago there was a huge shortage. In fact, a lot of companies using acrylonitrile in India That had a shortage. They had to shut down their plants for 2, 3 weeks. Those kinds of things don't happen if there is at least some amount of inventory or want to supply the activities in India. So I think it's extremely critical whether we'll be able to just because they'll have new products, I don't think so. I mean that's an internal issue. That's on internal R and D and that's depending on the competitive landscape. So that's a different issue, but it will certainly give us a lot of confidence to invest more. Okay. So I mean, I think that more or less it will increase the pace of import substitution, then it will make you aggressive in terms of CapEx. Absolutely. Yes, because for example, going forward, once most our plants are completely utilized and we've been discussing at the senior management level and the Board level Is also that if you want to the next phase of growth, if we want to do a greenfield project, one of the important considerations is raw material availability. Then why would we is option to do it in other parts of the world. Why do it only in India? And raw material availability is a huge consideration. By then, if there are raw materials that are available in India, then that makes case for India better for us. Yes, of course that helps. Yes, so I think you sort of just touched on my next questions. I wanted to ask, so now if you are planning a third Can we expect it to be in a petrochemical complex where there is consistent supply of butadiene, which can again help you save on working capital and logistics? Yes, absolutely. I mean, it's not easy because we have to work with other parties to make that happen considering we don't have our own petrochemics plant. But certainly, yes, I mean that's one of the big considerations for future expansion. Okay, okay. That's it for me. Thank you and all the best. Thank you. Thank you very much. Thank you, Nikky. Thank you very much. Next question is from the line of Amar Maurya from AlphaCredit. Please go ahead. Hi, Abhiraj. Am I audible? You are audible to Siebel. Mr. Moria, please speak a bit loud. So, Avinaj, I mean, my question was pretty long term. I mean, I had watching this company from last 10, 11 years. So one thing is that there is a fair amount of visibility you reach into a 1,000 crore revenue either by 2023 or by 2024. The thing which I asked you 10 years back that broadly at that point of time you were having 5 chemistries, which were at certain level and you were already a market leader. I think the same kind of situation now looks in a majority of your chemistry except the or Gloslatex. So how do you now plan to change the whole course of the business? Or I mean, how you plan to include new products into the business, so that the next level of growth can come faster and probably the size which we are at 1,000 crores can become double in next 3, 4 years. Yes. So frankly, we have In the last few years seen opportunities, what we have done is we have realized what our strengths are And played to our strength, therefore the acquisition that we made 5 years ago was also with an objective that look, we understand the chemistry. It was a new product and new market for us when we understood the chemistry and we added value, we turned around the company. And now we're building in that facility because we at that time also we knew that nitrile latex was something we wanted to get into. Similarly, we do have other Products on the horizon, which we are seeding now, but obviously those are things that we don't talk about and it will be a little premature to talk about that. But certainly we do have plans to try and develop other products. Again, keeping in mind our strength And keeping in mind the market opportunity, we do have a few things in mind that we're working on. So those products like are a large sized product kind of Globeslatex, which can take you global and which can basically give a pretty larger runway than the earlier ones? Well, there is 1 or 2 products that are more specialty, don't have the kind of global It's size that Nitra and Latex, for example, does a Styrene design, latex, for example, does. But there are more niche products, But certainly large enough for a company Aquatex's size, which is as you said for a 1,000 crore company, we need to grow to the next level. We are also mindful of We're conservative in terms of investment and taking risks, taking a lot of debt and so on. So We will take it step by step. For now, I think our hands are full for the next 2, 3 years. And at the right time, of course, we would be Talking about the future plan for growth. And of course, we are open to also not only investing in brownfield or greenfield, but also Potential acquisition that could add value. Got it. Thank you, sir. Thanks a lot. Thank you. Thank you. Next question is from the line of Rajesh, a retail investor. Please go ahead. Hello, sir. Am I audible? Yes, you are. Please go ahead. Yes, Yes. Thanks for taking my question. So this is regarding the Swarani plant, it was shut down in the beginning of this month, right? Is it tough and running now? Yes, it was maintenance shutdown we needed for about 10, 12 days. It's up and running now. And with the Madara subsidiary, is there any impact because of the recent rainfall? No, fortunately not. We are in the Taloja area, which is not in the parts of I mean, it's in Raiga district, but not in the parts where There was heavy rainfall. We have had no impact on production because of the recent quarter. Okay, okay. Thank you. Thanks, Seth. That's all for me and all the best for your future. Thank you, Daniel. Thank you. Next question is from the line of Farooq Agbundole from Avesta Fund Management. Please go ahead. Yes. Hi, Abhiraj. Hi. Good evening, Faroo. Hi. Just a couple of questions. Firstly, this expansion at Baliya, you mentioned 50,000 tons. And you also mentioned that you're making provision for a further expansion at an appropriate time. So what is that what is given once this 50,000 comes up, How much further can we expand it and at what cost? I alluded to the fact that we about are at least making provision for up to 50% more expansion. And it will be at obviously a much is a marginal cost, additional marginal We haven't exactly worked that out and if you don't mind, let's get going. The idea was to 1st sell the 50,000 tonnes, make sure we are currently doing a good volume, but this would be a different scale of operations. So we just wanted to first stabilize and then take decision on the further, but obviously it would be let me put it this way, asset turn ratio would be much better than what it is currently. Got it. And just wanted to get some sense on this Finance Ministry not notifying On the antidumping duty, for so assuming a status quo on that front, What will be the determining factors for this NBR project? Or could it also be that you may shell the NBR project entirely And look at maybe new products or maybe look at expanding gloves capacity further or what's the thinking? I mean, I don't expect you to commit to anything, but just in terms of what are the deciding factors for whether this will go ahead or not, presuming things like Salesforce? Yes. So good question. So I just wanted to mention 2, 3 things. One is that over the last months there has been no anti dumping duty in India and we have competed effectively with all the steps that we have taken. So we feel fairly confident that NBR also We are quite competitive at these levels. If we do decide to go ahead and double the capacity for NBR, obviously, we will become even more competitive because some economies of will start kicking in. Number 2, the Indian market itself will be larger. It's large enough where even currently at only about 25% Market share. So we feel the Indian market itself has that. And the third important factor is just a month ago, one of our Large competitors have announced they're coming out of the NBR business by December. So, we'll wait and watch. We have applied for environmental clearance for that project as well. We expect to get it sometime next year calendar year in 2022. Given our experience Over the last 6 months, I don't want to commit to which month or which quarter, but sometime in the 1st few months of 2022 is a current expectation from what my team tells me. So I think we'll take a call on we'll have another year to decide on that. Also from a risk point of view, we want to focus on the current 2 projects that we've taken up, Finish those and by then we'll decide. And the issue is I frankly don't think I think the NBR market personally I think will be attractive to in India Ogg? To invest as well, but it will depend on where we want to allocate our capital at that point. Got it. Okay. So that's the thinking. I hope as I said, it's we haven't committed to it, but we are Optimistic that it would work out and we are leaving space in Walia for now and we are we will probably we may pick up their project next year. Okay. That's good enough. And just lastly, if you could, You mentioned earlier, one of the earlier questions was regarding the interim 12 months Before the new capacity the 2 new projects go on stream, is it fair to assume a 10%, 15% growth Between volume and price for the next 4 quarters going forward in terms of revenues, Given that, as I said, we are in this zone of being high on our capacity utilization at this point in time And still 4 motors away from the new projects. Yes. And as I said, we have invested some for debottlenecking in the last few months and which will all come on stream in Q2. Some of it has already started playing out. So yes, I think we should be okay for the next one year For 10% to 15%, yes. Great. Thanks a lot, Abhiraj, and all the best. Thank you, Fazil. Thank you. Next question is from the line of Karan Battelia from Asian Markets Securities. Please go ahead. Hi, sir. Thank you for the opportunity and congratulations for a great help. Sir, now that we don't have any anti dumping duties in place for the NBR. So just wanted to understand the pricing data between our pricing and what is the landed price? Look, we are forced to price it at whatever price it comes in at, right, because we have to compete. If we want volume, even if our price is 5% higher, buyers won't buy from us, 5% or 10% higher. It's more of a commodity than Latex is in that sense. So the pricing at the end is the same. Yes, there was injury. There is we did we want some duty and We had a very good case for duty. The DGTR, which is under the Commerce Ministry actually went into the details. It was a 1 year detail investigation. And for both petitions, they did impose some duty, different types of duty for both petitions, but They did think our case was strong and agreed to it. It's unfortunate that the Ministry of Finance Did not notify them. I think it's not only us, from what I understand this is happening for a majority of the cases these days. I hope that answered your question. Yes, yes, that does this. Also wanted to understand how far are we with respect to our historic high realizations or margins, especially in the NVR portfolio? NBR portfolio, quarter on quarter there are changes of course. Certainly NBR in the last 3 to 4 months has not been the historic high margins of Because we went through April May where we had really because of the lockdowns, especially the automotive industry in the North Went through some trouble. So it hasn't been historical highs recently. Right. So just wanted to understand how far RVA, is it a 10% or a 20% lower in terms of pricing or in terms of margins? I don't exactly stop me. I don't have the exact numbers with me right now. Right. No issues. And just one last question if I go ahead. We are catering to various set of industries in latex. So how is the overall sense for FY 2022, which industry you feel can grow Faster and which can be a Lagard or like which can be a flattish industry? We supply as you know to Several industries, paper, carpet, construction, auto, gloves, a lot of industrial rubber parts and what We've been seeing for the last 6 months is a fairly bullish in India, a very bullish trend and everyone Seems to in general feel that this year is going to be quite strong for them. However, We have to wait and watch and the way we are building our business at least is that we're making sure that from an industry point of view and from a geographical point of view we're derisked. And in case one of the industries doesn't do well even, at least some of the volumes can be pushed into another geography or another industry. So We're trying to derisk from that. But yes, in general, it seems that people are Our customers seem to be quite bullish for the next year. That's right. Yes, that was it. Thank you for the detailed answer. Thank you. Thank you. Next question is from the line of Vinay Nagodi, an individual investor. Please go ahead. Hi, Abhiraj. Congratulations on the great set of numbers. Thank you. My first question is for the last three quarters, we've been spending on repairs and maintenance to make our reactors fungible. So Going forward from the next quarter, as you had guided before, do we expect some operating leverage coming from here? Frankly, I don't know where The question is coming from, but I don't think repairs and maintenance is that large line item that Significant advantage would be there. And look, whatever is required, we both our plants are now Fairly old, 30 to 40 years old. And so as and when repairs are required, we do them. And we ensure that assets are maintained at a high level. There are some quarters that we have higher than normal repairs and some quarters that are better, but I don't think it's going to be a Big factor in terms of overall margins or anything on that front. Okay. And just wanted to understand, so now 3 years down the line, we will be reaching a top line of around INR 1100 crores. So we'll be having a very strong cash flow. So then after that, are we thinking of, say, going down Steve, in NBR or say, band building in ABCO build, are those logical steps am I thinking into? As I said, our hands are quite full for the next 2, 3 years, I think, if we go ahead with all the plans that we have. I think it's a little premature to talk about it, but certainly we have besides seeding products and businesses that we are already doing, we also have opportunities at that point and when we feel that we are comfortable amounts of cash again, we are going to take on some debt this year. And As an entity feel comfortable that we have enough levels of cash, you may even look at other opportunities, inorganic opportunities. Most options are on the table. Okay. And I just wanted to understand how many have you added A good amount of customers in the last 1 year? And have you developed some new products? Well, this for Nitra, Latex for gloves certainly has been a new big industry for us and we have added quite a few customers In that space, as far as the other industries are concerned, we obviously all add in, but it's a good point. One of the things we Alex, I don't track very closely how many number of customers we have, but I know our sales and marketing department tracks it. Next time, I'll perhaps get that number for you. But certainly we add every quarter we add new customers. And even within the industry we are in, we are Grades are always increasing or tweaking or changing. We always find niche applications within those industries like paper and construction as well. Okay. Yes, I hope that answers your question. Yes. Thanks a lot. Best wishes for future. Thank you. Thank you. Next question is from the line of Deepak Mehta, an individual investor. Please go ahead. Yes, thanks for the opportunity and great set of number in this quarter, sir. So my question is around the Product R and D, what is the pipeline for new products and R and D? Yes. Thank you, Mr. Westar. We have a pretty good strong R and D team and again within The industries that we are in, we are constantly doing work for improving the number of grades, Increasing number of grades, improving our current product range, reducing costs wherever we can. And as far as completely new Ideas are concerned. We have a few, but as I mentioned to one of the previous callers, that's something we don't really talk about Till, we are sure we are going to invest in that business and go ahead with it. Okay. So my next question is around the you mentioned that one of the competitors exiting the market and we have market share of 25%. So if you can throw out how much the market share is that with that competitor and What will in terms of market share we can grab due to this exit? Well, I think this competitor, at least in India, the market share was low. It was in the single digits, I think maybe 7% to 9% from what I recall last. But the more the bigger issue would be that with 1 big plant shutting down or They are diverting their capacity elsewhere to other products, not taking NBR they're not going to make NBR from what I understand. It could of course overall globally or in Asia help the entire demand supply ratio. And I'm not sure if immediately we'll be able to increase market share by too much because we are already running at pretty close 100 percent utilizations for the Indian market. So if you feel the margins are good enough, next year we will double the capacity of NBR and then take a call going forward. Okay. So thank you so much. I will get in the queue. Thank you. Thank you. Next question is a follow-up from the line of Manav Vijay from Deep Financial. Please go ahead. Yes. Thank you for the opportunity once again. I've got a couple of questions from me. So now in next, let's say, 12 months, you will have your XNB project ready. And you also mentioned what kind of sales can generate for you. So help us to understand one thing is that As far as your current existing business is concerned, there, the number of customers that you have are large. Whereas as far as XNB is concerned, there the number of customers would be lower. So you believe that once you have this entire Sales in your P and L, the volatility in margins that you have Will actually subside to a large extent or we still continue to have, depending upon the way raw material prices move, that volatility? I'm not sure Even live trial, let's say, for glass, there are many customers all over the world, mostly in Asia, of course, these days. But in the future, I believe America also we've had a few now America and Europe, there are a few glass manufacturers that are coming up from what we hear. So they also introduced importing latex from Asia. So I don't think the number of customers are bearing on margins. It's just the volatility of the raw materials that we're in and sometimes we do Because we're importing so many raw materials, sometimes we do get stuck with higher cost inventory. That does happen and therefore margins quarter on quarter could get affected by a few percentage points. As I said, it's very hard to predict what happens. I'm just saying historically what has happened is that margins have gone affected quarter on quarter. Overall, as you see, our endeavor has been if you see annual numbers or it takes any 4 or 5 quarters together, endeavor has been slowly improve margins and we've done that by and large. From the single digits to the last, I would say almost 1 year we've been in the mid teens, right, between 13% 16% for the last 4 quarters. Actually, Ebrahim, my question was slightly on the longer term. I mean, Yes. Let's say, so in the last 10 years, you have increased your margins from around, I mean, 8%, 9% or almost 15%, 16%. All I'm saying is that because of the volatility in raw material prices, your margins move very sharply. Yes, you always I mean, we'll be in a position to pass on that with a certain time lag. But because of the lower number of customers, it's all relative, on the X and B side, The margin's profitability will be better or not? That is my sole point. I'm not sure. Frankly, the answer is I'm not sure. As I said, it's a new business for us as well. And as we do higher volumes, I think margin predictability would be a little better, but I'm not sure because suddenly raw material prices obviously are stuck with some high cost raw materials and Overall market also whatever reason then the margins will fall in that segment as well. So I'm sorry, it's not a great answer, but the ideal answer is I'm not sure. Sure, sure. My next question is, I have on the XL I mean sorry, the NBR rubber is concerned. So auto is a large part of I mean, I get business for you of your current business. You believe that the way whatever changes that we That is happening on the EV side. You believe that, that is going to have any kind of impact On the demand of NBR over next 5 to 7 year timeframe? The short answer is absolutely yes. The long answer is that overall 30% to 35% of the Indian NBR consumption is in autos according to our studies that we have done. And within autos also there's 2 wheelers, 3 wheelers, passenger cars, trucks and buses. So obviously within that, We do think in the next 5 to 10 years, especially 2 wheelers, 3 wheelers, there'll be a large amount of electrification that would happen. But if you see the remaining will grow. So overall, while the growth in on the NBR market may not be As strong as some of the other products and segments that we are in, I do feel that there will be A good single digit growth either way with or without electrification. And of course, electrification is going to happen. There's no question about it. Okay. My last question to you is that you mentioned that because of this Yes, debottlenecking, we will have around, I mean, 10% kind of a growth, let's say, for next I will get until the time the expansion comes in place. So would it be safe to assume that the Quarter 1 sales becomes a baseline and that whatever you do, whatever that will come from De Bottlenecking will be on top of that? Yes, I mean, I would say in Q4 and Q1, so the previous quarter and this quarter, we have been at somewhere between 90% and 95% capacity almost 100% capacity utilization, anything above 90% is almost 100%, I would say. And the only reason is because in some products, Obviously, our capacity is not absolutely we can't make every product in every aspect that we have. So there are some products that were at Maybe 80%, 85% capacity utilization and some products were 100%. So I would say, yes, if you see the last two quarters, there would be a good benchmark or a good base. Okay. And what kind of tax rate is possible For this year and next year because last year also your taxes was around 42%, quarter 1 you are at 21%, Whereas normally, so let's say, if you move to the new regime, you will be paying 45.6%. So what would be a safe number to work with? Yes, I think we had some carry forward that credits that we could take for a couple of reasons. I believe they are they have now I mean they've come to an end. We don't have any more credit. So I think the same assumption would be 25%. Sure. Thank you and all the best. Thank you. Thank you. Next question is from Darshita Shah from Axis Securities. Please go ahead. Hi. Am I audible? Yes, you are. Please go ahead. Yes, go ahead. Hi. Yes, so thank you for the opportunity and congratulations on the good set of numbers. Most of my questions are already answered. I just needed the revenue contribution Between the segments that we have, that is the latest HSR and NPR for the current quarter and also for FY 2021, if possible? FY 2021, I think it was overall about 55% Latex and 45% Rubber. In Q1, I think it was more Latex because some of our rubber customers were affected due to the lockdown in India. So I don't have the exact number, it will be more Latex, maybe 60%, 65% Latex in Q1. But on average, I think we expect Latex to be going forward at least about 55%, 60% in the red rubber. Okay, all right. That's it for my question. Thank you. Yes, that's it. Thank you. Thank you very much, Michelle. Thank you. Ladies and gentlemen, that was the last question for today. I now hand over the conference to the management for closing comments. Over to you. Thank you very much. Thank you for once again joining us, ladies and gentlemen. We look forward to meeting you next quarter again, till then stay safe. Thank you again. Thank you very much. Ladies and gentlemen, on behalf of Apkatex Industries. That concludes today's conference call. Thank you all for joining us and you may now disconnect your lines.