Privi Speciality Chemicals (NSE:PRIVISCL) Q1 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to the Privi Speciality Chemicals Limited Q1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions at the end of today's presentation. Please note that this conference is being recorded. From the management, we have with us Mr. Mahesh Babani, Chairman and Managing Director of the company Mr. R. S. Rajan, President of the company Mr. Narayan S. Ayer, Chief Financial Officer of the company Mr. Sanjeev Patil, Executive Vice President, Strategy and Biotechnology Ms. Ashwini Shah, Company Secretary and Compliance Officer.

0:50 And before we begin the conference call, I would like to mention that some of the statements made during the course of today's conference call may contain forward looking statements about the company, which are based on beliefs, opinion and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and may involve risks and uncertainties that are difficult to predict. I would now like to hand the conference over to Mr. Mahesh Bhavani, Chairman and Managing Director of Privi Speciality Chemicals. Thank you, and over to you, sir. Thank you. Good afternoon, everyone, and thank you for joining Privi Speciality Chemicals FY 'twenty seven Earnings Conference Call. FY 'twenty seven marks another important year in Privi's growth journey.

1:38 Our focus remains on executing the expansion for Privi's currently underway, extending our speciality portfolio and further building on the long standing relationships with customers across the globe. The first quarter reflects a very positive start of the year. Our business continues to be to benefit from the confidence that global customers placed in Privi manufacturing capability and ability to consistently deliver high quality products. These enduring customer relationships remain one of our key strengths and continue to support our growth across existing products and new business opportunities. With that, I will now request Sandeep to take you through the operational highlights of the quarter.

2:25 Thank you, sir. Good afternoon, everyone. Q1 of FY 'twenty seven has been an encouraging start for the year. During the quarter, company reported revenue of INR 66 crore, which is reflecting growth of 19.22% year on year, supported by healthy demand across both domestic and international markets. Despite adverse global headwinds, demand across the fragrance and flavor value chain remained healthy during the quarter. Global customers continue to focus on supply chain diversification and dependable sourcing, while premiumization and innovation across end to end use category continue to support demand for specialty arma ingredients. These structural trends continue to create opportunities for companies with differentiated manufacturing capabilities, diversified sourcing and strong execution capabilities like our company.

3:23 Operationally, we continue to execute our expansion road map during the quarter. The balanced manufacturing base, together with our sourcing flexibility across both processes remains an important competitive advantage, enabling us to optimize raw material procurement while ensuring reliable supplies to our global customer base. Our product development pipeline also continues to progress well. We are advancing several high value specialty molecules like maltol, ethyl maltol, ethyl methacylate mostly, as we call it, cyclobentagon. Further, our long term road map envisages introduction of 10 advanced specialty products as part of our Phase II and Phase III expansion program.

4:11 The joint venture of Privi also continued to make steady progress during the quarter. Following the achievement of profitability in Q4 FY 'twenty six, we remain focused on scaling the business further, supported by planned capacity additions with infusion of additional equity, as you all know, and development of high value specialty molecules further. Operationally, our supply chain remains stable despite the evolving global political geopolitical environment. Our diversified sourcing strategy, particularly our backward integration into fine chemistry and global raw material procurement network continues to provide resilience and flexibility in managing input availability and customer deliveries. This has enabled us to consistently meet customer requirements across key markets.

5:01 Looking ahead, our focus remains on disciplined execution of ongoing expansion program, progressing the specialty product pipeline and further enhancing our position as a preferred global partner in Aroma and Specialty Chemicals. With that, I now hand over to Mr. Naran Ayer, our CFO, who will further into the financial details. Thank you. Good evening to all. Thank you, Sandeep. Thank you, Maheshma, and a very, very warm welcome to all of We are pleased to report and start the financial year twenty twenty six-twenty twenty seven with strong financial performance delivered in a dynamic and evolving macro environment. Our performance reflects strong execution, disciplined cost management and continued strength of our diversified product portfolio.

5:54 Our performance for the quarter highlights our ability to protect profitability across cycles and reinforces our confidence in the structural strength of our operations and the organization. Key highlights for the quarter, which has gone by. We reported strong growth despite subdued market, a 19.22% revenue growth was reported during this quarter on a year on year basis comparison. We delivered around 25% margins consistently now across the last nine quarters. The EBITDA margins are expected to sustain at a 20% plus, driven by the operational efficiencies and improved product mix and increased capacities going to come forward in the near future and in the coming years.

6:49 Our JV with Privi is progressing as per expectations, and we expect meaningful contributions to keep coming ahead. On the CapEx update, as Hadjeev mentioned, our Phase one of production capacity expansion is progressing as planned and is expected to be commercialized shortly. This shall increase our production capacity from 48,000 to 54,000 metric tons of all our existing products. Phase two of the and three of the multi specialty Arauma Chemicals project is also progressing as planned. Additionally, during the year and also during the quarter, we continue to make progress on the proposed merger of Privi Speciality Chemicals Limited, Privi Fine Centers Private Limited and Privi Biotechnologies Private Limited.

7:39 This consolidation is aimed at simplifying the group structure, enhancing operational synergies, improving scalability and creating a more integrated platform for future growth. Members may note that we are pleased to share that the company has filed a scheme with the NCLT post receipt of observation letters from both the stock exchanges with a no objection, this marking an important milestone in the merger process. We expect the merger to be completed in this financial year. Now coming to key financial highlights for the quarter twenty six, twenty seven quarter one. The total income that was achieved on a consolidated basis for the quarter was around INR681.42 crores, which indicates a growth of 20.01% on a year on year basis.

8:34 The EBITDA achieved during the same period was INR167.47 crores, registering a growth of 18.73% on a year on year basis. EBITDA margins were at around 24.58% for the quarter, and we expect, as mentioned, EBITDA margins to be almost similar in the near future. Profit after tax for the quarter was around INR 83.2 crores as against INR 61.46 crores achieved in Q1 of twenty five-twenty six. The overall growth continues to be driven by volume, price increase and improved product mix. This growth was supported by sustained demand across key end user industries and increasing traction in our specialty and value added product segments.

9:26 While input costs remained volatile during the quarter, we continued to focus on operational efficiencies, cost optimization initiatives and improved capacity utilization, which supported margin resilience. We have been able to bring down the manufacturing and other administrative expenses, which has enabled to improve the margins. Giving a key highlight on balance sheet, we continue to maintain a very prudent capital structure. I'm very happy to inform that due to the excellent management and constant monitoring and focus, we have been able to bring down our overall working capital cycle in this quarter to one hundred and eight days during the period as against one hundred forty one in the previous year.

10:14 Our net debt as of June 26 was INR $8.65 crores. This is net of cash and surplus money deployed in mutual funds with a net debt to EBITDA ratio of 1.29, reflecting our focus on maintaining financial flexibility while supporting growth investments. Our net debt to equity ratio was a very sound healthy 0.57, reflecting good generation of profits. Our ROE and ROCE achieved during the quarter was 21.722.72% respectively. Looking ahead, we remain confident in our ability to deliver sustainable growth.

11:02 Our strong balance sheet, robust cash flows and disciplined capital allocation strategy position us well to capitalize on emerging opportunities while navigating external uncertainties. With the planned capacity expansion of existing products and the introduction of new specialty products, we have established a clear road map and are on track to achieve the vision and message by our Honorary and Honorable Chairman and Managing Director, Mr. Mahesh Babani, division of INR five thousand crores in revenue and INR 1,000 crores plus of EBITDA over the next three to four years, representing a growth of about 2x. With this, I would like to conclude now and ask the moderator to open the floor for question and answers.

11:55 Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. We have our first question from the line of Vivek Rakulia from Viacom Family Office. Go ahead. Very good afternoon. Am I audible? Yes, yes. Thanks a lot for the opportunity. My first question was...

12:41 Could a bit louder? Yes. Yes. Be better. I mean if you are a bit louder. Yes, sure. So gross margin came in at 44.2% in Q1 FY twenty twenty seven versus almost 51% in last year Q1 FY 'twenty six, which is a decline of about six fifty basis points, even as the revenue grew by 20%. What drove the compression? And how much of it do you expect to recover over the balance of FY 'twenty seven? And also in Phase one CapEx completion in mid August twenty twenty six and commissioning thereafter, should we read that FY 'twenty seven growth will more likely be back ended towards H2 of this year?

13:29 Thank you. This is Narayan here, replying to it. Yes, your observation with regard to the RNC percentage consumption, there being about 4% is true. I would like to take you back to last year where we had stated that we had the advantage of low cost raw material and the high cost of selling prices, which we were able to get during the calendar year 2025. But on an average, we had also mentioned that the RMC percentage on the sales will be between the range of 52, 53% to 55%. You also have to understand the import CST and GTO from across the globe and across various periods and various cycles.

14:17 And so there could always be the usage of the mix that they come about by which there could be about a few percentage year and there on the raw material pricing impact. So we just look, Sanjay here, we make over 75 products and which are based on almost 60 different raw materials. So sometimes raw material cost could be substantially skewed. But overall, Narayan mentioned, that between 52% to 53% is what we are looking at. What you should also see is how much we have shared on other expenses. So as the volumes grow and as the value grow, economies of scale do sit in and we overall, we are able to not only maintain EBITDA margin, but even subsequent from EBITDA to that, we are able to maintain that as well because the impact of depreciation as well as interest also has come down.

15:21 So we see that EBITDA of around 24%, what we assumed is about 24 some percentage point, 0.6 or something, but 24% and more nearly to 25% is definitely on the cards going forward. Does that answer your question, Rit? Yes, sir. Yes, sir, it does. My second question was in FY 'twenty six annual report in the Chairman's statement on Page 17, it indicates that the capacity rising from 48,000 tonnes today to 66,000 tonnes by June 2027, which is divided into Phase one increasing to 54,000 tonne and Phase two increasing to 66,000 tonne by September of 'twenty seven.

16:09 Which Phase two date is correct? Is it June of 'twenty seven or September 2027? And also, are we on track for Phase two CapEx? Or should we expect some delay just like Phase one? In light of the above questions, would you like to revise your overall guidance for FY 'twenty seven? So first, let me answer your last question. No change in guidance. Guidance do remain what we have said. We will achieve five ks, one k in a promised time. That's first and foremost. Secondly, in terms of implementing our projects, we are on time and things are going on. It could happen for a week or two, you may not have any activity if it rains too much. But on the overall, the projects are being planned and being executed right now to deliver growth that we have promised to all of you.

17:01 That's the first thing. And about the capacity expansion, the current flagship product expansion will happen in the course of next fifteen days or so. So from 48 will as Narayan said in his opening remarks, from 48 will go to 54. So one last line I would like to make as a comment. We are confident of achieving 20% maintaining 20% CAGR with similar EBITDA margins. So means you can understand what I'm trying to say. I don't want to speak numbers. What last year's number, multiply by 20, again, multiply by 20%. That will be the minimum achieving that target.

17:51 Thank you, sir, for the confidence. But just again, a small clarification in terms of when would the capacity 6,000 capacity be coming live in June '27 or in September '27, just a small No. So let me clarify this. First and foremost, the 6,000 metric tons of capacity was to come by June 26, will now come by September 26 is what we are seeing. And from 54,000 to 66,000 metric tons, the balance 12,000 metric tons with regard to the Phase two CapEx, That's what we are trying to say that by September 27, the Phase two will be completed. I hope I'm clear now. Yes, very much. And the next question was on the bio based pilot plant.

18:40 What specific operating metrics like conversion yield or product priority, cost per kg, etcetera, will decide whether or not the company will move from a pilot plant to a commercial scale? And what is the minimum ROIC that is being kept in mind and targeted for these projects? So we have been progressing very well in terms of conversion of biomass into several value added products. A lot of patents are being filed now. And what we are doing is we are putting up a demonstration plant as we had covered in the last conference call. We are putting up a demonstration plant in Nairo Mumbai, which would handle about two tonnes of biomass per day, which is sizable quantity, which will then help us in terms of subsequent scale up. Right now, we process about few 100 kilograms every fortnight or so. So we will be putting up two tonnes per day pilot plant, which will produce all the molecules that we are looking at. And that would kind of as it says demonstration and therefore, of the concept would be given. So that's what we are looking at. And investment in this is subsequent to the five ks, one k plan. So this is something that would happen probably after we put up the plan, which will take about twelve months to fifteen months. And once it is commissioned, we'll probably run it for a year to study all the nuances of manufacturing.

20:03 And then we go for the large scale plant. We are, at the moment, very confident about the entire commercial profitability of this venture. So one closing remark I would like to give, Sandeep, about this particular case that in the 5,000 crore road map, this is nowhere part of the story. The part of the story will come future on after this INR 5,000 stores, the biomass projections will come in, kick in. So this will be for two, three years will be more learning, scale up, doing homework for the future beyond five I hope you understood. Understood. Understood. And the last question, if you could throw some light in terms of how do we benchmark against the peers in terms of process efficiency? That will be very helpful. Thank you.

20:59 So we that's an ongoing process, and we continue to work that. There is not a single day when it is not reviewed at the highest level. So we continue to strive because we always have believed and have proven that money lies within. So therefore, we continue to work every single day on improving the processes, reducing the steam costs and doing all of that. So we continue to focus on that. Thanks a lot, sir, for patiently answering my questions and all the various. Thank you. Thank you. Next question is from the line of Neera Gandhi from Suneeti Securities. Please go ahead.

22:02 Neera, are you there? Yes. Hello. Yes. Please go ahead with the questions. Yes. First question is regarding the revenue contribution from the previous JV. How much was it during Q1? And what was the EBITDA generated from the JV? You want to understand about the Privi? Yes. The PRIVISCL revenue generated was about INR 18 crores and EBITDA generated was about 14%, 15%. Right. Yes. And my second question was regarding the regarding our understanding that alpha pinene prices have risen by 7080% in last five months. So how much of that we have benefited from the price increase?

22:55 And how do we see the prices of alpha pinene going ahead? If I would have known that, I would have been a billionaire myself, but no one can actually predict alpha pinene prices. But the good news is, and as we always keep saying that when we do CST procurement, we do the back to back contract with our customers, and that is what helps us. So to that extent, we are covered in terms of our CST and back to back with our customers also. As far as the balance of that is made from GTO, the prices are right now at a high level. There are both views, some views say that the prices may still go further, but they are at historic high. Fact remains low. And we are able to pass on those costs to our customers.

23:47 Right, sir. And sir, if you can share the breakup of revenue in terms of volume growth and realizations, that would be helpful. We're not giving volume growth on quarter on quarter basis. So we will give you at the end of the year. But it's good mix of all the pricing. So All product round growth, Ladav. So let's not get into net increases, but it's an all round growth overall. As I mentioned in the opening remarks, it's a mix of product, increase in prices as well as increase in the volume. And sir, what is the status of the merger of Privi Fine Sciences with Privi Speciality? Sir, it will happen by this year end.

24:34 The good news that has happened in this quarter is that we have been able to file the application with HCLT. So we progressed in this quarter very well. The next question is from the line of Anisha Dalal from Universal Capital. Please go ahead. Hello? Yes, ma'am. Hello? Yes, ma'am. Hello?. We can hear you, ma'am. Yes. First of all, congratulations on the performance.

25:23 Have two questions. One is the cost of raw material and inventory has been increased as compared to the previous quarter. Can you give some highlights on that? And the second is the industry, especially in the camphor market facing the demand supply mismatch with significant new tamper manufacturing capacities that have been come up in India. So I also like to have comments on that. Yes. So Manisha, I think the first question I just answered with regard to cost of credit. So it's actually a mix of various things. But last quarter for the same period, we had some advantage of low cost raw material and increase in the selling prices for the contracts for the calendar year 'twenty five. Thus, our good product mix was also there. So you need to look back in Q2, Q3, Q4, the RM percentage vis a vis the sale was higher than what it is currently.

26:24 And so we are in line with that between 52% to 54% that we always talk about what could be the RNC as a percentage on sales. So lastly, I've always been telling that do not look at Privi on a few quarter on quarter basis. We need to look it into as a yearly basis because the contracts that we enter is on an annual basis that is a back to back contract that we have. You will find us the RNG Yeah. There is lot of background noise. Hello?

27:14 So I was saying there was some mismatch in the import manufacturing capacities that have been come up to India for the camper manufacturing, which has increased the prices of camper. So in that regard, wanted to know the highlights from you. Okay. So camper, there were always, always number of players who make camper, But their source of making camphor is based out of government and oil, which is very volatile in terms of pricing. Whereas we make it from more from CSC route, and it's a very small percentage of overall revenue. So it's not an important product. We sell on our terms. Do not really to sell. Manisha, the most important thing is that for us, Camphor is one out of 75.

28:10 For many others, it could be the product. So that's why we do not give so much of importance to Camphor per se in our overall portfolio. Okay. Fine. It's about 5% to 6% of our total revenue. So we bother up to one point, but we don't. The previous participant got disconnected. We have our next question from the line of Sahil Goel from Equinox Capital Ventures. Go ahead. Hello? Am I audible? Yes, yes. Let me say it louder. Sir, I have a question regarding your revenue mix, molecules contribute to the major portion of our revenue?

29:07 Fine continues to be the main contributor. Can you specify the name? As you are aware, we have stopped giving this mix product mix and product segments and all. So this is as per the Board directive. So the important thing is that it's a complete product mix that we are selling and all our products and our capacities are close to 90% of the installed capacities that we have. So you should understand that. And so what are the industrial utilization right now? Around 90%. Okay, sir. 90%. Thank you.

29:55 Thank you. The next question is from the line of Rajesh Mishra from Liberty Trading. Please go ahead. Yes, Congratulations on great set of results. Sir, I have two questions. First is due to the Iran war impact of raw material prices effect on profitability and how you managed? Second is, what is percentage of camper segment in your total business? And it is increased month to month basis or it is still same?

30:44 Yes. With regard to the Iran war, there has not been too much of an impact on our RM percentage consumption, in fact. So because crude as a segment and the product that we do is very, very limited, in fact. So predominantly, it is non crude items that we manufacture. So really, we've not been impacted because of the war that has been going around. And your second question with regard to Camphor forming a part of our overall portfolio, as Sanjeev rightly currently mentioned, it is between the range of 4% to 5% broadly on the total turnover that we do. And last, you asked for the capacities that we are operating around, it is around 90% or so.

31:34 I hope I've been able to answer you, Mr. Rajesh. Thank you, sir. Thanks a lot. Welcome. Thank you. The next question is from the line of Krish Talod from WeGrowth AIF. Please go ahead. Good afternoon, sir, and congratulations on good set of numbers. I just wanted some clarity on the capacity. So our expansion plans are up to 70,000 metric tons. But post merger, what would be our capacity? So combining three d fine science, what kind of capacity we can see and further... We are not currently looking for for the current macro indications, but we find science has certain capabilities of macro integration.

32:27 So how are we looking to better integrate peripheral as well moving forward? So if you can share some light on that. Okay. You, sir. To answer your first question, the post merger, what will be the volume that gets added? It is close to about 6,000 metric tons that got added to the Privi portfolio. And second, your question whether Privi Fine Science has a backward integration for the product that it is manufacturing? Currently, no, sir, because it's in a different set of chemistry. The raw materials are available, and there is good margins available on that side. But maybe going forward in future, we can always consider once it becomes a part of the Privi portfolio. So additions would be around 6,000 metric tons, right? That's correct. That's correct. Also, on our previous joint venture, what kind of capabilities from the technical know how and prospects know how that we are yet building out that you can utilize the other client base as well, which are also good in the flavors and present in the present segment?

33:41 We I'll tell you, we don't really speak much about our technical details. But we have over the years, we have mastered almost all kind of chemical reactions. And those are platforms on which we are working. So we are particularly good at hydrogenation, for example. We're extremely good at distillation. We also do a lot of other separations as well, which normally are not being done by other chemical manufacturers. We do that. So we also do a lot of reaction. All these chemistries we do, and that is what helps us in terms of overall looking at newer molecules as well. Other thing that we also do well is the environmental treatment. So we ensure that it is zero liquid discharge. So in that area, also, we have substantial expertise in terms of treating all the effluents and ensuring that it is zero liquid discharge. These are platforms that we have. And there are a couple of more, which I would not like to disclose.

34:43 But there are some more apart from biotechnology, there are some more technologies that we are working on, which are really breakthrough technologies, which in the due course of time, probably over the next twelve to fifteen months, we will talk about those. Okay. And just one more last thing. Are we looking for similar kind of joint ventures, more joint ventures and partnerships? Sorry, sir? What are joint ventures? Are we looking for more this kind of joint ventures and partnerships? Very, very, very strategic work on. We'll have strategic alliances, but not joint ventures. We'll have strategic alliances. We have two underway, but joint ventures become very, very tightrope to work on because one customer feels you are favoring the other. So now we are going to do strategic alliance instead of joint ventures. Of course, have two strategic alliance underway.

35:43 Okay. Thank you so much. Thank you. The next question is from the line of Anika from CRK Research. Please go ahead. Hello? Yeah. Nigit. Hello? Am I audible, sir? Yeah. You are. First of all, congratulations on a good set of numbers, sir, and thank you for the opportunity. So my question, most of my questions were answered, but I would like to ask, what kind of a funding split are we looking when we are about to, like, start the phase one, phase three CapEx? So I just wanted to ask about that.

36:31 Okay. As far as the funding part is concerned, since we have mentioned that it's there on the public domain, that Phase two, we have already commenced. And Phase III, we will commence somewhere around end of this year or early next year or so. A broad guidelines given is it will be primarily done through internal accruals. And as in when needed, maybe we will borrow from the banks or from whatever institutions are available at very competitive prices. Even after having said that, you would see that our ratios pertaining to debt to EBITDA and debt to equity, they all shall be very closely monitored and be much, much below the so called thresholds that normally preferred people prefer to be around.

37:32 Okay. Understood, sir. Thank you so much. My second question would be like, can you just explain like up to what extent are we looking for adding continuous flow chemistry? Or is it being used across the manufacturing processes? Or are there any opportunities to increase the adoption and particularly for the new molecules? Yes. On the existing molecule also, we because each molecule is involved between three to four chemical reactions. So in some cases, for example, we may be continue on two, we are trying to do all of them continuous. Distillation, most of our decisions are now continuous. And then we are in the upcoming projects as well, we are trying to see wherever possible, we are trying to start with continuous manufacturing for a large scale molecules like and all that. For specialty molecules, obviously, it can't be continuous. But otherwise, we are working on continuous chemistry on ongoing basis. It's a good point to see. Yes. Thank you so much, sir. That's really good to hear.

38:39 That's all from me. Thank you, sir. Yeah. Sure. Thank you. Thank thank you. The next question is from the line Suraj Chandi from YES Securities. Am I audible? We can hear you. Yes. So my first question is what percentage of our raw materials are group based? And how has this impacted the pricing? Okay. I've just mentioned earlier, this is Narayan here answering you. Crude based raw material forms about close to 15% to 18 of the overall purchases that we do. Okay. Okay. And can you please tell us what amount of CapEx that we will be incurring this year and also the next two years?

39:33 Okay. The broad outline for this year and following two years, it could be around in the range of INR $8.50 crores to INR 900 crores or so. So that's the CapEx that is outlined, which will ensure Phase two and Phase three completion. Okay. And can you talk more about your new products and the new initiatives over and above the five ks, one k plan? Also, what is the progress in our peripheral products? At what stage are we in currently? Our new five ks, one story starting from about INR 2,500 crores that we closed last year. Out of that, if you see our investor presentation on Slide number 18, we have these details, wherein we have given previous investor presentation, I think, yes. So in which we have given these things. So essentially, we are looking at three arms to this growth.

40:38 One is chemistry, which is based out of Farfural, which is a building block, which is made from on crop. So we would be the only company fully integrated from crop up to making of molecules like maltol, ethyl maltol and cyclopentadol. That would add about 1,000 crores and more to the revenue in this vertical. We are also looking at a molecule called as MuscT or ethyl bacillate. And then there are about 10 specialty molecules, 10, perhaps 11. And these molecules, of course, we are not putting any names to these ones right now because of obvious reasons. And all these plants are right now under implementation. We are expecting that by about middle of next year, they would be mechanically completed.

41:26 And we expect that H2 of next financial year, we should start getting contributions from these plans. So that we are on our track to achieve five ks, one k plans that we have made, that is 5,000 crore of revenue and over INR 1,000 crore of EBITDA, INR 1,000 plus EBITDA. Okay. Okay. Understood, sir. Thank you for the opportunity. Thank you. You. Next question is from the line of Nitun James from Mohit DMS. Please go ahead. Hi. Am I audible? Yes. Yes. Yeah. Thanks for the opportunity, and congrats on a good set of numbers.

42:13 So my question is on the CapEx plan. So if I'm not wrong, you have... Broadly, you have three broad CapEx plans that you have mentioned in the previous presentations, which is on the existing side, you have some 300 of CapEx for the new product, 300 crores of CapEx, which is supposed to be closed, which you clarified in next year, h two of next year, and then another 300 crores of CapEx, which is for new specialty products. Is my understanding right? That's correct. Okay. And the existing product CapEx you're saying is should...

42:58 Is sort of delayed slightly and now it will happen in September of this year, right? Yes. That's correct, Mr. James. Yes. Okay. Okay. And just to talk a little bit more on the new product side with the previous part and also alluded to. So what will be the struct... I mean, these two products, basically, as well as the, will you be... As in... What is the opportunity? When will you be supplying? Do I have a similar one that's for flavor and other than fragments and all that? So can you give give a little bit more color on the market opportunity, the sort of customers you would be providing? So Maltol and Ichal Maltol, both are right now made, I would say, over 95% of this manufactured only in China.

43:50 So it's an obvious China plus one post where we stand to achieve India as a source for manufacturing this. India imports significant amount of which is used in making pharmaceuticals. And we are in touch with most of these customers. They would be very happy to procure it from us. Maltol as such is actually used as a flavor, all the oval tin, all the chocolate, biscuits that you eat, that has maltol. It has that milky flavor that you get is from maltol. There is I mean we are putting up a capacity, which would represent almost as per our normal strategy, onefour of the global opportunity.

44:41 And we are confident that given that this will be consumed by our existing customers, and we would be the only company which would be fully backward integrated, only company globally, starting from COB right up to making and few other products. So therefore, we would have substantial competitive advantage in terms of manufacturing costs and everything. And that's what gives us assurance that we will be able to scale up our revenues pretty quickly. Sure. That's great to hear. So this will be a similar play to your code self worth of and then as well. It's like a base to kind of a strategy. So you are saying you are the only company in the world which has got this technology to sort of convert corn corn of the cob to Malcom?

45:33 Okay. So there are a number of companies which convert I mean, there are multiple ways of converting copper into sulphurol, okay? And there are a number of companies in China who process and produce sulphurol, which has lot of other applications as well. I mean, Furfuran production is over few lakh tons. So there are a number of companies in China, which will process Furfuran and they sell that Furfuran. And there are companies which make part in China, we then procure that Furfuran. What I am saying is we will be the only company which will start from COB, make Furul. And for that also, we have a slightly different technology, superior technology. So that's what our advantage would be. And just another quick last question on the Privi JV.

46:22 So what sort of products are you targeting in that Privi JV? Is it more to do with supply towards Privi? Or how does that product... Mr. James, we have agreement of non disclosure, so I will not be able to give too much of details on that. But whatever is manufactured in the JV will be exclusively sold through Jivadan. Sure. I got your... There are 42 products and you can see the confidence in the joint venture by the fact that together we have decided to invest additional INR 50 crore in equity for next phase of expansion. Cool. Thanks. So thanks for the answers and all the best.

47:13 Thank you. We have our next question from the line of from Investment Advisors. Please go ahead. Hello. Am I audible? Yes, please. Okay. I just wanted to ask about the crisis happening in the currently, I think, related to the. So do you guys see your freight costs increasing in the next couple quarters? Or how are you tackling this issue? Let's see, impact now has been for quite a number of years, and we have been sailing through that impact. Now I could I can only say that. So with regard to freight expenses on account of the Hormuz trade, we've not been too much impacted on that, but resi continues to be as it is. And do you have anything specific to get it clarified?

48:16 Sir. Margins will be affected. No, no, no. We don't find any such challenges. The next question is a follow-up from Krish Talod from the Growth AIF. Krish, are you there? Krish, are you there? Hello? Am I audible? Yes. And just a quick one question again.

49:03 I just wanted one clarity on the Maltol front. It will be a flavor of molecule than what and it will go into probably pharmaceutical application. There will be approvals that will be required. So what will be the approval timeline and process that we can see in that? So there are two Maltol, Krish. One is Ital Maltol, one is Maltol. One of this goes for pharma application, but as this is an intermediate, therefore, it doesn't require any approval. As far as other one, our mitral is concerned that goes for flavor. So our plans are designed as per GMP standards. So we will be getting good manufacturing practices certification to sell those products because it's a flavor. Okay. Understood. And just one more question on the strategic alliance that you mentioned. Can you share some light on what will be the scope of the strategic alliance?

50:00 And what will be the purpose of the strategic alliance? Currently, we are not in a position to disclose too much of that. So at the appropriate time, we will announce. But this would be typically, let's say, one or two specific molecules that our customers may ask us to do exclusively for them. So that's what we'll work on. Okay, thank you so much. Thanks, Ashish. Thank you. Ladies and gentlemen, that was the last question of today. And I now hand the conference over to Mr. Narayan S. Ayer for closing comments. Over to you, sir. You. Thank you, Banu. On behalf of Privi Speciality Chemicals Limited and the management, on behalf of Mr. Mahesh Bhavani, I thank all of you investors, shareholders of the company and every person attending this particular call for having taken the time out.

50:54 Thank you, and it was a pleasure interacting with all of you and look forward to interact very shortly soon. Good day. Thank you. Thank you, speakers of the management. On behalf of Privi Speciality Chemicals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.