Advanced Enzyme Technologies Limited (ADVENZYMES) Earnings Call Transcript & Summary

Welcome to Advanced Enzyme Technologies Limited Earnings Conference Call Q3 FY '21. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Tiwari from Antique Stockbroking. Thank you. And over to you, sir.

On behalf of Antique Stockbroking and ITI Capital, we thank you for joining us on the Advanced Enzyme Technologies Third Quarter and 9 Months FY '21 Earnings Call. Today, we have with us, Mr. Mukund Kabra, Director; and Mr. B.P. Rauka, Group CFO with us. We will begin the call with opening remarks from the management, followed by an interactive question-and-answer session. At the outset, I would also like to clarify that certain statements made or discussed on the call today may be forward-looking in nature, and a disclaimer to this effect has been included in the investor communication shared with you earlier. To begin with, Mr. Kabra will share with us the operating performance and the growth plans of the company, followed by Mr. Rauka, who shall be taking us through the financial and segmental performance. I will now hand over the call to Mr. Kabra for his opening comments. Thank you, and over to you, sir.

Thank you. Good evening, everyone. It is my pleasure to connect with you and convey our quarter 3 results of the financial year 2020/'21. I would like to congratulate everyone for staying strong during the pandemic and wish good luck ahead as we are working towards achieving normalcy. In the first part of this conference call, we will take you through the earnings and the business highlights, followed by the question-and-answer session. Now I would like to give some highlights on the operational aspects. Despite of persisting COVID pandemic situation, we are able to maintain our international sales. Revenue in our U.S. company has gone up by 7.5% during this quarter and by 1% during 9 months, even we had a loss of sale of INR 5.47 million from the [ beginner ] customer in the first 9 months of the last financial year. Supply chain and logistical issues faced during the lockdown are being solved slowly. However, freight cost has gone up significantly in some cases, 3x to 4x. All our manufacturing units are running efficiently and progressing well towards normalcy. Our R&D units are operational, and we are working as per given government guidelines. Now let me take you through business updates. Moving ahead, we announced that we are positive at all fronts and working towards our goals. As you are aware, we strongly believe in delivering long-term value to our shareholders. In past, we have explained that our annual financial results are more relevant to derive our performance and not the quarter-on-quarter results. In the -- last time, we said that this year, we will be EBITDA positive, maybe 4% to 5% on the revenue front, and we are on our targets. We are happy to say that for the -- our EBITDA for 9 months stood at INR 176.6 crores, 48% of sales, increased by 15% from INR 153.6 crores, 46% of sales in financial year '20. And our PAT increased by 17% and stood for 9 months at INR 117.7 crores, 32% as compared to INR 100.4 crores, 30% in last -- in the previous financial year. I'm glad to announce that we have a decent growth in profitability because of our product mix. As mentioned in our last con call, about the outlook for financial year '21, we are positive as everyone around the world in rebuilding and we hope there are no further lockdowns. Now let me hand over this call to Raukaji, our CFO, who will walk you through the company's financials. Thank you, everyone. Raukaji?

Yes. Thank you very much, Mukund. I will just take you briefly through the company's financials for the 9 months of FY '21. The revenue in 9 months has increased by about 10% from INR 3,337 million to INR 3,686 million, this is mainly driven by growth in our human nutrition of about INR 421 million, although there was deduction in the animal nutrition business of about INR 56 million and bioprocess business of about INR 6 million. During 9 months, we also witnessed some rupee appreciation in that sense. Overall -- sorry, the rupee depreciation of 6%. So our international sale is up from INR 1,911 million to INR 1,948 million, an increase of about 2%, but since rupee has depreciated by 6%, so overall it is a 6% -- 4% down in that sense. AEU sales, this is our U.S. subsidiary company, and the sale is up by 1%, as Mukund already mentioned, in spite of the fact that we have lost a sale of about INR 5.47 million, which was there in Q -- in 9 months of FY '20. So in spite of that sale being not here, we recouped our sale, and we have 1% increase in the sale of -- in the revenue of our subsidiary company in U.S. Domestic sale is up by 22%. This is in India from INR 1,426 million to INR 1,738 million. The EBITDA increase is mainly driven by increase in gross margin because of the higher sales, although there are some expenses which has also increased, like employee cost, this is like annual increments and some increase in our other expenses because of some GST, taxes and other expenses being higher as compared to last year 9 months. Our profit before tax has increased by 20%, INR 266 million from INR 1,360 million to INR 1,626 million during this 9 months. And this is mainly again because of the improvement in gross margin. Finance cost is -- I mean, not significant, it has reduced, so there is some savings because we have not replaced the working capital limits. We don't need utilization. And apart from that, repayment of term loans by our subsidiary companies. So there is fall in the finance cost in that sense. And other income was up in 9 months as compared to the last year because of some PPP grant we've got in our U.S. company, and depreciation cost has slightly increased during the 9 months. Our PAT is up by 17% from INR 1,004 million to INR 1,177 million, so roughly INR 118 crores from INR 100 crores in last year 9 months. The increase is mainly driven by increase in gross margins and increase in other income, as mentioned earlier. Taxes has increased by INR 93 million because of higher income or higher income before tax and some impact, of course, during this particular quarter because we have worked out our tax provisioning based on the new tax regime, this has been enacted by Government of India during Finance Bill 2019. So that impact has been taken into account based on working that which one is going to be more beneficial to the company. So because of that, the tax liability outgo cash flow will be definitely lower by about INR 6 million, but the tax charge is higher because we need to do a lot of working of deferred tax. That has certainly -- because of that, the deferred tax has increased by about INR 25 million. This was for 9 months. Q-on-Q, again, there's increase of 14% in our revenue, top line. So it is about INR 1,377 million as compared to INR 1,204 million, so increase of INR 173 million during the quarter. EBITDA is up by INR 79 million, and PBT is up by INR 90 million. PAT is up by INR 58 million. So everywhere, you can see an upward trend during this quarter. Year-on-year, again, the increase is about 23% on the revenue top line of INR 258 million from INR 1,119 million to INR 1,377 million. EBITDA has increased is about 26%, which is INR 664 million from INR 529 million. PBT is up by 30%, and PAT is up by 28%. So the PAT during this particular quarter is INR 443 million as compared to INR 346 million. And a couple of frequently asked questions, which I would like to just place before you is, Evoxx is EBITDA positive in 9 months, and JC Biotech sales is up to INR 354 million in 9 months. And our largest enzyme pharma industry stood at INR 854 million in 9 months as compared to INR 762 million in previous year 9 months, and during this quarter, INR 365 million as compared to INR 289 million in the corresponding quarter of the previous year. So this was from my side. And now we would commence question-and-answer session please and open this house for Q&A.

[Operator Instructions] The first question is from the line of Raghav Kapoor from ActiveAlpha.

Mukund, after Mr. C. L. Rathi's departure, which was around 2 years ago, we haven't seen a replacement to him come on Board. When are you planning on bolstering the management team as it seems at this point, we don't have a dedicated CEO or COO to the business?

Raghavji, so the CEO is like a Board's call. At present, we have a structure, and the whole time Director is working as the CEO.

So Mukund, you are the CEO right now?

Yes. So I'm working and acting as a CEO.

Okay. But this is a temporary thing? Or are you going to be there permanently?

I'm going to be there permanently.

All right. Any addition to your team in terms of COO or someone like that to assist you?

Not right now. We are working on all the structural things at this point of time.

[Operator Instructions] The next question is from the line of Shikha Mehta from Equitree Capital.

Sir, could you give the R&D cost for the quarter and for 9 months? And could you give the breakup of how much revenue comes from our top 10 clients for the quarter and 9 months?

Yes, Shikha. Just a moment. Top 10 customers, 10 number is about, just a moment, I'll give you the exact number, is about 47% during the quarter and for 9 months, it is about 41%.

Okay. And the R&D cost?

R&D cost is about 4.5% of our top line.

All right. And sir, moving forward, for the next 2, 3 years, could you tell us something about your growth plan? Or what do you expect moving forward? Anything specific in any products, any acquisitions, anything of that sort?

Yes. I think Mukund would be addressing this particular issue.

So Shikha, as we already, like, talked before also, our -- we can't go like annual-to-annual basis or quarter-to-quarter basis, we cannot exactly give the growth numbers. But yes, we plan to double our revenues in the next 5 years. So that's the goal. In terms of acquisition, that's a constant working what we are working. We just recently added one acquisition, which was a small acquisition, but we are working on more acquisitions. And when the time will come, we will tell you about the acquisitions. The products -- the segments of the products, which we already said, those are the segments which we are working on, like the biocatalyst area, the food area, the animal food area, the probiotics area.

So is it fair to assume that given our current structure only we can double our revenues over the next couple of years? And we don't -- like we might acquire something if it looks interesting, but even if we don't, given this current structure, we're capable of doubling our revenues over the next couple of years?

Not a couple of years. I already said 5 years, right?

Yes, sir.

Yes. Yes, we are working on like other plans like B2C in some of the segments, but these are the focus areas. And even with acquisition or without acquisition, we are confident that we will make this guidance.

[Operator Instructions] The next question is from the line of M.P. Kulkarni, a private investor.

Yes. The question is to the management team. The growth projection looks a bit unambitious in terms of the global trend of going away from a chemical-based pharma industry and going towards more natural resources-based pharma industry. So why is the management being not more aggressive? And also whether this 14% CAGR revenue growth over the next 5 years is going to be achieved with the existing capacities? Or would it need to be expanded at the Brownfield sites?

So Kulkarniji, what you said is right, but in our industry, like even you -- for example, you mentioned about pharma and API molecules are going towards more natural rather than the chemical processes. But to develop the enzymes truly, it needs longer time, sometimes even 1 year, 2 years because it needs a lot of proteins, which is involved in the process. Even like once you develop the enzyme, it takes time for the customer to do the trial, then they need to study the stability studies, they need to go through the regulatory approval, and the process is time consuming. So yes, we are working into these areas and again, it's a cost involved and the time involved in the whole process. So you can work at few molecules at given time, you cannot go with all the molecules right away because you need to use your resources very, very delicately. This is the reason like why we are saying like, at least, we should be able to go with the 14% CAGR. Now coming back to the capacity. We have enough capacity, and we feel that we should be able to achieve this with the existing capacity. But whenever the capacity level of utilization will reach to somewhere around 80%, we will plan for our expansion. The expansion costs will not be very high because we have built up our structure in such a way that we can double our Pithampur Plant's capacity with some -- maybe about INR 60 crore, INR 65 crore. So yes, did I give your answer, Kulkarni, or anything?

Yes, sir. I'm reasonably satisfied with the answer. And I detect from your tone as well as regarded the way you spoke that you may actually surprise us on the upside and you are being conservative.

I don't want to commit anything.

The next question is from the line of Swechha Jain from ANS Wealth.

Just a follow up question. Like you said, we plan to double our revenue in the next 5 years. And you also addressed to the next caller separately as to how and when do you do this. But if you could just guide us or throw some light how strategically or what are the key 2 or 3 things would be the main driver of this doubling the revenue over 5 years? I mean, what would be the main pillars?

Okay. So Swechhaji, like, we divide our sales into the 3 major segment. First is like, Human Nutraceutical where we subdivided into the 4 parts, nutraceutical, pharma, then we have biocatalyst and probiotics. The biocatalyst is the area which I just explained in the last question about the API. And we feel that this is one of the growth driver for us in the coming days. At the same time, the probiotics is one of the growth driver. The other one is like nutraceutical where the B2C sales we expect to grow in the coming days. Now going to the second pillar is the animal feed where we feel that we will have growth into that area as well as the pandemic is over and we can move, probably that area should also grow. Going to the third area is bioindustrial process where we again subdivide into the food areas and nonfood areas. And particularly in the food areas, our focus is in the baking areas, and we feel that, that should be another one, our growth driver.

Okay. Okay. And for all this, if capacity expansion is needed, we would do it as and when the requirement comes in, right, sir?

Yes. We do need a capacity, I mean, like capital INR 10 crores to INR 12 crores as a maintenance capital every year. But besides that, whenever like we will reach to somewhere around 80%, we'll start our capacity increase.

Okay. Okay. And sir, just a bookkeeping question, if you could let us know the cash and receivables as on 31st December?

I think, Rauka, you can take that.

Cash is about INR 279 crores. And receivables are about 70 days of our top line.

The next question is from the line of Rohit Sinha from Emkay Global.

In the domestic business, we have seen strong growth in this quarter. So specifically, in which segments we are -- we have witnessed strong growth? And how much sustainable these are? I believe there would be some pent-up demand also in some segment. But still some segment would have witnessed a sustained growth. And how we should see basically the domestic business going forward in context with pharma industry growth in India?

So Rohit, you read the e-mail, in a sense like this quarter, we had a strong demand from the pharma or one-off like our strong molecule or the largest molecule at the same time, the probiotic. But I would say that those numbers may not be sustainable as we go on because, like, the numbers will come from some other areas, I don't expect this area to grow that rapidly because we always feel that this area should not grow more than 5% on the annual basis. Probably yes, there can be some some growth, which was witnessed because of the pandemic or maybe this is the stock situation. But yes, we are optimistic about our, like, year-on-year growth rather than the quarter-on-quarter growth.

Okay. And sir, in pharma, then have we added new customers or it is existing customers where we have extended some growth?

I think it was more towards the extending -- towards the existing customers. Some of the demand has come up because of the regulatory rules, which were like supposed to come from the January month, and probably they might have come up, and there might be some slackness or something going forward because of that. But yes, I could say only that much at this point of time.

Okay. Okay, sir. Sir, if you could help us with recent SSPL performance if possible in this Q3 side? And then also, if you can share the debt in the books of SSPL?

We have already shared those numbers, Rohit. I mean, it's there in the, I think, one of our uploads, but I'm not sure. Anyway -- and the SSPL is -- I mean, as such, the debt is about INR 16 crores on the books of SSPL. Out of that, I think, roughly INR 12 crores will be retired and remaining we will continue because that is some borrowing from the bankers. So that will continue. And other than that, they had some high interest-bearing debt. So that will be retired out of this investment we have done.

Okay. Okay. And any color on what sort of a performance was there on this quarter? I mean, in first half, we have reported close to INR 19 crores sales. So any number for this Q3?

Q3 numbers -- in fact, this acquisition has happened on 11th January. So from 11th January onwards, we will be definitely tracking those numbers in the sense that...

So from Q4, definitely, we'll be having some number from...

Yes. So those numbers will -- but I think 9 months -- yes, 9 months number, we might have shared, but let me give you those numbers also. The -- so that was I think about INR 30 crores and then the PAT of about INR 21 -- INR 2.1 crores. That's how the numbers were for.

Okay. Okay. And sir, any update on the -- our new R&D facility, which we are working on?

Yes, we just got our land NA, and we are under the further development process now. So we are like contacting the architect and other things and developing the plans now.

Okay. Okay. And last question on, sir, Evoxx side, as you've mentioned that with an EBITDA positive from there. So -- I mean, was the sales also increased? Or is this just cost optimization?

Sale is decreased. But yes, it's EBITDA positive. That's the good news because they were badly affected because of this pandemic. So revenue is down. But overall, the expenses are also contained in that sense. So overall, like for 9 months, we could see it's the EBITDA positive.

Okay. Okay. So sir, if you can share Q3 numbers of Evoxx, sales and EBITDA only?

I will definitely share with you. Okay. Q3, I think, revenue is about 78 -- this is EUR 780,000, okay? And the expenses are about EUR 460,000. Finance cost is about EUR 280,000.

Okay.

And 9 months, I think I'll give you if you want 9 months also, EUR 2.06 million as compared to EUR 2.36 million last year. And EBITDA is about EUR 2,050 as compared to EUR 50,000 last year. Then there is a finance cost of about EUR 9,000 -- EUR 90,000, sorry, as compared to EUR 80,000. So overall, you could see that we are EBITDA positive in Evoxx.

The next question is from the line of Vishal Bhardwaj from S Capital.

Congratulations on wonderful numbers this time. Just had a couple of things to understand on the generic side. The first one is from the COVID-19 part, we've seen that trend normalize and now normalization in our revenues as well. But we see that the animal healthcare business has come down quite a bit while the human healthcare business, which is already a larger chunk in the business, has even grown further. So just wanted to understand that has any industry dynamics changed as such for the company since the COVID part? And is it sustainable going forward?

So COVID has impacted. In addition to that, in animal healthcare, you might have noticed in couple of states have faced the bird flu situation as well. So our main sales assets is happening in domestic market. Exports were down in any case in last 2 quarters also because of this pandemic. Logistics were not so much available and there were many more issues. So that's the reason I think this animal healthcare segment has barely impacted, and that's not the focus area also because of change in the pattern of consumption also. So people were like, in particular, in India, were avoiding to eat non-veg during this pandemic because of its own reasons, this is known to everyone. So that has impacted animal healthcare significantly in that sense. So it's down by 9% in that sense.

[Operator Instructions] The next question is from the line of Ritu Chhabria, an individual investor.

Sir, we're seeing that there's huge dependency on the U.S. part of the business. And with the North American markets opening up now, are we equipped to capitalize on this opportunity?

So it's the dependency, in the sense, this is our own subsidiary company and we have been in that business since 1975, madam. Yes. And of course, because of some impact in 9 months during last year, the sale -- I mean, the revenue was not used significantly, but still we could recoup that lost sales and there is an increase of 1%. So that way, now the U.S. business, we could expand in this particular 9 months and our reach has increased mainly even in B2C segment. So that has grown very well, where we market our own products through our online sales to own website. And in addition to that, we do market our products through a retailers and the doctors -- I mean, health practitioners. So that segment is growing for us and giving us a very good visibility in this U.S. market. And in addition to that, this business of B2B has also grew in this 9 months. So we are definitely working to expand that particular market because it's a very big nutraceutical market in that sense.

The next question is from the line of M.P. Kulkarni, private investor.

Yes. Kabraji, this is my second interaction. It was very encouraging to hear about your efforts to break into B2C. Would it be possible for you to detail out as to what is the route to market? Of course, you mentioned you are going with retailers and doctors, clinics, gyms, et cetera. But are you also looking at partnering with major consumer goods companies or pharma companies so that they take care of the last mile marketing as well as the overall brand awareness, and you simply concentrate on the product development and manufacturing?

Kulkarniji, we are working on a B2C segment on the nutraceutical depending on our success in the U.S. market. We are -- that's why it's very conservative. We are like keeping all the -- we are not keeping our legs very aggressively. We are just assessing the B2C nutraceutical market in India, particularly, but in U.S., we are very strongly active. There, our model is more on a web-based model and through the Amazon and that kind of a model. In India, we are also working on B2C segment, particularly not only into the nutraceutical, but maybe in the coming days, we will come up in the baking areas, maybe in detergent areas and other industrial areas. So with the acquisition of SciTech, we are working on a new type of delivery systems, in particular, these industries, and we are working how to take it further to the customer.

Right, sir. And I'm sure it need not be explained to the group of people here, but B2C sales are much more preferred as a strategic avenue for growth because they are resilient to downturn and all?

Right. So those are more stronger sales, not like depending on too many people. So over a longer run, we need to get into B2C area.

Encouraging to know that there is strategic focus.

[Operator Instructions] Next question is from the line of Mitesh Shah from ICICI Direct.

And congratulations for the good set of number. My first question is your new tax regime. When you are expecting to take new tax regime?

That, as such, or for accounting purchase, we have already done our working during this 9 months. And going forward, I mean, that is the new rate, which we will apply. So we are not going to claim any kind of exemptions which is otherwise available. So the tax rate will be 25.17% as compared to 29.12% as enacted, and the effective tax rate probably will be about 25% to 26% in that sense going forward.

So going forward, you are already there you mean to say?

Yes. During this year, yes, we have done the working best on the new tax regime because that appears to be more beneficial to the company.

Got it. And the second question is regarding more of the strategy. Actually, in many of the companies like pharma and API, or the chemical companies are getting a huge inquiries across the world mainly because of the China Plus One strategy. So can we see such kind of pent-up, I mean, demand as inquiries for our companies and if yes, then how do we tackle that, sir?

I think I did not get your question. Sorry. Can you repeat this?

So basically, if you see -- because of the China issues and many of the companies are looking at India as a preferred partner. So many of the API countries across the world are the -- across the world, many of the companies are looking India as a preferred partner in the API and the chemical sectors. And the growth in many of the companies are putting extra CapEx to ramp up their capacity as well. So that kind of pent-up inquiries or the sudden inquires we have sales in the commitment -- last 1 year?

So let me take this, Raukaji. If you look into the China, the enzyme industry is very different. They do a certain like bulk enzymes or like the commodity enzymes where like the Chinese players are present at this point of time. They will continue to be there in that area as of now, the way we see. But yes, some of the pharma molecules or the API molecules, which were being made in the China, there is a big demand shift is happening in India. So lot of like APIs are being manufactured or getting manufactured from the big API companies in India. And we expect the biocatalyst area to grow because of all of this. Some of the demand this year has been increased into the existing biocatalyst portfolio what we have, even the numbers on the larger context is very small. On the biocatalyst, presently, I feel like we are about 4% share in the biocatalyst area. But yes, that kind of demand shift we can see.

Okay. And then -- my another question is regarding the second wave in Europe and the U.S. So do you face any issues for this second wave of COVID?

Yes. So because of the second wave of COVID, yes, some of the sales are getting affected in the Europe area. If you really look at it, we were hoping to get bigger into the baking areas. But currently, if you really look into our Germany office, there is a lockdown from last 1, 1.5 months. And nobody is really able to work or most of them are working from home. Similar situation at the customer level. So yes, some sales are not being happening. Similarly, if you really look into the U.S., U.S. is getting slower because some of the inventory buildup might have happened during the first or 2 quarters or 3 quarters because people were not sure whether the material will come, not come. And this is my best guess at this point of time. And probably, as the pandemic is growing, the demand is there, but there are lot of disturbances there because of the -- all this logistics and other things and the sales are getting affected. So it's a very difficult situation to really predict, but things will evolve in U.S. and we will come to know in the coming days. At present, you can just guess.

The next question is from the line of Bhavesh Jain from ITI Mutual Fund.

Sir, this acquired entity, what can be the peak revenue potential post the fund infusion? And what kind of a capacity expansion we can see, the INR 30 crores which we have invested?

Yes. So this capacity could be -- like, it can be increased to about, I think, 90% of existing capacity by infusing about another INR 10 crores or so. So we are working on that to expand that particular capacity also. And the revenue, based on the current scenario and after the expansion, could go to up to INR 100 crores.

Okay. Okay. From INR 27 crore in FY '20?

No, no, no. I'm saying, when you are asking how much it can grow based on that capacity, right?

Right, right, right.

So once we expand the capacity, one can go up to INR 100 crores. That's what I'm saying after investing this amount in expansion of the present capacity.

Right. Right. And sir, it seems this Q3 EBITDA or PAT margin is lower in that business. So any significant because revenue is more or less same around INR 10 crores? And you said for 9 months, it has done a PAT of INR 2.1 crores and 6 months PAT was INR 1.6 crores. So any margin pressure over there?

No, that's what I'm saying. Right now, the numbers are provisional. So let me tell you, those numbers, again, are all subject to audit so that once the audit and everything happens, then we will be getting the final number. Because right now...

I think I can add to something to this. There are like a lot of logistic costs, which have gone up. And probably, like lot of export is happening from SciTech. So maybe the numbers might look lower. But as Raukaji said, probably those are unaudited numbers and we will need to go through it.

Yes, since we are working on the audit numbers.

Okay. And sir, can you explain with one example, we have mentioned this, it will provide new delivery system for our existing vertical. So can you -- for benefit for all of us, can you quote one example, how it will help us?

Yes. Mukundji will do that.

We are working on, let's say, like improver market. There are lot of small, small bakeries whose mixing capacity is, let's say, about 60 kg of flour in their mixes. So we are coming out with some kind of like effervescent tablets, which you just need to add into the water, and that water you can use with the bread. So instead of like the improvers what these guys are using are the -- there's a lot of like unorganized market into this area where they might have to add about 0.3% to 1% of the improver, you can simply add 1 tablet -- effervescent tablet, which can dissolve very fast, very concentrated. And it can give you better results, like your bread volume can go up, the softness of the bread can go up, the whiteness of the bread can go up and the better quality of the bread, right? So -- and it's easy for them to just go with it because even like in the smaller bakeries, it's very difficult for them to measure, let's say, 0.300 gram or 0.400 gram. So they always have some losses and the quality. And since there are like a lot of small, small players, the quality is always a problem. So we are coming out with this kind of tablets, and we are going to the all the different areas because now the quantities what you need to shape is very small. And this is the way like we are building up this area.

Okay. So initially, it will be B2B?

It will be B2C in a sense, like, yes, you might have to go through the distributors, and some of the players -- some of the people who are there and who has approached to them, which you might have to go and conduct lot of trials. So yes, it's a B2C, but through the distributors.

Okay. But we need to build a sales team and everything, that process will be on for next year?

Yes. So some of the team is being built up by the distributors, which you're appointing, you're giving them with margins, and they can give it. And some areas like you need to travel with your team, and we are using our existing textile team as well for this purpose. And this is what is going on.

[Operator Instructions] As there are no further questions, I now hand the conference over to the management for their closing comments.

Thank you, everyone, for asking a lot of probing questions. We need all of your support. Thank you for all of your support. We wish you all the best. And with that, I would like to conclude this call. Thank you again.

Thank you very much.

Thank you. On behalf of Antique Stockbroking, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.