Ester Industries Limited (500136) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Ester Industries Limited Q2 H1 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Gavin Desa from CDR India. Thank you, and over to you, sir.

Thank you. Good day, everyone, and a warm welcome to Ester Industries Q1 and H1 FY '23 Analyst and Investor Conference Call. With us today, Mr. Pradeep Rustagi, Executive Director, Corporate Affairs; and Mr. Girish Behal, Business Head. We will begin this call with opening remarks from the management, following which we will have the floor open for interactive Q&A session. Before we begin, I would like to point out that some statements made in today's discussion may be forward-looking in nature and a note to this effect was sent to you in the invite earlier. I would now like to invite Mr. Pradeep to make his opening remarks. Over to you, Pradeep.

Thank you, Gavin, and thank you, everyone, for joining us today. I will begin the call with a brief overview of the businesses, followed by walk-through of financial performance for the quarter and half year under review. We have had a good first half wherein both films and specialty polymers reported good volumes of sales, resulting in higher revenue growth. In terms of profitability, our results for the quarter have been mixed. While the film business performance was muted due to commissioning of new capacities, inflationary pressure on cost of conversion and operations and a challenging macroeconomic environment, we are happy with the growth of our high-margin specialty polymer business. Let me elaborate on the performance of each business segment. So starting with the polymer business, especially polymer had a stellar run with Q2 registering higher sales and EBIT in terms of -- in absolute terms still today, improved performance, both in terms of revenue and profitability was driven by volume with better product mix as well as higher sales value. We continue to see good traction for our marquee products only MDRT and innovative PBT. Shares of our lead and established offering, MD03 line with the quarterly run rate at 423 metric tons. Innovative PBT witnessed considerable traction with sales volume of 605 metric tons for the quarter, higher by 25% on a substantial basis and more than double on a year-on-year basis. Overall volumes for the bills are higher by 15.3% compared to Q1 FY '23. While on a year-on-year basis, we had a growth of about 41%. This business, as we have discussed before, is one whose corner exploring innovation and a portfolio of recent products will largely net value propositions. We continue to enhance our capabilities through fresh investment and focus on development of new innovative products. EBIT for the quarter stood at INR 23 crores as against INR 17 crores dilating Q2 FY '22, higher by 36%. Margins for the quarter in terms of percentage moderated in comparison with the corresponding quarter last year and it stood at 32%. The selling prices are going to be moment of input prices. While it is possible that in the near term, demand may be impacted by retailer trends in the global markets, especially U.S. In the long term, we remain extremely bullish about this business. This is the patented expanding product portfolio. We have some exciting new products in the pipeline, which are expected to start getting commercialized in the first half of calendar year '23. Moving on to the film business. Growth in revenue in premises was only driven by increase in free destock prices leading to higher per-unit realization. While sales are marginally higher on a year-on-year basis, on a sequential basis, though we have seen some moderation last to benign margins. The addition of new capacities in India have [indiscernible] demand-supply imbalance with the supply exceeding demand. This, in turn, has resulted in pressure on margins. Another reason for lower operating performance in inflationary pressure resulting in higher cost of conversion and operations, especially power and fuel, and logistics stores. The demand-supply rebalance in India, global mic environment is expected to see the industry continue to face challenges in the near term. We expect the situation to normalize in medium to long term and expect the margins to improve as growth in demand continue at the rate of 11% to 13% per annum domestically and 6%, to 6.5% per annum globally. We continue to increase our focus on enhancing proportion of value-added products, which will help mitigate the cyclical nature of bun. We remain positive about the business in medium to long term. Furthermore, the commission of new units in tailing anted is estimated to have no cost of conversion and operations due to a state-of-art manufacturing facility should also help us retail up our business and improve profitability profile of the billion. Moving on to immune plastic business. Q2 returned the last quarter for us, consequent to transfer of indium plastic business as a going concern on some basis to LG Plastic India Private Limited on 15 September 22. The prospects of this business, therefore, are not relevant to the discussion. The sale of [indiscernible] business has happened at the right time as margins that we paid in June '21 has started to normalize. Proceeds from the company to improve its liquidity position and further strengthen the leveraging, as demonstrated by net debt-EBITDA multiple of 0.23 as at 30th September 22. -- surplus liquidity of about INR 207 crores related to sale of business has been invested in safe and secure financial implements. So since the transaction has not only enabled the company to further determine but will also provide the required growth capital for scaling of the core beat of the company, namely polite and specialty polymers. Transaction with C Plastics is also a reflection of s ability to build a business and create value. We are confident of the long-term growth outlook for both our businesses. commissioning of our new units will help to further examine our competitive position as new unit will turn operations. Our strong balance sheet offers comfort and supportive of our growth plans. That concludes our remarks about the business. I will now walk you through financial performance for the quarter and half year ended September 30, '22, both of which we can begin the Q&A session. Starting with the top line, revenues on the continuing operations is code at INR 34 crores as against INR 259 crores reported during Q2 FY '22, that is higher by 17.4%. Revenues from discontinued operations of inner plastic business, it stood at INR 58 crores as INR 74 crores reported during Q2 FY '22, lower by 21%. On a half-yearly basis, revenue from continuing operations stood at INR 629 crores as against INR 519 crores, higher by about 21%. This improvement is driven by both seen specialty polymer businesses. On a half-year basis, revenue from discontinued operations of VC business, it cold at INR 136 crores INR 133 crores reported during H1 FY '22, marginally higher by 2%. EBITDA for the quarter from continued operations stood at INR 30 crores as against INR 51 crores generated during Q2 FY '22. EBITDA for the H1 FY '20 from continued operations there against INR 83 crores related during H1 FY '22. -- during Q2 FY '23, notation and profitability of Business was partially made good by a strong performance of petiole business. from disposal of discontinued business, company earned profit before tax of INR 148 crores and profit after tax of INR 114 crores. That company as a whole and profit before tax of INR 168 crores and PAT of INR 127 crores as against PBT of INR 44 crores and PAT of INR 33 crores during Q2 FY '22. PAT for the H1 FY '23 stood at INR 169 crores as against INR 71 crores during H1 FY '20. As of September 30, '22, outstanding interest bearing interest bearing debt, it good at INR 294 crores. Debt net of cash and liquid investment so at INR 50 crores, which is 0.23x for the current financial year. We expect our interest outgo net of returns on liquid investments would be significantly lower than current levels going forward. We remain committed towards maintaining a strong balance sheet that is supportive of our growth initiatives. That brings me to the end of our opening remarks. We would now like to open the floor for questions. Thank you.

[Operator Instructions] The first question is from the line of Deepan Shankar from Trustline.

Sir, firstly, I wanted to understand how has been the BOPP prices beginning over October and November so far.

We are not into [indiscernible] bill. We are into BOP-oriented DSL. So you're asking about moto... PET business. So Girish, would you like to answer? Or should I give the numbers?

Yes. So we'll share with you the numbers for the commodity film, which is 12-micron corona treated. In October, the prices were in the range of INR 104 crores to INR 105. And in November, it has reduced to about INR 97 98. Okay.

Okay. So over medium term, what will be the outlook? And what would be the driver for BOP films prices, sir?

So as the demand improves because the demand is continuously growing at about 11% to 13% domestically and overseas, it is growing at about globally at about 6% to 6.5%. There will be continuous growth in demand. And as the macroeconomic situation also improves, we should see improvement in the performance. And therefore, we are confident and positive about the performance of the business in the medium to long term.

Strong supply growth coming up in -- over the next 2, 3 years?

Yes, I will answer. I think just to add on what Pradeep said earlier, last few quarters, the ocean fates were running very high which were becoming a sticker being competitive in many of the export markets. So portion rate levels are normalizing now, so which is making many more markets, very, very competitive from supply in India. So that is going to add to the demand prospects for the industry. Few lines have also got tied up to a large extent. I think 2 or 3 more lines that are expected in the next financial year, probably looking at the demand prospects and opening up the global economies of an ocean freight normalization, the medium to looks to be better than what you're having correctly.

The next question is from the line of Gaurav Lohia from [indiscernible] India Fund.

Sir, in terms of Metricon, can you please quantify what kind of demand is there. You said that the demand is going to be 13%, but if you can quantify metric terms? And similarly for capacities, what kind of capacities were there as of September end or as of today, what kind of capacities were added in the last 6 months? And what kind of capacity addition will be there in the next 12 months?

Girish, you may answer this?

Yes. I think the demand -- the first question is regarding demand. You're talking -- I think you're talking about the demand in India. So let's say, the demand in India is around anywhere between 50,000 to 60,000 tonnes per month. And we see Virtu if you look at some capacities, which are added in last 6 months or so, from, let's say, April till now. So Probably I think 4 lines got started. And we think as the next 12 months, maybe 3 to 4 lines may get added.

A line of how many tons sir?

Let intensity take a tumble line of, let's say, 3,000 tonnes per month...

And what was the industry capacity as on today or what is investees as of today?

I think industry capacity as of today could be around anywhere around 80,000 tonnes per month.

So that's 1 million tonnes per annum.

So that's substantial. And this includes these 12 lines include our CapEx also, right, which is coming up in..

These lines -- correct all the numbers that I'm saying that includes our line.

Okay. Understood. And sir, you mentioned about the price being or coming down from 104 to 970. But can you give a gross value addition per kg for last quarter and what it is right now?

Last quarter, INR 12, we had value addition, which is selling price minus [indiscernible] cost of about INR 28, INR 29. And currently, it is in the range of Girish, you would have better sense of the numbers in the current month.

So I think you can will refer to you on the current numbers, and I don't have the number in front of me. So what remains…

The number that I have is plus of INR 20 -- in the month... About franchisees. Yes... I think included in the range of 225 is, yes. Okay. Understood.

And sir, I understand that it's difficult to care the moment in the specialty wines now because of the global cars. But on the longer run, let's say, 1 or 2 years, what kind of revenue and margins we can do over there? And if you can give some further details on the product side, MB-3 right now, you said it's 423 metric ton per quarter, right? But next 1 or 2 years, what kind of product or the size of the market and the size of this product could be, let's say, 2 then similarly for innovative PBT or MDM and LMC...

So in the current year FY '23, we expect to do a volume of about 1,200 to 1,300 tonnes of [indiscernible] and about 1,400 to 1,500 tonnes of not PBT. Given the current situation that is prevailing in the world, I think at this point in time, it will not be right on our part to give you an indication of what the volumes could be in the financial year ended March 24 or 25, but it would definitely be better than March '23. That is for sure. Okay.

Let's say, if the world is in a normalized well, what kind of potential is there for this product innovative PVT...If things were to be normal... What kind of potential would be there for MD03 or innovative PBT or other -- any of the major products that we have in the specialty polymer side.

So we can be sort of -- we can look at a growth of about more than 25% to 30% in the top line of especially polymer in each of the following years, and let's say, March 24 and 25. So we can look at -- if you were to give it a broad range of growth that we can see in the revenue, anything between 25% to 35% is the revenue growth that we can easily target, and we are confident of being provided the situation comes back to normal in terms of the economic environment.

And margins, EBIT margins would be north of...

As we have been maintained and as is evident from the results that are on the table, we can easily expect EBIT margins, I mean, before interest tax of about plus of 30% to 33%. So anything between 33% to 37%.

This is before EBIT.

Pardon?

This is before an allocable expenses. Had you to...

Yes, it is based on the direct expenses, yes. The common expenses are not deductive come. These are as per the segmental risers that have drawn in terms of accounting standards, providing a company spend.

Understood. And the last question, sir, the cash we got from the deal above INR 200 crores. Have we decided whether we are going to distribute it or you would be think we are thinking about other CapEx once this Becomes on...

So we have certain amounts of CapEx already drawn for the financial year '23 and '24. And instead of raising loan, we would rather use these funds. And therefore, as of now, these are retained in the business to meet the capital expenditure requirement of the company.

So the CapEx for porting to what?

These are for debottlenecking efficiency improvement for certain tech polymers, et cetera, et cetera. So there is -- and of the certain investment in capacity for value-added and specialty product in polices. So efficiency improvement, value-added and specialty product enhancement, et cetera.

Understood. And how much CapEx you're looking at?

We are looking at close to INR 200 crores of expenditure between -- by March 24.

By March 24th. This is over and above the CapEx that we have undertaken right for the...

The CapEx that is undertaken. It doesn't creep into account any fresh capital expenditure. This was the capital expenditure approved for the 2 financial years ended.

The next question is from the line of Alpesh Lad from Dolat Capital.

Congratulations on set of numbers, sir. Actually, I wanted to get a broader view on the specialty polymer business. And specifically, I wanted to ask that, is there any slowdown in the upward versus for the new production that we have launched in the specialty polymer business.

And we have taken in our presentation in the near term following 1 or 2 quarters, because of the refractory trend in U.S., there could be some pressure on the volumes and therefore, the top line and bottom line of net polymer. But as the situation improves, we should very soon be bouncing back to the normal levels, and then we should have an increasing trend going forward.

There is no slowdown in any approval process for the product side.

On the new products, there are products under development. There are products at various stages of approval. Those are progressing at the right pace, and we should be coming out with new products in the first half of the calendar year '23. -- in of September 2, we should be coming out with new products assets.

Okay. Okay. Great. And also, the second question was on the polyester and again, the specialty -- so in the polyester film business also, like we have seen other companies and other segments where there has been a slowdown in the textile side, line industries. So have you witnessed for our products, any demand slowdown in the same during the quarter?

Girish, please... Rich, would you please take this?

Sorry, can you please repeat once again?

I think I Yes. And specifically, the polyester film business, in other companies as well, we have witnessed some demands well down from an end-user industries like textile. So have our product demand has also been hampered because of the same during the quarter.

I think we are not much present for polyester for textiles. So that is not the segment we operate in. But yes, the textile market in general is affected. So the sales requirement in textile market is affected, so which is impacting the total film demand on an overall basis in India.

Okay. And my last question is now we have seen a higher revenue from specialty polymer business in this quarter. So like at what level are we expecting this revenue to stabilize or the percentage of revenue from Specialty Polymer business to stabilize out of our total even...

I think the way to answer the way you mine the problem to Rustagi has answered in the previous question, then you can to at least a 25% to 30% revenue growth is something like what we can look forward in time to come. Right. So there is... Only normalized in...

The next question is from the line of Jatin Damania from Kotak Securities.

So sir, I just wanted to check that you said that the current monthly demand on Boat is around 50,000 to 60,000 tonnes with an installed capacity of 50,000 tonnes. Now with a couple of lines you have already seen came up in FY '23 and another 3, 4 lines coming in. So don't you think that it could be immense pressure on the supply trend in the medium term, which can weigh on the overall margins of the business?

I think let me just repeat what I said earlier. In the last -- I mentioned the last 6 months, I think to fines started. -- which is in the, let's say, from April to, let's say, October, we were talking about. And the previous question was how many more lines are expected in the next 12 months? 3, 4 new lines are also expected in the next 12 months or so. That change yes, this capacity has put some pressure because many of the export markets, which were not available to Indian producers because of higher ocean freight that was -- that is now a balloon kits have come crashing down. So at least many of the markets which is available to Indian producers. And we are also happy that despite tile slowdown, but overall, other consumption sectors of as well. So we are very optimistic about and then we can the future of the business.

That's true. But if you look at the globally because of the inflation, definitely, the demand is not going that good. And given the current stats, I don't -- do we think that the current spread that you mentioned of plus INR 20 25 its sustainable in the near to medium term? Or probably we can see a track coming down to around INR 10 to INR 15 for the overall packaging business.

Yes. I think we expect the spreads to improve in coming times. While we are talking about the global market and probably recession on that to be of higher energy cost across the which are interrupting which I say, hurting the overseas producer. So there's a reasonably good opportunity for introducers.

Sir, can you help us in understanding the breakup of spares in terms of your boat and your facility business?

Both are 2 different business products. So there's no rationale in drawing a comparison to see margins of et polymer and films.

No, sir, I totally agree. But if you say that with your facility business will continue to -- you are likely to maintain 25%, 30%. So just looking at in terms of the EBITDA contribution that can come from the facility over a longer period of time as compared to the coater we might see a margin pressure.

So we told you that the -- in the -- especially polymer business, the EBIT margins, I mean before interest back is expected to be in the range of 32% to 37% of the sales revenue. So that's the kind of margins we are -- because there is no competition. It is just that as the volume picks up the top line and the bottom line improves in polymer -- in film, the margins are more market-driven. But we continue to work on value-added and specialty products and our proportion of value-added and especially products is going up quarter by quarter. We are currently at about 24% per out of the total sales of polyester, 24% is in the form of by terms of quantity in the form of value-adding and specialty products.[indiscernible]

Mr. Jatin Damania may we request you to please note your line when the management is answering the question.

Sure.

Girish, you want to answer these?

Yes. I think one more thing with provision. The new line is expected to start that is also going to add a lot of new volume available that will help the profitability in the company.

And sir, last question on the CapEx side of the INR 200 crores, how much we have already spent?

So the -- it is already -- none out of that has been spent. It is kept in the liquid investment. So we have not yet used any funds out of the in-purpose of immune plastics.

The next question is from the line of [indiscernible] from Forbes Marshall Private Limited.

My first question... The revenue compensation of the sold plastic business, can we expect it will be -- revenue compensation will be there in -- from the Q3 onwards. So we can see that Q3 will be now the sole plastic business sale opportunity, which has been launched will be compensated from the higher top line from Q3 on 1. And in addition to that, what is the additional revenue we expect from the Telangana plant, which is -- which is coming up operational from the December. So how much revenue will be additionally available on top of that?

So going by the current scenario, we don't -- I mean, it would not be possible to make [indiscernible] plastic business in quarter 3 and quarter 4 of the current financial year. So next year onwards, we may be able to compensate the loss of revenue by increased revenue from Selman, especially polymer business. As far as Telangana operations are concerned, we expect to generate revenue of about INR 600 crores once the capacity utilization decreased almost the optimum level.

My second question, so 21 '22 was the INR 1,400 crores, how much your expectations on the top line growth for '20 to '22?

Yes. So if we exclude the in plastics, we should be closing the year anything between INR 1,200 crores to INR 1,250 crores.

Can we expect dividend yield as now company is now reaching cases? And regularly, there are 2 dividends. One is the interim in full. So can we expect the interim dividend, which is the pending for 2022 will be available for Carole?

We have a dividend payout policy, which has been very well drafted by the Board of Directors. We will listen to the quality and distribute dividends in terms of provision of that policy.

And any effect on attrition on a similar kind of industry, so people are switching on and leveraging the opportunity that is yielding any negative part on the operational side?

Girish will answer that, please.

No, I think that's not a concern that's what we have.

That's all from my side.

The next question is from the line of Saket Kapoor from Kapoor & Company.

Sir, firstly, if you could outline just for the sake of reputation also what has actually happened in the Film business, wherein -- whether this is a lower demand scenario that has led to margin squeeze or the raw material pass-on lag effect is there. So if you could held more- the reason special for the Film business performance going down? Girish should you answer this, please.

I think in the previous set of questions, the as explained about some slowdowns in the textile market and some slowdowns in the global market. Plus on top of that, there's some capacity expansion, which has resulted into an imbalance and demand-supply equation that has put pressure on the spreads.

Second, so the raw material cost has not gone up since June '22. So there is no question of passing on the increased raw material costs. It is just the reasons that Girish has just now explained, which are -- you must say the lower performance can be attributed to these reasons.

Okay. And sir, how has the raw material market been has paid for this quarter, if we give the breakup for this effect and the Nice.

Yes. So if you look at the September quarter, the PTA was about INR 79 the K. NG was 51 and the raw material cost was 85%. In the month of October, the same is in the range of INR 81 crores to INR 82. And in November, it is INR 77 crores to INR 78.

Okay. And how -- what has been the price trend for both CTA and... So what has been the price trend for PTA and MEG post-September quarter?

Yes. PTA in November, it is INR 72. Currently, it is at INR 72. MEG is at INR 44 gas.

Okay. So there is a significant decline in energy prices?

Yes. So yes, Dan, both prices have declined in the last 7 to 8 months. In June, it was INR 87 down to INR 72 for PPA, [indiscernible] INR 57 down to INR 44, INR 45 in the month of November. Right.

Sir, then what explains the cost of material consumed increased quarter-on-quarter from INR 188 crores to INR 192 crores, it is mainly because of the facility polymer that the same has happened or...

So you are comparing this quarter to which quarter...

I'm comparing Q-o-Q. So June 22, [indiscernible] revenues are 324 and the raw material consumption was INR 18. September revenue is seen for INR 20 crore and the raw material can enter is INR 192...

So it is not a case of the revenue is down because the selling prices have reduced.

Correct, sir. And for the raw material consumption has gone up.

Raw material is almost the same. The volumes in specialty polymer has increased. So the raw material cost for PT Megan there especially polymers, there are other products also.

Right, sir. And sir, also for this quarter, there was a lower employee benefit expense booked for this quarter.

So what happened that we have not -- we generally created a provision for sharing our profit with the Executive Director that has not been -- pro has not been made in this quarter, looking at the lower performance. That's the reason there is a lesser but on account of strategy wages in this quarter. No provision has been created for commission payable to the executive directors, the whole-time director.

So that is temporarily only posted third-quarter numbers we can again get...

Everything will depend on the profit that we generate.

Right Sir, now coming to the percentage of value-added in business, what has been the percentage of tonnage term for this quarter as well as for first half?

Which product you are talking about...

The value-added metallurgical filter, which we do the Flint business that get higher realization.

Yes, yes. In film, just a minute, I'll give you the numbers.

And sir, overall, for the debt, which are also, sir, we provided the cost of fund and how would the increase in the report that is going to affect our finance costs.

Yes. So out of the 15,000 tonnes that we have sold of polyester film in the quarter ended September 22, about 3,500 tonnes have been sold in the form of value-added and specialty products, which is 23% of the total volume. And in terms of value, it is contributing to 35% of the value of political business.

Okay. And going ahead also, that we are looking for this band only '22, '23 or we are looking to enhance it further.

Girish, you have a better sense…

Can you please repeat your question once again?

A bank that 22%, 23% for the value-added portion. So going ahead, are we looking in this bracket? Or what steps are we taking to enhance this percentage going ahead?

Because of the steps that we have taken, we have come from investment for enhancing the volume of the products. We are putting some offline and other capacities to be able to broaden our offering. And going forward, of course, the new capacity in [indiscernible] that could come in, probably that may not have similar levels of the product mix. But let's say, our existing facility, the share will keep on going. We have committed a sizable capacity expansion for enhancing the station.

Okay. sir, for value addition, what kind of CapEx are we deal for the existing line.

So for the enhancing specialty films. So probably, we are -- we have committed additional CapEx in the quoting and metalizing machines.

Any amount that you would like to say? How much...

I think it will be in the cycle of quarter Yes. I think all assets put together will be close of close to about INR 40-odd crores.

Okay. And sir, for the new greenfield plant, Arista, you were mentioning that we will not have the same product profile there. So any reason, sir, why it will be only commoditized clam that we start with? Or if you could give some more color which aspects are you going to cater from the new facility?

I think that the new line is especially design line. There also our strategy of serving specialty funds would continue to play. But the movement the line starts in the specialty portfolio will not come from day 1. So there are also -- there are plans for building a specialty portfolio from that plant as well.

Okay. But sir, taking this into account the current environment, would we take a number of time for us to ramp up the capacity? Or how will the ramping up will happen -- so going since they are seeing a drop in demand. How do we see the commercialization coming up there? And what is the event base we are working with?

I think, let's say, we are talking about in today's scenario where there is a session fees across the group that may have some minor impact on the ramp-up, but that would not be significant.

But... Like to add, Saket, you said drop in demand. There is no drop in demand. It says that the additional capacities are available. We are not seeing contraction in demand.

So to reach the optimum level for the new plant will take longer time. So this understanding is correct, sir?

There could be a minor issue, but we don't expect any significant change in the ramp-up time, which we have no reason in the past.

And sir, the perks margin, you were mentioning some figures, arise, I missed that. What are we seeing that to increase going ahead because of the lower raw material prices?

No, I did not mention any for margin.

Okay. So INR 20, INR 25, you mentioned I missed that there was a drop in...

INR 20, INR 20, INR 25 is that spread that probably that is happening as of now. But then the way we expect things at the spread levels to improve going forward.

What was the spread for the first half, sir?

I don't have the numbers.

Yes, I have the number. The first -- the June quarter, it was very good. It was plus INR 50 in September quarter, it dropped to about INR 28 or INR 29...

And last year, average sir, occurs.

Last year, I have quarter-by-quarter, not the -- so if we talk of INR 12 one, June '21 was about INR 36. September was about INR 136 December was very good at 46% and March, it improved to about INR 55, INR 5, INR 63…

Sorry to interrupt...

Yes. Yes, my one question was unanswered about the debt part, sir. The cost of fund has gone up, sir?

Yes. Yes. The debt -- the cost of debt in Ester industries has gone up because the reverse people reported has increased 140 basis points is the increase. But our increase is not 140 basis points, close to 100 basis points. But on a net outflow basis, we should see less butter on the P&L because we have this value of about INR 200-odd crores. which will generate some income. And therefore, net outflow on account of finance interest expenses will be lesser in the following quarter.

The next question is from the line of[indiscernible] our Individual Investor.

Sir, my question is about specialty products. You saw from most some products, which are in the patent start canteen. -- what are your products on the ortho...

Girish, would you be able to explain...

So you're talking about the specialty products in our specialty polymer business. I think in the initial remark you mentioned about MDG, IPT and NBB, a long list of products at what we do there.

In some time that you are sort of an what would be the donor product. You still not so that…

I'm sorry, the voice is not clear. Anything repeat?

So on alone...

That is also a product and development.

And the development of which is approved...

It was approved. I see the volume uptake has to begin in a big way because of the recessionary pressure in the U.S., they can slow down in the take-off...

Okay. And sir, in order to do those core business, we are only focusing on USF or specialty products. other than...

The next question, which is from the line of Miraj, an individual investor.

Hello. Hello.

Mr. Kamal request you to speak a bit louder?

Yes, sir. Sir, about [indiscernible] next quarter may in or cutter growth Deca Q3 new... Q2 may be put up.

It would be difficult to share the number at this point in time. But it could be lower than the September '22 quarter.

Yes. Okay. Sir, Oceania plant to the December Maya the October may start on a -- so December may start on.

So if a linear your operation [indiscernible] came in mix your revenue impact basically March quarter money, we would have started the plant earlier, but Samara, is external matter has powered the connection of the [indiscernible]. Many I would state government enhance that is available, we are ready to go with the commercial production. From our side, we have completed all aspects of the commissioning and trial production, et cetera.

So as your revenue quarter 1 FY '24 so start open?

Fourth quarter of FY '23 to alive.

Okay. Okay. So quarter-to-quarter cost was production...

Pardon, what do think you take?

The next question is from the line of Raven Adan, Individual Investor.

Sorry, LMC... Game-changing new product hedge, especially polymetallic volume roughly at Chenal Joints care.

There are many products in various stages. A few have been approved by the customers, we have -- are in the process of being approved. And all the products that we are talking about are getting developed, they are going to add to the profitability of the business. So each one is going to have good margins, and we expect to maintain EBIT margins of more than 32%, 35% going forward as well. So each product that will get developed or that will get commercialized will add to the performance of the business.

And sir, yes, especially the polymer the business U.S. meant -- so the risk that a single country. China, Europe or [indiscernible] that I have for [indiscernible]

Our current specialty polymer business is there in the U.S.? Is it also there in China is also there in Europe to some extent. And we are focusing on all the geographies because we are working on various products, and various concepts, which are promising, let's say, which can offer a potential of thousands of tonnes of one particular product in all the categories that we are working on. And we are focusing on all the geographies. We are not only focusing on U.S.

And sir, that the product nothing or use final product could recycle Banana recyclable...

LMC, yes, it removes, let's say, a binding component with the polyester component to make the entire product recyclable as it is.

[indiscernible]will get approved to is starting on a current game.

There are -- because there are various steps on qualification involved at each of the products. So it is taking time, and it is at different stages of approval at different customers.

So sir, what a realistic timeline for that to approve?

I think it's very difficult to policy clarify exact timeline because each project and each customer and each company is different. So what we can say at this stage, at least the product and the approval process is moving then. And there are certain concerns related to the global economic scenario, probably this may put some bit on the entire progress. But we remain optimistic about the future, which the products are offering.

we have been maintaining that so from the -- let's say, by June of 2023, the first half of the calendar year next, we should see immediate traction in the specialty polymer business.

And from this all M7 and all of these all products.

The other products, the existing products right...

Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.

Thank you so much for participating in the earnings call. We look forward to meet you all next quarter in the month of January or February. early February or late January.

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