Granules India Limited (532482) Earnings Call Transcript & Summary

Ladies and gentlemen, a very good evening. We -- at the outset, we would like to apologize for the delay in this -- starting this conference. And we would like to welcome to the Granules India conference call to explain the impact of COVID-19 on business, hosted by Centrum Broking Limited. [Operator Instructions] I now hand the conference over to Ms. Cyndrella Thomas of Centrum Broking Limited. Thank you, and over to you, ma'am.

Thanks, Vikram. Many apologies. There were some technical difficulties. Good evening, everyone. I welcome you all on this investor interaction for Granules India on behalf of Centrum Broking. I would like to take a moment to thank the management of Granules India for giving us this opportunity. Today, we have with us, Mr. Krishna Prasad, Chairman and Managing Director; Ms. Priyanka, Executive Director, GPI; Mr. Sandip, Chief Financial Officer; Mr. Abhinay, Head of Finance. The intent of this call is to discuss the impact of COVID-19 to the current business environment. Now I hand over the call to Richa for the disclaimer. Over to you, Richa.

Cyndrella?

Yes. I think -- is that Mr. Prasad?

That's right.

Yes, I'll hand over to you, Mr. Prasad. I think we are facing some difficulties here. You can start over. Thank you so much.

Okay, okay. Good evening, ladies and gentlemen. Really apologize for all the mess-ups, technical mess-ups that have happened. So let's get on with this call. I think the time has come for us to connect and that it is essential that I brief you all about the performance of our company in view of the extraordinary current crisis. All of you, in India and abroad, are aware of the grave situation the world is facing today, and I will not attempt to explain that issue. However, in case there are any questions specific to it, I'll be happy to answer them. Even though we are facing a tough crisis at the moment, I would like to emphasize that our performance in fourth -- Q4 will not see a very major impact. There will be some impact. We expect the year to close by crossing our guidance of achieving -- crossing our guidance of bottom line of INR 300 crores. Earlier, we were expecting to have a Q4 that was similar to the previous quarters, which would have enabled us to exceed our guidance for the bottom line growth for FY '20 by a great number. Despite the situation in China, we were not affected much. While production and dispatches ran normally with the introduction of the -- normally, the introduction of the national lockdown, some of the trucks that have been dispatched will not reach the ports in time. Also, we have held back some trucks waiting in the factories due to potential problem of refrigeration failures in case the trucks get held up on the way. So this month, sales will be impacted... [Technical difficulty]

Excuse me, sir, this is the operator. We are unable to hear you. Hello, Mr. Prasad? We seem to have lost the line of Mr. Prasad. Please stay connected participants. We will be redialing back. Sir, we are back in the conference. Please go ahead. [Technical Difficulty]. Please go ahead. Thank you.

Once again, ladies and gentlemen, I'm extremely sorry as some of you may have missed out my opening remarks, let me start again. So ladies and gentlemen, I felt this time had come for us to connect and that it is essential that I brief you about the performance of our company in view of the current extraordinary crisis. All of you in India and abroad are aware of the grave situation the world is facing today and I will not attempt to explain that issue. However, in case there are any questions specific to it, I'll answer that. Even though we are facing a tough crisis at the moment, I would like to emphasize that our performance during Q4 will not see a very major impact. There is going to be some impact, but we definitely expect to close the year by crossing the guidance -- our guidance of INR 300 crores. Earlier, we were expecting to have a Q4 performance that was similar to the previous quarters, which would have enabled us to exceed our guidance of the bottom line growth for FY '20 by a very big number. Despite the situation in China, we were not affected much. While production and dispatches ran normally, with the introduction of the national lockdown, some of the trucks that have been dispatched will not reach the ports in time. Also, we have held back some trucks waiting in factories due to the potential problem of refrigeration failures in case the trucks get held up on the way. So this month, sale will be impacted to some extent. Despite this, I would like to reiterate, we are confident of comfortably crossing our guidance, very comfortably. While we have challenges in FY '21, if the lockdown is lifted on the 14th of April, as proposed, we would be able to make up and achieve our normal numbers. Even if it continues till the end of April, we would still be able to achieve our guidance of 25% CAGR. Production had slowed from last Sunday, but we expect the situation to improve slightly in the next few days, as the government had declared pharmaceutical manufacturing as an essential activity and allowed us to continue work. However, for the period of the 21-day lockdown, till the 14th of April, we've been forced to work at less than normal pace due to shortage of staff and the social distancing norms. Local logistics for incoming and outgoing materials will also be a challenge. But as said earlier, even if the lockdown goes on till end of April, we can still meet our guidance. I would like to state that the incoming material from China is normal till the Indian ports, however, the local logistics are posing some problems. We have a lot of material at the ports, on the roads from the ports to our facility and also on the sea. With the current inventory levels of raw materials in the facilities and the slowdown in production for the next 1 or 2 weeks, we do not anticipate any disruption on that front. During the past few weeks, we had implemented a lot of precautionary measures in our staff transport buses, workplaces and cafeterias and are confident that the workplace will be safe. I'm optimistic that the inbound and outbound logistics will also improve after the lockdown. So to finally sum up, we are optimistic that we will be able to resume normal production and dispatches by the end of April and will be able to supply medicines as a first-line of defense to the global population shortly. The demand and pricing for our products is very good, and we'll see the positive effect of this in the next fiscal. Going forward, I see a very bright future for Granules with the vertical integration into APIs and also considering the potential of our U.S. operations. Our current cash situation is good and future cash flows look robust. We do not expect any major issues on that front. The buyback announced earlier will continue as planned. We expect to open the offer in April and close it by mid-May. We have kept aside INR 250 crores in escrow and fixed deposits for this purpose. The proceeds from the divestment of Granules OmniChem, which amounts to INR 109 crores, are in escrow and will be received as soon as the government approves the transaction. On my pledge front, I would like to mention that though the margin cover is very comfortable with the lenders, I had pledged more of my shares just in case there is a drop in share price to the current -- due to the current volatility in the market. This was done as a matter of abundant caution. The pledge now stands at 45.4% of my personal shareholding compared to 29.8% previously. It is also 16.7% of the total equity of the company compared to 10.6% previously. Once the buyback is completed, this pledge will come down significantly to around 5% of my personal shareholding. With this, ladies and gentlemen, I'll open the floor for questions and answers.

[Operator Instructions] We have our first question from the line of Ashwini Agarwal from Ashmore.

Couple of quick questions. There was this advice from the government banning the export of paracetamol, and we were seeking exemptions from the relevant ministry to be able to continue with our exports. Could you give us an update as to what's happening there?

Yes. Unfortunately, the government said paracetamol cannot be exported. Paracetamol and paracetamol dose formulations. So we are represented in the government from various bodies. And these have taken some time, but we expect -- they have exempted paracetamol for export from SEZs. Unfortunately, there's no paracetamol manufacturing in the SEZs. We are the only EOU, export-oriented unit in the country. So we expect that we will get an exemption in the next few days. We have representative from government who are working on this. And we're very confident we can expect this. Even our customers from Europe and U.S., European government officials have been calling up the PMO's office, and we are very confident this will be sorted out and these shipments will happen. We have a huge inventory of paracetamol and paracetamol-based combinations. These will be dispatched in the first week of -- or possibly immediately after the lockdown or during -- maybe after the second -- in the second week. We expect to make up the lost sales in the next year.

And is there any potential in any of your product lines because of the transportation in shipment bottlenecks that you're facing at this point in time? And could that sort of [Audio Gap] the company in any way from the medium term?

There would be -- for normal containers, there would not be any problem because even if they're held up on the road for a few days, nothing would happen. But for refrigerated containers, if they're held up for more than 5, 6 days in the [ district ] port, the refrigeration may not work. And hence we have to be a little cautious. So I'm sure till things normalize or reach a sort of normalcy, we would not dispatch reefer containers. However, many of our customers are willing to airlift the material and we had explored the possibilities, and of course, it could be at their expense and there are possibilities of even chartering some aircraft for this purpose.

We have next question from the line of Jamie Soo from HSBC Global Asset Management.

I just have a really quick one. The guidance that you had just provided for INR 300 crores, does that include any of the gains and losses from the dispositions of our JV over the course of the year? And are we still expecting the disposition of our second JV, the gains to be recognized in the fourth quarter?

Okay. Unfortunately, Jamie, the transaction for OmniChem, which would give us a profit of INR 40 crores in the consolidated books, will happen only in early April. We were expecting it to happen in this year, and it would have offset the loss on divestment of Biocause. So the INR 300 crores -- crossing INR 300 crores, what I said, would have taken with into account that -- would not have taken into account the loss of INR 30 crores on that estimate of the Biocause, but with -- even with not taking into account the loss of Biocause, I think we will be at INR 300 crores or very close to it.

We have next question from the line of Chirag Dagli from HDFC AMC.

Sir, in terms of our commitments to supply in the U.S., how do these -- is there a risk of penalties on noncompliance or nonselling -- not being able to sell because of this lockdown? And how should we think about this particular aspect?

I'll take your question, this is Priyanka. So all the sales in the U.S., for especially the B2B business, we do have some inventory build-up for the next few months. And whatever we have manufactured till date is -- some of it is being airlifted depending on the levels of inventory we have based on the product. Now for the rest of the shipments, we have sent out notifications to our customers about the situation and push comes to shove, you have to trigger force majeure claims as well.

So this kind of situation allows you to invoke a force majeure, right, and not pay the penalty?

As of this point, we are just looking at triggering it, and we are very confident that this is a force majeure event, and the documentation -- sorry, the wording in our agreement provides for us to consider the force majeure.

And this should be applicable for across the industry then or is this specific to Granules and something specific with the products that you're participating in?

I mean, it depends on the agreement our competitors have with their customers, but our agreements -- and this is pretty standard language. It depends on definition of force majeure in such agreements. So we have gone over all our agreements, and I'm pretty confident that we will be covered under the situation.

And when you say you have inventory, for how many months inventory would be there in the U.S.?

We have between 2 and 3 months of inventory, depending on the SKU. But like I said, we are prioritizing, deprioritizing our SKUs now for whatever we have produced. So we have over 2 months of inventory for all these products. And once we commence shipments, these products where we have [ clearly ] supply clauses, the production for those products will somewhat be prioritized to make -- to ensure that we're not hit with any changes on that side.

Understood. And just a last bit on how is the lockdown -- how are -- how is the operations on -- at our U.S. facilities impacted by lockdowns lockdown, [indiscernible] because in India, there is a nationwide lockdown. I don't know about the U.S., how it is?

In U.S. right now, only New York is -- there's certain states, not just New York, there's certain states that are required to shut down completely or go under 14-day quarantine. Virginia is not a state that has been subject to a full lockdown as of now. So -- but as a company that's completely focused on safety of our employees, we have asked all our employees work from home -- sorry, all our desk job employees to work from home. In terms of production, we have a meeting every day in the morning, and we ensure only the people who are required to be there are present to ensure that there's a smooth supply of both R&D and manufacturing ongoing as of now.

So you would say production is as normal in the...

Yes. As of now production is completely normal in the U.S.

We have next question from the line of Ravi Sundaram from Sundaram Investments. Sir, please go ahead. We can't hear you. We have next question from the line of Nikhil from ICICI Ventures.

So wanted to understand the current market environment last 2 or 3 months, are you seeing a lot of dislocations, both on the pricing side of the core product as well as on the raw material side? And how you're seeing some of those play out?

The raw materials, let's just say, we have seen -- in the last week, we've seen a small trend in price increases. But on the finished product front, I see -- I mean, there's huge demand, and we could get huge prices but we, as a responsible company, have decided not to impose anything for the current dispatches. But going forward, I do feel that we will be able to take advantage of better pricing, which will also have -- of course, have some impact on our cost of production and also our raw materials.

I'd just like to correct one word you said. When you said advantage of the pricing, it just means we'll pass on whatever cost that we've incurred to the extent that we can pass on, that's it.

So broadly, you expect to maintain margins? Or do you see any, sort of, visibility on that?

I think there will be a small decline in margins going forward. However, with the products coming into the U.S. that are being commercialized, I think at the end of the year, we should be able to make up for any possible margin decline.

But given our leadership position in some of our core products, what constraints our ability to pass on the raw material variations? Do we have a long-term [ sales ] contract? Or how does it look on the finished product side?

With more than 50% of our customers, we have the ability to pass on price increases. And with some of the people there, the actual consumers that distributes into the U.S., it's a little different. We have to sit and negotiate with them and see what we have to do. But B2B customers, other companies, we can definitely pass on the prices.

And that's pretty much seamless? Or is there a time lag or...

With most of these people, we have worked on contracts which are based on currency, raw material pricing and many things, from -- even when raw material prices shot up in the last 2 years ago, we were not impacted. And definitely, we can only see a little positive side, but not any negative side of this current situation.

Last question, more on the currency side, what's our typical strategy on ForEx? I mean are we covered? What sort of -- are we able to take advantage of the current dislocation on the spot rates?

You said currency?

Yes, sir.

Yes, currency is -- definitely our revenues and profitability would do better. But that would also have a slight impact on our debt position because we have to reinstate -- restate our debt because everything of that is in U.S. dollars. But on the profitability, there would be a positive impact.

We have next question from the line of Sameer Baisiwala of Morgan Stanley.

Sir, just wanted to check, given the current lockdown situation in your -- referring to your earlier opening remarks, which is lower employees on manufacturing sites, what is the utilization that you're running or you expect to run in next, whatever, 1 or 2 months?

During the period of the lockdown, starting from, I believe, Sunday, we're at about 25% production till the lockdown [ ends ], but day by day it could increase. Maybe towards the end of the lockdown period, it could go up to 50%. So after the lockdown, it would take things a while to normalize. So it could keep going up a little bit, but 15 days after the lockdown, we assume that we would be back to 100%. This will also involve the normalizing of logistics and everything, that's why I said 15 days. And like I said before, we're fairly confident even if the lockdown is there, we should be able to do that.

Okay. And sir, I would imagine that most of your blue collar employees are living nearby villages or nearby area. So they have not gone away anywhere. Is it in [indiscernible] of transportation or is it their fear of catching virus that's keeping them away?

Well, first of all, for last 2 days, there's been an issue of police preventing anybody from coming on the streets. Now we have permits from police for the buses and also permits for all the white collar workers in the cars and other things. So people are scared. So we are educating them, communicating with them, sending them videos of different precautions and other things. And slowly, they're coming back, so it will take a while. And people are around still there. Nobody has gone away from nearby places. And we expect that, like I said, 25% to 30% to start with and slowly ramp up production.

Excellent. Sir, one more. If you look forward 3 months or whatever, and then God forbid, if there was a couple of people identified who are COVID-positive on your manufacturing site, so in that situation, what happens? And I actually think that this won't happen, but if it were to, then what happens from FDA point of view, from a company point of view? And what precautions are you taking there?

We are taking maximum precautions of fumigating our buses and scanning people for temperatures when they're entering the buses and sanitizing their hands and sanitizing door handles, equipments. Continuously, a lot of measures are happening and even distancing during -- in the cafeteria. Now we have even gone to the extent of setting up open cafeterias where the distancing can be maintained much better. We are serving -- planning to serve, maybe from tomorrow, food on the lawn under the trees. So we are taking every precaution possible and improving on it day-by-day. And if somebody catches the virus, I don't know, it's anybody's guess, we really don't know the situation, I think we can isolate. FDA-wise, there's no issue because this is not a virus that is supposed to last. So I don't anticipate issues there, but workplace may possibly slow down, but this is a if-situation. So let us see if something like that happens. But on our side, we're taking all precautions.

Sir, can you [ swing ] the regulator into action if you find that there's some such case identified on the site and come and issue a warning letter or something like that? Or are they -- [ to receive ] any differently?

Are you talking of local regulators?

Well, mostly U.S. FDA, they're the most strict, but also from other markets, including India.

No, that would -- I don't foresee that situation because it all depends on if anybody has any contact with the product or not. And -- but even then, this is a products -- a virus that doesn't last too long, so I don't anticipate any problems. We have discussed internally with us -- within ourselves, and our regulatory people feel quite comfortable. However, now that you have brought this up, I don't think I can go back to the FDA and ask them this question, but we can think deeper on this. But we are fairly confident it would not have any impact.

The FDA has not yet issued any advisory, any protocol or any to-dos related to this pandemic, have they?

No. There's been no guidance from the FDA so far. Again, while you are on the line, excuse me, I would like to answer Jamie's question. The CFO had just given me the detail. If including the loss of INR 30 crores on the sale of our JV, we expect to cross our guidance of INR 300 crores, not INR 300 crores, we'll cross the guidance. I'm sorry about that before. Jamie from HSBC has asked me this question.

We have next question from the line of Tushar Bohra from MK Ventures.

Sir, just one thing. I understand in a lot of the cases in China earlier on, and even now globally, use of Paracetamol and Ibuprofen has been prescribed along with other medication, whatever has been used for the treatment of symptoms. So purely from a demand-supply situation, mainly for your key products, para and ibu as well as for other products, can you just sort of give us any qualitative or quantitative data points how the demand and supply, both, are getting impacted due to this issue?

I'll take that question, Tushar. From a demand perspective, our demand is off-the-chart, especially in the U.S., and also in Europe, right now, there is shortage of the Paracetamol, so there the demand is off-the-chart completely. People, our wholesalers, our customers, are placing blanket POs for 3, 4, 5 months of product at once. And there's absolutely no Paracetamol, no Ibuprofen. In fact, there's no metformin on the shelves or at the prescription counters. So people are preparing for a bad situation because the demand is completely off-the-chart. From a manufacturing perspective, like we mentioned earlier, there is product readily available for shipment of certain quantities of paracetamol [indiscernible]. All the other shipments are happening as we speak until -- for the products that has happened till now. So it really depends on how quickly the government uplifts this restriction on Paracetamol and how quickly the -- our manufacturing sites are up and running.

But even in the situation that -- I mean you are not able to supply Paracetamol to say U.S. or Europe, but I believe domestically also the demand as well as the pricing would have gone up. So does the -- is there a compensating factor for that?

Yes. Tushar, domestically the pricing is really good right now and there's huge demand as we are still [ holding ] back just to service our existing customers. And I'm very confident these restrictions will be lifted in the next few days. Worst case, they are not lifted, there's always demand here within India, and actually selling in India could be more profitable than even exporting it, but we have to keep up the relationships.

And sir, from a supply perspective, is China back to completely normal, including, say for Ibuprofen, the API?

Our ex-JV plant is producing -- back in production for the last one week, and we expect shipments to start in the next 1 or 2 days from [indiscernible]. But for PAP, P-A-P, our main raw material, which we import for metformin, supplies have been normal throughout, except for a week, never any interruption on that. And again, [indiscernible], which goes into our metformin, which comes from [ inner Mongolia ], everything has been normal right from day 1, only ibuprofen was affected. And that we have evaluated other sources, and there also we do not see any big impact.

We have next question from the line of Ranvir Singh from Sunidhi Securities.

Sir, few questions I can ask from somewhat -- from different perspective. In U.S., like we have a lockdown, or we have some stock, some inventory withheld somewhere. Other countries' government might have withheld their stock also. And so can you highlight any particular competition is not coming -- from competition angle, any players are not coming up in U.S.? We have a leadership position in key products. So the next competitor, how is the position there? How -- whether they are resuming, they're in U.S., supplying from different sources? Or how is your competition there?

I'm sorry, can you just repeat that question again?

So my question is that like our products are withheld due to lockdown, it's a worldwide lockdown. I believe the other suppliers would also have disrupted their supplies there in U.S. So can you highlight that any of the big competitor or any of our next competitor is also going to be affected? Or their suppliers are not coming up [ in here ]?

See for some of our core products in our stock, primarily for the 5 core products, and then I'll take the U.S. side, we are one of the biggest customers in the U.S. for these products. And -- sorry, sorry, suppliers for these products in the U.S., followed by other Indian suppliers. So it's a guess at this point and also a little bit too early to understand whether these suppliers are continuing to supply or not. It depends on how much inventory they had in their warehouses prior to this situation. So at this point, like I said, it's a little bit too early to discuss the competitor analysis.

Okay. And second one, on Ibuprofen side, our sourcing -- we have started sourcing from China or our sourcing we have been located in India only?

For one -- I mean, we have 2 sources qualified for Ibuprofen -- 3 sources qualified for Ibuprofen. On the OTC side, we have 3 sources and on the prescription side, we have 2 sources.

So these sources are just in India or out of India?

One -- let me take this. One is in India, one is in the U.S. Of course, U.S. is not really doing great, but we think it's getting some supplies. And the third one is in China, which is our ex-JV plant. And like I said, the plant has started working and supplies should start in the next 1 or 2 days. And again, we do not see any major interruption on ibu supplies in the future.

And I would like to just reiterate one point here. For ibu, especially the Rx product, our partner does have enough inventory in store in the U.S. So I don't see this as -- unless this is a very long-term situation, I don't think there will be a depletion of market share per se.

We have next question from the line of Abhishek Maheshwari from Wallfort Financial Services.

Yes. So I wanted to know if any of your facilities in India are operational? So you are saying that you're currently operating at 25% utilization. So I wanted to know whether you're manufacturing formulations or API or PFI, what's going in?

Well, actually, as of today, for the last few days the plants have been shut, and we are expecting to start in the next 1 or 2 days. And we will be continuing to work at -- start working with 25% capacity. And this will -- we are starting with formulations. And every second day or third day, we'll be starting another plant. The next plant will possibly be the paracetamol [indiscernible] plant. And after that, we'll be starting one plant after another.

Okay. So in this case, the talks are on with the government because right now we don't have the visibility that it will be on in 1 or 2 days?

No, talks are not -- the government has permitted us to allow -- they've given us permits to operate our buses and given us passes for workers to come to the facility. The only thing is we'll just start resuming, which is that -- it may take a while.

Okay. Okay. Understood. And sir, my second question is regarding your working capital borrowings. So what kind of impact are you seeing on your working capital borrowings, sir, because of this issue?

As of now we have no impact, actually, short-term borrowings continue to be the same or slightly going up. We don't see any major impact as of today. We expect our domestic customers to pay us late, but international customers, all the payments are coming in time, we see absolutely no issue. And even domestic consumers, since there's a lot of demand for our product, Paracetamol, we expect that people would pay up and also possibly pay us an advance which is needed. But it all depends on the length of the lockdown, so we'll have to see what happens.

We have the next question from the line of Tushar Manudhane from Motilal Oswal.

So just on the clarification on the pricing for the raw materials coming from China. Now that China manufacturing has resumed, so on the raw materials side, are you seeing downturn in the prices or because of lockdown in India, the prices are remaining elevated?

There weren't a great decrease in prices in the last few months. But with the -- even after the problem in China, prices did not increase. They kept [ shipping ]. But however, last few days, we've been hearing the Chinese talking about higher pricing. So there will definitely be some pricing increases, but not to very great levels.

Got you. And just on the distribution side, on the U.S., like, are you facing any disruption on the distribution side of the product?

Well, as of now, our 3PL logistics company, they are monitoring that very carefully as well. As of now, there hasn't been any disruption. But they themselves have their own precautions that they're taking. Their blue collar staff, they are working as of now. So we're good for now.

We have the next question from the line of Charulata Gaidhani from Dalal & Broacha.

Yes. I have questions pertaining to your contracts. What is the normal tenure of the Paracetamol contracts? And how much of the business is on a fixed contract basis?

Most of our B2B, most of the business is on a fixed contract basis. And where we have -- most of the cases, we have price increase for raw material [ fixed clauses ] and other things. But when it comes to our distribution, our own distribution in the U.S., we do not have such contracts as such. So we will have to analyze the situation. So we could have a position where we will not go for price increases with existing customers, but possibly some new customers, we could add on increases.

One thing that I'd like to add is, especially on the B2C side, which is a situation that's unprecedented even for our customers. And so some of our customers, we are in discussions with them to take increased prices for the products that they're shipping to them over and above [Technical Difficulty] take an increase in price -- we're in discussions with them to take an increase in price for the units, so the extra [indiscernible] unit, up to the extent that we are seeing an increase purely on raw material increases from our suppliers.

Okay. And you mentioned that 50% of your customers, you can pass on the prices. So what is the percentage contributions of these customers to sales?

So that's a number I don't have in front of me, Charulata, right now, but maybe later on I can ask the CFO to come back to you.

Okay. And how many days has the plant been shut?

Like I said, [indiscernible] a few days, 2, 3 days, the plant is shut, and we are starting in the next 1 or 2 days. And again, like I said, we'll not be operating at full capacity. Actual shutdown is going to be -- was just a few days.

We have next question from the line of [ Ravi Sundaram ] from Sundaram Investment.

So my first question is on crude. So I think a few quarters back, we have discussed about the crude's impact to our raw materials cost. So any color on that? Now crude has fallen. Do we have any advantage in terms of better prices for our raw materials?

Yes. Our PAP, P-A-P, and most of even ibuprofen and key raw materials are totally based on crude, and they are definitely linked to the prices of crude. However, even though the prices of crude have fallen today, the Chinese plants also are not working to full capacity, they're still ramping up their capacities. And I guess, they don't see any great advantage at this time of falling crude prices. But going forward, if crude stays at this level, definitely we expect prices to be on the lower side.

Okay. My second question is on the guidance. So I expect -- I did listen to the initial opening remarks, so you're likely to have a [ softer ] Q1 maybe, depending on the length of this shutdown. But for the full year, next financial year, do we still stick to the guidance that you've shared in the earlier con calls?

Yes. I shared this in the -- initially, even assuming, let's say, the lockdown ends on 14th [ of next month ], we have no issue even in the first half, we should be able to make up. And even if it goes on a little longer, I'm sure we'll definitely meet our guidance for next year.

Okay. And third question is on debt. I know we have our debt in comfortable, manageable levels. Just a [Audio Gap]