Indorama Ventures Public Company Limited (IVL) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to IVL's IV Segment Knowledge Sharing Day. My name is Vikash Jalan, VP, Investor Relations and Planning. Joining me today for this session, Mr. D.K. Agarwal, Deputty CEO and Group CFO, Alastair Port, Executive President of the IOD segment; and Parolin, CEO of South American business of IOD segment. Today's event is a special session for knowledge sharing on IOD segment, which we have organized for the first time. Last year, this segment contributed 1/3 to our EBITDA, showcasing the significance within our organization. This event is being recorded and will be available on our website after the event. The session will be approximately for an hour, and then we'll take some Q&A sessions. The main purpose of this session is to share our learning about the IOD segment. And for this, we would take Oxiteno acquisition as a sample to talk about our downstream business. Hence, we will request all of you to refrain from asking very detailed financial questions in this session. And with that, I invite Mr. D.K. Agarwal to open the session. Thank you.

Thank you, Vikash, and very good morning to all of you. Thanks for joining this IOD sharing story. Some of analysts and the fund managers took time to visit us in Brazil, and it was very nice. And this -- we thought that it would be a good platform that we share about this business. As you know, IVL has been organized in 3 verticals. One is combined part IOD and fiber. Our journey in IOD started in 2012 with acquisition of an asset. It was the upstream integration strategy at that time with glycol because PET uses glycol as a feedstock, and we got purified ethylene oxide with that with a significant market share of 40%. As we learned about this business, we thought that there's an opportunity to expand this business, leveraging on the shale gas advantage in the United States, which still remains a very strong advantage. Today, our cleanest cheapest in U.S., as I speak today, also, it is $0.16 a pound, which is $350 a ton. Then we did the Huntsman acquisition, $2 million acquisition. It started with a rough timing because in 2020, as you know, the oil prices were down but last '21 and '22 has been a fantastic year for us as this produces a downstream products as well as MTBE NPO. We wanted to enlarge this portfolio, and then we went for another acquisition of Oxiteno, Brazil, which is the leading market leader in Latin America. Today, with these 2 businesses together, we are the largest non-necectant producers, one of the largest EO producers in Americas. So we thought that it would be very good that you know about this business, as Vikash was mentioning that this contributes significant part of the EBITDA of IVL. And also a lot of potential to grow this business as you know, in Europe and Asia, which we have been telling you in different quarterly earnings calls. So today, we are joined by Alastair, who leads this business came with the acquisition of Huntsman and Parolin, who came with the acquisition of Oxiteno. So thank you for attending. Now I hand over to Alastair. Thank you.

Good morning, ladies and gentlemen, and thank you, DK for the introduction. As DK said, my name is Alastair Port, I'm the executive President of the Integrated Oxides and Derivatives segment of IDO. As always, I look forward to meeting you in Thailand next time and there. I'm sorry if some of you couldn't attend the recent visit in Brazil that was very well received. On both sides, we learned from you, and I'm hoping you all learn from us. I'm excited to be with you today to talk about our strategic vision. Given this is a living strategy, some of our progress-to-date, the key must dos where we are with our strategy development. And hopefully, this virtual Connect provides a great opportunity for you to learn what makes us tick, witness some of the elements of the business, technology and culture we're creating to make IOD successful. Next slide, please. So what you'll see is running through the strategy itself. You'll see the different elements that make it up. And then I'll hand over to Mr. Parolin, who's CEO of South America to talk about the downstream markets which are very complicated and involved markets that change the world. And then you also talk about the R&D facilities we have in the innovation pipeline that we're building across IOD. Next slide. So let's start with reminding ourselves of our purpose statement. This was launched in 2022 across the whole of IVL sort of covers the whole cooperation plus the 3 segments. And this has been translated into our branding in the coming months to make sure it's integral to the whole of IVL and in our case, in IOD. So Reimagining Chemistry together to create a better world. This is the core to why we exist as a business. The Reimagining Chemistry is focusing on innovation, new ways of working, and ensuring we have a meaningful place amongst our peers and our customers to continue our business of growth. The Creating a Better World is about making our environment, the society, our people better. And that's because we exist as an organization. It's such a key message built within our sustainability road maps, which you'll see in the coming slides. And together is we can fulfill this working in silos. It's quite clear as we talk to our peers, as we talk to our suppliers and talk to our customers. You can't pull in different directions. You've all got to join together, support each other and build a very unique supply chain as we're seeing certainly in the Americas and now starting to see in Asia and Europe, a very strong sustainable supply chain. And that will help build IOD into a very unique part of that supply chain and being very stronger in the future. Okay. Next slide. So our vision for IOD. We're developing into a multibillion-dollar high-growth sustainable chemical company. Focused on high value-added innovative solutions, which you'll see in the next few slides. Specialty products and services, making us very, very core to our customers and our suppliers. We're operating globally mainly across the Americas, but with an increasing focus on renewable raw materials, sustainable solutions, and really growing with our customers. And as we talk to our customers, they've got high growth patterns in mind, and they want us to grow with them and be our main [indiscernible] suppliers. Top-notch challenge is very, very important and along with a first-class infrastructure -- process and tools, digitalization, the core backbone of SAP to support the performance and growth. So we can really see how the business is performing and take action on it. And we want to be up in the first quartile compared to the specialty chemical peers, and we're doing a lot of benchmarking at the moment. And whilst we want to do that, don't forget our other mantra within IVL of doubling EBITDA every 5 years. And we have the extra challenge of making sure that IOD becomes a 10x multiple EBITDA company. And again, we're doing a lot of benchmarking to look at what we need to achieve internally. So the external markets view us as a much higher multiple company. Next slide. So within IOD, we've created a very strong integrated platform, as D. K. mentioned, we're cost competitive. We're based on shale gas, or if not shale gas, a highly integrated raw material platform all based around the year, which I'll come to in a minute. We've got $4 billion of revenue as Vikash said, we're about 1/3 of IVL's EBITDA in 2022, 17% EBITDA margins and a double-digit ROCE during the '22 period. We've taken a leap forward in terms of capacity with the Oxiteno acquisition on top of the Huntsman acquisition. We're certainly making meaningful strides in to help you to consolidate the market. We've become the leading EO producer in the Americas and the leading surfactants producer in the Americas, and we're second largest in the world. This in tandem with strengthening our customer intimacy has helped us grow locally with both international customers and also the key national customers in those countries we operate in. As we'll get to, we serve very highly attractive markets all into population growth, need for crop production, crop yields, growing urbanization, wealth and hygiene focus amongst the world population. And this drives not only the home and personal care needs of the population, but also the energy transition needs, which we can reduce energy usage within [indiscernible] structure. And the growing environmental consciousness is driving the demand for naturally derived by degradable products. We're about 70% on our downstream businesses biodegradable products today. We think we can get better. And we've got a range of formats that we ship in and including all way to ships and all the way down to tablets that you put in the laundry and dish wash. Next slide. This is all built on a really, really good and experienced management team. We've got a lot of diversity. The top 30 -- top managers in the company about 30% women. We've got a lot of diverse backgrounds from Latin America to North America to Europe to Asia and India. We've got a very strong diverse background of experience, a lot of it in this chemical industry and specifically in surfactants, you can't run one of the surfactants business without the knowledge and the experience and the knowledge of customers and knowledge of products to run it. And we've got a very, very experienced team. And I would say would be at the envy of any of our peers in the industry. We're arranged on a regional basis. So Mr. Parolin runs South America, we have an equivalent in North America and an equivalent in APAC as one of our key growth areas. And they're supported by an enabling function team that includes the [indiscernible] and sustainability, legal, manufacturing, procurement, finance, HR, et cetera. And then we have corporate enabling functions that help the business in all 3 segment businesses. which includes the EHS, Sustainability, Business Continuity, Communications, IVEX and Digital. So that's where the concept of one IDO really place that we can leverage our size to really create some good synergies. Okay, next slide. So where are we? We've now got 18 industrial units in 8 countries, 8 manufacturing R&D centers. We've got over 3,200 employees today. So as of April of '22, we reached 3,200 employees. If you look back to December of 2019, we had about 170 employees. So you can see the scale of growth that we put together in a very short period of time. And we're becoming the envy of a lot of our peers and customers and supply as to see how strong we're becoming in a very pretty short space of time. The bulk of our plants are in North America and Brazil, but we also have plants in Mexico in Uruguay. We have research centers and sales teams in Europe. We have a plant in Australia and then a plant in India. And we've now networked all of our new R&D facilities together. So we have a new center in the Woodlands in Texas, a new 1 in Mumbai and a new 1 in Shanghai and China. And as I said, they're all linked by a project management team for innovation. Next slide. As you'll see during today's presentation, very diversed portfolio company. We started ethane or ethylene if we don't have the crackers and convert to EO or PO, and along with natural alcohols, this creates a multiple of effects for our customers and end markets. All of this is created on the backbone of EO to the addition of raw materials and chemistries into the multiple of products that you'll see during the presentation today. This is the real reasoning why we wants to become the biggest integrated EO solution provider in Americas, you need that level of integration to provide the cost base to the big customers that we supply, and you also need the agility of the downstream manufacturing to produce very bespoke products for some of the smaller applications that we use. We've got really good synergies with IVL for MEG, but also don't forget MTBE, which is a good hedge against tilings. We've got a bespoke portfolio of over 2,000 products in the downstream business. And we help solve problems, day-to-day problems in home and personal care, crop solutions, coatings, resources. And we're a major provider to some of the not only household companies like Unilever, P&G, Syngenta and Bayer, but also the household brands, that we all use every day. Next slide. So what's our focus areas that you'll hear Mr. Parolin taken us through today. Well, firstly, I will transition into a specialty surfactants business, very, very important in our growth plans. That doesn't mean we diminish the more commoditized products that we make. We make them very efficiently and to high quality, and we're committed to them. But we see the real growth area in some of the downstream surfactants and LAB and ethanol means types of businesses where we think we can grow, continue to grow exponentially in those areas. The surfactants market is very fragmented as you'll hear Mr. Parolin talk about. There's definitely areas for further consolidation. We're about 15% of the world capacity. And we're the second biggest. So as you can imagine, there's a lot of areas where we can move into, in particular, in Asia, in Europe, et cetera. I think we've got a good market penetration plan. It's based on some opportunities because these are highly guarded and valued chemistry platforms. People don't normally want to sell. And definitely, you look for good opportunities. But we can also look for the smaller companies that we can take highly valuable product technology and scale it very rapidly within our platform. Customer centricity and innovation capability absolutely key in this area as you'll see, we run at around about 15% -- 14% to 15% vitality index. We need that to grow to continue to be meaningful to our customers the supply chain is always innovating because we, as customers, and customers always want innovation always want something different, improved efficiency, improved plan, et cetera. So that's where we come in to providing that capability to our customers. And the sustainability road map is a whole new circular economy that's growing within our industry. Green raw materials, recycled raw materials are going to be absolutely key, reducing carbon content from the supply chain, absolutely key. And also, a lot of our products not only go on the floor on dishwashing plates or clothes, but they go into the skin or go into the mouth or hair, and therefore, the quality testing, the natural mildness of the product, the free from nature of the products is absolutely key to becoming a successful company in the future. So that's our strategy. You'll see it in play now as I hand over to Mr. Parolin so he can take you through how we're doing as a business.

Okay. Good morning, everyone. I'm João Parolin based in Sao Paulo. I'm in charge of the South American IOD business. And our first slide tells a little bit about our sustainability map. So we have a very comprehensive sustainability plan. We had one in Oxiteno. We consolidated this plan as we were acquired. You can see there are 3 different dimensions in this map. So I would -- obviously, we have our targets for waste reduction, water consumption, energy, greenhouse gases and everything, as everybody else. We do have our targets related to the community, how do we relate with the community close to our plants, responsible sourcing, we are doing an assessment of all of our suppliers through a company called EcoVadis and putting some targets for our suppliers in order to control our supply chain. On the diversity, well-being, we have a diversity internal program. And obviously, for safety, we are going through a very good period the last 2 years in safety. We are now on the top quartile of the companies comparing to the ACC statistics and governance. In dark green, you can see that we are doing an assessment of our product portfolio as well. So what we are doing a life cycle analysis of our portfolio as we have more than 1,000 different products, and we are creating 5 categories in this product portfolio, starting with a challenged product that is a product that has regulatory pressures and so on and not a very good profile on sustainability until a transitionary standard performer and leader. Leader is a product that has great sustainability profile. So we are doing this assessment with our product line together with the applications, tracking not only Scope 1 and Scope 2 emissions, but Scope 3 as well depending on the application. And we have some targets of improving over time the profile, the sustainability profile of our products. So if we have a challenged product, we have to put in place action plan and transform this product into something else that is more sustainable that is greener and it's better for the environment and so on and so forth. So a very ambitious plan and is a guideline for our innovation team to improve and get always better products in terms of sustainability. Next slide, please. So Alastair mentioned that we are transitioning into a specialty surfactant business. So in this chart, you have IOD in '21 and IOD today. Oxiteno was a company concentrated in downstream products. We had very little upstream results. And with the acquisition, IOD had a lead in this direction. But our intention is increasingly create more specialty and more niche products, namely Surfactants and Specialty products. I won't read the chart because it's self-explaining. On R&D spending is always a very tricky indicator because you can spend a lot and spend in efficiently, so our -- and you can do the math in many different ways. Our intention is to be very efficient, very focused on our final markets and the customer needs. In sales and marketing, obviously, as we move into more specialty type products, our interface with the customers. Our knowledge of the final market is key to help them find new solutions and reduce their pains. Next slide, please. So IOD downstream still has a lot of growth opportunity. As D. K. mentioned, we are constant -- mostly concentrated in the Americas have a lot of room to grow in Asia, in Europe. IOD if you look at the global surfactants market, IOD accounts for 5% of this market. So it's a fragmented market, and we can act consolidating and buying good companies to increase our footprint and our presence in the markets. So there is this upside potential. And on top of that, we are searching for HVA products and companies. So the idea is to grow both organically and inorganically taking advantage of this fragmentation of this market and our opportunity to grow in other geographies. Next one, please. So IVL has a very good track record of large strategic acquisitions to realize synergistic benefits. So the Huntsman acquisition in 2020, Huntsman was the leading EO and surfactants producer in North America. So this acquisition -- after the acquisition, IVL was able to unlock a lot of value through the Project Olympus, $108 million in synergies, BRL $433 million average EBITDA in '21 '22, a 15% ROCE in the same period '21, '22. As Alastair mentioned, we have 1,250 employees after the Huntsman acquisition. And then in '22 came the Oxiteno acquisition, it was project Vivaldi and extending the portfolio of HVAs. Oxiteno was the leading EO and surfactants producer in South America. So the combination of Oxiteno and Huntsman transformed the company to the market leader, the #1 in EO and surfactants in the Americas, and acceleration into sustainable solutions and high-growth product offering. You know that Brazil, especially is a agricultural country. We have lots of renewable raw materials. And after the Oxiteno acquisition, we are realizing $100 million in synergies that were unlocked until 2025. The average EBITDA for Oxiteno in '21, '22 was $246 million and ROCE about 14% in the same period. So 2 big acquisitions and a lot of value unlocked both on cost control and new projects in the production sites and also in the market. Obviously, I think on this next slide, we will see -- please next slide. Yes. the synergies after the acquisition of Oxiteno, obviously, cross-selling, Oxiteno has a very deep knowledge of Latin America, where Huntsman had a very big customer lease in North America, so cross-selling the products in both regions and optimizing what we do commercially. On the go-to-market strategy, we have some strength on both sides. So Oxiteno was very strong and still is in the Paints and Coatings business. Huntsman had very little participation in paints and coatings in North America. On the other hand, Huntsman had the mining business, and then we have better little business in mining in South America. So the combination of the 2 businesses brought many new opportunities. we could compare contracts with the big customers, some of the multinational companies, they were customers, both for Huntsman and for Oxiteno. On the manufacturing side, lots of opportunities because now we have more than 20 EO production units and more than 40 etoxylation units. So we can do internal benchmark about best practices, to do -- to change catalyst or the way we operate or in cycle times of the products. So many opportunities by comparing the operations of both companies in North and South America. On R&D and innovation, obviously, as we develop new solutions and new products we can now roll out these innovations in a much larger geography and new customers. So the results of the innovations increased on the asset uplift as well the way we operate, the way we do maintenance and vertical integration. As you know, Huntsman was the market leader for EO in North America. We had an intoxication plant in Pasadena, Texas. And obviously, as we were acquired, Huntsman immediately started to supply ethylene oxide into our Pasadena plant. So many different opportunities in different areas. So of about $100 million in synergies to be unlocked until 2025. Next one, please. So this -- in this slide, we some of the applications of our products. So starting from the right side, we see that we sell raw materials for formulating soaps and shampoos, liquid soaps, toothpaste, detergents in the automotive industry products for oil, lubricants, products for the paint industry, obtain enhancers for fuels. On the left side, you see ink and paints as a whole, Biocides or sanitizers, dishwashing detergents and hand sanitizers, mattresses polyurethane foam. So we provide raw materials for polyurethane foam. And with control in the garden, but also in the agriculture provide raw materials for the crop solution companies. So a very broad and very diversified market. Most of these markets are connected with the basic needs of the people. People have to use the products almost every day. So we are very resilient and very diversified set of final markets. Next one, please. [Presentation]

So this little video shows a little bit what we do. And obviously, with the acquisition by Indorama, we found many similarities in the final markets in things we do. So Home & Personal Care is the main market and then Oil & Gas and Crop Solutions. So these markets are key to the business. We do have this very big product line starting for glycos and petrochemicals into the oleochemicals, surfactants and specialties. And these are the main markets we operate in. As we move from left to right, from glycos into solutions, then the complexity, the number of products and the knowledge about the final application is really key in this relationship with the customers. Next one, please. And now I will talk a little bit about surfactants because I realized when we had the group in Brazil, visiting our plants and so on. I asked who knew what a surfactant is. And to my surprise, nobody does. So I decided to explain a little bit what a surfactant does. So I apologize to being so chemical at this point. But a surfactant is a molecule that has 2 parts. One part that is attracted to water, that is the hydrophilic part or the head of the molecule. And the other part is hydrophobic. As all of you know, water and oil they don't get along well together. So a surfactant is a molecule that has 2 ends with one hand, it grabs water. With the other hand, it grabs oil or oily kind of stuff, organic compounds, fats and oils. So what the surfactant does is to make compatible water with oil ethane. And there are the 2 main types of surfactants, anionic that make that compatibility through electric attraction with the water and the non-ionic that are the EO derivatives, they are kind of -- they do a kind of a roping with water and -- but the principle is the same. It's a molecule that has 2 parts and that is used in many, many, many processes in which you have water and oil in the same situation. So when you're washing a dish and the dish is greasy with the food, you need to put a detergent on that to wash the dish. The same happens with your hair, the same happens when you are preparing a fabric, a textile, you need to remove the natural oils from cotton to make it -- to enable the dying of this cotton or stamping or doing whatever you want. So in many different industrial and day-by-day processes, the surfactants are used and surfactant is one of the key parts of our strategy. And ethylene oxide derivatives are one of the most versatile kinds of surfactants. Next slide, please. So in this chart, we tried to explain a little bit the EO derivatives in the center of everything you have EO. In dark blue in the next circle, you have the other raw materials that we react with EO. In gray, you have the final products from IOD. So for instance, if you take EO with water, you will obtain glycose. If you take EO with alcohols, you obtain glycolate, if you react with ammonia, then you have ethanolamines. And for each one of these families of products in gray, you have the final markets in this dark blue part out of the circle. So glycos are used for PET, automotive coolants, polyester fibers and resins and so what. Then you have the EO derivatives and the final markets as well. I think it's a very interesting chart because it enables you to understand how versatile is the EO molecule. Indorama has technology to produce all the derivatives with no exception. So we are able to produce polyols, we are able to produce demulsifier and non-ionic surfactant glycos, glycol ethers, ethanolamines and sterilants. And on the left side of the circle, you have the surfactants, demulsifiers, and is the part of the circle in which you find most of the specialties and these specialties they can also combine different product families with solvents, with esters, with other technologies that we have in order to create a final solution for the customer. that has the right functionality. So we have a very broad and very diversified platform, including the EO chemistry, the Oleochemicals chemistry the solvent chemistry and the Aster's chemistry by combining all these platforms and propylene oxide as well I forgot to mention. But if you combine all these different platforms, you can create thousands and thousands and thousands of different combinations and solutions for the customers. Next one, please. So as we mentioned before, the main final markets are Home and Personal Care, Coatings and resources and Crop Solutions, Home and Personal Care is growing strongly, especially in the emerging markets. Coatings and resources with very robust 4% and Crop Solutions, 3%. And on the bottom of each one of the markets, you have a sample of the main customers we serve. So most of them are international companies and we have an international coordination doing the account plans for each one of these companies. And where do we want to go with them at what kind of projects we intend to perform and how to gain more market share and more business from this set of customers. Next one, please. So one important thing about our business is that most of our innovation is connected with some mega trends. On the right side of this slide, you see some very important megatrends. Obviously, the growth in population, the world is going in a direction to have 8 billion people with a middle class expansion, urbanization, sustainability, scarcity of resources like water, like energy, like land and climate change. All this megatrends will pose some challenges for our customers. So I will take some examples here. For instance, if you have a Unilever or P&G or a producer of detergent the challenge is to use less and less water, to use smaller packaging, to save on plastics, to save on logistics, to wash with less use of energy, so wash in cold water. So these are the kind of challenges that these megatrends will pose to our customers. And obviously, as they have to reformulate their products. They come to their suppliers asking for solutions. We see the same challenges in the Crop Solutions business. Obviously, Crop Solutions is about herbicides, fungicides, insecticides, but also is about water retention and how to make the yields increase with a limited amount of arable land. So -- and protecting the environment and having products with a lower toxicity and so on. On the coatings, people want to paint their houses or their apartments in the morning and move in, in the afternoon. So this kind of solvent and kind of paints that we use today are completely different from the paints we used in the past with very toxic solvents and solvents that had hazards or polluters and so on. So in all these markets, oil and gas, again, a very strong concern on environment as well. So what we do we concentrate in these key markets with very specialized people with both in sales and R&D and technical services, and we interact with the customers to understand their challenges. And then we provide solutions and we co-create solutions and we help them reformulate their own products in order to address the needs of the final consumer. Next one, please. So innovation is obviously essential to our business as a way of differentiating from competition is a way of creating more sustainable products. So we are reimagining chemistry together with our customers to create this better world. It's key to improve our margins and our results as we differentiate and as we create more interesting solutions for the final markets. So innovation is one of the pillars of our strategy. And from now on, we will start talking a little bit more about that. Next one, please. So we have a world-class with R&D and tech centers. We are -- have a very green chemistry portfolio, and we are moving in this direction even more. We have more than 700 patents and the contribution margin for new product developments in 2022 represented 13% of the overall margin of IOD. And we have more than 340 high-skilled professionals. We are connecting all these R&D centers in the same software in the same innovation pipeline in order to avoid duplication and in order to make the products and develop the projects in the best geography depending on your objective. Next one. And we do this effort not only inside IVL, but as well together with technology institutes, universities, and our own customers. So we do inside out and outside in both ways for our innovation. Next one. And we have this very robust project pipeline with 448 ongoing projects. Some of them you have, in green the crop solution projects, more than 100 projects in Crop Solutions, approximately 100 projects in a cross-segment that apply to many different applications, home and personal care. So it's very diversified. And as I mentioned, the surfactants and specialties can be applied in many, many different applications. The challenge is to focus and to put resources in the right place and have a very disciplined process of product development in order to use wisely the resources. Next one, please? So on the innovation, we select the projects by a set of criteria, we have some financial scores, some risk scores and some strategy scores is a set of KPIs. So whenever we come up with a new idea, we submit this idea to a set of questionings about the raw material, the profile in terms of sustainability, how profitable it is what's the risk of the project, if it has only one customer or has a set of goes interfaces into our strategy it helps develop a platform or a technological platform. So a very robust set of KPIs that will enable this idea to become a project. Next one. So this is our performance on IOD Global of new products, new product developments consider a product new for 5 years. So in 2022, we had 13% of the overall contribution margin coming from products developed over the last 5 years. we intend to increase this percentage. It's not easy, but we are doing a lot to increase the throughput in our innovation system and be faster and better we normally target a products that have a margin that is superior to our average today. So over time, the idea is to increase more and more the contribution margin of our product line. Another one, next one. So with downstream markets as I mentioned, Crop Solutions. It's very important in Brazil, it's the largest segment in Brazil. Brazil is a world power in agriculture. So we interact with this final customers that you see on the screen, providing solutions and different products as they move new herbicides, insecticides, fungicides, so we serve them locally with a very good agility. Next one. Yes. Only three examples of opportunities in the Crop Solutions application by drone. Obviously, a drone carries about 50 liters of product, whereas tractor carries about 200 liters. So the more we use drones, the more concentrated the products. And obviously, that poses new challenges on the stabilization of the solution and the kind of surfactants and solvents that you use. We have this green packet on crop solutions that improves most our retention in the soil, Obviously, water is scarce and a significant part of the water is used today in agriculture. So we have to retain this water in the crop. And the other one is the solution for glufosinate that is a growing product in the herbicides scenario. Next one, please. Talking a little bit about Home & Personal Care. Obviously, we sell many surfactants. It's very important for shampoos for body lotions of our hair care and many other applications. This market is the largest surfactant consumer in the world, and the Americas represent 30% of the global consumption of surfactants. Next one. Here, we have an example of development that we did with Unilever. Unilever is selling this liquid concentrate from -- for laundry. It's a 1-liter package, but you dilute that in 3 liters of water, and we developed an additive to this product that keeps the good property of this liquid detergent when you dilute at home. It's very critical for the viscosity of the product, and it's a co-creation. We have exclusivity this product with Unilever. It's picking up very quickly. It started in Latin America, but now they are rolling out this innovation into Europe to Asia. So it's very interesting. Next slide, please. And the good news about this product is that it reduces 83% the CO2 emission on transportation because it's a concentrate and reduced to 75% of the packaging because, again, it's a concentrate and we could stabilize and we could get the right properties for the product to be sold. So as you see in the picture, the consumer buys a 1-liter of the detergent and gets a 3-liter flask in which he dilutes the detergent and uses for the laundry at home. So very, very nice innovation on Home & Personal Care. Next one. Oxismooth is another product line that substitutes silicones, silicones are products that are being challenged by the customers because of their biodegradability and some other properties. So we develop a solution to replace silicones in hair care products and also for skin care as well. Next one. So talking a little bit about coatings, I already mentioned that the coatings today are very different and more friendly and with products that have low toxicity, low water and high efficiency. Next one. And finally, the Energy & Resources Market, America is a very -- Americas is a very large market for oil and gas. You have all the shale exploration in the U.S., but Brazil is among the top 10 oil and gas producers in the world. Argentina is a big producer as well. So we serve most of these oil and gas companies with additives for oil field exploration for fracking, for gas treaty. So very, very broad and very stable energy market. We are connected with. Next one. And finally, Performance Products, it's a set of many different other applications. I would like to emphasize a little bit on Nutrition & Health. We have been growing very fast on Nutrition & Health because these markets are very regulated and require lots of certifications for use, both on the nutrition area and pharmaceutical products. So it's growing fast. We have a very good position, a very good technology and we are growing fast in this Nutrition & Health market as well. In this area, we also have some other industrial markets like textile, pulp and paper and others. Next, one please. Yes. So now I hand over to Alastair to summarize the presentation. Alastair, please.

Okay. Thank you, Mr. Parolin and just shows the depth and knowledge that exists. So I think in summary, for IOD, a few partying messages, before we start the Q&A. One is IODs continue to make incredible strides to becoming a sustainable specialty company. We've got strong improvements in our portfolio mix and in normal circumstances, strong downstream volumes as well. I think the acquisition and integration of Oxiteno has been a success. We've had a well laid out integration plan being executed with real passion and care, and we brought our new colleagues into key positions within the new IOD configuration. As we've applied IVL's tested efficiency programs, we will deliver the stated synergies across both operational excellence and unlocking the commercial value, we're well on the way to doing that, and we've got some more journey to go, but we've got a lot of very dedicated people looking at this as how they extract a lot more efficiency. I believe our platform for integration and growth provides an excellent base to explore further organic and inorganic expansions and adjacencies and very attractive end markets and growth regions. We've invested a threefold increase in our customer-backed innovation. As Mr. Parolin said, how important it is to our lifeblood of products coming through. So as I said before, we added 3 state-of-the-art innovation centers in Mumbai, Shanghai and the Woodlands of Texas. That's backed by the global PMO, as Parolin mentioned, not focuses on our NPI rate, new product introduction right, our vitality index. And this contributes to forward-looking volume growth and margin growth. We've got a fully enabled and governed sustainability program. We meet quarterly, and we assess not only our progress for the year -- for this year, but also our progress towards 2025 and our progress towards 2030. We've got some really good KPIs that we check the whole team on. It covers the breadth of the roadmap from diversity and inclusion, all the way through to envelope compression, biomass and sustainability. And quite frankly, some of our 2030 targets we've already met some of our achievements. And finally, as you could see on the last 20 or so slides, you can see the depth and knowledge of Mr. Parolin. This is the critical type of knowledge we have in IOD. Key markets, key product and customer technology, and it's those people that really make a difference in our success. And it does create a huge barrier of entry to our competitors. So I think we're in a good place. We're in a good place to capture the upside of the market as we move through 2023 and into '24. And I think, as I said, we've got a great platform to grow even further. Okay. So very thanks, very much, thanks. I hand back over to Vikash.

Thank you very much. Mr. Parolin, Mr. Alastair and Mr. Agarwal. Can we have all the speakers on the screen page for the Q&A? And audience, if you have any questions, you can ask them now. You can raise your hand in connection as well as you can type a question in the chat box. So you can ask them now. While we are waiting for the question, I have one question with me, in the WhatsApp is about competition. If you can talk a little bit more about the competition in this business on Slide #11, please.

Yes, Alastair, do you want to take that?

Yes, I certainly can do. I hate to talk about my competition [indiscernible] platform for debate. Look, I think we have -- this is a big market, as Parolin mentioned. There's room for many players to play in and be successful. I don't think you'll ever get to 1 player having such a significant part of the market that there isn't any more room for anybody else. So if I think about the different players, and we did have a really good conversation earlier on today, we're reviewing our whole consolation strategy and how we go to market and how customers see us versus how we see the competition. And I would say, everybody is different in different ways. Let me talk about us first, and then you can take the comparison. So as I mentioned, we're very strong in the Americas -- the strongest in the Americas, the most integrated so we have a very good position. And we talked to some of our customers during the recent trade shows. And we did ask, do you like working with IOD? And I think the answer is sort of, look, you provide the product that we need to the quality we need at the price we needed at. So there's your absolute base level order qualifier that any business needs that we do the job that we're paid to do. Being large but also local. So if they want to penetrate the local markets, they need us to be there. So again, a base order qualifier be big with your biggest customers and be local with your biggest customers. What's the order winners? Well, I think we're flexible. I think we work with our customers to their needs. Not everybody is perfect in the supply chain and not everybody knows what the customer has been, us around on this call are going to do in any other day. And we're flexible. So we have a good, flexible supply chain. We have a good, flexible manufacturing assets. And we have a broad range of products. So maybe they want a low [indiscernible] oxalate but maybe they need, as Parolin mentioned, some surfactant that creates a special property. And we also have a full range so that they come to us as a one-stop shop. They like our people. I think it's a good team. We are customer-centric. We do try and satisfy our customers. And I think we've got real intentions. We've got good values. We want to innovate with them. We want to be sustainable with them. We want to help them solve their problems that they're trying to solve. And I think that makes a unique environment for us to work and grow. And I think people appreciate that of us. I hate to talk about specific other customers, but there are other integrated players out there and very good chemists and very good chemical engineers and very good business people out there that do similar work. Possibly a little bit less flexible, possibly a little bit less accommodating, certainly innovative, certainly got a good platform but some of them just aren't as integrated as we are and as local as we are. So what would I say? I would say, we're in a good position. As you can see, there are so many competitors up there. It's not as though we're one of 50 competitors. We're one of a handful of competitors. And as IVL is built at this business, these businesses do not come up very often for sale. I think Huntsman owned it for what get on onto 25, 30 years. I think Oxiteno was plus 30 years and Ultrapar's past case, Croda, 115-year-old company and hasn't been for sale. Stepan been around for a long time, Clariant's been around a long time, Dow, BSF, Shells, Sasol, you know them all, they don't generally sell these businesses. So it's a very high barrier to entry business. And I think there's room for more than 1 competitor. So I think we work in our space, and I think we work well with our peers and our customers. So that's how I will calculate.

Just to add Alastair's point, I think here, what you saw that there is an integration play as well as specialty play. Some of the players are pure integration play. And when we say integration that when, as you saw a slide presented the ethane oxide is the big bone of each thane or the fatty alcohols are there. And to create ethane oxide capacities for the expansion, so we are in high-volume commodities plus specialty surfactants. And you can see on the right-hand side, as we are moving the number of projects which we have, so it's a perfect blend of integration and specialty portfolio. And that's exactly what we are doing, some of our competitors you saw, Stepan and Clariant and particularly Stepan, they are not integrated from ethane oxide or similarly in Croda. So it's a blend of integration and specialty, integration captures more value chain margin. And today, if you want to put ethane oxide plant, it is $2,000 per tonne of capacity. It's very expensive to build in U.S. particularly with the company costs going up. So this is the way you give the solutions to the customers of creating more value. So I hope that explains you our competitive edge. Thank you.

Thank you, Mr. Agarwal and Alastair. Audience, if you have any more questions, you can ask them now. I'll take one more. So IVL [indiscernible] was a PET company and integrating into that business and then moved into Huntsman and Oxiteno. So what was the motivation and synergy between these 2 segments? If you can talk a little bit about that. So that's the question.

Yes. So I can take that question. I think if you look at PET, PET was also a very fragmented industry. When DuPont and when Shell took exit from this business, I will solve this opportunity of consolidating this business. So we were a buyer of PTA and MEG when we built the PET plant. We saw that there's a consolidation opportunity. We bought so many assets. We bought from British Petroleum. We've bought from Sepsa and then we worked upstream integrated and built PTA plant in Thailand. We had the acquisition of PTA plants. And then we thought that let's acquire a glycol plant, and that's where we started with old world, as you can see on the top, acquiring old world. And that was a glycol upstream integration strategy with Shell gas leverage. And as I mentioned, that you've got ethane oxide. So with that EO where we've got the merchant market of ethane oxide. So the PET connection is, of course, with MEG as you can see. And then as we got that ethane oxide, then we saw that it is better to go into more value-added products below that. And that's where the Huntsman acquisition came. In this slide, we don't see the MTB portion, that we did not cover today because this is predominantly IOD. We also make propylene oxide and MTV. And MTV is like an octane-booster, which is a perfect proxy for our mixed xylene in what we experienced for paraxylene. So the 2 businesses are connected, as you can see from ethane oxide, making glycol. You saw that, Parolin, they also make glycol, a very small quantity. We are a large buyer in Brazil too, but we presently import a significant quantity. So there are -- these 2 businesses are well connected.

I just have one question about the growth strategy, the plan to double the growth in 5 years, it's quite aggressive. Wondering you probably have kind of penciled down how to achieve that, already. Maybe you can share with us like how much of that is organic? How much is inorganic or how much of it is the margin cycle? And just to confirm that this is not a market share gain, right? It's not something that you have achieved with PET business that you grew from being a smaller player until you own a significant market share globally. This is not the same thing, right?

Yes. Thank you, I will take, and then I'll hand over to Alastair to respond more. You're absolutely right. It's a combination of organic and inorganic strategy, which we have. With Oxiteno and Huntsman acquisition, we've got the position in Americas, right? We've got the chemistry as we saw a large number of product portfolio, which we've got it. Who are the customers, like in crop sciences, we have buyers in [ Yanda ]. We have Unilever in Personal Home Care. So all these customers, and Parolin mentioned to you about cross-selling. These are the chemistries which we create and give solutions to our customers, which can be a global platform to provide in different geographies. Now it will be a combination why I mentioned is because there will be bolt-on acquisitions, which may be much more on the specialty side, because we wanted to say, buy more chemistries around and it will be organic, too. And organic in the sense that, yes, I -- we may have where we want to take a feedstock advantage. We want to capture the marketplace in Asia. We want to capture the marketplace in Europe. So it has to be a combination of organic and inorganic. The idea will be to enhance the EBITDA margin, capturing the integration as well as the specialty portfolio. And that's why with our R&D platform, as you heard, Shanghai, Woodlands and all this, a lot of projects being worked and then you unlock the value to those projects. Alastair, you may like to add some more and Parolin.

Yes, I'd like to say we could do it organically and double EBITDA. But yes, as you said, that's quite a tall order. I think there's a few ways to look at it versus the markets that we serve. So I think practically all of the markets will be above GDP in terms of organic growth. But that certainly isn't going to double EBITDA. But it's going to be a good, meaningful growth. So we'll fully be anywhere between, I guess, the 2 to 4 points above GDP, depending on the market they were going into. Those are our big markets, our big volume markets becoming more meaningful because there's a lot of things going on in the world that you know about. I mean, with the Ukraine war, we've got big problems with food supply and the amount of food that Ukraine brings to the market and then blocked again. South America is going to be clearly one of the food baskets of the world and growing at a significant rate, and that's very noticeable. I mean, that's one of the reasons we wanted to move into Brazil in the first place, how meaningful they are into crop sciences and how big Brazil is going to continue to be in the crop business. I think Home & Personal Care is going to just keep growing. The urbanization, the population changes, the developing country-type approach, even the developed country, are all wanting bigger and better solutions to hygiene. I think the Energy, Coatings, Resources, I think they're going to continue to grow. Maybe albeit at a slightly lower rate, more closely linked to GDP. But I think we've got some opportunities around the cross-sell that Mr. Parolin mentioned that could allow us to grow at a faster rate. So you're talking between 2 and 4 percentage points of GDP. The ones I think we could grow significantly larger than that, as Mr. Parolin mentioned was food, pharma. I think those are markets that we have a small presence in. We've got some really good products but a small presence. And I think we can really grow those quite exponentially double-digit figures, if we can get our portfolio matched up. So that's one area. The second area is there's the sort of string-of-pearls strategy where you buy much smaller bespoke technologies and scale them very rapidly. So that's the sort of hybrid inorganic, organic, so start small, buy small and then scale rapidly and I think that's got a lot of potential if we can find the right technology that we want. And then the third one is through inorganic. And there are some acquisition targets out there that we'd like to look at. And I think the market is pretty right at the moment to have some discussions. So we're looking at it across all 3: organic-hybrid; organic and organic; and inorganic to help us grow. That's probably about as much as I should say about this at this stage.

Thank you, Alastair and Mr. Agrawal. There's a question on Crop Solutions. Actually, there are 2 of them. So one question is a little bit more high level and simple that this organic footprint, so what are our thinking around herbicide and insecticides growth? Do we think that this organic food trend is not that big? Or how do we think about it? How important is this segment? And the second question in the same is about El Niño, like the hot weather expectation next year, so how do we think about that?

Parolin, do you want to take that?

Yes, I can take the first one, at least. I think I heard the phrase, we made an event with the customers in Crop Protection. And we took a specialist there and he said a phrase that shocked me. He said in the next 30 years, we need to produce as much food as we produced in the last 12,000 years because of the population growth and the earnings and so on. So the challenge to feed 8 billion people, it's a huge challenge. And we cannot do that with organic food. It's not -- it's simply not possible. So we need very, very high yields to feed all these people to provide protein and to provide all the biofuels. And so it goes -- it's not only food, it's biofuels, it's textile products as well. So if you sum up all of this, it's a huge challenge, and I don't believe that can be made with traditional organic agriculture. Obviously, there are some areas in which the companies are developing, for instance, biologicals, but yet biologicals need surfactants as much as the traditional crop protection products. So it's not something -- it's not a threat, it's an opportunity. So in my perception, and nature always fights back so whenever you develop an herbicide or an insecticide or a fungicide, the bugs and the weeds, they start creating some resistance. So you have to keep innovating all the time because nature always finds a way to go around you. So it's a very dynamic market. The challenge is huge, and the amount of food to be produced is huge. And on top of that, I would like to say that Brazil has this huge opportunity as well. So nowadays, we use far less than we have arable land available. So it is the best place to be in agriculture. We are -- Brazil is already feeding more than 1 billion people today, is amongst the top 5 producers of soybean, corn, meat, poultry and many other types of foods. So it's -- but again, organic food is a niche and we need to feed all the poor people and all the emerging countries and the technological challenge is really huge.

Yes, thanks for the question on El Niño. Look, so I guess the way to look at El Niño is a number of ways. One is El Niño is the warming in the Pacific of the Pacific Current and that setting the -- I guess the certainly, the Southern Hemisphere weather patterns but also can affect Northern Hemisphere. So what could happen and there is a high likelihood that El Niño will happen this year. I think in the part of the world, it will become wetter, the East Africa and East Asia. And the other part of the world can become dryer. So I guess South America and some parts of Asia, Australia, et cetera. That's the phenomenon. What are we likely to see? I think it's changing crop cycle patterns, some crops will get planted earlier and grow faster and be harvested earlier, and some might be a little bit later. I think if there's a dryer environment in Indonesia, you can get an effect on the palm kernel oil, which would mean palm kernel oil prices would go up, which is not a bad thing for us because we have our own alcohol production as well in South America, remember? I think you could see some crop failing, which means crop prices will go up, especially on the back of Ukraine, you might see a spike in food if some crops fail. How does this -- I guess the question is, what does it mean for us and IOD? Very difficult to predict, because it depends on whether it is a low-impact El Niño, high-impact El Niño. Who gets drought, who gets rain? Does the U.S. actually benefit because they'll get a warmer Midwest and maybe not less would bring. So you're going to get different effects around the world. I think the beauty we have as a company is we have the North and South American production capability, which means we're in both hemispheres. So if 1 hemisphere needs more products because they've had a failed crop and have to replant then we can pull from North America to South America. If equally, the crop's not been so good, the Northern Hemisphere is very good, then we can push products into North America. So we can play the logistics game very, very well and make sure whoever needs the product gets it at a timely manner. I think we've got a robust network to supply these chemicals. We've got capacity where we can ramp up quite quickly, which is good. And I think some of the products that we produce actually help the situation, products that make it a little bit easier to absorb the chemicals onto the plant service and stay there, chemicals that are less easy to wash off it as torrential rain and products that help in the water conservation through the formulations we can make. So I think in all areas of if it is and God forbid if it does, we can react quite well to the market and push product where it's best with our customers because they know this market very well as well. So I think we're in a pretty good position but we'll watch it. Just a few hurricanes coming in, in [indiscernible] El Niño will watch the weather trends and make sure we're ahead of it.

I've got 3 questions. The first one is that in terms of R&D capability, would you consider the leader in this space? And where are you? What is your position in Chart 11 on the R&D scale? And second one is that in terms of specialty surfactant, what is the current percentage of specialty out of your total portfolio? And the rest is the commodity type? And what is your target? And how do you get there with the current R&D capability? Or do you have to resort to acquisition? And if that is the case, what is your -- what are you looking for in your next acquisition? Is it R&D capability, patents, client list? And the last one is that in terms of integrated model, I understand correctly that Huntsman surfactant is the only one who has a fully integrated model down to cracker, EO and then others, but they still have to buy [indiscernible] from some place else. And Oxiteno is -- don't have any cracker and buying ethylene from Braskem to produce EO and also buying [indiscernible] from some place else. In this regard, what is the current contract with Braskem will be expired for the ethylene?

Good questions from Komsun. I'll take the third one and maybe the first two can take, Alastair. You're right. In Huntsman, we have the integrated. We have the complete record. We have downstream integrated entire ethylene is basically consumed and I'm talking about excluding glycol,okay? So for the glycol import that I'm talking about, we buy ethylene to make glycol, and this is a perfect collision right now. And in Clear Lake, of course, we have integration with Lake Charles. So that's the integration model. As far as -- you're right, in Brazil, we buy ethylene from Braskem. It's a multiyear agreement. And Parolin can certainly add. I mean, these are multiyear agreements, there's a surplus ethylene in Braskem. But we do have a 30-hour plant. So we buy palm kernel oil, and we make our own fatty alcohols. But in Huntsman, you're right, we buy fatty alcohols. That is also certainly an opportunity if you want to upstream integrate with fatty alcohols and Asia because, as you know, the largest producer of fatty alcohols is in Indonesia and Malaysia. So there is certainly opportunity to upstream integrate that part of the business also. So now I hand over to Alastair. Please go ahead, Alastair, on the specialty and...

Yes. So I think the way we think about our business is in 3 segments in terms of products. So we have -- today, about half of our products in terms of volume are in the very simple commodity markets that you could track. So ethylene, propylene oxide, ethylene oxide, MTBE, oleochemicals. And that's about 50% of COMA is in those products. And it's about 70% of our volume. And then the other way to look at the business is our higher volumes of actins, the products that go into some of the crop solutions, some of the Home & Care solutions that we have, some of the oilfield chemicals, et cetera. Now when I look at the more commoditized big volume, nothing special in pricing-type products. They run at about $300 a tonne in terms of margin. If I move to the higher volumes of actins, they're more like $500 to $600 a tonne. So you can see we almost double COMA per tonne by moving those more commoditized ethylene et cetera, into a selective type product. So I can double in the COMA per tonne by doing that. And that's about 30% of our COMA -- for about 30% of our COMA. When you move to the HVA, the real HVA, so this is the more bespoke products, much lower volumes, maybe only about 6% of the volumes, but 15% of COMA. So despite we're only making a small quantity of these products, the year, we get a very high margin. And those products sit at over $1,000 a tonne, some over $2,000 a tonne. So I think it answers your question. Look, we still move a lot of product, as you can see. We make 6 million tonnes. We sell 3,500 million tonnes a year. We move a lot of high-volume commodities, and that's why we place a lot of attention onto ethylene, onto propylene, onto MTBE, butanes, et cetera, because we move a lot of these products. But as you move into the derivatization of those products, we make a lot more margin. So think about it at about 350 -- 300, 350, about $500 to $600 in the middle range and then at the very high range, you're making over $1,000 a tonne. So our strategy is to move more and more of these larger commodity products into more and more of mid-range and move more and more of the midrange into more and more of the specialty products. And that's why we're increasing our innovation rate because the COMA per tonne is so much more beneficial. I think -- can we do this internally? I think in some of the markets, yes, we can. We have really good crop science people. We have really good Home and Personal Care people. And we have really good resources, energy, coatings type people, who can do a lot more innovation and penetrate the markets in a more meaningful way. As we move closer towards the Food and Pharma, we have some really good products that can penetrate that knows a very, very high COMA per tonne products. That's where we might need more bespoke outside assistance, people use the marketing in those markets. People are used to innovating in those markets, quality people who are used to operating in that quality space. These are all things we can look at. And as DK mentioned, when you buy this business and IVL has been very successful at buying businesses, you really buy an asset where you're buying people. And sometimes rather than going to the market and just trying to piece together a team from good people. Sometimes it's better to go and buy a business that does this, and have all the integrated systems and processes and quality systems, et cetera, buy you to do that. So that's another thing we're looking at that can we accelerate our penetration of these markets by an inorganic acquisition as well as an organic self-development. And we're doing both. We're looking at both.

I have 2 questions. One, I would like to ask about the [ subset ] factor that you believe that you can implement in order to grow your size and your -- the, I would say, the level of the integration because you mentioned that. I would say, one, the strategy that we now emphasize would be integration and innovation that you go to the midstream, right, from basically the upstream. But besides that, what are the key factors? Because in the downstream that you are focusing on, I think is a way more variety of the products and the scale is a bit small in terms of the lease market in this product based on what I understand. So this kind of thing, how can grow in such a time and a big scale in a strong period in my view because you say that in 3, 5 year, we actually basically more than double the size that will be very challenging to me. The second thing I'd like to add specifically on the geographic question which and because in terms of the China, India and also the European market and also actually in North America, how you see it for regions in terms of the broad strategy, in terms of the product synergy and also in terms of competition to the landscape, can you compare that to us -- for us to understand how to move into those kind of market and see the kind of the opportunity for your company?

So that's a good and a straight question. So look at the IVL the way we moved with the 2 major acquisitions, Huntsman and Oxiteno, we created a very strong platform and the knowledge and the innovation pipeline, right? These 2 acquisitions today revenue of $4.2 billion last year's EBITDA of $700 million. Now what you have created here is the capability, a lot of ethane oxide capacity. I can always divert that ethane oxide from glycol to these derivatives. And if you recall, in acquisition of Oxiteno, we've got a state-of-art surfactant production facility in Pasadena, which was actually costed $270 million per oxidant to build, they are later state-of-art. So you can always add more reactors whether you want to do it in incremental reactors because you have the feedstock availability and you can expand it. Coming to the question of geographical diversification. So Alastair was mentioning, these are all GDP plus growth, but if you split this GDP plus growth rate, like PET, you have developing world growing much more, correct? And with those chemistries, what we have, there's a lot of active interest by many players in this part of the world to create those alliances, which have ethane oxides, which has -- or we can create ethane oxide capacities and orders a bolt-on acquisition. So to -- there will be some targets. It will be an organic plus inorganic, and once you create this, then there is a lot of synergy benefits, which get unlocked in terms of cross-selling, as you saw. Even in case of Oxiteno, we are talking $100 million plus synergy benefit, and then you've become exactly like PET. What did we do? We acquired the assets, we integrated the marketing. It wasn't a lot of specialty play there. But in this case, you have a lot of specialty play. So let Alastair add more on it and what would be the further our strategy and Parolin, if you want to add, yes.

Yes, I'll go next, and I'll hand it over to Parolin, the deep knowledge of the industry. So I'll try and capture a few of your points. I think integration is very important, unless you were a real specialty producer. You've got to remember, even just looking at the U.S. or South America, people who compete with us in the specialty place also by EO from us. Anybody that says they can do this business without ethylene oxide is a misnomer. They either buy it or they make it and they're integrated. I know I bought it, the position of integration rather than when we go to buy it. And therefore, there's going to be a landscape of, I think, something like 50 to 70 of the EO that's used into the actins in the U.S. isn't on the pipeline. And therefore, there's going to be a real shift in the U.S. and what the pipeline producing, and as you saw, Stepan's just building their plant, and they're still not on pipeline, but at least it's close to a pipeline. I think there's going to be a move -- seismic move of specialty producers coming more towards the ethylene oxide producers. So I think that's one thing to watch out for. I think in South America, we're the only EO producer there. So I think that's a very important part. So as we move into, say, Europe or China or India or Asia, we've got to think about either the EO supply or the level of specialization that we do linked to the EO supply. And that's an in-depth analysis we do all of the time. We prefer both, but if we can't do both, we have to come more special would be the way to look at it. I think the other thing to think about is you can buy EO plants of licenses. You can buy ethoxylation plants from licenses from equipment suppliers. What we tend to see around the world is the amount of people that try and do this can fail miserably. And it's not because they're not good people, it's because they don't have the product technology. They don't have the quality systems. They don't really know how to run the plants. They don't have the marketing capability. They don't have the innovation capability. They don't have the connection to both suppliers and customers. And therefore, you see a lot of capacity in China that isn't really being used. So it's being used for very basic products. You see the same in the Middle East. You see the same in other parts of Asia. You've seen a lot of plants in Singapore, as you know, that have tried and failed and sold up. You have to have many legs on the stool, if you have one leg at the still, which is basically some assets, you're going to fail badly. And a lot of companies have tried to enter this space and have exited a couple of years later, just haven't been successful. And therefore, it's the whole resilience of the company, the business model, the supply chain, that really makes a difference to this industry. And that's what's going to make us successful because we have the people, the knowledge, the innovation capability, the product knowledge, the quality systems, et cetera, that all go together that make us a success with our customers. So it's a low-barrier entry because you can just book capital, a very high barrier to entry because of all the other things they need to be successful like PET as well. But I'll hand over to Parolin to add to that.

Yes, I have exactly the same vision, trying to build a little bit on what DK said and what you said. On one hand, you have the back integration that requires a lot of capital to build the EO units and having access to competitive EO is obviously key for this business. But on top of that, you have to have this kind of asset footprint that guarantees to our customers' responsiveness that we can react and be agile in terms of the supply chain. So we, in the Americas, we have a unique footprint and we can serve the customers all across the Americas and some of the supply chains are very volatile, especially on crop solutions. You never know when a bug will appear or [indiscernible] or something happens or a climate change or a drought. So it's tricky. And these companies, they rely on companies that can be very responsive and can supply them just in time the consumer products, company is the same story. And as Alastair mentioned, is a set of capabilities, we have a capability back a little bit on the R&D. We are very agile going from the lab into the industrial plant and that requires a lot of knowledge, requires the pilot plant. So whenever you invent a new [indiscernible] going to the industrial plants, we can do that very quickly because we have all the hardware and all the knowledge necessary to do so. Not all the companies have this very broad scope of products in terms of EO derivatives. We have a very broad product line. So back to the growth story, each region -- each and every region is different. So the kind of opportunities and the kind of markets to serve our different -- North and South America are different in terms of what one can do. So going to Asia and into Europe, my perception, we need to do part of that inorganic because then you buy knowledge, you buy relationships with some of the companies. And yes, you can build that from scratch, but takes more time. So whenever you can buy a nice company, either a bolt-on or a big company, you do a lift and you do a shortcut in terms of growth and you acquire the resources and the people and the knowledge and the relationships that you need to be successful with this kind of solution provider market.

I have follow-up questions to previous question. About the products that have high margins like on average, $500 to $600 per tonne cost that inning, but what is the proportion of that value added to the total of channel EBITDA per year? And could you provide roughly about R&D commission cost? And the second question is on the margins on the surfactant. If you look across all the applications like the crop solutions, either it's the household, are there any difference in terms of the margins between applications or it's actually the same for all?

Parolin, do you want to take that?

Yes. The proportion of these high-margin products, it's a little bit higher than the IOD as a whole because we have -- crop solution is a very strong business in South America. It is the main market for us and crop solutions, as Alastair already mentioned, we have a great team, a great knowledge, a great market position in South America and some of the products are protected by patents. Some of the others, EO have a very special performance. So yes, it's a very important market for us. On Home and Personal Care, I mentioned that case of Unilever, but we have other ones in terms of coatings with some coalescence. So lots of different opportunities in this high-value added products.

Just to add, if you see the EBITDA per tonne here on the surfactant side is $374 but as you were asking, conversion cost -- rewarded the conversion cost. Now this can go to even $600, $700 per tonne EBITDA because it all depends on the cycle time of those particular surfactants, which we make because different type of surfactants have different cycle time in the reactor. But I also see a question in chat box regards where we are asking that do we have a breakup on the addressable market, coatings and all that. So if you want to answer that, Alastair, that what the breakup...

Yes. There's a few ways to think about the business that's different from true commodity. So true commodity, you're looking at conversion cost, volume, yield, keep the plants full, move the product, very clear process to run the business. As you move towards more high value-added products, you're not just looking at COMA a tonne. You're looking at COMA per hour on the reactors. So which product, as DK mentioned, from a cycle time point of view, actually makes the most COMA for every hour you're running the reactor. And when the reactors get full, as they do in normal markets, you're really playing a product management-type exercise of where is the best place to put the product for the maximum throughput and the maximum return. So that's one way to look at it. Another way to look at it is, as we've integrated Oxiteno, what we've done is a network optimization. So some plants are well suited to high-volume, very short cycle time products and some plants are well suited to complex build products. And if you take a simple product, you can move it within 3 to 4 hours through the plant. If you take a complex product, you can move it through in 19 hours, 20 hours. They're very different bills where you get a lot more money for the 19-hour product versus the 3-hour product. So that's one way to look at it. I think the other way to look at it is you can sometimes have the same product that creates the same effect that goes into a very different market. So sometimes, you can get exactly the same product with the same conversion cost and the same cycle time but you can get a very different price for the product, depending on which market you put it into. And that's the beauty of the market approach. We have the big markets, but we can go to 1 market with 1 product, get 1 price and market it in a completely different way in a different application and get a very different price. So it's very difficult for us, and I know you find it difficult to track. You can move products around and play a really good marketing game and get a lot of value by penetrating some of these markets. And that's when we're sort of saying moving into Food and Pharma, you get another 2x on the value engine if we can penetrate those markets. I think the other question that DK mentioned the question in the chat box. What's this year? So roughly, for the Home and Personal Care market, it's about 50% of our downstream volumes, for Coatings and Resources, it's about 30% and crop is about 20%. So as you can imagine, you can see the size of the market versus the others. We're a big player in Home and Personal Care. A lot of volume goes in there and a lot of value comes out of it because they're quite in the more detergent-type products. We can make products very, very quickly and move it at high volume and make good money. When you get to the malls, bespoke products like the unstoppables, the perfume additives and things they take more cycle time, but we charge more money for that. So the Home and Personal Care market globally is a much bigger market and about 50% of our volume goes in there. About 30% of the crop market, but you see how important we are in the crop solutions. So 30% of our volume goes into a relatively small market because we're so big in it. And that's the one to watch that as we grow in that market and become more meaningful in the other areas of the world, I think that's going to generate some good margins.

Thank you very much. We don't have any more questions. So thank you, everyone, for taking time to join us. The recording of this session will be available on the IVL website and we sincerely appreciate your participation. Thank you very much.