Oriental Aromatics Limited (500078) Earnings Call Transcript & Summary

Ladies and gentlemen, I, Kiranpreet Gill, Company Secretary and Compliance Officer, attending the meeting from Mumbai. On behalf of the Board of Directors, an entire team of Oriental Aromatics, welcome you all to the 52nd Annual General Meeting of the company, which is being held through video conferencing in compliance with the provisions of the company's Act, listing regulations and the circulars issued by the Ministry of Corporate Affairs. Before we proceed further, I would like to introduce the Board members, the key managerial personnel, scrutinizer and auditor of Oriental Aromatics Limited. At the outset, I would like to introduce our Chairman and Managing Director, Mr. Dharmil Bodani. Mr. Dharmil Bodani has over 3 decades of rich experience in the fragrance, flavors and chemical industry. With specialized perfumery training from Gras, France, his visionary leadership has been pivotal in transforming Oriental Aromatics into a fully integrated player in the F&F industry driven by research and strategic foresight. He plays a crucial role in developing and executing business strategies and have been instrumental in shaping the group's overall vision and direction. Presently, he is serving as a member of Audit Committee and Stakeholders Relationship Committee of the Board. I would now like to request our Chairman, Mr. Dharmil Bodani, attending the meeting from Mumbai to welcome everyone to the 52nd Annual General Meeting of the company.

Good morning, everyone. Sorry, I have a bit of a traffic issue. Good morning, ladies and gentlemen. I extend a warm welcome to each of you to the 52nd Annual General Meeting of Oriental Aromatics. On behalf of the Board of Directors, I sincerely thank you for your continued trust, encouragement and support. It is truly a pleasure and honor to host you today. I now request Shyamal Bodani to introduce himself.

Good morning, everyone. I'm Shyamal Bodani, the Executive Director of the company, and I have joined this meeting from Mumbai, India.

Thank you so much, Shyamal. Mr. Shyamal Bodani has over 2 decades of rich experience in fragrance, flavors and chemical industry. Mr. Shyamal Bodani plays a pivotal role in strategy formation and implementation. He has expertise in both domestic and international marketing, sales, export promotion and is actively involved in the company's financial activities. As Head of execution for the entire group, he spearheads project management, ensuring that all projects meet their deadlines. Presently, he is serving as the Chairman of Corporate Social Responsibility Committee of the company and is a member of Risk Management Committee. I would now like to request Mr. Satish Ray to introduce himself.

Good morning, everyone. I'm Satish Kumar Ray, Executive Director, Operations, and I am joining this meeting from Mumbai.

Thank you, sir. Mr. Satish Ray holds Master's degree in Business Administration and serves as the occupier of the factories of the company. Having close to 3 decades of experience in factory operations, human resource management and other fields such as policy formulation and planning, he brings a wealth of knowledge and expertise to his role. I would now like to request Mr. Ranjit Puranik to introduce himself.

Good morning. I'm Ranjit Puranik and joining this meeting from Mumbai, and it's always an honor and pleasure to be a Director at Oriental Aromatics.

Thank you so much, sir. Mr. Ranjit Puranik is serving as a Managing Director of Shree Dhootapapeshwar Limited, involved in manufacturing of Ayurveda healthcare formulations. He is a trustee of All India Ayurveda Congress and World Ayurveda Foundation. He also serves as President of Ayurvidya Prasarak Mandal and is Advisor to the Herbal and AYUSH Panel at PHARMEXCIL. Presently, he is serving as a member of Audit Committee, Stakeholders Committee and Nomination and Remuneration Committee. I would now like to request Mr. Harshvardhan Piramal to introduce himself.

Good morning, everyone. This is Harshvardhan Piramal. I'm joining from our office in Mumbai. It's a pleasure to be at the meeting and pleasure to be on the Board of Oriental Aromatics.

Thank you so much, sir. Mr. Harshvardhan Piramal holds an MBA degree specializing in finance and strategy from the London Business School and currently serves as Executive Vice Chairman of Morarjee Textiles Limited. In August 2001, he was appointed COO, Allied Pharma Businesses at Nicholas Piramal India Limited, now Piramal Enterprises Limited, where he was responsible for the turnaround and robust growth of all the divisions. He was in this position until April 2004 when we took up his current position. In addition to business pursuits, he actively participates in tiger conservation efforts and serves as a trustee of the conservation wildlands trust. He is serving as the Chairman of Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee of Oriental Aromatics. I would now like to request Mr. Deepak Ramachandra to introduce himself.

Good morning, everyone. I'm Deepak Ramachandra attending the meeting from Mumbai. Pleasure to be here and very honored to be on the board. Thank you very much.

Thank you so much. Mr. Deepak is an experienced finance professional who completed his MBA from London Business School. He served as the Managing Director and Head of Equities at Axis Capital. Additionally, he was the Co-Head of Equities at the Bank of America, Merrill Lynch India. Prior to that, he served as the Head of Emerging Markets for Europe, Middle East and Africa at Credit Suisse in London. He was also part of the Citi Group India and led business development and distribution at Sharekhan. I would now like to request Mr. Cyrus Mody to introduce himself.

Good morning, everyone. I'm Cyrus Mody, Independent Director of the company, and I'm joining this meeting from Mumbai. Pleasure to be here.

Thank you so much, sir. Mr. Cyrus holds was a bachelor's degree in economics and strategy from Bucknell University. After gaining experience in various roles, which included legal investment strategy and town planning and following a 2-year stint with the Boston Consulting Group, he transited to the real estate industry. He currently manages Viceroy Properties LLP, a leading real estate development firm. I would now like to request Mr. Parag Satoskar to introduce himself.

Good morning, everyone. My name is Parag Satoskar, I'm the Chief Executive Officer of the company, and I'm joining this meeting from Mumbai head office. Thank you.

Thank you so much. Mr. Parag Satoskar Patoka has over 2 decades of rich experience in the chemical, fragrance and flavor industry. Mr. Satoskar specializes in marketing across all divisions with a strong focus on sustainability and optimizing processes, ensuring the company consistently meets its growth targets. This technical and commercial expertise plays a key role in the strategic execution at Oriental Aromatics. Now I would like to request Mr. Girish Khandelwal to introduce himself.

Good morning, everyone. I'm Girish Khandelwal. I'm joining this meeting from Ahmedabad. Thank you.

Thank you, sir. Mr. Girish Khandelwal is a Chartered Accountant. He has been instrumental in the prudent management of the company's finances overseeing areas such as financial planning, taxation, risk management and financial reporting. This proficiency involves identifying the company's financial strength and weaknesses and suggesting effective corrective actions. Further, from the Compliance Team, Mr. Anusha Bafna and Ms. Karishma Mrug have also joined. Now I would like to request them to introduce themselves.

Hi. Good morning, everyone. Welcome to the 52nd AGM of Oriental Aromatics. I have joined this meeting from Mumbai. Thank you.

Thank you so much. Karishma please introduce yourself.

Good morning, everyone. Welcome to the 52nd AGM of Oriental Aromatics Limited. I'm the Joint Assistant Company Secretary, and I have joined this meeting from our head office in Mumbai. Thank you.

Thank you. Apart from the management team, CS Shreyans Jain, our Secretary Auditor, and scrutinizer for today's meeting; and Mr. Hariharan, representative of Statutory Auditor, Lodha & Company have joined this meeting. I would now like to request them to introduce themselves. Shreyans, kindly introduce yourself.

Good morning, everyone. I'm Shreyans Jain, Company Secretary, Secretarial auditor for Oriental Aromatics and scrutinizer for today's Annual General Meeting. Thank you.

Thank you so much, Shreyans. Mr. Hariharan.

I think he has some technical issues, but he has joined from Mumbai.

Thank you, Shreyans and Mr. Hariharan for joining this meeting today. Anusha, please if the confirm that the requisite quorum is present.

I confirm that the requisite quorum is present.

As the requisite quorum is present, I request our Chairman to call the meeting to order.

Thank you, Kiran. I call the meeting into order. Should I continue with my speech Kiran?

Yes, yes.

Okay. Dear shareholders, this year at Oriental Aromatics has been another significant year of resilience and optimism, made possible by the coherence of our team and the support of our stakeholders. We continue our journey of innovative and sustainable creation, excelling in fostering generational relationships with our customers globally. Today, Oriental Aromatics proudly stands as a leading fully integrated global enterprise, excelling in manufacturing of fragrances, flavors, specialty aroma ingredients and cam. Continuous capacity expansion, process reengineering and creativity in fragrance creations are the core of our strategy. Sustaining and enriching our generational relationships with both long-standing and new customers empowers us to elevate our company to new heights despite challenges that we face in the marketplace. Through expanding our capabilities, diversifying our product portfolio and entering new markets, we have solidified our positions and are poised to elevate our company to even greater heights. The tireless dedication and exceptional performance of our passionate team has been crucial in understanding client needs, exploring innovative solutions and delivering performance solutions. We extend our heartfelt appreciation to all stakeholders for their steadfast commitment and outstanding contribution towards achieving the goal of sustainable growth across all our divisions. We also express our gratitude to our stakeholders for their ongoing support. Here, we come together to acknowledge the challenges we have faced and the measures that we have taken to overcome them. I would like to now provide you with an overview of our business performance. Over the past year, we have observed a global scenario marked by overstocking and reduced demand. However, there are positive signs of recovery in our Specialty Aroma Ingredients segment. Our Specialty Chemicals vertical faced challenges of price erosion and demand fluctuation early in the year, but made a notable comeback in the latter half, achieving a remarkable 12% sequential improvement in EBITDA over the last 2 quarters. Demand remains robust in our Flavor & Fragrance division, driven by strong consumption trends in India. In FY '23, '24, our Fragrance and Flavors segment recorded significant growth with sales increasing by 15% year-on-year. Meanwhile, the camphor and terpene chemical markets continue to pose significant challenges, especially in the camphor powder sector. Despite competitive pressures, particularly in India, strategic adjustments in our portfolio management helped us optimize profitability. Although the first half of the year was challenging due to global price declines, our focus on operational efficiencies and portfolio enhancement positions as well as for positive outcomes in coming quarters. Production and financial performance. In FY '23, '24, despite economic challenges, we maintained a resilient operational stance. Our consolidated operational revenue was INR 836 crores with a decline of 1.5% year-on-year. Our EBITDA stood at INR 47 crores, reflecting proactively efficiency measures coming in place, albeit a 13% decrease. The most significant achievement during the year has been the generation of operating cash flow to the tune of INR 142 crores, resulting in improvement of our net debt-to-equity ratio, which stood at 0.3x as of 31st March 2024 compared to 0.34x in the previous year. The improvement is particularly noteworthy as it was achieved despite our ongoing investments in capital expenditures. It reflects our disciplined approach to financial management and underscores our commitment to maintaining a strong balance sheet amid evolving market conditions. Expansion and milestones. The company has successfully completed its ambitious 5-year program, investing approximately INR 250 crores in expanding new plant capacities, which began in 2020. Our products launched in the specialty space over the last 5 years have been well received by customers with a continuous growth in demand for these products. To support our growth ambitions, we've made substantial investments in expanding our manufacturing capabilities. Moreover, our brownfield project of hydrogenation in Baroda, Gujarat commenced commercial production in July 2024, and it is aimed at enhancing our capacity in specialty aroma chemicals. The greenfield project in Mahad, Maharashtra is progressing well with trial runs of commercial lots underway for full-scale production, reinforcing our commitment to meeting growing global demand. Future strategy. We continue our journey -- as we continue our journey, our company remains committed to achieving success through innovation, efficient supply chain management and expanding its customer base. By embracing innovation and enhancing operational efficiency, we strive to create value and foster enduring partnerships to mitigate risks and enhance the raw material strategy by diversifying our raw material sources and exploring alternative technologies. We aim to reduce dependence on specific inputs and build a resilient supply chain for seamless operations. Sustainability and community engagement initiatives. Sustainability is at the heart of everything we do. We are committed to reducing pollutants in our effluent discharge, safeguarding local ecosystems and achieving zero liquid discharge within coming years at our Baroda and -- at Bareilly & Vadodara facility. Our facilities in Ambernath and Mahad are in full compliance with ZLD standards. We are proud of our progress in cutting greenhouse gas emissions, recognized with EcoVadis Gold Medal for our dedication to sustainability. Our investment in green chemistry and affluent control further shows our commitment towards sustainable future. Environmental and social sustainability are key components of our development strategy, and we have implemented various internal programs to meet these objectives consistently. To address environmental challenges, we have set up targets to reduce carbon emissions, minimize waste and conserve natural resources. Through energy-efficient practices such as continuous process reengineering and the adoption of renewable energy sources, we have made substantial progress in reducing our environmental footprint. On the social front, we prioritize the well-being and development of our employees, ensuring a safe and inclusive work environment. In governance, we have strengthened our corporate governance practices to ensure transparency, accountability and ethical behavior. Our Board of Directors and management team uphold the highest standards of integrity, ensuring fair and responsible decision-making. By addressing ESG challenges, setting ambitious targets, achieving tangible results, we are committed to building a sustainable future for our company, stakeholders and the communities we serve. Our outlook going forward. Looking ahead, we are cautiously optimistic about a steady revival of demand, supported by reduced input raw material prices. We anticipate maintaining steady production across our existing product lines, leveraging our plant capacities efficiently. We are delighted to share that we are on the path of establishing ourselves as a global supplier in all our operational areas, holding a significant market share across our product offerings. This strategic initiative aligns with our growth vision and enables us to fortify our global network, thereby enhancing our ability to serve our customers more effectively. We highly value the strong relationships we have maintained and actively engage with our customers to understand their needs and provide them with the best solutions. We extend our heartfelt gratitude to our stakeholders for accompanying us on this journey of value creation and express our sincere appreciation to the Board of Directors for their invaluable guidance and direction. Your confidence has been crucial in driving our efforts towards sustained growth and success. Looking ahead with optimism, we are committed to upholding excellence, innovation and sustainability. Thank you. Now I request Shyamal to address the members.

Dear shareholders, good morning. I welcome you all to the 52nd Annual General Meeting of Oriental Aromatics. I'd like to thank each one of you for being with us on this journey. Oriental Aromatics has always remained at the forefront of industry innovation through the support of its trusted partnerships and relationships built over the years. Through continuous advancement of all our areas of operation, whether it's our winning fragrances in the perfumery space, new product approvals in the specialty aroma ingredient space or our expertise as one of the oldest and largest producers of camphor, we continue to strengthen our market leadership, drive innovation and meet the evolving needs of our customers across diverse industries. Our operational excellence boosted by efficient cost management and a robust supply chain, ensure that we deliver value consistently to all stakeholders. Benefited by the knowledge gained from decades of experience in the national and international markets, we have established ourselves as a preferred supplier of specialty aroma chemicals to leading brands globally in the fragrance, flavor, FMGC, food and beverage space and as a reliable supplier of camphorin the religious markets and pain management space, significantly contributing to their product success. This year's performance highlights our resilience, which was tested last year due to a sudden drop in demand of our products globally, followed by a sharp reduction in prices. We overcame this by looking internally at our processes, becoming more efficient and sustainable. As highlighted in the Chairman's speech, the last year can be summarized as a year with a unique set of opportunities and challenges. However, we are glad to inform you that we have looked at the last year majorly as an opportunity for improvement. We remain committed to our philosophy of pursuing profitable growth. Our diversified and risk-mitigated range of products has enabled us to maintain nearly identical annual sales compared to the previous year. Further, by continuously seeking opportunities for improvement and adaptation, we aim to sustain profitability within the market dynamics. During the financial year 2023-'24, we dedicated our efforts to commissioning of our hydrogenation plant in our Vadodara site. a brownfield project and successfully commissioned it in July 2024. We have taken multiple batches of product and this new facility that leads received are quite encouraging. Additionally, pre-trial commercial production has commenced at our dedicated specialty aroma chemical plant greenfield project in Mahad, Maharashtra and has reached an advanced stage of commissioning. We expect it to start contributing towards our top line from the second half of the financial year '24, '25. The results from the current trial production have been encouraging, and we remain optimistic about the future performance of this product. Our efforts and achievements have not gone unnoticed. During the year 2023, we were honored to receive the prestigious Global Supply Excellence Award from Procter & Gamble. We are proud to be amongst the 80 companies that have got selected for this prestigious recognition out of approximately 60,000 business partners, suppliers of P&G globally. In terms of operational performance, production of our specialty Aroma ingredients were near full capacity. Similarly, our Fragrance and Flavor division has shown robust utilization levels and in the camper powder and terpene chemistry segment, our focus remains steadfast on driving profitable growth without ensuring balanced capacity usage across all business units. Notably, over the past 2 years, our export contribution has significantly surged, climbing from 30 to 44 driven primarily by the success of our Specialty Ingredients and Flavor & Fragrance division in international markets. Under our strategic vision to carve out a strong growth chart for our business, we prioritize global markets while recognizing the local potential within India. We are keenly aware of India's hypergrowth trajectory and aim to leverage this opportunity to propel our company forward. When evaluating our strategy, we consider 2 factors: accessing project future demand of the product and prioritizing absolute control over our internal processes. With integrated operations spanning product conceptualization to manufacturing specialty aroma ingredients, fragrances and flavors, we have better control over the entire value chain. This seamless integration, coupled with the expertise of our knowledgeable team, empower us to meet client requirements quickly and at a sustainable and competitive price. At Oriental Aromatics, we are dedicated to empowering communities to prosper by fostering inclusive growth as well as diverse positive changes in the regions where we operate. Keshavlal V. Bodani Education Foundation is a nonprofit extension of our company that has established the Gateway School of Mumbai in the year 2012. Since its inception, the Gateway School of Mumbai has worked tirelessly to create a nurturing and supportive learning environment for students who face challenges in mainstream education settings. The school's approach ensures that each child receives the personalized attention by developing their skills, knowledge and understanding. The school aims to transform these students into independent and successful individuals. The school has also been recognized by an Ashoka Changemaker School since April 2016. During the year in February 2024, the foundation also inaugurated the Gateway Intervention Center, a one-stop multidisciplinary center, which focuses on creating individual plans to ensure each child receives optimal support tailored to their unique strength and areas of need. The team has at the center focused on working closely with families and caregivers to optimally support each individual's growth. In a short time, the center has already supported over 75 families. With a focus on empowering 130 students, the Gateway School of Mumbai is making a significant impact in the lives of children with learning disabilities. The foundation is also committed to serving children beyond the gateway school through its various development programs through which the foundation has reached over 450 teachers from across India and the world. Its unique reading app is being used by teachers to build early literacy skills in English, Hindi Marathi. The foundation also works directly with schools and organizations to build more inclusive environments for all learners. We are committed to a girl child education by supporting infrastructure and educational improvements Kasturba Gandhi Balika Vidyalaya and Composite Government Basic Vidyalaya near our facility in Bareilly, Uttar Pradesh. During the year, our employees visited the King George V Memorial at Mahalaxmi, Mumbai, distributing food and essential item kits to the residents, and also donated Sewing Machines to Seva Sadan Society, Mumbai, benefiting women from marginalised backgrounds with employment opportunities. Our healthcare initiatives have had a substantial impact in the area where we operate, including supporting the Blind Organisation of India with folding canes for blind individuals in Mumbai, providing medical equipment for a mobile ambulance through Gurukrupa Foundation in Ambernath, conducting eye checkups for people and donating oximeters to Medical Care Centre Trust in Vadodara, and organising free health check-ups, and distributing free medicine in Bareilly. These efforts underscore our dedication to improving healthcare access and services in the communities we serve. During the year, Oriental Aromatics remained dedicated to environmental conservation and sustainable development through a range of initiatives like tree plantation drives, waste management programs and energy-efficient projects across our facilities aimed at reducing our carbon footprint, enhancing resource efficiency and conserving biodiversity. During the year, our employees participated in a tree plantation drive carried out in Mumbai and in Vadodara, showcasing our commitment to a greener environment. We also proudly support and inspire Institute of sport in Bareilly -- in Bellary, Karnataka by making a significant donation to aid the development of their facilities and programs. This contribution is aimed at nurturing and training talented athletes to excel in their sports career. Looking ahead in 2024, '25, we anticipate a potential rise in demand, supported by favorable raw material prices and outgoing operational efficiencies. Our investment in the Mahad and Baroda facilities are progressing well and are poised to enhance our production capabilities while introducing new product lines. With robust capacity utilization across our Specialty Aroma Ingredients and Fragrance and Flavor divisions, coupled with the strategic growth initiative and increased export contributions, we are well positioned to capitalize on the emerging opportunities and drive sustainable growth. On behalf of the Oriental Aromatics family, I assure you that we will persistently strive for greater heights each year, working towards long-term sustainable profitability for our esteemed shareholders. We are deeply humbled by your trust and pledge to nurture this trust through unwavering dedication, innovation and excellence. We are reflected on this year's accomplishments and are inspired to reach new summits annually guided by your confidence and our shared vision of success. Thank you once again for your invaluable support.

Thank you, Shyamal, for the speech. I would now like to highlight certain points with respect to today's proceedings. The joining to this meeting opened 15 minutes before the scheduled time of the commencement of the meeting, which was 11:00 a.m., and it will remain open for another 15 minutes after the end of the meeting. Further, as mentioned in the notice, the facility of participation at the AGM through video conferencing has been made available for 1,000 members on first come first serve basis, except for large shareholders, promoters, institutional investors, directors, KMP, the Chairperson of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee as well as the auditors who are allowed to attend the AGM without any restrictions on account of first come first serve basis. To transact the business, as mentioned in the notice, all documents registers are available in electronic mode for inspection by the members throughout the meeting, and the same are available on the website of the company under the head Investor Relations. The registered office of the company at 133 Jahangir Building shall be deemed to be the venue for this meeting and the proceedings of the meeting shall be deemed to be made here at. The company has received 4 authorization letters authorizing representatives to attend the AGM on their behalf, representing 0.47% of the voting capital. As physical attendance of members has been dispensed with, the facility for appointment of proxies by the members is not available for this meeting. We have received request from 9 members for registration as a speaker shareholder in the AGM. All those shareholders have been provided specific links to log in to the meeting by NSDL, and we shall be inviting them to speak one by one. We request speakers to confine their questions to the financial statements, Board report and agenda of the Annual General Meeting. Further, your company is also providing the facility of e-voting during the AGM. Members who have not exercised their right to vote through remote e-voting are entitled to vote during the meeting. Therefore, only those of you who have not already cast your votes through remote e-voting are entitled to vote at this meeting by using the electronic voting system, which is now available on the screen. This electronic voting system will close 15 minutes after the conclusion of the AG. Members are requested to refer to the instructions provided in the notice for seamless participation through video conference. In case members face any difficulty, they may reach out on the helpline numbers. I would now like to request our Chairman, Mr. Dharmil Bodani, to proceed with the formal business of the meeting.

Thank you, Kiran. I now proceed with the formal business of the meeting. The annual report for the financial year '23-'24 containing the notice conveying the meeting together with the audited annual financial statements as on 31st March 2024 as well as the reports of the Board of Directors and auditors thereon have already been circulated electronically to the members of the company. I hope that most present here have got an opportunity to go through the annual report. With your permission, I take the notice as read. Members may please note that the statutory auditor's report and the secretarial auditor's report do not contain any adverse qualifications, observations or comments on financial transactions. Therefore, I request the members to take the reports as read. I would like to inform that CS Shreyans Jain, Practicing Company Secretary, has been appointed as scrutinizer to scrutinize the remote e-voting and voting at the AGM in a fair and transparent manner as stipulated under the company's Management and Administration Rules 2014. We now take upon resolutions as set forth in the notice. In short, the resolutions are as under. Ordinary resolutions to consider and adopt the annual stand-alone and consolidated financial statements and reports thereon for the financial year ended 31st March 2024, to declare final dividend on equity shares for the financial year ended 31st March 2024. to appoint Mr. Satish Kumar Ray, who retires by rotation and being eligible, offers himself for reappointment. Special business, to ratify the remuneration to be paid to V. J. Talati & Co. cost auditor for the conduct of the audit of the cost accounting records of the company, to conduct to appoint Cyrus J. Mody as an Independent Director of the company; to appoint Mr. Deepak Ramachandra as an Independent Director of the company. To make investments, give loans, guarantees and securities in excess of limits specified under Section 186 of the Companies Act 2013. To alter the object clause of the Memorandum of Association of the company. As all the resolutions mentioned in the notice of the AGM have already been put to vote through e-voting, the resolutions are not to be proposed or seconded by members at the meeting. As the objective and implications of the resolutions have been explained in detail in the explanatory statement accompanying the notice, the same is not being repeated. Now I would like to request our Company Secretary to explain the voting process. Thank you.

Thank you, Dharmil. All the eligible members as on the cutoff date, that is 14th August 2024, are entitled to cast their vote electronically through the e-voting services provided by NSDL on all resolutions mentioned in the notice of the AGM in compliance with the provisions of the Companies Act and rules made thereunder and the listing regulations. Accordingly, your company had provided the facility for e-voting, which began at 9:00 a.m. on 17th August '24 and ended at 5:00 p.m. on 20th August '24 and has now been disabled for voting. As informed earlier, members who have not already cast their votes through remote e-voting are entitled to vote at this meeting by using the electronic voting system, which is already available on the screen. Members are requested to vote on the resolutions. This electronic voting facility will close 15 minutes after the conclusion of the AGM. The outcome of the meeting will be a cumulative count of the valid votes cast through remote e-voting and voting at the AGM. The consolidated voting results and the report of the scrutinizer will be displayed on the website of the company and on the website of NSDL and will also be intimated to the stock exchanges within the stipulated time. I would now like to invite the registered speakers one by one to express their views or ask questions. Speakers are requested to keep their questions brief and specific and avoid repeating the questions that have already been asked by the earlier speakers. [Operator Instructions] Our today's moderator is Ms. Anusha. Anusha, you may start calling the names of the speakers.

Yes. Thank you. Mr. Vinay Bhide, you are the first speaker shareholder I have promoted you to the panelist list. Kindly unmute yourself. You may also start your video.

Chairman and Managing Director, Mr. Dharmil Bodani; Executive Director, Mr. Shyamal Bodani; Operations Executive Director, Mr. Satish Ray; CEO, Mr. Parag Satoskar; CFO, CS, Company executives, fellow shareholders as already announced, I'm Vinay Bhide, a long-term supporter and shareholder of Oriental Aromatics, and I'm joining from my residence in Mumbai. At the outset, your team has already provided me with a hard copy of the annual report. I have gone through it in detail. And all that I can say is that in spite of a very difficult condition, both for our industry as well as for the overall scenario, we have done an extremely good job. And not only that, whatever we have performed, we have put it very nicely in the form of an annual report. So the first comment that I would like to make on the annual report is that it is extremely well prepared. It is well detailed. Please send the annual report as a competition entry for the competition of the annual report. That is the first thing. Now just to understand the present and the future better, I have listed a few questions on both the product as well as financials, and I'll quickly run through them. And the first among the questions is that we are having the divisions of flavors, fragrances, specialty aroma ingredients and camphor and terpene chemicals as a part of our overall business. Could you please share the rough revenue breakup of each of these verticals as of the concluded financial year? That was the first question. The second question is on the material that we use and the sources and the price trends. We use turpentine oil, alpha pinene, petrochem inputs for our end products. So can you tell us whether you are sourcing them locally? I suppose we must be sourcing them locally or if it's a combination of both local as well as outside sourcing. Please tell us so. And what is the change in the price trends that we have seen in the concluded financial year as compared to the prior financial year? So that was question number two. Question number three, on the annual report, and this is just basically for the purpose of understanding. We have mentioned in the annual report that in the global aroma chemicals, we find the use of artificial intelligence -- now that is extremely good. Could you please tell us whether we are watching this space on the use of AI or have already started to use AI as a part of our business. And an ancillary question is that I don't find the use of AI mentioned in the Fragrances and Flavors business. So is AI also used internationally as locally in the flavors business? Have they started to use it and your comments on the same? The fourth question, we'll start with the financials. I find that employee benefit expenses are in the range of INR 53 crores to INR 54 crores for the past 2 years. Now I suppose that we may have, let's say, moderated the total number of count of employees. So you could please confirm as to how you have been able to maintain the employee costs under control. The next question is on the finance costs. The finance costs this year have shot up to INR 20.5 crores versus INR 13 crores in the prior year. I was just trying to look at as to what were the reasons for the increase in costs. So please help me understand. I looked at Pages 226 and 227, which show the ratios. And I also find that we have repaid a lot of short-term loans and long-term loans. So please tell us as to what was the critical component which led to the increase in the finance costs and how we plan to keep it under control because I find that our collections is very good, which means that customers are paying on time, and we are also doing a good way by way of collection as the figures shown on Page #27. And of course, the final question is on the capacity utilization. We have 4 manufacturing sites. So if you broadly could give us the overall capacity utilization figures for the company as a whole. And maybe for the individual factories, if you have the questions ready. I have, of course, not sent the questions in advance, as I normally do not do. But in case you are not able to reply immediately, I would be most happy to understand the business and the questions later, if you could share on me. And I will support all the resolutions. I think we are at an inflection point in terms of a business. But I not being a sub expert, I would like the directors and the entire team to confirm that my understanding is correct. I stay supportive of the company. We are a great company, and I support all the resolutions. Thank you for giving opportunity to speak.

Thank you so much. Parag, I'll leave it to you.

Thank you, Mr. Bhide for the question. So I'll probably take each question one after the other. So in terms of your first question, which was the revenue breakup, more or less, out of the 3 verticals that we operate out of, which is the Fragrance and Flavors, the Specialty Aroma Ingredients division and the camphor and terpene chemicals space, more or less, the revenue split is 1/3 each. Every passing year, it might be a plus or minus a few percentage points here and there. But broadly speaking, it is 1/3 each in terms of the revenue breakup. So that is my -- that is the answer to your first question. Related to your second question, I think it's an extremely broad question, which is pertaining to the trends in terms of the raw materials that we use across all our divisions. So if you look at the raw material consumption, I can say that it's been the year that has gone by, the first half, it has been pretty challenging with most of the raw material prices staying extremely unstable because of a lot of global factors impacting them. As we move towards the second half, across the board, we are seeing that prices have stabilized. Prices have stabilized at the lower end, except for some critical raw materials like pining, where we are seeing an increase in the raw material price. And that is kind of putting some pressure on some of the specialty aroma ingredients that we make from pining as well as camphor and the terpene chemicals. I think the third question is a very interesting question, intervention of artificial intelligence. I probably will focus the conversation more on the intervention of artificial intelligence in the chemical industry. I think this particular question can be answered in 2 ways. I think the first part of this intervention will involve automating all your plants as we make all the plants that manufacture our chemicals fully automated, then we are able to collect a lot of data points when it comes to process monitoring. And once these data points are collected, I think that's when the artificial intelligence will come in, which will be in a position to analyze data points and create certain trends in terms of either identifying problems or suggesting ways by which we can improve productivity. So to broadly answer your question, I think we are well on our way in completing the first part, which is all our plants in Baroda, all our new greenfield project in Mahad and all our plants that will come in the future will be fully automated and controlled by DCS systems. And this enables us and our team to really collect large amounts of data about our processes. And once we have the right platforms because AI according to us is also evolving. So once we have the right platforms, which can analyze or crunch this data and create some trend analysis, I think we will definitely work more closely with incorporating artificial intelligence either on the productivity side and/or on the safety side when it comes to chemicals. In terms of the employee benefit cost, I would like to mention that both Dharmil and Shyamal have touched upon this point that the year that has gone by has been a year where there have been immense challenges externally. And so there was a very intentional focus of looking internally and seeing how we can kind of put a control on the expenses without losing productivity. And I think that's why I would really like to compliment the whole team right from the Chairman to the operator at the plant. All of us have contributed much more than what we have done in the past. And that has really helped us keep the costs in control at the same time, stay productive. I think in terms of the finance cost, which is your question #5, based on my understanding, and Girish probably, who is our CFO, can answer your question in a little more depth later on. But I think the increase in finance costs primarily is driven by the term loans that we have taken for our new projects. So I mean, because of these term loans now being actioned we have an outgo in terms of interest and in terms of repayment of the principal amount. And that is the reason why probably we have an increased outgo in terms of finance costs. But if you look at how to optimize that, in spite of -- like Dharmil mentioned in his speech, in spite of having such a very strong streak of expansion, we have been able to generate free cash flow, which shows the tight control that simultaneously we try to keep on expense management. And I think in terms of capacity utilization, when it comes to our fragrance and flavor facility, we are running the plant at -- in one shift. And so we have a substantial opportunity to really kind of expand the capacity over there. Apart from that, most of the plants that are more than 500 days old or say, 1.5, 2 years old, I will very proudly say that most of these plants are now running at their optimum capacity. When I say optimum, we are looking at anywhere between 75 to 85. And the older plants are running most of the times at peak capacity. So with this, I think, Bhide sir, I have answered all your questions

Parag, Thank you so much. You have taken very careful notes of in all the questions. Just one small question, if you will permit me. Our raw materials, whether they are locally procured or we procure them from outside India, some flavor of that.

Excellent. So I think if you look at the camphor and the terpene chemical space, the gum turpentine or the palm, we are one of the key consumers of this commodity globally. And hence, we buy the gum turpentine from all the gum turpentine growing regions in the world. And we derisked our dependence on China a long time back. And we move to various other turpentine growing regions like Brazil, Argentina, Mexico. So that is where we have a global footprint in terms of our procurement of raw materials. When it comes to the other raw materials bidders, I would very proudly say that finally, we are seeing substantial amount of capacities for critical feedstocks in the petro space that are being now generated in India. I mean just to give you some examples, capacities put by Deepak Phenolics, et cetera, are very, very enthusiastic for a company like us who wants to play a very critical global role in petro-based products.

Thank you, Vinay sir, for joining the meeting. Second speaker and third speaker, Mr. Satish Shah and Anil Mehta have not joined the meeting. So we will move to the fourth speaker shareholder, that is Ms. Lekha Shah. Ma'am, I have promoted you to the panelist. Kindly unmute yourself, start your video and you can ask your questions.

Respected Chairman, sir, Board of Directors and my fellow members, good morning and regards to everyone. Myself, Lekha Shah from Mumbai. First of all, I would like to thank our Company Secretary, Kiran ma’am for their best performance and outstanding support for all my doubts. Thank you Shyamal sir for such an informative and wonderful presentation. I have no questions today, sir. Chairman sir, I hope the company will continue video conference meeting in future. Sir, I would like to thank all the person of company for receiving awards and recognition by your plan during the year '23 and '24. Also, I am glad the company is doing very well the CSR activities. Chairman, that 2024 with great prosperity for our company. I strongly and for wholeheartedly support all the resolutions for today's meeting. Thank you so much, sir.

Thank you, Lekha ma'am. As we don't have any questions from Lekha ma'am, we will move to the next speaker shareholder, Mr. Bimal Agrawal. Sir, I have promoted you to the panelist link, kindly unmute yourself and start your video. Mr Bimal. Kindly accept the request for panelist. NSDL team, Bimal Agrawal, is declining the request for panelist.

You can make him allowed to speak.

Bimal Sir, I have allowed you to speak. Bimal Agarwal, Sir. In the meanwhile, we will move on to the next speaker shareholder, Mr. Yusuf Rangwala. I have promoted you to the panelist.

[Foreign Language] Sir, how many people are working in factory in Mahad and what are the total number of staff Point number 2 [Foreign Language] We are manufacturing attar. Sir, madam [Foreign Language] We are manufacturing different type of attar. Sir, how many varieties of attar are you manufacturing as I mentioned, if possible, can you send me free sample madam, it is my humble request [Foreign Language] if you can send some product as a sample so that I can use. Point number 3, we are in dividend list Chairman sir [Foreign Language] it was very excellent very knowledgeable and very particular to your work, I'm very salute. [Foreign Language]. I am very happy with your company. Thank you, madam.

[Foreign Language] And regarding the attar Yusuf Bhai, I'm sure the CS team will coordinate with you and our creative team [Foreign Language].

[Foreign Language]

[Foreign Language]

Thank you, Yusuf, Sir, for joining the meeting. The next speaker shareholder is Mr. and Mrs. Mascarenas. Ma'am, we have promoted you to the panelist. Kindly unmute yourself and ask your question.

So many meetings and answering same time is very rating because the 2 way, no company is doing 2-way this Zoom meetings. All the questions are asked and in the end answers and sometimes if they are not able that time, they give it means sent by e-mail. Anyway, I come to the formal part. Respected Chairman and MD, Dharmil, A. Bodani; Executive Director, Shyamal, A. Bodani; CEO, Mr. Parag K Satoskar and all the other directors on the Board and my dear fellow shareholders who are in this meeting. And I am Mrs. C Mascarenas speaking from Mumbai. First of all, I thank the Company Secretary, Mr. K. Gill and her team for sending the annual report, also registering me as a speaker and giving me platform to speak. Thank you so much. Also, I thank you for in these difficult days, which dividend you have given INR 0.50, I appreciate very much. Thank you very much. Good market cap. Congratulations for all awards and accolades received during the year and also CSR work. Good. All Chairman has explained. Now my queries, 4 plants we have, Vadodara, Ambernath, Bareilly, Mahad. What is the capacity utilization of these plants? We have 2 R&D labs, how many people are employed in this R&D, age and attrition level? How much is spent on R&D? Next question is we have 1,685 employees, total employees and workers. How many are male and female? Next one is, do you find any challenges, especially logistics due to geopolitical issues, especially Red Sea as we are supplying to 35 countries. Next, we are in the flavor, fragrance, specialty aromas and camphor and terrapin chemicals, in which of these is very much growth-oriented where we get good margin. Last but not the least, future road map for the next 3 years, CapEx program and which vertical will be the growth driver, growth engine. With this, I support all the resolutions. I thank you very much. I especially wish you and the entire team good health as health is well. And once again, thank you very much. May God bless you and our company. Number three. Now Mr. Mascarenas [indiscernible] because the time is gone. There are so many meetings, and they are calling the names. That is my problem. When you bid two way, it hurted me so much. Give my answers on the phone, on the e-mail.

I'm the speaker on the line. Can I proceed, sir? Yes. Respected Chairman, sir, very distinguished members of the Board and my fellow shareholders. Good morning to you all. My name is Alosha Mascarenas. At the outset, I thank the management, company secretary and the team for sending me a balance sheet, which I received on time. It is self-explanatory, illustrative, informative, transparent and adhering to all the parameters required for a good corporate governance. Our results are good with a very small dividend, but welcome. We are in the dividend list. We have got many products, and I would like to know, are we planning any new products? And we are supplying the above products to different countries of the world. Now I would like to know whether which of these countries we are getting revenue by way of dollars because dollar rises day by day against the falling rupee. So what is the total revenue by way of dollar, dollar inflow. Then our budget, union budget, what is the effect of the union budget on our company? Rest, I don't want to ask any more questions because of the time constraint. So I end my speech, wishing you personally, all the Board members and more importantly, all the employees, all the very best in the days and years to come. With this, sir, thank you very much for patient hearing. Good luck, goodbye and good health. Thank you.

So madam, as you requested, I mean, I have the data with me, but we'll send you a response by e-mail about all the queries that you have asked for. I mean, just to give you a breakup of male and female workers, which I have with me right now. So I can very proudly say that the number of -- the participation of the females in the overall ecosystem of Oriental is increasing every year. And currently, we have in the employees around 84% who are male and 15% who are female. And in the workmen, we have around 94% who are male and around 7% who are female. For all the other questions, madam, we will send you response by e-mail.

Thank you, Mr. and Mrs. Mascarenas for joining this meeting. We have only one speaker shareholder left, that is Mr. Bimal Agarwal. We'll just try if we can speak or else we'll ask him to e-mail his questions. Okay. So Mr. Bimal kindly just e-mail the questions that you have. Kiran ma'am, over to you.

I would like to thank all the shareholders for participating and all the speakers for asking the questions. We hope most of the queries raised by the members have been dealt with. Should there be any further queries, then we request the members...

Good morning, good afternoon, good evening and good night to the other shareholders who have joined from any part of the world. My question was already asked by the other speaker. I won't take your time. That's all from me. Thank you very much. try to arrange a plant visit or the Diwali time, you can send some support to the shareholders who have joined.

Thank you, sir. Kiran ma'am, we don't have any questions from Bimal, sir, so we can start with the proceeding.

Thank you, Bimal, sir, for participation. Should there be any further queries, then we request the members to address the same to us at the e-mail ID [email protected], and we would be happy to furnish our response. I would now like to request our Chairman to give vote of thanks.

Thank you, Kiran. On behalf of the Board of Directors, I would like to thank all the members for attending and participating in this Annual General Meeting. The e-voting facility at NSDL portal shall remain open for the next 15 minutes post conclusion of AGM. Members who haven't casted their vote may proceed to vote. Thank you, everyone. It was a pleasure to connect with you all. Wishing you and your family good health and happiness. I now declare the proceedings of the 52nd Annual General Meeting of the company as closed.