Vidhi Specialty Food Ingredients Limited (531717) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Vidhi Specialty Food Ingredients Limited Q2 and H1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Parth Patel from MUFG Intime IR. Thank you, and over to you, Mr. Patel.

Thank you, Hina. On behalf of MUFG Intime IR, I welcome you all to Vidhi Specialty Food Ingredients Limited Q2 and H1 FY '26 Earnings Conference Call. From the management side, we have Mr. Bipin Manek, Chairman and Managing Director; Mr. Mihir Manek, Joint Managing Director; Mr. Mitesh Manek, Chief Financial Officer. I hope everybody had an opportunity to go through our investor deck that we have uploaded on exchanges and the company's website. A short disclaimer I would like to say before we begin the call. This call may contain some of the forward-looking statements, which are completely based upon our belief, opinions and expectations as of today. The statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. Also would like to highlight all questions will be answered by Mr. Mihir Manek and Mr. Mitesh Manek. With this, now I hand over the call to Mr. Mihir Manek. Over to you, sir.

Thanks, Parth. Good afternoon, everyone. I extend a warm welcome to all of you on our earnings conference call. First and foremost, I want to express my gratitude to each one of you for joining this call and for your continued support throughout our journey. The outlook for the global food color industry remains positive, underpinned by growing demand across beverage, bakery, confectionery and processed food segment. The increased popularity of flavored drinks, nutritional beverages and ready-to-eat products continues to drive market expansion. While synthetic food colors remain highly in demand [Audio Gap] high stability under light and heat and resistance to microbial contamination, there is some parallel shift towards natural colorings. This is particularly in developed markets. Natural colors, however, face challenges in cost, formulation complexity and regulatory approvals. Synthetic food colors, on the other hand, are finding new avenues of usage in several industrial applications, in several regulated markets, in previously -- wherein previously carcinogenic industrial dyes and pigments were used. Global trade dynamics continue to shift. Ongoing trade tensions among major economies such as China, the U.S. and Western Europe have impacted global supply chains, resulting in a realignment of sourcing and manufacturing strategies. For Vidhi, this macroeconomic environment offers a strategic advantage. The company is well positioned to leverage its capacity expansion and enhanced product mix to strengthen profitability. As most of the participants know, Vidhi is a globally recognized and leading manufacturer in the food color industry with a robust presence over 80 countries, spanning all the 6 continents, operating within a critical segment of the Indian chemical and food processing industry. The company specializes in the production of superior synthetic food trade colorants, including synthetic water-soluble colors, its aluminum lakes, FD&C colors, D&C colors, blends, co-blended lakes and granules. These colorants are essential ingredients used across a wide range of sectors, including food and beverage, pharmaceuticals, confectionery, dairy, pet food, cosmetics and health care. The company has established world-class manufacturing infrastructure with 2 primary facilities. One is in Dhatav Village of Raigad District, situated in Maharashtra and other at its recently commissioned greenfield site in Dahej of Bharuch District of Gujarat State of India. These facilities span over 2.8 lakh square feet combined and our equipment modern technologies to ensure efficiency, compliance and scalability. The Dahej plant, which began commercial operations in December 2023, following a successful trial phase, has significantly increased the company's total production capacity from an earlier 325 metric ton per month to 675 metric tons per month. I repeat from 325 metric tons per month to 675 metric tons per month. Vidhi is now the third largest manufacturer of synthetic food grade dyes globally and the second largest in Asia with an installed capacity exceeding [indiscernible] metric tons per annum. Additionally, with these forward-looking investments in R&D, [indiscernible] R&D unit working on developing several value-added forward product lines and infrastructure such as the upcoming Roha Phase 2 facility Also, a new plot in Dahej GIDC admeasuring 16,834 square meters was allotted to our company on 3rd of April 2025, and we are -- and it is expected this to bolster our portfolio. The company's focus on operational efficiencies, expanding customer base, deeper geographic penetration and increasing its wallet share from its existing customers aligns with its growth-oriented strategy. As part of our forward integration strategy, Vidhi is targeting industries higher up on the value chain, that is sectors that demand specialized value-added ingredients with greater application depth and stronger profitability potential. The strategic move will not only strengthen our presence across diversified end-use segments, but also position Vidhi as a comprehensive solutions provider rather than just a color manufacturer. Though these initiatives, we aim -- through these -- I'm sorry, through these initiatives, we aim to capture a larger share of the value chain while maintaining our focus on quality, innovation and sustainability. Now I would like to hand over this call to Mr. Mitesh, who is our CFO, so he can discuss and outline the financial highlights. I request you to take over, Mitesh.

Thank you, Mr. Mihir for that. First of all, I would like to extend a very warm welcome to everyone present on this call. Allow me to discuss the Q2 and H1 FY '26 financial performance of the company. The consolidated revenues for the quarter stood at INR 75 crores versus INR 91.3 crores in Q2 of FY '25, thus registering a degrowth of 17.8% on a year-on-year basis on account of gradually exiting low-margin trading business as well as branch transfer in from raw materials to our Dahej unit. The EBITDA stood at INR 17.7 crores as compared to INR 15.2 crores for the corresponding quarter last year, thus registering a growth of 16.3% year-on-year. Our EBITDA margin for Q2 FY '26 was at 23.6% as compared to 16.6% in quarter 2 FY '25. The PAT of the company stood at INR 10.6 crores versus INR 10.3 crores, registering a growth of 2.3% year-on-year and PAT margin for the quarter was 14.1% as compared to 11.3% in the quarter of FY '25. Now moving to the half year annual performance. The consolidated revenues for H1 FY '26 stood at INR 162.9 crores versus INR 174.3 crores in H1 FY '25. EBITDA in H1 FY '26 stood at INR 38.2 crores versus INR 29.3 crores in H1 FY '25. Our EBITDA margin for H1 FY '26 was 23.5% as compared to 16.8% in H1 FY '25. And PAT stood at INR 23.3 crores in H1 FY '26 versus INR 18.8 crores in H1 FY '25, hence registering a strong growth of 24.1%. Now despite the moderation in the overall revenue, primarily due to reduction in trading income as indicated by the company in the past interactions, the company has managed to achieve a notable improvement in profitability. This improvement stems from a conscious shift in our product portfolio towards higher-margin value-added products. The enhanced portfolio mix supported by operational efficiency and disciplined cost management has resulted in a healthy expansion in EBITDA and profit after tax during the period. Accordingly, the company has also declared a second interim dividend of INR 1.50 per share, that is 150% per equity share, having a face value of INR 1 each for the financial year 2025-'26. Now our Joint Managing Director, Mr. Mihir Manek, has explained you in detail about the functioning of the company, the growth potential of the company in form of equity and EBITDA margins, but as a part of my duty, I am pleased to further evaluate -- elaborate for you on this. Speaking of natural colors, I have 2 observations. Scenario 1, the huge propaganda by MAHA to use natural colors replacing synthetic food-grade colors and several other such ingredients without any support of scientific evidence or data at a state level. As we are all aware, food colors and several other food ingredients are being regulated by a federal authority, namely the U.S. FDA. To change a federal regulation, one needs approval from the Congress. MAHA knew that was impossible to achieve and therefore, quietly put forward to pursue this replacement on a voluntary basis by the food and beverage industry and not as a compulsion by regulation. However, even this voluntary movement started by MAHA faced a very, very strong backlash from the food and beverage industry in the U.S.A. It is very easy for a certain bureaucrats to direct the industry to replace not only synthetic colors, but other ingredients also with their natural substitutes without knowing the impact of cost. Just for your explanation and understanding, natural colors are expected to increase the coloring budget of any company by at least 20x. Also, they would face reformulation goes, stability crisis because natural colors are not heat stable, they are not light stable. They are not compatible to all types of packaging. Availability is a big issue, crop failure, weather patterns, short shelf life...

Limited shelf life also, please.

Short shelf life, like I said, also affects logistics, ingredient compatibility, et cetera, are all pain points as far as natural colors are concerned. And it is a whole different ball game to put this in practice. As I said, this has made the food and beverage industry revolt in the U.S.A. There was one article which was recently published in one of the newspapers in the U.S. saying that after months of shaking hands with the Head Secretary, Mr. Robert F. Kennedy, Jr. and pledging to take artificial colors out of candy and drinks, the food company executives are now done playing nice because this is simply an impossible task. Speaking of the actual impact in form of present global meltdown in clear terms, while most of the export to the U.S. market from India has had a massive impact, Vidhi, of course, has suffered a total of 20% beating on the top line for the last quarter on sales and revenue. Overall, the revenue generated by the company from the U.S. market was affected roughly by around 10% in the September quarter and the remaining can be attributed to other markets. However, in the current quarter, the sales to the U.S. market is expected to have almost nil to a very negligible impact. Based on our past experience, we expect to see revival globally and first and foremost amongst all will be our industry as our products are used by the food, beverage, pharma, cosmetics, health care, personal care, et cetera, industries and people do not and cannot stop eating, thinking of falling sick or using personal care products, cosmetics, et cetera, these are a part of our daily life. Additionally, in case of our products, there are only 2 countries manufacturing food colors, that is India and U.S.A. While we in India suffered a tariff impact on our products, food color manufacturers in the U.S.A. also suffered the same tariff impact on their raw material imports as all their raw materials are being imported from India, barring one. Also, the American manufacturers bear the burden of incompetitive manufacturing costs and overheads. So they too were victims of this tariff. This is the reason we see no impact in the current quarter to our sales in the U.S.A. Of course, in the first quarter also, the logic was the same, but it did not work amidst all the tariff chaos, which was created in that quarter. We at Vidhi are optimistic based on the reasons well explained to you by our Joint MD, Mr. Mihir Manek, on the future performance of the company. There is another scenario which has quietly developed also. Personal care, health care, sanitation, hygiene industries, fertilizer industries, ink industries and several other such industries worldwide are now -- and especially in Europe, are now in the process of restricting the use of certain industrial carcinogenic dyes, which they were using in all their products and are replacing the same with food grade colors -- synthetic food grade color. So we are talking about -- of a whole new sector, which till now is lesser known to most. Such a replacement is extremely easy to make as there is no cost disadvantages and there are no challenges on reformulation front as well for all these industries. But of course, as we all know, good news tend to flow a little slower than the bad news. So I wanted to make this known to one and all during this call. I have another good news, which has come to our attention only today. I will explain that to you. I'm sure one and all would have read in today morning's Times of India that the Government of India has come out with an export promotion mission, wherein they have proposed 2 integrated subschemes. One of the scheme is known as NIRYAT PROTSAHAN. According to this scheme, they will be reintroducing the interest subvention for pre- and post-shipment credit to provide affordable finances to the MSME exporters. For your information, Vidhi is also an MSME exporter. This means once it comes into effect, this will reduce the interest cost on the company and the scheme may be introduced retrospectively as it has happened in the past. If that is the case, it will have an impact on the actual outflow of interest from the company for the first and the second quarter also. Currently, we are not sure as to how much subvention will be given. But I would like to inform you last time the subvention existed, it was at 3%. I would also like to give everyone present here some overview on the industry, especially the chemical, dyestuff, dyestuff intermediates and pigment sectors. The chemical and dyestuff industries are currently facing a prolonged phase of subdued demand and margin pressure, both in the domestic and the export markets. This slowdown has significantly impacted overall production levels across the value chain, including dyestuff, intermediates for dyestuff and pigment. At present, a lot of the units in these segments in several MIDCs in Maharashtra, to name a few from Raigad like our Roha MIDC, Mahad, Lote, Taloja, Patalganga, et cetera, are operating at production reduction by around 30%. Some of the units are running at approximately 35% of capacity utilization, that too in 1 shift only. A lot of them are sitting on extremely high inventory. This low operating rate reflects a combination of several factors. One of them is weak demand from key downstream sectors, particularly from textiles, coatings, [indiscernible], et cetera. Another one is excess inventory and price competition in both domestic and international markets. The third one is reduced export volumes, especially to the U.S.A. due to the tariffs and also to Europe and parts of Asia due to sluggish global consumption and currency fluctuations. The dyestuff intermediates segment is also suffering as it is a critical link between basic chemicals and finished dyes. They have witnessed a lot of demand pressures from both ends as there is no demand from dyestuff producers and whatever demand there is remains highly inconsistent. Similarly, the pigment industry has seen reduced offtake from paint and plastic sectors, leading to lower plant load factors and cautious production planning. Many producers are currently focusing on maintaining cash flow, managing working capital and limiting fresh raw material procurement until the market shows clear signs of recovery. As you all know, we are witnessing a turbulent phase in the global environment marked by heightened geopolitical tensions, regional conflict and economic uncertainties. Supply chain disruptions and fluctuating demand patterns have created challenges across industries. Despite these headwinds, I am proud to say that Vidhi has remained resilient, focusing on operational efficiency, prudent financial management and strategic agility. Our diversified market presence and strong customer relationships have enabled us to navigate this volatility while continuing to deliver sustainable growth. And as explained by our Joint Managing Director, Mr. Mihir, the new products which Vidhi is foraying into will ensure that the company grows at a very good sustainable pace in the years to come ahead. Now I -- with this, now I would like to open the floor for any questions that our participants may have. Mr. Parth, please take it over now.

[Operator Instructions] The first question comes from the line of Gokul Maheshwari from Awriga Capital.

First of all, really appreciate you keeping the call. My first question is that what is the current capacity utilization of the Dahej plant? And when do you expect full utilization for the plant to come through?

Thank you for the question. Let me inform you that the current capacity utilization at the Dahej plant is about 65% to 70%, and we expect full capacity utilization by the end of this year. And Roha is currently being utilized at 100% utilization.

Great. My second question is that in the first half, as per the balance sheet and the cash flows, you have improved your working capital, so commendable on that. But there is a jump in the inventories while the sales have remained sort of flattish. What is the reason for the increase in the inventory?

I will explain you -- as I said, the Roha facility is running at 100% capacity utilization. Dahej facility, which is a new facility opened up in the end of December '23, has now been running at almost 70% capacity utilization. So the higher inventory comes from operations running at 2 plants. So we are inviting raw materials in process stocks and finished products. Now in the last quarter, we have seen some sluggish demand as a company also. Like I explained, several other companies in the dyestuff and the chemical industry have chosen to cut down their production. Some of them are working at 50%, some at 35%, Vidhi as a company is absolutely confident that the revival in demand will be first in our industry. We have not curtailed any production activities whatsoever. We would like to build some stock. So eventually, when the demand is at full potential -- earlier on, we had certain lead times, which we were offering to our customers, which they were not liking. We would like to improve our service to our customers in form of immediate deliveries. And like we have also informed you in our speech, we are already seeing improvement in demand in this quarter. So all these inventory that we have built during the last quarter will come to good use in the current quarter and the next quarter.

Great. And lastly, can you just comment on the volumes from manufactured units from -- in Q1 and Q2 of this year and last year's numbers? This is just a data question.

So last year, the total volume produced and sold was 4,977 tonnes, quarter 1 was 1,343 tonnes and quarter 2 was 1,233.

Can you tell me last year's number -- you're talking last year's H1 was 4,977?

No. No, no. The whole last year, '24-'25 was 4,977 tonnes.

So what was last year...

April to June '25, which is the first quarter was 1,343 tonnes. And July to September, which was the second quarter was 1,233 tonnes. Am I clear now?

Yes. But Mitesh bhai, I was wanting even last year's number so that we can compare the base number, H1 of last year.

H1 of last year, I don't have it in my hand right now. Can I...

One moment, you said 1,300 and 1,200 is Q1 and Q2 of last year or this year?

This year. Current year. So can I provide it to you separately after the...

Later on, sure.

Next question comes from the line of Jinal Sheth from Awriga Capital.

You did mention about the demand environment and you gave a good update about the global industry. Just to understand the revenue impact, the growth impact that we saw in this quarter, does that have a tariff-related impact as well?

See, like I said, our sales to U.S.A. were only affected by 10% in the first quarter. So you can call it a small tariff impact. But otherwise, Jinal bhai, the entire chaos in the world, like I explained, has meant that there has been sluggish demand from the world over because people are choosing to be cautious.

See, I would like to add to this statement. This is Mihir here. See, a lot of the Southeast Asian countries, the other African countries, which are our -- countries to which we export our colors and where they are manufacturing their products, they are also exporting their products to the -- see, ultimate consumers are the developed markets, number one being the U.S. market. So when there is this whole tariff chaos going on by the U.S.A., all these customers, these producing companies, food producing companies, personal health care, hygiene producing companies, cosmetic companies who are using our colors and then exporting their finished products to these markets like U.S.A., et cetera, were also nervous in telling us that look, we don't know what will be the tariff on our products tomorrow. So we are being very cautious and we are scaling down our inventories. Because until and until these kind of uncertainties subside, we don't want to be very heavy on our inventory. So that is the reason why a lot of the other markets were showing a slowdown as a result of this tariff chaos, which was created by the Trump administration.

This brings me to my next question that let's -- I mean, markets might expect that, okay, we could -- during this tariff negotiation. But let's assume that this tariff negotiation, we don't know when this ends, but your product is such that the consumer requires it on a day-to-day basis. So how long are they going to prolong this if -- and they're running out of inventory? So any thoughts on this?

See, it is not only about tariffs. As you know, since last 42 days, the U.S. government has been in a shutdown. I think more than 7.5 lakh employees have not -- government -- federal employees have not even been receiving their pays, et cetera. And even when this whole tariff thing happened, a lot of the companies had to let off a lot of employees. I mean, I have heard the top 4 or so have let go of 100,000 jobs just in the last 2 months in the U.S. So see, there is a lot happening. When there is so much uncertainty, people will want to cut back on spending. So all these factors -- there are a lot of factors at play here. However, as things start settling down, there is more -- I have heard of some quantitative easing also, which the U.S. wants to now start. Why? Because they want to increase the spending in the economy. So all these things that are going to be happening are going to again create more liquidity in the hands of people and spending will increase there, thereby causing -- there was also a survey very recently that 22 -- 26 out of the 50 states are already in a recession in the U.S. And California and the state of New York, which was so far not in recession were also -- I think this was a survey -- there was report by the Moody's. So this came out only about last month. So there has been a lot of chaos. However, we see that the feedback that we have been getting from our people on the ground there, our distributors there, is that sales is looking good going ahead. And these are the ground reports that we have, based on which we are getting our confidence that going ahead, we are seeing better time.

And lastly, since you mentioned that your -- Dahej will get fully utilized by year-end, any thoughts about capacity expansion with the other plant? And any thoughts on that?

See, that is why we have already covered that, I believe, in our -- in my speech, wherein I have spoken about a new piece of land admeasuring 16,894 square meters, which is about 4.5 acres that we have acquired in April of 2025, which speaks volumes about our intent going ahead. We are in due process of acquiring the required approvals, public permissions from various government authorities like GIDC, GPCB, et cetera. And once we have them in place, we will immediately be starting our CapEx activity on that piece of land also. There is another piece of land in Roha, Raigad, which is about 4.5 acres where too we are starting a CapEx program very soon wherein we have already received permission from the Maharashtra Pollution Control Board also. So there are no regulatory approvals that need to come through for that CapEx plan. We are only currently -- ongoing -- the engineering work is ongoing for that. So all the plans -- construction plans, et cetera, are being prepared for that site too. And within the next 2.5 to 3 months, we will start construction. We will start -- preliminary construction also has been done on that site. So the remaining part of the job will be undertaken on that site at Roha. And we expect in about [indiscernible] also we will complete that, but that will be a smaller CapEx activity. The bigger one will come at Dahej.

The next question comes from the line of [indiscernible] [Operator Instructions]

My question is like despite the decline in total revenue due to lower trading sales, Vidhi has reported strong EBITDA and PAT performance. So could you please elaborate on how the shift in product mix and operational efficiency contributed to margin expansion? And whether this margin profile is sustainable going forward?

Mr. Mitesh, I request you to take this because you are the person who is expert on numbers.

Yes, sir. So ma'am, as I have already covered it in my speech, we are constantly in the process of introducing new products and increasing sale of some of the new products, which we have already introduced in the last few quarters. This means the company is looking at improving the product portfolio mix of colors being manufactured and being sent to our customers. We are relying more and more on high-value, high-margin products and with the increased sale on that, which we are experiencing quarter-on-quarter basis, I assure you that the EBITDA performance, which the company has achieved in the last -- in the second quarter, we are confident of improving on that in the next few quarters to come. And we have several such products in the pipeline as has been explained by Mr. Mihir in his speech.

Okay. And like what would be the average selling price of these newer products?

The newer products are of an expensive nature around more than USD 25 per kilo upwards.

Okay. And has the company undertaken any pricing action in like key export markets, in currency fluctuation is there or input cost changes?

See the currency fluctuating -- fluctuation is only on the depreciating side of the rupee. And since 95% of the company's revenue is generated by the form of exports, a depreciating rupee would make us more comfortable and is good news for us.

No. But naturally, as she is asking that whether we -- see that we don't typically get into long-term contracts. The orders are -- yes, the orders are negotiated with the customers on each order basis. So naturally, every time they ask for a quote, we do tend to pass them certain benefits if there is some appreciable depreciation in the currency because you have to also remain competitive vis-a-vis your competitor in the Indian market.

Correct.

Yes, Mihir. Got it. Got it. And my last question would be like what is the current share of high-margin value products in your revenue mix? And how do you see this evolving over the next 12 to 18 months...

Good question...

And phase coming and ramping up?

So the high-value, high-margin products currently constitute of around 15%, and we would like to increase that to around 50% in the next few quarters. So 50% high-value products and 50% standard products.

[Operator Instructions] The next question comes from the line of [indiscernible] from SK Associates.

I wanted to know, given that over 95% of our revenue is export driven, could you discuss demand trends across key geographies like U.S., Europe and Australia? And like are you witnessing any shift in customer preferences or regulatory changes impacting demand?

See, the only shift or change in customer preferences that we are experiencing currently is the change by the industrial applications, which I have explained. By that, I mean certain fertilizer industries and ink industries and sanitation industries and personal care and health care shifting towards synthetic food colors and dropping the carcinogenic industrial dyes from their products. Now as far as Vidhi is concerned, we have a very evenly distributed sales geography-wise. So we are present very -- we are -- the North American continent, South American continent, European continent, Southeast Asia, et cetera, Australasia, this is where we find our demand from. We do not depend on any one particular continent or country for our demand. However, we are very strong in the European and the American market -- in the U.S. market. Both North and South America and Europe is where our company's strong hold is.

Understood. And with regards to capital management, how do you plan to allocate capital going forward between capacity expansion and R&D? Like what would be your debt levels going forward? And do we plan to add any debt going forward?

Yes. See, the ongoing expansions, et cetera, would be a mix of our internal accruals as well as some debt. And as far as R&D activities are concerned, the company presses forward with the same, and we are not worrying about investing any capital on the R&D front because it is an investment which has already contributed to a certain new products which the company has already introduced and is selling worldwide. And there are certain other new products in the pipeline, which are very exciting for the company also.

[Operator Instructions] The next question comes from the line of [indiscernible] from SBA Finance.

So I had a couple of questions from my end. Sir, with long-standing relationships with global FMCG and pharma makers, what initiatives are being taken to deepen wallet share with, say, existing clients or cross-sell new products to them?

Look, the point is that the company enjoys a very vast customer base world over and a net of distributors world over. We have excellent relations with all the top MNCs, et cetera. So whenever we introduce any new products, the first and obvious customer base for us would be to target our own distributors who are present in all those industries which we wish to target. So for Vidhi as a company, it is rather easier to introduce such new products to our existing distributors. And also, we have a very strong marketing campaign, which means that we are present in most of the top exhibitions world over industry-wise, where we exhibit and showcase our products. We are exhibiting in a different country almost on a monthly basis, and making our products popular amongst all those geographies and target clients and winning new business at the same time and also winning new distributors for new products and trying to promote the products through our existing distributor chain also, which is very strong and robust worldwide.

Got it, sir. Just a follow-up to this. Are there efforts to enter newer customer categories or end use segments?

Of course, as our newer lines of products come out, which cater to a slightly different industry than what we are catering right now, we would look to enter into different areas of end use also.

I would like to add to this. See, since I'm very closely working with the R&D team in our company, we are continuously developing forward integrated products, which find a wider application in certain higher category of industries which require products which are having slightly more complicated manufacturing and formulation processes. And so due to which as we go -- continue to go ahead, we will see these products being commercialized over the next 6 to 8 quarters, and you will see a higher -- quarter-wise, you will see sales from the -- participation of these products increasing in terms of sales realization coming in from these products. So that way, we are increasing -- we are diversifying our product portfolio with respect to the target industries of use and therein migrating only from food and personal care and hygiene to increasing focus on industries like pharma, et cetera, which require products with much higher quality and complicated regulatory mechanism. So that is why we are confident of getting better margins, et cetera. I hope that gives you some idea in which direction we are heading.

Yes, sir. Actually, it was quite helpful. So I had -- my second question was on the productivity improvement, say. Are there further productivity improvements planned, which could involve CapEx for de-bottlenecking or replacing some older machineries of our older plants?