S H Kelkar and Company Limited (SHK) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the SHKLCR and Company Limited Earnings Conference Call. As a reminder, all participle lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal the operator by pressing star, then zero on your touchstone telephone. Please note that this conference is being recorded. I will now have the conference over to Mr. Meachia from CBL India for opening remarks. Thank you, and over to you.

Thank you, Ryan. Good afternoon, everyone, and thank you for joining

us on SHKLQR and Company Limited's Q1-FI-27-Earling Summit Squad. We have with us Mr. Keitar Vajay, full-time director and group CEO, Mr. B. Ramakrishnan, CEO, Pregnances Asia and USA.

And Mr. Krati Kharawal, Group Chief Financial Officer of the company. We will begin the call with a brief opening remarks from the management, following which we will open the forum for a Q&A session.

Before we begin, I'd like to point out that the statements made in today's call should be forward-looking in nature, and a disclaimer to this effect has been included in the UN's presentation shared with you earlier. I'd like to invite Mr. Vazay to give his opening remarks. Thank you, and over to you, sir. Good afternoon, everyone, and thank you for joining us for the S.H. Kelkar and Company earnings call for the first quarter financial year 2027. We are pleased to have begun the year with a sustained solid performance and an encouraging revenue growth accompanied by improvement in the operating profitability. However, the operating environment continues to warrant caution. Geopolitical developments continue in West Asia have kept energy, freight, and generally trade volatility remains high. At this time, the fundamental demand drivers of our industry in the consumer's preferences of fragrance and taste across personal care, home care, and food categories have remained intact and continue to grow. But we are cautious on the overall environment. We therefore are not looking to predict the environment and the macroeconomic growth, but to be prepared for rapid changes. Our long-term priorities are unchanged, deepening customer intimacy, expanding the opportunity pipeline, and with invested ahead of demand in the R&D and creative development centers and manufacturing capabilities. These investments carry near-term costs, but they are what position us to win larger briefs, anticipate evolving consumer preferences, and build durable, differentiated positions across categories and new markets, especially in European and American markets. We are making these investments with discipline and with a clear line of sight to the revenue opportunities they are designed to unlock. We remain equally focused on supply continuity and service levels to our existing clients, areas where our proactive planning has allowed us to support customers without any interruption, despite the fluid global supply environment. With that, let me hand over to Jagdish to take you through the financial performance in greater detail. Over to you, Jagdish.

Thank you, Kedash. Good afternoon, everyone, and thank you for joining us. The consolidated revenue flow operations grew 14% to Rs.662 crore. A flagrant segment delivered healthy growth led by Europe and select international market. A performance we are particularly pleased with giving the subdued consumer backdrop in parts of the developed world. The labour segment recorded strong broad-based growth across geography and was a key contributor to the quarter. I would note that a portion of this growth reflects the timing of certain customer orders and the pace of the growth. Therefore, we lead on an analyzed basis rather than extrapolated from a single quarter. Gross margins are stable on year-on-year, supported by a favorable product mix and to active raw material planning. An outcome we consider satisfactory given the volatility in select input price here. Thank you. 21% to Rs.89 crore, with the EBITDA margin improving to 34% from 12.6% in the corresponding quarter last year, headed by operating levels only higher revenue rates. Within the frequent segment, reported profitability absorbed higher operating expenses linked to the continued dispensing of our IND capabilities and global CDC network. These are delegated growth-related investments, and while they will be on, The global ingredient business or software quarter will lower demand in select export market and we are watching this closely. On the balance sheet, net debt increased by Rs 65 crores during the quarter to Rs 18 as of June 2026. This is next. Two consist decisions are a strategic emergency build-up to assure supply security for customers in uncertain geopolitical environment and continued capital deployment towards capacity expansion and growth initiatives. While we continue to navigate near-death-of-headings, we remain firmly committed to deleveraging our medium to long-term. In the quarter, we recognize exceptional income of approximately Rs. 30 crores towards the insurance claim relating to the prime incident. The claim process is progressing well, and they accept full settlement within the current financial year. Looking ahead through April 27, the claims of revenue growth may vary across quarters depending on the timing of demand and orders and the geopolitical situation. Not concerning these quarterly variations, the current business momentum keeps us on track to develop a double-digit revenue growth and improve barges for the full year. We remain focused on balancing growth with financial discipline through appropriate pricing and cost management initiatives, improved care conversion, and improved capital allocation. With that, I would request our moderator to open the forum for questions.

Thank you.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question.

Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Abinir Akela from Quotac Institutional Equities.

Please go ahead.

Yeah, good afternoon. Thank you so much, and congratulations on an improvement in this quarter's numbers. Just hoping to dig deeper into a couple of areas. One was on the revenue growth front. First of all, flavors as you pointed out has grown extremely strongly, maybe some lumpy orders this quarter. Would it be possible to share some outlook for the full year in terms of what your budgets are for our business just in terms of revenue growth for the full year just so we get some perspective of how the rest of the year might be? And then on the fragrances side, the India piece seems to be a little bit soft, the flat revenues here and here. But is that mainly because of a high base from last year's 1Q? And if so, how are you seeing trends in the India fragrance business? And finally, just on the foreign exchange contribution, just given the sharp depreciation in the rupee, could you just spell out how much that might have contributed to revenue growth this quarter? Thanks.

So, I think on the revenue side, while the overall revenue of the quarter is in line with the budget, the internal dynamics or the product mix is skewed more towards flavors being higher than the budget and the ingredient business being lower than the budget. But the overall revenue is in line with our expectation. For the future remaining quarters, we expect AID to catch up as the year goes through, and the flavors to normalize. I would say we did 112 crore revenue for flavors this quarter, and ballpark 95 would be on a normal basis. We expect that one odd month or two or three weeks of recruitment of orders by clients given that the lead times and shipping times were not normal. So we have seen uptick in the orders from some of our clients. However, in July, we don't see any decline in this momentum, so there is continued demand, but I would look at something like 95-96 crores of labour sales of Potter 1 and estimate about 15 crores of pre-government through the kind of extra stock build-up in the distribution. Then you had a question on foreign exchange, 9% is like-for-like growth, net 5% is our additional FX sales due to exchange rate. You had a third point. Thank you very much. Yeah, so V1 last year was quite a strong quarter in comparison, and we have taken conscious decision as we pointed out in quarter four to exit from some low margin businesses, and we have kind of held back on over sales to clients and only given what they actually regularly consume. And not taken any additional advance orders as the pricing movement has been happening in the quarter. So as we increase prices, we have rationalized the margins, we have made sure that we are selling the right products to the right people at the right pricing. In a much more disciplined manner and more focused on the overall business, given that we are not confident of having raw material to service all clients in the first quarter. I think subsequently with our inventory buildup and the current scenario, we are servicing almost all the clients.

Thank you. No, that's a really helpful color. Thanks for that.

The other point I just had was on the margins. So, one thing is, you know, you've mentioned the possibility of some margin expansion this year along with double digit revenue growth. Given we've reported, you know, 13 odd percent margins this quarter. Any broad range that we might be comfortable sort of offering from a full year perspective, I mean would it be say 10 to 12 or maybe slightly higher than that, anything you might be comfortable talking about. I also just wanted to check should we expect gross margins to remain around these levels, current levels given all the volatility in the marketplace. And finally just on flavors, flavors have been reporting extremely strong margins. So, what is a reasonable number, sustainable number to work with going forward?

So, on the flavors front, I think the margins are obviously fast growth has resulted in a very healthy bottom line. We continue to see the growth. So, at the moment, we are quite bullish on how the flavor business is evolving. Quarter 1 is, I would say, very strong. We may not see the same sort of momentum in the remaining quarters, but it is doing exceedingly well. There is repeat demand, new product adoption last year has been good. We are seeing that momentum continuing into this year. So, flavors will outperform as the current year vis-à-vis the previous year's trend. So, it is in line. To your question on the bottom line, so I think this quarter is not an unusual quarter in any way. So we would, if there are no big changes, we should look at similar sort of margin and growth. We just remain cautious, I think. The demand and the overall geopolitical situation, if it affects different parts of the world, and if it affects some parts of our business, then that will affect the overall results. At the moment, we see strong double-digit growth across the board, and if that double-digit growth is sustained and remains there, we should be in similar margin. We are in no way this is a kind of exceptional quarter. This is the baseline normal quarter.

Thank you so much. And just one last thing for me before I return in the queue, if you will permit me. So, just a timeline for your factory rebuild and the other expansion that you could please just give us an update on that. Number two, on the debt front, should we expect some further increases during the course of this year? And finally, on your tax rate, it seems a bit on the higher side. What's the full year rate we should work with? Thanks a lot.

English? Okay. So, when we talk about the factory, I think we are looking one or three in the third quarter. Most likely, we will move into the new third quarter. Date position more or less are going to remain the same as what we have in June. Slightly may go up probably in September, but otherwise when we talk about a long term or mid term, we are fully deleveraging and there will be a path to reduce it. So, I don't see that that's going to be the same situation as what we have underage. You talk about effective tax rate, so definitely, you know, when we at March 2016, the ETI was at very high, and it's going to get moderated as we start making the growth into all of the subsidiaries, and when we look into the overall profitability, so even today when we look at June quarter, we were around 31.5% or 32% kind of ETI. Our target is that it should be less than 30%. That's why we are working on that.

Okay, great. Understood. Thank you so much.

Thank you. Participants in the interest of time and fairness to others, we'd expect you to restrict to two questions for participants and rejoin the question queue. We take the next question from the line of Pranav Tendolkar from Rare Enterprises. Please go ahead.

Hi, can you hear me?

Yes. Yes, sir, so I understand that you are not giving a pattern for similar growth in fragrances, but what is the opportunity set here, like in say two years, three years off the line, whatever investments we are doing, whatever relationships we have? And this industry is relatively unexplored. So, what is the opportunity set here? Can you just spend some time on evaluating that or assuming that?

So, if you look at the fragrance business market size in just UK and USA, which are our latest new initiatives, this market is roughly 35 to 36 percent of the global demand. Vis-a-vis India, which is 5%. So, we are talking about a market size, which is 6 to 7 times bigger than the India fragrance market. It's a different magnitude of size and scale of business. So, we are putting our first... First, let's say, efforts in that market, we have seen some traction. We will continue to grow that over the next two, three years. So the market opportunity is very large. It's basically $10 billion of opportunity or market size. We are new. It will take us some time to keep building the relationships and start to build these. But the overall market size is quite large compared to the Indian market, the Asian market.

And this market size is actually addressable with the skill sets that we have.

I mean, effectively, in the longer term, yes. I think we are targeting the 100 million-odd market in these markets, which is sort of low-hanging or easily addressable by us as we continue to build our R&D capability and customer engagement. So, we have more than adequate, let's say, market opportunity for the next 2-3 years. On the longer term, we have built the platform around innovation, around patents and processes which we are able to market. So, it's a sustainable advantage we want to build in the market and continue to grow. So, yes, entire 10 billion is an opportunity for us. It will take 10 years to reach that kind of opportunity space, but the capability to reach all 10 billion is already sort of built-in with the patents, with the back-end systems and IP generation.

And that's a, that's a lot of stuff.

We take the next question from the line of Shyam Gupta from Trivetra Asset Managers. Please go ahead.

Hi, sir. Thank you for the applause. My question is, if customer factors continue to evolve, are you seeing faster growth in premium fragrances compared to mass market product?

And how do you expect this trend to influence your product mix over the next few years?

So, I think generally speaking, as customers have higher disposable income, there is a move to premiumization. This is a normal phenomenon year on year across the globe. I think in years of high inflation, which we expect this year to be a bit muted on the premiumization because of inflation. But in general, this trend is a normal trend where people go in for more premium product or up marketing. The brands also bring in better versions and higher. And this is a normal trend, so it's not disrupting in any way for us. The benefit of having working in Europe markets for the last few years is that we have already product developed for the next wave of products that will come in Asia. We are cross-selling previous versions in Europe which are still in trend in Asia.

Okay, sir. And the second question is, like, what percentage of your revenue today come from the product launched in the last 3 to 5 years?

About 10 to 11%.

And it...

Okay, sir. That's it. Thank you.

We take the next question from the line of Chetan Chawla from RTL Investment. Please go ahead.

Yeah, hi. Good evening, and thanks for the opportunity. My first question is that we've seen a lot of raw material volatility, and given that, you know, we have kept some strategic inventory, are we seeing some benefit of that in the gross margin and going forward? Can there be some negative impact on the gross margin once this inventory that we have starts depleting?

So, we have prepared in a manner that we have six months visibility on the inventory and our contracts are pricing to the client. So, we have increased the inventory to ensure that for the next four to five months, we don't, I mean, six months from July effectively, we don't have any additional cost pressure on the raw materials. So, all the prices are fixed with stock in hand or contracts in place. So, we don't see any big changes in the profile of selling price or cost structure in the next six months on the part of the raw material. We will obviously keep updating what is happening on the raw material month on month, and we have got, in a way, extra 45 days of inventory in the system to allow us to pass on any big shocks or any big changes to the clients in proper time and not take a hit on the gross margin at our end. So we have additional inventory to allow us to go back to the clients well in time and ask for and push for the recalibration of the selling prices if required.

Got it, got it. A related question to that is that, you know, if we are confident that our gross margins can be maintained, then shouldn't our EBITDA margins go up as the revenue scales up because your CTC investments are largely done now, so that, you know, risk loss absorption should improve going forward?

Yes, your comment is absolutely right. We are just not in a... A sort of position to anticipate or predict the demand structure or demand situation for the full year. As of now, things look quite in normal range and as we grow double digit plus our margins will improve. But for the full year, we are not confident to... Thank you. If we do double-digit growth, our margins will be better than the first quarter in the full year, but if we at some point with the currency, with exchange rates and or growth faltering in any part of the world, then if it has a significant effect on the overall number, then we will have a little bit muted result as a basis.

I know, thanks. The second question is on the capacity expansion, so the CAPEX plan for this full year, how much was done in Vancouver, and if you could kind of split it between Europe and India, that would be useful.

Sir, about 25 crores was done in Europe in the quarter one. European CAPEX is now completed. The plant is operational since May. Our quarter-two capex will continue on Manute and Vasivoli in their fragrance projects. We expect bulk of these investment capex to happen in India. Typically, before end of quarter two, and the Vanuity factory to be operational in quarter three, and then we have opportunity to, based on how things are running and demand scenario, to either put out the last 25 crores of apex in the quarter four, or defer it to quarter one next year for the Vanshivli plant upgradation.

And in 2Q in Vanamete, how much do you plan to spend?

In Q2 in Vanamete is about 25 crores.

Okay, so 25 crores was spent in 1Q, 25 crores in 2Q, and remaining 25 crores you will decide whether to do it this year or next year?

No, remaining around 50 crores we will put. This is the 3 plans in India.

Got it, got it.

Thanks, thanks a lot. I'll come back to the call.

Thank you. We take the next question from the line of Tanish Javiri from Bolling AMC. Please go ahead.

Hi, can you hear me? Yeah.

Yeah, so I just wanted to ask more on the CDC front. By when can we expect a ramp-up in the European subsidiary, and what kind of a revenue stream can we expect from it, and an incremental ROIC?

What are we expecting the return ratios for our investment in Europe to be?

So, on the longer term, we see ROC around 17-18% in the European business. We have just invested in a large centre in Germany and with a new factory in Almere. So, we are at the sort of full capex cycle. It will take 3-4 years of growth to come back to the normal trend line. Opportunity space, we are investing roughly 3 million a year additionally in R&D, and as I said earlier, the markets which we are addressing are quite large. We have more than 4 to 5 billion dollars of new areas where we are operating in Europe. It's not that four or five billion dollars will happen tomorrow morning, but effectively, opportunity space for us is quite large. So we are confident of growing extremely fast in these markets because we have very small space.

Okay, thank you. And on a group level, what kind of ROE and ROC do we have in mind, like in the longer term, like two, three years down the line?

So, I think we should have excess of 15% ROC as our target. Our long-term target is 20%, but at the moment we will see 3 to 5 years of slow traction towards the 15%, and then as the sales ramp up in the new initiative areas, you know, post-break-even and EBITDA plus, and then we will reach that 20% ROC level.

Okay, thank you so much.

Thank you. We take the next question from the line of Advait Chowkar from Equipoise Capital Management. Please go ahead.

Yeah, thank you for the opportunity. I have one question about the recent heavy rainfall and flooding in the parts of Gujarat, including the Wapi region. Have any of our manufacturing facility or supplies and operations been impacted because of this? No. There is no impact, or there is no shutdown we are expecting from this airport.

So far we had no impact.

Okay, okay. Thank you. Thank you. That's it from my side.

Thank you.

We take the next question from the line of Ashwin Patil of Intelligent Prosperity Solution. Please go ahead.

Thank you for the opportunity. My question is, your Catholic cycle will already be completed. If so, what depreciation expense should we be expecting at 0.27?

Right now we are at around 35 crores per quarter. And once we do one-out-take capitalization, we'll move into that. We are expecting somewhere 38, 39 crore per quarter kind of a run rate.

Thank you. Thank you. Thank you. We take the next question from the line of Sajjal Kapoor from Anti-Fatial Thinking.

Please go ahead.

Yeah, thank you for the opportunity. Hi, Kezar. A couple of questions from my side. First is, what has to be true three years from now for you to say the investments that you have been making in the operating system, improvement of KEVA? And that you have made over the past decade were all kind of successful rosy. You mentioned we can probably look at 17 to 20% rosy over the long run. But what will give you an early indication of the fact that we are trending in that direction?

So, typically we have three large new market bets, which is Germany, USA, and UK. In the last two years, little bit more than two years, we have invested quite heavily in these three development centers with sales, marketing, and the whole teams. We see traction in each of these, and what we are looking at is each of these investments to break even on a year-on-year basis in the year 3, this is our milestone. So Germany which has come first, we should look at somewhere between this year and next year to have a break even position that we have generated enough business that covers the cost. A year later for USA and a year later for UK. So if we track in three years on this line where we have a EBITDA break-even on the investments, then we will grow from there in our longer term basis.

Helpful, helpful. Thank you. And today, if you could remove just one constraint to double Cheva's earnings over the next five years, what would that constraint be? Just one.

Revenue doubling in five years, you are talking about?

Yes, yes. What is that one constraint, you know, that if you take care of that bottleneck or limitation, you could double the...

I think the main sort of concern for us is major disruptions on the global macro. Our business and nature of business is quite annual, annual repeat, annuity basis. So once we have a business, it grows, it sustains. The moment we have a macro like we had the pandemic or something like this, then it is affecting not only the year in which the pandemic happens, but also the pipeline for product launches in the subsequent couple of years. So what we have underestimated is the effect of You know, subsequent year growth is also dependent on the previous year product adoptions. So this is as long as we have a consistent macroeconomic situation. Even whatever is the conditions today, they remain as it is for the next five years. We will be in a very good position to double our revenue and go on the track that we have outlined. So, major changes affect our business. It takes us much longer than it's a very complex business, the kind of momentum building, and we are not able to cut down R&D and put it back in time. So, if there are quick fluctuations, we lose out on that area. Is it the main concern or constraints? If there is a... Stable environment, even if it is, I mean right now it is not a very positive global environment for growth, but if it remains like this, stable, we have more than adequate opportunities and spaces where we can continue to grow and double the revenue and go on our path. Wonderful.

Thank you. Thank you so much, Kezar. All the very best. Thank you.

Thank you. We take the next question from the line of Ankur Adharwal from RT Business House, Private Limited. Please go ahead.

Hello. How much promoter holding place at the end?

I think 50 lakhs, something like this. I think what is the value of the borrowing against the shares? I think it's 50 lakh shares.

Okay.

And what is the planning to reduce the debt for next one-two-year?

Sir, as Jagdish mentioned, we have, the debt level will remain high for the next quarter, the similar levels. As we continue our capex this quarter and next quarter, I think from the third quarter, it will start to reduce, and our expectation is that every quarter we will continue to reduce by approximately 25 crores quarter on quarter thereafter.

Okay. Well, thank you. That's all from my side.

Thank you. Protestants, if you wish to ask a question, please press start and 1.

We take the next question from the line of Amit Kumar from Jitter Night Investments. Please go ahead.

Dear, thank you so much for the opportunity. Can you hear me?

Yes, please go ahead.

Yeah, thank you. Sir, my understanding, you know, of the business, typically, you know, you, you know, fix your pricing with customers, you know, at the beginning of the year. Now, you know, given the, you know, disruption that we have seen on the raw material side, I mean, certainly pricing, you were sort of, you know, talking a little bit about availability also. Definitely a fair bit of pricing disruption between March to July. So I just wanted to get a sense given the kind of, you know, disrupted, you know, raw material environment. Have you sort of taken, you know, any sort of pricing actions, you know, during this time between March to, till now? And, you know, how much of that, given that it's a B2B business, I mean, how much of this has been accepted, you know, by your customers?

So, we have corrected the pricing to our customers based on the cost inflation that we have ourselves. This is a result of the geopolitical effect. We have passed it on. I think almost 95% plus of the clients we were able to get reasonable price corrections. And we have implemented that across the board that certain clients were reluctant. We have not supplied till the negotiations were completed. And if you see that's part of the reason the domestic fragrance sales is a bit lower than same quarter last year. But we have been successfully able to pass on the costs. We have also increased our inventory, so we are not exposed to future stocks. We are basically committing to the client's delivery quality and supply certainty with the inventory in hand.

Alright, understood. That's it from Bayer. Thank you so much.

Thank you. We take the next question from the line of Bharat Gupta from Fair Value Capital. Please, go ahead.

Hi, Tidak. Thanks for the opportunity.

A couple of questions. So, one is on the global ingredient business. So, you mentioned that it's seen under votes, but

any key turnaround which we anticipate over the next few years in this region?

We didn't hear quite which business you were talking about.

About the global ingredient business.

Yeah, global ingredient business.

So the global ingredient business obviously is much more directly affected by supply chain disruptions in the recent situation. We have muted growth for the first quarter. We will resume the growth and we have taken steps as we mentioned a few years ago on backward integration and complete away from China supply chains. So those are in place. Unfortunately, the disruptions have created a supply gap in this period. So we are not in a strong position to push the global ingredient. But it is a stable business and we will continue to see a recovery in the second half of the year.

Sure.

With respect to the insurance team, so I think we have received somewhere close to 30 or close in the quarter.

What's the estimate with respect to like how much we have purchased for the rest of the year?

I think 50 to 55 crores, 60 crores is the claim amount spending. So we will continue to chase the insurers to fulfill the claim in this year.

Sure. That's it from my side, sir. Thank you so much.

Thank you. We take the next question from the line of Bharat Chhid from Quest Investment, Manchester, Private Limited. Please go ahead.

Hi, Kedar, and congratulations on good. So, Kedar, my question is related to, well, first is on this Unilever business that we have. So, how that is ramping up is happening, and are we getting more RFPI from same plant or inter-raming? Introducing new clients, are we getting a kind of RFP from new clients, that is one part. And second, on USA and UK USA, we are seeing some traction, so if you can give some color, because last year in Q4 we had also started supplying to USA.

So, like I mentioned, let me answer your two parts. So, Unilever and Global Accounts, we are continuing to engage, not only Unilever, but others. There is a continuous stream of projects and developments which are happening at the moment. We don't have any large breakthrough significant... You know, additions to the existing portfolio in that scenario. But work is happening and things are a bit changing at their end as they are also facing pricing pressures on their commodity and their sort of new product development or launches are not in the full swing. We have talked about the new initiatives with Europe, Germany, then USA and UK. Germany is now kind of truly on its way. We have seen regular traction on the developments that are happening there and the sales part of that. USA, we have just started traction in the fourth quarter last year. We expect to do about one and a half to two million. Minimum revenue for the year in the U.S., so that is good development. And UK is early days, we have just started this year, so we need to wait at least 12 to 15 months before substantial businesses are materialized.

Okay, great. And second question, I mean, let's reverse. So, that fact, also, we were talking about a global account. So, any update on that, how that is missing out? And secondly, you said this, so, Clever's business are 95 crore kind of a run rate that we should expect from Q2 onward. Is that fair understanding?

I think Q2 may be even stronger than 95. My guesstimate, now nobody has an exact number because client purchases have happened. We have done 112 in the first quarter. My guesstimate is that about 10 to 15 crores out of this would be sales which is extra stock, not actual final consumption. So, we may not get that 15 crores quarter on quarter every quarter. So, it is higher inventory buildup in these, particularly in the export markets. And also in domestic, because of the disruption in the supply and the price increases, people would have stocked up their inventory levels with the old price benefit. There is an additional estimated 15 crores in the 2012, so 97-95 crores is the actual regular business if there was no big disruption. This is our estimate. So base is 95-96, quarter 2 will be better than 95-96 and quarter 3 will be better than that and so on and so forth. We don't expect 112 plus growth in the quarter too.

Right.

That's not our expectation.

And second, I mean, any global account that we were working on, so any update on that?

Nothing large. I think businesses have started with some global nutrition companies and things like this, but nothing is substantial, significant at this moment. Typically in flavors, products are normally new introductions. It takes three to four years for significant value to come.

And in Q1, apart from this 15 crore, which business, like personal care, beauty, food and beverage, so which business has been driving a large part?

So, I think across the board, it's pretty much business as usual. Global ingredient business has been lower than expected. We have curtailed the suppliers. We have no certainty in this period on the raw material side. So, we have sort of controlled and made sure that we service all our existing clients. And on the flavor side, we have higher than budgeted or higher than expected sales. Which I believe will kind of normalize in the quarter two onwards. There is no segment, new segment, nothing out of the normal. It's very much normal quarter with kind of, if I would summarize it, normal business, double-digit growth, flavors, outperforming, AID, global ingredients, below budget, but overall on budget.

Thank you. Ladies and gentlemen, we take that as the last question and conclude the question and answer session. I now have the conference over to the management for their closing comments.

Thank you. I hope we have been able to answer your questions.

Should you need any further clarifications or would like to know more about the company, please feel free to contact our team or CDR India. Thank you once again for taking the time to join us on this call.

Thank you. On behalf of SH, Kaiser, and Company Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.