SRF Limited (SRF) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to SRF Limited, Q2 and H1-FI27 Onyx Conference Call, hosted by Dam Capital Advisors Limited. As a reminder, all participant clients will be 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 the conference call, please signal an operator by pressing star then zero on your touch-front phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nathana Garwal from Dam Capital Advisors Limited. Over to you, sir.

Thank you. Hi, good afternoon, everyone, and thank you for joining us today. We at Dam Capital Advisors Limited are pleased to host SRF Limited's Q2 and HU1 F27 results conference call. We have with us today Mr. Sameer Kashyap, President and Chief Financial Officer, and Ms. Sugandha Singal, Senior Vice President, Head Treasury and Investor Relations of SRF Limited. I would like to invite Ms. Nikita Gawan, Head of Corporate Communication at SRF, to initiate proceedings for the Results Con Call. Please go ahead now.

Good afternoon, everyone, and thank you for joining us on SRF Limited's Quarter 2 and Half Year FY27 Results Conference Call. We will begin this call with brief opening remarks from our President and Chief Financial Officer, Mr. Samir Kashyap, following which we will open the forum for an interactive question-and-answer session. Before we begin this call, I would like to point out that some statements made in this call may be forward-looking, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Mr. Kashyap to make his opening remarks.

Thank you. Good afternoon, everyone, and welcome to SRF Limited's Q2 and H1 FY27 earnings conference call. Thank you for joining us today. I will begin with an overview and then cover key developments and business updates across our segments, after which we will open the floor. I'm pleased to share that SRM Q2 has worked effectively to change and focused on maximizing opportunities. Continued focus, we continue to make advances on our strategic investments, technology-led cost optimization interventions, and new product development initiators. Our investments in future laying the foundation for sustainable growth and strengthening our market, deepening customers' share of value-added products over time. For the quarter end of September, the company's operation EBIT was sent in our chemicals business to deliver towards a higher end of the status, reported a 25% increase in revenue from 1,667 crores to 2,079 crores during Q2 FY27, compared with the corresponding period last year in a challenging market environment. In agrochemicals, we are witnessing demand recovery of strong customer relationships. Progress made by some of our customers on registration for key active ingredients is further strengthening our future demand visibility. We continue to expand our pharmaceutical intermediates portfolio through targeted product development and customer engagements. New product approvals and commercialization are progressing effectively and helping us build a broader portfolio and opportunity pipeline. Together, these developments in agrochemicals and pharmaceuticals are positive for the business. We expect them to ramp up progressively over the coming years. Using new products and scaling up existing ones remain key priorities for the business. We remain focused on strengthening our cost competitiveness through technology-led process improvements and effective sourcing strategies. Reflects well on the commentary from Global Energy from Europe is encouraging. A resilient supplier base, creating opportunities for trusted Indian manufacturers. We have witnessed opportunities, given our technology, leveraging our chemistry to new domains around environment, a bigger of our long-term growth strategy, 39 patent application volumes, global trade flows, which could make significant inroads to expand volumes and revenues, even in the Middle East. We have been able to continuously broaden our geographic We have a diversified geographic footprint and continued expansion into newer geographies and provide greater resilience. We are also from Parkour, URISA, where key regulatory approvals have recently been for FY28. We significantly strengthen our competitive position in the industry, our in-house HFing the grades in our PTFE portfolio. During the quarter, we made further progress in customer qualifications and commercialization of higher value grades, resulting in an improved enhancement of commercial micro-powder sales as well. As we continue to broaden our presence in specialized applications, the portfolio is becoming increasingly differentiated, positioning the business beyond bulk PTFE and improving the business mix to higher value grades. Our PVDF project remains on track for capitalization, with customer engagements underway across multiple end-use applications. PBDF will initially start making inroads into chemical processing, fluid handling, and architecture coating applications, with the goal to gradually move to solar and battery applications as well. This is an important milestone in this part of mobility and growth in our fluoropoleum emerging value chains across electricals and corresponding period last year. These are moderated during the quarter utilization stage and differentiated substrates that align with long-term growth sectors and evolving customer requirements. These continue to gain traction initially anticipated Q3 of FY27. Every BOPP-BOPPE film line is expected to commercialize in Q3 of FY27. Sustainability continues to be an important strategic priority for the business. We are actively working with customers and partners to develop solutions that support circularity, including recyclable monomaterial structures, advanced coatings, and sustainable packaging formats. These initiatives respond to changing customer and regulatory requirements while supporting the development of differentiated solutions. We have a shift towards value-added firms and foils. We have commercialized 16 products across Bopet, POPP, and Coatings, and more than 35 products are under development. We are among the forerunners in the industry in super ultra-high barriers across substrates with leading global brand owners, supported by strengthening export traction on high-end aseptic packaging, and are now working closely with the collectively enable the business Transition from being a pure packaging film's player to a high-end performance films and foil business. Moving on to our technical textiles business, the business reported a 25% increase in revenue from 474 crores to 594 crores during Q2 FY27 over the compatible period last year. The Coated Fabrics business maintained its leadership position in the domestic market, Supported by a healthy product mix and continued emphasis on value-added products. Our focus on operation efficiencies and cost optimization helps us navigate the competitive pressure as well. The laminated fabric set of identified, SRF has embarked on a journey to effectively target these high-growth areas of these sectors. The applications in each of these fund-based sectors is part of our investor presentation. Pay your attention to the new CAPEX that was a better growing opportunity in the energy storage, and all the films and foils business, to reflect our growing aspirations in this sector. Step towards realizing these growth aspirations, as we had intimated yet, investment of approximately Rs. 600 crores to set up a new aluminum foil facility at our existing site at Jetapur in Madhya Pradesh, to cater to battery applications targeted at the growing energy storage and EV sectors. A total capacity of about 12,000 metric tons per annum and will serve both lithium-ion and sodium-ion battery applications, along with high-end packaging foil. The project will be carried out in two phases. Phase 1 has an estimated cost of Rs. 300 crores within about 23 crores. Importantly, the proposed universal foil mill shall be capable of producing both battery-grade and high-end packaging foil. This provides us operational flexibility, enabling us to address multiple value-added end-use markets, even while customer qualifications for battery applications are in progress. Battery applications with growing demand arising from the energy storage and EV sectors. The government's ECC-PLI scheme, which incentivizes domestic battery manufacturing and mandates progressive domestic value addition to accelerate localization of the battery supply chain, Driving demand for key battery-grade aluminum foil. Education, vocational skills, or several initiatives translate innovation and sports platforms further reflected the growing impact on young people. During the quarter, supply chain solution category at the Adam Smith Awards Asia 2026 supply chain. Recognizing our focus on innovation, these awards reaffirmed SRS's commitment to operational excellence, strategic planning, and delivering on the outcomes we had envisaged. Thank you very much.

We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Participants, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rohit Nagraj from 361 Capital Market Private Limited. Please go ahead.

Hi, good afternoon. Thanks for the opportunity. So first question is, you just mentioned in your opening remarks that second half seasonally is the best for us, and we are confident that our growth will be more in second half. Is it backed by certain firm commitments, particularly in the chemicals business? And a light question to that, in terms of the AI commercialization, the 6-7, which we have been working on, if you can give the latest update on the scene. Thank you.

Thanks for your question, Rohit. What I reiterated at that range, H2 specifically, yeah, we do see, I think, even in the last quarter, we talked about the fact that we're starting to see volume recovery. So, in terms of the AI, what we called out on the investor presentation as well is that on a couple of the products, two specifically, customers make progress in terms of their own registrations. So, this is in a couple of initial markets, and that should, in due course, start translating into better visibility in terms of our own funnel in terms of…

Thanks a lot, sir. The second question is, what would be our marketing strategy for HFOs once we commercialize at the end of FY28? Is it going to be a domestic market or, sorry, a domestic or exports market, and there too, whether we have certain firm commitments from certain geographies or customers? Thank you.

Yes, so the HFO play, at least in the initial couple of years, is clearly going to be largely Western world oriented. I think that that's a certainty. I think the fact that as a company, you know, we've operated in those markets for the number of years that we have already positions us very well in terms of already being entrenched with, you know, as well as the customer base. So, yeah, there will be some incremental efforts, I think, from a marketing standpoint, but I think we've already established ourselves very well in those markets, even in the past, and, you know, therefore, I think it, you know, it should not be a significant transition or significant incremental investment to start addressing that opportunity area as HFOs come on stream.

Thanks a lot and all the best, sir.

Thank you. The next question is from the line of Arjun Khanna from Kodak Mahindra Asset Management Company. Please go ahead.

Thank you, sir, for taking my question. The first question is on the HFC side of things. So what capacity do we envisage during the end of this baseline period? So by the end of this quarter, what would be our capacity for HFCs?

I think we shared in the last call, Arjun, where we desire to land on capacity. We talked about where our HFC capacity would expand to. You heard me in my commentary as well talk about the fact that the incremental portion that has to happen out of the hedge is progressing effectively. I think for fairly obvious reasons as we lead up into the last two months of the baseline period, I'd rather not be very specific about a number where we shall land, but I think suffice to say we are progressing very well in terms of the numbers that we called out.

Okay, sure. So, we had talked of the repurposing some facilities and brownfield expansion. So, has that been done, or do you expect that to be done by the end of this quarter?

If you are talking about what we were doing in the hedge, like I just said, it's progressing well, and, you know, we should be at the level we need to be well in time.

The second one is on the Keymore's projects. So in the previous quarter, we said that there was maybe a quarter delay. Would we expect in FY28 by the first quarter commercialization? And in terms of scale-up, if you could help us understand over what period we should see the scale-up of this project?

So we have said the first of the plans actually would be up on the first product in Q4 of this fiscal and the second one in Q1 of the following fiscal. So those timelines still hold large. I think we had also in the previous call, and we identified that same comment, I think for it to be at full scale ramp up, it's probably anywhere between a 10 to 12 month window. So, the following year after that is kind of when I think you should see full stream revenue.

So, FY29, we should see the full revenue scale-up?

FY29. Yeah, FY29 from the start of that year is kind of reasonable too.

Sure. Just a quick one on the KPEX that we have announced. So, in terms of technology, et cetera, could you help us? How is it different from our current aluminum foil project? Because this project, we took slightly longer to scale up. What other execution, et cetera, issues that you envisage out here? And in terms of customers, while thank you for the presentation, we have well covered it. But if you could help us in terms of grades, et cetera, how long would qualifications take?

Yeah, no, great question. So I think rather than just immediately dive into answering yours, I think it's probably best we talk a little bit of the scale-up that we've seen in the aluminum foils business. That will, I think, give you a better picture of how we find ourselves better positioned than maybe where we were, say, about a year ago. You heard me call this out in the previous call as well, that we are, even in the existing plant, able to move to significantly higher rates. Conversations have progressed very well, you know, with one of the leading aseptic players. So that's pretty much the top of the value chain that you're talking about. You know, these are the likes of Tetra Pak. We are kind of done with audits at our plant as well. So I think a lot of the learning, yes, you're absolutely right that the scale-up did take some time. But I think we find ourselves in a place where a lot of those learnings are now translating into results. And, you know, sharing this progress that we've made on septic, I think, is a great qualifying benchmark to know that we've kind of, I always want to say, cracked the code in terms of what we need to do to deliver those higher-end grades. So that's kind of where we are growing a lot of assurances from in terms of our ability to now go further up that chain, you know, into battery foil. It is a different plant in terms of the rolling list. Visually, what we have today. However, that mill, you know, and I call this out in my opening comments as well, it is going to be a universal mill that can address packaging needs as well. So when you think about higher grades like aseptic, we can use that mill to address a lot of aseptic demand, you know, besides other high grades, even as qualifications around battery continue, you know. Timelines for battery qualification, I think, realistically, it's probably, you know, anywhere close to a two-year period from the time we're kind of ready. So in the interim, I think the fact that we've taken this decision to go with the universal mill positions as well to say to use all of what we can produce out of that mill into areas like a septic and other higher value-added rates while qualifications continue, And then we will be able to switch over into battery foil.

Sure. And just for an understanding, would our aluminum foil business possibly by the end of the year be profitable by itself?

Yeah, I think we're fair to say that.

Thank you and wishing you all the best for the future.

Yeah, absolutely.

Wishing you all the best.

Thank you. The next question is from the line of Kumar Somya from Ambed Capital, Private Limited. Please go ahead.

Hi, sir. Good afternoon. Sir, a couple of questions from your side. Firstly, on the specialty chemicals, if you could throw some light on how are the customer engagements and conversations shaping up, given that we are looking at inflationary crop prices, and how are they talking about their registration timelines?

Yes, I think I answered that just a bit earlier, at least in terms of registration timelines. You know, I just shared, I think it was two questions ago. So, progress has created this call last quarter, and now there has been progress on at least two of the products. Registration, like I said, has progressed, markets like Brazil, a couple of other initial markets. So, finally, there seems to be momentum from this long pause, I think, that we've had, you know, waiting. I think we are in a much more positive place to know that at least on two of the products, there is momentum. There is a lag associated between when those registrations happen and when it starts translating into, you know, full-blown demand coming through to us. But in the interim period, I think it's reasonable to expect that, you know, intermediate products that could still be needed kind of get forced from us, even as demand around the core AI product itself scales up over a period of time. So that's, I think, the progress around AI. I'm not sure if I answered your question.

No, sir, that was clear enough. So, secondly, on the aluminum foil project that you have announced, 12,000-pound capacity, so typically, what is the revenue potential of this project?

So, if you, you know, let me answer that question in a different fashion rather than talk about revenue potential. If you think about, you know, the price points at which aluminum foil typically sells at, I think you can apply a factor very easily, you know, about one, one and a half times, if not more. So, you know, from there, but easily plain foil, aluminum foil that goes into packaging. Got it.

And in terms of margin, so is this fair to assume 15% margin should be achieved in this segment?

I use that, as you know, but just if you look at what I just shared with you in terms of pricing, and you look at existing or tech business, and where we kind of exit for this year, I think you need to project out what potential margins we could be looking at.

And, sir, lastly, if you could just throw some light on the HFO project. So, currently, the prices are somewhere $50 to $60. How do you expect this pricing to land up when the patterns go up?

Well, I think it's only fair to say that just like what we've seen, even in past versions of the generations of refugees, there will be a decline on stream. Having said that, I think what's also important to consume is that the baseline kind of resets in terms of where the price of the product is. So we should easily that HFO prices would be at a significant premium versus anything that we see on the HFC side. We're still two years out of patent, but we should see C price point significantly north of typical HFC pricing.

Thank you. Thank you.

The next question is from the line of Arun Prasad from Aventus Park, Private Limited. Please go ahead.

Yes, thank you for the opportunity, Grafman, Zomir. First question is on the first half, we have roughly around 25% on the chemicals business. If you can qualify both into the volume and pricing and repeat appreciation, there is a reason for it.

I'm greener, and I think as we walk into the second half of the year, I feel reasonably confident that we'll see a significant growth in speciality revenues driven by better volumes between H2 and H1. So, you know, that's as much as a volume as we're hearing.

You know, very helpful. Just like how much of this is, you know, influence of the rupee deprivation has helped us in this delivering this stuff, because now we have fairly in terms of other markets or other producing countries, our currency movement should be helpful in either gaining market share or raising benefit. So, if Rupi were to, again, appreciate back to, say, 3, 4, 5 percentage, should we see some kind of a reversal in this trend that we have delivered in this, Mr. Stop?

I think a good way to consume our shelf for food is a good sign that, and pricing, like I said, is holding. I think are all good benchmarks to give you a sense that irrespective of currency movement, I think you word our commentary for sometimes, and we expect prices to stay stable. So if you're alluding to, you know, could we start seeing softness in price, you know, because of competition, import, et cetera, You know, we don't see that at this point in time. Yeah, so our view on the quarter is we see it being strong. We see sizing on freight and some, you know, input costs. You could see, you know, a bit of impact in terms of the cost side of the whole equation. But aside from that, you know, I think we're at a very firm wicket and continue to go from strength to strength.

The second question is on the Zennikin, the Zennikin. We have written that in a few products, the product sampling and optimally, these are the samples, either planned or commercial planned, and if you can also, you know, help us understand what are the series of next steps that we should expect, and in my own set, that we need to do before, you know, recording a significant revenue from this segment.

You know, so these are in the commercial plant, but just to give you a little bit more color in terms of the sampling, a lot of this right now is at the lab level, externally to SRF, but at the lab level. So kind of once we are done with optimization that is necessary is when I think you should start seeing more commentary from us around, you know, more the downstream side of the whole sales chain, starting from sampling with customers and qualification. So we're a little bit away from that just yet, but I think, you know, that we make progress on this journey. So, presently, a lot of it is around lab sampling and our own product optimization, the consequence of what we're getting back. But, yeah, I don't think we're too far away from starting opening the doors around the customer side conversations. A lot of free work in any way is happening on that front so that we can trigger those pieces once a lot of the product optimization side is done and behind us.

Understood. Thanks, Rami. Thank you.

The next question is from the line of Ankur Perival from Axis Capital Limited. Please go ahead.

Yeah, hi, sir. Thanks for the opportunity. First question on the overall, you know, pricing environment. You did allure towards saying that, you know, prices are largely stable. Will it be true across PECCHEM as well as, you know, the overall chemicals portfolio, given that there has been a decline in our margin, you know, on Q&A basis? And what time frame are we looking at in terms of full pass-through, if at all it's a work in progress right now? First question was on the RM scenario overall. You did allude towards, you know, largely stable pricing, you know, across the segment on a Q&Q basis, while you're still seeing, you know, a decline in chemicals margins.

Sorry to interrupt, Mr. Perival. So could you try speaking loudly?

Sorry, I'm audible now?

Yes, sir. Please go ahead.

I can hear you, Ankur. Thank you. Sure. So on the pricing front, how are we seeing things there, given that while you said that, you know, RM pricing is largely stable, but on the margins front, we are seeing some decline in our chemicals margins on a Q&Q basis. So if you could, you know…

You know, just to clarify, we are, you know, I actually said we are seeing pressure on raw material pricing. I think we've been able to offset large parts of that in the businesses, either through pass-through to customers or being offset versus our own cost optimization. But yes, there is pressure on RM pricing. I think everything downstream and petrol, as well as on some of the chemicals, there is, in fact, that's well known. I think what we've additionally been able to do on some specific inputs is to be able to secure longer-term contracts with, you know, more fixed pricing so we're not supposed to be vagaries of price shifts. But, you know, is there no impact that that would not be active to call out? There has been some, you know, we are hoping that it kind of stabilizes and gets better from here, but, yeah, between quarter on quarter, there has been some impact. Both on rheumatism, I think, as well as, you know, freight, you probably are well aware of this. Both those numbers are elevated, so, you know, all of the oil level in terms of margin.

Sure, sir. Just a clarification. The pass-through here is we are specifically talking of specialty chemicals, or even in ref care, there is a lag?

Like I said, I think on the ref care side, the ability to pass things through is looking better. Speciality, I think you all know the commentary from the past. You know, I'm talking about volume recovery. So the ability, I think, over there to pass everything through isn't, I'll just comment out by saying a lot more on the operational efficiency side around the speciality business. Has that offset a reasonably large part of the increases, but not entirely?

That's helpful, sir. And just secondly, on the packaging films as well as the technical textile margin profile, there were some inventory-led gains in the first quarter. Q2 will be a clean quarter that way? And how do you see that number sustaining going ahead?

Yeah, I think it's fair to say on technical textiles, I think it's, you know, there aren't any of those anomalies which were there in the Q1 numbers. On firms, I think for the most part, it's kind of normalized that it was a little bit, you know, I think in Dribbs, we've had a few situations where pricing kind of moved interestingly, but it's a small part, I think, of the overall. So, I think it's reasonably fair to say this is very representative.

Sure, sir. That's it from my side. Thank you and all the best.

Yeah, thanks, Raskar.

Thank you. The next question is from the line of Saurav Jain from HSBC Asset Management Company. Please go ahead.

Hi. Thank you for the opportunity. Continuing on the same question, the Q2 margins have kind of dipped significantly, and you explained some reasons also. How to now look at the second half? Do you think there will be a better pass-through in terms of the costs which are likely to remain elevated as we have moved already into 3Q? Or do you see that the, you know, and do you see if the margins are going to improve from what we delivered on Q2, going back to 28-30% kind of margins in the chemicals business in particular?

I think there are lots of factors at play over here. One is obviously, if you split up, I think if you look at the ref gas side, I think over there, you know, pricing for the most part, there has been in terms of margins on the ref gas side because of elevated input costs, logistics, transportation, etc. So the property holds until they kind of wear off. So I think Q2 is reasonably representative in terms of how we look at things forward. I think on the speciality side, as volumes kind of peak, we will start operating with a much higher level of efficiency as well. We see a strong ramp coming through now, I think, in terms of the revenue side. How much of that starts trickling down into an EBIT and margin level way to be seen? I don't want to, you know, declare victory over here just yet. I think at this point, we derive a lot of confidence from the fact that revenue is looking significantly more positive. You've always heard us talk about this line around holding share, and I think that's now starting to come back and show us the early signs of recovery. So I think if we get to the second half, you should expect to see that. How much of that will translate all the way through into margin, just given how uncertain things are around the whole geopolitical environment and input costs, it's really tough and premature to call that out at this point. I think, suffice to say, we remain optimistic that pricing vis-a-vis customers, you know, reasonably old and probably get better from here, you know, continue to go.

That is helpful. Secondly, you also mentioned that the volumes in your HFCs is continuing to going to expand. You know, is that more like a mid- to long-term comment or even the near-term view would expect the volumes to expand? And if you could also give us some sense in terms of how is the capacity utilization for you for the HFC portfolio in particular.

So, you know, I think there is absolutely no doubt anyone should carry that at least until December of this year, our plan is to run imperative decline period. We call that out specifically. That remains a core focus area. That should give you adequate sense in terms of capacity utilization. I think we are very, very maximized at this point in time. And I said this in the past as well. You know, there will be times when we need to optimize what we are even manufacturing in the plant so that we optimize quota, right? Maximize and achieve as we hit December 31st. So that will drive a lot of short-term decision-making, assurance and confidence that plants are pretty much maxed out and optimized at this point in time. To stay pretty much, you know, there's been interesting demand movements. I'll answer this question a little differently for you. There's been interesting demand movements even through the first half of the year, you know, between Western world, Asia, as well as the Middle East. And I think the agility and nimbleness that we've demonstrated to kind of operate across these markets and continue to maximize our outcome, even as demands have looked very different across these geographies, you know, I think just speaks volumes on our ability to not have over-dependence on either a specific product or a specific geography. And I think that positions us very uniquely involved in terms of even how things look post-December of this year.

Got it. If I may squeeze in one last question, if you can give us more on that side. For the new projects that you have listed out in the presentation, you talk about it's like a billion-dollar kind of opportunity. Is it possible for you to give us some sort of breakdown in terms of how you add up to that $1 billion kind of a number across these different segments? That can be really useful.

It's, you know, I think just even if you look at the next slide in terms of where we talk about progress, sort of, I think, you know, no rocket science saying that it's clearly at different stages of germination at this point in time, you know, Capacitor, for instance, like I said, we're selling, it's at a significant premium to vanilla firm, you know, so that's one that's way ahead of the curve versus anything else probably. So, where price points are likely to be versus packaging. So, you can do a bit of a map. We've said we're going to do the same thing that we're ready. And very, very quickly given where both storage and EV is going to be in the country at that point in time, you know, by any metric order of magnitude. So what we can control, you know, in terms of giving you more visibility on this is as we see projects kind of get to stage of commercializing, I think that's the place and time where we'll be able to talk numbers more effectively with you. I suffice to say, we kind of accumulate this all. That's why we see the Opportunity Act for us. And this is only, these slides right now only talking about places where we have already made inroads. What I can incrementally tell you, there are at least a couple of other spaces across these sectors itself, where in the coming quarters, you'll continue to hear more announcements from us in terms of progress made. Now, I can't be more specific than that for obvious reasons, but, yeah, there are pieces over here that are not even talked about that still add up with that billion-dollar opportunity as we see it, right? So, to split this down at any level, if this point of time is very, very premature.

Got it. Thank you so much and all the best. Thank you so much, Saru.

Thank you. The next question is from the line of Surya Narendh Atra from Philip Capital, India Private Limited. Please go ahead.

Yeah, thanks. Thanks for the opportunity, sir. My first question is about, again, the sunrise sectors. So, you have very well packaged your existing manufacturing capacities for the newest industry applications. So, here we have already indicated about the individual projects and the capex, but going ahead, what would be your kind of a capital allocation towards this, whether sizable investment that we are thinking about currently or any color on that, and develop also timeline, even if you are thinking about 29, FF30, like that timeline. So, if you can put some color about the timeline possibilities and the kind of capital allocation that we are talking about to sunrise sectors.

Yeah, so, you know, just like I answered the previous question, the timelines around and develop, you know, just like I said, Capacitor, for instance, is already up there. Yeah, will we invest more? I think just given the traction we've already seen in less than six months, I'm reasonably certain that sooner than later we'll probably plan a second line. We have an approval for it already. I can't tell you with assurance when that will be. I'm reasonably certain that it'll happen sooner than later. You've already seen us talk about our aspiration on FOIL. We've taken approval from the board for the whole aspiration, right, for all of 600 going phases. So that's the level of confidence I think we are approaching some of these. We already have made the investment, but, for instance, if you start thinking, and I'll be specific and just call out one example to tell you why I don't think we can give you a number so definitively just at this point. You know, you look at PVDS. I think it's going to be a journey for us as we kind of go from more entry-level applications all the way through to, you know, say, the battery binder space, which will be the highest end rate. Would we need to make more investments between now and getting to that end product rate? Reasonably certain, yes. You know, what timeline do we contemplate that? It will be a function of, I think, how we start seeing off-take in terms of the earlier rates of So I think you have to consume this a little bit as a journey, and like I said and committed to you, you should continue to see more color. You know, as we go through quarters, I think our commitment is to keep sharing with you proactively as we kind of reach more decisions and are more affirmative on specific steps My

next point is about the HFO project. See, we know that the timeline and since some time that we know the timeline about integration and kind of commissioning of the project, but in that title, can you give some sense what are the kind of immediate opportunities that we would be targeting, whether it is a kind of a contract manufacturing kind of thing or what, and also what challenges that you might face once it is a project.

Yes, you know, I think we've always said that, you know, our view, and this is not just about HFO, I think we've kind of said this consistently in the past, the moment anyone is setting up a new plant, I think we statistically, you know, the SRF view is you need a period of somewhere between 8 and 12 months to kind of stabilize and run that plant effectively. You could have something for everything meaningful is about 10 to 12 months away. So if you work with what we announced and how it would be ready and plan 10 to 12 months from there, that gives you a window to reasonably imagine a world scenario where you don't see China repeat at that level, you're never going to be affected. So I think we call this out even when we made the HFO announcement on the KPEX. I think the fact that we've developed our own non-infringing technology and the fact that it is what we believe going to be in terms of being thought competitive, there's enough optimism to compete with anyone in the market. And I think that's going to be probably the, you know, the one big question mark, if any, out there. Barring that, I think what answered earlier today as well, it's a function, I think, of being able to entrench ourselves in the new products of customers. And I think we've already demonstrated that capability and capacity for, you know, multiple years in the Western world already. So I think it's just about leveraging a lot of the relationships. I think we've done a phenomenal job of holding them through this whole period. I think we are a trusted partner with those businesses out of reason to imagine that any of that should look differently merely because we've changed the grade of a product to something better, where I think the big daddies of that so-called product are curious to understand and how SRF is practical already. So, I think all the signs are very well in terms of being able to give us confidence to know that we are very well positioned to not just compete, but have access to the right markets when the products come on stream.

Sure, sir. Yeah. Thank you, sir. Wish you all the best.

Thank you so much.

Thank you. The next question is from the line of Ranjit from IIFL Capital Services Limited. Please go ahead.

Yeah, thank you, sir. Thanks for this opportunity. First of all, thanks for sharing the strategic outlook. I think it displays a clear intent of moving beyond agrochemicals. My first question is on the couple of comments that you have made in the presentation. Firstly, on the fluorochemicals, you have said that an aggressive expansion in the newer markets helps offset the softness in the U.S. market. The question is that the aggression came at the cost of profitability, and again, what's your outlook on the U.S. market? That would be my first question.

Yeah, no, I don't think it was a – the market push was not at the cost of profitability. I think Rashi generated better price maybe in some of the newer markets we've gone into because they have some compelling needs, I think, even from a quota standpoint. So, yeah, I think there were just newer opportunities in the area that hitherto we've not kind of pushed product out into. We continue to explore those. You know, we see ourselves as being a global refrigerant player, not just in – obviously, we will want to have a significant share in the key markets. But I think we also recognize the growing need to expand that global footprint into spaces where maybe there are opportunities that remain unaddressed. So I think a lot of our effort kind of went over there. U.S. market, you know, I think at this point, it's buying very differently versus what it traditionally bought. So, yes, to some extent it is softer, but it is also buying a very different product mix versus maybe the previous year. I think that kind of trend is what's expected to continue. In some ways, it plays out very well for us because I think a lot of other players are potentially going to struggle to be able to fulfill that demand that is coming out of the U.S. So, as I see it, I think it's positioned SRF in a unique place because there aren't too many others who can go fulfill that demand very effectively at a meaningful scale. And the fact that any software that we're seeing in the U.S. is capacity that we can redirect elsewhere and address newer markets and grow them, you know, just augurs very well, I think, in terms of the footprint.

The second question is on the pharma pipeline. I think we are saying for the first time, you mentioning an encouraging traction in select molecules with key Western world customers. If you can shed more light on that and the potential revenues that we can generate.

Yes, so I can tell, okay, what I can share is these are the two specific customers. They are very meaningful names in the pharmaceutical space. I can share, but yeah, suffice to say, two very meaningful interactions that are looking very promising. If you recollect the last call, I had shared with you that we're engaged with more customers and we're engaged in more molecules, and, you know, I hate saying it, but in a positive way, a lot of averages is playing out, and I think that's translating into outcomes. Happy to have been able to call out the fact that on two of these, we should start seeing positive momentum very quickly. I am hoping that in the near term, I will be able to give you more constructive view in terms of revenue outlook and ramp and path. At this point in time, it's probably a little premature, Ranjit, but suffice to say, in a very solid place on both those engagements and looking very promising in terms of what the revenue funnel could look like, you know, as we kind of wrap.

The last one, you did call out the freight cost as one of the key elements for the drag in the margin. If one way to put a ballpark figure for that, what it could be, just on the percentage terms?

Well, not all of it in all the cases. In some cases, yes, it is, but it's not everywhere. If it was all passed through, I wouldn't have called that out as an impact. There are places where it isn't all being able to get pushed through to the customer, in a sense, where pricing is a little bit more sensitive. It's orders of magnitude, you know, Ranjit, depending on where a product is going out to. In some cases, I hear a number is even higher than that, depending on where you're shipping and what route you're taking. Some of it is a function of the Middle East issue. Some of it is just having to take longer routes to get to specific markets. So it's a combination of factors, but, yeah, there is definitely price inflation on that front. And I think that's across the board. It's not unique to us. I think anyone who's exporting product out of India is kind of witnessing that, you know, even in our board meeting yesterday, we kind of heard that commentary through from some of the others who sit in the board in terms of what they were seeing in other businesses. So I think you're going to hear that consistently from anyone who's an export-oriented kind of business in India today.

Thank you for answering all the questions.

Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

To address your questions, should you have any further queries, our team will be more than happy to assist. We value your continued support, and on behalf of the management team, thank you once again for taking the time to join us today.

On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.