Aarti Industries Limited (524208) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Aarti Industries Limited Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Shiv Muttoo from CDR India. Thank you, and over to you, sir.

Thanks. Good evening, everyone. Thank you for joining us Aarti Industries Q1 FY '21 Earnings Conference Call. We have with us today on this call are Mr. Rajendra Gogri, Chairman and Managing Director of the Company; Mr. Rashesh Gogri, Vice Chairman and Managing Director; and Mr. Chetan Gandhi, CFO of the company. Before we begin the call, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation shared with you. I would now like to invite Mr. Rajendra Gogri to take you through the performance of the company and his outlook on the business. We will then open the forum for Q&A. Over to you, sir.

Thank you. Good evening, and very warm welcome to all of you. Firstly, I would like to wish you all to be in good health and to stay safe in the current very difficult situation created by the COVID-19 pandemic. I trust that all of you would have received Q1 FY '21 financial results presentation that has been uploaded in the stock exchange website earlier today. Q1 performance was largely in line with our expectations and the outlook shared with all of you during our previous interaction. As shared last time during the quarter on account of the lockdown-linked restriction, our units for the Specialty Chemicals segment were operating at about 50% capacity in the month of April. The same was subsequently ramped up progressively and thereby helping us to operate our units at about 80% in the months of May and June '20. We also face challenges for the sale of our products with the customers in domestic market as some of our customers' units were also under lockdown during April and May. We started resuming activity on June '20, and hence this had impacted our sales in the domestic markets. Thus, the quarter has the maximum impact of the COVID-19 pandemic and the gross income from operations for the company was lower by 9% at INR 1,035 crore. Our exports remain almost stable at INR 487 crore. Within our business segment, revenue in Specialty Chemicals declined by 11%, while Pharma revenue moved up marginally. Even EBITDA saw a decline of 27% due to higher operating expense in the respect of new facility operationalized in Q4 including our fourth R&D center at New Bombay. The same also resulted in the increase in depreciation cost for the company. On account of lower demand and logistics-related challenges during the quarter resulted into higher inventory at the end of Q1 FY '21. Considering the value of care, we have extended our support to fight against COVID. In this regard, various measures were taken up to support contract workers impacted due to the lockdown restriction and COVID. Additional measures were done to support the NGOs joining to the fight by providing necessary PPE medical equipment as per the need of the hour. We are also supported by making CSR contribution to PM CARES and state relief funds. The company had contributed over INR 10 crores for this cause. During the quarter, the Specialty Chemical business was impacted by weakness in some key end user applications, such as automotive, aerospace, dye intermediates, pigments, et cetera, that are dependent on discretionary spending. Demand from other segments such as pharma, Agro and FMCG, which contribute about 60% of our revenues, has remained firm. I also want to highlight for the quarter, we have recognized revenue of INR 38 crores being the shortfall, be eligible as per the terms of the long-term contract. Now for the Q1 production update. Given the restructuring due to lockdown, the production quantities in Q1 were lower as compared to last year. The production for Nitro Chloro Benzene was about 13,000 metric ton for Q1 as compared 16,100 metric ton a year back. Similarly for the hydrogenated product, we have achieved production of about 2,050 metric ton, it was about 1,880 metric last year. On the nitrotoluene front, the production for Q1 was about 2,140 metric ton, which was about 2,750 metric ton last year. At present, we are operating at around 90% of the capacity across locations and expect a steady improvement in operating and financial performance through the next 3 quarters for the Chemicals segment. During the quarter, our Pharma facility continued to function efficiently. After some initial disruption, they have been able to deliver Y-on-Y growth and substantial expansion in margins, driven by growing supplies of off-patent generics and other value-added products. EBIT by higher operating leverage and product mix segment profit expanded significantly from INR 32 crores to INR 45 crores, which is a new high for the segment, while maintaining flattish top line. Going forward, capacity expansion will drive deeper penetration in therapies, such as NT, hypertensive, cardiovascular, oncology, corticosteroid, et cetera. We also have a strong pipeline of approvals and visibility to maintain growth momentum. The Pharma business continues to see profitable traction and growth will be accompanied by margin sustaining above 20% levels. After the delays as updated by us last time in respect to various projects due to COVID-19 related challenges of lockdown logistic issues and labor migration, the project work has gathered momentum, and the major works are now on track to completion as per the timeline largely stood by us . We'd like to share that chlorination project is in its final stages and is expected to be commissioned in the current quarter. While the other projects such as NCB expansion and expansion of Pharma USFDA unit specialty for the long-term contract are scheduled to be coming onstream at FY '21 and FY '22 in accordance with the plans given earlier. In line with our previously stated guidance, and as I explained above here, we have had the maximum impact of COVID-19 on our Q1 performance. This has resulted in our consolidated EBITDA to be lower at INR 182 crore for Q1 FY '21 as compared to INR 219 crore for Q4 FY '20 and INR 250 crore for Q1 FY '20. And the consolidated PAT for Q1 FY '21 was INR 82 crores as compared to INR 110 crores for Q4 FY '20 and INR 138 crores for Q1 FY '20. As communicated earlier, we see the business delivering EBITDA growth in FY '21, whereas profits are expected to be flat based on the higher cost of the expanded base of operations. We invested INR 222 crore in capital expenditure programs during the first quarter and are on track for our planned CapEx of about INR 1,000 crore to INR 1,200 crore for FY '21. Going forward, our pipeline of new chemistry processes and products remain robust backed by deep customer engagement and substantial investment in world-class manufacturing facility. We remain strongly positioned to benefit as India gains traction as a preferably -- preferred supply location for global corporations that look to establish stable and de-risked long-term strategic supply arrangements. Overall, we see the business bouncing back from this near-term disruption faced due to COVID-19, and we'll be able to maintain long-term profit growth guidance of 15%, 20% over the next 3, 4 years. With that, I conclude my opening comments, and we'll open the floor for the Q&A session. Thank you.

[Operator Instructions] The first question is from the line of Kishan Gupta from CD Research.

[ Bhagat Shah ], this side. Sir, I wanted to ask what sort of integration do you have between the Specialty Chemicals and the pharmaceutical segments?

I don't understand the question.

Sir, I'm asking what sort of integration is there between the pharmaceutical and the Specialty Chemical segments?

No, no. There is no integration. Virtually, we don't supply into Pharma, except maybe limited basic raw materials like sulfuric acid or DMS.

Okay. So virtually no integration as such?

No, no, no.

Okay. And sir, on the administrative side as well, nothing?

Their manufacturing sites are totally differently. There are no overlapping manufacturing in the same site. Pharma sites are totally different. So that administration is separate.

Okay. Okay. And sir, how much revenue can come from new products over the next few years?

In Pharma, we expect 20% top line growth for next few years.

Okay. And Specialty Chemicals, sir?

Yes, that should be an upward of INR 1,000 crores [indiscernible]

Sorry, INR 1,000 crores, you said, sir?

Yes, yes.

So this is over next 3 to 5 years?

Over the next 2 to 3 years?

Okay, INR 1,000 crores next 2 to 3 years in Specialty. And Pharma, you said, sir, 20%, how much of that would be from new products?

So we are combining both. So basically, it will be the expansion of current portfolio as well as the new products. So it will be mix of both. We can say 50%, 50% would be new product and expansion of current range of products. Because in Pharma, normally, the gestation period of any product to go commercial is almost 3 to 5 years. So though we produce this product in smaller quantities, sir, becomes an existing product and that grows also.

Okay. Yes. So the -- all right. And sir, what is the -- what would be the -- you said, planned CapEx of INR 1,000 crores to INR 1,200 crores. Can you give us a bifurcation if that's possible?

Yes, we announced various numbers earlier. Our Nitro Chloro Benzenes expansion is going on, which is about INR 150 crores. And Pharma expansion currently on, which is also about INR 150 crores. And this really is long term, the third long contract is about INR 135 crore. So these are the major expansions which are going on right now.

The next question is from the line of Surya Patra from PhillipCapital.

Sir, if you can just give me some clarity, what is the provision of INR 38 crore, which has been created relating to the Specialty Chemicals business in doing which line item that is factored in?

Yes, Chetan.

Yes. So basically, we have long-term contracts, whether a specific provisions of [indiscernible] and other things. This is in relation to the contract for the quarter, they have to buy certain quantity. And if not, the differential is being eligible as the shortfall fee, which has been added to the revenue from operations.

Sir, this is a charge or this is a revenue that is impacted, sir. Understood. See, if this is a shortfall fee, I mean, this is a charge or this is income that we have booked.

So it will be an income. It will be attributable to an income.

Okay. And so that means this is nothing to do with a kind of a deal cancellation or the compensation from the deal cancellation, right?

Yes, that will be coming in the next year. So this year it will be still on a shortfall fee.

Sir, this is -- whether this is relating to the first contract, which has been canceled?

Yes.

Okay. So sir, see, we had guided about something like this around the $120-odd billion kind of total miles meaning compensation that we'll be getting. Out of that $20 million possibly this year and $20 million next year. But this $20 million implication at the EBITDA level that we would be seeing. So whether this INR 38 crores is just a kind of a compensation that we have received and factored in the top line, which should be flowing directly to the EBITDA. Is that correct?

Yes. Yes, that's what I believe it. Out of $20 million expected in this financial year, the first quarter, we have provided $5 million.

Okay. Okay. Understood, sir. So now second question, sir, on the Specialty Chemicals business again. This margin correction, what we are seeing Y-o-Y or even the overall gross margin, that correction that we are seeing or flattish gross margin scenario that we have seen. So not able to really understand. Sure, we are seeing a kind of improved product mix for the Specialty Chemicals and all. And the prices of the products has not corrected as much as that of the correction levels in the input prices. So why is the gross margin is [indiscernible] is low or the Specialty Chemical effective volumes is down?

Yes. That is because the overall the effective volumes are down. And you see the overall inventory also is higher. The gain in inventory also because of the as was the initial production disruption and then because of the demand slowdown, the sales have been down, corresponding, and it depends on what kind of sales which is down, that has impacted operating profit. That operating profit impact on the EBIT level, it impacts more than at a [ cost of goods ] level.

Yes, yes. But on the gross margin level, whether that justifies, sir?

Yes, at EBIT margin, that's what I'm saying. This will impact more you on this EBIT margin reduction.

Okay. Sir, whether for this R&D center that we commissioned or all that. So whether that is also kind of creating a kind of a dent to the overall margin scenario?

That will not be much. That's not as significant.

Okay. And just last question from my side. In the API side, are you really seeing any kind of advantage in terms of supply opportunity because of China may not be catering all people might be thinking of replacing from China, practically? What is the case that is not there with the many other API players? So whether do you see similar kind of trend for in the export market or anything on that front?

Yes. In the API intermediate market, that is what is the trend that you rightly said that generic players don't want to buy intermediates from China, if they are able to get the same intermediate from India. And in API space, we cater to more regulated markets. And these projects, customers can't switch overnight. So these are long-term projects. And had there been COVID or no COVID they would have dropped here, basically, in terms of the numbers and operating efficiency. Of course, our local sales relatively is less in the API category in our Pharma. But local sales has seen some improvement of late, but the base is lower.

The next question is from the line of Chetan Thacker from ASK Investment Financials.

Sir, what will be the number on NCB and PDA? And second question was, is there any currency benefit that you would like to separately call out?

So we -- I'll just give you the numbers for NCB and PDA. For NCB, we had a production of almost 13,000 tonnes in this quarter.

13,000, Yes, 1-3. Okay.

And the PDA number was around 360 tonnes per month for the quarter And on the ForEx, it would not be any significant number. Anyway, that's given as a part of the note in the financials, which have been there, but it's not significant.

Okay. And the way to sort of look at the Specialty Chemical EBIT number would be, we'll be booking this $5 million for 4 quarters now this year and a similar number for 4 quarters in the next year as well and then the final compensation that comes in will come in? That would be the right way to see it?

Yes, yes. Yes, broadly.

The next question is from the line of Arun Prasath from Spark Capital.

My question would be, you gave a revenue guidance of around INR 1,000 crores in Specialty Chemical top line. This is equal to around 8% percentage growth. Am I right in the understanding, sir? 8% per annum on the current base?

Yes. That will have to be checked the number wise.

Rather, what I'm getting at is that the INR 1,000 crores that you told is for the next 2, 3 years combined, right? Not...

Yes, yes, yes.

So on the current base of around...

Yes, INR 1,000 crores -- INR 1,000 crores plus, you should get it.

So will there be any non-linear expansion in the margin -- in the margins as compared to the top line.

The top line is something which generally because of -- as we have been mentioning, and all, we are a raw material pass-through model. So exact top line, it will be INR 1,000 crores plus. The exact number, I think, will not have readily available. But as we were going forward, we instated value-added products, our EBITDA margin to the turnover will increase that margin. It will be both. There will be increase in EBITDA margin.

So EBITDA growth should be much more than 8%? Is it?

Yes. Could you just repeat the question?

I was saying that EBITDA -- the absolute EBITDA from the Specialty Chemical projects, though you don't disclose, that should be much higher than the revenue growth. That is what you're implying?

Yes. So going forward, the EBITDA growth will be higher than top line.

All right, sir. Sir, one more. You mentioned that the chlorination capacity is about to be commissioned in this quarter. So given that current slowdown -- lower volume uptake, how will you be filling this capacity? Will it be just a depreciation charging or there will be any incremental revenue from this project? Can you just throw some light on this?

Yes, [indiscernible] So this -- we'll be able to sell part of this volumes coming out of it.

Will it be right mostly like a [indiscernible] kind of product or more value-added product, sir, out of this capacity also?

Yes, it will be both, value-added also as well as the .

Right from the first quarter?

Yes.

Okay. Okay, sir. And can you just throw some light on the NCB expansion? Where is the current stage? Is it still on track? Or is it delayed? Or there will be -- the utilization will be full? Some light on that front?

Yes, first phase will be in the second half of this year. And the second phase will be more happening in maybe towards the second half of next year.

All right, sir. Okay. My final question is, can we get some -- give a little bit explanation on how the product mix has changed, say, before COVID and after COVID, during the COVID during -- in the Specialty Chemicals segment. Is it back on track? Or is it a permanent change? Some explanation on that front would be great.

Yes, basically, demand on our products, which are going into textiles and construction and aerospace and auto, that demand is down during this year. This quarter, and it will be down for this entire year. Subsequently, I think next year as the global economy starts recovering, in FY '22, we expect volume to be more than FY '21. Especially on this small economy gains. So the product mix, as a percentage basis, we are more skewed now on agro and pharma for this quarter.

All right. So the EBIT margin that for -- whatever is there for current quarter, so that would be the fair estimation of what would be there unless and until things improve. Is that right?

No, the volumes will improve. Overall volumes itself will improve because this quarter was bad because of the lockdown and customers were also not -- so that's why this was the worst quarter. But going forward, we feel that volumes will start increasing in this sector also.

The next question is from the line of Abhijit Akella from IIFL.

Just to clarify whether this INR 38 crore amount we've booked, is there any cash that we have received against this? Or this is on an accrual basis?

So it's on an accrual basis.

Okay. And the cash, when do we expect to get on this account?

It a year-ending provision. Basically, at the year-end. Okay.

So that means the entire 2 years out then the full lump sum payment come, that's when the cash will be booked?

No, no. This is part of the annual setup. So after the end of the year, the cash would come in as regards to this account.

Understood. So every year, they need to settle the balance for the year.

Yes, yes.

Understood. Chetan, just on the expense items, there has been an increase in employee cost on a sequential basis by about INR 10 crores. Is this largely because of the new R&D center? Or is it any other onetime provisions, et cetera? And also in the segment reporting, the other unallocated expenses have increased on a sequential basis. So again, just wondering if there are any one-off items within this?

So on the segment, on the other segment, there is -- out of the total amount of INR 10-plus crores, INR [ 7.5 ] crores relates to the -- paying for the COVID CSR activities for COVID, which is like contribution to the PM CARES Fund, the state relief refund and any other activity. The staff will cost because there's gone up, there have been a couple of factors. One, the new facilities, like in Q4, we commissioned some of the first phase of the Dahej unit. So there's been a -- and power costs coming in over there plus we have been extending support to the contractors and other people who have been operating during the lockdown situation and to various entities who have been doing that. So there has been additional staffing cost related to that as well and a standard level of increment there. Even that has been in a normal manner. So it's combination of that.

Got it. That's helpful. And also just on the Pharma side, if I may just ask. The margin expansion, is it in any way also because of an increase in prices or realizations of some of our key products, like say, caffeine, for example? And what are the key raw materials in Pharma? And how -- have they registered some correction?

Yes. So in Pharma, we had basically advantage of the currency in this quarter because the rupee got depreciated over last quarter. And also, overall, we were able to produce budgeted volumes because we could sustain the production even during the COVID period. And as far as the caffeine and raw materials are concerned, yes, the caffeine because during the last quarter, there were issues in China. We had orders in the current quarter -- we had large quantity orders in current quarter, which we could cater because our production was continued. And the raw material prices slightly have started falling from mid of last quarter. And correspondingly, I think caffeine prices also has started dropping a little bit. So that raw material and caffeine prices are going to move in tandem. So there may not be a heavy impact on the margin.

Okay. Okay. What is the key raw material we use in this sir?

No, there are several raw materials, which are used in manufacturing of caffeine. So it could be a nitride or nitric acid or sodium nitrite, right? Actually, there are more than 10 raw materials, which are used.

Got it. That's really helpful. Just one last quick one, and I'll get back in the queue. Just with regard to this INR 1,000 crore top line outlook that you provided for Specialty Chemicals, am I right sort of in estimating that, say, about INR 500 crores comes from the second long-term project, another INR 100 crores from third long-term project? And then if you could also just help us fill in the gap, I mean, the remainder is coming from which projects, specifically over the next 2, 3 years?

Yes, Nitro Chloro Benzenes expansion also will come. This chlorobenzenes expansion and nitrotoluene will get ramped up, PDA ramped up. Actually, INR 1,000 crore, it will be more than INR 1,000 crores, I've put it at INR 1,200 crore. So we expect that to be still further more than that. So across the value chain, Nitro Chloro Benzenes, nitrotoluene, PDA and chlorobenzene. Other than those 2 contracts, we'll have volume growth across various lines.

The next question is from the line of Ritesh Gupta from AMBIT Capital.

Sir, just -- sir, I wanted to understand a bit more on the INR 1,000 crore revenue guidance that you're giving. So you are talking about INR 1,000 crore incremental revenues on Specialty or overall? And is it...

Specialty.

Okay. Just for specialty. And this is for...

It's upward of INR 1,000 crores. So it's not an absolute number. As I mentioned earlier, the top line is not a major thing we generally track. It is more on the volume and how much operating profit and gross profit we are going to generate. So that is a bigger number, which we track. So exact top line estimate growth, I think, we'll have to -- but it will be upward of INR 1,000 crore.

In that context, would you like to give any EBITDA guidance because revenue guidance, I mean, if it doesn't reflect breakeven, there is no point.

No, so overall, we are seeing that the [indiscernible] range of 12% to 18% growth rate at a company level. We are looking at those kind of numbers.

Okay, okay. And sir, on the CapEx side, I mean, when you were mentioning CapEx to one of the earlier participants, you said CapEx of about INR 1,000, crores, INR 1,200 crores, out of which you said Nitro Chloro Benzenes is INR 150 crores and Pharma is another INR 150 crores and then the third long-term price is INR 130 crores. So any other heads because it still leaves a gap of about INR 500 crores?

There would be the normal maintenance CapEx, which is generally mirroring depreciation of around INR 250-odd crores. And then there are a lot of other projects works and other products that may make a substantial impact that are going on. So it will be combination of those as well.

Okay. And from a recovery perspective, I mean, what is your take on like is it going to be like -- you're already seeing some green shoots as the economy is reopening? Plus, I would understand that there would be some benefits you would have already started to get from some of your previous year's CapEx from a growth perspective, I mean, that you have done in the last 2, 3 years. So to that extent, what is your like -- you had earlier given us guidance of flat EPS, flat profit, I think, in the previous call. Would you maintain that for effect or would it change?

We are maintaining the same value. Main reason is the global slowdown, basically. As you are aware, U.S., Europe, India, everything is slowdown economy. So all the products, which are going in that, that sector, the volumes are impacted. So that's why now whatever the capacity growth we will have and against that, the demand slowdown. Because of that, the combined impact, we are seeing flattish in short term growth.

Okay. Okay. So you're not changing your '21 guidance?

No. No.

No, no, no. So what we are saying is that we will be recouping the gaps what we have in the Q1 and in the subsequent quarters.

The next question is from the line of Naushad Chaudhary from Systematix.

So I missed your initial remark of 2, 3 minutes, so apologies if I ask any repetitive questions, sir. You shared your NCV and PDA volume, can you also share your hydrogenation and nitrotoluene production of this quarter?

Yes. So the nitrotoluene volume for the quarter is around 2,140 tonnes and the hydrogenation is 2,050 tonnes. So nitrotoluene for quarter end, hydrogenation is 2,050 per month.

Okay. Secondly, as of March FY -- March 2020, we had an inventory of around 95 days, if you can talk about what is the current status of our inventory? And has there been any improvement versus the last quarter?

The inventory days would have gone up, because if you see on the numbers, there's a higher inventory position as well, which is there. Some of it was impacted because of the restrictions or in terms of the port movement are not operating and subsequently the logistic side affected. And some of the facilities started to operate from June gradually. So there is -- the inventory levels have gone up a bit. We don't have the correct correlating data but the days have gone up.

Yes. Would it be fair to assume it should be more than 100 or 110 days versus 95 days earlier?

Yes.

Okay. Can you also share the revenue mix of your spectrum in terms of value-added products versus traditional products?

Sorry, the inventory level, I don't think would have reached 100 days. I mean last quarter, it was not beyond 90 days, it was less than 90 days. There's some correction in the numbers needs to be in that line.

Okay. So which side of inventory is piling up for us? Is it for finished goods? Or is it for the raw materials, which we have accumulated?

It is more on the side of finished goods.

Okay.

I guess you are referring to the higher inventory, probably for Q4 was related to some of the products, which we were importing from China for the Pharma side of the business, where we used to maintain higher inventory cycles beyond 100 days as a normal practice to un-complicate issues related to the solution and other problems in China. So that was on the Pharma side, but at the company level, that was still a smaller number.

Okay. And how much revenue -- what was the percentage of the revenue share from the value-added products in our spectrum?

The value-added product would be close to around 76% kind of stuff -- 74%.

7-4?

Yes.

Okay. And last one on the inventory loss. As we mentioned in the last quarter, there was a steep fall in the benzene prices, and we were expecting some inventory loss in this quarter because of this. If you can quantify how much inventory loss was there in this quarter?

We are yet to work out the full number, but there always has been some inventory loss, but there has been also some offset because in a few of our export commitments, the contract has a quarterly lag on the pricing count. So the earlier contract pricing prevailed in Q1 as well. So it would have -- help us map some of the loss which we will see. I still have to look at the numbers, and we'll probably come back to you with that subsequently.

The next question is from the line of Dipesh Mehta from SBICAP Securities.

A couple of questions. First about, $20 million which you have received -- likely to receive from shortfall fees. I just want to understand is implication on your EBITDA margin for the segment. Ideally, your operating margin for that segment should benefit from it, right? If that is true, your margins should be much higher than what you earlier used to report because you don't have any expenses related to that revenue, which generally flows through. So you should have actually a significant benefit because of the way you accounted business. If you can help me understand or rephrase this.

So Dipesh, there would be certain costs related to the people, the overhead to the facility and other stuff. So there would be some benefit, but I would think that significant cost also which is coming in. So you have to...

Depreciation of the first phase also will come in. So overall just about 3.5%...

But, sir, raw material is roughly half of the revenue, broadly.

Expense maybe around 10% will be the only expense.

Yes. So now, let's say, if I look at your Specialty Chemical, you used to operate 20% plus margin in normal time. Now with this benefit your -- whether we can see similar improvement in your Specialty Chemical margin? Even the Q1 was one-off because of COVID-19-related implication. But going into next 3 quarters, whether that performance would be 20% plus this benefit?

Yes, that's what we are saying is going forward, Q2 onwards, we expect further -- the plants are operating at higher capacities. And in general, the volumes -- demand overall volumes are also better than what were in the Q1, but in Q1, there was a substantial lockdown in some of our customer facilities in India and local sales were down. So we'll have a higher production as well as sales going forward in Q2 and second half also.

Let me rephrase. Let's say, earlier, we used to operate at 20% plus with this $20 million benefit, whether we will reach to 25% kind of volume?

As a percentage, and I think it will again boil down to raw material price and everything. But the number -- the absolute number will grow.

Yes. Okay. Okay. So broadly, that flow will be reflected from Q2 onwards?

Yes, yes, sure. That would reflect.