Thank you. We will now begin the question -and-answer session. The first question is from the line of Ankur Periwal from Axis Capital. Please go ahead.

Congratulations for a good set of numbers and than ks for the opportunity. First, on the HALS bit, so you mentioned revenues were largely flattish Q-o-Q. But at the same time, you know, seeing new product approvals coming in. So, I was just saying on the HALS bit, so while the quarterly revenues were flattish, there has been sort of new product approvals as you highlighted from multiple geographies. So , two questions. One, the distribution network tie -up that we had done earlier, how has been the progress there and are you satisfied with that? And secondly, from a ramp-up perspective, what timelines are we looking at?

Perfect. So, with respect to the distribution setup model, we set up some distributors over the last two quarters. However, out of some of those distributors, we realized that some of them are not effective as we had expected. So, in those geographies, we are re -looking and re-finding some of the distributors. So, this is part of the business cycle. So , you appoint few distributors , but you realize at a later date that they are not as effective as you would have wanted them. They were also keen to partner , but eventually for whatever reason, for resource problem, they also decided that maybe they are not able to allocate enough time and hence that process in some of the geographies have restarted. However, some of the distributors have become very active and are trying and have also got approvals in some of the large accounts globally in their particular area. To give you a little flavor in FY '24, we did about 600 ton of HAL S sales, whereas in FY '25, we did roughly 2,000 tons of HAL sales. So, this is approximately 3x. And going forward in FY ‘26, our target is to touch 4 ,500 tons of sales. When I am talking, it is in cumulative with all together. So, from Rs. 25 crores of FY ‘24 revenue, we came to roughly Rs. 80 crores.

Ankur?

Yes, just the last sentence. So, from Rs. 25 crores we went to Rs. 80 crores in '25. On '26, give me the number.

And for '26, we are expecting closer to Rs. 210 crores.

Okay, that's helpful. And our earlier target of full ramp up in HALS, so given the run rate, we are broadly looking at FY '27-'28 for that at the current capacity?

FY '28. So the total capacity is over 10,000 tons.

Correct. And when do we decide to go for, let's say, the Phase-two of HALS expansion? Will you wait for more approvals coming in or a ramp up actual sales happening maybe '26 end, what's the thought there?

See, once we start getting majority of approvals globally, once we start seeing decent ramp up, when we start seeing that okay we are seeing about 60%, 65% capacity utilization scenario, that is the time we should go for Phase-2. Phase-2 will be far more pointed because we will not get into products which are lower margin accretive compared to the higher series.

Also, little more optimized towards product portfolio.

Your voice got cut in the end, but I under stood. So, focus will be on the high margin products there.

Absolutely.

When we look at the international markets, especially the ones wherein the distributors are working well, what is the typical product approval cycle that we are seeing? Obviously, it will vary from product to product, but on average.

3 to 6 months.

3 to 6 months.

Product to product, 3 to 6 months.

And just lastly on this, the breakup of 600 tons in '24, 2,000 tons in '25, what will be the export breakup here for both the years?

The export is not as large. Domestic is large, but going forward there will be more export coming into it.

Fair enough. That's helpful. Secondly, if I do your consol minus standalone numbers, Q4 looks like a positive EBITDA versus a negative EBITDA for the last two, three , whatever, quarters. So, am I looking at the right that we are breaking even? And this is largely HALS, right?

Yes, yes, yes. This is largely HALS. The new other products are yet to ramp up.

And lastly, on the balance sheet side, working capital has inched up a bit for the full year. Is it largely because of your product mix changing or higher contribution from HALS versus earlier years, especially the receivable parts?

Fair enough. So, it’s fair to say that once we see a ramp -up in our HALS volumes, let's say, by FY '26 end, the working capital should come back to the normal range, 24-23% range?

Yes.

Great. Sounds good. Thanks, Siddharth, and congratulations once again.

The next question is from the line of Arun from Avendus Spark. Please go ahead.

Good evening, Siddharth. Hopefully, it's clear. So, when we said the majority of the 2,000, 1,900 tons volume that we sold i s in domestic, and does it mean that we have largely saturated the domestic demand and from here…?

Not really. We have still got I think only 50% of the domestic market. There is still 50% domestic market left. Of course, we are not envisaging that we will get all the domestic market. But there is still quite a bit of room to capture in the domestic market itself.

So, what is the reasonable share that we can expect from the domestic market?

65% odd.

All right, so basically around another 300 -400 tons we can hope to saturate in the domestic market.

Easily.

And of course, that also grows at a certain rate.

Yes, that is also growing at a certain rate, yes, absolutely.

And specifically on Q4, when we said sales is almost same between the Q3 on a sequential basis, but why is that subsidiary revenue i s higher than almost double of December quarter? Any particular reason?

Arun, the subsidiary revenue, you are right, has gone up from Rs. 10 crore Q3 to Rs. 21 crores in Q4. But I mean at a group level, the sales is in that range of Rs. 22 odd crores. That's just because we have a facility for 770 in the parent and the subsidiary company both, right? So, we produced more from the subsidiary company, and that has led to higher sales from the subsidiary company for HALS. But at group level it is approx. 22 crores.

So, less volume sales in the parent level. That's a reason.

But we thought we have saturated the capacities in the Unit-3. So, is there any reason for such rebalancing?

No, we are taking certain products in the parent company in Unit-3 for the HALS facility where the hydrogenation chemistry is available. So, that's why we moved 770 in th e subsidiary company. We are pivoting to some new products. We are just trying it.

On the export market, I think we are focusing more on the distributors, but Siddharth, what about the direct sales to the big enterprises?

No, no. I meant, distributor is important business for larger accounts. Say, big companies in Israel, some big accounts in Greece, some big accounts in Europe or in other parts like Middle East, we are talking directly to them. So , there is again same network, larger accounts plus all these larger accounts also wants to deal directly with the manufactu rer. So, in that case we are talking direct, but also trying to set up a distribution network because that is very important in these businesses because there are even small customers in quite a part of the world, which has to be catered only by the distribution network. I mean, by stock and sale.

This is mainly because of the being export because in domestic, if I am right, we have done largely a direct sales, right? This we can't replicate in the export markets.

Not possible, boss, because different languages, different geographies, different time zones, People want just in time. In India, it is possible. I mean, we can ship material anywhere within 4-day window. But that we cannot do in some part of America or some p art of Europe or any other location, right?

And in your presentation, even in your opening remarks, you mentioned that record sales, does it mean even in MEHQ and BHA, in our traditional products also it's a record sales for us.

Yes, all our traditional products is what we mentioned. Ye s, traditional all our products, other than HALS. HALS is also highest actually. So, yes, all segments.

So, how much room do we have in MEHQ and BHA to further increase sales in '26?

We have about 70%-72% capacity utilization. So, we still have window there.

And any market share gain which is possible this year, given that competition has also said that they will also be placing their volumes in the export mature market?

See, till date we have not seen the competitor product, but I think it's still premature to say. I think, let us wait for another quarter to decide what's going on actually.

The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead.

Good afternoon. Thank you so much for taking my questions. First one, just a clarification on the opening remark regarding the expansion of the addressable market by $1.5 billion that you alluded to earlier on. This is exclusive of HALS, right? Just to understand.

No, no. Inclusive of HALS and inclusive of the performance chemicals which are about to commercialize in this financial year. Both of them including. Inclusive of both of them.

So, this is the total global addressable market.

Yes. Total what we…

HALS is about...

$1 billion.

HALS are about a billion. $1 billion out of that, right? Okay.

Yes, closer to that.

For HALS, the average realization of Rs. 425 that we are making at this point, should we expect that to improve significantly in the next couple of years as the business ramps us?

Yes, 100%. Of course, it has to improve because the higher range products which are now commercialized will start being sold in the market.

So, what would be a good number to work with at full utilization?

Say you can assume about Rs. 495, to Rs. 500.

For FY ‘26.

Yes.

There is scope for further improvement.

Yes. So, at peak, I mean, still looking at say Rs. 700 crores, Rs. 800 crores from HALS overall or is that a bit on the higher side?

Bit on the higher side. We are looking at about Rs. 565-70 odd crores.

Not, zero, zero. We still are facing some teething issues. The product, the chemistry which was done in lab and pilot is behaving very differently on plant scale. Every day we are learning a lot of new things about it. So, probably, it will take at least four weeks more to set right the process before we get into commercial scales.

Fair enough. And just last thing from my side, on the two new projects, Performance Chemicals, I guess one is coming up in 3Q and then the other one in 4Q.

About August, you can expect that we will start by August this year, so about three months from now. And other we are expecting to start by February 26. So, an additional six months from that day, from August. This is a very exciting year. I mean, a lot of new products are coming online.

Yes and just wondering if it's possible to share a little more detail on these two, especially there was one product that was catering to water treatment. So , any sense of the capacity over there, the addressable market?

See, both are around 10,000-ton capacities and closer to commercialization, I think, in the next con call, we will give a little bit more picture on the performance chemical products.

What sort of market share will we be targeting?

Once we, I think, in the next corn call, we will have far more better clarity on commercialization, actual dates, volumes, and also what markets. So, we will give more detail during that period of time.

All right, we will wait for that. Thank you so much, Siddharth. All the best.

The next question is from the line of Naushad Chaudhary from Aditya Birla AMC. Please go ahead.

Hi, thanks for the opportunity. A few clarification. On the R&D side, if you can share how much we have spent in this financial year on R&D? The recurring...

Rs. 5.5 crores.

Rs. 5.5 crores. And we have roughly 90 staffs in R&D, right?

Yes, sir.

Rs. 5.5 crores, this entire is recurring expenditure, right?

So with this, the rough calculation suggests roughly Rs. 4-4.5 lakh average cost per staff in R&D. Is this the industry standard? Because if we look at the other companies, like SRF, PI, even at very large scale, their R&D cost per staff is substantially higher versus our number. How should we read this?

You should be happy. We are saving more money and delivering higher productivity.

No, but despite 9 PhDs we have and the smaller size of R&D team, shouldn't this be at least at par of industry? Because in terms of percentage of PhDs also looks 10% of the R&D staff which is quite decent?

I think important is output rather than quantitative. I think you should focus more on qualitative rather than quantitative.

I am just trying to understand how are we able to manage it at substantially low cost versus how…

Naushad, this number which you calculated, this is an average number. However, there are resources which are cost -wise at much higher number than what you have calculated because this is an average number.

So, there are chemists also, basic chemists.

Yes, these chemists are freshers just passed out from college. So, that is also getting included in your 90 count. And that is also pulling down the average.

I was talking about the average cost of the peers as well, but anyways, we will take this offline.

Sure. That would be nice.

The next question is from the line of Prasad Vadnere from HDFC Securities. Please go ahead.

Hi, sir, thank you so much for the opportunity. Sir, wanted to get more understanding about which type of HALS we are looking to push in domestic market apart from HALS 770.

All, 622, 944, 119, 783, all of them have domestic market as well, right?

The next question is from the line of Rohit Nagraj from B&K Securities. Please go ahead.

So Europe, U.S., Middle East , South Africa. So , these are s ome of the markets which we are aggressively getting into apart from India, of course. India is a home ground. Yes.

And there in terms of competition, what are we looking at? Because I think the competitor would already be present there. So, from the offering perspective.

Price advantage.

That’s the advantage which we have.

Price advantage, non-Europe, non-Chinese.

The second question is, now next year, you alluded that we are expecting about Rs. 210 crores from HALS. What is the kind of EBITDA margins that we are looking at? And in FY '27, when we further scale up, what is the kind of EBITDA margins we probably will be based on the operating leverage?

So at company level, we are looking for 40% EBITDA margin, because it’s not only HALS. The pharma intermediate and performance chemical 1, which are more margin accretive compared to HALS, will lead to better margin at the company level. So , we look forward to around 40% EBITDA margin at consol level.

That's for FY ’26-’27 as well, right?

That's for FY ’26. ’27.

And on consolidated?

Yes, that's on consolidated basis.

And on consol level and next year FY '26, what kind of growth we are looking at?

So, at consol level, for the parent company, it's existing products which are growing at industry growth rate of 5 -6%. And for the new product launches, there will be a significant growth in terms of sales value, which will absorb the overheads and depreciation costs for subsidiary. So, I mean, the operating profit growth rate could be in line with what we have recorded this year, which is in the range of 18% to 20%.

That's on the consolidated level you are talking about.

Yes.

The next question is from the line of Krishan Parwani from JM Financial. Please go ahead.

Congrats on good set of numbers and breaking even in the subsid iary. Just a couple of points from my side. First, have you started the production of Barbituric acid?

We will start by August. Month of August.

And on the BHT, have you seen any contribution or not yet?

We have already sold some quantities in the U.S., and you will see progressively the volumes are increasing over the next few quarters.

That’s great. And coming to HALS, so I wanted to understand at this point of time which grade do you think could go in Phase-2?

Sorry, go again?

I am just saying at this point of time in the HALS, which grades do you think you could go for expansion in Phase-2?

It could be the higher one like 944, 119 and the newer ones which we are trying to make which are 2020 and these are all high polymeric HALS.

So, basically targeting like the $8-9 per kg kind of products, right?

Absolutely.

And just one clarification on HALS. I think I missed your earlier comment. So, you highlighted 10,000 tons of sales with probably about a Rs. 570, Rs. 580 a kg realization. So, that comes out about Rs. 580 crore sales. Is that the peak for HALS by FY ‘28 from the Rs. 300 crores CAPEX that we did?

Yes.

More or less, current realization.

At current realization, of course, if the realization increases over the period of time, then this realization will also improve.

And plus whatever capacity that we had, probably Rs. 30-40 crores of HALS capacity in Unit- 3. So, that's all, correct?

Thank you for answering my questions. I wish you all the best.

Thank you so much, Krishan.

The next question is from the line of Shiwani from Monarch Network Capital. Please go ahead.

Hi, Siddharth and Pratik. Good evening. Congrats on the good set of numbers. Most of my questions are asked, but a couple of them is one, could you give a split between, you know, size and volume growth in FY ‘25?

So, around 25% was the volume impact and low er realization offsetted that impact by around 8%. So, that's how you see around 17% growth in the sales for full year FY ‘25.

And I just wanted to reconfirm that for the three new products which is DHD T, DHT and Barbituric acid, we haven't had any significant contribution in FY ‘25. Am I correct?

Barbituric acid is in Clean Science which we expect to start in August. BHT is a small contribution this quarter. And DHDT, as I mentioned, we still are facing some teething issues in the facility. So, hopefully in the next couple of weeks , we expect the plant to start commercial production.

That is helpful.

The next question is from the line of Abhigyan Srivastav from Marcellus Investment Managers. Please go ahead.

Hi, sir. Congratulations on the good set of numbers. I have two questions. The first question is, why has COGS gone up this quarter?

Hi. So, the reason is the product mix that has led to a higher RMC as a percentage of sales during this quarter. So, if you note, there has been a meaningful growth in pharma segment, where the margin contribution is lower than the performance segment. So, that has led to a slight increase in the RMC as a percentage of sales.

And the second question is, what are the key cost items that are driving up the other expenses? And are these cost items recurring?

Actually, if you see sequentially, it's CSR expense, which has led to a higher other expense. That is the only item which has led to an increase in the other expenses. Otherwise, the other expenses are in line with last quarter.

Thanks for the follow-up. For FY ‘26, given that the two performance chemical projects will be capitalized, what is the overall CAPEX number that we are looking at?

Rs. 300 crores overall. And for FY ‘26, Rs. 300 crores.

And beyond that, we don't have currently any projects which are slated for FY ‘27 as of now.

No, no, no. We have. But we will announce once, let these two big products come online, and then we will announce the subsequent CAPEXs.

I mean to say no announcement as of now.

Sorry?

No announcement as of now.

No, no announcement.

And generally from announcement to the actual commissioning takes about 12.

10 months.

The next question is from the line of Jason Soans from IDBI Capital. Please go ahead.

So, thanks for taking my question. Just wanted to understand. So, before we started HALS, I mean, we used to clock in margins of around 43%, 44%. Okay. Now I understand with the new HALS and all, our margins have taken a slight dip, which is in line with o ur strategy. But now coming from 42 %, 43% of 40%, is that a fair enough, I mean, going ahead 40% should be maintained. I was just under the impression that when you start HALS, you are probably targeting margins of 15 % to 25%. So, I actually expected a sha rper margin drop on a consol level. But seems like we are doing better than expected. So, just any reasons for that same, for the same?

So, Jason, we have never alluded to any sharp dilution in the margin at Company level. We have always maintained that EBITDA margin could remain in that narrow range of 38 to 42, plus minus 1% or 2% to 40%. And as these new performance chemical and pharma intermediates product scale up , w e expect margins to improve. Because these are more margin acc retive compared to HALS. HALS is important from a point of view it will give us a scale benefit.

The TAM of HALS is the largest. So, the ramp up is, I mean each block can give equivalent of Rs. 500 crores revenue. Whereas the other product TAM are smaller. Plus HALS has exposed us to a very different variety of customers, different chemistries which will be useful , like, for instance, hydrogenation chemistry has been useful to getting into newer products.

So, I got that. And just sir, I just missed the volume and the realization breakup for, if you could give it for the year also, if possible?

Yes, for full year FY ‘25, 17% increase in sales was led by volume, 25% impac t was volume led, while lower realization offsetted the positive impact by around 8%. So, that's how you come to a 17% increase in standalone sales.

Those are all my questions.

The next question is from the line of Rohan Mehta from Ficom Family Office. Please go ahead.

So, firstly, I wanted to understand what your outlook is for BHA and TBHQ from a global standpoint. And secondly, are you evaluating customized antioxidant blends for, let's say, some peak lines basically forward integrating into antioxidants? And if so, what is generally a margin profile under these blends?

No, we are not getting into blends. That's what our customers do. We don't like getting into our customers' shoe.

And what is your outlook on TBHQ and BHA?

So TBHQ is a decent, I mean, both the products are decent products. I mean , they are growing at about 4%-5% industry standard. TBHQ is an edible oil business. So, as edible oil production increases, TBHQ consumption increases. BHA is more about pet food consumption. So, as that increases, BHA increases. BHA plus BHT go hand in hand. So, yes, there is a decent and good outlook for both the products. Both have different avenues, different markets, but both are growing at 4%-5% industry norms.

The next question is from the line of Agam Shah, an individual investor. Please go ahead.

A quick question, sir. Can you talk on the CAPEX for this year as well as for FY ‘27?

So, this year, CAPEX, we just mentioned two performance chemicals, one starting in August, one starting in February. FY '27, we will announce it probably six months later.

No, so, in terms of amount for this year would be Rs. 150 crores?

Rs. 300 crores.

See, all put together is what you are asking us?

Yes, all put together where we can know the growth really takes off.

So, it should be, I mean in terms of revenue?

Yes, revenue.

Rs. 2,500 crores to Rs. 3,000 crores is the revenue potential.

And that should be reached possibly in the next three years? Or how should we look at it?

Too much forward statement. We are trying our best.

And the margins can also increase at that time?

No. I mean, these are only, I mean, we would want to maintain similar margins.

I mean, it would be great to hold such margins already in the business.

The next question is from the line of Jason Soans from IDBI Capital. Please go ahead.

Thanks for taking my question again. I just wanted to know, sir, a lot of some time back, MEHQ, we were seeing some weakness and demand for MEHQ. Of course, realization s were down. I believe they are still kind of soft and we have more of volume driven. Now, just wanted to understand, are there any tail winds for MEHQ to grow ahead in conjunction to more consumption of acrylic acid, any tailwinds you see from that perspective? And again sometime back going we had, yes.

So, we are growing in volumes. Opening remark s mentioned that our volumes have been the highest in the history of the company. Prices are near lower levels. That is why you are seeing these numbers. But in terms of growth, I think for MEHQ volumes it should be around 4 % to 5% on a year-on-year basis.

Yes, and previously again in some few calls back we had alluded to those issues around Guaiacol due to the cough syrups and etc. Have those been...

All resolved.

That's all been ironed out, right?

All resolved.

The next question is from the line of Shiwani from Monarch Network Capital. Please go ahead.

Thank you for taking my follow -up question. So, I just wanted to get sense of the two performance chemical which will be commercialized in FY '26. So, what's the asset turn we are expecting? And I think in FY '26 there won't be any significant revenue contribution. So, in FY '27, how are we looking at the contribution from these two performance chemicals?

I think we will talk about these performance chemicals closer to the date. So , we will take one product at a time. So , I think the first one, as I said, is goi ng to start in August. So , in the next con call, we will talk a little bit more on the products.

Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Siddharth Sikchi for closing comments.

So, thank you so much all of you for your time to attend this con call and understanding more about the company. I think with this, I close the meeting. Thank you all and have a great week ahead.

Thank you. On behalf of Clean Science and Technology Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.