Thank you very much. We will now begin the question -and-answer session. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit the 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 Sinha from Sunidhi Securities. Please go ahead.

Thank you for taking my question, sir. My first question is in terms of the utilization level and our peak potential regarding the revenue side. So, what is the current utilization right now for the overall business and for the Mahad plant? And with the peak utilization level of all these plants, what sort of revenue number we will be looking at and possibly by when that should be achievable?

So, primarily, I think the Mahad plant currently, we ar e looking at a capacity utilization of between 50% to 60%. If you look at the Specialty Aroma Ingredients division and the Camphor and the Terpene Chemicals plant, except the hydrogenation facility, most of the other plants are at between 85% to 90%. And t he fragrance compounding facility, we have substantial additional ability to increase production. So, in terms of capacity utilization, the Mahad facility is something where we feel that in the next few quarters, we will have better utilization of the Mahad facility.

And with this full utilization, what sort of number we will be looking? Because Rs. 1000 crore is something which we have done last year. And what kind of further possibility of revenue addition is there left with this full capacity utilization?

So, I probably can give you a near -term number. I mean, we are looking at a trajectory of anywhere between 10% to 15% growth in our sales in the next one year. So, that's our near - term goal. And I think in terms of our long -term strategic goal based on projection, you can reach out to Girish and he probably can share the numbers.

Sure, sir.

Sorry to interrupt, Mr. Sinha. May we request you to return to the question queue for a follow- up question? Thank you. The next question is from the line of S hubi from Trinetra Asset Managers. Please go ahead.

Hi, sir. So, my question is that we are looking at some favorable product mix. If you could just talk a little more about that. How much are the margins and how will that look like? That is my first question. And my second question is about the raw material price pressure. How are we looking at the coming quarters regarding that?

So, I think an answer to your margins question is, frankly speaking, looking at the crystal ball because the global geopolitical situation is having an impact on the availability and the pricing of all your inputs. And hence we probably can only state that we are extremely mindful and we are very watchful of the situation. And we are taking very calibrated steps to ensure that we strike a balance between raw material availability so that all our sales are fully catered for and the raw materials are available at the lowest price. So, I think to answer your question on margins, it's something which is very fluid currently. In terms of the impact of raw materials, I think from a trend perspective, we see that all the Alpha-Pinene based raw materials will tend to be expensive because of the sustained increased pricing in Alpha-Pinene. The petro again remains in a seesaw situation where the prices have been very firm in the last few months, and they came down for a month. So, to answer your question, I think in terms of margin, in terms of the impact, it's something which is an ongoing process. And we are watching the situation very, very closely on the raw material side, on the utility side, and also on our sales side.

Thank you. The next question is from the line of Rajesh Mishra from Liberty Security. Please go ahead.

Namaskar, sir. Rajesh Mishra speaking. Congratulations on great set of results. I have two questions. First is, in the last meeting, sir, you said that there has been a discussion with the central government regarding the ban on Camphor imports. Please tell us about the current situation of these discussions and also tell us if there has been any progress or response from the government. The second question is, I want to know that in the Camphor segment, there is a lot of discussion on the issue. How much is the percentage of the retail sector? Say 50-50% or any other figure?

So, Mr. Mishra, in the first call, we told you that we had a meeting with government representatives where there was an open discussion about Camphor and its imports and its impact. So, after that, there has been no further development on that subject in this quarter. And regarding your second question, as a strategy, we don't give break -ups category-wise or division-wise. So, I would like to give you the answer that our three categories, Fragrances, Specialty Aroma Ingredients, and Camphor and Terpene Chemicals, their contribution in our sales is roughly one-third, one-third, one-third.

Okay, sir. Thank you.

Thank you, Mr. Mishra. Okay.

Thank you. The next question is from the line of Maitri Shah from Sapphire Capital. Please go ahead.

Yes, hello. So, this quarter, we had close to 22% sales volume increase, while the revenues have been 15%. So, there was a dip in the realization of our products. And I think most of the pressure is coming from increased capacity. So, with this 10 %-15% revenue growth that you are expecting, what sort of volume growth are we penciling in for that, and how much do you see the realization going further down?

So, like I said that Maitri, we find ourselves in a very interesting situation where some part of the volume growth that we saw in the quarter that just went by was the product that our customers had given us as allocation in Q1. And therefore, they kind of decided to take them before the stipulated period in which they were going to buy it because of the geopolitical situations. So, to answer your question, the gap primarily is driven beca use there was an increase in the raw material price, there was a hastening in terms of the customers wanting the material early, and hence we see this gap. Going forward, our focus is always going to be to strike a balance and to ensure that we are targeting business where we see volume growth, where we see also this volume growth at a decent contribution in terms of profit margins. So, that's our broad objective. I cannot share with you very specific numbers beca use these numbers across the three divisions keep changing month-on-month.

Got it. So, so far in Q2, have you been able to have conversations with your customers on the pass-through of the price increase that we have taken in on the input side or still there are contracts we are taking in on a lower realization while taking the hit on the margins from the input side?

Wherever it's been possible to do a pass-through, I mean, we have been very, very successful. And like we mentioned that in the Specialty Aroma ingredient space and in the Camphor space particularly there have been significant capacity additions in the Asian region which kind of puts a bit of a challenge in terms of achieving a pass-through. Having said that, I think we have been in a position to kind of mitigate these challenges by giving a step-up pass-through process to our customers to at least cover the foreign exchange impact as well as any raw material hike impact.

Got it. And that was very clear. And I will ask you on the tax side, what sort of effective tax are we penciling in FY27 and then FY28?

Girish, do you want to answer this because it's related to tax?

For us it's around 25%. Because in the parent only, there is no tax liability. On the OS end there is no tax liability.

So, it's 25% for the full year, that's what we are expecting?

Yes.

Okay, got it. Thank you so much.

Thank you. The next question is from the line of Anisha Dalal from Universal Capital. Please go ahead.

Okay. First of all, congratulations on the performance.

Thank you.

In our last interaction, you mentioned that the industry is currently facing a demand -supply mismatch with significant new Camphor manufacturing capacities that have come up in India. This has understandably put pressure on pricing and profitability across the sector. As a shareholder, I would like to give a suggestion that since all the Camphor manufacturers are facing the same dema nd-supply imbalance, why don't the manufacturers come together to work towards as a common cause to the entire industry so that the prices can be corrected?

So, Anisha, I would first like to thank you for giving the suggestion. I think the challenge being that since there is a demand -supply gap because of excess capacity, it becomes very challenging for the existing players to come together and develop a common strategy,

especially when the final product market h as a very limited CAGR. So, the expansion that has happened is not linked to the CAGR capacity of the finished product. And hence, it's going to be pretty challenging for the industry to come together and create a program for coming out of this challenge.

Actually, I am asking for specifically the manufacturers who are selling the Camphor in raw material prices.

Yes, ma'am, but it's wishful thinking. I do not have an answer because I can speak for my company where I can see that there is this demand -supply gap and everybody is trying to probably get a piece of pie which is not growing. So, I don't know how we will come at a strategy. But we have taken your view, and we will see if there's something possible.

Okay, thank you.

Thank you.

Thank you. The next question is from the line of Moksha Ranka from Oramh. Please go ahead.

Hello, sir. I wanted to understand regarding our brand Saraswati and 3 Pines. So, roughly speaking, how much their contribution would be to our Camphor division?

So, Moksha, like I mentioned in the previous interaction with one of our investor friends, we don't give the breakup of individual sub-divisions in our broad divisions. We broadly state the contribution of each of our three verticals.

Also, could you provide some color regarding the Camphor pricing as compared to Q1 and maybe last year? And currently, what's the import pricing difference between China? Has it narrowed down or what's the scenario there?

So, there is substantial double-digit increase in the price of Camphor powder regarding Indian Camphor. We do not follow a lot of Camphor that is coming from China. So, I will not be able to give you a very specific answer about that. In terms of Indian Camphor, there is a very significant increase in the price of the sale price.

And any underlying economic reason behind it, l ike because of increased demand or maybe the input costs have become cheap? So, any reason why the sudden increase?

There is a very specific reason that a large contributor to the cost is a material called Alpha- Pinene. And the Alpha-Pinene prices over the past five months have gone up by almost 70% or 80%. And they continue to stay at this high price point.

Yes, correct.

And is there any scenario where we are seeing the prices cooling down or are they firm still?

Normally, we answer two questions, but I will just probably answer this one. Right now, they continue to stay firm.

Okay, I will get back in the queue.

Thank you. The next question is from the line of Rohit Sinha from Sunidhi Securities. Please go ahead.

Thank you for the follow-up, sir. One is on the export side. So, normally we have around 32 %- 33% kind of export contribution. So, what was the contribution in this quarter and how we are looking this figure to end for FY27?

I mean, Girish, I think the figure is not 30%. I think it is more than 30%.

For the quarter, it is 35% and previous financial year it was 33%, actually.

Okay, great. So, we will probably stay in the same range in terms of our export contribution going forward as well. We do not see a substantial change in the proportion of exports versu s local sales.

Got it. And, sir, again looking at the overall CAPEX side, I think we have done decent CAPEX in last 4-5 years and probably I think we have completed the cycle. But, if we look at the overall contribution or the peak potential w here we go from here on, I think with 85 %-90% kind of utilization for all other plants and Mahad around 50 %-60%, another maybe 60 crores to 70 crores would be added from Mahad and rest would be adding some 10 %-12% further. So, we still reach up to I think 1400 kind of max level from here on. So, what is the plan going forward or how we should look at this growth for the next maybe 5 years?

So, Rohit, I think you missed a very important element in the Oriental universe which is the Fragrance division. So, the logic of the CAPEX over the years has not been to only benefit the company by selling the ingredients that we make in these investment driven plants. These products which are now being made have been extensively used by our Fragrance division. And I think that the growth that we expect because of that in our Fragrance division, unless you do not capture that in the overall opportunity cost going forward, I think you will miss a very critical piece of the Oriental story. So, what has happened is our investor friends keep on looking at us only from CAPEX, only from Aroma Ingredients, only from generic materials. But I think the underlying story is how is that eventually going to help our Fragrance division to not only have a backward integration piece attached to it, but actually having a depth in terms of competitive strategic positioning which will be a key value driver. And there you don't need CAPEX, there you need the ability to create and sell at the right price.

So that means maybe probably our mix which is around 33, equally among the three segments, that mix would basically going to change if we are more focusing on that Fragrance or Aroma business.

When that change happens, I promise you, I will inform you and the investors.

Okay, sir. Okay. And one more question I can squeeze in. Our overall R&D spent on annual basis would be how much?

I stand corrected on this one. The last time I checked, we were at anywhere between 3% to 4% of the sale. Girish, am I correct?

Yes, because currently we are at around 2%-2.5%. Because we have control over it.

Yes. Rohit, the mantra is optimization everywhere.

Yes. Got it. That is from my side, sir. Thank you.

Thank you, Rohit.

Thank you. The next question is from the line of Saket Sourav from Sagari Capital. Please go ahead.

Yes. So, I think just it was mentioned that Mahad is operating at 50 %-60% capacity. And if I subtract the standalone from consol, it seems the top line contribution was around Rs. 3 crores from Mahad. So, first of all, am I right? And if yes, then is it like we are producing and it is getting inventorized right now? So, just I needed one clarity on that. And second, while I think there was clarification on the right, it is a volatile environment, it is dynamic and all. But any color on, is there a scope for improvement on margins? Because we have talked ab out doing all the right things. And for last couple of years, even for current quarters, initially it was tariff and all. But that margin has kind of stuck around 7 %-odd. In fact, even on Y oY, there was a minor dip. Even if I just took a standalone number, Mahad, I have already removed that from the profitability number. So, any scope for even improvement, say even the immediate term on the margin front?

So, to give you a very clear picture, I mean, since we are on both sides of the coin, Saket, where we also make Fragrances, so we buy Aroma Ingredients. And on the other side, we sell Aroma Ingredients to global fragrance houses like ours. We found ourselves in a cycle in the last probably 12 to 16 quarters, where there has been substantial c apacity expansion that has happened in Asia, primarily in China. And hence, the availability and the pricing opportunity that existed a few years back has been challenged over the last few quarters. That's the reality of the market. And that's the reality of the Generic Aroma Ingredients market globally, without any exception.

I mean, I can vouch for this because I also buy these materials on my Fragrance side. As these capacities get utilized, as the Fragrance business globally grows, we will see that there will be opportunities that will come up. And when these come up, we will be more than happy to grab them, point number one. Point number two, I think the basket of products that we currently offer to our customers globally and in India, that basket keeps on expanding, and that basket gives us the ability to have an EBITDA at a basket level. So, these two strategies put together, along with a very strong headwind in terms of capacities coming and pressure on pricing, w e feel very confident that going forward, whenever there are opportunities in generics, we will be able to capitalize them. Having said that, the generics are already giving a lot of value to our Fragrance division, from where we will see additional margin contribution. So, these are the three broad pillars based on which we feel that margins going forward, whenever they come, we will be there to accept them.

And Mahad had 50%-60% utilization, leading to Rs. 3 crores of quarterly run rate. So, are we inventorizing the production right now, or that doesn't tie in?

So, Mahad has gone through a phase where first we produced, then we inventorized, then we went through a slew of approvals, so the material started moving, then we had the geopolitical situation because of which one raw material became extremely challenging, and so when we got access to that raw material, we have again produced and we have inventorized. So, that's why probably, and Girish could answer in terms of the numbers, but broadly what's happened on the ground is what I can tell you.

So, I am just saying that the top line is Rs. 3 crores only. So, my question is, is it like inventory buildup is there?

Yes, to answer your question, there is an inventory buildup which has been initiated because of probably a challenged access to one raw material which is petrol-driven, and that inventory we are very, very confident that we will be able to sell it in the near future, point number one. Point number two, also I feel from a communication perspective, the Mahad investment is not only for this one product, it's a very large site where we have just done Phase-1. And as Shyamal mentioned in his speech, it's a long -term strategic investment done for a large number of products when we are ready to be installed over there.

Okay. So what kind of top line are we seeing, say at least Q3, or when is the meaningful scaling up even envisage for Mahad because if you recall it is almost--

Sir, I promise you that as and when it happens, we will be informing the investor community. We are trying our best. We are always saying that new products, and we have been in that

cycle for the past 20 years, it takes anywhere between 500 days to 1,000 days to see the light of the day. So, we are very confident and we are seeing those early shoots of greenness happening where we have got approvals from a wide range of global customers. We already have three questions that I have answered. So we give an opportunity to some others.

And any color on remote possibility of…

We already have three questions that I have answered. So, you know, we give an opportunity to some others.

Thank you. The next question is from the line of Vinayak, an Individual Investor. Please go ahead.

Hello. Sir. Am I audible?

Yes, you are.

I just have one question. How did you manage the significant volatility in raw material prices due to the West Asia crisis?

So, I think it has been a combination of extremely vigilant communication with our existing suppliers and leveraging the long-term relationships that we have built over the past many years to ensure that whatever volatility happens, it has hit us probably the last and it has hit us to the lowest possible extent. So, a combination of these two, three things, where I think we have a dedicated team which is looking at all our raw material portfolios in the Fragrance as well as the other two divisions and takin g strategic decisions of what to long buy and what to short buy.

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

Thank you.

Ladies and gentlemen, that was the last question of the day and now I would like to hand over the conference to Mr. Dharmil Bodani from Oriental Aromatics Limited for closing comments.

Thank you. Thank you all for participating in the earnings conference call. I hope we have been able to answer your questions satisfactorily. If you have any further questions or would like to know more about the company, please reach out to our IR managers at Valor em Advisors. Thank you.

Thank you. On behalf of Oriental Aromatics Limited, that concludes this conference. Thank you for joining us and you may now disconnect your line.