Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
AETHER INDUSTRIES LTD (NSE: AETHER) Q4 2026 Earnings Call dated May. 15, 2026
Corporate Participants:
Rohan Desai — Whole Time Director
Aman Ashwinbhai Desai — Whole Time Director
Faiz Nagariya — Chief Financial Officer
Analysts:
Unidentified Participant
Presentation:
Rohan Desai — Whole Time Director
Aman who will talk us through the exciting progress in R and D and our new client acquisition initiatives. Over to you Aman.
Aman Ashwinbhai Desai — Whole Time Director
Thank you Rohan. Good evening everybody. I’m extremely happy to connect with you all again as we do every quarter as we continue to navigate these volatile times that Rohan has talked about at length, let me talk about R and D and projects and competencies. I’m very pleased to inform you that the interim R and D expansion with two new labs and 18 fume hoods, including five engineering fume hoods and a very nice 400 MHz NMR nuclear magnetic resonance Machine installation have been completed in the current R and D facility and we expect the commercialization of these new fume hoods and NMR machine to begin from Q2 onwards of this fiscal as we had expected over the last few quarters the number of grants inquiries continues to increase and these new teamhoods and the NMR which corresponds to this interim R and D expansion that we are doing will hold us in good stead and help us address these increased inquiries.
We already have a number of new projects lined up in the material science and the oil and gas sectors for the new capacity that we have now commissioned and that’s the area that we are focusing on in terms of new business development. The construction of the entirely new RD plant and the new R and D wing that we are also undergoing is also progressing on schedule and is completed expected to be commissioned in second quarter of FY28. This new R and D building and the new RD site will have 15 new labs including TRI Engineering labs and a cumulative almost 140 teamhoods and this will represent a double expansion, a 2x expansion over the current RD strength that we have including the interim R&D expansion, 2x expansion over that which is significant R and D expansion and this is being done with full visibility of additional load on the CRAMS business model that we foresee.
With the current leadership in RND also having been set to address this increased demand of the R and D grants inquiries and this significantly increased R and D infrastructure, we are also in the process of grooming the next generation of R and D leaders in the R and D organization and so there’s a huge focus on that. These new leadership leaders are expected to take leadership roles in our new world class R and D facility which will be online in the next one or two years. Also with my associations with premier institutes in the country like ICT, Mumbai, NCL, Pune and other institutes where I’m an official PhD co guide as well, as a member of the Board of Studies, we are really tapping into this network that we have to groom our next generation of R and D leaders.
And we are confident of having a young and dynamic team of R and D leaders which are expected to work on these increased grants. Project coming through. In the significantly expanded R and D infrastructure that we are set up and process of setting up over the course of the quarter and the last few weeks we have had a number of follow ups and site visits from senior management from the highest levels of management of current and prospective customers. We have participated in chemical conferences in India, Japan and Europe.
And it is evidently clear that global chemical companies do want to get ahead of the curve and accelerating the developmental plans with label partners. And the focus in all these engagements that we have with all the innovators across the industry spectrum, especially material sciences, oil and gas is pure is singularly, singularly India. They want to be in India unless they can’t. And so it’s really up to us to maximize this potential of collaborations that we are always seeing. We believe that we are well placed considering the relationship that we have already forged with these clients and also the world class infrastructure that we are setting up in R and D.
As I’ve already talked about the pilot plant which is one of the largest pilot plants in the world that we have have and the new sites that Rohan has spent some time talking about. I’m also very happy to inform you that we are also expanding and we have expanded our senior leadership team which is what we call our global technology and business development team with the addition of Mr. Gunther Stevens. Gunther has extensive experience in chemical R and D process development, raw material development and sustainable technology development within Germany.
So, so he started his career with DARE and then ended his career with more than three decades in Altana and Bukami which is a leading additives company, multibillion dollar leading additives company in the world. He has extensive experience in the chemical industry and will be based out of Germany. But specifically what’s very exciting about his repertoire and experience is his experience of technology and leadership in technology and R and D and product development for material sciences performance materials and application testing which is an area and a core competency of application testing that Ather is not amongst the forte of ather school competencies today.
And he is expected to and he will be opening up an entirely new envelope and new frontier for competencies and application areas for Ather to tap into. And so that’s why his skill set complement the core expertise which I said currently has built and with this it is very exciting in terms of the new frontiers we’ll be able to enter into and also thereby tap into new customers for additional projects and products in R and D in pallet plant as well as in production. We are in addition we are looking to add one more chemistry to our core competencies which is what we are calling focus and integrated polymerizations.
Also leaning for this co competency onto our core technology competencies of high pressure chemistry, extreme process conditions and continuous technology. We are currently working on a few opportunities based on this focus on integrated polymerizations and we’ve identified a number of opportunities in the cramps space for this chemical process. With chemistry again being mostly targeted towards the material science and the oil and gas sectors. We continue to focus on CEM opportunities, exclusive manufacturing opportunities.
I expect quite a few of the cramps projects that we have in our pipeline today to shift to the CEM vertical in this financial year which has just started and most of these will be launched in Site 5. We continue to develop and deepen our relationship with existing customers by entering into new CRAMS projects with them which fills up the pipeline of the crams which will further on lead into exclusive manufacturing contract manufacturing. In the last fiscal year as Rohan mentioned, we have commercialized the Site 3, increase our revenue from Site 4 and also commenced the commercialization of a small CM contract from Site 3 for our global customer.
Site 5 as Rohan mentioned is also very exciting and the first phases will be launched momentarily. With the current projects and the robust pipeline of projects which are expected to come in shortly. We are very confident of achieving our vision of 70% of revenues coming from grants and contract exclusive manufacturing business models by fiscal year 30. So let me stop talking. In summary, I would like to mention that we are extremely well placed to take advantage of the current golden age of the specialty chemical industry in India.
The opportunities are expected in the next few years and our investments in the new R and D site interim and the completely new as well as site 5 which are world class will certainly have a positive impact on the company. So thank you very much. Looking forward to the questions and again thank you for joining us on Friday evening. Prushan, over to you.
Faiz Nagariya — Chief Financial Officer
Thank you Dr. Aman. Good evening everybody. I would like to present the financial results of HNS Limited for Q4 of financial year 26 and full year of financial consolidated revenue. Sorry
Rohan Desai — Whole Time Director
To interrupt sir, your voice is not clear.
Faiz Nagariya — Chief Financial Officer
Can now is it clear?
Rohan Desai — Whole Time Director
Yes, please go ahead.
Faiz Nagariya — Chief Financial Officer
Yeah. The total consolidated revenue from operations of the company stood at rupees 11,601 million in financial year 26 as against rupees 8,406 million in financial year 25. That is an increase of 38% year on year. This has resulted in EBITDA of 3,547 million in financial year 26 as against 2,312 million in financial year 25 which is an increase of 53% in the comparing financial years. EBITDA margin stood at 31% in financial year 26 as against 28% in financial year 25. The PAT amounted to rupees 21.
95 million in financial year 26 as against Rupees 1,584 million in financial year 25 which is an increase of 39% year on year. The PAD margin stood at 19% in financial year 26 as against 18% in financial year 25. The consolidated revenue from operations of the company stood at Rupees 3051 million in Q4 of financial year 26 as against Rupees 3001 had an 188 million in Q3 of financial year 26. This has resulted in EBITA of 814 million in Q4 of FY26 as against 1. 99 million in Q3 of financial year twenty six and the PAT has been Rupees 6 has been 540 million in Q4 of FY 26 as against 645 million in Q3.
The main reason for the decline in revenues and profitability in Q4 as against Q3 of financial year 26 were on account of one of items like one time flop claim income which was booked of 20 million at 200 million in Q3 of financial year 26. The same was also has impacted EBITDA by around 150 million in Q3 of financial year26 and it also was impacted also impacted the PAT by 112 millions in Q3 of financial year 26. Further, a provision for loss of inventory on account of an fire at an External warehouse near site 1 on March 1126amounting to rupees 70 million has been provided in Q4 of Financier 26.
Further year end provisions coming for the first time of approximately 10 million rupees has also impacted the Q4 financial results. I would like to give more glimpse on the claim of the fire which occurred in November 20 and 2023 at Site 2. The final claim of for the fixed assets lost in fire accident on 29-29-2023 has been submitted to the insurance surveyor and the same is being assessed at the insurance company with expectations to get the claim settled by end of Q1 of FY27. We have also taken.
We also removed the assets which were destroyed by fire and it has been impacted in the financials of the financial year 26. We remain cognizant of the working capital and reduction in market capital is a priority for us. We have been able to reduce the overall working capital cycle to 179 days as on 31st March 26th from 194 days as of 31st March 25th. Even though these levels remain elevated, the inventory days increased primarily on account of raw materials purchased and the production of the new molecules going on at Site 3 and the raw materials purchased at Site 3 Site 5.
We expect the working capital days to decline as we expect revenues from Site 3 and the commencement of Site 5 very soon. Also, with the increase in CM contracts and expansion of crime facilities should have a positive bearing on the reduction of working capital intensity. Cash flows from operations have increased to Rupees 14,24 million in financial year 26 from Rupees 1000 million in financial year 25 on account of increasing profitability and improvement in working capital cycles. The total capex for finance year 26 was rupees 3838 million.
And the capex expected for finance year 27 is rupees 3000 million to rupees 3500 million. The capex in finance 27 will be primarily for site 5 and also for the new R and D site which is already progressing well. The capacity utilization at plants stands as under site 2 75%, site 3 70% and site 4 55%. Thank you once again and we look forward to better outcomes than this in future as well. Back to you, Kushal. Can we open? Thank you, Faith. Can we open it for Q and A? Thank you very much, sir. We will now begin the question and answer session.
Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to withdraw yourself from the question queue, you may press Star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles.
Questions and Answers:
Rohan Desai
First question is from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead.
Faiz Nagariya
Yeah, thank you for taking my questions. Hi team. I’m getting a sense that there is a reinforcing flywheel likely emerging as the setup increasingly looks like, you know, more chemistry capabilities. Attracting larger global customers, which then enables more complex molecules, which then improves margins and stickiness, generates more cash flow, funds more R and D&CPEX and creates even deeper capabilities. So with that kind of a context, the question is if the current CAPEX and R& D cycle succeeds exactly as management imagines, what will be structurally different about Ather’s business model five years from today that may not be visible today?
Aman Ashwinbhai Desai
Yeah, I’ll take it. Susaman, very interesting question. Precisely captured the intention and the goal behind what we are trying to do. We want to establish ourselves as a company in specialty chemicals, agnostic of industry application, focusing on really innovation with the marriage of chemistry and technology and engineering and systems. And so this was actually the very first slide that we made back in 2013 when we started the company was precisely with innovation in chemistry and technology and systems.
And so it’s nice to see how it’s panning out and that we are sticking to what was our foundational premise of the company. We see it spanning out in terms of what we are doing in the competencies and the chemistry technologies leading to complex products, as you said, being aided by this really fundamentally solid and cutting edge infrastructure that we are putting up in R and D and pallet plant and then complementing it with manufacturing assets, especially our site five. And so what will be structurally different in five years from now?
You know, we hope not much. We hope it continues to stay the same, but only do it, you know, for the lack of a better word, bigger and better but at the same time being fundamentally grounded in the foundational premise of the company, which is what we talked about. And so I don’t know if it’s answered your question, but thank you. Well said. And that’s what exactly what we’re trying to focus on as a company
Faiz Nagariya
That’s helpful. And then secondly, as ether scales and what do you think becomes more important to sustain the mode or the competitive advantage? Capital deployed chemistry complexity or customer integration? And how has that answer kind of changed internally over the last few years starting from 2013 as you said? Right. I mean what is, is there any shift in internal kind of a benchmark between capital deployed chemistry complexity or customer integration? Or perhaps it’s a mix of everything. I mean how do you make measure success internally above and beyond the visible numbers that we all see?
Aman Ashwinbhai Desai
Yeah, initially it was more about setting up the chemistry, setting up the products, establishing the customers, establishing proving ourselves in a way to ourselves and to the customers. Now it’s more about there’s plentiful Opportunities, there’s plentiful in the Indian context as well as in what we have done for ourselves. There’s plentiful opportunities across the industry domain, across customers, fortunately, and hopefully be in a position to be able to pick and choose as well what we want to work on and what we want to do.
And then the challenge now is execution, execution, execution, translating these opportunities into practice in the R and D, in the pallet plant and production, for which, of course, the team needs to be built, which is what we are focusing on as well. Which is a big chunk of my speech today was the leadership team that we are trying to build at all levels. And so now it’s the challenge and exciting part ahead is now putting these things into practice in a bigger and vaster scale than we have previously.
Thank you.
Faiz Nagariya
Thank you. Thank you. Definitely exciting times for us and wish you guys all the very best. Thank you.
Aman Ashwinbhai Desai
Thank you very much.
Faiz Nagariya
Thank you. Next question is from the line of Amazar from Punar Investments Advisors. Please go ahead.
Operator
Hi, sir, thank you so much for the opportunity. So, sir, just wanted to understand, with the increase in the currency prices, do we get any kind of a benefit given that we export a lot of our finish question,
Rohan Desai
Yes, but we do have a natural hedge where we are importing certain products also from various parts of the world. So we have a natural hedge on this. We try to capitalize this as much as possible. However, our exports currently, because of various uncertainties, had been reduced by the CN customers which had structurally put their Indian subsidiaries ahead. So we are selling to Indian subsidiaries and then they are exporting the same to various part of the world instead of us selling into the US basically.
But now that things have been resolved and I think in the quarters to come, you will see the exports growing and coming back to 50, 60% of our total top line.
Operator
Like, does that mean that we may get some benefit going forward with the currency price? So maybe our margins will increase going forward?
Rohan Desai
Hopefully, yes.
Operator
Okay. Okay. And sir, is there any kind of a demand disruption because of this disruption going on in the oil market?
Rohan Desai
No, we have seen a steady demand in all our products as such. So there is no holding of material happening in this instance during this war. Okay.
Operator
And you also mentioned that in the LSN segment, the prices have increased. So did it increase basically in the March quarter? In the March month or maybe like before that as well, the prices are increased?
Rohan Desai
No, it has happened post the war scenario.
Operator
The benefit of that again is expected in the coming quarters. Yes,
Rohan Desai
In this quarter also. We are Seeing the pricing being sustained. So I think that will benefit quarter one.
Operator
And are we seeing any kind of an increase in the. So like you said, we are seeing increase in the raw material prices as well. But like I think we have an open cost P and L with all of our clients. So that is not expected to impact us negatively. Or am I missing something?
Rohan Desai
Yes, it is not going to impact us
Faiz Nagariya
For the CM at least which is a open cost P L. So for that it will not be. It will not impact. But for LSM there will be some delta within certain margins will go up and then it will subside.
Operator
Okay. Okay. Okay. Understood. Thank you so much. Thank you.
Faiz Nagariya
Thank you. Next question is from the line of Sai Kumar from Family Fund. Please go ahead. Hello. Am I audible, sir?
Operator
Yeah,
Faiz Nagariya
Yeah. Thank you for giving me this opportunity, sir. So currently I would like to know what’s in this current quarter. What is the revenue for the bakeries? Previous quarter it was something around 60 crores. So is there any increase this quarter and. Yeah, yes. Yeah. And we have a lot of refined. I mean Baker use has some refineries in the Middle East. So due to this what most of the refineries they had some impact due to this war. So do you see any supply getting disrupted to Baker use to in this.
Yeah, that is a question, sir. Yeah. So the revenue to beverages in this last quarter was approximately 84 crores. 68 was from the subsidiary and also from our main company. Also there were some cramps which was done to for them. And 68 crores have gone and there is no disruption which has happened to the supplies which are due to be. And in fact we are getting continuous orders from them. Currently we have not faced any reductions or delay. Means cancellation of orders from them.
Operator
Okay, so in this quarter it was around compared to previous quarter.
Faiz Nagariya
Yes, it was 68 crores.
Operator
The material you supplied to them.
Faiz Nagariya
Okay. Yeah. And one more thing. On the baker you side you said there are seven to eight molecules that are going to be getting applied to. In the last call you said. So is there any progress on that? Another new molecules you said, right? Do you see any progress on that side
Operator
Currently in the cramps process? You know, once we have visibility we will come back to you on that Once it gets processing cramps. But right now the R and D continues on those products.
Faiz Nagariya
Okay, yeah. And the second question is on the Saudi Aramco JV sir, on the polyol side. So what is the like. Are you seeing any impact for Saudi Arambo supplies to polyols and what Is the demand you are going to see for the polyols in the next two to three years?
Rohan Desai
There is no. We have. We have application which is niche in nature. We are. We. The application of the converse polyole is in the case industry, I.e. Coating, adhesive, select and elastomers industry. It is a niche industry and niche has a niche application. So we have not seen any disruption happening on that. And the demand has also not reduced because of the external situation which have faced since last two months.
Operator
Okay. Yeah. Okay. That’s all good. Thank you. I’ll come back in the queue. Yeah, thank you. Right. Thank you.
Faiz Nagariya
Thank you. Next question is from the line of Prasad Weave from Union Mutual Fund. Please go ahead.
Unidentified Participant
Hello, I’m audible.
Operator
Yeah, Prasad.
Faiz Nagariya
No, there is a background noise coming from your end. Your line is disturbed.
Operator
Okay, so my question was on this. Prasad,
Faiz Nagariya
There is a disturbance coming from your line.
Operator
Okay, I’ll. I’ll join the. Okay,
Faiz Nagariya
Thank you. Next question is from the line of Abhijit Akela from Kie. Please go ahead.
Aman Ashwinbhai Desai
Yeah, good evening. Thank you so much for taking my questions. First one, just on the LHM business, you know it does. Is it correct that the revenues are a little bit lower on a sequential basis? Just to check, you know about. I think I have about 111. Sorry, yeah. 111 crores or compared to 131 in the preceding quarter. Whereas we were Talking about almost 20% kind of price increases. So please just help us understand what that might mean.
Faiz Nagariya
Abit, you’re right. In terms of the absolute amount, it is a decline. That’s primarily because in the last month, in the month of March, we were not able to ship some of the products due to logistical issues. These have been shipped in the months of April, April and May as we speak. Coincidentally also they have been shipped at a higher price. So yes, you are right with that. With respect to the pricing, as Rohan mentioned, we have seen increase in pricing which has sustained through April and May.
Aman Ashwinbhai Desai
Okay. But there’s no sign of volume softness from any customers right in the face of these higher prices?
Faiz Nagariya
No, not yet.
Aman Ashwinbhai Desai
Okay. All right then just on the working capital, what’s the outlook for next year now? I mean, with cum ramping up significantly, how much of a reduction in working capital days could one expect for next year?
Faiz Nagariya
Abhijit? We are continuously working on the working capital additions and lots of measures are being done and we had considerably reduced in the first six months also, if you are aware. And this increases on account of the new site which started for the Milliken site 3 wherein the raw materials and the working progress of the materials was there. And we see that again this will subside when the because started in April and May to Milliken. So now the flushing of inventory is going on. The debtors will be paid also.
So we see that by end of this year that finance in 27 we’ll be again having a healthy working capital reduction which we expect to be around 160 days at least. Our tries to bring it down to 150 days but 160 days is what we are expecting currently to be.
Aman Ashwinbhai Desai
Okay, so from 179 to 160 that’s the expectation. Right. Okay. And in terms of the debt number which is about 400 odd crores right now, what’s the outlook for that? You know, will that increase a little bit further as Capex so goes up or do you think we can maintain it around these levels?
Faiz Nagariya
No, no, definitely it will increase because we have been speaking about that. The QIP monies have been completed in the Q3 itself. So we will now be requiring term debts. We already started speaking with the bankers and we will see. You will see the debts coming up, debts increasing a bit in the current year and it will gradually increase. It’s not that it will increase in one go. We’ll be taking the dates for the requirements of the project progress and that will also ease certain other things.
And so debts will increase but not very fast. It will be sequential.
Aman Ashwinbhai Desai
Understood. And finally just one last thing from my side with regard to the growth outlook for next year, revenue growth outlook, any sort of guidance we’d like to put out there in terms of overall top line growth and also is possible to just share with us. Will most of the growth continue to be driven by the ramp up in Milliken and Beaker hues? Or are there other projects as well which can start to contribute significantly? Maybe Converge or maybe five or anything else which can make a meaningful contribution Any color around that would be excellent.
Thank you so much
Faiz Nagariya
Abhijit. So we don’t usually give guidance in terms of revenue growth for the year but what we can tell you is that yes, the Site 4 and Site 3 will continue to get ramped up in this financial year. We will also be having the 18 Fumos and NMR which will start contributing in terms of projects. And the most important thing I think will be the commencement or commercialization of Site 5 in Phase 1 where we look to commercialize this entire phase in this financial year. These will be the major growth drivers in terms of revenues in this financial year FY27 we hope to keep margins stable between the 29% to 30% EBITDA margins as well as in the fat around 19 to 20%.
Aman Ashwinbhai Desai
Sorry, just one last follow up question there. So site size, how much can one expect for the upcoming year? And also the 18 fume hoods R and D expansion, how much can one expect from these initiatives?
Faiz Nagariya
Abhijit, Sorry, we’ll not be able to. We don’t get a site wise data so I’ll not be able to comment on that.
Operator
Okay, fair enough. Thank you so much and all the best.
Faiz Nagariya
Thank
Operator
You.
Faiz Nagariya
Thank you. Next question is from the line of Nikonj Gupta from AK Investments. Please go ahead.
Operator
Hi, good evening team. Thank you for giving me the opportunity. So my first question is based on past quarter to quarter performance. Why margins were not it in this quarter? Hello?
Faiz Nagariya
Yeah, margins actually in my commentary also I have given a very clear indication the major reason was the 70 million inventory write up on account of fire which took place at the external warehouse. Also in the third quarter there was a flop claim income which was which was a part of the revenues from other operations which was not there in the fourth quarter. Otherwise the quarter has been and of course year end provisions which were not there in the three quarters initially which were done. Otherwise there is no problem in the margins as such.
So again you see the same thing coming up back coming back in the first quarter there’s a one off switch out there. So because of that it’s gone.
Operator
Thank you.
Faiz Nagariya
Thank you. Next question is from the line of Jayesha from Genuity Capital. Please go ahead.
Aman Ashwinbhai Desai
I am audible.
Faiz Nagariya
Yes, please go ahead.
Aman Ashwinbhai Desai
The question is for Aman broadly and it’s
Faiz Nagariya
More on the qualitative side. First of all congratulations for a great set and you know being an ICT alumni, you know it feels proud to be an eighth shareholder the way the industries are scaling up. So among the question is, you know, in the legacy product like for Nap nod, you know the chemistry had been out there for a while so and we were competing against the likes of Bass, Lanxes, Eastman, etc guys who have a you know, 100 year old legacy and still we’ve been able to scale up. But as I see in our presentation also two areas and especially I want to focus on material science where a lot is being done by acre and I think this is one of the fields of the future because the way geopolitics is shaping up, it’s more like you know, you have to do more with less material and keep more and more R and D and the demand that, you know, semiconductor, AI, these kind of sectors are coming up with.
So I want to know, you know, now in these new chemistries or new products that will be needed by these industries, when Athore is, you know, competing against a DA or a BSA for a landscape, etc. You know, what gives Athor a fighting seat at the table so that the principal, you know, comes ahead and actually shakes their hand with you versus one of these guys.
Aman Ashwinbhai Desai
Yeah, thanks, thanks for the question and always happy to talk to ICT alumni and still very much involved in ICT. I think I did once in six months, at least an official PhD and so happy to meet over a cup of coffee. But to answer your question, basically, you know, we continue to focus on core technologies, core chemistry, score competencies, innovate. I think we are one of the very few companies in specialty chemicals, especially at our level in India that has a massive force of chemical engineering, chemical engineers along with chemists and chemistry in the R and D itself at the inception stages of any project.
That’s where we can truly innovate in terms of unit operations and chemical engineering outlook towards the processes that we develop which ultimately translates into increased cost competitiveness. When we go to scale up production, then also the economies of scale that we try to achieve are truly world class in all the production facilities that we set up. And finally, I think, you know, it’s also as if you are competing with the BSF and Eastman landfill as you mentioned, the are placed in with assets in Europe and US especially then the cost competitiveness from the labor component of the production cost is truly very competitive in India.
And this cost position will remain for a very long time. We have a country of 1.6 billion with 60% under the age of 30, billion under the age of 30. And so this is going to remain. And so combining the innovations and chemistry and technology that we bring in into the processes which are truly new age and modern and economical scale of anything that we do and then being strategically located in India provides us firmly a preferred seat at the table. Some other seat at the table. I prefer seat of the table with these principles.
Faiz Nagariya
Okay, that’s lovely to hear. So this diving down more on, you know, advanced materials, if you can just explain me that when it comes to R D or even, you know, product development, how is it that the whole process works? Maybe you can take any sector like an EV or a semiconductor or maybe space or defense, but a lot of, you know, new Coatings are being required by the industry or new kinds of solvents are being acquired by the industry. So you know, how is it that the ether plus the principle, is it a full and a push model or is it aether that is doing something bottom up on its own or is it the requirement of the customer?
You know, like if you can throw some light on one of the breakthrough products that our advanced material division has currently, how was it developed or something. I mean, obviously I don’t want the name, but there’s the whole process
Aman Ashwinbhai Desai
As a whole business model take much longer than a minute to explain. But in a very broad perspective, you know, it’s a truly collaborative approach that we take with the customer. The customer has the product innovation where they prove the efficacy in a plant, in a body, in a material or in some application the efficacy is proven that improving the efficiency. They made the molecule, but they didn’t really care about how the molecule was made. They just wanted to prove the efficacy on a material and material sciences.
And that’s where we step in, where we pretty much start on scratch, start on paper. A lot of times we take apart the entire route that they use to make the molecule in R and D during discovery, where we think about the whole molecule and the process that they have and put it back together in what will be the ultimate economical, sustainable manufacturing process. Bringing in our innovation in chemistry and not only in chemistry, but also chemical engineering and technology. And so then we do the process development in the lab, validate the process, innovating the lab and scale up in the pilot plant which is where we have one of the largest pilot plants in the world, where we have more than 15 going on at the same time, where we can really pilot a process to death.
And that’s where you can really innovate library of chemical engineering as well within the pallet plant. And then so that when you go into manufacturing, our internal mantra is that the first manufacturing should be had with a cup of tea. And so the process should be so well defined and that’s broadly, it’s a collaborative approach that we take where we really bring in the process side and the customer brings in the discovery side. Thank you, thank you for the question.
Faiz Nagariya
Great man, great Aman, hope to see you sometime in future. All the best.
Aman Ashwinbhai Desai
Thank you.
Faiz Nagariya
Thank you. Next question is from the line of Bhavika Sanghvi from Nivesha. Please go ahead.
Unidentified Participant
Yeah, thank you for the opportunity. So my first question is on the RND side as, as you mentioned that you are doing this expansion in rnd side with 18 fumes already being installed. Can I get to know for what sector we are focusing? Like if you can give the bifurcation sector wise that from the R D which sector we are targeting and the second how much the portion of R D is going for the client specific for chem section and for the LSM section.
Aman Ashwinbhai Desai
Yeah, high level, we focus on all sectors. Pharma, Agro, material sciences and Oil and gas are the four main sectors. And the pipeline is filled with projects from all sectors. The current primary focus is material sciences and oil and gas and Moti. In terms of the business models, you know you could say the pipeline is 70, 75% brands, product manufacturing, exclusive manufacturing and 20, 25% 30% LFM.
Unidentified Participant
Okay. And as you mentioned in the beginning that in the semiconductor material space you are expecting the opportunity to go triple by 2030. So can you tell me what the current opportunity you are getting in this segment of semiconductor
Aman Ashwinbhai Desai
Details in terms of what exactly is the question?
Rohan Desai
We are looking at producing all the first phase of 400 ton of a particular set of molecules and where the average price would be $40 to $50 per kilo. So I think you can do the math and you will have that number
Unidentified Participant
And just the last one on the LSM side as you said that the Q1 was, Q4 was impacted because of the current situation. So are we expected to see the growth in going forward if such a situation get normalized in future? And what the growth we can expect segment wise from lsm, Gram and CEM
Rohan Desai
As of today what we think and what we are anticipating is that in the medium term the prices will not decline. And so I think for the next two quarters we are safe to say that this elevated prices will remain and it will maintain this price momentum for the next two to three quarters.
Faiz Nagariya
In terms of the business verticals, I don’t think we can give you a split as to what vertical will be growing. But safe to assume that the CRAMS and CM business models being shared in the pie will continue to increase. Especially with the commercialization of Site 3, increase in revenue from Site 4 and commercialization of Site 5. So I think this 55% from CRAMS and CEM will continue to rise in this financial year.
Unidentified Participant
Okay, got it. Thank you.
Faiz Nagariya
Thank you. Next question is from the line of Rohit Nagraj from 361 Capital. Please go ahead.
Aman Ashwinbhai Desai
Good evening and thanks for the opportunity. First question is in terms of the debt. So this year
Faiz Nagariya
You mentioned that we’ll be investing about 300 to 350 crores and there is already debt sitting on the books. Plus we will have additional revenues coming in for which the working capital requirement will also be there. So what is the
Operator
Number, approximate number that we are looking at? FY27N and what is the current cost of debt? Thank you.
Faiz Nagariya
Approximately by end of final year 27 you can expect a 200 to 250 crores additionally in the debts, not more than that. I’m sorry, on the one platform I cannot give you the cost of debt.
Operator
Sure. Second question again in terms of the CapEx. So if you could just let us know in terms of what is the remaining CapEx across the three sites which we have already announced. So effectively what would be the total CAPEX that is still remaining?
Faiz Nagariya
A
Operator
Part of it probably will be commissioned during this year and part will fall in the next year. Thank you.
Faiz Nagariya
It will be approximately all put together. The site PHI is the major site and the site one where we are expanding the R D. So all put together it will be approximately 1500 to 1600 crores in next four years. Not in one year, next four to four years.
Operator
Okay, fair enough. And any number on the asset terms for the entire 1500 crores ballpark.
Faiz Nagariya
I didn’t get you. Asset terms for site 5 is being targeted between 1.5 to 1.75.
Operator
Perfect. Thanks a lot and all the best. Thank you.
Faiz Nagariya
Thank you. Next question is from the line of Prasad Hussey from Spark Capital pwm. Please go ahead.
Operator
Yeah hi sir, hope I’m audible. So my question was regarding CRMs.
Faiz Nagariya
So for last three years if you see on annual level our CRMs contribution was roughly around 12 to 14% but this year it has significantly fallen to 9%. So my question was is there any structural development
Operator
Or you see the contribution rising again to Double digit maybe FY27.
Faiz Nagariya
Prasad, I’ll take this the in the absolute terms the cramps numbers have increased though there is a slow increase. It’s a service income so it is increased. And because other verticals like the CEM is increasing well so the percentages it is showing us 10%. Otherwise if you see on year, on year basis last year it was around I think so this time it is 107. Next year we are expecting it to grow more and this is going to grow in, in this way only because cramps is a service income and it will keep on coming when the customers want to develop some products.
Operator
Okay. And sir, I just want to try my luck any you
Faiz Nagariya
Know ballpark Mix that you look forward maybe you can guide us for for 28 at least.
Operator
Sorry, can you repeat that question again?
Faiz Nagariya
Any ballpark product mix, segment wise mix if you can give a guidance for at least FY28. FY28. But what we’re looking over the next three to four years is 70% of the revenue coming from CRAMS and CEM and 30 odd percent coming from large scale manufacturing.
Operator
Thank you. That’s it. Thank you.
Faiz Nagariya
Thank you. Next question is from the line of Pratik Srivastava from Nivesh Wisdom. Please go ahead.
Operator
Thank you for giving me the opportunity to ask the question sir. First let
Faiz Nagariya
Me just congratulate on a great set of numbers and a Great product mix 70, 30 which we are going toward. So the first question is on this fire sector now we are seeing two fire incidents. One in November, now in March. So my question is what are the additional steps we are taking to sort of address this?
Aman Ashwinbhai Desai
Yeah, thank you. Obviously needless to say safety remains the topmost priority of the company in all aspects. The November 2023 fire incident was the major one where we have spoken quite a bit about it and there’s no need to speak about it again I believe. But in terms of the current fire incident that happened was truly non event. Minimal loss to property and no injury. No casualty, no injury even to anybody. And it was completely caused by an event that wasn’t under control. It came from a neighboring premises and in fact the safety system were there in the warehouse worked exceedingly well to protect the majority of the property inside the warehouse.
And what was remaining was the very top floor which was impacted where it was only packing material. And we have obviously done a thorough study of why even that much was impacted and we are putting in measures to prevent that. And so actually this last incident was completely out of our hands away from all operations. No injury systems work very well to prevent this from escalating. And so we are satisfied with the level of response that was automatically triggered from that incident and whatever was missing has been taken care of and we continue to improve on a daily basis and safety and remains a top priority of the company.
Thank
Faiz Nagariya
You sir. I think this is it should be taken at a higher priority given again the new management which you are setting up in the company. So I think this is very important and thank you sir for. Because I think you know we truly believe in the management and the company but sometimes you know these incidents causes some confusion. Right. And chaos. So thank you for my second question is on our product mix. So first is one, the LSM revenue. So we are seeing that in Q4 our LSM revenue dropped 9% y o y despite 25% volume growth.
Now if I take that it means that there was a 25, sorry 27 to around 30% price erosion in LSM. So what can this be attributed to? Is this China driven or can you share some more color on that? Hi, not sure how you got the price erosion, but what we have seen is a price increase. There’s been a volume decrease in LSM in Q4, which as I mentioned to you earlier was that on account of the logistics issues which has then been shipped to the respective customers in the months of April and name which were done at a higher price.
Having said that, in terms of pricing as well as demand, it continues to sustain and we are seeing good progress with respect to the LSM model, especially with our current products as well as the new products which will be coming up on commercialization from Site 5.
Rohan Desai
Yes. And coming to Site 5 we
Faiz Nagariya
Are saying that we will have three new LFM products, right? At 30 to $40 per kilogram. Does China currently manufacture any of these molecules and do we know what the market price would that be for? Around
Rohan Desai
Two are Chinese, one is Japanese manufacturer. So we are competing against majorly a Japanese manufacturer. But again to needless to say, China is present in all the molecules which we or anybody else in India is making. So for that reason we have to indirectly or directly fight against China or compete against China. On the pricing side we always defend our pricing. We are never very aggressive in terms of selling at lower margins. So we always keep our pricing at par. And we also consider import duties as a delta between the Chinese price or foreign price and Asia price when we are selling in a domestic market.
Faiz Nagariya
Got it sir. And sir, we are moving towards the 70, 30 target, right? 74 CEM and CRAMS and 34 LSM. Any sort of guidance on the timeline when we can reach this distribution? No, I don’t think we would like to give you any timelines but we’re targeting this in the next couple of years. So. Yeah,
Operator
Got it, got it. Okay. Okay, thank you. Thank you sir. Thank you for. Thank you.
Faiz Nagariya
Thank you. Next question is from the line of Rohit Ori Progressive shares. Please go ahead. Hiding three questions from my side. While the tailwinds of China plus one and probably Europe plus one now they’re still supportive where some of these customers would be looking at alternative suppliers where we can play a big role as skilled specialty manufacturing platform. These Recent wins which are there, these were basically because of either pricing or chemical capabilities or maybe because of our supplier and ability.
Aman Ashwinbhai Desai
Yeah. So China plus one, Europe plus one is all happening and accelerating and increasing. So and I think the mix of all the factors that you listed, it’s chemical capabilities, proven track record, you know, we talked quite a bit about our innovation and competencies, that’s certainly the most attractive point. But also being placed strategically in India where the cost competitiveness I think they’re driving. And so combining both the competencies and innovation truly comparable to anywhere in the world, along with being a strategic location of India helps quite a bit.
And yeah, that’s what pushes towards.
Faiz Nagariya
Okay, okay, if you can take us through at site 5, how many production blocks are already constructed and probably running and how many are still yet to be constructed in phase 2?
Rohan Desai
Rohan here we have already completed the construction of four blocks.
Faiz Nagariya
Two
Rohan Desai
Blocks are already ready to run. So waterfowls and solvent trials are ongoing. I think we’ll have a good news very soon when we start the commercial production on two production blocks. However, we have started digging holes in the other four production blocks
Operator
So
Rohan Desai
That we are out of the ground before the rain hits us. And a total of 16 production blocks can come in on Site 5. And then we also have 15 acres of Site 5 which is the adjoining plot we recently bought. So over there we think around 4 another production blocks can come in. So if you combine both of both the land bank, it’s 45, 46 acres and we’ll have 20 production blocks coming in more or less as per our plan as of today, our plan in this site.
Faiz Nagariya
Okay, My last question, Dr. Aman, currently we must be at around maybe 8×8 by when do you think we’ll be 10×10?
Aman Ashwinbhai Desai
Thank you. We surveyed by edX. EdX and I think we already had about say 9 by 9 if you will and 10 by 10 should be for sure within the end of this year. And so we are rapidly accelerating the adoption of newer competencies and chemistry and technologies supplementing and complementing the original eight by eight. So that’s the focus, remains the focus, will always be the focus. Thank you.
Faiz Nagariya
Is it possible to share something on these upcoming chemistries that you’re already working on?
Aman Ashwinbhai Desai
So I mentioned in my speech earlier about integrated and focused polymerizations, specifically continuous high pressure and extreme process conditions polymerizations. That’s literally the flavor of the quarter. Doing quite a bit towards that. Okay, okay. Dr. Aman, thank you for answering. Thanks a lot. Thank you, thank you,
Faiz Nagariya
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.
Operator
We thank everyone for joining the conference call. If there are any further questions, please reach out to us directly. Thank you once again. Bye bye.
Faiz Nagariya
Thank you, sir. On behalf of HDFC securities, that concludes this conference. Thank you all for joining us. And you may now disconnect your lines.