Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Chembond Chemicals Ltd (NSE: CHEMBONDCH) Q4 2026 Earnings Call dated May. 16, 2026
Corporate Participants:
Kiran Mukadam — Company Secretary and Compliance Officer
Nirmal Vinos Shah — Chairman and Managing Director
Unidentified Speaker
Prachi Mahari — Chief Financial Officer
Analysts:
Unidentified Participant
Presentation:
Kiran Mukadam — Company Secretary and Compliance Officer
Good afternoon everyone on POP company I would like to welcome you all. The Kimborn Chemicals second analysis investor meet for quarter four and half year. Second for financial year 2526. Today on this meet we have with us from the management, Mr. Nirmal Vinos Shah, Chairman and Managing Director, Mrs. Prachi Mahari, Chief Financial Officer and myself Kiran Mukadam, company Secretary and Compliance officer of the company. We will begin with the meeting meeting with the brief opening remark followed by the presentation of the financial result.
After the presentation we will proceed to a question answer session. Participants who wish to ask question can click on the question answer icon on the bottom of your screen and post your question here. We request all participants to keep their microphone muted during the opening remark and the presentation to ensure a smooth and uninterrupted session. Please note that certain statement made during this meet may be forward looking in nature. Such forward looking statements are subject to certain risk and uncertainties that could cause the actual result or projection to differ materially from those statement.
Kmon Chemical will not be in any way responsible for any action taken based on such statement and undertake no obligation to publicly update this forward looking statement. I would like now hand over the main to Mr. Nirmal Shah for his opening remark. Thank you sir. Over to you.
Nirmal Vinos Shah — Chairman and Managing Director
Hello everyone. It’s a Saturday afternoon so whether it’s a good siesta time or should I say wake up everybody, time will tell us. So. Welcome to this second investor meet and presentation that we are having. We just concluded our board meeting a few minutes ago and we have a set of numbers that have been uploaded on the website. Our aim today is to for the new members joining this call, quickly walk you through the company’s businesses and its activities. Won’t take too long. Provide some updates on the financials, hopefully preempting any of your questions on those fronts.
And then we’ll, you know, have an open house with some questions and we’ll try to put some context. I’m sure many of you might have some questions, queries or comments, some concerns. So please do feel free to express them at the appropriate time. Kiran, can you please put up the presentation? The company presentation.
Unidentified Speaker
Okay sir, Miss Madik is along with me here and so she’ll also step in at the appropriate time. Yes. Can you please move on next slide? Yeah.
Nirmal Vinos Shah — Chairman and Managing Director
So a quick roundup. We are an old company. 50 years old. 51 years actually. Now we have a 950 team size. This 290 crores is for the previous financial year. We intend to update this presentation. Couldn’t do it earlier because the announcements to the stock exchange just happened few minutes ago. We operate three manufacturing locations. As you know we underwent demerger in the financial year under review and we are now the new entity. Kimbond Chemicals Limited which was Kimborn Chemical Specialties Limited is also listed on the NSEN pse.
Our board of directors is a mix of experience, young and very knowledgeable people. Professor Nirudda Pandit is the vice chancellor of ICT and professor of, of repute and standing. Mrs. Paraskar. She’s the independent woman director on board. A marketing and HR professional. Mr. Galani is a solicitor of long standing and Sushi Lakhani is a chartered accountant and also on various panels of international taxation. Mr. Samisha and Nirmal Shah both of us are promoter directors and post this demerger.
I’m. I’ve assumed the chair and Samir continues to be the director. Next slide please. So I just take a moment to orient you. This is the bottom, the base on which we’ve built Kanbond over the years. It’s not just something of a statement that we provide. We believe that the customer is a priority for us and that not just by saying that, but we want to deliver a lot of value and do it in a very committed way. So we understand that every customer is investing his money and we owe it to ourselves to deliver, you know, a good service to them.
So that’s what we do. Supplier of choice is again we don’t want to impose ourselves on customers but we aim to be adopted by them and choose us as they are suppliers of choice. We remain committed to growing continuously by learning and being aware of our surroundings at all times. Power of innovation is another aspect that’s always been there whether it’s in processes, in products, in technologies. Something that we want to harness to stay relevant at all times. We want to keep improving, get better at what we do and thus the setting higher standards is a core value.
And everything we understand is not done on our own. It’s all about collaboration and working towards towards the customers and partners common objectives. Usually those are getting better value, good quality and working towards increasingly now more important is also delivering a friendlier environment. So these are the six foundational and principles of Kimborn right since the early days and we stand committed to always keeping these in our sites. Yeah. Next slide please. These are our businesses.
We operate across four segments. Water technologies is by far the largest. Construction chemicals and distributions are the Other two larger businesses. And the cleaning and hygiene is a smaller business that is a JV with a German company called Calvatis. And we are still, you know, working hard to get some more traction in this business. Yes. Next slide please. We’ll talk a little more on the water technologies in the following three, four slides. Yes. So what we do is we provide chemicals, specialty products.
These are formulated to solve certain problems that a customer faces. These problems are identified by our team by doing a lot of work in the field, analyzing the water quality at the customer’s location and coming up with a recommendation that can solve pretty much like a doctor who would, you know, give a prescription on the basis of some blood tests. So it’s something similar. We also do equipment solutions, more complementary rather than being our primary focus. So if it’s about improving the cycles of concentration or better feed control of products, or better water quality in the recirculation circuit, so those are solutions that we work with.
And then a newer business, not really new, but something that’s having tremendous potential right now is the wastewater remediation using microbial cultures and enzyme systems. So that’s something that complements and it’s a triad of solutions. And all of these are backed by a very dedicated technical team and capabilities like remote monitoring, online feed and data logging capabilities. Yes. Next slide please. So we treat cooling towers, we treat boilers, we treat intake water. That’s whether it’s bore, well, it’s a lake or it’s municipal water.
We work with clarification of that. Water effluent treatment is the last leg of any industrial process where the wastewater is treated and either for recovery or for final discharge. Within these, we also then encounter situations of foaming. So we have foam control solutions, we have RO membrane treatments that prevent fouling on membranes and elongate their life. Ahu fin cleaning and drinking water disinfection are additional businesses that we are growing. We are seeing some pickup in this segment, especially driven by a lot of data centers and commercial buildings having significant, significantly large AHUs in place.
Next slide please. This is a cross section of industries that we serve. Every segment that you can see that will use water will need our products. So our customers come from all of these segments and a few more which we would have left out. Next slide please. Talking about our water bu this second half. So first H1, we did our review earlier in the year, so our revenues in this year are higher by 34% approximately. So we clocked 162 lakhs of sales in this last six months and we also hit our highest revenue ever in single month in March of about 30 30.
So Prachi, please feel free to step in.
Prachi Mahari — Chief Financial Officer
Hi, good afternoon all. So yes, revenue as compared half year, first half year to second half year. So 162 crores in second half year and volume growth from 9905 in terms of metric tons. It has grown to 14813 metric tons. So 50% increase in terms of volume for our water business
Nirmal Vinos Shah — Chairman and Managing Director
And most of this is carrying forward. So we’re starting this financial year with a strong order book for our chemicals business. Also equipment systems are of course on the order book we have but even the chemicals we have contracts running till late in this financial year before they come up for renewal. Yeah. Next slide please. In the construction chemicals business we do admixtures for concrete modifications, sealants, waterproofing. So it’s the entire gamut of solutions for the construction industry.
Our focus has been on infrastructure predominantly a lot of. So some achievements of the year were that our products are certified for use in all MSIDC projects. So and we were already had about four or five contracts post that approval sealants. We are seeing a significant growth and we intend to consolidate, consolidate our presence in that segment through our polysulfide and PUC lens. That’s a strong growing area for us. Waterproofing and repair mortars. Waterproofing is a little crowded space and some large names already dominate the retail space.
So it’s something that we do as we get projects with a comprehensive solution. As you know a service provider repair motors. Yeah, they are powder products. So distance from manufacturing is a hurdle. So outsourced manufacturing is what we’re doing currently and we’ll continue to expand that network to reach further away. Next slide. So these are the segments. Everywhere you see construction is a potential site. So every building, every bridge, every dam, every airport or a road would be a potential customer for construction chemicals.
Next slide,
Prachi Mahari — Chief Financial Officer
Coming to numbers on construction chemicals. So first half year was 11 crores and second half we were at 13 crores. So this is a 20% increase over first half year. In first half year our quarter two was slow on account of monsoon. But yes, quarter three and quarter four picked up in terms of volume. First half we were at 1988 metric turn of volume it increased by 30%. So in second half we were at 2590 metric turns of volume. We are maintaining a tight credit policy and our days sales outstanding for construction chemicals is around 88 days as on 31st of March 2026 customer bases are increasing especially in Maharashtra and Gujarat region so we have dealers, distributors which have grown in these two regions and also few projects wherein we have taken up we have got approvals from major key agencies so wherein we are approved vendors and so getting orders have become.
Nirmal Vinos Shah — Chairman and Managing Director
Yeah, I’ll just add that in this segment we are operating at a PBT of about 20 odd percent which is the. I mean I’ve. I’ve not known any of our peers in the industry operating at those levels. Of course it’s at a small base sales base but it gives you an idea as to where making up with the bottom line even if sales are not a very large part of the overall consolidated sales that we have. Next slide please. Yes so in our cleaning and hygiene business it’s a JV between Chembond and Calvatis. We do various treatments like a clean in place we do disinfection, we do fryer cleaning, we do milk tank vertical storage tank tank wall cleaning.
So we have products that are used in all these applications in bottle washing, in lubricant, lubricants for large conveyor lines for any bottling or packaging plant. In the institutional segment we have the professional series of products that are in smaller packs and more attuned to for use in kitchens, laundry and housekeeping departments of hotels, hospital, restaurants, malls, etc. Next slide please. So it’s all of these. What we consume is a typical way to explain where cleaning and hygiene products have application so whether it’s food, beverage, milk, anything of that sort or what we wear and where we live.
So housekeeping and laundry. Yes. Next slide please. In the distribution business we import and trade a lot of specialty chemicals so we have four product lines various additives for water treatment, various additives for construction chemicals typically dry mortar industry we stock and sell additives for paints and inks and then we have some polymers and sealants which we don’t manufacture but then we import and sell. Next slide.
Prachi Mahari — Chief Financial Officer
Coming to numbers on Kan bond distribution so in half year first half year we were at 9 crores in second half year we were at 12.5 crores so distribution contributed to 21 crores in terms of revenue in terms of volume for first half year we were 594 metric ton and the volume nearly doubled to 1049 metric tons in second half so Q3 and Q4 growth was highest in terms of quarterly revenue performance for distribution. So here also we are maintaining tight credit policy with days sales outstanding at 80 days roughly as on 31st of March 2026.
And here the customer base is increasing, especially it increased in quarter three and quarter four of the year.
Unidentified Speaker
Next slide. Yeah, we’ll quickly walk you through the
Nirmal Vinos Shah — Chairman and Managing Director
Financials for the year. Yeah, next slide please. The second half of this year our consolidated revenue was at 188 crores. It’s up 35% over H1. H1 was a little slow which we had mentioned last time. Various segments were subpar performance but we had the confidence that we’d be able to ramp up and our team has delivered a spectacular performance in second half. What technologies grew 36% construction 18, distribution 40% and cleaning and hygiene 15%. So you see us, you know, complete stream of green on this page because the second half was in general also for the industry and specifically in these segments that we’ve seen growth.
Some changes that we made structurally in the distribution business. We realigned our teams, introduced several new products and that has led to an addition. So some of the products that we used to were slowing down. So we’ve brought in new products to the basket. Cleaning and hygiene is now better aligned with our channel partners and segments that are being that are selling to these industrial segments. So it’s a synergy with our water business that we are now exploiting more efficiently. Our EBITDA for second year, second half at 29 crores is a 31 improvement over the first half.
And the consolidated PBT that’s post interest and tax and depreciation at 26 crores is a 33% improvement over last year. Same period, first half of this year. Most of the margin improvements are of course on lower costs. Unfortunately this story has changed post this war having started this financial year and many new product technologies have led to our improved margins. Revenue outlook continues to remain positive. However on the earnings, profitability is a little bit of a challenge right now.
We’ll talk about it a little later. Next slide please.
Prachi Mahari — Chief Financial Officer
Revenue track for consolidated business of Kimbon Chemicals. And this is quarter wise comparison for last nine quarters starting for quarter four of financial year 24 for quarter four of financial year 26. So quarter four financial year 26 the revenue is highest 101.4 crores. And if we compare quarter to quarter, so quarter four financial year 26, quarter four financial year 25 and last quarter four. So again it’s the highest in terms of all quarters. So the track remains positive and on the positive growth for all quarters.
Next slide.
Nirmal Vinos Shah — Chairman and Managing Director
So even within this financial year. Kiran, can you just go back one slide one moment? Yeah. So this financial year every quarter is an improvement over the previous and every quarter this year has been an improvement over the same quarter in the previous year except Q2 which was a small aberration that we would have. Yeah. Next slide
Prachi Mahari — Chief Financial Officer
Profitability track. So this is EVITDA and profit before tax again quarter wise for last nine quarters. So quarter four, financial year 26 EBITDA is 15.7 crores and PBT is 14 crores. So highest in this financial year. If we compare from quarter one to quarter four and also yes highest of the last nine quarters. What we have Next slide. Kim Executive summary for financial year Year on year so this is the year on year comparison. Consolidated revenue for financial year 2026 at 326.15 crores it is higher by 12% or last financial year.
Nirmal Vinos Shah — Chairman and Managing Director
So this is a significant improvement. And most of this is led by the water business. As you’ll see the first half of both the construction and the distribution businesses were low. And we mentioned last time that the 15% decrease in that you see here is primarily the first half the prolonged monsoon. It started in May and ended around October. That took out two and a half full months of sales for a lot of projects. Most of the construction activity was impacted. Distribution we had mentioned earlier was a change in the team as well as the product mix.
However both these businesses have started tracking back and second half as you saw have already been larger segment. EBITDA for the full financial year is at 51 crores up 7% over prior. Consolidated PBT is at 45 odd crores 7% improvement over prior. All of these businesses are having strong sales pipelines and we see that the sales growth outlook looks positive across all these business units. Next slide please. Water continues to be our largest segment 87 comprising 87% of the pie. We intend to bring the portion of the total pie a little lower but in the financial year this is the fastest growing business.
Construction is a 7% of total distribution 6% and the cleaning and hygiene is a small 1%. And all of these by and large are tracking to the previous year. This 3% differential has been taken away from the construction, chemicals and the distribution businesses. Next slide please.
Prachi Mahari — Chief Financial Officer
This is a year on year comparison of revenue, operating EBITDA and profit after tax. So strong revenue growth in financial year 2026 as compared to earlier two years. Revenue at 326 crores, operating EBITDA at 46.3 crores and profit after tax at 34 crores. So higher than earlier two years. And in terms of Percentage margin to sales, EBITDA is 14% of sales and profit after tax is 10% of sales. Next slide.
Nirmal Vinos Shah — Chairman and Managing Director
So to conclude this presentation and open up the floor for questions. Water bu. We are entering this as I mentioned earlier with a strong order book for chemicals as well as for the equipment. We have things lined up on the bioremedia. We should be able to start seeing a larger contribution from that wastewater treatment small subsection construction chemicals were impacted but we’ve taken action this year to try to recoup and surpass the sales that we’ve had in past several years. We’re also ramping up our team and presence.
Material costs started increasing from March end of February. March. A lot of volatility in metals before that. So some key materials that we use are based on metals. So zinc and molybdenum and stuff like that. All of them had been tracking up and post war declaration. It was a very challenging period. We had limited inventories of surplus inventories but had to ration them across customers. We kicked in our force majeure very quickly and proactively tried to manage the situation. About 30 odd percent of our total business in the water business comes from public sector units and none of them had accepted a force measure until the government just declared it two weeks ago.
And hence we had a challenging time delivering good customer service and maintaining product flow to other customers as well as them. But we were able to balance those expectations with consistent deliveries of a lower volume. So volumes could have been higher but we constricted our supplies and we are seeing a little more impact in this financial year. And we’ll closely monitor, we are prepared with certain contingent actions in case this situation prolongs beyond another month. So on this note, I think we come to an end to the formal presentation part of this meeting and we’d like to take some questions and try our best to answer them hopefully satisfactorily.
Unidentified Speaker
Kiran, how does this go? You’re going to be unmuting and allowing the questions or. Yeah. Yes sir. Okay. Hello, Nasir Investment. Please ask your question. Yes. Good afternoon Nirmalji. And congratulations on crossing the 100 crore mark in the quarter. Sir, I have a few quick questions in terms of. Number one is would you see the current quarter trend continue into the next year? Sir, in terms of at least the next four quarters being 100 crore plus.
Questions and Answers:
Nirmal Vinos Shah
Simple answer. Yes, it’s possible. But some seasonality comes into this business. Quarter one is not as fast as quarter four but on a quarter to quarter. Yes. If you compare Those. Yes, we see it to be an improvement over the prior year throughout.
Unidentified Speaker
And sir, in terms of other income, I think we have a small negative. Is that an accounting adjustment or what is it because we, we have certain balances on the books and we account for interest. So how come it is negative this quarter, sir,
Prachi Mahari
It’s an accounting adjustment. So that is on account of net gain and net loss differential. So net gain last 31 December was lower whereas net loss on fair value of investment is higher. So that is a fair value adjustment. Yeah,
Unidentified Speaker
Okay.
Nirmal Vinos Shah
Yes, it’s a fair value adjustment.
Unidentified Speaker
Okay. And sir, our EBITDA margins have been from 15. 15, 15.5, 16%. You mentioned that you see a slight pressure because of input cost. How many percentage point would that be, sir? And I believe in the past week, 10 days chemical prices have returned to more saner level, sir. So would it be possible for us or maybe if things improve in another week or so that our EBITDA margins be maintained at maybe the last year levels Overall,
Nirmal Vinos Shah
Excellent question. I was hoping you someone would ask that gives me a chance to give a little more perspective. So historically, I mean this is not the first time we’ve seen some cost pressures. The magnitude is more intense this time. But what happens is that when costs increase it takes us about a couple quarters to pass them on fully. And there are multiple factors in place. Some of our contracts that come up for renewal in the financial year in April. So most of them we have made at higher value considering the higher baseline cost.
So and those plants cannot run without product. So they have to take a decision. So if they lock in, if we lock those in at a higher value, then the margins will start improving. The total impact is, I mean I don’t know whether I can give you up to the day updates, but in the immediate month we saw about a 3% impact on our margins due to these haywire costs. Your third part of the question was where you’ve seen some chemical prices return to normal. Unfortunately we are not seeing them coming to a much lower level.
Yes, they’ve softened because some import cargo has arrived or some plants that were under shutdown have restarted. But they are still tracking 100 and some materials are at 140% and 100 and I mean we have a list of 15 A group items which are all above 120%. So yeah, so this is going to impact us. But the beauty is that we’ve always had this situation. And when we lock in contracts at current prices costs the day they start Softening the margin instantly starts upticking
Unidentified Speaker
Sir.
Nirmal Vinos Shah
Yeah. And if I can add one more
Unidentified Speaker
Question sir. Sir, water is a large percentage of our business. 85, 86%. Do you, do you see that continuing? And if you could throw a bit of light on your hygiene business like you said, water of the milk, tank cleaning. So do you supply the hardware for this all also or you just supply the consumables for this business? And how does that, that work? That model?
Nirmal Vinos Shah
Yes. So as of now we’ve been doing only the chemicals and some small supporting equipment but we’ve won some significant, I mean I wouldn’t call it significant but we won quite a lot of business in the dairy segment, milk processing plants especially in southern part of India and our product supplies, you know would start coming up in the dairy segment. Most of these have pretty elaborate cleaning in place systems so if at all they need, we would need to supply some foam cleaning machines etc but nothing beyond that.
So that’s a segment that we have now closely integrated with our water treatment middle market segment. A lot of our channel partners are taking up these products for sales and we are seeing synergies play out now.
Unidentified Speaker
And about the water, you expect water to remain.
Nirmal Vinos Shah
Yeah, yeah we of course we don’t want anything to decrease, we want the other businesses to grow faster. So I’d be very happy if water comes down to 80 and then 70% of the total pie. With the pie expanding more rapidly with the other businesses. Yes,
Unidentified Speaker
But
Nirmal Vinos Shah
All opportunities in all businesses are, I mean they exist.
Unidentified Speaker
Sir, which other players. See you are one of the largest in, in this niche, the water niche, you and Vasu Chemicals. Which other players are there which have a large pie? I would say more than 10% kind of stuff. Sir.
Nirmal Vinos Shah
Sir, all the companies that you can think of operate in this business. The international companies like Ecolab, Nalco, Solenis, there’s Suez, that is now a part of Veolia. So the three global companies operate here. There’s Iron Exchange, there’s Thermax. They are all very active, they have good teams, good business networks and are doing well.
Unidentified Speaker
Thank you. I’ll come back in the queue.
Nirmal Vinos Shah
Yeah, thank you very much. Yes,
Unidentified Participant
Yes, Sorry, I was on mute. Good afternoon Nirmalan team. Firstly I’d like to commend this the way you guys have you know summarized the results and the commentary and it’s a great start for you guys. Just want to touch upon firstly that when we demerged from Kanban material and Kanbond chemicals or the demerger obviously the Bigger objective being each of the brothers could get focused to their businesses. So in that light, along with as you, you know, you gave your commentary on water. But are there any new products that you guys have introduced and over the next say two to three years would we see a decent contribution coming from that is my first question.
Nirmal Vinos Shah
Yes, you know, so what this is a little tricky for me to answer because there are some incremental technological changes that we keep making in the products and our expertise lies in solving problems. So if a customer expresses that he has an issue, we can dive in and start working on providing a solution. So when the next such big opportunity will come, our teams keep scouting for it. But yeah, so one is that is customer led innovation and development of a solution. The other one is something that we work on, develop and go to the market and try to launch.
So currently we are working on the first option. So three new applications that we picked up in the last year have been all proof of concept, trials have been completed, we’ve been approved in the largest of these customers and they are on the full commercialization pipeline and we expect those. So there’s a little bit of uncharted territory for us as well as for the customer because they’ve never had, they’ve never seen this kind of an improvement. So they are also going a little guarded and but that confidence and trust will build up in this year and we will see some larger upticks from those new three new solutions that we have developed.
Unidentified Participant
Okay, thanks. And I noticed that the capex this year has shot up to almost 20, 21 crores or so now is that for the existing capacity ramp up or anything? Any observations there?
Nirmal Vinos Shah
I think what primarily is the full year of impact of the demerger. So some of the assets that were on the common books and could not have been very critically identified or tagged, they have started coming in and of course the office building, the improvements that we’ve done and the the entire renovation of the office building to house our teams. So that has taken up but 21 crores
Prachi Mahari
PPE which has come into our books. So this is the demerger effect.
Unidentified Participant
Okay, great. And just lastly as you already have answered this nirmal but just touching upon it that looking at the environment currently, do you still believe that in this, if this environment were to persist for a bit more, do we believe that the outlook that you’re given that is basically from new business wins or incremental wallet share increase? So is that where the confidence is coming from for the growth for the coming year.
Nirmal Vinos Shah
So yeah, the I’m of course when I say this, it’s all things being equal. So current situation, the scenario, if the industry continues to grow, I don’t see any hiccup in the growth momentum. At the most there would be a temporary impact on our margins. Again that is not something that we overly get worried about because over time, over a couple quarters those start reflecting back and then we again have a tailwind effect where we continue to get, you know, those higher margins for few more months until another desperate competitor starts dropping prices.
So I think from that perspective the growth story continues and we are the government, after seeing them for so many years, they’re not going to slow down on Capex because that’s a better way to pump the economy rather than just giving some freebies. So we believe that sense will continue to drive businesses for us.
Unidentified Participant
Thank you so much and good luck to the team. Nirmal.
Nirmal Vinos Shah
Thank you. Jinhao.
Unidentified Speaker
Yes. There’s a question from Himanshu. Hello. Am I audible? Yes, you are. Yeah. Yes. Yeah. So my first question was on the water business. Now when Force Majuri has been declared in the fear in the period agreements, what we have with our clients, okay, can we raise the prices for the raw material or the fixed price contract remains. How does it now move ahead or so private sector,
Nirmal Vinos Shah
Private sector we’ve been quite successful and we’ve approached this that this is a temporary phenomenon. So we need at least a temporary price increase. So several customers on the private sector have already given us increments for three months and which would continue if the situation doesn’t normalize and in case it worsens then we have to go back to them and seek higher increases. Public sector is a different story. They are refusing to amend the terms and for that then our only hope is that the situation starts getting better.
But several public sector units operate on an April to March calendar for their annual contracts. And where we don’t have multi year contracts then those have already come up for tendering and we’ve already been submitting bids at a higher price.
Unidentified Speaker
And one more thing, generally retention of client in the one year or two year period contract is difficult. More in inflationary periods or on the when the markets are much more sanguine or the prices are not moving too much. How has been the historical situation be and your experience? Anything? I’m
Nirmal Vinos Shah
Sorry, I actually didn’t fully understand your question.
Unidentified Speaker
No. So I was saying that how difficult or easy is to maintain the client relationship in terms of the period contracts or long term Contracts fixed prices in inflationary periods. Okay.
Nirmal Vinos Shah
Yeah. Do we tend to see more
Unidentified Speaker
Loss of customers in inflationary periods or in a more stable price period?
Nirmal Vinos Shah
No. No. So this is a business where customer stickiness is important. If you don’t mess up with your performance then the customer is ready to keep working with you. Private sector looks at how honestly you’re doing your job and how much money you’re saving them and then giving 5%, 8%, 12% extra for a temporary period is not a challenge for them. In public sector unfortunately they have a vigilance team that’s always monitoring and the, you know the law. The their general terms and conditions state that you cannot favor any single party.
So unless you don’t rebid then you know there is no other alternative. So in those cases either we have to just lay low, keep doing our work and watch very carefully how we are performing and other ways then to talk to the management and say we just can’t sustain at this cost and price and then come with a rebate. So there it might be driven by us not being able to supply and because a force majeure has been declared by us and also by the government, there is no risk purchase fear where they will buy from anyone at our cost.
So that fear is now out of the equation.
Unidentified Speaker
Okay. And one small question, FY26 the water chemicals which has done pretty well. Okay, can you elaborate on what were the two, three things which helped us do pretty well means is it more client addition which helped or new products or something on that will be helpful to understand the situation. Yes.
Nirmal Vinos Shah
So new client addition is the primary driver and hence you see the increase in volume. So definitely that and we have those contracts lasting till the mid of this year. So that volume and you know sales trend is already provided for in this financial year in our budget sales budget for the team. So yeah it is driven by new customer acquisition and volume growth. Price growth did not play a factor in this incremental grow in the growth for the financial year this year. Hopefully though there will be a negative pressure on the margin.
Some price increases that have kicked in would contribute to negating the margin loss to some extent.
Unidentified Speaker
Okay, okay, I’ll join back in the queue for further queries.
Nirmal Vinos Shah
Thank you very much.
Unidentified Speaker
You have the query. Am I audible? Yes, yes, yes. Nirmandi, we have around 65 crores on books. Any, any plan for that? Any, any apart from the current year Capex, any further deployment or any additional plant setting up is planned?
Nirmal Vinos Shah
No, no, nothing to that extent but currently we Are we are preparing to for the worst eventualities? The situation is unfortunately not very readable to us on this call also. So we are staying ready for everything. We intend to deploy some of it in network growth and geographical expansion.
Unidentified Speaker
And sir, what percentage of our top line would be Contributed by top three to four customers? I mean does any customer command more than 10% of our sales?
Nirmal Vinos Shah
No, currently, that is, we have overcome all those challenges. I would call it a challenge because I don’t want to be too heavily dependent on a few. So it’s a very good distribution that we have and the 8020 rule could apply. But that’s a lot of customers in that 20%. It’s not one. So no one customer of ours would contribute more than 25, 5% to 6% of total revenue.
Unidentified Speaker
I think. I think that’s. That’s a very healthy mixer.
Nirmal Vinos Shah
Yes, yes.
Unidentified Speaker
Thanks a lot sir. And, and best of luck. And hoping to see all four quarters cross 100 crore, sir.
Nirmal Vinos Shah
Yes, yes, thank you very much. If you come again across any prospects needing water treatment please refer them on. We’ll do
Unidentified Speaker
Sir. Definitely. Definitely. Thank you. Hello
Kiran Mukadam
Vivekji.
Unidentified Speaker
Hello Mr. Vivek. You have a question. Please unmute yourself and ask your question.
Unidentified Participant
Can you hear me?
Unidentified Speaker
Yes.
Unidentified Participant
Yeah. Hi. Just had a couple of questions. I was just seeing the presentation and in both the construction chemicals as well as the distribution business the realization seems to have gone down in H2 over H1. So any specific reason for that? In construction chemicals you had about 55,584 per metric ton in the first half and then it fell down to 51274 per metric ton. And in distribution you had 1 lakh 50,842 in the first half and 1 lakh 19,000 odd in the second half. So any specific reason for that?
Nirmal Vinos Shah
No. It’s usually the product mix and a lot of these would be seasonal. So if admixtures is selling more then you’d have a lower price realization in the construction chemicals. And if sealants sell more then you have a higher price realization. And likewise in the distribution business too. If it’s depending on the customer demand we. This is a purely distribution trading business. So yes, it would be the product mix driven
Unidentified Participant
And in. Sorry, I missed the water chemicals part. So there also you’ve seen a fall in the realizations?
Nirmal Vinos Shah
Not really, no.
Unidentified Participant
So there is broadly stable. And can you just confirm how much is the realization broadly in water chemicals?
Nirmal Vinos Shah
I’m sorry I don’t have the number of hand in the Presentation
Unidentified Participant
If it
Nirmal Vinos Shah
Was total value and divide by volume.
Unidentified Participant
Right. So if you could share the presentation as well, that would be helpful.
Nirmal Vinos Shah
We’ll put it up on the website, of course. Yes, yes, it’ll come.
Unidentified Participant
The second question I had were you were saying that it’s a little difficult to get price hikes for the material price increase in the public sector. So how much of our business is public sector and how much is private sector?
Nirmal Vinos Shah
So in the water business roughly about 28 to 30% is public sector driven.
Unidentified Participant
Okay. And these are what generally these are municipal contracts or. No, no, we. No,
Nirmal Vinos Shah
No, we are not at all into municipal segment. Primarily these would be power plants and refineries.
Unidentified Participant
Okay.
Nirmal Vinos Shah
So yeah, the Indian oils. Yeah, Indian oil. The hpcl, BPCL in the refining space and NTPC and NPC in the power segment.
Unidentified Participant
Sure. And one last question from my side is how much volume growth are you seeing basically, especially in the water chemicals business? I mean I know pricing depends on what you finally get in terms of raw material pricing and everything. But generally how much volume growth are you seeing on the construction chemical side?
Nirmal Vinos Shah
So in all the businesses I think we are, most of the delta in the sales is coming from volumes last so many years. I don’t remember price increases contributing to any enhanced revenues to that extent one or you know, hardly a small percentage of, you know, fraction actually is driven by price increases. So almost all of it is volume driven. Yeah, Brachi.
Prachi Mahari
First half year to second next half year it was 30 volume growth. But this high increase was mainly because Q2 was lower. But coming to quarter one of this year we foresee around 15 to 20% of volume growth in construction chemicals
Unidentified Participant
And in water chemicals.
Prachi Mahari
Water chemicals. It would be roughly around 10%.
Unidentified Participant
And you would have, I mean budgeted how much volume growth for the full year. Is that possible to be shared
Prachi Mahari
Around?
Nirmal Vinos Shah
I think we’ll have to refer. Actually that’s not something we were really very prepared for. We’re more prepared to discuss this past financial year. Yeah. So the budgets, we’ll get to that.
Unidentified Participant
Sure. Okay, thanks a lot.
Nirmal Vinos Shah
Yeah, thank you. Vivek.
Unidentified Speaker
Hello Lalaji, please, please ask your question. You are on mute, sir.
Unidentified Participant
Hello, good evening. And the team. Congrats on the results. Good growth on revenue side. Good to see after a long time.
Unidentified Speaker
I’m sorry sir, your voice is very feeble. Can you please speak up a little bit?
Unidentified Participant
Hello. Is it better now?
Unidentified Speaker
Ah, much better. Thank you very much.
Unidentified Participant
Great. Good evening Nirmalji and the Kimbon team. I have a few questions. Number one Is in the previous con call you had said that you aspire to test thousand crores as a company within four years specifically. Yes,
Unidentified Speaker
Yes.
Unidentified Participant
I would like to understand how we are looking to achieve that number. Broadly broad direction given that our current sales is 330340 crores. So it’s, it’s a. Almost a tripling of sales and going by the historical growth of the company which has been around 10 12% it’ll be good to understand what, what, what will change. Sure,
Nirmal Vinos Shah
Sure. Number
Unidentified Participant
Two.
Nirmal Vinos Shah
Yes. Okay, go ahead.
Unidentified Participant
Can I ask all the questions or you want to answer one by one?
Nirmal Vinos Shah
No, no, go ahead please.
Unidentified Participant
Second question is Chembound Chemicals. As a group the DNA has been profitability and good receivables management etc. So when I look at say a water chemical business if I compare with almost all the competitors I see we have the lowest margin. Something that you know, I would want to understand because when you said that Construction chemical makes 20% PBT margin which is generally a commodity business. Right. I would like to believe that. Why can’t we make similar margins in the water business which looks much more value added in nature and more critical.
Unidentified Speaker
Yeah,
Unidentified Participant
So that’s the second question. Can we touch 20 PBT margin in the water business? If no, what’s the reason and if yes, you know, why are we not able to do that right now today? What is leading to the, you know, lower margins?
Nirmal Vinos Shah
Yeah, sure, I got your point. Yes. Also
Unidentified Participant
Allude that you know one of the competitors, Vasu Chemicals which I think got acquired by. By a European company I believe so their numbers say that they make 30 EBITDA margins and which. Which looks very high and we are almost in the similar business. Right. So would. Would love to know about the margin structure. Right.
Nirmal Vinos Shah
I. And because there’s a little constraint on time, I’ll just quickly answer these three questions that you already posed. So thousand crore is. Yes, it is an aspiratory number. We are trying to to ensure that we have plans in place to get to that number. It’s not something that we are saying we will get to but yes, various strategies are in place. As I mentioned the geographical expansion, some markets that are responding favorably, we are activating more aggressively. Secondly, on a larger base with more reach, organical growth itself will also start contributing.
The construction chemicals business is compared to the market potential a very small business. So that’s the top priority that will contribute a larger pie of our largest lice to the pie. And the cleaning and hygiene has been operating at a subpar level for the past seven years. So that’s something that with this integration with our water treatment technologies team, we are seeing some early signs of traction and we hope to be able to amplify those. So that’s on the thousand, 000 crores. On the profitability.
I am, I don’t know where you’re getting these numbers from, but when we compare to all our peers in this industry, we are almost at par, maybe a half a percent point up or down. And most of them are driven by, you know, the, the mix of the business that we get. In some years, if we get more successful with some tenders, there would be a small depression. But in general, this business is a people business and a solutions business. So a lot of our cost, if you look at about almost 18% of our top line is into employee cost as opposed to, you know, 14% or something like that in the other businesses.
So that’s one reason that causes this. You mentioned about Wasu. Yes. It’s been taken over by an Indian company called Dove Kettle. And if I look back historically at their margins, they were at about 6.5 to 8% at best. And it’s only in the past two years that we’ve seen some sudden magic that’s happened and it’s started lifting up to 25 and now 30%. So I really don’t have access to their financials. So maybe being from this faculty and field, if you can analyze what changed for them in the past two years, it would.
And share that with us. We’d really appreciate that help from you. Yeah, I think there’s a time just for the last question. Mr. Anut Sharma, if you can please ask your question.
Unidentified Participant
Yeah, thank you so much. Just on, on the water segment first, see there are a couple of players in this, international players, domestic players, large. What is our positioning here and how is that? If, how has that evolved over the past three, five years? That’s question number one.
Nirmal Vinos Shah
Okay.
Unidentified Participant
No, I’ll ask one by one if you can answer this.
Nirmal Vinos Shah
Okay. So our position is that the customers trust Kanbond for its product performance and the service that we deliver. They prefer Kanbond over any multinational and any other Indian manufacturer and supplier of these products. So this is something I can say with confidence because there are some public sector units that you know, are so scared of shifting because their productivity, certain lines in their plants are profitable only because, you know, their water treatment is doing a good job. And the day that trips then, so typically in the fertilizer space, you know, the most of the money is made from the chemicals rather than the fertilizers which is a subsidized business.
So. So when it comes to real solutions and consistent performance, people will always prefer chembot. So that’s our positioning. We don’t. And that’s also what I mentioned about our core values. I think that’s something that’s within the DNA of every techn service and salesperson in our organization. Right. Since the day the company was founded in 1975. Yeah, all right,
Unidentified Participant
Yeah, that’s helpful. And second question is on, on the construction chemical. As you rightly said, it’s a, it’s a huge market and we, we do want to get big over there but what is the area or what is the strategy there which can help us increase our positioning or our market share?
Nirmal Vinos Shah
Yeah, so. Yes, yes. So with revived attention to this business we’ve started getting approvals from large government agencies and consultants. So that’s an enabler for our sales team. We’ve been able to have cost competitive product development and production with debottlenecking some of our production lines. So that’s a segment that will grow for us. The sealants business, the curing compounds and surface treatment products admixtures, I don’t see it scaling up too much because there are again it’s a bulk product and freight is a big cost.
So we, unless we you know, have remote manufacturing or toll manufacturing, we don’t see ourselves scaling up in that and we don’t want to get into that toll manufacturing for liquid products yet. But the sealants is another thing and all the approvals that we have started obtaining is going to help us and we’ve not ramped up our team in a long time. We’re very focused on improving margins and profitability and now that we’ve done that it’s time for us to get back. So last seven, six, seven years we’ve been saying that we’re very, very credit conscious on that business.
Consolidation has happened and maturity has also crept in. So and we’ve also sensed how to gauge the, you know, credit worthiness of a customer. So that’s, these are the factors that, that makes me a little more bullish about that business now. Again,
Unidentified Participant
Excellent. Congratulations. Just one hygiene factor. Hygiene number. What is the difference between, what is the breakup between private and non private in water segment chemicals,
Nirmal Vinos Shah
Private business is roughly about 70% of our total revenue. 28 to 30% is public sector here.
Unidentified Participant
Excellent. Okay, thank you so much and wish you all the day.
Nirmal Vinos Shah
Thank you very much. All Right. I think we’ve reached the end. Himanshu, you have one last quick question then please go ahead. Otherwise.
Unidentified Speaker
Yeah, hi. My question was, see historically when we, we also tried our expand our business outside India. Okay. Through inorganic and putting some businesses on. What is your thought process currently means outside India? Do you want to go or not go? Inorganic versus organic. Any. First is. Yeah,
Nirmal Vinos Shah
First is we had a JV in Malaysia which didn’t really work out well. So we acquired that piece and it’s a hundred percent business. It’s continuing to maintain it at that level. Health in Thailand, we’ve been able to add new accounts, new customers. So that’s a segment where we also are growing our team. We have about I think six or seven employees there and the customer base and the volume is increasing. So that’s a focus that we’ll continue to maintain. Nigeria was another pocket where we were doing significant export business for the water treatment products.
We discontinued that because the customer did not want to operate with LC terms and wanted open credit. At that time we weren’t, you know, the Nigerian economy wasn’t really firing on all cylinders and the payables from their side and receivables at our end would have been a challenge and we didn’t want to get into all those RBI issues on, you know, not collecting the fund. So we went away from that business. We walked away in fact. And just as an update to you, our competitor who walked in and through the ex employee of us who joined a competitor, he got them that business and they are having more than 15 to 18 months of receivables and are being arm twisted.
If they don’t supply, they don’t get paid. So I think we turned out pretty well on that one. So it will be driven by those kind of things. So we’re looking at some partnerships in different geographies. Those who bring in some value in either through market access or through a customer base and selectively we’ll keep picking them up. We are not in any rush to get into any rash decisions. We’ll, we’ll keep doing things slowly but steadily.
Unidentified Speaker
Thank you. Thank you. Yeah,
Nirmal Vinos Shah
Yeah. Thank you. Thank you very much.
Kiran Mukadam
Thank you all. Thank
Nirmal Vinos Shah
You. So I call this meeting to a close. Thank you very much for joining us and forgoing your afternoon nap on a Saturday. Take care and have a nice weekend. Bye bye.
Unidentified Speaker
Yeah, thank you all.