Clean Science and Technology Limited (NSE: CLEAN) Q3 2025 Earnings Call dated Jan. 30, 2025
Corporate Participants:
Siddharth Sikchi — Promoter, Executive Director
Sanjay Parnerkar — Chief Financial Officer
Analysts:
Priyank Chheda — Analyst
Sanjesh Jain — Analyst
Arun Prasath — Analyst
Ankur Periwal — Analyst
Pankaj Bobade — Analyst
Jay Patwa — Analyst
Huseain Bharuchwala — Analyst
Abhijit Akella — Analyst
Jason Soans — Analyst
Rohit Nagraj — Analyst
Jash Gandhi — Analyst
Srishti Jain — Analyst
Krishan Parwani — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’25 Earnings Conference Call of Clean Science and Technology Limited. We have with us on the call Siddharth Sikchi, Executive Director and Promoter; Sanjay Parnerkar, CFO; and Pratik Bora, Vice President.
As a reminder, all participant lines will be in a listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you read assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Siddharth for opening remarks. Thank you, and over to you, sir.
Siddharth Sikchi — Promoter, Executive Director
Thank you so much. Good evening, everyone.
I am happy to connect with you all-in this new year to discuss the business performance of our company for Q3 FY ’25. I would like to say these are difficult times for chemical industry. Despite that, Clean Science has demonstrated robust cross-cycle EBITDA margins and firm growth plans underpinned by its technology progress and customer-first approach. Our business performance continues to reflect the enduring fundamentals and agility.
Regarding the standalone financial highlights, for quarter-on-quarter comparison, on sequential basis, the revenues were steady with domestic and international sales mix being 40% and 60% respectively. Favorable product mix and utility cost increased EBITDA by 8% to INR102 crores, while EBITDA margin strengthened to 45%. Profitability of the company increased by 10% to INR74 crores with margin being 32.5%. For year-on-year comparison, the sales increased by 20% and this was primarily volume-led. Improved sales led to strong EBITDA growth of 18% during this quarter. Consequently, company reported 19% growth in profitability for the current quarter.
Regarding consol financial performance, company recorded INR240 crores sales for quarter three, which is 23% higher on annual basis and steady on sequential basis. Consolidated EBITDA stands at INR98 crores, which is 14% higher on annual basis and 10% on — higher on sequential basis. EBITDA margin for the quarter came in at 41.5%. For the quarter, profitability was INR66 crores, which is 5% higher on annual basis and 11% on sequential basis.
On business update, let me first start to discuss the has HALS, first, I’m really pleased to report that during the quarter, HAL sales volume scaled to approximately 190 tonnes, while December exit-rate was 200 tonnes. The HALS product offering continues to diversify with revenue contribution coming in from HALS 701-770-622 and the newly-launched 944-119 and 783 during the quarter, company commercialized two new products: DHDT, a pharma intermediate, which is used for manufacture of lamivudine.
Company Clean Science is key domestic manufacturer of DHDT, leading to import substitution-led demand traction. With commercialization of DHDT, value proposition of pharma segment further strengthens, further by creating cross-selling opportunities with our DCC customers. Another product for performance segment which we added is BHT. It further strengthens company position in segment as it is being synergistically sold along with BHA, TPH2 and Palmited. A little bit on-sales profile. The contribution from performance, pharma and agro continue to be 69%, 18% and 13% respectively. During the quarter, performance segment witnessed strong growth on annual basis amongst all segments led by increased volumes.
Regarding capex, we have incurred capex of INR160 crores during first-nine months FY ’25, which was primarily towards investment in our subsidiary Clean PhenoChem. The construction of the new performance chemical product is expected to — we expect to commercialize the production by H2 FY ’26. In ESG, we have expanded our solar capacity by adding 400 kilowatt rooftop solar plant at our subsidiary. We have recently uploaded an updated sustainability report for FY ’24 on our website based on GRI standards. I am pleased to inform that Board has approved interim dividend of INR2 per share.
Overall outlook, we look-forward to increased growth in revenues led by scale-up of recently commercialized HAL series and also the pharma intermediates.
Thank you so much. We are open for Q&A now.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of from Priyank Chheda from Vallum Capital. Please go-ahead.
Priyank Chheda
Yeah. Hi, team. Congratulations for great set of numbers. My question is on — we were planning to take some price hike somewhere in December. Post December, have we taken that? Is that the reflection of gross margins quarter-on-quarter improving or is it because prices have slightly fallen down? So without price increase also is what the gross margin gains have come?
Siddharth Sikchi
And also because of the dollar movement of INR87. So we have not increased prices. Our prices have still remained constant. Volume has increased. But of course, as you said, there has been a slight reduction in raw-material price and of course, the dollar impact which has naturally, which has given us the edge.
Priyank Chheda
Perfect. Now coming to MEHQ, PBQ and TBHQ. MEHQ, what has been the utilization based on the capacity — based on capacity. Has that improved slightly? PVQ and also TBHQ, if you can highlight? In PVQ, we were supposed to restart. In last quarter somewhere we had given some update, update on that also will be helpful.
Siddharth Sikchi
So on performance segment, our utilization is around 65% 70%, pharma agro is also around 65%, FMCG is around 80%, okay. Regarding PBQ, because we are still struggling and we were not able to achieve the quality which is needed by the customer, hence, we have now decided to drop that product product entirely. And in this same-facility, we will be starting another product, which is called as acid which is an intermediate used to produce pigment yellow and there is — this product is not made in India, currently imported from China.
Our product from lab and pilot have been approved by large customer like Sudarshan Chemicals and we expect to begin this production of acid by in the next three months’ time. So same equipment of para benzukinone will be converted into barbiteric acid. So no capex little bit here and there, but we will start with this new product.
Priyank Chheda
Great. Great to know that quick decisions and quick improvisation. So, anything on what would be the quantum size of the production and the realization from this product that we can expect?
Siddharth Sikchi
So the gross margins are decent about 50-odd percent. But on production, let me take it on plant skin to really understand how much production can be made. But the same set of equipments we have mapped it, the same set of equipment can exactly be used to produce this new product.
Priyank Chheda
Okay, great. And just last question, did we have certain revenue contribution from the new pharma intermediate product in this quarter as a — sorry?
Siddharth Sikchi
Are out to customers for evaluation. So I think for this quarter three, there was zero impact from the DHDT Pharma Intermediates.
Priyank Chheda
Perfect. Thank you. All the best.
Siddharth Sikchi
Thank you.
Operator
Thank you. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go-ahead.
Sanjesh Jain
Good evening. Thanks for taking my questions. First on the cost side, bookkeeping question, there has been a sharp decline sequentially. This power cost decline can be attributed to the solar plant or is this something else? And why the other expenses have dip sequentially by 10%?
Siddharth Sikchi
Yeah. See, sir, the other income has come down, because we lost price.
Sanjay Parnerkar
Other expenses is power and fuel.
Siddharth Sikchi
Power and fuel came down because there was a slight reduction in coal prices. Hello?
Sanjesh Jain
Yeah, yeah, I can hear you.
Siddharth Sikchi
Second was that out of in this last quarter, five days we were off for Diwali production. So there was production was also stopped and hence the coal consumption was not there. So that is why coal consumptions were lower by 7% because of these two parameters.
Sanjesh Jain
Got it. And other expenses?
Sanjay Parnerkar
Other expenses, the largest part is power and fuel. So that is essentially driving the lower other expense number.
Sanjesh Jain
Okay, okay. That’s the same question. Got it. Got it. And if I look at the subsidiary number, even at base sequentially they have come off, while I understand there is an increased offtake in the HALS that should be from our existing plant in the Clean signs. Any anything you want to talk about the subsidiary performance?
Siddharth Sikchi
Yeah. So what happened is during this quarter, we also produce 770 in our parent company. So what we did is, Sanjesh, we made maximum 770 in our subsidiary — sorry, in our parent company. And in our subsidiary 770, we established this new product called as BHT. We didn’t need so much capacity because the plant is still starting up, you know. So we thought why — I mean, why not use this facility to add-on another product. So with very minimal capex of about INR2 crore INR3 crores, we entered into this new product, BHT and we will be making this product on campaign basis for few of our customers who are also our current customers of BHA.
Sanjesh Jain
And how much capacity or revenue potential the BHT will have for us because I think it’s a product…
Siddharth Sikchi
But now what is happening is as and when — so of course, because it was taken for the first time, so we were also — we had some teasing issues and all, but now we are contemplating to produce about 3,000 to 3,000 ton on annual basis. So it’s about the $3 [Foreign Speech]. So about 2,000 to 3,000 ton if we are able to make, so this is about INR60 crore 80 crores of revenue, but the best part is that there is no capex needed and it can be made in our existing HALS facility where we have enough capacities right now.
Sanjesh Jain
Got it. And the same capacity will come down for. So, this…
Siddharth Sikchi
Today, we have ample capacity now because I mean this ramp-up will anyways take three years time. So why wait for three years? In the meantime, we can start producing another product. And tomorrow after a year or so, we feel that, okay, we can do about 5,000 or a 10,000 ton BHT, then we will go and set-up an individual or an independent block to make BHT dedicated plant for BHT.
Sanjesh Jain
That’s fair. That’s fair. That’s fair. That’s actually very good capital allocation.
Siddharth Sikchi
Absolutely.
Sanjesh Jain
And second on the DHTT, this was a INR30 crore, right? And…
Siddharth Sikchi
There is 30 crore capex.
Sanjesh Jain
INR30 crore capex and this should yield a revenue of what INR100 crores?
Siddharth Sikchi
Close to INR80 crores to INR90 crores.
Sanjesh Jain
Close to INR80 crores to INR90 crores of revenue. And when do we expect this to happen, say, it will take two to three years given our decision?
Siddharth Sikchi
See, typically, we expect to get all approvals in the next six months. So, [Foreign Speech] we expect that we should get from approvals from the large customer. Fortunately, this is a very Indian market. So in the next six months, we should get approval. And the following six months, we will finish all these trial requirements and all that. So the following year, we should be a good year to get 70%, 80% capacity utilization. So you assume about one and a half year to reach optimum capacity utilization. We will not need three years here.
Sanjesh Jain
So this will be quite.
Siddharth Sikchi
Because it is cross-sell now all the customers know us.
Sanjesh Jain
That’s good. And I get you that our last quarter was 135 metric ton. This year we did 190 metric ton in this quarter we did 190 metric ton in HALS. So we are on hoping to touch this 400 kind of a metric ton end of March or you think it is more like 300 to 50?
Siddharth Sikchi
So next year target, we are — we are targeting a decent number. I think by next quarter, we should touch about 300. See now quarter-on-quarter you should — we should start expecting an increment every quarter-on-quarter because now I think we have started getting — now that all the products are commercially approved and commercially started, now the only point is to grow our market, grow our distribution network and that is what we have been doing now. So I think in the next year, we expect about 3,000 tons year sales of in totality.
Sanjesh Jain
In FY ’26?
Siddharth Sikchi
Yes.
Sanjesh Jain
Yes. That’s good. And then the blended realization should be higher now, right, more than $5 considering this.
Siddharth Sikchi
Should be. It should be closer to $5.5, $6. This quarter is worth close to $4, so that should go to $5.5, $6 now.
Sanjesh Jain
Very clear, very clear. Thanks for that. Very helpful with all your answers and best of luck for the coming quarters.
Siddharth Sikchi
Thank you, sir.
Operator
Thank you very much. The next question is from the line of Arun Prasath from Avendus Spark. Please go-ahead.
Arun Prasath
Thank you for the opportunity., first on this, apart from 770, we are — in which of those grades we are seeing maximum kind of a good feedback from the — from the customers or distributors and which is likely to scale-up faster where you have — we are hopeful of utilizing the capacity?
Siddharth Sikchi
So the deal is now that now see all these products came one after another. So first we started with 770, then we started with 622, then with 119, then with 944. So as and when these products started coming in, those were the first products which will — which we started selling. But when you start — now that the entire basket is there, now we expect that based on our capacity on similar pro-rata basis, we should start seeing the market growth. I mean, all the distributors whom we have appointed, they were more keen that you — I mean they onboarded us because they know that the entire basket is going to be around.
So, now going-forward, the way we have, so I think 770622 is more Indian plus customers which are buying a low range of health and then 944, 119 are products which are majorly be useful for Europe and American markets.
Arun Prasath
Right. And scheme of things, I think 119 and 944 will be the right or a much higher price. Is the right understanding?
Siddharth Sikchi
They are of higher price compared to 770701 and 622, which you are absolutely right. So $944 is about $7, $8 and 119 is about $8 to $9.
Arun Prasath
Right. And then these distributors who are — who will be distributing our product. Previously were they distributing Chinese or European products of the?
Siddharth Sikchi
No, some of them understand the market because they have been selling, say, for instance, a distributor of ours were already — was selling phenolic antioxidant. He understands the customer, but he never had any opportunity to work with any producer. So these are some of the distributors who are very keen to work with us. So that completes their basket also.
Arun Prasath
Okay. So for some of the distributors for also the health is new?
Siddharth Sikchi
They have heard about it. It is new is — it is like DHD and DCC, you know. So we know DCC, we know DHD is just about putting it together. So it’s not new. They have heard about it. They know that product and that is why they quickly onboarded us, right? They have — it is not that they don’t understand what were the products who are — I mean what are these products? It’s not that they don’t know. They were aware, but they never had any chance to collaborate with because there are only four other producers who are fully backward integrated.
Arun Prasath
Okay. Yeah. And then — but what I understand is these distributors, their customers already consume hearts. Is understanding right?
Siddharth Sikchi
Of course. Of course. Absolutely.
Arun Prasath
Okay. And what is — what is the current status of our direct sales to the, say, direct house consumers. Where we are in the whole customer acquisition cycle?
Siddharth Sikchi
So samples are being given. I mean it depends again every customer is different. I mean we have a long list of customers because this is not a very — it’s not like customer there. I mean, this is a very long-cycle of customer, long list of customer. So at some scale price negotiation is happening at some product qualification is happening. So it’s at variety of stages.
Arun Prasath
Understood. And specifically to 119 and 944, which are the categories in categories which drive these two on?
Siddharth Sikchi
So 119 is majorly used in agricultural films. So very good market in Turkey, Europe and in North-America, South America. And 944 is into fills. So again, again, markets, very good market in these areas, which I mentioned and also some markets in India.
Arun Prasath
Okay. So none of the categories, these categories that you have mentioned is, I mean, from the very end category perspective, is there any stress going on or the product itself for the category itself is not doing well. Anything that you are picked-up from the — you have picked-up from the distributors? Or is it still recovering…
Siddharth Sikchi
Just price walk. I mean, there is China always in the market, plus there are European. We are the new boy in the game, right? So we have to — people have to trust us, people have to believe our quality. But the advantage is that we have geographical location, customers who are looking for non-Chinese, non-European, we are the only source. So — and let’s see how the US tariff thing happens because if China gets a large tariff, then I think we will get great openings in the US market. And now we have multiple distributors in the US as well. So who are also very keen to partner and to work with us.
Arun Prasath
Understood. And secondly, my second question is on the existing business. If you see the alternate process, the spreads in the alternate process that is NEHQ versus HQ, it’s kind of still comfortable for the alternate producers to produce. So what is — what will drive this the alternate producers to actually stop producing and which will enable us to take a higher market-share or take a pricing improvement. Any thoughts on that?
Siddharth Sikchi
Sir, I don’t know which calculation you did because if that was the case, we would never gain the volumes which we lost — I mean, which we lost because of destocking.
Arun Prasath
No, I was talking about the…
Siddharth Sikchi
Because of — entire growth has come only because of volume. So the spread again with the conventional process cannot lead — is still way off than the process which we are using.
Arun Prasath
I understand. I agree with that. I agree with that. In-between the spread of MEHQ versus HQ was negative and it has only once again become positive nowadays but that’s the reason are they — are they once again started the facilities outside or do we see any reduction in their utilization in that — along those lines, I was questioning.
Siddharth Sikchi
That’s what I told you, if that was the case, we will not have gained the volumes. So I’m not seeing that anymore, but we can connect offline to further get your calculations — I mean, to rectify the calculations again.
Arun Prasath
I’ll take that. Thank you. We’ll take it off. Thank you. All the best.
Siddharth Sikchi
Thank you.
Operator
Thank you. The next question is from the line of Ankur Periwal from Axis Capital. Please go-ahead.
Ankur Periwal
Yeah, hi, sir. Thanks for the opportunity and congratulations for good set of numbers. First, a clarification. So we — apart from HALS, we were doing three capex, INR150 crores, INR150 crore and INR30 crore. INR30 crores has already got commissioned. And for the other two, you mentioned they — both of them will get commissioned by H1 of next financial year. Is that right?
Siddharth Sikchi
No. The Performance Chemical one, INR150 crores starting in July.
Ankur Periwal
And the other one was December.
Siddharth Sikchi
Other one, December construction begins first week of February.
Ankur Periwal
Sure. And sorry, you said construction starts in February and the commercialization is December next — this year ’25.
Siddharth Sikchi
December or January.
Ankur Periwal
December or January. Or so let’s say Q4 of next financial year. Fair enough. Secondly, again, you know, just trying to understand, since you mentioned the focus on distribution network for HALS will be the key thing to look out for. Now I’m trying to divide it into India and global. And India, largely the distribution network is already in-place or there is still scope for improvement here?
Siddharth Sikchi
Majorly direct. We are sitting here. So very few customers prefer distribution. India is majorly all the big ones are direct because in global, outside of India, there are big MNCs where we are talking directly to them. But like India, there is a tale of customers for this because there is combination, it’s not one-product, it’s a combination of four, five products. So now we have established distributors across Europe, Latin, US, and also Gulf and South Africa.
Because this business now, Ankur, unlike our other businesses there are customers who even buy small quantities like anywhere between 500 kilo to two two-ton material. So these people need domestic stock points. So now we have appointed and signing contracts with some of the distributors and now you will start seeing these distributors also getting active.
Ankur Periwal
Sure. And in the global market, North and South America will be a bigger market for our products right now versus the other markets that you mentioned. Will that be right?
Siddharth Sikchi
North-America and Europe will be large compared to South America.
Ankur Periwal
Okay. And distribution — distribution network now is ramping-up or probably will deepen further, let’s say, over the next couple of quarters.
Siddharth Sikchi
Well, we have now set more or less just few additions here and there. So you can say 70% network is there, now business should start coming.
Ankur Periwal
Fair enough. Just trying to understand the competitive landscape here. So as you mentioned, China and Europe-based players are the bigger ones here. The distributor, is there an overlap or largely our distribution network is different, which you highlighted that some of them are into phenol — phenolic-based antioxidants and they understand what they were not — they are not selling has right now. So how should we look at that bit?
Siddharth Sikchi
And you should look at it that they were not selling health before. So there is no cross-sell. So they will be — exclusively will be our distributors now.
Ankur Periwal
All of them or this is only a set?
Siddharth Sikchi
No, all of that. See, now I see ultimately enough, boss, Ankur, this is also very performance-driven product, like if a approval takes time in some customers. So now if that is approved, so the link has to be thorough. Now we also don’t want to change the channels and I don’t — and even the customer does not recommend us to change the distributor. So these are — now relationship will be — which will only develop over the next years to move on. So we have taken some time to really work and understand whom we are working with. We had a lot of proposals in pipeline, but we are shortlisted whom we want to work. We have personally met them in their countries to understand their reach and now we are appointed over the last 30 days.
Ankur Periwal
Fair enough. That’s helpful. And just last bit on this. The end-customers for the end-customer as in from a — either on the plastic side or polymer side or let’s say, agri side is formal, whether it is for BASF globally or for these new distribution network or they are different sets?
Siddharth Sikchi
No, no customer, this customer, set of customers. They are…
Ankur Periwal
We already have a connect with that customer is where I’m coming from.
Siddharth Sikchi
Sorry?
Ankur Periwal
They — this new distribution network that we are going through. They already have a connect with the end-customer, which is also consuming has.
Siddharth Sikchi
Of course, they want to target first, whom they want to target second. So yeah, they understand this business very well.
Ankur Periwal
Sure, fair enough. And just one more bit on the overall growth front — sorry, overall realization front. Are we seeing any further pressure versus, let’s say, on a Q-on-Q basis or maybe versus six months for our products? Or it is largely stable?
Siddharth Sikchi
I think, I mean the prices what we have today are like all-time low prices in the chemical segment. I mean be it our or be it performance or be it agro segments, I think these are the lowest prices we have seen in many, many years. So I don’t expect prices to further dip. It might not increase very soon, but we are comfortably placed. I mean, you can see from that our numbers, right?
Ankur Periwal
Yeah, yeah. Fair enough. And lastly, we were also thinking of or we were also supposed to launch blends of the core products, the five, six, seven products that we had launched. And has it already started?
Siddharth Sikchi
783 is a blend. So we have started — we have also started selling it.
Ankur Periwal
So that’s the only one. But are there more in the pipe or probably let the distribution network get established and maybe over a period of time over the next few quarters, we’ll start picking-up more on that?
Siddharth Sikchi
So the blends are not very complex. It’s just mixing two products. See, European clients don’t like to do that in Europe. So it is just mixing two products, it’s not some rocket science. So we will be doing it as and when the customer tells us. So we know the 783 customer requested that we don’t want to buy individual, you please mix it and give it to us. We did that.
Ankur Periwal
Okay. Okay, fair enough. That’s helpful. Thank you and all the best.
Siddharth Sikchi
Thanks.
Operator
Thank you very much. The next question is from the line of Pankaj from Affluent Assets. Please go-ahead.
Pankaj Bobade
Thanks for taking my question. Am I audible?
Siddharth Sikchi
Yes, sir.
Pankaj Bobade
Well, well, congrats for a very good set of numbers. So I’m good — new to this company. So just wanted to understand that there is a difference between the standalone consolidated EBITDA margins. Can you please help me what is dragging this? Because the difference in revenues is minuscule as compared to the margins difference? And when can we see it converging down?
Sanjay Parnerkar
Right. So subsidiary was commercialized only this year like last year March and it’s a 34-acre greenfield capex, which we have undertaken for tax reasons. The tax in the subsidiary company would be 17% perpetual and hence the expansion is happening in the subsidiary company. And as of now…
Pankaj Bobade
So, when can we…
Sanjay Parnerkar
Yeah, go ahead.
Pankaj Bobade
Sorry, please proceed. So when can we see it narrowing down? The difference?
Sanjay Parnerkar
Yeah. I mean as the scale-up of happens and as the new products scale-up, which we have recently launched like DHGT and the Performance Chemicals.
Pankaj Bobade
I mean, can you give some timeline, say, this year end FY ’26 or so?
Sanjay Parnerkar
I mean, we’ll look at somewhere between two to three years. The gross block has already reached INR376 crores for the subsidiary. So, yeah. So as soon as it sweats, it could be between two to three years.
Pankaj Bobade
Sure. Well, secondly, the revenue to net block is around — historically has been around two. So when can we see our sales grab picking-up, I mean, currently our net block is around INR700 odd crores. So when can we see this reaching the sales reaching to INR1,400 or 1,500?
Sanjay Parnerkar
So, Pankaj, it’s similar to the first question, which I just mentioned that the subsidiary, which is a greenfield capex, which we have undertaken. That’s why you see increase in the net block, but not a proportionate increase in the revenue, which will start reflecting in the timeline which we mentioned, I mean, as the scale-up happens for the new products.
Pankaj Bobade
So is it possible by FY ’26 or will it be — it will be spilled out to 27?
Sanjay Parnerkar
Yeah. It might get spilled over to ’27.
Pankaj Bobade
Okay, sir. Thank you. Thanks a lot.
Sanjay Parnerkar
Thank you.
Operator
Thank you. Your next question is from the line of Priyank Chheda from Vallum Capital. Please go-ahead.
Priyank Chheda
Yeah. Hi, thanks for the follow-up opportunity. So this year INR160 crore capex nine months is broadly for Performance Chemical and for next year, we require that INR150 crores for water treatment. That’s the only capex spend required for next two years, right?
Siddharth Sikchi
I mean, unless we don’t come up with something new. But so-far these are the numbers.
Priyank Chheda
Got it. Now did I heard correctly that you said that you’re looking out for something 4,000 tons as a target number for health in FY ’26, is that right that I heard?
Siddharth Sikchi
We are targeting 3,000 to 4,000. See that is plan we want to pursue. So we are keeping the bar a little higher. So let’s see what we are able to achieve. But now that all the lines are ready, the production is ready, product is approved, customers or distributor network is set-up, do we think why we should not be able to do this.
Priyank Chheda
Exactly. So if we have to — if we are planning to reach somewhere around 300 tons per month-in Q4 itself, I think we can at least achieve 4,000 plus given the scale-up that is happening. So just was curious to know 3,000 tons or 4,000 tons?
Sanjay Parnerkar
Yeah. Priyank sir, you’re right. I mean, last quarter we closed with a run-rate of 135 tonnes per month. This quarter we closed with a run-rate of 200 tonnes per month. But you should also understand that between last and this quarter, the product mix has also changed. Now we are coming up with an advanced version of hands, which just now Siddharth mentioned that this quarter the average realization was $4.5. Next year, we are targeting an average realization of close to $6. So we want the distributed — distribution channels, which is recently established to pick-up these advanced health also, which is 944-119. So that will help us with the realization and the margins both.
So we’ll have a more clear and candid answer to the volume guidance for next year, probably in a quarter’s time as we see the scale-up happening. Like for this quarter, we have almost 10% of our revenue coming from health at the console level. So we are upbeat on health volume, but we want the product mix also to be favorable now going-forward.
Priyank Chheda
Got it. Great. Just last question. On MAHQ, on the competition, last-time you did mention that you haven’t seen any new entrants coming in plus I think one of the local competitor had an issue on the plant with respect to procurement. So anything on the competitive landscape would you like to comment on, particularly for?
Siddharth Sikchi
Sir, we are not seeing even till-date. If you find out, please connect us offline and let us know.
Priyank Chheda
Great. Thank you.
Operator
Thank you very much. The next question is from the line of Jain — Jay Patwa [Phonetic], an individual investor.
Jay Patwa
Hello?
Siddharth Sikchi
Yes, sir.
Jay Patwa
Hi, Siddharth. I have a like broad-spectrum perspective, I want to know that because your company is like entering in a market where you have a few checklists, like it should be a clean technology, it should be a unique process, then it — basically it should be an import substitution and again, if all this fulfills, then it should be a high-margin product. But as a company, how difficult for you to find such product in R&D?
Siddharth Sikchi
Very difficult, sir, but we are trying our best.
Jay Patwa
Okay. So is it like a — can we assume that in future, if the company wants to grow, then you have to compromise in this checklist either at the level of margin or at the competition will be there or something like that?
Siddharth Sikchi
So we don’t want to compromise on few aspects like green chemistry. We want to produce chemicals which are clean in nature. We don’t — it is not that we are our worse to making something which is made in India. If we have a better tech, why not? If it is decent, good margins like we have been able to do, why not? Health, for instance, absolutely new product never made in India, very large TAM. We have been able to find this product.
And the pharma intermediate, again, not made in India, China-produced China plus one, good technology we have developed. Performance Chemical one also the same. So we have been able to find out. So we’ll see as the quarter moves on as the number — I mean, you and I will both see how things move along with us. But we are trying our best.
Jay Patwa
Okay. So the reason why I’m asking is because the — I think in previous con-calls also you mentioned that the newer two CapEx, which you are doing INR150 crore each for water treatment and performance chemical, there are already competitors there in the Indian market. Is it correct?
Siddharth Sikchi
There are Indian competitors, yes.
Jay Patwa
Okay. But the technology will be new or unique process will be there for…
Siddharth Sikchi
Yes. We feel — our technology will be better. So we feel we will have that edge over the competition.
Jay Patwa
And even for this DHDT currently commercialize this product. We have this UPL Limited, I think, selling it in Indian market. So again, we have any edge over there or something?
Siddharth Sikchi
I mean, you should check, but to whoever customers we are selling, we are not seeing UPL at all because I think they don’t make it themselves, they get it told manufactured somewhere, plus there are quality issues. I think I have been hearing UPL for last two years, but I mean, where-is the product, I think.
Jay Patwa
Okay. So as per you currently, there are no suppliers of DSTT from India?
Siddharth Sikchi
I mean, if you see the import statistics 200 tons [Foreign Speech]. I mean that is a clear indication that there is no entrant. Otherwise that number should drop, right? I mean that is a clear logic we apply.
Jay Patwa
Okay, that’s great, great. And one more query regarding — like three years ago, when you plan to go commercialize the health product in a big way. You assume that the gross margins will be similar of 25% when — at a full capacity or things has changed in last three years due to the overcapacity or something like that?
Siddharth Sikchi
I think we are still little premature because now the advanced are coming. We expect this to improve only. That was a very based minimum number we had, but I think it should be better than this only.
Jay Patwa
Okay. But the market dynamics has changed or something like that in last three years because of the overcapacity or at the beginning itself, we have assumed that the maximum margin level will be 25% around which you have indicated in previous con-calls.
Siddharth Sikchi
I mean everything world has become so dynamic. I mean, you know it is — I mean, Chinese are there, BSF is there and we have to compete. I think with advanced health, the margin should be better only. I mean, you will allow us to one or two more quarter and with the whole picture and with the entire distribution network, we’ll have a far crystal-clear idea of this business.
Jay Patwa
Okay. Thank you. Thank you very much and best of luck.
Siddharth Sikchi
Thank you.
Operator
Thank you very much. The next question is from the line of Huseain Bharuchwala from Carnelian Capital. Please go-ahead.
Huseain Bharuchwala
Yes, I just wanted to understand. Basically, how do you see — how much percentage will come directly from the client segment and how much we see from the distribution?
Siddharth Sikchi
This is very difficult question because as I rightly said, it’s just been a month that we have started appointing distributors. It is very difficult question to tell you today that the percentage is X&Y.
Huseain Bharuchwala
Got it. And why not approached by the traditional distributors means you said you have appointed new distributors on the health side who had — who had similar products, which you will cross-head in terms of health. So existing new distributors only and approaching. They just wanted to understand it.
Sanjay Parnerkar
Why did we appoint new distributors for not existing?
Siddharth Sikchi
No, sorry, go again.
Huseain Bharuchwala
We have appointed lot of distributors who are new, who don’t sell halz. So why we approach to the existing distributors of rather than appointing new set of distributors? We are not selling as but now they are selling selling.
Siddharth Sikchi
One sec. If somebody is already selling opposed he is buying from China and selling, why would he buy from us? I mean, he has already taken that distribution from Chinese, right? We are not off and on relationships. These are not — I mean, these are LO relationships actually.
Huseain Bharuchwala
Got it. Okay. Got it, sir. That’s it from me.
Operator
Thank you. The next question is from the line of Abhijit Akella from Kotak Securities. Please go-ahead.
Abhijit Akella
Yeah, good evening. Thank you so much. Just — sorry, I joined the call a few minutes late, so I might have missed this data point in case you shared it. But for HALS, what would the total volume have been that we have done year-to-date, if it’s possible to share, please?
Siddharth Sikchi
Last quarter we did 600 ton Q3, so which is the highest and exit of December was about 200 ton a month, which I had discussed about two quarters ago that our target — first target of the first milestone is to do 200 tons a month, which we have achieved. Now going-forward, we only have to increase these volumes. All the products are commercialized, quality is approved, our product is in-line with our competitors. So now there is no problem there. I mean, few quarters ago, people had this question whether our product is would be approved or would be similar to BSF or a competitor. Now those questions are behind us and now it is only about growing the market.
Abhijit Akella
Got it. So on a full-year basis, would it be fair to just for modeling purposes, I’m asking, pencil in a number of say around 1,800 or 2,000 tonnes for fiscal ’25?
Sanjay Parnerkar
’25.
Siddharth Sikchi
No.
Sanjay Parnerkar
So, I mean Q1 was 125 tonne per month average. Q2 was 135 tons per month average. This time it’s close to 200 tonnes per month average, right? Quarter-four would be probably in the similar range of 10%, 15% higher.
Siddharth Sikchi
We will try and see, I think majority sales should start coming in FY ’26 because some of the products, I mean, started coming September, October sorts. So network established January product submission, samples. So I think mature large chunk of business we will see in FY ’26.
Abhijit Akella
Okay. Understood. No, thank you. That’s really helpful. And just the other thing I had was on the margin situation in the subsidiary. Acetone prices have corrected. So are we seeing an improvement in the margin profile there? And should we sort of see that starting the 4th-quarter or how are you seeing things over there?
Siddharth Sikchi
Absolutely. I think because of the main raw-material, which is acetone once the price goes off, of course, we should start seeing that flowing through. And I think Q4 and onwards, we will see that reflection happening.
Abhijit Akella
Okay, great. Thank you so much and wish you all the best.
Siddharth Sikchi
Thank you, boss. Thank you, Abhijit.
Operator
Thank you very much. The next question is from the line of Jason Soans from IDBI Capital. Please go-ahead.
Jason Soans
Yes, sir. Thanks for taking my question. You know, my question is related to the previous participant also. So he did mention that on a quarterly basis, 1Q was around 125 tons and 135 tonnes then 200 tons. So it does lead to a figure of around 1,700 tonnes 1,800 tons. Is that a fair volume assessment for for FY ’25, I’m saying?
Siddharth Sikchi
That is true. I mean [Foreign Speech] with quarter-four of about 600 tonne again, more or less 600, 650 [Foreign Speech].
Jason Soans
Right. Yes, sir. Yes. And you did also mentioned that average realization for this year probably around 4.5 and of course with the advanced health, you’re looking to target $5.5 to $6 for HALZ, right?
Siddharth Sikchi
This quarter was 4.5%, quarter three was 4.5%.
Jason Soans
Okay. And of course…
Siddharth Sikchi
Similar. But future on, as we dive into FY ’26 with all these new products, we expect that next year, say, a volume of whatever a few thousands or 3,000, 4,000 tons with prices of $5 to $6.
Jason Soans
Sure. And sir, in this definitely the depreciating rupee or the strengthening USD helps you because has generally is targeted towards the export markets. So that would be a fair understanding, right?
Siddharth Sikchi
Well, even the raw materials are imported, right? So…
Jason Soans
Okay. So that kind of gets — that kind of gets netted somewhere. Okay, that’s what you’re trying to trying to say. Okay. Got it, got it. Okay. Okay. And sir, in the initial part of the call, you did mention that you have dropped PBQ and you are diverting the application, yes, to manufacturing barbeteric acid. So sir, just wanted to clarify this barbeteric acid, where do you slot it into the Performance chemicals or I believe probably a pharmaceutical intermediate and what is the end-use application for this, if I may know?
Siddharth Sikchi
That is used to produce pigment yellow. This will be actually our first product, which will go into a pigment industry. So we will categorize this into FMCG segment.
Jason Soans
Okay. Okay. You categorize it into FMCG. Okay. Sure, sir.
Siddharth Sikchi
About 100 odd tons. Sudarshan chemicals, I think and Sajan, I think there are two, three large pigment producers who are importing this product from China. So I think it first will be a very domestic market for us.
Jason Soans
Okay. You’re looking at targeting to manufacture around 100 tonnes per month you said.
Siddharth Sikchi
I don’t think I said 100 tons. I just said that we are mapping the capacities and by end of next — I mean on the next con-call, I will give you exact tonnage is what we think we’ll be able to achieve is a plant which was earlier built for Parab.
Jason Soans
Sure, sir. And sir, just wanted to understand one thing. I mean, of course, you’ve mentioned the timeline for the INR150 both the blocks of the INR150 crore capex is. Now just wanted to know for the Performance Chemical bit, what could be the revenue potential? I mean, would it be a normal as in the general 2x kind of thing. And also would want to know the end-use for this Performance Chemicals, some color on that as in terms of where the end-use application for this performance Chemical would be?
Siddharth Sikchi
So sir, INR300 crore is the revenue expected on full runs. And this is Performance Chemicals, so they find application in antioxygen stabilizers and similar such businesses.
Jason Soans
So — and the timeline for the peak revenue hit probably around a couple of years or you would say two years, couple of years for the peak revenue hit? Yeah, okay, okay.
Siddharth Sikchi
Actually a couple of years.
Jason Soans
Okay. Couple of years. Okay, fine. Okay, sure. Sure, sir. Thanks. Thanks a lot for that. Thank you.
Siddharth Sikchi
Thank you, sir. Thank you.
Jason Soans
Thank you, sir. Thank you.
Operator
Thank you very much. The next question is from the line of Rohit Nagraj from B&K Securities. Please go-ahead.
Rohit Nagraj
Thanks for the opportunity and congrats on good set of numbers. First question is, given that now we are expanding and appointing distributors domestically as well as outside, will it lead to the inventories and debtors being higher than the current levels? Thank you.
Sanjay Parnerkar
I mean, it won’t have a very big impact because the revenues are also scaling up. So we are not stocking very-high inventory. And apart from these Pharma intermediates and Performance Chemical segments which are coming up, they have sizable domestic market. So the inventory or the receivable won’t pile up. We would remain in that narrow range of, 24% 25% of sales as a working capital.
Rohit Nagraj
Fair enough. That’s — that’s helpful. Second question again on the HALS front. So currently, I think you said that about 10% revenues came from Health during this nine months, if I’m not wrong?
Sanjay Parnerkar
During the quarter.
Rohit Nagraj
During the quarter. Okay, sorry, my bad. So how much of that has come from domestic and how much from exports? And in FY ’26, how are we looking at the overall revenues from domestic and exports in terms of just percentage, broader percentage? Thank you.
Sanjay Parnerkar
I think so for this quarter, as we mentioned earlier, also the large contribution continues to come from our starting or the basic has, which is 7, 70. Hence the domestic contribution continues to be dominant. And apart from that, revenues contributions came in from USA and then some small portion from rest-of-world. For FY ’26, it will be a little early to comment on the geography mix given the product mix, I mean it depends on how much of 62% to 944 we’ll set. So that guidance we’ll be able to give probably by next quarter-end.
Rohit Nagraj
Fair enough. Just one clarification. In terms of pricing, is there a differential pricing for the domestic market and the exports market in terms of premium or discount?
Siddharth Sikchi
Yeah. I mean look because people have to import the product in India to 7.5% duty. When we export to Europe, the European — because there are European entities, our product has 6.5% import duty. So we have to keep matching these prices and then selling to these markets.
Rohit Nagraj
Fair enough. That’s it from my side. Thanks and all the best.
Siddharth Sikchi
Thank you.
Operator
Thank you. The next question is from the line of Josh Gandhi from Dalal and Broacha. Please go-ahead.
Jash Gandhi
Hello. Yeah. Am I audible? Hello?
Siddharth Sikchi
Yeah.
Sanjay Parnerkar
Yes, Jash.
Jash Gandhi
Yeah, hi, sir. Thank you for the opportunity and congratulations for a good set of results. Sir, my question is on HALS. So you mentioned that next year you are looking to garner more share from 944 and 119 and that should improve the realization. So — and you also mentioned that, that should improve the margins as well. So what level should we assume? Because we used to say 25%. So any guidance on that.
Siddharth Sikchi
I think just wait for a quarter, we’ll give you more clear guidance in the next quarter call. Best important takeaway from this quarter is all the products are now commercialized, all quality issues, teething issues are over, network growth is happening. So now things should only revolve around selling of these products. So give us a quarter to get all these numbers and get back to you.
Jash Gandhi
Okay. And sir, what should be the margins currently on health?
Siddharth Sikchi
25% gross margin.
Jash Gandhi
Okay. And sir, on the new products on-the-water treatment and the Performance Chemicals for the INR300 crore capex, what should be the margin that we should work with?
Siddharth Sikchi
So these are still quite — I mean, these are decently good margins compared to ever compared to our health segment. So you should expect over 25% for sure.
Jash Gandhi
Over 25%. Okay, sir. Okay. Thank you, sir. So, thank you so much. Thank you.
Operator
Thank you. The next question is from the line of Srishti from Monarch AIF. Please go-ahead.
Srishti Jain
Thank you for the opportunity. I wanted to understand what’s China’s market-share in terms of capacity in and who is driving the price — who is driving this pricing pressure China or Chinese stores or BSF?
Siddharth Sikchi
BSF.
Srishti Jain
And China’s market-share in terms of capacities or maybe market size of?
Siddharth Sikchi
Maybe 30%.
Srishti Jain
30%. Understood. And sir, we were talking about what kind of savings can we expect from — in the power — in our power cost now that we are talking about solar coming in and has that materialized — has that fully materialized in this quarter?
Sanjay Parnerkar
No, no, we just installed 400 kilowatt of solar capacity.
Siddharth Sikchi
Kilowatt.
Sanjay Parnerkar
Kilowatt, not megawatt, right?
Srishti Jain
Okay.
Sanjay Parnerkar
Our utility cost is largely coal, which is essentially fuel, right? I mean power cost is hardly 15% of utility fuel cost.
Srishti Jain
Understood, understood. And sir, there was this some noise about funding for the ARV drugs and — but that’s faded. So what were customer conversations you must-have had did we — like what our customer conversations tell us during that period where there was a probability of the funding going away?
Siddharth Sikchi
So actually with our customers, I have no such idea because they have to produce, they have to buy DHDT and that has been happening for years. I mean, you see imports of coming from China and we are just trying to replace from China to our main. That’s all I have on this.
Srishti Jain
Okay, perfect, sir. Thank you.
Operator
Thank you very much. Next question is from the line of Krishnan Parwani from JM Financial. Please go-ahead.
Krishan Parwani
Yeah, hi, sir. Congrats on good set of numbers. Just three small questions from my side. Yes. So first on — of the — just wanted understand of the overall health volume that you’ve done till now. So just a ballpark number, how much would be like 770, not the exact one, but just a range like 40%, 50% or more?
Siddharth Sikchi
In all the last questions we have given on health, if you put all these together, you will get all your answers because we are not going on category-wise. We are talking about health in particular in general.
Krishan Parwani
Yeah. No, got it, got it. Fair enough. I don’t want you to reveal the confidential data. That’s fine. So just on the — secondly on this, do you expect large revenue contribution from BHT and barbiteric acid in FY ’26?
Siddharth Sikchi
BHT if — see barbiteric acid, of course, I told you we are mapping the capacities. So even if we are able to say 400, 500 tonne, we will have to really map it. Again, these are very approximate numbers. This is about a $4.5 kilo product. So even if we do 400 to 500 tons, you can do the math. BHT, we estimate we will do about 60 parts, say about 300 to 400 tons of BHT in this year in the next year or three. So again, that is about INR300 product. So then you do the math. So this is what we are estimating for and Turing. So both put together could be around INR50 crores INR60 crores sort of.
Krishan Parwani
Okay. Got it, got it. And just a last bit. Given you’ve achieved 200 tonnes monthly run-rate in subsidiary Health, I think you manufactured more in the parent company. But just wanted to understand how far do you think the subsidiaries breakeven is as in would it be at a 300 tons market run-rate?
Sanjay Parnerkar
Sorry?
Siddharth Sikchi
Breakeven.
Sanjay Parnerkar
No, I mean at INR11 crores to INR12 crores of monthly revenue, subsidiary would breakeven. So whatever we did quarterly that should come into monthly. We will see a breakeven in the subsidiary.
Krishan Parwani
Okay, fair enough. This is very helpful. Thank you for patient answering my question. Wish you all the best.
Operator
Thank you. The next question is from the line of Arun Prasath from Avendus Spark. Please go-ahead.
Arun Prasath
Thanks once again for the follow-up opportunity. So that my question is on the sales to the Europe. It seems to be picking-up a lot and especially this quarter, is this something which is one-off or this is structural and will be more-and-more selling more-and-more towards will be Europe oriented rather than Chinese. Is that the way it will play-out?
Siddharth Sikchi
Sir, we are trying to increase the market-share. So I mean it is not — nothing is one-off now. Now the market should grow, we should start selling [Foreign Speech], but things should now only start picking-up. We have done all the reach registration except one-product. So as and when reach registrations are also in-place, we should start selling in the market. When we sell more, then it is not one-off. It is what we are trying to achieve, right?
Arun Prasath
So, fair to say that Europe will become the largest for us in couple of years?
Siddharth Sikchi
I mean there is US, there is Europe there is also on Latin-America. I’m not saying that Europe will be the largest. I mean, Europe will be important for us. So three geographies apart from India is Latin, US and Europe, including Turkey. So these are an important market for us. So we have to be — I mean, we have to target these customers very well.
Arun Prasath
Okay, understood. Thanks. All the best.
Siddharth Sikchi
Thank you.
Operator
Thank you very much. Ladies and gentlemen, due to time constraint, that was the last question for today’s call. I now hand the conference over to Mr. Siddharth Sikchi for closing comments.
Siddharth Sikchi
Thank you so much, all of you for spending time to understand our company in this late evening. Have a great week ahead and thank you and we’ll catch-up again on the next quarterly call. Bye-bye.
Operator
Thank you. On behalf of Clean Science and Technology Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.