Fairchem Organics Ltd (NSE: FAIRCHEMOR) Q4 2025 Earnings Call dated May. 30, 2025
Corporate Participants:
Anuj Sonpal — Investor Relations
Rajen Niranjanbhai Jhaveri — Chief Financial Officer
Nahoosh Jariwala — Chairman and Managing Director
Analysts:
Shivam Parek — Analyst
Ritesh Udsaria — Analyst
Madhur Rathi — Analyst
Sunil Parikh — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q4 and FY ’25 Conference Call of Organics Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assessions during the conference call, please signal an update by pressing Star then zero on a touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Anit from Valorem Advisors. Thank you, and over to you, sir.
Anuj Sonpal — Investor Relations
Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Fairchem Organics Limited. On behalf of the company, I’d like to thank you all for participating in the company’s earnings call for the 4th-quarter and financial year ending 2025. Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s con-call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management.
Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today’s earnings call and hand it over to them for opening remarks. We have with us Mr Nahujariwala, Managing Director and Chairman; and Mr Javeri, Chief Financial Officer. Without any further delay, I request Mr Javeri to start with his opening remarks. Thank you, and over to you, sir.
Rajen Niranjanbhai Jhaveri — Chief Financial Officer
Thank you,, and good afternoon, everyone. Welcome to our earnings call for the 4th-quarter and financial year ended 31st March 2025. Let me first start-off by giving you some of the key financial highlights, after which our CMD,, Jarivala will give you some of the operational highlights. For the 4th-quarter under review, the revenue from operations stood at INR121 crores, which increased by 6.3% on immediately preceding quarter and decreased on 75% year-on-year. EBITDA for the quarter was around INR4 crores with EBITDA margins at 3.64% and we reported a net profit-after-tax of approximately INR60 lakhs. For the full financial year ended purchase with the revenue from operations stood at INR538 crores, EBITDA was around INR43 crores with EBITDA margins at 7.96% and we reported a net profit-after-tax of approximately INR22 crores with a profit margin of 4.09%. I now request our CMDC, Jarivala to brief you on the operational highlights for the period under review.
Nahoosh Jariwala — Chairman and Managing Director
Good afternoon, everyone. As many of you are aware, the Indian specialty chemical sector is facing a particularly challenging environment. This is not only due to the domestic cost pressures, but also due to the increasing global volatility. Geopolitical shifts have compounded the industry’s challenges. The potential imposition of US custom trade tariffs on selected chemical imports. The continuous redesignment of the global supply-chain post China Plus One strategy and shifting economic alliances across the regions like Europe, Southeast Asia have disrupted traditional trade flows, created logistic bottlenecks and introduced a new level of uncertainty in cross-border business planning. In this complex scenario, I am pleased to report that we have demonstrated solid operational resilience, whereby we have been able to increase our volumes in the Q4 by 11% — greater than 11% and value growth we have achieved of greater than 6% on quarter-to-quarter basis.
However, the biggest concern is EBITDA margins, which have declined, mainly due to the relatively higher raw-material cost as a percentage of sales. A key challenge since last two quarters is the 22% additional custom duty imposed on the key raw-material used for manufacturing of our prime product acid, which came into effect on September 14, 2024. As anticipated, this has resulted in SAP cost escalation. Unfortunately, the cost burden couldn’t be passed on to customers due to pricing pressure from Chinese competitors who are not subjected to similar additional custom duties at their end. On a positive note, I would like to say that we have started working on energy-saving, yields improvement and at the same time, we have started working on a new raw-material, which can help us mitigate this mitigate this additional custom duty cost and reduce our raw-material cost, which will help us in-going — improving our EBITDA margins.
We remain optimistic about our high-value, high-value value-added product isosteric acid. We anticipate a staggered increase in export volumes with the initial pickup expected in the first-half of ’25, 26, followed by further scale-up in second-half. In parallel activity, we are actively pursuing regulatory clearances and customer approvals across several international markets. Based on the current momentum, we are confident of achieving higher capacity utilization by end of this year. As the global landscape evolves, Indian specialty chemical companies are increasingly seen as reliable agile partners in diversified supply chains with a forecasted industry CAGR of over 12% and growing demand in sectors like cosmetics, home care, industrial additives, we remain well-positioned to tap in both international and export opportunities. Going-forward, we will continue to focus on value-added product expansion of optimization of operations and building enduring relationship across the global world. With that, I open the floor for a question-and-answer session.
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 on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press R&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 ladies and gentlemen to ask a question you may press and one now. The first question is from the line of Shivam Parek from ValueWise Wealth Management. Please go-ahead.
Shivam Parek
Hi, sir. Thanks for the opportunity. So my first question was, can you provide us update with respect to the representation made to the government for increased custom duty on one of our raw-material. So can we expect the same to go back to historical levels? And second question was, the paint industry is reeling under significant pressure from the demand-side and we have huge contribution in revenue from the same sector. So could you throw some light-based on your experience on when the demand can come back?
Rajen Niranjanbhai Jhaveri
As regards the pain sector, we are still there fairly comfortable as regards our sales to all the top paint industry players because the product what we are manufacturing is one of a kind and we are not seeing any major downside in-demand in that particular product stream, major, but little bit of downside is there that I won’t disagree with you. But it is there, I mean, but no major downs line is there. The way things are going on, I don’t think we should be bullish for the paint industry because this quarter is going to be the monsoon period. And typically during monsoon period, paint activity is always-on the lower side. So probably we can expect things to revive back-in October-December quarter for the paint industry per se. Otherwise, we’ll be able to sell currently like we have — if you really look at it, there has been a drop-in our supplies to paint industry, but it’s not significant. It’s not a significant drop.
Shivam Parek
How much drop is there,?
Rajen Niranjanbhai Jhaveri
Drop is. We could sell approximately 5,500 tons in January, March quarter compared to, 74. So for the quarter per se it is a high, but compared to the earlier two quarters, it is showing a fall. A little bit false. Minor difference is that it’s not big of a problem for us. As regards the representation made to the Government of India, you’ll have to remember one thing that we are the only manufacturer of dimer fatty acid in the in the country . And typically, if there is — there are number of manufacturers and if there is an association like as for example, cement manufacturers association or steel manufacturers association. If they do the repreciation, the government would take it more seriously. Being the only player in India, it is really tough. We are trying our best, but I mean, I cannot say when it will happen in terms of value also, compared to the overall value of cement or over value of steel or all manufacturers put together and we as an isolated manufacturer with the kind of value, government — see, when government imposed this particular duty, they would have seen a larger interest of farmer community prima appears. So it is highly unlikely that our sold request may receive substantial attention from government.
Shivam Parek
Okay, but sir, they are causing loss to an Indian company and providing support to Chinese manufacturers. So what may be the rationale for the same?
Rajen Niranjanbhai Jhaveri
If there is no rationale, there IBM benefit advantage. I think there must be a number of companies like us who must be facing the same situation for products for their products.
Shivam Parek
Okay. And sir, with regard to the paint, I had a follow-up question. Like can we expect mean reversion to happen in the paint industry with respect to the peak volumes that we had achieved like in 2022. So when can we expect the peak demand from the same — from the paint industry to get back?
Rajen Niranjanbhai Jhaveri
Real-estate sector has to pick-up. Real-estate sector is to pick-up. I mean otherwise from our side, what we can say is we are supplying to practically all the big players and there is no competition to us. So beyond that, for us to say anything would be tough.
Shivam Parek
Okay. So sir, can we expect in the next two, three years our peak demand volumes should come back?
Rajen Niranjanbhai Jhaveri
See, ultimately, you have to understand one thing that we are supplying to paint sector and paint sector ultimately is supplying to the end consumers. So it will be very difficult to predict what will happen in next two, three years as far as paint demand from paint sector for our product is concerned.
Shivam Parek
Okay. Got it, sir. And sir, could you also provide update with regard to our new product isoteric acid?
Rajen Niranjanbhai Jhaveri
Sure. Acid is gradually picking-up. It is gradually picking-up. It will take further six months. And in the first-half of this — this financial year, it would pick-up compared to previous six months. And again in the second-half of this current financial year, it will further pick-up. Okay. So have we seen increased volumes with respect to the last financial year? Yeah, yeah. Last — compared to last financial year, there is an increase.
Shivam Parek
Yes. Okay, sir. Yes. Thank you, sir. That was from my sir.
Operator
Thank you. Before we take the next question, we would like to remind participants that you may press char and one to ask a question. The next question is from the line of Ritesh from Capital. Please go-ahead.
Ritesh Udsaria
Yeah, thanks for the opportunity. Sir, again coming back on isosteric acid. Sir, if you could give us some indication whether which will we reach the optimal utilization in current year or still it will take some time.
Rajen Niranjanbhai Jhaveri
So if by next year we should reach the optimum utilization.
Ritesh Udsaria
Yeah, basically it goes in making of cosmetics, whereby the trials and approvals take pretty long-time. So that’s the basic reason. So on positive side, you can say that, yes, the entry barriers are also tough, but once you break-in into the market, your exit also becomes very tough because the other person would also have to do that much of longer trials. And only thing is that there are just four players in the world. And so everyone is excited to have a new player like us. And so we are getting a positive response on practically all the major buyers, but it’s taking its own time, nothing else. So if you can give us some idea of how many customer approvals have been received and how much?
Rajen Niranjanbhai Jhaveri
Around 16 even around 16 approvals we have got.
Ritesh Udsaria
Okay, you already got the 16 approvals. Yeah. So at least trial orders of the 16 can happen in this year.
Rajen Niranjanbhai Jhaveri
So no, quite a few of commercial orders have also started going quite a few.
Ritesh Udsaria
Okay. So — and in regard — in regard on your product parameter on. It’s on par, it’s on par with the world player.
Rajen Niranjanbhai Jhaveri
Okay, absolutely on par with the world players.
Sure. And sir, last-time you talked about the new products, if you can give some status on is going on. Work is going on for — so we are ordered equipment for — whereby the small quantity plant will be first — stage will be commissioned, we have ordered the equipment, which will take six months-to come because all these are specialty equipments. And so if you take around six months for us to receive the equipments and then so by — before end of December, we should have all the equipment and we start our trials in January-March period.
Ritesh Udsaria
So nothing can be commercial will be approved in this year. It will happen in FY. Again,
Rajen Niranjanbhai Jhaveri
No, no, no, that also will take long, because again in that also we are — in India, we are going to be first-in Europe there are just two players. I mean China, there are one or two players. So I mean it’s again a noveling product. Okay. Because the commodity players some commodity products you cannot sustain for long.
Ritesh Udsaria
Okay. So you also spoke on Daimer. I said that you are — I mean, you are working on the new raw-material. So it is a domestic sourced or it’s altogether new raw-material is just or not altogether, but it is one of the byproducts of one of the vegetable oils. So we are working on it whereby the — we’ll be able to bring down our cost, nothing else.
Rajen Niranjanbhai Jhaveri
Yeah. And sir, finally, sometime like we hadn’t given a guidance. So is there any proposal to revise the guidance or you are still not? No, no, not yet. Not yet. In — by maybe in Q2 Qs to con-call when there is there, we might — no, no, we — our company never give guidance, we never give guidance of the future.
Ritesh Udsaria
Sir, in February corporate presentation, you have taken the guidance line. Yet you again go through the presentation, whatever internally we had shared with the promoters that only was placed there. We are not giving any guidance in — for the — in any of such con-calls, that is what I’m trying to tell you. Yeah. So yeah, can we update that slide and put up again?
Rajen Niranjanbhai Jhaveri
No, no, these were historical things there — what is to be updated in that? We have not prepared any updated figure or those presentations again, those projections again, so nothing is to be updated.
Ritesh Udsaria
Okay. Yeah. That’s all from my side. Thank you.
Operator
Thank you. Participants who wish to ask question one at this time the next question is from the line of Madhur Rathi from Counters Cyclical Investments. Please go-ahead.
Madhur Rathi
Sir, thank you for the opportunity. Sir, I’m relatively new to the company. So I’m trying to understand this acid, sir, what would be the global demand-supply dynamics of this product? And sir, what kind of margins are we making currently on this product?
Nahoosh Jariwala
This is a value-added product from one of the finished products, which we have been selling since last 20 years, we are upgrading that product and from — while upgrading that product also, we are going to get few pure co-products also. It is a high-value product and there are — as earlier said, there are only four players in the world. We are the fifth player and whatever capacity we have put up, we do not — we anticipate that we will not have any difficulty. Once the required approvals come in next whatever period, once those approvals from everyone comes, we will not find any difficulty in selling whatever capacity we have.
Madhur Rathi
I’m trying to understand like if we have — if we will operate at an optimum utilization in FY ’26, I’m trying to understand how this product will shape up over the next three, four, five years. So for that aspect, I’m trying to understand the demand-supply dynamics, is there a current supply shortage or how is the demand-supply — and has this product is growing at.
Nahoosh Jariwala
As per our stand — our understanding, currently there is a demand — there is a shortage of supply vis-a-vis demand because this is a biodegradable product and that is the demand in developed countries. So there is a supply shortage, that is what we understand. And as far as — and as far as our utilization is Is concerned, I already told you that once the approvals are in-place by end of this current financial year or whatever, and thereafter, we will not find it difficult to reach some utilization in the subsequent financial year.
Madhur Rathi
Got it. Any plans to further increase this capacity? And sir, how is our cost of production for this product versus the other four players company.
Nahoosh Jariwala
See, as I said earlier, this is a value-added product from one of the — one of the finished products which we have — we are selling since last 20 years. So that is the raw-material for these. So if we want to further increase the production of isosteric acid, we will need the higher production of that particular raw-material, monobasic acid. And if we want more of monobasic acid, there is a corresponding more dimer acid production. And for acid production, just now we discussed that government came out with a duty in September ’24, which has increased the price of the raw-material which is used for making the dimer acid. So we cannot absorb more pressure of higher quantity of dimer sale unless this duty is reversed. So entire thing is linked to one another.
Madhur Rathi
Got it. So until and unless the government custom duty don’t favor us, it will be difficult to and we have enough time also on-hand.
Nahoosh Jariwala
See, we are expecting all the approvals by FY ’26 and then ’26, ’27, we will be operating optimizing our utilization of these. By that time government will come out with something
Madhur Rathi
Got it. Sir, do we have an idea about the cost of production versus — so although I understand that it is a raw-material for the — our timer and all these raw-material — the current product. So on the cost of production, do you have some kind of idea
Nahoosh Jariwala
Of the cost of production — cost of production for this particular raw-material — this particular acid would be, what is the alternative selling price of monobasic acid that is the raw-material. And it is a high-value product. And as I said earlier, while making isosteric acid, we are getting several core products also, which also have a realizable value. So there is an entire bunch of thing got it.
Madhur Rathi
Okay. Are we making — sir, is it currently at a breakeven or a positive EBITDA margin or currently, how is the margin profile currently for this product?
Nahoosh Jariwala
And see this is all a part of a business. And in this con-call, which subsequently is placed on the stock exchanges of BSE, NSE and then everybody has look at it. In the interest of our 30,000 shareholders only, it will be better if we refrain from answering certain questions. Interest of our 30,000 shareholders.
Madhur Rathi
No, sir. Sir, that was from my side. Thank you so much and all the best.
Operator
Thank you. The next question is from the line of Parik from Wealth Management. Please go-ahead.
Sunil Parikh
Sir, my another follow-up question was like to one of the previous participants, the new plant which we are working on currently, so is it for acid or is it for a completely new product that we are working on.
Rajen Niranjanbhai Jhaveri
No, no, no, isosteric we are already selling isosteric acid since last more than a year. So the new plant is not for isosteric acid. Okay. So it’s for a completely new product. A completely new product. New set of products, new set of products, but overall falling within this primary of oils only.
Sunil Parikh
Okay. Got it, sir. And sir, any plans that we have decided for with regards to the production capacity with respect to the new plant that
Rajen Niranjanbhai Jhaveri
We’ll be picking-up I think in our — one of our previous con-calls or in our presentation, we have already stated that out of our installed capacity of 120,000 metric tons per annum in terms of throughput of raw materials, we have already earmarked one-third, that is 40,000 tonnes of capacity for this new product.
Sunil Parikh
Okay. Got it, sir. That was very interesting. Thanks.
Operator
Thank you. Ladies and gentlemen, to ask a question you may press R&1. Participants who wish to ask questions may please press R&1 at this time thank you. As there are no further questions, I would now like to hand the conference over to the management of Fairchem Organics Limited for closing comments.
Rajen Niranjanbhai Jhaveri
Thank you all for participating in this earnings conference call. I hope we have been able to answer your questions satisfactorily. If you still have any further questions or would like to know more about the company, please reach-out to our IR managers, Valoram Advisors, who are based in Mumbai. We now hand over to Anu, founder and promoter of Valorem Advisors. Ms I think perhaps is not there. You can conclude your call.
Operator
Yeah, thank you. On behalf of Valorem Advisors Limited, thank you for joining us and you may now disconnect your lines