Neogen Chemicals Ltd (NSE: NEOGEN) Q1 2026 Earnings Call dated Aug. 04, 2025
Corporate Participants:
Unidentified Speaker
Gopikrishnan Sarathy — Chief Financial Officer
Nishid Solanki — Investor Relations, CDR India
Harin Kanani — Chairman and Managing Director
Anurag Surana — Director
Analysts:
Unidentified Participant
Ankur Periwal — Analyst
Abhijit Akella — Analyst
Kartik Srinivas — Analyst
Jason Soans — Analyst
Arun Prasath — Analyst
Archit Joshi — Analyst
Rohit Nagraj — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Neogen Chemicals Q1FY26 earnings conference call. 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 assistance during the conference call, please signal an operator by pressing 0 on your Touchstone phone.
Please note that this conference is being recorded. I now hand the conference over to Mr. Nishid Solanki. Thank you. And over to you, sir.
Nishid Solanki — Investor Relations, CDR India
Thank you. Good morning everyone and welcome to Neogen. Chemicals Q1FY26 earnings conference call for analysts and investors. Today we are joined by senior members. Of the management team including Dr. Harin Kanani, Managing Director, Mr. Anurag Surana, Director and Mr. Gopi Krishnan Sarathi, Chief Financial Officer. We will commence the call with opening thoughts from the management team after which we’ll open the floor for your questions. Before we begin, a standard disclaimer. Certain statements made or discussed today may be forward looking. Actual results could vary and a detailed disclaimer is available in our Q1 FY26 earnings presentation which has been shared and uploaded on stock exchange websites. With that, I’d like to invite Dr. Harun Kanani to share his perspectives. Dr. Kanani, over to you.
Harin Kanani — Chairman and Managing Director
Thank you, Nishit. Good morning everyone. Thank you so much for joining our early morning earnings call for Q1FY26. We are pleased to have you join us today to review our financial performance and update you on our key strategic initiatives. Beginning with our performance for the quarter, we achieved remarkable resilience, successfully maintaining our momentum. Our diversified business model proved its inherent strength especially as we navigated the challenge of our Dahesh plant unavailability throughout the quarter due to the fire incident. Despite those operational hurdles and a prevailing soft pricing environment, our results were bolstered by sustained volume growth in the base business.
Additionally, initial commercial sales from Neogen Ionics. For both electrolyte and lithium salts — Hello? Can you hear me?
operator
Ladies and gentlemen, we have the management line reconnected hearing, sir. You can go ahead.
Harin Kanani — Chairman and Managing Director
Yeah. So. Despite the operational hurdles and a prevailing soft pricing environment, our results were bolstered by sustained volume growth in the base business. Additionally, initial commercial sales from Neogen ionics for both electrolyte and lithium electrolyte salts began contributing meaningfully. Our ability to navigate this complexities underscores the remarkable strength and adaptability of our overall operations. Turning your attention to the key updates during the quarter, our recovery from the hedge fire incident is progressing swiftly. We have secured initial insurance claim with INR 60.55 crore received in the June 2025 and additional 30 crore received in July 2025. With this, the net claim receivable is INR 268.27 crores on consolidated basis.
We expect this to be realized in due course. In addition, there will be some additional amount which we realize which is not determined for reinstatement value difference as well as for the loss on profit. The replacement plant is taking concrete shape at an adjacent location. We have completed the civil foundation work and placed orders for long lead time equipment. The plant remains firmly on track to be operational by next year. In another significant development, our Chairman and Managing Director Mr. Haridas Khelani will be retiring from his position effectively September 30, 2025 as he completes 80 years on that date.
The entire Neogen family extend its deepest gratitude for his immense contribution since founding the company, his visionary leadership in establishing a strong foundation and his pivotal role in making Neogen a leader in specialty chemicals while fostering a culture of excellence and innovation. In recognition of his outstanding dedication and invaluable contribution, the Board has conferred upon him the honorary title of Chairman Emeritus effective 10-01-2025, ensuring we continue to benefit from his invaluable guidance and mentorship. Concurrently, the board has designated Mr. Anurag Sivana as Chairman and non executive non independent director effective 10-01-2025. This ensures a seamless transition and strong leadership and guidance for Neogen in the future.
Shifting our focus to strategic growth drivers, I will provide updates on expansion initiatives particularly in battery chemicals segment. Regarding the greenfield security for electrolytes using MUIS technology in Pakhajan Dahech CPIR filing work is completed, civil work is significantly finished and long lead equipment have already been ordered and we have started receiving the same. A crucial milestone is the ongoing factory acceptance test of the module manufacturing plant at Mitsubishi Engineering Corporation manufacturing workshop site of our total 1500 crore capex. We have deployed INRs 506 crore to date and remaining amount will be deployed shortly in line with the accelerated project schedule.
A major development is the incorporation of Neogen Morita New Materials Limited NML for short. NML is wholly owned subsidiary of NeoGenionics Limited and step down subsidiary of NeoGen Chemicals Limited. This venture aims to leverage Morita Chemical Industries, Japan’s proven technology for over 30 years of experience to produce lithium salts. This salts will be used captively for our electrolyte production and for global sales, addressing the growing demand, accelerating our entry into high growth lithium ion battery materials vital for India’s EV and energy storage. This project positions Neogen as a scale domestic manufacturer. We aim to capture significant market share, reduce import dependence and leverage global technology, diversifying revenue and establishing ourselves as a critical advanced battery supply chain supplier driving future growth and profitability.
Despite adjusting our near term revenue guidance to reflect current operational realities, our long term trajectory remains robust. Overall, we are confident in our ability to continue delivering value to our shareholders through strategic execution, innovation and unwavering commitment to operational excellence. That concludes my opening remarks. I would now request our CFO, Mr. Bhubhikrishnan Sati to share financial highlights for the period under review.
Gopikrishnan Sarathy — Chief Financial Officer
Thank you. Dr. Hareem Karani Good morning everyone. Welcome to Neogen Chemicals Q1FY26 earning call let me walk you through our key highlights. Financial Highlights all numbers are on consolidated basis except unless called up specifically for Q1FY26 we achieved a revenue of 186.7 crores, higher by 4% despite the non availability of the hedge plant for the quarter as highlighted by Dr. Harin Karnani, the NeoGen Ionics contributed Rs. 5.4 crore revenue in Q1 FY26 building on its previous year full year revenue of 11.95 crores. Organic revenue for the period stood at 165 crores reflecting a 16% increase while inorganic revenue came at 22 crore.
EBITDA stood at 31.5 crore up 2% year on year. Despite the headwinds, we maintained a steady EBITDA attributed to favorable product mix and our ongoing cost optimization initiatives which effectively offset the declining realization. Consequently, our EBITDA margin reached 18.8% on standalone basis and 16.9% on consolidated basis. Our profit after tax largely reflected our operational performance during the quarter coming at 10.3 crores. Moving to other key developments during the quarter, CRISIL has reaffirmed our credit rating at Crisil A with an outlook negative for long term and CRISIL A1 for short term with both removed from the rating watch with developing implications.
This reconfirms the confidence in our financial stability and strategic direction. Furthermore, our Board has Approved raising of rupees 200 crore through private placement of fully paid Secured, listed, rated, redeemable, non, cumulative, NCD through one or more tranches. This will provide us additional financial flexibility for our growth initiatives. That concludes my remark. I will now request the moderator to open the forum for Q and A.
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 the 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’ll wait for a moment while the question queue assembles. The first question is from the line of Ankur from Axis. Please go ahead.
Ankur Periwal
Yeah, hi sir, thanks for the opportunity. First question on the salt weight. What’s the status on the product approvals here? Given that we were waiting for the, the exports revenue ramp up there. So just wanted to check.
Harin Kanani
From our side we are all ready. We are still waiting for the customer to schedule an audit. There were like, you know, with whatever is happening in the U.S. currently there were some delays from the customer side. They have not yet fixed the date. But again we remain connected with them and it should happen sometime soon. Also as you are aware, our Dahesh capacity ramp up is also happening. So I think in Q2 for around 15 days. We are also going to take a break to connect the existing plant to the increased capacity which is likely to come by September and October.
But from our side we are ready for the salt. We are just waiting for customer approvals and in the meantime whatever small revenue we generate in the salt, we are basically selling it to nonregulated markets. I mean not non regulated but in let’s say China market where we are actually going against very strong competitors who are already present there. But that’s the small revenue generating. So from our side we are ready. Our capacity increase is also coming online because as you know the hash capacity is going to go up to 2500 metric ton by March.
So ramp up of that and connection to the like that connection to the existing facilities is also going on there.
Ankur Periwal
Sure, just a follow up there. So you know, from a key end user market perspective, US will be bigger or Europe and secondly, how is there any change in demand or slight softness because of the tariff led sort of, you know, uncertainty there and how do. You put your. Question later?
Harin Kanani
Yeah, so for your first question, US or Europe? US is the larger market which is because there’s already a lot of established battery manufacturing activities which are already happening in the U.S. also, you know, while there is A change in Iraq, there is a follow. So there was also. So there were two subsidies available in the US. One IRA was for the EV maker and there’s another subsidy I think called as 45x credits which are basically available to the cell makers. So that is still available to the battery makers and that is also significant like between 25 to 35% of the total battery manufacturing cost.
And that also has a requirement of localization and China free supply chain. So what we have seen is the interest is actually even growing stronger because people didn’t have a clarity that you know, pose the big beautiful bill, what changes are going to happen. But those who are maintained and to some extent even the non China provision were made stricter. So I think that we have seen interest from the international market actually increase. So the combination of that as well as Neogen forming jv, we have seen more newer companies, you know, who were kind of sitting on a fence waiting for this clarity to now join.
And now one by one they’ve started visiting Neogen. So before we had one or two potential customers. Now we have four, five different customers who have started approaching. They are battery makers, electrolyte makers as well as even EV makers. So all of these guys are now approaching Neogen and having some visits that have already happened and some more are happening during this quarter.
Ankur Periwal
Sure, that’s helpful and just you know the follow up there. So what is the typical time lag required at your end if you want to let’s say increase your salt capacity given there is so much demand and interest coming in.
Harin Kanani
So at present we will be at 2500 what we are targeting. And if I have to increase little bit, I can increase 1000 metric ton more. And that is mostly be focused on the additives because I mean the lithium additives part, let’s say lithium salt is two part the main electrolyte salt as well as the additives. So we are basically keeping right now additive facility increase is all planned at Dahej and the main electrolyte salt capacity is like as you are aware, you know it’s coming out at Pakharan. So we have kept a room to add one Kta in Pakhajal very fast, sorry in our Dahesh facility for the additive.
And we have kept two additional KTA in Pakhajan. So when we complete the Capex and we have 5.5 KTA, at least 3 KTA can come in relatively quickly within like 6 to 9 months kind of a period. And then beyond that, you know, we’ll have to Plan because we a new manufacturing block either at our Dahij or our Pakaran site. So 3kpa can be added from 5.5 to 8.5. But beyond 8.5, you know, we will have, we will have to wait and maybe around 12 months to 15 months if you have to set something up.
Ankur Periwal
Sure, that’s very helpful. And just a second pick on the, you know, the battery plants coming in India. There are some delays but if you can, you know, highlight the timelines on, you know, which all plants are coming and what could be the time frame t hat we can look at.
Harin Kanani
So from our view, you know, we are seeing our customer like Ola, they’ve announced the timeline that by September, October, they want to have commercial operations like ramp up and then another ramp up which is expected by next March or April. So we are on track of that. I think we also heard like publicly that Excite is also starting relatively very soon in the second half. I think the announcement was the 15th of August for some trials to start. So I think they are, they both are on track as we had predicted in 2024. And the remaining customers like Reliance, Tata and Vari and Amaraja.
So they all are targeting what, you know, they’re publicly announced by 2026. So that timeline remains.
Ankur Periwal
Okay, great sir, thanks a lot for all the questions and all the.
operator
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Abhijit Akela from Kotak Institutional Equities. Please go ahead.
Abhijit Akella
Yeah, good morning and thank you so much. So possible to share the volume growth number for the first quarter please across the businesses.
Harin Kanani
I would say on the bromine derivative side, on the organic side, the volume growth would be around 10 to 15%. And on the lithium side, there’s been little bit of a degrowth in this particular quarter. So last quarter we had pushed a little bit and Q1 is generally softer but this time it was a little bit more softer than normal. But overall in the demand that is not too much of a challenge. The demand still continues and I think by the end of the year lithium will also make up will have the same volumes or slightly better.
Abhijit Akella
Okay, and just to clarify, the ionics business is included within inorganic itself, right? The 5 crores or.
Harin Kanani
That’s right, yes.
Abhijit Akella
Okay, thank you. The other one was just, you know, the thought process behind this NCD issuance. So you know what exactly the purpose we are looking for here, Is it working Capital or something else.
Harin Kanani
Yeah, so basically you know we still have around 250 crores odd amount which is to be received from the insurance and there can be sometimes you know, mismatch in the timings versus we want to ensure that our capex like you know, plans and everything doesn’t get affected. So I think there was a small interest delta so we thought that is worth having but ensuring that there’s a smoothness capex happening and we are not fully dependent on the insurance only. So overall you know once we receive all the insurance money as well as you know this debt considering and this is basically some additional liquidity that we want to have in the system so that you know no like you know we have like so many capexes which are ongoing so that there is no delay or anywhere because of you know, cash flow related funds.
So it’s just a basically liquidity to be keeping the system any mismatch in insurance receipt or any other funds which we need to be used. With so many capexes which are ongoing overall there is no additional need per se it’s just that just to keep the liquidity and just to keep the flexibility and reduce the dependence in case there’s a timing mismatch with the insurance.
Abhijit Akella
Got it. So by when do we expect to close this? That was run by NCD issuance, the timeline for this and number two then once this is done we have basically all our lines of financing tied up. So for whatever capex we plan plus working capital requirements. Is everything in place now with this?
Harin Kanani
Everything is already in place. Like this is only additional you know, just in case insurance timing mismatch. And yes this also is likely to happen in the current year, current month, sorry within August, before August 10th. Again we have received confirmations from investors who want to participate in that. There’s even requests for more but we are capping IT at the 200 crore limit which we have kept and yeah and all the other working capital capex for phase one, phase two everything is already there.
Abhijit Akella
Thank you. And just on the capex at pakhajan out of 1500 I guess 500 odd is done. So far the amount spent in 1Q was only about 36 crores. So is that the normal phasing you expect the capex to pick up significantly in the next to three quarters to meet your deadline of March 26th for commissioning?
Harin Kanani
Yes. So there are two things, you know this module plant once it shifts so that’s going to be one big expense. So once we complete the fat and post fat we have Given some modifications. So as they complete and ship that, so that’s going to be one large capex item which is going to add significant chunk. The second point is that you know, for our salt, as you know our JV discussions are progressing well. Our JV partner also made an official announcement in Japan, you know with the intention of forming the jv. Our discussions have progressed well.
We are mostly aligned the technology and like some of the only finer points are now getting aligned. So we expect that to happen in two, three months. So what has happened is the equipment which we were the long me time equipment are already ordered by my JV partner in the Japan and I mean they’ve already ordered from their existing suppliers, they are kept ready. So as soon as we conclude the JV a large chunk of equipment will be ordered from there. So more or less, you know we are on track to complete by March. Electrolyte is 100% sure.
On the salt side we are just reviewing once we have the final alignment we will know it will be just couple of months here or there depends on like you know how the exact alignment happens and we have clarity after alignment but overall capex will happen more or less in time. Maybe some slight change on the SALT side we are watching once we have the final JV alignment we’ll be able to use the right picture on that.
Abhijit Akella
And that is actually my next question on the jv. Any further details that you might be able to share in terms of the stakes of the two partners or the total Capex amount and the split between the two of you? Something like that.
Harin Kanani
So I would request to you know, share this once the JV agreement, I know the numbers and we have agreed on that but I think we would wait for the JV agreement to get concluded and after that we will do okay.
Abhijit Akella
Okay, just one final thing from my side. While these auto battery capacity was still awaited in the Indian market in the meantime there seems to be quite a significant amount of development around energy storage, around solar, etc. So how sizable could that opportunity be? How are you seeing things unfolding on that front?
Harin Kanani
No, so you know, this was something which you know in the past also we had eluded that you know energy storage can surprise us. And what we are seeing is and I think you can also track that more and more people are requesting almost now all new solar projects which are coming, they are coming with a energy storage kind of capacity which has to come online. What I have seen is you know the percentage. So if you are setting up like 100, like you know, 1 giga kind of a facility or 500 megawatt kind of a facility.
I’ve seen like around 25 to 50% of that requested as an energy storage backup, you know, so that you can utilize the maximum of the solar energy which can happen. So I think if you look at that and if you think of 500 gigawatt hour of solar capacity which India wants to put by 2030 and economically also it’s making such a strong sense, you know, this number in my view can be like you know, 30, 40 giga or even higher per year basis because you know we are going to go to the 500 giga by 2030 and you can have around 100 to 150 giga kind of like a battery storage requirement over the next four to five years.
So it can be somewhere between 30 to 40 giga kind of just for energy storage over next three to four years. At present if I have the last year number there were around 10 to 12 gigawatt hours of energy storage projects which are already tendered which will come, let’s say over a two year kind of period. So around five to six giga is like, you know, on an average consumption for energy storage is already there.
Abhijit Akella
Okay, okay, so sorry, just to clarify, out of the total capacity that we. Have in terms of electrolytes, do you. Expect a significant portion of it to go towards energy storage? Any rough estimates over there?
Harin Kanani
So if you just think of you know the six people who have announced, the six people I mentioned earlier, right. Who have giga factory starting till end of the next year, you have Reliance and Worry Energy which are completely basically from energy storage, solar point of view and both Excite and Amharaja, partly solar and partly for auto. So you can say at least like you know, 40, 50% of the capacity in terms of the number of people who are coming online is actually for energy storage and if you actually put their giga capacities and divide maybe 50% or even more is for giga storage, energy storage.
Sorry.
Abhijit Akella
Great, thank you. Thank you so much Dr. Ara. All the best. I’ll come back in the queue for more.
Harin Kanani
Thank you.
operator
Thank you. The next question is from the line of Kartik Srinivas from Unifi Mutual Fund. Please go ahead.
Kartik Srinivas
Hi sir, good morning. Thanks for the opportunity. I just had two questions. One is on achieving the revenue run rate of about 300 crores which we have guided the market in terms of Neogen inx. So we have done about. We are currently running at about 5 crores for this Quarter. So how do we. So is this going to be a quick ramp up over the next 3/4 to achieve the 300 crores on it?
Harin Kanani
Yes. So we had you know, guided earlier also that majority of this will come in the second half of the year. That remains still true. I mean in the second quarter it’s not going to be like a hundred crore kind of number but third and fourth quarters will be very strong. It again depends on two points, like you know, how fast the electrolyte companies come up and so the cell production comes up which will drive the electrolyte demand. And the second is how fast once we approve how fast the international customers will ramp up the salt, electrolyte, salt and additive purchase.
So again both of these based on whatever customer guidance is in the second half. So we are expecting this to likely come in the second half.
Kartik Srinivas
Got it. So for this 300 crores we have the orders tied up. Right. So on a steady state basis how much will be export? Now given that the VESS demand is picking up even in India and lot of battery manufacturers are coming up and inquiries are lining. So how will be the split of exports and domestic on a steady state basis?
Harin Kanani
Actually you know, if you think of like, you know the capacity which we are ultimately setting up, which is 30 kta of electrolyte and 5.5 km of the salt, what we believe is in the beginning around 4, like out of the 5.5, around 3 and a half to 4 kilometers will be for the international market and then the balance will be for our local consumption and then for our internal consumption and then as we basically ramp up the capacity like all the electrolyte we will have to most likely add more capacity for the salt. So it will depend on like you know how that happens.
But in the beginning it will be more export heavy let’s say if we’re talking of next financial year. But then as we go maybe they will balance out. And this also depends on you know, how international market like how strong policies will be put for non China policies because everybody wants to have Neogen as a backup like even if there is no. So some of the customers I had recently interaction with, they said okay, even if there is no incentive, they can’t depend only on China because of what they did in Anode and Rare earth.
So they definitely want to have a backup supplier. But will we be the backup supplier or will be the main supplier? Also depends on all the policy frameworks which are getting set up across. I think it’s little bit early to say okay, three years down the line, five years down the line. But in the current year and in the next year exports will be the main drivers. And once India picks up electrolyte. So we are talking of let’s say 2027, 2028. Whether Indian electrolyte will be more or salt will be more will depend on like you know how much market share we get in India for the electrolyte and like you know how the international view is about non China suppliers.
Kartik Srinivas
And who will be our competitor in India for the same electrolyte and this one salts capacity.
Harin Kanani
So till now you know I think Gujarat Floro is one of the companies which has announced electrolyte capacities but we don’t have exact clear volumes on that. And also for electrolyte salt they have announced capacities and intention to increase capacity in the future. This is in India. But basically you know when you are thinking of electrolyte salts you are thinking of a global market. So if you look at a non China global market you have one company which has started in Japan, one company in Korea and after that Neogen and GFL are number three, number four.
So there are only four people at present outside China who can, you know, give you electrolyte salts and additives the way we are.
Kartik Srinivas
So at the world level what will be the total capacity as it stands today? So we are at about 5.5km after two years and what will be the global capacity today and by FY28 say what will be the how little ramp up.
Harin Kanani
So you know today the world capacity is somewhere between 50km to 100km of the salt and we are 5.5. So we’ll be somewhere between 2.5 to 5%. Sorry around 5 to 10% depending on that, depending on the consumption. And I think if you go to our investor presentations we have given some numbers already for 2030 for the international expected demand assuming 3000 GWh kind of battery production, battery requirement by the time the main point is, you know, out of this. So if you look at non China demand, the total non China demand, sorry capacity which is available today is around 7, 8 KTA.
So you know what we are adding is significant of that because today 90, 95% of the capacity is 90, 95% of the capacity is basically China.
Kartik Srinivas
You got it. And my last question is on the tariffs given that the new tariffs have been announced. So is there any impact for you or just stated.
Harin Kanani
As I explained, you know in one of my earlier questions Karthik G. That what we have seen is that with the tariff coming in now, there is more clarity and while there is lesser the ira, the IRA for the battery EV manufacturers that is like, you know, is like curtain, but the clarity on the battery and the requirement of non China has given clarity. So again customers who are sitting on the fence are now like, you know, are now even more keen. And with what happened in Rare Earth and to some extent Anode and China’s message that they want to restrict even LFP technology, people are even now more worried to depend on China because most of the EV makers, non China, IV makers, China is the biggest competition for them and they’re all worried if they will influence and not allows them to get either key materials or key technology.
So we have seen international customers being more keen to have a China free supply chain now as compared to even earlier.
Kartik Srinivas
Got it. So that’s it from our side. Thank you so much and wish you very all the best.
Harin Kanani
Thank you.
operator
Thank you. The next question is from the line of Jason Sones from IDBI Capital. Please go ahead.
Jason Soans
Yes sir. Thanks for taking the question. So first question, just wanted to know, you know, in terms of the base business for both bromine and lithium side of the business, are you seeing some pickup in let’s say, you know, our verticals like pharma, aggro, kins, what is the pickup you’re seeing if any? And in light of that, and I know the fire incident that has impacted your plant and all that, so the standalone guidance, is that maintained what you released on March 7 or is there some change to it? Just wanted to see some more color on the sub segments within the base business.
Harin Kanani
Yes, Jason. So I think for the pharma we are seeing a very strong pickup. We are also seeing good new inquiries coming from, you know, semiconductor, flavor, fragrance and other industries as well. Agro has improved but like you know, again still not at its full and especially agro we had international business and you know, with the Dahesh plant getting affected this year for us, agro again will not be able to contribute so much because some of the international customers we had to supply from the Hedgehog. Although one positive point is that in our CSM business we have received some quite good large inquiries on the agro side for let’s say 20, 26, 27, 28 kind of launch.
So the pipeline for the agro remains good. So as the market recover, we are there to basically capture the demand from the customers. And almost most of the customers appreciated the speed at which Neogen communicated the fire incident, the speed at which we are rebuilding the plant and we are bringing them online and some of the improvements we are making there. So all these were taken very positively by the customers. So to answer your question, Pharma is looking good and getting better. Other industries are also looking good and getting better. So the interest again that China plus one kind of mentality is again little bit getting more active in these industries as well.
And agro, the demand is slowly improving. Like not great jumps but it’s doing better. We’ve seen also good interest on our organo lithium piece. So we have now started making more inroads once we have a capacity visibility in the international markets. So I think that is also something which we are hoping will help us with all of that. You know, look we are on track to achieve what we had targeted. So around 825 to 875 crore on the base business. Like we as you know we had to like, you know, change some of the strategies to take care of, take care of the impact on the hit side.
So our Q1 performance was little bit affected by you know, while we are transitioning to alternate strategies and shifting molecules around. But I think we’ll see even further and in spite of that we were able to you know, do last year performance when the hedge fund was still there. And as we get into Q2, Q3, Q4, we should see better performance as compared to what we did in Q1. And we look, so that’s why our guidance remains the same on the inorganic lithium side. As I explained earlier that like you know we want on the inorganic lithium side also that the demand this quarter was a bit less but I think by the end of the year we would have caught up or we would have been slightly higher.
So that’s I think covers all the, all the segments.
Jason Soans
Okay, sure sir. And for this to, I mean I. Understand that an earlier participant did ask. This but for battery chemicals you are. Seeing a good ramp up. I know you had checked 100 crores for 26. That could have some change. But we have good visibility in the second half. You know, of course it depends on the cell capacities coming up and the lithium salts pick up as well. But we have still decent visibility for.
Harin Kanani
That in the second half. Yes, there is. And if I see right, I mean for example I sold more electrolyte in one quarter than I sold in the whole of last year. So I think that’s a positive sign. Right, right. And even in last July, August, I think even this quarter would be similar or slightly better. So I think we are seeing ramp ups. But I have to say, you know, with the way the industry is transitioning and you know, we are being one of the earliest battery material, I think maybe one of the only battery material producer who’s ready with giga facility already.
So I request, you know, all of you to have a little bit of patience. I think what we really should be looking at because we are the pioneers or the beginners here. So we have to mainly look at, you know, what is the scenario in 2027, 2028, right when we said we are going to have the full utilization levels. And if you look at 27 and 28, whatever has happened in China, the rare earth and the anode, like, you know, people are more interested, more keen to basically buy from India. So, you know, that makes our long term business more strong.
As well as our JV also has been very, very strongly appreciated by the customers because they get the comfort that, you know, Japanese technology in India from whom they are buying for 30 years is like that. We are the only combination who can give that. And similarly on the electrolyte side also with whatever is happening in energy storage, the concern about like, you know, India having enough demand is going because whatever EVs, two wheelers, three wheelers, four wheelers can be a little bit slower. But you will have a bigger demand also coming from energy storage part also like, you know, companies like Suzuki have been announced that, okay, they would also be now setting up a battery plant maybe a little bit later 2020 and 29.
So once the mainstream companies also start joining into battery and cell production, I think all these are positive signs for good demand, you know, in 2728, both on electrolyte side as well as solid side. So I think this is going to be. So we will have to really keep our eyes focused on 2728, try to do best in 25, 26. But I think if I look at 2728, we are in a very good shape.
Jason Soans
Okay, sure, sir. Thanks for that detailed answer. So just also I missed, you know, you had mentioned in the response to an earlier participant, I think you mentioned two subsidy acts in the US So again there’s a lot of, you know, uncertainty over the tariffs thing and the ira, you know, in fact getting reduced and the one big beautiful bill and all these things. How do you, how are you seeing in the us? Because of course there’s a, you know, a kind of a China plus one is on the up move. You know, that bodes very well for us.
So what are these Acts of this and some color on how the US is approaching it. I mean, all the, you know, the confusion we have there.
Harin Kanani
Yeah. So you know, basically Ira and the big beautiful bill. Right. I mean both of that basically were focused on one very clear message which is basically not to depend on China. Right. So even the parts which relate to the battery material, what I called as like 45x credits. Right. So even those are basically linked to like, you know, having some non dependence on China and localization. So that’s a positive message. I think, you know, that is there is no point to guess now. You know, we have to see when the dust settles. Right. What is the final.
And the only thing which matters is because sometimes you see some very critical things. They just completely exempt. So they can even say that oh, all battery material is exempt from the tariff. Like you know, like they did for iPhone and sometimes for pharma. So we’ll have to see what is exempted from the tariff and what is not. And then what is the relative position between India, China, Japan and Korea because this is the only four places you can make. Also Japan and Korea. Again, I think largely that also what will be more important is the India and China because Japan and Korea, even.
If they want to set up a. Large capacity, they take very long time because of formations. So mostly we have to see where the dust settles between India and China and whether, you know, they are exempt or not. But for us, what is more important is that when they are giving some billions of dollars of subsidies to the cell makers in US that is linked to not having supply security from China. So supply chain coming from China and having a non Chinese supply chain. So I think that is the positive message. What is the government’s intention? And then, you know, we’ll keep watching there.
But as I told you, that will only make a difference whether we are a backup supplier with, you know, 20, 25% of the market or like, you know, we are the majority supplier with 30, 40, 50% kind of market. That’s the only difference like you know, these policies will have between like the way the policy decision happens. But I think whatever we are currently aiming, we should not have to worry for that. It is beyond that. How fast we will grow will be clear once the dust settles on the policies.
Jason Soans
Sure. And just some quick confirmation.
Harin Kanani
I mean, there are three more participants waiting and we have today limited time because one of the customers is actually visiting us today. So we’ll not be able to attend the call too much longer.
Jason Soans
Sure, sure, sure.
Harin Kanani
Okay, thank you.
operator
Thank you. The next question is from the line of Arun Prasad from Evan, this park. Please go ahead.
Arun Prasath
Good morning everyone and thanks for the opportunity. Dr. Harin, you mentioned in detail about how customers do not want to depend on Chinese for a long period of time. Is there any. Contractually they are locked till certain months or period or year because of which they can’t buy anywhere outside from China. Any of the potential customers that are visiting you as far as you know?
Harin Kanani
No, I don’t think that is basically a concern.
Arun Prasath
Okay. Because despite so much, you know, clearly it seems that they are 100% dependent on Chinese and we are there as an alternative. But still the progress in product approvals or plant visit seems to be in a slightly slower pace. One would assume that given this kind of a high dependence and, and important to diversify supply chain, they would be doing it in a war league scenario. But, but, but on the ground it seems to be moving slow. So what explains this kind of a dichotomy?
Harin Kanani
So the visits are happening, the discussions are happening. But like, like, like we discussed right last two, three months. There’s lot of variability which is happening on the daily basis. So they are just trying to get a hang of that. Like you know, and I think the only other thing is that the real deadline for them is that in 2026. So 25 is more like a comfort year for them. That okay, if I start buying in 25 and I’m more comfortable, 26 is the year where they want to basically start shifting and for the, for the, for the subsidy and all that, 27 is the year where they just cannot buy.
So you know, as we get towards end of 25, 26, so they keep having some breathing room and at present with all the things which are happening with tariffs, you know, they have to take care of what is happening today and juggled with that versus preparing for 2017. So I think that’s a dichotomy.
Arun Prasath
Okay, understood. Just for clarity, the plant visit will happen usually after the sample from commercial plant is received, tested, approved and then only the plant visit happens or it happens after the plant visit. This. How should we look at this process now?
Harin Kanani
So each customer has their own strategy. So some of them have taken the samples and then they will come. Some of them will say no, first I will come, I’ll approve. Only then I’ll spend time in testing the sample. So depends on them.
Arun Prasath
And you also talked about the backup process main being a main supplier or a backup supplier. Typically what is the volume share given to us? A backup Supplier what is your assumption when you assume that you will be a backup supplier becoming a lane supplier.
Harin Kanani
So you know, so one of the customers I discussed with that hey if there was no tariff, what would you do? So that particular customer said hey I would be still 50% non China. And I said how many suppliers would you have in non China? I would have at least two. So that’s basically how I basically come with that number of at least having 20, 30% broadly. Also I have seen that customers don’t like to have more than two or three sources because they want so I think the maximum like you know they’ll have a three supplier approved two, two or three.
So depends on I would say backup would be somewhere on the lower side, 10, 15% on the higher side around 25, 30%.
Arun Prasath
Understood, understood. My second question is on the Morita JD you mentioned that you are yet to get aligned with the JV partner. What kind of a. In what kind of a topics that you there is still say a misalignment either the financial in nature or oper or strategic or more like a product portfolio. How should we look at this non alignment at this point of time?
Harin Kanani
Just basically I would say a lot of it is just the lawyer stuff, legal stuff, you know on the language of the agreement and they are very strong Japanese companies. So Japanese legal way and India’s legal way kind of trying to understand that. So that’s I think mostly that and little bit what we are doing is because they have not given us the exact final, you know, drawings and exact. Because the JV still do happen, right exact detail SOPs. So as we understand that you know we know the big changes we had to do that we have done like you know, the final changes that we need to do in our design to basically crystallize on the final dates etc.
Those are the things which are happening in parallel. So when the JV agreement progresses, you know, in parallel we have more and more information that okay, which segment India technology is better or our Indian equipment is better which is the Chinese equipment or their technology is better and then we are taking the better of the two. In some cases we are even thinking of a third option together that hey, you know, why not build better. So I think those kind of things are currently happening.
Arun Prasath
Understood. One last book mission doctor on our fire incident we have claimed the insurance and got insurance claim for that. But what is our internal estimate for the loss of profit because of this incident?
Harin Kanani
So you know it’s very difficult because the loss of profit is going to Be for a period from April to March. Right. So for the whole year. And basically the loss on profit, the process starts after you reinstate the plant. So the process of giving you loss on profit will be only after that. So if we had a very good number we would have put it in our estimate.
Arun Prasath
Okay.
Harin Kanani
But that’s something, you know, it’s ongoing. So as a company we are very trying out to like maximum operations not affected. But the loss on profit will basically take into account some of the fixed overheads which you would still have like, you know, what is the business which we could have done which didn’t happen and also like you know, some additional expenses we had to do when we shifted the productions around. So I think it’s going to be a little bit complicated. So we will wait for you know, the experts to do that after it especially being insurance, I don’t want to hazard a guess right now.
Arun Prasath
So. Right. So the timeline is basically the next financial.
Harin Kanani
Yes, yes. Loss and profitability if we have a clarity subject to accounting rules in this year. If you can take a provision, we’ll take a provision. But like at present I don’t have.Any number which I can say
Arun Prasath
thank you very much and all the best.
Harin Kanani
Thank you.
operator
Thank you. Ladies and gentlemen. In order to ensure that the management is able to address questions from all participants in the conference please limit your questions to two per participant. The next question is from the line of Archit Joshi from Nirvama. Please go ahead.
Archit Joshi
Hi, good morning sir. Thanks for the opportunity. In the interest of time I have two questions we bunched up together. So first you mentioned that the capex on the JV with Morita that is still undisclosed with respect to the current, you know, agreement that you have with them. Beyond 1500 crores of the announced capex there will be incremental capex coming in Morita or 1500 is accounted for.
Harin Kanani
So basically as you know, you know the existing capex that we have included both the salt and electrolyte and we are not planning unless we feel like right now so many additional capacity. So the only thing is that for the same capacity when we completely align with their technology is there something less, is there something more? So we would get to know that. So that’s the only thing pending. So it’s basically 1500 crore if there is any delta created because of the JV that we will know once we have the full alignment.
Archit Joshi
Got it. So secondly on the current situation on salt and electrolyte in terms of its dollar realization or our current estimate as to what kind of profitability or ROCE we can generate. Is there any estimate to it that we have calculated internally?
Harin Kanani
No. So you know, we continue to have that 20% ROCE kind of as a target in all our discussions with our customers. As we know, the salt contracts and the additive contracts that we have, basically as long as, you know, we, as long as we meet the operational efficiencies that we have targeted, you know, we will be able to get the 20% ROCE on a full utilization basis. So there’s no change in that. And whatever discussion we are having in electrolyte or small quantity of electrolyte also we are selling, we are keeping that delta. Of course the plant is not utilized today but we are keeping that long term delta that at the peak volume this is what it will be so that we can generate the 20% RL.
Archit Joshi
So this is despite, you know, the volatility that we’ve seen in prices of lipsticks or the electrolyte.
Harin Kanani
Yeah, because. Yeah, yeah. Because that is basically China. And we feel even at that, you know, we are cheaper than the Japanese and the Korean. So like, you know, if they want a non China, then this is still one of the best bets in our view.
Archit Joshi
Understood. Thank you. And all the best.
Harin Kanani
Thank you.
operator
Thank you. The last question for the day is from the line of Rohit Nagaraj from BNK Securities. Please go ahead.
Rohit Nagraj
Thanks for the opportunity. So first question. Just clarification on the fire incident. But net claim receivable is 268 crores. And out of that we have received about 81 crores. Right. That’s a total amount. 260.
Harin Kanani
No, 268 is the one. 268 is balance now. Yeah. Remaining. Yeah. And that. And plus as we said, that is from just estimating the net block and the inventory loss. But the in the insurance we have is on a reinstatement basis. So when you reinstate the same capacity, any additional cost that you incur will be on top and will be reimbursed by the insurance company. And there will also be like, you know, there will also be some loss on profit which you were discussing earlier. So these are not included here. They will be in addition to that.
But most of this will be towards the end of the financial year or like you know, something, some, something may go even next year like the loss on profit especially. And the final bid which is about reinstatement might go in the next year.
Rohit Nagraj
And the 200 crores that we are raising. So is it just a top gap arrangement or is it going to stay for the tenure of the entities?
Harin Kanani
So it will stay for the period, the, for the next, I think two and a half years. That’s approximately the period. And it will stay till, you know, all the, all this capex and everything is completed, all the insurance is completed. Yes.
Rohit Nagraj
And the second question is, we have done remarkably well in terms of the standalone EBITDA margins given that the bromine and lithium prices have been denied. If the prices increase, is there any risk to the percentage margin given that probably the EBITDA per kg would remain more or less similar for the businesses?
Harin Kanani
Yes. In bromine, you know, mostly we are able to manage EBITDA and the contribution or the fluctuation in bromine, even if it’s high, is like 20, 30%. So it doesn’t change the percentage margin so much. In case of lithium, it is more like per kilogram kind of a basis. And in the past we have seen that when lithium went to 70, $80, our EBITDA margin on a consult on an aggregate basis had gone down to 16% or I think, yeah, around 16, 16.5% because of that per kilogram basis, where on a percentage basis we are a bit lower.
So that has happened in the past. So if it goes to like 70, $80 kind of level, things like that can happen.
Rohit Nagraj
That’s it from my side. Thanks a lot and all of us, sir, thank you.
operator
Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments.
Harin Kanani
Thank you for joining us today. We trust your queries have been addressed. For any additional questions, our investor relations team is available. We appreciate your time and look forward to connecting again next quarter. Thank you. Once again.
operator
Thank you on behalf of Neogen Chemicals Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.