S H Kelkar And Company Ltd (NSE: SHK) Q4 2025 Earnings Call dated May. 22, 2025
Corporate Participants:
Anoop Poojari — Investor Relations
Kedar Ramesh Vaze — Group Chief Executive Officer and Whole-Time Director
Rohit Saraogi — Executive Vice President, Chief Financial Officer
Analysts:
Madhav — Analyst
Mahesh — Analyst
Abhijit Akella — Analyst
Bharat Gupta — Analyst
Shiwani — Analyst
Prakash Kapadia — Analyst
Rohit Nagraj — Analyst
Yash Sinha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to SH Kelkar and Company Limited’s 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 star then zero on your touchstone phone.I now hand the conference over to Mr. Anuk Pujari from CDR India. Thank you, and over to you, Mr Pujari.
Anoop Poojari — Investor Relations
Thank you. Good afternoon, everyone, and thank you for joining us on SH; Company Limited’s Q4 and FY ’25 earnings conference call. We have with us Mr Kedar, Whole-time Director and Group CEO; and Mr Rohit Al Saraoghi, EVP and Group CFO of the company. We will begin the call with opening remarks from the management, following which we’ll have the forum open for a question-and-answer session.
Before we start, I would like to point out that some statements made in today’s call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings presentation shared with you earlier.
I would now like to invite Kedar to make his opening remarks.
Kedar Ramesh Vaze — Group Chief Executive Officer and Whole-Time Director
Hi, good morning, everyone, and thank you for joining our FY 2025 earnings call. We appreciate your interest and trust that you have a chance to review the results documents. We are pleased to report a strong 15% revenue growth for the fiscal year. This performance was driven by sustained demand across all our segments and especially healthy traction in the domestic market. Our fragrance division grew by 19%, while the Flavor division record a robust 43% growth on a subdued base in the previous year. While large FMCG companies faced constraint in expanding volumes, our growth was supported by increased engagement from small and clients, resulting in improved wallet share and deeper account penetration. Additionally, contribution from global MNC account further supported the overall results. Our European operations also delivered strong growth during the year.
As previously communicated, gross margins were impacted in the second-half of the year-by supply-side constraints. However, we are now seeing signs of improving raw-material availability. To mitigate the impact of elevated input cost, we have already implemented price increase measures and the benefits of which are expected to gradually reflect in our margins in the coming quarters. Notably, the incremental cost associated with our strategic growth initiatives have stabilized, positioning us favorably for margin recovery and operating leverage in the second-half of ’26 and onwards.
Our Ingredients segment continues to make steady progress during the year. We are seeing — at this point, we are seeing good emerging opportunities driven by the tariff and China Plus one-shift as well as rising demand traction in the European markets. These trends, coupled with a favorable global export environment are expected to aid the segment’s growth outlook going-forward. Coming to our ongoing projects, the reestablishment of the fragrance facility is progressing well and is expected to be commissioned within the current financial year. This facility was fully-insured and the rebuilding is supported under terms of the insurance coverage.
Separately, we have received an interim payment of INR95 crores from our insurer as part of the fire-related claim settlement while the balanced claim continues to be processed. Our upcoming greenfield facility at is also advancing as planned and is slated for commissioning later this calendar year. Given the proximity of both these sites, we are building operational synergies in systems as part of our broader BCP framework. This will also enable better inventory management and support our objective of reducing inventory days of sales going-forward. In addition, while the year began with operational challenges on-the-ground, we have since stabilized our business and pleased to share that in-line with the dividend policy and continued commitment to shareholder value-creation, the Board has recommended a final dividend of INR1 per equity share of face value INR10 each.
Looking ahead, we remain focused on leveraging multiple growth drivers. In addition to ramping-up our CDC in Germany and UK, we are advancing strategic partnership, driving product innovation across segments, capitalizing on favorable global market dynamics. As the macroeconomic pressures ease, we are confident in our ability to sustain capture emerging opportunities across both domestic and international markets and deliver sustainable growth for all stakeholders.
With that, I now invite the moderator to open the floor for questions. Thank you.
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 — if you wish to remove yourself from the question queue, you may press and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles you. Our first question comes from the line of Madhav from Fidelity. Please go-ahead.
Madhav
Hi, good afternoon. Thank you so much for your time. Sir, you spoke about having good multiple growth drivers lined-up. And you also mentioned something about favorable market dynamics. Could you give some more color in terms of these comments? And also if you could maybe give us some sort of guidance for FY ’26 sales growth, that would be really helpful? That’s my first question.
Kedar Ramesh Vaze
So as you know, we have invested in our CDC in Germany. We are upcoming investments in Manchester plus New Jersey. So all these are new geographic new geography investments. So they will result in more business in newer geographies for future sustainable growth. That in addition, we also see favorable market dynamics vis-a-vis ingredients business and global ingredients business, which has turned around in the last two years, we see good tailwinds from the China I think China Plus One strategy or alternate to China strategy, especially in the chemical and ingredient business, India has a very strong position vis-a-vis other countries in the world. So that should benefit the industry as a whole. And for us, it’s a good opportunity for future growth on the global ingredients business.
To give a color on the revenue, whilst their opportunities are quite high and different, these are more mid-term opportunities as we are just entering these markets. Our current existing markets in Europe and domestic market in Southeast Asia, we continue to see healthy traction. I continue to, I would say, forecast or predict 12% plus CAGR growth year-on. And as we have always alluded on the mid-term, I think there is no reason to believe there will be any slowdown in this coming year. So we are still guiding 12% plus CAGR year-on-year despite a strong growth here last year.
Given that our factory production facility is basically getting on-stream later part of this year, we will look at also margin improvement and look at — so we had very strong growth this year. We may look at a more moderate growth and focus on the margin management to improve our margins from the 43% average we had for this year to slightly better for next year. So I’m — I’m very confident that we have good leverage to both grow — grow at 12% plus and maintain or improve our gross margins.
Madhav
Understood. And sir, anything on the EBITDA margin as well? I think we finished at about 15%, right, for this year. We know there was some pressure on gross margin and some fixed costs, which we spent ahead of time, but anything on the EBITDA margin recovery for this year?
Kedar Ramesh Vaze
So I think we had some additional cost this year, revenues will ramp-up. So those costs in relative terms will come down. I am just mindful that our loss of profit policy will get over this year. We have some additional operating costs to the tune of maybe INR15 crores to INR20 crores annualized basis. These are cost which we will incur for, I think two to 3/4 of this year as the new factory gets ramped-up, so maybe for the full-year. So I don’t see much leverage. In this year for big jump on the EBITDA margin, there will continue — we continue to be one year of additional cost till the new factory operations resumes end-of-the year. So this will again be a transient hit. We expect it to be least two quarters, maybe 3/4 of subdued margin. So 15% remains and it may get little bit better as we grow, but the real jump will come in the next financial year when the new factory setup or the revised factory setup comes back into operations.
Madhav
So this — sorry, just to understand, INR15 crore to INR20 crore of additional cost will be spent in fiscal year ’26 for the new factory commissioning. Is that right? And then that we spent in the next —
Kedar Ramesh Vaze
Not for the new factory commissioning. We have incurring this cost in this year as well for our operations. So this is the additional cost because the factory is not in operations today. We are hiring different locations and kind of rent cost, transport costs, lot of miscellaneous cost all adding up to roughly INR20 crores in total. So this INR20 crore for the — this year is covered under loss of profit insurance policy. Next year, we will not have that coverage and as soon as the new factory is ready and we move back into our own operations, these are rental costs and miscellaneous costs related to BCP operations will — this will go down or reduce substantially in the year-after.
Madhav
Okay. Maybe I’ll just clarify it offline again, but you’re saying so this year you’re saying margins — EBITDA margins could stay-in the 15% range only and then next year it should start recovering. That’s the way we should look everything.
Kedar Ramesh Vaze
Yeah, 15% will start to improve, but it will not be in-line with the long-term EBITDA expectation that will happen in the year-after because our own factory will come on,
Madhav
Which is the 18% to 20% range, right, the longer-term, which we are in?
Kedar Ramesh Vaze
Correct. So I think 15% will start to improve in this year. We may not reach the 18% to 20% in the operational additional cost. And then the year-after we should hit that target.
Madhav
Okay, perfect color. All right. Thank you.
Operator
Thank you. Our next question comes from the line of Mahesh from LIC Mutual Fund. Please go-ahead.
Mahesh
Hi, sir. Just on margin front, I think this year we reported EBITDA margin of 14%. So is it that next year — this year could be 15% and maybe FY ’27 will be the year when margins could be 17%. Am I right understanding, sir?
Kedar Ramesh Vaze
Yeah. So we have around 15%, I mean somewhere I don’t know you’re saying 14%, maybe it’s somewhere around 14 points something. So I see it as 15% this year. We will improve from that in the coming financial and on the longer-term, the year-after and thereafter, we are looking to be between 18% to 20% EBITDA as a business.
Mahesh
So FY ’27 could be like 18% to 20%, right?
Kedar Ramesh Vaze
That’s right.
Mahesh
Okay. Okay. And sir, any capex from plan for next two years?
Kedar Ramesh Vaze
Yes, we have almost INR200 croress in this year itself. Some of it obviously financially will spill-over in terms of actual cash flows for next year financial as well. So in the next two years, we are looking at something like INR200 crores of capex.
Mahesh
Okay. And sir, what will be the closing date probably this year, next year? I mean, given the capex plan.
Kedar Ramesh Vaze
I couldn’t hear the net-debt. Rohit, you may want to answer that.
Rohit Saraogi
Yeah, so our net-debt today is at INR658 crores with the INR200 crores of capex planned for next two years and the insurance money funding for part of it plus the cash-flow. FY ’26, we believe would be somewhere in the range of INR550 odd crores, plus-minus INR20 crores depending on how much we received from insurance. And from FY ’27, there will be a substantial reduction.
Mahesh
Sure. Thank you so much, sir.
Operator
Thank you. The next question comes from the line of Abhijit Akela with Kotak Securities. Please go-ahead.
Abhijit Akella
Yeah, good afternoon. Thank you so much. First of all, on the price increases that we’ve been trying to institute in India, could you help us understand, you know, what the status on that is and how much of a contribution to revenue growth that might make in fiscal ’26, just the price increase component.
Rohit Saraogi
I think the price increase in average is roughly 3% to 3.5% in term of the overall business. So that is the expected price increase effect.
Abhijit Akella
Okay. So this is across the consolidated company, right, including India as well as Europe all altogether.
Kedar Ramesh Vaze
Yes, yes. Yes.
Abhijit Akella
Understood. Understood. Thank you. And from the new — three new centers that we have set-up overseas, the ones you alluded to, any visibility we have regarding any traction in business that we are starting to see in the upcoming financial year?
Kedar Ramesh Vaze
Yeah. So the first center in Germany, we just completed one year from the first, let’s say, the first nuts and bolts starting in the — working in the center. It’s taken us six to seven months-to hire, put all the people and teams and get fully ready. We just completed one year from the actual first date of starting our work-in the center. So we are now fully ready. It is operational. We have already projects and project wins, which have started from Germany and which is going to various companies. So there is a — it’s now in a full swing operation and that will help us to generate good traction on business.
Manchester and New Jersey are just starting, so it will take at least another year before New Jersey is fully up and running and maybe Manchester Center takes even 18 months from now before it’s starting to deliver in terms of project and business in that in that sense. We have enough projects, enough visibility for these centers to come up and so that continued — continued growth momentum is sustained.
Abhijit Akella
Got it. Maybe just to understand, upon peak utilization from all of these centers, which I presume would take maybe three to four years. What might be the revenue potential that one could target given the — we’re spending INR50 crore INR60 crores per year-on there. So what could it be potentially?
Rohit Saraogi
So the INR50 crores INR60 crores will give us INR50 crore INR60 crores of new business every year ended, so it is cumulative. And we are also looking for, let’s say, a INR60 crore to INR80 crore single businesses with the global accounts. So that may not happen every year, maybe happen every alternate year, it could happen every year. So the potential is there. But the INR70 crores to INR70 crores of new business in addition to our standard INR30 crore INR40 crores. I see that the growth momentum as a absolute number will almost double. But denominator also as we have grown substantially, we see that denominator also will grow. So you know to sustain 12% growth year-on-year on a bigger denominator, we need more new wins and more new business per year. So that’s what will happen. I think next year, and we will start Germany coming on-stream the year-after USA and then UK. So in three years, we will keep building momentum of new wins and growth. I think at its peak, probably INR100 crores of new business we will generate from these EV centers per year.
Abhijit Akella
Understood. So just to clarify, over the next three to four years, this could potentially — these three centers could potentially be contributing somewhere in the range of INR250 crore INR300 crores of revenue for us, right?
Kedar Ramesh Vaze
The next three years, yes, yes, I would take that number.
Abhijit Akella
Got it thank you so much. And just on the 12% guidance that we are offering for the upcoming year, is there an order book visibility we already have like in terms of maybe you know, certain amount already tied-up that gives us confidence that this is very much doable.
Rohit Saraogi
So we don’t have many long-term contracts, but we have very good data from how the client behavior and business has been growing in the last years. So we are very confident of this number. We will need to do 7% to 8% of new business wins, which I believe we have consistently done in the last few years. So I’m not faced with the 12% number for this year. The momentum is already there, a new win pipeline is there, things are in-place. I think the challenge will start after a couple of years when we have a bigger denominator, so we need to do that 12% in absolute terms a bigger and bigger number. So that’s how we see it.
Abhijit Akella
I get the picture. And one last thing before I get back-in the queue, if you don’t mind. Just on the global ingredients business where you mentioned that this China Plus One tailwinds are creating new opportunities. I was just sort of hoping to understand, we’ve always been a fragrance company rather than a chemical company. And so how do you see Kelkar’s right to win in that market given that there are already quite a few chemical producers in India as well. So how do we sort of position ourselves to benefit from these opportunities?
Kedar Ramesh Vaze
So our position vis-a-vis other producers in India is very, very, very nice. We don’t largely compete with them. We have a lot of niche — I mean, our capability in terms of the chemistry and what we can do is much broader than almost all the other players in the country. So we have niches where there are no or very few or very small competitors within India. What we have not been aggressively pursuing is to compete with the — largely the Chinese chemical companies and it ends up being a low-margin business and lot of capex. So we have not been competing with them accepting one or two large ingredients. But given the current geopolitical and the tariff scenario, there is demand from the client side to have alternate vendors. So when you have — you have, you know, getting business by competing on price is different from getting business of 20% 30% market-share because they want alternate suppliers. So that business we are keen to enter into, which is not margin-dilutive. The business where there are five producers and we will be the sixth is not something which we want to get into.
Abhijit Akella
Understood. And are we planning to make this in-house or we rely on toll manufacturers for this?
Kedar Ramesh Vaze
And I think it’s very early because we are also still not wanting to put any capex till there is clarity on the tariffs and sort of global order of how supply chains will work. So we are not proposing to do any substantial capex at this point. So most of it will be toll manufactured with one or two steps internally done and the rest done from outside. There is more than adequate chemical production capacities in the country, so we can use our IP and know-how and get the get it produced from others.
Abhijit Akella
Got it. Thank you so much, Kir and all the best.
Kedar Ramesh Vaze
Thank you.
Operator
Thank you. Our next question comes from the line of Bharat Gupta from Fairvalue Capital. Please go-ahead.
Bharat Gupta
Hi, Kitar. I hope I’m audible. A couple of questions from my side. So first, when we look at the European fragrance market, so that remain on a flattish note in-quarter four? Any particular reason for it? And how do you see the growth momentum out there for FY ’26.
Kedar Ramesh Vaze
So I think in the European context on the capacity, we are reaching a level where we are now starting to be — let’s say our growth being affected by our capacity. We are putting a new facility in this year as well in Europe. So that problem will get solved by midyear maybe last quarter of this calendar. So the to kind of look at the growth, we have enough growth opportunities. We have not capitalized on everything in Europe in the last quarter and we will see some level of, I would say, flattish growth. We’re doing double-digit growth, we probably do a little 2% lesser than that, but with better margins. So our focus will be on margin improvement to optimize our capacity in Europe at the moment till the new capacities come on-board the end-of-the year.
Bharat Gupta
And what would be the capex number in?
Kedar Ramesh Vaze
It would be EUR6 million to EUR7 million of about 60 crores to 70 crores.
Bharat Gupta
Got it. Second question in terms of the RFQs, so what would have been the contribution during FY ’25 and how do you see FY ’26 panning out for us? And any further update in terms of further award wins or the talks are there in-place with respect to different products out there from the same as well as for other MNCs as well?
Kedar Ramesh Vaze
Yeah. So we have been pitching. There are some small wins and small indications where things have gone from development to commercial discussions. Nothing is concrete yet, but it is the global MNC consumer fragrance business is quite robust. We’ve done roughly EUR10 million last year and we see there is a good traction across-the-board.
Bharat Gupta
Thank you. And last question.
Kedar Ramesh Vaze
It’s a — it’s a new business for us, the global MNC relatively only we have been operating last two, three years. So it’s difficult to judge how fast it will ramp-up, but we are going slow and steady and I appreciate and the team and the way we are headed is in a very steady growth pattern.
Bharat Gupta
Right. So currently, we are working along with the same MNC from like — and with respect to the further like are we in discussions with other MNCs or —
Kedar Ramesh Vaze
Yes, we are in — we are in discussions with other MNCs, US-based MNCs, European-based MNCs, other regional large players. So it has opened doors for other engagements and we are continuing to do that.
Bharat Gupta
Right. And just on it, like in terms of creating subsidiaries across the U Middle-East and the US, so is that has to do any relation with the RSUs only or like any contract manufacturing opportunities?
Kedar Ramesh Vaze
No, we already — we already have business in the Middle-East. We are setting up our own office to better closer contact with our clients and further develop that business. So business in Middle-East already exist by supply from both Europe and India. So it will be largely a sales and marketing office where we increase our customer penetration.
Bharat Gupta
Right. And just a last question, like in terms of any signs of domestic recovery from the Tier-1 clients like with respect to the tax relaxation which has been brought in the budget. So any colors like which you can provide with respect to increase in the order inquiries from the Tier-1 clients as well.
Kedar Ramesh Vaze
No, we are not seeing substantial either increase, but we also did not see substantial decrease in the last year. We’ve seen steady growth, 5%, 6%. It has been quite a normal year for our set of products last year. We are not seeing any signs of any kind of de-growth or substantial upgrowth or faster growth in this quarter either. So it is steady-state for us. It has not de-grown last year as what was mostly reported by all the — all the at least the listed entities and what we know in the market. So the industry as a whole, the larger corporates have not grown as fast as the previous years. But we haven’t seen that in the portfolio of products they have been buying from us and we’ve neither seeing any fast-growth subsequently. So it’s very steady-state, it’s quite different from the overall business industry view that they have.
Bharat Gupta
Sure. So for the FY ’26, we are expecting a higher double-digit coming out from the domestic space because I think in the European context, we will be confined to a single-digit growth.
Rohit Saraogi
That’s correct.
Bharat Gupta
Right. Right. Thanks,. That’s it from my side.
Operator
Thank you. Our next question comes from the line of Shivani from Monarch Networth Capital. Please go-ahead.
Shiwani
Hi, good afternoon. Congratulations on good revenue numbers for this quarter. I have couple of questions. One, I wanted to know the revenue mix between small, medium and large customers. If you can give me that split?
Kedar Ramesh Vaze
I don’t have that split. I will come back to you on that. I just want to say that the small and medium have been growing double-digit plus and the large have been growing at roughly 7% to 8%, somewhere between 7% and 8% for the year.
Shiwani
Sure, that was helpful. Secondly, secondly, on raw-material, although I understand that you know you guys have restrategized it and trying to improve the supply-chain. But could you suggest like what’s the local — what is the mix between local procurement versus what we are sourcing from international market?
Kedar Ramesh Vaze
So I don’t again have an exact number, but it’s about 60% to 65% is local procurement now.
Shiwani
Sure. Next on the flavor segment, we saw a soft Q4. Any specific reason for that? And also are we in talks with any large account, especially from the MNC side for the flavor segment?
Kedar Ramesh Vaze
So we are in dialogue with a lot of large and small companies, both global MNC brands and large food brands in India as well. So that dialogue and continuing project discussions are on. To your question on softer quarter-four, it’s actually in relation to quite a strong quarter-four last year, which we had a bit of a, let’s say backloading in the year. The first couple of quarters, the demand was slow and then it picked-up in the second-half last year. This year, we have seen more even demand. So when you see the 4th-quarter versus 4th-quarter comparison, you see subdued growth. But quarter-on-quarter, we are growing. We continue to see that growth and we are expecting strong robust 15% plus growth in the flavor segment as well as we as we move along.
Shiwani
Sure. Thank you. That was very helpful. Just one last question if I may. I wanted to understand more on global ingredient business. So today, it’s around INR70 crore in FY ’25. So how to expect a global ingredient business in the coming years, more from the growth perspective and margin perspective?
Kedar Ramesh Vaze
So we are looking at growing this business. It will — it is not going to be 70 growing at 10% kind of business. We either look to invest and grow it by kind of magnitude that we had another INR70 crores or INR100 crores business in next couple of years or we just keep the same. But I — like I mentioned, there are large opportunities which are coming this way. And we will be selective. We will do our strategy in the next couple of months and then put out to the shareholders and to the strategy what is the net outcome. All I would say is that there are good opportunities in the global ingredient space and we will not want to get into crowded spaces where there are five or six competitors, but there are good niche businesses which we can build-on top of the INR75 crores to further increase our global ingredient business.
Shiwani
Sure. That was it from my side. Thank you so much.
Kedar Ramesh Vaze
Thank you.
Operator
Thank you. Our next question comes from the line of Prakash Kapadia from Spark PMS. Please go-ahead.
Prakash Kapadia
Yeah. Thanks for the opportunity. Two or three questions from my end. If you could help us understand the balance sheet improvement given that we were operating with multiple plants because of the fire incident. So any impact on the inventories and at the balance sheet level or would it be possible in FY ’26 or no? That’s the first question. Secondly, in our operating sales, we have a INR70 crore contract manufacturing income. So is that you know for a specific client, is it multiple clients? Is there a scalability in that side of the business? And on the global MNC, any further insights you could share from a scale or a cross-sell perspective? I think we were looking at $10 million sales for this year has that been achieved? So those are my questions.
Kedar Ramesh Vaze
Okay. So in terms of the working capital inventory, obviously, operating in four, five locations as we are doing today, the levels are higher than the average where we should be. So surely there will be a balance sheet benefit in the kind of capital deployed as we move back to one location and it is much more efficient from a stock and inventory point-of-view.
The second question was on-contract manufacturing. Yes, we have a strong contract manufacturing tie-up with another global MNC in Europe. We continue to do that business. That’s about EUR7 million, EUR8 million business. So it’s a continuing business. It’s not our strong focus area for growth. It is — let’s say, it was very important in the past when we had this base volume for our operations. Now we have enough growth in our operations to kind of keep it at steady-state and we’re not looking to grow this contract manufacturing part of the business. So we grow the business where we have better gross margin and net margin. There was a third question.
Rohit Saraogi
Yeah, the global MNC scale or cross-sell.
Kedar Ramesh Vaze
Yeah. So that as I already answered, we have reached around 10 million and we have good traction with that company and with other companies in sort of other global MNC FMCG companies.
Prakash Kapadia
And any quantification for the balance sheet improvement in terms of number of days or an absolute amount, if you could quantify which could be possible at the balance sheet level?
Kedar Ramesh Vaze
So as Rohit has said earlier, we would be broadly at INR650 crore debt. End-of-the year, we expect next year ’26 to be around INR550 crores of debt. And then after, I think there will be substantial improvement in the balance sheet in total basically as the capex cycle is over.
Prakash Kapadia
Thank you.
Operator
Thank you. Our next question comes from the line of Rohit Nagaraj from B&K Securities. Please go-ahead.
Rohit Nagraj
Yeah. Thanks for the opportunity. It’s first question
Operator
Before you go-ahead. Sorry to interrupt you, sir. May I request you to use your handset, sir. Sir. The audio is not coming in clear, sir.
Rohit Nagraj
Hello?
Operator
Not yet, sir. So if you’re using a Bluetooth device, I would request you to —
Rohit Nagraj
Is it better?
Operator
Yes, sir, sir. Please go-ahead. Thank you.
Rohit Nagraj
Sir, first question again on the balance sheet front. So we have currently debt about INR660 crores and this is as at March-end and after we have received about INR95 crores. So is it safe to assume that we will be repaying the short-term debt that takes from capex as well as inventories, effectively, our debt will be closer to maybe INR560 crores INR70 crores. And just a light question so that this year, we are again targeting — in the next two years, we are targeting about INR200 crores of capex, which probably would be funded through internal accruals given the cash generation — I mean healthy cash generation that we are looking and growth that we are looking. So I’m just trying to reconcile why the year-end FY ’26 year-end debt still will be at INR550 crores, given that there will be additional settlement even from the insurance to the tune of maybe INR50 crore INR60 crore INR70 crores. So just trying to reconcile these numbers. I think somewhere the math is not right.
Rohit Saraogi
Yeah, the insurance bit we are taking quite a conservative number because we don’t know-how much they will pay-out within the year. And of course, we have got the first tranche, so there is no question of admissibility or anything they will pay. We haven’t taken a very — we have taken, let’s say, a very conservative plan of cash-flow from the insurance. So if the insurance does pay-up everything before end of March, the 550 number could be lower, but this is the number which we want to put out and go after based on conservative insurance payout.
Rohit Nagraj
Sure. Second bit, again, on the capex front, so I think a year — couple of years back, we were saying that for the next maybe three to five years, we don’t need any material capex. And again, now we are saying that for the next couple of years, couple of hundred crores capex. I understand partly it would be for the reconstruction. And just a light question to that. In terms of the reconstruction, are we looking at expanding the capacity from whatever it was earlier and to what extent.
Kedar Ramesh Vaze
So in general, when the capex discussion because of the incident and the fact that we need to rebuild the factory, we have undertaken to rebuild and build the future capex in sort of little bit earlier because the capex — running the capex in simultaneously helps us from a managing the capex point-of-view. In normal-course, we would have not needed to do this capex for another two, three years. But given the magnitude of the incident and the overall capex plan, we have decided to put additional factory in parallel with the rebuilding of the factory and we will look at sort of closing down the operations in a faster than originally planned be and some part of the OpEx cost that we incur there will reduce and offset this capex.
Rohit Nagraj
Right. And just one clarification. So effectively after this capacity expansion, what is the kind of incremental capex that will be running? Is it only to the extent of maintenance capex for the next three, four years once this facility is opened
Kedar Ramesh Vaze
From the India perspective, we have no-growth capex planned for creation and development that is sort of fully laid out. We have — with these new two new factories on the fragrance, largely we will not require any capex. On the flavors, it depends on the growth rate. So if we do higher than 15% growth for three, four years, we may need some incremental investment in flavor capacity. But as a general basis, I think our fragrance requirement for capex is — will be these two plants and then we don’t need much capex for the next 10 years.
Rohit Nagraj
Fair enough. That’s all from my side. Thanks a lot and all the best.
Kedar Ramesh Vaze
Thank you.
Operator
Thank you. Our next question comes from the line of Yash Sinha from MIPL Office. Please go-ahead.
Yash Sinha
Hi, am I audible?
Operator
Yes, sir. Please go-ahead, sir.
Yash Sinha
Yes. Hi, most of my questions are already answered, but I had a couple more. First, from a bookkeeping perspective, noticed that you guys collected about INR90 crores out-of-the insurance payment this quarter. The total claim from my understanding is around INR160 crores, right? What’s the timeline to kind of recoup the balance amount?
Kedar Ramesh Vaze
It’s not clear. Technically, we have made the claim. So anytime it can come in, but practically, I think we need probably six to nine months of further follow-up to look at the balance amount to come in. It will happen in so the total insured amount, let’s say, it’s ballpark INR300 crores with all loss of profit and so on and so forth. So it will happen roughly INR100 crores a year. Firstly, the inventory, second is the capex replacement and the third is loss of profit. So this is our expectation in how the insurance monies will come. So this year or 95% to 3-year process? Yeah. So ’25 which is inventory, we get some additional monies on inventory this year for the capex probably early next year financial loss of profit we will push, but these are kind of a long, long processor. So I think two years is a fair time to receive all the balanced insurance monies.
Yash Sinha
Got it. Got it. My last question is from my understanding, we are making inroads with fairly large FMCG player in India for your flavors division. Are we expecting any material increases in the flavors business in India this year? Or is that something that will take slightly longer to really materialize?
Kedar Ramesh Vaze
Yeah. So the typical plant audit on the flavors are more strict because of the final food and infant and pharma sort of applications. So plant audits, etc., have been completed. We are sort of approved vendors. We are submitting different flavor ideas. So it’s a process. Now part of it is already in the 15% CAGR growth that we indicate. If there is something specific large contract over and above this, then we will communicate to the street.
Yash Sinha
Got it. And that ties into my third question, which is this 15% guidance that you’ve given for FY ’26, that includes any expected revenues from existing clientele only or also you’ve also factored in many additional client wins for the year?
Kedar Ramesh Vaze
Yeah. So existing and new clients, new geographies, so flavors as well, we are expanding to Middle-East, Southeast Asia, some of the markets. So yes, it is an ongoing process, the creation development and market development, so ongoing process. So the thing I was trying to arrive was that in a base-case scenario at this 15% includes some growth expected from your European and Middle Eastern markets. But if you were to assume only growth from your existing, what number would that be exactly? So on the flavors, we have very small market-share in India. So this 15% is basically our current clients in India and Middle-East, Southeast Asia, where we already have connections and businesses growing. We are also talking to other clients in different newer geographies, that’s an add-on. We are not considering that in the 15%. So 15% is the base-case with the existing clients and existing geographies.
Yash Sinha
Okay. Got it. Congratulations on a good set of numbers and all the best. Thanks.
Kedar Ramesh Vaze
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing comments.
Kedar Ramesh Vaze
Thank you. I hope we have been able to answer all your questions satisfactorily. Should you feel any further clarification or would like to know more about the company, please feel free-to contact our team or CDR India. Thank you once again for taking the time to join us on this call.
Operator
Thank you. On behalf of SH Khalkar; Company Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.