Tatva Chintan Pharma Chem Limited (NSE: TATVA) Q3 2025 Earnings Call dated Jan. 28, 2025
Corporate Participants:
Dinesh Sodani — General Manager Accounts and Finance
Ajesh Pillai — Investor Relations Officer
Chintan Nitinkumar Shah — Chairman and Managing Director
Ashok Bothra — Chief Financial Officer
Analysts:
Sanjesh Jain — Analyst
Nirali Gopani — Analyst
Jay Vaghasiya — Analyst
Arnab Bhattacharjee — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Tatwa Chintan Pharma Chem Limited Q3 FY ’25 Results Conference Call hosted by ICICI Securities. 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 start then zero on your touchdown phone.
I now hand the conference over to Mr Sanjesh from ICIC Securities. Thank you, and over to you, sir.
Sanjesh Jain — Analyst
Thanks, Sima. Good evening, everyone. Thank you for joining on for Tatwa Chintan Pharma Chem Limited Q3 FY ’25 Results Conference Call. We have Internal Management on the call represented by Mr Chintan Shah, Managing Director; Mr Ashok, Chief Financial Officer; and Mr Ajesh, Investor Relations.
I would like to invite Mr Dinesh Sudhani, AGM Finance to initiate with the opening remarks, post which we will have a Q&A session. Over to you, Dinesh.
Dinesh Sodani — General Manager Accounts and Finance
Thank you, Sanjay ji. Good evening, everyone. On behalf of the management, I’m pleased to welcome all of you to Tattu Chintan’s results conference call to discuss financial results of the quarter and nine months ended December 2024. Please note that a copy of all the earnings call related disclosure is available on both the both the stock exchanges, that is NSE and BSE. Any statement made or discussed during this call, which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. A detailed disclaimer in this regard has been included in the investor presentation that has been shared on both the stock exchanges, that is NSE and BSE.
Now, I will hand over the call to our Investor Relation Officer, Mr Ajesh Pille for his opening remarks. Over to you.
Ajesh Pillai — Investor Relations Officer
Thank you,. Good evening, everyone. It is a pleasure to welcome all of you to quarter three earnings call of Chinton Pharma Chem Limited. Today, I’m honored to share the company’s financial results, which have been made available on the stock exchanges and our company’s website. I’ll walk you through the key performance metrics and highlights for this quarter. In-quarter three financial year 2025, the Switch Indon achieved revenue from operations of INR859 million, reflecting a 2% year-on-year growth and a 3% growth quarter-on-quarter. The EBITDA for the quarter stood at INR71 million, which represents 36% decline year-on-year, but a 26% increase compared to the previous quarter.
Now breaking down our performance across product segments, starting with transfer catalyst, this segment delivered a quarterly revenue of INR295 million, achieving a 7% growth quarter-on-quarter and impressive 19% growth year-on-year. Electrolyte salts, this segment reported a quarterly revenue of INR25 million, showcasing a 101% quarter-on-quarter increase and an outstanding 113% year-on-year growth.
Coming to Pharma and Agro Intermediates and specialty chemicals this segment continued its positive trajectory with a quarterly revenue of INR298 million, marking a 10% increase quarter-on-quarter and an 18% growth year-on-year. Coming to Structured directing agents, the segment recorded a quarterly revenue of INR230 million, reflecting 15% quarter-on-quarter degrowth and 29% year-on-year decline.
I’ll now hand over the call to our respective Managing Director, who will provide you further insights into the company’s strategic direction and business outlook. Thank you. Over to you, sir.
Chintan Nitinkumar Shah — Chairman and Managing Director
Thank you all this. Good evening, everyone. This is Chinkan Shah. It is an absolute pleasure to welcome you to our first earning call of the calendar year 2025. As we step into this promising new year, I am confident that we will finally reap the rewards of the hard work, persistence and resilience that have defined our efforts over the past few quarters. Overall, the market situation continues to remain subdued in terms of demand, but we are beginning to see a frained sense of improvement in the market.
Talking to various customers, the general feeling is that the industry as a whole seems to have begun the path to recovery. While we may not have completely left the challenges of the past behind, there are encouraging signs pointing towards better business prospects over the coming quarters. Raw-material prices have shown relative stability and sea freights also have moderated. What is particularly encouraging about Katpa is the strong position and deep inroads we have made in various segments where we are present. We are poised to commercialize the few products this year with the necessary infrastructure already in-place to support these efforts.
Now let me give you a development in various segments that has taken place Phase Transfer Catly PTCs. We have successfully onboarded two new MNC customers. The commercial business with both these customers have begin as on-date. The business will ramp-up with both these customers over the coming quarters. Both these customers have potential to give us a decent volume for business on PTCs. Overall, we continue to maintain a steady level of business in this segment, ensuring both growth and stability. Structured directing agents, SBAs.
Owing to the continued weak demand in the Chinese market for heavy-duty commercial vehicles, the demand for SDAs continued to remain subdued during the quarter. Recently, our customers have started indicating about the early signs of improving demand. The first two customers with whom we got approval in 2024 have started uptake of the products on regular basis and now we are seeing a gradual increase in the volumes from Patwa Chintan as we continue to build the level of confidence with them. The other two large customers with whom we got approval in 2024 for various applications are now ready to begin actual commercial supplies from us from April 2025.
Currently, we are discussing the opportunity in terms of logistics and warehousing of our products to ensure smooth and continuous supply at their multiple global locations. The implementation of Euro 7 norms, which is very much on-track and we are very sure of improving demand for SDAs to begin within a couple of quarters. Electrolyte salts, the demand from customers for electrolytes used in energy-stored devices is beginning to gain momentum. This upward trend is expected to continue in the coming quarters, further solidifying our position in this growing market.
Additionally, the qualification process with a key customer involved in manufacturing batteries for hybrid cars is also progressing very well, marking a significant milestone in this segment. With encouraging results of our electrolyte formulation from lab scale, the customer has now request to scale-up the formulation to pilot-scale. We expect to run the scale-up at pilot level by the month of April. This is a very exciting development for us, which can lead us to a very unique position, wherein we make the salt ourselves and also able to formulate the electrolyte ourselves. This will give us a unique competitive advantage and a potential to significantly increase our presence in the segment of energy storage.
PASA, the approval process of the plant scale material for two large agro intermediates is progressing smoothly. We expect to get final clearance within the current quarter. Post-approval, the commercialization should begin immediately. We meet the forecasted demand of these new agro products, we are constructing the new plant on the existing Dahej site. We expect the plant to be ready for production in Q4 of FY ’26. These products hold good potential and are poised to make a noticeable impact on the company’s revenue.
Finally, all the four agro intermediates which we were under approval basis will see commercialization happening during the current year. We have concluded R&D and optimization of a new agro intermediate having good potential in the domestic market. This will be slowly commercialized within this financial year, but the full-scale commercialization will be possible from our future upcoming greenfield project at Zolwar.
We have also concluded R&D activities on a very large potential agro intermediate. We are now working on backward integrating the key raw materials to make it competitive globally. This product is involving electrolysis, continuous flow chemistries and conventional chemistry. The R&D samples have already been approved by one large Indian agrochemical customer, which has given us validation about achieving the quality matching at par with global suppliers. In this case as well, the commercialization will be possible from our future greenfield project at site.
In respect to pharma intermediates, three products have been formally approved and we expect gradual commercialization to begin from end of ’25 or early ’26. The fourth product has taken-up in the approval process. Commercialization is expected to happen by end of next calendar year. The trials of will begin at 100 kg catalyst level as we have received the necessary cooling systems for this machinery. We are also expecting the final equipment to be — to handle 1,000 cages of that list to be delivered by the end of March. Installation and commercialization are projected to be completed by June 25, marking a key milestone in our operational expansion. Flame retardants. We are set to begin the first commercial supply to the customer in current quarter.
The situation in terms of pricing continues to remain a big challenge. We are keeping a very close look on the market conditions. So besides this first customer with whom we have certain pricing mechanisms, we will fully commercialize this product only at the right time. Only then — until then we continue to deploy our R&D resources in-building a product portfolio of flavor regards. In addition to these developments, we are pleased to inform you that after completing the necessary checks, we successfully started our distillation plant in January. This new facility will significantly ease production capacities to manufacture some of our major products.
Our focus is on development of products for use in semiconductor and electronics industry, which will become our growth engine after three years. We have made significant headway in coming close to the ultra-high purity quality requirements. We continue to work hard in this direction. In these turbulent times, the strength that has kept us resilient and afloat has been our unwavering R&D capabilities. Our consistent investment in R&D has not only fruitful results but has also enabled us to navigate challenges with confidence throughout our journey.
Our vision for the future, which is deeply embedded in the projects we undertake in R&D, which boasts a robust pipeline of high-value products with immense business potential. The innovative approach we apply to every product we develop underscores our commitment to growth and sustainability. As a team, we strive to remain future-ready, tackling obstacles with meticulous preparations and determination. The resilience demonstrated by our team, investors and other stakeholders is a true measure of our company’s strength and it continues to propel us towards a brighter future. Thank you.
I will now hand over the proceedings to our CFO, Mr Ashok Botra.
Ashok Bothra — Chief Financial Officer
Thank you, sir, and good evening to everyone present on our call today. The financial highlights for the current quarter Q3 FY ’25 versus Q3 FY ’24 are as below. Revenue from operations is INR859 million versus INR842 million in Q3 FY ’24. EBITDA is at INR71 million versus INR110 million in Q3 FY ’24. EBITDA margins are at 8.2% in Q3 FY ’25. Lower-margin is due to the increase in COGS and other expenses by 4% and 1% respectively Y-o-Y basis. PAT is at 1.4 million versus 35 million in Q3 FY ’24. PAT margins are at 0.2% versus 4.1% in the same-period previous year. During Q3 FY ’24 ’25, exports stood at INR528 million, that is 61% of the revenue.
The financial highlights for Nine-Month FY ’25 versus Nine-Month FY ’24 are as below. Revenue from operations are at INR2,749 million versus INR2952 million in nine months FY ’24. EBITDA is at INR256 million versus INR526 million in Nine-Month FY ’24. EBITDA margins are at 9.3% in nine months FY ’25. Lower margins is due to increase in COGS and other expenses by 6.4% and 1.6% respectively. PAT is at INR47 million versus INR207 million. PAT margins are at 1.7% versus 7% in the same-period previous year.
That concludes an update on the financial highlights of the company. I shall I request the — I shall now request the moderator to open the floor for question-and-answer.
Questions and Answers:
Operator
Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone. If you wish to remove yourself from the question queue, you may press star in 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. Thank you the first question from the line of Nirali Gupani from Unique PMS. Please go-ahead.
Nirali Gopani
Yeah, hi. Thanks for the opportunity. Sir,, you have given a fair picture on the demand-side of our products. But how has been the pricing over the last quarters? Have we seen further negative impact on the pricing also or they are fairly stabilized for our finished goods?
Chintan Nitinkumar Shah
The pricing has not fairly, but I would say, almost stabilized. So now we are not seeing any kind of downward revision to pricing. In fact, certain key raw materials, we are also seeing a bit of uptick in the pricing happening. So price stability is now very much there. We don’t see any further erosion in terms of pricing.
Nirali Gopani
Right. And particularly on the SDA side, do we see any change in the competitive intensity also among the competitors because of the low demand or once or once there is — the demand bounces back, we should see the older realization when it comes to SBA.
Chintan Nitinkumar Shah
So no, so there is no internal competition between us two competitors. So the division of business is quite practical that has happened depending on what volumes we share between us. So we are not trying to undercut prices to get more business. It is — as soon as the demand starts kicking-in and there are very clear indications from customers that they are seeing some early signs of demand recovery happening and they have also asked us to remain ready if there is a sudden surge in volume requirements, then we should be little bit ready to cater to those kind of demand. So the positive signs are very much there in-place since January, beginning of January, we are seeing that indications coming in from the customer. So as soon as the volume and the demand kicks-in, we will definitely see a systematic uptick in the numbers some.
Nirali Gopani
Right. So if I understand correctly, the raw-material pipe prices have stabilized to some extent. So — and we have also consumed our high-cost inventory. So now the only thing that we are waiting for is some the growth on the demand-side, right? So as soon as we see that we should see improvement in our numbers and there’ll be no other negative surprise except for the demand.
Chintan Nitinkumar Shah
Absolutely. See, even if you see these numbers, then our raw-material consumption, if I’m not wrong, has been in the range of, 44% 45% vis-a-vis the sales. So the numbers in terms of actually speaking, the COGS numbers are very healthy. So now the question is the cost — the overall operational cost which is being distributed over lower numbers. So as soon as the volumes start picking-up, the margins automatically will show a very healthy growth.
Nirali Gopani
Perfect. And just last question. So given the prices that are there today, what is the peak revenue that we can do from our total capacity, the older plant and the new plant?
Chintan Nitinkumar Shah
These numbers are drastically changing. So we are also building up a new plant, as I said, which will become — we expect it to become operational by January of 2026. So we expect our plant to be almost fully occupied by somewhere around June or July of this year, the existing plant. And then we will definitely need this new plant for future growth. The only issue is the reactor side of the plant becomes fully operational and fully occupied. The problem is still we have the electrolysis part, the assembly part of the plant where we make the SDAs, that still has very low occupancy. So as soon as this occupancy is fulfilled, then we definitely have the chances to get a revenue — cross a revenue of more than 900 with the existing and upcoming capacities.
Nirali Gopani
Right.
Chintan Nitinkumar Shah
And we are looking at the lowest numbers in terms of raw-material cost and the product cost. So right now, we are at the bottom of the cycle in terms of pricing also. So all the finished product prices or even the raw-material prices are nearly at their — at least historic bottoms is what I can use the word over the last decade. That is the situation.
Nirali Gopani
Right. And lastly on the flame retard. And if I’m not wrong, we were supposed to ship the product in Q3 and you mentioned now that is shifted to Q4. Is there any particular reason for this delay and how confident are we that this shipment will happen in Q4?
Chintan Nitinkumar Shah
I that is right, the delay has happened because of a special packaging material requirement that the customer came up with. So they have a very specific design of the big bags under which they want this product to be shipped. Typically what we get-in India is completely different than what demand they had eventually made after placing the orders. So we had to import this special packaging from Germany and that is what has caused this year of about four weeks in terms of shipment. We are ready with the product, the jumbo bags, the big bags have just arrived. So now we are making arrangements discussing the product.
Nirali Gopani
Okay. Yeah, that’s it from my side. Thank you.
Chintan Nitinkumar Shah
Thank you.
Operator
Thank you. Before we take the next question, a reminder to all the participants, if you wish to join the question queue, you may press and one on your touchstone telephone. We take the next question from the line of Sanjesh from ICICI Securities. Please go-ahead, sir.
Sanjesh Jain
Yeah. Thanks, for taking my question. I got three of them. First on the PTC side, you said we have added two new customers. Are they the same product what we are selling and these are new customer or these are new products and new customers?
Chintan Nitinkumar Shah
No, both are the existing products which we are selling, but these are for the new applications the new applications which they have now started using phase transfer catalyst. So our customer is — both the customers are a very well-known global companies and this is a new application of phase transfer catalyst that has come in. And that is where we got this approval for our product and we have actually started shipping out the product in current quarter, the dispatches.
Now again the challenge is these are all multi-locational as a global multi-location is where we have to deliver the product to them. So we are figuring out which would be the best warehousing location where we can store the bulk cargo, how to manage these logistic costs. We are working very closely with the customer. This is very exciting and large-volume business that we are looking at. So probably the largest phase for catalyst business that we have added in the last three years, I can say.
Sanjesh Jain
Got it. When you say new application, it is non-agro, non-pharma or within agro pharma?
Chintan Nitinkumar Shah
No, no, it’s not agro, not pharma, no.
Sanjesh Jain
So what is the clarification we are looking here?
Chintan Nitinkumar Shah
This is basically getting into some kind of specialty polymer. And this is — theoretically speaking, if I could just largely say it is kind of a recyclable plastic application where they are using.
Sanjesh Jain
Okay. And this should add a material revenue going into FY ’26?
Chintan Nitinkumar Shah
Yes. Definitely, yes, because this is definitely a very large-volume business. Of course, it will take at least six, seven, eight months-to stabilize the business with them, taking care of all these logistic arrangements, making the contract with them, suitability of the product at their multi locations globally. So all those things will take at least six, seven months-to stabilize. But after that, this is definitely a quite significant jump-in the phase transfer business.
Sanjesh Jain
And where were they buying this earlier then?
Chintan Nitinkumar Shah
It’s a new application. So this is what — now it is kicked-in.
Sanjesh Jain
Okay. Okay. We are also stimulating with the product?
Chintan Nitinkumar Shah
No, so we are not replacing anybody. This is just a generation of new business.
Sanjesh Jain
Got it. Got it. On the SDA side, you did mention that there is an early sign of revival. It is more restocking or you’re seeing that end-market itself reviving. In China, we also had an issue towards the going towards CNG. How do you see SDA from here?
Chintan Nitinkumar Shah
SDAs — see, I talk to both my very large two customers and both have indicated that we prepared for the uptick. We are seeing very encouraging signs coming in from the end-use customers seeing demand uptick in terms of IC engines and hybrid engines. So this is where they feel that the demand has started to pick-up. And also China is also gradually, very slowly it has started to ramp-up in terms of demand. So this is the reason why they have already indicated that be ready if there are any surprise shipments to be made. So we are also geared up your that’s not an issue. But this is an indication that is coming from both the large customers.
Sanjesh Jain
Got it, got it. And on the electrolyte salt, this quarter we did see a material jump. Is it lumpy product or do you see these numbers scaling up now that the client has commercialized their product
Chintan Nitinkumar Shah
It will smoodle out from April. So this patch is beginning from April, it was definitely smoothened out in terms of consistent sales that is happening. So this is what is the customer indicated that now their production lines have stabilized, they are now able to ramp-up their production the way they wanted to say it. So they are coming to a point where they will now see a very regular consistent demand for the products.
Sanjesh Jain
And now that there is a new administration in the US and all, you see risk to your electronic salt business?
Chintan Nitinkumar Shah
No. So this is probably the announcements that have been recently made in terms of their drastic shift in terms of policy moving slightly away from the EV thing, it might indirectly benefit us in some way, but still time will say what will happen. So it’s not going to be a negative impact to the business. In theory, it’s going to be a positive impact on our business.
Sanjesh Jain
So why a positive impact?
Chintan Nitinkumar Shah
They are discouraging the use of EV and this will have a positive impact on the business of SDS. Okay, put it that way.
Sanjesh Jain
Got it. Got it. And on the PASC, it’s been two years, we are talking about the product development approval and all. Are we confident that in 3Y ’25 we should be launching products and how many products do you see starting up in first-half of 2025.
Chintan Nitinkumar Shah
The four products are being commercialized. So two are already seeing the commercialization. We are working on their POS production is happening. And the two, which are the two, the largest products that we have, we’ll definitely see shipments, regular shipments rolling out from April or May of this year. So all four agro products definitely getting into full-scale commercialization from this year.
Sanjesh Jain
Yeah, yeah. We were also working on the photochlorination where we are in terms of photochlorination approval cycle.
Chintan Nitinkumar Shah
So that also we are through. So that is now we will see consistent shipments rolling out again from April or May of this year.
Sanjesh Jain
Commercial?
Chintan Nitinkumar Shah
That application, yes, yes, now it is getting into the commercial mode. Yeah. So approvals are in-place now. So we have to start execution. So we are actually having the customer visit us in end of February for the discussions on terms of contract beginning from April of this year.
Sanjesh Jain
So supplies will start from April ’25.
Chintan Nitinkumar Shah
Yeah, we’ll have to start shipments from April of this year. Yeah.
Sanjesh Jain
And any update on the polymer
Chintan Nitinkumar Shah
That this will be recorded in sales because this will be abroad. So this is getting into exports. Of course, it will be recorded in sales of our subsidiary. So in terms of numbers, it will reflect after two months.
Sanjesh Jain
Got it. Got it. And on the polymer side, you didn’t comment where are we in the polymer side? We were trying to do.
Chintan Nitinkumar Shah
Trial is planned trial has went well. So it’s just getting into final quality checks and packaging. So we’ll make the first shipment probably by mid of February. So that will be the first rollout. And then we have to wait with the kind of feedback we get from the customer in terms of approvals as soon as approvals are there, which should not take very long-time. These are not very tedious or approvals. So it should not take more than few weeks for them to approve the product. And once the approval is in-place, then we have to start commercializing the process.
Sanjesh Jain
Got it. And last on the…
Chintan Nitinkumar Shah
In terms of development, in terms of piloting and scaling up to plant, now everything is through. So we are executing our first one metric tonne product per validation of the product.
Sanjesh Jain
Got it. Got it. And you said that the column or the distillation plant is ready. So how much capacity should? So how much capacity should it free-up in the actual plant or reactor capacity, how much reactor capacity should we have?
Chintan Nitinkumar Shah
We do not have the exact number, but I think it should give us at least 12% to 15% of free space in the plant. 12% to 15% in more space. Yeah.
Sanjesh Jain
Okay. Got it, got it. And you said that we will
Chintan Nitinkumar Shah
Besides distillation of recovery of solvents, these plants — so the new agro products that we are launched. So one is on the photochlorination side, one is the other large agro product. So both of these products eventually also — the product also needs a distillation, a high column distillation. So this old plant is not only about solvent recovery, so part of it is solvent recovery and reuse and part is also product dissillation.
Sanjesh Jain
And you said that by June, July, you may run the plant at full utilization. Any plan in terms of optimizing both this?
Chintan Nitinkumar Shah
Sorry, in terms of optimizing?
Sanjesh Jain
Do we have any mechanism to optimize and increase the revenue despite plant running fully
Chintan Nitinkumar Shah
So we are working on — so basically, we have created a team which we Call-IT as process excellence. And this team identifies which could be the potential bottlenecks, which if removed with some minor investments, it can boost up the productivity. Also, if they find anything which needs to be done in terms of process where we can optimize the time of reactions. So these are the aspects on which now we have a dedicated team which works on these aspects to bring about. So that is our — we know the plant is going to be almost 100% occupied. So what are the means and ways how we can optimize the process. So we are working on that.
Sanjesh Jain
One last question
Chintan Nitinkumar Shah
Because we are always a very, very continuous activity at all-the-time, all the years in terms of optimization of processes. So there may not be a very large scope, that is what I believe. But whatever best we can do, we can — we are trying to optimize that.
Sanjesh Jain
Got it. One last question, from my side. On the gross profit side, now that STA contribution will structurally decline with PAC, all the products kicking-in and polymer and all other flame retardant and all. Where do you think your gross profit margin or a material margin stabilizing? We are at 52% now, where majority is coming from PTSE, 35% is PTSE. PTC will also fall, STA will also fall. Where should we see gross profit margin stabilizing for us
Chintan Nitinkumar Shah
What do you term as gross profit margin?
Ashok Bothra
Sales minus
Sanjesh Jain
— sales minus COGS.
Ashok Bothra
So fairly between 45% — roughly in the range of 45%, I would say.
Sanjesh Jain
Okay, because we are doing 52 now, you think it will be dilutive for us, all these new products?
Ashok Bothra
Yes, because it’s — these new launches, what the agro products we have is more in terms of technology and length — lending processes. So in terms of raw-material consumption, these are a better contributor. They require larger capex. So your — so basically in phase transfer catalyst, let us say we can make about 3 times in terms of what I invest and what I can generate in revenue, whereas in these large products, your capex is almost 1.2 kind of a thing. So against INR200 crore revenues and think
Sanjesh Jain
The raw-material cost will be lower.
Ashok Bothra
Will be lower.
Sanjesh Jain
Okay. Okay. The margins will be higher is what you’re telling.
Ashok Bothra
The gross margins as you term, it is higher correct.
Sanjesh Jain
Got it. Got it. Got it. That’s it from my side,. Thanks. Thanks for answering all the questions. And best of luck for the coming quarters.
Chintan Nitinkumar Shah
Thank you.
Operator
Thank you. Before we take the next question, a reminder to all the participants, if you want to join the question queue, you may press star and 1 on your touchstone telephone. Ladies and gentlemen, if you wish to ask a question, you may press star and 1 on your touchstone we take the next question from the line of Jay Vagasia, an Individual Investor. Please go-ahead.
Jay Vaghasiya
Yeah. Hello. So my first question is regarding you mentioned in the investor presentation regarding materials for semiconductors. So one of our SBAs that is ammonium hydroxide, TMH, it is used in photolithographic process. So are we now — is it the same substance that you mentioned in investor presentation? Are we going for high-purity levels of the or
Chintan Nitinkumar Shah
Pure ethicals is picking, one of the product is the same product what you are talking of. But the quality what we are talking in terms of SPAs and what we terms in the semiconductor application, these are starkly referred. So what we offer in SDAs is with a limiting factor of trace metals below 5 ppm parts per million levels. And now when we talk of offering this same product into a semiconductor grade product, it has to qualify with all trace metals below one part per billion, one PPB levels. So this is way, way.
So today, as of today, if you ask me honestly, we are still in the range of about 38 to 60 PPB when it comes to the final product. So probably it is still four months, six months away. So we have gradually brought this down from 5 ppm levels to 50 60 PPB levels. Sometimes we have also recorded numbers like 30 PPB, but we have to bring it down to one PPB. So every direction, each and everything has to be controlled in such a way, you are basically working in a dusty environment as of the hair quality what we are looking at in generally speaking in India is not-so-good.
So first is purification of the ambient air where you want to make this product. Your water quality has to be because lot of these things are solutions in water. So your water has to be pure than less than 1 PPB level, then only you can use it for the process. So all those things have been gradually, gradually, slowly, steadily have been achieved. So now we have a water which is super-high purity water, which is sufficiently pure to be used for the processes and for the 3D. And we have also overcome the biggest challenge in terms of establishing analytics to test something below 1 PPB level. So we are talking of anything below, you are talking of PPT levels, parts per trillion levels.
So all those things are now in-place. So cross fingers, I hope we should be able to crack it within next four to six months’ time three or four places of correction where we feel that these are the potential points of contamination, which are leading to these slightly higher numbers than what we are actually wanting. So we are gradually one after another attacking at those points, rectifying them and we are gradually improving on our numbers. So if this works through, probably we’ll be the first company in India to have qualified for these grades of high semiconductor material.
Jay Vaghasiya
And even, if we are able to achieve these levels of below I think the demand-side of this would be much more than HPA, right, and with pretty good margins.
Chintan Nitinkumar Shah
Very large. It’s a very large demand. Yes, you are right.
Jay Vaghasiya
Okay. And we have guided for — regarding PAC segment, we have guided for next year revenue of at least INR8,200 crores. So what would be the EBITDA margin that we can aim for that?
Chintan Nitinkumar Shah
The EBITDA margin is — see, as such, if you realistically see the EBITDA margins, if you cover the plant as a fully occupational plant, the EBITDA margins are already healthy. So basically, your raw-material consumption factor is already very good. So what you need is the volumes to hit in and which now we are very confident we will start hitting those numbers from May of this year. So EBITDA margins definitely will start becoming much healthier.
Jay Vaghasiya
Okay. And last question is, in last quarter we had a pretty fair amount of around INR10 crores of goods in-transit. So you said there will be around INR5 crores of EBITDA that would be added in this quarter, but still we are flat on Q-o-Q basis. So are the lead times still high, you have much more goods in-transit or
Chintan Nitinkumar Shah
End of last quarter was about INR10 crore INR11 crores in-transit. Even in this quarter, the transit amount is roughly the same, about INR11 crores. And this — basically the transit amount has start — has kept at these levels potentially because of the very long transit times that we are seeing. So bringing something into US warehouse is now typically taking eight to nine weeks. And even Europe, which is only half the distance, now it is taking about seven to eight weeks to bring the product into the European warehouse. So this is what is keeping a lot of material in-transit on what.
So just today, I have been informed that there has been some respite in terms of the Red Sea route being opened up. So we expect probably within next two, three weeks see that potentially the European route will again start operating from the RedC channel. So let’s hope if it works out, then again, we are done with the inventory levels that we’ll carry-on water.
Jay Vaghasiya
Okay. And gentlem, just a broader question. So if we consider the last two to three years, what has hit us is actually cyclicality in auto segment as well as some volatility in raw-material prices. But if we look auto segment is always cyclical and more so the commercial vehicles are even more cyclical. So going-forward, should we expect this cyclicality of business in SBA to continue or do you think we can have some other applications like we are discussing with semiconductors or would eventually we would be able to nullify the effective cell, your thoughts about it?
Chintan Nitinkumar Shah
It’s called SBAs, you are — so we introduced — we actually started understanding and knowing the auto industry part probably from 2018 to 2019 when we actually started commercially selling the SKAs. So that’s when we actually had this first look into how the auto industry functions. And since then, when we are talking to various customers about this cyclical aspect, I am made to understand that since 199, until today, they have seen three cycles of downtrend where the demand subduced and then again it picks up and goes to the peak. I’m not the master on that, but this is what I have been made to understand by my customers. So yes, it’s a cyclical thing.
There are — as of today, one is the petrochemical application, which is large in terms of volume, but the SDAs required there are — in terms of price are much cheaper. Recently, we have come across a customer beginning to commercialize the product where we got up to is in terms of desulphurization of fuel. So this is where now this is a new technology being deployed where they are desulphurizing the fuel using some kind of a catalytic technology and to make such catalyst, they require SDAs where we are approved and we have started commercially selling to the customer. So this is something new, which they expect would become big, but nothing that can replace the automotive segment.
And thirdly, where we recently got approved last year in 2024 is for a customer where they are using the catalyst for — in terms of plastic recycling. So this is one — and this is still a kind of a new application where a lot of R&D is going on, they are piloting certain things. So the future is still not absolutely sure where and how this will progress. But if this thing really goes in the right direction, then the plastic recycling application has the potential to become kind of a natural hedge. If the auto industry demand goes down, then your plastic recycling will continue to remain a of your demands.
Jay Vaghasiya
Yeah, thank you, and thanks for the opportunity and all the best.
Operator
Thank you, sir. We take the next question from the line of Arnab. Please go-ahead.
Arnab Bhattacharjee
Hi, hi,, sir. Am I audible to you?
Chintan Nitinkumar Shah
Yeah. Yes, loud and clear, sir.
Arnab Bhattacharjee
Thank you, sir. Sir, I had two questions related to whatever you are doing with your R&D, mostly related to understanding your business better. So the previous guy who asked the question, I just wanted an extension for the same question. I wanted to know when you say that you are building this high-purity of this elements for semiconductor manufacturing, like high-purity, what are you manufacturing chemicals for it, right? Like is — am I — is my understanding correct? Is that the thing or you are supplying the water only
Chintan Nitinkumar Shah
Water is used as a part of our process in terms of — because we will not have access to such high-purity water, we cannot transport it from somewhere and get it. So we have to learn the art of how to make the water so pure. So that is what has been mastered and now we have commercially set-up a plant where we can produce very large-volume of such high-purity water. So that obstacle has been — it has taken us three years to actually overcome this obstacle of reaching the water of required quality.
Arnab Bhattacharjee
And — but is that for inward use or is that for my question was, is that water for inward use? Okay. And will you be open to supplying this high-purity water?
Chintan Nitinkumar Shah
We have not given any thought on that so-far, honestly speaking. So that was never the purpose of getting into the R&D of that water for selling purpose. But primarily it is for our own self-consumption. And what we synthesize is chemicals, what we intend to sell.
Arnab Bhattacharjee
Got it. The second question will be, has there been any development regarding the super capacitor chemicals, which you were working on? I think last quarter you said that there were only three suppliers globally? And has there any newer developments you’re seeing in that field? Because from what I have heard is that like the B is the segment like the supercapacitors are supposed to show a huge promise that at least in the paperwork and theory. I’m not sure how much it has played out yet in the — in the current scenario. But have you heard anything from your customers and any new queries regarding?
Chintan Nitinkumar Shah
Surely this is actually playing out in terms of the hybrid vehicles. So this is where now they know that this is one large application for super capacitors that is now kicking-in. So the shift to hybrid vehicles is what is going to push the needs for super capacitors drastically high. So this is what
Arnab Bhattacharjee
And anything around BASS so-far? Because my belief was that most yeah, sir, please go-ahead. I’ll come back
Chintan Nitinkumar Shah
Which is very-high in Europe for the hybrid vehicles.
Arnab Bhattacharjee
Yeah. So the way I saw the scenario was more like I thought it was a better fit for DSS because my understanding was super — tech super capacitors were higher in weight compared to — so my belief was that it would be more useful for the VASS storage in order to have a high — because they have generally high-throughput. But yeah, like I don’t know whether that has played out, but I definitely believe that even the BESS story on super capacitors is also going to play-out in the future. That — those were the two of my questions. I wish you all the very best, sir and I hope you guys are having — like you guys have gone through a tough time and now it’s probably the next two years, three years, it will be good time for both us and you and your team. Thank you.
Chintan Nitinkumar Shah
Thank you so much. Thank you. Really needed that.
Operator
Thank you, sir. Ladies and gentlemen, we take that as the last question for today. I would now like to hand the conference over to Mr Ashok Potra, CFO, for closing comments.
Ashok Bothra
On behalf of the management of, we thank you for joining us on our earnings calls today. We hope we have been able to address majority of your queries. You may reach-out to Mr Ajesh or our Investor Relations partner ENY for any further queries that you may have and they would connect with you offline. Thank you, Sanjeji, for hosting our call. Thank you all.
Operator
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.