IOL Chemicals & Pharmaceuticals (NSE:IOLCP) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to IOL Chemicals and Pharmaceuticals Limited q two and f one f y twenty seven 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 this conference call, please signal an operator by pressing star, then 0, on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to mister from MGST Investor Relations. Thank you, and over to you, sir. Thank you,. Good morning, everyone, and welcome to q two and h one twenty seven earnings call of IOL Chemicals and Pharmaceuticals Limited.

0:51 Joining us today are mister who is the chief financial officer, Mister who is senior vice president and company secretary, Mister director works, and who is the financial adviser in strategic head to provide the results overview recently announced by the company. Before we begin the call, I would like to give a short disclaimer. This call may contain some of the forward looking statements, which are completely based upon our beliefs and expectations as of today. These statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. With this, I would now like to hand over the call to mister Abhay, sir, for his opening remarks. Over to you, sir. Thank you.

1:41 Thank you,. Good morning, everyone, and welcome to the q two and actual FY twenty seven earnings conference call of IOL Chemicals and Pharmaceuticals Limited. Thank you for joining us today and for your continued trust and support. I hope you have had an opportunity to review our financial results and investor presentations filed with the stock exchanges and available on our website. We have maintained the positive momentum during the second quarter of FY 'twenty seven, delivering healthy growth across our businesses accompanied by a meaningful improvement in profitability. This performance is particularly encouraging in the backdrop of continued geopolitical uncertainty, global supply chain disruptions and volatility in raw material prices.

2:29 It reflects the benefit of our continued focus on product mix, operational efficiencies, better capacity utilization and disciplined execution of our business strategy. Coming to our Pharmaceuticals business, we continue to witness encouraging demand across our product portfolio. Our non ibuprofen portfolio maintained its growth momentum, registering approximately 70% Y o Y revenue growth during Q2 and contributing 45% of Pharmaceuticals revenue compared with 38% in the corresponding quarter last year. This reflects the increasing scale and contribution of our diversified API portfolio. At the same time, ibuprofen continues to remain an important business for IOL, and we remain focused on strengthening our competitive position through capacity expansion, backward integration and process efficiencies.

3:29 Our Chemicals business also witnessed a significant improvement in performance, which is contributions to overall EBIT increasing to approximately 7% during Q2 compared with around one percent in the corresponding quarter last year. This improvement reflects better realization, operating efficiencies and disciplined procurement. We believe our integrated manufacturing capabilities and investments in capacity enhancement will further strengthen this business and support its contribution to the company's overall performance. On the regulatory front, we achieved important milestone during the quarter. We received certificate of suitability from EDQM for fenofibrate process two taking our total CEP approvals to 22.

4:20 Additionally, we received a GMP certification for our formulation CDMO facility, further strengthening our regulatory credentials and manufacturing capabilities. During the quarter, we also secured EU REACH registrations for our Triacety strengthening our ability to access international markets. These developments represent important steps towards expanding our regulated market presence, enhancing our manufacturing capabilities and creating opportunities for sustainable growth across our pharmaceuticals and Specialty Chemicals portfolio. Moving to our strategic growth initiatives. During the quarter, we announced three significant manufacturing projects involving a combined investment of approximately INR500 crores to be funded through internal accruals.

5:13 These projects represent an important step in strengthening our manufacturing platform and broadening our business portfolio. The initiatives include the expansion of our ibuprofen manufacturing capacity from 12,000 NTPA to 18,000 NTPA through a backward integrated facility, establishment of a formulation CDMO facility with an annual capacity of 1,500,000,000 tablets or equivalent direct compressible grade volume and setting up a dedicated specialty chemical facility under a long term stalling arrangement with a leading global chemical company. These investments are aligned with our long term objective of building scale, strengthening integration and creating additional growth avenues.

6:03 The CDMO and specialty chemical projects are expected to commence commercial operations during FY 'twenty seven, while the ibuprofen expansion is targeted for commissioning in FY 'twenty eight. Our CDMO initiative will enable us to leverage our existing pharmaceutical manufacturing and process capabilities to participate in a broader range of customer requirements. Similarly, the specialty chemical project is aimed at establishing our presence in contract manufacturing, providing an opportunity to develop long term engagement with global customers and create an additional revenue for growth. Together, these initiatives will broaden our revenue stream and strengthen our position across the Pharmaceuticals and Specialty Chemicals value chain. Looking ahead, our priorities remain focused on executing the announced capital projects, scaling our diversified KPI portfolio, improving operating efficiencies and strengthening our presence in international market.

7:08 We will continue to pursue growth opportunities with a disciplined approach to capital allocation, while maintaining a strong focus on operational excellence and financial performance. The progress achieved during the first half of FY 'twenty seven reinforces our confidence in the actions of our business and our long term growth strategy. Going forward, we remain focused on strengthening our capabilities, expanding our business portfolio and executing our strategic initiatives with discipline, while continuing to create sustainable value for all stakeholders. With that, I would now request Mr. Puneet Khanna, our CFO, to take you through the financial performance for Q2 and actual FY twenty twenty.

7:57 Thank you, Mr. Good morning, everyone. I will now financial performance of the company for the second quarter and first half year of next year twenty seven. Sir, can you please come closer to the device? During second quarter of next year twenty seven, our revenue from operations stood at INR $7.95 crores, listing a growth of approximately 40% Y o Y and 5% sequentially. This growth was supported by a healthy demand across our Pharmaceuticals and Chemicals businesses, along with an improving product mix.

8:53 On the operating front, EBITDA for second quarter stood at approximately INR115 crores compared with INR54 crores in second quarter of financial year 'twenty six, resisting a growth of nearly 18% year on year basis. Our EBITDA margin improved by three twenty one basis points to 14.4 percentage compared with 11.2% in fourth quarter last year. For first half year of twenty twenty seven, EBITDA increased by approximately 70 percentage Y on Y to '27 with an EBITDA margin of 14.5 percentage compared with 11.8 percentage in the first half year of financial year twenty six.

10:02 INR 30 in quarter two of the last year, reflecting a growth of approximately 170%. For first half of twenty twenty seven, pattern increased to approximately 130 crores compared with INR 64 crores in the corresponding period of last year, more than doubling by 25 basis. On the cost front, the cost increase during the quarter compared with the performance period last year, primarily due to higher working capital utilization to support increased business operations and volumes. From a segment perspective, the pharmaceutical business continues to be key contributor to overall performance, while the chemical business witnessed a meaningful improvement in the operating profitability.

10:58 Export contributed approximately 28% of revenue during the first half of twenty twenty seven, reflecting the continued contribution of our international business. As we move to the second half of the financial year, our focus will remain on improving profitability, optimizing working capital and maintaining financial discipline. With this, we can now open the floor for questions and answers. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2.

11:43 Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue is handled. The first question is from the line of from. From. Please proceed. Hello. Am I audible? Yes, please. Yeah. Thank you for the opportunity and congratulations for good set of number. So sir, first, I wanted to understand that, are we in the line of coming up with the facility, like we are seeing up by '28. So, how, what is the status currently going on, like, the several construction has been started and have you placed the order for the equipment and all? And how quickly we are coming up with it? Because what I can see from the market scenario, there has been a quite realization increase happening in this ibuprofen market.

12:43 So wanted to understand from you also about the current scenarios of the market, like, how you see the ibuprofen realization have been, and what are realization this quarter compared to the previous one? And are we getting benefited from it, like, other players in the market are seeing the benefit out of it? So as we already said, this project is the thing that will be operationalized during the FY '28. And relating to the equipment, this already ordered, and we are in line as per our projected target lines. So we are very hopeful that this facility will come up during the FY 'twenty eight.

13:32 Relating to the global market and ibuprofen business, see, this should not be considered as a short term reserve for the company's initiative. This is a strategic initiative that we have taken. And this is in line with our current utilization of the ibuprofen. Also, development or engagement we are having with the various customers. And having said that, we also come up coming up for the CDMO formulation based. So we are having the good interest, the industry is bearing. So some part of the ibuprofen will also be utilized in that facility. So I think we are very in line with our strategy, long term strategy.

14:19 So this is not related to the what is going on presently and what is going on with the peers. Understood. But sir, can you tell us, like, what are the current scenarios? Like, do we see the realization, like, going up, like, rapidly? And do we see it sustainable for the coming two, three years? Because I think there are lot of players globally who are backing, like, who are setting back in this ibuprofen business. So just wanted to understand from you the scenarios going on, like, how the demand and the realization scenarios currently, though our strategy is for the long term. But wanted to understand what currently we can see, like, for example, in q three q four, can we see the realization gain happening in our ibuprofen business and how we see that benefiting us in terms of EBITDA because we are already best for integrated. So wanted to understand in the, like, one, two quarters, can we see a good margin hike and realization gain in this business?

15:29 So so I think we remain mindful of global demand supply dynamics, pricing trends and competitive developments across the peers and in across all global markets. The prices, I think, are stable for last I think from last quarters and hovering around the same level. And we assume that it will remain more or less same in near term, so two to three quarters. Having said all this, our investment should not be viewed nearly as increasing installed capacity. This is relating to should be considered rather than strengthening our position into the global market and the domestic markets both.

16:18 So we are hopeful that we will be definitely be able to achieve good realizations from this business and our development as per our targeted line. So things are going well for the ibuprofen. Got it, sir. And so just to follow-up on this that, can you, like, share, like, do we have a long term contract for the customers in our, like, API business? Or we generally, like, what is the timeline of order book for we generally for this API business? If you can help me understand that. For API, any product... Yeah. For API for API business for any product, it takes around eight to six to eight months for any customers from beginning to start the commercial orders.

17:09 So, know, I don't book the main... Around four to six months for every big customer, and average order book size is around four to six quarters. Got it. And we have the clause to pass on the... Any, like, cost because raw material prices are also increasing a lot. Okay. On the last year, the prices are very volatile. So the clause is in settling debt. Got it. And, sir, the... Another question I have is on the CDMO business. Basically, just wanted to understand that there, what we are trying to make, like, though it's a call... Customer base, but just wanted to understand which therapeutic area or which kind of formulation you are focusing there, if you can make us understand on the serial business.

18:06 So currently, our plans are to convert our existing molecules either into the bulk tablets or into the customized requirement, be it list of packing or something. So currently, we don't have our plans to go with our own MAs. So we will be going ahead with our own products as of now. So you are saying you will make for the CDMO customer. For example, you are into ibuprofen, then you will make ibuprofen tablet out of it and sell it to your CDMO customer. Am I right? Yeah. Yeah. Yes. I do. Any type of API This is our current product. Which are the... In our current portfolio, we can make tablet for that.

18:53 Okay. And do we have, like, a full... How much commitment from our CDMO customer? Like, do we have only one customer for that or there are multiple CDMO customer for our formulator facility? So as of now, we have development going on with two three customers, but, apparently, we are talking to other vendors and manufacturers also. Got it. And, sir, how much margin we are expecting to make in the CDMO business? Because we are so backward integrated. We will have it... Having our own API and all. So what margin can we expect coming out of the CDMO business? Basically, my result is too early to discuss the margins. But, like, chemicals, if we have three business chemicals, API, and this is, again, the forward integrations for the API.

19:45 So, generally, CDMO commands better than the API. This will have better margins as compared to the API product. Got it. That's all. Thank you so much. Thank you. Thank you. The next question is from the line of Ahmed Madha from Unifi Capital. Please proceed. Thanks for the opportunity. Just a follow-up on the previous participant's question. Who will be the typical customer for us? Will it be the domestic guy selling a branded product? Will it be US guys selling a product in OTC market? Can you give a little bit more clarity on the profile of the customer base in our CDMO business for formulation?

20:31 So the CDMO formulations, we already announced that actually. So the... Our target is export. And if we say the export, this is majorly the European market, and the development is happening with few of our existing customers. Those we are having the long term relationship with customers. And basically, this is a customer side business also. So our focus is very clear that we are going for the CDMO, and we are starting with the existing customers. Alright. And in... Yeah. Conditionally. Yes. Yeah. So you can continue your answer for this.

21:17 My answer is completed. What I was saying is in European region. The target is for the basic and European region. And sir, can you give some more sense on how pricing for ibuprofen has moved for you in current quarter compared to last quarter? I understand some of the formulation guys will have some sort of contract with you, which is for about four to six months. So the order in India index pricing is here has eased up a little bit in last six months post war. So do you see pricing benefits further coming in your new orders in Q3, Q4 or that is already in the P and L as of now? No, I think it's already in the P and L and the prices are sort of stable for last quarters, and they were also into the same this quarter again.

22:13 And relating to the how it would be that can be vouches by the capacity utilization, we are operating it for last three, four quarters around 90% to 95% capacity that is being utilized. So I think our prices for the next two, three quarters, we expect that will remain in the same level. Yeah. In terms of your expansion from going from 12,000 tons to 18,000 tons, which I think will come by from the current, do you see the sort of market becoming again a little bit tricky in terms of excess supply? There are couple... There is an Indian company who is sort of wanting to expand capacity. I I don't know lot of visibility or clarity in terms of timing supply. So how do you see the supply side evolving at twelve, eighteen months down the line?

23:11 So basically, this is a sort of the long term initiatives that we have taken and heavy project will ramp up during the FY 'twenty eight. And I think it will be fully utilized by the 'twenty eight and the 'twenty nine. So optimum utilizations will happen in FY 'twenty eight and 'twenty nine. And for last few quarters, we are operating around 95% and even more than that capacity utilization. And this step has been taken not considering the current scenario, which is happening around around the market. But this is on the basis of our development we are already having in, and we have very well visibility that how this product is going to be utilized in the API and the CMO both in next two to three years.

24:02 Yes, sir. And, sir, for your incremental capacity, do you expect it to be your similar merchant customers, or you think a large part of the incremental capacity will go towards the formulation supplies. I think it's for both. Can you give a broad... I understand to understand how much It's a broad thing. And IOLCP market will grow at certain percentage, three, four, five percentage. And there is fair amount of supply coming in. So I'm just trying to understand how much supply expansion happens and how much we utilize to fulfill your formulation customers. So I think I think it will be a mix again, probably. We have some new developments with our API suppliers also. So their market demand will be scattered from this plant. And additionally, like our CMO plant is going to be utilized. So some of the quantity, You can say fifty fifty. Other 50% will go to the new customer, and 50% of it will be consumed for my internal CMO supplies.

25:07 Customer. Thank you so much. Thank you. The next question is from the line of from Sequium Investments. Please proceed. Hello, sir. Congratulations on a good set of number in a tough environment. Right? So my first question is on the CDMO side. Just wanted to understand if if our commission... You mentioned that commissioning commissioning is in FY twenty seven. This is what... I wanted to understand how long does it take for the customer approval to come, you know, for the product that we intend to manufacture in this facility. So it will depend from customer to customer and in which market the customer is operating.

25:56 So as we said that we have main focus area for the European market. So like we will start the validation process first. And after validation, we'll submit our samples. Then probably we'll make documentation accordingly, and then that customer will go ahead for their approval into their respective country, and then it will move on. So, generally, it is maybe one year's time... Around one year's time. Meaning, three, four months here and there. Okay. Got it. Got it. And, also, can you share the, you know, CapEx number that we have actually already spent in first half of this year? And how much you will be spending, you know, on the second half of the year?

26:51 We planned the CapEx of $2.50 CR in the current year, and we have already spent half of this in the first half and remaining spend in the second half of the year. So if I understand, 250 per... For the entire year. Right? The total CapEx? Yes. Okay. So, also, you know, in... With the elevated prices of the product, you know, we are seeing, like, there would be a requirement of higher amount of working capital for this entire year. Am I right with my analysis on this?

27:40 Or... I mean, so so the total finance that will... You will require CapEx plus working capital will probably be more than your cash... The cash flow that you will be making for the year. So so there will be some elevated level of borrowing in this year? Yes. You are right that the... On the increased level of operation and increase in selling and the input prices, the requirement of working capital is on the higher side. As you've seen that in other numbers, there is a slight increase in the finance cost also. But these limits are proper, already not fully utilized. So we now in the last quarter, we had used these working capital at optimum level.

28:30 And we are not going to take any borrowing in the coming year. We have sufficient cash flow operating and in the handle cash flow with the company as of now. So this $200 of bottom that you have as on 09/30/2026, that will be the peak borrowing is what you're saying for the rest of the year. Yeah. It is working capital from the bank only other than when this is short term working capital only. Yeah. So that is the peak working capital requirement is what I'm saying. So you won't require more than 200 per month, right, for the rest of the year. Yeah. Yeah. Oh, yeah. Okay. Thank you. Thank you, sir. That's all I have.

29:16 Thank you. The next question is from the line of Malik Waria from three sixty one Capital. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. I hope I'm audible. Just a little bit of reiterating and clarification on the previous participant question. So firstly, sir, our CDMO business, so you mentioned that it has been recently inspected by... I mean, the g m... GMP inspection has been done. So for the products which we are converting, the API... Existing API products, which we are converting into formulation, will we require any additional filings or approvals apart from this? Or how how does this work? Can you please make a understand?

30:05 So as far as the approvals are concerned, we have the local approvals from the state licensing with prior to starting the plant and additional requirements from the customer side was the European GMP, which is already in place. And probably, I think going forward, it will be the documentation requirements for filing into their respective countries. So that process will go on as usual. Okay. Okay. And in terms of our IOLCPEN, you mentioned that the new capacity, which is coming up, will be utilized by FY '28 and FY '29. Is my understanding correct? Yeah. Right. It's correct. Okay. Okay. Okay. And also, sir, in terms of order book, you mentioned the four to six quarters. So that was across all pharma products or only for IOLCP? Sorry.

31:01 I missed that point. Can you help us in breaking up between volume and value growth for chemicals and pharma? So for quality, so if we talk about the volume, all our major products are being utilized at 95 to 100 capacity utilization. So I think breakup of what volume is contributing and what price is contributing is not available right now with us. But, majorly, this is on the basis of the prices and the better utilization better utilization and also the efficient procurement.

32:06 Understood, sir. Okay. Okay. It's not three four six. Understood. Okay, sir. And sequentially, what do we expect So for the second half of twenty seven, do we still expect improvement on... As compared to first half? What is your view, sir? For FY '27, in that country, we we we perhaps that we will be having around 25% plus revenue growth with 14 to 15% of the EBITDA generation. So I think that's why the two quarters already gone. So I think we should have for this next quarter more or less same performance.

32:53 Sorry, sir. Sorry. Your wife text for me. Sorry? Q three... I think q three and q four, remaining two quarters, six months, perhaps we should have the same performance because we are expecting more than 25% or close to 25% revenue growth this year. Understood, sir. Okay. And the new projects, so the IOLCP, which is expected to start in FY twenty eight, so that will be in first half or second half of FY twenty eight? So probably in the third of the fourth quarter. So this will be having very less amount of the impact during that time of the year, FY '28. So real benefits will come in FY '28 and '29. Okay. Okay. So second half of FY '28 and FY '29 will be seeing contribution from IOL business also?

33:47 No. No. No. No. So this will be commercialized during the FY '28. During the December and March, between between somewhere. So in that FY, this will be very less time for renting of the productions and rewrite this one. So the benefit will start coming from 2829. Understood. Okay. Okay. Got it, sir. And so another question is on bookkeeping side, the other expenses were higher for the quarter at approx 14 and a half percent of sales, usually are under 13.7 to 14. So any particular reason? And is this the new normal, which we should expect going ahead? Other expenses have increased due to cost of power and fuel and the logistic cost during the quarter.

34:42 Power and fuel cost generally every year higher in the second quarter because of summer season and rise in material cost of group. So the other cost is the cost, which is due to higher cost of the things rate. It's we will we have capacity to pass on the customers in the coming months. So we hope it will decrease both the cost, will decrease in the third and fourth quarter.

35:33 Okay. Okay. And my final question is, sir, what products would be the key drivers in the Chemicals segment, which drove the 38% growth in this quarter? We have used a 100% of approximate capacity for both a high level acetate as per canahydide and prices are also better in this space. So this will contribute this is contributed to our chemical basis. Okay. Okay, sir. Okay. Thank you. If I have more questions, I will transfer you. Thank you. The next question is from the line of from Investment.

36:23 Please proceed. Yeah. Thank you very much, and good good afternoon, sir. Sir, I'm just revisiting your guide. You said 25 full year growth. It means the h two growth would be lower relating to the h one growth? No. No. What we are seeing that this is the overall year we are talking about. So it was 25% plus we are seeing. So I think... Because we... Initially, we said that we will be around 15 to 20%. Now we have the visibility because half year already gone. So the remaining half year will be performing more or less the same that the half year we go. So in overall terms, it'll be 25 plus.

37:12 Okay. And in more cash, between around 25. It. Obviously, we are doing a lot of that backward integration and process improvement. And I see around 100 bps improvement in gross margin and operating leverage in spite of higher other expenses. Sir, do you see going forward? Because, see, pricing is not in our control. We we can only improve the productivity or reduce the cost. Sir, do you see the cost of production in going forward will vary from here on part on this or or really any any. You can see that again depends on the raw material prices, how they are going up. But our... As likely Cost of production. I think cost of production. Being active in the current integration or continuous focus on how we can increase our efficiency to better product mix and how to minimize impurities and give better quality.

38:20 This is our main focus for better realization or better bottom line in the company. But the price realization or the prices maybe not controlled by any person in the industry. That that I completely understand. Yes. Because we we can only... We can improve the productivity. We don't have control and. And then in in in business, but sorry, I'm sorry for... I'm new to this company. But we are investing almost a 110 crores. So what would we roughly asset on here? How how much revenue we can embed here, roughly?

39:06 We have just entered this CDMO business just now. And then as we projected, one is to one as a turnover in in the initial initial phase of this. We got... We incurred around 110 crore, and we are expecting 125 crore revenue from this this CDMO business at the cost of 102. Sir, in in this CDMO, there will be competition 'nineteen not very serious. So what could be roughly the off margins or maybe EBITDA margins approximately? I'm not asking the exact, but just to understand it better slightly. And now, already, what we are...

39:53 Let's say, we are running 15... Around 15. So it would be more or less similar to 15 plus something, or it is, like, equal to 15? Yeah. As Abid just told us that in the CDMA business, everyone expected to maintain this EBITDA margin as compared to API or chemical business. So we are also expecting high margin in CDMO business as compared to existing business. Okay. And then final question from my side, since we are we are growing company and considering the scenario, because you deal with customers and markets where you know better than us. Sir, what is the aspirational target for FY twenty nine? I'm not asking any hardcore target, but there is a because since we are doing all CapEx and increasing capacity based on our judgment. So just what could be the roughly ballpark number we can generate at at FY twenty nine?

40:55 And all CapEx I think the sustainable... I think we we should rather than the big aspirations, we should talk more on the sustainable EBITDA number. So around 15 to 17% is a sustainable number, and we should target that. So premium. Okay. Similar margins. Yeah. So Thank you. We are talking about the company as a whole. Yeah. A company. Right, sir. Yeah. It's a blended margin. Okay. Thank you,. Thank you. The next question is from the line of from IOLCP Securities. Please proceed. Mister Cody, we can't hear you.

41:49 Hello? Yes, sir. Please continue. Yeah. Hello? Can you hear me? Yeah. Yeah. Please continue. Yeah. Thanks for the opportunity. Just wanted to understand just wanted to understand, sir, our 25% growth, will it be only volume growth or will it be value growth? Sir, it's a value growth. Okay. So there is no room for further one to growth in... With existing No. They are they are are they are basically... So the growth is... So we are talking about the revenue growth vis a vis the last year's revenue. So we are talking about the value growth. Obviously, this will also include the volume growth and the operational efficiencies and the benefits of the integration we are making continuously.

42:43 Also the process of R and D, which we are utilizing and keep on updating our process. So it's a mix of that. So we are hopeful that not only the '25, perhaps we will be having a better growth. And scope you are talking about that we are keep on enhancing the capacity of. So this is growth we are talking about on the basis of this current capacity. But as you've seen, the last two, three years, we have gone through various capacity enhancement and just few... To inspect the also around the further capacities and the new business. So there are lot of scope for the next year and the next to next year and so on. Hello? Yeah. Hello? Yeah. Yes, sir.

43:29 I I resolved last. No. No. So you said that there is no scope of the volume growth. So my take was on that question that you would have seen that for last four, five years, we are continuously increasing the capacity of our existing products as well as bringing in the new product. So the growth we are talking about 25 plus is on the basis of the existing capacity, whereas we have announced INR 500 crore investment into the new businesses and also enhancing the capacities of new products. Similarly, last year, increased the capacities of the pantoprazole, capacities of the minoxidil, clopidogrel, so many products. So considering the utilization, when we wish to a particular utilization and maintain a certain level and basis the customer engagement and the development, we increase the capacity for that particular product.

44:30 So there is a lot of visibility for next two, three years from now for increasing in the volume and increasing the revenue from the other products and other business line also. Right, sir. In terms of raw material consumption, how much would be in percentage terms in value and imported raw material? It is around 52 or 53% overall. Sorry. Sorry, sir? Twenty two twenty two to 63% overall. Okay. So it means that we do have margin pressure whenever there is a currency volatility.

45:18 No. No. See, he wants to say that the overall consumption for raw material company as a whole is 50... Around 52. And regarding the import in chemical, certain products are being imported primarily around 60% to 70% of raw materials are being imported, like acid gases. Whereas in API, there is... For import percentage, not more than twenty twenty, 22%. And in case... And we have both availability means domestically, the material is also available, and we have the option for import also. In the eighties.

46:03 Yes. Okay. Okay, sir. Thanks. I'll come back in line. Okay. Thank you. The next question is from the line of from IOL Financial Services. Please proceed. I wanted to know the asset tone for each plan or the expansion that is happening because I wanted to understand that you gave the guidance of ROC of around 15% from the current 11%. So just wanted to understand the math as to how will you be able to achieve that, if you could elaborate. Assets are no more dependent on the product to product. But five.

47:01 So overall, blended, we think it is company as a whole, one is to 1.75. Okay. Understood. And the last question would be that on the ethyl acetate side, talking about the chemical side. So what's the growth more price driven or volume driven? Because you also started a new plant. So if you could comment on the current utilization and expected ramp up for the ethyl acetate. So... Yeah., we have not set a new plan, but we have increased the capacity of existing from one less time to one less 20,000 tons. And the increase in this revenue from combination of increase in volume, capacity utilization, increase in our penetration in the sport market, and then to certain high value for the... This customers also.

48:03 Okay. So it's a breakdown with you in terms of volume versus price? No. The volume or the breakdown is not available with us as of now. Okay. No worries. Okay. Can you lastly comment on the price trend that you expect for ibuprofen over the next two years? How do you see it? And I'm biased to you. I think considering there's so much dynamism in the current situation, Forecasting two, three years prices of the ibuprofen from here is pretty risky for me. But the prices are hovering at around the same price for last more than one quarter, and we are expecting that remain similar on similar line in next one or two, two quarters.

48:50 Okay. All the best. Thanks. Thank you. Thank you. The next question is from the line of Santos from LGFC Capital. Please proceed. Hello? Yeah. Yes, sir. Please continue. Export contribute to export approximately 8% of h one revenue. So is incremental export growth being driven primarily by existing products in established markets or by new product approvals and customer additions? Like, which opportunity offers better realization? Export, we have increased penetration in certain part of chemical like the Chinese state, and the main part is contributed by the non IOLCP segment.

49:53 Oh, my second question is regarding pharmaceutical formulations, CDMO. Earlier, you said q three f I twenty seven, and now you mentioned f I twenty seven. So exactly when can we extend the commercialization? Commercializations of c... CDMO, this is going to be commercialized in FY '28. And the optimum level utilizations will happen in FY 'twenty eight and 'twenty eight. Already validation batches are given to our anchor customers, and they are under the from a new plant. And it may took one quarter or two quarter for complete validation by then.

50:42 Okay. Thank you so much, and thanks for the opportunity. All the best. Thank you. The next question is from the line of from. Please go ahead. Yeah. Thank you for the opportunity. So so, basically, I wanted some understanding on this specialty chemical plant that we expect to commercialize in q three. So could you provide more clarity on the product or maybe chemistry being manufactured, like, are planning to manufacture there? And what profile of global customers do you have onboarded for this particular capacity? Because I think you mentioned that it's purely your tool manufacturing. So just wanted to understand, like, will it be a CMO based contract or the CDMO capabilities?

51:33 And how we have contracted the structure of pricing, minimum take off take off commitments or maybe the revenue guy, like, commitment we got from the customer. If you can highlight any of this information on this plan. So... Okay. The first part of your question is the customer. So the customer is one of the renowned chemical manufacturing company. And as of now, the arrangement with us is tolling agreement is there for manufacturing of a certain quantity. Plant is almost commissioned and probably we will be starting batches maybe in the month of November and by the end of November.

52:23 And then probably, will ramp up the capacity slowly and gradually in line with the requirement from the customer. And the pricing arrangement is the cost plus cost plus cost plus model. Yes. Okay. Got it. And, like, on the This is this this is, as you said, the customer's visibility, and this is CMO. CMO, ma'am. CMO. Yeah. Got it. And what kind of product, if you can highlight that, like, the Actually, we are under confidentiality arrangement. We are under confidentiality arrangement. That is the reason we are not able to discuss the name of the company as well as the product product name also.

53:10 Okay. But it's, like, for which the particularly, like, end application of the chemical product or is it a end minus one or maybe, like, what Concentration of product. Basically, it's a new product, but we are not manufacturing so far. The plant has been set up dedicatedly for the customer. So I think we are not able to speak more on this due to confidentiality. Got it. But can you, like, provide information?... That many... It has many it has many applications. So that's it. But it it is a common, like, it's a specialized just because we are making for one customer, but in market, like, this chemical is there and how much market we, like, for this particular chemical we are expecting, like, the total TAM market, if you can quantify. Basically, basically, we are not marketing this product into the open market.

54:11 This is being manufactured on the contract phase, And the benefit of this is that the process is provided by the customer, validated by themselves. We are making for them, and the benefit is that we have greater visibility of the realizations and the profits as well. Also, this this opens up the opportunities for entering into the CDMO business for the chemicals also. And the arrangement the company we are having is one of the renowned global company. So we we will have the operational advantages, value such excellencies, visibility of the value, as well as the profits. Got it. Okay. Thanks. That's all. Thank you so much. Thank you.

54:58 The next question is from the line of Varun from. Please proceed. Hi. Thank you so much for the opportunity. I hope I'm audible. Yes. Yes. Hi, sir. So this is regarding the paracetamol facility that we have. We have recently ended up to 10,800 metric ton. I just wanted to understand in the last month of September... Last month of quarter, which is September, acidic acid prices were up 50%. How much of that effect has... It have had on the end API prices? That's question number one. And going forward with the facility of Paracetamol, how do you see the Indian landscape? Is that still room for more volume led growth or the market is saturated?

55:48 I think the acetic and hydrate... Basically, acetic acid is not directly used for the manufacturing of number one. Number two, yes, acetic acid is used as a input material for acetic anhydride manufacturing, and acetic anhydride is further used for manufacturing of paracetamol. Number, that is one. And yes, you are right. There was increase in the prices of acetic acid. But yes, if you talk about the prices of the paracetamol, they are almost near to the flat like previous quarter. Okay, sir. So I'm just trying to quantify the price would have hovered around $404.25 x IOL, if I'm correct.

56:36 So prices, I think, are not fair for us to discuss on the prices because the prices is not relating to the one prices. That depends geography to geography, customer to customer. And there are different specifications also. So normal prices, what are there, you can very well understand from the market. But for the IOL, we have various prices. So I think not fair for us to discuss on the exact prices. Got it, sir. And how how about the competitive landscape around the paracetamol drug do you see in India? Competitive? I think I think in paracetamol also, we are fully backward integrated. And, like you can see, we are making acetic anhydride, we are making para aminophenol also.

57:27 So I think as far as product competitiveness is concerned, I think we are well positioned with respect to the product competitiveness. Understood, sir. Last question on this, As far as you said that you're fully integrated on the PAP as well as aesthetic and I, right, what sort of EBITDA... I mean, gross margins do we enjoy in the specific business? Because it's not a very high-tech business as a vertical. So just want to understand how much of the value accretion happens because we are reverse integrated into this. So, again, we we never discussed the product to product basis profitability and the EBITDA as a as a chemical and the pharmaceutical business we always discuss.

58:15 So this product is profitable. That is what we can share as of now. Got it, sir. Got it, sir. Any any plans to increase our paracetamol capacity further, sir, from 10,800 metric ton? So as of now, we are running around 70%, and we set up... We are planning to optimize up to 100% level first because the infrastructure is already there. Got it, sir. Sir, sorry sorry for the couple of questions. Just last one. As compared to the last quarter, which is q two f y q two f y twenty six versus q two f y twenty seven, how much of the price increase has happened at a per kilo level for API approximately? I I just want a ballpark number. So there are multiple products, and the price ranging is from few 100 to thousand.

59:07 So I think how this is going to be... And and the capacities and volume level is I think they will drop between cost of 2 to 20 So I think this is very difficult question to answer, but as we will not be able to answer these questions also. Understood. Thank you. Thank you so much, sir. Again, congratulations on a great set of numbers. Thank you very much. I'll get back with you. Okay. Thank you. The next question is from the line of, an individual investor. Please go ahead. Many many congratulations for excellent set of numbers. My question is, Stallion Group have closed their plant in Europe. So what kind of advantages we are getting from it or any effects of that on pricing and plant utilization?

59:55 And also, how we are utilizing... How we are using acidic anhydride? Mister Muhammad, can you please repeat the first part of the question? First of all, what are the advantages or any advantages we are getting from Styron Group plant closure, acetyl plant closure, and effect of that on pricing and plant utilization, and also the acidic and hydrate utilization. We are also using in terraflavour production, and then also we are selling it outside. So I think I think you told that Chilean plant for acetyl is still closed. So probably there is nothing to do for acetyl chloride with paracetamol. Then we are talking about the paracetamol, acetic anhydride is the input material for it.

1:00:44 Acetyl, we have our own manufacturing, and that is used as a input material in my production. Yeah. You're right. But the prices of acidic and and hydride have also increased because of that plant closure. So can we export that... The the material we are use... Constructing in our plant? Some some some materials we are also expecting means, I... Do we... And conserve entire... Hydrate in the rest of world production only or we have some extra? So as far as acidic and hydrate is concerned, we have the capacity of the plant and almost some quantity of it is used for the in house consumption in three products. One is, other one is, and third one is, the rest of the 23 is going for the merchant sales.

1:01:44 Maybe around currently around maybe for 50 tons, we are selling per month for the merchant team. So do do you see any advantage we will get from that stallion plant closer? No. Probably. I think I think it will be very... It will not be the right answer. We don't have the right answer for this question. Sorry. Okay, Sir, we have given the guidance of 22,800 for top line and 14 to 15% EBITDA margin. So do you want to raise the guidance in terms of any top line or bottom line? It is not the 20,000. It's 22,000. 25,000.

1:02:31 Yeah. So so it is little better from the 2700. Initially, you are right. We said that the 2,700 by '20... FY '27. So I think we will surpass sufficient with the sufficient margin, that guidance. And we are revising that, and we've given in the presentations '25 plus, we will be achieving. And EBITDA margin should be something around 14%, 14 to 15%. Okay. Sir, do we have started a triacetin export? Yes. Yes. The plant has started. Export. We received the reach. Yeah. We have received reach, we have started I think I think that commercial orders has not been done so far, but the development has... Are in discussion with the customers. We are in discussion with the customers. And to that extent, some of the customers are visiting our facility first.

1:03:32 That is why it is little bit technician. Sir, for many products, we are having two manufacturing process approval for CEP. So does that have the advantage? So, basically, yes, it has the advantage because in some cases, we are getting better quality. But, yes, and the customers are billing full to get that better quality of the product, wherein you can have the negligible level of impurities. So depending on the customer's requirement, we are developing the process and then finally going for the means development at R and D scale because in some cases, the customers are coming up with their own specifications.

1:04:19 So to meet out those specifications, we have to develop the process. And then finally, to sell that material to that customer, we need the CAP approval also. So that is why we have to go with the alternative process. Sir, do you think as a company, now we have to think about go for that one integration of Acetic Asset? Is it is it possible? As of now, probably no. Okay. That was my last question. Thank you very much. Thank you, sir. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

1:05:06 Thank you, everyone, for your questions and for engaging in today's discussion. To conclude, we are encouraged by our performance during the first half of FY 'twenty seven and the progress across our Pharmaceutical and Chemical businesses. The sustained growth in our diversified API portfolio, improvement and continued in scaling up our existing businesses, executing the announced strategic investments and strengthening our manufacturing and record integration capability With our established manufacturing capability, diversified product portfolio and disciplined approach to growth, we remain confident in our ability to build a stronger and more resilient business and deliver sustainable long term value for all our stakeholders.

1:06:16 So on behalf of the management, I thank all our stakeholders for their continued trust and support. For further inquiries, if any, please feel free to contact our IR team. Thank you, and have a good day. Thank you. On behalf of MUFG Investor Relations, that concludes the conference. Thank you for joining us, and you may now disconnect your lines. Thank you.