Ladies and gentlemen, Good day and welcome to Vinati Organics Q2 FY 2027 earnings conference call hosted by Nuvama Wealth Management. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then 0 on your touchtone phone. Please note that this conference is being recorded. Also note that this conference call is scheduled for 30 minutes. I now hand the conference over to Mr. Archit Joshi from Nuvama Wealth Management Limited. Thank you, and over to you, sir. Thank you, Sagar. Good afternoon, good afternoon everybody. Wishing everybody a very happy Diwali. At Nuvama Institutional Equities, we are pleased to host the 2Q FY27 earnings conference call of Vinati Organics Limited. We are joined by Mrs. Vinati Saraf Mutreja, Managing Director, Mr. Gulshan Kumar Sakhuja, CFO, and Mr. Aditya Chirivala, DGM Corporate Finance. Without further ado, I would like to hand over the call to Mr. Gulshan Sakhuja for his opening remarks, and then we can take the question and answers. Thank you, and over to you, sir. Thanks. Uh, good afternoon, friends, and thank you for joining us for the Q2 FY27 results conference call. I will begin with an overview of our financial performance for the quarter and half year ended 30th September 2026. On a standalone basis, on YOY basis, in Q2 FY27 Net income including other income increased by 21% from ₹562 crore in Q2 FY26 to ₹707 crore. However, EBITDA declined by 27% from ₹195 crore in Q2 FY26 to ₹142 crore. Profit after tax also declined by 33% from ₹129 crore to ₹87 crore. On Q&Q basis, in Q2 FY27, net income including other income declined by 4% from ₹707 crores in Q1 FY27 to 681 crore. For H1, net income including other income increased by 25% from ₹1,112 crore to ₹1,387 crore. However, EBITDA declined by 10% from ₹368 crore in H1 FY26 to ₹333 crore in H1 FY27, while PIPE pack declined by 15% from ₹242 crore to ₹210 crore. On a consolidated basis, YOY basis, in Q2 FY27, net income including other income increased by 23%, rising from ₹566 crore in Q2 FY26 to ₹1,387 crore. to ₹693 crore. However, EBITDA declined by 24% from ₹183 crore in Q2 FY26 to ₹138 crore. On Q-on-Q basis, in Q2 FY27, net income including other income declined by 2% from ₹704 crore in Q1 FY27 to ₹693 crore. For H1, net income including other income increased by 25% from ₹1,115 crores to ₹1,398 crore. However, EBITDA declined by 9% from ₹350 crore in H1 FY26 to ₹318 crore in H1 FY27, while PAT declined by 15% from ₹219 crores to ₹187 crores. Now moving to the operational performance, our business is facing challenges on account of prevailing market conditions, especially ongoing war in the Middle East, which has led to an increase in the raw material prices energy prices as well as the logistics cost. Even though the increase in raw material prices have largely been passed on to our customers, the logistics and energy cost could not be passed through entirely. This led to an increase in the top line but adversely impacted our bottom line. The logistic rates have started cooling in Q3, and we expect further reduction in Q4. Which will positively impact the Q3 and Q4 profitability. Moving to our major product categories, demand for ATBS did not pick up as anticipated during the beginning of FY. owing to destocking by customers, which impacted our ability to meet half-year's target. We expect volume recovery in H2. The butylphenol segment delivered stable performance, and we anticipate better performance in H2, supported by improving demand conditions. Our antioxidant business delivered strong performance in H1 despite a challenging market environment. We expect this segment to maintain momentum in H2, supported by market expansion. IB reported strong performance during H1, and we expect the performance to continue in H2. IBB delivered strong performance in H1 in terms of volume as well as pricing. We expect similar performance in H2. Overall, we expect to end FY 2027 with 20 to 25% improvement in top line over the previous year owing to the improvement in volumes as well as pricing. Under VOPL, few products require process re-engineering, which is under process. After completion, we expect VOPL to contribute meaningfully to the top line and the bottom line of the consolidated entity. Turning to the capital expenditure, our investment strategy remains closely aligned with our long-term growth objective. In view of this, we have announced a CapEx plan of ₹500 crore to develop and commercialize new specialty chemicals with application of fragrances, personal care, water treatment solution, oil field, and others, with scope for further expansion into adjacent product segment based on the market growth and opportunities. This CapEx will be entirely funded through internal accruals and is expected to commercialize in 2 years. In addition to this, we are also planning for additional CapEx of ₹500 crore. We are currently working on a land acquisition for the same and will be able to provide more clarity in a in next couple of months. This additional CapEx too will be funded through internal accruals. Thank you. I now welcome your questions for the Q&A session. Over to Archit. Thank you, 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 then 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Rohit Nagraj with 361 Capital. Please go ahead. Uh, thanks for the opportunity. Uh, so just one question on the ₹500 crores new CapEx. So you can just elaborate in terms of which chemistry platforms are we working on, whether it is aligned to the current chemistries or forward integration or so. And whether these prior products are tested in our pilot facility, uh, so that it goes into commercial without any teething problems. Thank you. Yes, uh, thank you for this question. Uh, these products are related to our existing products. There is some sort of integration, some sort of adjacencies whether backward, forward, or horizontal. Uh, we have been testing these products over the last 1 year, so we are quite confident of implementing it, and hence we have announced it. Sure. And just one clarification, uh, the project will come, uh, after 2 years. What is the kind of revenue scale-up that we are looking at and the margin profile for these products. Thank you. Yeah, so usually the asset turnover one can expect in this 1:1 or maybe slightly higher, maybe 1.2, 1.5. Since they are, you know, related to our chemistries. But ROI, or, you know, on this expense, one can— it can be in the range of 15 to 20%. Sure, uh, thanks a lot. All the best and Diwali wishes to the entire team. Thank you. Thank you. Your next question comes from the line of Nilesh Goge with HDFC Securities, please. Yeah, hi. Yes, yeah, thanks. Uh, just first question on the sales mix. Uh, can you tell us the sales mix for sales mix, uh, product-wise? For this quarter and if possible for H1 FY27? Uh, if I come to that product mix, if I say this ATPS, that has contributed approximately, uh, 27-28% to the top line. And if I talk about IBP, it is in the range of 12 to 15%, butylphenol in the range of 16 to 20%, and AO again, it's in a range of 15 to around 17% overall. Okay, okay, thanks. And, uh, you mentioned that because of destocking, ATBS demand was not as per your, uh, expectation for H1. Uh, but can you tell us what kind of demand growth in ATBS you expect for this year? Yeah, in fact, we are seeing a meaningful improvement in volumes, uh, with Q3 itself looking strong, uh, with an uptick in demand for ATBS. So we definitely see, uh, are going to see some recovery through the second half. Uh, okay, uh, we usually, uh, what we have observed that when there is a good oil and gas prices in international market, we see significant improvement over demand. So, uh, why this is not there in this? Any, any reason? You will see in second half. You will see in second half. Okay. And on the viral organics, uh, when Do you expect MEHQ and other products commissioning? So when we have actually started manufacturing MEHQ at a lower, uh, you know, volume which we are self-consuming to make BHA. Uh, the expansion of MEHQ, you know, the debottlenecking is taking slightly longer than expected so we can offer it commercially, but we expect starting April commercial sales. Okay, okay. And, uh, it will take another 2 years to ramp up to optimum utilization? Uh, any, any guidance on that? I think, I think 1 year, because now we've already started customer evaluations and, you know, we are already getting our products tested and qualified. So once that is over, and then simultaneously our plant will start, so shouldn't be— should be another 1 year of it, I think. Yeah, and just last question, uh, in opening remarks, sir mentioned that 20% YOY growth in top line, uh, but on the operating profit level, can you guide us? Earlier, your guidance was in the range of 25 to 30%. So looking at the current situation and H1 results, can you guide us on the margin? Yeah, I I think we will end the year maybe around 24% EBITDA margin. Is that correct, Mr. Gulshan? Yes, ma'am. Yeah, 24-25%. That's all from my side. Thank you. Next question comes from Naushad Chowdhury with Aditya Birla Mutual Funds. Please go ahead. Hi, thank you for the opportunity. On the CapEx announcement, if I heard it correctly, apart from the press release of ₹500 crore of specialty CapEx. Uh, you touched upon additional ₹500 crore of investment, which— for which we are scouting for land. Uh, if I had it correctly, what exactly, uh, would this project be and, uh, by when we can, you know, expect more clarity on this piece of acquisition? Yeah, I think it was mentioned in the opening remarks that you will get more clarity on this investment over the next 6 months when both, uh, the land acquisition as well as the pilot trials are completed. 1.5 times. And economics of this project would be similar, similar, similar. 15-20% ROI, asset turnover may be slightly higher. And if I look at your gross block addition in last 4 years, so on a base of 1,000, we have added 1,500 in last 4 years. And then these blocks are also coming in, uh, the additional ₹1,000 crore of plan we have. So what, you know, gives us a confidence in terms of getting the ROI of 15-20% from these assets. And, um, If you can, you know, elaborate a bit more, how are you thinking about these investments, uh, versus getting a desired ROI? Yeah, so, you know, these invested investments are in products that are related to our existing products. We have actually been spending a lot of time and effort in the pilot trials, in the R&D, uh, this time, uh, we feel fairly confident. Uh, we have also learned from our mistakes of the past. Um, regarding product, uh, project executions, uh, we are better, uh, positioned now as to which agencies we need to hire and which agencies we need to give the assignment to. So hence we feel fairly confident, and hence it has taken us so long to announce this, and we are still not announcing, uh, you know, fully announcing the next 500, you know, uh, It may not happen also, so we'll wait for 6 months before we confirm that one. So does that mean the, uh, the new project commissioning and scale-up would be, uh, much smoother versus what we have experienced? Well, we hope so, and we plan to do, you know, be— do, do that. This time we are going with a little more, uh, you know, how do I say, a little more confident suppliers, technology and process engineers. Understood. And, um, are we behind in terms of the stabilization of the OPL, uh, and by when we can, you know, expect the ramp-up of this plant? Yeah, ramp-up will start in April. And how much time will it take to get to the— one year, one year. Okay, and the technical and taping issues which we had, are we behind, uh, of all those problems, or do we still have— Yeah, yeah, now our product is qualified. We are using it to make BHA We are also commercially making the other products, but it will just take another 4 months to, you know, reach capacity, optimum capacity. Okay. Okay, all right, ma'am. Thank you. All the best. Thank you. The next question comes from the line of Abhijit Akella with KIE. Please go ahead. Yeah, good afternoon and thank you for taking my questions. The first one was just to clarify that the sales mix shared on the call a little bit earlier was for the first half of the year or was it for the second quarter? It's for the first half. First half. Okay, thank you for that. EBITDA margin guidance for FY27, you mentioned 24%, but for FY28, should we expect that we should get back closer to the 26-27% we normally aspire to? You can say the worst is now behind us, and as far as the product of ATBS, ma'am just said in the 3rd and 4th quarter and next year would be of a better volume along with the prices. So we are expecting means 25-26% of EBITDA margin next financial year also. Yeah, sorry, just to clarify, you said 26% or 25 to 26? 25 to 26. Okay. And just the last thing from my side regarding these new products, the ₹500 crore CapEx you've announced already. What exactly is the competitive landscape like for these products? Are there local producers in India of these or are you going to be the first one? And is it all import substitution or is it also an export opportunity that you're targeting? Well, for some of them we will be the only producer in India, but for one segment, uh, we will be the second producer or third maybe. Yeah, and is it all domestic sales only or exports as well? No, this is domestic and export both, mostly export actually. I would say 65-70% is export. Right. In terms of realizations per kilogram, I mean, what sort of range would these products lie in? On average? That's a very good question. Uh, you know, they range. I would say the average would be $3 per kg. There's a wide range starting from, you know, maybe $2 to $4.50, but You can average it at around $3. products, most of them, not all, but yeah. Okay, and we can sort of aim to maintain the similar EBITDA margin profile even with those products, 25%? They are all slightly more special specialty Right. And sorry, just one last thing. What sort of market share would we be aspiring to in these segments at the global level? Would it be very large or will we be a relatively smaller new entrant? Depends, as in there are 3 major, you know, different product segments. Uh, I think in 2 of them we will be fairly large. Uh, in one there are— the other one there are other product players also. Okay, got it. Thank you so much and wish you all the best. Thank you. The next question comes from the line of Surya Narayan Patra with PhillipCapital India Private Limited. Please go ahead. Yeah, thanks for the opportunity, ma'am. Uh, my first question is about the new product line that we are adding, or new products that we are introducing. See, generally If I see our historical business, because of the cost leadership globally, so this business used to kind of maintain kind of a profit leadership, cost leadership, and volume leadership. accordingly. Now, recently, whatever the new project that we have talked about, let's say MEHQ BHA and all that. So that is a very, very competitive space, uh, and China is a kind of a major player also there, uh, and now we are talking about 3 more product areas as a kind of a new business, new product, new projects. So what are the kind of strengths, uh, that we are thinking about the new product pipeline, whether it is Chinese competition is there for those products or we are confident about our cost leadership. What strength— based on what strength that we are thinking about playing this, uh, new product or new projects going ahead? I think one, like I said, we are looking at, you know, adjacencies, so which will give us some cost leadership. We are also confident of being the only Indian player in some of them. Like I said, some of them are also high-margin products, meaning there are very few players in that globally. And hence we are getting into it because we have access to the technology. Okay. Uh, and also if you can talk about the applications of these 3 new products. They are into various applications starting from fragrances, personal care, water treatment, oil field, as well as resins. Okay, okay. Uh, my second question is about, let's say, the margin profile or the margin what we have reported for the quarter. This is looking like the lowest ever kind of margin performance what we have seen. Uh, why so, ma'am, and what change that we have seen in this? So how different the scenario and environment or the kind of product mix that we have seen? For this quarter that the margin profile has come down to such a low level, the— in the history that we would not have seen it. Gulshan ji, you want to answer this? And in this particular Q2, means there is a shift of this ATPS from 2nd quarter to 3rd quarter that has led to that reduction of margin to 21% in this quarter. This was the only reason and Second, as far as the increase in raw material cost is concerned, we are able to pass on through to our customers increase in logistics and power cost that has not been fully passed on to the customers. And second, a shift of ATPs, uh, this, uh, that sales from Q2 to Q3 and Q4. That has led only to the reduction of Q2 margin, nothing more than that. Now the worst is behind us. We can say this thing only. Okay. Uh, just one clarification about the product mix, what you have said for the first half. So what is the revenue mix from the butanes and also I just told her it's in the range of 15 to 17%. So that you talk about AO, right? It's in same range. Now, I talked about 15 to 17% for, uh, for butylphenol, also in the same range. I told you it's around 17 to 18% in the, in the start of the conference call. माम, I think this year we'll cross hundred crores in BOPR. What would you say, Pray? And, and BOPL has products. Okay, okay. And just last one point from my side, again reiterating the point of MEHQ. So how do you see this See, in fact, this space, the, the entire chemistry value chain of this space is facing a significant competition, larger capacities, larger volumes. That's what we are witnessing. also getting added in China. So given that background, what expectations that you are still building out of this product? See, we are supposed to kind of see about ₹100 crore kind of revenue out of MEHQ-BHA kind of a value chain, uh, this year itself. Now we are kind of delaying to next year. So what is the challenge? It is whether it is a kind of a competition or it is a kind of issue at the manufacturing level, or what that we are trying to sorting out? 26, 27, it will be in the range of around 75 to 100 CR, not more than that. It will not— we will not cross 100 CR in this, in this, in this financial year. Okay, okay. But that is, that is mostly because of our, our problems, our production. हाँ इट इज़ इंटरनल पर वी आर वर्किंग ऑन दैट रिएंजीनियरिंग प्रोसेस एंड दैट इज़ गोइंग टू टेक सम टाइम एंड दिस विल गेट स्ट्रीमलाइन्ड से बाय अप्रैल बाय अप्रैल ऑफ़ और मई नेक्स्ट ऑफ़ नेक्स्ट फाइनेंशियल फाइनेंशियल ईयर वी ईयर कैन We have 5 products, right? It has MEHQ, guaiacol, anisole, uh, 4-methoxyacetophenone, and also isoamylene-based products, tertiary amyl alcohol, as well as PTAP. वे हैव जस्ट स्टार्टेड, सो द रेवेन्यू फ्रॉम दोस्त वे स्टार्ट कमिंग फ्रॉम दिसंबर। जनवरी और राधा Okay, sure, man. Yeah, thank you, thank you for answering all the questions. Wish you all the best. Thank you. The next question comes from the line of Prasad Wadnere with Union Mutual Fund. Please go ahead. हेलो अलाउडिबल Is correct. Yeah, yeah. So, so ma'am, my first question is on the, the chemistries that could be, could we expect in this ₹500 crore CapEx? Are these different to what we are entering, we are into currently? Or is it just a forward integration of, um, the chemistries that are there in our current business? Well, they are related to our products. Uh, one could say most of the processes we are familiar with. Uh, however, these are dedicated plants. Uh, there will be some different, uh, technology, different, uh, processes also involved, but nothing that is very different from what Vinati Organics does. Uh, there will also be synergy with our existing product segments in terms of the end use. Some of them serve similar customers. And hence we are focusing on these, and this is how we have shortlisted these products. Okay, ma'am. And my second question was on the MHQ side. So, uh, considering the whatever the competitive landscape that is there in terms of MHQ market How are we looking to scale up this product over next 2 to 3 years? I think— I don't think MEHQ still has a strong demand because it is used ultimately as an inhibitor in polymers, and overall The, you know, these industries, polymer applications are growing. This, I think what you're talking about is a temporary downturn. Um, it is still a high margin product if you look at the gross margins. on MEHQ itself. Having said that, our whole plan, you know, out of ₹3,000 crores or ₹4,000 crores that we will be at in the next 2 to 3 years, MEHQ is just ₹100 crores of it. Uh, good, ma'am. Thank you. Thank you. Ladies and gentlemen, we take this as our last question for today. I now hand the conference over to Vinati ma'am for closing comments. Over to you, ma'am. Uh, thank you everyone for participating, uh, and you know, in spite of this quarter, how it has turned out, we believe it is important to look at the underlying performance and the opportunities ahead. We are seeing encouraging— like mentioned, we are seeing encouraging volume trends. Several of our businesses continue to perform well, whether it is IBB, isobutylene, butyl phenols, as well as antioxidants. Hence, we are investing in new specialty chemical opportunities that can expand our platform and further grow it. Our focus remains on profitable growth, disciplined capital allocation, and long-term value creation. Thank you. Thank you. Thank you. Ladies and gentlemen, on behalf of Vinati Organics, that concludes this conference. Thank you everyone for joining us, and you may now disconnect your line.