Ladies and gentlemen, good day, and welcome to Camlin Fine Sciences, Q2 and H1FY26 earnings conference call hosted by InCred Equities. As a reminder, all participant lines will be in 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 zero on your touchstone phone. Please note that the conference is being recorded. I now hand the conference over to Mr. Chaitya Dosh i from InCred Equities. Thank you, and over to you, sir. Thank you. On behalf of InCred Equities, I thank you all for joining the 2Q H1FY26 earnings conference call of Camlin Fine Sciences Limited. From the management team, we have with us Mr. Ashish Dandekar, Chairman and Managing Director, Mr. Nirmal Momaya, Managing Director, and Mr. Santosh Parab, Chief Financial Officer. Before I hand over the call to the management team, I would like to draw your attention to the safe harbor statement in the investor presentation. Over to Mr. Ashish Dandekar, sir, for opening remarks. Thank you. Thank you. Welcome, ladies and gentlemen, to this call. I know your time is precious, so we'll get on with it. Santosh will give you a brief of the quarter's performance, after which we will answer your questions. Santosh? Yeah, thanks, Ashish. Good evening, everybody. Quickly to the financial statements. We had a revenue of around INR 4,600,000,000 in this quarter, which is a growth of 8.6% over last quarter. The increase was fueled by the increase in trades and blends vertical of us, where we grew our turnover in both the trades business of TBHQ, BHO, BHA, and also the blends business has increased during this quarter. As you know, aroma, the another vertical of us, the volumes have increased. However, the net realization there has been subdued due to the tariff situation. Overall, costs are stable. In trades business, we have realization pressure because the prices are under pressure, even though costs have remained stable, especially the heightened local competition coming from local investments in India. There are competitions coming on TBHQ, BHA. However, we have held on to our volumes. Our volumes have increased this quarter by around 40%. This was mainly because last quarter, if you remember, we had a shutdown there. We have come back on volumes in the trades. Blends business has been growing at around 8%, which has grown by 8% in this quarter. Our margins have improved as compared to last quarter by around 2%. It is around 46% this quarter. It was 43-44% last quarter. Last quarter, we had certain shutdowns and as the gross margins were impacted, this quarter, our Tarapur plant as well as the H plants have been working at an optimum capacity utilization, and that has helped us to get back to 46% gross margin. Of course, we could have got more margins, but for the impact, the tariff pressure on the volume, vanillin realization, vanillin business volume has increased almost by 35%. The sale volume has increased by 35% as compared to the last quarter. The realizations have been under pressure, especially due to the 50% tariff which has been levied on Indian exports to the U.S., and that has put pressure on the realizations. Prices have been, the costs have been stable. There is no increase in cost because the raw material, butterflies, and food prices have been under control. Coming to the other cost, if you remember, there was some one-time expenditure happening on employees' costs, but we had also said that we would be strengthening our blends team because we are looking at a lot of exciting prospects in our blends business. We have been strengthening our employees, especially in blends marketing employees, almost in all our three regions of the U.S. and Brazil, even Europe, the new White Pine in Belgium, in India. We have almost added 20 people this quarter also, and that's why the employee cost, despite being a one-time hit last year, has been remaining at the same level, and it will remain at this level now of this quarter. In fact, we have planned to add a few more heads in marketing in various sub-verticals in the blends business. There could be a small, some percentage increase in employee cost going forward. As far as other costs and other expenses are concerned, there also, we had to absorb fixed costs in the last quarter because of the closure of the shutdown of the plant. This time, the volumes are higher, as I said. Volumes in Tarapur plant were almost more than 40%. Even vanillin plant, we had additional 35%. Our plant was working between 50%-60% vanillin. Obviously, that has brought the other costs. The end result was an EBITDA of around INR 33 crore this year, this quarter, at 7.27% as against INR 19 crore in last quarter. There is an increase, but as I said, margins on cost side, we have been fairly stable, but for the bank strength, which we have increased in employee costs. However, there are certain pressures on the realizable values of our products. Our blends business sectorally remains exciting and good. We are growing. Of course, in the US, it is a geography where we have seen certain sluggishness, especially which was also due to the inflationary thing in the US. We are certain that we will get back to the original levels, and we will be able to achieve the generally budgeted thing of growing at around 18%-20% on blends year to year. This will be supported by the blends strength, which we are increasing, as well as inorganic growth. We had just, are on the verge of issuing starting shares with new acquisition in France that will also come. It will become a subsidiary sometime in this quarter, which will bring additional revenue. We feel that we are on track for the growth, which we have been seeing in blends. Coming down to the profit, yes, we had a loss last year, last quarter, because of the shutdowns and other things, but we had almost, it is almost zero, and it will improve as we go to the subsequent quarter. As far as loan coming down to the balance sheet, we did not have any big fixed assets expenditure apart from what we had to do for maintenance and other things. Our gross debt situation has remained stable. It was around INR 645, INR 86, INR 40. We did repay certain loans, but as we have been always saying that this repayment, we have to go for working capital also because your revenue keeps on increasing. The net debt was INR 490. It has been at INR 520. That is basically we had some rights issue money which has been used. Largely, the gross debt is expected to remain at the same level. Correspondingly, if you see, interest cost has not gone up much. Net of fixed cost, we have been at the same level. All in all, we are in an increasing trend despite all the issues of tariffs and the struggle on the realization. We are making, I would say, on a growth path, and I think this path will remain as the year progresses. Thank you. You can open the question floor. Thanks. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchscreen telephone. If you wish to remove yourself from the queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all the participants that you may press star and one to ask a question. The first question is from the line of Rehan from Coheron Wealth. Please go ahead. Hi. Am I audible? Yes. We can hear you. Thanks. Loud and clear. Thank you. I just had a couple of questions. In the Q1 con call, you had mentioned we have about three to four months of, there's three to four months of channel inventory for vanillin. I see on a QOQ basis, you've done really well in a challenging time. Kudos to you guys for that. Could you help us understand how is the channel looking currently at the moment? Is the de-stocking complete? That's my first question. The de-stocking in the U.S. is expected to be completed by Q4 of this year. In Europe, it is expected to be cleared by Q1 of FY2027 because in Europe, the anti-dumping duty was levied only in July. There was a large amount of channel stocks lying in Europe. Understood. Because on the Q1 con call, you had mentioned you're expecting by November to be cleared the entire channel. Are we seeing a delay on that? Yeah, I think so. I mean, there is, also there is the effect of tariffs, which has played a role on overall demand in the U.S., which is now opening up. We expect by Q1 for it to be, the channel stocks to be empty and we get a good position in the market. Just for this quarter, what would have been your blended realization? Around $12, $13? Around $12, yeah. $12 is 25, and the net price, net of freight and other things which we have bore, it's between $11-$12. Understood. Sir, I wanted to confirm on that, that year on year, if we look, not quarter on quarter, because I understand you took the plant shutdown. If we look at it year on year, your sales have improved by about 8-9% for the quarter, out of which vanillin has improved specifically by about 70-75% year on year. Still, your gross margin is down about 200 basis points. I mean, it just does not, just wanted to understand more on that. Last year, as I've been mentioning, there is certainly a price pressure here. In last year's trades, like TBHQ and BHA, was being sold at $8.5 and $9. The prices have come down to $7. Similarly, vanillin, the situation was totally different. We were hardly producing at that moment of time. Generally, the margins are lower. The costs have almost remained the same year on year, but the whole trouble is the realizable pricing is under pressure. That has taken out around 2-3% of our margins. Considering that Europe now scheduled their fresh contracts for vanillin, are we seeing 15-16 kind of realization in what has been the historical median? Are we seeing those kind of prices and contracts coming in for us? No, not in Europe, not as yet. Like I said, in Europe, the channel stocks will remain till end of the year, till March at least. The price realization is in the $12, $13. We will see it move once the channel stocks are empty. Do you feel you are confident of reiterating your guidance for about 2,500-3,000 tons this year for vanillin and also blends? Because on H1 YOY basis, you're about 7-8% kind of growth. Do you think you guys are going to stick to that for this year, considering the tariff headwind and other macro factors? I think vanillin, we are, how much have we done? For the half year, we have done almost 1,300 tons. 1,000? 300 tons. 1,300. So yeah, we are good for the 2,500. And for the blends also, we are the 20% that we are seeing between 18-20%, I think we are okay for that as well. Okay. Because on H1 basis, you still have high single digits. You feel that that will cover up in H2? Yes. Also, there is an acquisition which will add some numbers. Okay. So that includes that 18-20%? Yeah. Okay. Okay. Thank you so much. Thank you. Thank you. The next question is from the line of Satish Kumar from InCred Capital. Please go ahead. Hi sir. I just wanted to ask one thing. This is regarding the guidance that was there of around INR 2,000-INR 2,100 crore kind of sales. Whether that will be achieved or are we changing it? No, that will be on, we are online for about 2,000-2,100. Sir, also, what will be the current prices, retail prices of vanillin in the US? In the U.S., the prices are minimum is $19. But we are seeing now some businesses even at $20 plus. Okay. So assuming, sir, that if Trump tariff comes down to 15%, what we can realize, sir? I mean, just, I'm not asking for a guidance, sir. I'm just asking a rough idea. No, so the pricing, I don't think will come below that because the local competition that we have is pricing it at around the same $20 price. Our realization should improve by at least $3-$4 or whatever, depending on the tariff situation, what it lands at. Okay. Got it, sir. Got it. Also wanted to understand regarding VinFi. When will the integration happen, sir? We are expecting it by November end. It should be the, we're just waiting for approvals from the stock exchanges for the swap. Once that is done, within 15 days, we will do the swap. By end of November, it should be done. We will start consolidating it from this quarter. Correct. For one year. Correct. Okay, sir. That's all from my side, sir. Thanks. Thank you. Bye. The next question is from the line of Surya Narayan Patra from Philip Capital India Private Limited. Please go ahead. Yeah. Hello. Yeah. Thanks for this opportunity, sir. My first question is on the US business. The North American business sequentially has seen a kind of impact. What is this business getting impacted? Is it the export from India or is it the pricing or is it the tariff? What is really getting impacted here? In the U.S., the one impact that had happened was there was a bit of a slowdown in the pet food business in the last two quarters, which now seems to have improved and is picking up again. Structurally, the natural that we were selling into the U.S. was getting replaced by some synthetic at the lower end of the market, which I think, again, now they are back on track and we should be back on track on the U.S. business. To add to what Nirmal is saying, we had been selling vanillin through the U.S. So 96% of revenue last quarter also had vanillin. Now, if we import and we have to bear the duty first, that impacts our working capital. In this quarter, we have tried to do direct sales rather than routing it through the U.S. The dip from 96 to 69 is not only because of blends. There is reduction because of vanillin. Blends, we have, it's not gone down. It's like 5% small on animal nutrition and other things. Because the turnover is shown of entire, in earlier times, there was no vanillin sale in the U.S. So it was very pretty. Safe to assume that it was blends. Now the case is different, at least for this quarter. Last quarter, there was vanillin sale in the US because we had selling through the US to get better margins. Now, to circumvent the working capital requirement and the vanillin to be the duty on us, we are directly selling. Okay. So hypothetically, just I wanted to understand. See, if the, see, we know that the historical leverage for vanillin is when, in terms of pricing, is when in the range of around $12 kind of. So what we are currently getting, even for the US market right now, even after the tariffs. If this tariff situation continues like that for, let's say, extended period, what will really restrict us from enhancing and expanding the volume? No, Surya, the point is that the volumes were impacted, as we said, was because of the channel stock. Once the channel stock is cleared, irrespective of what the tariffs land at, whether they continue at the same or they come down, if they go up from where it is, of course, our net realization will get impacted because the final price in the market is around $20. Now, our net realization today is $12 because of the tariff in between. It is really a calculation now where the tariffs will land at. If they go more than 55, this will come down, net realization. If it comes below 55, our net realization will go up. Just to add also to this, if the prices remain at $12, channel stocks are out, we will be increasing our production, say, to much more. As you know, we are running at 50%. So the cost is higher. So we may be saving around $1-$1.5. If we go on 100% with $12 realization only, there will be some margin improvement though, not the turnover doesn't increase. As Nirmal said, the tariff situation is different. There will be a much higher margin increase. Correct. Yes. Yes. Yes. No, fine. The way to look at it, Surya, sorry, Surya, the way to look at it is all our costs of running the vanillin plant are in today. Whatever incremental sales that I do on vanillin, my RMC today is, say, at roughly about $8. And if my realization is $12, I get a straight $4 margin on every incremental sale that I do because in these numbers, all my costs today are in, 100% of the costs are in. Yes. Yeah. So then it is a question that, okay, when the on-ground demand will really pick up after the decrease of the inventory? Correct. That is the real question. For that, our expectation is by Q4, it should start picking up in the U.S. and Q1 in Europe. Okay. And about the non-U.S., non-Europe market, what is the trend and what dynamic that you are seeing, sir, for vanillin? Trend is very bad because the Chinese are desperate, selling at $7, $7.5. It is not really a market that you can play in. Of course, we do have some markets where, especially in F&B, we do sell small volumes, and we are yet focusing on those markets and trying to build small. It will not be very large volume, but whatever we do get is always, it always has. Okay. Okay. My next question was about the blends business. If I remember last time that you have been mentioning about creating the franchisee, the branded franchisee in the blends in the advanced markets. Today, in the opening remark also, it has been mentioned that there is a field force expansion likely. If you can, sir, give some sense that, okay, what is the field force that you are currently having for the blends business, what you are currently having, and what metrics that you do follow in terms of revenue per sales representative or something like that? What is the field force you are expanding, and what timeline that would be required to achieve an optimal kind of revenue per representative on that front? In every market, Surya, the metrics are different because every geography, the cost structures are very different. We can't really generalize and say that our metrics in the U.S. are very different than it is in India. It's very different in Mexico as compared to Brazil. It's again market to market. However, on the number of people, I mean, we have expanded the field force by almost 31 people in this quarter, starting, I mean, in this last quarter, which the impact of that we will start seeing from typically takes six months for the impact to start showing once somebody's onboarded. You will start seeing the impact of this additional by Q4 and Q1 of next year. However, we had also added people, say, six months ago. Also in Q1, we had added a few people. That will also start showing results from Q4 onwards. That means, is it fair to say, sir, this is a 10%-20% kind of field force expansion, or in what any numerical sense you can provide? No, it's more than 10%. It's almost, I think we were at 21% increase in field force. Oh. And hence, according to the employee cost, we'll see a kind of a swing to the tune of, let's say, 5-7% incremental. Yeah. It's already you've seen this quarter what this is. Beyond this, there will be a little bit more than that by the next quarter because we are also adding a few more people. More or less, it will be on these lines. That's why we are projecting by adding 20% sales force, we are projecting at least 20% growth in the next year. Patra, just to add to this, there is no you are not observing any increase in the employee cost because there was a one-time bonus which we had given last quarter. This increase in employee cost is getting hidden because of that. If we so there is we have added people and salaries have increased. In fact, if there was a one-time in first quarter, my salary should have gone down. It has not gone down because we are adding people. Okay. Just last one point, sir, from my side. See, we know that there is a kind of over-inventory for vanillin, both in the U.S. and Europe. But we also know that this is the time that by December, we sign the contracts for the next full year. On that point, what feedback that you are getting, whether there is demand, people are? No. Right now, people are not signing for the full year. Typical contracts are for one quarter or two quarters because they have some stocks also and some contracts spilled over. That is the reason why it is very difficult to gauge what ultimately that volume will turn into. Yes, the indication is, I mean, we did win some contracts for the first half of the next year, all at these prices that we are discussing. We are also kind of happy that it does not go on. The contracts should not be too long because if there are any changes in the tariffs or whatever, we need to be careful on how we are quoting. That means if the tariff situation eases, then our first target would be spot market rather than the contract fuel supplies. No. I mean, no. The contract, it is DDP price, right? For us, we are taking those contracts. It's not that we are not. We are signing up as we are bidding. We've also got some contracts already, the bids we have won for H1 of next calendar year. There will be a strong, we will tie up for the H1 a decent volume through contracts. Of course, the rest is the spot market. Okay. Okay. Yeah. Sure, sir. Thank you. Wish you all the best. Thanks. Thank you. The next question is from the line of Raj Agarwal from CJ Shah Family Office. Please go ahead. Hello. Am I audible? Yes. Sir, I just wanted to understand on this European business. What are our plans for this business? By when will these losses, even now in discontinued operation, but how long will this continue? Because quarter on quarter, it's not that increased over here. As we have been saying that we have mudballed the diethanol plant, and we are trying to revive the blends business in Europe. On average, we should have INR 5-6 crore of cost hit. There are some expenditures which get spilled over in the quarters. Last quarter, it was INR 5 crore. It has become INR 8 crore. On average for the year, for this year, it will be around INR 25 crore. Going forward, next year onwards, it will come down to INR 2 crore per quarter. This quarter, it will be there. This cost will be there for this discontinued business. We also have other discontinued business of China which has a cost of around INR 1 crore, which we have already initiated liquidation proceedings. There will be no cost going from FY2027. Okay. Okay. Thank you. This was helpful. Sir, one more question. Sir, have we signed any contracts at this kind of prices for next year as well, or basically, are we only signing these contracts till the channel inventory is there in the system? We have signed some contracts for H1 calendar year 2027. That is at this price, roughly $12 price? Yeah. No. Actually, it's DDP. It's DDP price, which is at around 19 and a half. Okay. And basically because of. Yeah. Yeah. Okay. Okay. Got it, sir. Thank you so much, sir. These were my questions. Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Rohan Mehta from FinCom Family Office. Please go ahead. Hi. Thank you so much for the opportunity. Am I audible? Yes. Okay. Perfect. Firstly, I want to understand what sort of trends are you observing, okay, first in the month of October and currently ongoing for the month of November when it comes to vanillin, A, in terms of the offtake that you're seeing, and also in terms of the pricing. Is the pricing more comparable to the softness you have observed in Q2, or are you seeing prices slightly go up? It's the same. We answered that question. We are seeing the prices at the levels that we've seen in the past. The DDP price in the US is around $19-$20. And in Europe, it is $12-$13. The volume trend also remains. We have done around 700 tons in this quarter. In October, November, also, it will continue on similar lines. Similar lines. Okay. In terms of your vanillin mix, last quarter, you had guided that Europe is going to be 40% of the mix. Given that there is uncertainty when it comes to Trump tariffs, are you looking to shift more of this to Europe, increase the revenue mix over there? Is there any change in strategy? No. No change in strategy at this point. They're continuing with the same strategy because the US is a bigger market. It will always have a bigger share in the total mix. With the Trump tariff also, ultimately, we have a lot of capacity which we need to fill up first. Once we fill up the capacity, we have to see on what the final strategy will be. There are channel stocks also in Europe. Right. Right. Lastly, on Cinesco restarting their synthetic vanillin unit in France, I wanted to understand, has it to some extent cannibalized your sales in Europe, considering that now there is an additional capacity coming up online that can actually service the clients in Europe? Or do you feel that you will still be able to push up the volumes which you were on track to guide? They have a capacity of 5,000 tons. Europe, the market is about 8,000-8,500 tons. There is a gap of 3,500 tons to be filled from imports into Europe, which is what we are trying to position ourselves to fill. Okay. Okay. Thank you so much. I'll get back in the line for more questions. Thank you. The next question is from the line of Satish Kumar from InCred Capital. Please go ahead. Thank you for taking my question again, sir. I just wanted to ask regarding the salespeople. When you are hiring them, you will be doing the sales for VinFi as well, or you want to hire separately for VinFi? No. No. They do for the whole basket of products. Of course, for VinFi itself, we'll also hire more people as we go along. At this point of time, the 31 that we've added does work on different verticals. There is pet food. There is animal nutrition. There is human food. As far as the human food team is concerned, they sell even the VinFi products. Oh. Got it, sir. I just wanted to ask on the VinFi itself. What is the revenue right now, sir, monthly run rate of revenue and VinFi? They are about EUR 1 million plus per month. Okay. And. Currently, yeah. Okay. And sir, in Europe also, we signed a contract for vanillin on the delivered-to-client basis, right, sir? Yes. Okay. So means all the tariffs, rate, etc., whatever it is that is in Europe as well as your US, has to be borne by us. Correct. Correct. Yes. Okay. So $20 that we have signed for next year, 19 and a half, 20, what you said, sir? No. That's for US market. That's for US market, not for Europe. Yeah. Oh. That is delivered to. The same customer has different prices for different markets. Right. Right. So this is delivered to customer in US? Yes. Yes. Okay. Thanks, sir. Thank you. Bye. Thank you. The next question is from the line of Ragniraj from White Pine Investment Management Private Limited. Please go ahead. Sir, thank you for the opportunity. Only two questions. One, if the local market US pricing is, say, $12, how much would we net realize after whatever adjustments we have for all the logistics, taxation, etc.? Net realization itself, $11-$12. The selling price in the US is $18-$19. Because of Europe. If the US price is. Yeah. We are getting the same realization. Net realization. Net realization is in the same level as U.S. U.S. should have been more, but for the duty, higher duty in U.S. Got it. The net realization in Europe is also $11-$12. Okay. The second question is, if tomorrow, say, the tariff is reduced to whatever number, after how many days will you start getting that realization because the contracts you have signed as $12, or is it like the import duty goes to, say, 15% or 20%, or your realization will increase just like you say itself? I wanted to know that delay. It will be on how the duty is reduced by the U.S. government. That I'm just wondering. Yeah. That I'm just wondering, how many days delay will it come to you, that money? For example, if the tariff is reduced to, say, 20% on, say, 15th of November, and you have signed contracts with the customer already for a quarter down the line, will you get $12? Yeah. It depends on whether the contract is CIF or it is. Right. DDP. Or it's DDP. Based on that, if it's DDP, the next day you get it. If it's CIF, till the next time the contract comes up, you have to continue to price it at the same price. Okay. The question is, what are our contracts, CIF or the other one? No. It's a combination. Some are CIF, some are DDP. The full impact of even if the tariff is reduced today, the full impact will be at least a quarter? No. On the DDP, contracts will be. Yeah. That is partial, right, because some contracts are CIF. Until you complete the CIF contract, your next lot realization will only be higher, right? The same lot would not be higher. Am I right? Yes. Yes. What is the maximum outward contract you have signed, sir? That is confidential. Yeah. We can't give you those numbers. Okay. No, I was trying to see, the only thing I was trying to see is if the tariff is reduced, by how many days or months will your full realization be coming to you? That's the only thing I wanted to know. Yeah. Yeah. Okay. Got it. Thank you. Thank you. Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Aditya from PolyLab Family Office. Please go ahead, sir. Hi. Am I audible? Yes. Hi. My question is regarding the BHA facility ramp-up. We commercialized the BHA methanol facility. It was expected to yield us an incremental EBITDA of about INR 60-70 crore at a full capacity realization and at a cost advantage of maybe $1 to $1.5 per kg. Can you just give me the current status of the current utilization rate and the incremental EBITDA that we are doing? I can tell you what is the current utilization. I have said that it's around 50-55%. We sold around 700 metric tons. Our capacity is 6,000 per annum. That's around 50% capacity utilization. At that utilization, our costs are $9.5-$10. At full capacity, it will come to $8. Okay. And that will eventually give some margin improvement, let's say in a certain time? That's a multiplier. I've told you the number. The whole thing is the realizable value. It's a multiplier. You can multiply it. Got it. Okay. That is also my side. Thank you. Thank you. Ladies and gentlemen, the next question is from the line of Satish Kumar from InCred Capital. Please go ahead. The last question on my side. Will you be giving any guidance for next year, sir, in the terms of vanillin sales or blend sales? Yeah. So vanillin, I think we should be looking at about 4,000 tons in the next year. The blend business also, we are looking at growing it by 20%. These are the two big drivers of growth for the next year. That's all. Thank you, sir. Thanks a lot. Yeah. Right. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand over the conference to the management for closing comments. Thank you. Thank you for being with us, ladies and gentlemen. We look forward to interacting with you for the next call next quarter. Thank you. Thank you. On behalf of Camlin Fine Sciences and InCred Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.