Ladies and gentlemen, good day, and welcome to the Camlin Fine Sciences Limited Q1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this call is being recorded. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to the management for the opening remarks. Thank you. Over to you, sir. Ladies and gentlemen, welcome to the earnings conference call. I am Ashish Dandekar, the Chairman and Managing Director. And with me are Nirmal Momaya, Managing Director, and Santosh Parab, our CFO. Since I know all of you are very busy, we will not waste time and get right into it. I hand over to Santosh for a brief on the earnings and the performance, following which we will take questions. Thank you, Ashish, and good evening to all the participants. Thank you for joining us. I will quickly jump into the real business matters today. Firstly, I will just make a few announcements that you would have seen that we have changed our disclosures from traditional lakhs and crores to million to match with the international standards. From this year, we have also started to disclose the segmental information. There were internal restructuring which happened, and management has started looking at the business in a more structured manner, and I think the investor community will be happy because this was always a request that it will be better understanding if we have segmental results. Coming down then on overall revenues. Our revenues were INR 5,199 million. That is around 28% more as compared to the last year's quarter. And it is almost INR 1,000 million more as compared to the last quarter. Obviously, we have done extremely well on the revenues, but the margins here are not in line with the expectation. But there are certain reasons for that. The main reasons have been the raw material side where, as you know, the entire situation of raw material and the prices, the availability, as well as the freight cost and other things have increased a lot. You would have seen the details of our financial statements, and you would have seen that our gross margins, which were +45% last quarter, have come down to 4%, and that is what has percolated down to our EBITDA for the quarter. Coming down to the segments, as you could see, we have now segregated our business into three main verticals. The traditional, what we used to call straights and blends, which is now called a specialty ingredient. This is, I say, a non-chemical business. It is more of a knowledge business, which we sell as blends to the end consumers. We have aroma, the vanillin flavor fragrance business. That is manufacture of vanillin. There is a third segment, which is performance chemical, predominantly down streams of our diphenol, which go to the product basket of straights and aroma. These are the other chemicals. All chemicals plants are in performance chemical division, which transfer certain materials to the other two divisions for forward integration. You would have seen the segmental results. There is an inter-segment knockout in performance. These are nothing but the straights which are sold by performance chemical as a chemical manufacturer to the specialty ingredients company and section. Raw material for aroma, which is predominantly guaiacol, which is sold by performance to aroma at market prices or the normal commercial terms based on arm's length principle. Specialty chemicals ingredient business sells straights as well as blends, as we used to show it in the earlier period. Coming down to the verticals, you would have seen that the straights business has been always growing and has better margins, and that has been also reflected in the numbers which we have disclosed. Trait sales has been around INR 927 million, while specialty ingredient, that is the value-added blends, has been more than INR 3,000 million. If you see on an overall basis, the specialty ingredient business has done more than INR 4,000 million revenue. The EBITDA is 6.35% here. Predominantly, it has come down basically because of raw material prices being high. Coming down to aroma, we have sold around 560 tons of vanillin in this quarter, which is primarily ethyl vanillin, which we took a campaign for ethyl vanillin last year in the last quarter. We have sold around 200 metric tons of methyl vanillin which were there in our channel stocks and internal channel stock. We have still sold around 350 metric tons of methyl vanillin. Naturally, the capacity utilization was not optimal because we are taking such a large campaign of methyl vanillin for the first time. We were cautious, and the ramp-up was very cautiously done to get the quality to have the capacity utilization on the right track, understand the dynamics of the new campaign. We are happy to announce that we have almost got 95% of our customers have approved our methyl vanillin. In this quarter, we have already sold 350. If you remember in last quarter, we have said that we are taking a campaign of 750 odd metric tons of methyl vanillin. Half of that is done. We have produced almost more than 300 metric tons. We will be taking a shutdown after the 750 ton methyl vanillin campaign is over in mid of August, and then we will switch to methyl vanillin. Naturally, we will be doing around 500 to 600 metric tons in the next quarter of methyl vanillin. On the prices, U.S. and the European prices are remaining same on the sale side as we are discussing the earlier period, and it will remain in $13- $14. As we ramped up our capacity and capacity utilizations are better, the sale happens at $13 and $14. We will be getting into a positive EBITDA zone on ethyl vanillin aroma business also, and we feel that in this quarter, the second quarter itself, we will have a positive EBITDA in aroma. As far as performance is concerned, there has been, again, as you know, diphenol plant is being shut down, and it remains shut down primarily for the economic reasons and the high prices. Still the phenol prices are still very high. Other raw material prices are very high. It is not very commercially economical. And why we could manufacture diphenol at this current stage, we took a shutdown. We have been procuring the intermediates from Chinese market because the prices are very comparable and competitive as compared to our prices, and we are relying on that. Though diphenol business is closed, shut down, we have ample catechol to service our aroma needs. Naturally, the closure of diphenol plant is weighing down on the performance chemical, and that is why we are seeing that 1.5% EBITDA there. But with shutdown and switching it to other thing, better resource planning, I think this performance chemical EBITDA also will be positive in next quarter because we also are manufacturing the straight chemicals in performance chemical, which are sold to at arm's length to the specialty ingredients company, such business segment. Hence, performance chemicals will also move to a positive zone. As far as coming back to specialty ingredients, blends has been the form of our business. We have been saying that we should grow at least 20% as a minimum this year, and in the budget, we are talking about 20%-30% of the growth this year. Last year, we had done around INR 10,000 million of sale in blends. We have already done INR 3,000. We have that run rate of 20% growth already in place, and this will be much more than that. All the companies in America are doing extremely well on this. The only issue here is the prices at which the conflict has forced to increase the prices. As you know, we have that some one quarter lag of transferring the increasing material prices and the other prices to the customer. That lag has played in this quarter, and there has been difficulty also here to pass on the entire increasing prices to our customer, and that is weighing down on the margins, the gross margins, and effectively, the gross margins are also impacting our downstream. Now, the question is that what will happen for the whole year. We had been guiding that we will be doing INR 2,000-INR 2,400 of revenue this year with EBITDA INR 250, INR 280. That is what we are saying. But looking at the prolonging nature of this conflict and prices being high, logistical issues and other things, we feel that we may end up with the same turnover because the revenue look sales side seems very secure. Business lines are in place. All the things are ready. We are very confident of delivering the top line. The whole issue is on the margins. Looking at the scenario, I think we will be able to just revisit these margins, and we feel that now the margin should be in the range of 10%-12% this year. Obviously, the prolonging war situation can have two different things. But if the prices stabilize at what they are, we should be looking at an EBITDA in the range of 10%-12% going forward. As far as diphenol is concerned, as I said, we have closed down. It is shut down, but we are looking at alternatives. We had talked about some other products, phenolic compounds there, but we are holding onto it because the raw material prices of those compounds have also increased. We are looking at various options. By third quarter, we will take a decision to either have an alternate use for that or maybe if the situation is right, we may shift back to the phenol production. At present, the Chinese prices of the raw material intermediate is very competitive, and we have secured hydroquinone from China for next two quarters. Coming down to the debt, we don't give the details of debt and other things. Debt remains under control. We have been almost in line with what we had disclosed. On 31st of March, there will be a slight increase because of the utilizations and the utilization of working capital. Working capital remains a bit of a concern because of the elongated working capital cycles. As you know, with the harmless waste and the RC issues, we have to now ship it across South Africa, and that has increased the working capital needs. Because of the global slowdown also, the recovery from the customers have also elongated by a few days, and that's weighing down on the working capital cycle. We are agile, and we will work through this issue. You'd have also seen exceptional item in our financial statements on account of the fire which occurred in February in Brazil. We had taken some kind of a write-off there on the losses. We have now tried to settle the insurance claim because cash is the requirement now, which is around INR 400 million insurance claim. We said that let's not haggle with the insurance people, taken a 20% haircut, and we have settled. Obviously it had an accounting impact, and we have shown it under exceptional item. As far as Europe is concerned, you know it has been already gone into liquidation. No more cash burn. Of course, there is a small cash burn because with the liquidation, we require legal help till the entire process is over. So there is a small cash burn which has happened. China is in the process of liquidation. We have been telling that this will happen this year, and we will have around INR 10 million to INR 20 million of expenditure which we'll be incurring during this quarter. With this, I think I'll open the floor for questions. 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 one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to mute answers while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Avinash Tiwary from Bakaria. Please proceed. Hi, am I audible? Yes. Hi. Could you repeat your next three quarters implied guidance? If you are looking at INR 250 crore EBITDA and you have done almost nine this quarter, that number seems to be, you think, deliverable given that it implies significantly good margin levels. Are you out of that problems you had on raw material costing side and everything, or you think there is some degree of uncertainty and you will have a better color end of Q2? Basically what we are guiding is INR 2,200 crore-INR 2,300 crore top line and EBITDA margin in the range of 10%-11%. It will be in that range, between INR 220 crore-INR 230 crore kind of EBITDA. Given the cost structure as we have it today, it seems within reach for us. But this number works out to be around 13% margin. I was trying to think through that the pressure you saw on gross margin first quarter, is it now completely behind us? Because 13% looks like a normal, decent margin levels. Or is it some degree of pressure is still continuing in Q2, so maybe end of Q2 when we get a better visibility on that. Just wanted to see if that pressure point is over or still continuing. Q2, of course, also with the war situation continuing, there is a pressure on raw material prices. But we are in a position to pass on some of it to the customers. I think going forward, to get to that 10% EBITDA in the next nine months seems to be on target. Once we are behind this raw material challenge, what is the normalized level of margin you think you can have given that your businesses are now coming back up on top line. Based upon whatever visibility you have, what kind of margin levels we can look at maybe in second half or FY 2028? In FY 2028, I think it is in the region of 12%-14%, is what we can look at. Okay. Last question I have is on the debt side. What is the level of debt you have, and is there any other plan other than organic way of reducing through internal cash flow, which you can take to strengthen your balance sheet? On debt side, at present, we are almost on the same level which we had. We were around INR 670 crores of debt on 31st of March, the gross debt, which is now INR 640. This is on mainly the reduction is on account of prepayment, which happened for my long-term loans on IFC and ICICI Bank for the Vanillin plant. The debt, no increase in debt during this last three months. Because we are talking about INR 2,400 crores of revenue, INR 1,700 increasing to INR 2,400, which will certainly entail working capital support. We will try to use the internal cash. But it looks like as the year progresses, we may have to go and take credit lines from the market in the range of INR 100 crores to INR 200 crores. How did you manage this good achievement of flat net debt given that pressure you had on several fronts, and a very low EBITDA levels? Any specific thing that you could extract cash from? One thing is there that I had revenue and the cycle was moving, the working capital cycle was moving. It was not a case that I have no revenue. Revenue has been high. I also have a 40% margin. So there is a generation of cash which is happening. Obviously, the question is like that, from where this increase in working requirement of working capital for increasing sale has come from. Naturally, there is one more stakeholder is that we have been using supplier finances, dealer finances to tide over this situation. So we are using some dealer financing on the sale side as well as using dealer for buying raw materials. Now that also, as I said, that has also played on the margins because if you try to get dealer finance on the purchase side, then obviously the cost increases and the margins get impacted, the gross margins. In other words, the interest which I would have paid the borrowing, I am paying it to the cost of raw materials. Cost. That 1%, 1.5% has impacted me because of this bit of a working capital need has impacted my gross margin. Right. Any plans to infuse capital or ways to get some cash balance sheet deleveraging other than internal growth? See, as I said, cash is required. We will see. We will be working on it. It is not the time now that I am standing on the edge of the hill and I will jump. There is time still. As it goes, we are looking at avenues. You may have heard it from the market also. But at the appropriate time, what is better? There will be a lot of consideration, the market price and all those things. What is the rate of interest, my rating and other things. We have been closely working on it. As soon as a final decision is taken, we will come and we have to anyway inform the thing. Okay, great. Thank you, wish you very nice. Thank you. Before we take the next question, I would like to remind participants that you may press star and one to ask a question. The next question is on the line of Rehan from Cowdron Wealth. Please proceed. Hi, am I audible? Yes. Thank you for taking my turn. I just had couple of questions, primarily on vanillin and the outlook going forward. We were always under the impression that vanillin, the EBITDA realizations per kg or per ton, were to be profitable because the fixed cost of the business was very minimal. Considering that, we always were under the impression that the cost to make per kg was about $9- $10 depending on the crude volatility. The realizations post tariff had improved to about $13- $14 between Europe and U.S. The fixed costs primarily were, I think, only your sales team. Can you just explain this loss at an EBITDA level for the aroma business because this 3 crore-4 crore loss for this quarter at EBITDA is new to some shareholders. Good question. As you rightly said, or indirectly said that the whole game is about the capacity utilization. As I said, we were cautiously increasing the ramp-up of ethyl vanillin, and you would have seen that we would have produced how many? 400 tons only in this quarter with a capacity of 1,500. Naturally there was cost of the plant, fixed cost, which cannot be absorbed entirely on the 400 tons. On a yearly basis, if you see, as I increase my capacities in there, these will get absorbed. But on a quarterly basis, we are in a fix because we cannot increase the cost more than the price. That's why this INR 4 crore to INR 4.5 crore of ADD one has come and hit us. As the capacity utilization crosses 70%-80% in the subsequent quarters, we will absorb almost all the fixed costs. On a yearly basis, it's come down to that. This is a cutoff in a quarter where the expenditures are for the whole capacity, but the utilization is hardly 25%. That's how this is panning out. As we go ahead, we'll get that EBITDA. Santoshji, basically at 70% means you're talking about at a quarterly run rate of production at about 1,000 tons? No. Its capacity is 6,000 tons. Achievable is 5,000 tons. If you divided by four, that is about 1,200. On a yearly basis, we are saying 3,000 tons is what we are estimating this year. That is around 60%-70% of my capacity utilized. At that, how much are you expecting to make at an EBITDA level? We will be making around 7% of EBITDA on the total if the prices are at $30. Okay. 7% EBITDA on that. Okay. Coming to blends, we had held that blends being the holy grail of the business at 40% gross trickles down to depending on each geography. Some geographies are more saturated, we see higher EBITDA because the fixed cost again is only sales. This has hit us further. Can you explain the outlook going forward, and how do we see that come back to about where we were sometime back before even the ADD kicked in? If you remember, we were at 14%, 15% kind of EBITDA margins about six odd quarters back. I am just trying to understand where is it not coming up. If you look at the March 2025 quarter, we were at 14% EBITDA, and that is without the ADD and without vanillin even coming in. Just trying to understand where were we there and where are we today, because we have the ADD, we have the utilization. Can you help us understand the same? Blends, there is no ADD. It is only on vanillin. If you see in the segment results, we have shown what was the EBITDA last quarter also, right? Last quarter, we had done around INR 264 crores in the March quarter. On a INR 3,400 million revenue, we had done INR 263 million of EBITDA. Yeah. Today we are at 255. On a year-on-year basis, we are at 255 versus 300. Let's talk first about quarter- to- quarter. Okay. The gross margins have come down. That 4%-5% percolation is hitting me down on the EBITDA. Okay. I think then this year also we may not end up with. For Q2, sorry, in the opening remarks, I missed your expected tonnage for Q2. Your voice wasn't very clear. Could you repeat the same if you don't mind? On blends we don't give tonnage. No, no. Vanillin, sorry. 500 to 600 metric tons. Similar as this quarter run rate. Yes. As I said, vanillin we had a 700 metric ton campaign which we are completing in August. That will be 350 tons of vanillin. We start the campaign. We will lose around two weeks there. We will produce and see. We will be ramping up entirely with vanillin. Looking at the period in the September being within 15 days of the start of the campaign, we are saying that we will sell 500 metric tons. Okay. It will be similar this quarter run rate, about INR 700, INR 800 crore revenue. Sorry, INR 70, INR 80 crore revenue. It will be around INR 800. To answer your question on the blend first. In Q2- Yeah. The blends margin will be better than they were in Q1. Specifically, we got hit in Brazil because of the fire. We had no stock, and we had to bring in stock by air freighting it at high prices, which now in the Q2, we have also pivoted to ship material on sea, which of course has now landed, and now that is the one that is being consumed in this quarter. There is a negative of about INR 8 crore in Brazil, which will get corrected in Q2. Then there are certain businesses where the raw material prices have gone up, and we have been able to pass on some of the price increases. Your Q2 numbers will look different from what they were in Q1 for the blends business. For vanillin, it will be slightly better than Q1 where Q3 is, where we will have 1,000 tons plus of production and sale in Q3. As far as the performance chemicals goes, we were negative EBITDA in Q1. In Q2, it will be positive. All in all, versus Q1, all three of the verticals will be significantly better than they were in Q1. Thank you for that. Actually, my concern was that over the last two, three quarters, it is because of geopolitical reasons, et cetera. Beyond the point, a lot of companies tend to have inventory gains, tend to have renegotiated prices. But in our case, over time, even though we have had couple of tailwinds for us, like the anti-dumping duty coming in our favor, it has been almost 14 odd months, and we are still seeing soften prices. As of now, a lot of people thought that, even on your Q4 con call, when shareholders and investors and analysts came to ask you on certain things segmentally, we were expecting a simple math that was about at $13, even if you did 500 tons, we were under the impression that your EBITDA per kg is directly trickling to your EBITDA. There was no other fixed cost other than the sales team. And your- No. It was very clear that what we are saying is our raw material cost for vanillin is between $7 to $8 for methyl vanillin, and conversion cost, which is a fixed cost, is INR 7 crores per month. The math is, if I produce 200 tons, my cost goes to $11. If I produce 400 tons, my cost goes to $9, $9.5, which gives me a straight margin of $4. So that is the math. Yeah. But Nirmal sir, you are already producing 400, 500 for the last three, four quarters, including this I am talking about a month, and this is a quarter. Okay. So even at $11, let us assume $11. At $11, you are still selling at 13, 14, 13.5, or let us say 13, even in this quarter it was 13, right? Because the tariffs came off, Q4 tariffs came off half the quarter. Yeah. But Let's- We have trade financing, so our net realization is lower because we are using trade finance. That is what Santosh mentioned, that what has impacted our margin is on the raw material side, we are using financing, and on the selling side, we are using trade channels for financing. This quarter is not methyl vanillin, it is ethyl vanillin, where the cost of ethyl vanillin is higher than cost of methyl vanillin. Even the selling price is higher, but these costs of ethyl vanillin, we have reached a breakeven point. Now, when the methyl vanillin starts, you will see that the margins will be significantly better, the gross margin. Similarly, EBITDA margin will be, and in ethyl vanillin in the next run, the margins will be significantly better because of the scale-up effect that ethyl vanillin will have. So primarily, basically, you are stuck on fixed costs on one side and margin on the other, thanks to the war, and third being your financing, which is impacting your margins overall. Correct. Is that correct? That is correct. The solution is only capital, or the solution is. No. Capital plus a normalized geopolitical time? No, I think first is capacity utilization. That is the first thing which is in our hands. That we can start increasing the capacity utilization. Of course, there is the question of financing for that, which we are using trade finance now, so it may impact the margin slightly, but at least the capacity utilization goes up and the cost comes down. That is the first thing. Second is geopolitical situation improving, and improvement in costs, which in the methyl vanillin run, we already have raw materials that we have acquired at very competitive prices. So our margins will be significantly better. The third is, of course, capital, which we are looking at different various options to be able to raise that capital. When would be a fair estimate to gauge that you would swing back to double digit kind of EBITDA margins at a company level? Like Q3, Q4? Q3- Q2 Could be there. Q3. Q3 would swing back to double digit? Yes. Okay. Thank you so much. Thanks. Thank you. The next question is on the line of Surya Narayan Patra from PhillipCapital. You may proceed with your question. Yeah. Thanks for the opportunity, sir. My first question is on the growth number. Hello, am I audible, sir? Yes. Yeah. Okay. If I see the quarterly growth trend for the segments, the growth number looks really strong, which is higher than the kind of a blended performance on the overall revenue growth for the company. Why it shows, is it because of the restatement of the numbers, or it is something else? If I see the slide seven, wherein the segmental revenue growth is more or less on an average, it is beyond 30%. This growth number looks higher compared to the kind of overall growth number. Surya Narayan Patra, unfortunately, I have not got the clear question. Okay. I am on seventh slide. The segmental growth for all the segments, it is like on an average more than 30% on a blended basis, if you look at it, then kind of a near 30% kind of a growth that we are seeing here. Whereas I think the blended growth for the company as a whole for the quarter looks like 22%, 23% kind of growth. But there is any difference that I am finding here. What is that? Yeah. Now, I think I have got a handle on what you are asking. Firstly, we are comparing the corresponding last year's quarter. Yes. With this quarter. Yeah, okay. Now last year's quarter, especially if we look at straights. We would have been almost same on the volumes. From quarter on quarter, we have been saying that straights, for example, straight business, it will saturate. The biggest thing of difference is the price side. We are selling a bit more safe and the average realization is giving this growth, from last quarter to this quarter. Blend has been increasing. There is no question of blend. Blend has been at 20 CAGR, it is growing at 20 CAGR. Performance is a different scenario because if I have catechol, I will sell catechol. If I do not have catechol, I will not sell catechol. No enough hydroquinone, no enough derivative. So that is a different set. It is like a refinery business. If sales do well, there will be lesser hydroquinone to sell. When it does well, there will be lesser catechol to sell. So performance will always be based on safes and aroma. Aroma has been increasing. We have got better price realization because that was a tariff era, anti-dumping duty has come down or our quantity was also less. That is the reason when you compare quarter-on-quarter, you have to see the price side also, the volume side also, and our capacity utilization. Okay. Sir, my second question is on the margin profile of the, let us say, specialty ingredient business, where both the blends as well as the straight. Those are the kind of a blended product area for us. This quarter, let us say 6% because of quarter specific challenges, if I believe. What should be the kind of a like-to-like margin that we should have seen for this specialty ingredient business in the previous year, sir? Let us talk about this quarter first. What we have lost on a normalized gross margin is around 4%-5%. Correct. 3%-4% because of the geopolitical and 1%-2% because of our liquidity situations. If I would have done this 4%, my normalized EBITDA at this moment of time and with all the pressures of putting the material to American markets and other things, I would have done 4% at least more on gross margin, which would have straight flown down to my EBITDA. In other words, EBITDA would have been more than 10%. As boss was telling you have to also see what is because this same business is not one company, there is across the geographies. There are certain like Brazil has its own thing because of lower margin. It was hardly 20%, 22% margin there because of fixed situation where we have to push material by air freight it or buy it from competitor at higher rate, raw material, and make the blends. There is other geography like Vinpai which is just growing now, just started now. EBITDA is a bit of a negative. As it grows, we provide working capital. If it grows, it will come down to 10%. While the businesses we are already settled like Mexico and U.S., they are already doing a very They should have done 17%, they have done 14% because they have lost on gross margin. So those are doing well, and that's why the growth part will be there. The laggards or like Vinpai and Brazil, they do well. The margins will increase. There is a great growth path we are looking. We have done here on a quarter-on-quarter basis also, we have sold almost 300 million INR more sales this year. So there is a growth path. We know which products to push and other things, and it will happen soon. On sales side, it's not a problem at all. The whole issue is on the purchase side. If this is settled and we have more things, the EBITDAs will grow because the fixed cost is not going to move. Even if you see our other expenses overall, they are not increasing. So the capacities are there, the fixed cost is in place, people are in place. It's only now, I think, number has to come from the top line and the margins, gross margin. Okay. So then, sir, if we believe that, let's say hypothetically, second half of the current financial year will look normalized environment, business environment, then which business out of the three segment is likely to deliver better margin profile? Or if you can give some sense that, okay, in a normalized business environment, what should be the likely margin profile of specialty ingredient and aroma? Basically, Surya Narayan Patra, right now aroma is negative. In Q2 it will be positive. In Q3, which is where we see much more normalized, because we'll have a run of methyl vanillin with all the raw materials in place. So that will be significantly better than Q2. So Q3 is where you'll probably see closest to normalized margins. And that's in aroma. In blends, of course, 4%-5% is the raw material hits that we have taken, which some of them already in Q2 have been corrected. So again, Q3 would be the right quarter for more normalized margin. But Q2 also there is an improvement over Q1. And Performance Chemicals, the residue business, which of course, it was negative because of the diphenol closure and some costs which were being incurred. We were selling catechol at a loss, which we've now stopped selling catechol because we are using all of it for our internal consumption. So that also will be positive. So all the three verticals or segments will be positive. Okay. But better or the best margin vertical would be specialty ingredient. Is that understanding right, sir? Yes. Specialty ingredient and aroma. Depending upon the scalability. Will probably be as good as specialty. Okay. Just last one point about the diphenol plant shutdown scenario, sir. You mentioned that, okay, you are also exploring about having that used for some other products. That is one. If you can talk something more on that. The second point here is that, if this plant shutdown situation continues for, let's say, for whatever reason, either the competition reason or the new tooling that would be required for manufacturing the new product. During that period, what really can happen for our other operation? Whether the performance chemical revenue, what we are seeing for this quarter, like INR 175 crore. What impact it can see and what overall margin impact it can put for other segment because this is integrated. First of all, INR 135 crores is the total, but it is netted off. A large part of the 135, almost 100 odd crores goes into trades business. Trades and blend. It is sold to trades and- Okay. Aroma was almost INR 30 crores. Net net in Performance Chemicals, I think that was your first question that the total was not adding up. INR 130 crores is internal transfer and net sale of Performance Chemicals is only INR 40 crores. Oh, okay. Yeah. You got that? Okay. Yes. Basically when you look at that number is not going to significantly change. The net sale to outsiders because that is It will reduce a bit because catechol sale will come down. But then there is an increase in sale of some other products like HPBHQ. We have some HQ sale also and TBHQ sale, which is increased. I mean, that number will be in that region. The numbers which I can follow are more shelf life and- Specialty ingredient and aroma. In the Performance you just look at the margin because a lot of the straight margin will be captured there. As the diphenol expenses go away and the negative goes away, you will see that the margin will improve considerably because a lot of the straight margin is captured under Performance Chemicals. Sure. Okay. The margin is captured there. Transfer prices, the sales is captured in straight. Okay. And the potential of introducing new product in that plant, that scenario, how do you. Yeah. We are working on alternatives, which we should be finalizing in the next few months on which way to go. We have options on how to utilize it. We are seeing which is the best possible way to sweat that asset. Where will we get the best margins and the best returns, and we will follow that. Sure. We will of course intimate once we are ready. Of course, sir. Sure. Thank you, sir. Wish you all the best. Thank you. The next question is on the line of Archit Saigal from Bajaj Automotive. Please proceed. Yeah, hi. Thanks for the opportunity. Sir, few questions. Firstly, clarification. Our last call, fourth quarter, would have happened in May end. At that moment, did we guide for weakness in first quarter? Yes, we had said that the margin will get impacted because of the geopolitical situation. We were always confident about the top line. The whole issue was on the raw material. That is why we had even closed our titanium plants. Revenue side was not an issue. This was entirely because of the margin, the raw material prices. Now that we are in mid-August and half the quarter is gone, the commentary which you are providing at 2Q will be much better than 1Q, that you are pretty confident about, right? Yes. Sir, last thing on mathematically, if I was to do numbers, to a previous question, you mentioned that you will hit double-digit margin in third quarter, and you are guiding for full year margin of 10%-11%. Mathematically, given 1Q was weak, 2Q would be slightly better. Is it fair that the second half margin can be to the tune of 13%-15%? Yes. Looking at the fixed costs per state are not going to increase a lot. Whole thing is the revenue is going to come, the growth in blends and also in aroma, and the margins thereon gives us a higher rate of EBITDA in the second half. Understood. Thank you. That's it from us. Thank you. The next question is on the line of Navish from Vermont Capital Investment Management. Please proceed. Hi. Thank you for the opportunity. Sir, actually, I was just hearing your comment. We mentioned that our volumes in aroma business will be similar to what we have done in Q1, whereas we are guiding for EBITDA to be positive in Q2. I just wanted to understand what will be the drivers that will help us to get this positive EBITDA, given that volumes will still be similar to Q1 level. As we said, we are going to go for methyl vanillin now, which is a lower cost product but a higher margin as compared to ethyl vanillin. We are switching over. We are ending the campaign of 700 tons because we have the orders in hand that have forced us to manufacture ethyl vanillin. We are moving back to methyl vanillin, and we also have orders on that, and that will give us a higher margin. The swing is the difference between the EBITDA is only INR 4 crores. We get that methyl vanillin, we are confident that we will come into a positive EBITDA for even that. Understood. Sir, I think if I remember correctly, in our last call, we had guided for almost 4,000 tons of vanillin in FY 2027. Whereas this time we are saying that we will do 3,000 tons in FY 2027. What has changed in the last three months, which is resulting in this lower guidance? We had guided for 3,600 to 4,000, and now we are saying around 3,000. The change is basically in our ethyl vanillin run. The ramp-up we took was slower than what we had anticipated, purely because we wanted to get the quality standards to be absolutely undoubtable. That is what we have done. We have got 95% customer approval in the first shot, which is excellent for a product like ethyl vanillin. Which meant that now we will be doing another campaign. Every time we switch a campaign, we lose about a month of production. In this year, we are going to do four campaigns. We will be losing four months of production. That is how we are looking at around 3,000 tons of production. Understood. Sir, any particular reason why we shift campaigns, given that you are saying that methyl vanillin is a lower cost and better margin, why are not we sticking to methyl for the full year? The customers require both. Ethyl vanillin in the next run, our margins will be similar to methyl vanillin. Because in this run, we had high-cost material that we had to buy, and production also of some of the intermediates was high cost, which in the next run, those costs will be rationalized, and the margin profile will be similar to methyl vanillin. Understood. And sir, I think you also mentioned that raw material costs were higher, which we were not able to pass on in this quarter. So quarter two, we are confident that we will be able to pass on, and how much of that would be passed on? Will we be fully able to pass on those costs? No, not fully. But in the blend, some of it, of course, we will be able to pass on. I am not saying that we will be able to pass on entirely the cost, but maybe half of the cost we will be able to pass on. Got it. Understood. Thank you. All the best for the future. Thanks. Thank you. Before we take the next question, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is on the line of Ved Gada from Sanghvi Family Office. Please proceed. Yeah. Thank you so much for the opportunity. I had couple of questions here. Wanted to understand the current demand scenario for vanillin and what is the situation on channel inventory with your customers. What sort of interactions you are having with your customers for pickup in volumes and for the utilizations to improve sequentially. That would be my first question. Vanillin, right now, as we understand, the channel stocks are getting cleared out. That issue which was there is now out of the way. We are absolutely on track to with all the customers that we discussed in the past, F&F companies and the others, for their quarterly and half-yearly and yearly contracts, we are in negotiations and that is progressing well. In terms of demand pickup, 3,000 to 4,000 tons is what we are estimating for this year, but we will not be able to produce that much because of the campaign that we are doing. But it is fair to say that the demand is picking up. Got it. Fair. Sorry, is it normal to have four campaigns in a year? What kind of vanillin volumes do we expect for FY28 year then? For FY28, see, I will tell you again, this ethyl vanillin campaign was a campaign, like I mentioned, to scale up, we took a lot of time. Normally, even if I take one month break, I can produce 400, 500 tons of whether it is methyl vanillin or ethyl vanillin per month. That is my capacity. Even if I run it for eight months, I ideally should be producing 4,000. But this time it is 3,000 because we took time on, we took four months for ethyl vanillin to scale up. Understood. So it is fair to assume that 4,000 tons should be your peak utilization for vanillin ton? No. It is not so. Because we will not be doing four campaigns. Ideally, we do not want to do more than three campaigns, and at that, we should be able to scale it up to 5,000 tons, yeah. Okay. My last question, sir, what kind of working capital requirement is there for the business currently? What kind of number of days you are expecting? When do you expect the credit funding of INR 100 crore-INR 200 crore to close? Our general working capital cycle on a consolidated basis is 100 days. At present, even in March it has reduced. It was looking better than that was because of we had extended the line due dates of with our creditors. This INR 100 crores is what we generally require for each INR 1 crore, I will require one-third of that as a working capital support. With INR 100 crores, INR 150 crores we are working, I think we should be able to have the line in place in max one and a half month. But at least we know how we are going to fund it. Got it, sir. Thank you. That is it from my side. Thank you. The next question is from the line of Satish Kumar from InCred Equities. Please proceed. Hi, sir. Sir, just one question. If suppose everything were normal, then what would have been our EBITDA this quarter? At least 6% more. We have lost only on the margin. What 5% was gross margin, 5% we have directly traveled to our bottom line. That is one in. The second quarter is impacted. That 6% would have given, and the second is, of course, the vanillin, where the gross margin was even more impacted because of ethyl vanillin. You mean to say- All in all, 4%-5% margin would have been. Better. We can say that if everything were normal, the EBITDA would have been in the range of INR 37 crores-INR 40 crores. Right, sir? Yes, correct. Okay. Correct. Sir, for the coming quarters, we are guiding for an average run rate of around INR 70 crores. Right, sir? EBITDA. I mean, obviously Q2 will be less and Q3, Q4 will be higher. Yes. Average we are guiding for is INR 70 crores. Correct. Sir, the other thing is that, do you think that raw material cost pressures has been behind us or it will remain so in this quarter as well? In Q2 it will remain because I do not see so much of a difference in raw material prices because with the war situation and the conflict, it keeps moving in directions which we do not understand sometimes. But till it is resolved, you will always see elevated raw material prices. So sir, our guidance actually factors in that elevated raw material prices. Yes. At least, I mean, elevated for three months, and we will start factoring six months and nine months. Yeah. Okay. But sir, as you said in the beginning that some of the cost has been passed through, particularly in blends, right? Yes. Okay. That is all from my side. Yes. Thank you. Yes. Thank you. The next question is from the line of Niraj from White Pine Investment Management. Please proceed. Yes. Sir, can you elaborate on the inventory situation in the U.S. and the global situation of vanillin, how you think will evolve in demand-supply equation? Niraj, you are asking for inventory situation in terms of vanillin? I am asking, can you comment on the inventory of the pre-anti-dumping duty which had collected, how is that inventory of vanillin in the U.S. and Yeah. I think you are asking for the channel stocks which were there at the start of- Yes. Those have dried out. There is no overhang of any channel stock, either Chinese or pre-anti-dumping duty on now. There is no channel stocks in any of the countries now. Okay. What is your estimate of the U.S. demand and what is your estimate of the residual demand that will come from India to supply to the U.S.? Basically, the demand is U.S. and Europe, where the anti-dumping duties are. Our focus are on these two markets. Yes. There seems to be a gap of about 5,000 to 6,000 tons of material which will have to be imported because the local production capacities are fully occupied at that level. We see that opportunity for us to participate in that supply. Okay. Sir, but the question here arises that if you are not producing and China is having anti-dumping duty on its head, so why are the prices not rising in the U.S. and Europe? Good question. We are asking this to the market leader, which is Solvay, who are producing in U.S. and Europe, why they are not increasing prices. There is a bit also, it Solvay increases prices. The Chinese price also increases. Chinese will again come back. They will come down. At present time, they sell at 18, the Chinese price is three. The problem is the customer. They are selling to the same customer. They are a multinational selling to customers across the world. A flavor fragrance company, if it is buying material at $8 in India and you charge them $35 in the U.S., the same company doing it does not go down well with the customer. They have to protect their global business also. They will always keep it reasonable. They will not take it to level, to equate it to the anti-dumping duty because some of these customers, they are servicing on a global level. I mean, sir, but if I just do the anti-dumping duty maths, they will not be able to supply below a particular price. Just, and by that math, the price needs to go up, actually. That is why we have been asking you that one. It is not a reverse working from my sale price plus 20% duty, 250% duty. The anti-dumping is to protect Solvay. Solvay is indirectly deciding the price, right? If they sell at $18, the Chinese has to bear 250% duty, which comes to $7, $8. That is how they have kept Chinese out. If they make the sale price to $21, the Chinese price becomes 8%, 8.5%. Despite 250%, they will start competing. That is one thing. Secondly, as Boss was saying, Solvay is not only selling only U.S. They have contracts leaving with IFF and Givaudan also, for entire world as a whole. They are balancing. They cannot take exorbitantly high. They increase prices in U.S., then Chinese do enter. They will sell at $8. They are happy with that. $8, 250 duty, if they get $20, if Solvay is saying $20, Chinese will enter. Okay. Yes, sir. Thank you. Thank you. Due to time constraints, that was the last question. I now hand the conference over to the management for the closing comments. Over to you, sir. Thank you. Thank you for your time, ladies and gentlemen. We look forward to interacting with you again at the next whatever earnings conference call. Until then, good evening. Thank you. Hello. Thank you. On behalf of Camlin Fine Sciences Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.