Ladies and gentlemen, good day and welcome to the Q2 FY25 earnings conference call of Clean Science and Technology Limited. We have with us on the call Mr. Siddharth Sikchi, Executive Director and Promoter, Mr. Sanjay Bere, CFO, and Mr. Pratik Bora, Vice President. 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 a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Sikchi for opening remarks. Thank you, and over to you, sir. Thank you so much. Good evening, everyone. I wish you all a joyful Diwali and a prosperous New Year. I'm happy to connect with all of you to discuss the performance of our company for Quarter 2 of FY25. The business environment continues to be encouraging. Our quarterly business performance has been a reflection of an encouraging business environment. Coming to the financial highlights, starting with a quarter-on-quarter comparison, on a sequential basis, the revenues were steady. Domestic and international sales mix were 30% and 70%, respectively. EBITDA remained steady at INR 95 crores, while EBITDA margins continued to be strong at 42%. For comparison on YOY basis, sales improved by 26%, and this improvement in sales is primarily volume-led. Improved sales led to strong EBITDA growth of 25% during the quarter. Consequently, the company reported a 30% growth in PAT for the current quarter. As the subsidiary operations scale up, the consolidated profitability is expected to improve. We are on track to launch the pharma intermediate during Quarter 3 and look forward to volume scale-up in the HALS series. A little bit about the sales profile. The revenue contribution from performance pharma and agro and FMCG chemicals were 69%, 18%, and 14%, respectively. Performance segment witnessed strong growth among all segments led by increased volumes. Pharma and FMCG segment witnessed similar growth, which was volume-led. For the quarter, HALS monthly sales volume scaled to 135 tons a month basis. A little on CAPEX update. We have incurred a CAPEX of INR 155 crores during H1 FY25, which was primarily towards investment in the subsidiary. We are pleased to announce the commencement of construction activity for another performance chemical segment, which is expected to commercialize by H2 FY26. On ESG, we are pleased to announce that the company has secured a Responsible Care certification for three years. The recognition underscores our commitment to safety, health, and environmental management. On the outlook, we are optimistic about the growth going forward, led by the launch of pharma intermediate, scale-up of our new products under the HALS series, and commercialization of performance segment products. Thank you so much. 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 the touch-tone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Sanjay Jain from ICICI Securities. Please go ahead. Yeah, good afternoon, Siddharth, and happy Diwali. Thanks for taking my questions. I got a few of them. First, you said that the entire growth, what we have seen both in performance and pharma intermediate segment, has largely come through volumes, which is very impressive, 30% plus, right? What is the current utilization? Are we running our plant right now in both this segment, and do you anticipate more capacity addition in the coming quarters? Currently, we are running at 70% capacity utilization in totality, and right now we have more bandwidth. So right now, we are not looking for expanding on immediate use. Siddharth, can you break this between the legacy and HALS? Because HALS is something which is a newer product. No, I'm not talking about HALS at all. I was only talking about Clean Science. I mean, HALS is an absolutely different ballgame because the capacities are far larger, and we are probably at 10%-15% capacity utilization. So the ramp-up has to happen. Oh, so what we are telling is that even in the MEHQ, BHA, and all those DCC, and all those other existing products, there we are running on the 70%. So we have a good headroom for growth. So there is no immediate need for capacity addition there, right? Oh, we have it. I mean, right now, it's not needed. I mean, we have de-bottlenecked at various points. So now we are good for some more time. That's very clear. Second on the, again, the parent business, which is the legacy business, the quarter-on-quarter, I see the mix of the business remains steady. Pricing, also, you are telling has been very stable. Any particular reason why there is a 250 basis points quarter-on-quarter dip in the gross profit margin? So now, Sanjay, what is happening is the market, see, the raw material prices have increased over the past few months due to the war scenarios. I mean, the Israel-Iran thing and all that. But however, we have not been able to increase or pass the price increase right now to the customers. We are right now focusing on getting the volumes back compared to last year. That is one. Second, our product mix is also changing. I mean, the principal products are reducing and newer products like the pharma intermediates, the TBHQs. So those products are now increasing the basket, and hence, there is a little compression in the margins. Okay. But on a like-to-like basis, MEHQ or BHA, it won't be so much, right? I can understand raw materials. Not so much. Not so much. Not to an extent of 250 basis, but. Not that far there. Got it. Got it. And do we intend to pass on the raw material pressure, or we will now focus on market share gain? Right now, I think for the next quarter, I think I would like to focus on getting the volumes back, getting the business back on track because now I think the volumes have come back, and I think it's better not to increase the price when we can see some competition might come up globally somehow, if there is, so right now, our focus is to remain with, to have the same stickiness of the customer, but get volumes as much as we can. Got it. Got it. And was there any particular activity in America? The revenue sequentially doubled. See, now our HALS segment, the water treatment chemical, those markets have opened up in the US. That is one. Plus, generally, I mean, some, because of the last year slowdown, some of our customers of performance chemical, which were not lifting material, have now resumed back. And so those volumes have also now come back to the business. This is sustainable, right? Yeah, yeah, yeah. This is absolute revenue sustainable. I can understand growth, but absolute is sustainable, right? Absolute is sustainable. Got it. Got it. The next is on the HALS side of it. We have three products, 701, 770, 119, and we expected to launch 944 and 292. Where are we in that? Let me go back. 701 launched, selling, no problem. 770 staying steady. Now there are three products, which is 622, 944, 119. 622, 944, and 119. 119. And 770? All three are now successfully launched. Now we have started receiving approval from the customers. And shortly, I mean, the sales have also begun. And now I think, hopefully, quarter on quarter, the sales and the volumes should start picking up, which we'll start seeing. Got it. Got it. This 622 was the water treatment one, right, you spoke about? No, no, no. 701 was water treatment. Okay. 701 was water treatment. That's what picked up in U.S.? Yes, that also picked up in U.S. Got it. Got it. The next on the CapEx, you said that the INR 30 crore pharma should be up and running next quarter, this quarter, right? Q3? Yes. By 15 November, 15 to 26 November is we expect to start putting raw materials in the system. This is what, domestic or largely exports? Majorly domestic. The major? China substitute. So it is an import substitution? Yes, China. Oh, sorry, import substitution, right? Got it. Got it. And we have all the approvals in hand, right? So because it's a relatively smaller capacity, so ramp-up should be faster? There is no approval because pharma does not want approval from your lab or pilot. They need commercial product for approval. I mean, this is a very standard practice. But we expect the validation and approval we should get between one month to five months to three months, depending on customer to customer. But once the ramp-up happens, I mean, once the approval happens and we start supplies, I think the ramp-up should be pretty much easy because the building is ready. We just have to add equipment and double the capacity. How much India imports its materials annually? Right now, our capacity is 50% of Indian imports. 50% of Indian import. Yes. We are competitive on pricing. That is the whole reason to put up the plan. Yeah, yeah. I'm just confirming. I can completely get that. Just reconfirming that. Yes, yes, no, no. Of course, I mean, tomorrow China reduces the price by 50%, then we don't know. But on current basis, I mean, what we have been tracking for the last three years, we should be able to catch up. No issues at all. No issues at all. And you said that one more product we are launching in second half of 2026. That's INR 150 crores of CapEx, what we announced, right? Yes, yes, yes. That should start by June, July, source. June, July of 2025? Of '25. Got it. And this will be for what application? Variety of applications. I mean, it's quite a versatile product. So it is like a stabilizer, inhibitor, performance chemical. So it has a lot of applications. Got it. Got it. Yeah. These are largely my questions, Siddharth. Thanks for answering all them very patiently and best of luck for the coming quarters. Thank you so much, Sanjay. Thank you, sir. Thank you. The next question is from the line of Priyank Chheda from Vallum Capital. Please go ahead. Hey, hi, Siddharth and team. Congratulations for what a fantastic performance on volumes. Again, coming back to gross margin, so with the HALS mix further going up, it was expected that gross margin mix will slightly deteriorate as well as EBITDA margin mix was slightly deteriorate. Now, when we again prioritize volumes, should we think that this would further go down as HALS further ramp up in the mix? Sorry, I think there was a hello? Hello. Yeah, we can hear you, Siddharth. Priyank here. We were not able to follow your question. If you can speak, I mean, I think there's some disturbance in the line. You have to speak a little slowly for us to catch up. Sorry. Am I audible right now? Yes, you are audible. You are, and focus one question at a time. Perfect. Perfect. The question is, on the gross margins, with the HALS mix going up, it was expected that gross margins will slightly deteriorate on the lower side. Now, when we are focusing yeah, and now, when we are focusing on volumes. On consolidated levels. Correct, correct. On consolidated levels. And now, when we are prioritizing volumes and we're not able to pass on slight price increases of the raw material, should we think and should we consider that this gross margin deterioration will further accelerate versus what we were thinking earlier? No, no, no, no, no. It is not like that. So the margin and sorry, the price increase, I was more or less talking about the parent company products. Yes. Okay? That is point number one. Point number two is, with these HALS volume pickup, as they pick up, our overall process becomes more and more robust because the plant are when a chemical plant is designed, these are continuous processes, right? So running a plant at 10% and 15% capacity utilization is not a very optimum level of capacity utilization. So as and when our capacity utilization increases, our gross margins will start improving. Also, due to the fact that our yield efficiencies will further start increasing or improving. So these will all account by increasing the gross margin. And of course, when we go to the fixed cost, because this is a very large facility, the fixed costs are relatively high. When the volumes pick up happen, the fixed cost distribution across the kilo basis will further improve dramatically and should start contributing more to the margin levels. Got it. That is clear. On the regional mix, China, we have seen YOY for the first half going up by 38%. Now, and as well as in Europe, we have seen a 34% jump. What should be the end markets, end products, end consumer products that we should think when it comes to China, Europe? And then also, is there a seasonality in India with respect to September quarter, particularly? No, no, no. There is no seasonality in our businesses. It is just that, I mean, the demand which you have seen last year was a real washout. So these were expected demand. These were the demand already in place earlier. I mean, there is an increase of 5%-7%. And I think that is what has come back now in the system. So these are sustainable market, I mean, volumes. Got it. Any particular end consumer market in China that we should think? Any particular end consumer market that we can expect producers? Sorry? acrylic acid producers. Got it. Got it. acrylic acid producers. Perfect. And on the CAPEX side, you did mention about another product of performance chemicals. I think that stabilizers where we are doing the CAPEX of INR 150 crore. You did not touch upon another product around the water treatment, which we are also again doing in the subsidiary company. Anything on that? Yes. That will also begin probably in the next two to three weeks. We'll start the construction, and we expect that plant to commercialize by December calendar 2025. And that's also INR 150 crores of CapEx. So now we are doing two projects. One is Performance Chemicals with INR 150 crores, and one is water treatment product with another INR 150 crores. Total CAPEX INR 300 crores. Perfect. And in the same complex of the subsidiary, we have further room to expand. Anything from your R&D lab, any breakthrough that we have got in terms of further expansion into new products in that line? There are a few, but let them crystallize and let us if we decide to go on commercial scale, we will make the announcement. Perfect. Now, last question on the standalone utilization, the standalone business, the parent business, ex-HALS, where we are at 70%. And we know the key plug-in that we need to do with respect to one that we know is PBQ, where we had to do some product rectifications. Where are we on that? And the second one is TBHQ. One question at a time, Priyank, because it is not your voice. We are not clear. So PBQ, we have restarted the plan, okay? We have restarted after our successful pilot trials, and we have submitted the samples to some of the customers. Let us get a feedback, and then we will know, I mean, has there been a process or product improvement in terms of application at the customer's end? So we will know the result probably in the next two weeks' time. On TBHQ, where we were somewhere around 50-60% utilization? No, that has gone up to 70% now. Okay. So PBQ and TBHQ are the key plug-ins to be done in terms of standalone utilizations going up. No, TBHQ did quite well quarter two as well. Okay. So. That is why our utilization of parent products came down. So TBHQ is more or less settled. Yes, PBQ is the one which we have to work on now. Any other product in the parent where we need to work it on for utilizations to go up, or is it a proper demand which will drive the utilizations going up? Right now, I think we are good. In case we see any demand coming up in any of these products, then I think the next stage will be to set up another facility for that. Got it. All my questions were answered. Thank you so much. Thank you so much, sir. Thank you. The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead. Yeah, hi Siddharth. Thanks for the opportunity and congratulations on a strong revenue growth there. Just on why you did mention volume-led growth across performance and FMCG and pharma, any Q1-Q2 further decline in pricing, or we are largely stable there across performance as well as HALS? Absolutely stable now. Sure. So and the comment that you earlier made in terms of focusing on market share gains, with the RM prices coming down now, is there any price cut taken by competition, or they are probably still holding on to the earlier pricing and hence more market for us to gain? Holding. We are holding at the same price now. And there is no real lowering of price. I mean, we are still in that range, plus minus 3-4%. So sometimes it goes up. Some news, again, it goes back. So more or less, we are in the range. I mean, I would not say there has been tremendous reduction in raw material prices. Sure. Just curious, given that we have been consistently gaining volume-led market share here, any price tactic or any strategy being played by the competition, or it's tough given the market environment? Very tough given the market environment. Okay. Fair enough. On the HALS side, we have seen last quarter we were at 125 tons odd. This quarter, we are at 135. So gradual uptake there. This uptake is largely led by higher growth in the existing products that we had launched, 770 and 701, or the newer ones wherein we were waiting for the okay. So the newer ones for which we were waiting for product approvals from global customers, where is the progress there? So you will see that the first time, I mean, of course, the material has been shipped to Europe. They have been shipped to the US. Now the customer base is increasing as we are moving forward. Fortunately, the next line of products which completes the entire basket is also now fully commercialized, approved. So now, I personally feel that going forward, the ramp-up should increase with existing as well as new customers. Plus, we are at a point where we have started appointing distributors globally in South America, in the United States, in Europe. So that's also the reach is also increasing as we move on. Yeah, that was the next question. So from a distribution point of view, we are there across the group. So there are no building blocks there. That is already in place. So that is already in place now. So the only thing which we are waiting for is the approval for the newer as well as existing products, which are largely five now, or have we started focusing on the blends as well? No. So basically, what is happening is, of course, we are also making one blend already, which is called 783. And if needed, we can make other blends. But so far, we have not received any other interest in any other blend. So 783 is a more prominent blend. So blend is not a very complex operation. It just needs mixing of two material at an appropriate percentage. Okay. Sure. And just last bit on the bookkeeping question. So this quarter, our tax rate had increased versus 25%-26% earlier. Is it a one-off, or should we read something into it? It is only one-off, but there is no major increase in the tax rate. It is largely because of the other gains where the tax rate is a little more. The change has happened because of the finance budget where they have changed the rates for capital gain tax. Okay. Fair enough. That's it from my side. Thank you and all the best. Thank you, Ankur. Thank you. The next question is from the line of Arun Prasad. From Avendus Spark, please go ahead. Siddharth, thanks for the opportunity. My few questions first on our traditional performance chemicals business like MEHQ and BHA. You said on the YOY basis, it's primarily volume-led growth. On sequential basis also, is it volume-led growth? Yes. Yes. On sequential basis also, it is volume-led growth. Okay. Because I'm just wondering, because in Q2, phenol price sequentially went up by 7%-8%, which means that we have not increased price in MEHQ and BHA and other traditional products, or we are not able to? It was a very, I mean, the prices shot up because of this sudden news about the war between Iran and Israel. But within a week or two, the prices again subsided down. So we are not in this one-off opportunity where we can increase the price so quickly. Okay, so as of now, our procurement price is more or less compatible in terms of phenol? Yes. Okay. And earlier, you also said that you are going after the volume instead of margin. This is to the MEHQ and BHA or the other traditional performance products? There is a new set of products in. I was speaking more or less about our pharma products, about the pharma business where we are trying to gain those additional market share. In terms of HALS, I mean, in terms of other performance chemical like other HALS, and we are anyways too little in the market. So we have to only keep adding and growing the market share. I mean, just to correct, we are not going for volumes over margin. We are conscious of not going for further margin dilution. We are conscious of ensuring EBITDA margins of 40% plus. Right. Okay. So which means is there any capacity additions in our traditional basket of products outside India? Because you said there is an increase in competition, and hence you are not able to pass on the prices immediately. Sorry, go again? Is there any capacity addition outside India from your competition where they are also placing huge volume in the market? No. I mean, right now, there is no competition addition. Of course, the conventional route is always available for anybody to make the products which we are making. So we have to be conscious of the fact that we have to place our pricing in a manner that the competitor is not incentivized to add or add more capacities and go to the customers. Okay. The PBQ price is spread between the MEHQ and the HQ. Is it still negative, right? So we should still have some room to increase MEHQ to gain this arbitrage? No. We will look at increasing probably post the December period once we understand how the market is shaping up, so probably we might look at it or relook at it going forward in quarter four. Okay. All right. Siddharth, can you also give approximately what is our current market share in MEHQ and what is our capacity share in MEHQ globally? In MEHQ, we think our market share could be 55%-60%. On a capacity basis? On capacity basis. Oh, okay. Capacity basis, 60%. Okay. And that means the actual volume share could be lower? I mean, market share on the production basis, MEHQ could be a little lower because MEHQ is also the capital we're consuming for BHA. And anything you are hearing from your competition on adding MEHQ capacity on this alternate route? Is there any sort of route apart from outside India anywhere you are hearing about that? No, not at the moment that we are aware of. Okay, so which means largely this margin reduction in this quarter in the parent businesses looks like a very temporary phenomenon. Is it the parent segment? Right. Yes. Any reason why in parent business power and fuel cost is disproportionately higher in this quarter as compared to previous quarters? Just gone up from 8.7%-9.6%, primarily led by increased production activity, some impact of monsoon where we got lower net solar credit, and the third is also a little bit alteration in the product mix, which had adverse impact on the power and fuel. But it's in that narrow band of 8.5%-9.5%. Okay. Because what I'm seeing is sequentially power and fuel increased by 15%, whereas our volume probably increased by around 6-7%. That's why I was wondering, is there any one-time one-off impact in the power and fuel? Yeah. There was a slight increase in the coal pricing also. All right. Okay. Understood. And finally, on the CapEx side, the INR 155 crores CapEx we have done on first shop, that is the investment or actual deployment of the cash? No, no. Deployment of the cash. Yeah. Investment in the subsidiary by parent company. Okay. Not at the deployment? Not at deployment? Because our cash flow CAPEX is part of it. Some part of it is deployed by the subsidiary company, and some part is still lying in the treasury, which should get deployed in this quarter. All right. All right. Thank you very much, Siddharth, and. Thank you so much. Yeah. Thank you very much. All the best. Thank you. The next question is from the line of Jitesh Agarwal from Finvision Capital Markets. Please go ahead. Yeah. Yeah. Hi. This is Jitesh from Finvision. My question is regarding the recent election outcome of the USA. How do you see its impact on your business, especially vis-à-vis to the exports that you do to China? I don't think there is any impact on our business per se because, I mean, we had Trump before also, then there was change, and again. So that has really not impacted much. So I think we are very neutral to this. So with his tariffs and the trade restrictions, did it create any kind of problem, any kind of business disruptions, or any kind of issue? No, no. The tariffs from India to—you are talking about tariffs from India to U.S.? No tariff on any Chinese product and your export to China, something like that? No, no, no. The tariff between India and China has nothing to do with U.S. elections. That is one, but the positive part is that U.S. anyways has an additional tariff of 25% for Chinese product, which anyways will be helpful to all Indian companies. Okay. So you see no impact as such by this election outcome? Not really. Okay. Thank you. Thank you. Thank you. The next question is from the line of Jason from IDBI Capital. Please go ahead. Yeah. Thanks, sir. Thanks for giving me the opportunity. So I just wanted to understand that last time we had spoken around a sales volume of 125 tons per month for HALS and looking at an average of around touching 200 tons per month going ahead in this year. So are we on track to probably have tracked to 2,000 tons of volume for HALS in this year? And if yes, then what are we tracking next year? Just wanted a directional sense on HALS volumes. See, first of all, all the four products which are commonly used by the customers are all now in place. That is one most important because earlier when we were offering only one or two products, whereas the customer had to buy the balance from the competitor. So now we have that entire basket. That is point number one. Second, because this was an absolutely new segment where Clean Science had entered, so the lack of trust, the lack of, I mean, the first-time entry barriers were already in place. But now that we have started supplying product one already to them, so there is a very high level of confidence in these customers to test our balance to three products which we have launched recently. So with all these things, with basic approvals in place, with getting REACH registrations in Europe, with having distributors set up across the world, I think now we are in a better shape than what we were earlier. So I mean, with this confidence, I think we should be able to going forward to touch 2,000 tons should be our target in 2025 for sure. Calendar year 2025, I mean. Sure. Sorry. Financial year 2025, you mean? Fiscal year. Yes. Financial year. And so for 26, I mean, would you, I mean, directionally, we had spoken about 4,500-5,000 tons. Right now, I think putting a number will not be easy. So maybe in the next call, I would have more further clarity on how things are, and maybe that is the time we can discuss on this. Sure. Sure, sir. But realizations, sir, on average, taking the basic as well as the premium niche products will stay at around $8 level, I would assume. Seven, eight, yes. 7, 8. Okay. Two products are about $5, $4.5, $5. One is about $10, one is about $7-$8. So yeah, about $6, $6-ish should be a decent number. 6-ish should be around a decent number. Okay. Okay. Sure, sir. And just in terms of, I understand that you have spoken about the CAPEX, the two INR 150 crore new blocks. Now, I just wanted to just confirm my numbers. So the water treatment one you said will commercialize in December 2025, and the performance chemical will commercialize in when? Could you just reconfirm those numbers? July 25. Okay. June, July 2025. About seven months from now. Seven months from now, and the water treatments are commercialized by December 2025. 10 months, 13 months from now. That's right. And sir, again, when you looked at the last call, you had spoken about that the performance chemical, when you look at it at a revenue potential of around INR 350 crore, of course, at peak output. And you were probably going to give us a number for the water treatment in terms of opportunity size. So right now, would it be fair to say you would have a better assessment on the peak potential for the water treatment? 320-odd crore. INR 300-INR 300. Okay. So you're looking at an asset turnover around 22X, right? Okay. And sir, in light of the same, yeah, yeah. In light of the same, just wanted to understand, of course, this is INR 300 crores CapEx. So how would we look at CapEx guidance in 25, 26 at a consolidated level? Look, the CapEx in parent companies is hardly negligible because there is nothing coming there. I mean, unless somebody bought it. No, no. I'm talking about a consolidated level. On a consolidated level, I understand all the CapEx is happening in the subsidiary, which is Clean Fino-Chem. So on a consolidated level, I'm asking you 25, 26, what is the CapEx guidance? So I think apart from so INR 150 crore to INR 200-odd crore. Each year. Each year, right? So this year, it would be pharma intermediate INR 30 crores. Part of the performance segment, it could be close to INR 100-odd crores. And next year, it would be the residual part of the performance segment, INR 50 crores, and incrementally INR 150 for the other performance segment, water treatment, what you call it. Okay. Sure. So this year probably should be around INR 180 crores, and next year should be around INR 280 crores. That's what the calculation said. Yes. And sir, just lastly, wanted to ask you in terms of PBQ. I mean, earlier part of the call, I did ask. So if you could elaborate, so is this the same thing where the color was an issue? Is this the same thing with the PBQ? Is that the same issue? Is there some other issue we are working on? You did mention that there is some work happening on the PBQ part. We've started the plant again with some improvements. As I said, it's a very delicate product. We need some approval from customers to understand if our product is suiting their application needs because that was the problem which is why we had to stop the facility to re-look at the process. But after the new commercial plant has commercial, I mean, after the new process has started, the customer again needs new samples, right? That's what I mentioned, that it will take us about two more weeks to determine if the new process, the product coming out of the new process, is suitable for the customer's application. Okay. Okay. Sure. Sure. Sir, those are all my questions. Thank you so much. Thank you. Thank you. The next question is from the line of Shivani from Monarch Networth Capital. Please go ahead. Hi. Thank you for the opportunity. Most of my question is already answered, but if I could chip in just one and two quick questions. One is around the sustainable margin. HALS is a low-margin product, if I recollect. And going forward, what could be the blended margin for the company? Yeah. So parent company could be 40% plus at an EBITDA level, and subsidiary as HALS commercializes, it could be around 25%. Okay. Sure. And for the new performance chemical products coming up, the margin would be similar range of 40%-42%, correct? Yeah. I mean, it's a differentiated technology, so margins would be better than HALS, and it's adjacent to our existing products. But we don't want to comment on number per se at this stage. Sure. And lastly, one more thing. Also, there are new high-margin HALS products which is also in the pipeline. So could you comment on that? Yeah. It's still in the pipeline. Any update or any additional comment, or it's too early to ask the same? A little too early. Sure. Sure. Thank you. Thank you. The next question is from the line of Krishan Parwani from JM Financial. Please go ahead. Yeah. Hi, Siddharth ji, Pratik ji. I hope you had a great Diwali. Just three questions from my side. So firstly, where are we in terms of approval for our new performance chemical, which is supposed to be launched in the first half of FY26? Once the plant commercializes, then we'll send the samples across, and it should take between one to four months for the customers to approve it. Okay. I mean, on the lab scale, are those approved? Our customers are such that, I mean, lab and pilot do not really hold too much significance in this. I get it. Okay. And secondly, on this HALS, the 135 tons per month volume that you indicated, so is it entirely from subsidiary, or is there some volume from the standalone entity as well? It is consolidated. It is consolidation. Yeah. But only HALS segment. Yeah. Got it. And just a follow-up on that, that's the last question. How long do you think it would take us for a meaningful ramp-up of HALS, let's say just to be a bit positive on the subsidiary side? This year, we—so Kishan, Pratik ji, we expect this year to close on a EBITDA neutral, I mean, break-even basis, FY25, for subsidiary. You mean the closing rate should be a EBITDA positive, correct? Yeah. We are hopeful for full year because as new products are getting launched, HALS 622 to HALS 944, they are more margin-accretive compared to HALS 701, HALS 770. Apart from that, pharma intermediate launch will also help drive the EBITDA for the subsidiary company. Okay. And the depreciation of that, let's say, Pharma intermediate plant is already there in the numbers, or it is yet to come in the coming quarter? No, it has to come. The plant will begin operations just in the next two weeks or so. We expect the real - I mean, the production to begin - I mean, the final product to come out, say, by the middle of December, and take probably one month to three months approval from a variety of customers. So we expect revenues starting quarter four. Got it. Got it. No, this is very helpful. Thank you for patiently answering my questions, and good luck for the coming quarter. Thank you, Krishna. Thank you so much. Thank you. Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead. Yeah. Thanks for the opportunity. First question is, you already mentioned that now we have basically a bouquet of HALS products. In terms of our proposition to customers, what are we proposing to the customer? Is it primarily from the cost-effectiveness perspective or anything else in terms of availability or some other parameter? Thank you. First is price. Second is geographical location. I mean, today, the dominance is between China and Europe. So we are the first player from India. So a little bit on geographical, say, China plus one. So that was another parameter. So these are some of the reasons why we feel we should be able to get. And we are, I mean, with the entire capacity ramp-up, our global market share would only be sub 7%-8%. And the market is already growing at 6%-7%. Fair enough. Second question is, we have also indicated earlier that there are premium HALS products which are priced upwards of $15. So where are we in terms of the process on the lab scale and maybe putting up the plant? As the pilots are conducted, we have sent some of the samples to some of the customers. As soon as we get some results to understand, then probably we will think of how can we manufacture in the existing setup. Okay. For that, we may not have to put in separate CapEx as such, at least in the initial stage. So very little de-bottlenecking, some equipment here and there. But we have no intention to put up any additional facility right now. That will take maybe a six-month, nine-month time, or shorter period? Six months. Fair enough. That's all from my side, and all the best. Thank you. Thank you. The next question is from the line of Archit Joshi from B&K Securities. Please go ahead. Thank you, sir. Good evening, gentlemen, and season's greetings to all of you. Sir, I have a question on the HALS industry as such with respect to the competitive dynamics as we see today, especially in comparison to maybe a few years ago when we decided to have this entire product portfolio with us. The realizations were a few dollars higher, if I recall correctly. We've seen some bit of a pressure on realizations in the entire pack, especially the newer ones that we are about to launch. What has changed, sir? And if you can also give a few sense of yours on what could be the drivers to these realizations improving? And mostly, sir, if you can help us explain the competitive landscapes within HALS as of today. So basically, I mean, I have said this. I had answered this earlier. Again, I'll just answer. So basically, the competition is basically from Europe and China, majorly. We are the fifth company globally to be fully backward integrated. There is tremendous pressure because Chinese have scaled up capacities over the past two or three years, and that is why they have driven the prices down. And we have to be closer to the market prices. Nobody wants to pay the premium. But as far as Chinese prices, we are able to set businesses. As things move up, as our capacity ramp-up happens, our yield efficiencies will keep improving, which will make us more and more competitive. As capacity utilization improves, as newer products ramp up in the subsidiary, the fixed costs will keep coming down, which will make the business more and more profitable as we move forward. Sure, sir. Sir, just out of curiosity, since some of our HALS are used in petrochemicals, mostly hydrocarbons like polyethylene or maybe polypropylene, you mentioned acrylic acid earlier. We have seen a situation wherein there is a decent bit of a pet chem overcapacity. Is there any parallel between realizations being depressed and the products where we are dispatching them to with respect to the application area? Polymer. I mean, acrylic acid was for our other product. That has nothing to do with HALS. Acrylic acid, when you mentioned, it was for MEHQ. HALS underlying application is largely polymer industry. Okay. I thought that would be a derivative of the petrochemical cycle. But anyway, got a point, sir. So lastly, on these three CapExes, one of them is the pharma intermediate that is already underway, and the other two with INR 150 crores each. If you can just explain how different or similar are they from the perspective of technology. I think we've had great laurels on our shoulders with respect to the tech that we have on MEHQ and the products in the base business. If you can share some of your insights on how cost-competitive we can be from the technology side. Thank you. So I will just comment on the performance chemical. I mean, on the pharma intermediate, as Pratik mentioned, it's a new technology which we have incorporated. Of course, we don't know exactly how Chinese are making it. But looking at the price point, we feel we have a decent margin going forward. That is one. In performance chemical, yes, it's again a newer technology. But of course, when the plant begins, then it will be more and more clear to us and also to the market on how we have been able to improve the technology compared to our competitors. Sure, sir. That explains a lot. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Abhishek Ranawade from Okane Capital. Please go ahead. Hello. Hello. Yes, Abhishek. We can hear you. Hi. Okay. So I joined a little late, so I just wanted to ask you about the capacity utilization segment-wise. We don't get segment-wise, but overall, on parent company, it is 70%, and subsidiary is brand new, so there is far lower capacity utilization. Okay, and I would also like to know about the margin growth trajectory for the HALS. HALS at optimal utilization, we expect an EBITDA margin of close to 25%. Okay. And is it going to be the same for the next few quarters, or is it going to improve? It will keep improving as we move on. Okay. Because the volume is picking up, it will increase, right? Yes. Hopefully. Okay. Okay. Thank you. Thank you. The next question is from the line of Arun Prasad from Avendus Spark. Please go ahead. Thanks for the follow-up opportunity. Siddharth, just wanted to understand on HALS, can you give us what is the full revenue potential based on current prices of HALS and the targeted mix at the full utilization? So, currently, we are manufacturing the base products where the prices are closer to $4. Going forward, we are coming up with products which are closer to $8, $9. So if you do the math, we should be closer to $6. Okay. $6 on the 10,000 tons of capacity. That is the revenue potential. Yes, sir. Understood. Understood. Thank you very much. Thanks, Siddharth. That's all from me. All the best. Thank you. The next question is from the line of Jason from IDBI Capital. Please go ahead. So thanks for taking my question again. Just wanted to understand, sir, on the pharma intermediate space, the 30 crore CapEx, what's the revenue potential of it, sir? INR 80-90 crores. Okay. Okay. Sure. And sir, just if I may, within just one last one, I mean, one of our domestic peers has started their facilities in some principal products where we also are large leaders. So sir, just if you could comment on if you are seeing some more competitive intensity on the ground in terms of those products. As of today, sir, I am not seeing anybody on the ground. Okay. Sure, sir. Sure. Sure. So those were my questions. Thank you, sir. Thank you. The next question is from the line of Niral Parekh from Auriga Capital Advisors. Please go ahead. Hello. Am I audible? Yes, sir. Okay, so my question is with respect to R&D of the company. If I compare what happened in the last six years, in 2018, the count of scientists was 22, which by 2024 increased to 90. The PhD guys in your team in 2018 was a single person. In 2024, it increased to nine, so I want to understand what is the role, how critical are both of these positions in your company, and the attrition rate of theirs? Very, very unique question. So let me start. I mean, the attrition rate is always higher on the chemist levels, which is a very low level in the company because of various reasons. There is one. Second, because there is a huge task force, hence we are able to put up more CapEx quickly compared to what we were doing probably 10 years from now, earlier. So as you see, the CapEx of INR 300 crore in HALS, additional INR 300 crore which we have discussed, plus a pharma of INR 30-odd crore. So all these CapEx of about 800, 300, 600, 650-odd crore, probably in a period of two or three years, is the highest level of CapEx which company has done in the last 19 years since the inception. So that is the role of R&D to keep churning more and more products and as early as possible to optimize and go to the commercial levels. Okay. Got it. I have one more question. That is with respect to the pay structure for the scientists and the PhD guys. Because if I look at the R&D cost of the company, it's not getting reflected well. So that's one. What is your question? So my question is, what is the cost of the scientists and the PhDs you employ? So for FY 2024, what portion of cost was it? So point is, apart from salary, there is also ESOP given to these scientists. And I think that is the reason why they are still with us. Okay. Got it. Thanks a lot, sir. That's from my side. Thank you. We'll take the next question from the line of Rishikesh Shah from Alchemy Capital. Please go ahead. Hello. Thank you for the opportunity. My question was relating to HALS. You said that the sustainable margin is. Louder, louder, please. Hello. Yeah. Am I audible? A little louder. Yeah. One second. Hi, Rishikesh, you are there? Hello? Yeah. Mr. Shah, please go ahead with the question, sir. Yeah. Hello. Yeah. My question was relating to HALS. The sustainable margin that you spoke is of 25%. Is this margin at current realization of 4% or at 6%? What is 4% and 6%, sorry? The sustainable margin for HALS is 25%, right? These are on 70%-80% capacity utilization. The realization that you assume is $4, or is it $6 overall, $6 going forward? $6 average. Okay. Understood. Thank you. That's all. Thank you. Thank you. We'll take the next question from the line of Neeraj, an individual investor. Please go ahead. Siddharth, can you comment on the growth potential, the rate at which revenue can grow in coming few years, please? Sir, apart from the CapEx we have done, the CapEx which is planned, I mean, we should be closer to 2.5x of our current revenues. In a period of how much time? Sir, we want to do it as early, but looking at the market scenario, I think fairly you should assume three years. Three years' time. Okay. Any plans related to the separate listing of subsidiaries, etc.? No. Absolutely no. No. Okay. Any other CapEx is planned or lined up apart from the mentioned three CapEx? Not at the moment, sir. No. Okay. All right. Thank you. Thank you so much, Siddharth. Thank you, Neeraj. Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Siddharth for closing comments. So thank you, all of you, for taking time out to understand the company, to understand our quarterly numbers. Thank you always for your support and time. Thank you so much. Have a good one. Bye-bye. Thank you. On behalf of Clean Science and Technology Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Bye.