Ladies and gentlemen, good day and welcome to Neogen Chemicals Limited Q2 FY25 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded, and I'll hand the conference over to Mr. Nishid Solanki from CDR India. Thank you, and over to you, Mr. Solanki. Thank you. Good morning, everyone, and welcome to Neogen Chemicals Q2 FY25 earnings call for analysts and investors. Today, we are joined by senior members of the management team, including Dr. Harin Kanani, Managing Director, Mr. Anurag Surana, Director, and Mr. Gopi krishnan Sarathy, Chief Financial Officer. We will commence the call with opening thoughts from the management team, post which we shall open the forum for Q&A, where the management will be addressing queries of the participants. Before we commence, I would like to share a standard disclaimer. Certain statements made or discussed on the conference call today may be forward-looking statements. The actual results may vary from these forward-looking statements. A detailed disclaimer in this regard is available in Neogen Chemicals Q2 FY25 earnings presentation, which has been uploaded on the stock exchange websites. I would now like to invite Dr. Harin Kanani to share his perspectives. Thank you, and over to you, sir. Thank you, Nishid. Thank you for joining us for our second-quarter earnings. Season's greeting to everyone. Hope you had a joyous Diwali with your family. Wishing everyone a very happy and prosperous New Year. As you know, we have appointed Mr. Gopi krishnan Sarathy as the Chief Financial Officer of Neogen Chemicals. We welcome him in the new role and wish him the best. I will be sharing my views on the performance and strategy, while Mr. Gopi krishnan will take you through the financial highlights. Neogen Chemicals achieved a robust performance during the period under review, demonstrating resilience and strong execution. This came amidst a challenging market landscape characterized by weak demand, oversupply situation, geopolitical tensions, and inflation, which impacted industries' pricing power as well as profitability. The performance was driven by volume gains registered in the base business, with additional contributions from BuLi Chemicals and Neogen Ionics. This achievement is a reflection of our team's commitment to excellence, their ability to innovate and adapt to changing circumstances to deliver results. I will now present a concise summary of the key financial figures for Q2 FY25. On a consolidated basis, our revenues grew by 20% year-on-year to INR 193 crore, while EBITDA came in at INR 35 crore, an increase of 33% year-on-year. This translated to EBITDA margins of 17.9% and an increase of 180 basis points. Profit after tax grew at INR 11 crore, representing an increase of 30% year-on-year. As informed, Mr. Gopi krishnan will share more insights on the financial performance. Now, shifting your focus to the segment performance, in Q2 FY25, organic revenues reported a growth of 34%, while inorganic revenues declined 24%, mainly contributed by lower lithium prices. Both bromine and lithium raw material prices experienced a steep decline during the period under review as compared to the same period in the prior year. Adjusting for this fall, the organic revenue would have been higher at about INR 186 crore in Q2 FY25, while the inorganic revenues would have been higher at INR 55 crore during the same period. I will now provide an update on our expansion activities. New capacity of 400 metric tons per annum for manufacturing lithium electrolyte salts and additives. Here, we already commissioned the first 200 metric tons per annum, and initial approval of the material that we have shipped to the customers has already been received. The volumes in this area will start growing in Q3 and Q4. For the remaining 200 metric tons per annum, trial productions and optimization of the processes are currently ongoing. We already had some customer site visits which have approved the facility, but further, a more rigorous approval process is currently ongoing. Planned for manufacturing the 2,000 metric tons of electrolyte at Dahej facility, we are implementing the phased commissioning strategy here. And in the first phase, 200 metric tons has already started, with which we have now approved more than four customers at a commercial level. And in Q3 and Q4, as our customers ramp up their self-production volumes, we expect our electrolyte volumes also to get ramped up. Both these will be fully utilized, will be fully online, and get approved before the end of the current financial year. By closely collaborating with our customers, we have jointly developed and exchanged multiple recipes of electrolytes with different lithium salt combinations. In the process, we also gained valuable insights on the technological capabilities and market trends. We are committed to maintaining stringent quality standards and adhering to strict safety protocols. The positive feedback from our customers validates our commitment to delivering high-quality and efficient products. Our business development team has been actively engaged with domestic and international customers, hosting them for on-site inspection and approval visits. About the greenfield battery material facility using MUIS Technology, with the financial closure secured, we have already initiated construction, and the project is progressing as planned. We have started the civil construction at the site, and our partners, Mitsubishi, have started the plant construction at their end. So both are meeting the targeted deadlines. We have a dedicated team in place to expedite the completion of the project. Several large battery manufacturers are expected to start operations soon, and we are progressing with long-term contract discussions. We are phasing the commissioning of this facility in FY26 as per our original plan. There's still a strong demand for the non-Chinese products, coupled with ongoing discussions and MOUs which we have, which basically secure the international salt business, which is expected from this site. We believe India's expanding EV industry presents a significant opportunity for the electrolyte markets. The work which Neogen has done, both domestically as well as internationally, we are seeing a lot more interest coming both from local as well as international customers, and as the country strives to achieve our ambitions of EV adoption goals, the demand for high-quality locally sourced electrolyte is expected to surge. With the work we have done in the last two years, we are in the right position to take care of this demand. Consequently, we are committed to making long-term investment to secure our future growth and success. Our growth strategy is focused on scaling up our organic and inorganic chemical business. Also, we are seeing good progress in our CSM business as well. Of course, we are waiting for improvement on the agro demand for this business to develop further. Navigating the current global economic landscape, Neogen Chemicals is demonstrating resilience, embracing innovation, and staying focused on delivering value to our stakeholders. That concludes my opening remarks. I would now request our CFO, Mr. Gopi krishnan Sarathy, to share the financial highlights for the period under review. Thank you, Dr. Harin. Good morning, everyone, and welcome to Q2 FY25 earnings call. I'm delighted to be a part of Neogen Chemicals family and look forward to contributing to its future success. As stated by Dr. Harin, I will take you through the financial highlights. Please note, these are all on consolidated basis, and the comparison is on year-on-year basis. In Q2 FY25, our revenue increased by 20% to INR 193 crore, driven by higher volumes in core business, along with incremental contribution from BuLi Chemicals and Neogen Ionics. Organic chemical witnessed 34% revenue growth year-on-year at INR 164 crore, while inorganic chemical revenue declined by 24% to INR 29 crore. The revenue of both could have been higher, but for the decline in the raw material prices during the quarter. EBITDA rose by 33% to INR 35 crore, led by higher planned throughput as well as better operational efficiencies. EBITDA margin remained healthy at 17.9%, even in this weak pricing environment and startup-related costs at Neogen Ionics. Profit after tax came at INR 11 crore, an increase of 38% year-on-year. This was in line with strong operational performance. The increased capital expenditure in the battery chemical segment is expected to result in higher depreciation and interest costs going forward. The domestic and export mix during the quarter stood at 74% and 26%, respectively. That concludes my initial remark. I will now request the moderator to open the forum for Q&A session. Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yes, hi. Good morning. Thank you so much for taking my questions. So first, with regard to the CapEx numbers for the first half, in the consolidated cash flow statement, I think we can see a number of about INR 140 crore or so. How much of this would have been towards the battery chemicals segment, and what should we expect on a full-year basis for CapEx for the overall consolidated company? Is it tracking in line with the timeline, given that we have to spend INR 1,500 crore maybe in less than a year now to commission the Mitsubishi plant? Hi, Abhijit. Good morning. Yes, the CapEx that you are seeing is mostly for the battery materials. And while INR 150 crore is in the first half of it, totally, I think we have spent around INR 350 crore-INR 400 crore over last in the battery material space out of INR 1,500 crore. Some of this was already sitting on Neogen's balance sheet, which was then transferred. So therefore, when you are looking at a consolidated number, that transfer you're not seeing. But in the battery material space, overall, we have already invested around INR 350 odd crore to INR 400 crore CapEx already has done. We feel we should end the year somewhere around INR 700 crore-INR 750 crore CapEx of the total INR 1,500 crore which we are targeting this year. And then the balance would come in next year. Some of it also, the way we are constructing it, Mitsubishi is constructing the main plant, so that sits kind of as an advance. And they are already starting construction on their end. And then the entire plant will be built there and then transferred together. So that's going to be a big chunk, which will come in the next financial year once that plant is ready. But from our side, the investment on that is already progressing. Understood. Thank you. Thanks, Dr. Harin. Also, on the subsidiary revenues breakdown for this quarter, would it be possible to just split it out between Neogen Ionics and BuLi Chem if possible? Broadly speaking, I would not like to give a specific number because these are one-product kind of companies. But when it comes to what you are seeing, the total difference, I would say the Neogen Ionics is still in single-digit crore, and the balance is basically from BuLi Chem. But we've seen significant improvement in BuLi Chem, and quarter one and quarter two from a battery material point of view has been more or less similar, single-digit crore. Understood. And just one question with regard to the environment in the U.S. now. I believe the Trump administration had kind of indicated plans to remove the Inflation Reduction Act if it came to power. How do you see the risk over there in this scenario? Sure. No, so what we have seen and what our experience has been when we've talked to the customer, of course, the discussions with the customers were before the election results. But there was always this possibility, and we had heard about it. The feedback which the customers have given is, "Look, even if whether there is an IRA or no IRA, we still need this, especially in the electrolyte salt business," because just to have a second backup, because 95% of it coming from China is something which we are not comfortable. So again, they continue to take that view that, "Are you the best source outside China?" This is one question. Then the second question which they've seen is that, like I said, if they look at the last four years with the formula pricing which we have, they would still have been better off than buying at a spot market from China. So these are the two decisions which are there. Separately, they've also commented that so much amount of investment also which has happened in case of related to IRA, IRA-driven investment, and that too in so many states where there's a very strong support for Trump that they feel it's going to be very difficult to completely unwind IRA. There might be few variations or changes around that, but mostly they feel there will be some form of IRA with some modifications still continuing. This is the views from our customers. But as far as our investment was going there, they said, "Harin, don't stop. We need more." And they are even encouraging us to think of some other molecules also, which doesn't require so anything which doesn't require a presence in the U.S., they are telling Neogen, "Please consider these options." So their interest remains still very high. And recently, also, we had visits from them. And during the visits, also, they are satisfied with the progress we are making and giving us more confidence to even challenge ourselves to do even more than what we have currently planned. Got it. And just one last thing, if I may, if you'll permit me before I get back in the queue. So from a second-half perspective of this year, with the salt volumes ramping up, and I'm not sure how the traction with regard to the commissioning of battery capacity is going from the large guys such as Ola or Exide. But in the context of whatever you are seeing, do you still believe that INR 100 crore or INR 150 crore of battery chemical revenue is possible for this year itself, fiscal 2025? No. So for battery chemicals, we had guided for this current year around INR 75 crore-INR 100 crore range. And what we still feel, again, it depends a little bit on the electrolyte ramp-up which happens. But what we are seeing is somewhere, let's say, between INR 50 crore-INR 75 crore. I'll be honest, the first six months, the approvals have taken longer time for the new site, so especially for some of the salts. So based on that, today, what I'm looking is best for this particular year for battery would be somewhere around INR 50 crore-INR 75 crore. But next year or the year after, I don't see any change. Okay. Understood. Thank you so much. I'll get back in the queue for more. Thank you. Okay. Thank you. Next question is from the line of Nilesh Ghuge from HDFC Securities. Please go ahead. Yeah. Hi, Harin. See, Harin, you mentioned that volume growth was very robust in your core business. My estimate suggests that it is close to about 50% YoY basis. So can you tell me which category of products have shown such a high growth? Is it in advanced intermediate or lithium derivatives, bromine derivatives, or in CSM? So for us, when you are comparing, we have seen good growth in lithium derivatives because if you see the corrected numbers, right, we have seen almost a 30%-40% increase on the lithium side. Of course, we are not seeing it just because the lithium prices are like one-third and even our cost per metric ton prices are less than half. So as we have given on our slide 20 of our presentation where we have shared what the number would have been if the prices would remain the same. In case of organics, the main contributor is going to be the BuLi Chemicals because we were just starting with our BuLi Chemical plants at that time, and now we are almost running at a full capacity. So that has been the main drivers. In terms of our organic production, in organic production, right now, the major improvements that we have seen is the non-agro CSM that has contributed and also the bromine derivatives. In bromine derivatives, we have few bromine derivatives which were used in the molecule which was getting approved by the innovators. If you remember, when we did our Dahej site expansion, we said we had signed one long-term contract, a five-year contract with a pharma customer where we are going to be supplying them bromine derivatives. But as the molecule gets more approvals, the demand will grow up. So I think that business is improving quite a bit. So I think bromine derivatives is doing a good job. In terms of non-agro CSM, so we had a target to reach around 20% CSM, but last two quarters, we are already at 15%-18%. We want to reach 20% by next year, but we are already at 15%-18% in spite of a lower demand from agro, so the agro demand not being there. The CSM that we have done for, let's say, semiconductor or what we are doing for our flavors and fragrance and some specialty polymer and other specialty materials, fine chemicals, that has also done well. Lithium salts have done well. Advanced intermediate, which we basically sell in the market, that is still the area. Agro is the other area where, in advanced intermediate, the Chinese competition and slightly lower demand in bulk APIs is still something which we need to improve upon. The agro CSM has not picked up in this year, although we are doing several projects which we had done last year. And now the customers will start planning their 2025, especially the Japan customers. They start from October onward, they are planning. So by January or so, we'll have a demand on Japanese agrochemical demand. So that will give us an idea how that CSM is going to work out. And so we'll get clarity on that. And the advanced intermediate is another area where we still need to work on. Okay. Okay. As you mentioned, BuLi Chemicals already reached its peak utilization. So the benefit out of that, as we have the entire chain of a bromine derived from bromine derivatives and, sorry, lithium derivatives to extraction of lithium technology, so are we getting benefit out of that? That means the salts regeneration of lithium and getting lithium back? Yes. So we have already started recycling the lithium which comes out, which was being given externally. And that is helping us increase some of the lithium volumes also. Some of the businesses where we used to have the price pressure, because we are able to do this recycle, we have been able to increase volume, even though lithium prices are depressed. And so I think that benefit is coming. You're not seeing it fully, like I said, because of the depressed lithium prices. But otherwise, that's something which is already helping us. Yeah. And the second question is on the margin. So we can see that more than 200 basis points improvement in EBITDA margin if I compare that with the last year. So is it largely because of correction in product prices, or is there increase in absolute level per kg EBITDA for the products? I think largely driven by this price fluctuation. Last time was a bit lower, right, because lithium prices were on the lower higher side. On the absolute, that margin was okay. But per metric ton, I mean, the percentage EBITDA was looking a little bit lower. Now, lithium prices have also corrected. Last one or two quarters, even after lithium price correction, there was a lot of Chinese pressure and utilization levels were lower. As now, last two quarters, BuLi have been making positive profits. That's something which is basically helping us. Overall, those were the drags. Even now, battery is still not broken even. We are just into a few single-digit crore, as I mentioned. The expenses are still there with the production and everything going on. So I think we will still see improvement in the margins as you see better utilization levels. But largely, it is just the lithium price corrections which are giving you percentage improvement in the margins. Okay. Thanks. Thanks, Harin. And all the best. Thank you. Thank you. Next question is from the line of Arun from Avendus Spark. Please go ahead. Good morning, everyone. Thanks for the opportunity. The first question is on the working capital performance during this first half. We have seen a moderate improvement in the working capital. Can you just indicate is it a seasonal stuff or is it something that is happening? Is Is it a permanent reduction? How we can expect this working capital to further reduce over the next couple of quarters? Yeah. We had already targeted that, let's say, by next financial year, we wanted to reach around 130-140 days of Net Working Capital on net sales days basis. What we are doing right now, we were at least, like we said, we had done maximum kind of investment which was needed for working capital in terms of inventory, in terms of receivables. We needed to work very hard to basically improve upon that. I think that trend has already started, and we'd like to maintain that. Again, every quarter, because we are still ramping up in a very variable kind of scenarios, we are seeing improvement in our demand, especially in the pharma side. Sometimes they are also coming very suddenly. We have to continuously keep shifting and adapting ourselves. But I think this will all stabilize, and we continue to maintain what we had said that by end of next financial year, when we have full utilization levels, we have INR 1,000 crore, our working capital will also stabilize and go back to historical 120-140. And beyond that INR 1,000 crore when we go is when you will start seeing improvement over that because then we'll have more mature molecules or CSM business would have stabilized. So we can expect working capital improvement beyond that, let's say in FY25, FY26, sorry, FY26, FY27. Right. And when we ramp up battery chemicals, should we expect a similar kind of working capital days from that segment? So that means that will drag certain working capital on an overall basis? So right from the beginning, what we expect that battery business is a very different business, right, in the sense that we have fewer customers, we have fewer products, we have fewer raw materials. They are dedicated plants. So that's where we can basically engage in working capital very well. The only variable there would be that some of the customers are very large, and they would want longer payment terms. But what we are hoping that with such large customers, we should be able to get factoring or invoice discounting, so some kind of a financial arrangement. So again, this is going to be Gopi's expertise area that we are going to depend upon, wherein even if our customers want a long credit, we can maintain our working capital cycle with a good financial arrangement. But at least from an inventory point of view, what we can say that we can contribute and we can control at around 60 days, let's say 75 to 90 days, so that and hopefully reach a situation where debtors and creditors basically balance each other out. So our target is like a 90 days kind of working capital cycle against 120 to 140 Neogen's base business. We target around 90 days for the battery business. That's our target. Again, we are just starting with this business, but this is what we feel we can achieve. Understood, sir. Secondly, you said that BuLi is kind of already near full utilization. Any chance that we can, with the capacities fungible with the other facilities that we have, and we can make BuLi products given that it seems to be in demand? So can we utilize some of our other facilities and manufacture the BuLi-related products there, or still we need to put some kind of a brownfield expansion there? BuLi is a very dedicated kind of a special plant. Because of the hazardous nature, it's very unique. Unfortunately, it's not fungible. The good news, however, is that we can increase capacity at that site. We have a capacity to grow up to five times. We already applied for Environment Clearance. We have already received the Centre's approval on that. Now we are working on the state-level approval. Fortunately, with a very small CapEx, 2x capacity increase we can do because this site had maintained the same capacity over a long period of time, and they had done some cycle time improvements and debottlenecking over time. Around 50%-100% increase in capacity can happen as soon as we get the Environment Clearance permissions and the necessary permissions for the increase. That can happen. And then we would have to do a brownfield to go from 2x to 5x. So that's still a further view. But I think up to 2x, what we are trying to secure, that now that we've got the central approval, if we get the state approval in the next, let's say, three months period or so, if we are able to do that, then for the next year, we would have almost like a 2x capacity available. Great. Understood. So if we go up to this 2x kind of an approval, would you revise your guidance of 1,000 crore revenue potential for the base business? And if yes, what would be that indicative figure for that? So for BuLi, depending on the lithium price, as we had indicated, the revenue will be somewhere between INR 50 crore -INR 100 crore on that 1x capacity, right? So 2x would also be like INR 100 crore - INR 200 crore kind of revenue potential, depending on the price of lithium. With the way the price of lithium is, it's going to be more closer to INR 100 crore-INR 125 crore, even at that 2x capacity. So it's not going to change significantly. That INR 1,000 crore at the max would change to INR 1,050 crore. But with all the other things happening in the agro world, etc., I would like to keep that INR 50 crore as my buffer. And I would like to still maintain INR 1,000 crore. Let first environment clearance come. Let's see how the agro recoveries. And then we'll see next year if we need to revise our projection on the base business. Also, as you might have seen earlier, we had requested for merging BuLi with Neogen so that applications are also going online. Most likely, by end of the current financial year, we expect BuLi to become part of Neogen because it's more similar to the base business, right? That's why we wanted it to be part of Neogen. Then we would have just Neogen and Neogen Ionics, only two entities. Most likely, for the next financial year, it will be part of our standalone results. It will become part of our standalone results itself. Understood. Fair answer. Finally, lastly, on the battery chemicals, you said in your opening remarks that a few of your customers are going to start the plant. This is in which geography? And also, what kind of battery capacity that the customer is putting up on aggregate level? How many gigawatt-hours? That will be very helpful, sir. So basically, when I mentioned that, what I meant is that the electrolyte business for India, which is basically all the battery plants which are coming up in India. So as we know, Ola has already started production, and they are ramping up, as well as a few other smaller battery makers with 100 MWh, 50 MWh, 250 MWh. They are also starting, and they are ramping up. And then, of course, Exide and Amara Raja would be targeted at some sort of start and a ramp-up in the next financial year. So what I meant was our electrolyte ramp-up is basically based upon Ola, Exide, Amara Raja, and other battery makers who are planning how that capacity is coming online. So that is the mention. The salt business that we have doing internationally, the capacities are existing there. The capacities are running together into hundreds of gigawatt-hour kind of level. Only the question is shifting from China to a Chinese source to a Neogen kind of a source. So that's the shift which needs to happen. So as our capacities get approved, like I mentioned in my call, so some of the basic infrastructure, the quality system, these things are approved. But in battery, there's a more rigorous system where once your process is completely optimized, that is when they will come and do an audit where it's like a parallel audit in front of them. You are doing all the production. So I think that rigorous audit is something which is pending for a few of the clients. And once that happens, then the volumes will start ramping up there. Right. And post that rigorous audit that you are talking about, after that, again, there will be a little few months it will take for us to get the first contract, or is it like how does this process happen? So many of these, so the contracts are already in place with some of them, right? What is remaining is the POs. So the contracts are there. The pricing volume, everything is decided. Once you clear all those audits, then the POs start flowing, and that's when you start doing the shipment. So from the audits to shipping, shipping time will not be too long. All right. All right. Understood, sir. Thank you very much for all of this. Thank you. Next question is from the line of Ankur Periwal from Axis Capital. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. First, on your comment on the plant inspection that we have been seeing, so one, is it for the electrolytes from the domestic players or largely from the salt manufacturers globally wherein you were commenting on the extended rigorous audit? So again, each company has its own, but they both have the same procedures. Okay. But from a, let's say, procedural or, let's say, ramp-up perspective, are we more closer to seeing a ramp-up or, let's say, product approvals on the salt side? And how has been your status of discussion with the domestic players for electrolyte side in terms of plant approval and ramp-up? So I think electrolyte side also with the four customers which we mentioned we worked with, some of them have already taken trials. They have used our electrolyte in their self-manufacturing facility, and some have seen the satisfactory performance. So now they are ready to place bigger volume orders. They're the main bottleneck. I mean, we have so they're the main bottleneck is all the approvers, whatever they need from our side, we are more or less ready. There are some comments or improvements which the customers have requested, which we are basically overcome, which we are doing the improvement like we do in any pharma audit also. So it's a very similar level. It's not something there's a main challenge is that they are also increasing their self-manufacturing capacity, right? Because all the smaller ones, the bigger ones, they are just right now in the trial production phase. As their trial production becomes regular production, basically our electrolyte volumes go higher. Sure. That's helpful. And you also commented on the new recipes and the new learnings that you had while working on these trials with the customers. What exactly, if you can substantiate that, are these learnings more on the larger number of recipes that you could have done, or it's a new salt or more efficiencies? Your thoughts? So basically, before we were focusing on how we make electrolyte of the best quality, right? So the process of manufacturing. Now, as we work with more and more customers with different kinds of cell designs, we are getting a more deeper understanding into that for a certain cell design, which electrolyte becomes better. Again, here also, we have a collaboration with Mitsubishi where when a customer wants, we can bring Mitsubishi also together. And then Mitsubishi, Neogen, and the customer together help design the electrolyte for the customer. So now some of the customers have already completed their first generation cells, and now they are working on the second generation and the third generation cells. So that is where we are now being a part right from the beginning to help them design what the electrolyte should look like, which will give them the best performance, especially in India kind of a scenario where India is going to be a high temperature region. Some of the electrolyte designs have to be optimized for India. We are in the beginning; everybody is basically trying to make whatever their technology partners were, except for a few who designed their own. In the next generation, now people want to design their own unique electrolyte. We are basically right now partnering with them to basically help them develop those electrolytes. That's the learning that we had. If you have this kind of a cathode, you have this kind of a binder, which is an additive which works better or doesn't. If you want to improve charging, what kind of electrolyte additive can help you? But it will create the other problem there. So depending on what the customer wants, how we can optimize. And again, we also have a Mitsubishi help here where some of the customers, we are working together and designing together these electrolytes for them. Sure. That's helpful. On CSM side, you did mention a target of 20% for next year, and we are already at probably 15%-17%. Given that agrochemical is still sort of slightly subdued here, and you mentioned you have got good traction from other sectors, can this growth be slightly more front-ended, or maybe the ramp-up in this business could be sharper? And secondly, from a capacity perspective, where are we in terms of ramping up this business to a nameplate of even 20, maybe even higher number from a growth perspective? Sure. So see, when I'm 17%-18%, but that's on, let's say, a run rate of around INR 200 crore, right? So when we are at 1,000, first of all, that becomes 250, and that itself is like a 25% growth, right? So you still have to grow this business by 25%. And then also another to catch up on that 2%-5%, you would need still another 30%-35% increase over what we are doing today just to meet our target next financial year, right? So I think we have already a capacity of that. And I think we've shared earlier that we feel with once we reach the full utilization level, with some de-bottlenecking, this side itself can our existing capacities together can give us still 15%-20% more with a better utilization of all the assets. So we might have to do some de-bottlenecking CapEx kind of thing. But we feel FY26, we can be at that INR 1,000 crore, and FY27, the base business can be somewhere around INR 1,150-INR 1,200 crore kind of revenue. We'll give you a more exact number next year. But this is what we can target. And we'll see. Right now, the way I am seeing it, because till we see light at how the advanced intermediates in the generic space plays out, we want to just basically see, okay, our better CSM numbers is just a backup for advanced intermediate. Because from a chemistry point of view, that advanced intermediate, which is a multi-stage chemistry, and the CSM, which is also a multi-stage chemistry, that basically is kind of fungible reactive capacities is what we are basically using there. So we'll use it as a backup. But what I feel is that with the slowness of the agro and for us also to understand the semiconductor and utilize our capacities fully, we would also like if we are in a position where we have too much of capacity, too much of demand and less capacity, we would also like to optimize our product mix also slightly for better margin or better working capital cycle. So up to FY27, unless something dramatic comes, my view is that I want to focus more on stabilizing this business, making it more efficient from margins, working capital, product mix point of view. And then FY28, 29 is where all the work which we have done in this will basically allow us to the kind of rapid growth we are seeing in battery. I don't know the same level, but the long-term view of the CSM to have single customer who can give you significant hundreds of crore kind of revenue kind of business. So that's something I'm looking at a ramp-up happening from FY28 onwards, right? And by that time, we feel battery also would have stabilized. So from a bandwidth point of view, from a cash allocation point of view, we see the rapid growth in the battery in FY25, FY26, FY27. And this is the time where we stabilize our base business, Dahej gets completely utilized, even hopefully the 2X capacity. The synergies of that start playing out. And based on that, with the agro, pharma, and other industries like semiconductors, aroma, CSM, we'll see where we are adding most value. And then we use that particular customer or that particular industry as a focus for further growth in the base business beyond FY27. Yeah. Thanks for the detailed answer. Just if you could remind us, FY26, our target was 20% CSM share. What was the same number for FY27? FY27, we have not. Because like I said, we had so far said only INR 1,000 crore FY26. So FY27 is just de-bottlenecking to, let's say, becoming INR 1,150-1,200 crore using the same capacity is what we are targeting. Let's say right now, let's just keep 20% as a target what they're keeping. The main CSM push or significant move will happen when we set up specific plants for a specific molecule, right? So once your single molecule is like INR 150 crore, INR 200 crore, you can have a plant, one single plant which is doing only one or two molecules kind of an MPP. Right now, our one single plant is doing like 30 products, 40 products. So we want to basically move on to like INR 100 crore plus kind of molecules beyond FY27. So that's what will basically drive the CSM growth beyond that. Sure. Just two bookkeeping, if I may. One on the pricing on lithium and bromine. On the year-on-year front, obviously, there's a decline. Even on a Q-o-Q front, there is a further dip or prices are largely stable now? Mostly stable. I think bromine a little bit started firming up a bit. Lithium is, I would say, within that $0.50, one month, $0.50 less, $1 less, $1.50, $1 more. So a little bit just in that noise level, but no strategic shift or change in lithium. But what we know is this is historically lower. A lot of lithium miners are consolidating or deciding their strategies going forward. What we are seeing is overall gigawatt-hour, even after some of the slowdowns and some of the closures, the gigawatt-hour worldwide are still growing significantly. So I would say, again, you will see some lithium price correction in the next two financial years. Okay. And lastly, for this quarter in our standalone financials, the other overheads have sort of a dip by 10-odd%. We were largely stable in that range for the last probably three quarters. But this quarter, there is a dip. Anything specific to read in there? I'm sorry, I've not looked very closely into there, but other than some product mix or I can't think of anything specific reason for that. Let me just look at it a little bit more closely and maybe in future calls if there is a specific reason beyond sometimes there are some provisions which we have kept, and those provisions are adjusted or some reasons beyond that, right? If there is something, I'll let you know. But otherwise, most likely, in my view, it is just some of the provisions which we had kept on the higher side, which were corrected, or some of the expenses between Neogen, Neogen Ionics, and BuLi are now a little bit more accurately bifurcated because they have some common facilities. So other than that, there should not be any major reason. Okay. No worries. Thanks a lot for the detailed answers, and all the best. Thank you. Thank you. Thank you. Next question is from the line of Jason Soans from IDBI Capital. Please go ahead. Yeah. Thanks for taking my question, sir. So just wanted to understand, I mean, we did talk about the base business, but clearly, what's been happening is the pricing side of it still remains weak. But considering that also, just wanted to understand, I mean, I understand that there was been some discussion, but we are still sticking to that base business guidance of around INR 9.5 billion-INR 10 billion by FY26? Yeah. INR 950 crore-INR 1,000 crore, yes, we are sticking to that. Okay. Sure, sir. And in terms of the realizations, we've spoken about the realizations for salts to be around $28-$35 per kg and electrolytes around $8-$9. So I understand that coming from a non-Chinese perspective, we always have negotiations going on compared to the Chinese pricing and so on. So just wanted to understand, I mean, of course, for lithium salts, we're looking at the export market, electrolytes, domestic. So how are the negotiations going on in terms of a benchmark for Chinese pricing? Just wanted to understand that because clearly, that will move the needle a lot. So just wanted to understand how are those negotiations playing out? So like I said, in both, so first of all, the negotiations when we are having with the customers, we are basically saying, "Look, lithium prices are going to fluctuate," right? And that's something which we cannot control. The numbers you were said were more closer to stable lithium price, what we are expecting between $20-$25. Right now, that price is almost less than half of that, okay? On top of that, you have other raw materials which also contribute in electrolyte also, which are at their historical low. So the top lines remains, maybe numbers would change. But both me and my customer are more concerned with what is Neogen's cost of production, our contribution, our ROC. So I'm basically protecting my ROC, and the customer is also more concerned with Neogen's overall operating cost. So the negotiations are around that. In fact, either the customer is working two ways. They say, "Okay, if they are talking to four guys, they said, 'Okay, this is the lithium price. What would be your price? You tell me that.'" Or they say, "Okay, other than lithium, what is your contribution?" And the feedback that we constantly received is that outside China, either they say, "You are the lowest," or "You are the second lowest." So that's why all the customers keep talking to us. And even the contracts that we have already entered into. So as I explained in some of my previous answers, we already have contracts in place. Once the approval starts, based on that contract, the POs will start flowing, okay? So in this also, this basically margins have been optimized. Even like I said, some of the recent customer visits also, I checked that. "Okay, this was something six months ago. Is that still the case?" Yes, still that's the case where they feel that for the salts where we entered into contract, we are still the number one or number two lowest outside of China. That's what basically they are focusing on. With Indian customers, we have not yet entered into long-term contract. There, okay. I mean, for a reference check, customers can tell us, "Okay, this is the price in China," but electrolyte is something that everybody acknowledges that ideally you want to make it locally, right? There are a few companies in the world who have tried internationally for smaller volumes, but when you get into larger volume, it's just too complicated. So basically, they are looking, and we're being very fair that we don't want to take a very extraordinary margin just because they want local, etc., because ultimately, they also have to compete in the international market with the Chinese cell prices, right? So we've been very fair, and we are basically targeting to protect our 20% ROC, which we feel something like the risk that we are taking is what we deserve. So far, again, we have not entered into any long-term contracts with the smaller volume businesses. We are trying to close at around this price. But again, we'll have a better answer on this once we enter into any long-term contracts for the electrolytes. So we're just so far not there. But so far, we've not received a very strong pushback on when we've given our conversion price at a 20% ROC kind of level. Okay. Sure, sir. But clearly, there will probably be a downside to those realizations which I just mentioned because of the conversation. Yeah. By the time the plant starts, if the lithium is back, it could be higher also. It could be lower also, right? So the per ton price will depend. The selling revenue will depend upon input cost. But the ROC that we are targeting or the absolute EBITDA that we are targeting, that remains unaffected. Sure, sir. And just wanted to also understand, you did mention that battery chemicals revenue for 25, you expected around INR 50 crore-INR 75 crore. And for 26, would you want to probably give any guidance as such for battery chemicals revenue? Yes. So we had shared in the past that the capacity that the 400 ton and 2,000 metric ton, which we feel will be fully approved in the current financial year, so that itself can give us around INR 250 crore of revenue. So that was a bare minimum with which we will start. On top of that, we are increasing our salt capacity from 400 to 2,500. So those capacities will come online. And in the second half, those capacity also will get approved. So we would have something additional coming from there. And our Pakhajan unit also is expected to come in the second half of next financial year. So in FY26, we said INR 250 crore is base, plus additional revenue from the increased capacity, and plus Pakhajan maybe last quarter once all the trials and depending on how long the trials and approvals happen. So that's why we have said it could be somewhere around INR 400 crore-INR 500 crore number. More precise number we can give, but it will be at least that much is what we feel. And then once we have more visibility on these approvals of the additional facility, as well as more visibility on electrolyte ramp-up in India, right, is when we can give you more precise number if it can be more. But my sense is at least INR 400 crore-INR 500 crore, and then maybe more. Sure, sir. And so just lastly, wanted to understand, last time you had, of course, we're looking at this INR 15 billion mega CapEx. And last time you had said for the debt component, you have tied up around, I think, INR 9 billion with SBI. Now, and the remaining INR 1.5 billion-INR 2 billion was under discussion. So has it been tied up, or we are still under discussion? Could you give an update on the debt status, basically, the loan processing? Yeah. So what we need for Pakhajan is fully tied up. And on top of that, what we need for the Dahej, where we are increasing the capacity. So again, partially, that has already been tied up, and remaining are in the final stages. So about, let's say, another INR 1 billion is already tied up. Close to INR 1 billion is almost tied up. And remaining are in the final stages of discussion. So we had to also undergo rating independently for Neogen Ionics. So that process is getting completed. And post that, in this quarter, we are expecting to close on that. But we are not stopping work on that. So we are putting also our own money to make sure that there's no delay there. So the work will continue there. Sure, sir. Thanks. Those were all my questions. Thank you. Next question is from the line of Rohit Nagraj from Centrum Broking Limited. Please go ahead. Thanks for the opportunity and congrats on good numbers. So first question, probably a light question. In terms of the electrolyte recipes that we are giving to the battery manufacturers, so generally, the battery manufacturer will have a single vendor for such recipes, or there will be multiple vendors. And if there is a multiple vendor, then would it be generally that the top vendor will get maximum share, and it goes down, reducing for the second or third vendor? Thank you. No. So, generally, what happens is, in case of battery, historically, what we have seen is many battery companies like to work with a single vendor. Some battery companies work with two vendors. But when they work with two vendors, what they do is that if they have four different cell types, let's say one vendor is giving them two or three cell types, and another vendor is giving them one cell type. So usually, they're divided on a cell type basis. Normally, it's very rare that for the same cell. So I'm just saying hypothetical case that if there is an electrolyte maker which is making GM has three car models and Ford has three. So there are totally he's making electrolytes or batteries for them. So he's making six different kinds of batteries. In that six different kind of battery, let's say in three or four batteries, he's using one particular electrolyte maker. For the another two, he might use another. When they try to work with multiple, they generally try to work that for one single model design. They would basically work with one electrolyte maker. Maybe they have a second generation cell or third generation or a different application cell. They might use a second. Normally, for one specific, they don't usually do multiple vendors. So just a light question to that. So when we are approaching the battery manufacturers domestically or internationally, so they are probably giving us the opportunity for the newly developed batteries or the existing ones, I mean, particularly in case of, let's say, international markets where they already have the manufacturing in place. So electrolyte is only domestic market, right? So Neogen focus for electrolyte is only domestic, whereas electrolyte salt is international. So the recipes come into play only for the electrolyte which we are offering in the Indian market. And as you know, in Indian market, almost everybody has their own new design, either their own design cells or some technology collaboration through which they will be getting. So that's basically the India case. So it's broadly for the new cell production which they are starting. Right. That's clear. And second, again, coming back to the lithium prices and bromine prices. So given that the pricing remains at the same level, and even if there is a fluctuation, you mentioned from the battery perspective, our per kg margins or the ROC threshold will not change. Will it be a same situation even for the base business? Because we've seen that in certain times when the price fluctuations are up or down, there is an impact on absolute EBITDA or the EBITDA margins. No. So historically, when lithium prices went crazy high and then crazy low, our absolute EBITDA was more or less predicted, I think, except for one or two quarters. So the percentage sometimes looked lower when the lithium prices were very high. But from absolute EBITDA point of view, I don't think we had an issue. Sometimes we had an issue when there was a very strong price correction. And especially in case of lithium, there was one quarter where there was a very strong price reduction, and customers were holding back. And then ultimately, especially when we had taken over BuLi and we had imported, expecting a very high demand with a new business, and then it sharply corrected. So that's where we had to take an inventory hit. But otherwise, in lithium, we are very mindful that we are controlling kind of back-to-back POs so that we can maintain absolute margin. So historically, what we have seen, other than BuLi, we have not seen an inventory hit which we had to take, and we were able to protect absolute EBITDA. Of course, a little bit what we have pressured on absolute EBITDA is in our advanced intermediates and bromine derivatives with Chinese competition, they are giving very low price. So in the international also business, sometimes we have to correct these prices to match where we have a Chinese competition. And in domestic also, advanced intermediates, we have to match that. And that's what we are basically over long term looking how it plays out. Otherwise, as we said, once we reach INR 1,000 crore full utilization, when we are increasing capacity, we can also try to optimize the product mix and the business, which are more stable margins or more predictable margins and better working capital cycles. Fair enough. Just last one clarification on the guidance. So FY26 base business guidance, INR 950 crore-INR 1,000 crore for the battery materials, INR 400 crore-INR 500 crore. Does it include BuLi as well? And if you can just spell out for FY27 also, what could be the guidance for base as well as the battery materials? Thank you. INR 950 crore- INR 1,000 crore includes BuLi Chemicals. Battery chemical, as I said, INR 400 crore-INR 500 crore is a possibility. I would not call it a guidance. Give us some more time for that to happen, but we see a very strong possibility of at least doing that and better, and FY27, yes, our target would be to look at if we can achieve a revenue of around INR 1,150 crore-INR 1,200 crore in the base, and when I say base business, BuLi will include it. Like I said, it is going to merge as part of Neogen, and as a business, I see it similar to the organic business that we have in Neogen, so it will be that, and yeah, so that would be for FY27, and again, battery with the variability that you have, it's too early to tell you or give a guidance for something like FY27. But it should be in thousands of crore. I mean, it should be above 1,000 crore. But how much above is something we'll have to figure out depending on how the electrolyte business is developing and how the salt market is playing out. So this is just a view, but more clearer guidance we can give you only in the next financial year. This is absolutely helpful. Thanks a lot and all the best. Thank you very much. Ladies and gentlemen, we'll take the last question from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead. Yes, sir. Thank you for taking my question. In your earlier remarks, you alluded to the Indian players being competitive globally and the cell manufacturing part and that you want to support them by charging lower, just getting a normal ROC 20%. So how long do you see them to be globally competitive? Can they really be globally competitive given CATL has a 20,000 R&D team and they're looking at using AI to get the next generation of battery materials? Yeah. So whatever I have worked with some of the Indian companies, look, there are two ways, right? I mean, either they get knowledge by partnership or they're generating their own knowledge. And frankly speaking, what I see is Indian battery people last two, three years were catching up. Once we catch up, then we can really innovate. So I think whatever I have worked with, I'm very happy and proud to I even feel proud that some of the battery development, the expertise that we have in India is really good. Also, some of the Indians are also international, and some of them are even willing to come back to India at even very senior levels to help India basically catch up on the world. So I think after we have done catch up, we will innovate. Also, in case of India, most of the companies, if you see, also have a very strong captive consumption. So for example, companies like Ola, they have their own captive consumption, or Tata who has announced they'll have their own captive consumption. So I personally feel that there is going to be and similar like Lucas TVS or JSW. So many of these are not basically trying to sell the batteries and make majority of the revenue by competing internationally. So there will be localization. And here, performance also will matter a lot. So we can also improve performance specific to India. And nobody is going to work specific to India other than Indians, right? So that's where what we are working is that, hey, India requires high temperature. Which cell performance will work best in India? So let's basically try and develop that. Once you have the performance, then you can create more value out of it. So it's not just the cost of manufacturing or the scale. So I think, yes, India can be competitive. In fact, some of the people I've worked with in Japan, many of them feel that outside China, the best potential place to make cells globally on a long-term basis is India. Because like China, we have the local demand also which can be significantly high. We have the skill set. We have the manpower. We have the expertise. We have the land where over a period of time so again, many of us basically doubt that can India make cells competitive. But many international people are looking at India as the next best base to manufacture cells long term once we have caught up to the world and once we have the initial start. So this is the view, and I strongly believe that. Of course, we are not just part of India. So we are also taking care of international requirements. So we are also into international supply chain as well as Indian supply chain. So that also gives us a lot of good insights. So just recently, in our last board presentation, I was summarizing companies with which Neogen is working. So we've worked with now in different forms more than 30-35 companies in India who have either planned to make cells or are planning to make cells at different scales. And we have worked with more than 40, 45 companies internationally in different aspects of battery material supply chain. So I think last four, five years being one of the early adopters in India has given us the option to both play very strongly with Indian customers who are interested as well as international customers. Now, whatever work we have done in the last two, three years, we have to basically achieve the results from that in the coming three to five years. And that's just the beginning. What we are talking three, five years, 30 GWh is what we are currently targeting in electrolyte. That's just a peanut of 3,000 GWh the world is going to be. So I think there's still a lot of room for growth for India as well as companies who are in the battery material supply chain. Right, and so second was on this partnership that a lot of them are working with partners or this thing. So Ola here is going on its own, but the Mitsubishi partnership, does that benefit them, your Mitsubishi, or how are they managing to just any thoughts there? I'm sorry, I didn't get a question clearly. So Neogen has partnership with Mitsubishi. Ola has just its own cells, and then other people have. So I mean, how do they have a fair chance to get kind of companies for somebody like an Exide and the Hyundai partnership, and how does it place them overall? And like you mentioned, they will need to I mean, their capacity will be such that they will need to export around 50% of what they can use themselves given the size of capacity that they're putting up. So they will have to compete globally very soon, I guess. I just wanted to understand your thoughts around the competitive opportunity. Yeah. So I think in their question, there are two parts, right? One is getting technology from outside is better or making your own technology, right? Both has its plus and minuses, right? I mean, when you get from someone outside when you get technology from outside, you are getting many years of their experience. When you do your own, you create your knowledge. And I think most of the Indian companies which basically tied up with outside, they've also developed their own R&D. So even if you look at Neogen, right, I mean, we knew 85%, 90% of the stuff, but we, okay, tied up with Mitsubishi to get the remaining 15% catch up so that we have the most efficient technology available with us. So I think that's basically the combination. And again, but if you look at the scale of investment which somebody like Ola did, right, for R&D, I mean, it's much higher than as a percentage of revenue or as an absolute number also. So I think those are both approaches which can basically work together. But ultimately, we'll have to catch up with the world. So there are different ways of catching up to the world. One is spend a lot of money on R&D on your own. Second is tie up with someone and do your own R&D, and then over a period of time, you internalize that knowledge. Then you build on that. So I think we have all taken, depending on the time at which we started, different approaches to basically gain knowledge and catch up and then build on that. Again, when you look at internationally, one fact remains that the whole world is going to say, "Hey, the whole world cannot depend on China for cells." So just as what we said for electrolyte salt, they are also going to say, "Outside China, who is the person who can give me the lowest-cost cells?" So the main question is, okay, one, you can say, "Well, can you compete against China?" And the second question against outside China, "Can you be the best source?" And then over a period of time, what is the gap between China and you? Is it like a 10% gap? Is it like a 25% gap? It's a 50% gap, right? So if you see, even today in the U.S., there are like 25% duties. Or if we saw even in Europe in EVs, I think 40%, 50% kind of duties. So if your gap is within that, right, then you have a right to play. Of course, and I don't think we will be so bad that because, again, material cost remains. Lithium price is almost similar for a Chinese company or an Indian company, right? Nickel, cobalt, whatever materials costs are quite similar. So I don't think the gap, as we grow, our scale becomes tens of gigas and hundreds of gigas, we'll narrow the gap with the Chinese quite a bit where India will be seen as a viable option. Thank you very much. Ladies and gentlemen, we'll take that as a last question. I'll now hand the conference over to the management for closing comments. Thank you, everyone, for joining the call. I hope we were able to address your queries. If you have any further questions, please feel free to reach out to our investor relations team, and we will address them. Thank you once again, and we look forward to connecting with you again in the next quarter. Thank you very much. On behalf of Neogen Chemicals Limited, that concludes this conference. 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