Neogen Chemicals Limited (NEOGEN) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the QT-FI26 Earnings Conference Call of Neogen Chemicals Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Anishit Solanki from CDR India. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and welcome to Neogen Chemicals Q3FI26 earnings conference call for analysts and investors. Today, we are joined by senior members of the management team, including Mr. Anurag Surana, non-executive chairman, Dr. Harin Kanani, managing director, and Mr. Gropi Krishnan Sarathy, chief financial officer. We will commence the call with opening thoughts from the management team, after which we will open the floor for clear questions. Before we begin, a standard disclaimer, certain statements made or discussed on today's conference call may be forward-looking. Actual results could vary from these forward-looking statements, and a detailed disclaimer is available in Q3 FY26 earnings presentation, which has been uploaded on Stock Exchange websites. With that, I would like to invite Dr. Harin Kanani to share his perspectives. Thank you, and over to you, sir.

Thank you, Nishit. Good afternoon, everyone. Thank you for joining us to discuss our third quarter fiscal 2026 financial results. I trust you had the opportunity to review our investor presentation. I will provide a summary of our operational performance and an update on our key strategic growth initiatives. Q3 served as a period of steady recovery and a decisive pivot towards a future-ready portfolio for Neogen. Despite global market volatility, our core business remains robust, underpinned by demand resilience and pharma flavors and fragrance and other speciality applications. With our product optimization initiative and the Dahej replacement plant nearing completion, we are firmly on track to achieve our growth ambitions. Before our CFO provides a detailed financial overview, here is a quick summary on a consolidated basis. We delivered 9% revenue growth in Q3 with a gross profit up 13% with around 150 basis points margin expansion. While top-line growth was strong, EBITDA and PAT were pressured by transient costs related to Neogen Ionics ramp-up, elevated operational expenses due to fire incidents and interim toll manufacturing setup, and higher finance costs from Daesh plant reconstruction and other investments. These are short-term impacts as we pivot to a future-ready portfolio. Furthermore, eligible costs will be recovered, at least part of the eligible costs will be recovered through loss-on-profit insurance claims in the coming quarters, mostly in the next financial year. Regarding the fire incident, we received INR 83.48 crores in insurance claims till 9 months FY26. Accordingly, net claim receivable stands at INR 251.12 crores. We are maintaining a close dialogue with insurance to expedite the final settlement of the remaining balance. Concurrently, construction and replacement plant of Dahej is progressing rapidly with commissioning on track for QNFI27. We are confident this new facility will be fully compliant and optimized for enhanced operational efficiency. Moving to update strategic expansion initiatives on battery materials, Strategic Indo-Japan Alliance for Electrolyte Salt Production, We have successfully concluded a joint venture with Japan's Morita Investment Limited to produce and sell LIPF-6 salt globally. Neogen will hold an 80% majority stake in the new entity, Neogen Morita New Materials Limited, supported by a 20 million investment from our partner for the rest of the stake. The JV integrates 30 years of proven Japanese technology to accelerate international customer approvals and production efficiency. Notably, this establishment is India's only non-FEOC compliant electrolyte salt plant with proven established technology, offering a strategic alternative to Chinese supply chain while advancing Atmanirbhar Bharat through significant import substitution. To give you an update on our Pakhajan Greenfield project, our Pakhajan Greenfield project is progressing on schedule with commercial production for electrolyte targeted for H1-F527 and electrolyte salts for H2-F527. This timeline is strategically synchronized with India's ACCP battery rollout and the surging global demand for non-FEOC compliant supply chains. At the facility, plant equipment have arrived, assembly is currently underway, and trial production is expected to commence shortly. We have already achieved a major milestone by securing long-term commercial supply approval from a prominent gigascale Indian manufacturer following successful PPAP completion. On the international front, we have received provisional approval of our lithium electrolyte salts from multiple global clients now, while final site audits are expected to be concluded in Q1 FY27. Upon commissioning, Neogen will emerge as a highly cost-compatible global source for lithium salts and electrolytes, backed by proven Japanese technology. We are currently seeing significant tailwinds from the U.S. 45X tax credits, non-FEOC requirements, and recent price volatility in China, both of which enhance our appeal as a strategic global partner. We expect several large-scale international customers to finalize their approval process shortly, paving the way for bulk consignments and regular commercial production in H1-FI27. Looking ahead, we are at a pivotal inflection point as we transition from project execution to the commencement of regular long-term supply agreements. We are confident that Neogen Ionics will become the cornerstone of our future growth, diversifying our revenue streams and enhancing our margin profile. By integrating world-class Japanese technology with our indigenous manufacturing excellence, we are enforcing Neogen's position as a technology-led leader within the global battery chemicals value chain. As the electric vehicle and energy storage ecosystems evolve, our readiness to supply material at scale position us to capture substantial market share, delivering long-term sustainable value to our stakeholders. That concludes my opening remarks. I will now turn the call over to our CFO, Mr. Gopikrishnan Sarthi, to provide a review of our financial performance for the period. Over to you.

Thank you, Dr. Kanani. Good afternoon, everyone. Welcome to Neogen Chemicals Q3 FY26 earnings call. I will share the financial highlights. Please note all the numbers are on a consolidated basis. Our revenue for Q3 reached 220 crores, representing 9% year-on-year growth. This was led by higher volume across both organic and inorganic chemical segments, reflecting the steady market demand. Notably, we maintained resilient operating volumes despite temporary capacity bottleneck at our dahit facility. These were effectively mitigated through strategic toll manufacturing arrangements. Additionally, Neogen Ionics contributed Rs. 12 crore to the quarter's revenue as we continue to scale our battery chemicals vertically. Breaking down our performance by segment, organic chemical revenue reached 187 crore, a steady 6% increase in year-on-year. Our inorganic chemical segment showed even stronger momentum, delivering Rs. 33 crores in revenue, a 35% growth compared to the same period last year. EBITDA for this quarter stood at 32 crores, demonstrating sequential resilience despite several transitionary headwinds. On an year-on-year basis, our performance was impacted by temporary cost factors, specifically the operational overheads as we scale up at Neogen Ionics, and following the Zahed fire incident, the additional interim tool manufacturing expenses. This was incurred mainly to keep the customer supply on during the plant reconstruction. We view these short-term costs essential to protecting our market share and preparing our future growth. As highlighted by Dr. Kanani, the near-term pressure from these transitionary costs will be balanced by insurance claim recoveries under the loss of profit policy. We reported a profit after tax of Rs. 4 crore for the quarter. Year-on-year variance is primarily attributable to the increased interest expenses related to our capital expenditure at Daesh. Alongside the front-loaded expenditure at Neogen Ionics as it prepares for the large-scale commercial production. Turning to the corporate update, reflecting their deep confidence in the long-term growth trajectory, Board has granted in-principle approval to raise up to 150 crore via preferential issue of equity share to the promoter. This infusion underscores that unwavering commitment to Neogen's expansion and provides financial flexibility to accelerate our growth initiative. This preferential issue is subject to the necessary regulatory approval. That concludes my remark. I will now request the moderator to open the forum for Q&A. Thank you.

Thank you very much.

Yeah, good afternoon. Thank you so much for taking my questions. Could we please just start with the update on the gross and net debt balance at December? And also, maybe some color on the working capital trends. It does seem like the inventory DSOs and receivable DSOs have increased during the quarter based on the, you know, numbers given at the back in the tables. So, just what exactly were the reasons for these and what our outlook is for, you know, improvement on that front?

Hi, Vijay. Thanks for your question. Yes, there's an increase bit in the inventory as well as for in terms of receivables. I think the receivables is basically in line with the increase in the business. And overall, what we expect, as you said, that, you know, this year, I mean, the debtors and the creditors, as we said, will be more or less matching each other. And in terms of inventory, there will be a little bit of increase this year because we are first, Right now, we are working in multiple external vendors, and we also want to build in a little bit of inventory because we want to stop the external vendors by end of the year, and we want to start internal production in Dahej in the first quarter. So, when we start internal production, you know, in the beginning, the plant is ramping up. So, that is the time where we want to ensure that, like, you know, even if there's a slight delay in production or ramp up, our customer needs are taken care of. So we're building up a little bit of the inventory by end of this year so that we can take care of the next quarters. I think as you know, our Dahej plant starts and streamlines in the second half of the year, inventory should come online and we maintain our target that, you know, once we have a full utilization in the next financial year, by end of next financial year, our inventories would be at around 140 to 160 days is what we are targeting. On the inventory side. And as you said, debtor creditors, usually, you know, depending on whether more international or more domestic sales, the debtors are usually between 60 to 90 days kind of a range by end of the year. And that's what we would like to target. And generally, debtor and creditor levels, we will try to keep at a similar kind of level.

Yeah, thanks, Arunbhai.

So, just gross and net debt numbers, if you could share at December 8th?

And maybe, Goofy, do you have those numbers directly with you? Okay. Hello? Which numbers are you saying, sir?

Hello?

So, I think I got those numbers. Yeah, I got those numbers here. So, on the total debt, the gross debt that is, sorry. So, that date that we have today is around 680 crores on standalone basis and around 1150 crore, around 1175 crores on a consul basis.

Got it. Yeah, thank you. Thank you for that. Second thing, just on the, you know, receipt of the money from Morita towards their 20% stake in the JV. So, by when do we expect to get that, and also this 150 crore ref allotment to the promoters, by when would that money be expected to come in?

So, there are four non-business flows, which are, like, non-operation flows, which are significant, which are coming. Let me share with you that. So, on the insurance front, we are very close to getting another 60 crores against our, like, you know, the rebuilding. As a second interim payment against the rebuilding, against the capex loss. So that is expected within this week. It was actually supposed to happen, but there was just some last time procedural issues between the insurance companies which slightly delayed. So we are expected around 60 crore within this week. And the main stock claim between 150 to 170 crore is expected before end of March. So that's around 210 crore, which is going to be expected here. In reference to the 20 million, which we are expecting. So we have to basically request our bankers because the entire project was part of one. So now we are taking the bank's permission to separate it out as two different entities. So that is in progress. Yes. As soon as that is received, we can complete the rest of the formalities, transfer the asset to the subsidiary Neogen Morita, and then we can receive the equity from our partner. So that will be towards the end of current quarter, and depending on the final timing, maybe either this year, before March, or little bit in April. So, but basically by Q1, we should receive money from there. And finally, the 150 crore by the promoter. So, our intention is to basically put the money before end of March. However, like you know, there's some regulatory approval which is needed because there were some transfers like during trust formation from my father and mother to the respective trust. So, we are just seeking a clarification. So, depending on the regulatory approval, either it will happen before March or it will happen in Q1. But in the worst case, like, you know, by Q1 next year, we would have 150 crore from the promoter, we would have around 200 crores from the partner, as well as you'd have at least 200 odd crores from insurance. So, we expect around 550 crore to come either in this year or in Q1 next year.

Understood. No, that's a very helpful color. Thank you for that. Just a last couple of ones, if I may, if it's not too much. One is on the SALT order receipts. So, obviously, I think in the presentation and your remarks, you mentioned that things are, you know, moving well and we are somewhat close to receiving the order. So, if you could please just put some more color around it, exactly what the status of things is and, yeah, by when we expect to see some meaningful shipments happening there.

So as we said in our opening remarks that, you know, a lot of people have shown very strong interest, right? Both like, you know, in the regulated larger customers as well as non-regulated, like, you know, guys who will buy just one time or two times or something like that. So, those sales have already increased, and that's why you can see the, like, smaller, but, like, in terms of value-wise, significant increase in terms of our year-on, quarter-on-quarter kind of sales increase on the salt business. However, like, you know, for me, the biggest important point is that while we have one customer with whom now, you know, we have completed majority of the requirements, so they have now started working on the final timelines for the approval. As we had said, you know, we will expect that by Q1 that to happen. But in parallel, three to four other customers who, as we had said, discussed earlier, have already started taking samples or some of them have started approving our samples. And because of what is happening in lithium, even our intermediate, like, you know, the simple lithium salt, also we have received very strong inquiries. So, we feel, unfortunately, you know, just the approval cycle is such that some of these have already approved our samples. They plan to do audits, let's say, in the month of March, April, May, and then maybe if we have something to basically do some corrective actions based on that. So, we expect by June, our Dahed site should get audited and approved. And by that time, as you can see, you know, majority of our capacity also will be coming online. So, that like, you know, once these capacities come online from Q2, Q3, Q4, we can see good salt related revenues coming from Dahed. And in case of Pakhajan also, we are trying to speed up the salt so that like, you know, by Q2 financial year, by September is when we said, like we've said second half, but we want at least trial production to start in first half so that we can start the validation process. And maximum by December, we try to get the Pakhajan site also approved, so that we can take the maximum benefit of the 2027 requirement. So, I would say Dahed site should be fully qualified through several customers by June, that is Q1, by end of Q1, and sales should start in Q2. And Pakhajan, we are targeting in the second half, but our target would be to complete it by Q3 so that it starts contributing in the same, from Q4 in the next financial year.

And just on the capacity addition slide, you know, the 1100 tons to be commissioned at the hedge. The timeline is now mentioned as March 26th, I believe last quarter it was December 25th. So, any particular reasons for maybe, you know, three months?

So, basically, you know, our team had a training session with Morita team. So, our team actually went to Morita's plant team and had a hands-on training session. And during that, you know, they picked up some of the improvements which we could further do. So, we are basically implementing that. So majority of it is almost ready, but we just wanted, and we also had some, one of the other plans, we also had some slight design change, which we carried out in the additive production part of that. So I think just that some changes in that design for further improvements that we were implementing. So it went March. Anyway, still we have not received the approval. So we felt it is good to get them done now, rather than, you know, start and then again stop. So that's the reason why we decided to complete them now and complete the expansion.

Thanks. But just one last thing from my side. One is, you know, there were some news articles recently regarding the fact that one of the largest potential customers of yours who could set up battery capacities in India kind of put their plans on the back burner because of lack of Chinese know-how or technology that they could source. So, any thoughts on that? And the other thing, just to add in quickly, bromine prices have been very strong in recent times. Has that had any impact on our business in terms of realizations? And is it possible to just break out the volume versus price for this quarter for organic and inaliening? Thank you so much.

Sure. So, first, you know, about like maybe customers, like specific customer which you mentioned. See, we have not received any such communication from the customer, and we basically continue to discuss with the customer how we can meet their demands, and those discussions continue. On the second side, on the second point about bromine being strong, so majority of this has been, see, again, it's not a very big difference, but I know, for example, in case of lithium, in case of organolithium, we have a volume, slight volume increase, you know, and in case of organic derivatives, it's very difficult to give you volume because the product mix changes quite a bit. So overall, there is a volume growth, yes. But it's like, you know, because of the product mix, really that volume growth doesn't tell you too much.

But specifically with regards to bromine prices remaining,

it's not changed too much of our business because usually majority of our bromine is contracted for a longer period of time. And with our customers also, we have contracts. So, you know, basically from one contract to another, it kind of gets material. So, unless you have like a two times, three times increase in bromine, we really don't see a big impact related to that.

Thank you. Thanks a lot. All the best.

Thank you. The next question is from the line of Arun Prashat from Evendus Park. Please go ahead.

Definitely. Dr. Harina, thanks for the opportunity. My first question is, you know, I'm just reflecting back to our commentary in the previous call that they said that some of the fast stage of approvals for response, your customers will be visiting your facility in February, this, I mean, Jan, Feb, or online, and then your final approval. Well, we are once again talking about the timelines three to four months down the line. So, maybe just understand why this repeated delay in the approval. I understand they have a bit more time to comply with the regulatory requirements, but what is actually causing this continuous deferment of the approval timeline? That's my question.

So, Arun, basically, you know, already the, we had said by Jan Feb, we will be ready with all the modifications which they need, post which, you know, they will do the online or visit. So, basically, that is today the status. So, we are today in the middle of Feb, and we are right now completing. And what, and we have basically intimated that, yes, we have carried out more of all the changes. So, we keep discussing with them like every alternate week. So, they said, okay, we will let you know like what is going to be our action plan going forward. So, whether they will come within one, two weeks, whether they will come in three weeks, I don't know. But we were supposed to be ready by Jan and Feb, which is what we are ready. And now, you know, they can come anytime. And what I told by June is not only the existing customer, but even the other customers also who are like now approved, even they are likely to complete their, so some of them started late, right? And even these guys now are saying, okay, I will come for an audit in April or March or something. So by June, what we are expecting is all the, even the new customers also should complete.

And then for these new customers also, there's a final leg of the audit or it is just a beginning first. No, no, finally, finally.

Of course, they can come and say, hey, I want a plant which is similar to your Pakhajan plant. So that's a call which they will take when they finally come and do. I can't predict that, right? But, yeah, I mean, that would be the audit. If they come, they are satisfied, then, you know, we can start. And then some of them say, oh, you know, Pakhajan is going to be a much better, much bigger plant because it's designed from scratch. Maybe we'll just wait six months and take it from Pakhajan. So that can happen. But many of them right now are showing urgency to buy now. So we hope that they will start buying from Tahit and then move over to Pakhajan afterwards. So after three or four, maybe one or two will go this way. The other may say, okay, I'll wait for Pakhajan and then start. Because anyway, the capacity that we have in Dahed also is relatively limited.

Right, right. And, Dr. Karim, we also... Sorry to interrupt, Mr. Arun.

May we request you to, if you can mute yourself when management is answering, because there is a disturbance which we can hear from your line, sir.

Sure, sure. Please go ahead. Yeah. Dr. Ryan, we also heard that a few of your US customers are going through some restructuring where the OEMs earlier had entered into the JV and Electron, they are packing out. Does it concern you that at this stage, this kind of restructuring is happening, which may potentially again delay the approvals or something like that?

I think maybe you are talking of GM and Ford, you know, doing some JV changes, etc. We are not affected by any of those.

Okay, and does it mean that the OEM is going forward? So, you will have two layers of approval, one from...

Yeah, can you go ahead?

Yeah, sorry. So, does it also reduce your potential clients from, say, earlier you might have a mix of clients between OEMs and battery manufacturers, and now potentially OEMs backing away from the directly being a stakeholder in the manufacturing. So, we will be having a reduced pool of such customers. Is it the right way to look at it?

So, basically, you know, you have to think that majority of the OEMs or these JVs are basically OEM is self-producer. So, basically, what happens is when you are thinking of electrolyte intermediate which is LIPF6, the two main vendors are self-producer and the electrolyte maker. So, these are the two people who have to approve you, okay. And the self, and of course, in some cases, you You know, the self-producer also will be an OEM. And as I explained that, you know, as compared to before when we had, okay, maybe one company, right, who was contract, who had contracted with Neogen, in the future now, I mean, not in the future, with the Morita JV that we have done, there are several more who are interested. So, actually, our market in a way with the JV has expanded and more customers are available to us as compared to earlier.

Okay, understood. Understood, sir. Second, you spoke about various fundraisers, which is going to happen across in the next six months, roughly 6.5 to 600 crores. This will be largely utilized for the working capital requirement as we scale up the business, because most of your capexes, anyway, you have already tied up. So, is it the case or we will be again going for the separate working capital loan? How should we look at this?

So, whatever money we are raising, right? So, part of it will, so some of it would, of course, we like to example the GV money which is going to come. That will be partly used for completing the capital projects, right? Because there also there are some contributions needed. Like, you know, as you see, our total debt, as I explained earlier, is not, we have not utilized all the term loans fully. So, there is some contribution required from us. So, partly it will be for that contribution, partly it will be for, of course, working capital reduction. And it's all not fundraised. That's the money which is going to come in, whether it is from insurance, the second is from the JV, and the third is from what we currently propose, promoter infusion.

And our first interest payment, that is a moratorium, that still we are few quarters, right? And for a principal repayment.

Yes, yes. So, yeah, so for whatever loans we have in Dahej, like, you know, let's say if we are completing in Q1, so then the first principal repayment will be Q1 of FI28. And, like, you know, in case of Pakhajan, right, it will be, like, we have right now said H1. So, for example, if we are saying H1 FI 27 is when it starts, when we, H1 FI 27 when we start, then H1 28 would be the equivalent first repayment after that. So, basically, one year from the start of the plan, from the SPOD.

Okay. All right. Thank you very much. Thank you.

Thank you. The next question is from the line of Rohit Nagaraj from 361 Capital. Please go ahead.

Thanks for the opportunity. So, first question is in terms of our guidance for FF27 and beyond. So, we had indicated that we will be having about 400 to 500 crores from the battery, chemical start of the business. However, there have been slight delay in terms of commissioning of the project, in terms of approvals. So, do we stand with the same guidance or we would like to revise it for FI27 and maybe that will fall back even on FI28? Thank you.

No, our guidance remains the same because, you know, the guidance, the expectation was that our Zaheer site will be fully ready by June and our expectation that, you know, we will start having sales of this from basically Q1 and majorly from Q2 onwards. So, that remains same. So, therefore, like, you know, our guidance doesn't change. We have right now not considered the Q4 sales from Pakhagel. So, that we have physically kept as a backup. Like, in case if, you know, there's some further delay or so that that would be like an additional sales which will happen. Just our dahed sales and whatever expected electrolyte demand should be able to allow us to reach the original target and whatever we do Q4, either in case if there is a slip up from dahed, that will be the Q4 soil sales will be contributor to that or that will be then an additional one which will be up over and above what we have done.

Yeah, that's helpful. And on the Neogen Ionics, the Morita JV, so how this entire deal has been structured, so effectively valuing the JV at $100 million, so what is the current infusion by Neogen in terms of equity as well as debt? And there will be another, you know, $20 million which will come from Morita. Given that we have 1,500 crores of total investment planned for this, how the equity participation and the debts will look like when the entire investment has been made?

So, basically, you know, we are still discussing on the, with the banks on, so one thing which is very clear is 80% is going to be, Obviously, 80% is going to be Neogen's portion, 20% is going to be Morita's portion. We are still discussing with the banks on, like, you know, exactly the debt equity ratio which we have once we do the separation. We are hoping they will maintain at the same 70-30 level. So, depending on that, like, you know, we will basically, whatever is the balance which is not contributed by the bank will be in the form of the equity. Some of this has already been contributed in the form of equity. So I think it is better that, you know, I will be able to give a better clarity on this once we have the final clarification from the banks. Once, you know, the loans are separated and we are able to take it separately.

Right, right. Just one clarification. So effectively next year when BAHEV starts generating revenues, there will be a 20% minority I am not sure if you are interested in the interest for the state activity stake of Morita. Is that right in the final?

No, not in Daesh. No, Daesh there is no, Daesh is 100% near to only the Pakhajan site is going to be through Pakhajan site is going to be through Morita.

Okay and can you just split up in terms of Pakhajan site what could be the potential revenues

So, again, in Pakhajan, the salt business will be, if the question is from that point of view. So, the Pakhajan side is going to be for Morita. Only the salt side will be Morita, and the H and the electrolyte will continue to remain with NIL. So, in Fi27, as I explained I mentioned earlier that currently we have not considered significant sales because it will be in Q4. We have kept it as a bonus. So, majority of what dividends we have given will be largely NIL sales. Maybe, you know, some of that would be routed to NML because, you know, ultimately, for example, the salt in the international business is going to be sold by the JV. But, like, you know, that from a revenue point of view, I think majority of this would be NIL for XI 27. If you talk of FI29, see, FI29 is a bit tricky because it depends on how much of the salt we are consuming internally and how much of the salt we are selling in the international market. Now, that depends on how the international market develops beyond the initial years and like the desire to have a China free supply chain, etc. And the second is how the Indian customers choose whether they want local supply of LIPF-6 or they want like lower cost or like, you know, so it depends on that. So actually, if you see, if we have to take care of

our existing international customer demand,

as well as, you know, Neogen's own internal consumption, then basically we would need more capacity for the salt. Because the current capacity of the salt is not going to be enough. We'll have to add capacity. But I think that those clarity and that's a decision will take somewhere towards end of FI 27 or FI 28 to take care of the FI 29 demand. So, because India electrolyte demand is still developing in FY27 and FY28, the existing salt, the capacity will be sufficient to take care of both. But by FY29, if we have to take care of both international as well as local consumption, then we need to add more capacity. So, I think it's a little bit difficult for me to tell you in FY29 how the breakup goes.

Sure. This is Elfin. Thanks a lot for answering all the questions and all the best, sir. Thank you.

Thank you so much. The next question is from the line of Amit Katrodia from Nivishar. Please go ahead.

Yeah, good afternoon, Tim. Thank you so much for the opportunity. Sir, one question on the U.S. side. If Chinese origin salts get resected from, let's say, 2027, so is it possible that U.S. customers think about pre-buying and storing inventory in 2026 and then start using it in 2027?

So, Amit, there are two things, right? I mean, see the batteries which are made in 27 cannot be using Chinese. So it's not about buying. It's about making batteries which are not containing, you know, the material. So it doesn't help them to store and use that. It's not like a custom duty which is going to come up, right? So it's a different thing. So it's on the usage. So therefore that has not happened. The second thing is the way things stand today. Right now, you know, with Chinese prices, sometimes China is even more expensive. Third point is even if you wanted to store and use, usually the shelf life is not more than six months even at an electrolyte salt stage. So, I don't think they can store too much of it.

Okay, got it. And sir, also when customers talk about releasing channel dependence, so how does it actually play out in practice?

So there are two types of customers, right? There are some customers who are cautious, who started working with us two years before and preparing for it. There are a few customers There are some customers who are basically saying that yes, they would like to have a ramp up, so they will have Q2 some quantity coming from Nehoja, and then Q3, then Q4, and then maybe next year, you know, further quantity. So there are some customers like that. There are some which are very price sensitive. So of course, now, last two months, you know, the things changed. But till that time, they said, till Q4, we will audit you, we will validate you, everything we will keep ready, and Q4 is when we make the switch, right? Because that is what is regulatory driven. So it's completely, there was one customer who was more regulatory driven. There were some customers who wanted to be cautious, wanted to gradually scale up. Other customer says approval is very complicated. So first do Dahej, then again do Pakhajan. So I will start only directly from Pakhajan. So it's kind of like a mix of those. And some of these also keep changing because they had some different response when the Chinese prices were very low three months ago. Now, they have another response where they said, okay, before I said, I will buy only from Pakhajir, but now, okay, maybe I can consider Dahej also. So, let me start approving Dahej. So, all this is like, you know, changing customer to customer and again, depending on the market situation.

Thank you very much. Thank you very much. And the last one, there is one relation to online negotiation with customers and ecosystem players in India. Any rough indication in actual working with the actual cellular capacity operation by the end of 1986 and how that number look up to you in 1987?

You will calendar year 26 and 27?

Yeah, right.

Sorry, what was the question again? You said something in India, the voice was not very clear.

Yeah, yeah, yeah. I asked that there's only many negotiations with customers and the ecosystem player in India for the battery cell manufacturing. So, any rough indication how much actual cell capacity can come online by, let's say, end of calendar in 2026, and how does that number look in 2027?

You're saying cell manufacturing capacity, right?

Right, right, right. Battery cell, right.

Okay. Battery cells. So, battery cells, you know, if you see right now what we have to go by whatever is public information available. So, Ola has announced to go from 1.5 to 5 giga. Then you have a 3 giga which is starting off Exide and a 4 giga which is starting from Wari Energy. So, this, if you look at that, so between them, technically, you should be having around 12 gigawatt hour of production, which will be coming online in the current year, right? And by end of this year, you should have a 12 giga, let's say, if we say 12 giga, and if the ramp up happens, okay, every month, for example, one giga kind of a consumption should be reached by, let's say, end of December 26, right? So the actual consumption may be somewhere between, actual production may be like 3 giga or 5 giga or 6 giga, depending on how it ramps up. But when you enter 2027, you enter with a 12 giga of already installed capacity. And to this, you may have to add like, you know, then whatever Reliance has announced and Amar Raja has announced and Tata has announced. So, if you think of their original starting capacities also, what they wanted to do. So, Reliant's intention was to reach up to 40 giga in one year from start. If you look at Amar Raja, I think the starting capacity was, I think, around 2.5 or 5 giga, and Tata has not announced the starting capacity. So, if you add all of that, you know, you should be, let's say, at least about 25-30 giga by end of 2027 as we enter 2028. And, of course, by that time, you know, you might, and, sorry, you also need to add that by that time if OLA further increases the capacity or VARI's intention to increase capacity from 4 to 20 or Amar Raj or Excite's plan to increase from 3 giga and beyond. So, sorry, I think by end of 27, we should be, if everything was well, by end of 27, we should be 40, 50 giga plus entering into 2028, based on whatever customers have shared.

Got it. And, sir, one question on, let's say, I was talking with many players, everyone is in a view that everyone will prefer to have two suppliers, right? One primary and another may be secondary also. Let's say if in India, let's say Vali wants to have a two supplier. So what is the, maybe let's say MOT or maybe the USP of Neogen that it can be a primary supplier as computer or computer. So just want to understand what are the qualitative terms that Neogen pitch to Vali or maybe other guys also that they prefer to have Neogen as a primary supplier.

So I think one is, you know, we are already ready. So we already have three, four years experience to make it in the lab and supply successfully. And last one or two years, even from a commercial plant in Zahej. Second is we have Mitsubishi collaboration. So like, you know, Mitsubishi is known to be the best electrolyte producer in terms of quality. So then you can be 100% be sure about the quality of the supply. And the third is, you know, we have the backward integration. So, I think, and the fourth is we have actually capacity. Because one of the things is, you know, we, you need to have the capacity. Right now, we have a 30 gigawatt hour worth of capacity, which will be ready, let's say, so that nobody has to worry about, oh, whether Neogen can supply enough quantity or not. So, I think these three, four things make Neogen in a positive note. And just for a reference, you know, not everybody in electrolyte has always two suppliers. I know historically many companies where one single supplier, if they feel the risk, they will ask the same supplier to keep multiple plants, but sometimes they can have one single supplier exclusively. So, two suppliers is not always a necessity in case of electrolyte.

Sorry to interrupt. May we request Mr. Mead to please rejoin the queue. We have participants waiting for the turn. Thank you. Ladies and gentlemen, we would request you to please limit your questions to two per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Nilesh Kouge from HDFC Securities. Please go ahead.

Yeah, hi. Good afternoon, Harin. My question is on our CDMO and advanced intermediate business. So how much was the contribution from these two business verticals in nine month FY26? And how is the progress and the inquiries in CDMO and advanced intermediate business? Any guidance on that for FY27?

So, Nilesh, thank you so much for asking me also a question other than battery. So, I appreciate that. So, I think 3DMO and Advanced Intermediate, we are slightly better as compared to last year, and like, you know, actually for the first six month, nine months, we were actually ahead as compared to last year, but whatever POs which we had with our customers, we completed. And like, you know, now some of the new revised repeat TOs people are waiting, especially on the CDMO side for the new site to come online. So already customers, we have shared our progress with the customers. And maybe by end of this month or from March onwards, customers will start visiting. And we expect, so we expect again some, you know, repeat orders or like new projects, which are kind of on hold, we can start achieving orders against that. But overall, I think, you know, we will expect that as we go, let's say this year, if you look at the run rate, you know, we are at around 800 plus kind of a revenue. And as we go from 800 plus to 950 or so, we feel CDMO will be one of the significant areas. Contract manufacturing for CDMO and advanced intermediate will be a significant area where we will have growth. If you, if I were to just look at nine-month numbers, they are basically, it has been same as compared to the previous nine months as against either CDMO and contract management, advanced intermediate and CDMO level.

But despite our drainage facilities not there, right?

Yeah, despite. So somehow like there was one semiconductor customer that required a specialized equipment. So, they had enough inventory, so we had to skip. We couldn't do this here. So, despite Dahesh not being there, you know, we were able to maintain the same levels. But most of these products, we were able to do from Mahapay and Karkadi. Some we couldn't do. So, we couldn't register the growth there, but we were able to maintain. Okay.

And just secondly, on this toll manufacturing arrangement that we made because of non-availability of a Daesh facility, so what percentage of revenue is currently coming from that and when we are ready with our Daesh facility, so do you expect some margin expansion because you are shifting from tooling model to in-house production?

Yeah, so, you know, currently some of the higher costs that you are seeing will reduce, right, as we move from, so like your other expenses will change a bit, where whatever is the tolling related expenses there will kind of go away. Of course, some of it will come in the form of additional power and fuel kind of expense at our Zahes plant. But net of what we feel is you should have improvement in our cost structure.

Just how much business currently we are doing through our tolling model that we can shift to our in-house production?

So basically, it's very difficult for me to say because, you know, in some cases, I'm just doing one stage there. In some cases, like, so it's not that, okay, completely has been done, right? So, but basically, we are using it on a need basis, right? And you can basically say that we are able to maintain our current revenues because of several sites. We are not using this one site. There are several sites which we are using in different ways. So, like, you know, just, like, most of it, whatever we want to use, it will be done by March, and April onwards, you know, our Zahej plant will start getting available partially. Maybe by end of June, we feel it will be fully available. So, with the inventory that will build up and the first quarter, the way, once the production starts, I think we should be okay and then let's say Q2 onwards, you should not see, we'll have a stable production. So, one, you know, as we try to get like let's say 950 crores or quarterly run rate also improves to like 225 to 250 crore kind of range in the next financial year, as well as some of the tolling related expenses will go down And also, our insurance premium also, you know, the first year is the toughest. So, that is from July to July. So, once that July gets over, so from next year, like maybe Q2 or Q3 onwards, you have Dahej, which is fully stabilized. You have, like, at least the worst of the insurance is over, right? And the tooling arrangement cost is also gone. And hopefully by that time, you know, the hedge also will be contributing from Q2, Q3 onwards significantly on the battery material side. So that's when, you know, you'll have good improvement in our performance.

Okay. Thanks. Thanks, Areen. Thanks a lot. And all the best.

Thank you.

The next question is from the line of Pratham Kankaria from Quantum Asset Management. Please go ahead.

Yeah. Hi, I am audible. Hello.

Yes.

Yeah. So I had one question on the inorganic segment. So if I just exclude the neogen ionics revenue, the trend has been on the downward side for the inorganic chemical segment. So if you can just present your views, what is the cause for this? Is this solely attributed to the downward lithium prices? But now that also has spiked up. So, just wanted to get your view.

Yeah, so, it's solely attributed to the downward lithium side, and the spike impact will see maybe a little bit in Q4, but more in the next year if the spike is maintained. So, because, like, you know, the lithium prices started increasing by November, December, I mean, almost towards December, and in January, you saw a majority of the increase to happen. So, the material from there will hit me by March or April, right? So, before that, you will not see a big spike.

Okay, sure. But, sir, still, revenue has come on the lower side. It's only attributed to the price, right? Okay, sure. Sure, sure. Thank you. That's it.

Thank you. The next question is from the line of Jason Soans from IDBI Capital. Please go ahead.

Yes, sir. Thanks for taking my question. Sir, now, probably, sir, given that Pakhajan will ramp up only in H2F by 27, as you are mentioning. Now, just accounting for that, sir, would we be able to, you know, clock in 400-500 crores from battery chemicals in 27? You know, accounting for that, and any approximate revenue estimations for 28 as well?

See, basically, you know, we have considered very limited from the soil sales of Pakhajan, right? Because we said it's in H2. So electrolyte will be stable in H1. And as you know, I answered earlier that increase in capacity of OLA, excite like getting stable. Then, you know, we said even VARI starting. So maybe we can expect some electrolyte revenues coming in the second half from these people ramping their operations up. So that is what something which we have considered. And as I explained that, you know, we said, okay, the salt in Pakhajan will come in H2. So technically, we have not considered any sales, although we are on track that at least in Q4, we can get some sales. But I have right now kept it as a backup that in case, because this year, you know, from the time we got listed first time, like, you know, whatever revenue projections we had given, we had to make a significant correction. So, I am a little bit more careful. So, what we have done is that Q4, whatever package and salt sales, we have not considered. So, in case, you know, if dahage is slightly delayed or electrolyte is not delayed, the Q4 salt sales will allow me to basically make up for that, so that we don't go wrong on our guidance in the next financial year. So, that's kind of on that. And I think FI28, it's too early for me to give a number. But one thing which looks very strong to me is that our salt capacity should be utilized at 80% or more. You know, because that is something which is, which will be in a very strong demand. And of course, if I sell it in the form of electrolytes, it will be higher. So, if I look at today's market price and, you know, if you think of 5,500 tons of total salt capacity and if you think of a 80% utilization even on that, right, so that's around 4,400 at 20 plus kind of a dollar price, right, salt and additive is even higher. So, on an average price above $20, it's very, like, you know, if this assumption is valid, then you would have a thousand crore plus kind of revenue. And of course, whatever I sell in the form of electrolyte, there's further value addition. So, therefore, it should ideally be beyond 1000 crores, like, you know, it should be sub, but how much beyond is a little bit before, a little bit difficult for me to tell you.

Sure, sure. But at least the initial estimate you said 400, 500, we are sticking to that for 27, for battery chemicals.

Yeah, yeah, yeah. There's no change in that.

Yeah, yeah. Because you said you're right, because electrolyte at least will be stable and at least we'll be able to garner some volumes from the electrolyte sales. Yeah.

And we don't have the electrolyte sales. Unfortunately, I'm dependent upon how my customers start their plant. You know, there's not something which I can do beyond. So, that's why I have kept the Pakhajan Q4 as a backup, where anything we do over performance there can be a backup in case, you know, India electrolyte demand doesn't shape up as much, or in the beginning approvals with Dahej are delayed. So, you can cut off make-up for that.

Sure, sure, sure, sir. And, sir, just if you could tell me, I mean, 30,000 is what you are clocking in at Pakhajan, which will come on stream, and I'm only talking in terms of electrolytes. So, by H1, how much will be online, sir? From the 30,000 NT?

So by end of action, the way the plant is because you know we are doing a joint trial with Mitsubishi, so our idea is that the exact 30,000 NT will be tested and we will be ready for the 30,000 NT kind of annual capacity which is monthly like you know around 2,500 NT but of course you know we will take care of the operational side that you know if we don't see the And we don't see in the first year business visibility. So, in terms of banging our people or from other expenses, we will kind of do it gradually. But the plan will be ready for the entire 30th hour today.

Okay, sure, sure, sure, sir. And so, just in terms of revenue group from the base business, which gets talked about less right now, nowadays. So, just to understand in 27 and 28, you know, 21 sublude, I understand the fire thing and everything is there. Yes. But with 27, you know, can we expect double-digit revenue growth, especially whether the hedge plant coming on track holds the fire? So, just wanted to know for organic, inorganic, how do you expect the base business? Can we expect a double-digit revenue growth there?

Yes.

Okay, sure. And just lastly, sir, I just wanted to understand in terms of this QIP, just 150 crores, as you mentioned, just a little bit unclear on this. So, the 150 crore is basically, you know, is it the promoter group is going to increase the stake or is it just a regular QIP which is done? Just want some clarity on that.

No, so this is a prep allotment. So, basically, we found that, you know, that, okay, you know, Neogen could help with equity. We know the insurance money is also coming, the equity is also coming. But as I said, you know, there's a good salt demand also. So we felt that, you know, in case, suppose, if we have to do a little bit more on the salt or additive, or as well as in the interim, you know, if we had that equity, then that would really help Neogen to seamlessly continue and like, you know, make sure that all our execution in 2026 happened seamlessly. And that was the whole idea. So we as a promoter group decided to invest 150 crore. But as I said, you know, there's just one clarification we need to take. Because my father and mother had formed a trust, which was a family trust. And you know, Stacey already gives the permission that this is like, you know, it's like a promoter and promoter group. But just because of that, there has to be some cooling off period. So whether that is needed or not, we are just taking some regulatory guidance on that. But otherwise, the idea was to bring in 150 crore in the company before March. So, that will also, like, you know, reduce the interest burden and also give us a lot of flexibility on things that we want to do.

But that comes in from the promoter group, is that right? So, our stake, which is right now at 51.22%, that increases, basically, in the company.

That's right. Yes, that's right.

That's right. Okay, that's great. That's great, sir. And just one last thing, this insurance claim money, I understand you said Morita is fine, that will take some time, 150 crores from the promoter, at least in Q1, FY27. This insurance claim, sir, there's 200 crores for the stock claim, by when can we get this?

See, so 60 crore is expected maybe today, tomorrow, like, you know, within a week. Okay, okay. Because the insurance company had already taken all the documents from us for release of the 60 crore, we had the agreement. This is the second interim against rebuilding the plant, right? So, we have no stock and rebuilding the plant. So, against rebuilding the plant, they are ready to issue 60 crore at any given point of time. They are five insurance companies, so they all have to pull into the lead insurer, and the lead insurer transfers the money to us. So, that process is ongoing, but that should happen any time. Then, you know, the stock claim was also, like, in case of the stock claim, the insurance company had appointed like a third party, big four kind of auditor, right? So, that is about to, so their process is almost complete. They should finalize the report based on that, surveyor should finalize the report. And, like, you know, based on that, the money should ideally be released before March. But, like, you know, maybe it can slip up. So, that's So I said March or April, but we are working very strongly now with the insurance that look, we have built the whole plant. In fact, if everything happens, we can even ask for the third interim again, because you know, this should still be 140 crores. So we can still ask for one more interim release before March, but at least these are the two which I am currently taking. And then of course, in the next year, as I explained earlier, that the rebuilding cost is going to be more than the loss, right? So the balance material which is left against the rebuilding plant as well as the higher rebuilding cost. So that has to be assessed and that has to be released and the loss on profit has to be assessed. So that is something in my view, you know, the first part, the balance on the stock, I'm sorry, the balance on the capital rebuild should happen before September and maybe the loss on profit should happen somewhere between September to December. So, in a way, everything from the insurance, ultimately, hopefully, should be achieved by September to December next year.

Okay. Thanks. Thanks for answering your question. Thank you.

Thank you. Ladies and gentlemen, this will be the last question for today, which is from the line of Pratham Kankaria from Quantum Asset Management. Please go ahead.

Just a small thing, what would be the ceiling on capacity utilization in terms of salts and electrolytes once we fully ramp up?

You mean utilization-wise? So, yeah, so normally salt would be at 80%. It's like a chemical plant. In case of electrolyte, it is a formulation plant. So, you can go up to 100%.

Okay, sure, sure. Thank you.

Thank you. Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference over to management for closing comments.

Thank you all for your time and participation today. We trust we have addressed your queries. Should you have any further questions or require additional clarification, please reach out to our investor relation team. We appreciate your continued support and look forward to updating you on our progress again next quarter. Thank you once again. Have a great day, Ahit.

Thank you. On behalf of Neogen Chemicals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.