Neogen Chemicals Limited (NEOGEN) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Neogen Chemicals Limited 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. I now hand the conference with Mr. Nishit Solanki from CDR India. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and welcome to Neogen Chemicals Q4FI26 earnings conference call for analysts and investors. Today, we are joined by senior members of the management team, including Mr. Anurag Sorana, non-executive chairman, Dr. Harin Kanani, managing director, and Mr. Gopi Krishnan Sarapi, chief financial officer. We will commence the call with opening thoughts from the management team, after which we will open the floor for your questions. Before we begin, a standard disclaimer. Certain statements made or discussed today will be forward-looking. Actual results could vary, and a detailed disclaimer is available in Q4 FY26 earnings presentation, which has been shared and uploaded on stock exchange websites. With that, I would now like to invite Dr. Harinkanani to share his perspectives. Thank you, and over to the result.

Good afternoon, everyone, and thank you for joining us to discuss our fourth quarter and full year FI26 financial results. I trust you had an opportunity to review our investor presentation. I will begin with an overview of our operational performance and key strategic developments during the quarter, followed by an update on our long-term growth initiatives. The global chemical industry continues to operate in a challenging environment marked by persistent overcapacity, rising volatility, and subdued demand across several end-use sectors. In addition, the industry has witnessed elevated supply chain disruptions and input cost pressure arising from geoparticle developments in the Middle East. Despite this, headwinds differentiated specialty chemical players with strong customer relationship, technological capabilities, and niche product offering continue to demonstrate resilience. Against this backdrop, Neogen Chemicals delivered a strong financial performance during Q4 FY26, supported by sustained demand visibility across our core products and high plant utilization levels. Our growth momentum was steered by rising volumes across key end-use applications, including pharma, flavors, and fragrance, and other speciality applications. While input costs, including packaging material and logistics-related expenses, remained elevated during the quarter, our strategic pass-through mechanism helped protect core profitability. Importantly, FY26 was also a defining year for Neogen as we continued our transition towards a future-ready portfolio led by battery materials. This strategic shift was further reinforced by the promoter group's capital infusion of INR 161 crore through preferential allotment at a premium to the SEBI 4 plies, reflecting strong confidence in Neogen's long-term growth trajectory and significant opportunities emerging within the lithium-ion battery materials ecosystem. The proceeds will support the expansion of Neogen Ionics' working capital requirement and other strategic initiatives. As our CFO will shortly take you through the detailed financial performance, let me briefly highlight the quarterly performance. On a console basis, revenue for Q4 FY26 stood at INR 247 crore, suggesting a strong growth of 22% year-on-year, while EBITDA increased by 21% year-on-year to INR 44 crore. EBITDA margin sustained at 17.8% despite expansion-related overheads, geopolitical-led supply chain disruptions, and temporary costs associated with the Dahej replacement facility and toll manufacturing arrangements. Profit after tax for the quarter stood at INR 11 crore. On the hedge replacement facility, construction of the plant is progressing rapidly and commissioning remains on track on June 2026. On the insurance front, we received a recent tranche of INR 60 crore in February 26, which provides additional liquidity comfort during our ongoing transition. This brings our total cumulative on-account insurance claims received to INR 140 crore plus a salvage realization of INR 7 crore. Our net claim receivable stands at INR 203 crore and we are working closely with insurers towards expediting the final settlement process. Let me now turn to our battery chemicals business which remains the most important strategic pillar for Neogen's current future growth. Our Pakhajan Greenfield site continues to progress in line with planned activities. Commercial manufacturing for electrolyte remains targeted for H1 FY27, while electrolyte salts are expected in H2 FY27. During the quarter, the project achieved a significant operational milestone with completion of mechanical assembly and successful transition into the trial run phase for the specialized electrolyte plant. Our immediate priorities are process stabilization, phase capacity ramp-up, and customer qualification. We continue to witness improving demand visibility for India's gigascale ACC battery manufacturing ecosystem alongside strong international interest for non-FEOC compliant supply chain. Encouragingly, we have received provisional approval from additional global customers for lithium electrolyte soils, while final site audits for multiple US-based electrolyte makers have also been completed and are currently awaiting final commercial clearances. These developments position us well to transition from pilot and qualification volume towards regular commercial supplies over the coming quarters. During the period under review, we calibrated our execution strategy, which led to a revision in the project timelines and capital outlays for our battery materials projects. Please note that the updated project timelines remain fully aligned with our earlier guidance. We are on track to commission both the Dahesh and Pathogen Plants within the current financial year FY27. Under this updated schedule, the Daesh Phase 1 project is budgeted at INR 428 crore and is formally on track for completion by February 2027. Concurrently, the revised clause for Pakhajan Phase 2 stands at INR 1367 crore and expected completion by March 2027. These revisions primarily reflect design-led optimization following the integration of advanced Japanese technologies along with higher localization of critical subcomponents aimed at improving long-term operational reliability and reducing import dependence. Importantly, this investment significantly strengthens the competitiveness and technological robustness of our battery material platform over the long run. Our strategic partnership with Japan's Morita continues to progress well, and their planned equity contribution of 20 million towards a joint venture is expected during the H1-FI27. Through this partnership, Neogen is building India's first non-FEOC compliant electrolyte salt manufacturing platform backed by proven Japanese technology, creating a differentiated and globally relevant supply chain alternatives. Neogen is at a pivotal inflection point as we enter FY27, a year that will fundamentally transform our business scale. The commissioning and ramp-up of one of India's largest dedicated battery materials facility at Pakhajan combined with normalization of our standalone operations following Dahej replacement plant commissioning will significantly strengthen our growth trajectory. We believe Neogen Ionics is well positioned to emerge as a globally competitive and reliable partner within the battery chemicals value chain, supported by improving customer visibility, technology partnership, and India's rapidly evolving energy transition ecosystem. We remain confident of achieving revenues in the range of INR 875 to 950 crore in FY27 on a standalone basis, considering full production from MPP5 from Q2 FY26 onwards. With that, I would like to hand over the call to our CFO, Mr. Gopi Krishnan Sarti, who will take you through the financial performance for the quarter and the year in greater detail.

Thank you, Dr. Kanani. Good afternoon, everyone, and welcome to Neogen Chemical's Q4 and FY26 earnings call. I will take you through the financial highlights for the quarter and the year. Please note, all the numbers are on a consolidated basis. Revenue for Q4, FY26 stood at Rs. 247 crores, registering a strong growth of 22% year-on-year. Performance was driven by improved volumes, sustained high plant utilization across our core businesses. Despite ongoing supply chain disruptions, elevated input costs arising from geopolitical developments in Middle East. Neogen Ionics also maintained steady momentum during the quarter, contributing 13 crores to Q4 revenue and 36 crores for the full year. Looking at our operational verticals, organic chemicals recorded a revenue of 194 crores, up 7% year-on-year, while inorganic chemical segment delivered a standout performance with 53 crore in revenue, marking an impressive 145% expansion over the previous year base. EBITDA for the quarter stood at 44 crores, up 21% year-on-year, with consolidated EBITDA margin maintained at 17.8%. As indicated by Dr. Kanani, the performance rebind resalines despite expansion-related overheads at Neogen Ionics, temporary supply chain disruptions, and one-off costs associated with Dahej Reclacement Facility and interim tool manufacturing arrangement. As the upcoming Pakajan and Daesh facility progressively scale up, we expect stronger operating leverage and improved fixed cost absorption. Further, this would also be supported by insurance recoveries. Profit after tax for Q4 FY26 stood at 11 crore, reflecting robust profitability. Finance costs remained elevated on account of ongoing capital deployment towards Neogen Ionics and the reconstruction of the Daesh facility. For FY26, revenue stood at Rs.862 crores, registering a growth of 11% year-on-year, while EBITDA increased to Rs.137 crores, and PAT stood at Rs.29 crores. H2 FY26 reflected a significantly stronger cash flow performance compared to H1 FY26, supported by improved operating efficiency, better working capital management. Net cash from operating activities turned positive for 14.6 crore in H2FY26 versus an outflow of 246.1 crore in H1FY26, driven by healthy cash generation from operation. Turning to our balance sheet, consolidated total debt reached 1,330 crore in FY26 and bringing the net debt to 1,295 crore. Increase in debt was driven by targeted funding for the Zahej facility rebuild and ongoing capital deployment at Neogen Ionics. We remain focused on optimizing our balance sheet, driving working capital efficiency, and maintaining high prudent capital allocation strategy to maximize sustainable returns on our investments. Reflecting our strong performance on long-term growth confidence, Board has recommended a final dividend of 1 rupee per equity share for FY26. This underlines our commitment to delivering consistent value to our shareholders. That concludes my remarks. I will now request the moderator to open the floor for Q&A.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask the question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Participants, you may press star and one to ask a question. The first question is from the line of Nilej from HDFC Securities. Please, go ahead.

Yeah, hi. Good afternoon, Harid. Good afternoon, go to sir. Yeah. So, my first question on this revision in your cost for the battery chemical projects. So, you mentioned that there will be import substitution and there will be a long-term operating disability. But our cost as far as this project is concerned has gone up more than 250 crores. But can you tell us how much saving we can do or the returns that you expect? Are you increasing your return? As you mentioned in the earlier discussion that 18% kind of returns you expect from this project, but if you are investing this much more than 250 crore of capex, so any improvement in that? That's the first question. Sure. So thank you for your question.

So like, you know, as you can see, we have basically, we are basically aligning our technology to Morita technology. So that has been one reason. And the second reason, if you would have seen that in the investor presentation, we added additional 500 metric ton intermediate facility of a simple lithium compound for which we have an opportunity to sell to our international customers, including our company. So this is a total of that. And with the savings that we have in raw material and other operational efficiencies, even today, when we look at our return on capital employed ROC numbers, they are like at 20%. So around 80 to 20%. So when we put together the revised model also, the return remains at 80 to 20%. 20% being the base target on the salt side. And with electrolyte, like as I said, we are finalizing it. But effectively, we should be targeting 18 to 20% ROC, like, you know, even after the revised CAPEX. Okay. Okay.

And secondly, sir, how much was the revenue from electrolyte business in FYI 26?

So in the total 36 crore kind of revenue numbers, it was below 10 crores, but I don't have the exact number for you right now. The majority of it is from the salt.

Okay. But sir, when you are guiding 875 and 950 crore kind of revenue in FY27 for our standalone business, how much revenue you are capturing from salt plus electrolytes in this?

No, 875 to 950 is a non-battery business, right? So, there is no salt or electrolyte sales in the 875 to 950 crore revenue.

And this is after factoring in the Dahej replacement plant? Yeah, yeah, yeah. I mean, that will be there.

Yes. So, if you remember, our original was like around 950 to 1000 crore on full utilization level. You know, so, Dahej plant is starting a little bit later. So if we are targeted to start in Q1, instead of that, there were some delays to start to complete the project because little bit of there were labor shortages related to constructions over last two, three months. So it got slightly delayed. So that's why we are saying 875 to 950. But we are seeing very positive signs for organo lithium sales as well as lithium sales, which is not impacted by the hedge. So, if we are able to outperform in that, then, you know, we would be able to even achieve the original 950 to 1000. But because there was a slight delay in starting the haze plant, that's why we said 875 to 950 crore. We hope, we are trying our best with organolithium and lithium compounds to achieve the original target of minimum 950 and then 950 plus kind of revenue From the standalone. And this doesn't include any electrolyte salt or electrolyte. The electrolyte salt and the neogen ionics revenue potential, we had mentioned last year to be 300 crore plus. So the same remains the current guidance also. We expect to have a 300 crore plus kind of revenue from our NIL business. Yes. However, like, you know, this will be mostly in the second half. We will see some improvement from Q1, Q2 as compared to, so we'll see quarter on quarter improvement. But majority of the sales will be the second half as more giga factories, like, you know, come online for electrolytes, as well as, you know, our Pakhajan site is also expected to come online in the second half. And the final capacity in the hedge is also expected to come by Q3. So, I think all of this will give a higher boost in Q3 and Q4. And that is where you will see majority of the revenue coming.

Okay. Okay. And so, lastly, on the quarterly number, our revenue grew by about 12% QOQ and around 22% YOI. So, can you speak that in volumes and value?

So, most of this is basically by volume. There was hardly impact of maybe two or three percent, which was because of value. Rest of it was completely through volumes.

Okay. Thanks. Thanks. And I'll do better.

Thank you. A request to all the participants, kindly limit yourself to two questions per participant, and rejoin for a follow-up. Next question is from the line of Arun. From Aventus Park, please go ahead.

Yeah. Good evening, Dr. Hari. My first question is, how is the lithium price and the booming price currently as compared to the previous quarter? Have you seen this stabilizing? And how will this reflect on our top line in our legacy business?

Yeah, so when it comes to, thank you for your question. So I think bromine prices have stabilized a bit, because we saw that like, you know, after there was a pause in the war. So there were shipments which let's see bromine was able to arrange to China market, which over a period of time started to Stabilizing the bromine prices and bromine prices have remained stabilized. We'll see if there is no further disruption, you know, they may reduce also because they remain kind of little bit on an elevated level. When it comes to the lithium prices, lithium prices continuously, there was a one large jump, but after that, like, you know, it is slowly increasing. So we have not yet seen a stable lithium price. It's very difficult to predict how it works. But we feel this is like, you know, driven by higher demand for ESF. And even some areas we are seeing a little bit more push towards EV with the current gasoline prices and higher petrol and, you know, crude oil prices. So, if the trend continues, we may see lithium prices increase further beyond levels, but it is very difficult to predict at this point in time.

And if these kind of prices sustain, our potential from the standalone business, how much it will increase? Because we are currently still seeking the close to 900 crore's top line. Any early indication how we can expect a kind of increase in this potential?

So, you know, I normally don't factor in like commodity price increase, how it will change our top line significantly, because most of it is like a pass-through and it's anyway something which is difficult to predict. So, for us, you know, more focus is on what we consider as a normal price, revenue potential, what we have given you right now, which is basically, you know, 875 to 950. So, any sustained lithium price. So, even now, lithium prices are around 24-25 dollars, lithium carbonate prices, which as per me is the kind of a normal price, like, you know, because 15 to 20 dollars is what I consider as a long-term stable lithium price. So, it's only slightly above. So, the abnormally low prices are gone. Now, it's like more closer. I would say $20 plus minus $5 as a long-term stable price. So, we are kind of in that range. So, if it goes beyond that, then, you know, you may have some additional revenue, but, you know, there's no point to factor in it. Basically, it will be a pass-through. My top line to that extent will be higher, but doesn't mean that it will have any impact on the EBITDA on that higher price. So, therefore, I don't tend to consider. Similarly, bromine price also ideally should be between 300 plus minus 50 rupees. Today, they are a little bit higher. Although, because of our contracts, we didn't see a very significant impact in the last quarter. But yeah, if they remain at this elevated level, there will be some increase on the bromine prices as well, which will impact the top line. But currently, we are not factoring that top line when we are doing our budgeting. Whatever, if they remain at an elevated level to that extent, you know, our revenues will be slightly higher.

Sir, what explains the inventory, absolute increase in the inventory receivables and... Okay.

So, the absolute increase in the inventory was mainly driven because, you know, We had taken some of the outside locations on kind of rent basis to basically get capacities. So these contracts were getting over by month of March. And since the hedge was not fully yet online, we kind of built up some inventories to take care of our sales, like in Q1 and Q2 level. We also decided to ultimately decide to extend it slightly by another month, month and a half to take care of the sales. But we wanted to wind down those operations with Dahesh client coming online. So it was mostly driven by that. And like, you know, some product mix-related requirements that we had where we had to create some inventory.

Thank you. Arun, I'll request to come back for a follow-up question. I request to all the participants, kindly limit yourself to two questions per participant and rejoin for a follow-up. Next question is from the line of Ankur from Access Capital. Please go ahead.

Hi, sir. Thanks for the opportunity. First question on, you know, the salt pricing. How is the price gap now, you know, with China versus our pricing?

Yeah, so, you know, when you compare with China, if you see majority of the beginning of the last year, the prices were actually almost 40, 30, 40, 50% lower, or even sometimes higher, lower as compared to what our, let's say, long term formula prices were. However, after December, January, we saw like when the lithium prices increased, again, we saw increase in the salt prices as well. And then afterwards, it's kind of reduced a little bit. So we still have like a 20-30% decrease, but it's lower as compared to earlier, but it is still a bit lower as compared to our prices. But in December, January, we saw an increase, but then it didn't sustain for too long. So there was a period in time where they were even more expensive than us. And then again, they pulled off a little bit, but still not to the same levels earlier. So this is more, like, you know, more reasonable prices as compared to who it was, but still like a little bit lower, lower as compared to what ideally it should be.

So, what is the gap now? You said they went up, they came down, but what is the differential now?

Now, the differential would be like around, like if we look at our formula long-term price, so it would be between around 20 to 25%.

Okay, fair enough. And just, you know, two clarifications. One, the interest subvention that we have, right? So, when does it start? From what date one should build that in? And it will be a cash flow relief, right? The P&L provision, et cetera, will still continue. And the second question is on the standalone manpower cost. We saw a sharp jump there on a, you know, Y&Y basis earlier. So, what is driving that?

So, sorry, I'm not very clear on what do you mean by interest subvention?

So, there is a deferment that we, there is a, sorry, not a subvention, moratorium, the moratorium that we got from PANX, right? So, from that.

Yes, yes.

So, I think all the moratorium is for the period of one year from the revised start of commercial operations. So, whenever we have the first start of stable commercial operations, there will be one year moratorium from that. So, as we announced, I think, last call itself, that for Pakharjan, like, you know, there was an extension of one year for the electrolyte as well as the salt. And, like, you know, so, assuming, like, from our side, I think most of the work on the electrolyte should, we are, like, targeting to be ready by H1. So, if we start commercial production and all the qualifications are completed in the H1, then, like, you know, one year from that, and in case of the salt in H2, from the time we have the commercial production, one year from that, and in case of our dahed site, we will be, like, we requested again an extension for one subsection of 1010 capacity, which again got delayed, and instead of Q1, we are expecting it to You start in early Q3. So, I think wherever that SCOD happens from that, there will be a one-year morat.

Sure. And this is a cash flow relief. The P&L provisioning will still continue.

Yes, sorry. I will just ask Gokhi to answer that. Yes, it is a cash flow relief only for the principal repayment. Interest will start immediately after the SCOD is achieved.

Thank you. Ankur Dal request to come back for a follow-up question.

And just for clarification, like you know, whatever interest is during the project is already considered in the revised cost of the project. So, till the time it is capitalized, the interest is already included in the revised cost.

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

Yeah, thanks for the opportunity and congrats on one good Q4. So, first question is in terms of the battery manufacturer's plant in domestic market. So, individually, what is the status? And just a light question to that, on slide number 12, we have given current project updates where we have mentioned that the first approval material is shipped to the customers and for The remaining 1300 MTPA, the trial production is ongoing. So, will we have to validate the entire 1500 metric term capacity as and when it gets, you know, commissioned from a trial production perspective and what could be the timelines for the sale?

Sure.

So, you know, let me answer the second question first. It was, so basically, the samples that we have given is representative for the entire 1500 metric time. And even the 1000 metric time, which is remaining is going to come from the same site. So basically, now, you know, with whatever samples that we have submitted, and like, you know, we also announced that we also intimated that three customers, three electrolyte makers in And the US have now just completed the audit trial. So I think with those, for the three customers who have already audited, and for the others, we've submitted samples. For Dahej, we don't need to submit any fresh samples, unless there is a customer request, because sometimes the customer for each electrolyte maker, for each battery maker, they may request separate samples. But for the majority of our customer requirements, most of the sampling work is done. The audits are also completed. Post-audit, they have given us some corrections, which we expect to complete within one month or two months. And then once we demonstrate that, gradually the commercial supplies can start. So we expect by July or August, we will have commercial supplies start. And we don't have to wait for additional approvals from Dahe site. Also, like all the customers who visited, they also visited Pakhajan site, which is under commissioning, and they were all very appreciative of the way the site is shaping up and the systems which we have put in the site, especially because it is designed from scratch with the Japanese technology. And most of them were of the opinion that the approval cycle in Pakhajan also will be shorter because our testing method, raw material supply, manufacturing, all of this is already aligned. Only just the site is changing, so Pakhajan will have a relatively shorter approval cycle. So this was the feedback from the customers who audited and approved us during the last quarter.

Right. And just one clarification on the question, in terms of the domestic battery manufacturers, where are they in terms of putting their plants and probably providing us the commercial orders?

Sure. So I think, you know, one of the customers have been already buying from a small volume for last one year, and they have now also increased their capacity, which is coming online. So within the first half, their capacity is also increasing from 1 giga to 5 giga. The estimation that we have received from them will increase for the current year. We expect a much significantly higher volume as compared to last year. There, all the approvals are in place. And like, you know, we are on track. It's just a question of their actual consumption. And Neogen right now is the only source for them. And we have excellent relationship with them. So that business is certain. And the only volume depends on their actual production and actual consumption. When it comes to a second customer, the second customer has like also visited and done an audit and in principle approved Neogen as a site. There will be still more detailed qualification. And this customer, so this is also a Giga customer who is starting a pilot line sometime in the second quarter. And they will start commercial production in 2027. So right now, the way it stands, we are still discussing some commercials, but technically, they have qualified the site to use the material in their trial production line, the pilot The volume will be much smaller. It will not be a giga scale. It will be mega scale. But the important thing is that since they will use it in the pilot line, you know, they are likely to, like, they'll have the customer approval. So the shift to the Giga factory will be more smooth. On top of that, two of the Giga customers who have started production or are expected to start, you know, later on in calendar year 26, both of them have, like, you know, given us, both of them have given us their recipes and we've already submitted our samples. And right now, they are testing our versus China performance of the cells using neogen electrolyte versus China electrolyte. So, you know, once they do the performance trial and they have sufficient data, then they will start the process of moving neogen as a qualified supplier for them. So, we already have two customers, one giga scale, one megawatt hour scale, who have qualified neogen. Two more are in the process of, like, who are starting in 26, they are in the process of, like, validating Neogen's electrolyte versus Chinese electrolyte, and two other customers who are likely to start in 2027. So, we have had good commercial and technical discussion, site visits, so, like, we remain engaged with them for the final approval and qualification. Again, the question is they both had an original intention to switch from China, but how to switch from China to Neogen is what is currently being worked out.

Sure. The second question in terms of the funds for our expansion. So, given that we'll be receiving 200 crores from the insurance claim and 20 million dollars from Morita JV. Do we need any additional funding during FY27? And after the current project commissioning, what is the gross block at the end of FY27? Thank you.

So, you know, both the Morita money coming in, insurance is expected. And as you know, 160 crore equity has gone, has been taken care of. So, this money is sufficient to take care of completion of the project and, you know, to take care of the initial requirements. So, we are on track for that. And I think the total gross block of Neogen Ionics would be around 1,700 crores, 1,700 to 1,800 crores at the end of FY27, as most of the capex will be completed.

And for standalone on a consolidated basis?

Gobi, standalone, it would be like somewhere around 450 to 550 crores. That's right.

Yeah.

Like once MPP3, MPP5, our dahed site expansion is completed, we expect to be in the range of 450 to 550. You can say basically whatever was a standalone gross block before fire, plus maybe 40-50 crore more, which would have gone towards higher cost of the rebuilding. Again, hopefully that will also be majoritily be covered by the insurance proceeds.

Sure. Thanks and all the best, sir. Thank you.

Thank you. A kind request to all the participants. Please limit yourself to two questions per participant, and we join for a follow-up. Next question is from the line of Amijit Akhila from Kota. Please go ahead.

Yeah, good evening. Thank you so much. First one, would it be possible to just share a breakdown of the organic chemicals business line between the three lines that we mentioned, you know, bromine derivatives and the other two?

I think bromine derivative was about 40-45% of the revenue. The advanced intermediates was about 30% of the revenue. The organolithium and lithium together were the balance.

Okay. And when you mentioned that most of the revenue growth was volume driven, does that apply even to the inorganic business? Because inorganic, you've seen 140% growth. Is that largely volumes?

Yes, it's mostly volume because I think people knew that the lithium prices were kind of going up and we still had some inventory. So there was a good demand. So we were able to capture that. We've seen that, you know, when the lithium prices are on upward trend, volumes increase first. We'll have to see whether, you know, that will be sustained because sometimes, you know, people are expecting higher lithium prices coming down the line. So they are covering up. Anyway, if you know, like, you know, Q4 is usually our strongest quarter for lithium most of the years. So we feel, you know, so we'll have to see how the next year goes. But we have also added a few new customers. And like, you know, we are now able to recycle the lithium, which is coming out of the organolithium plant. So all these also has made our lithium business a little bit more stronger. So, we'll see, you know, if that will allow us to still continue the growth, as well as whatever is the growth because of a higher price of lithium in terms of the overall top line we expect in the coming year.

Okay, thank you. And just the last second one I had, just, you know, two, three small parts within this, some accounting qualifications. One is in the standalone cash flow statement, there is a, under investing VC, an 86 crore proceeds from sale of assets. So, is this by the parent to Neogen Ayani? I just wanted to clarify that because it doesn't show up in the console books. Second thing is the capital work in progress, if I look at console minus standalone, the difference is about 700 odd crores, which implies that maybe we still have another 1,000 crores to go, given that the total project cost is now So, this entire 1,000 crores we expect to complete by PQ, you know, or could that be a, I mean, this really sounds a little bit realistic there. Last one was just the employee costs. Sequentially, it seems to be down about 22%. So, just wanted to get your perspective on that. Thank you.

So, I'll answer just the, like in the calculation that you did for CWIP 700 crore plus, I wanted you to just keep in mind that some of the capex for our inorganic, for the battery business has already taken place, right? So, it's not 700 plus what is capitalized is what we have spent. So, that will be roughly at around 950 to 1050 crore is what we have spent. And the remaining 600, 700 crore will be spent at the current end. And also, some part lies in the capital advance.

Okay.

And some of it is also part of the capital advances which has been there. For the specific query about your 86 crore, I'll ask Gopi to reply. All right.

You are right. The sale proceeds relates to the sale transfer of assets from NCL to NIL, which was done two years back. The money was not received while the transfer had happened earlier. Now that the CCD is in place, NIL has paid off that money. So, that's why it has been recorded in the cash flow as sale of property, plant and equipment. And the other question on the employment cost, sequentially it has come down, mainly because of the actuarial. There was some change in the actuarial assumption that has resulted in some credit. That's the reason between, on a sequential basis, the numbers have, employment cost is showing a reduction.

Great. Thank you so much for the clarification, sir. All the best.

Thank you.

Thank you. Next question is from the line of Jason from IDVI Capital. Please go ahead.

Yes, sir. Thank you for taking my questions. Sir, just wanted to understand you did speak about lithium pricing being on a normalized level right now. So, just with regards to that, just wanted to know what could steady state realizations be in dollar terms for soils and electrolytes both?

So, you know, for me, the more stable lithium price would be $15 to $20, $20 kind of being like a base price. So, I feel, ideally speaking, on a long-term basis when supply and demand are kind of balanced, $20 of lithium carbonate is a reasonable price considering the cost of the lithium, the spodiumene, like mining cost, And some royalties which are paid to the governments on that. So plus minus $5 would be the kind of fluctuation. So $15 to $25 would be like an ideal-speaking range of lithium, which should be. So right now, they are a little bit on the higher side. They are around $24, $25. So higher end of it. And at $20, you know, we have given salt around $20 odd and $20, $21 and our additive around $25 to $30 in that range. So, right now, it would be a little bit higher as compared to that.

Okay, and so you said Soyuz 2021 and it is around 25-30, and what about electrolytes?

So, electrolytes also, depending on the volume and the scale, we had, as you remember, in the beginning, we had said around 8 to 10 dollars, and later on, we had said around 6 to 8 dollars per kg. So, we expect that, you know, currently it should be with the current lithium price somewhere around $7 to $9 per kg, otherwise $6 to $8. This also depends on other raw material inputs. So, like they are still, the lithium prices have corrected, but some of the other inputs like solvents, etc. have not yet fully corrected. In this, I am not taking the VOR related because if I consider today's prices with impact of VOR, then it can be even above $8, like more closer to $10 plus. Kind of a price. This is at like a 5,000, 10,000 ton level. And in the beginning, you know, customer demand would be 1,000 ton, 2,000 ton, at which it should be a little bit higher because the raw metal cost and conversion cost is higher at that point in time. Sure. So, 6 to 7, 7 to 8 dollar would be a decent range for electrolytes. If you are thinking of $20 with the other raw materials, I would say $68 would be the range. So $7,30 as an average price.

Yes, yes. Yeah, yeah. Sure, sure. And sir, I just wanted to know, I mean, when you look at the console cash flow, Capex has basically amounted to 555 crores in 26. Now, and of course, our CAPEX also has been revised upwards, which was around 15 billion now. It's basically gone to around 18 billion. So, it's an extra 300 crores, which is for the revised CAPEX. Now, just aligning all these things, just wanted to know what could be the CAPEX outflow over a like-to-like basis in 27 and 28, going ahead.

Oh, okay.

So, see, 27 and 28, you mean calendar year 27 and 28, right?

No, no. So, when I look at 26, 26, sir, I mean, when you look at the cash flow statement, 556, so 26 is 556, so 27, 28, just wanted to know how that would look like, yeah.

So, FY27, we would complete with the balance KPS, right, which would be around 600, 700 crore, right, plus maybe about 100 odd crores in the urgent, so total together at around 800 crore. Right. So that's what FY27 and FY28, we don't have, unless something changes dramatically, we don't have at present any fixed plans for increase in CAPEX for Neogen because we want to fully stabilize the plant, achieve full utilization. And similarly, we have not yet planned any major TPEX for FI28 at present. Although, as we have said in the past, that if both international demand and India demand comes up, we will have to increase our salt and additive capacity. But to what extent, we have not yet decided. So, I am not able to give a number at present.

And just one final clarification, I believe you said, 27, you said 36 crores was battery maker's revenue for 26, and 27, you expect 300 crores, but it will be more towards the H2FY27, that's the second hour. Revenue, you mean, right?

Revenue.

Yes, revenue, revenue, revenue.

Yes, revenue for the non-battery, it is 870.

Yeah, I have got that. Yeah, battery use at 300 crores, entire battery chemicals, 300 crores for 27, right?

More than 300 crores for FI-27. Larger portion in the second half, every quarter sequentially, you should see an increase.

Yes, and 28, when everything going on stream, finally, what do you, I mean, you know, the entire CAPEX, any ball pass numbers for 28?

Yeah, we had in the past calculated that, you know, just the salt capacity at 80% utilization, and we expect a very healthy salt demand, like electrolyte salt and additive demand. So, that itself is like, you know, revenue of 1000 crore plus, right? So, depending on how the electrolyte demand shapes up, it will be something more than 1,000 crore. As we said, you know, on FI29, it's like 2,400 to 2,900 crore. So, we feel in FI28, it will be, you know, something more than 1,000 crore. Let's say 1,200, 1,400, some kind of a number like that. But we'll be able to give you more clarity, like, you know, in the second half of the current year.

Sure. Thank you so much for answering.

Thank you so much.

Thank you. Next question is from the line of Meet, from Neveshay. Please go ahead.

Yeah, hi, Dean. Thank you so much for the opportunity. Am I already with?

Yes.

Yeah. Our first domestic electric customer is highly satisfied with Neogen compared to our competitors. So mainly because of our quick response time and our ability to modify the electric solution as per the requirement, right? So, these help us to secure a sole supplier position at the end. So, I just want to share how the negotiations are progressing with other cell manufacturers who are not using the standard, who are not using the wet dry coating, right? So, are you also achieving a dominant position there?

So, I think as I explained earlier in my call that, you know, second customer also visited Our facility had a pre-round and qualified to use our electrolyte for their second line. And then there are two more who are now evaluating, you know, our electrolyte performance versus China electrolyte performance. And two more are discussing with us. I think the factors are Neogen's existing experience and like, you know, the bigger plant capacity which is available because you need a higher capacity to take care of all the customers. So, we have a 30,000 ton plant, which is under trial production,

and that too, which is built with Mitsubishi technology.

So, I think all of this is like a positive for the customer, and now the customers with their experience in China last one year are also looking at localization. So, the fact that Neogen has electrolyte, salt, and additive backward integrated, even electrolyte solvent purification is backward integrated. So, some of these features are very attractive for the customer, and with all the six giga factories under construction, we are having very positive discussions on going currently.

Got it. And, sir, second one, several South Korean electrolyte players already have their plans in U.S. for electrolyte. Now, they are, and they have also already announced a KPEG in Korea itself for solid manufacturing, either JV or MOE. So, in that context, are your U.S. sold customer looking at Neogen mainly as a second source or as a backup supplier, or do you see clearly visibility for Neogen to become a meaningful supplier for the U.S. facility?

Yeah, so, you know, at present, if you look, there are already existing established, we have discussed in the past calls that there's one Japanese company and there's a Korean company with a limited experience. And there are two manufacturing plants which are coming up in India. And in Korea, while there were many announcements, but of the announcement today, actively being pursued is only one company which is still working on and they are working with a technology. So, you have two existing, one Japanese and one Korean, and three new, two Indians and one more Korean who's trying to start up. So, in this, you know, Neogen is the only one which has a technology partnership with Morita, which is very seen as an established kind of a technology because it has been in use. So, between the three new, we see some advantage of customer looking at us as a stabilized or more reliable supplier, and hence, like, you know, they look at Neogen a bit more preferentially as compared to the others.

This is our kind of view for LIPSs. It looks like sort. Thank you so much. Thank you.

Thank you. A request to all the participants, please limit yourself to two questions for participants and rejoin for a follow-up. Next question is from the line of Archit Joshi from Nuama. Please go ahead.

Hi, good evening, sir. Thanks for the opportunity. Two short questions, squeezing them into one. What would be the contribution of VULI-Chem in Q4 and FY26? And number two, what explains the sharp increase in trade payables, you know, almost as good as the COGS for the whole year, if you can explain these two things. Thank you.

So, we are not giving, you know, our sale of organolithium plant individually because it's a single molecule. But as compared to last year, we have seen an increase in our revenue, and we have seen approvals in the international market in the semiconductor applications, and we are expecting few more approvals in the international market. So for us, current year in organolithium is organolithium business, we are looking really forward to this year where we expect a sharp increase in the business contribution from the organolithium side. We achieved one of our highest production, like as some of you may know, in the past we had announced, we had increased capacity two and a half times. So we reached the full monthly volume, the highest peak volume ever in the month of March, and we continue to see that in the current quarter as well. So as compared to the installed capacity, which was around 120 metric tons, we had increased two and a half times to 300 metric tons per year. So, this year we are, and last year was somewhere in between. So, this year we are, like, you know, very strongly looking at a potential to achieve almost 80-90% of our increased capacity. And then if everything goes well, we may do a small capex to further increase this capacity in the coming year. But we are seeing a very strong response to our organolithium business.

Sir, second bit was on the trade tables, the very sharp spike that we have seen. And like I said, almost like 365 days outstanding of trace labels. What would explain that?

So I think, you know, as you know, that we have, like, last year, we had already a lot of financing to do. So like, there were a lot of funds which were required. So we also and we were awaiting some insurance payments. So we kind of discussed with our suppliers, and we were able to negotiate like longer credit terms with them. And some of them were also able to get factoring against Neogen's payment lines. So we were able to get longer credit terms. So we basically used longer credit terms with them. And our long-term target, as we said, is to balance our debtors with our creditors. This time, the creditors were still a little bit on a higher side than that, which was like some kind of a special support because of fire-related situation from our suppliers. I got it.

So, going to S27, we should start seeing the payables to come down as we get the insurance part of the money and stuff like that.

Yes. And hopefully, like I said, our debtors and creditors will stabilize each other and our stock will keep improving as we use full utilization level. So, we'll achieve the long-term working capital cycles gradually over the next two to three years as we had informed earlier.

All right. Sure. So, thank you. Thank you.

I request to all the participants, please limit yourself to two questions per participant. Next question is from Lan of Tejas, from Asian Market Securities. Please go ahead.

Yeah. Thank you for the opportunity. I just have one question. And in the recent document, you have mentioned the revised project timeline for PAKAS in phase 2 as March 20, 2027. I just wanted to understand this is the timeline which has been provided as both of the electrolyte formulation part and also DAHES is one of as we have highlighted, the capacity which we are setting up at DAHES would be largely based on our own technology. While in the remarks, you have also said that we are transitioning from the in-house to the, you know, Morita technology. That will be more towards the packaging part? Or are we also, we'll be shifting our 11, 2100 incremental salts capacity to the Morita technology? That's it from my opinion.

Yeah, so I think most of the Dahej capacity remain our capacity. We've done some adjustments to the technology, but majority remain. And also the salt capacity in Dahej also includes additive, where, you know, we don't have the collaboration with Morita that remains completely Neogen's own technology. So, large part of that 2,500 is related to our own, and majority of the Morita-related technology adjustments were in our Pakhajan facility, as well as, but one thing, if you look at our investor presentation is, we've added 500 metric tons of additional intermediate salt capacity, which is required or which is the starting material for our raw material for electrolyte salt, which we are in discussion. Where this is consumed by our partner Morita in China, as well as few other customers who are making LIPS6. And they all, and Morita being our, like, you know, partner, they are positively considering to purchase this from us. And other LIPS6, established LIPS6 producers are considering to buy this intermediate from us to achieve the China-free requirement. So, I think that is the additional CAPEX required for in our DAHIS site, which has been updated in our presentation.

Okay, got it. And on the revised project timeline, which was given in the result, the document is March 27th. That is for our electrolyte 30,000 ton capacity, which is coming up?

No, so that is for the entire project, because till now, like, you know, the bank is in the process of dividing it. So, this is the SCOD which we have taken approval from lenders. In terms of our timelines, we expect H1, we should have completed majority of the electrolyte work and H2 for the salt. So, that remains unchanged. And similarly, in case of Dahej Phase 1 also, by Q3, we feel like already 1,500 tons is completed and only the last bit of 1,000 and the 500 ton addition that we have planned should be completed by Q3 and maybe a little bit some capacity by Q4. So again, this is the approval which we have taken from the bank. We remain committed to complete majority of the balance, the 1000 plus the new 500 intermediate by Q3. And as we explained for the Pakhajan, H1 for electrolyte and H2 for the soil. And in H2 also, mostly by end of Q3, it should be ready. Q4, we should be able to do additional revenue. Revenue can start getting generated, but since sometimes approval takes longer, so we have not factored in any revenue from this. We have kept it as a backup in case if electrolyte revenue is reduced because of lower demand in India, then whatever revenue we get from Pakarjan in Q4 will be used as a backup. Or otherwise, it will be additional revenue, which is the 300 crore plus part, depends on Q4 from package, minus any reduction in electrolyte. So that would be the balancing frame.

Okay. Just a small follow-up, sir. So 5,500 would be our total salt plus additive capacity, and this 500 intermediate which we are setting up would be over and above that 5,500 tons.

That's right, yes. Yes, yes.

And out of that 5,500 tons, what is the split between salts and additives?

So, salts would be approximately around 4,000, around 4,000 odd crore and 1,500 to 750 would be the additives.

Okay, okay.

Thank you so much, sir. That's all from myself.

Thank you. Participants, kindly limit yourself to two questions per participant. Thank you. Next question is from the line of Pratham from Quantum Asset Management. Please go ahead.

Hi, sir. Just one thing, since we have increased the CAPEX, what would be the peak debt that you would be seeing? Previously, we have alluded to 1,700 crores, I guess, as the peak debt, and what would be now?

So, as we explained, you know, in our presentation, since we have already 160 crore equity, which has come in from the promoter, as well as the 20 million from our JV partner, which was not factored in during the initial discussion. So, the peak debt will not change, will remain the same as earlier.

Okay, and just one thing, since you mentioned, the, the,

sir, sorry to interrupt you, we are losing your audio, Pratham. Pratham, can you come in a better reception area?

Oh, yeah. Hi, I'm audible.

Yeah, go ahead.

Yeah, just one thing mentioned that 36 crores is from neogen ionics. So, if I just deduct that from inorganic, we actually degrowth. So, what is the result of degrowth?

Sorry, I couldn't get your question. You are saying was there a degrowth in organic chemical business?

If I just deduct the 36 crores revenue from the which we received from Neogen Ionix, then there is just a 10% drag in the inorganic chemical business. So and it has been dragging us continuously. So what is the reason that we can attribute it to?

So, I think it was, I mean, during majority of the year, the lithium prices on an average was lower, so I can see one of the reasons, but I would need to take a little bit more closer look before I can answer.

And in volume terms, have we been growing on that front?

I have seen no significant increase or decrease, have been more or less overall stable.

Good, yeah.

Or slight increase also, but yeah.

Yeah, just one more thing. So, if suppose, you know, there is a delay in ramp-up in capacity, given what I am trying to factor in, I foresee a liquidity issue in the company. So, if you can just help me, you know, if you can just clarify on this part, how is the ramp-up at me?

So, you know, as you see, whatever has been the delay in our project startup has been, like, so the repayment schedule has been already been delayed to the same extent. So broadly speaking, let's say whatever was supposed to get completed in March is getting March 26. So everything is getting completed by March 27. But now that we got the extra time, most of the approvals, everything will be in place. So the revenues also will ramp up. And, you know, so we feel overall, I don't see a big change as compared to that. And the additional CAPEX, which was required, was already funded through additional equity, both from promoter side as well as JV partners. So for us, there's not too much of a difference. Whatever insurance proceeds we are receiving on a regular basis and whatever balance also we expect to receive in a relatively shorter period of time. So, therefore, you know, we are not concerned. But if there is any need, you know, we will always keep a watch and if required, we would raise money if needed or if required.

Sure, sure. No concerns. Thanks. Thanks. Okay. Thank you.

Thank you. Next question is from the man of Akshay from Alpha Invisco. Please go ahead.

Hi, thank you for the opportunity. So the question was regarding our domestic gigafactory customer who is utilizing dry battery electrode. Sir, how does the architectural shift impact the technical specifications of the electrolyte considering it's a dry battery electrode? It will be a little more sensitive to moisture and all. So, I wanted to understand that.

So, you know, basically, when it comes to electrolyte, any component you change in your manufacturing changes the electrolyte composition. So, when you go from LFP to NMC or within LFP for the application, I mean, different kind of like cylindrical versus prismatic type, or even depending on the application, whether it is for energy storage or like energy storage or whether it is for, So, as you know, on the anode also, you have carbon-only or carbon-silicon. So, all these permutation combinations require a separate individual electrolyte design and optimization. Yes, dry cathode is a relatively challenging technology. So it required more trials to begin with. But in my view, it's one of the syringes requirements, you know, when you go for NMC, dry cathode, that too with like, you know, no secondary cooling. So I think we've already kind of achieved electrolyte, which is performing really well in this condition. So, yes, each electrolyte, each cell design, we have to optimize the electrolyte.

Okay, thank you. Got it. And so, for the same customer, they have been scaling up the capacity to 2.5 LW. So, that would, like, create a demand for 360 to 400 TNG of LIPF6. I wanted to understand what portion can he cater to from this demand?

So, normal rule is, you know, one gigawatt hour requires, one gigawatt hour requires 1,000 ton for LFP. I mean, actually, 1,200 to 1,400 ton for LFP. And in case of NMP, between 400 to 600 metric ton per gigawatt hour. So, again, I won't be able to commit specifically, but as I explained earlier in my call that, you know, the scale-up which has been done by the customer, we expect a higher electrolyte demand from them as compared to last year, significantly higher. However, actual consumption, one is the capacity, but you run the plant at what capacity depends on the customer's production and sales plan. So, depending on that, we will see how much actual electrolyte gets bought. But yes, the demand will be significantly higher as compared to last year.

Okay, so based on what's going on, the current demand that's been going to the customer, can we say we could do 50-60% of the requirement?

Oh, from our side, we can meet 100% of the customer requirement and more, because we have a capacity of 2,000 metric tons, which is already in place, and another 30,000 will be ready by H1. So, we have, we can take care of the entire customer requirement.

So, we can take care of the customer, but is it a requirement, but is it feasible or even wise enough? So, I am just trying to understand what is the probable scenario here.

So, there is a very high probability that last year also 100% was met by us, and unless there are commercial differences, next year also 100% can be met by us. It's very common for a battery company to work with only one electrolyte company. I mean, historically for decades, you know, companies have worked in this way, or at the most when they go to like a 500 giga kind of a volume or very large volume, they may have two suppliers, but there are very many examples where like for decades, you know, one entire battery company consume electrolyte for only one company.

Thank you. Akshay, may I request you to please come back in the queue? Thank you. Ladies and gentlemen, we will take the last question from the line of Vedant, from Nerman 1. Please, go ahead.

Am I audible?

Yes sir, go ahead.

Thank you for the opportunity sir. So, I want to understand like we wrote in our press release that we are confident of achieving a revenue in the range of 875 to 950 crore in FI 27. So, if we contested an 875, it's kind of 2.33% growth for a full-year basis. So, can I get some understanding of in 3 to 5 years of the timeline, if we get all the approvals, our all KPEGs and capacities come into picture, what kind of revenue we can make at Neogen on a consolidated basis? For the financial year next year?

Well, three to five years time frame I'm asking for. Three to five years. Okay. So, our FI29 full utilization level. So, let's say we have already stated that this year was 950 to 1000. You've been a little conservative, saying 875 to 950. As I explained earlier, we will try our best to achieve the higher end of the spectrum, which was the lower end earlier. So this is on the Neogen level. And our guidance was that for FY28, we would like to have a full utilization with optimization, which can produce 1,100 crore plus kind of revenue. So our FI28 tentative target is around 1100 odd crores. And if we maintain the same growth rate, like by FI29, we should be 1200 crore plus. Between 1200 to 1400 crore plus revenue, just based on the regular demand in the existing business. If we make a significant further investment in organolithium or some semiconductor-related or flavor fragrance or to take care of higher CSM needs, you know, that would be additional. But with investments which we have done today, we would expect somewhere around 1200 to 1250 crore by FI29. And on the battery side, we already guided to 2500 to 2900. So somewhere around 3700 to 4200 is the expected revenue by FI29 on a console basis. Again, like I told you, I see a need that we would have to add some additional salt capacity because we are like in FI28. Because we are seeing increase, we are seeing increase both local demand of electrolytes as well as international demand for LIPS6 soil. As well as, you know, we see increase, we would also expect the CSM demand to start coming in from FI29 onwards. So there will be some additional investment, which we may have to make in FI28, which will give a higher revenue in FI29. But this is something we don't know yet. With the existing capacity, we can have revenue of around 3,700 to 4,000 crore plus based on the projections which you have made till now. In terms of capacity, you know, currently our Pakhajan site can take care of around approximately 30 gigawatt hour of electrolyte and electrolyte salt. There is a space to go three times higher, like, you know, in Pakistan. So, depending on, if you're talking of fires, so depending on how the demand in India shapes up and in the international market, we can basically increase capacities for that. And similarly, across our organo-nithium site and our dahed site, as well as our Baroda site, we have an ability to go up to 4,000, 5,000 crore of revenue through brownfield expansions. So we'll see, depending on how the demand shapes us, on the three-year FI29, with whatever projections we have given, we project somewhere between 3,700 to 4,200 kind of revenue by FI29. And then, let's say if we are thinking of FI 31, whatever we decide in the future, CAPEX, to increase on electrolyte, electrolyte salt, as well as in the base business, for more CSM, more semiconductor, more organolithium, as well as the inorganic lithium demand to kind of go further ahead.

That was very interesting. Thank you so much.

Thank you.

Thank you very much. And I'll hand the conference over to the management for closing comments.

So, thank you for your time and engaging discussions. For any remaining questions, our investor relation team is available to assist you. We value your continued partnership and look forward to sharing our next quarterly update with you. Thank you again.

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

Thank you.

Thank you.