Aether Industries Limited (AETHER) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Ether Industries Ltd. Q4 and FY26 earnings conference call, hosted by HDFC Securities. As a reminder, all participants will be in the lesson-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 touch-down phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nilesh Gughe from HDFC Securities. Thank you, and over to you, sir.

Yeah, thank you, Jisoo. Good afternoon, all. On behalf of HDFC Securities, I welcome everyone to this Ether Industries conference call. to discuss the results for the quarter ended March 2026 and financial year 26. From the Acer Industries, we have with us today Dr. Aman Desai, Promoter and Whole Time Director, Mr. Rohan Desai, Promoter and Whole Time Director, Mr. Fayez Nagariya, Chief Financial Officer, Mr. Kushal Doshi, Lead Investor Relations, and Ms. Shubhangi Desai, Executive IR. Without further ado, I will now hand over the floor to Mr. Kushal Doshi to begin with the earnings for the quarter and financial year. Over to you, Krishan.

Thank you, Nilesh. A warm welcome to everyone. Today, our board has approved the financial results for the fourth quarter and fiscal year 2026, and the same have been filed with the exchanges as well as updated over our website. Please note that this conference call is being recorded, and the transcript of the same will be made available on the website of Ather Industries Ltd. and the stock exchanges. Please also note that the audio of the conference call is copyright material of Ather Industries Ltd. and cannot be copied, pre-broadcasted, or attributed in the press or media without specific and written consent of the company. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements which are predictions, projections, or other estimates about future events. These estimates reflect management's current expectations on future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause or are actual results to differ materially from what is expressed or implied. Ather Industries Limited or its officials do not undertake any obligations to publicly update any forward-looking statements, whether as a result of future events or otherwise. Now, Mr. Rohan Desai will begin by sharing Ather's business outlook, ongoing expansions. Then, Dr. Aman Desai will provide inputs on the R&D and new client initiatives and strategy of the company going forward. And Mr. Faiz Nagaria will cover the financial highlights for the period under review. I shall hand over the call to Mr. Rohan Desai for his opening remarks.

Over to you, Rohan. Thank you, Kushal. Good evening, everyone. Thank you for joining us today. Over the last two months since the conflict began, there has been unprecedented disruption at scale. Roughly 20% of global oil capacities went offline and nearly half of the global ethylene and polyethylene supplies have been disrupted. These are unparalleled numbers, reflecting a combination of physical infrastructure damage, feedstock limitations, and severe logistics disruptions. Despite broader near-term market volatility, we anticipate demands will remain resilient for our products, providing meaningful pricing potential, particularly in large-scale manufacturing business models, as evidenced by recent March settlements. Let me share what it actually means for Ether. Our large-scale manufacturing business vertical has seen a sharp increase in the price. of our products in quarter 4 caused by the conflict. Importantly, those prices are still being maintained in April and May. Pricing has been exceptionally strong over 20% year-on-year and 18% quarter-on-quarter in Q4. We believe this pricing environment is sustainable in the medium term. We are also in the cusp of major myson. There are three new large-scale manufacturing products, two in pharmaceutical and one agrochemical from site 5, which will be commissioned by May end or starting of June first week. Validation batches are done and orders are already in hand. Laskin manufacturing business model contributed 43% of the sales, and Krams and CEM together delivered a strong 55% of our revenues. Site 4 has seen a tremendous growth from 50 crores to 220 crores, a 4x increase, and now represents 21% of our total sales. Pharma plus agro still at a healthy 46% and material science at 17%, a share we expect to grow meaningfully with Site 3++ ramping up very fast. Let's talk about momentum with global customers. In the last few months... This has been incredibly exciting on the commercial front. We have participated in key chemical exhibitions in Japan and Europe, and the quality of the conversations were insightful with respect to their strategies and future plans. Existing customers are deepening their commitment, and new ones are actively qualifying us. This year, we have completed 50-plus customers and certification audits and added 19 marquee clients to our rosters. Multiple customers have already completed pre-audits for Site-5. These interactions have reinforced our confidence that CRAMS and CEM can contribute 70%-plus sales in the coming years. We have hit our targets on converged polyols, an innovative high-margin product, and have strong order visibility for FY2027. And in the semiconductor material space, the feedback from our customers have been very positive. We see this opportunity tripling by 2030. Looking ahead, in summary, we are entering a new growth phase powered by three big levers. Successful commissioning of Site 3++ and Phase 1 of Site 5. Deepening relationships with global technology and industrial leaders. And sharp focus on operating cash flow and discipline execution. With that, I would like to hand over this call to Dr. Aman, who will talk us through the exciting progress in R&D and our new client acquisition initiatives. Over to you, Aman.

Thank you, Rohan. Good evening, everybody. I'm extremely happy to connect with you all again, as we do every quarter. As we continue to navigate these volatile times that Rohan has talked about at length, let me talk about R&D and projects and competencies. I'm very pleased to inform you that the interim R&D expansion. With two new labs and 18 fume hoods, including five engineering fume hoods and a very nice 400 megahertz NMR, nuclear magnetic resonance machine installation, have been completed in the current R&D facility, and we expect the commercialization of these new fume hoods and NMR machine to begin from Q2 onwards of this fiscal. As we had expected over the last few quarters, the number of crimes inquiries continues to increase, and these new fume hoods and the NMR, which corresponds to this interim R&D expansion that we are doing, will hold us in good stead and help us address these increased inquiries. We already have a number of new projects lined up in the material science and the oil and gas sectors for the new capacity that we have now commissioned, and that's the area that we are focusing on in terms of new business development. The construction of the entirely new R&D plant and the new R&D wing that we are also undergoing is also progressing on schedule and is expected to be commissioned in second quarter of F5 28th. This new R&D building and the new R&D site will have 15 new labs, including five engineering labs and a cumulative almost 140 fume hoods. And this will represent a double expansion, a 2x expansion over the current R&D strength that we have, including the interim R&D expansion, a 2x expansion over that, which is significant R&D expansion. And this is being done with full visibility of additional load on the grams business model that we're forcing. With the current leadership in R&D also having been set to address this increased demand of the R&D crimes inquiries and this significantly increased R&D infrastructure, we are also in the process of grooming the next generation of R&D leaders in the R&D organization, and so there's a huge focus on that. These new leadership, these new leaders are expected to take leadership roles in our new world-class R&D facility, which will be online in the next one or two years. Also, with my associations with premier institutes in the country like ICT Mumbai, NCL Pune, and other institutes where I'm an official PhD co-guide as well as a member of the Board of Studies, we are really tapping into this network that we have to groom our next generation of R&D leaders, and we are confident of having a young and ethnic team of R&D leaders which are expected to work on these increased grants projects coming through in the significantly expanded R&D infrastructure that we are We have set up and we are in the process of setting up. Over the course of the quarter and the last few weeks, we have had a number of follow-ups and site visits from senior management, from the highest levels of management of current and prospective customers. We have participated in chemical conferences in India, Japan, and Europe, and it is evidently clear that global chemical companies do want to get ahead of the curve and are accelerating the developmental plans with label partners and the focus in all these engagements that we have with all these innovators across the industry spectrum, especially material science as well. gas is singularly singularly India. They want to be in India unless. They can't. And so it's really up to us to maximize this potential of collaborations that we are seeing. We believe that we are well placed, considering the relationships that we have already forged with these clients, and also the work of the infrastructure that we are setting up in R&D, as I've already talked about, the pilot plant, which is one of the largest pilot plants in the world that we have, and the new sites that Rohan has spent some time talking about. I'm also very happy to inform you that we are also expanding, and we have expanded our senior leadership team, which is what we call our global technology and business development team, with the addition of Mr. Gunter Stevens. Gunter has extensive experience in chemical R&D, process development, raw material development, and sustainable technology development within Germany. So he started his career with Bayer and then ended his career with more than three decades in Aldana and Lugkami, which is a leading additives company, multibillion-dollar leading additives company in the world. He has extensive experience in the chemical industry and will be based out of Germany. But specifically, what's very exciting about his repertoire and experience is his experience of technology and leadership in technology and R&D and product developments for material sciences, performance materials, and application testing, which is an area and a core competency of application testing that Ather is not amongst the forte of Ather's core competencies today. And he is expected to and he will be opening up an entirely new envelope and new frontier for competencies and application areas and for it to tap into. And so that's why his skill set. Compliment the core expertise, which it currently has built, and with this, it is very exciting in the terms of the new frontiers we'll be able to enter into, and also thereby tap into new customers for additional projects and products in R&D, in pilot plant as a lesson production. We are, in addition, we are looking to add one more chemistry to our core competencies, which is what we are calling focus and integrated polymerizations, also leaning... For this core competency onto our core technology competencies of high-pressure chemistry, extreme process conditions, and continuous technology. We are going to be working on a few opportunities based on this focus on integrated polymerizations, and we have identified a number of opportunities in the grams space for this chemical process. This chemistry is, again, being mostly targeted towards the material science and the oil and gas sectors. We continue to focus on CEM opportunities, exclusive manufacturing opportunities. I expect quite a few of the CRAMS projects that we have in our pipeline today to shift to the CEM vertical in this financial year, which has just started. And most of these will be launched inside five. We continue to develop and deepen our relationship with existing customers by entering into new CRAMS projects with them, which fills up the pipeline of the CRAMS, which will further on lead into exclusive manufacturing, contract manufacturing. In the last fiscal year, as Rohan mentioned, we have commercialized the Site 3++, increased our revenue from Site 4, and also commenced the commercialization of a small CN contract from Site 3 for our global customer. Site 5, as Rohan mentioned, is also very exciting, and the first phases will be launched momentarily. With the current projects and the robust pipeline of projects which are expected to come in shortly, we are very confident of achieving our vision of 70% of revenues coming from PRAMS and contract-explicit manufacturing business models by fiscal year 30. So let me stop talking. In summary, I would like to mention that we are extremely well placed to take advantage of the current golden age of the specialty chemical industry in India. The opportunities are expected in the next few years, and our investments in the new R&D site, interim and the completely new, as well as Site 5, which are world class, will certainly have a positive impact on the company. So thank you very much. Looking forward to the questions. And again, thank you for joining us on Friday evening.

Thank you, Dr. Aman. Good evening, everybody. I would like to present the financial results of A3 Investors Limited for Q4 of Finance Year 26 and full year of Finance Year 20.

Sorry to interrupt, sir. Your voice is not clear.

The total consolidated revenue from operations of the company stood at Rs. 11,601 million in financial year 26 as against Rs. 8,406 million in financial year 25. That is an increase of 38% year-on-year. This has resulted in EBITDA of 3,547 million in financial year 26, as against 2,312 million in financial year 25, which is an increase of 53% in the comparing financial years. EBITDA margin stood at 31% in financial year 26, as against 28% in financial year 25. The PAD amounted to Rs. 2,195 million in financial year 26 as against Rs. 1,584 million in financial year 25, which is an increase of 39% year-on-year. The PAD margin stood at 19% in financial year 26 as against 18% in financial year 25. The consolidated revenue from operations of the company stood at Rs. 3,051 million in Q4 of financial year 26, as against Rs. 3,001 had an $188 million in Q3 of financial year 26. This has resulted in EBITDA of $814 million in Q4 of F526, as against $1,099 million in Q3 of financial year 26. And the PAT has been 540 million in Q4 of FY26 as against 645 million in Q3. The main reason for the decline in revenues and profitability in Q4 as against Q3 of financial year 26 were on account of one of items like one-time FLOP claim income, which was booked of 200 million in Q3 of financial year 26. The same was also has impacted EBITDA by around 150 million in Q3 of financial year 26. And it also was impacted, it also impacted the PAT by 120 million in Q3 of financial year 26. Further, a provision for loss of inventory on account of an fire at an external warehouse near site 1 on March 11, 26, amounting to Rs 70 million has been provided in Q4 of financial year 26. Further year-end provisions coming for the first time of approximately 10 million rupees has also impacted their Q4 financial results. I would like to give more glimpse on the claim of the fire which occurred in November 29-23 at Site 2. The final claim for the fixed assets lost in fire accident on November 29-2023 has been submitted to the insurance surveyor and the same is being assessed at the insurance company. With expectations to get the claim settled by end of Q1 of FY27. We have also taken, we also removed the assets which were destroyed by FHIR and it has been impacted in the financials of the financial layer 26. We remain cognizant of the working capital and reduction in market capital is a priority for us. We have been able to reduce the overall working capital cycle to 179 days as of 31st March 26, from 194 days as of 31st March 25. Even though these levels remain elevated, the inventory days increase primarily on account of raw materials purchased and the production of the new molecules going on at site 3++ and the raw materials purchased at site 5. We expect the working capital days to decline as we expect revenues from Site 3++ and the commencement of Site 5 very soon. Also, with the increase in CEM contracts, an expansion of cramps facilities should have a positive bearing on the reduction of working capital intensity. Cash flows from operations have increased to Rs. 1,424 million in financial year 26 from Rs. 1,000 million in financial year 25 on account of increase in profitability and improvement in working capital cycles. The total capex for financial aid 26 was Rs. 3,838 million, and the capex expected for financial aid 27 is Rs. 3,000 million to Rs. 3,500 million. The capex in financial aid 27 will be primarily for site 5 and also for the new R&D site, which is already progressing well. The capacity utilization at plant stands as under site 2 75%, site 3 70%, and site 4 55%. Thank you once again, and we'll look over to better outcomes than these in future SBL. Back to you, Kushal.

Can we open it for Q&A?

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Sajal Kapoor from Anti-Fragile Thinking. Please go ahead.

Yeah, thank you for taking my questions.

Hi, team. I'm getting a sense that there is a reinforcing flywheel likely emerging as the setup increasingly looks like, you know, more chemistry capabilities, attracting larger global customers, which then enables more complex molecules. Which then improves margins and stickiness, generates more cash flow, funds more R&D and CapEx, and creates even deeper capabilities. So, with that kind of a context, the question is, if the current CapEx and R&D cycle succeeds exactly as management imagines, what will be structurally different about Ather's business model? Five years from today that may not be visible today.

Yeah, I'll take it, Sussamman. Very interesting question. Precisely captured the intention and the goal behind what we are trying to do. We want to establish ourselves as a company in specialty chemicals. Agnostic of industry application, focusing on really innovation with the marriage of chemistry and technology and engineering and systems. And so this was actually the very first slide that we made back in 2013 when we started the company was precisely this innovation in chemistry and technology and systems. And so it's nice to see how it's panning out and that we are sticking to what was our foundational premise of the company. We see it spanning out in terms of what we are doing in the competencies and the chemistry technologies leading to complex products, as you said, being aided by this. Really fundamentally solid and cutting-edge infrastructure that we are putting up in R&D and pallet plant, and then complementing it with manufacturing assets, especially our Site 5. And so what will be structurally different in five years from now? You know, we hope not much. We hope it continues to stay the same, but only do it, you know, for the lack of a better word, bigger and better. And, but at the same time, being fundamentally grounded in the foundational premise of the company, which is what we talked about. And so, I don't know if it's answered your question, but thank you. Well said, and that's what exactly what we're trying to focus on as a company.

Now, that's helpful. And then, secondly, as Ether scales, What do you think becomes more important to sustain the moat or the competitive advantage, capital deployed, chemistry complexity, or customer integration, and how has that answer kind of changed internally over the last few years, starting from 2013, as you said, right? I mean, is there any shift in internal kind of a benchmark between capital deployed, chemistry complexity, or customer integration, or perhaps it's a mix of everything? I mean, how do you measure success internally above and beyond the visible numbers that we all see?

Yeah, initially, it was more about setting up the chemistry, setting up the products, establishing the customers, establishing, proving ourselves in a way to ourselves and to the customers. Now, it's more about there's plentiful opportunities, there's plentiful, in the Indian context, as well as in what we have done for ourselves, there's plentiful opportunities across the industry domain, across customers. We're going to, fortunately and hopefully, be in a position to be able to pick and choose as well what we want to work on and what we want to do. And then the challenge now is execution, execution, execution, translating these opportunities into practice in the R&D, in the pilot plant and production, for which, of course, the team needs to be built, which is what we are focusing on as well, which is a big chunk of my speech today was the leadership team that we are trying to build at all levels. And so now it's the challenge and the exciting part ahead is now putting these things into practice in a bigger and waster scale than we have previously. Thank you.

Thank you. Thank you. Definitely. It's an exciting time for us and wish you guys all the very best. Thank you.

Thank you very much.

Thank you. Next question is from the line of Amin Sharda from Ponartha Investments Advisors. Please go ahead.

Hi, sir. Thank you so much for the opportunity. So, sir, I just wanted to understand with the increase in the currency prices, do we get any kind of a benefit given that we export a lot of our

Yes, but we do have a natural hedge where we are importing certain products also from various parts of the world. So we have a natural hedge on this. We try to capitalize this as much as possible. However, our exports currently, because of various uncertainties, had been reduced. And by the CEM customers, which had structurally put their Indian subsidiaries ahead, so we are selling to Indian subsidiaries, and then they are exporting the same to various parts of the world instead of selling into the U.S., basically. But now that things have been resolved, and I think in the quarters to come, you will see the exports. Growing and coming back to 50-60% of our total top line.

Like, does that mean that we may get some benefit going forward with the currency price? Yes. So, maybe our margins will increase going forward.

Hopefully, yes.

Okay. Okay. And, sir, is there any kind of a demand disruption because of this disruption going on in the oil market?

No, we have seen a steady demand in all of our products as such, so there is no hoarding of material happening in this instance during this war.

And, sir, you also mentioned that in the LSM segment, the prices have increased. So, did it increase basically in the March quarter, in the March quarter, maybe like before that as well, the prices had increased?

No, it has happened post the war scenario.

So, the benefit of that again is expected in the coming quarters.

Yes, in this quarter also we are seeing the pricing being sustained, so I think that will benefit quarter one.

And are you seeing any kind of an increase in the, like you said, we are seeing increase in the raw material prices as well, but like, I think we have an open cost P&L with all of our clients, so that is not expected to impact us negatively, or am I missing something?

Yes, it is not going to impact us.

For the CEM at least, which is an open cost P&L. So, for that, it will not be, it will not impact, but for LSM, there will be some data wherein certain margins will go up and then it will subside.

Okay. Okay. Okay. Understood. Thank you so much. Thank you.

Thank you. Next question is from the line of Sai Kumar from Family Fund. Please go ahead.

Hello. Am I audible, sir? Yeah. Yeah, thank you for giving me this opportunity, sir. So, currently, I would like to know what's in this current quarter, what is the revenue for the bakeries? Previous quarter, it was something around 60 gross. So, is there any increase in this quarter? Yeah, yes, sir. Go on, go on. Yeah, and we have a lot of refineries. I mean, Baker Hughes has some refineries in the Middle East. So, due to this war, most of the refineries, they had some impact due to this war. So, do you see any supply getting disrupted to Baker Hughes in this? Yeah, that is the question.

Yeah, so the revenue to bakerages in this last quarter was approximately 84 crores. 68 crores was from the subsidiary and also from our main company. Also, there were some cramps which was done for them. And 68 crores has gone. And there is no disruption which has happened to the supplies which are doing to bakerages. And in fact, we are getting continuous orders from them. Currently, we have not faced any reductions or cancellation of orders from them.

Okay. So, in this quarter, it was around, compared to previous quarter?

Yes. It was 68 crores, the material was supplied to them.

Okay. Yeah. And one more thing on the bakery side. You said there are 7 to 8 molecules that are going to be getting supplied to in the last fall, you said. So, is there any progress on that? Another new molecules, you said, right? Do you see any progress on that side?

Currently in the cramps process, you know, once we have visibility, we will come back to you on that once it gets processed in cramps. But right now, the R&D continues on those products.

Okay, yeah. And the second question is on the Saudi Aramco JV, sir, on the polyol side. So, what is the, like, are you seeing any impact for Saudi Aramco supplies to polyols? And what is the demand you are going to see for the polyols in the next two to three years?

There is no, we have a, we have an application which is niche in nature. We are, we, the application of the converged polyols is in the case industry. That is coating, adhesive sealants and elastomers. It is a niche industry and has a niche application, so we have not seen any disruption happening on that, and the demand has also not reduced because of the external situations which have faced since the last two months.

Okay. Yeah. Okay. That's all good. Thank you. I'll come back in the queue. Yeah. Thank you. Thank you.

Thank you. Next question is from the line of Prasad Weave from Union Mutual Fund. Please go ahead.

Yeah, pass up.

Hi, for the Congress and the Bush Department.

Pass up, I'm still there.

No, there is a background noise coming from your line. Your line is disturbed.

So, my question was on this, do you remember, do you remember that...

Prasad, there is a disturbance coming from your line.

Okay, I'll, I'll, I'll turn back to you then.

Okay. Thank you. Next question is from the line of Abhijit Akela from KIE. Please go ahead.

Yeah, good evening. Thank you so much for taking my questions. First one, just on the LSM business, you know, is it correct that the revenues are a little bit lower on a sequential basis? Just to check, you know, about, I think I have about 111, sorry, yeah, 111 crores odd compared to 131 in the preceding quarter. Whereas we were talking about almost 20% kind of price increases. So, could you please just help us understand, you know, what that might be?

Well, we are right. In terms of the absolute amount, it is a decline. That's primarily because in the last month, in the month of March, we were not able to ship some of the products due to logistical issues. These have been shipped in the month of April and May, as we speak. Coincidentally, also, they have been shipped at a higher price. So, yes, you are right with that. With respect to the pricing, as Ruan mentioned, we have seen increase in pricing, which has sustained through April and May.

Okay, but there's no sign of volume softness from any customers, right, in the face of the higher prices?

No, not yet. Okay, all right.

Now, sir, then just on the working capital, what's the outlook for next year now? I mean, with, you know, CE and ramping up significantly, how much of a reduction in working capital days could one expect from next year?

Abhijit, we are continuously working on the working capital reductions and lots of measures are being done. And we had considerably reduced in the first six months also, if you are aware. And this increases on account of the new site which started for the Millikan, the site 3 plus plus, wherein the raw materials and the working progress of the materials was there. And we see that, again, this will subside, because delivery started in April and May to Milliken. So now the flushing of inventories is going on, the debtors will be paid also. So we see that by end of this year, this financial year 27, we'll be again having a healthy working capital reduction, which we expect to be around 160 days at least. Our try is to bring it down to 150 days, but 160 days is what we are expecting currently to be.

Okay, so from 179 to 160, that's the expectation, right? Okay. And in terms of the debt number, which is about 400 odd crores right now, what's the outlook for that? You know, will that increase a little bit further as capex?

No, no, definitely it will increase because we have been speaking about that the QIP monies have been completed in the Q3 itself. So we will now be requiring some dates. We already started speaking with the bankers and you will see the dates coming up, the dates increasing a bit in the current year. And it will gradually increase. It's not that it will increase in one go. We'll be taking the dates as per the requirements of the project progress. And that will also ease certain other things. And so, dates will increase, but not very fast. It will be sequential.

Understood. And finally, just one last thing from my side with regard to the growth outlook for next year, revenue growth outlook. Any sort of guidance we'd like to put out there in terms of overall top-line growth? And also, if it's possible to just share with us, you know, will most of the growth continue to be driven by the ramp-up in Milliken and Baker Hughes, or are there other projects as well which can start to contribute significantly, maybe Converge or maybe Site 5 or anything else, you know, which can make a meaningful contribution. Any color around that would be excellent. Thank you so much.

Abhij, so we don't usually give guidance in terms of revenue growth for the year, but what we can tell you is that, yes, the Site 4 and Site 3 plus will continue to get ramped up in this financial year. We will also be having the 18 FUMOTs and NMR, which will start contributing in terms of projects. And the most important thing, I think, will be the commencement or commercialization of Site 5 in Phase 1, where we look to commercialize this entire phase in this financial year. These will be the major growth drivers in terms of revenues in this financial year, FY27. We hope to keep margins stable between the 29 to 30 percent EBITDA margins as well as in the past around 19 to 20 percent.

I'm sorry, just one last follow-up question there. So, Site-5, how much can one expect for the upcoming year and also the 18 film hoods, you know, R&D expansion? How much can one expect from these initiatives?

Abhij, sorry, we will not be able to, we don't give the site-wise data, so I will not be able to comment on that.

Okay, fair enough. Thank you so much and all the best. Thank you.

Thank you. Next question is from the line of Nikonj Gupta from AK Investments. Please go ahead.

Hi, good evening, team. Thank you for giving me the opportunity. So my first question is, based on past quarter-to-quarter performance,

why margins were not hit in this quarter?

Margins, actually, in my commentary also, I have given a very clear indication. The major reason was the 70 million inventory on account of fire which took place at the external warehouse. Also, in the third quarter, there was a FLOP claim income, which was part of the revenues from other operations, which was not there in the fourth quarter. Otherwise, the quarter has been, and of course, year-end provisions, which were not there in the three quarters initially, which were done. Otherwise, there is no problem in the margins as such. So, again, you'll see the same thing coming back in the first quarter. There's a one-off switcher there. Because of that, it's gone off.

Okay. Thank you. That's it.

Thank you. Next question is from the line of Jai Shah from Genuity Capital. Please go ahead.

I am Arvind.

Yes, please go ahead.

The question is for Amun Broadly, and it's more on the qualitative side. First of all, congratulations for a great set, and you know, being an ICT alumni, you know, it feels proud to be an Ather shareholder, the way Ather industry is scaling up. So, Avan, the question is, you know, in the legacy products like 4NAP, NODG, you know, the chemistries had been out there for a while, and we were competing against the rights of BSS, Lancashire, Eastman, etc. Guys who have a, you know, 100-year-old legacy, and still we've been able to scale up. But as I see in our presentation also, two areas, and especially I want to focus on material hands,

where a lot is being done by Ather, and I think

this is one of the fields of the future because the way geopolitics is shaping up, it's more like, you know, you have to do more with less material and keep more and more R&D and the demand that, you know, semiconductors, AI, these kind of sectors are coming up with. So, I want to know, you know, now in these new chemistries or new products that will be needed by these industries, when ATOR is, you know, competing against a DAO or a BASA or a Lancer, etc. You know, what gives Aether a fighting seat at the table so that the principal, you know, comes ahead and actually shakes your hand with you versus one of these giants?

Yeah, thanks. Thanks for the question, and I'm always happy to talk to ICT alumni, and still very much involved in ICT. I think I was at once in six months at least. I'm an official PhD. And so I'm happy to meet in Munna Cantina with a cup of coffee, but to answer your question. Basically, you know, we continue to focus on core technologies, core chemistries, core competencies, innovate. I think we are one of the very few companies in specialty chemicals, especially at our level in India, that has a massive force of chemical engineering, chemical engineers, along with chemists and chemistry in the R&D itself at the inception stages of any project. That's where we can truly innovate in terms of unit operations and chemical engineering outlook towards the processes that we develop, Which ultimately translates into increased cost competitiveness when we go to scale and production. Then also the economies of scale that we try to achieve are truly world-class in all the production facilities that we set up. And finally, I think, you know, it's also, if you are competing with the BASF and Eastman and Lancet, as you mentioned, those are placed in, with assets in Europe and the US especially, then, you know, the cost competitiveness from the labor component of the production cost is truly very competitive in India. And this cost position will remain for a very long time. You know, we have a country of 1.6 billion with 60% under the age of 30. We have a billion under the age of 30. And so this is going to remain. And so combining the innovations in chemistry and technology that we bring it into the processes. Which are truly new age and modern, and economies of scale of anything that we do, and then being strategically located in India provides us firmly a preferred seat at the table. It's not a seat at the table, a preferred seat at the table with these principles.

Oh, that's lovely to hear. So, just diving down more on, you know, advanced materials, if you can just explain me that when it comes to R&D or even, you know, product development, how is it that the whole process works? Maybe you can take any sector like an EE or a semiconductor or maybe space or defense, where a lot of, you know, new coatings are being required by the industry or new kinds of solvents are being required by the industry. So, you know, how is it that the Aether plus the principle, is it a full and a push model, or is it Aether that is doing something bottom-up on its own, or is it the requirement of the customer? You know, like, if you can throw some light on one of the breakthrough products that our advanced material division has currently, how was it developed or something? I mean, obviously, I don't want the name, but just the whole process.

Yeah, that's a whole business model. It'll take much longer than a minute to explain, but in a very broad perspective, you know, it's truly a collaborative approach. That we take with the customer. The customer has the product innovation, where they have proved the efficacy in a plant, in a body, in a material, or in some application. The efficacy is proven, where in proving the efficacy, they made the molecule, but they didn't really care about how the molecule was made. They just wanted to prove the efficacy on a material and material sciences. And that's where we step in, where we pretty much can start on straw and scratch, start on paper. A lot of times we take apart the entire route that they use to make the molecule in R&D during discovery where we take apart the whole molecule and the process that they have and put it back together in what will be the ultimate economical, sustainable manufacturing process. Bringing in our innovation in chemistry, and not only in chemistry, but also chemical engineering and technology, and so then we do the process development in the lab, validate the process, you know, weight in the lab, and scale up in the pilot plant, which is where we have one of the largest pilot plants in the world, where we have more than 15. Purchase going on at the same time, where we can really pilot a process to death, and that's where you can really innovate by way of chemical engineering as well as in the pilot plant, and then so that when you go into manufacturing, our internal mantra is that the first manufacturing should be had with a cup of tea, and so that the process should be so well-defined, and

that's broadly, it's a collaborative approach that we take, where we

really bring in the process side and the customer brings in the discovery side. Thank you. Thank you for the question, sir.

Great one, great one. Hope to see you sometime in future. All the best. Thank you.

Thank you. Next question is from the line of Bhavika Sanghi from Niveshaid. Please go ahead.

Thank you for the opportunity. So, my first question is on the R&D side. As you mentioned that you are doing an expansion in R&D side with 18 fumes already being installed. Can I get to know for what sector we are focusing, like if you can give the bifurcation sector-wise from the R&D, which sector we are targeting? And the second, how much the portion of R&D is going for the client-specific, for chem section, and for the LSM section.

Yeah, high level. We focus on all sectors. So, Palma, Agro, Material Sciences, and Oil and Gas are the four main sectors. And the pipeline is still doing projects from all sectors. The current primary focus is Material Sciences and Oil and Gas. And, Moti, in terms of the business models, you know, you could say the pipeline is. 70-75% RAMs, cotton manufacturing, exclusive manufacturing, and 20-25%, 30% LSM business model.

Okay. And as you mentioned in the beginning that in the semiconductor material space, you are expecting the cost which will go triple by 2030. So can you tell me what's the current opportunity you are getting in this segment of semiconductor?

We are looking at producing on the first phase 400 ton of a particular set of molecules, and where the average price would be $40 to $50 per kilo. So, I think you can do the math, and you will have that number.

Got it.

And just the last one on the LSM side, as you said, that the Q1 was, Q4 was impacted because of the current situation. So, are we expected to see the growth in going forward if such situations get normalized in future? And what the growth we can expect segment-wise from LSM, CRAM, and CEM?

As of today, what we think and what we are anticipating is that in the medium term, the prices will not decline. And so I think for the next two quarters, we are safe to say that this elevated prices will remain and it will maintain this price momentum for the next two to three quarters.

In terms of the business verticals, I don't think we can give you a split as to what vertical will be growing, but, you know, it's safe to assume that the CRAMS and CEM business models shared in the pie will continue to increase, especially with the commercialization of Site 3++, increase in revenue from Site 4, and commercialization of Site 5. So I think this 55% from CRAMS and CEM will continue to rise in this financial year.

Okay, I got it. Thank you.

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

Yeah, good evening and thanks for the opportunity. First question is in terms of the debt. So this year, you've mentioned that we'll be investing about 300 to 350 crores. And there is already debt sitting on the books. Plus, we will have additional revenues coming in for which the working capital requirement will also be there. So what is the number, approximate number that we are looking at, FY27N? And what is the current cost of debt? Thank you.

Approximately by end of financial year 27, you can expect 200 to 250 crores additional in the debts, not more than that. I'm sorry, on the open platform, I cannot give you the cost of debt. Sure.

Second question, again, in terms of the CAPEX. So, if you could just let us know in terms of what is the remaining CAPEX across the three sites, which we have already announced. So, effectively, what would be the total CAPEX that is still remaining, a part of which probably will be commissioned during this year and part will fall in the next year. Thank you.

It will be approximately, all put together, the site 5 is the major site, and the site 1, where we are expanding the R&D. So, all put together, it will be approximately 1,500 to 1,600 crores. Whole. In the next four years, not in one year. Next four years.

Okay, fair enough. And any number on the asset terms for the entire 1,500 crore ballpark?

I didn't get you. Oh, asset terms. Asset terms for site is being targeted between 1.5 to 1.75.

Perfect. Thanks a lot and all the best.

Thank you.

Thank you. Next question is from the line of Prasad Hase from Spark Capital PWM. Please go ahead.

Yeah. Hi, sir. Hope I'm audible. So, my question was regarding CRMS. So, for last three years, if you see on annual level, our CRMS contribution was roughly around 12 to 14 percent. But this year, it has significantly fallen to 9 percent. So, my question was, is there any, you know, structural development or you see, you know, the contribution rising again to double digits maybe in FY27?

Yeah, Prasad, I'll take this. In the absolute terms, the crimes numbers have increased, though there is a slow increase. It's a service income, so it is increased. And because other verticals like the CEM is increasing well, so the percentage is showing as 10%. Otherwise, if you see on year-on-year basis, last year it was around, I think so. This time it is 107. Next year we are expecting it to grow more. And this is going to grow in this way only because cramps is a service income and it will keep on coming when the customers want to develop some products.

And, sir, I just want to try my luck. Any, you know, ballpark mix that you look forward, maybe you can guide us for FI28 at least.

Sorry, can you repeat that question again?

Any ballpark product mix, segment-wise mix, if you can give guidance for at least FI28.

This is FY28, but what we're looking over the next three to four years is 70% of the revenue coming from cramps and CEM and 30% coming from large-scale manufacturing.

Thank you.

That's it. Thank you. Thank you.

Next question is from the line of Pratik Srivastava from Nevesh Wisdom. Please go ahead.

Thank you for giving me the opportunity to ask that question, sir. First, let me just congratulate on a great set of numbers and a great product mix, 70-30, which we are going toward. So, the first question is on this fire safety. Now, we have seen two fire incidents, one in November, now in March. So, my question is, what are the additional steps we are taking to sort of, you know, address this?

Yeah, thank you. Obviously, needless to say, safety remains the topmost priority of the company in all aspects. The November 2023 fire incident was the major one, where we have spoken quite a bit about it, and there's no need to speak about it again, I believe. But in terms of the current fire incident that happened was truly non-event. There was minimal loss to property and no injury, no casualty, no injury even to anybody. And it was completely caused by an event that wasn't under control. It came from a neighboring premises. And in fact, the safety systems that were there in the warehouse worked extremely well to protect the majority of the property inside the warehouse. And, you know, what was the meaning was the very top floor, which was impacted, where it was only packing material, and we have obviously done a thorough study of why even that much was impacted, and we are putting in measures to prevent that. And so, actually, this last incident was... Completely out of our hands, away from all operations, no injury. Systems worked very well to prevent this from escalating, and so we are satisfied with the level of response that was automatically triggered from that incident, and whatever was missing has been taken care of, and we continue to improve on a daily basis on safety, and it remains the top priority of the company.

Well, thank you, sir. I think this should be taken at a higher priority given, again, the new management which you are setting up in the company. So, I think this is very important. Thank you, sir, because I think, you know, we truly believe in the management and the company, but sometimes, you know, these incidents causes some confusion, right, and chaos. So, thank you, sir. My second question is on the product mix. So first is on the LSM revenue. So, we are seeing that in Q4, our LSM revenue dropped 9% worldwide despite 25% volume growth. Now, if I take that, it means that there was a 27% to around 30% rise erosion in LSM. So, what can this be attributed to? Is this China-driven or can you share some more color on this?

I'm not sure how you got the price erosion, but what we have seen is a price increase. There's been a volume decrease in LSM in Q4, which, as I mentioned to you earlier, was that on account of the logistics issues, which has then been shipped to the respective customers in the months of April and May, which were done at a higher price. Having said that, in terms of pricing as well as demand, it continues to sustain, and we are seeing good progress with respect to the LSM model, especially with our current products as well as the new products which will be coming up on commercialization from site price.

Yes, sir. And coming to 5, we are saying that we'll have three new LSM products, right, at $30 to $40 per kg. Right. That's not. Does China currently manufacture any of these molecules? And do we know what the market price would that be for?

Two are Chinese. One is Japanese manufacturer. So we are competing against majorly a Japanese manufacturer. But again, needless to say, China is present in all the molecules which we or anybody else in India is making. So for that reason, we have to indirectly or directly fight against China or compete against China. On the pricing side, we always defend our pricings. We are never very aggressive in terms of selling at lower margins, so we always keep our pricings at par, and we also consider import duties as a delta between the Chinese price or a foreign price and Easter price when we are selling in a domestic market.

Got it, sir. And, sir, we are moving towards a 70-30 target, right? 70 for CEM and CRAMS and 30 for LSM. Any sort of guidance on the timeline when we can reach this distribution, this product mix?

No, I don't think we would like to give you any timelines, but we are targeting this in the next couple of years. So, yeah.

Got it. Got it. Okay. Thank you. Thank you. Thank you. Thank you.

Next question is from the line of Rohit Ori. Progressive shares. Please go ahead. Hi, James. Three questions from my side. Well, the tailwinds of China Plus One and probably Europe Plus One now,

they're still supportive where some of these customers would be looking at alternative suppliers where we can play a big role as a scaled specialty manufacturing platform. These recent wins which were there, these were basically because of either pricing or chemical capabilities or maybe because of our supplier reliability.

Yeah, so China plus one, Europe plus one is all happening and accelerating and increasing. So, and I think it's a mix of all the factors that you listed. It's chemical capabilities, proven track record. You know, we talked quite a bit about our innovation and competencies. That's certainly the most attractive point, but also being placed strategically in India where the cost competitiveness of India drives in. And so combining both the competencies and innovation. And truly, I mean, like, comparable to anywhere in the world, along with being a strategic location of India, helps quite a bit. And, yeah, that's what pushes towards.

Okay. Okay. If you can take us through at site five, how many production blocks are already constructed and probably running, and how many are still yet to be constructed in phase two? Krishan?

Rohan here. We have already completed the construction of four blocks. Two blocks are already ready to run, so water trials and solvent trials are ongoing. I think we'll have good news very soon when we start the commercial production on two production blocks. However, we have started digging holes in the other four production blocks, so that we are out of the ground before the rain heads up, and a total of 16 production blocks can come in on Site-5, and then we also have 15 acres of Site-5+, which is the adjoining plot we recently bought. So, over there, we think around four other production blocks can come in. So, if you combine both the land bank, it's 46 acres, and we'll have 20 production blocks coming in, more or less, as per our plan, as of today, our plan in this site plan.

OK, my last question, Dr. Aman, currently we must be at around maybe 8x8. By when do you think we will be 10x10?

Thank you. We started with 8x8x, and I think we already had about, say, 9x9, if you will, and 10x10 should be for sure within the end of this year. And so we are rapidly accelerating the adoption of newer competencies and chemistries and technologies, supplementing and complementing the original 8x8. So that's the focus. Remains the focus, will always be the focus. Thank you.

Is it possible to share something on these upcoming chemistries that you're already working on?

So I mentioned in my speech earlier about integrated and focused polymerizations, specifically continuous high-pressure and extreme process conditions polymerizations. That's literally the flavor of the quarter, doing quite a bit towards that.

Okay, okay, Dr. Amman. Thank you for answering.

Thanks a lot. Thank you. Thank you.

Thank you. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.

We thank everyone for joining the conference call. If there are any further questions, please reach out to us directly. Thank you once again. Bye-bye.

Thank you, sir. On behalf of HDFC Securities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.