Camlin Fine Sciences Limited (CAMLINFINE) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Cameron Fine Sciences Limited Q2 and H1 FY27 Mornings 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 the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this call is being recorded. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involves risk and uncertainty that are difficult to predict. I now hand the conference over to the management for the opening remarks. Thank you and over to you, sir.

Good evening, ladies and gentlemen, and welcome to the Q2 FY27 earnings call. I'm Nirmal Mamaya, the managing director of Cameron Fine Sciences, and welcome again. I will hand over the call to Santosh Parab, President's Strategy and Global Finance. Updating you on all the decisions taken in the board meeting, as well as on the, at least, for this quarter, Q2 of financial year, 27. Santosh, over to you.

Thanks, Mabel. Good evening, Eriki. We also have our CFO contact partner with us. He just joined, and he will be also accompanying us in this call. I will drive down to the two main decisions which were taken. One, of course, was the financial statement, but the other decision was that our board today approved right issue of around 250 cross. So we will be filing our draft letter of offer to stock exchanges tomorrow and wait for the red cross, and very soon we will launch the issue. This issue is being backed by... By our promoters to the extent of their share individually and or intersex. As you know, we have been talking about the liquidity issues. We have also seen that we had negative carries in our earlier. Quarters, quite a few, three, four quarters, and even this quarter, I will discuss about it is not very encouraging on the EBITDA numbers and the cash flows. And also there are economic conditions, the price changes, our inability to transfer the increase of prices to our customers, local competition. And which has been impacting the liquidity issues, liquidity issues impacting our margins, because we had overused creditors, we had channel financing, so it was imperative, and this liquidity issue was also impending our growth, though some of the verticals have immense potential that we were not able to push despite. Having excellent opportunities in the market, so we thought that then the promoters and the managers thought that it's the right time to infuse equity, infusion of equity, which will help to bring the growth engine back on track, and it will help, of course, this liquidity. Due to the procedure, we'll take some time, and we expect that we should be in money by the end of this calendar year or early part of the next year. Obviously, you know the process that after the network offer is approved by the stock exchange is, we'll immediately approach the board, decide the procedure, the pricing, the cutoff, and the... Obviously, this purpose of the issue is for augmenting working capital. There are no project finances or other things. We are trying to stabilize the working capital. So, obviously, this infusion also is to bring back and come back on the growth prospects of the company. Coming down to the financial result, of course, the financial result doesn't seem to be anchoring at all, but as I said, the issues of higher prices, inability to... Transfer those prices, local competition in some of the products. We had to, we had changed over from Vithyl-Venlin to Vithyl-Venlin almost one month before this hot rain, and that has also impacted the sale of aroma, the production of aroma. Under utilization of the plant has also impacted our margins and Thank you very much, everyone, and welcome to the Ebitda Margins of Aroma. Almost our revenue in Aroma reduced from 77, 774 million to 472 million, and this is entirely almost entirely Thank you. Blends and the straights, the specialty ingredient business has been always the hallmark and it has always done well. We have been able to hold our market in the blends business or the ingredient business. We were at 3,086 million last year. Last quarter, this quarter we had around 2,970 million. Of course, we would have grown much, much faster. But for the liquidity issues, we have been not pushing the growth because this would have created working capital issues. On states also, we have been talking for the last two quarters that our volumes have decreased a bit, but we have come back and we have taken back the volumes. We have moved from 927 to 1109, and this is despite the local competition, which is trying to reduce the prices and try to take market shares, but we have been able to... We feel that we will be able to keep this trajectory on. Consequently, the total turnover of this specialty ingredient was a bit higher. From 2013, we moved to 2089. Obviously, both these sectors, we could have pushed more, but for the liquidity, it would obviously improve from 6.35 to 8.04. This has this adequate liquidity support. This should very fast go to the table region. Performance, the residual thing here, we have the diphenol plant which has been closed since May of 26th. We closed it because of the The absorbent input prices and the rapid changes in the prices, the basic romatocinol, which is almost doubled, more than doubled in the last six months, and it is economically untenable to make diacinol. So it is much, much cheaper to buy hydroquinone from China, which is much cheaper at this level, and we feel that the Chinese will be. Reducing the prices further because we have learned that there will be additional capacities coming on both the dikenol, hydroquinone as well as plastic oil. We have been largely able to control our costs despite the revenues of some time. We have been able to hold on to our... The cost of other expenses, this is despite we had freight cost which has almost doubled in this quarter because of the war situation and other things, but still, largely the operating expenditure has been controlled. As far as Dosh Mahdi is concerned, he has lost around... Almost 2% of the gross margin. This is mainly because of high prices, dollar going up. And the main culprit here is the liquidity issues. Our payables had increased, but to support more and to have more working capital, we had used channel financing both on the purchase side as well as sale side. Obviously, financing costs us because any channel financer will take interest, and because it is on the cost and sales side, the impact has moved to the gross margins, and on an overall basis, our gross margins have reduced from 2,142 to 1,958 in this quarter. And this has percolated down and eaten up our EBITDA, which anyway was 3.4% has almost come down to 0.5% in this quarter. Obviously, the question will be that how this right issue is going to help us to come out of the trouble and how it will help us to grow back. Obviously, the first and the foremost thing which is going to come is to the margin improvement. Because at present, since I am using the channel financing and even the long outstanding. The accounts payable, which I have, obviously, people have been charging at higher rates to cover their interest costs because of long outstanding. That itself is around 4% of the overall cost that comes to around 190 to 200 million rupees in a quarter. So, if you are able to release this long outstanding or... We are able to unwind the channel financing which we have. This could be a direct margin improvement. This is the so-called interest saving, which is coming because of funding from the RID. In addition to that, as I said earlier, we had good prospects in Europe. We didn't push our business in blends, obviously, because of liquidity issues. There are a lot of low-hanging fruits and almost 500 over and above what we did for the turnover which we did of 300 million. We can add another 50% to that. It can be easily added. So the 3,000 odd revenue for the quarter can be increased further by 500 million just by providing working capital. And this is the 35%. The third and the most thing, we have been always saying that our super profits or the blockbuster thing is the Vanlin, product Vanlin, that it has for various controllable and uncontrollable reasons, economic things. The economic viability, distributed challenges, we were not able to scale up. But now, a lot of green shoots, and we will discuss that much. Obviously, there will be questions, and we can explain why we are saying this. We are looking at that we can be able to, with an effective distributor in management and identifying strong distributors, we can push at least 1,000 metric tons per quarter at a reasonable price of $12. We are not looking at $14 or $15. We are looking at $12 because distributors will take their margins. We see that we can do around $1,000, which means that we can have an incremental revenue of around $650 to $700 million in the coming quarters as compared to this quarter, and that being traditional gross margin of around $230 million. So, if I say that what would have been my adjusted EBITDA, if I would have had enough liquidity tuition, my EBITDA should have been somewhere in the range of 575 to 630. And obviously the revenue would have also been at 630. 6,000 plus, if I would have had the liquidity, which would have meant at least a double-digit minimum margin. So these are the low-handling codes, which we see, obviously, will just come in the subsequent context of CO3. To be frank with you, because... The whole right issue procedure, as I said, will be completed by end of this calendar year. So it looks like we have to fight for this. Third quarter to stay afloat and at least give a similar result. We would have liked a much better EBITDA. But to be frank, I think we will have some improvement than what we did. Rather, I will say that we cannot go below what we have done in Q2. So we will be a tad better on the margin, not very big improvement, but tad better than the margin in Q3. But Q4, I think we can, with the liquidity support, we can cross 6,000. We have been able to keep that loan book at that and at that. It was under control. It was around 5,260 million, which has gone up to 5,380 million, and the last portion of that is because of the formation of business. Our interest was without forex, which was around 163, which was 169. Because of not much, we have also repaid some loans. Despite the crisis, we have been able to repay the loans. With respect to the banking system, we are performing because our business is there and we have cash flows to pay the interest and repayments. With this, I will open the floor for discussion and questions. Thanks.

Thank you very much. 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 remove yourself from the question queue, you may press star and 2. Participants are requested to use answers when asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Pratyush Kamal, from Ingram Equity. Please proceed.

Yeah, am I audible?

Yes.

Yeah. So a couple of questions from my end. First regarding, you know, the standard financing, basically the rights issue and all. So, I just wanted to have your, you know, outlook on had we been able to, you know, do this rights issue prior, what would have been the incremental gross margin as such due to that first? Second, what would have been the, you know, kind of revenues, incremental revenues over and over whatever we posted in the Q2? So, that's regarding the rights issue part. And second, regarding the vanilline realization, so this 1-2% nominal blended vanilline realization, and what's the vanilline realization net, basically factoring the discounts and trades, which you would be giving to your customers.

I think Santosh answered your first part of the question in his opening statement, but again, to elaborate, the margin improvement and top-line improvement leading to the sales. The sales would have been higher, if we had done the rights issue a quarter earlier, the sales would have been higher by about 100 crores, and the EBITDA margin would have been better by about 60 crores or so. As far as your second question on the vanillin realization, it's about $12. And blended is $13.7 with ethyl vanillin and methyl vanillin blended is $13.7.

Okay, got it. And the next question is regarding the rights, upcoming rights issues. I just wanted to understand, you know, are all the promoter group, you know, also putting their money into the rights issue, and what's the kind of dilution you're looking forward to in the upcoming rights issue?

Yes, the promoters will be putting in their share of the rights issue. At 250 crores, you can see we have not yet decided on the pricing. We will take a decision in the next few weeks. So, the dilution really will depend on what is the final pricing that we come with.

Just to add, this is a simplified process and... The promoters have to put their 48%. So, there is unlikely that they will get diluted, they have more than the equity.

So, our total equity dilution we will know only when the pricing is done.

Good, all this.

Before we take the next question, I would like to remind participants that you may press star and 1 to ask a question. To ask a question, you may press star and 1. The next question is from the line of Rehan from Kohedan Wealth. Please proceed.

Hi, good evening. Thank you for the opportunity. Just a couple of questions. You know, if you look at last year versus this year, we started also when we started selling Vanilla and VTA with two distributors, we followed the B2B model. And, you know, with the B2B model, you have to give them credit cycles as well. Don't you think that spiral will continue because we moved from B2B to trying to do more of B2C work? And, you know, this again, going back to B2B, giving a credit cycle of whatever, 45 days, 60 days, whatever you do in the VanLyn side of the business may again impact our cash flow. So that's my first question on VanLyn. And second question on VanLyn is that, you know, considering the ADD is with the tariffs now at about 15% and the rupee depreciation should also benefit you guys. How is the pricing moved for you guys at cost, and why is the realization still at about net of $12 to $1.5? So just first two questions on this, please.

So the first one, I didn't follow B2C or B2B. Can you explain that?

So first, last year when we started selling Vanlin, we were going to do the distributor route, where we gave certain distributors stock to sell on behalf. of the company to, you know, push the Vanlin in the market, which worked for us for a brief period. But then, you know, because of the credit cycle, you were stressing on working capital on both sides. One is inventory, which you're holding for Vanlin. And second, you have to give them credit. So it proved to be double whammy for you guys. Then you move trying to sell more to direct to customer to reduce that cash, to normalize that cash. But by the time that happened, you still could not ramp up production that much. Now, when things are better or looking better towards the tariff, why are we going back to the B2B model where we have to give a credit when you're already struggling for cash flow?

So, to answer your question, if you go to direct customers, the credit period is generally much longer. The large F&F companies typically ask for minimum 90 to 120 days. So, which is actually the reason why we are introducing channel partners is basically to improve that liquidity and improve that sales cycle, because typically large distributors are now looking at terms of not more than 30 days. So, you save 90 days of working capital. So it's not the intention of not going to the customers directly, but rooting it through distributors gives you that money or liquidity that you don't need to wait for 120 days for payment from large actual user customers. That is the first part of the question. Second part is that what we've seen is, specifically, some Chinese material is flowing through Asia, through Thailand, Malaysia, into U.S. and Europe, which, of course, the principal mover of the anti-rumping duty is Science Corps, who has been acting to stop and block that entry of... ...illegal imports coming into US and Europe, and that is the reason why the realizations are at this point slightly muted. But as we go along, I think our sense is in the next three, four quarters, all that rerouting which was going on will discontinue, and the realizations should include, from the levels that we are at 12, 12.5 net realizations, net of tariffs and net of...

So, thank you for the explanation. I'll just start with what I asked in the beginning only, that earlier you had started with B2B and they were also taking 60 days credit cycle is what you had guided earlier. And you had said that the brands are paying faster because it's a cash and carry business. Now you're seeing that the cycle has reversed, because earlier this was vice versa, not this way.

We've never said that the brands will give you cash and carry. That is always in any food ingredient business, if you're dealing with companies like Mars and IFF and Jivodan, the minimum, minimum these guys, I mean, in anti-oxygen business, we know that the minimum we have to give to the likes of Cargill's and ADM's and these guys is minimum 120 days.

Okay, and second is that this, so on 12, 12.5 net, which is after everything, so this technically would become your EBITDA spread, I'm just clarifying this.

So 12 minus whatever your cost. So only freight and some selling cost that we have of our people, which is not much, which is not significant.

So what would be at the current realization and current costing, what would be your EBITDA per kg or per ton?

So, our EBITDA per kg or per ton, for our run that we're doing now, is estimated to be roughly about $2.

$2, right? So, because QOQ, you had guided that all three verticals would turn EBITDA positive. We have idled down further. So, if you can share some light on that, because, you know, we, as Santos rightly said, that we should.

I think we mentioned, Santos did mention about the liquidity issues, and that is why we've not been able to scale our VanLyn business purely because of liquidity issues.

So, what was the tonnet we sold of VanLyn in Q2?

So, we did ethyl vanine of 334 metric tons in Q2. So, last quarter, we sold methyl and ethyl of around 508 metric tons. This quarter, we only sold around 358 metric tons.

Okay. And what would be the stock we are carrying? Any stock? Inventory on our books of Vanlin?

Very small, about maybe 175, 200 tons, not more than that.

So what is the cost today now to make Vanlin with the current geopolitical tension, crude, etc., etc.? Would it still be at around $10 at 60% utilization?

Yes, at 70% utilization, it is $10, and we have visibility for that now, for utilizing it at 70%.

So, you know, in Q1, you had tapered down your guidance because of the liquidity issue, the geopolitical headwind, and various external factors. But now that Q2 is also over, and Q3 also, we don't have that much liquidity to... Grow the business at the rate of change that we would prefer. So then, do you think FY27, you won't reach that 200 crore EBITDA figure which you had given at 10%? You had said that it'd be about 2,000 crore top line with a 10% EBITDA. That means that if I just take H1 as 10 crores at a round off figure, that's 190 crores over Q3 and Q4. And with Santosa's opening remark, Q3 also seems just slightly better than Q2. So that means QFI-27, you wouldn't be able to do that kind of runway.

Yeah, that's right.

Okay, so what kind of Q4 number would you expect that the company closes off in a better quarter? Because Q4 is usually a strong quarter.

The first Q4 will be the first quarter with the liquidity with us. The turnaround will happen in Q4. The turnaround, we expect the top line to be 600 crores, and the EBITDA to be 60 crore plus in Q4. And then going forward, it will keep improving.

Okay. Because, you know, if you go back to March 25, you know, before the Vanlin ADD came in and things were good, you were doing a 60 crore EBITDA with a 400 crore top line, 400, 430 odd top line. And now, that time there was no Vanlin that the business was significantly generating. The 60 crore, I'm assuming, would have at least 300, 500 tons of Vanlin. Or even more, if not less. So, you know, where is that disparity in numbers? Because if you could do back in the day without your biggest problem.

Very simple, very quickly, I'll tell you. It's basically the raw material prices. If you see from February onwards, most raw materials have doubled and the selling prices have not been able to pass on. So that's really where the difference is. And this, what we are assuming for Q4 is assuming today's raw material prices. If there is worsening, it can worsen. If it is better, if the war situation improves, that much more better margin will be made.

Sure. Thanks.

Thank you. The next question is on the line of Neeraj from Whitefine Investment Management. Please repeat.

Can you hear me? Yes. Can you tell me, you just said that you have an EBITDA of $2, but your presentation shows an EBITDA margin of minus 23% in Aroma. Can you hear that?

So, we said that $2 at 70% capacity utilization.

What is the EBITDA pattern at the current selling price today? Whatever volumes we did in the last quarter, what was the EBITDA pattern? Zero. No, but then you are showing minus 23% EBITDA margin in the aroma.

So, unabsorbed fixed overheads. To that extent.

No, no, when we are talking about EBITDA, we talk EBITDA after fixed overheads, actually.

So the question is that how much I absorbed. So I had my cost. If I load all my costs, including selling prices and other selling costs and other things, we lost around 11 crores on 300 metric tons.

Sir, can you just, sorry for this, but I think I'm not able to get it. So when you said you have an EBITDA of $2 per time on a 70% capacity utilization, you meant EBITDA before fixed overheads. Is that right?

We said, including all the comments. My raw material cost is only $8. Now the question is, if at 70%... My absorption is $2. If my capacity utilization is 80%, it is $1.8. If my capacity utilization is 30%, the incremental cost of the fixed overheads will go to $3.5. My cost becomes $11.5. When the capacity utilization is there, largely these are fixed over it. We have a fixed cost of around 20 crores per quarter.

Okay. 20 crores per quarter. So basically, when you say $2.00 at 70% capacity utilization, you mean before decrease cost of 20 crores a quarter, right?

Absorbing 20 crores.

Okay, I got it. And, sir, can you tell also something about your blends, how the margins have been there for the quarter, and what is the situation right now?

Blend has always hold on to its margin. It ranges on the basis of product mix, which is between 35 to 40%. So I'm talking about the gross margin. And it's an increase in business. We are recovering all our fixed costs because we have a positive large EBITDA margin. And that's why, if I talk only about blends as a sub-vertical, I am having an EBITDA margin of around 11-12%, and it's 11-12% because we have two main procedures we are growing in Europe, that is Vitafore and Empire, the most recent purchase, and if you are able to provide working capital to that, these margins will move to 13-14%. Talking about only ingredients, we are in the range of 11 to 12%, but at this activity, we have 3,000 million things.

And talking about, that was the same performance in the last quarter, right, of senior crews of the news that you did? Okay, got it. Chase, I'll come back on the queue. Thank you.

Thank you. The next question is on the line of student R.N. Patra from Philip Capital. Please proceed.

Thanks for the opportunity.

My first question is on the vanilla business.

If you can provide... Any visibility that you are finding for the Rambo of the Vanilla in the second half, or let's say for next year, what visibility and where from that you are getting?

From the U.S., we have visibility of about 2.5 to 2,100 tons for the next calendar year. And Europe is about 1,300 to 1,500. So that's why we are saying that probably in Q4, that is the Q1 of next calendar year, we should be at about 1,000 tons. And going forward, that should be at least that much and slight improvement as we go forward.

Okay. So, in terms of the demand from the U.S. market, there is no problem, right? Because in the recent period, we have not seen much ramp up because of whatever reason.

No, sir, I'll explain the reason to you. There were certain large distributors, which have a big market share in the U.S. market, were buying Chinese... This material, which we believe is, of course, of Chinese origin, but rooted through Thailand and Malaysia, as I explained earlier. And they, of course, have now discontinued buying that material because of the legal risks and have reached out to us. And now we are in the process of starting. We've already started some supplies and we continue and we grow that from Q1 of next calendar year, which is Q4 of our FY20 channel.

Okay, sure. So, that is it, sir. And my second question, see, in the opening remark, I think you mentioned about large diaphenyl capacity getting added in China. Is it that and if that is kind of a case? So, is there any future for our diaphenyl unit going ahead?

Very good question. The way the Chinese capacity, scale and size is. And their raw material positions are so much better than in India. It's very, I don't know, it's very difficult to say whether a time will come where we will restart that plant. So at this point, there is no visibility, because just the kind of pricing that they're coming at is way, way, way below our cost.

So, then, in that case, is it fair to believe that the entire chain of these diphenols is likely to face a kind of its own fate in terms of the pricing and all that, the competitive scenario that is likely to mount further only?

Yes, I mean, its only thing is what protection we can get for some businesses in some markets. This is probably the way to view it, because otherwise, the Chinese production is on our rampage, which is far except of what the global market can absorb.

Great, correct. Okay. My second question is about the blends business. See, generally, this was considered to be a kind of a branded business. Means, catering any kind of food additives to a kind of a brand is as good as like a branded business only. And in this current scenario, when the pricing, elevated cost and elevated pricing trend that is visible in various areas, wherever the pricing power is there.

So in such a scenario, it looks like that our blends growth

is a kind of a normalized growth, what we have been delivering in the last few quarters.

So is it fair to

believe that when there is a kind of a cost push? The industry witnesses, blends do not enjoy that kind of pricing advantage, or something like that.

No, I think, you know, when we see, pricing has increased for... You know, petrochemical and downstream of that. In natural products, there is no real increase in pricing. So, we also have a large portion of our blends business portfolio, which is natural. Okay? And the pass-through of some of these petrochemical downstreams, the pass-through takes a bit of a while. If the Chinese are very aggressive in some of these products in the downstream, you probably get some raw materials at favorable pricing, and you can maintain your margin. So, I would say that the margin of 35 to 40, it remains, the gross margin remains in that region. Okay, okay.

So, then, slightly one additional point here. See, when we say that the specialty ingredient, which is a kind of a mix of both brands as well as the straight,

So, obviously, trade should be seeing the, being the kind

of a value chain of the diphenols, would we be seeing a kind of a larger squeeze in terms of margin? And that is why possibly the entire specialty ingredient margin is getting or looking smaller in terms of number. But if you can just a ballpark indication, if you can give that the blends would be kind of meaningfully better than the kind of recorded integrated margin profile for the specialty ingredient.

Yes, you're right. Shantosh did mention that the blend business was at about 11 to 12 percent, and society ingredients straight was at much lower, so averaging coming to 8 percent EBITDA margin, which is a very right observation because raw material prices are elevated. Selling prices have not gone up to absorb that elevated raw material prices. So, till such time as these raw material prices are elevated, we will have some pressure on that margin. But as soon as the raw material prices start easing off, you know, that also kind of then normalizes to, you know, 10, 11 percent. Our blend business will grow from 12 percent to 14 to 15 percent as we go along in the next few quarters.

Okay. And if that would be complemented by Aroma, then that is additional. While the trade scale still can face some challenge in terms of the margin profile.

Correct. That is right. Absolutely right.

Okay. Yes. Thank you for all these answers and wish you a happy delivery to you.

Thank you. Yeah. I wish you too.

Thank you so much for the opportunity. I had a couple of questions here. You know, firstly, how much incremental capital will be required after this rise in fusion of 250 crores? And if there is some requirement, how do you plan to raise those funds and what will be the timeline? That will be our first question.

So, I think we will be providing enough 250 crores will help in two ways. One is that stabilizing the current working capital mismatch, if we have seen the balance rate. My working level days are looking like 60 days. It is impossible. So our general working capital cycle is 200 days, and that's looking lower because we have 130 crores of OOD crisis. So I'm using that 130 crores for stabilizing the current capital and obviously the balance. We will be using for the growth which we are talking for the next calendar year. So, if everything goes as we have been planning, and if there are more lags in that, we don't think we'll be requiring any additional support, either to borrowings or other things.

Got it, got it. So, also in the opening remarks, you alluded to the fact that you were not able to pass the cost pressures to your customers, even the previous participants asked that, you know. How much improvement should be built on in case you are able to pass on these inflationary pressures? And what stopped us from passing these pressures to the customer?

So one thing is that we have, you know, sales business, we have tremendous competition from the local customers, our local competitors, and The prices have been falling. We have been able, we also had to carry that train. So, it was a funny thing in states where my raw material cost had gone up because the underlying phenol had gone up. While my realizations were coming down, almost all the raw materials required for manufacture of the EHV and VHA, which are all my products, have increased at least by 15 to 20%. So, this we have not because it was purely for local companies. As far as natural blends are there, we did not have that much issue, but the prices have been stable. The other part of business, performance chemicals, is a small business, but the whole burn of not able to transfer the increase in cost was in streets. And obviously, because in Aroma again, because it was subscale 1, and due to the typical nature of Aroma with anti-dumping and those things, the pricing, the way the pricing is happening is not elastic with the increase in the cost. So, there we were not able to pass. So, only some portion of natural way where we were able to pass, but the competition, especially because of our business. You are not able to pass.

Understood. So, let's say, for example, 4% you are able to save on the vendor financing, you know, some additional 2-3% margin when you are able to pass on the cost structures. And, you know, how much saving do we expect from the operating expenses, you know, like freight, repairs and maintenance, power cost, you know, if you can highlight it on the software aspects of the business as well.

So, at the numbers which we have been sharing, It has been totally with relation to the liquidity inclusion. Now, liquidity inclusion, because apart from the normal increase in cost because of the geopolitical issues and the volatility in the food prices, apart from that, we are still buying a higher cost. As you told me, we have an easy channel financing and long outstanding accounts for you. Anybody who is giving credit beyond 90 days is going to increase the price. So this itself is around 3-4%. And if I calculate that... I have a lot of savings because I release the long outstanding account payable as well as financial financing. It can bring at least 180 to 190 crores just because of liquidity. So here we are not talking at all about the savings which can come. Because of the price decrease, as Nirmal said, answered for some questions some time ago, he said that we are benchmarking these numbers for Q1, Q4, 5.27 based on current prices. We are not looking at any kind of. Reduction in those prices. We don't know. And we are assuming that pricing, sale pricing, as well as the cost will remain the same. We are only talking about the systemic issues which are, the structural issues we have, and we are relieving that, and this is going to come because we didn't have, we had visible business, but we didn't go further because I didn't have working actors. So that's that. We are talking about a glance increase of at least 500. We are not including any advantage on other operating expenses. We are just talking about what is relatable to the funding which is going to come with the 250 cost. And of course, if something reduces, yes, we will get that benefit. Of course, if something goes up, that's an uncontrollable factor, and in today's world, with the way, the worst situation and other things, it's really impossible to predict it.

Understood. Also, this 5 crore which you have spent on this maintenance of bifenol plant, is it recurring in nature every quarter?

Yes, so I'll tell you because in the last quarter when we made this question over there and we said that it's almost 8 to 9 to us. We have been able to reduce it. To five throws in this quarter. And our aim is to bring the— it cannot be zero because it's a plant which we have to maintain. It's like a mockball plant. There will be some cost on keeping some things moving and working and that. So we feel that by the end of Q4, Q4, Q2, Q2 and Q2, this cash mulk

could be reduced to 25 million rupees.

Oh, annualized basis.

No, quarterly 25 million.

It cannot be analyzed. You see, it's impossible. And the size of plant which we have, 18,000 up to 10 plants cannot be maintained with 25 million rupees an annum. It's for quarter.

Understood. You know, how much incremental revenue addition do we expect from the new product launches in the functional ingredients which you have mentioned as a key focus area? Thank you very much.

The revenue would be annualized for the blends business, you're saying, right?

Yeah. The functional ingredient is a part of the end zone.

Yeah, it's a part of the blend. So that's part of the growth that we're saying. So 20% growth in which more than 50% would be functional ingredients.

Understood. And just one last question over here, you know, are there any excess inventories built in the U.S. vanilline market due to this Thailand circumvention? If you can throw some light over this.

That is getting emptied out. We understand, as I said, we are already getting orders. So I think that would be cleaned out.

Understood. Nothing in terms of like a monthly basis or one month, two month, three month kind of inventory.

No, I think, I think they'll be dried out by the year-end for sure.

Thank you very much. But, yeah, the answer from us, I think, will be the best in the conference. Thanks.

Thank you. Due to time constraints, that was the last question. I would now like to hand the conference over to the manager for the closing comments. Over to you, sir.

Okay. So, thank you, everyone, for joining the Q2 F527 call. We wish everyone a happy Diwali and a new year, and we shall connect again at the end of next quarter. Thank you.

On behalf of Tamlin Fine Sciences Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.