Fine Organic Industries Limited (FINEORG) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Fine Organic Industries Ltd. Q400526 Earnings Conference Call. As a reminder, all participant lives 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 than zero on a touch-tone phone. Please note that this conference has been recorded. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involved risk and uncertainties that are difficult to predict. I now hand the conference over to Mr. Mukesh Shah, the promoter and chairman. Thank you, and over to you, sir.

Good afternoon, everyone, and thank you for joining us for our annual earnings call to discuss the business and financial performance of Fine Organic Industries Limited for the financial year 2526. Thank you. I hope you have had the opportunity to review our financial results and investor presentation, both of which are available on company's website and their talk exchanges. I am joined today by our Chief Financial Officers, Ms. Sonali Badani, along with our Investor Relations Advisors from SGA. Over the years, we have built a strong and globally recognized specialty edifice platform, catering to a diverse range of end-user industries, including foods, plastics, polymers, food nutrition, personal care, coatings, inks, rubber, and several other industrial applications. Today, our products are supplied to leading domestic and multinational customers across geographies, supported by long-standing customer relationships, strong technical expertise, and consistent focus on quality, reliability, and global regulatory compliances. What differentiates us is not only the breadth of our product portfolio, but also our ability to develop customized and performance-driven solutions aligned with evolving customer Our continued investments in innovation, process capability enhancement, application development, and customer engagement have enabled us to steadily strengthen our positioning across the global markets. We have evolved from being not only a product supplier to becoming a strategic solution for a partner for several customers globally. This transition has helped us deepen our customer relationships, improve our product stickiness, and expand opportunities across multiple application segments globally. FY26 was another year characterized by an evolving global macroeconomic environment, heightened geopolitical uncertainties, changing trade dynamics, volatility in raw material prices, and disruptions across global logistics and supply chains. Demand conditions across several international markets continued to remain uneven, while business globally operated in an environmental market by cautious inventory management, trade volatility, currency fluctuations, and supply-side uncertainties. Despite these external challenges, we continue to demonstrate resilience and stability, supported by our diversified product portfolio, balanced geographic presence, strong customer relationships and operational discipline, and long-term strategy vision. On the operating front, FY26 continued to witness elevated input cost pressures. Row monetary prices remained higher compared to FY25, primarily driven by volatility in global commodity markets and higher feedstock costs. Additionally, row monetary prices witnessed a marginal increase during Q4 of FY26 compared to Q3 FY26. Trade costs, which had largely stabilized during most part of the year, witnessed an increase during Q4 of FY26 due to disruptions arising from the West Asia conflict and related supply chain uncertainties. Operationally, all our manufacturing facilities continued to run at almost full capacity levels, full utilization levels. Our Patal Ganga facility, which was commissioned for food initiatives, has also seen a steady ramp-up, and we expect the plant to operate at full capacity during the next financial year. From a strategic perspective, FY26 has been an important milestone year in our long-term global expansion journey and multiple initiatives progressing simultaneously across key geographies. I am pleased to share that board has approved of the acquisition of up to 80% stake in Oleofine Organics, Sentry and Barat, Malaysia, also referred to as OFM. OFM is engaged in manufacturing and sales of food additives and reported a turnover of approximately Malaysian Ringgit 23.3 million, equivalent to approximately 44 CR, as of January 31-26. This acquisition aligns with our long-term growth strategy, strengthens our presence in the specialty additive space, and further enhances our international footprint in the growing Asian region. Post-completion, OFM will become a subsidiary of Fine Organic Industries Limited. The acquisition will be undertaken through cash consideration with the aggregate transaction value expected to be approximately Malaysian Ringgit 34.2 million, which is approximately 82.9 CR, subject to transaction cost and exchange rate relations. The transaction is expected to be completed within the next three months, subject to customary approvals and definitive agreements. Of the proposed 80% stack, 50% will be acquired from Smooth-Ex Chemicals Private Limited, a promoter group entity, while the remaining 30% will be acquired from other existing shareholders of OFM. The transaction will be carried out on an arm's length basis. During the year, the continued investment in Fine Organic Industries, ACZ Private Limited, our wholly owned subsidiary, focused on the upcoming JNPA-ACZ manufacturing project in India. The subsidiary issued a preference share amounting to the 65 CR as part of its equity capital structure. With this, the total investment made by Fine Organic Industries Limited in the subsidiary stands approximately 192.5 crores to date. We are working actively on the JNPA project, and Project Execution Committee continues progress as per the scheduling. As communicated earlier, we expect the commencement of commercial production sometimes during FY28. The SEZ facility remains a critical pillar of our long-term growth strategy and is expected to strengthen our export manufacturing capabilities, While also creating additional room within existing facilities to cater to the growing domestic demand. One of the key developments during the year was incorporation of a Holy One subsidiary in Dubai, United Arab Emirates. The objective of this entity is to establish a stronger local presence across GCC countries and enhance supply chain efficiencies for customers in the West Asian region. During Q4 FY26, we infused equity of Rs. 2 lakhs around, approximately Rs. 49.5 lakhs, into this subsidiary. The West Asia continues to emerge as an important market for several specialty applications, and this initiative will help us improve customer engagement, regional responsiveness, and distribution efficiencies across nearby export markets. During the year, we have additionally infused equity of approximately Rs. 6.17CR, approximately Thai bar 22.5 million, in our joint venture company, Fine Organic Industries, Thailand Company Limited, to support future business growth. We entered United States to send up manufacturing units. We have infused equity investment of approximately US$1.12 million, We have received all the necessary approvals for the project and are currently in advance The Board has approved the appointment of Mr. Shailendra Natkarni as an additional director in the capacity of non-executive independent director for a period of five years, effective May 19, 2026, subject to shareholders' approval. Mr. Narconi brings over three decades of extensive experiences across corporate banking, project finance, retail banking, MSME, and agri-finance, digital banking, and human resources. During his distinguished tenure at IDBI Bank, including as an executive director from 2018 to 2024, he played a key role in driving digital initiatives, leadership development, and organizational transformation. We believe a strong expertise in banking, risk management, and strategic leadership will further strengthen company's governance and strategic direction going forward. Overall, the near-term global environmental continues to remain dynamic and uncertain. We remain confident about the long-term opportunities for the specialty additives industry and photofinogenics. With that, I would now like to invite Ms. Sonali Badani, our CFO, to walk you through the company's financial performance.

Thank you, sir. A very good afternoon to all of you who are joining today. Let me take you through the company's key consolidated financial performance parameters for the year financial year 2026. The revenues from the operation is up by 4.3% amounting to Rs. 2,365 CR from 2,269 CR in FY25. The PAD profit after tax for the FY26 was up by 1.6% on a year-on-year basis from basis up to Rs. 417 CR as compared to last year's 410 CR in FY25. The EBITDA margin for the FY26 stood at 20.4%. With this, I would like to open the floor for question and answers.

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 the touchdown 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ankur from Access. Please go ahead.

Yeah, hi, sir. Thanks for the opportunity and congratulations on a good show in the current macro. My first question is, you know, on the overall RM inflation that we are seeing. So your thoughts in terms of, you know, how do you see this space playing out in terms of both the customer demand, if at all there is any impact there, as well as from a supply chain perspective, any thoughts there?

Yeah, thank you very much. As far as demands are concerned, we don't see any change. We don't see any change. The demand is quite stable. We are facing some supply chain issues, especially for our customers in Middle East, where all the ports are not operative, but only some ports are operative. So now the customers are taking to those ports and then taking it to their side by road and all that. And freight costs have gone up in certain regions. But this is all, again, the customers have accepted to buy on FOB from us because of this situation. All the customers have agreed that they will take all the risk for freight, you know, extra charges of freight and other things. Thank you. Because the prices are going up, because of the increase in the crude oil prices, the demand for vegetable oils has gone up globally. Like, for example, the palm oil, which used to come from, which still come from Indonesia and Malaysia, there the impact is coming stronger because the Indonesia has decided to use 50 percent of the palm oil in

biodiesel to mix with their diesel and petrol and all that.

So availability has reduced. Similar thing happened And in Malaysia, they are now at about 15%, but they may also increase. So I believe that palm oil prices will continue to increase till this war issue is over. And other vegetable oils following the palm oil also probably increase. So I don't see raw material prices coming down in near future till this issue is completely sorted out.

But we are, fortunately, we have great customers, very nice customers.

So we are, I mean, they are quite cooperative, and we are also not taking very large long-term orders. We are taking very short-term orders, maybe one or two, and customers are quite cooperative. They understand the situation, and they are very much cooperating with us. So, we are quite confident to go through this, and we have not stopped, I mean, this crisis has not stopped us from going ahead with further expansions. Now, this Malaysian venture is also going to be with us, so we have a lot of plans for that unit also. And ACZ, we are working on full swing, we are trying to start it as early as possible, and The U.S. is also definitely, we will go there, and only thing, you know, right now, the discussions are going on. So, we are very, very positive for our growth plans.

Sure, Mugash, that was very helpful. Just, you know, for the second question on our expansion plans, while you did, you know, highlighted the JNPA expansion as well as, you know, the U.S. plans, if you can share, you know, some thoughts, One, in terms of what, you know, could be the opportunity size here, especially on the U.S. side, wherein we have got sort of, you know, 160 acres there. So how big or, you know, in terms of capacity, in terms of revenue, whichever way, what are the expansion plans there, and by what time frame can we look at? And similar thoughts on the Thailand plant as well, wherein we had done some pilot testing for food editors, but wanted to scale up subject to the response. So your thoughts.

That's right. That's right. First of all, as far as U.S. is concerned, there is no point in putting up a small plant there. It has to be the world-sized, world-scale plant. But we know that we don't have any experience in running the plant in U.S. so far. Plus, this is 100% owned fine organic company. There is no joint venture. So, that first step, we expect some issues, some problems we may face. So, what we have decided that we will have little conservative capacity in the first phase, so that we can manage the smaller problems which

we may come across in the first one or two years. As far as the market demand is concerned, we are not worried at all.

What we are worried probably is that running the plant efficiently and running the business successfully there, with the initial hiccups and all these things, we are a little bit concerned. So that is why we are going little cautiously in the first phase. But after first phase, it will be much bigger. Second phase will be much bigger. Third phase will be much bigger. As of now, we have planned for at least three stages as of now. But we will start walking before we start running, you know. So this is the U.S. expansion. Thailand, JV, yes, we want to go for that. But right now, our team is extremely busy in ACZ plant, you know. We don't want to delay that expansion, so we have requested Thailand people to bear with us for a few months till our team gets a little bit free from SCZ, and then we can send them to Thailand. So they are cooperating with us. Right now the Thailand plant is running at full scale, but we want to expand there as well, and that expansion, you know, it will involve a lot of manpower from our side, especially for the project and engineering and all these things at the beginning. So, if I send them to Thailand, my expansion in SZ may get delayed. So, I don't want to take any risk, and I have told them, and they have readily agreed. They said, okay, we will wait for a few months till you are free, and then the Thailand is definitely going to be there. And meanwhile, this Malaysia is also in queue now. So, we have a lot of things to do. So, everybody is very busy and we are trying to take up everything, you know, coming out. We have very less number of people compared to the expansions coming up, but everybody is geared up, everybody is charged up, and everybody is working hard except me. So, I think it's going to be there. But we need to have a little bit of patience. We don't want to make a blunder, especially in U.S. and in SCZ.

Great, sir. Thank a lot for your detailed reply. Congratulations and all the best for the expansion. Thank you. Thank you. Thank you.

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

Yeah, thanks for the opportunity and congrats on a strong sequential recovery. The first question, just from the earlier participant, in terms of the investment for our SEZ plant, what kind of initial investments that we are planning and in terms of potential revenues that we are looking at? And similarly, for the U.S. plant, you have explained there will be three phases, but what could be the potential investment in the first phase that we are looking at in terms of maybe amount or capacity? Thank you.

Okay. So as far as SCZ investment is concerned, we have already announced it last year. SCZ investment is approximately 700 to 750 CR. So, that is the first phase we have already announced, and we will build some, you know, base for the phase two also.

So, with the majority of the 750, we will go into the first phase CAPEX and some basic investment for second phase.

As far as U.S. investment is concerned, we are still to announce probably within next quarter we will be able to give you the right Because as of now, the discussions with a lot of contractors are going on, and their contracts are not yet finalized. There are a lot of discussions are going on. So once these figures are increased, then probably we should be able to. I think by next quarter, we should be ready with the U.S. investment figures also.

Sure. And on the SEZ front, 700, 750 crores, what kind of revenue potential that we are looking at?

No idea, my friend, no idea. As of now, no idea. We know what we are going to do there, what we are going to make there. But the prices are so volatile as of now, you know, it is impossible to predict anything. But at the right time, we will, you know, announce that. As of now, we are totally focused only on the starting of this SDS facility. Once we achieve that, then probably, yes, we will have some idea to share with you.

Right, got it. The second question is on the oleofine organics, which has been acquired. First of all, congratulations for that. And you indicated the turnover has been close to about some 40-odd crores. So, what are the plans there in terms of scaling up this, given that some existing products?

Yes, it is a very old company, which since 1988, I believe, and the products what we make there are completely based on palm-based raw materials, and we have yet to acquire, we are going to acquire within next three months. The revenue is approximately Rs. 54 CR as of now, and there is a lot of scope of expansion there. But that is the reason we have acquired this 80% share, and we have a lot of things to do there as well. But everything will be palm-based there. As of now, they are only in food additive mainly, but going forward after doing the investment, we will expand into other lines also. Of course, the food will be always there because it's palm-based.

Right, and do we have the exports from this Malaysian venture to the U.S. currently, and are we planning to incrementally do that till the time the U.S. site is?

No, as of now, from Malaysia, there is no export to U.S., but major exports are to Asian countries like Indonesia, China, Vietnam, those kind of countries, mostly Asian markets, something going to Pakistan and all those small, small countries nearby. But yes, after expansion, there will be some products going to other markets also. But U.S., not immediate chances in the first place, because we are planning to start manufacturing in U.S. only the products required for U.S. So probably from U.S. and U.S. exports will not be so much, maybe a little bit here and there, but not much. But mainly it will be Asian region.

Sure, sir. Thanks a lot and all the best.

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

Thanks for the opportunity. Good evening, Mukesh Bhai. So, my first question is on the JNPT timelines you indicated as somewhere in FY28. Can you be a little bit, you know, give more details, probably it will be in the early 28th or at the end of the 28th. And how confident are you about this timeline? Because I'm sure most of this pending work would be in your controllable. So, are you very confident that you will be starting this plant within the timeline? And how about the product approvals for this site? Do we have to do it again right in the beginning? Or it's largely the same customers?

So, Arunbhai, we are trying very hard to start it as early as possible, but we believe that we will be able to start at least in the second half of 2028. As far as the product approvals are concerned, there is no issue about product approvals because initially we are going to make the product which we are already exporting because this plant is in the SCZ area and whatever we produce will be exported. So, initially our plan is in The first phase at least to transfer the production what we are already exporting currently in our existing plants to these assisted plants and start exports right away. That is the first phase. So the approval and other things are not necessary, except maybe there will be one or two Japanese or U.S. or those kind of very large companies who may come here for a formal approval because we are changing the site, although the chemistry process and everything is going to be same in the first phase. So, but for their, according to their process, audit or whatever, they will come for a formal approval, but 98% of other buyers will not bother. Only some two, three large customers may come for this audit approval or whatever their procedure or approval. But it's basically the formal formality. So, we don't see any issues coming up in SED as of now, and everything is, as of now, moving quite fast and as per our schedule, we have got very nice agencies working on this, and I was there last week to see, and I was very happy to see that it is going on. And as of now, I mean, there is no other approvals are also pending from governments, right? Maybe we will have to face one or two more approvals once we come closer to the commissioning stage. But as of now, there is not an issue there.

Understood. On our U.S. plant, we almost got land, almost at a similar timeline as it of JNPT, but we are still on the contractor finalization. Is this because of the volatile U.S. policies, and do you see the U.S. manufacturing policies now closer to reality, and do you need some more clarification from the local government to go ahead? See, I don't know why.

Local government is more than cooperative. They are really helpful. Very, very helpful, I must say. Very positive, very supportive in all respects. Only thing, initially, we faced the issue when they imposed 50% import duty and all that. So, that was making it a little bit shaky at that time. But we knew that it was going to be temporary, so we patiently waited for them to get clarification. And now the duty factor is always there, but it is not a very big factor. I think 10, 15 percent is there. But that's okay. That's not a very big issue. Of course, the cost will definitely, it will impact the cost, but there is no other way because everybody has 10 percent, 15 percent duty. That's nothing, not too bad, you know. So, after calculating on 50 percent basis, we think 10, 15 percent is acceptable. So we are not worried of tariff or other such thing. We are not delaying anything for that. We are going right with this. So tariff is not really an issue now. Once we finalize these contractors, which other team is working on full swing with them, we will immediately would like to start the activities there, the construction. We would like to start there. Understood.

And you said earlier this U.S. plant will be of world scale. That would be, I'm assuming, at the end of the phase, final phase. So, would, after the final phase, would that be as big as our current SVZ plant, or relatively how?

We will start only the first phase together. First phase. We will not, because we believe that we may face some problems, because we are totally not experiencing U.S. operations in U.S. So, we may face certain issues in the first two years. So, we would like to sort out all these things and make it smooth to work before we go for the bigger investment in phase two. So, first phase, we will be a little conservative, but still, you know, conservative means it is not that small, but comparatively, compared to the second and third phase, it will be a little conservative. And again, the sales will not be an issue for the first phase, because we have the ready markets, customers, approvals, everything is there. So we are very positive about the U.S. plant, at least for the phase one.

Just a little bit, one clarification, when you say phase one, that capacity will be, approximately will be half of our GNPT, one third, what is the kind of...

I will not give any production capacity figures.

I have told you earlier. No, not in absolute concern, just in related.

It is not in the interest of the company. Although we are aware of the first phase, we are aware of the second phase also. But I would not like to mess up that, you know.

No, no, no problems. One final question on Malaysia. I am sure that you have thought about this, but it seems like the acquisition is a very small one as compared to our scale. 45 crores of revenue, maybe I'm assuming even with a 20% margin, it's a 10 crore cash flow plant. Given that we have too much in our plate, how this is helpful at this sense?

Arun Pai, I understood your point, but don't forget that this is a strategic decision because you are situated in the right place. This is basically for oleochemical derivatives. Farm oil is the most important thing. India does not have that. So, there are certain big advantages there in Malaysia, being in Malaysia, and we have taken that decision for everything. We are definitely going to expand that in a sizable way, and that is the reason we have taken over. We were not interested in this small one facility, but we are looking at a big projections in the future coming up. So, Malaysia definitely is going to be an important one for us.

So, this company has a lot of land, so, it

does not have a lot of land, but, you know, existing land is up for us to start with at least something and make it a little sizable one to start with with a specialty product, especially based on palm and palm carnivores, some high value products and all that. So, we will, we are focusing only on that as of now.

Understood. Understood. Thank you, sir. All the best.

Thank you. Thank you. The next question is from the line of Nitesh Tooth from Anandrathi Institutional Equity. Please go ahead.

Hi, sir. Good evening. Thank you for the opportunity. So, first, on the raw materials, more specifically on ammonia, which is, you know, which is a critical input for several of your product categories. So, ammonia was, you know, has been in tight supply. My question is, you know, whether fine organics has experienced any disruption in the ammonia availability because of this?

As of now, no, Nitesh, as of now, we have some storage capabilities and other things, but so far there is no issue. We have dials with our suppliers and all that. So, so far, there is nothing, but if this war, you know, prolongs further, and probably as the government keeps on saying, it could affect, but as of now, we are fine.

Sure. And what is your current read on, you know, whether FY27 could be the year where, you know, the macro setup starts to mirror the earlier cycle that we had seen in FY23, you know, given the demand supply environment? Is this a similar tightening, you know, that we are seeing on the global oleochemical supply chain, you know, similar to what we have seen in F523?

Supply chain is affected everywhere, there is no doubt about it, but it is, because the oleochemical supply chain mostly is from Asia as of now, and in India, we have other oils available, but majority, so that is the great cost and everything has gone up, but as of now, there is no problem. But going forward, I anticipate some short supplies, particularly for palm oil, because if the crude oil prices continue to go up, the use of biodiesel will increase, and the use of biodiesel will take away a lot of vegetable oils from the market.

So that could, I mean, the prices may go up.

It will not be, the oil will not be available, not like that, but the prices may go up. That's what I see. But, so, 27, I'm sure, considering, even if the war is over, it will going to take a few more months to get everything stable. So, I would say that in 27, we should not expect lower price of raw materials, especially vegetable oils. It will continue to be on a higher level. So, we have to be a little careful in FY27.

Sir, and on the capital work in progress on your consolidated balance sheet, while you were referring to the work that is going on on the SCZ side, but the balance sheet is not reflecting any significant increase, you know, as of March 26. So, typically, you know, once the civil and the construction activity commences, we would expect the CWIB to start building up meaningfully. So, could you help us reconcile this? I mean, specifically, has there been any trend, you know, on the on-ground construction or has it, you know, been primarily on the land and the approvals and the subsidiary, you know, infusions there? Just trying to gauge the actual pace of execution, you know, and whether the FY28 commissioning timeline, you know, would be largely met.

Yeah. Hi, Nitesh. Sonali, this side. So, we have started spending and we have on-boarded the contractors on the SEZ side and the advancements have been released, but this has happened very recently, and I think the meaningful number which you are looking for, you will see in the coming quarters.

So, ma'am, when, you know, probably if you can give us some timelines as to, you know, whether we can commission in the first half of FY28, or would it be towards, you know, towards the end of FY28?

Yeah, yeah, that Mukeshwai already told that it will be somewhere later in my question.

Second of 28 will be possible, according to me.

All right, all right. Just one more question, ma'am. So, on the employee costs, even after stripping out the 7 crore, you know, one-time gratuity provision related to the new labor codes, The underlying employee cost growth is approximately 16%, you know, in FY26, against a backdrop of a 4% revenue growth and, you know, I mean, a relatively soft performance for the year. So could you help us understand how much of this is, you know, routine, annual increments and how much reflects strategic hiring, whether for the SEZ project team or the U.S. subsidiary or the global entities, the new ones like Dubai and Malaysia?

So, not for Dubai and Malaysia. I think the strategic hiring has been started for our SEZ plant, which is going to come up. Because those people, by the time the plant is ready, they should be trained, fully trained, and then they could be transferred to that particular company. So, that is there. But, yeah, I do not have exact breakups to that. But out of that employee cost, there is something which includes our director's salary also. So, it includes all employees and directors' salaries and the new hiring, and whatever opportunities Mukesh Pai has discussed, I think the strategic hiring, you know, is including everything, because the project team, all other teams need to be strengthened. The bandwidth needs to be, you know, improved, because as we jump on all these opportunities.

So, for FY27, you know, I mean, could we expect a similar or probably a higher rate there in terms of the increase in employee costs?

Yeah, something similar, yes. But out of which this graduate part is 7th year, you can, you know, keep it aside because that is one time which we have taken. But, yeah, something similar because our hiring will keep on going on for next one year also across because people need to get trained here and then move to the respective locations.

I got it. Just one last on the tax report.

Mr. Nitesh, may we request you? I'll be writing this here. Thank you. The next question is from the line of Pigyan Srivastav from Marsalis Investment Managers. Please go ahead.

Hi, sir. Am I audible? A few questions. Once construction starts in the US, how long would it take for Phase 1 to complete?

Where in S is it? In the US. In the US, what do you mean?

Phase 1 completion.

Phase 1?

So, once we start, I think, then we can give you the timeline.

Because right now, we have not yet started the construction. So, right now, we are finalizing the contractors and other requirements. So, once we start the construction, the plant should be commissioned within 18 to 24 months. We will try for 18 months, most likely. Of course.

And sir, given that we are in a raw material price inflation scenario, is there any change in the length of the company's contract with our clients?

Raw material price scenario what?

Sorry, I could not... Given that the raw material price is increasing, is there any change in the length of the company's contracts with our clients?

So, since, I mean, this war started somewhere in February or March, and since then we have been very cautious, and so we,

also the raw material prices are going up, and it will, as I told you earlier,

the raw material prices will remain higher at least in 2027. And so we are very cautious in making customer contracts. So whatever contracts were there, we completed before that fortunately. But there are some still small contracts might be there. But most of the customers are very cooperative. So we don't see any much issue. And right now we are told the customers that we will not be able to make long-term contracts because of this unstable situation. And the large companies, they all understand and they are all fully cooperative. So, they are saying that, okay, let us do for one month, two months, three months, whatever is possible, and they are cooperating with us. So, we don't have that problem so much as of now.

Got it. So, short-term contracts is what we are looking at. And, sir, for plans, are we expanding our product portfolio currently? Have we added any new divisions, and how is the progress in the subsequent division?

As of now, all the plants are running at the full capacity. But product portfolio is a different way. The R&D continues to develop the new products, new applications. Those developments are going on. And, yes, there are a lot of developments going on. But as you say, in our kind of products, I mean, it doesn't start immediately because then it goes for regulatory approvals and a lot of other approvals before the customer approval. So, it is a long-term process. So, we believe that we have already done several developments, and they are slowly progressing, and we hope that some of these products will be available when we have spare extra capacity available after one and a half year, two years.

Okay. And, sir, finally, in India, are we seeing, how has the demand situation been in the current year, especially with inflation starting to creep up?

See, prices have gone up, and as of now, demand, we don't see any drop as of now, because you see, our products are used in a very small quantity, typically 0.1 to 0.5%, and they are edited as a performance edited, so these are not commodity kind of products, so these are absolutely performance-oriented products, and people, when they make certain products, they require basic, some performance, so we are not affected, although the prices of products are going on, but we have not seen any customers stop using the product, or Or taking any, you know, people going bankrupt or something. Nothing of that sort, at least as the customers say. Every customer is in fact expanding in India. So India is a very positive development is going on. In spite of all the challenges, the growth continues in India. Okay.

Thank you, sir. This was very helpful. I'll take that.

Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Rona Sheda from Avriga Capital. Please go ahead.

Yeah, hi. Thanks for the opportunity, sir. So, my first question was on your existing plans. So, the day when your JNPA starts to scale up because you will shift some products on the SESR plant, I just wanted to take your understanding on the facility which gets vacated in your Ambaranath plant. How soon should we think of catering to incremental demand from the existing plant? If you could share some thoughts.

Yes, yes, of course. So, first of all, when the products are transferred to ACZ, it will be for the products which we are continuously regularly exporting. So, it's a good situation, I believe. So, we are continuously working on that. We know that what we are going to make after the plant, we get extra capacity. And we are already prepared for that. I don't see much challenges in that filling of that plant for the domestic sales.

Perfect, sir. This was very helpful. And my second question is, you mentioned that the Thailand team is waiting for our manpower to get freed up. So, is this our right understanding that the Thailand's expansion and probably adding new lines in Malaysia would probably come before phase one of JNPA or this will be after?

No, no, because these are smaller ones. Our priority is JNPA is the top priority. Then U.S. plant, and when U.S. plants are set, the team is totally different. So when S.I.Z. team is free, they will focus on Thailand and Malaysia.

Sir, but can that facility function in Thailand? It's a follow-up. It's a follow-up.

There are several participants in the conference. Please return to the question for a follow-up. Thank you. Thank you. The next question is from the line of Yashika Gogia, from Nirzad. Please go ahead.

Yes, sir. Am I audible?

Can you use your handset?

Your voice is very disturbing. Hello, am I audible now?

Now, now, yeah. Okay.

Yeah. So, first of all, I would like to ask, like, how are we differentiating ourselves from our peers, like Keri Group, DSM, Pulse Guard, in terms of, like, technology, innovation, or the customer relationships, how are we better than them or a difference in them?

Yes, see, you said about Kerry. Kerry is a very large daily conglomerate, Irish dairy conglomerate, and they are in so many other businesses related to food, and maybe something from non-food also. They're starting with the milk and a lot of other things. We are competing with Kerry only in the one small segment of emulsifiers, nothing else. Otherwise, Kerry has hydrocolloids, Kerry has a lot of flavors and a lot of other things. So we don't think that Kerry is our peer, actually. We are just a competitor to them for some particular line of emulsifiers. Nothing more than that. And similar situation with the Pulseguide. But Pulseguide is like us, you know, they are more focused on emulsifiers, like us. So you can compare us with Pulseguide. And Pulseguide is more than 140 or something years old company. Very, very nice company, very, very good company, based in Nordisk. It's a great company, I would say. And we learn a lot from them. They are very good in confectionery. Their specialty is confectionery. Chokrasin confectionery. They are probably the world's best. And so we are also learning from them. We are better in certain lines. They are better than ours in certain lines. But it's a very good company. We work very closely with them. And we know each other very well. We meet each other very well. We exchange some ideas. And it's a very nice company to work with. We both learn from each other. So, it's a good company to work with. You can connect us more with the pulse guard rather than carry. But DSM and other things you told me, they are totally different. They are not our peers.

So, furthermore, I would like to ask, like, have we done the product approval for the domestic customers, since more manufacturing will be catered to the domestic customers, which will be used to the export earlier? Also, my another question would be, are we planning to do any co-creation or co-development with any of the, with the U.S. expansion we are doing, or with the GNPSAs, in these recent expansions or subsidiaries that we are taking, are we planning to do any type of co-creation, co-collaboration? These are my main two questions.

See, product approval from domestic customers, we already have the product approval, except for the new products. Now, suppose new products tomorrow we are going to introduce in market for domestic, then we have to go for those approvals. But for all our existing products, we already have global approvals for most of the domestic customers, the large ones, small ones, medium ones, all of them. So we don't have that issue. But okay, for the new product, we will have to go for the product approval first, after the regulatory approval First of course. And so we don't see any challenges, at least in India, the approvals are getting much faster. But wherever the headquarters is in Europe or US or other countries, there it gets a little slower because they have to depend on the, you know, their headquarters to get the approvals and all that. But that's okay. Now, we are very much, we have done all this work for the US customers. We've already got it done for the last many years. So there we are in a good position. And that's why we are going to put up the plant there. And And as far as the co-development with customers are concerned, yes, some large companies we do have co-development projects where they have a confidence in fine organics and we work under the non-disclosure agreement. We have quite a few such cases where we develop products specifically tailor-made to suit their requirements. So, yes, those cases are also there. And we like those type of co-development work because we also learn a lot from them.

All right, sir. I would like to cover up with one last question.

May we request you to return to the question queue for a follow-up question. Thank you. The next question is from the line of Ishwar from Ithor PMS. Please go ahead.

Yes.

Yes, sir. So over the years, we have been constantly doing R&D, but the capacity has been stagnant for us. So, we must have developed a lot of new products. So, is there any particular new product that you are most excited about?

No product which you are excited about?

Any new industry, like the beauty and personal care or the animal feed segment, any products in those industries that you are most excited about and which can scale up to a big level?

So, Ishwar, in our line, you know, I am very much afraid of getting excited about the new product, because if I get very excited, then sometimes the regulatory does not approve that. So, it is very, you know, I have to keep my fingers crossed. So, first, we develop the product, first we go to the approvals. We get little bit excited when we get regulatory approvals, then yes, you are saying. And then second, again we get a little bit more excited when the customer approves. And then finally, you know, when the commercial production starts, then we say, yes, now we are fine. So that excitement is actually divided into four or five different segments, you know, so there is not a big excitement, but small, small excitement coming in two, three, four years, you know, this is how it is happening in our kind of theory. I mean, I am sorry to disappoint you by cutting off these excitement levels, but this is what is the reality in our business. And new industry and opportunities you are talking about, there are lots of opportunities. If you, I mean, if I tell you the kind of industries, I mean, we are working with, you will laugh, you know, there are so many things are going on, which are crazy things going on. Of course, all of them may not be successful with all of them, But yes, there are definitely a lot of opportunities are there. And people now want everything based on the sage chemistry, green chemistry. And that is where we have an edge over others. So we have a lot and lot of opportunities coming to us. Our R&D is very busy in developing so many new products and applications. We are continuously appointing new people with the new skills and new expertises in our R&D. So, lots of things are going on. But I can only tell you something, you know, once we get crystallized, you know, something where we see that, yeah, now it is getting commercialized. Now, for example, the last thing which we got, we did was expanding the food nutrition division, which was not there earlier. It started only in 2018-19, and then now it is growing very well right now. So that is where we feel very happy that small division, we started with one product, now we're having 14, 15 products, all getting commercialized and getting into so many new fields and applications. So it is definitely happening, but it's a slow process. It's not like something happening, something very fast. It's a very, very slow process, but it is happening.

My second question was, the past two, three years, have there been any domestic customers We are not able to cater to because of the constrained capacity, but we will be catering to once Umbarnath's exports move to JMPSE here. And how far do you expect to fill up this remaining capacity in Umbarnath?

Now, Ishwar, we are very much experienced in facing this kind of short supply situation. This is not first time to us. So we have devised already the system for that. So what we do is we give our domestic customers a priority. And the export customers, we explain them very well. We convince them to buy a little bit less from us, you know. And they are ready to cooperate. They help us out, you know.

And then whenever we have extra material, we go to them.

But so whatever we do, I mean, I must have told them all these things two years ago that I am going to have this issue after this year. So please buy a little bit Thank you.

Participants are requested to restrict the questions to two participants. The next question is from the line of Bharat Shah from BCS Capital Ideas Limited. Please go ahead.

Hi, Mukesh Pai. Yes. Well, namaste, and I didn't have any questions for this quarter or this year, really, but I had more a kind of a view over the last several years. So when I think over the last six, seven years, there was a dramatic period of 2020-2023 when top line really dramatically upsurged. As well as the profits went really dramatically up, both in terms of the size of the profits as well as the percentage margin. But if you leave aside that one- or two-year period, and then I see the picture over the last six, seven years, our turnover has grown at the rate of 11, 12 percent. Our operating profits also have grown somewhat at the similar pace. And last three years, in particular, actually have been a kind of a very low growth and degrowth in the profit. So what do you assess of this? Is this the nature of activity with a wide variety of products, specialty products, custom-built products, geographies, multiple applications, and long approval cycle development time? Our long-term predictable growth is likely to be more like these 18% or do we think that this period is a special one?

Yes, what you said is correct. That period, what you told, 2022-2023, that was just after COVID or something. So, at that time, there was a lot of supply chain disruptions, and fortunately, we had all the stocks of raw materials, and we could manage supply chain much better than anybody else compared to our competition in U.S. and Europe. And that is why that I would consider just one of the year where we got highest profit. It was not a normal year for us. It was definitely the best year what we had. But that was because of the prudent steps what we took of storing up all the raw materials required, which we were anticipating this going to be the supply chain issues. And fortunately, we were right. And that is it. So I don't think we should consider that as a benchmark year. That was just one of the year. It was just one of the year. Our benchmark, I would say sustainable EBITDA limit, we have been telling, if you would have met me earlier in any other investor meeting, I have been always telling our investors that our sustainable EBITDA is in the range of 18 to 20%. So that is based on the last 10 years record, if you see officially. We have never targeted any particular EBITDA, but this has actually come into that. So 18 to 20 probably is the sustainable, and you should look at it at least till now. I do not know about U.S. plant and after ACZ plant and all these things, I am not able to tell you. But as of now, I would say, if you ask me, my sustainable EBITDA is 18 to 20%. Now, what you said that the growth is limited. Yes, the growth is limited because our plants are running at full capacity. Even since last year, I have been telling our investors that my two years are going to be flat, absolutely flat, because I cannot add any additional capacity. So, this was expected. There is nothing wrong in, according to me. We have told very people very well. We never, even next year is going to be the flat year. Not only this year, even the next year is going to be flat. Because all my plants are running at full capacity, then what is the point, you know, how can I achieve the growth? It is not possible only. So one more year is going to be flat. After that, yes, the growth will start coming, one, the SCJ plant is commissioned, and then the U.S. plant commission, then the growth will come. But at least till 2020, definitely the growth is not going to be there. And, amid that, we will try to be between 18 to 20 percent, if the raw material prices, you know, are not going up heavier, which, of course, the raw material prices will be higher, but it will not go totally, completely out of control. So, I still, I am quite hopeful that 18 to 20 percent, we should be able to maintain, even in the worst situation. Because that is based on the historical data.

Mokesh, my debt you have always maintained. In fact, you have done a little better than that over the 10-year period, where typically 20% or a little better than that is being in general the profitability we maintain. But my key point was really about the growth rate. So you are saying even for 26, 27, 27, 28, meaningful top-line growth is unlikely?

Yes, it is going to be very flat. Let me be very clear. It's going to be very flat till the assisted plant is commissioned. It is going flat. And even if you see some top-line growth, it will be because of the price increase, not because of any sales growth. Right.

And going beyond... Sorry to interrupt, Mr. Bharat. No, I just need to complete this question relating to this question. So, after 28, what kind of picture, Mukeshwai, do you think would prevail?

After 28.

After 28.

After 28, too early to tell you, you know, because right now we are focused only on starting the plants, not on this revenue and all those figures and all that. We don't look at it. We are just focused only on starting the plants. First is SZ and second is U.S. We are just after that. So once the plant starts, automatically the growth will come.

Thank you, Mikesh, and I will talk to you later. Thank you.

Thank you. The next question is from the line of Pratham Kankaria from Quantum AMC. Please go ahead.

Yeah. Hi, sir. So, just, you know, I have even started tracking a company recently. So, just notice the similar trend that, you know, between, so even if I just take between FY26 to everything, FY22 to 26, absolute growth has been 25%. And historically, there appears to be a pattern where we have taken a capex and then followed by one to two years of strong growth. And then there is relatively another phase of relatively flat growth until these capacities are optimally utilized. So, given we generally have the good visibility on approvals, demand, and the ability to sell incremental volume, so, in hindsight, do you think that whatever the CAPEX that we are doing, this could have been pre-porned, and instead of going through a phased expansion, we could have been on a more continuous CAPEX expansion spree. So, I want to get your thoughts on this.

Yes, yes, yes. We already tried to do that, but unfortunately, we could not, I mean, our land acquisition got delayed in Gujarat. The Gujarat government delayed it for more than one year. We selected the land, we paid for the, you know, earnest money deposit. It was a, how many acres land, 100 acres? And we were very much hopeful. We prepared everything. This I am talking about two years ago or more? Two years ago? Two years ago. But after one year, they said, sorry, we can't give you the land. So that delayed our expansion for one year, one and a half year. And that is what. But now it is a Gujarat government. Everybody was talking that Gujarat government is very friendly for investors and business and all that. Even today in the newspapers, they think about Gujarat government. Gujarat government, but we got totally different experience of Gujarat government. So we got actually delayed by them. And so this is what has happened.

Okay, I'm sure one thing, one more thing, so just a request.

No, it's policy, because they did not want, you know, chemical companies to come into that section. They wanted to reserve it for semiconductors or automobiles. It was a policy decision, so it's okay. But we would have been happy if they would have told us earlier. Then we wouldn't have been delayed. But right now, we are delayed.

Sure, sure, sure. Just one more thing. So, you know, just a request from my side that, you know, if you could hold at least half yearly calls, you know, and instead of, you know, quarterly, that's just one request.

So, we are already doing a call post AGM also. Post AGM also, I think anybody can join us there. But, there's no much, you know, as of such updates as of to give it. But, we will definitely consider your request and we'll think over it.

Thanks. The next question is from the line of Chazdeep Alia from Clockwine. Please go ahead.

So, thanks for taking my question. So, there has been a significant increase in depreciation on a quarter-on-quarter basis, I think from 14 crores to 18 crores in your console numbers. So, why has the depreciation increased despite the company not adding any commercial capacity?

So, we have added a few things in the past one or two years. Our R&D has expanded. We have got one corporate office also coming up, which should be soon capitalized. So, there have been a few additions in some warehouses also, which we have added on. So, not the capacities, but other kind of expansions as the company grows has also been done during a couple of years.

I am talking about quarter-on-quarter trend from December quarter to March quarter. It has gone up by 4 crores, approximately 30%, 25%.

On the depreciation?

Correct. So, in December quarter, which is third quarter, it was 14 crores, and now in fourth quarter, it is 18 crores.

But that is also because of, you know, the other NDS-related adjustments which we have to do on the new leases.

Okay, ma'am. Thank you.

Thank you. The next question is from the line of Yash Mehta. An individual investor, please go ahead. As there is no response, and due to time constraints, we will take that as the last question of the day.

Thank you very much, everyone. I hope we have been able to answer all your questions satisfactorily. However, if you need any further clarifications or want to know more about the company, please contact the SGA team, our investor relations advisors. Thank you very much. Thank you.

Thank you. On behalf of Fine Organic Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect the lines.