IOL Chemicals and Pharmaceuticals Limited (IOLCP) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to IOL Chemicals and Pharmaceuticals Ltd. Q2 and F1 FY27 Earnings Conference Call. As a reminder, all participant clients 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 with zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Waredhav Vijayavadhyaya from MGLG Investor Relations. Thank you, and over to you, sir.

Thank you, Huda. Good morning, everyone, and welcome to Q2 and H1-27 earnings call of Iron Chemicals and Pharmaceuticals Ltd. Joining us today are Mr. Pardeep Kumar Dhamna, who is the Chief Financial Officer, Mr. Abhay Raj Singh, who is Senior Vice President and Company Secretary, Mr. Kushal Kumar Rana, Director Works, and Mr. Rakesh Mahajan, who is the Financial Advisor in Strategic Health, to provide the results overview recently announced by the company. Before we begin the call, I would like to give a short disclaimer. This call may contain some of the forward-looking statements which are completely based upon our beliefs and expectations as of today. These statements are not a guarantee of our future performance and involve unfortunate risk and uncertainties. With this, I would now like to hand over the call to Mr. Abhay sir for his opening remarks. Over to you, sir. Thank you.

Thank you. Thank you. Coming to our pharmaceutical business, we continue to witness encouraging demand across our product portfolio. Our non-ibuprofen portfolio maintains its growth momentum, registering approximately 70% value-wide revenue growth during flu-2 and contributing 45% of pharmaceutical revenue, compared with 38% in the corresponding quarter last year. This reflects the increasing scale and contributions of our diversified API portfolio. At the same time, ibuprofen continues to remain an important business for IOL, and we remain focused on strengthening our competitive position through capacity extension, backward integration, and process efficiencies. Our chemical business also witnessed a significant improvement in performance, which contributes to overall edit increasing to approximately 7% due to compare this around 1% in the corresponding quarter last year. This improvement reflects better realisation, operating efficiencies, and discipline procurement. We believe our integrated manufacturing capabilities and investments in capacity enhancements will further strengthen this business and support its contribution to the company's overall performance. On the regulatory front, we achieved important mid-score during the quarter. We received Certificate of Suitability from EDQM for fanofibrate process 2, taking our total CEP approvals through 22. Additionally, we received a GMP certification for our formulation CDMO facility, further strengthening our regulatory credentials and manufacturing capabilities. During the quarter, we also secured EU REACH registrations for our dry equity, strengthening our ability to access international markets. These developments represent important steps towards expanding a regulated market project, enhancing our manufacturing capabilities and creating opportunities for sustainable growth across our pharmaceutical and accessibility chemicals portfolio. Moving to our strategic growth initiatives, during the quarter we announced three significant manufacturing projects involving a combined investment of approximately 500 crore to be funded through internal accruals. These projects represent an important step in strengthening our manufacturing platform and broadening our business portfolio. The initiatives include the extension of our ibuprofen manufacturing capacity from 12,000 mTPA to 18,000 mTPA through a backward integrated facility, establishment of a formulation CDMO facility with an annual capacity of 1,500 million tablets or equivalent direct compressible grade volume, And setting up a dedicated specialty chemical facility under a long-term stalling arrangement with a leading global chemical company. These investments are aligned with our long-term objective of building scale, strengthening integration, and creating additional growth avenues. The CDMO and specialty chemical projects are expected to commence commercial operations during FY27, while the ibuprofen expansion is targeted for commissioning in FY28. Our CDMO initiative will enable us to leverage our existing pharmaceutical manufacturing and process capabilities to participate in a broader range of customer requirements. Similarly, the specialty chemical project is aimed at establishing our projects in contract manufacturing, providing an opportunity to develop long-term engagement with global customers and create an additional avenue for growth. Together, these initiatives will broaden our revenue streams and strengthen our position across the pharmaceuticals and specialty chemicals when we share. Looking ahead, our priorities remain focused on executing the announced capital projects, scaling our diversified API portfolio, improving operating efficiencies, and strengthening our presence in international markets. We will continue to pursue growth opportunities with a disciplined approach to capital allocation, while maintaining a strong focus on operational excellence and financial performance. The progress achieved during the first half of August 27 reinforces our confidence in the actions of our business and our long-term growth strategy. Going forward, we remain focused on strengthening our categories, expanding our business portfolio, and adjusting our strategic initiatives with discipline while continuing to create sustainable value for all stakeholders.

Thank you, Mr. Abhay. Good morning, everyone. I will now take you through the financial performance of the company for the second quarter and first half year of financial year 2021.

Sir, can you please come closer to the device?

During second quarter of 1927, our revenue from operations stood at Rs.795 CR, resisting a growth of approximately 40% Y1Y and 5% sequentially. On the 1st April of 1927, revenue from operations increased by approximately 59% per year by 2 to 5151 CR. This growth was supported by a healthy demand across our pharmaceuticals and chemical businesses, along with an improving productivity. On the operating front, EBITDA for second quarter stood at approximately 115 CR compared with 64 CR in second quarter of financial year 26, resisting a growth of nearly 18% year-on-year basis. A beta margin improved by 321 basis point to 14.4 percentage compared with 11.2 percent in 4.4 last year. For past half year of 1927, beta increased by approximately 70 percentage Y on Y to 227 CR with an beta margin of 14.5 percentage compared with 11.8 percentage. And then in first half year of next year 26. Coming to profitability, profit after tax for second quarter of 1927, soon as approximately Rs. 55 and here compared with Rs. 30 here in quarter 2 of the last year, resisting a growth of approximately 170 percent. For first half of 1927, payed an increase to approximately Rs. 130 CR compared with 54 CR in the correspondence period of last year,

more than doubling by 1.5.

On the cost price, tax cost increased during the quarter compared with the correspondence period last year, primarily due to higher working capital utilization to support increased business operations and volume. From a segment perspective, the pharmaceutical business continues to be a key contributor to overall performance, while the chemical business witnessed a meaningful improvement in the operating profitability. Exports contributed approximately 28% of revenue during the first half of March 27, reflecting the continued contribution of our international business. As we move to the second half of the financial year, our focus will remain on improving profitability, optimizing working yourself, and maintaining financial discipline. With this, we can now open the floor for questions and answers. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press the R&1 on their touchstone telephone. If you wish to remove yourself from the question queue, give a click star and two. Participants are requested to use handset 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 Bhavika Singhvi from Nevisai. Please proceed.

Hello, am I out again? Yes, please.

Yeah, thank you for the opportunity and congratulations for a good set of numbers. So, sir, first, I wanted to understand that are we in the line of coming up with the facility, like we are seeing up by 28? So, what is the status currently going on, like the civil construction has been started and have we placed the order for the equipment and all, and how quickly we are coming up with it, because I can see some of the market scenarios. There has been a quite a realization increase happening in this ibuprofen market. So, I wanted to understand from you also about the current scenarios of the market, like how you see the ibuprofen realization have been, and what are realizations In this quarter compared to the previous one, and are we getting benefited from it like other players in the market are seeing the benefit out of it?

So, as we already said, this project is, we think that will be operationalized during the FY28. And relating to the equipment, this is already ordered, and we are in line as per our projected target line. So, we are very hopeful that this facility will come up during the FY28. Relating to the global market and ibuprofen business, see, this should not be considered as a short-term reserve for the company's initiative. This is a strategist initiative that we have taken, and this is in line with our current utilisation of the ibuprofen. Also, the development or engagement we are having with the various customers. And as I said that, we also coming up for the CDMO formulation based. So, we are having the good interest generations therein. So, some part of the ibuprofen will also be utilized in that specialty. So, I think we are very in line with our strategy, long-term strategy. So, this is not related to what is going on presently and what is going on with the peers.

Understood. But, sir, can you tell us, like, what are the current scenarios? Like, do we see the realization, like, going up, like, effectively, and do we see it sustainable for these coming to three years? Because I think there are a lot of players globally who are backing, like, who are stepping back in this ibuprofen business. So, just wanted to understand from you the scenarios going on, like, how the demand and the realization scenarios currently, though our strategy is for the long term, but wanted to understand what currently we can see, like, for example, in Q3, Q4, can we see the realization game happening? In our ibuprofen business, and how we see that benefiting us in terms of EBITDA, because we are already better integrated. So, I wanted to understand, in the, like, one-two quarters, can we see a good margin hike and realization gain in this business?

So, I think we remain mindful of global demand supply dynamics, pricing trends, and competitive developments across the peers and across all global markets. The prices, I think, are stable for last, I think, from last quarter and hovering around the same level, and we assume that it will remain more or less stable in near terms of two to three quarters. Having said all this, our investment should not be viewed merely as increased installed capacity. This is relating to should be considered rather than strengthening our position into the global market and the domestic market mode. So, we are hopeful that we will definitely be able to achieve good realizations from this business and our development as per our targeted lines. So, things are going well for the ibuprofen.

Got it, sir. And so, just to follow up on this, can you, like, share, like, do we have a long-term contract for the customers in our, like, API business, or we generally, like, what is the timeline of order book, or we generally, for this API business, if you can understand that?

For API, for API business for any product, it takes around 8 to 6 to 8 months for any customers from beginning to start the commercial orders.

Usually the order book remains around 4 to 6 months for every big customer, and the average order book size is around 4 to 6 quarters.

Got it. And we have the clause to pass on any, like, cost because raw material prices are also increasing a lot. Okay.

On the last year, the prices are very volatile. So, the clause is inserted in that.

Got it. And so, another question I have is on the CDMO business. Basically, just wanted to understand that there, what we are trying to make, like, Like, though it's a customer-based, but just wanted to understand which therapeutic area or which kind of formulation we are focusing there, if you can make us understand on the CDM business.

So, currently, our plans are to convert our existing molecules either into the bulk tablets or into the customized requirement, be it blister packing or something. So currently, we don't have our plans to go with our own MA, so we will be going ahead with our own products as well.

So you are saying you will make for the CDMO customer, for example, you are into ibuprofen, then you will make ibuprofen tablet out of it and sell it to your CDMO customer, right?

Yes, I do Parasita Moon Metform, any type of API in our current portfolio, which are in our current portfolio, we can make tablet for that.

Okay, and do we have, like, full, how much commitment from our CDMO customer? Like, do we have only one customer for that, or there are multiple CDMO customers for our formative facilities? Okay.

So, as of now, we have developments going on with two-three customers, but parallelly, we are talking to other vendors and manufacturers also.

Got it. And so, how much margin we are expecting to meet in the CDMO business? Because we are so backward integrated, we will have our own API and all. So, what margin can we expect coming out of the CDMO business?

Basically, this is too early to discuss the margins, but like chemicals, if you have three business, chemicals, API, and this is again the forward integrations for the API. So, generally, CDMO commands better than the API. This will have better margins as compared to the API product.

I got it. That's all. Thank you so much.

Thank you. The next question is from the line of Ahmed Madha from Unify Capital. Please proceed.

Thanks for the opportunity. Just a follow-up on the previous participants' question. Who will be the typical customer for us? Will it be the domestic guy selling a branded product? Will it be U.S. guy selling a product in OTC market? Can you give a little bit more clarity on the profile of the custom-based in our CDMO business for formulations?

So, CDMO formulations, we already announced that actually, so our target is export. And if we say the export, this is majorly the European market, and the development is happening with a few of our existing customers. Those, we are having the long-term relationship with customers, and basically this is a customer-led business also. So, our focus is very clear that we are going for the CDMO, and we are starting with the existing customers.

And in the world...

Yeah, continue, continue.

Yeah. So, you can continue our answer for your capital.

So, my answer is completed. This is what I was saying in European region. The target is for that basis in European region.

And can you give some more sense on how pricing for Ibuprofen has moved for you in current quarter compared to last quarter? I mean, I understand some of the formulation guys will have some sort of contrast with you which you spoke about 4 to 6 months. So, the order of India index pricing we see has ended up a little bit in the last six months post-war. So, do you see pricing benefits further coming in your new orders in Q3, Q4, or that is already in the P&L as of now?

So, I think it's already in the P&L and the prices are part of the schedule for last quarter, and they were also into this quarter again. And relating to the how smooth we are, that can be vouched by the capacity utilization, we are operating it for last 3-4 quarters, around 90% to 95% capacity that is being utilized. So, I think our prices for the next 2-3 quarters, we expect that will remain in the same level.

Sir, in terms of your expansion from going from 12,000 times to 18,000 times, which I think is combined in the clear end, do you see the market becoming again a little bit tricky in terms of excess supply? There is an Indian company who is sort of wanting to expand capacity. I don't know, a lot of visibility or clarity in terms of Chinese supply. So how do you see the supply side evolving at 12-18 months down the line?

So, basically, this is a sort of the long-term initiatives we have taken, and the project will ramp up during the FY28, and I think it will be fully utilized by the 28 and the 29. So, optimum utilizations will happen in FY28 and 29. And for last few quarters, we are operating around 95% and even more than that capacity utilizations. And this step has been taken not considering the current scenario, which is happening around the market, but this is on the basis of our development we are already having, and we have very well visibility that how this product is going to be utilized in the API and the CMO both in next two to three years.

Yes, sir. And for your incremental capacity, do you expect it to be a similar merchant customer, or you think a large part of incremental capacity will go to the formulation supply?

I think it's a vote.

Can you give a broad break? I'm just trying to understand how much... At the end, Ibu market will grow at a certain percentage, 3-4-5 percentage. And there is a fair amount of supply coming in. So, I am just trying to understand how much supply expansion happens and how much we utilize to full feed your formulation customers.

So, I think it will be a mix again. Probably, we have some new developments with our API suppliers also. So, their market demand will be scattered from this plant. And additionally, like our CMO plant is going to be utilized, so some of the quantity, you can say 50-50, either 50% will go with the new customers, and 50% of it will be consumed for my internal CMO supplies.

Thank you.

Thank you. The next question is from the line of Vignesh IS, from Sequent Investments. Please proceed.

Hello, sir. Congratulations on a good set of numbers in a tough environment, right? So, my first question is on the CDMO side. I just wanted to understand, you mentioned that Commission is in FI 27, so you wanted to understand how long does it take for the customer approval to come, you know, for the products that we intend to manufacture in this facility?

So it will depend from customer to customer and in which market the customer is operating. So as we said that we have main focus area for the European market. So like we will start the validation process first and after validation we will submit our samples then probably we will make documentation accordingly and then that customer will go ahead for their approval into their And then, it will move on. So, generally, it may be one year's time, around one year's time, meaning three, four months here and there.

Okay, you got it. Got it.

And also, can you share the, you know, KPEX number that we have actually already spent in first half of the year, and how much we will be spending, you know, on the second half of the year?

We planned the capex of 250 CR in the current year, and we have already spent half of this

in the first half, and very many

spent in the second half of the year.

So if I understand, 250 CR for the entire year, right, the total capex? Yes. Okay, so, also, you know, with the elevated prices of the product, you know, we are seeing that there would be a requirement of a higher amount of marketing capital for this entire year. Am I right with my analysis on this? Or, I mean, so the total finance that we will Yes,

you are right that on the increased level of operation and increase in selling and input prices, the requirement of working capital is on higher side. As you've seen that in our numbers, there is a slight increase in the finance costs also, but these limits are proper, already not fully utilized, so we now in the last quarter, we have used these looking at the optimum level, and we are not going to take any boarding in the coming year. We have sufficient cash flow operating and in-hand cash with the company as of now.

So this, you want the short term borrowing that you have as of 30 September 2026, that would be the peak borrowing is what you are saying for the rest of the year?

Yeah, it is working capital from the bank only, other than this is short term working capital

Yeah, so that is the peak working capital requirement is what I am saying. So, you won't require more than 200 per hour, right, for the rest of the year.

Yeah.

Yeah. Yeah. Okay. Thank you. Thank you, sir. That's all for my time.

Thank you. The next question is from the line of Maulik Varya from 361, Capitan. Do you go ahead.

Yeah. Hi, sir. Thank you for the opportunity. I hope I'm audible. Just a little bit of reiterating and clarification on the previous participant's question. So firstly, for our CDMO business, so you mentioned that it has been recently inspected by I mean the GMP inspection has been done. So for the products which we are converting, the API, existing API products which we are converting into formulation, will we require any additional So,

as far as the approvals are concerned, we have the local approvals from the state licensing prior to starting the plant, and additional requirements from the customer side was the European GMT, which is already in place, and probably, I think, going forward, it will be the documentation requirements for filing into their So that process will go on as usual.

Okay, okay. And in terms of our iBook Open, you mentioned that the new capacity which is coming up will be utilized by Fi28 and Fi29. Is my understanding correct?

Yeah, it is correct.

Okay. Okay, okay. And also, sir, in terms of order book, you mentioned the four to six quarters. So that was across all pharma products or only for I do sorry I missed that point.

No, I am trying only for Ibu, Parasica, Morgan, Metron.

Okay, okay. And so in terms of our growth, so we witnessed strong growth in the quarter. And this can help us in terms of breaking up between volume and value growth for chemicals and pharma.

Thank you. And also the efficient procurement.

Understood, sir. Okay. Understood. Okay, sir. And sequentially, what do we expect? So, for the second half of 27, do we still expect improvement on as compared to first half? What is your view, sir?

For FY27, we will be having around 25% plus revenue growth with 14-15% EBITDA. So, I think FY two quarters have already gone. So, I think we should have for this next quarter more or less same performance.

Sorry, sir. Sorry. Your wife cracked for me. Sorry.

Q3, I think Q3 and Q4 remaining two quarters, six months, perhaps we should have the same performance because we are expecting more than 25% or close to 25% remaining growth this year.

Understood, sir. Okay. And the new projects, so the IBU which is expected to start in FY28, so that will be in first half or second half of FY28?

So, probably in the third or the fourth quarter. So, this will be having very less amount of these impacts during that time of day. So, real benefits will come in FY28 and FY29.

Okay, okay. So, second half of FY28 and FY29 will be seeing contributions from IBU business also.

No, no, no, no. So, this will be commercialized during the FY28, during the December and March, between somewhere. So, in that FY, this will be very less time for renting of the productions and realizations. So, the benefit will start coming from 28-29.

Understood. Okay. Okay. Got it, sir. And, sir, another question is, on bookkeeping side, the other expenses were higher for the quarter at about 14.5% of sales. Usually, our run rate is 13.7 to 14. So, any particular reason, and is this the new normal which we should expect going ahead?

Other expenses are increased due to cost of power and fuel and logistic cost during the quarter. Power and fuel cost generally every year higher in the second quarter because of summer season and rise in material cost of fuel. So, the other cost is a resistance cost, which is due to higher cost of shipping freight, which we will, we have a capacity to pass on the customers in the coming months. So, we hope it will decrease, both because it will decrease in the third and fourth quarter.

Okay, okay. And my final question is, sir, what products would be the key drivers in the chemicals segment, which drove the 38% growth in this quarter?

We have reduced 100% of approximate capacity for both acylacetase as such and hydride and prices are also better in this space. So, this will contribute, this is contributed to our chemical business.

Thank you. Thank you.

The next question is from the line of Yogesh Patel from Prami Investment, Vistokhi.

Yeah, thank you very much and good afternoon, sir. Sir, I am just revisiting your guidance. You said 25% full year growth. It means the H2 growth would be lower relating to the H1 growth?

What we are saying is that this is the overall year we are talking about. Because 25% plus we are saying. So I think because we initially we said that we will be around 15 to 20%. Now we have the visibility because half year already gone. So the remaining half year will be performing more or less the same that the half year we want. So, in overall terms, it will be 25% plus.

Okay, it is not capped between around 25%. Yes. Obviously, we are doing a lot of backward integration and process improvement, and I see around 100% improvement in gross margin, and operating level in spite of higher other expenses. So, do you see, going forward, because see, pricing is not in our control, we can

You can see that again, depends on the raw material prices, how they are going up, but are as rightly...

Cost of production, I think cost of production.

The activities in backward integration are continuous focus on how we can increase our efficiency, better product mix, and how to minimize impurities and give better quality. This is our main focus for better realization, better bottom line in the company. But the price realization or the price is maybe not controlled by any person in the industry.

That I completely understand. Yes, because we can only, we can improve productivity. We don't have control of entry and everything. And then, let's say in CDMO business, sorry, I'm new to this company, but we are investing almost 110 crores. So, what would we roughly accept on here, roughly, how much revenue we can get back here, roughly?

We have just entered this CDMO business just now, and as we projected, one is to one as a general rule in the initial phase of this, because we incurred around 110 crore, and we are expecting around 125 crore revenue from this CDMO business at the cost of 110 crore.

Sir, in this video, there will be competition might be not raised here. So, what could be roughly graph margins or maybe EBITDA margins approximately? I am not asking the exact, but just to understand it better slightly or maybe what we are, let's say we are running 15, around 15. So, it would be more or less similar to 15 plus something or it is equal to 15?

As Abhay just told us that in CDMO business, everyone expects improvement in this visa margin as compared to KPA or chemical business. So, we are also expecting higher margin in CDMO business as compared to existing business.

Okay. And then, final question from my side, since we are a growing company, and considering the scenario, because you deal with customers and market scenario, you know better than us, sir, what could be the aspirational target for FY29? I'm not seeing any hardcore target, but there is it, because since we are doing capex and increasing capacity based on our judgment. So, just what could be the roughly ball-bar number we can generate at FY29?

So, I think the sustainable, I think we should, rather than being aspirational, we should talk more on the sustainable EBITDA number. So, around 15 to 17 percent is sustainable number, and we should target that.

Okay, 15 to 17, similar margin.

Yeah.

So, we are talking about the company as a whole. Yeah, the company, right.

Yeah, it's a branded market.

Thank you, Ahmed, and I'll learn. Thank you.

Thank you. The next question is from the line of Asit Koti from Almond Global Securities. Please proceed. Mr. Cody, he can't hear you.

Hello. Can you hear me?

Yeah, yeah, he's continuing.

Thanks for the opportunity. Just wanted to understand, sir, our 25% growth, will it be only volume growth or will it be value growth? So, it's a value growth. Okay. So, there is no room for further volume growth?

No, there is basically, so the growth is, we are talking about the revenue growth vis-a-vis the last year's revenue. So, we are talking about the value growth. Obviously, this will also include the volume growth and the operational efficiencies and the benefits of the integration we are making continuously. Also, the process of R&D, which we are utilizing and keeps on updating our process. So, it's a mix of that. So, we are hopeful that not only the 25, perhaps we will be having a better growth. And it's hope you are talking about that we are keep on enhancing the capacity also. This is growth we are talking about on the basis of this current capacity. But as you've seen, the last two, three years, we have gone through various capacity enhancement and just two months back, we also announced the further capacities in the new business. So, there are a lot of hope for the next year and the next to next year and so on.

Hello. Hello. Yes, please. Yes, please. I went out last.

No, no, so you said that there is more scope of the volume growth, so my take was on that question, that you would have seen that for last four, five years, we are continuously increasing the capacity of our existing products as well as bringing in a new product. So, the growth we are talking about, 25 plus, is on the basis of the existing capacities. Whereas, we have announced 500 crore investment into the new businesses and also enhancing the capacities of your products. Similarly, last year we increased the capacities of the pentaprazole, capacities of the niroxidil, clobidogrel, so many products. So considering the utilizations, when we reach to a particular utilizations and maintain a certain level and basis the customer's engagement and the development, we increase the capacity for that particular product. So, there is a lot of visibility for next two, three years from now for increasing in the volume and increasing the revenue from the other products and other business plan also.

Right, sir. In terms of raw material consumption,

how much would be in percentage terms and value imported raw material?

It is raw. It seems 2.53% over half. Sorry? Sorry, sir? 62 to 63% overall.

Okay. So, it seems that we do have margin-based, whenever there is a currency volatility.

No, no. He wants to say that the overall consumption for raw material company as a whole is around 62%. And regarding the import in chemical, certain products are being imported, and primarily around 60% to 70% of raw materials are being imported, like acid acid, whereas in API, there is import percentage, not more than 20%, 22%.

And in case, we have both availability needs. Domestically, the material is also available, and we have the option for import also.

Yes, please.

Yes. Okay. Okay. Thanks. I'll come back in line. Okay.

Thank you. The next question is from the line of Virag Shah from Ineos Financial Services. Please proceed.

I wanted to know the acid turn for each plant or the expansion that is happening because I wanted to understand that you gave the guidance of ROC of around 15% from the current 11%. So, just wanted to understand the math as to how will you be able to achieve that if you could elaborate.

The assets are over-dependent on the product to product, but in our sector, like in chemical, it is around 1 is to 3, and in API, it is 1 is to 1, and in CDMO, we are projecting around 1 is to 1 also, or 1 is to 1.25, so overall blended, we think it is company as a whole as 1 is to 1.75.

Okay, understood. And the last question would be that on the ethyl acetate side, talking about the chemical side, so was the growth more price-driven or volume-driven? Because you also started a new plant, so if you could comment on the current utilization and expected ramp-up for the ethyl acetate.

We have not set up a new plan, but we have increased the capacity of the existing plans from 1,000,000 to 1,200,000 tons, and the increase in this revenue plan is a combination of increase in volume, capacity utilization, increase in our penetration in the sport market,

Okay, so is there a breakdown with you in terms of volume versus price?

No, the volume, the breakdown is not available.

Okay, no worries. Okay, can you lastly comment on the price trends that you expect for as iGo for an over the next two years? How do you feel? And unbiased to you?

I think, considering there's so much dynamism in the current situation, forecasting 2-3 years prices of the ibuprofen from here is pretty risky for me, but the prices are hovering at around the same price for last more than one quarter, and we are expecting that remain similar on similar line in next one or two quarters.

Oh, thank you. All the best. Thank you.

Thank you. The next question is from the line of Santos from LJC Capital.

Please proceed.

Export contributed to approximately 28% of H1 revenue. So, is incremental export growth being driven primarily by existing products in established markets

In sports, we have increased penetration in certain parts of chemical, like the type of state, and the main part is contributed by the non-Igul segment.

My second question is, regarding pharmaceutical formulations, CDMO, earlier you said Q3, F27, and now you mentioned F27.

So, exactly when can we expect the commercialization?

Commercializations of CDMO, this is going to be commercialized in FY28, and the optimum level utilization will happen in FY28 and F28.

Already validation batches are given to our Anchor customers, and they are underway from the new plant, and it may took one quarter or two quarters for complete validation by then.

Okay, thank you so much, and thanks for the opportunity. All the best.

Thank you. The next question is from the line of Bhadika Singhvi from Neveshya. Please go ahead.

Yeah, thank you for the opportunity. So, basically, I wanted some understanding on this specialty chemical plant that we expect to commercialize in Q3. So, could you provide more clarity on the product or maybe chemistry being manufactured like we are planning to manufacture there? And what profile of global customers we have on-goated for this particular capacity? Because I think you mentioned that it's really a total manufacturing. So, I just wanted to understand, like, will it be a CMO-based contract or the CDMO capabilities? And how we have contracted the structure of pricing, minimum take-off commitments, So,

okay, the first part of your question is the customer. So, the customer is one of the renowned chemical manufacturing companies, and as of now, the arrangement with us is the chawling requirement is there for manufacturing companies. And the pricing

arrangement is the cost plus model. Yes.

Okay, got it. And this is,

this is, as you said, the customer's visibility, and this is the CMO one. Got it.

And what kind of product, if you can highlight that, like, the...

Actually, we are under confidentiality arrangement. We are under confidentiality arrangement. That is the reason we are not able to discuss the name of the company as well as the product's product name also.

Okay, but is, like, for the particularly, like, end application of the chemical product, or is it a end minus one, or maybe, like, what...

So, basically, it's a new product. Like, we are not manufacturing so far. The plant has been set up dedicatedly for the customer. So, I think we are not able to speak more on this due to confidentiality.

Got it.

It has many replications, so that's it.

But it is a common, like, it's a specialized, just because we are making for one customer, but in market, like, this chemical is there, and how much market we, like, for this particular chemical, we are expecting, like, the total TAM market, if you can quantify.

So, basically, we are not marketing these products into the open market. This is being manufactured on the contract phase, and the benefit of this is that the process is provided by the customers, validated by themselves. We are making for them, and the benefit is that we have greater visibility of the realizations and the profits as well. Also, this opens us the opportunities for entering into the CDMO business for the chemicals also. And the arrangement, the company we are having, is one of the renowned global companies. So, we will have the operational advantages, manufacturing excellencies, visibility of the revenue, as well as the profits.

Got it. Okay. Thanks, Barkhami. Thank you so much.

Thank you. The next question is from the line of Varun Sanghvi from Akshay Dharthaman. Please proceed.

Hi, thank you so much for the opportunity. I hope I'm audible. Yes. Hi, sir. So, this is regarding the paracetamol facility that we have recently ampeded up to 10,800 metric funds. I just wanted to understand in the last month of September, last month of quarter to September, Ascetic acid prices were up 50%. How much of that effect has it have had on the end API prices? That's question number one. And going forward with the facility of paracetamol, how do you see the Indian landscape? Is there still room for more volume-led growth or the market is saturated?

Acetic anhydride.

Basically, acetic acid is not directly used for the manufacturing of paracetamol, number one. Number two, yes, acetic acid is used as the input material for acetic anhydride manufacturing, and acetic anhydride is further used for manufacturing of paracetamol, number that is one. And yes, you are right, there was an increase in the prices of acidic acids, but yes, if you talk about the prices of the Paracetamol, they are almost near to the flat like previous quarter.

Okay, sir. So, I am just trying to quantify, the price would have hovered around 400-425X IOL, if I am correct.

So, prices, I think, are not fair for us to discuss on the prices because the prices is not relating to the one prices that depends geography to geography, customer to customer, and there are different specifications also. So, normal prices, what are there, you can very well understand from the market, but for the IOL, we have various prices, so I think Got it, sir.

And how about the competitive landscape around the paracetamol drug that you see in India?

Competitive? I think in paracetamol also, we are fully backward integrated, and like you can see, we are making acetic anhydride, we are making para-aminophenol also. So, I think as far as product competitiveness is concerned, I think we are well positioned with respect to the product competitiveness.

Understood, sir. Last question on this, sir, as far as you said that you are fully integrated on the PAP as well as aesthetic and I did, what sort of, I mean, gross margins do we enjoy in the

So, again, we never discussed the product-to-product business profitability and the EBITDA, as the chemical and the pharmaceutical business we always discuss. So, this product is profitable, that is what we can share as of now. Got it, sir. Got it, sir.

Any plans to increase our paracetamol capacity further, sir, from 10,800 metric tons?

So, as of now, we are running around 70 percent, and we are

planning to optimize up to 100 percent level full, because the infrastructure is already there.

Got it, sir. Sir, sorry for the couple of questions. This is the last one. As compared to the last quarter, which is Q2FY, Q2FY26 versus Q2FY27, how much of the price increase has happened at a per kilo level for API, approximately? I just want to ball past number.

So, there are multiple products, and the price ranging is from a few hundred to thousand. So, I think how this is going to be, and the capacities and volume level is very different from Q2FY26. I think this is a very difficult question to answer. Perhaps we will not be able to answer these questions also.

Thank you. Thank you so much. Again, a great set of numbers. Thank you very much. I'll get back to you.

Thank you. The next question is from the line of Sheikh Mohammed, an individual investor. Please go ahead.

Many, many congratulations for the excellent set of numbers. My question is, Stalion Group have closed their plant in Europe. So, what kind of advantages we are getting from it or any effects of that on perishable pricing and plant utilization and also how we are utilizing, how we are using acidic anhydride?

Mr. Mohamed, can you please repeat the first part of the question?

First of all, what are the advantages or any advantages we are getting from stallion group plant closer, acetyl plant closer, and effect of that on paracetamol pricing and plant utilization, and also the acidic and hydride utilization. We are also using it in paracetamol production, and also we are selling it outside. So, I think, I think you told that stallion plant for acetyl is closed. So, probably there is nothing to do for acetyl chloride with paracetamol. When we are talking about the paracetamol, acetic anhydride is the input material for it. Acetyl, we have our own manufacturing, and that is used as an input material in my ibuprofen production. Yeah, you are right, but the prices of Acidic Anhydride have also increased because of that plant closure. So, can we export that, the material we are using, conserving in our plant, some materials we are also exporting, means do we conserve entire Acidic Anhydride in congressional production only or do we have some extra? So, as far as acetic and hydrate is concerned, we have the capacity of the plant, and almost some quantity of it is used for the in-house consumption in three products. One is Makar Chakamol, other one is Abu Ghoshan, and third one is Maipanto Brazul, and the rest of the quantity is going for the merchant sales. Maybe around, currently around, maybe 50 tons we are selling per month for the merchant sales. So, do you see any advantage we will get from that Scarium plant closure? No, probably, I think, I think it will be very, it will not be the right answer, we don't have the right answer for this question. Sorry. Okay, sir. Sir, we have given the guidance of 20,000, 2,800 for top line and 14 to 15% EBITDA margin. So, do you want to raise the guidance in terms of any top line or bottom line? It is about the 20,000, it's 25,700.

Yeah, so it is a little better from the 2700. Initially, you are right, we said that the 2700 by 27, so I think we will surpass sufficient margin, that guidance, and we are revising that and we have given in the presentations also 25 plus. We will be achieved. And EBITDA margin should be something around 14%, 14 to 15%. Okay.

Sir, do we have started dry acetine export? Yes, yes. The plant has started export. We received the REACH. Yeah, we have received REACH and we have started, I think. I think that commercial orders have not been done so far. We are in discussion with the customers. We are in discussion with the customers and to the extent some of the customers are visiting our facility first. That is why it is a little bit tickling. Sir, for many products, we are having two manufacturing process approval for CEP. Does that have your advantage? So, basically, yes, it has the advantage because in some cases, we are getting better quality, but, yes, and the customers are willing to get that better quality of the product wherein you can have the negligible level of impurities. So, depending on the customer's requirement, we are developing the process, and then finally going for the development at R&D scheme, because in some cases, the customers are coming up with their own specifications. So, to make out those specifications, we have to develop the process, and then finally, to sell that material to that customer, we need the CAP approval also. So, that is why we have to go with the alternative process. Sir, do you think as a company now we have to think about go for that for integration of acetic acid? Is it possible?

As of now, probably no. Okay, that was my last question. Thank you very much. Thank you, sir. Thank you.

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

Thank you, everyone, for your questions and for engaging in today's discussion. To conclude, we are anchored by our performance during the first half of FY27 and the progress across our pharmaceutical and chemical businesses. The sustained growth in our diversified API portfolio, improvement in terms of business productivity, and continued social and operational efficiency, will affect the

strengthening environmental of our business.

Looking ahead, our priorities remain focused on scaling up our existing businesses, reducing the announced strategic investments, and strengthening our manufacturing and backward integration capabilities. With our established manufacturing capability, diversified product portfolio, and disciplined approach to growth, we remain confident in our ability to build a stronger and more resilient business and deliver sustainable long-term value for all our stakeholders. So, on behalf of the management, I thank all our stakeholders for their continued trust and support. For further inquiries, if any, please feel free to contact our IRT. Thank you and have a good day.

Thank you. On behalf of MUFG Investor Relations, that concludes the conference. Thank you for joining us and you may now disconnect your lines. Thank you.