Yasho Industries Limited (YASHO) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Yesho Industries Limited Q2 FY27 Announce Conference Call, hosted by MUFG in time. As a reminder, all participants will be in the lesson-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Sejal Bhatta from MUFG in Thai. Thank you, and over to you, ma'am.

Thank you, Yusuf. Welcome to Yasuo Industries Q2 and H1FI 27 earnings conference call. From the management today, we have Mr. Parag Zaveri, Managing Director and CEO, and Mr. Chirag Shah, CFO. Before we proceed with the call, I would like to give a small disclaimer that this call may contain certain forward-looking statements which are based on business operations and expectations of the company as of today. These statements are not guarantees of future performance and involves risks and uncertainties which are difficult to predict. A detailed disclaimer has been given in the company's investor presentation, which is uploaded on the stock exchange. Now, I will request Parapser to give his opening remarks. Over to you, sir.

Good evening, everyone, and thank you for joining us for the Yasuo Industries Limited Q2 and H1 FY27 earning conference call. We are pleased to report a strong performance in the first half of FY27. Given by robust volume growth, increasing demand across our key market, and continued progress in strengthening our industrial chemical business. These results reflect the benefit of our investments in manufacturing capacity and the opportunities we see ahead. Q2 F5, we have achieved a sales of 147.33 crore, while for F527, it has stood at 656.98 crore, registering an year-on-year growth of 71.7%, while EBITDA has increased by 122.8% to 147.33 crore. We recorded volume growth of 62% year-on-year and 7% on quarter-on-quarter, supported by higher off-tech from existing customers. Our industrial chemicals business remain a key growth driver, contributing approximately Approximately 90% of the revenue. Our focus is on strengthening our product portfolio and capturing a larger share of the addressable market through deeper customer engagement and new product offerings. Capacity, utilization stood at 66% in Q2, FY27, reflecting better demand absorption across our key market. Our priority is to ramp up utilization, further which shall enable us to benefit from better fixed cost absorption, export account for 70% of the revenue. The Supply Agreement we signed last year will start contributing to our growth from FY28. The company has received Rs. 120 crores to date under the contract. We are expecting trial production by Q4 FY27 and commercialization in a Q1 FY28. We remain focused on executing these milestones as planned. We foresee growing demand for several of our products. We have committed a capex of Rs.250 this year on building two new manufacturing buildings at our Parkhajan site. This will enable us to grow beyond FY28. And enable us to pursue projects that align with the long-term growth plan for the company. With that, I would like to thank our employees, customers, shareholders, business partners, leaders, and the board of directors for their continued support.

Thank you.

I will hand over to our CFO, Mr. Chirak Shah, who will take you through the financial details.

Thank you, Paragwai, and good evening, everyone. I will take you through the financial performance of Yashu Industries for Q2 and H1 FY27. Total income stood at 347.92 crores compared with 183.6 crores in Q2 FY26, registering an year-on-year growth of 89.5%. EBITDA increased to 72.92 crores from 33.42 crores, representing growth of 118.2%. Profit after tax stood at 33.68 crores compared to with 4.86 crores in the corresponding quarter last year. Our net working capital cycle stood at 149 days as of H1 at 527. On capital expenditure, the planned outclave for FY27 stands at $250 crore. This will be funded through internal accruals of $100 crore and $150 crore of term loans, which has been sanctioned. This investment is intended to support the company's manufacturing expansion and future business requirements. Our focus remains on deploying capital in line with project milestones while maintaining financial discipline. Total debt stood at 615 crore as of Q2 FY27, comprising short-term debt of 329 crore and long-term debt of 286 crore. Our debt-to-ebitda ratio stood at 2.09 acts in H1 FY27 compared with 3.74 acts in FY26. Our ROE for H-1A527 stands at 27.3% and our ROC at 18.4%. During the quarter, the cost of freight increased from 10 crore in Q1 to 20 crore in Q2. Increase in gas prices in the quarter also resulted in an additional expenditure of Rs. 1.8 crore. Operationally, the company had to absorb both these additional expenditures as we cannot pass on the spot changes or input cost to customers where purchase orders have already been accepted. We expect this to be passed on to the customers from this quarter onwards. Overall, our financial performance for the first half reflects strong year-on-year. Growth. Going forward, we will continue to focus on disciplined capital allocation, efficient working capital management, and maintaining a healthy balance sheet. Thank you. We will now be happy to take your questions.

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

Hi, thank you for the opportunity. Am I audible?

Yes.

Yeah, sir, my question is regarding the capacity utilization that we have reported and the revenue growth that we have shown. So as I can see from 4Q FI26 to this quarter, our revenue has grown by roughly 40%, while our utilization has only grown from 60% to 66% over two quarters, which as per my understanding implies 10% volume growth. So how should we think about volume growth and pricing growth over these quarters, and what are the drivers of the pricing growth that we have seen?

I think, I don't know, there's some misunderstanding or calculation. The growth in this quarter is about 7% in volume, Q1 to Q2, and in value terms is about 13%. So, I don't know how you got different growth number. So, you are talking Q4 or you are talking Q1 referring.

Actually, I was comparing 4Q to this quarter because I wanted to see that.

You cannot compare 4Q to Q. Either compare from Q1 to Q2 or you compare from Q4 to half yearly. So, half yearly, we have grown almost by 73% in our revenue. Sorry, in volume growth.

So, this is year on year, sir? 2H versus 1H?

Yeah, 6 months growth in volume growth.

So, actually, sir, what I wanted to understand is that if we look at our index of core basket of products, how much has pricing moved for these products, let's say, pre-war versus today?

Well, I think from last, if you're looking at March quarter to today's day, six months down, prices have increased by 10 to 15%. That is, because of the row multiplied increase.

Got it. And the rest of the increase, sir, would be pricing, sorry, mixed exchange?

Mixed exchange, absolutely product mix.

Got it. So, sir, would it be correct to say that our new products that we have introduced, those would be higher margin and higher realization as compared to our previous product that we were doing?

No, I don't think so. That's a wrong assumption. It depends. See, again, we have increased certain new product from 140 plus to about 152 product we have now, today. And a couple of products which were sold, sometimes low volume in the past, 7-matter sold, higher volume. So there's a lot of mix. You understand, it's not only 20%, 150 plus product now. So, difficult to get which product lines be, but we see overall good demand for the product and also the pricing are quite strong. When you're looking at the price, also price include, the top-line include the freight cost too, so that is also, you can see a higher revenue, but you deduct the freight, which is re-incurred during last quarter, higher, if you deduct, then there won't be a downturn growth, you know.

Got it. No, actually, sir, the way I am seeing is it that over the last two quarters, if we compare 4Q to 2Q, our gross margin has roughly increased by, again, 200 bps. So just wanted to understand what is the driver of those gross margin? Is it like our products are having higher margin or is it that we have been able to pass on costs which are more than the, we have been able to increase price which are more than the cost?

I think more on that I will put the deleveraging of the assets, you know, the volume has grown, fixed cost has come down. So one of the, I will put that as a major factor to increase on the EBITDA margin, look at the gross margin is a constant. If there is a gross margin is one person.

On a bit, I can understand, but gross margin is also improving.

About a one person, sir. I don't know. This is probably due to the product mix. I put that. Thank you. Got it.

Thank you.

Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and 1. Next question is from the line of Amanvij from Astut Investment Management. Please go ahead.

Good afternoon, sir. My question is on the MNC contract, which will be starting from next year, which is worth 150 crore. So for how many products is this contract for?

Well, there is confidence. We are under NDA, so cannot divert that information.

Okay, okay. So, sir, so this is one contract we had gotten two, three years back. Now, I believe there are. Four such MNCs in the world. So, first of all, when we are doing additional capex of 250 crore, is there more visibility from the same customers? Is there more visibility from another of the big MNC customers that we were trying for a while now? Could you give some colors?

Aman, honestly, first and foremost, you need to clarify what four big customers are referring. I don't know. I have a, I have many, many big customer MNCs in our customer list.

Okay. Okay. I was talking about the 150 crore order we have from one of the big MNC, right?

One of the big MNC, but you're talking about other four, so I don't know about what other four. So, yes. Okay. We, well, when we're talking about the new CapEx, which is because of the customer request for our additional quantity. Also, A lot of our existing and new customers we onboarded in the last six months, a couple of market customers, onboarded last customers. For them also, we need to create some additional capacity. So this is a mixture of existing and the new customer we onboarded has given us the confidence to put the additional capex.

Okay. Okay. Makes sense. Just some final question. Now, we are at 65% utilization and we have already reached a very decent margin. You explained it as mix of both product mix and operating leverage, but there were some additional costs this quarter which we will pass on. But say going forward, now we will every quarter like you have explained, we will try to increase utilization. So do you think there is scope? Not now, not immediately, but in the next 2-3 quarters when our utilizations are much higher to increase the margin even further, providing the cost remains the same.

Yeah, see, this is a really challenging time as of today. Okay. We need to be cautious about passing on all the costs to customers. As you see, we are more into the export market rather than the domestic market, and when in the export market, other geography has sometimes a better romantic prices compared to us. So we have to be cautious. So we will always try to maintain our EBIT of more than 20 plus percent. That is what the company will do. Anything about that could be your guess. I cannot comment on that every quarter because it's too difficult. Things are really volatile. Current scenario is very volatile. So we are ensuring that we get at least 20-21% or something more than that. But that's our aspiration. Maintaining that is our aspiration, and that will do our best to do that. As the capacity grow up, definitely there will be more de-leveraging on a full hour. Fixed expenses. So that will help us. So rather than we try to aspire for a more profit, I will say I will aspire to go with cut down, passing on the benefit of the deliverance to the customer and to grow the business.

Thank you for answering the question. Thank you.

Thank you. Next question is from the line of Darshil Jhavidi from Crown Capital. Please go ahead.

Hello. Yeah. Hello. Yeah. Hi. First of all, congratulations on behalf of our members and our channel. Sir, I just wanted to know in terms of our margin, sir, is doing 20% plus, sir, but is there any risk, you know, you see that, you know, costs are, you know, maybe due to the elongation of war might be, you know, on more increasing trend and as you said, rightly that we cannot pass on everything to the customer. So is there any risk of, you know, sir, Marlin's declining a bit? Could you help us in that, sir?

I think we are working hard to maintain this margin. We'll do our best. I cannot comment. Tomorrow, there will be some adverse factors which can impact, but I don't foresee that factors coming so soon to us. Demand is not slowing down. So that's one good sign for us. Demand is growing. We are able to reach out to either existing customers or new customers. With our price band, and we are gaining the business. So, in a short term, I don't see a challenge. We will see how far, how things, you know, progress with the, you know, current crisis.

Okay. That's really great to hear, sir. So, I just wanted to know, sir, next year when we are, you know, we'll have higher operating leverage and, you know, capacity utilization. Can we, you know, do around 23-24% UBITTA margin?

I don't know. I will say I will do more than 20%. That will be your guess for.

Okay. Okay. Okay. Thank you. Thank you. Thank you.

Thank you. Participants, if you wish to ask a question, you may press star and 1. Next question is from the line of Umesh Gupta from Alpha Optimus PMS. Please go ahead.

Yeah. Hi. My question is again on the margins. I think in the last quarter corn call on your 24% odd margin, you would ask repeatedly about whether you'll be able to maintain this margin, and I think you sounded very confident that you'll be able to maintain margins. Yet one quarter down the line, we see a 300 basis point decline in margins. And now, I think you are giving a guidance of 20% plus margins. So, how should we read into it that, I mean, in one quarter, the margins fell by 300, which is point. Should we assume that this is a base or there can be more accidents in terms of margins?

I think this is more of a challenge of a current crisis, unexpected increase during the quarter or during the six months of a contract happening that has not been passed on. So... I won't say more than that. The margin has shrunk purely. In last concord, we said that we will be happy to maintain the margin. Still, the guidance was 20% plus on an EBITDA, and we are standing back to that commitment of 20%. But I cannot give you more than that. I don't have any assurance today. What we just concluded some of the business in the last one week for the next quarter. I don't know what my freight will be in November or December. So we can't comment on it. We can assume that freight will be a certain bandwidth, but it can increase the bandwidth, it can hit, it will reduce, we will gain.

Okay. So the entire impact of this around 300 basis point on a Q1Q basis is on account of freight only or there are other things also?

I think 200% was freight and the energy cost. Balance 1% maybe because of the product mix, the margins fluctuate.

Okay. And in fact, in the Q1, you mentioned that the capacity utilization goes up, you will be probably aspiring to do better margins. So which means that there has been no operating leverage, which we have been able to gain by increased scale of operation in this quarter with Q1? No. Will there be any gains whenever you aspire to go up from 66% to, let's say, 70%? Will there be any gains in operating margin or you think that 20% is the best case?

Well, 20% will be the lower side. I will use that way. Anything about 20% will be happy to achieve and we'll work for that. But I can assure that we'll achieve 24% or I will achieve 25% or I don't know. That's too difficult to say in current situation. Also, we need to gain more market share in this crisis. So, it's better to be wise than the foolish to increase the market, despite your saving on your deleveraging and you want to increase the margin.

Okay. Thank you, sir.

Thank you.

Thank you. Next question is from the line of Rohit Sinha from Sunidi Securities. Please go ahead.

Yeah, thank you for taking my question, sir. So, first thing is, as in the PPT, you have mentioned export revenue is close to around 70%. Can we get the number for H1 FY26 and Q1 FY27?

Q1 was about 65%. Q127 was 65, which has gone to 70, and for FY26, it was in the range of 63%.

Okay. And given these high export number, obviously this logistic cost remains a key concern for us. And as you indicated, it has almost doubled in this quarter. So how we are seeing going forward these logistic costs right now shaping up and how much it is possible to pass on to the clients?

Well, whenever there is a fixed contract for six months until December will be assigned in month of June, those cannot be changed. So one which was for quarter-on-quarter, that's where the price we can pass it on. Okay, so depending on the pricing and which is a spot business today, whatever we are getting business negotiated, we take the current price.

Okay. Okay. Okay, got it. And, sir, with all these capex, which is currently going on, when we will be expecting this full capex to be completed and next sort of revenue stream to kick in?

No, that two building capex will be started commercializing only by last quarter of 28 or only or first quarter of 29.

Okay, okay, so it's take time. One last question, as you have mentioned earlier that from March to September, almost 10 to 15% increases there on the raw material prices. I believe there is more price increase in a lot of other chemicals, so... I mean, still it is yet to, I mean, reflect in our numbers, or that is only for, I mean, 10 to 15 percent is only what increase we have seen in our set of raw materials.

Well, it's a mix of, it's, somewhere could be 100 percent, somewhere could be zero. So I'm looking at 10 to 15 percent as the overall hit on a raw material price.

Okay. Okay. That is one. Thank you.

Thank you. Thank you. Next question is from the line of Jai Mandrecha from C9 family office. Please go ahead. Hello.

Am I audible?

Yes. Thank you for giving me the opportunity and congratulations on good set of numbers. Just wanted to understand recently there have been some sanctioning on the Chinese players. So has this impacted us positively how big the market was and like how big the market for Yashu has opened up for us and whether we are seeing increased demand because of the sanctioning?

Are you talking about what product line is on Chinese sanctions? And where? Who has put Chinese sanctions?

European sanctions on Chinese players. I have no idea which company. Can you just please elaborate for me? Richful, Richful.

Well, I don't know how much impact that has on the business. We see very limited impact on that.

Okay. Yeah, that was my question. Thank you.

Thank you. Next question is from the line of Ajit Sethi from iKiko Quantum Solution. Please go ahead.

Thank you for the opportunity.

So as our phase 1 will be operational in Q1 FY28. So what kind of utilization we can expect in FY28? And going forward, how should we see the ramp up in FY29? And for the phase 2, what kind of utilization we can expect in FY29?

Well, with the current capacity and the current year of expansion, what we are doing is a special project, which we are looking at in the range of about 75% utilization in FY28, while FY29 for the new two buildings, we are looking at a 50 to 60% utilization in the first year, and then going forward, it will increase.

Sorry, you said 60 to 65% utilization, right?

50 to 60% utilization for a phase 2.

And for a phase 1 in FY29?

Should be in the day of about 80-85%. From 75% will go to 80-85%. Okay. Thank you, sir. Thank you.

Thank you. Participants, if you wish to join the question queue, you may press star and 1. Next follow-up question is from the line of Lovish Soyan from Berman Capital Management. Please go ahead.

Thank you. Thank you for the opportunity. Sir, my question is regarding the new capex that we have announced for 250 crores last quarter. Have we tied up with any customers for this phase of CAPEX or is it more speculative in the sense that VA will first do the CAPEX and then go out to customers or have we tied up with any customers in particular?

There is a soft commitment for the customers.

And how much of that soft commitment would cover the total utilization?

About 50%.

Understood. And, sir, last quarter, I think we mentioned that our utilization for FY27 would be roughly 75%. If I look at the first 75, yes. So, if you look at 1H, it is roughly around 65%. Does that mean that utilization in the second half could be as high as 80%?

We have always experienced in ASO's history that the quarter 2 is always lower, but this time, surprisingly, we had done, surpassed us a Q1 number on utilization point of view.

Yeah, we do expect a better utilization in the next two quarters, means current quarter and the next quarter.

So October, Q3, Q4, always that is our historical higher sales.

Understood. And so just one last question a bit on the fundamental side. We have been hearing that large global lubricant additive players are looking to localize their production in India. So just wanted to understand what are you seeing on the ground in terms of these events that are happening? And what is the opportunity size that you see from the shift in strategy by these large players?

Yes, we also see some inquiries on that part of it. A lot of people are looking to source locally made product, and it's a quite good opportunity for us to work with them. Since we get the local business, we also expect to get a global business, little global business from them. So it's a sizable opportunity for a while.

So is our say 250 crore capex for this strategy, or will this be incremental to what we are I'm ready to do it.

No, this will be part of it, that strategy, and part of it is incremental.

Got it. So any quantification you can do in terms of the total size of this opportunity can be? I'm not asking about the revenue or any particular year, but what is the total potential of this opportunity for us?

It's difficult to guess, my dear friend. That's purely guesswork, and I don't want to do any guesswork.

Thank you, sir. Thank you for answering my questions. Thank you.

Thank you. Next question is from the line of Ghulam Soni, an individual investor. Please go ahead.

Hi, sir. Thank you for getting my question. And congratulations for good sets of numbers. First of all, I would like to, you know, make a comment. Our past three years results are quite stellar in terms of maintaining IPTA margin about 17%. So long term, you have kind of graduated towards a more stable IPTA margin kind of a company. So what I want to ask, sir, is our business model after this chemistry R&D setup that we have done in Pakhajan, are we kind of looking for multi-customer based on our R&D setup that we can, you know, innovate products for them in industrial chemicals in different kind of applications other than these which are we are currently manufacturing in lubricant chemicals. So are we exploring some of that, leveraging our chemistry lab or chemistry expertise?

Obviously, our R&D team works on different projects. One of them is also lubricant and also the customer what we need. Besides that, we also work on a lot of other industrial applications too in our R&D. So that will be our focus point.

So, sir, beyond FI28, where we are targeting 1500 kind of a number, so are we kind of shifting our business model towards more customized solution for our clients in future?

If there's an opportunity, we will be, why we should be shy away? We will work hard to also get this opportunity.

In terms of mindset or kind of a strategy, in terms of business strategy, are we kind of exploring that or more inclined towards that? Because we have kind of demonstrated that we can, you know, maintain our margin for a long period of time.

The company has a lot of strategy for the growth, and I cannot disclose those strategies here on this call. But this company is aspiring. Company has also planned. Company will come with a further future growth prospect in the end of 27th call, what we are looking for further down the line. So we will give that time.

Okay.

Thank you.

Thank you. Thank you. Next follow-up question is from the line of Rohit Sena from Sunidi Securities. Please go ahead.

Yeah, thank you for the follow-up. So, as you mentioned earlier, we are looking to gain the market share. So, that would be in the domestic market or in the export market? And if that's so, I mean, what kind of scope do we have to expand it?

I think that's it. We have ample opportunity in our presentation. We have said that there is an addressable market of $15 billion, and we are just talking about growth from $100 million this year or $120 million this year will grow. We can go to $300 million, $400 million. We don't see a challenge that, but it will take a while.

Yeah, but does that mean that, I mean, we have to shave off margin to a big extent, or maybe one or two percent would still be good enough for us to get the market share?

I don't know. I will not comment on that. We are not shedding a margin, I suppose I understand. We don't intend to do that. But if we have to, we'll see.

I mean, the rest of the players are doing at a higher margin, or how that is what I do. No idea.

I have no idea about the players' margin, what they do, what they don't do. We always expect to work about 20% margin that will continue to do that.

Okay. And, I mean, on domestic and export side, opportunities on the both sides for us, a similar kind, or export has a better angle? I think number speaks.

I think number speaks. Number in the data board speaks.

Yeah? Okay. Okay, sir. Got it. Thank you. Thank you.

Thank you. Participants, to join the question queue, you may press star and one. Next question is from the line of Amanvij from Astut Investment Management. Please go ahead.

Yes, sir. So, my question is when you talk about two buildings, so is this all for phase 2, that 150k road capex, or is one building phase 1 and the other building is called phase 2?

No. Currently, we have two buildings existing in the facility, Pakhajan facility. We are building two additional buildings. That will be for a future requirement. Current two buildings, we have a lot of space empty, which will be filled, hopefully, by the end of FI27, or maybe a little bit slip over until quarter one of FI28. So, building one, building two will be fully occupied and operational by that time. Building three and building four will be operational earliest by Q4 of FI28 or FIQ1 of FI29.

And the total capex, when we talk about 250, it is for building 3 and 4.

Partially, some equipment also for building 1 and 2 also.

Okay, okay, because this was the confusion.

No, there will be a, we will need additional capex to fill that building 3 and 4. But that, we'll talk, we'll talk in month of January or Apple call.

Okay, so that makes sense. Second question is, in one of the interviews, you had talked about that your first goal is taking the sales to double. Sorry? Sorry? So, sir, in one of the interview, you had talked about that your first goal is to take the sales to 1500 crore doubling by FI 28. And then there is another goal in next two years, you want to double again. And you had mentioned you will be disappointed if you are not able to achieve that.

Absolutely.

Yeah. Yeah. So the question was again, Say, we are targeting 300-400 million dollars kind of sales in the next four to five years. So, sir, out of this, do you think we will require like we had one contract worth 150 crore, do you think this, we require several such contracts or do you think this same contract can scale to maybe after we deliver in one, two years can scale to 300-500 crore because we have a 16-year contract. Yeah.

We have disclosed only one contract because there was a material involvement was there. There was a financial transaction was there. There are several other contracts with the companies working. Where there is no financial implementation, we are not going to disclose. Okay.

But in a sense, any contract which is if we get worth 100, 150 crore, this you plan to disclose, right?

No, I didn't say. If you're going to get the money from my customer, then only we'll disclose, other than we'll not disclose.

Okay, okay. So there might be already a few contracts, like you are saying, for the 250 crore capex, we have soft commitment from a customer. So that, because maybe there's no advances in all those things, you might not disclose, but you still have a lot of other contracts, which we are in talks, maybe final talks and all those things.

Absolutely. How can you make such a big commitment?

Okay, okay. Final question is so bigger segment of this industrial market 15 billion is lubricant. So most of the growth say for next three, four years.

No, I didn't say 15 billion is including all the industrial is not really lubricant. Rubber and the performance and everything included.

Yeah, yeah. But for us to scale to 300-400 million dollars, do you think lubricant will be at least 40-50% of that? Or do you think no other segments also can scale given a lot of the MNCs want to set up higher up in India? What is your view on this?

Yeah, it's a mixed opportunity. So, there are a lot of opportunities coming from some of the performance chemicals also who are looking at us. To work on similar arrangements, there are definitely lubricant will be one of them, and lubricant rubber, we see a good opportunity in a lot of diversified chemistry. So yeah, we are happy.

Okay, but the same set of chemistry, the 3-4 segments we are into, lubricant, fiber, performance, this is good enough to scale to 300.

We are, I don't see a challenge that, because we are, see, we have today full-fled R&D working for new chemistry. We are proud of that, and I see a good result coming out. In six months, I see a couple of good results coming out, so we are happy with that, and we are confident that that will help us to grow beyond 2028, because we talk about 2028, but what about beyond 2028? So that we need to work.

Yeah, and any plans for next two, three years in terms of addition in R&D? You have mentioned some numbers in the...

That will keep on continuing. That will keep on... As and when need arises, we don't shy away to invest in R&D. That's the backbone of the company.

Okay, and any plans of backward integration of some of these products? Because I believe a lot of these products we are importing and doing the additive part with our formulation and all those things. But any plans you think we have for some of the backward integration of the products which are scaling for us?

We always evaluate this aspect and we are taking the necessary steps as and when we film. It's great to do that, as I could imagine.

Okay, sir. Okay. Thank you. Good. Thank you.

Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and one. Next question is from the line of Concur from Gurk Advisors. Please go ahead.

Yes. Hi, sir. Congratulations on good set of numbers. Sir, I have just two questions. My first question is, I think in the PPT, we have mentioned that we are targeting 1,600 crore of revenues by FI 28. I think given the guidance in the first half, it seems that we may be able to do some 1,400, 1,15 crore revenues in FI 27. Do you think this target is a bit conservative?

It's better to be conservative than optimistic, no, my dear friend, in today's scenario. You'll be more happy if you cross the target. If you don't cross, then you'll ask a good question. What went wrong?

Okay, because I think the management has always been very positive, right? So I just thought that...

We are positive. We are positive. We are positive, even today. But I don't want to commit anything more. And we are very clear that it will be more than 1,600. We didn't give a 1,600 target. Absolute number.

Okay, so my second question is, this contract, right, this 120-130 crore contract for which we have done a CAPEX, so when will that commercialize, can we assume it to commercialize in FI28?

We already said that, we already said that, we start calling Q1 and FI28, already we said.

Q1 and FI28, sorry I missed that. And then my last question is, given a lot of... Unavailability of raw material is because of the crisis. Do we face any problem in procuring raw materials or there is no problem there and we are just, it's just the prices have increased?

No, there are a lot of challenges currently to procure the raw material, but that's okay. That's part of personal life.

Sure. Thank you. Thanks a lot, sir. Best of luck.

Thank you. Participants, to join the question queue, you may press star and one. Next question is from the line of Amit Vohra from PCS Securities. Please go ahead.

Thank you, sir, for the opportunity. Sir, this question pertains to the debt of the company. Where do you see the debt panning out over the next couple of years with the kind of capex what we have in store?

Well, we aspire to keep it within the limit. As of now, we are well below 2.5. And we will see, we will give a look at the board level, where, where we find our comfort zone. All right.

So any ballpark figure that you can give us for FI 28 and 29, where should we see your date? No, I don't have. I don't have that. I don't have that. Thank you.

Thank you. Next follow-up question is from the line of Lovish Thoen, from Bergman Capital Management. Please go ahead.

Thank you for the opportunity. Sir, in last call, I think we mentioned that we have onboarded some new customers who had helped us to increase our volume of take. Any new customers that are currently in the process of being onboarded who are close?

Yes, there are many, many new customers that are coming onboard. Everybody says before.

You know, sir, but any notable ones who might be significantly helping us ramp up volume over the next couple of quarters?

No comments.

And sir, just one clarification I had. Hello? Actually, sir, if I see that the repeat revenue that you have given from your existing facilities is coming out to be roughly around 1650 crores. Whereas if I see the revenue run rate that we are, we are already at 1400 crores, which implies roughly 85% utilization. Whereas when we talk about utilization, we are saying 66%. So just wanted to understand, what's the discrepancy between the both? Or am I not comparing the right numbers?

So, understand this is a product mix. I don't know from where you are getting 1400 number. I don't have that number in my site. If I ask you, I'll be happy. I'll be happy. So, yes, total revenue, peak revenue, we can achieve about 1,600. We should be close to, I think we should be able to, if we're able to utilize the plant at 80%, 80% in next two quarters, yes, we'll be able to achieve that. So, yeah, I don't see a challenge that, but that's a number as of 30th of March 26 capex. We are putting new capex in this year. We are having a new, this special contract will also start filling in from Q1 of 28. So that all will help us to continue to grow further.

Understood. Sir, is the peak revenue that we have mentioned in the BPD based on older prices? Because I think the prices have moved significantly over the last couple of quarters. That could be one of them.

Yeah, yeah, that could be, that could be, that could be. See, we need to be conservative here. No, we cannot be here. If I put today's price and price drop tomorrow, then you will also ask me why the price has gone, why your revenue has gone down.

Right, right. Okay. And just one last question. I think the 1600 plus guidance that we have given, is it based on the current prices or is it based on pre-work prices?

It was based on pre-work prices.

Okay. Understood. That's helpful. Thank you.

Thank you. Next question is from the line of Harshal Bayani, an individual investor. Please go ahead. Hello. Can you hear me?

Yeah, hi, sir. Thank you for the opportunity. Sir, I just have one very general question. Sir, from a management perspective, what are some top two to three risks, external risks, which you foresee? And, sir, as a company, how are we trying to mitigate it?

Well, because crisis, what we see is the logistics, that means getting in product is also getting delayed. By 30 to 60 days against a standard time of 25 to 30 days. Exporting, we are not getting a vessel on time, freight is going up. So those are challenges we are facing. That's one of the biggest risks we are getting today. Number two, if the crisis continues, then there could be a further jolt on the prices. We don't know which way the crisis is going. So, yeah, these are the major, and if the crisis goes up, And the fuel price really goes further up. There will be somewhere we see a softness. There is a resistance nowadays by customers saying that price is too high, we want to hold back. That's what we have seen also. Sometimes customers switch purely because somebody is supplying a cheaper price. So we need to worry about all those things.

So, sir, as a mitigation, so the subsidiary which we have in US, are we exporting some products in advance or we do on order basis?

No, we, we, on, on an anticipation, we always have some extra, extra quantity,

but it's always against commitment.

So that is only purely a sales office, sales subsidiary.

It's, it's only a stock point, it's only stock point.

I understand. And, sir, as you said in your previous questions, this logistic cost and the fuel cost, some of it or the major part of it can be readjusted in the future contracts, prices, but if it exceeds a very huge amount, then somewhat we have to bear it. Yeah, we have to bear it. We have to.

Yes, that's true.

Okay, sir. Okay. Thank you.

Thank you. Thank you.

Thank you. Participants, to ask a question, you may press star and 1. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.

Thank you, ladies and gentlemen, joining for today's call. Appreciate the support and confidence in the company. Looking forward to see you again in the next call.

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