Good evening, ladies and gentlemen. I am Akash, moderator for the conference call.

Welcome to the Advanced Enzyme Technologies Limited Q2 and H1 FY26 earnings conference call. As a reminder, all participants will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone telephone. Please note, this conference is being recorded.

I would now like to hand over the floor to Mr. Ronak Saraf, Manager, Investor Relations.

Thank you, and over to you, sir.

Thank you. Good evening, everyone.

Welcome to the Advanced Enzyme Technologies Q2 and half-year FY26 earnings conference call. We hope you all have gone through our financials, press release, and the presentation, which has been posted in the investor relations section of our website and on stock exchanges.

We have with us Mr. Mukund Kabra, Whole-Time Director, and Mr.

Beni Rauka, Group CFO. Today, the management will discuss the performance and the business highlights, update on strategies, and respond to any questions that you may have.

As is usual, for the ease of discussion, we will look at our consolidated financials. I would like to draw your attention to the fact that some of the information shared during the call, particularly regarding our plans, strategies, and future outlook, may contain forward-looking statements.

These statements involve inherent risks and uncertainties and are based on current expectations, forecasts, and assumptions. Actual results may differ materially from those expressed or implied in these statements, influenced by a range of factors, including, but not limited to, economic conditions, changes in government policies, regulatory developments, and other unforeseen circumstances.

Recipients are cautioned not to place undue reliance on these forward-looking statements as they are not guarantees of future performance and should not be viewed as a substitute for independent judgment. The company undertakes no obligation to update or revise any such statements, whether as a result of new information, future events, or otherwise.

Without any further ado, we shall commence this call. Over to you, Mukund, sir.

Thank you, Ronak. Good evening, everyone.

I really appreciate you all for taking out your valuable time, and I extend a heartliest welcome to everyone joining us today on the conference call for the quarter and half-year ended 30th September 2025. I am happy to announce that we are reported good numbers for the quarter two fiscal '26, continuing the growth trajectory.

We have witnessed growth across all business segments of our presence. Our top line for the quarter stood at ₹1,845 million, reflecting a 26% year-on-year growth and marginally decreased by 1% compared to the previous quarter.

EBITDA came in at ₹601 million, which is a 42% increase year-on-year and a 6% higher quarter-on-quarter. Our EBITDA margin for the quarter stood at 33%.

Moving to profitability, our profit after tax reached ₹447 million, registering a 34% growth year-on-year and 11% increase quarter-on-quarter. The PAT margin stood at 24% for the quarter.

Now I will take you through our segment-wise revenue performance for the second quarter of financial year '26 and compare it both year-on-year and sequentially with quarter two financial year '25 and quarter one financial year '26. Let's begin with human healthcare.

Our largest segment, revenues for quarter two financial year '26 stood at ₹1,212 million, making a 22% year-on-year growth and a marginal decline on 1% of 1% quarter-on-quarter. This growth was driven by higher sales in the pharma API and nutritional business across both domestic and international markets.

Human healthcare remains the vital of our portfolio, contributing 66% of our total revenues. Next, we have animal healthcare.

Revenues rose to ₹193 million, delivering a 6% increase year-on-year and a 26% decline quarter-on-quarter. Animal healthcare accounts for 10% of our total revenues.

Turning to bio-processing, this segment recorded strong growth of 52% during the quarter, reaching ₹255 million and an 8% sequential growth. This growth is primarily on account of robust performance of our food business.

The food business grew by 77% on year-on-year basis and 18% on quarter-on-quarter basis. The non-food business underperformed during the quarter.

It degrew by 4% on year-on-year basis and 20% on quarter-on-quarter basis. Lastly, the specialized manufacturing segment delivered a strong growth of 54% on year-on-year basis and 30% on sequential basis, reaching ₹185 million.

This segment represents 10% of our overall revenue. We anticipate that our strong growth trajectory will continue across all business segments in the foreseeable future.

With this, I will now hand over the call to Rauka. He will walk you through the financials and key subsidiary numbers.

Thank you.

Thank you very much, Mukund. Good evening, everyone.

I hope you all are in good health and doing well. On the company's consolidated financial performance for the second quarter and year-to-date of fiscal year 2026, let me talk about year-on-year.

Our revenue grew by 26% from ₹1,461 million to ₹1,845 million. Our EBITDA increased from ₹424 million to ₹601 million.

Profit before tax increased by 41% from ₹422 million to ₹595 million. Profit after tax increased by 34% from ₹334 million to ₹447 million.

On quarter-on-quarter basis, our revenue slightly decreased by 1% from ₹1,859 million to ₹1,845 million. EBITDA increased by 6% from ₹564 million to ₹601 million.

Profit before tax increased by ₹46 million, 8%, from ₹549 million to ₹595 million. Profit after tax increased by 11% from ₹404 million to ₹447 million.

For six-month performance for FY26 as compared to FY25 six months, revenue increased by ₹698 million, about 23% of increase, from ₹3,006 million to ₹3,704 million. EBITDA increased by ₹229 million from ₹936 million to ₹1,165 million, and it stood at 31% of our revenue as compared to 31% during six-month of FY25.

Profit before tax increased by ₹236 million, 26% increase, from ₹909 million to ₹1,144 million. Profit after tax increased by ₹168 million, 25% increase, from ₹684 million to ₹852 million, and profit after tax stood at 23% of our revenue.

Now I would like to give you numbers of our subsidiary companies. Revenue of JC Biotech stood at ₹186 million, EBITDA of 37 million, and PAT of ₹17 million for Q2 of FY26 as compared to 158 million of revenue, 20 million of EBITDA, and 5 million of PAT.

For six months, the revenue of JC Biotech stood at 397 million as compared to 317 million, 25% increase, and EBITDA of 70 million as compared to 44 million, 59% increase, PAT at 31 million as compared to 13 million. Evox revenue stood at 74 million and EBITDA of 17 million, PAT of 14 million in Q2 of FY26 as compared to 49 million of revenue, 12 million negative EBITDA, and 19 million of negative PAT during quarter two of FY25.

Evox six-month numbers stood at revenue 144 million as compared to 96 million and EBITDA of 31 million as compared to negative 19 million and PAT of 21 million as compared to 35 million negative during six months of last year. SciTech revenue stood at 185 million, EBITDA of 33 million, and PAT of ₹15 million in Q2 of FY26 as compared to 120 million of revenue, 14 million of EBITDA, and 3 million of PAT.

For six months, our revenue in SciTech was 330 million as compared to 232 million, 42% of increase, and EBITDA of 38 million as compared to 36 million, PAT of 8 million as compared to 13 million. The top 10 customer contributed 27% in the total revenue in Q2 FY26 as compared to 25% in Q2 of FY25.

For six months, top 10 customer 23% as compared to 22% last year six months. B2C segment contributed USD 1.29 million as compared to USD 1.1 million during the same period during the previous year.

Let me also give you the breakup of our human nutrition business. Our Q2 numbers for India sales is about 570 million as compared to 659 million during Q1 and the Q2 of last year 419 million.

International sale during quarter two is 642 million as compared to 562 in Q1 and 573 in Q2 of last year. Domestic numbers from human nutrition is about 570 million as compared to 642 million.

I'm sorry, domestic is 570 million, international sale was 642 million during quarter two of FY26. In Q1, it was 659 from the domestic market and international market was 552.

In Q2 of FY25, domestic was 419 million, international sales was 573 million. Our R&D spending during Q2 is 78 million revenue expenditure and capex of 1, total is 80 million as compared to 85 million in Q2 of last year.

On consolidated basis, R&D spend is about 5%, ₹84 million during Q2 and 6% in Q2 of FY25. This is without considering intercompany elimination.

On consolidated basis, R&D spend is about 3% during Q2 and 5% in Q2 of FY25. That was from my side.

Now we shall open the floor for question-and-answer session.

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session.

If you have a question, please press star and one on your telephone keypad and wait for your question. If you would like to withdraw your request, you may do so by pressing star and one again.

The first question comes from Rachna K. from SCIL Ventures.

Please go ahead, ma'am.

Opportunity, and congrats on a good set of numbers. I have a couple of questions.

My first question would be could you provide color on how could we achieve year-on-year good growth rates across our geographies like India, Europe, and Asia, and what caused a slight decline in USA? If you could please provide color on drivers of growth for this quarter across each geography individually.

This is my first question.

Rauka will give you some numbers, okay? What is the next question?

Similarly, for our product categories, animal healthcare, human healthcare, food processing, and specialized manufacturing, and what were the growth drivers? If you could give some color on each category separately and what caused a decline or industrial processing revenues to remain flat?

Do we see the growth trajectory sustaining over the long term? These would be my question.

Good evening, Rachna. I would say this way, when we talk about India, Europe, all the different segments, numbers can be given by Rauka, but in general, it's marketing efforts we are putting up from last so many days into the different areas, different geographies, Asia, as well as in Europe, and all of this it's a long-term efforts.

You cannot just go and say that in one day growth can come and it can go. I would put it this way, it's into the all the different segments which we are working.

In Europe, we are working into the baking areas. We were working into those different food areas.

In India, as well we are working on a different food areas. In Asian markets, we are working into the different pharma areas.

All of those gives you some effect. At the same time, we did have some back-footing because of the tariff issues which is there and what we anticipated little more growth didn't because of tariff issues which are still there.

We anticipate that may continue. We don't know when it will be because uncertainty is there, and probably that is the one area which has caused little bit slower in US as of now.

Also in some of the areas where the indirect market is there. We are waiting how this tariff issues pan out to make further strategies what we should do, what we shouldn't do.

What I would like to say that it's a long-term efforts which are turning into some sort of growth.

I would like to give you the numbers. Total revenue, 50% has come from India on six-month basis, YTD FY26.

30% has come from Americas, where we see a decline of 4% in our numbers as compared to last year six months. Europe is about 6% of our revenue, and we have seen 61% of growth from this geography.

Asia is about 12% of our revenue coming from there in the six month of current year, and we have seen 24% growth in this particular geography. Rest of the world is constitute about 2% of our revenue, and 30% increase in six-month period.

Do you need absolute number or you will get some idea from this?

I've get some idea. On a product categories, if you could give some color?

Product categories, in what sense you are saying? Anti-inflammatory is our live product.

The drivers of growth, because the growth rates this quarter are very good. Just wanted an idea on those aspects.

Because all the different areas and different products everything is showing growth. If you really look at it, our anti-inflammatory product growth is also there.

Our baking enzymes growths are also there. Animal feed enzymes also there.

All of them are growing at this point of time. There are a lot of research which is happening.

Those are also supporting into some of the areas, and those are also going to support in the future. That's all what I can say as of now, Rachna.

Thank you. One more question.

How will we offset the impact of tariffs? You said you have some strategies in place, if you could provide some color on that as well?

Rachna, I don't want to reveal those strategies. We will wait and see how the things pan out, and then we will take appropriate call at a given time how do we need to do.

We are still working on different areas if this persists, then what we need to do.

How do you think the growth in H2 FY26 will pan out, if you could provide some color on that as well?

There are a lot of uncertainties are there. What I would say is we will still stick with the numbers and the initial guidance what we have given, that we will have this year mid-double-digit growth.

I would like to continue with that as of now, and we will see how the things pan out in the given time because I see a lot of uncertainties around the world. I don't want to comment too many things as of now.

Thank you so much.

Thank you.

Thank you, ma'am. The next question comes from Mr.

Umang Shah from Banyan Tree Advisors. Please go ahead, sir.

Hello, am I audible?

Yes, Umang. You can be a little louder.

Sure.

Hi, sir. Congratulations on good set of numbers and thank you for the opportunity.

Sir, I had two questions. First was the specialized manufacturing business, right?

Last two years, the bottom line is around 4 crores or so in that subsidiary. At what scale do you think the margins will scale up, and what is the current line and where do you think the margins will land at for next two years?

See, margin in that particular business is really low, and currently, a lot of expansion is happening. I think that the depreciation expenses has gone up, and capacity utilization is also gone up.

Yet, the margin is low in that particular segment, and particularly, geography-wise if you look at the numbers, then I think the domestic market little bit more competitive in the sense in getting the kind of a margins. I think we will go with the same kind of a margin that is what we had in the last year.

In this particular company, I think, maybe, about 8% to 10% of the kind of the margins we are going to have.

Okay. Sure, sir.

Very helpful, sir. Sir, and how is the competitive intensity for serratiopeptidase in India?

Competition is always there, Umang, and it will continue.

Right, right. No, because last year, the competition had significantly increased after many years.

Do we continue with that intense competition, or now you see that the rates are still firming up?

No, I would say that rates are more or less stable, and competition is going to be there, and you need to deal with the competition with whatever the tools what you have.

Right, sir. Sir, in the last call, you had helpfully mentioned the total impact on our profits for the full year if the US tariffs go to 50%.

Now they are at 50%. Do we work with those numbers?

Right now, what are the conversations like with our customers? Are they taking some impact of the tariffs?

See,

as last time also I think we mentioned that at the worst case we will have a 2% impact on the EBITDA if we absorb everything going forward as well.

Right.

The way we will work it out is some of them probably who will absorb, some of them we will try to pass it on. It depends on the customer, it depends on the strategies, it also depends on the volume of the customer, size of the customers, and what different actions what we need to take.

Still it's absorbable if the volume goes up. We are open on that as of now, and we'll see how it works out.

Got it, got it. Thank you so much, sir.

All the best.

Thank you. Thank you, Umang.

Thank you so much, sir. The next question comes from Mr.

Raman KV from Sequent Investments. Please go ahead, sir.

Hello, can you hear me?

Yes, yes, Raman. Good

evening, sir. Thank you for this opportunity.

I'm fairly new to the company. If you don't mind, can you please explain me the business vertical?

My second question is what are the key growth drivers for your double-digit growth for the year? As in are you planning to launch more product, or are you planning to scale the existing products?

Raman, the business segments what we have and we have mentioned in our presentation on the website as well, but for you I will give you in short. We do have a nutraceutical business where all the pharma and nutra business is a part of it.

Second one is a bioprocessing business where food and non-food business is a part of it, and the third one is the animal feed business. I would like to say that the growth is always with the existing products as well as the new products.

We are more like a R&D-driven company. We heavily work on the R&Ds, and the new products and new launches are always into the pipelines, but all the products doesn't scale up that fast or that quickly.

There is always some time lag in our areas, and we intend to increase our R&D intensity as well going forward. We are coming up with the new R&D center as well where we would like to increase our R&D capacities multifold than what we have at present.

The simple answer is it's a combination of both existing products as well as the new products what we are going to launch, some of them not maybe a individual form, maybe in the blends and formulation form.

Understood, sir. Sir, while looking at the historical figures, I have noticed that our historical margin before COVID, it was around 46% 44% to 46%.

Can we assume this 30% to 32% kind of margin is the new normal, or can we go back to the 44% margin?

Into the last few calls also, we were saying that at this point of time, our view is this is going to be the new normal for us. If it improves, it is good, but we will go with this numbers as of now.

Sir. Sir, my last question, it's more of a doubt.

If you can give a ballpark figures, which is a better-margin business amongst all the vertical?

We don't really track with the different products, different margins, different areas to that level, but I would say that all of the segments are more or less equal. Whenever there is a sale from our US subsidiary, it adds up to the margins.

Understood, sir. Thank you, sir.

Thank you, Raman.

Thank you, sir. The next question comes from Mr.

Lakshmi Narayan from Tunga Investments. Please go ahead, sir.

Thank you. I want to understand our largest product.

What has been the sales for the last 6 months versus the previous year 6 months?

Lakshmi Narayan, ₹829 million as compared to ₹555 million.

Okay. If you look at it, this is entirely domestic, I believe, right?

Now in this, what is the total market size for this product?

It's difficult, Lakshmi Narayan, but I would say that we command maximum percentage of it.

Okay. Then when you say, is it another 35% or 20% more would be that?

I just want to understand what is the broad number, what is the range it should be.

See, the application can be different. It can be into the other areas as well, you can extend the applications, right?

It's very difficult to put it into the actual number, but if [foreign

language] 300CR [foreign language] anti-inflammatory.

[foreign language] I don't have exact number

[foreign language] applications [foreign language]. That's a

challenge, Lakshmi Narayan, to tell you exact numbers.

Got it. Now how many players are there right now?

Because if the market itself is around 200 crores or so, then it's a different thing as well as when the market is large. Because it needs minimum size for somebody to set up this particular product, correct?

Now in your view, what is the minimum revenue somebody has to generate to actually enter into this particular business?

I would put it this way, individual single product probably it's very difficult to set up

Or survive, yeah.

or survive. You need to have a different batteries of the products.

You need to have a different products. You need to take the capacity utilization very differently.

It's because just giving a one product doesn't work out.

Got it, sir. We talked about the American business, and there has been tariff impact.

Now is it that the entire product that are being shipped to the US suffers from this tariff? Can you just tell me what is the percentage?

Because if you add value, then the tariff becomes different, right? What is the weighted average thing for this?

Then what kind of mitigation you can actually do? Although you've talked about some of the things like 2% is an impact, just want to understand how much would get suffered with this tariff, and then what is the weighted average and then what are your mitigation steps?

If I go with the last year's number, at the worst scenario, probably we'll have a impact of 7-8 crores.

In the EBITDA.

Total whatever we can tell. That

PAT at 7-8 crores, and 10 to 12 crores of EBITDA.

Sorry, sir, can you just repeat?

So 10 to 11 crores is impact on EBITDA and 7 to 8 on PAT on overall basis.

How do you intend to mitigate? Is there a way which you can mitigate by changing the source of origination or keeping the place at which the value is being added?

Is there something which you can mitigate?

I think that's what we are working.

We'll explore all of those areas.

Sure. If you look at India non-pharma business, right, can you just give me a split of India non-pharma and how it has actually grown?

When we talk about India, non-pharma is basically textile and leather, and we mentioned many times that that is not our focus area, Lakshmi Narayan, but we intend to be there and see how is the market moving. Maybe in the future, we would like to come out with the products into those areas.

Sir, yeah, because I thought there is a sizable amount of animal feed business which No.

Animal feed doesn't comes under the non-food areas. The non-food areas basically compromises of textile

Textile, leather.

and leather.

I was looking for non-pharma, sir. Sorry, I think I wanted to know the non-pharma part of India.

What is the revenue that is actually for the last 6 months and how it has grown, excluding pharma domestic sales?

Rauka-ji can give you the numbers of the food business how it has grown, and basically the other one is the animal feed, overall numbers. We don't have a numbers separately geography-wise or others, right?

You can give the six-month comparison, Rauka-ji. Yeah.

I am just giving you number for food segment. For 6 months, it is about 380 million as compared to 312 million.

Other than that, the animal feed business, that is what we call it, it's 453 million as compared to 353 million in last year 6 months. Then

This is India?

No, it's not India. It's all India plus

yeah.

Got it. Total number I'm giving you.

Okay. Sir, and moving on to Europe, which is also grown for us, can you just give me a split of what is growing in the Europe?

Is it the

No, I would put it this way, Lakshmi Narayan, we shouldn't go on a quarter-on-quarter or half-yearly basis. Overall yearly basis, it has a more relevance.

I would say that the focus area is still the same what we have into the food areas and particularly into some of the nutraceutical areas which is still there into the Europe. We are registering our few products in the EFSA, and we are waiting for the novel food approval.

If that works out, then probably the Europe business can grow much faster. Similarly, we are waiting for some of the approvals for some of the pharma areas into the Asian areas.

If those happens, probably that should really increase the growth into those areas as well. Particularly, it's a long time-consuming process.

The process we started 1 and 1/2 years back, and still we are waiting. Maybe 6 to 8 months down the line, we expect that that should materialize.

Sir, and just last question, the American business has shown a little slower growth. Is it completely related to tariffs or it is something outside the tariff issues that is actually leading to this?

We don't know at this point of time, Lakshmi Narayan, but what we can say that particularly last two, three months, there is a lot of slowness what we have observed. The number of inquiries which used to be let's say about 100 in a month dropped down to four, five, six new inquiries, that just shows that there is a lot of slowness which is happening into the market.

Now, is it because of the tariff or some others or because of the price rise what is happening into the US, we still need to wait and watch. What I would like to say that there is some slowness which we can see, and we believe that it has to do more with the tariff and other cost increase what is happening in US.

Thank you. I will come back in queue.

Thank you, Lakshmi.

Thank you, sir. The next question comes from Mr.

Nitish Raj from ChrysCapital. Please go ahead, sir.

Hi. Thank you for the opportunity.

Hope I'm audible. Just a question on the guidance which you said you want to maintain at the mid-teens level.

You expect 2H our revenue growth rate to decline? We've done 23% YoY in the first half.

If you want to do mid-teens, we expect 2H to be a slower growth for us?

I think that's what we have been telling because of a lot of uncertainties around the world. We feel we need to have the same guidance for the time being.

Got it. Just if you could share some color on margins, do you expect it to be at this 32.5% EBITDA margin levels going ahead?

I'm sorry, I did not get you. Margin, I think, we have already mentioned.

Except the impact of the tariff, otherwise, I think, we will continue to have the margin of PAT about 21% to 22%, EBITDA of 30% to 32%. That's what we are still maintaining.

I would say that still we will not go with the quarter-and-quarter. I would still like to see more certainties as to some more clear picture how the whole situation pan out.

As of now, what we are trying, we are getting some results. We expect some more results.

Some of the results didn't come up because of tariff issues and other issues. We'll wait and watch how the things pan out.

Got it. Sir, we've got close to 600 crores of cash on our balance sheet right now.

Is there any M&A we are targeting or any such acquisitions where you have in mind you're assessing right now? The

acquisitions and other things always there in the mind. We always work.

We are working on few of them, but it's always depends on the cost and what we are getting out of it. We don't know whether it will happen or it will not happen as of now.

Are we looking for targets which are in the human nutrition or in the industrial bioprocessing? Anything we are favoring?

That's a ongoing process. It's more of forward integration.

We are looking at, say, animal feed business, of course. In human nutrition, we are looking more at probiotics.

That's the area of our interest.

Okay. Just lastly from my side, what traction are we seeing on the biocatalyst side?

We do have a lot of good traction which is coming up. We do see that there are a lot of products which are under the pipeline, and probably they should also add up to the growth going next year, maybe the last quarters.

We will see, wait and watch how the things pan out.

Any number, if you could just call out for the number?

I won't be able to. Rauka can give the numbers, but the market work which is going on, that's all what I can say as of now.

Rauka can give the number.

I think biocatalysts total for 6 months stood about, I think, 128 million as compared to 104 million last year.

Got it. Thank you so much.

Thank you.

Thank you, sir. The next question comes from Mr.

Rajas Joshi from ChrysCapital. Please go ahead, sir.

Good afternoon, and thank you for the opportunity. Sir, I just wanted to get a sense on the growth that we've reported both for earlier quarter and this quarter, how sustainable is this growth?

Are there any one-offs per se, to speak, in the numbers for H1, both with regards to revenue and/or margin?

I would say that there is no one-off, but there is not a every quarter you get the same, I would say, the same order. Some quarters may be here and there, a few here and there, but I would say this is a little bit long-term growth rather than we just go with the quarter-and-quarter basis.

It's difficult. There is no one-off customers, but we still need to wait for how this tariff comes up because there are a lot of time the indirect sales are also there which also goes to the US.

We need to wait and watch how the things pan out.

In the future. Has the strategy in any sense changed, especially with regards to, let's say, sales and marketing or business development, any other kind of change in strategy that we've done over the past 1 year or that you would like to highlight specifically?

No comment.

I don't want to comment on that, Rajas.

Okay. Understood, sir.

Secondly on the gross margin, right? Q4 was kind of the bottom, and then last Q1 also we were about, I think, 73-odd percent.

This quarter now, we've given about 76-odd percent in terms of gross margins. If I look at your sales in the US, which is, as you've rightly said, a higher-margin market for us, quarter-on-quarter basis sales are down for this high-margin market.

Then what is really driving this gross margin expansion per se on a quarter-on-quarter basis?

Overall, operational efficiency is driving.

Operation efficiencies, as well as some of the research is there and some of the product mix which varies with quarter to quarter.

On mix, could you highlight what exactly is higher-margin and what is lower-margin, which would help us understand going ahead as well how we should think of gross margin? No,

I think for you, it will be difficult to arrive at such things, frankly speaking, because you have animal nutrition, human nutrition, biocatalysts, probiotics. It's very difficult to drive in that sense those numbers.

Sir,

even qualitatively, not from a number perspective, if you could, let's say animal nutrition is higher-margin or some other product is lower-margin, anything of that sort?

No, I don't think we will be able to give you that kind of a guidance.

Okay. All right.

Thanks a lot, sir.

Thank you, sir. The next question comes from Zaki Nasser from Nasser Investments.

Please go ahead.

Sir, congratulations on a very strong set of numbers. Sir, you've given a guidance of a mid-teens growth, which I think is on the cards.

Sir, how do you foresee the company 3 years from now? How do you want Advanced Enzyme to shape out as a company in the global scenario, sir?

Because it's a complex company with the products itself are pretty complex. Also, I would like you to throw some light on your sector of industrial and bio-processing.

What do you foresee that, because that has had a good growth this quarter, sir?

If you ask me we always wanted to maintain the growth trajectory of mid-teens over a longer period on an average if I would like to say. That's our always a goal.

In terms of bio-processing and all of these different areas, we are coming out with the different new geographies. We are adding up new products what we are working on.

Some of them are in the R&Ds, some of them are into the final stages. Some of them we already added and marketed into the market, right?

To support that, you need to add more geographies, just not dependent on the baking. We are working into the different areas into the food categories as well, and we are coming out with the new products, new R&Ds.

That is how we are working on the bio-processing. That is how we need to grow in each and every areas.

Sir, and would you have a broad idea of what your share in the world market would be, or how large would Advanced Enzymes be as a world player, sir? Would you have 10% to 15% market share or more, sir, in this area?

I would say that we are very small. Even though we will be among the top 5 or top 10 players, there are very few companies in the world.

If you just go and compare the revenues of the biggest like Novozymes or now dsm-firmenich right now, we are very, very small. We won't be commanding even 5% of the share in the world market.

Probably

Less than 2%.

Huh?

Less than 2%, sir.

Less than 2%, somewhere around that. That is what our share is as of now.

There is a huge headroom, sir, if you have a good couple of years.

Yes, and yeah, but that has to be supported with lot of R&Ds and this is a complex business, as we always saying, right? That needs a lot of research, and that is what our focus is going forward as well.

Thank you, sir, and best wishes.

Thank you.

Thank you so much, sir. The next question comes from Shereyans Gathani from SG Securities.

Please go ahead, sir.

Hi. Good afternoon, Mukund and Rauka.

I had a couple of questions. The first one was, we've seen a big pickup in high-protein foods in India, especially like high-protein yogurts and milk.

Are we providing any kind of enzymes towards those, specifically lactase or in that particular area? What kind of growth are you looking at?

We are working onto those areas as of now. We do have certain products under the trial.

Even though our Indian market share is smaller into those areas, in India, there are little different challenges, but we are overcoming on those, and you need to have a lot of different product batteries. When we talk about lactase, there are couple of types of lactase.

Particularly into this area, probably you need a neutral lactase. We do have a very good acid lactase.

Neutral lactase is also under the R&Ds. There are a lot of different aspartic enzymes, proteases, and all of those are also into the customer testing phases and all of that.

In giving a short answers, we are working into those areas. As of now, we don't have too much of the sale in Indian market particularly of those, but those are the products under the

Different stages. under the

different stage of developments.

Okay. We're in testing phase, we've developed the product, is what I can understand?

Correct.

Is it under customer testing or what phase is that?

There are a lot of different products, right? Some of them are at the customer testing, some of them are in our lab testing, some of them are under the development stage as well.

Okay. Second question was on the B2C India business.

How do you see that shaping up? Any kind of traction that we're seeing, and what's the strategy over there?

We're main B2B company, and that is where we are separating that arm from Advanced Enzymes to the new company what we just recently formed. Yeah.

We'll be transferring that business. As of now, we do have a good growth on a smaller number.

This year probably we'll be hitting somewhere around 1 to 1.5 CR, which is lower than what we budgeted initially. We'll see, and there is a young dynamic team which is working behind it, and it's a different company.

That's what we are trying to aim at it to develop it further.

Got it. Lastly, any update on how we're going with the R&D center and what plans of hiring and all people in that, sir?

R&D center is at a different stages, and I would put it this way, probably by the end of the March, it should have some kind of a shape should come up, and probably we are targeting to capitalize some of the assets during that time. But

Partially it become

It will partially become active by the March. By the end of this fiscal year, correct.

By March? Okay.

Yeah.

Okay. Got it.

Last is the European subsidiary, we had an order any kind of similar orders we're looking at? We did see a revenue jump there.

If you could give some color on how that is doing and yeah, just some update on that.

European subsidiary is more like a R&D, but we are working on some of the similar contracts out there. Some of them are on the advance stages.

We see a good growth if those materializes maybe in next 2 years, 1 years down the line and 2 years down the line, but we will wait and see how the things work out because some of them are still the development stages for them.

Got it. All right, that's all from my end.

Thank you so much.

Thank you.

Thank you, sir. The next question comes from Mr.

Aditya Khandelwal from Simple. Please go ahead, sir.

Hi, sir. Thanks for the opportunity.

This question has been asked before, but I'll also try my luck. See, the growth which we have witnessed in the first half, more than 20%, if you could just provide some flavor what is leading to such high growth?

Is it that we have won new customers, or some of our products have clicked which is leading to this high growth, or is it just purely a base effect playing out? If you could just spend some time and help us understand what is leading to this high growth.

We are getting good growth in all four segments. In human nutrition, we are getting a good growth of about 21%, which is our largest business.

Here we have different products and different product mix. Many of products are getting good orders.

Because of that, I think, the growth is good in this particular segment. In animal health segment again, we are getting 28% of growth, so that is coming from India as well as from the international market.

This is because mainly we have done a lot of work in last 3, 4 years. I think we are getting now a lot of orders from our customers.

Bioprocessing food is another area where we see the good growth of 22%. All these segments are doing well in this two quarters, and there are several things because the efforts have gone in the past.

Now you are getting those kind of numbers from different customers. It's not only one particular thing which we can say, okay, it's only because of A, B, C, D reason.

There are several things which has gone back into getting this kind of a support and numbers. If you look at the contract manufacturing business, where we have effervescent-based technology, and we could see 42% of growth in this particular business as well, which is run by our subsidiary company.

All put together is kind of given a kind of growth of 23%.

Thank you, sir. We'll take up the next question from Mr.

Abhishek Kohli, an individual investor. Please go ahead, sir.

Am I audible, sir?

Yes, Abhishek-ji.

Yeah. My question one is, I see high inventory in your balance sheet.

Is it in preparation for US tariffs that you are maintaining this high inventory? That's my question one.

Abhishek-ji, in our business, the inventory is always high. If you look into the historically as well, you will see that the inventory is always high because we have a multiple different products, different locations.

The product cycle is bigger. Let's say if you want to make a one product today, you will at least need 1 month's time.

That too depends on whether the capacity is available, because when there are multiple products, there are different batch campaigning as well happens. At the same time, we have different plant locations in India as well as out of India.

That makes it always and the delivery time has to be as short as possible. We historically as well has been inventory levels.

Okay. As of now, there is a business between India and US, as in you are able to do that despite this tariffs?

We anticipated that, and we did some movement into the first quarter, some of that which can take care of another 1 quarter or so, 1 and 1/2 quarter.

Okay. That was actually my question because I see 173 crores inventory, which looks big compared to your past.

I was asking were you preparing for that in the form of finished goods?

A little bit built up, yes.

Little bit built up. Okay.

Yeah. Question two.

I think two quarters back, I think I remember you mentioned about a pharma intermediate that was in pilot stage. Any update on the commercial orders for that pharma intermediate?

We had few, but there are a few challenges as well which we are working. We are working on few of the intermediates as of now.

We'll see how it's pan out, and probably after one or two quarters, maybe we'll be able to more highlight on that.

Okay. My question three, this is my final question.

I remember our CEO mentioning that there was a reduction in the number of inquiries. Despite that, you are guiding for mid-teens growth.

My main question is, will this reduction in inquiries be affecting the H2 or next fiscal year '27? See,

this is already affected if you really look at it. Our US sales is down by

7%.

7-8%, whatever that number is. It's already affecting us to some level because we see some of the slowness.

If we really go back and when we were calculating, it was we were anticipating some 9-10% of growth in the US business this year. This has already affected us.

Okay. Okay.

The US this tariff-related slowdown, is it like affecting only your US business, or is it affecting like the global supply chain as if that what you're feeling as of now? No,

it's mainly USA.

It's mainly the US business and some of the indirect US business.

Okay. The reason I'm asking is your business is a more countercyclical business, like recession-proof businesses because food and pharma, these products.

Textiles anyway No,

I would put it this way, our enzymes goes into the pharma intermediates as well, but also most of the enzymes categorize in US as a nutraceutical. When it goes to the nutraceutical, let's say if I am selling some enzymes to the tablet manufacturing company and they are exporting to the US, that is not happening because of the 50% tariff which is there onto their final products as well.

That's how indirectly also it affects, and it did affected us into the last one or two quarter. Okay.

Then

really fantastic job actually what you guys did despite all these headwinds, a 20% growth rate. I think without that, it could have been more than I think close to 30%, right, by what you're saying?

Thanks. Thanks a lot.

Great job.

Thank you, Abhishek.

Thank you, sir. We have a follow-up question from Mr.

Lakshmi Narayan from Tunga Investments. Please go ahead, sir.

Yeah. Sir, just wanted to understand whether people who are taking material from us in US, have they found alternate supply sources or that is number one.

Second, with respect to the growth in Asia, the growth has been stupendous. Can you just help me understand what are the levers of growth in Asia and this US question, please?

Thank you.

I would put it this way, Lakshmi Narayan. I don't think there is a alternate supply or this.

We haven't raised the prices or anything as of now to a level which it should be, right? We might take some hits as well as we are saying, and we will wait and watch how the things pan out.

One thing what we can look at it as of now is everywhere there is going to be a price increase in the US, which will happen by the next year. This is what our anticipation is as of now.

We will wait and see how things pan out in the US. What was your second question was Asia?

So Asia, what led to that growth in Asia, which segment?

See, nothing happens in one day, Lakshmi Narayan. You need to do a lot of registrations and other things, and it's a efforts of last 1, 2 years what you put in, they starts getting materialized, right?

Nothing is in a 1-day process or this process. We were working on it.

We got some success. We are still working on some of the geographies, and we will wait for those geographies to materialize.

Is it animal feed or is it human nutrition, what actually drove the growth in Asia, sir?

It's all the segment, I would say. Yeah.

Except food, I would put it more into the animal feed and into the

Human nutrition.

human nutrition business.

Got it, sir. Asia business as a whole.

Got it, sir. Thank you so much.

Thank you, sir. We have a follow-up question from Mr.

Umang Shah from Banyan Tree Advisors. Please go ahead, sir.

Hi, sir. Thank you for the opportunity again.

Sir, sometime back, Rachna had mentioned on one of the calls that our market share in US is 15%. Just wanted to confirm the number.

Is the understanding correct?

15% of, I think we must have mentioned about the nutraceutical and that too, I think, the bulk, right?

Yes, in nutraceutical market in US. That is the right understanding, right?

In that,

with that 15%, what would be our rank? Would we be first, second, third, fourth?

I think there are three, four players.

Yes.

Okay. Three, four players ahead of us or three, four players in the market?

No,

they are ahead of us.

I would say that three players. You will be one of them.

There will be some small players, but mainly three players.

Sure, sir. Sir, and the second question was this food business revenue that we've got in this quarter, is it sustainable or is it based on a contract or one-time?

Because previously also, we have seen some volatility in this segment.

I would not say that it's a one-time business. I would say that I will still go with not a quarter-and-quarter.

Some quarters probably you will have a lower, but I would say that this is a more sustainable business.

Right, sir. Got it, sir.

Just last one thing, R&D expenses, is it simply a function of higher sales due to which they have declined, or have you also ramped down?

I think an absolute number, we have about, I think, 19 crore or so. Okay.

For this year 6 months, and last year also the similar number. Here, we are spending a lot of money which we are not capitalized.

We are not taking those numbers into account when we are talking about our total R&D spend.

Sure, sir. Sure, sir.

Sir, once the R&D center comes on stream next year, how much R&D are we budgeting from the P&L?

I think this will increase substantially in the sense supposing we are spending say about 25 crores, roughly for next year, it is going to go about 10 to 12 crores higher than whatever we are going to spend in FY26. Gradually, it will ramp up.

Gradually, it will ramp. Got it.

Got it, got it. Thank you so much, sir.

Thank you, sir. Due to time constraints, that will be the last question for the day.

Now I hand over the floor to Mr. Ronak Saraf for closing comments.

Thank you everyone for taking your valuable time for attending our earnings conference call. We will keep you all posted for any further updates.

I request you all to kindly send in your questions that may remain unanswered, and audio recording and the transcript of this call will be uploaded on our website and on stock exchanges in due course. Looking forward to host you all in next quarter.

Till then, stay healthy, stay safe.

Thank you.

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