Thank you. Ladies and gentlemen, welcome to the fourth quarter earnings call.

We know your time is precious, we will immediately begin the relevant portion. You will note, amongst all the noise that is happening around the world, that we have been on a very consistent strategy implementation for the last two years, three years, and you'll see the progress in the numbers and in explanations.

Without anything more, I'll hand over to Santosh Parab for his brief.

Thanks, Ashish. Good evening, everybody, and thanks for attending our earnings call.

I'll just start with a brief on what is happening around around the world everybody knows, but there has been some some impact on our business in this quarter. This quarter the sale was impacted by around 20% due to delay in shipments, lack of ships, and increased voyage time to our markets across the globe.

This prolonged conflict also has affected the availability and prices of some of our raw materials. The longer delivery time has also impacted our working capital cycle, and that paucity of working capital cycle has also percolated in some ways on the pushing of our business and growing of our business in some of the geographies.

With this, we clocked around 424 crores of revenue in this year. The total revenue is 1,723.

You have to note that we have some disclosures on discontinued operation, on which I will talk later, which have been shifted from the total revenues to a discontinued business. Hence, the 9-month revenue and as well as the last year's revenue is looking like it has reduced, but it is a disclosure.

The revenues have been made. In this this quarter also, we had 7 to 8 crores of revenue, which had to be shown at discontinued business.

The total revenue of 17 1,723 23 is also lower by around 52 crores. I will now come to the segments, our segments.

The straights business, we have been able to hold onto our market share. However, due to local competition and pricing pressures, the revenue from straights has reduced a bit.

Of course, it was also helped by increase in the dollar prices, but the local competition has impacted us straights. Having said that, we changed our straights strategy of trying to use more of these straights for making blends rather than competing it with the local Indian competitors.

We have been trying to blend this straights into blends business, and hence some of the the straights sales business have moved to the blends business. In blends, we have shown that has been the hallmark of our revenue in last few years, and we have maintained a steady growth.

We have been saying that we'll be doing around 20%. We have clocked 17%.

If we add the discontinued business of blends business of Europe, we would have grown by 18%. We missed the target of 20% primarily because the projections of Vinpai, which did 10 crores in the first month, was only able to do around 17 crores in the last 3 months.

As I said, the working capital cycle and the liquidity crunch has impacted their business. We are confident that it will come, and it will give the results which which we have been talking about in Vinpai.

Going forward also, blends business is looking good. I will tell you about it after some time.

The vanillin aroma portion, we had told you last time that we we have changed to the ethyl vanillin campaign, and we stopped the production of methyl vanillin. We had we were not modification, but changing over our methyl plant into ethyl vanillin plant, which took around 2 months, and then we started ethyl vanillin plant.

Largely methyl vanillin There was very small portion of ethyl vanillin produced in in the quarter four, it's around 110 metric tons, but we did have internal channel stocks. We had sold, and we were holding onto some inventories in in US, especially looking at the tariff.

Tariff going down, we delayed some of the inventories and hold those inventories to reduce the tariff impact. Internal channel stock, the whole entire sale of vanillin which has been happening in Q4 is largely through the internal channel stock, which will be liquidating liquidated.

We also have some internal channel stocks still remaining of methyl vanillin, which will help us in the coming quarters. Of course, ethyl vanillin we have orders on hand for the quarter one of around 300 metric tons.

The plant is running well. We will be taking a campaign of around 600 metric tons of ethyl vanillin.

We have enough methyl vanillin to Not enough, but a fairly good stock of methyl vanillin to not allow the market to dry. Of course, and the tariff withdrawn, there would be higher realizations.

We have started looking the green shoots on that. Our own We did the channel stock was sold in the last month, and our average realization for the company for the vanillin had gone up from sub-$11 to more than $12, $12.50 in quarter four.

We are quite confident it will grow grow obviously above because of no tariff there, only 15% tariff is there in in US and Europe. This higher realization will also benefit us in the next quarter.

You have seen that we also had lodged a claim after the withdrawal of tariff by the Supreme Court order. We did had we had paid around 9 crores of duty through the customs till February, which we have filed for the claim, and that has reduced our cost, because the payment of duty was considered CO cost of goods sold, which we have now reduced.

We are confident that this claim will be received. This have been lodged and accepted by the authorities.

If you see, the overall cost also remain under control. As far as employee cost is concerned, we have been saying that we'll be investing in human capital to help us grow the business, especially in the blend sector.

We are really looking at exponential growth in blends business. Hence, last 2 years, if you see, we have been investing into employee cost, and that's the main one of the main reason of increase in employee cost.

Of course, Vinpai also came for 4 months. This entire quarter results also incurred revenues and expenses of Vinpai for the whole quarter.

Last last quarter, it was only 1 month. That has also pushed the cost.

Overall costs also are under control, but for the freight cost, which has increased the last 6 months, and some of the other costs. Vinpai also has contributed to increase in that cost.

Resultantly, the the quarter EBITDA is in 21 crores, it's 5%. We I think it's a In the given circumstances, it's it's not a bad performance.

Obviously, going forward, the currency fluctuations will impact the business, but for us, we being dollar sales sales in dollars, it should positively impact, and it may increase our revenue to extent such extent that we will be able to absorb the increase in the cost of the raw materials, of course, may not be entire it, but there will be we can recover the cost. This year this quarter, we also liquidation of CFS Europe has happened.

We received the order, liquidator order. The accounting entries has been done.

There is a gain booked on loss of control of the company, which is around 100-odd crores, which we have booked this this this quarter. One good thing about this is the cash burn on this discontinued operations of around 50, 60 crores every year is going to come to zero from next quarter, and that that's a big cost saving.

China still remains under liquidation, but we don't think the cost will be more than 7 to 8 crores each year. Just quickly on outlook for the next year or the subsequent quarters, vanillin business, as I said, will improve its realization.

Volumes are also likely to increase, but yes, we have to see the lingering conflict situation, how it acts. Blends, again, as I said, we have invested into the human capital.

We are already at the pole position to now push the blends for higher growth. In the first month itself, we have clocked more than 100 crores of global blends business.

If that run rate is taken, you can guess see the kind of growth we are looking at blends. Obviously, we have also Last Friday, we had an unfortunate incident, though it was not a fire at Dahej plant.

Fortunately, because of our responding quick and safety measures being there, the flyer fire didn't didn't spread to all the plant. We were able to contain it.

There will be some loss, but we will be We have adequate insurance coverage. In fact, we were we have reduced the or planning to close down the plant shut down the plant of diphenol, especially with the price, as the our basic raw material price is Rs 85, is now being quoted at more than Rs 150 per kg, and the availability is also not consistent.

At present, we are getting it, but we are not sure if the conflict lingers how it will look like. We had taken a conscious decision that we should reduce the cash burn because of the high pricing and lower realization in catechol.

We had already secured hydroquinone from China, which is at a very reasonable rate, and can we would save by purchase rather than manufacture, which helps us to keep our downstream of straights still running. Catechol, we already have enough stock because the plant was running at 60%, 70% last year, and it was not matching the the consumption was not enough for the vanillin, and hence we had we have enough stocks in the system of catechol, which can sustain 8 to 9 months of our vanillin production.

Having said that, things look good. We we will we will be looking at how to use or repurpose this diphenol plant.

We have to also look at how the prices move, what will be the the raw material prices of diphenols, how the competition is looking at it, how the Chinese are responding to the whole situation, and also the conflict. Soon we'll take some decision, and decide on the path for the diphenol plant.

Having said this, I think I'll open this forum for questions.

Hello, sir. I just have some doubts.

One is with respect to diphenol prices, which you said have been increased drastically from 85 to 150. This is a raw material for production of what actually?

Hello? Can you hear me?

Yeah.

Diphenol is the product which we manufacture. Diphenol is nothing but hydroquinone and catechol.

I was talking about the raw material phenol, which was generally Rs 85 just before the conflict. Now it has gone up to 150.

Naturally, the cost of production of our product, hydroquinone and catechol, have drastically increased.

Understood. Catechol we are manufacturing internally and hydroquinone we are supplying it from China, right?

We manufacture hydroquinone and catechol together as diphenols. If we stop the diphenol plant, both of the product cannot be manufactured.

I was saying that hydroquinone we used to use entirely for our straights production, value added. That hydroquinone, we'll be importing.

As far as catechol is concerned, because vanillin plant has not achieved enough capacity utilization last year, we are carrying enough catechol, which can help us to produce vanillin for next 8 to 9 months. That catechol will not be importing.

We will be importing hydroquinone for our downstreams, and that hydroquinone we have already secured from Chinese manufacturers for next quarter.

Understood, sir. Basically, we don't have any direct impact of this sudden rise of phenol prices, if my understanding is right?

Yes, we're trying to make or buy. It's a simple thing.

It's better to buy now the raw material than making it at higher cost. You're right in that sense.

We are buying hydroquinone so that our real downstream sales of straights and vanillin, we are able to keep that sales, and at a reasonable margins than producing it at present.

Sir. From the report, our result and the PPT, I can see that we have 85 crores gain from discontinued operations.

Can you just elaborate, what is this?

As I just mentioned that we have this CFS Europe subsidiary, which was liquidated, and there were certain loans in that subsidiary, which has been booked as a gain on derecognition of CFS Europe. That's what has come.

It's around 95 crores of loans, but the credit is lower, because there are some discontinued business and the losses there in, which have been adequately explained in the notes. That this discontinued business, the credit is largely on account of the loans which are now derecognized from the financial statements on liquidation of CFS Europe.

Understood. Sir, with respect to vanillin, you have mentioned that the internal channel stock of vanillin has been liquidated at the end of quarter four.

Now can we expect our realizations to move upwards, given that the inventory has been liquidated, and at the same time, the US tariff had reduced from 15% to 25%?

As I started with saying that we had taken a campaign of ethyl vanillin. We have two vanillins, methyl and ethyl.

Till now, we were producing methyl and selling methyl. We had a good order book of ethyl vanillin, and hence we wanted to produce ethyl vanillin.

For that purpose, we had to take a break of methyl vanillin. We stopped the production of methyl vanillin for 15th of January.

There was hardly any production here, but we have sale of vanillin. That sale of vanillin is from internal channel stocks in the sense the material which we had sold to US to our subsidiary, was carrying the stock.

That channel stock has been sold in this quarter, and that's why you can see the revenue. Still, we are carrying internal channel stocks, which will be sold in the subsequent quarter.

We'll also be selling ethyl vanillin, which the campaign has started, and the production we have got from April. In the Q1 quarter, we'll be selling ethyl vanillin, which we are producing now, and we'll be selling some internal channel stocks of methyl vanillin.

Now coming to

prices,

you had that last, I will answer that point. Yes, the tariffs have gone down.

Naturally, we were impacted. The basic prices in US are not more.

They're 18, $17.50, $18 in US. Because the duty was at our cost, we had to sell from India at $11, $12.

Now, duty reduced, our realizations will increase. In fact, as I said, our realization moved from sub-$11 in the last quarter to almost $12.50 plus in this quarter.

Naturally, the realizations are better. Realizations will increase in the next quarter.

Sir, just a follow-up on this. Is there any realization difference from methyl vanillin when we compare methyl vanillin to ethyl vanillin?

I just want to understand the rationale behind switching from methyl vanillin to ethyl vanillin.

Generally, methyl and ethyl, Ethyl is a more stronger note product, its consumption is lesser than methyl vanillin. The customers ask for ethyl vanillin also, and they're happy if the supplier is able to sell both the vanillins.

Now having said that, this ethyl vanillin, the price difference generally is $1 to $1.50 more than methyl vanillin. Our cost is also almost one and $1 more.

Either I sell methyl or ethyl, the margins per dollar per kg remain the same.

Understood, sir. Understood.

Thank you, sir.

Yeah. Am I audible?

Yes.

Yeah. Thank you for taking my questions.

Sir, I wanted to know, what would be our vanillin sales this quarter? Focus.

In quantities or? Quantity.

In quantity.

In quantity, vanillin we sold

quarter,

around 320 tons.

320. Yeah.

If I remember correctly, in Q3, you had mentioned that we had 200 tons of vanillin which we had held back. I thought this quarter, we might see a better volume sales.

What would be the reason for only 320 [unclear]

So

I know that we had to hold off our production, but still we had 650 crores in 650 tons in our channel, with subsidiaries and everywhere. I think our volume should have been better, right?

I'll just put the same numbers which you said. We talked last in February.

By that, we had done 100 tons. We said that we'll be doing 200 more tons by holding back the stock and trying to take the benefit of realization at 300.

As I said, I'm still carrying around 300 tons of vanillin stock in the channel to sell in quarter one. That's how it's 600 works out.

Okay. Got it.

Sir, my second question was, if we look at our profitability, how much of an impact would you say this Middle East crisis had on our EBITDA? See, because if I remove the 10 crores or 12 crores of tariff rebate that we have got, then our EBITDA would have been around 10 crores.

It is only 2%, 2.5% EBITDA margin in FY '27, we have guided for double-digit. What do you think?

Would there be any change to our guidance, revenue-wise and margin-wise?

I'll explain to you. The Middle East crisis has impacted our sales by about 50 crores or so, as well as, as Santosh mentioned earlier in his opening remarks, that the Vinpai acquisition, there was a loss at EBITDA level of 10 crores, due to some liquidity issues which Vinpai had, which of course, we are addressing.

If you combine these two, our EBITDA should have been higher by about 30 crores or so.

Okay.

We're not changing our guidance for FY '27. We're guiding on the same lines.

Right. Sir, let's say our tariffs are down to 18%, and we are able to sell it at $18.

Ethyl would be at $20 or something. What would be our blended realization we can take for FY '27?

I think it'll be around in the range of $13.50 to $14.

Okay. I have one more question on the blend side.

Sir, Blendtek, Vitafor, what would be the EBITDA breakeven we can expect at what revenue run rate?

Yeah. Vitafor is at 15, at $16 million for the whole year.

Is Vinpai is also at the same level, $14 to $16 million.

Okay. That's it.

I will come back if I have any other questions. Thanks a lot.

All the best.

Hi. Can you explain and help us understand your debt levels at March '26, and how you plan to manage your cash flow in fiscal '27 in terms of how much you expect from operations and any other sources to meet your debt payments and working capital requirements as you're growing the business again in '27?

Last year, we started with around 620 crores of debt. Our business was increasing.

We did take some debt in India of around 45 crores on working capital, which is an increase. If you are seen, we have also borrowed 30 crores for our Vinpai open offer.

We borrowed at the year-end. On a global basis, Vinpai was added to the whole kitty this year.

It was acquired. It had around $6.5 million of loans in its books, so that was 60 crores or so increase because of that loan.

However, the increase in the total loan is only by 50 crores, because we knocked out around 85 crores of Italian loan. At the end of this year, we have around 670 crores loan.

Out of that, we are carrying 30 crores in escrow, which is for the Vinpai open offer. Having said that, with 670 crores, the overall repayment for the whole year on a consolidated basis around 60 to 70 crores.

We think that it could be managed. There will be some stress if our turnovers increase at a faster rate.

We will require additional liquidity and additional support. We are looking at some support from the market on debt for the growth as well as stabilizing the current business, and have some cash to tide over this conflict situation.

It's better to have some cash, because there could be longevity of the working capital if the conflict lingers.

Right. Are you looking at some degree of capital infusion just to make it even more resilient so that you can pursue a growth plan?

Capital infusion is the last resort. We are in the market for debt at this moment.

That looks like a better option. We know that the times are difficult, and that's why we have kept that door open, and you have seen that we have increased our authorized capital to some extent in the month of March.

At this moment, equity infusion is really a last resort, not on the table at all.

This is a simple, plain bank debt? Or this is more structured or high-yield debt of between equity and debt?

We're

looking in a combo, because we have large now network of our companies all over the place. If you see in India, I'll go for a structured debt.

For example, if I borrow in Mexico, it will be more of a bank debt. We will be looking at a combo.

We have kept all doors open. As the times are difficult, especially to have cash from the market, right, in that situation.

Largely structured in this situation, but we are also looking at the bank finance.

Do you have some sort of a sense or range what cost it would come at?

It's very difficult now, because it will be assessed. The guy who gives structured finance is going to assess my risk.

We will try to keep it at as minimum as possible as the market rates.

Got it. Second question I had in the industry cycle.

You're talking about inventories in that channel reducing in US and then we getting your volumes back in US. How is that situation?

When you think you can get your volumes strongly going in US?

This is for the vanillin business?

Vanillin business, yeah.

Yeah. The vanillin business this year, as we've said in the past, our estimate for FY '27 in the US will be around the 2,200 to 2,400 metric tons.

We are on stream to achieve that number. That's both methyl and ethyl together.

We have several businesses already contracted and some being contracted. I think that 22 to 2,400 is what we're looking at for this year.

Will it be more coming in second half? Or even Q1, Q2 can also see a strong pickup?

Because I think Q4 was less than 300 plus tons.

Yeah. Q1 also will show some pickup in the US.

The total combined between your US and Europe, Q1 will show some growth over Q4 of last year of FY '26.

Got it. Then it will keep picking up to meet your guidance.

Yes, correct. That's right, yeah.

Thank you.

Thank you very much.

Hi, thank you for the opportunity. I had a couple of questions across the business.

What is the tonnage or catechol inventory we are sitting on for now?

It's in the region of about 3,000 tons.

That in terms of vanillin yield is how much approximately between methyl and ethyl, because I know the yield would be different because of catechol? Sorry?

Yeah. It's about 1:1.

Roughly for your calculation, you can take 1:1 for both, for methyl and ethyl.

Okay. Considering our guidance for FY '27 has been about 70% utilization, so that would be about 4,000 to 4,200 tons of vanillin.

Where would the balance 1,000 come from?

We'll buy from China.

You'll buy catechol from China?

Either catechol or guaiacol.

Then you'll blend it here and do the needful?

Then we'll do it. Then the final step, whatever that vanillin manufacturing is that.

Understood. The tariffs currently, as per my understanding, is 10%, not 18%, right, because of the

15%?

15%.

There's a base 5.5% duty and then there's 10% tariffs across the board, it's 15.5%.

Your current realization would be about $16-odd in US at the moment? No, I know, because

the DDP pricing today in the US market, our competitors, Solvay, is selling at about $17 to $18. There's a holding cost and the tariff cost and some channel financing costs, all of that gives us net realization would probably be in the region of about $13.

I think a couple of quarters back, we had seen prices signed at $19, $19.50?

Correct. Yeah.

No, but Solvay is trying to saturate the market, get the Chinese out of the market completely. They've taken this position of pricing.

We can't price higher than them, we kind of maintain pricing along with them. I think in the next quarters, they have no choice but to increase the price, and that's what we're thinking, that they would look at increasing the prices to the $19 to $20 region.

Your pricing for Q1 as on blended across Europe and US, realization would be about in-hand, post-tariff would be about closer to 14?

Yeah, 13.5, 14, in that range.

Okay. Because it's been almost a year since the ADD came in, is the channel clear, because prices should have been north of $20 by now, excluding Solvay, even with them?

I'm wondering how with this inflationary scenario,

what We're surprised with what they're doing. I think we expect them to change their position in the next couple of months, yeah.

They will increase it, because their capacity utilization would be at 100% by then, they naturally, they'll have to increase the prices, yeah.

The cost currently that the company is incurring because of employees, is this as we had discussed earlier in the February concall as well, this is the peak, right? Now we will let the business stabilize a bit because you've done two acquisitions, you have a new facility coming on stream, which is the vanillin.

Now is this the peak hiring? We're not seeing more increased employee expenses on the P&L?

Yes. No, I don't think there will be significant changes.

It will be in this region. Then

considering you're moving from manufacturing to importing and then doing your value addition here, with vanillin scaling up and blends in its nature is already asset-light, are you on track to deliver about 300, 330 crores of EBITDA for FY '27? Because vanillin alone at your current realizations of 13.5, 14, should give you 200 crores of EBITDA.

Yeah. The way we are seeing it is that on the top line, we should be in the region of between 22 to 2,400.

EBITDA margin would be between 12% to 14% on overall basis. That's the swing.

Of course, we do have a plant which we are trying to look at what to do with to make into multipurpose and see if we can reduce some of the costs on our raw materials as well. There are different programs which we are working on.

That's why the range would be between 12% to 14% in terms of EBITDA, and top line also would be in this range of 22 to 2,400.

Going forward, we don't have any European losses. The Chinese losses, I think, are about 8 to 10 8 crores-odd annually, right, which is about 2 crore 1.5, 2 crores a quarter.

Considering you have about 300-odd crores 300 tons of stock in vanillin plus a 600 metric ton campaign, are we moving back to double-digit margins in Q1 onwards at least, because Q4 we expected some sequential performance, but I think we've slipped further because of the geopolitical tensions?

Q1 is difficult to say that because we did have manufacturing of diphenol till the 22nd of May when we discontinued, and we started getting material from China, which now we are consuming. The full impact of that will really come in Q2.

You'd also have phenol inventory, right, which would give you some inventory gain? No, no,

no, phenol we don't have any inventory, because it's just-in-time, because it's next door, no, the Deepak Phenolics plant. We don't keep any stock.

It's just-in-time supplied to us from them.

In Q1, are we going to maintain these 48% gross margins, or are we going to slip down, because if you're going to do 4,000 tons of vanillin I think

we will maintain that margin. There could be 1% up or down, but we should be able to maintain that margin, yeah.

Because

at 700 tons of vanillin alone, even if not 700, at 1,000 tons of vanillin, even if I take it as a quarterly phenomena, I know it's not that way, but if you have to even average it out just for simplicity, that alone should give you back to your old numbers, right, at 13.5, with this current rupee depreciation, even if your cost of manufacturing is $9, $9.50 all-inclusive, you're at Rs 360 a kg. At 1,000 tons, that's automatically 30 36, 37 crores of EBITDA.

I'm just not understanding the numbers, if you can help me understand the same.

No. Again, the raw material costs have gone up, right?

The $9 is no longer $9, because phenol costs and all other raw material costs have gone up with the current situation that we are seeing. That 9, 9.5 assumption was prior to the war.

After that, of course, with all these cost increases, your realization has not gone up, but your cost has gone up for vanillin. When I look at vanillin, I would say you break in

This catechol is old inventory, right, as Santosh sir also mentioned, that 3,000 tons is not Come on, it's being No,

no, catechol is only a quarter of the raw material. There are other raw materials as well.

For example, glyoxylic acid, caustic. Caustic is actually equal in value as catechol, and that has gone up by literally doubled up after the war situation.

The total cost of raw material cost is still $7.50 pre-war with around $2 $2 of catechol. You can just imagine there are a lot of other raw materials that go in, which can really get impacted by the geopolitical situation.

Today, at current pricing, at 4,000 tons, what will be your per kg cost of vanillin?

My raw material cost, even if you hold onto the catechol and we're assuming that around 20% 20% to 25% increase in cost. If I knock out $2 to $1.50, $2 from my total cost of $7.50, 4% 5.5% 20%, that's how boss was saying $9.

Today is it $10 or $9.50?

This is on the same, madam. No, Santosh, what is the current cost of per kg of vanillin at these levels?

That's what I'm saying. That raw material, and the raw material cost, which was $7.50, has gone up by at least $1.20.

It's almost $9 is a raw RMC. Plus your conversion cost at 4,000 tons, if you were to look at your conversion cost, it would be at $1.50.

You're at $10.50 of base cost. Your realization is 13, 13.5, you're talking about $3 spread.

On a 800-ton in the first quarter, you're looking at 20 to 22, 23 crores coming from there, not 35, 36 what you are making.

Thank you for this opportunity. Sir, my first question on let's say the base business, TBHQ, BHA, and all those kinds of things.

The kind of price pressure, competition, also the kind of a recent in general rise in chemicals prices because of the war situation, what we have seen, given those backgrounds, what are the kind of outlook that you would be having on that, the straights specialty ingredients as well as the specialty the straights business? In

the straights business, some of the cost increases we will be able to pass on, and we are passing on. TBHQ prices have corrected and have gone up to reflect that.

BHA pricing also is slightly better than it was pre-war. In terms of passing on the increase of costs with a lag, we are in track to be able to pass it on.

I don't see a problem with that. As far as volume is concerned, I think we are gaining a lot of market share also in the blends business, where our TBHQ and BHA consumption, internal consumption is growing, which also is giving us some economies of scale in terms of production of TBHQ and BHA.

The outlook for '27, it would be positive or how should one really think, sir?

For TBHQ, BHA, it is positive. Yes, for TBHQ, BHA, it is positive, the outlook.

From the performance chemical point of view, it would be?

We don't have much for performance chemicals. We don't have much now.

Now with catechol, after stopping the diphenol production, the performance chemicals will be very small part. We're not selling, we were making hydroquinone and selling some hydroquinone also in the market.

Slowly all of that will go, the focus is not on that.

Okay. Now second question is on the supply chain issue practically that you would be seeing currently.

There was a obviously difficult situation. Whether the worst is behind now, and Q1 onwards, should we see a kind of improved supply situation for us, or there would be still there would be some challenges relating to some particular input if you can highlight that and See,

the problem is, as in the supply chain, the bigger problem is logistics. That is very, very unpredictable, because what looks like 20-day shipments are taking sometimes 40 days to come or 50 days to come.

That uncertainty, till this geopolitical situation settles down, will remain, and very difficult to predict whether that will very quickly correct, or it will take maybe a few months to correct.

There the overrun remains, because even if the situation is, I don't think the logistics guys will immediately come down. In fact, tomorrow morning, I am meeting one of our guys, who is a big logistics guy.

He's coming, and I know why he is coming. He wants to increase the price.

The cost, if you compare pre-war and now, in fact pre-war also, the cost were increasing of freight. The cost, as far as we are concerned, where we put almost a lot of material across the globe in the American continent, both North and South of freight, the costs are almost three times.

Hm. Yes, you can always say why it's not fiat, but it doesn't work like that.

I don't think even if tomorrow the war stops, this thing is going to get unwound in a day or a week. We feel that this will linger on for some time, at least it will take a quarter to come back to the normal situation.

Then

H1 of FY '27 is a continued impacted period for the business generally, theoretically. That is what one should believe, right, sir?

How this passed on on cost basis, I feel that the cost of freight may remain high. If even if the war is over and the crude remains at 100, then there's no respite, right, for the freight cost.

It's very unpredictable. The question is if the crude is 100, how much I can pass it on to my customer, right, and how much I may have to bear from that.

It's a very difficult calculation to say. I feel that even a stable growth of 10% to 15% over these two quarters is great, really great.

Okay. Sir, about vanilla business, you have talked about it already.

Since the tariff US tariff was not there or almost near-normal kind of tariff situation that is in there in some time and so and this is a kind of a year-end situation and normally the order book builds at this time also. Any order book build-up that you have seen for FY '27 and hence that confidence that, okay, the certain quantum of the supply that is definitely possible irrespective of the pricing or the cost equation?

Also Yes, sir.

Yeah. To answer that, we've started with the ethyl vanillin campaign.

The campaign is for 600 tons, and we already have a order book covering 50% of that.

We'll

have to maintain stocks also, because we can't be out of the market once we change back to methyl vanillin. I think in terms of demand, what we were saying around that 4,000-ton mark, I think is very very doable.

Our bigger challenge is, of course, the longer working capital cycles and logistics and cash flow. That's what we need to address, because we have a large order book even in all our business, actually, and executing that with tight cash flow position is a bigger challenge than the market itself.

Okay. If you can also just add up on for your outlook about vanilla for the European market, sir?

Do you see some easing situation in the Europe at least?

Yeah. The market situation is much better.

In the ethyl vanillin also, out of the 300, 150 is coming from Europe. Methyl vanillin, we have no stocks to give to the European market till we start our campaign again.

The market is coming back. What we had said, that 1,500, 1,600 tons for the year, I think we're good for that.

Okay.

Just last one point from my side. About the Vinpai and the Vitafor ramp-up, we have been trying to build up the field force for scaling up those operations, which was almost stalled before acquisition.

What is the field force addition practically now we have created during FY '26? What about the exit rate revenue that we have seen for both these two businesses?

What is the kind of scale-up that we should see in the blends operations?

In the blends operation, we closed the year at 1,000

and 50, 50, including discontinued.

1,050, including discontinued, right. This year, we are looking at anything northwards 1,400 crores for the FY '27 in the blends business.

As far as adding sales force, it is across the world, it's not only in Vinpai or Vitafor. We've also added workforce because the markets are in different places, right?

The sales people are being added across the world, and that addition we have done, which will support Vitafor and Vinpai growth. We expect Vinpai and Vitafor to be about breakeven EBITDA in FY '27 for sure, and the overall blends business to be northwards of 1,400 crores.

Sure. Just one point, sir.

This tariff refund that you have mentioned from the US, whether that would be real tangible or it would be adjusted the subsequent to trade?

That's what we understand is normally it becomes 50-50.

Historically, it has been 50-50, but the US government and the consultants are saying that we may get the cash up front. Historically, if you see similar situation, they have given 50% as cash and 50% has been adjusted against duties.

The kind of turnover we have from India, vanillin itself, that 9 crore, 10 crores, we can swallow it in couple of 3, 4 months, we are not worried about that. If they give cash, we are more than happy.

If they give duty rebate, still we are happy.

Okay. Sure.

Yeah. Thank you, sir.

Wish you all the best.

Thank you.

Thank you. Thank you for your precious time, ladies and gentlemen, and we look forward to interacting with you in the next quarter.

Thank you.