Aether Industries Limited (AETHER) Earnings Call Transcript & Summary

Ladies and gentlemen. Good day, and welcome to Aether Industries Limited Q4 FY '24 Earnings Conference Call hosted by HDFC Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nilesh Ghuge from HDFC Securities. Thank you, and over to you, sir.

Thank you, Nirav. Good afternoon, all. On behalf of HDFC Securities, I welcome everyone to this Aether Industries conference call to discuss the results for the quarter and financial year ended March 2024. From Aether Industries, we have with us today Dr. Aman Desai, Promoter and Whole Time Director; Mr. Rohan Desai, Promoter and Whole Time Director; Mr. Faiz Nagariya, Chief Financial Officer; and Ms. Shubhangi Desai, Executive IR. Without further ado, I will now hand over the floor to Ms. Shubhangi Desai to begin with the earnings call for 4Q FY '24 and financial year '24. Over to Shubhangi.

Thank you, Nilesh. Good evening, one and all. Today, on May 21, 2024, our Board has approved the financial results for the fourth quarter and financial year ended on March 31, 2024 and we have released the same to the stock exchanges as well as updated the same on our website. Please note that this conference call is being recorded and the transcript of the same will be made available on the website of Aether Industries Limited and Exchanges. Please also note that the audio of the conference call is the copyright material of Aether Industries Limited and cannot be copied, re-broadcasted or attributed in press or media without specific and written consent of the company. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are predictions, projections or other estimates about future events. These estimates reflect management's current expectations on future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Aether Industries Limited or its officials do not undertake any obligation to publicly update any forward-looking statements, whether as a result of future events or otherwise. Mr. Rohan Desai will begin by sharing Aether’s business outlook, then Mr. Faiz Nagariya will cover the financial highlights for the period under review. And Dr. Aman Desai will share the ongoing expansions and strategy of the company going forward. Now I shall hand over the call to Mr. Rohan Desai for his opening remarks. Over to you, sir.

Thank you, Shubhangi. Ladies and gentlemen, thank you for joining us today. I want to address our recent quarterly performance, which was unfortunately impacted by the significant fire accident. The foremost priority of the company immediately after the accident was towards the injured and for the family members of the deceased. And we have done our very best for them and their families. Coming to the business, while this event has certainly present challenges, we want to assure you that we are fully committed to addressing the situation and mitigating its effect. Our team is working tirelessly to rebuild what is lost, get the production streams online in a phase-wise manner after getting necessary statutory approvals and ensure the safety of our employees and facilities. During the start of this quarter, we had announced that we had restarted 50% of the facility post this accident. This came online in phased-wise manner, and hence, the effect we've seen in our performance. Our swift response by effective crisis management systems minimize the disruption of our supply and enabled us to meet our commitments to our customers to the best of our abilities. The other half of the affected site 2 is expected to be operational soon with all the safety protocols in place. We are expecting to receive revocation of the closure order of site 2 to resume operations to the extent of 75% and 100% of the environmental clearance capacity shortly. We have taken several onetime hits on our books, which has impacted our bottom line. We appreciate your patience and support as we navigate through these challenging times together. There has been several positive developments in this quarter. We had announced the successful piloting of recycling and upcycling of plastics with our customer Novoloop. Also, we had announced the appointment of our new CTO, by Aether, Dr. James Ringer, who has taken up this role after already been here with us for 3-plus years. We have also invested in 15 megawatts of solar power plant, which will make us 95% sustainable on renewable electrical energy in 3 sites. And last but not the least, we have commercialized site 4, which starts the production line for oilfield drilling services businesses. Dr. Aman will be sharing more information on the above in the short period of time. In spite of the pricing pressure and the fire accident by site 2, we have been able to sustain the market of our products and we are seeing a good inflow of orders through our existing molecules. Our large-scale manufacturing business model contributed to 59% of the total sales in this quarter, CRAMS contributed to 14%, and contract/exclusive manufacturing was at 26%. Robust growth in all the 3 business segments is expected in the current financial year 2024-2025. We will have the site to fully schedule operational by quarter 1 of 2024-'25, wherein we are expecting the revocation orders for site 2 to come any time from the authorities. Now let us discuss on the growth outlook from here on. We have commissioned our site 4, which is under 100% wholly owned subsidiary, Aether Specialty Chemicals Limited. This has been created largely for 1 of the top 3 biggest oilfield services company. We had announced a letter of intent with this company in the recent past, leading to the creation of this site, and we expect to be announcing the finalized strategic supply agreement with this customer shortly. Production and the supply of the products from site 4 to these customers will be increasing in phases, with the first phase beginning from quarter 1 of financial year 2024-'25. While the coming quarters, we anticipate a very significant revenue contribution from site 4 in this oil field drilling services domain. Site 3, which was commercialized in January 2023, has seen pricing pressures also. And we have not been able to get the desired results but we expect the pricing pressure to ease out soon, and we will get the entire results in financial year 2024, '25. Commercialization of site 3++ and launch of 3 to 5 products in site 3++ under the LSM model in quarter 4 of financial year 2024-2025 is on track. Commissioning of the new 15-megawatt solar power plant, we'll be adding to saving of electricity expenses, which will be done in 3 phases. Phase 1 will come online in the end of May 2024. Second phase will start online by July 2024, and the last phase will start in September 2024. Each phases would be of 5 megawatts capacities. We have also successfully expanded and commissioned the pilot plant. This will further lead to enhancement and faster scale up of newly developed products in R&D, which are to be launched in the near future. This expanded pilot plant also helps us in expanding our CRAMS business model in a significant footing. I would now request Faiz to take you through all the financial highlights of the company. Over to you, Faiz.

Thank you, Rohan. Good evening, everybody. Here we present the financial results of Aether Industries Limited for Q4 and financial year '24. The total revenue of the company in standalone stood at INR 6,399 million in financial year '24 is against INR 6,676 million in financial year '23 resulting in EBITDA of INR 1,619 million in financial year '24 million as against INR 2,028 million in financial year '23. EBITDA margin stood at 25% in FY '24 as against 30% in FY '23. The PAT amounted to INR 881 million in FY '24 as INR against INR 1,304 million in FY '23. The PAT margin stood at 14% in FY '23 against 20% in FY '23. The consolidated financials are here with total revenue of the company stood at INR 6,373 million in financial year '24 as against INR 6,676 million in financial year '23, resulting in EBITDA of INR 1,577 million in financial year '24 as against INR 2,028 million in financial year '23. The EBITDA margin stood at 25% in FY '24 as against 30% in FY '23. The PAT amounted to INR 825 million in FY '24 as against INR 1,304 million in FY '23. The PAT margin stood at 13% in FY '24 as against 20% in FY '23. The loss in Q4 is attributable to deferred tax provision in Aether Speciality Chemicals Limited due to the operation started in March '24 and capitalization of various fixed assets. that is INR 11.03 million. Otherwise, there is a PBT of INR 5.6 million, and there is a cash profit as well. The main reason for the reduction in the revenues in Aether Industries is attributable to the fire accident at our site 2 in November 2023 wherein the production at our manufacturing facility 2 was stopped for a couple of months. The reduced revenues and other exceptional expenses related to the accident like compensation paid to the families of the deceased, penalty payment to GPCB, medical treatment expenses of the workers who were hospitalized and increased insurance premium of our IAR policy resulted in the reduction in EBITDA and PAT margins eventually. The amount of such onetime cost is approximately INR 70 million for the quarter. We incurred an incremental impact of approximately INR 30 million on account of increase in insurance premiums due to fire accident in this financial year '24. Further, we have also incurred a loss of INR 138.97 million on account of damage of inventories in process and finished goods, which were either in the reactors, other equipment, and on the shop floor when the fire accident happened. The loss of fixed asset is being assessed as various equipments are being inspected as a results and outcome are expected to be released by the end of this month. We have though submitted our first claim of INR 1,000 million to the insurance company towards stocks, fixed assets, loss of profit, et cetera. And we have applied for an on-account payment of INR 210 million to the insurance company, which has been approved, and we expect the payment in due course in few days. Acceptance of on-account payment also entitles that our claim is accepted by the insurance company, which will be settled in next few months. Due to the fire accident manufacturing facility 2, that is plant 2 majorly affected, new production could not be done in the entire December 2023 and January 2024, and hence, this also led to the reduction in the finish goods and semi-finished goods inventories, resulting in a reduced margins as well. Though when we received the partial revocation orders from the authorities, we started building up stocks of RM, manufacturing started resulting in increasing stocks of SFG as the production is going on for various products. I'll stop here and request Dr. Aman Desai to share update on Aether's ongoing expansion plans and strategies going forward.

Good evening, everybody. Despite the unfortunate turn of events in this fiscal year, impacting our profitability and our overall performance, our team's resilience and dedication have allowed us to navigate through this difficult situation. Our swift response and effective crisis management system have minimized the disruption of our supply chain and enabled us to meet our commitments to our customers. [indiscernible]

We are losing your audio. Can I request you to speak a little louder, please?

Yes. No problem. Let me know if it's not audible. In January, the unaffected plants of our fire impacted site 2 resumed operations after an initial closure by the GPCB. The other half of the affected site 2 is expected to be operational very soon with all the safety protocols in place. We are expecting to receive revocation of the closure order of site 2 to resume operations to the extent of 75% of our capacity in the next coming days. With that, let me put forth the strategic developments that have been executed and which remained the key drivers during the period under review. We announced the first commercialization of the novel Converge polyol technology, which we have developed in collaboration with Saudi Aramco, and this first commercialization was led by one of the largest U.S.-based adhesives manufacturer H.B. Fuller. This builds on the numerous years of joint work done so far on the Converge platform with Saudi Aramco Technologies Company. As we speak, we are continuously working to widen the array of Converge Polyols application in the CASE industry. We are upbeat on the fact that the successful product launch by H.B. Fuller is the first of many with an aim to serve the customer by providing sustainable solutions as these first launches of the Converge polyol technology begins. We are hoping now to see a rapid growth in the commercialization and sales of these novel and sustainable polyols. We're also proud to partner with Novoloop for a first of its kind Lifecycling process, creating a pathway of Circular Plastic Future. This technology provides an economical and sustainable solution for hard to recycle plastics. This project is a plan to unfold in phases with an initial startup of operations already commenced in the first quarter of the fiscal year '25 at the newly built pilot plant dedicated to the project. Novoloop’s novel technology has immense potential, and we are excited to begin preliminary discussions with Novoloop already towards the full-scale commercialization at Aether of this technology in the very near future. In the recent past, we have announced partnerships with Polaroid of Netherlands and Otsuka of Japan. Both these partnerships remain robust. We continue to be the exclusive research, development and supply partner for Polaroid digital and instant photography platforms. This upcoming fiscal year, we'll see substantial revenue contributions coming up for the first time from our partnership with Otsuka, thus transforming the work done over the last several years in building this partnership into a substantial commercial business. We also recently announced the execution of an agreement with a major global lithium-ion battery producer, thereby giving an announcement for our foray into specialized electrolyte additive products. We have partially conditions -- commercialized these products already and expects full commercialization in our upcoming sites 3++ and site 5. Additionally, this partnership is developing quite well, and we expect additional benefits from this partnership, which we will also announce in due course of time. Our R&D and pilot plant assets, infrastructure and manpower continued to increase quarter-on-quarter, even in the accident affected quarters. This reflects on the continued fullness of our R&D pipeline with numerous projects across all business models. Even with the recent setbacks, our CRAMS portfolio has, in fact, grown year-on-year, and we anticipate the upcoming fiscal year, we'll see a significant expansion of this CRAMS portfolio with new projects and new customers being added across the industry spectrum and a few of these products making the golden transition from the CRAMS portfolio to the contract/exclusive manufacturing portfolio. We have also given guidance on the hierarchical changes that we are planning to bring about, especially in the wake of accident, in line with that. We have announced Dr. James Ringer as our CTO who has already been associated with us since the last 3 years as a Business Development Leader for the Americas. He's a very well recognized R&D professional with the carrier spanning more than 30 years at the Dow Chemical Company in the U.S.A. at an R&D director level. He will be jointly overseeing the R&D and technology verticals of the company. Under his leadership, we look forward to maneuvering to greater heights in strategic innovation and technical leadership in cementing our place as a premier partner for chemical development, scale-up and manufacturing across the industry spectrum. We have commissioned successfully our site 4 under our 100% wholly-owned subsidiary Aether Specialty Chemicals. This has been created largely for one of the world's 3 biggest oilfield services company in the U.S. We have announced a letter of intent with this company in the recent past leading to the creation of this site 4, and we expect to be announcing the finalized strategic supply agreement with this customer in the coming weeks or even days. Production and supply of products from this site 4 to this particular customer with increasing phases, with the first phase beginning in this first quarter of fiscal 2025. By the coming quarters, we anticipate very significant revenue contribution from this site 4 in the oilfield services domain. CapEx at our greenfield manufacturing site 3++ and site 5 is advancing well with all the regulatory approvals in place and the civil work going on as planned, and the machinery and equipment also being installed in site 3++. We anticipate the commissioning of site 3++ by the end of this upcoming fiscal year. We are going to launch several exciting new products in this site 3++ for both the large-scale manufacturing business model as well as in contract/exclusive manufacturing business models. These products are as always made and offered by us for the first time in India, have their genesis in our core chemistry and technology competencies and have been painstakingly developed in our R&D labs and with production ready in our pilot plant. The product under planning for the site 3++ includes some of these new electrolyte additives and 2 large molecules moving from the CRAMS portfolio to the contract/exclusive manufacturing portfolio and pipeline molecules under our large-scale manufacturing business model played by us for the first time in India. Site 5 is developing quite well from the civil logic perspective, it is a mega production site with 16 production blocks and it's shaping up very well to become the true face of production of Aether Industries with world-class engineering, technology and safety and sustainable systems. At the very end, I do want to touch upon the tragic and unfortunate accident in our manufacturing facility in site 2 in the last quarter. As Rohan had mentioned at the start of this call, the topmost priority of the company, our management and our family has been towards the injured and the families of the deceased. We have tried our very best to stand by them, and we will continue to do so for the lifetimes of these immediate families. This was a major accident. We have responded by undertaking comprehensive and systemic changes in the safety protocols and processes of the company. Each and every single operation being conducted in R&D, pilot plant and production for all the sites in the company have been reviewed for safety and only then our operations have been resumed. We have spent several weeks in drawing up an elaborate corrective and preventive action plan, which focuses equally on the short term, the medium term and the long term. This plan has already been implemented and validated for the short-term actions and is being implemented with utmost seriousness for the medium term and long-term actions. Vigorous implementation of this plan remains the company's top most priority and it was also my personal top most priority as a company, as a family, and as the person leading the operations, we are and I am committed to ensuring that such an event will never ever happen again at Aether Industries. Finally, I do want to express our deepest gratitude to all our colleagues, our stakeholders and our valued investors and their continued faith and trusting us. And I assure you that we are working tirelessly to ensure that we deliver value to you and live up to our promise and potential. Shubhangi, back to you.

We shall now request the moderator to open the forum for question and answer.

[Operator Instructions] The first question is from the line of Rohit Nagraj from Centrum Broking.

Sir, first question is in terms of competition from China. We've been hearing across the board that there has been competition from China, which has cropped up over the last couple of years. So have we faced any competition? And because of the incident, is there any irreversible market share loss that we are experiencing. That's the first question.

Thank you, Rohit. Yes. On the pricing side, we are seeing a lot of pressure from China because the raw materials have also reduced and obviously they are back to their original state. So we are picking good competition in terms of pricing. However, we have only lost certain market share in certain products because of our inability to produce because we have only 50% of our production plant, which is online. So that product is where we have lost some market share, but we are very, very confident that we will regain this market share in Q1 and Q2, respectively, and we'll be back to our original state. We have commitments from the customers and their readiness from the customer side and their willingness to buy from Aether. So we are not worried on the existing molecules. And we are already taking a lot of orders with the anticipation of the restarting of the plant as per our internal time lines.

Sure. That's helpful. Second question is in terms of the your CapEx, so if you could just give us a time line as to when commercialization of these projects will happen? And what kind of revenues that we are expecting over a period of time. So maybe a at peak utilization based on the current CapEx, and how the trajectory would move maybe in FY '26, '27 in terms of overall revenues?

All right. So we are talking about site 3++. To start with, site 3++ is INR 200 crores of investment, and it is expected to come online and stabilize in Q4 of this financial year 2024-'25. Site 4 is already up and running, and we are seeing the outputs and the sales happening in phase-wise manner where it is being ramped up in this current quarter, that is Q1 of 2024-'25. And it will attain to its full potential in Q2 and Q3, respectively, of this current financial year, '24, '25. And talking about site 5, we will be -- we are estimating our online, getting online in the phase-wise manner where the first phase will get online in December of 2025 which will stabilize in the last quarter of 2025, '26, and the potential will start unlocking in '26, '27 for that site. This is an expansion of INR 500 crores of revenue -- sorry, I mean capital investment, out of which INR 300 crores would be productive assets and INR 200 crores will be nonproductive assets. That is the accessories and the infrastructure around which we need to build up for 16 production blocks. Does this answer your question, Rohit?

Sure. Just one small clarification. In terms of the usable asset base, what would be the asset terms that we are looking at?

At maturity, after a period of 2 years of stabilization of the plant, we are looking at 2x of the investment done in the plant.

[Operator Instructions] Next question is from the line of Dhruv Shah from Dalal & Broacha Stock Broking.

So my first question...

Dhruv, sorry to interrupt you. Can you speak a little louder please?

Am I audible now?

A little better.

Yes. So my first question is with respect to your CRAMS business. If I look at your full-year revenue, it has been kind of flattish. Can you justify what is the reason behind this flattish growth?

Yes. So quite a few of them. So on the rate of the accident, quite a few of these projects were put on hold. And there's almost a period of overall, I believe 2 months where we put a lot of things on hold because I mentioned in my speech, we had done a thorough safety review of every single operation and every single project. And for that matter, we have put quite a few projects on hold and quite a few of the bigger projects were put on hold for a longer time for these safety reviews. And so we are looking at this one quarter where we were delayed by our deliverables the milestones on all of these projects. And so, in fact, we were hoping to have a showcase a significant growth on the CRAMS year-on-year. But in spite of this setback of 2 to 3 months, we have still been -- we've still grown on the CRAMS by a couple of percentages, I believe, and that reflects on how strong the pipeline was.

Sure, sir. Sir, my second question, what was your average selling price per kg for the full year?

At the moment. Average selling price per kg was INR 1,509.

INR 1,509?

Yes.

Yes. And sir, like what is your outlook on this? Are you seeing any improvement in prices because the prices have been falling only, right? So are there any green shoots that you are observing in terms of prices?

Currently, for Q1 and Q2, no. We are not expecting any price to be correcting, but we are seeing a good demand at least to start with, which is a very, very positive note. And with the demand, we hope that from Q2 onwards, the pricing will go towards the north.

Sure, sir. And my last question was with respect to your agrochem sector. So what is the scenario over there? Are there any improvements over there? Because I think so earlier you had mentioned that some deals were delayed, not canceled. So are they back with us or they're still not with us yet?

Yes. So we are not a major agro player as such. We hold approximately 30%, 35% of our sales comes out of 4 products, which are in agro. And we are not seeing demand trouble in these 4 products. However, the pricing pressure is still true in all these -- for all these 4 products.

Sure, sir. And just one last question, if I could squeeze in. Sir, there has been some significant increase in your noncurrent borrowings. So can you please mention what is that regarding?

Non-concurrent borrowings is the working capital requirements, which we have started taking because we had taken INR 45 crores in the working capital. So this...

Your voice wasn't audible. Can you please repeat that?

Yes, the noncurrent borrowings are the working capital limits, which we are enjoying with the banks. So these are towards the CC, PCFC and LC limits which we are using from the banks.

[Operator Instructions] Next question is from the line of Inderjeet Bhatia from HDFC Securities.

First question is, would you want to kind of put a number as to how much of revenues we lost in the previous quarter because of this unfortunate accident? Is there some assessment of that?

We lost almost close to INR 150 crores to INR 200 crores of revenue, which we are assuming in 2 quarters. I mean, 4 months. There are many aspects, we lost 1 quarter in site 4 also, which we are anticipating to get as a revenue which was oilfield drilling services, which was also delayed because we wanted to do the safety reviews, and safety check again in the existing site and site 4. And also, we had QEHS, which was kicked in by our customers which we passed with flying colors to also.

Okay. So this is -- when you say INR 150 crores of revenue loss, is this revenue is delayed which will all expected to come into FY '25? Or do you think some part of this is actually loss because those orders do not exist any longer with us because customers might have shifted it.

No. So it has been pushed a quarter back. So we are not going to recover it in this financial year, for sure.

Got it. Got it. Second is now with the -- you said that we are not large players in agro, but if I recollect, agro was still a fairly substantial portion of our order -- of our revenues. If you could kind of just let us know as to what percentage do you think would be agro in FY '25 or FY '26 once all these new capacities come up? That is one. And the second is in any of your existing contracts or the new contract that you have kind of got, has there been any change in pricing or any kind of extra cost that is associated either because of the accident or just generally because of, say, the environment changing?

No. So no additional cost has been put in by Aether or there is no discount which will be given by Aether because of the accident. We are anticipating 30% to 35% of our total topline to the agro for this financial year.

Thank you. That's it from my side. Best of luck for FY '25.

Next question is from Atishray Malhan from Fortress Group.

I have a few questions regarding the Converge polyols opportunity. Firstly, so you've previously mentioned that the addressable market size for the Converge polyol opportunity is about 850,000 tonnes per annum. Can you maybe quantify the TAM in dollar terms?

So it's 150 KTA would be at the average selling price of $4 to $5 a kilo -- sorry, $3 to $5 a kilo.

Okay. Okay. So just harping upon that point, I mean, considering that the Converge polyols are more value-added products compared to the other polyols used in CASE application. Are they being priced at a premium compared to the other polyols in the market?

Yes. It is priced at a premium. It is approximately 35%, 30% to 35%, depending on the volume, which you require it at 30%, 35% premium.

Okay. Okay. And just a quick follow-up on that. So for the various CASE applications that you're targeting, what percentage of the end-use applications total COGS would be attributable to polyols? I understand that the exact figure would be difficult to estimate, even a range would be very helpful.

So that would be difficult to estimate, I think.

[Operator Instructions] Next question is from the line of Krishan Parwani from JM Financial.

Just two small questions from my side. First is on the volume or revenue growth, which you are targeting FY '25, given some new plants are coming up and there would be certain impact in site 2 in 1Q '25. So just some thoughts there.

Yes. So Q1, we are anticipating the site 2 come online. So at any time we are expecting a revocation to be circulated and so we can push and move ahead full steam ahead in site 2, and site 4 has come online. So that will contribute quite a lot in financial year 2024, '25.

Okay. So you are -- at this point, you are probably not putting a number to the growth guidance that you have. Is that understood...?

No, really not.

Yes. No problem. And the second question I had was on the working capital days. So how much of the moderation you are expecting in FY '25, given I think we had some higher working capital days in '24. So how do you...

Krishan, can you just speak bit louder? I cannot hear you.

Sure, sir. So I was actually asking like, was there any particular reason for higher working capital days in FY '24? And how much of moderation we are expecting in FY '25?

So the main reason for the increase is attributable to the inventory days, wherein the working progress, inventory has gone up. So we had a fire incident and then the site 2 revocation for part was received. And we started the production in February. So there was -- this production was going on. So this work in progress inventory has been higher at this site. And if this is moderate, and we will again come back to the normal scenario and normal terms by end of this finance a '25, for sure.

Perfect. So essentially, it was because of the fire incident. Understood, understood.

Yes, [indiscernible] various products production was to be started. Otherwise, the raw material, finished good, all the inventory days are not are all in control. There's no such problem.

Perfect. So we can expect it to be a normal level once again?

Correct.

[Operator Instructions] Next follow-up question is from the line of Atishray Malhan from Fortress Group.

Just a couple of more follow-up questions on the electrolyte additives opportunity. So the electrolyte additives that you're currently developing, how fungible are they? Can they be used across different electrolyte salts and solutions? Or are they specific to a specific electrolyte salt such as, say, a lithium hexafluorophosphate?

Yes. Thanks for the question. Great question. We are focusing only on the organic molecules, small organic molecule, electrolyte additives, and that's a very specific subset of the electrolyte additives. So we are not going after the salts. We are not going after the solvents. We are not going after the salt additives. We are going after the organic small molecule electrolyte additives only, which plays to our strength of our core competencies of chemistries and technologies. And so the -- so that's the first part of the answer. The second part of the answer is that these are commonly used. So 2 out of the 3 that we are developing are very commonly used electrolyte additives in almost every single formulation of lithium-ion batteries. And so they are going to be broadly applicable and marketable to the entire world of the lithium-ion battery formulation partners. And the chemistry play, and the technology play to our strengths of core competencies and therefore are fungible in our manufacturing assets.

Okay. So my understanding is that you plan on sending the first validation batches to the clients by the end of this calendar year? Is that correct?

That is correct, yes. Hopefully before that.

Okay, okay. So I mean when do you expect commercialization of the additives by?

So the commercialization will be partially done by the end of this calendar year, and the full commercialization will happen in the site 3++, which will be by the end of the fiscal year or the quarter thereafter.

[Operator Instructions] Next follow-up question is from the line of Rohit Nagraj from Centrum Broking Limited.

Sir, we have recently elevated Dr. for the CTO position. So what is the structure that we are working with, I mean, in terms of the total staff cost, how much is the percentage for the expats, and to retain them for a fairly long period of time, what is the incentive structure or probably ESOP structure that we have formulated. If you can just give some color on this.

Yes. So we are very excited to have Jim on the Board and Jim's personally known to me for the last 20 years now. And with the company for 3 years already. And he is probably one of the best process scientists in the world that I know, and I know quite a few. And so we're excited to have him when he joined us, obviously for a good package, but also and benefit, but also because we believe in the story and of the personal connection that we shares, and he's very excited to be working with us. And so this -- I won't share the details here, but there are several aspects of the overall package that we have put together for him and it includes obviously attractive ESOPs as well. He already had access to ESOPs from the development leader position that he was in, and this gives additional benefits to him as well. And so we work very closely. He is at Aether for the full month every quarter, and he's working in the Indian time zone partially over there in the U.S. for coordinating with the projects over here and then partially in the U.S. time zone for the business developments activities. And he is already contributing immensely to all the projects and it's a parallel structure. To me, if you will, in terms of the R&D and technology development of the company. And so it's very, very positive. Hopefully that answers some of your questions.

Right, right. And a similar structure in place even for the other expats who are working from other geographies?

The other business development team has ESOPs, and a reasonably good package compared to the Indian standards, that's already in place. So the design of the structure is done in such a way that it is expandable for the near future, if anybody wishes to join Aether.

Sure. And just one clarification in terms of FY '25. Given that the unfortunate incident has happened and probably will get the revocation order in some time. Is it safe to assume we will be able to do at least similar kind of revenue run rate, what we did in FY '24? Barring the new projects which have come on in terms of the site 4 and the upcoming projects.

Obviously. Yes, for sure.

Thank you very much. As there are no further questions, I will now hand the conference over to the management for closing comments.

Thank you, everyone, for participating in the call. We hope that we have addressed majority of your questions. If you still have any further questions, please feel free to reach out to us. Thank you.

Thank you very much. On behalf of HDFC Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.