Archean Chemical Industries Limited (ACI) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Archean Chemicals Industries Limited Q3 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ranjit Pendurthi, Executive Vice Chairman of Archean Chemicals Industries Limited. Thank you, and over to you, sir.

Thank you. Good morning, everyone. A warm welcome to all of you joining our Q3 and 9 Month FY '26 Earnings Call. Thank you for taking the time to be here with us today. On this call, we are joined by Mr. Rampraveen Swaminathan, Managing Director; Mr. Nagayanallur Ramachandran, CFO; Mr. Rajeev Kumar, DGM Finance; and SGA team, our Investor Relations Advisor. First update is on the changes in the senior management team. Further, the Board has appointed Mr. Rampraveen Swaminathan as the Managing Director of the company. We would like to welcome him to the Archean team. Rampraveen Swaminathan has over 28 years of experience in business leadership, operations and strategic transformation across industrials, energy and manufacturing sectors. He has led large-scale growth, technology-enabled transformations and operational turnarounds across multiple geographies and industries. He's most recently served as the MD and CEO of Mahindra Logistics Limited, where he repositioned the company as an integrated technology-driven logistics provider and significantly scaled its revenues. Our colleague, Mr. Kannan, has decided to move out of the company due to personal reasons. I would like to place on record our thanks and appreciation for Mr. Kannan for his contributions to the company. Mr. Kannan will continue to work closely with Ram and myself over the coming months as part of the leadership transition. We are at a very exciting phase in Archean Chemical's businesses across the range of businesses we operate. And to further lead this exciting phase of growth, Ram has agreed to come on board and lead the management. I will now hand over to Ram to provide an overview of the business performance. Thank you.

Good morning, everyone, and thanks, Ranjit. I'm pretty excited to be joining the team as we focus on developing the organization and scaling up our businesses further in the future. I'm also looking forward to engaging with our investor community, including all of you on the call today and taking your inputs and insights as well on this journey. I hope you all have had a chance to go through the financial results and the investor presentation, which is available on our website and the stock exchanges website. I will provide a quick summary of the overall business performance and then hand it over to Natarajan for a quick financial summary and then revert back for the Q&A and closing comments. So starting with just an overall market environment. Over the last -- we have been working -- operating in a mixed market environment driven by some of the uncertainties over the past 3 to 4 quarters. While there are early indications of improvement, we expect the rest of this year largely to be one of stabilization and the operating environment to normalize as we move forward. We are closely tracking developments across the proposed India, U.S. and the India-EU FTAs, which could be a platform to create new opportunities for the Indian specialty chemicals exporters over the medium to long-term. The India-EU FTA and other regional trade agreements will provide long-term tailwinds for the sector, though it has short-term -- limited short-term impact on our operating segments. During this period, our focus continues to remain firmly on strengthening the fundamentals of the business, driving focused growth, accelerating operational excellence, deepening our customer partnerships and capability building across the enterprise. Our continued focus and acceleration on this will ensure that we are well positioned to benefit from these initiatives and other macroeconomic drivers, which we believe continue to remain extremely positive for our company and the sector as a whole. Coming more specific to our own performance. As we have mentioned in prior earnings calls as well, the overall business performance in the first 2 quarters was challenging with results impacted by multiple issues, including erratic monsoons, logistics disruptions in our area of operations, some technical issues in our plant operations and lower crude prices, which kind of impacted rig activity and affected some of our end markets. We've also seen a mixed environment on pricing with continuing pressure on industrial salt prices, but favorable movements on bromine. On a positive side, in the quarter we just completed, I think salt pricing was stable, and that's kind of a good trend as we look forward. Increasing bromine prices have also put pressure on margins in the derivatives segment and demand for some of the downstream products. Despite these challenges, I think we were able to capitalize on some of the tailwinds and drive a stronger momentum in the third quarter. We saw a healthy demand in the industrial salt segment, which showed strong volume growth year-on-year and also year-on-year growth in derivatives, which partially offset weaknesses in other segments, most specifically the bromine business. On a consolidated business, the company has reported 11% year-on-year revenue growth for the 9-month period. And for Q3 specifically, our revenues on the standalone operations grew by 12% and consolidated operations grew by around 10%. I'd say growth was limited for us in as much by operational factors as by the market, and I'll kind of talk about them a little bit more as I cover segmental performance. So going to the specific segments, and I'll start off with elemental bromine. Demand for bromine continues to remain strong. During the first 9 months, India was a net importer of bromine with stable to positive trends globally as well as domestically in terms of demand. Short-term pricing trends have also remained favorable, and we continue to have a very healthy order book and are seeing positive traction with our customers. We'll also continue to see growing demand internally from our derivatives business, which is Acume. And overall, I think we believe we remain very well positioned from a market perspective. And from a demand side, we definitely think that the volume growth is likely to continue to happen. Our engagement with clients remains strong, and they continue to support us. And obviously, this year and next year, we expect bromine consumption from our captive operations to also drive further growth. During the quarter, as in prior quarters, I think our performance remained constrained by operational challenges and disruptions. These did continue to -- some of the challenges we had in Q2 did impact us in early Q3 as well. We have launched several improvement projects, which we expect will help us get back to steady-state in Q4, and then we'll further try to scale up operations in the coming quarters. For the quarter, elemental bromine contributed approximately 24% of standalone revenues. And for year-to-date, it has been approximately 29% of our consolidated revenues. On industrial salt, during the quarter, we sold approximately 1.1 million tons of salt, kind of reverting back to our quarterly run rate of more than 1 million tons. The segment contributed nearly 70% of standalone revenue. And for the 9 months, our volumes are now about 3 million tons with demand remaining robust despite the moderation in prices. Sequentially, Q-on-Q, pricing has remained stable, and we expect that to continue in the short-term. We have a strong demand visibility and our long-term contracts with our customers continue to be in good shape. So we continue to expect to scale this business up with some seasonal uptick in Q4 and continuing kind of expansion of operations as well. On SOP, which I think just continues to extending from what we had covered in the last quarter. Our pilot stage trials have been completed successfully. During the quarter, we have worked towards progressing from pilot to plant scale trials. The site is ready, and we are on the verge of commencing plant scale trials and expect meaningful contributions from this business in the -- in F '27, especially the latter half of F '27. As we stated -- as we have stated repeatedly, we continue to believe and have strong conviction that SOP has significant potential for the business in the long-term. And we -- our challenges in that business has been obviously around changes in feedstock given brine quality. And those are the technical changes we are making in the plant operating system now, which should -- when successful, will kind of position us well to start scaling up operations again. On bromine derivatives, which is essentially in Acume, our operations are up and running. We're currently at around 30% to 40% utilization. We have around 40 reactors and month-on-month, they change, but generally around 30% to 40% utilization. Global uncertainties and obviously lower crude oil prices have impacted rig activities, which has further impacted the oilfield chemical market demand. On the supply side, price increases on bromine have also increased cost pressures. However, we are engaging with clients, availing certifications and approval, right, and expect the volumes to start scaling up. We continue to focus really on product development. We have around 15 new products in pipeline, which are at different stages in terms of customer trials and completion. And this should help us, we believe, in total 50% to 60% utilization in the coming quarters. We have in the past mentioned about the flame retardant bromine project. So a quick update on that. We are in the project evaluation phase there, and we'll provide a more detailed update on that as we make progress. Current market environment is kind of mixed there. So we are trying to evaluate the feasibility of that business and how quickly we can scale that -- scale volumes up. Now moving on to our strategic initiatives, especially in what I call the advanced materials space broadly. On the semiconductor side, during the quarter, our semicon business initiative through SiCSem continued to make strong progress. As you're all already aware, SiCSem is among the 10 projects approved by Union Cabinet under the Indian Semiconductor Mission. The finalization of the fiscal support agreement with the Indian Semiconductor Mission is currently underway and is expected to be completed soon, which will then give further finalization to the overall funding framework. Execution on the ground has already begun. The 25-acre site in Info Valley, Bhubaneshwar has been allotted, and we held a groundbreaking survey on that at the site in November 2025. Land leveling is complete, and we are right now going through topographical survey and soil testing right before we start any construction activity. Along this -- along at the same time, we're also kind of investing in developing our go-to-market strategy, finalizing our supply partners, including for fab design, EPC and project execution. And overall, we believe the project is well positioned. From a timing perspective, we are on target right now in terms of our internal schedules. And from a medium- to long-term perspective, we continue to believe that this is very well positioned to not just enhance our own business, but also, I think, contribute meaningfully to India's emerging compound semiconductor ecosystem, right? We continue to share -- this is a long gestation project, so we'll continue to share updates with all of you as we move to the next phase of execution. Our energy storage business, which is the other strategic initiative we have. As you know, we have invested in Offgrid Energy Labs, a zinc bromide battery innovator with a robust IP portfolio of over 50 patents and more across cathodes, anodes and separators. In May 2025, just to remind everyone, we successfully acquired 18.14% with the remaining commitment expected to be completed over the coming period. The company, as in Offgrid Energy Labs plans to set up a 10-megawatt hour demo manufacturing facility in the U.K. The work has already started and is progressing well with the R&D for the next-generation stationary energy solutions kind of underway. Again, this project will continue to keep you all updated on progress in the coming quarters. Overall, if I kind of look at summarizing at a summary level, our business fundamentals remain strong and robust. Our marine chemicals portfolio is well positioned with high product quality, strong customer acceptance and continued focus on strengthening our cost position. Year-to-date, we have had some challenges operationally due to some external factors and operational factors really in the bromine business and of course, some external issues around pricing on the industrial salt side. But we remain focused on recovering this in coming quarters. Our long-term investments in advanced materials are on track to continue to position us well for the long-term. So I'll now hand over to Natarajan to provide a more detailed financial summary for the quarter and for the year-to-date. And then I'll come back for the Q&A and wrap. Natarajan?

Yes. Thank you, and a very good morning to all the participants on the call. We are pleased to report a notable performance for the quarter gone by. To give you a summary of Q3 and 9 months FY '26 on a standalone basis, I start with Q3 FY '26 performance. Total income for Q3 FY '26 stood at INR 2,608.1 million, 2.4% increase on a year-on-year basis. We have shared the revenue and business mix in the investor presentation for better understanding. Our business mixes are as follows in Q3. Bromine contributed 23% of the total standalone revenue and industrial salt contributed around 77%. Sales volume of the business were as follows. Volume sales of bromine for Q3 FY '26 stood at 2,403 tons. Volume sales of industrial salt Q3 FY '26 stood at 1.1 million tons. EBITDA for the company stood at INR 698.6 million in Q3 FY '26, 25% decline on a year-on-year basis. EBITDA margin stood at nearly 27% for the quarter. Increase in expenses were largely due to increase in logistics costs, new employees and other overhead costs from the new units. Net profit of Q3 FY '26 stood at around INR 343 million. Coming to 9 months performance. Total revenue for 9 months stood at INR 7,840 million, 7.4% growth on a year-on-year basis. EBITDA stood at INR 2,416 million, 10.8% dip on a year-on-year basis. Net profit is INR 1,246 million, 1.6% decline on a year-on-year basis. On a consolidated basis, Q3 and 9-month performance stood at total revenue Q3 FY '26 stood at INR 2,615 million, bromine derivative INR 142.1 million. EBITDA for the company, INR 613.5 million and the net profit, INR 240 million. 9 month performance, total revenue, INR 8,016.7 million, EBITDA INR 2,166 million and net profit, INR 931 million. With this, we conclude the speech and open the floor for Q&A.

Thank you, Natarajan. We will now open for Q&A and I request the moderator to kind of facilitate the same.

[Operator Instructions] The first question is from the line of Sanjesh Jain from ICICI Securities.

So quickly, I got a couple of questions. But before that, just data keeping questions. Natarajan, sir, can you repeat the revenue for Acume for Q3, SOP and volumes for both?

Yes, sure. One second. Q3 only, right?

Yes, Q3.

Q3 total quantity is 799 metric tons and value is [ INR 137 million. ] And for 9 months ended...

No, for SOP. No, 9 months we got.

SOP, you want?

Yes, SOP volume and revenue.

Yes. SOP Q3 is -- one second, okay, Q3 is 71 metric ton, okay, and value is...

751, okay.

No, 71.

71, okay. And value is?

Value is [ INR 32 lakhs. ]

Okay, [ 0.32. ] So now coming to the questions, you mentioned in the initial remarks that you are seeing pressure on the bromine derivative. But on the other side, if I look at the bromine prices, they have really shot up. Now both really doesn't add up. If there is a pressure on the derivative, how can the elemental prices go up? Or if there is -- or there is some supply constraint which is driving this bromine prices? How should we read this commentary in together?

No. So I think my comment was that we obviously -- the increase in bromine prices obviously sprint cost pressures on our bromine derivatives business. And what I mean by Sanjesh, obviously, is that given the specific products we are making right now and the way the contracts are, not all of the cost increase is something we're able to pass through to our clients, right? So you are seeing this trend where obviously, bromine prices are up. I think very favorable for us if our volumes have been better on the bromine side, but that increase is also putting cost pressures on the elemental bromine business. And that's why you have seen in the Acume side, we've had to enhance our product development efforts towards new products. And also, we've seen some downtick in our revenues because we've had to kind of adjust volumes in some of the products where we had a higher cost impact.

No, I got it. There are only 3 products which significantly take away the bromine volumes globally. What we are telling is that the derivative pressure is specific to the Archean, not to the industry, right, then...

Yes, it's specific more to our products. That's why I made that comment that currently -- our current product portfolio has a longer tail on that, which is why I mentioned we are in the process of accelerating the 15 products we have in the pipeline.

Very clear. Second, on the bromine, last quarter, we mentioned that we have a 10,000 metric ton of backlog, the production really not keeping up. Just wanted to understand how much of this backlog is with the lower pricing, which may hurt us because we are not fulfilling that and probably may have to fulfill them in the future. And number two, that means the realization, we will be in the catching up game. And number two, what really is happening on the production side? Can you help us understand when we say the technical problem, what we really mean technical problem?

All right. So let me answer the first question first. I think we -- so we have -- much of the order intake we had is roughly at the same price. It's still very much still there, Sanjesh. So I think the 10,000 ton or 9,500 ton backlog we had at the end of last quarter. We obviously shipped approximately 2,500 tons of that. So we have still around 6,500 tons in backlog. We've not seen a significant amount of cancellations there. We are obviously reviewing by contract with our individual customers on what is -- what we can do to reprice those contracts. If I had to give a simple headline message, I think there will be some carry over the next 1.5 quarters or so, but we hope to then reset to market pricing over the next couple of quarters, right? So there will be some carry in it. I don't have a more specific answer at this stage. We are happy to kind of revert back to you a little bit more detail there, but that's just like a headline view. On the operational side, I think what's really happened is -- and I think Ranjit and Kannan may have spoken about this a little bit last quarter's call. We've obviously had a fair amount of weather changes in the last -- first 6 months and flooding and kind of weather changes have meant that the brine quality which then kind of drives the feedstock quality has changed in terms of composition. That has meant that we've had to make some changes in our brine field operations to kind of ensure that we are enhancing the feedstock quality. We've also had to make some changes or improvements in the operation -- in the plant itself to be able to kind of manage a wider range of brine or input feedstock. So we had a trailing effect of that essentially throughput came down because of that last quarter as well. And we had a trailing effect of that, Sanjesh, in the first half of this -- third quarter as well. We then obviously launched some improvement projects. We had -- that also resulted in some time off because we had to kind of make changes in the system. We ended the quarter getting back on a positive trend. And that's why I mentioned I believe that in the coming quarters, in the short -- earlier rather than later, we should be able to get to a steady-state. Steady-state to remind you in my mind, is kind of what we did last year. Last couple of years, we've been at the 18,000 ton kind of level. And we want to get back there. And then obviously, our goal is still in the medium -- near to medium-term to try and get to the 25,000 ton run rate.

Got it. So we had a capacity of 42,000. Why are we targeting only 25,000? There's a disconnect between the capacity we have and the production we are targeting.

So Sanjesh, Rajeev here. So see, as we have previously mentioned in our call, the capacity expansion will actually primarily happen between 25,000 and 42,000 in line with the capacity expansion in the derivative business.

Okay. So as we put up more derivative only then we will be able to extract more bromine or we will be extracting more bromine probably?

So I think obviously, yes, that's a headline that's overall.

No. But I just want to understand on the derivative side, there's a sharp drop in the volume. How do we plan to ramp it up? And I think we are lagging significantly in terms of what we thought we could do. I know the market conditions, but can you help us understand how should we look at FY '27 for us?

Yes. So I think just to answer the question more clearly. See we are right around 35% to -- 30% to 40% utilization. So first, the plant is -- first target for us, [indiscernible] we get the utilization up. The second thing, I think, is that the product mix we have, we have essentially 3 to 5 products which are running most of the volume. Those are things which we would like to kind of move away from or change the mix away from that. So that's the 2 big focuses right now is to get the right product mix, get the right level of penetration with customers. The potential is there. Even though markets are a bit soft, I think the potential is there. And we have -- we ended -- we started the quarter with around 5, 6 products in the pipeline. Q3 -- and as we speak right now, we've actually expanded products to around 15 products, which are now in trials and going through kind of customer acceptation -- acceptance, validation and so on. So that kind of the focus is to kind of expand the product portfolio and repivot the portfolio, let me say, towards better yield kind of products for us. What does this translate into math? I think for '26, '27, as I mentioned earlier, we are trying to scale it up to around 60% to 70% utilization at a plant level. And of course, that will move day-to-day or week-to-week based on which reactors we operate. But just from an overall throughput perspective to get to that 60% to 70% level. That's a product portfolio we've been working on. And I think you will see that step up Q-on-Q. It will not -- it won't be -- it's not a one-time switch. But over the next couple of quarters, you should start seeing that scaling up.

The next question is from the line of Vinay Nadkarni from Hathway Investments Private Limited.

I have just one basic fundamental question. When I'm looking at your company for the last about 7, 8 quarters now, the -- whether it is Oren Hydrocarbons, whether it is your bromine derivatives, whether it is bromine also or SOP, everything gets delayed as the quarters go by. So every time there is some kind of a delay that is happening. Is there any management bandwidth issue that you have, which is impacting this?

Hemant, I think -- I don't think that would probably -- so firstly, every company has challenges around management bandwidth, scale up operations. So I'd be cautious -- but that would be an oversimplification of the issue. I think the very specific challenges we've had, right? So obviously, bromine, we have -- we were at a good run rate prior. I think we were at 17,000, 18,000 tons. We are looking at a run rate of around 25,000. And then as you mentioned earlier, to do a kind of a minor brownfield expansion to take it to a target of 40,000. We've had the setbacks which we talked about earlier. And I think we have good bandwidth on the ground, which is why we've been able to make these changes within 1 quarter, right? It's a continuous process manufacturing plant. And we've been able to make changes, in fact, without any major shutdowns, right? Because we have fairly good bandwidth on the ground. Industrial salt volumes are growing. right? And therefore, we are -- so in that part of the business, I think there are headwinds, but there's no challenge around bandwidth, right? The Idealis investment is -- was always -- was projected saying that it will take us multiple quarters as we had got the assets out of NCLT. We had to make step-wise changes. There are issues in terms of local ecosystem challenges and so on. The good thing -- and so there -- it's not that we don't have bandwidth. We don't have team working on it. It's just, I think, the nature of the program which we had. And we always, I think, more caution to the fact that given it's an NCLT asset buyout, it will be a staged recovery process and not an overnight kind of scale up. 3 plants are now operational, right? We have to take -- these products actually have a long customer certification cycle. It's not a commodity product like salt, right? And therefore, it does require a fair amount of customer approvals. So 3 plants are up and running now. We are in the process of scaling it up. On the Acume side and the derivative side, yes, I think that's a piece which has been -- I think we have to execute that a little bit better. And those are changes which we are making, right? So I think -- and a lot of that is around product development. We've accelerated that over the last quarter. And we are continuing to focus on accelerating that this quarter even further, right? So that's a piece where back end is really solid. Operationally, we are in -- the plant is in great shape. It's very good. It's got great operating metrics. But the demand side has been -- scale-up has been weak because we have had to kind of rework our go-to-market and our product portfolio. And that I take your point, and that's what we are working on right now.

Yes. My observation was also on SOP because that is one high-margin product that you have and which has got a good demand also. But somehow quarter-after-quarter, we see delays getting a little frustrating now.

So Hemant, as you know, our conviction on SOP, -- Vinay, sorry, our conviction on SOP still remains extremely strong, right? We have maintained that now for several years, right? It's a complex technical issue. And not -- it's not the lack of our resources committed to it or the capability of those resources. We have strong resources, partnerships globally, but it is a complex technical problem, which takes time to solve. I think we are now getting close to a point where we think we have, I would say, a more enduring fix. We have been trying to do many short-term fixes, which obviously have not given the yield we had expected. So we are now at a point where I think we have a more enduring fix, but it will take us a few more quarters to get there.

The next question is from the line of Rohit Nagraj from 360 One Capital.

Sir, first question is in terms of the contracted volumes for bromine. So if you can just help us understand how much is maybe a medium, long-term contract and how much is spot? I mean the perspective that we want to hear is whenever there is change in bromine prices, whether we'll get that advantage or not? Because I think last year also, it happened sometimes in the month of April, May, bromine prices went up, but it was not reflected in our performance. In the last couple of months, now bromine prices have gone up beyond $5,000. So when we will be able to see the tangible benefit in the financials? So a broader perspective in terms of contracted spot will also help us.

So I think -- so I'll just -- I assumed it in the earlier part of the call as well when I answered part of this in some ways. I think we have around 6,500 tons, you can say, of contracted backlog, right? But that's not backlog, which is like only for 1 quarter or 2 quarters. It's kind of spread over a period of time. And we have a mix of both spot and contract prices. So we have obviously the balance of both long-term contracts and short-term contracts in the mix. I think the challenge for us is about the production side of it. Obviously, when the production side has been trailing, we have -- don't have enough bromine coming out to actually balance both those customer sets. And we do have to make strategic calls given our customer relationships. And that's probably the reason why you may not have seen some of this impact, at least this year, I can't talk about last year, but this year's perspective. And I think as I mentioned, we will probably see a trailing impact on some of these contracts for a couple of quarters. The exact impact of it will also be a function of how much we're able to get through into our system, right, in terms of production. So at this stage, I mean, that's probably the best input I can give you is that I do think we will see that the contracts will have an impact over the next couple of quarters, but they should probably -- the longer-term contracts should probably represent probably 50% to 60% of our volume and not more than that.

So once these -- I mean, just a clarification on this. Once these long-term commitments are over, what could be the optimal mix in terms of medium, long-term contracts and spot just to get an advantage of the spot market as and when it arrived, otherwise...

Let me -- if we can just hold, let me come back to you specifically on that. I don't have a perfect answer on that right now, right? We're still kind of reviewing some of this as well. But I will try and reach out -- somebody from our team will reach out to you separately outside this call and provide you some info about that.

Sure, sir. Sir, second question is in terms of next year, given the constraints that we have on bromine, is there a fair chance of reaching at least the 18,000 tons of production, which includes both the element sale as well as for our captive.

So simple answer, yes.

Perfect. That's helpful. And one more question I just want to squeeze in. Oren, we had indicated that -- I mean, there have been delays in terms of the revenues. Next year, what is the reasonable number that we can put INR 100 crores, INR 150 crores based on the current understanding of where we are?

See, I think as a matter of rule, we don't give guidance, and I think, right. So -- but what I would say, I think, is on the Acume side, I was very specific. We do expect we'll get to a 50% to 60% capacity utilization there. On the Oren side or the Idealis side, I think each -- as I said, we are still in the process of scaling up plants and operations. So at this stage, I probably defer answering that question. But if you can pick the thread on it next quarter, I'll probably be able to give you a better insight on it.

The next question is from the line of Aditya Khetan from SMIFS Institutional Equities.

Just a couple of questions. Sir, on the bromine side, today, so climate change is quite visible, as you mentioned, like there was some bad weather impact. And it seems sir, nowadays like even a smaller wind comes, it takes away our volumes. So sir, just putting things in perspective, how many months or days of lost volumes we can build? And what is the sustainability of the numbers which you have given of 25 kt? How should one put faith in the numbers like this bad weather impact wouldn't be there in the coming fiscal, so 1 to 2 years? And how should this play out like in the long run?

No, I think the -- so the weather impact is 2 things. Obviously, in some extreme cases, it can result in a total shutdown of operations. But the larger set of issues we've had is more about adapting our systems to it. When these changes happen, they obviously change the flow of feedstock and the chemical capabilities of the system. I'm reasonably confident that I think we should -- we are -- we have solves on most of this implemented now. There is clearly a road map to get to that 17,500, 18,000 number. As I mentioned to the earlier -- to Vinay earlier that we are -- a simple answer, we will be north of 18,000 tons next year. right? Now the goal is to get to a run rate of between 18,000 and 25,000 at which stage we obviously have to do some expansion work, right? And we're hoping that the derivatives bromine business will also start scaling up meaningfully at that stage, so we can actually make that step up beyond 25,000, right? But I don't think this is a flash in the pan thing that when it happens, we just end up having going sideways. There is -- there are technical things which one has to do to solve the problem, and that's what we have taken care of now. And we should start seeing that coming through in our results as well.

Got it. Sir, on to the bromine derivative side, we have clearly witnessed like the business has not been able to ramp up quite steep. Just sir, I want to know, like you mentioned earlier also, like there is -- demand is not that great today. So is that also related to the higher bromine prices because the feedstock prices are higher. Consequently, the CBF and PTA synthesis prices are also higher, which is where you might not be able to pass on or the demand itself like in the global world that is muted today?

So let me just take this overall, just several of you might be interested. I think medium- to long-term demand on the derivative side is pretty good, right? Short-term demand across categories is also fairly stable and improving. Our challenge has been -- in scaling up the business has been in some of the specific products we make and driving penetration with our -- with the end user accounts, right? So that -- there is -- obviously, there is a supply side pressure, which we have to either optimize through our own cost of operations or in different customer contracts, pass it through to our clients as well, right? So this is not an enduring -- this is not that kind of a challenge. What we have to -- and the steps we have taken, obviously, is to kind of refocus a lot on getting the right product portfolio and increasing the speed at which we're getting products out, right? So that's been the big pivot we have to accelerate in the business. I think if we get the product expansion out and accelerate the customer acceptance cycle, we should be able to get there. So obviously, we are, I think, probably 12 to 18 months behind. I don't have an exact number because I'm still trying to figure out some things. But I would say that whatever duration we are behind, a lot of this has just been how could we execute here. And that's what I kind of commented earlier on that -- to the person who asked me, do we have a bandwidth issue. I think this is one area where we could have executed a little bit better, but we have put the fixes in now. We are putting some more fixes. So we should be able to get this back on stream in F '27. I won't say that's going to happen in Q1 of F '27. But from a run rate perspective through the year, we should be able to get to that 60%-ish kind of capacity utilization.

Got it. Sir, just one last question. Sir, considering the recent geopolitical tensions between Israel and Iran, is there any sort of -- is there any -- so while talking to customers, are they hinting about diversifying from Israel to India volumes because Israel Chemicals, like which is the biggest player in Israel, is there any sort of like if these things turn out, there could be some short-term supply chain issue, supply issue? And customers are looking more towards India towards other players. Is there any sort of like things you're talking in? And secondly, sir, if you can also highlight the global supply. Is there any new player which is entering or existing players looking to expand the supply in China and in other countries, that would be helpful.

Yes. I think some supply will come up globally probably next year or so with expansions probably in Australia, right, somewhere towards '27 or so, right? But again, it's -- these are organic changes, which do continue to happen. From a demand perspective, I think our focus markets have actually been around Asia, South Asia and East Asia. And we've not heard any significant repivot. Demand still is stable and growing, right? And therefore, I don't think anything to be concerned about in that sense. No immediate upside as well because of the way global supply chains work, but in our kind of focused markets, we don't see anything dramatically changing. I think we've heard from our customers at least.

The next question is from the line of Dhruv Muchhal from HDFC AMC.

Sir, one of the challenges in the bromine production, I believe, as you have mentioned in some of the previous calls, was also as you're focusing some bit on the SOP. So as you're confident of the recovery in bromine from next year, also, can you highlight how the SOP trajectory could be? I understand it's still on the plant trial stage, probably starting soon, but some early trends, if you can share something on that.

No, I think our pilot trials, these are fairly independent programs, as you know, obviously the -- and the pilot trials have been successful. The chemistry works. We have been able to ensure that we are getting good yields out. And from a quality perspective, we are good. We have the plant scale trials somewhere in this quarter or early next quarter. We have kind of got the plant ready. That's one of the reasons why probably volume has been lower in Q3 because we've been getting plant ready. But we should -- I think it's hard for me right now to give a specific number, if that's what you're looking for, okay? I think once we finish the plant trials probably in April or May, we will be in a better sense to see what kind of ramp-up will be required. We also have to -- because we'll have to understand what kind of modifications we have to do at a plant level. And we have a preliminary sense, obviously, of what has to be done, but we'll be able to confirm that only after we do the plant trials. And that's when we'll be able to give a far clearer view on what the projected kind of throughput will be. You already know the capacity numbers. So that's been out there in the public world for a long time. So that's -- so the goalpost is known to everyone, right? We just have to come back with a more specific ramp-up plan, which we'll share with you as the plant trials get complete.

And sir, the second question was...

But I do want to highlight -- I just want to highlight that obviously, if you look at F '27 perspective, there will be plant modifications, et cetera, to be done. Once the plant trials are successful, we'll have to make some modifications in the plant. So hard right now to say even what the F '27 impact will be. A couple of you have asked that question. So I just want to kind of reclarify that.

So -- but just to confirm, probably clarify, these plant trials will not have any implication on the bromine production because now that can...

No, nothing -- they're independent. They're independent value chains. There's a lot of shared infrastructure on utilities and so on in the business, right? And on the feedstock side, but operationally, they are very different.

Got it. And sir, the second question was on the flame retardant project. Now I think I could have missed, but the project -- earlier you had mentioned about 12 to 18 months for the project. I think in the commentary you mentioned earlier that re-project -- you're relooking at the project now. This was to be a downstream project, which could have taken some of the virgin bromine. Does it have any implication in terms of how you ramp up your -- assuming this project is on hold for now, does it have any implications on how you ramp up your elemental bromine now?

No, I think what I mentioned was that we are evaluating the project feasibility and not the viability, right? So we are going to continue to work on flame retardant. It's only that we are working through the project details and working on that. It has no direct impact on our ramp-up -- so 60% to 70% growth in the utilization I talked about, right, that has got -- that is something which we hope to achieve in either case.

No. So the near-term happens -- for example, FY '27 happens, FY '28 also happens because of your other downstream bromines. But assuming this project, I'm not -- still not very clear, but is the project on hold or not on hold?

No, it's not on hold. It's not on hold. It's just that we are working on it in a fair amount of detail, trying to ensure that we launch the product properly and that we have a clear ramp-up plan, which we deliver on, right? So that's -- so as I said -- and that's kind of what we are working on in a very detailed project plan. Like I talked about what we did in SiCSem, SiCSem at a high level. We talk about SiCSem in more detail, but very similar approach here as well. We're trying to do the project planning in a lot more detailed way, ensure that we feel safe in execution, looking at margins, returns, product mix, et cetera, a lot more carefully. And that's why the execution is taking a longer period of time. But it's not -- it's very much on -- it's not on the back burner. It's not off the burner. It's very much on the burner.

Okay. So because if I just -- I was just looking at 2Q conference details, you had earlier mentioned it can come online in 12 to 18 months. So assuming by end of -- in 2Q, so end of FY '27-ish somewhere. Does that time line still remains or...

Yes. Still remains.

Okay. Got it. Okay. So basically, you are just reconfiguring the product and -- that way, okay.

That was the update I gave, we are working through the project details, and that's all it is. And we give you an update because we mentioned in Q2, that's why we gave an update this quarter.

The next question is from the line of Rushabh from RBSA Investment Managers LLP.

Just to get a more sense on the weather impact that we have over the years. So you mentioned that we've done some fixes currently. I just want to understand next time the bad weather hits us, does the impact remain as same as earlier or we are better off now?

Bad weather is a very broad statement. But as I said, I think what does bad weather do to us? I'm just going to repeat what I said earlier. Bad weather can either have impact on just operating environment or it can just have an impact on our -- on the brine fields and overflooding, et cetera, can change that. I think we'll be -- technically, we'll be in a strong position to manage those kind of challenges going forward, right? I mean if you have a cyclone or something which requires you to kind of temporarily take safety measures on operations, that's something which I don't think anything which -- any fix sort of protect against that. But on the feedstock, the brine fields, et cetera, and what higher levels of rain or floods, et cetera, do to that, those are things which I think we've put in the fixes to try and get strong process control and we'll be able to manage that range of it. Sorry. Go ahead.

Yes. Given that we have so much on our plate right now, and I just want to understand on the senior management and the mid-senior management bandwidth, so are we done with hiring? Or what is the progress on that so that next time as industry headwinds appear, we don't falter again. So I just want to understand on that sense, is the team...

No. I think organization -- let me give you a perspective of someone who is very new to the job, right? So I obviously have a very sharp sense on this. I think organizationally, we are well set up, right? And I'm not worried about it as well. We have to add some capacity as the business grows. But I would say that from a capability perspective, there are many pockets in the company where the capability is very deep. Even some of the changes we made to the bromine operations, as I said, we've done it without long -- without any shutdowns. And we've done it within 6 to 8 weeks in some of the changes we have made. So those are a reflection of the depth we have tactically and on the execution side. So I'm not -- I wouldn't be worried about that in that sense. I think we've got plans around it, and we are executing those.

And just the last question to Mr. Ranjit. Post the designation change, where do you devote your time more now? If you just share your thought process now.

So I think I'm happy that the management depth is increasing. I think that's one of our tasks as promoters to ensure that there are people who are right and fit for the job to be able to take it up and then move the company at the speed and execution level that we want. So I think that's the first change that we have consciously made. With your specific question regarding my own role, I think it will remain strategic. I think that's where possibly most of my time will go. We do have the new initiatives going on. So while I work with Ram on the existing business and making sure that I'm an enabler for him and guiding and helping him make these things happen in the existing base businesses, I think my focus will also possibly more shift towards the strategic initiatives and making the semiconductor business happen on the ground, team building there and working on that part of the business as well.

The next question is from the line of Rikin Shah from The Boring AMC.

I just wanted to ask on the Oren side. So in Q4 FY '25, we have guided for INR 150 crores, INR 160 crores of revenue in FY '26. In Q2 FY '26, we have guided that nothing will meaningfully come this year, and we've shifted the guidance to FY '27. So we have acquired this asset to NCLT. It was well known to have complexities. So why was the initial diligence so far off regarding regulatory time lines and other challenges? And now that you're guiding numbers to come in FY '27, what is giving you reasonable confidence that this will happen?

I think the first one is from a diligence perspective, we did a diligence in operating assets, the products which we can make from there. And obviously, what would be a reasonable operational time to get the assets back. And as always, coming out of the NCLT process, there are several other issues we have to deal with as well. There are many other ecosystem factors which we have dealt with, the local environment issues, the local communities we have to engage with labor groups which we have to engage with. And so that is something which -- so our ability in any scenario to predict the last part of it perfectly is a challenge, right? So I think the first 2 parts, which is getting the plant readiness back, understanding go-to-market and products. I think those will be fairly in good shape even in terms of what we projected. The plants were shut down for nearly 6 years. And we have -- we forecast to be aggressively able to get plants back in a year. We've got 3 plants up in 12 months, right? In fact, even lesser if you actually see the actual operating deals we had. But we've had obviously challenges which you had to deal with, right? And they do -- and therefore, it's been on-off, on-off situation. Now that the plants are -- so that's been the real issue, right? What we could predict, the things which we can control, we can influence which are not outside our control. And that's been the factors which has been here. Nobody wants us -- we obviously want to -- we bought the asset. We want to ramp it up quickly. We put in resources to kind of scale that up. So we want to always work on it in the hardest way possible. What gives us confidence now is obviously, our plants are up. 3 of the plants are up. We are operationally there. We are getting -- the customer trials are going on in different products. So we are in the process of ramping it up. And I think just the fact that we have operational stability now is what gives me the most confidence, right, that we will start seeing scale up. I don't -- I think at this stage, I'm not going to give you a number, say, INR 150 crores, INR 160 crores, et cetera. But I think you will start seeing meaningful progress in terms of getting this up and going. But that's been the real challenge, which has been there.

Okay. Got it. But even in SOP, we are seeing similar pattern that in Q1 FY '26, we have stated meaningful contribution. But in the previous -- in the last quarter, Q2, we have stated that trials will only happen after Q4 and production will start post monsoon next year in FY '27. So we are seeing persistent delays in other segments. So are there some issues fundamentally? You have obviously clarified on bandwidth issues that you are saying that they don't exist. But just trying to understand why these delays are happening in all the segments.

Well, I think our -- I mean, it's a fair point in one way, obviously, from outside and view, several of our programs have got delayed. I will take that on as a matter of fact because they are a matter of facts. I think clearly, our ability to -- what I think is the one thing which we can do a lot better on is our ability to see the interplay between external and internal factors and organize ourselves better to respond to them, right? And that's the piece which we are investing a lot more on doing right now. So if you look at the SOP issue, I think there have been technical delays. We are working with a technology partner there, pilot trials do take time. I won't say it's hit and miss, but there are multiple scenarios which they test on. And we have to do -- it's a bit iterative because you get results from every trial and try to rework it. We went into F '25, '26 thinking that we are in a good shape there. But obviously, as we did the trials, we give you an update that we will actually require more time on it. I think Idealis is a very unique case because of the NCLT issue, right? I mean these 2 -- in my mind, are 2 big things which, as you called out, probably have been more longer-term shifts. But one is very technical and the other one, I think it is a bit of an ecosystem issue. Can we do a better job of synchronizing between external and internal factors? I think, definitely. And that's our job as a management team to execute better. And hopefully, you will see that going forward.

All right, sir. And lastly, just building upon was...

Mr. Shah, sorry to interrupt you. Can you please rejoin the queue for more questions? The next question is from the line of Rohit Sinha from Sunidhi Securities.

Most of my questions are already answered. Just one thing on the order backlog, which we are trading around 6,500 for derivatives side...

...cement and bromine, not derivatives.

Okay. So that 6,500 is pertaining to, I mean, which geography or industry, if you can indicate?

I think it's across the board. There's no specific factor of materiality in that. It's across the board. And the only thing I would say that it's not 6,500 tons, which is all due. Our contracts are stamped for different delivery dates. So it's not necessarily that all 6,500 are actually -- all to be dispatched today. They have to be dispatched over a longer period of time, right? And that's why we have a balance between short-term contracts and long-term contracts in the portfolio. And as the volume starts getting ramped up, you will start getting -- seeing that getting kind of burned out, right? Already it is getting repriced. But there's no specific trend line which has shifted in that. Largely, we remain a lot heavily focused on the Asian markets for the larger part. And our segments still remain pretty much the same, no real shift.

Okay. So industry specific, if you can indicate?

Sorry?

For which industry these products are arising on? Already we have indicated for the region-wise as Asia Pacific mainly we will be having this. But on the industry side, whom we are going to supply these on volumes?

We'll provide -- why don't you -- if you can just send an e-mail to SGA, probably I'm not able to understand the question very well. But if you can just send a query to our Investor Relations team, we will give you a more detailed response on it. I'm happy to share whatever is not very sensitive, but please let us know, okay.

Okay. And one just for information sake, for this semiconductor side, if you can just indicate the time line from where this financial agreement will be completed and post how things will be progressing and by when we should start seeing the final output from the plant?

So I think as you mentioned earlier, one is on the ground, I think we've broken ground. We are going through topographical evaluations, land soil evaluation and so on. So that is one program, one item which is going on. I think the funding framework has to be finalized. That's something which we are having discussions with the Indian Semicon Mission on. That's an external dependency, which we don't have a clear end date on, right? We are in good shape there. We have got good progress happening there. Once that gets finalized, I think we'll be in a position to give you more specific details on timing and impact.

Ladies and gentlemen, in the interest of time, that was the last question. I would now like to hand the conference over to the management for the closing comments.

All right. Thank you all for joining us in the call today. We appreciate your time and continuing interest in the company. In case of any queries, you may please feel free to get in touch with SGA, our Investor Relations Advisor. And obviously, I look forward to meeting all over the next call and some of you probably even before that. Thank you all for your interest and participation.

On behalf of Archean Chemical Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.