Camlin Fine Sciences Limited (532834) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '25 Results Conference Call of Camlin Fine Science Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Dandekar, Chairman and Managing Director. Thank you, and over to you, sir.

Thank you. Ladies and gentlemen, welcome to this earnings call. I know you have a busy day ahead, so without much pause, we'll get into the actual workings of the call. Our CFO, Santosh Parab will give you a brief of the highlights, following which he and our MD, Nirmal Momaya, will answer all your questions. Over to you, Santosh.

Thanks, Ashish, and good evening to everybody. You would have seen our investor presentation, we uploaded on our website and also the results. The current economic situation is slowly improving over the years but the Chinese impact on pricing and supply still remains. But still, we have done a far better performance in this quarter. Our turnover has increased from INR 422.97 crores to INR 433.49 crores, which is 2% increase, but in the current circumstances, it's not a bad performance. So gross margins have also increased by -- from 48% to 50%. Operationally, EBITDA has also increased from 10% to 12%. So the business is stabilizing. Of course, we have profits but it's an improving trend. We had some other income on foreign exchange during last quarter, which is not there, because the foreign currency has been very volatile and we had taken some hits on foreign currency in this quarter, so we have lost. But overall, the situation is improving despite the difficult conditions at present. Briefly on the verticals, our Vanillin vertical has, with the sale prices increasing owing to the likely antidumping action on the Chinese manufacturers in the U.S., the prices have been improving every -- almost every day, I can say. We have also increased our output from last year -- last quarter to this year. We had a realization of around 600 metric tonnes as compared to around 500 metric tonnes last year. The average price has also gone up. We are slowly ramping up our production in -- at our Dahej plant of Vanillin. We will be reaching around 70% of capacity utilization by this year-end. And based on the market scenario and the pricing, we will slowly ramp it up to 100% capacity utilization. Another vertical which has performed very well is Blends. We have done extremely good performance in American continent, even in India, we are improving. So it has been a 20% growth vertical for now almost 2 to 3 years and is performing. All the verticals are also performing. As you know, we just completed the right issue. You know that we had an overwhelming response to that issue. We just last week completed the issue and monies were received. We have -- in December, we had taken some NCDs for easing out the liquidity, that NCD we've repaid yesterday itself along with interest. So the debt almost remains at the same level as it was in September. So things are good. I think we will keep on improving as the economies over in the world stabilized and the Indian situation also improves. Thank you very much. You can ask the questions now.

[Operator Instructions] The first question comes from the line of Tushar Raghatate from KamayaKya Wealth Management.

I just wanted to know, the Vanillin you have guided 75% utilization for FY '26. Firstly, do you hold that guidance? The second, sir, in terms of realization, how do you see that increased margin to add in the company level margin going forward?

Didn't really understand the question, but I think that you are saying that capacity utilization of 35%, how it will we go to higher percent by this quarter end. Was that the question?

Sir, I think the last call, you guided for 75% utilization of your Vanillin plant for FY '26.

FY '26, yes. That guidance remains.

Got it. In terms of improving the realization, for FY '26, I'm asking, do you see the margin to improve now sequentially and Y-o-Y going forward?

Yes, there would be some improvement. Very difficult to predict where the prices would ultimately go through, but we're seeing some improvement as compared last few months. There has been some improvement in pricing.

Got it. Considering the current capacity, what sort of peak revenue potential do we hold?

For FY '26?

I'm not asking for FY '26. Just the current capacity which we have. So the peak revenue potential of the capacity?

The revenue for Vanillin is 6,000 tonnes. So between $60 million to $70 million, so that's INR 600 crores.

Asking for company level, actually.

Company level, with the current capacity that we have, it's between -- depending on pricing between 2,500 to 2,800. This can be expanded even further without much capacity constraints.

Got it, sir. And surely, you've been doing very well in the Blends business. Going forward, how do you see the future of the Blends like in terms of percentage contribution of your sales?

Yes. The Blends business will continue to grow. I think we've been growing the business in excess of 15% to 20%. And that will continue to grow at that level at least for the next few years.

The next question comes from the line of Satish Kumar from Incred Research.

I just wanted to know what has been our fixed cost in European operations this quarter?

So our costs have been roughly about INR 16 crores.

And as you guided last time around that from Q1, this cost will not be there, from Q1 FY '26?

From Q1 FY '26, it will reduce considerably. We have some material lying there in the tanks, intermediate materials which we have to evacuate. Once that is done, the crops will get rationalized. So yes, it will get rationalized considerably.

And sir, the CFO, Mr. CFO was saying that prices are recovering on day-to-day basis. So what is the current prices of Vanillin right now?

So in different markets, it's a different kind of pricing because some markets like U.S., there is an anti-dumping duty which has been leveraged. In Europe, there is a proposed antidumping duty, so the prices are on those markets. The other markets, prices are also slightly improving, but it's market specific for pricing.

Yes. I was asking about U.S.

U.S., of course, our entire business is not in the U.S. It's only a part of our business is to the U.S. And the Vanillin prices are in around $12, $13 range.

The next question comes from the line of Shubham Jain from NV Alpha Funds.

My first question was on Vanillin. What is the total loss that we're still making in the catechol plus Vanillin sort of combined entity at a quarter level?

We don't make that calculation.

Okay. And sir, at what levels of utilization will the Vanillin and catechol sort of breakeven, just for us to understand?

Yes, I think at about 70% of Vanillin utilization, catechol and Vanillin line should break even.

Right. So by next year, we should see a breakeven over there happening assuming we get to 75% utilization in FY '26?

Right. That's right.

Understood. My second question is on the Blends business. Just wanted to understand a little more on what are the raw materials that are used in this business? Are they largely captively consumed from the HQ part of our chemistry? Or do we take raw materials from other sort of companies as well?

Yes. So it's a -- there are several raw materials, which we buy also from outside. Our own will probably be -- about 30% of the purchases would be our own raw material, 70% would be from third parties.

And this 70% is what kind of products? Is it the same BHA, BHT kind of...

No, no, BHA, BHT and TBHQ is produced by us. The other products, which we don't produce are the ones which we buy, so there are some antioxidants. There are many, many organic acids. There are like more than 30 different items that come under that.

Got it. And what is leading to the growth in the Blends business for us? What geographies are helping us build this business? And have we cracked new customers? Is that why we're seeing this 20% kind of growth, and we believe that this can go 15%, 20% for us?

So it's basically customer acquisition in this. All the regions -- we're growing all regions at about 15% to 20% with new customer acquisitions. So it's quite uniform in the sense all markets are growing at that level.

Got it. My last question was on the interest cost. It's gone up quarter-on-quarter as well. So what's led to this interest cost increase?

The interest cost has gone up quarter to quarter.

So we had borrowed INR 100 crores. That is 1 thing. We -- almost all of our long-term borrowings are in foreign currency, dollars. And as you know the dollar is going up. So we have disclosed that in our UFR also that the finance cost includes furnishing on the long-term debt. So across almost in all geographies, the dollar has appreciated. The local currencies are appreciated by several percentile points. And that's what is weighing down on our balance sheet. Largely, this is unrealized. So any improvement in the -- appreciation in rupee or the local currencies, this will come back. As far as average rate of interest is concerned, it has been in the range of 9.5%, 10% for the consolidated balance sheet.

If could you just quantify the impact of the translation on the interest cost increase in this quarter?

You can see it in our UFR, there is a note where we have separately shown what is the foreign exchange included in the finance cost.

[Operator Instructions] The next question comes from the line of Ravi Mehta from Deep Financials.

My question was on Vanillin. I heard in the opening remarks probably we sold 600 tonnes of Vanillin. And when I look at the top line, so that gives me an average $11 realization that we made in Q3. So I wanted to understand how it has moved from October to December gradually? And where is it now?

I don't think the price has moved to $11 in this quarter. The average is lower than that. And the prices have actually started going up since December when the anti-dumping duty was expected. But really speaking, in January, it was levied in the U.S. So we saw pricing starting to improve from there on.

Okay. And even in Europe also the prices are tracking closer to the U.S. market prices? Or is it not?

Not the same as U.S. market because antidumping duty is proposed, not yet levied, but it is -- the pricing there is, of course, a little higher than what it is in other markets.

Okay. And how much of business when we talk of 70% utilization, what kind of market splits, region splits we are trying to build as a business plan in terms of U.S., Europe and other markets?

So I think 1/3 U.S., 1/3 Europe and 1/3 rest of the world.

Okay. And with this antidumping, are you seeing dumping in other markets like Asian markets and all, because that usually happens that China would try and divert the material elsewhere?

I think in the other markets, they generally have almost 90% of market share. So there can't be further dumping by them because they already have large market shares.

Okay. Sure.

So we don't see them dumping any further and the prices are constant in those markets.

Okay. Okay. And Q4 is basically will have a better pricing compared to the Q3, what we are seeing here?

Yes, there will be some improvement, yes.

Okay. And just 1 clarification. I think you probably answered it to an earlier participant that at 70% utilization, it will kind of breakeven. And I think that was meant for the catechol losses, not for Vanillin?

Yes, catechol losses. The whole catechol chain will be...

But Vanillin itself will be profitable, maybe at much lower utilization, right?

Yes, correct. That's right.

Like any ballpark like 25% or something?

No Vanillin breakeven, I mean, on a full cost basis, would probably be at about 40% utilization.

The next question comes from the line of [ Raman K V from Sequent Investments ].

Hello, can you hear me?

Yes, please go ahead.

I just wanted to know what is the current capacity utilization with respect to catechol and Vanillin?

So the Diphenol plant, so we are working at around 75% of the capacity in the last quarter, we'll be working at around 85-90%.

Can you come again, which plant?

Diphenol plant, hydroquinone and catechol. And regarding Vanillin plant, I said that we will be gradually going up to 75% by the end of the year.

Okay. Basically, we will -- the catechol plant will breakeven by Q4?

Catechol plant is a joint product. So it is breaking even on its own at this moment of time.

And with respect to catechol itself, what is the capacity utilization only to produce Vanillin?

Of Vanillin plant or catechol plant?

Vanillin plant.

As I said, we are working at around 50%, 55%, and we'll be moving to 75% by this year.

Okay. And sir, can you give us the average price of Vanillin and how the price has moved post the inflation of this antidumping?

I think, Nirmal just answered that question.

Anti-dumping is only in the U.S., which is a part of the business. It is not the only business. So that's it.

And can you give the average price of Vanillin as of now?

I mean, it's improving. It's about 10% better than it was in the last quarter.

Okay. Also, sir, with respect to the Blends segment, the Specialty Ingredients value-added Blend, you said you are expecting 20% growth because of customer acquisitions. Apart from that, do you see any growth triggers?

So basically, new customer acquisition and some, of course, growth of business within the existing customers. It's both, a combination of both things.

The next question comes from the line of Jatin Sangwan from Burman Capital.

My first question is around the EBITDA. We have an EBITDA of INR 48.8 crores. And if we add back the ForEx loss of INR 4.4 crores, it becomes INR 53 crores. So of course, it includes the loss from Europe, China and some maybe other exceptional items. So my question is what is EBITDA from the continuing operations, excluding the losses from Europe, China and exception items?

It will be about INR 70-odd crores.

INR 70-odd crores?

Yes.

And my second question is around Vanillin. So you mentioned that at 70% capacity, we would be breakeven Vanillin and catechol combined. So what kind of EBITDA swing would be there in absolute amount?

I think, you can expect -- in absolute amount, difficult to say because prices are both on the raw material side as well as selling prices are dynamic, but there can be an improvement of EBITDA margin by a couple of percent.

Okay. And just following up on the Vanillin part. Earlier you used to say that your cost of producing Vanillin used to be around $8 to $9. So is it the same? Or has it also increased?

No. Right now, it has remained the same because raw material prices are generally stable in the last quarter.

Okay. And next is around antidumping duty. So U.S. has recommended preliminary antidumping duty of 187% in the mid of January. So what kind of price increase have you seen and what kind of talks with clients are you having at this point?

The price increase will typically be -- in the U.S. will be about 20% or so higher than it was in the last quarter. And of course, everybody now wants to look at longer-term contracts because there could be some shortages in the market because, of course, ultimately, we are not only going to be selling in those markets, we need to have a balanced approach to the business. So for overall Vanillin business we are not only U.S. focused. So the overall, the Vanillin business should see an improvement of about 10%, at least, 10% to 15% on pricing.

The next question comes from the line of Surya Narayan Patra from PhillipCapital.

First question is on the volume ramp-up in the Vanillin. This is, I believe, a contracting period for the next year. And we are anyway have been vocal about the kind of 70% kind of utilization for the full year FY '26. So have you seen any kind of a ready contract that is giving you a kind of visibility for next year? And what portion of the business that we can have from the spot market so far as Vanillin is concerned?

So now, in fact, with the prices being a little dynamic with all these different antidumping duty actions in different countries, we have not actually signed any long-term or a yearly contract. And it also happened that some of the companies are also looking for quarterly contracts because this antidumping duty was expected. So everything was very uncertain. So which is a good thing for us that we've not -- we have some contracts, but those kind of run out in this quarter in Q4. From Q1 of FY '26, there's hardly any contracted, very small quantity is contracted. And we are in conversations now to see because now there is certainty in some markets of antidumping like U.S. We can enter into some contracts in the U.S. But in Europe, we are not yet there with the antidumping duty. We don't know the quantum that will be there. And the timing will come around June to start contracting.

Okay. So that means the final order, which is due in July, was that things -- the optimal pricing situation also will be seen and that is when the volume visibility will also be 100%?

Correct. Correct. What is final in Europe is expected in June, the first one. U.S. more or less preliminary and final generally, there's not a difference that is expected. But yes, certainty is only when it is final.

Second question is on the Vitafor acquisition, on the progress on the integration front? And how is that going to benefit us in terms in our Blends business? So anything on that front if you can give some sense what is your experience so far? And what progress in the Blends business of Europe that you are now witnessing?

So with Vitafor, after the acquisition, we have made many applications for registrations in several countries, and a few of them have started now -- started getting those registrations. So we are rolling out our launches in Mexico, in Colombia, Peru, India. U.S. also will get launched. Brazil will get launched. So in from -- in FY '26, we see that there could be substantial growth in the business at Vitafor. It has opened up a new market for us in terms of the kind of product profile that they have. It's more a farm product, which, of course, is something which we didn't have in our portfolio. So all in all, I think in FY '26, we will see some good movement in Vitafor.

Sir, it is already broken even in the bottom line level or it is still?

At bottom line level, it is not breakeven. But on EBITDA level, it is breakeven.

Okay. From the loss-making situation prior to the acquisition.

Yes, it's correct. So we are now breakeven on EBITDA. And I think next year, we should get into above breakeven.

Okay. So -- and with this, if once the turnaround of this Vitafor that we will see and the integration happening properly, so can we expect an elevated growth for the Blends overall guidance that we have been giving around 25% or it will be part of that story, sir?

It will be part of that story.

Okay. Just last 1 question from my side is that, see, having first all these loss-making operations in, let's say, China and Europe, so the remaining operation, what I find is, it is an integrated -- fully end-to-end integrated self-life business, end-to-end integrated Vanilla business and a kind of established global operation on the Blends front, where we would be just scratching the surface where the scope of opportunity is like quite significant. So given these 3 verticals that is there as a growth figure for us, so what is the way forward that we would be having here on for Camlin, sir, whether we will be focusing more on these 3 verticals and try to optimize our profitability or we will think for some incremental business opportunities going forward?

Going forward, I mean, our focus area will remain in the 3 verticals. Clearly, Blends is something which is a high focus area. Aroma is also vanillin. There are many types of vanillin and we want to get into -- ultimately get into all the different types of vanillin, which are being offered in the market. So that we are a complete solution provider in the vanillin business, and we can service our customers with the entire portfolio. So the idea is to focus on other value-added HQ and catechol products other than what we are in today. So we've started -- we've launched a few new products, and now we are trying to scale those up. So focus will be in where we are in these kind of businesses.

Okay. Sir, do you find any challenge flowing from this tariff-related talks, which is currently -- which is not clear as of yet, but still?

No. I mean that is very difficult to predict. It's there today, tomorrow, there's no tariff. I don't know. I mean it is very difficult.

Okay. And what is the final gross debt level that is now we are having, sir, having added the INR 100 crores repaying that and now having the equity through this route?

Yes. The gross debt now is -- after repayment of INR 100 crores is around INR 600 crores.

Okay. So that has been kind of a constant over the last 2 years?

Yes.

It has come back to the normal. Subject to only last year, we had that Vitafor acquisition in which there was some loans. Otherwise, the debt is at the same level.

The next question comes from the line of Saurabh from Multi-Act.

Yes. This is Rahul Picha from Multi-Act. So continuing on the debt part, so what is the debt repayment plan for FY '26?

So we generally repay around INR 45 crores to INR 50 crores per annum. We'll be repaying that. And you can see we have arranged for the repayments also some -- we have reserved some of the rights issue money for repaying the debt. Obviously, we'll not be accelerating the debt, but we have kept them in reserve.

Okay. So by the end of next year, we expect to be around INR 550 crores from INR 600 crores right now?

Yes.

Okay. And what is the CapEx plan for FY '26?

The CapEx plan is about -- roughly about INR 30 crores to INR 35 crores.

Okay. So this will largely be maintenance CapEx in...

Yes, yes.

Okay. And then on the Europe plant losses. So this quarter, we had around INR 16 crores of loss. And you mentioned that next year, that loss is going to reduce. So how much reduction do we expect?

So I think once the total wind down happens of the Diphenol activity, including evacuating all the materials, we should be able to annually -- bring it down to an annual cost of between INR 20 crores to INR 25 crores.

Okay. And so far in the first 9 months, how much loss have we had in Europe this year so far?

I think this year, we have had a loss of about...

INR 44 crores.

INR 45 crores in 9 months?

PBT was INR 45 crores.

So from an annualized run rate of around INR 60 crores, next year, it's expected to be around INR 25 crores?

Yes. So it is about INR 55 crores, the loss. It will come down to...

Okay. And in China, how much loss are we making right now?

China is not bleeding like vanillin though there is a loss. We are getting around INR 3 crores to INR 4 crores on China.

Per quarter.

Per quarter.

Which also we should be able to reduce in the next year.

The next question comes from the line of Nisarg Vakharia from NV Alpha Fund Management.

Sir, what are the gross margins in your Blends business?

Typically, they are in the region of 30% to 35%, more towards 35% than 30%.

And EBITDA margins are close to 20%, right?

Depending on geography, once the threshold is reached, they typically end up at about 20%. But till that minimum number is reached, it can be anything up to 20%.

And secondly, sir, how much working capital do you need for a Blends business with an approximate annual run rate of INR 900-odd crores?

So there, I think roughly our working capital requirements in the Blends is about 100 to 110 days.

100 to 110 days of working capital requirement in Blends?

Yes.

And that is generally inventory or receivables?

Both, inventories and receivables.

Inventory and receivables?

Yes.

Okay. Okay. And sir, just to clarify, you said that the EBITDA from continuing operations today is INR 70 crores?

Right.

And that INR 70 crores run rate will be visible to us from quarter 4 or quarter 1 of next year?

So, this is the quarter 3 right now, what we have -- the INR 53 crores plus INR 17 crores from discontinued businesses, that's INR 70 crores.

Okay. But the reported is INR 53 crores. So INR 70 crores EBITDA will be visible from quarter 4?

No, no. INR 53 crores is the EBITDA, where INR 17 crores is a loss from discontinued business. So if you add that back, it becomes INR 70 crores from operating business.

Okay. So operating cash flow today is INR 70 crores for this quarter?

No, no, no. From operating businesses, we are saying. The discontinued businesses where we are losing INR 17 crores.

That's right. So that discontinuing business of INR 17 crore loss will become negligible by which quarter?

By Q2 of FY '26, it will become much, much smaller.

Q2 of FY '26. Yes. And why will it take 2 more quarters to sort of reduce it, sir, significantly? Why it cannot be reduced overnight, just for my understanding?

Because there are several employees and those employees have to be maintained right now because we have some intermediate materials in those plants, which have to be evacuated as per law. So that should get done in the Q1. By Q1 that -- those materials will get evacuated. And then we can rationalize the cost.

Okay. Great. Sorry, last question, if you may. Sir, any reason why you're not giving the catechol loss separately?

No, it's a combined operation. It's a joint product.

We don't sell. If we sell catechol in the open market, there is a loss. If we are producing vanillin, we will not be selling catechol in the market. So in this quarter, we hardly sold any catechol. So the question -- and hydroquinone and catechol is a joint. If I stop at that level, hydroquinone chain is making enough profit to justify the carrying of catechol.

[Operator Instructions] The next question comes from the line of Tushar Raghatate from KamayaKya Wealth Management.

Just wanted to understand like post H -- in H2 FY '26, what sort of incremental margin are you seeing? Like all the losses will be taken out and also the vanillin will start adding the margins?

Sorry, what kind of growth after FY '26?

No, I'm asking for H2 FY '26, what sort of margins are you seeing like Y-o-Y H2, I'm asking?

H2, yes, difficult to predict at this point of time because prices are -- I mean, it's not that we have reached any stable stage of -- to come to a conclusion on what that margin will be. So right now, it's positive. It's looking good. But let's see where it settles down. I mean it's too early in the day to give you really what that margin will look like.

Okay. Got it. And sir, your North America business is doing great. Like I just wanted to know the incremental growth will come from which country exactly? And what sort of growth are you seeing for FY '26?

We are seeing about 20% growth across all the geographies. So all the geographies will grow at 20% or so.

The next question comes from the line of Jatin Sangwan from Burman Capital.

Sir, in earlier calls, you have guided that cost of producing vanillin will go down as you ramp up your production. So I just wanted to ask that, let's say, 75% kind of utilization, what will be the cost of producing vanillin and what will the cost at 100% utilization?

So at 100% utilization, the cost from where we are today should come down by about 10% or so.

Okay. And what's the cost today? Is it $9 or $8?

It's about between $8.5 and $9.

Okay. So then the cost would be like around less than $8?

Yes, in that region.

So at a price of $11, you will be getting an EBITDA of $3 per kg?

Correct.

And then $1 positive swing would come from catechol. Is my understanding right?

Sorry?

$1 positive swing from catechol?

Not $1. It would probably be more like -- yes, it's actually $1 will come from catechol, yes.

The next question comes from the line of Prashant Kothari from Stock Market REIT.

Two small questions. First, you acquired Vitafor Invest NV, right, to strengthen the animal feed market presence. Has the integration progressed -- how has the integration progressed? And what revenue growth are we expecting from there? Second question, there are -- there is a lot of scrutiny on the Mexican imports into the U.S. Has there been any impact on Camlin's Mexico operations?

So on the first one, Vitafor, yes, the integration is complete and now the focus will be in FY '26 to grow that business by at least 20% to 25%. So -- and thereafter to keep growing it at least 20% a year. On the Mexico, the tariffs -- on Mexico, we do supply some material into the U.S. from Mexico. So in the event the tariff is applied, we'll have to look at alternatives -- to produce it in alternate countries and then supply. But at this point of time, we don't see that a tariff is likely, it's been suspended for a month, but it seems like it's being negotiated, so should settle down.

The next question comes from the line of Raman KV from Sequent Investments.

Sir, we raised INR 224 crores via rights. Can you tell where we will use this fund?

We have given the details in our object to the right issue, but INR 100 crores we have used for repaying the LCD, which we borrowed in the last quarter. We are reserving around INR 68 crores for debt repayment and for the general corporate purpose, INR 56 crores.

And sir, with respect to the additional INR 17 crores loss from discontinued operations, did we sell the European facility? Or I'm not understanding that particular part. Can you just...

So we have impaired the asset, European factory in the last quarter. That factory was shut down because of economic reasons for last 2 years. We may not sell it. We may keep it mothballed. We are evacuating all the material which is lying in the system. And that's why the cash burn is there because by Italian law, if any hazardous chemical or any kind of chemical is in the factory, you have to maintain the factory with security, people, utilities, maintenance and everything. So we have to do. And it's not an easy process to pull out the raw material in the plant. So it's taking time. We have to also get clearance from the local authority because the material is lying for 2 years. So we have to see the -- what kind of chemical composition is there and then. So that's why it will take time. We are expecting it to sell it off or take the necessary action by end of FY '26, Q1 '26, next year.

The next question comes from the line of Parthiv Shah from [ TS ] Builders Private Limited.

I just wanted to understand the trend for the Blends business. So in the Blends business, as we are aware, there are various types of blends like polymer blends, dairy blends, blended fibers, biofuel blends. Just want to get a sense which particular segment we are targeting? Because I'm hearing that the dairy blends will have one of the highest growth because of the health consciousness nature of the customer. So where are we targeting as a company?

So our focus area is, of course, human food. It is one of our main target areas. Then there is feed, animal feed, which goes into whether it's poultry, dairy or swine or aqua feed. So it's with all species including dog, cat, dog food, cat food. So we make ingredients that the blends go into these kind of feed products.

And sir, what I see is that generally the global trend for the various blend growth is anywhere between like 4% to 5% on a compounded basis right up to 20%, 30%, 32% is the projected market. And for the next few years, we are talking of growth of almost 20%. What brings us this us confidence? And what are we doing to improve the price mix and the product mix in our blends business versus a lot of global peers like, say, somebody like Super Blends or [indiscernible] Protein or JW Nutritional, et cetera?

So I mean, of course, it's a very technical business. Blends is a business which requires a lot of technical service, technical understanding and needs teams which understand the function of all the ingredients that we supply into that market. And the product mix, of course, is always a question of competitiveness versus competition in different geographies, different markets require different products and competitiveness. So essentially, we've been growing this business for the last 3, 4, 5 years at that rate. And we have enough visibility from our people who are in the market that to grow at 20% in the next year is very likely.

Okay. And sir, if I understand the rated capacity for our vanillin at Dahej is 6,000 tonnes per annum, right?

Yes.

What we can do to debottleneck that capacity and what is the maximum we can go to?

The maximum we can go to is about 7,000 tonnes or so from that capacity, which will require debottlenecking. But yes, at some point of time, we'll see.

So next year, you are targeting not more than 75% capacity utilization. Only in FY '27, you're talking of, say, 100%?

Yes.

Okay. And sir, I just want to understand the additional EBITDA per kg in terms of ethyl vanillin or methyl vanillin. And if I'm not wrong, just wanted to recheck that in the past, we did face some sort of contamination issue. All of that is now solved? And what sort of products we are targeting more downstream in vanillin?

In vanillin, no, we are looking at no downstream products on vanillin. Basically, we are producers of vanillin, ehtyl vanillin, methyl, ethyl, we will get into the natural vanillin also over a period of time to complete the basket of products in the vanilla portfolio.

Okay. And sir, what's the additional benefit you get by selling products like ethyl and methyl vanillin versus normal vanillin?

No, these are -- that's the synthetic vanillin is called methyl and ethyl. And the natural vanillin are, of course, very, very much more expensive.

What generally called vanillin is methyl vanillin.

The last question is regarding the China dumping. So along with the CBD, probably, I think sometime in June or July, we are expecting the ADD to come from U.S., right? And over and above that, if I'm not wrong, whatever the tariffs that the new President has put, that will be over and above all these ADD-related duties?

Yes, that's right.

So would it be safe to pencil in if at all China, despite its cost disruption were to dump again at these rates, it will be not less than $14, $15? Or would it be more?

Yes, it will be probably a little more than that.

Okay. So that should eventually help us to increase our share of business in U.S. and Europe?

Yes.

Ladies and gentlemen, that brings us to the end of the question-and-answer session. I would now like to hand the conference over to the management for the closing comments.

Thank you. Ladies and gentlemen, thank you for your time and interest. Until the next time that we interact, good evening. Thank you.

Thank you, sir. On behalf of Camlin Fine Sciences Limited, that concludes this conference. You may now disconnect your lines.