Camlin Fine Sciences Limited (532834) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Camlin Fine Sciences Limited Q3 and 9 Months FY '26 Earnings Call hosted by Strategic Growth Advisors. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the 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. Thank you, and over to you, sir.

Thank you. Welcome, ladies and gentlemen, to this quarterly earnings call. We know your time is precious, so we'll get right into it. Joining me is Nirmal Momaya, Managing Director; and Santosh Parab, CFO. Santosh will first give you highlights and numbers of the quarter, after which both of them will answer your questions. Thank you for being here. Santosh?

Thank you, Ashish. Good evening, everybody. I'll directly jump into the business. Yes, this quarter has been a bit tepid. We had a turnover of INR 572 crores. It was almost equal to what we did in Q2, but there is a 6% hike when we compare it to the last corresponding quarter. We had been telling you that we'll be doing a high amount of Vanillin sale. We had done almost 700-odd tonnes in the last year, which -- looking at the entire tariff scenario and other things, we had control our sales because we knew that the sales there is more than likely to have higher realizations because of the tariff. As you know, we have been selling at an average price of INR 12.5 especially in U.S. because of the tariff situation. In this quarter, we did INR 490 crores of sales to the third party, however, there is -- in the internal channels, that is with our subsidiaries in India as well as in the financing distributors, we have around 650 tonnes, out of which around 500 is committed sale at INR 12.5. But the recent reduction of tariff to 25%, we can have a benefit of that on the INR 400 crore tonne stock which we have in the -- some part of it will fall in the quarter 1 -- quarter 4 and then major portion will fall in quarter 1. From quarter 1, the real benefit of this will be appearing. So Vanillin, we did INR 490 crores, which is around -- tonnes, which is around INR 55 crores with a realization price of INR 12.5. As far as trades, the main ingredient business is there, it has seen a fall in it. It has come down to INR 80 crores from INR 87 crores, primarily for 2 reasons. One, the prices have been going down, and that's what is impacting our margins. And as you know, there are local manufacturers who have come and there's intense competition in India itself. Plus, this business has a very plateaued growth, and hence, there is an intense competition. We had some -- a bit of lower volumes also, but the major portion was because of dip in the realizations on states. As far as blends is concerned, we have been saying blends has been the hallmark of our business, and we have grown by around 11% corresponding quarter and almost 13% this quarter. We clocked around INR 271 crores in this quarter, of course, this also was pushed by our recent acquisition, which happened in December 1, the French company will buy a listed company, which contributed almost near to INR 13 crores in this quarter. And that has also helped to grow the business. Blends remains on track. It is going to grow at a very high growth rate of what we have been saying. As far as performance is concerned, as we have been saying that this is what Diphenol, other than Aroma and the states, these are other chemicals where there were always lower margins, and it remains plateau. So in total, the revenue was INR 457 crores. Coming to the cost structure, if you see employee cost, we have been saying employee cost has been increasing because we are bracing for this future. We have been acquiring new geographies and companies all over the world and which requires people on the ground all across who are experts to help us sales. So there's a lot of investment in employee cost, which has been happening over last few quarters now almost -- we'll be adding a few people, but not more. So you can see the employee cost has been quite stable. The only increase is because of the acquisition which we did in Vinpai. So the salary also increased [indiscernible] generally in the American and Latin American markets, it's like Diwali and Christmas. So there is some kind of statutory bonuses also paid. As far as other expenses are concerned, they remain under control, and we feel that they will remain in this range for the next quarter and will increase as the revenue grows. EBITDA -- coming to the EBITDA, yes, EBITDA expectation was high because we had said that we'll be doing a higher number of -- on Vanillin, which we have, in a way, controlled it to take the benefit of the tariff because if you would have sold now, we would have, in any case, realized only [indiscernible]. Delaying the sale into the subsequent quarters will help us to get $2 to $3 more per kg and which is playing cash and entire EBITDA. So that was a plan to do. You would have also learned that we had disclosed that there was a fire incident last week, last Saturday at our -- one of the blending unit in Brazil. There was a massive fire at one of the machines which was being commissioned and the fire was of such extent that almost we have lost all the stock which was there in the -- it was along with the warehouse [indiscernible] unit. So however, we have another unit also, which is working and is operational. Obviously, we have to -- we will keep on continuing operation. Brazil was looking forward, there was great traction, and it remains very interesting orders on various Blends as well as biodiesel market, which is a market in Brazil. We have trying to provide raw material from our nearest geographies and also from the local distributors. We want to keep the sale happening. Obviously, because we are sort of buying on spot, a bit of margins will get impacted, but we are trying to keep the traction on sales, keep our customer service on all our orders. As far as today's condition is concerned, the survey is expected -- insurance survey is expected to start tomorrow. At this moment, we feel that we are adequately insured. The surveys generally take 3 to 4 weeks. So there will be clarity on the surveys and other things. We are also using tollers -- local tollers to also satisfy the manufacturing and servicing the customers. At present, the unit is entirely closed. We don't think it will be immediately usable. As the time passes, we'll see how to rebuild it, where to rebuild it and other things. You would have also read in our results that we have filed for -- our statutory Board auditors have already filed for a petition for liquidation of Europe. Naturally, the Blend -- the continuing business of Blends will continue, though the entity will be closed because we'll be shifting that business to our other companies in Europe. So we are not worried about the revenue of continuing business, but the good thing is that the cash burn, which has been happening will certainly stop going forward. The [indiscernible] court is scheduled on February 26. We'll have more clarity. And as per the requirements, we'll keep you updated on that. You would have seen that there were some few exceptional items also in this quarter. As we acquired Vinpai, the acquisition-related cost, the due diligence costs and other things had to be recognized which was around INR 3.69 crores, which has been accounted. Obviously, the new labor code, we had aligned our salaries much earlier. So we were very near to 50%. And hence, you could see that even though we have around 800 employees in India, the impact is not high. Other aspect is that we have a very younger team workforce. Hence, there is part service less. We have provided for all the required under the statute, what is to be provided already, which is INR 2.25 crores. We also provided for an advance some loan, which was a very old loan, which we had given for some project, which unfortunately, we don't think accounting provision is required, but we feel will be trying to recover it. So subject to that, the PAT has been impacted for this. And we have also shown the discontinued business, which is mainly on account of Europe, it's around INR 9 crores and some portion on China. China is also on the verge of liquidation. We have filed the necessary documentation. We accept that it will move -- the liquidation process will move by the -- before the end of this financial year. Going -- remaining year and going forward, we feel that Vanillin is the business. And the good thing is that it has already the duty has come down by 25%. And very near future, it will come down furthermore. Blend keeps -- blends has been doing. We have this inorganic acquisition of Vinpai, which will certainly help us to grow our business. At Vinpai as well as those products we will be replicating and selling all over the world. So the blend business is going to keep on growing at the same pace as it was in the earlier period. Now we open the forum for questions.

[Operator Instructions] ur first question comes from the line of Hrushikesh Shah from Alchemy Capital.

So my first question is, currently, our Vanillin realization at $12, right? And you mentioned that they may increase by $2 to $3. So according to me, let's say, your realization in U.S. is $18 if your tariffs move down by 25%, then your realization should increase by $6. So where is the disconnect in this?

So the price in U.S. is around $18, $19. That's correct. But what comes from India was being 50% duty has to be paid. So to match the realizable value because there is a local manufacturer [indiscernible] who is selling at $18, who doesn't have the duty. If we have to match the price of $18, we have to bear the duty as we used to transfer the material from here at $12, pay the 50%, $6 duty, it is cost to us and sell in the open market at $18. So that's why the realization was $12. Now if the duty becomes $25, we'll get that additional duty, which we are paying to the government will help us increase our realization. In another words, we'll be selling at around $14.5, pay the duty at 25%, which will match the local price of $18.

Okay. Understood. And what is the volume guidance for FY '27?

For FY '27, we have both methyl Vanillin and Ethyl Vanillin. And our guidance for FY '27 is between the 2, the total would be 4,000 metric tons.

Okay. Understood. And sir, I had one more question regarding Vinpai. What was the revenue for the full year for them? I know we have consolidated from December onwards, but just to get an idea.

12 million -- around INR 13 crores was their monthly, which has been consolidated. But the turnover has been in the range of INR 12.5 crores on a monthly basis till December.

Okay. Understood. And sir, our margins are down like 2%, 4%, or 5% this quarter. So what do you think is a steady-state margin that we can expect after we have Vanillin realizations going up and your volumes also increasing on Vanillin side. So what are the kind of margins you expect gross margin as well as EBITDA margins from next year onwards?

The gross margin, as we said, were impacted by the states business. As I said, the realization has come down almost the sale price of [indiscernible] which is down by around $1. The cost remains the same. So that has impacted us. So the EBITDA -- the gross margin which have come down because of the sale price decrease was 46% in 9 months in quarter 2, which has come down -- from 46% it has come down to 45.8% in this quarter on operating revenues. And this is mainly because of impact of states. And also the new acquisition of Blend also will take time to settle. So there is a cost is there. EBITDA margin has got impacted also because of the -- mainly because of freight. And we have sold lesser amount of volume in this year, which impacted the fixed cost on the Vanillin business. That's why there is a reduction of around 55 basis points on the EBITDA margin as compared to quarter 2. So it was 7.3 it came to [indiscernible].

To answer your question on next year, FY '27, the gross margins should improve by at least a couple of percent with higher realization of Vanillin as well as growth in the Blends business, which is also -- depending on the product mix, there could be an improvement in margin. So our guidance is that we should improve the margin by 1% to 2%. It will be in the range of 46%, 47%. And EBITDA margins based on the growth that we are projecting in Vanillin and the Blends business should improve and go to between 12% to 14%.

Okay. And sir, we already are at 46% right now. So -- and you are saying we'll be at 46% to 47%. Yes, so it should be higher than that, right? 48%, 49% or something?

We are at 45% right now. We are at 45%. So we are saying we go to 47%.

Okay. Understood. And sir, once again, EBITDA margins from 12% to 14%.

Yes.

Our next question comes from the line of Satish Kumar from InCred Equity.

So I just wanted to understand what is the duty right now in U.S.? It is 25% or it is only 18%?

No, it is 25%. What is expected is once the trade deal is officially signed and announced. Right now, only fact sheets and some other documents have been shared by both sides. But once it is finalized, it will come down to 18%.

But today, whatever has been cleared from India, in U.S., whether it is in bond or coming from the ship, the duty is 25%. So the additional duty, which was levied on 27th of August 2025 of 25% because of Russian oil, that has been knocked out. But the first increase to 25% on 1st of August 2025 still remains, and that could come down after they signed the treaty deal between India and U.S.

Okay. Got it, sir. And sir, the second question was that you were saying that we didn't do some sales, so -- this quarter of Vanillin. So what was the quantity of that?

So -- we say that we would have pushed and sold another 200 tonnes. We went slow and tried to push it in the next quarter so that we get the duty benefit. So we would have made around another 200 tonnes at [indiscernible]

Okay. Got it, sir. And so the next quarter, our sales -- Vanillin sales should be in the range of what, sir?

In volume?

Yes, sir.

Yes. So what we are doing now is we are taking a campaign for ethyl Vanillin. Starting next week, we will start the production of ethyl Vanillin, which we expect by March, we should be able to produce another 300 tonnes or so, and we produced another 300 tonnes of methyl. We should be in the region of 600-plus tonnes.

Satish, to add to this, we have a channel stock of around 500, 550 tonnes of that -- 150 is at $12, which is already committed. So -- and another additional 200 tonnes is likely to be manufactured and sold. So you can just count that number.

So maybe around 700 tonnes kind of range, right, sir?

It should be between 600 and 700 because half the quarter has gone, the Q4.

[Operator Instructions] Our next question comes from the line of Surya Narayan Patra from PhillipCapital India Private Limited.

First question is on the Vanillin pricing. Sir, it looks like that both U.S. as well as Europe pricing currently looks similar during the tariff period. So in the post tariff scenario, if the U.S. pricing is likely to see a rise, so whether we should expect similarly in the Europe also?

No, not in Europe. So Europe, the antidumping duty on Chinese material is 131%, whereas in the U.S., it's effectively with the tariffs at about 265%. So there is a difference -- that delta will remain. The DDP prices today in U.S. are $19, $19.5 DDP, whereas in Europe, that is around $15, $15.5.

And our realization would be slightly lower than the other party.

Correct.

And in U.S., what is the price differential between the ethyl and methyl, sir?

So typically, the price difference is between $1.5 to $2. In the U.S., that's about $21 or so DDP.

Sure. And second question is on the Vinpai and Vitafor integration and way forward, if you can just talk about it because this is a year of acquisition integration and some strategic plans about it, people addition, all that. So next year, going ahead, how should one really think about those 2 business and that's contribution to the overall Blends?

Yes. So Vitafor, as you know, is in the animal feed side of the business. After our acquisition, we've got several registrations now in -- for several of our products in many countries. So the push on Vitafor is going to be in the coming year in FY '27 is to scale up from where we are currently at roughly EUR 12 million to EUR 13 million top line to take it to about EUR 17 million to EUR 18 million top line in the next financial year. So we are looking at least a 40%, 50% growth there. We've launched the product in the U.S. market in Mexico. And in the next quarter, we are launching it in the Brazilian market as well as we've launched a product in the Indian market. So wherever our own sales force is operating, we have launched these products. We are increasing our reach to the other parts of the world through various distributors. And also some of them -- countries we are yet in a registration process. So all of that will kind of start opening out in FY '27. And for Vinpai, the next one was on Vinpai, Vinpai which is doing about EUR 11 million of top line. In FY '27, we look at, again, scaling that up by at least 40% to 50%. We've got several businesses in different parts of the world where our products have been approved by customers. There, of course, there's no registration, but we have the approval process with customers. And we are pushing hard to see if we can grow it even faster than that. We've launched the product in India. We've launched the product in Mexico and Central America, in Brazil. So wherever our sales channels are there, we started introducing these products.

Okay. Sure. Sir, next question is about the base business, the antioxidant business ingredients. So that has been seeing a kind of continued competition enhanced either because of Indians or because of the Chinese, also the kind of price pressure also that is a separate thing along with the crude. So given that, is it fair to believe that, okay, this is a kind of -- this business is likely to see a kind of -- kind of decline or something like that? If that is [indiscernible] what is the utilization of the Diphenol plant [indiscernible] Catechol for next year?

So for Diphenol plant for the next year, we are -- basically, we calibrate the Diphenol based on Catechol -- really it's not so much the hydroquinone. It's more the Catechol because Hydroquinone, even if we don't do value addition with the antioxidant business, there are some opportunities in Performance Chemicals that we can do. But the idea is to -- at this point of time, we are saying the Diphenol capacity, we will run at similar as what we had in the current year. And there is enough outlay for us -- for HQ in the coming year because we have some contracts that we have signed also, so which will give us some volumes for selling Hydroquinone and Catechol, of course, Vanillin is the big outlet for us.

Okay. Just 2 clarification I wanted, sir, on this fire impact, is it or whether we are likely to see any kind of impact in the quarter, although it is fully incurred? That is one. And secondly, are we getting any out of the liquidation process, sir?

Sorry, what was the first part? I couldn't -- your voice broke.

So about any fire impact that we are likely to see in the upcoming quarter for Brazil, although it is fully insured?

Yes. So that -- I mean, that we will have to see how the insurance process goes. Very difficult to predict right now whether there will be any impact. And if so, what will be the impact. At this point of time, it's -- in fact, the access to the premises has not been allowed as yet by the fire department because they want to check the integrity of the structure and they don't want any other mishaps to happen. So very, very early days to say whether there will be an impact. And if there will be an impact, what that would be.

No, it is not only the kind of fire loss -- fire-related loss. Business loss subsequently in the subsequent [indiscernible]

So in the business loss, not really. We have the blending unit, which was our original blending unit. This was a unit 2, which was just commissioned right now for looking at the expanding numbers that we had. So -- and in fact, the incident happened with a brand-new equipment also because that site was just being started out. So in terms of manufacturing, there is -- there will not be so much of an impact for us. If there is any shortfall because we have some new contracts that we are signing. So for which if there is a shortfall in capacity, we have contract manufacturing tie-ups in place, which we'll be able to service. Having said that, of course, since the raw material was destroyed, we have to arrange for raw material immediately for servicing the business that we have on hand. And that possibly can have some impact on margin in Brazil for the short term for the next 1 month or so till material which is on water will reach Brazil. I mean already, there's a lot of material which has been shipped out in anticipation of all these contracts. So that should start hitting Brazil in the next 15 days. So there would be some impact, but we are trying to buy material locally. And of course, it will be more expensive than what we would have supplied from India or from Mexico. But having said that, it's only temporary for 1 month or so, there will be an impact on the margin. Not on the top line. Top line, we'll maintain.

Okay. And any benefit that we are likely to see from the liquidation process?

Liquidation of Europe?

European.

Yes. So the benefit is really the cash bleed that was there and every quarter that we were taking a hit. Once it goes into official liquidation, which by end of this month, the [indiscernible] or the court will have to decide. And if that is the case, then of course, the entity gets dissolved into a liquidation entity. And of course, no other impact then will come to us.

But any money realization out of the liquidation is not likely?

No, unlikely, unlikely. At this point of time, unlikely.

Our next question comes from the line of Rehan from Coheron Wealth.

Just a couple of questions. What would be the margin profile at EBITDA level or gross level for Vinpa and the other acquisitions?

Vinpai has really started late, it was a [indiscernible] asset we have bought. Vinpai is just near breakeven on EBITDA. The breakeven should be at INR 15 crores, we have done INR 13 crores. But at present, they are just below the breakeven margin. But as the business grows, they will be not able to sell because there's no much access to the market, which we have given. So it will generally go as the boss said, if it's a 50% growth, you can it will certainly start giving the margins. But at this point, it's almost EBITDA negative for a month. Vitafor has already broke even and has been making small 4% to 5% -- 10% to 12% EBITDA, and I think it will go as -- grow as it -- as we start increasing the business.

Understood. And if you could just quantify the expense for Vinpai acquisition. I think you mentioned about INR 3 crores to INR 4 crores on employee expense. On the other expense front, we've seen a sharp jump of about INR 10 crores to INR 15 crores on a yearly -- year-on-year basis. So -- and you mentioned, I think it is sustained. Any reason for such a sharp jump we are seeing? Or is it only a onetime because of the acquisition?

So it's better to understand the Vinpai acquisition, it's better to compare it with last quarter. The increase in other expenses are predominantly because of Vinpai for a month. So naturally, going forward, Vinpai had generally an operating cost of around INR 3.5 crores to INR 4 crores on a monthly basis. So that will be an increase in the next quarter. Similarly, there is around -- Vinpai is -- labor cost is also around -- employee cost is around INR 1.5 crores to INR 2 crores per month. So that also will increase. As far as other expenses from other businesses are concerned, we don't think there will be an increase. Obviously, there's a Brazil impact if it comes, there could be some expenditure on that. But we don't think the other businesses are going to increase. But in the next quarter, obviously, my other expenses and employee cost will increase because the entire 3 months it will come from Vinpai.

But that would be proportionately with the sales as well, right? This quarter was only [indiscernible] 30 days?

So it was 30 days, INR 12 crores. The run rate is already INR 12.5 crores when they were under stress, now we have come, we'll be certainly improving the business. But looking at this coming quarter, it's a very short period, in 3 months, you cannot. But we think that we will do -- we'll keep maintain that run rate for the balance year.

Understood. And sir, just another question on Vanillin. You have about INR 400 crores of stock you mentioned?

Not 400 tonnes.

400 metric tons?

Yes.

And last call, we were gauging that we would see some kind of channel inventory easing off. Are you seeing that happening? Or are we still seeing a stuff channel?

Channel stock -- sorry, what was your question?

I think last quarter when you had the conference call and the quarter before that as well, you were seeing buildup of inventory because of the ADD. And you gauge that it would take a couple of quarters before you have a better insight as to how your demand scenario is going to pan out. Has there been liquid -- and consistently, you guys have also been scaled, which is extremely great in a tough time. But are you seeing a possibility for better tonnage going forward? I know you've given a guidance of 4,000, but I want to understand, can we see European pricing move up to probably $14, $15?

No, pricing will not move up. Pricing will remain in that region because the antidumping duty effectively makes the Chinese product come in at $15. So that's at GDP level, so which means at a net level, it's about $13. So we believe that the prices in Europe will not go up. It's only in the U.S. where the tariff difference of 25%, our margin will improve. And in terms of channel stocks, they are being liquidated. So that's the reason why we think that we'll be able to scale up our sales from around 2,500 tonnes this year, 2,300, 2,400 to about 4,000 in the next year.

Understood. And if I can just squeeze in one last question. Santosh, could you just reexplain that provisional for INR 11 crores that we've taken for this quarter?

No, the exceptional item?

Yes, the thing was -- the PDD of INR 11 crores, 12 crores?

Yes. So there are 3 components, acquisition-related cost labor cost, and we have also made a provision for a doubtful advance from loan, which was given 5 to 6 years back. That was for anticipating a project. The project didn't happen and now because 5 years have gone, this is an accounting adjustment. We will be taking other actions to recover that.

[Operator Instructions] Our next question comes from the line of Rohan Advant from Prad Capital.

Sir, what was our Vanillin tonnage in the first 9 months of FY '26?

First 9 months?

Yes.

1740 metric tons.

Okay. Okay. And sir, next year, we plan to do 4,000 tonnes. And even if we realize, say, $14 on an average, that is revenue of INR 500 crores. In your comment on margins, where you said the gross margin should be at 46%, 47%. With Vanillin scaling up and realizations improving, shouldn't it add more to our margins? Or will the Blends business face margin pressure and that's why the margin improvement is likely to be lower?

So the gross margin in the Blends business typically is less than 45%, and we are going to grow the Blends business by at least 20% to 25% next year. On a base of INR 1,000 crores, we are looking at least INR 1,350 crores in the next year. So that's why we are saying overall margin will average out at this price -- at this level.

Okay. So your revenue growth should be much higher because Vanillin will grow significantly and also the Blends business.

Correct. Correct. That is the assumption.

Okay. And sir, on this 4,000 tonnes of guidance that you have for FY '27, are you already -- have you committed offtake or you are waiting for spot prices to maybe improve and get higher realizations? How are you looking at that offtake? And how confident are you of 4,000 tonnes?

So I mean, in this environment, we have done 2,400 with a large amount of channel stock lying pre-antidumping duty in anticipation there. So our assessment is that the market will open up. We are not rushing in for any contracts because even customers are looking at quarterly contracts as opposed to longer ones because they don't know how long this channel stocks will remain. So I think our sense and our estimation comes from the fact that given all the adverse situations that were in FY '26 with channel stocks being emptied out to grow it by about 50%, 60% from where we were is very likely.

Our next question comes from the line of Niraj Mansingka from White Pine Investment Management Private Limited.

Sir, just wanted to clarify if right now, the prices in the U.S. is $19. And if we have a 25% tariff, we'll get a realization of $15. Is it right?

Yes, about 14.5% or so because there is also local freight and things. This is duty paid.

And if the tariff goes to 18%, our realization would be 15.5% or so, right?

Correct. Correct.

And this does not -- and there can be -- so -- and you said that the potential of price increase in Europe is lesser than U.S. because U.S. has much higher tariff and it's not adjusted to that level, the dumping duty. Is it right that U.S. is $19? And if you assume a 265%, it comes to $23 plus. If I assume -- I'm just assuming $6.5 in China.

In China, $6.5 will come to $23. That is right.

Okay. So there is still $4 upside in the price of Vanillin if there is a pari passu the way the Europe is trading.

Yes.

And sir, if the tariff is -- the detail is signed today, so then your realization will go up immediately, right?

Correct.

Okay. Then why are you saying that we'll be realizing less value for next year because there's a very high possibility of that being signed also, right?

Yes, yes, of course. But till it is signed, it is not signed. We were waiting for this reduction of from [ 50% to 25% ] for the last 6 months. So I can't predict that. So we are assuming that at 25% and work on that basis.

On the stocks, please, I could not fall, a very apology for that. You have 400 -- sorry, you have a guidance of 700 tonnes for Q4. Am I right?

Correct.

And of that 700 tonnes, how much will be at $15 -- sorry, $14.5 if the -- and how much would be at $12.5?

So I would say the U.S. will have out of 700 tonnes, about 350 to 400 tonnes will be in the U.S., which will be at a higher realization. And in Europe is at the same realization.

Europe same realization means $15 -- $14.5?

No. $12.5, what we are getting.

Yes. Okay. And sir, what about -- so okay. So -- and is it right to assume a similar ratio would be there for FY '27 for the entire 4,000 tonnes?

Yes, it will be 60% in the U.S. and 40% in Europe.

Okay. Got it. And sir, how much was the Brazilian value of the stock that you were carrying, which got higher?

The stock value was about 24 crores -- BRL 16 million and how much was that in rupee?

Okay. BRL 16 million. Okay.

INR 16 crores roughly.

Okay. And this was on this -- yes. And what is your guidance on the new plant of the competition starting in the Vanillin? Can you give some color on that? I think the U.S. plant was supposed to start for the Vanillin, just wanted to know.

Yes, in Europe, actually, the European plant. yes. So that -- of course, that will start now soon. And so the total market, as we've said earlier, that between Europe and U.S. is about 16,000 tonnes. And the 2 plants in U.S. and Europe put together have a capacity of 10,000. So there's a gap of 6,000 tonnes, which needs to be filled, which we expect that hopefully, we should be able to fill at least 80% of that.

Got it. Before -- sorry to interject. I'll just correct the numbers because on the Brazilian loss by fire. Total loss at the book value is at INR 33 crores. Out of that, INR 28 crores is inventory. He told BRL 16 million that is Brazilian real. The Indian rupee is INR 28 crores and around INR 4.5 crores of machine and equipment. So it's total INR 32.7 crores, right?

Yes.

Got it. So if there's a delay in the insurance, then you'll -- is it possible you'll write off next quarter and write back whenever you recover -- get that amount?

That's an accounting thing, how the insurance companies look at it. We are confident with -- you know how the insurance companies if there are cuts and things. If the insurance claim is finalized and there is no dispute, we may end up recognizing that shortfall in the next quarter. But it's not at all determinable at this stage because the surveyors have not even entered that factory cycle.

Got it, sir. And sir, just -- I think you said about the channel stock. Do you have any clarity on -- because the U.S. pricing will only go up to 23 once the channel stock is totally liquidated. So any color on that side?

No, I think it is more driven by what our competitor in U.S. does in terms of pricing. So we -- since they are the leaders there and they define the price, we just follow. In that sense, the price will be really defined by them. Currently, this is the price that they've defined. And as the channel stocks do come down, they will probably increase it by $1 or so. I don't think they will take it to match it to the antidumping duty impact. They'll keep it just below that.

Understand. Sir, last question. On the China and the Europe cost, which were for the factories which were shut down, what is it -- what was the run rate last quarter? And what will be the run rate in, say, Q1 of next year?

So in Q1 of next year, as I mentioned earlier, we'll be in -- by end of this month, there will be a ruling on the liquidation. And if it goes into liquidation, then there is no impact to us on our balance sheet on a running cost basis. And even China is the same by end of this quarter, that will also go into liquidation or winding up. So our estimate is next year, we should not have any significant impact.

And what was the impact for Q3?

So Q3 was INR 8 crores on discontinued business of Europe and INR 1 crore on a quarter of China. Both of this, if the plea for liquidation is accepted, then pro rata will not have any cost from February. on Europe because it is instead going to liquidation. As far as Chinese business, there is a different process. So we may have to bear INR 1 crore expenditure in the coming quarter and maybe another INR 1 crore in the next quarter.

So after Q3 of '27, your cost will become 0, which cost run rate is [indiscernible]

This year itself, in the next quarter.

China will be there.

Europe, the hearing with the tribunal or the court is on February 26. If the plea is accepted and given, then the bleed stops immediately because liquidation when it goes to the liquidator, liquidator becomes the operator of the company, we are out. So if it doesn't happen, courts may take their own time a few months, it's a [indiscernible]. So it's very fast, but they may take a few months. In that case, the control remains with us, and we may face that cash build of INR 7 crores, INR 8 crores next quarter also on Europe. China has a INR 1 crore run rate of bleed because we had to keep some people there to look after the proceedings of liquidation. We may end up INR 1 crore of bleed for 2 more quarters.

Got it. So our run rate after this goes down, the China and the Europe, the EBITDA will improve by INR 9 crores per quarter?

At present, this is not shown in operational EBITDA. It's shown as a discontinued. [indiscernible] So how you react EBITDA is, if it is net of that, then there's no impact on [ EBIT ].

Our next question comes from the line of Chaitya Doshi from InCred Capital.

Sir, have we got FSSAI approval for [indiscernible]?

No, we've applied for it.

Okay. And what is the status of selling Vin'Curd in Indian market?

Yes. So there is a potential. So we are working on that.

Okay.

So it's basically -- the market is large. I mean the cheese market is growing in India and Vin'Curd is a product which goes into manufacturing cheese. And so the process is, of course, these are all processing aids. So most producers don't really need to get FSSAI because we are FSSAI approved, but the product doesn't need to be because it's not part of labeling. So that's a question of interpretation. So I mean that's something that is in the pipeline.

Okay. Okay. And sir, so what would be the overall take on Vanillin sales for FY '27 guidance? And what would be your value growth?

No, we've already given that.

Okay. And guidance for Blends?

For Blends also, we've given that, 25% growth over FY '26.

Our next question comes from the line of Shikhar Mundra from Vivog Commercial Limited.

For the company as a whole, what kind of revenue guidance are we targeting giving for the next couple of years, '27 and '28?

So '27, we should be looking at about INR 2,200 crores.

INR 2,200?

Yes.

Okay. And for '28?

That will be about INR 2,400.

Fair enough. And it's considering similar prices as of -- INR 2,200 is considering similar prices as of now of the product.

Yes.

And what kind of CapEx are we looking to put in for the next couple of years?

So at present, no new plants. There is the maintenance CapEx, which keeps on coming because of the big plants which we have. So we have a CapEx -- maintenance CapEx of around INR 40 crores to INR 50 crores on an annual basis. But at this moment, we have not any CapEx plan approved or otherwise.

Okay. So the kind of debt levels we have, so these are kind of peak debt levels?

We may require -- if I'm going to increase my revenues, there will be [indiscernible]

On the working capital side, I mean the long-term borrowings. So these are...

Nothing on cards. These are all repaid and they will go on around INR 40 crores to INR 50 crores, which is repaid every year.

Got it. So I mean, I want to understand for -- as a company as a whole, there are so many moving parts. There's Vanillin, then there are Blends. So if the Vanillin prices rise, the Blend prices are falling. So I mean something or the other is pulling our performance down. So how should we look at it? I mean...

Very difficult to answer that question. Our Blend prices are not falling. Our margins in the Blends are quite stable. Gross margins are not falling. It's only in the straits business, which is the TBHQ, BHA business, where the margins have fallen in this year. And Vanillin, the gross margin remains stable.

Ladies and gentlemen, due to time constraints, we take that as the last question. I now hand the conference over to the management for closing comments.

Ladies and gentlemen, thank you very much for participating in this conference call. We look forward to interacting with you at the next -- end of next -- of this quarter. Until then, a good day, good evening.

Thank you. On behalf of Camlin Fine Sciences Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.