Himadri Speciality Chemical Limited ($500184)

Ladies and gentlemen, good day, and welcome to the Himadri Speciality Chemical Limited Q4 and FY '26 Conference Call hosted by MUFG. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to [ Mr. Chirag Bhatia ] from MUFG. Thank you, and over to you, sir.

Good evening, everyone, and welcome to Q4 FY '26 Earnings Conference Call of Himadri Speciality Chemical Limited. Today on the call, we have with us Mr. Anurag Choudhary, CMB and CEO; and Mr. Kamlesh Agarwal, CFO. Before we proceed with the call, I would like to give you our disclaimer that this conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations as of today. Actual results may differ materially. The statements are not guarantees of the future performance and involve risks and uncertainties that are difficult to predict. A detailed safe harbor statement is being given on Page 2 of investor presentation of the company, which are being uploaded on the stock exchange and on the company website. With this, I now hand over the call to Mr. Anurag Choudhary. Over to you, sir.

Thank you, [ Chirag. ] Good evening, ladies and gentlemen, and thank you for joining us today to discuss Himadri Speciality Chemical Limited's performance for Q4 and FY '26. I sincerely appreciate your continued trust and engagement, and it is a pleasure to connect with you once again. At Himadri, research and development is not only an enabler, it is foundational to who we are and how we have evolved over the years. It is not a stand-alone function, but deeply embedded in our business strategy and culture. It is part of Himadri's DNA. Our growth into high-value speciality chemicals and advanced materials have been driven by deep and sustainable commitment to in-house innovation supported by our efforts and constantly evolving research and development ecosystem. Today, we operate one of India's most comprehensive speciality solutions, research and development platforms with a team of over 180 scientists, technologists and subject matter experts, including 28 [ PSCs ] in different disciplines of chemistry and international specialists brought from Japan, South Korea, Australia, United States, Europe and China. This global exposure combined with strong process engineering and scale-up capabilities has enabled us to consistently translate ideas from [indiscernible] into commercially viable business alternatives, scalable solutions across carbon value chain, speciality chemicals and increasingly advanced material chemistry. Importantly, it is this same research and development engine that continues to drive the development of several new breakthrough solutions that are currently in our pipeline, many of which have reached advanced stages of development and in the progress towards commercialization. During the current year, we spent 120 crores in research and development. It is this long-standing R&D capability built recently over more than a decade of focused working with the mine chemistry that has culminated into the most defining milestone for Himadri this year. On 23rd April 2026, we successfully commenced operations at our first Anode material manufacturing facility in Mahistikry, West Bengal with an initial capacity of 200 metric tonne per annum, marking a pivotal step in our entry into lithium-ion battery material value chain. What makes this achievement particularly significant is that the entire technology platform from raw material processing to finished anode active material has been developed fully in-house without reliance on external or licensed technologies. At the core of this capability is a specially engineered high purity coal tar pitch produced entirely in-house by Himadri. This serves as a primary raw material [indiscernible] and enabler for superior quality, consistency and performance. This degree of backward integration, supported by a proprietary process know-how gives Himadri a fully integrated and self-reliant manufacturing ecosystem, while manufacturing, maintaining the flexibility to process alternative raw materials as market evolves. As we engage with OEMs at various companies [indiscernible], our differentiated approach built on innovation, cost efficiency and sustainability positions us strongly for validation and scale up in this high-growth segment. Building on this, our broader lithium-ion battery material strategy continues to progress in a calibrated and disciplined manner, underpinned by strong progress on the capital deployment to drive sustainable returns and maintain our robust ROC profile. Execution of Phase 1 of our lithium and phosphate cathode active material project, which enriches our total capacity of 40,000 metric tonnes per annum is on track. As part of this phase execution, the first milestone capacity of 2,000 metric tonnes is targeted for commissioning by Q3 FY '27. The balance Phase 1 capacity will be progressively brought on stream over the subsequent 12 months, closely aligned with customers' approval and demand visibility, with FY '29 envisaged as the year for full Phase 1 operations. Beyond Phase 1, our long-term desire is to build our scaled globally [indiscernible] LFP platform, we have capacity to produce 200,000 metric tonnes of LFP cathode active materials catering to the approximately 100 gigawatt of lithium-ion battery capacity, executed in a phased manner and demand-led manner. Importantly, this positions Himadri as first company globally to establish commercial scale LFP cathode-active material manfacturing facility outside China, serving both domestic and international markets and representing a significant step towards [indiscernible]. Customer engagements have intensified significantly with leading Indian as well as global cell manufacturers and the response has been strongly encouraging. This reinforces our conviction in LFP as a chemistry of [indiscernible] electric mobility and ESS globally and underpins our confidence in long-term relevance of this platform. In panel, our coloration with Sicona Battery Technologies has progressed meaningfully over the year. Margins are truly transformative phase in the development of next-generation anode materials. Through an exclusive technology licensing agreement, Himadri has secured right to access, localized, commercialized Sicona's proprietary silicon carbon anode technology in India for the [indiscernible]. During the year, Sicona has achieved important milestones at pilot scale level with product capacity expansion currently underway and targeted for completion by Q2 FY '27, supporting intensified engagement with global sales manufacturers across multiple stages of sample approvals. Performance-wise, Sicona's Gen3 SiCX material have demonstrated superior energy density and improved [indiscernible] chemical factor SiCX, while Gen4 SiCx has shown high capacity retention over extended cycle like aligning with the stringent requirement of leading global OEMs. Further advancing our strategic road map, we have made a strategic investment in IBC, International Battery Company, our U.S. headquarter developer and manufacturer of chemistry agnostic [indiscernible] lithium-ion cell. This collaboration represents an important milestone for Himadri as it enables real-world validation and early commercial deployment of our lithium-ion battery materials, including LFP cathode active materials and anode solutions. Leveraging IBC operational lithium-ion cell manufacturing facility in South area, we are actively engaging in product validation, scale up and customer engagement, thereby accelerating our readiness for commercial [indiscernible]. From a market perspective, IBC operates across a diversified set of end-use applications, including B2B fleet customers 2, 3, 4 wheelers OEMs, global battery exports for energy storage and mobility solutions. Importantly, IBC looking forward products road map also addresses high-performance, high-value applications, such as defense drones, AI-driven data center infrastructure, aligning well with margin ambition to be an innovation-led and differentiated [indiscernible] across the evolving global battery ecosystem. Alongside this, our collaboration with Invati Creations continues to progress steadily with focused research efforts under the [indiscernible] advanced lithium-ion battery materials [indiscernible] brings strong capabilities in modular engineering research and intellectual property development, which complements Himadri's ambition to build innovative high-performance battery material platforms. Taken together, these initiatives and decisions and strategic investments and patterns are enabling market margins to build a future [indiscernible] integrated product and technology platform across the lithium ion battery value chain by combining advanced material innovation, real-world validation and deep research capabilities, we are creating a collaborative ecosystem that is well positioned to solve emerging sunrise industries spanning electric mobility, ESS, defense, drones, next-generation digital infrastructure. This approach strengthens our ability to develop differentiated solutions, sorting commercialization cycle and remain relevant as new applications comercially use cases continues to evolve globally. Turning to the operating environment. Recent geopolitical developments in West Asia have introduced volatility in energy prices and logistics. However, our business remains structurally insulated as we are not dependent on that reason for our [indiscernible] operations. Our raw material platform, diversified end-use portfolio and strong customer relationships continue to provide stability and resilience. I'm pleased to report that FY '26 has been a year of strong execution and delivery. During the year, we successfully commissioned an additional 70,000 metric tonne speciality carbon black facility at Mahistikry, taking our total speciality carbon black capacity to 130,000 metric tonnes per annum and overall carbon black capacity to 250,000 metric tonne per annum. This positions the Mahistikry facility as the world's single largest location for speciality carbon black plant and places Himadri among the top 5 players globally in this segment. Alongside this, our coal tar pitch and associated products business is also well positioned for the next phase of growth with the successful [ debottling ] of our coal tar pitch [indiscernible] capacity, taking it to 600,000 metric tonnes per annum and the commissioning of liquid coal tar pitch export terminals at [indiscernible], we are now in a position to leverage our operational headrooms and logistics capability to support growth in the coming quarters and further consolidate our leadership position in coal tar pitch segment. Financially, we have delivered our strongest performance to date. On a consolidated basis, EBITDA stood at INR 1,006 crores, PBT at INR 1,001 crores and profit after tax at INR 755 crores, reflecting the strength of our value-added products portfolio, operational discipline and consistent focus on in-house innovation. Beyond this, our growth continues to be supported by a well-diversified portfolio spanning across graphite, aluminum, lithium-ion batteries, speciality chemicals and advanced chemicals. Turning to our next strategic growth pillar, Birla Tyres. Fy '26 marked the first half year of operations of Birla Tyres. This year, we have been able to revive the brand and steadily progress in rebuilding both market presence and the operating foundation have been encouraging. We have closed this revival in a calibrated manner, prioritizing product market channels [indiscernible] and then repositioning before pushing volume-led growth. Our client portfolio anchored by proven products such as KalaPatthar, Shaan+, BT339 and Ultra Trac continues to be very value accretive across key segments, particularly in agriculture and commercial vehicles. In the fourth quarter, we strengthened our agri portfolio with launch of new SKUs, AgriPlus and AgriWin tractor tire series, both of which are already witnessing encouraging market traction. From a distributor standpoint, we have established a strong and expanding network of 43 distributors and over 1,000 dealers, giving us a solid platform for scale. More importantly, brand acceptance continues to guide as we consistently deliver on quality, liability and performance, key drivers in this category. Looking ahead, our focus is clearly on disciplined scale up. We are now entering the next phase of revival. The production ramp-up will be aligned closely with demand visibility and channel expansion. Over the next 12 to 24 months, we will be progressively enhance our capacity utilization supported by a robust pipeline of new product launches across agriculture, mining and commercial vehicle segments. In parallel, we are strengthening our manufacturing processes and supply chain to ensure consistent quality and volume scale. Our objective is not mainly to regain presence, but to build a competitive and differentiated tire business that can sustainably participate in both domestic and [indiscernible] international markets. Birla Tyres is still early in its journey, but the direction is clear, a major and disciplined revival built on productive sales, market build up and execution excellence. We are confident this business will evolve into a meaningful contributor to margin's overall growth in the coming years. Beyond this, our consumer [indiscernible] continues to gain increasing traction, adding further depth to our diversified portfolio. Looking ahead, our entrepreneur [indiscernible] project is progressing as planned, and we expect it to commercially in [indiscernible] FY '27, helping address a significant import dependency in India. At Himadri, research and development is not a function, it is core capability embedded in how we operate. Our global R&D ecosystem continues to drive innovation across all business verticals, enabling us to develop depreciated high value-added solutions for emerging industries. Sustainability remains integrated to our core strategy, driving our approach to responsible manufacturing, efficient resource utilization and long-term value creation. Himadri, for the second year, has been awarded with platinum rating by EcoVadis. Being among the 1% company among 150,000 companies rated by EcoVadis globally. As I conclude FY '26 marks an important milestone in margin transformation journey. When we stood before you 12 months ago, we made clear commitments, and I'm pleased to say that we delivered on all of them and in several areas gone beyond. We committed to expanding our speciality carbon black capacity we delivered. We spoke about deepening focus on value-added products, which is reflected in our consumer [indiscernible] with [indiscernible]. We reported our coal tar installation capacity from 500,000 to 600,000 metric tonnes, and revival of Birla Tyres. Importantly, this execution has been underpinned by strong operating performance as we set new benchmarks across key financial and operational metrics during the year. As we look ahead, we are entering the next phase of growth with a strong foundation, clear strategic direction and disciplined execution. With our extending presence in Advanced Materials, particularly within lithium-ion battery ecosystem and the steady development of Birla Tyres, we are confident of placing sustainable long-term value for all our stakeholders. Thank you, and I now invite our CFO, Kamlesh Agarwal, to take you through the financial performance in details. Thank you, Kamlesh.

Thank you, Anurag. Good evening, everyone, and thank you for joining us today. I [indiscernible] that everyone has had it done to review our financial results and [indiscernible], which has been made available on both the stock exchanges and our company website. This quarter last year marked an important milestone in our transformative learning. On a consolidated basis, we are pleased to say that we have achieved [indiscernible] EBITDA and PAT on both quarterly and full business. This was due to our focus on a high value-added solution of personnel efficiency and cost of [indiscernible]. From a quarterly perspective, in Q4 FY '26, our consolidated revenue stood at INR 1,288 crores as compared to INR 1,135 crores, an increase of 14%. EBITDA came in at INR 280 crores, registering a growth of 21% year-on-year, while tax stood at INR 208 crores, delivering a strong growth of 34% year-on-year. Looking at the cumulative performance for full year basis, our consolidated revenue stood at INR 4,661 crores. EBITDA reached INR 1,006 crores, up around 19% year-on-year from INR 847 crores in FY '25. Profit after tax stood at INR 755 crores, reflecting a growth of 36% year-on-year over INR 555 crores reported in FY '25. This performance highlights the strength and resilience across all the business segments. Coming on stand-alone basis performance. In Q4 FY '26, revenue stood at INR 1,101 crores with EBITDA at INR 252 crores while PAT came to INR 186 crores, registering a growth of 17% against INR 158 crores of EBITDA in Q4 FY '25. For FY '26, on a stand-alone basis, revenue stood at INR 4,405 crores. EBITDA, INR 978 crores, reflecting a growth of around 16% when compared with INR 844 crores in FY '25. While profit after tax stood at INR 750 crores, a jump of 34% as compared to INR 558 crores in FY '25. Over the last 5 years, on a consolidated basis, we have demonstrated a consistent and robust financial performance, reflecting the strength of our strategic focus and execution. Since FY '22, our revenues have grown at an impressive CAGR of 14%. More significantly, our EBITDA has expanded at a CAGR of 58%, and our profit after tax has growth at an exceptional 110% per year. In terms of financial health, we continue to maintain a resilient balance sheet. As of 31st March 2026, we hold a net positive cash balance of INR 121 crores, which gives us ample flexibility to pursue growth opportunities while maintaining a prudent approach to capital allocation. Our return on capital employed has also shown a steady upward trajectory, reaching to the level of 32% in FY '26. It is tantamount to our sharp focus on value creation and capital efficiencies. With these results, we believe we are well positioned to continue our upward trajectory, building on a foundation of financial strength, operational excellence and strategic foresight. Thank you.

Operator, we can start the question-and-answer session.[Operator Instructions] The first question is from the line of [ Sanjesh Jain ] from ICICI Securities.

This is Sanjesh Jain.Thanks for the opportunity and business. In the anode business, like you have mentioned, the growth tap for your cathode where you want to start with, say, 2,000 metric ton and scale up to 40,000 in FY '27 and eventually to the 200,000. Can you share us the thought process on the growth trajectory for anode?

So for the anode business, we are still working on it. And in due course of time, we'll come up with the figures and the investment required and the time frame.

Got it, sir. But what will be the market size for anode today and what is the economics between cathode and anode? And how do you see the pitch-based cathode, anode demand versus silicon-based carbon, which we are developing parallely. How do you see these portfolio playing out for us?

See, cathode and anode together constitute an integral, an important raw material for lithium-ion batteries. In terms of cost, it is 65% of our sell, lithium-ion sell, cathode/anode together. And in the ratio, support for the lithium cell anode and cathode using a ratio of 1:2. So [indiscernible] is a requirement of an anode, so 200 will be the requirement of cathode. So basically, in whichever cathode chemistry you are working, but anode will be requirement remains stable. So whether it's NMC, CLO, LP, whichever activities, but you need anode. And anodes, there are different types of anodes, natural, synthetic. Synthetic, we are petroleum-based and coldest. So we have the unique positioning of both And regarding silicon carbon anode material, it is added to synthetic or natural anode to increase the capacity of the battery, increase the density and reduce the charging time. So it -- silicon is an add-on, it makes -- to make hybrid anode. So it's not actually that you can use either this or that, the silicon has to be added to this material.

Got it. Got it. But today, we don't add it, right? This is something, which will happen.

It already has started in some percent, very small percent globally. But still, the capacity material availability is very limited, so that supply is not much.

Got it. And my second question, the [indiscernible] Middle East issue, we were planning to export coal tar pitch in the Middle East and, obviously, South Africa and other geographies. But Middle East is something where we have already started. With this situation, what's happening in the Middle East? Do you see there will be some shift in the focus for coal tar pitch from Middle East to other geography and which will be the geographies?

See, this is a temporary phenomenon we see. And so some segments are planned for Middle East, but that's not having -- don't have any material impact because we are diverting those materials to other geographies. So there is absolutely no issues with that.

Which are the geographies we are tapping apart from Middle East?

We are looking at different geographies like Southeast Asia, Africa remains intact. So these are the few.

Got it. But Southeast Asia, we would see competition higher from China, right, geographically?

China, actually, competition is not there because we supply, our quality is very high and plus, the China cost is higher than India. So even in India, we supply coal tar, which has a price lower than China. So that dynamic doesn't work for our business. China dynamic is no -- not at all valid for our business.

Got it. Got it. And the carbon black business, we started this new plant. How has been the ramp-up in that? That's one. Number two, the situation in carbon black should be positive for us, right? Because carbon black realization has gone up. Globally, there is a large capacity which uses crude-based feedstock, while we use coal tar based feedstock. Now that coal tar prices, my sense would not have gone as sharply as crude. So this shift in the carbon black business from the higher input cost should positively reflect for Himadri?

So see, what we have developed is a long-term sustainable business model, and we don't look at quarter-on-quarter ups and downs. But one thing is there, the model that we have built up, we can transfer the increasing price to our customers. So whether it is crude base or coal tar based, whatever increase in prices there, we transfer to our customers. So that has helped us to build up our resilient business model.

No. But in a situation where on carbon black feedstock is expensive, we can use more of our own oil to produce carbon black. That economics is much better right now?

Yes, definitely, the economics is better, but coal tar prices have also gone up. So I don't think that is the delta on which Himadri has built up its business model also. And that is not something which we eye also. We have -- we work on sustainable profit and which is only assured.

Best of luck for the coming quarters.

The next question is from [indiscernible].

So firstly, coming back to this anode capacity, specifically the 200 metric tonnes, right? Can you tell us what will be the peak revenue potential from there? And how will the utilization look like in FY '27?

So this capacity is basically to commercialize our R&D efforts and to focus that what we have worked on R&D what we worked in a commercial plant. So this is the beginning of the journey. And if you have the next step, we will be announcing CapEx for large-scale commercial capacity, where meaningful revenue will start coming in.

Okay. So as of now, nothing is expected from this 200 metric tonnes in terms of numbers?

In terms of numbers, they are not significantly material [indiscernible] based volumes.

Okay. Got it. So in FY '27, this will not be contributing to our revenue?

This will be contributing, but not materially speaking.

But not materially, okay. Secondly, then coming to the Birla Tyres segment, which you restarted. How much did it contribute in FY '26 in terms of revenue? And how will it scale up now going ahead?

The Birla Tyres top line contribution for this year was INR 187 crores, and we expect to be around INR 3,000 crores of top line for this business in the next 4 years.

Do you have any indication as to what will it be in FY '27, particularly?

We don't give year-on-year -- yearly guidance.

Okay. So what about like overall and consolidated level, any guidance there for revenue and our EBITDA margins so far in FY '27?

See, again, coming to that, I have given a guidance that FY '25, we had a PAT of INR 555 crores. So we have committed to double this PAT in the next 3 years in FY '28 to 1,100-plus crores. So the right way to look at Himadri is not at EBITDA, but at PAT levels. If you look at Himadri also as a percentage of top line, it is 16-plus percent. So because there is no interest and no additional cost. So the right way to look at Himadri is the consolidated top line and PAT rather than EBITDA.

Okay. So just last thing, then if I observe your top line has, I think, in FY '25, it grew at 10%, okay? And FY '26, it largely has been flat, right? So with these new additions of Birla Tyres and the added carbon black capacity, will your top line also grow? And if so, yes, any indication there?

Sure, sure. So up till now, last 3, 4 years, we have not been able to see any growth in the top line practically. Maybe a few percent. But now the real top line growth starts. FY '27, you will see top line growth also and bottom line growth.

Okay. But you don't have any sort of growth number to that?

I don't want to give any growth numbers.

The next question is from the line of [ Akshay ] from [indiscernible].

Thank you so much for giving me this opportunity and also congratulations for a great set of numbers. My first question is, we have generated the highest ever gross profit margin this quarter. So do we see this trend will be continuing going forward for the next 2 to 3 years? And also, are we able to continue the 20% EBITDA margin going forward?

Yes, we are confident of achieving this on a sustainable basis. So looking forward also, we'll see growth in these numbers.

Okay. Sure, sir. Okay. And sir, secondly, on the U.S. and Iran war, and geopolitical situation. So due to the commodity prices inflation all over the world. So how do we see impacting our types of business and whether we will face any pressure moving forward due to this war?

See, as I told in my opening commentary also, we are resilient to any [ stock ] in any movement in this location in supply chain logistics in West Asia because of the ongoing geopolitical situation given our mill dependence on this geography. So definitely, the energy pricing is going up, the [indiscernible] is going, this will have impact. But good thing is that we'll be able to pass on this to our customers. So as such, we don't have an impact on our P&L for -- because of this geopolitical situation.

The next question is from the line of [ Nitin Shakdher ] from Green Capital Single Family Office.

This is Nitin Shakdher from the Green Capital Single Family Office. My question is more from an investor's point of view rather than an analyst type of a question is that for this annual year and in terms of approximate margin guidance, for the 3 businesses, which is, let's say, advanced battery materials, the turnaround of the acquired assets on Birla Tyres and obviously, the main core business, which is the speciality carbon black, are you able to give any sort of an indication margin guidance growth rate for the year? I do understand that geopolitically, raw material cost will be up and down, but just as an indication.

So for the current year, we don't prefer to give any specific number guideline. But on a macro basis, I can give you a guideline that current year, we will see both top line and bottom line growth. So up until now, we are not -- we are not able to give any bottom line growth basically because we are going for value added within the same product profile. So what was happening, we were adding value to our existing products. So the margins were increasing, but the top line was not increasing in a big way. But now with new capacities coming up, you will see top line growth plus margin expansion. So both you will see in the year to come.

The next question is from the line of Animesh Jain from Dalal & Broacha.

I want to ask, sir, what is the current utilization level that we have newly commissioned 70,000 metric tonnes of speciality carbon black. And what is the steady-state utilization level and EBITDA per tonne?

So we expect to have around the 85% to 90% capacity utilization for our newly announced capacity for FY '27. And EBITDA, in terms of -- if you look at our EBITDA per metric tonnes, it was around 17,000 per metric tonnes on an average on the entire basket of portfolio. And with this being a speciality will be significantly higher than this average 17,000 plus.

And I want to also ask about that we have set up a new subsidiary in China that we have mentioned. So why we have set up that subsidiary? And what is it?

So we are importing some raw materials and equipment from China for that, we have set up our subsidiary to take some local tax benefits.

The next question is from the line of Dhruvin Kadakia from SKP Securities.

Congratulations on this robust set of numbers. My only request would be that in terms of sales volume, will it be possible for you to provide me with the breakup as to what was the volume generated between your legacy business, carbon black and tires in this particular year?

So tires, they are not consolidated. So once we consolidate, then we can discuss this. Now is a part of sales only, which is coming into Himadri. So as such number, the detailed numbers, we don't disclose.

Okay. So not a problem. And any new updates with regarding to the CapEx plan and what we already know? Like is there something on the block?

No. As of now, we have already announced all the CapEx. But yes, annual CapEx, we'll be announcing soon. And once that is finalized, the volume, the capacity and CapEx that will come up with our new disclosure.

The next question is from the line of Sagar Jethwani from Phillip Capital PMS.

The significant jump in the other expenses is because of the ForEx loss. Is that correct?

Yes, yes.

And so what is our hedging policy in that case? Can we see some curtailment of this impact from the ForEx volatility?

Yes. As you know, there were sharp depreciation in rupees, which impacted us on the import side and the export side also, we hedge something. But generally, we keep our position open. But because of this huge volatility, we hedged and hedging -- because of the hedging, we had to incur income losses this time. It was the other way around. But looking forward, we are very vigilant on this. And maybe we are confident that after Q1, Q1, there may be some hit. But after that, they will be very strong position in terms of any open position of FX.

Actually, my question is not quarter-on-quarter, it is more of a structural in nature. Can we reduce the volatility swing from these ForEx losses in the long term?

Definitely, since we have export and import, more or less are in parity. So leaving the position open gives us with very less chance of any FX volatity.

Understood. And secondly -- yes.

So that this time, we hedge the position, thinking it is going to be volatile, and that's why we had the FX loss. But our standing policy was to keep the position open being import and export being more or less in parity with each other. So we'll continue with our existing principles.

Understood. So but you're saying that beyond Q1, the impact would reduce?

I don't think there will be any impact after Q1.

Okay. Secondly, how many new clients that we have added in the last 2 years and geography wise, any new countries that we are planning to enter or scale up where you might be witnessing some kind of a significant opportunity given China plus one, there's a cost escalation in euro as well. So some color on that would be helpful.

Definitely. So last year, our exposure was 56 countries. We were selling our product. This year, it is 61 countries. So there is 5 more countries, particularly, Europe is doing good and U.S. is doing good for us. In Europe also, more and more countries are being added. So because of -- as you correctly said, because the cost structure in Europe and U.S.A., this is giving us a lot of advantage and China one policy is also working out well for our supplies to the global market.

Lastly, any color on margin? Can you give up until FY '28? I'm not talking about FY '27, again, not the 1-year guidance, typically. Just structurally long term, how do you see the margins because we are adding some new capacities also considering that fact.

Yes. So with the new capacities coming on, we are confident of strengthening our existing margins further from here on.

The next question is from the line of [ Suhani Singh ] from [indiscernible].

Okay. So I wanted to ask if the passenger car radial commissioning. So what is the targeted PCR capacity, the CapEx and commissioning time line? And so PCR is a notoriously crowded segment in India. So what is the differentiation strategy for that as well?

So PCR, we target to commission in the next 24 months. And differentiating strategy will be focusing more on EV. That is the segment we will be focusing on and specialized tire for electric vehicles. And given the margin strength in carbon black chemistry. So that gives us a unique advantage of basing a value-added tire with more strength in carbon chemistry. This gives our unique positioning in the business, the understanding of key raw materials.

Okay. Okay. I also wanted to understand the stand-alone other income jumped from INR 51 crores to INR 176 crores. So could you break down the composition, which means treasury, dividends from subsidiaries, government incentives or one-offs?

Yes. Basically, this is because of FD interest in investments that we have put in mutual fund gains then -- and cities that we have deployed for operation of Birla Tyres, that fair value calculation, then based on our investment, different investment, the fair value calculation, it's a combination of all these.

Okay. Understood, sir. Lastly, with Haldia and Mangalore liquid coal tar pitch terminal is commissioned, what is the targeted FY '26 export value? And what's the portion of stand-alone CPP revenue do you export from -- expect from exports by '28, FY '28.

See, by FY '28, we expect the new commission capacity of 100,000 tonnes, which gives us 50,000 tonnes of coal tar pitch that will be completely exported to the global market.

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

Congrats on good set of numbers. The first question is on the annual material facility that we have commissioned. So here, in terms of the commercial validation of materials, how much time will it take? And [indiscernible] the customers that we will be targeting to send the material? Is it domestic exports? How are we looking at it? And once the validation is done, how much timing will it take for us to put up a new commercial sales?

The idea to commercialize and start this plant was to expedite the time frame required for validity of material. And that is the idea behind commercializing this plant. We are engaged with all the customers in India and all the who's who in the industry globally. So we have already sent them sample A, which has been -- got a very good response from our customers in terms of quality validation. Now we are to send them sample B, C, D that we start now. Once it is done, then we'll come up with a road map for our future capacity expansion. But that will happen very soon. It will not take a significantly long time now.

Sure. Just one line question in terms of the [indiscernible] pricing. How has that changed over the last 5 years? So what was the price about 5 years back given that new technologies with some commercial operations capacity? How the price are doing into in terms of [indiscernible]?

I don't want to comment on price per metric tonnes. But to give you a broader idea, all the cell component prices have come down between 50% to 60% over the last 4, 5 years, whether it is cathode or anode.

Sure, sure. And second...

Also, depending on what quality you make, what grade you make, what application it is, it has significantly value. So we'll not light on that path to comment on -- for [ Mexican price. ]

That's helpful. The second question is in terms of our gross margins, which have expanded. So mostly, the perspective on the pricing of [indiscernible] work in progress and raw materials would have been at a higher level given that volumes will increase during the month of March. Is there any element of inventory gains might we have observed during this quarter? And if so, what could be the [indiscernible] on the plan?

See, the margin expansion that you are seeing is not one-off thing, it's sustainable long-term margin improvement that because of our all efforts in terms of improvement in operational efficiency, [indiscernible] systems we have been able to do, and these are [indiscernible] on a long-term basis and strengthened [indiscernible].

I was just concerned more on the gross margin front. And because of revaluation or better valuation of the inventories, is there any benefit of inventory gains, [indiscernible]?

No, no, not really.

The next question is from the line of Dhruvin Kadakia from SKP Securities.

I just wanted to confirm that in the segmental breakup of revenues that we've given, we've included a new category called others, which includes mining and other businesses. So could you shed a little bit light on what the other businesses are? Like is it tires combined?

Yes, it's tires combined, right.

And you mentioned the figure for tire sales this year. What was it? Could you please repeat that?

INR 187 crores.

INR 187 crores. And would you be comfortable in sharing what was the realization per tonne on this that you've gotten for this year?

We don't give per tonne realization like that.

The next question is from the line of [indiscernible].

Just want to understand about the upcoming cathode segment business. What would be the typical asset turn for the project or for the segment?

2x.

I just want to understand the asset turn for the upcoming cathode segment, sir.

Yes, 2x. It will be 2x of the asset investments, turnover to assets.

Okay, sir. And one more thing. For the first phase, we had around 2,000 tonnes would be commissioned. With this operation, how much would be the total one in the operation?

What is? Can you speak louder, you're not audible.

Is it better now?

Yes, it's better.

Yes. Yes. we said initial will be 2,000 MTPA. And what was the total [ phasing ] capacity?

40,000.

40,000. And 40,000 will be commissioned by FY '29?

Yes, yes -- no, FY '28-- end of FY '28, before FY '29. So FY '29, you will see the full year of operation of entire 40,000 capacity. And the reason, logic, we see capital allocation has been done, but they have -- we are very careful in terms of deployment of capital because we are focused on ROCE. So I don't want to -- as a company policy, we don't want to deploy capital ahead of requirement. We can very well set up and start the commissioning and settle the facility and deploy capital for 40,000 metric tonnes. But since the approval period, it still takes longer time, so it makes sense to get 22,000, get it approved. And in the same time, 40,000, [ 28,000 ] will continue and it will commission. So that gives full realization and proper return on capital employed.

Got it, sir. That's helpful. And what would be the total CapEx incurred for this 40,000.

INR 1,125 crores.

Okay. Okay. And in the cathode facility, if energy comes, is it energy heavy? Or how are we planning to -- any plan for the energy side as such, renewables or something like that?

For cathode?

Yes, yes, cathode plant.

Yes, yes. We have renewable plants to consume renewable energies.

So those can be [indiscernible].

Where you buy in terms of a long-term contract, we don't plan to invest on our own.

The next question is from the line of [ Yash Mehta from Alken Capital. ]

I want to ask, are there any binding LOIs, MOUs or offtake signed with Indian global cell manufacturers for LSP supply? And what proportion of Phase 1 capacity is contracted? What proportion of Phase 1 capacity is contracted?

See, any MOUs or LOIs that you have signed, we have an NDA, we cannot disclose this now. At that point of time, it will be disclosed. And for our Phase 1 capacity, depending on the product approval, these LOIs will be active.

Yes. Okay, okay. Got it, sir. And my next question is, as we can see the net cash declined from INR 392 crores to INR 122 crores despite record PAT, and the stand-alone current borrowings also rose from INR 306 crores to INR 719 crores. So could you please walk me through the FY '26 sources and uses? And moreover, can you tell me about the steady-state debt level that you will be comfortable carrying forward?

See, the increase in the [indiscernible] volume basically, we have [indiscernible] we have significant bank elements that we utilize this limit to keep our limits in PAT, and we take at a lower rate and defer back to the bank at a higher level. So that gives a delta also, which is part of other income. So for our future expansion, the plan is to [indiscernible] only for all expansion. So in any case, [indiscernible] also that is very significantly low portion and will be just timing gap, not much. We don't want to be heavy on that.

Due to time constraints, I now hand the conference over to Mr. Anurag Choudhary for closing comments.

Thank you. Thank you once again for taking the time to join us on today's conference call. We hope we have been able to address your queries adequately. This year has been truly been transformational as we set new performance records, achieve world-class capacity addition, earmarked landmark recognition and made decisive progress on our future growth engines. And yet, we firmly believe the best chapters of Himadri's story are still ahead of us. We remain committed to delivering long-term value and are grateful for your trust and confidence and engagement as we scale new capacities and capabilities, and scale new frontiers and scale the next phase of our growth. Should you have any further questions please feel free to reach to our investor partners, relation partner, MUFG Intime IR. Thank you once again for joining the con call today, and we look forward to your continued support. Thank you.

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