Neogen Chemicals Limited (NEOGEN) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '26 Earnings Conference Call of Neogen Chemicals Limited. [Operator Instructions] I now hand the conference over to Mr. Nishid Solanki from CDR India. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and welcome to Neogen Chemicals Q3 FY '26 Earnings Conference Call for Analysts and Investors. Today, we are joined by senior members of the management team, including Mr. Anurag Surana, Non-Executive Chairman; Dr. Harin Kanani, Managing Director; and Mr. Gopikrishnan Sarathy, Chief Financial Officer. We will commence the call with opening thoughts from the management team, after which we'll open the floor for your questions. Before we begin, a standard disclaimer. Certain statements made or discussed on today's conference call may be forward-looking. Actual results could vary from these forward-looking statements, and a detailed disclaimer is available in Q3 FY '26 earnings presentation, which has been uploaded on stock exchange websites. With that, I would like to invite Dr. Harin Kanani to share his perspectives. Thank you, and over to you, sir.

Thank you, Nishid. Good afternoon, everyone. Thank you for joining us to discuss our third quarter fiscal 2026 financial results. I trust you had the opportunity to review our investor presentation. I will provide a summary of our operational performance and an update on our key strategic growth initiatives. Q3 served as a period of steady recovery and a decisive pivot towards a future-ready portfolio for Neogen. Despite global market volatility, our core business remains robust, underpinned by demand resilience in pharma, flavors and fragrance and other specialty applications. With our product optimization initiatives initiative and the Dahej replacement plant nearing completion, we are firmly on track to achieve our growth ambitions. Before our CFO provides a detailed financial overview, here is a quick summary on a consolidated basis. We delivered 9% revenue growth in Q3 with a gross profit up 13% with around 150 basis points margin expansion. While top line growth was strong, EBITDA and PAT were pressured by transient costs related to Neogen Ionics ramp-up, elevated operational expenses due to fire incidents and interim toll manufacturing setup and higher finance costs from Dahej plant reconstruction and other investments. These are short-term impacts as we pivot to a future-ready portfolio. Furthermore, eligible costs will be recovered -- at least part of the eligible costs will be recovered through loss on profit insurance claims in the coming quarters, mostly in the next financial year. Regarding the fire incident, we received INR 83.48 crores in insurance claims till nine months FY '26. Accordingly, net claim receivable stands at INR 251.12 crores. We are maintaining a close dialogue with insurers to expedite the final settlement of the remaining balance. Concurrently, construction and replacement plant of Dahej is progressing rapidly with commissioning on track for Q1 FY '27. We are confident this new facility will be fully compliant and optimized for enhanced operational efficiency. Moving to update strategic expansion initiatives on battery materials. Strategic Indo Japan alliance for electrolyte salt production. We have successfully concluded a joint venture with Japan's Morita Investment Limited to produce and sell LiPF6 salt globally. Neogen will hold an 80% majority stake in the new entity, Neogen Morita New Materials Limited, supported by a $20 million investment from our partner for the rest of the stake. The JV integrates 30 years of proven Japanese technology to accelerate international customer approvals and production efficiency. Notably, this establishment is India's only non-FEOC compliant electrolyte salt plant with proven established technology, offering a strategic alternative to Chinese supply chain while advancing Atmanirbhar Bharat through significant import substitution. To give you an update on our Pakhajan greenfield project, our Pakhajan greenfield project is progressing on schedule with commercial production for electrolyte targeted for H1 FY '27 and electrolyte salts for H2 FY '27. This time line is strategically synchronized with India's ACC battery rollout and the surging global demand for non-FEOC compliant supply chain. At the facility, plant equipments have arrived, assembly is currently underway and trial production is expected to commence shortly. We have already achieved a major milestone by securing long-term commercial supply approval from a prominent giga-scale Indian manufacturer following successful PPAP completion. On the international front, we have received provisional approval of our lithium electrolyte salts from multiple global clients now, while final site audits are expected to be concluded in Q1 FY '27. Upon commissioning, Neogen will emerge as highly cost competitive global source for lithium salts and electrolytes backed by proven Japanese technology. We are currently seeing significant tailwinds from the U.S. 45X tax credits, non-FEOC requirements and recent price volatility in China, both of which enhance our appeal as a strategic global partner. We expect several large-scale international customers to finalize their approval process shortly, paving the way for bulk consignments and regular commercial production in H1 FY '27. Looking ahead, we are at a pivotal inflection point as we transition from project execution to the commencement of regular long-term supply agreements. We are confident that Neogen Ionics will become the cornerstone of our future growth, diversifying our revenue streams and enhancing our margin profile. By integrating world-class Japanese technology with our indigenous manufacturing excellence, we are enforcing Neogen's position as a technology-led leader within the global battery chemicals value chain. As electric vehicle and energy storage ecosystems evolve, our readiness to supply material at scale position us to capture substantial market share, delivering long-term sustainable value to our stakeholders. That concludes my opening remarks. I will now turn the call over to our CFO, Mr. Gopikrishnan Sarathy to provide a review of our financial performance for the period. Over to you.

Thank you, Dr. Kanani. Good afternoon, everyone. Welcome to Neogen Chemicals Q3 FY '26 Earnings Call. I will share the financial highlights. Please note all the numbers are on a consolidated basis. Our revenue for Q3 reached INR 220 crores, representing 9% year-on-year growth. This was led by higher volume across both organic and inorganic chemical segments, reflecting a steady market demand. Notably, we maintained resilient operating volumes despite temporary capacity bottleneck at our Dahej facility. These were effectively mitigated through strategic toll manufacturing arrangements. Additionally, Neogen Ionics contributed INR 12 crores to the quarter's revenue as we continue to scale our battery chemicals vertical. Breaking down our performance by segment, organic chemical revenue reached INR 187 crores, a steady 6% increase in year-on-year. Our inorganic chemical segment showed even stronger momentum, delivering INR 33 crores in revenue, a 35% growth compared to the same period last year. EBITDA for this quarter stood at INR 32 crores, demonstrating sequential resilience despite several transitionary headwinds. On a year-on-year basis, our performance was impacted by temporary cost factors, specifically the operational overheads as we scale up at Neogen Ionics and following the Dahej fire incident, the additional interim toll manufacturing expenses. This was incurred mainly to keep the customer supply on during the plant reconstruction. We view these short-term costs essential to protecting our market share and preparing for our future growth. As highlighted by Dr. Kanani, the near-term pressure from these transitionary costs will be balanced by insurance claim recoveries under the loss of profit policy. We reported a profit after tax of INR 4 crores for the quarter. Year-on-year variance is primarily attributable to the increased interest expenses related to our capital expenditure at Dahej, alongside the front-loaded expenditure at Neogen Ionics as it prepares for the large-scale commercial production. Turning to the corporate update, reflecting their deep confidence in the long-term growth trajectory, Board has granted in-principle approval to raise up to INR 150 crores via preferential issue of equity shares to the promoter. This infusion underscores that unwavering commitment to Neogen's expansion and provides financial flexibility to accelerate our growth initiative. This preferential issue is subject to the necessary regulatory approval. That concludes my remarks. I will now request the moderator to open the forum for Q&A. Thank you.

[Operator Instructions] The first question is from Abhijit Akella from KIE. Please go ahead.

Good afternoon, thank you so much for taking my questions. Could we please just start with the update on the gross and net debt balance in December? And also maybe some color on the working capital trends. It does seem like the inventory DSOs and receivable DSOs have increased during the quarter based on the numbers given at the back in the tables. So just what exactly were the reasons for these? And what our outlook is for improvement on that front?

Thank you for your question. Yes, there's an increase, bit in the inventory as well as for -- in terms of receivables. I think the receivables is basically in line with the increase in the business. And overall, what we expect, as you've said that, this year, I mean -- the debtors and creditors as you said will be more or less matching each other. And in terms of inventory, there will be a little bit of increase this year because we are first like -- right now, we are working with multiple -- like multiple external vendors. And we also want to build in a little bit of inventory because we want to stop the external vendors by end of the year. And we want to start internal production in Dahej in the first quarter. So, when we start internal production, in the beginning, the plant is just ramping up. So that is the time where we want to ensure that even if there's a slight delay in production or ramp-up, our customer needs are taken care of. So, we are building up a little bit of the inventory by end of this year so that we can take care of the next quarters. I think as our Dahej plant starts and streamlines in the second half of the year, inventories should -- inventory should come online, and we maintain our target that once we have a full utilization in the next financial year, by end of next financial year, our inventories would be at around 140 to 160 days is what we are targeting on the inventory side. And as you said, debtor, creditors, usually depending on whether more international or more domestic sales, the debtors are usually between 60 to 90 days kind of a range by end of the year, and that's what we would like to target. And generally, debtor and creditor levels, we will try to keep at a similar kind of level.

Yes. So just the gross and debt -- net debt numbers, if we could share at December end?

Maybe Gopi, do you have those numbers directly with you? Okay.

Which numbers you're saying, sir?

… the debt numbers.

Yes, I got those number here. So, the total debt, the gross debt that is sorry -- so net debt that we have today is around INR 680 crores on stand-alone basis and around INR 1,150 crores -- around INR 1,175 crores on a consol basis.

Thank you for that. Second thing, just on the receipt of the money from Morita towards their 20% stake in the JV. So, by when do we expect to get that? And also, this INR 150 crore press allotment to the promoters, by when would that money be expected to come in?

So, there are 4 nonbusiness flows which are like nonoperational flows, which are significant, which are coming. Let me share with you that. On the insurance front, we are very close to getting another INR 60 crores against our like the rebuilding as a second interim payment against the rebuilding against the CapEx loss. So that is expected within this week. It was actually supposed to happen earlier, but there were just some last-time procedural issues between the insurance companies which slight delayed. So, we are expecting around INR 60 crores within this week. And the main stock claim between INR 150 crores to INR 170 crores is expected before end of March. So that's around INR 210 crores, which is going to be expected here. In reference to the INR 20 million, which we are expecting, so we have to basically requested our bankers because the entire project was part of one so now we are taking the bank's permission to separate it out as two different entities. So that is in progress. As soon as that is received, we can complete the rest of the formalities, transfer the asset to the subsidiary, Neogen Morita, and then we can receive the equity from our partner. So that will be towards the end of current quarter and depending on the final timing, maybe either this year, before March or a little bit in April. So, by -- but basically by Q1, we should receive money from there. And finally, the INR 150 crores by the promoter. So, our intention is to basically put the money before end of March. However, there is some regulatory approval which is needed because there were some transfers like -- during trust formation from my father and mother to the respective trust. So, we are just seeking a clarification. So depending on the regulatory approval, either it will happen before March, or it will happen in Q1. But in the worst case, like by Q1 next year, we will have INR 150 crores from the promoter. We would have around INR 200 crores from the partner, as well as you would have at least INR 200-odd crores from insurance. So, we expect around INR 550 crores to come either in this year or in Q1 next year.

Understood. No, that's very helpful color. Just a last couple of ones, if I may, it's not too much. One is on the salt order receipts. So obviously, I think in the presentation and your remarks, you have mentioned that things are moving well, and we are somewhat close to receiving the order. So, if you could please just put some more color around it, exactly what the status of things is and yes, by when we expect to see some meaningful shipments happening there?

So, as we said in our opening remarks that a lot of people have shown very strong interest right -- both in the regulated larger customers as well as nonregulated segment, guys who will buy this one time or two times or something like that. So those sales have already increased, and that's why you can see the like smaller, but like in terms of value-wise, significant increase in terms of our year on -- quarter-on-quarter kind of sales increase on the salt business. However, for me, the biggest important point is that while we have one customer with whom now we have completed majority of the requirements, so they have now started working on the final timelines for the approval. As we had said, we will expect that by Q1, that to happen. But in parallel, 3-4 other customers who, as we have said -- discussed earlier have already started taking samples or some of them have started approving our samples. And because of what is happening in lithium, even our intermediate, like the simple lithium salt, also we have received very strong inquiries. So, we feel, unfortunately, the approval cycle is such that some of these have already approved our samples. They plan to do audits, let's say, in the month of March, April, May and then maybe if we have something to basically do some corrective actions based on that. So, we expect by June, our Dahej site should get audited and approved. And by the time, as you can see, the majority of our capacity will also be coming online. So that once these capacities come online from Q2, Q3, Q4, we can see good salt-related revenues coming from Dahej. And in case of Pakhajan also, we are trying to speed up the salt so that by Q2 of the financial year, by September is when we said -- like we have said second half, but we want at least trial production to start in first half. So that we can start the validation process. And maximum by December, we try to get the Pakhajan site also approved so that we can take the maximum benefit of the 2027 requirement. So, I would say Dahej site should be fully qualified through several customers by June, that id Q1 -- by end of Q1, and sales should start in Q2. And Pakhajan, we are targeting in the second half, but our target would be to complete it by Q3 so that it starts contributing in the sales from Q4 in the next financial year.

And just on the capacity addition slide, the 1,100 tons to be commissioned at Dahej, the timeline is now mentioned in March '26. I believe last quarter, it was December '25. So, any particular reasons for maybe slip of 3 months?

So basically, our team had a training session with Morita team. So, our team went to Morita's plant team and had a hands-on training session. And during that, they picked up some of the improvements, which we could further do. So, we are basically implementing that. So, majority of it is almost ready, but we just wanted -- and we also had some -- one of the other plants we also had some slight design change, which we carried out in the additive production part of that. So, I think just that some changes in that design for further improvements that we were implementing. So, it went March. Anyway, still, we have not received the approval. So, we felt it is good to get them done now rather than start and then again stop. So that's the reason why we decided to complete them now and complete the expansion by March.

Just one last thing from my side. One, is there were some news articles recently regarding the fact that one of the largest potential customers of yours who could set up battery capacities in India has kind of put their plans on the back burner because of lack of Chinese know-how or technology that they could source. So, any thoughts on that? And the other thing, just to add in quickly, bromine prices have been very strong in recent times. Has that had any impact on our business in terms of realizations? And is it possible to just break out the volume versus price for this quarter for organic and inorganic? Thank you so much.

Sure. So first, about like maybe customers, like specific customer, which you mentioned. See, we have not received any such communication from the customer. And we basically continue to discuss with the customer how we can meet their demands and those discussions continue. On the second side -- on the second point about bromine being strong. So majority of this has been -- see, again, it's not a very big difference. But I know, for example, in case of lithium, in case of organolithium, we have a volume -- slight volume increase. And in case of organic derivatives, it's very difficult to give you volume because the product mix changes quite a bit. So overall, there is a volume growth, yes. But it's because of the product mix, really that volume growth doesn't tell you too much. But specifically with regards to bromine prices remaining, it's not changed too much of our business because usually, majority of our bromine is contracted for a longer period of time. And with our customers also, we have contracts. So basically, from one contract to another, it kind of gets material. So, unless you have like a 2x, 3x increase in bromine, we really don't see a big impact related to that. Thank you.

Thank you. The next question is from the line of Arun Prasath from Avendus Spark. Please go ahead.

Good afternoon. Dr. Harin, thanks for the opportunity. My first question is, I'm just reflecting to our commentary in the previous call that we said that some of the first stage of approvals for the salt, your customers will be visiting your facility in February -- I mean, Jan, Feb or online and then approve -- and then the final approval. Now we are once again talking about the timelines three to four months down the line. So just understand why this repeated delay in the approvals. I understand they have a bit more time to comply with the regulatory requirements. But what is actually causing this continuous deferment of the approval timeline? That's my first question.

Arun... Sure. Yes. So, Arun, basically, already the -- we had said by Jan, Feb, we will be ready with all the modifications which they need, post which they will do the online or visit. So basically, that is today the status. So, we are today in the middle of Feb, and we are right now completing. And what -- and we have basically intimated that, yes, we have carried out more of all the changes. So, we keep discussing with them like every alternate week. So, they said, okay, we will let you know like what is going to be our action plan going forward. So, whether they will come within one, two weeks, whether they will come in three weeks, I don't know. But we were supposed to be ready by Jan and Feb, which is what we are ready. And now they can come any time. And what I told by June is not only the existing customer, but even the other customers also who are like now approved, even they are likely to complete their -- so some of them started late, right? And even these guys now are saying, okay, I will come for an audit in April or March or something. So by June, what we are expecting is all the -- even the new customers also should [ complete ].

And then for these new customers also, just a final leg of the audit or it is just a beginning.

No, no final leg. Of course, they can come and say, hey, I want a plant which is similar to your Pakhajan plant. So that's a call which they will take once they finally come and do. I can't predict that, right? But yes, I mean that would be the audit. If they come, they are satisfied, then we can start. And then some of them say, oh, Pakhajan is going to be a much better, much bigger plant because it's designed from scratch. Maybe we'll just wait 6 months and take it from Pakhajan. So that can happen. But many of them right now are showing urgency to buy now. So we hope that they will start buying from Dahej and then move over to Pakhajan afterwards. So, after three or four, maybe one or two will go this way. The other may say, okay, I'll wait for Pakhajan and then start. Because anyway, the capacity that we have in Dahej also is relatively limited.

Nice, nice. And Dr. Harin we also.

[Operator Instructions]

Sure, sure. I'll do that. Dr. Harin, We also heard that a few of your U.S. customers are going through some restructuring where the OEMs earlier had entered into the JV and later on, they are backing out. Does it concern you that at this stage, this kind of restructuring is happening, which can potentially again delay the approvals or something like that?

I think maybe you are talking of GM and Ford doing some JV changes, et cetera. We are not affected by any of those...

Okay. And does it mean that the OEM [indiscernible] going forward? So, you will have two layers of approval, one from … Hello.

Yes, can you go ahead, yes sorry.

So does it also reduce your potential clients from, say, earlier, you might have a mix of clients between OEMs and battery manufacturers. And now potentially OEMs backing away from the directly being a stakeholder in the manufacturing. So, we will be having a reduced pool of such customers? Is it the right way to look at.

No. So Arun, basically, you have to think that majority of the OEMs or the JVs are basically OEM and cell producers. So basically, what happens is when you're thinking of electrolyte intermediate, which is LiPF6 the two main vendors are cell producer and the electrolyte maker. So, these are the two people who have to approve you, okay? And the cell -- and of course, in some cases, the cell producer also will be an OEM. And as I explained that as compared to before where we had, okay, maybe one company, right, who was -- who had contracted with Neogen. in the future now with -- I mean, not in the future, with the Morita JV that we have done, there are several more who are interested. So actually, our market in a way with the JV has expanded and more customers are available to us as compared to earlier.

Okay. Understood, sir. Second, you spoke about various fundraises, which is going to be happen across in the next six months, roughly INR 500 crores to INR 600 crores. This will be largely utilized for the working capital requirements as we scale up the business because most of your CapEx is anyway you have already tied up. So, is it the case? Or we will be again going for the separate working capital loan? How should we look at this?

So whatever money we are raising, right? So, part of it will -- so some of it would, of course, be like, for example, the JV money which is going to come, that will be partly used for completing the capital projects, right? Because there also there's some contribution still needed like as you see our total debt, as I explained earlier, is not -- we do not utilize all the term loans fully. So, there's some contribution required from us. So partly, it will be for that contribution, partly will be for, of course, working capital reduction. And it's all not fundraised. That's the money, which is going to come in, whether it is from insurance. The second is from the JV and the third is from what we currently propose promoter infusion.

And our first interest payment that is a moratorium that still we are a few quarters away, right? And for a principal repayment?

Yes, yes. So yes. So, for whatever loans we have in Dahej, like, let's say, if we are completing in Q1, so then the first principal repayment will be Q1 of FY '28. And like in case of Pakhajan, right, it will be like we have right now said H1. So for example, if we are saying H1 FY '27 is when it -- when we -- H1 FY '27 when we start, then H1 '28 would be the equivalent first repayment after that. So basically, 1 year from the start of the plant from the SCOD.

All right sir. Thank you very much, all the best.

Thank you.

Thank you. The next question is from the line of Rohit Nagraj from 360 One Capital. Please go ahead.

Thank you for the opportunity. Sir, first question is in terms of our guidance for FY '27 and beyond. So, we had indicated that we will be having about INR 400 crores to INR 500 crores from the battery chemicals part of the business. However, there has been a slight delay in terms of commissioning of the project in terms of approvals. So, do we stand with the same guidance or we would like to revise it for FY '27 and maybe that will fall back even on FY '28? Thank you.

No, our guidance remains the same because the guidance -- the expectation was that our Dahej site will be fully be ready by June. And our expectation that we will start having sales of this from basically Q1 and majorly from Q2 onwards. So that remains same. So therefore, like our guidance doesn't change. We have right now not considered the Q4 sales from Pakhajan. So that we have basically kept as a backup, like in case if there's some further delay or -- so that would be like an additional sales which will happen. Just our Dahej sales and whatever expected electrolyte demand should be able to allow us to reach the original target. And whatever we do Q4, either in case if there is any slip up from Dahej, that will be the Q4 salt sales will be contributor of that or that will be then an additional one, which will be over and above what we have [indiscernible].

Sure. That's helpful. And on the Neogen Ionics, the Morita JV, so how this entire deal has been structured? So effectively valuing the JV at $100 million. So what is the current infusion by Neogen in terms of equity as well as debt and there will be another $20 million, which will come from Morita? Given that we have INR 1,500 crores of total investment planned for this, how the equity participation and the debt will look like when the entire investment has been made?

So basically, we are still discussing on the -- with the banks on -- so one thing which is very clear is 80% is going to be -- 80% is going to be Neogen's portion, 20% is going to be Morita's portion. We are still discussing with the banks on like exactly the debt equity ratio, which we have, once we do the separation, we are hoping they will maintain at the same 75% level. So depending on that, like we will basically -- whatever is the balance, which is not contributed by the bank will be in the form of the equity. Some of this has already been contributed in the form of equity. So I think it's better that I'll be able to give a better clarity on this once we have the final clarification from the banks, once the loans are separated and we are able to take it separately.

Right, right. Just one clarification. So effectively, next year, when Dahej starts generating revenues, there will be a 20% [ minority ] interest for the stake -- equity stake of Morita. Is that right understanding?

No, not in Dahej. No. Dahej, there is no -- Dahej is 100% Neogen. Only the Pakhajan site is going to be through -- Pakhajan site is going to be through Morita.

Okay. And can you just split up in terms of Pakhajan site, what could be the potential revenues in FY '27 and maybe longer term in FY '29?

So again, in Pakhajan, the salt business will be -- if the question is from that point of view. So the Pakhajan site is going to be for Morita. Though only the salt part will be Morita. And Dahej -- and the electrolyte will continue to remain with NIL. So in FY '27, as I explained earlier, that currently we have not considered significant sales because it will be in Q4, we have kept as a bonus. So majority of what guidance we have given will be largely NIL sales. Maybe some of that would be routed through NML because ultimately, the -- for example, the salt in the international business is going to be sold by the JV. But like that -- from a revenue point of view, I think majority of this would be NIL for FY '27. If you talk of FY '29, see, FY '29 is a bit tricky because it depends on how much of the salt we are consuming internally and how much of the salt we are selling in the international market. Now that depends on how the international market develops beyond the initial years and like the desire to have a China-free supply chain, et cetera. And the second is how the Indian customers choose whether they want local supply of LiPF6 or they want like lower cost or like -- so it depends on that. So actually, if you see if we have to take care of our existing international customer demand as well as Neogen's own internal consumption, then basically, we would need more capacity for the salt because the current capacity of the salt is not going to be enough. We'll have to add capacity. But I think that those clarity -- and that's a decision we will take somewhere towards end of FY '27 or FY '28 to take care of the FY '29 demand. So because India electrolyte demand is still developing in FY '27 and '28, the existing salt -- this capacity will be sufficient to take care of both. But by FY '29, if we have to take care of both international as well as local consumption, then we need to add more capacity. So I think it's a little bit difficult for me to tell you in FY '29, how the breakup will be.

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

Good afternoon team. Thank you so much for the opportunity. Sir, one question on the U.S. side. If Chinese origin salts get restricted from, let's say, 2027, so is it possible that U.S. customers think about prebuying and storing inventory in 2026 and then start using it in 2027?

So Meet, there are two things, right? I mean see, the batteries which are made in '27 cannot be used in Chinese. So it's not about buying. It's about making batteries which are not containing the material. So it doesn't help them to store and use that. it's not like a custom duty, which is going to come up, right? So it's a different thing. … so it's on the usage. So therefore, that has not happened. The second thing is the way things stand today right now with the Chinese prices, sometimes China is even more expensive. Third point is even if you wanted to store and use, usually the shelf life is not more than six months even at the electrolyte salt stage. So I don't think they can store too much of it.

Got it, got it. And sir, also, when customer talk about reducing China dependence, so how does it actually play out in practice, let's say, do they typically start a phase dual sourcing ramp-up or ahead of the time, let's say, they will start from Q3 -- Q2, Q3 FY '27 onwards? Or when we can see the major ramp-up from U.S. customers? Your idea.

So there are two types of customers, right? There are some customers who are cautious who started working with us two years before and like preparing for it. There are a few customers who are basically saying that, yes, they would like to have a ramp-up. So they will have Q2 some quantity coming from Neogen, then Q3, then Q4 and then maybe next year, further quantity. So there are some customers like that. There are some which are very price sensitive. So of course, now last two months, the things change. But till that time, they said till Q4, we will audit you, we will validate you, everything we will keep ready and Q4 is when we make the switch, right? Because that is what is regulatory driven. So it's completely -- so there was one customer who was more regulatory driven. There were some customers who wanted to be cautious, wanted to gradually scale up. Other customers say the approval is very complicated. So first do Dahej, then again do Pakhajan. So I will start only directly from Pakhajan. So it's kind of like a mix of those. And some of these also keep changing because they had some different response when the Chinese prices were very low three months ago. Now they have another response where they said, okay, before I said I will buy only from Pakhajan. But now, okay, maybe I can consider Dahej also. So let me start approving Dahej. So all this is like changing customer to customer and again, depending on the market situation.

Got it, got it sir, very helpful. And sir, last one, based on [indiscernible] ongoing negotiation with customers and ecosystem players in India, any rough indication actual -- what can be the actual [indiscernible] capacity operational by, let's say, end of 2026 and how that number look up to you in 2027?

You mean calendar year '26 and '27?

Yes, right.

Sorry, what was the question again? You said something and the voice was not very clear.

Yes. I asked that based on negotiation with customers and ecosystem player in India for the battery cell manufacturing. So any rough indication how much actual cell capacity can come online by, let's say, end of calendar year 2026? And how does that number look in 2027?

You're saying cell manufacturing capacity, right?

Right, right, right, right. Battery cell right.

Okay. Battery cell [indiscernible]. So battery cell, if you see right now, what we have to go by whatever is public information available. So Ola has announced to go from 1.5 giga to 5 giga then you have a 3 giga, which is starting of Exide and 4 giga which is starting -- 4 giga, which is starting from [ Waaree ] Energy. So this if you look at that, so between them, technically, you should be having around 12 gigawatt hour of production, which will be coming online in the current year, right? And by end of this year, you should have a 12 giga -- let's say, if we say 12 giga and if the ramp-up happens okay, every month, for example, 1 giga kind of a consumption should be reached by, let's say, end of December '26, right? So the actual consumption may be somewhere between -- actual production may be like 3 giga or 5 giga or 6 giga depending on how it ramps up. But when you enter 2027, you enter with a 12 giga of already installed capacity. And to this, you may have to add like then whatever Reliance has announced and Amar Raja has announced and Tata has announced. So if you think of their original starting capacities also, what they wanted to do. So Reliance's intention was to reach up to 40 giga in one year from start. If you look at Amar Raja, I think the starting capacity was, I think, around 2.5 giga or 5 giga and Tata has not announced the starting capacity. So if you add all of that, you should be, let's say, at least about 25 giga, 30 giga by end of 2027 as we enter 2028. … and of course, by that time you might -- and sorry, and sorry, you also need to add that by the time if Ola further increases the capacity or [ Waaree ] intention to increase capacity from 4 to 20 or Amar Raja -- or Exide's plan to increase from 3 giga and beyond. So sorry, I think by end of '27, we should be -- if everything goes well, by end of '27, we should be 40 giga, 50 giga plus entering into 2028. Based on whatever customers have shared till now.

Got it. And sir, one question on, let's say, I was talking with many players, everyone is in a view that everyone will prefer to have two suppliers, right, one primary and another maybe secondary also. Let's say, in India, let's say, if [ Waaree ] wants to have two supplier. So what is the [indiscernible] or maybe the USP of Neogen that it can be a primary supplier as compared to our competitor? So just want to understand what are the qualitative terms that Neogen pitch to [indiscernible] or other guys also that they prefer to have Neogen as a primary supplier?

So I think one is we are already ready. So we already have three, four years' experience to make it in the lab and supply successfully and last one or two years even from a commercial plant in Dahej. Second is we have Mitsubishi collaboration. So like these are some of -- Mitsubishi is known to be the best electrolyte producer in terms of quality. So then you can be 100% be sure about the quality of the supply. And the third is we have the backward integration. So I think -- and the fourth is we have actually capacity, because one of the things is we -- you need to have the capacity. Right now, we'll have a 30 gigawatt hour worth of capacity, which will be ready, let's say, so that nobody has to worry about whether Neogen can supply enough quantity or not. So I think these three, four things make Neogen in a positive note. And just for your reference, not everybody in electrolyte has always two suppliers. I know historically, many companies were one single supplier. If they feel the risk, they will ask the same supplier to keep multiple plants, but sometimes they can have one single supplier exclusively. So two suppliers is not always the necessity in case of electrolyte.

Sorry to interrupt. May we request Mr. Meet to please rejoin the queue. We have participants waiting for the turn. [Operator Instructions] The next question is from the line of Nilesh Ghuge from HDFC Securities.

Hi, good afternoon Harin. Harin, my question is on our CDMO and Advanced Intermediate business. So how much was the contribution from these two business verticals in nine months FY '26? And how is the progress and the inquiries in CDMO and Advanced Intermediate business? Any guidance on that for FY '27?

So Nilesh, thank you so much for asking me also this question other than battery. So I appreciate that. No, I think CDMO and Advanced Intermediates. We are slightly better as compared to last year. And like actually, for the first six months -- nine months, we were actually ahead as compared to last year. But whatever POs which we had with our customers, we completed. And like now some of the new revised repeat POs, people are waiting, especially on the CDMO side for the new site to come online. So already customers -- we have shared our progress with the customers. And maybe by end of this month or from March onwards, customers will start visiting and we expect. So we expect again some repeat orders or like new projects which are kind of on hold, we can start achieving orders against that. But overall, I think we will expect that as we go -- let's say, this year, if you look at the run rate, we are at around INR 800 crores plus kind of revenue. And as we grow from INR 800 crores plus to INR 950 crores or so, we feel CDMO will be one of the significant areas. Contract manufacturing -- sorry, CDMO and advanced intermediate will be a significant area where we'll have growth. If I were to just look at nine month numbers, they are -- basically, it has been same as compared to the previous nine months as against -- at a CDMO and contract manufacturing -- Advanced Intermediate and CDMO level.

Despite our Dahej facility is not there, right?

Yes, right. So some of like -- there was one semiconductor customer that required a specialized equipment. So they had enough inventory, so we had to skip. We couldn't do this year. So despite Dahej not being there, we were able to maintain the same level. But most of these products, we were able to do from Mahape and Karakhadi, some we couldn't do. So we couldn't register the growth there, but we were able to maintain.

And just secondly, on this toll manufacturing arrangement that we made because of non-ability of the Dahej facility. So what percentage of revenue is currently coming from that? And when we are ready with our Dahej facility? So do you expect some margin expansion because you are shifting from tolling model to in-house production?

Yes. So currently, some of the higher costs that you are seeing will reduce, right, as we move from -- so like your other expenses will change a bit where whatever is the tolling related expenses there will kind of go away. Of course, some of it will come in the form of additional power and fuel kind of expense at our Dahej plant. But net of what we feel is you should have improvement in our cost structure.

Just how much business currently we are doing through our tolling model that we can shift to our in-house production?

So basically, Nilesh, it's very difficult for me to say because in some cases, I'm just doing one stage there. In some cases, like -- so it's not that, okay, completely, it has been done, right? So -- but basically, we are using it on a need basis, right? And you can basically say that we are able to maintain our current revenues because of several sites. We are not using just one site. There are several sites which we are using in different ways. So just like most of it, whatever we want to use it will be done by March. And April onwards, our Dahej plant will start getting available partially. Maybe by end of June, we feel it will be fully available. So with the inventories that will build up and the first quarter, the way once the production starts, I think we should be okay. And then, let's say, Q2 onwards, you should not see -- we'll have a stable production. So one, as we try to get like, let's say, INR 950 crores, so our quarterly run rate also improves to like INR 225 crores to INR 250 crores kind of range in the next financial year as well as some of the tolling-related expenses will go down. And also our insurance premium also it's -- the first year is the toughest. So that is from July to July. So once that July gets over. So from next year, like maybe Q2 or Q3 onwards, you have Dahej, which is fully stabilized. You have like at least the worst of the insurance is over, right? And the tolling arrangement cost has also gone. And hopefully, by that time, Dahej also will be contributing from Q2, Q3 onwards significantly on the battery material side. So that's when you'll have a good improvement in our performance.

The next question is from the line of Pratham Kankariya from Quantum Asset Management.

I had one question on the inorganic segment. So if I just exclude the Neogen Ionics revenue, the trend has been on the downward side for the inorganic chemical segment. So if you can just present your views, what is the cause for this? Is this solely attributed to the downward lithium prices, but now that also has spiked up. So just wanted to get your view.

Yes. So it's solely attributed to the downward lithium side and the spike impact we will see maybe a little bit in Q4, but more in the next year if the spike is maintained. So because till like the lithium prices started increasing by November, December, I mean, almost towards December and in January, you saw a majority of the increase to happen. So the material from there will hit me by March or April, right? So before that, you'll not see a big spike.

Okay. Sure. But sir, still revenue has come on the lower side, solely attributed to the price, right?

Yes. Yes.

The next question is from the line of Jason Soans from IDBI Capital.

Sir, now probably, given that Pakhajan will ramp up only in H2 FY '27, as you mentioned, now just accounting for that, sir, would be able to clock in INR 400 crores, INR 500 crores from battery chemicals in '27, accounting for that? And any approximate revenue estimation for '28 as well?

See, basically, we have considered very limited from the salt sales of Pakhajan, right, because we said it's in H2. So electrolyte will be stable in H1. And as I answered earlier that increase in capacity of Ola, Exide like getting stable, then we said even [ Waaree ] starting. So maybe we can expect some electrolyte like revenues coming in the second half from these people ramping their operations up. So that is what something which we have considered. And as I explained that we said, okay, the salt in Pakhajan will come in H2. So technically, we have not considered any sales, although we are on track that at least in Q4, we can get some sales. But I have right now kept it as a backup that in case if -- because this year, from the time we got listed first time like whatever revenue projections we had given, we had to make a significant correction. So I'm a little bit more careful. So what we have done is that Q4, whatever Pakhajan salt sales, we have not considered. So in case if Dahej is slightly delayed or electrolyte is not delayed, the Q4 salt sales will allow me to basically make up for that. So that we don't go wrong on our guidance in the next financial year. So that's kind of on that. And I think FY '28, it's too early for me to give a number. But one thing which looks very strong to me is that our salt capacity should be utilized at 80% or more because that is something which will be in a very strong demand. And of course, if I sell it in the form of electrolyte, it will be higher. So if I look at today's market price and if you think of 5,500 tons of total salt capacity and if you think of an 80% utilization even on that, right, so that's around 4,400 at $20-plus kind of a dollar price, right, salt and [indiscernible] is even higher. So on an average price above $20 it's very -- like if this assumption is valid, then you would have a INR 1,000 crore plus kind of revenue. And of course, whatever I sell in the form of electrolyte, there's further value addition. So therefore, it should ideally be beyond INR 1,000 crores, like it should be -- but how much beyond is a little bit before -- a little bit difficult for me to tell you now.

Sure, sure. But at least the initial estimate, you said INR 400 crores, INR 500 crores. We are sticking to that for '27 for battery chemicals.

Yes, yes, there's no change in that. There's no change in that.

Yes, yes, because you said you're right, because electrolyte at least will be stable and at least we'll be able to garner some volumes from the electrolyte sales.

Yes. And we do see electrolyte sales, unfortunately, I'm dependent upon how my customers start their plant. There's not something which I can do beyond. So that's why I have kept the Pakhajan Q4 as a backup where anything we do overperformance there can be a backup in case India electrolyte demand doesn't shape up as much or in the beginning, approvals in Dahej are delayed. So we can kind of make up for that.

Sure, sure, sir. And sir, just if you could tell me, I mean, 30,000 is what you are clocking in at Pakhajan, which will come on [ stream ], and I'm only talking in terms of electrolytes. So by H1, how much will be online, sir, from the 30,000 MT?

So by end of H1, the way the plant is because we are doing a joint trial with Mitsubishi. So our idea is that the entire 30,000 -- so there are few client that all the [indiscernible] will be tested and we will be ready for the 30,000 tons kind of annual capacity, which is monthly like around 2,500 tons. But of course, we will take care of the operational side that if we don't see the -- and we don't see in the first year business visibility. So in terms of banging our people or some other expenses, we will kind of do it gradually. But the plant will be ready for the entire 30,000 ton.

Okay. Sure, sir. And sir, just in terms of revenue growth from the base business, which gets talked about less right now nowadays. So just to understand in '27 and '28, '26 was subdued, I understand the fire thing and everything is there. But with '27, can we expect double-digit revenue growth, especially with the Dahej plant coming on track post the fire? So just wanted to know for organic, inorganic, how do you expect the base business? Can we expect a double-digit revenue growth there?

Yes.

Okay. Sure. And just lastly, sir, I just wanted to understand in terms of this QIP, INR 150 crores, as you mentioned, just a little bit unclear on this. So the INR 150 crores is basically -- is it the promoter group is going to increase the stake? Or is it just a regular QIP, which is done? Just wanted some clarity on that.

No. So this is a pref allotment. So basically, we felt that, okay, Neogen could help with the equity. We know the insurance money is also coming, the equity is also coming. But as I said, there's a good salt demand also. So we felt that in case suppose if we have to do a little bit more on the salt or additive or as well as in the interim, if we had that equity, then that would really help Neogen to seamlessly continue and like make sure that all our execution in 2026 happen seamlessly. And that was the whole idea. So we, as a promoter group decided to invest INR 150 crores. But as I said, there's just one clarification we need to take because my father and mother had formed a trust, which was a family trust and SEBI already gives a permission that this is like, it's like a promoter and promoter group. But just because of that, there has to be some cooling off period. So whether that is needed or not. So we are just taking some regulatory guidance on that. But otherwise, the idea was to bring in INR 150 crores in the company before March. So that will also reduce the interest burden and also give us a lot of flexibility on things that we want to do.

But that comes in from the promoter group. Is that right? … so our stake, which is right now at 51.22%, that increases basically in the company.

That's right. Yes, that's right.

That's right. Okay. That's great. That's great, sir. And just one last thing. This insurance claim money, I understand you said Morita is fine. That will take some time, INR 150 crores from the promoter is in Q1 FY '27. So this insurance claim, this INR 200 crores for the stock claim, by when can we get this?

So INR 60 crores is expected maybe today or tomorrow, like within the week. Because the insurance company had already taken all the documents from us for release of the INR 60 crores, we had the agreement. This is the second interim against rebuilding the plant, right? So we have to stock and rebuilding the plant. So again, rebuilding the plant, they are ready to issue INR 60 crores at any given point of time. There are five insurance companies. So they all have to pull into the lead insurer and the lead insurer transfers the money to us. So that process is ongoing, but that should happen any time. Then the stock claim was also like -- in case of the stock claim, the insurance company had appointed like a third-party big four kind of auditor, right? So that is about -- so their process is almost complete. They should finalize the report. Based on that, surveyor should finalize the report. And like based on that, the money should ideally be released before March. But maybe it can slip up. So that's why I said March or April. But we are working very strongly now with the insurance that, look, we have built the whole plant. In fact, if everything happens, we can even ask for the third interim against because this should still be INR 140 crores. So we can still ask for one more interim release before March, but at least these are the two which I'm currently taking. And then, of course, in the next year, as I explained earlier that the rebuilding cost is going to be more than the loss, right? So the balance material, which is left against the rebuilding plant as well as the higher rebuilding costs. So that has to be assessed and that has to be released and the loss on profit has to be assessed. So that is something, in my view, the first part, the balance on the stock, I'm sorry, the balance on the capital rebuild should happen before September and maybe the loss on profit should happen somewhere between September to December. So in a way, everything from the insurance ultimately, hopefully should be achieved by December -- September to December next year.

Ladies and gentlemen, this will be the last question for today, which is from the line of Pratham Kankariya from Quantum Asset Management.

Just a small thing. What would be the ceiling on capacity utilization on the salt and electrolytes once we fully ramp up?

You mean utilization-wise. Yes, so … normally salt would be at 80%. It's like a chemical plant. In case of electrolyte, it is a formulation plant, so you can go up to 100%.

Thank you. Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference over to management for closing comments.

Thank you all for your time and participation today. We trust we have addressed your queries. Should you have any further questions or require additional clarification, please reach out to our Investor Relations team. We appreciate your continued support and look forward to updating you on our progress again next quarter. Thank you once again. Have a great day ahead.

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