Tatva Chintan Pharma Chem Limited ($TATVA)

Ladies and gentlemen, good day, and welcome to the Tatva Chintan Pharma Chem Limited Q4 FY '26 Earnings Conference Call, hosted by ICICI Securities. [Operator Instructions] Please note that this conference has been recorded. I now hand the conference over to Mr. Sanjesh Jain from ICICI Securities. Thank you, and over to you, sir.

Thanks, [indiscernible]. Good evening, everyone. Thank you joining -- thank you for joining on Tatva Chintan Pharma Chem Limited Q4 FY '26 Results Conference Call. We have Tatva Chintan management on call represented by Mr. Chintan Shah, Managing Director; Mr. Ajesh Pillai, Chief Financial Officer. I would like to invite Ajesh to initiate with opening remarks, post which we will have a Q&A session. Over to you, sir.

Thank you, Sanjeshji. Good evening, everyone, and welcome to Q4 FY '26 Earnings Call of Tatva Chintan Pharma Chem Limited. Our financial results for the quarter have already been submitted to the stock exchanges and also available on the company website. I will take you through the key financial highlights and provide you a brief update on the performance of our major business segments during the quarter. For Q4 FY '26, the company reported operating revenue of INR 1,341 million, reflecting a strong growth of 24% year-on-year and 2% quarter-on-quarter. EBITDA for the quarter stood at INR 281 million, marking a significant increase of 214% compared to the same period last year and a 10% improvement sequentially. This growth was primarily supported by better product mix and improved operating leverage. Now turning to segment-wise performance. First is a transfer catalyst. It recorded revenue of INR 311 million, registering an 11% sequential growth through revenue -- though the revenue was lower by 20% on a year-on-year basis. Electrolyte also delivered a strong performance with revenue of INR 131 million reflecting an exceptional growth of 865% quarter-on-quarter and 1,378% year-on-year. Pharma and agro intermediates and Specialty Chemicals, generated revenue of INR 358 million, representing a 10% increase year-on-year and despite a 24% decline sequentially. Structure directing agents reported revenue of INR 525 million, witnessing a marginal decline of 2% quarter-on-quarter, while achieving our robust 52% growth compared to the corresponding quarter last year. With this, I conclude the overview of performance for the quarter. Once again, our Managing Director, Mr. Chintan Shah has interested me with the opportunity to deliver this address on his behalf. And I sincerely value the confidence placed in me. With that, let me take you through his perspective on the year gone by and the progress achieved across the business and the direction we envisage going forward. First and foremost, I would utilize this opportunity to congratulate all the stakeholders on achieving revenue in excess of INR 500 crores in recently concluded financial year. This year also marks an important milestone as your company completes 30 years of operation, a journey defined by committed innovations. As we conclude the financial year, we are pleased to note that [indiscernible] is at an inflection point where multiple initiatives across our business segments are beginning to converge, reflecting the early stages of a more structured growth. Over the last couple of quarters, we have been observing a gradual pickup in momentum in business activity across the segments. Order flows are becoming relatively more stable, there is a consistent gradual uptick in demand. Customer interactions are increasingly moving beyond short-term procurement towards broader business discussions and future requirements. The overall engagement environment across key end use segments has improved significantly compared to what we experienced over the last couple of years. This is helping in better planning, improved continuity in business discussions and more structured commercial engagement across all the segments. At an operational level, our efforts during the year remained centered around improving execution across businesses, stabilizing newly commercialized products and preparing the organization for higher scale across select segments. Also, we remain focused on making the new production block at the hit site operational. The new block is now fully operational on commercial scale. Alongside this, we continue to work on process optimization and on strengthening the manufacturing readiness for upcoming opportunities. As we move into the new financial year, our focus will increasingly beyond translating these efforts into more consistent commercial outcomes while ensuring the organization remains adequately prepared to support future growth across multiple business verticals. We believe the work carried out over the last few has created a stronger operational foundation for the company as several opportunities gradually move towards higher scale and regular business engagement. Let me now take you through the segment-wise developments. Phase Transfer Catalysts. Phase Transfer Catalysts continue to deliver steady organic growth in line with historical trends. Over a period of time, industries across the chemical sector are increasingly recognizing the process and efficiency advantage offered by PTC chemistry in various applications. We believe this gradual widening of acceptance across industries will continue to support the long-term organic growth of this segment, structured directing agents. In structured directing agents, the demand are consistently growing. And as we come here to the 2027 implementation of shifter emission norms via implementation of Euro 7, the demand will continue to gradually rise. The first implementation of these norms is beginning with Europe and would be followed by other geographies gradually. We are also witnessing improved customer engagement across key geographies with business discussions becoming more structured. Given the specialized nature of this chemistry and our established position in the segment. We continue to remain positive on the long-term prospects of the SBA business and expect it to remain an important contributor to the company over the coming years. Electrolyte Salts and Solutions. The Electrolyte Salts segment continued to scale gradually supported by increasing consumption in energy storage applications. The customer utilizing our electrolytes for energy service devices has shown a steady ramp-up in volumes, and we expect this trajectory to strongly strengthen during the current year. In addition, work with the customer engaged in hybrid battery application is also progressing well. We shall see a beginning of commercial business for this application in Q3 of this current year. With gradual scale up across customers, this segment is steadily strengthening its strategic relevance within our overall portfolio. The current year will reflect electrolyte segment as a relevant contributor to our overall revenue. Pharma agro and specialty chemicals, that is [indiscernible], commercial traction has improved meaningfully. The agro intermediates commercialized earlier are witnessing sustained demand and are expected to see healthy uptake during the year. On the pharma side, all the validations of our products are successfully completed and commercialization will begin from current year. We have one product getting into commercialization and the other 2 products will get into commercial production from Q3. These products would be produced and delivered on a campaign basis. Overall, this segment continues to reflect the benefits of our focus on catalytic technologies and complex finish development. Semiconductor chemicals. In the semiconductor chemicals segment, we are pleased to report a significant milestone. Plan scale trials for our first product having completed successfully and its respect would happen in the current quarter. This is a big continent booster for our team, and this success brings in new deal to putting more efforts to make this as one of our most important product segments over few years. This marks an important step forward in our long-term semiconductor road map. And while the scale-up will remain gradual, it strengthens our continent in the emerging opportunity within this domain. As we discussed earlier, our focus on building infrastructure for future growth remains a key priority. With respect to the new greenfield project at [indiscernible], the proprietary work has progressed further, and we expect to commence the groundbreaking during this quarter. As the project engineering and planning were refined further, we identified opportunities to enhance long-term scalability and operational efficiency of this facility. We believe this additional effort at the design stage will strengthen the long-term value creation potential of this asset. This facility will be a key enabler of products with strong domestic demand and will significantly enhance our manufacturing flexibility as we move towards commercialization over the next 18 months. The current ongoing geoprartical contracts definitely of challenges. This leading to rising cost of fuel, packing material. And of course, the biggest challenge is the steep increase in the prices of key raw materials which has accrued on and related to ammonia. The freight rates are also increasing. The good part is that so far, availability of raw materials continue almost smoothly except for some delays in certain cases. We have worked closely with each customer, and most of our major customers has shared the impact of rising costs. We appreciate the support of each customer in their understanding and support in this difficult time. With the help, we have been able to minimize the impact of increasing costs . Of course, as a part of our commitment, we have honored each and every open order for all the customers. The increased price have gradually been implemented on new orders. With multiple developments getting into commercial phase, we foresee the momentum of growth to continue for next 2 years. Once the new greenfield projects at Jolva goes online, it will bring in the next phase of growth from financial year '28, '29. We will launch 2 agro intermediates with significant revenue potential. We have successfully piloted the innovative technology by which we will produce these products at the new plant. We face the new launches, the Jolva project will also have capacity available for us to grow within our existing products. As we reflect on the journey of the company over the last 3 decades, it is evident that the foundation of [indiscernible] has been built on consistent investment in technical capability, innovative technology, customer-centric approach and disciplined execution. Today, we are seeing the results of the sustained efforts gradually coming together across the business setting the stage for a more integrated and scalable growth platform. We remain committed to maintaining this disciplined approach as we move forward with a continued emphasis on operational excellence, technology-led differentiation and long-term value creation for all stakeholders. We would like to sincerely thank our customers business partners, shareholders and employees for their continued trust and support over the years. With that, I now request the moderator to open the floor for question-and-answer session.

[Operator Instructions] We have the first question from the line of Sudhan Singh from Green Portfolio Private Limited.

Sir, to begin with, how should we think about the overall revenue growth outlook for FY '27 and overall blended EBITDA margin like as in Q4, we have, I think, then achieved 21% EBITDA margin. So what is the overall outlook for FY '27?

Yes. So the -- actually, this has -- the guidance has already been given in our previous calls. We have already maintained that we will be growing the revenue by around and EBITDA should be in the range of somewhere around 20% to 22% on a very realistic basis. So we will lead to that.

Okay. Okay. And like due to geopolitical issues, like we are not decreasing our guidance, like EBITDA guidance?

Not actually because -- so the crisis are going up due to the geopolitical situation and other things. But gradually, it is being absorbed by our customers. Our customers are operating although they are not being as of at 100% level, but probably, we believe that it will gradually be absorbed and we don't intend to change anything on our guidance in that matter.

Sir, at the start of the call, like you told Electrolyte Salt segment will be a key contributor this time in FY '27 right? What will be the percentage, like if you can quantify it?

Around 8% to 10% that we had already informed in last earning call, and we are still going by [indiscernible].

Okay. Okay. And the -- and like we are -- we are getting any visibility about Electrolyte Salt orders like with any key customer in the U.S. or anywhere?

Yes. Actually, it's a Sunrise existing segment, and we have been an early entrant [indiscernible]. So we have been working with quite a few companies on this, and we have been very transparent in earning all about it. And now gradually, we are seeing that it's materializing the things are getting stabilized at the customers and the uptake of the products from our end is actually increasing. So that is quite evident in the results that we provided.

Yes. Okay. And sir, one thing, like, I will be like what is the some execution time line for [indiscernible] project?

We are actually at the planning state -- actually at the planning stage. And after the planning, we would take somewhere around 18 to 20 months. So it's roughly around in January 2028. I mean first couple of months of 2028, we would be commercializing [indiscernible]. We will be starting the commercial product.

So like current facility, like what is the utilization of current capacity, I mean, revenue terms?

Around 85% -- 80% to 85% range.

Okay. Right now, we are [indiscernible] revenue will be around somewhere around INR 700 crores maximum from current capacity. And after the [indiscernible] plant, we can like enhance that?

So the current facility, it would be somewhere around INR 850 crores to INR 900 crores of revenue. And our facilities, the revenue would be on the similar lines. [indiscernible] will go in multiple cases. For Phase 1, we estimate the revenue potential in the range of [indiscernible]

Okay. Got it, sir. And one final question, like on the [indiscernible] conductors, as you told, like, we are going to dispatch our first trial this quarter only, like -- but apart from that, like we are seeing any more demand uptake here or any new pilot project or like we are still thinking about that commercialization? Will it still be happening in calendar year '28?

It's a very complex industry. And there are a lot of validation cycles that will be happening in that period, okay? So it's the planned ramp product that is being spent as of now, which again will undergo different validations and then the final commercialization deal will begin somewhere around in 2029.

We have the next question from the line of Sanjesh Jain from ICICI Securities.

I have a few questions. First on the Electronic Chemicals this quarter, we had seen a sharp chunk, quarterly wise, is this the run rate we should see for the remaining year? Is that a fair assumption that what we are selling in this quarter for next quarter quarterly basis, should we sustain at those levels?

It's a sustainable growth. Sanjesh. It will be somewhere around the same point in all the quarters.

[indiscernible] on every quarter, but on a yearly basis, you can say it will be 4x of this revenue were done for correctly.

So we will see a very sharp jump then next year for this. And this is only for one application or this is including both application?

Currently, only for one application. Second application of [indiscernible] will go online by somewhere in the phase of November or December of calendar year. The run rate should increase from there for us. So that should increase, but that business will also get into full commercialization. So it will be a gradual ramp up getting in the old scale by when the actual vehicle launch is having in mid of 2028. Before that, probably late '27 or early '28 is in the actual [indiscernible].

Got it. Got it. And for PASC, this quarter, we saw a decline. I thought we had a big win in PASC. How should we see PASC -- how are we see the agrochemical demand and the demand for our product in the next quarter -- sorry, next year?

Demand is pretty stable, why we saw this decline was not because of lack of order because of that has happened because of -- we started producing it from the new facility. Now we started trial production in [indiscernible] commercializing [indiscernible] and post that, we have seen a lot of challenges this year to overcome this [indiscernible]. That is what [indiscernible] of delay in terms of discussing the product. And then this has now been overcome and things are moving. So in terms of orders, we have good visibility until end of calendar year -- current calendar and I assume the same to remain same continue for the next year as well.

And so agrochemicals, we had 2 products like one [indiscernible] the other one is larger product. Both are seeing the production ramp-up or just one?

Both of them. So the [indiscernible] had a lot of challenges with being gradually one after another people sort out all the [indiscernible]. And now there as well the production has become much more smoother and now we are seeing consistent [indiscernible].

Got it. Got it. And on the pharma side, we said we are having one product to commercialize from the Q1 onwards. How should we see entire pharma piece for FY '27?

On the upper side, we should see a revenue in the range of about, I believe, somewhere close to INR 70 crores to INR 75 crores in [indiscernible] That is compared to a new add-on INR 70 crores to INR 75 crores is the [indiscernible] be a completely new add-on to our existing -- so of course, there has been revenue from pharma, but it was very negligible only coming from the validation trials and stuff like that. It's now the actual commercialization has begun. So we are already executing a couple of orders for this first product. So production is ongoing and we have already started. So yes, we have clear visibility to scale within.

Got it. And on the SGA side, this year has been a very good year. And given that the gas prices have also gone up very sharply, which can become a tailwind for our engine growth and Euro VI implementation on the card starting with [indiscernible]. How should we see this number is sustainable or you expect in FY '27 we will grow the SDA even on the high base of this year?

We expect to grow at least by 20% in this current. We should reach any number between [indiscernible] this year.

Got it. Got it. When I see we [indiscernible]

Now as we go ahead, month-on-month basis, we are gradually seeing more orders being put up for the Euro VI application. Now that is happening. So that switch is happening to 6 to 7. So yes, we will see that uptick probably somewhere around July or August is when we'll start seeing that uptick in the number [indiscernible]

Got it. Got it. So if I look at the 3 segments, which is [indiscernible] it appears that next year could be a pretty strong than the 20%, 25% revenue guidance which we gave, right?

I will stay with 25%. So there are a lot of uncertainties in terms of the new political -- it may not hit but it may hit the first [indiscernible] and so there are a lot of units in this era right now, what is happening is something which we have never [indiscernible]. So I would stay a little conservative with a prediction of 20% to 25% intake. There are possibilities we can be higher, but I would safely say credit growth about 25% will move to analysts.

And on the Southeast for West crisis, we use a lot of mines, which is made from ammonia and all. How is the raw material situation and the price increase that we have taken, what is the bulk price increase we have started taking now because that will also add to the growth, correct?

Yes. There was a phase of 2 or 3 weeks when nearly mines were not available at all. Immediately more or less immediately after this Iran issue started. Somewhere in March, we lost loan production base because of unavailability of [indiscernible] but post that, the availability has become very smooth, no issues in terms of our ability. But the prices have gone up by nearly 34% in that performance. So there is no better and so in most of the cases, we have been able to pass on that price increase on gratefully most of the customers have fortunately on accepted that has not become a big challenge. There are certain cases where customers are even in terms of only allowing us to change the raw onto price. In fact, the only passing on the impact related to the raw material prices. So that may have some adverse impact on EBITDA but largely on a broader scale in [indiscernible] volumes and a robust year that we forecast, I think that [indiscernible] it increased fuel cost and a little [indiscernible] margins in some of the [indiscernible] should not really have any material impact in terms of what we do from a -- so there also, we say 2% because what is happening is improve the efficiency of the plant output. The occupancy of the plant is going up, so that is taking care of some base variables which are exported by [indiscernible]. So that's a good part. The time when we are seeing the reversal in terms of demand is, I think, virtually is a very good time, which is taking the adverse impact of [indiscernible] prices.

So we are [indiscernible] despite all the situation, we will maintain the margin and growth probably there is a possibility of a green shoot, but we should achieve at least 25%.

Got it. And one on the end customer, what is the feedback you're getting on [indiscernible] because I think there is a lot of concern on actin volumes. Are you hearing the same concern from your customer for your product?

Not for it. It's not for our product. And we have very insignificant volume to the total demand. So probably, we are not impacted by that. So we continue to enjoy our share of the business from those 2 particular products, which we have [indiscernible]. And I don't see any challenge facing calendar year '26. What I hear is in terms of allocation, potential allocation for [indiscernible] confident to even in the farm market. So both years at least for this year and the next 3 years, [indiscernible].

Got it. And the new plant we started should it ramp up from the Q1 completely and should it add to the growth because sequentially now...

So now it is working very smoothly. And that's the only way where we can now say that we can sell up to revenue of INR 60 crores from this [indiscernible]. So even before the [indiscernible] pressure, this is a place where, of course, we still have certain [indiscernible] there is specific bottleneck which we have to remove. So there would be an inclusion of some CapEx, but very minor, maybe in INR 10 crores, INR 12 crores a year kind of a thing which will help us [indiscernible] up the revenue to around for [indiscernible] and this is only possible with this new [indiscernible].

And we should hopefully reach the full potential in FY '28?

Next so not this current financial gain, but next financial year, yes.

Got it. And then on the margin earlier, we used to do 25% when the plant is fully operationalized, that target also is achievable, right?

That is [indiscernible] becomes a listing, yes.

Got it. And then on the Jolva side, can you help us understand what we earlier talked about?

Now we are into detail engineering. So during this course of detailing, we got certain feedback from our designer team basis on which we had to do some more further trials which actually helped us to optimize the process and engineering requirements to a very large extent. So that is what held us up for nearly 4 or 6 weeks. But that has really helped us to identify that this process can be further to become more robust optimized and that you see our need for a number of reactors to be installed at the plant. So that is what we achieved during this last 4 to 6. So now it is into final designing space. And then potentially, now we will be calling in for [indiscernible] the various construction company for civil construction. And then I think by -- within next 6 years, we should be breaking the -- from that point on, let's say, we are in mid-May, we break ground in mid-July on there, let us consider the [indiscernible] of 18 to 24 months [indiscernible] so that is what probably calendar year '28 -- early calendar year '28 [indiscernible].

And then we should be investing about INR 250 crores, INR 270 crores?

[indiscernible]

Yes. And this will have, as we said earlier, a dedicated plant and an MPP, right?

This has one dedicated facility for this larger product that we are granting. And just to mention here, which I'm really proud of, and it is being done by a new technology, which has been fully developed in-house. And we have not seen any single quite of process via this route [indiscernible] something exceptional that our team has achieved, and we are really proud of that. So this is what we have now successfully piloted [indiscernible] and now it is a matter of commercializing when the plant becomes [indiscernible].

Got it. Got it. And then one last bookkeeping question on the tax rate. And this quarter, the tax rate appears to be exceptionally high at 38%. Can you just take us how should we take tax rate? I thought we have this tax holiday because we were enjoying the tax holiday in our facility, which is the larger one. Can you kind of take us through the tax rate, what's happening there? And how should we see it?

[indiscernible]. One is that we had some carryforward losses on income tax basis. So the benefits a lot. We are not [indiscernible] benefits this year. And plus the capitalization, I mean, the CapEx has been very heavy, I mean, around INR 100 crores of CapEx as added so which actually increases the deferred tax. And that -- both of them combinedly affects the quarterly this thing. Otherwise, if you look at the annual figure, it would be somewhere around 2%.

And going forward, should the tax rate effectively come down because we will start...

That it will effectively come down. As we continue using these assets, as the depreciation between the books and the income tax synchronized more, the [indiscernible] rates will come down.

And we still enjoy that tax holiday, right?

Yes, yes.

Because the tax cash, what we are paying is just INR 7 crores. But if I look at P&L, it's much, much higher.

Yes, yes. because of that, I mean deferred taxes.

And then what is the total CapEx we are looking for the next quarter -- next year?

Next year, [indiscernible]

[indiscernible] because it will take nearly 20 months [indiscernible] this year and part of it happening next financial year.

So INR 100 crores in FY '22, INR 175 crores in FY '28.

We have the next question from the line of [indiscernible] an individual investor.

My first question was on the SBA. So what has happened over the past 3 to 3.5 years is that initially, we were caught up with the high-cost inventory. And in the latter part, there was the fluctuation in raw material prices, which really [indiscernible] so of course, we can't do anything about the raw material fluctuation, but is this the inherent risk that the business has that in the FDA, we don't have [indiscernible] we just get the visibility and then be able to make the products and eventually if the price fructuation is too much, it attracts in the P&L. So is it the event risk in the business of the [indiscernible]

No, no. basically, you have [indiscernible] And based on that, they keep releasing dollars. So usually, they are very precise in terms of except if something becomes really [indiscernible]

Are [indiscernible] speaking?

Okay. Yes. So basically, the forecast is pretty much precise and see, for example, in recent times, when [indiscernible] on all prices shot up, very immediately post our inventory. So whatever we are holding in terms of rolling inventory for the customer where we continue to ship out of the existing growth. And they have readily agreed to apply the available formulas what we have. This is the consumption of this DRAM impact to set [indiscernible] so those implications have already been applied and the prices for the new [indiscernible] in this particular part of business. Only this is in terms of demand when it becomes very volatile. And that is what had happened during the past 2 years that demand is literally [indiscernible] massive uptake that happened post cohort lot of inventory [indiscernible], the demand faster that but I think now to get pretty much more, and we are seeing [indiscernible].

Okay. And secondly, [indiscernible] total market, right? So there's 85% around [indiscernible] 15% would be us. So when in India, our cost structure would be much better as compared to Satan. So once this Euro 7 is and then additional demand, can we expect that market will be much better than 15%?

Here, it is a little different way of the business happens in this segment. It is not really a price-sensitive matter. So -- and there is only a reason why customers ready says, okay, from next month, we have the new price allocated. So there is not much discussion over [indiscernible]. It is not a really price-sensitive matter when something is approved for one specific vehicle, then there is literally no space to change it. So for example, if the approach product is applied to the variant and it continues to remain there until the variant has its market. So replacing somebody is not an option here for an existing business. You only get opportunities and to open only for the new opportunities that come in. So that is where we have slowly started gaining momentum over our competitors. And gradually, we saw, for example, [indiscernible], we are very late [indiscernible] So a lot of things were already picked up, and we were quite flat for that part [indiscernible] are very well in time, we have our foot in a [indiscernible] beginning. So we'll gradually see our market share keeps on rising. Because yes, there is advantage in terms of casing between us and the U.S. manufacturers, right? So that advantage [indiscernible]

So that's what roughly. So any model that...

[indiscernible] see, there are only very few select customers [indiscernible] and customers also know that there are only 2 suppliers so we always try to keep our balance. Maybe if I say I get most of the shares then I mean I may be getting 70% of you will never get more than that as from any particular customer or any particular product because that is how they want to keep both of us engaged in this business.

So with Euro 7, any [indiscernible] we would be wherever [indiscernible] would be there, right, in most 85% to 90% of social?

Yes.

And [indiscernible] the agrochem side, PSU segment. So the kind of pipeline that we have built -- so going down 2 to 3 years ahead, SP would eventually be much more bigger than the [indiscernible]?

It has definitive chances to do so. You are very correct. So if I say not 2 years, but I would say once the [indiscernible] becomes operational. And then very much it will become much larger than the rest year, for sure.

Right. And one more we have declared it this time. I don't understand the rationale behind the dividend. So we have higher our long-term increase, sir, short-term borrowings have increased. And at the same time, we are paying dividends. So it's not just a finance [indiscernible]

See, basically, it is that we recent 50% of our earnings post net profit we want to distribute [indiscernible] nearly about 10% of that profits in terms of [indiscernible] I think it is for all the stakeholders holding [indiscernible] the company, then they should be paid back. That is [indiscernible] we are flowing by 90% of the [indiscernible]

Got it, sir. But just to request that and I think there should be -- there should be [indiscernible] the interest cost that [indiscernible]. And sir, my final question was regarding the semiconductor space. So can you just throw some light on the supply chain that would be involved with. So would you be sending our chemicals directly the export market? Or how would it work? Would it be sending directly [indiscernible] intermediaries involved?

No, no, there are intermediaries involved. Basically, see a [indiscernible] normally have larger companies who supply into these [indiscernible]. And the larger companies kind of work is bringing in multiple products from different [indiscernible] certify them under our own CEO and not [indiscernible] to the investor. So that is how the supply chain will be up. So the quality qualification cost happens at the integrated level, which is definitely one very large MNC company and then the certain sale of qualification happens [indiscernible] If SBI have been saying all these years, these are very difficult at the most difficult part to get [indiscernible] this work for the opportunity for years. This particular segment is even worse than that. The demand start of [indiscernible] and when the time is right, and probably we could we have been working on this since almost, I think, now 8 or 9 years, and we are seeing fossil of commercialization now. And this is also not commercialization. This is just getting into validation. Actual commercialization, we expect by end of 2020, early 2021. When the product will be really used into [indiscernible]

Right. So sir, I understand it, sir, would be selling it to maybe Japanese or the South Korean M&G and then eventually, they'll be sending it to the Taiwan. Am I correct?

Correct.

And sir, the pilot plant that we have set up for the semiconductors per. So what level of priority have we achieved? And what are the cost revenue because this multistate distillation and [indiscernible] will be much positive.

[indiscernible] is already ready. So the setup is already ready. We are going to actually -- our first commercial sale back, not the pilot scale. Pilot scale drives have been finished long back. And now we are talking of our cost plan sale that it has to be this best in this quarter. So that whole setup is in place. And when you are talking in terms of [indiscernible], I'm sorry, it goes [indiscernible] but in terms of impurity levels, we are talking of imperative [indiscernible]. So we are talking of 1,000 parts per trillion sales.

Got it. That's fair. And sir, [indiscernible] so where would [indiscernible] be reaching [indiscernible]

[indiscernible]

Ladies and gentlemen, [indiscernible] the last question [indiscernible] question-and-answer session. I now hand the conference back to Mr. Ajesh Pillai.

Thank you. On behalf of Tatva Chintan, thank you for joining us on today's earning call. Features that we have addressed most of your questions during the discussion. Should we require any further clarification, please feel free to reach out, and we will be happy to connect offline. Thank you.

Thank you, members of the management. On behalf of ICICI Securities, we conclude this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.