Management Participants

The call featured Dr. Aman Desai (Promoter and Whole-Time Director), Mr. Rohan Desai (Promoter and Whole-Time Director), Mr. Faiz Nagariya (Chief Financial Officer), Mr. Kushal Doshi (Lead Investor Relations), and Ms. Shubhangi Desai (Executive Investor Relations). The moderator was Mr. Nilesh Ghuge from HDFC Securities Limited.

Business Performance and Outlook

  • Q2 FY27 was described as a "solid quarter" reflecting disciplined execution and strength of product portfolio
  • CRAMS and CEM businesses continue to lead, now contributing over 65% of total sales
  • Macro environment remains volatile but company is building momentum for next growth phase

Baker Hughes Partnership Expansion

  • Commercialized an entire new set of oilfield industrial chemicals for Baker Hughes, shipped in Q2 FY27
  • Completed minor modifications to production streams at Strata site (Site 4) to accommodate new products
  • Total Baker Hughes opportunity now estimated at INR 750-800 crores (previously INR 300-400 crores)
  • New products represent a market of approximately USD 2-2.5 billion
  • Target to achieve over USD 100 million (INR 1,000 crores) business with Baker Hughes in near future
  • Oil and gas segment currently accounts for 33% of sales and expected to remain key growth driver

Semiconductor Business Development

  • Started first commercial shipments to semiconductor customers from existing production facilities
  • Volumes described as "modest" but growing month-on-month
  • New production block at Magnum site being equipped, on track for commercial production from Q4 FY27
  • At maturity, targeting INR 300-400 crores revenue from semiconductor segment within 2-2.5 years (by 2029)
  • Products are building blocks for silane coupling agents used in circuit boards and high-performance PPE resins
  • Average market price range: USD 45-50 per kilo

Magnum Site Expansion Update

  • Execution at Magnum site and R&D facility expansion on track and ahead of schedule in several areas
  • 14 of 16 production blocks have line of sight for allocation:
  • 2 blocks earmarked for LSM products (pharmaceutical advanced intermediates)
  • 12 blocks earmarked for CEM contracts to be commercialized over next 2-3 years
  • Current status: More than 6 plants above ground and nearing completion
  • Specific allocations mentioned:
  • 1 plant for semiconductor production
  • 1 plant (Block 4) for agrochemical innovator contract
  • 1 plant in material sciences (1,000 tons/year) with single company
  • 1 plant with oil and gas major (announcement expected soon)
  • 2 plants with multinational chemical company (announcement expected soon)
  • 4 plants being discussed with another customer

Dow Silicones Project Update

  • Multi-year research program with Dow to develop advanced silicones manufacturing technology in India
  • Progress moving from scientific exploration toward commercially viable technology platform
  • Complex chemical engineering challenge requiring innovations in process design, material flow, and operating conditions
  • Operating at extreme temperature and pressure conditions in continuous flow regime
  • Immediate goal: Design, build and operate pilot unit to answer key engineering questions
  • Long-term investment expected to become distinctive platform for future explorations

CRAMS Business Development

  • Currently working on more than 65 CRAMS projects in R&D and pilot plant
  • NMR-based analytical capabilities helping broaden work with global majors
  • New CRAMS engagements started with:
  • Automotive ancillary major
  • Global mining company
  • Different oil and gas major
  • European market showing growing momentum, including discussions with small and midsized specialty chemical companies
  • R&D operations moved from 24/6 to 24/7 schedule for faster response and project execution

New CEM Contract

  • Signed new exclusive manufacturing contract with leading global agrochemical innovator
  • New chemical entity (pipeline molecule, patented IP, advanced intermediate)
  • Customer qualification completed over 12-16 months
  • Production at fourth production block of Magnum site starting Q4 FY27
  • Initial volume: 200-250 tons per year, projected path to 600 tons per year over time
  • Example of CRAMS program transitioning to commercial CEM contract

Customer Development

  • Added 16 new customers in first half FY27
  • Completed more than 20 customer and certification audits
  • Negotiating several contracts, expect to conclude number of them this financial year

Financial Metrics and Guidance

  • Gross margins expected to improve as company moves more toward CEM and CRAMS
  • EBITDA margins guided conservatively at 30%+ considering various external factors
  • Working capital cycle at 165 days (3 days higher than March 31 mainly due to inventory buildup for new sites)
  • Capex guidance: INR 300-350 crores for FY27 (possibly up to INR 370 crores)
  • INR 700 crores CWIP on balance sheet largely relates to Site 5 (Magnum)
  • Expect to capitalize approximately INR 400 crores by end of FY27

Segment Strategy

  • Pharma and agrochemical segments showing slower growth compared to oil & gas and material science
  • Target end-state: 25% revenue contribution from each of oil & gas, material science, pharma, agro and other sectors
  • LSM business: 12-15 projects in R&D, plan to launch minimum 2 LSM products annually
  • Absolute LSM growth expected but overshadowed by faster CEM growth

Operational Details

  • Inventory increase to 172 days from 151 days in March primarily due to:
  • New site ramp-up for Milliken project
  • Magnum site new product launches
  • Imported raw materials with longer lead times
  • Price protection mechanisms in place for CEM contracts
  • Working capital improvement expected quarter-on-quarter