Clean Science & Technology (NSE:CLEAN) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Q1 FY twenty seven earnings conference call of Clean Science and Technology Limited. We have with us on the call, Sadat Sikchi, managing director and promoter Sanjay Parnergar, CFO and Prateek Bora, President Commercial. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. I now hand the conference over to Mr. Siddharth Sikhi for opening remarks. Thank you, and over to you, Mr. Siddharth Sikhi.

0:49 Thank you so much, Itra. Good evening, everybody. Thank you so much for attending the call on a Saturday evening. So let me start by welcoming everyone and a warm welcome for the quarter one FY 'twenty seven earnings call of the company. And I thank you for joining the call. Let me first speak on the business environment. The quarter performance shall be viewed in backdrop of geopolitical headwinds impacting raw material supply chain and its cost. Non availability of shipping vessels impacted timely export of goods, leading to supply side challenges. Further, the raw material costs in China were not impacted as much as they were compared to India.

1:41 Despite external challenges during the quarter, Clean Science reported a steady performance during the quarter. The company was able to improve revenue, maintain operational stability and continue progress on its value creating initiatives. We are also pleased to report our highest ever consolidated sales in company's history, reaching approximately INR264 crores during the quarter. Let me speak on the stand alone business performance. On a sequential basis, the revenue improved by 5% to INR203 crores, largely due to increase in realization in all the products. The EBITDA and the PAT margins are at forty three percent and thirty six percent, translating into an EBITDA of INR87 crores and PAT of INR73 crores.

2:38 The Q4 FY 'twenty six EBITDA and TAD after adjusting the one off operative expense transactions is roughly INR83 crores and INR53 crores, respectively. Thereby, the current quarter EBITDA and TAC reflected a growth of 537%, respectively. The Q on Q increase in revenue was primarily led by improved realization in all the segments. Speaking on Y o Y comparison, the sales were moderated by 6% during the quarter. The revenue moderation was primarily led by decrease in sales volume, which was on account of supply side headwinds as mentioned earlier.

3:24 The demand environment continues to be steady. On consolidated business performance, the HAL scale up continues to drive operating leverage and sustainable profit improvement. HAL is now 22% of our sales and we have been able to derisk our reliance on the top four legacy products by moderating their share from 85% in Q4 FY 'twenty three to 60% this quarter. Another important point was that CFCL reached an important milestone by becoming operationally self sustaining.

4:11 Having fully recovered its operating expenses, we now shift from investing phase to monetizing phase. Our first year of HAL sales were entirely domestic. In contrast, the current quarter reflects a much more diversified geographical mix with exports contributing nearly 50% of the HAL sales. On sequential basis, the consolidated revenues grew by seven percent to INR $2.64 crores. EBITDA and TAC are 3728% respectively, which stands at INR 96 crores and 73 crores respectively.

4:58 On Y o Y basis, the revenue increased by 10% during the quarter and the increase in revenues primarily led by consistent scale up of our HAL's business. Hence, the sales profile looks like Performance Pharma and FMCG respectively 83%, 107% respectively. I would like to take a minute to discuss the key business development which happened during the quarter. Point one, we entered into a strategic collaboration with our Swiss partner called Genus Chem. This represents an important step in the next phase of our health journey. This will provide Clean Science and entry into differentiated advanced grade of health chemistry that are technology intensive, value added and aligned and evolving global customer requirements.

5:55 Taken together, these developments reinforce our confidence that Health Platform can evolve into a much stronger growth driver for the company over the coming years. With expanding customer acceptance, improving export penetration and a richer product basket, we believe that the platform is steadily moving towards more meaningful scale, stronger margins and greater strategic importance within the company's portfolio. The stabilization of the Hydroquinone Catercol plant has been largely completed and our operations are now progressing well. We have received the necessary customers' approval and are ramping up for commercial supplies.

6:41 As the production scales up, we expect a gradual increase in revenue in the coming quarters. On a CapEx subject update, the Performance Chemical II will get commercialized by quarter three FY 'twenty seven. And during the quarter, capital infusion in the subsidiary was approximately INR100 crores, with this total investment the subsidiary stands at approximately INR850 crores. I think that's all from my side and I'm open for any questions and answers. Thank you very much. We will now begin the question and answer session. Call.

7:47 The first question is from the line of Sanjesh from ICIC Securities. I got a couple of questions. First on the health, what was the volume this quarter? Because the consolidated subsidiary, it shows we have grown close to 170%. So what was the mix of volume and pricing? And how much was the contribution of the products beyond 07/2001 and 770? So in terms of price realization, Sangesh, the product mix has improved from 7 seventy-six 22, we have now moved to the higher grades.

8:40 So I think the average prices have moved from $4.40 odd to $5.50. So this is in terms of price realization. And in terms of volume... Just volumes are 1,000 tonne and the product mix has significantly improved to the higher grades of HALs, meaning I mean last quarter where almost 50% of contribution came in from HAL seven seventy. This quarter it has come down to 35 odd percent. And hence the gross margins have improved on the subsidiary level. Got it. Got it. So then, we were looking at what's close to 3,000 metric ton for house this year. You think you can do much better than that? Have started with 1,000 metric ton in Q1.

9:28 Yes. Yes. My health guys says, yes, they can do it. So what what what are we looking at now? And even the export has picked up. You mentioned that 50% of the revenue now has is coming from the export market. So what is the realistic number we are looking at in house for FY 'twenty seven? Annualized this quarter is INR $2.53 crores. So I mean, if you just annualize this also, this will reach to $2.50 crores, 300 crores of annual revenue. That we are very comfortable, correct? Yes, that should be comfortable. Now second question on the gross profit margin. Last year, we were hovering under 40%, this year consistently above 40%. Was there any benefit of low cost acetone we were carrying and price increase will help us and lower raw material costs is benefiting on gross profit margin?

10:25 Or do you think this 43%, 45% of gross profit margin in this segment is sustainable? I think it should be sustainable and we had no real advantage of cheap raw material. In fact, we since moving to higher grades and of course improving our operational efficiencies has helped us to get to these margins. Got it. Got it. One last question on Hal's. Can you give us more detail on Genesis? Are we also trying to acquire 25% in the distribution company? It's more like a distribution company. Right? They're not really a technology company. How will you... How did you get that? No. I thought I read that in the press release. I was little confused.

11:10 So what is the transaction between us and Genesis? No, no. So the deal is if you go through their website, the founders are highly technical people and they have come up with advanced health technologies. They have developed and patented products in Europe, U. S, Japan and I think also China. I'm unsure of China. And these are far advanced level of NORHALs, which is called. And these products will now be made at Clean Finochem and supplied globally. With this, we will get entry into some of the very advanced level of customers who are who would also buy these advanced grades, but also help us in our other portfolio of has.

12:00 So it's a very, very highly driven company. And the tech transfer is happening from them to us or how is it? Yes, yes. They have developed this very interesting technology and this patented product and this is the tech transfer is happening and the plans will start in quarter three this year. And what is Clean Science paying for all this? Sorry? So the tech transfer and all is for the production and we will be official contract manufacturer for this company. Is that the way to think of it? We are a contract manufacturing with the tech belonging to the customer? No, no, no. We are also doing joint marketing. Okay.

12:47 Yes. So we will have the client marketing this product. And the product will be exclusively supplied to them or we are free to supply to anybody? So we have some geographies defined between us so that we don't want clash, but everything will be like co branding, yes. It will be like a co branded product, where their name and our name will appear on the packaging and in all the documents. Got it. And what is the revenue potential we are looking for from this partnership, say, in twenty nineteen twenty twenty eight, sorry? In overall three to four year period, we are looking at INR 300 crores to INR $3.50 crores of revenue, additional revenue. From this partnership?

13:35 Absolutely. Got it. Got it. That's pretty clear. Last one, the legacy business, the decline was largely because and on a Y o Y basis was largely because the non availability of the raw material? Yes. Or there was it's only because of raw material available? Yes, yes. Because the main primary supplier in India had to shut down the facility due to non availability of their key raw material, Propylene. So we had those, I think, about two weeks of ore shutdown, which led to this. The demand is absolutely steady. And starting Q2, we should see all those recouping and then all the volume we should be to the normal level or there is still a challenge? No, volumes is not an issue. Raw material pricing is an issue and availability of shipping vessels, I'm sure this is across the industry.

14:39 Got it. Got it. One last question. What is the now economical difference between any sold to MEHQ versus HQ to MEHQ, are we still competitive or you'll see Chinese competition still being intense in the MEHQ and the value chain? So far, we are not seeing. Otherwise, you would not see these numbers. Right? Correct. So we believe that HQ is still not as competitive for us to threaten the market share? I think so. Thank you. Thank you.

15:26 Next question is from the line of Ankur Periwal from Axis Capital. First, a clarification on this strategic collaboration. You said the product will be jointly marketed by you and the partner here. So the globe... The global markets are divided that, you know, this x x countries go to Clean Science and the balance go to you? Or how is it? And this $3.54000000 dollars Let me answer one thing at a time. See, they are based in Europe. They are highly they are present there. And they have already conducted lot of trials over the last couple of years and have established a solid customer network, okay. So there is no point in us duplicating those efforts.

16:22 So hence, there has been a clear geographical differentiation wherever they have done enough work, they will market it. Wherever they are not present and we are present, we will be doing it. So it's a very, very collaborative partnership where we have very open discussions to understand who is where and wherever strengths to be needed, we will do the need for because it is all going under core branding. Sure. So this INR $3,000,000,003.50 crores revenue that you are talking of, this is as a product of as a sort of output of this collaboration. Is it the case that you are manufacturing from them on their behalf as well? So for whatever they said, you will be manufacturing here in India?

17:11 Or this $3.50 sale is only from your fresh sale as a b to c or b to b to b to c? No. It is only from us. Their sales over and above. So say, I am selling them I'm just giving you an hypothetical example. If I am selling them at, say, 30, that is my revenue. And if they sell at EUR 40, that is EUR 10 is their revenue. Yes, which is fair. But your direct sale is this INR 300 crore target that you're talking of. And if you are manufacturing anything on the partner's behalf, that's a top up or everything is inclusive of this INR $3.50 crores? Our direct sales to the market is incremental to this INR 300 crores is only with them because they have prescribed volumes, which they have some understanding on or commitments on.

18:00 Over and above whatever we develop, say, if we sell 100 ton in India, that is over and above this. Okay. Okay. Got it. And fair to say that given that you are saying that this is further differentiating and more advanced version of grades, we were not supposed to manufacture these ones or there is some overlap and this will be having much higher realization here? No, no, no. This is a further better product and one of its kind And hence, these are all patented products by there. Sure. And whatever we are making on health on using our tech, that continues as it is, which is the ramp up that you're using. And one of our raw materials, 2,020, which we will be making will be a key starting material for this chemistry.

18:50 So this is an additional market for our own 2020. Okay. Okay. That's that's clear. Secondly, on Sorry. Yeah. Okay. Yeah. Secondly, on, you know, the the agreement wherein we are supplying the key ingredients for food and feed, if you can put some light there. I mean, the light is that we have very, very close relationship with the customer over the last decade. And I think they are increasing their demand. We are being fulfilling them. And because we would be making additional CapExes on some of these products, so we thought both of us decided to enter into a longer term contract for a minimum period of five years where we will be supplying their needs of these products, and that is where it is.

19:54 So it's a very, very interesting collaboration for us because it gives us an assurance volumes from the largest customer in the world. So therefore, currently buy BHA, BHT, TBHQ, which are all and AP, these are all our product portfolio, which we supply to them. And we have now an exclusive I mean, more or less, we will be the supplier for all these products. Sure. So a few clarifications. One, know, Kemin must be getting this source from somewhere or was it captive for them? And whom are we replacing? No, no, it was so, Kemin is an end customer. They make formulation for pet food industry. So they are a manufacturing company with global locations, and we will be supplying these three ingredients to all their global locations.

20:50 Okay. So the customer continues just that the size and scale is much higher now and you are getting a five year commitment? This is not a new customer. He continues to be our existing customer for ten years. We'll just increase the wallet share with that customer. Sure. And will this commitment yes, go ahead. Yes, will this commitment? Sorry, will this commitment require you for another incremental capacity addition or the existing capacities are supplied to fund this? No. We will need additional capacities, and we have already started the process of that. Sorry. There will be requirement of additional capacity, you said? Yes. Yes. Yes. Okay.

21:35 Thank you. And third bit on the margin profile on the stand alone side. While revenues have been you highlighted in your initial comments as well the q on q increases largely led by pricing. Volumes are flat. The the margin slight dip that we are seeing here, even on a q on q on a Y and Y basis, is largely because of the pricing volatility, RM volatility, or there is a further pressure on the end product pricing also? No, I think that the major factor is the raw material pricing because of these Middle East prices. So you can see there has been decline I mean increase in our RM prices. Okay. So product prices here remain stable. So from a competitive intensity perspective, no changes at the global level?

22:27 Not at the moment. Okay. Fair enough. And just on the stand alone side, what could be the domestic export mix for the quarter? If you may help with that number, please. 60 fivethirty five. 60 five-thirty five. Okay. And lastly, any if you can guide on the CapEx, what should we take as an annual run rate going ahead given there could be some capacity expansion plans there? Actually, we have not worked out in that detail, but it's not going to be too much. We are still working on it and I'll be able to let you know in due course. Okay. No worries. Thank you and all the best. Thank you. Thank you, Bose. Thank you. Next question is from the line of Abhijit Akhilha from KIE.

23:19 Please go ahead. Good afternoon. Thank you so much for taking my questions. First one, just on the supply chain disruptions that impacted volumes in the quarter. I was just wondering if that would be possible to share some color on how much better the earnings would have been. I know the quarter has already significantly improved, so my compliments on that. But could it have been somewhat significantly better had it not been for these issues? Yes. So of course, we lost a couple of weeks. I think to be precise, about two weeks or so in production. So of course, if you would have been able to produce, you would have got higher revenue. That is number one. And number two was also with these all labor issues we faced because of these gas issues and all. That was another challenging time.

24:12 So if these issues weren't there, then I think you would have seen a better quarter. So things are looking much smoother now in the second quarter, is it? Yes. Issue which I mentioned with availability of the prices are volatile, that is still an issue. But the availability is there, which was not the case in quarter one. So yes, So, I think all those issues are now behind us, except the RM volatility. Understood. And on the price hike side, were you able to fully pass along all the input cost increases that happened last quarter or are there still some further increases that you're taking? No, wherever we had long term contracts, we are respecting most of them.

25:01 And so in that case, we are not able to pass on. And also, it is not like I mean, we were not able to pass on 100%. In some cases, we were able to pass a percentage of the price increase. Okay. Fair enough. So compared to the June quarter results, which we have just seen, we should not expect any significant price increases benefit next quarter, right? Yes, price increase might be a big question. Okay. Understood. Secondly, was just on this INR 300 odd crores revenue number that you quoted for the Genius tie up. Just wanted to clarify that this is a cumulative number. Of course, it's a cumulative number over the next four years.

25:49 Yes, understood. So the peak number in year four might be say some 100 crores plus minus, somewhere in that range. Is that right? Yes, yes, that understanding is right. Okay, great. And on the Performance Chemical one and two, I know you made some comments, but is it possible to just share your thoughts on how both those projects are going? Yes. So the Hydroquinone Catapult, I mentioned, we started the line somewhere in quarter three between October, November, December, the trials. The product trial started in first couple of months. Of course, when we had these crisis raw material shortages, so we were not dedicating too much raw material to that facility, but running our regular businesses.

26:34 And again, we restarted the operations in April or in quarter one. And now the plants are more or less stabilized. In the meantime, we took this period to sample with our all international existing customers. And most of these sampling processes are almost over. We have got some approvals. And now I think starting August, September, the revenue should also start coming in. And plus, there will be operational efficiencies, improvements will also keep happening as we ramp up the capacities. Great. Thank you so much. And just one last. Yes, sorry, please. Okay. On Performance Chemicals two, the client, we expect to start in quarter three, which would be November, December starts.

27:24 Yes. In terms of the ramp up for Performance Chemicals two, any thoughts on that aspect? Thoughts in the sense? I mean, just with regard to timelines, should we expect So a fairly let's see, quarter three and quarter four will majorly go into setting up the lines and getting the right product quality. So we expect the major revenue should only come from quarter one next year. Okay, great. And just one last thing from my side. On the Kemin agreement, congratulations on that, by the way. Thank you. So how large is this customer as maybe a share of the overall world market for these relevant products?

28:11 That was really your question. And I guess this agreement now basically preempts any other possible new entrant into these products from getting into a tie up with this company, right? As you see, he's the largest buyer of some of these ingredients. And the relationship now gives both of us, both Kenin and us, I mean, the strategic alliance where we make sure that there is no shortages. I mean, in all these difficult times, we have been able to supply without any price hikes, which has given them that confidence over the last several years. And hence, have entered into this definitive five year of contract. And yes, you are right that I do not see any scope for any other entrant or new entrant or any competitor from India or globally to get into this alliance.

29:05 Got it. Thank you so much, Siddharth for all the questions. Wish you all the best. Thank Thank you. Thank you. Next question is from the line of Saurabh Bhanik from Divis Consultants. Please go ahead. Good afternoon, sir. Congratulations on a mix set of number. Sir, as per your presentation in this quarter, they are you have mentioned that HAL stands for around 22% of sales. So I just would like to know from you, in FY 'twenty seven, FY 'twenty eight, how actually plan for that has been constituted around which percentage of sales for our company? If you just give us few colors on it. So, basically, I told you in terms of revenue this year, the target is between INR250 crores to INR300 crores, okay? So, that could be around 30% to 35% of overall revenue growth.

30:06 For the next financial year, let us work out and we will come back to you. Okay, sir. Thank you so much for the information. And second, sir, on health, I just would like to know from you the in domestic and export both markets, who are the core competitors for this product as you have mapped out? So if you give us the information about this? So we have two major competitors in Europe. They are namely BASF and Savo. And we have a couple of them in China. Major is Rianlon and Souqian, who is also called as United Chem. Okay, sir. And lastly, on the financials front, in this quarter, on a consolidated basis, I've seen that other expenses, it is surged by around 13%.

30:57 So any primary reason for this? I mean, you're referring to other expenses, right? Yes, yes. In other expenses, I've seen that in console level, it is rises around 13%. So the primary reason that you can Sequentially, there is a CSR impact. In quarter four, there was a high expenditure towards CSR compared to quarter one. And there was some provisioning towards some other expenses, which was done in quarter four, which was not required in quarter one. This has led to other expense. Okay. Can you assume is it for one off kind of things, right? Yes. So quarter one, you can assume to be a sustainable number.

31:44 Okay. Thank you so much for the clarifications. Okay. And wish you all the best for the FY 2027 and FY 2028 as well, sir. Thank you so much. Thank you. Next question is from the line of Nilesh Gruge from HDFC Securities. Please go ahead. Hi. Hi, Siddharth. Hey, Siddharth, my question regarding this new house that you will be manufacturing through the collaboration. So what differentiate this house from the the has that currently Clean Science is manufacturing? This is a very technical question, but I will still try and answer in the most simplest form I can. All the has we make are called as alkoxy halves.

32:31 I don't know the twenty twenty. Sorry, sorry. We make the free hydroxy. But with this company, we will be making the alkoxy halves, which are called as the NOR. So these are higher grade of halves because they have their performance is far higher and superior compared to the conventional halves which are made. However, these advanced levels of halves are also far more expensive compared to the traditional hands. So that is why the applications are also niche compared to the traditional hands. Okay. And what about the end user?

33:18 Industry will remain more or less same or it will be very specific to these higher grade, these are more applicable to agricultural film businesses. So where higher and harsher environment is there, where these products are used. So these NOR will be used in such applications where tougher environment is there in terms of agro films. Also, with this collaboration, what we get is these existing customers also use regular grade of talc, where we anyways are present completely. So it will help us in cross selling to the same customer. Okay. Okay.

34:06 So do you see that there is this is this new has will replace the overall the has that is being used or consumed by the end user? Or will it be the totally new market creation? For us, it will be a totally new market in terms of this particular segment of product. So if a customer is using NOR, he will not replace it with the regular house. Okay. For you... Yeah. Yeah. Sorry. Sorry. Go ahead. Go ahead. Yeah. So of course, this will be a new segment of customers, which will come up to us. Okay. But as far as the global market health market is concerned, will these replace the existing ones or it's a completely new market?

35:00 Completely new market, which we were not catering at all today. The Norhas market is different, which we were not catering. Now we will start catering. Okay. Okay. Thanks. Thanks a lot. Thanks. The NORHULS market is currently dominated by only BSF. Okay. Okay. Okay. Yeah. Thanks. Thanks, sir. All the best. Thank you so much. Yeah. Thank you. Next question is from the line of Sanjesh from ICICI Securities. Please go ahead. Thanks. Thanks for that for taking my questions again. I got two questions. One on the contract with the. Now that they are signing up five year, are we giving any volume based discount? What is an advantage from a payment perspective for locking in the contract?

35:53 So it is a supply security. It's a supply security. There is no additional commercial benefit we are transferring to them. I think, I mean, are little finer details, but I think you can consider supply security as the major outcome of this contract for both of them, for them as well as for us for the complete volume offtake. I mean, the offtake will they will take from us. Got it. Got it. Second question on the Genesis one. Are these same product goals as a UV stabilizer or the application is entirely open? So the application goes into agricultural films, which is a very large market in globally.

36:42 And currently, only, I think, more or less covered majorly by BASF. But it goes as an additive, right? The use case remains the same. Use case remains the same. But just the application is agriculture film, which are spread across the field, right? That's the one you're talking about. Agriculture, higher, higher grade of agriculture. The normal, sometimes even the normal, some of the grades are also used, but these are for more harsher environment conditions, where more pesticides, sulfur, chlorine is present in the environment. Got it. Are we putting up any fresh capacity because of the two contracts or this can be catered with the existing capacity?

37:29 No, no. Both are additional investments. And what kind of number are we looking at here for the CapEx? So basically, we are still working on it. But in terms of Genascan, I think the plant will start. So where we are expecting for that particular product, we will be putting about 25 odd crores. Got it. Got it. That's clear. That's clear. And Cambium contract, what is the volume increase are we expecting from what they are buying us today? What could be the quantum increase because of the contract and higher market share? Sorry, it is not Camlin. It is. Camlin. Sorry, sorry.

38:16 My bad. My bad. Yes. So Camlin is American. So I mean that gives us So our Camlin is probably it will our offtake will increase by 20% to 40%. 20% to 40% over five years? Yes. Or you will start saying immediately? Start immediately probably in the next two, three months' time. That's clear. Thanks, Itad, for answering all those questions. Thank you. Thank you. Next question is from the line of Saurabh Bhanik from Divis Consultant. Please go ahead.

39:03 Thank you so much for giving me again another opportunity, sir. Now I would like to know from you that in this quarter, you have done 100 share of CapEx in Clean Chem Limited. So sir, if you can please share us the long term structural plan that you have built for this wholly owned subsidiary. So that would be highly helpful. So all the products now in future in the company will only happen in this subsidiary, which is Clean Finochem. So all the businesses, all the new products, all the new lines will all happen in Clean Finochem only as a company. Okay. Okay. Thank you so much for the clarification. And finally, sir, as we all know the geopolitical issues are truly continuing and all that. And this is unpredictable and uncertain, we all know it. But sir, how Clean Science is actually planning out or mapping out or going ahead for the rest of the three quarters? So if you please put some color on it, so that would be again very much helpful for us.

40:12 So basically, sir, this is all about supply chain, and we are trying our best to have all supply chain, all raw materials to be delivered and to be present so that there is no delay in any of our productions. So that we have planned quite well. And hopefully, we should not see any stoppages in any of our facilities in the next coming quarters. Okay. So that is what I mean fully confident in what that that stock is will not even there. So it's just a... Well, casually, I'm just asking you. So if you just give us few, you know, information regarding it. I mean, it is 100% confirmed from your end. Right? Sorry. What is confirmed?

40:58 I mean that supply... No. No. That supply chain that you said, it is... It will not stop that you are planning on that you said. I mean, it is from your end totally you are confident on it? That's I'm just asking. Sir, that is uncertain and nobody can control. Yeah. Yeah. So so exactly your point. And nobody can control. So even I cannot control. Yes. Yes. Yes. Exactly. So, sir, as you said, that's just for that particular reason I just asked you. So if that happens, so that is definitely the, you know, better for you and for everybody as well, sir. So that is what I'm just --. Yes. Okay. Thank you. So we will take that update on q two as well, sir.

41:48 Sure. Okay. Thank you. Next question is from the line of Rohit Nagraj from three sixty one Capital. Please go ahead. Thanks for the opportunity and good sequential performance plus the two new collaborations. First question, again, the Genius Chem, in terms of tech transfer, is there any transfer fees or royalties that are attached to it? Or it is just CapEx and then okay. So it's purely CapEx and then the revenues will start flowing in? Absolutely. And in terms of since these NOR has probably niche set of products, the margins will be higher than the current margins on our entire basket?

42:39 Yes. Technically, it should be. Perfect. And second question in terms of halves, you mentioned that this quarter was there was almost 50% exports and 50% domestic, and the component of exports has increased tremendously. Is it because of the high grade has that we are manufacturing where we've been able to sell into the export market and where now there we are seeing a good amount of traction? See, the point is over the last one year, these sampling paperwork, all this is happening. See, these are very large accounts which do not come very quickly. So there has been a lot of back and forth which was happening to get approvals to these accounts. And we have now started seeing these approvals coming in trial businesses happening and now commercial shipments have started.

43:28 So this also gives the confidence that all the grades of hires which we are producing today, which are the higher grade as well as our commodity grades are now completely approved and at par quality with other competitors in line. So this gives that confidence. And now you can see these ramp ups are happening in advanced levels of health also. Plus with this collaboration with GC, with this further higher grade of advanced health will open doors to further more customers globally for us. Right. And just one last clarification, compared to last quarter in terms of the supply chain, things have been better during the month of July? See, supply issues have come down definitely because now I'm sure all other companies have also started importing and keeping those safety stocks.

44:25 But the basic concern remains because of these volatility in these discussions between these particular countries, the prices of crude oil keeps moving, which impacts the prices of basic raw materials, which impacts our pricing. So there will be issues in profitability, but not with respect to supply position is what my understanding is. Perfect. Thanks a lot and all the best sir. Thank you so much. Thank you. Next question is from the line of Shreyans Khattani from SG Securities. I have one question on the HAZ business. So we have around 10,000 ton capacity.

45:10 So just trying to understand how much of that would be the higher grade whereas like seven-zero to like twenty twenty and... We are not getting all these subdivisions. We are not getting into these subdivisions. But on more or less basis, to just give you a thumb rule, we would be probably 40% or 30%, 40% lower grade and balance should be higher grade. Which are these higher grades, think, is too much detailing. But yes, so this is the split 40%, 60% is what you can assume. Got it. Sir, and are we currently in a position to produce NorHelves or that would require some plant and machine use? No, I think this is a completely new setup, new technology, which we have acquired from this partnership.

46:02 So yes, it needed our CapEx and hopefully we'll start the production in Q3. Okay, got it. Sir, second question, I joined a little late, so maybe it might be a repeated question. So on the Performance Chemical II plant, are we on track for September production beginning No. No. No. I think there was a there will be delay because of these all these labor issues we had over the last couple of months. So, yeah, I think there would be a delay, and we expect to plan to start in November ish. Okay. So that'll be commercial production or trials in November? Commercialization. So I think in between November and March will be stabilization phase, and you can expect any revenue from quarter one.

46:53 Okay. I see. Got it. All right. That's all from me. Thank you. Thank you so much. Thank you. Next question is from the line of Manish, an individual investor. Please go ahead. Hi, sir. Am I audible? Yes, sir. Hi, sir. So thank you for the opportunity, sir. So I've been with you guys since the IPO days. So as a momentum, I had few queries. So the first query was regarding the PAL export since we're exporting more PALs now. So do we see the EBITDA margin in your profit to increase for two, three quarters... Two, three years down the line.

47:39 Second query is we have... The EBITDA margins will keep improving because as we get into sales of more and more higher grade, the EBITDA margins will keep improving. Plus running the plant over the last couple of years, the operational efficiencies also kicks in. So we are very confident that the EBITDA margins will keep improving. Okay, sir. Second question is regarding the last two, three con call you had issues because of the Chinese competitors that are affecting the business and also because of the tariffs. So now we have a sort of idea about what tariff, when serious impact on India will put on India. So do we see any orders coming from The US or any inquiries from The US?

48:27 It good as of now? And has that China competition Europe, our exports to US have been very, very steady. Okay, sir. Okay, And the third thing is regarding the maintenance crisis. There are two parts to it, right? One part is the prices of raw material and the second part is the shipment cost. So now both are high, right? So that will impact our profitability maybe for some time in Is case it gets my understanding correct? Absolutely correct. Okay. And sir, the fourth part is we had the new operating there. You will be signed. It will be active, I think, next year, and we have a subsidiary in Netherlands.

49:14 So that subsidiary is for the planning... For planning, right? So we will be getting for all the clients for the year, is my understanding correctly as well? No, we will be starting the subsidiary in mid September and it will be operational starting there. So and that will catch up the unit demand? Of course. Sir. All the best, sir. We just Thank you so much. Just waiting to grow with you guys, sir. Sir one more thing and one more thing. Sir from the last two calls, was not able to ask any questions. Can you, I do want to, can you allocate ten minutes of your comfort to retail investors at the end, so that if the retail investors have some queries, they can ask you. Because we have only one medium to contact you, sir.

50:03 No, sir. Absolutely, I mean, they have no issues absolutely there. Yes, sir. Sir, thank you very much, sir. Thank you so much, sir. Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Sidharth Sikchi for closing comments. Over to you, sir. So thank you all for attending the company's quarterly performance. I really appreciate all of you taking your time out. And if we have if there is still more clarity, you can reach out to us. But thank you so much. Have a good one, and have a great weekend. Thank you, sir. On behalf of Clean Science and Technology Limited, that concludes this conference.

50:52 Thank you all for joining us today, and you may now disconnect your line.