Camlin Fine Sciences Ltd (CAMLINFINE) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Camlin Fine Sciences Limited Q2 and H1 FY '27 earnings conference call. 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that that this call is being recorded. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involves risk and uncertainties that are difficult to predict. I now hand the conference over to the management for their opening remarks. Thank you and over to you, sir.
Nirmal Momaya (Camlin Fine Sciences Ltd): Good evening ladies and gentlemen and welcome to the
Nirmal Momaya (Camlin Fine Sciences Ltd): Q2, FY27, earnings call. I'm Nirmal Momaya, the Managing Director of Camlin Fine Sciences. And welcome again. I will hand over the call to Santosh Parab, the President Strategy and, Global Finance for updating you on all the decisions taken in the board meeting, as well as on the earnings, for this quarter, Q2 of, financial year '27. Santosh, over to you.
Santosh Parab (Camlin Fine Sciences Ltd): Thanks, Nirmal. Good evening everybody. We also have our, CFO, Pankaj Pandey, with us, who just joined and he'll be also accompanying us in this call. I straight drive down to the two main decisions which were taken. One, one of course was the financial statements. But the other decision was that our board today approved a rights issue of around 250 crores. And we, so we'll be filing our draft letter of offers to stock exchanges tomorrow and wait for that approval and very soon we'll launch the issue. This issue has been backed by by our promoters to the extent of their share individually and or inter se. As you know there we have been talking about the liquidity issues, we are also seen that we had negative carries in in our earlier quarters. Quite a few, three, four quarters and even this quarter I will discuss about it. It is not not very encouraging on the EBITDA numbers and the cash flows. And also the rap- economic conditions, the prices price changes, our inability to increase transfer the increase of prices to our customers, local competitions, and which has been impacting the liquidity issues. Liquidity issues impacting our margins because we had overdue creditors. We had this channel financing, so it was imperative and this this liquidity issue was also impending our growth, though some of the verticals have immense potential, but we are not able to push despite having excellent opportunities and markets. So, we thought that and the promoters and the managers thought that it's the right time to infuse the infuse equity, infusion of equity which will help to bring the growth engine back on track and it will it will help. Of course, this this liquidity due to the procedure will take some time and and and we expect that we should be in money by the end of this calendar year or early part of the next year. Obviously, you know know the process that after the letter of offer is approved by the stock exchanges, we'll immediately approach the board, decide the procedure, the pricing, pricing, the cut-off, and the issue size. Obviously, this purpose of the issue is for augmenting working capital, and no other there are no project finances or other things. We are trying to stabilize the working capital. So, obviously, this this infusion also is to bring back and come back on the on the growth prospects of the company. Coming down to the the financial results, of course, the financial results doesn't seem to be encouraging at all. But, as I said, the issues of higher prices, inability to transfer those prices, local competition in some of the products. We had to we had changed over from ethyl vanillin to methyl vanillin almost 1 month before this quarter end and that has also impacting the impacted the the sale of Aroma, the production of Aroma. Under utilization of the plant has also impacted our margins and the EBITDA margins of Aroma. We almost our revenue in Aroma has reduced from 77 774 million to 472 million and this is entirely almost ethyl vanillin sale. Blends and the states the specialty ingredient ingredient business has been always the hallmark and it has always done well. We have been able to hold our market in the blends business or the ingredients business and we were 3,086 million lastly last quarter, but
Santosh Parab (Camlin Fine Sciences Ltd): quarter we are around 2,970 million. Of course, we would have grown much, much faster, but for the liquidity issues, we have been not pushing the growth because this would have created working capital issues. On States also, we had been talking for last two quarters that our volumes have decreased a bit, but we have come back and we have taken back the volumes. We have moved from 927 to 100 and 1,109 and this is despite the local competition, which is trying to reduce the prices and try to take market share, but we have been able to keep our market share and we we feel that we will be able to keep keep keep this trajectory on. Consequently, the EBITDA, the total turnover of this this this specialty ingredient was a bit higher from 4,013, we moved to 4,089. Obviously, these both these sectors we could have pushed more, but for the liquidity. EBITDA obviously improved from 6.35 to 8.04. This has this with adequate liquidity support this this this should very fast go to the double digit. Performance, the residual thing here, we have the diphenol plant, which has been closed since May May of 2006. We closed it because of the exorbitant input prices and the rapid changes in the prices. The basic raw material phenol which is almost double more than doubled in last six months and it is economically untenable to make diphenol. So, it is much, much cheaper to buy vanillin sorry, hydroquinone from China, which is which is much cheaper at this level and we feel that the Chinese will will be reducing the prices further because we have we have learned that there will be additional capacity is coming on both the diphenols, hydroquinone as well as well as catechol. We have been largely able to control our costs despite the revenues have come down. We have been able to hold on to our our costs of other expenses, the fact this sector. This is despite we had freight costs, which has almost doubled in this quarter because of the war situation and other things, but still largely the operating expenditure has been controlled. As far as gross margins are concerned, we have lost around almost 2% of the gross margin. This is mainly because of high prices, dollar going up and the main culprit here is the liquidity issues. Our payables had increased, but to support more and to have more working capital, we had used channel financing both on the purchase side as well as sales side. Obviously, channel financings costs us because any channel financer will take interest and because it is on the cost and sale side, this has the impact has moved to the to the gross margins and and on overall basis, our gross margin has reduced from 2,142 to 1,958 in this quarter. And this has percolated down and eaten up our EBITDA which anyway was 3.4% has almost come down to 2 to 0.5 5% in in this quarter. Obviously, the question will be that how how how how this rights issue is going to help us to come out of the the trouble and how it will help us to grow back. Obviously, the first and the foremost thing which will is going to come is to the margin improvement, because at present, since I'm using the channel financing and in the long even the long outstanding accounts payable, which I have, obviously, people have been charging us higher rates to cover their interest costs because of long outstanding. That itself is around 4% on 4% of the overall cost that that comes to around 190 to 200 million rupees in a quarter. So, if you are able to release this long outstanding
Santosh Parab (Camlin Fine Sciences Ltd): accounts payable, as well as we're able to unwind the channel channel financing which we have. This could be a direct margin improvement. This is the so-called interest savings which is coming because of funding from from the rights issue. In addition to that, as I said earlier also, we had good prospects in Europe. We we didn't push our business in blends obviously because of liquidity issues. So, there are a lot of low-hanging fruits, and almost 500 over and above what we did 3 that turnover which we did of 300 million, we can add another 50 crores to that. So, this can be easily added. So, the 3,000-odd revenue for the quarter can be increased further by 500 million just by providing working capital, and this is a 35% margin business. The fixed cost covered, this can add another 175-odd million rupees of margin. The third and the most thing we have been always saying that our super profits of the blockbuster thing is the vanillin product vanillin, but it has for various controllable and uncontrollable reasons, economic change, the economic viability, distributor challenges, we were not able to scale up. But now, there are a lot of green shoots, and we'll discuss that much. Obviously, there will be a question end on this, and we can explain why why we're saying this. We're looking at that we can be able to with an effective distributor management and identifying strong distributors, we can push at least 1,000 metric tons per quarter. At at at a reasonable price of $12-odd, we are not looking at a $14 or $15. We're sending at $12 because distributor will take their margins, but we see that we can do around 1,000 metric tons at $12, which means that we can have an incremental revenue of around 6 650 to 700 million in the coming quarters, as compared to this quarter, and that brings additional gross margin of around 230 million. So, if if I say that what would have been my adjusted EBITDA, if if I would have had, then, enough liquidity cushion, I my EBITDA should have been somewhere in the range of 575 to 630. And obviously, the revenue would have also been at 6 600 6,000 plus if I would have had the liquidity, and which would have made meant at least a double digit minimum margin. So, the the these are the low-hanging fruits which which we see. Obviously, will this come in the subsequent quarter, Q3? To be frank with you, because the whole rights issue procedure, as I said, will be completed by end of this calendar year, so it looks like we have to be we have to fight for this third quarter to to to stay afloat and at least give a similar result. We would have liked a much better EBITDA, but to be frank with, I think we will have some improvement on what we did or rather I will say that we cannot go below what what we have done in Q2. So, we we will be a tad better on the margin, not very big improvement, but tad better than the margin in Q3. But Q4, I think we can we have with the liquidity support, we can cross 6,000 turnover, and EBITDA at 10% and part. Coming down to the balance sheet, as as I said, because of liquidity crisis, we have used channel financing, and that is that meant that we don't have our loan book has not increased a lot. We have been able to keep that loan books that net debt under control. It was around 5,220 5,260 million, which has gone up to 5,380 mil million, and a large portion of that is because of the foreign exchange up updation. Our interest cost without forex was around 163, which was 169. That's because of not much. We have also repaid some low some loans, despite the
Santosh Parab (Camlin Fine Sciences Ltd): the crisis we have been able to repay the loans. With respect to the banking system, we are performing because our business is there and we have cash flows to pay pay the interest and and repay the loans. With this, I will open the floor for for discussion and questions. Thanks.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Pratyush Kumar from InCred Equities. Please proceed.
Pratyush Kumar (InCred Equities): Yeah, am I audible?
Nirmal Momaya (Camlin Fine Sciences Ltd): Yes.
Pratyush Kumar (InCred Equities): Yeah. So, a couple of questions from my end. First regarding, you know, the channel financing, basically the rights issue and all. So, I just wanted to have your, you know, outlook on, had we been able to, you know, do this rights issue prior, what would have been the incremental gross margin, as such, due to that? First. Second, what would have been the, you know, kind of revenues, incremental revenues over and above whatever we posted in the Q2? So, that's regarding the rights issue part. And second, regarding the vanillin realizations. So, just wanted to understand, what's nominal blended vanillin realization, and what's the vanillin realization net, basically factoring the discounts and credits, etc., which would be giving to your customers?
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