Operator: Ladies and gentlemen, good day and welcome to Yasho Industries Limited Q2 FY27 Earnings Conference Call, hosted by MUFG Intime. 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 this conference is being recorded. I now hand the conference over to Ms. Sejal Bhattar from MUFG Intime. Thank you, and over to you, ma'am.
Sejal Bhattar: Thank you, Yusuf. Welcome to Yasho Industries Q2 and H1 FY27 Earnings Conference Call. From the management today, we have Mr. Parag Jhaveri, Managing Director and CEO, and Mr. Chirag Shah, CFO. Before we proceed with the call, I would like to give a small disclaimer that this call may contain certain forward-looking statements, which are based on business operations and expectations of the company as of today. These statements are not guarantees of future performance and involve risks and uncertainties which are difficult to predict. A detailed disclaimer has been given in the company's investor presentation, which is uploaded on the stock exchange. Now, I will request Parag, sir, to give his opening remarks. Over to you, sir.
Amit Vora: Good evening everyone, and thank you for joining us for the Yasho Industries Limited Q2 and H1 FY27 Earning Conference Call. We are pleased to report a strong performance in the first half of FY27, driven by robust volume growth, increasing demand across our key market, and continued progress in strengthening our industrial chemical business. These results reflect the benefit of our investments in manufacturing capacity and the opportunities we see ahead. For Q2 FY, we have achieved the sales of INR 147.33 crore, while for FY27 it has stood at INR 656.98 crore, registering a year-on-year growth of 71.7%. EBITDA has increased by 122.8% to INR 147.33 crore. We recorded volume growth of 62% year on year and 7% on quarter on quarter, supported by higher offtake from existing customers. Our industrial chemicals business remain a key growth driver, contributing approximately 90% of the revenue.
Parag Jhaveri: Our focus is on strengthening our product portfolio and capturing a larger share of the addressable market through deeper customer engagement and the new product offerings. Capacity utilization stood at 66% in Q2 FY27, reflecting better demand absorption across our key market. Our priority is to ramp up utilization further, which shall enable us to benefit from better fixed cost absorption. Export accounts for 70% of the revenue. The supply agreement we signed last year will start contributing to our growth from FY28. Company has issued INR 120 crore to date under the contract. We are expecting trial production by Q4 FY27 and commercialization in the Q1 FY28. We remain focused on executing these milestones as planned. We foresee growing demand for several of our products. We have committed a CapEx of INR 250 crore this year on building two new manufacturing buildings at our Pakhajan site.
Parag Jhaveri: This will enable us to grow beyond FY28 and enable us to pursue projects that align with the long-term growth plan for the company. With that, I would like to thank our employees, customers, shareholders, business partners, leaders, and the Board of Directors for their continuous support. Thank you. I will hand over to our CFO, Mr. Chirag Shah, who will take you through the financial details.
Chirag Shah: Thank you, Parag bhai, and good evening, everyone. I will take you through the financial performance of Yasho Industries for Q2 and H1 FY27. Total income stood at INR 347.92 crore, compared with INR 183.6 crore in Q2 FY26, registering a year-on-year growth of 89.5%. EBITDA increased to INR 72.92 crore from INR 33.42 crore, representing growth of 118.2%. Profit after tax stood at INR 33.68 crore, compared with INR 4.86 crore in the corresponding quarter last year. Our net working capital cycle stood at 149 days as of H1 FY27. On capital expenditure, the planned outlay for FY27 stands at INR 250 crore. This will be funded through internal accruals of INR 100 crore and INR 150 crore of term loans, which has been sanctioned. This investment is intended to support the company's manufacturing expansion and future business requirements. Our focus remains on deploying capital in line with project milestones while maintaining financial discipline.
Chirag Shah: Total debt stood at INR 615 crore as of Q2 FY27, comprising short-term debt of INR 329 crore and long-term debt of INR 286 crore. Our debt-to-EBITDA ratio stood at 2.09x in H1 FY27 compared with 3.74x in FY26. Our ROE for H1 FY27 stands at 27.3%, and our ROCE at 18.4%. During the quarter, the cost of freight increased from INR 10 crore in Q1 to INR 20 crore in Q2. Increase in gas prices in the quarter also resulted in an additional expenditure of INR 1.8 crore. Operationally, the company had to absorb both these additional expenditure as we cannot pass on the spot changes on input cost to customers where purchase orders have already been accepted. We expect this to be passed on to the customers from this quarter onwards. Overall, our financial performance for the first half reflects strong year-on-year growth.
Chirag Shah: Going forward, we will continue to focus on disciplined capital allocation, efficient working capital management, and maintaining a healthy balance sheet. Thank you. We will now be happy to take your questions.
Operator: Thank you very much, sir. 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 withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Lovish Soien from Burman Capital Management. Please go ahead.
Lovish Soien: Hi. Thank you for the opportunity. Am I audible?
Parag Jhaveri: Yes.
Lovish Soien: Yes. Sir, my question is regarding the capacity utilization that we have reported and the revenue growth that we have shown. As I can see from Q4 FY26 to this quarter, our revenue has grown by roughly 40%, while our utilization has only grown from 60% to 66% over two quarters, which as per my understanding implies 10% volume growth. How should we think about volume growth and pricing growth over these quarters, and what are the drivers of the pricing growth that we have seen?
Parag Jhaveri: I think, I do not know, there is some misunderstanding on calculation. The growth in this quarter is above 7% in volume, Q1 to Q2, and in value terms is about 13%. I do not know how you got a different growth number. Are you talking Q4 or are you talking Q1 before it?
Lovish Soien: Actually, I was comparing Q4 to this quarter because I wanted to look at-
Parag Jhaveri: You cannot compare Q4. Either compare Q1 to Q2, or you compare from Q4 to half yearly. So half yearly, we have grown almost by 73% in our revenue, sorry, in volume growth.
Lovish Soien: Got it. So this is year-on-year, sir, or H2 versus?
Parag Jhaveri: Yeah. Six months growth in volume growth.
Lovish Soien: Got it. So actually, sir, what I wanted to understand is that if we look at our index of core basket of products, how has our pricing moved for these products, let's say pre-war versus today?
Parag Jhaveri: Well, I think if you are looking at the March quarter to today, this six months down, prices have increased by 10% to 15% because of the raw material price increase.
Lovish Soien: Got it. And the rest of the increase, sir, would be pricing, sorry, mix change?
Parag Jhaveri: Mix change. Absolutely product mix.
Lovish Soien: Got it. So sir, would it be correct to say that our new products that we have introduced, those would be higher margin and higher realization as compared to our previous products that we were doing?
Parag Jhaveri: No, I don't think so. That's a wrong assumption. See, again, we have increased certain new products from 140-plus to about 152 products we have now today.
Lovish Soien: Okay.
Parag Jhaveri: A couple of products which were sold, sometime low volume in the past, certain matter sold higher volume. So there's a lot of mix. You understand, it's not only 20%, 150 plus products now. So difficult to get which product lines will be. But we see an overall good demand for the product and also the pricings are quite strong. When you're looking at the price, also price include the top line, include the freight cost too. So that is also you can see a higher revenue, but you deduct the freight, which we incurred during last quarter higher. If you deduct them, there won't be that much growth.
Lovish Soien: Got it. No, actually, sir, the way I am seeing is it that over the last two quarters, if you compare Q4 to Q2, our gross margin has roughly increased by, again, 200 bps. Just wanted to understand what is the driver of those gross margin. Is it like our products are having higher margin, or is it that we have been able to pass on costs which are more than the. We have been able to increase price, which are more than the cost.
Parag Jhaveri: I think more on that I will put the deleveraging of the assets. The volume has grown, fixed cost has come down. So I will put that as a major factor to increase on the EBITDA margin. Look at my gross margins are constant. If there's a plus minus 1%.
Lovish Soien: On EBITDA I can understand, but gross margin is also improving.
Parag Jhaveri: About 1%. I do not know. This is INR 20 of product mix. I put that in.
Lovish Soien: Got it.
Parag Jhaveri: Thank you.
Lovish Soien: Got it.
Parag Jhaveri: Thank you.
Lovish Soien: Okay.
Operator: Thank you. Before we move to the next question, a reminder to the participants, to ask a question you may press star and one. Next question is from the line of Aman Vij from Astute Investment Management. Please go ahead.
Aman Vij: Good afternoon, sir. My question is on the MNC contract, which will be starting from next year, which is worth INR 150 crore. So for how many products is this contract for?
Parag Jhaveri: Well, that is confidential. We are under NDA, so cannot divert that information.
Aman Vij: Okay. This is one contract we had gotten two, three years back. I believe there are four such MNCs in the world. First of all, when we are doing additional CapEx of INR 250 crore, is there more visibility from the same customer? Is there more visibility from another of the big MNC customer that we were trying for a while now? Could you give some color?
Parag Jhaveri: Aman, honestly, first and foremost, you need to be clarified what four big customer referring. I do not know. I have many, many big customers, MNCs in our customer list.
Aman Vij: Okay. I was talking about the INR 150 crore order we have from one of the big MNC, right?
Parag Jhaveri: One of the big MNC, but you are talking about the four. I do not know about what are the four. Yes. Well, when we are talking about the new CapEx, it is because of the customer request for additional quantity. Also, lot of our existing and new customer we onboarded in the last six months, couple of multi customers or onboarded large customers. For them also, we need to create some additional capacity. This is a mixture of existing and the new customers we onboarded has given us the confidence to put the additional CapEx.
Aman Vij: Okay. Makes sense, sir. Just some final question. Now, we are at 65% utilization, and we have already reached a very decent margin. You explained it is mix of both product mix and operating leverage. But there were some additional costs this quarter which we will pass on. But say, going forward now, every quarter like you have explained, we will try to increase utilization. Do you think there is scope, not now, not immediately, but in next two, three quarters when our utilizations are much higher to increase the margin even further, providing the cost remains the same?
Parag Jhaveri: Yeah. See, this is a really challenging time as of today. We need to be cautious about passing on all the cost to customers because as you see, we are more into the export market rather than the domestic market. When in export market, other geography has some time a better room to prices compared to us. So we have to be cautious. We will always try to maintain our EBITDA more than 20+%. That is what the company will do. Anything about that could be your guess. I cannot comment on that every quarter on quarter because too difficult. Things are really volatile. Current scenario is very volatile. We are ensuring that we get at least 20%, 21% or something more than that. But that is our aspiration. Maintaining that is our aspiration, and that we will do our best to do that.
Parag Jhaveri: As the capacity grow up, definitely there will be a more deleveraging on a full fixed expenses. That will help us. Rather than we try to aspire for a more profit, I will aspire to go with cut down, passing on the benefit of a deleverage to the customer and to grow the business.
Aman Vij: Okay. Thank you for answering the question.
Parag Jhaveri: Thank you.
Operator: Thank you. Next question is from the line of Darshil Jhaveri from Crown Capital. Please go ahead.
Darshil Jhaveri: Hello.
Parag Jhaveri: Yeah.
Darshil Jhaveri: Hello. Yeah, hi. First, congratulations on a great set of numbers and a fabulous margin, sir. Sir, I just wanted to know in terms of our margin spread. It is doing 20% plus, sir. Is there any risk you see that costs are maybe due to the elongation of port might be on more increasing trend than as you said rightly that you cannot pass on everything to the customer. So is there any risk of the margin declining a bit? Could you help us in that, sir?
Parag Jhaveri: I think we are working hard to maintain this margin. We will do our best. I cannot comment. Tomorrow, there will be some adverse factor which can impact, but I do not foresee that factor coming so soon to us. Demand is not slowing down. That is one good sign for us. Demand is growing. We are able to reach out to either existing customers or new customers with our price band, and we are gaining the business. In short term, I do not see a challenge. We will see how far, how things progress with the current crisis.
Darshil Jhaveri: Okay. That is really great to hear, sir. So, sir, just wanted to know, sir, next year when we will have higher operating leverage and capacity utilization, can we do around 23% to 24% EBITDA margin?
Parag Jhaveri: I do not know. I will say I will do more than 20%. That will be your guesswork.
Darshil Jhaveri: Okay.
Parag Jhaveri: Thank you.
Darshil Jhaveri: Yeah. Thank you. All the best, sir.
Operator: Thank you. Participants, if you wish to ask a question, you may press star and one. Next question is from the line of Umesh Gupta from AlphaOptimus PMS. Please go ahead.
Umesh Gupta: Yeah. Hi. My question is again on the margins. I think in the last quarter con call, on your 24% odd margin, you were asked repeatedly about whether you will be able to maintain this margin, and I think you sounded very confident that you will be able to maintain margins. Yet one quarter down the line, we see a 300 basis point decline in margins. Now I think you are giving a guidance of 20% plus margins. So how should we read into it that, I mean, one quarter, the margins fell by 300 basis point. Should we assume that this is a base or there can be more accidents in terms of margins?
Parag Jhaveri: I think this is more of a challenge of a current crisis, unexpected increase during the quarter or during the six months of a contract happening that has not been passed on. I will not say more than that. Margin has shrunk purely. In last con call, we said that we will be happy to maintain the margin. Still, the guidance was 20% plus on an EBITDA, and we stand by to that commitment of 20 plus, but I cannot give you more than that. I do not have any assurance today. What we just concluded some of the business in last one week for next quarter, I do not know what my freight will be November, December. We cannot comment on. We can assume that freight will be certain bandwidth, but it can increase the bandwidth, can hit, it will reduce, we will gain.
Umesh Gupta: Okay. The entire impact of this around 300 basis point on a Q1 Q basis is on account of freight only or there are other things also?
Parag Jhaveri: I think the 200% was freight and the energy cost. Balance 1% may be because of the product mix, the margins fluctuate.
Umesh Gupta: Okay. In fact, in Q1, you mentioned as the capacity utilization goes up, you will be probably aspiring to do better margins. Which means that there has been no operating leverage which we have been able to gain by increased scale of operation in this quarter vis-à-vis Q1?
Parag Jhaveri: No.
Umesh Gupta: Will there be any gains whenever you aspire to go up from 66% to, let's say, 70%? Will there be any gains in operating margin or you think that 20% is the best case?
Parag Jhaveri: Well, 20% will be the lower side. I will use that way. Anything above 20% we will be happy to achieve, and we will work for that. But I cannot assure you that we will achieve 24 or I will achieve 25 or I don't know. That's too difficult to say in current situation. Also, we need to gain more market share in this crisis, so it's better to be wise than the foolish to increase the market. Despite your saving on your deleveraging, you want to increase the margin.
Umesh Gupta: Okay. Thank you, sir.
Parag Jhaveri: Thank you.
Operator: Thank you. Next question is from the line of Rohit Sinha from Sunidhi Securities. Please go ahead.
Rohit Sinha: Yeah. Thank you for taking my question, sir. First thing is, as in the PPT you have mentioned export revenue is close to around 70%. Can we get the number for H1 FY26 and Q1 FY27?
Parag Jhaveri: Q1 was about 65%. Q1 2027 was 65%, which has gone to 70%. And for FY26, it was in the range of 63%.
Rohit Sinha: Okay. And sir, given these high export number, obviously this logistic cost remains a key concern for us. And as you indicated that it has almost doubled in this quarter. So how we are seeing going forward these logistic costs right now shaping up and how much it is possible to pass on to the clients?
Parag Jhaveri: Well, wherever there is a fixed contract for six months until December, like we assigned in the month of June, those cannot be changed. The one which was for quarter on quarter, that where the price we can pass it on. Okay, so depend on the pricing and which is a spot business today, whatever we are getting business negotiated, we take the current price.
Rohit Sinha: Okay. Got it. Sir, with all these CapEx which is currently going on, when will we be expecting this full CapEx to be completed and next sort of revenue stream to kick in?
Parag Jhaveri: No, that two building CapEx will be started commercialization only by the last quarter of 2028 or first quarter of 2029.
Rohit Sinha: Okay. So it will take time. One last question. As you have mentioned earlier, that from March to September, almost 10% to 15% increase is there on the raw material prices. I believe there is more price increase in lot of other chemicals. So, still it is yet to reflect in our numbers or that is only 10% to 15% is only what increase we have seen in our set of raw materials.
Parag Jhaveri: Well, it is a mix of. Some there could be 100%, some there could be zero. So I am looking at 10% to 15% as overall hit on our raw material price.
Rohit Sinha: Okay. That is one more question.
Parag Jhaveri: Thank you.
Rohit Sinha: Thank you.
Parag Jhaveri: Yeah. Thank you.
Operator: Thank you. Next question is from the line of Jainam Madrecha from C9 Family Office. Please go ahead.
Jainam Madrecha: Hello. Am I audible?
Parag Jhaveri: Yes.
Jainam Madrecha: Thank you for giving me the opportunity, and congratulations on good set of numbers. Just wanted to understand, recently there have been some sanctioning on the Chinese players. Has this impacted us positively? How big the market was and how big the market for Yasho Industries has opened up for us, and whether we are seeing increased demand because of this sanction?
Parag Jhaveri: Are you talking about what product line Chinese sanction? And where? Who has put Chinese sanction?
Jainam Madrecha: European sanctions on Chinese players.
Parag Jhaveri: I have no idea which company. Can you just please allocate for me?
Jainam Madrecha: Richful.
Parag Jhaveri: Well, I do not know how much impact that has on the business. We see very limited impact on that one.
Jainam Madrecha: Okay.
Parag Jhaveri: Yeah.
Jainam Madrecha: That was my question. Thank you.
Operator: Thank you. Next question is from the line of Ajit Sethi from Eiko Quantum Solutions . Please go ahead.
Ajit Sethi: Yeah. Thank you for the opportunity. Sir, as of phase 1 will be operational in Q1 FY28. So what kind of utilization we can expect in FY28? Going forward, how should we see the ramp-up in FY29? For the phase 2, what kind of utilization we can expect in FY29?
Parag Jhaveri: Well, with the current capacity and the current year expanse, what we are doing is a special project, which we are looking at in the range of about 75% utilization in FY28. While FY29, for the new two building, we are looking at a 50% to 60% utilization in first year, then going forward it will increase.
Ajit Sethi: Sorry, you said 60% to 65% utilization, right?
Parag Jhaveri: 50% to 60% utilization for phase 2.
Ajit Sethi: For current phase 1 in FY29?
Parag Jhaveri: Should be in the range of about 80%, 85%. From 75% it will go to 80%, 85%.
Ajit Sethi: Okay. Thank you, sir.
Parag Jhaveri: Thank you.
Operator: Thank you. Participants, if you wish to join the question queue, you may press star and one. Next follow-up question is from the line of Lovish Soien from Burman Capital Management. Please go ahead.
Lovish Soien: Yeah. Thank you for the opportunity. Sir, my question is regarding the new CapEx that we have announced of INR 250 crores last quarter. Have we tied up with any customers for this phase of CapEx or is it more speculative in the sense that we will first do the CapEx and then go out to customers? Or have we tied up with any customers in particular?
Parag Jhaveri: There is a soft commitment from the customer.
Lovish Soien: Got it. How much of that soft commitment would cover the total utilization?
Parag Jhaveri: About 50%.
Lovish Soien: Understood. Last quarter, I think we mentioned that our utilization for FY27 would be roughly 75%. If I look at the-
Parag Jhaveri: 70%, 75%. Yes.
Lovish Soien: Yeah. All right. So if you look at H1, it is roughly around 65%. Does that mean that utilization in the second half could be as high as 80%?
Parag Jhaveri: We have always experienced in Yasho Industries's history that the Q2 is always lower. This time, surprisingly, we have surpassed also Q1 number on utilization point of view. Yeah, we do expect a better utilization in next two quarters, means current quarter and next quarter. So October Q3, Q4. Always that is our historical higher sales.
Lovish Soien: Understood. Sir, just one last question a bit on the fundamental side. We have been hearing that large global lubricant additive players are looking to localize their production in India. Just wanted to understand what are you seeing on the ground in terms of these events that are happening, and what is the opportunity side that you see from the shift in strategy by these large players?
Parag Jhaveri: Yes, we also see some inquiries on that part of it. A lot of people are looking to source locally made product, and it is a quite good opportunity for us to work with them. Since we get the local business, we also expect to get a little global business from them. So it is a sizable opportunity for us.
Lovish Soien: Is our INR 250 crore CapEx for this strategy or will this be incremental to what we are already doing?
Parag Jhaveri: No, this will be part of that strategy and part of it is incremental.
Lovish Soien: Got it. Sir, any quantification you can do in terms of the total size of this opportunity can be? I am not asking about the revenue or in any particular year, but what is the total potential of this opportunity for us?
Parag Jhaveri: It is difficult to guess, my dear friend. That is purely guesswork, and I do not want to do any guesswork.
Lovish Soien: Okay. Thank you, sir. Thank you for answering my questions.
Parag Jhaveri: Thank you.
Lovish Soien: All the best.
Operator: Thank you. Next question is from the line of Ghulam Soni, an individual investor. Please go ahead.
Ghulam Soni: Hi, sir. Thank you for taking my question, and congratulations for good set of numbers. First of all, I would like to make a comment. Our past 3 years results are quite stable in terms of maintaining EBITDA margin above 17%. Long term, we have kind of graduated towards a more stable EBITDA margin kind of company. What I want to ask, sir, is our business model after this chemistry R&D setup that is now done in Pakhajan, are we kind of looking for multi customer based on our R&D setup that we can innovate products for them in industrial chemicals in different kind of applications other than these which we are currently manufacturing in lubricant chemicals. Are we exploring some of that, leveraging our chemistry lab or chemistry expertise?
Parag Jhaveri: Obviously. Our R&D team works on a different process. One of them is also lubricant and also the customer what will need. Besides that we also work on lot of other industrial application too in our R&D. That will be our focus point.
Ghulam Soni: So sir, beyond FY28, where we are targeting 1,600 kind of a number. Are we kind of shifting our business model towards more customized solution for our clients in future?
Parag Jhaveri: If there is an opportunity, we will be. Why we should stay away? We will work hard to also get that opportunity.
Ghulam Soni: So in terms of mindset or kind of a strategy in terms of business strategy, are we exploring that or more inclined towards that? Because we have demonstrated that we can maintain our margin for a long period of time.
Parag Jhaveri: Company has a lot of strategy for the growth, and I cannot disclose those strategies here on this call. But the company is aspiring. Company has also planned. Company will come with a further future growth prospect in end of 2027 call, what we are looking for further down the line. So we will give that guideline that time.
Ghulam Soni: Okay. Thank you, sir.
Parag Jhaveri: Thank you.
Operator: Thank you. Next follow-up question is from the line of Rohit Sinha from Sunidhi Securities. Please go ahead.
Rohit Sinha: Yeah. Thank you for the follow-up. As you in earlier participant question mentioned that we are looking to gain the market share. That would be in the domestic market or in the export market? If that so, what kind of scope we have to expand it?
Parag Jhaveri: I think there is ample opportunity. In our presentation, we have said that there is an addressable market of $15 billion. We are just talking about growth of from $100 million this year, $120 million this year, we will grow. We can go up to $300, $400 million. We do not see a challenge there, but it will take a while.
Rohit Sinha: Yeah. But does that mean that we have to shave off margin to a big extent, or maybe 1% or 2% would still be good enough for us to get the market share?
Parag Jhaveri: I do not know. I will not comment on that because we are not shaving a margin as far as I understand. We do not intend to do that. But if we have to, we will see.
Rohit Sinha: Rest of the players are doing at a higher margin or how? That is what I.
Parag Jhaveri: No idea. I have no idea about other players' margin or what they do, what they do not do. We always aspire to work about 20% margin. That we will continue to do that.
Rohit Sinha: Okay. On domestic and export side, opportunities on both sides for us are similar kind or export has a better angle? Anything on that.
Parag Jhaveri: I think numbers speak. Numbers in the data both speaks.
Rohit Sinha: Okay. Okay, sir. Got it.
Parag Jhaveri: Thank you.
Rohit Sinha: Thank you.
Operator: Thank you. Participants, to join the question queue, you may press star and one. Next question is from the line of Aman Vij from Astute Investment Management. Please go ahead.
Aman Vij: Yes, sir. My question is when you talk about two buildings, is this all for phase 2, that INR 150 crore CapEx, or is one building phase 1 and the other building is called phase 2?
Parag Jhaveri: No. Currently, we have two buildings existing in the Pakhajan facility. We are building two additional buildings that will be for our future requirement. Current two buildings, we have a lot of space empty, which will be filled, hopefully by end of FY27 or maybe little bit sleep over until Q1 of FY28. So building one, building two will be fully occupied and operational by that time. Building three and building four will be operational earliest by Q4 of 2028 or Q1 of FY29.
Aman Vij: The total CapEx, when we talk about INR 250 crore, it is for building three and four.
Parag Jhaveri: Partially, with some equipment also for building 1 and 2 also.
Aman Vij: Okay. This was the confusion.
Parag Jhaveri: No, we will need additional CapEx to fill that building 3 and 4.
Parag Jhaveri: That we will talk in the month of January or April con call.
Aman Vij: Okay, sir. That makes sense. Second question is, in one of the interviews you had talked about that your first goal is taking the sales to double.
Parag Jhaveri: Sorry?
Aman Vij: Sir, in one of the interviews, you had talked about that your first goal is to take the sales to INR 1,500 crore, doubling by FY28.
Parag Jhaveri: Yeah.
Aman Vij: Then there is another goal, in next two years, you want to double again.
Parag Jhaveri: Yes.
Aman Vij: You had mentioned you will be disappointed if you are not able to achieve that.
Parag Jhaveri: Absolutely. Yes.
Aman Vij: Yeah. The question was, again, say we are targeting $300, $400 million kind of sales in the next four to five years. Sir, out of this, do you think we will require, we had one contract worth INR 150 crore. Do you think we require several such contracts, or do you think this same contract can scale to maybe after we deliver in one, two years, can scale to INR 300, 500 crore? Because we have a three-year contract. Yeah.
Parag Jhaveri: We have disclosed only one contract because there was a material involvement. There was a financial transaction. There are several other contracts which the company is working. Where there is no financial implementation, we are not going to disclose.
Aman Vij: Okay. But in a sense, any contract which is if you get worth INR 100, 150 crore, this you plan to disclose, right?
Parag Jhaveri: No, I did not say. If you are going to get the money from my customer, then only we will disclose. Otherwise, we will not disclose.
Aman Vij: Okay. So there might be already a few contracts, like you are saying, for the INR 250 crore CapEx, we have soft commitment from our customers. So that because maybe there is no advances and all those things, you might not disclose, but you still have lot of other contracts which we are in talks, maybe final talks and all those things.
Parag Jhaveri: Absolutely. Otherwise, how can we make such a big commitment?
Aman Vij: Okay, sir. Final question is, so bigger segment of this industrial market, $15 billion, is lubricant. So most of the growth, say for next 3, 4 years
Parag Jhaveri: No, I did not say. INR 15 billion is including all the industrial, it is not only lubricant. Rubber and the performance chemical, everything included.
Aman Vij: Yeah. But for us to scale to $300, $400 million, do you think lubricant will be at least 40%, 50% of that? Or do you think no other segments also can scale, given a lot of the MNCs want to set up, hire up in India? What is your view on this thing?
Parag Jhaveri: Yeah, it is a mixed opportunity. There are a lot of opportunities coming from some of the performance chemicals also, who are looking at us to work on similar arrangement. Definitely, lubricant will be one of them, and lubricant rubber, we see a good opportunity in lot of diversified chemistry. Yeah, we are happy.
Aman Vij: Okay. But the same set of chemistry, the three, four segments we are into, lubricants, rubber, performance, this is good enough to scale to 300, 400?
Parag Jhaveri: I do not see a challenge there because, see, we have today a full-fledged R&D working for a new chemistry, and we are proud of that. That I see a good result coming out. In six months from there, I see a couple of good results coming out. So we are happy with that, and we are confident that that will help us to grow beyond 2028 because we talk about 2028, but what about beyond 2028? So that we need to work.
Aman Vij: Yeah. Any plans for next two, three years in terms of addition in R&D? You have mentioned some numbers in the presentation.
Parag Jhaveri: That will keep on continuing. As and when need arises, we do not shy away to invest in R&D. That is the backbone of the company.
Aman Vij: Okay. Any plans of backward integration of some of these products? Because I believe a lot of these products we are importing and doing the additives part with our formulation and all those things. But any plans you think we have for some of the backward integration of the products which are scaling for us?
Parag Jhaveri: We always evaluate this aspect, and we are taking the necessary steps as and when we feel fit to do that. As of today, none.
Aman Vij: Okay, sir. Okay, thank you.
Parag Jhaveri: Good. Thank you.
Operator: Thank you. Before we move to the next question, a reminder to the participants, to ask a question, you may press star and one. Next question is from the line of Kankar from Garg Advisors. Please go ahead.
[Analyst] (Garg Advisors): Yes. Hi, sir. Congratulations on good set of numbers. Sir, I have just two questions. My first question is, I think in the PPT we have mentioned that we are targeting INR 1,600 crore of revenues by FY28. I think given the guidance in the H1, it seems that we may be able to do some INR 1,400, INR 1,415 crore revenues in FY27. Don't you think this target is a bit conservative?
Parag Jhaveri: It's better to be conservative than optimistic, my dear friend, in today's scenario.
[Analyst] (Garg Advisors): Okay.
Parag Jhaveri: We'll be more happy if we cross the target. If we don't cross, then we'll ask the same question, what went wrong?
[Analyst] (Garg Advisors): Okay, because I think the management has always been very positive. I just thought that.
Parag Jhaveri: We are positive. We are positive even today. I do not want to commit anything more. We are very clear, sir, it will be more than 1,600. We did not give a 1,600 target. Absolute number.
[Analyst] (Garg Advisors): Okay. My second question is, this contract with this INR 120, INR 150 crore contract for which we have done a CapEx. When will that commercialize? Can we assume it will commercialize in FY28 or it will start
Parag Jhaveri: We already said that. We already said that it will start commercializing in Q1 of 2028. We have said.
[Analyst] (Garg Advisors): Q1 2028. Sorry, I missed that. My last question is, given a lot of unavailability of raw material because of the crisis, do we face any problem in procuring raw materials or there is no problem there and it is just the prices have increased?
Parag Jhaveri: No, there are a lot of challenges currently to procure the raw material, but that's okay. That's part and parcel of life.
[Analyst] (Garg Advisors): Sure. Thank you. Thanks a lot, sir. Best of luck.
Parag Jhaveri: Thank you.
Operator: Thank you. Participants, to join the question queue, you may press star and one. Next question is from the line of Amit Vora from PCS Securities. Please go ahead.
Amit Vora: Thank you, sir, for the opportunity. Sir, this question pertains to the debt of the company. Where do you see the debt panning out over the next couple of years with the kind of CapEx what we have in store?
Parag Jhaveri: Well, we try to keep it within the limits. As of now, we are well below 2.5. We will give a relook at the board level where we find our comfort zone.
Amit Vora: Correct. Any ballpark figure which you can give us for FY28 and 2029, where should we see your debt?
Parag Jhaveri: No, I do not have. I do not have that.
Amit Vora: panning out? Okay.
Parag Jhaveri: I don't have that.
Amit Vora: Thank you.
Parag Jhaveri: Thank you.
Amit Vora: Thank you.
Operator: Thank you. Next follow-up question is from the line of Lovish Soin from Burman Capital Management. Please go ahead.
Lovish Soien: Thank you for the opportunity. Sir, in last call, I think we mentioned that we have onboarded some new customers who had helped us to increase our volume offtake. Any new customers that are currently in the process of being onboarded who are close?
Parag Jhaveri: Yeah, there are many new customers are coming on board. Everybody says this.
Lovish Soien: No, sir. But any notable ones who might be significantly helping us ramp up volume over, let's say, the next couple of quarters?
Parag Jhaveri: No comments.
Lovish Soien: Oh, got it.
Parag Jhaveri: Thank you.
Lovish Soien: And sir, just one clarification I had. Hello?
Parag Jhaveri: Yeah.
Lovish Soien: Yeah. Actually, sir, if I see that the peak revenue that you have given from your existing facilities, it is coming out to be roughly around INR 1,650 crores.
Lovish Soien: Whereas if I see the revenue run rate that we are, we are already at INR 1,400 crores, which implies roughly 85% utilization.
Lovish Soien: Whereas when we talk about utilization, we are saying 66%. So just wanted to understand what is the discrepancy between the both, or am I not comparing the right numbers?
Parag Jhaveri: So understand this is a product mix. I don't know from where you are getting 1,400 number. I don't have that number in my site. If I had, I'd be happy. So yes, total revenue, peak revenue we can achieve about 1,600. We should be close to I think if we're able to utilize the plant at 80% in next two quarters, yes, we'll be able to achieve that. I don't see a challenge there, but that's a number as of 30 March 2026 CapEx. We are putting new CapEx in this year. We are having a new special contract will also start filling in from Q1 of 2028. That also will help us to continue to grow further.
Lovish Soien: Understood. Sir, is the peak revenue that we have mentioned in the PPT based on older prices? Because I think the prices have moved significantly over the last couple of quarters. It could be one of them.
Parag Jhaveri: Yeah, that could be. We need to be conservative here. If I put today's present price, drop tomorrow, then you will also ask me that why the price has gone, why your revenue has gone down.
Lovish Soien: Right. Okay. Just one last question. I think the 1,600 plus guidance that you have given, is it based on the current prices or is it based on pre-war prices?
Parag Jhaveri: It was based on pre-war prices.
Lovish Soien: Okay, understood. That is helpful, sir. Thank you.
Parag Jhaveri: Thank you.
Operator: Thank you. Next question is from the line of Harshal Bayani, an individual investor. Please go ahead.
Harshal Bayani: Hello, can you hear me?
Parag Jhaveri: Yes.
Harshal Bayani: Yeah. Hi, sir. Thank you for the opportunity. Sir, I just have one very general question. Sir, from a management perspective, what are some top two to three external risks which you foresee? As a company, how are we trying to mitigate it?
Parag Jhaveri: Well, biggest crisis what we see is logistics. That means getting in product is also getting delayed by 30 to 60 days against a standard time of 25 to 30 days. Exporting, we are not getting vessels on time, freight is going up. So those are challenges we are facing. That is one of the biggest risks we are getting today. Number two, if this crisis continues, then there could be a further jolt on the prices. We do not know which way the crisis is going. Yeah, these are the major, and if prices goes up and the fuel price really go further up, there will be somewhere we see a softness. There is a resistance nowadays by customers saying that price is too high, we want to hold back. That what we are seeing also. Sometimes customers switch purely because somebody is supplying a cheaper price.
Parag Jhaveri: We need to worry about all those things.
Harshal Bayani: Okay. So sir, as a mitigation, the subsidiary which we have in US, are we exporting some products in advance or we do on order basis?
Parag Jhaveri: No. On an anticipation, we always have some extra quantity. But otherwise it is always against commitment.
Harshal Bayani: That is only purely a sales office. Sales subsidiary.
Parag Jhaveri: Yes. It is only a stock point.
Harshal Bayani: Understood. Sir, as you said in your previous questions, this logistic cost and the fuel cost, some of it or the major part of it can be readjusted in the future contracts prices which we have. But if it exceeds up of, say, a very huge amount, then somewhat we have to bear it.
Parag Jhaveri: Yeah, we have to bear it. Yes, that's it.
Harshal Bayani: Understood. Okay, sir. Okay. Thank you.
Parag Jhaveri: Thank you.
Harshal Bayani: Yeah. Thank you.
Operator: Thank you. Participants, to ask a question, you may press star and one. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.
Parag Jhaveri: Thank you, ladies and gentlemen, joining for today's call. Appreciate the support and confidence in the company. Looking forward to see you again in the next call.
Operator: Thank you, sir. On behalf of Yasho Industries, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.
