Neogen Chemicals Limited (NEOGEN) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Neogen Chemicals Q2 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nishid Solanki from CDR India. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and welcome to Neogen Chemicals Q2 FY '26 Earnings Conference Call for Analysts and Investors. Today, we are joined by senior members of the management team, including: Mr. Anurag Surana, Non-Executive Chairman; Dr. Harin Kanani, Managing Director; and Mr. Gopikrishnan Sarathy, Chief Financial Officer. We will begin the call with opening thoughts from the management team, after which we'll open the floor for your questions. Before we begin, a standard disclaimer. Certain statements made or discussed today may be forward-looking. Actual results could vary, and a detailed disclaimer is available in Q2 FY '26 earnings presentation, which has been shared and uploaded on stock exchange websites. With that, I would like to invite Dr. Harin Kanani to share his perspectives. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and thank you for joining us for our Q2 FY '26 earnings call. We will walk you through our performance and provide updates on strategic growth and expansion initiatives. Operational resilience defined our Q2 FY '26 performance. The temporary impact of Dahej plant outage was effectively neutralized through a rapid pivot. Production was swiftly relocated to our alternate plant and supplemented by capacity from key outsourced partners. While the strategic maneuver ensured we maintain our volume trajectory, it did incur additional temporary costs related to contingency production arrangements and plant rebuild expenses until the insurance claim is fully recovered. Some of these costs associated with loss of profit will be claimed in FY '27, aligning with the planned resumption of operations at Dahej SEZ organic plant. Having said that, our core business sustained its market position and achieved stability, navigating persistent geopolitical uncertainty and volatile pricing. Before the detailed financial overview by our CFO, here's a quick summary. We delivered 8% revenue growth in Q2 FY '26. Gross profit improved by 16%, driven by 350 basis points margin expansion. However, EBITDA and PAT were affected due to elevated operating costs as indicated. Let me now share a key update during the quarter under review. We have taken significant steps to enhance our corporate governance network framework in line with best corporate governance practices, the Board has approved the separation of the roles of Chairman and Managing Director, effective October 1, 2025. We are pleased to announce the designation of Mr. Anurag Surana as Non-Executive Chairman of Neogen Chemicals Limited and Mr. Sanjay Mehta as a Non-Executive Chairman of our subsidiary, Neogen Ionics Limited. Furthermore, we welcome Mr. T.C.N. Sai Krishnan as Executive Director of Neogen Chemicals Limited on the Board. These appointments, including the designation of a non-promoter family members as Chairperson, reinforces our commitment to robust independent oversight. Moving to strategic expansion initiative in battery chemicals. Greenfield facility for electrolyte using MUIS technology at our Pakhajan, Dahej PCPIR plant. We are rapidly moving towards commercializing our greenfield plant. We anticipate to complete mechanical completion before the end of this year and then commence trial production followed by commercial production in first half of FY '27, which is April to September 2026, and electrolyte salt in H2 of FY '27, aligning with the expected rollout of ACC battery capacities in India and growing non-FEOC global demand for the salt. Specifically, the additional time taken for the salt is to completely homologate the technology from our JV partner from Japan, which is what costs slightly more time for the same. This momentum is underpinned by recent critical approvals, a leading Indian gigascale customer has successfully completed the stringent Production Part Approval Process, also called as PPAP and approved our Dahej plant for long-term commercial electrolyte supply. This is a significant milestone and may be the only plant in India to have achieved so till now in the history. Furthermore, our quality systems have received provisional approval for lithium electrolyte salt from key international customers with final approval anticipated in Q4 FY '26. We are also actively working with several other international clients who have already approved our electrolyte salt samples and final approvals are underway, expected in Q4 FY '26 or Q1 FY '27. These milestones validate our quality and position us as a reliable partner in the lithium-ion supply chain. In a recently participated international event, we received a very positive response from the international community with the joint venture because we offer the only Indian reliable -- only Indian combination of low cost from India with reliability from international -- reliable technology for electrolyte salt, specifically LiPF6 from India, which has seen very positively by the customers. Execution of joint venture agreement by -- between Neogen Ionics and Morita Investments. So we are thrilled to announce this major strategic milestone, the formation of the first Indo-Japan joint venture in the crucial battery materials space. This JV formed by Neogen Morita New Materials Limited, or NML as we described in future communication, a wholly owned subsidiary of Neogen Ionics Limited till now is designed to leverage synergies and capitalize on the rapidly expanding lithium-ion battery market. NML will be dedicated for producing, developing and selling solid LiPF6 salt, a key ingredient for lithium-ion battery electrolyte, along with other related products. Typically, this facility will be the only non-FEOC compliant plant for electrolyte salt in India, utilizing proven established Japanese technology, offering a significant advantage in terms of cost speed and reliability. Under this agreement, NIL will hold a minimum of 80% ownership in NML with our JV partner, MIL, holding a maximum of 20%. As you know, U.S. lithium-ion battery cell producers must comply with foreign entities of concern guidelines to secure the lucrative U.S. government tax credit, also known as 45X credits. This requires a complete transition to non-FEOC suppliers by 2027 for electrolyte salt. Consequently, most international customers are proactively accelerating their supplier transition to non-FEOC sources throughout 2026. This phase shift is essential for them to mitigate compliance risks and ensure uninterrupted eligibility for the tax credit. Our ability to offer a non-FEOC compliant established LiPF6 technology solution positions Neogen at the forefront of this mandated global supply chain period. We are executing a long-term strategy to evolve into a stronger technology-led and agile specialty chemical leader. This strategic alliance with MUIS and Morita are key to accelerating our entry and cementing our position in the high-growth battery materials value chain. Despite global economic headwinds, our commitment to volume growth, enhancing operational efficiency and driving transformative projects reinforces our confidence in achieving a robust long-term trajectory and delivering sustainable value creation. This concludes my opening remarks. I now request our CFO, Mr. Gopikrishnan Sarathy, to share financial highlights for the period under review.

Thank you, Dr. Harin Kanani. Good evening, everyone. Welcome to Neogen Chemicals Q2 FY '26 Earnings Call. I will share the key financial highlights, please kindly note all numbers are on a consolidated basis. Q2 FY '26 number -- revenue reached INR 209 crores, up 8% year-on-year. This growth was achieved through sustained demand and increased volume across base and also organolithium business. This was mitigating the effect of the Dahej plant unavailability. Neogen Ionics contributed INR 5.42 crores to the quarter's revenue. Organic revenue for the period stood at INR 184 crores, reflecting 12% increase, while inorganic revenues stood at INR 24 crores. EBITDA for the quarter was at INR 30 crores. Although the gross profit held steady, EBITDA margin percentage was constrained by various factors. Some of them were: higher employee costs stemming from performance-linked incentive and long-term benefit and strategic new hires; two was, sharp rise in the insurance premium following the recent fire incident; and increased job work and conversion costs. As indicated by Dr. Kanani, we expect to recover some of these expenses under the business interruption loss of profit insurance plan in FY '27 once the operations are resumed at Dahej SEZ organic. Neogen reported a PAT of INR 3 crores for FY '26 -- Q2 FY '26. This reflects the cumulative impact of several factors that constrained profitability, namely higher operational costs as shared earlier, increased finance costs related to the capital deployed for inventory and plant rebuild following the Dahej fire incident; continued investment in the organic Dahej SEZ, while we await the final insurance payout for the loss -- fire loss; and initial cost of Neogen Ionics; and also lower utilization at Dahej plant, pending both final approval for electrolyte salt and delayed market demand for electrolytes. Moving to the key development during the quarter under review. To ensure that we maintain our growth trajectory and operational stability, we have successfully executed a private placement of INR 200 crores NCD. The immediate availability of these funds provide us with a crucial financial flexibility to execute our ongoing growth projects. Crucially, these funds will also provide necessary liquidity to expediate the rebuilding of Dahej organic plant ensuring the timely progress. Finally, just a snapshot of our balance sheet highlights. Despite operational challenges, Neogen's financial foundation remains solid. Balance sheet is strong, ensuring uninterrupted business continuity and providing financial flexibility to pursue strategic growth initiatives. Stand-alone debt in this quarter stood at INR 722 crores and net debt was INR 595 crores. This increase of around INR 200 crores is due to the NCD issuance, which was basically for -- raised for rebuilding the Dahej plant till the time the final insurance claim is received. Debt coverage remains healthy and demonstrated by the 12 months DSCR -- trailing 12 months DSCR of 2.1x. On a consolidated basis, total debt was INR 1,078 crores. Net debt was INR 900 crores. The company maintains a strong liquidity with a liquid investment of around INR 167 crores as on the quarter end. This concludes my remarks. I will now request the moderator to open the forum for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Arun Prasath from Avendus Spark.

Dr. Harin, my first question is on the guidance of the...

I'm sorry to interrupt you, Mr. Arun, but there is a disturbance from your background. Can you please check?

Sorry, I don't. Is it still like that?

You may please go ahead, sir.

Arun, it's okay. We can -- I can hear you. Go ahead.

All right. Dr. Harin, the first question is about the guidance on battery chemicals starting, especially the salt. Earlier also, we had -- we kind of indicated that we will -- from 2025, '26 onwards, we should see a lot of -- maybe some of our U.S. customers who will be starting the battery plant will start giving orders. Now we have seen a bit of delay on that. Now what is driving the delay in the orders from the -- at least the overseas customers for salt? And how confident are we this time that the current guidance will stand true and we will start the plant -- bigger facility also in time? That's my first question.

Sure. So thanks, Arun, for the question. So I think in our current year's guidance, there were 2 major assumptions. One was the electrolyte requirement for India and when basically our Indian gigafactories such as Ola and Exide start their production and ramp up. As you have seen, Ola just recently got their ARCI approval. So we expect that their ramp-up should happen in the second half and especially in the next calendar year 2026. So we feel from Q4 onwards, we should see more stronger demand for the electrolyte. And similarly, what we understand like for Exide also that end of this year or early next year, they will start. So as compared to our earlier estimation on when these were going to start, the electrolyte in India was a bit delayed, and that caused lower volumes, although we are still watching how the Q4 will come. And we basically -- like Q4 performance of Exide and Ola demand is what we are currently looking at. And that will also determine what the final numbers look like. But as compared to what we had earlier estimated, the demands to start from almost Q2, Q3 itself, electrolyte demand in India has been delayed. In reference to the salt question, as we had discussed earlier, and as I mentioned also in my opening remarks, so you first have a quality validation, quality confirmation and then you have a very detailed what is called as a PPAP procedure in the auto world where they would finally give you the approval. So we are very pleased to inform that for electrolyte, we already successfully cleared our PPAP. And for electrolyte salt before [ pre PPAP, ] when we had our final audit, mostly we have received a provisional approval and some further suggestions or improvement in our facility were asked by the customer. Some are just software, so some additional instrumentation, which they want us, some software systems, they want us to update and some facilities also which they want us to improve. So we expect most of this to be completed by January or February 2026 because these were some additional ask during the final audit. So they've already given a provisional approval to Neogen. And then based on our compliance and completion of this, either they will have just an online procedure to approve us or maybe one more visit in January, February. So once that happens, then our commercial production of the salt can be sold on a regular basis. So today, it's this trial or something like that. So I think this was something which we had hoped that we would reach by September. So basically in the first half. And based on that, in the second half, we would have fully available for sales. However, based on the current developments and the additional ask given by the customer, we expect that sometime in 2026, Q1 or Q2 -- sorry, calendar year '26, Q1 or Q2. So basically, either Q4 FY '26 or Q1 FY '27 is when we feel majority of the salt demand will increase. Further, like when we had -- so the requirement by the U.S. government is that in 2027 to comply for 45X credits, they need to switch to non-FEOC -- sorry, FEOC compliant, so non-Foreign Entities of Concern supply chain. And for that, most of the customers, depending on their stringencies, have indicated that some of them who are more cautious, they will start switching from Q1, Q2 calendar year FY '26 and some who are a little bit more price conscious, they would like to switch from Q3, Q4 of calendar year '26. So basically, 2027, everybody has to switch. Before that, 1 quarter or 3, 4 quarters before. That depends on the nature of the company and how much risk covers versus cost conscious they are. So most of the customers also are intending to switch during calendar year 2026. So like some starting from Q1, some starting from Q3, Q4, depending on the policies of the -- internal policies of those companies. So that's why calendar year Q4, which becomes H2 of FY '27. So we are very confident that H2 of FY '27, there will be a very, very strong demand, and we should see a demand improvement in H1 FY '27. But FY '26 like did not pan out the way we had envisioned earlier, both like delay in electrolyte and delay in the final approval by the customers is the main causes. And maybe a little bit customer desire to make the final switch in 2026 versus second half of '25 is the contributing factor.

Understood. One follow-up on this. We spoke about the various steps in getting the approvals. Finally, we hope to get it by, say, probably January 2026. So this -- the same set of approvals, again, the procedures will be followed for the greenfield facility as well or that will be on a fast-track mode? How should we look at it?

So it will be on a fast-track mode because one, like what we feel is that this will be a facility where we are transferring technology because it will be like the main equipment, the raw materials, the specification, all of those kind of remain the same. So a lot of work will get reduced. Also, some of the customer suggestions will also be incorporated there in the greenfield facility. The third point is customer also will be running on a more tighter time line because most of them want to switch in 2027. So they would have only 1 or 2 quarters to complete the procedure. But procedure-wise, like we feel it will be much faster. And while we've said that the whole facility would be ready at full capacity in H2 of FY '27, some trial production will start even earlier. Like, for example, even electrolyte, we are saying instead -- our first target was to complete everything by Q4 FY '26. But mostly electrolyte, we should be even ready for trial production and stabilization by Q1 FY '27. And the salt, we are targeting to be ready by Q2 FY '27. So there will be some trial production, which will start, and we will try to do some of the validations also in line, at least customer visits and things like that.

Understood. And on the FOEC (sic) [ FEOC ] norms, the customer has to shift to our or Indian or other non-Chinese sources. What kind of a U.S. volume that you are expecting, not to us, but overall -- at the industry level, what is the volume available for the players to target this FEOC volume?

Sorry, I couldn't hear your question properly. You are mentioning non-U.S. sorry, U.S.

Yes. I'll repeat. I'll repeat, Dr. Harin. So you're talking about the non-FOEC (sic) [ non-FEOC ] electrolyte salt demand, which is our target market. What is the kind of volume in terms of tonnage that we are talking about, at least which has already started and which do not -- which is not binded by the long-term contracts with the, say, the current suppliers?

Okay. So most of the current supply today is actually from China, except for one Japanese and Korean suppliers, right? So most of the switch would happen, and we would be the #3 company, like which they would be approving. There is still no supply available in Europe. There is still no supply available in U.S. There is one Korean company who is talking about starting -- but again, we don't know exactly how, but we are way ahead in terms of contracted volumes and contracted volume interest and approval processes. So I think we should be mostly #3 or #4 company, which we have. And in terms of -- if you think in terms of capacity, our understanding is that -- the Japan has a capacity between 3 KTA to 5 KTA. The Korean supplier has a capacity around 2 KTA and Neogen would be like adding around -- okay, both the salts together on the LiPF6, the greenfield, we are adding around 3 KTA at the greenfield and including our Dahej SEZ would have around 4 KTA. So I think we have similar orders of magnitude or slightly better as compared to the existing players. And we believe as compared to Japan and Korea, the customers also have cost advantage. And most of -- and with some of these customers, we already have a long-term agreement where the pricing has already been agreed upon. So I think with a few, we are discussing pricing. But with the major customer, we already have pricing, which has been agreed upon. And that pricing will already take care, which basically shows that there is acceptance to the cost structure of Neogen.

Dr. Harin, can you just mention what is the U.S. demand for salt in terms of KT? You mentioned supply non-Chinese capacity. What is the demand from the U.S.?

Yes. Okay. So I think if we take like 300 to 500 kind of gigawatt hour, right, -- so there will be around -- there should be a total demand of around 40 KTA to 60 KTA if everything has to switch for a 300 gigawatt production.

This will be by which year, sir?

By '27.

Okay. And of this 300 gigawatt, how much is in currently live and how much is under construction?

So I think currently, we are already at 140 gigawatt hour or 150 gigawatt hour, which is already online.

Okay.

And more are also coming online, but the actual consumption of the cells or actual cell production is to the extent of around 140 gigawatt hour, 150 gigawatt hour. This is just my estimate. There is no official number, which says how much it is, but this is a summary of the major producers, right? If you think of major producers like Panasonic, then Tesla, then LG and Samsung. So if you take their capacity --- and SK On, so if you take their capacities what they are today producing, our estimate is somewhere in this region.

Sorry to interrupt, Mr. Arun, may we request you to please rejoin the queue. We have participants waiting for their turn. [Operator Instructions] The next question is from the line of Archit Joshi from Nuvama Institutional Equities.

My first question or rather, if you could help us understand the PPAP or rather the agreement that we have signed, if you could throw some more light on how do we understand this phenomena? Is it like a contractual obligation that the customer has gotten us into? Does that give us visibility of, let's say, X amount of volumes? Would we be facilitating, let's say, some level of gigawatt capacity? Anything around those lines, if you could help us understand, we can maybe substantiate it a bit better.

So PPAP is basically actually your quality system approval. And also, it also measures the productivity and the capacity and also the quality of the product being suitable. It's also the sign of systems. So it is equivalent to like a U.S. FDA pharma customer coming and giving you the final approval or U.S. FDA coming and giving you the final approval, post which your product can be put into commercial usage. So it is basically kind of equivalent of that. And what PPAP basically means is like, let's say, if we are thinking of an API world, like U.S. FDA has come and given you approval, so now your product can be sold in the U.S. market at a commercial level and can be consumed. So you might do some trial production, et cetera. But mostly before you start commercial supply, you need to complete the PPAP. This is usually done by individual customer. So one of the gigafactories in India have already completed the PPAP with Neogen. So now they can continue to buy electrolyte and put it in commercial products, which can go in auto or other kind of applications. So this is what basically PPAP means. Separately, in terms of volume commitments, what we have mentioned earlier that electrolyte salt, we already have volume commitment agreements, which is separate agreements, which is about pricing and payment terms, et cetera. So for the salt, we have already agreements in place which basically -- which will completely take care of the 5,500 metric tons or 5.5 KTA capacity, which we are putting. So we have full agreements for the salt already. For the electrolyte, like in parallel to PPAP, we are also discussing with the customers long-term supply volume. And similarly, electrolyte also, we are planning to conclude long-term supply agreements. However, mostly, as you can see, Indian gigafactories are just starting one by one. Some of them -- most of them will start in the second half of 2026. So there's a little bit of time before that. And the ones who have started, we are in active discussion with them for concluding contracts like for long-term supply. So this is ongoing, but we are the only facility in India with a PPAP approval for electrolyte salts today. And based on that, like if anybody wants to buy locally, right now, they have to buy only from Neogen. So we are in a very strong position, and it also gives confidence on the quality systems and supply, which Neogen can do.

Sure. Sir, in the PPT, you have mentioned that this is for electrolyte demand. And I think I heard you say that it is for the 5,500 tonnes salt commitment. So just a little confused whether this is for salt, electrolyte or both?

PPAP is for electrolyte approval. And the -- separately, I mentioned that for the salt, we already have the pricing commitment. So in electrolyte, we have completed PPAP, but the pricing agreement is under progress. For the salt, the pricing agreement has been done. We have gotten like provisional approval, but the final PPAP approval is subject to us implementing some of the suggestions, which I mentioned earlier. We expect by January, February 2026. Yes.

Got it. Got it. Sir, second one, so I heard on one of the battery manufacturers call that they are starting with NMC battery production in the beginning before starting LFP. Does that have any repercussion on our visibility of demand, whether it is -- irrespective of whether it is NMC or LFP?

So the only difference between NMC and LFP from electrolyte point of view is that -- I mean, from a business point of view, that 1 gigawatt hour of NMC requires around 400 metric ton to 500 metric ton of electrolyte. In case of LFP, it requires around 1,200 metric tons of electrolyte. So like let's say, if there is a 10-gigawatt hour of NMC facility, the demand would be 5 KTA. And if there is a 10-gigawatt hour of LFP capacity, then the demand would be around 12 KTA. So it's the demand. But broadly, like when we look at the overall demand and the production, which is coming, which is our -- so what we expect like that when India reaches, let's say, maybe 50 giga or 100 giga, it would be 70%, 80% LFP, around 10%, 20% will be NMC and 10% would be others. Based on which we have come at an average number of 950 metric tons to 1,000 metric tons per gigawatt hour kind of consumption. And with whatever we have feedback from our customers, we are still confident that NMC, LFP mix can change a bit, 10%, 20%, even if it becomes 30% NMC, 70% LFP. Although more and more, when we think of a 30 giga, 50 giga, 100 giga level, more is going to be LFP driven. So the demand is going to be more than what we had originally expected, but our full utilization target by FY '29 doesn't change. We would still be able to easily achieve full utilization of our electrolyte facility and of course, salt even earlier by FY '29.

Understood. Sir, one bookkeeping question, if I may squeeze in. At -- what could be our peak gross debt -- at what scale would we reach our peak gross debt, the time lines of that? Also, the inventory in the current balance sheet seems to be quite high. So if you can just explain as to why there's almost a INR 130-odd crore inventory jump that we saw.

So our peak debt is expected to be INR 1,800 crores. And like we would basically reach this, let's say, 1 year -- like closer to our full utilization level. So around FY '28 or so, we would reach when our peak demand would be there for the peak debt. In reference to your second question, also in line with our revised change in the commissioning date, our bankers also have extended for our greenfield site, our start date by around 1 year. So that also will push our repayment schedule also by 1 year. So that gives us further additional comfort in maneuvering the cash flows. And therefore, the delay will not have much significant impact on the on the cash flow requirements, and we would remain comfortable because of the approval given to us by the bank. Finally, about your question on the inventory. So as you are aware, we had indicated we lost around INR 180 crores of inventory in Dahej during fire -- INR 170 crores to INR 180 crores of inventory during fire. So the increase that you are seeing in last 6 months is basically making up for the inventory which we have lost because you can see we have regained our revenue performance. In fact, it's slightly higher as compared to what we had around that time. So to be able to maintain that, the inventory that we lost is being made up now.

The next question is from the line of Abhijit Akella from Kotak Institutional Equities.

So just on the Battery Chemicals business, we were guiding to about INR 300 crores of revenue previously. Obviously, things seem to be moving a little bit slower. Just wondering if you would like to maybe update your guidance for this year and maybe next year in terms of that business.

Sure. So based on today's situation, as I explained earlier, since our electrolyte demand has been lower, although we are ready, and we took longer time for getting approval, we are expecting it longer. So this year, we would not be able to achieve INR 300 crores. As we had indicated earlier also, it was going to be difficult, but the number we were trying to get more clarity. So depending on how electrolyte basically demand comes up in the Q4, we expect it to be in the range of around INR 30 crores to INR 40 crores for the current year. For the next year, we expect that -- again, next year, many facilities are going to come online, especially in H2. And again, it depends a little bit on how that happens. But we are more -- and again, salt also, most of the customers would be transitioning in 2026. So basically, in FY '27, they are doing the transition. FY '28, we have much stronger clarity both on electrolyte or salt. But we feel at the least, we should be able to do around INR 400 crores to INR 500 crores of revenue in FY -- in the next financial year, which is basically FY '27. And we remain on track to achieve full utilization level by FY '29. That is the guidance we have given of INR 2,400 crores to INR 2,900 crores on the full utilization of the facility. FY '28 will be somewhere in between. We expect salt demand to be very strong and electrolyte depending on how ramp-up in India happens and basically share between India ramp-up and some customers in the beginning for a short while because of contractual limitations, will have to import electrolyte from China, but how soon they decide to switch to us. So that will determine the FY '28 revenue, which we will guide you as we get more clarity. But we expect it to be more than INR 1,000 crores, so at least significantly more than INR 1,000 crores, but between the INR 500 crores and, let's say, INR 2,900 crores number.

That's really helpful. And on the base business itself, we had this INR 850 crores planned for this year. So that seems on track, right? And then how do you see it shaping up next year?

Yes, that remains on track. And for the next year also, we will target a full utilization level, which is, let's say, somewhere between INR 950 crores to INR 1,000 crores. And then as we had shared earlier, we expect in the year beyond without any CapEx, just optimizing the plant fully, we would like to target at least a double-digit growth over that at least from what we can see today.

Just last couple of questions from me before I get back in the queue. One is what is the amount of maybe debt servicing that we have lined up over the next 12 months? So just maybe the principal plus the interest obligation lined up for the next 12 months, if you could just help us with that number. And the other thing was just on the Battery Chemicals side, it seems like in recent weeks and months, prices have started to move up in China quite significantly across all manner of battery chemicals. So what exactly might be happening there? And what's your expectation for how that market might evolve?

Sure. So thank you for your question. So I think the total repayment that we have to do over next 1 year, like is hardly around INR 40 crores, INR 50 crores on the term loans. In terms of interest, like whatever is our mainly working capital interest because most of the project finance-related interest will be part of the project cost. So that will not hit except maybe like Dahej-related CapEx in NIL, but majority of the Pakhajan greenfield site is part of the project cost. So that will not be -- that is already accounted for in the project investment. In terms of the regular interest which we are paying on working capital, we are yet to receive majority portion. So we received INR 80 crores, but we are yet to receive the remaining around INR 250 crores plus the loss on profit plus additional cost on rebuilding from the insurance. So these like around INR 300-odd crores is what we will be receiving in, let's say, next 1 year. So as we keep receiving that, our interest cost should basically -- working capital interest that is currently higher will kind of taper down and will improve. So that is kind of the estimate on the repayments which we need to make. On your second point about the pricing in China, we also heard that there was a very strong move in the electrolyte salt as well as, to some extent, electrolyte cost also in China. And most of the Chinese were selling only at raw material costs and what I call like manpower, some of them are even not even accounting for power and fuel kind of cost. I think some of these companies were not able to sustain, started closing down. Also, the demand situation is looking better. So the overcapacity in China, which was at least for the good cell producers is now no longer there with the strong best energy storage demand across the world, including in India, the good quality cell producers, their capacities are now almost getting full. So that reduces their pressure to sell at a lower cost. And therefore, we have seen firming up of battery material prices as well as electrolyte, electrolyte salt and to some extent, even cell costs are also likely to go up over coming years -- coming year.

[Operator Instructions] The next question is from the line of Jason Soans from IDBI Capital.

Sir just one question, what I had was just relating to the insurance payout. Just wanted to know, I mean, those things are going on fine, but probably there is some delay in getting the insurance payout for which we had to raise some funds as well. So just -- if you could just give us some color on why is the delay in this insurance payout?

So till June or July -- sorry, till June, basically, the insurance company was just wanting to confirm through several rigorous testing, the cause of the fire, all the permissions were in place. And once that process was completed, they basically released the first interim payment, which was basically a sign of acceptance of the claim. Now as you know, there are 2 stock claims as well as the MPP -- I mean, the rebuilding of the capacity, the CapEx-related claim. So the CapEx-related claim against that, they've already given us INR 80 crores. And as we complete this INR 80 crores, which is -- we expect in current quarter, we would fully end up utilizing that because we are also on track to complete this by Q4 so that the plant becomes available for the next financial year. So as we complete that INR 80 crores, they will give us the next interim payment against that. On the stock side, post fire and post taking care of the CapEx-related claims, then they started processing. Just because the claim amount is large, sometimes there are 1 or 2 rounds of reviews from their side, back and forth, additional queries, which we are answering. And sometimes they also organize external experts. So we are again pushing insurance, and we hope that in current quarter, so in Q3, we should complete receiving the stock-related claim, at least majority portion of that. And the final payment -- final payment against the CapEx rebuilding because we have like replacement basis insurance -- so not the cost of the loss, but to replace that. So that will be finally determined only once the plant is ready. So some amount we will get by Q1 of next year. And as we have seen that some of the costs have increased because of like doing some outsourcing, some employees, some standard cost at Dahej continuing. So all these will become part on loss on profit claim. So that is normally expected sometime in Q2 or Q3 of FY '27, because the calculation and the working on that starts only once the plant is rebuilt. So that exercise itself will start. So it's -- for us also, it's a first time. But when you have a large claim, it just takes a little bit longer for them to do each and every stage.

Sure. But more or less, notwithstanding some delays, it's on track. I mean it's as per estimation, right?

Yes, yes. So we actually -- like it's as full estimation. And that's the reason with the -- like we are paying a little bit over cost, but we are able to maintain our operations at full stage. We are continuing our growth. We are doing what is needed to whatever we had planned for employee retention, for employee motivation. So those programs also have been continued. The CapEx has continued at the same pace, like there's no because of want of funds, delayed CapEx or something like that. So I think those are the positives because of the INR 200 crores bonds that we issued.

Sure, sir. And just to get this right, I mean, in terms of, of course, the battery cell commissioning in India, which has been delayed, as you mentioned, -- it would be fair to probably estimate that it's a 1-year delay, right, with the likes of Ola, the Exides, the Amara Rajas, probably it's a 1-year delay with all the EV domestic chain -- supply chain being set up in India. Would that be a fair take?

Yes, I would agree. And in a sense that we expected Ola to start in the first half, but the time it took for them to get their cell approvals and go full commercial scale. So it took a little bit longer, right? In some sense, like I would say, 6 months to a year kind of a delay. And yes, mostly what we are seeing by 2027, majority of the players who had planned would be like start manufacturing. So 2026 is a bit of a challenge, but calendar year '27, which is FY '28, we see very strong demand. And the other thing which has happened in while the delay has happened, the consumption of the cells is only increasing. I think EVs, there's a good positive response. More and more people are coming. And also, we see a very strong demand for energy storage, best what is called battery energy storage demand. So that demand has become more stronger. So therefore, everybody is like trying to work very hard to get cell capacity as fast as possible.

Sure. And sir, just one final question. '26, of course, you had revised the stand-alone guidance. I understand the battery chemical gets downward revised in terms of whatever has happened in the delays. You spoke INR 3 crores, INR 4 crores in '26 and INR 400 crores, INR 500 crores in '27. Now in terms of stand-alone, you're maintaining that guidance and probably you said '27 probably will be just in terms of base business, I'm saying you said double digit at best. Probably you will strive for double digit going in '27.

Sorry, no, we said '27 was INR 950 crores to INR 100 crores (sic) [ INR 1,000 crores ] -- and FY '28, like basically full utilization of the existing capacity. And FY '28, what we said because we don't want to do significant CapEx. So without the CapEx, we are confident to give double digit. In case like, for example, we see very good demand in organolithium because we have seen organolithium as well as CSM business. So actually, in spite of the fire, our CSM business contribution reached almost 16%, and we are seeing very strong demand of that. So if we see a very strong demand, we do some additional CapEx for FY '28. But currently, like our aim is to -- with the same, we can deliver at least a double-digit growth. So like somewhere around INR 1,150 crores or so kind of a revenue is what we are targeting without CapEx. If we see very good demand and if we see good reason to do it, we'll take a call in FY '27 on that. FY '28 is what I was referring to for the double digit. And FY '27, INR 950 crores to INR 1,000 crores. There is no change in that.

The next question is from the line of [ Nikhil Agarwal from Money Stories Asset Management. ]