Ladies and gentlemen, good day and welcome to the Camlin Fine Sciences Limited Q2 and H1 FY 2027 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 0 on your touch-tone phone. Please note 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 involve risks 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.
Good evening, ladies and gentlemen, and welcome to the Q2, FY 2027 earnings call. I am Nirmal Momaya, the Managing Director of Camlin Fine Sciences. Welcome again. I will hand over the call to Santosh Parab, 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 2027. Santosh, over to you.
Thanks, Nirmal. Good evening, everybody. We also have our CFO, Pankaj Pandey, with us. He just joined, and he will be also accompanying us in this call. I will straight drive down to the two main decisions which were taken. One, of course, was the financial statement, but the other decision was that our board today approved a rights issue of around INR 250 crores.
We will be filing our draft letter of offer to stock exchanges tomorrow and wait for their approvals, and very soon we will launch the issue. This issue is being backed by our promoters to the extent of their share, individually and our interest. As you know, we have been talking about the liquidity issues. We are also seeing that we had negative carries in our earlier quarters, quite a few, three, four quarters, and even this quarter.
I discussed about it is not very encouraging on the EBITDA numbers and the cash flows. Also there are economic conditions, the price changes, our inability to increase, transfer the increase of prices to our customers, local competition, and which has been impacting the liquidity issues.
Liquidity issues impacting our margins because we had overused creditors, we had channel financing, so it was imperative, and this liquidity issue was also impending our growth, though some of the verticals have immense potential, but we were not able to push despite having excellent opportunities in market. We thought that, then the promoters and the managers thought that this is the right time to infuse equity, infusion of equity, which will help to bring the growth engine back on track, and it will help.
Of course, this liquidity, due to the procedure, will take some time, 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 the process that after the draft letter of offer is approved by the stock exchanges, we will immediately approach the board, decide the procedure, the pricing, the cutoff, and the issue size.
Obviously, this purpose of the issue is for augmenting working capital, no other. There are no project finances or other things. We are trying to stabilize the working capital. So, obviously, this infusion also is to bring back and come back on the growth aspects of the company. Coming down to the financial result, of course, the financial result 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 changed over from ethyl vanillin to methyl vanillin almost one month before this quarter, and that has also impacted the sale of Aroma, the production of Aroma. Underutilization of the plant has also impacted our margins and the EBITDA margins of Aroma.
Almost our revenue in Aroma reduced from INR 774 million to INR 472 million, and this is entirely almost ethyl vanillin sale. Blends and the Specialty Ingredients 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 ingredient business, where we had INR 3,086 million last quarter. This quarter, we are around INR 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 straights also, we have been talking for last two quarters that our volumes had decreased a bit, but we have come back and we have taken back the volumes. We have moved from 927 to 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 feel that we will be able to keep this trajectory on. Consequently, the EBITDA, the total turnover of this Specialty Ingredients was a bit higher. From 4,013, we moved to 4,089. Obviously, both these sectors we could have pushed more, but for the liquidity. EBITDA obviously improved from 6.35 to 8.04.
This has, with adequate liquidity support, this should very fast go to the double digits. Performance, the residual thing here, we have the diphenol plant which has been closed since May of 2026. We closed it because of the exorbitant input prices and the rapid changes in the prices, the basic raw material phenol, which is almost more than doubled in last six months, and it is economically untenable to make diphenol.
So, it is much, much cheaper to buy hydroquinone from China, which is much cheaper at this level. And we feel that the Chinese will be reducing the prices further because we have learned that there will be additional capacities coming on both the diphenol, hydroquinone as well as catechol. We have been largely able to control our costs despite the revenues at some times.
We have been able to hold on to our costs of other expenses, the sector. This is despite we had freight costs which had almost doubled in this quarter because of the war situation and other things. 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, USD 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 financing costs us because any channel financer will take interest, and because it is on the cost and sales side, the impact has moved to the gross margins.
On an overall basis, our gross margin has reduced from INR 2,142 to INR 1,958 in this quarter. This has percolated down and eaten up our EBITDA, which anyway was 3.4%, has almost come down to 2.5% in this quarter. Obviously, the question will be that how this rights issue is going to help us to come out of the trouble and how it will help us to grow back.
Obviously, the first and the foremost thing which is going to come is through the margin improvement. Because at present, since I am using the channel financing and even the long outstanding accounts payable which I have, obviously people have been charging us higher rates to cover their interest cost because of long outstanding. That itself is around 4% of the overall cost. That comes to around INR 190 to INR 200 million in a quarter.
So, if we are able to release this long outstanding trade accounts payable as well as we are able to unwind the channel financing which we have, this could be a direct margin improvement. This is the so-called interest saving which is coming because of funding from the rights issue. In addition to that, as I said earlier also, we had good prospects in Europe. 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, that turnover which we did of INR 300 million, we can add another INR 500 million to that. So, this can be easily added. So, the INR 3,000 odd revenue for the quarter can be increased further by INR 500 million just by providing working capital. This is a 35% margin business.
With fixed cost, this can add another INR 175 odd million of margin. The third and the most thing, we have been always saying that our super profits or the blockbuster thing is the vanillin product, but it has- For various controllable and uncontrollable reasons, economic change, the economic viability, distributor challenges, we were not able to scale up. Now, a lot of green shoot, and we will discuss that much.
Obviously, there will be question on this and we can explain why we are saying this. We are looking at that we can be able to with an effective distributor and management and identifying strong distributors. We can push at least 1,000 metric tons per quarter at a reasonable price of 12 odd USD. We are not looking at a 14 or 15 USD and 12 USD because distributor will take their margins.
But we see that we can do around 1,000 metric tons at USD 12, which means that we can have an incremental revenue of around INR 650 million to INR 700 million in the coming quarters as compared to this quarter, and that brings additional gross margin of around INR 230 million.
So, if I say that what would have been my adjusted EBITDA if I would have been in a liquidity position, my EBITDA should have been somewhere in the range of 575 to 630. And obviously, the revenue would have also been at INR 6,000 million plus if I would have had the liquidity and which would have meant at least a double-digit minimum margin. So, these are the low-hanging fruits 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 fight for this third quarter to stay afloat and at least give a similar result. We would have liked a much better EBITDA. But to be frank, I think we will have some improvement than what we did, or rather I will say that we cannot go below what we have done in Q2.
So, we will be tad better on the margins, not very big improvement, but tad better than the margin in Q3. But Q4, I think we can, with the liquidity support, we can cross INR 6,000 million turnover and EBITDA at 10% and odd.
Coming down to the balance sheet, as I said, because of liquidity crisis, we have used channel financing and 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 INR 5,260 million, which has gone up to INR 5,380 million, and a large portion of that is because of the foreign exchange translation. Our interest cost without forex was around 163, which was 169.
That's because of not much. We have also repaid some loans. Despite 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 the interest and repayments. With this, I'll open the floor for discussion and questions. Thanks.
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 on the line of Pratyush Kamal from InCred Equities. Please proceed.
Yeah, am I audible?
Yes.
First regarding the channel financing, basically the rights issue and all. I just wanted to have your outlook on, had we been able to 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 kind of revenues, incremental revenues over and above whatever we posted in the Q2? That is regarding the rights issue part.
Second, regarding the vanillin realization. I just wanted to understand the nominal blended vanillin realization and what is the vanillin realization net, basically factoring the discounts and credits, et cetera, which you would be giving to your customers.
I think Santosh answered your first part of the question in his opening statement. But again, to elaborate, the margin improvement and top-line improvement leading to the sales, the sales would have been higher if we had done the rights issue a quarter earlier, the sales would have been higher by about INR 100 crores, and the EBITDA margin would have been better by about INR 60 crores or so. As far as your second question on the vanillin realization, it is about $12. And blended is $13.7 with ethyl vanillin and methyl vanillin blended is $13.7.
Okay, got it. Next question is regarding the upcoming rights issue. I just wanted to understand, are all the promoter group also putting their money into the rights issue, and what is the kind of dilution you are looking forward to in the upcoming rights issue?
Yes, the promoters will be putting in their share of the rights issue, which is at INR 250 crores, you can see. We have not yet decided on the pricing, which we will take a decision in the next few weeks. The dilution really will depend on what is the final pricing that we come with.
Just to add, this is a simplified process, and the promoters have to put their 48%. There is unlikely that they will get diluted. They are more than likely to dilute the equity.
The total equity dilution we will know only when the pricing is done.
Got it. Understood.
Thank you. Before we take the next question, I would like to remind participants that you may press star and 1 to ask a question. To ask a question, you may press star and 1. Next question is on the line of Rehan from Coheron Wealth. Please proceed.
Hi, good evening. Thank you for the opportunity. Just couple of questions. If you look at last year versus this year, we started also when we started selling vanillin, we gave it to distributors, we followed the B2B model. With the B2B model, you have to give them credit cycles as well. Don't you think that spiral will continue because we moved from B2B to trying to do more of B2C work? This again going back to B2B, giving a credit cycle of whatever, 45 days, 60 days, whatever is due in the vanillin side of the business may again impact our cash flow. So that's my first question on vanillin.
Second question on vanillin is that, considering the ADD, with the tariff now at about 15% and the rupee depreciation should also benefit you guys, how is the pricing moved for you guys at cost, and why is the realization still at about net of $12, $12.5? So just first two questions on this, please.
The first one, I didn't follow B2C or B2B. Can you explain that?
No, first. Last year when we started selling vanillin, we were trying to do the distributor route, where we gave certain distributors stock to sell on behalf of the company to push the vanillin in the market, which worked for us for a brief period. But then, because of the credit cycle, you were stressing on working capital on both sides.
One is inventory, which you are holding for vanillin, and second, you have to give them credit. So it proved to be double whammy for you guys. Then you moved trying to sell more to direct to customer to release that cash, to normalize that cash. But by the time that happened, you still could not ramp up production that much. Now when things are better or looking better towards the tariff, why are we going back to the B2B model where we have to give a credit when you are already struggling for cash flow?
Rehan, to answer your question, if you go to direct customers, the credit period is generally much longer. The large F&F companies typically ask for minimum 90 to 120 days. Which is actually the reason why we are introducing channel partners, is basically to improve that liquidity and improve that sales cycle, because typically, large distributors are now looking at terms of not more than 30 days.
So you save 90 days of working capital. So it is not the intention of not going to the customers directly, but routing it through distributors gives you that money or liquidity that you do not need to wait for 120 days for payment from large actual user customers. That is the first part of the question.
Second part is that what we have seen is, specifically, some Chinese material is flowing through Asia, through Thailand, Malaysia, into U.S. and Europe, which of course, the principal mover of the anti-dumping duty is Syensqo, who has been acting to stop and block that entry of illegal imports coming into U.S. and Europe.
That is the reason why the realizations are at this point slightly muted. But as we go along, I think our sense is in the next three, four quarters, all that rerouting which was going on will just continue, and the realizations should improve from the levels that we are at 12 and a half net realization, net of tariffs and net of distribution costs.
No, thank you for the explanation. I'll just start with what I asked in the beginning only, that earlier you had started with B2B, and they were also taking 60 days credit cycle is what you had guided earlier. And you had said that time the brands are paying faster because it's a cash-and-carry business. Now you're saying that the cycle has reversed because earlier this was vice versa, not this way.
We had never said that it's a brand that will give you cash and carry. That is always in any food ingredient business, if you're dealing with companies like Mars and IFF and Yoda, the minimum these guys, I mean, in antioxidant business, we know that the minimum credit we have to give to the likes of Cargill and ADM and these guys is minimum 120 days, yeah.
Okay. Second is that this, so on 12 and a half net, which is after everything, so this technically would become your EBITDA spread. I'm just clarifying this. So 12 minus whatever your cost.
Only freight and some selling cost that we have of our people, which is not much, which is not significant.
What would be at the current realization and current costing, what would be your EBITDA per kg or per ton?
Our EBITDA per kg or per ton as for our run that we are doing now is estimated to be roughly about $2.
$2, right? Because QOQ you had guided that all three verticals would turn EBITDA positive. We have spiraled down further. If you can shed some light on that because, Santosh sir rightly said that we should-
I think we mentioned, Santosh did mention about the liquidity issues and that-
Yeah. Correct.
We have not been able to scale our vanillin business purely because
What was the tonnage we sold of vanillin in Q2?
We did ethyl vanillin of 332, 334 metric tons in Q2. Last quarter we had sold methyl and ethyl of around 508 metric tons. This quarter we only sold around 358 metric tons.
Okay. What will be the stock we are carrying? Any stock? Like inventory on our books of vanillin?
Very small, about maybe 175-200 tons, not more than that.
What is the cost today now to make vanillin with the current geopolitical tension, crude, et cetera? Would it still be at around $10 at 60% utilization?
Yes. At 70% utilization, it is $10. We have visibility for that now, for utilizing at 70%.
Sir, even in Q1, you had tapered down your guidance because of the liquidity issue, the geopolitical headwind, and various external factors. Now that we are, Q2 is also over, and Q3 also, we don't have that much liquidity to grow the business at the rate of change that we would prefer. Do you think FY27 you won't reach that 200 crore EBITDA figure which you had given at 10%?
You had said that it'd be about 2,000 crore top line with the 10% EBITDA. That means that if I just take H1 as 10 crores at a round off figure, that's 190 crores over Q3 and Q4. With Santosh sir's opening remark, Q3 also seems just slightly better than Q2. That means FY2027, you wouldn't be able to do that kind of run rate, right?
Yes. That's right.
Okay. What kind of Q4 number would you expect that the company closes off in a better quarter? Because Q4 is usually a strong quarter.
The first Q4 will be the first quarter with the liquidity with us. The turnaround will happen in Q4. The turnaround, we expect the top line to be 600 crores and the EBITDA to be 60 crore plus in Q4. Then going forward, it'll keep improving.
Okay. Because, if you go back to March 2025, before the vanillin ADD came in and things were good, you were doing a INR 60 crore EBITDA with a INR 400 crore top line, INR 400, INR 430 odd top line. Now, that time there was no vanillin that the business was significantly generating. The INR 60 crore, I am assuming, would have at least 300, 500 tons of vanillin, or even more, if not less. So, where is that disparity in numbers? Because if you could do back in the day without your biggest profit-
No, it is very simple, Rehan. Very simple. Very quickly, I will tell you. It is basically the raw material prices. If you see from February onwards, most raw materials have doubled, and the selling prices we have not been able to pass on. That is really where the difference is, yeah. This, what we are assuming for Q4 is assuming today's raw material prices. If there is worsening, it can worsen. If it is better, if the war situation improves, that much more better margin we will make.
Sure. Thanks.
Thanks.
Thank you. The next question is on the line of Niraj from White Pine Investment Management. Please proceed.
Can you hear me?
Yeah.
Can you tell me, you just said that you have an EBITDA of $2 per ton, but your presentation shows an EBITDA margin of minus 23% in Aroma. Can you explain that?
We said that $2 at 70% capacity utilization.
What is the EBITDA per ton at the current selling price today? Whatever volumes we did in the last quarter, what is EBITDA per ton or
Zero.
No, but then you are showing a minus 23% EBITDA margin in the Aroma.
Unabsorbed fixed overheads, to that extent.
No, when you are talking of EBITDA, we talk EBITDA after fixed overheads, actually.
So the question is that how much I absorb. I had my cost. If I load all my costs, including selling prices and other selling costs and other things, we lost around INR 11 crores on 300 metric tons.
Okay. Sorry for this, but I think I am not able to get it. So when you said you have an EBITDA of $2 per ton on a 70% capacity utilization, you meant EBITDA before fixed overheads. Is it right?
We said including all the My raw material cost is only $8. Now the question is, if at 70%, my absorption is $2. If my capacity utilization is 80%, it will be $1.8. If my capacity utilization is 30%, the incremental from 8 of the fixed overheads will go to $3.5. My cost becomes $11.5. When my capacity utilization is there, largely these are fixed overheads. We have a fixed cost of around INR 20 crores per quarter.
Okay. INR 20 crores per quarter. So basically, when you say $2 EBITDA at 70% capacity utilization, you mean before the fixed cost of INR 20 crores a quarter, right?
Absorbing INR 20 crores.
Got it. And sir, can you tell also something about your blends, how the margins have been there for the quarter, and what is the situation right now?
Blend has always held on to its margin. It ranges on the basis of product mix, which is between 35% to 40%. I am talking about the gross margin. It is an increasing business. We are recovering all our fixed costs because we have a positive large EBITDA margin. That is why, if I talk only about blends as a sub-vertical,
I am having an EBITDA margin of around 11% to 12%, and it is 11% to 12% because we have two main subsidiaries we are growing in Europe, that is Vitafor and Vinpai, the most recent purchases. If we are able to provide the working capital to that, these margins will move to 13% to 14%. Talking about only ingredients, we are in the range of 11% to 12% at this activity of INR 3,000 million sales.
You are talking of that was the same performance even in the last quarter, you are telling, right? Of INR 300 crores of revenues that you did.
Yes.
Okay, got it. I will come back on the queue. Thank you.
No problem.
Thank you. The next question is from the line of Surya Narayan Patra from PhillipCapital. Please proceed.
Yeah, thanks for the opportunity. Sir, my first question is on the vanillin business. If you can provide any visibility that you are finding for the ramp-up of the vanillin in the second half, or let's say, for next year. What visibility and where from that you are getting that strategy?
From the U.S., we have visibility of about 2,500 to 2,700 tons for the next calendar year. And Europe is about 1,300 to 1,500. So, that's why we are saying that we probably, in Q4, that is the Q1 of next calendar year, we should be at about 1,000 tons. And going forward, that should be at least that much and slight improvement as we go forward.
Okay. In terms of the demand from the U.S. market, there is no problem, right? Because in the recent period, we have not seen much ramp-up because of whatever reason.
No, sir. I will explain the reason to you. There were certain large distributors, which have a big market share in the U.S. market, were buying Chinese material, which we believe is, of course, of Chinese origin, but rooted through Thailand and Malaysia, as I explained earlier. They, of course, have now discontinued buying that material because of the legal risks and have reached out to us, and now we are in the process of starting. We have already started some supplies, and we continue, and we grow that from Q1 of next calendar year, which is Q4 of our FY 2027.
Okay, sure. That is helpful, sir. My second question, see, in the opening remark, I think you mentioned about large diphenol capacity getting added in China. Is it that, if that is the kind of a case, is there any future for our diphenol unit going ahead?
Very good question. The way the Chinese capacity, scale, and size is, and their raw material positions are so much better than in India, it is very, I do not know, it is very difficult to say whether a time will come where we could restart that plant. At this point, there is no visibility because just the kind of pricing that they are coming at is way below our cost.
So then, in that case, is it fair to believe that the entire chain of this diphenols is likely to face a kind of its own fate in terms of the pricing and all that, the competitive scenario that is likely to mount further only?
Yes. I mean, it's only thing is what protection we can get for some businesses in some markets is probably the way to view it, because otherwise, the Chinese production is on a rampage, which is far excess of what the global markets can absorb.
Correct. Okay. My second question is about the Blends business. See, generally, this was considered to be a kind of a branded business, means catering any kind of food additives to a kind of a brand is as good as like a branded business only.
See, in this current scenario, when the pricing, elevated cost, and elevated pricing trend that is visible in various areas wherever the pricing power is there, in such a scenario, it looks like that our Blends growth is a kind of a normalized growth, what we have been delivering in the last few quarters. So, is it fair to believe that when there is a kind of a cost push realization rise the industry witnesses, Blends do not enjoy that kind of pricing advantage or something like that?
No, I think, when we see pricing has increased for petrochemical and downstreams of that. In natural products, there is no real increase in pricing. So we also have a large portion of our Blends business portfolio, which is natural. Okay?
Correct. Yeah.
And the path through of some of these petrochemical downstreams, the path through takes a bit of a while. If the Chinese are very aggressive in those, some of these products in the downstream, you probably get some raw materials at favorable pricing, and you can maintain your margin. I would say that the margin of 35% to 40%, the gross margin remains in that region, yeah.
Okay. Slightly one additional point here. See, when we say that the Specialty Ingredients, which is a kind of a mix of both blends as well as the straights, obviously straights would be seeing the, being the kind of a value chain of the diphenols, would we-
Yes
be seeing a kind of a larger squeeze in terms of margin? And that is why possibly the entire Specialty Ingredients margin is getting small or looking smaller in terms of number. But if you can just ballpark indication, if you can give that the blends would be kind of meaningfully better than the kind of a reported integrated margin profile for the Specialty Ingredients.
Yes, you are right. Santosh did mention that the Blends business was at about 11% to 12%, and the Specialty Ingredients, the straight was at much lower, so averaging coming to 8% EBITDA margin. This is a very right observation because raw material prices are elevated, selling prices have not gone up to absorb that elevated raw material prices.
So till such time as these raw material prices are elevated, we will have some pressure on that margin. But as soon as the raw material prices start easing off, that also kind of then normalizes to 10% to 11%. Our Blends business will grow from 12% to 14% to 15% as we go along in the next few quarters.
Okay. If that would be complemented by Aroma, then that is additional, while the straight still can face some challenge in terms of the margin profile.
Correct. That is right. Absolutely right.
Okay. Yes. Thank you for all these answers and wish you a happy Diwali to you.
Thank you. Yeah. And wish you too.
The next question is from the line of Nishada from Sanghvi Family Office. Please repeat.
Thank you so much for the opportunity. I had couple of questions here. Firstly, how much incremental capital will be required after this rights infusion of INR 250 crores? If there is some requirement, how do you plan to raise those funds, and what would be the timeline? That was my first question.
With, I think we will be providing enough, this INR 250 crores will help in two ways. One is that stabilizing the current working capital mismatch. If you have seen the balance sheet, my working capital days are looking at 50 days, which is impossible. Our general working capital cycle is 200 days, and that's looking lower because we have 130 odd crores of overdue credits.
I will be using that INR 130 crores for stabilizing the current capital. Obviously, the balance we will be using for the growth which we are talking for the next calendar year. If everything goes as we have been planning, and if there are no lags in that, we don't think we'll be requiring any additional support, either through borrowings or other things.
Got it. Also in the opening remarks, you alluded to the fact that you were not able to pass the cost pressures to your customers. Even the previous participant asked that. How much improvement should be built on in case you are able to pass on these inflationary pressures, and what stopped us from passing these pressures to the customer?
One thing is there that we have in our straights business, we have tremendous competition from the local customers, our local competitors, and the prices have been falling. We also had to carry that train. It was a funny thing in straights where my raw material cost had gone up because the underlying phenol had gone up, while my realizations were coming down.
Almost all the raw materials required for manufacture of the TBHQ and BHA, which are all my products, have increased at least by 15% to 20%. This we are not, because it was purely for local manufacturing. As far as natural blends are there, we didn't have that much issue, but the prices have been stable. The other part of business, Performance Chemicals, is a small business, but the whole burn of not able to transfer the increase in cost was in straights.
Obviously, because in Aroma again, because it was subscale one, and due to the typical nature of Aroma with anti-dumping and those things, the way the pricing is happening is not elastic with the increase in the cost. There we are not able to pass. Only some portion of natural blends where we are able to pass, but the competition, especially on INR 100 crores of our business, we were not able to pass.
Understood. Let's say, for example, 4% you are able to save on the vendor financing, some additional 2% to 3% margin when you're able to pass on the cost pressures. How much saving do we expect from the operating expenses, like freight, repairs and maintenance, power cost? If you can highlight on the softer aspects of the business as well.
The numbers which we have been sharing has been totally with relation to the liquidity infusion. Now, liquidity infusion, because apart from the normal increase in cost because of the geopolitical issues and the volatility in the crude prices, apart from that, we are still buying at higher prices. As we told you, we are using channel financing and long outstanding accounts payable.
Anybody who is giving me credit beyond 90 days is going to increase the price. This itself is around 3% to 4%. If I calculate that saving, because I release the long outstanding accounts payable as well as channel financing, it can bring at least INR 180 crores to INR 190 crores just because of liquidity. Here we are not talking at all about the savings which can come because of the price decrease.
As Nirmal said, answered for some question some time ago, he said that we are benchmarking this numbers for Q4 2026/2027 based on current prices. We are not looking at any kind of reduction in those prices. We do not know, and we are assuming that pricing, sale pricing, as well as the cost will remain the same. We are only talking about the systemic issues which are the structural issues we have, and we are relieving that.
This is going to come because we had visible business, I mean, good, but we did not go for that because I did not have working capital. We are talking about a blends increase of at least INR 500 million in the quarter four. Sales side, [inaudible] said that we will be able to push 100 metric tons. We are saying at $12, $12.5.
We are not including any tau advantage on other operating expenses. We are just talking about what is relatable to the funding which is going to come with this INR 250 crores. Opposite, if something reduces, yes, we will get that benefit. Of course, if something goes up, that is an uncontrollable factor in today's world, with the war situation and other things. It is really impossible to predict it.
Understood. Also, this INR 5 crore which you have spent on this maintenance of diphenol plant, is it recurring in nature every quarter?
Yeah. I will tell you, because in the last quarter when we made this question over there and we said that it is almost eight - nine crore. We have been able to reduce it to five crore in this quarter. Our aim is to bring it. It cannot be zero because it is a plant which we have to maintain. It is like a mothball plant. There will be some cost on keeping some things moving and working in that. We feel that by the end of Q4 FY27, this cash burn could be reduced to INR 25 million.
On annualized basis?
No, quarterly INR 25 million.
Okay.
It cannot be annualized. You see, it is impossible in the size of plant which we have. 18,000 metric ton plant cannot be maintained with INR 25 million in annual. It is forgotten.
Understood. How much incremental revenue addition do we expect from the new product launches in the functional ingredients which you have mentioned as a key focus area?
Functional ingredients.
The revenue would be annualized for the blends business, you're saying, right?
Yeah. The functional ingredient is a part of blends only, I'm thinking.
Yeah, yeah. It's a part of the blend. That's part of the growth that we are saying. 20% growth in which more than 50% would be functional ingredients.
Understood. Just one last question over here. Are there any excess inventories built in the U.S. vanillin market due to this Thailand circumvention? If you can throw some light over here.
That is getting emptied out. We understand, as I said, we are already getting orders, so I think that would be cleaned out.
Understood. Nothing in terms of like a monthly basis or one month, two month, three month kind of thing?
No, I think they will be dried out by the year end for sure.
Understood. Well, that is it from our side. Thank you. All the best on the fundraise.
Thanks.
Thank you. Due to time constraints, that was the last question. I would now like to hand the conference over to the management for the closing comments. Over to you, sir.
Okay. Thank you everyone for joining the Q2 FY27 call. We wish everyone a happy Diwali and a new year, and we shall connect again at the end of next quarter. Thank you.
On behalf of Camlin Fine Sciences Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.