Ladies and gentlemen, good day and welcome to the Q4 FY 2025 earnings conference call of Aether Industries, hosted by HDFC Securities. 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 Mr. Nilesh Ghuge from HDFC Securities. Thank you, and over to you, sir.
Thank you, Rithuja. Good morning, all. On behalf of HDFC Securities, I welcome everyone to this Aether Industries conference call to discuss the result for the quarter-ending March 2025 and financial year 2024, 2025. From the Aether Industries, we have with us today Dr. Amand Desai, Promoter and Whole Time Director, Mr. Rohan Desai, Promoter and Whole Time Director, Mr. Faiz Nagariya, Chief Financial Officer, Mr. Kushal Doshi, Lead Investment Relations, and Ms. Shubhangi Desai, Executive IR. Without further ado, I will now hand over the floor to Mr. Kushal Doshi to begin with the earnings call for the Q4 FY 2025 and financial year 25. Over to you, Kushal.
Thank you, Nilesh. Thank you, and a warm welcome to everyone. Yesterday, our board has approved the financial results for the fourth quarter and the full financial year ended 2025, and the same has been filed with the exchanges as well as updated over our website. Please note that this conference call is being recorded, and the transcript of the same will be made available on the website of Aether Industries Limited and the stock exchanges.
Please also note that the audio of the conference call is the copyright material of Aether Industries Limited and cannot be copied, rebroadcast, or attributed in the press or media without specific and written consent of the company. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are predictions, projections, or other estimates about future events.
These estimates reflect management's current expectations on future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Aether Industries Limited or its officials do not undertake any obligation to publicly update any forward-looking statements, whether as a result of future events or otherwise.
Now, Mr. Rohan Desai will begin by sharing Aether's business outlook. Then, Mr. Faiz Nagariya will cover the financial highlights of the period under review, and Dr. Aman Desai will share the ongoing expansion and strategy of the company going forward. I hand over the call to Mr. Rohan Desai for his opening remark.
Good morning, everyone. It is a pleasure to connect with you all today as we review Aether's outstanding performance for the quarter four of financial year 2025. I hope you are all doing well, and I'm excited to share our progress. We have achieved remarkable growth this quarter, with overall volume surging by 21% compared to the previous quarter. For the full year of financial year 2025, volume soared by an impressive 34% compared to the financial year 2024.
Pricing for our products has remained stable over the past six months, reflecting our strong market positions. Demand for our offerings continues to be robust, and we are thrilled to have welcomed six new clients in quarter four of financial year 2025, further expanding our reach. Aether's strategic pivot towards CRAMS, contract research and manufacturing services, and CEM, contract/exclusive manufacturing business models, is yielding excellent results.
In Q4 of financial year 2025, 38% of our revenues came from contract/exclusive manufacturing, 10% came from CRAMS, contract research and manufacturing services, and 51% came from large-scale manufacturing. It is particularly exciting to note that CRAMS and CEM now contribute nearly 50% of our revenue, a trend we expect to strengthen as our robust CRAMS pipeline continues to drive opportunities for our CEM business model.
Our goal is to achieve a 70% contribution from CRAMS and CEM, with 30% from large-scale manufacturing, and we are well on our way to realizing this vision. Additionally, we have successfully commercialized Site 4 over the past two quarters, and production is going on full-fledged manner in Site 4. Our expansion initiatives are progressing seamlessly. Site 3+ has been dedicated to a key client under a CEM business model, with installation of pipelines and reactors well underway.
We anticipate production to begin at the end of quarter three of financial year 2026. This milestone highlights our ability to forge unique high-value contract manufacturing relationships outside of agrochemical and pharmaceutical sectors, an achievement that underscores Aether's distinctive position in the industry.
Similarly, Site 5 in Panoli is advancing steadily, with the first two production blocks on track for commissioning by December 2025. On the trade front, Aether's exposure to the U.S. market remains minimal at 7% of the total sales, insulating us from potential tariff impacts, if any. We continue to monitor this development closely. I will now hand over our phone to our CFO, Faiz Nagariya, who will share the financial highlights for this exceptional quarter. Over to you, Faiz.
Thank you, Rohan, and good morning, everyone. I am glad to present the financial results of Aether Industries Limited for Q4 of financial year 2025 and the financial year ended on 31st March 2025. The total consolidated revenue of the company stood at INR 2,453 million in Q4 of financial year 2025, as against INR 2,333 million in Q3 of financial year 2025, resulting in an EBITDA of INR 819 million in Q4, as against Q3, INR 757 million, an increase of 8% in the comparable periods. EBITDA margin stood at 33% in Q4, as against 32% in Q3 of financial year 2025. The PAT amounted to INR 504 million in Q4 of financial year 2025, as against INR 434 million in Q3 of financial year 2025, which is a 16% increase year-on-year, quarter-on-quarter.
The PAT margin stood at 21% in Q4 of financial year 2025, as against 19% in Q3 of financial year 2025. The consolidated revenue of financial year 2025 increased by 38% to INR 8,803 million from INR 6,374 million in financial year 2024, enabling a very healthy EBITDA of INR 2,709 million, which is a 31% margin in financial year 2025, as against INR 1,577 million, which was 25% in financial year 2024, resulting in an increase of 72% year-on-year. PAT stood at INR 1,584 million in financial year 2025, as against INR 825 million in financial year 2024, which is an increase of 92% in the comparing periods. PAT margin increased from 13% in financial year 2024 to 18% in financial year 2025. During the quarter, we have also received the stock insurance claim from the insurance company. The re-emptying of the affected site is completed.
100% operations at the prior affected site have been started since January 25, post-approval from the regulators. The remaining claim for the fixed assets for the loss has been put up to the insurance, along with the loss of profit claim, and we are confident to get the same settled by the insurance company by or before the end of Q2 of financial year 2026. We have been able to reduce the inventory cycle to 173 days on 31st March 2025, as against 210 days on 31st March 2024. The debtor cycle has also been reduced to 126 days, as on March 31, 2025, as against 142 days, as on March 31, 2024, encompassing the payment flow from the customers. With more of contract manufacturing businesses unfolding in the near future, we anticipate to have better data and inventory cycles in the future.
The return ratios have also improved for us, wherein the ROE has gone up to 7.12% in financial year 2025, as against 4% in financial year 2024, and ROC has gone up to 8.5% in financial year 2025, as against 4.7% in financial year 2024. We are continuously using the solar power benefit, and we will be expanding that to our other units as they come up. The total benefit of solar power in financial year 2025 has been INR 188 million, as against INR 172 million in financial year 2024, encompassing the sustainability initiative of Aether Industries, and we will continue to add capacities to the solar or wind or hybrid models of renewable energies for our upcoming new sites as well. Now, I would like to request Dr. Aman Desai to share updates on Aether's ongoing expansion plans and strategies moving forward. Amand sir.
Thank you. Thank you, Faiz, for the financial highlights. Good morning, everybody. I'm very happy to connect with you all. An idea of the various five sites that we have. Faiz and Rohan have spoken extensively about how good the quarter has been and the fiscal year has been. Just to give you an idea of the five sites that we have and what's happening and how bullish we are. Site 1 is the R&D and the pilot plant. We have eight research groups, 60 fume hoods in the Site 1 in the R&D center. We are doing a double expansion of this Site 1 R&D center. The excavation has already begun. This represents our bullishness on the R&D and the CRAMS business model that we have.
The CRAMS business model has grown by 24%, which is quite pleasing, and this continues to be the heart and the engine of Aether's new ventures. Our R&D expenses for the fiscal 2025 stood at INR 681 million, which is approximately 8% of the total revenues was R&D spending. We already have what we call the largest pilot plant in the world, and that also reflects on the bullishness that we have on the CRAMS business model. The site two and site three were largely LSM with some large-scale manufacturing, which is against Chinese import substitution, which was our original business model. A significant portion of it was also contract manufacturing, exclusive manufacturing, but largely LSM business model that has also stabilized. Both sites are running at full capacity. We have fully stabilized post the fire accident that happened in November 2023. Both sites are running at full capacity.
Chinese pricing has flattened out, and they are on the way up. The volumes are back, and the pricing is also inching upwards. Site 3+ , as Rohan mentioned, is now fully dedicated for contract manufacturing, exclusive manufacturing for one particular Material Science company for one particular product. And this particular product is transitioning from the CRAMS business model to the contract manufacturing, exclusive manufacturing business model. We have been working on this product for the last three to four years now for this particular customer, and now we are fully dedicating our Site 3+ to the exclusive contract manufacturing of this particular product for the Material Science company.
The Site 4, which is for the oilfield services company, a large part of that being towards Baker Hughes, is also running quite well, a very healthy order book already in that site and expanding more and increasing more on a monthly basis, and that is now fully on track. Site five is currently progressing very well in the Panoli site, which is a very large production site that we are constructing. We have a full line of site of about three to four plants in Site 5, and that's going to be the first couple of plants will be the large-scale manufacturing business model, which were the products which were kept on hold for Site 3+ , which will now go into Site 5.
And also, we have already finalized and are on the verge of finalizing several contracts for the contract manufacturing and exclusive manufacturing of various products in the Material Science arena from European and American customers for Site 5. And more of this will come in the next few months as you see these announcements unfold. I think especially the Site 3+ , Site 4, and the various.
Sorry to interrupt, ladies and gentlemen. We lost the line for Mr. Desai. Please stay connected while I'll reconnect him. Gentlemen, thank you for patiently holding. We have the line for Mr. Desai connected. Over to you, sir.
Can you hear me okay?
Yes, sir. We can hear you. Please wait.
Okay. Apologies for that. Somehow the line got disconnected, but anyway, I was mentioning that I just gave a highlight of the various five sites. And so, especially Site 3+ , Site 4, and Site 5, all the various contracts that we have either finalized or finalizing right now, as I mentioned, are very firm validation, and I think absolute incontrovertible proof that our CRAMS business model is working in a very robust manner. We are forging relationships with innovators across the globe, across the industry spectrum, and these are actually completely non-pharma and largely non-agro. And by next year, or definitely over the next two years, we'll be firmly, fully diversified with a very broad 25% pharma, 25% agro, 25% material sciences, and 25% oil and gas into our overall pie of revenues.
I think especially over the last few months, as the global conditions have intensified and in some cases further exacerbated, the CRAMS and the contract manufacturing business models are seeing major inquiries and fast tracking of some of the CRAMS projects. We are seeing a palpable sense of urgency from various customers across the globe as they look towards expediting the finalization of contracts with companies, especially in India, and I think we are very well placed for that, considering all the relationships that we have already forged with these various companies. Currently, we have over 50 CRAMS projects that we are working on, out of which 70% in the R&D are non-pharma and non-agrochemical projects, and that is almost 35 CRAMS projects in the R&D that are ongoing today, which are non-pharma, non-agro.
Over the last three months, we've also had numerous international customers who have come to visit at our site five, which is the Panoli site, which I talked about already. We have a clear line-up site, as I mentioned, for the various projects that we would like to start at Panoli and at site five in the first three to four plants. For the fiscal year 2025, the CRAMS and exclusive manufacturing business model has grown by 55%, which has also helped us to increase the company's margins as well as reduce the pricing pressure from which the LSM model has been suffering. So I always mention that this has been a golden age for the Indian chemical industry, and especially over the last three to six months, we are seeing that this is especially the case.
We are seeing tremendous potential in all the opportunities that are available to Indian specialty chemical companies who are diversified and have their fundamental pieces well in place. And we are working tirelessly towards converting these opportunities into actual projects, which are going to start within a year. So let me stop there. Thank you, everybody, for your time and attention today, and happy to answer any questions from the investor community. Again, thank you for all the support. Kushal, back to you.
Yeah. Thank you. We shall now request the moderator to open the floor for questions and answers.
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 the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Akshay from AK Investment. Please go ahead.
Hello. Am I audible?
Yes.
Yes, you are. Please go ahead.
Yeah. Yeah, yeah. Thanks for the opportunity. So my first question is, how much capacity will we increase by expanding our capacities in Site 3+, Site 4 and 5 combined compared to the Site 2? Hello.
Hi. Hi. And I explain to you, Akshay, it is very tough to. Chemical field, obviously, with the Site 3+ contract or whenever it happens, you will come to know about the capacities and everything once it is available on the public domain. Site 4, we have always mentioned that we are putting in a capacity of 16 KTA, that is 16,000 tons. That is for Baker Hughes plant. And Site 5, we are talking about each. Of manufacturing about 500 tons of product. But as the product mix are differentiated and which plant the combinations will happen, we'll soon let you know. But at this moment, it would be very tough to mention this. I'm sorry, I could not answer it in a straight line, but this is a very complicated question which you asked.
Yes, sir. Not an issue. Sir, my second question is, can you put some light on our products and our competitive edge on all our products like in oil and gas sectors and in the material science sectors? So I am new to this company, and so would like to understand what is our market share and product competitive edge.
Amand?
Yeah. So Akshay, thanks for the question. Again, we are very competitive. We focus on chemistry and technology innovations across the spectrum of the productions that we do. And so the idea is to be the most competitive source in the world for any product that we take into manufacturing. We incorporate a lot of technological and engineering innovations in all the chemistries that we perform.
And so there's a marriage of chemistry, technology, and engineering always, which brings a lot of efficiencies into the systems and drives down the costs. And so it's difficult to pin down specifically on any particular product because we are, as I mentioned, we are quite diversified into pharma, agro, material sciences, oil and gas. We are selling products which are $23 per kg, and we are selling products which are $5,000 per kg and everything in between. And so to pin down any. But I think suffices to say that we are very competitive because we bring innovations which are aligned to our core competencies, which is the fundamental foundation of the company to begin with 13 years ago. Thank you, Akshay.
Akshay, I can add two more points over here. For the large-scale manufacturing, we manufacture products for the first time in India, and we are the only manufacturer of most of the products which we manufacture on the large-scale manufacturing business model. In terms of the CEM and CRAMS, what we are doing currently is partnering with the innovators and launching the products for the first time in India. And now, with the few launches which are coming up in Site 3++ and Site 5, we will be launching them for the first time in the world. Would that answer your question?
Yeah, yeah. Yeah. Very, very sufficient, sir. And lastly, on the FY 2026 outlook, so how much you are anticipating the growth and the margins in FY 2026?
Akshay, we don't give forward guidance on numbers, but suffice to say that the margins will remain pretty much the same.
Okay. Okay. Thank you so much, sir. Thank you.
Thank you. The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead.
Yeah. Good morning, and thank you so much for taking my questions. First one is on the quarter four results. The EBITDA margins, even excluding other incomes, seem very strong at north of 33%. And it does seem like the decline in the OpEx lines, especially maybe other expenses, a little bit in employee costs as well. So if you could please just help us understand what's happened there, and do we expect to continue this 33% margin in upcoming quarters as well?
Yeah. Abhijit, I'll just take this question. You're right that this time the EBITDA margin is more inclined towards the revenue from operations. As the QIP funds which we had raised, we have deployed, and so now other income which was coming from mostly FD interest is reduced. And going forward, we'll be at 30% EBITDA margins for sure. And the expenses which are reduced, there is no reduction. Actually, what has happened is new projects have started.
So as per the upcoming standards, various capitalizations of expenses of project and process teams is being done. So that is the thing, and that will be the CapEx thing. Otherwise, there is no change in the expenses. Also, other expenses are reduced because I think my comment also, if you heard, I said that solar power plant is giving a good return to us. So that has also helped us reduce the electricity cost overall, which is also a good factor which has increased our EBITDA margins.
Abhijit, just to add to that, if you see the CRAMS business model and the CEM have now started firing, especially the CRAMS, if you see for the first quarter for the financial year FY 2025, CRAMS has for the first time passed 100 crores of revenue. This is, of course, a very high EBITDA margin business, which is for us. And as you realize that R&D is the core for this company. So now you're seeing the results of the R&D coming in, as well as the CEM now taking off with the two new CEM contracts, which were mentioned by Rohan and Dr. Amand.
Got it. Yeah. Thank you. That's helpful. The other one was just on the working capital. There's been some improvement year-on-year, but for the year ahead, if you could please share some outlook regarding how you're seeing things moving now that the revenue mix has started to shift.
Yes. So we are trying to incline more towards the contract manufacturing and CRAMS more. And in contract manufacturing, there will be definite payment terms, and also the inventory flushing will be continuously going on. And so there will be no more piling of the inventories because it will be the context will be very much defining the quantities which we have to sell to these customers. So of course, we are looking forward to reducing this better. Currently, we are at around 195 days of working capital. We expect it to bring it down to better levels. And within a couple of years or three years, we will try to bring it down to 150 days level for sure.
Understood. Thank you so much. And on the revenue growth that we have seen in FY 2025 in LSM and CSM, sorry, CEM, would it be possible to just share broadly which products or which contracts have sort of driven this kind of growth?
Abhijit, we can connect separately on this. Basically, we do not want to mention the product names and the companies because they are more confidential in nature. So we can discuss this offline if required.
Fair enough. Thank you. And the last thing for me is just on the tariff situation. I know our U.S. exposure is only 5%-6% of total revenues. But I mean, could there be some sort of indirect impact coming in from other geographies because of all this environment? And there's also some concern that Chinese may turn more aggressive outside of the U.S. in case they are blocked from the U.S. market. So how are you seeing the industry environment evolving in that context?
I don't know about people, but what we are seeing is a lot of inbound conversion into contracts and commercialization. So in fact, we are seeing a lot of companies moving towards in a very, very fast manner towards getting the things into commercial stage because they are worried about the tariff structures and what the U.S. might do in the next few months. And we are not seeing any negative impact for Aether, especially at this moment. And the contribution from the top of our top line for the last financial was only 7%.
So we are not at all worried on this at the moment. Most of our products are exempt from the tariffs, or are they actually subject to them? No. Nothing is going into the U.S. So, I mean, except for the 7%, nothing is going into the U.S. And that 7% is also mostly constituting of CRAMS businesses. So that's more of a service-oriented business, which we are doing.
Okay. Great. Thank you so much. I'll get back in the queue for any more.
Thank you. Thank you.
Thank you. The next question is from the line of Chaitanya Kamdar from Avesta Fund Management, LLP. Please go ahead.
Yeah. Hi. Congratulations on the good results. I had a question. Basically, we see Aether as a major player in the Material Science space, which is unlike other players in India to the scale of what you are manufacturing. So can you give us your strategy over the next two to three years as to how Aether is tapping into the segment and what can we expect?
Yeah. I can take this. Thanks, Chaitanya, for the question. It is a good question. We are focusing consciously on increasing the partnerships and the CRAMS projects and the contract manufacturing projects in material sciences, as well as oil and gas, and so that's a conscious strategy adopted by the company.
The focus is quite simple, actually. It's strategic partnerships with innovators in the material sciences and oil and gas space, and for every one that we announce, we are working with four to five others in the space as well, and so the strategy always has been and will continue to be quite simple. It's strategic partnerships with these innovators where we would like to be their one-stop solution and their go-to partner for all complex chemistry and technology needs.
And so if they have pipeline molecules of various launches in the future that involve complex chemistry and complex technology, then we want to be the first ones they connect with. We are and we look to be considered as the internal research scale-up and commercial supply arm of these various innovators, which just happens to be a different company located in India. And so that's the strategy. It's always been the strategy, and that will be a continued strategy. And we are focusing on this much more, i.e., focus on the core competencies of the company in chemistries and technologies, and then focus on strategic partnership with innovators, having multiple eggs in the basket with the same partner.
And so we want to be working with a partner for their R&D needs in the CRAMS business model, for the scale-up and supply needs in the CRAMS business model, and then also be their partner for commercialization as the products are launched, which now we are seeing the proof in the pudding with the Site 3+ and the Site 5 contracts that have been finalized already. Hopefully, that answered your question, Chaitanya. Happy to explain.
Yeah. No, that's great. You've answered that. And just a bit of a follow-up question on follow-up to the previous question is, how is the Site 5 shaping up in terms of phase one? And do we have any clarity on the first four plants?
Yeah. So Site 5, as I mentioned in my little ramble earlier, is shaping up quite well. The Zone 1, the phase one is four plants, and we have more or less 80% clarity on the first four plants that we are going to be installing and operating. And it is healthy. Actually, we had three products that we were going to launch in the LSM model in Site 3+, which has now been dedicated to a contract manufacturing customer, as I mentioned earlier. And so those three products are going to be launched first in the Site 5 in the LSM model, and then the next two and a half plants are going to be dedicated for contract manufacturing projects with various customers, the contracts for which have been and are being currently finalized. So firm line of sight of the first four plants mostly.
Okay. Noted. Thanks a lot. That's it from me.
Thanks.
Thank you. The next question is from the line of Krishan Parwani from JM Financial.
Good morning. Congrats on a very strong set of numbers. A couple of questions from my side. First, I think you mentioned that the revenue from Site 3++ would begin from FY 2026. So just wanted to check if you have already received the orders for the same or the orders will come in probably over the next couple of quarters.
The contract is being finalized. Once the contract is being finalized, we are on the very end to finalize this contract, and so once it is done, the orders will follow immediately.
Understood, sir. And from Site 4, was there large revenue in FY 2024 by 25%? Just from an understanding point of view, given we've seen a good increase in our top line in FY 2024. So just wanted to check whether the contribution has started from Site 4.
Yeah. So from Site 4 in Q4, we had approximately around INR 25 crores of revenue, which were the validation contributions which were sent. Now the commercial purchase orders are received, and we are going to do the commercial supplies to them from this quarter onwards. It's already started in April, sir.
Okay. That's great, sir. And just the last bit. So just can you highlight a revenue trajectory for Site 4 and Site 3++ in case if you are able to publicly? I think in the past, we had indicated that Site 4 will gradually ramp up to INR 250 crores-INR 300 crores. So just wanted to understand the trajectory for both the sites.
Krishna, in terms of Site 4, our statement remains valid. What we had mentioned in the past, it will gradually ramp up in FY 2026. We'll come back to you later during the financial year.
Noted, sir. Noted, sir. And just last bit, I think on the EBITDA margin, you answered to a previous participant that EBITDA margin will go up from here. But just wanted to understand, let's say for FY 2026, a 33% EBITDA margin is the right number to work with or probably more like an average 30%-31% kind of an EBITDA margin?
Yeah. So Krishna, it will be an average of around 29%-30%, and from there, it will grow gradually. So currently, we are not looking at 33%. It will gradually grow in a couple of years or so. So 29%-30% expecting, and we are working on.
That's great, sir. Thank you so much for your patience.
Thank you. Ladies and gentlemen, to ask a question, you may press star and one. The next question is from the line of Krishna Mudra from NJ Invest. Please go ahead.
Hi, Jay. Congratulations on the good setup in U.S. So as you can hear.
I'm sorry to interrupt you, Mr. Mudra. Can you please speak a bit louder? We cannot hear you, sir.
Hello. So am I audible now?
Not actually. Can you speak a bit louder, sir?
Hello. Am I audible now?
Yes, you are. Please go ahead.
So congratulations on a good set of numbers. So as you mentioned that U.S. sales are just only 8%, which is from CRAMS business. So regarding the Baker Hughes contract, is it going to U.S. or other geography? So just wanted to get the.
Other geography.
Okay. And next is on the Converge polyols business. So we had started commercialization with H.B. Fuller. So are there any developments on that part?
Yeah. We have a contract with H.B. Fuller, and that contract is being well executed. In this financial year, we are looking to close two new contracts in the Converge polyols, which will take us about 500 tons of manufacturing and sales financial year.
The next is regarding, in the last quarter, you said that you were evaluating for starting LSM or CEM business from the Site 3++. So have you done that, or have you taken any decision regarding that, what we are planning to do?
Yes. Site 3++ will be dedicated to CEM business model.
In that CEM, if you can provide any which chemical we are planning to manufacture, any agrochemical, pharma, or material science?
It's non-pharma, non-agro. That is the max I can say at this moment. Once the agreement and the contract is finalized, we will publish it in the public domain, and we can discuss this more openly at that point of time.
Okay, and the next was regarding the pricing. You said that we will, from starting the Chinese New Year, we can see an upward trajectory in the pricing. So during the fourth quarter, did we see only the rise in top line was only due to volume increase, or there was some price increase which we have seen?
So price was stable. We have seen only volume growth.
Okay. Thank you.
Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Manasi Bhadane from B&K Securities. Please go ahead.
Sir, congratulations for the good set of numbers. Sir, I'm new to your company. So just understand the rationale behind your strategic goal of achieving a 70/30 split. So this is aligned with your long-term growth strategy.
Aman?
Yes. Thank you, Manasi, for the question. Basically, the focus is to, as I said earlier in response to one of the questions, is to have strategic partnerships with various innovators across the industry spectrum across the globe. And that's the push towards the increased portfolio of contract manufacturing, exclusive manufacturing. The large-scale manufacturing business model is a business model where we pick our own products, which are generic advanced intermediates for pharma and ag primarily, which are against Chinese import substitution. That was the business model that we started the company with, and that is a business model that we still continue to nurture and grow. But the contract manufacturing, exclusive manufacturing is a business model that is driven by both us and the customer together, and that grows much faster. And that's what you see in the numbers that are being portrayed.
In the future going forward, this will stay more or less the same. We'll try our best to keep the large-scale manufacturing business model at least at 25% or more in the years going forward. Especially in terms of the global scenario that we are in today, the push towards contract manufacturing, exclusive manufacturing, and partnering up with companies and NDIs is significant from various companies and innovators across the industry spectrum across the globe. So we see the increased numbers of the contract manufacturing.
Okay. So that's helpful. Thank you.
Thank you. The next question is from the line of Rohit Ohri from Progressive Shares PMS. Please go ahead.
Hi team. A couple of questions. The first one on Site 5, if we see that you've added, you have acquired some more property, taking it from 31 acres to 46 acres. Dr. Amand and team, my question is that what gives us that sense of positivity or what are you looking at? Because Dr. Amand said that R&D is a backbone and you're focusing more on the R&D. But what gives us that sense that we have added this approximately 15 more acres of land?
Yeah. Thank you, Rohit, for the question. We've always been very bullish in terms of our partnerships that we have been forging over the last 13 years now in the non-pharma, non-agro sector for the CRAMS business model. We are very bullish about the growth trajectory of the company going forward. It is a golden age for the chemical industry. It has always been a golden age for the chemical industry over the last few years, and especially since the last few months as the global conditions have further exacerbated. We are seeing a sense of urgency for various customers to start finalizing partnerships with especially companies in India. And so everybody wants to be not in China, and the only obvious choice for everybody in the world is India, more or less.
We are seeing this pan out in the kind of inquiries we are getting, the urgency we are sensing from customers to close contracts and finalize the contracts with us. We are based on R&D and technological and chemistry innovations as the fundamental base of the company. The fundamentals of the company are very sound in terms of chemistry and technology and innovation and R&D. We continue to expand that as well in terms of the infrastructures and the manpower. We are led techno-commercially from the top, putting in the way the contracts have been finalized for Site 3+ and Site 4 and some for Site 5 in these exclusive manufacturing, contract manufacturing business models, which are actually results of the efforts done in the CRAMS business model in research for these various customers over the years.
So, we have actually proven this business model that it is quite robust, and that leads us to be very bullish, and that leads us to continuously expand on all fronts of the R&D, pilot plant, and production, which is as a result of which you see the additional land being bought next to Site 5 in Panoli.
I know it's slightly too early to kind of gauge the timeline for completion of the additional land because we already have probably 14 or 16 subunits which are coming up in Site 5. But any thoughts on by when do you think that Site 5 construction and the entire work will be completed so that we move on to Site 5+?
I'll let Kushal verify his answer in terms of what guidance we are giving to people.
I'll take this up. The goal is to complete Site 5 in three to four years. That's the internal goal. I mean, I thought as the projects are developing, it can accelerate based on the incoming projects and inquiries which are getting commercialized as we speak. Site 5, additional land which we have acquired, which is 15 acres more, which makes the total land parcel at 46 acres. What we are projecting is try to keep it isolated for large customers, which would give us space to expand that customer's likes of Baker Hughes, similar kind of customer whom we can dedicate the whole parcel of land for a very big facility.
Do you have to say is it possible to share the cost of acquisition of this property?
It's approximately 420 million.
Okay. With this 30-40 kind of a range, do you think you'd be able to sustain this going forward as well with the inquiries that are coming in the CRAMS business or maybe the CEM business?
Yes. That's the target and the internal goal for the company to be at around 29%-30% EBITDA margins and grow from there for sure, and we are seeing this coming up.
Is it possible to chalk out maybe 18% or 20% agro growth over the next three, four years, or maybe faster than that?
Continue at 18% and grow from there. It's definitely possible as new contract manufacturing and CRAMS business customers are coming up, and we are getting business with them.
Last question from my side team. The promoter holding is somewhere around 81.7%. When do you think that you'll be able to come to this SEBI requirement or rules of 75%? How much time do we have for that?
The timeline for this regulatory requirement is May 31st. We are in discussion with our bankers, and we'll come back to you all shortly once we have decided the right course of action.
Any thoughts whether you'll be placing to some strategic shareholders or maybe go for OFS or something like that?
There are only certain mechanisms which are allowed by SEBI for allowing us to reach the minimum promoter shareholding. So we'll be abiding by those requirements. So we'll come back to you.
Okay. Team, thank you for answering the question. All the best. Thanks a lot.
Thank you.
Thank you. The next question is from the line of Nilesh Ghuge from HDFC Securities. Please go ahead.
Yeah. My question is to Amand. So Amand, we look at the industry as an R&D-driven technology-oriented organization. If you look at the revenue spend on R&D, it's about 8% revenue. So going ahead, let's say a couple of years down the line, you have expansion in R&D, you have new capacity. So will that number go up from 8% to somewhere like 10%-12%? Are you looking at that kind of number with this expansion?
Nilesh, thanks for the question. As you know, I'm originally a scientist, and fortunately, I've become a manager now. And so if it were up to me, I would be spending a lot more money. But I have the likes of Faiz and Kushal and Rohan slapping my wrists every now and then. But jokes aside, we anticipate to be investing significantly in R&D, continue to invest. Just for an example, we are placing an order for an NMR, which is an analytical equipment, which is almost a little less than $1 million of a single equipment for R&D in the next few months. And so those are the kind of advanced technological, analytical, and R&D tools that we'll be investing in.
In addition to the expansion of the infrastructure and the manpower that is going to be there, we have started excavation for the new R&D center, which is right adjacent to our existing R&D center, which is going to more than double the capacity of our R&D. And the excavation of that has already started, and we are going to come above the ground before the monsoon, which is like one and a half months from now. And so that activity has started. It's going to be a grand, very nice, globally advanced R&D center for organic synthesis and organic chemistry. And so that's what we're already building.
And so I think, at least for the next few years, we will continue to expand and continue to invest in R&D. These numbers will more or less stay the same. Faiz can comment more on the numbers, but especially the vision from our side is that the investment into R&D will be a continuous effort and work in progress. Yes. And Nilesh. That is the engine, and that is what drives the company forward. And that is going to be the sustained focus of the company for years and years to come. So Faiz, over to you.
Yeah. So, Nilesh, we will continue to invest in the R&D, as Dr. Amand said, and we would be minimum around 6%-6.5% for sure because we are expanding R&D, and new products will be developed there. New people will be added, so our thought is that at least 6%-6.5% of our revenues will be invested in R&D for the next few years for sure.
Okay. Thanks. Thanks. So Aman, coming on the R&D, now you are expanding your infrastructure. So before that, can you tell us, or can you break up the number of projects or molecules you are working on in two parts? Firstly, which will be you are working on your large-scale manufacturing, and other is a CEM or a contract manufacturing. Can you break up now? And where do you see that number going after expansion? Because as you mentioned, that R&D will reflect in your revenue terms over a longer period of time. So we would like to know the number of molecules you are working on so that we can estimate that number of projects which will be fulfilled into large-scale manufacturing or contract manufacturing.
Yeah. Thanks, Nilesh. Just to give a high-level summary, we have eight research groups. These groups handle we have a total of 120 R&D scientists plus more than 100 engineers. But in terms of broadly, 20 projects, let's say. And as we expand further, I think we'll have to try hard, and we will, because it's going to be a sustained focus, is to keep the LSM model alive and growing and nurture it. But we see a tremendous amount of inquiries coming into CRAMS business model and projects.
And so keeping the CRAMS, as we expand more, say, even achieve a two-year expansion in the next two years of R&D, keeping the CRAMS at 70%-75% is going to be, I think, personally, straightforward and quite easy just in terms of the relationships we are forging and the inquiries we are seeing and the reputation and foundation that we are standing upon today. But we'll try hard to make sure that the LSM business model stays at 20%, 25%, 30% at least in terms of the overall number of projects we do in the R&D. Hopefully, that gives you a good sense of the numbers.
Yes. Yes, sir. Thanks, Aman. Just a last bit to Rohan and Faiz. As you mentioned in your comment, that contract manufacturing and CRAMS, which is currently contributing close to about 50%, and in a few years, we are expecting to reach to about 70%+ . So don't you think that it will be easier for you to manage working capital in a much, much better way because your share of your CRAMS or contract manufacturing is going up compared to current scenario, and working capital cycles should reduce drastically with rising your share of contract manufacturing and CRAMS? Any thought on that?
Yeah. Yeah, Nilesh. That's the total plan. And we have been hearing about working capital since various quarters. So we are happy that we are able to bring it down to a good level, and we will be further working on it. And contract manufacturing and CRAMS business model business will definitely help us bring them down more. And our target, as I told you, even one of the earlier speakers was to bring it down to 150- days levels in the next two to three years.
Thanks. Thanks for answering all my questions, Kushal. Thanks. Thanks a lot.
Thank you. The next question is from the line of Abhijit Akela from Kotak Securities. Please go ahead.
Yeah. Thank you so much for the follow-up. Just to check if you could please help us with the capacity utilization at present across your key manufacturing plants. And by when do you expect them to hit full capacity utilization, and what sort of revenue potential do you see from each of them? Thank you so much.
Yeah. So Abhijit, Site 1 is R&D in Panoli, and we do not measure the capacity because it's dependent upon the contracts and the R&D which is done. But Site two is currently operating at around 70% capacity, and we expect it because the site has come up slowly with the regulatory approvals as it was hit by fire. So we expect that it would be working to full capacity of around 80%-82% in the current year, in the financial year 2025, 2026.
And Site three is also approximately around 66% capacity utilization, and we expect that it should be around 75%-80% in this current year itself. And the revenue trajectory, we would not be able to give any forward-looking statements. So we would comment on that. Site four, yeah, we have started the validation quantities. Currently, we are at around 25%-30% capacity utilization. This year, it will be a great jump, and it will be around 75% utilization.
Understood. Thank you so much and all the best.
Yes, sir.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Thank you, everyone. We look forward to seeing you guys again for Q1 FY 2026 financial results. If any further queries, you can reach out to Faiz, myself, or Shubhangi, and we look forward to meeting you. Thank you.
Thank you. On behalf of HDFC Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.