Ladies and gentlemen, good day and welcome to Jubilant Ingrevia's Q2 and H1 FY 2026 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 this 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. Pavleen Taneja, Head of Investor Relations at Jubilant Ingrevia Limited. Thank you and over to you.
Thank you. Good evening, everyone. Thank you for joining the Quarter Two of Financial Year 2026 earnings conference call of Jubilant Ingrevia Limited. I would like to remind you that some of the statements made on the call today will be forward-looking in nature, and a detailed disclaimer in this regard has been included in the press release and the results presentation that has been shared on our website. On the call today, we have Mr. Shyam Bhartia, Chairman, Mr. Deepak Jain, CEO and Managing Director, and Mr. Varun Gupta, CFO, Jubilant Ingrevia Limited. I now invite Mr. Shyam Bhartia to share his comments.
Thank you, Pavleen. A very good evening to everyone. Thank you for joining us on the Quarter Two of the Financial Year 2026 earnings conference call of Jubilant Ingrevia Limited. We are pleased to share the financial results for the second quarter of this fiscal year. The company grew 7% year-on-year basis with high double-digit volume growth. Our specialty chemicals segment continues to drive the growth momentum with double-digit year-on-year revenue growth and positive growth over the last quarter. Our nutrition business maintained a steady volume growth trajectory across the core products. Meanwhile, our chemical intermediate business logged highest quarterly sales across value and volume in the last six quarters. Despite the challenging market conditions, we have grown revenue on the back of growth in volume, market share, and maintained profitability. This quarter, our EBITDA grew 8% year-on-year, and our profit after tax saw an impressive 18% increase.
On a half-yearly basis, EBITDA grew 18% and profit after tax surged by 34%. Let me share the overall market update with you all. Across the broader chemical industry, we are witnessing a steady recovery in volumes, even as pricing remains under pressure across all segments. At the same time, many global players, especially players in Europe, are reporting deteriorating financials due to weaker demand, continued pricing pressure, and elevated energy costs. The pharmaceutical end-use market continues to show steady volume growth, supported by stable pricing. We saw consistent volume expansion across CDMO and fine chemicals products. Additionally, we saw margin recovery in volumes last quarter within the paracetamol segment. The global agrochemical sector has successfully moved beyond the inventory destocking phase, with volumes now stabilizing and showing clear signs of growth. This upward momentum is supported by strong volume expansion on both year-on-year and quarter-on-quarter basis.
Pricing in the segment has remained stable over the last few quarters, reinforcing the recovery trend. The nutrition market recorded steady volume growth during the quarter through feed-grade vitamin pricing and showed short-term volatility globally in India. Niacinamide demand showed a modest uptick as customer purchasing activity resumed following subdued volumes at the start of the financial year. Pollen volumes traditionally dip in Q2 versus Q1 due to festivals. However, we have seen a notable increase in year-on-year volume increase. Let me share a few details on our future outlook. Looking ahead to H2 FY 2026, we expect continued growth momentum fueled by progress in our specialty chemicals and nutrition businesses, along with the expected part recovery in the acetyl portfolio.
We are also on the track to start serving our major CDMO order in early 2026, a milestone that is expected to significantly accelerate our growth trajectory in the CDMO segment. To meet the increased demand in CDMO, we did groundbreaking of our new MPP in Gujarat. We hope to complete it by late 2026. With this, I hand it to Deepak to discuss the business in detail. Thank you.
Thank you, Mr. Bhartia. A very good evening to all of you. I would like to thank you all for joining us today for the Q2 FY 2026 investor call of Jubilant Ingrevia Limited. Over the past year, we have made substantial strides across all pillars to set business up for long term while also stabilizing the short-term performance amid challenging global market conditions. These efforts are already bearing fruits, as reflected in our recent quarterly results, highlighted by robust growth in our specialty and nutrition portfolio, stable EBITDA, and a significantly expanded funnel of 100+ new opportunities. In Q2 FY 2026, we continued to build momentum in our pinnacle journey, achieving several new milestones that further reinforce our trajectory toward long-term value creation. Let me share the overall business update with you all.
From an overall business perspective, we are pleased to report our highest quarterly revenue and sales volume in the last 10 quarters. This milestone reflects the strength of our diversified portfolio, consistent execution across segments, and our ability to capture market opportunities despite a dynamic and tough operating environment. The specialty chemicals segment continued on its revenue trajectory and reported 25% + margins during the quarter, driven primarily by strong performance in fine chemicals and CDMO sales. Pyridine derivatives have delivered high double-digit growth on both quarter-on-quarter and year-on-year basis, underscoring robust demand over competitive positioning. Picoline derivatives also maintained its growth momentum across both quarter-on-quarter and year-on-year basis, reflecting consistent performance and market traction. In our CDMO business, we successfully delivered volumes against one of our new agro-CDMO innovator contracts in Q2.
In the last few quarters, we have added 10+ new molecules in our CDMO and fine chemical portfolio, which have already started to show in our FY 2026 revenues and are expected to contribute almost INR 1,200 crore of peak annual revenues in the coming years. We have another 10+ opportunities in advanced stages of discussions, which we hope to convert in the coming quarters. We continue to make rapid progress in our new growth segments, such as cosmetics and semiconductor chemicals. In cosmetics, our team has already developed multiple products, and we are getting good traction with several customers. Similarly, in semiconductor chemicals too, the number of opportunities has increased in the last quarter, and we are making significant investments in equipment and teams to accelerate our journey. The nutrition and health solutions business segment grew volumes on a year-on-year basis, with volume growth seen across most segments.
We achieved record high volumes in both vitamin B3 and B4 during the quarter. While pricing softness partially offset revenue growth, the underlying volume performance remains robust. Our new cGMP facility is ramping up and continues to drive growth in cosmetic-grade sales. The EU's anti-dumping duty on Chinese origin choline products is creating a good pipeline, which would get realized in the coming quarters, with early orders already booked in Q2. In the chemical intermediate segment, our strategic initiatives on ethyl acetate and acetic anhydride sales drove a notable quarter-on-quarter and year-on-year growth in volumes and revenue, clocking the highest quarterly revenue and volumes in the last six quarters. We have continued to secure and grow our domestic and global market share despite market pricing pressures. With our sustained focus on cost efficiency, we successfully maintained margins in line with the previous quarter.
Let me give a quick update on the progress we have made across the five core pillars of our strategy. From a customer centricity perspective, our key account management approach continues to deliver strong results. In Q2, we expanded our opportunity funnel to over 100+ active opportunities, up from 70 in Q1, reflecting deeper engagement and growing interest across strategic accounts. These opportunities collectively have peak annual revenue potential of INR 3.5 billion. Over the past year, we have secured confirmation for more than 10 molecules with an estimated peak revenue potential of INR 1.2 billion, and we are in advanced stages of discussions for another 10+ opportunities, which we hope to close in the coming months. From an operations and ESG standpoint, we are seeing tangible results from our sustainability initiatives. The impact of our green power is clearly visible.
Our power and fuel expenses dropped by 16% year-on-year despite an increase in production volumes. We have successfully commissioned renewables O2 power at our Bharuch site, taking Ingrevia's renewable power share to 28%, a significant step toward our clean energy goals. On the operational front, our INR 100+ crore per annum lean savings program remains firmly on track, driving efficiency across the value chain. We are also proud to share that our ESG efforts were recognized with the ICC Sustainability Award in the Water Stewardship category, reinforcing our commitment to responsible growth. From a people and organization building perspective, we continue to strengthen our leadership bench with strategic senior talent additions. For instance, this quarter, we welcomed the new Head of Nutrition and Health Ingredients to drive innovation and growth in a key segment. We also onboarded a Business Development Head for the U.S.
market to accelerate our global outreach. We also expanded our R&D and technology teams significantly in the last few months, specifically to support the new CDMO fine chemicals opportunities. These appointments reflect our commitment to building a high-performance future-ready organization aligned with our long-term growth ambitions. On the innovation and R&D front, we continue to build a strong pipeline that supports our long-term growth strategy. We now have approximately 50 + products under development across our business segments, reflecting our commitment to differentiated and value-added solutions. Looking ahead, we expect to launch 18 new products in FY 2026, each aligned with emerging market needs and customer priorities. These innovations will further strengthen our portfolio and reinforce our position as a science-led customer-centric organization.
On the CapEx front, we firmly remain on track with the Q4 commissioning of our $300 million agro innovator project, a key milestone in our CDMO growth strategy. In Bharuch, a new boiler is scheduled for commissioning in Q3 FY 2026, further enhancing operational efficiency. We are also debottlenecking capacity in our existing plants by 15% - 20% to serve incremental volumes from new CDMO and fine chemical opportunities. Additionally, during the quarter, we have also done groundbreaking for a new multipurpose plant at Gujarat, which will add significant flexibility and capacity across our CDMO portfolio. Looking ahead, we are excited to announce plans for the state-of-the-art semiconductor R&D facility in Greater Noida, making our entry into a high-tech innovation space with long-term strategic relevance.
Given the progress across our strategic initiatives, we remain confident in sustaining the expected growth trajectory in both top line and margins over the coming quarters. With that, I would now like to invite Varun to walk you through the financial performance of each of our three business segments, followed by a consolidated financial overview.
Thanks, Deepak. A very good evening to all of you. Starting with the overall financial update, we achieved our highest quarterly turnover in the last 10 quarters, with overall revenue reaching INR 1,121 crore, compared to INR 1,045 crore in Q2 financial year 2025. Importantly, volume grew by approximately 18% during the quarter, despite macroeconomic headwinds and the typically muted price momentum seen across most segments in Q2. EBITDA for the quarter stood at INR 146 crore, marking an 8% year-on-year increase. This growth was largely driven by margin expansion in our specialty chemicals segment on a year-on-year basis, supported by ongoing cost optimization initiatives across the business. On a half-yearly basis, EBITDA stood at INR 300 crore, representing an 18% increase compared to the first half of last year.
The net debt of the company as on 30th September 2025 was INR 748 crore, and the net debt-to-EBITDA ratio remained at 1.24x , calculated on the basis of trailing 12 months EBITDA. During the quarter, we incurred a capital expenditure of INR 59 crore, taking the year-to-date CapEx spend to INR 109 crore. This was primarily directed towards the upcoming CDMO agro plant at Bharuch and the groundbreaking of our new multipurpose facility in Gujarat, which Deepak just mentioned. The investments were largely funded through internal accruals. Looking ahead, we plan to invest approximately INR 600 crore in 2026, which will also be supported by internal accruals. The PAT for the quarter was INR 70 crore, as against INR 59 crore in Q2 2025, witnessing an increase of 18% on a year-on-year basis.
For the first half of 2026, we have delivered a 34% increase in the PAT as compared to the first half of 2025. Specialty chemicals. In Q2, our specialty chemicals segment delivered 12% year-on-year revenue growth, led by a strong performance in CDMO, pyridine, and pyridine derivatives portfolio. Also, EBITDA grew 50% year-on-year to INR 125 crore, with margins holding steady at 26%, which was supported by a higher uptake of fine chemicals and CDMO offerings, along with the cost optimization initiatives. Sequentially, EBITDA declined marginally due to the short-term price volatility in pyridine and picolines and a temporary pyridine plant shutdown for maintenance. Nutrition and health solutions business segment. While we saw strong volume growth in both vitamin B3 and choline during the quarter, overall revenue growth was tempered by short-term pricing pressure across the broader nutrition portfolio, wherein the revenue declined marginally by 1% on a year-on-year basis.
EBITDA for the segment declined 13% year-on-year, with margins trending lower and settling in the 12% and 12%- 14% range, primarily due to pricing pressures. However, we expect margin improvement in the coming quarters as prices stabilized and the share of cosmetic and food-grade products increased in the overall portfolio. Chemical intermediates business segment. The segment delivered 20% sequential revenue growth and 6% year-on-year, fueled by strong volume expansion in acetic anhydride and ethyl acetate, reaching the highest levels seen in the last six quarters. On a quarter-on-quarter basis, the segment EBITDA marginally remained stable, while the year-on-year decline in absolute EBITDA was primarily due to the market-driven contribution erosion. Subdued pricing resulting from the pass-through of lower cost of input raw material and the oversupplied market also impacted EBITDA performance. Overall, business is showing steady growth across segments and delivered yet another solid quarter.
We will now be happy to address any questions that you may have.
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. We'll take our first question from the line of Rohan Mehta from Ficom Family Office. Please go ahead.
Hi, thank you so much for taking my question. Am I audible?
Yes, please go ahead.
Okay. On the nutrition segment, firstly on the choline chloride, I'm trying to understand that after the EU's anti-dumping duty, what sort of shipments are you currently exporting to Europe versus Q1? What has so far been the market feedback on this? When it comes to the realization, what sort of premium currently are you seeing versus the domestic market? Within the nutrition segment, coming to niacinamide, so currently, what is the capacity utilization? Given that the quarter one period was a lean period when it came to inventory from the customer's end, what sort of customer uptake have you seen since then? In the month of October, any improvements have you seen on the realization front?
Thank you, Rohan, for those questions. Let me just take each one of them one by one. On the choline chloride side, as I mentioned in my opening remarks also, we are seeing strong traction with European customers after the anti-dumping duties got imposed on Chinese players. We have already sent a few shipments to Europe in the last quarter as well, and the pipeline is looking very healthy. The overall market, as per our estimates, is running into at least 30,000- 40,000 tons. We are hopeful that as our product gets qualified in the coming months and quarters, we will be able to capture a meaningful portion of that. We have already started to work with customers very closely in qualifying our product and ensuring that if they have any requirements for specific grades, we work on them.
All of that work is ongoing, and you will start to see the impact of that in our nutrition business portfolio in the coming quarters. The realization part of it, obviously, the realizations are better than the Indian market. We are still testing waters, and the market dynamic is also changing very quickly with, of course, Chinese players not able to supply the material at such lower prices as they were doing earlier. Obviously, there is some competition coming from other markets as well or other manufacturing markets as well. We are going through all that process, but definitely, we are expecting to get price premium vis-à-vis the domestic market in choline. That's on the first part. On the niacinamide part also, as we explained in the opening remarks and also in our investor presentation as well, we have seen a very strong increase in volumes vis-à-vis last quarter.
We are hoping, and by the way, a significant portion of that has come on the back of volumes increasing in the high-value categories like cosmetic-grade and food-grade. We are hoping to maintain that momentum into this quarter and the next two quarters. We are in advanced stages of discussions with some of our biggest customers to start supplying them high-value grades in the coming months. The utilization of the plant, of course, will accordingly increase. We are hoping that within the first few months of commissioning of the plant, we should be able to take our volumes up at least by 25%- 30% vis-à-vis what we had earlier. The pricing, the last part of your question was on the pricing of niacinamide.
As I think is already well known in the market, the pricing went through a trough in the last quarter, which is also reflected in our margins for the last quarter. We have seen a slight uptick in recent months, and we are hoping that will sustain, and we can also see some uptick in the coming months. That's the hope we have.
Right. For the realizations, the same thing goes for choline chloride, right, when it comes to the improvement that you are expecting for the next quarter?
Yes. The other thing to note is the mix of cosmetic, food, and pharma-grade niacinamide in our portfolio is continuously increasing every passing month. The pricing there is far more stable and, of course, has a premium in build. As the relative proportion of those grades in the overall portfolio increases, which is part of our strategy, and that's why we have commissioned this new plant, we are hoping the volatility coming from the feed grade will gradually get subdued.
Okay. My final question is on the CDMO segment. You spoke about the Gujarat plant that is trying to break by next year, late 2026. I'm trying to understand what sort of pipeline is this part of the peak revenue that you see from the 10 molecules worth INR 1,200 crore? Which part of the molecule does this address?
Yes, that's right. Of course, in the business case that we have built for that new multipurpose plant, which will have multiple streams, we have taken certain assumptions on which products out of the pipeline that I announced will come up first. We are planning for them, and we are hoping to ramp up the volumes of those products starting 2027 calendar year. In the interim, for 2026, when we need relatively smaller volumes on those products, we would be able to serve them through our existing multipurpose plants that we have, almost seven of them in Gujarat and three of them in Bharuch.
Got it. Got it. That means you're still on track for INR 2,000 crore EBITDA by FY 2023.
Yes, we hope to get there. Of course, we are working on multiple fronts to achieve that milestone. If you remember, there was some inbuilt element of inorganic and partnership-driven opportunities as well into that. We, as of now, are hopeful that we'll be able to achieve in the timeframe we announced in the investor day last year or early part of this year.
Got it. Got it. No update to your guidance, right?
No.
Okay. Okay. Sure. Thank you. Thank you so much.
Thank you.
Thank you. Ladies and gentlemen, in order to ensure management is able to answer queries from all participants, kindly restate your questions to two at a time. You may join back the queue for follow-up questions. We'll take our next question from the line of Gaurav from Invesco. Please go ahead.
Hi. I hope my voice is audible.
Yes, please go ahead.
Thank you very much for the opportunity. The first one is just a clarification. Like we mentioned, I think because of anti-dumping duty on China in the European Union region, we have already booked certain orders in Q2 itself. I am just wondering if the reported number of Q2 is including the revenue from these pre-booked orders or how it is.
Yes, we have booked orders, and we have made deliveries as well for some volumes. Of course, in the overall scheme of things, that number is not as big given the size of our nutrition business, but that number is included right now. As we move into Q3 and Q4, we are hoping to scale it up significantly. You need to understand that the product approval process takes a few weeks, if not months. Right now, we are going through that process with at least a dozen different customers. As and when that process gets completed and as we start booking higher volume orders with them, you will see a meaningful uptick in the revenue trajectory going forward.
Gaurav, Varun here, just to add on to what Deepak just mentioned, the revenue includes only the deliveries made. The order booked, we have anything in quarter three delivery, we'll be recording quarter three delivery.
Of course. Yeah, that's great. Thanks for the clarification. In the first question, which would be like, we have again mentioned that in the last couple of quarters, we have added almost 10% new molecules, right, including our CDMO and fine chemical chemistry, right? Would you be able to help us as an investor, as an analyst, what percentage of our revenue in Q2 or H1 of FY 2026 is having contribution of these 10 molecules, right, either in percentage terms or maybe some more top number, approximate number if you can share?
Yeah, Gaurav, that's a good question. Of course, I can't give you the breakup on a quarterly basis because, as you can imagine, the CDMO business by nature is slightly lumpy. Having said that, the typical ramp-up of a new CDMO contract, especially when it is focused on innovative molecules, is not more than 15%- 20% in the first year, going to close to, let's say, 40% - 60% in the second year, and hopefully reaching the peak revenue by the third year of 80%- 100%. In most cases, right, these are general guidance I'm giving, not talking about any specific molecule here. We hope to see a similar kind of trajectory for most of these 10 molecules that we have announced, which essentially means we are expecting some revenue from these molecules even FY 2026.
Also, in fact, as we have announced in the previous call, one of the molecules that we announced last year with the agro innovator, the volumes corresponding to that we already supplied in the last quarter.
That's great. My last question is, considering the tariffs announced by the U.S. and the difference between India and the U.S. over a couple of issues, is there any impact of these announced U.S. tariffs on our business or on our margin profile or our overall competitiveness in the world markets when we supply our products? Yeah, that's what from me.
Yeah, again, excellent question, Gaurav. Let me just answer that in two parts. One is our existing business, and the second is the prospective business, which we are building in CDMO and fine chemicals and nutrition particularly, on the back of those 100+ opportunities I announced. On the existing business, and I think we have clarified that earlier also, only 2% of our business falls in areas where duties have been imposed. There also, we are far more competitive than Chinese if you take into account all the duties which have been put on the Chinese suppliers. In short, on that business, we have seen zero impact so far, and we hope that will continue. In fact, that will only get better as the dust related to all these tariffs settles down. On the new business also, most of these discussions that we are doing, especially with the U.S.
customers, are very strategic molecules for which customers are looking for genuine alternate suppliers from India, mostly outside of China. Hence, they have an imperative to create a long-term strategic partner for these molecules in India. They are, in many cases, hand-holding us. Of course, we are using our technological strength to serve them. As of now, we don't see any big impact of tariff coming into that, except for the fact that tariffs have created some short-term uncertainty. Hence, some of the discussions which should have completed in three months might be taking six months or eight months. That's the only impact we see as of now.
From a mid to long-term trajectory perspective, given the fact that by design, customers want to develop a strategic partner in India, and they are continuing to engage with us and even confirming these molecules, as you can see, we have 10 confirmations. We will continue on that journey. For our existing molecules, there is no, as of now, to the best of our knowledge, even the existing molecules, or sorry, new molecules that we have signed, which some of them are expected to go into the U.S. market, we don't see them in the list of tariffed chemicals. Hence, we are hopeful that these will not impact us in the future also.
That's great. That's great. Thanks a lot, and best wishes for the year ahead. Thanks.
Thank you. We'll take our next question from the line of Archit Joshi from Nuvama. Please go ahead.
Hi. Good evening, Deepak . Thanks a lot for the opportunity. Hope you had a great Diwali, all of you. My first question, I guess in the opening remarks, I heard you saying something about a new plant in Greater Noida within semiconductor chemicals. I think we kind of stopped at that. Would it be possible to have a slightly more better understanding of what we are trying to do here? Any CapEx or any product-wise details that you might want to share?
Hi, Archit. Happy Diwali to you as well, and thanks for the wishes. In the opening remarks, we talked about semiconductor R&D lab, not a plant, in our Greater Noida facility. This is a facility we are creating to accelerate the pace of R&D and innovation that we are doing in our semiconductor vertical, which, as we have been announcing in the last four or five quarters, there is meaningful progress we have made there with almost a dozen plus different molecules that we are working with different customers in Europe, U.S., and Japan. The idea is to create a dedicated facility, which is, of course, world-class in nature, but also takes into account the extreme level of cleanliness and class 1,000 kind of setup, which is required to serve these molecules. We have already started to build an R&D team, also a dedicated R&D team.
We have also started to invest in equipment, including buying some very expensive equipment, which are required to serve this segment. That's the idea. In our pipeline CapEx plans, we also plan to set up a new plant, most likely a pilot plant in the near future. As and when the plans for that plant are finalized, we will announce it to our investors and analysts.
Sure. Thank you.
We will be coming back.
Sure. I have my second one on a CDMO bit. I'm slightly perplexed with regards to how we classify this entire segment. I think I believe that right now, whatever CDMO revenues we are doing is largely from pharma. In the analyst day, we were speaking of some six to eight opportunities, which are in the advanced stage of discussion, which we are hoping to convert soon. We are talking about these 10 products that we commissioned recently, which could have a INR 1,200+ crore potential. Plus, we have these two contracts, right? I think one of which is already contributing to our Q2 revenues and one we are expecting in the early part of the next calendar year.
These 10 products, I would that also have some shape and form with regards to, let's say, a five-year project or a 10-year project or a contract, any particular industry that might mimic anything that you might want to help us with. How do we categorize all this in better understanding of our business?
Yeah, no. Archit, that's again a good question. It's pretty consistent with what we said in the investor day. You're right. At that time, if I remember correctly, we had said about six to eight molecules in advanced stages of discussion for pharma and I think three to four in agro. Pharma and agro still remain the dominant segments, but of late, we have started to get good traction in nutrition and cosmetic segments as well. The 10 molecules that we have not commissioned, by the way, you used the word commission. We have not commissioned the 10 products. We have won the 10 products, of which one is already supplied, and a couple of them are being supplied in recent or in near months. One big one will start the supplies in next quarter, Jan to March quarter.
To your question, it's a combination of pharma, agro, and a couple of opportunities coming from cosmetics and nutrition. It's a well-diversified portfolio. Even in the new opportunities that I mentioned in my opening remarks of 10+ molecules, which we are hoping to close in the coming months, you will see a similar kind of distribution across agro, pharma, and other segments.
Sure. Just one addendum to the same question. When we speak of CDMO, because we have two contracts per se, which essentially should be coming under the broader terminology of contract development, these seem to be products that we are doing on a campaign basis, these new 10 ones that we have won, not commissioned, pardon me. The 10 more that we are working on, I'm just trying to understand the nature of this business in terms of classifying them. Should this be consistently seen as revenue-growing businesses with some longevity expected from our side?
Yeah. I think you're right, Archit. I think your overall question is whether we see these products to be giving us volumes consistently year on year, right, and with a certain level of threshold margin levels, which is what the nature of CDMO business is. The answer is yes. Most of these products, in fact, all of these products are long-term products as per the understanding with the customer. All these products, we are hopeful will give us at least 20%- 25% EBITDA margin and healthy ROCI, as we have announced in our past calls also. The threshold for us at the ROCI level is 20% minimum. All these products, in most of them, I would say, will be working exclusively with the customers. Maybe one or two products will be serving a couple of customers, but not too many. These are exclusive or semi-exclusive arrangements with the customers.
From a contractual obligation perspective, every customer has a different way of working. Hence, not all of them will be like a multi-year contract to start with. The understanding is that we will be working with them for multiple years with a certain level of volume commitments, which will come every year.
Sure, sir. Thanks. Last one, if I may squeeze in, FY 2025 R&D expenses, I think, were a tad lower than 1% of the total top line. Do we have a ballpark, let's say, guesstimate how do we look at expanding R&D over the, let's say, next one, two, three years, maybe? That would be my last one. Thanks too, and all the best.
R&D should be seen separately for acetyl business and the rest of it, right? When you just calculate it on the overall company, that gives a wrong picture in my view because acetyl business is a stable, mature business and does not require too much R&D. We always look at our R&D spend more with the denominator being some of the new areas, particularly coming from specialty and nutrition business. If you look at it from that perspective, our R&D spend will be at least 2x, 2.5x of what you just described. Number two, we are investing heavily in our R&D in a few areas. We have strengthened our R&D team with the new R&D Head of Specialty Chemical who joined us early part of this year or about a year back. We have expanded the number of people in our R&D team by almost 20%.
Even now, we are hiring almost on a daily basis to expand the team because to serve all these 100+ opportunities that we are talking about, 50+ products in R&D, we need more manpower. We are expanding that. Number three, we are also investing in new equipment and new infrastructure. Our Greater Noida R&D, which came up about two years back, we are expanding the number of stations. We are investing in new equipment, like I talked about for semiconductor. In fact, we are expanding it into another floor to create a dedicated lab for semiconductor. All of that put together will obviously increase our R&D spend as a percentage of specialty and nutrition revenue in the coming years.
The right way to look at it is to look at how much we're spending as a percentage of specialty and nutrition because most of our R&D spend goes into those segments, not in acetyls.
Got it, sir. Thank you. Thanks and all the best.
Thank you. Next question is from the line of Darshita from DSP Asset Managers. Please go ahead.
Thank you for the opportunity and good evening to the team. My first question was actually more of a clarification. Deepak , you mentioned briefly that one of the products of the 10 + new molecules with a revenue potential of INR 1,200 crore, this applies for which will start in early next year. This is expected to be a bigger product. Is it the, I mean, my clarification is, is it the same as the CDMO, the one large $500 million CDMO contract that we've spoken about in the past?
Yes, that's $300 million five-year contract.
Yeah, $300, yeah.
That's the big one, which will start in the next quarter.
Right. The INR 300 million is included in the INR 1,200+ crore number? I'm sorry.
$300 million is the five-year number. The annual number is $60 million, which is close to INR 500 crores.
Okay. There's the, sorry, I actually ended up joining a little late. The INR 1,200 crore number that you're mentioning isn't per annum kind of a revenue increase that you're expecting?
That's right.
Yes.
That's the peak annualized revenue number, which we, as I was explaining, we hope to get to in the next couple of years. A significant proportion of that, including the big contract, will start to come into our P&L next year itself.
Got it. Okay. Just on the big contract, we have a threshold of ROCE, 20% ROCE and a 20% EBITDA is something you've mentioned in the previous calls. That kind of translates to about INR 100 crore- 120 crore of EBITDA every year. Would the pricing of the product have any impact on that additional INR 100 crore EBITDA that we could get from this large contract?
Of course, if the price changes, it will. I don't know what is triggering that question because it's a signed contract with a pre-agreed pricing, and we don't see any change in that price happening. In short, we maintain to start serving this big contract starting next quarter, and we will hope to get the kind of EBITDA margins that we built into the original business case.
Got it. Great. We've mentioned in our PPT a few times that we've been seeing a temporary softening in the prices for pyridine, picolines, and a few of our other products. Why do we say this is temporary in nature?
Because, see, if you see, we have mentioned it on a couple of occasions, primarily for vitamin B3 segment and for pyridine beta segment for some derivatives. For B3, if you track the feed prices over the last few years, you will see there will always be a few quarters or a couple of quarters, every four to six quarters, where the price dips, and then it recovers. In fact, as somebody asked early on on this call, we already saw some uptick in B3 prices towards the end of last quarter and the early part of this currently running quarter. We are hoping that that should come back. Secondly, on pyridine beta also, our experience is that the price, while it wobbles sometimes on a quarterly basis, it recovers if it stays too low for a couple of quarters.
Because the pyridine and beta prices have been low for now last quarter and the early part of this quarter, we are hopeful it will come back like it has done in the past.
Got it. Got it. Okay. Yeah, that's all from my side. Thanks a lot.
Thank you. We'll take our next question from the line of Siddharth Wadekar from RDS. Please go ahead.
Hi, sir. Happy Diwali and congrats on a good set of numbers. The first question is on the human-grade vitamin plant. Can you just highlight that where are we in the cycle in terms of commissioning the plant and ramping up the supply to the customers? Like, are all customer approvals in place, and when do we get to peak volumes in that capacity?
Yeah, that plant we already commissioned in March. You're talking about vitamin B3, right, Siddharth?
Yes, yes. Yes, sir.
Yeah. That plant is supposed to make both cosmetic and human-grade products. We have the flexibility in that. The cosmetic-grade product already started to be shipped to the customers about two quarters back. I think in March or April is when we started the shipments, and that volume is ramping up well. We have started to produce the human-grade product also from that plant now, and we shipped starting volumes in the last quarter. We are hoping that this will continue to ramp up in the coming two quarters. To your overall question on the utilization, we are hoping that we expected, by the way, that plant has been designed to serve 4,000- 4,500 tons of cosmetic and food-grade products in the steady stage. We are hoping that in 18- 24 months, we'll get to those numbers.
The initial ramp-up that we have seen between cosmetic and food grade, we are hoping that sometime by next year, we'll hit 60%- 70% utilization levels. One part of your question was the approval process. I'm happy to share that we will be starting supplies to one of the world's biggest cosmetic players starting January, where the approval process has already happened. With another big consumer player globally, we are running through the approval process, and we hope to get the green flag from them by November or December and start the supply from early next year. There are several other conversations going on with the big as well as smaller customers to get the approval. As soon as that happens, then volumes will start to ramp up quickly, which is why I said that we hope to get to 60%- 70% utilization by sometime next year.
What would be the realization difference or the margin difference between the animal-grade and the cosmetic-grade product?
I think, Siddharth, I have explained in previous calls also. Generally, there is at least $2- $3 delta in pricing between feed grade and the high-value grade, what we call the high-value grade, which is cosmetics and even food and sometimes even pharma grade. Of course, the margin profile also changes accordingly. That's where in the early part of the call, I said as the share of food, cosmetics, and pharma-grade niacinamide increases in our overall mix of niacinamide, that will bring a lot more stability as well as high margins to the business. As we have said in the past, that business in steady state, we hope to get to 16%- 18% EBITDA margins, which I think we should be able to get as soon as the volume share of high grades increases to 60% - 70% next year.
Coming to the CDMO part, the contract that we have already started supplying volumes for in the first two quarters, how should we think about that opportunity given that the end product is relatively almost an $800 million- $1 billion opportunity over the next 5-7 years? What could be the peak revenue for us on that molecule, and how should we think about the scale-up of that product?
Yeah, no. I think I have said in the past, that is an intermediate which goes into an expected blockbuster AI of one of the global innovators. What we supplied in Q2 primarily is just the starting point. As per at least the direction given to us or visibility given to us by the innovator, the peak revenue could be at least 4x-5x of what we have supplied. We are hopeful, and even next year, the volume visibility we are getting is at least 50% more than what we got this year. I'm hopeful that it will get to that 4 x-5x mark in the next three years.
Okay. Lastly, on the $300 million contract, is it fair to assume that the intermediate that we will be supplying would not be restricted to a single product, but it will be going to multiple products?
Siddharth, we have a very exclusive arrangement with the innovator there. Our agreement with them is to supply the intermediate in a certain quantity every year. Where they want to use it, it's entirely their prerogative. We neither have a say nor the visibility into that process. Having said that, yes, this is an intermediate which can serve multiple products, and hence it brings some flexibility at the innovator end. We don't have visibility into what they want to use it for.
If any other product would require the same intermediate, are there any restrictions for us to supply it to any other innovator?
No, this is an exclusive arrangement. We cannot supply it to any other innovator.
Okay, thank you so much, sir.
Thank you. Next question is from the line of Nitesh Dhoot from Anand Rathi. Please go ahead.
Hi, sir. Thanks for the opportunity and happy Diwali to the entire team. My first question is on the renewable power contribution. How much would be the contribution right now in our quarterly requirement, and what is the differential in terms of per unit cost for us?
As I mentioned in my opening remarks, this quarter with Bharuch starting, we have almost just 28% of our overall power requirement to be served through renewables. Even Gujarat has started, but it's ramping up. In total, in steady state, maybe in a few weeks from now, renewable will be contributing almost 35% of our overall power requirement. In terms of the rate differential, I think those numbers are well known for every sector in India. While the grid power costs anywhere between INR 7- 9, depending on which state you're talking about, the landed cost for renewable is much lower. It's in the range of ±INR 5 , depending on what billing charges you are paying. There is definitely an impact we are expecting in our overall power cost. If you see, our energy cost has already come down by almost 16% versus last year.
At around 9.5%, we are now versus 11.5%, 12% that we were last year. With all the initiatives we are taking in our energy mix, including the introduction of renewable power, we are hoping that our energy cost will come down further.
Captive power.
It is captive power. By the way, our new boiler is also coming up in Bharuch, which we are hoping to start this quarter itself. That will also give us benefits as the boiler and turbine, which will give us benefits starting next quarter. All those initiatives put together should continue to reduce our overall energy cost and thus add to our P&L bottom line.
Great. Okay. Sure. The second one is on the CDMO business. Can you just give the number of what is the total completed CapEx so far and the laid-out number? In terms of CapEx, what is the total amount that we are investing in the CDMO business?
See, we treat the CapEx together for our CDMO and fine chemical businesses because both use multipurpose plants. In a fungible manner, we optimize which products to be manufactured where. As we have said in the past, of the INR 2,000 crore odd investment that we have made in the last few years, almost 70% has been targeted towards our specialty and nutrition portfolio. Specialty will be almost 50%- 60%, let's say around INR 1,000 crores- 1,200 crores. Most of it is targeted towards the multipurpose plants we have created in Gujarat and Bharuch, and there are more we are creating which serve both our CDMO and fine chemical businesses. The new plant that we announced, with the plant that is expected to serve the big contract that will be ready hopefully by December or January itself, has a huge investment we have made.
Now we are starting the work on another multipurpose plant in Gujarat, which will serve our CDMO business primarily.
Sure. Okay. Just one last thing. Maybe you know on the acetyl business, you indicated of you know signs of improvement there. Could you just elaborate a bit you know on that? If at all you know there's something structural that is happening, if you can give some follow-up.
Yeah, no. Acetyl business has been volatile, and we look at it one quarter at a time. Obviously, last quarter from a volume perspective was good, which is reflected in our numbers as well. The drivers for acetyl business are, number one, how the paracetamol market is doing in India. Number two, how the agrochemical market is doing in India. Number three, how Europe, which is a significant market for us, for acetic anhydride particularly, is doing. A combination of these three things essentially drives what is happening in acetyl. At least based on the early signs for this quarter, we feel this quarter will be more or less similar to the last quarter. We're still getting more visibility from our customers on what their volume requirements are. At least in terms of volume, we hope that we will replicate what was done in the last quarter.
Pricing is very volatile, and it's very hard to make any estimates or projections on pricing. That will have to play on a day-to-day basis, depending on the direction of the market.
All right. Thanks a lot. Thank you so much, sir, for answering the questions, and wish you all the best for the coming quarters.
Thank you.
Thank you. Next question is from the line of Prateek Poddar from Bandhan AMC. Please go ahead.
Yeah, hi. Just two clarifications, sorry. You talked about 16%- 18% margins for the nutrition part. Was it for the new plant or you were saying for the segment overall?
For the segment overall, Prateek, because if you see last few quarters, we were keeping that business at around 15%, even without having a big share of cosmetic and food grade. Only this quarter, it has dropped by one or two percentage points because of the price dip that we believe is temporary. It should come back to 14-15% anyway. With the mix change we are doing, we are hoping to take it to 16-18%.
Oh, fantastic. Lastly, sir, you talked about out of the 10 molecules signed, one has already been shipped or supplied, and the others are in the process. Yeah. You said, and I just wanted a clarification here, you said INR 1,200 crore of annualized revenue, the peak revenue, and you said a couple of years. Is it like two years from today or two, two and a half years from today on an exit basis, we kind of get to that full ramp-up mode? You just explained, right, it's 20, 60, and 100, depending on the molecules and their life cycle, etc. From a two and a half years.
Yeah. No, that is what the hope is for the majority of them, as I said earlier, Prateek. Of course, some part of it also depends on customers' own projections. If their plans happen faster or later, then accordingly, that trajectory changes. As I said, you picked it up right. 20, 60, 100 is the typical trajectory, which means in three years, you get to the peak revenue, which is what we are hoping to get for most of those molecules. By the way, there's one exception here, which I think we have been talking about. The big molecule that we are starting in January, February will start from 100% potential from day one itself, which is the agreement with the customer.
No, that's clear. Lastly, sir, fantastic cost controls. How much more juice is left for you? I think this is something of an ongoing exercise. Just wanted to check because it keeps on building operational efficiency. Is there still material levers for you to lower your entire fixed cost for the company as a whole?
I think Varun here. Yes, there's still a juice. They will continue to endeavor to find new ways and means to cut the cost, either to more better norms or more efficiency or taking a hard call on the cost that can be weeded out. There's a proper process where we keep on finding it and then putting it in place. Answer to your question, we have given an indication of INR 100 crore per year. It's part of Lean 2.0. We are firmly on track. Whether we will find more cost-saving opportunities in years to follow, answer to yes to that question is also yes. We have that process, robust process of how we can be more efficient in terms of our manufacturing or in terms of sourcing or how we work.
No, this is very helpful.
Yeah, just to add, and then for everyone's benefit as well, I think we'll keep digging is the short answer because the markets are very dynamic. What kind of pressure we have seen in some of the segments on pricing, it will be premature for us to just be complacent and say whatever cost we could have taken out. We have done that. I think it's the need of the hour. All our peers are also doing it and will not stop. This year, we are pretty much on track. In fact, we are ahead of what we had defined as targets internally. We are hoping that we will be able to create similar programs in coming years as well.
This is very helpful. Thanks. Thanks and best wishes for the future. Thank you.
Thanks.
Thank you. Next question is from the line of Rohit Nagraj from B&K Securities. Please go ahead.
Thanks for the opportunity. First question, again, sorry for delving into CDMO.
Varun, I'm sorry. Can you use your handset mode, please? Your audio is not very clear.
Is it clear?
Yes, please go ahead.
Sure. Thanks for the opportunity. Delving onto the CDMO part, just a question about this INR 2,200 crore revenue potential. Just a clarification, does this include the molecule starting from January? Because that itself will have close to about, say, $60 million of yearly revenue potential.
Yes, it does.
Sorry?
It does. It includes it.
Okay. Fair enough. That clarifies. Second, on the semicon chemicals, we are starting with the R&D process. What is the journey that we are looking at in terms of commercialization investment? If we are starting indigenously, probably it will be slightly longer in terms of the gain. Any more clarifications in terms of markets that we are looking at, domestic, external, any technology tiers that we are looking at? Will it also form a part of some revenues by 2030 in terms of our targeted goal? Thank you.
Yeah. I think we have been very explicit about it in the past calls as well. Semiconductor is more of a 5- 10 year journey rather than just, let's say, next couple of years, given the nature of that segment, the fact that it is new to India, not just us, and the qualification process itself is quite long. We are starting, but not necessarily or not organically entirely. We are collaborating with a few of our customers and are in advanced stages of discussions with some of them to take this collaboration to the next level. At the right time, we will, of course, announce that. That will hopefully accelerate the journey. Right now, we are focusing on two things.
One is keep building the capabilities because we need at least some starting ground to be able to even work collaboratively with some of the partners we are speaking to. Second, just focus on the synthesis of some of the CDMO molecules.
are getting in semiconductor space, so that we start getting traction with the customers in that field and build relationships with them.
Sure, that's helpful. Just one last clarification on the CDMO front. This will be completely for the exports market. Any particular geographies that we are targeting, or is it across the geographies? Thank you.
See, our international markets are largely focused on Europe, U.S., and Japan now increasingly. Those are the three geographies where we are focusing primarily.
Sure, that's all.
We have hired people on the ground in all three geographies now.
Right. Right. That's helpful. Thanks a lot and all the best.
Thank you.
Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference back to management for closing comments. Over to you, sir.
We thank you all for joining this call today. We hope we have been able to answer your queries. For further clarification, I would request you to please get in touch with me. Thank you once again for your interest in Jubilant Ingrevia Limited.
Thank you. On behalf of Jubilant Ingrevia Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.