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Ami Organics Ltd
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Ladies and gentlemen, good day and welcome to Ami Organics Limited Q2 FY '25 Earnings Conference Call hosted by JM Financial Institutional Equities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Krishan Parwani from JM Financial. Thank you, and over to you, sir.
Good afternoon, everyone, and thank you for joining us on Ami Organics' Q2 and H1 FY '25 Earnings Conference Call.
Today, we have with us Ami Organics' management, represented by Mr. Naresh Patel, Chairman and Managing Director; Mr. Abhishek Patel, Vice President, Strategy; and Mr. Bhavin Shah, Chief Financial Officer.
I would now like to invite Mr. Bhavin Shah to initiate the proceedings. Over to you, sir. Thank you.
Thank you, Krishan. Good afternoon, everyone. Warm Diwali wishes to all of you. We are pleased to welcome you all to our earnings conference call to discuss Q2 and H1 FY '25 financials. Please note that a copy of our disclosures is available on the Investors section of our website as well as on the stock exchanges.
Please do note that anything said on this call which reflects our outlook towards the future or which could be construed as forward-looking statement must be reviewed in conjunction with the risks that the company faces.
The conference call is being recorded. And the transcript, along with the audio of the same, will be made available on the website of the company and exchanges. Please also note that the audio of the conference call is the copyright material of Ami Organics and cannot be copied, rebroadcasted or attributed in press or media without specific and written consent of the company.
Now I would like to hand over the floor to our CMD, Mr. Naresh Patel, for his opening statement. Over to you, sir.
Thank you, Bhavin. Good afternoon, everyone. I hope you are all doing well. From all of us at Ami Organics, I had like to extend warm Dhanteras and Diwali wishes to you and your families. May Lord Dhanvantari bless you with health, wealth, and success.
Now let me provide some perspectives on the current state of the chemical sector. From the demand side, the demand continues to improve albeit at a slower pace than what everyone had anticipated. Speaking of various subsegments of chemical sector some of the pockets are witnessing growth in the demand, but majority subsegments are seeing stagnant demand. This is driven by overall slowdown in consumer spending that we all have been witnessing across the sector.
Coming to pricing. Even though pricing has been stabilized, the upward movement that everyone has been anticipating is taking longer than what we expected.
Now let me give some more highlights on the different industries that we serve, starting with pharmaceutical intermediates. The demand has been slowly improving, but what is more painful is the pricing. The pricing for the generic intermediates have been at their lowest. I strongly believe that demand will see uptick in H1 of calendar year 2025 if price slowly moving upward.
Moving on to the battery chemicals. We are witnessing that major carmakers and industry players are deferring their additional investment in HEV battery capacities and in related space. I believe the big investment outlined by these companies at the start of the decade got ahead of consumers' appetite for full switch to EVs.
Even though I fully believe in the future of EVs and fit to EV, only point where I differ is the time line. I believe EVs will take center stage, but it will be later than sooner. That is why we are also taking each step cautiously. As you all know, we have announced CapEx for electrolyte additives only after we receive the firm contracts from the same.
Moving on. The semiconductor industry. The part of industry we are serving is seeing stagnant demand, while we are hoping the tide will turn in our favor soon. I believe the pain will be there for a couple of more quarters.
In commodity chemicals, pricing remains under pressure driven by oversupply.
Overall, I believe the industry has started witnessing revival, but the pace of revival is slower. And therefore, I believe, even in this finance year, the pricing pain and demand weakness, it will continue.
Coming to the performance of Ami Organics. Even in this difficult industry backdrop, I'm delighted to say that we have been able to deliver a stellar revenue growth of 43.2% year-on-year in Q2 FY '25. Our strategies on building industry-leading infrastructure, completed by cutting-edge process technology, developed by our team with focus on CDMO contracts and chronic products has helped us deliver stronger results.
The growth during the quarter was driven, strong performance in pharmacies intermediates as well as specialty Chemical business. I will let Abhishek to discuss these in detail.
Moving on to business update. During the last earning call, we had highlighted that we successfully concluded the GMP, Good Manufacturing Practice, inspection by the pharmaceutical and medical device agency, PMDA of Japan with no critical or major observation. I'm very happy to say that, during the last quarter, PMDA Japan has issued inspection result before declaring the Sachin facility as GMP-compliant.
I believe we are one of the few, if not the only company in the intermediates segment, who has successfully concluded inspection section and subsequently received compliant report from PMDA Japan.
Overall, we are seeing a revival in demand for our core molecules, supported by a strong ramp-up in CDMO contract and robust volume growth in our specialty chemicals business. Looking at the order in our end, we are -- and the forecast, what we have, we are revising our revenue growth guidance upward from 25% to 30% for FY '25.
Now I will hand over the floor to our Vice President of Strategy, Abhishek Patel, for further business updates. Over to you, Abhishek.
Thank you, Naresh bhai. Good afternoon, everyone. Happy Diwali to you and your families. Let me elaborate more on the business performance.
Starting with pharmaceutical intermediate business. The pharmaceutical intermediate business grew strongly by 53% Y-o-Y in Q2 FY '25. The growth was driven by strong performance in key molecules as well as earlier-than-anticipated ramp-up in CDMO business. Anticancer, antidepressant, [ facial ] disorder, antipsychotic, Parkinson disease, anticoagulant, and cardiovascular, continues to be top therapeutic segment for us.
Coming to CDMO contract. We witnessed a strong ramp-up in Q2 which was earlier than we have anticipated. The specialty chemical, we delivered growth of 7.6% Y-o-Y. I would like to highlight here that this was mainly driven by subpar performance in our subsidiary, Baba Fine Chem. If we look as the business ex Baba Fine Chem, then there was a more than 25% growth in the specialty chemical business, which was offset by degrowth in BFC.
As Naresh bhai mentioned, the demand scenario for the part of semiconductor industry that we are serving remains subdued, which is impacting sales of BFC. But we are very much optimistic that this is a temporary situation, and we will grow, we will see growth coming back in FY '26. As explained in last conference call as well, we have already started promoting our products to -- of BFC to new geographies and have already sent samples to the customers in Korea and Japan. This will also add to the growth trajectory in coming years.
Now coming back to specialty chemicals business of ex BFC. We have seen growth across our entire product portfolio driven by significant uptick in volumes.
Coming to CapEx for the year. CapEx for H1 FY '25 was INR 80 crores. Majority of it was for remaining CapEx of Ankleshwar site and some towards solar and electrolyte additive CapEx.
Let me know -- let me give you further updates on the CapEx project, starting with Ankleshwar. One production block has already been completed as informed earlier. Remaining work of other 2 blocks is progressing, and this is expected to be completed in current quarter. These were slightly delayed due to extended rain during Q2.
Extended heavy rains in Gujarat also impacted our solar project work. The work progress was impacted during the monsoon and after -- thereafter, there is a delay. Now -- we now expect this project to be completed by end of Q3 FY '25 with energy savings expected to start from Q4 FY '25, which will contribute positively to our EBITDA.
Moving on to the electrolyte additive CapEx. The project work has been started with civil structure plan in place and construction is expected to start soon. We have started ordering machinery as well. Overall, we hope that we will complete the project in H1 FY '26 -- FY '25 -- of calendar FY '25.
With I -- with that, I will hand over the floor to CFO, Mr. Bhavin Shah, to provide the financial update. Over to you, Bhavin.
Thank you, Abhishek bhai. I would like to briefly highlight the key performance metrics for the quarter before we open the floor for questions. I will start with the quarterly performance.
Revenue from operations for the quarter reached INR 246.7 crores, representing 43.2% increase year-on-year basis. Gross profit for the quarter was INR 107.2 crores, reflecting 51.5% increase compared to the same period last year. The gross margin was 43.4%, up 239 basis points on a year-on-year basis and 136 basis points on a Q-on-Q basis. Gross margin was driven by the better product mix.
EBITDA for the quarter was INR 48.9 crores, almost doubled compared to the same period last year. EBITDA margin was at 19.8%, up 543 basis points year-on-year basis and 312 basis points Q-on-Q basis. EBITDA margin was driven by gross margin as well as operating leverage.
PAT for the quarter was INR 37.6 crores, which grew 1.5x compared to the adjusted PAT of INR 14.7 crores in Q2 FY '24. PAT margins for the quarter was 15.2%, so the expansion of 668 basis points Y-o-Y basis and 682 basis Q-on-Q basis.
Moving on the half-yearly performance. Revenue from the operation for the first half of the year reached INR 423.4 crores, representing 29.8% increase on a year-on-year basis. EBITDA for the H1 FY '25 was INR 78.4 crores, up 33.4% Y-o-Y basis. PAT for H1 FY '25 was at INR 52.3 crores, up 41.3% Y-o-Y basis.
Moving on to the balance sheet item. Net cash and cash equivalents were at INR 279.5 crores. I'm happy to share that even with strong growth, we were able to control our working capital, which was 108 days during H1 FY '25. This was driven by improved [ debtor ] and inventory days. Better working capital management led to a strong generation of cash flow from operation of INR 46 crores, which was 60% of the EBITDA for H1 FY '25.
Overall, as Naresh sir has mentioned, we are well on the track to deliver 30% growth for the year with healthy EBITDA margins.
With that, I request the moderator to open the floor for questions. Thank you.
[Operator Instructions] The first question is from Sudarshan Padmanabhan from JM Financial.
Sir, this quarter, if you can give some color on how the margins for intermediate, the pharma intermediate and specialty chemical stand. And also some color on how do you see the margins, do you know, in the next few quarters or [indiscernible].
Yes. So as you asked, the margin for pharma intermediate for the quarter is at 21.44%; and for specialty, 11.36%. And as we have already said that we'll see better performance from here. So on a quarter-on-quarter basis, we'll see improved EBITDA margin from here onwards.
Sir, I mean, I'm not taking this quarter performance, specifically on the pharma...
Sudarshan, your audio is not clear. Can you speak to the handset, please?
Sure. Okay now? Am I audible?
Yes, go ahead.
Sir, I would just like to look at -- this quarter has been quite a transformational quarter for us, especially on the pharma intermediate side. And I think we do have a strong pipeline, including the contract with Fermion that is darolutamide. So what I'm trying to understand here is you had given a 30% guidance going forward. But if you look at it slightly a little longer, we have built capacities, we have built capabilities, both on the R&D as well as the product synthesis side, and having relationships built over the years.
One is primarily minding existing customers like darolutamide. I mean, the opportunity size is big and growing. So I mean, how do we see the wallet share from the existing clients?
And also if you can give some color with respect to how many products we have which is in the late stage, which can give more molecules. Something like what you are seeing with the Fermion contract.
So what I'm trying to understand is, this year, we are looking at 30%. But if I'm taking 3 years, what is it that we should be comfortable with as far as growth is concerned?
Thank you. Clearly [indiscernible]. First of all, considering our report past performance of last 10, 12 years. On an average, we are CAGR of 25%, so we are growing. That growing not only because of the one contract, but because we have a strong pipeline which we have seeded since 2008, '09, which is now giving the fruit which are coming, launching and all. So that is how we are growing annually 20%, 25% CAGR in terms of the top line. And that is ongoing till 2035. We have -- up to 2045, we have a product, but we have a good visibility of this intermediate, which is a part from the Fermion.
And also not only Fermion, we have other originators also, which with whom we are working with CDM as well as the regulated intermediate, and also some lead generic player also is our customer. So that is also giving us some confidence that we have grow continuously like 25% annual CAGR.
And related to Fermion, whatever the mistake we have done in the past by saying product names, customers, product and everything that created a lot of problem for us in terms of competition areas and confidentiality concerns. And hence onward, we will be not disclosing several CDMO name, product names and all. But we will give you the cumulative guidelines.
So in CDMO sector, it is -- in the next 3 years, it will be 30% what we see, similar kind of growth, we can consider with this kind of inclusion of the CDMO project.
Sure, sir. And sir, with respect to the margins. I mean, this quarter we are at 20%. But given that we have built so much of capacities in place, and I understand that with this capabilities, our margin should be significantly higher than where we are. So in 3 years, what should be an aspirational margin that you would be targeting, sir?
The first target of our is to reach to 21%, where we were at 23%. And from then onwards, our main target is to go beyond 25%. And between 25% to 30% is our targets to be reached in the next 3 years.
Sure, sir. One final question before I join back the queue. I mean, if you can give some color when we see the offtake on the vinylene carbonate supplies and the battery chemicals which we were expecting to be a less large client.
We have never said we have a large client. So it's -- but we have a lot of contracts signed with big manufacturer of EVs and battery manufacturers. We've already done validation batches and submitted to them at a commercial scale as well. And now we are waiting for them to start revamping their system to use our chemical for the commercial need there.
In commentary also, I tried to highlight that all EVs are deferring the time line, and that's also impacting us as we are on the bottom chain -- bottom supply chain supplier. So that's also impacting us as well.
Next question is from the line of Rikin Shah from [ AMC ].
Congratulations on a fantastic set of results. My question was pertaining to the weakness highlighted in Baba Fine Chem. So at our clients and -- is that an issue on a client-specific level or an industry level issue that is persisting right now? And with respect to finding new clients in new geography, like how big of a discussion period do we think before we can sign more clients?
So then we had Baba Fine Chem in our basket, when we acquired controlling stock of Baba Fine Chem, it was running at INR 40 crores or INR 40-odd crores of the revenue. Then there is a procedure of changing the ownership and documentation. And all that as has created little bit of a sluggishness at both side. And that's how our buyer has used their buffer stock to support their production. And we can able to have a time period which can be utilized for making these changes and all.
But after -- during that period also, there is some business at the end of the consumption, also a little bit on the service side. But this year will be the last year where we got some muted revenue. But from next year, we are looking good demand. We already received a forecast from them that ensuring that we are going back to the normalization from FY '26.
Considering the new client, they are with the new products, which are -- we are getting our projects from them. And a few are already, we have developed in the past, see all is a cumulative combo that help us to enter -- so if there is an existing product, it is a longer [ gesture ] time. But if it's a new product which is developed by an chief manufacturer or a chemical purifier, then it will be faster. So it's a combo of that. And we have very good [ detection ] in Korea and Japan for the several molecules in this segment.
Perfect. With respect to what we discussed in the last call for the NCE tariff for the second block, the second CDMO with that. So where are we in terms of time lines with that?
We are in line with whatever the expectation of the originator. That is the only disclosure I can able to provide you for that.
All right. And since you mentioned for EV, is that there is a deferral at the OEM and projects are getting deferred. So what does this mean in terms of our Enchem project that we were anticipating to do this year?
So Enchem is one of our clients, including other contract manufacturer. And we got the firm contract in our end. That is the reason why we are putting CapEx which is incremental capacity for VCs this year around 2,000 metric ton each in Jhagadia facility. And that will be ready by middle of next year FY '26.
So that is that. We have started putting -- considering all these demand and projections and forecast, what we receive from the customer. Enchem is also in the same pipeline, where maybe it will go faster than the others, but it is going well.
If you are talking about the JV between AMI and Enchem, that is on the [ cost ] position. We are still discussing several terms and conditions. If that will be fulfilled, then we will go ahead with that as well.
Next question is from [ Gupta from Swan Investments].
Am I audible?
Yes, sir.
I had 2 questions. Sir, one is that in your QIP that you build for INR 500 crore. In that utilization, you mentioned that the INR 250 crore be for debt utilization. But from your cash flow, I guess, we can see only INR 200 crore of utilization for debt repayment. If you can throw some light on the subject.
And I have another question. If you want, I can pile it on.
So when you see our cash flow, debt repayment. So there is a debt which we have taken during the period and which has repaid back. So it is a net debt. So I think what you are talking about is the debt figure during March '24 financials. So you are right, it was around INR 200 crores at that time.
But during the Q1 FY '25, we had raised -- took the disbursement of additional fund for to complete our rest of the CapEx work at Unit 2. And that was the reason the total debt repaid out of QIP proceeds is again INR 250 crores only, so which is in line with the QIP object. And that has been already spent and closed in September quarter, FY '25.
And I have another question the same mobilization. There is mention that INR 88 crores [ CNCR ] will be used for general corporate purposes. So like if you can throw some light on it, for which we will be using those funds?
So yes, there was INR 88 crores of general corporate purpose. That is for the purpose of some of the working capital requirement and any other future opportunity which we see during our journey. So that portion is largely unutilized as on date.
Okay. And that lies in our cash on cash...
Yes. Yes, we have INR 279 crores of cash available on our financial as on 30th September 2024.
[Operator Instructions] Next question is from the line of Reena Shah from Subhkam Ventures.
Congratulations on good results. Can you hear me?
Go ahead.
Congratulations on good set of numbers. Sir, I wanted to understand your export numbers and revenue numbers come generally at a discount. Just wanted to understand what kind of adjustment is being done to the export numbers.
Generally, those exports numbers are not completely -- use are fair and true feature of the actual export done...
We are bound with...
And we are obviously not calling those numbers. Then maybe different sources of those numbers and we cannot verify that numbers.
There is a [indiscernible] I'm not -- if I'm understanding is correct, there is some [indiscernible] we generally talk about in wherein, hence, we get a discounted number on reported numbers. Is there something [indiscernible]?
Madam, export number is not a legal disclosure, right? So we cannot comment on that. You can ask any other question related to that.
Okay. And sir, a [ follow up ] on Japan. You said that there is an approval of Surat facilitates. Is there going to be any benefit in terms of numbers because of this?
Yes, definitely. That will be -- that is one of our CDMO, which is we are doing for the originator. So now, Reena, we can sell their product in Japan with new manufacturer in Surat.
Okay. Okay. Happy. I believe that Surat's facilities and is fully utilized, and maybe the new orders will come from [indiscernible]. So that's why I had to [indiscernible].
Yes. So that is the planning for -- with the originator that how we can utilize both the facilities with different regulatory area so that we can maximize output on that.
Okay. And sir, you talked about your core products have started. So can I assume that apixaban has now started in [ those numbers ], when we can see more ramp-up going forward?
Yes, apixaban already started and it is going slowly ramp up. But there are some other products which are also now started in launching. And then slowly, it will go up.
[Operator Instructions]. Next question is from the line of Jason Soans from IDBI Capital.
Congratulations on a very good set of numbers. Sir, my first question was just related to the various CapExes which are online. I just sort of missed that. So I just wanted to know the various CapExes which are online and when are the expected completed time line?
Now one thing I know is that Ankleshwar is a 1/3 is being blocked sort of Fermion. So basically, we have 2/3 more remaining. So just some more color on any other CapEx which is on the board as of now, and the expected timelines.
So as of now, the CapEx project going on. One of the CapEx projects ongoing is that you Unit 2 Ankleshwar site, which is about to get completed in this quarter only. It took some more time, which was expected to be completed by Q2 FY '25, because of rain. So this will get completed. The total project size was INR 310 crores, out of which INR 70 crores was spending at the end of March -- 31st March 2024 and balance is getting completed in this financial year.
Second, CapEx project is electrolyte additive project which we have planned for INR 100 crore CapEx. And that is after we signed some of the long-term contracts with some of our customers. And then we have started building up a 2,000 metric ton capacity for VC and 2,000 metric ton capacity for FEC. That Is expected to get completed, maybe around quarter 1 of FY '26.
And the third project which is ongoing right now is the solar power plant -- captive solar power plant project. And this is going to get completed by end of Q3 FY '25 by -- maybe by December '24. And [ fruits ], we will get from the last quarter of this financial year.
Okay. Just 2,000 -- electrolyte additives. 2,000 tonnes for VC, and another 2,000 tonnes is what?
FEC.
FEC. Okay, okay. I just want clarification, I just wanted to know, I mean, in the presentation, you mentioned that the bolster -- your revenue [ bolster ramp up in the contract ]. Here, you mean the Fermion contract, right?
Yes. That is one of the...
Yes, sure. And sir, I just wanted to know from an overall perspective, sir, last FY '24 was pretty challenging for the business as well. Now we did talk about pricing of APIs also being under pressure, Chinese competition, prices getting driven down. So sir, in this quarter, of course, we have seen very, very good growth in numbers. Anything materially changed on the ground in terms of prices or in terms of competition? Just talk about China stimulus also. So I just wanted to understand, in terms of this dumping and everything, has it, the picture materially changed on the ground in terms of pricing? Is there a chance for an uptick? Just wanted your view on the same.
So if you follow my last con call, in Q1, we announced that we are changing back to our normal contract situation where now sort to -- that all helping us to go back to the improvement in our margin. Apart from that, because of the lowest price of the raw materials helping us also on the COGS side. And we have improved our process and operational efficiency, that's also giving us an operating margin improvement. Though there is a pressure on the top line, but still we are managing to improve in our margin, which is we have proved several times in the last 3 years.
And that is visible in our margins from Q4 to -- FY '24 to Q1 FY '25 and Q2 FY '25.
Sure, sir. Sure. And just lastly from my side, of course, our products are driven from the end product. So just wanted to know, I mean, I don't want specific product names as such because I understand confidentiality, too. But just wanted to know in terms of sort therapies, any particular therapy helping us in terms of growth, in terms of our demand for our APIs?
We are very strong in anticancer, antipsychotic, antidepressant, anticoagulant, and [indiscernible] very small amount of [ anti ]. But these are where we are very, very strong and our pipeline is also very strong, that helping us to move very fast in this area.
Next question is from the line of Krishan Pavani from JM Financial.
Congratulations on strong set of numbers. A couple of questions from my side. Firstly, your revised guidance of 30% top line growth in FY '25 translate to roughly current quarterly sales of INR 250 crores for the coming quarters as well. So are you being conservative while providing this guidance?
This is the guidance which we are giving, which is based on the forecast and orders are on hand.
Okay, okay. Noted, sir. And on CDMO side, keeping confidentiality in mind. But would it be possible to kind of highlight how many intermediates you would have in your pipeline for Phase II and Phase III drugs?
The numbers are very large in Phase II. It's in a double digit. And there are some are in Phase III. And some -- the larger number is in Phase I, then lower in Phase II, and very few are in Phase III right now. Single digit in Phase III. But the numbers are not disclosing because we cannot prove that number because customer has not disclosed out the status and all. So it's like a coding number way, which is not advisable for us to say the status.
Understood. Understood. But I mean, yes, I mean, we don't want their names, obviously, because I think you also mentioned in your opening remarks -- or probably to one of the earlier participants that it is attracting the competition. But yes, I mean, the number of molecules probably if -- that's fine. We understand it's double-digit is also fine for Phase II.
And on this Enchem JV, know it's -- I think you also mentioned that there has been a slight delay in the overall EV value chain. But any update you would like to give on the same? Because I think that might take care of the growth beyond, let's say, FY '27 or so. So any update there?
See, growth, as Naresh bhai has mentioned, that we have a strong pipeline for our products till '45. So it's not growth is only depend on this Enchem JV or electrolyte solution business. We have other area of growth as well.
But as we earlier mentioned also, that we want to invest only in the business when we see the good visibility in place, and then only we will have some investment done. Considering current scenario in EV market, in particular in India, because their business is focused on India market only. So we have been a little cautious and assessing the situation, and then we'll move forward.
And particularly, this is an OEM for them. It's like an all-manufacturing from the top. We are not going to do any marketing or something like that. It is just job work, CDMO kind of work for them. So it is not directly or indirectly impacting on our planning. It's just an additional arm for us, leaving us and leverage of selling our VC, FEC also to them, that will be additional benefit to us. So you can understand that.
Yes, yes. I mean, I meant like additional growth driver. And I understand that you have obviously a lot of other projects that you will be working on, but I was just wondering if there is anything. But okay, fair one, got it.
And lastly, I think I missed your earlier commentary on the electrolyte additives. I'm not sure whether you mentioned. When would the start -- when would the revenue start flowing in from the electrolyte additives?
If everything goes well, it can be start immediately as well. So we are ready with everything for initial supplies. So now we already supplied them the validation quantity that is a large commercial scale now. We are waiting for them to move ahead for placing an order. This is a part of the contract, but this all depends on how fast we will move ahead for their approval and final manufacturing.
So it will be very soon, as soon as possible, maybe in Q4, maybe in Q3 as well. It's -- but you all know very well that we are always -- our guidelines and guidance are always excluded from the electrolyte additives, so that will be remaining like that. Very few, minimal portion of INR 30 crores, INR 40 crores revenue, we were expecting from this in this year. So that may be for -- if it is not changed.
Next question is from the line of [ Anna from MC Pro ].
Just a couple of questions. I mean, on the Ankleshwar plant, could you tell what is your utilization level for the first block, which we have? And when can this reach a steady state of peak utilization level?
So in last quarter, Q2, the utilization level was around 20% for the first block, it has been capitalized. And of course, the full -- when it comes that CapEx gets completed fully by end of this quarter, we expect around 3 years' time to fully occupy the whole capacity.
Yes, sorry. So my question was just for the first block. So I mean, 20% we have reached particularly for this first block on...
Only for the first block basis.
So 20% is its total capacity of including Block 1, Block 2 and Block 3. Total of 20% is in Block 3, we have utilized. And for Block 3 itself, we are utilizing around 35%.
Okay. Okay. And secondly, in that the time line for the second CDMO the second large of contracts which you referred to. And a related question would be like, for the other 2 blocks which are to be commissioned this quarter, when do we expect commercial supplies from [indiscernible]?
Block 2, I think we should be good to start supply from the Q4 FY '25.
Okay, okay. And the status on the second CDMO? Have you already signed?
No, the supply of the validation, that is already given to them. So now we are -- we will start also as it is render qualification finish, we will start by Q4.
Next question is from the line of [ Gautam Rajesh from Northbridge Capital Partners ].
So I had a question regarding the electrolyte project. Is there any update on the electrolyte project, by when do we expect to sign the agreement and start the CapEx on it?
Agreements already signed with several customers, which as we already announced in the last 2, 3 quarters. CapEx will start -- already started, and that will be finished by Q1 FY '26.
[Operator Instructions] Next follow-up question is from the line of Jason Soans from IDBI Capital.
Sir, I did ask you about the CapEx in terms of the status, that's fine. Just wanted to know, sir, I mean in light of the QIP you have done recently. So I just wanted to kind of in light of that, in terms of CapEx, could you mention, give a guidance for CapEx of '25 and '26, both? Probably for stand-alone and subsidiaries both? Of stand-alone, and then the electrolyte sales 1separate, and BFC also separated, if that's possible, for '25, '26 both?
Yes. For '25, around INR 70 crore is the CapEx, spending CapEx for Unit 2 Ankleshwar. INR 100 crore is the CapEx for electrolyte additives. And INR 60 crores is the CapEx for captive solar power plant project. And then around INR 30 crores is the regular maintenance CapEx. These are all around INR 250 crores CapEx is for FY '25 for Ami Organics. And for Baba Fine Chem, it will be all normal maintenance CapEx on which is required for regulatory purpose.
And the same is for FY '25 for both Baba Fine Chem as well as Ami Organics Limited, around INR 30 crores to INR 40 crores is the maintenance CapEx at Ami Organics.
Okay. Okay. So sir, roughly, you are saying probably 100 -- is around...
INR 250 crores is the CapEx for FY25. And around INR 40 crores is the CapEx for maintenance CapEx for FY '26.
Okay, okay. Sure, sure, sir. And so, sir, in terms of -- what I meant is when you look at our consol cash flow, the CapEx last year for '24 was around INR 281 crores. So when you look ahead, '25, '26, you see roughly the consolidations will do around INR 250 crores to INR 260 crores of CapEx in [indiscernible].
No, no. For this year, we are making CapEx of INR 250 crores. And next year, we will be making CapEx of around INR 40 crores.
Okay. So this [indiscernible] particles. Okay, okay. Sure. On a consolidated basis, right?
Yes. Yes.
Yes. Okay, okay. And sir, just to clarify. I mean, this capacity utilization, an earlier participant asked, of that also 20%. So that capacity is also all for Ankleshwar block? It's a little confusing. Could you just elaborate on that?
Yes, it is for all Ankleshwar block.
Whole Ankleshwar block, just 20% capacity utilization? And in 3 years, you expect that it will get fully utilized. Is that...
Yes.
Yes. And you're also saying that this whole block should be ready to give supplies from around Q4 FY '25? The whole block?
Yes, correct.
[Operator Instructions] Next question is from the line of [ Vin Choudhary from ThinkWell ].
I have a couple of questions. First, in last con call, you had mentioned that we are in negotiation with some of our original stock clients in Europe, and we expect to sign deal by the end of this Q2 or Q3. So can you please share some -- where we are right now?
Yes. So that is what we said, that it is almost done, and validation batches have sent to them. Once it will be approved, then we will go for the contract and start supplying by Q2 or maybe Q1. Depends how fast they will do the vendor qualification for us from Block 2.
Okay. Sir, this is all related to CDMO, right?
Yes, yes. 100% CDMO.
Okay. Another question was for the 20% growth guidance which you have mentioned. So this relate -- this includes that CDMO, Fermion? Or it is still excluded?
Averaging. It's the overall growth guidance for Ami Organics specialty, everything included.
Okay, so that includes Fermion as such, right?
Everything.
[Operator Instructions]. Next question is from [ Ankur Kumar from NAFA Capital Group ].
Congrats for a very good set of numbers. My first question is on the increase in other income, which is like INR 8 crore. And decrease in finance cost, there's a big reduction in finance cost. So is that all because of QIP money, or is there something?
So see, you need to understand, we have repaid the debt during the quarter. So it is -- there is a impact of decreased finance costs. With regard to other income, now we have INR 4 crores of interest income and around INR 4.5 crores of exchange fluctuation income.
Got it, sir. And sir, on guidance that you are giving, 30% growth guidance for this year. So what kind of margins can we expect? And also, can you comment, for FY '26, can we expect like this 25%, 30% growth to continue?
Yes. On the margin side, as we mentioned earlier, also, the margin is improving because of stabilizing pricing and market situation. And that is going to continue for Q3 and Q4 as well, along with the operational leverage with increased sales level. And that is expected in FY '26 as well.
Next question is from the line of Prashant Nair from AMBIT Capital.
On the Fermion contract, is validation for all markets done? So are your supplies now representative of what the overall market demand for the product is? Or are some markets still, I'll supply only for a few markets now, and the rest is still being supplied by someone else?
Thank you, Prashant, for bringing this question because some people might thinking that 30% Fermion contract, why it's so low? So it is slowly ramping up in FY '25. So we already get in market like few markets of these. And slowly, slowly, FY '26 is the fully utilize, every, all the regulated market with them. So currently, we are approved Japan, in Europe and some portion of other country. And then slowly, we will go with all the countries worldwide. In FY '26, we'll be fully approval for all the regulated market.
Yes. And this product has patent protection till, what, 2032, '33. Is that the time frame roughly in most of the key markets?
Yes, it will be may be extended also because they are already got new approval, 2 new applications already approved. Other application approved or in clinical trial Phase III. So I think that will be -- it will be much longer than what we are expecting. And the demand might be increased because of these new application as well.
[Operator Instructions] Next question is from the line of [ Piyush ], an Individual Investor.
Just want to know how many business we did in this quarter with CDMO? Can you share the margin on the CDMO business?
So as Naresh bhai mentioned, actually, we have stopped giving any product specifics or guidance for revenue or margin from this quarter onward because of confidentiality concerns.
Okay, okay. So just [indiscernible], excluding CDMO, whatever number will do. Will we expand the margin? Because our gross margin expanded 200 bps only in this quarter. [ There are others ] EBITDA expanded around 500 bps.
So we will not be able to give you the ex CDMO business. Otherwise, it will -- we will -- people can make out those things. But let me give you that, see, revenue has increased by 42%. And that, you can see in our operational margin improvement also. You can see the improvement at the cost level as well as the as well as the employee cost level. In fact, the employee -- despite of increasing employee cost level, the percentage overall decreased. Coupled with the improvement of 1.36% improvement at gross level.
Yes, that I understood. What I'm trying to ask is that gross margin has increased by 2.5% only. So which I understand largely supported by CDMO and all. So are we able to -- let me ask in a way. Are we able to maintain our margin in intermediates?
We are improving margins in all sectors, in intermediate and specialty as well as -- CDMO were not that large in this quarter. But definitely, it will be larger from next quarter onwards.
Okay. And we have given growth guidance revised from 25% to 30% for FY '25? And what is beyond FY '25, '26 onwards?
We are always conservative in guidance, so it will remain 25%, is our standard.
And can you share some detail, how many maybe programs which is going on with CDMO, which is in pipeline, or which is NCE? Can you share some color around this?
As we already mentioned, that one of the CDMO contract is already there in the advanced stage of finalization, and we are expecting this to get signed by end of this financial year. And next year onwards, that CDMO contract should give us a sizable revenue. In fact, apart from that CDMO, we are working with several other originators in Europe, USA, Japan. And those CDMO projects already going on. And some of them on sampling stage, some of them are going ahead in the next few quarters. So it's slowly, slowly, all those projects will mature, and EBITDA revenue maybe from next year onwards or thereafter.
[Operator Instructions] Next follow-up question is from the line of [ Gautam Rajesh from Northbridge Capital Partners ].
Is the full ramp-up of a CDMO project already visible in Q2 numbers? Or further scale-up is expected in coming quarters?
It has just started in the Q2. In the latter part of Q2, the full ramp up -- the full effect as well as the ramp-up is still to get materialized.
Next question is from the line of [ Varun ], and Individual Investor.
Congratulations on a good set of number. Just one question. What is the expected revenue from Ankleshwar unit at full utilization?
So we expect that our project, all CapEx projects should give us the more than 3x kind of revenue. And that is what we are expecting from Ankleshwar facility also.
Okay. And then what is the full CapEx for Ankleshwar?
It is INR 310 crores.
Okay. So approximately INR 900 crores is the full expected revenue from Ankleshwar at full utilization?
Yes, you can work it out that way.
Next question is from the line of [ Hamen ], an Individual Investor.
Congratulations on a very good set of numbers. Sir, my first question is regarding the capacity. The current capacity is 1,100 kL, right? And as per my understanding, the Block 3 of Ankleshwar unit is -- has been commissioned. So once that other 2 blocks gets commissioned, which is then Q3 FY '25, which is the current quarter, what will it take that total capacity to?
For Ankleshwar unit, the total capacities will be 442 kL. And that 1,100 kL capacity which you mentioned, that includes this capacity.
Okay. So you mean to say all the 3 blocks, if we put together, the total capacity comes out to the 442 kL. And the 1,100 kL includes 442 kL capacity on Ankleshwar unit. Correct?
Correct.
Yes, sir. Yes, sir.
And sir, Block 3 of Ankleshwar, it is operational now, right?
Yes, sir. Yes.
And what is the capacity of Block 3 alone?
It's somewhere around 144 kL. A exact number, I don't have. But it is somewhere around 134 kL.
144 kL, around?
134 kL.
134 kL, around. And both the blocks, Block 2 and Block 1, will be operational by Q3 FY '25. And the commercial production will begin from Q4 FY '25, right?
Yes, sir. Yes.
And sir, I mean, did I hear it correctly that the Ankleshwar unit will be fully utilized over the next 3 years?
Yes, sir. Yes.
And we are expecting a 20% to 25% CAGR the next 3 years, right?
Yes, sir.
Thank you very much. As there are no further questions, I'll now hand the conference over to the management for closing comments.
Thank you to the JM Financial team for hosting our conference call. We appreciate everyone's questions and hope we have addressed most of your peers. If we meet any of your questions, please reach out to our Investor Relations team and we will get back to you promptly.
Once again, thank you very much. Happy Diwali, Happy New Year, and have a good day to you. Thank you.
Thank you very much. On behalf of JM Financial Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.