CLEAN SCIENCE AND TECHNOLOGY LIMITED Concall Summary Date: 15 May 2024

FINANCIAL HIGHLIGHTS

• The YoY increase in revenue from operations was primarily led by volume growth.

• The EBITDA declined by 6% YoY to ₹99 crore from ₹105 crore in Q4 FY23.

• On a QoQ basis, the revenue from operations grew by 16% on account of a 23% increase in volume growth which was partly offset by a 7% decline in price realization.

• During the quarter, the EBITDA increased by 14% QoQ and the EBITDA margin stood at 44.4%.

• The net profit grew by 20% QoQ to ₹75 crores led by a better product mix and the benefit of operating leverage.

BUSINESS PERFORMANCE

• Segment-wise revenue contribution was: Performance chemicals ~67%, Pharma & Agro Intermediates at ~19%, and FMCG (fast-moving consumer goods) chemicals at ~14%.

• During the quarter, the revenue contribution from principal products was 76% as compared to 84% during the same period last year.

• The capacity utilization stood at 70% for performance chemicals, ~70% for Pharma & Agro Intermediates, and ~75% for the FMCG segment.

• The performance chemicals segment profile diversified by adding new HALS (Hindered Amine Light Stabilizers) 770 and HALS 701. However, the price realization impacted the growth during the year.

• During the year, the pharma and agro segment reported de-growth primarily due to Guaiacol, which recovered in the year’s second half. The DCC (Dicyclohexyl Carbodiimide) product contributed positively to the growth during the period.

• The FMCG segment contributed positively to the growth during the year.

• The company’s new product segment, i.e., HALS 770 and 701 continued to report sequential volume growth with sales increased by 40% on a lower base.

• In FY24, the new products, i.e., PBQ (Para Benzoquinone), TBHQ (Tertiary-butyl hydroquinone), and HALS contribution was 23% from 18.5% in FY23.

• During the year, the company incurred capital expenditure of ₹235 crore. Of this, ₹216 crore was invested in the subsidiary Clean Fino-Chem Limited (CFCL).

• During March 2024, the company commenced production at Clean Fino-Chem Limited.

• HALS 701 is majorly used in water treatment. The major market for the same is out of India. The company has started trial orders and commercial shipments to its customers. It expects to reach ~1,000 tonnes per annum of volume in the next 3-5 months.

• For HALS 770, currently ~50% of the Indian market is supplied by the company. In the next 3-4 months, the company expects this to increase to ~60%-65%. The company is giving a price discount of 2.5%-3% on this product compared to its competitors. In the export market, the company is shipping material to Europe and the Middle East. It is in discussion with customers and distributors in North America.

• Europe region is the bigger market for HALS products.

FUTURE OUTLOOK

• The company is on track to commercialize the capacity for pharma intermediate by Q3 FY25. The capex for the same was ~₹30 crore.

• The management expects the volume growth for FY25 would be mainly from new products and capacity ramp-up of new pharma intermediate.

• In the HALS series, the company expects sales of ~3,000 tonnes per annum by year end with majority sales of HALS 770.

• The company expects to launch HALS 622 and HALS 944 in the next 3-4 weeks. It would further launch HALS 119 and 2020, which would be largely towards exports.