CLEAN — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

TECHNOLOGY LIMITED · MR. PRATIK BORA – PRESIDENT, COMMERCIAL –

MR. SANJAY PARNERKAR – CHIEF FINANCIAL OFFICER – CLEAN SCIENCE AND

MR. PRATIK BORA – PRESIDENT, COMMERCIAL – CLEAN SCIENCE AND TECHNOLOGY LIMITED Clean Science and Technology Limited January 31, 2026

Jason Soans: · Okay. And just our realization would be around $5, that range or $5.5? Or are we looking at a

Okay.

And just our realization would be around $5, that range or $5.5?

Or are we looking at a

Sure.

And just lastly, sir, just wanted to understand, I mean, you spoke in your initial comments about, I mean, probably losing a customer in the cosmetics segment.

Just I missed that comment.

Was it in the Performance Chemicals segment?

Or what segment was that?

Clean Science and Technology Limited January 31, 2026

Siddharth Sikchi

FMCG segment, where a product called 4-MAP, where we've lost a customer in China.

And due to secondary impact of tariff of our end customers in India, they have lost their business in the United States, and hence, we are impacted by them as well.

Moderator · Conference Operator

The next question is from the line of Sanjesh Jain from ICICI Securities.

Sanjesh Jain

I got a few.

Let's go segment by segment.

First on the performance, you did mention two things.

One, you said MEHQ and HALS has a lower volume, but you also mentioned that there was no competition in the domestic market.

At the same time, in the opening remarks, you said that China has started producing some of these molecules?

Can you give us a complete road map on performance established molecule?

It is China, which has got aggressive and hence, we have seen MEHQ BHA volume decline?

Or was it general demand slowdown?

What's your take on MEHQ and BHA?

Siddharth Sikchi

First, let me speak on MEHQ.

So the reason of price drop is reason is because overall pricing of hydroquinone, which is in the old process, the conventional process to make MEHQ starts from hydroquinone.

Now because the Chinese have lowered the prices of hydroquinone all-time low price and hence, the conventional process of hydroquinone to MEHQ makes MEHQ also at a lower cost point.

To attribute to this, we have no choice but to lower our prices of MEHQ to compete with these emerging players of hydroquinone-derived MEHQ in China.

That is point number one.

Are you clear on this?

Sanjesh Jain

Yes.

But we said that there is still no price decline.

What you're mentioning the price decline in MEHQ is to hit our P&L or it's already there in Q3?

Siddharth Sikchi

It is already mentioned in Q3.

Sanjesh Jain

We have already taken that in Q3.

Siddharth Sikchi

We have taken that.

We have reduced the prices because the endeavor was to keep volumes intact.

But -- so this has happened.

BHA, no, there is nobody in China.

When I mentioned about domestic player, I was pertaining to the players, which announced coming in MEHQ or BHA or guaiacol and 4-MAP.

That is what I meant that we have not seen any competition from these players.

So there is no volume loss to these players is what I wanted to mention on the call.

Sanjesh Jain

And reason for BHA being slower for us, is it pricing driven or it is more volume driven unlike MEHQ?

Siddharth Sikchi

The BHA, we've reduced -- it went lower mostly in quarter 3.

It is a very typical standard because the drop has happened in North America.

There was some tariff-related concern and also because Clean Science and Technology Limited January 31, 2026 a lot of customers prefer to have lower stocks at the end of December month.

So that impact is not as huge as the other products.

Sanjesh Jain

And you mentioned about China starting certain product, you mentioned about HQ and MEHQ value chain?

Siddharth Sikchi

Yes, and 4-MAP.

Sanjesh Jain

And 4-MAP?

Siddharth Sikchi

Which we lost a customer in China and also indirect tariff, which has hit our customer, and hence, we are hit by them.

Sanjesh Jain

Got it.

Now we forward integrate MEHQ to make BHA.

Can that be possibility in China as well now that they have started manufacturing MEHQ?

Siddharth Sikchi

The possibility in China is very difficult to mention today.

Sanjesh Jain

I agree, Siddharth.

I know it's very open-ended, but have you seen any sign is my question, because it is open-ended?

Siddharth Sikchi

No, no, there is nothing today.

There is nothing today.

Sanjesh Jain

Got it.

Got it.

Now coming to the FMCG, last quarter, you mentioned that probably that 4-MAP customer is also looking to backward integrate?

Or it's purely the U.S. thing, which has hurt or the customer not going to backward integrate.

Some time can it come back or that possibility is rolled out?

Siddharth Sikchi

No, I mentioned even on the last con call, and I'm rerepeating it again, that customer, I think, is dead.

I mean it's lost for us because they have backward integrated.

So that remains for China.

However, the Indian customers and the customers in other parts, the reason is because, say, our end product of 4-MAP is avobenzone.

Now avobenzone from India has a tariff of 55% in the United States.

So all the Indian customers who are buying have slowed down dramatically because of this severe impact of tariffs from the U.S.

Sanjesh Jain

So what is the revenue hit from the Chinese customers, so we know that, that is a permanent loss and remaining can come back?

Moderator · Conference Operator

The next question is from the line of Abhijit Akella from Kotak Securities.

Abhijit Akella

So maybe just to start with the volume versus price breakdown of the revenues this quarter, if it's possible to share that, please, on a Q-o-Q and Y-o-Y basis?

Siddharth Sikchi

So on a Q-o-Q basis, the volume decline, out of the 13% decline, majority is by volume decline.

And on a Y-o-Y basis, out of the 21%, the volume decline is 19%, whereas the price realization is 2%.

So majorly, it's volume decline.

Abhijit Akella

Got it.

And just on HALS, on a sequential basis, what would the volume trajectory have been like 3Q versus 2Q?

Moderator · Conference Operator

The next question is from the line of Ankur Periwal from Axis Capital.

INR425 per kg, okay. · Management:

First question on the geographic breakup.

If I look at the Q3 numbers in specific, domestic demand slowdown probably was a bigger factor here.

If I look at 9 months, obviously, China is also a contributor here.

So any thoughts from a demand uptick both in the international markets as well as on the domestic side?

Siddharth Sikchi

So domestic -- first, let me understand the international.

International, yes, definitely, both in Europe and U.S., we have seen a decent decline closer to 15%, 16% in these markets.

As I Clean Science and Technology Limited January 31, 2026 mentioned right now, it is because of two factors: one is tariff; and other is whether they're being impacted by the global acrylic acid prices, which have come down and they are at its all-time low point.

So if that is the reason, that is why the Europe and the sales are down.

In terms of India, these were just campaign-related cycles, I think, which have moved or postponed, and it is a very customer-centric thing.

So when these agchem cycles come back, probably these volumes will again come back.

But we have not lost the volumes.

I just want to repeat this.

The volume is not lost, it is postponed.

INR425 per kg, okay. · Management:

Sure, sir.

And just on the volume bit, is it largely the macro?

Or is there a risk of the backward integration what we saw in 4-MAP, also playing out in some of our leading products there?

Siddharth Sikchi

See, the leading products, there are -- you have to understand, these are performance chemicals.

So again, as I mentioned, these are performance chemicals, which are -- so an acrylic acid is the biggest example where MEHQ -- a 1,000 PPM MEHQ or a 2,000 PPM hydroquinone is used.

So a backward integration to these would not make any sense to the buyer -- I mean, to the customer.

This was particularly in a particular example of 4-MAP because avobenzone 60% of the cost of raw material depends on 4-MAP.

And hence, it made probably logical sense for them to do so, but not in other segments.

INR425 per kg, okay. · Management:

Okay.

So it's largely the end product driven demand, which is slowing down and possibly maybe a couple of quarters and then there should be some leg up there.

Siddharth Sikchi

Absolutely.

INR425 per kg, okay. · Management:

And another thing on the pricing bit.

Given what you already share on the China bit as well, the pricing in the overall, let's say, HQ value chain.

Presuming these prices are what they are, let's say, even 1 year down, what will be your thoughts in terms of the cost economics for us or probably the pricing and whether these margins probably can hover in this range only going ahead?

Siddharth Sikchi

If everything remains the same, then this is what is going to happen.

I mean if your question is, if prices of finished good is going to remain at this point, assuming the raw materials are also at the current -- I mean, the oil prices are also at low point?

So if this continues for 2 quarters, then the number remains the same over the next 2 quarters as well, right?

INR425 per kg, okay. · Management:

So my question was more like, let's say, 3, 4 quarters out, the volume growth recovery comes back, but the pricing is what it is.

Is there further sort of scope for us to probably improve our costing in terms of improving the margins or probably it's only the operating leverage, which will play out on those front?

Siddharth Sikchi

See, operating leverage will play out.

We will try and optimize some of the costs.

So these are initiatives, which we are taking constantly on trying to improve the prices.

But again, I mean whatever we do, we cannot -- I mean, because these are so squeezed out products for us that I Clean Science and Technology Limited January 31, 2026 don't see anywhere that we can do some magic and reduce the prices by 10%.

So it will be very marginal what I can do, but rest, the prices are currently driven by the world market itself.

INR425 per kg, okay. · Management:

Sure.

Fair enough.

And just lastly on HALS, how has been the geographic mix now?

You did mention the higher-end products are seeing some pickup, which is driving the EBITDA breakeven as well.

How should we see this?

Siddharth Sikchi

70% is domestic currently, Ankur.

70% is domestic, 30% is international, but you will start seeing as we move in quarter 4 and then subsequently in '27, this mix will start changing, and we expect the exports to quickly start ramping up.

INR425 per kg, okay. · Management:

Yes, we were waiting for some product approvals to come in from Europe and other countries.

Siddharth Sikchi

Yes, we have got some of these approvals.

And in fact, in month of January also, you will start seeing a lot of shipments happening in the United States.

But yes, you will start seeing more action in the export markets.

Moderator · Conference Operator

The next question is from the line of Archit Joshi from Nuvama.

Archit Joshi

Sir, first question on MEHQ.

I mean you did explain quite well as to how MEHQ prices have come off.

But sir, the entire let down in HQ prices would also be a function of phenol prices coming off.

Would it be right to assume that with phenol maybe pricing cycle going higher, HQ prices will also eventually be on the higher side, and we will have the MEHQ prices also going upwards.

So is this like a very transient situation?

A slight extension to the same question like you mentioned before.

HQ also is used as a polymerization inhibitor.

So is there a down-trading that is happening from MEHQ to HQ, which might have aided into this volume loss?

Siddharth Sikchi

No, no, no. There are a couple of questions you asked.

Let me start by the last one.

See, these processes of interchangeability of performance additives is not -- I mean, I'm sure people would have done this in the past, but these are now set rules of the game.

So I don't think those shift has happened that people have replaced MEHQ to HQ.

So that has not happened, number one.

Number two, yes, the phenol prices have come off, but I have seen these phenol prices a couple of time in my 20-year of working career.

But the prices of HQ and MEHQ, which I'm seeing today are the prices which were not even -- these are not even -- I mean, they are below 20 or low prices.

So what I'm trying to mention is just raw material play is not playing out.

There is also competition and the prices of -- lower prices of hydroquinone is also pushing, lowering prices of MEHQ and hence, we have to lower the prices to keep our volume up in these markets.

Clean Science and Technology Limited January 31, 2026

Archit Joshi

Got it.

Got it.

That's why the fluidity in the situation, I get your point.

Sir, secondly, on the hydroquinone, catechol plan that we've had, and I believe we did have plans to have better yields of HQ and catechol compared to the competitors.

Where would we be in that learning curve or have we already achieved that yield that you had expected earlier?

Siddharth Sikchi

So I can say that probably we are better than the competition, but we are still a little away from where we had expected to be.

And probably all the endeavors we are still trying to figure out how to reach at that point, which we had anticipated.

So actually, we are in midpoint between the competition and the perfect scenario, we are actually in the midpoint.

And probably in the next couple of months, we should reach the better yield process.

Archit Joshi

Sure, understandably.

Sir, the same question on HQ and catechol.

On an overall margin basis, would we be at par to what we are doing in terms of EBITDA margin?

Siddharth Sikchi

No. I don't think that -- no, that EBITDA margins will not be at those extent.

They would be -- they will be lower.

I think they will be better than HALS', lower than the parent business.

Again, they will be like midpoint.

And with these current prices of hydroquinone, which we are currently seeing and because they have declined quite a bit, so I think it is, again, a very fluid condition to mention really on the EBITDA front.

Probably another quarter or so to understand where it all stabilizes, how our plans also stabilizes.

And I think we will have some better picture.

Archit Joshi

Sir, one last on HALS.

I believe in the previous quarter, a few global majors have taken a price hike in HALS.

Is the overall global situation in HALS improving by that price action that they had taken?

Anything that you would like to comment on how margins and prices can be in HALS, let's say, 1 year down the line?

Siddharth Sikchi

I think those announcements were made.

Yes, we have also seen those public announcements, but they have not really translated into reality, so we have to just keep a wait-and-watch scenario.

But they have not been implemented by the competition yet.

Archit Joshi

Understood.

So the situation broadly is status quo on the total supply-demand dynamics of HALS, let's say?

Siddharth Sikchi

Yes.

So we have to keep working and keep improving our wallet share, and that is what we are doing.

And despite of those low prices, I think the improvement has completely happened because of our improvement in our process efficiency and of course, because these higher-grade HALS have also started picking up.

So I think this will keep improving over the next few quarters.

Archit Joshi

Understood.

Sir, would it be fair to assume that our cost competitiveness in HALS will be better than our peers globally?

Or we are still in that learning curve to improve our yields or maybe cost to that extent?

Clean Science and Technology Limited January 31, 2026

Siddharth Sikchi

See, I think we are still -- see, it is very difficult to understand the competitive processes of the other competition and what are their yields and norms.

But what I believe is, we are still not at the most optimum situation because I think we are still improving.

Like if you can see between Q2 and Q3, also, there is an improvement in the process efficiencies, and I believe there is still more scope for us.

And I think that is what makes a little difference that because these products are all created in-house, we have an ability to improve the process further and the endeavor is to further improve these so that it will start meaningfully impacting our EBITDA levels.

Archit Joshi

Got your point, sir.

Wish you all the best in these tough times.

Thanks a lot.

Siddharth Sikchi

Thank you so much, Archit.

Moderator · Conference Operator

The next question is from the line of Bala Murali Krishna from Oman Investment Advisors.

You are on mute, Bala.

As there is no response from Bala's side, we'll move to the next question.

The next question is from the line of Jason Soans from IDBI Capital.

Please go ahead.

Jason Soans: · Okay. And just our realization would be around $5, that range or $5.5? Or are we looking at a

Thank you so much for taking my question again.

Sir, you explained very much in detail about the HQ prices and how that those types are going down.

Now I understand that they're at an all- time low.

Just wanted your take on, sir, I mean, there's a lot of talk about this China anti- involution drive going on where they'll basically focus on getting back to market dynamics.

Do you expect, by any chance, this drive to basically -- at least gradually, there will be some uptick in those HQ prices that will help you gain pricing advantage?

Siddharth Sikchi

See, I mean, I have also been reading a lot of articles, but I think it's better to see in reality than to make assumptions because what is said and what really happens is absolutely two different scenarios.

So all our costings and all our pricing currently, we are based at the current market situation rather than speculating of any price increase from the Chinese competition.

Jason Soans: · Okay. And just our realization would be around $5, that range or $5.5? Or are we looking at a

Sure, sir.

And sir, just the next question.

I mean I understand both these INR1.5 billion capex, they have been a little bit delayed.

I understand tariff thing and you've explained that the distribution is fluid.

Now I just wanted to understand, sir, the Performance Chemical 1, at least must be ready.

Are we expecting it to generate revenue?

By when do we expect in '27 for it to generate any revenue?

And how much?

Siddharth Sikchi

We will start seeing -- so the plant started.

Currently, we are using -- because there are teething issues, the product is slight off spec, but we are currently consuming all the products in-house.

So where I was importing, say, probably around 70, 80 tons of hydroquinone per month, you would have seen that those imports have stopped completely.

Same is the case with catechol, which we were importing to make our own Veratrole.

So these imports have stopped completely.

So all these current products are being serviced by our own subsidiary to the parent company.

That is point one.

And point two is, we will start seeing sales starting in the month of February and of course, gradually increasing in March.

And of course, we expect decent numbers coming in FY '27.

Clean Science and Technology Limited January 31, 2026

Jason Soans: · Okay. And just our realization would be around $5, that range or $5.5? Or are we looking at a

Okay.

But Performance Chemical 2, so you expect revenue only in the last quarter.

That's been a little bit delayed from that perspective, right?

Siddharth Sikchi

Yes.

I think we had anticipated that we will start the production in March.

But now we feel with the current scenario, we'll start by May.

So there has been a 2 month -- a 60-day delay, probably another 15-odd days for water trials and commissioning.

So yes, there has been a quarter delay; yes, you're right.

Moderator · Conference Operator

We'll take the last question from the line of Manish, an Individual Investor.

Manish

Sir, I'm a retail investor.

I have written a mail to you as well.

So what I understand from the layman term, as a layman term, that we have some loss from China because of some customers, and we have some loss from U.S. So that's the reason we have -- because of the tariff, so we are losing revenues.

On top of it, because of the Chinese competition, we are losing revenues, right?

So we are hit from all ends.

Now what message do you give to retail investors who have been invested in you since long?

When can we see the margin that we used to do around -- revenue growth that we had around '21 to '23 could come back?

Siddharth Sikchi

So Manish ji, thank you for your question.

Of course, the endeavor for us is always to keep making more profits.

But alongside the endeavor is also to retain our market share in the segments because it has taken us 20 long years to build these markets, to retain these customers.

But the macroeconomics is something, which is very difficult and which is beyond our control.

So a tariff of 55% in United States was never anticipated.

The overcapacities in China was never anticipated.

And all this has led to margin reduction.

However, the endeavor is to come up with new products.

The endeavor is to derisk from a couple of products to more products.

The endeavor is to keep performing and doing R&D and to get more and more products online so that the revenues built-up keep happening.

The endeavor is to not lose a customer to a competition.

So these are some things which I, as a promoter, have to do to make sure that my business does not -- I mean, it's not a quarter business that we run for a couple of years.

I mean, we have to look for a 5-year strategy in the company.

So with all this, yes, there has been a hit.

But we are there.

I mean, we are healthy in terms of cash flow, company is still sitting on INR450 crores of cash.

The projects, which we had mentioned, have all happened beyond -- I mean, within probably a less than a quarter delay, but all the capexes have happened at the project costs, which we had anticipated despite of all these volatile times.

So I mean we are trying our best, I can only say that.

And even our endeavor is to reach those profitability, but with the macroeconomics in hand, I mean we have -- I mean something which we cannot control, we cannot control.

Manish

Agree, sir.

I have read about you a lot.

I'm a great fan of yours, how you build up this company along with the Boob family.

So I respect that.

But I was just coming from a retail point of view.

Clean Science and Technology Limited January 31, 2026 Many retailers have seen many trends of mine.

Everyone is scared, everyone is scared.

What will happen next?

Okay.

So that's the reason I thought of asking you.

And second, one more question that I wanted to ask you is, the trade deal that we had, right, as of now with Europe, that might help us, right, sir?

That might help us to negate some traffic or that might help us -- if you compare to China, china has some tariff -- if you see, China has some tariff in Europe, EU, but we'll not have that tariff.

So do you see that playing around?

And why -- sorry, sir?

Siddharth Sikchi

Yes, I agree with you.

That would play.

But of course, I mean this -- I think this will only start in '27.

I think there's still a lot of paperwork has to be done between the two countries.

So it is not going to -- I mean you will not see anything on an immediate basis.

This will, I think, only start in '27.

And the trade impact would have a 5.5% to 12% is the tariffs, which we pay and also the Chinese.

So if those will come out then, of course, it will help the Indian chemical industry for sure versus the Chinese, of course.

Manish

So we have one, what do you say, positive for the FTA.

And also, why don't we capture the market of Australia?

Have you any plans to do that, or Canada, by any chance?

Because by -- if you see the condition going on, Canada is anti-U.S. Sorry sir?

Siddharth Sikchi

To your point, sir, Australia or Canada, they don't have such acrylic acid plants.

For that matter, even India does not -- India has only one acrylic acid plant.

Plus all these blends of pet food industries where we supply, they are users, but they are not producers.

Hence, Australia is not a market for our products at the moment.

Manish

All the best.

We hope to grow with you.

Thank you, sir.

Siddharth Sikchi

Thank you so much, Manish ji.

Moderator · Conference Operator

Thank you.

I now hand the conference over to Mr. Siddharth Sikchi for closing comments.

Over to you, sir.

Siddharth Sikchi

So thank you all for spending time with us on Saturday.

I understand there has been -- I mean, it has not been a greatest quarter for us.

I think we've had a glitch in our quarter 3 also as well as in quarter 2.

But I can only assure that we are working towards improving the margins, improving the revenues, bringing new products online as quickly as possible, trying to maintain our capex cycles.

And I think we are trying to do, as a team, whatever best can be done.

And I think that's all from our side.

Thank you so much.

Moderator · Conference Operator

On behalf of Clean Science and Technology Limited, that concludes this conference.

Thank you for joining us, and you may now disconnect your lines.

Questions and answers

Moderator · Conference Operator

Thank you very much.

The first question is from the line of Jason Soans from IDBI Capital.

Please go ahead.

Clean Science and Technology Limited January 31, 2026

Jason Soans: · Okay. And just our realization would be around $5, that range or $5.5? Or are we looking at a

Yes.

Sir, first question just pertains to the -- I mean, the 2 capexes which we had mentioned.

Now you've spoken about Performance Chemical 2 and 1.

So going back, of course, you were investing INR1.5 billion in both of these projects.

So I just wanted to know, sir, I mean, according to your internal -- I mean, calculations, how much revenue do we expect these -- both these projects to generate in '27 and '28, just as a broad outline.

I know you've spoken about an asset turn of 2 for both these projects, but just '27, '28, just some specifics could be given?

Siddharth Sikchi

So typically, in these fluid market conditions, we would avoid giving any forward-looking statements.

But to just pinpoint with the Performance Chemical 1 because of the prices reduction overall, the -- around 80% capacity utilization, we are looking at a revenue of INR260 crores, which was earlier INR320-odd crores.

And Performance Chemical 2, the capex is under -- I mean, we are still under capex phase and the facility will only begin by May, June.

And we expect after teething issues, customer approvals, we should only see revenues in Q4.

Jason Soans: · Okay. And just our realization would be around $5, that range or $5.5? Or are we looking at a

Okay.

So Performance Chemical 2 will be commissioned by May, June and then probably Q4, you will get some revenue from that, right?

Siddharth Sikchi

Not full revenue.

Of course, staggered revenues.

Jason Soans: · Okay. And just our realization would be around $5, that range or $5.5? Or are we looking at a

Yes, staggered revenue.

Okay.

Sure, sir.

And sir, again, now with regards -- yes, and with regards to -- with regards to HALS, I'm sorry, the Hindered Amine light Stabilizers, just wanted to understand how much volumes and realizations are we targeting for '26 and '27, now '26 is almost done.

But how much volumes and realization in dollars are we targeting for '26 and '27?