Clean Science and Technology Marks Strategic Milestone with Commercial Production of HQ and Catechol

Clean Science and Technology Limited (CSTL) has marked a significant operational milestone with the commencement of commercial production of Hydroquinone (HQ) and Catechol. This production is being spearheaded by its wholly-owned subsidiary, Clean Fino-Chem Limited (CFCL), in a newly dedicated facility. By bringing these functionally critical chemicals online, the company aims to become a leading domestic supplier, directly addressing India's reliance on imports and strengthening the local supply chain.

The move into Hydroquinone production is a strategic boost for the company’s performance chemicals segment. It allows for high-value cross-selling opportunities with existing MEHQ customers and is expected to increase the company's foothold in the TBHQ market. Additionally, the production of Catechol provides a vital internal advantage, as it will be captively consumed to produce Guaiacol and Veratrole, ensuring cost efficiencies through vertical integration.

Financially, the company is navigating a challenging global environment. In Q2 FY26, standalone revenue reached Rs 206 crore, a slight dip caused by lower volumes in legacy products. This decline is largely linked to aggressive competition from Chinese suppliers and tariff uncertainties in the Americas. Despite these external pressures, the company maintained a strong EBITDA margin of 44 per cent, proving the resilience of its high-efficiency manufacturing processes and debt-free balance sheet.

One of the most promising growth drivers remains the HALS (Hindered Amine Light Stabilisers) segment. This subsidiary saw a 25% volume growth this quarter, capturing nearly 50 per cent of the domestic market share. The company is successfully pivoting toward higher-grade products, which has led to value growth outstripping volume growth. Exports to the US, Europe and the Middle East are also ramping up, helping to diversify revenue away from volatile markets.

Looking toward the near future, the company is preparing for the commercial launch of Performance Chemical 1 (PC1), which is expected to begin contributing to sales by Q4. This facility alone has a long-term revenue potential of over Rs 300 crore. Furthermore, the successful commercialisation of Barbituric Acid and ongoing developments in pharmaceutical intermediates suggest a robust pipeline that will mature over the next three years.

While management remains cautious about providing strict financial guidance due to global "black box" uncertainties—particularly regarding Chinese trade dynamics—their strategy is clear. They are focused on defending market share through competitive pricing and leveraging in-house R&D to optimise yields. With new facilities coming online and a broadening Service mix, the company is positioning itself for a recovery as global demand stabilises.

Disclaimer: The article is for informational purposes only and not investment advice.