Chemplast Sanmar Limited (CHEMPLASTS) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Kemplar Senmar Ltd. Q3FY26 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 the conference call, please signal an operator by pressing star 10-0 on your touchstone phone. Please note that this conference is been recorded. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of the call. These statements are not the guarantees of future performance, uninvolved risks, and uncertainties. I would now like to hand the conference over to Mr. Ramkumar Shankar, Managing Director. Thank you, and over to you, sir.

Thank you very much, and good afternoon, everybody. On behalf of KELPLAS Tanmar Limited, I extend a very warm welcome to everyone joining us on our call today. On this call, we are joined by our CFO, N. Moodli Dharan. Dr. Krishnamar Rangachari, who heads our Custom Manufacturer's Technicals Division, and SGA, our Investor Relations Advisor. I hope everyone has had an opportunity to go through the financial results and investor presentations, which have been uploaded on the stock exchanges and on our company's website. During the quarter, the company reported consolidated revenues of Rs. 835 crores and a net loss of Rs. 119 crores. This has been the most challenging quarter in the last three years, with multiple factors impacting our performance. The suspension PVC business states the challenging environment. With the seasonal decline in demand, weather-related production disruption caused by inability of peak stock ships to burst due to unusually rough seas during this year's northeast monsoon, and a sharp fall in import parity prices caused by regulatory uncertainty at the beginning of the quarter. We have setbacks on the regulatory side with the anti-dumping duty recommended by the Directorate General of Trade Remedies not being accepted by the Ministry of Finance. The quality control order on PVC, which was scheduled to be implemented in December, was also extended in November along with the quality control orders on various other polymers. On the paste PVC side, we saw continued pricing pressure from imports originating from the European Union. However, we believe that Q3 represents the bottom of the PVC cycle, with an uptrend being visible in January, continuing into February. Market sentiments are more positive, resulting in higher demand and better prices, boarding well for the company in the days and months ahead. Getting into details, during Q3, domestic demand for Pace PVC remains stable, thanks to the footwear and automobile segments. The cut-loop Pace PVC facility is operating at full-capacity utilization, reflecting steady operations and market absorption. Post the end of the quarter, we see an uptick in demand for Pace PVC, which resulted in a significant drawdown of invention in January. Some price improvements in Pace PVC are also being seen. The anti-dumping investigation on Pace PVC imports from the European Union and Japan is ongoing, with the final findings expected before the end of Q4 of the current year. On the custom manufactured chemicals business, as highlighted during the earlier analyst call, the flow down on agrochemicals impacted our quarterly performance. That said, our new product development and customer diversification initiatives continue in future. We now have 17 products commercialized with additional products on the development. On the capacity expansion, work on MPB3 phase 3 and MPB4 continue during the quarter. MPB3 phase 3 is expected to be completed in Q4 of the current year, with pilot commissioning also targeted for Q4 of this year, following which production is expected to ramp up gradually. Simple works for MPB4 are targeted for completion in Q1 of FY27. On a refrigerant gas project, the R32 capacity expansion of 14 KTPA is underway, including two new R32 plants of 10 KTPA and 2 KTPA capacity, respectively, and conversion of the existing R22 capacity into a swing plant at METO. Commercial sales are expected to start post the swing plant commissioning by the end of this quarter. Moving on to our value-added chemicals business. Our business portfolio in this segment, as you may be aware, includes cosmic soda, chloromethines, and hydrogen peroxide. During the quarter, prices and margins for caustic soda and chloromethane remained under pressure globally. Caustic soda's domestic demand remained stable from key consuming sectors including pulp and paper, soaps and detergents, alumina, and textile. Sales volume declined in quarter three, primarily due to lower production at the main tool facility. Caustic soda output was impacted by technical issues, which in turn reduced hydrogen peroxide volume as well. We expect the production to normalize by March 2026, in two months from now. Prices are expected to remain stable, barring any material changes in market conditions. On the suspension PVC business, as mentioned earlier, the suspension PVC business faced a difficult environment in Q3 with a perfect storm of adverse conditions, including weather-related production disruptions, lower import prices following the non-implementation of the long-awaited anti-dumping duty, and proper domestic demand due to both seasonality and uncertainty around regulatory action. A key positive development post the end of the quarter has been the decision by the Chinese government to withdraw the export tax rebate on PVC, suspension PVC, effective from April 2026. This rebate, which amounted to 13% of the export price, or roughly around $70 to $80 per message account, had been a significant factor supporting Chinese exports to India. Its withdrawal is expected to reduce the price advantage of Chinese exports and indeed has already helped improve market sentiment in the last few weeks. Despite the challenging operating environment, we continue to execute our strategic priorities with discipline. Our base PVC expansion has seen precision in execution with the new line reaching 100% utilization and quick time. With key capacity additions and custom manufactured chemicals nearing completion, new products gaining traction, and the regulatory and structural developments supporting improved market sentiment, particularly in suspension TVC, we believe that the company is well-placed to emerge stronger from what has been a long draft and deliver sustainable growth going forward. On a personal note, after 13 years at the helm, I will be stepping down as Managing Director of the company with effect from the 1st of April, May 26th. I would like to take this opportunity to place on record my sincere appreciation to our shareholders, the analyst community, and all other stakeholders for the understanding, trust, and support you have extended to the company and to me personally over the years. Subject to requisite approval, Mr. Ganesh Kumar will be taking over as managing director from April, and I am confident that the company will continue to build on a strong foundation under his leadership. Now I would like to invite a CFO Muddhidharan to walk you through the financial performance of the company.

Thank you, Ransh Kumar, and a very good afternoon to all the participants on the call. Talking about the performance in Q3 FI26, the company went through a very difficult quarter. On a consolidated basis, the company recorded revenues of Rs. 835 crores, a 21% drop on a year-on-year basis. The net loss for the quarter suited Rs. 119 crores. Now, coming to the quarterly segment-wise performance, the specialty chemical segment generated revenues of 335 crores, with volume increasing 13% on Iran airbase. The value-added chemical segment revenue stood at Rs. 105 crores for the quarter, down from Rs. 153 crore in the quarter in the same period last year. Performance was impacted by drive volatility and production-related challenges, as mentioned by Ramkma earlier. The suspension PVC recorded a top-line of Rs. 394 crores for the quarter, down from Rs. 525 crores in the respective quarter last year, mainly due to lower volumes on account of weather-related disruptions. And adverse pricing dynamics due to unabated dumping which served as a significant headwind throughout the quarter. Looking at the split-up revenues for the quarter, specialty chemicals contributed 40% of revenues, value-added chemicals accounted for 13% while the suspension PVC segment comprised the remaining 47%. For 9 months FY26, the company reported revenue of 2,968 crores. Its EBITDA at the piece 4 crores, while the net loss to the period was at the piece 234 crores. Coming to the segment one highlights during the 9-month period, while the value-added chemicals and suspension PVC witnessed a draw due to pricing pressure and lower volume, specialty chemicals registered a marginal growth. During the period, the company incurred a one-time impact of Rs. 2.63 crores due to the implementation of the new labor codes. As Raffmer highlighted, we are seeing green shoes emerging, more specifically in the suspension-free space. This, combined with the traction that we are gaining for the new products in the custom-manufactured chemicals business, will help improve the profitability of the company in the coming quarters. With this, we conclude the presentation and open the floor for further discussions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are required to choose answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Rohit Naganaj from 361 Capital. Please proceed.

Thanks for the opportunity. The first question on R32. You mentioned that the swing plant will be operational by the end of this quarter. So, is it possible for us to update the plant at its optimal capacity throughout FY27 and which are the markets that we are targeting for R32, is it going to be domestic or a mix of domestic plus exports? Thank you.

Thanks for the question, Rohit. The first swing plant would have a capacity of around 2KT, and that should come in by the end of this quarter. It will have some ramp-up period. It will not operate at 100% from day one. There will be some ramp-up. Obviously, like we always do with all our expansions, we would aim to get to 100% as early as possible, as we had done in phase PVC as well. And that would be a ring, but I would not say that it would run at 100% from day one. This 2KT, we should be selling it in the domestic market, but once we have the full 14KT online next year, there would be a mix of domestic and exposure.

Yeah, thanks. The second question in our highlights, key highlights, we have mentioned that PM3D's performance was impacted by agrochemicals' slowdown, but our new product development and APEXs are on time. Here in terms of setback, is it going to be still a short-term setback on the agrochemicals? And we expect that, you know, FI28, things should again come back to a large part to normalize business. Our earlier guidance of 1,000 crores for FI27 has been postponed by a couple of quarters. Is there any possibility of that getting further stretched to maybe a second half of FI28? Just a broader view of it. Thank you.

Hi, this is Krishna here, Rohit. As we outlined in the last quarter call, the global action market remains mixed. The demand is picking back up, but there's a lot of price pressure due to low-cost generics. In terms of, you know, from China. And while this is not impacting us directly in any way, the, you know, the launch of new molecules by the innovators, the ramp up is not happening as quickly as they had originally anticipated. And so, these stages impacting in the near term, but not in the long term. The long term projections and the demand. For many of the molecules we have commercialized, it is very healthy and very strong. So, from a guidance standpoint, you know, we are still comfortable, you know, while there is a delay by a few quarters, in terms of our ramp up to the 1,000 quarters, it's 1,000 crores. We don't see, you know, any significant.

Thank you for answering all the questions and all the best.

Thank you.

Thank you. The next question is from the line of Bhujan Shah from Molecule Ventures. Please proceed.

Yeah, hi sir, and thanks for the opportunity. Am I Oliver, or is it...

Your order, please. Please go ahead. Okay.

My first question would be the consideration of BFINA PVC price hike of 7 to 8 rupees, and there is also a discussion on MIP which is going on the industry forward. So, first question would be on the MIP, that how much tenure we have been looking in terms

of government that they will allow us a leeway for MIP, and are we filing any ADD, refiling to ADD ex-US, or we are still on the,

we are still in the deciding mode that we want to file ADD or not. Okay, um... Thanks for the question. As far as you are right, there have been a few PBC price increases rolled out from January onward, which is what I was talking about when I said that the sentiment has changed and we are seeing a positive upswing right now. As far as the MIT is concerned, this is traditionally a short-term measure, which can be up to a year, and that is, while this is a measure, it's a bridging measure, that will give time to the industry to apply for any other longer-term solutions that we see fit. And the industry is looking at certain other longer-term measures that we have approached the government on, and we are confident that one of those will move ahead in the coming months. We will be able to give you better details on this maybe in a few weeks' time.

So, any expectation on any timeline for MIP or it is just right now industry discussion, so we won't be able to justify the timeline?

No, no, MIT is, you know, we wouldn't, obviously, we would not be able to come here and give you a timeline on that, but I, all I can say is that the process started some time back, and it is at least halfway into the process, so I think, and this is not a very long-drawn-out process, so I think we should see some traction on that in a couple of months. Thank you. Thank you. Okay, good teacher. I just wanted to understand the current crisis versus the last quarter crisis. Is that a firm crisis has been stayed along or it has been cooled

off on a largely basis right now?

It's stable. There's no major change in our 30 seconds. So, I want to understand a sustainable thing is that if you look at a break-even

on R32, so understanding that it will take time to take to shorten KGPA, but if we want to

understand a break-even point at which we have been able to sustainably generate at least a flat EBITDA margin, so what would be the break-even price or would it be difficult to

justify because right now the temporary scenario has been changing?

We are very confident that this is a very short term break even for this project. We believe that it will not extend beyond a couple of years. Okay, I just wanted to understand on the anti-involution front, are we seeing any improvement in PVC on anti-involution

front or it is just right now on the state of books only?

No, that is a very concrete move on that front. In fact, the withdrawal of the export tax rebate that I was talking about that was announced by the Chinese government on multiple products including suspension TVC will take effect from the 1st of April 2026. That is in a couple of months from now. And that is in a sense to, you know, remove the incentives that were being given for exporting all that capacity that had been set up without real economic justification. So, what we expect this to fuel would be an advancing of the rationalization of some of the carbide PVC capacity. This could accelerate it. At least, that is what we believe. Once this export tax rebate withdrawal is completely, you know, that withdrawal comes into effect on the first basis, we do believe that some of those carbide PVC capacities, which are dependent on merchant carbide purchase, Yes. Those capacities could be rationalized sooner than we thought. So I think this is one step forward in the anti-involution program of the Chinese government. Okay, sir. And... If we look at the prices right now and this inting or this export duty incentive being removed, do you feel that in a short term, like let's suppose in a fab march, there would be a dumping effect which can be seen due to low prices, start keeping on, like inventory will be filled by lower pricing and then eventually it will reset to a new pricing. Is it a possibility that could happen right now or it is now a far-care scenario because shipping time and all this delay will

take time to ultimately reset to the new prices?

It's a very fair question from your side, and I think that the possibility definitely is there. Since this was announced, we have also been tracking it. Will there be a sudden flood of imports coming in to beat the April deadline? And so a lot more comes in right now, and then it settles into the higher level. But actually, what we are seeing is that the prices have only gone off in January and it continues to go off in February. And we hear that even some of the older orders placed on Chinese suppliers have not been shipped out. So I guess there is some logistic issues as well that the Chinese exporters are facing. And therefore, since we are already into mid-February, we have hardly six weeks now. So, the risk of it coming in after the 31st of March is there. So, there could still be some increase in quantities coming in in March, but we believe that it is manageable, especially given the fact that the demand has come back strongly. Got it, sir. I will just turn it in the case. Thank you for meeting us, sir.

Thank you.

Thank you. Before we proceed with the next question, a reminder to the participants, in order to ask a question, you may press star and one on your touchtone telephone. We take the next question from the line of Nikhil Gandhi from Bajaj Life Insurance. Please proceed.

Hello. Thank you for the opportunity. Am I welcome?

Yes, Nikhil. Please go ahead.

So, concerning the current trajectory, how should we look from the fundraising perspective? Should we expect any kind of fundraising in the form of equity or debt in the next one or two years kind of a time frame? Because currently we are facing some losses. And the second question which has a quantity to understand is, at what price, since we have seen around Rs.06 to Rs.68 kind of price increase in SPBC? And at what price will we expect and break even for SPBC as well as for Pace-PBC?

More on the fundraising part. Actually, fundraising is an ongoing exercise, both the projects and also for our short-term requirements. I think those will go as per our plans that we have done over time. As per equity raising is concerned, we don't have any plans as of now. I can't come out about the next two years, but we don't have any plans as of now. And the question on the suspension PVC break-even, actually we look at it more from the contribution, that is the contribution that we get, rather than the prices, because the prices may move up and down, but what really matters is the margin that we get from the suspension PVC, after all the variable cost, that's what we look at. That generally varies between somewhere around 11,000 to 12,000 rupees per time.

And then for Pace PVC?

A Pace PVC is quite difficult to sort of say because Chemplast is an integrated entity. It has paste, plastic, chloro-methane, CMCD, all that as an integrated operation. So it will be difficult for us to look at the evidence of individual products and then look at the breaking.

Well, I think in safe PVC, the price increase has only been, you know, we just rolled out one price increase of around 2,000 rupees very recently, and I think we have some way to go there before we can say we are comfortable. Suspension PVC, I think we are in the comfort zone, we are heading into that comfort zone.

When we are talking about the brakes, we are talking about the brakes on the TV area.

Okay, okay. So, at the current pricing scenario, should we expect it is a break-given kind of thing for a suspension PVC?

Suspension PVC by February and March, yes. The answer is yes.

Oh, okay, okay. So, if we expect 1 to 2 rupees kind of price like in the PVC prices, so we will be at a break-given kind of thing.

I think with the current numbers, we would already be at the break-even levels in February and March, because it's not just the business price increases, there are also some discount schemes that we had to get in December, which have been rolled back now.

Okay. Thank you, sir, for the lovely paper.

Thank you, Nick.

Thank you. We take the next question from the line of charge from Dallal and Brocha. Please proceed.

Yeah, good afternoon, sir. Thank you for the opportunity. Sir, just time for rolling the last question. You're saying that we are now breaking even in the suspension PVC at the contribution level. How much more price increases we will require now to break even at the EBITDA level? Okay, now when we said the break-even, we were talking about the PBT level, not contribution level. Ah, okay. That is what it is. Obviously, you know, given the investment that we have, you would need to get a decent return on the investment, you would need to earn more. So this is really at a break-even level. But this is the first step. That's what I would like to make upon. We still need to ensure that we can't take our eyes off the ball in terms of preventing unfair trade practices. We need to ensure that dumping is stopped. But this is a good first step. Got it. Sir, one last question. Assuming the Chinese prices move up post-April, rather post-March, because of this withdrawal of 13% export rebate tax, how much more price increases are possible? I think you spoke about 7-8 rupees already being increased. So does that equate to 13% rollback or there is still more room for the prices to go up? See, you can't really relate that export tax compared to the current price increases. Usually, it would be difficult to draw a direct correlation between the two. It is a mix of economic conditions and the change in sentiment, the return of demand in India and so on. However, we would not be able to draw that direct correlation. And then, uh... Adding to how much more is possible, that is not something that we can predict with any certainty at this point in time. Okay. Okay. Yeah. Thank you, sir. One second, sir. One second. And, sir, just in case that the prices move up by, say, 8 to 10 rupees, how much the contribution will move up from here, from, say, 11 to 12,000? That depends on how the feedstock prices also move. So, it's not just the contribution is, you know, both the product price and the feedstock price. So, we would expect that the feedstock price would also start moving up as the PVC prices move up. But obviously, in a rising market, as we've always said in this call, in a rising market, we would get the benefit of the time lag between the product price movement increase and the feedstock price change. Whereas in a falling market, we would always be hit by that. The last three years, unfortunately, have been the latter case. Hopefully, going forward, we would get the benefit of that.

Okay, perfect. Thank you so much.

Thank you. We will take the next question from the line of fire. From Quest Investment Advisors, Private Limited, please proceed.

Hi, sir. Good afternoon and thanks for the opportunity. Sir, my first question, as you said, that CBC price has already moved up by 7-8 to 2, and hence we are at a break. Can you give some more color on EDC price, which is a bridge to how much it has increased, and how are we seeing the availability

and demand scenario over period?

Okay. ETC prices have been at around less than, you know, $300 right now. If you look at the last few months from January onwards, from around $225 by around April or end of March, prices are right now by end of January, it's come down to $194. These are all CFR Asia prices. For our EVC, we are only for paid PVC, because we do not use, you know, and a little, for our suspension PVC, we import ECM straight away. So, both EVC and VCM prices have been stopped over the last five months, in keeping with softness in PVC prices.

But, most increases in this PVC price, how are we seeing currently ruling in April and March, and for what?

They never go up. If PVC prices go up, definitely VCM prices will follow because VCM is a 1-6-4-0 which is used only for making PVC last year. So, therefore, it should follow BVT, but like I was explaining to the previous caller, as well, there will be a lag in a rising market, which would work to our benefit. EDC dances to a different tune. It is equally dependent on power price, energy price, economics has also passed its realization. We believe that EDC prices will also slowly move up, and AT&T will also play a role in that. But it's not going to move up for shortly. Unless, of course, there is some major supply-type constraint that develops all of the country, which we don't. Sir, typically, can you give some color on the trade between the PACE-CVC and PCM price?

Thank you. Can you use the sense on the spread of FacePVC and VCN?

Normally, the VCM price, you can say that the spread between VCM and PVC, suspension PVC, right now is around $200. It usually moves between $175 to $200. And paste PVC is another around $200 above suspension. Okay. This is with the post, as you said, that type of paste PVC has increased by Rs. 3000 per ton, correct? And how is the demand in paste PVC in domestic market as well as PVC, if you can give some more color? The demand of suspension PVP until December was actually a little flat. In fact, it was marginally negative. If you look at April to December 25, the apparent consumption in India is around 3.2 million tons as compared to 3.3 million tons in the same period last year. And this is largely because of this year there's been a far more extended monsoon and a pretty strong monsoon at that. There's also a lot of uncertainty on price volatility and regulatory uncertainty. So there has been holdbacks in demand and destocking happened. But we believe that from January, with a lot more positivity around prices and the return of positive sentiments in the market, we are seeing good, strong demand returning. Therefore, for the year as a whole, I believe that we would make up this very small negative in the first nine months, and we'll end up either at the same level as last year or maybe slightly more than that. As far as space QVC is concerned, actually the demand has been pretty strong. There's been an 8% increase in the first nine months of the year on a year-on-year basis, and we are seeing a very strong pull in January and February.

Okay, sir, on CRM and in custom manufacturing, I missed initial remarks.

So, we were targeting around 1,000 crore kind of a stop line by end of 26-27. So, where are we in that journey? Or will we be able to achieve that? Or there will be some quarter leg will be there?

Hello, my name is Dr. Moon. We have indicated last call that we anticipated delays to water, and we continue to promote that projection. So it's just a deferment, primarily because the ramp-up of some of the new molecules cannot happen as quickly as we anticipated. The pipeline continues to be strong, our engagement with all our customers in terms of what we are working on. Our projects continue to be strong as well, but as you are aware, the whole active industry has been going through a very difficult cycle for the past couple of years, and each one of them one by one is coming out of that, and which is impacting many of their pipeline launches and ramp-up.

Are we seeing some, I mean, the bottoming out of that, their inventory earlier, which was piled up, the stocking, as well as the new launches, is bottoming out, and we are seeing any uptick?

Okay, so, what we hear is that, yes, the demand is starting to take off, so the inventory correction, as you pointed out, you know, is behind. Thank you. However, the price pressure continues in terms of very high capacity of generic manufacturing put up in China. So that's impacting at a price level, which in turn is impacting some of the new molecules because of the tendency to use the older. Our chemistries and chemicals, which are now available at much lower prices, so the incentive to switch from a farmer standpoint, you know, that incentive is not as good as it could have been.

Can you give some more color idea, the RF32, how much potential do we have when we start to manufacturing the thing? And does it be sector in 1,000 crore revenue? R-32, like we mentioned, we are targeting a total capacity of around 14,000 tons. There will be three units. We are first converting our R-22 plant into 20,000 tons. That will get ready before the end of this financial year itself. Then there is another new plant of another 2,000 tons, and that will get ready by the first quarter of next year, and then the last 10,000 tons, which will get ready by the end of the calendar year. So, overall, in the first full year, I think we target to make around 11,000 tons, and we should have around annual revenue of this stock. How much is that?

5,50 crores.

Okay, great, sir.

First, part of the 1,000 crores T.M.C. will come. There is a separate sort of time. And this is not part of that 1,000 crores.

Okay, thank you. I mean, last, I mean, how much is currently late date? Okay. Okay, ma'am.

I would request you to join back the queue as we have several participants waiting for the turn.

Thank you.

Thank you. We take the next question from the line of Skir and Gardier from Nithstone Capital Management LLP. Please proceed.

Hi. Good afternoon. Apart from Westlake Corporation rationalizing some PVC raising capacity, are you observing any more shutdowns?

It's an interesting question. Actually, we did see some rationalization that has happened in Europe. There was one Netherlands plant at around 230,000 tons that shut down towards the end of last year. And then a few other plants of the same company in different parts of Europe have gone into receivership. So I think there is a lot of stress, especially in Europe, in terms of the PVC industry there. And there could be some announcements, we do not know, or further announcements. As far as China is concerned, like I mentioned earlier in the call, once this withdrawal of the Expo Tax rebate plays out, That could be an acceleration of rationalization of the carbide PVC capacity, which is dependent on purchase of calcium carbide. So that could be some rationalization there as well. How much capacity are you expecting for carbide base? So, these are not things that we can put a number on. All I can say is that China has around 20 million tons of carbide PVC capacity, of which around 4 to 5 million tons depends on purchase of calcium carbide on a merchant basis. How much of that, and all of this is operating at maybe around 75-80% operating rate right now. So, how much of that will shut down and what impact it will have is yet to be seen.

Okay, thank you.

Thank you. Before we proceed with the next question, a reminder of the participants, in order to ask a question, you may press star N1 on your touchtone telephone. We take the next question from the line of Praneet from Samathwa. Please proceed.

Thank you for the opportunity. So, in terms of the new FTA with the European Union, do we see any green shoots from this or do we see any negative factors? Can you explain how the company sees it?

With the European Union, the way we would see it is that I am not sure that we will have, the details are yet to be seen because the schedules, the detailed schedules are yet to be released, so we would need to figure that out when it is officially released. And anyway, the approvals from the European Parliament and on both sides will also take time. So it is not something that is going to impact us tomorrow or next month. But if, assuming that automobile imports into India increase from Europe and a lot of the artificial leather that is made from Pace PVC is PVC-based, And a lot of our customers are exporting the leather cloth to European car manufacturers. That could result in some positive demand pull in the market. On suspension BVC, I don't see much. On CMCD, I'm sure there would be some benefits in that.

We'll have to wait and see what is included and what's captured there. There should be some advantages, because on the CMCD, 100% of our sales or our products are exported eventually, so there should be some benefits there as well.

Understood. And in terms of the ADD, could you repeat, I think I missed it. So we are not going to have the ADD for this anymore, right, from your opinion?

The ADD on suspension PVC was not implemented. The ADD on paste PVC imports from European Union and Japan, that case is still ongoing, and we are expecting the final findings from the DGTR before the end of this quarter. And after that, of course, it will have to go to the Finance Ministry for notification. We'll have to wait and see how that is received.

And that's true. So, but China is getting less compared because they're removing the subsidies. That's a very true for us. Or also subsequent PBCC. Is that the right understanding?

That is right. On suspension PVC, the removal of the export tax benefits that they had, the rebate that they had, is going to be a definite positive for the suspension PVC industry here in India. Because China was the significant exporter to India. It was flooding the Indian market with low price exports.

So, let's say in terms of imports broad-based, how much would have China contributed versus EU and Japan?

Okay. EU and Japan is in paid PVC. China's position is in suspension PVC. So I think we should, you know, EU and Japan are not so much. Japan is the player in suspension as well. EU not so much. On paid PVC, China is not so much a player because there is already an anti-dumping duty that is in play. So let me just tell you the, you know, the broad numbers for suspension first. Out of the total import arrivals of around 2 million, 2.1 million tons in the 9 month period, April to December 25, China accounted for around 52% of the arrivals, Japan accounted for 14%, Taiwan accounted for 9%, and Korea accounted for 6%. So these were the four large exporters to India as far as the suspension is concerned. If you look at the space PVC, out of the around 62,000 tons of import arrivals in the nine-month period ended December 25, Europe accounted, European Union accounted for around 45 percent, Korea for 22 percent, and then you had the Malaysia for 8 percent, and then Taiwan and Thailand 7 percent each. So this is really the input arrival breaker.

Understood. So that's actually interesting. But in terms of price parity, what would be, let's say, imports versus us? The price parity versus the cost of production. Landed price for them versus cost of production for us. What would be the priority between that?

Okay. That is really the subject of the anti-dumping duty, and the DGCR, that is exactly what they calculate, and that is how they work out the injury margin and the dumping margin. That's something that we can discuss offline.

Understood. Thank you. That's been interesting. Thank you for your answers. Thank you very much.

Thank you. We take the next question from the line of Nikhil Gandhi from Bajaj Life Insurance. Please proceed.

Thank you for the opportunity again. First, I wanted to understand R32 quota and how should we look into that 10,000 KT capital city which we are planning.

Given the fact that we have resized the ambition and our plans in this product to 14,000 tons, and given that we had also a presence in the R22 production in the 2009-10 period, we are quite confident that we would get the quota for this volume that we are going ahead with.

Okay, okay, okay. And the second thing is relating to this EMC report. So, for this EMC report, though we have highlighted that we will be achieving that target with a delay of two to three quarters, could we expect twenty to twenty-five percent kind of initial margin guidance which we have given to be sustained?

Yeah, in the long-winded case, like we had mentioned in the earlier call, when we are sort of pushing through a number of new products, there is a learning curve. So the margin level will be slightly lower in the initial year. But on a steady state basis, we still hold that number. That's what the industry is making. So we believe that we will also be in that range.

Are there any tentative number which we can model in for FI-27, for FI-28, H1, H2, or something of that sort?

We would avoid giving you specific guidance. We have already sort of said that we will be somewhere around, we will look at the target of 1000 crores by FI-28. Beyond that, I wouldn't like to set up specific guidance.

Okay. Thank you very much.

Thank you. We take the next question from the line of GRG from SOSIRE Capital. Please proceed. Hello.

Yes, please.

Am I audible? Sir, what kind of revenue are we expecting from the R2P2 plant?

I don't know. Can you repeat that, please? I lost that.

What is the revenue that we are expecting from the R2P2 plant?

The first full year we should have around 550 crores, 600 crores, roughly around 600. I did pay 550 earlier. My team just corrected me. It should be around 600 crores.

And going forward?

That will be the full year advance. I am talking about a full year of production. After the ramp-up administration.

Oh, all right. Thank you.

Yeah, thank you.

Thank you. We take the next question from the line of Poojan Shah from Molecule Inventures. Please proceed.

Thanks for the opportunity.

Sir, first I want you to understand the Cauchy Soda pricing as we became a net exporter and we see that once the addition of foreign integration capacity comes up, eventually it also falls out by coming the Cauchy Soda capacity as well.

So, do you feel that P

remain, P remain raised from over a year on due to the scenario of already having a surplus capacity or? It is difficult right now to comment because of the muted demand. So what's your thought on cost? Caustic soda, you are right. India, from being a net importer for a very long time, turned into a net exporter in the last couple of years. And today, I think, we export around half a million tons of caustic soda a year. And prices are range-bound right now. As you said, we are at anywhere between 30 to 34 rupees per tonne, diametric tonne. And it is hovering anywhere in that range. In different months, it could be slightly higher. In the higher end of the range, sometimes it's at the lower end. The one advantage that maybe we could claim to have is the fact that we are located in the south, whereas most of the capacity is concentrated in the rest of the country, and costed by nature of the product is transported, you know, it is sold as a 150% solution. So, the transportation cost over long distances adds significantly to the cost of the product. Therefore, it is largely a regional market. Therefore, we are a little better, definitely, than the rest of the, you know, at least producers in the Western region. The new capacities coming up, especially in, you know, again in the western part of the region, associated with new PVC capacity, would add to the export from India. There is, of course, definitely some demand improvement also happening on the end-user side of the caustic choda industry, given the fact that caustic is a significant chemical use in the refining of critical minerals that are used in the EV industry, etc. So there will be an improvement in demand as well. Yes, to some extent, prices we expect would remain range-bound. We have to wait and see once the new capacities start coming.

Thank you, sir.

And the second question is just to have a broad thought on, can you just, I am new to the industry, so please spare me if I am asking a very new question, but just want to comment on what is the specific, can you speak about the quota, so what is the specific quota, is it allocated by the government, how it works, the dynamic, how it works, is it that it is a protection for the domestic industry, It is about the environmental concerns, that's why they have alerted as a quota. What is the key message where did we look at the specifically quota thing? This entire quota is not for protection. This entire quota is arising out of an international agreement amongst various countries, and this is a quota that will be decided at the national level and indicated by the government. On the exact details of this, may I suggest that you contact us offline and we can, you know, one of us can take you through, you know, the genesis of this entire quota and the protocol and so on. That could be... Please do contact us. We would be more than happy to take you through that.

Sure, sure, sure.

And my last question is, can you stand up the QOQ price, prices of R32 and R22. In percentage terms, you can help me just that wanted to understand the brief, how the prices form of last quarter.

Actually, R32, like Rahmat mentioned earlier, we are ready to commission the plant, so we are not in the market for selling R32 currency. The R22 price for the last quarter was around 3 lakhs by 1.000.

R32 prices currently are at around 7.5 dollars per kilo.

Thank you.

We take the next question from the line of Rohit Nagaraj. From 351 Capital, please proceed.

Thanks for the follow-up. Sir, one question on the KPEX front. So, for this year and FI27, what could be the KPEX and probably if you can split in terms of segment and maintenance KPEX. Thank you.

Apart from maintenance KPEX, we announced KPEX CGR32 that we announced. And whatever residual out of the CMCD expansions that we announced. And the rest is one thing related to capex. So, if you want details of the maintenance capex, then those details we can always take offline and provide you the details. So broadly, they still don't see any large capex at least as of now.

And second just theoretically speaking, considering the current raw material or you know VCM pricing environment, if after 1st April the price goes up in the international market by $70-$80, would that construe to the spreads entirely barring maybe some discounts for you know domestic production? Would that be the right assumption to work on?

This will not go down completely into the margin because there would be some increase in the feedstock price as well because feedstock prices do follow the finished product prices. But it will not, there will be some improvement, we believe. The reason being the feedstock VCM price is largely determined in Asia by the PVC price in China. And if the quantum of exports out of China fall, and since such time that the capacity rationalization happens, there could be pressure on the PVC prices within China. And if that happens, then VCM prices could get, you know, impacted downward, which could be favorable to us. So I think it is a little early right now to talk about how much of it would flow down to the bottom line. Let us just wait and see how it rolls out. We believe that there are certain positives there.

Thanks, sir, and all the best. Thank you very much.

Thank you. Ladies and gentlemen, due to time constraints, we take that as the last question. I would now like to hand the conference over to the management for Closing Commons.

Thank you, everyone, for joining us again today on this earnings call and for all your closing questions. We appreciate your interest in the company, and if you have any further queries, please do contact SGA, our investor relations advisor. Thank you, and good day.

Thank you. On behalf of Kempla Sunmar Ltd, that concludes this conference. Thank you for joining us and you may now disconnect your lines.