DCM Shriram Limited (DCMSHRIRAM) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q4 FY26 Earnings Conference Call of BCM Sriram Ltd. 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 this conference call, please signal an operator by pressing star then zero on it at stonefall. Please note that this conference is being recorded. I now hand the conference over to Mr. Shruti Joshi from CDR India. Thank you and over to you, ma'am. Thank you, Swapnali. Good afternoon and welcome to DCM Sriram Limited's Q4 and FY26 earnings conference call. Today we have with us Mr. Ajay Sriram, Chairman and Senior Managing Director, Mr. Ajit Sriram, Joint Managing Director, Mr. Aditya Sriram, Deputy Managing Director, and Mr. Amit Agarwal, Group CFO of the company. We shall commence with remarks from Mr. Ajay Sriram and Mr. Ajay Sriram. Members of the audience will get an opportunity to ask their queries to the management following these comments during the interactive question and answer session. Before we begin, please note that some of the statements made on today's call could be forward-looking in nature, and a note to that effect has been included in the call invitation that has been circulated earlier and is available on the Stock Exchange website. I would now like to invite Mr. Ajay Shriram to give us a brief overview. Over to you, sir.

Thank you, Shruti. Good afternoon, ladies and gentlemen, and a very warm welcome to all of you. I will begin with perspectives on the business dynamics and the strategic imperative, following which Ajit will share views on the financial perspectives. Financial year 2526 was characterized by high-impact events from tariff wage wars by U.S. to the war between Israel and Palestine and then the state start of the West Asia conflict. The escalation of conflict in West Asia emerged as a material external risk. Although India is geographically insulated from the conflict, its economic ecosystem is closely intertwined with the region through energy, fertilizer supply chains, shipping routes, and export markets. These developments have reinforced the importance of supply chain agility, operational resilience, and strong balance sheets. The Indian economy demonstrated better resilience amidst these global headwinds. While elevated energy prices exerted inflationary pressures and tested currency stability, macroeconomic fundamentals remained robust. They were supported by healthy foreign exchange reserves, proactive monetary policy, and sustained domestic consumption. Continued government capital expenditure, along with gradual revival of private capex, supported growth in the manufacturing sector. Although India remains well positioned, the leader of continuing geopolitical conflicts will present new macroeconomic challenges to navigate going forward. Our focus on value chain integration, operational efficiency, cost discipline, and digital enablement helped us navigate a dynamic environment. We are exploring to grow our businesses through strategic partnerships where there is a need for high-end technology. Financial prudence remains a key advantage. A strong balance sheet and disciplined working capital management supported continuity amid commodity volatility. Healthy operating cash flows guided growth while preserving agility to capture opportunities. Sustainability remains integral to both our future readiness and long-term value creation. Our daily operations and strategy are committed to minimizing our environmental footprint, optimizing resource utilization, and uplifting the communities we serve. To solidify our role as environmental stewards, we have institutionalized a bold pledge to achieve a 40% reduction in our scope 1 and scope 2 emissions by 2040. We are actively executing this transition by pivoting our energy mix towards renewable power and agri-based fuels alongside rigorous energy efficiency mandates across all our facilities. Further, in March 2026, we have raised funds through the sustainability-linked non-convertible debentures from the International Finance Corporation, IFC. This partnership is more than a financial transaction. It is a global validation of our ESG roadmap. This transaction marks a significant step for DSM Shira in integrating sustainability into our capital structure and aligning with the company's financial outcomes with measurable sustainability targets. I will now invite your attention to industry dynamics across our businesses. First is chemicals. Globally, caustic soda market is operating at about 80% capacity with annual install capacity of around 109 million metric tons. Caustic will experience growth demand by demand. Caustic will experience growth driven by demand from industries like alumina, textile, pulp and paper, soap and detergents, pharmaceuticals, etc. The industry continues to witness volatility in prices due to economic factors, geopolitical uncertainty, and increased energy costs. The supply chains of chlorine downstream industries have also been impacted, thereby putting pressure on demand. The supply chain disruptions are creating a mixed global outlook. Over the past year, India's Gothic soda market operated at reasonable levels of about 85% capacity utilization. Domestic demand grew at about 5% driven by capacity expansions among major alumina players alongside sustained consumption from paper and detergent industries. Hydrogen peroxide continues to be structurally oversupplied in the domestic market, and low-cost imports from Bangladesh add to this situation. On the back of shortage of natural gas supplies, the industry witnessed a shortage in supplies in March 26, leading to a surge in realizations. We continue to operate the plant at full utilization, and the plant performance has been good. The advanced materials value chain comprising of glycerin to ECH to epoxy, including formulations, continues to grow, driven by strong demand and supported by anti-dumping duty on ECH and epoxy. Further, our ECH plant got fully commissioned in the month of April 26, and the product is well accepted in the market. Our projects in aluminum chloride and calcium chloride at Baruch are running as per schedule. The 68 megawatt green power project with average supply of 34 megawatts at Kota has started average injection of 15 megawatts from May 2026 onwards. Our board has approved capital expenditure of 217 crores towards obtaining approximately 48 crores of additional renewable power supply for our Varuz plant and related infrastructure development, thereby taking the total RE power provision for Varuz plant from the present peak of 50.4 megawatts to 98.4 megawatts. The indicated timeline for completion of the above project will be around Q1, financial year 28. The Board has further approved Rs. 101 crores for the expansion of epoxy-led formulated residence capacity by 36,000 kilotons per year, increasing the total formulated residence capacity to 50 kTPA. The same is expected to be commissioned by Q2, financial year 28. The demand in both global and domestic markets remained flat, yet the market experience pronounced price volatility driven by a complex interplay of macroeconomic and geopolitical factors. Initially, realizations came under severe downward pressure due to aggressive export dumping from China. This trend abruptly reversed as prices surged in response to supply chain anxieties stemming from the Middle East conflict, a situation further compounded by currency headwinds from a depreciating rupee. Prices softened once again following regulatory intervention by the government of India, which waived import duties through to the end of June 2026. Amid decline in domestic PVC prices and damage to the Indian PVC industry, mainly driven by dumping of Chinese PVC resin, the domestic industry filed an application requesting introduction of minimum import price, MIP, for PVC imports. Further, the domestic PVC industry continues to pursue its efforts on the QCO front. In alignment with our strategy to scale businesses to technology-driven partnerships, we have announced a joint venture with Technor Apex BV, a global leader in plastic material science solutions, by selling 50% stick in our subsidiary Shriram Polytech Limited, which is a leading plastic compounding player in India. By integrating global innovation with local execution capabilities, The partnership is well positioned to accelerate growth and deepen consumer engagement. Sugar and ethanol. Global sugar supply over demand for sugar season 25-26 is expected to be in surplus of 2.9 million metric tons, mainly due to India's 2.3 million metric tons per year-on-year production increase. Domestically, this season is expected to close with an inventory of 4.3 million metric tons, accounting for 28 million metric tons in production, after a diversion of 3.1 million metric tons to ethanol, 28.1 million metric tons in consumption, and a little less than 1 million metric tons in exports. Operationally, adverse weather, crop economics, And varietal challenges in the state of Uttar Pradesh curtailed industry-wide crushing. Consequently, our units concluded the season with a lower crush of 473 lakh quintals of shivacane, albeit with an improved recovery of 10.8%. To counter the lower crush, our agronomy teams are aggressively optimizing varietal selection to boost Future yields and using digital tools to enable cane development. Despite these efforts, profitability remains under pressure as realizations from sugar and ethanol have not offset rising sugarcane costs. The ethanol segment faced critical bottlenecks. Against a national capacity of 1,900 crore litre, OMSI allocations, Stand at just above 1,100 crore litres, with share of sugarcane-based feedstocks restricted to a mere 28%. This penalizes integrative players who invested in distillation capacities based on stable blending assumptions. Ensuring the sector's long-term viability requires calibrated policy interventions, specifically aligning sugar and ethanol selling prices with sugarcane costs. Prioritizing sugarcane-based ethanol allocation and expanding targets beyond E20 blending. Finaster Building Systems. Finaster Building Systems continues to progress along its strategic trajectory of evolving from a product-centric offering to a comprehensive building materials solution partner. The business has delivered healthy volume growth through the year, with expanding brand reach and deeper market penetration. Margin reduction, reflecting increased scale and shifts in the product mix towards newer categories, is as planned. The aluminum extrusion project at Kota is progressing on schedule. This facility will meaningfully enhance our capabilities in the rapidly growing aluminum fenestration and building materials segment. Moving on, the Agri-Inputs business portfolio comprising of sugar farm solutions, Shriram farm solutions, fertilizers, and bioseed businesses is next. Shriram farm solutions. The SFS business sustained this robust growth trajectory, delivering double-digit growth this financial year. This performance was anchored by a research wheat segment, which achieved a record sale and a 22% growth despite headwinds from extended monsoons. Concurrently, our crop protection and specialty plant nutrition vertical continue to gain. Market traction, supported by strong farmer adoption of R&D-driven products in specialty plant nutrition and recently launched crop protection molecules. Notably, in the current financial year, SFS has launched 13 new products in crop protection and specialty plant nutrition verticals, including four new products from our own R&D. To sustain this momentum, we are deepening our R&D and exclusive partnerships with global technology leaders to deliver differentiated, high-efficiency solutions. Furthermore, our targeted shift towards new-age digital marketing and influencer-led campaigns has significantly amplified brand visibility, translating into higher product inquiries and stronger brand equity across all geographies. Fertilizer, the urea business remains largely stable. We continue our efforts towards improvement in energy consumption, maximizing urea production, as well as control on fixed expenses. In view of the ongoing West Asia war, there may be a reduced availability of natural gas due to disruptions in LNG supplies and increase in subsidy outstanding. Bye, you see it. This year, the industry faced a challenging scenario for cotton seed for a variety of wheat. Going forward, bioseed is well positioned to navigate growth with a strong pipeline of new product launches across key crops. New introductions are witnessing increasing acceptance from farmers, supported by improved genetics, yield stability, and consistent field performance. The business remains focused on portfolio prememorization, disciplined execution, and strengthening farmer and trade engagement. I will now request Ajit to provide the financial perspective. Ajit, over to you.

Good afternoon, everyone. I will now take you through the financial performance for Q4 FY26. Excise duty for Q4F526 were at Rs.3193 crores versus Rs.2877 crores in Q4F525, an increase of 11% year-on-year. PBDIT for Q4F526 was at Rs.400 crores versus Rs.426 crores last year. An increase in revenue of 32% year-on-year, the Cossack Soda volumes were up 2%, while ECUs were down by 4%. Advanced materials, which include glycerin to ECH to proxy value chain, has also contributed positively to the top line. PBDIT for the quarter was flat at Rs. 163 crores due to elevated fixed costs. Associated with business expansion. There was a one-time positive impact of Rs. 19 crores due to incentive received from the Government of Gujarat relating to the projects commissioned in previous years in Baruj. The benign business. Nineteen percent year-on-year. The premiums are both PVC and carbide, up by 23% and 5% respectively. PVDIT for the segment improved by 68% to 39 crores, led by higher prices, and further supported by lower energy costs and better operating efficiency. And ethanol business revenue, net of excise duty, was down by 3% to Rs. 991 crores. Domestic sugar volumes and prices were largely in line with the same period last year. Ethanol volumes were flat in the quarter, while prices were down 15% on account of change of sales mix. PBD90 for the segment came in at 18% lower at 207 crores. Due to the increased gain price. The inventory is valued at Rs.3876 per quintile. Finestra Building System Reached a milestone of crossing the revenue of Rs. 1000 crores during the year by clocking a revenue of Rs. 1112. In the quarter, the business reported a growth in revenues by 34% year-on-year, led by higher prices across the segments. PVDIT for the quarter was up at 37 crores, led by volumes, partially offset by increased fixed costs towards enhancing capacities, higher sales promotion, setting up of new business platforms like facade, wooden doors, and acquisition-related costs. Sriram Farm Solutions. This quarter is an off-season for the business. Revenues increased by 32% year-on-year, supported by volume growth. The revenue was down by 11%, mainly due to a maintenance shutdown taken during the quarter to coincide with lower gas supply. PBDIT was Rs. 28 crores as against 9 crores last year. There was a one-time gain of Rs. 33 crores on account of revision of retention price of the previous years. Outstanding fertilizer subsidy was Rs. 189 crores. This quarter is an off-season for the business. Revenues were down by 1%, while PBDIT was at negative Rs. 8 crores, as against Rs. 2 crores last year. Coming to the highlights of FY26. FY26 net revenues, net of excise duty, was up 12% year-on-year at Rs. 13,538 crores. Other key businesses, especially chemicals, pedestal building systems, and Sriram farm solutions, except sugar, have contributed towards the top-line growth supported by volumes. EIT was up 15% at Rs. 1694 crores. Chemicals, sugar, SFS, and fertilizers was a key contributor to growth. Thank you. The report for March 26 has come in at 13% as against 14% last year. Further, investments made in prior failures that were commissioned over the last one or two years are scaling up and will further strengthen the businesses and enhance the ROCE. The board has recommended a final dividend of 200% amounting to Rs. 62.38 crores in this board meeting. The total dividend for the year is 560%, amounting to Rs. 176.66 crores. As we successfully conclude our major capex cycle within our chemicals business, our fortified balance sheet and strong cash generation open a new chapter of strategic capital deployment. We are now exceptionally well positioned to explore synergistic value chain integrations. Across our broader manufacturing portfolio, I remain deeply confident in our ability to leverage these financial strengths to deliver sustained and responsible growth for all our stakeholders. That concludes my opening remarks, and I request the moderator to please open the forum for the Q&A. Thank you.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star then 2. Participants are requested to use kindly handsets while asking a question.

Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all, you may press star and 1 to ask a question. We will take the first question from the line of Poojan Shah

from Molecule Ventures. Please go ahead.

Hi, sir. Thanks for the opportunity. My first question pertains to the Vinal segment. So, just want to understand the broad aspects on... So the pricing what we should expect going forward. So we have seen the realistic prices of China is at 20-year low. And how do we see this situation impacting PVC business in general? Versus we are also hearing out that inefficient plants of PVC has been shutting down in China. So, how to read that in terms of considering the positive news flow of anti-involution versus the negative news flow of real estate not picking up?

Okay, so thanks, sir. Thanks for this question. I think the pricing, as I mentioned a little earlier, has been very volatile in the last 3-4 months. It's actually led to China dumping earlier, then the import duties in India were reduced. And thereafter, because of the shortage of availability, the prices went up again, but now they have come down again. So I think it's very difficult to give an indication of what are the prices going forward. I think because of the West Asia crisis, it's very difficult. We sincerely hope one small advantage is the devaluation of the rupee. That is giving the imported prices a little higher position. So that helps the domestic industry also. But I think the prices of PVC are very volatile. And if the West Asia crisis is sorted out in the next few weeks, it will still take some months before there will be any stability. We are hoping that from 1st July, the import duty of 11 percent, which was removed earlier, we hope that comes back. That will give us the advantage of a pricing for the domestic market, because considering the energy costs, industry today is under a lot of stress. So we are hoping that the government will look at it positively and bring back this import duty. And we hope the West Asia war is sorted out soon, so the stability in the world's geopolitical business environment. So, impact one doesn't know. China plans closing. Frankly, China's capacity is so large that we don't know what's closed, what's running, what's not. And they've been dumping for a long time, not only PVC, but many other products. So, we really don't know what the policy is going to be.

Got it, sir. And, sir, just to understand a broader aspect, we have been discussing about the MIP. And versus we also, the industry has also initiated ADD, but it didn't succeed in November, right? So are we going for, because MIP is a short-term phenomenon where we can be able to protect our margins or our industry structure, but on a longer term, are we still going for ADD in terms of to get a longer term protection from the government side?

Yes, the industry has taken it up. CPMA has had multiple meetings in the government over the last couple of months, including one which was held last week with the new secretary of chemicals who have come in now. And we have mentioned that, look, we gave the data for the imported prices for the last five years. In the last four months since the dumping started, the prices have fallen dramatically by almost $150 to $200. So we have suggested that you please revisit the ADD application will go again because it got rejected just some months back. MIP also is very much on the agenda. They have recommended a price, but that's pretty low. So we are actually talking to the government saying to please look at the MIP in a realistic manner and then recommend to the Finance Ministry. So dialogue is on with the government.

But sir, just to understand a broad aspect, considering the crude price has already been up, I understand we have been a carbide base, but just to understand as crude has already been up by a significant percentage, while considering the other ethylene-based root PVC manufacturers might not get their RM, and that's why they will always keep the inching of the prices. Again, the only negative side would be that China keep dumping because they have that carbide capacity. Other than that, it seems like it seems that price should sustain around 85-90 in PVC per kg or it would be difficult situation to call right now because all the scenarios are not been under one conclusion.

So, you are right, it is a little difficult. Our prices are ranging between 81, 82 and that range right now. But, you know, China dumping is coming at any time. We don't know at what price and what is the policy behind it. So, it is very uncertain. I think energy prices have gone up, not only gas but even coal. So, all these are impacting the cost of production. So, I think there is an uncertainty in this market.

Got it, sir. My last question would be in the portion of the dream region.

I would request to please rejoin the team.

Thank you. Thank you.

Thank you. We will take the next question from the line of Rohit Nagraj from 361 Capital. Please go ahead.

Thanks for the opportunity. Sorry for hopping on the PVC front. So one is that when do we expect the MIP to come in place? Because it's been since a while that the PVC EGD is now out of question. And the second question, in terms of the anticipated increase in import duties again post-June, is there accelerated dumping which is happening from China or probably some kind of inventory built up by the domestic producers at the lower prices? Thank you.

So, the MIP, actually, we are in dialogue with the government to look at a reasonable MIP. That is the conversation going on right now. The industry is representing again, giving the cost of production, giving all the data to the government of what is the reasonable MIP based on the parts prices, based on what's the China prices, etc. So that dialogue is going on. I think that's one thing. Secondly, the price stability no one can say because, you know, the uncertainty in terms of availability of the movement of material goods, etc. That is open and China can dump. And they are actually exporting to India quite a bit. In the last year, 50% of India's imports were from China. So the quantity was very large. So, we are in fact with the government in dialogue with the government. If this import duty is removed at the end of June, and we get the 11% back, that will be a saving grace and a real breath of life for the PVC industry. So, let's hope that happens. But the pricing mechanism is very open-ended. No one can give any commitment of any type.

So, thanks. So, second question is, again, on the caustic front, given that there is a sizable amount of azimuth capacity in Middle East, which has gone off-stream, how do you foresee the caustic balance in the global market? Is there a possibility of, again, that particular material, which was supposed to go to Middle East, can be routed to Asia, and that will have, again, some kind of an implication from the domestic pricing? So just your thoughts on this. Thank you.

Yes. So as we mentioned earlier in the call as well, the global caustic capacity is close to 109 million metric tons, and of course the demand is spread across globally. So there are always regional balances and regional dynamics that come into play. So you're right that some particular utilization in the Middle East has reduced. But we have to see how it all plays out. The unpredictability remains very high, and there are always many factors in determining the price of any commodity, really, including caustic. So we can't correlate it very directly, the impact of one demand area going down. But we do expect, in the long term, we expect, you know, the Indian situation to be quite robust, while there might be some short-term volatility.

Sure. Just if I can squeeze one more small question. What is the current ECU?

The current ECU is in the range of Rs. 32,000 to Rs. 33,000 per metric.

And just to add, this is ECU without including the flakes element, because some of the peers include flakes element as well. This is for live.

Sure, sure. Thanks a lot and all the best, sir.

Thank you.

Thank you. We will take the next question from the line of Ahmed Madha from Unified Capital. Please go ahead.

Yeah, thanks for the opportunity. First on cost take, is the export volume steady or has there been any impact because of logistics?

So, as a country, our exports have been increasing steadily over the year. In fact, India was a net importer a few years back. Last year, as a country, we exported over 600,000 metric tons of caustic. For us as well, if we look at the financial year, Well, in the last quarter, you're absolutely right. There is some implication, you know, which is there. But if you look at the last financial year, our exports have gone up significantly, and we are now exporting approximately 12% of our capacity.

And is there any caustic production constraint you see because of chlorine disposal issue? And is there more room to improve volumes for caustic soda as a whole for Fi27?

So, the unpredictability, of course, with the war in the Middle East is very high. And while not directly an implication for us, but a lot of our customers do consume products that come from the petrochem value chain. So, there can be an impact of that. But we do see that between domestic demand and global dynamics. We do expect at least our capacity utilization to stay robust in the coming year.

Sure. On the ECS, you have mentioned that the plant got fully commercialized from April. What will be the current utilization as of Q1, if you can say, and what utilization you are expecting for full year FY27? And also, in terms of margin profile at current prices with the full value chain, glycerin, and so on, what sort of margin profile one should consider for?

So, the ECH plant, as you rightly mentioned, was fully commissioned in April 2026. Now, actually, the plant is running at close to 60 to 70 percent capacity utilization, and we are ramping up the capacity. The product approval from customers has been coming in regularly, and so we expect a steady ramp up in the coming next quarter or two. In terms of the margins, it is not always so easy to say. For instance, crude glycerin price has gone up significantly. And while we do have refining capacity, so we refine our glycerin and then of course convert that into ECH. So the margins will depend again on how the raw material prices and how the finished good prices move. But overall, there has been an increase in the raw material cost and an increase in the ECH selling price. So we do expect, again, a healthy margin to continue in the ECH plant.

And for epoxy, in terms of volumes, how is it currently? And in terms of break-even for the acquired entity as a whole, what sort of timeline one should assume?

So, epoxy, as you would know, we acquired Hindustan Specialty Chemicals Limited in August, we completed the process in August 2025. So, it has been a couple of quarters now. We are in the process of doing smaller de-bottlenecks, some improvements. Safety focus areas, etc. So it is now, I think, running well. We are running at capacity. Of course, we want to increase the capacity of the unit. The board, as you would know, has approved a capex of 101 crore in its board meeting two days ago to enhance the formulated raising capacity from what was earlier 14,000. Tons per annum to 50,000 tons per annum. So this is a material expansion in the formulated resin capacity, which we expect to complete by Q2 FY28. And with the ramp-up of this, you know, we are very confident that the profitability of the advanced materials vertical will move Sure.

If possible, give a sort of a timeline based on the efficiencies you are trying to achieve and volumes you are trying to achieve, whether the break-even will be achieved in probably this year itself or you see it to be extending?

Yes, we expect to achieve break-even this year.

The way it will work is that the first 6-8 months we utilized to stabilize the operation. It was a loss making unit. I believe this year we should be a little better than break even because we are also, we've just expanded our formulated resins from 7,000 to 14,000 which Ariste was mentioning. So that will also improve our margin profile. It should be good and then, you know, we'll keep adding the cognitive raising capacity, which will, which are high margin and high returns. So that will, you know, change the face of this business that we've got into.

And for ECH, coming back again, can you quantify margin? I think a couple of quarters ago in the concord, you have given 20-25% range. Is that sort of a range one should assume for an epichlorohydrin plant?

Look, I feel, Amit, the way we look at, you know, because Baruch, where we have multiple businesses now, and each of these businesses are linked to each other in terms of their some or other free stock. Caustic going into it, chlorine going into it, hydrogen going into hydrogen peroxide, so it's best to look at what is the profitability of the entire setup, the entire chemical complex, and also because it's a complete value chain, something is down, something is high, so that's only, you know, it's best to look at how the overall complex is performing, and if at all it is not performing well, what is pulling it down. So I believe currently the way it is happening, if you see the last full year numbers, revenue went up by about 38%, profit went up by about 50%, EBITDA went up by about 50%. So that shows that one, the volumes that are getting added are helping the overall profitability of the complex. The other good thing that has happened is that before the start of this last financial year, The new products were contributing about 14% to the total revenue. Now the new products contribute about 34% or 35% and going forward this will increase. So that will also strengthen the whole complex. Like today we just talked about caustic soda and what really happened in caustic. I think it will be beyond that. So gradually it is gaining strength. There have been some technology issues and XYZ what we are now we have got over it largely. Some It is yet to be resolved. But then we are almost there, and we progressively see more stability and better earnings.

Sure, I get it. This helps. I was coming from the standpoint that for caustic, we generally take per-turn margins, and then in this, it's very hard to segregate. But considering you report as a whole chemical business margins, which were 20% for at EBITDA level for FI26, Do you expect, as a whole, that number to improve materially, considering the all new products you have added, or this sort of a range will be a number to take going forward?

You know, it will be hard to give a number on this, because it's a forward-looking situation, and the unpredictability with the global geopolitical situation, etc., is... But at least what we can say is we always look to run our operations and run our businesses in a very efficient manner. So we do expect that, you know, in case the raw materials and the finished good prices are reasonable, that we will make reasonable margins.

Question on the sugar side of the business. You have been very vocal about the industry support, and obviously there are a lot of challenges, and now the ethanol thing has probably become very critical. So, is it fair to assume that considering current prices of sugar, ethanol, and your cost of inventory, it will be very tough to make a reasonable margin in this business, and it's likely that we make some money, but it won't be material?

You see, yes, you're right, the margins are, currently they are different lower than what they were last year, but you know, again, given that the inventory levels are very low now, right, they are all-time historical low of about 4 million tons in the country, expectation is the prices should be a little better than where they are right now. This export ban announcement really does not make any impact, except for some sentimental piece for a very short tenor. So, I feel prices should improve a little bit. Margins may not be the same what they were last year, so there will be some shrinkage in profitability, but you know, it's not very significant shrinkage is what our estimate is.

Sorry to interrupt. I must have a request you to please rejoin the queue again for more questions.

Thank you.

A reminder to all, you may press star and 1 to ask a question. We will take the next question from the line of Manish Bhadane from 361 Capital. Please go ahead.

Hi, sir. Thank you for an opportunity. Sir, I just want to understand, like, we are into the ECH. So, how much ECH we are captively consumed to manufacture the epoxy resin? Like, currently, what it is, and in future, what it will be?

Our ECH capacity is 150 tons per day, so that's roughly 52,000 tons per annum. Our LER capacity, which consumes ECH, is a smaller capacity. So we do expect to sell a large percentage, close to 70-75% of our ECH in the market. That's the current situation.

Thank you so much. That's all for my time.

Thank you.

Thank you. Before we take the next question, a reminder to all, you may press star and one to ask a question. We have the next question from the line of Priya Mehta from Aquitas. Please go ahead. Hi, thank you so much for giving me the opportunity.

So, my first question is in regards to the Sriram Farm Solution business. In the last couple of years, we have made it really big, and I think our R&D efforts have put in place. I just wanted you to elaborate on what kind of efforts we are taking and what business potential we see out of this business in the next two, three years.

Well, as I mentioned earlier, Shizam Farm Solutions has three verticals. One is the seeds business, the other is the crop protection business, and the third is the speciality nutrients business. So we have research going on in all three of these verticals quite actively and aggressively. As you rightly said, the seeds business wheat has been a touchwood, a good success for the business, and is doing well. Even this year, in spite of the earlier rains and the heat, etc., etc., the optic has been pretty good. We are focusing on the crop protection also, where we have a tie-up with a couple of international companies to get molecules in, which we are doing in our outsourced processing plants, and we are making the product and selling that in the market for the farmers, which is also doing well, and we are continuously working on that, of getting more tie-ups, as well as our own R&D and the crop protection. In the specialty nutrients business, as you may be aware, we have a factory in Kota called Shiram X Mart, where we manufacture specialty nutrients. That is there, plus we get some more products from outside, plus we have an R&D. And as I mentioned in my opening remarks, we have made a couple of new products in crop protection and in specialty nutrients from our own R&D plus from outside, which have got a good response in the market. So our plan is to grow in all three. Got it, got it.

And the next question is in terms of Fenista. So Fenista, we've been doing excellently in the last couple of years and currently with the metal prices going up, aluminum also reaching all-time high. How are we passing on the cost and how do we see the margin going forward? Also, one question is in terms of margin and second is in terms of demand. Are we seeing any demand fallback since the cost has increased so much?

So, one is on passing on the cost to the customer. So, there are two types of customers. One is the retail customer, the other is the institutional customer. In retail customer, it becomes a little difficult to pass on the cost if, you know, although the contracts also have a shorter value and a shorter tenor. But then, it is difficult to pass down the cost there. However, in institutional clients, a lot of our contracts are made in such a way that there is a tolerance level, post which the cost is passed down to the builder. However, till the tolerance level, it does impact our margins. Now, in terms of your second question on demand, I think we are seeing good demand even now. If you see our Q4 numbers also, they were pretty good. So, we have had record order book. So, demand is pretty good right now.

Got it, got it. Now, my third question is in regards to the PVC business. Considering that currently China has been dumping, etc. In the current scenario, do you think prices will fall down to as, like, similar to 60-65 level, which were there in November, December? Or what kind of, because I am assuming that China will also be under energy cost pressure, then they would also likely increase the prices.

Well, what you're saying, we sincerely hope not. I mean, that is the thing. And also one is saying because freight, international freight and movement of goods is also not so easy now because of the disruptions happening across the board. So I think this disaster of 80, 81, 82, which is prevailing now, we do hope that it stays. It might go down a little bit. You know, this is also like a situation where if suddenly, you know, excess material comes in, it affects the market price straight away. But then after a couple of weeks, it can go up a little bit again. But it's very difficult to predict on any of these commodities what the price will be, but we hope it stays somewhat stable.

Got it. Thank you so much, Tom. That's it, Ramitra.

Thank you.

Thank you. A reminder to all, you may press star and one to ask a question. We have the next follow-up question from the line of Ahmad Madha from Unify Capital. Please go ahead.

On the Finesta margins, is there any impact on margins because of the acquisition of DNV, if you can quantify the number?

No, there is no significant impact right now. That's a separate entity, and we are still buying on the same arm's net basis that we were doing earlier. So there is no impact on the margins. The reason for that acquisition was more in terms of indigenization. Therefore, lead times improved. It's also about doing more R&D in-house to come out with the newer products on the Windows hardware. So I think we are progressing that well.

And, overall Capex, what sort of number one should consider for FY27 for the overall company as a whole?

So, that should be in the range of around 1,200 crores, including the normal Capex. As of now, whatever is in there, which will be, let's say, approved by the board, but we have a few projects in the pipeline as well. So, let's see how that pans out.

Okay, okay, got it, got it. And last question on the bioseeds, obviously, career placement should have started by now or something of that sort. So can you give some sense, just not company specific, but in general, what trends you are seeing across crops, cotton, paddy, maize? In terms of channel inventory, pricing discipline, off-take, if you can give some broad sense based on the trend you are seeing in the market.

See, as of now, placements are good, although they are apprehensions because of expected LN, you know. So the placements are happening. The only place where we are seeing some apprehensions... Beyond El Nino is on cotton because every producer in the country has huge inventory of cotton and therefore how the discounts will be passed and all that has to be looked at. Yeah, but otherwise it's a reasonable start to the season.

Thank you very much. Ladies and gentlemen, we will take that as the last question. I now hand the conference back to the management for the closing comments. Thank you, and over to you, sir.

Thank you. Ladies and gentlemen, thank you very much for your participation in our earnings conference call. As we navigate an evolving global landscape, we are actively fortifying our resilience and growth by one, driving operational excellence. We remain hyper-focused on optimizing our core manufacturing base, ensuring our operations are clean, agile, and capable of sustaining healthy margins across our portfolio. Two, deepening our value chains. We are strategically strengthening integrations across our business verticals to invest and unlock synergies and enhance our competitive edge. And three, accelerating digital transformation. Technology is the backbone of our evolution. We are embedding data-driven insights and automation into our daily operations to drive efficiency and sharpen our strategic decision-making. Furthermore, environmental stewardship is no longer a peripheral objective. It is the cornerstone of our capital allocation. By building greener, future-ready operations, we are securing sustainable long-term value for our shareholders. Thank you once again for your continued trust. Goodbye.

Thank you, members of the management. On behalf of DC and Sriram Limited, we conclude this conference. Thank you all for joining with us today, and you may now disconnect your lines. Thank you.