IG Petrochemicals Limited (IGPL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the IEG Petrochemical Limited Q1 FY27 Onyx 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 about the presentation come too. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company on the date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Pramod Bhandari, CFO, IGPL. Thank you and over to you, sir.

Good afternoon, everyone, and a warm welcome to all the participants. On the behalf of IG Petrochemical, we thank you for joining us today. We also have the SGA, our investment relation advisor with us. We trust that you have had an opportunity to give you our financial results as well as the investment presentation, which have been uploaded on the external exchange and also available on the company's website. During our discussion, we will be giving you a brief overview of the industry, followed by the IGPL operating and financial performance for the quarter and late June 2026. In terms of the industry, the overall domestic demand across several downstream industries is supported by the infrastructure expanding, manufacturing activities, and healthy industrial demand. As a result, the Indian chemical industry demonstrates resilience and reflecting a gradual transition from cyclical weakness towards a more stable trajectory. While the global commodity chemical market remains competitive, however, the geopolitical uncertainties have improved the operating environment in the domestic market compared to the corresponding previous quarter for the last year. Although the near-term volatility may persist, however, the industry's long-term outlook remains positive. Supported by the rising domestic demand, global supply chain shift, infrastructure growth, and favorable government policies. The chemical industry continues to operate in a dynamic environment. Ongoing geopolitical tensions in the Middle East have also created a greater term uncertainty for Indian economy, particularly through their impact on the energy prices, supply chain, and logistics. This has led to the volatility. In the prices of clear material, including the ortho-gyli, as well as several other chemical products across the chain. However, we expect these disruptions to gradually ease over the short to medium term and supporting a more stable operating environment. Against this backdrop, ICPL has delivered a strong operating performance during the quarter. Our business continues to benefit from a strong domestic presence, a well-established customer network across key end-users industries, primarily within a range of 150 to 200 km radius of our manufacturing facility. This localized customer base enhanced supply chain efficiency, fostered strong customer engagement and control to the stable demand. While certain downstream industries, served by IGPL, experienced temporary moderation in their demand over recent quarters, We are also now witnessing an increasing sign of recovery in several end-user segments. IGTL continues to maintain its legacy position in the Thalic Android market. We are among the largest producers of Thalic Android in India and among the largest producers globally. Over several decades, the company has built a strong reputation of manufacturing excellence, operating efficiency, product quality, and customer reliability. One of our key strengths is low cost manufacturing. Through our continuous operational improvement, efficient plant management, and disciplined cost control, we have maintained our position as one of the lowest cost producers in the industry. This enables us to navigate the market cycle more effectively while continuing to deliver the value to our customers and their stakeholders. In terms of the business performance and operating performance, Q1 FI27 was a strong quarter for the ICPA. We developed a healthy revenue growth along with a significant improvement in the profitability supported by the improved realization across all product portfolios. Our performance benefits to our continued focus on the operational excellence. As a part of our ongoing focus on strengthening long-term competitiveness, We have continued to invest in the equipment upgrade and maintenance to enhance the operating efficiency and support the future growth. Now, turning to the greenfield expansion, as we are aware that we have concluded the mechanical completion of our process as a plant in March 2026. The facility will have an initial capacity of 75,010 and are expected to start commercial production before September 2026. The plant will manufacture a broad portfolio of plasticizers, including Neop, DINP, DPP, and DIGP, getting to a wide range of round-stream industries. Several of these industries have a healthy domestic demand, with limited import dependence. This development represents a significant step. In expanding our value chain, strengthening product diversification, and enhancing the profitability, we believe that the product is a business offer, attractive long-term growth potential, and will become a meaningful contributor to IGPL revenue going forward. To capitalize on the growing demand, we successfully completed the deep water leaking of our DQ plant during the last quarter, increasing its production capacity. We expect this diversified product line to contribute minutely to our overall business performance. Over the next four to five years, and creating a more balanced and resilient revenue mix. In terms of the sustainability, it remains an intensive part of IGP long-term strategy, guided by our commitment to the environment and circular economic principles to continue to invest in the initiative that supports the sustainable and long-term value creation. Our CBG plant at Raichur is progressing well, and the project will support renewable energy transition. While creating a sustainable and diversified revenue stream. The project not only diversifies our business opportunity but also reinforces our commitment to sustainable industrial practices. In addition to the growth, we remain focused on improved operating efficiency across our manufacturing network. We have continued integrating solar power and other renewable solutions into our facility to reduce overall carbon emission intensity in our businesses and optimize energy costs. Furthermore, we have initiated the phase replacement of conventional fuel, solid LSFO, and diesel with the natural gas. This transition is expected to deliver multiple benefits, including improved energy efficiency, lower operating costs, and reduce emissions and have sustainable performance. Looking ahead, we remain optimistic about the growth opportunity ahead, demand across all key end users expected to improve, supported by the infrastructure development, manufacturing activity, and increasing industrial demand. With our strong market position, expanding manufacturing capability and diversified product growth, we are well positioned to capitalize on these opportunities. On our ongoing investment, product diversification and operational activities are expected to further strengthen the competitive position and support the sustainable, profitable growth over long term. We continue to execute our strategic initiative with the disciplined capital allocation. We remain focused on creating long-term sustainable value for our stakeholders. With this, we thank our stakeholder, investor, stakeholder for their continued trust and support. We remain committed to execute our growth strategy with a disciplined and deliverable, sustainable long-term value for our stakeholders. Now, coming to the financial performance for the quarter, for Q1 FY27, the company delivered a strong quarterly performance with the revenue rising by 30%, 2,625 crores, driven by the improved realization across all product segments. The revenue contribution to the non-pay was standing at 49 crores, led by a better realization of Malik and Raghad at DEP. Gross profit in the margin was around 207 crores at 33%. EBITDA was 120 crores compared to 13 crores for Q1FI26. EBITDA margin was 19.2% compared to 2.7%, reflecting a strong improvement in the profitability. Profit after tax for the potter stood at 71 crore, reflecting a significant improvement over the corresponding potter for last few years. India has extended the anti-dumping duty. I think the notification has come as recent as last two days back on the thalic antite, which is $40 for China and around $140 for Korea. That is effective for five years, effective from August 5, 2022. With this, I conclude my presentation and open the floor for question and answer. Thank you.

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 requested to answer while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Neera from Envil Belks. Please proceed.

Yes, sir. Good afternoon. I have a few questions to ask. So, sir, in our earlier conference calls, like, we used to say that the Indian demand for cellic anhydride is close to around 450 to 500 tons. So, let's say on a run rate basis for Q1, how has been the industry demand? Because you mentioned that there were some user industries where the demand was slightly subdued, which have now recovered. So, if you can just say, if we just…

So basically, there was an impact when there was a sudden jump in the prices of various petrochemical feedstocks, including Thalic, because most of the industries which we cater, like plasticizer, pigment, EPC, UPR, alkydrezine, they are not only using Thalic as a raw material, but also multiple other petrochemical feedstocks are used. So, because of that, there was some moderation in the demand we have witnessed because the pricing has gone up by 50 to 60 percent. While we have seen there is a moderation in demand in April and May, while June we have seen again the good recovery of the demand. So, the segment which has gone very well is the alkyl regime and the pain segment, while the segment which has impacted was the specialty chemical and the plastic. The similar demand which was prevented before the...

Sir, in terms of our production and sales this quarter, how was the situation in terms of when we compared to Q4 of FY26? So, if we see this quarter, if you can throw some understanding in terms of the production and sales part.

So, actually, in terms of the production, we are operating around three to three and a half plants, so we were between 40 to 45. For the overall sales, compared to the last quarter, the sales were 10 to 15% lower compared to the last quarter. However, the overall price realization was very high because the prices have jumped by 30 to 40% for feedstock as well as final product. That's why if you look at the revenue, the reflection of the revenue is basically indication of the higher price realization rather than the higher quantity.

Correct. And safe to assume that this run rate of 40,000-45,000 tons, which we have seen in Q1, and the demand improvement, what we have just discussed, there would be an uptick in the numbers in the quarters coming by.

Yes, we will see that there will be uptick and improvement in overall quantity of the production and the sales, as well as there will be the sales from the plasticizer, which we are turning to retard by the end of this month or early next month. So that volume will also be added. So we will see a good overall revenue, increment revenue, as well as the overall quantum of Thelic and plasticizer to improve. We have also improved our DEP because we have done the deep water making last quarter. So now we are running at a run rate of around 10,000 per annum basis compared to 6,000, 7,000 earlier.

Correct. So is that like between 49 crores of revenue from non-thedic business, how much was the DEP sales this quarter?

So DEP this time we have crossed highest ever in the quarterly basis. It was 28 to 29 crores for the DEP and around 70 to 18 crores of Malik.

Correct. The last question from my side, what was the gross margins this quarter, and if you can share for Q4 of FY26, that would be helpful. Thank you so much.

So, but typically, the gross margin for this quarter was around 32%, compared to the Q4, FY26, 73%. So, typically, right now, the margin is between $250 to $300. IG is making around $150, $120 extra. Because of the operating efficiency and the by-product, and since the prices were very high, and operating efficiency gave us some extra yield, that has translated into the higher margin.

Correct. What was this for Q4, sir, if you can just clarify?

32% gross margin.

No, no, sir, in terms of dollars per ton, like you mentioned, this quarter was 250 to 300.

Typically, for gross margin, industry was around 250 to 300. We were $100 or above that.

Got it. Got it. Thank you so much, sir, and wish you all the best. Thank you.

Thank you. The next question is from the line of Mohit from Shubh Lab Research. Please repeat.

Hi, sir. Hope I am welcome. Yeah, hi. Thank you for giving me a opportunity, sir. Sir, my first question is, since we have got the ADD approval once again from Minister of Finance, Correct. If you could please tell us, what's the lending price of China and Korea would be after the ADD? Can you repeat your question? I'm not getting your voice clear. What would be the lending price of France from China and Korea after the ADD addition?

So basically, whatever is the price today, $40 will be added to China and around $140 to Korea. So basically, whatever is the price in China and Korea, it added four things. First, fate, transportation cost, the insurance cost, then the port cost, then local logistic cost, then the forex hedging cost,

plus the duty, which is import

duty, which is already there in some cases, then the anti-dumping duty of $40 and $140. So, typically, if you ask me today, that today, if the price is, say, let's say, assume today, price is $1,000, so it will be around $11,000 to $1,070. Oh, depending on what different you archive, around 10 to 15 percent higher. Oh, very clear. Particularly, Korea and China will be, because there is already a duty, import duty in some of the cases. So, according to these four costs, if there is an applicable of import duty, it will be applicable, and over and over, anti-dubbing duty will be applicable.

So, very clear, sir, very clear. Also, sir, can you tell us what percentage of high-time revenue? It comes from paint and specialty chemicals. I am asking this because we are seeing good growth in both industries. Also the growth given in these industries, if you can provide some guidance also going forward, what would be the volume coming from?

Typically, we were selling around 20 to 25 percent for the paint industry in terms of the quantity of thallic goes to and it maintained during even Q1 Fi27. So, for specialty, we were selling between 4 to 5 percent and it remained 4 to 5 percent.

Okay. And are you expecting some volume increase from the paint industry?

Yeah, yeah, because there are a lot of new players entering into the paint, and the segment is usually not only for the two-wheeler, four-wheelers, but there are demand growing across all the paint segments, and since infrastructure is being developed in India, we expect that demand to grow between 8 to 10%.

Okay, so very fancy. And so, my next question is on plastic side of the plan. Since we have done the mechanical completion and we are just getting it ready to start from September, can you give some idea on how customer building, clients' scrutiny and approvals are going on?

So, I think all approvals are fairly in place. We are planning to start probably either in August or early September. And we expect that we will start with around 1,500 to 2,000, and we expect that around 2,000 to 2,000 ton per month, we will be able to sell for the balance period of six months. That is what our target is. So it will generate roughly a revenue of 2,850 to 300 Crohn. Gradually, over the probably next six to nine months, it will reach to a capacity of 50,000 to 75,000 ton.

Okay, sorry. And sir, if also, can you please share the end-user industry, which we will be focusing on now, for the plasticizers now?

I think all the plastics users, which is some of them are Thelic and Malik customers. The particular industry will be leather industry, it will be the cable industry, it will be the other plasticizer industry. It's across, I think, wherever you see the plastics, it's all the result of the plasticizers. So, we will be focusing mainly on the cable industry, which is DINP and the DOP, which goes for the various plastic modules. These are the key focus areas, and since it is a batch processing, we will be producing based on whatever is the requirement in the market or demand in the market. So, our production is just fungible. We will be able to produce based on the requirement in the market.

Thank you. Thank you. It was nice to be here. Thank you. Thank you.

Thank you. The next question is from the line of Rhea Mehta from Equities Investment. Please proceed.

Thank you so much for giving me the opportunity and congratulations on the set of numbers. Thank you. I just wanted your input on the current quarter results. What would be the amount coming from inventory gain? There is a lot of disturbance.

So inventory gain as such we have not concluded of course, there are inventory gain available because at that time when we were in April, there was a lot of inventory was spending at our end at the barge and then that inventory of 5,000 to 10,000 tons which is available at a lower cost has been sold at a higher price. So typically whatever is the inventory loss which we have taken in the nine months has been able to, we are able to cover it up in the this current quarter. Right.

What would be the amount if you could help me out?

I have not calculated it specifically, but you can say it's raised between 10 to 15.

10 to 15 crores.

Okay.

And in terms of volume, we were always driving for 50,000 tons kind of volume to be done. However, this quarter we've done 40 to 45,000. So, is this because of demand impact?

I think it is not only the demand, because you are aware that there are certain exports we are not able to do because there is a logistic transition in the market. The containers are not available. There are a lot of other geo-products. Typically, we sell around 15 to 20 percent to export. The export volume was around 7 to 8 percent or 10 percent. So that is one of the reasons. Some of the industries we are able to sell, but it has been not taken into, like it has been at the end of, say, it has been sold at the end of June. And when our order is actually on delivered basis. So if we are selling in the last five days, it's delivered in the first week of July, then it is considered in the next quarter.

So, overall for the year, we are still there at around 5 lakh ton, right?

2 lakh ton, not 5 lakh. We are guiding again for the 2 lakh ton of plus minus 2 to 3 percent on either side. So, 2 lakh ton is intact.

Yeah, because I think that is a flat number since last two years.

Yeah, yeah, I know. It is expected to improve once we start the Plasticizer project, and if the Plasticizer project is expected to grow in terms of their quantity and the sales, then automatically Thalip will also grow in overall sales.

And for the full year for Plasticizer, we would be able to do around 500 odd crores of revenue, right, at full capacity utilization.

At full capacity utilization of 75,000 crores, it will generate a gross revenue of around 1,000 crores, but that will be the gross revenue, and net revenue will be around 600 crores, because 350 to 400 crores is metallic, which will be...

Sorry, net would be how much? You are not orderable.

Net revenue, just a minute, net revenue will be between 500 to 600 crores, because there is a higher prices for plastic sizes right now.

Right, right. And also, going from this, how much time will we take to ramp up the capacity? When will we be able to complete full speed? Where a processor, where it goes into testing phase with companies, etc. And what would be the typical time frame?

For this year, particularly, for the remaining six months, we are targeting around 2,000 to 2,500 tons per month. So, for six months, it will be between 15,000 to 20,000 tons for a balance period of FY26-27. Then it will grow up to 50,000 to 60,000 or 65,000 in the next year. That is our target. We are planning to achieve it. Okay.

Got it. Now, in terms of realization, you mentioned that it was up 30 to 40 percent. This is for Thalic, right? And how have you realized it now?

Yeah. So, I think realization remains at an elevated level because the overall demand in the market is good since everybody is using 60-65 percent of their capacity. So, overall supply is also limited in domestic market. So, an import is hardly happening, happening at a very, very little quantity. So, right now, whatever is the demand is fitted by the domestic players. And the margin remain between 250 to 300 level right now. Which is on a higher side, because there is a lot of geopolitical tension. And because of that, all the feed stocks of the petrochemicals are at higher price. When the prices of the raw material is high, it ended up a higher realization for the final product. And second point, we have some operating efficiency. Because of that, we are getting some extra yield that is also being sold at a higher price. So, there is a double benefit happening on that account.

Got it. So, got it. Even after the war situation easing out, we have not seen spreads reducing is my takeaway, right?

So, I think we should not take any extraordinarily higher or lower spread. I expect between $200 to $250 would be the average spread, which is the last 10-year average. Right now, market spread is between $250 to $300, and IG make $100 over and above because of operating efficiency and the byproducts.

This is the EBITDA per ton you are mentioning?

No, I am talking about the gross margin, dollar per ton.

Can you help me with the EBITDA per ton, which you used to mention that last year around, it was around 150 to 200, 100 to 150 for the last Q4, and then we did 100 quarter extra.

Typically, if you remove the advantage of the yield, as well as the byproduct, which generally cover around 80 to 90% of the operating cost, so whatever is the margin, remain EBITDA margin. So if you take only the thalic margin, you will be able to get the EBITDA margin.

Actually not, but there are some disturbance coming.

You are not able to listen to me?

Yeah, there are some disturbance.

Sir, I am able to hear your voice properly.

There may be a distribution factor, right? I am saying if you take our gross margin and reduce the operating cost, converging cost and other cost, converging cost is around $150 to $160, you will be at EBITDA level, and then there is another cost, which is interest and other. So, total cost for us is around $150 to $200. So, typically, when you are making $400 margin, including the byproduct and yield, and remove $200 to $250, you will end it up at $200 for the EBITDA margin in the current world.

Sorry to interrupt, Rimaam.

May we request you to join the question queue again? Thank you. The next question is from the line of Chirak from Keynote Capital. Please proceed.

Yeah, thank you for the opportunity there. Pramos, just a couple of clarification. You said that on a QOQ basis, our volumes are down about 10 to 15 percentage, right? That means our volume for the quarter is around 46 to 48,000, not 40 to 45, right?

I would not like to comment specifically. It means between 40 to 45. Okay, 40 to 45.

Secondly, our spread currently, you said, is about 250 to 300. A normalised decadal event rate is about 150 to 200.

200 to 250 is average for 10 years.

So currently, even in the month of July, we are seeing this spread to be around 250.

Yeah.

Got it. Similarly, last year or in last year, 6 to 12 months time frame, where Malik and I did prices were around $600 to $700 per time. If I'm not wrong, it is around about $1100 and are sustaining at that level.

Correct. Right. Because all feedstock prices have gone up, apart from Thalik, Malik prices have also gone up.

Got it. And so earlier, the reason for the decrease in magics and hydrate prices was there was significant capacity built up in China. Are we seeing any kind of constraints taking place, due to which there is a supply-demand mismatch, and we are now back to a normalized level of capacity?

It is happening because China has built around 2 million-plus capacity in Malik, while other chemical prices have gone up by 50-60%, Malik has gone by 30-40%, and then again come back to 10-20%.

So, will you try to assume that this would be the normalized generate now?

Generate for what we are talking about, production? I think still the global market is in oversupply mode. It will take some time because China overcapacity is yet to be fully utilized. Why? Because they have decided to come up with a plan of BTO, PBAT and PBT. Now the government has extended the deadline for single-use plastics for PBAT. So that capacity which was built for that purpose is not utilizing and they are selling the mallet into the international market. That has actually depressed the margin overall. If you look at history, typically Mali's prices are 20% higher than Thalic, and right now it is 20% or 25% lower than Thalic. The reason is the oversupply from the Chinese market.

Got it. Got it. No fair. Just last one question from internet and go on back to you. As there will be some dry trial runs already going on the plasticizer plan, I just wanted to check the quality as per the requirements of client. Are we able to match that? And as you're saying that we would be able to sustain the run rate of like 15, 15K, that would be about, if I'm not on a cross level, it would be around 200 to 50K if I'm not on. So, this is the expectation for the 202.

How will it break out? For this quarter, for the balanced six months. Yeah, for the balanced six months. Because by September it will be starting and then either end of August or September only. And then six months we have taken it 2000 to 2500 and depend upon the production. The quality and all issues that I think we will be able to respond to you over the next one or two quarters rather than doing it today. And generally, it's a commodity product and quality for all the plasticizers remain same, like thalic. If you ask any thalic producer, it's a similar quality for all thalic across the board. Similarly, it's a commodity product like BOP, EDI, and the others.

I just wanted to complete the question, sir. I was trying to understand how will it drill down to the profit level because we are backward integrated. This should lead us to have improvement in operating in gross level margins, right? Because we would be consuming the product sales and selling it for this. So, how will be the incremental gross profit margins and EBITDA margins would look like? And so, all the costs related to plants are already incurred or it will come with quotas?

No. Let me explain you. So, typically, the plasticizer margin is around EBITDA margin is between 8 to 10 or 12%. Right now, it's 15%, but take 10 to 12%. At a net level, it is 4 to 5%, which is the average of the last 4-5 years. But since the asset turnover, we have invested around 180 to 200 crore, asset turnover of plasticizer is five times. So whatever margin we are making, it will be translated into the higher path. Suppose you touch a 75,000 ton of the production and your sales is 1,000 crore, on that you will be making around 50 crore. So for investment of 200 crore, your payback period is around four years. And for the purpose of calculation of plasticizer margin, we are taking the average realization. cost of the Thalic at which Thalic will be transferred to the plasticizer. So whatever margin of the Thalic, that will remain with Thalic and at a market rate, Thalic will be transferred to the plasticizer project and then margin of plasticizer project will be calculated.

So will it be fair to assume on a longer run rate, margin used to be about EBITDA levels 20 to 30, 20 to 14 percentage, we are going to add about 300 to 400 BIPs on EBITDA levels.

I think, let's wait, rather than commenting on that, let it be reflected in the performance. I would not like to comment about the future. But, having said that, there will be a saving because Thelic, which we will be using in-house, there is no transportation cost, no bagging cost, and there is no cost to convert into flex. So, that will be saving on account of Thelic uses in plasticizers.

Any plasticizers, what's the last matter in the room?

10 to 12 percent, I mentioned it to you in EBITDA.

Gross, is it possible for you to stay in gross?

I think typically, we have not operated right now, but typically in the market, if the margin is between 15 to 18 percent, and EBITDA is 10 to 12 percent. Got it.

Thank you so much, sir. I will get back into here.

Thank you. The next question is from the line of Rohit Sinha from Soniji Securities. Please proceed.

Yeah, thank you for taking my question, sir, and congratulations for a good set of numbers. So, one question is, as we are seeing that volumes are pretty much stagnant for some quarter or some year for us on a quarterly basis, and as you also indicated, we are operating at a pretty lower level as of now. But once we are through with the plasticizer and we are operating higher level of utilization for overall plant, I mean, would it be the existing customers where we would be pushing volumes, or we would be also looking at newer customers to add-on, and would it be more of a plasticizer volume increase, or it is both Thalic and plasticizer volume increase?

I think it's a good question. Right now, we are... Targeting around 2 lakh ton. And going forward next few years, you will see the overall volume to go up to food cycle 240. And there are two parts to that. First part, overall the plant capacity utilization will improve. Second, the plasticizer will be ramp up 250 to 75,000 times. And third, there are a lot of other opportunities in the export market, including GCCA. I think the Europe has also opened up in terms of the FTA, which has been signed and executed by the Indian government, the UK government. Similarly, a lot of FTAs are signed, and there will be a better global opportunity for us to supply the Thalic to various countries where there is a FTA signed. So when I look at, we generally look at, from the point of view, what is the total capacity utilization of plants. Right now, we are between 65 to 70. We hope we will be reaching between 80 to 90 very soon.

Okay. Okay. Got it.

Thanks. And secondly, as this extension of ADD was close to $40 per turn, but currently if we see the prices are at the higher level, so that makes a pretty low percentage in terms of ADD rate. But I think, I mean, just wanted to understand whether the price correction in Thalic would be benefiting us or will the higher price would be benefiting us? Describe this ADD.

So I think ADD is one part, but we hardly buy very few quantity of Thalic Android from China. Sometimes Korea and Taiwan is number one and two, China is number three. So, I will not see it, but because government has not given as a percentage. It is given as a fixed dollar per ton. For company, higher prices are always better because you are operating efficiency because of that extra yield you had sentencing that you will be able to get at a higher price. If the prices are lower, then the realization for extra yield will be lower. So, if you ask directly what is beneficial for the company, it is simply if the prices remain at an elevated level, it is more beneficial for the company. However, if moderated, then you will see the more volume getting into the market, and then plasticizers and other businesses will drive the overall volume. Growth for Thelic as well as plasticizers.

Got it. And second, sir, as plasticizer plant is about to commission, just wanted to know, I mean, going forward, what sort of quarterly run rate would be there for us on the interest and depreciation side?

So, it will be around annualized basis, around 10 crores for plasticizers, and similarly, the depreciation will be between 8 to 10. This is a similar rate, around you can say around 20 crores plus minus 2 or 4 percent annualized basis. So, for a quarter, you can say 5 to 6 crores.

Okay. Okay. Got it. Yeah. That's it from my side, sir. Thank you, and best of luck. Thank you.

Thank you. The next question is from the line of Shirak from...

I just wanted to get your thoughts on the spread, sir. Now, sir, this crude is very volatile, sir. What is your view on the spread, sir?

So, I would like to give the futuristic view on the spread. But the crude is very volatile and so as the NAFTA and other free stock. So sometimes it's go 5 to 10% up and someday it is 5 to 10% down. So as a strategy, we wanted to operate at a minimum inventory so that we are not having a much impact on what is the volatility. So that means whatever is required, we maintain minimum inventory, produce and sell the crops so that we can maintain our operating margin and not much impacted because of that volatility. And for margin, I think that if margin right now between $250 to $300, I am not seeing that the war to end, and I can't even predict it. But so long as the crude remain elevated level, all petrochemical products prices will remain high. So similarly, that margin will be maintained at that level. Then it will be probably moderate in line with if there is a full settlement between the US and Iran, then everything has to come probably next three to six months in the normalized level.

And sir, how much was the freight supply issue contributing to the jump in freight? Was it a significant part?

I think freight, I will tell you there are two or three important data points in the freight. The first is the container freight has gone up by 30 to 50 percent, shipping cost. Then there is a congestion, because the state of Hamras is closed for most of the period, there is an extraordinary congestion at the Muzra and the JNPT port. The congestion for JNPT is around 10 to 15 days and Muzra is around 50 to 20 days. Because of that, the company who are importing and exporting also need to bear a lot of damages. And there are 1,500 plus ships in and around the state of Hamras. As well as the Red Sea. So, it has created a full disruption and added a cost of around $80 to $120 for most of the petrochemical products. So, it's not easy to import. If you are importing with the assumption of 30-45 days, it takes 60-90 days along with the increased cost. So, right now, I think there is a big disruption happening in the industrial market for freight, shipping and containers.

Yes. Similarly, our working capital cycle then will have similar impact, right? It would have gone up.

Working capital cycle for export has definitely gone up because it takes time to export the product. And similarly, for the import of the raw material, which 40-50% we are importing, that cycle has gone up because it takes now around 30 to 45 days to bring the raw material. But in domestic market, we maintain the similar cycle, which is 30 to 40 days average. We sell in 30, 60 days, cash 30 and 60 days. In domestic market, it remains same, but for the import as well as export, it has gone up.

Sir, just one last thing, sir. The audio was inaudible. So, just wanted to understand your contribution of plasticizer and CBG plant for FY27, sir, in terms of top line or EBITDA.

See, I think I will give you only the quantity, EBITDA and the pet number, I think you leave it to for next two quarters. We expect around 2,000 ton every month beginning from October, September, October. So around 15,000 to 20,000 ton. And the CBG, we are planning to start somewhere in October, November, December quarter. So hardly any negligible amount will be there for this year. Probably next year, we will see the full effect of the CBG project. The only thing which I need to add is government has yesterday announced the new CBG policy in which the capital subsidy has been increased for typically by 40 to 50 percent and the prices are up by 33 percent for the CBG being produced and sold in the domestic market. It was announced yesterday, new CBT policy.

Okay, thank you. Thank you.

Thank you. The next question is from the line of Gunit Singh from Countercycling PMS. Please proceed.

Hi, sir. Thank you for the opportunity. So, what were our spreads in Q1 with the low-cost inventory that we had?

You already mentioned the market was 300 and the number was around 400, which you can easily calculate from the revenue number and the profitability number given in the financial results.

Okay, thank you very much. And what are the spreads currently? I mean, with the higher cost inventory or if we procure the raw materials now?

I think the spread, I have mentioned it earlier in the call, spread is around $200 to $250 right now in the market. And we are making extra because of the by-product and extra operating efficiency.

Well, it's right now, it's 200, 250, and with the lower cost inventory for Q1, it was around 300 for us.

There is no lower cost inventory for this quarter, because our inventory maintain at a

minimum level, and whatever we are buying, and we are generally selling.

We are maintaining the minimum inventory in our system, right now.

Got it. So, I mean, as on date, I mean, we are seeing the same spreads as we saw in Q1. Is that the same standing? More or less same. Got it. So you mentioned that over the last 10 years, normal spreads have been $150-$200 itself.

Around $200-$220 average for the last 10 years.

Got it. So, the current scenario is more or less not the upcycle, it's just the normal case scenario.

It is slightly better than the average. It's not extraordinarily high, it's slightly better than the average.

Got it. And how are, I mean, if we compare our prices to prices from Chinese or Korean imports, can you help me understand how, how much difference is between them?

Hardly any difference because if you do import from these guys, with the freight, insurance, transportation, congestion, and other things, and including the duties you count, more or less, I think... Between 3 to 5% because we are able to sell just on time and they take 30 to 40 days. That's all. Otherwise, there is hardly any difference for the import and the domestic price.

Got it. So, this 40 to 140...

Sorry to interrupt, Mr. Guneet. May we request you to join the question key for a follow-up question as there are other several participants waiting for that one. Thank you. The next question is from the line of Aditya Khetan from Smith's Equity. Please proceed.

Thank you, sir, for the opportunity. Just a couple of questions. Sir, manufacturing of thalic anhydride via OX route and versus the naphthalene route. Uh, any sort of, uh, in the last two to three months, was there any instance like manufacturing via naphthalene had became more, more profitable? We know like, because the conversion cost in naphtha basis is two times. Correct. But because the crude prices itself jumped, so that fixed cost of naphthalene got recovered and manufacturing via that route could have became profitable. Was there any day in the last two to three months wherein this route has became more Profitable and customers, have they shifted on spot, but because the trend didn't materialized for a longer term, that didn't shaped up. I think there are two points.

First, India doesn't have any naphthalene-based thalic production facility. Generally, all the thalic facilities converted 90% to 95% in the world on the ortho-gyline basis because it's efficient, energy efficient, as well as the operating efficiency is much higher. There are some of the Chinese guys who are operating in China at a very lower capacity. They take the advantage of spread available between OX and Naftaline. It's not Nafta, it's Naftaline, which is the byproduct of steel. So we have not witnessed in the last few seasons any import on that account happening in India because India has come with some standard which generally doesn't allow these guys to sell the product to the domestic market. So, I have not seen any impact. For the prices, I have not checked. Of course, the last six months naftaline prices. But two years back, there was a spread of between $250 to $300. Then it was profitable. Of late, I have not checked, but I have not seen any import of naftaline-based delic in the domestic market.

Got it. Sir, on China, like we have seen like, so taking a trend of the last 10 years, so earlier, so South Korea was the largest importer that overtook China, overtook it, and now it became the largest importer, like some 50-60% imports coming from China. So any idea, sir, if you can give like over the last 10 years, how much capacity addition happened in China? And was that through the UX route like you mentioned? And second, like recently also like Chinese government is rollbacking all the subsidies which they are giving out. So, on thalic anhydride also, is this similar trend working or like, so the duties are still intact?

No, no, there are two parts. First, right now, China don't have any new capacity which is based on Namsanin. It is the old 30-40 years old capacity. And China is actually withdrawing all the benefit given to the various products. Specifically, they have not published any list which product they are giving what benefit. It is in the public knowledge only. That it is on the public knowledge. It is not in the public knowledge that it is available to a specific product because generally it is done inside the China. They don't publish it. So nobody is actually aware of that. What is the benefit or the benefit they are offering to particular chemical or chemistry while doing the export to the other countries? So it is general perception that they are giving some benefit, but it is not in public domain or published anywhere.

The capacity additions in China, if we can get the data, like how much has been added in South Korea?

I don't have right now, but last two years, one or two plants of around 2 lakh ton has been added in China. I will give you the detail of two plants separately. I don't have right now handy with me.

Got it, sir. Got it. Thank you, sir. That's it.

Thank you. The next question is from the line of Karan from Dam Capital. Please proceed.

Hello. Hello. Mr. Karan. Yeah. Yeah. Yeah. Hi, sir. Thank you for taking my question. Congratulations on a great set of numbers. So I've just got two. One, I think we've done about 112 crores of EBITDA in Q1, and I think 68 crores, 67 crores in Q4. Correct. Given how the entire geopolitical situation panning out, how do you, what is the sustainable run rate for us from Europe?

So, your question is, how much run rate will we be able to maintain for the production or the EBITDA or the pet?

On the EBITDA level.

So, EBITDA right now is around 112 crore and including the other income 120 crore, which is 19%. Next few quarters, I think the next quarter is also looking good. I will not be able to predict for the entire year, but compared to the last year when we have a full year EBITDA of 130 crores, this quarter we have done 120 crores. We expect next one or two quarters is also looking good, but it all depends upon the geopolitical and all that. Typically, when we assume that we will have a or four plant operating or fifth plant operating along with the plasticizer, we will have a similar type of EBITDA every quarterly basis. And so you depend upon the margin, of course, subject to the margins. Sure, sir.

And if I could just look at purely from the fan business, then how do you look at your quarterly runnit? Are we comfortable in saying that at least for the next few quarters, it should be higher than what we did in Q4?

So, I will not be able to comment for that at quarter. I can tell you that if EBITDA remain, margin remain between $200 to $50, then our EBITDA will remain between 15% to 16% level.

Understood. Okay. And so, second, reportedly, is there some, how is the raw material availability more from an orthodox ID perspective? Are we running our production at optimum crystallization? So, raw

material is available in the international market. Of course, the prices are high. Typically, we buy 40 to 50% in domestic market, 40 to 50% in import market. The challenge in the import market is the delivery. Because generally, it takes 10 to 15 days or 20 days. Now, it is taking 40 to 45 days, sometimes 50 days. So, that timeline is always there. And similarly, the cost of the freight and transportation has gone up as I indicated earlier. So, it's raw material is available to bring the raw material to your country or to your plant is something which is difficult in this geopolitical scenario. But having said that, the raw material is sufficiently available in the industrial market. So, you need to plan everything in advance.

Do we have sufficient inventory to maintain optimal neutralization for plants?

Yeah, yeah, we have sufficient inventory. We always maintain sufficient inventory.

And just for my understanding, how much, typically, how much inventory to be maintained of OrthoJani?

Typically, as a company, we maintain the OrthoJani inventory of 5 to 10,000 crore ton average, which is typically 15 to 20 days of inventory required for the plant.

Okay. Thank you so much. Thank you so much. Thank you.

Thank you. The next question is from the line of Rhea Mehta from Equities Investment. Please proceed.

Ms. Ria, you may proceed with your question.

You did no response from the current participant. Due to time constraints, that was the last question. I would now like to hand the conference over to the management for the closing comments. Over to you, sir.

Thank you very much, everyone, for joining this call. We appreciate your time and sharing interest in our company. In case, if you have further questions, please contact SGA, our industrialization advisor, or you can send directly mail to us. We will be happy to respond. Thank you very much. Have a nice day.

Thank you. On behalf of IT Petrochemicals, that concludes this conference. Thank you for joining us, and you may now disconnect your line.