Lords Chloro Alkali Limited (LORDSCHLO) Q4 2026 Earnings Call Transcript

Ladies and Chairman, good day, and welcome to the Lord's Chloroalkali Limited Q4F526 Earnings Conference Call. As a reminder, all participant lines remain 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 the operator by pressing star, then zero on your touchstone telephone. Please note that this conference is being recorded. I will now have the conference over to Mr. Smetjia from AdFactors PR for opening remarks. Thank you, and over to you.

Thank you. Good afternoon, everyone, and thank you for joining us on the Q4 and FY26 Reserves Conference Call of Lost Chloroalkali Hymn. We have with us Mr. Ajay Bhirmani, Managing Director. Before we begin, I would like to remind you that certain statements made in today's discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available in the Q4 and FY26 results presentation that has been uploaded on the stock exchanges and website. I now hand over the call to Ajay, sir, to begin the proceeding. Thank you, and over to you.

Thanks, Mitch. Good afternoon, everyone. I'm Ajay Vermani, Managing Director, Lord's Prove LTE Limited, and I welcome you to Q4 results and the FOLIA 26 earning call. I am pleased to report that the financial year 26 has been a landmark year for Lord's Door Wealthy Limited. The hard work and the disciplined execution across our operations have translated into strong financial outcome that reflect the structural improvements we have been building over the last, you know, one or two years. Our total income for financial year 26 stood at Rs. 393.1 crores, a growth of 44.62% year on year. And the profit after tax for the full year is Rs. 28.49 crores, this is PAT, which represents a growth of 360.9% over financial year 25. These numbers reflect the power of operating leverage when volume growth is combined with cost discipline. The foundation of this performance was healthy volume growth. Arcaustic soda-like volume for the year reached 84,690 metric tons, up 29.7% over financial year 25. In Q4, financial year 26, specifically, volume stood at 20,935 metric tons, up 8.72% year-on-year. This growth was driven by a strong demand for our key end-user sectors, albinium, paper, textiles, pharmaceuticals, and our ability to service this demand reliably from our expanded production capacity. Friends, on profitability, our full-year EBITDA came in at Rs. 66.38 crores, a 159% increase over financial year 25. And with the EBITDA growth of 16.89%, an improvement of 747 basis points year on year. For quarter four, financially at 26, EBITDA was 13.72 crores at a margin of 14.03%, up 141 basis points year on year, and 247 basis points quarter on quarter. The sequential improvement in Q4 margins reflects both better operational efficiency and our ongoing renewable energy integration, despite a headwind from higher electricity rates that came into effect on October 25. On Q4 specifically, total income was Rs. 97.75 crores, up 22.3% year-on-year. Chlorinated paraffin wax also contributed meaningfully to revenues during the quarter alongside the steady growth in caustic soda live organs. Fat for Q4 was Rs. 4.39 crores, up 68.64 crores over quarter 4 financial at 25. While Q3 financial at 26 saw elevated margins north of 20%, quarter 4 was partly impacted by higher power and fuel expenses owing to the great electricity rate ratio. We expect this headwind to meanfully ease 1.21 megawatt solar plant in Rajasthan is commissioned around mid-June 26. On the balance sheet, our shareholders constricted at Rs. 242.52 perot as of March 31. Up from 181.67 a year ago, reflecting strong earnings acceleration during the year as well as successful completion of our warrant issue, which has strengthened our equity-based and financial flexibility. The total assets stood at 478.7 crores, the long-term debt It was 96.37 crores and short-term borrowing 65.58 crores, resulting in a debt-to-equity ratio of approximately 0.67x. Capital work in progress stood at 43.85 crores, reflecting the ongoing 21 megawatt solar project and the cost of solar and CQW capacity expansions. Hence, energy remains our single largest cost component and our biggest labor for long-term margin improvement. Popper and fuel costs accounted for 61% of our production cost structure in financial year 25. Through the commissioning of our 15 megawatt solar plant in Beekan Air and 10 megawatt hybrid wind solar group captive project in Beekan Air, we have brought the ratio down to approximately 42% in financial year 26. This is a meaningful improvement, and we are only pathway through our renewable energy journey. Our 21 megawatt solar plant is expected to become operational by mid-June 26. Once commissioned, our total captive renewable capacity will be 37 megawatt plus 10 megawatt from the group captive project, taking our renewable energy share to between 40 to 45 percent of our total power requirements. This will further reduce our energy cost per time, improve our EBITDA margins on a sustainable basis, and reduce our carbon footprint. We believe this positions Lord Slodo as one of the most energy-efficient caustic soda producers in India. On our CAPEX program, our total outlay of Rs. 315 crores across financial year 24 to 27, 28, continues on track. The first race of Rs. 150 crores covering the 90 TPD caustic soda expansion and the 16 MW solar plant. And also, the equity-infusion to 10-megawatt hybrid project has been completed, and we are now executing the second phase of our captive solar plant of 21 megawatts, the TPW capacity expansion from 50 to 100 ton per day, and the further 100 ton per day expansion of fossil solar plants. So, post-expansion, our total installed capacity will be 360 ton per day. Since we will be re-commissioning another, an old 40-run plant, otherwise the capacity would have been 400, but, you know, the resulting capacity will be 360, adding 100 and deducting 40, so it will be 360 on Thursday. These projects are being funded through a mix of internal accruals and debts, keeping our balance sheet healthy and leverage at manageable levels. As I mentioned, the debt-equity ratio is pretty healthy. From a strategic standpoint, what we have achieved in financial year 26 is not just a strong set of numbers for a single year. It is the confirmation that our thesis of building a green, efficient, and scalable chemical company is working. Our renewable energy investments are delivering measurable cost savings. Our capacity extensions are being resolved by a healthy demand environment. Our CPW business by converting chlorine, historically a volatile by-product, into a value-added downstream product is improving our product mix and providing greater stability to the overall business. And our focus on serving the North Indian market, where trade economics protect our pricing power, continues to be a structural competitive advantage. On the macro front, on the industry environment, the Indian plastic soda industry, with an annual capacity outlay of 6.4 million tons, accounting for 5 to 6 percent of the total global capacity, continues to grow in line with India's GDP trajectory. India has now transformed from a net importer to a net exporter of plastic soda, which reflects the competitiveness of our industry. Looking ahead to financial at 27, we are optimistic about the demand environment. Realizations for caustic soda lie have shown improving trends on a quarter-on-quarter basis, supported by strong domestic demand across the key and user sector, as well as global commodities backdrop. We expect this position momentum to sustain. As we enter financial at 27, we remain focused on three clear priorities. Operational excellence, energy cost reduction through our renewable initiatives, and disciplined capital allocation. The commissioning of our renewable power infrastructure over the coming months is a significant milestone that we are confident will contribute meaningfully to margins stability and long-term competitiveness. Financial Year 26 marks an improvement inspection point for Lord Floro Elpli. The strong growth in revenue and profitability is the result of deliberate investments and disciplined execution over several years. We remain committed to creating long-term value for all our stakeholders through our continued transformation into green chemical companies powered by renewables. With this, I would like to thank all the investors and analysts for their continued support and engagement with the company. I'll be very happy to take questions. Thank you.

Thank you. Ladies and gentlemen, 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 use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to ask a question, please press star and one. We take the first question from the line of Shubham from Ra's Capital. Please go ahead.

Yeah, hi, thank you for the opportunity. So my first question is a bookkeeping question. I think we had some shortfall in energy from our consortium to the tune of 97 lakh units. So if you can explain the accounting for that, and if in coming quarters we receive that energy unit, so is there going to be some impact on our power expenses?

See, I tell you, we infused into this capital project, you know, of 10 megawatt wind and solar hybrid. First, you know, the power was to come to us from October, and there was some grace period for, you know, as per the power purchase agreement. They were allowed the period up to November, you know, to supply us the power. From November onwards, they were to give us some dedicated number of units every month. Their implementation of wind project got delayed. So the solar started operating. That also increases. But now the wind project, you know, it is a 100 megawatt project out of which 10 megawatt we have contributed. So the solar 100% has been completed at 100 megawatt. And then the wind now, till now, also 65 megawatt is commissioned. And by next month, the full 100 megawatt will be completed. So, the projects are getting completed. This is the first year of the project. The project is getting completed over phases. So, the number of committed units minus whatever they could provide to us is the number of units which is reflecting, and this is as per the share purchase agreement, which we have executed with them. So, now that the project has been completed, there were some, you know, issues about the battery installations, also storage batteries, you know, now that the government has mandated that, that also has come on site. So, I don't see... We can't see now any issue remaining on the project, so this year we should see the full number of units which we were to get.

So, so though, uh, We have done on the power expenses, so that is not reversible, right?

No, no, because it is as per the share purchase agreement.

Okay.

Share purchase and the power purchase agreement.

Got it. Also, a question on growth. So, I think we are operating currently at 80% utilization, and our new capacities are coming online at the end of F527. So, how do you foresee growth for the next couple of quarters? Because we are already operating at, I think, max capacity.

Okay, so you see the demand growth is around 5%. All over India, 5 to 6 percent. North India, I would say, 4 to 5 percent. But this year, there is no capacity coming up in North. Our capacity, which is coming up, there are only four plants in North of India, and we are the only one who is expanding, and none of the other three units has announced any capacity addition for the next, say, 15 to 18 months period. So by the time we come out, because even if they announce, then they have to buy machinery, salt, do everything. So I don't see any capacity coming up in the next two, two and a half years, additional capacity coming up in out of India.

So I don't find any problem.

Rather, I think we will be in a situation where the demand will be more than what we should be producing.

Yeah, I get that, but I was asking more on the basis of quarterly growth. So, because our 100 TPD cost is coming at the end of the F527, and same with our CW capacity. So, given that our current capacities are running at 80% utilization, so for the next couple of quarters, how are we thinking about growth? Thank you.

I tell you, yeah, yeah, yeah, tell me please, complete a question.

No, no, no, yeah, yeah, I'm done, I'm done.

So I tell you, this quarter, the prices have been pretty good. So there has been a little shortfall in the, you know... But I think because of the war situation, but I see that the growth cycle taking place for the next one year, and we will have 80% to 85% capacity utilization, which we are forcing in the last so many years. We will make up that. So the capacity utilization at the best, you know, 85% around or so will continue to happen.

Got it. And also, in last quarter, we had announced that we are going to have sulfuric acid capacity as well, but I think we have, for some reason, you know, not going ahead with it. So, what was the reason for that?

I tell you, sulfuric acid, you know, as a chemical, we had two reasons, you know, to get into sulfuric acid business. One was, you know, for per se, adding a new chemical line, and the second reason was to get, you know, when you make sulfuric acid, you create a lot of heat energy, which we are wanting to use for our own, you know, products, because we are adding flakes also to our, you know, kitty of products. Right now, we're making Cosmic Codalye, but we'll be adding flaking unit also. So we are thinking of using that, you know, heat energy for that. But you see the sulfur situation all over the world, you know, for the last nine months, six to nine months has been very, very volatile, and especially, you know, the war has started three months back. The sulfur position is very, very erratic. So, we don't know how these situations are going to ease out. So, we have deferred that for a little bit of a while so that the situation stabilizes. Right now, it is not making any sense to put our, like I said in my address also, that we want to do a prudent capital allocation. So, it's not that we are not thinking about it. It's not that it is not on the radar. But right now, it's on a back burner because of that.

And one on industry level. So, we've seen that prices shot up in March, but I think they have again come back to the pre-war level. So, is it because more capacities, which was initially export-oriented because of the shutdown of many international plants, so those capacities have been shifted to domestic market? Or what has happened, if you can give us a sense of last quarter and current situation?

I missed out the first two lines of your question.

So, the prices of Caustic, I think in March they shot up, and then again currently they are back to the pre-war level, if I'm not wrong.

No, they are still much elevated than the pre-war levels. They had gone, you know, quite high. And you see, anything which goes up very suddenly has to come down to a reasonable level. So, it had gone up, you know, drastically up, almost 30-35% up. So, it was not sustainable. You know, world finds its own, you know, way. It's like water, you know, the world finds its own balance, you know, on a long run. So, within three months, some balance has come into the situation, but the prices are still, I would say, almost 12-15% higher.

In regards to capacity shifting from exports to domestic, are you seeing any excess supply in the market?

No, I don't see that, you know, the capacity is shifting from export to domestic much. Europe is now, a lot of orders are coming from European markets, and the products are going that side. So, there was a lot because of the fake, you know, and the ship's not getting away. For some time. But now the things are getting back.

All right, that's all from us. Thank you, and good luck from here.

Thank you. Participants in which to ask a question, please press star and one. We take the next question from the line of Risha Shah, an individual investor. Please go ahead.

Good afternoon, sir. I have a couple of questions. Firstly, your EBITDA margin has improved around 747 basis points here on year 2, around 16.89% in this year, but Q3 was stronger at around 20% plus growth, while Q4 came at around 14%, so I just want to understand what exactly drove this sequential margin compression in Q4, you know. Was it purely because of the grid electricity rate hike in October or were there any other factors which came into play?

The region rate, when you compare between Q3 and Q4, it is similar that the region came. The quarter took the full impact of the price increase and the quarter also. It was a similar situation on the grid rate. But the prices had come down a little in comparison from quarter three to quarter four for costly soda. So that is why, you know, and one of our, you know, You didn't tell me it was okay or no.

My other question is related to the power and fuel cost, which also rose at around 165 crores this year. You know, despite our solar plant being operational this year, so I just want to get an understanding on the net saving from the renewables in this year, and what would the power cost have been if without the 16 megawatt solar plant that we have installed?

You see, I may not have the figures right in front of me right away. Suppose whatever the solar plant was not there, what could have been my power cost? Let me just tell you that the grid rate, you know, landed to us is around 8.2 or 8.3 rupees per unit. So any addition of solar, you know, brings a lot of saving into the whole thing. Like I mentioned in the beginning that, you know, our renewable energy, you know. I think it's around 15 to 20 percent now, which will go up to around 40 percent with our 21 megawatt project getting commissioned and the 10 megawatt giving us full power. So the power and fuel went up mainly because of the increase in the grid price. From the last two quarters. So in total yearly, you know, kind of figure, you see a higher figure because in six months there was a very, very steep increase. Our landed cost was around 7 rupees, you know, per unit of power. And they went up to 8.2, 8.3 depending on the variable charge. So it was a very steep increase of almost 15 to 18 percent in the power rates by the discount. So that is why the figure is higher.

Okay, that answers my question, sir. So, regarding the raw materials also, which, you know, the costs have doubled nearly. So, was it driven by the volume increase at large, or are we seeing any input price inflation? And also, I wanted to understand, you know, what are your key raw materials, and how much pricing power do we have?

See, our key raw material, other than power, is salt. So, salt is also, we do an yearly contract, and then there are some purification chemicals. The prices of the salt, we entered into a contract a year back, so there is no variation in the salt price, which is roughly around 11 to 12 percent of our total, you know, production cost. But the other chemicals and additives which we use to purify that brine, their prices have gone up by almost 20, 25 percent, in some cases 30 percent also. So, but, you know, they have a one or two percentage total, you know, cost impact on the total thing. But salt, you know, is something, the figure which you see on the higher side is because of the higher, you know, production. The cost is variable that, you know, you use a certain kind of salt for a certain, for one ton of, say, to be very precise, 1.6, 1 or 62 tons of salt for every ton of cost, say. So, that is why, you know, you see that because the production has increased, so the value of salt also has increased.

Okay, thank you, sir. Just one last question, if I may. So, since we are doing a capex of around 160 crores, so 160 odd crores, so how do we expect the interest cost to look like in FY27, and what would be your current cost of debt?

Current cost of debt averages around a little shy of 8%. Our total debt cost is, I think, 7.9 or something, the total. So that is how it is going to look like. We are raising additional long-term debt of around 90 crores, in addition to what 90 crores I mentioned, which is spending in the books. But then the additional production capacity will also start kicking in. So, that's how it's going to be. 8% is our, you know, cost of interest.

Thank you so much, sir. That answers my question.

Thanks. Thank you. We take the next question from the line of Ruth B. Gandhi from family office. Please go ahead.

Good afternoon, sir. Thank you so much. Good afternoon, sir. Yeah, sir, so my first question is that beyond solar, are there further renewable energy investments planned beyond the current CAPEX cycle? And is there a path to 60-70% renewable energy share in the medium term?

Sorry, you'll have to just repeat your question again. I understand that you were asking about the renewables, but what was your precise question?

Yeah, so I'm saying that other than the solar investments, the CAPEX that we are already doing, are we planning on another CAPEX in the renewable energy sector?

We are always looking for opportunities. We are speaking to a lot of people. See, I tell you, because of the new government regulation, you know, because they have now, it is mandated that all the solar plants have to use Indian cells. Initially, it was Indian panels. Now, domestically manufactured cells will also have to be used, you know, from this month onwards. So, the market, you know, will take a month or two to stabilize because, you know, some productions are coming up streams. So, we are also looking at this issue. We are in the middle of completing this 21 megawatt project, and once we complete that by mid-June or so, and then, you know, we'll see how the market situation is on the panels and cells. And we'll look into further opportunities. This is a very ongoing process for us. This renewable energy, our target is to achieve the max whatever is possible under the regulations. So we will keep working on that all the time.

Got it. Also, sir, regarding the 21-megawatt solar plant that is going to be commissioned by June 2026, around that, so once that is fully commissioned, what are our target blended costs since the electricity rates, the grid electricity rates, had increased around October 2025? So what is our current blended cost of power, renewable versus grid, and what are we targeting?

See, like I said to the earlier question also, our grid rate is around 8.2 to 8.3, and the renewable component right now is around 20% of our total power, but we'll go up to around 40%, you know, once this 21 megawatt comes on stream, and that 10 megawatt hybrid also starts giving us full power by June end, so we'll be roughly over 40%.

Got it. Thank you so much. That was really helpful. All the rest for the future.

Thanks. Thank you. Participants who wish to ask a question, please press star and 1. We take the next question from the line of Mandira A from Investor. Please go ahead.

Thank you for the opportunity. A couple of questions from my friend.

Mandira, I do apologize to interrupt you there, but your audio is too low. Could you please use your handset, Apple?

Is it better now?

Yes, please.

So, I have a couple of questions. If you could help me with it as a few questions for producers in Northern India, how large is your effective captive market, and is there any regional capacity likely to dilute your objective market?

Your voice is coming up and down too much. If, Ryan, you could hear the question fully, can you repeat it for me?

Just a second. I'll... So, is it better now?

Yeah, it seems so. So, I was asking, like, as one of the few caustic producers in

North India, how large is your effective captive market, and is any regional capacity likely to value to your pet advantages?

See, the total north market is roughly around 1600 tons per day, you know. production capacity, and we are doing 300 tons per day. So we are 20% of the total. Capacity has been announced. For the next two years, any fresh capacity getting added to North India. I hope you were talking about the region, not the whole country as such.

No, no, on the specific region. And secondly, with India adding 2.5 million ton of caustic soda capacity over the next three years, how do you see the impact on domestic pricing and risk of oversupply?

You know, one is the price part, other is the... We call the price of chlorine and caustic put together. It's called ECU in our parallel lens. So we take the price combined. Right now, the chlorine price is negative in India. So these two capacities which you have just mentioned, which are going to be coming up in the next three years, they will be actively using the whole chlorine thing within their own plant because they're making downstream projects. PBC is what So what will happen is that there is a demand growth, you know, and the capacity additions going on in the chlorine segment also. So we foresee that, you know, if there will be any decrease in the price of caustic, it will be well compensated by the increase in the price of chlorine. So we always take the price, you know, of these two commodities put together. So one will offset the other. Which we have seen in the past also, that whenever the chlorine prices, you know, go down, the phosphate prices go up. And then secondly, as far as the phosphate soda, you know, situation goes, these two plants are on the west coast. They have their own jetties. And there's a ready market, you know, in Africa, in Europe, in Australia. So these units will take, you know... The kind of benefit of their location and they will export a lot because India is becoming a big export hub. And these two plants are going to be world class, you know, capacity size. So they will find opportunities for exports in a much bigger way than to come into a fragmented Indian market, you know, especially if you talk to me in sitting in North, we have a very small fragmented market, people consuming 100 tons a month, 500 tons a month, 300 tons a month. So that kind of capacities for those kind of big plants are not possible to, you know, serve air. They would rather find bigger customers. So they will, as far as my understanding, they're looking for export opportunities more than domestic opportunities.

Got it, sir. And lastly, are customers increasingly seeking green credential or sustainable certification? And is your renewable energy-led ESG positioning providing any tangible commercial benefits?

Of course, it is. As far as the sustainability thing goes, we are very aware of it, and we are very committed to it, so our ESG team and our ESG consultants, we are working continuously on this, that is one, and of course, when you go for the cost of producing renewable energy is much, much lower than getting the power from grid, which is a coal-based power. So, of course, it brings, you know, working on the ESG path, it brings a lot of cost savings also.

Got it. So, got it. That was really helpful. Thank you.

Thank you. Participants who wish to ask a question, please press star and 1. As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.

So, thanks, everyone, for participating in the earning call of Ross Glow LQ Limited. I hope you have been able to address most of your queries. However, if there's anything, you know, we have missed out or you have, you know, an afterthought or to this, then you finally reach out to our IR team, and we'll be really happy to take up, you know, that question. So with this, I thank everyone. Thank Ryan, you know, Smith, and all the investors and analysts who have been there on the call. Thank you, sir.

On behalf of Lord's Chloroalkali Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.