SRF Limited (SRF) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to SRF Limited Q1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kumar Soumya from Ambit Capital. Thank you, and over to you, sir.

Thank you. Good morning, everyone. Thank you for joining us today. We at Ambit Capital are pleased to host SRF Limited's Q1FO27 Results Conference Call. We have with us today Mr. Samir Karshap, President and Chief Financial Officer, and Ms. Sugandha Singhal, Senior Vice President, Head Treasury and Investor Relations of SRF Limited. I would now like to invite Ms. Nikita Dhawan, Head of Corporate Communication at SRF, to initiate proceedings for the Result Concord. Thank you. Over to you, ma'am.

Good morning, everyone, and thank you for joining us on SRS Quarter 1 Financial Year 27 Results Conference Call. We will begin this call with brief opening remarks from our President and Chief Financial Officer, Mr. Samir Kashar, following which we will open the forum for an interactive question and answer session. Before we begin this call, I would like to point out that some statements made in this call may be forward-looking, and it just came out to this effect, has been included in the earnings presentation shared with you earlier. I would now let you invite Mr. Gashuk to make his opening remarks.

Good morning, everyone, and a warm welcome to SRF Limited's Q1 FY27 earnings conference call. Thank you for joining us today. I trust you've had the opportunity to review our financial results and the investor presentation shared earlier. I will begin by taking you through the key highlights of our performance during the quarter, followed by an update on each of our businesses, and we will be happy to then take your questions. The operating environment remained volatile during the quarter, shaped by ongoing geopolitical developments, evolving trade dynamics, and disruptions across global supply chains. Demand trends also remain uneven across some of our end markets. Despite these challenges, SRF delivered an extremely strong start to the financial year, reflecting the resilience of our diversified business portfolio, the agility of our teams, and our disciplined focus on execution and operational excellence. During the quarter, we strengthened our market positions with technology-led innovation, deeper customer relationships, and improved operating efficiencies. We also made steady progress on our strategic investments, aimed at expanding capacities, broadening our product portfolio, and strengthening the capabilities required to drive sustainable long-term growth. For the quarter ended June 30, 2026, gross operating revenues to rate 5,033 crores. The company's operation EBIT increased 61% to 1,116 crores in Q1 FY27 when compared with the comparable period last year, translating into an EBIT margin of 22%. Profit after tax to its 759 crores, registering a growth of 76% over the corresponding quarter last year. The board is also... We grow driver during the quarter. Our continued investments in technology, process innovation, and cost optimization. We strengthened our innovation pipeline through the development of new AIs and intermediate molecules while deepening customer engagement across both agro and pharmaceutical applications. At ETB, we are now working on various molecules that are beyond our traditional customer segments which we believe will bring greater impetus to the future of this business. Our efforts towards operational excellence were also recognized externally during the quarter. SRF received the ET Edge Bronze Award for Supplier Relationship Management and was recognized as the ISCM Supply Chain Champion in the diversified sector. The fluorochemicals business deliver another strong quarter supported by healthy domestic demand and Refrigerants, industrial chemicals, and fluoropolymers, along with improved realizations that offset the impact of elevated raw material costs caused by supply chain disruptions. Our HFC facilities continue to operate at high utilization levels. We also made further progress in scaling our PTFE with an increasing contribution from value-added rates. As communicated earlier, we expect the fluoropolymer portfolio to make a progressively stronger contribution as customer approvals and higher value-added grades translate into higher commercial volumes. Our strategic projects, including the proposed investments at our new site in Odisha, are progressing in line with our plans. These investments in next-generation refrigerants, backward integration, and speciality fluoropolymers, are central to our ambition of building a globally significant chlorochemicals business. Post the commissioning of our new HFO plants in Odisha, we will be in the top three to four refrigerant gas manufacturers globally, thereby positioning us uniquely. While geopolitical and trade-related developments may continue to create near-term volatility, we remain confident about the outlook for the chemicals business. Growth will be supported by healthy refrigerant demand. Improving contribution from fluoropolymers, a strong innovation pipeline in speciality chemicals, and the progressive commissioning of new capacities. Moving on to our performance films and foils business. This business reported revenues of 2017 floors, reflecting a 42% year-on-year growth. The business delivered a strong operational performance across all manufacturing locations. Margins improved across regions. Supported by temporary supply disruptions arising from geopolitical developments. During the quarter, we capitalized our capacitor-grade BOPP firm project following the successful completion of trial runs undertaken earlier. The project strengthens our presence in the specialized high-value segment through Kapla, our brand of capacitor-grade BOPP firms, offering excellent dielectric stability and self-healing performance. Thereby enhancing reliability and extending capacitor life. Customer qualification is progressing well, with approvals already secured from several leading customers. Commercial volumes are expected to ramp up progressively as additional approvals are received. The aluminum coil business also continued to gain momentum. Exports increased during the quarter, while customer approvals for value-added applications progressed further, especially in the esteptic packaging segment. These developments should support an overall improvement. for setting up of a Bopec thick film line in India, with a capacity of 25,000 metric tons by an end, at a projected cost of 250 crores. This addition serves a few strategic objectives, including expanding into a new substrate, where due to limited domestic capacity, there's lesser volatility versus thin film, as also helping us provide a wider product offering to our customers, so that we can truly become a one-stop shop for them. We intend to target high-end use cases in the electrical and electronics industry and are slated to be the only manufacturer of Sixth Firm with a dedicated line, thereby setting us apart from competition. We see a 24-month time frame for this line to be commissioned. We are also progressing with our investments in additional metalizers and coating lines. These projects will enhance our value-added product portfolio and strengthen the business abilities to address emerging opportunities in sustainable and specialized packaging applications. There has been some benefit due to the geopolitical uncertainties. There has been a sustained effort to enhance product penetration. While competitive pressures remain... Thank you. After this exceptional performance in Q1, which was aided by supply constraints and higher prices due to geopolitical uncertainties, we do see the performance of this business stabilizing to more normal levels in Q2. Having said that, we expect the baseline performance to be recalibrated at a higher level from here on. Our technical textile business reported revenues of $597 crores during the quarter. The nylon tire core fabrics business, Continue to generate stable performance, supported by resilient demand across key end-use segments. Optimal plant operations, disciplined manufacturing, and focused cost optimization initiatives help the business maintain a healthy operating performance. The Berking Fabrics business benefited from improved domestic demand and robust exports to the U.S. The outlook for the business remains positive, particularly following the rationalization of tariffs in the U.S. Our focus will remain on expanding volumes and improving operating efficiencies. PIY has performed well in the quarter, supported by improved share in geotextile and seat belt segments. TTB's performance in Q2 is expected to normalize, but yet deliver an improvement versus a comparable period previous year. Our other businesses, comprising coated fabrics and laminated fabrics, delivered a stable performance during the quarter. The Coteau Fabrics business maintained its leadership position in the domestic market. Discipline cost management, operation efficiencies, and a growing focus on value-added products helped sustain profitability. The laminated Fabrics business also delivered a steady performance, supported by product mix optimization and continued improvements across manufacturing operations. Shooting 21F527. Our CSR arm, the CSRF Foundation, continued to drive meaningful social impact across education, digital inclusion, skill development, healthcare, and community development. The foundation reached thousands of students through learning and STEM programs, expanded access to digital services, supported youth employability initiatives, and strengthened community engagement through partnerships and government convergence, reaffirming its commitment to creating sustainable, inclusive, Furthermore, I am happy to share that the SRF Foundation was honoured with the prestigious Bhama Shah Shiksha Bhushan Award for the 9th time in June 2026. To conclude, the global operating environment remains uncertain with geopolitical developments, Thank you. We have a confident in SRS ability to navigate these challenges. Across our businesses, we are focused on improving operating efficiencies, increasing the contribution from value-added products, deepening customer relationships, and executing our strategic capital expenditure program. Our investments in innovation, technology, and new capabilities are creating new growth opportunities and strengthening our competitive position. Supported by our diversified portfolio, strong balance sheet, and disciplined execution, we are well positioned to deliver profitable and sustainable growth. Overall, we are pleased with the start to the financial year and remain confident about SRS future prospects. It is important, though, to recognize that SRS business, especially the chemicals business, is highly seasonal in nature and as has been the case in the future. We will see lower numbers in Q2 as compared to Q1. Having said that, this exceptional outcome across all our businesses in Q1, which has helped us deliver our best This outcome is a strong testament to the resilience, maturity, and robustness of our business to convert adversity into opportunity and maximize outcomes while remaining strongly committed and steadfast in our efforts to ensure the success of our customers as well. On that note, I conclude my remarks. And we'll be glad to discuss any questions or comments that you may have. I would now like to ask the moderator to open the line to the Q&A session. Thank you very much.

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 use handsets while asking a question. A request to all participants, please restrict your question to two questions per participant. For more questions, please rejoin the queue. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. The first question is from the line of Sanjeej Jain from ICICI Securities. Please proceed.

Yeah, good morning, sir. Thanks for taking my question. I've got a few of them. First, on the infrastructure space in the Dahaj, How much land more left because the Odisha plant may take another two years to come? For the next two years, do we have enough land parcel available in the Dahej facility for us to commission all the active ingredients we are working there? How are we placed on the infrastructure side? That will be my first question. Thank you.

Yes, so in Daesh, we do have some space. We are reasonably well utilized in Daesh, Sandesh, but there is still space specifically for speciality. There are structures that are available over there to, you know, expand and grow all that they need for this next 24-month period. So, yeah, there is adequate space specifically for speciality. And everything else that we've already commissioned on the CapEx side, you know, those spaces are already well earmarked and work is ongoing over there. So, yeah, in a nutshell, enough space to cater to anything that we need to get into at least for the next 24 months at the age.

That's clear. Thank you. Second, when do we see some of these active ingredients really getting into scale? Because we have been speaking now for almost three years. I know it takes time and market hasn't been supportive. But what are you hearing from your customer? You spoke about some green shoots in the specialty business. Are we seeing good offtake in the second half in active ingredient or it's more like an FY28 story for us?

Yes, so, you know, even in the last call, Sanjesh, I called out, you know, two leading aspects when I talked about the green shoots. One was, we were seeing volumes. Start to show their first signs of recovery. I think through the last year, you heard the commentary from SRF being very clear around protecting share. That was the primary focus, and I think that's paid off well over this time, while it's been a very difficult journey, you know, as we saw the price destruction around us. But nevertheless, I think we've done a fabulous job of holding onto share. That's number one. So we are starting to see volumes over, you know, a little bit through last quarter and this quarter as well, start improving, you know, the trend is upwards. So that's the first sign. And I think the second, which is probably one that has you all more concerned, is around price. And at least across key products at this point in time, we are finally starting to see price trend marginally upwards in the right direction. We've seen some volume support, so given your specific question on what we're hearing from customers, through this period in Q1, while there has been some opportunistic buying as well, I think through specific pockets where we have kind of stayed by the customer side through this journey, We are starting to see support from them on the volume side, and we're seeing uptick over there. So I think, you know, that's the basis and genesis of my opening comment around volumes starting to look better. So that's, it's still early times. It is in pockets, so I wouldn't say it's a broad-based improvement just yet, but first science, directionally, building on, I think, what I shared with all of you when we did this call in May.

Got it, got it. That's very clear, very helpful. One last question on the fluorochemical business, which is our refrigerant gas. The prices appear to be very strong and sustaining. Thanks, they were very harsh summer this year across the... But do you see these pricing trends sustaining at the level what we saw in the last quarter, or post the season over, have we seen some softening of the prices?

So, you know, Sanjay, you probably recollect from the previous call as well. There was this whole concern around RG pricing through this year. Our broad commentary was, we expect less cash pricing. Broadly, to stay at the level they were, only get better from here. I think what you've seen in Q1 is a testament to that view that we had. I think that view is playing out well. Having said that, I think we all do know Q2 and Q3, specifically from an India and Middle East standpoint, is weaker versus Q2, even from a volume standpoint. Forget just price. From both standpoints, it is softer. So we will see that come off a little bit. But I think we are very clear that we will see strong growth versus, you know, last year Q2. And we'll continue to do so, I think, through the rest of this year for a bunch of different reasons that we've talked about multiple times in the past.

Got it, Samit. Thanks for answering all those questions. So, patient and best of luck for the coming quarters.

Thanks. Thanks, Anjesh.

Thank you, sir.

Thank you. The next question is from the line of Jason from IDBI Capital. Please go ahead.

Yes, sir. Thank you so much for taking my question. Sir, first question just pertains to, I mean, you know, the performance business has basically performed very, very well in this quarter. So, I just wanted to know what could be the reason for this, is that such a strong outperformance in this quarter, especially from the performance business?

Yeah, so, you know, I'm not sure if you have joined the call in May, but I have kind of... Put the seed in all of your minds that, contrary to what you were all hearing around strife and grief in the packaged firms' business, you know, we were going to do well. I think I talked about the fact that we had robust supply chains that were holding up despite everything happening in the Middle East. Thank you. I think all of that is what has really panned out in Q1. So let me try and give you a few broad indicators on what kind of drove the Q1 performance. So, you know, in a perverse way, the war has helped us. I think the rest of the world were shutting plants. Capacities were going off stream. And like I told you all on the previous call as well, we were operating flat out, 100% capacity. And that really just points to the fact that we did not have, you know, domestic reliance on raw materials. The fact that we operate in a DTA unit, the fact that we source globally. In short, that our raw material supply chains were very robust. So, you know, one, that ensured we were operating right through this entire quarter, and like I said, we pretty much operated flat out. So that's factor number one, especially, I think, when you contrast us with the competition, we will stand out and show up differently on that account. I think the second piece is, there was a whole period where there was a lot of panic buying by a bunch of customers at that point in time. And, you know, we shared at different points in time that we've tried to manage this journey of price volatility. Effectively with our customers, because we also realize that at some point it is going to correct as well, and we want to manage that downturn equally effectively. So we've tried to be rational about pricing, but having said that, prices had significantly improved because of panic buying. What happened in Q1? Thank you. Thank you.

Thanks for that, sir. And my next question just pertains to, I mean, we do agree that there are some green shoots in the agrochem cycle. And so slowly, volume seems to be coming back and, you know, that recovery is there. Now, with even prices of the refrigerant gases also are pretty strong. Just wanted some color on how we are going to grow the chemicals business. What are the, you know, the big strong growth drivers of this business going ahead? Just wanted some color, more color on that trend. Probably you can highlight some, you know, factors from the pharma piece as well, which you are slowly trying to grow. So could you give us some color on what are the growth drivers for the chemicals business going ahead?

Yeah, sure. So, I've got guidance on chemicals for this year was that we could grow 15 to 20 percent. We continue to hold that guidance, and I think the Q1... You know, I think everything around, you know, quota and all that will happen through December, you know, will also drive a set of outcomes which will be significantly positive for the ref gas business. You know, for the longest time we've said this, and I know people have kind of looked at it differently, maybe from the market standpoint that, you know, the time for ref gas has arrived. And we were saying this all. A little while now, I know a lot of people look at it differently, and that's fine, but I think what you're seeing in our results is that part of the portfolio to reshining at this point in time and delivering to a plan that I think we put in motion some time ago. So that will continue to be a big driver. We continue to hold the overall growth range that we've set for the year. I don't think directionally we're moving away from that range. You know, hopefully we will eventually land at the higher end of that by the end of the year, given how strong Q1 has been. In terms of pharma, since you asked about that specifically, you know, we – I've said this before, but I'll repeat it again. We have a created goal to be, you know, in the 20-30% range of revenue by 2030. We are progressing well on that journey. You know, we've had a strong outcome. It is baby steps, and in the largest theme of the numbers, it kind of obviously doesn't just show up as yet. But I think to give you some more color what is positive on that front through this quarter is we are working on a larger number of molecules with a set of customers. The number of customers we are working with is also growing. So when you kind of put that together, you're in a matrix of sorts where the likelihood of your hit rate improving has only gone up because you've just increased both the universe you're playing in and the number of molecules that you're playing in. So, you know, when one of these comes to real fusion in terms of true large quantities that matter, I think we'll start seeing some step function changes. At this point in time, the volumes are smaller, and in the larger scheme of things. On the overall chemicals business, it doesn't really show up, but yeah, that's some additional color on the farmer sector for you.

Sure. Thanks, sir. And just one thing with reference questions. Sorry to interrupt you, Mr. Jason.

Can you please rejoin the queue for follow-up question?

Sure. Sure.

Thank you. The next question is from the line of Arjun Khanna from Kotak Mahindra. Please proceed.

Thank you for taking my question, and congratulations on a great set of numbers. Sir, the first question is, just in your comments, you did allude to probably the second quarter being sequentially weaker. Just from my understanding, year on year, we don't see, because seasonality would be second quarter previous year also, you were specifically referring to sequentially Q1 to Q2. Is that the right understanding?

Yeah, absolutely. So, year over year, we will see growth. Sequential quarter Q1 has been fairly obviously a kind of a blowout in terms of outcomes. So, yeah, versus that, there will be correction, but versus last year, we will see growth.

Sure. The second query, sir, is regarding, say, the aluminum foil piece. Essentially, Our packaging piece has been expanding. Now, these quarter margins are significantly higher, but when you all look at a sustainable level, so a bit moved from maybe 10 to 17 this quarter, what would you believe the sustainable levels to be for this piece for the remaining part of the year?

Without giving you a specific number, let me just give you some color here. I think at a structural level, I think we're doing a bunch of different things in aluminium, okay? We have kind of significantly now managed to deliver progress in a push to be more export-oriented versus the past. So, you know, directionally, close to half the volume or maybe a bit more kind of actually moved into Europe. So that's kind of given us a good bump up in terms of being in a different market, number one. Number two, we are participating in areas where traditionally we weren't in terms of product end use, and that's giving us a better realization from a price standpoint. Yeah, there was a big spike in, you know, the aluminum price points anyway. Earlier this quarter, those are more or less, I wouldn't say entirely rationalized out, but yeah, they're at lower levels versus the peaks that we saw. But, you know, there is that impact too. But having said that, I think. The most important piece, and I think we spoke about this in our last release that we put out yesterday, is we are making some very strong progress on the aseptic packaging side, working with a bunch of leading players. There's very significant progress that has been made thus far. Early next fiscal is all things go well, we're in stages of testing at this point in time, but if all things go well on that front, it could mean opening up a completely different segment and space of revenue for us.

Sure. So when we had announced aluminum, we had said we may look at expansion. If you could comment on where we are on that thought process, and two, what's the outlook on BOPET and BOPP at this point in time? I'll come back for questions later. Thank you.

Yes, so, you know, I don't think we're getting into expansion on aluminium just yet. We are pretty much right now more focused on where product goes out to in terms of markets. Like I said, our focus is to build on that export share. You know, as time comes and we are ready, our site at Jetapur is ample space for us to be able to expand. I think right now... The focus remains around moving to higher grade of foil and better use cases and applications, like what I spoke about around aseptics. Once you've kind of gone past those gates, I think is the point where we'll start thinking about potential capacity expansion. At this point in time, there isn't anything on the cards that we're talking about. So that's the answer. For an expansion, I would look on Bope and UBT. Q1 was, like I said in my comments in the previous question, we saw disproportionate pricing in Q1 just because of all that was happening in the Middle East. I wish I could crystal ball gaze and tell you what is going to happen in the Middle East crisis. You guys are probably a better judge of that than I am. But the uncertainty... 70-ish range. plastic pricing in general, and that's the way we see it panning out. So, yes, there will be a correction. I don't think we will see numbers that look as crazy as Q1 heading into Q2, but we don't see a steep cliff either.

Sure. Very helpful. Just on the PTFE, we were talking of scaling up. I mean, there is a comment in the presentation on the same, but if you could throw some more Good color on that.

Yeah, sure. So, you know, we've been talking about moving into higher grades for some time. So that work on even just the base, PTFE side is progressing well. The last call, we talked about some small KPEX that we were making over there on the PTFE front to kind of get to the higher grade. So that's kind of on track and progressing well. PVDF plant is set to be commissioned towards the end of this quarter. So that's all on track two. On Kemos, they are happy with the progress that we've made. Kemos has requested a few design changes in the plant, and they also, you know, Kemos is very specific in terms of expectations they have on equipment, so there are some pieces where there are only specific manufacturers. Thank you. We will incorporate to make the plants more effective and to bring in this equipment.

Perfect. Thank you, and wishing you all the best. Thank you so much.

Thank you. The next question is from the line of Noshak Chaudhary from Aditya Birla. Please proceed.

Hi. Thank you for the opportunity. Two questions. Starting with the electronic grade pins, capacitor and conductor grade, where I believe we are committing roughly 520 kWh of capex. Can you elaborate a bit more on this? What is the time size for these two grades could be in the next few years? What are the key drivers here? Thank you, sir. Is the economic or these rates of films are different than what is our core packaging film business, especially in terms of margin profile and volatility?

Okay. So, in terms of capacitor, like I said, we capitalized earlier in the quarter. You know, trial runs are done. We are in the stage right now where we are working with a set of customers on satisfying quality parameters, testing on... The computer side is significantly more extensive versus, you know, vanilla film, as you can imagine. So those timelines, you know, are where we are right now in terms of the middle of testing, so to say. We have... We're expecting to start seeing some early state revenue towards the later part of this quarter, and by Q1 or Q2 of next year is when we think we should be, you know, close to full capacity. That's kind of the outlook that we have. Pricing on capacitor film is significantly better than vanilla film. It is only going to be accreted to margins for the film's business. You've heard us say this in the past, you know, kind of our whole... And presently, you know, there are... Electronics industry. So there's a lot of customer interest and demand, and that universe of who we are working with is only growing at this time. There's a fair amount of early acceptance that we've reached with a set of customers as well. So strong momentum on all of those fronts and getting through those check posts at this point in time.

In initial study and sense in terms of the economics and volatility of this piece of packaging business versus the base business, would it be similar? Would it be better?

I don't think we see as much volatility. That was part of the rationale behind the play. So, you know, if you go back to what we've been saying for a few calls, the broader strategy right now of the packaging film side of the business is really to go and... De-risk ourselves from the volatility of them from pricing. So everything that we're doing on every value-added play, whether that is around metalized product, whether that's around coated product, whether it is, you know, what we're planning to do on BOFA. And capacitor, you know, and even some of the new initiatives that we announced, including the new CAPEX that the board approved yesterday, are all steps in that direction. So the reason we are embarking on those journeys is really to de-risk ourselves from, you know, the cyclicality of polyester pricing. And this is another initiative on that front. We don't see the cyclicality to be, you know, as volatile as what you're probably imagining and as compared to Symfone.

Sure. Second question on the floral polymer business.

Sorry to interrupt you, Mr. Chaudhary, but I request you to rejoin the queue.

Yeah.

Thank you. The next question is from the line of Rohit Nabaraj from 361 Capital. Please proceed.

Thanks for the opportunity, and congrats on a strong quarter. The first question on the AIs front, so the six, seven AIs that we had, we have in our QT, part of them commercialized, where are we in terms of the journey from revenue recognition? Given that at peak, we were expecting something like $400, $500 million of revenues. So how many have commercialized, what are the stages, and maybe some milestones In terms of reaching that, you know, $400, $500 million revenue. Thank you.

Yeah, so I think that, you know, we've, similar question to, I think, what. Really, it's a function of registration, right? And I think you kind of all have a good sense on what is happening in the larger innovator space and everything happening around farm economics. Directionally, the only piece that I can tell you incrementally versus what I shared last quarter, and it alludes to kind of what I said earlier in this call, is those first signs of green shoes. The innovative world is only going to wake up and move and do things differently when this pricing pressure and, you know, the direct thing from generics and everything else that is happening in that space, kind of a base to some extent, right? And that kind of has held through the quarter as well. The only piece that gives us confidence that this is slowly starting to turn on us and we could start seeing some traction is really what has happened around both price and volume. And, you know, the so-called no bottom to pricing from China kind of now holding out and getting better from here on. So, our expectation, therefore, is that once we kind of start hitting a more positive cycle, given that the downturn seems to be kind of behind us now, it's still early days, is that, you know, the innovator world will be able to start making these steps, you know, to go. Take actions around everything that is needed around registrations and what have you, after which everything starts panning out then in terms of their whole AI space. But it's still early days, I think, you know, before that recovery kind of truly shows up. It is fairly initial at this point in time. So I therefore think, you know, the innovator world is still going to be cautious. At least for the foreseeable future before they go whole hog and move the needle on the whole registration front. So I think that kind of more or less summarizes our views on it at this point in time. So no great directional shift, but for what we're seeing on the overall, you know, agrochem space in terms of all human pricing, being the first green shoots to hopefully kick things off.

Got that, sir. So second question in terms of PTFE and CHEMOS. So on PTFE, we have said that we'll be adding value-added grades. Where, I mean, what timeline do we see in terms of getting a material traction on this? And even on the CHEMOS front, given that usually the validation cycles are relatively longer, what is the timeline that we are looking at when meaningful contributions from both these products will be there from the fluoropolymer space? Thank you.

PTFE, I think, you know, as we hit the end of Q4 and early Q1 is when we will start seeing, you know, PTFE. Starting to show meaningful scale, I think that's probably the best way to kind of give you a view. Like I said, you know, we will commission PBDF towards the end of this quarter. So hopefully, you know, by similar timelines, i.e. start of the next financial year, where you start starting to see meaningful volumes and realizations on that front as well. You know, KeyMod... The slippage is really, you know, mutually agreed in terms of timelines because of changes that they are making. At the end of the day, it is a design that they need to have approved and blessed, and these are changes they have requested that they are incorporating. Like we said in the past, this is an effective... So, once we're commissioned and we're ready, you know, we will start seeing that flowing through. I think if you have to think about the whole fluoropolymer portfolio, right, kicking in and across all, you know, Substance that we're talking about over here, whether it's PTFE, PBDF, FP3, or FP4, I think we're talking, you know, timelines where significant meaningful volumes are going to probably start kicking in towards the end of 27, 28, and early 28, 29. That's kind of when the volumes will get to really meaningful levels. You know, during 28, 29 is when we expect to be... Absolutely full stream in terms of capacity.

Sure, that helps and thanks a lot and best of luck, sir.

Thank you.

Thank you. The next question is from the line of Arsit Joshi from Nuwama. Please proceed.

Good morning, sir, and thanks a lot for the opportunity. A bit more harping on the speciality chemicals piece, especially on the AIs at the outset, sir, I just wanted to understand. Do we have the readiness in terms of creating of assets required to launch those six or seven AIs? And would it be the right way to read that we're just awaiting imminent approvals from our customers, whenever it is conducive for them to, you know, see some green shoots of patents? You know, growing this year or next year. But do we have the readiness and should we read it as whenever the doors open for those products to get launched? There'll be a decent bit of operating leverage in the early few quarters itself. Should that be a right reading, sir?

So, you know, the capacity is kind of reasonably there on the ground, right? Just given how we set up plants, I'm sure you're well versed with that across dedicated and multipurpose and, you know, the way we are able to swing plants across. In terms of capacity and ability to get product out of the door, I don't see that being a constraint. The readiness, obviously, in terms of the... The chemistry behind the product, you know, you couldn't be in conversation around waiting for registration unless that was all done, right? So that part is reasonably taken care of as well. So really, I think the only piece that you're waiting on, like I said earlier in my commentary as well, is the progress that is needed around registration and these products getting launched by the innovators. You know, there isn't a big... Sales-side infrastructure requirements are needed because of who we are selling to. We are going to sell to the innovator world. The chain from there downstream is really theirs. So, you know, we own everything from production through to making sure. There's acceptance of that product with the innovator world, and I think on those pieces, we are in a very, very progressed, advanced state. So, yeah, I think on your question, I can positively state that we definitely are ready, but there is this last mile piece, which is a hurdle that has to be overcome, and the timelines around that are uncertain at this point, to say it mildly.

Understood. That wasn't the AI piece, but the base business that we have, which is predominantly all chemical intermediates, be it minus one and minus two, even those which you probably have rightly pointed out in many of the concords that there is a pricing pressure. But have we at least seen any growth in volumes across the portfolio despite the competition beating up from China? And is there a positive trajectory at least on the volume front as we progress in the current financial year?

Yeah, so, We clearly, I think, through the last quarter and this quarter, I think we, at least on the core set of products that you're kind of alluding to over here, you know, in the portfolio, we definitely have seen a directional shift in volume. I won't say it's a step function as yet, but even sequential quarter, we're starting to see that trend get positive on us, so that is a great sign. It's not only volume. It is both on volume and on price on those core set of products. So, directionally, at least on that front, it seems like we have scraped the bottom and we are getting better from here on. So, our outlook is that, you know, through the rest of this year, we will keep making steady profits over here. It's not going to be a hockey stick kind of a recovery. It will be linear and probably be slow, but that's the way we expect and see this panning out through the rest of the financial year. We do see, you know, as a typical seasonality that we see in chemicals, we think H2 will be stronger than H1, so it will be a more back-loaded sort of a recovery, but yes, you know, directionally, we are seeing volumes better, we are seeing price better.

That helps a lot, sir, and wishing you all the best. Thank you.

Thank you so much.

Thank you. The next question is from the line of Ranjit from IIFL Capital. Please proceed.

Yeah, hi, sir. Thanks for the opportunity and congratulations on a great set of numbers. In the opening commentary, you did allude to the packaging films margin business while you said The margins are likely to normalize in Tokyo, but the baseline will be higher now. On this, just wanted to get a bit more clarity because what we also see is our overseas operations with South Africa, Thailand, and Hungary have been under pressure.

Ranjit, sir, can you please be a little louder? Can you please be a little louder? Yeah.

Is this better? Is this better?

Yes, yes. Please continue.

Yeah. Should I repeat my question?

No, it's okay. I got you, Ranjit. Go ahead. Go ahead. I could hear you.

Yeah. So... Yeah, so the question is mainly on the new baseline that you are indicating. While we also see that the overseas subsidies have been reeling under pressure, and if you take the last 10 years, the trend line has been 8% to 12% on EBIT margins. So when you say that you are seeing a new baseline, so whether one should assume it's going to be above those rates?

Okay, so let me answer that in, you know, with two or three comments. So number one, I think, you know, we said this in Q4. I'm saying this again very clearly. We have performed very, very effectively across all overseas locations these last two quarters, right? So, the outcome is... Showing at every level, revenue, EBITDA, EBITDA, all of the overseas locations are performing seemingly well. Hungary was a concern some time ago that has, you know, improved significantly. All tech at some point in the past, you know, was facing pressure. That's kind of behind us as well. So overseas locations are all doing good. That, in many ways, is also a reason we carry the, you know, this positive view around the baseline being better. Yeah, against those directional numbers that you called, we expect margins to be north of that. Yeah, Q1 is, like I said earlier, is an aberration. Do not peg it over there. You know, as we bring things like the volumes of capacitor and everything to, you know, full commercial levels, like I said, the price points are significantly different versus when in our firm. So all of those are treated from a margin standpoint. And I think you therefore see that expansion coming through as we add more of these value added plays into the portfolio.

The second question is on the rev gas front. We do have certain duties in the U.S. on the Chinese imports and that are up for renewal. Do you have any comments on that and the progress?

I think I could tell you with certainty what Mr. Trump would do, but... You know, U.S. and China and how they will pan out. I think in terms of what... In terms of quantities, you know, through the rest of this year, we don't see... Our belief is pricing from China is going to hold to the rest of this period. I'll continue to say that now.

Thank you. One last thing, you also commented that robust export volumes on the rev gas funds, but we believe that a certain part, at least to the Middle East, would have got impacted, but despite that, the volumes were quite robust.

In Q4, we did have impact in Middle East. In Q1, we have actually done very, very well in that market, both from a volume as well as a price standpoint. So, fluoron actually receives differentiated pricing in the Middle East market. So, we've actually done very well over there through Q1. We expect that to continue through Q2 as well. You know, there was some disruption in terms of the points, you know, the amount of time you could freely ship. Yeah, so there was impact around that, but eventually through Q1, we found our own workarounds and have not had any issue getting product into the Middle East at an overall quarter level. So, there could have been... Skews in timelines, if you looked at it month-wise, but over the quarter, you know, these volumes have been very, very robust, has delivered strong growth year over year, and given Q4 was impacted, which, like I shared in my previous commentary on the May call, even sequentially looks better.

Thank you, sir, and wish you all the best.

Thank you so much.

Thank you. The next question is from the line of Ankur from Access Capital. Please proceed.

Yeah, hi, sir. Thanks for the opportunity. First question on, you know, the aluminum foil bit.

Ankur, can you please be a little louder? We can't hear you properly.

Sorry, is this better? Yes. Okay, so first question on aluminum foil as well as the KMOS contract. While you alluded towards aluminum foil getting commissioning or seeing a ramp-up by Q4 or by Q1 next year, how quick can be the revenue ramp-up here, both for aluminum foil as well as for the KMOS contract?

I'm not sure what ramp-up you're talking about on aluminum foil. On aluminum foil, we're already operating effectively.

In terms of optimal or, you know, full utilization.

Yeah, so, you know, like I said, the area we're trying to really move the needle is markets we have access to. And, you know, there's been a lot of strong push on that front towards getting... you know, access into Europe and getting a sizable amount of volume over there. Like I said, we've kind of got close to half of our volume of Q1 into that market this last quarter, so that's a very promising sign. You know, and that trend kind of holds through, you know, Q2, and thereafter, there's no reason why we won't be able to, you know, increase. I also talked about septic. That is the piece that is expected to actually kind of come through by Q1 of next year. And then that kind of takes you into a different space in terms of pricing. So you truly then move away from, even on the domestic side, in terms of what we would be doing. You know, you should start seeing change, I think, even as we go forward through the rest of this year, just given access to Europe market, which is half of kind of what we're doing. And on domestic, as we make more and more plays into things like a septic and those kind of spaces, you know, through early next year, we should see the domestic side of the business also start seeing better realizations. So, that's on aluminium. I'm sorry, I didn't quite get your second part of the question on chemo. If you could just repeat that for me.

So, the Kermos contract, you know, in terms of the product, while there are some rejects in terms of the plant specification, the contractual obligation, you know, from a revenue ramper perspective should be there in year one of its operations itself, or it may take slightly longer.

So we will start seeing revenue, you know, from the time we kind of fairly soon after commissioning the plan. So it should be within the first year itself. But like I said, 27, 28 will be lower. When we hit 28, 29, we'll start getting to kind of full stream.

Sure. And second bit on, you know, the proportion of medium or, let's say, longer term contract, especially for the performance film as well as on the technical textiles front. Has there been any change, you know, over the last six months? Maybe we have entered into shorter term contracts or longer term contracts?

Well, uh, you know, on... On performance films, it's been very opportunistic buying. You heard that in my opening commentary, right? There's been a lot of panic buying in Q1. I think the contracts that we have that are longer term, those continue, right? We have a very established footprint with customers. This is a business that prides itself on being easy to do business with its fair motto. And it's a very strong portfolio of customers that is subsisted for a very long time. So those contacts are, in general, long and, you know, sustained with, you know, think of all the big FMCG players that you can imagine. They're all on that customer list, in a sense. That continues as is. I think the piece that has kind of come on top of that is really a lot of the spanning line from people. Many of whom were not our customers in the past. Some of it is from the existing customers who are also worried, but there have been newer customers that have come into our portfolio because of the sheer reliability with which they can buy from a player like SRF. And I think they saw the impact. of being associated with other players and not being able to reliably get product, which then impacted them in terms of being able to get, you know, their product onto shelves. So we've seen that shift. And, you know, I kind of said this as well on the previous call, that part of the whole journey has been around You do not want to be predatory about fighting either because you know it is going to correct on you. So managing that with the customer base effectively to ensure there's collective success at the end of this whole craziness that we're seeing out in the Middle East has been part of this whole agenda, so to say, to ensure it's not one-sided. But, yeah, the long-term contracts that have existed in the past, they continue on package rooms and kind of more different on technical textile. Yes, again, over there, we did, over there, slightly different, not so much opportunistic buying that happened or panic buying, but, you know, there were issues around the ability to renegotiate spreads, I think. because of what was just happening on raw material pricing and what have you. So I think that's kind of the impact that you see in the numbers in Q1. That will kind of normalize out in Q2. But like I said, even in my opening remarks, it will settle at a level that is, you know, it is better versus a comparable period last year. But in terms of long-term contracts, you know, those that are in place continue. No significant direction changes over there.

Sure, sir. Thanks a lot for those answers. That's it from my side. Thank you. Thank you. Thank you.

Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to the management for closing comments.

I hope you've been able to address your question. Should you have any further queries, our team and I would be very happy to assist. We value your continued support, and on behalf of the management, I thank you once again for taking the time to join us today. Bye-bye.

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