DCW Limited (DCW) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to DCW Ltd. Q4 FY26 Earnings Conference Call, hosted by Arihan Capital Markets Ltd. As a reminder, all participants will be in the lesson-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ayush Chaturvedi from Arihan Capital Markets Limited. Thank you, and over to you, sir.

Thank you, Yusuf. Good afternoon, everyone, and thank you for joining us on DCW's Q4 FY26 earnings call. I would like to thank the management for giving us the opportunity to host. And on this call, representing DCW's management, we have Mr. Sathvik Jain, President, Mr. Amitabh Gupta, CEO, Mr. Sudarshan Garapati, CEO, and Mr. Pradeep Tohukharji, CFO. I would like to invite Mr. Sathvik Jain now to give his opening remarks, post which we can open the forum for Q&A. Omu to you, sir. Thanks.

Thank you. Good afternoon, everyone, and thank you for joining us for DCW's Q4 and full year FY26 earnings call. As always, I appreciate your time and continued interest in our company. I will begin with a brief view of the broader industry environment and then move on to our full year performance, operational progress, and way forward. FY26 was another volatile year for the global chemical industry. The sector continued to deal with fluctuations in crude-linked feedstock and energy costs, geopolitical disruptions, changing trade flows, and elevated logistics costs at different points during the year. While underlying demand across several NU sectors broadly remained stable, pricing was under pressure across many chemical value chains. Due to excess global capacities and weak international realizations. For Indian chemical companies, the pressure was even more visible. Large volumes of competitively priced imports, especially from China, continued to impact domestic pricing and margin structures. This was particularly relevant for commodity chemicals, where global oversupply and import competition kept net realizations. At the same time, India's medium-to-long-term opportunity remains intact. Domestic consumption, infrastructure creation, housing, water management, agriculture, industrial growth continue to provide a strong base for chemical demand. While near to volatility and input costs to your politics. Trade flows will continue to remain constructive on the sector's long-term outlook. Against this challenging backdrop, we are happy to state that BCW delivered a steady and satisfying performance for FY26. Our EBITDA grew by approximately 11% year-on-year, and our FAT grew by more than 60%. This performance is particularly encouraging because it was Achieved in a year where naturalization declined across. our entire product range, with the exception of our pigments. CPVC realizations alone corrected by more than 20% during the year. Therefore, the improvement in profitability was not driven by pricing tailwinds, but by higher volumes, better operating discipline, improved utilization, and a stronger specialty contribution and leaner balance sheet. During the year, we recorded higher production and sales across almost all of our products compared to FY25. The only exception was external PVC sales where incremental volumes were consciously diverted for captive consumption in our C-PVC production. This is a light. With our strategy of moving further downstream, improving value realization, and strengthening the specialty chemicals contribution within our portfolio. FY26 was also a record year from a volume perspective. We achieved our highest ever sales volumes in CPVC, synthetic iron oxide pigment, and synthetic root oil. This is an important milestone for us, especially given the difficult external environment. In CPVC, the year marked a significant step forward. We added 30,000 tons of capacity to our earlier 20,000 ton base, taking our total annual capacity to 50,000 tons. The expansion was commissioned on time, within budget, and commercialized at full capacity, all within one quarter. The final 10,000 tons was also completed on time towards the end of March and we expect the benefits of this additional capacity to start accruing from Q1. Our synthetic rutile business also delivered a strong year with record sales volumes and a significant reduction in inventory pressure. This is a positive development considering the tough market conditions in this product over the last few years. The progress reflects. Better customer engagement, improved dispatch planning, and sustained focus by our team on rebuilding market confidence. The synthetic iron oxide pigments business continue to perform well, supported by healthy demand and market penetration. As discussed earlier, we are also working on expanding our product range with newer grains, which should help improve our market reach over time. From a segmental perspective, specialty chemicals continue to support overall profitability, although margins moderated due to the correction in CPVC realizations and spread compression. On the other hand, the basic chemicals business showed improvement performance, supported by better utilization levels and benefits of our renewable energy project. Our renewable energy project was also commissioned during the year and the benefits have already started reflecting in our power costs. This was an important initiative both from a cost competitiveness and sustainability perspective. Equally important, FY26 was not only about capacity additions and operational performance. We also repaid 145 crores of long-term debt during the year and ended FY26. with a net debt to EBITDA at 0.3 times. This gives us a much stronger financial platform as we prepare for the next phase of growth. As I had mentioned last quarter, we are not only preparing for a cyclical recovery, we are building the organization for scalable growth. During the year, we progress on several foundational initiatives. The implementation of SAP S4 HANA is a key step forward to stronger governance, sharper financial controls, better data visibility, and process standardization. We have also begun piloting AI-based process optimization at a SORAGE plant in partnership with a Netherlands-based technology company, and the early results are encouraging in terms of operational efficiencies. Across functions, there is a clear focus on digitalization, technology adoption, and building systems that can support larger, more agile, and more accountable organizations. As we enter FY27, the global environment remains dynamic, particularly due to the situation in West Asia, which has created a near-term disruption in PVC supply chains and pricing. We will remain watchful on capital deployment in this uncertain environment. At the same time, our growth plans are in advanced stages and our intent remains clear. With the expanded CPC capacity, improving specialty volumes, reduced synthetic route and inventory, renewable energy benefits, stronger systems, significantly leaner balance sheet, DCW enters FY27 with a more resilient and future-ready base. Our focus now is to convert this stronger platform into sustained growth while maintaining discipline in our capital allocation and execution. With that, I will hand it over to our CFO, Pradipto, to take you to our financial performance in detail. Thank you.

Thank you, Sathik, and welcome, everyone, to Q4-FI26, Earnings Call for DCW Ltd. Quarter for revenue stood at 609 crores, which was higher by 13.2% on a YOY basis and 17% on a sequential basis. The annual revenue stood at 2144 crores, an increase of 7.2% on a YOY. The annual revenue numbers registered this growth despite the realization across all product segments have been impacted during the course of the financial year, and further 25-30% incremental PBC volumes were diverted for captive consumption. It is important to mention here that at the annual level, the company recorded highest-level sales volume for CPBC, SIOB, and synthetic rutile. While CPVC incremental volumes were produced due to capacity expansion, the commercialization of the same happened seamlessly, thereby nullifying any inventory increase. In case of SIOP and synthetic rutile, the company was able to sell more volumes than production, thereby reducing the inventory levels. The annual production across all product segments have also surpassed the previous year's production Some numbers. With standout of CPVC, 60% increase in production volumes and synthetic motiles, 20%. The soda ash production for the quarter 4 also recorded the highest number in the past 11 quarters. Now the EBITDA, Q4 EBITDA including other income stood at 70 crores, up by 14% YOY and 40% on sequential basis. The annual EBITDA stood at 240 crores, as against 216 crores last year, that's an 11.2% increase. Q4 basic EBITDA stood at 30 crores, over 14 crores in Q4 last fiscal, that's an increase of 1.1 times. The annual EBITDA for basic chemicals stood at 54 crores over 19 crores in the last fiscal, that is 1.8 times. The performance could be attributed to higher production across all product segments under basic chemicals resulting in a better fixed cost absorption coupled with benefits flowing from substitution of power supplies from Tamil Nadu electricity board to solar. Quarter 4 Specialty Chemicals EBITDA stood at 39 crores, over 46 crores in quarter 4 of last fiscal, which is a 16% reduction, and 50 crores in the previous quarter, which is 22% reduction. The annual EBITDA stood at 177 crores for the Specialty Chemicals, as against 189 crores in last fiscal, a degrowth by 6.5%. Despite volume increase in both CPVC and SIOP, the significant reduction in HANR by 22% in CPVC, with no consumerate reduction in PVC input prices, resulted in PVC-CPVC spread contraction and consequently margins. Annual EBITDA margin for the company stood at 11.2% in the current year, an improvement from the last year, last fiscal. Margin of 10.7%. While the specialty margin clocked at 30%, a contraction by 6% over last fiscal, the basic chemical margins improved to 3.5% over 1.3% last year. The PAT for quarter quotes stood at 18 crores, which is higher by 60% YOY and 2.7 times on sequential basis. The annual PAT stood at 48 crores, as against 30 crores last fiscal, which is a significant increase of 60%. Such a growth could be achieved by an increase in EBITDA by 11%, coupled by a reduction in finance costs by 7.5%. The finance costs for the quarter quotes stood at 15 crores, 15.4 crores. Reduction by 2.3% YOY and 4.9% sequential basis. Annual finance cost stood at 62 crores, down from 67 crores in the last fiscal, showcasing a reduction of 7.5%. On the balance sheet front, it's important to discuss these two numbers. The company's closing gross debt stood at 276 crores versus 426 crores in India. A year back, this is a reduction of 150 crores due to scheduled term loan repayment. The company had not borrowed any additional term facility during the current fiscal, and such closing borrowings are the lowest over many financial year ends of the company. The company continues to maintain a healthy cash position, including bank FDs at a level of 204 crores. Thereby having a net debt of only 71 crores, demonstrating the effect of significant re-leveraging program run for the last couple of years. With this, we open this forum for Q&A. Thank you.

Thank you very much, sir. 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 withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Pujan Shah from Molecule Ventures. Please proceed.

Hello, am I audible?

Yes, please go ahead.

Yes. Sir, first of all, good set of numbers, and we are starting with FI27 with a very cleaner balance sheet. So congratulations on all the efforts you have made for that. Coming to my first question, so it pertains to caustic soda. So we have seen the prices are forming right now. So what is the core reason for that? It is more of a caustic push or we are seeing some end-user industry demand coming up which is driving the prices?

One of the primary reasons in our view is that there has been lot of production interruptions in the entire Southeast Asia. Because of the geopolitical situation and usually the caustic complex also has a EDC-VCM facility because there has been no supply of petrochemical feedstock, operating rate of caustic soda had come down. So there was a supply imbalance which helped the prices to improve. So this situation is likely to continue for some more time till the situation normalizes.

Okay, okay, got it.

And a similar question pertains to the short answer. Do you feel the, so as the chloralkali always move in a, in a same tandem, so do you feel that it also, it will remain elevated for the similar time being?

We can't comment because the situation is changing on a daily basis, so we don't know. I just can't answer on that aspect as of now.

And are we expecting any government support on that part, on Sodaesh?

Sodaesh, I think the efforts are being on, right? Efforts are being on.

I think Sodaesh have moved for the anti-dumping duty. So let us hope things come out. But since there is not much of imports coming from Russia and Iran, the prices have gone upwards. And the margins are pretty good at this stage. And the situation is likely to continue for some time, but nobody can predict forever.

Got it. Sir, and pertaining to the PEC, so I just want to understand two parts. One is we have seen a reduction in inputs due to China removing the duty. And there is also implementation of duty by Indian government, which was removed due to all this geopolitical situation. Now, considering all the scenarios, do you feel the PVC price should remain range-bound at 85.90, or do you feel we have some headroom still over from this price as well?

We don't know, because... As of now, yes, prices have started improving. But whether it will go to 85, 90, 95, that I think that is anybody's guess. What has happened in the month of April, I think, was that there was a lot of PVC coming from China, which was in the ACZ, which was to be exported before they started the duty, which was withdrawn on the exports from China. So, now that the VAT concession has been removed on exports of PVC from China, what will be the impact? We are waiting and watching. As of now, it is too early for us to give any, I would say, heads up or the forecast on how the prices will go.

Why I am coming to the question is because we have seen the real estate prices in China has been at a 20-year low, and versus there is a China anti-involution where they are taking some measurable steps by shutting down some inefficient plants of PVC. So I am not able to gauge the incremental delta of how it will be converging into the scenario.

See, anti-invaluation we have been hearing last six months, but how it is going to pan out, nobody can really forecast. And with regard to the real estate growth drivers which are not doing well in China, the same was the case even in the last couple of years. So, I don't know how the Chinese economy operates or how they work. We just can't. We can only watch and see how they are able to supply the product and if they are. If there is some real thought on anti-involution by which they will be forcing their products where they are not making any margin to shut, then it will help us. But it is too early for us to make any forecast or comment on that.

Got you, sir. And understanding the power cost savings, so we draw solar, we invested in solar and we try to have a savings benefit of 40 to 50 crores. So, in this quarter we have drawn around 12-15 crores of savings from power or we are still mature to get the understanding correct?

See, the number was never 50 crores. The number when we assessed and got into this, you know, substitution by, you know, and went into the decision was around reaching up to 40 crores. But that had a different dynamics so far as CNEB prices and coal prices were concerned. Right. Now, what we guided, you know, last time was around 25 to 30 crore number. I think if you see our numbers this year with the volumes which we have achieved, we have still our power cost in the face of the financials will be 7, 8 crores less. There is an incremental volume effect. There is a coal price which has gone up from last year to this year. So, negating the coal price increase effect, negating the volume effect which has an impact on power cost, our power cost in absolute terms are still lower on the year level by 7 crores. So, according to our estimates, the savings would have been around 23-24 crores.

And are you planning to invest in solar going forward for this year or we are still in a, we are on likely mode that we do or not to do?

So far as the investment goes, we could come up with some investment proposition, but as and when we do, we'll let you know. We'll be the first thing to include all our shareholders, you know, given information. But as we've been told, we're going a bit slow because we want to tide over the uncertainty so far as this Iran war is going on, and then we have our plans for the investments going forward for this year and maybe a couple of years to come.

Apart from this, we are waiting for a clarity on the regulatory matters, because there were some regulatory changes announced by the Tangent Co in Tamil Nadu, wherein the banking rules got changed. So, we are waiting for a clarification on that, because entire dynamics will depend on extent to which we are able to offset the PNEB rates.

Thank you, sir. Sir, in our initial remarks, we have said that there was a narrower spread on PVC and CPC. So in the current situation, are we able to get the pre-war type of spread or we are still in the early, we are getting a narrower spread than the previous, than the last month?

The spreads have improved. It has gone back to the pre-war. What has happened is that there was a spike in the PVC prices in the month of March. So that was how the Passover was not happening in the CPVC. That's why we have seen a contraction in our topic numbers on CPVC, which we feel that in the coming quarters will regularize, normalize.

Got it, got it, got it. And my last question is, are we still facing dumping issues from Malaysia for TVC or we are seeing easing out there from that region?

Dumping issues are there from everywhere. For all the products, we have dumping issues. So, that's a separate, I think we can have a separate debate on that. Dumping issues are there. But, but, but, no issue.

Thank you so much. I will join back in the queue. Thank you so much for all my queries.

Thank you.

Thank you.

Next question is from the line of Keshav Gar from Counter-Cyclical PMS. Please proceed.

Sir, I wanted to get clarity on a couple of things. Firstly, our net debt seems to be around 80 crore, but the annual interest cost is in the vicinity of around 60 crores. Sir, so going forward for FY27, what is the finance cost number that you have in mind?

See, the finance cost, which is 62 crores this year, has an effect not only on the net debt, which you see. It has also, the net debts are distributed into two parts. One is the long-term debt, which interest is gradually coming down as we are repaying. And as we have been maintaining 200 crores of cash in the balance sheet. There is, and the working capital challenges have come up over the couple of quarters. We have a separate line of credit which we have taken without, you know, without infringing our internal strategy of keeping around 5% of the top line in cash. There is a negative carry. So if you have to see my interest cost, you please also reduce my interest income to find what is my debt overall. You may not see the benefit of the interest cost reduction. But over the period of last 2-3 years, to the extent of the debt reduction, but you have to also take into cognizance what is the other income or the interest income which has increased over the 2-3 years. So we're deliberately keeping a negative spread because as an internal financial policies, we're keeping around 200 crores kind of FD for which we are earning interest. For next year also, we are keeping the philosophy of 100-200 crores odd as FDs, and the repayments which are planned out, the interest cost should go down by around 12-13 crores. Now, having said that, we also have to see how the pressure on our short-term working capital comes in if the war continues. That will have an effect of interest cost increase because we will borrow some credit. We utilize some credit lines to support the working capital function. So roughly it should go down to 50 crores if we are not having very much challenge by the working capital borrowing lines. We have to keep it open for longer. If that is not the case, it should be for 50 crores or sub-50.

Understood. Sir, and we had... Estimation for FY27 for roughly 2500 crore top line and 400 crore EBITDA and net debt free by the end of FY27. So are we on track to achieve all these parameters?

See, our scheduled debt repayment for next year is again 130 crores. So, obviously, we will be debt-free because we have a 71 crores of net debt. So, net debt, obviously, will be debt-free. The only challenge, what we find, is the 400 crore number which we have planned for, which we had communicated as a part of the, you know, I mean, couple of years plan. And that actually gets a bit derailed because of the pricing pressures, which we are seeing both in the commodity segment and, more importantly, on the speciality segment. We have tried to maintain the absolute value of speciality profit by increasing volumes of CPVC from 10 to 20, 20 to 40 now. We have also announced a 10KT commissioning of the last phase, which we had communicated to all our stakeholders. That also will be in place. So, the only thing is that we are definitely not seeing the benefits of the increased CPVC volumes, commercialization volumes, because a large part of it is eaten up by the price erosions, which we did not anticipate when we gave you a 400 crore of guidance. But debt number, as we discussed, if it's 71 and 131, 38 crore of scheduled payment, we will be net cash positive company.

So, does 300 crore EBITDA for 27 looks reasonable?

We would not be able to give you a guidance on that because the prices movement has an impact. You have to please understand that we are an upstream B2B business. Our downstream prices does not reflect in line or tandem with the sale prices. So if the sale prices of commodity chemicals remain elevated and goes up, we will have profits which we cannot anticipate at the moment. So we are trying to, whatever we are trying to do is we are trying to exhaust our capacity produced to the fullest and sell to the fullest. And see how the prices shape up, right? Because fixed costs are in control. We're trying to do all efficiency improvement drives, which reduces our fixed costs or keeps it in control. That's what we can do as an organization. But today it's very volatile in terms of pricing of both our raw materials and finished goods, which we sell. So giving a number would be difficult. But we are well-placed to tide over this storm if this war continues for long. That much I can say.

Sure. Sir, now coming to our investor presentation page number 13, 14, which shows the capacity utilization product-wise, it seems that in almost all the products, we are at or near full utilization. So, I understand the CPVC volumes, we have increased capacity. So, in FR27, we can see some volume growth. Sir, but in the rest of all the products, Are we at by and large, I mean, how much incremental volume growth can happen from FY26 level?

So, as you rightly pointed out, this year we are more or less at capacity for the SIOP. The two products where we were chasing capacity was CCVC, where we were doing CAPEX and, you know, increasing volumes. SIOP, where we did the bottlenecks from 18 to 28, and we have moved on to 24,000 last year. Now, almost, you know, I mean, almost capacity saved this time. So, there is no much scope of capacity expansion in any products and thereby giving, you know, revenues or EBITDA except for CPBC. And hence, we are in a place where we have to announce our capexes, which is in line, which has been sorted, but we are just waiting out for this couple of months for the geopolitics to play out to its fullest. At the same time, we have done certain investments in SIOB, wherein we are moving for not... Growth in volumes, but moving to value-added products, wherein we think that there will be some amount of incremental margin which will be expected to flow.

Sir, and directionally, going forward, will we do capex only in the speciality side, which is CPVC-SIOP, or in the commodity side as well, we are open?

So, in the commodity side, it will be more capexes for efficiencies, not for volume. The capexes which will come for growth predominantly as of now our thought process is to make it in the speciality segment or in the niche segment with related chemistries. So that as and when we are just a bit comfortable with this geopolitics, we will announce and inform all our stakeholders. You have to only understand that as we are closing this year, we are in the most deleverage balance sheet over many years or many decades maybe. So we have, and our legacy loan gets over by this year end, which eventually gives us a lot of headroom to take a good KPEX size. You know, take the company forward, but we're just holding back because we just want to see the geopolitics, how it shapes up, and accordingly take an informed decision so far as Capex is going.

Sir, now coming to the CPVC division where we have incurred capex, but so have all the other industry players. I understand Epigral has done a significant capex, Lubrizol, Reliance, Grassim. So now all that capacity is coming at the same time, and please let me know if I missed any other player which is also bringing some capacity. Sir, so what is the total capacity in the pipeline of CPVC, which is expected to get commissioned, and even globally, if you could shed some light, that is there any significant capacity in the pipeline globally also? Sir, so, and basically, what will be the demand supply? I mean, is there a chance of a glut in CPVC, specifically?

On the companies which you have named presently, even if Epigral has come in, Epigral and our volumes put together still leaves a lot of headroom for import of CPBC into the country for the domestic requirement itself. So, with the capacity which has been informed by Lubrizol which comes in, we don't see by the time it comes in, there will be any mismatch in domestic production versus domestic demand. So, that's where we are comfortable as of now, you know, with the fact that if and when a Frigrol comes with the full capacity and Lubrizol comes with the full capacity, we would not be challenged in placing our volumes.

Sir, lastly, our power cost is 307 crore rupees, so out of which power and fuel, so out of which how much is power cost?

I mean, that breakup we generally do not give, but we will take your question and come back if you prefer.

Where I am coming from is that since we have two and a half thousand acre land, so what is stopping us from just putting solar capacity and basically captively generating this, I mean, and stop taking this power from the state electricity board?

So, state electricity board and fossil fuel is a stable source of power. Solar gives power only in the morning. So, there is a very unique balancing which goes in. Most of the time when we take alternate power, there is a lot of effort which goes into either side to understand what is the power timing of supply, whether we blend it with solar and wind or not, then also what is the flow of supply because we cannot keep our, you know, plant, and operating based on power supply fluctuations. So, it is not that easy. We have substituted 25% of our power. There is future capexes which comes in and steam which is required that the plant is not given from solar power. It's not generated. So, eventually, and you have your captive boilers in place, you have your TNEB. So, it's not a very simple math to do that we substitute all the power from, you know, TNEB to electricity board to us. Because in any case, we have to do the wheeling. So, it's a lot of complex calculation. It's not as easy, we think. Secondly, we are tying this for 20 long years, right? So, today it may look lucrative. We have to do a balanced approach in terms of how much substitution of TNUB we do from solar and what is your power capacity from your own power plant. So, that math goes in here.

Sir, and lastly, if you could just tell us that for each of our products, what is the starting raw material that we are buying from outside?

See, PVC, we have been very vocal about, you know, in BCM, soda ash, we have limestone, it's very openly available in the market, so CPVC becomes PVC, caustic becomes salt and water, and what else? Ion oxide is, you know, iron.

Sir, and synthetic rutine?

Intimate ore is the starting material, so that is also procured locally only, and we use HCL along with that.

Sir, so out of all of these that you just named, sir, we are like, we have our own minds of which all products are we sourcing captively?

No, no, salt is captive. Coal we are sourcing from Indonesia. Synthetic rutile, for hyaluronite ore, we are sourcing from Indian garage. So, for PVC, we are importing VCM. And for CPVC, we are using the PVC produced wires.

Understood, sir. Thank you very much. Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the question queue, please restrict yourself to two questions only. Should you have a follow-up question, please rejoin the queue. Next question is from the line of Abhinav from Equitas Investments. Please go ahead.

Hi. So my first question was regarding Caustic Soda. Can you tell me what were the realizations in Q4 and what are the current ECU realizations?

Realization in Q4.

Q4, I think it was around $350. And as we talk in Q1, the real decision is in the north of 400, yeah, 400 dollars.

Have you seen any capacities globally shut down because the chlorine production has been reduced because of PVT?

Again, I'm not able to hear you. Can you please repeat your question, please?

Have you seen any capacity closures or reduced capacity utilization in Caustic globally because chlorine is not getting diverted to PVC? And what do you mean by chlorine utilization?

No, no. There have been some capacity closures in the Europe of PVC. Which will ultimately result in a corresponding capacity closure of caustic soda. But we have not seen any significant closure of capacity of caustic soda as yet.

Okay. And what will be the chlorine realization currently?

Chlorine realization? We don't sell any chlorine.

It's not relevant for us because that's one transition which we have done as an organization over the years. We have now been a chlorine neutral facility down south.

But that would be around 8,000 rupees, I and a half negative.

Maybe, maybe. Market prices, yes, maybe 7-8,000 rupees negative.

7,000. And for caustic, it is 100% domestic or do we export? Because we are in terms of caustic, the entire supply is higher than the demand with the parent.

We are also exporting. We also export because we are also port-based. So always we have an option of selling to a domestic user in the East Coast of India or export the product to Southeast Asia. So we have been doing both on and off whenever there is a demand from any of the customers in the East Coast, mainly the Alimina companies, or we export it to some of our customers in Southeast Asia.

And why has our capacity utilization in Q4 reduced from 96% to 90% for caustic? That is because of some maintenance outage. No problem in the demand, right? Because I have heard that in paper and textile people have curtailed capacity and those two segments being the highest user for caustic. Have we seen any demand issues there?

Thank you. As you may be knowing, caustic soda is 50% water. So the ability of any producer to sell their product will be within the 300 km radius. The remaining of this product is only sold as a bulk shipment to either a bulk consumer like Nalco or Vedanta or to any of the customer in the Southeast Asia or Europe or some other market. So, yes, there has been a demand dip because of the lower uptake from the sectors that you have mentioned, but there has been no production development because of the demand dip that we have seen.

And all said and done, these sectors are not very big consumers of plastic soda. The main consumption comes from the Illumina industry, which is doing very, very good.

Oh, what? And because of soda ash, with China coming up with a newer capacity and Inner Mongolia having a newer natural basis, have you heard of any material capacities going off in China? And are they still exporting to us?

No, frankly, there's not. The main imports in India used to be from Iran and Russia, as I mentioned earlier, which is not happening now. And China is not a very big exporter of solar ash. So there is not much of issues from China. And all said and done, because of the increases in the freight rates and everything, the prices are pretty healthy today.

What would be the current solar ash prices?

Sorry?

What would be the current solar ash prices?

See, today the import prices in the vicinity of about $250.

Thank you. Thank you.

Next question is from the line of Manish Bhadani from 361 Capital. Please go ahead.

Thanks for the opportunity, sir. If I look at the slide number 20, so our ROC is around 8.56%. So, it is even below the cost of date, like 9-10% of the cost of date, that's in India. So, what are the steps we are taking to improve the ROC going forward?

So, we have to only go into products which are, you know, high margin and lower capex. That's the only way to increase your ROC. We are into business of plastic, PVC, sodas for many years now. The investments, there is no much investment. ROC is a function of profit, wherein if the business conditions or the prices go up, you will see the profit going up and automatically ROC is getting, moving upwards. Now, so far as what we can do as an organization is only ensure that we do investments which are of high margin or high ROC. That means, I mean, higher capital turnover ratio and also higher margin business which gives you higher ROC. So, that's what had triggered our investments into SIOP and investment into CQBC, which obviously is much lower as an investment, payback period roughly, for the incremental capacities what we did, were around two years, two and a half years, even at current prices. So, that would have already been baked in, but what you need to understand is that the ROC for us as an Thank you. Speciality chemicals going up is low because the commodity chemicals are at its bottom cycle. If you place this ROC with the prices of which we got for commodities in 2023-2024, then the ROC will be north of 14-15 percent.

Thank you so much.

Thank you. Next question is from the line of Madhur Rati from Counter-Cyclical Investments. Please go ahead.

Sir, thank you for the opportunity. Sir, I wanted to understand, you mentioned that there has been some spread improvement and realization improvement in SIOP and synthetic rutile. So what led to this improvement and what are the current realizations for these products?

On SIOP, I don't think there is a spread improvement. We told on PBC and CPBC spread. On SIOP, what we told is that we are moving to higher value-add products, in which case we can command a better margin in those products, though the volume may not increase. Coming to your other product, which you asked, was on... Synthetic rutile, the prices depends on the mix through which we export. It's a 100% export business. When we are exporting into China, we don't get those prices. When we export into our existing customers who have been taking X of China, their prices are better off. So if we can have our share of sales more into X of China, The mix gives us a better realization and hence a better margin. We believe that we've got certain of external customers' long-term contracts which we are building up and hence the margins should stay elevated just because of a better weighted average price which we will achieve from sale of synthetic utile.

Sir, what was the realization and spread for both of these products in Q4 and what are they currently?

See, for a synthetic rutile, you cannot see a quarter because it depends on how is the skewing of the sales across the full year. Now, for SR as a product, we have never been giving it because it's a part of the caustic business and now caustic is a part of. The basic chemicals. The whole idea is basically what we can tell you is that the spread should stay elevated for synthetic rutile for this year compared to last year, which will give us some incremental profits compared to what we have closed in this financial year. SIOP, we had already communicated when we were showing that as a separate segment earlier, our margins were around 35 to 40 percent. We still continue to get those margins.

There's also a major improvement in Erica.

Sorry to interrupt Mr. Rati, may we please request you to rejoin the queue, sir, for the follow-up question. Thank you. Next question is from the line of Praneet Bamachati, an individual investor. Please go ahead.

Hi, thank you for the opportunity. The management has previously delivered the fact that we have been facing a lot of pressures in terms of dumping. Could you explain what kind of pressures, how is it different between the speciality versus commodity dumping, and which countries is it between, and what kind of margin compression the company has been able to take, as we needed to take because of this dumping force?

We had filed a couple of petitions for... Dumping support from the government on PVC and on soda ash. And on both the products, despite there was a positive finding, those duties never got implemented. We had a case in CPVC of dumped imports coming from China and Korea, for which we had got a favorable dumping duty levied. A couple of years back. So this is a phenomenon which keeps on and off based on the demand-supply imbalances from those respective exporting countries. So there cannot be any standard guidelines. But what was the speciality? Speciality there are no dumpings now. Only in CPVC we had a dumping duty case. Ion oxide there is no dumping. In fact, we are exporting the product.

And one last question regarding the cap table. What is the exact association? Is there an association with the Times Group versus our promoters? Could you explain the relationship? Is there any more relationship with the Times Group?

I think all these things, better you write to our PR firm, company secretary, he will explain to you.

I think it has nothing to do with the business. And last question, in terms of operational margin efficiencies, are we at our peak? Because I think most of our utilization is the highest it can be. So going forward, without the price increase, our margins are going to stay in the same range, right? Is that a right understanding?

Yeah, it would, because as we told that there is a 10 KT of additional volumes of CBBC which kicks in. Which takes care of, you know, the increased growth for next year, growth growth per se. There are certain factors which we think would help us in terms of margin improvement. Like as we told and discussed that we are going to long-term contracts with ex-China SR sales, which eventually increases our weighted average net realizations for the product and thereby the margins of the profitability. We see certain price increases, which we expect to be here for a couple of quarters, so far as Paustic and Sodaash is concerned, but at the same time, we see that there is a bit of a challenge, so far as we see in PVC spread is concerned, and also PVC-C-PVC spread is concerned. We are trying to see how the pricing is played out and accordingly take decisions on the... On the procurement as well as the sales side. But I think there are chances and there are more opportunities for us to increase the operating profit for next year than what we have achieved.

But, so, can you list out those? I understand the long-term contracts, you'll get a better weighted average. Apart from that, operationally, what can we do? Because you told...

There's about 10 KT of additional volumes for CPVC, which comes in, which we hope to place the volumes, and we will derive an annual benefit out of it, because, though we commissioned the plant in, you know, March end. We think that we will scale up pretty quickly with our experience of first 20 to 40 getting, so more or less an annualized benefit of additional volumes and margins, absolute profit should go up there. There is some effect, as I told, on the weighted average contract prices for SR, while in Caustic and Sodash, we expect the prices to stay elevated. There will be some amount of dip so far as VC and PBC is concerned, and that is predominantly with this war. We have to see how things shape up. Apart from that, we don't have a lever of capacity because we are doing almost the capacity utilization whenever we are doing a capex, seamlessly commercializing them. We have to wait for the next round of CAPEX, which we have to announce, and that also has to do with the fact that how the geopolitics shapes up.

Understood, sir. One last question regarding our potential expansion to other chemicals and speciality. Is there any near term that the company has in terms of intention to expand into new chemicals or will it be expanding the specialty chemicals we already have

in the next three to five years? Speciality chemical growth which will come has to be in related chemistry. The synergy comes either by utilizing your marketing leverage or your chemical understanding of the product. That's the second one. And thirdly, very importantly, where thematically we want to see this organization five years or seven years hence. Putting all this into practice, we have relatively had drawing board discussions and certain products which we can venture into. Please wait for us to come and communicate to you.

Understood, sir. Thank you so much. That's it from my side. Thank you.

Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and one. Next follow-up question is from the line of Madhur Rati from Counter-Cyclical Investments. Please go ahead.

Thank you for the opportunity once again. So, if I look at our YOY EBITDA from the speciality chemical segment, so is it fair to assume that whatever decline that we saw in the spread composition for CPVC, PVC was mitigated or offset by SR spread improvement? Is that a fair understanding?

SR is not a part of our specialty. What happened is that the spread contraction of, since the specialty business to products, which is SIOP and CPVC. These were separate segments that we have clubbed into one. What has happened is the spread contraction of PVC to CPVC has been mitigated by the volume increase of CPVC, which is basically, which we did around about 22,000 tons. This year we are doing around. 37,000, 38,000 times. So, the volume more or less has doubled so far as PPVC is concerned. That helped us almost meet the numbers, even despite the PPVC-CPVC spread contraction. Anything you want to add, sir?

No, no, what he says is, this is, you are asking about the quarter four in specific quarter four.

No, sir, I was asking about why there has been a flattish EBITDA closer to 180 crores. So I was trying to understand what has been the spread compression in CPVC and what has been improvement in SIOP. So I thought that synthetic route is in SIOP, but only SIOP.

So see, SIOP we have increased the volumes by 20% and CPVC we have increased the volumes almost double, 60-70%. Okay, so that has been mitigated by the price correction only in CPBC, which did not have a consumer and input CPBC price correction, which basically means the BBC CPBC spread came under contraction. That contraction was mitigated by the additional volumes which we produced and sold. So that's the way it has been.

Got it. And sir, on our CPVC segment, sir, how, what is the extent of capacity closure that you mentioned that has happened in Europe? And sir, how is our feedstock availability currently that we import?

CPVC, we don't import any feedstock.

No, sir, I'm talking about PVC.

Yeah, PVC, there is, we don't import PVC also, we import VCM, we produce PVC, and we use those PVC in making our CPVC.

Yes, sir, I was asking about... Sorry to interrupt Mr. Rattie, may we please request you to reach out. This is just a clarification. I think there was some... Sir, I am trying to understand what has been the capacity closure in PVC that you mentioned that has happened in Europe, and what is the stock availability of VCM for our PVC segment? Is it available, or are we facing shortages for this VCM for our PVC segment?

No. See, one is that we used to source our feedstock majorly from Middle East. Because of the Gulf War, that supply which has been the closest logistically is not coming. So our contracts were all put on pause. So to tide over the situation, we are procuring the feedstock. There has been no issue in the production, but it is coming at a high cost, which we are finding it difficult to pass on in our finished product, which is PVC. This is a temporary phase. So, there has been, and even if there has been a planned closure in the Europe, technically the product, the VCM cannot come to India because of the logistics cost, because it's a pretty long distance, and VCM comes in a, not comes in a container, it comes in a ship, so, you know, logistics pays a very big cost.

No, sir, I was asking how much capacity in metric terms has closed in Europe?

Europe capacity, I think two plants got closed. I think Vinova is one capacity, I think that is some 2 lakh tons which got closed, and one more plant which I don't recall, it got closed. But these closures happened much before the start of the West Asian conflict. It has got nothing to do with the current geopolitical conflict. These capacities got closed in the course of last year.

Right. Sir, that was from Mayan. Thank you so much and all the best.

Thank you.

Thank you. Ladies and gentlemen, we will take this as the last question for the day. I now hand the conference over to the management for the closing comments.

Thank you, everyone, for joining our call today and hope we've been able to answer all your questions. If any further clarifications needed, I request you to reach out to our investor relations advisors at Valorant. Thank you once again, and we'll talk to you next quarter. Thanks.

Thank you very much, sir. On behalf of Aryan Capital Markets Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.