Q1 2027 I G Petrochemicals Ltd Earnings Call

August 7, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to the IG Petrochemicals Ltd. Q1 FY27 Onyx Conference Call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity to ask questions after the presentation concludes.

Operator: Ladies and gentlemen, good day and welcome to the I G Petrochemicals 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 the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Pramod Bhandari, CFO, IGPL. Thank you, and over to you, sir.

Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded.

Speaker #1: This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company on the date of this call.

Speaker #1: These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Pramod Bhandari, CFO, IGPL.

Speaker #1: Thank you, and over to you, sir.

Speaker #2: Good afternoon, everyone, and a warm welcome to all the participants on behalf of IG Petrochemicals. We thank you for joining us today. We also have SGA, our Investor Generation Advisor, with us.

Pramod Bhandari: Good afternoon, everyone, and a warm welcome to all the participants. On the behalf of I G Petrochemicals, we thank you for joining us today. We also have the SGA, our Investor Relations advisor with us. We trust that you have had an opportunity to review our financial results as well as the investment presentation, which have been uploaded on the stock exchange and also available on the company's website. During our discussion today, we will be giving you a brief overview of the industry, followed by the IGPL operating and financial performance for the quarter ended June 2026. In terms of the industry, the overall domestic demand across several downstream industries continues, supported by the infrastructure expanding manufacturing activities and healthy industrial demand. As a result, the Indian chemical industry demonstrates resilience and reflecting the gradual transition from cyclical weakness towards a more stable growth trajectory.

Speaker #2: We trust that you have had an opportunity to review our financial results, as well as the investor presentation, which have been uploaded on the stock exchange and are also available on the company's website.

Speaker #2: During our discussion today, we will be giving you a brief overview of the industry, followed by IGPL's operating and financial performance for the quarter ended June 2026.

Speaker #2: In terms of the industry, the overall domestic demand across several downstream industries continues to be supported by infrastructure spending, manufacturing activities, and healthy industrial demand.

Speaker #2: As a result, the Indian chemical industry demonstrates resilience and reflects the gradual transition from cyclical weakness towards a more stable growth trajectory. As the global commodity chemical market remains competitive, however, geopolitical uncertainties have improved the operating environment in the domestic market compared to the corresponding previous quarter last year.

Pramod Bhandari: As the global commodity chemical market remains competitive, however, the geopolitical uncertainties have improved the operating environment in the domestic market compared to the corresponding previous quarter for the last year. Although the near-term volatility may persist, however, the industry long-term outlook remains positive, supported by the rising domestic demand, global supply chain shift, infrastructure growth, and favorable government policies. The chemical industry continue to operate in a dynamic environment. Ongoing geopolitical tension in the Middle East have also created a near-term uncertainty for Indian economy, particularly through their impact on the energy prices, supply chain, and logistics. This has led to the volatility in the prices of key raw material, including the orthoxylene, as well as several other chemical products across the value chain. However, we expect these disruptions to gradually ease over the short to medium term and supporting a more stable operating environment.

Speaker #2: Although near-term volatility may persist, the industry's long-term outlook remains positive, supported by rising domestic demand, global supply chain shifts, infrastructure growth, and favorable government policies.

Speaker #2: The chemical industry continues to operate in a dynamic environment. Ongoing geopolitical tension in the Middle East has also created near-term uncertainty for the Indian economy, particularly through their impact on energy prices, supply chain, and logistics.

Speaker #2: This has led to the volatility. This has led to the volatility in the prices of crude raw material, including orthoxylene, as well as several other chemical products across the value chain.

Speaker #2: However, we expect these disruptions to gradually ease over the short to medium term and support a more stable operating environment. Against this backdrop, IGPL has delivered a strong operating performance during the quarter.

Pramod Bhandari: Against this backdrop, IGPL has delivered a strong operating performance during the quarter. Our business continue to benefit from a strong domestic presence, a well-established customer network across key end user industries, primarily within a range of 150 to 200 km radius of our manufacturing facility. This localized customer base enhance supply chain efficiency, foster strong customer engagement, and contribute to the stable demand. While certain downstream industries served by IGPL experienced temporary moderation in their demand over recent quarters, we are also now witnessing increasing sign of recovery in several end user segments. IGPL continue to maintain its leadership position in phthalic anhydride market. We are among the largest producer of phthalic anhydride in India and among the largest producer globally. Over several decades, the company has built a strong reputation of manufacturing excellence, operating efficiency, product quality, and customer reliability.

Speaker #2: Our business continues to benefit from a strong domestic presence, with a well-established customer network across key end-user industries, primarily within a range of 150 to 200 kilometers' radius of our manufacturing facility.

Speaker #2: This localized customer base enhances supply chain efficiency, fosters strong customer engagement, and contributes to stable demand. While certain downstream industries served by IGPL experience temporary moderation in their demand, in our recent quarters, we are also now witnessing increasing signs of recovery in several end-user segments.

Speaker #2: IGPL continues to maintain its leadership position in the teleconductor market. We are among the largest producers of teleconductors in India and among the largest producers globally.

Speaker #2: Over several decades, the company has built a strong reputation for manufacturing excellence, operating efficiency, product quality, and customer reliability. One of our key strengths is low-cost manufacturing, achieved through continuous operational improvement, efficient plant management, and disciplined cost control.

Pramod Bhandari: One of our key strength is low cost manufacturing through our continuous operational improvement, efficient plant management, and disciplined cost control. We have maintained our position as one of the lowest cost producer in the industry. This enable us to navigate the market cycle more effectively while continuing to deliver the value to our customers and the stakeholders. In terms of the business performance and operating performance, Q1 FY27 was a strong quarter for the IGPL. We delivered a healthy revenue growth along with a significant improvement in the profitability supported by the improved realization across all product portfolio. Our performance benefit to our continued focus on the operational excellence. As a part of our ongoing focus on strengthening long-term competitiveness, we have continued to invest in the equipment upgrade and maintenance to enhance the operating efficiency and support the future growth. Now turning to the greenfield expansion.

Speaker #2: We have maintained our position as one of the lowest-cost producers in the industry. This enables us to navigate the market cycle more effectively, while continuing to deliver value to our customers and their stakeholders.

Speaker #2: In terms of the business performance and operating performance, Q1, FY27 was a strong quarter for the IGPL. We delivered a healthy revenue growth along with a significant improvement in the profitability, supported by the improved realization across all product portfolio.

Speaker #2: Our performance benefit to our continued focus on the operational excellence. As a part of our ongoing focus on strengthening long-term competitiveness, we have continued to invest in the equipment upgrade and maintenance to enhance the operating efficiency and support the future growth.

Speaker #2: Now, turning to the greenfield expansion, as you are aware, we have concluded the mechanical completion of our process as a plant in March 2026.

Pramod Bhandari: As you are aware that we have concluded the mechanical completion of our plasticizer plant in March 2026. The facility will have an initial capacity of 75,000 tons and expected to start commercial production before September 2026. The plant will manufacture a broad portfolio of plasticizers, including DOP, DINP, DBP, and DIBP, catering to wide range of downstream industries. Several of these industries have a healthy domestic demand with limited import dependence. This development represent a significant step in expanding our value chain, strengthening product diversification, and enhancing the profitability. We believe that the plasticizer business offer attractive long-term growth potential and will become a meaningful contributor to IGPL revenue going forward. To capitalize on the growing demand, we successfully completed the debottlenecking of our DEP plant during the last quarter, increasing its production capacity.

Speaker #2: The facility will have an initial capacity of 75,000 tons and is expected to start commercial production before September 2026. The plant will manufacture a broad portfolio of plasticizers, including DOP, DINP, DBP, and DIBP.

Speaker #2: Catering to a wide range of downstream industries—several of these industries have a healthy domestic demand. With limited import dependence, this development represents a significant step in expanding our value chain, strengthening product diversification, and enhancing profitability.

Speaker #2: We believe that our plasticizer business offers attractive long-term growth potential and will become a meaningful contributor to IGPL's revenue going forward. To capitalize on the growing demand, we successfully completed the de-bottlenecking of our DP plant during the last quarter, increasing its production capacity.

Speaker #2: We expect these diversified product lines to contribute meaningfully to our overall business performance over the next four to five years, creating a more balanced and resilient revenue mix.

Pramod Bhandari: We expect this diversified product line to contribute meaningfully to our overall business performance over the next 4 to 5 years in creating a more balanced and resilient revenue mix. In terms of the sustainability, it remain integrated part of IGPL long-term strategy, guided by our commitment to the environment and circular economy principles. We continue to invest in the initiatives that support the sustainable and long-term value creation. Our CBG plant at Raichur is progressing well, and the project will support renewable energy transition while creating a sustainable and diversified revenue stream. The project not only diversify our business opportunity, but also reinforce our commitment to sustainable industrial practices. In addition to the growth, we remain focused on improved operating efficiency across our manufacturing network.

Speaker #2: In terms of sustainability, it remains an integrated part of IGPL's long-term strategy, guided by our commitment to the environment and circular economy principles.

Speaker #2: We continue to invest in initiatives that support sustainable and long-term value creation. Our CBG plant at Raichur is progressing well, and the project will support the renewable energy transition while creating a sustainable and diversified revenue stream.

Speaker #2: The project not only diversifies our business opportunities but also reinforces our commitment to sustainable industrial practices. In addition to this growth, we remain focused on improved operating efficiency across our manufacturing network.

Speaker #2: We have continued integrating solar power and other renewable solutions into our facility to reduce overall carbon emissions, intensity in our businesses, and optimize energy costs.

Pramod Bhandari: We have continued integrating solar power and other renewable solutions into our facility to reduce overall carbon emission intensity in our businesses and optimize energy costs. Furthermore, we have initiated the phase replacement of conventional fuel, solid, diesel with the natural gas. This transition is expected to deliver multiple benefit, including improved energy efficiency, lower operating cost, reduced emission, and enhance sustainable performance. Looking ahead, we remain optimistic about the growth opportunity ahead. Demand across all key end users expected to improve, supported by the infrastructure development, manufacturing activity, and increasing industrial demand. With our strong market position, expanding manufacturing capability, and diversified product portfolio, we are well positioned to capitalize on these opportunities. On our ongoing investment, product diversification and operational excellence are expected to further strengthen the competitive position and supported the sustainable profitable growth over long term.

Speaker #2: Furthermore, we have initiated the phased replacement of conventional fuel, as well as FO and diesel, with natural gas. This transition is expected to deliver multiple benefits, including improved energy efficiency, lower operating costs, reduced emissions, and enhanced sustainable performance.

Speaker #2: Looking ahead, we remain optimistic about the growth opportunity. Demand across all key end users is expected to improve, supported by infrastructure development, manufacturing activity, and increasing industrial demand.

Speaker #2: With our strong market position, expanding manufacturing capability, and diversified product portfolios, we are well positioned to capitalize on these opportunities. Our ongoing investments, product diversification, and operational excellence are expected to further strengthen our competitive position and support sustainable, profitable growth over the long term.

Speaker #2: We continue to execute our strategic initiatives with disciplined capital allocation. We remain focused on creating long-term, sustainable value for our stakeholders. With this, we thank our investors and stakeholders for their continued trust and support.

Pramod Bhandari: We continue to execute our strategic initiative with a disciplined capital allocation. We remain focused on creating long-term sustainable value for our stakeholders. With this, we thank our shareholder, investor, and stakeholder for their continued trust and support. We remain committed to execute our growth strategy with a discipline and deliver sustainable long-term value for our stakeholders. Coming to the financial performance for the quarter. For Q1 FY27, company delivered a strong quarterly performance with the revenue rising by 30% to INR 625 crore, driven by the improved realization across all product segments. Revenue contribution to the non-PAN was standing at INR 49 crore, led by a better realization of maleic anhydride and DEP. Gross profit and the margin was around INR 207 crore at 33%. EBITDA was INR 120 crore compared to INR 13 crore for Q1 FY26.

Speaker #2: We remain committed to executing our growth strategy with discipline and delivering sustainable, long-term value for our stakeholders. Now, coming to the financial performance for the quarter: for Q1 FY27, the company delivered a strong quarterly performance with revenue rising by 30% to ₹2,626.25 crore, driven by improved realizations across all product segments.

Speaker #2: Revenue contribution to the non-PEN was standing at ₹49 crore, led by better realization of maleic anhydride conductors and DEP. Gross profit and the margin was around ₹207 crore at 33%.

Speaker #2: EBITDA was ₹122.12 crore compared to ₹13 crore for Q1 FY26. EBITDA margin was 19.2% compared to 2.7%, reflecting the strong improvement in profitability.

Pramod Bhandari: EBITDA margin was 19.2% compared to 2.7%, reflecting a strong improvement in the profitability. Profit after tax for the quarter stood at INR 71 crore, reflecting a significant improvement over the corresponding quarter for last few years. India has extended the antidumping duty. I think the notification has come as recent as last 2 days back on the phthalic anhydride, which is $40 for China and around $140 for Korea. That is effective for 5 years, effective from 5 August 2026. With this, I conclude my presentation and open the floor for question and answers. Thank you.

Speaker #2: Profit after tax for the quarter stood at ₹71 crore, reflecting a significant improvement over the corresponding quarter for the last few years. India has extended the anti-dumping duty.

Speaker #2: I think the notification has come as recent as the last two days back on the thaliconductors, which is $40 for China, and around $140 for Korea.

Speaker #2: That is effective for five years, starting from August 5th, 2026. With this, I conclude my presentation and open the floor for questions and answers.

Speaker #2: Thank you.

Speaker #1: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to unmute themselves while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Neeraj from Anvil Wealth. Please proceed.

Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use a handset while asking a question.

Speaker #1: Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Nira from Envil West.

Speaker #1: Please proceed.

Speaker #2: Yes, sir. Good afternoon. I have a few questions to ask. So, sir, in our earlier conference calls, we used to say that the Indian demand for phthalic anhydride is close to around 450 to 500 tons.

[Analyst] (Enville West): Yes, sir. Good afternoon. I have a few questions to ask. Sir.

Pramod Bhandari: Yeah.

[Analyst] (Enville West): In our earlier conference calls, we used to say that the Indian demand for phthalic anhydride is close to around 450,000 to 500,000 tons. Based on a run rate basis for Q1, how has been the industry demand? You mentioned that there were some user industries where the demand was slightly subdued, which have now recovered. If you just indicate in terms of how was the demand in Q1, and how from there onwards it has recovered too.

Speaker #2: So, let's say on a run-rate basis for Q1, how has the industry demand been? Because you mentioned that there were some user industries where the demand was slightly subdued, which have now recovered.

Speaker #2: So if you can just say, if you can just indicate in terms of how was the demand in Q1, and how from there onwards it has recovered too.

Speaker #3: So basically, there was an impact when there is a sudden jump in the prices of various petrochemical feedstocks, including phthalic. Because most of the industries which we cater to, like plasticizer, pigment, PPC, UPR, and LK dressing, they are not only using phthalic as a raw material, but also multiple other petrochemical feedstocks are used.

Pramod Bhandari: Basically, there was an impact when there was a sudden jump in the prices of various petrochemical feedstock, including phthalic, because most of the industries which we cater like plasticizer, pigment, CPC, UPR, alkyd resin, they are not only using phthalic as a raw material, but also multiple other petrochemical feedstocks are used. Of that, there was some moderation in the demand we have witnessed because the pricing has gone up by 50% to 60%. While we have seen there is a moderation in demand in April and May. By June, we have seen again the good recovery of the demand. The segment which has grown very well is the alkyd resin and the paint segment. While the segment which has impacted was the specialty chemical and the plasticizer. UPR remained more or less same. CPC remains same. Some of the product line has improved.

Speaker #3: So, because of that, there was some moderation in the demand we have witnessed, because the pricing has gone up by 50 to 60 percent.

Speaker #3: While we have seen there is a moderation in demand in April and May, in June we have seen again a good recovery of the demand.

Speaker #3: So, the segment which has gone very well is the LK dressing and the paint segment, while the segment which was impacted was especially the chemical and the plasticizer. UPR remained more or less the same.

Speaker #3: CPC remained the same. So, some of the product lines have improved. Some of the product lines remained moderate for the first two months, April and May.

Pramod Bhandari: Some of the product line remained moderated for first two months, April and May. In June, we have seen the similar demand which was prevalent before February 2026. The demand has come to the normalization.

Speaker #3: But in June, we have seen similar demand which was prevalent before February 2026. The demand has now come to normalization.

Speaker #2: Correct. And, sir, in terms of our production and sales this quarter, how was the situation when we compare it to Q4 of FY26?

[Analyst] (Enville West): Correct. Sir, in terms of our production and sales this quarter, how was the situation in terms of when we compare to Q4 of FY 2026? If we see this quarter, if you can throw some understanding in terms of the production and sales part.

Speaker #2: So, if we look at this quarter, could you provide some insights in terms of the production and sales figures?

Speaker #3: So actually, in terms of the production, we are operating around three to three and a half plants. So we were between 40 to 45.

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

Speaker #3: For the overall sales, compared to the last quarter, the sales were 10 to 15 percent lower compared to the last quarter. However, the overall price realization was very high because prices have jumped by 30 to 40 percent for feedstock as well as the final product.

Speaker #3: That's why, if you look at the revenue, the reflection of the revenue is basically an indication of higher price realization rather than higher quantity.

Speaker #2: Correct. And safe to assume that this run rate of 40,000 to 45,000 tons, which we have seen in Q1, and the demand improvement we have just discussed, there would be an uptick in the numbers in the coming quarters.

[Analyst] (Enville West): Correct. Safe to assume that this run rate of 40,000, 45,000 tons, which we have seen in Q1 and the demand improvement, what we have been just discussed, there would be an uptick in the numbers in the quarters coming by.

Speaker #3: Yes. We will see that there will be uptick and improvement in overall quantity of the production and the sales, as well as there will be a the sales from the plasticizer, which we are planning to start by the end of this month or probably early next month.

Pramod Bhandari: Yes. We will see that there will be uptick in improvement in overall quantity of the production and the sales, as well as there will be the sales from the plasticizer, which we are planning to start by the end of this month or probably early next month. That volume will also be added. We will see a good overall revenue increment, revenue as well as the overall quantum of phthalic and plasticizer to improve. We have also improved our DEP because we have done the debottlenecking last quarter. Now we are running at a run rate of around 10,000 per annum basis compared to 6,000, 7,000 earlier.

Speaker #3: So that volume will also be added. So, we will see a good overall revenue increment, revenue as well as the overall quantum of phthalic and plasticizer to improve.

Speaker #3: We have also improved our DP because we completed the deep bottom making last quarter. So now, we are running at a run rate of around 10,000 per annum, compared to 6,000–7,000 earlier.

Speaker #2: Correct. So, sir, I'd like to know, between the ₹49 crore of revenue from non-phthalic business, how much was the DEP sales this quarter?

[Analyst] (Enville West): Correct. Sir, between INR 49 crore of revenue from non-phthalic business, how much was the DEP sales this quarter?

Speaker #3: So, DEP this time we have crossed the highest ever on a quarterly basis. This was ₹28 to ₹29 crore for the DEP, and around ₹70 to ₹80 crore of maleic.

Pramod Bhandari: DEP this time we have crossed highest ever in the quarterly basis. This was INR 28 to 29 crore for the DEP and around INR 17 to 18 crore of maleic.

Speaker #2: Correct. Sir, last question from my side. What were the gross margins this quarter, and if you can share for Q4 of FY26, that would be helpful.

[Analyst] (Enville West): Correct. Sir, last question from my side. What was the gross margins this quarter, and if you can share for Q4 FY26, that would be helpful. Thank you so much.

Speaker #2: Thank you so much.

Speaker #3: So, but typically, the gross margin for this quarter was around 32 percent compared to Q4 FY26, which was 73 percent. So, typically, right now the margin is between 250 to 300.

Pramod Bhandari: Typically, the gross margin for this quarter was around 32% compared to the Q4 FY '26, 73%. Typically, right now the margin is between $250 to 300. Our IG is making around $150, $120 extra. Because of the operating efficiency and the by-product. Since the prices were very high and operating efficiency give us some extra yield, that has translated into the higher margin.

Speaker #3: IB is making around $100, $150, $120 extra. Because of the operating efficiency and the byproduct, and since the prices were very high and operating efficiency gave us some extra yield, that has translated into the higher margin.

Speaker #2: Correct. What was this for Q4, sir? If you can just clarify.

[Analyst] (Enville West): Correct. What was this for Q4, sir? If you can just clarify.

Speaker #3: 32 percent gross margin.

Speaker #2: No, sir, in terms of dollars per ton, like you mentioned, this quarter was $250 to $300.

Pramod Bhandari: 32% gross margin.

[Analyst] (Enville West): No, sir, in terms of dollars per ton. Like you mentioned, this quarter was $250 to 300.

Speaker #3: Typically, for gross margin, industry was around $250 to $300. We were $100 or above that.

Pramod Bhandari: Typically, for gross margin, industry was around $250 to $300. We were $100 over and above that.

Speaker #2: Got it, got it. Thank you so much, sir, and wish you all the best.

Speaker #3: Thank you.

[Analyst] (Enville West): Got it. Correct. Thank you so much, sir, and wish you all the best.

Speaker #1: Thank you. The next question is from the line of Mohit from Shivlab Research. Please proceed.

Pramod Bhandari: Thank you.

Operator: Thank you. The next question is from the line of Mohit from Shubhlaxmi Research. Please proceed.

Speaker #2: Hi, sir. Hope I'm audible.

Speaker #3: Yeah, hi.

Speaker #2: Oh, thank you for giving me the opportunity, sir. The first question is, since we have got the ADD approval once again from the Ministry of Finance, if you could please tell us what the landing price of China and Korea would be after the ADD—a ballpark number.

[Analyst] (Shubhlaxmi Research): Hi, sir. Hope I'm audible.

Pramod Bhandari: Yeah, hi.

Pramod Bhandari: Thank you for giving me opportunity, sir. Sir, my first question is, since we have got the ADD approval once again from Ministry of Finance-

[Analyst] (Shubhlaxmi Research): Thank you for giving me opportunity, sir. Sir, my first question is, since we have got the ADD approval once again from Ministry of Finance-

Pramod Bhandari: Sorry?

Pramod Bhandari: If you could please tell us what the landing price of China and Korea would be after the ADD, a ballpark number.

[Analyst] (Shubhlaxmi Research): If you could please tell us what the landing price of China and Korea would be after the ADD, a ballpark number.

Speaker #3: Sure, sir. Can you repeat your question? I'm not hearing your voice clearly.

Pramod Bhandari: Sorry. Can you repeat your question? I'm not getting your voice clearly.

Speaker #2: Sir, what would be the landing price of fans from China and Korea after the ADD addition?

Pramod Bhandari: Sir, what would be the landing price of PAN from China and Korea after the ADD addition?

[Analyst] (Shubhlaxmi Research): Sir, what would be the landing price of PAN from China and Korea after the ADD addition?

Speaker #3: So basically, whatever is the price today, $40 will be added to China and around $140 to Korea. So, basically, whatever is the price in China and Korea, it added four things.

Pramod Bhandari: Basically, whatever is the price today, $40 will be added to the China and around $140 to the Korea. Basically, whatever is the price in China and Korea, it added 4 things. First, freight, transportation cost, the insurance cost, then the port cost, then local logistic cost, then the Forex hedging cost, plus the duty, which is import duty, already there in some cases. The anti-dumping duty of $40 and $140. Typically, if you ask me today, that today if the price is, let's say, assume today price is $1,000, it will be around $1,100 to $1,150.

Speaker #3: First, freight, transportation cost, the insurance cost, then the port cost, then local logistics cost, then the forex hedging cost, plus the duty, which is import duty already there in some cases.

Speaker #3: Then the anti-dumping duty of $40 and $140. So, typically, if you ask me today, if the price is, say, let's assume today's price is $1,000.

Speaker #3: So it will be around, around, around $1,100 to $1,150. Depends on which country you are buying for. It could be around 10 to 15 percent higher.

Pramod Bhandari: Okay, sir. Got it.

[Analyst] (Shubhlaxmi Research): Okay, sir. Got it.

Pramod Bhandari: Depends for which country you are buying. Around 10% to 15% higher.

Speaker #2: Oh, very clear.

Speaker #3: Or particularly, Korea and China will be, because there is already a duty—import duty in some of the cases. So, apart from these four costs, if there is an applicable import duty, it will be applicable, and over and above that, anti-dumping duty will be applicable.

Pramod Bhandari: Oh, very clear.

[Analyst] (Shubhlaxmi Research): Oh, very clear.

Pramod Bhandari: More particularly for Korea. China will be, because there is already an import duty in some of the cases. Apart from these four costs, if there is applicable of import duty, it will be applicable and over and above, antidumping duty will be applicable.

Speaker #2: Oh, very clear, sir. Very clear. Also, sir, if you can, could you tell us what percentage of our total revenue comes from sales and specialty chemicals?

Pramod Bhandari: Oh, very clear, sir. Very clear.

[Analyst] (Shubhlaxmi Research): Oh, very clear, sir. Very clear.

Pramod Bhandari: Yeah.

Pramod Bhandari: Sir, can you tell us what percentage of our PAN revenue comes from paint and specialty chemical? I am asking this because we are seeing good growth in both industries. The growth given in these industries, if you can provide some guidance going forward, what would be the volume coming?

[Analyst] (Shubhlaxmi Research): Sir, can you tell us what percentage of our PAN revenue comes from paint and specialty chemical? I am asking this because we are seeing good growth in both industries. The growth given in these industries, if you can provide some guidance going forward, what would be the volume coming?

Speaker #2: I am asking this because we are seeing good growth in both industries. Also, regarding the growth given in these industries, if you can provide some guidance going forward.

Speaker #2: What would be the volume coming?

Speaker #3: Typically, we were selling around 20 to 25 to the paint industry in terms of the quantity of phthalic that goes to them, and it maintained even in Q1 FY27.

Pramod Bhandari: Typically, we were selling around 20% to 25% for the paint industry in terms of the quantity of phthalate goes to, and it maintained giving even Q1 FY27. For specialty, we were selling between 4% to 5%, it remain 4% to 5%.

Speaker #3: So for specialty, we were selling between 4% to 5%, and remain at 4% to 5%.

Speaker #2: Okay, sir. Okay. And as expected from the volume increase from paint industries, yeah, yeah.

Pramod Bhandari: Okay, sir. Okay. Are we expecting some volume increase from paint industry?

[Analyst] (Shubhlaxmi Research): Okay, sir. Okay. Are we expecting some volume increase from paint industry?

Speaker #3: Because there are a lot of new players entering into the paint segment, and the segment is used not only for two-wheelers and four-wheelers, but there is alkyd resin demand growing across all the paint segments.

Pramod Bhandari: Yeah. There are a lot of new players entering into the paint and the segment is using not only for the two-wheeler, four-wheelers, but there are alkyd resin demand growing across all the paint segment. Since infrastructure is being developed in India, we expect that demand to grow between 8% to 10%.

Speaker #3: And since, in fact, infrastructure is being developed in India, we expect that demand to grow between 8% to 10%.

Speaker #2: Okay, sir. Very clear. So my next question is on the plasticizers plant. Since we have done the mechanical completion and we are just getting it ready to start from September, can you give some idea on how customer visits, plant protien, and approvals are going on?

Pramod Bhandari: Oh, okay, sir. Very clear. Sir, my next question is on plasticizers plant.

[Analyst] (Shubhlaxmi Research): Oh, okay, sir. Very clear. Sir, my next question is on plasticizers plant.

Pramod Bhandari: Yes.

Pramod Bhandari: Since we have done the mechanical completion and we are just getting it ready to start from September.

[Analyst] (Shubhlaxmi Research): Since we have done the mechanical completion and we are just getting it ready to start from September.

Pramod Bhandari: Yeah.

Pramod Bhandari: Can you give some idea about how customer visits, plant scrutiny, and approvals are going on?

[Analyst] (Shubhlaxmi Research): Can you give some idea about how customer visits, plant scrutiny, and approvals are going on?

Speaker #3: So I think all approvals are fairly in place. We are planning to start probably either in August or early September, and we expect that we will start with around 1,500 to 2,000.

Pramod Bhandari: I think all approvals are fairly in place. We are trying to start probably either in August or early September, and we expect that we will start with around 1,500 to 2,000, and we expect around 2,000 to 2,000 ton per month we will be able to sell from the balance period of 6 months. That is what our target is. It will generate roughly a revenue of INR 285 to 300 crore. Gradually, over the probably next 6 to 9 months, it will reach to a capacity of 50,000 to 75,000 ton.

Speaker #3: And we expect that around 2,000 to 2,200 tons per month we will be able to sell during the balance period of six months. That is what our target is.

Speaker #3: So it will generate roughly a revenue of ₹250 to ₹300 crore. Gradually, over the next six to nine months, it will reach a capacity of 50,000 to 75,000 ton.

Speaker #2: Oh, okay, sir. And sir, also, can you please share the end user industries which we’ll be focusing on more for the plasticizers plant?

Pramod Bhandari: Oh, okay, sir. Sir, if also can you please share the end user industry which we will be focusing on more?

[Analyst] (Shubhlaxmi Research): Oh, okay, sir. Sir, if also can you please share the end user industry which we will be focusing on more?

Speaker #3: I think all the plastics users, which is some of them are phthalic and maleic customers, in particular, which will be the leather industry, it will be the cable industry, it will be the other plasticizer industry, it's cross. I think wherever you see the plastics, it's all result of the plasticizers.

Pramod Bhandari: For the plasticizers plant, I think all the plastics users, which is some of them are phthalate and maleic customers. It will be leather industry, it will be the cable industry, it will be the other plasticizer industry. It is across, I think wherever you see the plastic, it is all result of the plasticizers. We will be focusing mainly on the cable industry, which is DINP and the DOP which goes for the various plastic modules. These are the key focus area, and since it is a batch processing, we will be producing based on whatever is the requirement in the market or demand in the market. Our production is just fungible. We will be able to produce based on the requirement of the market.

Speaker #3: So we will be focusing mainly on the cable industry, which is DIMP, and the DOP, which goes for the various plastic modules. These are the key focus areas.

Speaker #3: And since it is batch processing, we will be producing based on whatever the requirement or demand in the market is.

Speaker #3: So, our production is fungible. We will be able to produce based on the requirements of the market.

Speaker #2: Oh, got it, sir. Got it. Thank you. Thank you, it was nice speaking to you, sir. And good luck.

Pramod Bhandari: Oh, got it, sir. Got it. Thank you. Thank you for clarifying for me, sir, and good luck.

[Analyst] (Shubhlaxmi Research): Oh, got it, sir. Got it. Thank you. Thank you for clarifying for me, sir, and good luck.

Speaker #3: Thank you.

Speaker #1: Thank you. The next question is from the line of Rhea Mehta from Equities Investment. Please proceed.

Pramod Bhandari: Thank you.

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

Speaker #4: Thank you so much for giving me the opportunity, and congratulations on the set of numbers.

Riya Mehta: Thank you so much for giving me the opportunity and congratulations on this set of numbers.

Speaker #3: Thank you.

Speaker #4: I just wanted your input on the current quarter's results. What would be the amount coming from inventory gain? Because a lot of disturbance happened.

Pramod Bhandari: Thank you.

Riya Mehta: Just wanted your input on, in the current quarter's result, what would be the amount coming from inventory gains? There is a lot of disturbance.

Speaker #3: So, inventory gain, as such, we have not concluded, but of course, there are inventory gains available because at that time, when we were in April, there was a lot of inventory pending at our end in March.

Pramod Bhandari: Inventory gain as such, we have not concluded. Of course, there are inventory gain available because at that time when we were in April, there was a lot of inventory pending at our end in the batch. That inventory of 5,000 to 10,000 tons, which is available at a lower cost, has been sold at a higher price. Typically, whatever is the inventory loss which we have taken in the 9 months, we are able to cover it up in this current quarter.

Speaker #3: And then that inventory of 5 to 10,000 ton, which is available at a lower cost, has been sold at a higher price. So typically, whatever is the inventory loss which we have taken in the nine months has been able to we are able to cover it up in this current quarter.

Speaker #4: Right. What would be the amount if you could help me with the volume?

Riya Mehta: Right. What would be the amount, if you could help me on the volume?

Speaker #3: I have not calculated specifically, but you could say it ranged between 10 and 15.

Pramod Bhandari: I have not calculated it specifically, but you can say it ranges between 10 to 15.

Speaker #4: 10 to 15 crores. Okay. And in terms of volume, we were always guiding for 50,000 tons kind of volume to be done; however, this quarter, we have done 40,000 to 45,000.

Riya Mehta: INR 10 to 15 crores. Okay.

Pramod Bhandari: Yeah.

Riya Mehta: In terms of volume, we were always guiding for 50,000 tons kind of volume to be done. However, this quarter we've done 40,000 to 45,000. Is this because of demand impact?

Speaker #4: So, are we—this—is this because of demand impact?

Speaker #3: I think it is not only the demand, because you are aware that there are certain exports we are not able to do due to logistic congestion in the market—the containers are not available.

Pramod Bhandari: I think it is not only the demand, because you are aware that there are certain exports we are not able to do because there is a logistic congestion in the market. The containers are not available. There are a lot of other geopolitical issues. Typically, we sell around 15% to 20% to export. The export volume was around 7% to 8% or 10%. That is one of the reason. Some of the industries, we are able to sell, but it has been sold at the end of June, when our order is actually on delivered basis. If we are selling in last five days, it's delivered in the first week of July, then it is considered in the next quarter.

Speaker #3: There are a lot of other geopolitical issues. Typically, we sell around 15 to 20 percent for export. The export volume was around 7 to 8 percent, or 10 percent.

Speaker #3: So that is one of the reasons. Some of the industries we are able to sell, but it has not been taken into—like, it has been at the end of, say, it has been sold at the end of June, when our order is actually on a delivered basis.

Speaker #3: So, if we are selling in the last five days and delivered in the first week of July, then it is considered in the next quarter.

Speaker #4: So overall, for the year, we are still there at around 5 lakh tons, right?

Riya Mehta: Overall for the year, we are still there at around 5 lakh ton, right?

Speaker #3: 2 lakh tons, not 5 lakh. We have a capacity of 275. We are guiding again for the 2 lakh tons, plus or minus 2 to 3 percent on either side.

Pramod Bhandari: 2 lakh ton, not 5 lakh.

Riya Mehta: Sorry.

Pramod Bhandari: We have a capacity of till 75. We are guiding again for the 2 lakh ton of plus/minus 2% to 3% on either side. The 2 lakh ton is intact.

Speaker #3: The 2 lakh ton is the impact.

Speaker #4: Yeah, because I think that is a flat number since the last two years. So, I think.

Riya Mehta: Yeah, because I think that is a flat number since last 2 years.

Speaker #3: Yeah, yeah, I know that. It is expected to improve once we start the plasticizers project. And if the plasticizers project is expected to grow in terms of their quantity and the sales, then automatically, phthalic will also grow overall.

Pramod Bhandari: Yeah, I know that. It is expected to improve once we start the plasticizer project. The plasticizer project is expected to grow in terms of their quantity and the sales, then automatically phthalic will also grow in overall.

Speaker #4: And for the full year for plasticizer, we would be able to do around ₹500-odd crore of revenue, right, at full capacity utilization?

Riya Mehta: For the full year for plasticizer, we would be able to do around INR 500 odd crores of revenue, right, at full capacity utilization?

Speaker #3: At full capacity utilization of 75,000 tons, it will generate a gross revenue of around ₹1,000 crore. But that will be the gross revenue, and net revenue will be around ₹600 crore because ₹350 to ₹400 crore will be thalic, which will be.

Pramod Bhandari: At full capacity utilization of 75,000 tons, it will generate a revenue of gross revenue of around INR 1,000 crore. That will be the gross revenue, and net revenue will be around INR 600 crore because INR 350 to 400 crore with the phthalic, which will be-

Speaker #4: Sorry, net would be how much? You're not audible.

Riya Mehta: Sorry, net will be how much? You are not audible.

Speaker #3: Net revenue—just a minute, huh? Net revenue will be between 500 to 600 crore because there is a higher price for plasticizer right now.

Pramod Bhandari: Net revenue. Just a minute. Net revenue will be between INR 500 to 600 crore because there is a higher prices for plasticizer right now.

Speaker #4: Right, right. Also, building on this, how much time will it take for us to ramp up the capacity? When will we be able to reach full capacity?

Riya Mehta: Right. Going from this, how much time will we take to ramp up the capacity? When will we able to complete full where it goes into testing phase with companies, et cetera, and what would be the typical time frame?

Speaker #4: Is there a process where it goes into a testing phase with companies, etc., and what would be the typical time frame?

Speaker #3: For this year particularly, for the remaining six months, we are targeting around 2,000 to 2,500 tons per month. So for six months, it will be between 15,000 to 20,000 tons for the balance period of FY26-27.

Pramod Bhandari: For this year, particularly, for the remaining six months, we are targeting around 2,000 to 2,500 tons per month. For six months it will be between 15,000 to 20,000 tons for balance period of FY2026, 2027. It will grow up to 50,000 to 60,000 or 65,000 tons in next year. That is our target. We are planning to achieve it.

Speaker #3: Then it will grow up to 50,000 to 60,000 or 65,000 tons in the next year. That is our target. We are planning to achieve it.

Speaker #4: Okay, okay. Got it. Now, in terms of realization, you mentioned that it was up 30 to 40 percent. This is for phthalic, right? And—

Riya Mehta: Okay. Got it. Now in terms of realization, you mentioned that it was up 30% to 40%, this is for phthalic, right?

Speaker #3: Thalic as well as malic.

Speaker #4: Realization now?

Speaker #3: Yeah. So I think realizations remain at an elevated level because the overall demand in the market is good, since everybody is using 60–65% of their capacity.

Pramod Bhandari: Phthalic as well as maleic

Riya Mehta: Realization now.

Pramod Bhandari: Yeah. I think realization remain at elevated level because the overall demand in the market is good since everybody is using 60% to 65% of their capacity. Overall supply is also limited in domestic market. An import is hardly happening at a very, very little quantity. Right now whatever is the demand is fitted by the domestic players. The margin remain between $250 to 300 level right now, which is on a higher side because there is a lot of geopolitical tension. Because of that, all the feedstocks of the petrochemicals are at higher price. When the prices of the raw material is high, it ended up higher realization for the final product. Second point, we have some operating efficiency. Because of that, we are getting some extra yield that is also being sold at a higher price.

Speaker #3: So overall, supply is also limited in the domestic market. So, imports are hardly happening, and only in very, very small quantities. So right now, whatever demand there is, it is being met by the domestic players.

Speaker #3: And the margin remains between the 250 to 300 level right now, which is on the higher side because there is a lot of geopolitical tension. Because of that, all the feedstocks of the petrochemicals are at a higher price.

Speaker #3: When the prices of the raw material are high, it ends up resulting in higher realization for the final product. And second point, we have some operating efficiency.

Speaker #3: Because of that, we are getting some extra yield that is also being sold at a higher price. So there is a double benefit happening on that account.

Pramod Bhandari: There is a double benefit happening on that account.

Speaker #4: Got it. So even after the war situation has eased, we have not seen spreads reducing—is that my takeaway, right?

Riya Mehta: Got it. Even after war situation easing out, we have not seen spreads reducing is my takeaway, right?

Speaker #3: So, I think we should not take any extraordinary higher or lower space. I expect between $200 to $250 would be the average spread.

Pramod Bhandari: I think we should not take any extraordinary higher or lower spreads. I expect between $200 to 250 would be the average spread, which is the last 10-year average.

Speaker #3: It is the last 10-year average.

Speaker #4: It is around 150 to 200, right?

Speaker #3: Right now, market spread is between $250 to $300. And I will make $100 over and above because of operating efficiency and the byproducts.

Riya Mehta: It is around $150 to 200.

Pramod Bhandari: Right now market spread is between $250 to 300. IG makes $100 over and above because of operating efficiency and the byproducts.

Speaker #4: This is the EBITDA per ton you were mentioning.

Speaker #3: No, I am talking about the gross margin, dollar per ton.

Riya Mehta: This is the EBITDA per ton you are mentioning?

Speaker #4: I think I agree with the EBITDA per ton, which you used to mention—that last year it was around 150 to 200, and 100 to 150 for the last Q4. Then we did 100 quarter extra.

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

Riya Mehta: Actually it was the EBITDA per ton, which you used to mention that last year around it was around INR 150 to INR 200. INR 100 to INR 150 for the last Q4, then we did INR 100 quarter extra.

Speaker #3: Typically, if you remove the advantage of the yield, as well as the byproduct, it will generally cover around 80 to 90 percent of your operating cost. So, whatever margin remains is your EBITDA margin.

Pramod Bhandari: Typically, if you remove the advantage of the yield as well as the byproduct, which generally cover around 80% to 90% of the operating cost. Whatever is the margin remain EBITDA margin. If you take only the phthalic margin, you will be able to get the EBITDA margin.

Speaker #3: So, if you take only the thalic margin, you will be able to get the EBITDA margin.

Speaker #4: Actually, it's not audible. There's some disturbance coming through the—

Riya Mehta: Actually not audible. There's some disturbance coming from the

Speaker #3: You're not able to listen to me?

Speaker #4: Yeah, there's some disturbance. Yeah.

Pramod Bhandari: You're not able to listen to me? Hello.

Speaker #3: But there is no.

Speaker #2: Sir, I am able to hear your voice properly.

Riya Mehta: Yeah, there's some disturbance. Yeah.

Speaker #4: Okay.

Speaker #3: And there may be disturbance at your end. I'm saying if you take our gross margin and reduce the operating cost, conversion cost, and other costs—conversion cost is around $150 to $160—you will be at the EBITDA level.

Pramod Bhandari: But there is no-

Operator: Sir, I'm able to hear your voice properly.

Riya Mehta: Okay.

Pramod Bhandari: There may be disturbance at your end. I am saying, if you take our gross margin and reduce the operating cost, conversion cost, and other cost. Conversion cost is around $150 to $160, you will be at EBITDA level. There is another cost which is interest and other. Total cost for us is around $150 to $200. Typically, when you are making $400 margin, including the byproduct, and yield, and remove $200, $250, you will ended up at $200 for the EBITDA margin.

Speaker #3: And then there is another cost, which is interest and other. So total cost for us is around $150 to $200. So typically, when you are making $400 margin, including the byproduct and yield, and remove $200, $250, you will end up at $200 for the EBITDA margin.

Speaker #3: In the current quarter.

Speaker #4: Got it, and this is sustaining.

Speaker #2: Sorry to interrupt.

Riya Mehta: Got it.

Pramod Bhandari: In the current quarter. Got it. This is sustaining.

Speaker #4: Okay.

Speaker #2: Just a reminder, you may request to join the question queue again. Thank you. The next question is from the line of Cherak from Keynote Capital.

Operator: Sorry to interrupt. Ma'am, may we request you to join the question queue again? Thank you. The next question is from the line of Chirag from Keynote Capital. Please proceed.

Speaker #2: Please proceed.

Speaker #3: Yeah, thank you for the opportunity. Pramod, just a couple of clarifications. You said that on a QOQ basis, our volumes are down about 10 to 15 percent, right?

[Analyst] (Keynote Capital): Yeah, thank you for the opportunity. Pramod, just a couple of clarifications. You said that on a QOQ basis, our volumes were down about 10% to 15%, right?

Speaker #4: Yeah. Yeah.

Speaker #3: That means our volume for the quarter is around 46,000 to 48,000, not 40,000 to 45,000, right?

Pramod Bhandari: Yes.

[Analyst] (Keynote Capital): That means our volume for the quarter is around 46,000 to 48,000, not 40 to 45, right?

Speaker #4: I would prefer not to comment specifically. It is between 40 and 45.

Speaker #3: Okay, 40 to 45. Secondly, our spreads currently, you said, are about 250 to 300. A normalized decadal run rate is about 150 to 200.

Pramod Bhandari: I will not like to comment specifically. It is between 40 to 45.

[Analyst] (Keynote Capital): Okay. 40 to 45. Secondly, our spreads currently you said is about USD 250 to 300.

Speaker #4: 200 is average. 200 to 250 is average for 10 years.

Pramod Bhandari: Correct.

[Analyst] (Keynote Capital): A normalized decadal run rate is about USD 150 to 200.

Speaker #3: So currently, even in the month of July, we are seeing the spreads to be around 250.

Pramod Bhandari: USD 200 is average, USD 200 to 250 is average for 10 years.

[Analyst] (Keynote Capital): Currently, even in the month of July, we are seeing the spreads to be around USD 250.

Speaker #4: Yeah.

Speaker #3: Got it. So, similarly, last year, or in the last 6 to 12 month timeframe, where Malik and I did, prices were around $600 to $700 per ton.

Pramod Bhandari: Yeah.

[Analyst] (Keynote Capital): Got it. Similarly, last year or in last six to 12 months timeframe, where maleic anhydride prices were around $600 to 700 per ton. If I'm not wrong, it is around USD 1,100 and are sustaining at that level.

Speaker #3: If I'm not wrong, it is around about 1,100 in, and sustaining at that level.

Speaker #4: Correct. You're right. Because all feedstock prices have gone up, so apart from phthalic, malic prices have also gone up.

Pramod Bhandari: Correct. You're right. All feedstock prices has gone up, apart from phthalic, maleic prices has also gone up.

Speaker #3: Got it. And so earlier, the reason for the decrease in malic and hydrate prices was that there was significant capacity built up in China. Are we seeing any kind of constraints taking place due to which there is a supply-demand mismatch, and we are now back to our normalized level?

[Analyst] (Keynote Capital): Got it. Earlier, the reason for the decrease in maleic anhydride prices was there was significant capacity built up in China. Are we seeing any kind of constraints taking place due to which there is a supply-demand mismatch and we are now back to our normalized level of-

Speaker #4: It is happening because China has built around 2 million-plus capacity in malic. While other chemical prices have gone up by 50, 60 percent, malic has gone up by 30, 40 percent, and then again come back to 10, 20 percent.

Pramod Bhandari: It is happening because China has built around 2 million plus capacity in maleic. While other chemical prices has gone up by 50%, 60%, maleic has gone by 30%, 40%, and then again come back to 10%, 20%.

Speaker #3: So, would it be fair to assume that this would now be the normalized run rate?

Speaker #4: Run rate—are you talking about production?

[Analyst] (Keynote Capital): Will it be fair to assume that this would be the normalized run rate now?

Speaker #3: For malic prices.

Pramod Bhandari: Run rate for, you're talking about production?

Speaker #4: I think still the global market is in oversupply mode. It will take some time because China's overcapacity is yet to be fully utilized. Why?

[Analyst] (Keynote Capital): For maleic prices.

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

Speaker #4: Because they have decided to come up with a plan for BDO, PBAT, and PBT. Now the government has extended the deadline for single-use plastics for PBAT.

Speaker #4: So that capacity, which was built for that purpose, is not being utilized, and they are selling the malic into the international market. That has actually depressed the margin overall.

Speaker #4: If you look at history, typically malic prices are 20% higher than thalic, and right now it is 20% or 25% lower than thalic.

Speaker #4: The reason is the oversupply from the Chinese market.

Speaker #3: Got it. Got it. No fairness. Just last one question from the side and then going back to Q. As there will be some dry trial runs already going on the plaster sizer plants, I just wanted to check the quality as per the requirements of client.

[Analyst] (Keynote Capital): Got it. No worries. Just last one question from my side and I'll join back the queue. As there will be some dry trial runs already going on the plasticizer plant, just wanted to check the quality as per the requirements of client, are we able to match that? As you're saying that we would be able to sustain the run rate of 15,000, that would be about, if I'm not wrong, on a gross level, it would be around INR 200 to 250 crores, if I'm not wrong. This is the expectation for the new year.

Speaker #3: Are we able to match that? And as you're saying that we would be able to sustain the run rate of, like, 15, 16K, that would be about, if I'm not going across levels, it would be around 200 to 250 crores.

Speaker #3: If I'm not wrong, this is the expectation for the new quarter.

Speaker #4: Yeah, ₹200 to ₹250 crores. For this quarter, for the balance 6 months.

Pramod Bhandari: Yes. INR 200 to 250 crore for this quarter. For the balance six months.

Speaker #3: For the entire year.

Speaker #4: Yeah, for the balance six months. Because July, August, we will be—by September, it will be starting, and then either end of August or early September.

[Analyst] (Keynote Capital): For the entire year.

Pramod Bhandari: Yeah, for the balance six month. Because July, August, by September it will be starting, then either end of August or September early. Then six months we have taken a 2,000 to 2,500 ton depend upon the production. The quality and all issues, that I think we will be able to respond to you over the next one or two quarters, rather than doing it today.

Speaker #4: And then, over six months, we have taken 2,000 to 2,500 tons, depending upon the production. The quality and all issues—I think we will be able to respond to you over the next one or two quarters, rather than doing it today.

Speaker #4: But generally, it's a commodity product, and the quality for all the plasticizers remains the same. Like phthalic—if you ask any phthalic producer, it's a similar quality.

[Analyst] (Keynote Capital): And just-

Pramod Bhandari: Generally it's a commodity product and quality for all the plasticizers remain same. Like phthalic, if you ask any phthalic producer, it's a similar quality for all phthalic across the board. Similarly, it's a commodity product like DOP, DI, and DINP.

Speaker #4: For all phthalic across the board. Similarly, it's a commodity product like DOP, DIN, and others.

Speaker #3: And just wanted to complete the question, sir. I was just trying to understand, how will it drill down to the profit levels? Because we are backward integrated, which should lead us to have improvement in operating and gross level margins, right?

[Analyst] (Keynote Capital): Just wanted to complete the question, sir. I was trying to understand how will it drill down to the profit levels? We are backward integrated, which should lead us to have improvement in operating and gross level margins, right? We would be consuming the product ourselves and selling it further.

Speaker #3: Because we would be consuming the product itself and selling it for the so how will be the incremental gross profit margins and EBITDA margins would look like?

Pramod Bhandari: Correct.

[Analyst] (Keynote Capital): How will the incremental gross profit margins and EBITDA margins would look like? All the costs related to plants are already incurred or it will come with quarters?

Speaker #3: And if all the costs related to plants are already incurred, it will come with quarters.

Speaker #4: No, let me explain to you. So, typically, the plasticizer margin—EBITDA margin—is between 8 to 10 or 12 percent. Right now, it's 15 percent, but take 10 to 12 percent.

Pramod Bhandari: No. Let me explain you. Typically, the plasticizer margin is around, EBITDA margin is between 8% to 10% or 12%. Right now it's 15%, but take 10% to 12%. At a net level, it is 4% to 5%, which is the average of the last four or five years. Since the asset turnover, we have invested around INR 180 to 200 crore. Asset turnover of plasticizer is five times. Whatever margin we are making, it will be translated into the higher PAT. Suppose you touch a 75,000 ton of the production and your sales is INR 1,000 crore, on that you will be making around INR 50 crore. For investment of INR 200 crore, your payback period is around four years. For the purpose of calculation of plasticizer margin, we are taking the average realization cost of the phthalic at which phthalic will be transferred to the plasticizer.

Pramod Bhandari: No. Let me explain you. Typically, the plasticizer margin is around, EBITDA margin is between 8% to 10 or 12. Right now it's 15%, but take 10% to 12. At a net level, it is 4% to 5, which is the average of the last four or five years. Since the asset turnover, we have invested around INR 180 to 200 crore. Asset turnover of plasticizer is five times. Whatever margin we are making, it will be translated into the higher PAT. Suppose you touch a 75,000 ton of the production and your sales is INR 1,000 crore, on that you will be making around INR 50 crore. For investment of INR 200 crore, your payback period is around four years. For the purpose of calculation of plasticizer margin, we are taking the average realization cost of the phthalic at which phthalic will be transferred to the plasticizer.

Speaker #4: At a net level, it is 4 to 5 percent, which is the average of our last four to five years. But regarding the asset turnover, we have invested around ₹180 to ₹200 crore.

Speaker #4: Asset turnover of plasticizer is five times. So whatever margin we are making, it will be translated into the higher PAT. Suppose you touch 75,000 tons of production and your sales is ₹1,000 crore on that, you will be making around ₹50 crore.

Speaker #4: So, for an investment of ₹200 crore, your payback period is around four years. And for the purpose of calculation of plasticizer margin, we are taking the average realization cost of the phthalic at which phthalic will be transferred to the plasticizer.

Speaker #4: So whatever margin of the phthalic that will remain with phthalic, and at a market rate, phthalic will be transferred to the plasticizer project, and then margin of plasticizer project will be calculated.

Pramod Bhandari: Whatever margin of the phthalic, that will remain with phthalic. At a market rate, phthalic will be transferred to the plasticizer project. Then margin of plasticizer project will be calculated.

Pramod Bhandari: Whatever margin of the Phthalic, that will remain with Phthalic. At a market rate, phthalic will be transferred to the plasticizer project. Then margin of plasticizer project will be calculated.

Speaker #3: So, would it be fair to assume that on a longer run rate, where our margins used to be at about EBITDA levels of 20% to 30%, or 12% to 14%, we are going to add about 300 to 400 bps on EBITDA levels?

[Analyst] (Keynote Capital): Will it be fair to assume on a longer run rate where our margin used to be about EBITDA levels 12% to 14%, we are going to add about 300 to 400 bps on EBITDA levels.

[Analyst] (Keynote Capital): Will it be fair to assume on a longer run rate where our margin used to be about EBITDA levels 12% to 14, we are going to add about 300 to 400 basis points on EBITDA levels.

Speaker #4: I think let's wait rather than commenting on that. Let it be reflected in the performance. I would not like to comment about the future.

Pramod Bhandari: I think let's wait. Rather than commenting on that, let it be reflected in the performance. I would not like to comment about the future.

Speaker #4: But, having said that, there will be a saving because phthalic, which we will be using in-house, has no transportation cost, no bagging cost, and there is no cost to convert it into flex.

[Analyst] (Keynote Capital): Got it.

Pramod Bhandari: Having said that, there will be a saving because phthalic, which we will be using in-house, there is no transportation cost, no bagging cost, and there is no cost to convert into phlex. That we'll be saving on account of phthalic usage in plasticizers.

Speaker #4: So that will be saving on account of phthalic anhydride usage in plasticizer.

Speaker #3: And for the plasticizer person, what is the gross margin level?

Speaker #4: 10 to 12 percent. I mentioned it to you in EBITDA terms.

[Analyst] (Keynote Capital): plasticizer works on what gross margin levels?

Speaker #3: Gross, will it be possible for you to gain gross?

Pramod Bhandari: 10% to 12%. I mentioned it to you in EBITDA terms.

Pramod Bhandari: 10% to 12. I mentioned it to you in EBITDA terms.

Speaker #4: I think, typically, we have not operated right now, but typically in the market, the margin is between 15 to 18 percent, and EBITDA is 10 to 12 percent.

[Analyst] (Keynote Capital): Is it possible for you to explain gross?

Pramod Bhandari: We have not operated right now, but typically in the market, the margin is between 15% to 18% and the EBITDA is 10% to 12%.

Pramod Bhandari: We have not operated right now, but typically in the market, the margin is between 15% to 18 and the EBITDA is 10% to 12.

Speaker #3: Got it. Thank you so much, sir. I'll get back into Q1.

[Analyst] (Keynote Capital): Got it. Thank you so much, sir. I'll get back into the queue now.

Speaker #2: Thank you. The next question is from the line of Rohit Sinha from Sunidhi Securities. Please proceed.

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

Speaker #1: Yeah. Thank you for taking my question, sir, and congratulations on a good set of numbers. So, one question is, as we are seeing that volumes are pretty much stagnant for some quarters, or maybe for a year, for us on a quarterly basis.

Rohit Sinha: Yeah. Thank you for taking my question, sir, and congratulations for good set of number. One question is, as we are seeing that volumes are pretty much stagnant for some quarter or some year for us on a quarterly basis, and as you have also indicated that we are operating at a pretty lower level as of now. Once we are through with the plasticizer and we're operating higher level of utilization for overall plant.

Speaker #1: And as you also indicated, we are operating at a pretty low level as of now, but once we are through with the plasticizer and are operating at a higher level of utilization for the overall plants, I mean, would it be the existing customers where we would be pushing volumes, or would we also be looking at adding new customers?

Pramod Bhandari: Right.

Rohit Sinha: Would it be the existing customers where we would be pushing volumes, or we would be also looking at newer customers to add on? Would it be more of a plasticizer volume increase or it is both phthalic and plasticizer volume increase?

Speaker #1: And would it be more of a plasticizer volume increase, or is it both phthalic and plasticizer volume increase?

Speaker #4: I think it's a good question. Right now, we are targeting around 2 lakh tons, and going forward, over the next few years, you'll see the overall volume go up to 2.3 to 2.4 lakh tons.

Pramod Bhandari: I think it's a good question. Right now, we are targeting around 2 lakh tons. Going forward next few years, you will see the overall volume to go up to 230,000, 240,000. There are two part to that. First part, overall the plant capacity utilization will improve. Second, the plasticizer will be ramped up to 50,000 to 75,000 tons. Third, there are a lot of other opportunities in the export market, including GCC. I think Europe has also opened up in terms of the FTA which has been signed and executed by the Indian government with the UK government. Similarly, a lot of FTAs are signed, there will be a better global opportunity for us to supply the phthalic to various countries where there is a FTA signed.

Speaker #4: And there are two parts to that. First part, overall, the plant capacity utilization will improve. Second, the plasticizer will be ramped up to 50 to 75,000 tons.

Speaker #4: And third, there are a lot of other opportunities in the export market, including the GCC. I think Europe has also opened up in terms of the 50A, which has been signed and executed by the Indian government with the UK government.

Speaker #4: Similarly, a lot of FTAs are signed, and there will be a better global opportunity for us to supply the phthalic to various countries where there is an FTA signed.

Speaker #4: So, when I look at it, we generally look at it from the point of view of what is the total capacity utilization of plants. Right now, we are between 65% to 70%.

Pramod Bhandari: When I look at, we generally look at from the point of view, what is the total capacity utilization of plant. Right now, we are between 65,000 to 70,000. We hope we'll be reaching between 80,000 to 90,000 very soon.

Speaker #4: We hope we'll be reaching between 80 to 90 very soon.

Speaker #1: Okay. Okay. Got it. Thanks. And secondly, as this extension of ADD was close to $40 per ton, but currently, if we see, yeah.

Rohit Sinha: Okay. Got it. Thanks. Secondly, as this extension of ADD was close to USD 40 per ton. Currently if we see the prices are at the higher level, that makes a pretty low percentages in terms of ADD rate.

Rohit Sinha: Okay. Got it. Thanks. Secondly, as this extension of ADD was close to $40 per ton. Currently if we see the prices are at the higher level, that makes a pretty low percentages in terms of ADD rate.

Speaker #1: So currently, if we see, the prices are at a higher level, so that makes for pretty low percentages in terms of ADD rate. But I think—I mean—I just wanted to understand whether a price correction in phthalic would be benefiting us, or will the higher price be benefiting us despite this ADD?

Pramod Bhandari: Yeah. Correct.

Rohit Sinha: Just wanted to understand whether the price correction in phthalic would be benefiting us, or the higher price would be benefiting us despite this ADD.

Speaker #4: So I think ADD is one part, but we hardly buy a very small quantity of thalic under that from China. Sometimes Korea and Taiwan are number one and two.

Pramod Bhandari: I think ADD is one part, but we hardly buy very few quantity of phthalic anhydride from China. Sometime Korea and Taiwan is number one and two, China is number three. I will not see it because government has not given as a percentage. It is given as a fixed USD per ton. For company, higher prices are always better because your operating efficiency, because of that extra yield you are generating, that you will be able to get at a higher price. If the prices are lower, then your realization for extra yield will be lower. If you ask directly what is beneficial for the company, it is simply if the prices remain at an elevated level, it is more beneficial for the company.

Speaker #4: China is number three, so I will not see it, but it was—government has not given as a percentage; it is given as a fixed dollar per ton.

Speaker #4: For the company, higher prices are always better because of your operating efficiency. Because of that extra yield you are generating, you will be able to get it at a higher price.

Speaker #4: If the prices are lower, then your realization for extra yield will be lower. So if you ask directly what is beneficial for the company, it is simply that if the prices remain at an elevated level, it is more beneficial for the company.

Speaker #4: However, if moderated, then you will see more volume getting into the market, and then plasticizers and other businesses will drive the overall volume.

Speaker #4: Growth for phthalic as well as plasticizer.

Pramod Bhandari: However, if moderated, then you will see the more volume getting into the market, and then plasticizers and other business will drive the overall volume growth for phthalic as well as plasticizer.

Speaker #1: Got it, got it. And secondly, sir, as the plasticizer plant is about to be commissioned, just wanted to know, going forward, what sort of quarterly run rate should we expect on the interest and depreciation side?

Rohit Sinha: Got it. Secondly, sir, as plasticizer plant is about to commission.

Pramod Bhandari: Yeah.

Rohit Sinha: Just wanted to know, going forward, what sort of quarterly run rate would be there for us on the interest and depreciation side?

Speaker #4: So, on an annualized basis, it will be around ₹10 crore for plasticizer. Similarly, the depreciation will be between ₹8 to ₹10 crore. This is at a similar rate.

Pramod Bhandari: It will be around annualized basis, around INR 10 crore for plasticizer. Similarly, the depreciation will be between 8 to 10.

Speaker #4: Around, you can say around 20 crore, plus or minus 2 or 4 percent on an annualized basis. For a quarter, you can say 5 to 6 crore.

Rohit Sinha: Fair enough.

Pramod Bhandari: This is a similar rate. You can say around INR 20 crore ±2% or 4% annualized basis.

Speaker #1: Okay. Okay. Got it.

Speaker #4: Yeah.

Speaker #1: Yeah, that's it from my side, sir. Thank you, and best of luck.

Rohit Sinha: Okay.

Pramod Bhandari: For a quarter, you can say INR 5 to 6 crore.

Speaker #4: Thank you.

Speaker #2: Thank you. The next question is from the line of Cherak from Budrani Finance. Please proceed.

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

Pramod Bhandari: Thank you.

Operator: Thank you. The next question is from the line of Chirag from Mudrani Finance. Please proceed.

Speaker #3: Yes, sir. Just wanted to

Speaker #1: Get your thoughts on the spread, sir. Now, sir, this crude is very volatile too, sir. What is your view on the spread, sir?

Speaker #4: So, I don't like to give a futuristic view on the spread, but crude is very volatile, and so are naphtha and other feedstocks.

[Analyst] (Mudrani Finance): Yes, sir. Just wanted to get your thoughts on the spread, sir. Now, sir, this crude is very volatile. Sir, what is your view on the spread, sir?

Speaker #4: So sometimes it goes 5 to 10 percent up, and some days it is 5 to 10 percent down. So as a strategy, we wanted to operate at a minimum inventory so that we are not having much impact from the volatility.

Pramod Bhandari: I not like to give the futuristic view on the spread.

[Analyst] (Mudrani Finance): Okay.

Pramod Bhandari: Crude is very volatile, and so as the naphtha and other feedstock. Sometimes it go 5% to 10% up, and someday it is 5% to 10% down. As a strategy, we wanted to operate at a minimum inventory so that we are not having a much impact on what is the volatility. That means whatever is required, we maintain minimum inventory, produce and sell the products so that we can maintain our operating margin and not much impacted because of that volatility. For margin, I think that if margin right now between $250 to $300. I'm not seeing the war to end, and I can't even predict it. So long as the crude remain elevated level, all petrochemical products prices will remain high. Similarly, that margin will be maintained at that level.

Pramod Bhandari: Crude is very volatile, and so as the naphtha and other feedstock. Sometimes it go 5% to 10 up, and someday it is 5% to 10 down. As a strategy, we wanted to operate at a minimum inventory so that we are not having a much impact on what is the volatility. That means whatever is required, we maintain minimum inventory, produce and sell the products so that we can maintain our operating margin and not much impacted because of that volatility. For margin, I think that if margin right now between $250 to 300. I'm not seeing the war to end, and I can't even predict it. So long as the crude remain elevated level, all petrochemical products prices will remain high. Similarly, that margin will be maintained at that level.

Speaker #4: So, that means whatever is required, we maintain minimum inventory, produce, and sell the crudes so that we can maintain our operating margin, and we're not much impacted because of that volatility.

Speaker #4: And for margin, I think that if margin right now is between $250 to $300, I am not seeing the war to end. And I can't even predict it.

Speaker #4: But so long as the crude remains at an elevated level, petrochemical product prices will remain high. So, similarly, that margin will be maintained at that level.

Speaker #4: Then it will probably be moderate, in line with if there is a full settlement between the US and Iran, then everything has to come probably in the next three to six months to a normalized level.

Speaker #1: And sir, how much was the freight supply issue contributing to the jump in spread? Was it a significant part?

Pramod Bhandari: It will be probably moderate in line with if there is a full settlement between the US and Iran, then everything has to come probably next three to six months in the normalized level.

Speaker #4: I think, on freight, I will tell you that there are two or three important data points. First is that container freight has gone up by 30% to 50%. Shipping—the state of Haldia port—is closed.

[Analyst] (Mudrani Finance): Sir, how much was the freight supply issue contributing to the jump in freight? Was it a significant part?

Pramod Bhandari: I think freight, I will tell you, there are two or three important data points in the freight. The first is the container freight has gone up by 30% to 50% shipping cost. There is a congestion because the Strait of Hormuz is closed for most of the period. There is an extraordinary congestion at the Mundra and the JNPT port. The congestion for JNPT is around 10 to 15 days, and Mundra is around 15 to 20 days. Because of that, the company who are importing and exporting also need to bear a lot of damages. There are 1,500 plus ships are in and around the Strait of Hormuz, as well as the Red Sea. It has created a full disruption and added a cost of around $80 to $120 for most of the petrochemical products. It is not easy to import.

Pramod Bhandari: I think freight, I will tell you, there are two or three important data points in the freight. The first is the container freight has gone up by 30% to 50 shipping cost. There is a congestion because the Strait of Hormuz is closed for most of the period. There is an extraordinary congestion at the Mundra and the JNPT port. The congestion for JNPT is around 10 to 15 days, and Mundra is around 15 to 20 days. Because of that, the company who are importing and exporting also need to bear a lot of damages. There are 1,500 plus ships are in and around the Strait of Hormuz, as well as the Red Sea. It has created a full disruption and added a cost of around $80 to 120 for most of the petrochemical products. It is not easy to import.

Speaker #4: For most of the period, there is extraordinary congestion at Mundra and the JNPT port. The congestion for JNPT is around 10 to 15 days, and Mundra is around 15 to 20 days.

Speaker #4: Because of that, the companies who are importing and exporting also need to bear a lot of damages. And there are 1,500-plus ships in and around the Strait of Hormuz.

Speaker #4: As well as the Red Sea. So, it has created a full disruption and added a cost of around $80 to $120 for most of the petrochemical products.

Speaker #4: So, it's not easy to import if you are assuming a timeline of 30 to 45 days. It can take 60 to 90 days too, along with increased costs.

Speaker #4: So right now, I think there is a big disruption happening in the international market for freight, shipping, and containers.

Pramod Bhandari: If you are importing with the assumption of 30, 45 days, it takes 60 to 90 days, along with the increased cost. Right now, I think there is a big disruption happening in the international market for freight shippings and containers.

Speaker #1: Okay, sir, similarly, our working capital cycle would have had a similar impact, right? It would have gone up.

Speaker #4: The working capital cycle for exports has definitely gone up because it takes time to export the product. Similarly, for the import of raw material—of which 40-50 percent we are importing—that cycle has also gone up, because it now takes around 30 to 45 days to bring in the raw material.

[Analyst] (Mudrani Finance): Sir, similarly, our working capital cycle then will have similar impact, right? It would have gone up.

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

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

Speaker #4: But in the domestic market, we maintain a similar cycle, which is an average of 30 to 40 days. We sell on 30- and 60-day cash terms—30 and 60 days.

Speaker #4: In the domestic market, it remains the same, but for imports as well as exports, it has gone up.

Speaker #1: Okay, sir. Just one last thing, sir. The audio was inaudible, so I just wanted to understand your contribution of the plasticizer and CBG plant for FY27, sir.

Speaker #1: In terms of top line or EBITDA.

Speaker #4: See, I think I will give you only the quantity. EBITDA and the PAT number, I think you leave it for the next two quarters.

[Analyst] (Mudrani Finance): Okay. Sir, just one last thing, sir. The audio was inaudible. Just wanted to understand your contribution of plasticizer and CBG plant for FY27, sir, in terms of top line or EBITDA.

Speaker #4: So, for plasticizer, we expect around 2,000 tons every month, beginning from September or October. So, around 15,000 to 20,000 tons. And for the CBG, we are planning to start somewhere in the October-November-December quarter.

Pramod Bhandari: See, I think I will give you only the quantity.

[Analyst] (Mudrani Finance): Yeah.

Pramod Bhandari: EBITDA and the PET number, I think you leave it to for next two quarters.

[Analyst] (Mudrani Finance): Yeah.

Pramod Bhandari: For plasticizer, we expect around 2,000 tons every month, beginning from September, October. Around 15,000 to 20,000 tons. The CBG, we are planning to start somewhere in Q4. Hardly any negligible amount will be there for this year. Probably next year, we'll see the full effect of the CBG project. The only thing which I need to add is government has yesterday announced the new CBG policy. In this, the capital subsidy has been increased for typically by 40% to 50%, and the prices are up by 33% for the CBG being produced and sold in the domestic market.

Pramod Bhandari: For plasticizer, we expect around 2,000 tons every month, beginning from September, October. Around 15,000 to 20,000 tons. The CBG, we are planning to start somewhere in Q4. Hardly any negligible amount will be there for this year. Probably next year, we'll see the full effect of the CBG project. The only thing which I need to add is government has yesterday announced the new CBG policy. In this, the capital subsidy has been increased for typically by 40% to 50, and the prices are up by 33% for the CBG being produced and sold in the domestic market.

Speaker #4: So, hardly any—there will be a negligible amount this year. Probably next year, we'll see the full effect of the CBG project. The only thing I need to add is that the government has yesterday announced the new CBG policy.

Speaker #4: It means the capital subsidy has been increased, typically by 40 to 50 percent. And the prices are up by 33 percent for the CBG being produced and sold in the domestic market.

Speaker #1: Okay. Okay.

Speaker #4: It was announced yesterday—a new CBG policy. Thank you.

Speaker #2: Thank you. The next question is from the line of Guneet Singh from Counter Cycling PMS. Please proceed.

[Analyst] (Mudrani Finance): Okay.

Pramod Bhandari: It was announced yesterday, new CBG policy.

[Analyst] (Mudrani Finance): Okay, sir. Thank you.

Speaker #3: Hi, sir. Thank you for this opportunity. So, what were our spreads in Q1 with the low-cost inventory that we had?

Pramod Bhandari: Okay. Thank you.

Operator: Thank you. The next question is on the line of Guneet Singh from Counter Cyclical PMS. Please proceed.

Speaker #4: We have already mentioned the market was 300, and ours was around 400, which you can easily calculate from the revenue number and the profitability number given in the financial results.

Guneet Singh: Hi, sir. Thank you for this opportunity. What were our spreads in Q1 with the low-cost inventory that we had?

Gunit Singh: Hi, sir. Thank you for this opportunity. What were our spreads in Q1 with the low-cost inventory that we had?

Speaker #3: Okay, thank you very much. And what are the spreads currently? I mean, with the higher cost inventory, or if we procure the raw materials now?

Pramod Bhandari: We've already mentioned the market was INR 300 and our was around INR 400, which you can easily calculate from the revenue number and the profitability number given in the financial results.

Speaker #4: I think the spread—I have mentioned this earlier in the call—the spread is around $200 to $250 right now in the market, and we are making extra because of the by-product and the extra yield operating efficiency.

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

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

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

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

Speaker #3: Got it. So, right now, it's 200, 250, and with the lower cost inventory for Q1, it was around 300.

Speaker #4: There is no there is no lower cost inventory for this quarter because our inventory we maintain at a lower minimum level. And whatever we are buying, and we are generally selling.

Guneet Singh: Got it. Right now it's $200, $250, and with the lower cost inventory for Q1, it was around $300 for us.

Gunit Singh: Got it. Right now it's $200, $250, and with the lower cost inventory for Q1, it was around $300 for us.

Speaker #4: We are maintaining the minimum inventory in our system right now.

Pramod Bhandari: There is no lower cost inventory for this quarter because our inventory we maintain at a minimum level and whatever we are buying and we are generally selling. We are maintaining the minimum inventory in our system right now.

Speaker #3: Got it. So, I mean, as on date, we are seeing the same spreads as we saw in Q1. Is that a fair understanding?

Speaker #4: More or less same.

Speaker #3: Got it. So, you mentioned that over the last 10 years, normal spreads have been $150 to $200 themselves.

Guneet Singh: Got it. As on date, we are seeing the same spreads as we saw in Q1. Is that a fair understanding?

Gunit Singh: Got it. As on date, we are seeing the same spreads as we saw in Q1. Is that a fair understanding?

Speaker #4: Around $200 to $220, on average, for the last 10 years.

Pramod Bhandari: More or less same.

Guneet Singh: Got it. Sir, you mentioned that over the last 10 years, normal spreads have been $150, $200 itself.

Gunit Singh: Got it. Sir, you mentioned that over the last 10 years, normal spreads have been $150, $200 itself.

Speaker #3: Got it. So, the current scenario is more or less not the upcycle; it's just the normal case scenario.

Pramod Bhandari: Around $200 to $220 average for last 10 years.

Pramod Bhandari: Around $200 to 220 average for last 10 years.

Speaker #4: Yeah, it is slightly better than average. It's not extraordinarily high; it's just slightly better than average.

Guneet Singh: Got it. The current scenario is more or less not the upcycle, it's just the normal case scenario that.

Gunit Singh: Got it. The current scenario is more or less not the upcycle, it's just the normal case scenario that.

Speaker #3: Got it. And how are—I mean, if we compare our prices to prices from Chinese or Korean imports, can you help me understand how much difference there is between them?

Pramod Bhandari: Yeah. It is slightly better than the average. It's not extraordinarily high. It's slightly better than the average.

Guneet Singh: Got it. If we compare our prices to prices from Chinese or Korean imports, can you help me understand how many difference is in between them?

Gunit Singh: Got it. If we compare our prices to prices from Chinese or Korean imports, can you help me understand how many difference is in between them?

Speaker #4: Hardly any difference, because if you do import from these guys, with the freight, insurance, transportation congestion, and other things, and including the duty if you count, more or less, I think between 3 to 5 percent. Because we are able to sell just on time, and they take 30 to 40 days.

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

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

Speaker #4: That's all. Otherwise, there is hardly any difference between the import and the domestic price.

Speaker #3: Got it. So this is 40 to 140.

Speaker #2: Sorry to interrupt, Mr. Guneet. May I request you to please join the question queue for a follow-up question, as there are several other participants waiting for their turn.

Guneet Singh: Got it. This 40 to 140-

Gunit Singh: Got it. This 40 to 140-

Speaker #2: Thank you. The next question is from Aditya Ketan from Smiths Equity. Please proceed.

Operator: Sorry to interrupt, Mr. Guneet. May we request you to join the question queue for a follow-up question, as there are other several participants waiting for their turn. Thank you. The next question is from the line of Aditya Khetan from SMIFS Equity. Please proceed.

Speaker #1: Thank you, sir, for the opportunity. Sir, just a couple of questions. Sir, manufacturing of phthalic anhydride via OX route versus the naphthalene route—any sorts of... in the last two to three months, was there any instance where manufacturing via naphthalene had become more profitable?

Aditya Khetan: Thank you, sir, for the opportunity. Just a couple of questions. Sir, manufacturing of phthalic anhydride via OX route versus the naphthalene route. In the last two to three months, was there any instance like manufacturing via naphthalene had become more profitable? We know because the conversion cost in naphtha basis is 2x of orthoxylene. Because the crude prices itself jumped so that fixed cost of naphthalene got recovered and manufacturing via that route could have become profitable. Was there any day in the last two to three months wherein this route has become more profitable and customers, have they shifted on spot but because the trend didn't shape up for a longer term, that didn't shape up?

Speaker #1: We know, like, because the conversion cost, the naphtha base is two times. Okay.

Speaker #4: Correct.

Speaker #1: But because the crude prices themselves jumped, that fixed cost of naphthalene got recovered and manufacturing via that route could have become profitable. Was there any day in the last two to three months wherein this route has become more profitable, and have customers shifted on the spot? But because the trend did not materialize for a longer term, that didn’t shape up.

Pramod Bhandari: Correct

Aditya Khetan: of orthoxylene. Because the crude prices itself jumped so that fixed cost of naphthalene got recovered and manufacturing via that route could have become profitable. Was there any day in the last two to three months wherein this route has become more profitable and customers, have they shifted on spot but because the trend didn't shape up for a longer term, that didn't shape up?

Speaker #4: I think I think there are two points. First, India doesn't have any naphthalene-based telec production facility. Generally, it all the telec facilities converted 90 to 95 percent in the world on the orthogaline basis because it's an efficient energy efficient as well as the operating efficiency is much higher.

Pramod Bhandari: I think there are two points. First, India doesn't have any naphthalene-based phthalic production facility. Generally, all the phthalic facilities converted 90% to 95% in the world on the orthoxylene basis because it's energy efficient as well as the operating efficiency is much higher. There are some of the Chinese guys who are operating in China at a very lower capacity. They take the advantage of spread available between OX and naphthalene. It's not naphtha, it's naphthalene, which is the byproduct of steel. We have not witnessed in last two to three months any import on that account happening in India because India has come with some standard which generally doesn't allow these guys to sell the product to the domestic market. I have not seen any impact. For the prices, I have not checked, of course, the last six months naphthalene prices.

Pramod Bhandari: I think there are two points. First, India doesn't have any naphthalene-based phthalic production facility. Generally, all the phthalic facilities converted 90% to 95 in the world on the orthoxylene basis because it's energy efficient as well as the operating efficiency is much higher. There are some of the Chinese guys who are operating in China at a very lower capacity. They take the advantage of spread available between OX and naphthalene. It's not naphtha, it's naphthalene, which is the byproduct of steel. We have not witnessed in last two to three months any import on that account happening in India because India has come with some standard which generally doesn't allow these guys to sell the product to the domestic market. I have not seen any impact. For the prices, I have not checked, of course, the last six months naphthalene prices.

Speaker #4: There are some Chinese guys who are operating in China at a very low capacity. They take advantage of the spread available between OX and naphthal.

Speaker #4: It's not naphtha; it's naphthalene, which is the byproduct of steel. So we have not witnessed in the last two to six months any import on that account happening in India, because India has come up with some standards which generally don't allow these guys to sell the product to the domestic market.

Speaker #4: So, I have not seen any impact on the prices. I have not checked, of course, the last six months' naphthalene prices. But two years back, there was a spread of between $250 to $300.

Speaker #4: Then it was profitable. Of late, I have not checked, but I have not seen any import of naphthalene-based telec in the domestic market.

Pramod Bhandari: 2 years back, there was a spread of between INR 250 to 300, it was profitable. Of late I have not checked, but I have not seen any import of naphthalene-based phthalic in domestic market.

Speaker #1: Got it. Sir, on China, like we have seen like so taking a trend of the last 10 years. So earlier, so South Korea was the largest importer that overtook China overtook it and now it became the largest importer like some 50, 60 percent imports coming from China.

Pramod Bhandari: Two years back, there was a spread of between INR 250 to 300, it was profitable. Of late I have not checked, but I have not seen any import of naphthalene-based phthalic in domestic market.

Aditya Khetan: Got it. Sir, on China, we have seen, taking a trend of the last 10 years, earlier, South Korea was the largest importer, China overtook it, and now it became the largest importer, some 50%, 60% imports coming from China. Any idea, sir, if you can give over the last 10 years how much capacity addition happened in China, and was that through the OX route like you mentioned? Second, sir, recently also Chinese government is rolling back all the subsidies which they are giving out.

Speaker #1: So, any idea, sir, if you can give, like, over the last 10 years, how much capacity addition happened in China, and was that through the OX route, like you mentioned?

Speaker #1: And secondly, sir, like recently also, the Chinese government is rolling back all the subsidies which they were giving out. So on phthalic anhydride also, is this similar trend working, or are the duties still intact?

Speaker #4: No, no. There are two parts. First, right now, China doesn't have any new capacity that is based on naphthalene. It is the old, 30-40-year-old capacity.

Pramod Bhandari: Yeah.

Aditya Khetan: On phthalic anhydride also, is this similar trend working, or the duties are still intact, sir?

Speaker #4: And China is actually withdrawing all the benefits given to the various products. Specifically, they have not published any list of which products they are giving what benefits.

Pramod Bhandari: No. There are 2 parts. First, right now, China don't have any new capacity which is based on naphthalene. It is a old 30, 40 years old capacity. China is actually withdrawing all the benefit given to the various products. Specifically, they have not published any list which product they are giving what benefit. It is in the public knowledge only. It is not in the public knowledge that it is available to a specific product, because generally it is done inside the China, they don't publish it. Nobody is actually aware of that, what is the benefit they are offering to particular chemical or chemistry while doing the export to the other countries. It is general perception that they are giving some benefit, but it is not in public domain or published anywhere.

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

Speaker #4: It is in the public knowledge only, that is, it is in the public knowledge. It is not in the public knowledge that it is available to a specific product, because generally it is done inside China.

Speaker #4: They don't publish it, so nobody is actually aware of that. What is the benefit, or the benefit they are offering to a particular chemical or chemistry, while doing the export to other countries?

Speaker #4: So it is the general perception that they are giving some benefit, but it is not in the public domain or published anywhere.

Speaker #1: The capacity additions in China—if you can get the data, like how much has been added in South Korea, and...

Speaker #4: I don't have it right now, but in the last two years, one or two plants of around 200,000 tons have been added in China.

Speaker #4: I will give you the details of two plants, separately. I don't have them handy with me right now.

Aditya Khetan: The capacity additions in China, if you can get the data, like how much has been added in South Korea.

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

Speaker #1: Got it, sir. Got it. Thank you, sir. That's it.

Speaker #2: Thank you. The next question is from the line of Karan from DAM Capital. Please proceed.

Aditya Khetan: Got it, sir. Okay. Thank you, sir. That's it.

Speaker #4: Hello. Hello.

Operator: Thank you. The next question is from the line of Karan from DAM Capital. Please proceed.

Speaker #2: Mr. Karan.

Speaker #4: Yeah, yeah. Hi, sir. Thank you for taking my question. Congratulations on a great set of numbers. So, I've just got two. One, I think we've done about ₹112 crore of EBITDA in Q1, and I think ₹68 crore or ₹67-₹68 crore in Q4.

[Analyst] (DAM Capital): Hello.

Pramod Bhandari: Hello.

Operator: Mr. Karan, yeah.

[Analyst] (DAM Capital): Yeah. Hi, sir.

Pramod Bhandari: Yeah.

[Analyst] (DAM Capital): Thank you for taking my question. Congratulations on a great set of numbers. I've just got two.

Speaker #4: Given how the entire geopolitical situation is panning out, how do you see the sustainable run rate for us from here on? So your question is, how much run rate will we be able to maintain for the production, or the EBITDA, or the PET?

Pramod Bhandari: Thank you.

[Analyst] (DAM Capital): I think we've done about INR 112 crores of EBITDA in Q1, and I think INR 68 crore, close about INR 67, INR 60 crores in Q4.

Pramod Bhandari: Yeah.

[Analyst] (DAM Capital): Given how the entire geopolitical situation panning out, what is the sustainable run rate for us from here on?

Speaker #4: On the EBITDA level, sir. So EBITDA right now is around ₹112 crore, and including the other income, it is ₹120 crore, which is 19 percent. The next few quarters, I think the next quarter is also looking good.

Pramod Bhandari: Your question is, how much run rate we'll be able to maintain for the production or the EBITDA or the PAT?

[Analyst] (DAM Capital): On the EBITDA level, sir.

Speaker #4: I will not be able to predict for the entire year, but compared to last year, when we had a full-year EBITDA of ₹130 crore, this quarter we have done ₹120 crore.

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

Speaker #4: We expect the next one or two quarters to also look good. But it all depends upon the geopolitical situation and all that. Typically, when we assume that we will have our fourth plant operating, or fifth plant operating along with the plasticizer, we will have a similar type of EBITDA on a quarterly basis.

Speaker #4: Depend upon the margin. Of course, subject to the margins.

Speaker #3: Sure, sir. And if I have to just look at it purely from the PAN business, then how do you look at your quarterly run rate?

Speaker #3: Are we comfortable in saying that, at least for the next few quarters, it should be higher than what we did in Q4?

[Analyst] (DAM Capital): Sir, if I have to-

Pramod Bhandari: Depend upon the margin. Of course, subject to the margins.

[Analyst] (DAM Capital): Sure, sir. If you just look at purely from the PAN business, how do you look at your quarterly run rate? Are we comfortable in saying that at least for the next few quarters, it should be higher than what we did in Q4?

Speaker #4: So I will not be able to comment for the next quarter. I can tell you that if EBITDA margin remains between $200 and $250, then our EBITDA will remain between the 15% to 16% level.

Pramod Bhandari: I will not be able to comment for the next quarter. I can tell you that if the margin remain between $200 to 250, then our EBITDA will remain between 15% to 16% level.

Pramod Bhandari: I will not be able to comment for the next quarter. I can tell you that if the margin remain between $200 to 250, then our EBITDA will remain between 15% to 16 level.

Speaker #3: Understood, sir. Okay. And sir, secondly, sir, reportedly we hear that—is there somehow more raw material availability from an orthogaline perspective?

Speaker #3: Are we running our production at optimum utilization? If you could just throw some light there, please.

[Analyst] (DAM Capital): Understood, sir. Okay. Sir, second, reportedly we hear that, how was the raw material availability more from a orthoxylene perspective? Are we running our production at optimum utilization? If you could just throw some light there, please.

Speaker #4: So, raw material is available in the industrial market. Of course, the prices are high. Typically, we buy 40 to 50 percent from the domestic market and 40 to 50 percent from the import market.

Speaker #4: The challenge in the import market is the delivery, because generally it takes 10 to 15 days, or 20 days. Now it is taking 40 to 45 days, sometimes 50 days.

Pramod Bhandari: Raw material is available in the international market. Of course, the prices are high. Typically, we buy 40% to 50% in domestic market, 40% to 50% in import market. The challenge in the import market is the delivery, because generally it takes 10 to 15 days or 20 days. Now it is taking 40 to 45 days, sometimes 50 days. That time lag is always there. Similarly, the cost of the freight and transportation has gone up, as I indicated earlier. Raw material is available. To bring the raw material to your country or to your plant is something which is difficult in this geopolitical scenario. Having said that, the raw material is sufficiently available in the international market. You need to plan everything in advance.

Pramod Bhandari: Raw material is available in the international market. Of course, the prices are high. Typically, we buy 40% to 50 in domestic market, 40% to 50 in import market. The challenge in the import market is the delivery, because generally it takes 10 to 15 days or 20 days. Now it is taking 40 to 45 days, sometimes 50 days. That time lag is always there. Similarly, the cost of the freight and transportation has gone up, as I indicated earlier. Raw material is available. To bring the raw material to your country or to your plant is something which is difficult in this geopolitical scenario. Having said that, the raw material is sufficiently available in the international market. You need to plan everything in advance.

Speaker #4: So that time lag is always there. And similarly, the cost of freight and transportation has gone up, as I indicated earlier. So, if raw material is available, bringing the raw material to your country or to your plant is something which is difficult in this geopolitical scenario.

Speaker #4: But having said that, the raw material is sufficiently available in the industrial market. So you need to plan everything in advance.

Speaker #3: So, do we have sufficient inventory to maintain optimum utilization per plant?

Speaker #4: Yes, we have sufficient inventory. We always maintain sufficient inventory.

Speaker #3: Understood. Just for my understanding, typically how much inventory do we maintain of orthoxylene?

[Analyst] (DAM Capital): Do we have sufficient inventory to maintain optimum utilization for plant?

Speaker #4: Typically, as a company, we maintain an orthogonal inventory of 5,000 to 10,000 crore tons on average, which is typically 15 to 20 days of inventory required for the plant.

Pramod Bhandari: Yeah. We have sufficient inventory. We always maintain sufficient inventory.

[Analyst] (DAM Capital): Also, just for my understanding, typically, how much inventory to be maintained of orthoxylene?

Pramod Bhandari: Typically, as a company, we maintain the orthoxylene inventory of 5,000 to 10,000 tons average, which is typically 15 to 20 days of inventory required for the plant.

Speaker #3: Okay, sir. Perfect. Thank you so much, sir. Thank you so much, sir.

Speaker #4: Thank you.

Speaker #2: Thank you. The next question is from the line of Rhea A. Mehta from Equities Investments. Please proceed. Ms. Rhea, you may proceed with your question.

[Analyst] (DAM Capital): Okay. Perfect. Thank you so much.

Pramod Bhandari: Thank you.

Operator: Thank you. The next question is from the line of Riya Mehta from Equities Investment. Please proceed. Ms. Riya, you may proceed with your question. Due to no response from the current participant. Due to time constraints, that was the last question. I would now like to hand the conference over to the management for the closing comments. Over to you, sir.

Speaker #2: You do not have any further questions from the current participant. Due to time constraints, that was the last question. I would now like to hand the conference over to the management for the closing comments.

Speaker #2: Over to you, sir.

Speaker #4: Thank you very much, everyone, for joining this call. We appreciate your time and interest in our company. In case you have further questions, please contact SGA, our industrialization advisor.

Speaker #4: You can send mail directly to us. We will be happy to respond. Thank you very much. Have a nice day.

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

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

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