Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Specialty segment experienced significant sales volume growth of 80% in synthetic iron oxide pigment and CPVC.
- EBITDA contribution from specialty chemicals doubled year-on-year.
- Successful completion and ramp-up of CPVC capacity, achieving 100% production in Q1.
- Investment in renewable energy project is on track for completion in H2.
- Increased internal consumption of chlorine to 70%, aiming for chlorine neutrality by FY26.
Negative Points
- Ongoing dumping of commodity chemicals into India, leading to pricing pressure.
- Export demand remains sluggish, particularly affecting synthetic rutile.
- Net realizations across products saw significant corrections, with caustic, soda ash, and synthetic rutile decreasing by 12% to 30%.
- Revenue dipped by 20% quarter-on-quarter, primarily due to lower sales volume in synthetic rutile.
- EBITDA margins dropped from 13% to 10% year-on-year, with commodity segment profits significantly reduced.
Q & A Highlights
Q: Sir, just wanted to understand on the caustic soda division. Are we witnessing continuous dumping pressure, and what is the outlook on demand and prices?
A: Amitabh Gupta, CEO: Caustic soda prices have bottomed out, and there is no scope for further reduction. However, there is also no scope for prices to increase significantly due to ample capacities available. Prices will likely remain stable at current levels.
Q: Are we seeing any improvement in terms of capacity utilization in caustic soda due to internal chlorine consumption?
A: Amitabh Gupta, CEO: Yes, we will be increasing production by about 15% within the next month and expect to run at full capacity of about 250 to 260 tonnes per day shortly.
Q: Any comment on the CPVC antidumping duty decision and its impact?
A: Amitabh Gupta, CEO: We are positive as the Commerce Ministry has recommended continuation of antidumping duties on China and Korea. We expect the Finance Ministry to notify this before the current duties expire in August.
Q: How is our raw material sourcing for synthetic rutile, and do we make the same product as other players like Cochin Minerals?
A: Amitabh Gupta, CEO: There is no shortage of ilmenite as it is freely importable. We source from Indian Rare Earths Limited and import as needed. We produce high-grade synthetic rutile similar to Cochin Minerals but do not produce lower-grade varieties.
Q: What is the outlook for revenue and margins for the full year?
A: Saatvik Jain, President: We refrain from giving specific guidance due to global uncertainties. However, we are focused on cost control, maximizing utilization, and adding capacity in value-added products.
Q: Can you provide sales volume for the quarter across product segments?
A: Amitabh Gupta, CEO: The Investor deck contains production numbers. For specific sales numbers, please drop a request, and we will provide the information.
Q: What are the current prices for PVC and CPVC?
A: Amitabh Gupta, CEO: PVC prices are around $850 import parity, approximately INR77,000 to INR78,000 ex works. CPVC blended prices are around INR150,000.
Q: Are we still losing money in caustic soda, and what is the outlook for the current quarter?
A: Amitabh Gupta, CEO: We faced challenges in the last quarter, including price erosion and lower export sales. We expect the situation to improve from H2 onwards, but Q2 profitability may still be under pressure.
Q: Are synthetic iron oxide pigment (SIOP) and synthetic rutile the same product?
A: Saatvik Jain, President: No, they are different. Synthetic rutile is used to produce titanium dioxide pigment and titanium metal, while SIOP is used as a coloring agent in the construction and paint industries.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
