Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Archean Chemical Industries Ltd (BOM:543657, Financial) reported a notable performance for Q1 FY25 with total revenue of INR2,234 million.
- The company has seen a steady demand for Bromine from both domestic and export markets, particularly from agrochemicals, pharmaceuticals, and flame-retardant manufacturers.
- The company expects a good recovery in the coming quarters despite logistics challenges.
- The response to the Clear Brine Fluids (CBF) and PTA synthesis business has been very encouraging, with approvals from around 10 clients.
- The acquisition of Oren Hydrocarbons is expected to enhance the product basket and build long-term relationships with clients in the oil and gas and drilling industries.
Negative Points
- There was a 37% drop in revenue on a year-over-year basis, primarily due to logistics challenges at the ports.
- Industrial Salt suffered dispatch delays in Q1 FY25, impacting overall business momentum.
- The company experienced increased freight costs and delays in the availability of vessels and containers, affecting export schedules.
- The monsoon season caused abrupt weather changes, leading to a switch from Jakhau to Mundra port and resulting in a loss of shipment movement time.
- The company has been conservative in its Bromine volume expectations, reducing the forecast from 25,000-28,000 metric tonnes to 22,000-25,000 metric tonnes for the year.
Q & A Highlights
Q: Can you provide the revenue and volume breakdown for Salt, Bromine, and SOP for this quarter?
A: The revenue for Salt is around INR1,172 million, Bromine is around INR937 million, and SOP is around INR22 million. The volume sold for Salt is around 660,000 tonnes, Bromine is around 4,700 tonnes, and SOP is around 66 tonnes. - Raghunathan Rajagopalan, CFO
Q: Is the lower volume in Salt due to dispatch problems or market pressures?
A: The lower volume is primarily due to dispatch problems caused by an abrupt weather change and early monsoon, which delayed the switch from Jakhau to Mundra port. There is no issue with customer contracts, and we expect to meet our annual targets. - Ranjit Pendurthi, Managing Director
Q: What is the expected timeline for sales acceleration in the Acume subsidiary?
A: Sales are expected to start coming through in H2 FY25, with significant contributions beginning around October. - Ranjit Pendurthi, Managing Director
Q: When will the Oren Hydrocarbons plants start operations, and will all plants be commissioned at once?
A: The plants will be commissioned in a phased manner, starting with two plants related to the oil and gas drilling industry and Clear Brine Fluids products. - Ranjit Pendurthi, Managing Director
Q: Can you provide guidance on Bromine prices and potential competition in the market?
A: Bromine prices have stabilized, and we do not foresee a drop. While new competitors may enter the market, our established capacity and infrastructure provide a competitive advantage. - Ranjit Pendurthi, Managing Director
Q: What is the status of the semiconductor business subsidiary and its collaboration with IIT Bhubaneswar?
A: The subsidiary is in the R&D phase, focusing on silicon carbide crystal growth. More details will be available in the coming months. - Ranjit Pendurthi, Managing Director
Q: What is the expected impact of the Oren Hydrocarbons acquisition on margins and revenue?
A: We are targeting INR200-plus crores in sales from Oren Hydrocarbons, with a phased plant refurbishment approach. Specific margin guidance will be provided later. - Ranjit Pendurthi, Managing Director
Q: What is the progress on the Phase 2 derivatives expansion, particularly for flame retardants?
A: We are finalizing the technology and permissions for Phase 2. The plant will not be commissioned before March 2025. - Ranjit Pendurthi, Managing Director
Q: How are global dynamics affecting the Bromine market, particularly in flame retardants?
A: The Bromine industry remains stable with healthy demand in agrochemicals and flame retardants. We are well-positioned to maintain our leadership in both domestic and export markets. - Ranjit Pendurthi, Managing Director
Q: What is the status of the leasehold land renewal with the Government of Gujarat?
A: The renewal process is ongoing, and we are actively engaging with the government. - Ranjit Pendurthi, Managing Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
