Thank you very much. We will now begin the question -and-answer session. The first question is from the line of Nirav Jimudia from Anvil Corporation. Please go ahead.

Sir, I have two , three questions on the Chemical side. Sir, when I see your presentation, particularly in terms of the production of caustic, I think we have clocked something around 1 ,920 TPD of production this quarter. If we do some math and do the calculation, I think our chlorine production was close to 1 ,700 TPD. If you can help us explain how much we have consumed internally for our SBP , Aluminum Chloride plant, how much was the sales to the pipeline customers and how much we have sold in the spot market. And sir, if you can also share the market of chlorine within our area of operations predominantly Jhagadia because I was doing some sort of readings, and my understanding suggests that the market of chlorine within that Jhagadia region is close to 1,000-1,100 TPD of chlorine. If you can share your thoughts, that would be very helpful.

One, in terms of our capt ive consumption, see, we have two plants, one in Bharuch, Jhagadia, and the other is in Kota. Put together , our capt ive consumption is close to about 18% , and through pipeline it would be another 35-40%. Now in terms of market in Jhagadia, I do not have the number in terms of size of the market there right now, but what I understand is that the market is growing given that industries around us , whether it is Aarti, KLJ and other, they are also expanding and therefore we see the market growing.

Sir, in terms of the integration project what we have announced , I think that would further consume something close to around 235 TPD of Chlorine. So, eventually when we will have or be in operating at close to 90% utilization , what sort of integration from current level of 18% of chlorine could go up to ? Any thoughts?

So, that should go up from 18% to close to 32%.

On the 90% utilization assuming we continue to operate our plant at 90%?

True. So, see the major delta will come in B haruch business , our Kota will remain more or less the same . So, therefore, overall, as a chemical business from 18% will go up to 32% , and pipeline you can add another 35-40%. So, more or less for the business as a whole, we will have 65% virtual certainty of supply and rest we are comfortable that we can supply in the market.

And sir, when we speak of selling our chlorine to the pipeline customers , how does the pricing work there? Because in the spot market , I think prices fluctuates a lot , and it lot depends upon the production of caustic also. So, when we sell through the pipeline customers, how the contracts, are there any fixed price contracts or are there formula-based pricing which is there and because of that the volatility in the Chlorine price is something like insulators from sales to our pipeline customers?

So, Nirav, it is more about giving exit to chlorine . I do not think it is so much about prices and the contracts are of all kinds, but mostly they are on spot basis.

Sir, second question is in the presentation , you have mentioned that though the capacities in India were increased and there were pressures on the realizations, but at the fag -end of the quarter, I think there were some spikes in the prices of caustic. So, just wanted to understand from you like in between the quarters, let 's say Q1 and Q2, the prices of caustic imported to India was close to $470, but our realizations have fallen. So, our ECU has fallen from, let's say, 28 to close to 25.9 this quarter. So, it is more related to the Chlorine prices and whether the increase in the prices in the international market very recently, what you have alluded in the presentation. Similarly, do we have taken the price hikes also in the domestic market following the increases in the international market?

One, I think the biggest reason why the prices have not followed international markets as in ECU is because of the chlorine. Chlorine, if I remember correctly, Q1 was about 4,000 negative and in Q2 it was about 7 ,000 negative. Currently, it is about 9000 negative . Right? And the other thing is there is always a lag in terms of international prices and the international prices went up only by September. September second half is when we saw prices going up. Ballpark, they have gone up by about $70 over the last 1.5 months. And there is always a lag in terms of getting reflected in the numbers because there are always supp ly contracts for one to two months which are fixed. So, therefore, they have impact.

But sir, safe to assume that how much, so t he extent to which the Chlorine has gone negative from, let's say, -7,000 to -9000, that sort of price increases we have taken in order to maintain our ECU or slightly improve that.

No, we do see our ECUs to be better in Q3.

And sir, last bit from my side . So, when I was just going through our annual report, what we have clo cked in terms of PBIDT for particularly the Chemical business was close to INR190 crore. So, sir, safe to assume that last year was because of the pressure on the ECU and the other cost . Was it more from the value -added products like hydrogen and aluminum chloride and SBP and less from the caustic chlorine business?

From last year’s perspective, what you are saying is right. But from this year ’s perspective hydrogen will continue to add value. It is th e cost side where there has been a significant reduction in cost and therefore caustic also is going to be profitable. On top of it, there are more volumes.

Thank you. The next question comes from the line of Jainam Ghelani from Svan Investments. Please go ahead.

Sir, my first question is on the anti -dumping duty. The anti-dumping duty is with the Ministry of Finance. So, if it is approved, how much benefit can we see in our profitability on the PVC segments?

The anti-dumping duty ranges country to country. The way the government has approved, or the Ministry of Commerce has approve d. The anti-dumping duty ranges in US, Thailand, Taiwan, Korea, Japan, Indonesia and China from the range of about $51 in Korea to C hina is between $82 and $125. China would be an average I would say about $100. So, it is ranging between this level, the highest band is in China, second is in US, $64 to $104. So, I think with all these coming in, it is now with the Ministry of Finance , and this was just issued on the 30th of October. It is very early right now. So, it's gone to the Ministry of Finance and the industry is pursuing it with the Ministry of Finance.

And since our ECH plan t will be commissioning in Quarter 4, we would need approvals from the customers. So, how long would the approval process be for the same?

The approval process ranges between , for domestic consumers, it will be anywhere between 1 to 2 months. For overseas customers, it is a lit tle longer. It depends on application-to-application, but that's the ballpark range.

Thank you. The next question is from the line of Parth Vasani, an individual investor. Please go ahead.

My question is more related to CPVC resin. I just wanted to know, is there any plan to make that special PVC, which is required to make CPVC resin which I believe most of the companies import?

No, we actually have not talked about making CPVC resin in our company.

So, you are not planning to enter into the CPVC resin manufacturing?

No.

Thank you. The next question is from the line of Saket Kapoor from Kapoor Co. Please go ahead.

First a small clarification sir, you mentioned that the Chlorine price was negative for the 2nd Quarter was 5000 and currently it is trending at 9000. Is this what you alluded?

So, exit of Septembe r the negative has increased significantly . What factors have led to this, and will this lead to lower utilization levels for caustic?

So, S aket, this is the other way around. One, this negative increase has happened more recently. 9000 I was giving you the number as on date. For the quarter ending, I mean quarter ending September, which is 2nd Quarter, it was close to about 6,700 to be precise average negative. And to answer your point that in fact, caustic utilization is the reverse. The more chlorine, today what's happening, what is leading to lower prices is that more chlorine is being produced. As new capacities have come up, prices are better for caustic, hence people are increasing their capacity utilization leading to more chlorine and therefore lower prices of chlorine.

And for the offtake of chlorine, sir, I think you did allude to our steps we are taking for increasing the portfolio of value -added products. Where are we in terms of the current captive use of chlorine and the external sales and what should be the number for H2 and next financial year?

So, if I look at capt ive consumption including pipeline for the business as a whole located in Bharuch as well as Kota, I am at about 48% including pipeline and going forward once these capacities come up which is ECH, calcium chloride and enhanced aluminum chloride then I should be about 65% to 70% including pipeline.

We have also heard about Reliance coming up with a big PVC complex. They made this announcement sometime in their A GM in the month of August. So, how are the dynamics of the industry going to change wi th this huge 1.5- million-ton PVC complex? What's the thought process and how are caustic players aligned to this huge PVC and also the PVC market itself? Your thought on the same, sir.

Your question is on caustic or PVC?

Both sir.

On caustic, the way we understand is that Reliance as well as Adani both are coming up with their caustic project largely to feed chlorine into their PVC. Now both of these projects will be in the coastal regions and looking at the global demand, which is about 106 million tons and growing at about 2%, we expect that the caustic that they are going to manufacture will largely be for the export market. So, that is point number one on caustic. It may cause some interim disruption domestically, but it is the intent what looks like. As far as PVC is concerned, see the total domestic market size in PVC is about 4 million tons. And today what we manufacture is only about 1.4 million tons. So, there is a huge gap. And they, I think, if I am not wrong, are coming up with about 225,000 kilo tons as a capacity , which is only a partial capacity. So, we do not see any stress coming on PVC. In any case, we are based out of North and these two plants are coming up in the Western region. So, we do not see any challenges as far PVC is concerned.

I do not see any issues with demand. PVC i n India itself, as I mentioned, there is a big gap on demand and supply and on top of that it is growing at about 10%-11%.

And for caustic? Caustic soda globally we find demand restrictions especially for the European economy where in big players also mothballed their capacities. That was my thought. Am I correct in that thought process?

There are two things happening here. One, Europe is closing down capacities because of their overall cost structure and they are probably looking at more value add. That's an opportunity for India to export. And other thing is globally demand is increasing. One example is new paper capacity, pulping capacity coming up in South America. In India itself, the aluminum capacity is increasing from about 4.1 million tons to about 6 million tons. So, I think demand is getting cr eated. But yes, it is only a matter of time when this new capacity in India gets absorbed.

And lastly, on the P &L part, I find that the power and fuel cost on the quarter is up significantly to Rs. 428 crore if we take the Q oQ increase from Rs. 373 crore to Rs. 428 crore, if you could just explain the key reason and I think we have also taken a maintenance shutdown . What is the cost that we have incurred and what is the update on the realignment of the capacity post shutdown?

Now we have taken a maintenance shutdown in vinyl business. So, all that is back on track. We are operating at nearly 100% capacity. And the increase in cost of power and fuel is primarily led by volumes.

And sir, on the new power plant in Kota, are we now accruing the benefit of the same completely?

The new power plant is at Bharuch and yes , we have started accruing the benefits.

And what was the annual saving we envisage from the same?

I think it's reasonable. I do not have the number right away, but it is something which we are happy and it's closer to what we had targeted as a benefit.

And what is the thought process of the outlook for the sugar bioethanol story from us? How are we going to pursue the opportunities? If you could j ust throw some more light on this, sir?

On sugar, see bioethanol is very futuristic right now. We are also evaluating where these technologies are because the technologies itself are not very matured. The market is not very mature and therefore the impact, you know, they are very expensive fuels. So, we will keep a watch. But yes, we are looking at how best we can make sugar as an ecosystem, right, where the re are multiple products. But they all will depend on how the technology is matured.

Thank you. The next question comes from the line of Falguni Dutta from Mansarovar Financials. Please go ahead.

I just had one question that's on sugar. What is the cost of sugar production for the season that just ended in September?

So, our cost of production was close to about 3,600, a dash lower than that , ballpark.

Does this include interest and depreciation also?

Yes.

And is it possible to tell me the number before interest , after depreciation but before interest if it's readily available?

Falguni, I don’t have that number right away.

Thank you. The next question is from the line of Surabhi from NV alpha. Please go ahead.

I wanted to know more about S hriram Farm Solution. I have been seeing that we have consistently been doing 17%-19% margins in the last couple of years. What exactly is the hero product? Is it the crop protection or is it the soluble fertilizers? And also , what is the capital employed in this business? Should we take the bioseed plus the fertilizers as the real capital employed?

No, I think the Shriram Farm solution actually has three verticals. One is the business of seeds, where they have hybrid seeds, and they have got research wheat and other products. Second, they have got crop care chemicals, which is a sub vertical within SFS. And third is where they have plant nutrient s, which is the third vertical. So, they're focusing on all three. And there is a focus research going on in all these areas to try to get products which are unique products which are effective with the crops, products which the farmers want to buy. So , the focus is very strong over there. The manufacturing we have is for specialty nutrients etc. at Kota, which is not that large. So , I do not know, Amit may be having how much money is involved there. But the working capital requirement in the business is no t too much. It's quite small. It's not really large at all . And SFS is a separate vertical in our group. Bio seed is a separate vertical in our group. And they both have their own management team s. They both have their independent CEOs. And they manage the business independently and manage their own cash flows independently.

What kind of ROC Es do we make in the SFS business ? And also, would like to know if Q3 is seasonally the best quarter for SFS correct?

So, one, yes Q3 will be the best quarter for this business because of research wheat that's the most profitable business in the Farm Solutions. So, I think that is one reason. And on your point of the ROCE, given that their capital employed is negligible and their EBIT will be in excess of Rs. 200 crore, so it's like abnormal number, it's very high.

And just last question, within like seeds and nutrients, what is the top selling product within the SFS segment?

Research wheat in the seed segment, but I think your question is also on the plant nutrition, is it?

No, so like overall, because I see that in the footnote it's written plant nutrients, water solubles and seeds. So, which of that is the higher contributor amongst the three?

Seeds.

Thank you. We have a follow up question from the line of Nirav Jimudia from Anvil Corporation. Please go ahead.

One question on the urea side. So, when I see the numbers I think our EBITDA per ton is close t o around Rs. 2,000-Rs. 2100. Just wanted to understand from you like are the numbers lower just because the fixed cost absorption or the compensation from the government has not been revised from last so many years and because of that there is some under recovery so far as the fixed cost compensation is concerned or our energy consumption Gcal per metric ton is higher and because of that we will not be able to materially improve our EBITDA per metric ton in the urea side.

One, Nirav, we need to understand that our focus businesses are Chemicals, Sugar, Farm Solutions and Fenesta. Farm Solution and Fenesta are the consumer faci ng businesses. And these are the four businesses that define the future of the organization. Now in terms of Fertilizer, I think it's performing reasonably well. Last year, if you see the EBIT was about Rs. 53 crore , almost capital employed was not very high given the subsidy situation resolved. So, we feel it has a ROCE of close to about 60 %-70%. Now that's very reasonable. Yes, our fixed costs are a little higher given their size, but our efficiencies are reasonably good. So , I think overall Fertilizer and we manufacture urea, so it's in pretty good shape.

The second question is on the chemicals that given the production of close to 1,920 TPD of caustic soda this quarter. If you can share the mix of power between renewables-captive, how is the mix and let's say when we ramp up our production how this mix would look like?

One our production I think at Bharuch it was close to about 1 ,400 tons per day and at Kota, it was close to about 500 tons per day. So, that's about 1,900 tons per day ballpark for the quarter. Now coming to renewable, see out of the total power requirement currently, our total power requirement is close to about anywhere between 125 to 150 megawatt at Bharuch. So, out of that, about 25 megawatt on an average basis is coming from renewable energy.

And is rest from captive?

Rest is from captive, yes , b ecause my contract , peak is about 44 -45 MW, average is 25 MW, so that will remain. We are just adding another 6.6 MW which will start coming from next quarter. So, peak, in Bharuch we will have about 50 MW . And Kota, in another 1–1.5 years we will add another 68- megawatt peak.

So, currently Kota is entirely on coal-based captive plant?

Yes. So, the only thing is we are also using almost 15 %-20% biomass there. To that extent, we are using green fuel.

And how the things would look like when we will keep on ramping up our volumes of caustic soda?

So, we are quite focused on seeing that how do we improve our green footprint. As of now, we do not plan to increase our capacity. There will be ramp up happening at Bharuch from, let's say, currently we are at about 1,400-1,500 tons, and we will go up to about 2 ,200 tons. So, that will largely be met by captive sources. And there also what we are looking at is the options of increasing our biomass. So, our boilers are capable of taking 30 %- 40% biomass, especially the new boiler. So, to that extent, we would like to reduce the carbon footprint.

So, last two clarifications, so one on the Flaker plant of 600 TPD, has it started operating?

Out of the total planned expansion of 600 tons per day, 300 tons per day has started operating.

So, that would help our exports possibly in order to improve our utilizations, right?

Yes. That's what Chairman mentioned in his opening remarks.

And the last clar ification is on is on the PVC plant at Kota. So, there possibly we may be converting chlorine to HCL for our PVC or does the chlorine directly go to the PVC plant?

Chlorine goes into HCL. And then HCL goes into PVC.

Thank you. The next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead.

Just one clarity that I needed, again on the power side of it, so, if I understand it right, you are spending Rs. 76 crore to increase your peak capacity from 44 megawatt to 68 megawatt. That is the addition of 24 megawatt, right?

We are investing close to about Rs. 73 crore to Rs. 74 crore. That is, we are doing a new tie-up for our Kota facility where we are tying up 68 megawatts.

That is over and above the 44 megawatts, that you already have?

Exactly, that is over and above. See, 44 megawatts is at our Bharuch facility which is in Gujarat.

So if I understand the average, you have done around 25 megawatts in your Bharuch facility, what would be like the average utilization possible out of the 68 megawatts?

So, just to add here, one in Bharuch we are currently at 25 MW, we will go up by about 2 to 3 megawatts because we have tied up another 6.6 megawatts in Bharuch. So, there we are spending close to about Rs. 3 crore as our equity participation. Now out of this 68 megawatt, I think it is about 32–33- megawatt average.

Thank you. Ladies and gentlemen, that was the last qu estion. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you. Ladies and gentlemen, thank you very much for your participation in our earnings conference call. Our growth strategy reflects our commitment to adopting and thriving in a complex global market while strengthening our core business capabilities and the value chain. Sustainability remains the cornerstone of our business philosophy, reflecting our unwavering commitment to e nvironmental stewardship and social respons ibility. Thank you very much once again. Goodbye.

Thank you. On behalf of DCM S hriram Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.

This is a transcription and may contain transcription errors. The transcript has been edited for clarity. The Company takes no responsibility of such errors, although an effort has been made to ensure high level of accuracy.