Thank you very much, sir . We will now begin the question -and-answer session. The first question is from the line of Pratik Tholiya from Systematix. Please go ahead.

Sir, just couple of questions. Firstly, in the chemicals, you said almost 1200 TPD of additional capacity is coming which I think 850 belongs to yourself. And the presentation also you mentioned there is a good demand from end user industries. So, you could just talk a little bit about the end user industries where you are seeing this kind of demand and in how many quarters can we expect the entire additional capacity to get fully absorbed?

Yes. So, in chemicals actually for caustic soda as you may know, it is used across a wide variety of industries inc luding textiles, paper and pulp, alumina, other organic, inorganic chemicals. So, it's sort of linked with GDP demand. If GDP is growing well, then the caustic demand also is expected to grow . So, we are very optimistic that while there is some over capacity in the short term. In the medium term, this capacity will all be absorbed comfortably.

And sir with this whole logistic s issue, I think the cost also wou ld have gone up for import, anyone who's importing caustic. So, what would be the imported caustic price and does that mean that Indian industry would slightly be better off, so the domestic price should also catch up with the total price?

So, Pratik, one, the imported prices are around $450 and frankly the imports are not very significant. If you see in the Q1 , only about 40,000 tonnes of caustic got imported. So, there is no significant advantage coming as of now from exports because see the point is that it's the freight, freight is not being used either by the importer or the exporter.

Sure. And secondly, I see that in the sugar business kind of see a sharp decline in the profitability while sugar prices have also moved up. And so just trying to understand whether it is the sugar business which has seen lower profitability or whether there is something in ethanol because C-heavy, I think large part of it we would have done C-heavy ethanol, s o, because of that there has been hit? If you could just explain within the sugar division whether it is in the sugar segment of the ethanol which has got hit?

So, as mentioned in the opening remarks as well, it is primarily in the sugar business, n ot ethanol. So , sugar got impacted one because there were no exports; last year same quarter, we exported about 2 Lakh tonnes and the cost of production went up and the selling price increase was not commensurate. So, that is the key reason. And the increase in SAP was about Rs. 20. So, to answer your question, it's primarily in the sugar business.

Some of the ot her competitors of your in the same business are in UP have not really highlighted a similar sort of cost pressure that you have experienced in t his quarter. So, other than the Rs. 20 MSP and zero sugar exports, are there any other reasons which has led to a significant drop in the sugar profitability?

No. See one is this. The other is this recovery has been lower and that has been across UP. Most of the mills especially in our region , the recoveries also have been lower. So, that also led to a little higher cost.

And sir lastly in Fenesta also again over year I am seeing margin compression of almost 400 basis points YoY. Can you just explain what has really happened over here?

So, see one , if you look at contribution margins, they have been largely intact. Now as again mentioned in the opening remarks, the revenue growth has been lower than what we would have expected because of elections. And therefore what we witnessed was that although our retail business grew even quarter-on-quarter; however, the B2B business, which is largely to builders – the institutional segment that has, I mean I would say that had degrowth, although year-on-year it is grown, but sequentially there's been a degrowth. So, that is th e reason I think which is temporary. It should get corrected , maybe we are still seeing some impact, but it should get corrected over next 1-2 months. And the other thing is on the fixed cost which as we mentioned it's like investment where we are investin g for future growth. So, we have 2 new factories which came up in last year and we also have facade business which was set up. So, all these add to the fixed cost along with the sales and business development cost. I think once if the revenue catches up , t hen it should be fine.

Understood. And sir did you say that project business was down? So, does it mean the project vertical has a higher margin versus retail?

No, the retail business has the higher margin, but then ultimately it is the mix. So, if the volumes don't catch up, then obviously it will have an impact on the amount that is available to cover the fixed cost.

The next question is from the line of Ahmed Madha from Unifi Capital. Please go ahead.

My question was on the caustic volume growth. Can you give some sense where we have grown our volumes - is it on domestic part or export side thi s quarter, for the new capacity?

Yes. So, it is largely on the domestic front that we have grown and exports as well we have grown, so it's been on both in fact . Exports for us including lye and flakes last year in the same quarter was 0.092 million metric tonnes. This time it is 0.12 million metric ton nes in this Q1 FY25. So, we have grown on both, domestically and exports.

And can you mention the key countries where you are exporting as of now?

So, it's largely going to the Middle East, Africa and the Southeast Asian countries.

And is there a sense on how much time it will take to ramp up the new capacity to optimum utilization? It will take more than a year or this by the end of this year, we should be able to do.

So, I think our entire team is focus ed on these efforts only to ramp up the capacity. I think we are seeing a steady growth in demand as well. So, we do expect that towards the end of the financial year , we will reach significant capacity utilization and by next year we will be able to reach optimal capacity utilization.

And on the cost side, it is very clear that energy cost has come down. Is there any decline in the salt prices for us?

Salt is only about 15% of the cost, so yes, there has been a decline, but the major impact comes from the energy cost.

So one, currently we are running on maize and we have a team which is procuring and we are procuring at a reasonable price and which is giving us reasonable margin.

On the epoxy, you mentioned that we'll plan it now. So, are we at the stage where we can give some guidance, how are we thinking about t he business or is it too early?

So, I think it is something which is being actively considered by the board and once the board takes a final decision on it, we'll be able to share that publicly.

Thank you. The next question is from the line of Jignesh Kamani from Ni ppon Mutual Fund. Please go ahead.

Just on the ECU realization, you mentioned it has increased around 8% QoQ because of the stabilization in the prices and lower, you can say the power cost. Now with capacity coming up for you and you can say industry aro und close to around 1200 TPD in the industry. Do you think there will be pressure on the ECU or current level is sustainable and you can say the volume growth in the industry is also happening demand wise, we can gradually improve from current ECU?

So, it is ofcourse difficult to predict prices going forward . As we've shared there has been significant capacity addition in the industry in the last 2 years. The capacity of the industry is now more than 6 million tonnes per annum. So, we do expect that in the short term, it will be range bound. The prices are on the lower side compared to earlier. But again in the medium term , we expect with the robust demand growth that prices will move up.

And second thing on the in-house chlorine consumption which you can say is the additional capacity coming up – what is our plan to increase the in -house chlorine consumption and what is currently our percentage of the in -house chlorine consumption?

So, along with our caustic soda expansion, we are expanding epichlorohydrin so that will consume you know a healthy amount of chlorine as well. We have expanded aluminum chloride also at our Baruch site. That again is the capacity ramp up is going on and we ar e consuming chlorine over there. So, along with captive consumption , for us a very important part is our pipeline customers and their growth journey, and our growth journeys have been in parallel over the last 20 years. So, they are valued customers of ours and in a way are the backbone for us as well. So, we look at it as captive consumption along with pipeline consumption. So, the two put together, w e will be close to 55% chlorine consumption and the remaining will be sold in the market.

So, what is the pure captive consumption excluding pipeline? Because pipeline will still carry the negative realization depend on the chlorine price movement. And once our epichlorohydrin and other derivative products also commence in next 2 year and then what would be our in -house chlorine consumption?

So, in Kota we have a PVC and stable bleaching powder as well. So, in Kota our captive chlorine consumption is close to 30% and in Bharuch our captive chlorine consumption will be close to 20%.

And what it will increase once all the derivative capacity of epichlorohydrin and other will be utilized?

So, th is is including those capacity additions. But in parallel we are also evaluating other chlorine downstream opportunities as was mentioned in the opening remarks. Once the board approves those, those will also be commissioned in due course.

The next question is from the line of Parth Gosani, an individual investor.

My first question is regarding the ECH. When are we expecting it to get commissioned, any tentative date?

So, towards the end of this quarter we will be ready with the trials for the plant and early next quarter the plant will be commissioned.

And by when do we expect it to reach optimum?

So, typically the process is for ECH we have to get approvals from the customers. So, after the plant is commissioned that process of approvals from the customers will begin. So, we expect that towards Q3 and into Q4 of this financial year the plant will be running steadily. But the ramp up will sti ll take some time. So, a lot of the material benefit we expect will come in the next financial year.

And one bookkeeping question that I have is, we consume coal in our power plant. So, that comes under the power and fuel cost, or it goes in to the raw material cost in the P&L?

Power and fuel cost.

Power and fuel cost consumes the coal that we purchase for running up our plant, right?

Yes.

The next question is from the line of Rohan Gupta from Nuvama.

First question is further in chlorine downstream. So, even the current plan which you have you mentioned, 55% max including the pipeline, we will go in a captive consumption 45% kind of number still have to be sold outside which still remains a larger number given that in chlorine many more capacities are also coming. So, over next 3 to 4 years, do we have plans, internal strategy to go to 100% kind of chlorine internal consumptio n and if so then what kind of investment you think that will be required apart from epoxy which other product line you will be evaluating?

So, to answer your question , yes we are evaluating other chlorine downstream opportunities of various sizes and scales. So, it would not be appropriate to comment on it until we have the approval from the board. But definitely, we are evaluating those actively and directionally we will l ook to increase our captive chlorine consumption. It might not reach 100% because we do want to remain in the market as well. But we will be increasing it continuously.

Last year many of the industrial chemical plants were facing disruption and under pressure because of China. So, your chlorine consumption would have also been impacted. How is the scenario now? Has the chlorine demand picked up ? A nd in the current ECH realization improvement , I think it is primarily driven by caustic soda on ly. So, chlorine prices still remain negative or lower and when you expect them to improve?

So, the chlorine prices continue to be negative. And in terms of, what we are seeing is that chlorine demand in the country over next 2 to 3 years we see it improving with a lot of chemical facilities coming in downstream. We ourselves are going to do a lot of downstream and we are seeing a lot of chemical capacities coming in. We should be consuming more and more chlorine. So, I feel this scenario shou ld improve over the period, but it will take time.

So, you are saying that chlorine still will remain negative and so ECH may remain under pressure unless we see chlorine going into positive or a sharp improvement in caustic prices?

I am not too sure why should ECH get impacted? You're talking about ECU.

ECU, yes.

So, yes to that extent ECU may have an impact definitely. And that is the reason we have been saying that for next few quarters we do s ee the ECU’s to be suboptimal. But what is important is that on cost side, we have taken steps ourselves in terms of investing on improving cost and efficiency and the energy costs are lower which we expect to remain sustainable and therefore we should see reasonable margins.

Next question is on our seed business. So, this year we have heard that there has been a shortage of seeds availability especially in cotton with the lower growing by the farmer, but we have seen growth and even further margin expansion in our business. So, do we also face any challenges in terms of the lower availability of seed and some outlook on that business for the current year?

The cotton seed even on the dem and side there have been issues because the acreage of cotton planting has been lower this year, significant fall in the acreage of the cotton seed.

So, we understand that from some of the competitor, they have mentioned that there is a non -availability of cotton seed in the market though demand is strong. So, that's what I just wanted to clarify from you that because you have shown growth as well in seed business.

At least I can talk about our company, we have not encountered t hat. And what we understand from the industry is that the planting has been lower, so there has been no shortage. So, that is one. And our performance has been good primarily because of the product mix and we are seeing good realizations for the seeds.

On ethanol business you mentioned that it's because of your capability to procure the raw material grain base at a competitive price thing, that is giving you still positive margin or profitability in ethanol. Otherwise, ethanol would have been under pressure. So, just wanted to know that, it's a basically procurement area wise benefit you have within your nearby 30 to 40 - 50 km whatever area is there or any other benefit or there is surplus availability of raw material in your area that is drivi ng the profitability in ethanol because otherwise we are hearing that the current grain prices and all ethanol is under pressure and not making money.

I am not too sure about the competition but as far as we are concerned one because maize-based ethanol prices also had gone up and we are procuring in the most competitive or most efficient way, I would say. It's not competitive, it is more about procuring efficiently , at the right time and which is helping us with reasonable margins. It can be better but they're reasonable.

So, can you give us a catchment area for maize or the procurement of grain for our refinery?

So, it will come from let's say MP, Bihar partly UP.

So, all across I mean nothing like that within or maybe 30 km, 40 -50 km catchment area, nothing like that.

No.

We'll take the next question from the line of Vignesh Iyer from Sequent Investments.

My first question would be, I wanted to know what is our total electricity, that is power and fuel that is consumed for the quarter coming from captive consumption, I mean coming from captive power?

Majority of our power is captive.

So, that includes the 120 MW that has been commissioned in June. I mean would that 120 MW create a surplus type situation in Quarter 2?

No, it doesn't create a surplus. It's about balancing the various power sets we have. So, the 120 MW has been put up once all the capacities that we are bringing in, once all of them are fully operational at 90% capacity utilization. So, we will be fully integrated on power. But as of now yes, we will see which set is more efficient and run the sets accordingly. So, 120 being the most efficient set will have the maximum utilization and maybe another s et, we have that capability because we have sets of 50 MW, 60 MW. We will see whichever is less efficient we will reduce the load on that set.

So, it is a thermal power plant. The raw material is fossil based, so that is coal and lignite and also biomass based. So, it's a combination of these fuels.

So, if I g ot it right, I mean say in a non -rainy time you probably prefer for a renewable power since it is more efficient, and less cost compared to having to use coal? If I got it right, the idea is that ?

I'll just put it this way t hat we already have a contract to get 44 MW of renewable power. But when you look at it on a 24 hours basis because you can't get renewable power 24 hours. So, on an average we get about 24 -25 MW of renewable power based on banking and getting it back. So, we are already using renewable power. We are exploring can we get more renewable power also. But this coal -based power plant also especially 120 , the new one, that price is also very competitive in terms of cost of production of power.

Also, coming on the PVC side of it how has the price panned out in July as compared to June?

So, the current prices are around Rs. 84,000-85,000. So, the international price also has come off. So, let's say in June they were around $980. Currently they are about $910 per metric ton. And domestic prices around Rs. 84,000-85,000.

And all this movement from May to June and June to July has been primarily because of freight only, right?

Yes.

The next question is from the line of Deepika, an individual investor.

My question is relating to the power cost. Would you be able to quantify what are the cost savings due to power in the chemicals business this quarter?

So, it's difficult to give you that number right away. Maybe you can contact us separately through our investor relations cell. We will give you the details.

And what would be the outlook for the ch emicals business with the remaining part of the year?

So, like we've shared earlier as well, in the last year or so the chemicals industry at an overall level has been under pressure. But now we are seeing that there should be a bottoming out. So, we expect it to be steady or gradually improve in the coming quarters.

And do we expect exports to open or we have no comments on that for sugar?

For sugar right now, there are extensive talks taking place with the government for allowing exports because as said in the opening remarks, last year our sugar stock on 30 th of September was 5 million tons. And this year is going to between 8 -9 million tons. So, we are trying to push for exports and our constant dialogue is on with the government, the old government and the new government.

The next question is from the line of Aditya Singh from Robo Capital.

Until when do we expect to commercially commence the hydrogen peroxide and the ECH plant s and what would be the optimum revenue potential from both the plants?

As we mentioned that the trials for hydrogen peroxide plant have begun and we expect the hydrogen peroxide plan to commission in this quarter itself which is Q2. And for epichlorohydrin, we should commission the trials in this quarter which is Q2 and commercial production should start in the Q3, maybe early Q3 we should start commercial production.

And what would be the revenue potential for both the plants?

For epichlorohydrin as we mentioned earlier, epichlorohydrin takes time to stabilize and to get the confirmations from the customers. We may not see very significant revenue coming or significant contributi on to bottom line coming in this f inancial year. And most of it will happen in the next financial year. Hydrogen peroxide, my sense is if you look at second half of the year, we should have close to about 40%-50% capacity utilization.

And regarding that 850 TPD c austic capacity that we commissioned in May ‘24. So, that led to a dip in the overall capacity utilization. So, for the entire year FY25, what capacity utilization do we see in this segment?

So, the point is as you've seen, the overall production has go ne up. Given the additional; it will all depend how much capacity we utilize depending on market conditions and the new capacity is coming in. So, we do expect that the additional capacity that has come that is about 850 TPD for let's say second half of th e year, we should reach close to about 50% or 40% to 50% there as well.

The next question is from the line of Shantanu Naik from HCMR.

I wanted to ask what would be the ECU pricing for this quarter?

It's, always hard to predict the pricing going forward. Current ECUs are in the Rs. 27,000 -28,000 range and we expect it to be range bound or improve gradually.

And second question is what would be the current contribution of chlorine derivatives in our revenue?

There would not be any general number which applies to all . It is a case -to- case basis. So, anytime we evaluate any product we look at it giving a healthy return and then we move forward with those decisions.

As I said it will depend product to product. So, it's hard to give a number like that in general for chlorine downstream.

And I just wanted to ask, I have been looking at the margins for SFS vertical, so why are they on a decline sequentially? Any specific reasons for that.

That is because of seasonality. And I don't think there is a decline frankly. Sequentially if you see March is not the season or March qu arter is not the season for that business. So, that's not the representative either and actually the margins have not declined for that business sequentially.

But if we see a previous quarter were 11 %, before that it was 14 %. So, I was just confused on that, so I asked.

No worries. I think this is a more specific question. So, maybe we have to go vertical by vertical. You can connect with our invest or relati ons department and they will give you the details.

The next question is from the line of Aditya Singh from Robo Capital.

I got dropped accidentally. I was asking that because of the addition of 850 TPD caustic capacity, the total capacity utilization has gone down. So, for the full year FY2 5 where do we see the capacity city utilization for this segment, caustic soda?

As I mentioned that in the second half of the year, the expanded capacity we should see a 40% to 50% capacity utilization. And the existing capacity, which is close to about 1800 tons per day, we should be utilizing about 80% - 85%.

Thank you. Ladies and gentlemen , t hat was the last question for today. 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. We continue to be guided by our philosophy of growing through capacity, capability, technology, new products and value addition. Further with our commitment towards the environment and society, we keep sustainability integrated into our business practices. We strive to create long lasting value for our stakeholders along with delivering better earnings and growth. Thank you very much once again for participating in our Conference Call today.

Thank you, members of the management. Ladies and gentlemen, on behalf of DCM Sriram Limited that concludes this conference. We thank you for joining us and you may now disconnect your lines. Thank you.