DCM Shriram Ltd. (NSE: DCMSHRIRAM) Q4 2025 Earnings Call dated May. 08, 2025
Corporate Participants:
Ajay S. Shriram — Chairman & Senior Managing Director
Vikram S. Shriram — Vice Chairman & Managing Director
Amit Agarwal — Group Chief Financial Officer
Aditya A. Shriram — Deputy Managing Director
Analysts:
Siddharth Rangnekar — Analyst
Nirav Jimudia — Analyst
Punjan Shah — Analyst
Surbhi — Analyst
Ahmed Madha — Analyst
Vivek Ramakrishnan — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4 and FY ’25 Earnings Conference Call of TCM Shriram Limited.
As a reminder, all participant lines will be will be in 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 Stardin zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Siddharth from CDR India. Thank you, and over to you, sir.
Siddharth Rangnekar — Analyst
Thank you,. Good afternoon, and welcome to DCM Sheram Limited’s quarter-four and FY ’25 Earnings Conference call. Today, we have with us Mr Ajay Shriram, Chairman and Senior Managing Director; Mr Vikram Shriram, Vice-Chairman and Managing Director; Ya, Deputy Managing Director; and Mr Amit Agarwal, Group CFO of the company.
We shall commence with remarks from Mr Ajay and Mr Vikram. Members of the audience will get an opportunity to post their queries to the management following these comments during the interactive question-and-answer session. Before we commence, please note that some of the statements made on today’s call are forward-looking in nature and a note to this effect has been included in the conference call invitation, which has been uploaded on the stock exchange website.
I would now like to invite Mr Ajay Shrena to give us a brief overview. Over to you, sir.
Ajay S. Shriram — Chairman & Senior Managing Director
Thank you. Thank you, everyone. Thank you,. Good evening, ladies and gentlemen, and a very warm welcome to all of you. To begin, I will present my perspectives on the external landscape and business dynamics. After that, Vitam will provide an overview of our financial performance. Once we shared our insights, we would like to hear your views, viewpoints as well.
The global economic growth is expected to be tempered due to complex geopolitical and economic environment, notably the ongoing tariff risks between US and the rest of the world, especially China. The imposition of reciprocal tariffs by the US and the subsequent retaliatory measures by China and other countries can have far easing consequences disrupting the international trade and financial markets. This has heightened uncertainty for businesses and policy makers worldwide.
The recent standoff between India and Pakistan has the potential to escalate, adding to regional uncertainties both in trades and geopolitics. Amid external headwinds, India’s growth forecast for financial year 2026 has been revised down to 6.5% by the Reserve Bank of India in the month of April. However, the impact remains moderate owing to strong domestic consumption. Further, to support growth, RPI has cut interest rates and implemented liquidity boosting measures.
In this dynamic landscape, our company is further anchoring its strategic integration both forward and backward to secure value chains, optimize costs and enhance competitiveness, while simultaneously increasing scale. We are embedding advanced digital technologies in our way of working to improve our efficiencies as well as serve our customers better. Sustainability is core to our operations and we are reducing our carbon footprint to renewable energy adoptions, circular economies and energy efficiencies.
Backed by completion of our capex programs, a healthy balance sheet and strong cash flows, we remain confident in our ability to pursue these strategic priorities while maintaining financial discipline and operational excellence. I will now turn to the discussion on key industry dynamics across our variable businesses.
First, I’ll take-up chemicals. Global and domestic caustic soda prices experienced volatility over the past financial year. However, the prices were better support — better supported versus financial year ’24, led by higher demand from consuming sectors. Impact of reciprocal tariffs on India may be moderate due to the comparatively high tariffs imposed on other countries. However, the disruption in supply-chain will lead to uncertainty in-product prices. In terms of volume, it may be positive for India.
India’s caustic soda industry has reached a capacity of approximately 6.3 million metric tons, operating at about 80% utilization, which is a positive. This has resulted in an oversupply of chlorine putting pressure on chlorine prices. However, some relief was observed this quarter in chlorine prices, primarily due to maintenance-related shutdowns of the few production facilities.
India continues to be a net exporter of caustic soda. Our newly commissioned projects are meeting performance norms and ramping-up steadily, leading to volume-driven growth. Peroxide market in India continues to be oversupplied on account of ramping-up of domestic capacities coupled with cheap imports from Bangladesh.
We have also commissioned our second flex field — flex field flaker plant in this quarter and this has further enhanced our flexibility to operate on multiple fuels and thereby optimize its costs and increase exports. Our ECH project is under commissioning and the refining facility is operational. The commissioning of the ECH plant has been delayed due to an issue in one of the equipments.
This issue is currently being addressed by our technology suppliers and we are going to start trial run by the end of May 2025, that is this month. The project work-in other chlorine downstream projects of aluminum chloride and calcium chloride at are progressing well. Our efforts towards cost efficiencies continued. The 120 megawatt power plant was one-step in this direction. 68 megawatt renewable power at Kota through group captive structure is progressing as per schedule.
We have tied-up the balanced 6.6 megawatt green power at and are expecting its injection in the next quarter and are also working towards further optimizing energy costs In our existing power plants. As this round of capex is nearing completion, we are actively working towards epoxy and advanced material projects, including other growth options., global demand for PVC remains subdued, leading to lower prices and high-level of inventory on the back of surplus production in China during the quarter. Tariffs by the US have led to China driving export prices further lower to clear excess capacity. In this context, imposition of anti-dumping duties on several countries, including China, has been delayed due to an irrational order in our judgment by the High Court, excluding certain grades of PVC from AG investigation. We have already filed petitions against the same in the Supreme Court and are hoping for a favorable response. Once the duty is imposed, this will bring some relief from the low-cost Chinese imports. Domestic PVC demand has grown by 7% during the financial year. The cost structure for our vanil business has improved. We are — we will continue with our strategy of utilizing the swing between PVC and carbide to maximize our margins. Sugar and ethanol, global sugar demand is expected to be higher than supply, leading to a reduction in the inventory level by around 3.3 million metric tons due to lower production in India. The Indian sugar season ’24 ’25 is expected to-end with a stock of around 5 million metric tons. The production estimate is 26 million metric tons after diversion of approximately 3.75 million metric tons for ethanol production. Consumption is estimated at 28 million metric tons and exports of about 1 million metric tons. Current prices are around INR4,180 per and given the demand-supply scenario, the prices are expected to remain supported for the next financial year. Central government has increased FRPE by INR15 per of sugar cane for the next sugar season. This increase is likely to put pressure on the margins and as there is a need to increase the minimum selling price of sugar and ethanol to support industry sustainability Government of India continues to be aggressive in ethanol blending and is planning to set a new target of 30% ethanol blending by 2030 after successfully reaching 20% mark in March 2025. Sugar season 24/25 has ended for most of the mills with reduced crushing and recovery across Uttar Pradesh and Maharashtra, the key sugar growing states. This decline is attributed to adverse weather conditions, crop diseases such as top borders and red rock affecting sugar yield and recovery. Our units concluded this season with a lower crush of 535 lakh winter and a reduced recovery rate of 10.5% on final devices. To address these challenges, our business team is actively working on optimizing varietal selection and agronomy practices to support increased sugarcane availability, crush and crush in the upcoming season. The recent uptick in sugar prices has helped in improving the margins of the business. However, the increase in sugar and ethanol prices has not fully compensated for the increase in sugar cane prices and reduction in sugar recovery and production. There is a need for a fundamental shift in sugar policy framework in order to make it generative in the long-run for the farmers as well as the manufacturers. Our compressed biogas project at Sugar Unit has been commissioned in the current quarter. Building Systems. The company continues to focus on strengthening its market presence by driving deeper penetration of new things products and expanding its portfolio through the creation of new revenue platforms. Our strategic alignment is designed to enhance the overall customer experience while supporting sustainable business growth. Further, we have completed the acquisition of 53% stake in Global Private Limited, a company present in the hardware space. This backward integration will unlock operational synergies in the supply-chain enhance customer experience by providing superior quality product range and has the potential to create a new revenue stream for future growth. Our aluminum extrusion facility project remains on-track and is progressing as per schedule. Collectively, these strategic initiatives are expected to enhance our position as a comprehensive solution provider in the building materials space and lay the groundwork for sustained long-term value-creation. Moving on, the agricular — agri input businesses portfolio comprises of Farm Solutions, fertilizers and the businesses. Shriram Farm Solutions. The business continues to register double-digit growth in the top-line as well as the bottom-line. The company’s growth trajectory was led by robust volume expansion across business verticals, most notably in the research weeks segment where SS continues to fortify its position as a market-leader. The business effectively navigated the climate volatility by ensuring placement of the relevant products as per pharma requirements and providing research-driven nutrition products which build stress and tolerance in the crops. Notably, in the current financial year, SFS has launched nine new products in crop protection and specialty — specialty plant nutrition verticals, including four new products from our own R&D center. Farm Solutions continues to be at the forefront of technology adoption, leveraging digital platforms to expand farmer engagement, optimized logistics and improve cost efficiencies. Fertilizer, the urea industry continues to be stable. Our business is continuously improving energy efficiency and optimizing performance. The budgetary allocation towards user allocation has been — towards user subsidy has been stable for the last couple of years, leading to reasonable subsidy areas, which is a positive for the sector. By the business is on a strong trajectory of turnaround, fueled by an enhanced range of hybrid steed across various product categories, which also drive future growth. The expansion of corn acreage in key states driven by higher crop prices and the push for maze-based ethanol has contributed significantly to its growth alongside strong performance in. We expect cotton to perform better in the coming season. I will now request Vikram to provide the financial perspective. Vikram?
Vikram S. Shriram — Vice Chairman & Managing Director
Thank you. Good evening, everyone. I will now take you through the financial performance for quarter ended — quarter-four financial year ’25. Net revenues net of excise duty for Q4 FY ’25 were at INR2,877 crores versus INR2,399 crores in Q4 ’24, an increase of 20% year-on-year, driven by growth across all the businesses. For Q4 ’25 was at INR426 crores versus INR289 crores last year, an increase of 47% year-on-year.
In Chemicals, the business saw an increase in revenue of 52% year-on-year, led by caustic soda volumes that were up 29% on account of better capacity utilization and the new 850 TBD facility in commissioning. ACUs were also up by 13%. BBDIT increased by 223% owing to the volumes, prices and lower input costs, particularly energy prices and efficiencies from the new 120 megawatt power plant. As mentioned earlier, new caustic soda capacities in India over last few years are increasingly getting absorbed.
However, chlorine surplus has increased, thereby putting pressure on chlorine prices. Our projects of, aluminium chloride and calcium chloride will increase our captive chlorine consumption. We are exploring several other Alternatives to enhance chlorine utilization and valuation. We business revenue increased by 2% year-on-year. The BDIT for the segment improved — improved to INR24 crores as against INR16 crores last year, led by lower-power and carbon material costs. Once the 68 megawatts of green energy comes online, it will help reduce our carbon footprint and enhance our cost efficiencies, supporting both financial environment and financial goals. Sugar and ethanol. Sugar and ethanol business net of increased by 16% to INR1,022 crores. Domestic sugar volumes were higher by 19% due to higher releases in the quarter. For the year, the volumes were in-line with last year. Domestic sugar prices increased by 5% to INR4,046 per. Ethanol volumes were lower by 16% on account of change in feedstock. For the segment was higher at INR252 crores as against INR236 crores last year, owing to better margins led by sugar. Sugar inventory was lower at 39.9 lakh quintons as against 43.5 lakh quintons last year. And Building Systems. Building Systems reported a growth in revenue of 4% year-on-year, led by retail vertical. PPGIT for the quarter came in at INR36 crores as against INR44 crores last year due to higher fixed expenses, expenses for enhancing capabilities and capacities along with higher sales and promotion expenses. Elevated expenditure levels are anticipated to continue, driven by the strategic need to scale-up our existing operations and add product portfolio to add to the product portfolio and expansion into new business areas. The order book continues to be healthy. Shridran Pharm Solutions, this quarter is an off-season for the business. Revenues increased by 17% year-on-year, supported by volume growth across all verticals. Fertilizer, fertilizer revenues were higher by 3% year-on-year, which is mainly attributed to the higher volumes. Last year in the same-period, there was a maintenance shutdown. The prices were lower due to lower gas prices, which are passed-through. EBITDIT was INR10 crores as against negative INR2 crores last year. Outstanding fertilizer subsidy was INR161 crores as against INR90 crores last year. The quarter is an offseason for the Bioseed business. Revenues are up at INR103 crores as compared to INR73 crores last year, contributed by both domestic as well as international operations. PBDIT was marginally positive against negative INR8 crores last year. Coming to the highlights for the full-year of financial year ’25. Financial year ’25 revenues net of excise duty was up 11% year-on-year at INR12,077 crores. All the key businesses, especially chemicals, freed solutions, sugar and bioseed contributed to the top-line growth. Similarly, PBDIT was up 35% at INR1,472 crores. Chemicals,, SMS and bioseed were key contributors to the growth with healthy cash flows across all our businesses and post completion of large part of our capex, our net-debt remained at comfortable levels of INR1,395 crores as on 31st March ’25 versus INR1,430 crores as on 31st March ’24. The return on capital employed for March ’25 has seen an improvement that came in at 14% as against 13.6% in last year due to reasons explained about the. Further, the capex incurred will start yielding returns going-forward and that is further expected to include top-line and ROCE. The Board has recommended a final dividend of 170% amounting to INR53.502 crores in the Board meeting. The total dividend for the year is at 450%, amounting to INR140.35 crores. Our financial discipline, ensuring a robust balance sheet, enabling agility to invest in R&D and scaling our businesses and adjacencies and cost side initiatives. That concludes my opening request remarks and I request the moderator to please open the forum for the question-and-answer-answer session. Thank you.
Questions and Answers:
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 touchstone telephone. If you wish to remove yourself from the question queue, you may test start and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.The first question is from the line of Neerav Jamodia from Wealth. Please go-ahead.
Nirav Jimudia
So first is when we see our.
Operator
I would request you to please repeat your question again.
Nirav Jimudia
Yeah. Am I audible now?
Operator
Yes, sir.
Ajay S. Shriram
Yeah. We can hear you.
Nirav Jimudia
Yeah. So sir, when we see our Q4 numbers, our PBIT in chemicals have improved by close to around INR42 crores on a Q-on-Q basis. While the ECU is more or less flat, one reason you mentioned that we have seen an increase in the production volumes on a sequential basis. If you can share your thoughts here like was power cost have come down sequentially or was it because of higher hydrogen sales in the outside market because of our higher caustic production or was it because we have ramped-up the volumes and fixed costs were distributed over a larger part of the volumes. If you can share your thoughts here.
Amit Agarwal
Yes. I think it’s a combination of largely, I would say two factors, one or three factors actually. One is volume increase definitely was the significant part. Product prices also, if you see versus and during the same-period last year, the product prices were better and even the variable-cost has come down.
Nirav Jimudia
More on a sequential basis.
Amit Agarwal
Yeah. So even on sequential, if you look at, large part will be coming from volumes. That is one. And on the variable-cost because in this quarter like the maximum benefit of the P120, significant part there was a lot of because of higher volumes, we use more of power of from P120.
Nirav Jimudia
Sir, what could be the utilization levels of the newly commissioned 120 megawatt power plant?
Amit Agarwal
Yeah. So the way to look at — if I talk of Q4, the way to look at it is that our capacity was 1,350 tonnes per day before expansion. Post expansion it is 2,225 tonnes per day at. And our utilization is close to about 1,700 tonnes per day, which was in Q4. It is inched up a little bit, but yeah, it is in the range of 1,700 to 1,800 tonnes per day.
Nirav Jimudia
So close to 170 megawatt of power, which was required this quarter in total.
Amit Agarwal
Yes. Yes.
Nirav Jimudia
Correct, correct. Sir, adding to it, last quarter you mentioned that our chlorine negative was close to around INR9 rupees and quarter prior to that was close to around INR6 INR50. So how was the situation in Q4 and if you can highlight a bit about the current chlorine prices that would help?
Aditya A. Shriram
So the current chlorine prices are also in the range of minus INR6,000 rupees.
Nirav Jimudia
Okay. And was similar chlorine prices or realizations in Q4 also minus INR6 rupees a kg or was it bit higher?
Aditya A. Shriram
Yeah, in the same range.
Nirav Jimudia
Got it, got it. Sir, last question from my side is, sir, when we see our chemical business sales of around INR2,800 crores for this financial year, if you can share how much could be coming from the value-added products like the chlorine derivatives as well as the other value-added products what we manufacture, if you can share some ballpark figures that would also help?
Amit Agarwal
So see, majority of the revenues, I think I would have some numbers, but majority of the revenue still comes from caustic soda. But let’s say, if you talk for the — you want for the quarter or for the full-year.
Nirav Jimudia
No, it’s a full-year Would also have because my calculation shows it could be anywhere between INR700 crores to INR800 crores. So if you can just verify that number, that would be helpful.
Amit Agarwal
A ballpark, I would say it is close to about INR550 crores to INR600 crores.
Nirav Jimudia
Okay. Okay. And is it possible to share.
Amit Agarwal
Hydrogen is there?
Nirav Jimudia
Correct, correct.
Amit Agarwal
Which includes hydrogen well.
Nirav Jimudia
Yeah, got it. And sir, is it possible to share a similar percentage numbers for PBIT? What could be the contribution to the PBIT for FY ’25 from these value-added products?
Amit Agarwal
I would have it right away product-wise, so maybe we can share with you.
Aditya A. Shriram
And directionally, just to add to that, we run a completely integrated complex.
Nirav Jimudia
Correct.
Aditya A. Shriram
So we continuously optimize for profitability at a complex level. And with our new capacities having commissioned or getting commissioned, the absolute number and percentage of the value-added products will increase in the current — coming year and in the years to come.
Nirav Jimudia
Got it, sir. I have a few more questions, but I’ll jump back-in the queue. Thank you so much and wish you all the best.
Ajay S. Shriram
Thank you.
Operator
Thanks. Thank you. The next question is from the line of Shah from Molecule Ventures. Please go-ahead. Audible.
Punjan Shah
Yeah, yeah. Yeah. Sir, my first question would be on the PVC side. So we know that the price has been eroded due to dumping from Chinese guys.
Ajay S. Shriram
I’m sorry, I couldn’t tell you. So could it.
Punjan Shah
Yeah. Am I clear now?
Ajay S. Shriram
Yeah, please.
Punjan Shah
Yeah. So on the PVC side, sir, just wanted to understand on a brief part that we know there is a subdued in-demand as well as dumping from Chinese guys out there or there is a delay in the implementation of as well. So just wanted to know on a broader case, if there would be an uptick in that suppose if we see demand uptick and inventory restocking. So then how the prices will evolve, it will go to that to INR70, INR75 per kg or it will remain in the same range because of the dumping from Chinese?
Ajay S. Shriram
I think two things. One is good to see that the demand in India is consistently growing at 6%, 7%, 8% a year. So that’s a stable position because of domestic demand itself. And secondly, I think the anti-dumping duty issue has been in court for a long-time now. The next hearing actually super quarter is on the 9th as tomorrow. So the industry is taking up very actively to see that it’s — there is a rationale view taken on bringing anti-dumping duty against China because they are dumping at very low prices because of their problems in the — in the tariff wars across the world.
So we are hoping to get something some benefit soon.
Punjan Shah
That benefit would be around INR5 to INR7 per kg if ADD gets implement.
Ajay S. Shriram
You know, I think it’s difficult to say because we don’t know what the government is, the industry has made the request based on the market prices, etc. And we’ll have to, I think, wait-and-watch to see what the government agrees to.
Punjan Shah
And sir, we have seen uptick in caustic soda in November and December, there was some of some rise — bit of a price realization in gel L and then again it was seen an uptick. So do you think that this price which is prevailing right now at — I’m talking about the current price, which is INR38, INR40, which will prevent for the year because no — there is no addition of the capacity coming in FY ’26 and additional — there is some shutdown of due to surplus capacity.
So do you feel that this price will remain sustainable going-forward and this ACU of INR30 can be inch up due to impact of chlorine will be a bit of a neutral.
Aditya A. Shriram
You’re absolutely right that the prices have — have moved up and then have come down slightly more recently. As we all know, there are many factors that go into determining the price. So it will be hard to predict the prices going-forward. And as you rightly mentioned, there are new capacities, but large capacities are coming one year and two years from now. So there’s still some time for that. But we do expect prices to remain healthy and remain pound.
Operator
Thank you. Ladies and gentlemen, you may press star one to ask a question. The next question is from the line of Servi from NB Alpha. Please go-ahead.
Surbhi
Hi, thanks for the opportunity.
Operator
I’m sorry to interrupt. I would request you to please use your handset.
Surbhi
This is the handset. Can you — am I audible now?
Operator
Just request you to be a little louder. Thank you.
Surbhi
Right. Okay. The first question is regarding. So you mentioned in your opening remarks that there were some higher fixed costs and higher sales expenses. So if you could quantify that and what kind of ad expenses are we going to do in FY ’26? So some more color on that. And secondly, once our ECH plant commissions this year and hopefully, what kind of utilization level do you see in the first year?
Amit Agarwal
So see on on the for Finesta for if you look at full-year as a whole, there has been increase I think giving exact numbers at this stage may not be possible, but what is important to understand is that given the increased competition in this space and also the verticals that we are entering into, it will require us to spend more on-sales and marketing.
And we will see, as we mentioned in the opening remarks as well that we will continue to see elevated levels of expenditure on this account as well as on the people account as well. So that is point number-one. Second, you mentioned about ECH. So ECH, we will be commissioning in phases. The first phase of commissioning will happen in June — early-June, we should be commissioning. So for the year as a whole, because it takes time for approvals and things like that.
So we do see from the date of commissioning, we should be at an average utilization of around 40%, 45% average for the year. But by year-end, we should be touching about 60% to 65% capacity utilization.
Surbhi
Got it. Just a follow-ups on. If I understand correctly, ad in ad expenditure was not as high, say same time last year or even few years back. So even as a percentage of sales, just to see what kind of push are we doing in that segment?
Vikram S. Shriram
Basically, the effort is to increase demand creation for especially for the new product lines of aluminium windows and also facades and that is advertising on one-side and fixed costs on the other because we put up the factory, the revenue is inching up slowly or picking-up slowly, but it will take-off in due course and the same is with the aluminium with those. UPVC has been a traditional product and that continues.
From the cost side, there will be benefits of the backward integration of and in due course, benefits of the backward integration of extrusion. That will help our cost competitiveness also and our supply chains will be much more smooth, which have been giving trouble for the last year. And once the supply chains are in our own control, the supply chains will also bottlenecks and also be out-of-the way.
Surbhi
Got it. Thank you so much. Thank you.
Ajay S. Shriram
Thank you.
Operator
Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Madha from Unifi Capital. Please go-ahead.
Ahmed Madha
Sir, good afternoon. As you know, we are the long-term leader. Can you hear us?
Ajay S. Shriram
Yes, yes, we can hear you.
Ahmed Madha
And you know, specifically my question is about the announcement you all made in March to evaluate reorganizing of the businesses into agri building materials and the chemical businesses so it seems like a brilliant thing to do and we’d like to congratulate you on the direction you’re going. For us it is still unclear. So if you can help subject of course to approvals that you all will seek, how is management thinking about people, capital, technology, what is the purpose of this? I know the purpose it said, shareholder value-creation. We lost audio. I would request you to please repeat. I was saying that the shareholder value-creation objective has to be achieved through management action. So we’d like to understand the actions that you have in mind in relation to people, technology, capital, go-to-market, how will the separation of these businesses empower these businesses to compete better and make meaningful impact and then eventually achieve shareholder returns.
Amit Agarwal
Yeah., see the key objectives of — so if you see what we had mentioned in the release also that what we’re looking at is separating out the consumer-facing business, because currently we have two to three consumer-facing businesses on the agri side and. The objective is to separate them because they require very different mindset within the management as well rather than looking at it together. That is point number-one.
Second is having a different board for these companies and then these businesses, which are, I would say, evolving and have grown over the last couple of years, they get adequate attention and adequate expertise and third-party — or I mean, when I say third-party, I mean more of experts to look at the business and provide inputs. Right? The idea is that if I put it very simply, the child has grown-up now it needs to fly on its own, right, and probably it will grow better, both in terms of technology, both in terms of capital because then it’s open to take partnerships, open to form joint-ventures, open to do larger acquisitions.
So it’s a much wider new world for these entities to grow. And I think that’s the perspective with which we’ve thought about separating the entities.
Ahmed Madha
So the agri businesses will contain seed, farm solutions and fertilizer. Is our understanding correct?
Amit Agarwal
No, not fertilizer, because that’s not a consumer-freecing business. So yes, what we are exploring is from agri input side, both and farm solutions. And on this side, on building material space, it’s only for Nesta.
Ahmed Madha
Okay. And on the capital employed for each of these three companies, should we take the capital employed as a broad indicative number that you disclose in your accounts?
Amit Agarwal
Yeah. So the only difference is, yes, what you’re saying is right that the capital employed in these businesses. But if you look at agri businesses, the only difference is that these are closing capital, which are always at their peak in March, given the seasonality of the business. Their average capital employed is lower.
Vikram S. Shriram
Finesta. And Fanesta is investing currently, they’ve acquired a DNB after the close of the year and they are investing substantially in backward integration in aluminium extrusion and in capacity enhancement. So the capital employed would go up during the course of this year. But this will be followed by increased in top-line and bottom-line in the quarter terms.
Ahmed Madha
Okay. And on people, besides the people who are running these businesses, do you feel these businesses now that they will be free-to fly on their own will need new leadership, is that possible and do you see the ability to align incentives of these leaders who come in as an important part of the objective?
Ajay S. Shriram
See, I think we are as a top management team of all our SBUs and businesses, we have a very strong leadership position. As a group and as a culture, we have focused a lot on people because we do believe our job as top management is to get the right person for the right job at the right time.
We have to build the best strength below our CEOs and EDs and we have to have an organization structure with Justice for the running, maintenance and growth of the business. So our objective is that the business heads who are running our businesses will very much be there. If we need to supplement somewhere, we’ll do that. Though frankly speaking, the supplement requirements would be fairly low in my opinion right now because we have strong leadership and strong business team running each of these businesses.
Amit Agarwal
Yes. So, just to add actually, these businesses have been actually running in virtual companies for many, many years and that’s how we work-in this organization. All the businesses work at virtual companies. So they have their strong structure.
Ahmed Madha
That’s helpful. Thank you.
Operator
Thank you. A reminder to all the participants that you may press and one to ask a question. The next question is from the line of Vivek Ramakrishnan from DSP Mutual Fund. Please go-ahead.
Vivek Ramakrishnan
Sir, congratulations on maintaining balance sheet strength to this growth phase. Sir, my questions are in terms of capex how do you see the capex in terms of amount for this year and next year? And if you’re trying to split the businesses, now the business is provided at on the other side, account of cyclical stability, how would you view the balance sheets of each of the businesses going-forward? Thank you.
Amit Agarwal
So see, each of the businesses have a strong balance sheet. Yes, there will be some businesses which are heavy on capital employed. And again, the reasons for that are different. Sugar is heavy on capital employed, primarily because of sugar inventory. Chemicals, on the other hand is heavy on capital employed because whatever capex we have undertaken in this recent past.
Other businesses are not very heavy on capital. Now, sure, really we don’t see any challenge on any of the businesses, whether currently or going-forward, that is point number-one. Other — for the capex this year, we have — the capacity that we’ve announced till late, which should be about INR500 crores INR600 crores of project capex that will — that will be incurring in this financial year for the group as a whole. So we cannot be large given.
Vivek Ramakrishnan
That’s right, sir.
Vikram S. Shriram
It is looking at other opportunities also, which would be pursued and announced as they are taken-up by the.
Vivek Ramakrishnan
Okay, but we expect that the kind of balance sheet maintenance would be one of the pivotal ways you look at growing your business.
Vikram S. Shriram
Yeah. Yes, we like to maintain the balance between balance sheet strength and leverage and debt and EBITDA. So we don’t like to stretch ourselves for the sake of growth and we’d like to, if needed spread it out a little bit, but we have managed to manage our balance sheet — solid balance sheet through up cycles and down-cycles as would have been seen over the last four, five years.
Vivek Ramakrishnan
Indeed, sir. Is there any guidance you like to give on debt-to-EBITDA since you mentioned the number?
Amit Agarwal
So we would like to maintain it at around 2.5x debt-to-EBITDA on a sustainable basis.
Vivek Ramakrishnan
Okay, great. Thank you so much and wish you all the best.
Ajay S. Shriram
Thank you.
Operator
Thank you. The next follow-up question is from the line of Jimonia from Wealth. Please go-ahead.
Nirav Jimudia
Yes, sir. Thanks for the opportunity again. So if you can share like in terms of — for the chemical business, how we are placed in terms of the renewable power currently and how the scenario could look like over next one or two years in terms of the mix between the captive and the renewables.
Aditya A. Shriram
So we have tied-up 50 plus megawatts of renewable power and we are very much committed to this journey of sustainability and having a larger percentage of our energy coming from — from renewable sources in., this is in and also we’ve tied-up 68 megawatts of renewable power in Kota, which will be spread across multiple of the consuming plants over there. In addition, we actually consume a significant percentage of biomass in our power plants, which is also green power. So I think we are well on that journey and we are continuously exploring new opportunities to further enhance our tie-up for renewable, which is going solar power.
Nirav Jimudia
Correct. So sir, like from currently, and over next two years, could the mix be 20% 25% of our power could be coming from renewables could be a good Good assumption to make?
Amit Agarwal
See currently as a group, we are 36% of our energy is green. Going-forward, we should be touching around 40%.
Vivek Ramakrishnan
Got it on the expanded capacity.
Amit Agarwal
Yes.
Vivek Ramakrishnan
Got it. And sir, second question is on the chlorine side. Sir, last-time when we have interacted over a call, you mentioned that like 18% of our chlorine is getting consumed for value-added products and, 35%, 40% is what we sold — sell-through the pipeline network. Sir, given the kind of situation currently where most of the players in the industry wants to have a downstream products of chlorine and the newer players who are also expanding, their chlorine would be consumed mostly for their own downstream products like PVC and otherwise.
Could there be a situation going-forward over next two, three years that with the chlorine demand in the industry growing, this negative prices of chlorine could start moving on a positive side, could there be a scenario building on your thoughts here?
Aditya A. Shriram
Yeah. Thank you. I think directionally, what we are doing is we are trying to become more-and-more integrated and that helps us build more robustness into the entire business and company and group. So with that perspective, we have been adding chlorine downstream capacity. And after our expansions are completed between our own captive consumption and our pipeline customers in, we will be close to 55% of chlorine integrated along with our pipeline customer that they have also grown along with us as we have grown and we really value that relationship.
So I think in terms of predicting the price, it’s always hard to predict how the price will emerge in the years to come. And but we do expect — we do hope actually that the chlorine price over-time comes into the positive range, but we’ll have to see how it evolves.
Nirav Jimudia
Got it. And sir, this 55% what you mentioned, including the pipeline customers, out of this 55%, how much would be required internally once all these expansions are completed, let’s say, by Q1 of FY ’27, what could be the proportion of captive chlorine consumption within DCM?
Amit Agarwal
So see, one is captive also, there are two-ways to look at captive. Just to add just adding to what I think Mr mentioned. Out of this 55 was the component where we think we are consuming captively. There is another component of hydrochloric acid because once you convert chlorine to hydrochloric acid, the improves. So that improves my production for caustic.
So if we add that, so that’s another about you know from current 18% that adds to another 10%. So we’ll be at 28% captive. And if we add pipeline to it, then another 30%, 40%, 30%, 35% gets added. Now going-forward, we will be around 44% captive, including the HCL, okay. And then another 35% will be through pipeline.
Nirav Jimudia
Got it. And sir, just a last clarification. The HCL what you mentioned goes for our PVC production, right, internally?
Amit Agarwal
No, it’s both PVC and what we sell externally.
Nirav Jimudia
Okay. Okay. Got it, sir. Thank you so much.
Ajay S. Shriram
Thank you.
Operator
Thank you. The next question is from the line of Nadha from Unifi Capital. Please go-ahead.
Ahmed Madha
Yeah. And on the finisha side, we had a weak year this year and we understand the — there are a couple of reasons. One is increase in the fixed costs and second is increase in the advertisement and marketing cost. So could you please explain if the gross contribution margin is same compared to last year?
Amit Agarwal
No, even the gross contribution margin will reduce given the product mix. We have UPVC windows, aluminum windows, the share of aluminum winters has been increasing and then their doors, facades. So the product mix also is changing. So that also leads to some reduction, but that’s not very significant right now.
Going-forward, that can also change, right? But I think what is important is also going-forward as we see it to look at the absolute amount of EBITDA, because if the business is growing, it can’t continue to grow at a 20% EBITDA.
Ahmed Madha
Got it. And see, could you please comment on the competition. We understand this space is very competitive and we have two divisions, retail and project and in project business, there could be high competition. So is that the case we have been witnessing over last year or so?
Vikram S. Shriram
The competition has been always there and yes, it will increase, but our countermeasures by backward integration of aluminum extrusion and of hardware is going to make us have a better cost position and better margins and better pricing powers. So it’s going to result in a higher top-line also.
Amit Agarwal
And just to add, Emil here that we are now focusing a lot on more innovative products in the same category. So our focus would be to keep introducing newer products, let’s say, same UPVC, aluminum, so which will also be a way to keep us ahead.
Ahmed Madha
And what would be our broad market-share, if you can comment on that. And secondly, what will be the current business mix between the retail business and the project business?
Amit Agarwal
That mix would be close to about 50-50.
Ahmed Madha
And on-market share.
Amit Agarwal
Market-share we should be in the whole window segment we will be about, 25% 30%.
Ahmed Madha
Okay, got it.
Amit Agarwal
Industry by.
Ahmed Madha
Yeah, sure, sure, definitely. And another question on the chloro segment. The way we segment the chemicals business and minerals business, we see there is slight change in the composition. So if you look at Vineral business, top-line as-reported last year is different for FY ’24 compared to this year. So if you can explain a bit how the — how are we classifying a few products in chemical and mineral business?
And secondly on the same question, in terms of margins, if you could give some sort of a range so that we can understand what will be the margin for caustic previously business and further balance our derivatives and chemicals business? Yeah.
Amit Agarwal
See, the reason for the change in numbers vis-a-vis last year for Vinil, which you would have taken from our investor release is what I’m assuming is because earlier we were reporting one of our subsidiaries, which was into derivatives of PVC, which is, you know, the compounding business under subsidiary Shriram Limited because the derivative of PVC we thought it best to show it as part of segment.
The turnover of that business is close to about INR150 crores and INR200 crores actually. So that is the change. And their EBITDA margin would be in the range of around I think around 10%.
Ahmed Madha
Okay. And for the other derivatives business, including hydrogen peroxide, aluminum chloride, that bucket, what will be the margins range currently?
Amit Agarwal
See, as we mentioned, it’s a verbal there and complete integration, right? And there are transfer pricing mechanisms. So it’s giving a margin may not be the individual margin, may not be the right barometer, I think it’s best to look at how the overall chemicals business is because there are these transfer pricing solutions products.
Ahmed Madha
Sure, sure. And on the sugar business, say, current sugar price is INR41 INR42 per kg, is it fair to assume that for the full-year FY ’26, margins will be better than FY ’25? Obviously, subject to all the cane prices move and the recoveries move for next season, but your preliminary assumption will be the margins will improve in current financial year.
Amit Agarwal
Assumptions, yes, what happens actually we don’t know.
Ahmed Madha
Okay.
Amit Agarwal
What you’re saying is right, that’s how it should be. But these markets don’t work on real — on fundamentals always.
Ahmed Madha
Yeah, fair, fair. We’ll see how it moves. And last on the capex side, from the balance projects which we have, what will be the capex amount roughly for FY ’26? And secondly, are there any timelines we have decided to enter the new business, epoxy and advanced material business.
Amit Agarwal
So for the total capex, because we’ve completed large part of the capex last year and the expenditure also has happened. So I think for next year, it should be in the range of around INR500 crores to INR600 crores, what is committed and as was mentioned with the call that we are looking at more opportunities and therefore, this number may go up within this year itself, but that is what we have right now, which is approved by the Board.
Yeah. And on yeah, I’m coming to that. On Advanced Materials, we have completed the land acquisition. So one part is there, where we complete land acquisition, we are in talks with technology suppliers, right, for the technology. So we should have some developments in next one to two months.
Ahmed Madha
And will the land parcel will be very adjacent to our new caustic project that like the new plant which we put last year and what will be the cost of land acquisition?
Amit Agarwal
That’s — see does not need significant amount of land. So — but it’s close to our current complex.
Aditya A. Shriram
And we have the environment clearances and everything in-place. So we are ready-to-move as soon as the final approval from the Board.
Ahmed Madha
Okay, got it. And what will be our guesstimate for the capex for the epoxy business?
Amit Agarwal
So what the Board has approved is around INR1,000 crores for 80 kilotons per annum capacity. Up to INR1,000 crores.
Ahmed Madha
Okay, INR2,000 crores. Got it, got it. Yeah, that’s it from my side. Thank you so much.
Operator
Thank you.
Ajay S. Shriram
Thank you.
Operator
Ladies and gentlemen, you may press star n1 to ask a question. A reminder to all the participants that you may press star Un1 to ask a question. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.
Ajay S. Shriram
Thank you. Ladies and gentlemen, thank you very much for your participation in our earnings conference call. Recognizing the ever-evolving and increasingly complex global economic landscape, organizations today must embed agility, innovation, customer-centricity and sustainability at their core to sustain growth and competitiveness. At DCM Shiram, we believe long-term success starts with our people and our values, which are integrity, agility, customer-centricity, teamwork, openness and newness.
These principles shape our culture where we fostered an engaged collaborative workforce ready to innovate, adapt and thrive. We actively invest in our teams through continuous learning and skill enhancements. We are leveraging digital advancements to improve our ways of working to better serve our customers. This approach ensures we remain adaptive and forward-looking, creating value and optimizing operations. Thank you very much once again. Goodbye.
Operator
Thank you. On behalf of DCM Shriram Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.