DCW Ltd (NSE: DCW) Q4 2025 Earnings Call dated May. 13, 2025
Corporate Participants:
Unidentified Speaker
Ashwath Rajan — Investor Relations
Saatvik Jain — President
Amitabh Gupta — Chief Executive officer
Sudarshan Ganapathy — Chief Operating Officer
Pradipto Mukherjee — Chief Financial Officer
Analysts:
Unidentified Participant
Pujan Shah — Analyst
Krish Kothari — Analyst
Manan Vandur — Analyst
Sanjeev Damani — Analyst
Amit Kumar — Analyst
Pranav Jain — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to DCW Limited Q4FY25 earnings conference call Home hosted by Arihant Capital Markets. As a reminder, all participant lines will be in the 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 Start and zero on your touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Ashwath Rajan. Thank you. And over to you sir.
Ashwath Rajan — Investor Relations
Thank you. Hello and good afternoon to everyone on the call. On behalf of Arihan Capital Markets, I thank you all for joining for the Q4FY25 earnings call of DCW minted today. From the management we have Mr. Satvik Jain, President, Mr. Amitabh Gupta, Chief Executive Officer, Mr. Subarshan Ganpati, Chief Operating Officer and Mr. Siddiptu Mukherjee, Chief Finance Officer. So without any further delay, I’ll hand over the call to Mr. Satu Jain for his opening remarks. Over to you sir.
Saatvik Jain — President
Thank you and good evening everyone and thank you for joining us today for our earnings call for Q4 and the financial year 2025. FY25 was a year marked by persistent volatility in the global chemical industry. As we entered the final quarter of the fiscal, the challenges only intensified from muted global demand, especially in Western economies and China, to continued pricing pressure caused by surge in low cost imports again particularly from China. A sharp drop in ocean trades out of China, in part due to their trade tensions with the US further enabled Chinese exporters to price more aggressively, especially into markets like India.
The geopolitical shifts only added to the woes including potential US trade tariffs and shifting alliances causing disruptions in traditional trade flows and raising uncertainty. The influx of cheaper imports has put pressure on domestic pricing environment especially for basic chemical products like PVC and soda ash where we’ve seen margins being squeezed despite healthy underlying demand. On the policy front, While the much anticipated antidumping duty on PVC has been delayed, we remain hopeful that the government will act soon to ensure a level playing field for domestic manufacturers is restored. That said, even in this tough operating environment, India remains a structurally growing market and we are encouraged by the year on year demand growth across most of the segments that we serve.
This long term demand visibility coupled with our execution capabilities is what gives us the confidence as we move ahead. Coming to our performance despite pricing headwinds in our basic chemicals portfolio, I am proud to share that our company has delivered a resilient performance with a 12% EBITDA growth over the last fiscal. This has been driven primarily by the strong momentum in our specialty chemicals business which now forms a much more meaningful part of our earnings mix. More importantly, with our ongoing efforts to reduce financial leverage and bring down our borrowing costs, this growth in EBITDA has Translated into a 100% increase in our profit after tax.
In fact, for the first time in several years we brought our net debt to EBITDA to below 1x which marks a critical milestone in our journey of financial strengthening and balance sheet discipline. Operationally, we have also made strong progress on our strategic growth plans and our forward looking investments are beginning to take shape. Our 30,000 tonnes CPVC capacity expansion at our SAO PAM site is progressing ahead of schedule. We expect to Commission the first 20,000 tonnes of this incremental capacity before the timeline of September 2025 which will give us a meaningful step up in our specialty volumes for the second half of FY26.
Our alternate energy project has been commissioned and power generation will be scaled up in phases. This initiative will help optimize energy costs, improve our carbon footprint and reduce our dependence on traditional sources of power over the long term. On the export front, the demand of synthetic rutile is slowly picking up. We have secured large volume orders from our Japanese customer base which is a positive sign for the recovery in this segment. As we enter FY26, we believe that the second half of the year will hold stronger tailwinds especially as the capacity led volumes from our specialty projects start coming on stream.
While near term market dynamics may continue to fluctuate, our strategic direction is clear. We will continue driving growth in value added specialty chemicals where margins and customer stickiness are higher. We will extract operational efficiencies across our core basic chemicals platform. We will continue to delever our balance sheet and internally fund our growth capex over the year and most importantly keep building a more resilient high quality earnings base for the long term. You may have noticed a change in the way we are presenting our business segments this quarter. We have moved from a product level reporting to a more consolidated view across two broad verticals which are basic chemicals and specialty chemicals.
This change is both strategic and reflective of our journey as a company. It allows us to highlight the growing contribution and momentum of our specialty chemicals segment while also aligning with best industry practices for competitive positioning. We believe that this will help investors better track our evolution into a more value accretive margin resilient portfolio over time. While FY25 was a test of resilience. FY26 will be about execution, delivering on our projects, maintaining our financial discipline and capturing margin upsides as the markets normalize. With a stronger balance sheet, visible growth levers and a sharpened portfolio, we believe that we are well positioned to deliver sustainable value creation for our stakeholders.
I request our CFO Pradito to now take you through our financial performance over to you.
Pradipto Mukherjee — Chief Financial Officer
Thank you. Satvik Good afternoon and welcome to the Q4FY25 earnings call for DCW Group. The revenue for the quarter stood at 538 crores which was a 13% decline from Q4 of FY24 of rupees 621 crores while the revenue from the specialty chemicals stood firm at around 125crores which is in line with Q4 of the previous fiscal. The basic chemicals segment clocked a degrowth in revenue predominantly due to weak export demand and lower realizations from one of our products, synthetic rutile and 8% reduction in net realizations from soda ash on sequential basis the Q4 revenues were higher by 13% for the quarter.
For FY25 the year as a whole, the revenue for the company clocked at 2000 crores up by 7% from 1870 crores. In FY24 the specialty segment revenue grew to 526 crores from 368 crores, a growth of 43% on back of increased Capex increased capacity led by capex from Q4 of FY24. The basic chemicals however declined 2% to clock our revenue at 1463 crores. It is important to note here that the production and sales volumes for all the products constituted in the basic chemicals have increased across broad including synthetic rutile but the effect of the same could not be witnessed due to sharp fall in average realizations in SR and SoDash.
The EBITDA for the quarter clocked at 62 crores a tipped by 10.5% from 69 crores in Q4 last fiscal the EBITDA from specialty segment again remained firm at 46 crores while the basic chemicals degree to 14 crores from 21 crores are fall by 33%. This fall in basic chemical EBITDA for the quarter was due to severe pricing pressures and export sales of synthetic ruta into China and a 7% prices of soda ash on sequential basis. The EBITDA for the quarter was seen at a level of 62%. For the financial year Fib 25 the EBITDA stood at 217 crores a 12% increase over last year of 194 crores.
The specialty EBITDA grew to 189 crores and an increase of 41% but the basic chemicals EBITDA dropped to 19 crores from 47 crores or dropped by 59%. This fall is due to the sharp fall in NR for SR and soda ash. As earlier mentioned, despite clocking higher sales and production volumes, the finance cost for the finance cost has been in a declining trend across quarters and at the end of the year the finance cost stood at 67 crores that is a reduction of 8.5% over FY24 numbers of 73.5 crores. This reduction is despite a borrowings of 80 crores to fund the ongoing CPVC capex with 12% EBITDA growth coupled with 8% 8.5% reduction in finance cost led to achievement of a profit after tax of 30 crores, that is doubling of the pact as recorded in F 524 of 15 crores.
With this we’ll just walk you through. The current ratio for the company stood at 1.08 in FY25 and as against 1.13x in March 24. The asset turnover ratio which is asset sweating for FY25 stood at 1.5x versus 1.4x in FY24. For the leverage and the cash position the debt equity ratio stood at 0.4 almost at par with 0.4 of FY24. The outstanding term loan stood at 366 crore as against 420 crores in March 24th thereby a reduction of 44 crores. It’s important to note that our scheduled repayment was made of 124 crores and fresh borrowings of 80 crores were made to fund the ongoing CPVC capex.
Short term borrowings stood at the year end at 59 crores which was at 27 crores for FY March and 24th and increase by 32 crores. The company is maintaining a healthy cash and cash equivalent of 215 crores which is also gone up by 46 crores from March 24. The net fund based debt to EBITDA ratio for the company at a year end 25 stood at 0.97 below 1 as against 1.4 in FY24. This eventually means that the company is in a position to pay off its entire debt with next one year of profits. The company’s debt EBITDA ratio below one has been achieved in FY25 despite the depressed commodity cycle over the last 10 years period.
If we see this number going below one was once in FY23 in a year when the commodity cycle was its peak. This demonstrates the company’s continuous drive to deleverage itself and also expand across its specialty chemicals segment over the past few years. On the reserve ratios, the EBITDA margin stood at 11% as against 10.5% last year and ROC stood at 8% versus 6.7% for FY24. The interest coverage stood at 1.73x versus 1.36x for FY24. With this we would. We would want to open the fort for question and answers. 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 touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. 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 Poojan Shah from Molecule Ventures. Please proceed.
Saatvik Jain
Yes, please.
Pujan Shah
Yeah, Hi sir. First of all, set of results in the specialty segment. First of all, just wanted to get a. Can you provide us the segmental sales and image breaker for the basic commodity and specialty commodity?
Saatvik Jain
You. You park your. You send your questions via mail. The basic idea was basically to now present the numbers as basic chemicals and specialty chemicals as opposed to giving information at a product level. Obviously if you would want those informations you have to send it across via the mail. We would.
Pujan Shah
Hello.
operator
Give. Give.
Pujan Shah
Hello. Hello.
operator
Give me a moment. It seems like the management line has got disconnected. Yeah, I’ll rejoice. It. We have the management slide connected with us.
Saatvik Jain
Hello.
Pujan Shah
Hello.
Saatvik Jain
Yes.
Pujan Shah
Yeah, yeah. Sorry for the disturbance. First question would be on the side. So if you look at the recent imports, blended imports, it will be around 150 to 160 rupees per kg while our domestic realization remains at 120 rupees a kg. Could you just explain the difference why it holds and is that a visible uptake in coming quarters in specific cpec per year?
Saatvik Jain
No, no. The. The average price realization for us also. Is in the range of 140 rupees. So this 120 rupees price from. From where you got. I don’t know. Even our realization for the year as a whole is 140 rupees. So it is always a blended realization. What we give
Pujan Shah
right? Right.
Saatvik Jain
And when someone is buying at a higher price, why should we sell at a lower price?
Pujan Shah
Yeah, yeah, that’s my question. But I on a blended I was looking at a few of the imports.
Saatvik Jain
It is coming at this price. If someone is importing with a weightage of waiting time of two months and all. Why should when it went. If they are selling at 120 rupees, why should he import at this price? I think something is wrong with your database. I think we are selling at 140 rupees. That is the price expert stores.
Pujan Shah
Right. Basically we check on a red level. We. We are. We are getting a spread of 80 rupees as of now. Right? 70 to 80 rupees.
Saatvik Jain
How can you say it is 70 rupees? On what basis?
Pujan Shah
If you considering the PVC prices and the CBD which is right now at 140. So what we can see is that right now the PVC prices we are at 7 bit 70 to 75 rupees.
Saatvik Jain
That is not the way to count. We have to only see what is our EBITDA spread. It is around 35% is our approximate. Er. Mar. You cannot exactly correlate. Today the price becomes 60 rupees. And if I sell it 140 rupees. 80 rupees is my margin. That is a wrong way to calculate.
Pujan Shah
Okay, what is. And we have seen a. In terms of utilization in SIOP and always in H2. We have been very strong in SIOB segment. So could you just help me to understand on that broader aspect.
Saatvik Jain
Talking about the production realization. I mean production numbers.
Pujan Shah
Yeah. We are using 84% while on
Saatvik Jain
SIOP. Consists of I think more than 12 or 15 grades. And the cycle time for the grades are not always consistent. Some grades takes longer time to produce. Some takes shorter time to produce because it is a batch process. So the production for the quarter will to a great extent will depend on what sort of grades that are being planned and produced. So you will not find a consistent number in siop. Some months will produce more, some months will produce less. Based on the product mix. Hello. Hello. I am not able to hear you.
Pujan Shah
Hello
operator
Siri. Sorry to interrupt, Mr. Pushant. Actually your voice is not clear. Could you please rejoin?
Pujan Shah
Yeah.
operator
Okay. Thank you. Before I take the next question, I would like to remind participants that you may press STAR in one to ask a question. The next question is from the line of Krish Kothari from Shinobi Capital. Please proceed.
Krish Kothari
Hi, can you hear me? Yeah, I actually wanted to. You know, Sadi sort of Talk a little more longer term. Do you have any projections or guess on when your specialty division will become the largest division in the company? Basically bigger than your basic chemicals division.
Saatvik Jain
In terms of revenue. So see our commodity predominantly is at a capacity of 1 lakh tonnes spread across sodas, caustic soda and PVC for specialty volumes obviously is much lower. The idea of getting into specialty for the organization was to bring stability to the bottom line and avoid the impact of cyclicality in the basic chemical prices that has classically played out this year. Because if you see the basic chemical prices have been sulking for the last six, seven quarters and our major share of profit or ETA has come from the specialty business. Our future investments as per our plan earlier communicated at various forums is coming into the specialty, namely in CPVC which is now into public domain where we are getting up from 20kt to 50kt.
We would concentrate in making our future investments costly into the value added products rather than into our basic chemicals. So from a EBITDA standpoint we have already crossed 90% of the profit comes at least last year came from specialty. But this obviously would undergo a change as the commodity prices go up because the commodity prices going up will have a significant impact to our bottom line because there are scales of 1 lakh tonnes which are available with us which we are producing and selling.
Krish Kothari
Got it. And yeah, sorry, sorry, please continue.
Saatvik Jain
Yeah, I think that was, I mean trying to answer to your question.
Krish Kothari
Right and just on this, so on your, in terms of CapEx plans, do you, other than maintenance CapEx, do you anticipate any meaningful CAPEX on the basic chemicals division in coming years?
Saatvik Jain
So as of now sir, we have made a communication a couple of months back from you know, CPVC taking from first 10 to 20 we had completed and then from 20 to 50 kilograms and that are, that are, that, that is basically operational so far as our growth is concerned. We are from a basic chemicals which is basically the pvc, the soda ash and the caustic soda. We are continuously doing certain investments into cost savings initiatives apart from the routine CAPEX or the maintenance CapEx which we do, which definitely would pull down our cost thereby enabling profitability at lower prices of commodities as well.
Krish Kothari
Okay, and just last question on again slightly longer term, do you think there’s any scope to either, you know, shut down or sell some of these basic chemical lines? I mean I know it’s very, it’s very difficult to commit to anything right now, but I’m just saying is that even potentially something that could Happen in coming years.
Saatvik Jain
See I think TBC and cpvc, PBC and Ossic. These are into our south facility and they are synergistically integrated into the plant. So far as soda ash is concerned it is the only basic chemical which is done in Dhangada chemical worlds. But that as a business roughly gives on a period of four to five years at 20 to 25% margin to maybe since these are couple of years when soda ash prices are also coming down. Government support of MIT has come in. The numbers are not showing up. But there has been years like FY23 where we have done a little bit of 75, 70, 80 crores to size from the soda ash facility.
So an average five year plan. If you see soda ash gives an EBITDA of north of 20% which maybe my previous year TBVC tends to give at times. So I think we may not add capacity into the. You know, the basic chemicals. But the question of you know selling off has not crossed our mind as yet.
Krish Kothari
Understood. Okay, thanks so much.
operator
Thank you. The next question is from the line of Mananvandar from Walford pms. Please proceed.
Manan Vandur
Can you hear me?
Saatvik Jain
Yes please.
Manan Vandur
Yes. Hello. So my first question would be on the guidance when we had last met. Having base case scenario of around 400. Crores in FY27 based on the previous. On the prices at that time. So do you think we are still on track for that or could there be any deviation in that?
Pradipto Mukherjee
So we have plucked a number of 250 watt crores this year. I think we are yet to see revenues from 30kt of additional CPVC which we have already mentioned. As Mr. Satik Jain also told the power facility on what we invested last year is trying will give its benefit this year. We would also have the capacity debottle making in our stored as facility where we were on because of our mechanical failure this put together plus our endeavor into last 5000 tons of sales of SIOP which can accelerate our capacity with certain efficiency.
Capexes what we are doing. I think 400 crores of ejecta looks quite likely.
Manan Vandur
That was my question. Thank you so much.
operator
Thank you. The next question is from the line of Sanjeev Damani from SKD consulting. Please proceed.
Sanjeev Damani
Am I audible? Did I correctly heard that likely EBITDA this year would be 400 crore.
Pradipto Mukherjee
No, no. It was an FY27 guidance.
Sanjeev Damani
Okay, okay, okay. Thank you sir. Second question which emerged from your saying that you have debottled soda ash plant. So would we be augmenting the capacity of Soda ash plant this year and the old problem is now over because some mechanical failure was there and we were not able to utilizing some parts were to come and get us repaired to make it normal. So can you give status data from this?
Pradipto Mukherjee
Yes. So we have plugged a capacity of 80% this year for the full of the year with our existing soft gap arrangement in absence of our the compressor which was supposed to come from Germany that has the right and we are only trying to look at an opportune time to make the replacement of our setup with the band compressor. However, we are also looking into an opportunity of augmenting the speed of the existing setup so that we can continue with the part which has come as a backup with us so that we don’t lose time on the changeover because that takes around 25 to 30.
Sanjeev Damani
Okay, so our capacity will remain the same. No augmentation of the installed capacity?
Pradipto Mukherjee
No, I think our capacity is 1 lakh ton plus minus 5% so that remains the same. We were operating at 80,000 tons because of these challenges should get offered by this year.
Sanjeev Damani
Okay, very nice. So the current scenario about soda prices. Can I understand from you sir?
Saatvik Jain
Good afternoon. Well, as Mr. Pradipto said, our capacities which is about 100,000 tons we will be achieving a production of about 95,000 tons this year. A growth of almost 20%. And of course they are working on improving on our netbacks because like anti dumping duty application has been filed against some of the countries like Turkey, China who have been dumping the product at very low prices. So we hope also will increase and our top line also will increase because of increase in the production.
Sanjeev Damani
Thank you very much. Now I’m coming to one suggestion that you had given that we will be using our own PVC for manufacturing cpvc. So some development has taken place there.
Saatvik Jain
I think we are working towards it. We have been only using our own PVC into cpvc. The incremental capacity which is coming would also use our PVC into cpvc. It’s always been the first technology setup which did not allow us for the new capacities. It’s obviously our all PVC going into basically
Sanjeev Damani
so. So will we be using our own PVC here onwards or after some time.
Saatvik Jain
Had been using as well? We are using and we will insist for the additional capacity also.
Sanjeev Damani
Okay. Okay. Sir, how is the pricing scenario of pvc? Because we have seen that in our commodities business the margins are very thin, sir. That is including everything, coffee, soda, soda, ice and PVC everywhere we have made very meager profit so are things improving from this year in that segment?
Pradipto Mukherjee
Coffee soda prices as told by Mr. Satvik Jain, PVC currently because of this US China trade war, China is pushing a lot of volumes into India at a very, very dumb price. This is having an impact on the PVC price and as we talk now the prices have come down. But we are hopeful that going forward the prices have bottomed out and prices will only improve from the oil.
Sanjeev Damani
Thank you very much sir. I am obliged. Thank you.
Saatvik Jain
Thank you.
operator
Thank you. Before I take the next question, I would like to remind participants that you may press star N1 to ask a question. The next question is from the line of Poojan Shah from Molecule Ventures. Please proceed.
Pujan Shah
Hello.
Saatvik Jain
Yes please.
Pujan Shah
Yeah, continuing with the previous question. Coffee, soda and specific. So what happened in this specification has been. The realization has been fallen so drastically and.
Saatvik Jain
Yeah, please continue, please continue. Yeah, yeah.
Pujan Shah
And just wanted to understand on a broader aspect, how is the order book in terms of SR and how is the outlook going forward?
Pradipto Mukherjee
So we take questions one by one. Your caustics rota prices. I think we are seeing green shoots in terms of prices going up for at least a quarter which went by compared to quarter three. The prices have been increasing. Our challenge obviously has been softness in exports. Synthetic rutile which is a part of the earlier caustic soda division and now basic chemicals. The quarter four profitability for the basic chemicals were impaired despite some price increase for caustic soda was predominantly due to liquidation of inventory so far as synthetic rutile is concerned into a more volume generic market which is China, which is not our usual market because of lack of demand in our existing market like Japan, at least for the.
I mean in quarter three and quarter four that had had a hit into our EBITDA that obviously will get corrected because now as Mr. Safik Jain mentioned, we have contracted for 70% of our annual productions of synthetic rutile into the base market which is Japan. And we hope that the rest of the volumes plus the inventory what we are carrying a part of that would also get liquidated. So in that our performance for the basic chemicals with this contract of 60, 65% out, 70% of our volumes being signed with Japan market will anyway show uptick.
Pujan Shah
Just wanted to know the context. So what the price decrease has been happened potentially strong in terms of percentage.
Pradipto Mukherjee
I think. See the usage of synthetic rutile defines the price and the geographies define the price for us. We sell synthetic rutile to a more evolved market which is Japan where we can command prices, which is into which goes into metal. However, if we do not, I mean for. For a long 3 4/4 we have not been getting. We are unable to track the orders for the merchants for Japan because there was an inventory correction which was on play. We have got the customers on board from this year and we were forced to sell the produce of us into the Chinese market which obviously we could not command good prices and hence there has been, you know, a suppressed EBITDA so far as the basic chemicals.
Pujan Shah
Okay sir, I just wanted to know. We have preponed the CAPEX line for the cpvc. So what are the timelines now and when, when are we planning to Commission the next 30,000 capacity?
Pradipto Mukherjee
So we have communicated in the, you know, when we made it public we told that this 30kt will be divided into two parts. 20kt comes on board by September 25th thereby giving benefits from H2 of FY36 and the last 10kt comes by March. We are as of now as Satlik has told that it would get. We are preponding in the sense that we will do the commissioning bit earlier. We as a management think that we could compress the timeline by a couple of months from each of these respective timelines which we have communicated.
Pujan Shah
Right sir, but any specific like in a month when we are planning to commission so that it once it ramp up the full utilization, full benefit can be utilized for this specific segment.
Pradipto Mukherjee
And there is a difference between commissioning and commercialization. We may give you a date of commissioning which depends on the plant’s performance to complete the capex. The commercialization obviously would happen about replacing the 20,000 volume into the market and as you may be aware that CPBC is a bit customer specific and not as generic as tvc. So we would obviously wear. We have encouraging firsthand information from the plant that the commissioning will go up, will be ahead of schedule. And this is that we are also our marketing team is obviously getting ourselves groomed for that couple of months of early commissioning so that we can place the volumes.
But to give a timeline would be difficult but it would be earlier than what we had communicated which is September 25th. Before that we will be commercializing the additional volumes as well.
Pujan Shah
Right. And sir, my last question will be in the PVC side. So we have seen a downward trend in terms of pricing in PVC and even the larger guys are talking a degrowth in terms of volume in FY26 due to different destocking issues. So what’s our expectation in this segment going forward? Will this FY26 remain muted here for.
Pradipto Mukherjee
Us see placing a volume has never been a challenge. So PVC’s concern for our company. I’ll give it to Mr. Ganpati to answer that our CEO so. But just we have always been all throughout the history in producing and selling one atom ever since we had the capacity irrespective of any market. Now we also have an advantage of utilizing our produce of PVC into the incremental CPVC volumes. So the net leftover which is around 40, 50 or 60 or 1000 tonnes I don’t think should be a challenge Increasing it basically is a BCM to PVC spread which again is into a.
But.
Pujan Shah
I have not understood from you what you are talking about Derow.
Saatvik Jain
So degrowth not de.
Pradipto Mukherjee
I was not clear about your question. That’s why I’m asking.
Pujan Shah
Question. So we have witness pricing down pricing in terms of pvc. Right. And even large of PVC players have been downgrading their volume growth for FY26.
Saatvik Jain
If you can be more specific I’ll be very obliged. I am deliver because nobody is talking about a degrowth in PVC. Everybody is talking about 6%, 7% growth in PVC. Whether the growth is happening at a right price or at a depressed price is what we are discussing. Nobody talking about a degrowth in pvc. This I am again emphasizing. The only thing is that because of higher commodity getting dumped from China there is a pressure on the price. I don’t think there is any question of the PVC demand not growing.
Pujan Shah
I think that is from my side. I will join the committee.
Saatvik Jain
Yeah, thank you.
operator
Thank you. Before I take the next question I would like to remind participants that you may press star in one to ask a question. The next question is from the line of Amit Kumar from Determined Investments. Please proceed.
Amit Kumar
Yeah, thank you so much for the opportunity.
Saatvik Jain
Yes, please.
Amit Kumar
One point. I mean you know, of your specialty chemicals, you know, business what is, you know, the export share in that business.
Saatvik Jain
So specialty business comprises of cpvc which is 100% domestic. There is another part which is SIOP which gets clubbed into a specialty business of that our capacity is 20,000 tons. We have produced and sold roughly around 24, 25,000 tonnes. 60% of that is is export. 40% is domestic.
Amit Kumar
Okay, and how much of this would. Be, you know, export to US?
Saatvik Jain
Around almost 60% is export to us.
Amit Kumar
I’m just trying to understand, you know, now with this, you know, new tariff regime, you know, in play, you know, all the, you know, and there is a question of, you Know, I mean, later on we don’t know what happens to the eventual sort of tariff level. But you know, 10%, you know, right now for the first quarter. So, you know, how is this 10%, I mean, how much of this you are paying and how much basically the customer is bearing? And is there a sense on that, you know, at all?
Saatvik Jain
Well, I think partially. You answered your own question. Because of the uncertainty on the tariff in US nothing can be said with guarantee. But then all said and done, we will always have an edge over China, who is the next main exporter to us. There is going to be a delta between the duty from India and duty from China. So I think there is nothing to worry about.
Amit Kumar
This is what I’m trying to understand that, you know, what is the, you know, I mean, I presume that volume sort of continue to flow. So you know, the negotiation that you are having with your, you know, US customers, given that, you know, it’s a fairly large, you know, share of exports of, you know, SIOP. So how should that, you know, 10% tariff, I mean, is that entirely being paid by your, you know, customers or are they asking for some additional discounts? What is the proportion of those discounts vis a vis that you have seen previously?
Saatvik Jain
I will tell you, like this iron oxide business, it is not like basically this is red and yellow and it is not that any red and any yellow can be used by foreign country. Like the buyer, he fixes up a particular shade in its formulations and even if there is a price advantage, disadvantage, they don’t change their formulations on a daily basis or monthly basis. So frankly speaking, of course the price is a very important part. But then the particular product which they are using in their formulations, they determine what are going to be the export from which country.
And I think that is where I will not say we are protected, but that is what gives the steady tonnages to our business.
Amit Kumar
So I understand that. I mean we, I think we are sort of, you know, I’m just, you’re not talking about volume, so I, I understand. I mean, you know, the customer relationships would be there and you know, product would sort of continue to flow. The point which I’m just trying to understand is that, you know, purely from a pricing perspective, which is the net pricing that you get, I mean, does this 10% tariff change anything at all?
Pradipto Mukherjee
Yes, it may. Hi Pradeepto, there are a couple of things. First of all is that there is a tariff of India of 10%. As President Amitabh Gupta also told the other supplier, major supplier of SIOPI to us is China. Then we should compare that China’s price in US will increase by 30%. So we have a pricing advantage to play that’s number one. But we don’t know how
Amit Kumar
significant impact. In that sense on you.
Pradipto Mukherjee
So the question is I think what we as an organization house feel that it may play out to our advantage. However, having said that, there are a couple of things like in pharmaceutical where you have a API going into formulation the SIOP also because there is shades, it also has the formulation to be made with the front end customer. They usually do not change for a 5, 10% volume advantage. Let’s say if Chinese imports into the US increases by 30% and ours by 10%, let’s assume that that is the case because we all are guessing what would happen because certain products are also exempted.
Like we have for some information that SIOP is exempted. But even if that plays out going forward because of whatever uncertainty for a 10 15% price advantage, a customer at the front end will not try to induct a new customer and incur cost in stabilizing their formulations with a different SIOP is what we are trying to say.
Amit Kumar
Now just a small follow up on this. Your capacity utilization in SIOP seems to be already hitting close to 90%. There is a 28,000 capacity and 24, 25,000. What you already produced in fiscal 25 almost are hitting capacity. So any sort of capex plan.
Pradipto Mukherjee
SIOP will not, may not come immediately. So far as volume growth is concerned, it is more about moving up the value chain. So our applications of SIOP we’ve started with products whose applications are in some cases at a very base level. We’re trying to make small investments where we upgrade the product and the applications go into higher applications are possible which also opens up newer markets. So we are very encouraged with the opportunity so far as SIOP is concerned and we would not wish to make it public at this stage. Thank you.
Amit Kumar
Thank you. Thank you so much.
operator
Thank you. The next question is from the line of Pranav Jain from Ageless Capital Finance. Please proceed.
Pranav Jain
Hi sir. Am I audible?
Pradipto Mukherjee
Yes, please.
Pranav Jain
Yeah. I just wanted to ask would it. Be possible to tell me how much chlorine we get as a byproduct out of of the manufacturing of caustic soda. And how much put into the making of CPVC?
Pradipto Mukherjee
Well, it is a general norm about 0.88% of the caustic production is what you get as chlorine and Chlorine, our chlorine is basically being used as our synthetic rutile plant hydrochloric acid. Okay. And frankly, whatever chlorine goes in CBVC, practically 50% of it comes back as the hydrochloric acid which has to be marketed.
Pranav Jain
So. And how much of PVC goes into CPVC?
Pradipto Mukherjee
So basically the coefficient is 1.0.8 is to 1. So eventually as the volumes for CBDC increases, our PBCs will get diverted at that proportion to make CPBC.
Pranav Jain
Got it, sir. Thanks a lot.
Pradipto Mukherjee
Thank you.
operator
Thank you. Before I take the next questions, I would like to remind participants that you may press Star in one to ask a question. The next question is from the line of Poojan Shah from Molecule Ventures. Please proceed.
Saatvik Jain
Exactly.
Pujan Shah
Just wanted to understand the caustic soda feed. So as of now we know that the domestic players have recent the ECUs remain in the range of 30. We earn higher ECUs due to internal consumption of chlorine. Or we are in the similar ballpark range.
Pradipto Mukherjee
You see, ECU changes from manufacturer to manufacturer depending upon the location and everything. Like I will not take the names, but some of the players on the west, the large producers, their ecu is hardly 28, 29,000 rupees a ton. Okay. Because depends upon how much they are using on chlorine, how much they are getting gaining on caustic soda. But then ECU of roughly 32, 33 is what we are fishing for. I cannot comment on ECU of in general because it will as I told you, it will depend upon location, placement of their customer, so many things.
And end of the day the international crisis of caustic soda, which plays a very important role because whether we like it or not, the domestic prices are influenced by the international pricing of caustic soda. And all said and done, India exports quite substantial quantities of caustic soda now.
Pujan Shah
Yeah, my last question will be pertains to the CPVC side. So we know that few applications have been emerging. Let’s suppose like five single assistants. Assuming that the adoption goes as what we have been expecting. So what would be the volume? Incremental demand in terms of volume can be open up. Can you just quantify in terms of demand?
Saatvik Jain
No, I can only tell you that in a house there is one bathroom, there are three rooms. So if the fire sprinkler application gets accepted, it is anybody’s guess what is the demand. It could be 2x, could be 3x. So it is a number which will evolve because it involves lot of approvals that we have to get from various state departments apart from the central government. So I believe it will grow gradually because initially most of the tire a metros will get the approvals from and it will gradually flow to the other cities. So I think that the demand growth can be can be multiple than what we are seeing purely on a plumbing side.
Pujan Shah
Got it sir. And my last question would be on the soda. So. As we know that the there is an anti dumping duty which will be revised by the government in coming months. So as of now there is a muted demand and cheaper imports being dumped in India. So do you think that once the EDD is levied we expect our EBITDA margins to be at 18, 20%?
Pradipto Mukherjee
See the EBITDA margin for us for this year is not a reference. If you have to see what was our ebitda margin for FY23 you would see it was north of 20% while others were doing maybe 25, 26%. We are a 1 lakh ton capacity landlocked in Gujarat as a facility. So and we are everyone very well benchmarked with our material contribution from the product with our competitors, even competitors who are five times more of our volumes. The advantage for other players basically is the economies of skills and which we don’t have and we don’t intend to expand there as well.
So eventually what happens is if the prices go up my fixed costs most likely will not go up and down. Would eventually make our EBITDA look much better. The margins to go up.
Pujan Shah
All right, got it. All the best and thank you for answering all my questions.
Pradipto Mukherjee
Thank you.
operator
Thank you. As there are no further questions I would now like to hand the conference over to the management.
Saatvik Jain
Thank you everyone once again for joining the call and hope we’ve been able to answer your questions. If you have anything further you can connect with our IR advisors Valerim for any further clarifications. Thank you once again.
operator
On behalf of Arihant Capital Markets limited that consists of this conference. Thank you for joining us and you may now disconnect your lines.