Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
DCW Ltd (NSE: DCW) Q4 2026 Earnings Call dated May. 06, 2026
Corporate Participants:
Saatvik Jain — President
Pradipto Mukherjee — Chief Financial Officer
Analysts:
Ayush Chaturvedi — Analyst
Pujan Shah — Analyst
Unidentified Participant
Unidentified Participant
Unidentified Participant
Unidentified Participant
Madhur Rathi — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and Gentlemen, good day and welcome to DCW Limited Q4FY26 earnings conference call hosted by Arian Capital Markets Limited. As a reminder, all participants will be in the lesson 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 Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr.
Ayush Chaturvedi from I Arihan Capital Markets Limited. Thank you. And over to you sir.
Ayush Chaturvedi — Analyst
Thank you Yusuf. Good afternoon everyone and thank you for joining us on DCW’s Q4FY26 earnings call. I would like to thank the management for giving us the opportunity to host and on this call representing DCW’s management we have Mr. Satwik Jain, President, Mr. Amitabh Gupta CEO, Mr. Sudarshan Garapati, CEO and Mr. Pradeep to Mukherjee, CFO. I would like to invite Mr. Satvik Jain now to give his opening remarks post which we can open the forum for Q and A. Over to you sir. Thanks.
Saatvik Jain — President
Thank you. Good afternoon everyone and thank you for joining us for DCW’s Q4 and full year FY26 earnings call. As always, I appreciate your time and continued interest in our company. I will begin with a brief view of the broader industry environment and then move on to our full year performance, operational progress and way forward. FY26 was another volatile year for the global chemical industry. The sector continued to deal with fluctuations in crude linked feedstock and energy costs, geopolitical disruptions, changing trade flows and elevated logistics costs at different points during the year.
While underlying demand across several end use sectors broadly remained stable. Pricing was under pressure across many chemical value chains due to excess global capacities and weak international. For Indian chemical companies the pressure was even more visible. Large volumes of competitively priced imports, especially from China, continued to impact domestic pricing and margin structures. This was particularly relevant for commodity chemicals where global oversupply and import competition kept net realization under pressure through most of the of the year.
At the same time, India’s medium to long term opportunity remains intact. Domestic consumption, infrastructure creation, housing, water management, agriculture, industrial growth continue to provide a strong base for chemical demand while near term volatility in input costs chirpal the trade flows will continue remain constructive on the sector’s long term outlook. Against this challenging backdrop, we are happy to say that DCW delivered a steady and satisfying performance for FY26. Our EBITDA grew by approximately 11% year on year and our PAT grew by more than 60%.
This performance is particularly encouraging because it was achieved in a year where net realizations declined across our entire product range with the exception of our pigments. CPVC realizations alone corrected by more than 20% during the year. Therefore, the improvement in profitability was not driven by pricing tailwinds but by higher volumes, better operating discipline, improved utilization and a stronger specialty contribution and leaner balance sheet. During the year we recorded higher production and sales across almost all of our products compared to FY25.
The only exception was external PVC sales where incremental volumes were consciously diverted for captive consumption in our CPVC production. This is aligned with our strategy of moving further downstream, improving value realization and strengthening the specialty chemicals contribution within our portfolio. FY26 was also a record year. From a volume perspective, we achieved our highest ever sales volumes in cpvc, synthetic iron oxide pigment and synthetic rutile. This is an important milestone for us, especially given the difficult external environment in CPVC.
The year marked a significant step forward. We added 30,000 tons of capacity to our earlier 20,000 ton base, taking our total annual capacity to 50,000 tonnes. The expansion was commissioned on time, within budget and commercialized at full capacity all within one quarter. The final 10,000 tonnes was also completed on time towards the end of March and we expect the benefits of this additional capacity to start accruing from Q1. Our synthetic rutile business also delivered a strong year with record sales volumes and a significant reduction in inventory pressure.
This is a positive development considering the tough market conditions in this product over the last few years. The progress reflects better customer engagement, improved dispatch planning and sustained focus by our team on rebuilding market confidence. The synthetic iron oxide pigments business continued to perform well supported by healthy demand and market penetration. As discussed earlier, we are also working on expanding our product range with newer grades which would help improve our market reach over time.
From a segmental perspective, specialty chemicals continue to support overall profitability although margins moderated due to the correction in CPVC realizations and spread compression. On the other hand, the basic chemicals business showed improvement performance supported by better utilization levels and benefits of our renewable energy project. Our renewable energy project was also commissioned during the year and the benefits have already started reflecting in our power costs. This was an important initiative both from a cost competitiveness and sustainability perspective.
Equally important, FY26 was not only about capacity additions and operational performance. We also repaid 145 crores of long term debt during the year and ended FY26 with a net debt to EBITDA at 0.3 times. This gives us a much stronger financial platform as we prepare for the next phase of growth. As I had mentioned last quarter, we are not only preparing for a cyclical recovery, we are building the organization for scalable growth. During the year we progressed on several foundational initiatives.
The implementation of SAP S4 HANA is a key step forward to stronger governance, sharper financial controls, better data visibility and process standardization. We have also begun piloting AI based process optimization at a soda ash plant in partnership with the Netherlands based technology company and the early results are encouraging. In terms of operational efficiency across functions, there is a clear focus on digitalization, technology adoption and building systems that can support larger, more agile and more accountable organizations.
As we enter FY27, the global environment remains dynamic, particularly due to the situation in West Asia which has created a near term disruption in PVC supply chains and pricing. We will remain watchful on capital deployment in this uncertain environment. At the same time, our growth plans are in advanced stages and our intent remains clear. With the expanded CPVC capacity, improving specialty volumes, reduced synthetic rutile inventory, renewable energy benefits, stronger systems, significantly leaner balance sheet, DCW enters FY27 with a more resilient and future ready base.
Our focus now is to convert this stronger platform into sustained growth while maintaining discipline in our capital allocation and execution. With that, I will hand it over to our CFO Pradipto to take you through our financial performance in detail. Thank you
Pradipto Mukherjee — Chief Financial Officer
Thank you Sathik and Welcome everyone to Q4. FY26 earnings call for DCW Ltd. Quarter for revenue stood at 609 crores which was higher by 13.2% YoY basis and 17% on sequential basis. The annual revenue stood at 2,144 crore, an increase of 7.2% on a YoY. The annual revenue numbers registered this growth despite the realization across all product segment have been impacted. During the course of the financial year and further of 25 to 30% incremental PVC volumes were diverted for captive consumption.
It is important to mention here that at the annual level the company recorded highest ever sales volume for cpvc, SIOP and synthetic rutile. While CPVC incremental volumes were produced due to capacity expansion, the commercialization of the same happened seamlessly thereby nullifying any inventory increase. In case of SIOP and synthetic rutile, the company was able to sell more volumes than production thereby reducing the inventory levels. The annual production across all product segments have also surpassed the previous year’s production numbers with standout of CPVC 60% increase in production volumes and synthetic retails 20%.
The soda ash production for the quarter four also recorded the highest number in the past 11 quarters. Now the EBITDA took quarter four. EBITDA including other income stood at 70 crores up by 14% yoy and 40% on sequential basis. The annual EBITDA stood at 240 crores as against 216 crores last year. That’s an 11.2% increase. Q4 basic EBITDA stood at 30 crores over 14 crores in Q4 last fiscal. That’s an increase of 1.1 times and a breakeven number in the previous quarter. The annual EBITDA for basic chemicals stood at 54 crores over 19 crores in the last fiscal, that is 1.8 times.
The performance could be attributed to higher production across all product segments under basic chemicals resulting in a better fixed cost absorption coupled with benefits flowing from substitution of power supplies from Tamil Nadu Electricity board to solar. Quarter four specialty chemicals. EBITDA stood at 39 crores over 46 crores in quarter four of last fiscal. It’s a 16% reduction and 50 crores over the previous 50 crores. In the previous quarter which is 22% reduction. The annual EBITDA stood at 177 crores for the spread specialty chemicals as against 189 crores in last fiscal, a degrowth by 6.5% despite volume increase in both CPVC and SIOP.
The significant reduction in NR by 22% in CPVC with no consumer reduction in PBC price input prices resulted in PBC CPVC spread contraction and consequently margins. Annual EBITDA margin for the company stood at 11.2% in the current year, an improvement from the last year last fiscal margin of 10.7% while the specialty margin clocked at 30%. A contraction by 6% over last fiscal. The basic chemical margins improved 3.5%, improved to 3.5% over 1.3% last year. The PAT for quarter four stood at 18 crores which is higher by 60% YoY and 2.7 times on sequential basis.
The annual PAT stood at 48 crores as against 30 crores last fiscal which is a significant increase of 60%. Such a growth could be achieved by an increase in EBITDA by 11% coupled by reduction in finance costs by 7.5%. The finance cost quarter four stood at 15 crores, 15.4 crores reduction by 2.3% YoY and 4.9% sequential basis annual finance cost stood at 62 crores down from 67 crores in the last fiscal showcasing a reduction of 7.5% on the balance sheet fronts. It’s important to discuss these two numbers.
The company’s closing gross debt stood at 276 crores versus 426 crores in a year back. This is a reduction of 150crores due to scheduled term loan repayment. The company had not borrowed any additional term facility during the current fiscal and with such closing borrowing and such closing borrowings are over are the lowest over many financial year ends of the company. The company continues to maintain a cash healthy cash position including bank FDs at a level of 204 crores thereby having a net debt of only 71 crores demonstrating the effect of significant deleveraging program run for the last couple of years.
With this we open this forum for Q and A. Thank you.
Questions and Answers:
Operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. If you wish to withdraw yourself from the question queue you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen will wait for a moment while the question queue assembles. First question is from the line of Pujan Shah from Molecule Ventures. Please proceed.
Pujan Shah
Hello. Am I audible?
Pradipto Mukherjee
Yes, please go ahead.
Pujan Shah
Yes sir. First of all good set of numbers and we are starting with FY27 with a very cleaner balance sheet. So congratulations on all the assets you have made for that. Now coming to my first question. So it pertain to caustic soda. So we have seen the prices are forming right now. So what is the core reason for that? It is morely of a cost push or we are seeing some end user industry demand coming up which is driving the prices.
Unidentified Participant
One of the primary reason in our view is that there has been lot of production interruptions in the entire Southeast Asia because of the geopolitical situation. And usually the caustic complex also has a EDC VCM facility because there has been no supply of petrochemical feedstock. Operating rate of caustic soda had come down. So there was a supply imbalance which helped the prices to improve. So this situation is likely to continue for some more time till the situation normalizes.
Pujan Shah
Okay, okay, got it. And similar question pertains to the. So do you feel the. So as the chloral cli always move in in a same tandem so do you feel that it also rem it will Remain elevated for the similar time being.
Unidentified Participant
We can’t comment because the situation is changing on a daily basis so we don’t know. I just can’t answer on that aspect as of now
Pujan Shah
And are we expecting any government support on that part? On soda ash
Pradipto Mukherjee
I think the efforts are being on right efforts are being
Unidentified Participant
For the anti dumping duty so let us hope things come out. But since there is not much of imports coming from Russia and Iran the prices have gone upwards and the margins are pretty good at this stage and the situation is likely to continue for some time but nobody can predict forever.
Pujan Shah
Got it. And pertaining to the PVC so I just want to understand two parts. One is we have seen a reduction in inputs due to China removing the duty and there is also implementation of duty by Indian government which was removed due to all this geopolitical situation. Now considering all the scenarios do you feel the PVC price should be be remain range bound at 8590 or do you feel we have some headroom still over from this price as well?
Unidentified Participant
We don’t know because as of now yes prices have started improving but whether it will go to 85 90, 95 that I think that is anybody’s guess. What has happened in the month of April I think was that there was a lot of PVC coming from China which was in the SCZ which was to be exported before the start of the duty which was withdrawn on the exports from China. So now that the VAT has been removed or what the VAT concession has been removed on exports of PVC from China what will be the impact? We are waiting and watching as of now it is too early for us to give any I would say heads up or the forecast on how the prices will go.
Pujan Shah
Why I’m coming to the question is because we have seen the real estate prices in China is being 20 at a 20 year low and versus there is a China anti involution where they are taking some measurable steps by shutting down some inefficient plants of pvc. So I’m not able to gauge the incremental delta of how it will be converging into the scenario.
Unidentified Participant
See anti involution we have been hearing last six months but how it is going to pan out nobody can really forecast and with regard to the real estate growth drivers which are not doing well in China the same was the case even in the last last couple of years. So I don’t know how the Chinese economy operates or how they work. We just can’t. We can only watch and see how they are able to supply the product and if they are, if there is some real thought on anti evaluation by which they will be forcing their products where they are not making any margin to shut then it will help us.
But it is too early for us to make any forecast or comment on that.
Pujan Shah
And understanding the power cost savings so we we draw solar, we invested in solar and we try to have a savings benefit of 40 to 50 crore. So is this quarter we have drawn around 1215 crores of savings from power or we are still mature to get the understanding correct.
Pradipto Mukherjee
See the number was never 50 crores. The number when we assessed and got into this you know substit by you know and went into the decision was around. Around reaching up to 40 crores but that had a different dynamic so far as TNEV prices and coal prices were concerned. Right now what we guided, you know last time was around 25 to 30 crore number. I think if you see our numbers this year with the volumes which we have achieved we have have still our power cost in the face of the financials will be 78 crores less.
There’s an incremental volume effect. There is a coal price which has gone up from last year to this year. So negating the coal price increase effect, negating the volume effect which has an impact on power cost. Our power cost in absolute terms are still lower on the ER level by 7 crores. So according to our estimates the savings would have been around 2324.
Pujan Shah
Are we planning to invest in solar going forward for this year or we are still in we are on likelihood that we do or not today
Pradipto Mukherjee
So far as the investment goes we would come up with some investment proposition but as and when we do we’ll let you know. We will be the first thing to include all our shareholders, you know given an information but as being told we’re going a bit slow because we want to tide over the uncertainty so far as this Iran war is going on and then we have our plans for the investments going forward for this year and maybe couple of years to come. Apart from this we have waiting for a clarity on
Unidentified Participant
The regulatory related matters because there are there were some regulatory changes announced by the Tangent Co in Tamil Nadu wherein the banking rules got changed. So we are waiting for a clarification on that because entire dynamics will depend on extent to which we are able to offset the renewable over the TNAB rates.
Pujan Shah
In our initial remarks we have said said that there was a narrower of spread on in PVC and cpuc. So in the current situation, are we. Are we able to get the pre war type of spread or we are still in the. At least we are getting a narrower spread than the previous. Last month
Unidentified Participant
The spreads have improved. It has gone back to the pre war. What has happened is that that there was a spike in the PVC prices in the month of March. So that was how Passover was not happening in the cppc. That’s why we have seen a contraction in our profit numbers on CPVC which we feel that in the coming quarter will regularize, normalize.
Pujan Shah
Got it, got it, got it. And my last question is are we seeing. Are we still facing dumping issues from Malaysia for CPC or we are seeing easing out there from that region?
Unidentified Participant
Dumping issues are there from everywhere. For all the products we have dumping issues. So that’s a separate. I think we can have a separate debate on that. Dumping issues are there.
Pujan Shah
Thank you so much. I will join back in the give. Thank you so much for all my queries.
Unidentified Participant
Thank you.
Operator
Thank you. Next question is from the line of Keshav Gar from Counter cyclical pms. Please proceed.
Unidentified Participant
I wanted to get clarity on a couple of things. Firstly, our net debt seems to be around 80 crore. But the annual interest cost is in the vicinity of around 60 crores. So going forward for FY27 what is the finance cost number that you have in mind?
Pradipto Mukherjee
See the finance cost which. Which is 62 crores this year has an effect not only on the net debt which you see, it has also the net debts are distributed into two parts. One is the long term term debt which interest is gradually coming down as we are repaying and as we have. We have been maintaining 200 crore of cash in the balance sheet. There is and working capital challenges have come up over the couple of quarters. We have a separate line of credit which we have taken without, you know, without infringing our internal strategy of keeping around 5% of the top line in cash.
There is a negative carry. So if you have to see my interest cost, you please also reduce my interest income to find what is my debt. Overall you will not see the benefit of the interest cost reduction but over the period of last two, three years to the extent of the debt reduction. But you have to also take into cognizance what is the other income or the interest income which has increased over the 23 years. So we’re deliberately keeping a negative spread because as an internal financial policies we’re keeping around 200 crores kind of FD for which we are earning interest.
Unidentified Participant
And next
Pradipto Mukherjee
For next year also we are, we are, we’re keeping the philosophy of 100 and 200 crores odd. As you know FDs and basis that the and the repayments which are planned out the interest cost should go down by around 1213 crores. Now having said that we also have to see how the pressure on our short term working capital comes in from if the war continues that will have an effect of interest cost increase because we borrow some credit, we utilize some credit lines to support the working capital function.
So roughly it should go down to 50 crores. If we are not having very much challenged by the working capital borrowing lines we have to keep it open for longer. If that is not the case, it should be for 50 crores or sub 50.
Unidentified Participant
Understood sir. And we had estimation for FY27 for roughly 2500 crore top line and 400 crore EBITDA and net debt free by the end of FY27. So are we on track to achieve all these parameters?
Pradipto Mukherjee
See our scheduled debt repayment for next year is again 130 crore. So obviously we will be debt free because we have a 71 crore of net debt. So net debt obviously will be debt free. The only challenge what we find is the 400 crore number which we have planned for which we had communicated as a part of the, you know, I mean couple of years plan that actually gets bit derailed because of the pricing pressures which we are seeing both in the commodity segment and more importantly on the specialty segment.
We have tried to maintain the absolute value of specialty profit by increasing volumes from of CPVC from 10 to 2020 to 40. Now we have also announced a 10kt commissioning of the last phase which we had communicated to all our stakeholders that also will be in place. So the only thing is that we are definitely not seeing the benefits of the increased CPVC volumes, commercialization volumes because a large part of it is eaten up by the price erosions which we did not anticipate when we gave you a 400 crore of guidance.
But that number as we discussed, if it’s 71 and 13130 odd crores of scheduled payment we will be net cash positive company.
Unidentified Participant
300 crore EBITDA for 27 looks reasonable.
Pradipto Mukherjee
We would not be able to give you a guidance on that because the prices movement has an impact. You have to please understand that we are upstream B2B business. Our downstream prices does not reflect in line or tandem with the upstream the sale prices. So if the sale prices of commodity chemicals remains elevated and goes up, we will have we will have, we will have profits which we cannot anticipate at the moment. So we are trying to. Whatever we are trying to do is we are trying to exhaust our capacity produce to the fullest and sell to the fullest and see how the prices shape up.
Right. That will be because fixed costs are in control. We are trying to do all efficiency improvement drives which reduces our fixed cost or keeps it in control. That’s what we can do as an organization. But today it’s very volatile in terms of pricing of both our raw materials and finished goods which we sell. So giving a number would be difficult. But we are well placed to tide over this term if this war continues for long. That much I can say.
Unidentified Participant
Sure sir. Now coming to our investor presentation page number 1314 which shows the capacity utilization product wise it seems that in almost all the products we are at or near full utilization. So I understand the CPVC volumes we have increased capacity. So in FY27 we can see some volume growth. So but in rest of the all the products are we at by and large the, I mean how much incremental volume growth can happen from FY26 level.
Pradipto Mukherjee
So as you rightly pointed out this year we are more or less at capacity for the siop. The two products where we were chasing capacity was CPVC where we were doing CapEx and you know, increasing volumes. SIOP where we did a debottleneck from 18 to 28 and we have moved on to 24,000 last year. Now almost, you know, I mean almost capacity sale this time. So there is no much scope of capacity expansion in any products and thereby giving you know, revenues or EBITDA except for cpbc. And hence we are in a place where we have to announce our capex which is in line, which is, which has been sorted.
But we’re just waiting out for this couple of months for the geopolitics to play out to its fullest. At the time same. At the same time we have done certain investments in SIOP wherein we are moving for not growth in volumes but moving to value added products wherein we think that there will be some amount of incremental margin which could be expected to flow
Unidentified Participant
Directionally going forward. Will we do capex only in the specialty side which is CTVC SIOP or in the commodity side as well? We are open.
Pradipto Mukherjee
So in the commodity side it will be more capexes for efficiencies, not for volume. The capexes which will come for growth predominantly as of now our thought process is to make it in the specialty segment or in the leaf segment with related chemistries so that as and when you know we are just a bit comfortable comfortable with this geopolitics we will announce and inform all our stakeholders. You have to only understand that as we are closing this year we are in the, you know the most deleveraged balance sheet over many many years or many decades maybe.
So we have and our legacy loan gets over by you know this year end which eventually gives us a lot of headroom to you know take a good capex size and you know take the company forward. But we’re just holding back because we just want to see the geopolitics how it shapes up and accordingly take an informed decision so far as capex is concerned. Now
Unidentified Participant
Coming to the CPVC division where we have incurred capex but so have all the other industry players. I understand Epigral has done a significant capex, Lubizol, Reliance, Grassim. So now all that capacity is coming at the same time and please let me know if I missed any other player which is also bringing some capacity. So what is the total capacity in the pipeline of CPVC which is expected to get commissioned and even globally if you could shed some light that is there any significant capacity in the pipeline globally also?
So, so and basically what will be the demand supply? I mean is there a chance of a glut in CPVC specifically
Pradipto Mukherjee
On the companies which you have named present is even if Epigral has come in Epigral and R volumes put together still leaves a lot of headroom for import of CPVC into the country for the domestic requirement itself. So with the capacities which has been informed by lube resolve which comes in we don’t see by the time it comes in there will be any mismatch in domestic production versus domestic demand. So that’s where we are comfortable as of now, you know with the fact that if and when epidural comes with the full capacity and lubrizole comes with the full capacity we would not be challenged in placing our volumes.
Unidentified Participant
The lastly our power cost is 307 crore rupees. So out of which power and fuel so out of it. How much is power cost?
Pradipto Mukherjee
I mean that breakup we generally do not give but will we take your question and come back if required.
Unidentified Participant
Where I’m coming from is that since we have two and a half thousand acre land so what is stopping us from just putting solar capacity and basically captively generating this, I mean and stop taking this power from the state electricity board.
Pradipto Mukherjee
So state electricity board and fossil fuel is A stable source of power. Solar gives power only in the morning. So we have to, so there is a very unique but balancing which goes in most of the time when you, when we take alternate power there’s a lot of effort which goes into either side to understand what is the power timing of supply whether we blend it with solar and wind or not. Then also what is the flow of supply because we cannot keep our, you know, plant operating based on power supply fluctuations.
So it is not that easy. We have substituted 25% of our power. There is future capexes which comes in and steam which is required at the plant is not given from solar power, it’s not generated. So eventually and you have your captive boilers in place, you have your tneb. So it’s not a very simple math to do that. We’ll substitute all the power from you know, TNEB to electricity board to us because in any case we have to do the wheeling. So it’s a lot of complex calculation. It’s not as easy we think.
Secondly is we are trying this for 20 long years, right? So today it may look lucrative. We have to do a balanced approach in terms of how much substitution of TNUB we do from solar and what is your power capacity from your own power plant. So this would be that much goes in. Yeah
Unidentified Participant
Sir, and lastly if you could just tell us that for each of our products what is the starting raw material that we are buying from outside?
Pradipto Mukherjee
See PVC we have been very vocal about, you know, in PCM so soda as we have limestone, it’s very openly available in the market. So CPGBC becomes pvc, caustic becomes salt and water. And what else? I
Unidentified Participant
Think iron
Pradipto Mukherjee
Oxide is, you know, iron.
Unidentified Participant
Synthetic rutile
Unidentified Participant
Ore is the starting material. So that is also procured locally only and we use HCL along with that.
Unidentified Participant
So out of all, all of these that you just named. So we are like, we have our own minds of which all products are we sourcing captively?
Unidentified Participant
No, no, salt is captive coal. We are sourcing from Indonesia synthetic rutile illuminate ore we are sourcing from Indian drivers. So for PVC we are importing VCM and first PVC we are using the PVC produced wires.
Unidentified Participant
Understood sir. Thank you very much.
Unidentified Participant
Thank you.
Operator
Thank you. Ladies and gentlemen. In order to ensure that the management is able to address questions from all the participants in the question queue please restrict yourself to two questions only. Should you have a follow up question please rejoin the queue. Next question is from the line of Abhinav from Equitas Investments Please go ahead.
Pujan Shah
Hi, so my first question was regarding caustic soda. Can you tell me what were the realizations in Q4 and what are the current issue realizations
Unidentified Participant
In Q4? Q4? Q4 I think it was around $350. And as we talk in Q, in Q1 the realization is in the north of 400.
Unidentified Participant
$400.
Unidentified Participant
Have you seen any capacity globally shut down because the chlorine production has been reduced because of pvc?
Unidentified Participant
Again I’m not, I’m not able to hear you. Can you please repeat your question please?
Unidentified Participant
Have you seen any capacity closures or reduced capacity utilization in caustic globally because of that? Because chlorine is not getting diverted to pvc. And what would be the current chlorine realization?
Unidentified Participant
No, no. There have been some capacity closures in the euro of PVC which will ultimately result in a corresponding capacity closure of caustic soda. But we have not seen any significant closure of capacity of caustic soda as yet.
Unidentified Participant
Okay, the chlorine realization. Currently
Unidentified Participant
We don’t sell any chlorine. It’s not relevant for us because
Pradipto Mukherjee
That’s one transition which we have done as an organization over the years. We have now been a chlorine neutral facility down south.
Unidentified Participant
But that would be around 8000 rupees INR negative.
Unidentified Participant
Maybe, maybe market prices. Yes, maybe 7,8000 rupees negative.
Unidentified Participant
For caustic it is 100 domestic or do we export because we are in terms of caustic the entire supply is higher than the demand with the current
Unidentified Participant
Caustic Sort of. We also export because we are also port based. So always we have an option of selling to a domestic user in the east coast of India or export the product to Southeast Asia. So we have been doing both on and off whenever there is a demand from any of the customers in the east coast, mainly the alumina companies or we export it to some of our customers in Southeast Asia.
Unidentified Participant
And why has our capacity utilization in Q4 reduced from 96 to 90% for caustic?
Unidentified Participant
That is because of the maintenance outage. No problem
Unidentified Participant
In the demand, Right? Because I have heard that in paper and textile people have curtailed capacities and those two segments being the highest user for Caustic, are we seeing any demand issues there?
Unidentified Participant
Caustic, as you may be knowing, caustic soda is 50% water. So the ability of any producer to sell sell the that product will be within the 300km radius. The remaining of the product is only sold as a bulk shipment to either a bulk consumer like NALCO or Vedanta or to any of the customer in the Southeast Asia or Europe or some other market. So yes, there has been a demand dip because of the lower uptake from the sectors that you have mentioned but there has been no production curtailment because of the demand dip that we have seen.
Unidentified Participant
And all said and done these sectors are not very big consumers of caustic soda. The main consumption comes from the alumina industry which is doing very very good.
Unidentified Participant
And in terms of soda ash with the China coming up with a newer capacity in Inner Mongolia having the newer natural bases have we heard of any material capacities going off in China and are they still import exporting to us?
Unidentified Participant
No, frankly there’s not. Main imports in India used to be from Iran and Russia as I mentioned earlier which is not happening now and China has never is not a very big importance exporter of soda ash. So there is not much of issues from China. And all said and done, because of the increases in the freight rates and everything the prices are pretty healthy today.
Unidentified Participant
What would be the current doordash prices?
Unidentified Participant
Sorry,
Unidentified Participant
What is the current road as prices?
Unidentified Participant
See today the import price is in the vicinity of about $250
Unidentified Participant
But. Got it. Okay, thank you. That’s it from my end. I’ll get back in,
Operator
Thank you. Next question is from the line of Manish Badani from 361 Capital. Please go ahead.
Madhur Rathi
Thanks for an opportunity sir, if I look at the slide number 20 so our ROC around 8.56% so it is even zero cost of debt like 9 to 10% is the cost of date that similar in India. What are the stakes we are taken taking to improve the ROC going forward.
Pradipto Mukherjee
So we have to only go into products which are, you know, high margin and lower capex. That’s the only way to increase your roc. We are into business of caustic PVC sodas for many years now the investments there is no much investments. ROC is a function of profit wherein if the business conditions or the prices go up you’ll see the profit going up and automatically ROCE getting moving upwards. Now so far as what we can do as an organization is only ensure that we do investments which are of high margin or high roc.
That means I mean higher capital turnover ratio and also higher margin business which gives you a higher roce. So that’s what had triggered our investments into SIOP and investment into CPVC which obviously is much lower as an investment payback period roughly for the incremental capacities. What we did was around two years or two and a half years even at current prices. So that would have already been baked in. But what you need to understand is that the ROC for us as an organization despite our proportion of specialty chemicals going up is low because the commodity chemicals are at its bottom cycle.
If you place this ROC with the prices of which we got for commodities in 20, 23, 24 then the ROC will be north of 14, 15%.
Pujan Shah
Thank you so much. That’s it.
Operator
Thank you. Next question is from the line of Madhur Ratif from Countercyclical Investments. Please go ahead.
Madhur Rathi
So, thank you for the opportunity. Sir, I wanted to understand. You mentioned that there has been some spread improvement and realization improvement in SIOP and synthetic rutile. So what are what led to this improvement and what are the current realization for these products?
Pradipto Mukherjee
Siop? I don’t think there is a spread improvement. We told on PVC and PVC CPBC spread on siop. What we told is that we are making, you know, we are moving to higher value at products in which case we can command a better margin in those products so the volume may not increase. Coming to your other product which you asked was on synthetic rutile. The prices depends on the mix to which we export. It’s a 100% export business. When we are exporting into China, we don’t get those prices. When we export into, you know, our existing customers who have been taking X of China, their prices are better off.
So if we can have our share of sales more into X of China, the mix gives us a better realization and hence a better margin. We believe that we’ve got certain of ex China customers long term contracts which we are building up and hence the margins should stay elevated just because of a better weighted average price which you will achieve from sale of synthetic rutile.
Madhur Rathi
Got it. And sir, what were the realization and spreads for both of these product in Q4 and what are they currently?
Pradipto Mukherjee
See these for a synthetic rutile you cannot see a quarter because it depends on how is the skewing of the sales across the full year. Now for SR as a product we have never been giving it because it’s a part subsumed in a caustic business. And now caustic is a part of the basic chemicals. The whole idea is basically what we can tell you is that the spread should stay elevated for synthetic rutile for this year compared to last year which will give us some incremental profits compared to what we have closed in this financial year.
Siob we had already communicated when we were. When we were showing that as A you know, a separate segment earlier our margins were around 35 to 40%. We still continue to get those margins.
Madhur Rathi
Major improvement in EBITDA. Sorry to interrupt, Mr.
Operator
Ratty. Maybe please request you to rejoin the queue, sir for the follow up question.
Unidentified Participant
Thank
Operator
You. Next question is from the line of Praneet Bomachetty, an individual investor. Please go ahead.
Unidentified Participant
Hi. Thank you for the opportunity. The management has previously noted the fact that we have been facing a lot of pressures in terms of dumping. Could you explain what kind of just how is it different between the specialty versus commodity dumping and which countries is it split between? And what kind of margin compression the company has been able to take has been needed to take because of this dumping force?
Unidentified Participant
We had filed couple of petitions for dumping support from the government on PVC and on soda ash and on both the products. Despite there was a positive finding, those duties never got implemented. We had a case in CBBC of dumped imports coming from China and Korea for which we had got a favorable dumping duty levied a couple of years back. So this is a phenomenon which keeps on and off based on the demand supply imbalances from those respective exporting countries. So there cannot be any standard guidelines speciality specialty.
There are no dumpings. Now only in cpvc we had a dumping duty case iron oxide. There is no dumping. In fact we are exporting the product. So.
Unidentified Participant
Understood. And one last question regarding the cap table. Like because what is the exact association? Is there an association Times group versus our promoter Promoters. Could you explain the relationship? Is there any more further relationship with times?
Unidentified Participant
I think all these things better. You write to our PR firm company secretary, he will explain to you. I think it is nothing to do with the business.
Unidentified Participant
And last question. In terms of operational margin efficiencies, are we at our peak? Because I think most of our utilization is the highest it can be. So going forward, without the price increase, our margins are going to stay in the same range. Right? Is that a right understanding?
Pradipto Mukherjee
Yeah, it would because as we told that There is a 10, 10kt of additional volumes of CBBC which kicks in which takes care of, you know, the increased cost growth for next year growth per se. There are certain factors which we think would help us in terms of margin improvement. Like as we told and discussed that we are getting into long term contracts with X. China is our sales which eventually increases our weighted average net realizations for the product and thereby the margins or the profitability.
We see certain price increases which are which we expect to be here for a couple of quarters. So far as caustic and soda ash is concerned. But at the same time we see that there is a bit of a challenge so far as DC and PVC spread is concerned and also PVCC PVC spread is concerned. We are trying to see how the pricing is played out and accordingly take decision on the on the procurement as well as the sales side. But I think there are chances and there are more opportunities for us to increase the operating profit for next year than what we have achieved.
Unidentified Participant
But so can you list out those because I understand the long term contracts you’ll get a better weighted average. Apart from that operationally what can we do? Because you told
Pradipto Mukherjee
About 10kb of additional volumes for CBVC which comes in which we hope to place the volumes and we will derive an annual benefit out of it. Because while though we commissioned the plant in, you know, March end, we think that we will scale up pretty quickly with our experience of first 20 to 40 kp. So more or less an annualized benefit of additional volumes and margin absolute profit should go up there. There is some effect as I told of the weighted average contract prices for SR while in caustic and soda ash.
We expect the prices to stay elevated. There will be some amount of dip so far as VCM PVC is concerned and that is predominantly with the, you know, this war to see how things shape up. So I think apart from that we don’t have a lever of capacity because we are doing almost the capacity utilization whatever. Whenever we are, you know, doing a capex seamlessly commercializing them. You have to wait for the next round of Capex which we have to announce. And that also has to do with the fact that how the the geopolitics shapes up immediately.
Unidentified Participant
But understood sir. One last question regarding our potential expansion to other chemicals and specialty. Is there any near term the company has in terms of intention to expand into new chemicals or will it be expanding the specialty chemicals we already have in the next five years?
Pradipto Mukherjee
Specialty chemical growth which will come would has to be in related chemistry. The synergy comes even by utilizing your marketing leverage or your chemical understanding of the product. That’s the second one. And thirdly, very importantly where thematically we want to see this organization five years or seven years hence putting all these into practice. We have relatively hard drawing board discussions and certain products which we can venture into. You have to please wait for us to come and communicate you officially.
Unidentified Participant
Understood sir. Thank you so much. That’s it from my side.
Pradipto Mukherjee
Thank you.
Operator
Thank you. Before we move to the next question, I reminded to the Participants to ask a question, you may press star and one next follow up question is from the line of Madhu Rati from Countercyclical Investments. Please go ahead.
Madhur Rathi
Thank you for the opportunity once again. So if I look at our YOY EBITDA from the specialty chemical segment. So is it fair to assume that whatever decline that we saw in the spread composition for CPVC PVC was mitigated or offset by SR spread improvement? Is that a fair understanding?
Pradipto Mukherjee
SR is not a part of our specialty. What happened is that the spread contraction of see the specialty businesses, two products which is SIOP and cpvc. These were separate segments but we are clubbed into one. What has happened is the spread, the spread contraction of PVC to CPVC has been mitigated by the volume increase of CPVC which is basically which we did round about 22,000 tonnes this year we are doing around 37, 38,000. So the volumes more or less has doubled. So far as PBC is concerned. That helped, helped us almost read the numbers even despite the PVC CPVC spread contraction.
Anything you want to answer?
Unidentified Participant
No, he. What he says is this is you are asking about the quarter four in specific.
Madhur Rathi
No sir, I was asking about why o y there has been a flattish ebitda closer to 180 crores. So I was trying to understand what has been the spread compression in CVC CPVC and what, what has been improvement in SIOP. So I thought that only SIOP.
Pradipto Mukherjee
So see SIOP, we have increased the volumes by 30% and TPVC, we have increased the volumes almost double. 60, 70%. Okay, so that has been mitigated by the price correction only in CPBC which did not have a consumer at input 6 pbc price correction, which basically means the BBC CPVC spread came under contraction. That contraction was mitigated by the additional volumes which we produced and sold. So that’s the way it is.
Madhur Rathi
Got it. And sir, on our CPVC segment, sir, how. What is the extent of capacity closure that you mentioned that had happened in Europe? And so how’s our feedstock availability currently that we import
Pradipto Mukherjee
Cpvc? We don’t import any feedstock.
Madhur Rathi
No sir, I’m talking about pvc.
Pradipto Mukherjee
Pvc there is not import PVC also we import vcl, we produce PVC and we use those PVC in making our situation
Madhur Rathi
I was asking about. Sorry to interrupt Mr. Rt.
Operator
Maybe please, this is a clarification.
Madhur Rathi
This is just a clarification. I think there was some. So I’m trying to understand what has been the capacity closure In PVC that you mentioned, that has happened in Europe. And what is the feedstock availability of VCM for our PVC segment? Is it available or are we facing shortages for this VCM for our PVC segment?
Unidentified Participant
No, see one is that we used to source our feedstock majorly from Middle east because of the Gulf War. That supply which has been the closest logistically is not coming. So our contracts were all put on pause. So to tide over the situation we are procuring the feedstock. There has been no issue in the production, but it is coming at a high cost which we are finding it difficult to pass on in our finished product which is pvc. This is a temporary phase. So there has been. And even if there has been a plant closure in the European, technically the product VCM cannot come to India because of the.
The logistics cost because it’s a pretty long distance and VCM comes in a. Not. Not comes in a container, it comes in a ship. So, you know, logistics pays a very big cost.
Madhur Rathi
No, sir, I was asking how much capacity in metric turns and has closed in Europe?
Unidentified Participant
Euro capacity. I think two plants got closed. I think Vinova is one capacity. I think that is some 2 lakh tonnes which got closed. And one more plant which I don’t recall it got closed. But these closures happened much before the start of the West Asian conflict. It has got nothing to do with the current geopolitical conflict. These capacities got closed in the course of, of last year.
Madhur Rathi
Right, so that was from mine. Thank you so much and all the best.
Unidentified Participant
Thank you.
Operator
Thank you ladies and gentlemen. We will take this as the last question for the day. I now hand the conference over to the management for the closing comments.
Saatvik Jain
Thank you everyone for joining our call today and hope we’ve been able to answer all your questions. If any further clarifications needed, I request you to reach out to our investor relations advisors at Valorum. Thank you once again and we’ll talk to you next quarter. Thanks.
Operator
Thank you very much, sir. On behalf of ariane Capital Markets Ltd. That concludes this conference. Thank you all for joining us and you may now disconnect your lines.