Laxmi Organic Industries Ltd (NSE: LXCHEM) Q1 2026 Earnings Call dated Jul. 29, 2025
Corporate Participants:
Unidentified Speaker
Rajan Venkatesh — Chief Executive Officer & Managing Director
Mahadeo Karnik — Chief Financial Officer
Ms. Tanushree Bagrodia — Chief Financial Officer
Analysts:
Unidentified Participant
Rohit Nagaraj — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Q1FY26 earnings conference call of Lakshmi Organic Industries Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions to after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star 100 on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Tanesh Shah. Thank you. And over to you sir.
Unidentified Speaker
Thank you Shruti. Good afternoon everyone. Thank you all for joining us on the Q1FY26 earnings conference call of Lakshmi Organic Industries Limited. From the management, we have with us Dr. Rajan Venkatesh MD and CEO and Mr. Mahadev Karnik, CFO. The company has uploaded its financial results and investor presentation on their website as well as stock exchanges. We hope everyone has had an opportunity to go through the same. We will begin the call with remarks from the management team followed by a question and answer session. Session. Before we begin, I would like to point out that this conference call may contain certain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call.
These statements do not guarantee the future performance of the company and involve risks and uncertainties that are difficult to predict. I now hand over the call to Dr. Rajan Venkatesh, MD and CEO. Thank you. Over to you sir.
Rajan Venkatesh — Chief Executive Officer & Managing Director
Thank you. Tanay Namaskaram from my side. Very good morning, good afternoon and good. Evening depending on where you are dialing in from. Always excited to be engaging with you guys. So a range of topics, you know a part of our quarter one performance. The topics I would like to cover are. First is some of the people topics and people have a very large bearing on the performance of our organization. So that’s a very important thing on the top of my mind. The second lens is how the raw materials have evolved as we speak now. The third one is the application or the market industry trends the way we view it. Then we sort of dig a little more deeper into both our business segments, essentials and specialties.
I would also like to give you an update on how do we progress with our investment projects. And last but not the least really leave you with the key focus areas that we as Lakshmi are focusing on into this year and and also beyond. So let’s talk about first the people topics. You know Mr. Prashant who was our president of manufacturing after a wonderful Nine year stint with Lakshmi will be retiring as of middle of August. His successor we have announced is Mr. Rajesh Naik. Rajesh brings almost a three decade experience. With him having worked in companies like Asian Paints, dupont and his last company being basf. So we are very thankful to Prashant. For his years of commitment and we are really looking forward for Rajesh to come on board and continue Prashant’s legacy on the manufacturing front. The other change at a senior leadership level is the role of procurement which. Was very ably managed by Mr. Jeetendra who was the head also and who. Is the head of our essentials business. As all of you know, we have certainly a larger ambition for our essentials business to double the top line from. Where we closed out in FY24. So we felt, you know, to really. Carve out the procurement function and give it even more sharper focus and that’s. Been a key important element for Lakshmi. Would do us good and very happy to share that. Dr. Keshav Rutia joins us as of 1st of August as the head of procurement. He has done his Bachelor’s from ICT here in Mumbai, his PhD from Netherlands, done a postdoc from the US and. Having spent about two decades with BASF, all of his experience outside India, he comes back home and is excited to take this opportunity again. A big thank you to Prashant and. Jiten and a big welcome to Rajesh and Keshav. Raw materials starting from that lens. I think the key raw materials as you are aware for us primarily are acetic acid. Just to give you a line of sense, in FY24 average acetic acid prices across the year was around 450. Last year it was about 400. And we have continued to see acetic acid prices dip lower. It was then at 1.380370 and today point in time is around the 340 ballpark. So that gives you a line of sense. This is despite the fact that in the interim, because of certain conflicts where Iran was involved, we saw methanol prices increasing for a certain few weeks.
We certainly did not see a larger. Dent on acetic acid. So supply side on acetic acid remains. Long and I think that is keeping us in good stead. You also saw recently the BIS was listed on acetic acid because India remains a net importer of acetic acid and. The authorities felt that they should not in any way impact producers who are consuming acetic acid. The second other key raw material is ethanol and ethanol prices have also been trending lower. So on an average in FY24 it was about 840. In FY25 it was about 720. And now as we speak it is around 700, 690 to 700 and sort of being stable at that level over. The last three quarters. Again, we don’t see any major bottleneck in procurement of ethanol. So key two key raw materials. We seem to be at least from a supply side to be on a good stead. So that’s the first lens on raw materials. Then let’s take into a deep dive into the market that we serve. So key markets include printing and packaging. There on a quarter, on quarter basis we see that demand to be stable. The second market is pharma. Again there we continue to see demand to be stable. When it comes to agro this year we continue to notice it remains weak to moderate.
Certainly not as weak as what it was, but certainly in discussion with our customers we don’t see this to be yet rebounding. The conversation of inventory in the system is ebbing away. So that’s positive. But there is also now more conversations. Of margin pressures into the agro value chains. Then we look at markets like case, I.e. coatings, additives, sealants and elastomers. Therein, specifically in the global markets of North America and Europe, we see demand a little bit more muted as compared to on a quarter. On quarter basis. That’s what we are hearing from a. Lot of our key customers in those geographies. So that gives you a broad line of sight into certain of the key markets. And I’m happy to take your questions if you require more larger insights. As we have shared in the past, we have also expanded our market footprint by entering into personal care with certain of our portfolios. And also with the last announced Hitachi. We are also entering into the entire power transmission phase. So that’s the market lens. Then moving further, if you look at closer to home, that is essentials, the spreads, the spreads of essentials, if you remember our narrative, has been it’s been in the range of about $140 average. Over a 12 year period the spread has been about $220. So certainly it continues to be subdued. We saw in the last quarter, and this is also something we had called out, that there was a propensity for the spreads to further dip below 140. So as we speak now it is in the 120 range. That is a point in time.
So that’s where you see this also getting reflected first on the acetic acid, what I called out that acetic acid prices are subdued and then obviously this flows into one of the key products which is ethyl acetate, which constitutes about 80% of our essentials basket. That is where also then the spreads for ethyl acetate remain subdued into quarter one. Then when we come into specialties, you have seen that there is a degrowth in specialties and we have also called that out. There are two key topics. One is there is an anticipated phase out of an agro AI.
This was. Why do I call it anticipated? This was expected to happen a few years back but the business continued and as a result of which we were able to supply that part of that pie and supplier customers manufacturing that. Now it’s very clear that is getting phased out and that is obviously then we’ll have an impact into FY26. Mahadev in his commentary will give you more color on the numbers. The other bucket is deferred deliveries of select products to global customers. So this is on a full year basis. It’s a wash because what we are not able to do in quarter one will certainly manifest in the second half.
Of this financial year. So that’s what is I would say point in time impacting the specialty. Quarter one revenues will also certainly have a spillover effect into quarter two. But we will rebound and Mahade will. Give more color on that in his commentary. Then when we talk about the project update, our Lotte the Fluoro Intermediate site that building on all the consistent effort over the past quarter, our ramp up continues and I think we remain on target to achieve as we have always called out in FY26, somewhere between 40. To 60% of the peak revenues. So that is what we are very diligently working towards. Also the Hitachi project which we with Hitachi Energy where we signed the LOI for an SF6 replacement that is also taking good shape and we are at really the cusp and the target is in quarter two of this year. So in this quarter we would ideally like to stitch up the contract with Hitachi. So thereafter we can lay out the. Capex and accelerate the sales. The hedge again a very important part of our CapEx puzzle. That CapEx, that project remains on track, on scope, in scope, on track with regard to budget and on time horizons. So that is also giving us confidence. So somewhere towards the end of quarter three, early quarter four is where we. Will have the mechanical completion and thereafter chemical char happening for all the key assets at our DAHIJ facility. Now people have asked me also with regard to the potential levers, you know what could impact margins, I think two key elements come to my mind. Finally, Beijing has signaled that it will intervene in producer price wars. So expectations are certainly growing for potential capacity moderation in China. But obviously this will take. We will need to see how fast or slow this happens, but certainly it has got the attention of Premier Xi Jinping. So I believe there should be certain elements on shakeout happening on the ground. This is not only linked to chemicals, it is across a range of industries in China and the ever present conversations that are happening with us or India, with the uk, India with Europe, all of that also has certainly potential to provide opportunities where there could be improvements into margins.
One other element, good call out for our Hitachi Energy loi that we signed being very, very prudent in the way we have now developed continued bustle on capex execution. We are happy to share that the Hitachi Energy CAPEX that we will need to install will be accommodated in the 1100 crore capex that we had lined up. So I think that’s a very positive work done by the team and also continues to build confidence in our project execution excellence. Now as is always the case in tough times, you start focusing again every day into granularity and our areas of focus at Lakshmi.
While we have started that we will be double clicking is productivity in all its aspects. Commercial excellence which is really looking at what can we do better across a range of products Execution excellence. I think this is really proof is in the pudding that projects are coming online in time and within budget cost discipline across the board. Zero based budgeting is something we have already started and that is something we will continue as a muscle. And I think last but not the least the growth projects which will certainly continue to pivot and continue our profitable growth journey.
As one example is the project that we have kick started in quarter one. This is the end to end digitization of our supply chain operations really while there is a certain capex and you see that in our results also. And Mahadev will call it out which will span through quarter one and quarter two. We certainly are anticipating that once we have rolled this out. This should be a great example how this would advance efficiency and predictability, end to end reduce costs and improve our agility to serve our customers. With that I hand it over to Mahadev to take you through again the granularity in numbers.
Mahadeo Karnik — Chief Financial Officer
So thank you Rajan. I will take you through quarter one numbers. In quarter one our revenue degree by nearly 4% in spite of our volume growth of 8%. The segment growths are like as follows. Essential grew at 4%. It’s led by volume growth of 11% offset by the price decline which is mainly due to the acetic acid feedstock price declining of nearly 7%. Now let’s come to specialty. Specialty has a decline of 18%. And as Rajan called out, there are mainly two factors impacting this. One is anticipated phase out of a product which is nearly 9% of our sales of the specialty product.
And the margin profile is in line with the specialty gross margin profile. So that’s one thing that has impacted in this quarter. We have plans to offset this but the plan should come in place by Q4 of this year. So next 2/4 still you will see the impacts coming in the financials. Secondly, there was a deferment of delivery that was expected which is nearly 4% of the sales. This has shifted to H2. So this is not really impacting yearly financials but it is coming in the quarters only. So let me come to the overall pml.
If you look at the cost that we have overall cost, overall cost in this quarter is around 1,828 million versus 1839 million last year. This is in spite of two things we have spent on the project for digitization of the supply chain. Nearly 79 million as well as our as our Lotte operations are now full fledged. The Lotte operational cost of nearly 39 million is starting US impacting our financials. And as you can see that we have saved nearly 110 million on our cost to serve mainly coming from freight and distribution. And there are some forex gains.
So I can tell you is that in this time we are double, you know, counting on our cost optimization measures, productivity improvement measures that will come in the financials clearly out the one time expenses of 79 million is specifically on account of the supply chain digitization project. There are two accounting changes that we have done in this time. In this quarter we have moved to a straight line method for depreciation accounting from a wdv. It’s mainly because the economic benefits are in the increasing trend because we are in a capex mode. Secondly, we have moved from an old regime of tax to new regime of tax.
That’s why as you can see in the note there is a one time gain in deferred tax liabilities that we have. That’s why the tax impact is positive. So overall we have PAT of 214 million which is at 3.1% versus 4.8% of last year. So on Q2 specifically, let me call out, we will continue to see performance which is in line with performance of quarter one or better performance. So that’s the guidance that we are giving for next quarter. So that’s it for me. Over to you, Tanay.
Questions and Answers:
Unidentified Speaker
Thank you. We can start the question and answer session. Shruti.
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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rohit Nagraj from B and K securities. Please go ahead.
Rohit Nagaraj
Yeah, thanks for the opportunity and the elaborate presentation. So first question is in terms of both essentials and specialties from the user segment perspective, where are we seeing more traction and where are we seeing still challenges persist and what is our expectation in terms of the challenges are persisting? What is the timeline that we feel that things will probably come back to normal? Thank you.
Rajan Venkatesh
So Rohit, I think reflecting on the. Comment which I just shared, if you look at the key segments again, printing and packaging, that demand continues to be stable. In pharma, we continue to see stability in demand. Now I’m talking quarter on quarter basis. Obviously if you look over a longer period, there will be certain subtle changes. But I’m trying to keep it point in time. Lens, I would say agro is where we continue to see that demand certainly was very weak before. It is moderating, but it is certainly not rebounded. That would be our lens. Now depending on whom you speak to in what product range they are, you would hear different narratives.
But this is the narrative we speak to when we hear it for the product ranges and the customers that we are dealing with on the agro part. And as I also called out, what. We see, given the consumer sentiment, especially in North America and parts of Europe, being very weakish. And that’s why you saw larger FMCG companies also lowering their forecast. This is also where we see areas. Like. Architectural coatings that we continue to. See demand being a little more muted. But we believe this is maybe a. Passing phase, nothing, something structural. Agro is something where we continue to. Keep a close watch. And what you also see, you know, as part at an enterprise level of. Lakshmi, the agro starts to play less than 10% at our enterprise level. So that’s where we are. Hopefully that gives you some line of sight.
Rohit Nagaraj
That’S helpful. So second question again on the geographical revenue breakup. So if you look at for this quarter, the Europe contribution has moved up materially on a year, on year basis. So are we seeing material traction coming from Europe in terms of the demand being normalizing and normalcy coming back from the purchase perspective? So just your thoughts on how things are moving or setting up as far as Europe is concerned?
Rajan Venkatesh
So Europe, I think, as we’ve all been tracking, continues to be going through a large upheaval where a lot of upstream capacity for chemicals and petrochemicals are coming offline. So certainly you can certainly see, I think pockets where the demand, if it is still existing, needs to be served. And for us, as Lakshmi, closer to home, we truly believe that there is. An opportunity in Europe. We have always been present in that geography with product like ethyl acetate with tank operations. So we are perceived to be local there. We are going to expand our product portfolio into Europe further in essentials and also in specialties. Again specialties. We were already entranced in Europe with key customers. So that continues to be the case. I think what you see in our lens is more a point in time view, as I called out, one of. The key elements in the Americas is. Really looking at the coating segment and where the demand is a little more. Muted at this point of time. That’s why you see a skew. So that’s a point in time lens, the split, the geographical split. But I think our focus remains also. To serve that opportunity and also grow. Our presence in Europe strategically with key customers. And I think last but not the least, Rohit, given all the conversations we. Are having about tariffs, this is evolving as we speak. And overall at a Lakshmi level, I. See this as neutral to positive for. Us and we will be ready to. Tap into those opportunities.
Rohit Nagaraj
Just one last question from my side. In terms of competition from China, has there been any change that we have witnessed during the quarter compared to maybe previous quarter or last year? So just your broader thoughts on the. Thank you.
Rajan Venkatesh
So the simple answer to that I. Think linked to Lakshmi. No, we have not seen any large change in the competitive landscape where we are serving from China.
Rohit Nagaraj
Okay, thanks a lot and all the best.
Rajan Venkatesh
Thank you.
operator
Thank you. The next question is from the line of Sawmill Shah from Paris Investments. Please go ahead.
Unidentified Participant
Hi sir. Good afternoon. So as we are targeting 3x EBITDA growth and 2x revenue growth by 2028, so I mean can we expect at least 1520 revenue growth for this year? And.
Rajan Venkatesh
So I think first and foremost. Amal, thank you for the question, let me also break it down right. What we said is the key element of our capex spend about 800 crores is primarily coming into our the hedge thing and the big chunk of our dahedge capex will come online. Mechanical completion and chemical charging would happen towards the end of quarter three and ideally into quarter four. That’s the line of sight and that basically keeps us so you would see that impacting us more positively into FY27 rather than into FY26.
Unidentified Participant
Okay. Okay. And whatever capex we have done, I think even this year we have done some capex. Right.
Rajan Venkatesh
So the midpoint of expenditure of the. Capex is going on as we speak. But plants need to be mechanically complete. Before I can leverage that. And again the specialty business while some of the products we will be ensuring customers business continuity and producing it across our mahad and also the H side but the customers will need to approve us. And the same goes to also for. Certain of our essentials products. Approval is not as stringent and time. Consuming as in speciality but those approval. Cycles so mechanical completion, chemical charging, approval process and then ramp up that would. Be the sequence of events. So that’s the line of sight we are having.
Unidentified Participant
Okay. Okay. Margin in the on the essential side of the business and on the specialty for this quarter.
Rajan Venkatesh
So adjusted EBITDA for this quarter for. Essential is 2% and for specialty it is 16%.
Unidentified Participant
Okay. Okay. And so my final question sir, what was the total amount we have spent on the fluorocam business? I mean on the capex side.
Rajan Venkatesh
So we have always stated 550 crores is the cost to complete.
Unidentified Participant
Okay. Because I think we are guiding for 200 crores. I think revenue for by FY27. So isn’t the offend term too low?
Rajan Venkatesh
Yeah, so yeah, so fair enough. So I think this is, we’ve been very transparent about that. You’re correct that the asset turn is low. But we have also, if you look. At our previous investor documents we’ve been very transparent what have been the levers which have a cost, the cost to complete, to increase. But more importantly I think what is giving us great conviction is the type of contracts we are lining up with Hitachi Energy and we would have been nowhere in the fray if we did. Not have this muscle. So for us the way forward is building on the platform that we have established in Lotte and take this into a much larger trajectory. So that remains the focus on it.
Unidentified Participant
Okay. So if we want to increase our revenue from say 200 to anywhere between 500, 600 crores. We don’t need any additional capex.
Rajan Venkatesh
No, we will as I called out. Now specifically, the existing asset that we have established can only give us 200 crores. The Hitachi energy project is something we are actually, with the CAPEX prudence that we have maintained over the 1100 crores. We are able to accommodate. But beyond that, that would certainly require additional CapEx. Where we have certain interesting headroom is on the IOU that is infrastructure and utilities because now it becomes a brownfield site, not a greenfield site. That will make the whole thing more. I would say there will be lot more synergies.
Unidentified Participant
Okay, okay. Okay. So as you said, your capex would be in the Q3 or Q4 of this year. So at least can you FY27 what can be the revenue or EBITDA guidance?
Rajan Venkatesh
So I, at this point of time, that’s a more detailed question. I think let’s, let’s follow the top offline. That’s what I would request you, you know, and then we can give you granularity.
Unidentified Participant
Okay. Is there any growth can we expect or are we basically fully utilized?
Rajan Venkatesh
No, broadly there is something you have seen, right? In the essentials business, we have grown 11% volume in quarter one on a year, on year basis. Even on the specialty part, if you take out those two special effects that we called out structural and deferment, we have also had plus 10% volume growth. So I think we continue to max out our assets. We have also an operational excellence or in the assets. So I think we continue to leverage to our strength.
Unidentified Participant
You’re not guiding anything on the.
Rajan Venkatesh
I. Would appreciate your, you know, understanding on this one.
Unidentified Participant
Okay, fine. Thank you and all the best.
Rajan Venkatesh
Thank you, sir.
operator
Thank you. The next question is from the line of Ravisha from VRs Capital. Please go ahead. Ahead.
Unidentified Participant
Hi sir. Thanks for the opportunity. I had two questions. Basically, can you provide some color on how the pricing of Kyle acetate has moved over the past four quarter comparison over the past four, five quarters. And I just wanted to get some pressure understanding on the pressure on our spreads. So progressively each passing quarter, have we seen any difference? And also if you could provide some kind of understanding on where do we expect this to move directionally.
Rajan Venkatesh
So I think again, Ravi, thank you for your interest. So what we saw in the few quarters we were seeing spreads in the. Range of about 140 to 150 given. That the acetic acid and that’s an. Important lens to bear in mind because. There are two levers in A business like Essentials, one is the raw material side, the other is the demand side. So demand side has been broadly stable and raw material side is where we see continued oversupply. And that’s why price is coming under pressure because acetic acid is also going into other downstream like vinyl acetate which has its own supply demand dynamics. So the spreads becoming lower is not really driven by the demand side. That’s why we are able to grow. You see the volume growth that we are able to deliver, it is really coming from an RM side.
And that’s why the spreads which were around 140 to 150 we saw in the last quarter, I would say point in time we were about 120. Now to your question, how would this develop? I think at least looking into this quarter we are not anticipating any big changes also on the raw material side or also on the ETAC side price side. But as I called out before, two elements which can have larger ramifications across our portfolio. One is this Beijing signaling that it will intervene in producer price wars. We will need to wait and see what ramifications it has.
Normally in the past this has implied that there has been potential capacity cuts. So this will then certainly help across the value chain. And also then depending on how the tariff conversations are going on say between India, us, India Europe, the recent concluded India UK may also provide us certain upside opportunities.
Unidentified Participant
Understood sir, thank you for the detailed answer. This question basically stems because last year has been declining. So right now I think we have a favorable base. If I’m right, am I right?
Rajan Venkatesh
I would say that would be a fair way to view it that this could be maybe for a lack of a better word, while we are in continuing to be in the bottom quartile, could really be the bottom of the bottom quartile. That’s the way I would view it.
Unidentified Participant
Understood. So one more question. Basically our essentials business has roughly stayed stagnant. FY24, FY25 we had done around a 2000 crore revenue. So now assuming there is no pricing pressure, assuming there’s less pricing pressures, do we anticipate to surpass this 2000 crores for Academy?
Rajan Venkatesh
The first is the top line price. In an essentials business one key driver. Is raw materials because you have ETA. Acetic acid and you’ve got ethanol. And as I called out the acetic acid prices have been on a decline. So actually to even maintain what we have done would have been difficult if we did not deliver volume growth. And if you remember the previous conversations in these calls we have said our operational excellence journey, which we started in FY24, which started delivering results into second half of FY24 and into FY25 where we grew double digit volume in essentials is what is keeping us afloat. And the new capex that is coming on in this financial year will increase our volume base and that’s the reason how we will move the forward trajectory.
Now again, the essentials as we have also called out, is a cyclic business. Again to give color to that, the average spread of ethal acetate over a 12 year period, if you exclude the COVID peaks, is 220 to $225 per metric ton. The numbers which I just shared with you are in the range of 140 and currently 120. So we truly believe there will be a cyclicity into this and we are very, very well prepared with our cost position and with our market positioning.
Unidentified Participant
Understood. So basically this would mean we would try to maintain our volume growth momentum which we had previously. Right.
Rajan Venkatesh
That’s what is also reflected into quarter one, that we have grown our essentials volume base by 11% on a year, on year basis.
Unidentified Participant
Thank you for the detailed answers and all the best.
operator
Thank you. The next question is from the line of Rohan Mehta from Ficom family office. Please go ahead.
Unidentified Participant
Hello sir. Am I audible?
Rajan Venkatesh
Yes, Rohan, you are perfect.
Unidentified Participant
Thank you so much for the opportunity. So my first question was has there been any capacity shutdown globally when it comes to ethyl acetate or acetic anhydride? That’s the first one. And the second is, you know, at 2% EBITDA margins on the essential business, it may look like, you know, this is very close to the bottom. So what would be your perspective on the recovery side which quarter onwards you feel that, you know, spreads can start to recover first.
Mahadeo Karnik
So Rohan, let me take. You had asked multiple questions, so let me take it PI smil and again jog my memory if I forget something. So first is you talked about have. There been any capacities which have gone offline? So there has been one announced capacity which is in the Middle east called Sid Chem. They announced to mothball their 100,000 tonnes ethyl acetate plant. So that’s certainly, I think a more. Formal announcement we know of on acetic anhydride. I am not aware of any capacity that has been formally announced that is going offline. But again, like in the essentials business. Different producers are in different parts of the cost curve. So not all producers would be in a position. So while we as Lakshmi, we believe. We are in the top quartile in. The cost curve and hence are operating our assets at full levels that might not be the same for other producers. So I hope that gives you one part of your question, Rohan. With the second part, you’re correct in. Saying that at about 2% of EBITDA margins maybe we are at the bottom. That’s what we also anticipate. The reasons I think first and foremost. As I also explained to the previous colleague, this is a cyclic business. We have seen spread average spreads over. The cycle 12 years excluding Covid of 220 to 225 dollars for ethyl acetate. This is excluding Covid peaks. So today point in time we are about $120 per metric ton. So we truly believe this is not sustainable. Over the next decade we will certainly see cycles kicking in at this level. Certainly we believe there might not be. Too many producers who would like to invest. That’s one lens. It will only be the committed producers. With clear customer lens who will invest. We are certainly one of them. The other lens is again, the cycles will need to play out and that’s our understanding. So we are ready to tap into. That whenever it happens.
Unidentified Participant
Got it. And just to follow up on that, do you anticipate spreads to go negative first before we see a bounce or you feel that the current market dynamics is such that this is where most likely the bottom could be and we could stay here for a few months before recovery could set in?
Rajan Venkatesh
We certainly have not seen in the. Past also and we have looked over a 12 to 15 year period, we have never seen spread go into negative territory. I think the worst we have seen spreads going to maybe about $100 and rebounding from those ranges. So I would say our prognosis is to spreads to be at least into quarter two because Essentials is a business again where you have prices settling daily. Just to keep it in perspective, very. Different to our specialty, the muscle. We have acetic acid prices that settle daily, ethanol prices settling daily and hence the way we are also pricing ourselves, we bring in a lot of agility and hence. First part of your questions, going spreads going negative. I don’t see that happening. Are we really at the bottom of the bottom? I think we are in that ballpark.
Unidentified Participant
Perfect. Thank you so much.
operator
Thank you. Our next question is from the line of Vikram Kotak from Ace Lands Down Investment Services. Please go ahead.
Unidentified Participant
Hello, thank you for the call. Just one question has been answered already. Second question is on the capex. So we are given a breakup of 1100 crore is 750 crore in FY 2526 and 350 crore in 2628. So can we, can we know what are the capex level as of today? Ballpark how much? We are completed out of 750 crore for the current year.
Rajan Venkatesh
So out of 750 crores we have now on a way to exhort nearly 680 crores.
Unidentified Participant
Okay, okay. And. And in 2628350 will be spread how broadly? Ballpark.
Rajan Venkatesh
The ballpark around it will be FY27 around 100. Yeah.
Mahadeo Karnik
So I think Vikram. So the lenses. The midpoint of expenditure of our capex. Is in FY26 and a big chunk. Of the 1100 crores that is 800. Crores is really going towards the hedge project. So like we explained that is that. Will take shape this year. Then the remainder is really more which was baked in. In the 1100 was about 50 crores from our Lotte project which was already spent.
Ms. Tanushree Bagrodia
Yeah, right.
Mahadeo Karnik
There were certain things for our innovation. Campus which was already done. So I think the way I would request you to look at this is a big chunk. The age midpoint of expenditure is this year with chemical, you know mechanical completion, chemical charging happening in quarter three, early quarter four.
Unidentified Participant
Right. So we should expect everything things to flow in. In FY27. Right? That’s the correct.
Mahadeo Karnik
Yeah, absolutely. The ramp up, ramp up happening in FY27. Yeah. We have obviously ongoing you know repairs. And maintenance and certain capexes are inside. But that is a smaller part of the puzzle.
Unidentified Participant
Thank you. All the best. Thanks so much. Thank you.
operator
Thank you. The next question is from the line of Sakshi Pratap from Pratap Securities. Please go ahead. Hi sir.
Unidentified Participant
Thank you for taking my question. So two questions majorly. Firstly in the specialty business we had clocked almost around 250 crores in Q1 and Q3 of FY25. Thereafter I think we saw a decline in the last two quarters. Currently we are almost at about 200 to 10 crores. So can you highlight the reasons that impacted this book? Was this driven by volumes or pricing? So basically just wanted to some sense over that. And also how do we plan to get back to that range of 240. 250 crores per quarter and go from there.
Rajan Venkatesh
So Sakshi, I called it out in my summary itself out of 18% nearly 9% is on account anticipated phase out of a product. We have planned to offset it that plant will realize only in quarter four. So quarter two and quarter three you will see the impact of nearly 9% of the sales rest is mainly the deferment to the H2. It’s not, it’s just a timing impact, it’s a quarter impact but not a full year impact.
Unidentified Participant
Understood. Okay. Secondly, given where we are in essential business cycle and also now with specialty business under some pressure so can you throw some insight on how do you see the full year FY26 in terms of revenue growth, blended EBITDA margins that way. And just to follow up on that, once the Dahid and Mahat Capex gets operationalized, what kind of ramp up can we expect in both in FY27?
Rajan Venkatesh
So Sakshi, one is we really don’t give out full year prognosis. So I would certainly respect your understanding on that. What we can call out is for our specialty business when there is a deferment from quarter one, quarter two into second half, second half for our specialty business is anticipated to be stronger as compared to our first half. I think that is what we can park second lens which we can certainly share with you is what we also spoke before in the essential lens given the spreads where we are today and if I take a point in time view also into quarter two because our essentials business is a very, I would say evolving and agile business in quarter two we are also expecting spreads to be at the same point.
So on that’s, that’s the line of. Sight we have at this point of time Sakshi. Hope that helps.
Unidentified Participant
Yeah, that was helpful. Thank you so much and all the good.
operator
Thank you. Our next question is from the line of Jigar Shah from Elevate Research. Please go ahead.
Unidentified Participant
Good afternoon sir. Thank you for the opportunity. I have just one question. So we are at about 240km in acetate capacity already. Please correct me if I don’t if I’m wrong. So we are in process of setting. Up additional GDP line now. So you have spoken about oversupply and capacity shutdown. So just wanted to get some sense. From you on the entire demand supply. Dynamics and our.
Rajan Venkatesh
Two elements. When you stated the number of about whatever 240kta capacity, this is our entire essentials basket. So this is not only ethyl acetate, it is also our capacity encompasses acetic anhydride, it encompasses acetaldehyde and also the newer products that we are introducing into our portfolio. That’s one clarification. The second lens, I think it’s a fair question and we’ve Explained that, that the 200 TPD first and foremost, this would be the single largest economy of scale line, I think in India and also one of the economy of scale lines globally. And so when as Lakshmi, when we embarked on our operational excellence journey, our first lens was to say across the lines where we are producing ethyl acetate, what is best in class in our line and how can we make the others to be best in class.
And the second ambition is really to be best in class globally. And that is the reason where we. Have really invested in the new 200 TPD line. So we are able to leverage both the domestic presence where we already have. A market, market share anywhere up to 40% and also in the international space. And we spoke about Europe to one of the callers where we also see opportunities where we can position it. So that’s the way we are looking at this. And the last thing I would like to talk with you is like in. Every essentials business, not all producers are. All producers are in different parts of the cost curve. And for us, as Lakshmi, the ambition. Has always been to be in the top quartile. And hence you see that in our. Numbers that we are able to run our assets full. We are able to grow our volumes actually on a quarter, on quarter basis. That’s the way we are steering this part of the business. Thank you, Jeep.
operator
Thank you. The next question is from the line of Chetan Doshi from TM Financial. Please go ahead.
Unidentified Participant
Thank you for giving me the opportunity. My first question is that in the slide in the specialities you mentioned, we are the only supplier for electrochemical chlorination products in India. So I would like to know what is the size of the market, what is the product, what product we are manufacturing and what is the current volume or change, if you can share that. And second question is regarding solvents. Industrial solvent is a very big market. So what we are catering to as. Far as solvents is concerned.
Rajan Venkatesh
Can you just come back on your second part of the question please?
Unidentified Participant
Second question is that we are into solvent, industrial solvents also. So what which market we are at present catering to because solvent is a very huge potential market as far as industrial applications is concerned.
Rajan Venkatesh
Okay. All right, Chetan, got the two questions. So let me start with the first one. The fluorination. The first and foremost, the fluorination world, I’ll take it at a macro level, is a $25 billion space. Now with the technology that we have established here in India, we basically are looking at targeting about a $2.5 billion, strategic, relevant market. So what we have now established is a small part of the larger vision we have and that is what we are building into. And electrochemical fluorination is a technology platform which enables us to tackle that opportunity. That’s the first part. I hope I’ve clarified it.
Unidentified Participant
Sorry to interrupt, but we’ll be catering to battery because one of the product goes into battery in a very, you know, huge way. So are we into that product?
Rajan Venkatesh
No. So I think chetan one is, one. Needs to dissect the large world of fluorination. So you got the fluoro surfactants, you’ve got the refrigerant gases in that world. Those are not segments where we are focusing on. We are focusing what we say is on fluoro specialties or fluoro intermediates. That goes into obviously agro pharma, it goes into other coating applications. And also with the LOI that we have signed with Hitachi, we are entering the space of power generation. So those are the lenses that we are focusing on with our fluorination platform. Now the second part of the question is more industrial solvents. You know, there we have, we have products in our portfolio like ethyl acetate which, you know, we’ve been talking so intensively about that primarily goes into the area of printing and packaging and into the pharma.
It has smaller applications into agro flavors and fragrances. But that’s the range which we are tackling with our essentials portfolio. We are also introducing newer products in that portfolio which serve existing segments and also newer segments. Hope that helps.
Unidentified Participant
We are not into industrial cleaning, am I right?
Rajan Venkatesh
No, we are not into industrial cleaning.
Unidentified Participant
Thank you.
operator
Thank you. Our next question is from the line of Sawmill Shah from Paris Investments. Please go ahead.
Unidentified Participant
Thanks for allowing me a follow up. So in our presentation we have mentioned that we have changed our depreciation policy and because of that our Depreciation is around 17 crores for this quarter. So for the remaining quarters can you, can we expect similar depreciation or. I mean because it can reduce. Our last year our depreciation was very high. So can we get some numbers on the depreciation part?
Rajan Venkatesh
So we will, we can share with you one on one. But if you look at the change of depreciation method, there is a note for the quarter that we have already called out. The impact for the quarter is nearly 24 crores.
Unidentified Participant
So, so that would be, I mean it will continue for the remaining quarter as well. Right?
Rajan Venkatesh
That you can reduce. Yeah.
Unidentified Participant
Okay.
Rajan Venkatesh
But only thing is that it will offset by the capitalization of the H when it comes.
Unidentified Participant
Yeah, right, understood. Okay, that’s it. From my side. Thank you.
Rajan Venkatesh
Thank you.
operator
Thank you. The next question is from the line of Dikshant Gupta from Geojit pms. Please go ahead.
Unidentified Participant
Yes, good afternoon sir. My question would be, would it be possible for you to give out more details about the eco efficient gas that you have mentioned in the presentation?
Rajan Venkatesh
So this is the SF6. So what, what details would you need?
Unidentified Participant
No, like. What exactly? Like why have you entered this segment and what is the potential here?
Rajan Venkatesh
Understood. So I guess you were not there. In the last call, so we gave the clarification. So again the thesis is very simple. We have entered. We are one of the newer kids. In the fluorination platform. We entered this platform by the acquisition of a reputed player in Italy called Mitten. And that is what is. And as I was explaining to the previous caller, we are very clear what is this that we are playing into. And one of the technology platforms that. We have is the electrochemical fluoridation and that is where the customer here, specifically Hitachi Energy, had approached us and we. Were able to come up with the. Technology for producing of this SF6 replacement in house. And that is how the relationship has been built up. So as we stand now, LOI is signed and we are working very diligently to get up the contract signed up. And get into a capex mode. We find this a very interesting opportunity because it has a larger, you know, it supports Hitachi Energy’s larger ambition to move away from SF6 in their global power grids. And that’s what excites us to support. Them in that journey.
Unidentified Participant
Thank you. That was it.
operator
Thank you ladies and gentlemen, as there are no further questions, I would now like to hand over the conference to the management for the closing comments. Thank you. And over to you sir.
Rajan Venkatesh
Thank you all again for your interest. So let me just provide you my reflections of quarter one. Apart from the larger conversation we just had. The global chemical industry has been marked by continued efforts towards cost optimization, rerouting of supply chain, linked to evolving tariffs and regional conflicts, and a strong push towards innovation. Regional dynamics continue to play a crucial role in shaping the industry’s trajectory. Coming closer to home, acetic acid prices remain bearish. The spread for ethyl acetate continued to be subdued. That notwithstanding, we have sustained our volume growth momentum and in line with our strategy, continued the diversification into newer products.
In this current backdrop, our primary focus for the essential segment remains achieving volume driven profitable growth while maintaining our market share in the specialty segments. During the quarter we faced impacts on account of one anticipated phase out of one agrochemical product for which we supplied the intermediate. This is to be offset with a map product by Q4FY26 and second deferred deliveries to global customers which will now happen in the second half of FY26. The fluoro intermediates operations at our LOTTE facilities are ramping up well and we remain on track to deliver revenues as previously outlined, 40 to 60% of peak revenues at the upcoming DHED site.
The project remains on schedule in terms of timelines, scope and cost. We anticipate concluding the contract with Hitachi Energy to set up the production of an eco efficient gas used in their SF6 free high voltage switchgear portfolio in quarter two. FY26 building on our execution excellence, we can accommodate this CAPEX for the same in the previously announced 11,000 million INR. Given the current operational backdrop, we will continue our focus on productivity, commercial excellence, execution excellence, cost discipline and growth project. The end to end digitization of our supply chain operations which has been started in quarter one of FY26 is one such example that should advance efficiency and predictability, reduce costs and improve agility to serve our customers.
As Team Lakshmi, we remain geared to win and geared for growth as we work diligently towards our plans for FY28. I would like to express my deep appreciation to the entire Lakshmi Organic team and all stakeholders for all their understanding and support as we navigate the current times. Thank you.
operator
Thank you on behalf of Lakshmi Organic Industries Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines.