PCBL Chemical Ltd (NSE: PCBL) Q3 2026 Earnings Call dated Feb. 03, 2026
Corporate Participants:
Nilesh Koul — Managing Director
Raj Kumar Gupta — Chief Financial Officer
Analysts:
Unidentified Participant
Aditya Khetan — Analyst
Radha Agarwalla — Analyst
Presentation:
operator
Sam sa. Sam. Sa. Foreign.
operator
Ladies and gentlemen, good day and welcome to PCBL Chemical Ltd. Q3FY26 earnings conference call hosted by ICSA Securities Ltd. As a reminder, all participants lined will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this 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 over the conference to Mr. Sanjesh from ICIC securities. Thank you. And over to you sir.
Raj Kumar Gupta — Chief Financial Officer
Thanks Pari.
Raj Kumar Gupta — Chief Financial Officer
Good afternoon everyone. Thank you for joining on for PCBL Chemicals Limited Q3 9 month FISO 26 results conference call. We have PCBL Management on the call Represented by Mr. Nilesh Kaul, Managing Director Mr. Raj Gupta, CFO Mr. Anand Kumar Group Head Investor Relations Mr. Pankaj Kedia ED Investor Relations. I would like to invite Nilesh to initiate with his opening remark post which we will have a Q and A session. Over to you sir.
Nilesh Koul — Managing Director
Good afternoon everyone and a warm welcome to you on PCBL Chemicals Q3 and 9 month FY26 earning conference call. Our result documents were shared with you earlier and I hope you have had an opportunity to glance through them. I will initiate by briefly taking you through the key financials and operational highlights for the quarter and nine months ended 31 December 2025. Following that we will open the forum for your questions. Before I talk about business, a quick introduction is in order. I’ve taken over this role from Mr. Kaushik Roy on 3rd November 2025. Prior to joining PCBL Chemicals I worked in Castrol, British Petroleum, Lafarge Wholesim in a career spanning 28 years and my last assignment was with Hindalco Industries Limited as Senior President, Aluminium and CEO Downstream Business.
Now about the business as we reflect on the quarter, our Q3 performance has been shaped by geopolitical developments and volatile market conditions across segments. While this has put pressure on near term profitability, the underlying fundamentals of our business remain strong and unchanged. Domestic demand remains healthy supported by high domestic consumption and rising tire exports. Globally, carbon black demand has been impacted in the short term due to trade tensions, tariffs and geopolitical challenges. Following significant capacity addition over the last few years, industry utilization currently around 75% is lower compared to the normal level of 80%. As utilization improves in coming quarters, pricing power should gradually return.
Given the uncertainty around global trade policies, particularly the US tariff and the US tariff was around 50% on India, we saw very cautious behavior from customers in the US the conclusion of Indian US Trade deal announced yesterday at a substantially reduced tariff of 18% will meaningfully benefit both PCBL and Aquafarm in expanding our sales volume and profitability in the US Market. The trade deal is a major boost to India’s export competitiveness as India is now a significant advantage to its Asian peers. Recent announcement of the India EU FTA is also positive for us. The EU carbon black market is around 1.5 million tonnes in size and offers meaningful headroom for Indian players to increase their presence in a more conducive trade environment.
Overall, improved trade relations should be supportive across our chemical businesses. Over the past three years, India’s carbon black exports have more than doubled to around 450kt. This gives us confidence that export momentum will continue and recent signing of multiple FTAs will increase the export opportunity in medium to long term. The continuous decline in crude prices over the past years impacted margins and led to inventory adjustments while also helping reduce working capital requirements. With crude now stabilizing and Moving up around USD $65 per barrel, we do not expect the same margin pressures going forward. China’s anti involution policy may also gradually moderate price competition, although the timing remains uncertain.
In the end, use industries such as tires capacity addition across Asia, US and Europe are expected to support downstream demand. Globally, the tire industry is expected to see close to 29 billion of new investment by 2029. In India, tire demand remains healthy supported by improved affordability following GST cuts, premiumization trends, EV adoption and upcoming tire investments. While Q3 has been challenging, we have remained disciplined in execution and and sharply focused on strengthening the core. In parallel, we have embarked upon a company wide cost optimization drive focused on procurement optimization, yield and productivity improvement, further reduction in downtime, logistics optimization and expanding our market reach.
These are measurable execution led projects and we are targeting cumulative cost savings of rupees 200 crore over the next two years which we expect to translate into visible improvement in profitability over the coming quarters. Alongside cost initiatives, our R and D teams are working on diversifying our feedstock mix as well, including evaluating alternates which includes coal tar as well. This enhanced supply chain flexibility reduces concentration risk and strengthens our ability to manage volatility across market cycles. Our growth strategy remains volume led supported by geographical diversification, efficiency initiatives, new value added product streams and improving performance at aquafarm.
We’ve also taken initial steps towards integrating circularity in our operations including evaluating the use of tire pyrolysis oil and end of life recyclable carbon black. These efforts are currently at an early stage but they align with our focus on sustainability, cost, resilience and long term competitiveness. As technology is matured and adoption improves, we expect momentum on this area to gradually accelerate. In the specialty carbon black segment, the near term environment has been influenced by slower infrastructure activity and consumer trends and continued capacity addition leading to lower pricing power. However, our newly developed value added grades are gaining acceptance in applications such as industrial coatings supported by their performance characteristics.
That said, we are seeing encouraging traction in segments like semiconductors, data centers and AI led investments. Overall, we remain constructive on the outlook and continue to selectively increase our focus and resource allocation in this segment. Alongside our ongoing focus on execution, we are progressing with strategic capacity expansion across segments. I’ll now share a brief update on these projects. We have commissioned 60,000 metric tons per annum brownfield expansion of rubber carbon black at our TN plant. This takes our total installed capacity there too of the overall organization to 850,000 metric tons per annum commenced for superconductive specialty black grids of 1000 metric tons at Palij, Gujarat pre commissioning process has started for the specialty black line of 20,000 metric tons in Mundra.
Nanoway’s pilot plant project of 80 tonnes is expected to be live by the end of March 2026. Work on 4,000 metric tons acetylene black plant has been initiated and we expect it to commission by the end of FY27 for the proposed greenfield carbon black project in AP. We have applied for environmental clearances and we expect to receive them within a period of 12 months. We are committed to meaningful investment in technology and digital capabilities also aligning with our long term vision. We firmly believe that the coming quarter will reflect the benefit of all these investments and the India US and India EU trade deal positioning the company on a stronger, more sustainable growth trajectory.
We continue to strengthen PCBL’s sustainability and safety performance alongside business execution. PCBL has retained its gold rating from Ecovartis, placing us among the top 5% of companies globally assessed on environmental, social and governance parameters during the year. We have also made measurable progress across our sustainability priorities including reduction in greenhouse gas emission, specific water consumption and energy intensity. PCBL’s TN plant and PCBL’s chemicals Durgapur plant received ISCC certification demonstrating our initiatives towards circularity and responsible consumption and production. Year to date, specific water consumption has reduced by 3.9% in Durgapur and 5.3% in Kochi while specific power consumption has reduced by 1.3% in Durgapur and 3.6% in Kochi.
All manufacturing sites have achieved zero waste to land cell certification platinum diversion rating. Importantly, we have also maintained a strong safety track record with zero lost time injuries in FY26 reflecting continued focus on operational discipline and people safety. Coming to the quarterly performance during the quarter, our consolidated sales volume in carbon black business marginally declined by 2% year on year to 141271 metric tonnes. Consolidated revenue from operations during the quarter was Rupees18.46 crores and consolidated EBITDA was Rupees 231 crores. Further, in alignment with recent changes in the labor code, we have recorded a one time provision of 21 crores during the quarter of the total carbon black sales volume, Domestic sales Volume grew by 6% year on year to 89,615 tonnes while international sales volume decreased by 13% to 51,656 tons in Q3FY26.
Moving on to our segment, Performance tires accounted for 81,219 tons, Performance chemicals 43,352 tons while specialty sales volumes was up by 17% year on year to 16,700 tons. Power generation increased by 28% year on year from 161 million units to 206 million units with an external sales volume growing by around 33% year on year to 125 million units as against 94 million units in Q3FY25. Coming to the nine month performance during FY26, consolidated revenues from operations stood at 6,124 crores as against 6,317 crores in nine months. FY25 sales volume from carbon black increased 2% year on year to 4.57,092 metric tons in nine months FY26 against 4 46,110 metric tonnes in nine months.
FY25 consolidated EBITDA for nine months. FY26 stood at Rupees 834 crores as against Rupees 1,067 crores in nine months. Power generation went up by around 14% and sales volume by 18% during the nine months of fiscal year. Despite a microeconomic volatility and trade barriers, PCBL continues to strengthen its position as a diversified multi chemistry anchored in cost discipline, innovation, scalable operations and long term resilience. Now I’d like to talk about our specialty and solutions business at Aquafarm. Recently there’s been a change in the leadership at Aquafarm. Mr. Suresh Kaldra who was the CEO of Aquafarm, has resigned due to personal reasons.
Interim leadership has been placed for effective business continuity and smoother operations. In coming weeks, we plan to organize an investor day at the aquafarm facility to take you through the various steps being taken to take the business to the next leg of growth. In the short term, the business faced a challenging and external environment. There are different dynamics shaping performances across our key markets. I will take it one by one. Performance was weak as geopolitical tensions remained elevated. Like tariff under few of our products in USA and slowdown in end offtake, Aquafarm reported revenue of 327 crore and an EBITDA of 35 crores.
In Q3FY26 home care sales volumes declined by 8% on a quarter to quarter basis. Our water solutions business also faced headwinds resulting in a 26% quarter on quarter decline. Application specific solutions remained flat while the oil and gas Segment declined by 23% quarter on quarter impacted by lower oil rig counts and frac spreads in the US While lower oil prices have led to more cautious customer behavior and an indirect impact on realization. But with crude prices stabilizing and moving, higher visibility has improved. Home care and water solutions are largely supplied from India and US Tariffs on biocides and silic polymers have impacted part of the business.
While impact on home care business is seasonal. This is now expected to improve with the lowering of the US tariffs. However, we continue to focus on our opportunity funnel. In Q3FY26 we saw some strong conversations green kilates, GLDA we received a formal allocation from PNG, MENA and Europe for the first time and we are also on track to initiate suppliers to Henkel from Q1FY27 in Europe ids received reach registration and initiated commercial supplies in Europe MGD Eliquit initiated seeding through distributors in Europe in water treatment Saudi water authorities we received letter of intent from them for anti scalent for RO plants and antiforming for thermal plants both for the first time.
New Product development PBTC initiated sampling of our own products PBTC across all major water treatment companies. Oil and Gas Geographical Diversification Strong efforts are being taken to diversify business geographically with dedicated hiring across Latam region and Midlands basin. We are further looking to hire to cover other basins as well. New product pipeline includes launch of new products to ensure increase in wallet share with all our existing customers. Recent regulatory tailwinds will lead a significant uptick in coming quarters. China vat refund of 13% revocation for products like PBTC will help us to expedite sales conversions. Constructive positive movement in imposing anti dumping on China For HEDP and ATMP coming India should also have India, Europe FTA will also move the 6.5% duty on our chemical exports and of course the India U S trade deal agreed at lower tariff at 18% will also help.
We have built a well researched opportunity pipeline across green chelates, biocides and phosphonates to support execution. We are strengthening our sales organization and appointing new distributors and markets where we have limited presence such as Africa, Latin America, Canada and Australia which should enhance our market reach over the coming quarters. We are also focusing on optimization of our vendor and raw material supply base for aquafarm. Now that these initiatives are largely completed, we are confident they will start reflecting better ebitda. With this I conclude my remarks. Thank you for your attention and I now welcome your questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aditya Ketan from SMIFS Institutional Equities. Please go ahead.
Aditya Khetan
Yeah, thank you sir for the opportunity. Just a couple of questions sir. When we look in this quarter holistically so overall volumes have seen a 23,000 tonnes decline quarter on quarter basis but the realization and gross profit still looks okay like despite all the tariff related uncertainty. But again on the hindsight our fixed cost has gone up. So what has led to this steep dip in volumes and higher fixed cost during the quarter?
Nilesh Koul
Aditya, if you look at our quarter on quarter cost changes the fixed overheads have not gone up. Actually there is a saving in fixed cost, you know fixed expenses but operating leverage has played negatively and consequently when you look at EBITDA level then it is slightly lower as compared to the last quarter.
Nilesh Koul
In terms of the volume decline. It’s predominantly come from a reduction in the export volume while we maintained domestic market share. The export environment being a little more tricky is where we have lost the volume and that’s impacted the bottom line.
Aditya Khetan
How much volume sir? We have impacted because of tariffs in US.
Nilesh Koul
So it’s difficult to put a hard number on that. One of the things that happened with the US customers was that even when we were competitive because they were not sure about what the eventual duty structure would be. They were not willing to commit. We shall now see how we engage back with them and get back that volume. So there’s not a particular number I can give you. But yes it did impact us not being able to convert a lot of opportunities which were being discussed earlier in the year.
Aditya Khetan
Got it.
Nilesh Koul
Last quarter Aditya is also end of calendar year and lot of our customers in international market for them that is balance sheet period. And consequently historically we have seen some inventory reduction on their on their books and which last quarter has also kind of hit us the changes in inventory level and consequently there was impact not only in US but in number of other geographies also.
Aditya Khetan
Got it sir. My second question is sir, when we look at the current business structure we have not been able to ramp up Aquafarm like it has been a very long period of time now. So what gives us the confidence that in our future businesses like your nanoways and your superconductive grades wherein I believe a bigger share of EBITDA going ahead would be coming from the nano waste. So what gives us the confidence that that also would be a linear ramp up or the company can start the plant. What they have said, considering what has happened in the hindsight in Aquafarm we have not been able to get that number.
Can you let us know like how things will move ahead and whatever we have said can we deliver onto it.
Nilesh Koul
Aditya on Eco farm side, you know while we have not been able to ramp up in the past, that point is true. But a lot of lot of steps have been taken in the recent past and lot of regulatory tailwinds are also supporting us now which gives us a belief that next financial year you would see a significant ramp up on the volume side. If you recall we almost added 30% of capacity in Aquaform in the last couple of quarters first half of this year. And those products where we were seeing customers demanding products, having commissioned those capacities, it takes some time to ramp up those capacities which we believe will start happening going forward.
Secondly, if you see on multiple product side of ours, practically a primary reason of Aquafarm not doing well in the last quarter was a decent degrowth in the oil and gas business where lower crude prices were kind of impacting in terms of customer demand to us. But with crude slightly moving up, we believe that that demand should pick up on some of the other products. Specifically on the green kellet side where we have in the past also spoken about a very large opportunity because we see very specific movement from the customer side requirement towards Green Kelets we have added capacities in the past for green Kelets.
We are working on new capacity addition on Green Killet and from the existing capacities which we have in the past we have now after a lot of efforts and product approvals in place we have started getting orders. As Nilesh mentioned in the call for the first time we have got an allocation from PNG and from Q1. We are also looking to initiate initial supplies to Henkel and as these top end top tier customers in Europe and then in US also start accepting our product. Probably a few quarters down the line we are expecting a significant growth in the Green Killets portfolio from the Saudi facility which we have.
We have received letter of intent for some of the anti scale and products which will add decent volume to us next year. On the oil and gas segment we were primarily not present on the Latin American market which we believe will now open up and while it is little early but again now Venezuela becomes a market for us which was practically not available. Also there are a couple of regulatory tailwinds which I am re highlighting to you which is on the PBDC product. The 13% VAT removal from Chinese site will now ensure that our margin on PBDC will move up significantly and it’s a reasonably decent portfolio for us.
And last year in September end we have filed an anti dumping session with DGTR for our HDP product. HDP and ATMP both already spent almost four months on that. The investigation is in process. As and when the add is imposed on these products you would see a meaningful increase on both the revenue and bottom line contribution from the fighting. Overall while Aquafarm has not grown as we anticipated but we believe in coming few quarters you will see gradual upward movement in both top line and contribution.
Aditya Khetan
Got it.
Nilesh Koul
And if I can take on the if we can take on the Nanobase question, I think what you should get confidence from is we have, we have put together a very strong project management framework in taking this product from lab to with very strong engagement with customers already at the pilot stage, dedicated teams being hired ahead of time and I think rigor in execution is something that we are prioritizing. With strong project management I think we are very confident that we’ll be able to take it to the commercialization stage as per plan.
Aditya Khetan
Got it sir. So putting things into perspective for Aquafarm you have said like you are also starting ankle supplies in Europe by first quarter anti dumping duty imposition on HMDCs and all. So putting these things like what Sort of volume growth we are anticipating in aquaform for the next two years and similarly in carbon black. Is there any change in the volume guidance which we have earlier stated?
Nilesh Koul
On the aquafarm side, I think we should be comfortably looking at at least a 20% volume growth next year.
Aditya Khetan
But sir, this volume growth figure of 20% was despite the current order of ankle and all these anti dump. So ideally it should be much higher.
Nilesh Koul
It should be higher. Some products are under approval stage and supply ramp up. It takes time. So we have conservatively estimated at that number. We’ll be happy to report a higher growth going forward.
Aditya Khetan
And on the carbon black side, sir.
Nilesh Koul
On the carbon black side again we should be seeing growth. As I talked about earlier, we have commissioned and started up an additional soft line in TNT which should demonstrate that we are confident that volumes are going up both in the domestic market. It will be in line with the growth of the market and in the international market we expect to grow market share. So you should see a strong growth coming in. We are already seeing some green shoots in Q4 itself. But the real value will start coming in from Q1 Q2 next year.
Aditya Khetan
Got it. Sajid. One last question. So when we look at the spread cycle of history today we might be standing at the lower of the spread. And quarter after quarter management has reiterated that this is the bottom. But every quarter we see a new bottom in spreads. So just I want to know, considering all the negatives today, what we have and we are seeing US volumes ramp up inside, is it fair to say so? This number could be the bottom and from here on we could see better numbers only. And on the demand side from the tire customers, is there any visibility you’re getting like in the export market and in domestic market whether we could inch up volumes further?
Nilesh Koul
As I said, the domestic tire market demand is robust. We should be expecting single digit growth, but strong single digit growth I would say between 5 to 6%. So tire demand will continue to grow and I think we can confirm that this, this quarter is the turning point. With both international volume shaping up and the growth returning. I think you should expect better performance going quarter to quarter.
Aditya Khetan
Got it sir. Thank you. That’s it from me, sir.
operator
Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their Touchstone telephone. The next question is from the line of Suyash from Mangal Das Venice Trade and Investments llp.
Unidentified Participant
Hello, Thank you for taking my question.
operator
This is a background noise. Noise. We are not able to hear you coming.
Unidentified Participant
Okay. One second.
Unidentified Participant
Hello.
Unidentified Participant
Yes.
Unidentified Participant
So I wanted to know, I wanted to know about the nano project. The pilot project is in place. So can you tell me more about this?
Nilesh Koul
So Nanowase is a project we are entering into the battery energy segment. This is a partnership with an Australian company. So the concept in terms of Nanowase is a new way of making the product. And we are already engaged with customers in validating the properties of the product. And we have got very, very interesting and encouraging returns from them. After the pilot project is done in March, we expect a validation period of a few months before we look at final ramping up of the capacity. This is a significant growth opportunity for PCBL to diversify and get into the battery materials industry.
Unidentified Participant
Okay. And what is the expected revenue and EBITDA margins from this product for FY27 and FY28?
Nilesh Koul
So commercialization of this product is going to take some time full. We are, we are planning to put a 2,000 ton commercial plant and at full utilization level it should generate somewhere around close to about 1700 crore kind of top line and almost 50% of that going to bottom line. But the full utilization is going to take beyond 28. So our sense is that it should be end of 29 or 30, beginning of 30 that we will reach the quarterly full run rate of utilization.
Nilesh Koul
Okay, so that means the 1700 crore top line will be after 28.
Nilesh Koul
No. So while the the commercial plant should come up by 28, end of 28 utilization thereof will take still take, you know, few more quarters. You know it can take four to six quarters or maybe even more. This is little early for us to comment on that. But at full utilization level it should generate about 1700 crore of top line. And about 50% of that should be flowing down to bottom line.
Unidentified Participant
So this is the commercialization will mean end of 28, not 27. I thought this was in second half of 27.
Nilesh Koul
Correct. You are right.
Nilesh Koul
You’re right.
Unidentified Participant
Yeah. Okay. Thank you sir. Thank you.
Nilesh Koul
Thank you.
operator
Thank you. The next question is from the line of Radha from BNK securities. Please go ahead.
Radha Agarwalla
Hello sir. Thank you for the opportunity. Sir, in the investor meet you had suggested that there will be no debt reduction in the next three years as you are planning to go for higher capex which was I believe about 3200 crores. But the recent presentation mentions that there is a relief in working capital and which was used for reduction in debt. So wanted to understand is there any change in strategy on the capex and debt front.
Nilesh Koul
Okay. So Radha, we are Largely through with our ground quill expansion we just commissioned one soft line in Tamil Nadu this quarter and while the other line is also ready, I mean the commissioning might take you know, few more months but the capex have been incurred for the Andhra Greenfield. We have applied for the environment clearance and again based on our past experience we think that it will be good three to four quarters before we get the clearance from government to start the project. So next one year the capex intensity is going to be very low.
Now coming to the debt side beginning of the year also we said that we are trying to make our working capital cycle more efficient and that’s where we have worked. So partly because of our being able to negotiate better credit terms with our vendors and our customers and better inventory management we have been able to reduce the overall working capital and also because crude came down in this period so that has also supported now on a net debt basis there is already a reduction of about 400 crore plus in the first nine months and we believe that by end of this year we should see about couple of hundred crores for the reduction in the debt.
Radha Agarwalla
So how much capex are you expecting for FY26 and FY27 26?
Raj Kumar Gupta
It will add up to about 550 odd crores. So far we have spent about 400 crores. There’s one specialty line which is underway currently but that’s the number for the current year. Next year it should be somewhere around 300 to 400 odd crores.
Radha Agarwalla
So 26, 550, 27, 300 to 400 crores.
Raj Kumar Gupta
And 2027 we expect sub 400 crore capital expenditure which includes maintenance capex and capex on nanovase part, some capex there, one acetylene black line would come that and maybe some small capital expense expenditure in aquafarm.
Raj Kumar Gupta
Okay.
Raj Kumar Gupta
Secondly operationally rather for next year we will be spending more effort on utilization rate improvement in India because we have lines which are yet to get commissioned which is what will happen by the end of this quarter so that we will have additional capacity available, effective capacity available next year which is in line with the growth ambition we have earlier talked about.
Raj Kumar Gupta
Actually previously our CapEx guidance were more aggressive than the current numbers. So in terms. So that was because we were expecting a higher growth in terms of volumes in our business. So since you have reduced the near term capex estimate, is there also a reduction in terms of volume growth that you were expecting previously in your business versus now.
Raj Kumar Gupta
In terms of the midterm to long term prospects of the Industry the dynamics remain very positive and therefore the guidance that we gave we are on track to achieve that. And therefore we have also applied. We have acquired this land in Andhra and applied for environment clearance. But these are all regulatory processes which eat some time and therefore this delay in incurrence of capital expenditure. But brownfield expenses, brownfield expansion we have already completed. There is some brownfield expansion which will happen next year and by that time we will also receive the environment clearance and we’ll start working on the first phase of Andhra.
So from four to five years kind of a perspective we remain very much on track.
Radha Agarwalla
And from next one year perspective sir.
Raj Kumar Gupta
Next one year perspective also.
Raj Kumar Gupta
Nilesh just mentioned that domestic market we expect to grow at industry growth rate about higher single digit maybe around 5, 6% and international market we are still very small compared to the overall opportunity and that’s where we are trying to garner a bigger share. We have plans to invest more in infrastructure which will give us inroads into some of the high margin markets.
Radha Agarwalla
Can we expect double digit growth in international market mid teens?
Raj Kumar Gupta
I don’t think honestly, honestly speaking in immediate next one year because the geopolitical situation is still very volatile. We are targeting double digit but I think in FY27 it will be very high single digit.
Radha Agarwalla
Understood. Secondly, the CPT mentions that company has embarked upon a cost optimization drive in carbon black segment which can reduce the cost by 200 crores. First question is can this be done in ACPR also? And second if you can give us some roadmap as to which are the. I mean if there is a yield improvement then from what to where are we targeting any more color on this?
Raj Kumar Gupta
So it’s a widespread project that we have taken which is multifaceted. So it’s starts with procurement where we are looking at diversifying our feedstock. So we expect 1 to 2% improvement there in yield across different grades. We are expecting further improvement. This is projects where we have already finished our pilots and now we are looking at expanding and horizontally deploying these solutions on productivity improvement Also through the use of digital and analytics we have got projects now which will deliver productivity improvement for us as well. Even on quality side we are going to be looking at reducing off spec production within the production cycle.
This is not quality that goes to the customer that we are very very good at. But within the manufacturing process any off spec generation reduction improves both yield as well as productivity. So we’ll look at that. On logistics there is an opportunity for us to improve. And as I said on the Procurement side, also, we see opportunity to improve our cost. So we have spent the last 60 days in identifying these projects and they are now in the execute phase. Of course, we won’t have a 100% hit rate, but we are fairly confident that this program is going to deliver on the promise that we are making today.
Radha Agarwalla
And the last question to you, sir, Mr. Cowell, so since you joined, it has been three months, so you must have understood about the company and the pain areas of the company. So according to you, what are the current pain areas and what changes are you planning to bring to create value for the shareholders?
Nilesh Koul
I think yes, it’s been nearly three months now and I’ve visited all our plants and met up with a lot of our customers. I think what I can confirm to you is that the fundamentals are very, very strong. I think we have got excellent people, there is a huge amount of ownership, there is excellent execution on the field that is happening and there is a willingness and openness to change. And therefore we are embarking on some of these projects with the help of external consultants as well. So what we have already started doing is getting some external consultants and experts to advise on some of the projects I was talking about earlier in terms of yield and in terms of productivity improvement and I think in terms of the feedstock diversity, that’s an opportunity for us to leverage.
The other opportunity for us to leverage beside the value added part of the business, which is nano waste and other battery materials, where we are strengthening the team and creating more focus, is that key account management with international players, which also requires us to invest in the supply chain assets in specific geographies. Especially with the improvement in FTAs which are coming through Europe, certain geographies will become very interesting for us. So it’s not just about appointing a distributor or supplying directly to the customers. One of the areas we will try to improve is reduce the lead time for customers by putting in supply chain infrastructure in specific geographies.
Not everywhere, but in a few specific geographies, which we believe is one of the key asks of the customers. So with these initiatives, I think we have the people to do it, we have the focus to do it. And we have now embarked on creating a roadmap in which each of these milestones is going to be tracked very rigorously to deliver on the promises that we make. I hope that helps.
Raj Kumar Gupta
Yes, sir. Thanks and all the best.
Raj Kumar Gupta
Thank you.
operator
Thank you. The next question is from the line of Sanil Jain from Ambit Capital. Please go ahead.
Aditya Khetan
Hello. Hello. Yeah, so just one question. I have, sir. What is the EBITDA per ton for the carbon black business for the third quarter as well as nine months of FY26? And do we expect to maintain the guidance of 25,000 per ton over the next two, three years?
Nilesh Koul
Well, third quarter we had 13,800 rupees EBITDA per ton. And this number for nine months is 15,300 rupees. Okay, what was the next question? Sorry, Sunil.
Aditya Khetan
Projections and the guidance. Yeah, sorry.
Nilesh Koul
So beginning of the year, in earlier earning calls we had spoken about all the initiatives we are taking on our product portfolio improvement side, manufacturing efficiency. Right. And the operating leverage playing its role as we grow higher in terms of volumes and capacity, all of that, I’m not talking about immediate short term, but four to five years. We stick to our earlier guidance, the potential is huge and we should be reaching somewhere near 24, 25 rupees in next five years. That’s how we see it.
Aditya Khetan
Okay. Okay, thanks. That’s all from my side.
operator
Thank you. The next question is from the line of Shashank Kanodia from ICICI Securities. Please go ahead. The next question is from the line of Ashwini Singh.
Aditya Khetan
Yeah. Hello. Yeah, my audible.
operator
Yes, you are.
Nilesh Koul
Yes.
Aditya Khetan
Okay. So with the European FD and American tariffs reduction in place. So would you like to quantify what percentage gains in volumes you expect in exports for FY27? And considering crude at 65, which is lower than your comfort zone of 72 to 75 USD, what should be the overall margin profile of PCBL in FY27?
Nilesh Koul
Okay, I’ll answer the second part of the question. The first one responds. The crude as such doesn’t impact our margin in absolute terms.
Aditya Khetan
Okay. Right.
Nilesh Koul
So the moment in crude becomes built in into the pricing and passed on to the consumer customers on a very macro level. I mean there are some segments of course which is, which is kind of impacted by change in crude prices. But it is more about demand and supply dynamics than the moment in crude. Right.
Aditya Khetan
Okay.
Nilesh Koul
In terms of the volume, I think it’s a dual question. One, what we did when the tariffs went up from 10% to 50% is we stayed engaged with our customer base which did result in us taking a little bit of a hit on profitability. But we were expecting that tariffs will settle down, which is what has happened right now. However, it will take us a few months before the customers are able to switch back over to us. So I expect growth to happen in terms of volume as the competitiveness improves. With the US and European customers.
The other element which we have to focus on is also the building of the infrastructure, the supply chain infrastructure in these locations, which is something that we have embarked on. I think a combination of that will deliver volume growth. I’m not able to quantify it for you right now, but I expect strong growth from both these markets, especially with focus on a few select territories where we believe the investment in local supply chains will impact both volume as well as profitability.
Aditya Khetan
Okay. And sir, I have one more question. So would you like to stick to the FY29 pad guidance of 2014, 500 crores as was claimed by the earlier MD of PCBL around I think in 2024. Or do you wish to, you know, postpone or revise that guidance?
Nilesh Koul
No, we don’t want to make any changes in our long term guidance now because all the levers which we built into our numbers for 29, those are still working and work in progress. Very much work in progress.
Aditya Khetan
One last question is like this quarter there was no dividend declaration. So this is probably the first time it’s like in many years in Q3 there’s no dividend. So earlier in Q2 you had a dividend, but it was termed to be an interim dividend. So would you like to comment anything about what should we expect on the dividend policy going forward?
Raj Kumar Gupta
Typically if you see last few years the board has declared the interim dividend either in Q3 or Q2. And while last financial year it was in Q3, this time the board choose to deliver on Q2. And currently I think at the board there was no proposal to go for any further round of dividend. So overall in the past few years typically we have been maintaining a payout of 40, 45% to 50% kind of a range. And generally we should be able to maintain that going forward.
Aditya Khetan
Okay, sir, thank you. Thank you so much.
operator
Thank you. The next question is from the line of Disha from Sapphire Capital. Please go ahead. Hello?
Raj Kumar Gupta
Yes, Disha.
Unidentified Participant
Am I audible sir? Yes, yeah, I just wanted to know what’s the total capacity spending for the nano waste plant?
Nilesh Koul
On the commercial pilot plant it would be just about four, five million dollars.
Nilesh Koul
And.
Nilesh Koul
On the full scale our current estimate gives us a number of about between 25 to 30 million dollars.
Unidentified Participant
And this we’re expecting to commercialize by the end of FY28, right?
Aditya Khetan
Yes.
Unidentified Participant
Okay, so what’s the utilization that we’re targeting for 29?
Nilesh Koul
So this is something that we will have a better hang of after the pilot Results are in and further qualification of the material happens. But we expect after qualification the ramp up to be fairly, fairly quick.
Unidentified Participant
Okay, so can we expect to reach peak by beginning of FY30?
Nilesh Koul
FY30 I think we should be seeing closer to where we want to target in terms of utilization. But as I said, it will require us to work on further downstream applications of nanowase and work with customers and see how that supply chain improves as well. But yes, we are confident that the ramp up will be passed.
operator
Okay, all right, that’s it from my side.
Unidentified Participant
Thank you.
operator
Thank you. The next question is from the line of Sanjay Jain from ICIC Securities. Please go ahead.
Radha Agarwalla
Thanks. Thanks for the opportunity. I got few question first on the euro. This euro 7 norms are being proposed to be started from November of this calendar year where for the first time there is a pollution norm getting introduced for the braking and the tire, which should mean that there will be a much stricter regulation and hopefully that should benefit somebody like us who has a stronger legacy in the carbon black business. Are we preparing anything for that or is that will be a game changer for us in terms of winning more market share and all? Can you help us understand that?
Nilesh Koul
So we are working very closely with the customers in developing new solutions for them. And you’re absolutely right. Our hope is that we should be able to increase our market share in the European tire customers. We are also working on in our Belgium R and D center on developing unique solutions for the EV ecosystem as well. Because that’s where a lot of growth and request for innovation has come from customers. So on both these fronts we are working very closely with customers so should benefit us in the medium to long term.
Radha Agarwalla
Got it, Got it. Second, now that crude has either stabilized, has increased from the lows we have seen, I think there could be some demand from the restocking. Are we looking at some restocking demand because crude is stabilizing or moving up? Any of those signs are visible today.
Aditya Khetan
For us.
Nilesh Koul
As of now we haven’t seen too much of that yet. But let’s see if the uptick continues because there are different models people are using in terms of what the trajectory is going to be. We haven’t seen any uptick right now, but if there is, we’ll be more than happy to support that.
Radha Agarwalla
Got it. My third question is on the domestic business. It appears that auto is doing very, very well while our domestic sequential numbers have declined. Anything that we have picked up for us to not do as good as auto OEMs.
Nilesh Koul
I think from a there is one is the seasonality issue which played a little bit of a role in quarter three. Second is that there has been additional capacity in the domestic market which has come in as well. So there is some jostling for market share which has happened. However, our market share with tire companies continues to be robust and we continue to stay engaged for long term relationships with them which are beyond transactional in terms of co creating and working together for long term strategic partnerships which should help us continue to stay in a good, good strong position in the tire market.
But yes, we expect to leverage the growth which we are expecting of the domestic tire market in around 5 to 6% growth next year as well.
Radha Agarwalla
Got it. One last question on this US tariff side. Earlier in the call we have mentioned that the US business was not profitable due to the tariff. This was still yesterday. Today we have an 18% tariff that the US business become profitable equal to the existing run rate with the 18% tariff. Or we will still see this 18% is increased from 0%. That will still have some kind of an erosion in the profit from where we started say a year back.
Nilesh Koul
No, we should see a significant improvement. So we started from a 10% tariff where the effective tariff on US is roughly around 4% because we source CBFs from the US so there is an offset that we get this 18% also will see the effective rate being less maybe around 8 to 9% or so. So we definitely see margin improvement happening and equally importantly we hope to see volume improvement happening as well as customers get more confidence on the stability of the tariff rate. The customers were more worried about the unstability and unpredictability of the tariff than on the absolute number.
So we should see improvement in both.
Radha Agarwalla
India now relatively tariff lower within the Asia peers. Will that put us in a better position to supply to the US versus Chinese?
Nilesh Koul
Short answer, yes. But as I said we need to do more work. We need to put in the infrastructure. We need to wait for some of the customers who have entered into medium term agreements with their other vendors, local vendors, so that it might take a little bit of time. But yes, definitely overall we should see better competitiveness from us compared to some of the other Asian players.
Nilesh Koul
And China doesn’t supply much to us. It’s a very small, I mean they do some annually some 10, 15,000 tons.
Radha Agarwalla
Okay, that’s it. Yeah, I think, I think the tire supply has increased. I think that is where at least Global carbon black OEMs have been talking of significant dumping of tires from China to North America and South America that that scenario is not changing. Right. Or you think Indian tire exports will become now competitive? Because I think section 232 remains unchanged. least that’s what the news is.
Nilesh Koul
Yes, we’ll have to observe it but yes, you’re right on that. And there is of course also additional capacity being set up in Latin America as well as America on the tire investments. So in the medium term we should see for more demand for carbon black as tire capacity increases. There.
Radha Agarwalla
Got it. Got it. Yep, that’s it from my side. Thanks. Thanks for answering all those questions and best of luck for the coming quarters.
Nilesh Koul
Thank you.
operator
Thank you. The next question is from the line of Bharat Set from Quiz Investment Advisors. Please go ahead.
Aditya Khetan
Hi sir, thanks for the opportunity. My all question have been answered. I have only one question. When we are talking of a yield improvement. So what kind of a improvement? Currently we have at Tamil Nadu which is a new plant vis a vis old plant and where do we reach have a strategy to improve when you talk about yield improvement measure.
Nilesh Koul
So just to give you. So some of the interventions we are looking at is for example the type of refractories we are using. We’re getting international consultants to come and support us on that and minor capex investments to improve efficiency. So we should see a 1 to 2% improvement in the near term with some of the interventions that we are.
Aditya Khetan
Planning near term in the sense that when you are talking of two year plan. Correct.
Nilesh Koul
Is that fair understanding that improvement might come earlier? As I said earlier we have done a pilot test and there we have.
Aditya Khetan
Been.
Nilesh Koul
Yield improvement and now it’s about horizontally deploying this across the other plants.
Aditya Khetan
Okay, medium term what kind of again improvement that are we looking for?
Nilesh Koul
I think we are looking at a minimum 1% improvement. Of course there is multiple other initiatives. This one is attributable to one specific new intervention that we are making. But there are other projects being identified which might take. There’ll be different phasing for multiple different initiatives to come into play. But I would say over the next two quarters we should start seeing this improvement.
Aditya Khetan
Okay, thank you. Thanks and all the best.
Nilesh Koul
Thank you.
operator
Thank you. The next question is from the line of Shashank Kanodia from ICIC Securities. Please go ahead.
Aditya Khetan
Yeah. Hi Grafton. Sir, just wanted to check sir, can you share the geographical mix of your exports? Apologies if you have already shared that and I’m missing the initial remarks.
Nilesh Koul
In international market about 50 odd percent goes to Southeast Asia, about 20% to Europe, 13, 14% to US. And this is spread across Middle East, Africa and Australia New Zealand.
Aditya Khetan
Right. So this is for the current quarter. So is this at a normalized level? Does this factor in the.
Nilesh Koul
I’m talking about the average of current year.
Aditya Khetan
Okay.
Nilesh Koul
Earlier, I mean two, three years back our Asia weightage was much more. It was almost about 70% more than 65% now. And Europe was very small, about 4 or 5%. So from there our North America and Europe volumes are on an increase.
Aditya Khetan
So effectively for the 13, 14 volumes will tend to benefit from the reduced US tariffs.
Unidentified Participant
Right.
Nilesh Koul
It is not exactly US tariffs. Like I try to explain that there’s also inventory destocking partly because of December being balancing month for number of our international customers. And also crude price has seen some correction, you know, continuous correction. And when that happens and typically the inventory level goes down in the system. So both things and also in some of the market, some of the customers where our margins were very low, we took a conscious call to reduce volumes.
Aditya Khetan
Right. And second in the case of Aquaform also you have manufacturing facilities in US Middle east and India. Sir, in the case of Aquaform you have the manufacturing facilities spread across US Middle east and India. So from India do we export to us in the case of Aquaform as well?
Nilesh Koul
Yes, we do.
Nilesh Koul
And what proportion that’s very small business. That’s, that’s more kind of raw material to, you know, for some of their end products. But in terms of overall percentage of their business, India business it will be like 4, 5%.
Aditya Khetan
Right, right. And in our broader scheme of things we were supposed to spend 3,000 crores incremental growth capex. Right. And you have considerably downward revise your CAPEX guidance for this next year. So by effect on T8 onwards do we, you know, pent up our CAPEX plants or it’s going to be at the similar levels going forward as well? No.
Nilesh Koul
So when we spoke about CAPEX plan that was kind of addition of all the brownfield expansion, greenfield expansion, the new projects in the conductive segment and also bed for the aqua firm. So part of that expenditure Sachan we have already incurred like the brownfield expansion in Tamil Nadu is complete. The specialty expansion in PCBL Mundra that is also about to get completed. The pilot plant of nanovase is ready. Ethylene black plant will come up next year. So it is not that we are cutting down on the size of our expansion plan. It is only that part of that we have already incurred and part is waiting to get started pending some approvals from the government.
Which is a green field primarily we.
Aditya Khetan
Were supposed to do a downfield expansion of 90,000 tons said Tamil Nadu.
Unidentified Participant
Right.
Aditya Khetan
So has it been in two parts?
Nilesh Koul
So that 90,000 ton included one soft line and one hard reactor. The soft line, 60,000 ton that is already commissioned. The hard line is currently under trial runs and we would announce commissioning of that too soon.
Aditya Khetan
Okay, thanks. Is there any possibility of advancing commissioning of a nano silica plant? Because that is something which is kind of interest to.
Nilesh Koul
So it’s. It’s. It’s a new technology. So we want to take it step by step. We want to ensure that the pilot project goes well so we have enough adequate focus on it. We are continued engagement with the customers. But I think it’s best to do it in a structured step by step way rather than trying to rush it and then sort of not being able to deliver on the promise. So as I said, new technology, we should have the pilot on time. And engagement with customers will dictate if we want to fast track this or not.
Aditya Khetan
Our FY30 plans included 2000 tons of nano silica plant recommission. So that remains unchanged, right? Or is it now scaled back to thousand tonnes?
Nilesh Koul
No, we have not made any changes yet. As I said, the pilot project will dictate the next steps on this one in terms of timing. But as of now we continue to hold on to that. The next phase will be a 2,000 ton plant.
Aditya Khetan
And last thing, in the case of Aquaform, last call guidance was 75 crores of EBITDA at the existing run rate. So do we stay by that guidance for Q4? For the case of Aquaform.
Raj Kumar Gupta
Next quarter we expect improvement from the current run rate. But yes, the Ebitda guidance will be slightly delayed, right?
Aditya Khetan
And on the dividend payout, sir, you said that you maintain 10 to be at 40, 45% of fat. Last quarter you already distributed 226 odd crores. Do you feel you’ve gone overboard on dividend payout this time?
Raj Kumar Gupta
From the current quarter’s profitability, if you add up, you know the overall payout will look high. But from a normalized level, you know it would still be that 45, 50% kind of a payoff.
Nilesh Koul
One thing I’ll add here, Sachan. The visibility around performance and cash flow remains very strong. And therefore the board has decided not to reduce dividend payout for now.
Aditya Khetan
Sure sir. Thank you so much and wish you all the best.
operator
Thank you. The next question is from the line of Aditya Ketan from SMIFS institution EQUITIES please go ahead.
Aditya Khetan
Yeah, thank you sir for the follow. Sir, my question is on to the feedstock. Sir, you mentioned that you are looking at coal tar also as a feedstock and some 1 to 2% benefit from it. So currently our raw material mix is of the CBFS which is a mix of each stock like an anthracite, quinon and petroleum oil. So then moving towards coal tar or carbon black oil, how benefit it is in the near term. And also can you share the difference in price between CBFS and CBO as on today?
Nilesh Koul
So we have predominantly being operated in the cbss which comes from the crude and now we are looking at diversifying. So it’s a strategy to diversify and sort of ensure that in different market cycles we are equipped to mix and match. The other advantage is that we produce a lot of different grades and types of products which have different quality requirements in specifics. Like for example, as an example now if you are able to blend the products together, we should see improvement in both being able to deliver quality at a lower cost as well as diversify our sources of feedstock.
So it’s more in that direction. So we continue to work on it. In the past also we used to use coal tar based products as well. So it’s a question of optimizing that flow and building optionality for ourselves.
Aditya Khetan
Got it sir. And the difference sir in prices.
Nilesh Koul
About $200 per ton.
Aditya Khetan
Okay, okay, got it sir. My second question is onto the EBITDA per kg number which you have mentioned of 2425 rupees per kg. So this number includes the new age businesses also EBITDA. This is your core carbon black EBITDA.
Nilesh Koul
No, that is carbon. That’s carbon.
Aditya Khetan
Okay, so carbon black EBITDA like 24, 25 rupees per kilogram seems like on the higher side because the current number looks quite lower. So what is that confidence like into to get this sort of a number?
Nilesh Koul
I think we are looking at both sides in terms of efficiency improvements so that there’s a cost reduction as well as realizing better premiums given we are going up the value chain in terms of different types of carbon black products as well. So a combination in the medium term we are fairly confident that we will hit that number.
Aditya Khetan
Okay sir, got it. Thank you sir.
Raj Kumar Gupta
Thank you.
Nilesh Koul
Thank you.
operator
Thank you ladies and gentlemen. That was the last question for today. Thank you on behalf of ICICI securities limited that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.