Ladies and gentlemen, good day, and welcome to the Lords Chloro Alkali Limited Q4 FY 2026 earnings conference call. As a reminder, all participant lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Smit Shah from Adfactors PR for opening remarks. Thank you, and over to you.
Thank you. Good afternoon, everyone, thank you for joining us on the Q4 and FY 2026 results conference call of Lords Chloro Alkali Limited. We have with us Mr. Ajay Virmani, Managing Director. Before we begin, I would like to remind you that certain statements made in today's discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available in the Q4 and FY 2026 results presentation that has been uploaded on the stock exchanges and website. I now hand over the call to Ajay sir to begin the proceedings. Thank you. Over to you.
Thanks, Smit. Good afternoon, everyone. I'm Ajay Virmani, Managing Director, Lords Chloro Alkali Limited, and I welcome you to Q4 results and the full year 2026 earnings call. I'm pleased to report that the financial year 2026 has been a landmark year for Lords Chloro Alkali Limited. The hard work and disciplined execution across our operations have translated into strong financial outcomes that reflect the structural improvements we have been building over the last one or two years. Our total income for financial year 2026 stood at INR 393.1 crore, a growth of 44.62% year-on-year. Our profit after tax for the full year reached INR 28.49 crore, this is PAT, which represents a growth of 360.9% over financial year 2025. These numbers reflect the power of operating leverage when volume growth is combined with cost discipline. The foundation of this performance was healthy volume growth.
Our caustic soda lye volume for the year reached 84,690 metric tons, up 29.7% over financial year 2025. In Q4 financial year 2026, specifically, volume stood at 20,935 metric tons, up 8.72% year-on-year. This growth was driven by strong demand for our key end-user sectors, aluminum, paper, textiles, pharmaceuticals, and our ability to service this demand reliably from our expanded production capacity. Friends, on profitability, our full year EBITDA came in at INR 66.38 crore, a 159% increase over financial year 2025. With the EBITDA growth of 16.89%, an improvement of 747 basis points year-on-year. For Q4 financial year 2026, EBITDA was INR 13.72 crore at a margin of 14.03%, up 141 basis points year-on-year and 247 basis points quarter-on-quarter.
The sequential improvement in Q4 margins reflects both better operational efficiencies and our ongoing renewable energy integration, despite a headwind from higher grid electricity rates that came into effect from October 2025. On Q4 specifically, total income was INR 97.75 crore, up 22.3% year-on-year. chlorinated paraffin wax also contributed meaningfully to revenues during the quarter alongside the steady growth in caustic soda lye volumes. PAT for Q4 was INR 4.39 crore, up INR 68.64 crore over Q4 financial year 2025. While Q3 financial year 2026 saw elevated margins north of 20%, Q4 was partly impacted by higher power and fuel expenses owing to the grid electricity rate revision.
We expect this headwind to ease meaningfully once our 21 MW solar plant in Rajasthan is commissioned around mid-June 2026. On the balance sheet, our shareholders' funds stood at INR 242.52 crore as of March 31, up from INR 181.67 a year ago, reflecting strong earnings acceleration during the year, as well as successful completion of our warrant issue, which has strengthened our equity base and financial flexibility. Total assets stood at INR 478.7 crore.
The long-term debt was INR 96.37 crore and short-term borrowings INR 65.58 crore, resulting in a debt to equity ratio of approximately 0.67x. Capital work in progress stood at INR 43.85 crore, reflecting the ongoing 21 MW solar project and the caustic soda and CPW capacity expansions. Friends, energy remains our single largest cost component and our biggest lever for long-term margin improvement. Power and fuel costs accounted for 61% of our production cost structure in FY 2025.
Through the commissioning of our 16 MW solar plant in Bikaner and 10 MW hybrid wind solar group captive project in Jaisalmer, we have brought the ratio down to approximately 42% in financial year 2026. This is a meaningful improvement, and we are only partly through our renewable energy journey. Our 21 MW solar plant is expected to become operational by mid-June 2026. Once commissioned, our total captive renewable capacity will be 37 MW plus 10 MW from the group captive project, taking our renewable energy share to between 40%-45% of our total power requirements. This will further reduce our energy cost per ton, improve our EBITDA margins on sustainable basis, and reduce our carbon footprints. We believe this positions Lords Chloro as one of the most energy efficient caustic soda producers in India.
On our CapEx program, our total outlay of INR 315 crore across FY 2024 to FY 2027, FY 2028 continues on track. The first phase of INR 150 crore covering the 90 TPD caustic soda expansion and a 16 MW solar plant, and also the equity infusion into 10 MW hybrid project has been completed. We are now executing the second phase of our captive solar plant of 21 MW, the CPW capacity expansion from 50- 100 ton/ day, and the further 100 ton/ day expansion of caustic soda plant. Post-expansion, our total installed capacity will be 360 ton/ day. Since we'll be decommissioning an old 40 ton plant, otherwise the capacity would have been 400 ton/day, but the resulting capacity will be 360 ton/day, adding 100 ton/day and reducing 40 ton/day, so it will be 360 ton/ day.
These projects are being funded through a mix of internal accruals and debt, keeping our balance sheet healthy and leverage at manageable levels. As I earlier mentioned, our debt equity ratio is pretty healthy. From a strategic standpoint, what we have achieved in financial year 2026 is not just a strong set of numbers for a single year, it is the confirmation that our thesis of building a green, efficient, and scalable chemical company is working. Our renewable energy investments are delivering measurable cost savings. Our capacity expansions are being absorbed by a healthy demand environment. Our CPW business are converting chlorine, historically a volatile byproduct, into a value added downstream product is improving our product mix and providing greater stability to the overall business. Our focus on serving the North Indian market, where state economics protect our pricing power continues to be a structural competitive advantage.
On the macro front, on the industry environment, the Indian caustic soda industry with an annual capacity outlay of 6,400,000 tons, accounting for 5%-6% of the total global capacity, continues to grow in line with India's GDP trajectory. India has now transformed from a net importer to a net exporter of caustic soda, which reflects the competitiveness of our industry. Looking ahead to FY 2027, we are optimistic about the demand environment. Realization for caustic soda lye have shown improving trends on a quarter-on-quarter basis, supported by strong domestic demand across our key end user sectors as well as global commodities backdrop. We expect this position momentum to sustain. As we enter FY 2027, we remain focused on three clear priorities, operational excellence, energy cost reduction through our renewable initiatives, and disciplined capital allocation.
The commissioning of our renewable power infrastructure over the coming months is a significant milestone that we are confident will contribute meaningfully to margin stability and long-term competitiveness. Financial year 2026 marked an improvement in inflection point for Lords Chloro Alkali. The strong growth in revenue and profitability is the result of deliberate investments and disciplined execution over several years. We remain committed to creating long-term value for all our stakeholders through our continued transformation into green chemical company powered by renewables. I would like to thank all the investors and analysts for their continued support and engagement with the company. I'll be very happy to take questions if there any. Thank you.
Thank you. Ladies and gentlemen, 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. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to ask a question, please press star and one. We take the first question from the line of Shubham from Raas Capital. Please go ahead.
Yeah. Hi. Thank you for the opportunity. My first question is a bookkeeping question. I think we had some shortfall in energy from our consortium to the tune of 97 lakh units. If you can explain the accounting for that, and if in coming quarters we receive that energy units, so is there going to be some impact on our power expenses?
See, I tell you, we infused into this group captive project of 10 MW wind and solar hybrid. The power was to come to us from October, and there was some grace period as per the power purchase agreement. They were allowed the period up to November to supply us the power. From November onwards, they were to give us some dedicated number of units every month. Their implementation of wind project got delayed. The solar started operating. That also increases. Now the wind project, it is 100 MW project, out of which 10 MW we have contributed. The solar 100% has been completed at 100 MW. The wind, till now, also 65 MW is commissioned. By next month, the full 100 MW will be completed.
Okay.
The projects are getting completed. This is the first phase of the project. The project is getting completed over phases. The number of committed units, minus whatever they could provide to us, is the number of units which is reflecting, and this is as per the share purchase agreement which we have executed with them. Now that the project has been completed, there were some issues about the battery installations also, storage batteries. Now that the government has mandated that also has come on site. I don't see now any issue remaining on the project. This year, we should see the full number of units which we were to get getting from June onwards.
Okay. The credit amount that we have done under power expenses, so that is not reversible, right?
No. It is as per the share purchase agreement.
Okay. Got it.
Share purchase and the power purchase agreement.
Got it. Also, a question on growth. I think we are operating currently at 80% utilization, and our new capacities are coming online at the end of FY 2027. How do you foresee growth for the next couple of quarters? Because we are already operating at, I think, max capacity.
Okay. You see the demand growth is around 5% all over India, 5%-6%. North India, I would say 4%-5%. This year, there's no capacity coming up in North. Our capacity which is coming up, there are only four plants in North of India, and we are the only one who's expanding, and none of the other three units has announced any capacity addition for the next, say, 15-18 months period. By the time we come out, because even if they announce, then they have to buy machinery, install, do everything. I don't see any capacity coming up in the next two to two and a half years, additional capacity coming up in North of India. I don't find any problem.
Rather, I think we will be in a situation where the demand will be more than what we will be producing.
I get that, I was asking more on the basis of quarterly growth. Because our 100 TPD caustic is coming at the end of FY 2027, and same with our CPW capacity. Given that our current capacities are running at 80% utilization, for the next couple of quarters, how are we thinking about growth? Is it only because?
See-
Yeah.
Yeah. Tell me, please. Complete your question.
No. Yeah, I'm done.
Okay. I tell you, this quarter, the prices have been pretty good. There has been a little shortfall in the capacity because of the war situation, I see that the growth cycle taking place for the next one year, we will have 82%-85% capacity utilization, which we are posting in the last so many years. We will make up that. The capacity utilization at the best, 85% around or so will continue to happen.
Got it. Also, in last quarter, we had announced that we are going to have sulfuric acid capacity as well, but I think we have, for some reason, not going ahead with it. What was the reason for that?
See, tell you, sulfuric acid, as a chemical, we had two reasons to get into sulfuric acid business. One was for per se adding a new chemical line. The second reason was When you make sulfuric acid, you create a lot of heat energy, which we were wanting to use for our own products, because we are adding flakes also to our kitty of products.
Yeah.
Right now, we're making caustic soda lye, but we'll be adding flaking unit also. We were thinking of using that heat energy for that. You see the sulfur situation all over the world for the last six to nine months has been very volatile, and especially how the war has started three months back. The sulfur position is very erratic. We don't know how the situations are going to ease out. We have deferred that for a little bit a while so that the situation stabilizes. Right now, it is not making any sense. I said in my address also that we want to do a prudent capital allocation. It's not that we are not thinking about it's not that it is not on the radar, but right now, it's on a back burner because of that.
Okay. Got it. One on industry level. We've seen that prices shot up in March. I think they have again come back to the pre-war levels. Is it because more capacities, which was initially export-oriented because of the shutdown of many international plants, so those capacities have been shifted to domestic market? What has happened, if you can give us a sense of last quarter and current situation?
I missed out the first two lines of the question.
The prices of caustic, I think in March, they shot up, and then again, currently, they are back to the pre-war level, if I'm not wrong.
No. They're still much elevated than the pre-war levels. They had gone quite high. You see, anything which goes up very suddenly has to come down to a reasonable level.
Yeah.
It had gone drastically up, almost 30%-35% up. It was not sustainable. World finds its own way. It's like water. The world finds its own balance on a long run. Within three months, some balance has come into the situation, but the prices are still, I would say almost 12%-15% higher.
Okay, got it. With regards to capacity shifting from exports to domestic, are you seeing any excess supply in the market?
No, I don't see that the capacity is shifting from export to domestic much. Now, a lot of orders are coming from European market and the products are going that side. There was a lull because of the freight, and the ships not getting available for some time. Now the things are getting back.
Okay. Got it. That's all from our side. Thank you and good luck.
Yeah.
Thank you. Participants who wish to ask a question, please press star and one. We take the next question from the line of Prisha Shah, an Individual Investor. Please go ahead.
Good afternoon, sir. I have couple of question.
Yes, sure.
Firstly, your EBITDA margin has improved around 747 basis points year-on-year to around 16.89% in this year, but Q3 was stronger at around 20%+ growth, while Q4 came at around 14%, 15%. I just want to understand what exactly drove this sequential margin compression in Q4. Was it purely because of the grid electricity rate hike in October, or were there any other factors which came into play?
You see the increase in rate when we compare between Q3 and Q4, it is same because the rate revision came on October 1st. Even the third quarter took the full impact of the price increase and the fourth quarter also, it was a similar situation on the grid rate. The prices had come down a little, in comparison from quarter three to quarter four for caustic soda. One of our electrolyzer was shut down for changing of anodes and cathodes, and changing of membranes. That is why the power consumption was little higher in the last month or so. That is why you see a little dip in EBITDA.
Correct.
I'm sure we completed our renovation and now I think the coming quarters it should catch up.
Could you tell me if it's okay or no? My other question is related to the power and fuel costs, which also rose at around INR 165 crore this year, despite our solar plant being operational this year. I just want to get an understanding on the net saving from the renewables in this year and what the power cost have been if without the 16 MW solar plant that we have installed.
You see, I may not have the figures right in front of me right away. I suppose, what if the solar plant was not there, what could have been my power cost? Let me just tell you that the grid rate landed to us is around INR 8.2 or INR 8.3 per unit. Any additional solar brings a lot of saving into the whole thing. Like I mentioned in the beginning that our renewable energy thing is around 15%- 20% now, which will go up to around 40% with our 21 MW project getting commissioned and the 10 MW giving us full power. The power and fuel went up mainly because of the increase in the grid price from the last two quarters. In total yearly, kind of figure, you see a higher figure because in six months there was a very steep increase.
Our landed cost was around INR 7 per unit of power. It went up to INR 8.2, INR 8.3, depending on the variable charge. It was a very steep increase of almost 15%-18% in the power rates by the DISCOM. That is why the figure is higher.
Okay. That answers my question, sir. Regarding the raw materials also, which the cost have doubled nearly. Was it driven by the volume increase at large or are we seeing any input price inflation? Also, I wanted to understand what are your key raw materials and how much pricing power do we have?
Our key raw material other than power is salt. Salt is also we do a yearly contract, and then there are some purification chemicals. The prices of the salt we entered into a contract a year back. There is no variation in the salt price, which is roughly around 11%-12% of our total production cost. The other chemicals and additives which we use to purify that brine, their prices have gone up by almost 20%, 25%, in some cases 30% also. They have a 1% or 2% percentage total cost impact on the total thing. Salt is something, the figure which you see on the higher side is because of the higher production.
The cost is variable that you use a certain kind of salt for one ton of, say, to be very precise, 1.61 tons or 1.62 tons of salt for every ton of caustic. That is why you see that because the production has increased, so the value of salt also has increased.
Okay. Thank you, sir. Just one last question, if I may. Since we are doing a CapEx of around INR 160 odd crore, so how do we expect the interest cost to look like in FY 2027, and what would be your current cost of debt?
Current cost of debt average is around a little shy of 8%. Our total debt cost is, I think 7.9% or something, the total. That is how it is going to look like. We are raising additional long-term debt of around INR 90 crore, in addition to what INR 90 crore I mentioned, which is standing in the books. The additional production capacity will also start kicking in. That's how it's going to be. 8% is our cost of interest.
Thank you so much, sir. That answers my question.
Thanks.
Thank you. We take the next question from the line of Ritvi Gandhi from Family Office. Please go ahead.
Good afternoon, sir. Thank you so much for the opportunity.
Yeah, good afternoon.
Sir, my first question is that beyond solar, are there further renewable energy investments planned beyond the current CapEx cycle? Is there a path to 60%-70% renewable energy share in the medium term?
Sorry you'll have to just repeat your question again.
Am I audible?
I understood that you are asking about the renewables, but what was your precise question?
Yeah. I'm saying that other than the solar investments, the CapEx that we are already doing, are we planning on another CapEx in the renewable energy sector?
We are always looking for opportunities. We are speaking to a lot of people. See, I tell you, because of the new government regulations, because now it is mandated that all the solar plants have to use Indian cells. Initially, it was Indian panels. Now domestically manufactured cells will also have to be used from this month onwards. The market will take a month or two to stabilize because some productions are coming upstream. We are also looking at this issue. We are in the middle of completing this 21 MW project, and once we complete that by mid-June or so, and then we'll see how the market situation is on the panels and cells, and we'll look into further opportunities. This is a very ongoing process for us. This renewable energy, our target is to achieve the max, whatever is possible under the regulations.
We will keep working on that all the time.
Sir, regarding the 21 MW solar plant that is going to be commissioned by June 2026, around that. Once that is fully commissioned, what are our target blended cost, since the grid electricity rates had increased around October 2025. What is our current blended cost of power renewable versus grid, and what are we targeting?
See, like I said to the earlier question also, our grid rate is around INR 8.2-INR 8.3.
Okay.
The renewables component right now is around 20% of our total power, but will go up to around 40%, once this 21 MW comes on stream and that 10 MW hybrid also starts giving us full power by June end. We'll be roughly over 40% of power.
Got it.
Yeah, it'll bring substantial savings to the whole thing.
Got it. Thank you so much. That was really helpful. All the best for the future.
Thanks.
Thank you. Participants who wish to ask a question, please press star and one. We take the next question from the line of Mandira A from Investor. Please go ahead.
Thank you for the opportunity. A couple of questions from my side. If you could help me-
Mandira, I do apologize to interrupt you there, but your audio is too low. Could you please use your handset? That will-
Is it better now?
A little better, yes.
I have a couple of questions. If you could help me with, as of the few caustic soda producers in North India, how large is your effective captive market, and is there any regional capacity likely to dilute your current advantages?
Your voice is coming up and down too much. If, Ryan, you could hear the question fully, can you repeat it for me?
Just a second. Is it better now?
Yeah, it seems so.
I was asking, as one of the few caustic soda producers in North India, how large is your effective captive market, and is any regional capacity likely to dilute your current advantages?
See, the total market is roughly around 1,600 tons/ day production capacity. We are doing 300 tons/ day. We are 20% of the total capacity, and we'll go up to around 26%-27% in the next year or so. No other capacity has been announced to come up. I don't foresee, for the next two years, any fresh capacity getting added to North India.
Got it.
I hope you were talking of the region, not the whole country as such.
No, no, on the specific region.
Okay.
Yeah. Secondly, with India adding 2 million tons- 2.5 million tons of caustic soda capacity over the next three years, how do you see the impact on domestic pricing and the risk of oversupply?
There are two questions within one. One is the price part, other is the glut of the supply situation.
As far as when we take off top of price, we call the price of chlorine and caustic put together. It's called ECU in our parlance. We take the price combined. Right now, the chlorine price is negative in India. These two capacities which you have just mentioned, which are going to be coming up in the next three years, they will be captively using the whole chlorine thing within their own plant, because they're making downstream projects. PVC is what they're going to produce.
No chlorine is going to come into the market. Only the caustic will come. What will happen, that there is a demand growth, and the capacity additions going on in the chlorine segment also. We foresee that if there will be any decrease in the price of caustic, will be well compensated by the increase in the price of chlorine. We always take the price of these two commodities put together. One will offset the other, which we have seen in the past also, that whenever the chlorine prices go down, the caustic prices go up. Secondly, as far as the caustic soda situation goes, these two plants are on the West Coast. They have their own jetties, and there's a ready market in Africa, in Europe, in Australia.
These units will take the benefit of their location, and they will export a lot, because India is becoming a big export hub. These two plants are going to be world-class capacity size. They will find opportunities for exports in a much bigger way than to come into fragmented Indian market. Especially if you talk to me in sitting in north, we have a very small fragmented market. People consuming 100 tons a month, 500 tons a month, 300 tons a month. That kind of capacities for those kind of big plants are not possible to serve here. They would rather find bigger customers. As far as my understanding, they're looking for export opportunities more than domestic opportunities.
Lastly, are customers increasingly seeking green credential or sustainability certification? Is your renewable energy-led ESG positioning providing any tangible commercial benefits?
Of course, it is. Though, as far as the sustainability things goes, we are very aware of it, and we are very committed to it. Our ESG team and our ESG consultants, we are working continuously on this. That is one. Of course, when you go for the cost of producing renewable energy is much, much lower than getting the power from grid, which is a coal-based power. Of course, working on the ESG path brings lot of cost savings also.
Got it, sir. Got it. That was really helpful. Thank you.
Thanks.
Thank you. Participants who wish to ask a question, please press star one. As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.
Thanks everyone for participating in the earnings call of Lords Chloro Alkali Limited. I hope we have been able to address most of your queries. However, if there's anything we have missed out or you have an afterthought or up to this, then you kindly reach out to our IR team, and we'll be very happy to take up that question. With this, I thank everyone, thank Ryan, Smit, and all the investors and analysts who have been there on the call. Thank you.
Thank you, sir. On behalf of Lords Chloro Alkali Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.
Thank you.