Good evening, ladies and gentlemen. In just a moment, we'll take you through the performance of Rain Industries Limited during the second quarter of 2022. Presenters are Mr. Jagan Reddy Nellore, Vice President of Rain Industries Limited, Mr. Gerard Sweeney, President of Rain Carbon Inc., and Mr. T. Srinivasa Rao, Chief Financial Officer of Rain Industries Limited. Before we begin, management would like to mention that some of the statements made in today's discussion may be forward-looking in nature, and they can be affected by certain risks and uncertainties. The company's actual results could differ materially from such forward-looking statements. Now, if you could turn to slide 3, Mr. Jagan Reddy will provide an update on the key developments within the Rain group. Thank you, and over to Jagan.
Thank you, Alan. Good evening, everyone. On slide three of the presentation, as you may see, we finished the second quarter with an EBITDA of INR 12.52 billion, an increase over our first quarter EBITDA of INR 8.35 billion. As with the first quarter, the increase in EBITDA earnings was primarily the result of ongoing strong demand for most of our products, combined with a continuation to the second quarter of what we have referred to in the past calls as the opportunity margin, resulting from the time lag that converters like Rain experience when our markets are in between rising sales prices and raw material cost resets.
This was the most significant driver of the current quarter results, and based on the increased raw material price seen in Q2, the opportunity margin will decrease going forward as raw material costs catch up to the finished product prices. We also continue to benefit from our decision to hedge a portion of our natural gas contracts and to revise our sales contracts so we could pass on a large portion of the high energy costs that we have experienced in Europe. Looking ahead, we anticipate demand for our products will remain reasonably strong during the third quarter, but we will experience margin compression as price increases are slowing and raw material costs catch up.
In parallel, the economic slowdown in China is resulting in lower demand for some of our products and creating pricing headwinds for others, such as calcined petroleum coke, as more CPC is available in the global market. Beyond that, like every other industrial company with facilities in Europe, we are closely monitoring the gas supply situation. Finally, the approaching hurricane season along the U.S. Gulf Coast could produce some headwinds for us during the third quarter. Moving on to slide four. Energy prices have remained elevated, and that has forced European aluminum smelters that rely on spot-priced electricity or electricity generated from natural gas to close or at least curtail production, as we noted in our previous call. More recently, there have been several additional energy cost-related smelter closures in the United States and Europe.
While this has been offset to some degree by continued strong production at most Scandinavian and Canadian smelters that rely on hydroelectric power and in the gas-rich Middle East, the combination of high energy costs and the significant drop in LME aluminum prices could impact demand for calcined petroleum coke and coal tar pitch as early as the fourth quarter. While we are hopeful that energy prices will fall to a point where European smelters could economically resume or even increase production, we are also acutely aware of what a continued shortfall in the natural gas supplies could mean in terms of energy prices in Europe. There could also be a carryover effect in North America, since there would likely be increased demand in Europe for LNG shipments from the United States, which could further increase energy costs for American smelters.
Regarding the cement business, the demand continues to be reasonably strong in South India. However, the cost of fuel continues to be a cause of concern, thereby impacting the near-term supply, which will have an impact on the cost of production. Power costs imposed during early June 2022 quarter also impacted the capacity utilization production costs in our cement business. With this business update, I will now turn over the presentation to Gerard Sweeney to take you through the industry and other business updates on slide five. Gerard?
Thank you, Jagan. Good evening, everyone. It's a pleasure to discuss the industry trends during the second quarter of 2022 with you. Let's turn to slide 5. In our carbon segment, demand for calcined petroleum coke and coal tar pitch from the aluminum industry remained favorable during the second quarter, aided by LME prices that remained above $2,700 a ton for the first two months of the quarter at least. CPC demand from customers in the titanium dioxide industry also remained strong during the quarter. While our CPC volumes were up a little more than 3% compared with the first quarter, we are disappointed in our ability to run both rotary kilns at our Vizag calciner in India due to a reduced annual GPC raw material import allocation.
Our allocation does not account for the capacity of our second vertical shaft calcination plant nearby in the special economic zone. Obviously, we would desire to resume production using both of our Vizag kilns at the facility. As we told you previously, our current GPC allocation, which is about 25% lower than during the previous fiscal year, is insufficient to run both kilns and our new vertical shaft calciner at higher capacity. We are trying to optimize CPC output from our limited allocation of high-cost GPC. That said, we are continuing our effort to work with the Indian authorities to secure a GPC import allocation for the new shaft calciner that is separate from the allocation for the existing rotary kiln plant.
As the only calcination company in India with an operating flue gas desulfurization systems at both facilities that remove more than 98% of sulfur dioxide from emissions at both facilities, we are well-positioned to help ensure that the country's aluminum industry has the CPC it needs for anodes, while also helping India achieve its goal of reducing industrial air pollution overall. Our argument for receiving a larger GPC import allocation was strengthened in June when India's Ministry of Environment, Forest and Climate Change issued a draft notification of its emissions regulations for the calcining industry, as ordered by the Honorable Supreme Court back in 2019.
While there was no announced timeframe for finalization or ultimate implementation of the regulation, we are likely to be among the very few calciners in India that will be in compliance with the emissions levels called for in that draft regulation. Put another way, Rain's historical commitment to sustainability should be advantageous for us as a company going forward in India. Elsewhere in the United States, we continue to make progress in our effort to commercialize our proprietary anhydrous carbon pellets or ACP. In recent months, we have been focused on improving and stabilizing the production facility's reliability and ACP's performance in our calcination kilns. In doing so, we are gaining a better understanding of the cost to operate this facility and ways we can optimize its ultimate production.
Looking ahead at our Carbon segment's calcination business, we anticipate a normalization of margins during the coming quarter, which, as I mentioned earlier, is being driven by the slowdown of China's economy and curtailments of some aluminum smelting capacity in response to higher energy costs. In parallel, we are seeing GPC cost increases better in line with the earlier rise in CPC prices. We are also experiencing similar trends on the distillation side of the business as coal tar costs have begun to catch up with our pitch prices. This correction is not a surprise since commodity prices have been in such inflated levels and global consumption has honestly been red hot during the past year due to pent-up demand post-COVID.
The challenge for Rain as a converter, as we've discussed in many previous calls during both rising and falling markets, is that our raw material costs lag the rising price of our finished products, which gives us benefit on the way up. Conversely, our raw material costs will lag finished product prices on the way down the value chain as well. The opportunity margin created by the lag of raw material costs is reversing, which means that we must be extremely careful and vigilant in managing our raw material feedstocks so that we are not saddled with high-priced inventories while finished good prices are falling. Excuse me. A certain amount of margin erosion is inevitable and to be expected, but we must avoid anything extreme that would prolong the impact of higher raw material costs beyond one quarter.
Moving on to the distillation side of our Carbon segment, demand for our products remained generally favorable during the second quarter, coupled with strong margins despite a tightening of raw material availability. Coal tar pitch volumes were about 8% lower during the quarter, due in part to reduced internal consumption of the pitch that we use in the production of our patented CARBORES and PETRORES engineered products. While we will discuss our Advanced Materials segment shortly, we can say here that these engineered products derived from our in-house pitch materials experienced lower sales volumes in their major Chinese markets during the lockdowns as demand fell precipitously for our CARBORES and PetroRez engineered products.
To finish up the discussion of our carbon segment's performance, in our carbon products category, or other carbon products category, sales of crude naphthalene and carbon black oil remained strong and in line with previous quarters, while creosote volumes were up significantly due to higher seasonal demand. Looking ahead, we expect that global demand for our carbon distillation products should support third quarter sales to a large extent. Beyond that, however, forecasting is difficult given the uncertainty around energy costs, rising inflation, geopolitical issues, and whether we see a resurgence of COVID as we approach winter, especially in China. Turning now to our advanced materials segment, the business performed extremely well as increased prices and margins more than offset lower volumes for certain products.
In terms of engineered products, demand for our seasonal LP Sealer Base was exceptionally strong. Conversely, as mentioned earlier, we saw a reduced sales of Carborex, which is used in refractory and graphite products due to lower demand in China as a result of its slowing economy and COVID lockdowns. Sales of our PETRORES specialty coating for lithium-ion batteries were also slightly lower due to the situation in China. Nonetheless, we have said many times in the past, we expect demand for PETRORES and Carborex to remain strong going forward, given the sustainability profile of these advanced material engineered products. Moving on to resins and downstream products. Sales volumes of our hydrogenated hydrocarbon resins increased another 10% during the second quarter. We are very pleased with the continued interest in our HHCR products from our current and potential new customers.
We remain cautiously optimistic that the plant will be operating at 75% of capacity by year-end, and increased volumes will translate into lower production costs for the unit overall. Elsewhere, we recently informed the German Works Council of our decision to phase out production of the aging aromatic chemicals at our Castrop-Rauxel facility. While future earnings from aromatic chemicals will be lost, we expect the long-term impact to be minimal. For instance, sales of our 3.5 DMP product, which was extremely strong at the beginning of the pandemic, have basically dried up as consumers have since shifted to a position favoring alcohol-based disinfectants. Moreover, our aromatic chemicals production unit is one of the largest consumers of natural gas within our Castrop-Rauxel site per ton of material produced.
We will realize measurable cost savings by reducing our gas consumption with the closure of this section of our plant. In terms of the personnel, we plan to transition the employees from the aromatic chemicals part of our plant to our new HHCR facility, replacing its contract labor and avoiding any expenses related to severance costs. In the rest of our advanced materials segment, demand remains strong for our chemical intermediates and downstream products, with increased sales during the second quarter of our products, including BTX and modifiers. Looking ahead, energy costs in Europe naturally remain an issue for our advanced materials segment, and now we and other industrial players are working to manage the potential risk of inadequate supplies of natural gas for the German manufacturing sector, which was not a major concern in the past.
While our advanced materials plants are energy intensive, we have hedged a portion of our European gas requirements for the second half of 2022. Moreover, we have the ability to substitute roughly half of our gas requirements in Germany and Belgium with non-gas alternatives such as petroleum-derived fuels, which should help us insulate ourselves if the flow of gas from Russia is further reduced for any reason going forward. At the same time, we are mindful that many of our customers are in an energy-intensive industry. As such, higher energy costs and/or lower availability could impact their production and in turn, demand for our products. With that, I'll now turn the presentation to Srinivas, who will take you through the consolidated financial performance of Rain on slide six. Srinivas, over to you.
Thank you, JD. Good evening, everyone. It is a pleasure to present our financial performance for the second quarter of 2022. In the second quarter of 2022, Rain achieved consolidated net revenues of INR 55.27 billion compared to INR 36.22 billion in the second quarter of 2021, an increase of INR 19.05 billion. This resulted from an increase in revenue of INR 16.41 billion from our Carbon segment, an increase of INR 2.74 billion from our Advanced Materials segment, offset by a decrease of INR 0.1 billion from our cement business. Rain's consolidated adjusted EBITDA increased by INR 5,655 million compared to the prior year.
This resulted from an increase in the Carbon segment by INR 5,542 million, an increase in Advanced Materials segment by INR 780 million, offset by a decrease in the cement segment by INR 667 million. Now turning to the next slide on Carbon segment performance. Revenue from our Carbon segment was INR 39.72 billion for the quarter ended June 30, 2022, as compared to INR 23.31 billion for the same period last year. During the quarter, sales volume decreased by 4.2% as compared to Q2 of 2021, driven by lower throughput due to raw material availability. Further, the average blended realization increased by 78%, driven by higher demand and market quotations across all regions.
There was a depreciation of euro against Indian rupee by 7.5% and an appreciation of US dollar against Indian rupee by 4.6%. Overall, due to the aforesaid reasons, revenue from carbon segment increased by 70.4% in Q2 of 2022 as compared to Q2 of 2021. Adjusted EBITDA of the carbon segment increased by INR 5,542 million as compared to Q2 of CY 2021, due to improved realizations offset by depreciation of euro against Indian rupee, and an increase in raw material and energy costs. Turning to the next slide on the performance of Advanced Materials.
Revenue from our Advanced Materials segment was INR 11.80 billion for June 2022 quarter, as compared to INR 9.06 billion for the same quarter in 2021. During the quarter, there was a decrease in volume by 14.2%, primarily driven by changes in the product mix based on raw material availability and lower demand from Asian markets and the adhesive industry. During Q2 2022, the average blended realization increased by 51.7%, primarily due to changes in the energy prices, oil-indexed prices, and a change in the product mix and customer mix, offset by depreciation of euro against Indian rupee by 7.5%.
Due to the aforesaid reasons, revenue from advanced materials segment increased by 30.2% during Q2 2022 as compared to Q2 2021. Adjusted EBITDA for the Advanced Materials segment increased by INR 780 million due to improved realizations offset by depreciation of euro against Indian rupee and an increase in the energy costs. Moving on to the next slide on our cement business. During the second quarter of 2022, cement revenue decreased by 2.8% compared to Q2 of 2021. The decrease was primarily driven by a decrease in volume by 4.6%, offset by an increase in realizations by 1.9%. Cement EBITDA decreased by INR 667 million due to higher energy costs and decrease in sales volume.
Moving on to the next slide on debt. We ended the quarter with total debt of $1,165 million, including working capital debt of $155 million. Net debt was $915 million, and based on LTM EBITDA of $433 million, we ended the quarter with a net debt to EBITDA ratio of 2.1x. We are comfortable at this level as our average borrowing cost stood at 5%.
Though the six months Euribor, which is the interest rate on our Term Loan B in our European operations, has moved from negative to positive during the quarter after long period of time, it will not have material impact on the average borrowing cost, as majority of our debt is designated as fixed interest rate of 7.25%. You would have noted the decrease in the senior secured notes, which is due to repurchases during the period. Referring to comments of last quarter, we are dealing with significant use of working capital in this peak pricing market for all products. During the half year, we used approximately $200 million on these requirements. We expect this trend will be reversed by end of 2022.
We incurred $48 million towards capital expenditure, including plant turnarounds during the half year. Our requirement for expansions capital will be minimal going forward. With that, I will now turn the presentation to Mr. Jagan for closing remarks.
Thank you, Srinivas. With EBITDA of INR 12.52 billion during the second quarter, we are pleased with our recent performance. We expect the third quarter to be in line with the same period last year. However, the strong levels of demand that occurred as economies emerged from COVID pandemic seem to be subsiding. In recent weeks and months, we have seen LME aluminum prices fall from more than $4,000 per ton to around $2,300, coupled with rising inflation, a contracting global economy and margin correction as our raw material costs increase and our finished goods prices retreat. While the past several quarters have been indeed favorable, what we experience is not the new normal, and this correction should not come as a surprise to anyone after a commodity super cycle.
Thus, we should proceed with caution in the near future. The good news is that our company is taking necessary steps to prepare for a return to normal. Our ongoing focus on cost control, raw material utilization, and operational efficiency, as well as our ability to produce a broad portfolio of products in a sustainable way that enables our customers to meet their sustainability requirements, has positioned Rain for continued success as the economy reverts to the next normal, whatever that might be. While we expect good demand for our products to continue for the foreseeable future, the lessons learned from previous challenging periods are fresh in our memory, and we will do all that we can to protect our earnings regardless of market conditions, while avoiding complacency and overconfidence.
Thank you all for your continued interest in Rain Industries Limited, and we look forward to the next quarter's presentation. Thank you.