Ladies and gentlemen, good day and welcome to Archean Chemical Industries Limited Q4 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference, please signal an operator by pressing star and then zero on your touchtone telephones. Please note that this conference is being recorded. I now hand the conference over to Mr. Rampraveen Swaminathan, Managing Director of Archean Chemical. Thank you. Over to you, sir.
Right. Good afternoon, everyone. Thank you for joining us here today, and a warm welcome to you all, to our Q4 and FY 2026 earnings call. Thank you for taking the time once again to join us. I'm joined here today by Mr. Natarajan Ramamurthy, CFO of the company, Mr. Rajeev Kumar, DGM Finance and Strategy, and our Investor Relations Advisor, SGA.
I hope you all have had a chance to look through the financial results and investor presentation, which is available on our website and stock exchanges. I will provide an overview of the market conditions and external environment, cover some of the significant events in the past quarter, provide you a commentary on Q4 performance and FY 2025, 2026 performance, and outline some of our focus areas going forward.
Just beginning with the market, I think overall demand for our products from our end key markets has been a mixed bag. For most of the year, demand from industrial salt has been muted, which has been reflected in a tough pricing environment for the product category, while demand for bromine and bromine derivatives has been positive in most geographies across the world.
Competitive intensity remains high, especially on salt, with increasing capacity in multiple regions and some more being added in FY 2026, in Australia and some parts of the Middle East. The year that has gone by has also been marked by considerable uncertainty, volatility and a continuously evolving external environment.
Several macroeconomic developments, including the India-U.S. trade discussions, the India-EU FTA negotiations, tariffs imposed by the U.S. government, and more recently, the Iran-U.S. conflict, have influenced market dynamics across demand, supply, and pricing. While we have managed to navigate these conditions, the impact on our business cannot be overlooked, and therefore, this year has been fairly skewed with headwinds outweighing the positives, resulting in a constant focus on recalibrating the business operations.
In Q4, we have seen a heightened impact due to the U.S.-Iran crisis. I'll cover that in more detail shortly. On a positive note, our end key end customers and industry participants share our optimism about the future. We believe that in the categories we operate in, demand outlook in the medium term remains pretty positive, and we are very well- positioned in terms of our overall value package.
If we're now looking at some key developments, which have impacted our business during the quarter, let me first begin with our semiconductor business. Earlier this week, our subsidiary, SiCSem, has signed the Fiscal Support Agreement with the Government of India for our semiconductor project in Odisha. This is a very important milestone for us as it now enables us to accelerate the financial closure and the execution of the project.
Just to provide you a recap, we did do the groundbreaking ceremony at site in November, and we have teams which since then have been completing detailed engineering, finalizing supply partnerships, and doing resource development and deployment. Overall, the program remains on track, and with the FSA, we hope to accelerate progress in the coming quarters.
Another key development for us during the quarter was the impact of some changes in terms of bridges and roads modifications in Kutch. In early part of Q4, the local administration of Gujarat has initiated road repairs and construction in a key stretch along the corridor from the Hajipir plant to the Jakhau and Mundra ports.
As a result of that, we saw a significant increase in distance of transportation, which has impacted our fleet availability due to higher TAT and fuel costs with, as the distance effective distance increased by 2x. As we stand right now, we understand this construction will continue till early Q3 of this financial year. After which, we'll be able to come back to more normal operations, both in terms of distance covered and TAT of our fleets.
The third big thing which has impacted us in Q3 has been the Middle East crisis. The U.S.-Iran conflict has had an impact on demand, supply chain volatility and commodity costs in our business. The demand for bromine has increased sharply due to global demand-supply imbalance as a result of the conflict.
This, of course, is now becoming normalized as end user industries are struggling to pass on the cost increase to their customers. The cost of logistics and global freight has also increased significantly. For our basket of customers and the geographies they operate in, our costs have increased by 18%-20% on a global freight. Since late February, the sharp rise of prices in industrial fuel, our industrial fuel prices have increased by nearly 50%.
Inconsistent retail availability has had a large bearing on our transportation costs, driven by the fuel increases, which have gone up by approximately 50%. Prices of other key commodities, Indonesian coal, sulfur and propanol have also been impacted unfavorably within the range of 20%-30%.
In a very demanding and difficult environment, despite these headwinds, our focus has been on the key areas I mentioned in the last earnings call. Stabilizing our operations, especially in terms of bromine production. Ensuring market growth, market share growth in industrial salt and derivatives. Retaining our key customers in bromine. Driving commercial and pricing actions, and doing aggressive cost reduction to mitigate the impact of these factors.
In this context, let me now cover the overall performance for the quarter and the full year on a standalone basis, as well as some of our key subsidiary divisions. Industrial salt volume for the quarter was 1.1 million tons, down 7.2% versus last year. Volumes are impacted by nearly 120,000 tons due to customer deference on account of the U.S.-Iran conflict and around 250,000 tons of shipments we could not complete cause of logistics issues and challenges I mentioned earlier.
For the full year, though we had sales of 4.2 million tons, up by 22% from the previous year. We had earlier shared that we estimated to meet around 4.5 million tons of shipments during the year, which has largely been impacted by the factors I just mentioned. Pricing in the quarter remained under pressure versus last year and was down by around 10%, but has been kind of stable versus the prior quarter.
Industrial salt has contributed 67% of the sales in the quarter we just completed. It's 67% of Q4 sales last year and around 70% in FY 2025, 2026. Coming to bromine. Bromine volume was at around 3,731 metric tons for the quarter. It is up 53% from the quarter of the second quarter of 2025, 2026, and up by 4% versus the prior year. We continue to drive improvement recovery plan in production, and since mid-Feb we have recovered our production levels to historical levels.
During the quarter, we continued to implement pricing actions with select customers and short-term contracts. Realization was up 14% year-on-year. Overall, elemental bromine contributed 32% of sales for Q4 last year and around 30% of the sales in Q4 FY 2026. The bromine derivatives business, which is housed in Acume Chemicals Private Limited, continues to scale up.
Sales for the quarter were up by nearly 50% year-on-year, and revenue for the full year was up by nearly 300% compared to the previous year. While our margins remained under pressure due to the lower capacity utilization during this ramp-up phase, we estimate that our contribution margins will improve in new products and process optimization initiatives underway, supported by volume growth from some of our existing products like calcium bromide and NPBR.
During the quarter, we launched PBr3 and also continued to scale up our zinc bromide volumes for select customers. Capacity utilization for the quarter still remained at around 45%, and we continue to focus on driving that up. SOP volumes in FY 2026 stood at 644 tons, contributing to a very small level of revenue of around INR 3.5 crores.
As highlighted in earlier calls, there are complex technical issues for which we are now defining a kind of long-term solution. This involves re-engineering of the entire product system and the manufacturing process. This program is currently underway, and we expect to complete plant trials in the first quarter of this year and go into a higher level of production in the second half of the year.
As you are aware, we continue to scale up our operations in Idealism Mud Chem, earlier known as Oren Hydrocarbons. Over the past 12 months, we have commissioned three plants and are currently progressing with customer trials. Our Gujarat plant is production ready, but we still await necessary approvals with state authorities.
For the Nagari plant in Andhra Pradesh, where we manufacture starch and PAC products, we are in the process of redefining the product roadmap to better align our product with market requirements. We expect to have a fairly lean first half this year in terms of Idealism Mud Chem, but we expect that the second half will start getting to a larger ramp-up. The aforementioned issues and logistics costs have impacted the short-term profitability of the industrial salt segment.
Our customer relationships and market position remain strong, and we estimate to see a full recovery in coming quarters with the completion of the highway projects and reduction in commodity and fuel costs as the Iran-U.S. conflict subsides. Coming on to financial performance.
To give you a quick summary of financial performance, total income for Q4 FY 2025, 2026 stood at INR 304.7 crores, a 9% decrease on a year-on-year basis. In terms of overall mix, bromine contributed 32% and industrial salt contributed 67%. Volume of sales of bromine, as I mentioned earlier, stood at 3,731 tons. Volume of sales for industrial salt for the quarter was 1.1 million tons. Overall, EBITDA reported was INR 66.4 crores, a 34.3% decline year-on-year.
EBITDA margin stood at 21.79% for the quarter, and profit after tax for Q4 FY 2026 was at around INR 29.8 crores. The year-on-year decline in EBITDA was largely driven by the drop in pricing or the lower pricing realization, and lower volume, both of which happened in industrial salt. We did also see a year-on-year increase in logistics cost, but that was largely offset by improvements in bromine, both in terms of realization as well as in terms of volume. In terms of full year performance, total revenue for the year is reported at INR 1,088.8 crores, a 2% growth on a year-on-year basis.
EBITDA for the year stood at INR 308 crores, a 17% dip on a year-on-year basis. Profit for after tax for the year, reported was INR 154.3 crores, a 17% decline year-on-year. On a consolidated basis, total revenue for Q4 was at INR 306.3 crores. The bromine derivative business contributed INR 23.8 crores with a volume sale of 1,400 tons for Q4. EBITDA for the company overall stood at INR 49.1 crores in Q4 FY 2026, and profit after tax on a fully consolidated basis was INR 12.2 crores. From an FY 2026 perspective, overall revenue was INR 1,108 crores.
Bromine derivatives business contributed around INR 81 crores. The volume sale of around 5,300 tons for the year. EBITDA for the company stood at INR 265 crores on a fully consolidated basis, with net profits of INR 105.4 crores. A detailed breakup of the constituent elements of our consolidated performance has been provided in the earnings deck on our website for your review.
Let me end my comments by summarizing our focus in the coming year and some reflections now that I've completed three months in my role. As we look forward, I think we have established three clear strategic priorities for the company. The first one is consolidate this core salt and bromine business. Secondly, to scale up our derivatives, oil fields and SOP businesses while we continue to invest in long-term opportunities and advanced materials for batteries and semiconductors.
The underlying focus of these priorities is to ensure that we are driving earnings quality while also ensuring effective capital allocation across the business. We are driving these priorities through four strategic levers. Driving focused growth, where we drive scale and volume in all businesses through differentiated products, long-term customer partnerships and commercial excellence.
The second one is operational excellence, driving productivity and growth in all our operations, especially on bromine, SOP, derivatives, and developing a world-class logistics capability, while ensuring capital efficiency. Thirdly, responsible stewardship in terms of driving an inclusive and empowered organization, focusing on sustainability and supporting local communities.
Lastly, technology and automation to drive increased efficiency, reduce our cost to serve, and drive agility and predictability across our business. I think together we look across these four levers and we believe that we will continue to drive volume growth in the core business. As we start getting some of the external factors on cost stabilizing, we should be able to get to a historical margin level of performance across the business. With this, I'll open it for Q&A.
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may enter star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may enter star and two.
Participants are requested to please use only handsets while asking a question. We also request participants to please limit their questions to two questions per participant. You may then rejoin the queue for follow-ups. We will wait for a moment while the question queue assembles. The first question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Good afternoon, Sanjesh.
Good afternoon, sir. Thanks for the opportunity. I got few of the question. On this freight thing, the entire long route and the higher fuel cost, how much it did really hurt in terms of the cost during the Q3? In terms of the Q4 earnings. That's number one. Number two. Bromine prices globally has gone up sharply. I know we have a long-term contract. Just to understand, how should we see the bromine prices for next year?
In your opening remarks, you mentioned that we have reached the historical peak of bromine production. I think historically, quarterly we were at 5,500 metric tons. This quarter we are at 3,700 metric tons . When we say that we have reached the peak, do we imply that we are touching that 5,500 metric tons kind of a production? Then added question to that, we have put up a Blue Acres where we are looking to expand the brine pond, and we said that this will only enhance the production. Including that, what is the peak production we are looking up, and will it come in FY 2027 and, or FY 2028? These are my initial questions. Thanks.
Sanjesh, I will take them in whichever order which we, which I find I can remember them. If I do slip a question, please do kind of remind me again. I think firstly, as far as the logistics cost is concerned, I think simplistically put, we have three phases. January was pretty lean. We didn't have a big issue in Jan. In Feb, as you've seen, you know, we had a significant increase because of the route change, and that added nearly INR 100 -INR 120 per ton of cost. In the third month, we had both the diesel price increase and the extended route. We ended the quarter with roughly around INR 200 -INR 220 per ton in increase of cost of transportation. Okay.
So this-
On a weighted average basis.
... what is the increase in cost? Yeah.
Yeah, on a weighted average basis across the quarter, probably around INR 14 - 15 crores was the impact because of the higher logistics cost right across the three months. That's kind of the net gross number. I think as far as your second question was concerned in terms of bromine production, yes, I think as I said, we've come back to historical levels on a daily rate. I think our historical peak, if I mean, I'm talking from memory, it was 5,230 odd tons in a quarter. That quarter, you know, was a 91-day quarter or something. Roughly, it would be around 54, 55 tons per day, we are roughly getting back to that range right now in terms of daily production. Okay?
Got it.
Now I just would state here that we will look at modeling it out or forecasting it out. Obviously, there are scheduled downtimes, et cetera, which do impact a little bit, but we are in that range right now. Okay. Just confirming that.
Broadly 20,000 tons. Yeah.
Yeah.
20,000, 21,000 metric ton in FY 2027 if we sustain, say 55 ton per day.
If we sustain 55 ton or in that range with a little bit of hit on the monsoon when we will come down a little bit, we should be in the range which you mentioned.
Got it. Got it.
I saw the third thing which you said, which I think raised to us around the brine field expansion. As you know, we have been expanding the brine field. We remain optimistic about long-term growth. We do expect the salt business will continue to grow at 10% to 12%. It's kind of bottomed out in terms of margins, in a large part because the cost increase we've had on logistics, but that's a structural cost which will go away.
We have line of sight to that kind of ending to some extent. We continue to be bullish on salt, the brine field expansion really will help us drive that 10, you know, 10%-15% in growth in capacity of salt. Of course it also will allow us to provide, you know, be able to produce more liquor for bromine volume as well.
What are we looking at bromine then in an expanded capacity, b ecause we had a name-
It's.
... to 500 ton. We are struggling at 20,000 ton. How should we look at the journey from here to the nameplate capacity?
I think that's a, it's a mixed question, right? Because, you know, there are multiple factors involved. I do think that we are expecting or hoping to be able to grow 15%-20% a year in terms of bromine production. I think that's what we had mentioned last quarter as well. Next first, I mean, what I said last quarter, our next pit stop, if you may, is to try and get to 25,000 tons. Beyond that to, you know, over a period of time, to 40,000 tons. That's kind of what I would really still be anchoring our business on in terms of what we are trying to establish as goals for the company. The 40,000 ton expansion obviously happens along with the derivatives business growth as well.
It kind of happens hand-in-hand. That's kind of where we're anchoring it at. Now, you know, is it sequential? Is it year-on-year? There are multiple factors involved. The brine fields themselves are being expanded now. It'll be, you know, it'll be 6 - 9 months before we finish the expansion, and then an entire season before we actually fill the ponds and we actually have enough condensation evaporation to be able to basically draw them out as liquor and as salt and crystallization. It's a, it's a staged period, Sanjesh, but the key thing for us has been to start putting capacity ahead of demand and start making that move, and this is what we are doing right now.
Very clear. On the pricing, bromine pricing, because globally.
Oh, yes. On the bromine pricing. Sorry, I missed that question. Yes. I think as I mentioned, we had a question last quarter as well, and probably heard it earlier as well, and I mentioned that we are making pricing actions. You've seen some impact of that in Q4 on a year-over-year basis, where we have increased the prices on contracts. Obviously prices went up in a short period of time very quickly. I think as we look at currently, we have, I would say, renegotiated a large part of our long-term contracts. Right? I won't put a specific number on it, Sanjesh, but we have negotiated a very large part of our long-term contracts for this year.
We have also gone back and, you know, reopened or rediscussed with customers on contracts which are going, which still had open windows on them, and gone back and renegotiated some of them back as well. Today, I think as we stand, a majority of our bromine contracts stand renegotiated upwards. I will not put a specific number on that, Sanjesh, but that's kind of direction at least, where we are going.
Got it. One on the Acume. We had not a great year last year. I thought the ramp-up expectation was much better than what we have delivered. What are the things which have not gone in our favor, and what are the measures we are taking to see that Acume really scales up to the level where it probably which is more satisfactory? Number two, what's the plan on the flame retardant? It's still under discussion or it is rested for a while? How should we see that?
Okay. I think, you know, for Acume's, there's no question that it has been a year where we've had growth, but we've not had the growth we expected. Right? I would say two, three things are the areas I think we have kind of been challenged with. I won't say they have been things we have necessarily done badly on, but they've just been challenged. I think the first one has been product development. You know, some of our products, especially targeted towards pharma applications, have been a little bit longer cycle than we expected them to be, Sanjesh. That's actually taken a little bit more time to get, you know, it can get converted into specific orders and pull through.
The second thing which has been a challenge has been, you know, in terms of, you know, commercial pricing. I think we have had to work hard on getting pricing in there. You're entering into the market. You're entering in an established market where other players are there. That obviously puts pressure on pricing. Right?
Probably we've been, you know, we've been forced to have slightly more aggressive pricing than we probably would have initially expected the same time last year. The third thing which has been a challenge to some extent has been that, you know, obviously the Acume business gets its bromine from the RGP business. Some of our challenges in the second and third quarter on bromine production obviously translated into a ramp-up in that business as well.
Okay? What are we doing to fix that? We are fixing the exactly three things I spoke about now. We have deepened our sales capability. We're expanding both in domestic and exports. Our channel partnerships, we are also accelerating product development. In Q4 alone, as I told you, we, you know, we upgraded the zinc bromide product. We launched PBr3. We are looking at releasing a couple of more alkali bromide products in the first half of this year. Right?
We've also been expanding on, you know, on CaBr2 and PBr3 volumes, which both, you know, which obviously are large markets in terms of the oil field and the ag intermediate usage. More market penetration, more product development, more consistent supply of bromine from the Hajipir plant. Lastly, we are working a lot in terms of process optimization and process costs. We actually have to kind of be able to drive that. I'm confident that I think you will see a step change in a significant improvement in the business as we drive that product utilization improvement starting the early part of this year.
Very clear, sir. Sorry, I'm pushing it a bit.
No.
On the semi sector, can you just help us, the milestone from here to the production, what is the timeframe and the key milestone we need to track?
Rajeev, you wanna take it?
Sanjesh, let me take this question. We have started working on the design aspect, and the early work we have already commenced. Our target is to start the substructure work from July and broadly it should take 24 - 30 months from that time.
24-30 months from now.
From July, sure.
From July. From July of last year, right?
July of this year.
Okay. From July of this year, we are looking at 24-30 months.
Yeah.
Sanjesh, if you index the period from now to July, probably 27-13 months roughly is what it'll take.
Got it. Just one bookkeeping question. What was the SOP volume and revenue for this quarter?
For this quarter, Sanjesh, I will have somebody drop you a note. I think I mentioned the full year number. It's okay. I'll have somebody in our team email it to you.
The full year number is fine. What is the full year?
F ull year was INR 3.5 crores and 60, and 650 tons.
650 tons.
664 tons, I think was the exact tonnage.
Okay.
644 tons and INR 3.49 crores.
Thank you, sir. I think that is all from my side. Thanks for patiently answering all those questions, and best of luck for the coming quarters.
Thanks, Sanjesh.
Thank you.
Thank you.
The next question is from the line of Aditya Khetan from SMIFS Institutional . Please go ahead.
Yeah. Thank you, sir, for the opportunity. Just a couple of questions. Sir, you mentioned in your opening remarks onto the competitive intensity pressures. Is that, sir, one of the reason why we are not able to increase the bromine prices? Sir, when we look at the spot prices of bromine over the last three quarters versus Archean's realizations, there has been a stark difference.
Actually, spot prices have gone up in one way, but our so realizations look almost flattish only when we look at the last two quarters' data also. Is it because of the competitive pressures which you have mentioned? Is that stopping the prices to move higher? Secondly, sir, when I heard your commentary onto the bromine volume, you mentioned about some 10%-15% growth.
Sir, when we look at this number, 10%-15% growth would still be around some 15,000-16,000 tons only for FY 2027 also, versus what earlier management was guiding around 20,000-22,000 to around 25,000 tons for FY 2026. There's a stark difference in into the numbers which earlier management was guiding and what we are seeing for FY 2027. Any thoughts of what has changed materially into the business volume?
Let me answer those questions a bit more specifically. Firstly, I think, on the bromine pricing, it's not a competitive intensity issue as much as the fact that, you know, as I, as you mentioned earlier as well, Aditya, we have a fairly large constituent of long-term contracts. These are contracts we enter typically with annual pricing. Since we enter them with annual pricing, we generally don't change the pricing based on spot conditions too much. 70%-80% Excuse me.
Let's say 70% of our business is long-term contracts. 30% of our business is short-term contracts, which is deal-to-deal pricing, right? Therefore, what you will always see is that when the prices go up, it takes us time to catch up. When the prices go down as well, we get the benefit because our customers continue to buy at the old prices from us, right? It's, and therefore what's happened in the last 18 months is, 15 months roughly, has been the prices have been inching up slowly, till around February when March when prices went up substantially, right?
We have taken the opportunity to go ahead of the curve this time in Feb, in Feb, and March, and kind of even, you know, start renegotiating our contracts, ahead of their closure, a nd that's why, as I mentioned to Sanjesh earlier on, you know, when Sanjesh's question was there, we have repriced now a majority of our contracts upwards. And therefore, I think you will see that being different going forward.
That said, I think you must bear caution that spot prices are not a very good reflection of the overall blended price of a market. You know, typically the entire industry on bromine works 60%-70% on long-term contracts and 20%-30% on short-term contracts. When suddenly one company suddenly has a shortage of bromine or has a production problem, then those customers assigned long-term contracts with them become spot customers in the market.
They often buy at very high prices because they have to manage their end customer contracts. Always spot prices are not a reflection of the blended average price for any company, we always encourage people to look at what people are reporting, right? Not, don't look at what the landed Shanghai index tells you or the landed China index tells you because there are short-term elements there. There's logistics pricing, there's transportation. There are multiple factors there.
Broadly we have gone back and renegotiated the majority of our customer basket. You should see some of that pulling through. As far as your comment on the bromine volume, I think let me restate what I said. You know, Sanjesh's question was, are you back to the 55 tons per day level? I kind of said, yes, we are up here at the 55,000 tons per day level, which adds up, which is around 20,000-21,000 tons. I said our goal next year is to be 15% above that. Right.
This year it's to be at that level, and next year it's to be at around 15% above that, which gets close to 25,000 tons number, which has been quoted earlier. Lastly, Aditya, on a lighter note, I would just like to tell you that the management has not changed. The management has expanded. The earlier MD remains as the Executive Vice Chairman of the company, and therefore the management has expanded. It has not changed.
Got it.
We still are very much committed to the numbers which have been shared by Ranjit and others earlier.
Just one more question, sir, if I can squeeze in.
Sure.
This quarter we are seeing some INR 13 crore of increase into the stocks, which is reflected into the COGS. Can you highlight, like, what this change is actually? Secondly.
Yes, we'll see-
Can you provide the internal sales volume of bromine for full fiscal, like, 2026? The captive consumption of bromine.
I think the second one, I will have to get back to you. I don't have a specific number right now, Aditya. If you can drop a mail to us, our team will respond. Okay. As far as the first question is concerned, the INR 13 crores, I think as I mentioned in my opening comments, initially also kind of hoped to do slightly higher volume of tonnage of salt in the quarter. We are not able to do shipments because some orders got deferred. Also we had an issue where we had because of logistics costs, we could not fill those volume. Therefore, salt, free salt inventory increased during the quarter, and that is a substantial part of what you see there as an increase in inventory cost.
Got it, sir. Thank you, sir.
All right. Thank you.
Thank you. The next question is from the line of Avnish Tiwari from Vaikarya. Please go ahead.
Hi. Am I audible?
Yes, sir. Please go ahead.
Hi, Avnish. Yeah, please carry on.
Yeah. Hi. Hi. Yeah, hi. You were mentioning in context of bromine demand that in increase because the end industry is not able to pass through the pricing, the demand sort of getting rationed out or getting normalized. Can you expand on that commentary? Will that be a hurdle for you? I mean, you have already renegotiated the long-term contract, but if you can give us a color around your 30%, which is deal by deal business, how is your pricing there in relative to your long-term contract versus the spot, which I know is not real, is much higher. Is it in the middle of these two spot versus your long-term contract or more closer to your long-term contract? These two areas if you can expand upon.
Sure, Avnish. I think let me just start off with the with the probably more external facing number, which everybody likes to quote, but that's at least generally a few minutes. I think as you know, when, you know, shortly after the crisis started, bromine prices went up around RMB 70,000-RMB 80,000 .
Right, which is, you know, which is almost like, what, $8-$9 per kg. It went up that high because there was a sudden shortage of bromine in the demand of bromine supply in the market. Our end users, like companies makes flame retardant, et cetera, has their supply contracts to honor. There was a sudden because of shortage of supply, they had to basically buy at whatever, spot prices went up.
Obviously what most of those our end customers are finding is that is not sustainable for them to price it to their end users. Therefore, there has been some softening in terms of their end users pushing back and not accepting price increases, and that coming back through the chain to us as well. Therefore, there's some amount of softening. Today, if you look at it, I think prices have come back to around $5 per kg, $4.5, $4.5 per kg. Then depends on how much transportation, et cetera, you consider in it and how logistics is. You have that. The other thing is just seesawing because of that issue.
You know, you must remember we make an intermediate which goes into a product which then goes to the end user, right? The entire value chain has to absorb the price increase. The first increase that's happened was a supply-led increase or supply, remember, supply shortage. That is normalizing itself because that price is not being passed through fully. That said, I do believe that our prices will reflect the broad movement in terms of market pricing going forward. Does that answer your question?
Yeah. That's good.
Thank you.
You were also mentioning that this the short-term deal by deal pricing, is this more closer to the long-term pricing or this more closer to the spot, which is $4.5 per kg?
No. In general, short-term pricing is closer to spot.
Okay.
Okay. You know, and obviously long-term pricing is driven by multi-year relationships we have, end markets we want to play with. We don't want to have geographic concentration in one geography. There are multiple considerations, Avnish. Now, what are the end user industries, flame retardant, right, pharma, et cetera, we want to be, we want to position our product in oil field chemicals. What's the geographical diversification we want to have? Right. What is the, you know, customer concentration in terms of what's the synergy benefit a customer brings across bromine, across derivatives? There are multiple factors, but spot is generally closer to market.
The second question, which I have is that if you look at your supply shortage, you said has now reduced. This other supply of bromine which comes from locations which are under stress right now, has that supply now normalized or that supply is still under not normalized?
No, I think that supply is still trailing probably what historical, the past levels were. It is still trailing that. Obviously, you're driving challenges with your new supply routes have emerged. Right. I would still say that there's still a gap in the market demand supply.
Israel supply, has it been affected or that Jordan-Israel has not been impacted that much?
I mean, to be fair, I mean, it probably would be unfair to just speak about specific geography because in each geography there are large companies which are at play, and large players. I would say generally, I think if you look at trade route volume, Avnish , I think there is still a gap, right, on those trade routes compared to some of the volumes pre-conflict.
Okay. There is still a shortfall and demand rationing is what is bringing the pricing down. Otherwise it would have been much higher price, right, effectively.
No. Well, the short, again, the point you must understand that, you know, this is because most of the industry works with long-term contract pricing, whenever there is a small dip in shortage and also sells long term.
Right. Right.
Capacity is sold and blocked, on a long-term basis. Effectively, spot capacity, which gets traded all the time, is only 20% or 25% of overall capacity. If one manufacturer suddenly Right? That's the impact which happens.
Yeah. Yeah. Maybe if I can ask you just one more. If you were to look at your numbers, standalone and consolidated, and there's a loss between these two, because of this, other businesses you have, can you articulate, where these numbers might go, let's say, in terms of, EBITDA or revenue, in one or two years' time? I mean, I know you mentioned a lot of steps you are taking-
No.
... on break even.
Avnish , as you know, we don't make forward-looking statements, I will probably take a-
Right
... I'll take an exception on that. You know, I won't be able to give specific guidance on those.
In the past, have you given the guidance around break-even points, when you can achieve there or any, like, what metrics we can track for those businesses?
No, we don't really provide specific guidance to that level of detail, Avnish.
Okay.
Yeah.
Maybe lastly, I was gonna ask you-
I'm sorry to-
What will require-
Sir, please.
Yeah. Of course.
Mr. Tiwari, please return to the queue. Thank you.
Yeah.
Participants, please limit your questions to only two questions. We have several participants awaiting their turn. The next question is from the line of Chirag from Keynote. Please go ahead.
Hi, Chirag. Good afternoon.
Yes, Chirag, please go ahead.
Yes. Thank you for the opportunity. First of all, I would like to understand the reason of significant volatility that is taking place in bromine prices. It has increased from almost $5,000 per ton to almost $9,000, $10,000, and now it is reverting back to almost $7,000, if I'm not wrong. Just wanted to understand what actually brings that kind of volatility in the market.
Yep. Why don't you just give, share all your questions, I'll answer them all together.
Sure. Sure. My second question is related to as crude prices have started moving, inching up from the earlier $35 per barrel. Great. Are we seeing new drilling activities taking place due to which the mud chemical business, Oren Hydrocarbons Business is actually starting seeing some new revenue to come into picture from this particular area? There are some bookkeeping questions. One is what actually comes into intangible under development when it is getting highlighted in our balance sheet? Were there any revaluation taking place on raw material levels?
Okay. I'll try and answer the 1st one, and then Natarajan to answer the next two. I think what drives bromine pricing, as I said, I mentioned a two times, right? The way the actually, broadly, the industry works is that basically the buyers and sellers in the industry tend to work on long-term contracting for a large part of their requirements or the large part of their production. Therefore, what happens is the majority of the market still transacts on that long-term pricing. Right?
For example, if you and I have a contract, and we have signed a contract that said three and a half dollars per ton, and you sign for 75% of your volume requirement, and I sign for 75% of my capacity, that volume still transacts at a long-term price only. What happens is that there's a sudden imbalance which comes, either because of a sudden spike in demand or a sudden shortage of supply. That puts pressure on the market, and that pressure gets concentrated around the spot business. If there's a sudden shortage in supply which happens, then what happens is that you have to go and still buy your bromine from somewhere.
You tend to go and buy your balance bromine, which I am not supplying on the long-term contract, at whatever price you think you can afford, and that pushes the prices up. Right? Therefore, what the industry tends to hear as volatile prices is basically only spot prices. Spot is a fraction of the market, right?
We kind of make an effort to consistently remind that spot is only a fraction of the market, but that's actually where you see all the volatility. You don't see a volatility in the majority of the market where there's a lot of movement happening. That's the question around that. Do you want to, Natarajan, do you wanna talk about revaluation?
Yeah, yeah. I will explain. Yeah. The second question, which was the intangible asset under development. SiCSem actually is doing a pilot line for wafer manufacturing at IIT Bhubaneswar. Whatever capital we are, we have spent there so far is under intellectual property development. At the same time, there is a technology transfer agreement with Classic Wafer Fab. The expenditure committed towards that so far is also under AUD.
Got it. Got it. Also two more questions.
Yeah.
One, the crude prices movement, are we seeing any positive development related to trials for mud-chemical? Second was related to the revaluation of inventory.
I think Archean Chemical. I'm sorry I missed that question, but I think right now oil and gas, oil and gas demand is still fairly muted because a lot of that space is in the Middle East, and therefore I don't think we have seen anything tangibly move in terms of short-term demand. I think the view is that once the war subsides, then obviously we'll go through reconstruction phase, and it should give us a flip in terms of demand.
Got it. Got it. Sir, related to that, any revaluation on inventory b ecause there is a significant short term. Is it just because the whole end surface is different, right?
No, no. No, no revaluation on the inventory.
What would be the CapEx, debt level, what kind of debt level are we comfortable with at company level?
We don't make-
It's not specific.
We don't make a specific view like that. Our view is that Capital discipline is about investing in projects which have got good returns. We are growth-oriented, therefore we will continue to look at investing in high-growth return projects, which also means that we have to scale up our existing businesses and deliver the right level of returns from them.
Sir, one thing-
I'm sorry, sir. Please come. Please return to the queue, Chirag sir.
Okay. I'll come back.
Thank you. The next question is from the line of Rohit Nagraj from 360 ONE Capital. Please go ahead.
Yeah. Thanks for the opportunity. I'll ask all the questions together. First is-
Thank you.
... on the bromine. Thank you, sir. On the bromine pricing, I understand that the long-term contracts would be either calendar year or financial year, and probably both would have consummated for the next year. What is the kind of pricing range that we are looking at? I am not looking at a specific number, but a range would be helpful in terms of building in for the estimates. Second thing, on Oren Hydrocarbon , when we acquired, we had an estimate of INR 150 crores of revenues. When are we likely to reach that mark? I mean, broader timelines would be helpful. Third is in terms of industrial salt. You said there is pricing pressure.
I was unable to get the exact point because anyways it's an export-oriented business and the realizations in terms of dollar terms are certainly, I mean, in rupee terms certainly would be better because of the depreciation. Last one, bookkeeping kind of question. What is the cash as of 31st March on the books? Thank you.
All right. I'll ask Natarajan to answer the fourth question, but let me try and take the first three. I think, I mean, I'm gonna award you a range as well on bromine pricing. I think as I mentioned, you know, we have gone and renegotiated a majority of our contracts even if they were not expiring. We have gone back and renegotiated almost all our ATCs off, right?
We've gone back to spoken to customers. I mentioned that we do this in the earlier call as well. We have kind of completed a majority of that. Therefore, I think we'll see the flow through of it. However, I will, you know, we generally don't give a very specific guidance on pricing, for reasons you will very well understand.
Okay. Because it's right. Therefore I would avoid giving a range as well. As I said, we will see some flows. We'll see flow through impact as we've done the action. As far as Oren Hydrocarbons is concerned, I think we had given a guidance of INR 150 crores. It was basically divided across three products, you know, bentonite, which we make in the Mandvi plant in Gujarat, barite in a plant in Kodur, and the third one has been around starch and Fibro Seal products and packed products which we make in the plant in Andhra Pradesh, in a location called Nagari.
More than around 40%-45% of our volume or it was supposed to come from the bentonite product in Mandvi. That plant actually has been under. We have to work with government on getting licenses cleared and approvals done. Unfortunately the Gujarat government, you know, interprets some of the NCLT provisions or orders in a slightly different way, and we are working with the local government authorities to get aligned on that, which is right now the hindrance in starting the plant up.
That's actually what's affecting it out. In the remaining part of the business, which was around half that INR 150 crores which we indicated, we have some challenges on retuning the product line. The markets have obviously changed, therefore the product composition is slightly different. We have developed new products in those, in those plants.
Those products are actually under customer trials now. Obviously those products are highly focused on the oil and gas market, and given the sluggishness has happened recently and now the crisis now, I'm not sure when we'll actually see a recovery there. As we go to this year, in the second half of the year right now, we hope that, basis where we are executing right now on, you know, on various fronts, we expect that all, at least two out of the three plants will be in operations at reasonable volume in the second half of the year.
Uh, and the-
Just on industrial salt, I think I'll consider that. I think on industrial salt, the way I tend to look at it is, you know, we supply, a lot of our salt goes into South Asia and Southeast Asia. Right? You know, as you know, in salt, the longer you go, the further you go away from India, the less competitive you are. Right? We sell a lot into, so on Where we sell to markets in South Asia for high grade applications, where, you know, where there's requirement for NaCl content is very high, where the customers need to pay a premium for low insolubles, we actually get very good pricing.
When you go into, you know, in some of the geographies like China, we are competing also with locally manufactured salt. Salt comes from other geographies which are geographically far closer to the end market. Therefore we get more pressure on pricing because of that, right?
That was my reference to my earlier comment saying that, you know, obviously that there's competitive intensity. It's by geography it's different, and the competitiveness in the geography determines the weighted average of our pricing in our basket. There are long-term customers that we've not seen price coming down too much because they are, let's say, in Indonesia or they're closer or they have an application where they need a very high quality salt.
There are customers who are very far away from India and probably are able to use a slightly lower quality salt in their application, and there we see more pricing pressure. That's kind of the balance which is there, and that's what drives broadly the contours of pricing in the market. With that, let me. Obviously if those, if the geographical demand, you know, and then demand in those geographies of those customers and they're growing very fast, we see benefits. If they're not growing, we obviously see some impact of that as well. With that, let me just let Natarajan answer the housekeeping-
Yeah.
... bookkeeping question.
Yeah. Just standalone, cash equivalent, bank balance is INR 37 crore and consolidated is INR 55 crore.
Sure. Thanks for answering all the questions and all the best, sir.
Thank you. Due to time constraints, that was the last question. I now hand the floor over to the management for closing comments.
All right. Well, thank you everyone for joining us in the earnings call. We appreciate your time and for showing interest in the company. In case of any queries, you can get in touch with our team or with SGA Investor Relations advisors. We will turn back those questions very quickly. Right? We look forward to meeting all of you over the next call. Just to, as a point of interest, you know, we have scheduled the date for the AGM, which is on June 12th. Hopefully those of you who are able to make it, we'd love to have some of you members join us at the AGM as well. All right. Thank you very much. Take care. Stay safe.
Thank you very much, sir. On behalf of Archean Chemical Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.