Ladies and gentlemen, good day and welcome to the Chemplast Sanmar Limited Q1 FY25 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ramkumar Shankar, Managing Director of Chemplast Sanmar Limited. Thank you, and over to you, sir.
Thank you very much. Good morning, everybody. On behalf of Chemplast Sanmar Limited, I extend a very warm welcome to everyone joining us on our call today. On this call, we are joined by our CFO, N. Muralidharan, Dr. Krishna K umar Rangachari, the head of our Custom Manufactured Chemicals Division, and SGA our Investor Relations Advisor. I hope everyone has had an opportunity to go through the financial results and investor presentations, which have been uploaded on the Stock Exchange website and on our company's website. After the very tough business conditions in 2023-24, we had a strong start to fiscal 2025 driven by better conditions in our Custom Manufactured Chemicals business, as also the specialty Paste PVC and the suspension PVC businesses. During Q1 FY2025, we delivered revenues of INR 1,145 crores with an EBITDA of INR 124 crores and an 11% margin.
Coming to the segment-wise performance, our specialty chemicals business delivered robust results. The first quarter benefited from the price uptrend that we witnessed on the paste PVC side, primarily led by higher ocean freights. Furthermore, based on the preliminary findings, provisional anti-dumping duties were announced in June 2024 for a period of 6 months on import of paste PVC from producers in countries such as Norway, Thailand, Malaysia, Taiwan, and China. The specialty chemicals division's volumes increased by 44% on a year-on-year basis, mainly due to the commissioning of the new paste PVC capacity in the last quarter of the previous year. We continue to see heightened levels of import of paste PVC at low prices.
While we do expect the announced provisional duty on Paste PVC to provide some respite, this anti-dumping duty, the provisional anti-dumping duty, is not on imports from EU countries, the volumes of which have surged in the last few months. The domestic industry has, therefore, filed a fresh petition to protect against dumping from EU in particular and Japan. On the Custom Manufactured Chemicals business, the demand showed signs of recovery as compared to the last quarter. We have recently signed a new letter of intent with an agrochemical innovator for an advanced intermediate for a new active ingredient. This LOI covers a period of five years. Besides broadening the customer base, this LOI also gives us an opportunity to participate in a newly launched molecule. This is the first LOI that we have signed over the past 20 months and reassures our healthy growth visibility in CMC business.
We are looking at a brighter future for our Custom Manufactured Chemicals Division due to planned expansion backed by a solid product pipeline and strong demand from our customers. Phase two of our CMC expansion is progressing well and is expected to get commissioned by the end of Q2 FY 2025. The board has also approved an investment of about INR 160 crores to increase the production capacity of the Custom Manufactured Chemicals Division at Berigai. This investment will further increase the total capacity of the new multipurpose production block. A portion of this investment will go towards creating the infrastructure for the next multipurpose production block. In terms of value-added chemicals, revenue increased by 20% as compared to the same quarter in the previous year, mainly due to improved sales volume, which is partly offset by subdued prices.
At Chemplast, we produce these chemicals as a part of our integrated operations, making the operations resilient. In chloromethanes, domestic capacity continues to remain in excess of demand, resulting in weak prices. In caustic soda, domestic demand has shown signs of an uptick in this quarter. Suspension PVC revenue has been stable in Q1 FY25 as compared to the corresponding period last year, while it has improved by 8% sequentially. We witnessed a positive swing in profits in the current quarter on account of both improved prices of suspension PVC and lower feedstock prices. The improvement in prices was largely due to a severe container shortage for cargo originating from Northeast Asia, in particular China, which briefly increased the prices of Indian-imported suspension PVC. However, these heightened freight rates have started dropping off from the end of June.
This drop, coupled with continued weakness in the Chinese economy, has resulted in large volumes of imports coming in from China at very low prices. While the domestic industry has already filed an anti-dumping petition on imports of Suspension PVC from various countries, the decision on this is expected only by Q3 of the current financial year. Domestic demand continues to remain strong. India's infrastructure missions to provide access to clean water and improve irrigation are critical projects that are bolstering this growth. Also, the construction sector is showing a significant promise to adopt new PVC profiles and types. At a broader level, the Indian chemical industry is looking at a gradual recovery during FY25, though the overhang of overcapacity in China continues to cast a long and dark shadow. Having said that, these stockpiles, which have significantly impacted the performance in FY24, are expected to ease considerably.
The key, however, continues to remain China and recovery in that economy. With our consistent investment during tough times, we have built new capacities and capabilities to be able to deliver a stronger performance in the coming periods. To summarize, while Q1 performance was a positive start to the year, prices of PVC have again dropped in July. While this may impact Q2 performance, we believe that various measures being taken to stem the flow of low-cost imports into India will bear fruit later in the year. Positive developments in the Custom Manufactured Chemicals division continue to augur well for future growth. Now, I would request our CFO, N. Muralidharan, to share the financial highlights for the quarter.
Thank you, Ramkumar. Good morning, everyone. Talking about the quarterly performance in Q1 FY25, the company recorded a healthy performance for the quarter and showed significant positive movement both on year-over-year as well as quarter-over-quarter basis. The revenue from operations came in at INR 1,145 crores, which is a 9% growth sequentially due to higher volumes of our Specialty and Value-added Chemicals divisions and higher realization per ton of Paste and Suspension PVC. On account of improvement in realization and increased volume from Specialty division, our gross margin for the quarter increased from 31% to 40% on a quarter-over-quarter basis. On a sequential basis, the employee expenses for the quarter increased by 14% due to the impact of new projects which were commissioned last year as well as the annual increments.
Other expenses increased by 9% as compared to Q4 of FY 2024, mainly due to higher power and fuel costs and freight costs on account of higher volumes. In Q1 FY 2025, we reported an EBITDA of INR 124 crore with an EBITDA margin of 11%. Our finance costs for the quarter stood at INR 59 crore, and the net profit for the quarter was at INR 24 crore. We have had significant traction in our custom manufacturing business, and confidence is reflected in the next phase of expansion that we have announced in the new multipurpose block. Liquidity position continues to remain strong, with the cash and bank balances remaining around INR 800 crore. With the recent capacity additions and the CapEx plans that have been announced, we are confident of the long-term potential of our businesses and are strengthening our capabilities and relationships to grow in a sustainable manner.
With this, we conclude the presentation and open the floor for further discussions.
Thank you very much. We will now begin the questions and answers session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Yeah, good morning. Thanks for taking my question. Ram, first on the standalone business, if I look at the gross profit per kg, we have reached INR 115. If I go back into the history and look at when we were doing this kind of a gross profit per kg, the conversion to EBITDA was, of course, INR 50 a kg. This quarter, we did INR 17 a kg in terms of EBITDA. Now, one can attribute this entire difference to custom manufacturing, which is ramping up, and for now is a drag. This should gradually improve as the custom manufacturing starts delivering on the EBITDA side. Will that be a right assumption?
Definitely, the Custom Manufactured Chemicals business will move the needle as we go forward, especially given the very exciting growth possibilities that we have. So that is going to weigh in as we move along. If we are looking at our margins right now, the margins on the rest of the products have been impacted largely by the dumping that I was speaking about. That is being addressed as we speak. Already on Paste PVC, we have a provisional anti-dumping that has come in on 5 countries, and the domestic industry has applied for anti-dumping duty on the European Union and Japan as well. And that would maybe come in maybe over the next few months. On Suspension PVC, there is already an active investigation that is ongoing on dumping from China in particular.
So we believe that all of this, when they come into force, will push up. They will further strengthen the prices and margins on the other products as well.
So again, on the Paste PVC side, sequentially, when you say that the dumping has, again, started from the Europe region, how much correction in the prices that have already taken up in the market?
Yeah. We have seen an improvement of around $150 or so on prices. That did happen. Some part of it would have been due to the freight rate, container freight rate movement as well. But the full impact of the anti-dumping duty has not been realized largely because of what is coming in from the West. And that is really what we are trying to address now.
This $150 improvement, has that corrected a little bit, or that's still there as we speak today?
A little bit of that. Whatever was attributable to the ocean freight, the container freight movement, that is corrected because, as you would have noticed, the container freight from east to west, that is, from Northeast Asia to, say, U.S. and Europe, went up very sharply by around June or actually end May and then June when they moved up from as low as $1,500 a container, a 40-foot container, to around $6,500 a 40-foot container. They have come off from those highs, but they're still above the historic levels. But definitely, the movement is, it's come down from the highs of $6,500.
Got it. Next, on the custom manufacturing side, if I heard you right, you said that this INR 160 crores of CapEx is largely to build the utility and the infra preparing for the next MPP. Was that right understanding?
This is Krishna, Sanjesh. No, the intent is we are increasing capacity in the new production block. So we are calling it phase three, phase three of that project. So a significant portion of the CapEx would be towards that. And some portion of the CapEx is for the next production block as a seed CapEx to primarily going towards creating a civil structure. And then, over a period of time, we will start investing in putting the ports and plants inside that block. So both of the entire 160, again, long story short, the entire 160 is towards increasing capacity.
Okay. Okay. This civil structure will be the size of MPP3 that we have built?
Yes, or slightly larger, actually.
Okay. It will be slightly larger than the MPP3. And Krishna, again, as Ram said, this is for the new customer. The new LOI signed is a new customer and a new product. Was that right?
Yes, that's correct. It is part of our strategy to diversify both the product mix and the customer mix. In fact, we just received an order, a commercial order as well. We will manufacture in the current production block for this year. Long term, this will go into either the phase three or a new production block.
Okay. Okay. And how many more products in the pipeline, Krishna, for us?
The pipeline continues to grow. We keep converting or moving it from development to pre-commercial to commercial. I mean, I would guess at least another 12-15 products in the pipeline.
Got it. Got it. Thanks, Ram. Thanks, Krishna, for all those answers. And best of luck for the coming quarters.
Thank you, Sanjesh.
Thank you.
Thank you, sir.
The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead.
Yeah, hi, sir. Thanks for the opportunity. First question on the CSM side. Now, this INR 160 crores is dedicatedly for the fifth LOI. Is that understanding right? Apart from the infra construction, etc., whatever the amount requirement there is.
That's not linked specifically to any particular LOI. We are creating the capacity because we see the pipeline strong, and we would need capacity to make the products that we are planning on making. As I indicated earlier, it is not necessarily infrastructure. This is specifically to create additional capacity in both the current production block and then preparing for the next stage of expansion in the new production block.
Sure. Sure, Krishna. So if I'm just correct me if I'm wrong. Phase one was INR 300 crore CapEx. Phase three was INR 380 crore. Phase two was INR 380 crore. And with the four CapExes or four LOIs that we have already announced along with the fifth one, we believe that more or less the capacity in phase one plus phase two will be utilized, and hence this incremental expansion.
You are right. Based on the LOIs that we received, the phase one and two capacities will be fully utilized. And in fact, phase three that we are planning, even part of that will also get utilized based on that. That's why we are creating an infrastructure, civil infrastructure for the next phase, for the next block, so that we are able to accelerate the sort of setting up that block quickly once we have the orders in place, extra order in place.
Sure. How much typical time post this INR 160 crore CapEx do you think you will take to ramp up for a new capacity to commission?
Again, we will keep you updated. I think the intent is we want to cut short the timeline required to put up a production block, which is the reason civil being the long lead time. We are proactively going ahead and investing in that. And as the pipeline moves, then we would be in a position to start installing the reactors and other equipment to start utilizing, to start to generate additional capacity. So right now, I would say maybe another 12 months from where we are now, but it could accelerate, or we could do it much faster. It all depends on how the pipeline is.
Sure. Sure, Krishna. Secondly, on the R&D side, the second phase expansion there, just wanted to get your sense. How are we looking at enhancing our capabilities? Will it be more focused on adding more chemistries, or probably from an application point of view, we are looking at a wider addressable universe? So your thoughts there, please.
Yeah. So the second phase of the R&D was commissioned a couple of quarters back. And similarly, we're also commissioning the next phase or it's already commissioned, the next phase of our pilot plant expansion. So all of these are to the intent is twofold. One is to make sure that we have spare capacity in both those areas to take up any projects that come in. So that is the primary objective because the chain is you need to have enough R&D resources, pilot resources, and then you need to have enough manufacturing capacity. And then you keep increasing each one of them sequentially. So the primary intent is to have enough spare capacity so that when we get these inquiries and projects, we are able to dedicate resources immediately.
But in terms of capabilities built up as well, the state-of-the-art R&D and pilot plants can handle additional chemistries that we are not doing right now. The infrastructure, the capabilities have been put in place, such as dedicated labs for hazardous chemicals, similarly dedicated scrubbing units in the pilot plant to handle complex chemistries. So that, from a capability standpoint as well, both of these, the next phase of investment in both these are coming online. And our belief is it would just make it even more attractive for us to go pitch our capabilities to our customers.
Sure. Sure. That's very clear there. Thank you. And just lastly, Ram, from a global on the PVC side, there was some bit of volatility in VCM, EDC prices as well. Are things settled there largely from capacity running perspective globally?
Oh, yeah. That is all settled. There will always be one plant or the other, either on the PVC side or on the Paste PVC side, which could be down for maintenance. But there is nothing that is alarming or out of the ordinary. And VCM prices are following PVC trends. Like I've always been saying in a rising market normally, that there's always a lag between VCM and PVC. The lag will help us in a rising market, and it will go against us in a falling market. In a stable market, we should be perfectly fine. And VCM prices tend to, are even today, following PVC prices. So there's nothing out of the ordinary there.
Sure. And any thoughts on the you did allude it towards the anti-dumping duty implementation there on both SPVC and Paste PVC. But any thoughts on timelines there, if you could share?
Yeah. Sure. Paste PVC, the provisional duty on five countries is already there. We have that is in place. And that will get converted into a final finding, possibly in the next couple of months. We have recently applied for another petition. We filed another petition for anti-dumping duties on imports from EU and Japan. And that is in its initial phases. So that would maybe take Q4 of this year for it to see the final decision coming in. Suspension PVC is in an advanced stage. The petition has been filed, investigation initiated, and we expect that maybe by Q3, we should see a decision on that.
Sure, Ram. That's helpful. Thank you and all the best.
Thank you. The next question is from the line of Rajk iran Gandhi from SBI Mutual Funds. Please go ahead.
Hi. Thanks for the opportunity here. So just on CMC, we are doing fairly well in terms of ramp-up and all. But overall, is it largely to do with us doing phenomenally well or top-down overall for this place? We were hearing about a lot of competition from China. Because of the lower demand there, they're kind of doing a lot of dumping and all of that. So top-down, how is the segment doing?
I think, Raj, as Ram is here, I think the dumping part of it is largely to do with the PVC side. The Custom Manufactured Chemicals Division is really 100% export-oriented. So I'm not very sure what your question was.
In the overseas market, let's say in U.S., Europe, and all, there is a lot of pricing pressure coming from China ramping up their exports and all. So in those markets, top-down from a CMC space, how is it? As in bottom-up, we are doing well and all. But just wanted to know top-down as a segment, are you seeing in global markets wherever you are exporting a lot of competition from China? Is the segment growth overall there? So in terms of whatever molecules they are outsourcing and all of that. So just wanted to understand top-down, how is the segment doing?
So our model is custom manufacturing. Second is we focus only with innovators, focus on innovators. And a lot of the projects that we are working on are what I call as pipeline molecules, which are molecules that are in the launch phase or they've just been recently launched. And in all these cases, the customers are very clear that they want to diversify the supply chain. They want to have a China plus one strategy. And as they look for reliable partners globally, they are focusing on India. And then India, again, as they look for reliable partners, there are only a few that they are comfortable in terms of with whom they are comfortable working with.
So from that standpoint, we are not seeing any significant impact with the global slowdown, the inventory corrections on the Agchem space , as well as exports from China coming in at very, very low prices. But most of that is impacting the generic or the established molecules. And we are not seeing that significant impact with respect to our business.
Sure. Sure. Thanks a lot.
Thank you. The next question is from the line of Archit Joshi from B&K Securities. Please go ahead.
Hi. Good morning, sir. So first question on our ambition on achieving INR 1,000-odd crore of revenues from CMC. Any change in our guidance with respect to either the timeline or the total value that we wish to achieve, especially after announcing the INR 160 crore CapEx?
This INR 160 crore CapEx actually will certainly add to the revenue. So earlier, we had talked about by 2027, we'll touch INR 1,000 crores of revenue. I think we will sort of surpass that with this new announcement and with the orders that we have signed. We'll definitely surpass that number by 2027. It'll be sort of over and above that INR 1,000 crores.
Sure, sir. Thanks for that. So secondly, when we were speaking of the Paste PVC investigation that we have initiated on EU and Japan, was this completely unprecedented that the cheaper imports will now start coming in from EU and Japan? Or is it that the Chinese companies who were first while dumping into India found another route of dumping it through EU and Japan? What's your reading on that, sir?
No. It's not a rerouting from China through EU. Actually, the freight alone would kill that kind of a rerouting. But this is really material coming in from EU. And to be very honest, we were also a bit surprised that EU could afford that kind of prices. We believe there is some kind of a cross-subsidization going on there. And that is really what is the entire purpose of our application. To just give you a perspective, the imports from Europe, last year in 2023, 2024, were around 30% of the total imports. And this year, it continues to be around the same levels. And that is really what we are trying to protect against. The provisional duty that has already come is against China, Malaysia, Taiwan, Thailand, and Norway.
The duties range from around $115-$600, different duties on different countries, different companies in the different countries. We should technically have got the full beneficial impact of this. We have not been able to get that full thing largely because of what is happening on the imports coming in from the EU side. That is really what we are now addressing.
Sure, sir. Sir, would you mind sharing the spreads of Paste PVC as of now vis-à-vis the spreads that we are experiencing in SPVC?
Okay. Another unit contribution, you can tell me. The unit contribution in the last quarter, that is in Q1 of Paste PVC, was around INR 21,000 per ton. As against the Suspension PVC, was around INR 14,500 per ton.
Understood, sir. Just last one, sir. Could you share our current net debt on the books?
Current net debt number is around INR 560 crore. We are carrying a cash of around INR 800 crore. This is around INR 570 crore net debt.
Understood. Understood. Thanks a lot, sir. Thanks a lot. All the best.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Meghna Agarwal from Mount Intra Finance. Please go ahead.
Hello. Good morning, sir. Thank you for giving me the opportunity. So my first question is that what is the input-output ratio of Suspension PVC and VCM?
Okay. Meghna, it's practically 1 ton of VCM per ton of suspension. It would be in the third decimal, maybe around 1.003 or so.
Sir, how can we track the VCM prices in India?
So these are well tracked by industry publications. There are monthly reporting of, not India, prices. It could be VCM Asia prices would be there, Southeast Asia and Northeast Asia. Those are the ones that we track.
We can get it on a monthly basis?
Yeah, yeah. They are tracked on a monthly basis. They're reported on a monthly basis.
And sir, what are the terms of contract? Is it take-or-pay contract? What are the terms of the contract?
For VCM?
Yes, sir.
Yeah, yeah. For VCM, we have rolling annual contracts. These are typically based on there will be a range. It's not like a one number. So you will have a range. The contract will be for a minimum and a maximum of quantity. So we will operate well within that range. We've never had a situation where we've had to pay because we couldn't take and so on.
Just one more last question on the input-output ratio. Sir, what are we expecting of this input-output ratio coming in this year?
No, this is stoichiometry. This doesn't change. This will be stable every year.
Okay. Sir, one more last question. What are the terms of the contract for the contract manufacturing, not for the VCM, sir?
Again, the model here is most of them, you would enter into a supply agreement. The time period of those are typically anywhere between 3-5 years. It may have a component related to the price structure or price formula. In some cases, there may also be some volume agreements or volume arrangements.
Hello. Hello. This is Subrata from Mount Intra only. Sir, just what we are trying to understand, when we get into our contract manufacturing, is it a typical contract manufacturing where a minimum quantity is assured? And at least for that quantity, that is pay-or-take, or it's totally only a contract for a few years but without any assurance of minimum supply?
So on the custom manufacturing, I mean, as I indicated before, it changes, varies from product to product. Some contracts would have some volume agreements or volume arrangements. In some cases, it would have a price component or a price formula. And the volume, there would be some minimum commitments, let's say. But yeah, so there may be some minimum commitments, but some of them don't have volume commitments at all. So it will depend on the particular project that we're working on.
So in that case, when we are doing a contract, we are putting up a plant for a particular client. So just to understand, sir, if there is no minimum volume assurance, and after putting up the plant, if we don't get that kind of a demand from that particular client, is that facility fungible so that we can cater to other clients? Or if this is very specific, that client, that particular product, and it is not really fungible?
That's a very good question. That's why we prefer to put up what we call as multipurpose blocks or multipurpose production blocks, which means that the production blocks would have the flexibility to change from one product to another. And so if you do a dedicated block for a particular customer for a particular product, then obviously, you would have agreements in place to ensure that there are minimum offtakes. But when you have a multipurpose block, you have the flexibility to move back and forth between products.
Okay. So all our blocks are multipurpose blocks, basically, which is fungible?
Correct. Currently, that's what we have. Yes.
Perfect, sir. Thank you.
Thank you, sir.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Dhruv from HDFC AMC. Please go ahead.
Yeah, sir. Thank you so much. Sir, in the non-specialty segment, if I do a simplistically per ton or per kg realization, there is an improvement on a QoQ basis. I believe this is Caustic and some of the other basic products. So for some of the other companies we have seen, there has been some improvement on a QoQ basis in some of these related products. So in your sense, is this also a bit influenced by the freight fee, or this is something more on-ground and hence the improvement? Or probably this will also reverse, as some part of this will also reverse as the freight fees are normalizing again?
No. If you're looking at the value-added chemicals, Caustic Soda, there has been some move up. It's not very significant, but there has been a slight move up as the market stabilizes and capacity settles down. And from July, we are also seeing a good move up in a couple of the chloromethanes products. Their prices have moved up a bit. There, the impact of ocean freight is not as high as in PVC, though there could be a little bit where, especially where it comes in barrels or so. But that is not so high. It's not so significant.
Got it. And so the second thing is on the SPVC, the duty provision, which is probably likely to happen. Now, how is the approach here? I mean, is it broad-based across all countries? Or probably we can see some of the same thing that happened in PVC that we go ahead against some countries, and then there are other alternatives which are available, and they bypass it through those countries. So how is the approach for SPVC?
Suspension PVC petition is filed against all the large exporters to India. So this covers really every single one of the large exporters. And see, what we need to understand is that the industry has faced an onslaught, especially from China, the likes of which has not been seen before in terms of the arrivals from there. So last year, just to give you an idea, last year, that is 2023, 2024, the import of SPVC from China was around 860,000 tons, which itself had grown multiple times from the 250,000 tons that they had in 2021, 2022, and around the 70,000 tons in 2021. So that 860 itself was very high. As compared to that, in the first quarter of this year, we have already seen 375,000 tons coming in from China. And July is expected to see another significant volume landing, should have landed.
We don't have the numbers yet. But that would take it to over 500,000 tons in just four months in this year. So obviously, this is something that is a reflection of the very weak economy in China, resulting in huge surpluses that are being dumped, particularly into India. So this is the onslaught that the domestic industry is trying to protect itself from because obviously, this is unnatural and too extensive, an onslaught for it to be just endured. And we are quite confident that we have a very strong case, and we believe that we will prevail in the petition that we filed.
Sure, sir. One question on the CSM. If I remember from the last call, you mentioned that the LOI3 and LOI4, you were also waiting for some commercial supplies, I think sample supplies, and then confirmation of those to get better clarity on the ramp-up of these molecules. Although broadly, it was in that INR 1,000 crore range was there. Is it fair to understand that there is better visibility also on the LOI3 and LOI4 now, probably as you have progressed with the customer?
Yes, yes. No. So LOI 3 and 4, we are in the process of making lab and pilot samples. And so there will be some time it takes to commercialize them. But we have clarity and visibility on when the commercial volumes and what the commercial when the volumes have to be delivered and what the volumes are. So there is a high level of visibility and clarity on that.
Perfect. That's very helpful. Thanks. Thanks so much, and all the best.
Thank you. The next question is from the line of Ketan Mehta from BOB Capital Markets Limited. Please go ahead.
Thank you, sir, for the opportunity.
Sorry to interrupt you, sir. May I request you to please use your handset?
Yeah. Is this better now?
Yes, sir. Please go ahead.
Yeah. The first question was on the Specialty Chemicals. Just wanted to understand the revenue dynamics. So when I look at the Q4 volumes, it was around 18,400 KT, and revenue was around INR 332 crores versus, I think, in Q1 FY25, we are seeing the Paste PVC volume of 25,700 crore, but revenue of around 350-odd crores. We just mentioned that we have seen an increase in the prices of Paste PVC during Q1 sequentially, but the same doesn't seem to be translated into the revenue. So what's the underlying dynamics, how it's playing?
No. Between the two quarters, like you rightly pointed out, the volume for Paste PVC did go up primarily because of incremental volumes that we got out of the new projects that we commissioned towards the end of the last year. The prices also moved up, prices which were average around 96,000, 95,900 rupees in Q around 96,000 rupees in Q4 of last year went up to close to around 98,000 rupees in Q1 of this year. There is a 2,000 rupees momentum price. Also, there is an increase in volumes.
I was asking, basically, there is a sort of 33% jump in the volumes, but the revenue increases less than sort of 5%-7%. Prices have actually moved up. What's the gap? Why is it sort of the revenue has not moved in proportion with the volume?
That is also. It's not only Paste PVC that is covered in the specialty business. It also has custom manufacturing. Custom manufacturing business had significant sales in the last quarter of the previous year because many of the dispatchers were skewed towards the last quarter of the previous year. That also had the impact. That's why you are not able to see that straight 33% growth driven only by Paste PVC.
Any more color would be sort of between the custom manufacturing, how has been the revenue decline between two quarters?
I wouldn't say it's not a decline. It's a timing of sale. In fact, you will see significant growth in the current year compared to the last year. It's a timing of sale. In the last year, significant part of the dispatches for the year were bunched up in the last quarter, whereas this year, the custom manufacturing dispatches are reasonably evenly paced. So that is the difference that you are seeing. It is not a drawdown.
Sure, sir. The second question was also related to the data. When we look at the standalone, we are seeing the purchase of stock in trade moving up to around INR 107 crore. But in the consolidated account, this purchase of stock in trade is not there. So is this basically the VCM that we are purchasing it from the CCVL? Is this a reflection of that, or are there any other products which we are purchasing from outside in the standalone business?
In the standalone business, it's primarily the VCM that spot between the two companies, between the holding company and subsidiary. That's the stock-in-trade.
Right. But VCM, we also purchased externally in CCVL as well. So why does it not sort of got reflected into the consolidated account as purchase of stock in trade?
Yes. Stock in trade is primarily in the standalone company. If there is a requirement of LC support for the subsidiary, we use these limits of the holding company and then sell to the subsidiary company. That is what is getting reflected in the stock in trade. What you buy for your own consumption doesn't get reflected in the stock in trade. It's more accounting rather than anything. It's how you need to.
Sure. The last question was on the custom manufacturing. Basically, across the phase one and phase two, we have indicated capacity as around 4,500 tons, cumulative revenue potential of INR 15-17 billion of the revenue, and peak revenue potential of INR 7 billion over the last call. So with the addition of the fifth LOI, would you be able to sort of update us on as well as sort of the next phase three investments commencing, would you be able to update on these numbers?
The fifth LOI that is added, actually, last time we talked about roughly around all five LOIs combined together on an annual basis, giving us somewhere around INR 750 crores at a steady rate and also totally around INR 1,500-1,700 crores on an overall basis. That will move up by another INR 300 crores now. The last LOI will add INR 300 crores to that. On an annualized basis, on a steady state, this LOI will add around INR 125 crores.
INR 300 crore on a cumulative basis and INR 125 crore on sort of the peak potential basis?
Yes. That's right. These are sort of minimum indicated volumes. Obviously, as we get into the product and it stabilizes, we expect things to move up even better.
Right. On the 4,500-ton capacity that we have indicated across phase one and phase two with the proposed phase three investment, how does that change?
The tonnage would actually depend on the product needs. So we would generally not look at the tonnage so specifically. So it would depend on the product needs, number of steps the product takes. So we wouldn't look at the tonnage so specifically.
Sure, sir. Thanks a ton for clarifying this.
Thank you. The next question is from the line of Princi Chaudhary from Pickw ealth. Please go ahead.
Hi. First of all, congratulations on the good size of number. I have several questions. For example, crude prices are at the 6-month low, and we see the feedstock prices also coming down. And also, the export from China for the month of July is very low. So do you think this will benefit for the current quarter?
Which product are you talking about, please?
See, our prices for the VCM and EDC also are down. So do you think this will benefit for the Paste PVC?
See, basically, what happens is that, first of all, the receipt from China in July was not low at all. We expect the Suspension PVC arrivals in India to have crossed 150,000 tons in July. So it is still pretty strong. There is no drop. If at all, there is only an increase in the export from China to India. As far as prices are concerned, all prices are down. So PVC prices have come down significantly. Like I said, VCM prices will track PVC prices. Maybe there will be a lag of maybe four to six weeks, but it will track it. And therefore, there will be that downturn in that entire chain.
Okay. And also, I might have missed it, but what is the revenue potential for the new LOI which we have signed?
Roughly around INR 300 crore, cumulatively.
Okay, okay. Yeah. That's it from my side. Thank you.
Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Ramkumar Shankar, Managing Director of Chemplast Sanmar Limited, for closing comments.
Yeah. Thank you, everyone, for joining us today on this earnings call. We appreciate your interest in our company. If you have any further queries, please do contact SGA, our investor relations advisor. Thank you again, and have a very good day.
On behalf of Chemplast Sanmar Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.