Q1 25/26

Jul 23, 2025

Ladies and gentlemen, good day and welcome to the DCM Shriram Ltd. Q1FY26 earnings conference call. As a reminder, all participant lines will remain in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touch-tone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Siddharth Ranglekar from CTL India for opening remarks. Thank you and over to you. Thank you, Ryan. Good evening and welcome to DCM Shriram Ltd. Q1 FY26 earnings conference call. Today we have with us Mr. Ajay Shriram. Shriram, Chairman and Senior Managing Director, Mr. Ajit Shriram, Joint Managing Director, Ms. Aditya Shriram, Deputy Managing Director, and Mr. Amit Agarwal, Group CFO of the company. We shall commence with remarks from Mr. Ajay Shriram and Mr. Ajit Shriram. Members of the audience will get an opportunity to ask their questions to the management following these comments during the interactive question and answer session. Before we begin, please note that some of the statements made on today's call could be forward looking in nature, and a note to that effect has been included in the conference call invitation that has been circulated earlier and is also available on the stock exchange website. I would now like to invite Mr. Ajay Sriram to give us a brief overview. Over to you, sir. Thank you, Siddharth. Good evening, ladies and gentlemen, and a very warm welcome to all of you. Thank you for taking out time and joining us today to discuss the company's performance around the first quarter of financial year 2023 results and 2026 results. Sorry. I shall commence with views on the industry dynamics and our strategic direction, following which Ajit will share the financial perspectives. The global economic growth projections continue to be lower, while headline inflation is soft across most regions. Tariff-driven cost pressures and geopolitical rifts continue to challenge policymakers. Significant risks to market disruptions remain. Many emerging and developing economies face headwinds from reduced exports, lower commodity prices, tighter financial conditions, and elevated debt burdens, putting their growth perspectives and development goals at risk. While India is impacted by these global developments, there is higher resilience given the domestic demand, policy fundamentals, and strategic fiscal interventions. The RBI's rate cuts and the government's continued support for infrastructure creation and manufacturing have created economic momentum. Our company is well positioned to benefit from India's growth and has over the years taken steps to fortify presence across its businesses. Our investments have been aimed at augmenting capacities and adjacencies through integration, optimizing costs, and staying competitive across business cycles. We continue to leverage digital platforms to enhance customer experience, streamline operations, and deliver more efficient services across all touch points. We remain committed to follow sustainability as a guiding principle in all our existing and proposed investments. I will now share with you the industry dynamics across our businesses. First, I'll take up chemicals. With uncertainties on U.S. tariffs and deepening geopolitical conflicts, the global caustic soda market was impacted, the demand reducing from key end use industries such as aluminum, textile, and paper. China continued to participate aggressively in the international market, leading to oversupply. The prices of caustic soda that have reached about $500 per metric ton FOB last year have retracted to $450 per metric ton, signaling softness in prices. India's caustic soda market continued to be oversupplied with current capacity of approximately 6.5 million metric tons operating at 80% capacity utilization. Chlorine prices also have been under pressure owing to oversupply coupled with subdued demand of chlorine derivatives. Our capacity utilization is 80% and is ramping up gradually. We are also witnessing benefits in our cost saving initiatives, especially in power. Hydrogen peroxide, both in the existing caustic use segments like pulp and paper, textiles, and water treatment, is growing at a healthy rate. We are focusing on building our market share. The plant is operating at about 65% capacity utilization. Our target this year is to reach over 80% capacity utilization. The trial runs of the ECS plant have started, and the utilities like glycerin purification, etc., are fully operational. We will be commissioning within this quarter, and the capacity ramp up will happen within the next few quarters. Our acquisition of Hindustan Specialty Chemicals Ltd. marks a foray into advanced materials and epoxy resins segments. The transaction is in line with our policy of growing into adjacencies through backward and forward integration. This acquisition shall help in giving us a jump start into this business and provide us a platform for faster growth. Work on aluminum chloride and calcium chloride capacities at Bharuch continues as per timeline in line with our objectives. Our green initiatives and cost efficiency programs continue to underscore growth initiatives. The additional injection of 6.6 megawatts of green power at Bharuch has started in this quarter, taking the total peak renewable power availability at Bharuch to 50 megawatts. The 68 megawatt renewable power project for Kota is progressing as per schedule. The benefits of the CapEx programs in our chemical businesses have started showing results by providing volume driven growth. Successful completion of the plans under implementation along with capacity utilization reaching optimum levels shall further aid in this growth. Vinyl global PVC demand has remained subdued, and global trends continue to indicate softer prices of PVC. While India remains a spot of confidence supported by construction and agricultural activities, China continues to redirect surplus PVC to global markets, impacting domestic Indian PVC prices negatively. The Supreme Court interim order has cleared the way for a comprehensive anti-dumping investigation into imports of PVC by DGTR, the Director General of Trade and Remedies, overruling the Gujarat High Court. Once imposed, it will bring some respite to the low cost import prices. The cost structure in our vinyl business has improved. We will continue to optimize production between PVC and carbide in order to derive optimal margins from this business. Sugar and Ethanol: Global sugar demand for sugar season 2024-2025 is expected to be higher than the supply, leading to a reduction of 4 million metric tons in the inventory levels for the current year. This was mainly due to lower production in India over the previous year by 5.8 million metric tons. The Indian sugar season 2024-2025 is expected to end with a stock of 5.2 million metric tons with a production estimate of 26.3 million metric tons after diversion of approximately 3.3 million metric tons for ethanol production, consumption of 28 million metric tons, and export of about 1 million metric tons. Current prices are around INR 4,020 for printl and are expected to remain range bound. The demand in Q1 was subdued and is expected to pick up in the coming quarter. On the ethanol front, the Government of India is planning to increase the target of ethanol blending in petrol and start mixing it with diesel. As of 31 May 2025, ethanol blending in petrol has reached 19%. This bodes well for the ethanol industry. However, in a regressive move, the Uttar Pradesh government has recently leveled export fees on ethanol exported outside the state of Uttar Pradesh retrospectively from 2018 in view of a judgment from the Supreme Court. Further, the increase in sugar and ethanol prices has not fully compensated for the increase in sugarcane and grain prices for ethanol. These steps are aggressive in nature and stall the growth of the industry. In this backdrop, it is important to review and overhaul the sugar policy framework in order to make it generative in the long run for the farmers as well as manufacturers. Our compressed biogas plant commissioned in March 2025 is operating at about 90% capacity utilization. Fenesta Building Systems: The company remains committed to expanding its market footprint by deepening the reach of its current offerings and broadening its portfolio through the development of new platforms. Our sales strategy is focused around enriching the customer journey through ensuring long-term sustainable growth. Meanwhile, our aluminum extrusion project is launching as per schedule. We have successfully acquired a 53% equity stake in DNV Global Private Limited, a company operating in the hardware space. These strategic actions are said to reinforce our position as an integrated solution provider in the building materials domain and support the creation of enduring stakeholder value. Moving on, the agri input businesses portfolio comprises of Shriram Farm Solutions, Fertilizer, and the Bioseed business. Shriram Farm Solutions first. This is a consumer-facing business and it continues its growth momentum. The company's growth trajectory was led by both robust volume expansion as well as better prices. Demonstrating agility amid climatic fluctuations, the company ensured timely deployment of need-based solutions and introduced scientifically developed crop nutrition products that strengthened the crop tolerance to stress conditions. Notably, in the current quarter, Shriram Farm Solutions has launched eight new products in crop protection and specialty plant nutrient verticals, including two new products from our own R&D. The business continues to focus on its own R&D, collaborations, and exclusive arrangements to bring the new age products and global technologies to Indian farmers. Fertilizer, on the backdrop of early onset to monsoon, higher rain expectations, and lower imports, the urea demand is expected to be healthy. As the stability in the urea industry persists, we are committed to energy efficiency and boosting operational effectiveness. India has seen stable allocation to subsidies translating into smoother transfers to producers. Bioseed turnaround is gaining momentum, underpinned by a broader hybrid seed range that is fueling growth across core sectors. The expansion in soil cultivation driven by attractive crop economies and rising ethanol demand along with strong paddy performance has boosted overall results. However, cotton acreage is likely to drop for the third consecutive year with organized sector in cotton seed taking a deeper cut in volumes. I will now request Ajit to provide the financial perspective. Ajit, over to you. Thank you. Good evening everyone. I will now take you through the financial highlights for the quarter. Net revenues for Q1FY26 were at INR 3,262 crore versus INR 2,876 crore last year, an increase of 13% year on year. PBDIT for Q1FY26 was at INR 326 crore versus INR 274 crore in Q1FY25, an increase of 19% year on year. Chemicals, the business reported an increase in revenue of 43% year on year led by caustic soda volumes that were up 20% on account of the new 850 tons per day facility that was made operational in May 2024. PBDIT increased by 68% owing to lower input prices, particularly energy prices, and efficiencies from the 120 megawatt power plant. The excess capacity in India is creating pressure on product prices, especially chlorine. However, the downstream projects such as hydrogen peroxide and aluminum chloride commissioned last year have also supported the revenue growth. We expect volume driven growth to continue with operationalization of our projects under implementation and capacity ramp up. Vinyls, the vinyl business had flat revenue at INR 209 crore in the quarter versus INR 211 crore in the quarter last year. The volumes of both PVC and carbide were higher. However, prices were down by 17% for PVC last year. There was a one-time positive impact of INR 16 crore each because of reversal of electricity duty on auxiliary consumption in vinyl as well as chemicals. Sugar and ethanol, sugar and ethanol business revenue net of excise duty was lower by 14% in the quarter. Domestic sugar volumes were lower by 23% due to lower offtake. Volumes of ethanol were in line. Prices for both ethanol and sugar were slightly better. PBDIT for the segment was lower at INR 7 crore versus a positive INR 37 crore in last year as increase in prices did not compensate for the increase in cost of production. There was also a one-time negative impact of roughly INR 36 crore on account of prevailing for levy of duty on ethanol exported outside the state of Uttar Pradesh effective 2018. The industry is exploring legal recourse against this levy. Fenesta Building Systems revenue increased 21% year on year led by volumes across project and the retail segment. The growth was better than the same period last year. PBDIT for the quarter was similar to last year due to higher fixed expenses for setting up new adjacent businesses, higher marketing expenses, and acquisition-related cost. We anticipate continued higher levels of expenditure to support the strategic scaling of our operations and our expansion into newer adjacencies. The order book continues to be healthy. Shriram Farm Solutions revenue increased by 29% year on year supported by volumes across verticals, especially crop protection. The prices were also better across the verticals except slight moderation in crop protection vertical. PBDIT for the quarter was higher by 22% on account of better margins despite higher marketing expenses focused on strengthening of the Shriram brand and higher. R&D investments expenditure. Fertilizers the fertilizer revenue was higher by 19% year on year. PBDIT was also higher by 65% led by volumes and better energy efficiency as there was a maintenance shutdown in the last year. In the current quarter there's a one-time positive impact of roughly INR 24 crore on account of revision in the retention price of financial year 2023. Last year also there was a one-time positive impact of roughly INR 20 crore on account of recovery of marketing margin. Outstanding fertilizer subsidy was at INR 236 crore as against INR 133 crore in the last year. Bioseed the segment saw a revenue increase of 30% year on year. Some of it, especially in Philippines, is a timing difference. PBDIT increased by 46%. The improvement is led by better margins across crop segments of corn and paddy. The company's net debt at INR 1,481 crore as on June 30, 2025, as against INR 1,459 crore as of June 30, 2024. Return on capital employed for June 2025 came in slightly lower than 13% as compared to 14% for June 2024 since CapEx incurred on the projects will start yielding returns in the forthcoming quarters. By maintaining rigorous financial discipline, we ensure a robust balance sheet that supports agile investments in strengthening existing and adjacent better businesses and cost-saving initiatives. That concludes my opening remarks and I request the moderator to please open the forum for the Q and A session. Thank you. Thank you, ladies and gentlemen. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Neerav Jimuria from Animal Wealth Management. Please go ahead. Yeah, good afternoon team and congrats for a superb performance. A few questions to ask on the chemical side, sir. When we see our Q1 performance for the caustic soda business, our PBDIT has improved by close to around INR 3.20 per kg as compared to INR 2.40 per kg in Q1 of FY2025. Just wanted to understand, like the PBDIT improvement of INR 3.20 versus ECO improvement of INR 2.40. The difference comes to around INR 0.80 per kg. If you can just help us understand, was it all because of the savings in power or some fixed cost optimization also would have helped us in the improved performance. See, the improvement in EBITDA is a function of two things essentially. One is the improvement in product prices, which as you mentioned have been better than last year. Second is, even the variable costs have been lower. The variable cost, ballpark, have been lower by about 10 to 12%. These are the two key reasons. Within variable cost, the major reason is the power cost. Power cost also had two components. One, because the power rate was lower given that the fuel rate was lower than the same period last year, and the efficiencies, as was mentioned in the Chairman's message as well, from the 120 megawatt power plant, that also acted, so mix of. Quite a few factors. Correct. Sir, when we have commissioned the plant for the expansion of 850 TPD caustic soda and 120 megawatt power plant at Bharuch, let's say before that our fixed cost was 100, how much our fixed cost would have gone up with the commissioning of these two capacities. It's difficult to give you a number on by how much pertaining to these two facilities. The overall chemical business is in a growth mode now. Therefore, again it has to hire for newer capabilities. For example, if we are looking. At growing in epoxy, the capabilities for epoxy were hired almost about a year back, at least the critical capabilities. It's a mix of creating an. Entire infrastructure of capabilities, and as we have growth, more the expenses will go up overall. Got it, got it. Sir, just an add on on this, like just we divide the production volumes. Possibly we would have required 220 megawatts of power for our caustic soda business in Q1 of FY2026. What was the mix of power between the renewables and our captive power plant? Our renewable average that we get in Q1 was about 2,425 megawatt against the total requirements. What we produced during the quarter averaged at about 2,200. Yeah, you're right. Therefore, only about 2,526 megawatt came from renewable. Correct. Second question is on the epoxy side, like the acquired asset has a capacity of 17,000 tons. Is it all predominantly the LER capacity or does it also include some downstream capacities as well? You are right. Yes, it does include some downstream capacity as well. This would be the starting point for us, and we will use this acquisition for entry into the. Business and also for further growth. We expect to grow the capacities. Relatively soon. One of the interview statements, you also mentioned that we intend to almost triple our capacities for the epoxy business. Given the kind of expansion we are looking at, what could be the timeline one could expect for this expansion, and what sort of CapEx would be required if we decide to go ahead with the expansion? It will be hard to share some of those details at this point, but the team is evaluating various technologies and of various capacities, and once the board approves these expansions, that will be announced. Got it. The last bit from my side, if you can share the market size of LER as well as the specialized epoxy market in India, that would be very helpful. See. The total market size of epoxy. The liquid epoxy resin and its formulations put together is about 200 kilotons as on date, and expected to grow to about 300 in the next three years. Got it, sir. Thank you so much, sir, and wish you all the best. I'll join back in the queue for further questions. Thank you. Thank you. We take the next question from the line of Ahmed Madha from Unifi Capital. Please go ahead. Thanks for the opportunity, sir, and congratulations on a good set of numbers. I'll carry the question of the epoxy side. Can you give a little more explanation in detail regarding the business? On a few aspects, one is you mentioned about the increasing capacity. What we understand is there is enough supply in India to sort of cater the domestic market. How do you see the exports? side of the epoxy and what countries, if you can give some sense how you are pursuing the business in terms of increasing the capacity and utilizing it, and secondly, how much of the ECH which we have planned capacity will be used internally? That's my question on epoxy. Epoxy, you are right, there is adequate supply of epoxy in the market right now. What we are seeing is that there is a healthy growth in the market for epoxy. As was mentioned already by our CFO, we expect the demand for epoxy to go up from roughly 200 kt to 300 kt per annum in the next three to four years. I think that will help in absorbing the increased capacity which we will also be coming up with. Additionally, we will of course focus on domestic demand, but we will also focus on exports. We will cater to the global market. I think with our cost structures being relatively competitive and we'll have to closely monitor the tariffs that are being levied across globally, I think it positions us well for growth in the years to come. Ahmed, just to add, a lot of capacities in Europe from players like Huntsman, Westlake, Holland, are being proposed to be shut down, especially the liquid epoxy resin facility. They probably would like to focus more on formulation. That will also make liquid epoxy resin from India a global product. Further, a lot of these wind manufacturers are coming to India to manufacture blades and things like that. I think there is a lot. Of growth, which is expected to happen. Within Indian market and global market for India to be a key player. Got it. Can you answer on the epichlorohydrine part, what % will be using internally and roughly what kind of margin range you think is sustainable in epoxy business? I think it will depend as our capacities grow. Currently, it will be a smaller % of our ECH which will be consumed captively. As we expand our capacity for epoxy, then a larger % of the ECH will be consumed captively and therefore we will grow ECH as well in the times to come. Since this is a growth vertical for us, it will be a dynamic number. The advantage of being across the value chain helps position us reasonably well for this business. Got it, got it. On the margin improvement part, you explained about the cost structure in terms of reducing coal cost as well as variable cost. I had a question on the increase in the captive chlorine consumption. If I do the numbers, I mean your caustic volumes are up 20%. If I look at the value-added business in the caustic chlorine segment, it looks the number is up 70, 80% because we have commercialized new capacities for aluminum chloride, hydrogen peroxide, and so on. In percentage terms, has our chlorine captive use increased materially in the last three to four quarters? If you can quantify the percentage number or you can even give the from. The base of 100, how it is moved. We actually look at it in two parts. One is the captive chlorine consumption directly, but secondly also is our pipeline customers. In the last 30 odd years we have grown and our pipeline customers have also grown. They are our valued customers and we have a very strong relationship with them. After the current expansions we expect approximately 40% of our chlorine to be consumed captively in Bharuch, and approximately 30% will be with pipeline customers. Roughly 70% across captive and pipeline customers will be consumed in the complex. This 70% includes the commercialization of ECH as well. Yes. Okay, got it. In March we had a board meeting regarding the corporate restructuring, and we had some update in the last call as well. Would you like to comment how the timelines are shaping up? How is the discussion going on at the board level? If you can give some sense at what level we have reached and when can we assume that it will be formalized? This is under discussion with the board level as well as internally, our own management of this entire exercise. It is a major exercise where our finance team and other teams are working with consultants and others. What is the best way, what is the best time? How can we take it forward as rapidly as possible? We are hoping the next few months we take it up to the board for their approval and then apply to the government for various permissions and clearances, which is a fairly unfortunate, lengthy, and complicated process, but we hope in a couple of months to take it to the board. Okay, got it. Last question on the epichlorohydrin part. I mean, we had a delay of nearly two years. If I go back to the original timelines, is it fair to assume that all the process-related, component-related issues have been resolved and it will be fully commercialized from Q3, or do you think still 12 pieces are yet to be done? Yes. The timeline for completion of the project has been longer than what we had originally anticipated. We are happy to note now that we have started trial runs of the plant, and we expect to announce commissioning in the next couple of weeks and then ramp up in the next few quarters. Noted, noted, noted. Just one question on the Shriram Farm Solutions business. If you could please join back the queue as Raj is waiting for their chance. Sure. Definitely. Definitely. Thank you. Thank you. I'll come back. Thank you. Thank you. The next question comes from the line of Poojan Shah from Molecule Ventures. Please go ahead. Hello. Thanks for the opportunity, sir. My first question pertains to the PC side. In the industry perspective, we have seen there was a hike of INR 3.5 per kilogram in April and May. While in our PPT we are mentioning there is a price correction of 17%. I'm not able to gauge. Can you just please correct my understanding? Yes. PVC prices have been soft. If you see in our presentation itself, we mentioned that PVC prices from April onwards, actually if you look at even Q4 of last year where they were very good in January, INR 76,000, and then they came down in April and May. May they came down to INR 66,000, INR 67,000, so they are currently continuing at that level. Can we read that stuff that initially what the price hike was being announced has been. Has been again compared to the previous. Levels because there is a continuous jumping from the Chinese yuan. Not very clear. Can you repeat your question? Maybe if you're on the speaker, if you can be on the. Phone. Am I audible now, sir? Yeah, that's better. Sir, just wanted to understand that if there was a price hike of INR 3.5 per kg, can we just read out that the price increase has again come back to the same level as there is a continuous jumping from the Chinese end. See, I am certainly not aware of this price hike because these prices, what we are giving you, is giving you, demonstrate we are also giving you the international prices as well. Yes, you are right, the major reason for this is we continue dumping from China and the delay in imposition of anti-dumping duty in India. In today's outcome, we have seen there is a precursor that has been announced from the DGTR for the EDD purpose and soon it might get converted into a final finding. I just wanted to understand in a broader perspective how much PVC prices from Chinese, and I understand the duty may vary from country to country. I just wanted to understand if the dumping continues from China, if EDD comes, what could be the industry pricing? Can it be around INR 73-74 per kg, and if it happens, what margins will we be able to retain? Will it be break even or flattish around 1 to 2% EBIT level, or how should we read that part? Thank you. What you said is right that DGTR in fact has made out the report today and they have actually now made it public today or they are going to make it public this evening or tomorrow and waiting for, I think, maybe a week, 10 days to get a feedback on that report. Thereafter, it is expected that the report will go to the Finance Ministry and the Finance Ministry, we hope, will take action on it quickly. As you are aware, there is a court case also been filed by one of the users and there the issue in that is that they are talking or they had talked about a couple of grades of PVC. The industry is saying that the decision on the grades of PVC had to be taken by the DGTR. They are the ones who are qualified and educated to understand the various grades and the uses of those grades. That has now come to the DGTR. They are taking action on it. We sincerely hope that in the next couple of weeks' time it goes to the Finance Ministry and from there they take action so that we are protected. Our expectation is that the price increase should be in the range of at least INR 6.00, 7.00 a kilo to start with. Once the ADD comes in, which all countries they bring it in, we are not sure as yet, but I think China is the main concern right now for the industry, which we are working on with the government. Okay. I would request you to please join the queue. Thank you. We take the next question from the line of Raj Vyas from TM Investment Technologies Private Limited. Please go ahead. Thanks for the opportunity and congratulations on a good set of numbers. Last time you had given a revenue guidance of around 10% to 15%, right. I guess margins were around 11% to 14%. For FY2026 for the remaining quarters, do we see the numbers in line or are we making some bit of changes to the top line as well as the margins. We do expect our numbers to be in this range for the rest of the year. Especially, you know, Q3 and Q4 should help us make up because there is seasonality in our business. Q3 and Q4 should help us make up the deficit. I just want to add, ladies and gentlemen, that you are seeing the geopolitics of the world, you are seeing the way the U.S. is moving on their trades, on the tariffs, and they make one level today, another one tomorrow. We are hoping that India can come to some agreement with the U.S. on at least some fundamental great terms so we have some stability in policy. Otherwise, the uncertainty is very high. Okay, so coming to the tariff point, like how we are looking at the chemical business, because in the press release we have mentioned that the global caustic soda supply chain is disrupted because of the tariff, so how we are looking at things presently, currently how it is shaping because it will shape up for next quarter's performance as well. As we have shared, there is unpredictability going forward for all types of businesses, including for caustic soda. India was not exporting any caustic soda directly to the U.S. Neither was China exporting any caustic soda directly to the U.S. There is no direct impact. There will be second order and. Third order effects in terms of the demand from the consuming industries including aluminum. If China exports more to other countries, which it has started doing, that impacts the global flow of caustic soda. We will have to see how this all plays out. Fundamentally, if the demand supply remains balanced, then we expect it to be a reasonable situation for the coming quarters and years. Okay, so lastly my question is with respect to the acquisition that we have made in Hindustan Specialty Chemicals. Though it was a loss making company, why have we picked up a loss making company? My second question is with respect to CMS, when do we see the company like breakeven coming to profitability in numbers? This is actually a strategic decision and a strategic acquisition for us. The board had approved previously that we will be investing INR 1,000 crore into the advanced materials, which is the epoxy business. This is the first major step in that direction. You are right that today some of the cost structures of this organization are not optimal. Luckily for us, with all the backward integration. Integration that we have, we will have our own ECH which will move by pipeline. We have our own caustic which will move by pipeline. Utilities which are at optimal cost. These initiatives or these advantages will help us improve the cost structure for the company. As we grow, we will look to grow. With growth we will get benefits of scale. We will cater to new markets which are higher value added markets. We expect this becomes an important starting point for our advanced materials business. Understood? That's it from my side. Thank you for answering my questions. Thank you. Thank you. Thank you. We take the next question from the line of Vignesh Iyer from Sequent Investment. Please go ahead. Thank you for the opportunity. My two questions are from the Shriram Farm Solutions vertical. Firstly, if I'm not wrong, we had launched around seven to eight products last financial year under this segment. I wanted to understand how much % of our total revenue has come from, I mean especially this growth part of 29% volume, has come from our new product launches. Yeah. The way to look at the new product launches is, as you rightly said, we have launched about 17 products in crop protection and crop nutrition vertical, in seeds vertical. Within that business we keep launching new products to maintain the life cycle of seeds and to add to the revenue. Now within crop production and crop nutrition, these new products that are launched obviously take time to gather momentum, which is about, let's say, it takes about one to two years to gather momentum. The way we assess and benchmark. Our success of new products is how. They performed over the product which have been introduced in last two, three years. What has been the revenue of that? Now, that is if I see in. FY25 for the full year basis, that was about 20% of the product. Were launched in the last three years. Now that's a very good benchmark. Generally, industries put that benchmark at about 20% to 30% of the revenue. We are pretty much there, and we are getting more aggressive on that. Out of those 17 products, eight products were launched in Q1. We have got a good pipeline, so we look forward. Also sir, wanted to understand our capital employed base has almost doubled when it comes to Shriram Farm Solutions. I wanted to understand is it primarily because of any new CapEx that we have done or is it because some part of R&D expenses are getting capitalized? It is neither of the two. It is essentially all working capital and it depends on the seasonality and various factors of the business. They will all on average basis be more or less at the same level as last year. The other point is we are growing the business. We are expecting higher volumes in research, overall higher volumes in the business, and therefore the working capital also is higher along with some bit of timing differences. Okay. I mean considering our quarter two is the strongest quarter amongst all quarters and we have enough idea of how the business would be in quarter two primarily because of that, any inventory, stocking, etc. Is it the right way to read it? If I understood you correctly, you mentioned quarter two is the strongest quarter for Shriram Farm Solutions. Right? Right, right. Actually, it's quarter three which is. The strongest quarter because some of its. Major products get sold in quarter three, Rabi season. Okay, got it. Got it. Yeah. That's all from Sir. Thank you. Thank you. We take follow up questions from the line of Neerav Jamuria from Annual Wealth Management. Please go ahead. Sir, thanks for the opportunity again, sir, two clarifications, one on the value-added products for the caustic soda business. What does it all include? If you can just correct me here, like my assumption shows that it also includes our Flaker plant, hydrogen peroxide, the hydrogen we sell in the outside market, and chlorine derivatives. Is it the right assumption to work with? Yes, that's right. Absolutely, that's right. The chlorine downstream would be epoxy, chlorohydrin, aluminum. Correct? Correct. What would be a rough contribution from these value-added products in Q1 of FY26? See, I don't have the numbers right away, but just to mention that caustic and flakes, they continue to be the major contributors, and hydrogen, these three product categories, major contributors. Others that we recently introduced, they are going through their life cycle of market development and cost capacity ramp up. Correct? Correct. Second question is on the chlorine realizations for Q1 of FY2026 because last quarter you mentioned that it was close to around INR 6.50 negative. If you can share the similar figures for this quarter as well. That's about similar level on average. If you put both our Kota and Bharuch units together, it's in the same range of around INR 6.57 as for Q1. Correct. Sir, last bit is on the ECH plan. What I could make out from the annual report is that we are also having our own refined glycerine plant. We would be importing the crude glycerine, converting into refined, and then possibly to ECH. I just wanted to understand from you what sort of benefits it could accrue to us if we hadn't put up this plant and would have bought directly the refined glycerine without converting crude to the refined one. If you can share your thought processes, it would be very helpful. There is a margin which comes in when you convert from crude glycerine to refined glycerine. In a way that is like a backward integration for us. We hope to capture that margin as well and then do further value addition to ECH and to epoxy and beyond. We will actually be across this value chain. Sir, is it safe to assume that it accrues close to around anywhere between INR 5 to INR 10 on a depending upon the prices of what the products put together on a run rate basis, is a benefit of INR 5 to INR 10 per kg benefit which could accrue to us if we keep on converting crude to the refined glycerin, is the right assumption to make. I think it will be hard to share an exact range of numbers at this point. Yes, it enables the business to be much more robust and allows us to optimize our purchase decisions. Got it, got it. Thank you so much, sir, and wish. You all the best. Thank you. Thank you. We take the next question from the line of Rohit Nagaraj from BNK Securities. Please go ahead. Thanks for the opportunity and congrats on a good set of numbers. First question is in terms of the capital allocation. Now we have also gone ahead with downstream integration in terms of the inorganic initiative. How are we looking at from individual business perspective where the incremental capital will likely be deployed, and in regards to that, are we building up any capabilities in house to get into maybe further or making inroads into certain other streams or other areas? Thank you. See, capital allocation, one, for us there are, you know, the capital intensive businesses are essentially chemicals and sugar and ethanol. These are two capital intensive businesses. The other two businesses which are more focused in terms of growth are Shriram Farm Solutions and Fenesta. There the capital requirement is lower. That is point number one. The second is the capital allocation can be for organic or inorganic growth, and it will all be a function of need of the business, our growth agenda, and the return. We have particular financial principles or the hurdle rates before we make an investment. The capital allocation, so there's fundamental, which is chemicals, sugar, and the other two businesses. Then each of the businesses can. Have the capital requirement depending on the. Opportunity, and that becomes the basis to decide. You want to grow all these four businesses very aggressively. Got that? The second question, I mean historically we have been only focused from the domestic market perspective. Given all business segments have been catering to the domestic market, is there any change in terms of thought process that we are also looking at the exports market? What gives us confidence that we will be able to make our mark in the exports market in any of the product states? Thank you. That is again based on the opportunity like what we mentioned in epoxy, we do see export market picking up and therefore we've invested in epoxy and we feel that some part of our production will get into exports. Yes, we will still continue to be largely a domestic player. Whatever product we have right now will be. We are open to opportunities for exports. Like in Fenesta, we are growing our exports market in a small way. In seeds, we are growing our export market. We are looking at those opportunities, yet majority still continues to be domestic. Thanks for answering all the questions and all the best, sir. Thank you. Thank you. The next question comes from the line of Sneha from SKS Capital. Please go ahead. Hello sir. Thank you for the opportunity. I just wanted to ask a very specific question. Regarding the Uttar Pradesh tax on sugar that you talked about, could you elaborate on that a bit more? How much impact did we see, and was it for the companies who are based out of Uttar Pradesh? What is the thing that I wanted to understand, if or not. There was a nine bench Supreme Court judgment in a particular case wherein the Supreme Court decided that the denatured alcohol, which is ethanol, is kind of a denatured alcohol, is at par with potable alcohol, which is fit for human consumption. They put in the same list, which empowered the state to levy charges on or regulate the denatured alcohol as well. Earlier, the denatured alcohol was in control of the center. As soon as the judgment came, which also reversed a judgment which came in 1990, the state government came out and the Uttar Pradesh government came out with notification to levy 1% export duty on any ethanol which is exported out of the state of Uttar Pradesh. With a retrospective export duty. From 2018, that's where it stands now, whether we are looking at the, you know, legal recourse if available. We will take it accordingly as an industry. This was the first quarter we were impacted by that. Yes sir. Because we made a provision on a. Conservative basis because the demand also was. Raised by the state also, we have not paid the demands, but on a conservative basis, we thought we will account for it from 2018. This entire amount that we have mentioned in our results, about INR 36-37 crore, pertains to amount from 2018 onwards till date. That's it. Thank you so much. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and 1. We take the follow-up questions from the line of Ahmed Madha from Unified Capital. Please go ahead. Yeah, thanks for the opportunity again. The Shriram Farm Solutions business. I had a question. What I understand is our portfolio today is still majority wheat and ruby focused. Is there any thinking on building a Kharif crop portfolio and any views on the same, please? You know, our entire range of products of seeds, we are expanding it continuously. At the moment wheat is of course the major crop. Research wheat, which is a major crop which we are selling. We are also getting into vegetables in a stronger way. We are also getting into other crops in a stronger way. Our plan is to have a range of products which will be able to be sold throughout the course of the year depending on the seasonal requirements based on the planting season. We are going to expand our range. We are moving ahead with that and that's part of our growth plan. If I may just add, it is also that there are two other verticals which we want to grow more aggressively than what they are right now. Even plant nutrition where we set up our own manufacturing about a year back and crop protection, there also we started our own formulation unit on a lease basis. I think we will focus on them as well to grow a little more aggressively. I think that will balance out the revenue quarter on quarter. Okay. For the CapEx part, obviously we made two good acquisitions for Hindustan Specialty Chemicals and DNV Global. On the organic side, with the renewable power plant, aluminum chloride capacity, and Fenesta, what will be the broad organic CapEx expected in FY2026? You are saying in terms of. The cash outflow on organic capex? Yeah, cash outflow. That should be in the range of around INR 600 to 700 crore. Can you give the breakup of the same if possible? About INR 300 crore. Is on aluminum chloride and calcium chloride, and I think about INR 100 crore should be on aluminum extrusion, and then there will be few others. Okay, got it. That's it. From my side. Thank you so much. Thank you. Thank you. We take the next question from the line of Poojan Shah from Molecule Ventures. Please go ahead. Hello. Hello. Hello. Yeah, this is a continuation with the previous question. I understand the carbide. We manufacture PVC from the carbide route. Let's suppose the RM prices remain the same. Let's suppose the add comes through the place. Let's suppose the hypothetical example that the price of what we have assumed of INR 6.00, 7.00 per kilogram. Becomes. A realization for us. Do you think that we can make an EBITDA margin of INR 5 to 7 or 5 to 7% on a blended basis assuming capacity utilization remains 100%? I think even today, even Q1 my. EBITDA margin was about 7%. I think it should only increase from here by about 4 to 5% if the prices go grow by INR 6.7. Okay, so base case assumption is there won't be any hike in the CARM for the PVC. Right. Right now because we for the enough capacity has been available for the RM purposes. That makes a better sense so that at least our EBITDA margin would reach around 10% to 11% once aggregate comes into place. See, in our business both input prices are largely the carbon prices. It's anybody's guess what they should be. We would always expect them to be stable. It is very difficult to say whether or not prices remain at these levels. We do work on improving efficiencies and improving our cost structures, but input rates can vary. Right, right, got it. My last question on the caustic soda part. We have seen a price increase. Could you state a reason? Do you think it's structural and this price will be stable from here on or might it impact because industry is already running at 80% capacity utilization and we are currently. We are. Also, operating at 80% now, the industry doesn't have more room to at least grow at an increase in the capacity because that will deploy more chlorine, and that will impact the margins ultimately. Do you feel that the price will remain stable from here on, and it might inch up in coming quarters? It's of course hard to predict how prices will evolve for commodities including caustic soda. There are many factors including domestic and global factors at play, but we do expect prices again in the medium term to be range bound or to move up in the medium term. Okay, thank you so much. That is from my side. Thank you. Thank you, ladies and gentlemen. If you wish to ask a question, please press star and 1. As there are no further questions, I would now hand the conference over to the management for their closing comments. Thank you, ladies and gentlemen, thank you very much for your participation in our earnings conference call. In a world marked by economic fragmentation, shifting trade flows, and geopolitical instability, businesses must remain agile and forward looking. Our company is well positioned to capitalize on these strengths. We have consistently invested to expand capacities, improve integration, and enhance competitiveness across cycles. We harness digital platforms and are embedding sustainability across operations. Our recently concluded CapEx programs set the stage for the next chapter of volume-driven profitable growth anchored in operational excellence and a strong balance sheet. Thank you very much once again. Thank you on behalf of DCM Shriram Ltd. That concludes this conference. Thank you for joining us, and you may now disconnect your lines.