Ladies and gentlemen, good day and welcome to the Q1 FY26 Earnings Conference Call of Laxmi Organic Industries Limited. As a reminder, all participant lines will be 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Tanay Shah . Thank you and over to the show.
Yes, thank you, Shruti. Good afternoon, everyone. Thank you all for joining us on the Q1 FY2026 Earnings Conference Call of Laxmi Organic Industries Limited. From the management, we have with us Dr. Rajan Venkatesh, MD and CEO, and Mr. Mahadeo Karnik, CFO. The company has uploaded its financial results and investor presentations on their website, as well as stock exchanges. We hope everyone has had an opportunity to go through the same. We will begin the call with remarks from the management team, followed by a question and answer session. Before we begin, I would like to point out that this conference call may contain certain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call.
These statements do not guarantee the future performance of the company and involve risks and uncertainties that are difficult to predict. I now hand over the call to Dr. Rajan Venkatesh, MD and CEO. Thank you. Over to you, sir.
Thank you, Tanay. [Foreign language] from my side. Very good morning, good afternoon, and good evening, depending on where you are dialing in from. Always excited to be engaging with you guys. A range of topics, you know, a part of our quarter one performance. The topics I would like to cover are first is some of the people topics, and people have a very large bearing on the performance of our organization. That's a very important thing on the top of my mind. The second lens is how the raw materials have evolved as we speak now. The third one is the application or the market industry trends, the way we view it. Then we sort of dig a little more deeper into both our business segments, Essentials, and Specialities. I would also like to give you an update on how do we progress with our investment projects.
Last but not the least, really leave you with the key focus areas that we at Laxmi are focusing on into this year and also beyond. Let's talk about first the people topics. You know, Mr. Prashant, who was our President of m anufacturing after a wonderful nine years stint with Laxmi, will be retiring as of the middle of August. His successor, we have announced, is Mr. Rajesh Naik. Rajesh brings almost a three-decade experience with him, having worked in companies like Asian Paints, DuPont, and his last company being BASF. We are very thankful to Prashant for his years of commitment, and we are really looking forward for Rajesh to come on board and continue Prashant's legacy on the manufacturing front. The other change at a senior leadership level is the role of performance, which was very ably managed by Mr. Jitendra, who was the head also and who is the head of our Essentials business. As all of you know, we have certainly a larger ambition for our Essentials business to double the top line from where we closed out in FY2024. We felt, you know, to really carve out the procurement function and give it even more sharper focus. That's been a key important element for Laxmi, would do us good. I'm very happy to share that Dr. Keshav Ruthiya joins us as of the first of August as the Head of Procurement. He has done his bachelor's from ICT here in Mumbai, his PhD from Netherlands, then a postdoc from the U.S., and having spent about two decades with DSF. All of his experience outside India, he comes back home and is excited to take this opportunity.
Again, a big thank you to Prashant and Jiten, and a big welcome to Rajesh and Keshav. Raw materials, starting from that lens, I think the key raw materials, as you are aware, for us primarily are acetic acid. Now, just to give you a line of things, you know, in FY2024 average acetic acid prices across the year was around $450. Last year it was about $400, and we have continued to see, you know, acetic acid prices dip lower. It was then at one point $380, $370, and today point in time is around the $340 ballpark. That gives you a line of sense. This is despite the fact that in the interim, because of certain conflicts, where Iran was involved, we saw methanol prices increasing for a certain few weeks. We certainly did not see a larger dent on acetic acid.
Supply side on acetic acid remains long, and I think that is keeping us in good stead. You also saw recently the BIS was lifted on acetic acid because India remains a net importer of acetic acid, and the authorities felt that they should not in any way impact producers who are consuming acetic acid. The second other key raw material is ethanol, and ethanol prices have also been trending lower. On an average in FY2024, it was about $840. In FY2025, it was about $720, and now as we speak, it is around $690 to $700, and sort of being stable at that level over the last three quarters. Again, we don't see any major bottlenecks in procurement of ethanol. Two key raw materials, we seem to be at least from a supply side to be in a good state. That's the first lens on raw materials.
Let's take a deep dive into the market that we serve. Key markets include printing and packaging. There, on a quarter-on-quarter basis, we see that demand to be stable. The second market is pharma. Again, there we continue to see demand to be stable. When it comes to agro, this year we continue to notice it remains weak to moderate. Certainly not as weak as what it was, but certainly in discussion with our customers, we don't see this to be rebounding. The conversation of inventory in the system is edging away, so that's positive, but there is also now more conversations of margin pressures into the agro value chains. Then we look at markets like CASE, that is Coatings, Adhesives, Sealants, and Elastomers. There, specifically in the global markets of North America and Europe, we see demand a little bit more muted as compared to on a quarter-on-quarter basis.
That's what we are hearing from a lot of our key customers in those geographies. That gives you a broad line of sight into certain of the key markets, and I'm happy to take your questions if you require more larger insights. As we have shared in the past, we have also expanded our market footprint by entering into personal care with certain of our portfolios and also with the last announced Hitachi. We are also entering into the entire power transmission phase. That's the market lens. Moving further, if you look at closer to home, that is Essentials, the spreads. The spreads of Essentials, if you remember, our narrative has been, it's been in the range of about $140, average over a 12-year period. The spread has been about $220. It continues to be subdued.
We saw in the last quarter, and this is also something we had called out, that there was a propensity for the spreads to further dip below $140. As we speak now, it is in the $120 range, that is a point in time. That's where you see this also getting reflected. First on the acetic acid, what I called out, then acetic acid prices are subdued, and then obviously this flows into one of the key products, which is ethyl acetate, which constitutes about 80% of our Essentials basket. That is where also the spreads for ethyl acetate remain subdued, into quarter one. When we come into Specialities, you have seen that there is a degrowth in Specialities, and we have also called that out. There are two key topics. One is there is an anticipated phase-out of an agro AI . Why do I call it anticipated?
This was expected to happen a few years back, but the business continued, and as a result of which, we were able to supply that part of that pie and supply our customers, manufacturing that. Now it's very clear that is getting phased out, and that obviously then will have an impact into FY2026. Mahadeo in his commentary will give you more color on the numbers. The other bucket is deferred deliveries of select products to global customers. On a full-year basis, it's a wash, because what we are not able to do in quarter one will certainly manifest in the second half of this financial year. That's what is, I would say, point in time impacting the Speciality quarter one. Revenues will also certainly have a spillover effect into quarter two, but we will rebound and Mahadeo will give more color on that in his commentary.
When we talk about the project update, our Lote, the Fluoro Intermediate site, building on all the consistent effort over the past quarter, our ramp-up continues, and I think we remain on target to achieve, as we have always called out in FY 2026, somewhere between 40% to 60% of the peak revenues. That is what we are very diligently working towards. Also, the Hitachi project, which we were with Hitachi Energy, where we signed the LOI for an SF6 replacement, is also taking good shape, and we are at really the cusp, and the target is in quarter two of this year. In this quarter, we would ideally like to stitch up the contract with Hitachi, so thereafter we can lay out the CapEx and accelerate the sales.
Dahej , again, a very important part of our CapEx puzzle, that CapEx, that project remains on track, in scope, on track with regards to budget and on time horizon. That is also giving us confidence. Somewhere towards the end of quarter three, early quarter four, is where we will have the mechanical completion and thereafter chemical charging happening for all the key assets at our Dahej facility. People have asked me also, with regard to the potential levers, what could impact margins? I think two key elements come to my mind. Finally, Beijing has signaled that it will intervene in producer price wars. Expectations are certainly growing for potential capacity moderation in China, but obviously we will need to see how fast or slow this happens.
Certainly, it has caught the attention of Premier Xi Jinping, so I believe there should be certain elements on shakeout happening on the ground. This is not only linked to chemicals, it is across a range of industries in China. The ever-present tariff conversations that are happening with the U.S. or India, with the U.K., India, with Europe, all of that also has certainly potential to provide opportunities where there could be improvements into margins. One other element, a good call out for our Hitachi Energy LOI that we signed, being very, very prudent in the way we have now developed, continued the bustle on CapEx execution. We are happy to share that the Hitachi Energy CapEx that we will need to install will be accommodated in the INR 1,100 crore CapEx that we have lined up.
I think that's a very positive work done by the team and also continues to build confidence in our project execution excellence. Now, as is always the case in tough times, you start focusing again every day into granularity. Our areas of focus at Laxmi , while we have started that, we will be double-clicking, is productivity in knowledge aspects, commercial excellence, which is really looking at what can we do better in what across our range of products. Execution excellence, I think this is really proof is in the pudding that projects are coming online in time and within budget. Cross-discipline, across the board, zero-based budgeting is something we have already started, and that is something we will continue as a muscle. I think last but not the least, the growth projects, which will certainly continue to pivot and continue our profitable growth journey.
As one example is the project that we have kick-started in quarter one. This is the end-to-end digitization of our supply chain operations. Really, while there is a certain CapEx payout, and you see that in our results also, and Mahadeo will call it out, which will span through quarter one and quarter two. We certainly are anticipating that once we have rolled this out, this would be a great example of how this would advance efficiency and predictability end-to-end, reduce costs, and improve our agility to serve our customers. With that, I hand it over to Mahadeo to take you through again the granularity in numbers.
Thank you, Rajan. I will take you through quarter one numbers. In quarter one, our revenue de-grew by nearly 4% in spite of our volume growth of 8%. The segment growths are as follows. Essential grew at 4%. It's led by volume growth of 11%, offset by the price decline, which is mainly due to the acetic acid feed stock price declining of nearly 7%. Now, let's come to Speciality. Speciality has a decline of 18%. As Rajan called out, there are mainly two factors impacting this. One is anticipated phase-out of a product, which is nearly 9% of our sales of the Speciality product. The margin profile is in line with the Speciality growth margin profile. That's the one thing that has impacted in this quarter. We have plans to update this, but the plans should come in place by Q4 of this year.
The next two quarters, still you will see the impacts coming in in the financials. Secondly, there was a deferment of delivery that was expected, which is nearly 4% of the sales. This has shifted to H2. This is not really impacting yearly financials, but it is coming in the quarters only. Let me come to the overall P&L. If you look at the cost that we have, overall cost in this quarter is around INR 1,828 million versus INR 1,839 million last year. This is in spite of two things. We have spent on the project for digitization of the supply chain, nearly INR 79 million, as well as our Lote operations are now full-fledged. The Lote operational cost of nearly INR 39 million is starting us, you know, impacting our financials.
As you can see, we have saved nearly INR 110 million on our cost to serve, mainly coming from freight and distribution. There are some forex gains. I can tell you that in these times, we are double, you know, counting on our cost optimization measures, productivity improvement measures that will come in the financials clearly out. The one-time expenses of INR 79 million are specifically on account of the supply chain digitization projects. There are two accounting changes that we have done in this quarter. We have moved to a first-line method for depreciation accounting from a WDV. It's mainly because the economic benefits are in the increasing trend because we are in a CapEx mode. Secondly, we have moved from an old regime of tax to a new regime of tax.
That's why, as you can see in the notes, there is a one-time gain in the deferred tax liabilities that we have. That's why the tax impact is positive. Overall, we have a PAT of INR 214 million, which is at 3.1% versus 4.8% of last year. On Q2 specifically, let me call out, we will continue to see a performance which is in line with performance of quarter one or better performance. That's the guidance that we are giving for next quarter. That's it for me.
Over to you, Tanay.
You can start the question and answer session, Shruti.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rohit Nagraj from B&K Securities. Please go ahead.
Yeah, thanks for the opportunity and the elaborate presentation. The first question is in terms of both Essentials and the Specialities. From the user segment perspective, where are we seeing more traction and where are we seeing still challenges persist? What is our expectation in terms of the challenges of persisting? What is the timeline that we feel that things will probably come back to normalcy? Thank you.
Rohit, I think, you know, reflecting on the comment which I just made, if you look at the key segments again, printing and packaging, that demand continues to be stable. In pharma, we continue to see stability in demand. Now I'm talking quarter-on-quarter basis. Obviously, if you look over a longer period, there will be certain subtle changes. I'm trying to keep it a point-in-time lens.
I would say agro is where we continue to see that demand certainly was very weak before. It is moderating, but it is certainly not rebounding. That would be our lens. Now, depending on whom you speak to, in what product range they are, you would hear different narratives. This is the narrative we speak to when we hear it for the product ranges and the customers that we are dealing with on the agro part. As I also called out what we see , given the consumer sentiment, especially in North America and parts of Europe, being very weakish, that's why you saw larger FMCG companies also lowering their forecasts. This is also where we see areas like architectural coatings that we continue to see demand being a little more muted. We believe this is maybe a passing phase, not something structural.
Agro is something where we continue to keep a close watch. What you also see, as far as at an enterprise level of Laxmi , the agro starts to play less than 10% at our enterprise level. That's where we are. Hopefully, that gives you some line of sight.
Sure, that's helpful. Second question, again on the geographical revenue data. If you look at this quarter, the Europe contribution has moved up materially on a year-on-year basis against, maybe, Americas. Are we seeing material traction coming from Europe in terms of the demand being normalizing and normalcy coming back from the purchase perspective? Just your thoughts on how things are moving or picking up as far as Europe is concerned.
Europe, you know, I think as we have all been tracking, continues to be going through a large upheaval where a lot of upstream capacity for chemicals and petrochemicals are coming offline. You can certainly see, I think, pockets where the demand, if it is still existing, needs to be served. For us as Laxmi, closer to home, we truly believe that there is an opportunity in Europe. We have always been present in that geography with a product like ethyl acetate, with tank operations. We are perceived to be local there. We are going to expand our product portfolio into Europe further in Essentials and also in Specialities. Specialities, we were already entrenched in Europe with key customers. That continues to be the case. I think what you see in our lens is more a point-in-time view.
As I called out, one of the key elements in North America, in the Americas, is really looking at the coating segment and where the demand is a little more muted at this point of time. That's why you see a skew. That's a point-in-time lens, the split, the geographical split. I think our focus remains also to serve that opportunity and also grow our presence in Europe strategically with key customers. Last but not the least, Rohit, given all the conversations we are having about tariffs, you know, this is evolving as we speak. Overall, at a Laxmi level, I see this as neutral to positive for us, and we will be ready to tap into those opportunities.
Perfect. Sir, just one last question from my side. In terms of competition from China, have there been any change that we have witnessed during the quarter compared to maybe previous quarter or last year? Just your broader thoughts on that . Thank you.
The simple answer to that, I think, linked to Laxmi, no, we have not seen any large change in the competitive landscape where we are serving from China.
Perfect. Thanks a lot. And all the best.
Thank you.
Thank you. The next question is from the line of Saumil Shah from Paras Investments. Please go ahead.
Hi, sir. Good afternoon. Sir, as we are targeting 3x EBITDA growth and 2x revenue growth by 2028, can you see a revenue growth of 15-20% for this year and next year?
I think, first and foremost, Somil, thank you for the question. Let me also break it down, right? What we said is the key element of our CapEx spend, about INR 800 crore, is primarily coming into our Dahej site. A big chunk of our Dahej CapEx will come online. Mechanical completion and chemical charging would happen towards the end of quarter three and ideally into quarter four. That's the line of sight, and that basically keeps us. You would see that impacting us more positively into FY27, rather than into FY26.
Okay. Okay. Whatever CapEx we have done, I think even this year we have done some CapEx.
The midpoint of expenditure of the CapEx is going on as we speak, but the plants need to be mechanically complete before I can leverage that. The Speciality business, while some of the products we will be ensuring customers' business continuity and producing it across our Mahad and also Dahej sites. The customers will need to approve us, and the same goes through also for certain of our Essentials products. Approval is not as stringent and time-consuming as in Specialities, but those approval cycles, mechanical completion, chemical charging, approval process, and then ramp-up, that would be the sequence of events. That's the line of sight we are having, Saumil.
Okay. What’s the EBITDA margin on the Essentials side of the business and on the Specialities for this quarter?
Adjusted EBITDA for this quarter for Essentials is 2% and for Speciality is 16%.
Okay. Okay. My final question is, what was the total amount we have spent on the fluoro-cam business, I mean on the CapEx side?
We have always stated INR 550 crore is the cost to complete.
Okay. I think we are guiding for INR 200 crore revenue for FY 2027. Isn't the asset churn is too low? [audio distortion]
Yeah, fair enough. I think we've been very transparent about that. You're correct that the asset churn is low. If you look at our previous investor documents, we've been very transparent about what have been the levers which have aimed for the cost to complete to increase. More importantly, what is giving us great conviction is the type of contracts we are lining up with Hitachi Energy. We would have been nowhere in the fray if we did not have this muscle. For us, the way forward is building on the platform that we have established in Lote and taking this into a much larger trajectory. That remains the focus Saumil .
Okay. If we want to increase our revenue from INR 200 crore to anywhere between INR 500 crore to INR 600 crore, we don't need any additional CapEx on Lote plant?
As I called out now specifically, the existing asset that we have established can only give us INR 200 crore. The Hitachi Energy project is something we are actually, with the CapEx prudence that we have maintained over the INR 1,100 crore, we are able to accommodate. Beyond that, that would certainly require additional CapEx. Where we have certain interesting headroom is on the IOU, that is Infrastructure and Utilities, because now it becomes a brownfield site, not a greenfield site. That will make the whole thing a lot more synergic.
Okay. As you said, the majority of the CapEx will be in Q3 or Q4 of this year. At least can we get a quite early thought on what can be the revenue or EBITDA items?
At this point of time, Saumil, that's a more detailed question. I think let's follow that off off line. That's what I would request you, you know, and then we can give you granularity.
Okay. Is there any growth can we expect on the revenue side, or are we basically fully utilized?
Broadly, there is some, as you've seen, right, in the Essentials business, we have grown 11% volume in quarter one on a year-on-year basis. Even on the Speciality part, if you take out those two special effects that we called out, structural and deferment, we have also had + 10% volume growth. I think we continue to, you know, max out our assets. We have also an operational excellence, in the assets. I think we continue to leverage to our strengths.
You're not guiding anything on this one?
I would appreciate your understanding on this one.
Okay, fine. Thank you and all the best.
Thank you.
Thank you. The next question is from the line of Ravi Shah from VRS Capital. Please go ahead.
Hi, sir. Thanks for the opportunity. I had two questions. Basically, can you provide some color on how the pricing of ethyl acetate has moved over the past quarter and on the comparison over the past four or five quarters? I just wanted to get some understanding on the pressure on our spread. Progressively as we start in quarter, have we seen any difference? If you could provide some kind of understanding on where do we expect this to move directionally?
I think, again, Ravi, thank you for your interest. What we saw in the few quarters, we were seeing spreads in the range of about 140 to 150. Given that the acetic acid, and that's an important lens to bear in mind, because there are two levers in a business like Essentials. One is the raw material side, the other is the demand side. Demand side has been broadly stable, and raw material side is where we see continued oversupply, and that's why price is coming under pressure, because acetic acid is also going into other downstream like vinyl acetate, which has its own supply-demand dynamic. The spread becoming lower is not really driven by the demand side. That's why we are able to grow, as you see, the volume growth that we are able to deliver.
It is really coming from an RM side, and that's why the spreads, which were around 140 to 150, we saw in the last quarter, I would say point in time we were about 120. Now, to your question, how would this develop? I think at least looking into this quarter, we are not anticipating any big changes, also on the raw material side or also on the ETAC side, price side. As I called out before, two elements which can have larger ramifications across our portfolio. One is this Beijing signaling that it will intervene in producer price wars. We will need to wait and see what ramifications it has. Normally, in the past, this has implied that there have been potential capacity cuts. This will then certainly help across the value chain.
Also, depending on how the tariff conversations are going on, say between India- U.S., India- Europe, the recent concluded India- U.K., may also provide us certain upside opportunities.
Thank you for the detailed answer to this question. Basically, because last year also has been declining, right now I think we have a favorable base, if I have some right side. Am I right?
I would say that would be a fair way to view it, that this could be maybe, for lack of a better word, while we are continuing to be in the bottom quartile, could really be the bottom of the bottom quartile. That's the way I would view it.
Understood. One more question. Basically, our Essentials business has roughly stayed stagnant. FY2024, FY2025, we had done around INR 2,000 crore revenue. Assuming there is no pricing pressure, assuming there's less pricing pressure, do we anticipate it surpasses INR 2,000 crore for FY2026?
The first thing you see, the price, the top line price in an Essentials business, one key driver is raw materials, because you have, you know, ethyl acetate and you've got ethanol. As I called out, the acetic acid prices have been on a decline. Actually, to even maintain what we have done would have been difficult if we did not deliver volume growth. If you remember the previous conversations in these calls, we have said our operational excellence journey, which we started in FY2024, we started delivering results into the second half of FY2024 and into FY2025, where we grew double-digit volume. In Essentials, this is what is keeping us afloat. The new CapEx that is coming on in this financial year will increase our volume base, and that's the reason how we will move the forward trajectory.
Now, again, the Essentials, as we have also called out, is a cyclic business. To give color to that, the average spread of ethyl acetate over a 12-year period, if you exclude the COVID peak, is $220 - $225 per metric ton. The numbers which I just shared with you are in the range of $140 and currently $120. We truly believe there will be a cyclicity into this, and we are very, very well- prepared with our cost position and with our market position.
Understood. Basically, this would mean we would try to maintain our volume growth momentum which we had previously, right?
That's what is also reflected into quarter one, that we have grown our Essentials volume base by 11% on a year-on-year basis.
Understood. Thank you for the detailed answer and all the best.
Thank you. The next question is from the line of Rohan Mehta from Ficom Family Office. Please go ahead.
Hello, sir. Am I audible?
Yes, Rohan, you are.
Yes, you are here.
Perfect. Thank you so much for the opportunity. My first question was, has there been any capacity shutdowns globally when it comes to ethyl acetate or acetic anhydride? That's the first one. The second is, at a 2% EBITDA margin from the Essentials business, it may look like this is very close to the bottom. What would be your perspective on the recovery side? Which quarter onwards do you feel that spreads can start to recover first?
Rohan, let me take your, you asked multiple questions, so let me take it piece meal and jog my memory if I forget something. First, you talked about, have there been any capacities which have gone offline? There has been one announced capacity which is in the Middle East called Sipchem. They announced to mothball their 100,000 tons ethyl acetate plant. That's certainly, I think, a more formal announcement we know of. On acetic anhydride, I'm not aware of any capacity that has been formally announced that is going online or offline, yeah? In the Essentials business, different producers are at different parts of the cost curve.
Not all producers would be in a position to, while we as Laxmi , we believe we are in a top quartile in the cost curve and hence are operating our assets at full level, that might not be the same for other producers. I hope that gives you one part of your question, Rohan. With the second part, you're correct in saying that at about 2% of EBITDA margins, maybe we are at the bottom. That's what we also anticipate. The reasons, I think, one and first and foremost, as I also explained to the previous colleague, this is a cyclic business. We have seen spreads, average spreads over the cycle, 12 years, excluding COVID, of $22 - $225 for ethyl acetate. This is excluding COVID peaks. Today, point in time, we are about $120 per metric ton.
We truly believe this is not sustainable for the over the next decade. We will certainly see cycles kicking in. At these levels, we believe there might not be too many producers who would like to invest. That's one lens. It will only be the committed producers with clear customer lens who will invest. We are certainly one of them. The other lens is, the cycles will need to play out, and that's our understanding. We are ready to tap into that whenever it happens.
Got it. Just to follow up on that, do you anticipate spreads to go negative first before we see a bounce? Do you feel that the current market dynamics is such that this is more closely the bottom and we could stay here for a few months before recovery could start?
We certainly have not seen in the past also, and we have looked over a 12 to 15-year period. We have never seen spreads go into negative territory. I think the worst we have seen is spreads going to maybe about $100 and rebounding from those ranges. I would say our prognosis is for spreads to be at least into quarter two, because Essentials is a business, again, where you have prices settling daily, just to keep it in perspective. Very different to our Speciality is muscle. We have acetic acid prices that are settling daily, ethanol prices settling daily, and hence the way we are also pricing ourselves, we bring in a lot of agility. Hence, first part of your questions, going spreads, going negative, I don't see that happening. Are we really at the bottom of the bottom? I think we are in that ballpark.
Perfect. Perfect. Thank you so much.
Thank you. Our next question is from the line of Vikram Kotak from Ace Lansdowne Investment Services. Please go ahead.
Hello. Thank you for the phone call. I have one question I did answer already. The second question is on the CapEx. We are a breakup of INR 1,100 crore, which is INR 750 crore in FY2025-2026 and INR 350 crore in 2026-2028. Can we know what are the CapEx levels as of today, ballpark? How much have we completed out of INR 750 crore for the current year?
Out of INR 750 crore, we have now on our way to exhaust nearly INR 680 crore.
Okay. Okay. In 2026-2028, $350 million will be spread how broadly, ballpark?
It will be FY2027, around 100. Sorry, sir. Yeah.
I think, Vikram, the lens is the big chunk. The midpoint of expenditure of our CapEx is in FY26. A big chunk of the INR 1,100 crores, that is INR 800 crores, is really going towards Dahej project. Like you explained, that will take shape this year.
Right.
The remainder is really more, which was based in the 1,100, was about INR 50 crore from our Lote project, which was already spent.
Yeah.
There were certain things for our innovation campus, which was already done. I think the way I would request you to look at this is a big chunk Dahej , midpoint of expenditure is this year, with the chemical, mechanical completion, chemical charging happening in quarter three, early quarter four.
Right. Fair point. We should expect everything to flow in FY2027, right?
Absolutely. The ramp-up, ramp-up happening in FY 2027. Yeah, we have obviously ongoing repairs and maintenance and certain CapEx on our existing sites, but that is a smaller part of the puzzle.
Thank you. All the best. Thank you so much.
Thank you.
Thank you. The next question is from the line of Saksri Pratap from Pratap Securities. Please go ahead.
Hi, sir. Thank you for taking my question. Two questions majorly. Firstly, as a Speciality business, we have dropped almost around INR 2.5 billion in Q1 and Q3 of FY2025. Thereafter, I think we saw a decline in the last two quarters. Currently, we are almost at about INR 2.1 billion. Can you highlight the reasons that impacted this versus driven by volumes or pricing? Basically, we just wanted some sense over that. Also, how do we plan to get back to that range of INR 240- 250 crores per quarter and grow from there?
So Sakshi, I called it out in my summary itself. Out of 18%, nearly 9% is on account of anticipated phase-out of a product. We have, you know, a plan to offset it. That plan will realize only in quarter four. Quarter two and quarter three, you will see the impact of nearly 9% of the sales. Rest is mainly the deferment to the H2. It's not, it's just a timing impact. It's a quarter impact, but not a full year impact.
Understood. Okay. Secondly, given where we are in the Essentials business cycle, and also now with Speciality business under some pressure, can you throw some insight on how do you see the full year FY26 in terms of revenue growth, blended EBITDA margins that way? Just to follow up on that, once Dahej and Mahad CapEx gets operationalized, what kind of ramp-up can we expect in both in FY2027?
Sakshi, one is we really don't give out a full year prognosis, so I would certainly respect your understanding on that. What we can call out is that for our Speciality business, given that there is that deferment from quarter one, quarter two, into the second half, our second half for our Speciality business is anticipated to be stronger as compared to our first half. I think that is what we can spot. The second lens, which we can certainly share with you, is what we also spoke before. In the Essentials lens, given the spreads where we are today, and if I take a point-in-time view also into quarter two, because our Essentials business is a very, I would say, evolving and agile business, in quarter two, we are also expecting spreads to be at the same point.
On that, that's the line of sight we have at this point of time, Sakshi. Hope that helps.
Thank you so much and all the best.
Yeah.
Thank you. Our next question is from the line of Jigar Shah from Elevate Research. Please go ahead.
Good afternoon, Sir. Thank you for the opportunity. I have just one question. We are at about 240 KTPA ethyl acetate capacity already. Please correct me if I'm wrong. We are in the process of setting up adding 70 KTPA line now. You have spoken about oversupply and capacity shutdown. I just wanted to get some sense from you on the entire demand supply dynamic and our reps on the setting of capacity.
So Jigar, two elements. When you stated the number of about, whatever, 240 KTA capacity, this is our entire Essentials basket. This is not only ethyl acetate, it is also our capacity. It encompasses acetic anhydride, it encompasses acetaldehyde, and also the newer products that we are introducing into our portfolio. That's one clarification. The second lens, I think it's a fair question, you know, and we've explained that, Jigar. That the 200 TPD, first and foremost, this would be the single largest economy of scale line, I think, in India and also one of the economy of scale lines globally. As Laxmi, when we are, you know, embarked on our operational excellence journey, our first lens was to say across the lines where we are producing ethyl acetate, what is best in class in our line and how can we make the others to be best in class.
The second ambition is really to be best in class globally. That is the reason where we have really invested in the new 200 TPD line. We are able to leverage both the domestic presence where we already have a market share anywhere up to 40% and also in the international space. We spoke about Europe to one of the callers where we also see opportunities where we can position it. That's the way we are looking at this. Jigar, and the last thing I would like to talk with you is, like in every Essentials business, not all producers are in different parts of the cost curve. For us, as Laxmi, the ambition has always been to be in the top quartile. Hence, you see that in our numbers that we are able to run our assets full.
We are able to grow our volumes actually on a quarter-on-quarter basis. That's the way we are steering this part of the business.
Understood, sir. Thank you for the clarification, sir.
Thanks, Jigar .
Thank you. The next question is from the line of Chetan Doshi from TM Financial. Please go ahead.
Thank you for giving me the opportunity. My best customers here in the slide in the Specialities, we mentioned we are the only supplier for electrochemical fluorination products in India. I would like to know what is the size of the market, what is the products, what products we are manufacturing, and what is the current volume or if you can share that? My second question is regarding solvents. Industrial solvents is a very big market. What we are catering to as far as solvents is concerned?
Sorry, Chetan, can you just come back on your second part of the question, please?
The second question is that we include solvents, industrial solvents also. Which market are we at present catering to? Because solvents is a very huge potential market as far as industrial applications is concerned.
Okay. All right, Chetan, those are the two questions. Let me start with the first one, the fluorination. First and foremost, the fluorination world, I take it at a macro level, is a $25 billion space. Now, with the technology that we have established here in India, we basically are looking at targeting about a $2.5 billion strategic relevant market. What we have now established is a small part of the larger vision we have, and that is what we are building into. Electrochemical fluorination is a technology platform which enables us to tackle that opportunity. That's the first part. I hope I've clarified this.
I think, sorry to interrupt, but we'll be catering to battery, because one of the products goes into batteries in a very, you know, huge way. Are we into that product?
No. I think, Chetan, one needs to dissect the large world of fluorination. You've got the Fluoro-surfactants, you've got the refrigerant gases in that world. Those are not segments where we are focusing on. We are focusing on what we say is on Fluoro-s pecialities or Fluoro- intermediates. That goes into, obviously, agro, pharma. It goes into other coating applications. With the LOI that we have signed with Hitachi , we are entering the space of power generation. Those are the lenses that we are focusing on with our fluorination platform, Chetan. Yeah.
Your second part of the question is more industrial solvent. There, we have products in our portfolio like ethyl acetate, which we've been talking so intensively about. That primarily goes into the area of printing and packaging and into the pharma. It has smaller applications into agro, flavors, and fragrances, but that's the range which we are tackling with our Essentials portfolio. We are also introducing newer products in that portfolio which serve existing segments and also newer things.
Hope that helps.
We are not into industrial cleaning, am I right?
No, we are not into industrial cleaning.
Oh, thank you.
Thank you. Our next question is from the line of Saumil Shah from Paras Investments. Please go ahead.
Hi, thanks for allowing me a follow-up. In our presentation, we have mentioned that we have changed our depreciation policy, and because of that, our depreciation is around INR 17 crore for this quarter. For the remaining quarter, can we expect similar depreciation, or, I mean, last year, our depreciation was very high. Can we get some numbers on the depreciation bust?
We can share with you one-on-one. If you look at the change of depreciation method, there is a note for the quarter that we have already called out. The impact for the quarter is nearly INR 24 crore.
That would be, I mean, it will continue for the remaining quarter as well, right?
You can deduce , yeah. The only thing is that it will be offset by the capitalization of Dahej when it comes.
Yeah. Right. Understood. Okay, that's it from my side. Thank you.
Thank you.
Thank you.
Thank you. The next question is from the line of Dikshant Gupta from GeoJit PMS. Please go ahead.
Yes. Good afternoon, sir. My question would be, would it be possible for you to give out more details about the eco-efficient gas that you have mentioned in the presentation?
This is the SF6. What details would you need?
No, like what exactly, like why have you entered this segment, and what is the potential here?
Understood. I guess you were not there in the last call, so we gave the client a chance to talk.
Yes.
The thesis is very simple. We have entered, we are one of the newer kids in the fluorination platform. We entered this platform by the acquisition of a reputed player in Italy called Miteni. That is what is, as I was explaining to the previous caller, we are very clear what is the space that we are playing into. One of the technology platforms that we have is the electrochemical fluorination. That is where the customer here, specifically Hitachi Energy, had approached us. We were able to come up with the technology for producing all this SF6 replacement in-house. That is how the relationship has been built up. As we stand now, LOI is signed, and we are working very diligently to get the contract signed up and get into a CapEx mode.
We find this a very interesting opportunity because it has a larger, you know, it supports Hitachi Energy's larger ambition to move away from SF6 in their global power grids. That's what excites us to support them in that journey.
Okay, thank you. That was it. That was it, yeah.
Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand over the conference to the management for the closing comments. Thank you, and over to you, sir.
Thank you all again for your input. Let me just provide you my reflection of quarter one apart from the larger conversation we just had. The global chemical industry has been marked by continued efforts towards cost optimization, rerouting of supply chain linked to evolving tariffs and regional conflicts, and a strong push towards innovation. Regional dynamics continue to play a crucial role in shaping the industry's trajectory. Coming closer to home, acetic acid prices remain various. The spread for ethyl acetate continues to be subdued. That is not withstanding. We have sustained our volume growth momentum and, in line with our strategy, continued the diversification into newer products. In this current backdrop, our primary focus for the Essentials segment remains achieving volume-driven profitable growth.
While maintaining our market share in the Speciality segments during the quarter, we faced impacts on account of one, anticipated phase-out of one agrochemical product for which we supplied the intermediate. This is to be offset with a mass product by Q4 FY2026. Second, deferred deliveries to global customers, which will now happen in the second half of FY2026. The fluoro intermediates operation at our Lotte facilities is ramping up well, and we remain on track to deliver revenues as previously outlined, 40%- 60% of peak revenues. At the upcoming Dahej site, the project remains on schedule in terms of timelines, scope, and cost. We anticipate concluding the contract with Hitachi Energy to set up the production of an eco-efficient gas used in their SF6-free high-voltage switchgear portfolio in Q2 FY2026.
Building on our execution excellence, we can accommodate this CapEx for the same in the previously announced INR 11,000 million. Given the current operational backdrop, we will continue our focus on productivity, commercial excellence, execution excellence, cost discipline, and growth projects. The end-to-end digitization of our supply chain operations, which has been started in Q1 of FY2026, is one such example that should advance efficiency and predictability, reduce costs, and improve agility to serve our customers. As team Laxmi, we remain geared to win and geared for growth as we work diligently towards our plans for FY2028. I would like to express my deep appreciation to the entire Laxmi Organic team and all stakeholders for all their understanding and support as we navigate the current times. Thank you.
Thank you. On behalf of Laxmi Organic Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect.