Ladies and gentlemen, good day and welcome to the PCBL Limited Q1 FY 2026 Earnings Conference Call hosted by ICICI Securities 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 the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Sanjesh Jain from ICICI Securities. Thank you, and over to you, sir.
Thanks, Vishakha. Good afternoon, everyone. Thank you for joining us for PCBL Chemical Limited Q1 FY 2026 Results Conference Call. We have PCBL Chemical management on the call, represented by Mr. Kaushik Roy, Managing Director, Mr. Raj Gupta, Chief Financial Officer, Mr. Anand Kumar, Group Head, Investor Relations, and Mr. Pankaj Kedia, ED, Investor Relations. I would like to invite Mr. Kaushik Roy to initiate the call with his opening remarks, after which we will have a Q&A session. Over to you, sir.
Thank you so much. Good evening, ladies and gentlemen, and a very, very warm welcome to each one of you, and thank you for joining Q1 FY 2026 Earnings Conference Call of PCBL Limited. Today, we'll be discussing our business and financial performance for the quarter in detail. I hope that you got a chance to review our financial results and the investor presentation, which are also available on stock exchanges as well as on your company website. Before we begin, I would like to express my sincere appreciation to all of you for taking the time to join us today and for your continued interest and support in our journey.
Amid rising global uncertainties, including the Iran-Israel conflict, India-Pakistan tensions, Red Sea disruptions, and escalating tariff risk from the U.S.A., macroeconomic pressure continues to affect global sentiment. While the intensity of dumping into the Indian market has moderated but remains at a somewhat elevated level. This is reflected in the pricing environment. Despite this backdrop, PCBL Chemical delivered a steady and stable performance in Q1, marked by volume growth across all key business segments. We remain confident in our ability to navigate the prevailing volatility in the business environment and strengthen our competitive edge in the evolving global landscape. The global tyre industry is undergoing a structural shift, with manufacturing steadily moving towards cost-efficient hubs like India, driven by the need to optimize costs and enhance supply chain resilience.
Also, as higher tariffs have been imposed on some of the key tyre exporting countries, India is well-positioned to increase its export share. Recently, one of the major global carbon black producers announced the planned closure of a few of its production lines in Europe and North America by the end of this year. This development further underscores the shift in global manufacturing dynamics. It also provides India an opportunity to capture larger market shares in the global trade of carbon black. This is likely to be beneficial for PCBL in the long run as we add capacities. In India, the tyre sector is witnessing steady growth, supported by OEM, expanding replacement market, and strengthening of export demand. As the world's third-largest tyre market, India continues to play a pivotal role in the global supply chain.
PCBL remains strategically aligned to this momentum, backed by its scale, specialty offerings, and commitment to innovation and reliability. PCBL is rapidly expanding its capabilities via customized offerings and continued innovation, particularly in high-performance applications like battery chemicals and energy storage. With tightening regulations on export of new-age battery technologies from China, we are seeing a natural shift in preference towards alternative and reliable sources. Our upcoming Nanovace facility is well-positioned to offer advanced solutions to meet the growing needs of both domestic and global customers. The pilot plant is expected to be ready by the end of the calendar year, post which the sampling process will commence. We are encouraged by the strong level of interest from the partners across the battery value chain, reinforcing the potential of this new segment for PCBL.
Recently, we have been granted a process patent by the U.S. Patent Office on our proprietary method of developing nanomaterials designed for next-generation energy storage technologies. This breakthrough patent represents a significant milestone in our R&D efforts and strengthens our intellectual property portfolio in the energy storage domain. The grant of this patent not only validates our technological innovation but also opens new avenues for strategic partnerships, licensing opportunities, and potential commercialization in global markets. The technology transfer process for our upcoming Acetylene Black expansion has been successfully completed this quarter. We have started detailed engineering work for setting up India's first Acetylene Black capacity. This has applications in high-voltage cables, batteries, semiconductor packaging, conductive plastic, and paint and coatings, and it is drawing strong interest from the partners across value chains. Currently, India is 100% dependent on import of Acetylene Black.
Once the PCBL facility is ready, we would be well-positioned to meet the domestic requirement and serve the global customers. We believe this development will have a significant positive impact on the company's long-term growth prospects and aligns with our vision to be a leader in sustainable energy solutions. Now, coming to carbon black projects, the first phase of our brownfield expansion of 30,000 metric tons per annum at PCBL Tamil Nadu has commenced trial runs and will be commissioned in the next few weeks' time. The second phase, comprising an additional 60,000 metric tons per annum along with 12 MW green power capacity, will be commissioned by the end of this financial year. We are in the process of completing the acquisition of 116 acres of land at Naidupeta in Andhra Pradesh for a Greenfield Carbon Black project.
This new facility will focus on producing Rubber Black P erformance Chemicals. CapEx at this site is expected to commence once we obtain environmental clearance in this year. We are also planning to set up a new line of specialty black of 20,000 metric tons per annum capacity, which is expected to be ready over the next three to four quarters. This would take our total specialty black capacity to 132,000 metric tons per annum. This line will be coming up in Mundra. CapEx activity is going on for 1,000 metric tons per annum specialty black capacity dedicated for superconductive grade, and as expected, will be completed by the end of FY 2026 in Palej. We are on track to achieve our targeted capacity of over 1 million tons by FY 2028.
This provides a good visibility of consistent growth in our Carbon Black business with an improving margin profile. PCBL anticipates continuous growth in international sales volume over the next few years, driven by expansion into new geographies, strategic investments in supply chain capabilities, moving up the value chain, and the launch of new specialty grades. The demand for specialty black continues to be steady. Over the last decade, we have been focusing on developing newer grades with varied applications in plastics, pigments, inks, paints, and coatings, as well as conductive applications. We continue to expand our product portfolio, enter newer geographies, while moving up the technology curve. Now, coming to Aquapharm Chemicals, the initiatives taken in the last few quarters have started yielding benefits and are setting a strong foundation for accelerated growth in the coming years.
We are focusing on expanding our business in the U.S., Latin America, Europe, and the Middle East. Corresponding increase in capacity, product development, and supply chain capabilities have already been undertaken. We are also working on end-to-end integration of the three business segments: detergents, oil and gas chemicals, and industrial water treatment chemicals, with a focus on opportunities for cross-selling across business segments and higher capacity utilization. Aquapharm Chemicals expansion projects are on track and nearing commissioning. We have commissioned a capacity of 11,500 metric tons per annum to produce polymer at Mahad plant. We are also working on de-bottlenecking as well as brownfield projects both in India as well as the U.S. We plan to commission additional capacities for PBTC, green chelates, acetyl chloride, granulations, amines, imidazoline in Q2 FY 2026.
Aquapharm is on track to deliver strong growth in FY 2026 versus FY 2025, with a focus on new product development and capacity growth for the existing portfolio. PCBL has established a resilient and far-reaching global footprint, supported by a seamlessly integrated manufacturing and distribution network. As the company scales into high-margin, high-growth segments, it continues to demonstrate discipline in capital allocation and agility in responding to evolving demand cycles. Coming to the quarterly performance, PCBL continues with a steady performance in challenging macro environment. During the quarter, our consolidated sales volume in Carbon Black business increased 2.6% quarter-on-quarter to reach 154,093 metric tons. This translates into a capacity utilization of over 97% during the quarter. In Aquapharm business, our sales volume increased by over 9% year-on-year to 26,523 metric tons during the quarter. Consolidated revenue from operations during the quarter was INR 2,114 crore.
Consolidated EBITDA increased by around 2.5% quarter-on-quarter to INR 325 crore. EBITDA stood at INR 120 crore, while the PBT stood at INR 94 crore. EBITDA per metric ton in carbon black business stood at INR 17,791. Of the total Carbon Black sales volume, domestic sales volume stood at 89,606 tons, while international sales volume stood at 64,487 tons in Q1 FY 2026, which is 2% year-on-year growth. Moving on to our segmental performance. Tyre accounted for 91,140 tons. Performance chemical reported sales volume of 46,888 tons, while specialty sales volume was 16,065 tons. With this, our specialty contribution in volumes has reached over 10% from less than 1% in the year 2015. We expect this share to continuously ramp up over the next few years. We continue to expand our product portfolio and customer base. Aquapharm Chemicals reported a steady performance during the quarter.
Q1 FY26 revenue stood at INR 382 crore, with an EBITDA of INR 50 crore. Under Aquapharm, the detergent accounted for 9,419 tons. Oil and gas reported sales volume of 8,501 tons. Industrial water treatment accounted for 3,944 tons, while remaining 4,660 tons pertained to other segments. During this time, we also achieved the highest-ever power generation and sales volume during the quarter. Power generation increased by 11% year-on-year from 194 million units to 215 million units, with an external sales volume growing by around 14% year-on-year to 132 million units, as against 116 million units in Q1 FY 2025. PCBL's transformation into a multi-chemistry platform reflects a clear intent to deliver science-driven, scalable, and sustainable solutions across high-impact sectors. With offerings that span traditional performance materials and emerging specialty chemicals, the company has created a portfolio that is both diversified and future-ready.
This diversity enables PCBL to address varied customer needs across mobility, industrial processing, infrastructure, water treatment, and energy storage, while reducing concentration risk and enhancing profitability. With this, I conclude and open the floor for your question. Thank you so much.
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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sailesh Raja from B&K Securities. Please go ahead.
Yeah, thanks for the opportunity. Sir, my first question is in the Rubber Carbon Black segment.
Our next pricing cycle negotiations are scheduled to begin in the month of August, with the reverse price set to take effect from October month. So considering the uncertainty around the U.S. potential tariff and the elevated inventory levels and the customer demand, there is likely to be a pricing pressure. So how do you see this scenario playing out in the near term?
See, at this point of time, you're right. There is some strong headwind, and also there is a lot of uncertainty in the market. As such, the economies were not very strong, and on top of that, the uncertainty got created because of the U.S. Mr. Trump's initiatives, what is going on at this point of time. So headwind is definitely very strong.
But at the same time, and we know that this might have some impact on the pricing, but at the same time, you need to understand there are markets where supply is less than demand, and U.S., Europe are examples for that. So there will still be opportunities in this market. There will be imports coming into this region, for sure, from Asia. So we'll be looking at that opportunity. As far as specific to the pricing, of course, it will depend on when we finally get into a discussion and negotiation and what is the situation, economic situation at that point of time. And at the same time, by that time, hopefully, there will be more clarity on the tariff side.
Once those clarities are there, and we have got another two- three months' time before we get into a final negotiation with these all big tyre companies across the globe, which will be effective 1st of January next year. So that will continue. But the other thing is, as an organization, we are also to kind of take care of the situation in terms of performance. We are taking a lot of initiatives internally, which are in our own hands in terms of improvement in efficiency across all functions, trying and improving our working capital management so that overall the organization's performance remains strong financially. So this is our strategy, and at the same time, we continue to grow and be ready for the future because we are quite confident and optimistic about this that eventually the market will turn positive going forward.
Maybe it will take some time, but we are quite positive and optimistic about it.
For the whole year, can we maintain this INR 17-INR 18 per kg EBITDA?
Sorry, you were saying something. We were not able to hear you, please.
Yeah, you can hear me?
Yes, now we can hear you.
Yeah, yeah. Yes, sir. For the whole year, can we see this EBITDA per kg to be maintained at INR 17-INR 18 per kg?
As I said, I don't want to give you any guidance for this, but as I said, there's a lot of focus internally in the organization for improvement in efficiency, and I'm quite hopeful that will bring a lot of value on the table. So can't give you a number or a guidance, but yes, we are positive. Why should we only talk about maintain?
Maybe at some point of time, we'll talk about improvement from here on.
Okay. Sir, my second question on the exports trend. So our volumes to Europe and U.S. that has grown significantly in the last three years from 9,000 tons to 85,000 tons. So with increasing consolidation in the global carbon black industry, how do you see our mix going up in the next one to two years given the current exports contributing to around 41% of the overall volumes? Right. Yes. So how do you see that mix going up? And within US and Europe, today, it is around 35% of overall exports. So how do you see that mix to go up in the next two to three years?
Yeah, again, I'll not put a number how much it will go up by, but I can generally tell you about our strategy.
As I said, that will be continuously growing in all segments, value-added as well as our regular Rubber Black, right? Now, in regular Rubber Blacks, as you already know, that in India, the supply-demand situation is in favor of the customer, in favor of the customer because supply is almost 1.8 million tons, whereas demand is just about 1.1 or 1.2. So India should be looked at as a manufacturing hub for the globe, and we are already a very strong player in India. We are the leader, so we'll continue with our leadership, but at the same time, the further major growth will come in the international market, where there is a lot of headroom for us. The market share of PCBL there is not as high as what we have in the domestic market, so naturally, there is a lot of headroom over there.
We're looking at the international market as a growth opportunity for us. Entire Asia, European Union as a whole, and of course, U.S.A., subject to the tariff situation doesn't go out of control completely because the logistics cost is obviously a little higher for U.S.A. And on top of that, if tariff goes haywire, then of course, there's a concern. But then at the same time, the tariff, if it is applicable in India, I'm sure the tariff rates will be even higher for some of the other countries. So maybe net-net will be in a beneficial position. So as we see, the international market growth will be very sharp going forward. And the new capacities which are coming up, greenfield in Tamil Nadu, and eventually after that in Andhra Pradesh, a major share will definitely go to the international market.
But at no point of time, we'll be ignoring or neglecting the domestic market. We are a leader, and we'll continue to be the leader.
Okay. Okay. Sir, so you said 1.8 million tons supply in the India market. Of that, how much is coming from China and Russia? Imports?
That's not much. India, in totality, imports about 9,000, 10,000 tons a month. So India net-net is an exporter.
Okay. Okay. Last question. In Aquapharm last year, I'm going to—it was muted EBITDA. But how do you see the performance to pan out in the next three quarters in terms of volume, seller margin? Now, so this business is diluting the overall ROC. So what kind of ROC you are targeting internally over the next two, three years?
What are the steps that we are taking in terms of customer acquisition, then raw material sourcing, and improving the conversion cost? Also, the capital allocation policy in acquisitions can you please discuss?
Last few quarters, a lot of work has been done towards market building, creating higher bandwidth in our sales and marketing team, expanding the product portfolio, and these are all gradually. They have started yielding results. Maybe this will be more visible in subsequent three, four quarters. We expect this year to be significantly better than last year, and of course, this business has significant potential to grow from here. Now, in terms of ROC, see, the internal expectation is always that whatever investment we make, whether organic capacities or capacity build-up or inorganic acquisitions, etc., that we have at least 17%-18% kind of minimum return on invested capital.
But it takes time to reach to those numbers. In three, four years' time, this business, as it becomes bigger in terms of top line, will start getting better and better returns on capital. Hopefully, in three, four years' time, we should be there.
How much CapEx do you have in this business?
How much?
CapEx.
In totality, during the quarter, we have done about INR 112 crore of CapEx.
Only in Aquapharm, I'm asking.
Aquapharm is not much. Aquapharm, it was ongoing. So a good part of CapEx has already been incurred in last year. This year, in the first quarter, it was about INR 15-16 crore.
Okay. Okay, sir. Thank you, sir.
Thank you.
Thank you. The next question is from the line of Sanjesh Jain from ICICI Securities Limited. Please go ahead.
Yeah, good afternoon. Thanks for taking my questions. I've got a few of them.
First, on the Orion plant closure, any sense is that the plant was old and not efficient, or you see that Europe and North America is becoming incrementally less viable for them to produce at those cost levels and become competitive versus India and China? What's playing out in the market of Europe and North America?
Yeah, you were right, absolutely, Sanjesh. That is precisely what is the reality. I think the cost structure is such for them in U.S.A. and Europe, and these plants are very old plants. And what we understand, and our intelligence says that they're trying to basically close down the Rubber Black lines. I mean, so-called not the high value-added lines they are trying to stop and put that money, whatever they save from there, more on the specialty lines. That is their target.
And indications are there out of these five what they're talking about, possibly two to three will be in U.S.A., and a couple will be there in Europe. That is the indication. And this clear indication that competition-wise or competitiveness-wise, India and China are definitely ahead of them today from those regions. It is difficult for them to compete, and that is what is reflecting. And this is honestly an opportunity for organizations like PCBL for growth. Definitely, there's an opportunity for us.
And do you expect more such closures to come? Is it fair to assume that in net-net, every year, there will be less of addition and more of closures? So net closure will have. Addition?
Yeah, addition for sure will not be there. No.
As a knowledge?
No, addition for sure, it is kind of ruled out for the regular black for sure. Specialty, something may happen.
But specialty, possibly what will happen, they'll convert some of these lines to specialty. They may not add anything new, but they will be converting some of the conventional lines to specialty. But that also requires a lot of CAPEX. It will be a call of those companies. But you'll definitely be not seeing any addition. So therefore, this gap between demand and supply will only grow in the future, which will be in a way an advantage for Asia.
Very clear. Very clear. Thanks. Thanks. Second, on the specialty, now including acetylene and the 1,000 metric ton in the superconductive grade, is it fair to assume that the growth will accelerate with all these products coming up next year in the carbon black side? And eventually, that should lead to a much better EBITDA per kg, right?
You are right, absolutely.
I'll tell you, as an organization, our strategy is on one side, looking at continuous growth on the conventional things, conventional items, where we supply, say, largely to tire companies and some of the non-tyre rubber companies. So that continues to grow through expansions in Tamil Nadu, in AP greenfield, etc., etc. But at the same time, to keep an eye on the profitability improvement, we have taken all these initiatives like Acetylene Black, superconductive, then Nanovace, the battery thing. So both will continue in parallel. So we are going to grow. At the same time, profitability also will improve. And I think Raj can add from the point of view of finance, what is his thinking on the.
No, these are all sometime away. The real reflection of all these new technologies on our bottom line would be more visible from FY 2028.
So you said the plants will be all available by end FY 2026 or early FY 2027, right? So we will have some benefit showing up in 27, right?
We will have some benefit, but the approval process, etc., will also take some time, Sanjay. So the real reflection, I'm not talking about the marginal reflection, but the real reflection would come with a time lag.
Got it. Got it. Raj, on the same line, what is now the difference between so that carbon black oil used to trade at a premium in China, has the situation changed with slowdown?
Yeah, the gap between the feedstock that we use and that of our Chinese counterparts use, that has come down a bit. Currently, it is about $130.
Okay. Okay. And any reason why China dumping has come down?
Sir, you mentioned in your opening remark that the dumping intensity in India has come down. Is that the freight cost not available or domestic or matching, and then or the grade is not right for India? Any particular reason why there is a sudden drop in the intensity by Chinese? Sorry, Russian.
You're talking about Russian, right? Not Chinese. Russian import intensity has not changed much. It all started a couple of quarters back, and Russia continues to sell in India, but the quantities are not very significant. They are doing about 2,000 tons a month out of roughly 9,000 and a half thousand tons which is coming in India. And mostly, this is being imported by small-time traders. So none of the tyre companies is buying directly from Russia because of the quality concerns and also because of the sanctions on Russian material.
It is mostly on spot market where this is being traded.
So where are Russians selling right now the quantities?
China. Mostly China.
Okay. Okay. And then last question on the Aquapharm. I think since we took over, the EBITDA has been consistent at INR 50 crore. When should we see this trajectory changing? We were expecting INR 300 crore plus kind of an EBITDA this year. Will Q2 show that trajectory changing for us in the Aquapharm?
See, we are still maintaining that guidance of INR 300 crore for the current year. And first quarter was also marked by all these U.S. first announcing tariffs and then withdrawing it. And the level of import in U.S. significantly increased during the quarter because of the first announcement and then withdrawal of that. So this quarter, again, is not a normal quarter from performance point of view.
Second quarter onwards, you will start seeing the numbers.
Got it. Got it. Thanks, Kaushik. Thanks, Raj, for answering all those questions so patiently and best of luck for the coming quarters.
Thank you, Sanjesh.
Thank you.
Thank you. The next question is from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Yeah, thank you for the opportunity. Sir, my first question is onto the power business. Sir, since last quarter, so sequentially, we have seen power business EBIT contribution has gone up. So some said INR 25 crore incremental EBIT has been added in power business alone, whereas Aquapharm and carbon black seems to be flattish only. Sir, what has changed since last quarter? Because I was checking the volumes, they have not gone up much like on quarter-on-quarter basis. So what explains this INR 25 crore jump?
You're talking about power segment performance, right?
Yes, sir. Yes, sir.
No, so there is increase in both volume as well as realization. Our power volumes have gone up to 13 crore from roughly 10 crore in the previous quarter, and realization also has improved by roughly 50 paisa per unit. So that explains the increase in the bottom line.
Okay. Okay, and sir, suppose if we so this power business contribution has gone up, but other businesses seem to remain muted only, sir. For the last few quarters, we have been very muted.
Yeah, so Aquapharm business and also the carbon black business, the performance was kind of flattish during the quarter.
Got it. Sir, what explains this dip in the spreads of Aquapharm? Because I believe we had mentioned earlier that as the volumes increase, so operating leverage, so that benefits the EBITDA, but the realization is spreads of Aquapharm has declined.
Is this because of higher imports from China? Are we facing today or any other reason?
It is not imports from China. It is, I mean, the reason for profitability to be not reflecting in the current quarter, one reason is higher freight cost that they had to incur because of all these geopolitical disruptions.
Okay. But the freight cost, it could have gone up by almost around, so 30%-40% in a quarter's time frame?
I mean, the impact of freight cost is around INR 6 crore during the quarter.
Okay. So this is additional INR 6 crore like we have incurred?
Yeah. Yeah. I think generally, you should. I'll explain something to you. While you're talking about numbers, we can definitely talk about specific numbers. But I think you need to understand the overall perspective of business.
Now, last quarter and this quarter, last two quarters, which means Q4 and Q1, possibly are the two most difficult quarters, and most probably, it will continue for a little more time, some more time. The whole economy has gone upside down across the whole world. None of the big economies are doing well today. You look at U.S., you look at Europe, you look at Asia as a whole, and within that, India and China. None of them doing too well, and on top of that, these policy changes which were announced by Mr. Trump created further confusion and uncertainty in the whole system, so today, if some companies are at least able to hold on to their performance of previous quarter or previous year, then I think it is a reasonably good performance, reasonably good achievement. I'll put it that way.
You need to see the overall perspective and then kind of analyze the whole situation. So that is my suggestion to you to kind of look at it that way. Within that, of course, we can talk about specific numbers to analyze and understand more. That is fine.
Got it. Thank you, sir, for that explanation. Sir, on Acetylene, so we have commissioned 11,500 tons in this quarter. So the remaining capacity would be completed by FY 2026, right?
This should come up in next two, three months' time.
Okay. So the remaining capacity will come. Okay. Yeah. Okay. Okay. Sir, any idea like for the next two, three years, how much capacity in carbon black would be added, and in which country, and how much expected closure could be there? Just that. Just roughly.
There is very little coverage on industry, but the historical trend has been every year about 3,400,000 tons of new capacity gets added.
Okay. Okay. Got it. Got it. Thank you, sir. Thank you.
Thank you. We'll take our next question from the line of Madhav Marda from FIL. Please go ahead.
Hi. Good evening. Thank you so much for your time. Sir, just wanted to understand if I look at the carbon black margins for us, we had a very strong improvement just after COVID. It improved until last year. So could you give some color in terms of the softness which you've seen this quarter? If you could break it down in terms of maybe domestic versus export market or how we should best understand sort of the impact of margins this quarter.
I understand the global macros are quite weak, but just some more color for our understanding would be good.
But there's not been much difference in terms of margins in different markets. I mean, international market, domestic market, more or less, margins have been in parity. The challenge that we are facing primarily is in the spot market trades, not the contractual trades, where because of little oil supply and plus all these global macroeconomic conditions weighing down on businesses, that is impacting margins.
Sir, could you remind me what is our spot volume mix versus the contractual volume mix for PCBL today?
We are doing about 60% to tyre companies and roughly around 10% on the specialty side. The balance, 30%, kind of remains in spot market or short-term contractual market.
Got it. Got it. Understood. Understood. And the competition is there.
In the spot market, it's from the Russian producers or sort of who are the players who are kind of creating the pressure? Or is it just some demand softness which is leading to temporary margin pressures here? What's happening here?
In recent past, capacity addition has been at a little higher pace as compared to the demand growth in industry. And that certainly is one of the reasons. Of course, I mean, a good part of these new capacities are in Asia, primarily India, just to say. And then, of course, Russia, because of sanctions, they are not being able to sell in Europe. So they are also dumping it in some of the Asian countries. And Asia, I mean, in totality, is still very big for us. We do about 60% volumes in India, and then another roughly about 24-25% in the rest of Southeast Asia.
So all this Russian dumping and rapid capacity addition has impacted. And of course, the demand growth has not kept pace with capacity addition. So that's, of course, one more factor.
Okay. And the Orion plant closure, what is the capacity which is shut down there? Any ballpark number, like the sort of two, three facilities in the U.S. and a couple of them in Europe? How much could that be?
We don't have exact details so far. We are trying to get some more details. Our sense is that it could be somewhere around 250,000-300,000 tons.
We do not know really how much it will be and by when. They're indicating by end of this year, but it has not happened yet. So we have to wait and watch for a while.
Okay. Okay. Got it. Got it.
And sir, just one more question was on the capital allocation. Could you give some sense in terms of CapEx the next couple of years, how much do we plan to spend in the carbon black business and then Acetylene Black and Nanovace? If you could give some breakup, that would be great. Thank you.
Acetylene Black and Nanovace would not require much investment. These are low-investment businesses. Carbon Black, I mean, between all the businesses that we have, Aquapharm, PCBL, and the Nanovace now, on an average, we would be doing about INR 600 crore every year.
Okay. And how much of that would go into carbon black versus non-carbon black businesses?
Total commitment for Nanovace will be around INR 200-250 crore. I'm talking about the residual portion. And Aquapharm would require roughly about INR 100-125 crore on an average every year.
The rest will be for carbon black.
Aquapharm is how much? INR 200 crore each year?
About INR 100 crore to INR 125 crore every year.
INR 100 crore. Sorry. Okay. Okay. Got it. Got it. Got it. And the Acetylene Black project, sorry, maybe I'm not fully sure of it, but how much capacity do we plan to add? You're saying it's not CapEx-intensive. So any outlook in terms of what capacity we want to add and by when?
Initially, we are planning 4,000 to 5,000 tons, but we will be creating higher cushion upstream and downstream. And in between, the reactors are kind of small reactors of 1,000 tons. So we can keep on adding reactors based on our market situation and all.
Okay. Got it. Okay. Thank you. Thank you so much.
Thank you. The next question is from the line of Krishan Parwani from JM Financial. Please go ahead.
Yes. Hi, sir. Thank you for taking my questions. Sorry, I joined a bit late, so forgive me if I'm being repetitive. Sir, did you give carbon black off-take guidance for FY 2026 and per kg EBITDA guidance, which stood at INR 17.4 a kg except for the income?
No, we have not given any guidance, Krishan. I mean, if you had seen our current quarter's number, you would see that we are already operating at 96%-97% capacity. I think we will reach almost full capacity this year. We'll maintain this kind of capacity utilization a little higher. And realization would also depend on momentum crude prices.
Yeah. Okay. So basically, you are at 154 KT rendered, and annualizing it, you would be closer to 660-odd and then probably some incremental. So 630-635 KT should be a fair assumption?
Maybe a little more. We are also about to commission one small line in Tamil Nadu in the next maybe few weeks, two or three weeks. So that will be available for a good part of the year.
Got it. So realization, I understand it's crude-linked, but I was more from the spread perspective asking, let's say, per kg EBITDA. I think you had indicated in the last call that your overall two- or three-year aspiration is to be at INR 20-INR 22 per kg EBITDA. For FY 2026, where do you stand?
I would not talk about current year's some number, but we are on track to achieve targeted EBITDA per ton. We spoke about some INR 4-INR 5 increase from the current level in the next four or five years' time. That will come because of the product portfolio expansion, moving up the value chain.
Some part of it will come from operating leverage. And also, a good part will come from all the work that we are doing towards conversion efficiency improvement. So we are on track to achieve that. I mean, but of course, I mean, the current I mean, the business environment volatility is very high. I mean, every quarter, there's some or other development which is negative for industry.
Got it. Coming to Aquapharm, you can see your volume has gone up. However, your EBITDA has not gone anywhere. So what actually happened there?
We just spoke about that. So first quarter, again, I mean, we were talking about U.S. announcing tariff and then again deferring it by a quarter, which kind of resulted in the U.S. importing a lot more during this quarter from China and some other countries, which impacted our business volume.
So this is, again, not a usual quarter for measurement of performance. But the guidance that we gave for PCBL for the current year, we are holding on to that.
Yeah. That, I got it. I mean, I think you said volumes were impacted, but I'm saying that the volume did go up, but your EBITDA went down. So something had to give, right? I mean, or was it the costs were high, or was it the realization went down, or you were holding some inventory? Because volume, we can see it's material input.
Yeah. So the product mix also changed, and also there was pressure on pricing, which resulted in lower margins also. Additionally, trade costs during the quarter went up because of this trade route disruption.
Yeah. That is probably the extreme, the INR 204 crore other expense went up to INR 231. Yeah. That is fine.
And I think you mentioned that you are holding on to your guidance of INR 300 crore. So just wanted to understand what will drive almost like INR 80 crore kind of a quarterly run rate if you were to just take it for the next three quarters. What will change to give you a INR 30 crore uptick from the coming quarter?
We are operating at low capacity. Operating leverage is going to give us that improvement in the subsequent three quarters. We are planning to increase capacity utilization.
Okay. So I thought your capacities are closer toward 130 KTPA plus you added 11 KTPA. So probably 140, and then you're already running at 110 KTPA kind of a run rate. Is that fair?
So capacity addition, which is happening, so we are going to get about 38,000 tons from the new facility, out of which only 12,000 tons have been commissioned so far.
And we had 130,000 tons before this capacity addition. So in totality, we will have about close to 170,000 tons.
Yeah. But isn't that the case in the initial quarters or initial couple of months? The OpEx is higher till your plant stabilizes. So are you still confident of operating leverage playing out just from this quarter and then the next quarter, or operating leverage playout could happen probably two, three quarters down the line?
The pricing this quarter was also not the usual pricing.
Yeah. And that has changed?
We can't extrapolate current quarter for the full year's profitability. We are already seeing some improvement in the current quarter. And hopefully, every quarter, you will see improvement going forward.
Got it. And just the last bit, if you may allow me. So what led to the increase in the interest expenses this quarter? Interest expenses going down?
It is one capitalization which happened in the last quarter of last year. So for one of our units, PCBL Tamil Nadu, where we are putting up this brownfield expansion, there was some interest expense, which was, I mean, for the CapEx that we are incurring, and ideally, that should have been capitalized in the first three quarters, but capitalization for the whole year happened in the fourth quarter, and consequently, fourth quarter interest cost went down to that extent, and on that base, current quarter interest cost is looking higher, but actually, in terms of overall cash outflow for interest payments, it has gone down in this quarter, and every quarter from here on, you will see further reduction.
Okay, and on this continuation, what was your gross and net debt at end June 2025? There is some reduction. Yeah.
We don't publish balance sheet in first quarter, but there is some reduction.
Yeah. I was just saying this is a ballpark number if you have handy, but in case you don't, that's fine.
Yeah. Okay. No problem.
Thank you so much for patiently answering my question. Wish you all the best. Thank you.
Thank you.
Thank you. Before we take the next question, we would like to remind participants that you can press star and one to ask a question. The next question is from the line of Yash Sinha from MIPL Family Office. Please go ahead.
I am audible?
Yes, you are audible.
Yeah. I had a bit of a unit economics question around the carbon black business. I just wanted to understand the difference in realization between your specialty carbon black, performance carbon black, and your normal carbon black.
It would depend on grade to grade, but.
This call is now being recorded.
Sorry, I think I missed you.
Yeah. I'm saying it would depend on grade to grade. I mean, we have a portfolio of some 100-odd grades between these three portfolios. At the portfolio level, we are getting about roughly 25% higher realization in specialty, 25%-30%, and about roughly 7%-10% kind of higher realization in the performance segment.
Got it. Got it. My second question was around the Orion plant closure. Since they've made this announcement, have you noticed any of your. Yeah. Hi. Am I audible? Hello? Yeah. Hi. Am I audible?
Yes, you are audible, sir. Hello.
Yeah. I was asking if after this Orion plant closure announcement, any of the larger export clients have intimated to you that they would be providing slightly larger orders going forward?
It is a little early for that. Of course, we expect to get some benefit out of it going forward, but it is going to take time, and these plants are still running. Orion has announced that they will close by the end of this year, these lines by end of this year. So I mean, there's still some time before we start getting concrete benefit out of this.
Got it. I think that's it from my end. Congratulations on a good set of numbers and all the best.
Thank you.
The next question. Thank you. The next question is from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Yeah. Thank you, sir, for the follow-up. For the new carbon black greenfield line, which we have planned, any ideas on when we are planning to start the construction and when it would be fully completed?
It takes about roughly 18 months to get the plant ready once we have all the necessary approvals in place. But the approval process is a little lingering. We expect all the approvals to be in place in the next four quarters or so. Yeah. So from now, maybe around three years, roughly two and a half to three years.
Got it. Okay. And sir, this new specialty carbon black line we have planned... Sorry, we're not audible. Hello? Hello? Am I audible now, sir? So you are not... Hello? Am I audible now?
It's slightly better. Can you say something more than you can understand whether you are audible or not?
Hello? Am I audible now, sir?
No. Not yet. It's breaking. I joined by a second. I think now it is better. Continue.
Okay. Okay. Sir, my question was onto the specialty carbon black line, which we are planning in the next three to four quarters. Sir, our current capacity utilization is around 50%. I think that would be fully operated by in the next one to two years. So this capacity addition, any outlook like we are adding onto the same capacity into the similar grade, and what will be the CapEx?
I'm sorry to interrupt, sir. Hello?
Yeah?
Hello? Yeah. Yes, please. I'm sorry to interrupt. You can speak. Sorry.
Okay. So first of all, there would always be a gap between the rated capacity and the actual achievable capacity based on the product mix. And in specialty, we can reach maximum around 64.5%.
I mean, that's the maximum that we can achieve. So against 112,000 tons, maybe we can reach about 70-75,000 tons. And we are already operating at a run rate of 16,000 tons plus every quarter, which is very close to kind of full capacity utilization. In a year's time, we are going to achieve that. And therefore, we require more capacity. And to get this line commissioned, it will take about four quarters' time. The second question, I think you asked about the CapEx for this line. Is it?
Yes, sir. Yes, sir. Okay.
So it will be somewhere around 85-90 crores .
Okay. And sir, the grades are similar like which we are manufacturing today? It is into the similar grade expansion?
This will be... Mostly similar. Some new grades, some in the category of ink and coating.
Okay. Okay. Got it. Thank you, sir. Yes.
Thank you. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.