Financial Performance Highlights

Q2 FY27 Performance (Quarter Ended September 30, 2026)

  • Total Income: ₹115 crores (highest revenue achieved)
  • YoY Growth: 14% increase compared to Q2 FY26 (₹100 crores)
  • Volume Performance:
  • Caustic soda lye: 23,000 tons sold (vs 21,000 tons in Q2 FY26)
  • Chlorinated Paraffin Wax (CPW): 40% volume growth YoY
  • Power and Fuel Expenses: ₹37.79 crores (reduced by approximately ₹5 crores from previous quarter's ₹42 crores)

H1 FY27 Performance (Half Year Ended September 30, 2026)

  • Total Income: ₹222 crores (vs ₹201 crores in H1 FY26)
  • EBITDA Growth: 10.36% YoY increase
  • PBT: ₹28 crores (largely remained same as H1 FY26 despite lower realizations)

Operational Updates

Renewable Energy Expansion

  • Commissioned 21 MW DC solar captive power with BESS (Battery Energy Storage System) in September 2026
  • Total renewable energy capacity now at 47 MW DC (40% of total power requirement)
  • Power Cost Structure:
  • Grid power: ₹8.3 per unit
  • Captive power: ₹2 per unit
  • Group captive: ₹4.50 per unit
  • 10 MW wind-solar hybrid project already operational and contributing to results

Capacity Expansion Plans

  • Total Capex Plan: ₹315 crores
  • ₹150 crores completed last year
  • ₹165 crores to be completed by July 2027
  • Current Production: 300 tons caustic soda
  • Target Capacity: 360 tons by July 2027 (including 100 tons of flakes)
  • Future Target: 500 tons caustic soda (timeline not committed)

Product Mix and Market Dynamics

  • Current Revenue Split: 20-25% from Chlorinated Paraffin Wax (CPW)
  • Chlorine Realizations: Between negative ₹2,000 to ₹0 in Alwar region (better than Gujarat's negative ₹2,000)
  • Pricing Strategy: Caustic soda priced at Gujarat rates plus ₹4,000-₹5,000 freight cost
  • CPW EBITDA Margins: Variable (0% to 20%) depending on paraffin oil acquisition costs

Strategic Outlook and Guidance

Financial Projections

  • FY28 Revenue Guidance: ₹550-₹600 crores (with 9 months of expanded capacity operations)
  • Post-July 2027 Free Cash Flow: ₹80 crores annually expected
  • EBITDA Expectations: ₹15-₹20 crores quarterly at current realization levels

Growth Strategy

  • Diversification Plans: Evaluating entry into specialty chemicals using internal cash flows
  • Funding Options: Internal accruals, debt, and equity (promoters hold 74%)
  • Acquisition Strategy: Researching potential acquisitions in specialty chemicals space
  • Renewable Energy Target: 70-80% renewable energy consumption in 2-3 years (subject to Rajasthan policy continuity)

Industry Context

  • India caustic soda production: 6 million tons, expected to reach 8 million tons with Reliance entry, then 10 million tons with Adani
  • Global production/consumption: ~100 million tons growing at 5% annually
  • European capacity shutdowns creating export opportunities
  • EU-UK FTA expected to open new market opportunities

Management Commentary

Cost Efficiency Focus

Company emphasized significant improvement in cost efficiencies through renewable energy investments, allowing similar profitability despite lower caustic soda realizations compared to previous year.

Raw Material Challenges

Cost of raw material consumed increased by ₹6 crores (₹30 crores in previous quarter to ₹36 crores in Q2 FY27) primarily due to paraffin oil and sulfuric acid price increases related to geopolitical factors.

Employee Benefits

Increase in employee benefits includes Diwali bonus and higher variable incentives linked to EBITDA performance.

Remuneration Policy

Company capped remuneration at 4% of profits (reduced from previous 4-6% range) following shareholder and board approval.

Q&A Session Highlights

Volume and Realization Details

  • Q2 FY27 caustic soda sales: 23,300 tons (highest volume)
  • Q1 FY27 caustic soda sales: 19,953 tons
  • Chlorine usage: 100 tons captive consumption, 150 tons sold in open market

BESS Implementation

  • Current BESS capacity: 1.45 MW (mandatory requirement)
  • No significant operational impact expected from BESS
  • Future investments dependent on cost reductions and regulatory requirements

Regional Advantages

  • Rajasthan location provides freight advantage (₹4,000-₹5,000) compared to Gujarat pricing
  • Fewer competitors in region supporting better chlorine realizations