IG Petrochemicals (NSE:IGPL) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the IG Petrochemicals Limited Q1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation Please note that this conference is being recorded. This conference call may contain forward looking statements about the company, which are based on based on beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr.

0:46 Pramod Vendari, CFO, IGPL. Thank you. And over to you, sir. Good afternoon, everyone, and a warm welcome to all the participants. On the behalf of IG Petrochemicals, we thank you for joining us today. We also have the SG, our Investor Relations adviser with us. We trust that you have had an opportunity to review our financial results as well as the investor presentation, which have been uploaded on the exchange and also available on the company's website. During our during discussion, we will be giving you a brief overview of the industry, followed by the IGPL operating and financial performance for the quarter ended June 2026. In terms of the industry, the overall domestic demand across several downstream industries continued supported by the infrastructure spending, manufacturing activities and healthy industrial demand.

1:40 As a result, the Indian chemical industry demonstrated resilience and reflecting a gradual transition from cyclical weakness towards a more stable growth trajectory. While the global commodity chemical market remains competitive, however, the geopolitical uncertainties have improved the operating environment in the domestic market compared to the corresponding previous quarter for the last year. Although the near term volatility may persist, however, the industry long term outlook remain positive, supported by the rising domestic demand, global supply chain shift, infrastructure growth and favorable government policies. The chemical industry continued to operate in a dynamic environment. Ongoing geopolitical tension in The Middle East have also created a near term uncertainty for Indian economy, particularly through their impact on the energy prices, supply chain and logistics.

2:31 This has led to the volatility in the prices of premium material, including the ortho gel as well as several other chemical products across value chain. However, we expect this disruption to gradually ease over the short to medium term and supporting a more stable operating environment. Against this backdrop, IGPL has delivered a strong operating performance during the quarter. Our business continued to benefit from a strong domestic presence, a well established customer network across key end user industries, primarily within a range of 150 to 200 kilometer radius of our manufacturing facility. This localized customer base enhanced supply chain efficiency, foster strong customer engagement and contribute to the stable demand.

3:19 While certain downstream industries served by IGPL experienced temporary moderation in their demand over recent quarters. We are also now witnessing increasing sign of recovery in several end user segments. IGPL continued to maintain its leadership position in semiconductor market. We are among the largest producer of silicon dioxide in India and among the largest producer globally. Over several decades, the company has built a strong reputation of manufacturing excellence, operating efficiency, product quality and customer reliability. One of our key strengths is low cost manufacturing through our continuous operational improvement, efficient plant management and disciplined cost control, we have maintained our position as one of the lowest cost producers in the industry.

4:04 This enable us to navigate the market cycle more effectively while continuing to deliver the value to our customers and their stakeholders. In terms of the business performance and operating performance, Q1 FY twenty seven was a strong quarter for the IGPL. We delivered a healthy revenue growth along with a significant improvement in the profitability supported by the improved realization across all product portfolio. Our performance benefit to our continued focus on the operational excellence. As a part of our ongoing focus on strengthening long term competitiveness, we have continued to invest in the equipment upgrade and maintenance to enhance the operating efficiency and support of future growth. Now turning to the greenfield expansion.

4:49 As you are aware that we have concluded the mechanical completion of our passenger plant in past 2026. The facility will have a retail capacity of 75,000 tonnes and expected to start commercial production before September 2026. The plant will manufacture a broad portfolio of plasticizer including BOP, DINP, DPP and IGPL, get into a wide range of downstream industries. Several of these industries have a healthy domestic demand with limited import dependence. This development represents a significant step in expanding our value chain, strengthening product diversification and enhancing the profitability. We believe that the plastic area business offer attractive long term growth potential and will become a meaningful contributor to IGPL revenue going forward.

5:37 To capitalize on the growing demand, we successfully completed the dewatering of our BP plant during the last quarter, increasing its production capacity. We expect this diversified product line to contribute meaningfully to our overall business performance over the next four to five years and creating a more balanced and resilient revenue mix. In terms of the sustainability, we remain it remain integrated part of IGPL long term strategy guided by our commitment to the environment and circular economy principles, we continue to invest in the initiatives that support the sustainable and long term value creation. Our CVG plant at Raichu is progressing well, and the project will support renewable energy transition while creating a sustainable and diversified revenue stream.

6:24 The project not only diversify our business opportunity, but also reinforce our commitment to sustainable industry practices. In addition to the growth, we remain focused on improved operating efficiency across our metrics in network. We have continued integrating solar power and other renewable solutions into our facility to reduce overall carbon emission intensity in our businesses and optimize energy costs. Furthermore, we have initiated the phase replacement of conventional fuel, solid aerospace and diesel with the natural gas. This transition is expected to deliver multiple benefits including improved energy efficiency, lower operating cost and reduced emission and sustainable performance. Looking ahead, we remain optimistic about the growth opportunity ahead. Demand across all key end users expected to improve supported by the infrastructure development, manufacturing activity and increasing industrial demand.

7:20 With our strong market position, expanding manufacturing capability and diversified product portfolio, we are well positioned to capitalize on these opportunities. On our ongoing investment, product diversification and operational excellence are expected to further strengthen the competitive position and support the sustainable profitable growth over long term. We continue to execute our strategic initiatives with a disciplined capital allocation. We remain focused on creating long term sustainable value for our stakeholders. With this, we thank our shareholder, investor and stakeholder for their continued trust and support. We remain committed to execute our growth strategy with a disciplined and deliverable, sustainable long term value for our stakeholders. Now coming to the financial performance for the quarter. For Q1 FY twenty twenty seven, company delivered a strong quarterly performance with the revenue rising by 30% to INR25 crore driven by the improved realization across all product segments.

8:15 Revenue contribution to the long tail was standing at INR49 crores led by a better realization of Malek and Target at DEP. Gross profit in the margin was around INR207 crores at 33%. EBITDA was INR120 crore compared to INR13 crore for Q1 FY twenty twenty six. EBITDA margin was 19.2% compared to 2.7% reflecting a strong improvement in the profitability. Profit after tax for the quarter stood at 71 crore, reflecting a significant improvement over the corresponding quarter for last few years. India has extended the anti dumping duty. Think the notification has come as different as last two days back on the telecondite rate, which is $40 for China and around $140 for Korea.

9:01 That is effective for five years effective from 08/05/2026. With this, I conclude my presentation and open the floor for question and answer. Thank you. Thank you very much. We will now begin the question and answer session. The The first question is from the line of Neera from Anvil Bell. I have a few questions to ask. So sir, in our earlier conference calls, like we used to say that the Indian demand for metallic anhydride is close to around 450,000 tons to 500 tons.

9:56 So let's say on a run rate basis for Q1, how has been the industry demand? Because you mentioned that there were some user industries where the demand was slightly subdued, which have now recovered. So if you can just say if you just indicate in terms of how was the demand in Q1 and how from there onwards it has recovered too? So basically, there was an impact when there was sudden jump in the prices of various petrochemicals feedstock, including Thelic because most of the industries which we cater like plasticizer, pigments, PPC, UPR, they are not only using phthalic as a raw material, but also multiple other petrochemical feedstocks are used.

10:41 So because of that, there was some moderation in the demand we have witnessed because the pricing has gone up by 50% to 60%. While we have seen there is a moderation in demand in April and May, by June, we have seen again the good recovery of the demand. So the segment which has gone very well is the LKD and pain segment. While the segment which has impacted was especially chemical and the plasticizers, UBR remain more or less same, CPC remains same. So some of the product line has improved, some of the product line has been moderated for first two months, April and May. But in June, we have seen the similar demand, which was prevented before the February 26, like the demand has come to the normalization. Correct.

11:27 And sir, in terms of our production and sales this quarter, how was the situation in terms of when we compare to Q4 of FY 'twenty six? So if we see this quarter, if you can throw some understanding in terms of the production and sales part? So actually, in terms of the production, we are operating around three to 3.5 plants. So we were between 40 to 45. For the overall sales, compared to the last quarter, the sales were 10% to 15% lower compared to the last quarter. However, the overall price realization was very high because the prices have jumped by 30% to 40% for feedstock as well as final product. That's why if you look at the revenue, the reflection of the revenue is basically indication of the higher price realization rather than the higher quantities.

12:19 Correct. And safe to assume that this run rate of 40,000, 45,000 tonnes, which we have seen in Q1 and the demand improvement, what we have been just discussed, there would be an uptick in the numbers in the quarters coming by? Yes. We will see that there will be uptick in improvement in overall quantity of the production and the sales as well as there will be the sales from the class sizes, which we are planning to start by the end of this month or probably early next month. So that volume will also be added. So we will see a good overall revenue increment revenue as well as the overall one time of and plasticizer to improve. We have also improved our DP because we have done the debottlenecking last quarter. So now we are running at a run rate of around INR 10,000 per annum basis compared to INR $67,000 earlier.

13:14 Got it. So sir, like between INR 49 crores of revenue from non Therag business, how much was the DEP sales this quarter? So, DEP this time we have crossed highest ever in the quarterly basis, it was INR 28 crores to INR 29 crores for the DEP and around INR17 crores to INR18 crores of MELIC. Correct. Sir, last question from my side. What was the gross margins this quarter? And if you can share for Q4 of FY 'twenty six, that would be helpful. Thank you so much. So, the gross margin for this quarter was around 32% compared to the Q4 FY 'twenty six, 73%. So, typically, right now, the margin is between $250 to $300 IG is making around $100 to $270 extra because of the operating efficiency and the byproduct.

14:04 And since the prices were very high and operating efficiency give us some extra yield that has translated into the higher margin. Correct. What was this for Q4, sir, if you can just clarify? 32% gross margin. No, no, in terms of dollars per ton like you mentioned, this quarter was $2.50 to Typically, three for gross margin, industry was around $2.50 to 300, we were $100 or above that. Got it. Got it. Thank you so much, sir, and wish you all the best. Thank you. Thank you. The next question is from the line of Mohit from Shubla Research. Please proceed. Hi, sir. Hope I'm working on. Yeah. Hi. Thank you for giving me a virtual meeting, sir. Sir, my first question is, since we have got the ATD approval once again from Minister of Finance.

14:56 Correct. If you could please tell us what's the landing price of China and Korea would be after the ATD, a ballpark number? Sir, can you repeat your question? I'm not getting your voice clearly. Sir, what would be the landing price of PAN from China and Korea after the 80 d addition? So basically, whatever is the price today, $40 will be added to the China and then on $140 to the Korea. So basically, whatever is the price in China and Korea, it added four things. First, freight transportation cost, the insurance cost, then the port cost, then local logistic cost, then the Forex hedging cost, plus the duty, which is important to already there in some cases, then the NTW of $40 and $140 So typically, if you ask me today, that today if the price is say, let's say, assume today's price is $1,000 so it will be around $1,100 to $1,100 Around 10% to 15% higher.

16:05 Oh, very clear. Particularly the Korea and China will be... Because there is already a duty, import duty in some of the cases. So apart from these four costs, if there is applicable of import duty, it will be applicable and over and over and anti theft and duty will be applicable. Oh, very clear. So very clear. Yeah. Also, sir, if... Can you tell us what percentage of our brand revenue comes from specialty chemical? I am asking this because we are seeing good growth in both industries. Also the growth given in these industries, if you can provide some guidance also going forward, what would be the problem for me? Typically, we were selling around 20% to 25% for the paint industry in terms of the quantity of Tali goes to, and it maintained during even Q1 FY 'twenty seven. So for specialty, we were selling between 4% to 5% and the remaining four percent to 5%.

17:04 Okay, sir. Okay. And are we expecting some volume increase from paint industry? Yes, yes. Because there are a lot of new players entering to the paint and the segment is usually not only for the two wheelers, four wheelers, but there are alkyl resin demand growing across all the paint segment. And since infrastructure is being developed in India, we expect that demand to grow between 8% to 10%. Okay. So very clear. And so my next question is on plasticizers plant. Since we have done the mechanical completion and we are just getting it ready to start from September, can you give some idea upon how customer visits, plant protein and approvals are going on? So I think all approvals are fairly in place. We are planning to start probably either in August or early September.

17:58 And we expect that we will start with around 1,500 to 2,000 and we expect around 2,000 to 2,000 ton per month we will be able to sell for the balance period of six months. That is what our target is. So it will generate roughly a revenue of $208.50 crores to INR 300 crores gradually over the probably next six to nine months, it will reach to a capacity of 50,000 to 75,000. Okay, sir. And sir, it's also can you please share the end user industry, which will be focusing on more for the I plastic end of think all the plastics users, which is some of them are telecom customers, the particular industry, it will be the cable industry, it will be the other plasticizer industry. It's cross, I think, whenever you see the plastic, it's all result of the plasticizers.

18:50 So we will be focusing mainly on the cable industry, which is the IIT and the DOC, which goes for the various plastic modules. These are the key focus area. And since it is a mass processing, we will be producing based on whatever is the requirement in the market or demand in the market. So our production is fungible. We will be able to produce based on the requirement in the market. Got it, sir. Got it. Thank you. Thank you. Was nice speaking to you, sir. Thank you. Thank you. The next question is from the line of Ria Mehta from Equities Investment. Please proceed. Thank you so much for giving me the opportunity. Congratulations on this set of numbers. I just wanted your input on in the current quarter results, what would be the amount coming from inventory gains?

19:42 There's a lot of disturbance. So inventory gain, as such, we have not concluded. Of course, there are inventory gain available because at that time, when we were in April, there was a lot of inventory was spending at our end in the March. And then that inventory of 5,000 to 10,000 tons, which is available at a lower cost has been sold at a higher price. So typically, whatever is the inventory loss, which we have taken in the nine months has been able to... We are able to cover it up in the... This current quarter. Right. The... What will be the amount? If you could help me on the volume. I have not calculated it specifically, but if you can say it range between 10 to 15. 10 to 15 crores. Okay. And in terms of volume, we were always guiding for 50,000 tons kind of volume to be done. However, this quarter, we've done 40,000 to 45,000.

20:37 So, Harish, this is... Is this because of demand impact? I think it is not only the demand because you are aware that there are certain exports we are not able to do because there is a logistic transition in the market. The containers are not available. There are lot of other geopolitics. Typically, we sell around 15% to 20% export. The export volume was around 7% to 8% or 10%. So that is one of the reasons. Some of the industries we are able to sell, but it has been not taken into like it has been at the end of say, it has been sold at the end of June, then our order is actually on delivered basis. So if we are selling in last five days, delivered in the first week of July, then it is considered in the next quarter. So overall for the year, we are still there at around 5 lakhs on it?

21:25 2 lakhs, not 5 lakhs. So we have a deficit of $2.75. We are guiding again for the 2 lakhs of plus minus 2% to 3% on either side. So 2 lakhs is intact. Yeah. Because I think that is a flat number since last two years. So I think that is. It is expected to improve once we start the class sizes project, and it... The class sizes project is expected to grow in terms of their quantity in the sales, then automatically will also grow in overall sales. And for the full year for classes, as in we would be able to do around INR 500 odd crores of revenue, right, at full capacity utilization? At full capacity utilization of INR 75,000 crores, it will generate a revenue of gross revenue of around thousand crore, but that will be the gross revenue and net revenue will be around 60 crore because 350 to 400 with the, which will be Sorry.

22:20 Net only how much? You're you're not audible. Net net revenue... That's the matter. Revenue will be between 5 to 600 crore because there is a higher prices for plasticizer right now. Right. Right. Also, going from this, how much time will we take to ramp up the capacity? When we'll be able to complete full speed? Is there a process where it goes into testing phase with companies, etcetera? And what will be the typical time frame? For for for this year, for the remaining six months, we are targeting around 2,000 to 2,500 ton per per month. So for six months, it will be between 15,000 to 20,000 ton for f... Balance period of FY 2627.

23:05 Then it will grow up to 50 to 60,000 or 65,000 ton in next year. That is our target. We are planning to achieve it. Okay. Got it. Now in terms of realization, you mentioned that it was up 30 to 40%. This is for. Right? And as well as now. Yeah. So I think realization remain at a limited level because the overall demand in the market is good since everybody is using 60, 65% of their capacity. So overall supply is also limited in domestic market. So an import is hardly happening happening at a very, very little quantity. So right now, whatever is the demand is fitted by the domestic players. The margin remain remain between two fifty to 300 level right now, which is on a higher side because there is a lot of geopolitical tension. And because of that, all the feedstocks of the petrochemicals are at higher price. When the prices of the raw material is high, we ended up a higher realization for the final product.

24:10 And second point, we have some operating efficiency. Because of that, we are getting some extra yield that is also being sold at a higher price. So there is a double benefit happening on that that account. Got it. So even after war situation easing out, we have not seen spreads reducing is my takeaway. Right? So I think we should not take any extraordinary higher or lower risk. I expect expect between 200 to $250 will be the average spread. This is the last ten year event. Around $1.50 to 200. Right? Right now, market spread is between $2.50 to 300, and IG makes $100 over and above because of operating efficiency and the byproduct. This is the EBITDA per ton you are mentioning?

24:57 No. I'm talking about the gross margin dollar per ton. With the EBITDA per ton, which you used to mention that last year around... It was around one fifty to 200. 100 to one fifty for the last q four, and then we did 100 quarter extra. Typically, if you remove the advantage of the yield as well as the byproduct, which generally cover around 80 to 90% of operating cost. So whatever is the margin, we mean the EBITDA margin. So if you take only the Telic margin, you will be able to get the EBITDA margin. Actually, not audible. There's some disturbance coming from the You're not able to listen to me? Hello? Yeah. There's some disturbance. Yeah. But there is no Sir, I'm able to hear your voice properly.

25:45 So there may be disturbance at your end. I'm saying if you take our gross margin and reduce the operating cost, conversion cost and other cost, converting cost around one fifty to $160 will be at EBITDA level. And then there is another cost which is in. So total cost for us is around $1.50 to $200. So typically, when you are making $400 margin, including the byproduct and yield and remove $202,150 dollar, you will end up at $200 for the EBITDA in the current quarter. It. And this is the first thing you to interrupt. Do is Rumam, may we request you to join the question queue again? Thank you. The next question is from the line of from Keynote Capital. Please proceed. Yeah. Thank you for the opportunity.

26:32 So, also, just a couple of clarifications. You said that on a q o q basis, our volumes are down about 10 to 15 percentage. Right? Yeah. Yeah. That means our volume for the quarter is around 46 to 48,000, not 40 to 45. Right? I would not like to comment specifically. It means between 40 to 45. Okay. 40 to 45. Secondly, our rate currently is about two fifty to 300. Right. A normalized decade run rate is about one fifty to 200. 200 is average. 200 to two fifty is average for ten years. Yeah. So currently, even in the month of July, we are seeing the spreads to be around two fifty. Yeah. Got it. So similarly, last year or in last six to twelve month time frame, where Malik and I did prices were around 600 to $700 per ton.

27:24 If I'm not wrong, it is around about 1,100 and a sustaining at that level. Correct. Right. Because all free stock prices has gone up. So apart from Malik, Malik prices have also gone up. Got it. And so earlier, sir, there... The reason for the decrease in malic and hybrid prices was there was significant capacity built up in China. Correct. Are we seeing any kind of constraints taking place due to which there is a supply demand mismatch and we are now back to a normalized level of It is happening because China has built around 2,000,000 plus capacity in Malik, while other chemical prices have gone up by 50, 60%. Malik has gone by 30, 40%, and then again come back to 10, 20%. So, Mallik, we try to assume that this would be the normalized run rate now?

28:14 Run rate for... You are talking about production? From prices. I think still the global market is in oversupplied mode. It will take some time because China overcapacity is yet to be fully utilized. Why? Because they have decided to come up with a plan of PTO, PBT and PBT. Now the government has extended the deadline for single use plastics for PBT. So that capacity which was built for that purpose is not utilizing, and they are selling the into the international market. That has actually depressed the margin overall. If you look at history, typically, mail prices are 20% higher than Telic. And right now, it is 20% or 25% lower than Telic. The reason is the oversupply from the Chinese market. Got it. Got it. No problem. Just last one question from Internet and going back with you.

29:06 As there would be some dry trial runs already going on the plasticizer plan, I just wanted to check the quality as to the requirements of client. Are we able to match that? And as you're saying that we would be able to sustain the run rate of, like, fifteen fifteen k, that would be about... If I'm not on a cross level, it would be around 200 to 50 crores if I'm not wrong. So this is the expectation for the Yeah. 200 to $2.50. For this quarter? For for the balance six month? For the entire year. Yeah. For the balance six month. Because July, August, we have... By September, it will be starting and then either end of August or September early. And then six months, we have taken a 2,000 to 2,500 and depend upon the production. The quality and all issues that I think we will be able to respond to you over the next one or two quarters rather than doing it today.

30:02 But generally, it's a commodity product and quality for all the the plasticizers remain same. Like, Telic, if you ask any Telic producer, it's a similar quality for all Telic across the board. Similarly, it's a commodity product like DUP, DIN, and TNAVS. I just wanted to complete the question, sir. Just... I was trying to understand how will it drill down to the profit level because we are backward integrated. It should lead us to have improvement in operating and gross level margins. Right? Because we would be consuming the product sales and selling it for the Correct. How will be the incremental gross profit margins and EBITDA margins would look like? And and all the all the cost related to clients are already incurred or it will it will come with with with quarters?

30:48 No. Let me explain you. So, typically, the process as a margin is around EBITDA margin is between 10... Eight to 10 or 12%. Right now, it's 15%, but take 10 to 12%. At a net level, it is four to 5%, which is the average of the last four, five years. But since the asset turnover, we have invested around $1.80 to 200 crore. Asset turnover of plasticized that is five times. So whatever margin we are making, it will be translated into the higher path. Suppose you touch a 75,000 ton of the production and your sales is thousand crore on that, you be making around 50 crore. So for investment of 200 crore, your payback period is around four years. And for the purpose of calculation of plasticizer margin, we are taking the average realization cost of the Telic at which Telic will be transferred to the.

31:37 So whatever margin of the Telic that will remain with Telic, and at the market rate, Telic will be transferred to the project, and then margin of project will be calculated. So when it is said to assume on a longer run rate, the margin used to be about EBITDA levels 20 to 30... 20 to 14 percentage, we are going to add about 300 to 400 bps on EBITDA levels. I think let's wait rather than commenting on that. Let it be reflected in the performance. I would not like to comment about the future. But having said that, there will be a saving because Telic, which we will be using in house, there is no transportation cost, no bagging cost, and there is no cost to convert into flex.

32:22 So that will be saving on account of Telic uses in plasticizer. And in plasticizer, what drop margin there is? 10 to 12%. I mentioned it to you in EBITDA. Gross? Is it for you to gain gross margin? Think, typically, we have not operated right now. But, in the market, if the margin is between 15 to 18% and EBITDA is 10 to 12%. Got it. Thank you so much, sir. I'll get back in the queue. You. The next question is from the line of Rohit Sina from Suneji Securities. Please proceed. Congratulations for a good set of number.

33:08 So one question is, as we are seeing that volumes are pretty much a segment for some quarter or some year for us on a quarterly basis. And as you also indicated that we are operating at a pretty lower level as of now. But once we are through with the plasticizer and the operating higher level of utilization for our plant. I mean, would it be the existing customers where we would be pushing volumes or we would be also looking at newer customers to add on? And would it be more of a plasticizer volume increase or it is a both and plasticizer volume increase?

34:02 I think it's a good question. Right now, we are targeting around two lakh ton. And going forward next few years, you will see the overall volume to go up to 40, and there are two parts to that. First part, overall, the plant capacity utilization will improve. Second, the pluses is that we'll be ramp up to 50,000 to 75,000 tonnes. And third, there are a lot of other opportunities in the export market, including GCC. I think that Europe has also opened up in terms of the FDA, which has been signed and executed by the internal government, the UK government. Similarly, a lot of FDAs are signed, and there will be a better global opportunity for us to supply the to various countries where there is a FDA sign. So when I look at, we generally look at from the point of view, what is the total capacity utilization of plant.

34:51 Right now, we are between 65 to 70, and we hope we'll be reaching between 80 to 90 very soon. Okay. Okay. Got it. Thanks. And secondly, as this extension of ADD was close to $40.40 dollar per ton. But currently, if we see... Yeah. So currently, if we see the prices are at the higher level, so that makes a pretty low percentages in terms of. But I think I mean, just wanted to understand whether the price correction in Tali would be benefiting us or will the higher price would be benefiting us despite this EDD?

35:41 So I think EDD is one part, but we hardly buy very few quantity of of telecom from China. Sometime, Korea and Taiwan is number one and two, China is number three. So I will not see it, but it was... Government has not given as a percentage. It is given as a fixed dollar per ton. For company, higher prices are always better because your operating efficiency, because of that extra yield you are generating, that you will be able to get at a higher price. If the prices are lower, then the realization for extra yield will be lower. So if you ask directly the... What is beneficial for the company, it is simply if the prices are remain at elevated yield, it is more beneficial for the company. However, if more take it, then you will see the more volume getting into the market and then plasticizers and other business will drive the overall volume.

36:34 Growth for as well as plasticizer. Got it. Got it. And second, sir, as a classified plant is about to commission, just wanted to know, I mean, going forward, what sort of quarterly and that would be there for us on the interest and depreciation side? So it will be around annualized basis, around 10 crores for plasticizers. And similarly, the depreciation will be between eight to 10. This is a similar rate. Around, you can say, around 20 crore plus minus two or 4% annualized basis. So for a quarter, you can say 5 to 6 crore. Okay. Okay. Got it.

37:20 Yeah. Yeah. That's it from my side, sir. Thank you and best of luck. Thank you. Thank you. The next question is from the line of from Gudrani Finance. Please proceed. Yes, sir. Just wanted to get your thoughts on the spread, sir. Now, sir, this crude is very volatile. So, sir, how is... What is your view on the spread, sir? So I would like to give the futuristic view on the spread, but the crude is very volatile and so as the naphtha and other Swedish stocks. So sometimes it's go five to 10% up and someday it is five to 10% down. So as a strategy, we wanted to operate at a minimum inventory so that we are not having a much impact on what is the volatility.

38:09 So that means whatever is required, we maintain minimum inventory, produce and sell the crops So that we can maintain our operating margin and not much impacted because of that volatility. And for margin, I think that if margin right now between $2.50 to $300, I'm not seeing that the war to end and I can't even predict it. But so long as the crude remain elevated level, all petrochemical products prices will remain high. So similarly, that margin will be maintained at that level. Then it will be probably moderate in line with if there is a full settlement between The US and the then everything has to come probably next three to six months in the normalized level. And sir, how much was the freight supply issue contributing to the jump in freight? Was it a significant part?

39:00 I think freight, I will tell you the two or three important data points in the freight. The first is the container freight has gone up by 30 to 40% shipping cost. Then there is a condition because the state of Hambray is closed for most of the period. There is a extraordinary condition at the Mundra and the JNPT Port. The condition for JNPT is around ten to fifteen days and Mundra is around fifty to twenty days. Because of that, the company who are importing and exporting also need to build a lot of damages. And there are 1,500 plus ships are are in and around the the state of Hormuz and as well as the Red Sea. So it has created a full disruption and added a cost of around $80 to $120 for most of the petrochemical products.

39:47 So it's not easy to import if you are importing the exemption of thirty, forty five days, it takes sixty to ninety days to increase in... Along with the increased cost. So right now, I think there's a big disruption happening in the international market for freight, sippings, and containers. It's just similarly our working capital cycle then will have similar impact, right? It could have gone up. Working capital cycle for export has definitely gone up because it takes time to export the product. And similarly, for the import of the raw material, 50%, 50% we are importing, that cycle has gone up because it take now 40 around thirty to forty five days to bring the raw materials. But in domestic market, we maintain the similar cycle, which is thirty to forty days average.

40:37 We sell in thirty, sixty days, cash thirty and sixty days. In domestic market, it remains same, but for the import as well as export, it has gone up. Okay. Sir, just one last thing, sir. The audio was in audible. So just wanted to understand your contribution of plasticizer and CBD plant for FY '27, sir, in terms of top line or EBITDA. See, I think I will give you only the quantity. EBITDA and the best number, I think you leave it to for next two quarters. Yeah. Yeah. Yeah. Yeah. Expect around 2,000 ton every month beginning from October, September, October. So around twenty fifteen to 20,000 ton. And the CBD, we are planning to start somewhere in October, November, December quarter. So hardly any negligible amount will be there for this year. Probably next year, we'll see the full effect of the CBD project.

41:27 The only thing which I need to add is government has yesterday announced the new CPG policy. In this, the capital subsidy has been increased for typically hunt by 40% to 50%, and the prices are up by 33 for the CPG being produced and sold into domestic market. It was announced yesterday, new CPG policy. Okay, sir. Thank you. Okay. Thank you. Thank you. The next question is from the line of from Countercycling PMS. Please proceed. Hi, sir. Thank you for the opportunity. So what were our spreads in Q1 with the low cost inventory that we had?

42:14 You already mentioned the market was 300 and our was around 400, which you can easily calculate from the from the revenue number and the profitability number given in the financial results. Okay. Thank you very much. And what are the spreads currently? I mean, with the higher cost inventory or if we procure the raw materials now? I think the spread, I have mentioned it earlier in the call, spread is around 200 to $250 right now in the market, and we are making extra because of the byproduct and the operating efficiency. But right now, it's $202.50, and with the lower cost inventory for QY, it was around 300. There lower is cost inventory for this quarter because our inventory maintain it is lower minimum level and whatever we are buying and we are selling.

43:01 We are maintaining the minimum inventory in our system right now. Got it. So, I mean, as on date, I mean, we are... We are we are seeing the same spreads as we saw in q one. Is that the same understanding? More or less. Got it. So you mentioned that over the last ten years, normal spreads have been $201.50, $200 itself. Around 200 to $220 average for last ten years. Got it. So the current scenario is more or less and not not not the upcycle. It's just the normal case scenario that Yeah. It is... It's just slightly better than the average. It's not extraordinarily high. It's a slightly better than the average.

43:50 Got it. And how are... I mean, if we compare our prices to prices from Chinese or Korean imports, can you help me understand how how many differences is it between them? Hardly any difference because if you do import from these guys with the freight, insurance, transportation, congestion and other things and including the duty, if you count more or less, I think between three to 5% because we are able to sell on just on time and they take thirty to forty days. That's all. Otherwise, there is hardly any difference for the import and the domestic price. Got it. So this 40 or 2... $1.40 Sorry to interrupt, mister. May we request you to join the question queue for a follow-up question as there are other several participants waiting for that one.

44:43 The next question is from the line of Aditya Khitan from Smiths Equity. Sir, just a couple of questions. Sir, manufacturing of phthalic anhydride via OX route and versus the naphthalene route, any sort of in the last two to three months, was there any instance like manufacturing via has became more profitable? We know like because the conversion cost in naphtha basis is 2x. Correct. But because the crude prices itself jumped, so that fixed cost of naphthalene got recovered and manufacturing via that route could have became profitable. Was there any day in the last two to three months wherein this route has became more profitable and customers have they shifted on spot, but because the trend didn't materialize for a longer term that didn't shape up?

45:38 I think I think there are two points. First, India doesn't have any naphthalene based talic production facility. Generally, it... All the talic facilities converted 90 to 95% of world on the ortho gelatin basis. This is efficient, energy efficient, as well as the operating efficiency is much higher. There are some of the Chinese guys who are operating in China at a very lower capacity. They take the advantage of spread available between OX and naphthal naphtha lean. It's not naphtha, it's naphtha lean, which is the byproduct of a sticky. So we have not witnessed it in last two to six months any import on that account happening in India because India has come with some standard, which generally doesn't allow you guys to to sell the product to the domestic market.

46:26 So I have not seen any impact for the prices. I have not checked, of course, the last six month naphthalene prices. But it... Two years back, there was a spread of between $2.50 to $2,300, then it was profitable. Of late, I have not checked, but I have not seen any import of naphthalene based telecom domestic market. Got it. Sir, on China, like, we have seen, like, so taking a trend of the last ten years. So earlier, so South Korea was the largest importer that overtook China overtook it and now it became the largest importer, like some 50%, 60% imports coming from China. So any idea, sir, if you can give like over the last ten years, how much capacity addition happened in China? And was that through the OX route like you mentioned?

47:12 And second, like recently also like Chinese government is rule packing all the subsidies which they are giving out. So on phthalic anhydride also, is this similar trend working or like so the duties are still intact? No, no. There are two parts. First, right now, China don't have any new capacity, which is based on Ramsanil. It is old thirty, forty years old capacity. And China is actually withdrawing all the the benefit given to the various products. Specifically, they have not published any list which product they are giving what benefit. It is in the public knowledge only that it is it is on the public knowledge. It is not in the public knowledge that it is available to a specific product because generally it is done inside the China.

47:57 They don't publish it. So nobody is actually aware of that. What is the benefit or the benefit they're offering to particular chemical or chemistry while export... Doing the export to the other countries. So it is general perception that they are giving some benefit, but it is not in public domain or published anywhere. The capacity additions in China, if we can get the data, like, how much has been added in South Korea? I don't have right now, but last two years, the two... One or two plants of around two lakh ton has been added in China. I will give you the detail of two plants separately. I don't have right now handy with me. Got it, sir. Okay. Thank you, sir. That's it. Thank you. The next question is from the line of from DAM Capital. Please proceed.

48:49 Hello? Hello? Mister Karan, yeah. Yeah. Hi, sir. Thank you for taking my question. Congratulations on a great set of numbers. So just... I've just got two. One, I think we've done about 112 crores of EBITDA in q one, and I think 67 crores in Q4. Given how the entire geopolitical situation panning out, how do you what is the sustainable run rate for us from here on? So your question is how much run rate we'll be able to maintain for the production or the EBITDA or the PED? On the EBITDA level, sir. So EBITDA right now is around 112 crore and including the other income INR 120 crore, which is 19%.

49:37 Next few quarters, I think the next quarter is also looking good. I will not be able to predict for the entire year, but for compared to the last year when we have a full year EBITDA of INR130 crore, this quarter we have done INR130 crore. We expect next one or two quarter is also looking good, but it's all depend upon the geopolitical and all that. Typically, when we assume that we will have all four plant operating or fifth plant operating along with the plasticizer, we will have a similar type of EBITDA every quarterly basis. Sir, have to look Depend upon the margin, of course, subject to the margins. Sure, sir. And if I could just look at purely from the bank business, then how do you look at your quarterly run rate? Are we comfortable in saying that at least for the next few quarters, it should be higher than what we did in q four?

50:28 So I will not be able to comment for the headquarter. I can tell you that if the EBITDA remain... Margin remain between 200 to $50, then our EBITDA will remain between 15% to 16% level. Understood, sir. Okay. And, sir, second, sir, that reportedly, we deal with that. Is there some... How is the raw material availability more from a ortho zaddy perspective? Are we running our production at Optimum utilization, which is. So raw material is available in the international market. Of course, the prices are high. And, typically, we buy 40 to 50% domestic market, 40 to 50% in import market. The challenge in the import market is the delivery because, generally, it takes ten to fifteen days or twenty days. Now it is taking forty to forty five days, sometimes fifty days.

51:19 So that time lag is always there. And, similarly, the cost of the freight and transportation has gone up as I indicated earlier. So it's raw material is available to bring the raw material to to your country or to your plant is something which is difficult in this geopolitical scenario. But having said that, the raw material is sufficiently available in. So you need to plan everything in advance. So do we have sufficient inventory to maintain optimum utilization per plan? Yeah. Yeah. We have sufficient inventory. So we'll maintain sufficient inventory. Understood. Just for my understanding, how much... Typically, how much inventory do we maintain of ortho gyne? Typically, as a company, we maintain the ortho gyne inventory of 5 to 10,000 crore per ton average, which is typically fifteen to twenty days of inventory required for the plant.

52:16 Okay. Okay. Thank you so much, sir. Thank you so much, sir. Thank you. Thank you. The next question is from the line of from Equities Investment. Please proceed. Miss you may proceed with your question. You do not respond from the current participant? Due to time constraint, that was the last question. I would now like to hand the conference over to the management for the closing comments. Over to you, sir.

53:07 Thank you very much, everyone, for joining this call. We appreciate your time and showing interest in our company. In case if you have further question, please contact SG, our investor relations adviser, who can send directly bill to us. We will be happy to respond. Thank you very much. Have a nice day. Thank you. On behalf of IG Petrochemicals, that concludes this conference. Thank you for joining us, and you may now disconnect your line.