Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Archean Chemical Industries Ltd (BOM:543657, Financial) has been awarded the Responsible Care certification by the Indian Chemical Council, highlighting its commitment to sustainability and ethical business practices.
- The company remains net debt-free with a strong balance sheet, allowing for strategic investments and long-term growth.
- Archean Chemical Industries Ltd (BOM:543657) has successfully onboarded new clients, indicating strong future growth potential and confidence from buyers.
- The bromine business is showing signs of recovery with stable prices and slight improvements, supported by China's recent stimulus measures.
- The company is making strategic investments in the semiconductor manufacturing business and energy storage solutions, aligning with future growth sectors.
Negative Points
- The chemical market remains challenging due to macroeconomic uncertainties and oversupply, leading to pressure on average realizations.
- Weather-related disruptions have impacted supply chain and logistics, although improvements are being made.
- There is a moderation in salt prices, which could affect future contracts and revenue from the salt business.
- The ramp-up of the bromine derivatives plant and the approval process for clear brine fluids are slower than anticipated.
- The semiconductor project, while promising, involves significant investment and potential leverage, posing financial risks.
Q & A Highlights
Q: Can you provide an update on the bromine business and the expected impact on volumes and pricing?
A: Yes, we are witnessing an uptick in the bromine business, and this will be visible from Q1. As contracts finish, we enter new ones, maintaining a healthy outlook for the remaining quarters. (Ramamurthy Natarajan, CFO)
Q: With the moderation in salt prices, do you foresee a decline in the salt business?
A: The salt business remains healthy. While prices may be slightly below last year's contract pricing, we aim to maintain margins through strategic pricing and cost optimizations. (Ranjit Pendurthi, Managing Director)
Q: Regarding the INR3,000 crore investment in the semiconductor facility, will this be solely funded by Archean?
A: The investment will be made through our subsidiary, Six Private Limited. Archean Chemicals will support financing and provide ancillary services. (Ranjit Pendurthi, Managing Director)
Q: Can you share insights on the expected financial performance of the semiconductor business from 2028 to 2030?
A: While it's early to provide specific numbers, we are confident in the project's long-term value creation. We will update stakeholders as we approach financial closure. (Ranjit Pendurthi, Managing Director)
Q: What is the outlook for bromine derivatives and captive consumption?
A: We expect captive consumption to grow to 20-25% next year, with bromine derivatives business picking up, contributing to our growth targets for FY26. (Ranjit Pendurthi, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
