Release Date: January 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PCBL Chemical Ltd (BOM:506590, Financial) reported a 21% increase in consolidated revenue from operations, reaching INR2,010 crores, driven by higher sales volumes and contributions from the newly acquired Aquapharm Chemicals.
- The company achieved a capacity utilization of over 90% during the quarter, indicating efficient use of its production capabilities.
- PCBL Chemical Ltd has been certified with the International Sustainability and Carbon Plus (ISCC) certification, highlighting its commitment to sustainability and responsible production.
- The company has unveiled a new identity, reflecting its diversification beyond carbon chemistry into new fields within the chemical sector.
- PCBL Chemical Ltd declared an interim dividend of 550%, or INR5.50 per equity share, demonstrating a commitment to returning value to shareholders.
Negative Points
- The company experienced a drop in Carbon Black spreads due to crude price movements and changes in product mix, impacting realizations.
- Aquapharm Chemicals, a recent acquisition, faced headwinds from tepid demand and competition from China, leading to a sequential drop in volumes.
- Despite a strong performance, the company is facing challenges from Russian carbon black imports in the Asian market, which are impacting margins.
- PCBL Chemical Ltd's interest costs have increased due to acquisition-related borrowings, affecting the bottom line.
- The company is operating at high capacity utilization, leaving limited room for immediate volume growth until new capacities come online.
Q & A Highlights
Q: Is there any particular reason for the drop in Carbon Black spreads on a quarter-on-quarter basis? Also, are there any plans to expand the specialty carbon black segment?
A: The drop in realization is primarily due to a decrease in crude prices, which affects our raw material costs. Additionally, there was a change in the product mix during the quarter. Regarding specialty carbon black, we have started work on a new specialty line in Palej, focusing on premium grades for conductive plastics and batteries. The specifics are still being designed, and more details will be available in a few weeks. - Raj Gupta, CFO
Q: Can you provide more details on the recent land allocation in Andhra Pradesh and the expected capacity addition?
A: The land in Andhra Pradesh can accommodate about 400,000 to 450,000 tonnes of carbon black capacity, but it will be developed in phases. Initially, we plan to set up a 150,000-tonne plant, with an investment similar to our TN plant, around INR950-960 crores. This will take about 2 to 2.5 years to complete. - Raj Gupta, CFO
Q: What is the outlook for Aquapharm Chemicals given the recent volume drop?
A: The specialty chemicals industry is facing headwinds due to tepid demand and competition from China. However, we are focusing on cost and operational efficiencies and increasing market penetration. We expect gradual improvement in performance over the next few quarters. - Raj Gupta, CFO
Q: How is the geopolitical situation affecting your export volumes, particularly in Europe?
A: Despite elevated inventory levels in Europe due to restrictions on imports from Belarus and Russia, our volumes in Europe and North America are increasing as we add new clients. We expect the situation to normalize soon, and our international sales have tripled over the last decade. - Raj Gupta, CFO
Q: Could you provide an update on the Kinaltek JV and the progress on nano silicon projects?
A: We are actively participating in global battery chemical fairs to increase visibility. The pilot plant for nano silicon is underway, with equipment orders placed. We expect to start placing samples with customers in the next few months. - Raj Gupta, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
