Chemplast Sanmar Limited (CHEMPLASTS) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Chemplast Sanmar Limited Q3 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I would now like to hand the conference over to Mr. Ramkumar Shankar, Managing Director. Thank you, and over to you, sir.

Thank you very much, and good afternoon, everybody. On behalf of Chemplast Sanmar Limited, I extend a very warm welcome to everyone joining us on our call today. On this call, we are joined by our CFO, N. Muralidharan; Dr. Krishna Kumar Rangachari, who heads our Custom Manufactured Chemicals division; and SGA, our Investor Relations Adviser. I hope everyone has had an opportunity to go through the financial results and investor presentation, which have been uploaded on the stock exchanges and on our company's website. During the quarter, the company reported consolidated revenues of INR 835 crores and a net loss of INR 119 crores. This has been the most challenging quarter in the last 3 years with multiple factors impacting our performance. The suspension PVC business faced a challenging environment with the seasonal decline in demand, weather-related production disruptions caused by inability of feedstock ships to berth due to unusually rough seas during this year's Northeast monsoon and the sharp fall in import parity prices caused by regulatory uncertainty at the beginning of the quarter. We had setbacks on the regulatory side with the antidumping duty recommended by the Director General of Trade Remedies not being accepted by the Ministry of Finance. The quality control order on PVC, which was scheduled to be implemented in December, was also rescinded in November, along with the quality control orders on various other polymers. On the Paste PVC side, we saw continued pricing pressure from imports originating from the European Union. However, we believe that Q3 represents the bottom of the PVC cycle with an uptrend being visible in January continuing into February. Market sentiments are more positive, resulting in higher demand and better prices, boding well for the company in the days and months ahead. Getting into details, during quarter 3, domestic demand for Paste PVC remained stable, thanks to the footwear and automobile segments. The Cuddalore Paste PVC facility is operating at full capacity utilization, reflecting steady operations and market absorption. Post the end of the quarter, we see an uptick in demand for Paste PVC, which resulted in a significant drawdown of inventory in January. Some price improvements in Paste PVC are also being seen. The antidumping investigation on Paste PVC imports from the European Union and Japan is ongoing with the final findings expected before the end of Q4 of the current year. On the Custom Manufactured Chemicals Business, as highlighted during the earlier analyst call, the slowdown in agrochemicals impacted our quarterly performance. That said, our new product development and customer diversification initiatives continued in Q3. We now have 17 products commercialized with additional products under development. On the capacity expansion, work on MPB 3 Phase 3 and MPB 4 continued during the quarter. MPB 3 Phase 3 is expected to be completed in Q4 of the current year, with pilot commissioning also targeted for Q4 of this year, following which production is expected to ramp up gradually. Civil works for MPB 4 are targeted for completion in Q1 of FY '27. On our refrigerant gas project, the R32 capacity expansion of 14 ktpa is underway, including 2 new R32 plants of 10 ktpa and 2 ktpa capacity, respectively, and conversion of the existing R22 capacity into a swing plant at Mettur. Commercial sales are expected to start post the swing plant commissioning by the end of this quarter. Moving on to our value-added chemicals business. Our business portfolio in this segment, as you may be aware, includes caustic soda, chloromethanes and hydrogen peroxide. During the quarter, prices and margins for caustic soda and chloromethanes remained under pressure globally. Caustic soda's domestic demand remained stable from key consuming sectors, including pulp and paper, soaps and detergents, alumina and textiles. Sales volumes declined in quarter 3, primarily due to lower production at the Mettur facility. Caustic soda output was impacted by technical issues, which in turn reduced hydrogen peroxide volumes as well. We expect the production to normalize by March 2026, in 2 months from now. Prices are expected to remain stable, barring any material changes in market conditions. On the Suspension PVC business, as mentioned earlier, the Suspension PVC business faced a difficult environment in Q3 with a perfect storm of adverse conditions, including weather-related production disruptions, lower import prices following the non-implementation of the long-awaited antidumping duty and softer domestic demand due to both seasonality and uncertainty around regulatory actions. A key positive development post the end of the quarter has been the decision by the Chinese government to withdraw the export tax rebate on PVC, Suspension PVC effective from April 2026. This rebate, which amounted to 13% of the export price or roughly around $70 to $80 per metric ton had been a significant factor supporting Chinese exports to India. Its withdrawal is expected to reduce the price advantage of Chinese exports and indeed has already helped improve market sentiment in the last few weeks. Despite the challenging operating environment, we continue to execute our strategic priorities with discipline. Our Paste PVC expansion has seen precision and execution with the new line reaching 100% utilization in quick time. With key capacity additions in custom manufactured chemicals nearing completion, new products gaining traction and the regulatory and structural developments supporting improved market sentiment, particularly in Suspension PVC, we believe that the company is well placed to emerge stronger from what has been a long trough and deliver sustainable growth going forward. On a personal note, after 13 years at the helm, I will be stepping down as Managing Director of the company with effect from the 1st of April 2026. I would like to take this opportunity to place on record my sincere appreciation to our shareholders, the analyst community and all other stakeholders for the understanding, trust and support you have extended to the company and to me personally over the years. Subject to requisite approvals, Mr. Ganesh Kumar will be taking over as Managing Director from April, and I'm confident that the company will continue to build on its strong foundations under his leadership. Now I'd like to invite our CFO, Muralidharan, to walk you through the financial performance of the company.

Thank you, Ramkumar, and a very good afternoon to all the participants on the call. Talking about the performance in Q3 FY '26, the company went through a very difficult quarter. On a consolidated basis, the company recorded revenues of INR 835 crores, a 20% drop on a year-on-year basis. The net loss for the quarter stood at INR 119 crores. Now coming to the quarterly segment-wise performance. The Specialty Chemicals segment generated revenues of INR 336 crores with volume increasing 13% on a year-on-year basis. The Value-added Chemicals segment revenue stood at INR 105 crores for the quarter, down from INR 153 crores reported in the same period last year. Performance was impacted by sales volatility and production-related challenges, as mentioned by Ramkumar earlier. The Suspension PVC recorded a top line of INR 394 crores for the quarter, down from INR 525 crores in the respective quarter last year, mainly due to lower volumes on account of weather-related disruptions and adverse pricing dynamics due to unabated dumping, which served as a significant headwind throughout the quarter. Looking at the split of revenues for the quarter, Specialty Chemicals contributed 40% of revenues. Value-added Chemicals accounted for 13%, while the Suspension PVC segment comprised the remaining 47%. For 9 months FY '26, the company reported revenue of INR 2,968 crores with EBITDA at INR 4 crores, while the net loss for the period was at INR 234 crores. Coming to the segmentally highlights during the 9-month period, while the Value-added Chemicals and Suspension PVC witnessed a drop due to pricing pressure and lower volumes, Specialty Chemicals registered a marginal growth. During the period, the company incurred a onetime impact of INR 2.68 crores due to the implementation of the new labor codes. As Ramkumar highlighted, we are seeing green shoots emerging, more specifically in the suspension PVC space. This, combined with the traction that we are gaining for the new products in the custom manufactured chemicals business will help improve the profitability of the company in the coming quarters. With this, we conclude the presentation and open the floor for further discussions.

[Operator Instructions] We take the first question from the line of Rohit Nagraj from 360 ONE Capital.

First question on R32. So you mentioned that the swing plant will be operational by the end of this quarter. So is it possible for us to operate the plant at its optimal capacity throughout FY '27? And which are the markets that we are targeting for R32? Is it going to be domestic or a mix of domestic plus exports?

Thanks for the question, Rohit. The first swing plant will have a capacity around 2 kt, and that should come in by the end of this quarter. It will have some ramp-up period. It will not operate at 100% from day 1. There will be some ramp up. Obviously, like we always do with all our expansions, we would aim to get to 100% as early as possible as we had done in Paste PVC as well. And that would be our aim, but I would not say that it would run like 100% from day 1. These 2 kt, we should be selling it in the domestic market. But once we have the full 14 kt online next year, there would be a mix of domestic and exports.

Sure. The second question in our highlights, key highlights, you have mentioned that CMCD performance was impacted by agrochemical slowdown, but our new product development and CapEx are on time. Here, in terms of setback, is it going to be still a short-term setback on the agrochemicals and we expect that FY '28, things should again come back to a large part to normalized business. Our earlier guidance of INR 1,000 crores for FY '27 has been postponed by a couple of quarters. Is there any possibility of that getting further stretched to maybe second half of FY '28? Just a broader view on this.

This is Krishna here, Rohit. As we outlined in the last quarter call, the global ag chem market remains mixed. The demand is picking back up, but there's a lot of price pressure due to low-cost generics in terms of -- from China. And while this is not impacting us directly in any way, the launch of new molecules by the innovators, the ramp-up is not happening as quickly as they had originally anticipated. And so we see this impacting in the near term, but not in the long term. The long-term projections and the demand for many of the molecules we have commercialized is very healthy and very strong. So from a guidance standpoint, we are still comfortable while there is a delay by a few quarters in terms of our ramp-up to the 1,000 quarters -- INR 1,000 crores, we don't see any significant issues in realizing that by FY '27, '28.

The next question is from the line of Pujan Shah from Molecule Ventures.

Sir, first question would be the consideration of -- we have seen a PVC price hike of INR 7 to INR 8. And there is also a discussion on MIP, which is going on the industry forward. So first question would be on the MIP that how much tenure we have been looking in terms of government that they will allow us a leeway for MIP? And are we filing any ADD -- refiling the ADD ex U.S. or we are still on the -- we are still in the deciding mode that we want to file ADD or not?

Thanks for the question. As far as -- you're right, there have been a few PVC price increases rolled out from January onwards, which was what I was talking about when I said that the sentiment has changed, and we are seeing a positive upswing right now. As far as the MIP is concerned, this is traditionally a short-term measure, which can be up to a year. And that is -- while -- and this is a measure -- it's a bridging measure that will give time to the industry to apply for any other longer-term solutions that they -- that we see fit. And the industry is looking at certain other longer-term measures that we have approached the government on. And we are confident that one of those will move ahead in the coming months. we'll be able to give you better details on this in the -- maybe in a couple of -- in a few weeks' time.

So any expectation on any time lines for MIP or it is just right now, industry discussions, so I won't be able to justify the time line?

MIP is -- no, we wouldn't -- obviously, we would not be able to come here and give you a time line on that. But all I can say is that the process started some time back, and it is at least halfway into the process. So I think -- and this is not a very long drawn out process. So I think we should see some traction on that in a couple of months.

Okay. Got it. Sir, on this R32 front, so just wanted to understand the current prices versus the last quarter prices. Is that a firm prices has been stayed along or it has been cooled off on a largely basis right now?

It's stable. There is no major change in R32.

So I want to understand a sustainable thing is that if we look at a breakeven on R32, so understanding that it will take time to take to 14 ktpa. But if we want to understand the breakeven point at which we have been able to sustainably generate at least a flat EBITDA margin, what would be the breakeven price? Or would it be difficult to justify because right now, the temporary scenario has been changing?

We are very confident that this is a very short-term breakeven for this project. We believe that it will not extend beyond a couple of years.

Okay. And just wanted to understand on the anti-involution front, are we seeing any improvement in PVC on anti-involution front or it is just right now on the state of books only?

No, that is a very concrete move on that front. In fact, the withdrawal of the export tax rebate that I was talking about that was announced by the Chinese government on multiple products, including Suspension PVC. -- will take effect from the 1st of April 2026. That is in a couple of months from now. And that is in a sense to remove the incentives that were being given for exporting all that capacity that had been set up without real economic justification. So what we expect this to fuel would be an advancing of the rationalization of some of the carbide PVC capacity. This could accelerate it, at least that is what we believe once this export tax rebate withdrawal is completely -- that withdrawal comes into effect on the 1st of April. We do believe that some of those carbide PVC capacities, which are dependent on merchant carbide purchase could -- those capacities could be rationalized sooner than we thought. So I think this is one step forward in the anti-involution program of the Chinese government.

Got it, sir. And if we look at the prices right now and this -- this export duty incentives been removed, do you feel that in a short term, like let's suppose in Feb, March, there would be a dumping effect, which can be seen due to low prices start keeping on -- like inventory will be filled by lower pricing and then eventually, it will reset to a new pricing. Is it a possibility that would happen right now? Or it is now a far-fetched scenario because shipping time and all these delays will take time to ultimately reset to the new prices?

It's a very fair question from your side. And I think that the possibility definitely is there. Since this was announced, we have also been tracking it. Will there be a sudden flood of imports coming in to beat the April deadline? And so all a lot more comes in right now and then it settles into the higher level. But actually, what we are seeing is that the prices have only gone up in January and it continues to go up in February. And we hear that even some of the older orders placed on Chinese suppliers have not been shipped out. So I guess there is some logistic issues as well that the Chinese exporters are facing. And therefore, since we are already into mid-February, we have hardly 6 weeks now. So the risk of it coming in after the 31st of March deadline is there. So there could still be some increase in quantities coming in, in March, but we believe that it is manageable, especially given the fact that the demand has come back strongly.

[Operator Instructions] We take the next question from the line of Nikhil Gandhi from Bajaj Life Insurance.

Yes, Nikhil. Please go ahead.

Sir, considering the current trajectory, how should we look from the fundraising perspective? Should we expect any kind of fundraising in the form of equity or debt in the next 1, 2 years kind of a time frame because currently, we are facing some losses. And the second question, which I just wanted to understand is at what price since we have seen around INR 6 to INR 8 kind of price increase in SPVC -- and at what price would we expect a breakeven for SPVC as well as for Paste PVC?

This is Murali. On the fundraising part. Actually, fundraising is an ongoing exercise, both for projects and also for our short-term requirements. I think those will go as per our plans that we have done over time. And as far equity raising is concerned, we don't have any plans as of now. I can't comment about the next 2 years, but we don't have any plans as of now. And the other question on the Suspension PVC breakeven. Actually, we look at it more from the contribution. That is the contribution that we get rather than the prices because the prices may move up and down. But what really matters is the margin that we get from the Suspension PVC after all the variable costs. That's what we look at. That generally varies between somewhere around INR 11,000 to INR 12,000 per tonne.

And sir, for Paste PVC?

Paste PVC, it's slightly difficult to sort of say because Chemplast is an integrated entity. It has paste plastic, chloromethanes, CMCD, all that as an integrated operation. So it will be difficult for us to look at the EBITDA of individual products and then look at the breakeven. But I think in Paste PVC, the price increase has only been -- we've just rolled out one price increase of around INR 2,000 very recently. And I think we have some way to go there before we can say we are comfortable. Suspension PVC, I think we are in the comfort zone, we are heading into that comfort zone. When we are talking about [indiscernible] breakeven PBT level.

Okay. Okay. So at the current pricing scenario, should we expect it is a breakeven kind of anything for Suspension PVC?

Suspension PVC by February and March, yes. The answer is yes.

Okay. Okay. So if we expect INR 1 to INR 2 kind of price hike in the PVC prices, so we will be at a breakeven kind of anything?

I think with the current numbers, we would already be at the breakeven level in February and March because it's not just a visible price increases, there are also some discount schemes that we were -- we had to give in December, which have been rolled back now.

We take the next question from the line of Yash from Dalal & Broacha.

Sir, just carry forwarding the last question. You're saying that we are now breaking even in the Suspension PVC at the contribution level. How much more price increases we will require now to break even at the EBITDA level?

Okay. No, when we said breakeven, we were talking about the PBT level, not contribution level. So that is really what it is. Obviously, given the investment that we have, you would need -- to get a decent return on the investment, you would need to earn more. So this is really at the breakeven level, but this is the first step. That's what I would like to make a point. We still need to ensure that we can't take our eyes off the ball in terms of preventing unfair trade practices. We need to ensure that dumping is stopped, but this is a good first step.

Got it, sir. Sir, one last question. Assuming the Chinese prices move up post April, rather post March because of this withdrawal of 13% export rebate tax, how much more price increases are possible? I think you spoke about INR 7, INR 8 already being increased. So does that equate to 13% rollback or there is still more room for the prices to go up?

See, you can't really relate that export tax rebate to the current price increases. You really -- it would be difficult to draw a direct correlation between the two. It is a mix of economic conditions and the change in sentiment, the return of demand in India and so on. However, we would not be able to draw that direct correlation. And as to how much more is possible, that is not something that we can predict with any certainty at this point in time.

And sir, just in case that the prices move up by, say, INR 8 to INR 10, how much the contribution will move up from some INR 11,000 to INR 12,000?

That depends on how the feedstock prices also move. So it's not just the contribution is a result of both the product price and the feedstock price. So we would expect that the feedstock price would also start moving up as the PVC prices move up. But obviously, in a rising market, as we've always said in these calls, in a rising market, we would get the benefit of the time lag between the product price movement increase and the feedstock price change. Whereas in a falling market, we would always be hit by that. The last 3 years, unfortunately, have been the latter case. Hopefully, going forward, we would get the benefit of that...

We take the next question from the line of Bharat Sheth from Quest Investment Advisors Private Limited.

Sir, my first question is you said that PVC price has already moved up by INR 7, INR 8, and hence, we are at breakeven. So can you give some more color on EDC price, which is a bridge to how much it has increased? And how are we seeing the availability and demand scenario over a period?

Correct. EDC prices have been at around -- less than [ $200 ] right now. If you look at the last few months from January onwards from around $225 and by around April or end of March prices are -- right now by end of January, it's come down to $194. These are all CFR Asia prices. ForEx EDC are better than [indiscernible] Paste PVC because we do not use -- and a little for our Suspension PVC, we import VCM straightaway. So both EDC and VCM prices have been soft over the last 9 months in keeping with the softness in PVC prices.

But post increase in this PVC price, how are we seeing currently ruling in February and March and forward -- if you can give some...

If PVC prices go up, definitely VCM prices will follow because VCM is a one-trick pony, which is used only for making PVC, largely. So therefore, it should follow PVC. But like I was explaining to the previous caller as well, there will be a lag in a rising market, which would work to our benefit. EDC dances to a different tune. It is equally dependent on power price -- energy price economics. There's also caustic realizations. We believe that EDC prices will also slowly move up and ethylene will also play a role in that. But it's not going to move up sharply, unless of course, there is some major supply side constraint that develops all of a sudden, which we don't [ specifically ] see.

Sir, typically, can you give some color on the spread between the Paste PVC and VCM price? Can you give some sense on the spread of Paste PVC and VCM?

Normally, the VCM price, you can say that the spread between VCM and PVC, Suspension PVC right now is around $200. It usually moves between $175 to $200. And Paste PVC is another around $200 above Suspension PVC.

Okay. This is the -- as you said that price of Paste PVC as we have seen increase by INR 3,000 per tonne, correct?

INR 2,000 so far.

And how is the demand in Paste PVC in domestic market as well as PVC, if you can give some more color?

The demand of Suspension PVC till December was actually a little flat. In fact, marginally negative. If you look at April to December '25, the apparent consumption in India is around 3.2 million tonnes as compared to 3.3 million tonnes in the same period last year. And this is largely because of this year, there's been a far more extended monsoon and a pretty strong monsoon at that, as also a lot of uncertainty on price volatility and the regulatory uncertainty. So there has been a holdback in demand and destocking happened. But we believe that from January with a lot more positivity around prices and the return of positive sentiment in the market, we are seeing a good strong demand returning. Therefore, for the year as a whole, I believe that we would make up this very small negative in the first 9 months, and we'll end up either at the same level as last year or maybe slightly more than that. As far as Paste PVC is concerned, actually, the demand has been pretty strong. There's been an 8% increase in the first 9 months of the year on a year-on-year basis. And we are seeing a very strong pull in January and February as well.

Okay. Sir, on CRM, I mean, custom manufacturing, I missed the initial remarks. So we were targeting around INR 1,000 crores kind of a top line by end of -- in '26, '27. So where are we in that journey? Or we will be able to achieve that or there will be some quarter lag will be there?

We have indicated in last call that we anticipate a delay a few quarters, and we continue to hold that projection. So there is a deferment primarily because the ramp-up of some of the new molecules are not happening as quickly as we anticipated. The pipeline continues to be strong. Our engagement with all our customers in terms of what we are working on new projects continue to be strong as well. But as you are aware, the whole ag chem industry has been going through a very difficult cycle for the past couple of years. And each one of them one-by-one is coming out of that, which is impacting many of their pipeline launches and ramp up.

Are we seeing some, I mean, bottoming out of that -- their inventory earlier, which was piled up destocking as well as the new launches is what I read out and we are seeing any uptick?

Correct. So what we hear is that the demand is starting to take off. So that inventory correction, as you pointed out, it's behind. However, the price pressure continues in terms of some very high capacity of generic manufacturing put up in China. So that's impacting at a price level, which in turn is impacting some of the new molecules because the tendency is to use the older chemistries and chemicals, which are now available at much lower prices. So the incentive to switch from a farmer standpoint, that incentive is not as good as it could have been.

Okay. And can you give some more color, the RF32, how much potential do we have and when we start to manufacturing the same? And does it factor in INR 1,000 crores revenue?

R32, like we mentioned, we are targeting a total capacity of around 14,000 tonnes. There will be 3 units. We are first converting our R22 plant into a swing plant capable of meeting 2,000 tonnes. That will get ready by -- before the end of this financial year itself. Then there is another new plant of another 2,000 tonnes, and that will get ready by the first quarter of next year. And then the last 10,000 tonnes, which will get ready by the end of this calendar year. So overall, in the first full year, I think we target to make around 11,000 tonnes, and we should have around annual revenue of delta of -- how much would that be? INR 550 crores.

Okay. Great, sir.

Bharat, a part of INR 1,000 CMCD target, that's a separate sort of line and this is not [ INR 500,000 crores ].

And last, I mean, how much is currently net debt?

I would request you to join back the queue as there are several participants waiting for their turn. We take the next question from the line of Kiran Ghatge from Knightstone Capital Management LLP.

Apart from Westlake Corporation rationalizing some PVC resin capacity, are you observing any more shutdowns?

It's an interesting question. Actually, we did see some rationalization that has happened in Europe. There was one Netherlands plant at around 230,000 tonnes that shut down towards the end of last year. And then a few other plants of the same company in different parts of Europe have gone into receivership. So I think there are -- there is a lot of stress, especially in Europe in terms of the PVC industry there. And there could be some announcements, we do not know, further announcements. As far as China is concerned, like I mentioned earlier in the call, once this withdrawal of the export tax rebate plays off, there could be an acceleration of rationalization of the carbide PVC capacity, which is dependent on purchase of calcium carbide. So that could be some rationalization there as well.

How much capacity are you expecting for carbide base?

These are not things that we can put a number on. All I can say is that China has around 20 million tonnes of carbide PVC capacity, of which around 4 million to 5 million tonnes depends on purchase of calcium carbide on a merchant basis. How much of that -- and all of this is operating at maybe around 75%, 80% operating rate right now. So how much of that will shut down and what impact it will have is yet to be seen.

[Operator Instructions] We take the next question from the line of Praneet from Samatwa.

So in terms of the new FDA with the European Union, do we see any green shoots from this? Or do we see any negative factors? Can you explain how the company sees it?

With the European Union, the way we would see it is that I'm not sure that we will have -- the details are yet to be seen because the schedules -- the detailed schedules are yet to be released. So we would need to figure that out when it is officially released. And anyway, the approvals from the European Parliament and on both sides will also take time. So it is not something that is going to impact us tomorrow or next month. But if -- assuming that the automobile imports into India increase from Europe and a lot of the artificial leather that is made from Paste PVC is PVC based and a lot of our customers are exporting the leather cloth to European car manufacturers, that could result in some positive demand pull in the market. On Suspension PVC, I don't see much. On CMCD, I'm sure there would be some benefits.

Exactly. Yes. We'll have to wait and see what is included and what's captured there. But there should be some advantages because on the CMCD, 100% of our sales or our products are exported eventually. So there should be some benefit there as well.

Understood. And in terms of the ADD could you also -- could you repeat? I think I missed it. So we are not going to have the ADD for this anymore, right, from the European Union?

ADD on Suspension PVC was not implemented. The ADD on Paste PVC imports from European Union and Japan, that case is still ongoing, and we are expecting the final finding from the DGTR before the end of this quarter. And after that, of course, it will have to go to the Finance Ministry for notification. We'll have to wait and see how that is received.

Understood. So -- but as China is getting less competitive because they're removing the subsidies, that's a green shoot for us overall for Suspension PVC side. Is that the right understanding?

That is right. On Suspension PVC, the removal of the export tax benefit that they had, the rebate that they had is going to be a definite positive for the Suspension PVC industry here in India because China was the significant exporter to India. It was flooding the Indian market with low-priced imports -- exports.

So let's say, in terms of imports broad-based, how much would have China contributed versus EU and Japan?

EU and Japan is in Paste PVC. China's position is in Suspension PVC. So I think we should -- EU and Japan are not so much -- Japan is the player in suspension as well. EU, not so much. On Paste PVC, China is not so much a player because there is already an antidumping duty that is in play. So let me just tell you the broad numbers for suspension first. Out of the total import arrivals of around 2 million, 2.1 million tonnes in April to December -- the 9-month period April to December '25, China accounted for around 52% of the arrivals, Japan accounted for 14%, Taiwan accounted for 9% and Korea accounted for 6%. So these were the 4 large exporters to India as far as the suspension is concerned. If you look at Paste PVC, out of the around 62,000 tonnes of import arrivals in the 9-month period ended December '25, Europe accounted -- European Union accounted for around 45%, Korea for 22%. And then you had Malaysia for 8% and then Taiwan and Thailand, 7% each. So this is really the import arrival breakup.

Understood. So that is actually insightful. But in terms of price parity, what would be, let's say, import versus us, the price parity of the cost of production, landed price for them versus cost of production for us. What would be the parity between that?

Okay. That is really the subject of the antidumping duty and DGTR, that is exactly what they calculate, and that is how they work out on the -- work out the injury margin and the dumping margin. That's something that we can discuss offline.

We take the next question from the line of Nikhil Gandhi from Bajaj Life Insurance.

Thank you for the opportunity again. Sir, I just wanted to understand R32 quota and how should we look into that 10,000 kt capacity, which we are planning?

Given the fact that we have resized our ambition and our plans in this product to 14,000 tonnes and given that we had also a presence in the R22 production in the 2009, '10 period, we are quite confident that we would get the quota for this volume that we are going ahead with.

Okay. Okay. And the second thing is relating to the CMC business. So for the CMC business, though we have highlighted that we will be achieving that target with the delay of 2 to 3 quarters, should we expect 20% to 25% kind of initial margin guidance which we have given to be the same?

Yes. In the longer term, yes, like we had mentioned in the earlier calls as well, when we are sort of pushing through a number of new products, there is a learning curve. So the margin level will be slightly lower in the initial year. But on a steady-state basis, we still hold that number. That's what the industry is making. So we believe that we will also be in that range.

Okay. Sir, any tentative number which we can model in for FY '27 for FY '28 H1, H2 or something of that sort?

We would avoid giving any specific guidance. We have already sort of said that we'll be somewhere around -- we will look at the target of INR 1,000 crores by FY '28. Beyond that, I wouldn't like to sort of get into specific guidance.

We take the next question from the line of Diya Jain from Sapphire Capital.

Sir, what kind of revenue are we expecting from the R32 plant?

No. Can you repeat that, please? I lost that.

What is the revenue that we are expecting from the R32 plant?

The first full year, we should have around INR 550 crores. INR 600 crores, roughly around INR 600 crores. I did say INR 550 crores earlier. My team just corrected me, it should be around INR 600 crores.

And going forward?

That will be the full year ramp. I'm talking about a full year of production after the ramp-up, et cetera.

We take the next question from the line of Pujan Shah from Molecule Ventures.

Sir, first wanted to understand the caustic soda pricing as we became the net exporter and we see that once the additional forward integration capacity comes up, eventually it also fall off by coming the caustic soda capacity as well. So do you feel that we remain -- the price will remain range bound over here on due to the scenario of already having a surplus capacity? Or it is difficult right now to comment because of the muted demand. So what's your thought on caustic?

Caustic soda, you're right. India from being a net importer for a very long time, turned into a net exporter in the last couple of years. And today, I think we export around 0.5 million tonnes of caustic soda a year. And prices are range bound right now. As you said, we are at anywhere between INR 30 to INR 34 per tonne, dry metric tonne. And it is hovering anywhere in that range. It can -- in different months, it could be slightly higher in the higher end of that range. Sometimes it's at the lower end. The one advantage that maybe we could claim to have is the fact that we are located in the South, whereas most of the capacity is concentrated in the west of the country. And caustic by nature of the product is transported -- it is sold as 150% solution. So the transportation cost over large -- long distances adds significantly to the cost of the product. Therefore, it is largely a regional market. Therefore, we are a little better definitely than the rest of the -- at least producers in the Western region. New capacities coming up, especially in -- again, in the western part of the region associated with new PVC capacities would add to the export from India. There is, of course, definitely some demand improvement also happening on the end user side of the caustic soda industry, given the fact that caustic is a significant chemical used in the refining of critical minerals that are used in the EV industry, et cetera. So there will be an improvement in demand as well. But yes, to some extent, prices, we expect would remain range bound. We'll have to wait and see once the new capacities start coming in.

And my second question is just to have a broad thought on -- can you just -- I'm new to the industry, so please spare me if I'm asking a very new question. But just wanted to understand what is specifically R32 is when we speak about the quota, so what is that specific quota? Is it allocated by the government? How it works, the dynamic, how it works? Is it that it is a protection for the domestic industry? It is about the environmental concerns. That's why they have allotted the quota. What is the key metric where we will look at specifically quota thing?

The entire quota is not for protection. This entire quota is arising out of an international agreement amongst various countries. And this is a quota that will be decided at the national level and indicated by the government. On the exact details of this, may I suggest that you contact us offline, and we can -- one of us can take you through the genesis of this entire quota and the protocol and so on.

That would be [indiscernible].

So please do contact us. We would be more than happy to take you through that.

Sure, sure. And my last question is, can you tell us the Q-o-Q prices of R32 and R22. In percentage terms, you can help me, just I wanted to understand the brief how the [ prices form ] 54:04 up last quarter.

Actually R32, like Ramkumar mentioned earlier, we are ready to commission the plant. So we are not in the market for selling R32 currently. The R22 price for the last quarter was around INR 305,000. R32 prices currently are at around $7.5 per kilo.

Okay. And it has improved from any [ period ] ?

It was -- if you look at it 1 year back, it was at $4 a kilo.

We take the next question from the line of Rohit Nagraj from 360 ONE Capital.

Sir, one question on the CapEx front. So for this year and FY '27, what could be the CapEx? And probably if you can split in terms of segment and the maintenance CapEx?

Apart from maintenance CapEx, actually the announced CapEx is the R32 CapEx that we have announced and whatever residual out of the CMCD expansions that we have announced. And rest is only maintenance CapEx. So if you want details of the maintenance CapEx and those details, we can always take offline and provide you the details. So broadly, we don't see any large CapEx at least as of now.

That helps. And second, just theoretically speaking, considering the current raw material or VCM pricing environment, if after 1st April, the price goes up in the international market by $70, $80, would that construe to the spreads entirely, barring maybe some discounts for domestic production? Would that be the right assumption to work on?

This will not go down completely into the margin because there would be some increase in the feedstock price as well because feedstock prices do follow the finished product prices. But it will not -- there will be some improvement, we believe. The reason being the feedstock VCM price is largely determined in Asia by the PVC price in China. And if the quantum of exports out of China fall and until such time that the capacity rationalization happens, there could be pressure on the PVC prices within China. And if that happens, then VCM prices could get impacted downwards, which could be favorable to us. So I think it is a little early right now to talk about how much of it would flow down to the bottom line. Let us just wait and see how it rolls out. We believe that there are certain positives there.

Ladies and gentlemen, due to time constraints, we take that as the last question. And would now like to hand the conference over to the management for closing comments.

Thank you, everyone, for joining us again today on this earnings call and for all your probing questions. We appreciate your interest in the company. And if you have any further queries, please do contact SGA, our Investor Relations adviser. Thank you, and good day.

Thank you. On behalf of Chemplast Sanmar Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.