DCM Shriram Limited ($DCMSHRIRAM)

Ladies and gentlemen, good day, and welcome to the Q4 FY '26 Earnings Conference Call of DCM Shriram Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to [ Ms. Shruti Joshi ] from CDR India. Thank you, and over to you, ma'am.

Thank you, Swatanali. Good afternoon, and welcome to DCM Shriram Limited's Q4 and FY '26 Earnings Conference Call. Today, we have with us Mr. Ajay Shriram, Chairman and Senior Managing Director; Mr. Ajit Shriram, Joint Managing Director; Mr. Aditya Shriram, Deputy Managing Director; and Mr. Amit Agarwal, Group CFO of the company. We shall commence with remarks from Mr. Ajay Shriram and Mr. Ajit Shriram. Members of the audience will get an opportunity to ask their queries to the management following these comments during the interactive question-and-answer session. Before we begin, please note that some of the statements made on today's call could be forward-looking in nature, and a note to that effect has been included in the conference call invitation that has been circulated earlier and is available on the stock exchange website. I would now like to invite Mr. Ajay Shriram to give us a brief overview. Over to you, sir.

Thank you, [ Shruti. ] Good afternoon, ladies and gentlemen, and a very warm welcome to all of you. I will begin with perspectives on the business dynamics and the strategic imperatives, following which Ajit will share views on the financial perspectives. Financial year '25-'26 was characterized by high-impact events from tariff wage wars by U.S. to the war between Israel and Palestine and then the state -- start of the West Asia conflict. The escalation of conflict in West Asia emerged as a material external risk. Although India is geographically insulated from the conflict, its economic ecosystem is closely intertwined with the region through energy, fertilizer supply chains, shipping routes and export markets. These developments have reinforced the importance of supply chain agility, operational resilience and strong balance sheets. The Indian economy demonstrated better resilience amidst these global headwinds. While elevated energy prices exerted inflationary pressures and tested currency stability, macroeconomic fundamentals remained robust. They were supported by healthy foreign exchange reserves, proactive monetary policy and sustained domestic consumption. Continued government capital expenditure, along with gradual revival of private CapEx supported growth in the manufacturing sector. Although India remains well positioned, the nature of continuing geopolitical conflicts will present new macroeconomic challenges to navigate going forward. Our focus on value chain integration, operational efficiency, cost discipline and digital enablement helped us navigate a dynamic environment. We are exploring to grow our businesses through strategic partnerships where there is a need for high-end technology. Financial prudence remains a key advantage. A strong balance sheet and disciplined working capital management supported continuity amid commodity volatility. Healthy operating cash flows guided growth while preserving agility to capture opportunities. Sustainability remains integral to both our future readiness and long-term value creation. Our daily operations and strategy are committed to minimizing our environmental footprint, optimizing resource utilization and uplifting the commodity communities we serve. To solidify our role as environmental stewards, we have institutionalized a bold pledge to achieve a 40% reduction in our Scope 1 and Scope 2 emissions by 2040. We are actively executing this transition by pivoting our energy mix towards renewable power and agri-based fuels alongside rigorous energy efficiency mandates across all our facilities. Further, in March 2026, we have raised funds through the sustainability-linked nonconvertible debentures from the International Finance Corporation, IFC. This partnership is more than a financial transaction. It is a global validation of our ESG road map. This transaction marks a significant step for DCM Shriram in integrating sustainability into our capital structure and aligning with the company's financial outcomes with measurable sustainability targets. I will now invite your attention to industry dynamics across our businesses. First is chemicals. Globally, caustic soda market is operating at about 80% capacity with annual installed capacity of around 109 million metric tons. Caustic will experience growth demand by -- caustic will experience growth driven by demand from industries like alumina, textile, pulp and paper, soap and detergents, pharmaceuticals, et cetera. The industry continues to witness volatility in prices due to economic factors, geopolitical uncertainty and increased energy costs. The supply chains of chlorine downstream industries have also been impacted, thereby putting pressure on demand. The supply chain disruptions are creating a mixed global outlook. Over the past year, India's caustic soda market operated at reasonable levels of about 85% capacity utilization. Domestic demand grew at about 5%, driven by capacity expansions among major alumina players alongside sustained consumption from paper and detergent industries. Hydrogen peroxide continues to be structurally oversupplied in the domestic market and low-cost imports from Bangladesh add to this situation. On the back of shortage of natural gas supplies, the industry witnessed a shortage in supplies in March '26, leading to a surge in realizations. We continue to operate the plant at full utilization and the plant performance has been good. The advanced materials value chain comprising of glycerine to ECH to epoxy, including formulations, continues to grow, driven by strong demand and supported by antidumping duty on ECH and epoxy. Further, our ECH plant got fully commissioned in the month of April 26, and the product is well accepted in the market. Our projects in aluminum chloride and calcium chloride at Bharuch are running as per schedule. The 68-megawatt green power project with average supply of 34 megawatts at Kota has started average injection of 15 megawatts from May 2026 onwards. Our Board has approved capital expenditure of INR 217 crores towards obtaining approximately INR 48 crores of additional renewable power supply for our Bharuch plant and related infrastructure development, thereby taking the total RE power provision for Bharuch plant from the present peak of 50.4 megawatts to 98.4 megawatts. The indicated time line for completion of the above project will be around Q1 financial year '28. The Board has further approved INR 101 crores for the expansion of epoxy-led formulated resins capacity by 36,000 kilotons per year, increasing the total formulated resins capacity to 50 KTPA. The same is expected to be commissioned by Q2 financial year '28. Vinyls, the demand in both global and domestic markets remained flat, yet the market experienced pronounced price volatility driven by a complex interplay of macroeconomic and geopolitical factors. Initially, realizations came under severe downward pressure due to aggressive export dumping from China. This trend abruptly reversed as prices surged in response to supply chain anxieties stemming from the Middle East conflict, a situation further compounded by currency headwinds from a depreciating rupee. Ultimately, prices softened once again following regulatory intervention by the Government of India, which waived import duties through to the end of June 2026. Amid decline in domestic PVC prices and damage to the Indian PVC industry, mainly driven by dumping of Chinese PVC resin, the domestic industry filed an application requesting introduction of minimum import price, MIP for PVC imports. Further, the domestic PVC industry continues to pursue its efforts on the QCO front. In alignment with our strategy to scale businesses to technology-driven partnerships, we have announced a joint venture with Teknor Apex B.V., a global leader in plastic material science solutions by selling 50% stake in our subsidiary, Shriram Polytech Limited, which is a leading plastic compounding player in India. By integrating global innovation with local execution capabilities, the partnership is well positioned to accelerate growth and deepen consumer engagement. Sugar and ethanol. Global sugar supply over demand for sugar season '25, '26 is expected to be in surplus of 2.9 million metric tons, mainly due to India's 2.3 million metric tons year-on-year production increase. Domestically, this season is expected to close with an inventory of 4.3 million metric tons, accounting for 28 million metric tons in production after diversion of 3.1 million metric tons to ethanol, 28.1 million metric tons in consumption and a little less than 1 million metric tons in exports. Operationally, adverse weather, crop economics and varietal challenges in the state of Uttar Pradesh curtailed industry-wide crushing. Consequently, our unit concluded the season with a lower crush of 473 lakh quintals of sugarcane albeit with improved recovery of 10.8%. To counter the lower crush, our agronomy teams are aggressively optimizing varietal selection to boost future yields and using digital tools to enable cane development. Despite these efforts, profitability remains under pressure as realizations from sugar and ethanol have not offset rising sugarcane costs. The ethanol segment faced critical bottlenecks against a national capacity of 1,900 crore liters OMC allocations stand at just above 1,100 crore liters with share of sugarcane-based feedstocks restricted to a mere 28%. This penalizes integrated players who invested in distillation capacities based on stable blending assumptions, ensuring the sector's long-term viability requires calibrated policy interventions, specifically aligning sugar and ethanol selling prices with sugarcane costs, prioritizing sugarcane-based ethanol allocations and expanding targets beyond E20 blending. Fenesta Building Systems. Fenesta Building Systems continues to progress along its strategy -- strategic trajectory of evolving from a product-centric offering to a comprehensive building materials solution partner. The business has delivered healthy volume growth through the year with expanding brand reach and deeper market penetration. Margin reduction reflecting increased scale and shifts in the product mix towards newer categories as planned. The aluminum extrusion project at Kota is progressing on schedule. This facility will meaningfully enhance our capabilities in the rapidly growing aluminum Fenestration and building materials segment. Moving on, the agri inputs business portfolio comprising of Sugar Farm Solutions -- Shriram Farm Solutions, Fertilizers and Bioseed businesses is next. Shriram Farm Solutions. The SFS business sustained its robust growth trajectory, delivering double-digit growth this financial year. This performance was anchored by our research wheat segment, which achieved a record sales and a 22% growth despite headwinds from extended monsoons. Concurrently, our crop protection and specialty plant nutrition verticals continued to gain market traction, supported by strong farmer adoption of our R&D-driven products in specialty plant nutrition and recently launched crop protection molecules. Notably, in the current financial year, SFS has launched 13 new products in crop protection and specialty plant nutrition verticals, including 4 new products from our own R&D. To sustain this momentum, we are deepening our R&D and exclusive partnerships with global technology leaders to deliver differentiated high-efficiency solutions. Furthermore, our targeted shift towards new age digital marketing and influencer-led campaigns has significantly amplified brand visibility, translating into higher product inquiries and stronger brand equity across all geographies. Fertilizer. The urea business remains largely stable. We continue our efforts towards improvement in energy consumption, maximizing urea production as well as control on fixed expenses. In view of the ongoing West Asia war, there may be a reduced availability of natural gas due to disruptions in LNG supplies and increase in subsidy outstanding. Bioseed. This year, the industry faced a challenging scenario for cotton seeds for a variety of reasons. Going forward, Bioseed is well positioned to navigate growth with a strong pipeline of new product launches across key crops. New introductions are witnessing increasing acceptance from farmers, supported by improved genetics, yield stability and consistent field performance. The business remains focused on portfolio premiumization, disciplined execution and strengthening farmer and trade engagement. I will now request Ajit to provide the financial perspective. Ajit, over to you.

Thank you. Good afternoon, everyone. I will now take you through the financial performance for Q4 FY '26. Net revenues, net of excise duty for Q4 FY '26 were at INR 3,193 crores versus INR 2,877 crores in Q4 FY '25, an increase of 11% year-on-year. PBIT for Q4 FY '26 was at INR 400 crores versus INR 426 crores last year. Chemicals. The business saw an increase in revenue of 32% year-on-year. The caustic soda volumes were up 2%, while ECUs were down by 4%. Advanced Materials, which include glycerine to ECH to epoxy value chain has also contributed positively to the top line. PBIT for the quarter was flat at INR 163 crores due to elevated fixed costs associated with business expansion and stabilization. There was a onetime positive impact of INR 19 crores due to incentive received from the government of Gujarat relating to the projects commissioned in previous years in Bharuch. Vinyl. The vinyl business revenues increased by 19% year-on-year, driven by volumes of both PVC and carbide, up by 23% and 5%, respectively. PBDIT for the segment improved by 68% to INR 39 crores, led by higher prices and further supported by lower energy costs and better operating efficiencies. Sugar and ethanol. Sugar and ethanol business revenue, net of excise duty was down by 3% to INR 991 crores. Domestic sugar volumes and prices were largely in line with the same period last year. Ethanol volumes were flat in the quarter, while prices were down 15% on account of change of sales mix. PBDIT for the segment came in at 18% lower at INR 207 crores, owing to the higher cost of production of sugar due to the increased cane price by 8%. Sugar inventory was lower at 32.2 lakh quintals as against 39.9 lakh quintals last year. The inventory is valued at INR 3,876 per quintal. Fenesta Building Systems. Fenesta Building Systems reached a milestone of crossing the revenue of INR 1,000 crores during the year by clocking a revenue of INR 1,112 crores, a growth of 28%. For the quarter, the business reported a growth in revenues by 34% year-on-year, led by higher prices across the segments and better volumes in the project segment. PBDIT for the quarter was up at INR 37 crores, led by volumes, partially offset by increased fixed costs towards enhancing capacities, higher sales promotion, setting up of new business platforms like facade, wooden doors and acquisition-related costs. The order book is up by 15%. Shriram Farm Solutions. This quarter is an off-season for the business. Revenues increased by 32% year-on-year, supported by volume growth across all verticals. Fertilizer. Fertilizer revenue was down by 11%, mainly due to a maintenance shutdown taken during the quarter to coincide with lower gas supply. PBDIT was INR 28 crores as against INR 9 crores last year. There was a onetime gain of INR 33 crores on account of revision of retention price of the previous years. Outstanding fertilizer subsidy was INR 189 crores as against INR 161 crores last year. Bioseed. This quarter is an off-season for the business. Revenues were down by 1%, while PBDIT was at negative INR 8 crores as against INR 2 crores last year. Coming to the highlights of FY '26. FY '26 net revenues, net of excise duty was up 12% year-on-year at INR 13,538 crores. All the key businesses, especially chemicals, Fenesta Building Systems and Shriram Farm Solutions, except sugar, have contributed towards the top line growth supported by volumes. Similarly, PBDIT was up 15% at INR 1,694 crores. Chemicals, sugar, SFS and fertilizers was a key contributor to growth. Our net debt remained at a comfortable level of INR 1,767 crores as on 31st March '26 versus INR 1,395 crores on 31st March '25. Return on capital employed for March '26 has come in at 13% as against 14% last year. Further, investments made in prior periods that were commissioned over the last 1 or 2 years are scaling up and will further strengthen the businesses and enhance the ROCE. The Board has recommended a final dividend of 200%, amounting to INR 62.38 crores in this Board meeting. The total dividend for the year is 560%, amounting to INR 176.6 crores. As we successfully conclude our major CapEx cycle within our chemicals business, our fortified balance sheet and strong cash generation opened a new chapter of strategic capital deployment. We are now exceptionally well positioned to explore synergistic value chain integrations across our broader manufacturing portfolio. I remain deeply confident in our ability to leverage these financial strengths to deliver sustained and responsible growth for all our stakeholders. That concludes my opening remarks, and I request the moderator to please open the forum for the Q&A. Thank you.

Will take the first question from the line of Pujan Shah from Molecule Ventures.

My first question pertains to the vinyl segment. So just want to understand the broad aspects on the pricing, what we should expect going forward. So we have seen the real estate prices of China is at 20-year low. And how do we see this situation impacting PVC business in general versus we are also hearing out that inefficient -- inefficient plants of PVC has been shutting down in China. So how to read that in terms of considering the positive news flow of anti-involution versus the negative news flow of real estate not picking up?

Okay. So thanks for this question. I think the pricing, as I mentioned a little earlier, has been very volatile in the last 3, 4 months. It's actually led to China dumping earlier, then the import duties in India were reduced. And thereafter, because of the shortage of availability, the prices went up again, but now they have come down again. So I think it's very difficult to give an indication of what will be the prices going forward. I think because of the West Asia crisis, it's very difficult. We sincerely hope one small advantage is the devaluation of the rupee. That is giving the imported prices a little higher position. So that helps the domestic industry also. But I think the prices of PVC are very volatile. And if the West Asia crisis has sorted out in the next few weeks, it will still take some months before there will be any stability. We are hoping that from 1st July, the import duty of 11%, which was removed earlier, we hope that comes back. That will give us the advantage of a pricing for the domestic market because considering the energy costs, industry today is under a lot of stress. So we are hoping that the government will look at it positively and bring back this import duty. And we hope the West Asia war sorted out soon. So the stability in the world geopolitical business environment. So impact one doesn't know. China plants closing, frankly, China's capacity is so large that we don't know what's closed, what's running, what's not. And they've been dumping for a long time, not only PVC, but many other products. So we really don't know what the policy is going to be.

Got it, sir. And sir, just to understand a broader aspect, we have been discussing about the MIP. And versus we also -- the industry has also initiated ADD but it didn't succeed in November, right? So are we going for -- because MIP is a short-term phenomenon where we can able to protect our margins or our industry structure. But on a longer term, are we still going for ADD in terms of to get a longer-term protection from the government side?

Yes. The industry has taken it up. CPMA has had multiple meetings in the government over the last couple of months, including one which was held last week with the new Secretary Chemicals who's come in now. And we have mentioned that, look, we gave the data for the imported prices for the last 5 years. In the last 4 months since the dumping started, the prices have fallen dramatically by almost $150 to $200. So we have suggested that you please revisit the ADD application will go again because it got rejected just some months back. MIP also is very much on the agenda. They have recommended a price, but that's pretty low. So we are actually talking to the government saying, please look at the MIP in a realistic manner and then recommend to the Finance Ministry. So dialogue is on with the government.

But sir, just to understand a broad aspects, considering the crude price has already been up. I understand we have been a carbide base. But just to understand, as crude has already been up by a significant percentage, while considering the other ethylene-based route PVC manufacturers might not get their RM, and that's why they will always keep the inching up the prices. Against the only -- the negative side would be that China keeps dumping because they have that carbide capacity. Other than that, it seems like -- it seems that price should sustain around INR 85, INR 90 in PVC per kg or it would be difficult situation to call right now because all the scenarios are not been under a one confusion.

So you're right. It is a little difficult. Our prices are ranging between INR 81, INR 82 in that range right now. But China dumping will come in at any time. We don't know at what price and what is the policy behind it. So it is very uncertain. I think -- and energy prices have gone up, not only gas, but even coal. So all these are impacting the cost of production. So I think there is a uncertainty in this market.

Got it. Sir, my last question would be in the...

Mr. Pujan, I would request you to please rejoin the queue. We will take the next question from the line of Rohit Nagraj from 360 ONE Capital.

Sorry for hopping on the PVC front. So one is that when do we expect the MIP to come in place because it's been since a while that the PVC EGD is now out of question. And just second question, in terms of the anticipated increase in import duties again post June, is there accelerated dumping which is happening from China or probably some kind of inventory built up by the domestic producers at the lower prices?

So the MIP, actually, we are in dialogue with the government to look at a reasonable MIP. That is a conversation going on right now. The industry is representing again giving the cost of production, giving all the data to the government of what is the reasonable MIP based on the past prices, based on what's the China prices, et cetera. So that dialogue is going on. I think that's one thing. Secondly, the price stability, no one can say because the uncertainty in terms of availability of the movement of material goods, et cetera, that is open and China can dump. And I mean, they are actually exporting to India quite a bit. In the last year, 50% of India's imports were from China. So the quantity was very large. So we are, in fact, with the government in dialogue with the government. If this import duty is removed at the end of June and we get the 11% back, that will be a saving grace and a real breath of life for the PVC industry. So let's hope that happens. But the pricing mechanism is very open-ended. No one can give any commitment of any type.

Sure. Sir, second question is, again, on the caustic front. Given that there is a sizable amount of alumina capacity in Middle East, which has gone off stream, how do you foresee the caustic balance in the global market? Is there a possibility of, again, that particular material, which was supposed to go to Middle East can be routed to Asia, and that will have again some kind of an implication on the domestic pricing. So just your thoughts on this.

Yes. So as we mentioned earlier in the call as well, the global caustic capacity is close to 109 million metric tons. And of course, the demand is spread across globally. So there are always regional balances and regional dynamics that come into play. So you're right that some particular utilization in the Middle East has reduced, but we have to see how it all plays out. The unpredictability remains very high, and there are always many factors in determining the price of any commodity really, including caustic. So we can't correlate it very directly the impact of one demand area going down. But we do expect -- in the long term, we expect the Indian situation to be quite robust, while there might be some short-term volatility.

Sure. Just if I can squeeze one more small question. What is the current ECU?

The current ECU is in the range of INR 32,000 to INR 33,000 per metric ton.

And just to add, this is ECU without including the flakes element because some of the peers include flakes element as well. So this is for live.

We will take the next question from the line of Ahmed Madha from Unifi Capital.

First on caustic. Is the export volume steady? Or has there been any impact because of logistics?

So in -- as a country, our exports have been increasing steadily over the year. In fact, India was a net importer a few years back. Last year, as a country, we exported over 600,000 metric tons of caustic. For us as well, if we look at the financial year, well, in the last quarter, you're absolutely right. There is some implication, which is there. But if you look at the last financial year, our exports have gone up significantly, and we are now exporting approximately 12% of our capacity.

Sure. And is there any caustic production constraint you see because of chlorine disposal issue? And is there more room to improve volumes for caustic soda as a whole for FY '27?

So the unpredictability, of course, with the war in the Middle East is very high. And while not directly an implication for us, but a lot of our customers do consume products that come from the petrochem value chain. So there can be an impact of that. But we do see that between domestic demand and global dynamics, we do expect at least our capacity utilization to stay robust in the coming year.

Sure. Got it. On the ECH, the -- you have mentioned that the plant got fully commercialized from April. What will be the current utilization as of Q1, if you can say? And what utilization you are expecting for full year FY '27? And also in terms of margin profile at current prices with the full value chain glycerine and so on, what sort of margin profile one should consider for ECH?

Yes. So the ECH plant, as you rightly mentioned, was fully commissioned in April 2026. Now actually, the plant is running at close to 60% to 70% capacity utilization. And we are ramping up the capacity. The product approval from customers has been coming in regularly. And so we expect a steady ramp-up in the coming next quarter or 2. In terms of the margins, it is not always so easy to say. For instance, crude glycerin price has gone up significantly. And while we do have refining capacity, so we refine our glycerin and then, of course, convert that into ECH. So the margins will depend again on how the raw material prices and how the finished good prices move. But overall, there has been an increase in the raw material cost and an increase in the ECH selling price. So we do expect, again, a healthy margin to continue in the ECH plant.

Sure. And for epoxy, in terms of volumes, how is it currently? And in terms of breakeven for the acquired entity as a whole, what sort of time line one should assume?

So epoxy, as you would know, we acquired Hindustan Specialty Chemicals Limited in August. We completed the process in August 2025. So it has been a couple of quarters now. We are in the process of doing smaller debottlenecks, some improvements, safety focus areas, et cetera. So it is now, I think, running well. We are running at capacity. Of course, we want to increase the capacity of the unit. The Board, as you would know, has approved a CapEx of INR 101 crores in its Board meeting 2 days ago to enhance the formulated resin capacity from what was earlier 14,000 tonnes per annum to 50,000 tonnes per annum. So this is a material expansion in the formulated resin capacity, which we expect to complete by Q2 FY '28. And with the ramp-up of this, we are very confident that the profitability of the Advanced Materials vertical will move up.

Sure. If possible, give a sort of a time line based on the efficiencies you are trying to achieve and volumes you are trying to achieve, whether the breakeven will be achieved in probably this year itself or you see it to be extending?

Yes, we expect to achieve breakeven this year.

Sure. Other part you have been very -- sorry?

I was saying, Ahmed, the way it will work is that first 6, 8 months, we utilized to stabilize the operation. It was a loss-making unit. I believe this year, we should be a little better than breakeven because we are also -- we've just expanded our formulated resins from 7,000 to 14,000, which Aditya was mentioning. So that will also improve our margin profile. This year should be good. And then we'll keep adding the formulated resin capacity, which will -- which are high margin and high returns. So that will change the face of this business that we have got into.

Okay. Sure. And for ECH coming back again, can you quantify margin? I think a couple of quarters ago in the con call, you had given 20%, 25% range. Is that sort of a range one should assume for our epichlorohydrin plant?

So I feel, Ahmed, the way we look at -- because Bharuch, where we have multiple businesses now, and each of these businesses are linked to each other in terms of their -- some of the other feedstock, caustic going into it, chlorine going into it, hydrogen going into hydrogen peroxide. So it's best to look at what is the profitability of the entire setup, the entire chemical complex. And also because it's a complete value chain, something is down, something is high. So that's only -- it's best to look at how the overall complex is performing. And if at all it is not performing well, what is pulling it down. So I believe currently, the way it is happening, if you see the last full year numbers, our revenue went up by about 38%, profit went up by about 50%, EBITDA went up by about 50%. So that shows that, one, the volumes that are getting added are helping the overall profitability of the complex. The other good thing that has happened is that before the start of this last financial year, the new products were contributing about 14% to the total revenue. Now the new products contribute about 34% or 35%. And going forward, this will increase. So that will also strengthen the whole complex. Like today, we just talk about caustic soda and what really happened in caustic. I think it will be beyond that. So gradually, it is gaining strength. There have been some technology issues in x, y, z, what we are -- now we've got over it largely, right? Some bit is yet to be resolved. But then we are almost there, and we should progressively see more stability and better earnings.

Sure. I get it. This helps. I was coming from the standpoint that for caustic, we generally take per tonne margins. And then in this, it's very hard to segregate. But considering you report as a whole chemical business margins, which were 20% for -- at EBITDA level for FY '26, do you expect as a whole that number to improve materially considering the all new products you have added or this sort of a range will be a number to take going forward?

It will be hard to give a number on this because it's a forward-looking situation and the unpredictability with the global geopolitical situation, et cetera, is very high. But at least what we can say is we always look to run our operations and run our businesses in a very efficient manner. So we do expect that in case the raw materials and the finished good prices are reasonable that we will make reasonable margins.

Sure. A question on the sugar side of the business. You have been very vocal about the industry support. And obviously, there are a lot of challenges. And now ethanol thing has probably become very critical. So is it fair to assume that considering current prices of sugar, ethanol and your cost of inventory, it will be very tough to make a reasonable margin in this business, and it's likely that we make some money, but it won't be material.

So see, yes, you're right, the margins are -- currently, they are definitely lower than what they were last year. But again, given that the inventory levels are very low now, right, they are all-time historical low of about 4 million tonnes in the country. Expectation is that prices should be a little better than where they are right now. This export ban announcement really does not make any impact, except for some sentimental piece for a very short tenure. So I feel prices should improve a little bit. Margins may not be the same what they were last year. So there will be some shrinkage in profitability. But that -- but it's not very significant shrinkage is what our estimate is.

Sorry to interrupt, Ahmed, I'll request you to please rejoin the queue again for more question. [Operator Instructions] We will take the next question from the line of [ Maneesh Madhani ] from 360 ONE Capital.

Sir, I just want to understand like we are into the ECH. So how much ECH we are captively consumed to manufacture the epoxy resin? Like currently, what it is and in future, what it will be?

So our ECH capacity is 150 tonnes per day. So that's roughly 52,000 tonnes per annum. Our LER capacity, which consumes ECH is a smaller capacity. So we do expect to sell a large percentage close to 70%, 75% of our ECH in the market. That's the current situation.

[Operator Instructions] We have the next question from the line of Priya Mehta from Aequitas.

Sir, my first question is in regards to the Shriram Farm Solutions business. In the last couple of years, we have made it really big, and I think our R&D efforts have put in place. I just wanted you to elaborate on what kind of efforts we are taking and what business potential we see out of this business in the next 2, 3 years?

Well, as I mentioned earlier, Shriram Farm Solutions has 3 verticals. One is the seeds business. The other is the crop protection business. And the third is the specialty nutrients business. So we have research going on in all 3 of these verticals quite actively and aggressively. As you rightly said, the seeds business, wheat has been touch wood a good success for the business and is doing well even this year in spite of the earlier rains and the heat, et cetera, et cetera, the uptake has been pretty good. We are focusing on the crop protection also where we have a tie-up with a couple of international companies to get molecules in, which we are doing in our outsourced processing plants, and we're making the product and selling that in the market for the farmers, which is also doing well. And we are continuously working on that of getting more tie-ups as well as our own R&D on the crop protection. In the Specialty Nutrients business, as you may be aware, we have a factory in Kota called Shriram Agsmart, where we manufacture specialty nutrients. That is there, plus we get some more products from outside. Plus we have an R&D. And as I mentioned in my opening remarks, we have made a couple of new products in crop protection & in specialty nutrients from our own R&D plus from outside, which have got a good response in the market. So our plan is to grow in all 3.

Got it. Got it. And my next question is in terms of Fenesta. So Fenesta, we've been doing excellently in the last couple of years. And currently, with the metal prices going up, aluminum also reaching all-time high, how are we passing on the cost? And how do we see the margin going forward? Also, one question is in terms of margin and second is in terms of demand. Are we seeing any demand fallback since the cost has increased so much?

So one is on passing on the cost to the customer. So there are 2 types of customers. One is the retail customer. The other is the institutional customer. In retail customer, it becomes a little difficult to pass on the cost if -- although the contracts also of a shorter value and of shorter tenure, but then it is difficult to pass on the cost there. However, in institutional clients are -- a lot of our contracts are made in such a way that there's a tolerance level, post which the cost is passed on to the builder. However, till the tolerance level, it does impact our margins. Now in terms of your second question on demand, I think we are seeing good demand even now. If you see our Q4 numbers also, they were pretty good. So we have had record order book. So demand is pretty good right now.

Got it. Got it. Now my third question is in regards to the PVC business. Considering that the currently China has been dumping, et cetera. In the current scenario, do you think prices will fall down to as like similar to 60, 65 level, which were there in November, December? Or what kind of -- because I'm assuming that China will also be under energy cost pressures and they would also likely increase the prices.

Well, what you're saying, we sincerely hope not. I mean that is the thing. And also one is seeing because freight, international freight and movement of goods is also not so easy now because of the disruption having across the port. So I think the prices of INR 80, INR 81, INR 82, which is prevailing now, we do hope that it stays. It might go down a little bit. This is also like a situation where if suddenly excess material comes in, affects the market price straight away. But then after a couple of weeks, it can go up a little bit again. But it's very difficult to predict on any of these commodities with the -- what the price will be, but we hope it stays somewhat stable.

[Operator Instructions] We have the next follow-up question from the line of Ahmed Madha from Unifi Capital.

On the Finesta margins, is there any impact on margins because of the acquisition of D&B, if you can quantify the number?

There is no significant impact right now because that's a separate entity. And we are still buying on the same arm's length basis that we were doing earlier. So there's no impact on the margins. The reason for that acquisition was more in terms of indigenization, therefore, our lead times improve. It's also about doing more R&D in-house to come out with newer products on the windows hardware. So I think we are progressing that well.

Sure. And overall CapEx, what sort of number one should consider for FY '27 for the overall company as a whole?

So that should be in the range of around INR 1,000 crores, INR 1,200 crores, including the normal CapEx. As of now, whatever is in there, which has been, let's say, approved by the Board, but we have a few projects in the pipeline as well. So let's see how that pans out. Surely committed to that range.

Okay. Okay. Got it. Got it. And last question on the bioseeds. Obviously, Kharif placement should have started by now or something of that sort. So can you give us some sense just not company specific, but in general, what trends you are seeing across crops, cotton, paddy, maize in terms of channel inventory, pricing discipline, offtake, if you can give some broad sense based on the trend you are seeing in the market?

See, as of now, placements are good, although there are apprehensions because of expected. So the placements are happening. The only place where we are seeing some apprehensions beyond El Nino is on cotton because every producer in the country has huge inventory of cotton. And therefore, how the discounts will be passed and all that has to be looked at. Yes. But otherwise, it's a reasonable start to the season.

Thank you. Ladies and gentlemen, we will take that as the last question. I now hand the conference back to the management for the closing comments. Thank you, and over to you, sir.

Thank you. Ladies and gentlemen, thank you very much for your participation in our earnings conference call. As we navigate an evolving global landscape, we are actively fortifying our resilience and growth by: One, driving operational excellence, we remain hyper focused on optimizing our core manufacturing base, ensuring our operations are lean, agile and capable of sustaining healthy margins across our portfolio; two, deepening our value chains. We are strategically strengthening integrations across our business verticals to invest and unlock synergies and enhance our competitive edge; and three, accelerating digital transformation. Technology is the backbone of our evolution. We are embedding data-driven insights and automation into our daily operations to drive efficiency and sharpen our strategic decision-making. Furthermore, environmental stewardship is no longer a peripheral objective. It is the cornerstone of our capital allocation. By building greener future-ready operations, we are securing sustainable long-term value for our shareholders. Thank you once again for your continued trust. Goodbye.

Thank you, members of the management. On behalf of DCM Shriram Limited, we conclude this conference. Thank you all for joining with us today, and you may now disconnect your lines. Thank you.