Deepak Nitrite Limited ($506401)

Ladies and gentlemen, good day, and welcome to the Deepak Nitrite Q4 FY '26 Earnings Conference Call. At the outset, I would like to clarify that certain statements made or discussed on the conference call today may be forward-looking in nature, and a disclaimer to this effect has been included in the investor communications shared with you earlier. The results documents have been shared with you earlier and have also been posted on company's website. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ranjit Cirumalla from IIFL Capital. Thank you, and over to you, sir.

Thank you, Sagar. Good afternoon, everyone, and thank you for joining us on Deepak Nitrite Q4 and FY '26 Earnings Conference Call. Today, we have with us Mr. Maulik Mehta, Deputy Managing Director of the company; Mr. Sanjay Upadhyay, Director, Finance and Group CFO; and Mr. Somsekhar Nanda, CFO of Deepak Nitrite Limited. We will begin the call with opening remarks from the management team, followed by an interactive Q&A session. To begin, Mr. Maulik Mehta will share views on the operating performance and the growth plans of the company, followed by Mr. Sanjay Upadhyay, who shall take us through the financial and segmental performance. I now invite Mr. Mehta to share his opening comments. Thank you, and over to you, sir.

Good afternoon, everybody, and a warm welcome to all of you on Deepak Nitrite's Q4 and FY '26 Conference Call. Our results documents were shared with you earlier, and I trust you had the opportunity to review them. I will cover the key operational, strategic and financial highlights for the quarter and year ended March 2026. Mr. Upadhyay will subsequently take you through the detailed financial review, following which we'll be happy to address your questions. The global chemical industry continued to operate in a challenging environment during '26, characterized by persistent global challenges and uneven recovery in demand. The environment further intensified in the fourth quarter during review due to the war in the Middle East, following which the industry witnessed unprecedented disruption in established supply chains, challenges to logistics and freight with the blocking of the strait of hormones, leading to volatility in prices of crude oil as well as related feedstocks. Concurrently, as logistics disruptions persist, both suppliers and buyers identified new opportunities by swiftly adapting and securing alternative channels. While global demand conditions remain mixed, domestic demand in India continued to witness relatively stable momentum across several end industries, including automotive, infrastructure, pharmaceuticals, electronic, polymers and other downstream sectors. Consequently, integrated and reliable manufacturing companies such as Deepak with a strong operational capability were able to capitalize on emerging opportunities arising from the evolving global supply chain landscape. In this demanding environment, Deepak Group has demonstrated a remarkable agility in the face of adversity, delivering strong operational and financial results for the fourth quarter of FY '26. During quarter 4, consolidated revenues stood at INR 2,127 crores compared to INR 2,202 crores in FY '25 and INR 1,983 crores in Q3 of '26. EBITDA for the quarter stood at INR 338 crores, reflecting strong sequential growth of 74% over Q3 and 13% on a year-on-year basis. Profit before tax -- profit before tax before exceptional items stood at INR 301 crores, while profit after tax stood at INR 220 crores, registering a growth of more than 120% quarter-on-quarter and 9% year-on-year. EBITDA margins improved significantly to 18% during the quarter under review compared to 11% in Q3. Our quarterly performance was underpinned by stable volumes and favorable pricing, alongside enhanced plant fungibility as we pivoted towards high demand from customers and markets. Furthermore, continuous plant process refinement and cost optimization initiatives, coupled with deeper supply chain integration have fortified our competitive positioning and sustained growth momentum across business segments. Our domestic to export revenue mix stood at 86:14 reflecting the resilience of our domestic franchise while continuing to maintain meaningful engagement across export markets. For FY '26, consolidated revenue stood at INR 7,947 crores, while EBITDA and PAT stood at INR 1,041 crores and INR 551 crores, respectively. Coming to the segmental performance. Advanced Intermediates witnessed a healthy growth trend during Q4, boosted by stable domestic demand and a favorable pricing environment, neutralizing the impact of slower exports caused by global logistics disruptions. Revenues for the quarter stood at INR 708 crores compared to INR 654 crores in Q4 '25 and INR 652 crores in Q3 '26. EBIT improved substantially on a sequential basis to INR 34 crores compared to INR 15 crores in Q3 FY '26. Profitability drivers included an optimized product mix and superior realization relative to input costs. Our deepened integration continues to provide a competitive edge through an increased raw material self-sufficiency and reduced supply chain volatility. Phenolics segment delivered strong performance during the quarter despite geopolitical disruptions, impacting supply of critical feedstocks. Revenue from operations for Q4 stood at INR 1,429 crores, while EBIT stood at INR 287 crores compared to INR 239 crores in Q4 last year and INR 145 crores in Q3. EBIT margins improved to 20% during Q4. Performance was supported by stable plant operations, improving spreads across the portfolio, downstream demand recovery and a disciplined procurement strategy. Ongoing process optimization and debottlenecking initiatives continue, and they will improve operational flexibility while strengthening our domestic market leadership position. During '26, we witnessed successful commissioning stabilization and ramp-up of Deepak Chemtech nitration and hydrogenation facilities in Dahej. These projects enhance raw material security, reduce external dependency, improve structural cost competitiveness and strengthen our positioning as a deeply integrated chemical manufacturer. Our supply long-term growth remains anchored in value chain integration and specialty chemical expansion. We witnessed a steady progress of our multipurpose agrochemical intermediates and MIBK/MIBC projects, which are scheduled for commissioning in Q2 FY '27. Our's and India's first fully integrated polycarbonate facility execution is on track. For this project, Chemtech has entered into a strategic long-term agreement with Praxair India to establish a dedicated on-site Hypo plant at our Dahej facility. Under this build-own operate model, Praxair India will manage the dedicated on-site infrastructure, allowing us to maintain a sharp focus on the polycarbonate resin project, significantly enhancing execution visibility and reduce upfront investment and supply chain resilience. Against the backdrop of heightened geopolitical tensions, we continue to strengthen our competitive position through disciplined execution and focused cost leadership initiatives. During FY '26, we undertook a comprehensive cost optimization program aimed at improving product yields, enhancing energy efficiency as well as increasing manufacturing productivity through digital and technological initiatives. While geopolitical and macroeconomic uncertainties may continue creating near-term volatility across global markets, we believe the industry is gradually moving beyond the most disruptive phases of the cycle. I would now like to hand over the call to Mr. Sanjay Upadhyay, who will take you through the detailed financial performance and key operational updates for the quarter and full year under review.

Thank you, Maulik. Good afternoon, everyone, and thank you for joining us today on earnings call. I'll take you through the highlights of the financial results for the quarter and year ended March 31, '26. During Q4 FY '26, domestic revenue stood at approximately INR 1,835 crores, while export revenue stood at INR 292 crores, resulting in domestic to export revenue of 86:14. For the full year FY '26, domestic revenue stood at INR 6,791 crores, while export revenue stood at INR 1,156 crores. For the quarter, company reported consolidated revenue of INR 2,127 crores compared to INR 2,202 crores in Q4 FY '25 and INR 1,983 crores in Q3 FY '26. Per in the period was supported by stable domestic demand and improved realizations across established product categories. EBITDA for Q4 stood at INR 83 crores compared to INR 39 crores in Q4 FY '25 and INR 29 crores in Q3 FY EBITDA margin improved significantly to 18% during the quarter compared to 11% in Q3 FY '26. This was underpinned by strategic combination of proactive feedstock procurement, improved core product realization and structural margin benefits for backward integration and byproduct realization. PBT before exceptional items stood at INR 301 crores, while PAT for the quarter stood at INR 220 crores, reflecting growth of 9% year-on-year and 120% quarter-on-quarter. Earnings per share for Q4 stood at INR 16.11. For the full year FY '26, consolidated revenue stood at INR 7,947 crores, while EBITDA stood at INR 1,041 crores and PAT stood at INR 551 crores. Please note that revenue and PBT excludes dividend income of INR 91 crores in FY '26 and INR 98 crores in FY '25 along with onetime land transfer gain of INR 13 crores in FY '25. The Board has recommended a final dividend of INR 7.5 per equity share of FY '26, reaffirming our commitment to delivering consistent shareholder value, continuing to invest in strategic growth and long-term value creation. Now coming to segmental performance. The Advanced Intermediates segment recorded healthy operational momentum during Q4 FY '26. Revenue for the quarter increased to INR 708 crores compared to INR 654 crores in Q4 FY '25 and INR 652 crores in Q3 FY '26, reflecting growth of 8% year-on-year and quarter-on- basis. EBITDA improved to INR 34 crores compared to INR 15 crores in Q3 FY '26. The business recorded stable volume growth during the quarter, along with pricing gains for end products supported by improving demand across key end user applications. The company continues to focus on portfolio optimization, product expansion and cost efficiencies and deeper customer engagement to strengthen long-term competitiveness within this segment. The Phenolics segment delivered strong gains during the quarter despite continued volatility of feedstock and global supply chains. Revenue from operations for Q4 FY '23 stood at INR 1,429 crores, while EBIT stood at INR 287 crores compared to INR 39 crores in Q4 FY '25 and INR 45 crores in Q3 FY '26. EBIT margins improved significantly to 20% during the quarter. Performance was supported by improved spread across the portfolio, stable downstream demand and integrated manufacturing benefits. Ongoing process optimization and debottlenecking initiatives continue to strengthen operational stability, cost competitiveness and market responsiveness. On operational front, operational excellence and cost discipline remain key priorities during FY '26. The company continued its focus to process optimization, energy efficiency initiatives, manufacturing productivity improvements and digital transformation programs across manufacturing locations. Finance cost for Q4 FY '26 stood at INR 19 crores, reflecting borrowings associated with ongoing growth investments and strategic expansion projects. Depreciation and amortization expense stood at INR 63 crores following capitalization of newly commissioned assets. The company's balance sheet remains healthy and resilient, supported by prudent capital allocation and disciplined financial management, providing adequate financial flexibility to support future growth initiatives. Consolidated net worth stood at INR 5,869 crores, providing adequate financial flexibility to support future growth initiatives. Now coming to growth initiatives and outlook. Near-term industry conditions are expected to remain influenced by geopolitical developments, Chinese supply dynamics, U.S. tariff policies and feedstock volatility. Against this backdrop, company remains focused on strengthening integration, expanding it into value-added downstream chemistries and enhancing differentiated capabilities across high potential product segments. Strategic investments in polycarbonate project and downstream chemistry expansions continue progressing in line with the planned time lines and are expected to support product diversification, import substitution and margin improvement in long-term growth. Supported by a strong integrated manufacturing platform diversified portfolio, disciplined execution and resilient balance sheet, Deepak Nitrite remains well positioned to navigate near-term volatility while creating sustainable long-term value for the stockholders. With that, I would now request the moderator to open the forum for question session.

[Operator Instructions] Your first question comes from the line of Sanjesh Jain with ICICI Securities.

First, on the nitric acid, can you just help us understand in this quarter, what was the utilization? Did we achieve the margin profile we were looking at? I know this is not a right quarter, but still -- are we track on to get that INR 90 crores, INR 100 crores of EBITDA addition for the nitric acid, which we planned earlier? That's my first question.

Okay. Sanjesh, thanks for the question. So in Q4, while we did start the plant, we were unable to run it on a consistent basis because of some technical issues that took place during the quarter under review. We're working along with the technology supplier and the equipment supplier to address these. So once the plant is under stable operations, we do anticipate the kind of target that we're looking at. But during this quarter under review, we were roughly at about 45% of utilization. And hence, for the balance, we had to secure nitric acid from the market in order to ensure that our products continue to be manufactured and sold.

Got it. Got it. That's clear. My second question is on the phenolic side. I know very volatile and a difficult quarter. But just wanted to understand on the raw material availability that is propylene, how much of our capacity right now we are running? And what's the scenario on the propylene availability? Are we able to run the plant at full or we are still running suboptimal because of the availability of raw material? And on the spread, again, some of the listed players did highlight that there is a significant difference in the price of phenolic product in China market and Indian market. Should it sustain for a few more quarters before we converge? Or you think that conversion will happen much sooner than what we think? So color on that will be really helpful.

So Sanjesh, just a clarifying question. You're referring to Q1 or Q4?

I'm referring to Q1 and a little color on the Q1, Q2 will be really helpful.

Okay. Thanks. So first of all, I'll just highlight that in Q1, in the first part of April, when there was a concern about feedstock availability, we also preponed the annual maintenance. So both of those were kind of addressed within that same period of time. I think it was about 10, 11 days. And what we have done in any case in the meanwhile is we have enough of the intermediate product so that we were able to continue to supply to the market. So our plant efficiencies, which are a factor of feedstock as well as operational capabilities continued relatively unhindered. So we expect that Q1, our productivity and our efficiencies will continue to be in the same improving trend as they have been quarter-on-quarter. Q4 to Q1 will also have some marginal benefit. And I want to highlight that because this is also a product where there is global availability, I don't want to comment on this principle of erogicity where we assume that the next month is going to be a factor of the last month. So given that, I want to share that our profitability will continue to remain healthy, will continue to be on an improving trend as compared to Q4. And we have enough feedstock as well as finished product to be able to cater to India's growing requirement. So I don't anticipate a challenge on that front because of propylene or anything like that. Wherever possible, we have ensured that we have secured all our relevant raw material and wherever relevant, we have ensured that we are able to pass through our cost increases. Nonetheless, we will see that during this quarter and the next quarter, we are remaining very close to our customers, engaging with them on a regular basis so that wallet share and market share always remains something that we maintain.

Okay. That's quite clear, Maulik bhai. One last question from my side. Any comment on MIBK/MIBC commissioning? When can we expect? Or do you think this is not the right time to start a new plant and probably you would wait for another quarter to see how the industry or uncertainty settle and then we go for the new product?

So we are already -- basically, we're finishing with the mechanical completion of the plant. And we will soon be getting into the pre-commissioning cycle as it may be. And at some point, maybe perhaps at the tail end of Q1 or the early part of Q2 is when we will be looking at commissioning of the asset because the asset is commissioned along with a couple of other plant assets as well. So we kind of remain on track with that.

Your next question comes from the line of Nirav Jimudia with Anvil Wealth.

Sir, first of all, congratulations on improved set of numbers this quarter. Sir, first question is on the stand-alone business. So given the kind of CapEx is what we have announced that one for a fluorinated molecule of INR 220 crores, which we have announced and which was supposed to start operations in Jan, plus some 6, 7 new products which we have told us that have already started production and they are at the various stages of customer approvals. So how do we see FY '27 specifically from the stand-alone business point of view, given these new products? And b, given the kind of raw materials what we use for the stand-alone business like ammonia, sulfuric acid, AHF, how we have secured in terms of the availability of these key raw materials and demand for some of our products which are specifically custom for the export markets. So if you can share your thoughts here, that would be very helpful.

Sure. So Nirav, I'll answer both your questions. First question was with regards to new products. So the 67 new product as well as the molecules, et cetera, we've already started the manufacturing for the thing, the commercial scale validation batches. And those are already either supplied to customers, and we've received positive feedback or in the process of being transported to customers. So in all of these, we -- as we said earlier, we anticipate commercial production on a regularized basis from Q3 onwards because this will reach our export customers towards the end of Q3 in time for their CY '26 requirements. So we remain broadly on track. We are constantly engaging with customers, updating them about the current possibility, and they are also appreciating this. So far, I do not anticipate any concern on those, including the fluorinated molecule as well as the non-fluorinated molecules. Now with regards to the volatility on the feedstocks, such as, as you mentioned, or toluene and others. So what happened was that in the beginning of Q4, I was tracking what was taking place in the Middle East. And in the end of January, early February, what we noticed is that we are having multiple U.S. aircraft carriers kind of converging on a location, but in a pincer movement. Now generally, this is a rare occurrence. And generally, this has -- in the past, whether it is the first Gulf War, second Gulf war or in the case of 2008 or whatever, it has actually preceded a significant volatility in prices. So from that perspective, we took a very unusual call of securing raw materials. We chose to buy it at every dip. -- you can appreciate that this was a risky move in the beginning of quarter 4, which is a few months away from the end of the financial year. So we targeted to buy in every dip. So we actually entered the end of Feb and Q1 with a much higher stock of critical feedstock, whether it was on high seas or whether it was with local suppliers, products such as benzene, products such as xylene and tolbeans and all that. We ended up with a much larger inventory than we would traditionally have had in Q4. So this was because we saw an unusual movement and we did not actually anticipate a hot war, but we did anticipate volatility. And that position has held out quite well for us, whether it is in Q4 or in subsequent quarters. Going with this perspective, we anticipate that the company has a reasonable inventory of feedstock at enviable prices until we seeing perhaps at the end, maybe Q2 or maybe halfway through Q2.

Perfect, sir. Perfect. And so can we assume that with this kind of raw materials, what we have secured in Q4, some benefit would have come in Q4, but most of this should come in Q1 impacting positively our stand-alone numbers?

I can say that our Q1 looks on track for numbers, which are better than Q4, whether it is on stand-alone or on consolidated basis. So we anticipate Q1 to be better than Q4, which was, of course, better than Q3.

Correct. And sir, in terms of the products, what we have in the domestic market, like DASDA, which was under pressure for, I think we have also filed antidumping duties and on the sodium nitrate, which also you have updated last quarter regarding the U.S. tariffs, plus the anti chain, I think, which is also now looking better in terms of its application in the agrochemicals. So in terms of -- apart from the stuff what we have mentioned, is there any green shoots in any of the products, what I just mentioned on where we can see some improved performance also coming in FY '27 for us?

There are some green shoots, and I will resort to once again mentioning safe harbor here. But what has happened also, which was actually announced in December 2025 is that China will administer significant constraints on certain key chemistries, including production, storage and transportation. So there, we find that there will be some uptick in the demand as well as the profitability for nitration products. Some of the products that you've mentioned are linked to the nitration chain, where Deepak continues to have a significant global market share. So we anticipate that these will have a bit of a tailwind. Now meanwhile, there is also some degree of a headwind, but it is a global headwind, not limited to India or Deepak, which is in the sulfur downstream. So whether it is the availability of sulfur, the price of sulfuric acid, SO2, Oleum, et cetera, those are places where there will be a heightened cost. But like I said, the important thing is to check what the delta between international prices and Indian prices are. And there, if we are able to buy as we pass for the course, we anticipate no significant net impact to the company and the benefit as it comes from nitration chemistries, which Deepak has a considerable market position as well as a technological strength.

Perfect. Sir, last question from my side. Sir, in terms of the Phenolics business, like we have already alluded the confidence in terms of the improved performance in Q1. So is it because our IPA business should do well in Q1 given the kind of the competitor who produces IPA through prop route and through an acetant route, where property innovability currently is a challenge for most of the players in India. So if you can share your thoughts here with respect to IP and also if you can share the production numbers for phenol for FY '26, that would be very helpful.

Thanks, Nirav. I appreciate the question, but I continue with my position of not going into details on production numbers. What I can say is that whatever is the Indian requirement for IP isopropyl, Deepak Nitrite and Deepak Phenolics in that continues to remain the largest capacity which is able to service the market for all the specifications, including pharmacological grade. So from the perspective of our ability to supply, that remains unconstrained. From the perspective of saying what are the margins, frankly, we look at it only on the perspective of an integrated margin approach because our assets are cost competitive. Our product quality is of the best nature. And finally, how much we make will be a balance of what the margins are in terms of the intermediate the SG. We will -- as I also mentioned, we will also be looking in the next couple of months at producing MIBK and MIBC. So we expect to have a good healthy mix of downstream as well as upstream.

The next question comes from the line of Arun Prasath with Avendus Spark.

First question is on [Technical Difficulty] sorry, am I audible?

[indiscernible] background noise.

Sir, there is a lot of background noise coming from your line.

Hopefully, now this is better?

Yes, please go ahead.

Yes. So I was asking about the phenol spreads. Typically, phenol is a very commodity across the high seas. So when we are seeing differential spread between, say, China and India, this could be either because of the local players in China stocking -- restocking or say, phenol is not to be transported because of the container issues. So that is the reason we are seeing should we expect this to get back to the normalcy post the crisis? Or are you seeing this kind of triggering some kind of a change reaction where this could put the all in the part of cyclical recovery?

Okay. So Arun, it's not possible for me to comment on the spreads of other companies and other countries. What I can say is that Deepak continues to operate with a high degree of productivity efficiency and is able to ensure that it is able to create the margin that you are seeing. And I've also already qualified that we anticipate that Q1 will be somewhat better than Q4 and also be better than last year's Q1. So keeping that in mind, let me put this way, there's a lot of factors at play. even though we're seeing that plant capacities all over the world are being constrained because of their own operating costs. We are also, at the same time, seeing volatility in currency, in freight times and freight costs and material movement from port to customers' plant. So in all of these cases, all I can say is that having a domestic supplier of high-quality products is a game changer for domestic consumers who don't need to be blocking in the kind of working capital that they would need to if they were importing with the kind of geopolitical risks that they are seeing. So at this time, I can confidently say that Deepak being a domestic supplier is something that our customers depend on to be able to aggressively work on their downstream expansion activities.

Understood. One follow-up to that question is that do you see domestic buyers, especially in the phenol market, back to ordering at the regular intervals or they are still resorting to the need-based buying

So answer to this question, to be Arun, is mixed. In a lot of cases, it has kind of resorted back to a normalized buying pattern. In some cases, not. And by and large, this is because of other factors such as availability of products or availability of gas and inputs. So it is not just about the demand supply of their own manufacturing environment. So what is important for them is to know that Deepak is always ready and always able to supply. So this is one thing that they just never need to worry about. That gives them a lot of support and that allows them to cost their working capital need it most.

Understood. My second question is on the status of where we are in terms of nitration and second hydrogenation plant. Is the plant ramping up and running as per the level of utilization that we thought of initially? And second, on your answer to the nitric acid utilization of 45%, is this the average one or this is the exit utilization at which we are currently operating on?

So on your first question on nitration and hydrogenation, those plants are already commissioned and they are operating with the right productivity and efficiency as expected. With regards to nitric acid, what we had as a situation is when we were operating, we were operating at full utilization. But as I mentioned, we did engage -- we did encounter technical challenges which the plant has been under repair and maintenance in line with our equipment -- so this is primarily our plant concentrated nitric acid plant normally.

Understood. On the nitration and hydration, any way you can quantify where we are in terms of...

Those plants are fully operational. They've been, I think at the end of Q2 or early Q3. So those are okay. There is a positive contribution. And if there is a constraint, it has been with regards to availability of nitric acid the prices have been substantially higher where we've been constrained to buy from the market challenges. The plants are all in line and operational.

Understood. One question on polycarbonate. We have mentioned that the commissioning target of 2028, this is only pertaining to PC resin or to the entire phenol and BPA production blocks as

So what I've mentioned with Mr. Bad has also clarified is that the answer is, at this moment, the same for the integrated. However, we've clarified that the PC resin plant will happen independently. It may happen alongside. It may happen with a mismatch of a few months. And the phenol expansion will happen in line with the commissioning of the propylene supply. So our CapEx includes the ability to have this in a slightly disjointed manner. So what we are anticipating is that perhaps they will all happen on time. Perhaps there will be maybe a quarter or so of mismatch. But all of the assets that we put in place as they are operationalized, they should be able to run at a high degree of plant productivity. In line with that, we've already been working to see how we can start compounding and supplying our polycarbonate compounds to customers in India as well as outside of India, so we anticipate that to also reach its capacity in line with our resin plant.

Maulik, on the compounding plant...

Arun, sir, may we request you return to the question queue for further follow-up questions, as there are several participants waiting for their turn. Your next question comes from the line of Tushar Raghatate with Omega Portfolio Advisors.

Sir, just wanted to know the -- days are increased. Any specific reason to that [indiscernible] The days are increased. the receivable days has increased. Just wanted to know, any specific reason to that? Secondly, sir in the advanced business, like do you see a major growth in that -- FY '27 going forward, because the business underutilized compared to the historical numbers?

So what you are seeing is the realization which has gone down, not that capacity has gone down. Capacity, we are running full, but it was the realization was lower as compared to earlier years. And regarding number of days, in some cases, we have changed the model because today, we are passing through a very volatile situation, and we do not want to risk our outstanding We have gone into dealership and CSA model. So that is helping us in at least securing our outstanding. So these are the reasons for this.

I'll also share the new products that we are, whether it is in Chemtech or in Deepak Nitrite, the new downstream products which are the ag space and outside of the ag space also, there significantly see in FY '27, certainly an improved margin profile on even the stand-alone business as compared to FY '26. And we are working towards a return to what we consider normalcy a couple of years ago. So FY '27 will be this period where you will see an improving trend.

Fair enough. And sir, due to the banking evolution of China, do you see any realization improvement in stand-alone businesses?

Like I said, whether it is because of the anti-involution stand or critical hazardous chemistries, et cetera, or the global demand improvement, whatever you want to call it, we do anticipate an improvement in margins as well as the gross numbers as we progress into FY '27. That is on the base of existing product portfolio as well as new products.

Fair enough. Sir, one of the player in India providing intermediate to the global plant, they said that in the agrochemical, the volumes are increasing, but the prices are not in the favor. Do you see the same happening in the ag part of the business?

This is, again, very nuanced, and it depends on the chemicals. It depends on the feedstock availability. It depends on the margin profiles. So generally, what we are witnessing is that the benefit will be unevenly distributed between integrated players and nonintegrated players. The players who have occupied a large number of positions on the supply chain will be able to benefit from this improvement in the volumes and with a general degree of derisking in the margin portfolio.

The next question comes from the line of Rohit Nagraj with 360 ONE Capital.

First question is on the phenol part of the business. So after the maintenance over the last one month or so, are we operating at optimal utilization of the plant?

Just to clarify, the maintenance was only in the beginning of April, maybe for about 10 days or so, not for the month of April. And we are operating at this moment at high efficiency. So we do not anticipate a constraint from plant or from feedstock availability.

Sure. And the second question is in terms of -- so we have said that we have certain low-cost raw material. So have we passed on the entire pricing increase, which has been witnessed in the market? So whether the prices have been adjusted to the current RM prices? And allied question to that, given that the final product prices for our Advanced Intermediate as well as phenolic business, those have increased, have we witnessed any demand side contraction in the domestic or exports market?

Okay. Thanks, Rohit. So just to clarify, we were able to secure feedstock on this, which we did very judiciously. So going into the end of Q4 and into Q1, we are in a good position. In terms of passing on the listing price increases equivalent to the market conditions, that is an ongoing exercise. What we do is we balance out that as well as market participation and wallet share. So what we are seeing is that, by and large, that has been a good work done by the business teams, keeping on constant engagement with customers as well as ensuring the plant productivity at a high degree. Now with regards to demand volume, as you can anticipate, demand volume for our products fluctuate based on availability of other co-products as well as their own production cycles. So keeping that in mind, what I can say is that we continue to have a significant wallet share across the board. So I don't think that there has been any significant disruption in terms of wallet share and ensuring that we are engaging with customers, what we're giving them as a good degree of certainty is that Deepak stands there. It is -- even if it is at market prices or whatever, they don't need to work hard to use up their foreign exchange to block import parcels because Deepak is there.

The next question comes from the line of Archit Joshi with Nuvama

So first question on the phenolics bit, knowing that there's a lot of fluidity, the dynamics are evolving in the global trade. But have we assessed a scenario wherein some of the European capacities or maybe Taiwanese or South Korean capacities are overshooting their cost curve in a scenario where energy costs are rising, feedstock prices are rising and let's say, if the situation persists for a fairly bit longer and knowing that we are in a cost competitive scenario, should we see a position wherein some of these capacities might be outed from the system? So that would be my first one, Maulik.

Thanks, Archit. So you know phenol is it's like an ocean. So water just flows wherever it can. So while there is a disruption, you will have some capacities going offline, some capacities being idle temporarily, some capacities being taken down for maintenance, sometimes in Europe, sometimes in the Far East, some places like China, you will have commissioning of some capacities, whatever it is. One thing is the fact that India and all of this remains a positive dynamic in terms of growth, in terms of consumption. And there, ensuring that there is availability of products such as phenol is key for our customers. So whether they import it and deal with the kind of volatility that they would face in terms of the amount of time that it takes the exchange gain or loss and the working capital what we are focused on seeing right now is our ear to the ground and focusing on optimal plant utilization efficiencies there and ensuring that we are as close to GI as possible. So our customers are able to focus on their own expansion activities. So I see that there is consolidation also on one side, geopolitical volatility also on the other side. Our job is to be able to exclude a sense of stability.

Sure. Understood, Maulik. The second one is on the proposed overhauls in China on these nitration plants. I believe it was supposed to get triggered on 1st of April, specifically in the region 1st of May, is it? Okay. I misread that maybe. But I think this was more specific to the region of Shandong, where I think there is almost 30%, 35% of nitration capacities. And we have seen in the past that products like Dada and thus by far our OBA portfolio had benefited back in 2019 when there was an explosion or ripple in the supply chain because of these issues. Are we referring to that when you made this comment about certain tailwinds that we might foresee in the nitration portfolio? And as such an action already taken place where some of the Chinese plants who are asked to automate using DCS and all have not done so and the tailwind is already seen or it prevailing?

Okay. Thanks, Archit. To clarify, my comment was not linked to one or the other because this is a general CCP guideline with regards to the chemistries as well as the safe material movement as well as the transport, which includes, of course, also product at ports and transport over oceans. So it is an all-encompassing audit, and it is an all-encompassing compulsion, which is not also limited to only things like DCS. Now like I said, this is something which can be considered as a tailwind, not specifically linked to A product or B product like DASDA. This is -- and again, it is not just nitration, but nitration has been a problem child in China again and again because a lot of plants operate without safety standards, whether it is at storage or production. Given that this is a structural tailwind for companies like Deepak who do it in a responsible manner.

Maulik, my only point being is that have we started seeing these developments on ground in China, irrespective of which province is it? I just wanted to know how are we backing our comment on this tailwind part? Has it already started happening is what I wanted to know?

It has already started happening.

[Operator Instructions] The next question comes from the line of Shah from CR Kothari and sons.

Regarding the reject, by when do we expect to commission this and how will this be funded?

So we've clarified earlier and we are, by and large, remain kind of in line with that, that we are expecting it to commission by June '28.

Okay. And what would be the funding source for this, worth INR 5,000 crores?

No, no, funding is -- the total project, what we announced is around INR 11,000 crores. The funding is for the entire all the project together. We have tied up with the banks for will be in the ratio of 60-40. We have already started putting in equities here. Bank funding is already in line. And once we put in 25% of equity as per the bank condition of 40%, we'll start growing from the date. So funding is not an issue. We are generating enough cash and bank loans are also tied up. And as and when required, if at all required, we'll approach the market.

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thank you so much. Thank you all for joining us on this call. In case any further clarifications are required, you can get in touch with our investor call relationship, Mr. Somsekhar Nanda or Mr. Gopal Thakkar. Thank you. Thanks again.

Thank you. On behalf of Deepak Nitrite, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines.