SRF Limited (503806) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to SRF Limited Q4 and FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ankur Periwal. Thank you and over to you, sir.

Thank you, Hamshad. Good afternoon, everyone, and thank you for joining us today for this call. We at Axis Capital Limited are pleased to host SRF Limited's Q4 and FY '25 post results conference call. We have with us today Mr. Ashish Bharat Ram, Chairman and Managing Director; and Mr. Rahul Jain, President and CFO of SRF Limited. I would now like to invite Ms. Nitika Dhawan, Head of Corporate Communication at SRF, to initiate the proceedings for the results con call. Over to you Nitika.

Good afternoon, everyone and welcome to SRF Limited Quarter 4 and Financial Year 2025 Results Conference Call. We are pleased to have you join us today. On the call, we have our Chairman and Managing Director, Mr. Ashish Bharat Ram, along with our President and CFO, Mr. Rahul Jain. To begin, our CMD will share insights into the company's performance during the financial year 2025, followed by an overview of our strategy, business outlook and growth plans. After these remarks, we will open the floor for a Q&A session with our CFO. Please be reminded that any statements made regarding our outlook are forward looking and are covered by a disclaimer included in the earnings [Technical Difficulty] shared with you earlier. Without further ado, I invite our CMD, Mr. Ashish Bharat Ram, to deliver the opening remarks. Thank you.

Good afternoon to all of you. I extend a warm welcome to all of you, and thank you for joining us today for SRF's Financial Year '25 Earnings Conference Call. I trust all of you have had the opportunity to go through our results and the presentation shared with you earlier. The fiscal year 2025 has been a journey of overcoming challenges and achieving significant milestones. The year began on a difficult note, primarily due to the ongoing environment in the Chemicals Business, which impacted sales in both our Specialty and Fluorochemical segments. Despite these initial hurdles, we remain confident of a revival in the second half of the fiscal year. As projected, we have done very well in half 2, especially in the fourth quarter. Having said that, we are still navigating through uncertain times. Geopolitical tensions are rising, the uncertainty around tariffs from the U.S. remains, and there is a chance that we could see global growth slowing down. Let me now share with you my thoughts on the business performance in the fiscal year gone by and the growth opportunities that lie ahead. Fiscal year 2025 saw distinct challenges, offering significant opportunities for growth and resilience. During this period, SRF revenue increased by 12% to INR 14,700 crores compared to the corresponding period last year. The company's EBIT rose by 6% to INR 2,336 crores over the current period last year. However, the company's PAT decreased 6% to INR 1,250 crores over the last year. Moving to my viewpoint on the performance and outlook of each of our 3 market-leading businesses now. I will begin with the Chemicals Business. The performance of the Chemicals Business can be categorized by 2 distinct periods. In the first half, margins were adversely affected by challenging market conditions. However, revenues increased in the second half with a particularly strong performance in the fourth quarter. Regarding capital expenditure in financial year '25, the Chemicals Business invested approximately INR 700 crores on various debottlenecking and expansion projects. Going forward, we will return to a higher level of capital expenditure intensity, consistent with our future aspirations. Overall, during the fiscal year '25, the Chemicals Business achieved a 6% increase in revenue amounting to INR 6,691 crores. More specifically in the Specialty Chemicals Business, in half 1 financial year '25, we witnessed tough market conditions. The prolonged inventory destocking cycle from our customers resulted in pricing pressures for some of our products. On a quarter-on-quarter basis, we have done significantly better in the fourth quarter of financial year '25 when compared to the third quarter. While the broader industry continues to witness challenges emanating from the agrochemical market, our performance was strong, driven by positive traction in recently launched products and a gradual pickup in demand for some key agrochemical intermediates, which was deferred earlier. Our cost competitive pricing strategies and robust export market performance further supported revenue growth. While we may encounter short-term challenges from China in the Specialty Chemicals Business, we will continue to implement effective countermeasures. SCB has prioritized advancing customers' new products and the developmental projects. Aligned with our objectives, we launched 5 new products in the agrochemical segment and 3 in the pharmaceutical segment during the fiscal year '25. Efforts have been made to optimally utilize production capacities for existing products and to optimize cost structures for greater product efficiency. Both the Bhiwadi and Dahej sites have continued to improve operational efficiency while managing an expanded portfolio of innovative products. SCB's expertise in novel chemistries has grown and progress in the pharmaceutical sector has been encouraging. One key area, which has redefined this business has been our implementation of debottlenecking projects. I can say with confidence that with all the minor CapExes that we've incurred over the past 18 months, our overall capacity of this business has increased by close to 30%. SRF's Chemical Technology Group exemplifies leadership by continuously driving innovation, developing advanced chemistries and building cost-effective routes for existing and next-generation products in the Specialty Chemicals and Fluorochemicals Businesses. SRF continues to invest in R&D to create enhanced capability and on that count, over INR 150 crores was spent during financial year '25. In financial year '25, our Chemical Technology Group worked on over 50 molecules, successfully scaled up many products, filed 38 patents and had 2 patents granted, bringing the total to 151 patents granted. Moving forward, with a strong pipeline and strong relationship we have with our agrochemical customers, we anticipate a better performance in the upcoming fiscal year. We have received registration of some of our future active ingredients and are hopeful of ramping up sales for some of these products during financial year '26 as customer demand for these pick up. We have a fundamentally positive outlook on this business. We believe that regardless of the situation in China, we will be able to maintain or increase our market share and move up the value chain. Having said that, we continue to operate in a VUCA environment. And while we acknowledge that the most challenging times may now be behind us, we're still not in calm waters. Pricing pressures in China continue, and we will have to wait through these waters. Coming to our Fluorochemicals Business. Financial year '25 presented mixed results for this business. The year began with a strong pull in the domestic market, but with margin pressure due to excess inventory coming out of China. However, as the year progressed, more so towards the end of calendar year '24, we observed an increase in prices for refrigerant gases in China, which is a positive development for our business. Additionally, inventory levels in the U.S. have decreased following the implementation of the quota regime. Domestic demand for refrigerants, particularly for room air conditioners remained strong, leading to record high domestic sales of refrigerant gases in half 2 financial year '25. The Chloromethane segment achieved stable results during the year. PTFE is witnessing healthy growth in the domestic market with ongoing trials for free flow and fine cut grades progressing as planned. We're also preparing for commercial sales of fine cut products targeted at high-end application processors in export markets with expected positive results beginning in financial year '26. A major milestone was accomplished in the fourth quarter of financial year '25 with the commissioning of the third AHF plant at Dahej. This development will facilitate the maximization of refrigerant gases production and sales, allowing us to leverage the quota regime effectively. During the year, the Board approved a project to develop fourth-generation refrigerants, which is distinguished by the significantly lower global warming potential and reduced carbon footprint. This CapEx with an estimated investment of INR 1,100 crores is slated for completion in around 30 months from the date of approval. The project highlights SRF leadership as one of the pioneering technology developers in the global refrigerant space. As an Indian company, we take immense pride in this advanced and eco-friendly technology with a significantly lower carbon footprint and global warming potential, which has been developed in-house. Our robust in-house R&D capabilities, which have been integral to our success for over 2 decades, will enable us to leverage our proprietary processes and technologies to innovate and drive the development of these next-generation refrigerants under our own brand. The same is initially looking to target the global markets that have transitioned to these low GWP alternatives and post 2032 the Indian market as well. In the future, our focus will be to optimize raw material sourcing, cost-saving initiatives, strengthening capabilities and new product portfolio with sustainability as our priority. Overall, the business performance is anticipated to improve over last year with maximum utilization of existing capacities and the commissioning of specialty fluoropolymer plants. Broadly, I estimate that the Chemicals Business as a whole will grow at 20% or so in financial year '26 and build a strong momentum for the years ahead. Over to the Performance Films & Foil business now. After a detailed strategic planning process, the business has been renamed Performance Films & Foil business. This new name reflects the business diversification and expansion beyond Packaging Films. It now includes aluminum foil, ventures into capacitor-grade BOPP Films and actively explores growth opportunities in both existing and new areas within the films and foil sector. This name change represent a commitment to innovation, growth and excellence. During fiscal year '25, the Performance Films & Foil business reported revenue of INR 5,554 crores, registering a growth of 24% over the previous year. Financial year '25 has been a recovery for the Performance Films & Foil business. Although, market conditions remain challenging, margins improved in both BOPET and BOPP as capacity utilization increased with growing demand and limited supply addition during the year. Overall, the business achieved its highest ever PAT production. With a focus on enhancing profitability, the business commercialized new VAPs in both BOPET and BOPP and significantly increased the sale of high-impact VAPs. Our overseas operations improved this year, driven by better performance from our Hungary unit. On the CapEx front, the Board approved the establishment of a new manufacturing facility for the BOPP-PE film line in Indore during the year. This project enables us to expand our existing BOPP substrate and VAP offerings and explore the innovative polyolefin BOPE substrate. Furthermore, it aligns seamlessly with our sustainability goals as polyolefin substrates like BOPP and BOPE are recognized for the eco-friendliness attributed to the mono family advantage and recyclability. The estimated cost for this venture is INR 445 crores with operations expected to commence in approximately 25 months from the date of approval. Work on all upcoming projects, namely the capacitor-grade BOPP Film, BOPP-PE Film and CPP line in India is progressing as to schedule. The business adheres to its philosophy of easy to do business with, focused on serving customers effectively every day. Sustainability remains a top priority and is integrated into all our operations. The business is strengthening its portfolio of sustainable product offerings, including products for mono-family structures, BILAM structures and PCR-based films. SRF has completed its registration process for SEZ and DTA units under relevant categories to comply with the plastic waste management rules, efforts to reduce the carbon footprint, including increasing the use of solar power and adopting various energy-efficient initiatives in global manufacturing plants. Going forward, SRF's primary objective will focus on significantly increasing sales of high-impact products within BOPP and BOPET through the commissioning of new downstream assets, including offline coating machines in India and metallizers in Thailand and India. Maximizing profitability of the aluminum foil business will be a key area of concentration for the upcoming financial year. With antidumping duty being levied in cheap Chinese imports, we are better placed to increase domestic pricing going forward. Besides that, we will also leverage our overseas relationships to enhance sale of aluminum foil. We will maintain our commitment to various free sustainability initiatives guided by the 3R approach, reduce, reuse and recycle. The vertical ramp-up of the newly acquired CPP line during the year will enhance our sustainable product offerings to customers, leveraging the advantages of mono-family production. Additionally, ensuring the smooth commissioning and scaling up of the capacitor-grade BOPP Film line will be a priority through the year. Moving to our Technical Textiles Business. In financial year '25, the Technical Textiles Business recorded revenue of INR 2,029 crores. However, the performance was adversely impacted due to weakness in Belting Fabrics. During the year, Technical Textiles Business expanded sales in nylon 66 and PTCF products and consolidated its customer base in Belting Fabrics. Despite facing margin pressure due to low-cost imports and lactam price fluctuations, SRF maintained its share in the flat N6 TCF market. Demand for Belting Fabrics was lower compared to the previous year due to delays in government spending and lower conveyor belt exports. Cheap imports from China affected the segment margins during the year. During quarter -- financial year '25, we successfully commissioned the full BF capacity expansion. Throughout the year, PIY demand remained strong with geotextile and seatbelts being key drivers, and the segment performed well compared to the previous year with full capacity utilization. In terms of sustainability, the business increased its share of renewable power. In financial year '26, markets are expected to remain moderate and margins will likely be under pressure due to cheap imports from China. Overall, the Technical Textile Business is expected to deliver a similar performance to financial year '25 with a focus on fully utilizing capacities, implementing cost optimization measures and offering premium and value-added products in building fabrics. In other businesses, the Coated and Laminated Fabrics business reported revenues of INR 428 crores. SRF retained its market leadership in Coated Fabrics, overcoming weak demand for food-grade liners with increased sales of other value-added products. The business is expanding textile capacity with new looms and a warper set to boost profitability next year. Laminated Fabrics ramped up its new hot lamination machine, but faced challenges due to the minimum import price of Chinese knitted fabric. To address this, the business will produce its own knitted fabric with new knitting machines expected to be operational in the first quarter of the new financial year. Going forward, we anticipate strong demand for both Coated and Laminated Fabrics. Coated Fabrics will focus on ramping up new looms in the warper, expanding its VAP portfolio and commercializing high-tensile strength Coated Fabrics. And Laminated Fabrics will aim to fully utilize its fabric knitting machines and lamination machines. As far as ESG is concerned, corporate citizenship and sustainability are integral components of our business strategy. This focus ensures effective resource optimization and meaningful contributions to the circular economy. At SRF, we uphold a high level of sustainability disclosure, enabling us to identify and measure ESG risk accurately and develop a comprehensive long-term plan for continual improvement in this area. Our dedication to sustainability has received international recognition. The SRF facilities located in Gummidipoondi and Viralimalai in Tamil Nadu were awarded a Bronze Medal for financial year '25 by EcoVadis, one of the most esteemed global business sustainability rating agencies. Further information on our ESG journey will be available in our Annual Report. On the SRF Foundation, we believe in the transformative part of education and are deeply committed to making a meaningful impact on the lives of last-mile learners. Our corporate social responsibility initiatives are designed to enhance educational access and quality, ensuring that every child can thrive. In financial year '25, we witnessed remarkable growth in our education programs, driven by unwavering dedication to transforming government schools into model schools. These efforts encompass improvements in infrastructure, digital integration, academic enrichment and school leadership, creating an environment where students can flourish. We're proud to share that the initiatives currently touch the lives of 190,000 students across 490 government schools in 34 regions spanning 13 states and 1 union territory. Our rural education programs have empowered over 2,700 teachers and 490 headmasters with the skills and resources they need to inspire and educate the next generation. In addition, financial year '25 marked a significant milestone of the laying of the foundation stone for the SRF School, Bharuch. This new institution will address education needs of the community near the SRF Dahej facility, further extending our commitment to nurturing young minds. Together, we're building a brighter future, one where every child has a chance to learn, grow and succeed. Concluding my speech, our balance sheet remains strong and with global interest rates trending downward, we expect the benefit of reduced borrowing costs in financial year '26. We are committed to strategic investments for long-term growth. Reflecting on financial year '25, I'm extremely proud of our team's resilience and dedication. Despite uncertainties surrounding tariffs and the VUCA environment, we believe financial year '26 will surpass financial year '25 for the Chemicals Business and the company overall. We're dedicated to driving growth and enhancing stakeholder value in the next fiscal year. While we have done exceptionally well in the fourth quarter, I would like to remind our participants that we are a seasonal business. In general, our second half performance is substantially better than our first half, and I expect that trend to continue this year as well. Thank you for your support and confidence in SRF. We look forward to your continued support.

[Operator Instructions] The first question is from the line of Arjun Khanna from Kotak Mutual Fund.

Congratulations on a great set of numbers. Sir, the first question is on the CapEx. While we did indicate in the opening remarks that we have done debottlenecking. But if I look at CapEx this year, it's been roughly INR 1,230 crores. And if I look at '23, almost INR 2,800 crores and INR 2,200 crores in FY '24. So just wanted to understand given that the CapEx is lower for '25, are we going to see substantially higher CapEx in FY '26? You have a number of projects such as fluoropolymers, et cetera, coming online. So just wanted a sense on that front.

Thank you, Arjun, for your question. You are absolutely right. We had said this earlier as well that the CapEx for FY '25 is going to be slightly lower. That's something that has panned out. Although there have been a lot of debottlenecking projects, as we said in the initial positioning of this, that there were a lot of debottlenecking projects that we have done this year. So to that extent, there is a lot of new capacity that has got created and added here. From an FY '26 perspective, in our current estimates, we believe CapEx for FY '26 will probably be in the range of INR 2,200 crores, INR 2,300 crores. So that's our current estimate of it. We have been judicious about CapEx going forward. But to a certain extent, yes, the intensity of the CapEx will increase for FY '26. I hope that answers it, Arjun.

Secondly, sir, if one looks at the Specialty Chemicals side, while we did mention we are looking at overall Chemical growth of 20%. If you could, now that we are at the end of the year, give us a sense how did Specialty Chemicals do for FY '25? And what would be the mix between pharma and agrochemical at this point in time? The second part to that question is, we have talked about intermediate prices improving. At the same time, we have talked about pricing pressure from China. So if you could clarify these points, sir.

So just to get on the annual thing, last year, the sales for our Chemicals Business overall were roughly about INR 6,300 crores. On that side, roughly about INR 3,700 crores was Specialty Chemicals Business and INR 2,600 crores was Fluorochemicals Business. This year, roughly the sales are in the range of INR 6,700 crores, out of which roughly about INR 3,850 crores is Specialty Chemicals Business and INR 2,850 crores being the Fluorochemical Business. So share between them has remained in the range of, let's say, 57%, 58% for the Specialty Chemicals Business and 40% to 43% for the Fluorochemicals Business. So that's the kind of breakup. Now to answer your second part of the question in terms of saying that pricing pressure on -- through China and various other things, this is essentially also something that we saw in the first year of -- let's say, in the earlier part of the year, H1. To a certain extent, that pricing pressure has come down a bit. We've seen both lower pricing pressure as well as better volume offtake coming through. Again, FY '26 also, we believe that there will be -- there is a positive traction that we are seeing from agrochemical customers, while in some pockets there are probably slightly lower positions that are playing out. But we are fairly hopeful that 20% plus growth in the overall Chemicals Business should be achievable going forward.

As for share of pharma.

Share of pharma, roughly about 6% to 7% from a Specialty Chemicals Business perspective.

Just a clarification on the opening remarks. We mentioned we have done debottlenecking and possibly 30% increased capacity. That's for the Specialty side of it, Fluorochemicals? Or should we read that INR 6,700 crores of revenue potentially can have INR 2,000 more crores of revenue if demand permits over a period of time?

Don't do the math on it, Arjun. What it referred to was Specialty Chemicals Business only rather than Fluorochemicals. It was being talked about in the same vein when we were talking about the Specialty Chemicals.

The next question is from the line of Naushad Chaudhary from Aditya Birla.

Congrats on a good set of numbers. One question on fluoropolymer business. I just wanted you to touch upon this in terms of how this business is doing, acceptance of our specialty polymer and how much capital so far we have deployed here? And how do you see this in the next 2, 3 years, how this business should look like?

So 2, 3 questions going together, Naushad. Let me try and answer each one of them. How is this business doing? I think we have improved on the domestic side in the fluoropolymers business. There has been better intensity that we've seen on the fluoropolymers business on fine cut and, let's say, the free flow grades of it. Export seeding of the fluoropolymers business has also started, and we are starting to see some traction on that side as well. Like we said in the opening remarks, I think we will see a positive on the fluoropolymers business during FY '26 coming through. Also, from a futuristic perspective, we've already announced CapEx of roughly, I don't remember, INR 550 crores or so in that range, for 3 new fluoropolymers PVDF, FEP and FKM. Some of those will get commercialized and completed out during FY '26. So from FY '27 onwards, we should see more fluoropolymer sales coming through. I think those were the questions. If I missed out anything, please do repeat.

The next question is from the line of Nitesh Dhoot from Anand Rathi.

Congratulations on a good set of numbers, sir. So my first question is on the India-U.K. FTA. If you could please throw some light.

I'm not able to hear you clearly.

One second. I hope it is better now.

Sure.

So sir, my question was on the India-U.K. FTA. If you could please throw some light on what kind of benefits would accrue to us business-wise?

Nitesh, to be frank about it, when we look at our European sales, sales to U.K. are very low. So I don't think there is a large positive or a negative impact in that sense from the India-U.K. FTA.

And sir, just one question on the mix of domestic and exports for the Chemicals segment.

Let me do that separately for the Fluorochemicals and the Specialty Chemicals Business. Specialty Chemicals Business, I would say roughly in the range of about 70%, 71% is exports and the rest is domestic. For Fluorochemicals, 60%-40%. 60% is domestic, right? So 60%-40% is the domestic versus export.

The next question is from the line of Sanjesh Jain from ICICI Securities.

Sir, first question on the refrigerant gas. What was the utilization last year now that we have started our AHF plant, we should be using 100% in FY '26. Will that be a fair assumption?

Simple answer to that is yes. From an FY '26 perspective, right? From an overall FY '25 perspective, we will probably roughly in the range of about 70% because 32% capacity utilization was slightly lower than what we had initially planned because of the AHF thing.

And from the pricing perspective, now that we see the inventory level in U.S. coming down, which adds to the demand, how should we see pricing for the HFC in FY '26? Should we hold on to the pricing of FY '25 exit?

Look, each gas will play out differently to be very frank, between 32, 134a and 125. I think to a certain extent, for 32, our pricing has to still play out fully. Whatever we've seen as exit pricing in FY '25, I think that should be -- we should be able to sustain that and maybe slightly better on it going forward from a 32 perspective. On 134a, I think it should remain flat to slight positive only. And 125, I think, again, should remain flat from where we have seen it exiting in FY '25.

How should we see at R22 now that there is a 50% cut starting from 1st Jan, '25? We should be using the remaining R32 in our PTFE plant? Have you started that?

R22 has always been used for the PTFE, Sanjesh. There is no -- as PTFE capacities grow out, as we see full utilization of PTFE capacity, R22's usage for PTFE is going to increase only. So there is no doubt on that. But today, I think pricing is pretty decent from a refrigerant -- from a market perspective. We have seen slightly increase in pricing on the 22 side as well. On 22's utilization, we have seen -- we will see, obviously, positive in terms of R22's utilization, not just for PTFE for other fluoropolymers that will come through over a period of time and for the Specialty Chemicals Business also.

One last question on the Specialty side, when we speak of 20%, I assume that we are looking at 20% growth in Specialty as well. Are we seeing this kind of order book growth coming in because BASF first results showed a quite muted volume growth, what they reported a couple of weeks back. How does our order book look like?

Look, to a certain extent, when we are giving you a 20% guidance, we are -- we have a fairly good confidence in terms of where the order book is. Now, if you ask me that do I have a 100% visibility of the order book, I would probably say that the visibility is probably in the 70% to 80% range. There will be countermeasures that we will implement, but we have a fairly good sense of how that 20% number is going to be achieved going forward, Sanjesh.

The next question is from the line of Madhav from Fidelity.

First question on the ref gas business. I think, sir, like you said, we've not seen the full benefit of R32 play out yet. Is it fair understanding that in both the export and the domestic markets for us, the R32 benefits will show up more in FY '26, especially exports where it seems like -- I don't know, if we have certain contracts which reset over a few months or a few quarters. So the full benefit, especially on export side reflects more in FY '26. Is that the right way to think?

The way we would look at it, Madhav, is that we will have a better volume utilization from an FY '26 perspective, given the fact that we should be able to produce more of 32, given AHF has now -- the issues with AHF have now kind of got sorted out. So that's a positive. From a pricing perspective, we believe current pricing should sustain and probably slightly higher going forward. But exact number is very difficult to be able to say. What I can only tell you is, let's say, the exit rates for March '25 were probably higher than what we saw as averages for the entire year.

But our export prices for R32 are playing catch-up to our current domestic prices? Like is that moving with a lag, the increase that we are seeing?

Again, there is a difference in seasonality between export volumes as well as domestic volumes. So yes, they will hopefully catch up with the lag is what I believe firmly.

And sir, the second question on the Specialty Chemical side, like from our 6, 7 AI launches, which we are speaking about, could you just give us an update in terms of how many of them may are already launched or will be launched in FY '26? And how we could see ramp-up in the next 1 or 2 years from these newer AIs?

Look, I don't think that position has changed very much, Madhav. We have always said that FY '26, we will see at least 2 to 3 more towards this H2 is when they will come through. We will give you an update on some of these as we start to see a pickup on volumes. When we look at it from an FY '25 perspective, the key AI still remains as P32 only, right? We have seen some new AIs come through over the financial year. There have been some positive developments that have come through. It will -- the ramp-up will continuously depend on the customer requirements going forward. Some of these are patented products. And as they launch in various geographies, we will start to see a pickup in volume of these. Exact timing of this is very difficult to be able to judge. But we are fairly confident that in H2, there will be some positive traction going forward.

And just on the CapEx of INR 2,200 crores, INR 2,300 crores, could you split it into the different segments? And within Chemicals, how much would go into Spec Chem versus like fluoropolymers, et cetera?

Madhav, I will have to come back to you separately on this. I will probably -- see, the way it is happening, Madhav is, today, what we are also implementing is Specialty Chemicals -- is Fluorochemicals on the fourth-gen gases. We are also implementing the fluoropolymer project on the Chemical side. So those are the larger projects that are being implemented. From a Packaging Film perspective, BOPP as well as the capacitor grade line and the CPP line are being implemented. So my sense is that from an FY '26 perspective, this will probably be 65%, 70% on the Chemical side and the balance will probably be the Packaging Film and Technical Textile. So that's how the split should be. But I will re-vouch that number and come back to you.

The next question is from the line of Pankaj from Ikigai Asset Manager.

Congratulations on great set of results. Rather than quarterly, just wanted to get a sense on how will the shape look like of the Chemical Business in the next 3 years. This year, we ended at about INR 6,700 crores of revenue. If you can just help us from a size and scale perspective, one on Chemical. And overall company, what is the medium-term thought process Ashishji and Rahulji.

Pankaj, Ashish is left, I am the only one answering questions. So I am to take all the brunt that you guys can throw at me. So thank you for that. In terms of the 3-year shape, from a Chemical Business perspective, again, I think 20% plus growth going forward should be a key positioning from a Chemicals Business perspective. So let's say, we ended up with INR 6,700 crores of revenue. We will probably be, let's say, INR 11,000 crores of revenues plus in 3 years. Again, I think the split of that probably remains similar in the nature of Specialty Chemicals versus Fluorochemicals. Fluorochemicals is also implementing large projects given fluoropolymers positioning as well as on the on the new gen gases side. So in 3 years, I think some of these should have come up and become revenue yielding. So mix remaining the same. I think at 20%, 25% growth, we should probably be hitting a INR 12,000 crore number going forward.

And on the BOPP side and the Technical Textile, how will the shape of the business look like in the next couple of years?

Pankaj, again, from a Packaging Film -- or sorry, Performance Films, I will also have to get my act right here, Performance Films & Foil business. The way we will look at it, Pankaj, is that there are new capacities. I think between PPP as well as the CPP, aggregate capacity expansion of 3,000 -- 5000 -- so roughly about 50,000 tonnes of -- 50,000, 55,000 tonnes of new capacity expansion is happening. Given a similar run rate in terms of their, let's say, asset turn, that is the addition that we are looking to get in the Packaging Film Business. Obviously, when we are thinking about it, more value-added products, better realizations, high-end products, all of that will keep on taking better shape from a Packaging Films Business perspective. But maybe I can come back to you separately in terms of a 3-year positioning of where this is likely to end up at.

The next question is from the line of Rohit Nagraj from B&K Securities.

Congrats on strong Q4 and FY '25. First question is in terms of the EBIT margin that we have done for FY '25, given that you have explicitly said that there was pricing pressure on the Specialty Chemicals front. So is it safe to assume that the margin expansion is predominantly from ref gas volume growth as well as the pricing increase that has happened during the course of the year?

Rohit, no doubt on that. I would say from a Q4 versus Q4 perspective, we've seen margin expansion happen in the Specialty Chemicals Business also -- we have seen significant margin expansion happening in the Fluorochemical side and the ref gas side also. So those are 2 positives. But when you think about it from an overall perspective, I think we had said between 25% to 26%, plus/minus 2% should be the range that we will continue to look at. I think that story remains pretty much intact, Rohit.

And second, just a minor question that the margins that we have reported for the Chemical Business, about 25% EBIT margins for FY '25, is it safe to assume that we will be able to at least maintain and better it in FY '26 given that conditions probably will further improve from the industry perspective?

Rohit again, like I said, I think the story remains intact between that 25%, 26% plus/minus 2%, even from an FY '26 perspective with larger volumes will be the story that will play out. Therefore, both from a revenue perspective and an overall volume perspective, we will start to see bigger positives going forward in the Chemicals Business. When we think about overall margins, I think even a 25%, 26% margin -- EBIT margin with a large depreciation is a pretty decent number going forward, Rohit. I think the targeting on that side remains in that range only, Rohit.

The next question is from the line of Meet Vora from Emkay Global.

So we have mentioned in the PPT that India and Middle East will drive future growth for refrigerant gases. So is it because that there is a baseline period in both these geographies, and we'll be pushing, say, more volumes in these markets to gain more quota? Because I don't think we are strategically moving away from U.S. as a market. Just wanted to get your sense there.

Okay. So the way we look at it, Meet, and I think you are right in terms of understanding this. Yes, there will be the quota position that plays out in calendar '24, '25, '26 in all of these -- in these 2 geographies, India and Middle East as well. The position that we are saying is that we have the capability, the capacity for supplying to these markets, and that's what will play out here. We are not strategically moving away from the U.S. market. That is also the right comment. The only point is that overall U.S. market, while inventories are low today, and we will probably see some inventory filling that will happen going forward. The other position also is that U.S. by law or by Montreal Protocol will have a lower HFC need. And therefore, we will have to kind of balance it out in terms of how we are thinking about that market. Given where our capacity is, I think we are fairly open to either export or sell in the domestic market, given where price positions are today, Meet.

Understood, sir. Perfect. And just one more question. I just wanted to get your sense on H1 on a Y-o-Y basis. So will it be better given that now ref gas volumes will grow because of our AHF plant, which is there now in place? And also, do we expect Spec Chem to grow Y-o-Y in H1?

You're talking about H1 FY '26?

Yes. On a Y-o-Y basis.

It's probably too early to comment on that, Meet. But thematically, we believe that volumes will be better, both for Specialty Chemicals and for the Fluorochemicals Business. But I think thematically is what we can talk about rather than pure and exact numbers around it.

The next question is from the line of Vivek Rajamani from Morgan Stanley.

Congratulations on a very strong set of results. The question was on Specialty Chemicals, the improvement that you are going to see in fiscal '26, would it be fair to say, it's going to be driven largely by increased volumes and cost efficiencies? Or do you think there could also be a positive mix change either from new products or some pricing improvement? Just wanted to get your thoughts on what's driving the -- what will be the biggest driver of the improvement in fiscal '26?

I think it is a combination of both rather than one or the other. We will probably see better volumes for some of the legacy products. Newer products that have started to ramp up in FY '25 should also see better volumes. So there is a volume positive that will come in, in the Specialty Chemicals Business here. During H1, we had also seen a lot of pricing pressure, while some of that we saw lower -- being lower in FY, let's say, Q4 FY '26 -- FY '25, sorry, we will probably start to see some of that positive coming through as well. Again, like I said in an answer to a previous question, I think the AI positions will also start to play out during FY '26, more towards H2.

Sure, sir. And just one clarification with respect to the improvement that you're foreseeing in fiscal '26, that already assumes the 2, 3 new AIs, not from your perspective, but from the customer registration perspective, correct? Or do you think that would be a significant upside risk if some of those things fall into place?

So again, we are assuming some volumes on the AI side here. I can't tell you exact numbers on it. But yes, there are some volumes that we are assuming. Some of these products have already been registered. It's now a question of when the customer starts to launch them and provide more volumes into the market, which will depend on his own business plan. Based on which, we will start to see volumes on that side.

But at least for fiscal '26, you'll be able to meet them with the existing capacities that you have in place. That would be a fair statement, correct?

I don't think capacity today is too much of a challenge, Vivek.

The next question is from the line of Keyur Pandya from ICICI Prudential Life Insurance.

Congratulations to the team for strong results. Sir, a question on the ref gas side, so the new R32 capacity, what is the utilization for full FY '25? That is first question. And second is either because of -- sorry?

Capacity utilization of HFCs is what you talked about for FY '26?

Yes, yes. The new R32 capacity or overall HFC also. So that is first question. And second, on the pricing side, so either because of the, say, news of upcoming newer supplies for R32 or relatively weaker, say, summer season in India or for any other reason, are you seeing any signs of, say, prices coming down or any moderation? So second question on the pricing, that is it.

So from a capacity utilization perspective, I think given where AHF positions were during FY '25, I think some of that has got better significantly. And therefore, we believe that during FY '26, capacity utilization should go up very, very significantly, maybe from a current 70% utilization on an average to about 85%, 90%, 95% utilization is where we should end up being from an HFC perspective. Again, on the pricing front of HFCs, even with new capacities that have been talked about, I think they don't come in, in early part of the FY '26, probably towards December is some people that talked about. And those plants will also have to get stabilized. Also from an overall pricing perspective, I don't see a big challenge or saying that there is a likely reduction -- significant reduction in the pricing of HFCs and more specifically 32 happening. That doesn't look like, Keyur.

The next question is from the line of Abhijit Akella from Kotak Securities.

Sir, just on the comment regarding the fact that maybe 1H is expected to be a little bit softer than 2H, if I understood it correctly. So just I was hoping to get your perspective on what are the factors that sort of lead us to believe that this might be the trend?

Again, Abhijit, you have to look at the historical trends of this. Go back to FY '20, '21, even probably other than FY '23, where it was kind of flattish. Seasonality does play out a factor from our overall Chemical Business and an overall business perspective also. So what we were tending to say here is that, that seasonality still remains. That seasonality has not gone away. We've always seen much higher sales in the Fluorochemicals Business happening towards Q4 and Q1, right? So that seasonality remains. Even when we think about the Specialty Chemicals Business from procurement trends, when we think about it from the past, we've seen always Q3 and Q4 to be higher than Q1 and Q2. So I think the reference here is -- reference point here is more towards the seasonality that we've seen in the business rather than anything else, Abhijit.

So just to clarify, in fiscal '25, we saw a mix of about 42-58 between 1H and 2H. So we can broadly go with a similar kind of trend for next year as well?

See, what I can tell you, Abhijit, when you compare it with CPLY, corresponding period last year, you will see certain positive trends. But the H1, H2 positioning between, let's say, 60-40 or 65-35, probably 55-45 remains overall.

And just one last thing, if possible. Possible to give us some rough sense of how much was revenue from the new projects of PTFE and aluminum foil for the full year?

I don't have that number readily available with me. I'll check and come back, Abhijit.

The next question is from the line of Krishan Parwani from JM Financial.

Congrats on strong set of numbers. Firstly, just a clarification. So this INR 2,850 crores of Fluorochemicals revenue, does that include the industrial chemicals? And what would be the number?

No, I didn't get the question. Could you repeat that, please?

So this INR 2,850 crores of Fluorochemicals revenue in FY '25, does that include the industrial chemicals revenue also?

Yes, yes. FCB includes all industrial chemicals, all of ref gases, 22 HFCs and HCFCs and CMS as well and fluoropolymers to a certain extent as well.

So just wanted to understand what was the industrial chemical revenue for the full year?

No, I don't give out breakups of each of those revenue positions because they are subsets and they are interlinked with each other. So this is all that you will get, Krishan.

No problem. Because I think in your Annual Report, you did give out, so I thought you might have it handy. No problem. We'll wait for the Annual Report.

To the extent, we have to give out in the Annual Report as well. The reason for that also is because there is a certain requirement by law to be able to give those out, right? Those are also to a certain extent, I would say, combined up in large numbers. So -- but we don't give out exact numbers here, Krishan.

No problem, sir. And secondly, from a 2 to 3 years outlook or how much have we spent on new AI capacities? And when do you expect these capacities to be fully ramped up? Just a 3 to 4 years outlook, if you could, please?

Look, as of now, from an AI capacity perspective, there has been -- what we are doing today is doing it from our multipurpose plants. Various blocks have been created within those multipurpose plants to be able to manage those AI requirements. And we have a fair sense in terms of how those AI requirements will pan out, and we should be able to meet them up from our own -- from our existing multipurpose plants from the agrochemical or the AI intermediate plants that we have kind of put up. As we see larger demand, as we see higher volumes, as we see consistent, we will look to put up newer capacities on that side. And obviously, those will get announced.

The next question is from the line of Dhruv Muchhal from HDFC AMC.

Sir, just on this U.S.-China tariff issue, are you seeing some any change in customer engagements for this region, both positive...

Yes, we are seeing lots of changes in customer engagement, Dhruv, right? And that customer engagement changes on a daily basis. Tonight there is 150% tariff. The next night, there is 30% tariff. Actually, to be very frank about it, Dhruv, there is no clarity in terms of how these tariffs will pan out. I think by end of June, early or mid of July is when all of these positions will kind of play out in terms of what tariffs have been imposed on what entities. Our belief today still remains that the tariffs that will come through on India -- on India versus China, there will be a differential tariff. And as long as there is a differential tariff, we should be in good shape. That's how we would probably budget ourselves out in respect to these tariffs going forward.

No, I'm wondering, are customers also thinking similarly and thinking of supply chain changes in favor of India and you also. So no comment for now, nothing changes?

Yes, there is a 90-day window, they will end up saying that supply me as much as you can, right? So that 90-day window will also expire at a certain point in time. We have not seen due to tariffs, a large change happening in, let's say, customer behavior.

Next question is from the line of Archit Joshi from Nuvama Institutional Equities.

So I just had one question, rather a clarification from a comment that I'm reading from the PPT, saying that innovators are expected to introduce more complex and downstream active ingredients. So I was just wondering how one should read this. Is this the global R&D spend of innovators are going up? Or these opportunities are by any chance presented to us in the form of any contract development opportunities?

Look, the thematic here is outsourcing as a key thematic from global majors, right? Now what is going to end up -- what will end up happening is some of their existing products, some of their future products, they are saying manufacturing in Europe is becoming more difficult. And because of this, there is -- they are looking at outsourcing opportunities, which is a clear trend that we are seeing. Whether they are, let's say, from a -- whether their overall R&D spend is going up or not, I really am unable to comment on that, Archit.

The next question is from the line of Jason Soans from IDBI Capital.

My first question, Rahulji, just pertains to when we look at it from a subsidiaries perspective, of course, we have the Packaging Films there. Now we have talked in a loss of around INR 173 million there for '25. Just wanted to know from an overall perspective going '26 and '27, is there a possibility that we can be profitable in that -- in the subsidiaries business, if I just take subsidiaries or the Packaging Films business?

What you are doing here, Jason, is you're calculating it on a PAT on PAT basis or PBT on PBT basis?

Yes, sir. PAT -- so basically, it's a consol minus standalone.

PAT, profit after tax.

Yes. That's right. That's right. Yes.

Yes. Let's understand the reason for it. I think the way we look at it is, largely it is Packaging Films business. When we think about it from an overall basis, I think Hungary because of the fact that they were going through a tough time, has ended up being probably at a PAT loss. I think as Hungary improves, we should start to see positive PAT contribution from an overall -- on an overall basis within, let's say, FY '26 itself. And the other one, obviously, is Altech, which is the aluminum foil. So 2 of these, once they start to show a positive positioning, I think we will start to see a positive PAT between FY '25 and FY '26 when you compare stand-alone versus consolidated also. On the EBITDA side, largely positive going forward as well. And I would say for FY '25 also, EBITDA was a large positive when we aggregate all of the subsidiary entities also.

Sir, just next question is what I understand, obviously, there is a consensus that probably agchem is still on an improving trajectory or overall, it's a kind of subdued environment there, but on an improving trajectory. Now you have mentioned in your PPT that you have seen good traction for your new products as well as certain key agrochemical intermediates. Now I just wanted to know from a directional sense, I mean, of course, there are so many intermediates in the market, I mean, which -- on your product offerings. Just wanted to understand from vis-a-vis the competition do, are we better at intermediates? Do you think we can buck this trend and we can have better growth as compared to competition, especially for the Spec Chem business, yes?

Look, I think 2 positives and one negative probably, right? Given our R&D, given our, let's say, relationships with global customers, given our current product profile, given the number of products that we are currently in stage of developing, I think the first element should pan out positively in our favor. The negative element of it also is that we are at, let's say, almost a INR 4,000 crore turnover right? And a 20% on INR 4,000 crores also means, say, INR 800 crores of additional revenue that we have to generate. So there are positives around it and negatives. We will have to go through and understand how we take more positives than negatives.

And just finally, I just wanted to ask, sir, I mean, let's get spoken about Dymel, which is the pharma propellant. Just wanted to understand, sir, not asking you for an absolute value or something I understand. But how is the prospects for that looking? I'm sure it's an integral part of your Fluorochemicals Business. So just wanted to know how is the prospects for this pharma propellant or Dymel looking ahead?

Two things that you will have to understand. 134a pharma is a high GWP product relative to 32, right? There is no time line with respect to Dymel or the propellant or, let's say, the 134a pharma piece. Overall, I think from a Dymel perspective, we are roughly at an 80% market share domestically from -- for the Dymel as a product and propellant. Going forward, we believe that -- so 2 positives. One, there is no time line in terms of this coming down on an overall utilization perspective. The product in itself is also seeing growth going forward. So I think it should do well, but remain probably a smaller number from our overall fluorochemical space. So no new expansions can happen. But yes, capacity utilization of 100%, probably at 80% today to be achieved going forward is certainly possible. Certain debottlenecking might happen over a period of time as we see more traction on that side. But it is still a product that is doing phenomenally well from our overall perspective.

Okay. And just one thing...

Sorry to interrupt, sir, but may I request you to rejoin the...

Sure.

I think we will have to wind this up, but one last question, please.

So the next question is from the line of Anirudh Shetty from Solidarity Advisors Private Limited.

My question was answered earlier.

Thank you.

Thank you very much. Ladies and gentlemen, we'll take that as the last question. I would now like to hand the conference over to the management for closing comments.

Thank you very much for being on the call. We hope we have answered some of your questions, if not all. We are happy to connect for any additional questions that you have. Thank you, and best of luck.

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