Ladies and gentlemen, good day and welcome to DCM Shriram Limited Q3 FY 2025 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shruti Joshi from CDR India. Thank you, and over to you, Ms. Joshi. Thank you, Nirav. Good afternoon and welcome to DCM Shriram Limited Q3 FY 2025 Earnings Conference Call. Today we have with us Mr. Ajay Shriram, Chairman and Senior Managing Director, Mr. Ajit Shriram, Joint Managing Director, Mr. Aditya Shriram, Deputy Managing Director, and Mr. Amit Agarwal, Group CFO of the company. We shall commence with remarks from Mr. Ajay Shriram and Mr. Ajit Shriram. Members of the audience will get an opportunity to post their queries to the management following these comments during the interactive question-and-answer session. Before we begin, please note that some of the statements made on today's call could be forward-looking in nature, and a note to that effect has been included in the conference call invitation that has been circulated earlier and is also available on the stock exchange website. I would now like to invite Mr. Ajay Shriram to give us a brief overview. Over to you, sir. Thank you, Shruti. Good afternoon, ladies and gentlemen, and a very warm welcome to all of you. We would like to wish all of you and your families a very happy and prosperous New Year. To start with, I shall share my thoughts on the industry and business dynamics, followed by Ajay will share the views on the financial performance. Post that, we would like to hear your viewpoints as well. The geopolitical environment is leading to economic uncertainties on various fronts. This is impacting international trade, investment, and consumption patterns. We expect global growth to moderate and monetary policies to become more accommodative. While we expect growth trends to be led by Asia, with India playing a pivotal role, there may be challenges on account of trade policies and inflation. We, as an organization, must navigate this challenging landscape, and our endeavor is to build an agile business to handle these evolving dynamics along with seeking opportunities for growth. Our business has seen a series of well-planned initiatives to strengthen capacities in core segments towards value creation and integration, both downstream and upstream. This remains a focal point for our growth strategy. Healthy balance sheets and cash flows continue to give us the confidence to pursue these growth initiatives. We are focused on strengthening sustainability across the organization with continuous reduction in carbon footprint and water conservation. Over the next 15 months, we shall be adding about 74 MW installed capacity of renewable energy for captive use. Our efforts have led to recognition among the top 7% of the 523 global chemical companies for ESG performance in the S&P Global Corporate Sustainability Assessment 2024. I will now turn to discussion on various industry dynamics across our various businesses. First, I'll pick up chemicals. At the beginning of the quarter, there were apprehensions of supply constraints due to a cyclone in the U.S. and increased demand in China led by fiscal stimulus. This led to an increase in international prices. However, now the prices have started correcting, with demand-supply adequately balanced. Caustic soda capacities in India are currently operating at a rate of around 80%, and this is resulting in an oversupply of chlorine in the market and therefore suboptimal ECUs. However, they have improved during the quarter. India continues to be a net exporter of caustics, which is a positive. Our newly commissioned projects are meeting performance norms and ramping up further steadily. As of late, hydrogen peroxide is operating at about 80% capacity utilization, and caustic soda post-expansion is operating at about 70%. There is an oversupply of hydrogen peroxide in the market. However, the caustic soda players are at a distinct cost advantage. ECH plant commissioning has taken more than anticipated time due to a technical issue. We are confident of starting the trial run in Q4 financial year 25. The project work on adding aluminum chloride capacity and the new calcium chloride plant at Bharuch that we announced in the last quarter has taken off, and our team is working to commission these as per the stated timelines. Our efforts towards cost efficiency continue, and we are working towards further optimizing our power costs. We have tied up another 6.6 MW of green power, and are expecting its inflow from the end of this financial year. We are also working towards further optimizing energy costs in our existing power plants. Global demand for PVC continues to be sluggish. U.S. prices of PVC remain weak, owing to slower demand in downstream usage, shorter working schedules in December, and higher interest rates that continue to impact construction. PVC pricing in Asia stayed soft on the back of surplus production and higher inventories during the quarter. Domestic PVC demand has picked up on account of an increase in agriculture and construction activities. This demand is estimated to have grown at approximately 10% during the nine-month period. The majority share of this demand was fulfilled by imports. China has continued dumping materials into India. In this context, the notification from the Finance Ministry on imposition of anti-dumping duties on several countries, including China, Korea, and the U.S., is awaited. Sugar and Ethanol: Global sugar balance for sugar season 2024-2025 has shifted to a deficit of 0.7 million metric tons due to a downgrade revision in global production. The Indian sugar season 2024-2025 is expected to end with a stock of 7.3 million metric tons. The production estimate is 29.3 million metric tons after a diversion of 4 million metric tons for ethanol production. Consumption is estimated at 29 million metric tons. Exports of 1 million metric tons have been permitted by the government, which is a positive step for the industry. Simultaneously, the industry is also pushing to increase the MSP of sugar. The current prices are at INR 4,000 per quintal of refined sugar. However, this should increase by another INR 2,300 per kg to enable reasonable margins in the business. On the ethanol front, for the current season, OMC has floated tenders for a supply of 916 crore liters of ethanol, targeting a blending of 18%. As of December 15, 2024, ethanol blending in petrol reached 15.4%. Margins for producers are suboptimal given higher feedstock prices. Recently, the government allowed FCI for sale of sugar to produce ethanol. This is positive for this segment. The sugar expansion and co-generation unit got operationalized in this quarter, and the compressed biogas project will be commissioned by Q4 financial year 2025. Fenesta B uilding Systems. The business continues to make efforts towards increasing penetration of the current range of products and enhancing the product portfolio by setting up newer revenue platforms. By strategically aligning our efforts with market demands, we aim to optimize the customer experience along with business growth. In line with this thought, the board has given approval to invest up to INR 65 crores in the fast-growing hardware business, which will enable backward integration, better customer experience, as well as develop into a new revenue platform. Our project to establish a new aluminum extrusion facility is progressing as per schedule. As a result of these initiatives, the business will be better positioned towards becoming a more holistic player in the building materials space and drive sustained growth. Moving on, the agri-inputs business portfolio comprises of Shriram Farm Solutions fertilizers and the Bioseed businesses. First, Shriram Farm Solutions: The business has once again achieved double-digit growth and continues to contribute significantly to the top line and bottom line of the company. The growth is driven by volumes across the business verticals in general and Research Wheat in particular, where SFS continues to consolidate its leadership position. Looking ahead, we remain optimistic about continued growth in coming quarters, buoyed by robust demand for rabi crops, increasing farmer adoption of our innovative solutions, and ongoing advances in our product pipeline based on the principle of better science. Fertilizer: The urea industry continues to be stable, with gas prices inching lower. By focusing on the areas of energy efficiency, maximizing production capacity, and controlling fixed expenses, the company aims to enhance operational and financial performance. Bioseed: The business is on a promising turnaround journey, bolstered by new and better hybrid seeds across product categories and a robust pipeline of products for future growth. There was increased acreage of corn across key states due to higher crop prices driven by maize's ethanol push. This, along with paddy, has driven the growth for the first nine months of this year. I'll now request Ajit to provide the financial performance. Ajit, over to you. Thank you. Good evening, everyone, and wishing you all a very happy New Year. I'll now take you through the financial highlights of Q3 FY 2025. The net revenues, net of excise duty for Q3 FY 2025, were at INR 3,367 crores versus INR 3,035 crores in Q3 FY 2024. An increase of 11% year-on-year, driven by growth across chloro-vinyl, SFS, and Bioseed businesses. PBDIT for Q3 FY 2025 was at INR 537 crores versus INR 480 crores last year, an increase of 12% year-on-year. Coming to the businesses, chemicals: The business saw an increase in revenue of 35% year-on-year, led by caustic soda volumes that were up 21% on account of the new 850 tonne capacity facility and ECUs that were up by 12%. PBDIT increased by 90%, owing to lower input prices, particularly energy prices and efficiencies from the new 120-megawatt power plant. Despite steady growth in downstream consuming industries like alumina, textile, pulp and paper, soaps and detergent, excess capacity in India is creating a pressure on product prices, especially chlorine. We have our plans in place to enhance our chlorine downstream in terms of ECH, aluminum chloride, calcium chloride, and a few more ideas. Vinyl: The vinyl business reported a growth in revenue by 26% year-on-year on account of higher volumes of PVC, as well as carbide, which is growing by 27% and 38%, respectively. Last year, there was a maintenance shutdown in the same period. PBDIT for the segment improved to INR 29 crores as against the negative INR 3 crores last year, led by lower power and carbon material costs. Commissioning of the 68 MW green energy by end of next year will reduce the carbon footprint along with better cost structure going forward. Sugar and ethanol: Sugar and ethanol businesses' revenue, net of excise duty, was flat at INR 889 crores, and the domestic volumes were lower by 6% due to low releases in the quarter, and prices of sugar were also lower by 3%. Ethanol volumes, as well as prices, were higher by 6% and 12%, respectively. PBDIT for the segment was lower at INR 113 crores as against 188 crores last year due to higher cost of production, led by a higher state-advised price, SAP, and lower recovery. Fenesta building systems: Fenesta building systems' revenue increased 4% year-on-year, led by increased volumes across segments. PBDIT for the quarter, at INR 43 crores, was similar to last year due to higher fixed expenses. These expenses are expected to remain elevated given the need to grow the existing businesses and invest in new verticals. The order book continues to be healthy. We are also excited to announce our foray into the hardware business, which will be through an acquisition to give us a head start into the segment. Shriram Farm Solutions: Shriram Farm Solutions' revenues increased by 19% year-on-year, supported by volume growth across all verticals. SFS has further strengthened its leadership position in the Research Wheat segment. PBDIT for the quarter was higher by 18% at INR 212 crores. Fertilizer: Fertilizer revenue was lower by 8% year-on-year, which is mainly attributed to the lower gas prices in the current quarter. PBDIT was at INR 29 crores as against 26 crores last year. Outstanding fertilizer subsidy was at INR 111 crores as against negative 21 crores last year. Bioseed: The Bioseed segment saw a revenue increase of 22% year-on-year, and PBDIT increased by 76%. The improvement is led by better volumes and prices in corn, wheat, paddy, and vegetable seeds. Both domestic as well as international operations contributed to the growth. The company's net debt stood at INR 867 crores as of December 31, 2024, as against 314 crores last year and INR 134 crores as of March 31, 2024. The year-on-year increase was because of capital expenditure over the last one year and a higher sugar inventory. Over March 2024, the decline is primarily because of reduction in sugar inventory. Return on capital employed for December 2024 came in slightly lower at 14% as compared to 16% for December 2023, since CapEx incurred on projects will start yielding returns in the forthcoming quarters. The board has announced an interim dividend of 180%, amounting to 56.14 crores recently. This takes the total dividend announced for the year at 280%, amounting to 87.33 crores. As this round of CapEx is nearly completion, we will advance stages of finalizing our foray in advanced materials as well as in value chain around our core businesses. That concludes my opening remarks, and I request the moderator to please open the forum for the Q&A session. Thank you. Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nirav Jimudia from Anvil Wealth. Please go ahead. Good afternoon, sir, and thanks for the opportunity. Sir, I have a few questions to ask on the chemical side. So, sir, when we analyze our ECU numbers for Q3 FY 2025 vis-à-vis of 2Q of FY 2025, our ECU was up around INR 3.50%. And if I just multiply it with our volumes of 180,000, what we have reported in Q3, it gives us a positive impact of close to 62 crores. But however, when we see our PBDIT numbers on a Q- on- Q basis, the net impact is only 27 crores. So if you can just help us explain why the difference between both the numbers is varying, and is there any specific one-time loss or increase in the depreciation because of which this number is not telling? Yeah, so see, as you rightly said, one is depreciation because the projects were capitalized, so there's increase in depreciation in the capital expenses. Also, sir, sorry to interrupt you, your audio is not clear, sir. Is it better now? Yes, sir. Yeah. So what I would change was that one of the reasons, or two reasons for difference, one is because the depreciation went up because of the capitalization which happened in the first half of the year. And second is also fixed expenses went up. One, because they were already being capitalized, and now they are being charged to P&L. And second reason is that as we move into operations, the overall expenses do go up with the higher manpower cost, repayment, and things like that. So I think that also leads to that, but that should even out over the period. As the volumes increase, then probably you see the higher impact coming in. Got it. So if you can just share what was the impact of depreciation in Q3 FY 2025 because of which the numbers are varying? I won't have it right away. Maybe you can connect with our Investor Relations team after the call. You provide that, please. Fine. So, secondly, when we interacted last time during Q2 FY 2025 call, you mentioned that chlorine was negative INR 6.50% in quarter two FY 2025, and which in Q3 FY 2025, the trend was around INR 9 negative. So if you can just help us explain what was the chlorine negative in Q3 FY 2025, and what's the current trend in terms of the chlorine negative in Q4 of FY 2025? So Q3, the trend was close to, again, the range around INR 9,000-INR 10,000, and the similar trend continues as we speak. So, sir, you mentioned in your opening remarks that the prices have started correcting for caustic soda in January, but of late, what we have seen also is that in China, the prices of caustic soda have also, again, started strengthening. So, is it like that? And also, when we see November and December ECU trend for us, I think it is close to around INR 30,500 for DCM. So, is it fair to assume that even for Q4, our ECU trend looks positive in terms of the higher numbers, or it would be on the similar lines what we have reported in Q3 of FY 2025? So, as you know, the caustic ECU is a combination of caustic and chlorine price. We have seen that the caustic price has been stable and has gone up, but of course, the pressure on chlorine continues due to the capacity and the demand-supply balance in the country. So the current ECUs are in the range of INR 29,000-INR 30,000 per ton, and we do expect it to remain at these levels or improve over time. Sir, also, if you can share the production breakup of 1,997 TPD in Q3 of FY 2025 between the Kota and Bharuch plants? Yeah. I mean, that's too much of a detail, but we—so broadly, of course, the details, the IR team can share with you later as well. But broadly, our Kota plant runs steadily at close to 550 tons per day caustic, and the Bharuch plant, therefore, is the remaining, which we are ramping up now with the new additional capacity. From my side, when we see our revenue of INR 721 crores in Q3 FY 2025, what number I could arrive based on the ECU realization multiplied by the volumes, our contribution from the value-added products was close to 27% in Q3 of FY 2025. Correct me if I'm wrong. So if you can share, what would be the contribution of the value-added product in the PBDIT of INR 66 crores what we have reported in Q3 of FY 2025? I would suggest we can take the detailing and the arithmetics offline, right? So I think broadly, we are giving the trend. The details, you can check with our Investor Relations team in Anshu Bhagadia, and we will respond to all your queries in terms of aligning these numbers, right? Thank you, sir. Nirav, I'll request you to join the queue again for a follow-up question. Thank you. The next question is from the line of Riya Mehta from Aequitas Investment Consultancy. Please go ahead. Thank you for giving me the opportunity. My first question is in regards to the caustic plant. So the new plant, what would be the capacity utilization like? As I mentioned in my opening remarks, the capacity utilization in the complex at Bharuch is in the range of about 70%. Got it. This would be the overall, right? Yeah, yeah. Yeah, yeah. And just particularly for the newer plant, what would be the utilization level like? So see, we don't look at it that way because the newer plant has its own set of efficiencies. So it may so happen we might operate newer plant at 89% and the older plant at lower capacity. So I think it's one should look at it as overall thing. Got it. Over the next one year, what kind of utilization levels do we look at here? Given we are in an oversupply situation. Yeah. So So we are looking to see how we can ramp up our capacity utilization. And in line with that, as you're aware, we are close to commissioning our epichlorohydrin plant. That will help us. We've also, the board has approved aluminum chloride further expansion and entry into calcium chloride. So again, both these will help us in improving our utilization. So we do expect it to take a little time, but we expect that in the next 12 to 18 months, we will reach full capacity utilization. So it is fair to say that maybe by FY 2027, we will reach by around 80% or 90% capacity utilization, which is our peak capacity utilization. Right. Okay. In terms of power, basically, we have commissioned our power plant, and it's been running for a while. What kind of savings and costs have we seen in the last phase, one quarter, with the new power plant? Yeah. I think we are getting good savings. We've invested close to about INR 500 crore in the power plant, and we are getting ballpark, we are running the returns of about 20%-25% on the power plant. 20%-25%. And that incremental 6 MW which we are buying, that would be also yielding similar returns? Yeah. That might be a little lower, but yes. That's more from our endeavor to reduce the carbon footprint. So wherever we have opportunity, we add that. Okay. That will not reduce our cost in a significant way, which earlier 120 MW. Yes. Yes. All right. So, now coming, where would we see cost savings coming in the chemical division as such? I think that's what we have done over whatever investment we have done over the last three years, whether it is the capacity expansion, the 850 TPD, which are more efficient electrolyzers. Second is the 120 power plant, or the green energy that we took 15 MW. By 44 MW, the first tranche we did will definitely add to a lot of savings. And then we are also, if you remember, I think in the last board meeting, we had approved a project for another extraction turbine that will further improve the cost structure. So that's a constant endeavor to keep working on cost. Got it. And in addition to that, we can also add that the other major raw material for us is salt. So we are seeing what steps can we take to further optimize our cost on that side. And also, there's a huge focus on digitalization and leveraging data and analytics to further enhance our efficiency and competitiveness. So with this holistic focus areas, we expect to remain cost competitive. Got it. In terms of ECH, when do we see this commissioning? Because I think we have seen a lot of delays. Is this because of late approvals, or after you commission, there will be an entire one year which will take approvals and all? So I think, as mentioned earlier in the opening remarks, we have faced a technical issue with the commissioning of the ECH plant. The teams are working very actively on it. And as we shared, we expect to start the trial runs and commission the plant towards the end of this quarter, which is Q4 FY 2025. Okay. And post that, we will see approval processes across all the clients, right? Yes. Approvals with the customers, that's part of the process. So we expect that to happen, and then we expect to ramp up the capacity. Got it. And aluminum chloride will come by when for us? I think that has been approved by the board. The timeline for commissioning for that is Q1 FY 2027. Okay. In terms of PVC, we have seen that anti-dumping duty was recommended. So where in this stage of regulatory approvals are we there, and how much time we can foresee if everything goes smoothly? Well, this is actually with the ministry right now. The Commerce Ministry is also aware of it. We've made our application. There are a couple of court cases which are dealing with. Hearings are going on. The results so far in the court cases are positive. So there is an expectation that after the budget, we hope it's not too late after that, but we expect that after the budget, it should come fairly soon. Thank you very much. Riya, sorry to interrupt you. May I request to come back for a follow-up question, please? Sure. Sure. Thank you. I request all the participants kindly restrict to two questions per participant and join the queue again for a follow-up question. The next question is from the line of Nisarg Vakharia from NV Alpha. Please go ahead. Yeah. Good evening, everyone. My first question is for Fenesta. Sir, we have an order book growth of 33%. Last quarter, also, we had an order book growth, but it's not translating into revenue growth. And secondly, our capital employed is only 45 crores for about 120 crores of PBT per annum that we do. If you could just explain both these points. Yeah. So, one, on the capital employed first, that is also because we get customer advances, right? And whether it is project customers or retail customers. So we work largely on advances that lead to lower capital employed. And in any case, this is a business which has the capital output ratio is high in any case. So I think those are the reasons why the total capital employed is low. Coming to the bookings, you're right. The bookings are good. However, the execution is slow in the market. Now, we are seeing. That's something which we are seeing across the building material space, that the growth levels are slow. Implementation is slow. And there are various reasons, I mean, liquidity issues and things like that. But yeah, we are seeing execution being slow. Sir, can you explain this INR 65 crore that we are deciding to invest for hardware manufacturing? I think I'd also read a few quarters or one two quarters back where you said you want to invest INR 150 crore in aluminum. Both of these are separate projects. If you can explain in detail on how you see this business ramping up over the next two to five years in India? Sure. So see, the aluminum extrusion project, the purpose of that, and that was for about INR 150 crore. So that project was to bolster our aluminum windows business. Currently, we are importing the aluminum extrusions and the profiles, and then they go for coating separately. So there is a lot of inefficiency involved in terms of transportation, logistics, and delays in execution, which is not a very good consumer experience, right? Our idea was that we should have our own extrusion facility where we can control the quality, as well as customer service. So that was one objective. And aluminum windows are actually doing very well. They are growing faster than UPVC today at the industry, as well as for us. So we see good scope there. And obviously, once we get into aluminum extrusion, it will open a door for other products within the aluminum space, which we can diversify into. So that's a little longish plan, maybe two years after commissioning. Coming to hardware, again, we procure hardware as we speak. We procure hardware of almost INR 90 crore in Fenesta. Almost 50%-60% is imported. The rest is indigenous. Now, the idea is once we are able to get into the hardware business, it will help us again on the logistics front because the old suppliers are a little unreliable given the logistic constraints at times that we have seen, and that again delays our service to the customer. So one, I think we can do that with our own. We can indigenize more once we have our own facility. That is one. Second, upgrading or innovative products is something what we're looking at. So our research and development can be at a much faster pace. So these two things are more from the customer experience perspective. And the last is, again, once we get more hands-on experience, we will be able to build that as a revenue platform as well. Thank you. Sir, now my second question is regarding Shriram Farm Solutions. Can you tell me what sort of volumes we have done in research wheat in this year? And do you think that we have captured enough market share, or we still have potential to grow these volumes for next year also? Yeah. So see, last year, we had done about 76,000 tons of research wheat seed. This season, we have done close to about 96,000. These are ballpark numbers. I may be off by about 1,000 here and there. So about 96,000 tons of research wheat is what we've done this year. Our market share is close to about 65%-70%. But the market itself is growing by about 15%, the research wheat market, in the overall market. So I think there is scope for growth. And then add to that that ultimately, in any of these research products, agriculture products of seed, one has to have a strong research setup to come out with new products which are better than the past one and continuously going through the trials and development, etc. Because everyone's in the business. So how do we stay competitively ahead? So we have a strong R&D setup also. So they're also coming up with new products. So we are fairly well positioned on the Research Wheat front. Sir, one thing is that in India, we haven't seen a company get such a dominant market share in Research Wheat. We have seen companies come and go in cotton, and the market shares change every three, four years. Can you please explain the Research Wheat segment slightly better for us as to how sustainable is this, and what is the reason that DCM has sort of got this dominant market share in this segment? So I would say, as Ajay mentioned, it is primarily because of our research and strong research on Research Wheat. We've been introducing products almost every year, except this year. Last year also, we launched about two to three varieties, and the year before that, also there was one variety which was launched, which ensures that we are doing the right life cycle management. It's not that other companies are not there in this segment. There are companies in this segment, but I would say they're not able to grow the way we also had the early mover advantage. So what is early mover advantage? Feeding the market with newer products, and there is competition as well. So that risk continues, and that's why we need to continue to feed products into the market. Thank you very much. Nisarg? Yes, I'm done. Thank you so much for your time. Thank you. Thank you. Next question is from the line of Jainam Ghelani from Svan Investments. Please go ahead. Hi sir. Thank you for this opportunity. So sir, my first question is that what would be a current captive chlorine consumption and post our expansion of all the derivatives? Where do we see it going forward? Yeah. So see, post expansion, overall, as a chemical, both Kota and Bharuch put together, our captive chlorine consumption will be close to about 32% captive. And on top of that, we have pipeline supplies, which again will be in the range of around 35%-40%. So if you add these, we are almost 70% captive. So one is what is consumed captively, and the other is virtually captive with what we supply pipeline. Okay. And sir, since we've announced fundraise, are there any other derivatives that we wish to expand into as of now? So we are continuously evaluating new opportunities and adjacencies for the chemical business and all our businesses. So at a suitable time, if we do decide and the board has approved, then we will announce those as well. Okay. So that's it from my side. Thank you. Thank you. Thank you. Next question is from the line of Rohit Nagraj from B&K Securities. Please go ahead. Thanks for the opportunity. So first question is on ECH. We've seen that the project has got delayed. Any material challenges from the initial on the delay front? Secondly, even during operations, do we expect that there will be teething problems because the technical issue has got prolonged? Another adjacent question to this, given that the domestic market is now completely supplied, what is the strategy from the management in terms of placing the product maybe partially in the domestic market or how to tap the exports market? Thank you. Yes. You're right. I think this was shared partly in our opening remarks as well. There has been a technical issue in the ECH project, but as we discussed earlier, the team is working very actively, and there has been a solution that has been found. We expect the commissioning of the plant to happen and trial runs to begin in this quarter itself, Q4 FY 2025. And once that is done, any plant might have some small teething issues to begin with, but we don't foresee any material issues going forward after that. In terms of the market, there are some capacity which is already there in the market, but we feel that this additional capacity will be absorbed in the market. There is a growing market domestically with a number of epoxy players expanding their capacities. So domestically itself, there will be a significant demand. And also, we are already in touch with customers globally as well. So we do expect that we'll be able to commission and then ramp up the capacity as planned now. Sure. That's helpful. So second question is on the PVC front. So in terms of current market trends, how are we expecting that the utilization levels will move up on the PVC front? Particularly the margins, what are we expecting? That the last couple of years, significant decline in margins because of the China overcapacity and supplies? Will that continue in the foreseeable future? Another allied question that we have carbide capacity, and we heard probably during pre-COVID that China's carbide capacities are also likely to get toned down. Any view from that side, is this happening in China from your connects or your contacts in China? Are we seeing any kind of such move? Thank you. To answer your question on the margins, this quarter, our margins were around 19%. I would say these are reasonable margins at a price realization for PVC at about INR 76,000-INR 77,000. Carbide also was in the range of around INR 64,000-INR 65,000. I would say prices have been sub-optimal. However, on cost front, there has been significant improvement, both because the raw material prices went down, as well as our efficiencies improved. So I would say that one, I don't see prices coming below 76,000. Unless something happens on cost front, margin of 19% are quite reasonable. So that was one. What was the next question you had? So on the carbide capacity, any cues from China that the capacities have been contained, or there is a move from the government to contain those capacities? Because I think earlier, pre-COVID, there was an expectation that due to pollution issues from coal, the government was taking steps to curb those capacities which are already in place. Yeah. Ideally, there was a phase of one to two quarters where they did curb capacities. But after that, all the capacities have come back, and most of the capacities are carbide-based, and they are dumping the product globally. So at least I'm not aware of any further action they're going to take. That's all from my side. Thank you so much and all the best. I'll come back in the queue. Thank you. Thank you. Thank you. Next question is from the line of Ahmed Madha from Unifi Capital. Please go ahead. Yeah. Thank you for the opportunity. I have a few questions on the sugar business. So there has been consistent commentary from your side and from the industry that the sugar prices have not gone up, but the SAP cane prices have gone up. The yields are low. So do you see the profitability weakness which was in Q3 to continue for the next season entirely, or do you have any levers which can help us offset the margin loss from the sugar business in the sugar and ethanol segment overall? Can you repeat the question? It was not very clear. Yeah. So my question is, we have seen the profitability margins being low in the sugar business in Q3, right? So now this weakness because of the lower sugar prices will continue for the entire season, or do you have any levers which can help you offset the margin loss? I think essentially there are two reasons. One is there was an increase of the state-advised price of sugarcane last year by the UP government, number one. Number two, there was a very good variety of sugarcane called 238, which was roughly 80% of the cane being crushed by most sugar mills. And that has got infested by a disease called red rot. And that has now decreased, and that was a very high-yielding and a high-recovery variety, which had come up in the last three or four years, four or five years. And that has now decreased dramatically. And that's one of the primary reasons why your cost of manufacturing has gone up because of lower yield, lower recovery, and also because of the higher SAP. Okay. Okay. And what was the ethanol mix this year? Or other discounted? Pardon me? Ethanol? Ethanol mix between B-Heavy, C-Heavy, grain-based? So we are primarily C-Heavy. Just primarily C-Heavy. Okay. And the decline in the rice cost from FCI, will that help us meaningfully? Right. Right. Yeah. It will be, I mean, probably in the next financial year, not in the current financial year. Yeah. Because we already covered, as far as feedstock is concerned, besides the molasses or C-Heavy, we've already covered till mid-April as far as other feedstocks are concerned. Okay. So for the financial year FY 2025, what will be our molasses-based ethanol and what will be grain-based ethanol? Percentage, roughly? Roughly, I think we've manufactured close to 16.5 crore liters. Out of that, about 45% should be grain-based. Okay. Okay. Got it. And last question on the hydrogen peroxide and aluminum chloride, in the presentation you have written that your utilization currently is 80%. What was the utilization for the full quarter, Q3, for these two products? Hydrogen peroxide, yeah. Average for Q3 was 40%. Average was 40%. Okay. Got it. Just one more thing. On the caustic side, this quarter, the volumes have further gone up sequentially. So do you see the utilization further moving up in Q4 as well? Utilization. For caustic soda? Yeah. That is a continuous focus area for us to utilize the capacity, and we do see it ramping up quarter on quarter. Okay. Got it. Thank you. Thank you very much. Thank you. Next question is from the line of Raj Vyas from TM Investment Technologies. Please go ahead. Yeah. Hi. Thanks for the opportunity. I just wanted to know, with a 12% YoY increase in EBITDA and a 9% increase in net profit, so any ballpark number that we are looking for going ahead, what will be the run rate going ahead? See, given that our volumes are increasing and the capital expenditure plans are coming to an end, the first round, or let's say whatever we had announced last Q4 year, we do expect volumes to increase. Our cost structures are better than what they were in the past. So we do feel our numbers should continue to get better. However, it is all a function of cost as well on the raw material cost as well as the product prices, which are not in our control. So it's difficult to say, but we are taking our steps to improve our profitability. Okay. Any reason for the fall in ROCE? It went from 16.1% to directly 13.7%. So any? That has been explained during the message by our JMD. That's because the new capital expenditure which got commissioned in this financial year in H1, that is part of capital employed with returns are yet to because the capacity utilization is low right now. So they will come up over the next one year. And that's when we will see the optimum return on capital employed. So what is the peak capacity that we are looking for? Pardon me? What is the peak capacity that we are looking for? That is newly. As was mentioned by Mr. Shriram, that we will look to ramp up over the next 12 to 18 months to about 90%-100%. Okay. Okay. Yeah. That's it from my side. Thank you. Thank you. Thank you. Thank you. Participants, you may press star and one to ask a question. Next follow-up question is from the line of Nirav Jimudia from Anvil Wealth. Please go ahead. Yes, sir. Thanks for the opportunity. Sir, you mentioned that our hydrogen peroxide plant operated around 40% in Q2. So even at 40% utilization, had it a positive contribution at the PBDIT in Q2, or the break-even point for hydrogen peroxide plant is slightly higher than 40%? If you can just share your view there. Yeah. So it has been positive on the contribution, definitely. Okay. Okay. And that should further improve in Q4, given the kind of utilization rates pickup we have seen in the current quarter, right? Yes. Yes. Sir, just a follow-up to this is our hydrogen production is ought to go up with the increase in the caustic production, right? So some of the increased caustic soda production helps us for the excess hydrogen, which could be utilized here. But I think we also had commissioned a flaker plant. So there also, probably, we would require some amount of hydrogen for lye to flakes, so at any point of time, our sales of hydrogen to the outside customers won't be curtailed on. Is this the right assumption to make here, sir? So we've actually done the mapping and the planning for our hydrogen production and demands, whether it is captive demand or it is catering to our customers' requirements, so we very consciously evaluate where to prioritize. Obviously, we really value our customer relationships, so that always gets the highest priority while we are ramping up our own capacity and internal utilization as well, so as it is ramping up, we are continuously optimizing, and at full load, we expect to have adequate hydrogen to cater to all the requirements. Just to add, I think the gas that we have started with natural gas as well in our flaker plant. Yes. Yes, sir. Our flaker plant has a dual feed fuel capability, which is one is natural gas and the other is hydrogen. That gives us flexibility as well to balance out the hydrogen requirement. Got it. Is entirely 600 TPD now commissioned or only 300 TPD is currently running on? In the flaking, so far, 300 TPD has been commissioned, and the remaining 300 TPD also is being worked on, and we expect that to be commissioned soon as well. Got it. The last bit from my side, in the hydrogen peroxide side, are our or is our hydrogen peroxide catering to some specialized applications, or it is safe to assume that it is similar to what it is available in the market? So is there any differentiation factor in our hydrogen peroxide which is getting sold in the market? So we are working on the special grades of hydrogen peroxide as well. We have an innovation center which is also exploring how to create differentiated hydrogen peroxide. So over time, we do expect a healthy percentage of our H2O2 to be specialty-grade hydrogen peroxide. Got it. Got it, sir. But that would take some time before it is getting operationalized, right? Yes. It will take some time, but the teams are working very actively on this. So we are very optimistic. Got it, sir. Thank you so much and wish you all the best. Thank you. Thank you. Thank you. Next question is from the line of Pratik Tholiya from Systematix Group. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity and congratulations with good set of numbers, especially in chemical and agribusiness. Sir, can you just help me understand your CapEx by 2026? Sorry, can you repeat that, please? So what is your CapEx guidance for FY 2026? Oh, CapEx guidance. So CapEx should be in the range of around, as of now, whatever has been announced, it should be in the range of around INR 700 crores. Okay. And sir, this could be projects this includes your aluminum chloride aluminum extrusion, right? And what else is there? Yeah. So there is aluminum chloride, calcium chloride extrusion, and then the INR 65 crores which has been announced very recently. And we have this 74 MW of green energy. That will also happen in FY 2026. Yeah. And there will be some CapEx happening on the infrastructure front at Bharuch, like water reservoir and things like that. There's a turbine investment as well of about INR 50 crore -INR 60 crore, which is a vast improvement which I was talking about. Yeah. Okay. Understood. And sir, what is your guidance on this epoxy resin? So where are we on that? Because we had announced it quite some time back, this INR 1,000 crore project. But any further development over there? Yes. So that is something which is very much on the agenda for us as a group. You rightly said, we've taken a board approval, and the board has approved INR 1,000 crore investment in the advanced materials, largely epoxy space. And so there are active discussions going on internally. And as we get final approval to go ahead from the board, we will announce. And just to add here, we've already acquired land for that, and we are in discussion with technical suppliers and all that. So the movement is happening. Hopefully, we should close things soon and start implementing. And sir, ballpark, what sort of capacity are we looking at? It will depend on the technical discussions. But overall, for INR 1,000 crores we're talking about, we're looking at about 80,000. 80,000 tons. Right. Yeah. Right. Right. And this would so how much of our ECH then goes into this? Pardon me? So how much of our ECH will be absorbed captively for epoxy? So it will actually depend as we ramp up the capacities. But as Amit has shared, at 80,000 tons per annum, that would translate to roughly 50,000 tons per annum of ECH consumption. But over time, we will look to ramp up this entire vertical. So therefore, there will be continuous capacity additions in this space. Sure. So that's helpful. And, sir, just lastly on Fenesta, because we see margins coming off from 18-odd% to 15%-15-odd%, of course. You did mention that there are additional fixed costs due to maybe some marketing activities and growing the business. So when can we then expect the margins to crawl back to that 18%? Or you think that a couple of years since you are in this expansion phase, it will remain in this 15%-16% range? Yeah. So see, my current last year, same period, I'm looking at the EBITDA margin, right? Now, EBITDA margin was about 19%, and the same period last year was about 21%. So there's a 2% dip. And I've always said that this is a business which is a 16%-17% EBITDA margin business, right? Given that as we increase our portfolio of products, each product will have a different set of margin. Currently, the major reason why it's down is fixed costs. And as was mentioned in the opening remarks, that fixed costs are expected to be elevated because we will have to invest more on marketing, brand building, and things like that, as well as more on people as we are growing the platforms and even otherwise on existing people. I mean, competition also adds to the cost pressure. Okay. Understood. So yeah, that's it from my side, sir. Thank you so much and wish you all the very best. Thank you. Thank you. Next follow-up question is from the line of Rohit Nagraj from B&K Securities. Please go ahead. Yeah. Sir, just a couple of questions. One is on the ECU. Given that the market is well supplied from the domestic point of view, do you see that the ECU should be in the similar range for the time being till, again, the demand-supply mismatch comes in, or probably from the demand side, there is sudden uptick from the domestic side? Thank you. So as you know, ECU is made up of caustic and of chlorine. Caustic, of course, is highly dependent on the global demand-supply situation, and chlorine is more dependent on the local demand-supply situation. So the ECU is currently in the range of about INR 30,000 per ton. And we do expect it to remain balanced in the times to come. And hopefully, over time, it will inch up further as well. Fair enough. Sir, second question. On the CBG project front, given that it will be commissioned sometime during this quarter, what is the arrangement in terms of off-take, in terms of supplies to customers, pricing for the same? And pardon me if I have not done my homework earlier, just to get more clarity on the same. Thank you. So this will be to OMCs, the oil marketing companies. We'll be supplying to them. And in terms of the infrastructure network to transport the gas, as well as from the pricing perspective, how will it be priced? So see, there is a pricing formula which is based on the natural gas prices, right? And that makes it pretty viable as a business. Transportation infrastructure is there. Further pipeline is being looked at. Also to add that we will definitely look at doing maybe some bit of supply to retail as well as we grow the business. Just last bit on this, when we have worked out the project, what is the threshold IRR or ROC that we had looked? I I mean, is it in line with other businesses or probably slightly higher for those businesses? If I remember correctly, this was about 18% return on capital employed business. Okay. That's it from my side. Thanks for that and all the best. Thank you. Thank you very much. Ladies and gentlemen, that will be the last question. And I'll hand the conference over to the management for closing comments. Ladies and gentlemen, thank you very much for your participation in our earnings conference call. We are dedicated to achieving long-term success by implementing strategic initiatives aimed at investing in scale, value creation, and boosting operational efficiency. To ensure that our values of integrity, agility, customer centricity, teamwork, openness, and newness are reflected in our ways of working, our approved priorities are for creating a more engaged workforce that is equipped to thrive in an ever-evolving business landscape. To this effect, we ensure effective team building and collaboration by encouraging open communication. Investing in people development through conducting skill gap analysis, upgrading skills, and encouraging continuous learning is another focus area that is vital for organizational growth and employee satisfaction. The integration of digital technology into management practices is transforming how organizations operate. Embracing digital transformation and addressing cybersecurity concerns have become imperative to improve customer experiences and maintain competitiveness. Central to our strategy is a focus on sustainability, which underpins our unwavering commitment to environmental stewardship and social impact. Thank you very much once again. Goodbye. Thank you very much. On behalf of DCM Shriram Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.