Chemplast Sanmar Limited — Q1 FY26 earnings call

Call held 29 Jul 2025

Management summary

Chemplast Sanmar faced a challenging Q1 FY26 with a 4% YoY revenue decline to INR1,100 crores and a net loss of INR64 crores, primarily due to pricing pressures from dumping and operational issues in Caustic Soda. Despite this, the new Paste PVC plant achieved full capacity, and the Custom Manufactured Chemicals business remained on track. The company anticipates positive impacts from ongoing anti-dumping investigations and China's overcapacity reduction policies, while also progressing on key expansion projects and green energy initiatives.

Highlights

  • New Paste PVC plant in Cuddalore successfully ramped up to full operating capacity and is delivering consistent operating performance.

  • Custom Manufactured Chemicals business delivered as per schedule and dispatches remained on track, with the agro-chemical sector showing signs of recovery.

  • Construction activities for MPB 3 Phase 3 and civil works for MPB 4 are progressing as planned, with completion expected by Q3 FY26.

  • Anti-involution measures in China, aimed at reducing overcapacity and disruptive price competition, are seen as positive for the PVC and chemical sectors.

  • The company's green power project is expected to cover 35-40% of total power requirement, leading to estimated annual savings of INR50-60 crores.

Concerns

  • Revenue for Q1 FY26 stood at INR1,100 crores, a 4% drop year-on-year, primarily due to lower realization in PVC businesses and reduced Caustic Soda volumes.

  • The company reported an EBITDA of INR17 crores and a net loss of INR64 crores for the quarter, reflecting a challenging market environment.

  • Persistent dumping of Paste PVC from Europe and Suspension PVC from China led to significant pricing pressures in the industry.

  • Temporary plant operational issues at Mettur resulted in lower Caustic Soda production, causing a 16% sequential drop in value-added chemicals volumes.

  • Price volatility was observed during the quarter due to anticipated policy actions on trade remedies, impacting market stability.

Key financials

  1. Revenue ₹1,100 Cr -3.9%YoY
  2. EBITDA ₹17 Cr
  3. Net Loss ₹64 Cr
  4. Suspension PVC Variable Margin ₹5,000/ton
  5. Paste PVC Variable Margin ₹24,000/ton
  6. Capacity Utilization 100%

What they filed

Q1 FY27: revenue up 2.3%, net profit down 175.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue993 1,058 1,151 1,100 1,033 +4%835 −21%1,256 +9%1,125 +2%
EBITDA26 32 37 17 43 +65%-57 −278%194 +424%-115 −776%
Net profit-31 -49 -54 -64 -51 −65%-119 −143%-45 +17%-176 −175%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹1,141 Cr Total
  • Suspension PVC ₹646 Cr 56.6%
  • Specialty Chemical ₹355 Cr 31.1%
  • Value-added Chemicals ₹140 Cr 12.3%

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Capacity expansion for Custom Manufactured Chemicals (MPB 3 Phase 3 and MPB 4 civil works)
    • R32 project for Refrigerant gases
    Construction activities for MPB 3 Phase 3 and civil works for MPB 4 are progressing as planned with completion expected by Q3 of the current financial year. On Refrigerant gases, we have received environmental clearance for the R32 project. The final decision on sizing and siting of the project will be taken shortly.

Guidance & targets

Regulatory

  • Suspension PVC ADD final findings Regulatory · Q3 FY26 · High confidence Released and in place
    With the disclosure statement having been issued, it is now expected that the final finding on Suspension PVC will be released soon. We are hopeful that we should see the ADD in place by Q3 of this year.

    — Ramkumar Shankar

  • Paste PVC ADD (EU and Japan) action Regulatory · by end of calendar year 2025 · High confidence Action on anti-dumping duties
    We are confident that before the end of this calendar year, we will see some action on that front.

    — Ramkumar Shankar

  • BIS certified PVC capacity worldwide Regulatory · by December 2025 · High confidence 14-15 million tons
    By the time December comes around, I think that we should have at least 14 million, 15 million tons of certified capacities worldwide.

    — Ramkumar Shankar

Volume

  • Paste PVC demand growth in India Volume · per year · High confidence 7-8%
    The demand for Paste PVC remains steady... and the demand is expected to continue to grow at around 7%, 8% a year as far as India is concerned.

    — Ramkumar Shankar

Business Outlook

  • Agro-chemical sector recovery Business Outlook · next year onwards · Medium confidence Acceleration in inquiries
    While the recovery is the turnaround in the ag-chem is happening, we believe sometime next year onwards, again, the speed of the inquiries and the number of inquiries in general will start accelerating and increasing further.

    — Krishna Rangachari

Capex

  • MPB 3 Phase 3 completion Capex · Q3 FY26 · High confidence Completed
    Phase 3 is on track to get completed over the next 2 to 3 months.

    — Krishna Rangachari

  • R32 project sizing and siting decision Capex · shortly · High confidence Decision taken
    The final decision on sizing and siting of the project will be taken shortly.

    — Ramkumar Shankar

Cost Savings

  • Green power project annual savings Cost Savings · annual · High confidence INR50-60 crores
    The estimated saving is somewhere between INR50 crores to INR60 crores by the contract.

    — N. Muralidharan

What to watch in Q2 FY26

Suspension PVC ADD final findings

By Q3 FY26 (or early August 2025)
Current Disclosure statement issued, final findings expected soon
Target ADD in place

Why it matters

Crucial for addressing dumping and improving domestic pricing for a key product, directly impacting profitability.

With the disclosure statement having been issued, it is now expected that the final finding on Suspension PVC will be released soon. We are hopeful that we should see the ADD in place by Q3 of this year.

Risks & concerns

  • Persistent dumping of PVC products

    high

    Persistent dumping of Paste PVC from Europe and Suspension PVC from China and other countries continues to create pricing pressures.

    Management acknowledged

  • Price volatility in PVC markets

    medium

    Price volatility was observed during the quarter due to anticipated policy actions on trade remedies.

    Management acknowledged

  • Oversupply in Indian Caustic Soda market

    medium

    The Indian Caustic Soda market is expected to experience excessive length for a period of 2 years due to 2 large projects coming online between FY26 and FY27.

    Management acknowledged

  • Uncertainty in R32 quota allocation

    medium

    The company is cautious about capital deployment for the R32 project, ensuring it aligns with potential quota allocations.

    Management acknowledged

  • Shifting dumping patterns for Paste PVC

    medium

    After ADD on certain countries, dumping shifted from EU and Japan, leading to increased imports (36,000 tons in FY25 vs 20,000 tons in FY24).

    Management acknowledged

  • Delay in BIS implementation for PVC

    low

    The BIS implementation for PVC has seen delays, though management expects sufficient certified capacity by December 2025.

    Management acknowledged

  • Carbide PVC phase-out in China

    low

    China's commitment to phase out mercury under the Minamata Convention implies a stop to carbide PVC production within 5 years of an alternative, with mercury mining stopping by end of 2031.

    Management acknowledged

Q&A highlights

7 direct
Likelihood of ADD on Suspension PVC and spreads Direct
The final findings or the final duties will be known only from around -- by around the first week of August, like I said. The current margins, again, would also be impacted by the stocks that we have, etcetera. The variable contribution margin would be anywhere from INR5,000 to around INR7,000.

Provides immediate timeline for key regulatory action on Suspension PVC and current margin context.

Asked by Rohit Nagraj

CMCD project completion and 5-year outlook Direct
Phase 3 is on track to get completed over the next 2 to 3 months. And similarly, we have triggered an investment on a civil structure for the next production block, which is also coming towards the completion in similar time line. And so both were triggered based on the health of our pipeline, which continues to be strong.

Confirms progress on key growth projects in Custom Manufactured Chemicals and reiterates focus for capital deployment.

Asked by Rohit Nagraj

Global PVC demand-supply and China's anti-involution measures Direct
As far as the demand-supply globally is concerned, it is still at the same level. There's no great improvement in the demand front in China. But there are some movements on the supply side in China. There has been some recent action by the government there to address overcapacity across multiple sectors.

Highlights the ongoing challenge of oversupply but also a potential positive shift from China's policy to address it.

Asked by Harsh Shah

Paste PVC market dynamics and ADD impact Direct
The total market for Paste PVC in the country is around 170,000 tons. And as you know, we are, by far, the largest producer of Paste PVC in India. We have a capacity of around 110,000 tons... demand is expected to continue to grow at around 7%, 8% a year as far as India is concerned.

Provides key market size, company capacity, and growth outlook for a significant product, along with context on past and ongoing ADD efforts.

Asked by Bharat Sheth

R32 quota allocation mechanism and capex safeguarding Direct
The actual sizing and the siting of the project, the decisions on those have not been taken yet. We will take it very soon... we are as much sensitized to the fact that we should put capital to the extent that we can get the quota approval. So we will keep that in mind definitely.

Clarifies the cautious approach to R32 capex, linking it directly to the critical aspect of quota allocation.

Asked by Sanjesh Jain

China's anti-involution policy details and chemical sector impact Partial
Involution is actually a pretty new term... refers to destructive price wars caused because of overcapacity... Ministry of Industry and Information Technology in China... issued a draft policy where they have said that they would look at plants that are over 20 years old... I saw definitely that they are looking at polymers, they're looking at caustic soda. But on specialty agro-chemicals, I'll have to see. I really don't have information. No.

Explains a new and potentially significant policy from China that could impact global chemical markets, though specifics for specialty agro-chemicals are still unclear.

Asked by Dhara

BIS implementation for PVC and potential delays Direct
The delay was largely to ensure that there is enough capacity available to meet the requirements of the downstream industry in India. And even in June, we did have around 11 million- 11.5 million tons of capacity that had been certified... by the time December comes around, I think that we should have at least 14 million, 15 million tons of certified capacities worldwide.

Provides an updated timeline and context for a critical regulatory change affecting PVC imports, indicating sufficient certified capacity is expected by year-end.

Asked by Kiran Gadge

Renewable power project cost savings and coverage Direct
Currently it covers roughly around 40% of our total power equipment, between 35% to 40% of our power requirement... estimated saving is somewhere between INR50 crores to INR60 crores by the contract.

Quantifies the financial and operational benefits of the company's sustainability initiatives, highlighting significant cost savings.

Asked by Madhur Rathi

2 min read 6 chapters

Detailed narrative

Challenging Market Environment and Financial Performance

Chemplast Sanmar reported a challenging Q1 FY26 with revenue at INR1,100 crores, a 4% year-on-year decline from INR1,145 crores in Q1 FY25. The company recorded an EBITDA of INR17 crores and a net loss of INR64 crores. This performance was primarily attributed to persistent dumping of Paste PVC from Europe and Suspension PVC from China, leading to significant pricing pressures and price volatility in the market.

Progress on Anti-Dumping Duties (ADD) and Trade Remedies

The company is actively pursuing trade remedies against dumping. For Suspension PVC, a disclosure statement has been issued, and final findings for ADD are expected by early August 2025, with implementation hoped for by Q3 FY26. For Paste PVC, an ADD investigation against EU and Japan, initiated in January 2025, is ongoing, with action anticipated before the end of calendar year 2025, aiming to counter the shift in dumping patterns.

Segmental Performance and Capacity Utilization

The Specialty Chemical segment maintained a flat revenue trend at INR355 crores. Value-added chemicals saw a 3% YoY revenue drop to INR140 crores, with volumes falling 16% sequentially due to temporary operational issues in Caustic Soda production. Suspension PVC revenue grew 12% QoQ to INR646 crores, with volumes increasing 17% QoQ to 92,849 tons. Both Paste PVC and Suspension PVC plants operated at nearly 100% capacity utilization.

Strategic Capacity Expansion and Future Growth Drivers

The new Paste PVC plant in Cuddalore has successfully ramped up to full operating capacity. Construction for MPB 3 Phase 3 and civil works for MPB 4 in the Custom Manufactured Chemicals division are progressing as planned, with completion expected by Q3 FY26. The R32 project for Refrigerant gases has received environmental clearance, and a final decision on its sizing and siting is expected shortly, with capital deployment prioritized for the CMCD business.

Impact of China's Anti-Involution Measures

Management noted China's new 'anti-involution' measures, aimed at addressing disruptive price competition and overcapacity in various sectors, including chemicals. This policy, which involves scrutinizing plants over 20 years old for energy efficiency and carbon footprint, is viewed as a positive development that could rationalize global overcapacity and benefit the PVC industry worldwide, although specific details for specialty agro-chemicals are still emerging.

Green Energy Initiatives and Cost Savings

The company's renewable power project is a significant step towards sustainability, currently covering 35-40% of its total power requirement. This initiative is projected to generate substantial annual cost savings, estimated to be between INR50 crores and INR60 crores, contributing positively to the company's profitability and environmental goals.

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