Chemplast Sanmar Q1 FY27 earnings call

Chemplast Sanmar Limited reported a consolidated revenue of INR1,125 crores for Q1 FY27, a slight increase from INR1,100 crores in the corresponding quarter last year. However, the quarter was significantly impacted by a sharp increase in input costs, leading to an EBITDA loss of INR115 crores and a net loss of INR176 crores. This challenging performance was attributed to a volatile global environment and geopolitical events affecting raw material availability and demand across several businesses.

The Paste PVC demand remained volatile through April and early May due to lower downstream operating rates and elevated input costs. The Suspension PVC segment's revenue declined to INR569 crores from INR608 crores in the same quarter previous year. The segment was particularly affected by high-priced VCM inventory, booked at over $1,000-plus per ton, which is expected to be consumed by July and August. Management anticipates a recovery in spreads to around $160 between PVC and VCM from Q3 FY27, supported by the reinstatement of customs duty and minimum import price (MIP).

The CMCD segment delivered a much improved performance, with Specialty Chemicals revenue reaching INR427 crores and volumes registering a healthy 21% year-on-year growth. The division is on track to achieve its INR1,000 crores revenue target, supported by a healthy order book, accelerating customer engagements, and a robust product pipeline of close to 50 molecules, with 14 already commercialized. MPB 3 Phase 3 and pilot Phase 3 projects were successfully commissioned and are on stream, reinforcing confidence in the segment's long-term growth.

The value-added chemicals segment reported revenues of INR129 crores, compared to INR138 crores in the corresponding quarter last year. Caustic soda and chloromethane continued to operate in a challenging market environment during the quarter, with pricing remaining under pressure due to weak regional demand and excess supply. In hydrogen peroxide, volumes improved on a sequential basis as raw material availability normalized, although prices moderated from elevated levels seen at the beginning of the quarter.

Productivity improvement initiatives at the Cuddalore Paste PVC facility are progressing well, with a 7,000 tons debottlenecking project on track for commissioning in October '26. On July 17, 2026, a fire incident occurred at the Karaikal PVC plant, leading to a manual shutdown of the facility. There were no injuries to employees or contractors, nor any spillage, and the fire was extinguished within 15 minutes. The company is working with authorities to facilitate the safe and timely restoration of operations.

The company faced significant headwinds from high-priced VCM inventory, which was booked at over $1,000-plus per ton, while current replacement cost is around $700. The Ministry of Finance allowed the antidumping recommendation against imports from European Union and Japan to lapse, initially increasing import pressure. However, the subsequent reinstatement of customs duty and a Madras High Court directive are expected to provide a more balanced competitive environment for domestic producers, with VCM prices expected to soften in the next quarter.

Commercial production of R32 from the swing plant commenced in May '26, with customer engagement progressing and positive feedback on product specifications. The new plant's project commissioning is underway and progressing as planned, with full capacity expected to be online by the last quarter of the fiscal year. R32 is anticipated to be one of the profitable segments, with a go-to-market strategy encompassing both domestic and international sales.