Rain Industries

Gerard Sweeney highlighted a "steadily increasing demand for CPC and CTP over the next three to five years," primarily driven by aluminium smelter restarts and brownfield expansions in North America, Europe, and parts of Asia. RAIN is "reasonably well positioned" due to its global production footprint, logistics, and customer relationships. The recent Carbon segment demand growth is mainly from existing customers increasing offtake and making spot purchases, reflecting higher utilization in primary aluminium, especially in India.

Management addressed the lack of direct correlation between crude oil and GPC/CPC pricing, emphasizing distinct supply-demand drivers. Regarding lithium-ion battery demand, while it increases interest in specialty GPC grades, RAIN views this as "manageable and largely non-structural." Calcination for aluminium smelting remains the "dominant end market" for anode grade GPC, with battery demand growing from a smaller base and being more selective.

Following a competitor's potential exit from North American coal tar distillation, RAIN asserted its strong position. Gerard Sweeney stated, "RAIN remains firmly focused on delivering reliability, continuity, and consistency for our customers," leveraging its established supply network and logistical flexibility. The company is "uniquely positioned" with capacity to process all available North American coal tar and supply up to 100% of the region's carbon and creosote requirements.

RAIN's ACP technology is valuable during raw material constraints, enabling processing of lower-grade materials into high-quality CPC. The company is deploying ACP "selectively and at relatively small volumes" to ensure consistent product performance and gain market acceptance. While ACP involves incremental conversion costs, it enhances raw material flexibility and resilience, with a scalable solution for future market conditions.

Jagan Nellore detailed sustained R&D investment in Battery Anode Materials (BAM) and Energy Storage Materials (ESM), supported by government funding and joint development agreements. A demonstration plant commissioned in mid-2025 will be fully operational through 2026 for scaling new technologies. However, "no new products from these initiatives are expected to reach commercial scale in 2026," with new materials projected to account for up to 40% of the Carbon Distillation portfolio by the end of the decade.

Despite past struggles in the European chemical sector, RAIN's operations are showing "signs of stabilization and improvement." The company's "deep integration across our European operations" and ability to leverage by-products provide resilience, enabling it to mitigate external pressures^🌐 more effectively than fragmented competitors. The European steel industry's recovery and stable energy markets contribute to this improving backdrop.

Srinivasa Rao outlined significant debt reduction efforts. The Euro Term Loan B, originally 390 million Euro in 2018, was refinanced to 353.5 million Euro in August 2023 and now stands at 310.6 million Euro. Senior Secured Notes decreased from 550 million USD in 2018 to 450 million USD by March 2025. Overall, gross debt has been reduced by approximately 200 million USD over several years, demonstrating a focus on deleveraging while managing interest costs and funding maintenance capex.

Working capital has increased due to higher input/product pricing and the ramp-up of the SEZ facility. Management views the inherent cyclicality of working capital as a stabilizing factor, releasing cash during downcycles. Regarding forex, movements in the Indian Rupee against the US Dollar and Euro have "minimal impact on our overall business performance" due to a naturally hedged foreign exchange exposure through aligned revenues and costs across currencies.