Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DCM Shriram Ltd (BOM:523367, Financial) reported a 9% year-on-year increase in net revenues for Q2 FY25, driven by growth across multiple business segments.
- The company achieved a 73% year-on-year increase in PBDIT for Q2 FY25, primarily due to lower input prices and improved efficiencies.
- The chemicals segment saw a 19% increase in revenue year-on-year, supported by a 16% rise in caustic soda volumes.
- DCM Shriram Ltd is investing in renewable energy, adding about 74 megawatts to reduce its carbon footprint.
- The company is focusing on strategic integration in its operations, both upstream and downstream, to bolster resilience and secure a competitive edge.
Negative Points
- The Indian caustic industry is facing oversupply issues, leading to lower chlorine prices and impacting profitability.
- PVC imports from China are increasing, accounting for approximately 70% of total demand in India, which could pressure domestic producers.
- The company's net debt increased to INR302 crores as of September 2024, due to capital expenditure and higher sugar inventory.
- Chlorine prices have been volatile, with significant negative pricing impacting the chemical segment's profitability.
- The building systems segment experienced a 6% moderation in PBDIT due to higher fixed expenses for future growth.
Q & A Highlights
Q: Can you explain the current chlorine production and its consumption internally and externally?
A: Ajay Shriram, Executive Chairman, explained that the company's captive consumption is about 18%, with pipeline sales accounting for another 35-40%. The market for chlorine is growing, particularly in the Jara region, due to industrial expansion.
Q: How will the integration projects affect chlorine consumption?
A: Ajay Shriram stated that the integration projects will increase captive chlorine consumption from 18% to about 32% when operating at 90% utilization. Overall, including pipeline sales, the company will have about 65% captive supply.
Q: What is the impact of the anti-dumping duty on PVC profitability?
A: Ajay Shriram noted that the anti-dumping duty varies by country, with China facing the highest duty. The duty ranges from $51 to $125, depending on the country. The industry is pursuing approval from the Ministry of Finance.
Q: What are the plans for CPVC resin production?
A: Ajay Shriram confirmed that DCM Shriram Ltd does not plan to enter CPVC resin manufacturing.
Q: How is the company addressing the negative chlorine pricing and its impact on caustic utilization?
A: Ajay Shriram explained that increased chlorine production due to new capacities has led to lower prices. The company is focusing on increasing captive consumption and pipeline sales to manage the impact.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
