DCM Shriram Limited

Chemicals

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Chemicals

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Chemicals

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Sugar

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Sugar

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Sugar

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Fenesta

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Vikram Shriram

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Vikram Shriram

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Ajay Shriram

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US Dollar continues to strengthen and is a cause of concern for net importing countries.

— Ajay Shriram

Our investment in capacity building, better integration, cost, efficiency, innovation and value creation are all aimed at driving business momentum while limiting the negative impacts of such a volatile operating environment.

— Ajay Shriram

A lot will also depend upon expected recessionary pressure across the world in coming months.

— Chemicals

Globally, PVC faced demand pressure leading to prices reaching sub US dollar 1,000 per metric ton level.

— Vinyl

Carbide prices have also witnessed a decline quarter-on-quarter, but continue to give reasonable margins and hence production is being optimized given the flexibility in the business model.

— Vinyl

Overall, we have delivered yet another good performance in the backdrop of uncertain macro environment and despite challenges in certain businesses, particularly on the cost side with the energy costs.

— Vikram Shriram

So, if they get the opportunity to expand, it’s sort of put less pressure on the domestic market.

— Ajay Shriram

So, that will then put less pressure on the domestic market.

— Ajay Shriram

See, PVC difficult to say because as you’re saying internationally PVC pricing also have become soft over the last couple of months.

— Ajay Shriram

So, that’s some exact correlation is difficult to give you, but then those are some of the factors which help supporting the prices of caustic.

— Amit Agarwal

So, that would directly put pressure on the utilization levels and hence the profitability for the domestic players would also be going down however, exports may support the volume up take, but the glut in chlorine needs more management rather than lower utilization level.

— Amit Agarwal

If you could just quantify the impact of breakdown the captive power plant and how much of the losses that we’ve reported, how much of that could be attributed higher cost could be attributed to the power plant?

— Pratiksha Daftari

So, is there anything particular in the domestic market that is impacting the caustic dynamic, demand slowdown?

— Pratiksha Daftari

It’s difficult to say because of geopolitics.

— Amit Agarwal

So, that’s why it’s fluctuating one can’t, it’s very difficult to give any commitment of how it will move forward.

— Amit Agarwal

Q

Thank you, Siddharth. Good afternoon, ladies and gentlemen. Thank you for being part of our Q2 and H1 financial year 2023 Earnings Conference Call. I wish to take this opportunity to convey our festive greetings to each one of you ahead of Diwali. I will commence with perspective on industry dynamics and the associated strategic imperatives for us. I shall be followed by Vikram with a discussion on operating and financial performance. Today, the world is witnessing historically high inflation and fears of recession are around the corner. Interest rates are rising. US Dollar continues to streng

Chemicals

First, I’ll cover chemicals. Global capacity utilization in chlor alkali is at the low level, given higher energy costs and moderation in construction activities. Consequently, India has stepped up exports with H1 financial year ‘23 net exports at 1.39 lakh metric tons versus 0.13 lakh metric tons in the same period last year. Average import prices are range bound around $650 per metric ton during Q2 financial year ‘23. The energy prices that form significant part of the cost of production continue to be firm. We expect the prices of caustic soda that support high energy costs and elevated chl

Q

Sir, my first question was regarding the caustic export volume. So if I look at the sequential numbers, they have more than doubled, right? So how should we interpret this number? Is this because of lower domestic demand or we see better realization in exports or we are setting up the export markets now so that when next year the new capacity comes up, we can export significant quantities, How should we look at those numbers? It’s a good question. See, I think there’s multiple reasons. One of the reasons is that in Europe, because of energy prices being high, their production has come down. So

Ahmed Madha

So, it will be assumed that going forward our export volumes will be close to 20% of total sales? I’m not sure it will be close to 20% of total sales that is a little high. See all the things depend so much on what is the market position in the export market and the domestic market. It’s a swing which happens. Yes what India is trying to do is couple of the large aluminum manufacturers, whether it’s Vedanta or a couple of others on East side, who used to import caustic soda, we as industry is trying to get into contracts with them. And rather than their importing caustic soda, Indian manufactu

Q

Sir as in your opening comments you did mentioned about correlation between PVC and the caustic prices. So, if you could dwell slightly more into it, how historically has been the correlation with now PVC prices on a continuous slide over the last one quarter, what should now be the impact on the caustic, are the dynamic aligned or are the geographies would be different this time sir. See, the way it works and the correlation that CMD sir was talking about, is essentially that when the construction activity is low and we all know globally construction activity has come down given the high inte

Amit Agarwal

down, which again as a consequence the caustic available is a little less globally. And therefore, the prices have gone up. So, if you see global prices which has gone down to close to about $500-550 I would say at the beginning of let say in the month of July now they are supposed to run $750 a level. So, that’s some exact correlation is difficult to give you, but then those are some of the factors which help supporting the prices of caustic. But sir currently there is the glut because of more chlorine there in the market, that will not be allowing the caustic players to run at optimum levels

Q

If you could just quantify the impact of breakdown the captive power plant and how much of the losses that we’ve reported, how much of that could be attributed higher cost could be attributed to the power plant?

Ajay Shriram

This is of the breakdown with Kota power plant? How much can we attributed to that. So, because of the break down in Kota power plant. It was there for almost three, three and a half months. The total loss would be in the range of around 25 crore to 30 crore for it this period. Okay, understood. So, in the presentation we’ve seen that the international prices have gone up, but the domestic prices for caustic even adjusting for the chlorine hasn’t really moved up. So, is there anything particular in the domestic market that is impacting the caustic dynamic, demand slowdown? I would put it this

Q

Just wanted to just check what was the chlorine prices during the quarter. If you’ve answered that I actually use that.

Management

The average prices Pratik were around (-6600) for the quarter and currently, as we mentioned, it’s about (-9,000) to (-10,000). Okay, I just wanted to clarify on that. The ECUs are good; at ECU level the prices are good. And sir are you seeing any benefit from this Europe Plus One, a lot of talks happening on that front of course, exports are slightly going up but do you see any long term benefits of this Europe Plus One theme, the way China Plus One has played out in some of the other chemicals. Can that happen in our caustic soda as well? It’s difficult to say because of geopolitics. You see

Q

Thank you. Ladies and gentlemen, thank you very much for your participation at Q2 FY 23 earning conference call. We will continue to work on our strategic direction of growing our businesses using scale, multiple revenue streams, enhancing efficiencies, furthering innovation, and moving further on a circular economy and sustainability. We will also ensure that the balance sheet and cash flows remain strong. We are conscious of our responsibility towards the environment, to our community welfare, and our employees who are the true assets of the company. We believe in working towards planet, peo

Management