Laxmi Organic Industries Limited

Rajan Venkatesh

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Mahadeo Karnik

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Jainam Ghelani

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Rajan Venkatesh

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Rajan Venkatesh

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Rajan Venkatesh

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Rajan Venkatesh

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Nitesh Dhoot

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Rajan Venkatesh

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Aatur

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In paints and coatings, it remains weak to moderate.

— Rajan Venkatesh

So on revenue front, our revenue declined by 9%, mainly coming from specialty, which is 20% decline, as Rajan called out.

— Mahadeo Karnik

This Essentials revenue saw a decline of 5%, mainly the price linked to the feedstock.

— Mahadeo Karnik

So Dhaval, the way we are steering this business because one needs to be always a little bit cautious about looking at a quarter in lens.

— Rajan Venkatesh

I'm trying to understand the bridge in the fall and what all factors have influenced the decline?

— Yash Mehta

So the factors that are -- so the question is the factors that are affecting larger part of the decline seem to be onetime related to this quarter rather than the next 2 quarters?

— Yash Mehta

Q

Thank you. So again, Namaskar to one and all. Good morning, good evening and good afternoon, depending on the time zone that you are dialing into. And also thank you for investing your time with Laxmi today. As we go through the commentary, the topics I would like to cover is give you just broad strokes or where we are in the chemical industry. The second element is get you slightly closer to home, talk about the markets that we are serving, what are the demand signals from that, give you quick updates on where we are in our journey across the various verticals, right? So let me start first on

Mahadeo Karnik

Yes. Thank you, Rajan. So I will take you through the financials in brief for quarter 2. And we have called it out in quarter 1 that the EBITDA would be in the range of quarter 1, and we are happy to say that we have kind of maintained the same. So on revenue front, our revenue declined by 9%, mainly coming from specialty, which is 20% decline, as Rajan called out. Out of this 20%, 10% was for the anticipated phase-out of the product, 7% was the market price moderations and rest was deferment of the orders to next half. This Essentials revenue saw a decline of 5%, mainly the price linked to th

Q

Sir, my first question is, as you mentioned in your opening remarks that we have some deferred shipments to -- for the H2. So would you be able to quantify as to in terms of value of volume that how much would be?

Rajan Venkatesh

So Jainam, thanks again for joining the call. I think we want to be a bit more coy about it. I hope you can understand because that is, I would say, a bit of competitive nature. But the call out still remains that we have (1) a phase-out of our one agrochemical intermediate. We have an alternative product mapped. And as you heard also from Mahadeo, when you saw the 20% drop in the specialty element. Mahadeo, you can give some clarity. But Jainam, I would require your respect that we cannot be more granular on that topic. But we can assure that we are also very, very clear with our customers. T

Q

So first of all, very happy to see the disclosure levels regarding the bifurcation of revenues, the Slide 17, which you mentioned. So my question is on the Spec Chem side. So just to cross check, so the EBITDA margin which you have done in the Spec Chem for Q2 is 8.6%. Is the calculation right?

Mahadeo Karnik

Yes, you are correct. So now -- so we did INR 950 crores last year in Spec Chem. And with this, the new product which is mapped, so will you be able to make up for the loss and end on a flat note for Spec Chem for FY '26? So Dhaval, the way we are steering this business because one needs to be always a little bit cautious about looking at a quarter in lens. What we have done and even if you have seen our past performance, we have been in our specialty vertical anywhere between the 20% to 25%. So in FY '25, we ended at about 24% of EBITDA. In FY '24, we were at 23%, 24%. So I think it's a point

Q

If I look at your presentation, you have given the export revenue breakup. So in that if I see that in Europe, it contributed around 23% in the first half of FY '25 and now it's around 39%. So are you seeing any sort of demand coming from Europe?

Rajan Venkatesh

So again, Manish, thank you for that question. So first and foremost, like we have also shared in the past, Europe as an area is going through a lot of change. So in my opening commentary, when I talked about shutdowns and restructuring, wherein we have seen structurally, I would say, subscale or non-competitive assets, a lot of that is happening in Europe. I would say we are double-clicking our capability in Europe because we already have tank operations in Antwerp and Genova for our key products like ethyl acetate. I would not say we are seeing a rebound, let me keep it in perspective. If yo

Q

Sir, so my first question is on the fluorochemical revenues. So you've indicated that it's likely to be about INR 80-odd crores in FY '26. Would it be possible to share how much have we done in H1 so far?

Rajan Venkatesh

So Nitesh, at this point of time, the focus still remains exactly like you called out. We want to land up close to about INR 80 crores. At this point of time, we don't break it down. We're gradually ramping up, but we have a great line of sight to be at that INR 80 crores that we have lined up for this financial year. All right. So no change to the outlook there, right? No change to the outlook for FY '26. Sir, second one is on the capex figure. So H1, if I look at the capitalization number is about INR 300-odd crores, the commercialization that is. So presentation says that you commissioned t

Q

Sir, you mentioned that you have already started supplying to one of the customers from the Phase 1 of the Dahej plant. So just wanted to know what kind of commitment do you have? What kind of -- what portion of the capacity is already tied up with that customer? That is my first question.

Rajan Venkatesh

So Harsh, we have a multiyear contract with the customer, and the majority of the capacity has been lined up contractually with our customer. All right. And sir, second question on the Essentials volumes. So in this quarter, the commentary which Mahadeo gave the Essential volumes are largely steady. So have we reached the full capacity utilization there or there's still headroom to increase the volumes from the existing capacity? If you have been sort of tracking us, we've been diligently building on our operational excellence journey, churning out more from our existing asset base. And I thin

Q

First question is on the incentive. So on Slide 25, we have given the bifurcated adjusted EBITDA. But if I look at the reported numbers, it seems that there is no line item below the EBITDA, which has this incentive income. So how there is a difference between the reported 371 million EBITDA and over and above the incentive income economy?

Mahadeo Karnik

So let me clarify. The GST incentive is part of INR 371 million EBITDA as we are eligible for this site, the incentive as per Maharashtra government's incentive scheme. We have considered it as sales and revenue from operations. So just clarification, there is another number…

Q

Yes. There is another element, 23 million which is there. So what is that for then?

Mahadeo Karnik

So that's the GST incentive, 23 million. That's the number... Okay. Second question is in terms of the capex plan. So out of the total INR 1,100 crores, where are we currently? And how are we planning in terms of FY '26 and FY '27 capex number? And what are the time lines for each of the projects for commissioning? So I think the midpoint of expenditure on the capex is going to happen in this financial year, Rohit. As I called out, the start-up timelines, Phase 1 at Dahej has already happened as we called it out. The Phase 2 of Dahej mechanical completion is anticipated by quarter 4 of this fi

Q

Yes. Sir, just wanted to check the incentive, which you mentioned is basically any period that you can highlight for what period will be eligible for that?

Mahadeo Karnik

So it is as per the incentive scheme of the government so it's for the earlier periods. That is what I can disclose currently. So basically, next quarter onwards, there will be no similar kind of... So it's a yearly affair. We will have to apply yearly to the government and then we get those incentives. So it will not be quarterly, but for sure, yearly. But Aatur, to your point, the majority has got baked in, in quarter 2, if that's the direction of your question.

Q

I had one clarification on the incentive side. The number is INR 234 million which is the GST incentive, but the EBITDA for that is INR 23 million. I am trying to understand why is there such a large drop between what is coming in as incentive and what is getting recognized as EBITDA because I believe this is an additional line item that drops directly to the EBITDA?

Mahadeo Karnik

Let me clarify, Yash. We have kept that in income from operation, the GST, which is INR 234 million. So it flows down to adjusted EBITDA. What you are seeing at INR 23 million, that's a onetime expenditure of the Symphony project that is there in quarter 2. So the numbers are INR 23 million and INR 234 million that's why I think there is some confusion. Let me again clarify, INR 234 million is part of our operating P&L. Okay. And 23 is -- sorry, if you can repeat what that what that is? INR 23 million was the Symphony project for the supply chain transformation that we are getting into, which

Q

Sir, wanted to know related to the SF6 replacement, so what is the opportunity size for us?

Rajan Venkatesh

Darshan, thanks for the question. Let me just call out what we have stated. Fundamentally, the first wave is 60 metric tonnes that we will be establishing. That is the alternative for the SF6. The capex for that is INR 75 crores. And this asset should be mechanically complete by quarter 2 of the next financial. Discussing with customers, we do see this as an interesting opportunity to support their growth, and Hitachi is our current partner and the primary partner in this journey. The technology is very much Laxmi's technology. So there is no exclusivity, and we can continue to also grow. That

Q

Sir, I would like to know what is our current capacity utilization for Specialty, Essentials and Fluorochem, if you can bifurcate and give us.

Rajan Venkatesh

So the reason why we are expanding our capacity in all is because we are very well utilized, Saumil. So our utilization, as we have been calling it out for our Essentials business has been upward of 90% to 95%, and that is where the expansions are happening in our Essentials basket. In our Specialty baskets in the diketene derivatives also, we are fully utilized. And hence, we are doubling our capability, and we will be then globally top 3 producers of the ketene, diketene derivatives. And our fluorination is we are ramping up, so we still have a journey to traverse there. Fundamentally, in th

Q

Thank you again. Thank you all for investing your time with Laxmi Organic. Let me just again conclude with my reflections, repeating some of the elements that I started with. The global chemical industry backdrop remains very demanding, and this is shaped by regional dynamics given the overall supply side overcapacities. The industry continues to be marked by targeted efforts towards cost optimization and restructuring of structurally subscale and non-competitive assets. We spoke about the demand signals from our customers and key segments. We spoke about the specialties, the performance into

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