Thank you, Pari. Good afternoon, everyone, and thank you for joining us on Deepak Nitrite Q3 and 9 months FY26 Earnings Conference Call.

Today, we have with us Mr. Maulik Mehta, Executive Director and CEO, Mr.

Sanjay Upadhyay, Director Finance and Group CFO, and Mr. Somsekhar Nanda, CFO of Deepak Nitrite Limited.

We will begin the call with opening remarks from the management team, followed by an interactive Q&A session. To begin, Mr.

Maulik Mehta will share the views on operating performance and the growth plans of the company, followed by Mr. Sanjay Upadhyay, who shall take us through the financial and segmental performance.

Thank you, and over to you, sir.

Good afternoon, everybody, and a warm welcome to you all on Deepak Nitrite's Q3 and 9 months FY26 Earnings Conference Call. Our result documents were shared with you earlier, and I trust you've had the opportunity to review them.

I will briefly cover the financial highlights and the operational highlights for the quarter and nine months ended 31st December 2025. Mr.

Upadhyay will then take you through a detailed financial review, following which we would be happy to address your questions. The global chemical industry continues to navigate through a very complex operating environment, characterized by persistent pricing pressures, heightened competitive intensity, and an uneven demand pattern across key end segments.

These challenges, driven largely by global trade flows, protectionism, and aggressive pricing by Chinese producers, have influenced market dynamics throughout the year. In this backdrop, Deepak Group has delivered a mixed performance, characterized by higher volumes with transitionally subdued margins.

During Q3, our consolidated total revenue stood at 1983 crores, registering a growth of 3% on both a year-on-year and a quarter-on-quarter basis. EBITDA for the quarter increased by 16% year-on-year to 219 crores, underscoring the benefits of improved operational efficiencies and prudent cost control measures.

This demonstrates stability despite softer price realizations across select product categories. For the 9-month period of FY26, consolidated revenue stood at 5820 crores with an EBITDA of 658 crores.

While profitability during the 9-month period reflects the impact of challenging pricing conditions, our continued focus on operational excellence and volume-led growth supported performance stability. Our domestic to export revenue mix remains at 83 to 17 during Q3 '26, highlighting the resilience of our domestic franchise while continuing to strengthen global customer relationships.

Working capital efficiency remained a strategic priority, and through tighter inventory planning, supply chain optimization, and improved receivables discipline, we achieved better cash flow management and enhanced balance sheet quality. The phenolics segment delivered a consistent performance during the quarter.

Revenues from operations stood at 1334 crores, and EBIT reached 145 crores, representing a 20% year-on-year increase. Increased phenol and acetone sales volumes were driven by higher plant utilization and ongoing process optimization, resulting in better operating leverage.

The advanced intermediate segment recorded stable revenue growth, with Q3 FY26 revenue reaching 652 crores, reflecting a growth of 18% year-on-year and 11% quarter-on-quarter. This was driven by higher volumes with improved market penetration of key products.

However, EBIT for the segment stood at 15 crores, reflecting the continued pricing pressure arising from aggressive Chinese dumping and global oversupply. A defining milestone during the year has been the strategic integration and ramp-up of new capacities.

The commissioning of the nitric acid plant, both the WNA as well as the CNA plant in Nandesari, along with the nitration and expanded hydrogenation plant at Dahej, completes our vertical integration across the ammonia, nitration to amines value chain. This integration enhances raw material security and structurally strengthens our margins through reduced supplier dependency.

It also unlocks a broader downstream product portfolio and positions Deepak Group as probably the only completed integrated aromatic to amine player. Our long-term growth strategy remains firmly anchored in value chain integration and specialty product expansions.

The MIBK-MIBC project is progressing well and is targeted for commissioning within this quarter. Our polycarbonate project, a transformational step involving India's first integrated propylene to polycarbonate manufacturing.

Plant dismantling activities at Stade, Germany are underway, marking a major milestone towards relocation to India. In the meanwhile, engineering activities, technology engagements, and site construction, amongst other initiatives, are progressing at a steady pace.

We are accelerating our transition towards green energy by sourcing 60% to 70% of our energy mix from hybrid renewable sources, improving energy efficiency, and embedding green chemistry principles across operations. To navigate current near-term headwinds, the group is strategically prioritizing product innovation and geographical expansion, with a specific focus on our fluorination, nitration, diazotization, and amination segments.

A boost to this strategy comes from a favorable shift in the US-India tariff policy, along with a complete removal of antidumping duty by the US on Deepak's sodium nitrite exports. Complementing this market expansion, the group's integrated approach of leveraging in-house nitric acid production for downstream nitration and amination is set to steadily improve overall profitability.

With this positive backdrop, the group expects a favorable performance in Q4 '26. Notably, the India-EU trade deal provides Indian chemical companies with seamless access to one of the world's largest markets, boosting global competitiveness through reduced trade barriers.

This fosters long-term strategic partnerships and encourages European firms to integrate Indian manufacturers into their high-value supply chains, while also opening up important sectors of the Indian consumer base to European manufacturers for high-end products such as automobiles. Deepak is driving the group's commitment to integrating different value chains, which will increase margins, enhance resilience, and reduce our carbon footprint in both current and future investments.

Our strategy is guided by three core mantras: achieving the world's best quality, maintaining the world's best capacity utilization, and ensuring complete integration across the value chain. Overall, while cautious, we remain optimistic.

Recent developments in global trade dynamics present an encouraging medium to long-term opportunity base. We remain focused on driving operational excellence, accelerating ramp-up of new capacities, expanding our specialty and high-value product portfolios, deepening geographical diversification, and maintaining financial prudence.

I would now like to hand over the call to Mr. Sanjay Upadhyay, who will address this forum and take you through the financial performance.

Thank you, Maulik. Good afternoon, everyone, and thank you for joining us today on Deepak Nitrite's earnings call.

I will now take you through the highlights of financial results for the quarter and nine months ended December 31st, 2025. DNL has delivered a steady and resilient financial performance during the third quarter and the 9-month period FY26.

Despite external headwinds, our strategic focus on project execution, volume expansion, operational excellence, and disciplined cost management enabled us to maintain stability across our core businesses. Strong capital efficiency continues to underpin our performance with consolidated ROCE at 15%, reinforcing our ability to consistently create value across business cycles.

For Q3 FY26, the company reported consolidated total revenue of 1983 crores, reflecting 3% growth both year-on-year and sequentially. This performance primarily was driven by improved volumes, supported by better plant utilization and stable domestic demand.

Our diversified product portfolio and agile operating model helped mitigate the impact of softer pricing trends across certain categories. On the operational front, domestic revenue stood at 1647 crore in Q3 FY26 and 4903 crores for the nine months ended December '25.

Export revenues were 328 crores in Q3 and 864 crores for the 9-month period. On a consolidated basis, export revenue stood at 17% for Q3 FY26.

EBITDA for the quarter stood at 219 crores, registering a 16% improvement compared with Q3 FY25. This growth highlights the benefits of operating leverage, process optimization initiatives, and sustained cost discipline.

The EBITDA margin improved to 11% compared to 10% in the corresponding period quarter last year. PBT stood at 151 crores, representing a 12% year-on-year increase.

Q3 FY26 PBT includes one-time exceptional provision of 12.84 crores under the new labor codes. For the nine months ended FY26, consolidated revenues stood at 5820 crores.

EBITDA amounted to 658 crores, and PAT stood at 331 crores. The moderation in profitability during the 9-month period reflects ongoing pricing pressure and margin compression in select product lines.

We also incurred certain one-off pre-commissioning costs for our new projects. As revenue scales, these expenses will be more effectively absorbed.

Nevertheless, sustained operational performance and volume-led growth supported the overall financial resilience. Now coming to segmental performance, phenolics.

For this segment, the phenolics business continued to demonstrate strength and stability. During the quarter, segment recorded revenue of 1334 crores and EBIT of 145 crores, reflecting a 20% year-on-year growth in EBIT.

Higher sales volume in phenol and acetone, better net raw material realization finished goods margin, along with process optimization efficiency gains, contributed to enhanced operating leverage. In advanced intermediate, the segment delivered strong top-line growth with Q3 FY26 revenue of 652 crores, representing an 18% year-on-year growth and 11% sequential increase.

Growth was driven by higher volumes and improved market penetration. However, EBIT stood at 15 crores, impacted by continued pricing pressure arising from global oversupply, residual inventory destocking, and aggressive import competition.

Finance costs for Q3 FY26 stood at 11 crores, reflecting higher borrowing associated with growth investments. Depreciation and amortization expenses stood at 58 crores, following capitalization of newly commissioned assets like nitration, hydrogenation.

The company's financial position remains strong, providing adequate liquidity and flexibility to fund strategic growth initiatives, results of which shall be visible in the coming quarters. Working capital optimization remained a priority through improved inventory controls, enhanced supply chain efficiencies, and tighter receivable management.

We strengthened cash flow discipline and improved operating cycle metrics, reinforcing overall balance sheet robustness. Our balance sheet continues to remain robust, supported by disciplined capital allocation and prudent leverage.

Consolidated net worth stood at 5651 crores, providing strong financial flexibility to support future growth and expansion. Capital allocation during the period was firmly anchored to our long-term strategic priorities with accelerated investments across multiple high-impact growth platforms.

We continue to scale key projects, including expanded specialty and commodity chemical manufacturing capacities at Deepak Chemtech Limited, alongside mega integrated complex establishing a fully integrated value chain from cumene to polycarbonates and other advanced derivatives. Notably, for the upcoming polycarbonate project, necessary financial arrangements and funding tie-ups are at final stage, ensuring readiness for both capital and balance sheet perspective.

These initiatives are progressing as per schedule and are poised to deliver a decisive step change in the revenue diversification, margin expansion, and sustainable shareholder value creation. Looking ahead, while near-term market conditions may continue to be influenced by global supply and demand dynamics, our integration advantage, cost leadership programs, operational excellence, and prudent financial management position will navigate us through this cycle and deliver long-term stakeholder value.

With that, I would now request moderator to open the forum for question-answer session, please.

Sir. Thanks for the opportunity, and good afternoon.

Sir, a few questions to ask. First is, in one of the investor presentation slides, we have mentioned that we are in the process of introduction of new products.

If you can share how many products will be coming up, where are we in terms of this product with the customers, the user industries or the application, and if possible, the size of revenue which company is expecting from this product put together?

Hi, Nirav. Thanks for the question.

At the moment, we have a pipeline of about 15 products at various stages between R&D and piloting and awaiting customer feedback with regards to samples. The largest segments in terms of applications would be in applications such as mining chemicals, flame retardants, personal care, flavors and fragrances, and polymer applications.

Correct. Are any of this products coming up in first half of FY27 where some of this could be commercialized and we can see some revenue contribution from them?

Other than the last one which I mentioned, which is for polymer applications, which requires medium size capex, the others are all already made at pilot scale, the plant mapping is also done in available assets, and the production plan will align with the customer's requirement plan. That's going through its validation cycles including the purity profiling and stability study.

As and when those things finish, which should happen in the next couple of months, we will then have a plan with regards to production and dispatching. Many of these will come over in the next several months in a staggered manner based on the stage of approval.

Correct. Sir, second question is on the sodium nitrite.

We mentioned that the duties which were there earlier has now been removed. Let's say before the tariffs in place and post tariffs, how much volumes we were exporting before and after the tariffs and which is now got a fair chance to get recouped with the removal of tariffs by the USA?

Historically for the last couple of years, you're referring only to sodium nitrite, right?

Correct. Correct.

Historically, for the last couple of years, when we exported to the US specifically, it was to the tune of about 5,000 tons a year. Over the last eight months, this has been at a tariff overhang between anti-dumping duty tariffs and other things in excess of about 105%.

Now of course, the total tariff overhang would be substantially less than that. We're still engaged with customers to see how we can ensure that we play a more typical role in sodium nitrite consumption in the US.

Our focus, as always, is to ensure that we are there to add value rather than reduce value.

Perfect. Perfect.

Sir, last question from my side is with respect to the FTA with EU. Because what I could understand from our annual report is that our export to Europe is substantial, close to around 46% of our standalone business.

With the kind of product profile we are having and the kind of opening up of EU, probably from next year onwards, how do you see this opportunity shaping up for us in terms of, A, the current products as well as extension of the current products in terms of the forward integration? Also, you can share your thoughts like, are we importing any raw materials currently from Europe, which earlier used to have a duty and with this EU FTA had a fair chance of duties getting diluted?

Okay. Nirav, you're well aware that the EU-India FTA requires a ratification by several countries.

What is there is a proposed FTA. It'll take whatever period of time it takes, between 6 to 8 months is what we believe, in terms of full ratification by, I think, all the 20-something member countries of the EU.

Along with that, so, I would also want to add that whether it is the US or it is Europe or the UK, all of these are unmitigated tailwinds, are all positives for the Indian chemical industry, specifically also for Deepak. That said, like anything else, this was my short answer, but in the long answer, there are obviously nuances.

For example, Europe does not currently have a very high tariff barrier for Indian products to go there. It increases the opportunity for European companies which are currently under a real malaise to have an export opportunity to India.

Deepak will also be looking forward to being able to procure some raw materials from Europe at a price, products for example, such as cyanuric chloride, where we are dependent on imports. At the same time, you have a mix between this, between the discussion, the bilateral trade agreement with the US, which will also have a lot of products imported into India, and it'll open up certain segments which in my personal opinion India is highly constrained on, whether it is in the farm segment or whether it is in the energy segment, where Indian consumers stand to benefit the most.

I'm not getting into governments, but I'm talking about the Indian consumer at large really will benefit, and that will increase the production and the disposable income of all of the countries that are involved. I'm not commenting on what happens to governments' tax and tariff revenues.

These kinds of trade deals where the benefit flows down to the consumer certainly have the significant advantage that comes to industries such as the chemical industry, the agriculture industry, the construction industry. This will have a positive effect when you look at all of these things put together.

If you look at only the EU-India trade deal, you will feel like the positive effect is, in my opinion, a fraction of what it'll turn out to be given the progress of time.

Sir, just a last clarification. When can we expect the full benefit of nitric acid into our operational numbers?

We commissioned the nitric acid plant in the middle of December. This quarter and next quarter will be the first periods where we would have pretty much 100% consumption of nitric acid.

We also have expanded our nitration and our hydrogenation capacities. Now, I'm sure this question will come up later on, but there were two points where there was a mistiming impact in Q3 where we had only limited control.

We anticipated the commissioning of our nitric acid and our nitration assets at the same time. Unfortunately, that did not happen, and the nitration with the ETP assets got commissioned earlier.

The nitric acid plant had some technical challenges in the last mile. That got delayed to middle of December, which meant that for that period of time, we took it upon ourselves as a strategic call to ensure that we maximize our market presence, even if it comes at the expense of having to procure raw materials like nitric acid at spot rates.

Now, this meant that Q3 looked much weaker. We do believe that we have taken the right approach.

Similarly, in sodium nitrite, we had an original judgment in our favor in October, and we were anticipating the public announcement. After that, the US went into shutdown for about 48, 45, 48 days.

This delayed the formal announcement of the judgment. That's why it also disrupted our sales planning as we had originally envisaged to the US.

Now both of these challenges are behind us, and we look forward with some degree of optimism moving forward. I hope that, and it's a long-winded answer, but I hope it also answered your question about nitric acid.

Perfect, sir. Thank you so much, and wish you all the best.

Thank you, Nirav.

Thank you. Thanks for taking my questions.

I've got few of them. Maulik bhai, first on the standalone business, now that we have started at least for part of this quarter nitric acid and the gross profit margin or a material margin at 33.6%, probably is one of the lowest we have seen in last seven, eight years.

Can you help us understand which product category where we have seen a significant margin compression? When you see that we are staring at a favorable Q4, what do we really mean from a advanced material or a standalone point of the business?

Which are the product categories which is showing some green shoots for the Q4? Thank you.

Okay. The two biggest pinch points that occurred to us, as I said, that we had limited ability to control the outcome, one was the delayed announcement of the anti-dumping duty between the US imposition on India.

It's also heartening to just share that the removal of the duty, by the way, is specific for Deepak Nitrite. It is not a removal of duty for Indian manufacturers.

It's only for Deepak. Because we anticipated that the public announcement would happen imminently after the judgment was passed, and this was in the beginning of October, there we had our hopes up, but unfortunately, the US went through its own turmoil on this front.

That affected our margins. The second point that affected our margins was, as I mentioned earlier, when we had our nitration capacities commissioned and our hydrogenation capacities that were commissioned towards the tail end of Q2, it became tactically sound, even though it compressed margins in Q3, you will notice that we mentioned even in our discussion that we did have significantly higher volumes in Q3 than in past quarters.

This was done with full knowledge that we were buying the feedstock at spot prices, because we were no longer expecting to remain in the market for purchase of products such as nitric acid. We had no long-term contracts or quantity discounts or such that we were able to apply in our purchase.

Nonetheless, we worked hard to see how to ensure that we are occupying a significantly larger market presence. Within the quarter, this did hit our contribution numbers.

Finally, one last point is that for Deepak Nitrite, the standalone entity, most of the world which is going through its own turbulent times has a financial year closing in December. A lot of customers were also already in a depressed state in terms of their own operating activities, and they were more focused on inventory rationalization rather than anything else.

All of them also were under the impression that India was going through a period where there were high tariffs, uncertainty about a lot of other trade dynamics, no one was sure about how to place long-term commitments or even medium-term commitments. You look at February, and of course the mood is quite different, and we have to see how this plays out in the remainder of Q4 and Q1 onwards.

Hello?

Yeah.

Sorry, I think your voice got gobbled in between, but I got the point. Maulik bhai, but just one point on the third point you said on the destocking from the customers worldwide, but we were able to sell a far more volume, right?

Is that really a reason for us to compress the margin, or we placed that volume somewhere else at a lower margin? Is that the point you want to drive?

No, we placed that same product at a higher cost because we had to buy the raw materials which we were otherwise intending to integrate ourselves and manufacture. Our cost of goods became much higher than it should have been in a traditional situation.

Instead of being restrained in the supply of our products to the market, we became aggressive in the supply of our products into the market. When I'm referring to these products, the larger markets here are domestic or near domestic.

When I'm referring to financial year closures and inventory destocking, I refer more to the European and the US markets. I hope this clarifies.

No, that clarifies. Favorable Q4, what are we seeing the green shoots there?

It's largely this issues getting fixed and margins coming back is what we are looking, or we're looking some green shoots even in side of demand?

We're looking at margins coming back to a normalized basis because of our integration. Let me also point out that we are working closely with customers on, as I mentioned earlier, some new products.

Those are already in the process of being approved. I just want to also share that whatever it is with regards to trade agreements and all, it is still quite a turbulent environment.

I definitely expect Q4 to be better than Q3. I also want to be cautiously optimistic on this front because whatever happens with regards to India and the Western countries that are our traditional markets, it doesn't change the fact that there is a significant Chinese overcapacity.

This will affect a couple of products. I don't anticipate that it affects every single one of our products.

60%, 70% of our products are not as directly affected by Chinese oversupply. When this oversupply is there, it does affect our customers.

Agrochemicals continues to be a space where there is a marginal improvement in the outlook, but it is not a consistent improvement. It is still a little bit rocky.

Places where we expect to see an uptick because of these trade agreements are places such as dyes and pigments, mining chemicals, explosives, polymer applications, food applications, pharmaceuticals, personal care. Those are places where I expect good improvement which has nothing to do with the Chinese overcapacity.

That's clear. One question on the agrochemical which you partly touched upon...

Sorry, I just wanted to add one thing. In all of this, of course, one thing that remains a bright spot is India's own growth story.

Any product such as phenol that is sold in India continues to see robust demand, and we remain quite optimistic about the downstream also as we are investing a significant amount there.

Yes, clear. One follow-up on agrochemical, Maulik bhai, which you touched upon partly.

If you look at the commentary from the global majors, a couple of them have already put out their earnings, they are turning more cautious on CY26 than what we have heard them say six months back or three months back. Even if you look at some of the Indian peers who supply to the agrochemical major have also turned a little cautious, particularly on the pricing side.

We look a little more optimistic. Is it more product specific that we are looking at or we are looking to diversify or as we have spoken earlier that we are moving up in the value chain, some of those efforts are paying up?

It is little bit product specific, but it's also geography specific. When you look at agrochemicals, you're talking about fungicides, herbicides, insecticides, seed treatments, etc., etc.

There's a lot of different applications, and weather patterns play as much of a role as overcapacity or inventories. The answer will be different depending on products, product categories, geographies, and weathers.

When you have commentary coming out from a lot of agrochemical majors, some amount of that is also due to inventory stocking, but some amount of that is also due to what they expect to see in terms of geopolitics. For example, now in the recent couple of weeks, it seems like the US is very bullish on agriculture exports to India, which has never traditionally been a large importer from the US.

Similarly, you're seeing that there is, at the same time, an imbalance between what Brazil is producing and what the US hopes to accommodate on the world stage. These trade tensions across geographies do continue to play out.

For us as an intermediate supplier to these majors, the impact of that is generally seen 1 to 2 quarters down the line because our products are eventually going 1 or 2 steps down the line to these majors. Last one point that I'll just mention on this front is that we've also made medium scale investment in Dahej for agrochemicals that is uniquely positioned because it has tremendous value integration with our chemistries.

The process that we're following is a world's first. That basis its carbon footprint, basis its cost, and basis its product quality will remain unmatched in the world for this product or this product category.

That will ramp up along with customer allocations on the basis of whatever contractual versus available. That will play out in full for supplies that go on from October onwards for calendar year '27 onwards.

It will play a role even in the first few months after commissioning.

Very clear. One last question from my side on the phenolics side.

Generally, winter appears to be best for us from the production perspective, and earlier, we have optimized ourselves to produce 350,000 metric ton of phenol. Have we touched that kind of capacity in this winter as well?

Number two, post Q3, we have seen a good run-up in the prices of phenolics. Should that also make us positive for Q4 on the phenolics side?

Are the spreads for us even in India are showing that trend? Thank you.

I want to share something. Today, we manufactured our 2 millionth ton of phenol.

Wow. Congratulations on that.

Looking back, you focus so much on the months and the quarters that it's also always good to step back and look at the journey so far. In terms of spreads and cracks and phenolics crack versus global cracks and all of those things, we continue to feel quite optimistic about finding new spots for potential debottlenecking even in our existing assets.

We are seeing some degree of volatility both on acetone as well as on phenol. Some of it may be seen as temporarily positive or temporarily negative.

I just want to clarify that this particular quarter, Q4, is always a quarter where you would expect a degree of volatility because China goes in for its New Year, customers start looking at their purchase patterns differently because in India you have the financial year closing, you have a lot of capex outlays also based on government investing in construction and infrastructure. This is a quarter where any answer that I give you will be outdated within the next week.

No, that's clear. From the production perspective, we are hitting that peak, right?

Absolutely no problem with that.

We've gone past what we thought were peaks in the past.

Very clear. Thanks, Maulik bhai.

Appreciate all the answers, and best of luck for the coming quarters.

Thank you very much.

Thanks for the opportunity. Sir, first on the projects that we have started in this quarter, can we broadly give a direction to reach steady state, say 80% to 100% utilization?

How many quarters we will take and how long it will take to reflect in our P&L? That's number one.

Second is broadly in the last three years in the AI segment, the top line has reduced from say 3000-odd crores to right now we are closer on say 2400 crores of annual run rate. What percentage of this would be purely led by the pricing?

If you can give the pricing and volume decline or a growth, some broad directions on this. That's on the first question.

Okay. For all of the investments that we have made so far, it is largely broken down into, I think about 100-odd crores for the R&D facility, which is a strategic investment, we don't look at operating rates there.

Then you have the nitration, you have the hydrogenation, you have the fluorination, chlorination, and the nitric acid investment. On the nitric acid investment, on the nitration, and on the hydrogenation, we are expecting to run at 100% or close enough to 100% utilization from this quarter onwards.

There may be between 95% to 100%, 105%. That's the kind of range we look at in terms of asset utilization on these fronts.

When we're referring to photochemical chlorination and fluorination, we expect those utilizations to pick up in Q1. When we talk about the fluorination diazotization asset, which will be commissioned in May, that will have a gradual ramp-up in line with customer requirements.

When we talk about MIBK, it will have a ramp-up in Q1 in a phased manner because these technologies are extremely unique. The process that we have invested in, while it is a high capex investment, it is probably the most efficient process in the world, and it allows us to have some downstream value-add products also along with MIBK and MIBC.

There we hope to have a reasonably quick ramp-up because what we did is on MIBC, we started seed marketing even over the last four months, and we've seen a good degree of customer interest both in India as well as abroad. This asset will allow us to be able to service the customers where we already have a broad degree of acceptance.

Finally, on the high pressure alkylation asset, which will come in around between June and July, that will have a ramp-up between 2 to 3 months basis the customer requirement. With that, we will complete the entirety of our phase one of investments.

I'm not referring at all to any small to medium scale up to about 100 crores of investments which are in debottlenecking assets.

Understood. That's understood, Maulik.

Just one additional information on this. If you can also, at current prices, what would be the steady-state revenue that we are talking for these production blocks at an accumulated basis?

That would also be helpful. On my question on that AI segment, 3000 to 2400 crores, the volume and pricing breakup, if you can address that, also will be useful.

Yeah. We can certainly drill down into that, Arun.

Just to once again clarify, about half of the investment that we've made, which was into things like nitric acid production, we don't anticipate any revenue. This was always clarified as an upstream integration.

Agreed. Understood.

Substantial EBITDA improvement into the AI business. When we refer to products such as MIBK, MIBC, and the nitroaromatics, I think on MIBK, MIBC, the right time to talk about it will be Q1 because Q4 is the period of commissioning.

There is an oversupply right now in the market, but at the same time, India is entirely import-dependent. The entirety of the market that we seek to service for MIBK is in India.

We have what we believe is the most efficient process of converting acetone to MIBK in the world. We have to see how this plays out with regards to overcapacity in China versus our efficient plant processes.

It is an integration story, I'll refer to revenue coming from this only in Q1. With regards to the numbers that we spoke about in Q3 in the advanced intermediate segment, I would say that at the very moment, a substantial amount of this is because of pricing, not so much because of volume.

There is some volume impact because of key agrochemical intermediates, but there is, more than that, I would say, a pricing impact because of the oversupply situation from China.

Understood. On the hydrogenation, nitration, and photo-fluorination blocks that we have photo-fluorination block has already started, any ballpark revenue at the current pricing?

Arun, just to clarify, the photochemical chlorination will start towards the end of this quarter. The fluorination, which we have commissioned, right now it is just doing campaign plant runs for key intermediates with customers.

It'll be more of a steady-state sales. These two are generally looked at together, and we'll refer to the revenue at that time because we're also currently in conversations with key customers about these particular assets.

I want to give the business teams the opportunity to conclude those, and then we'll update with optimistic or cautiously optimistic or whatever.

Maybe we'll get the update from you probably from next quarter. My second question is on the Europe FTA.

See, in polycarbonate, we have very high aspiration, and Covestro is the market leader there. Probably, does this Europe FTA gives Covestro a slight advantage in taking over in competing against us in the markets like India?

Does it negate the cost benefits in India, especially in a highly grade-specific products like polycarbonates?

I don't believe that it does, frankly speaking. I think the kind of investments that are taking place in India for consumption of polycarbonate resins and compounds, when we first envisaged this project, we were looking at India's import dependency of about 200,000 tons a year of polycarbonate resin, not even the compounds.

When Covestro exports, they generally export the compounds, and I'm referring to the resin itself that is imported. That was, I think, just about a year, a year and a half ago.

Right now, India has already been importing in excess of 300,000 tons. Just within a year, our estimates of what India's domestic requirement of polycarbonate resins has changed by a factor of 50%.

We are planning on coming online with this asset over the next two, two and a half years in an integrated fashion with propylene, phenol, BPA, and then polycarbonates. We believe that the resilience of this integration, as well as the investments that are taking place in India for the consumption of the resin, as well as our earlier investment also into the compounding piloting facility to work in partnership with companies such as Covestro, such as SABIC, such as Trinseo itself, will help us be very relevant in India's consumption of the resin as well as the compound.

We don't anticipate this or any other trade deal to really derail the advantage of having an integrated chain in India.

Right. On phenol also, if you see European players are operating at a very low operating rates because they couldn't sell to the Chinese when the Chinese started their plant.

So, 10% swing is a large because that's a duty free now. Should we be worried in phenol also because at least in phenol, the market is large in India and import is still coming in.

Should we see some step-up or restarting of the European phenol operators to dump in say India?

I don't think so, frankly speaking. India already imports a certain degree of phenol from Asian countries where it is made more cost-effectively, and it is supplied here.

If a place as close to India as Singapore decided to permanently shut down its phenol manufacturing, I don't anticipate that the removal or reduction of an import duty—and by the way, Singapore is a duty-free import into India. It is a 5% import, but it is negligible, to be honest.

If it could have survived operating in Singapore conditions by exporting to India, it would have. I don't anticipate any inflow of any substantial amount of phenol coming from Europe to India.

However, I do anticipate with all of these free trade agreements and all that, an improvement in the consumption of phenol itself in Europe, where there will be a gradual recovery of downstream consumers such as automobiles. When that happens, it is good for everybody.

At the same time, the way that Chinese investments have been taking place over the last couple of years now are starting to alarm even the Chinese government, they're putting all sorts of deflation control measures in place. What happens with regards to trade deals is to be looked at, in my opinion, personally, from the chemical industry, in pretty much a positive light.

What happens with regards to China's attempt to rein in its deflationary cycle because of its overcapacities is to be looked at in an entirely separate lens. There's no real reason to conflate these two.

Understood. Any Chinese capacities coming this year, new capacities coming this year in phenol?

Last year, the year before that, the year before that, this year, next year, every year. Traditionally, even with the kind of overcapacity, even with the physical proximity of China to India, India has not really been the destination for Chinese phenol.

No, no. It depresses spreads, right, if there is a suddenly higher capacities there and people who are selling to the Chinese couldn't sell there, they obviously bring down the international prices.

That's the point of view of my question.

Yeah. Look, we may end up finding some volume coming, it's an ocean, right?

Material flows happen the way that they happen. We have to be resilient no matter what.

Just want to share that this is not a new phenomenon. This has been taking place since we commissioned the project, since we conceptualized the project, and it'll remain always.

In the meanwhile, we have to see whatever we can do to be as internally resilient as possible. Even in the last couple of months, there has been announcements about Far Eastern capacities shutting down permanently this year.

Right? Things are happening.

There is in Singapore an announcement of a shutdown, in the Far East an announcement of a shutdown, in China the announcement of capacities coming in, capacities that may be constrained because of the government's campaign, in Europe capacities being brought down permanently. This is a very dynamic situation.

Understood. One bookkeeping question for Sanjay bhai or Nandaji.

We have seen reported standalone revenue and reported AI segment revenue closely matching in the past. Of late, in last two quarters, there is some difference, small, but still this difference keeps increasing.

What should be the reason for this, sir?

Difference in what?

Difference in reported standalone revenue versus AI segment revenue and as well as the EBIT.

This is because of the inclusion of Deepak Chemtech's AI-related business into Deepak Nitrite's AI segment.

Right. Sanjay bhai, segment revenue is lower than the standalone revenue, and EBIT is also lower than the standalone EBIT.

There are other incomes also. Because of that, it...

Okay. Segment EBIT includes other income for the respective segments, that is what you are saying,

sir? Revenue will include that, whereas this is not there in the

EBIT. Uh-huh.

Arun, if it's okay, I can call you on Monday and discuss that.

No problem, sir. We will do it separately.

Thank you very much, and Maulik, thanks for answering all the questions. All the best.

Thank you, Arun. Thank you.

Yeah. Good afternoon, sir, and thank you for the opportunity.

Sir, I just wanted to know the new products which are coming up like 10, 15 products. Firstly, the competitive scenario in India and in that, specifically the application of mining and explosives and the polymer ones.

Our right to win in this segment, your view on that, sir?

On the mining, the explosives, and which segment?

Polymer. Polymer one, 2-ME PPDPA.

Okay. On all of these, we do have an extremely strong right to win because we manufacture all of these in an integrated fashion.

The teams are already working along very tightly along with customers to see how there is a significant value addition that Deepak is able to provide to customers. For example, one of the applications which has turned out to be a significant one in terms of volume in India is the explosives segment.

Products such as trinitrotoluene, which seem to be in very high demand all over the world for their mining applications as well as the defense applications. Deepak is a strong partner to these applications and these customers.

There's a very high degree of, I wouldn't call it dependency, there's a very high degree of collaborative partnership where the technical teams of both sides work hand-in-hand to see how to improve the performance, to make it meet and exceed military grades at global standards. This is something which has actually transpired over the last year.

We expect to see the outcome of this over the next three months, six months, whatever, as it picks up, because the kind of investment that's going here is very major, not at our end, but at our customers' ends. In terms of other mining chemicals, as I've mentioned, we already started seed marketing products such as MIBC, and that has also been received very favorably.

We've been waiting for our main plant to come up so that we can start manufacturing volumes in line with customer demands. We will see how that progresses, and it should have good feedback to you.

Rest assured, the market across geographies is looking forward to Deepak value and volume addition here. Finally, when it comes to certain other segments where you have energy, things like heat treatment and things like that, again, we're working along with customers.

We are bullish here. We were more bullish couple of years ago when global industrial policy also encouraged more of these investments.

Lately, between the US and other regions, they have deprioritized these. That said, our product quality is excellent.

It's been received well, and there are still good customers in these segments, not so much yet in India, but in other regions. We're working with them.

This is something that we expect to see landing in somewhere over the next six months. Until then, these will be small scale volumes.

Fair enough, sir. Sir, this Chinese VAT rebate removal and the Chinese anti-involution stance.

There are some companies from India supplying intermediates to global giants. They said that the prices has improved, adjusting that VAT rebate thing.

Do you see that for our product basket? Some.

We see that there is an anticipation of improvement in others. These are still ongoing conversations.

Very often what ends up happening is that the final action that the Chinese government takes may be a version of what it has announced it'll work on, and it'll also be based on how rigorously it kind of follows through. I think this month you will also get their 5-year strategic roadmap, I think the 15th 5-Year Plan.

Let's see how much it features into that. Until then, these are all conversations which are more intent-driven rather than on-ground reality.

Fair enough, sir. Sir, on the phenolics front, the major laminate players in India have been increasing their capacity and major company's capacities are on-stream as well.

Do you see a place where you might go for a phenol debottlenecking or some capex in case if the polycarbonate plant get a little extended?

We continue to remain vigilant about debottlenecking opportunities. Even right now, we're seeing how we can do a little bit more, a lot bit more even in the existing site.

In the meanwhile, to be very clear, the second phenol plant that is coming in will have some amount of its product being consumed internally for polycarbonates, and some amount of it will be placed outside for market sale. We expect to remain as relevant as a percentage of India's consumption as we are right now.

If the current phenolics consumption in India's requirement is at, say, I think 55% to 60%, we're working hard to ensure that it remains that moving forward also.

Right. Sir, for my last question, you mentioned in your standalone business kind of raw material you got it from the spot market.

Sir, in case had that been the case if you're procured internally, what would be the gross margin difference to that?

I don't want to speculate, but in the Q2 con-call, I had sounded quite upbeat about our Q3 performance. You can assume that that delta between how upbeat I was and what it turned out to be would be an accurate reflection of the gap between having our own self-consumption versus buying it at spot rates.

The rates that we ended up buying these raw materials was obviously higher than we would have procured if we were not investing in our own asset and if we continue to buy large volumes with discounts and contractual agreements in place.

Fair enough, sir. Sir, in the polycarbonate business...

Hello, sir. Thank you for this opportunity.

I had two questions. One on advanced intermediates.

Taking into account the anti-dumping duty withdrawal as well as the US-India deal and the EU deal, could you give us some color on the outlook of this segment going forward?

The outlook of segment for the advanced intermediates

or sodium

nitrite in particular?

Advanced intermediate would be better, sir.

As I mentioned earlier, we are cautiously optimistic. It would be better than Q3.

Q4 will also be a quarter where you have, the performance looking better from middle of the quarter rather than the beginning of the quarter. Frankly, you will, I think Q4 Q1 will be, continue in that positive direction.

Q4 will be better. Q1 will be better still.

Okay. Sir, on the follow-up on the initial question when you answered on the sodium nitrite, I didn't get the amount of the current exports what we do to US in terms of sodium nitrite.

You said around 5 ktpa is what we used to do a few years ago.

No, no, no. I said for the last few years, we've been doing 5 ktpa.

Okay. Prior to that, it

was... That was on anti-dumping duty even when there was a 50% reciprocal tax on India.

The anti-dumping duty was specific on sodium nitrite, and the reciprocal tax was on all Indian exports to the US. We were operating in a regime where it was about 105%, 106% total gap between the ex-factory price here and the price within the US for Deepak sodium nitrite.

That will be significantly reduced now, because the anti-dumping duty has been reduced from whatever that 45%, 48% was to essentially zero. The countervailing duty continues to remain as it was, more or less, I think 3%, 4%, 5%, something like that.

Then you have the 18% reciprocal duty as against the 50% reciprocal duty. The delta, as you can see, is down from about 106%.

It is certainly heartening news for Deepak Nitrite in particular. We're still working with customers to understand what the near-term and the medium-term looks like, both in volumes as well as in value.

Thank you, sir. That was a detailed explanation.

I had another quick question on phenol. Does the company get a premium pricing to the benchmark market pricing on phenol and acetone?

The answer is not universally yes. In some segments, it does because our quality is superior, and 100% it is superior compared to the co-mingled phenol or acetone that is imported into India.

We have also, of course, recent development has been that we've also started selling pharmacopeia grade acetone, small volumes. This is a beginning, and we see how to ramp this up moving forward.

In terms of the premiumization of the product, it is a very relevant one. In some segments, I would say that our phenol is over-specced, we don't really get any value premium for that.

The premiums that we get with regards to our physical proximity to the customers, our ability to supply to them in different packaging types, drums or tanks or IBCs, all those kinds of things, and as well as having really strong customer relationship and a dealer network. The premium that comes is the premium of convenience in most cases.

In some applications, customers do pay a justifiable premium because they require a higher quality and we supply a higher quality.

Thank you, sir. That was super helpful.

Thank you.

Yeah. Thanks for the opportunity.

Sir, first quick question on polycarbonate facility. Based on the current status of the project, when is the facility likely to be commissioned?

Hi, Rohit. We gave certain anticipated timelines.

Plus, minus a couple of months, it is basically aligned with that. I think December '28 is what we had—sorry, December '27, my mistake.

I'm getting lost in these days. December '27 is when we had talked about being on-stream.

One second, sorry. December '27.

Yeah. We're roughly about, okay.

If there is any delay on that, we'll let you know. Far, all the activities with regards to site dismantling at Stade, as well as site construction works in Dahej, both of those things are progressing.

This is, of course, a very delicate execution where you to get those assets here properly, and in the meanwhile, you have to have these assets built here. You're doing this in partnership with the equipment and technology suppliers, where they will also be an anchor customer.

They have an inventory that they have to keep drawing down until our asset starts on-stream again. We're working to see how we can manage this as well as possible.

Right. Second question again on the advanced intermediates...

Sorry, I just clarify... Go ahead.

Sir, please go ahead.

Okay. On the second phenol plant, that is coming online along with the upstream propylene at PLL Petronet.

That we have delinked it from the polycarbonate asset. If they all happen along the same time, no problem.

If there is a misalignment also, we have worked with the assumption that there will be a misalignment, and we're going with that production schedule.

Sure. Second question is on the advanced intermediates.

Given that probably some products where there is continuous oversupply and because of which the pricing margins are under pressure, are we recalibrating some of the product plate to focus more on better margin products or something new where the value addition can be there? Thank you.

While we're doing new products, we prioritized in Q2 and Q3 on the assumption that we need to see how to maximize in line with our assets, which have been debottlenecked, the new investment that has come in, we have a familiarity with the market, and we have a nitric acid plant being commissioned, and our anticipation originally was that all of these are going to happen around at the same time. In fact, the nitric acid plant would be commissioned a few weeks earlier than the nitration assets.

Our first priority and target was no matter what happens, let's make sure that we are being aggressive with market presence here, even if it comes at some short-term price drops, because we want to be significantly higher in line with our upstream investment. That was a plan.

It was a good plan. Unfortunately, because nitric acid got delayed in its commissioning, even during that period where it was being delayed, we did deliberate on this, and we believed that the right thing to do was to remain the course, continue to see how to ensure that we're aggressively utilizing our recently commissioned and existing assets, place the product in the market, even if it comes at a short-term impact on price.

Sure. That's helpful.

All the best, and thanks.

Thank you.

Hi, sir. Thank you for the opportunity.

I just have two questions. The first one is, can you let us know the capex outlay for '26 and '27?"

Okay. Sanil,

2,500 crores.

2,500 crores for FY26? FY26-27,

'26-27. Not '26, '26 is already ended.

That is around 100 crores spending, around 12 1,300 crores.

Understood. The...

And 2500 for '27. The second question is that if we see the phenol spreads, they have declined sequentially.

If we see the gross margin of the phenolics business, then the gross margins have improved by 150 bps sequentially. Can you help me understand the disconnect between the spreads and the gross margins?

The spreads that you're referring to are the international indexes.

Yeah.

Yeah. What cracks you refer to.

In terms of our margins, one element of that is that in India, there is an increased pressure also on suppliers, we've been able to see that our raw material procurement and our FG pricing, the cracks there are slightly different compared to global cracks. Secondly, there is a value-add that comes from increased capacity utilization, which allows you to iron out more and more of the potential inefficiencies that you consider into what you calculate as a crack in other companies.

Okay. What will be the utilization rate for the phenol business?

I think we're at a good significant utilization rate. We're trying to work through some debottlenecking exercises.

We're trying to align that in time with what we would traditionally have as shutdown periods for regular inspection of things like boilers and all that. There's no specific number I can give you.

That number passed a long time ago.

Okay. Understood.

Thanks. That's all from my side.

We have some room between where we are and where we can be. We continue to investigate other opportunities for further debottlenecking.

Understood. Thanks.

That was quite helpful. Thank you.

Thank you.

Yes. Hi, sir.

Thank you for taking my question. I'm not sure if you have already answered it, sorry for the repetition.

Just wanted to understand couple of things. First, what has led to the delay of close to two years in commercialization of our MIBK and MIBC project?

Krishan, first of all, it hasn't been a delay of two years. There has been a delay, no doubt about it.

Honestly, if I'm being very frank, we attempted something which generally is not practiced in the chemical industry. Worldwide, I think we would be the only chemical company in this kind of chemistry where we decided to go ahead with a divided wall column saying that India is inherently disadvantaged against places like China when it comes to energy cost as well as energy quality in terms of power and the steady-state availability of energy.

We went ahead with a technology which is new to this space. We put a lot of our own engineering hard work into that.

In the construction of this technology, there were a lot of hiccups that took place. Luckily, they've been ironed out, but it ended up taking longer than it should have.

In line with that, what we hence therefore did was we started seed marketing of the downstreams of MIBK earlier. This was one of the areas where we had a delay.

On the other hand, the second place where we had a delay is where we said that, look, there is this Chinese overcapacity, there is this situation. While the plant is taking its time being constructed with these technical hiccups, what can we do with regards to further optimizing on certain things like the catalyst?

We've been working to see how we can improve on that front, improve the recyclability, improve the cost, those fronts. Our original schedule was ambitious.

Okay. Fair.

No, so, I think I understand where you're coming from. It's just probably technical delays.

Probably in the future, it would be helpful if you could probably indicate that this is probably a tentative timeline, not the exact timeline, maybe. That way, there is some bit of a buffer for building in those numbers.

That was one point, suggestion. Secondly, Maulik bhai, you mentioned that in the AI segment, is a pricing pressure, which has led to kind of a subdued performance.

Does that mean that your volume growth could have been almost similar to 20% YoY growth that you have shown in the AI segment this quarter?

I want to just clarify. I think partially the pricing pressure and the margin pressure, to be completely honest, were a little bit self-inflicted, as I mentioned earlier.

Because we decided tactically to be aggressive in placing our product in the market that would allow us to also ensure that as usual, if there are any technical hiccups or this and that in newly commissioned plants, they get ironed out as you're making it, ensuring the quality is the right quality, placing it in the market. Certain small challenges, for example, would be things like the ETP running as efficiently as it needs to be, product being supplied in drums versus tankers versus other SKUs.

Some of these things get ironed out when you commission. We decided to be a little bit aggressive post-commissioning even before the upstream integration was commissioned.

That is where we ended the quarter. If I look at this quarter and the next few quarters, our job will be to ensure that we maintain our market presence now that we have our upstream integration.

We'll see whatever we can do to improve the prices where it doesn't look like as a key supplier we're in such a hurry to push these volumes out there. We were maybe overaggressive because we wanted to ensure that our quality matches and even if it is with a discount, this and that.

Now the customers are satisfied with the quality and the consistency of our supply. We work with them to see how we can, over a period of time, optimize on pricing.

I want to clarify that this is not something which is across the board. This has been in certain products.

Key amongst these, for example, would be a product called para-nitrotoluene, which is made as an isomer. It was anyways a soft market.

I think by increasing our production and supply to the market, we may have softened it a little bit more. We'll work to see how we can improve the margins over and above the margin expansion that comes from the integrated raw material.

Understood. Lastly, if I may, have we started manufacturing BTF from BTC and consequently, have we started using the nitric acid in-house?

At what stage are we and will those benefit our AI margins to improve going forward?

Okay. Krishan, just to clarify, BTC is made by the photochemical halogenation of toluene.

BTF is made by a Halex replacement of those three chlorines into three fluorines. There is no nitric acid consumption there.

However, the next step...

No, I meant separately. I meant separately, like BTC to BTF requires HF, right?

First point was that whether you have started the fluorination and the nitric acid for the other reactions, let's say probably meta-aminobenzotrifluoride, right, MABTF, you would use there or maybe before creating TFMAP somewhere, or for the other products also. That was the whole question.

Okay. Amazing clarity on the product profile.

I really have to commend you on that, Krishan. The second point that you mentioned with regards to BTC to BTF, as I mentioned, I think a couple of questions ago was that this will come online in Q1, while the asset for fluorination has been commissioned, I think about a year or year and a half ago.

There were challenges with regards to getting the right quality of the BTC. I hope that, as we're speaking right now and in the next month, those gremlins will have gone out of the system.

From Q1 onwards, we anticipate either BTC to BTF or other products which have the exact same chemistry. Instead of toluene, you just replace toluene with something else.

Those will feature in, and they will continue to have the nitration reduction and downstream assets also being consumed for the same thing. We have a degree of multi-product flexibility, same process, multi-product.

Nitric acid is something that we have been already manufacturing from the middle of December onwards. As I speak, I think about close to about 100% of our requirement is already made ourselves, 100%, and over the next couple of months, we're still seeing that there are opportunities to debottleneck both the nitric acid as well as the nitration assets.

Fair enough, sir. Thank you so much for patiently answering my questions, and wish you all the best, sir.

Thank you.

Thank you.

Thank you very much, and look forward to speaking with you for the Q4 results conference call and every opportunity to speak to you in the interim. Thank you.