Thanks, Pari. Good afternoon, everyone.

Thank you for joining on for PCBL Chemicals Limited Q3 9-month FY26 results conference call. We have PCBL management on the call, represented by Mr.

Nilesh Koul, Managing Director; Mr. Raj Gupta, CFO; Mr.

Anand Kumar, Group Head Investor Relations; Mr. Pankaj Kedia, ED Investor Relations.

I would like to invite Nilesh to initiate with his opening remark, post which we will have a Q&A session. Over to you, sir.

Good afternoon, everyone, and a warm welcome to you on PCBL Chemical's Q3 and 9-month FY26 earning conference call. Our result documents were shared with you earlier, and I hope you have had an opportunity to glance through them.

I will initiate by briefly taking you through the key financial and operational highlights for the quarter and 9 months ended 31st December 2025. Following that, we will open the forum for your questions.

Before I talk about business, a quick introduction is in order. I have taken over this role from Mr.

Kaushik Roy on the 3rd of November 2025. Prior to joining PCBL Chemicals, I have worked in Castrol, British Petroleum, LafargeHolcim in a career spanning 28 years.

My last assignment was with Hindalco Industries Limited as Senior President, Aluminium and CEO Downstream Business. Now about the business.

As we reflect on the quarter, our Q3 performance has been shaped by geopolitical developments and volatile market conditions across segments. While this has put pressure on near-term profitability, the underlying fundamentals of our business remain strong and unchanged.

Domestic demand remains healthy, supported by high domestic consumption and rising tire exports. Globally, carbon black demand has been impacted in the short term due to trade tensions, tariffs, and geopolitical challenges.

Following significant capacity addition over the last few years, industry utilization, currently around 75%, is lower compared to the normal level of 80%. As utilization improves in coming quarters, pricing power should gradually return.

Given the uncertainty around global trade policies, particularly the US tariff, and the US tariff was around 50% on India, we saw very cautious behavior from customers in the US. The conclusion of Indian-US trade deal announced yesterday at a substantially reduced tariff of 18% will meaningfully benefit both PCBL and Aquapharm in expanding our sales volume and profitability in the US market.

The trade deal is a major boost to India's export competitiveness, as India has now a significant advantage to its Asian peers. Recent announcement of the India-EU FTA is also positive for us.

The EU carbon black market is around 1.5 million tons in size and offers meaningful headroom for Indian players to increase their presence in a more conducive trade environment. Overall, improved trade relations should be supportive across our chemical businesses.

Over the past 3 years, India's carbon black exports have more than doubled to around 450 kt. This gives us confidence that export momentum will continue, and recent signing of multiple FTAs will increase the export opportunity in medium to long term.

The continuous decline in crude prices over the past years impacted margins and led to inventory adjustments, while also helping reduce working capital requirements. With crude now stabilizing and moving up around USD $65 per barrel, we do not expect the same margin pressures going forward.

China's anti-involution policy may also gradually moderate price competition, although the timing remains uncertain. In the end-use industry such as tires, capacity addition across Asia, US, and Europe are expected to support downstream demand.

Globally, the tire industry is expected to see close to $29 billion of new investment by 2029. In India, tire demand remains healthy, supported by improved affordability following GST cuts, premiumization trends, EV adoption, and upcoming tire investments.

While Q3 has been challenging, we have remained disciplined in execution and sharply focused on strengthening the core. In parallel, we have embarked upon a company-wide cost optimization drive, focused on procurement optimization, yield and productivity improvement, further reduction in downtime, logistics optimization, and expanding our market reach.

These are measurable execution-led projects, and we are targeting cumulative cost savings of ₹200 crore over the next 2 years, which we expect to translate into visible improvement in profitability over the coming quarters. Alongside cost initiatives, our R&D teams are working on diversifying our feedstock mix as well, including evaluating alternates, which includes coal tar as well.

This enhanced supply chain flexibility reduces concentration risk and strengthens our ability to manage volatility across market cycles. Our growth strategy remains volume-led, supported by geographical diversification, efficiency initiatives, new value-added product streams, and improving performance at Aquapharm.

We've also taken initial steps towards integrating circularity in our operations, including evaluating the use of tire pyrolysis oil and end-of-life recyclable carbon black. These efforts are currently at an early stage, but they align with our focus on sustainability, cost resilience, and long-term competitiveness.

As technologies mature and adoption improves, we expect momentum on this area to gradually accelerate. In the specialty carbon black segment, the near-term environment has been influenced by slower infrastructure activity and consumer trends, and continued capacity addition leading to lower pricing power.

However, our newly developed value-added grades are gaining acceptance in applications such as industrial coatings, supported by their performance characteristics. That said, we are seeing encouraging traction in segments like semiconductors, data centers, and AI-led investments.

Overall, we remain constructive on the outlook and continue to selectively increase our focus and resource allocation in this segment. Alongside our ongoing focus on execution, we are progressing with strategic capacity expansion across segments.

I'll now share a brief update on these projects. We have commissioned 60,000 metric tons per annum brownfield expansion of rubber carbon black at our TN plant.

This takes our total installed capacity of the overall organization to 850,000 metric tons per annum. Trial runs commenced for superconductive specialty black grades of 1,000 metric tons at Palej, Gujarat.

Pre-commissioning process has started for the specialty black line of 20,000 metric tons in Mundra. Nanovace pilot plant project of 80 tons is expected to be live by the end of March 2026.

Work on 4,000 metric ton acetylene black plant has been initiated, and we expect it to commission by the end of FY27. For the proposed greenfield carbon black project in AP, we have applied for environmental clearances, and we expect to receive them within a period of 12 months.

We are committed to meaningful investment in technology and digital capabilities also, aligning with our long-term vision. We firmly believe that the coming quarter will reflect the benefit of all these investments and the India-US and India-EU trade deals, positioning the company on a stronger, more sustainable growth trajectory.

We continue to strengthen PCBL's sustainability and safety performance alongside business execution. PCBL has retained its Gold rating from EcoVadis, placing us among the top 5% of companies globally assessed on environmental, social, and governance parameters.

During the year, we have also made measurable progress across our sustainability priorities, including reduction in greenhouse gas emission, specific water consumption, and energy intensity. PCBL's TN plant and PCBL's Chemical Durgapur plant received ISCC Plus certification, demonstrating our initiatives towards circularity and responsible consumption and production.

Year to date, specific water consumption has reduced by 3.9% in Durgapur and 5.3% in Kochi, while specific power consumption has reduced by 1.3% in Durgapur and 3.6% in Kochi. All manufacturing sites have achieved Zero Waste to Landfill certification, Platinum diversion rating.

Importantly, we have also maintained a strong safety track record with zero lost-time injuries in FY26, reflecting continued focus on operational discipline and people safety. Coming to the quarterly performance.

During the quarter, our consolidated sales volume in carbon black business marginally declined by 2% year on year to 141,271 metric tons. Consolidated revenue from operations during the quarter was ₹1,846 crores and consolidated EBITDA was ₹231 crores.

Further, in alignment with recent changes in the labor code, we have recorded a one-time provision of ₹21 crores during the quarter. Of the total carbon black sales volume, domestic sales volume grew by 6% year on year to 89,615 tons, while international sales volume decreased by 13% to 51,656 tons in Q3 FY26.

Moving on to our segment performance, tires accounted for 81,219 tons, performance chemicals 43,352 tons, while specialty sales volume was up by 17% year on year to 16,700 tons. Power generation increased by 28% year on year from 161 million units to 206 million units, with an external sales volume growing by around 33% year on year to 125 million units as against 94 million units in Q3 FY25.

Coming to the 9-month performance during FY26, consolidated revenues from operations stood at ₹6,124 crores as against ₹6,317 crores in 9 months FY25. Sales volume from carbon black increased 2% year on year to 457,092 metric tons in 9 months FY26 against 446,110 metric tons in 9 months FY25.

Consolidated EBITDA for 9 months FY26 stood at ₹834 crores as against ₹1,067 crores in 9 months FY25. Power generation went up by around 14% and sales volume by 18% during the 9 months of fiscal year.

Despite macro-economic volatility and trade barriers, PCBL continues to strengthen its position as a diversified multi-chemistry anchored in cost discipline, innovation, scalable operations, and long-term resilience. Now I'd like to talk about our specialty and solutions business at Aquapharm.

Recently, there's been a change in the leadership at Aquapharm. Mr.

Suresh Kalra, who was the CEO of Aquapharm, has resigned due to personal reasons. Interim leadership has been in place for effective business continuity and smoother operations.

In coming weeks, we plan to organize an investor day at the Aquapharm facility to take you through the various steps being taken to take the business to the next leg of growth. In the short term, the business faced a challenging external environment.

There are different dynamics shaping performances across our key markets. I will take it one by one.

Performance was weak as geopolitical tensions remained elevated, like tariff under a few of our products in USA and slowdown in end offtake. Aquapharm reported revenue of ₹327 crore and an EBITDA of ₹35 crores in Q3 FY26.

Home care sales volume declined by 8% on a quarter-to-quarter basis. Our water solutions business also faced headwinds, resulting in a 26% quarter-on-quarter decline.

Application-specific solutions remained flat, while the oil and gas segment declined by 23% quarter on quarter, impacted by lower oil rig counts and frac spreads in the US. While lower oil prices have led to more cautious customer behavior and had an indirect impact on realization, but with crude prices stabilizing and moving higher, visibility has improved.

Home care and water solutions are largely supplied from India, and US tariffs on biocides and select polymers have impacted part of the business, while impact on home care business is seasonal. This is now expected to improve with the lowering of the US tariffs.

However, we continue to focus on our opportunity funnel. In Q3 FY26, we saw some strong conversations.

Green chelates, GLDA, we received a formal allocation from P&G, MEA and Europe, for the first time, and we are also on track to initiate supplies to Henkel from Q1 FY27 in Europe. IDS received REACH registration and initiated commercial supplies in Europe.

MGDA liquid initiated seeding through distributors in Europe. In water treatment, Saudi water authorities, we received letter of intent from them for antiscalant for RO plants and antifoaming for thermal plants, both for the first time.

New product development, PBTC, initiated sampling of our own products PBTC across all major water treatment companies. Oil and gas, geographical diversification, strong efforts are being taken to diversify business geographically with dedicated hiring across LATAM region and Midlands Basin.

We are further looking to hire to cover other basins as well. New product pipeline includes launch of new products to ensure increase in wallet share with all our existing customers.

Recent regulatory tailwinds will yield a significant uptick in coming quarters. China VAT refund of 13% revocation for products like PBTC will help us to expedite sales conversions.

Constructive, positive movement in imposing anti-dumping on China for HEDP and ATMP coming into India should also help. India-Europe FTA will also remove the 6.5% duty on our chemical exports.

Of course, the India-US trade deal agreed at lower tariff at 18% will also help. We have built a well-researched opportunity pipeline across green chelates, biocides, and phosphonates.

To support execution, we are strengthening our sales organization and appointing new distributors in markets where we have limited presence, such as Africa, Latin America, Canada, and Australia, which should enhance our market reach over the coming quarters. We're also focusing on optimization of our vendor and raw material supply base for Aquapharm.

Now that these initiatives are largely completed, we are confident they will start reflecting better EBITDA. With this, I conclude my remarks.

Thank you for your attention, and I now welcome your questions.

Thank you, sir, for the opportunity. Sir, just a couple of questions.

Sir, when we look in this quarter holistically, overall volumes have seen a 23,000 tons decline quarter-on-quarter basis. The realization and gross profit still looks okay despite all the tariff-related uncertainty.

Again, on the hindsight, our fixed cost has gone up. What has led to this steep dip in volumes and higher fixed cost during the quarter?

Aditya, if you look at our quarter-on-quarter cost changes, the fixed overheads have not gone up. Actually, there is a saving in fixed expenses.

Operating leverage has played negatively, and consequently, when you look at EBITDA level, then it is slightly lower as compared to the last quarter.

In terms of the volume decline, it's predominantly come from a reduction in the export volume, while we have maintained domestic market share. The export environment being a little more tricky is where we have lost the volume.

That's impacted the bottom line.

How much volume, sir, we have impacted because of tariffs in US?

It's difficult to put a hard number on that. One of the things that happened with the US customers was that even when we were competitive, because they were not sure about what the eventual duty structure would be, they were not willing to commit.

We shall now see how we engage back with them and get back that volume. There is not a particular number I can give you, but yes, it did impact us not being able to convert a lot of opportunities which were being discussed earlier in the year.

Got it. Sir, my second—

Last quarter, Aditya, last quarter, Aditya, is also end of calendar year, and lot of our customers in international market, for them that is balance sheet period. Consequently, historically we have seen some inventory reduction on their on their books.

Which last quarter has also kind of hit us, the changes in inventory level, and consequently there was impact not only in US, but in number of other geographies also.

Got it, sir. Sir, my second question is, sir, when we look at the current business structure, we have not been able to ramp up Aquapharm, it has been a very long period of time now.

What gives us the confidence that in our future businesses like your Nanovace and your superconductive grades, where in I believe a bigger share of EBITDA going ahead would be coming from the Nanovace, what gives us the confidence that that also would be a linear ramp-up or the company can start the plant what they have said? Considering what has happened in the hindsight in Aquapharm, we have not been able to get that numbers.

Can you let us know how things will move ahead and whatever we have said, can we deliver on to it?

Aditya, on Aquapharm side, while we have not been able to ramp up in the past, that point is true. A lot of steps have been taken in the recent past and a lot of regulatory tailwinds are also supporting us now, which gives us a belief that next financial year you would see a significant ramp-up on the volume side.

If you recall, we almost added 30% of capacity in Aquapharm in the last couple of quarters, first half of this year. Those were those products where we were seeing customers demanding products.

Having commissioned those capacities, it takes some time to ramp up those capacities, which we believe will start happening going forward. Secondly, if you see on multiple products side of ours, practically primary reason of Aquapharm not doing well in the last quarter was a decent degrowth in the oil and gas business where lower crude prices were kind of impacting in terms of customer demand to us.

With crude slightly moving up, we believe that that demand should pick up. On some of the other products, specifically on the green chelates side, where we have in the past also spoken about a very large opportunity because we see very specific movement from the customer side requirement towards green chelates.

We have added capacities in the past for green chelates. We are working on new capacity addition on green chelates.

From the existing capacities which we have in the past, we have now, after a lot of efforts and product approvals in place, we've started getting orders. As Nilesh mentioned in the call, for the first time we have gotten allocation from P&G, and from Q1 we are also looking to initiate initial supplies to Henkel.

As these top-end, top-tier customers in Europe and then in US also start accepting our product, probably few quarters down the line we are expecting a significant growth in the green chelates portfolio. From the Saudi facility which we have, we've received letter of intent for some of the antiscalant products, which will add decent volume to us next year.

On the oil and gas segment, we were primarily not present on the Latin American market, which we believe will now open up. While it is little early, but again now Venezuela becomes a market for us, which was practically not available.

Also, there are a couple of regulatory tailwinds which I am rehighlighting to you, which is on the PBTC product. The 13% VAT removal from Chinese side will now ensure that our margin on PBTC will move up significantly, and it's a reasonably decent portfolio for us.

Last year in September end, we have filed an anti-dumping petition with DGTR for our HEDP product, HEDP and ATMP both. Already spent almost 4 months on that, the investigation is in process.

As and when the ADD is imposed on these products, you would see a meaningful increase on both the revenue and bottom-line contribution from these. I think overall, while Aquapharm has not grown as we anticipated, but we believe in coming few quarters you will see gradual upward movement in both top line and contribution.

Got it. Putting this—

If I can take on the—

Yes, sir.

If I can take on the Nanovace question, I think what you should get confidence from is we have put together very strong project management framework in taking this product from lab to commercial with very strong engagement with customers already at the pilot stage, dedicated teams being hired ahead of time, and I think rigor in execution is something that we are prioritizing with strong project management. I think we are very confident that we'll be able to take it to the commercialization stage in as per plan.

Got it, sir. Putting things into perspective for Aquapharm, you have said you are also starting Henkel supplies in Europe by first quarter, anti-dumping duty imposition on HMDCs and all.

Putting this things, what sort of volume growth we are anticipating in Aquapharm for the next 2 years? Similarly in carbon black, is there any change in the volume guidance which we have earlier stated?

On the Aquafarm side, I think we should be comfortably looking at at least a 20% volume growth next year.

Sir, this volume growth figure of 20% was despite the current order of Henkel and all this anti-dumping duty, ideally it should be much higher, isn't it?

It should be higher. Some products are under approval stage, and supply ramp-up, it takes time.

We have conservatively estimated at that number. We'll be happy to report a higher growth going forward.

On the carbon black side, sir?

On the carbon black side, again we should be seeing growth as I talked about earlier. We have commissioned and started off an additional soft line in TN, which should demonstrate that we're confident that volumes are going up, both in the domestic market, it'll be in line with the growth of the market, and in the international market, we expect to grow market share.

You should see a strong growth coming in. We are already seeing some green shoots in Q4 itself, but the real value will start coming in from Q1, Q2 next year.

Got it. Sir, just one last question.

Sir, when we look at the spread cycle of history, today we might be standing at the lower of the spreads, and quarter after quarter management has reiterated that this is the bottom, but every quarter we see a new bottom in spreads. Just I want to know, considering all the negatives today what we have and we are seeing US volume ramp-up in sight, is it fair to say, this number could be the bottom, and from here on we could see better numbers only?

On the demand side from the tire customers, is there any visibility you're getting in the export market and in domestic market whether you could inch up volumes further?

As I said, the domestic tire market demand is robust. We should be expecting single-digit growth, but strong single-digit growth, I would say between 5% to 6%.

Tire demand will continue to grow, and I think we can confirm that this quarter is the turning point with both international volume shaping up and the growth returning, I think you should expect better performance going quarter to quarter.

Got it, sir. Thank you.

That's it from my side.

Hello, am I audible?

Yes, Suyash.

Sir, thank you for taking my questions.

There is a background noise, Suyash. We are not able to hear you properly.

Okay. Hello.

Yes. Sir, I wanted to know about the Nanovace project.

The pilot project is in place, can you tell me more about this? What was the question?

Hello.

Nanovace is a project we are entering into the battery energy segment. This is a partnership with a Australian company.

The concept in terms of Nanovace is a new way of making the product, and we are already engaged with customers in validating the properties of the product, and we've got very, very interesting and encouraging returns from them. After the pilot project is done in March, we expect a validation period of a few months before we look at final ramping up of the capacity.

This is a significant growth opportunity for PCBL to diversify and get into the battery materials industry.

Okay. What is the expected revenue and EBITDA margins from this product for FY27 and FY28?

Commercialization of this product is going to take some time. We are planning to set up a 2,000-ton commercial plant, and at full utilization level, it should generate somewhere around close to about ₹1,700 crore kind of top line and almost 50% of that going to bottom line.

The full utilization is going to take beyond '28. Our sense is that it should be end of '29 or '30, beginning of '30, that we will reach the quarterly full run rate of utilization.

Okay. That means the ₹1,700 crore top line will be achieved after '28?

No, while the commercial plant should come up by '28, end of '28, utilization thereof will still take a few more quarters. It can take 4 to 6 quarters or maybe even more.

This is little early for us to comment on that. At full utilization level, it should generate about ₹1,700 crore of top line and about 50% of that should be flowing down to bottom line.

Okay. The commercialization will be in end of '28, not '27.

I thought this was in second half of '27.

Correct, you are right.

You're right.

Yeah. Okay.

Thank you, sir. Thank you.

Thank you.

Hello, sir. Thank you for the opportunity.

Sir, in the investor meet, you had suggested that there will be no debt reduction in the next 3 years as you are planning to go for higher capex, which was, I believe, about ₹3,200 crores. The recent presentation mentions that there is a release in working capital and which was used for reduction in debt.

Wanted to understand, is there any change in strategy on the capex and debt front?

Okay. Radha, we are largely through with our brownfield expansion.

We just commissioned one soft line in Tamil Nadu this quarter. While the other line is also ready, the commissioning might take a few more months.

The capex have been incurred. For the Andhra greenfield, we have applied for the environment clearance.

Again, based on our past experience, we think that it will be good 3 to 4 quarters before we get the clearance from government to start the project. Next 1 year, the capex intensity is going to be very low.

Now coming to the debt side, beginning of the year also, we said that we are trying to make our working capital cycle more efficient, and that's where we have worked. Partly because of our being able to negotiate better credit terms with our vendors and our customers and better inventory management, we have been able to reduce the overall working capacity.

Also because crude came down in this period, so that has also supported. Now on a net debt basis, there is already a reduction of about ₹400 crore plus in the first 9 months, and we believe that by end of this year, we should see about couple of hundred crores further reduction in the debt.

Sir,

how much capex are you expecting for FY26 and FY27? '26,

it will add up to about ₹550-odd crore. Far, we have spent about ₹400 crore.

There is one specialty line which is underway currently. That's the number for the current year.

Next year, it should be somewhere around ₹300 to ₹400-odd crore.

Okay. So '26, ₹550; '27, ₹300 to ₹400 crores?

And

2027, we expect sub-₹400 crore capital expenditure, which includes maintenance capex and capex on Nanovace, some capex there, one acetylene black line would come, that and maybe some small capital expenditure in Aquapharm.

Okay. Secondly, the PPT mentions—

Operationally, Radha, for next year, we will be spending more effort on utilization rate improvement in India, because we have lines which are yet to get commissioned, which is what will happen by the end of this quarter, so that we'll have effective capacity available next year, which is in line with the growth ambition we have earlier talked about.

Sir, actually previously our capex guidance were more aggressive than the current numbers. That was because we were expecting a higher growth in terms of volumes in our business.

Since you have reduced the near-term capex estimates, is there also a reduction in terms of volume growth that you were expecting previously in your business versus now?

Radha, in terms of the mid-term to long-term prospects of the industry, the dynamics remain very positive, and therefore, the guidance that we gave, we are on track to achieve that. Therefore, we have acquired this land in Andhra and applied for environment clearance.

These are all regulatory processes which eat some time, and therefore, this delay in incurrence of capital expenditure. Brownfield expansion we have already completed.

There is some brownfield expansion which will happen next year, and by that time, we will also receive the environment clearance and we'll start working on the first phase of Andhra. From 4 to 5 years kind of a perspective, we remain very much on track.

From next 1 year perspective, sir? How much growth should we expect?

Next 1 year perspective also, Nilesh Nilesh just mentioned that domestic market we expect to grow at industry growth rate, about higher single digit, maybe around 5%, 6%, and international market, we are still very small compared to the overall opportunity, and that's where we are trying to garner a bigger share. We have plans to invest more in infrastructure, which will give us inroads into some of the high-margin markets.

Can we expect double-digit growth in international market? Next year?

I don't think, honestly speaking, in immediate next 1 year because the geopolitical situation is still very volatile. We are targeting double digit, but I think in FY27, it will be very high single digit.

Understood, sir. Sir, secondly, the PPT mentions that company has embarked upon a cost optimization drive in carbon black segment, which can reduce the cost by ₹200 crore.

Sir, first question is, can this be done in Aquapharm also? Second, if you can give us some roadmap as to if there is a yield improvement, then from what to where are we targeting?

More color on this.

It's a widespread project that we have taken, which is multifaceted. It starts with procurement where we are looking at diversifying our feedstock, we expect 1% to 2% improvement there.

In yield, across different grades, we are expecting further improvement. This is projects where we have already finished a pilots, and now we are looking at expanding and horizontally deploying these solutions.

On productivity improvement also, through the use of digital and analytics, we have got projects now which will deliver productivity improvement for us as well. Even on quality side, we are going to be looking at reducing off-spec production within the production cycle.

This is not quality that goes to the customers, that we are very, very good at. Within the manufacturing process, any off-spec generation reduction improves both yield as well as productivity, we'll look at that.

On logistics, there is an opportunity for us to improve, and as I said, on the procurement side also, we see opportunity to improve our cost. We have spent the last 60 days in identifying these projects, and they are now in the execute phase.

Of course, we won't have a 100% hit rate, but we are fairly confident that this program is going to deliver on the promise that we are making today.

Okay. The last question to you, sir, Mr.

Koul. Sir, since you joined, it has been 3 months, you must have understood about the company and the pain areas of the company.

According to you, what are the current pain areas and what changes are you planning to bring to create value for the shareholders?

I think yes, it's been nearly 3 months now, and I've visited all our plants and met up with a lot of our customers. I think what I can confirm to you is that the fundamentals are very, very strong.

I think we have got excellent people. There is a huge amount of ownership.

There is excellent execution on the field that is happening. There is a willingness and openness to change, and therefore, we are embarking on some of these projects with the help of external consultants as well.

What we've already started doing is getting some external consultants and experts to advise on some of the projects I was talking about earlier in terms of yield and in terms of productivity improvement. As I think in terms of the feedstock diversity, that's an opportunity for us to leverage.

The other opportunity for us to leverage beside the value-added part of the business, which is Nanovace and other battery materials where we are strengthening the team and creating more focus, is that key account management with international players, which also requires us to invest in the supply chain assets in specific geographies, especially with improvement in FTAs which are coming through Europe, certain geographies will become very interesting for us. It's not just about appointing a distributor or supplying directly to the customers.

One of the areas we'll try to improve is reduce the lead time for customers by putting in supply chain infrastructure in specific geographies, not everywhere, but in a few specific geographies, which we believe is one of the key asks of the customers. With these initiatives, I think we have the people to do it, we have the focus to do it, and we have now embarked on creating a roadmap in which each of these milestones is going to be tracked very rigorously to deliver on the promises that we make.

I hope that helps.

Yes, sir. Thanks, and all the best to you team.

Thank you.

Hello. We

can hear you.

Yeah. Just one question I have.

Sir, what is the EBITDA per ton for the carbon black business for the third quarter as well as 9-month of FY26? Do we expect to maintain the guidance of ₹25,000 per ton over the next 2, 3 years?

Third quarter we had ₹13,800 EBITDA per ton, and this number for 9 months is ₹15,300.

Okay.

What was the next question, sorry, Sanil? Projections?

The guidance for Yeah, sorry.

Beginning of the year and in earlier earning calls, we had spoken about all the initiatives we are taking on our product portfolio improvement side, manufacturing efficiency, right, and the operating leverage playing its role as we grow higher in terms of volumes and capacity. All of that, I'm not talking about immediate short term, but 4 to 5 years, we stick to our earlier guidance.

The potential is huge, and we should be reaching somewhere near ₹24, ₹25 in next 5 years. That's how we see it.

Okay. Okay.

Thanks. That's all from my side.

Shashank, are you there?

Hello.

you are audible. Am I audible?

Okay. Sir, with the European FTA and American tariff reduction in place, would you like to quantify what are the percentage gains in volumes you expect in exports for FY27?

Considering crude at $65, which is lower than your comfort zone of $72 to $75 USD, what should be the overall margin profile of PCBL in FY27?

I'll answer the second part of the question. First part, Nilesh wants to.

Crude as such doesn't impact our margin in absolute terms, right? The movement in crude becomes built in into the pricing and passed on to the customers on a very macro level.

There are some segments, of course, which is kind of impacted by change in crude prices, but it is more about demand and supply dynamics than the movement in crude, right?

Okay.

In terms of the volume, I think it's a dual question. One, what we did when the tariffs went up from 10% to 50% is we stayed engaged with our customer base, which did result in us taking a little bit of a hit on profitability, but we were expecting that tariffs will settle down, which is what has happened right now.

However, it'll take us a few months before the customers are able to switch back over to us. I expect growth to happen in terms of volume as the competitiveness improves with the US and European customers.

The other element which we have to focus on is also the building of the infrastructure, the supply chain infrastructure in these locations, which is something that we have embarked on. I think a combination of that will deliver volume growth.

I'm not able to quantify it for you right now, but I expect strong growth from both these markets, especially with focus on a few select territories where we believe the investment in local supply chains will impact both volume as well as profitability.

Okay. Sir, I have one more question.

Would you like to stick to the FY29 PAT guidance of ₹2,500 crores, as was claimed by the earlier MD of PCBL around I think in 2024? Or do you wish to postpone or revise that guidance?

No, we don't want to make any changes in our long-term guidance now because all the levers which we built into our numbers for '29, those are still working, and work in progress, very much work in progress.

All right. One last question, this quarter there was no dividend declaration.

This is probably the first time in many years in Q3 there's no dividend. Earlier in Q2 you had a dividend, but it was termed to be an interim dividend.

Would you like to comment anything about what should we expect on the dividend policy going forward?

Typically, if you see last few years, board has declared the interim dividend either in Q3 or Q2. While last financial year it was in Q3, this time the board chose to deliver on Q2.

Currently, I think at the board, there was no proposal to go for any further round of dividend. Overall, in the past few years, typically we have been maintaining a payout of 40%, 45% to 50% kind of a range, and generally we should be able to maintain that going forward.

Sir. Thank you.

Thank you so much.

Hello?

Yes, Disha.

Am I audible, sir?

Yes.

I just wanted to know what's the total capex that we're spending for the Nanovace plant?

On the commercial pilot plant, it would be just about $4 million to $5 million. No,

on the full scale.

On the full scale, our current estimate gives us a number of about between $25 million to $30 million.

This we're expecting to commercialize by the end of FY28, right?

Yes.

Okay. What's the utilization that we're targeting for FY29?

This is something that we will have a better hang of after the pilot results are in and further qualification of the material happens. We expect after qualification that the ramp-up to be fairly quick.

Can we expect to reach peak by beginning of say FY30? FY30,

I think we should be seeing closer to where we want to target in terms of utilization. As I said, it will require us to work on further downstream applications of Nanovace and work with customers and see how that supply chain improves as well.

Yes, we're confident that the ramp-up will be fast.

Okay. All right, that's it from my side.

Thank you.

Thanks. Thanks for the opportunity.

I got a few questions. First on the Europe, this Euro 7 norms are being proposed to be started from November of this calendar year, where for the first time there is a pollution norm getting introduced for the braking and the tire, which should mean that there will be a much stricter regulation.

Hopefully, that should benefit somebody like us who has a stronger legacy in the carbon black business. Are we preparing anything for that or is that will be a game changer for us in terms of winning more market share and all?

Can you help us understand that?

We're working very closely with the customers in developing new solutions for them, and you're absolutely right. Our hope is that we should be able to increase our market share in the European tire customers.

We are also working in our Belgium R&D center on developing unique solutions for the EV ecosystem as well, because that's where a lot of growth and requests for innovation has come from customers. On both these fronts, we are working very closely with customers, should benefit us in the medium to long term.

Got it. Second, now that crude has increased from the lows we have seen, I think there could be some demand from the restocking.

Are we looking at some restocking demand because crude is stabilizing or moving up? Any of those signs are visible today for us?

As of now, we haven't seen too much of that yet, but let's see if the uptick continues, because there are different models people are using in terms of what the trajectory is going to be. We haven't seen any uptick right now, but if there is, we'll be more than happy to support that.

Got it. My third question is on the domestic business.

It appears that auto is doing very, very well, while our domestic sequential numbers have declined. Anything that we have picked up for us to not do as good as auto OEMs?

I think one is the seasonality issue which played a little bit of a role in quarter 3. Second is that there has been additional capacity in the domestic market which has come in as well, there is some jostling for market share which has happened.

However, our market share with tire companies continues to be robust, and we continue to stay engaged for long-term relationships with them which are beyond transactional in terms of co-creating and working together for long-term strategic partnerships, which should help us continue to stay in a good strong position in the tire market. Yes, we expect to leverage the growth which we're expecting of the domestic tire market in around 5% to 6% growth next year as well.

Got it. One last question on this US tariff side.

Earlier in the call, we have mentioned that the US business was not profitable due to the tariff. This was still yesterday.

Today we have an 18% tariff. Does the US business become profitable equal to the existing run rate with the 18% tariff or we will still see this 18% is increase from 0%, that will still have some kind of an erosion in the profit from where we started say a year back?

No, we should see a significant improvement. We started from a 10% tariff where the effective tariff on us is roughly around 4% because we source CBFS from the US, there is an offset that we get.

This 18% also will see the effective rate being less, maybe around 8% to 9% or so. We definitely see margin improvement happening, and equally importantly, we hope to see volume improvement happening as well as customers get more confidence on the stability of the tariff rate.

The customers were more worried about the unstability and unpredictability of the tariff than on the absolute number, we should see improvement in both.

Indian relatively tariff lower within the Asian peers, will that put us in a better position to supply to a US versus Chinese?

Short answer, yes, but as I said, we need to do more work. We need to put in the infrastructure.

We need to wait for some of the customers who have entered into medium-term agreements with their other vendors, local vendors. It might take a little bit of time, but yes, definitely on the overall, we should see better competitiveness from us compared to some of the other Asian players.

China doesn't supply much to US. They do annually some 10, 15,000 tons to US, it's

not a very big competitor there. That's it.

I think the tire supply has increased. I think that is where at least global carbon black OEMs have been talking of significant dumping of tires from China to North America and South America.

That scenario is not changing, right? Or you think Indian tire exports will become now competitive?

Because I think Section 232 remains unchanged. At least that's what the news is.

Yes, we'll have to observe it, but yes, you're right on that. There is of course also additional capacity being set up in Latin America as well as America on the tire investments.

In the medium term, we should see more demand for carbon black as tire capacity increases there.

Got it. That's it from my side.

Thanks for answering all those questions and best of luck for the coming quarters.

Thank you.

Hi, sir. Thanks for the opportunity.

My all questions have been answered. I have only one question.

When we are talking of a yield improvement, what kind of a improvement currently we have at Tamil Nadu, which is a new plant vis-a-vis old plant, and where do we have a strategy to improve when you talk about yield improvement measure?

Some of the interventions we are looking at is, for example, the type of refractories we are using, we're getting international consultants to come and support us on that, and minor capex investments to improve efficiency. We should see a 1% to 2% improvement in the near term with some of the interventions that we're planning.

Near term in the sense that when you are talking of 2-year plan, correct? Is that fair understanding?

That improvement might come earlier. As I said earlier, we have done a pilot test and there we've been able to realize the yield improvement, and now it's about horizontally deploying this across other plants.

Okay. Medium term, what kind of again improvement that are we looking for?

I think we're looking at a minimum 1% to 2% because there is multiple other initiatives. This one is attributable to one specific new intervention that we're making, but there are other projects being identified, there'll be different phasing for multiple different initiatives to come into play.

I would say over the next 2 quarters, we should start seeing this improvement.

Okay. Thank you.

Thanks and all the best.

Thank you.

Yeah. Hi, good afternoon, sir.

Just wanted to check, sir, can you share the geographical mix of your exports? Apologies if you have already shared that and I'm missing the initial remarks.

In international, about 50-odd percent goes to Southeast Asia, about 20% to Europe, 13%, 14% to US, and rest is spread across Middle East, Africa, and Australia, New Zealand.

Right, sir. This is for the current quarter or this is at the normalized level?

Is this partly the design in U.S.?

I'm talking about the average of current year. Earlier, 2, 3 years back, our Asia weightage was much more.

It was almost about 70%, more than 65%. Now and Europe was very small, about 4%, 5%.

From there, our North America and Europe volumes are on an increase.

Right. Effectively, sir, this 13%, 14% volume will tend to benefit from the reduced US tariffs, right?

It is not exactly US tariff. Like I try to explain that there's also inventory destocking partly because of December being balance sheet month for number of our international customers, and also crude price has seen some correction, continuous correction.

When that happens, then typically the inventory level goes down in the system. Both things.

Also in some of the markets, some of the customers where our margins were very low, we took a conscious call to reduce volumes.

Right. Secondly, sir, in the case of Aquapharm also, you have manufacturing facilities in US, Middle East, and India, right?

Shashank, you're not audible.

Sir, in the case of Aquapharm, you have the manufacturing facilities spread across US, Middle East, and India. From India, do we export to US in the case of Aquapharm as well?

Yes, we do.

What proportion?

That's very small. That's more kind of raw material for some of their end product.

In terms of overall percentage of India business, it will be like 4%, 5%.

Right. Sir, in our broader scheme of things, you were supposed to spend ₹3,000 crores in incremental growth capex, right?

You have considerably revised your capex guidance for this and next year. By FY28 onwards, do we pent-up our capex spend or it's going to be at a similar level going forward as well?

No. When we spoke about capex plan, that was kind of addition of all the brownfield expansion, greenfield expansion, the new projects in the conductive segment, and also bet for the Aquapharm.

Part of that expenditure, Shashank, we have already incurred. Like the brownfield expansion in Tamil Nadu is complete.

The specialty expansion in PCBL Mundra, that is also about to get completed. The pilot plant of Nanovace is ready.

Acetylene black plant will come up next year. It is not that we are cutting down on the size of our expansion plan.

It is only that part of that we have already incurred and part is waiting to get started, pending some approvals from the government, which is a greenfield primarily.

Right. Sir, we were supposed to do a brownfield expansion 90,000 tons in Tamil Nadu, right?

Has it been in two parts, or—

That 90,000 ton included one soft line and one hard reactor. The soft line, 60,000 ton, that is already commissioned.

The hard line is currently under trial run, and we would announce commissioning of that too soon.

Thanks. Sir, is there any possibility of advancing commissioning of the nanosilica plant, because that is something which is kind of interest to—

It's a new technology. We want to take it step by step.

We want to ensure that the pilot project goes well. We have adequate focus on it.

We are continued engagement with the customers, but I think it's best to do it in a structured step-by-step way rather than trying to rush it and then sort of not being able to deliver on the promise. As I said, new technology, we should have the pilot on time, and engagement with customers will dictate if we want to fast track this or not.

Right.

Sir, our FY30 plans included 2,000 tons of nanosilica plant commissioning, right? That remains unchanged, right?

Or is it now split that 2,000 tons?

No, we have not made any changes yet. As I said, the pilot project will dictate the next steps on this one in terms of timing, but as of now, we continue to hold on to that the next phase will be a 2,000-ton plant.

Okay. Sir, my last thing, in the case of Aquapharm, last call guidance was ₹75 crores of EBITDA exit run rate.

Do we stay by that guidance for Q4 for the case of Aquapharm?

Next quarter we expect improvement from the current run rate, but yes, the EBITDA guidance will be slightly delayed.

Right. On the dividend payout, sir, you said that you tend to be at 40%, 45% of PAT.

Last quarter, you already distributed ₹226-odd crores. We feel you've gone overboard on dividend payout this time?

From the current quarter's profitability, if you add up, the overall payout will look high, but from a normalized level, it would still be that 45%, 50% kind of a payout.

One thing I'll add here, Shashank, the visibility around performance and cash flow remains very strong, and therefore, the board has decided not to reduce dividend payout for now.

Sure, sir. Sure.

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

Thank you, sir, for the follow-up. Sir, my question is on to the feedstock.

Sir, you have mentioned that you're looking at coal tar also as a feedstock, and some 1% to 2% benefit from it. Sir, currently our raw material mix is of the CBFS, which is a mix of feedstock like anthracite, qunon, and petroleum oil.

This moving towards coal tar or carbon black oil, how benefit it is in the near term? Also can you share the difference in price between CBFS and CBO as on today?

We have predominantly been operating with the CBFS, which comes from the crude, and now we are looking at diversifying. It's a strategy to diversify and sort of ensure that in different market cycles, we are equipped to mix and match.

The other advantage is that we produce a lot of different grades and types of products, which have different quality requirements in specifics like, for example, sulfur as an example. Now if we are able to blend the products together, we should see improvement in both being able to deliver quality at a lower cost, as well as diversify our sources of feedstock.

It's more in that direction, we continue to work on it. In the past also, we used to use coal tar based products as well, it's a question of optimizing that flow and building optionality for ourselves.

Got it, sir. The difference, sir, in prices?

Currently it is about $100 per ton.

Got it. Sir, my second question is onto the EBITDA per kg number which you have mentioned of ₹24, ₹25 per kg.

This number includes the new age businesses also EBITDA or this is your core carbon black EBITDA?

No, that is carbon black.

That's carbon black.

Okay. Sir, carbon black EBITDA like ₹24, ₹25 per kg seems like on the higher side because the current number looks quite lower.

What is that confidence to get this sort of a number?

I think we're looking at both sides in terms of efficiency improvements, there's a cost reduction, as well as realizing better premiums given we are going up the value chain in terms of different types of carbon black products as well. A combination, in the medium term, we are fairly confident that we'll hit that number.

Sir. Got it.

Thank you, sir.