Thank you. Thank you so much, and good morning, everybody.

On behalf of Chemplast Sanmar Limited, I extend a very warm welcome to everyone joining us on our call today. On this call, we are joined by our CFO, K.

R. Balaji; Dr.

Krishna Kumar Natarajan, heading our Custom Manufactured Chemicals Division; N. Muralidharan, Executive Director, Finance; and SGA, our investor relations advisor.

I hope everyone has had an opportunity to go through the financial results and investor presentation, which have been uploaded on the stock exchanges and on our company's website. Q1 FY '26-'27 was shaped by a volatile global environment, with geopolitical events influencing raw material availability, feedstock cost, and demand across several of our businesses.

We are seeing respite in the feedstock prices, with supply conditions improving towards the end of the quarter. Against this backdrop, the company reported a consolidated revenue of ₹1,125 crores for the quarter.

However, a sharp increase in input costs severely impacted profitability, resulting in EBITDA loss of ₹115 crores. Getting into the details, on the Paste PVC side, the demand remained volatile throughout April and early May, primarily due to lower downstream operating rates caused by PNG, LNG supply issues and elevated input costs.

However, the market turned around in June as Middle East situation eased, providing better visibility on raw material availability and helping downstream operating rates to recover to 70% to 80%. We remain confident that this demand recovery will continue in the coming quarters.

Pricing improved compared to the previous quarters. Supplies from Europe and Asia remained limited through much of the quarter before turning aggressive again from mid-June as market conditions normalized.

On the regulatory front, the Ministry of Finance allowed the anti-dumping recommendation against imports from European Union and Japan to lapse, prolonging import pressure on the domestic industry. In response, we filed a writ of mandamus before the Madras High Court and obtained a favorable order directing provisional assessment of imports and execution of bonds by importers to facilitate retrospective recovery of ADD should it ultimately be imposed.

The basic customs duty on Paste PVC was waived off from 1st of April 2026 to 30th of June, with the waiver extended until 15th of July 2026. This was reinstated with effect from 16th of July 2026.

With the reinstatement of customs duty and the ongoing legal proceedings relating to ADD, we expect a moderation in low-priced dumping from Europe and Japan, which shall provide a more balanced, competitive environment for domestic producers. Operationally, productivity improvement initiatives at the Cuddalore Paste PVC facility is progressing well, and the 7,000-ton debottlenecking project remains on track for commissioning in October 2026, further strengthening our manufacturing capabilities.

Coming to Custom Manufactured Chemicals Division, the segment delivered a much improved performance during the quarter, reflecting encouraging signs and recovery from the slowdown witnessed over the past few quarters. Backed by a healthy order book, accelerating customer engagement, and robust product pipeline, we are confident that this positive momentum will continue through FY27.

On the execution front, MPB3 Phase 3 and Pilot Phase 3 have been successfully commissioned and are on. Our business development initiatives are also yielding encouraging results.

The appointment of a business development head for Europe and a representative in Japan have significantly strengthened our customer engagement and new product opportunity. Our molecule pipeline has expanded close to 50 molecules, with 14 being commercialized, reinforcing our confidence in the long-term growth prospect of the business.

On our refrigerant gas business, following the commencement of commercial production of R-32 in late '26 from our swing plant, customer engagement continues to progress. Feedback from customers on product specs has been positive.

On the new plant, project commissioning is underway and progressing as per plan. Moving to our value-added chemicals business, caustic soda and chloromethane continued to operate in a challenging market environment during the quarter, with pricing remaining under pressure due to weak regional demand and excess supply.

While demand for caustic soda remained stable across key end-user industry, chloromethanes volumes were impacted by softer demand in select end-use segments. In hydrogen peroxide, volumes improved on a sequential basis as raw material availability normalized, although prices moderated from elevated levels seen at the beginning of the quarter.

On 17th July, a rare fire incident occurred in our PVC plant in Karaikal, resulting in manual shutdown of the facility. There were no injuries to employees or contractors, neither was there any spillage, and the fire was quickly extinguished within 15 minutes.

We are working closely with the concerned authorities and undertaking all necessary corrective actions to facilitate the safe and timely restoration of operation, with the safety and well-being of our employees remaining our foremost priority. On Suspension PVC business, market headwinds impacted the Suspension PVC this quarter due to declining prices, particularly in April 2026.

The quarter was marked by significant volatility following the Middle East conflict, which disrupted feedstock availability and led to elevated VCM prices. To support the domestic economy and reduce import cost, the government exempted customs duty on PVC resin and reduced the duty on VCM to nil from 2nd April to 30th June 2026.

This led to higher imports, particularly from China, putting pressure on domestic market. In addition, the demand softened towards the end of the quarter due to seasonal factors.

Re-imposition of the customs duty and introduction of a minimum import price on low-price Suspension PVC imports are expected to provide some pricing [support?] .

During the last quarter, we mentioned about formation of a committee comprising of three independent directors to examine the strategic priorities of the company with a view to enhance the long-term value creation for stakeholders. The committee is currently evaluating the various options available and have engaged advisors to assist them in the process.

Once there is a definitive development or a concrete outcome to share, we will certainly provide an update. The improving outlook of our specialty business coupled with positive development in our PVC product portfolio gives us confidence in the future.

The strong momentum in CMCD together with our ongoing investments in capacity expansion in the specialty segment positions us well to drive profitable growth. We remain focused on disciplined execution, creating long-term value for our stakeholders.

Now I request our CFO to talk about the numbers.

Thanks, Ganesh. Good morning to all the participants on the call.

Coming to our financial performance for quarter one FY27, on a consolidated basis, the company reported revenues of ₹1,125 crores compared to ₹1,025 crores in the corresponding quarter last year. The company reported a net loss of ₹121 crores for the quarter.

Now moving to segment-wise performance, the specialty chemicals segment reported revenues of ₹427 crores during the quarter, with volumes registering a healthy 21% year-on-year growth. The value-added chemicals segment reported revenues of ₹129 crores compared to ₹138 crores in the corresponding quarter last year.

The Suspension PVC segment reported revenues of ₹569 crores compared to ₹608 crores in the same quarter previous year. In terms of revenue mix, the specialty chemicals segment contributed 38% of the consolidated revenues, the value-added chemicals segment accounted for 11%, while the Suspension PVC business contributed the remaining 51%.

On a standalone basis, the company reported revenue from operations of ₹592 crores, while EBITDA stood at ₹7 crores for the quarter. With this, we conclude the presentation and open the floor for further discussion.

Thanks.

Thanks for the opportunity. Sir, first question is in terms of VCM sourcing.

What is the current condition in terms of sourcing from different geographies? Given that VCM prices have been largely similar to the product prices, PVC, at any point in time, would we be taking the decision to partially shut down the facility because anyways it is not making money as of today?

Thank you.

Thank you, Rohit. VCM high-priced inventory that we had booked, which was close to $1,000-plus, that affected the first quarter, and we will consume everything by July and part of August.

As of today, if I look at the replacement cost, the VCM is priced at about $700 delivered price, and we are selling PVC at about $900-plus. There is a spread of $150 to $160 net of taxes, which is available for us to operate.

We will continue to evaluate the situation. We are trying to look at alternate sources of VCM sourcing.

To give a perspective, the reason why the prices went up end of March, early April was primarily due to lack of the feedstock for the VCM plants, which used to come from Middle East. That has now eased out, and plants have started going back to their 70%, 80%, 90% capacity.

We see that VCM prices will continue to soften as we go into the next quarter.

Sure, sir. Sir, second question is in terms of the margins for suspension as well as Paste PVC.

Now given that the ADD investigation or the ADD did not go through for both the products, how are we foreseeing the margins for the next one, one and a half years? You mentioned about the Chennai High Court writ appeal, but beyond that, from an ADD perspective, have we been going ahead with any incremental process so that again it can be taken up by the government?

Thank you.

One is the ADD suspension. Yes, suspension, we are relooking at taking it up as an industry in terms of we are working on the data to see what would be in favor of an ADD proposal.

On the paste side, I think this itself, this court directive itself is pretty strong and will be a deterrent to low-price dumping into the country because it is against a provisional bond of retrospectively collecting duty in case if it is applicable. It means that the prices will adjust in a normative approach as we go.

For the next steps of application for paste, that is something which we always keep reviewing on a quarterly basis in terms of how are we with respect to the data and what is it that we need to do as an action. That will continue to be a consistent process to represent to the government and see how to get a anti-dumping duty on Paste PVC.

The focus of anti-dumping duty is also only a level playing field. As long as we get a level playing field, we are competitive technically with the global players into the market.

Got that, sir. If I can squeeze in one more on the CMCD front.

In the commentary, you mentioned that this quarter has seen a good amount of pick-up and good traction in the business. Is it because of any external factors, or do we feel that this is going to be a case incrementally for the quarters and the pick-up will continue?

Where are we on the ₹1,000-crore target for CMCD as of now? Thank you.

I will hand it over to Dr. Krishna Kumar Natarajan to respond to this.

We are on track on the ₹1,000 crores target as we communicated in the last call. Going back to your first question, this is a reflection of the molecules that we have commercialized over the past two years starting to ramp up as we had expected them to, and so we expect the trend to continue in the coming quarters as well.

Perfect. Thanks a lot for all the answers, and all the best, sir.

Thank you.

Hi, sir. Thanks for the opportunity.

Continuing on the CDMO side, we were working on 40-plus molecules earlier and were expecting commercialization of around 15, 17 of them this year. Any changes to that thought, or any update on that?

How are we looking at the product commercialization side? This will be largely agchem, right?

Or there are some other non-agchem molecules as well that you're looking to ramp up?

Thank you for the question. The pipeline continues to be healthy.

Our number of molecules in the pipeline that we track has continued to increase. We are close to around 50 molecules in various stages of development.

We have currently 14 commercial, but we anticipate more commercialization in the coming months. We've also deployed resources both in Europe as well as in Japan to accelerate our business development efforts in these regions.

The activities in terms of BD is not just restricted to agchem. This pipeline that I'm talking about of close to 50 molecules includes markets in pharmaceutical as well as in other specialty chemical end markets.

We are trying to diversify beyond just agchem.

Sure, Dr. Krishna.

If you can just highlight maybe in percentage terms or whichever way it works, how do you see let's say this ₹1,000-crore revenue that we're looking at, right, maybe three years out, what would be the potential breakup of this between agchem and non-agchem? Secondly, from a client diversification or concentration perspective, you did mention BD efforts in Europe and Japan, but do we have visibility on revenue from incremental newer clients or the same client is adding more business to us?

The ₹1,000 crore would continue to be pretty much agchem, so that number is reflective of what we have done till now. What we are doing now will reflect a little bit down the road, and it's not [unclear] the agchem overall market continues to be subdued and it is reviving, but there's still significant competition with respect to generics from China.

Majority of our molecules that we have commercialized, many of them are pipeline molecules, those are more linked to long-term growth and things like that. The growth for us is coming from what we have developed and commercialized, and they are going through the ramp-up phase that we had originally anticipated.

Some of them could have been delayed by a quarter here and there, but overall, they continue to be on a healthy, positive trend.

Sure, sir. That's helpful.

Just one last bit on R-32. We are looking at 14,000-ton of capacity.

One, any timelines on that side in terms of commissioning? Secondly, how are you looking to sell this across?

Is this largely going to be a domestic sales, or are we looking at some global tie-ups, etc.? Thank you.

Thanks, Rohit. A, all the capacity will be online by the end of this fiscal.

That is as per plan. It's not something it is changing as of

now. Voice cracked.

End of this quarter?

Fiscal, fiscal.

Yeah.

Fiscal.

Thank you.

Fiscal. That has been the plan always, and that is how we are on track to deliver on that.

Second is regarding the go-to-market strategy. The go-to-market will encompass both domestic and international trade.

We are in active discussions with various partners, and by the time we get the capacity online, we would have tied up some of the partnerships.

Sure, sir. That's it from my side.

Thank you, and all the best.

Thanks.

Hi. Thank you for giving me this opportunity.

Sir, I've got three questions. I will put them across one by one with your permission.

First one is you just disclosed and also in your annual report that you have 14 molecules in commercial production on the CMCD side. Without naming customers or products, how concentrated is that revenue?

What share comes from, let's say, top three molecules, and how broadly distributed the revenue base is across these 14 today?

It's concentrated mostly in agchem, but beyond that, we don't want to comment on both customer concentration as well as product concentration, because many of them, as I've indicated before, we have confidentiality obligations with the customer. I can assure you that it's with multiple customers and across multiple innovators and multiple products.

Products, we know that it's 14, but you also just mentioned that you've got multiple innovators or customers across the 14 molecules.

Absolutely. Absolutely, yes.

Okay. Sure, sure.

I guess there is slight delay in the line, but that's fine. My second question is you have expanded the CMCD capacity from roughly 1,100 to 5,400 tons.

Excluding the uncontracted pipeline, what utilization does the current order book support today, and what utilization is required for CMCD to earn your targeted ROCE?

Answer on the utilization side, as you are aware, we just this quarter commissioned Phase 3 of the expansion of MPB3. If I exclude that, our utilization would be maybe close to 60% to 70% on the assets that are already commissioned.

That's because I think that's a fairly healthy utilization, because if you also recall, these are multi-purpose blocks, can handle multiple products, but there are times required to change over from one campaign to another. Utilization in these blocks can never be 95% or 100%, let's say.

Question on ROCE—

Absolutely. It will never be Krishna, can you I think I'll clarify the question.

For the blocks that are reasonably well utilized—

We don't break it up.

If I can clarify very quickly, I think there is some delay in the line. For the

Okay.

Go ahead. Sir, if you can repeat the question.

It's not clear.

Sure, sure. I will repeat.

My question was that on the gross block that is reasonably well utilized, 60% to 70%, are you getting the desired ROCE based on your internal estimates on that part of the gross block which is utilized? I'm just trying to understand the overall economics that at a certain Yes, of course.

We will never get 90%, 95% utilization on a sustainable basis because these are multipurpose plants, and in multipurpose plants, the changeover, etc. will impact the utilization.

These are not dedicated capacities, one molecule continuous manufacturing, etc. I completely understand that.

On the part that is reasonably well utilized, are we getting the desired ROCE? That is the question.

Thank you.

Sajal, thank you. I think like Krishna explained, one, the order book is healthy, and the delivery in Q1 has been healthy, and the utilization has been at reasonable levels.

Of course, it can sort of go up marginally. In terms of return expectations, I think earlier also we had indicated with new products, the contribution margins gradually increase.

I think we are now reaching a stage where we are more or less able to optimize the cost levels and then get to the industry leverage of returns. That's where we are.

I think we will get there this year.

Okay. Understood.

Thank you. My last question is on the debt levels, we have a positive operating cash flow, but with the interest costs now around ₹235 crores annually, and free cash flows is still negative because of the growth capex, what level of sustainable operating cash flow do you need to service the interest and the debt repayments while completing the committed growth capex without requiring additional capital, be it a dilution of equity or some external funding?

Thank you.

Sajal, this is Balaji. We have pumped cash over the years.

That, along with the current accruals, will take care of all the debt servicing obligations. We have enough liquidity in the system to take care.

It should not be a cause for concern.

Understood. Thank you so much for answering all my questions.

Thank you.

Hi. Thanks for the opportunity.

Couple of questions. First on the PVC.

Sorry, I joined a little late in the call, but want to understand how has been the spread starting this quarter, because are we still carrying a high-cost inventory, because there is a significant impact of high-cost inventory of Q1? How should we think about Q2 and Q3 considering the current prices if they sustain the way they are?

Hi, Sanjesh. Thanks for the question.

The high-cost VCM still continues. Part of it was there in July and will be there in part of August, and after that, we are getting into the normal price equity.

Getting into September and getting into Q3, we should be in a better position if the same price levels continue on both sides, whether VCM or PVC. We are talking of a spread of around $160 between PVC and VCM.

Between PVC and VCM. They are sustaining now?

They are sustaining now. See, now that the customs duty is back, the MIP is imposed for the next six months, both of these things will ensure that prices will not go below this level.

When we say $160, it is India spread or we are talking about the global spread, because if I take $160, then should I add the differential in the excise duty, freight cost to come to an actual spread? This is our spread.

Roughly around

This is our spread.

This is India spread. Got it,

got it. Second, on the Paste PVC, we have done a 7,000-metric-ton of debottlenecking, which is a great thing.

How is the spread in the Paste PVC business, because your standalone has done reasonably well when we compare to your subsidiary? Is there a difference in the inventory carrying days for both the business, and how has been the spreads for the Paste PVC?

A, the Paste PVC realization has been much better for us compared to the Suspension PVC. There is always a positive spread between suspension and paste.

That's one of the reasons why we are pushing for the paste debottlenecking. That is what has helped us to put the standalone P&L in a good position.

What is the differential spread today in the paste versus Suspension PVC?

That is roughly around $200, the spread between paste and suspension.

Got it. My next question, on the value-added product, the production appears to be lower.

Is because we have bought more EDC from the market because of the ethylene shortage, or is there anything else to read there? See,

we went through a membrane changeover. Because of this, during the membrane changeover in caustic, the plant was shut down.

That is where we had lost the capacity. Knowingly, it was a well-planned initiative.

Post membrane changeover, the productivity improves, in the long term, it benefits us. That is why you see that delta.

What will be today our capacity in the caustic? We were at 120,000.

Still there, or

Still at that. Capacity is there, but then different electrolyzers because of aging has different efficiency.

So 100 to 120 will always be the range in which we operate.

Got it. Got it.

On the custom manufacturing business, we were confident this year of a decent growth. Has the visibility improved or you still see there's a challenge in the underlying agrochemical market?

No,

we don't see any challenges in the underlying agrochemical market. The concern that we would have is how the pipeline in the agrochemical market moves, because, as I've talked about this in the past, in terms of new molecule launches are getting delayed and are not taking off as originally our customers were expecting because of price pressures on existing molecules and availability of cheap generics, which motivates the farmers to continue using existing chemistries and formulations and not move to new molecules.

Don't see significant downsides to the demand that we have on the molecules that we've already commercialized.

What has been the pick-up of some of the molecules, because we did some of these patented, I thought considering the revival, there will be push from an innovator for the patented product. Are we seeing that happening in the market, as a more uptick for our products?

No,

the molecules that we have commercialized, many of them are pipeline or are linked to customer's newly launched products, right? We are seeing good traction, and we are seeing positive revival and momentum on some of those already.

Krishna, anything beyond the agrochemical we are thinking at this point of time, or we are largely focused on getting this agrochemical entire diversification?

No, we talked about this I think probably before you joined. We are investing in resources both in Europe and in Japan to support our business development.

These are fairly senior-level resources, and the intent is to look beyond. Obviously, agchem is a focus because there is significant opportunity both in the near and long term, we're not going to move away from that.

We believe that there is good opportunities there. At the same time, parallely, we are looking at pharmaceutical and other specialty chemical applications and customers where we are seeing some traction as well.

It's again our intent to diversify beyond agchem in the long term.

Very clear. Have we hired the people, or we're still in the process of identifying the talent?

No, no,

no. The resources are already on the ground and running.

On the ground and running. Great.

Great. Thanks.

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

Thank you.

Hi. Thanks for giving me this opportunity.

With four consecutive quarters of losses and thin margins, what is management's plan of sight to EBITDA breakeven and by when? Okay.

See, the challenges have been continuing for a long time, mainly driven by the PVC segment. What we are looking at is four broad triggers in terms of positive triggers.

First is, if you look at Suspension PVC, we are looking at the reinstatement of customs duty, the MIP that has been implemented, and also globally the market's recovering very, very marginally. That's even though marginal, but the MIP and the reinstatement of duty will bring up the price levels.

For this accompanied by the drop in VCM prices will help us to improve the spread as we move into the next quarter. We may still have some challenges in this quarter, but as we move into the next quarter, we see that this margin should be able to sustain.

We are talking of reaching a spread of close to 100 $160. This will be healthy for the Suspension PVC business.

Coming to Paste PVC business, there is, of course, the duty which has come back. That is the first one.

Second is, while we did not get the anti-dumping duty, we filed a writ in the Madras High Court in terms of seeking reinstatement, and till the time a decision is taken, provisionally allowing importers to clear the consignment on a bond with ability to retrospectively recover the duty if it is imposed. This has already started seeing offshoots in terms of prices going up.

To that extent is a positive sign. Third is on the CMC, Krishna has explained that we've had a strong quarter.

There are 14 molecules which are already in play. We have a strong order book, as we speak, for the remaining nine months of the year, and also the new molecule pipeline at 50, which will move around and start getting into concluding phase as we go into the next few quarters.

Fourth is the ref gas, part of the plants are already operational. The full capacity will be in the last quarter of the fiscal.

By that time, we will also start getting into the profitable growth. All the four put together, I think we have a strong resilient position today to see that the business turns around and moves towards the positive.

Thanks for answering. My next question is around refrigerant gas capacity of R-32.

Now that the commercial production has started, what is the current utilization rate, and when do we expect full ramp-up? What is the expected revenue and margin contribution from R-32 in FY27?

See,

full ramp-up will happen only in the last quarter of this year and the first quarter of next year, because that is when all the capacities will come up. As we move, we see a healthy margin contribution there as of today, but it's too early to give a forward-looking statement on how much will that scale.

Yes, it is as per our plan, and we see this is going to be one of the profitable things.

How does the swing plant flexibility between R-22 and R-32 get decided commercially?

We would be moving to R-32, and then depending on if we have an opportunity, we can take a call later. As we see the entire country and the global moving towards R-32, we may not have significant demand for R-22.

Okay. Thank you.

Thank you for answering my questions. All the very best.

Thank you so much.

Hi, good morning. What was the PVC-VCM spread in Q1?

PVC-VCM spread in Q1 was negative. Was a negative spread for us.

It was because of the high-cost VCM, because if you look at the average landing of VCM in Q1 was about $1,000-plus per ton, and the realization was close to $700 to $750 per ton.

Okay. At what spread would

we be EBITDA positive? See, to become EBITDA neutral, we need roughly $120 to $130 a ton.

Kiran, actually, as Ganesh has mentioned, the Q1 had the impact of the high-cost VCM, which we had spoken about in the last earnings call also. Currently on a replacement basis, if we look at the PVC and VCM prices, I think the current high-cost material will move out maximum by August.

Post that, we will realize the current market spreads. Current market spreads, like Ganesh was explaining, is somewhere around $160.

That will give us a reasonably healthy EBITDA numbers on an annualized basis.

For PBT positive, what kind of spread will be needed?

Maybe another $20 to $30 of spread will make it PBT positive.

$180, $190.

Okay. Thank you.

Thank you so much for the opportunity. I just wanted to understand, you said Suspension PVC is around $160 to $200.

I just wanted to understand the trend of this while the EDC prices have gone up significantly, and what are they currently? Similar for PVC paste.

Yeah. Riya, a couple of clarifications.

The $160 is basically the spread at a replacement level. If you look at the replacement market today, if I buy VCM and convert to PVC and sell it, it will be at $160.

We still are carrying contracts and obligations of high-price VCM, we have still not reached that level. That'll happen from September.

Okay?

That will happen from September.

Okay. For Paste PVC?

Paste PVC here on the positive side. We are, as I mentioned earlier, we are on a $200 upward versus suspension in terms of realization.

Got it. While our MIP has increased and creates a floor for us, what can act as a fixed final price or the realization is more of a global determining factor?

Just wanted to understand that does this create a lower margin or a lower spread, and are we able to pass on the incremental hike or the increase in PVC price because of the MIP?

See, today as we speak, the MIP is lower than the market prices, as we speak. This is a floor as we say, this is a base floor that helps us to calibrate as we go along if the markets fall in future.

Ultimately, we are selling on global prices. It's a commodity traded globally, the global prices determine the price of the product.

Okay.

Okay. Just wanted to understand, our inventory, like you mentioned, would get replenished by almost September.

What are the current EDC prices which you are getting?

See, we buy mostly VCM. We don't buy so much of EDC because the mover and shaker is the VCM, which is a majority of it.

VCM replacement price today in the market is roughly about delivered at $700 per ton.

Okay. Got it.

I'll get back in queue for further questions.

Thank you. Thank you.

Sir, I just want to know, can you just give guidance how the numbers going to be from this quarter, because, I'm sorry to say this, I just want to know when it's going to turn profitable, because this quarter, it's loss, right?

We don't want to sort of give a guidance on the exact numbers. Like Ganesh explained, a few positive triggers have happened.

On the Suspension PVC side, the MIP has been announced. Customs duty, which was kept sort of in abeyance for a few months, that has been restored back.

With all of that, the Suspension PVC prices have moved up. The high-cost VCM that we carried, that also is getting washed out within this month.

Inevitably, going forward, we will be able to realize the market spreads. Because the Suspension PVC price is moving up, I think there will be a reasonable EBITDA that that business will generate.

On the Paste PVC as well, the customs duty impact, there again the duty has been restored back, the positive impact of that, along with the fact that we've also got a favorable order in the writ that we have filed in the High Court, which has sort of helped improve the Paste PVC realizations as well. Paste PVC realizations and margins are at a reasonable level.

Custom manufacturing business, like I said, the order book is good, the Q1 performance has been good, the outlook for this business is strong. Overall, I think we believe the sort of the worst is over, and I think the outlook is reasonably positive, more so on the specialty side of the business.

The last two quarters, yes, we did see a few quarters of underperformance, which primarily were driven significantly by the dumping we have experienced over the period. The last two quarters has been more due to the high-cost VCM that we carried.

With all of that getting washed out, I think from Q3, we should see a reasonable performance. I don't want to provide an exact number to you, but I think we should see a reasonable performance from Q3.

Thank you so much, sir. One last question.

I just want to know are there any delegations from pharma towards your site, Hyderabad, including Telangana?

Your voice is not clear. Can the moderator help us with the question?

Sir, I just want to know are there any delegations from pharma towards Hyderabad, Telangana?

Any pharma. Yes, we have various projects ongoing with pharma innovators as well.

Most of them are in the pipeline at a development stage, and we would see some of them becoming commercial either later this year or by early part of next financial year.

Thank you so much, sir, and have a good day ahead.

Thank you.

Yeah. Am I audible?

Yes, please.

You're audible. Thanks for the opportunity.

Sir, my question is on the onerous contracts for which we made ₹152 crores provision last quarter. There was a comment made in the conference call that that provision will be reversed in the current quarter, and also you mentioned there are one or two more contracts where you'll be losing.

Can you give color as to what has happened in this quarter with reference to this ₹152 crores?

The entire onerous contracts have been fully reversed, but, of course, we have certain high-cost inventory coming in again during the current quarter. The net provision is around ₹90 crores for PVC and ₹30 crores for ref gas.

That will get reversed during the current quarter.

The entire provision has been reversed, and you're having

a new onerous contract? Technically, we a mark-to-market for that, net provision is around ₹90 crores right now, NRV provision, ₹30 crores for ref gas.

So ₹90 crores is you're carrying in the balance sheet, is that what you're saying?

That will get reversed during the current quarter.

Okay. Okay.

Extending the same question, I just want to know, see, when your margins are in the region of 4% to 5%, what is the impetus behind signing fixed-price selling contract while keeping the raw material portion exposed? See,

normally, this what we have seen during the last couple of months, starting April, has been an anomaly. It has never been the case.

We have seen PVC-VCM spreads in the range of 100-plus plus-minus dollars. Idea is it was not fixed-price contract, it was a market contract which we had to take.

I hope I'm able to answer your question.

Sir. Sorry to labor on the point.

The thing is, see, if you're having a lower margins, sorry to be blunt on this, from a prudent standpoint, you should have your selling price also protected if there is a raw material fluctuation, right? Keeping the raw material portion exposed completely and while having the selling price fixed, it's kind of putting a lot of pressure on the bottom line.

I also want to know how many such contracts you have to be executed in the future as well.

Look, see, the contractual formula-based pricing that we have basically has worked for years, okay? It is just that as an anomaly, this 2, 3 months when these market prices went up and we had to pick up.

Otherwise, it has never exposed us to this extent. Second, market price is also not fixed.

Market price is also based on the global market, how it shapes up. These are two separate commodity cycles that we are working on.

Normally, PVC to VCM spread is maintained at 100, 150, between 80 to 150, that range is there. This is only an anomaly.

I don't think as an anomaly, we should make a decision and go back to spot purchases, because if you'd have been in spot, then even today, we would have been buying it at a much higher price.

Rajakumar, just to add to what Ganesh is highlighting, actually, it's not that we have fixed the PVC price. PVC price was also dependent on the market price, and VCM is also linked to the market price.

Though they are contracts, they are always linked to the market price. This is a particular situation when the end March, the PVC prices were quite high, and at that point of time, because of the war situation, the availability of material became a question mark.

We had booked certain parcels at that point in time, keeping in mind PVC prices prevalent when we booked the parcel. Subsequently, market prices dropped, and that is the reason we are sort of seeing this negative impact in Q1.

In general, PVC price is floating, and VCM prices are also market-driven and they are floating. We don't lock one side and keep the other side open.

Okay. Thanks, sir.

Thank you so much for the clarification. I was thinking it was a fixed price.

Okay. Thanks for the clarification.

Okay.

Thank you so much for joining us on this earnings call. We appreciate your interest in Chemplast Sanmar Limited.

In case you have further queries, please do contact SGA, our investor relations advisor. Have a great day.

Thank you.