Thank you. Namaskaram from my side.

A very good morning, evening, and afternoon depending on the time zone that you guys are all dialing in from. I hope you all continue to do very well.

Before we get into nit-picky, I had the pleasure of introducing Amit Jain, our new CFO, last time, but here he is there in the flesh and blood. He is also here with me during this call.

Amit, again, welcome on board to Laxmi. As I've shared with the broader audience, Amit comes with 30-plus years of deep experience across industries from pharmaceuticals, packaging, and chemicals.

We're very thrilled to have him as part of our leadership team and as our CFO.

Thanks, sir. Yeah.

Coming to the chemical macro ecosystem, as I always do, I'll talk a bit on the macro, then I'll go back to our key markets and applications that we service, speak a bit on our raw materials, how they have developed, give you guys an update on our projects, and then basically will hand it over to Amit, who will take us through the financials. I think the macro, not surprisingly, if we reflect back into Q1, unpredictability, volatility, and there have been multiple such words that have been employed ever since the sort of West Asia crisis unfolded towards the end of February into March.

That is what dominated a big chunk of, I would say, March and certainly into April. We saw some sort of easing out into the latter part of the quarter, but now as we stand as the cusps, we are also seeing in quarter two a 2.0 version of the West Asia crisis unfolding.

That's broadly the macro. I guess we are all tuned in into it and that is evolving daily as we speak.

If we look at really the chemical ecosystem globally, the structural shifts are continuing to happen. There is, I would say, almost monthly call out of capacity restructuring, realignment shutdowns, primarily in the geographies of Europe, Japan, and Korea.

That seems to be an important element within the structural chemical ecosystem. As a result of the backdrop, we've also, not surprisingly, seen large disruptions on the logistics side, be it pricing.

I think the Gulf of Hormuz, everybody knows very, very well, the Red Sea. The availability of vessels, and if we have to now reflect what we just experienced, the large typhoon around the South China belt, which had larger ramifications also for transportation, moving into the global direction and also into India.

That's broadly remains the macro. Now coming to our key segments that we serve, Pharma Solutions is one key industry that we serve.

We have seen demand broadly on a quarter-on-quarter basis—this I'm referring to quarter four of the last financial year into quarter one of this financial year—I would say broadly being stable, slight differences or nuances between our essentials and the specialty business. When we talk about the agro side, the agro solutions there again on a quarter-on-quarter basis from a demand perspective, we have seen stability despite the backdrop what we are operating in.

In our pigments, a sort of downstream, we have seen certain slight softness at our customer side. Printing and packaging, we have seen that stability.

Also, when we talk about our Industrial Solutions segment, which encompasses the coatings and many of the other new-age industries that we service, we have seen there a positive momentum. That being said, I think given all the large gyrations in feedstock prices have made many of our customers, buyers far more cautious.

We have seen the mix of buying what they need for some overstocking because they realized how the disruptions were. Some were doing it just-in-time, some took a just-in-case approach, some looked at deferment.

We've seen the plethora of directions being taken by our downstream customers, but this is broadly what I would like to park with you from a demand perspective. When we come to our raw materials, and I know many of you guys have been tracking apart from crude, we have obviously seen large, large jumps.

This started fundamentally in March, and we saw this continuing well into April, and it was only towards the end of May and into June where we saw there sort of especially for key raw materials that we employ, acetic acid, we saw moderation. Even in the case of ethanol, we saw in North America ethanol prices moving slightly upward given it is used in the fuel industry there.

That's the dynamic that we were sort of grappling with when we were navigating through our quarter one. We have seen these spikes.

If you now base in March you sort of base it at 100, we saw sort of acetic acid spiking about almost 200%. We saw methanol, which is a precursor or a raw material for acetic acid, spiking even more.

Those elements have brought in a lot of disruptions. Now that's the lens on the raw materials side.

Let me then also closer to home, our projects. Our Dahej project, which is the key element for us, that continues to take very good shape.

As we look into quarter two and into quarter three, the focus remains that we stabilize, mechanical completion, stabilization followed by customer qualification in quarter three, and then ramp-up looking into quarter four for our Phase 2 of our Dahej project. We have a slide in the investor deck, so that gives you also clarity and status how we've sort of navigated that.

We have also had a turnaround, a planned, scheduled turnaround at our site one, and that took place in May in the second half, and we did that in time. Also, this was very safely concluded, a lot of kudos to the whole team that enabled that to happen.

That given all the backdrop that I have been speaking about, you've seen our performance. I think, and this is very important to note, we've been talking about this from time and time again that upcycle benefits larger players who certainly have economies of scale.

They are able to win, and more importantly, they are able to fulfill the customer requirements. That is something that Laxmi prides itself on, and that is what we have basically leveraged.

In our specialties, also we have seen a positive rebound, and this remains very importantly a multi-year journey for us with now Dahej taking shape. We are also blessed, and we are working very, very diligently into a robust pipeline into our specialty vertical.

With that, I would now hand it over to Amit to take the financials.

Yeah. Thanks, Rajan.

I am very happy to be on board at Laxmi and look forward to partner and help steer the business through a challenging operating environment. My first earnings call at Laxmi happens to coincide with one of the strongest quarters in the recent past.

Against the backdrop of continued volatility arising from all these geopolitical uncertainties and the West Asia crisis, we have delivered a strong, broad-based performance in Q1 FY '27. Revenue for the quarter stood at ₹9,683 million, growing 40% year-on-year and 32% sequentially, which is mainly driven by mix of volume growth and the higher price realization, as Rajan talks about.

In addition to better pricing, our supply chain agility and procurement efficiencies contributed significantly to the growth in operating profitability during this quarter. Despite there were very big challenges on the increased freight side and the energy costs linked to tariffs and the coal prices.

The EBITDA for the quarter was ₹1,143 million, representing a growth of 272% year-on-year and 113% sequentially. During this quarter, to secure the procurement efficiencies and ensuring the timely availability of the key raw materials in this volatile situation, our net working capital increased bit during the quarter, and as we are navigating this, we expect that this will normalize over time.

In the current volatile operating environment, our priority remains ensuring uninterrupted supply and business continuity. As Rajan talked about Dahej project, with the Dahej CapEx cycle nearing completion, our term debt has peaked at approximately around ₹6,100 million, and we continue to maintain a healthy net debt-equity of around 0.3x.

Coming to the business unit performances, the specialty business revenue stood at ₹2,418 million, growing 17% year-on-year and 13% sequentially. The essential business revenue stood at ₹7,265 million, growing 50% year-on-year and 39% sequentially, supported by a double-digit volume growth.

This is the financial performance for Q1 FY '27, and now we can open the floor for the Q&A session.

It's Visaria Family Trust. Hello, team.

Congratulation on a very good set of numbers. My first question is related to our specialty project, Dahej.

Can you just remind what is the type of total CapEx spending this year which we will have to complete to make this commission? Second, the entire, let's say, ₹600 crore plus gross CWIP plus the remaining CapEx will get capitalized in quarter two, that's what the expectation is, right?

Phase 1 and Phase

Hello? Yeah.

Yeah.

Dahej Phase 1 and Phase 2, as you're aware that the Phase 1 was already capitalized, which was around 15%, 18% of the total CapEx, and 85% of the CapEx for the Phase 2 will be capitalized during the second quarter. Okay.

What is the CapEx spending this year which will be spending?

Funding meaning?

We'll have to spend additional fund this year, right? In the quarter one we must have spent some amount there in the CapEx.

Okay. For the full year, if I would like to give you an estimate, the full year estimate will be between ₹125 to ₹150 crore for all the CapEx including Dahej.

Okay. You've mentioned quarter four ramp-up, let's say for FY '28, what kind of incremental revenue and EBITDA we should look at from Dahej now?

As we have always said that the specialty business, the important lens, why are we looking at quarter four is we need to get qualified at customers, and then that's why we are looking at in the quarter four. What we are doing is we are doubling our diketene derivatives capability, right?

Our ambition remains that and we are very well diversified with the industry segment. Our strategy remains to go deeper into many of these industry segments.

We are already, as we are looking at this year, we are seeing positive momentum into many of our key products into our diketene derivative segments. I would say, bear with us, we will start giving you more guidance on how FY '28 is looking like, but the ambition remains that ramp-up would take place into FY '28 and then focusing into FY '29.

Okay. One question if I can just ask on this side.

When we conceptualized the project about two years back, we started work on July 2024, the margins profile, is still similar ROCE, ROE-wise when the pricing and spread that point of time and now? No.

The question you have to ask is in two phases, right? One is we have two distinct business vertical: one is our essentials and other one is the specialty.

The Dahej project is a blend of our essentials and specialty: 60% is dedicated to our specialty vertical, and 40% is to our essentials vertical. The first product which came out in our Phase 1 which we started is backed by a multi-year contract with a large global MNC.

That was the rationale for us to set up that product in our Phase 1. The Phase 2 is an integration into the ketene diketene Verbund or integrated setup.

To answer your question, in especially the essentials, certain of the margin assumptions have taken a beating if you look at the last financial year. Again, it is no surprise.

Again, if you look at this financial year and if you look at this quarter, if you saw the essentials delivered an EBITDA close to 11% to 12%, right? That is very, very important to note, and that's what we've been calling out for quite some time is our essentials business is a business to be viewed over the cycle.

We were at low single-digit EBITDA, and we have now seen high double-digit EBITDA, at least the 11% to 12%. We expect over the cycle the essentials to be somewhere the mid-range single-digit EBITDA would be a fair estimation or for our essentials business.

Specialty business, our strategy was that at our site two, where we are currently manufacturing the diketene derivatives, we were already fully utilized. Hence, for us being a leader and with this expansions globally we become the number three producer for the diketene derivatives.

We wanted to expand our portfolio and penetration into our existing and new customers. That has been the thesis.

Also a specialty business, as surely you can imagine, it is very unlike an essentials. These are more batch processes, that there is an element of seasonality, there is an element of you'll have campaign products in there.

That is the whole basket with which. I would not say today, it's very quick to say whether the assumptions were right or wrong.

We believe that they will pan out, but you will just need to see it not on a quarterly basis, but over a multi-year period.

Okay. Just last, you mentioned about the essential part.

How's the margins basically looking on the coming quarter? Should we take, like you mentioned mid-range single-digit range, is that the number we should take it from quarter two onwards or that's what we're talking about the FY '28 kind of a thing?

Essentials, again, the nature of the beast of steering this business is the key feedstocks that we are using, our raw materials, they settle almost daily and weekly. One who is basically steering this business has to have immense agility to navigate on a daily basis.

The best reference for you is to really look at spreads. I think there are enough houses who are actually publishing spreads of a lot of key products, including ethyl acetate.

If you see that we have seen the spreads especially when we look at March and even so for April, we have seen spreads for ethyl acetate being higher than an average 12-year spread, which is about $215 to $220. We've seen that being higher of that range.

Now, also if you look into quarter two, what we are sensing is there is still quite some disruption happening with the West Asia 2.0. Obviously that is not only impacting Middle East, but what we are currently navigating through is the typhoon that has happened in South China, which is also creating a bit of a bottleneck.

We are monitoring this very, very closely. I think too early to say how quarter two will pan out, but these are, I would say, if you would say for a lack of a better word, leading indicators.

That is what we're grappling with in quarter two.

Okay. Thank you.

Yeah.

Hello. Am I audible?

Thank you for the opportunity. I wanted to ask that I can see the margins have grown to around 12% this quarter.

Do you look at these margins as sustainable for, let's say, for the medium term or a year or two? What is your lookout on the margins?

I could give you a very simple, straight answer, but there is no straight answer. I think one needs to look at it by the two business units that we steer by.

Essentials, as I just was explaining to your esteemed other colleague who asked the question, is a business you need to steer over the cycle. Hence, we will see these swings in margins.

If you have been tracking Laxmi, you'd have seen in quarter three of the last financial year where margins were under a lot of pressure, and the spreads were also very, very low. Now what you see is really in quarter one where you have seen the large swing.

The important lens is what is your right to operate and right to win, that is economies of scale, end-to-end integration, and really talking about the upcycle benefits that large players like Laxmi can bring on to the table, obviously in close collaboration with our customers. Specialties obviously a very different story, but what we have been also calling out if you have been following the narrative, if you talk about last financial year, we did call out that key feedstocks also for the specialties actually had a deflationary effect over the FY '25, '26 period, and that has also impacted where our specialty business was impacted apart from the phase-out of one key product.

What you are seeing is a good positive start to this financial year also for our specialty business. With now Dahej also taking good shape, I remain in confidence we will navigate not only this year, but the coming years also positively into our specialty

thing. Got it.

Second thing I wanted to ask is about the revenue. I can see the revenue has grown nearly 40% from the last quarter.

Can you give a split between the volume and the price growth in the 40%?

At the enterprise level, the volume growth is around 10%, and the rest is coming from the price and the product mix. There are a lot of variables in that depending on the geography, product mix, and other things.

Please understand that we have multiple products, it is not only just one product, and that is what makes it sort of, if you ask such a broad-based question to pin that down. I think, Amit, you have correctly answered.

Thank you. That was all.

Thank you and all the best.

Thank you for giving me the opportunity. Sir, my question to you is, given the strong start to the year, how do you expect the essentials business to perform for the rest of FY '27?

Listen,

as we've said, essentials business is a business we steer with a great deal of agility. That is, we have to steer this business end-to-end, right from the procurement strategy to supply chain, to manufacturing, and needless to say, then bringing this into the market.

This is again, I keep calling this out, this is a business which is cyclic in nature. That is what we have done very, very well time and again as Laxmi.

This is again what we have represented. There is a lot of strong customer connects, which are also depending on our ability as Laxmi to service their needs.

I think too premature. My lens is we will play to our strengths, we have done it in the past, and we will continue to do it now.

The proof is in the pudding. We have clocked EBITDAs in the range of 11% to 12%, and that we believe gives us the right to expand and win.

My second question is, could you comment on the demand environment for acetic anhydride, particularly from the pharmaceutical sector?

Acetic anhydride, and this is a conversation we've been also sharing very transparently, broadly we have seen during COVID is when we saw a big increase in the entire paracetamol capacities, linked also then to the anhydride requirement related to the same. While we have seen that being a bit muted, given the current backdrop, we are seeing a positive momentum.

That's the way we are viewing this from a market lens on anhydride.

All right. Thank you, sir.

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

Thank you.

Hi. Thank you for the opportunity.

Can you provide the volume growth for the essential segment for the quarter? Also, how are you looking at the volume growth for the next 1 to 2 years?

Just wanted to understand how and by when our new capacity can get absorbed and we can reach optimum capacity utilization.

Thanks, Hetvi. I think as we call it out, and as Amit was explaining, and we've also made that as part of the presentation, the world-scale ethyl acetate capacity has already been commissioned at our Lote site.

It has come at a good time, we are able to also bring that into the market. Our assets at Dahej, Phase 1 has taken good shape, and we are already at a good utilization rate, and that we will ramp it up in collaboration with the customer.

When we talk about our Phase 2, that is taking shape as we speak now. Our lens would be first and foremost to win in our essentials business, we really look at economies of scales and cost positions, which we believe as Laxmi we have.

On the back of that, and we are also servicing markets which are growing in line or above GDP. We remain confident that with these capacities that we have put up, we will scale this up.

Certainly Laxmi has been a company that relishes ramping up its capacity and not running it idle. Bear with us as the conversation progresses, we will make those numbers very abundantly clear.

Thank you so much.

Thanks for the opportunity, and congrats on a strong set of numbers. Sir, first question is on the Hitachi project.

If you can just give us where are we currently, and in terms of timelines for the next 1, 2 years, how the revenue recognition is expected? Thank you.

Project Vayu is basically taking good shape, Rohit, and we are anticipating mechanical completion happening in, I would say, early quarter three. Thereafter is where we will start the ramp-up with our partner.

Sure. Effectively, for FY '28, we should have this capacity available, and scale up in terms of volumes, revenues should happen, right?

Yes, that is the line of sight.

Perfect. Second question is on the electrochemical fluorination.

We were the first one to start off in India. Obviously, we'll have the first-mover advantage.

Again here, too, where are we in terms of any customer engagements, any visibility? If you could provide, that'll be great.

Thank you.

Rohit, electrochemical fluorination, we believe we still remain the leader, and that is something we will leverage. What I can comment here is we have a very robust pipeline for our specialty business new product development pipeline.

There is an element of leveraging the electrochemical fluorination as a technology platform for some of those projects. In due course, we will certainly make it also public the partnerships that we are lining up on this.

Stay tuned.

Sure. That's helpful.

Just two bookkeeping questions. During Q1, was there any contribution from the fluorination part of the business, and what could it have been?

There was, but not to the full hilt of that. I think so that would be a fair way to look at it because you've had these delayed monsoons and others.

We could not juice out everything that we would like to from that setup. As we move into the remainder of the year, we remain very positive.

Yeah. Just one clarification.

Last year base quarter, did we have that one molecule revenue which has been now discontinued?

No. The phase-out molecule did not manifest in quarter one of FY '26.

Is that your question?

Right. Was there any contribution during the course of FY '26 to get a understanding in terms of YoY growth?

No. There was no contribution from that.

Fair enough. Thanks a lot, and all the best, sir.

Thank you.

Thank you.

Hello, sir. Am I audible?

While revenue growth in specialties has been decent, we have seen pressure on the margins for the last couple of quarters. Is this a transitionary phase or is the margin profile of the business fundamentally lower now?

How should we look at the margin in the specialties on a steady state sustainable basis going forward?

Manav, thanks for that question. Again, when we reflect on last year, let's make it real, and we have been also explaining, there have been two key elements that had impacted the business.

The one was a phase-out of one key product, which accounted for 10% of our revenues. The other element was the deflationary feedstock pricing which had occurred across FY '25 and '26.

At some point of time, even if you run a specialty business, you cannot run away from the fact that feedstocks have fallen by about 25%, customers will seek for some, I would say, accounting of that in your prices. That is what we experienced.

Second lens is before we started off our Dahej project, we were fully utilized at our site in Mahad, at our site two. With our Dahej project coming up, and so fundamentally what one does when you're fully utilized is you look at bottom slicing of your portfolio.

Now with the new capacities up and coming in Dahej, I believe we will bring in some of those products which we were not able to produce at our Mahad site, which our customers, by the way, still need. I think we are well positioned to supply our customers.

The second lens is the element that we are seeing now raw material prices moving upward, so that's some momentum we would like to build on. One needs to look at really the specialty business, and that's what I spoke about in my opening commentary.

You can't look at it from a quarter and say, is it on the ball or off the ball. This is a business which has basically batch process, multi-purpose reactors, there is a seasonality, and there are campaign products.

One needs to look at it at the very least annually or at the best over a 2- to 3-year period. Our ambition remains that we are there.

We were expecting maybe the 20% to 25% range that we enjoyed in the past. We might not be there in the short term because we are now ramping up with the new capacities coming online, and globally we will be number three, and that is saying quite a lot.

I think that is where we are very prudently steering this business. We have seen a positive momentum in quarter one of this year for many of our key products in our specialty portfolio.

That is the way I would like to explain it to you, Manav.

Okay. Thank you for it.

I understand. My second question is you have mentioned CapEx coming to an end and debt having peaked.

Post commissioning, what is the annualized depreciation? Also, should we expect some debt reduction over the coming year or is it likely to stay stable here?

Yeah.

The depreciation will definitely go up from next quarter when the capitalization will take place for Phase 2 Dahej. A tentative number you can consider is in the range of around ₹7, 7.5 crore incremental per quarter.

That's the depreciation amount. As far as the debt is concerned, the repayment will start from next year, and that will continue for another 5 years.

Got it, sir. Thank you, and all the best.

Thanks.

Hello, sir. Please quantify our Hitachi project when to contribute revenue?

Hi, Vijay. I think as I was explaining to the colleague, we are expecting mechanical completion and stabilization happening in quarter three of this financial year.

We will really see revenues flowing in into the next FY '28 financial year, Vijay.

Sir. Thank you.

Thank you all for participating and for the important questions you raised and your interest about Laxmi. I would like to again thank first and foremost the whole Laxmi team in what continues to be a very evolving backdrop that we are operating in, which has then obviously resulted in the outcomes that we just discussed and have reflected.

Also a big appreciation to our customers who have also supported us during this transition and who continue to support us during this times. We remain committed to all our stakeholders as we are ramping up.

Thank you all, and upward and forward. Thank you.

Thanks.