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Q2-2026 Earnings Call
AI Summary
Earnings Call on Nov 6, 2025
Revenue: Q2 revenue was INR 473 crores, slightly higher than last quarter but down year-over-year.
Profitability: Net profit for the quarter was INR 1.4 crores, significantly impacted by one-off charges and lower product realizations.
Margins: Gross margin improved over Q1, with spreads for Phthalic Anhydride rising to $120–$150 per tonne from $100–$120 in Q1.
CapEx & Expansion: Plasticizer plant commissioning expected by March 2026, with ramp-up and revenue contribution starting Q1 FY27.
Biofuel Entry: IGPL is entering the compressed biogas (CBG) business via a 100% subsidiary, with pilot project commissioning targeted for June/July and expected revenue of INR 16–22 crores.
Balance Sheet: IGPL remains net debt-free after prepaying INR 40–50 crores of debt and converting most euro loans to rupee, limiting FX volatility.
Demand & Outlook: Annual phthalic production guidance of 2 lakh tonnes (+/-5%) is maintained, despite near-term downstream and export market headwinds.
Investment Property: A London property worth INR 215 crores is up for sale, with expected realization of INR 100–150 crores.
The Indian chemical industry continues to face headwinds from geopolitical issues, volatile crude prices, higher trade costs, and weak Western market demand. While IGPL is largely insulated due to its domestic customer base, some downstream users are affected by US tariffs and sluggish export demand, resulting in lower plant utilization in parts of the supply chain.
Phthalic Anhydride spreads improved in Q2 to $120–$150 per tonne (from $100–$120 in Q1). However, overall margins were weighed down by lower Maleic Anhydride prices, which are at historic lows due to Chinese oversupply. Gross margin was slightly better than Q1, but profitability was affected by one-time charges and low realizations.
Production volumes were marginally higher than the prior quarter, with guidance maintained at 2 lakh tonnes annually (+/-5%), factoring in regular plant shutdowns for catalyst changes. Q2 output was affected by maintenance-related shutdowns at some plants. Management expects quarterly production and sales of 45,000–50,000 tonnes going forward.
The advanced plasticizer plant is on track for commissioning by March 2026, with initial capacity of 75,000 tonnes and plans to expand to 100,000 tonnes. The project will drive significant future revenue, though initial utilization will be low. The company is also investing in renewable energy and a circular economy, including a CBG plant and a facility for converting plastic waste to fuel.
IGPL is entering the compressed biogas (CBG) business through a new 100% subsidiary, I G Biofuel. An initial 5 tonne/day plant is expected to start by June/July with projected annual revenue of INR 16–22 crores and IRR of 16–18%. Management sees the business as scalable and expects to have a competitive advantage through raw material control.
IGPL has actively reduced debt, prepaying INR 40–50 crores and converting most euro-denominated loans to rupees to reduce FX risk. The company aims to remain net debt-free despite ongoing CapEx, aided by strong cash flow and possible proceeds from property sales. Interest costs are expected to fall to INR 30–35 crores per year in FY26.
A commercial property in London, initially built as part of a Maleic project, is up for sale. IGPL expects to realize INR 100–150 crores net of debt from this asset, providing non-core cash inflow.
Despite challenging market conditions, IGPL maintains its core production and revenue guidance. The company expects future top-line potential of INR 3,000–3,200 crores and significant EBITDA upside once all plants, including the new plasticizer facility, are fully ramped up. The chemical sector’s recovery is seen as a matter of time, tied to improved geopolitical stability and demand in downstream industries.
Ladies and gentlemen, good day, and welcome to the I G Petrochemicals Limited Q2 FY '26 Earnings Conference Call.
This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involves risks and uncertainties that are difficult to predict.
[Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Pramod Bhandari. Thank you, and over to you, sir.
Yes. Hi. Good afternoon, everyone. Thank you for joining us today. We are happy to welcome all of you on the behalf of I G Petrochemicals Limited.
We have SGA as our Investor Relations adviser. We trust all of you have got the opportunity to review the financial performance and the results, including the investor presentation available on the stock exchange as well as our company website.
We will give you a brief overview about the recent industry development as well as the IGPL progress, followed by operational and financial highlights for the quarter.
Coming to the industrial highlights, I think Indian chemical industry continued to face the challenges due to the combination of factors like geopolitical matters, volatile crude pricing, rising trade costs, weak demand from the Western markets. This has impacted the overall performance of major petrochemical players in domestic as well as global market. IGPL will not be an exception.
Companies that are heavily dependent on the key raw material from import regions such as Europe and China were particularly impacted. And the companies who need to sell the product to the U.S. market is also impacted because of the tariffs.
Although some of the downstream sectors were impacted due to sluggish demand, however, the impact was limited to a few players like us because the majority of our customers are within the span of 200,000 to 300,000.
Although IGPL doesn't directly sell anything to the American market, but some of the downstream industries are supplying the product to the U.S. market. IGPL is known for one of the largest manufacturer of Phthalic Anhydride in India, second largest globally.
In general, the demand for Phthalic Anhydride is expected to be around 500,000 to 550,000 tonnes, growing at a steady pace of around 5% to 6% per annum. We foresee this demand to remain intact or growing at a similar pace in near to the medium to the long term.
IGPL has a capacity of 2.75 million tonnes of Phthalic Anhydride. Over the decade of dedicated effort and the continuous improvement the company has developed a strong manufacturing excellence, ensuring a consistent supply of high-quality Phthalic Anhydride.
Our diversified product portfolio includes Maleic Anhydride, Benzoic Acid and DP. These products find their application across diverse industry base, has a meaningful increase in the contribution in next 4 to 5 years.
Particularly for the Q2 performance, our performance was largely affected due to -- in terms of the quantity, it is up to mark better than the last quarter. However, it was affected due to the mark-to-market losses on the euro loan, which most of the euro loan has been paid by the company.
And one of our fire production plant was temporarily shut down to fulfill some statutory maintenance requirement and one more unit was operating at a low level due to some repair and maintenance.
As a thoughtful strategy, we -- when the demand is sluggish, we decided to focus more on the strengthening our unit and upgrading our machinery. We are ready to capture the opportunity when the demand revives in the markets.
In terms of CapEx, in line with our goal, our CapEx on the advanced plasticizer is on track. We are expected to commission the unit by March 2026. This plant will have an initial capacity of around 75,000 tonnes, which will be expanded up to 1 lakh tonnes with some additional investment.
It will manufacture a variety of plasticizer like DOP, DINP, DPP, DIPB by simultaneously internally consuming around 30,000 to 35,000 tonnes of Phthalic Anhydride.
Additionally, the IGPL is also venturing into the green capacity in the field of sustainable circular economy initiative by setting up the compressed biogas plant and the biogas plant in Raichur, Karnataka. These projects generate revenue for the sustainable resources and reinforce our commitment to the circular economy.
The construction of CBG plant is on track and currently under implementation. The [indiscernible] facility is on schedule. This facility covers the plastic waste into the fuel oil through the chemical recycling.
The Board of Directors has approved an investment in I G Biofuel. I G Biofuel, we have already floated that company is going to be the 100% subsidiary of IGPL and we are planning to invest all the future CBG plants and its derivatives into -- through I G Biofuels.
These expansion are set to build a new expertise and expand our clientele base, unlocking the new horizon for the company. These expansions are aligned with our long-term strategy of driving the sustainability and stable growth.
With our consistent efforts to increase operational efficiency and cost reduction, we have started integrating the solar power plant and other renewable energy resources like natural gas into our facility to lower the overall carbon footprint and lower the energy cost.
We also started using the natural gas as a replacement of conventional LSFO and diesel, further enhancing -- expected to enhance our operational performance and sustainable growth.
Now coming to the financial performance, the total revenue for the quarter stood at INR 473 crores, which was compared to the corresponding quarter, it was declined, but it was slightly higher compared to the previous quarter.
Similarly, the contribution from the non-spend revenue remained steady at around INR 39 crores. Gross profit for the quarter was INR 116 crores and EBITDA stood at INR 27 crores. That is mainly because of the maximum charges, a lower margin Phthalic, lower price realization on the Phthalic Anhydride and repair and maintenance costs.
For the quarter ended, we reported a profit of INR 1.4 crores. Total revenue for the half year was INR 952 crores. Total revenue of non-PAN business for the H1 was around INR 74 crores and the gross profit was INR 216 crores for half year.
EBITDA for half year was INR 40 crores. And the profitability mainly was affected for the various factors as indicated earlier. Despite the headwinds faced by the company, we continue to maintain a strong balance sheet and healthy cash flow position and remain a net debt-free company.
During the last quarter, we have prepaid a debt of around INR 40 crores to reduce the overall interest cost. We have also converted the debt -- major portion of the debt, which was in euro into the rupee to basically protect ourselves from the market volatility for depreciation of the dollar and the euro against the rupee.
We believe that the financial strength, combined with our diversified product portfolio position us to capitalize on the emerging opportunity and drive sustainable growth in future.
With this, I would like to conclude the presentation and open the floor for question and answer.
[Operator Instructions] The first question is from the line of Aditya Khetan from SMIFS Institutional Equities.
Sir, this fixed asset write-off of INR 5 crores, if you can explain, sir, more, what is this related to?
Sir, can you repeat again?
This fixed asset write-off of INR 5 crores, what is that related to?
There was some minor incident at one of the units. Because of that, we need to change the entire portion of that unit. That was the asset write-off basically. The unit was a part of fixed asset. Completely it was new. So it is the asset write-off.
Okay. So it was a fire incident or like some, or shutdown...
I will not say fire because it has to go out of the plant. It is some internal misconnection or connection type incident. It's not exactly fire. You can say that the mismatch in the switchboard of electricity failure, technically.
Okay. Got it. So this total INR 8 crores of one-off, actual EBITDA is INR 20 crores. So if you add INR 8 crores, it is INR 28 crores. Is that a fair estimate?
That is -- as well as the MPL charges of INR 8 crores. These two, INR 8 crores, INR 8 crores, INR 16 crores was exceptional.
Got it. Okay. Okay. Sir, on to your -- the biofuels, like we are investing INR 100 crores into the subsidiary, which is into CBG. Sir, what are the plans? Like what is the sort of capacity we are putting up and what sort of revenues?
And what is the competitive advantage we have here? Like I understand, sir, like some of the big players like Adani and Reliance are into these businesses. So what advantages do we have? And how much money can we spend on this...
So the INR 100 crores, which we have provided is a total investment. It is not the IGPL equity. IGPL equity may be INR 15 crores to INR 20 crores or INR 30 crores, depend upon the size of project.
We are planning to set up 15 to 20 tonnes plant once we are done with the existing plant, which we are planning to start in June, July.
So you are asking about the competitive advantage. I think every player who is into that segment has the full ability to set up because the technology is proven. Offtake is not a challenge, but you need to set up the raw material.
So for us, the competitive advantage is we will be the first player and I think, it will be the biggest player for setting up the CBG plant based on the [indiscernible] where we will have a control over the raw material.
So it's very simple business. Technology is proven. Subject to raw material availability in a good quantity, you can set up and it's a complete offtake by the government.
Okay. Sir, this I G [indiscernible] INR 100 crores investment, like that is given to I G Petro only?
No, no. I G Petro will be contributing only equity, INR 15 crores, INR 20 crores. Balance will be done by the I G Biofuel directly by raising the money as and when required. So investment by I G Biofuel into CBG will be INR 100 crores.
Okay. Okay. So INR 15 crores, INR 20 crores will be done by I G Petro and remaining would be [indiscernible]?
Yes. Equity will be contributed by I G.
Okay. Got it. Got it. Sir, this plasticizer, how confident are you, you can start by March because it is delayed by 3 months? So just like for sampling and testing will take another 3 months, 4 month, say we can build in by...
We are 100% confident to commission the unit before March. But the ramp up will take time, as you have indicated that. So we don't expect to utilize 80%, 90% in the first year. The utilization will be lower, but we are confident to start it before March.
So revenues will flow from second quarter or from first quarter or from third...
It will start from first quarter because the day you declare the commercial production, you need to take the revenue, whatever it is, whether it's 10%, 20% or 30%, you need to take it into the P&L. So revenue will be starting from the quarters June 2026.
Okay. Got it. Got it. Sir, on Phthalic Anhydride, like we are again with a quarter of lower operating utilization. We understand you mentioned there was also a shutdown in one of the plant.
So this had been normalized again in second quarter or this run rate of -- any number you can highlight what was the run rate number and how this will be in the coming quarters?
So there are 2 or 3 things which I need to highlight. The production and all that are fine because right now, we've actually indicated that we will be crossing 2 lakhs, maybe 5% here and there.
We will be around that in terms of overall production. But overall sales also is sluggish because there was a lot of geopolitical issues like U.S. market has put a lot of duties, although there is no direct impact on IGPL, but some of the downstream industry to whom we are supplying, they got impacted and they are operating at 30%, 40%.
So in view of this, so we may need to decide based on the quarter third and fourth, what will be the quantity. But we are sure we will be between 45,000 to 50,000 tonnes per quarter in terms of the production and sales.
Okay. Okay. Got it. Got it. Sir, just one last question. Are we on track to achieve that number of INR 2,000 crores top line, so INR 1,000 crores addition from this business and addition similar to an EBITDA, is that on track or any change on that guidance now?
So when all the plants of Phthalic and plasticizer when we be operating, I G will be between INR 3,000 crores to INR 3,200 crores of revenue. That is the optimum when we are operating at 90% capacity. So based on how much percentage you are operating and all plants are operating, you will be around INR 3,000 crores plus revenue.
Got it. And similar, sir, on the EBITDA, please?
EBITDA and all that, that will depend on the margin because today the margin is -- if you look at from I G point of view, although the margin has improved compared to the last quarter, margin was high, but because of M2M and other charges, it got impacted. And another factor which impacted is the Maleic realization. Maleic is in the investment market lower than the $700, which is all-time low.
Of course, we are producing Maleic on [indiscernible] basis. So whatever is the revenue added to EBITDA. But the same Maleic can fetch you 2x revenue. But today, we are at annualized rate of INR 60 crores to INR 65 crores of the Maleic sales because the prices are 50% lower than the historical prices. Typically, they are 25% higher than Phthalic. Today, they are 30% lower than that.
Sir, to put a number, it could be $900, Maleic prices?
Maleic is today less than $700 in international market. Less than $700, not $900.
The next question comes from the line of Nirav Jimudia from Anvil Wealth.
Sir, one of the major user industry like plasticizers, I think they have seen lot of pressure in terms of the demand side in China and...
I'm sorry to interrupt you, Mr. Nirav, but can you please speak through your handset?
Yes. Now it is okay?
Yes.
Yes, sir. So if we just see the demand for plasticizers in China, I think that has seen a lot of corrections. And even though the prices of plasticizers across various categories has seen lot of price corrections.
What we understand is that the end users of plasticizers are facing troubles in terms of the exports to the U.S. and other countries. So if you can just share your views, how has been the situation in India, given the lot of plasticizers are also our consumers in India for Phthalic. So if you can just share your views here.
India, I think demand is fairly steady between 400,000 to 450,000. And generally, India has very little import of plasticizer. Of course, the downstream industry, which are using the plasticizer and Phthalic and Maleic as a downstream and if they are producing a product which is sold to the U.S. market, that is about the packet.
We are planning to start by March. I hope before December, the U.S. and India standoff on the tariffs will be over.
So overall, Indian market is growing at a healthy rate and we believe because India per capita income -- per capita consumption of plasticizer is very low. So there is a big headway if you're not talking about a particular 1 or 2 quarters.
If you look at 4, 5, 10 years down the line, there will be a gradually good demand in the Indian market. In fact, in 5 to 7 years, we believe the Phthalic and the plasticizer demand will be 2x from here if India continue to grow at 8% to 9%.
Of course, it is subject to clarity from the regulatory point of view, the tariff point of view, geopolitical issues. But we don't believe that there will be a challenge in particularly for plasticizer in domestic market.
Got it. And the 30%, 40% utilization for one of the user industries, what you maintain...
I'm sorry to interrupt you, but I would request you to please speak through a handset and it is creating a lot of airy disturb...
Yes. So sir, you mentioned that one of the user industry was operating at 30%, 40% utilization only in the second quarter and because of which the Phthalic demand was slightly impacted. So was this user industry pigments because of which the demand for Phthalic was slightly impacted?
No, there are multiple. It's not that a pinpoint industry, like in UP, they are selling most of their product to the U.S. market, which is the artificial marble. They got impacted because U.S. got impacted.
Similarly, the pigment and the CPC industry, although the Phthalic is at a lower cost, but they use the urea 1:1. And that cost has gone up by 30%, 40%. So we are -- the profitability has got impacted.
So that they decided because we are not making money, then we will not be utilizing the higher capacity.
There are multiple headway for that. And we believe with the -- I think next 3 to 4 months when the U.S. will have a clarity in terms of tariff and I think in geopolitical, the tension between the countries has to be sorted out for the free flow of the raw material and the final product.
It's not about only what you are producing because you are also part of the bigger supply chain of the global market.
So everybody is work out smoothly, it will be better off because if you look at all chemical companies are impacted. It's not about I G. Because of geopolitical issues or the tensions between the countries, all the supply chain of the entire chemical value chain is impacted. So that is essential to be sorted out to have a normalcy in the business.
Got it, sir. Sir, second question is on the antidumping duty for Phthalic Anhydride, which is imposed currently in India. So just wanted to understand from you that when it is going to get expire? And are we in the process of filing any extension to this?
I think everybody is in the process, but I think it is still have, I think, 6, 7 months, July, August is the time line to again give you it.
Okay. Okay. But we have already started the work in terms of...
Everybody. I mean, that work, it's not for 1 or 2 days. So everybody is working towards that to ensure that there is no dumping in India.
Got it. And sir, you also mentioned that the gross margins in second quarter was slightly better than that of first quarter. I think for the quarter --
Correct.
-- you mentioned that it was anywhere between $110 to $130 a tonne. So if you can share the figures for second quarter, how it was? And as the thing stands today, what are the current margins in Phthalic?
Margin [indiscernible] to $150. But only margin doesn't make sense because in terms of when you look at I G, you are operating between 3, 3.5 plants for the last quarter, while you are carrying the expenditures, the interest and depreciation from the 5 plants.
So not only the onetime expenditure of INR 15 crores, INR 16 crores, which we have spoken about M2M and the repair maintenance and write-off of assets, but also the interest and depreciation for all plants are put into the system.
Otherwise, it is always profitable. Even at 3 plants, it would have been a profit of INR 15 crores. But because of the onetime expenditure, it is so. And the second reason is the lower Maleic realization and third reason is operating a 3, 3.5 plants operating around 45,000 to 50,000 tonnes compared to 60,000 -- 55,000 to 60,000. These are all 3 reasons put together has got impacted the profitability.
Sir, just last bit on the answer given by you in terms of only 3.5 plants are currently operating for us. So when we see our conversion cost...
I mean, 3.5 plants was operating because there was some temporary shutdown in one of the plants, agreed. So when we are talking about cost in terms of the conversion cost is $70 to $80. When you're talking about overall cost is $120 to $130 for all, but having the advantage of yield and the byproduct, it will be nil or $250.
Got it. Sir, just wanted to understand from you like when we hadn't expanded the last Phthalic PFI, our conversion cost used to be anywhere between INR 65 crores to INR 70 crores, in that range on a quarterly basis.
And today, we are at INR 85 crores. So is it safe to assume that the incremental INR 20 crores, which has come in terms of the conversion cost is all because of the PFI plant and the revenues of which --
Yes, yes. Yes, yes.
-- or the utilization of which is yet not accrued?
Absolutely. Absolutely. In fact, the marginal cost of operating plant will be very low, very, very low because 70% to 75% is fixed cost.
The next question comes from the line of Kunal Ochiramani from Alpha Alternatives.
Sir, just wanted to understand, so China had a very big Maleic capacities coming in last 2 years. And the downstream come -- again, like you said, downstream CapEx was not done. So just wanted to understand on Maleic front, are the downstream CapEx done? And are they up and running so that the dumping will reduce and eventually the realization should get better from here?
Secondly, like you said, you are implementing gas and solar. So what kind of savings are we looking at here?
And thirdly, if there was not a shutdown, what should have been a volume increase which we had foregone this quarter?
Yes. So as the China -- I think China has set up the Maleic capacity for last 2 years. But it's not about the downstream. I think they also set up the downstream, but the question is whether the downstream will be able to utilize or not because they have extended the date for single-use plastics price.
So ultimately, the Maleic has to go to PD to PDT to PBT to produce the biodegradable plastics. But that is not happening right now because there's no composite for [ mating ] the single-use plastics.
So that Maleic is coming into the international market. When I'm saying international market, they are coming -- sending it to Europe, even America, Middle East, all the places.
So till that is flowing from the China side, the margin will remain sluggish. We are actually producing from wash water. So whatever is the revenue, 90%, 98% is EBITDA. But anybody who is producing from the butane route and all that, it's very difficult.
And butane is between 500 to 550, conversion is 300. So your actual cost is 800 to 850, the price is 700. You can assume it is a cash loss today if you are setting up the new Maleic plant.
So I think it will take 1, 1.5 years to improve. It will improve gradually. It is not going to change like 700 to 1,000 because still China is producing and supplying it to the global market, margin will remain like that for Maleic.
We assume that as and when they're getting into more and more into the downstream, excess capacity will not be done into the international market, the price will improve. When you're talking about India, India is 80,000 to 90,000 tonnes of demand. We are producing 7,000 tonnes, so 90% is imported. So the question is about timing. Nobody can tell you with a precise prediction that when China will change that move.
Your second question was on the solar. We set up the solar plant and also getting into the natural gas. Natural gas, once we fully implemented today, 20% of benefit will be coming. Fully implemented basis, it will save around INR 4 crores to INR 5 crores per annum, which is a payback period of 3 years.
Similarly, for the solar, which we have already implemented, it provide saving between INR 1 crores to INR 2 crores per annum.
Sir, and lastly, on the volumes that were impacted due to shutdown and...
Volume, volume, it's not the much volume, but typically 3,000 to 4,000 tonnes was the overall impact.
Sir, and any update on subsidies we were going to receive? We had mentioned in last couple of calls.
Yes, yes. We have got a very favorable indication from the government and we are expecting it to -- receive it soon.
Sir, can you quantify it? And what...
I think it's better to wait till the time we receive it. There is no way to quantify it because it's actually received which matters, not the [indiscernible] that you will be receiving it. As and when we will receive it, we will inform.
The next question comes from the line of Madhur Rathi from Counter Cyclical Investments.
Sir, and looking at the balance sheet, sir, there's a line item, investment property of INR 215 crores. So what is this regarding?
Basically, at the time when we were setting up the Maleic plant in [indiscernible], there was a office which has been built. There was a office which has been set up and all that. Then we finally developed that office and that has been completed and now which is up for the sale. So that property, that has been shown as a property.
Sir, so where is this property set up, and if I require...
Office was set up outside India in London. Now that -- the office was up for the sale. We have completed it because earlier there was a planning to set up that office for the purpose of Maleic plant along with the ADNOC, but that the deal was not able to be concluded. Now that everything is over and we will be able to realize the money very soon.
Got it. Sir, we also have an investment in a subsidiary of INR 108 crores in the UAE subsidiary, IGPL International Limited. So...
It is same. It is same. It has basically the basic engineering, detailed engineering and the properties, all are the same part, part of same. It's the same.
Okay. So is it fair to assume that we'll have INR 100 crores gain whenever this property gets sold?
INR 100 crores to INR 150 crores will be realized.
Got it. Sir, just a final question. Sir, how is the current Maleic capacity globally? And what is the extent of overcapacity that we expect to -- that should improve in the 1, 1.5 years going forward?
So today, the global capacity is around 4 million to 4.5 million tonnes. China has set up some extra capacity. So one of the plant in Germany of one big player has been shut down because of the extra supply from China.
The name of the plant is Huntsman, you can Google it out. They closed 1 plant. They have 2 plants in U.S. Huntsman is the big #1 player, not only Maleic, they are producing Maleic, Maleic Acid and lot of other chemicals.
You can go through the website because they have given a full presentation on the Maleic market demand-supply equations, the overall margin. They have specifically mentioned in their report about extra supply of Maleic in U.S. market, which has impacted the overall demand.
So they tend to shut down the European market. They are now supplying the Maleic from U.S. plant to U.S. as well as Europe.
So I think it will take 1, 1.5 to 2 years before it rebalances out. Right now because the U.S. has put so much duty into the any import from China, the Chinese are supplying everywhere except the U.S.
So that's why you can see the impact, the Maleic prices, which was 780 to 800 is today less than 700 in market -- Asian market.
Got it. And sir, on Phthalic, has there been any capacity closure globally for Phthalic?
No, no, I have not heard anything in the last 3 to 4 months. There may be some temporary shutdown for a purpose of upgradation of facility or lower capacity utilization, but I have not heard any shutdown of the capacity. I think [indiscernible] or somebody has closed up the capacity 1, 1.5, 2 years back.
And sir, has the prices reduced further in October for Phthalic and how are the spreads currently over and above?
It has. It has reduced. It was actually INR 90 to INR 95. Right now it is hovering around INR 84, INR 85. Correspondingly, oil price has also gone down.
Sir, so the spreads currently are at what levels?
$120 to $150.
And they were $130 to $150 in Q2. Is that...
Q1 $100 to $120, now between $120, $130 to $150 because it's changing every week. And it is average. Yes.
The next question comes from the line of Chirag Vekaria from Budhrani Finance.
Sir, Q2, what was the spread, sir? I missed out that number.
Actually, the company spread, you can easily calculate. But in the market, it's between $120 to $150.
$120 to $150. And this similar number in Q1 was?
$100 to $120.
Okay. Sir, second thing, on that balance sheet line item of investment property, INR 215 crores. Can you throw some light? Was it just a structure? Or is it some...
No, no. It was the official premises, commercial premises, plus there was -- the total investment was in the Maleic Anhydride project right now, which is basic engineering, detailed engineering and that.
So now it has been reconstructed, completed, showing as the investment is up for sale, we are planning to realize INR 120 crores to INR 150 crores from that. That will be cash inflow for the I G Petrochemicals.
So the value is roughly around INR 215 crores and what we realized is around INR 100 crores, INR 150 crores, you're saying?
Net of the debt. Yes.
Net of debt. Okay. Sir, second thing in terms of the balance sheet, is there some thought in terms of working on the interest cost, sir? Because when the margin --
We are working...
-- always have this stress of being -- at least remain in the profitability zone. So do you have some sense?
So let me explain what we have done in last 1 quarter. We believe there is a lot of volatility in Indian rupee versus euro.
So we have converted most of our debt into Indian rupee, except I think 5 million. All other debt has converted into Indian rupee. Second, we have prepaid around INR 45 crores to INR 50 crores of one of the debt of the bank.
So today, our debt on the Phthalic Anhydride business is around INR 170,775 crores compared to INR 250 crores 6 months back.
So we prepay as per normal and also we have paid in line with the installment and we have prepaid INR 50 crores loan also. So we have reduced our debt compared to 1 year back.
Of course, classified the debt, I'm not counting because that project is under construction right now. That we have spent around INR 100 crores, debt is around INR 25 crores.
The advantage is you will not see much impact on account of M2M because now the euro is more or less out. One debt of which is INR 100 crores was converted and balance debt was also converted. Except 5 million, all debt are in rupee today.
So we have consciously taken the decision in view of the sluggish market to prepay certain debt and convert the debt so that there's no impact of M2M charges in view of the global volatility.
Okay. Sir, just one request because there is so much of volatility, I think the entire operating profit is being eaten up by the interest cost. So if you could look into that structure.
I think if you ask me, we expect between INR 30 crores to INR 35 crores of the total interest cost. When I'm talking about interest cost, it is actually for term loan is INR 10 crores to INR 15 crores.
Balance is on account of the working capital, CC, LC, which we need to open for the procurement of raw material, the bill discounting [indiscernible], which we are looking at. I think once there is a improvement in margin, there will be accelerated overall collection, the credit will be curtailed.
So that as overall INR 35 crores to INR 40 crores is we were expecting since we have paid INR 50 crores of debt, we expect INR 30 crores to INR 35 crores of the overall interest cost.
So sir, let it put it this for FY '25, you had a debt -- so roughly finance cost of around INR 38 crores, INR 39 crores. So what --
Yes.
-- do we expect for FY '26 or say, FY '27, if you can throw some light there?
So FY '26, it will be in similar line of INR 30 crores to INR 35 crores annualized basis. FY '27, it will be slightly up because then revenue will be INR 3,000 crores, you will beginning your plasticizer project.
But we are planning to pay even another INR 100 crores of our debt. So in all cases, we wanted to remain net debt 0. We have a cash of around INR 230 crores to INR 250 crores today. And we are planning by way of central subsidy and others, we are planning to get INR 20 crores, INR 30 crores more.
So as and when we are getting the money from the government by way of whatever deals, we are planning to prepay the debt. This quarter, last quarter, we paid INR 42 crores of the debt. So we intend to remain net debt 0 even after spending all the money for CapEx and new projects.
The next question comes from the line of Renuka from First Water Capital.
So you mentioned in your opening remarks that due to certain downstream industries, we were seeing a softer demand. So if you can just highlight if it was any specific downstream industry and whether such a scenario will be prolonged and if we are going to see softer demand. So in that case, whether we are revising our volume guidance as well?
So there was a sluggish demand in few segments because of the various reasons. Like I mentioned, the UPR segment was impacted because of the U.S. duty because most of the UPR which is used in the artificial marble goes to the U.S. market.
Secondly, the CPCL pigment segment was impacted because another raw material which is used in that is urea that price has gone up by 30%, 40%. So there is no way to pinpoint one particular segment. Every quarter, there are some segments which have got impacted.
So in terms of the volume guidance, we continue to maintain 2 lakh tonnes of annualized production, which may vary 4% to 5% plus and minus. Of course, there is a sluggish demand, but typically, the domestic market remains more or less insulated if there is some sluggish demand in 1 or 2 segments, the better demand in other segment.
So it is creating equilibrium. But the opportunity to sell in the export market is difficult because the pricing and the intense pricing by the other players also creating the healthy competition in that sense. But we remain on track for overall volume. Of course, we are not able to utilize all the 5 plants, but for 2 lakh tonnes, we will be around plus/minus 5%.
Okay. And since we have converted most of our loan into Indian rupees, so going forward, in other expenses, should we take the previous run rate of INR 55 crores per quarter and not expect the interest cost one-off over there?
Yes. So today, when we are talking about most of our debt is converted except 5 million, which is INR 45 crores or INR 46 crores or INR 50 crores of debt is in euro because that is from the Commerce Bank that is very low cost.
We don't think it is right to convert it into rupee. Whereas all the debt has been converted. So overall M2M charges will be negligible or nil to the extent of 5 million. But slightly there is a increase in the cost because when you are converting in euro into the rupee, then rupee cost of the interest is slightly higher.
However, we are working to further rationalize the interest cost because we have prepaid the INR 50 crores of debt last quarter. So that will further reduce the interest.
And we are also working to further reduce the overall cost of our funding by way of bill discounting, LCs, which you need to do as a part of your working capital. So more and more, we will be able to utilize it once we have a better capacity utilization along with the plasticizer.
Right. And just one last question. If you can give any details on the biofuel project, what is the expected revenue and other metrics?
So biofuel I think, revenue -- this is the first pilot project where we will produce 5 tonnes per day, which is typically 1,500 to 1,600 tonnes per year. We expect IRR between 16% to 18% and supply will be to the government and the raw material will be the metal [indiscernible].
And I think revenue will be between INR 16 crores to INR 20 crores, INR 22 crores because at 5 tonne, you will be getting around INR 20 crores of revenue when you are at 70%, 80% of capacity utilization. And PAT margin between 10% to 15% or 20%.
It's all dependent on the price which you are locking in with the government because government keep on changing the price. As we are able to control the raw material cost, everything else is fixed in that.
And when are we expecting to just commission and [indiscernible]?
I think June, July, we are planning to start the -- yes, June, July, we are planning to start the project, commissioning the project. And we are planning another project under 100% subsidiary.
Next, all the projects in future of CBG will come under the IGPL 100% subsidiary, I G Biofuel. And this project also, once it is completed, we are planning -- intend to translate to I G Biofuel.
And when are we expected to reach the peak utilization for this? 70% to 80% that you are guiding?
July to December because it's a first project based on [indiscernible]. So I will not be able to give you a date, but we will start with 50%, 60% and then see how it will go. That is the reason it is generally subject to the availability of raw material since we have a control over the raw material. So it will be fairly quick to reach 70%, 80%.
The next question comes from the line of Chirag from Keynote Capital.
Pramod sir, if you could highlight what was the volume sales in Q2 FY '26 for Phthalic Anhydride?
Generally, we don't give the value. But you can say one of 2,000 tonnes extra compared to last quarter.
About 2,000 compared to last quarter.
1,000 to 1,500 tonnes extra compared to last quarter.
Got it. Got it. Second thing, Pramod sir, in Q4 FY '24, we had a plant shutdown. In Q1 -- sorry, in Q4 FY '25, we had a plant shutdown for maintenance purpose. In Q1 FY '26, we had a planned and an unplanned shutdown.
And in Q2 FY '26 also, we have another planned and unplanned shutdown. So in this particular year, we had 2 plant shutdowns. And is it fair to expect that for the next 2 quarters, we are not going to have any planned shutdowns?
No, no. Let me confirm to you. We have 5 plants today. And every year, we will have a 2 plant shutdown because of the change in catalyst. Every 3 years, you need to change the catalyst.
So if you have 3 plants every year, you will have shutdown. If you have 5 plants, every year you have 2 shutdown because you need to change the catalyst for 2 plants in every year. So when we are giving the guidance of 2 lakh tonne plus/minus 5%, it includes the shutdown. Plant shutdown is always included when we give the guidance.
And plant is something which is not beyond our control, but plant shutdown, we already know in this year, how many plants we need to change the catalyst. So plant shutdown will not impact the overall volume in terms of the guidance.
Got it. Fair enough, sir. Fair enough. Sir, just wanted to understand one thing, what kind of volume sales are we doing in Maleic today?
Volume, I will not be able to give you directly, but we are typically between INR 15 crores to INR 16 crores realization today.
Annualized?
Annualized INR 60 crores, INR 15 crores to INR 16 crores a quarter, annualized INR 60 crores to INR 65 crores. While we are expecting INR 100 crores to INR 120 crores, the price is about 20% higher than Phthalic. But today, it's INR 60 crores to INR 65 crores annually.
Sir, based on $700 per tonne...
$700 is the international market price. We are getting slightly better than that.
So even at $700 or slightly better than that, we are making an annualized revenue of INR 15 crores?
INR 15 crores to INR 16 crores right now at the current price.
Got it. So sir, based on my understanding, whenever we see such a scenario where PAN Phthalic Anhydride spread goes to $100 per tonne and being better off because of the size of capacity that we have --
Correct.
-- complete integration, there are a lot of plant shutdowns internationally that take place, right? So --
Yes.
-- in last 2 quarters, are there any highlights or any incidence of plant shutdowns taking place?
I have not seen it particularly. There was shutdown for the maintenance like change in catalyst or lower capacity utilization, but I've not seen the permanent shutdown of any plant.
It was 1, 1.5 years ago for some Narnia plant, 70,000, 80,000 tonnes, which was [indiscernible]. After that, I have not had any plant shutdown particularly in Asian side.
Got it. Got it. Would it be fair to assume that they would be working in EBITDA level losses at current levels?
EBITDA level loss, you are talking about Maleic, yes?
I'm talking about Phthalic opportunity.
Because -- yes. Phthalic is very difficult to know because the other players have a fully integrated refinery cum petrochemical. There is no data available that how much they are making on a particular product of Phthalic or where, because it's a complete integrated refinery cum petrochemical. They don't publish it separately.
Got it. Got it. Next thing, sir...
[Indiscernible] 1 refinery and petrochemical, it is less than 0.1% or 0.2% -- 0.2% of their sale.
Fair enough. Fair enough, sir. Sir, next thing I wanted to understand, as earlier Maleic run rate used to be at $1,400 and just because of the capacity addition taking place in China, would it be fair to assume that because of this capacity ramp up, now the average price would trade on a normalized level around $900 to $1,000 only?
Ideally, it would be. If you ask me, it was actually $800 [Technical Difficulty].
Sorry to interrupt you, Pramod sir, your voice is breaking. I'll reconnect you.
I'm saying that it was actually $1,500 to $2,000 when the Phthalic was $1,200. And in the COVID, it has moved to $3,500 also for a period of -- brief period of 6 months.
So to assume when it will be recovered or recovered to the same price, which it was historically for 20 years, it will be difficult. But I think as and when there is excess supply from China will reduce or moderate, that is the time we will see the recovery in the price.
Got it. Got it. And it would be fair to assume that Phthalic prices would only rise with increase in demand from the downstream products going forward?
100% because as and when there is a extra demand or the demand recovery in the downstream, which is paint, plasticizer, pigment, CPC, UPR, specialty chemical, Phthalic demand will automatically go up. Today, if you see, it's okay. Demand is not good or not bad, but overall, the chemical market is not that good.
The next question comes from the line of [ Moksh Ranka ] from Aurum Capital.
I wanted to ask what are the -- what are we expecting CapEx for the full year and the peak long-term debt for us?
So this year, INR 160 crores was the CapEx proposed in the plan for plasticizer. We have already done around INR 100 crores, so around INR 50 crores, INR 60 crores on account of plasticizer.
And for the pyrolysis and the CBG, we have allocated around INR 35 crores to INR 40 crores. We already spent INR 5 crores to INR 7 crores or INR 10 crores basically committed, around INR 30 crores. So you can say INR 50 crores to -- INR 70 crores to INR 80 crores is the CapEx plan for 12 months from now.
Okay. And what is the peak debt we are expecting this year to be long term [indiscernible]?
Peak debt -- today this plasticizer -- with plasticizer and the existing debt, we have INR 202 crores today. And it will be another addition of around INR 50 crores to INR 60 crores. So INR 250 crores to INR 260 crores is the peak debt once we complete plasticizer, pyrolysis and CBG, all 3 projects.
Okay. And what are the current -- like 3 years down the line, how much would we expect the non-PAN revenue to be? And what are the sustainable margins in that?
So non-PAN revenue will be around INR 900 crores to INR 1,000 crores is plasticizer, around INR 100 crores -- I believe Maleic will be INR 100 crores plus business. Even at the similar rate will be INR 70 crores to INR 80 crores when we operate CSR plant.
So INR 100 crores in Maleic, INR 900 crores is plasticizer and INR 100 crores is of DP and another INR 40 crores to INR 50 crores is the Benzoic Acid and other products. So you can see INR 300 crores is all other products and then around INR 1,000 crores to INR 1,100 crores will be the revenue from non-Phthalic products which is plasticizer, DP, Maleic, Benzoic Acid, yes.
Yes. And the sustainable margin, sir?
Sustainable margin because Maleic and all that is basically 90%, 95% goes into EBITDA. And for plasticizer business, 10% to 12% is the EBITDA margin is expected and PAT margin around 4% to 5%.
Because the capital turnover ratio is 5x, you are spending INR 160 crores, INR 170 crores, revenue is INR 1,000 crores [indiscernible].
Okay. And the current price trend as compared to the Q2 price, so like how is the price trending currently in October and November?
It has gone down from INR 90, INR 92 per kg to around INR 84, INR 85, INR 86. It has gone down by 7% to 10%. But correspondingly, OS price has also gone down. Ultimately, it's a margin that matter, which is hovering around between $120 to $150.
The next question comes from the line of Aditya from Securities Investment Management.
So for PAN globally in terms of cost curve, would we say we are one of the lowest cost producers for PAN?
Yes. We are one of the lowest.
Sir, but if there are peers who are vertically integrated, who are backward integrated to us some raw material, how is it possible for us to be more competitive?
Let me explain to you. When I'm saying we are lowest cost producer, we are talking about conversion cost. If somebody says I'm quoting -- today say [ OX ] price is say $750 per tonne. Somebody say I got the OX at $200.
So I'm not comparing with that. If you are getting OX free of cost, I'm not -- I'm saying from OX to PA conversion, how much cost is required by other companies, we are one of the lowest.
Understood. Got it. So the point I was trying to get is, is that the current spread, it is possible that the current spreads could go down further as well because if the companies are making -- are not making losses, are making profit because they're backward integrated?
Generally -- no, no, no. Generally, it is not possible at $100 margin in international market, most of guys will be making loss, most of at EBITDA level. So generally, whenever price go -- margin go down below $100, you see a lot of closures or shutdown, temporary or permanent.
So $100 is the lowest I have seen in last 10 years. Whenever it goes $100, it comes back again to $150 to $200. And $300, $350 is on high side. Average, I have looked at between $180 to $200 is average for last 20 years.
So today, we are at a lower side. There are chances it will improve over the period of time. Whenever there is a sort out the geopolitical issues, the wars, the American tariff, it all has to be sorted out, it will automatically come to $200.
Ultimately depend upon all the downstream demand, paint, plasticizer, pigment, CPC, if they all are doing well, especially chemicals, then Phthalic demand will automatically go up.
Understood. And sir, globally, if I have to understand this PAN industry, would we see that it is a more consolidated industry where top 7, 8 players would control 80% to 90% of the market or it's a fragmented industry?
No, no. It is consolidated -- what you have mentioned is top 7, 8 players completely have 90% control over that. And Phthalic is required everywhere wherever there is a requirement of infrastructure [Technical Difficulty].
All the downstream industry where we supply is more or less linked with the infrastructure. It's a [indiscernible] material, paint, plasticizer, pigment, CPC, especially -- everywhere is linked to the growth of the GDP. Typically, in line with the GDP grow, it will grow.
Ladies and gentlemen, due to time constraint, that was the last question for today's call. I would now like to hand the conference over to Mr. Pramod Bhandari for closing comments.
Thank you very much, everyone, for joining the call. We appreciate your time and showing the interest. The one last point I need to highlight is a lot of chemical companies like I G and other have built the capacity.
Of course, not able to utilize the full capacity. But whenever time will turn, our capacity utilization improve, we are operating 5 plants, including plasticizer, we will generate very good revenue, EBITDA and profitability. So it's only the matter of time before we will see the good profitability for I G.
In case you have any other questions, please interact or contact with our SGA, Investor Relations adviser, you can send the mail to us. Thank you very much. Bye.
On behalf of I G Petrochemicals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.