Lords Chloro Alkali Ltd (LORDSCHLO) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to Lords Chloro Alkali Limited Q2 and H1 FY '27 Earnings Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Smit Patel from Adfactors PR. Thank you, and over to you.
Smit Patel (Adfactors PR): Thank you. Good afternoon, everyone. Thank you for joining us on Q2 and H1 FY '27 earnings conference call of Lords Chloro Alkali Limited. We have with us today Mr. Madhav Dhir, Executive Director, who will take you through company's operational and financial performance for the quarter and half year ended 30th September 2026. Before we begin, I would like to remind everyone that certain statements made during today's discussion may be forward-looking in nature and may involve risk and uncertainties. A detailed statement in this regard is available in Q2 and H1 FY '27 results presentation, uploaded on the stock exchanges and on the company's website. I now hand over the call to Mr. Madhav Dhir to begin the proceedings. Thank you, and over to you, sir.
Madhav Dhir (Lords Chloro Alkali Ltd): Hi, thanks, Smit. Good afternoon, everyone. Thank you for joining us on Q2 H1 '27 earnings conference call of Lords Chloro. I have a small speech prepared, after which we can go into Q&A. So, I'll just take you through, first, what we believe how our results was, and a little bit of the analysis of the results. So, we've entered FY '27 with a continued focus on strengthening our performance and especially improving our cost efficiencies. In H1 FY '27, we reported strong numbers, similar to H1 '26, even though there were significantly lower product realizations. Caustic soda lye has been under pressure for the last quarter, as you may be aware. So, even though there were lower product realizations, we've managed to give similar numbers. That's primarily because of the improvement in our cost efficiencies. One of the more later developments during this quarter was that we have also sanctioned and commissioned 21 megawatt DC solar captive power with BESS. In total, our captive and group captive renewable energy has now increased to 47 megawatt DC. That constitutes around 40% of our total power is now coming from renewable sources, which is very likely the highest in any caustic soda manufacturing plant in India and even, maybe, around the world, is one of the higher-end ones. So, it would make us a significantly low-cost or green caustic soda to about 47% 40% of our total energy needs. That has also meant that our power grid rate has reduced significantly, which the grid rate is at about INR8 INR8.3, whereas captive power comes at about INR2, and group captive power comes at about INR4.5. So, that is where the cost efficiencies are showing and coming through that even at lower realizations, we're doing significantly better than what you would expect us to be doing. It also means, even though we're in commodity chemicals, the intent is to try to rationalize our EBITDAs such that there's not big swings basis the realizations of caustic soda, and we're able to always deliver profitability come what may in terms of realization of caustic soda. Our manufacturing unit in Alwar, Rajasthan, also allows for us, because it's on 84 acres, allows for us to expand within this, and we're, as you're aware, having a INR315 crore capex plan, of which, approximately, INR150 crore was completed last year, and another INR165 crore will be completed by July of next year at the latest. Now, I just want to take you through a bit of the numbers, although you have all the numbers available with you. The total income stood at about INR115 crore, which is the highest revenue that we have done in comparison to last quarter, or, sorry, quarter FY quarter 2 FY '26, which was at about INR100 crore, means a year-on-year growth of about 14%. And that, too, on lower realizations. This is primarily because we were able to produce and sell far more caustic
Madhav Dhir (Lords Chloro Alkali Ltd): growth in terms of volumes, as well as the improvement in realizations of chlorinated paraffin wax. In terms of volumes, we did about 23,000 tonnes of caustic soda lye as opposed to 21,000 tonnes if we compare Q2 FY '27 versus Q2 FY '26. Now for the first half, as I mentioned, total income was similar to H1 FY '26, which is INR 222 crores this year versus INR 201 crores this year -- last year that INR 20 crores is a marginal jump in terms of realization and is primarily due to the volumes. We will get a significant jump subsequent to the expansion plans that are yet to be commissioned which will be happening around July of next year at most, primarily March, and at most July. Our EBITDA of H1 FY '26 has registered a growth of about 10.36%, which is also significant. On the operational front, the volumes of caustic soda lye, as I mentioned, are above 9% -- over 9% year-on-year. And CPW is over actually 40% in terms of volumes. So we are -- we've done a much significant growth in chlorinated paraffin wax. It is a new product for us, and we have been producing it for only a year, year and a half. So we have significantly managed to get our product sold in the market. Power and fuel expenses is something where we are trying to do our cost expense savings. So for example, if you see, fuel -- power and fuel expenses declined to INR 37.79 crores, despite the increase in sales of caustic soda and the production of caustic soda, from INR 42 crores in just the previous quarter. So a quarter-on-quarter -- sorry, my mistake, yeah, quarter-on-quarter, INR 5 crore reduction in power cost. This may actually increase coming next quarter, so we are doing well on that. Employee benefits have increased. This in this includes Diwali bonus, this includes, for example, the the the give me a moment, sorry. Higher incentives and the variable employee benefits that we have over here. The PBT has largely remained the same, about INR 28 crores for the first half of this year versus last year. And I repeat myself that it's, even though it's due to much lower realizations, we have done fairly the same, even though the caustic soda realizations were much lower. The commissioning of the additional captive solar plant in September marks an important step, because that will bring us to about 40% of our power coming from renewable sources, and increase the decrease the power cost significantly. We remain focused on capacity expansion, downstream integration plans, and the planned expansion of caustic soda and CPW. We are committed on the timelines that we had originally envisaged. And thank you for all the investors and analysts for their continued support and engagement with the company. And we are now open to any questions that you may have.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press "*" and "1" on their touchtone telephone. If you wish to remove yourself from the question queue you may press "*" and "2". Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Trisha Shah from Shah Family Office. Please go ahead.
Trisha Shah (Shah Family Office): Hi, sir. Good afternoon.
Madhav Dhir (Lords Chloro Alkali Ltd): Hi. Good afternoon.
Trisha Shah (Shah Family Office): Hello. Sir, I have a couple of questions. So firstly, starting with you know looking ahead, where do you vision Lords Chloro being there over the next 5 years specifically in the terms of, you say, scale of operations and the product mix? So can you please put some color on that?
Madhav Dhir (Lords Chloro Alkali Ltd): Yeah, sure. I think I would like to start by saying next year itself, we are expecting to do a realization of at least INR 550 crores. That's primarily going to come from the expansion in caustic soda. And going forward within this, because we are only if we are if you're up and running with a new plant by July, we'll only have 9 months of sales, and possibly within the same capacity about INR 550 to INR 600 crores is the revenue that we expect for the following year.
Madhav Dhir (Lords Chloro Alkali Ltd): current capex plan that's already ongoing. Besides this post July, our entire capex plan of 315 crores will be complete, which means any new cash flow that is generated by this business subsequent to July which we expect to be at least 15 to 20 crores EBITDA. On the on the more basic level that we are able to do even with these lower realisations, we'll have at least a free cash flow of 80 odd crores to invest in other chemicals that we may seem appropriate at that time. What that means is that the growth will only grow much significantly quicker subsequent to the expansion plans being completed. Now, what do we, where do we see ourselves in 5 years? Where we see ourselves in 5 years is that we're not just a commodity chemical player, we already view ourselves as just not a commodity chemical player. 20-25% of our income now comes from chlorinated paraffin wax which we intend on increasing to a more significant level. Secondly, we have very large renewable assets on our books as in comparison to other companies which primarily do group captive structures in terms of getting renewable energy. Their power cost landed about 4.5 rupees on on that front, whereas because of a lot significant portion of our assets solar assets are on are on our books, our cost of power is significantly lower at about 2 rupees to a certain extent. So, so, we are actually far more than what we believe the market perceives us to be, which is just a commodity chemical player. We're a commodity chemical player with 25% income coming from chlorinated paraffin wax and large renewable assets on our books. Besides that, what we intend on growing to be in within the next 5 years is a much more diversified chemical company and definitely more towards specialty chemicals. We we see ourselves having the appropriate cash flow available with us starting from July of next year to be able to diversify significantly into any specialty chemical that we may seem fit, and we are in the research phase of identifying such chemicals that may be appropriate and will be able to announce something maybe later in the future by the time something comes through. I hope that answers your question.
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