Refused to commit on epoxy resin manufacturing plans.

On the agrochemical side, can you help us understand what really has happened, it is lower demand, because destocking appears to be largely behind for the conventional portfolios of the innovators or it is China oversupply, because China still continues to add a lot of capacity. So that issue doesn't look like going away very soon. So what gives us confidence that we should see a much better recovery going forward? Also, volumes were steady - on a standalone basis in AI, volumes were broadly flattish, which suggests agrochemicals have declined. Within the non-agrochemical segment, what should be the expected growth rate, especially for some of our key products like sodium nitrite, OBA, and BHA? And on the value creation from the agrochemical value chain, where are we in moving up in the value chain? And lastly, on the new product commission, could you provide an update on its ramp-up progress?

China has ramped up its capacity significantly. But most of that capacity that has been ramped up is for the final product, which goes into formulations. We are an intermediates manufacturer. So what's important is that we focused on seeing what we can do to optimize our cost structure as well as our affluent footprint. And on both of these, along with our quality, I think we stand out as the best in the world. And this has also been given as feedback by customers. Now the Chinese market is also open to us to supply, albeit at perhaps lower realization if we choose to take it. Now that choice remains ours, and we will engage with all potential customers, both in India, in Europe as well as in China to optimize our customer mix. But that way, we will ensure that we are derisked from a geographical perspective. These products continue to remain extremely desired in terms of their effectiveness and efficacy at the farm level. Now that said, we have also worked to see how we can engage with partners and see where we can go downstream to further optimize our value offering. In a couple of the plants, we have made sure that we are able to run multiple products in discrete streams. Now these products, because we're literally in the middle of the year, at the moment, what we have worked with strategic customers for is plant pilot batches, which are roughly about 20 or 30 tonnes in terms of volume in order to be able to qualify for contractual agreements, which would start with meaningful volumes from January onwards. So these are certain steps that we have taken to not only derisk from 'x' particular product, but also from 'x' particular customer. I think we will see a meaningful improvement because orders delayed are not orders declined. And meanwhile, we will see what we have to do in order to make our assets multipurpose in campaigns to be able to run along with customer requirements. With your second question regarding volumes: on the other products, which are going more into the dyes and intermediate space, our volumes are largely intact with a marginal growth. And also, in our PP, our optical brighteners and intermediates, there also, we have seen a growth in line with our debottlenecking efforts. The agrochemical products have had a temporary blip, as I mentioned. Some of them which would be higher margin have had a deferment of supply from our customers, which we are working to see how to address. So all in all, I would say that the net impact on volume is not substantial, but there has been, of course, a net impact in terms of profitability.

On the investment of close to around INR 220 crore to manufacture a key agrochemical intermediate for foray into specialty fluorochemicals - is this for a novel agrochemical or off-patent product, what are the market potential estimates, and when can we see the full benefit of this investment accruing?

The investment of INR 220 crore is in its construction phase and expected to be commissioned at some point between the end of January and the middle of March 2026. We're engaging with customers just also to highlight that while the primary customer for this would be an agrochemical major for a product which is under patent and our process also would be under intellectual property control. The plant is designed in such a way that it doesn't necessarily only have to make that. It will also be able to supply to the cosmetics industry as well as the polymer industry, both of which appreciate the higher quality as well as the considerably reduced carbon footprint that this process will allow us to put on the table. So this technology as well as this plant is probably the first and only of its kind, and it leverages two key strengths of the company. So the moat is significant.

Any timelines of the launch of this product by the innovator? In the earlier phase, we'll be supplying samples to them and once that is launched, the sales could have been ramped up. Any tentative schedule given by the innovator?

This product will be supplied as "plant relevant batch" in quarter 3 and in time for us to be able to engage with them meaningfully for long-term contracts moving forward. But as I also mentioned, the asset will be fungible for us to use in other applications. There also, we are engaging with customers. There also, we are ensuring that we are using this opportunity to supply small plant relevant batches for them to test. In some of these applications, there is also things like stability testing and all of those things. But in all of the cases, whether it is for cosmetics, whether it is for advanced polymers, whether it is for agrochemical intermediates, in all the three spaces, the customers have definitely reverted back very, very positively with regards to our industry-leading specifications and purity. So on that front, our product is a benchmark.

Is it safe to assume that the new product would be backward integrated in the sense that it would use most of the bouquet of products which we are currently manufacturing, and this is a kind of forward integration going to the customer through the bouquet of products what we are already having?

You are partially correct. But also I'll highlight that this plant, the protected IP is the process, not the product. So the same plant will be able to make multiple products using a process which will be intellectually protected by Deepak using a common set of strengths. So you change the raw materials from A to B, you're able to make a product which goes into a different application. And in most of these cases, there is significant synergy with our core competencies. And in two cases, a significant synergy also with Deepak manufacturing the upstream product.

The Chairman mentioned about projects worth INR 14,000 crore under pipeline with some turnover figure of INR 7,000 crore. We are undergoing INR 8,500 crore of capex plus INR 2,000 crore of capex under various stages of commissioning. For the rest of the projects, are the products finalized? And what sort of integration would it help with existing product lines?

Many of the products which are in the process of commissioning, whether it is products like MIBK, MIBC, whether it is nitric acid, those are already part of this, and they are in various stages of commissioning or something that was commissioned 1.5 years ago, which was the fluorination asset. There is something which is in the process of being commissioned in this particular quarter that we are referring to and some more which is being commissioned in Q3, which is in the mechanical completion and pre-commissioning stage. So all of these put together, then over and above this, what we're talking about with regards to INR 8,000 crore of revenue is to keep in mind that when we make phenol, acetone, bisphenol A, these will be largely fed into the manufacturing of polycarbonate. So they will be able to accrue a higher ROCE and earn EBITDA percentage. So it should be looked at in line with that, that all the investment when you look at a backward integration does not result in a top line as high, if it was just a downstream investment. But it builds a significant amount of resilience, and we are able to leverage that to create long-term agreements with our customers.

Just on nitric acid, should we expect the benefits to start from the second quarter of this financial year? Or will it really start from the third quarter? And could it add something like 200-300 bps to the Advanced Intermediates segment margin?

In terms of the margin expectation, you're right. And just to clarify, since we are in the middle of the second quarter, we've already begun trial production and we've already started the commissioning activities for the WNA asset. Integrated, both of these will be commissioned and online, on stream for their desired capacity by the end of Q2. If we're able to take advantage of some volumes as the trial production commences, of course, there will be that benefit, which is accrued. But meaningful and consistent benefit will be accrued from the beginning of Q3 onwards at infinitum. Sanjay Upadhyay: And to answer your question, yes, it will add to EBITDA, maybe about 2% to 3%, what you mentioned, that's right. Maulik Mehta: Also, I'll just highlight that while we have been constructing this, we have also invested in expansion of our nitration capabilities across multiple locations. So we will be able to consume more of what we make as compared to what we had originally anticipated. Our market presence is already established, and we should be able to hit the ground running once these assets are fully commissioned.

On the polycarbonate compounding facility, which is up and running at present, are there meaningful contributions expected for this year in terms of revenues or profits as well?

Frankly, what you should look at is not so much for this year. It's more about what we're able to accelerate on, over the next year or 2 years. This asset, while it will have contribution in revenue, it's a strategic investment to fast track our approval cycle. So it is to be looked at as if it is a very large-scale pilot project, and it allows us to move forward the validation cycles. Many of these end applications have validation cycles, which are more than 18 months long. So we've just started that a few months ago. And if you look at 18 months, then you should not look at a meaningful contribution if and when that happens during the year, certainly, we'll appreciate it. But it will allow us to run the polycarbonate resin plant when it is commissioned all the way to a 100 without at that time waiting for 18 months of qualification.

On the Advanced Intermediates segment, profitability has been weak for the last couple of quarters. With backward integration coming up - nitric acid plus new products and contract manufacturing initiatives, can we expect to get back into double-digit EBIT margins maybe sometime next year?

Yes. In fact, if the orders from our strategic customers had not been deferred, we would have been able to see that even in Q1. But the unfortunate truth is that, this is a situation that prevailed despite our best efforts. So yes, but of course, I will just highlight that many of these products that we're talking about, like nitric acid happen to be in Deepak Chemtech. So the profits as they are will be booked in the company where they're manufactured. And as a group, we will be, of course, able to take advantage of that. Deepak Nitrite standalone EBIT percentage should be able to improve steadily over a period of time. But from that perspective, I would rather focus on the EBITDA of the group rather than the standalone. Sanjay Upadhyay: But Abhijit, to answer your question, it will be a part of AI segment only. So AI segment will certainly show the improved EBITDA at a consol level.

On capex budget for this year - last time we had mentioned INR 1,500 crore for fiscal 2026. Is that still on track? And the next 2 years, should we expect the remaining INR 10,000 crore to be spent?

This year, it would be in the range of INR 800 crore to INR 1,000 crore, roughly. That INR 500 crore is spent. So next year, it will be a significant amount out of whatever new capex is what we have announced. So, around INR 1,000 crore we have already spent this year and next year will be around INR 3,000 crore and around INR 5,000 crore, the balance in 2028. That's how it will be. But some portion goes to the next year also because if you're talking of cash outflow, I'm mentioning about cash outflow, not the actual capex in the balance sheet. Projects will be completed by dates what we have given by 2028. But cash outflows can happen in the next year also.

Considering the INR 9,000 crore capex in DCTL and polycarbonate resin import and end user markets, what sort of market size are you seeing to cater from this PC compounding facilities going forward? What sort of IRR and in how many years do you see cash flows contributing positively?

The polycarbonate market size in India is 4 lakh metric tons. The payback is around 5 years, 5.5 years, between 5 and 5.5 years when you take the entire integrated value chain. You cannot be doing it in bits and pieces. So it's from bisphenol A to phenol, the entire capex will be 5, 5.5 years payback, 16% to 18% IRR.

One of the major iron ore capacity in Germany - about 30% of their capacity is getting shut due to European carbon policy. Any benefit from that in the phenol business?

Phenol - we have expanded capacity. Even this month also, we have reached another peak. And we are able to sell the entire volumes. And that's because of these reasons only. Because we are one of the integrated players. And secondly, India is consuming these intermediates in a significant way. Our demands are increasing, so we are able to sell, that's why we are increasing the capacity when we are putting up polycarbonate also because we can't let go the market.

One of the players is setting up phenol and acetone capacity in India and also plans to enter the BPA segment. Do you anticipate any competition? And do you have plans for merchant sales in phenol, acetone, or BPA in the future?

By and large, this will be captive. There is room for one more player also, because the way demand is growing. But our additional capacity comes for a captive consumption largely. Maulik Mehta: But there will be demand of phenol BPA, which is also sold in the market, but it will be a much smaller share of the total capacity.

Given the current scenario, what are the options that you have to deal with trade war uncertainty?

The options that we are working on our investments for, because these options allow us to cater to investments which are already being planned by the consuming industry within India. So when we are investing in something which is going to be made in India using feedstock that is made in India and consumed by customers in India, this is one way that we are working to see how to protect the future of Deepak Nitrite's growth trajectory.

How will the trade war impact your capex plans? Do you have any plans of slowing down capex if tariffs are high?

We do not have plans to slow down our capex, because of the tariff war that is ensuing all over the world. Because our capex plans are very clearly targeted towards supplying our product to Indian customers with some amount being supplied to our technology partner who will compound it into their applications in Europe.

On the Phenolics front, volumes have increased again but margins have declined materially both sequentially and Y-o-Y. Was there any element of inventory losses on raw materials?

Sorry, just to correct you there. I would actually say that it is quite the reverse of that. The margins have improved from what was actually a multiyear low in quarter 4. Sanjay Upadhyay: Almost 8% to 11%. Maulik Mehta: Yes. So it's been a substantial drop. However, in quarter 1, I would also highlight that two things have happened. One is we've had our highest ever production, but also our production has been constrained in the same quarter, because of the heat wave. Our last highest production was in the coldest month of the year. So it is heartening to know that we are capable of making a new high in the hottest month of the year. But the kind of heat wave that took place in Gujarat, especially in Dahej was unprecedented for the last, I think, 50 or 70 years. And hopefully, with this learning and this experience as we move through the rest of the year, now hopefully into colder months, we will be able to maintain this high production.

On the second MOU of INR 9,000 crore - plans of expanding into MMA, PMMA and NME, any update? What are the peak debt levels we could see by FY28? And adjusting for Government incentive income, Phenolics revenues show a 6% sequential decline even though realization improved and volumes were steady - what explains this?

The MOU of MMA is, whatever we have announced INR 8,500 crore, that is what the announcement is. Very soon, we'll be coming up with the BPA announcement also provided our Board approves that. MMA, we'll come back to you when we decide on that. Today, the capex plan is around INR 11,000 crore. If you include BPA also into that plus whatever we have spent earlier. Second question, even at peak levels, we do not expect to cross the threshold of around 1.5x Debt-to-Equity at the time of project completion. So if it can be in the range of, say, INR 7,000 crore, INR 7,500 crore, we have worked out, but it depends on the capex, how we are phasing out, what kind of creditors and LCs and everything. But roughly, it can be in the range of INR 7,000 crore, INR 7,500 crore, considering INR 11,000 capex. Maulik Mehta: You may have misunderstood when we said realization, what we were referring to was the bottom line, the EBITDA. However, when we spoke about revenue, you're correct that there is a 6% sequential degrowth after adjusting for the SGST benefit. The improvement in the realizations, aka, the EBITDA is because of somewhat of an improvement in the spread as compared to Q4 FY25.