Chemplast Sanmar does well post IPO, reports 48% jump in consolidated PAT

During a virtual press briefing on Saturday, company officials said that revenue registered a strong growth on account of higher realisations per tonne for its key products - specialty paste PVC resin, suspension PVC, chloromethanes and caustic soda.

On the volume front, the caustic soda volume for the quarter under review was higher. However, specialty paste PVC and suspension PVC volumes were lower on a YoY basis, primarily due to restrictions around operation of downstream units in the NCR region due to poor air quality and the extended monsoons during Q3. The demand for both specialty paste PVC and suspension PVC, the company officials said, had picked up strongly. They are expecting the  inventory to get diluted in near-term.

The company has begun dispatches of the two newly-commercialised products of custom-manufactured chemicals business. “The product pipeline is strong with a number of projects at various stages of commercialisation,” a top official said.

The company has also got environmental clearance for its proposed specialty paste PVC expansion. “We have received clearance for 70 ktpa, but as of now, we are going ahead with 35 ktpa expansion as Phase 1,” a company release said.

In the wake of the IPO, the company has become debt free on a standalone basis and on a consolidated basis, the net debt is negligible.

“The demand outlook, for both paste PVC and suspension PVC, is quite strong due to significant deficit and high import dependence in the domestic market. Increasing tight supply at the global level for both these products, augurs well for domestic manufacturers like us. With our dominant position in the Indian market and expansion plans to cater to the growing demand, we believe that we are well-placed to benefit from uptick in the PVC market. Custom manufacturing business is expected to benefit significantly due to China plus one strategy of global innovators,” said Ramkumar Shankar, managing director.

The specialty-chemicals business reported a strong quarter with paste PVC registering a higher realisation, resulting in healthy margins. “After reaching all-time highs in October, paste PVC prices corrected a bit and are now trading close to $1,700 –1,750 a tonne. In the near- to medium-term horizon, we expect prices to be range-bound,” he added.

On the non-specialty chemicals front, caustic soda prices peaked during the quarter and still continue to be on the higher side. Currently, prices are at a level of $600 – $650 a tonne. The price of chloromethanes in India reached record highs due to limited availability on account of reduced import arrivals. “However, with the addition of new capacity in India, there has been some correction in prices (though even after correction, the prices are still higher than pre-pandemic levels). Once the market absorbs incremental volume, we expect the prices to strengthen again,” the release said.

“Suspension PVC prices reached a record high in the month of October largely on account of supply side tightness. Thereafter, prices have softened but continue to remain at healthy levels. We expect prices to continue to remain strong as no significant capacity addition is on the anvil in the near- term,” it said. The prices of feedstock VCM have dropped even more than PVC has.  However, Sanmar officials expect the benefit of the drop in VCM prices to kick in after a lag of 30 to 45 days. The impact of the drop in PVC prices would have an immediate impact, the company said.

 Vijyay Sankar, vice-chairman of the Sanmar group, said post the IPO the company was well poised to capitalise on the growth opportunities.  According to him, Chemplast was perhaps among a few manufacturing companies in Chennai to report a net profit of over Rs. 400 crore in the first nine months of this current financial year. Reiterating its strong focus on Tamil Nadu, he said Sanmar would strive for a growth with profitability even while emphasising on safety and environmental issues.