PCBL held a conference call on 24 May 2024 to discuss the results for the quarter ended March 2024 and way forward. Mr. Kaushik Roy- Managing Director, Mr. Raj Gupta- CFO, Mr. Saket Sah- Head, Investor Relations and Mr. Pankaj Kedia- Vice President - Investor Relations of the company addressed the call.

Highlights of the Concall

• Consolidated sales volume was 20% YoY in Q4FY24 to 142000 tonne.

• Consolidated EBITDA per metric tonne in carbon black business stood at Rs 22,600 in Q4FY24.

• The company commissioned the greenfield carbon black project in Chennai in FY24 with capacity of 1,47,000 tonnes. As a result consolidated installed capacity of the company increased to 7,70,000 tonne per annum. This new Tamil Nadu greenfield facility is based on Industry standard 4.0, which provides cutting-edge technology that includes AI, machine learning and data analytics.

• The Chennai plant was operating at 60% capacity during Q4 and on a full year basis, it was about 55%. It is hopeful that to reach full capacity utilization for the plant by Q3 or Q4 of FY25.

• The company also commissioned the cogeneration captive power plant in FY24 at Tamil Nadu site, having a capacity of 24 megawatts. As a result the total cogeneration power capacity now stands at 122 megawatts.

• Besides this the company also commissioned 1 specialty black line of 20,000 tonne at Mundra, Gujarat in FY24. And another specialty line of 20,000 tonnes is under implementation and will be commissioned during the current year.

• The company expects all these strategic initiatives to increase PCBL total manufacturing capacity to 7,90,000 tonne in FY25

• PCBL has acquired further land measuring 28 acres in Mundra which will help it in future expansion requirements.

• The company is also going ahead with brownfield expansion of 90,000 tonne of Carbon Black at PCBL Tamil Nadu facility which will be completed in 2 phases. The first phase will be having 30,000 tonnes capacity, and the second one will have 60,000 tonnes of capacity. It expect to complete this expansion next year. And once this expansion is over, total capacity would be 880000 tonne.

• Further the company is evaluating a new Greenfield expansion for which necessary discussions are already underway. This would take its capacity beyond 1 million tonne in near future which will significantly increase its global market share.

• PCBL has recently acquired Aquapharm Chemicals Private Limited, which is a leading specialty chemical company with end applications in detergent, water treatment, oil and gas chemicals and multiple other applications. This acquisition allows it to enter global specialty segment with multiple applications and propel PCBL from single platform to multiple platforms

• Aquapharm derives 75%-plus revenue from Western markets, U.S.A. and Europe. Their key products include phosphonates, polymers, green chelates and oil and gas chemicals. In terms of phosphonates, their global customers represent FMCG majors like Procter & Gamble, Unilever, Henkel, Reckitt & Colman, et cetera. Oil and gas companies like Halliburton, Baker Hughes, they're their major customers in that particular segment. And there are chemical giants like BASF and Ion Exchange as their customers. It has got manufacturing plants in U.S.A., India and Saudi Arabia.

• Aquapharm acquisition was completed on 31st January 2024 at a total consideration of Rs 3,850 crore. The current quarter's consolidated financial captured only for 2 months. The company is working on integration of the business with PCBL and aligning the vision of Aquapharm with the growth vision of PCBL. It plans to expand capacities of various specialty chemicals in Aquapharm rapidly.

• PCBL and Kinaltek, a sydney-based Australian company, has executed a JV agreement on March 16, 2024 to form an Indian joint venture company called Nanovace Technologies Limited which will develop nano silicon additives to be used in anodes of a lithium-ion battery. The transaction involves acquiring the IPs and lab-scale assets in Australia by Nanovace Technologies for a consideration of USD 16 million. PCBL will own 51% of Nanovace Technologies, and Kinaltek will hold 49% shareholding. It also involves the infusion of INR equivalent amount of USD 28 million by PCBL in the JV company towards capital expenditures and commercialization of the technology over next 1.5 to 2 years.

• Kinaltek Private Limited is an innovation company, specializing in advanced technologies. Kinaltek has developed a patented mobile proprietary technology for direct production of metallic alloys and compounds, including nano silicon which will have applications in lithium-ion battery. The technology developed by Kinaltek provides a breakthrough in production of nano silicon enabling lower cost and lower carbon footprint manufacturing process. Kinaltek has been awarded global patent pertaining to the above-mentioned technology.

• The JV will help PCBL to foray into the high-growth battery materials segment with innovative technology, giving a huge impetus to the originally developing conductive Carbon Black grades like Energia to a multi-specialty material portfolio for enhanced battery capacities enabling higher mileage to EV, faster charging, safer battery chemicals, and reduced carbon footprint and cost per unit energy stored.

• In April 2023, PCBL incorporated a wholly-owned subsidiary company in the name of PCBL Europe SRL in Belgium. The European subsidiary would significantly enhance our capabilities to increase research and development initiatives at its global R&D center, Sushila Goenka Innovation Center, in Belgium. It would also allow it to serve European customers better by enabling local involvement and just-in-time delivery of both rubber grade materials as well as specialty chemicals.

• PCBL also secured 2 patents in relation to oxidized and surface modified grades, which will further strengthen the Specialty portfolio of the company. Oxidized grades have applications in ink and coating while the surface modified grades improves fuel efficiency and tyre life.

• In March 2024, the Board of Directors has approved the issuance of 16 million warrants convertible into equity shares at an issue price of Rs 280 per share aggregating up to Rs 448 crore to promoter group. This would help it to deleverage the balance sheet.

• The Indian tire sector is witnessing a strong growth opportunity and the industry appears to be well positioned to drive a long-term growth opportunity. Indian tire sector is a big beneficiary of supply chain derisking strategy by global OEMs following the continued supply chain disruptions over the last 3-4 years. The company expects tyre industry to grow by high single digit to low double digit for the next few years.

• The capital outlay for the Brownfield expansion is expected to be around Rs 500-550 crore which will be spent over current year and next year. Capita outlay for the Greenfield capcaity ix expected to be around Rs 900-1000 crore. But exact specification or the size of that Greenfield is still under consideration.