Chemfab Alkalis Limited , a leading manufacturer of chlor-alkali products and OPVC pipes, has reported mixed financial results for the first quarter, reflecting a challenging operating environment with softer global caustic prices.

Revenue and Profitability

The company's consolidated revenue from operations for Q1 stood at ₹91.54 crore, marking a 19.1% increase compared to ₹76.83 crore in the same quarter last year. However, the net profit after tax declined to ₹2.55 crore from ₹8.96 crore in the corresponding quarter, primarily due to increased costs and lower realizations in the chlor-alkali segment.

Segment Performance

Chlor-Alkali Division

The chlor-alkali segment faced headwinds during the quarter. ECU (Electrochemical Unit) realization declined from ₹42,386.00/MT in the previous quarter to ₹40,955.00/MT in Q1, reflecting softer global caustic prices. The segment reported a loss before interest and tax of ₹3.72 crore, compared to a loss of ₹6.37 crore in the same quarter last year.

OPVC Pipes Division

The OPVC pipes segment showed resilience, with revenue increasing to ₹38.70 crore from ₹30.93 crore in the corresponding quarter last year. The segment's profit before interest and tax rose to ₹8.63 crore, up from ₹7.40 crore in the same period.

Operational Highlights

• The company undertook planned maintenance for recoating and re-membraning of elements in its chlor-alkali plant, which temporarily impacted production.
• Market demand for OPVC pipes remained muted, with no major uptick in Central Government fund flows towards the Jal Jeevan Mission.
• Chemfab Alkalis is progressing with two significant capex projects:
  1. A ₹60 crore technology modernization initiative
  2. A ₹15 crore hybrid power sourcing project Both projects are expected to be completed in Q2, with anticipated cost savings and improved profitability starting Q3.

Management Commentary

Mr. V.M. Srinivasan, Chief Executive Officer, stated, "While Q1 posed short-term challenges, we remain optimistic about the upcoming quarters. Our focused investments in technology, energy efficiency, and capacity enhancement are poised to strengthen our competitive position and drive improved financial performance in the periods ahead."

Future Outlook

The company is expanding its OPVC pipes capacity from 14,000 TPA to 23,000 TPA, with the 5th production line expected to be installed within Q2. Management expressed confidence in improved order inflows for the OPVC segment in the second half of the year.

Chemfab Alkalis continues to focus on operational efficiencies and strategic investments to navigate the current market challenges and position itself for future growth.

Chemfab Alkalis Limited has reported a robust financial performance for the first quarter, with significant growth in both revenue and profitability.

Financial Highlights

• Revenue Growth: The company's consolidated revenue from operations increased to Rs 915.00 million, up from Rs 765.00 million in the corresponding quarter of the previous year, marking a 19.61% year-on-year growth.

• Profit Surge: Consolidated net profit after tax jumped to Rs 25.00 million, compared to Rs 9.00 million in the same quarter last year, representing a substantial 177.78% increase.

• EBITDA Performance: The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) improved to Rs 113.00 million from Rs 83.00 million year-over-year, with the EBITDA margin expanding to 12.35% from 10.85% in the same period last year.

Segment-wise Performance

Chemfab Alkalis operates in two primary segments:

1. Chemicals and Related Products: This segment continues to be a significant contributor to the company's revenue.

2. PVC-O Pipes: The PVC-O Pipes segment showed stronger performance compared to the Chemicals segment.

Operational Updates

• The Board of Directors approved the allotment of 4,000 equity shares under the Chemfab Alkalis Employees Stock Options Scheme (CAESOS 2020).
• The company amended the CAESOS 2020 scheme, subject to shareholder approval, increasing the total number of options from 4,00,000 to 5,00,000.
• Mr. C. S. Ramesh resigned as Non-Executive and Non-Independent Director, effective July 31.
• The Board reconstituted various committees, including the Audit Committee, Nomination and Remuneration Committee, CSR Committee, and Stakeholders Relationship Committee.

Standalone Performance

On a standalone basis, Chemfab Alkalis reported:

• Net profit of Rs 539.40 lakhs, compared to Rs 393.06 lakhs in the previous quarter and Rs 332.89 lakhs in the same quarter last year.
• Revenue from operations stood at Rs 8,758.10 lakhs versus Rs 8,784.59 lakhs in the preceding quarter.

Outlook

While the company has not provided specific forward-looking statements, the strong Q1 performance sets a positive tone for the fiscal year. The expansion in EBITDA margin suggests improved operational efficiency, which could bode well for future quarters if market conditions remain favorable.

Chemfab Alkalis Limited continues to demonstrate its resilience and adaptability in a dynamic market environment, positioning itself for potential growth opportunities in both its core chemical business and the expanding PVC-O pipes segment.