Laxmi Organic Industries , a leading manufacturer of acetyl intermediates and specialty chemicals, reported a 9% decline in revenue for the second quarter. The company's performance was primarily impacted by a significant drop in its specialty chemicals business.

Key Financial Highlights

Segment Performance

Specialty Chemicals

The specialty chemicals segment, a key focus area for Laxmi Organic, experienced a substantial 20% decline in revenue. This drop was attributed to three main factors:

1. A 10% decline due to the anticipated phase-out of an agrochemical product
2. A 7% decline from market price moderation
3. The remainder from deferred orders to the second half of the fiscal year

Essentials Segment

The Essentials segment, which includes the company's acetyl intermediates business, saw a 5% decline in revenue. This was primarily due to feedstock-linked pricing, although volumes remained in line with the previous year.

Operational Updates

Despite the challenging quarter, Laxmi Organic Industries reported several positive developments:

1. Dahej Facility: The company received consent to operate from the Gujarat Pollution Control Board for Phase 1 of its Dahej facility and has started supplying customers.

2. Fluorination Project: The project is ramping up according to plan, targeting 40-50% of peak revenues.

3. Hitachi Energy Partnership: Laxmi signed a contract with Hitachi Energy for SF6-free gas production, with a 60 metric tonne capacity and INR 75.00 crores capex. The project is expected to be mechanically complete by Q2 of the next financial year.

Management Commentary

Dr. Rajan Venkatesh, Managing Director and CEO of Laxmi Organic Industries, commented on the quarter's performance: "The global chemical industry backdrop remains very demanding, shaped by regional dynamics given the overall supply side overcapacities. The industry continues to be marked by targeted efforts towards cost optimization and restructuring of structurally subscale and non-competitive assets."

He added, "As Team Laxmi, we remain geared to win and geared for growth. We continue our focus on productivity, commercial excellence, execution excellence, cost discipline, and growth projects."

Outlook

While the company faces short-term challenges, particularly in its specialty chemicals segment, Laxmi Organic Industries is positioning itself for future growth through strategic investments and partnerships. The ramp-up of the fluorination project and the new capacity at the Dahej facility are expected to contribute to the company's performance in the coming quarters.

The management remains cautiously optimistic, emphasizing their focus on cash flow from operations and cost discipline to navigate the current demanding global chemical industry backdrop.

Laxmi Organic Industries has announced plans for its fluorine chemicals business, projecting revenue growth and capital expenditure in the coming years.

Revenue Projection and Capital Expenditure

The company has outlined its expectations for the fluorine chemicals segment:

Laxmi Organic Industries expects to generate approximately Rs. 80 crore in revenue from its fluorine chemicals business by the fiscal year 2026. This projection suggests a focus on expanding this particular segment of their operations.

Capital Allocation Strategy

The company has also revealed its capital expenditure plans, aiming to complete Rs. 800 crore in capitalization by the conclusion of FY26. The remaining amount, which has not been explicitly quantified, is scheduled for completion in FY27.

This phased approach to capitalization indicates a structured investment strategy by Laxmi Organic Industries, potentially aimed at enhancing production capabilities or expanding its market presence in the fluorine chemicals sector.

Investor Communication

Laxmi Organic Industries continues to maintain communication with its investors and analysts. The company recently held an Investor & Analyst Meet on October 30, 2025, to discuss its performance for the quarter and half-year ended September 30, 2025.

The recording of this meeting has been made available to the public, demonstrating the company's commitment to keeping stakeholders informed about its financial performance and future strategies.