Chemplast Sanmar vows to better performance in FY25 on improvements in PVC biz

Chemplast Sanmar expects to record a better performance in this fiscal when compared with FY24 as it sees many favourable factors that would help tackle the challenges posed by an influx of cheap imports in its PVC business.

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The year that ended on March 31, 2024, proved to be one of the toughest years for the company as it posted a net loss of ₹158 crore as against a net profit of ₹152 crore in FY23 due to pricing and margin pressures on account of excessive dumping of PVC resins by China and other countries, sharp correction in prices of caustic soda and chloromethanes.

While there was a slight decrease in Paste PVC import volumes in FY24 compared to FY23, domestic prices remained impacted by low-priced imports from the European Union, China, Malaysia, and Thailand.

Conversely, Suspension PVC imports increased by 16 percent in FY24, with India becoming China’s top export destination, receiving about 8.6 lakh tonnes of Suspension PVC during the year, which accounted for a third of all Suspension PVC imports into India.

In FY24, both Suspension PVC and Paste PVC prices dropped by 19 per cent and 12 per cent, respectively, compared to the previous year. However, there have been signs of improvement on a quarter-on-quarter basis, with a slight price increase noted in the March 2024 quarter, Ramkumar Shankar, Managing Director, indicated during the company’s Q4FY24 earnings call.

Strong demand

Despite these challenges, several positive factors are expected to enhance the company’s performance. These include strong demand for PVC resin driven by growth in the real estate and infrastructure sectors, the impending implementation of a quality control order on PVC resin to prevent the importation of substandard products, and significant progress in the investigation for the imposition of anti-dumping duty on PVC imports.

These factors are likely to lead to a correction in PVC prices over the next two to three quarters, signaling a potential end to the industry’s struggles. Chemplast Sanmar is optimistic about its prospects, expecting a turnaround and better performance starting this year.

Positive results

Shankar said that during this challenging period, the company has remained resilient and focused on enhancing its capacities and capabilities, which are poised to yield positive results with the anticipated improvement in market conditions. The company commissioned the 41,000-tonne Paste PVC expansion project during the March 2024 quarter. “We are pleased to announce that products from this new plant have met the quality expectations of our customers. We anticipate reaching 100% operating capacity by the end of the first quarter of the current year,” he added.

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This expanded capacity is meant to meet domestic demand through import substitution and will further strengthen the company’s position in Paste PVC in India.

Meanwhile, the company’s other chemicals business, which includes caustic soda, chloromethanes, hydrogen peroxide, and refrigerant gas, continues to be adversely affected by the oversupply situation in the country.