Chemplast Sanmar is poised for a significant turnaround in the fiscal year 2025, driven by positive developments in its polyvinyl chloride (PVC) business. The company, which faced considerable challenges in FY24 due to an influx of low-priced imports, anticipates several favorable factors to enhance its performance this year.
In FY24, Paste PVC import volumes slightly declined compared to FY23, yet domestic prices continued to be pressured by cheaper imports from the European Union, China, Malaysia, and Thailand. On the other hand, Suspension PVC imports surged by 16%, with India becoming the top export destination for China’s Suspension PVC, receiving about 860,000 tonnes—accounting for a third of India’s total Suspension PVC imports.
Both Suspension PVC and Paste PVC prices dropped by 19% and 12%, respectively, in FY24 compared to the previous year. However, there have been quarter-on-quarter improvements, with a slight price increase observed in the March 2024 quarter, as highlighted by Ramkumar Shankar, Managing Director of Chemplast Sanmar, during the company’s Q4FY24 earnings call.
Strong Demand and Strategic Measures
Despite the challenges, Chemplast Sanmar sees several positive indicators that could bolster its performance. The strong demand for PVC resin, fueled by the growth in the real estate and infrastructure sectors, is a significant driver. Additionally, the impending implementation of a quality control order on PVC resin is expected to curb the importation of substandard products. Moreover, the ongoing investigation into the imposition of anti-dumping duties on PVC imports is progressing, which could lead to a price correction in the next two to three quarters, potentially ending the industry’s recent struggles.
Expansion and Future Outlook
Shankar emphasized the company’s resilience and strategic focus during the challenging period. The commissioning of a 41,000-tonne Paste PVC expansion project in March 2024 marks a crucial milestone. “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 stated. This expanded capacity aims to meet domestic demand through import substitution and fortify Chemplast Sanmar’s position in the Indian Paste PVC market.
Meanwhile, the company’s other chemicals business, including caustic soda, chloromethanes, hydrogen peroxide, and refrigerant gas, continues to face adverse effects from the oversupply situation in the country. With these strategic measures and a favorable market outlook, Chemplast Sanmar is optimistic about delivering improved performance in FY25, marking a significant recovery from the previous fiscal year.
