Alkyl Amines Chemicals Ltd

Ladies and gentlemen, good day, and welcome to Alkyl Amines Chemicals Limited 4QFY25 Earnings Conference Call, hosted by Ambit Capital Private Limited.

As a reminder, all participants’ lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing the “*,” then “0” on your touch tone phone. Please note that this conference is being recorded.

I now hand the conference over to Mr. Kumar Saumya from Ambit Capital. Thank you and over to you, sir.

Thank you, Steve. Good afternoon, everyone. Welcome to 4Q Earnings Conference Call of Alkyl Amines Chemicals Limited.

From the Management we have with us, Mr. Udipt Agarwal — Chief Commercial Officer, Mr.

Chintamani Thatte — General Manager (Legal) and Company Secretary, Mrs. Kanchan Shinde — Chief Financial Officer.

I will now request the Management for an opening remark, post which we will open up the floor for Q&A. Thank you. Over to you, sir.

Thank you, Kumar. This is Udipt Agarwal here. Good afternoon, everyone, for joining our call today for our 4Q and annual performance review.

Let me begin by giving a few opening remarks about the year that has just gone by, and then we will open the conference for detailed question and answers.

On all our major products, projects are moving forward as planned. As we announced last year, so all the project, this new project at over Dahej site is moving as planned. We expect mechanical completion to be over by December of this year or January next year. So we will see the impact of that in our numbers in the next financial year.

I think we will have more and more clarity, and we will have more discussions, and I will open the floor for the question-and-answer now. Page 2 of 15

Thank you. We will now begin the question-and-answer session. The first question is from the line of Devansh, an individual investor. Please go ahead.

Wish you a very good afternoon, sir. And good results in Alkyl Amines. Can you please throw some colors related to anti-dumping duty on acetonitrile and something related to it? Thank you.

Yes. As we all know, the Ministry of Commerce department DGTR, Director General of Trade Remedies announced the imposition of the anti-dumping duty on product acetonitrile originating from certain regions and countries. But this is just an announcement from DGTR. After this there is another process which is with the Ministry of Finance and that is still to be completed.

The Ministry of Finance typically has 90 to 100 days window after the DGTR recommendations.

So the impact of that is not there as yet on our business. But you are right, there is an imposition of anti-dumping duty on acetonitrile.

Are anti-dumping duties imposed or not? And this is just investigation running on or did you get the anti-dumping duty by government?

The investigation was completed by DGTR, Director General of Trade Remedies. They made a recommendation, and the Ministry of Finance has to approve it now. Okay, sir. Thank you.

Thank you. The next question is from the line of Rikin Shah from Boring AMC. Please go ahead.

Hi, team. Thanks for taking my question. If we can help break down what kind of pricing pressures are we seeing and volume growth have you seen this quarter?

So this quarter volumes are more or less stable around 4% to 5% growth compared to previous quarter. But compared to corresponding previous year quarter, there is significant growth of around 15%. And prices now more or less remain stable. Compared to last year prices have dropped, but compared to the previous quarter the prices are stable. Margins are also stable; you can see stable EBITDA margins of around 21%.

Sure. So, is the pricing pressure more to do with the dimethylamine component or is it a broad basket-based pricing we are seeing the pressure? It is I think across some product groups more, some product groups less. Ethylamines and methylamines, because of the demand supply situation, are more under pressure. Acetonitrile, because of the continued dumping from China. Okay, alright. That's all from my side. Yes. Thank you. Page 3 of 15

The next question is from the line of Nilesh from HDFC Securities. Please go ahead.

Yes. Good afternoon, sir. Sir, in our previous conference call you mentioned that the volume growth was about 8% to 10% in the first half over FY ‘25. Can you guide us how much was the volume growth for the full year FY “25? Around 13%.

Okay. And top line growth was 9%, so pricing pressure I can see that about 4% because of the value, right? Yes.

So where you can witness pricing prices, is it in your specialty product or the ethyl or methyl chain?

It is more so in ethyl chain and methyl chain because of the demand supply situation. And that's really driving the prices down. And acetonitrile, we did not see any change in terms of the prices.

China continued to dump and prices kind of remain very stable at a low level. Marginal difference of few rupees plus/minus, that does not have any significant impact on the overall situation. I was saying that acetonitrile prices remain more or less stable, however, at a very low level.

Okay. And sir, as you mentioned that in methyl and ethyl amines there are pressure. Particularly in methylamine space, is it because of the capacity addition in the domestic market or is it because of the China dumping?

Methylamine as a product cannot be transported to long distance or exported, so it is pnmarily because of the local situation what we have here in India. So methylamine is not imported into India from China. What we get impacted methylamine is because of the agrochemical demand.

So, some of the agrochemicals are being imported into India from China, and some of the derivatives are also being imported into India from China. So that is creating a little pressure upstream on the base methylamine margin.

Okay. And how do you see FY ‘26 in terms of prices for all three categories of your product basket?

I think methylamine and ethylamines will continue to have a similar situation. We will see how the acetonitrile plays out post the imposition of the anti-dumping duty, the impact of which we expect that should be sometime in financial year Q2, second part of Q2.

Just an update on your CAPEX, how the CAPEX is moving, the product launch, at what stage the ongoing CAPEX is planned or the plan is? Page 4 of 15

As I mentioned in the beginning, the announced CAPEX are moving forward as planned, so there is no change in that. Last year, we announced a CAPEX of about Rs. 110 crores to Rs. 120 crores for a new product at Dahej site, so that is ongoing. Other than that, there are few other projects which are in the pipeline, but we have not decided as yet on the timelines of those. And the amounts are still also being finalized. So we will be announcing as and when we are ready.

Okay. And just last bit, can you tell us about the ethylamine demand supply in domestic market overall?

Nilesh, as you know, you have been following our company, and as you know, I mean, there are two major segments of the ethylamines demand, one is the pharma and the other is the agrochemical. So pharma side demand seems to be a little bit stable. Agrochemicals, it’s up and down. Well, it's a mixed situation, but more or less I would say is that there is a very small marginal increase in demand over the years. That's on the demand side. However, on the supply side, I mean, you know it that we had expanded our capacity with the new plant in the previous financial year ’23-’24, so we have a new plant with the capacity. And other competitors also had their existing capacity. So at this moment it's an oversupplied situation in India.

Okay. In terms of can you quantify how much is the demand as per your assessment, domestic demand? We see a demand which is somewhere, I mean, I can give you a range, it depends on how you look at it, because there are few derivatives also. And we generally also do not comment on the capacities and demand numbers. But directionally speaking, since you have asked it, somewhere around I would say 25,000 tons, 30,000 tons per year.

Yes. Thanks a lot, sir, for patiently answering all my questions. And best of luck. Welcome.

Thank you. The next question is from the line of Bhargav from Ambit Asset Management. Please Thank you very much for the opportunity. Sir my first question is that if the DGTR recommendation on acetonitrile anti-dumping duty goes through, then is it fair to assume that there could be an increase in realization in the range of around 15% to 20%?

Hard to say, honestly speaking. As you read the recommendations of DGTR, I think the lowest is $205 or $207 per metric ton, and highest goes to $480 per ton. But I think floor gets settled at the lower end, generally, in the commoditized semi-specialties markets. We also have to see after this once the Ministry of Finance accepts the recommendation, how is the approach of the other importers into India, I mean, primarily the Chinese. I mean, what is their philosophy around Page 5 of 15

pricing. So we will have to play, and we have to wait and watch how it will play around. But overall, it should help us to improve our position in the market, I would say so.

What is the current pricing for us in acetonitrile?

Our current pricing is similar to as what we had said in the last call also, around Rs. 140 to Rs. 150.

Okay. And secondly sir, we believe that this demand for GLP drugs is now rising, is it fair to say that every ton of GLP drug will require about 15 times acetonitrile?

This is true that the demand for these kinds of molecules is rising, these kinds of applications in the pharmaceutical industry is rising, no doubt about it. More and more pharmaceutical companies are trying to enter into this market segment, which seems to be very lucrative. This is early, still early stages. People are talking about or the customers of ours are talking about significantly higher volumes in this area. At this moment, we are also trying to assess whether it is really like this as you described, I mean, multiple times the demand. But I also understand that let's be optimistic about it. But at the same time, we also know that as the drugs go generic in nature, there is also a process engineering which happens. And the prices of the finished goods also come down resulting in the raw materials as well, pressure comes on to the raw materials as well. But directionally, yes, your information is correct, there is a larger demand or upcoming demand in these kinds of applications.

And basically we are in touch with those customers as well, right? I mean, meaning once the opportunity for active buyers we will also be benefited? Yes, true.

Okay. And does our name also feature in the filing so that there is some entry barrier or no? I mean, can you come again?

Meaning these GLP drug manufacturers, do they have to sort of disclose to someone that they are buying acetonitrile from a particular company, or it does not work like that?

Again, answer is yes and no. If it is for the innovator, producing it for innovator, they probably might have to specify. These are basically key raw material suppliers or key solvent suppliers, which is generally there. | mean, when you file a drug master file, DMF they call it, if you are included you are included there and then the name is there.

Okay. Sure. Great, sir. Thank you very much and. All the very best, sir. Page 6 of 15

Thank you. The next question is from the line of Rajeev Rupani, an individual investor. Please Yes, sir. Thanks for the opportunity. Sir, I had a question. The US has placed the tariffs on China for many goods, so I would like to understand, is there additional pressure or dumping by China to India for our products? Could you please clarify?

The US tariff situation is an evolving situation. So what will happen in July, we do not know at this moment, right. But to answer your question, the second part which is more interesting and more relevant for us is, impact on us with respect to China dumping more into India. In our kind of product, we have not seen that as yet. But depends on what happens in the next couple of months in the US. But at this moment, no, we have not seen that impact. But the speculation, the theory is right, I mean, if China would be less and less competitive in U.S. market, all those capacities need to find a new home. And India, which has already been a dumping ground for the international producers, I expect the intensity to increase.

That was helpful. And my next question was, the products which you are going to introduce in the future, would we be the only producer in India for those products?

There are other producers, but with smaller capacities. Okay. And my last question is, this PLI scheme for pharma, which the government has announced, so when does that benefit accrue to us in the future?

We are not into the pharmaceutical industry, so it is our customers who might get some benefit from it. So we are a raw material supplier to the pharma industry.

And there is, as yet I do not think there is any PLI scheme for the chemical or specialty chemical industries. It has been in the works for the last so many years, we have been hearing about it but nothing concrete at this moment that we are aware of. Thanks, Rajeev.

The next question is from the line of Mehul from 40Cents. Please go ahead.

Hello sir. Thank you so much for the opportunity. Sir, I have a question on the earlier question about new products. Sir, what are the products which we are going to manufacture, the new products? Page 7 of 15

As a policy, we do not announce it. So of course, some of the customers where we have tested it know about it. But as a policy, we do not announce it. When the product is ready and we start selling, we will be announcing it.

Okay. And what are the timelines like for the new products?

As I said, the CAPEX is going on and we expect mechanical completion in December this year or early January 2026. Post that, we would be launching the products in the market. So we will see some impact of that showing up in the next financial year.

Right. And sir, in the earlier discussion you mentioned about that the tariff situation is evolving as we all know, but you also mentioned that we will know in July. So please pardon my ignorance, but can you just share what are you referring to when you said July?

Yes, July because there was an announcement from the US side that the window is for 90 days or 100 days and that period was ending in July. That's what the time frame I was referring to.

This is emerging information, and which may change at any point in time. I mean, we heard about a new trade pact between or new deal between China and US yesterday. So the situation is evolving, as I said, every day seems to be a new day.

Yes, we are ina very dynamic world in terms of geopolitics. Yes.

Sir, on the question on the CAPEX for the new products, so which site you are having the CAPEX being done on which site of Alkyl Amines? In Dahej.

And I am just new to this company, so how many sites do we have other than Dahej?

We have three sites. The company started manufacturing products at site called Patalganga which is on the outskirts of Mumbai. Second site, which is the largest, also is in Kurkumbh, MIDC Kurkumbh. And the third one is in GIDC, Dahej.

Okay, sir. Thank you so much. And all the best.

Thank you. The next question is from the line of Rudraksh Raheja from ithought Financial Consulting. Please go ahead.

Thank you for the opportunity, sir. 1 am very new to business so please bear with me. Sir, what would be our capacity utilization across different plants? Page 8 of 15

Average is around 60% to 70% across all the plants. Some are in the range of 80% to 85%, some are between 50% to 55%, but the average is 60% to 70%.

And this is also a little bit could be different, because if you are talking about at the finished goods level, it could be a little different because so many products which we also derivatized, for example methylamine we also derivatize, right, so there the base utilization would be different. So that's why Kanchan mentioned that it at an average level. The utilization is in that range.

On an average, at best what would be our highest utilization level? Around 85%. Some plants 80%. Understood, understood. Thank you.

Thank you. The next question is from the line of Rajeev Rupani, an individual investor. Please I had a follow up question on the new products. So could you just at least guide us on the new products, is it going to be on the specialty chemical side or there are derivatives of amines?

That’s more on the specialty chemical side, Rajeev.

Thank you. The next question is from the line of Kumar Saumya from Ambit Capital. Please go ahead.

Hi, sir. A couple of questions from my side. This year every quarter the EBITDA margin has been in the range of 18% to 20%. So do you see the range for improvement in the next fiscal? EBITDA margin in the range of?

Yes, EBITDA margin is 21%. Last year it was around 19%. So our average, if you see in the past, it is around 20% to 21%. So we are like now stabilized at that.

Do we expect to improve to around 21% on net in the next financial year?

Difficult to say, but at present we do not foresee, because the pressure on prices continue to remain as in past year. Page 9 of 15

Got it. And then about the CAPEX, where is the total CAPEX apart from that Rs. 100 crores Dahej CAPEX, do we have any more CAPEX that we are planning to do this fiscal?

It is around Rs. 150 crores, so that is from carry forward projects from past year also and some new projects in current year, so around Rs. 150 crores we forecast for next year.

And this includes Rs. 100 crores at Dahej, right?

Right. So for out of Rs. 100 crores, we have already spent something in last year also.

Yes. And then this year what was the total exports? This year, what was? Total exports.

Exports generally it is around 20% of the total sales. 20:80 generally it has continued to remain.

Right. Okay. Thank you, ma'am. I will come back in the queue.

The next question is from the line of Devansh, an individual investor. Please go ahead.

Hello. Sir, just wanted to ask about it's a bottom for the cycles because I just noticed that promoter group project trading company is buying your shares from open market because it's a good sign to add quantity at that price. Can you please share some thoughts on it?

It's difficult to say in market what is the bottom level, you never know.

Ma'am, sorry to say, but as you mentioned sometimes you are getting anti-dumping duty and this will directly impact your margins too, and impact on volume growth too.

We already spoke about the volume growth and overall growth in the coming years. Okay, ma'am. Thank you. Thank you. The next follow-up question is from the line of Bhargav from Ambit Asset Management. Please go ahead. Yes, I just wanted to know one thing that what is the probability that the Ministry of Finance may reject the DGTR recommendation? I mean, in your past instances, is there any case where it has happened? Page 10 of 15

Yes, it has happened in our case also when we had the sunset review for our product monoiso propylamine. That time Ministry of Finance, it did not go through the Ministry of Finance. So there have been instances, but we also see that of late quite a number of most of the cases are also going through Ministry of Finance. So, Ministry of Finance generally accepts the DGTR recommendation, that's what I am trying to say.

Okay, great. Thank you. Thank you so much.

But we have to keep our fingers crossed till the time final notification from Ministry of Finance is out and available to everybody.

And sir, does the pricing immediately improve or would there be some low-cost inventory also in the system, so once that inventory gets absorbed, just to get some sense?

I think every time there would be an inventory impact, for sure, yes. And let's not forget that it will not only help us, same conditions are also applicable for other producers of acetonitrile in India.

No, no, sir I was referring more to the Chinese dumping, which they do. So is it that before this anti-dumping duty announcement they would preempt it and flood the market, from that perspective?

I think there would be some inventory effect.

Okay, understood. Thank you. Thank you very much, sir. Thank you. The next question is from the line of Vatsal Shah from Kingstone Capital Management. Please go ahead.

Hi. Thank you for taking my question. I wanted to ask the split between amine, amine derivatives and specialty chemicals from a revenue point of view.

Around 50% is from amines and 30% is from derivatives, and around 18% to 20% from specialty chemicals.

Okay. And from what I understood was, from amine and amine derivative side, the problem is on the oversupply situation in local market, and specialty chemicals the problem is for anti- dumping duty, is that correct?

Amines and amines derivatives, the base amines which is the methylamine and the ethylamine, there is an oversupply situation, yes. And specialty products if you look at it, we say that there's a margin pressure because of dumping from China. But at the same time, if you look at our Page 11 of 15

revenue shift, or revenue growth, it's also similar across all three segments. So we are growing across all segments, amines, amines derivatives and specialty products.

No, I was trying to gauge the situation more from the point of view of recovery. So if there is an oversupply situation for amine and amine derivatives, so like for how long will it persist? Yes, the major oversupply situation is in the amines, yes, which is the methylamine and ethylamines, base amines. And there is a significant over-capacity. But we also have to keep this in perspective that when we build these plants, these plants are built for long term. Because these are large capacity process plants, it's difficult to put smaller capacity plants every two years. So, everybody who puts up these kind of plants, they plant it for the future, not for the short term demand. So from that perspective, I think it will take a while for the capacities to be absorbed in the domestic market.

Got it. And can you also share the amine and amine derivatives industry growth rate, like what is the current industry growth rate?

We primarily find applications in pharmaceuticals and agrochemical applications, and there you know how the requirement has been growing. I am not talking about the formulations, that grows at a decent rate, so that's typically 6%, 7%, 8%.

Got it. And volume wise, we are looking for around 10% in the next two years?

Yes, we are looking at a double-digit volume growth. Okay. Thank you so much.

Thank you. The next question is from the line of Rajeev Rupani, please go ahead. | had a follow-up question on ACN, acetonitrile. Sir, what I believe is our competitor is commissioning 60 metric ton a day plant of ACN, which will be commissioned by FY °25- °26. And the domestic demand is about 30,000 to 35,000 tons. So what do you think will be impact on the price of ACN when their plant comes up, will we suffer some price damage and capacity utilization will be less for us?

Depends on the timing of the capacities which come into the picture. But if you look at the basic rule of demand supply, if there is an oversupply situation in the market, yes, then it has an impact on the overall profitability of all the industry players, it's not only us. So that principle does not go away anyway. As and when somebody expands or new capacities come on stream, this kind of phenomena is observed in the market. Page 12 of 15

Thank you. The next question is a follow-up question from the line of Vatsal Shah from Kingston Capital Management. Please go ahead.

Yes. Thank you for the follow-up. So there was a news about Aarti Drugs backward integrating into some of your products. So, is Aarti Drugs a significant customer of yours or like what will be the impact from them backward integrating into methylamine?

There is a news which we are also following up, we are also tracking at what point in time they would be able to come in the marketplace. So we will see as and when it happens. But methylamines may sound simple product, like it's a one-step reaction of alcohol plus ammonia, but it is not so simple to produce. Of course, since they have invested into it, they will learn and come on stream. But again, the same logic applies here as well, whenever there is a new capacity and market becomes oversupplied, there is a pressure on the margins.

Got it. And like, are they a significant customer of ours or it is negligible?

I would not say significant, but it's not negligible either. They have a decent demand, I would say, but there are other customers who have similar demands. Okay, alright. Thank you.

Thank you. The next question is from the line of Kumar Saumya from Ambit Capital. Please go ahead.

Hi sir. Sir, just one question, during the quarter how was the demand, particularly for this quarter, was it similar to what we saw in the last nine months or some new development or some underlying demand trends a little different that we are seeing?

In this particular quarter, I would say, the demand was slightly on the lower side, market demand.

But that is not because of any kind of fundamentals changing or any macro indicators. It was more because of certain customers were down, and they were not able to produce, and/or availability of other raw materials, from that standpoint. But not because of any fundamental change in the market, which can happen in any quarter. I would say, the underlying still remains the same, no deterioration in the fundamentals.

And sir these customers that you are talking about, were they from pharma segment or agrochem segment?

I would say more on the specialty chemicals segment.

Okay. Got it. And are they back to normal or are they still struggling? Page 13 of 15

No, I think they are back. That's why I said, I mean, there's no change in the fundamentals of this.

Got it. That was very helpful. Thank you.

Thank you. The next question is from the line of Rajeev Rupani. Please go ahead.

Yes, sir. I had a follow-up question. By when do you think this pricing pressure on ethylamines and methylamines goes away? Since you and your competitor have a good capacity, so how much time do you think will it take for capacity utilization to improve and the prices to improve, a year or two, or three years, could you please guide us? Maybe a little longer.

I wish it happens sooner, but it all depends on the demand development.

At this moment, if you look at the capacity, there's massive over capacity. So one of your participants in the call also mentioned, the Aarti Industry or Aarti Drugs impact, so market is going to remain long in the next few years. Thank you. That was helpful.

Thank you. The next question is from the line of Simprit Singh. Please go ahead.

Hello, sir. I have a question about capacity utilization, can you list what is the capacity utilization currently for our plants?

Repeat your question, your voice was not very clear. I think your question is more related to the capacity utilization of our plants, right?

So it's around 60% to 70% average utilization.

Okay. And one more question, like recently promoters are buying the stakes, so are both considering any buyback or any form of reward for the shareholders? No, we are not aware about any of this.

Okay. Ma'am, one feedback,. This time I did not see any investor presentation on the website or on exchange. So that's the only way for small shoulders to reach the management or see the presentation.

By tomorrow maximum the presentation will get updated. Okay, ma'am. Okay. Thank you. Page 14 of 15

Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.

Thanks everybody once again for joining the call, listening in and spending the time with us. I hope we have been able to answer some of your queries. And we look forward to your continued support in the future as well.

I am sorry to interrupt, sir. There's a question. Yes, please.

It's from the line of Devansh. Please go ahead.

Sir, just wanted to ask, any guidance regarding for this FY ‘25 or maybe you can guide some volume expectations or your views on your demand and supply.

So, we expect double digit growth in next year around 10% to 15% which we have been achieving. So on volume growth, it will remain. Prices, we will continue to have some pressure on prices, but let's see. It's too early to comment on how prices will move.

Yes, got it. Thank you so much. All the best for your upcoming results.

Yes, sir. There are no questions, you can carry on with your closing comments.

I was saying just thanks to everyone for listening, and looking forward to the continued support.

Thank you. On behalf of Ambit Capital Private Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you. Page 15 of 15