Supreme Petrochem Ltd

Ladies and gentlemen, good day and welcome to the Supreme Petrochemical Limited Q4 Fy25 Earnings Conference Call hosted by Valorem Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity foryou to ask questions after the presentation ioncludes. Should you need assistance during the call, please signal an operator by pressing "*" then "0" on your touch-tone phone, Please note that this conference is being recorded. I now hand the conference over to Ms, Nupur Jainkunia from Valorem Advisors. Thank you and over to you, ma'am, Good evening, everyone, and a warm welcome to you all, My name is NupurJainkunia from Valorem Advisors. We represent the lnvestor Relations of Supreme Petrochem Limited' On behalf of the company, I would like to thank you all for participating in today's earnings call for the 4th Quarter and Financial Year 2025. Before we begin, let me mention a quick cautionary statement. Some of the statements made in today's earnings call may be forward- looking in nature, Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward- looking statements in making any investment decisions, The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review.

Now, let me introduce you to the management participating with us in today's earnings call, and hand it over to them for opening remarks, We have with us Mr. Rakesh Nayyar - Executive Director and CFO, Mr. Dilip Deole - Chief Executive of Finance and Accounts, Mr' D.

N, Mishra - Company Secretary of the Company.

Without any further delay, I request Mr. Rakesh Nayyar to start with his opening remarks' Thank you and over to you, sir.

Thank you, Nupur, Good evening, everyone. lt's a pleasure to welcome you all to our earnings conference call for the 4th Quarter and Financial Year 2025. Let me give you a brief overview of the financial performance for the quarter and the Financial Year 2025. ln the 4th Quarter, operating income was Rs.1,539 crores, up 99,5% from the previous quarter, but down by Page 1 of 16

€) L5% onyear-on-year basis, Total EBITDA was INR 163 crores, increasing ovet 40% on quarter- on-quarter basis, though it was down by t5.9% on year-on-year basis. Net profit after tax was Rs.107 crores.

To support our growth strategy, we acquired Xmold Polymers Private Limited, a Tamil Nadu based compounding company specializing in engineering polymer compounds with a capacity of 15,000 tonnes. This facility is ideally located near Chennai's automotive corridor and Siri City, which is a major hub for consumer electronics. Xmold acts as a tier 2 supplier to automobile OEMs and appliance manufacturers, strengthening our footprint in these key industries.

I am pleased to share that the company has maintained a debt-free status with an investable surplus of Rs,872 crores as at the end of March 2025. This reflects our strong balance sheet and prudent financial management, The Board of Directors have recommended a final dividend of Rs.7.50 per equity share, bringing the total dividend for the year to Rs.10 per equity share of the face value of Rs,2 each. Phase 1 of the Mass ABS project is progressing well and is expected to be mechanically complete by May 2025' With this, now I open the floor for the question-and-answer session' Thank you Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Sailesh Raja from B&K Securities. Please go ahead.

Sir, we have noticed, the recurring trend since FY21, that employee cost in every March quarter constantly, it is coming down below 1% of sales. ls there any specific reason? Sorry, I couldn't get you what you said?

No, every March quarter, starting from FY2I, the employee cost as a percentage of sales is coming down. ls there a specific reason?

Okay, you are talking about employee cost? Sailesh Raja Yes, correct. Page 2 of 16

€) Because in the previous quarter, the December quarter, generally annual performance incentive is given to the employees or there is an ex-gratia payments or the Diwali bonus, all that comes in there, And the second quarter has generally the annual appraisals coming in and the arrears are given, So, compared to the two previous quarters of the year, the fourth quarter salaries have become normal then.

Okay, got it sir. Sir, regarding that Xmold Polymers, of the 15,000 tonnes of installed capacity, what is the split between P3 lite and thermoplastic compound line?

These are all thermoplastic compounds lines only Okay. So it's a fully thermoplastic line, sir? Yes, Okay, So based on this 15,000 tonnes per annum capacity, so what is the potential revenue and EBITDA we can report sir, in FY24 it was Rs,73 crores and Rs.4,4 crores of EBITDA. So what is the potential revenue?

Earlier utilization was only around 60%, as out of the 15,000 tonnes the 5,000 tonnes capacity was implemented only towards the end of the last financial year. And on a 60% utilization, meaning of the total capacity ilis40% utilization, Xmold had a revenue of Rs.72 crores. So, going by that, the total potential is closer to Rs.200 crores for this business, Okay. Sir, at full potential what kind of EBITDA we can see there?

See, the product mix will change going forward, so I really can't give you that estimate at the moment, please.

Okay. Sir this Xmold has a subsidiary, K-Polymer Private Limited, engaged entirely in trading plastic raw material. So all our transactions, current transactions with Xmold inclusive of this trading operation?

No. The K Polymer is not the subsidiary of Xmold, K- Polymer is also a company owned by the previous promoter of Xmold, So that's a separate unit' Okay. So what is the current user industry is there, how much is automotive, how much is appliance, how much is electrical and electronic can you give us an industry mix?

This unit is currently almost 50% of this is going into the appliances and electrical electronics, and around 30%to 40% is with the automotive industry. Page 3 of 16

,9, Okay. Sir, our press release mentioned that we gain access to Xmold lab facility' So what is the USp of this lab and how does it align with our goal of expanding the compound business, can you please explain, sir?

They have good equipment there. Their lab is well-equipped and since they are totally focused on the compounds, the development of new compounds in their facility would be an advantage to us, because with our ABS coming we have ambition to grow in the compound business. So then that adds to our resources.

Okay, The document that specifically states that upon deal closure, so we are obligated to pay an additional 2O% of Xmolds increased net worth, so in this context, are we still permitted to expand capacity within Xmold during the interim period or ultimately, we can consider setting up thermoplastic compound lines within the existing business?

There is no restriction on our operating any business in that company' Okay. Do we have enough space, sirfor expanding capacity in Xmold in Chennai?

There is enough capacity, but then going forward, when we have to grow further there, we will require more areas there. The land is available in that belt.

Thank you. The next question is from the line of Aditya Khetan from SMIFS lnstitutional Equities. Please go ahead.

It's very difficult for me to answer at this stage. What is given to us by our technical collaborators, and what actually happens, really there could be a difference, it could be Page 4 of 16

(D

Okay, sir. Sir, my next question is on to the EPS, I believe, sir, you had mentioned earlier that polystyrene and EPS generally commands a similar spread. 5o, like now into the Haryana unit where we are planning to install EPS downstream, how much incremental EBITDA like or incremental you can say per kilo or per tonne spread we would be enjoying from this business, from the Haryana plant? Any sort of an EBITDA number ifyou can share?

Yes, as far EPS is concerned, we shall also have EPS downstream unit, which is the 3D board there. That is what we have talked about is setting up 3D board there. And 3D boards are 1,00,000 square meters. That should give us a revenue of Rs.100 crores or so and the EBITDA margins would be in line with our current extruded insulation board or maybe marginally less than that. We expect that it should be 35% or so.

Okay. Sir my last is onto the Styrene, sir we have seen like US has imposed a duty on China, now Styrene supplies from China to US would be limited instead they could lndia, so this would benefit Supreme in any way?

China was never sending Styrene to USA. China is consuming Styrene in-house' So that does not alter the trade flow for us.

Okay. So no benefit on to tariffs or any sort of things on to the Styrene trade? On this Styrene trade, yes Okay. Sir, one last question sir, what would be the trading revenue figure for this quarter and lor FY25? 23% on an annual basis is our trading revenue Thank you. The next question is from the line of Manish Oswal from Nirmal Bang Securities Private Limited. Please go ahead. Page 5 of 16

(D Manish Oswal Manish Oswal

Pardon me if I am asking the repetitive question, ljoined the call slightly late. So, sir if I look at our volume visibility, so we have one is the ABS project which is going to start in F26 along with the acquired entity of engineer polymer compound business, That will also give some volume visibility and plus we have currently 79% capacity utilization. So, these three things put together, what is the volume visibility we see for F25 given the demand condition?

We expect to grow around 13% in volumes this year And given the mix in changing due to the new business, any outlook on margin, sir?

It's the first year, so I would not comment on the margins at this stage' Okay, And, sir, next phase of capacity expansion of ABS, when we can see?

The work is on that, but then still it's maybe another 78lo 24 months down the line Thank you. The next question is from the line of Nirav Gemoda from Envil Wealth Management. Please go ahead, I have few questions, Sir, first is on one of our slides in the investor presentation' We have spoken about the recyclability of EPS. So, if you can share your thoughts here and how it can help our EPS business?

Our initiative in the EPS recycling is born out of the fact that generally there was a negative perception about EPS because thermocol blocks after post-consumer use, were all thrown around on the roads. People did not know how to dispose it off, 5o, we took initiative, engaged some NGOs, involved ICPE into it, hired our own team, essentially to encourage the collection of the waste. We joined hands with the OEMs. We joined hands with the appliance marketing retail chain shops. So, with that, now you do not see EPS waste lying on the streets because it is all getting collected and it gets recycled, So, one it is sustainable, it proves that the EPS can be recycled. Two, it does not carry a bad name, Three, the recycled EpS is being used by the industries like the photo frame industry or the wall panels' They use the recycled material, either imported or scrap. Now, they are using this material, So, that helps the EPS market to sustain in the business and to grow. perfect, Sir, any plans here to expand the capacity of EPS that our existing plant, like Karnal plant has time to come up. So, I presume that possibly our capacity utilization there would be higher tha n lhe 79% on a compa ny basis. So, any plans to expa nd the ca pacity of EPS here or to introduce some value-added grades for the export market?

Our second phase of expansion of EPS is as per schedule and it will be on stream by the end of this first quarter of 26 or in the second quarter. But then, as far as the local demand is concerned, because there are some players up North have also expanded we don't see any Page 6 of 16

(D Rakesh Nayyari appreciable increase in the volumes in the coming year because of everyone having increased their capacity. But then, we have worked on our grades with the overseas buyers. Our grades have been approved in the GCC countries and in Europe, So, we hope to increase our exports of EPS this year.

Correct. Correct me if I am wrong, sir, This incremental capacity would be close to around 23,000-24,000 tonnes which is going to get commissioned by the end of this quarter? Yes, around what you said.

Okay. The second question is on the value-added polystyrene in last one of the conference calls you have explained us that, it commands some sort of premium pricing because of the application based products we have developed on, So, how much now this value added grade within PS would be forming the part of our polystyrene volumes? It sits around 40% Okay. And the ratio was similar last year or?

Yes. Generally the value added grades are for the OEM market, or the high-end non-OEM market. ln this quarter for polystyrene segment this is a peak season for the oEM.

Sir, you were explaining something about the value-added grades getting sold to the OE players, so if you can just continue over that, I said that the generally the value-added grades get sold to the OEMs. And since the demand from OEs is very good in the last quarter of the financial year, so in that particular quarter, the pSvalue-added sale is more, Butthen on an annual basis, it is around the same 40%to 42%.

Got it. Sir last question from my side, like in terms of our manufacturing sales for FY25, if you can just break it down between polystyrene EPS compounds and XP$, percentage numbers would also do.

Of the manufactured products, two-third comes from polystyrene, one-fourth comes from EPS, and the remaining 10% comes in from the compounds and XPS business' Thank you. The next question is from the line of Gargi Singh from Value lnvestments. Please go ahead.

Sir, my first question was with respect to the Haryana plant, where we are setting up the capacity for PS sheeting, which in previous calls you have mentioned the capacity to be 1 Page 7 of 16

(D Rakesh Nayyan Gargi Singh million square meters, with a revenue potential of 150 crores. So, I wanted to understand the EBITDA potential of PS sheeting at full utilization and also 3D panels?

They both would be in, the EBITDA potential of around 25%.

Okay sir, Sir, next question is that, for PS sheeting for 1 million square meters of capacity, is it a correct understanding that we will require 5,000 metric ton of PS?

Difficult to say at the moment because it will all depend upon the product mix there then.

The various things, the thicknesses and all that will matter, so it is difficult to predict at the moment, exact volumes of the polystyrene' Am I going right, if we just take on a blended basis, is it near to the correct number?

I will have to actually check with my technical team then, whether this is the right number or not, So, I won't comment on that, please.

Okay. Sir, next question is that you mentioned the 13% volume growth. So, that gives an additional 45,000 tonnes of sales on FY25 SALES. So, of this, how much of ABS sales are you expecting to sell this year?

Around 50% of this would be ABS, or maybe 60% of this could be ABS.

So, if we take 60% of this to be ABS, then See, the ABS will not be ABS, there will be ABS compounds made from this ABS, so it will be all blended. So, just saying that it will be ABS will not be correct, Okay, sir. So, if we take 20,000 tonnes of sales from ABS, so from the existing capacity, and the existing products, that gives us around 4% to 5% of volume growth, which is lower compared to the?

The 45,000 if you take 20,000 and it is 25,000 there, that will make it something around 7% to 8%for you. 3,55,000 sales, sir. And sir last question is that, in the March quarter the inventory has gone up by Rs.220 crores. And you have mentioned in the opening remarks that the Styrene monomer prices are also coming down since March. So, do we expect inventory loss due to fall in these prices in the subsequent quarter?

Some of that is getting used this month only, These are the inventories which have arrived' So, they have already getting used. I don't foresee any major impact of these price falls at this stage on these very inventories. Page 8 of 16

Gargi Singh Rakesh Nayyan Yash Manthala a\,t And sir any analysis or your understanding on how the pricing trend should pair out for the remaining quarter?

We don't foresee any further fall because all depends upon the crude as well benzene, ethylene, all the products which are raw materials for the styrene, So, if the crude stabilizes or the benzene prices stabilizes then there should not be any impact.

Thank you. The next question is from the line of Yash Manthala from Equita lnvestments Please go ahead, I have a few questions, Based on the tariff situation, is there a possibility of dumping of products in our product line from our competitors outside lndia?

It all depends upon the trade flows, lf the trade flows were moving towards the U'S' from China, possibility but then our polystyrene was not getting exported to U'S.A. so I don't foresee that happening. But then other countries where the duties are high or the reciprocal tariffs which are proposed from July, if they are high, and then they are not able to export there, they will certainly look at lndia. But we are prepared for that, These players are always there, we are in a global market, So we will have to compete with that' 5o based on your understanding, how much of China's products are exported to U,5. in our category? ln our category, China does not export any volumes to U.S'A, as far as our understanding goes because they consume all of this within China and they export actually the processed products.

Okay. So the processed products as in derivatives of polystyrene? Yes, derivatives of polystyrene Understood. So on a different track, can you give us any visibility on the freight prices which we experienced in the last quarter because we primarily import our raw material?

Sorry, I couldn't get you. Can you repeat that?

Could you give us any sight on the freight prices which we experienced in the last quarter compared to the preceding quarter?

No, the freight prices have become normal now. They are almost closer to the pre-COVID levels now. Page 9 of 16

No, we don't have corporate debt. lt's only in the mutualfunds or into the sovereign bonds' So how much of the Rs.430 crores is in mutual funds? Majority of that.

And are these mutual funds equity linked? No, they are all debt linked Thank you. The next question is from the line of Dhruv Muchhal from HDFC AMC. Please go a head.

Sir, if I look at the overall annual volume over the last, two, three years or even four years, overall we have done very, in context of the overall macro and everything, volumes have been reasonably strong. And if you look at particularly this year, it seems autos have not done as well, but still our volumes are very reasonably healthy. So what's helping, from a macro perspective what's helping us, is it probably export market, import replacement is it some new segment which has emerged and is taking up a lot of volumes?

The appliances have grown in the country. And particularly the PLI incentives going to the air conditioners market, that has also helped the demand for polystyrene. And similarly, the other appliances, the refrigerators or washing machines, they have also grown. And lndia is also kind of becoming an export hub for all the appliances. So that demand is growing there' Alright. So, drilling down to that level, what was your customer mix in terms of end-use segment, three years back, the autos would be some share, these appliances would be some share and what would it be now?

No, we were not in the auto segment. We have been always in the appliances segment. And now, with our Xmold which we have acquired now, we will now be entering the auto segment. We have been into the appliances OEMs' Okay. So always we were into appliances OEMs. And that segment has grown reasonably well, so we are not impacted by whatever happened, at least in the past we are not impacted. We are not impacted by the auto sector Page 10 of 16

Rakesh Nayyart a\,t okay, perfect, And, sir last question is on the cAPEX for FY26, sir, What is expected for FY26?

FY26, we expect to spend only around Rs.200 odd crores' So this completes the ABS CAPEX?

No, that isn't, ABS phase one gets completed. That already, almost all the expenditure has been incurred on that for the phase one. So this Rs.200 includes part of the ABS second line and the EPS as well as the compounding business, There will be major expense on the compounding business.

Okay. So this is cash CAPEX that you are guiding for Rs.200 crores cash CAPEX? Yes.

Thank you. The next follow-up question is from the line of Aditya Khetan from SMIFS lnstitutional Equities. Please go ahead' Sir, my question was on to the export market. Sir, any number you can share, like for FY25 how much was exports in terms of volumes and in terms of percentage of total revenue?

Aditya, I am sorry, we are not bifurcating our export or domestic revenue. I won't be able to help you there.

Okay, sir. On to the CAPEX side, sir you mentioned Rs.200 crore. So, sir I believe total ABS was around Rs.850 crore. So how much was phase one on that?

This one this including the cost for the infrastructure and utilities for phase two also, including the main utilities, costs, everything, that will be closer to Rs'500 crores for us. okay, And sir, into this Rs.200 crores which we are doing, how much would be the compounding CAPEX? Around 50% 50% compounding. Okay, sir my next question is, this acquisition of Xmold Polymers we had done, we were already having a compounding line. So, is it addition of some newer grids f rom Xmold Polymers or is it more of a continuation of the same grids only?

No, we are into the automobile sector also. They have been doing the automobile compounds. So, this will be new area for us' Page 11 of 16

Dhawal (D Okay. Sir, if you could help me, what would be the total capacity of compounding business post-expansion of FY26, including the Xmold Polymers? We should be closer to 70,000 tonnes.

Okay. Any rough idea, like what would be the peak revenue potential on this 70,000 tonnes? 70,000 tonnes, will be a peak revenue of Rs'1,000 crores Thank you. The next question is from the line of Dhawal from Sequent lnvestments' Please go a head.

Sir, I wanted to know, in the current quarter what would be the expenses towards the new plant which we have expensed in the P&L? I couldn't get you, sorry Sir, the plant, it seems mechanically it is complete in this quarter. ls there any expense that is expensed in the P&L?

No, it is still not, as of 31st of March it was not complete, we have said that it will be complete by May only. Okay.

And till the plant is not commissioned, no expense is going to be expensed out.

Thank you. The next question is from the line of Nirav Gemoda from Envil Wealth Management. Please go ahead.

Sir, when we see our compounding business, over the years we have been operating in a very narrow band in terms of the overall volumes. We already have PS as our base material, and now ABS also coming up. How do we see the opportunity size in terms of our size of the opportunity or the addressable market for the compounding, and what extra needs to be done from our side, like in terms of customer approvals or building up the distribution network or getting closer to the customers in terms of their own requirements how do we see, because in earlier remarks you mentioned that this business has the potential to touch around 1,000 crores of top line, so how near, or how much time this would be taken in terms of achieving those numbers, and if you can share those qualitative parameters in achieving this, that would be helpful, See, there is a work in progress on all fronts which you have mentioned, And as and when our capacity gets built in the years going forward, with our ABS available to us, and now with the Page 12of 16

(D expertise and experience and client base of Xmold in our fold, we will be growing on that. So we already have some experience on the PS, PP, PE compounds. Xmold has also experience on the PP and ABS compounds, And with our own ABS now, and with our own PS, we will be growing. We have a decent customer base. Applications are known to us and we will be working on that. So, we have a dealer distribution network, we have relationship with our clients, so only thing is that we have to go and target some more new clients which is a work in progress for us.

Correct, and sir ln terms of the major compounds which are being used by the auto OEs, if you can rank in terms of the application wise like it is more of PS based or it is more of ABS based or it's a combination of ABS PC orABS PP so, in terms of ranking which of the. Yes, PP and ABS They are all PP based or ABS, okay. And the other polymers are being mixed into tit to give better applications.

I am not the right person to comment on that, Okay. Sir last bit is, on one of the presentation slides you have mentioned that like, now bathroom fitting, scooters are the newer application areas for ABS, so how do you see this volumes over a period of time building up in the overall ABS market in lndia like currently we are close to around 3,20,000 tonnes of ABS market in lndia. 5o how do you see this newer applications growing up the entire market?

This is now started, we are already doing compounds for some of the bathroom fittings also' And the business, the construction business grows and particularly the affordable housing segment where people will not like to go for the premium branded fittings' So these fittings demand will be linked to the new construction coming up for affordable housing or the middle-income group housing.

Thank you, The next question is from the line of Pritesh Cheda from Lucky lnvestments. Please go ahead.

Sir, on this ABS capacity of 7O,OO0 tonnes, so what is the status of this capacity in terms of when it should start contributing to your revenues?

Second quarter of this financial year FY26.

Okay. And lsee a 680 crore CWIP in the balance sheet. So this ABS 70,000 tonne capacity, what should be the total CAPEX that you will incur? Approximately around Rs.600 crores. Page 13 of 16

Pritesh Chedal z\' It'sprll \2' And you have called out a total CAPEX of Rs.1,000, right. So there is some additional Rs'400 to be spent anywhere else? Rs.1,000 on what?

I have heard wrong. okay, can you give out the GAPEX number, sir, total GAPEX number?

We have only the second line of ABS number, which is still to be spent, which should be closer to Rs.250 to Rs.300 crores.

So is it that the second line means over and above this 70,000 tonnes? Yes, that's right, Okay. So the first 70,000 tonnes comes at Rs.600 crores, correct? Yes.

And then the additionalsecond line means additional 70,000 tonnes comes at Rs,250 crores?

Rs.250 to Rs.300 crores, All the infrastructure, all the civil, the utilities, the tank farms, everything has already been built, Okay. And when should the second line be planned for?

We hope to be commissioning it in the next two years or so' Okay. And the last thing is, this particular product line, will it, is it similar to what is already available with a couple of other players in the market?

It is ABS really, it's only that the process, the route to produce ABS is different. At the end of the day, it is AB5.

Thank you. The next question is from the line of Sarah from UVR Natural Foods Private Limited. Please go ahead.

Sir my first question is, what is the breakup of user industries in PS, EPS for us and also, what is the potential user industry breakup of ABS?

Generally, all these industries have a similar client base, which is close to 50% is the OEMs, and the remaining non-OEM segment is 50%. So, when lsay OEM, they are all appliances, where polystyrene is used. And the ABS will come, its usage is in appliances, as well as automobile segment. And the non-OEMs have various uses, including starting from daily Page 14 o'f 16

,ffii \2' house hold to packaging, to the sheeting business, stationary, pens, household items, So the business is divided almost 50:50 between the OEMs and non-OEMs.

Okay, got it sir. Sir last year, the power cost was Rs.50 crores, and logistics cost was Rs'110 crores, Can you please give us the figures for these two costs for FY25? Last year, you said power was? Rs,50 crores This year, it should be marginally lower because, we have used our solar power from October onwards, but with the costs going up, as well as the capacity utilization going up, but the overall power cost would be similar to last year, or it would be marginally lower than the last year, How much marginally lower, sir can we expect? Maybe2%lo3% Sarah Okay, sir. So who are the other major players in North lndia that have expanded the capacity in EPS?

There is a company called Styric and there is this new company which has come up in Gujarat, EPACK. Sarahr Okay, So, like in the previous question, I didn't get the figures for logistics cost. Like, last year, it was Rs,110 crores, this year, how much can we expect, how much is it? Logistics cost for what area? The freight outwards.

Rs.110 crores, which is logistics cost for. Sarah Freight outwards, sir Outwards? Yes, sir It was Rs.100 crores last year? Rs,L10 crores. Page 15 of 16

,O, Yes, this will be around Rs.125 crores this year.

Thank you, Ladies and gentlemen, that was the last question for today' I now hand the conference over to the management from Supreme Petrochemical Limited for closing comments, - Thank you all for participating in this earnings concall. lf you have any further questions or would like to know more about the company, please reach out to our lnvestor Relations managers at Valorem Advisors' Thank you so much' Thank you, On behalf of Supreme Petrochemical Limited, that concludes this conference Thank you forjoining us, and you may now disconnect your lines. Page 16 of 16