Chemplast Sanmar reports robust Q3 FY25 growth amid global market pressures

Chemplast Sanmar Limited, a leading Indian speciality chemicals manufacturer, reported strong consolidated financial results for the third quarter and nine months ending December 31, 2024. Despite facing global headwinds, including pricing pressures and increased competition from international markets, the company demonstrated resilience, driven by significant growth in Paste PVC demand, strong performance from its custom manufacturing business, and expanding capacity in Suspension PVC production.

How Did Chemplast Sanmar Achieve Revenue Growth in Q3 FY25 Despite Global Challenges?

Chemplast Sanmar’s revenue from operations for the nine-month period stood at ₹3,195 crore, marking an 11% year-on-year growth. This growth was largely attributed to improved pricing strategies, better margins in the PVC segment, and a stable performance from the custom manufacturing business (CMCD). The company’s third-quarter revenue rose 19% year-on-year to ₹1,058 crore, reflecting its ability to navigate a challenging economic landscape.

According to Managing Director Ramkumar Shankar, the company faced significant challenges over the past couple of years, particularly due to aggressive dumping of Suspension PVC from China and Paste PVC from the European Union. These factors exerted downward pressure on prices and margins. However, Chemplast Sanmar’s proactive strategies, including capacity expansions and operational efficiency improvements, helped mitigate these impacts.

Shankar highlighted that while global demand remained subdued, domestic markets showed strong resilience. “India‘s Suspension PVC demand grew by 11% year-on-year, and Paste PVC demand surged by 13% during the nine-month period, demonstrating the underlying strength of the Indian economy,” he stated.

What Factors Drove the Surge in Suspension and Paste PVC Demand in India?

The growth in Suspension PVC demand and Paste PVC demand in India was supported by several factors, including robust infrastructure development, government-backed initiatives, and strong performance in key sectors such as construction, housing, irrigation, and water supply. The government’s extension of the Jal Jeevan Mission until 2028 is expected to further boost the demand for Suspension PVC, especially in projects related to drinking water supply and sanitation.

Chemplast Sanmar’s Cuddalore Paste PVC facility played a pivotal role in supporting this growth. The company has been ramping up production at this facility, with full operational capacity expected by the end of the fourth quarter of FY25. This expansion is set to enhance the company’s ability to meet growing domestic demand while positioning it to counteract the adverse effects of international price pressures.

Despite global economic uncertainties, the company’s strategic investments in new production capacities and its focus on operational efficiency have helped it maintain a competitive edge in the PVC market. These efforts are part of Chemplast Sanmar’s broader strategy to strengthen its leadership position in the Indian speciality chemicals sector.

How Is Chemplast Sanmar’s Custom Manufacturing Business Performing?

The custom manufacturing business (CMCD) has been a cornerstone of Chemplast Sanmar’s growth strategy. In Q3 FY25, CMCD maintained stable performance, supported by the successful commissioning of Phase 2 of the Multi-Purpose Production Block (MPB 3) in December 2024. This expansion is part of the company’s ongoing efforts to diversify its product portfolio and enhance its manufacturing capabilities.

Phase 1 of MPB 3, which was commissioned last year, has been ramping up effectively, contributing to revenue growth from new commercialised molecules. The company has also initiated project activities for Phase 3 of MPB 3 and commenced civil and infrastructure work for MPB 4, indicating its strong commitment to expanding its custom manufacturing capacity.

Shankar noted that the custom manufacturing segment’s growth is driven by increasing customer inquiries and a robust pipeline of new products under development. This trend underscores the company’s ability to adapt to changing market dynamics and meet the evolving needs of its clients across diverse sectors, including pharmaceuticals, agrochemicals, and fine chemicals.

What Are the Challenges and Opportunities in the Value-Added Chemicals Segment?

Chemplast Sanmar’s value-added chemicals segment experienced mixed performance during the quarter. The company reported steady demand for caustic soda, leading to price increases, while chloromethanes faced pricing pressures due to intense market competition. Demand for other key products, such as hydrogen peroxide and R22 refrigerant gas, remained stable, providing a degree of balance to the segment’s overall performance.

Despite these mixed trends, the value-added chemicals business remains a critical component of Chemplast Sanmar’s diversified portfolio. The company’s focus on innovation, sustainability, and operational efficiency continues to drive growth opportunities in this segment, even amid challenging market conditions.

What Is Chemplast Sanmar’s Outlook for the Future?

Looking ahead, Chemplast Sanmar remains optimistic about its growth prospects, supported by strong domestic demand, strategic capacity expansions, and a focus on high-margin speciality chemicals. The company plans to continue investing in its infrastructure, with an emphasis on sustainability and eco-friendly manufacturing practices.

Shankar expressed confidence in the company’s ability to capitalise on improving market conditions, stating, “We remain resilient and focused on expanding our capacities and capabilities, especially in the speciality segment. Our strategic initiatives and strong demand outlook position us well for sustainable long-term growth.”

Despite reporting a net loss of ₹49 crore for Q3 FY25, an improvement from the ₹89 crore loss in the same period last year, Chemplast Sanmar’s performance reflects a company in the process of transformation. Its strong revenue growth, strategic investments, and commitment to innovation highlight its potential to deliver value to stakeholders in the years ahead.