Thirumalai Chemicals Navigates Headwinds with Strategic USA Expansion in Q3 FY26

Thirumalai Chemicals Ltd., a key player in the Indian chemical sector, recently released its investor presentation for the third quarter and nine months ended December 2025 (Q3 & 9M FY26). The period reflects a challenging global market environment, which significantly impacted the company's financial performance. Despite these headwinds, Thirumalai Chemicals has demonstrated operational resilience and made substantial progress on its strategic growth initiatives, particularly its ambitious expansion into the United States.

For Q3 FY26, the company reported a standalone total income of INR 307 crore, a notable decrease from INR 504 crore in Q3 FY25. Consolidated total income also saw a decline, settling at INR 420 crore compared to INR 447 crore in the previous year. Profitability metrics mirrored this trend, with standalone EBITDA turning negative at INR -8 crore from INR 10 crore, and consolidated EBITDA at INR -11 crore from INR -20 crore. The net profit (PAT) also reflected the challenging conditions, with standalone PAT at INR -27 crore and consolidated PAT at INR -46.57 crore. The nine-month figures for FY26 also showed similar pressures, with consolidated total income at INR 1,322 crore, down from INR 1,539 crore in 9M FY25, and consolidated PAT at INR -140 crore compared to INR -32 crore in 9M FY25.

The company attributed the subdued performance to several external factors. Continued weakness in global markets, exacerbated by tariff-related uncertainties, dampened overall chemical demand. Utilization levels across major markets remained in the 70-75% range, and distributor inventory levels stayed elevated at 1.5–2.0 months of coverage, delaying restocking. In China, weak infrastructure and housing demand limited incremental Phthalic Anhydride (PAn) demand, leading to suboptimal operating rates and margin pressure. Additionally, rising raw material costs and intensified cost pressure led to strong resistance to PAn price increases, making the quarter volume-driven rather than margin-driven.

Operational Resilience and Strategic Initiatives

Despite the challenging market, Thirumalai Chemicals demonstrated robust operational management. The large reactor in Ranipet, India, operated without interruption for over 400 days, showcasing strong operational stability. The company also implemented energy cost optimization and process improvements in its food ingredients segment, expected to yield long-term cost savings. The changeover to gas-based energy continued to provide benefits. At TCLIPL, Dahej, the plant operated at a steady rate since August 2025, progressively reducing energy costs and improving product yield, utility, and ETP performance, which resulted in a positive EBITDA for the quarter. Furthermore, rationalizing operations at Optimistic Organic Sdn. Bhd. (OOSB) in Malaysia helped stem cash losses, contributing to a reduction in consolidated Q3 EBITDA losses year-on-year.

The Game-Changing USA Expansion

A cornerstone of Thirumalai Chemicals' future strategy is its greenfield project in the USA, aimed at establishing a 40 KTPA Maleic Anhydride (MAn) capacity along with food ingredients. This project is being executed by TCL SPECIALTIES LLC in New Martinsville, West Virginia. The first phase of commercial operations commenced in December 2025 with the first sale of MAn, and the project is on track for completion and stabilization during H1 CY26. The strategic rationale behind this expansion is compelling:

• Feedstock Advantage: Abundant feedstock with assured long-term supplies at competitive prices (n-butane).
• Integrated Plant: A fully integrated plant provides a significant competitive advantage for manufacturing downstream products and utilizing self-generated energy.
• Portfolio Diversification: Opportunity to increase the portfolio of food ingredients (Malic Acid & Fumaric Acid) to mitigate the impact of price fluctuations.
• Market Access: Direct access to American and European markets, building a local supply source for major customers and large distributors.

The project leverages cost arbitrage by manufacturing 100% of the plant and machinery (modular) in India and shipping it to the USA site for final assembly. The USA plant will also be AI and IoT enabled, optimizing plant management and allowing for predictive maintenance and continuous performance improvement.

Product Segment Highlights

In the PAn segment, paints demand remained subdued but is expected to stabilize in Q4. Increased tariffs by the USA led to weak UPR demand, with key producers operating at 40-50% capacity. CPC manufacturers also operated at half capacity due to weak domestic demand and export impacts. Rising raw material costs intensified pressure, leading to strong resistance to PAn price increases. Offtake remained volume-driven, with buyers negotiating aggressively.

For Food Ingredients, particularly Malic Acid, the company secured strong contract wins in the US and EU despite aggressive pricing from China and Korea, indicating rising domestic demand. In Fumaric Acid, EU shipments grew, and domestic sales remained steady. Despite aggressive pricing from Chinese suppliers, Thirumalai Chemicals focused on technical engagement and quality improvements to capture specialty applications and expand market share.

Outlook and Sustainability Focus

Thirumalai Chemicals is committed to driving sustainable progress, with ambitious ESG aspirations including a 25% reduction in GHG emissions and a 10% reduction in water consumption and industrial waste by 2030. The company also emphasizes product safety, quality, and employee development. The strategic USA expansion, coupled with ongoing operational efficiencies and a strong focus on R&D, positions Thirumalai Chemicals to navigate current market challenges and capitalize on future growth opportunities. The company's disciplined execution and forward-looking investments underscore its commitment to long-term value creation for stakeholders.