Ladies and gentlemen, good day, and welcome to the Q1 FY23 Gujarat Fluorochemicals Limited earnings conference call, hosted by DAM Capital Advisors Limited. As a reminder, all participant 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 the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors Limited. Thank you, and over to you, sir.
Thanks, Michelle. Good afternoon, everyone, and a very warm welcome to DAM Capital Advisors Limited's Gujarat Fluorochemicals Q1 FY23 post-results earnings call, hosted by DAM Capital Advisors Limited. I thank the Gujarat Fluorochemicals management for giving us the opportunity for hosting the call. I'll just announce the names of the Gujarat Fluorochemicals management team, and then hand over the call for them to make their opening comments from there on. Representing the Gujarat Fluorochemicals management on the call today we have Mr. Vivek Jain, Managing Director, Dr. Bir Kapoor, Chief Executive Officer, Mr. Vijay Kumar Soni, Head Projects and New Initiatives, Mr. Manoj Agrawal, Chief Financial Officer, Mr. Vibhu Agarwal, Head Investor Relations. I hand over the call now to Gujarat Fluorochemicals team to take it forward from here. Please go ahead, sir.
Thank you very much, Nitin. On behalf of Gujarat Fluorochemicals Limited, I would like to extend a very warm welcome to all of you. We are happy to inform that Board of Directors of Gujarat Fluorochemicals Limited has in its board meeting approved the financial results of the company for Q1 FY 23. The financial results, as well as the earnings presentations, are uploaded on the website of the stock exchanges, as well as on the website of the company. I will take you through this presentation initially, then we can open the call for any questions that you all might have. Starting with the financial highlights at the consolidated level for the quarter ended 30th June 2022. Consolidated revenue for the Q1 FY 23 was at INR 1,134 crores, up by 46% on year-on-year basis.
Consolidated EBITDA for Q1 FY23 was at INR 459 crores, up 80% on year-over-year basis. The EBITDA margin for Q1 FY23 were at 34%, up 6 basis points from 28%. Consolidated PAT for Q1 FY23 was at INR 303 crores, up 101% on year-over-year basis. This was the consolidated performance at the company level. Now we would like to take you through the detailed overview of the financial performance during the quarter for each business vertical. For each business vertical, Caustic Soda revenue for Q1 FY 2023 stood at INR 189 crores as compared to INR 88 crores in Q1 FY 2022, up 115%. The fluorochemicals revenue for Q1 FY 2023 stood at INR 102 crores as compared to INR 94 crores in Q1 FY 2022, up 9%.
Refrigerants revenue for Q1 FY 2023 stood at INR 196 crore, which was 93 crore in Q1 FY 2022, thus having a growth of 111%. The PTFE sales for Q1 FY23 were at INR 379 crore as compared to INR 320 crore in Q1 FY 2022, up 18%. The new fluoropolymer sales were at INR 331 crore, up 124% as compared to INR 148 crore in same quarter previous year, Q1 FY22. The specialty chemicals sales was up 38% from INR 86 crore to INR 119 crore when compared to the same quarter of the previous year, Q1 FY22. This was the segmental performance of all the business verticals.
As regards to ROCE and ROE, so ROCE is significantly improved from 24.46% to 35.3%, and ROE is improved from 20.1% to 27.70% as compared to FY 2022. On the debt front, the company is virtually debt free and the net debt equity ratio stands at 0.29. On working capital cycle, our continuous efforts have resulted in further reduction of the working capital cycle from 120 days as on March 31, 2022 to 109 days as on June 30, 2022. As regards to our expansions and CapEx, we continue to expand and commercialize additional capacities for new fluoropolymers. All our new projects and additional capacities, as announced earlier, are producing as per schedule.
With all these initiatives will offer a sustained business growth with higher margins and will lead to further improvement in the financial performance as seen in the last few quarters and will continue in future also. That, ladies and gentlemen, is the walkthrough of the presentation. I would like to open this up for any questions that you might have, and then we'll, as a management team, try to answer all your questions. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Yeah. Good afternoon, sir. First of all, congratulations on a very strong set of numbers. I have just a few questions. First on the PTFE side. So PTFE, revenue has declined 16% sequentially. Now, I know that you have mentioned in the presentation that there was a lower availability of TFE. Now, why was this issue with the TFE availability? I thought you were also adding another TFE plant, that is TFE three. What has caused the disruption in the TFE, if you can explain that?
Yeah. Sanjesh, as you know, as we had mentioned that there was, you know, we have started the R-125 production also in the last quarter. While yes, we were planning to start up the third TFE line also, but that is something which has now come up. There was some amount of disruption on availability of TFE during that period. From July onwards, that plant is also in full production now.
Our TFE 3 is now up and running?
Sorry?
The TFE plant 3 is running now? It's operational?
Yes, it's running all right.
Yeah.
TFE 3.
No, let me first complete this R-125. Now, what was the sale of R-125 in terms of volume for the Q1? And for the full year, what is the volume we are looking at?
We don't provide now the quantitative breakup of our segment revenues.
Got it.
We won't be able in a position to provide you this information.
Will it be fair to assume that incremental revenue in the forecast, whatever has come in, is largely the benefit of R-125? Or there is also normalization of R-22, which was lower in last quarter?
I think your assumption is right.
Got it. On the new fluoropolymers, that looks like growing all out. Can you help us explain what is driving this strong growth in new fluoropolymers, almost 90% sequential increase? Two things here. One, which are the new capacities in the new fluoropolymers have we added? That's number one. Number two, what is the volume growth or which are the products which are driving the growth? I know you don't give the volume, but some qualitative assumption, which are the products within the new fluoropolymers which is driving? And how is being the pricing in the new fluoropolymers? This is on the new fluoropolymers.
Yes, Sanjesh. New fluoropolymers, actually there has been an all-round increase in whether it's in FKM, PVDF, PFA and to some extent micropowders also. There has been all-round increase in all the new fluoropolymers. There has also been a price improvement, which has taken place in the last quarter. That also has contributed to the overall numbers going up. Both volume and price mix have contributed to this increase in volumes.
What is the facilities have we added for the new fluoropolymer in the last, say, a quarter or so?
In the last quarter, as we mentioned, we were adding about 300 odd, 400 odd tons of new fluoropolymers. As we had mentioned that we expect to keep on adding more capacity during this financial year.
What is the capacity utilization as we run with the new fluoropolymer?
Capacity utilization would almost be about 75%. Since we are adding more capacity, by the end of this financial year, we would expect that on the enhanced capacity we'll be at about 75-80%. The balance production will be made up during the next two quarters in the next financial year.
Got it. What is the kind of capacity addition we expect to add beyond this 400 metric tons for this year in new fluoropolymer?
That's an addition of about 400 additional tons. Yes.
Basically this year, beyond this INR 400, we will add another INR 400-INR 500. Is that understanding right?
That is right.
Basically we will add this 12,000 metric tons of capacity on the base of 8,000-odd metric tons we had last year, right? We will reach 20,000 metric tons of capacity by end of FY 2023.
Yes. By and large, yes, that's right.
We expect to have a 75% utilization ballpark there in this capacity. What we are talking is only for the capacity which was there for last year?
No. By the time this new capacity gets added by the end of this financial year, at that point of time, with the added capacity, we'd be at about 75% capacity utilization.
Got it, sir. Got it. One last question on the cost side. Power cost has gone up significantly. Now is this expected to come down? Are we seeing the coal prices coming down? How should we think about are we doing anything to control the power cost? Are there any measures we have taken to see that we can normalize the power cost?
Sanjesh, at this point of time, I don't think there is anything much that we can do because as you know, coal still remains at fairly high price of almost about $135 a metric ton. That is not going down. Of course, the freight pricing is also high. That also is not gonna go down. I think, for the time being, at least for the next one, till the end of 2023-2024, we don't expect much reduction in power cost. Beyond that, we are looking at the possibility, and this is something which is I cannot share with you the details at this point of time, but we are working on a possibility which can help us in, reducing power cost fairly significantly from the year 2023, 2024 on. In the year 2023, 2024 in fact.
Got it, sir. Got it. Very helpful. Best of luck for coming quarter.
Not 23, 24. It's 24, 25.
You are telling that new benefit which we are looking at power cost will start showing up from FY 2025?
Yeah. 2024, 2025. Yeah.
Fair enough.
25, actually.
Yeah. Got it. Thank you.
Thank you very much. The next question is from the line of Ketan Gandhi from Gandhi Securities. Please go ahead.
Yeah, sir. Sir, with regards to R-142b, last time, last presentation we have said we are selling from this quarter, this refrigerant gas has any component of R-142b, or we are using it for making PVDF?
Well, by and large, we are using it for making PVDF and FKM. From this quarter onwards, we will start the exports of 142b to some select customers.
Can you quantify? I mean, how many tons per month or?
No, at this point of time, Ketan, it will be difficult for us to quantify, but, we will be exporting R-142b as per our business plan and the excess availability over and above our own requirements of R-142b, which as you know will keep on expanding because of our, you know, expanding production of FKM and then PVDF.
Sir, is it safe to assume that whatever capacity of PVDF we have, we will be consuming R-142b for the captive use and balance quantity we will be selling to the export markets?
That's right.
That's helpful, sir. Sir, regarding new energy business, I mean, how we are geared up for LiPF6 and other products?
For LiPF6, the battery salt, we'll be completing the project by end of this year. Early next year in January, I mean, calendar year, January, we'll be pushing out samples, and it takes about
Three months.
Three months for validation. We will start commercializing LiPF6 thereafter. Maybe in the first quarter next year.
Sir, we are planning for domestic or export purpose or both purposes?
At the moment, as you know, domestic is a bit slow, so we'll start with export and followed with the sales in the domestic area.
This is only.
I think that, you know, we will get the plant commercialized, the quality approved for battery purposes and after that, I think in the second half of 2024, in the second half of calendar year 2024, the demand from the domestic battery manufacturers will also come up, as well as demand from European battery manufacturers.
Fair enough, sir. Sir, with regards to LiFSI, are we planning to manufacture ourselves? Because, last research report has been saying that if you add higher portion of the LiFSI in the electrolyte, it gives very good, you know, quality, and it enhance the density of the energy.
Yes, you are right. Actually, at the moment, the battery chemistry is predominantly LiPF6, but there are moves towards adding LiFSI, and we are also evaluating gearing towards it by evaluating the technology, et cetera. Apart from that, there are other additives also, which we are evaluating. As we mentioned last time, we have a very integrated approach for the entire electrolyte arena.
Sure, sir. Sir, in solar backsheet PVDF, how much capacity we are looking at in terms of square meter or?
See, we are looking at metric tons because square meter depends upon the thickness, the microns. If the micron is less, the square meter is more and vice versa. We will start with about 700 metric tons in a year.
Sir, Adani is building ANIL, that is, Adani New Industries Limited, 20 gigawatts of hybrid wind and solar. If we look at it, then there is ample opportunity for us to, you know, tie up with them or supply to them regarding this solar back-sheet PVDF. Even they are looking at the membrane, that means the production using the electrolyte with either alkaline method or the PEM method. What is your view on that, sir?
Actually, we have these two projects in New Age. One is lithium salt, which we discussed. The second is the PEM, the proton exchange membrane, which goes predominantly in the fuel cells and also into the electrolyzers. Regarding your question of alkaline versus PEM, both will remain in force. For example, for transport sector, the fuel cells, it is predominantly PEM. Whereas for the non-fuel cell sector, for non-transport sector, like for making ammonia, et cetera, it will be mostly alkaline cell. The disadvantage or the advantage of PEM is that it can start very rapidly compared to longer time required to start alkaline.
I mean, are we geared up to supply to Adani if need arises?
For, for, uh, for, uh-
PEM.
Yes, the previous thing, we are talking to them and, we have initiated the exercise, so we will certainly be supplying to them or any whosoever else which will need it in the domestic market. That is one thing is sure. As far as PEM is concerned, you know, the project is still about 1.5 years away. We are in the process of developing the technology, and, we have to start in, raw material, for making those PEM. There is a full scale R&D effort which is going on also in conjunction with some of the CSIR labs. We hope that in about a year's time we should be able to develop the membrane and then thereafter we'll commercialize it.
The demand for the PEM membrane is really going to start from about two years from now when electrolyzer and the fuel cells, you know, the production of those start increasing.
Great, sir. Thank you, sir. Thank you. It's very helpful, sir. Thank you so much.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to answer questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead.
Yeah. Thanks for the opportunity and congrats on a very strong set of numbers. Just first question, given that the numbers have been phenomenal during the quarter, can we expect that this is the base level at which we will be able to operate incrementally, given that there are multiple capacity expansions which are happening and ongoing? From a sequential basis on a quarter to quarter basis, our performance overall should be improving from Q2, Q3, Q4 onwards. Is that the base assumption that we can make? Thank you.
Rohit, you are asking too many questions about the future. You know, in future, as you know, is not always very predictable. Yes, basically, since we are making additional investments on various fronts, we certainly expect the revenues and profitability to keep on improving.
Right. Got it, sir. Second question is particularly under Specialty Chemicals. What has changed during the quarter and why there has been a serious increase in the performance on a sequential basis? Are there order backlogs which have been executed during the quarter? Do you expect that this particular kind of performance will be sustainable or there is any kind of seasonality which may affect incrementally? Thank you.
Sir, your question was related to Specialty Chemicals?
Specialty Chemicals, sir.
I think you're partly right, because the growth is seen because the last quarter was subdued, for one reason, because of the incidents. There were some orders. The new plants, the capacity that we had planned are at the various stages of commissioning. The yielding result now. We expect this to continue.
Right. Sir, just one last clarification on the wind power project. Last quarter, we had indicated that 20 megawatts is likely to be commissioned in July. If you can tell us what is the status for the same?
Rohit, that will be commissioned during this quarter. There has been a delay of about a month and a half. The commissioning activities are going on, and we are very hopeful that by the end of this quarter, those will be commissioned.
Some effect from the benefit from this wind power project will start trickling from Q3 onwards. Is that a right assumption?
Yeah, that's right.
Thank you so much, sir. I will come back in the queue. Best of luck, sir.
Thank you. The next question is from the line of Ajit Joshi from B&K Securities. Please go ahead.
Thank you, sir, and congrats on a good set of numbers. My first question is on PTFE. If you can broadly highlight the structure of the industry at this point in time, if you are seeing any imbalances in the supply-demand equilibrium, given that, you know, PTFE spreads continue to be quite strong. Any comment on that would be helpful. Thank you.
See, the PTFE demand continues to be strong as far as we are concerned. Because as you know, over a period of time, we have spent a lot of time, energy, and efforts to develop a large number of grades which are required in different applications, across different applications. as you know, we export almost about 75% of our PTFE is exported to Europe and U.S., where these applications are required. there is a continued growth in these applications, where demand is coming in and, sufficient amount of capacity doesn't exist. or the supplies are not coming in from the established, legacy supplier. As a result of which we have been able to, you know, fill our capacity.
We have moved more and more towards these grades, which are now required in Europe and U.S. in different demanding applications. This has also given us a certain amount of, you know, sort of, I would say pricing power. Because there you know we have been able to step in to meet the demand shortage between demand and supply.
Sir, what I was trying to understand is how sustainable is this supply shortage situation that we have seen. What's exactly happening on that front? You know, because we understand that, you know, a few months back we had a whole lot of shutdowns in China from the energy control norms. Is that what is, you know, emanating into supply shortage? And how long would you think that this can go on? Given the fact that China is known to have, you know, the highest PTFE capacity. So what's your read through on that, sir?
Not really, because as I mentioned, you know, we have spent time, energy, and effort to develop a huge number of grades which go into different applications. The Chinese are not present in most of the grades, at least in the Western markets. We don't see their presence there at all. Even despite whatever supply disruptions which might be happening or, you know, production disruptions might have been happening in China over these last two, three years. Even prior to that, we have not seen Chinese participating in those kind of applications. The demand from those applications is only growing.
Understood, sir. Sir, another question on the integrated approach that you spoke of a bit earlier on the LiPF6 front. We understand that you are making great progress on manufacturing the solute of the salt that is LiPF6. You also mentioned that there could be certain additives. In your interactions with some of your customers, have you understood anything on this front that they are looking for a more packaged solution of an entire electrolyte which also involves the solution? How is the supply chain placed on that front? Are customers only looking for a particular chemical or the entire package so that they can integrate their operations efficiently?
Well, yes, customers would prefer if you can supply them everything, but that is unlikely to happen. I don't think any company will be in a position to supply all the various ingredients which are going to be required. We have picked and chosen those which we think will give us where we will have an advantage, and where the requirements are going to be sufficiently large for us to participate in that market. The second thing is that till now, most of this production is centered in China. I think as we all know, there is a very, very strong move for a China plus one strategy. With all these battery plants which are slated to come up in U.S. and Europe, they would certainly.
From interaction which we've had with customers now and which are ongoing, there is a very strong interest for those potential customers to enter into some kind of a supply arrangement with us. We are seeing a very strong market developing. You know, once our products are qualified fully and the battery capacity starts coming up both in Europe, U.S. and India. It's probably going to happen almost at the same time from middle of calendar year 2024 onwards.
Understood, sir. Thanks for your elaborate clarification. That's it from our side. Wish you all the best.
Thank you. The next question is from the line of Krunal Shah from Enam Investment. Please go ahead.
Yeah, hello sir. Congratulations on the very great set of numbers. Two questions. One is, what are the key applications that are driving the demand for FKM currently?
For?
FKM.
You see, as you might know, FKM is largely used in the auto industry, and there is of course a very strong industrial segment also. We are seeing demand growth in both those two segments and across geographies, whether it's U.S., Europe, China, even China, Japan and of course in India. There is a strong demand growth. Of course, the automobiles are also becoming more compact and they have to be more environmental friendly in the sense that emissions have to be controlled more stringently. This is also requiring a larger component of FKM in the cars. As a result of all this, we are seeing a huge growth in demand.
The other thing also which has happened of course, is that, you know, we have developed FKM, maybe about 20-25 grades over the last few years, which are suitable for just about every application again in FKM. That is the reason why we have been able to now diversify our customer base across geographies. Another element, of course, which has come to our advantage is the fact that we are now vertically integrated, and we have our own raw material, which is the starting raw material R-142b, which again, I think now largely has been available from China, where there are, you know, disruptions on supplies and availability, and all these three factors have combined to give us a very strong, healthy offtake from the consumer segment.
Are you exporting FKM to China also?
Yes. Some grades we don't make.
Okay.
There are some grades which are required in batteries, and these are new grades which have been developed in order to make the batteries safer in use. For the sealing requirements in those batteries, we have started now supplying certain high-end grades of FKM to China also. We hope we are hoping that application will keep on going because China has a huge battery production capability.
Great. One last question. You said that in PTFE, the legacy suppliers are currently short on supply or they're supplying on lesser volumes. What are the key reasons for that, sir?
Well, the key reasons are they're not adding capacity.
Okay.
They're not adding capacity because for a couple of reasons. One is environmental because of very, very strict environmental control, the costs, the CapEx which are required for putting up capacities is very, very large. Second, raw material availability is also a major issue there. For these reasons, they've practically not increased any capacity in the last few years.
Got it. Great. Thank you so much, sir. Thank you.
Thank you. The next question is from the line of Rohan Gupta from Edelweiss. Please go ahead.
Hi, sir. Good evening, and congratulations on such a solid set of numbers. Sir, couple of questions, sir. First is on our TFE limitation to meet our PTFE requirement. You mentioned that our PTFE revenues in the current quarter has been lower than the Q4, and it is primarily because of the limited availability of TFE, which I understand that TFE has been moved to the value-added PTFE and other grades of PTFE. Is that right, sir?
Also we have started production of R125, which in our technology is from the PTFE route.
Okay. We are replacing this TFE to R-125 and other grades of PTFE, I mean, PVDF and obviously FKM and all those.
No, no. FKM, PVDF doesn't require TFE. That is made from VDF, another starting monomer, which is made from R-142b.
Okay. It goes in the micropowders and other range of PTFE, right?
Micropowder is going into PFA.
Okay. Sir, so this TFE we've seen that will remain the limitation unless we increase the capacity of TFE and we keep on moving to R125 and other grades.
We have, as I just mentioned, we have taken our third TFE in line, third TFE plant in line. From this quarter onwards, we should not face a problem of unavailability of TFE for the requirements in different product categories, including PTFE.
Okay. Good. Sir, second question is on the solid realization which we have seen in the refrigerant gases. How do you see that the realization? Because what we hear that the realization has started softening in current quarter onwards or in the current month onwards. How do you see the realization across the gas business?
I don't think there is going to be any impact on realization even in the next two quarters.
Okay. They will remain solid?
Yeah.
Sir, just the third, and after that I'll come back to you. Sir, you have seen that the solid demand coming from FKM and the high acceptability of the product. You know, you have already mentioned that by end of the year you will be almost reaching up to more than 70% utilization and you are across the trend of PTFE value added. Do you have any already plans in place to meet the growing requirement of this FKM and other PTFE copolymers, sir?
See, we are continuously expanding capacities. We are adding new capacity, additional capacity in FKM, which will keep on getting into production in the next few quarters.
Sir, in terms of CapEx plans, if you can just mention what you feel that can be the investment in entire fluoropolymers chain, including FKM and PVDF, given the solid demand scenario right now. How much you think that the investment capability is there, and how much investment do you think that segment can absorb over the next 12 months?
Actually, we have given those numbers in the last presentation, but maybe we'll just amplify on that for the.
Yes, sure.
CapEx just now. The year ended March 2022, our gross CapEx was about INR 4,300 crore. Every quarter this year we plan to add about INR 300 crore, about INR 1,150 crore in the whole year. In the last quarter up to June, we added INR 300 crore. This twelve hundred crores, the breakup is about a broad breakup is about INR 400 crore for new fluoropolymers, about INR 300 crore in specialty, including battery chemicals, and in special chemicals like VDF, refrigerant gases, INR 300 crore, and wind energy and miscellaneous infrastructure, about INR 150 crore. This totals about INR 1,150 crore.
Okay. That is for the current year, FY 2023 you're planning this, right?
Yes, please. For next year, we have projected about INR 1,000 crore.
Like that remains kind of what it was earlier, sir.
Yeah, it could possibly go up by another INR 200 crore-INR 250 crore.
Sir, on the batteries requirement from the EV side, you mentioned that definitely we expect some approval coming in from the customer by end of this year. If you can just mention which are the players with whom we are competing in the international market, in the global market, because we mentioned that the domestic demand from EV batteries remains still muted, and your focus is more on export. Sir, when we are giving the trial runs and giving the product sampling to your customers, which are the suppliers we are competing with?
We are not in a position to disclose the customers' names, but these will be customers in China, Korea, Japan, and some in Europe. We will also be sending sample quantities to the potential Indian battery manufacturers who will have the capability of testing and analyzing our quality and comparing it to what is their specified quality.
Fine. Thank you. Thank you for this, sir.
Okay.
Thank you. The next question is from the line of Tejas Sheth from Nippon India Mutual Fund. Please go ahead.
Yeah, yeah. Good evening, sir.
Mm-hmm.
Sir, on the new-age polymers, fluoropolymers, you mentioned that there's a price uptick. If you can just tell us that on quarter-on-quarter, what will be the price range increase across these products?
No, that's very, very difficult to estimate. You know, that will all depend upon the demand supply situation, you know, which is, you know.
Of course. Q1 over Q4.
Sorry?
Q1 over Q4.
Sorry.
Over Q4. Q1 over Q4, the price change.
Q1 over Q4?
Yes. Quarter-over-quarter. Yeah.
It is in double-digit numbers, but I won't be able to give you an exact number at this point in time.
Sir, in this new-age fluoropolymers, we mainly compete with European players, right? Unlike in PTFE where we compete with China. If the cost increase in Europe for the energy is significant, we would continue to benefit on these higher realizations going ahead?
Well, we hope to. You know, as I mentioned, it's more not from the point of view it's cost push in Europe, but it is also from the point of view that availability of material is not there. Given the fact that we have now developed the you know the large number of grades for various applications within FKM usage also, it's difficult for more suppliers coming in to displace us. From that point of view, we feel that we have a fairly good position in the market. As a result of which we hope that we will be able to sustain our prices.
What do we want? 7% of the market share on volume terms?
FKM?
Yeah.
By the time our new capacities come up, maybe by the end of the year, it could well be about 10% of the world market.
World market. Okay. Sir, on the battery chemicals, how is the product approval cycle? I mean, is it something which is very long, or with the plant commissioning, the sales can be made?
In the chemicals it could take three-four months after we start supplying commercial samples. Polymers, it could well take about six-eight months.
Okay. Thank you. Thank you very much.
Thank you. The next question is from the line of Tarun Mukerji from HDFC Mutual Fund. Please go ahead.
Yeah. Sir, thank you so much. Sir, our R125 capacity is around 5,000 tons. Is that right?
That's what I mentioned last time.
Okay. With this TFE expansion line three, we should be. Is it fair to say the PTFE expansion plus the R125 can run at decent capacities then?
Yes, absolutely. Of course, there are some other polymers also which are made from TFE.
Yeah.
Like PFA and micropowders, which, as and when the demand for that increases, we should be able to cater to that requirement too.
All right. The TFE expansion handles our upcoming expansion in PTFE plus the R125, plus probably some of the other fluoropolymers.
Right.
Expansion. Sure, sir. Sir, this quarter, is it fair to assume from a PVDF and FKM, we were fairly integrated for our R142? I mean, the numbers reflect the R142 benefit, the backward integration benefit.
Yes. Because we had stopped importing any further 140 PB.
This is 44. Got it. Sir, lastly, can you give the capacity utilization for our PTFE for this quarter?
It's almost about 85%.
Sir, I thought this quarter would be a bit lower because you had diverted some volumes to.
Yeah. That's the reason why 85%. Otherwise, we have been running our PTFE capacity at close to about, you know, full capacity utilization, about 100%. 90%-95%.
Sure, sir. Sir, one small request is you have a lot of capacity additions happening across portfolio. If it is possible, if you can give in your presentation what are the capacities? When are they likely to come? It will help us in our understanding and also in our modeling purpose.
We'll try and do it, but you know, we are suspect of, you know, putting in too much information.
On a broad level. For example, the PTFE category, the fluoropolymer category overall number, how much is the quantum that is probably getting added? That will help us.
We just informed that, you know, in the new fluoropolymer, our capacities by the end of this financial year, all combined would be somewhere around 1,500 tons. Which is up from about 700 tons, which was there till last year. You know, we are adding almost about 800 tons in various new fluoropolymers. PTFE, of course, you know, we are running as I said, that we have been running at or close to 90%-95%, we're using full capacity. We are working on debottlenecking our PTFE capacity by maybe about 20%-25% in the next six months, by the end of this financial year.
Sure, sir. That's very helpful, sir. Thank you so much.
Thank you. The next question is from the line of Viral Shah from Enam Holdings. Please go ahead.
Yes, thank you for the opportunity and congratulations on a very strong set of numbers. My first question was, just a clarification. You said that you've expanded your TFE capacity. What would the capacity now be after this expansion?
I'm not going to disclose the TFE capacity numbers. Yes, there's a capacity. I mean, there is a significant increase in TFE capacity.
Okay. Just secondly, on the numbers for your subsidiary, and I derived these numbers from subtracting the consolidated numbers minus the standalone numbers. It seems that the subsidiary profitability has meaningfully improved during the quarter. Is there something to read into it or what was the reason behind this?
Sir, we cannot hear you.
Hello?
Yeah. Can you hear me?
Yes, this is better.
There's nothing much to read into this. Because whenever you sell through subsidiaries, there is a huge transit gap. The goods when it ships from India and ultimately reaches there. Always there is some inventories which we keep for the demand for serving to the customer there. Whenever there is a price increase or market price or favorable price movement, that gets reflected into the sales from GFL in India. Otherwise we will have a normal trading margin which will be there.
Sir, my third question was on caustic. You mentioned in the presentation that there was some price uptick that you saw during the quarter compared to the quarter four. Would it be possible to share what was your realization for caustic in Q1 and how are you looking at that number in going in the coming quarters?
Just one moment. April, May, June, there has been a marginal increase in caustic raw prices.
Would that be around INR 50-INR 55 of realization or even higher?
It's around, if you look at the consolidated EC, it's about INR 50-INR 51.
50. Okay. Okay, thanks. Finally, the last question, sir, on wind power, sir. Sir, you did write that the 20 MW would likely be installed by Q2 end. Sir, is there any status on the remaining 100 MW which was to be installed?
As of now, the policy has not been announced by the state government insofar as captive wind is concerned, so we will have to wait till such time that announcement is made and, you know, the policy is defined. As we had mentioned earlier, by the end of this year, to the extent that there is unfulfilled obligations, Inox Wind will return back the money to GFL.
Is there any timeline to when the money will be refunded, in?
By the end of this financial year.
Okay. The same would hold true for corporate guarantees as well?
Largely, they will also slip off. As we are raising funds also in Inox Wind, that will enable them to, you know, reduce substantially their standalone debt, which will then result them to fall off of our corporate guarantee.
Sure. Thank you so much for the clarification. That was helpful.
The next question is from the line of Anant, an individual investor. Please go ahead.
Thanks for the opportunity, sir, and congratulations on a great set of numbers. If I were to look at Gujarat Fluorochemicals, like last 10 years of business, which used to be commodity has now transitioned.
Hello? Hello?
Yes, sir.
Sorry, the voice went off.
Mr. Anant, can you please repeat your question?
I think Anant can join back. You can ask him again.
Yes, sir, I believe we have lost the line of Mr. Anant. In the meanwhile, we'll take the next participant, whose name is Vishal Biraia from Max Life Insurance. Please go ahead.
Hello. Thank you. The battery chemicals plant was supposed to commission end of this calendar year, somewhere near November 2022, was the earlier guidance. Now is it delayed by about six-eight months?
No, no. It's not been delayed by six-eight months. We never said that. That plant is going to be commissioned by the end of this calendar year, maybe give or take one or two months. This can always happen in large chemical plants of this sort. It's only that commercial production will then take about five-six months thereafter because it takes a month or two for the plant even after the plant is commissioned for the stabilization. The process which has to be followed to get the samples approved from different customers would take about three or four months.
Right. Okay. What are the primary products that these battery chemical plants will make? One will be LiPF6. Apart from that, what will be the other products?
Basically, as I said, it is an integrated complex. We start with the lithium fluoride, PF5, LiPF6, and also go on to make the electrolyte. These are the products.
Once you commission the plant, you will send the products to the customers where you would already be in touch with for a couple of years.
Yes. Right.
commercial orders. Okay. The last question is, what will be the capacity of this plant, sir? How many tons?
You know, again, starting with the prototype capacity, and as the capacity of EV vehicles grow in India and abroad, we will be augmenting the capacity. To start with, we'll have a capacity of almost about 2,000 tons, which will perhaps be utilized in the next two years. After that, as the battery capacities come up in all the geography, we intend to substantially augment the capacity.
Okay. Fair enough. Thank you very much, sir.
Thank you. The next question is from the line of Anant, an individual investor. Please go ahead.
Congratulations on a great set of numbers, sir, and thanks for the opportunity. My question is that, you know, if I were to look at our company in last 10 years, we were basically into commodities at some point of time with caustic and fluorochemicals contributing to the largest amount, then we moved to PTFE. Going ahead, and then of course, fluoropolymers and fluoro specialty chemicals came in. Going ahead in next two years or three years, what do you think would be our key growth drivers? And how do you see our company's business in next two, three years in terms of products or-
The key growth drivers will both be chemicals and fluoropolymers. Chemicals, you know, the various kind of chemicals which are going to be utilized in batteries as we said, and this, you see, is going to be a huge growth driver for the company, and both in terms of revenues, in terms of capacity, in terms of profitability, and of course, the polymers which go into batteries and into hydrogen fuel cells and other hybrids. Those will be the drivers of future growth.
Like, just taking a look two-three years from, like, for example, like this year, looking at what our projections are for specialty fluoropolymers. I think specialty fluoropolymers by FY25 can be a INR 2,000 crore business by the end of this year. Do we see similar kind of opportunity in LFP space in, let's say, two years from now?
Yeah, certainly. I think it's not larger, certainly a similar kind of opportunity. I think it will probably be larger over the next five years. It will develop into a fairly significant business.
Oh, that's absolutely amazing. Well, the second question that I have is that how has the sampling for PVDF used in battery going on? Have you started supplying for that? Last question on PVDF, what's the status of PVDF back films for solar project?
As we mentioned last year, the grades are in the development. Some grades have been developed, which have now been sent to potential customers. Which, you know, for us to get full feedback on the approval, could take maybe about two-four months. In case there is any gap which still remains, that will then we will work towards you know filling that gap. Hopefully we should be able to then start commercial supplies of PVDF for the battery grades. It could take a total of about four months, four-five months before we start commercial supply. As of now, we have received favorable response grades which are you know similar grade.
We have been able to develop grades which are similar to what is available in the market. We are very, very confident that in the next few months we should have our first few approval and which will allow us to start commercial supplies.
On solar back films, sir?
Sorry?
On solar back films.
Solar back films. The PVDF film which goes to the solar battery, the project is under commissioning and should be commercialized in the first quarter next financial year.
Okay, great. Thank you.
Thank you. The next question is from the line of Hansel Thakkar from Lalkar Securities. Please go ahead.
Yeah, hi, sir. Congratulations on the great set of numbers. Just a follow-up on a previous question. I'm assuming that, I mean, if the state policy is favorable to us, is there a possibility that we might absorb the entire wind energy capacity?
There is a possibility, but we'll have to watch and see. Wait and see. Let's see how and what form the policy comes. If it is something which is definitely going to yield very strong results, then we will certainly look at maybe enhancing, adding more capacities over and above what we are currently adding. I think we'll have to wait and see what is the final shape of the policy.
Okay. The reason why I was asking is given the current state of, you know, the power and fuel cost, it may actually be advantageous, which is why I was inquiring.
That is very, very clear. You know, there is a huge delta between renewable energy power and you know fossil fuel-based power. That is quite clear. We have to see what form the policy actually comes.
Great, sir. Very helpful. Thank you and congratulations, sir.
Thank you.
Thank you. Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference over to the management for closing comments.
Yeah. We would like to thank you for your interest in the company. We look forward to your continued participation on these earnings update calls. Thank you very much once again.
Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.