Ladies and gentlemen, good day and welcome to Prasim Industries Q4 FY 'twenty one Investor Conference Call. We have with us today from the management Mr. Dilip Gaur, Managing Director Mr. Kalyan Ram, CEO, Global Chemicals and Group Business Head, Fertilizers and Insulators Mr. Jayandhuva, Chief Executive Officer, Chemical Division Mr.
Ashish Adhutia, CFO. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity I would now like to hand the conference over to Mr. Ashish Adokya, CFO. Thank you and over to you, sir.
Thank you. Good afternoon to all the participants. I hope that you and your families are safe. The FY 2021 was a year of 2 halves. We started on a very grim note in quarter 1 with low operating rates across all our plants, which was followed actually by a Solid recovery from quarter 3 onwards.
In this quarter presentation, we would like to start the Discussion with highlighting the qualities of viscose as a green fiber. What makes viscose the green fiber It's based on 3 tenets, which are Green Product, Green Technology and Green Ecosystem. These are highlighted in the presentation on Page 4, which has already been uploaded. We have listed down 6 powerful credentials of viscose, which makes it superior product on the sustainability front. Viscose is made from ethically 100 percent sourced wood and from sustainably managed forests.
The land for viscose wood does not require added fertilizer or pesticides. Therefore, there is no use of chemicals for growing its raw material. Viscose needs very less amount of water as compared to other natural fibers during its life cycle, which makes it low on water consumption. Viscose is also fully biodegradable in 8 weeks. In comparison to that, the other fibers take much longer.
Additionally, pre- and post consumer waste can be converted into fiber again resulting in circularity. Brasim is one of the companies which has all the 3 generations of fiber under one roof, which are viscose, Modal and Lyocell. Lyocell technology is a closed loop technology with recovery rate of key chemicals such as NMMO by more than which is recovered by more than 99.7%. Even the recovered water from the process is reused. We are currently implementing a closed loop technology In all our viscose plants, which will lead to reduction in emissions to air and water, improve the working ambiance and also cut down on raw material consumptions.
We also have unparalleled focus On adopting global standards and systems accepted and recognized globally, we have received HIC FEM 3.0 average scores For all our sites, and we are committed to achieve stringent EU batch norm for all our sites by December 2022. Key to create ecological value is to use less. On Page 6, you will see How we have reduced use of water, caustic and focused on reducing emissions. Moving on to the 3rd tenet, which is green ecosystem. It's about making an impact that goes beyond your own operations.
The 3 pillars, Green Ecosystem, are responsible sourcing and the supply chain, valuable partnerships and social responsibility. We ensure that our resource our wood pulp requirement for certified forestry that follows responsible Practices. We work with our partners in the entire value chain to impart the importance of sustainability. We have partnered with GreenTrack that provides end to end supply chain traceability for textile industry. We have also been making a positive impact to the society around us for many years.
As a company, we have actively engaged with more than 1,000,000 people across several states. Our CSR spends are focused on education supporting 25,000 plus students, health, Sustainability livelihood supporting almost 14,000 plus farmers, infrastructure development and women empowerment. Our efforts towards sustainability has not gone unnoticed. Under Responsible Sourcing, VSF was ranked number 1 in Canopy's Hot Button Report 2020 with dark green shirt rating. The VSF business received the prestigious Innovation and Sustainable Supply Chain Award from United Nations Global Compact Network India in 2021.
The business was given the award for its pioneering Innovation relating to recycled and circular fiber made with pre consumer fabric waste based on in house technology. Let me now switch to the operational and financial performance of the company. The fertilizer Business divestment process is expected to be completed by quarter 2 FY 2020. After Receipt of NCLG approvals for the scheme of arrangements amongst other pending approvals. The reported financials has already classified it as discontinued operations.
Grasim Premium Fabric Limited, the Erstwhile Soktas India, which was a subsidiary of the company, has received the approval for merger with the appointed date of 1st April 2019. We are yet to file the final order with ROC, But our substantial steps are already over. The financials of this subsidiary has been incorporated as part of Textile segment of the company. In the Q4, all our businesses witnessed all round improvement In operational performance on back of strong consumer sentiments due to receding COVID cases, The financial performance of BSF Epoxy Textiles was much ahead of expectation in this quarter. The global textile fiber demand witnessed a sharp recovery in second half led by spurt In consumer demand and restocking of the dry supply pipeline, the growing consumer preference for comfortable casual And value for clothing value for money clothing has spurred demand for cellulosic fiber And VSF has been key beneficiary of this shift.
In India, our VSF plants operated at full capacity for 2 Successive quarters. The domestic demand grew by 9% YOY in quarter 4. The share of value added products in the overall sales mix also improved to 26% in quarter 4 as against 22% in quarter 3. The BSF prices in China traded at their multiyear high in China. The BSF prices rose from RMB12,800 in Jan to RMB15,800 in March 2021.
This was driven by strong consumer demand, restocking and rise in cotton prices during the last 12 months. China's VSF inventory at launch declined significantly from 45 days in April to 13 days in March. The VSF business reported 1 of the highest EBITDA of INR548 crores during quarter 4. As part of VSF segment, the VF Y business reported revenue of INR465 crores and EBITDA of INR77 crores in the quarter. The chlor alkali Capacity utilization touched 94% in quarter 4 from 89% in quarter 3.
The international caustic soda prices improved sequentially, led by temporary supply disruption in the large sorry, the later part of the quarter. In the Chemical segment, the Advanced Material business, that is Epoxy business witnessed sales volume growth driven by demand across segments, especially Wind and Auto segment. The sector witnessed demand outstripping the supply due to Raw material constraint coupled with disruption at certain global manufacturers leading to exceptional performance. Our consolidated revenue for quarter 4 rose to 24,399, up 26% Y o Y And the EBITDA and PAT was INR 5,142 crores and INR 1715 crores respectively, jumping 62% and 14% Y o Y respectively. On the standalone basis, excluding the discontinued operations of Fertilizer, Revenue and EBITDA for quarter posted at INR 4,394 crores and INR 8.80 crores, respectively.
EBITDA reported an Y o Y improvement of 121%. The revenue and EBITDA from the Continued operations of fertilizer for quarter 4 stood at INR 561 crore 33 crore and has not been included in the published financials. On CapEx, you may please refer to Page 14 of the investor presentation. The total CapEx spent for FY 2021 The CapEx plan for FY 2022, Excluding Paints and Fertilizer is INR 2,604 crores, which includes the VSF expansion project at Goliath with Line 1 Scheduled to be commissioned in quarter 2 of FY 2022 and Line 2 to be commissioned in quarter 3 of FY 2022. The other CapEx includes Grasen's plans to invest towards increasing its advanced material, I.
E. Epoxy business capacity by 125 ktpa. This would be done through a brownfield expansion at the existing location at Willyette Gujrat, this will include standard and specialty epoxy products along with curing agents. Being an industry leader, Grasim will continue to play a proactive role in growing and supporting the demand growth of epoxy. In the chlor alkali business, RASM plans to invest in 200 TPD caustic ground field expansion at Vialyte.
This would take the total capacity to 1400 TPD at its village site and will primarily meet the customer's requirement In the country's western region, including that the requirement of VSF business, which Which will also be commissioning its expanded capacity. The expansion will be commenced commissioned in 24 months Post receipt of statutory clearances and approval. The expansion of chemicals WAP, Which is in various different flaps will improve the OREIT integration to About 40% by FY 2025. This is excluding what we plan to Sell to our customers through pipelines. We have successfully commissioned 182 Megawatts of new capacity in our solar business during FY 2021, taking the total capacity of solar To 502 Megawatts.
I would like to remind you that the solar business is in our subsidiary. It's not Our division, so it's not included in the CapEx slide that you're seeing. It's a subsidiary, so it's separately captured. In next 2 years, we are scheduled to add another 3 43 megawatt of new capacities. Our balance sheet has stayed strong despite headwinds in half 1.
At the end of the year, the consolidated net debt reduced to INR8831, a 58% reduction from March 20 levels. At standalone level, the net debt reduced from INR 2,999 crores in March 2020, which included the debt of Erstwhile Soktas, which has got merged now to only INR 914 crore in March 2021. Based on our performance and comfortable liquidity position, the Board of Directors of VASIM has recommended a dividend of INR5 5 per share for the year ended 31st March 2021. And in addition to that, A special dividend of INR 4 per share, taking the total dividend to INR 9 per share. The total outflow on account of the dividend would be INR 5.92 crore.
In terms of outlook, We expect the 2nd wave of COVID to impact the operational and financial performance During the lockdown due to the demand slowdown, but we expect the recovery to happen as smart as last year after the lockdown is over. With our inherent financial strength, operational excellence and diverse product portfolio of Cement, Financial Services, viscose and chemicals, we've always demonstrated the ability to be resilient and rebound quickly. So now I would like to hand it back to the operator for Q and A.
Thank you very much. Ladies and gentlemen, We will now begin the The first question is from the line of Priyant Mahajan from Quota, please go ahead.
Hi, this is Mongal Nivedita from Quota. First question is with respect to the VHF business, A very strong recovery, but starting April, we are seeing some softness in prices and also cost is expected to catch up as far as pulp is concerned. Is it possible to share some color both on prices and cost in 1Q 2021? How is it moving? And also, I mean, what is the recent volume trends given the recent lockdown and restrictions in the country?
Thanks.
Dileep, you're there.
Yes. No, I couldn't share the question properly. It is about Q4.
No. So, Dileep, the question is regarding the 2nd wave of COVID, how it has impacted Price, volume, both price and volume, yes.
And something about pulse you wanted, Right?
And yes, and the pulp price because the cost is going up. Yes, sorry.
If you look at The quarter 4 and as we were excluding the quarter 4, the demand was very strong. I think India witnessed the highest ever The announcement of this quarter's budget in the March quarter. And until the lockdown was imposed, the volume was pretty strong in the Indian market. The prices also global prices has been at the peak in the quarter 4, but those prices were It's actually high because of there was an underlying demand, but there was a lot of restocking happening. So we expected some rebalancing of the prices to happen.
So to that extent, yes, There were some moderation in the primary, but still the VFS value remained quite attractive as a quarter end. With the lockdown, as you know, a typical textile from fiber to garment, at Move across 4 to 5 states. So whenever there is a lockdown, so entire value chain gets stalled. To that extent, there has been I think that the domestic demand has come down significantly because of lockdown, particularly in South So what we are doing, but the underlying sentiment remains very strong. So when you talk to the value field, we believe that the day lockdown is lifted, there will be Hello.
Central demand rates, they picked up very fast. The good news is the global market continue to remain very strong. The export businesses are doing extremely well. So the export businesses are going full throttle. And I think the U.
S. Economy is doing well. The U. S. Sales have done very well.
U. S. Sales are doing well. But to my mind, I think once the road bump Lockdown get lower, demand will come back to its healthy level. Yes, like all commodity, the pulp size also have But there's a word you, the pulse size run up is a lag of VSF because VSF has already, if you look The VSF prices are 1 of the 54% Y o Y.
So, pulse is now catching up. In our case, the advantage is that if you recall, Last year, when the pulp prices were falling, it was our pricing is 1 quarter behind. We are always losing. But today, we will at least for 2 quarters, we get Yes. Does that answer your question?
Yes, Philip, that covers it well. I think one more point, What has happened is that, of course, the spread of BSFO of pulp has gone up significantly And it is gone beyond even FY 2019 levels, which will normalize with the pulp prices also catching up.
Okay. Okay. So can I is it fair to conclude that Q4 we've It's a peak in terms of profitability so in terms of margin, given the benefit of lead in VSA prices versus pulp? Is that a fair assessment?
Yes. I think, Dilip, what Sumangal is asking is that, is it fair to conclude that quarter 4 was the peak for Because,
yes, obviously, because you see it was not only the demand growth, there were restocking Understood. Second question is with respect to the CapEx. So Ashish, last year Q4 outstanding CapEx was somewhere around INR5 1,000 crores. This year we spent 1500 and the plan is another 2500 odd in FY 2022. So from our design CapEx Around 1,000 odd crores is still pending, which will be spent in the following year.
Is that the right understanding of our CapEx plan?
No, no. So, Sumangal, I don't think you should read it that way. I think earlier we used to give the sanctioned amount, right, Which was more of an outstanding CapEx and then we used to show year wise breakup, okay. I think to give better guidance to the market because it was very difficult to give outlook of 2 years down the line, what the CapEx would be to give a better outlook. Now we are giving 1 year outlook of CapEx, Which is other than for Paints, which is and fertilizer it is INR 26100 crores.
So that's how you should be reading the chart. Don't calculate the balance amount and assume that, that would be the full amount.
Okay. But I mean in terms of all our ongoing projects, will we be completing all the Expenditures were chosen this year itself? Or there will be some leftover? No.
So, VSF 600 TPD, what I talked about the two lines in Willyette will complete in quarter 2, quarter 3. The Chlor alkali capacity expansion, which is ongoing in Voliath, the current ongoing in Voliath And Rella, these and Balwadrupuram, there has been some delay in these capacities to come Because of the COVID, okay. So the local situation in, for example, Balabadropuram is not good. So therefore, we are having to push out CapEx commissioning. So there is some delay out there.
In terms of VELAYER, new 200 TPD, we are giving a guidance of 24 months after Receiving the statutory approvals. Yes, so these are the broad timelines Of the current plan that I talked about. Jayant, is there anything that you would like to add to that?
The only thing I would add over here, Sumandir, is like our chloro methane that will come up in July again early H2. So Krela will come in early H2, BB Puram K1 will come in early H2 and as the 200 Fresh expansion, but it will take another 24 months. So we have a fairly large set of projects, which are going to be coming up in the pure alkali business this year, Starting, it's too early till the end of the year getting commissioned.
Understood. Understood. Thanks for these details. Just one small clarification. So the CapEx slide mentioned ex of pain.
So, does it mean that this year there will not be any start up CapEx in the paint business? Or it's still very early to share details on that business?
Yes, it's the latter. So there will be CapEx in paints business. But as you know that It's only about 3, 4 months back that we discussed about entering into Paints business. So we are still formulating our Strategy and CapEx plan as we're going along. We're looking at land Acquisition, etcetera, for the locations of our plant.
So right now, it's too early to say what the CapEx guidance For the year would be, so therefore, we are just maintaining the earlier guidance that was given right now, which is INR 5,000 crores over 3 years of CapEx. And as we get more clarity, we will feed that to our investors.
Got it. Thank you so much and all the best.
Thank you, Smedes.
Thank you. The next question is from the line of Pheeraj Ahmadia from Annual Research. Please go ahead.
Good afternoon, sir. Sir, my I have two questions. So one is on VSF and then on Chemicals. So first on VSF. Sir, VSS prices like in the presentation you have shown that it has moved up from the gray VSS prices have moved from almost $1.2 a kilo to almost now $2 to $2.2 a kilo.
So how does the premium moves for the Value added or the specialty VSF? Because if I recall it correctly, in Q2 conference call, you have mentioned that premium for Model XL is generally $1 premium to the gray VSF prices. So let's say gray VSF prices were $1.2 in Q2 and now at $2 So How does the premium moves for the specialty? Because what I find from the numbers is I think The value added premiums have slightly shrinked as compared to what we were earlier doing. So let's say in H1 FY 2021.
So if you can Give us
some sort of explanation here. And a related question for Specialty VSF is that how is the market for Specialty VSF in India? So How it is growing over the years? And if you can explain our market share in terms of The growth, what we have seen in the specialty VSF marketing. So this is about VSF, sir.
Thank you. Good question. So I'll respond So first, your premium part of it. If you recall, our earlier conversations, I had told you The premium always goes up when the base ESS price is less.
Your voice is slightly unaudible. Could you be slightly louder, sir?
Can you hear me now?
Yes, yes. Now it is okay.
So if you recall our 2 conversion on couple of occasions, I have also explained That's the premium goes up when the base VSF price goes down because there is a band in which the premium price works. Okay. If you take a model price, there is a RMB 18,000 to RMB 20,000 is the price. Correct. When your base price goes down, you see a premium going very high, it went up to $1 plus last time.
Correct.
You got previous back in the When the prices were again $2 the premium has gone down to $0.6 So there is always a healthy premium with the tank, dollars 0.6 to $1 Okay. When the ASP has gone up, the PMS has shrunk to that extent.
Okay. The second point
is The other thing is premium is a premium products are a mix of there is a modal, there is a dope dye, there is Okay. There is no flat fee on no accounts across the board.
Absolutely.
The third is one product which is the Lyocell or XL product. Yes, there has been a bit of a structural change in the market because a lot of Chinese capacity has started been announced basically. They have not come on the ground, but they haven't announced.
Okay. I
mean, we have been able to make not the quality of external ISL, which perhaps we make or our European competition, But that is good enough for certain applications to go in the blend.
Okay.
So that had lowered the because in anticipation of the very good capacity announcement. Yes. Every dip in the price of Lyocell in Chinese market, it's 10% off. Okay. Because one of the companies
Okay. So, you are
more sentimental response, but you are now regarding that. Okay. So, this is a bit of transition on the premium part of Right. Okay. But that remains that in all these things the market has been very strong.
Okay. And
one of the big CVRs even in all along has There is demand for premium market. I think that modal is doing significantly well. So there is a huge surge in the market across the The eco friendly variant of course. The brand has been very, very enthusiastic in receiving this brand. So a lot of commodity risk costs has been to a equal risk cost.
Okay. Maybe better 15, it will be 0.20¢ premium. Now that is a free premium for us, There is no difference in the fiber. Fiber? Okay.
Okay. What you do is you make it in a via process with the most efficiencies. You make it with lead and you give flexibility. Okay. So that has been a very big change.
So I think to that extent the whole textile world is shifting more and more to specialty fiber. That's a good thing for the fiber business. Okay. And our share of Correct. We'll be about 20,000,000, 25,000,000 earlier.
So I think that's what I'll ask.
Okay. Okay. Okay. So The second question is on the chemical side. So like if I see your quarter on quarter EBITDA, I think it has not moved up much.
So one of the Statement in the presentation is that caustic has seen some cost pressures probably. So the cost increase is mainly because of the power cost or any other reason? So this is one. And a related question is, sir, if we see for the Puxi, what you have rightly mentioned in your opening remarks also, what we have seen is that the percentage increase in the prices of LER is more than probably all the raw materials put together, be it bisphenol or be it the epichlorohydrin. So But when we see the profitability, I think it has not moved up much on a quarter on quarter basis.
So if you can help us understand That is there any lag effect which would be visible in H1 of FY 2022? And if you can give some understanding about Our expansion also because I think we have announced an expansion by 125,000 tonnes for epoxy. So are we also planning some backward integration like some of the players in India have announced standalone capacities for Epic, Lorie, Hadrian. So are we also planning same sort of backward integration? Thank you.
Jayant, would you like to comment on the cost side of this kind of this? Yes.
So I think the larger impact on a Flattish kind of a situation on caustic is due to the international prices, which only started seeing a little bit of an It's in the later part of March of the last quarter. While on the commodity side, I think each one of us knows that the prices did go up. But I think our is Ted Goa. But I think our power management, we did a good job and are actually we were Right. We were not impacted too much in the power cost other than the coal increases which happened.
But the results are more because of The caustic price movement rather than anything else on that particular front. I hope that answers your question.
Yes. Because I think ECU realizations are also higher on a quarter on quarter basis. I think what you're
It is marginally higher compared to The earlier one, not significantly higher.
So
that's what I'm saying. The last part of the quarter, there was an uptick basically Due to the winter storm in U. S, which led to a little bit of a demand supply situation, which did move the helped to move the pricing up.
Correct, correct. Okay.
So I yes, so in the cost side, basically, there were some also repairs and maintenance, etcetera, of the Plant which was which increased the cost a bit more than quarter 3 In comparison to quarter 3, actually. Yes. On the epoxy fund, I will request Kalyan To comment in, I think there are a couple of questions out here, Epoxy. 1 is on the Prices increase in realization had increased quite a bit. But According to Wimal, the margin is not reflection reflective of that, is it because of the cost increase?
Yes.
So I'll take that, Ashish. Yes. Please go ahead. So, Epoxy as a business has always been an extremely steady business for us. We are a business We are now more or less sold out on our epoxy capacities.
And what happened in the last 6 months has It's been more with Biscayne Ole. Globally, Biscayne Ole, for various reasons, initially forced measures And later on, a real serious shortage through supply chains have not been very easily accessible, whereas the demand has been picking up For the end products, whether it is just as resins or in terms of our own formulations, we offer up to the formulation, The specialties as well as formulations. So when the phenolay became severely short, majority of epoxy players have actually not run their Plants 100%. They could only run at say 90%, 85%, 95%. What we have done is We look at it as product, as a formulation and as a solution Within the raw materials that we have accessed because we had one of the better supply chains, so we could get majority of our raw materials, which we had a plan for at least in the Reliance plant.
And we have used it for gaining the key customers and their requirements Mostly from both products as well as solutions. So in a way, it's hypothetical whether a bid spin on A was Low price or IO price. It was not just available after a while. So it's about getting access, whereas once you get access, You would definitely be able to pitch it at a much higher price. What we expect in the next 1 or 2 months, This might flip slightly.
We expect at least for the next month or so after June, this quarter Should still be fairly strong. Still, the raw materials are fully not available. When the raw materials are fully available by Q2, the prices might soften a bit, but still we expect the market to be strong Because end of the day, all of the downstream, coatings, electricals, auto, wind, all are going strong. That's also one reason for us. We are sold out and we are looking at expansion.
And on the integration side, sorry if
you can share with us. Yes.
So very obvious, if you can think of it, we are the largest Chlor alkali player, we are the largest epoxy player and we are highly integrated across the board and we are a Chlorine derivative player. So it's very obvious that we should be putting the largest ECH plant too. It is at an advanced Consideration, it is being reviewed, it is being finalized. Maybe we will have something to tell you in a period of time, In a short period in future.
Thanks a lot for answering the queries in detail and all the very best. Thank you.
Thank you. The next question is from the line of Chirag Surekha from DSP Mutual Fund. Please go ahead.
Hi, this is Vivek Amakshan. I just wanted to know about your leverage policy, because your net debt has come down significantly and the way I see it is Even given your CapEx on some fertilizer sales and internal growth, you'll be probably net debt Negative or you'll be cash positive in the matter of a year or so. Could you please explain where would you like to take this? Thanks.
Yes, sure. I think, see, I would not like to comment On it being net cash by end of the year because we have certain CapEx plan. We've not yet to Discussed paints CapEx, but if you include paints CapEx, then it's possible that We will not be able to go back to the net cash position. But overall, if you look at the policy that we follow, It's to stay AAA for Grasim. I think it's very important that we remain investment grade Both in the international as well as domestic market because that's the leverage that I have in terms of my cost of debt and my ability to therefore Undertake projects and implement projects.
Our AAA balance sheet also helps So our subsidiary really like ABCL to get good cost of debt as well. So it improves the Return for the equity holders because of their margins, NIM, etcetera, going up. And therefore, keeping that in mind of keeping a strong investment grade balance sheet, We don't like to go definitely not beyond 3 times on a net debt basis, but that's on the Really on the outer limit where I have to get worried and start doing things like selling at non core, etcetera, to make sure you come back. But I don't anticipate our net debt to EBITDA ratio in the next So 5 years going beyond 2, 2.5 times, so even within implementation of our paying CapEx.
Thank you, sir. That was very useful. Thank you.
Thank you. The next question is from the line of Pratik Kumar from Antique Stock Broking. Please go ahead.
Yes. Good evening. Thanks for the opportunity. My first question is on your CapEx. So last quarter, Recall, like while the numbers are not given precisely, but you are sort of thinking of Pending CapEx of around INR2500 crores for next 2 years, INR 202, INR23.
Now we are staying at INR26 100 crores for FY 2022. So just wanted to understand what is the new CapEx it is around just in this quarter, particularly on New expansion projects on a proxy and other way?
Sure. Without giving the numbers, like I Said the new CapEx that is there is your Relia 200 TPD. So, this call, there is no new CapEx. Let me first clarify that. Okay.
In Chemicals, we have taken Relia 200 TPT. And this is going to be incremental CapEx is going to be very small because this is a brownfield expansion, the infrastructure utility etcetera is all there So there is no question of a large CapEx out here. Okay. Then there is There are a couple of value added products, which is the chlorine derivatives, Which we have also included. So you talked about chloromethane.
So like that, there are few more that we have budgeted for. We are not Disclosing right now for competitive reason of what those products are, but those are some of the products that is there in chemicals. Then I've talked about epoxy. Epoxy, while it is not a very large CapEx, But amongst the CapEx between chemicals and others, other than BASF, which is pending, that is probably one of the larger CapEx that is there for epoxy. And other than that, in VXY, we are Considering and right now we have budgeted for a small CSY expansion.
So you have 3 products out there PSY, CSY and And CSY and SSY are much better solution products in comparison to PSY. So what period of time we want to make the VFI product mix more oriented to the high margin products. So that's why the whole idea is to put up some capacity in CSY. So that's broadly what the overall plan in CapEx is.
Sure. And the cost if you're looking to go to 1457 ATPA earlier, So that completes Sai. Earlier, we were looking at 1 to 'twenty two. Now that completes Devon.
Sorry, voice was not very clear. So I missed what you asked.
The trial caustic We were looking to have a caustic capacity to 14.57 ktpa.
Yes. That was See, like Jayant mentioned, is likely to come in second half, in the early second half. So there is It was supposed to have come in quarter 1, quarter 2, but it has it's got delayed to second half because of COVID. And what you see out there in the chart is additional 200 TPD, which I also saw another 73 KTPA, Which will take 24 months?
On the asset profitability, Like the prices, I mean based on our channel text and I mean industry interactions like pricing Look, very high, strong Q on Q. It's sort of slow to profit, but cost also seems to have increased by 15% quarter on quarter. So has there been already impact of higher pulp during the quarter or is there some other cost that has hit the quarter?
So on VSF, there is no impact of high raw material cost in this quarter.
Only one sulfur. Sulfur price has gone up and coal price.
Okay. Sulfur and coal has gone up. My apologies.
And pulp, While the market is 1 above 30%, our consumption cost is 1 above 7%.
Yes. So the impact of the real impact of The raw material cost increase due to pulp will come in only in quarter 2 perhaps, Quarter 2,
end of quarter 3, yes.
And my last question on the Topgasm amalgamation, since when it has been amalgamate since I mean full FY 2021?
Yes, yes. So what you see in the financial is the entire year's Financials of Soctas is included in the financials of textiles. So what you see It is 100 percent of Softas.
No, I mean, it is for full FY 2020 2021?
Yes. That's right. Even the comparable figure, Absolutely
right. I'll get back to you. Thank
you.
Thank you. The next question is from the line of Naveen Sahedu from EDWY. Please go ahead.
Hello. Yes, Naveed. Hello. Yes, good evening, sir, and congrats for the set of numbers. Just one question and sorry if it's a repeat, maybe due to bad audio, but what was the average pulp cost In Q4 and where are the prices currently?
Q4, you want to know the market price? Yes. I mean, because I believe we are like largely we are integrated. So if you could help us with our cost, as in what was our cost for Q4 and Even if we are integrated, we are upstream pricing. So we don't have So we buy a pulse from our subsidiary on an onshore basis.
It's a market driven price. Understood. So what was the price for average Q4 average pulp price of the China's GT effort is $9.18 per ton, Right. And spot price as of quarter ended, dollars 1100 per tonne?
Yes. So if I give you an indication, so that's the pulp spot price. In quarter 4, our consumption rate, right, would be because we are getting advantage of the earlier Pulp prices and our contracts, etcetera, would be somewhere around 54,000 per metric ton,
What's the
The consumption price. Understood. But this will as the time goes, like we said, it will go up.
Correct. So both from a pricing point of view, like because there is some cool off that has happened to the VSF prices also. I mean, though your presentation says That March prices are 13% March exit prices are 13% higher over Q4, but thereafter, clearly, there is some Easing of that has happened, if not more, at least RMB1 1,000 to the China prices and cost is Also going up. So fair to assume that there can be a decent sort of a margin pressure in the coming 1 to 2 quarters, right? The other way to look at it is Q4 was exceptional margin quarter.
It was not a nominal margin. I'm assuming that I see Good VSS business has a VSS to pulp delta of 0.9. And that delta went up to almost 1.3, 1.4 in Q4. That was It's an abnormal quarter. So I think what we do is we compare to the healthy margin quarter.
That's Fair. I was just looking at slightly longer term in the sense this current quarter margins were at 24%. And historically, like A peak has been even higher upwards of 35% and so. So just from a longer term like Given, let's say, China is acting up towards some of the environmental concerns, so slightly broader question. And this is more from the feedback that even in metals, You're seeing China acting towards these environmental concerns and hand shutting some factories.
So is there anything that is happening on BSF front from A broader perspective, which can see that margins can or prices can see uptick or this is what the range boundary is? There are 2 things in here, say what is happening. The biggest question margin of cotton. China made cotton in Shenzhen region with 85% of China's cotton comes from there. And that cotton has been banned by the U.
S. And European brands because of the human rights violations and Yes, sanctions are there. Now if that happens, it is happening already and that's why there could be a run up in the cotton prices. And the moment quarter prices go up, this course gets the benefit. So the one big upside is what happens to the Indian quarter Issue with the China, because there is no way China can substitute the Indian production if they have to win the export market.
If they don't do it, China market gets vacated and We will benefit because of that. So either way, it will help the business. That's the upside. Let us see how it unfolds. We can't predict how it will unfold.
A fair point. Right, right. Thank you. Cotton prices Have gone up despite the fact that people thought it might come down. Because the cotton prices were pretty high, both the cotton yarn prices as also the cotton Okay.
Thank you. Thank you.
Thank you. The next question is from the line of Satik Kumar from Antique Stock Broking, please go ahead.
Yes. So thanks for the opportunity again. Given the very strong exit of caustic chlor alkali prices for March quarter, So margins can be like sort of quite different in Q1, let's say, for 2022 Or they should be like rain bound here as well because of higher
Would you like to take?
No. So I think it's difficult to give us guidance for quarter 1.
I mean, I generally I mean, we had a very strong margins in caustic segments also in FY 2019 And like till FY 2020 also first half, then it started to fall in line with industry, I guess. But with now the improving prices, I'm not sure if they're sustainable. But should we see margins of chemical
Yes. So maybe I'll take that, Ashish.
Yes, please go ahead.
Yes. So I think the assumption very clearly even in terms of our Aspiration for this year has been that it should be at least equal or higher than the previous year. And hence, we are expecting or we are hopeful of it. 2 or 3 things which are concerning us. Number 1, for In the Q1, because of the 2nd wave, we have some difficulty in certain segments for at least 6 weeks.
The second concern we have is we were expecting certain projects to take off by End of Q1, Q2 and then that's coming towards the later part of the year, the second half as Ashish mentioned. Both will have a slight impact on the overall year ahead. What we are banking on is What was unexpected last year was the V shaped recovery. If really the markets recover as Well as last year. It's not I'm probable to imagine that we would at least partially recover this.
But it is too early. As Ashish said, we can't really say it's going to be as good or better or worse. We're taking 1 quarter at a time. This quarter, I think We want to just see how May goes and then June how it recovers and we'll take it from there. Thanks.
Thank you. That was the only thing.
Thank you. The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.
Yes, sir. Danewad for the opportunity. In continuation to as been remarked, sir, when the first wave of COVID hit, It was all of a global phenomenon. But now as we see that the international markets are have opened up And the utilization levels there industry wise are coming to their pre COVID levels. So In terms of that scenario, sir, how well is this caustic market shaping up?
And sir, what kind of imports have happened for the last year? And what should be the situation going forward this year, sir?
So let me take that, Ashish. I think, yes, you're right. At the end of the day, when you look at Q4, You had in the winter storm coming up a robust global demand on caustic including India. And practically all of us We did actually better than the Q4 of the preceding year on volume basis. At this point of time, I think caustic demand is Linked with chlorine demand and chlorine demand is largely globally linked with the vinyl demand, which is doing very well.
Whereas Denial production or PVC production in India is not there and that's why the impact is significant over here. Plus it's a localized Wave 2, that is impacting the situation currently. But even like last year, it took us about If you look at it from the removal of lockdowns to getting back to peak, it took about 60 days And the entire industry was up and running in late 2018s of capacity utilization. And that is what I think Ashish and Kalyan had been immune to That if the situation changes, it will change very fast because the inherent underlying demand continues to be there. And globally, we also expect that the demand will be robust.
As regarding imports, I think the entire Supply chain globally was disrupted. So we did see a marginally about 10%, 15% less import compared to last year. That is also because the Q1 literally was a washout for the whole industry as the large Capacities were not up and running. We expect the imports to continue at the same pace as they were last year In the current scenario and largely to the eastern and the western part of the country, which is coming from your Japan side or Southeast Asia. So not too much expected on the import side.
It will continue to be at the same pace as about 3, 3.5 tonnes annually, which came in earlier in coming now.
Sir, on the antidumping part front, sir, something was initiated earlier in 2 months ago. So what is the update on that?
So the update is, I think with the entire COVID situation, the investigation piece has slowed down. We've had a couple of meetings with the body, but I think the since the investigation is not over, we will not be able to comment.
So taking these factors into account, Manay, the price trends in the caustic market Are going are likely to be subdued only because if the recovery in other Other chemical segment or other market have not led to recovery in caustic soda realization. What factors would lead to recovery? Manay, I think so it is still hovering around that $300 bank, something in that vicinity.
Yes. You're right. It's Sovereign in India had about a 300 shade less than $300 band as we call it.
With banks in Iqalini, what would be the factors that will reverse This downtrend in the ECU realization that is there for I think last 2, 3 2 years, if I'm not wrong.
So, your point is, I think caustic is the
basic chemical. So it goes into all the commodity application. And at this point in time, any capacity which comes in, it's like a step up. When the prices are very high, a lot of capacity additions took place. We expect that basically the capacity utilization for the industry has gone up and also the recent trends in the last What the Q4, we did say that the price of caustic has moved up slowly.
We expect that trend to continue, but it is again a Sumption of the larger clarity coming in this COVID wave 2 that was down when we start seeing the industries and the lockdowns opening up. It's very difficult at this point of time to say anything on that front. More so the current capacity in India It's about 20% higher than the current demand, 20% 25% of the current demand. So it's a combination of the lockdown and the capacity, Which is keeping the caustic price. I would not call it subdued.
It's basically being at this point of time, It's not being able to keep pace like it used to keep pace in the past.
Very small point and we are also coming up with new capacities, Now not only Graseem, other players also have somebody someone has commissioned also and people I have lined up fresh capacity, 6 months, 1 year, 2 years down the line, including you. So in that case, there has to be a demand push to keep up for these Expanded capacities going forward and plants running at higher 90s. Otherwise, the fixed cost and the variable cost metrics will also dampen down the Margins level, that assessment is correct, sir?
No, I will not
be able to comment upon what the others are doing. I think everybody understands As we look at the market situation, looks at their own customer base and capabilities and then arrive that and it's not that you can set up a caustic Usually it takes you about 24 to 36 months to put up a greenfield and about 24 months for a brownfield. So all in all, we all believe caustic has a great future being a basic chemical and that's what is moving this industry forward. If you look at from our consumption scenario, our demand supply, we're just about not even yet at a 5,000,000 tonne capacity. But the good part what is happening is the chlorine story, which is improving quarter on quarter And that is what is also now balancing the echo, which was earlier mostly skewed towards caustic and purine as of now.
So I think there is potential in this business to grow further, and that's what is being led by the entire industry, Including us.
Right. And for the chlorine derivative part, my concluding remark, for the chlorine derivative part, what percentage of our Chlorine goes to the downstream and how much is in our market sale?
As Ashish put it, I
think he gave a figure. There are 2 parts we look at clearly. 1 is the entire VAP story, which by 2025, we will be at 40%. And then there is a pipeline by which goes to the industry along with us or our ancillaries or what we would call it. If I would take it for 25, we will be somewhere around 65 ish percent, 60 5 percent, which will be consumed by this particular mode And the balance will go to the market.
Yes. So just to repeat 40% WAP, Another 25 would be pipeline and the balance would be merchant sale.
That is for 2025, sir. I'm asking for
Currently,
I'm asking for current.
Yes, so currently about 27% is WAP.
27 plus pipeline Plus pipeline takes you to about 40% and the balance 40%, 45%, 50%, 55% goes to the market as it takes.
Right. And sir, one of your competitors are developing a product Hydrogen Hydrate. They are coming up with the capacity and As per their presentation and all, they will be the only player in the country. So have you looked into this product also and the demand scenario, Mani? What are the
metrics? So like we've been saying quite earlier because of competitive reasons, We don't want to get into a discussion what we are analyzing and studying. But let me assure you on one part, there are multiple products that we are analyzing, studying I'm looking at an appropriate time when we reach the comfort level is when we will get into announcements.
Just to add Yes, sir. Please conclude.
I said that I had to say that. You're not the
whole result
of it. That you got interrupted.
Hello? Yes, yes. So I can add one last point. I think, first of all, Globally, there are no new chloralkali investments. They are just getting relocated.
You might have heard there has been closures in U. S. And elsewhere. Each of the players in different countries are making choices. So there is a huge amount of relocation going on from West to East.
So globally, as the demand is going up globally, the new investments are not actually coming globally. They are only getting relocated. India is actually seeing a 2nd, I think we don't invest on a next 2 year basis. We invested based on next 30 years basis. And we see, as Jain said, a very, very strong growth option there, and we'll continue that.
And the last one is, We'll fundamentally see unlike in the last 10 years, we'll fundamentally see chlorine being making a lot more Leading product compared to caustic in future, just like what happens globally, We will see more of that and more of chlorine derivatives and chlorine pricing, which is going to determine the equal levels in future than before. So We have seen all types of products. Again, when we look at derivatives, we look at derivatives where How much of chlorine intensity is going into these products? As Jain said, I think we are doing a lot of calculation, but our scale is very large unlike other competitors. So when we look at it, we will have a much more focused conversations on selective chlorine derivatives than all of them.
Thanks.
Thank you, sir. Thank you for all the answers. And all the best,
sir, and stay safe, sir. Thank you.
Thank you. The next question is from the line of Amit Murarka from Motilal Val, please go ahead.
Hi, good evening. Most of the questions have been answered. Just had one Good question on the time line of the fertilizer business realization. So I believe you guided for 1 year Completion, so that comes around September or December. So are you still confident of being able to receive the funds by then?
And the second question to that is, is it fair to say that the CapEx for the payments will only start after the revaluation of the funds from the first hydro sale?
So the first question, you got it absolutely right. So I think by September, we'll be able to complete the Process and receive the funds. On the second bit, paints is irrespective of So it's not that we will start. So we will right now the first dollars of paints will go into Acquiring land, so which is already we're actively looking at and we have started deploying that. And Of course, I'm not talking about employee expenses and also that are already started.
From the CapEx point of view, land will be the first one, which you've already started doing.
Okay. Sure. That's all I have.
Thank you. The next question is from the line of Dharvind Chheda from INAM Holding. Please go ahead.
Yes. Good evening, sir. So what was the VF y top line and the EBITDA missed out from your presentation?
Yes. No, no, I had mentioned it in my speech, it is INR465 crore Of revenue and INR77 crore of EBITDA.
INR77 crore of EBITDA. Okay. And the other thing, I think the voice was not clear. I missed out the because of the quarter one lockdown, how are your factories operating currently both Chemical and VSF, what would be the utilization level at both in the quarter 1 or current month? I'll take on the VSF?
Yes, please. Yes, Vivek.
So I think VSF, all our factories are right now running full capacity except Hari here, because normally, every year, we take an annual shutdown for the pulp plant. It was supposed to be taken in the 1st week of June. That will advance to this month of May. So I think this is a good time to finish up all the shutdowns so that when the demand comes back, we have That's the only thing we have done so far. Let's see how the lockdown continues and then we'll review the normal details again.
One more thing we have done is like last year we did as the lockdown happened we took on board export. So there is a lot of exports we are doing It's on the Indian market right now, so that our plants remain fully utilized. So export of fiber as well as we have converted One line to non go on in Kharaj and then maybe one more line will convert. So we'll start making again non go on in Kharaj, it will be exported to Europe and U. S.
Market till the time till the time the India normalizes. That's why we're making sure that the plants are utilized fully. Okay. Thank you, sir.
Thank you. The next question is from the line of Nirav Jamodia from Annual Research. Please go ahead.
So continuing with the earlier question, so like you mentioned that we are going for more of the exports of the specialty we had What you mentioned about non woven. So, sir, it is safe to assume that we are selling more of modal and XL in the domestic market and dopedite and other Value added products are exported. So the mix looks like more of Model NXL is sold here domestically. So the realizations are higher in the domestic market as compared to that of the export market for the specialty VSS?
You are right. So you see, Modal is sold in domestic market and exported both. About 30% to 40% is sold in local market and balance by export. Okay. Lyocell, Lyocell again is sold in domestic market And export, but 30% domestic, 70% export.
Okay.
And the domestic is at slightly better price because of the trade advantage of what we have. Okay. The good thing what will happen in non go on is non go on is that is the quarterly contracts.
Okay.
We have been able to sign high priced content because we We shared them in the last quarter. Okay. So that is a good advantage. So I think the normal and more exposure will be much better value than one
Okay. Okay. And yes, and sir, if you can because Yes, sir. Yes, continue, sir.
One point I would like to inform, we used to make our Leva Eco, which I told you, the Eco variant of This course fiber, we have now started manufacturing the new in Relias.
Okay.
The new project, that has just got permission. Okay. This Export from Gasim Windpower because EVA Eco, there's huge demand by the global brands, which we started for us about a year and a half back and we have
Okay. And sir, in the presentation, you have Given the exit prices for China VSF as well as the starting prices also, but if you can tell us about our realizations for the gray VSF, some sense, Some idea about how we have been so our realization
For Q4?
Yes, sir, for Q4. Good day, sir.
Yes. So our this is a problem. Our realization has been broadly in line with the China, slightly That's fine. As the issue is, you see, as I told you, China is an indicative price.
Correct. Correct.
And then market is governed by the local conditions because what How is AliPay is doing? Because the buildup in the Indian market was slow.
Correct.
Correct. March, my price was almost like international price.
Okay. Okay. So the full catch up happened in the month of March, correct?
That's right.
Correct. Sir, and the last
We don't initially decide the product just because China is selling a company because my value chain has to be able to afford it.
Absolutely. Absolutely. And so the last and final point is on the Epoxy. So if you can give some sense of The percentage growth in our absolute EBITDA on a Y o Y basis, so let's say, as compared to last year, last Q4 of FY 2020 and this Q4 of FY 2021, how in what percentage terms, however, EBITDA has grown for the epoxy?
So epoxy would be almost a big growth actually. If you look at QoQ, for example, okay, QoQ would be almost to close to twice.
Okay. It's almost double.
Yes. So And Q4 of last year was quite depressed because that was the quarter When you lost 1 whole month?
1 week almost.
1 week, sorry, of this one. So you could assume that 1.5 times compared to quarter 3, 1.5 to 2 times roughly, But much more in comparison to Q4 of last year.
Got it. Thanks a lot, sir, and all the best.
Yes. Thank you.
Thank you. That was the last question for today. I would now like to hand the conference over to Mr. Ashish Adhukia, CFO, for closing comments. Over to you, sir.
Thanks. See, I think We are all going through difficult times personally. So I hope everything is safe at your end. And please take care of yourselves, stay safe, and of course, we will connect again in the next quarter. Thank you.
Thank you. On behalf of Gerasim Industries, that concludes this conference. Thank you all for joining. You may now disconnect your lines.