Grasim Industries Limited

Ladies and gentlemen, good day and welcome to Grassim Industries Limited Q1 FY20 earnings conference call. We have with us today from the management, Mr. Dilip Kaur, Managing Director, Mr. E.R. Raj Narayanan, Group Executive President and SBU Head, Clore Alkali, and Mr. Ashish Adhukia, CFO and other senior members of the management team. 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 Ashish. Thank you, and over to you, sir.

Thanks, thanks, and good afternoon, everyone. all to our quarter one FY20 results call. I'd like to start the call with some quarter highlights, and then I will follow it up with a few slides from the presentation. You may not have had the opportunity to go through it, but this will give you an opportunity to actually get oriented to the presentation so that you have pointed questions on strategy and operational clarifications. This quarter, Gratham reported excellent growth in consolidated numbers with 31% year-on-year improvement in EBITDA, which was primarily contributed by Ultratech and ABCL performance. On this call, I'll focus more on standalone performance, as you may have access to UTCL and ABCL call transcripts. The standalone performance witnessed growth in both VSF and chemicals volume. but overall financials were slightly muted due to softening of global prices in both VSF as well as chemicals. This was, in fact, after many quarters of consistent growth in our financial numbers. Let's take VSF to start with. While there has been softening of VSF prices, it continues to be fastest growing fiber globally with 6% to 7% growth, and India demand continues to be buoyant with actually a double-digit growth. Another positive in BFF business is that bulk prices have been correcting meaningfully. We may see this benefit coming in the next quarter given the time lag of inventory purchase and consumption. Let's look at chemicals now. Costs and prices are impacted in Asia mainly due to demand slowdown in the end-use sectors. In this quarter, there has been some impact in India, too, due to increased supply from imports and addition in domestic capacity. Cost of production, while it was higher by 2%, it was also partly impacted due to monsoon delay and disruptions due to cyclones. Our BSF expansion projects are progressing well. we started production in our third generation specialty fiber plant of 16 kTPA in Kharaj, which is based on in-house green technology. While third generation fiber is a leap forward towards quality and sustainability, amongst many other initiatives on sustainability front, we have further reduced water consumption in our other VSF plants by over 15% in this quarter. With this, in last three years, we have achieved overall reduction of over 50% water consumption, making us the lowest water consumer in Briscoe's industry. Moving to some exceptional items, we have taken a write down for our investments in Idea Payments Bank, amounting to rupees 238 crore, which is net of taxes, as they have decided to wind down the operations Now, we would like to just refer to the presentation, so maybe I'll give you a few seconds to pull that out. We will walk you through only select slides, so if you would want to just jump to slide nine. On slide nine, they provided the capacity breakdown by plant for both VSF as well as caustic soda. In case of VSF, you can see the increase in Fi20, which is basically addition of specialty fiber capacity. By Fi21, we'll be completing both phases of our Wulife expansion. Likewise, in caustic soda, as you can see, we will be completing most of our expansion in Fi21. If you move to page 12 now, You may note the decline in global prices across all fibers. VSF has witnessed similar pressure, primarily due to capacity overhang, which, by the way, we've been talking about in all our quarterly polls. And this is further accentuated by addition of capacity in Indonesia. US-China trade war has also impacted the prices. As you may know, US imports almost 50 billion worth of textiles from China. On page 13, we have further Instapower domestic sales contribution to around 85%, which actually provides us some insulation to global prices. There's an interesting chart in the bottom left on pulp prices. If you may notice, the red line, which is our own consumption price, is at a perfect lag to the orange line, which is the benchmark pulp spot prices. While in this quarter, we have not been able to see the benefit, which would have actually made our EBITDA look better, but in the subsequent quarter, we should get the benefit of reducing pulp prices. On page five, we have financials of QISCOs. And the EBITDA is better on a Q-on-Q basis due to volume improvement and consistent effort on operational existence. On a YOY basis, the business performance has been resilient, driven by volume growth and steady domestic realization. We have included VFI numbers as well for your analysis. On chemicals, if you come to page 19, By the way, just to pause on page 17, we have a picture of our specialty fiber plant which has been newly commissioned. Back to chemicals, if you come to page 19, caustic soda prices have declined in Asia due to demand slowdown. But in India, it is only recently in the last quarter that it has got impacted due to increased imports and new capacity additions. The excess of supply over demand led to negative chlorine realization, which has recently partly reversed. On page 21, despite lower sales, we have improved EBITDA due to lower power cost, amongst other factors. Our efforts to increase WAP continues. Today, WAP plus epoxy forms around 21% of chemicals EBITDA. Lastly, On page 27, you will notice we have created lease liability of 73 crore on standalone basis on account of primarily the new lease accounting policy. This has a very small impact. It has improved the EBITDA by 5.5 crore on standalone basis and around 77.9 crore on consolidated basis. We'll be now open to questions. We have Raj and Dilip here. We should take benefit of their presence to focus on operational clarification and strategic inputs. If you are unable to resolve any of your queries immediately, you can feel free to reach out to us, to the IR team, to seek notifications.

Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. 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 Gunjan Prithyani from JP Morgan. Please go ahead.

Yeah, hi. Thanks for taking my questions. Firstly, on the VSF business, could you just give us some sense on how should we think about the next 12, 18 months? Because clearly the global VSF prices have seen very sharp decline, whereas if I really look at your numbers, we've been able to contain the price decline reasonably well. Is there more pressure, you think, with a lag which could reflect in our realizations going forward? And how do you think, you know, do you think even globally, VSF prices are bottoming out? What would be your view there? And within VSF, it seems that the margins are still held out well despite this price softening and pulp hasn't contributed as you mentioned in this quarter meaningfully. So what are the other operational efficiencies that have driven the margin improvement?

That's a good observation. I think the global prices to my mind if you look at what is happening today, they are around 1.43, 1.44 dollars per kg. They are well below the cost of what the Chinese are producing. In fact, they are almost putting a critical cost on many producers. So to my mind, this is not sustainable. Now what has worsened the situation is the US-China trade war. So there is a pressure because of overcapacity and then the American buyers are not renewing the contracts going forward for the Chinese suppliers. Now that is putting a pressure. So to my mind, I think It can't get any worse than this. So the global prices should see some kind of recovery going forward but very difficult to predict when. I think it's very difficult to what will happen with the US-China trade relations. But I think later half of the year hopefully should improve. In our case, yes, we have been able to contain it because we have been saying that we have two or three distinct advantages to continue. Our business model, because we are highly integrated. A lot of other people are not. Second is our Leva brand still holds a lot of strength in the market space. Third, why the models are better is the pulp is a distinct improvement. Like we didn't get the benefit now, but going forward, the pulp prices have gone down to almost 100 plus dollars per ton. There is a 10 cents per kg advantage which should accrue over a period of time from the pulp. And they are softening the other inputs as well. So the coal has improved. So I think altogether, yes, some positives and negatives. But very difficult to tell exactly how things will go. But to my mind, yeah. So that in brief is how the outlook looks. The demand is still very healthy. At least in India, demand is very healthy. But going by the comments that you're saying and even looking at what Lenzing also seems to be saying that

Prices have kind of reached the level from where it doesn't make sense that they go meaningfully lower. So I'm just trying to understand, do we see more pressure in your numbers to come with a lag? Or if, let's say, global prices hold on stable, then we should not see further deterioration in your realizations going forward?

See, as I always told you, there will be some pressure if the global prices continue to be low. But I think in our case, the impact will be much lower than what happens globally. Which I have been saying in all my earlier calls as well.

And which is this Indonesia capacity which you have indicated in the presentation? Is that in addition to what we were talking about Chinese capacities in the past conference calls?

This is the Chinese guy who has put up a plant in Indonesia. We did speak about it earlier. So what happened earlier, so far China was the biggest exporter to the world. Now with this guy coming up, the Indonesian overhang is 55% of the capacity. And the Indonesian market has plummeted because they have become unviable on the yarn side. So the yarn business is not doing well. Fiber capacity has become excess. So Indonesia is now in a much worse situation than China was. And China keeps importing into Indonesia in any case. So that's how the whole dynamics is working. So this is Satiri only. So he is a Chinese guy who has a plant in China but has invested through another company in Indonesia. APR.

And industry operating rates would have been down to 75% also.

Right now, it went down to 65% also. See, that's the point. The war has come now. Some plants either toned down or shut down. Despite that, the inventory went up to 31-32 days, which is 9-10 days. Today, as we speak, the inventory has come down to 18-19 days. So, there is some kind of equilibrium coming in the market, hopefully.

Okay, just second question I have more on strategy perspective. Clearly on and off we do face these concerns from investors on how would Grasm look at capital allocation. And, you know, I know that you guys have already infused money and idea, but these concerns do crop up very often. Is there anything that you can, you know, commit in terms of, you know, the capital allocation to subsidiaries will not be beyond a certain amount or whatever? Is there any clarity you can give to us? How should we think about subsidiary investments over the next 12, 18 months?

Sure. Sure. Gunjanji, I think on capital allocation front, if you see how we have done historically, most of the capex is given priority over investment in subsidiaries. So all along, most of our investments have gone into the capex for the standalone businesses. barring the exception of VIL investment that was done recently. Going forward, I think the credit rating in this environment has become extremely important and we are the highest rated company and we would want to protect that rating so that there will be no disproportionate investment done in subsidiaries which may impact the ratings of the business. So that's one guiding principle that we follow. The second guiding principle, like I said, that there will always be priority given to CapEx over investment into the subsidiary. So these are the two guiding principles that we would follow. It's very difficult to give an amount. The amount can be more linked to me maintaining my treasury to an adequate level as well as maintaining my AAA rating.

But is there any ratio you have in mind that where you would be very skeptical to reach let's say on a net debt to EBITDA level or on a net debt to equity level where you think this is where I am comfortable with and we are not going to infuse any money in businesses beyond the core operations.

I think that the comfort would be again linked to maintaining my highest rating. And again, you know, making sure that I give priority to my standalone capex over investing into subsidiaries. And I have almost 6,500, 7,000 crore of pending investment that needs to be made in my standalone capex itself.

Okay, got it. I'll join that with you. Thank you.

Thank you. The next question is from the line of Bhavin Chera from Inam Holdings. Please go ahead.

Yes, a good set of numbers in a challenging environment all across. So a few questions from the follow-up to the presentation. We saw in the chemical division, quarter on quarter there was a volume decline due to some shutdown or something. So has that normalized and are we back to the normalized volumes?

Yeah, so the chemicals we had this water shortage issues in South as well as an East unit and since the onset of monsoon, those problems have been sorted out. It's it's got normalized now. OK, second thing on the VSF side. I think here as you mentioned the speciality plant. already started so what's the outlook on volumes from that plant in the overall volume outlook because as you said the domestic market has been growing in double digits so I don't think so there is a demand issue it's the supply from your side how much you can incrementally produce and sell so if you can give some outlook on our vsf volumes in fact this product is different than a normal vsf it's a very valued product So it is about 16,000 times capacity and we have achieved 100% utilization in the first quarter. And we are selling the entire quantity. And the premium of this product is more than a dollar for the existing VSA prices. So it's a much better value-added product and running to full capacity. A part gets sold in India, part gets exported. So it's a global market. It's a very high-value product.

Okay, okay.

Okay, thank you, sir.

Yeah. Thank you. The next question is from the line of Madhav Madha from Fidelity Investments. Please go ahead.

Hi, sir. Good afternoon. So just in continuation to previous question on the capital allocation bit, just want to understand that in case, you know, I understand you're prioritizing the standalone KPEX over investment and subsidies, but in case there is a requirement for further capital infusion in Vodafone Idea or Aditya Birla Capital in the future, will the policy remain the same that we invest in line with our shareholding in the company? Will that be the thought process or there could be a situation that we might not contribute money and our stake gets diluted to whatever extent?

Sure, I think I would like to differentiate between Aditya Birla Capital and VIL. Aditya Birla Capital is my consolidating subsidiary and where I own 56% and therefore, you know, and Aditya Birla Capital gets the benefit of my rating, you know, as well. So, therefore, I need to maintain the consolidating stake in Aditya Birla Capital with some headroom as well because financial services business continuously looks to raise funds So I need to make sure that I have some headroom of dilution in other similar capitals. So 56% is a good stake to have. Anywhere between 51 to 56% is a good stake to have. So there's some headroom out there. Nevertheless, we should also bear in mind that other similar capital goes through certain cycles and When there is a down cycle, when you can get an opportunity to raise funds out there through grass and putting money at a good value, then it is value accretive to the shareholders. And when there's an up cycle, you can dilute to the third party. So you can do some which the group had articulated in the past as well. So therefore, you need to differentiate a Isabella capital with VIL. In VIL, coming to that, it's not a consolidating, it's a group investment rather than a subsidiary. And there, like we have done in the past, we are less likely to put disproportionate investment. More likely that it will be proportionate, but there is Currently, there's no thought process. VIL raised the funds of 25,000 crore and very clearly they articulated that for two years they would not require funding. So there is absolutely no proposal that has come to us or no thought process or no discussion that has happened with us on further fundraise after the 25,000 crore that has already been raised.

Understood. And just on the VSS business, what is the global operating rate right now and how much has it declined by in the past year?

Can you repeat the question?

No, in the VSS business, the global utilization for VSS, how much would it be currently and how much has it declined by in the past year given the additional supply?

In the previous year, it was 90% and as we speak it is 75% but for most part of the quarter it was 65%. That's a global, but ours is 100% utilization.

But where is the strict capacity? Indonesia, how much capacity have they added, sir, in the VSF?

They have added, no, no, no, 360 TPD each line. So they have got two lines of about 720 TPD into 350 per count. Okay. 720 into 350. So about 2.5. 2.5. 262 and 460 000 tons yeah so as i told you the indonesia the capacity versus local demand is 75 percent lower capacity now okay okay i understand and any other new capacity which we envisage coming in the industry in the next 12 i see i mean there is something which has been in the pipeline at best 200 to 400 thousand tons can come globally but that is is that they are not there in a six million ton industry So now I think we are going to see next two or three years of quiet VFR investment. And as Ashish mentioned, because it's a very fast-growing fiber, hopefully it should equilibrate sooner than later.

Understood. Great. Great. Thank you so much for that.

Thank you. The next question is from the line of Pratik Kumar from Antique Stock Broking. Please go ahead.

First question is on this capacity again, global capacity. So last year CY18 had around 1 million tonne addition of capacity. So including this Indonesia expansion which we talked about, total expansion now is at around 0.5 million tonne to 0.6 million tonne additional over the 1 million tonne which was added last year. Is that correct? 250,000 tonnes, over 1 million added last year. So it is 1.25 million tonnes. Another $200,000 may come. It's not very sure, but there's something in the pipeline, may or may not. So you can safely take two years over $1.5 billion, you're right. Okay. And on VSF, your realizations, just to verify, your realizations dip by around 2% to 3% quarter on quarter. Is that correct? 2%. 2%, yeah. Okay. And there's this chart of chemical caustic soda prices where it shows that the prices are stable. So this, I guess, is for India prices. But you mentioned that the caustic soda prices have also fallen. So is this happening in Q2? Yeah. So I think what Ashish was mentioning was also about the domestic prices. So till Q4, we had the domestic prices were ruling higher than the international prices because of the BA certification requirements, etc. Suppose that in Q1, domestic prices have dropped and primarily driven by some capacity additions. But that reflects in our realization also, domestic, I guess, it sort of reflects. So our realizations have come down as well. So but our margins seem to be quite strong in this quarter at around 30%, which was almost similar year on year, despite, I mean, like quarter on quarter, it went down to 26%. has come back to around 30% despite lower volumes. So what has helped the margins in chemical segment? Two things. Primarily, one is of course the cost. Of course the power costs have come down compared to the previous quarter. Plus also the speciality chemical segment has done well. So the application-based approach to the market has helped us to improve the margins. Despite, I mean, chlorine is also negative in 1Q. So despite that, the margins, I mean, the specialty has significant offsetting impact. Yeah. So chlorine prices came down towards the end of the quarter. But, you know, the one thing which we're driving on specialty chemicals, which are basically the chlorine derivatives, is to de-link the prices and see how we can, you know, put this product for the performance. So, you know, this requires a lot of efforts on application knowledge and also taking the technical trials, et cetera, slowly. So we are moving away from selling a product to creating a solution for the customer. Okay. And there's an increase in CapEx guidance also during the quarter from $78 billion versus $65 billion earlier. And I see most of it is related to modernization in CapEx. Capacity is not getting added due to this.

So most of these CapEx is the normal modernization CapEx at various plants. So we have almost 22 plants across the country now. So that is annual CapEx, modernization CapEx.

And some of it is in sustainability performance, those kind of things. So that gives you a positive in terms of your product plus. may not be capacity but it gives you a product plus so it says that this capex is over for fi 22 fi 22 uh like we would have similar number like what 6500 was for fi 22 22 so there is an increase in number by around thousand crores during this period this is all ready to maintain and schedule which you are not envisaging in last quarter Sorry, can you please elaborate, you're referring to... I'm referring to last quarter's presentation, where the number of stand-alone CAPEX was around 6500 crores, which that number has moved to 7800 crores this quarter. Okay, so I see what you're saying now because I've pulled out the earlier presentation. So, you know, I think the increase is basically there in the normal CapEx plans that we have put down. So maybe in more specific numbers we can talk offline and see what the breakup is. The point being made is that the nature of these CAPEX are basically that of efficiency and modernization rather than anything else.

No capacity increase as such, but these are the normal modernization CAPEX. Every year we take additional approvals from the board and that is how it is increasing compared to before.

It can be environment related, it can be operations, etc. Okay, and just on numbers, segmental numbers, there seems to be disconnect between reported EBITDA number of 930 crore, which is a reported EBITDA number. But when we add up segmental EBITDA, it is coming lower at around, I mean, when we add up the four segments, the numbers look different. So there's some adjustment in other segments which we have done in this quarter? No, there's no adjustment at all. If you sum up the business's EBITDA and if you compare that to 928 crore that we have reported, the gap is generally what is not allocated income or expenses to the corporate. Okay, so for example, and it is a mix of recurring and non-recurring, mainly non-recurring. A recurring can be like, for example, treasury that we maintain up about 2,500 crore at the end of this quarter and we earn about, you know, whatever, about 8% or so or 9%, 8, 9% income on that. So that also sits in the difference that you're seeing between summation of business EBITDAs and the reported EBITDAs. So it's just a mix of... But typically that is a positive number every quarter, but this quarter it is looking like a negative number. So 930 is the reported EBITDA and segmental number adds up to 980, which is 442 plus 446. Like I said, they may be non-recurring sitting out there for this quarter. Next quarter, it will normalize to positive number on the basis of treasury income, unless there is one-off or non-recurring that may come in this one as well. Sir, can you elaborate on this one-off which would be impacting this quarter's numbers? So this, you know, we will have to see the numbers offline separately. This can be, you know, some CSR that might be sitting there. There might be stores, repairs, maintenance, which are not allocated to the businesses that might be sitting there. legal costs, etc., which are more at the corporate level. So it's a bunch of things that could be there. We can have maybe Saket share with you some of those details offline. Sure, I'll take that offline. Thanks for all the answers. Thank you.

Thank you. The next question is from the line of Abhishek Lika from Nesse Wealth Management. Please go ahead.

Yeah, hi sir. Thanks for the opportunity. I'm coming back to the academy location. You've talked much about Velocon idea and our concern is also about the same because our investments are actually not yielding the fruits and I guess one of the points that you've highlighted is like maintaining of AAA which I think that it's a good decision but still I'm not very sure whether because since EU is getting ton of aggression and whether our decision is actually because it may be like you mentioned it like two years we are not required to put in any money but it looks like in any way year and year or quarter and there we may again have to put in money so as shareholders our holding company discount are increasing by the day our subsidies other subsidies like gas ultra tech and capital they're doing excellent the rafting standard is doing excellent but we're not getting the right valuations and because VIL is actually meeting a lot of concerns for the shareholders. I just want your quick comments on that.

Like I said, we note your point that you've made. I think we draw comfort that the 25,000 crore has been raised out there and that is that publicly stated that for two years there is no requirement. I think it's probably not for us to judge whether on quarter-on-quarter basis they will need funding because we've not been indicated that at all. So therefore, it is very difficult for us to comment on their funding requirement unless they change their public statement that they have made.

Okay. That's fair, but ultimately we have to look at the shareholder's interest as well. And if the holding company discounts keep on increasing, just like our investments into your idea of other firms. And as it is, I understand your point of view and that we cannot judge your investments. But as a matter of one small request or probably one more suggestion, if I may, that if we can freeze our investments into Vodafone, that is, we do not want to put in more fresh money into Vodafone idea and let our investments prove their worth.

Yeah, no, absolutely. I think I hear you and we are also concerned about the holding company discount. We don't, you know, capital allocation could be one of the reasons for that. But we will note that concern and we are also mindful of shareholders' interest.

Yes, thank you. I look forward to certain things that you do. It increases shareholder value. Thank you. That is a nice thing.

Thank you. The next question is from the line of Tanuj Mukheja from Bank of America. Please go ahead.

Hi, I just had one accounting question. If I look at the write-off taken by Vodafone Idea this quarter on account of winding up of Aditya Birla Idea Payments Bank, it was 159 crores. However, the write-off taken by Graphene is higher than Vodafone Idea at 290 crores. Can you please explain the shareholding structure of Aditya Birla Idea Payments Bank?

No, so sorry, I'm not too sure which page you're referring to, but let me just clarify a little bit. The investment that has gone into Ideas Payment Bank from Grasm for its investment of 51% is 290 crore till date, till basically the quarter end. 290 crore we have written down. It will be written off basically when they finally wind up the business but it has been written down in my books. I get the tax benefit of that because of this write down of about 52 crore. So end of the day the net write off in my books is 238 crore on account of Idea Payments Bank. And on a consolidated basis, if you look at the same picture, so this is on a standalone basis. On consolidated financials, if you look at the same picture, the Idea Payments Bank losses that were coming in the Idea Payments Bank was getting recorded in the consolidated financials irrespective. So therefore, there was no requirement to then write off the same amount for which you have taken the losses already. So, therefore, the write-off amount in consolidated financials is much smaller.

Okay. And just one more thing. Did Grassland directly invest into Aditya Birla Idea Payments Bank or was the investment routed through Vodafone Idea?

No, no, no. It was a JV between Vodafone Idea and erstwhile APNL which got merged with Grassin. So Grassin had direct holding in Aditya Birla Idea Payments Bank while remaining stake was held by Vodafone Idea.

Okay, and what was Grassin stake in Aditya Birla Idea Payments Bank? Direct stake?

51. So it was a 51.49 JV between between us and VRM.

Okay, got it.

Thanks. Thank you. The next question is from the line of Sanjay Parikh from Reliance Mutual Fund. Please go ahead.

Yeah, so thanks. I had one question. You know, because of this China-U.S. trade war, over a medium to long-term period, do you think that we would benefit at the NDO segment and hence the demand for VSF can go up or you don't think so that will be the case? Like our exports of textiles can increase at the end use which helps VSF demand to go up. Do you think that could happen?

I think in the context of India, the US-China trade war is a third modern opportunity. China exports $50 billion worth of textiles to US. If they are not able to export, what for good? Where do they go? They have the capacity, they have the equipment, they have got the labor with that. So they would even be willing to sell on a variable cost at the end of the day. And what are the next markets? They have to go to South Asia and India. They are the proximate markets. So I think, and that's what we have been telling policymakers also, because we understand it's an opportunity only when you are the lowest cost producer. And in government, India is not lowest cost. You see there are Vietnam, there is Ethiopia has come now, so many people have come up. So to that extent, I think we have to make sure that long term, I think it will be there. But short term, they could be there.

Okay, fine. Thank you. And one more suggestion on the same Vodafone thing. You know, clearly, as you'd appreciate that the holding company discount has gone up because of Vodafone idea. So one suggestion could be that there could be a vertical split in a sense that you have in one entity a core business holding UltraTech and ABCL and another entity which, and of course you could have small investments in Indalco and ABFR in the same entity, but the other entity could have the insulator business, the fertilizer business, the Vodafone idea. There is a vertical split. Each one of them is given a share. and maybe even at the cost of putting some cash there for needs, that would actually go a long way, and everybody gets a vertical split. So each of the shareholders will get shares of both, and that may solve the problem of the discount going higher. And if at all there are capital needs in ODA, eventually as fertilizer and insulator is not a core area, that can be sold. And I am saying even to the extent of giving thousand crores there, for some need that may happen in two years, that can also be given, but that could dramatically reduce the discount. Because I think the concern comes around what idea, and not so much about investment that you may have to do in ABCL. So that's just a suggestion if you can consider.

Sure, sure. No, I've understood what you've highlighted as a structure. So we will certainly look into it.

Yeah, thank you.

Thank you.

The next question is from the line of Manish Agarwal from Eaterwise. Please go ahead.

I just wanted to know about what is the current price trend of ESF and caustic soda compared to last quarter?

In India or globally? In India or domestically? so so that you want to go first yeah yeah maybe quarter one uh we normally you know talk about uh the concentrated number of chlorine caustic etc so compared to last quarter we would be down by about between 10 and 15 percent

Hello.

Hello. Yeah, I didn't catch the answer properly.

Yeah, so did I miss out something?

Sir, I was just asking like 10 to 15% caustic prices down from using Q1 average.

That's right. So I'm not only talking about caustic prices. We generally do a consolidated number, what we call ECU. So it is a number, composite number of caustic and chlorine. So I'm talking about the consolidated number, the ECU number. Correct, sir. And so the same for the VHS segment? It's very difficult to do VHS prices because VHS has multiple products. So there is a Modas, there is a Viscose. within just for the different denier products. But the blended basis for the company, yeah. But what we are saying is that the drop is not 3%. It is not. And that's what might continue kind of a thing.

Sorry, sir. I didn't get you, sir. What was the number?

No, 3%.

Okay. Okay, 3%.

And, sir, you were talking about, you know, the credit rating that we are concerned about and we would like to maintain it there. So do we have a particular, you know, total gross debt or net debt number in picture that that will be a maximum scaling that we can go up to? So, no, there is, you know, we don't, hopefully we will continue like this and we won't have to track that number at all because we are not concerned about our net debt at all. I think we have enough, you know, headroom to maintain our highest ratings. I think the focus is on highest rating and today I can tell you that we've done some entities in March and April and June and we've got excellent rates in those entities that we have done only because we demand an excellent credit profile in the market and we want to not lose that benefit at all, both Ultratech and us, our benchmark pricing that we get in the market.

Okay.

Already a lot of discussion has happened on that part, but I just wanted to get a clarity on that. Recently, Aditya Billak Group itself has been, the promoter group has been buying stake in Vodafone. I think that would be towards the shareholder agreement with Vodafone International to bring the stake, promoter stake, as equal in a couple of years, two to three years. So will there be any pressure from that perspective that would come on us as well? It's nothing to do with RASIM. I think that discussion is best had with my president, actually, Mr. Sushil Agrawal. Okay. Okay, sir.

Thank you. A reminder to our participants, anyone who wish to ask a question at this time, they may please press star and 1. Ladies and gentlemen, as for the questions from the participants, I now hand the conference over to Ashish for closing comments. Thank you, and over to you, sir.

Thanks a lot for everyone on joining this call. I think they were excellent questions. We thoroughly enjoyed them. Some of them which were more accounting, et cetera, we were not able to give you the specific details. Happy to provide that offline. And we look forward to any queries that you may have. I'll be available. I'll make, you know, Dilip Raj will be available to make sure those queries are resolved. So great talking. Thanks a lot. Thank you. Thanks.

Thank you very much. Ladies and gentlemen, on behalf of Grassland Industries Limited, that concludes this conference. Thank you for joining us. And even now, disconnect your lines.