Grasim Industries Limited

Ladies and gentlemen, good day and welcome to the Q3 FY20 earnings conference call of Graphim Industries Limited. We have with us today from the management, Mr. Dilip Gaur, Managing Director, Mr. Jayant Dua, CEO of Chemical Business, Mr. Ashish Adukia, CFO, and other senior 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 touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Adukhia. Thank you and over to you, sir. Thank you and good afternoon, everyone. I welcome you all to the Q3 FY20 results call. Let me start the call with a few financial highlights, and then I'll follow it up with the select highlights from the presentation that has already been uploaded. On consolidated basis for the quarter ended December 2019, Gratham reported a revenue of 19,205 crore, an EBITDA of about 2,968 crore. On standalone basis, revenue and EBITDA for the quarter stood at 4,499 crore and 495 crore respectively. The business performance for both viscose and chemicals was impacted by weakness in realization. The global viscose industry was impacted by factors such as large capacity addition of about 1.3 million tons in Asia last year. the ongoing US-China trade war, and RMB depreciation which contributed to the drop in global VSF prices. The current prices are near the variable cost of production for a significant part of the industry, possibly indicating that the prices should be bottoming out. The domestic VSF prices witnessed a continuing decline in line with the global prices. Import of cheaper yarn further impacted the viability of some homegrown spinners. On the cost side, pulp prices fell below $650 per ton. We correspondingly gained with pulp consumption costs coming down from 62,620 rupees per ton in the September quarter to about 60,524 per ton in this quarter. For VFI, the revenue and EBITDA for the quarter stood at 446 crore and 82 crore respectively. The decline primarily is on account of lower sales volume, which was 9% down YOY, primarily due to die-hard slump in automotive sector. The domestic VSF prices may witness some improvement due to improving sentiments post Phase 1 deal. There may be some near-term relief due to current supply constraint from China given the ongoing issues there. The prices of caustic soda declined significantly during the quarter to $3.50 in Asia on back of demand slowdown. In India, the caustic soda prices are getting impacted by new caustic capacity addition and increase in imports. Our caustic soda sales volume of 261 KT has improved sequentially as well as YY. We've been able to maintain a market share of 27% despite capacity additions by industry players. In India, IKU in short term is likely to remain under pressure till new capacities are absorbed by new demand generation. In our value-added products, performance has been reasonably okay given the current economic conditions, but chlorine consumed in WABS has improved to 30% from 27% in Q3 FY19. Value-added product sales growth in volume terms reported an improvement of 18% YY. The EBITDA from epoxy which is part of chemicals business was marginally higher as a weakness in realization was offset by stocking of input costs. Sustainability has been the core focus area for the company. The VSF business recently released its sustainability report. We would like to just highlight few key points covered in this report. We continue to be one of the lowest water consumers globally. Secondly, Canopy's hot-button report has ranked us number one VSF producer. This report ranks the world's top rayon and viscose producers on their progress in eliminating endangered forests from their supply chain. More than 200 leading global brands, retailers, and designers are part of the Canopy style initiatives. Let me briefly cover a few targets that we have taken up in this sustainability report for the VFF business. Reduce sulfur release by 70% by 2022, and this is for all the VFF sites. Reduce water intensity by 50% by 2025, and reduce the lost time injury frequency rate below 90%. Now on the CAPEX fund, I would like to reiterate that our project team is committed for timely execution and commissioning of the project. If you notice on slide seven, the CAPEX earmark to be spent for FI20 as a whole has come down by 500 crore in comparison to the estimate that we had given in quarter one. We have primarily phased out certain payments and we will see some savings as well but it is a little early to state what that amount of savings would be. Our disciplined cash flow approach has yielded results this quarter as well as if I look at the nine-month financials. For the nine-month FY20 standalone operating cash flow, the generation before CapEx has been 3,438 crore. A large part of the cash generation has been on account of production and working capital. So that's it from my side. We are open to questions. So I'll hand over to the operator. Please feel free to reach out to us on any queries that you may have during this call or if they're unresolved, then post the call. Thank you. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question, may please press star, then 1 on your touchscreen telephone. If you wish to remove yourself from the question queue, you may press star, then 2. Participants are requested to use handsets while asking a question. Anyone who wishes to ask questions, please press star, then 1. The first question is from the line of Amit Murarka from Motila Loswan. Please go ahead. Hi, good afternoon. Just on the margins, so particularly like the prices side, so the prices have slid quite sharply in the past couple of months. What we have been discussing on the call is that like we have reached nearly a bottom, but it seems like the prices have continued to slide. So the Can we now finally say that the margins which we have seen in this quarter is really the bottom now and going ahead, the margins are expected to be better? So, you know, we don't give guidance as such, but I think some of the points that I mentioned about VSS, for example, the price reaching, you know, it's almost reached the variable cost of the global players. So it's highly unlikely that it will go down further. It's expected to, in fact, bounce back because of the whole coronavirus issue. There is no supply coming out from China, so there could be some temporary relief that we may see in the VFF price. Dilip, would you like to add any point? And then we can hand over to Jayant for chemicals. Yeah, I think it is very difficult to predict which way the prices go. As Ashish mentioned, every Chinese player is right now losing up to 2,500 RMB per tonne on the production there and the sales they are making. So I think you can't sustain this for very long. And it is reflecting in the OR, the operating rate of the Chinese plants, which has come down to 75%. Today it has come down to 66% as we speak. So the stress is being felt by the industry, and I think there has to be some bit of discipline coming in. And as to this whole coronavirus thing, it is a short-term issue. Yes, the market will see some kind of upswing, but that long-term ultimately, the demand-supplier balance has to match. Then only the stability will come. Ashok? Very similar on me. The only difference is that India got a fair amount of capacity in slump over the last one quarter, which is getting absorbed by the market, and we expect the absorption to be completed by another three quarters. The imports have gone up, particularly from Northeast Asia and also from the Middle East part, both sanctioned and non-sanctioned countries. We started seeing a slight reduction in the intensity of the drop, but the drop of prices continues to be a challenge now. Generally, there is a two-month lag, right, between the bulk prices shifting into the P&L? Our system is we take the previous quarter price. And then the inventory also, there's about a three to six month gap it becomes. So depending upon, so pricing is last quarter, but the consumption happens. So the whole lag story, this quarter also had a huge amount of lag, about 120 crores of lag impact. Yeah. So, but I think going forward now, we have to see the end of it. So because the prices are now flattening out of bulk, so hopefully before we should see the end of the price lag. And also just one more question on the CAPEX. So you have a fairly large CAPEX program and given that the industry profitability is so weak, is there any thought around delaying some of the CAPEX and wait for a recovery in the industry? I don't think it makes sense to delay the CAPEX at this point in time because I think the demand is there. And by the time our first line goes on stream by third quarter and third and fourth quarter, I think By the time this plant stabilizes, the market should see an uptake, hopefully. And even if it doesn't, this plant we are putting up is far more efficient than the existing plant, so I'll have a lower cost of production advantage and more flexibility, so we can do more value-added products. So I think we don't want to delay the project right now. We should be there in time when the market looks up, we should have the capacity ready Just to add to that point, these capex are quite strategic. So if you look at VSF, for example, there is a large commitment that has already happened and we see a demand of growth to serve that market from our capacity as well. And if you look at chloralkali, the major capex that has come is on account of, say, Balbadrapuram, Okay, which is again in the region, eastern region, which is a deficit market today, that market actually imports caustic. So it's a ready market for us to serve. So therefore, both these big capex are strategic in nature. And then there are other capex which are, you know, in value added product side in chemicals which are strategic. And then you should go back. the history when we had put up our last one in 2014-15 it was exactly the same cycle was there and the and the commodity cycle the down cycle lasts about 18 to 24 months so hopefully i think the timing should be fine okay understood thank you thank you the next question is from the line of pratik kumar from hunting stock broking please go ahead Hello. My first question is on your domestic VASF segment. So what would be the industry growth in this quarter because it seems that our growth is flat during this quarter in the VASF segment. The industry growth should come back again. I don't know whether you picked up the point. What happened in last quarter, because of the VASF prices became very low globally and VASF because we are defending our market for the fiber and a lot of cheap yarn started coming into India. So if you see between June to August and September, the yarn import became 259 tons per day. Almost 20% of the market was grabbed by the yarn imports. And so the demand actually, so if you are asking for VSF fabric, the demand did not go down. But part of the demand was met up by the imported cheap yarn. And that is the reason why we had to drop our VSF prices to make sure that our spinners, I always have been telling in this call, it's about policy to provide our product to help the value chain, to keep them healthy and because Indian value chain came under a lot of pressure because of the cheap imports and we dropped the VSF prices to do that and as we see the imports have virtually stopped. So I think that the demand should go back, come back. So there is no shrinkage of demand in Indian market, enough demand. I think if that yarn import had not happened, we would have gone by about double digits only. am i making myself clear yeah yeah it's good so actually i joined the call later it was discussed earlier in the call uh so on on regarding this impact of coronavirus so uh in chemical segment caustic or value-added specialty segment uh does any of these segments get benefits from the prices i mean um i mean i understand we understand that there's It is temporary, but like the speciality segment, does it benefit significantly from the ban on, I mean, the closure of capacity in China? Currently, no such indicator is available which gives us any confidence to say that that could happen. But the flip side of the situation can be there are a lot of pigment and dye stuff manufacturers who are dependent on a lot of imported stuff from China. Now, normally they carry an inventory of anything between 30 to 40 by 60 days, depending upon the leak times. If this thing doesn't settle down, you could actually have some of the value-added products going up because of shortage of raw material for their entire feedstock. But it's too early to comment on that. We need to wait and watch and see what happens. On the caustic side, we don't see any impact at all. So caustic is not related, only the speciality segment, as you mentioned, might benefit. Okay, basically, yeah, and regarding our net debt position and standalone business has gone up sequentially by around 700 crores. Is it related to that investment we added in like AB, Aarti Birla Capital, you know? Yeah, so you have to look at it from overall company's point of view of cash inflow and outflow during the quarter. So, yes, that is the investment that was made of 770 crore into Aditya Birla capital that led to increased cash outflow. And that's one of the reasons for the debt to go up. However, like I mentioned, there is a good amount of cash that has got generated as well due to release of working capital in this quarter as well as for nine months, which was used to obviously meet the requirement of the business. Okay. And just one question on capex. So a nine-month capex is around 2000 crores. Channel of business, we are in this adding 1200 crore in fourth quarter. That's the right figure I'm looking at. Yes. So the total comes to about 3,200 for the entire FI20. And what we had given initially was somewhere close to 3,700, 800 as an estimate. So it's lower by 500 crore. But that just spills over to, I mean, in fact, some of this might also get spilled over to next year. And total CAPEX numbers remains the same. Yeah, so right now, so like I said in the beginning of the call, as of now, we're not changing the estimate of the total CAPEX that will be spent over the next two to three years. So that estimate is not changing. but we have seen signs of some savings that can be made in some of these capex, like Dilip was also mentioning. It's a little early for us to give any kind of an amount for what that saving could be, but there may be some savings that we will see in these capex. Okay, and on ECU realizations in the standard pressure, so How the chlorine realizations continue to remain negative third quarter straight? The chlorine realization, the intensity of negative has gone down. So it went as high as about 1500 negative in the earlier part of the year. It's down to now just about 100 degrees negative as of now. It's also because the chlorine demand, particularly in Gujarat area, which is a fairly large consumption area for chemicals, has been fairly stable. We expect chlorine to remain at the last quarter in similar ranges. So is this something also we import, chlorine, which could also benefit? Chlorine does not travel at all. Chlorine being hazardous the way it is, does not travel at all. tend to do either by pipeline or very limited movements through tunnels in a small lead district. Okay. Thanks a lot. I'll get back to you for more questions. Thank you. The next question is from the line of Gunjan Pratyani from J.P. Morgan. Please go ahead.

Yeah, hi. Thanks for taking my questions. On the VSF, I just needed a clarification. For the last many quarters, we have been able to kind of keep our realizations more steady given, you know, the various initiatives we were taking on branding side or also improving the mix. It somehow seems that in this quarter, the decline that you guys have had is much steeper than what, you know, global VSF prices would have seen. So, what really changed in this quarter for the the realization to see such an acute pressure in a quarter that the catch up happens.

See, as I mentioned to you, this was a strategic intervention we did to make sure that our spinners continue to remain viable. Because their viability, so they were bleeding at the, because they had to match the imported price of viscose yarn. Viscose yarn which was coming at 148 took me the kg. At that price, Indian spinners were losing money. So we had to kind of support them and that is why the prices came down disproportionately. But even now also, we still were at a premium to the landed prices of this course in India. But as we speak, by the end of the quarter, the global price came down to $1.2 per kg.

The premiums would have compressed, can you give some sense how much was the premium maybe let's say earlier into the year and what is the premium now?

It's difficult to give a number there but I think So premium is broadly maintained. It has not come down. In fact, the premium in the earlier quarter had expanded when the correction in the price was not as much as the global prices. It had actually expanded. In this quarter, it is more or less, you could say that it has come down, but it's not shrunk from an average.

Okay, and this is basically a strategic intervention I understand you've made in this quarter, but is there anything which suggests that the domestic prices could be at a disconnect with the global prices in the next couple of quarters, or now from here on we continue to follow how the global prices are?

See, look, I always told you that domestic prices will follow the trend, but the delta will depend upon what the value chain can take. So, the delta comes only depending on how healthy the value chain is. Otherwise, there are some inherent barriers and protection that is what we also get in the system. So, the biggest issue was the loss of demand to the cheap imported yarn and once that stops, I think the whole value chain becomes more healthy and things will start looking up.

And on the speciality side, I thought this mix has come down for the last two quarters. I mean, I'm not so sure. I think last year the levels of speciality contribution were higher, right? What has changed on that front?

See what happens, one thing is this quarter is better than last quarter. There is slight improvement in the speciality contribution. Secondly, how do we define speciality? We have got four big products of speciality. Modal, Excel, rope guide and non-woven. Actually, the top three internal margins are rope guide, modal and Excel, which have grown significantly. The non-woven, which is a specialty but not with a high margin. So that part we have kind of defocused in India because that's not a big market in India. It's an export market and there was not much value in that market. So that we are not breaking India. We have diverted that volume to grey market. So the grain in India is far more attractive than the normal one in India. So that's the difference. If you look at the real, if you differentiate specialty to value-added specialty, our growth is much higher. And the thing is, we can share the numbers. And the 2% increase that you see is primarily in the diet, dope diet market. Okay.

Got it. And the other question I had was on the caustic side you mentioned about the capacities. Could you give us some sense on where we are as an overall industry in terms of the total capacity and the consumption? So where are we on the operating rates for the domestic industry?

So the average operating rate of the industry is somewhere between 80% to 85% across different geographies. Our operating rate is also in a similar trend depending upon the geography the plant is located in. The current growth rate is rooted at about 3-4% and we expect that maybe this is the kind of growth rate which will be the way forward also.

But what is the total installed capacity now? I mean whose was the big commissioning that you saw in the last six months?

So I think the total installed capacity that we have at this point of time is approximately, India has made about 4 million tons of capacity as of now. The large capacity addition which took place was of BCM, which was 128 KT. That's about 350 tons per day. You had the GSTL, which was about another 800 tons per day, which is there. MakeMoney is not yet finished. It will probably, before the end of this financial year, will commission its capacities.

How big is that, sir?

That is probably taking it up by another 350 tons per day.

Okay. You get to know real numbers once they commission it, but that's what we... Which is why your guidance on the echo pressure, on the pressure on the realizations.

With the growth rate between 3% to 5%, it will take about 12 to 18 months for this capacity to get absorbed.

Okay, got it. And last question on the capital allocation besides the CAPEX, is there anything that is, you know, we should keep in mind as you're looking for the next couple of quarters? Because I know the Aditya Birla capital thing is happening, but is there anything else besides the standalone CAPEX commitment that we should have, keep in our mind?

Currently, no, Gunya.

Okay. Thank you. That's it. Thank you so much.

Thank you. The next question is from the line of Samangal Nivedia from Cortex Securities. Please go ahead. Yeah, thanks for the opportunity. Just continuing on the previous question on Caustic, and initially, sir, you mentioned that the price reduction continues, only the pace has reduced. So just wanted to understand your sense of where the margins bottomed And at what level do we start seeing some supply reaction similar to what we are seeing in VSF in China? Unfortunately, we don't have any such clarity as of now in terms of guidance, but then we'll see it. Because clearly the major import area for us was not China. It is more of Japan and the East. So the China play on import of caustic in India is not actually insignificant as of today because it doesn't come. So we cannot comment on that. But to say that when will it bottom out, I think time will tell us because it is also a function of how the demand uplift starts taking place in the country. But in terms of domestic cost curve, do you have a sense where are we versus our competitors? I think you will have to look at it in terms of our power control because power approximately is around 65% to 70% of our variable cost. We've got about a 55% of our capacity where we control the power. And that number is significant. We're steadily going up with both renewable and other assets which are coming up through capital deployment. So without getting into numbers, I would say that we are significantly much better off as compared to practically all the competition in India. Understand. The next question is with respect to VSF, this 1.3 million ton capacity addition, what you're seeing, I mean, how is the ramp up there happening and how will that new capacity fit into the overall cost curve if you have any intelligence there? 1.3 has already happened, what he said. That happened in last year. And one plant was commissioned just end of December, early January at 250 kt. The further capacity coming during the year is only 150,000 to 200,000 tons. So the capacity addition, at least for the foreseeable future, has stopped or tapered in response. So I think we can see this year another 150,000 to 200,000 tons capacity might come up. It depends upon who is putting the capacity. So, fundamentally all the latest VSF plants like the one we are putting in Vilayat and what people are putting on are similar cost structure. They are more efficient than the existing plants. But the real value comes from the pulp cost. So, I think now people are looking at integrated value chain. So, it depends upon how well you integrated and how much of the captive pulp comes from your own unit. It decides your total competitiveness. I understand. But this last year's 1.3 million ton capacity addition, has that ramped up to its... Yeah, good question. 20% of that capacity is only used up right now. So all the surplus, if you see between last year and now, the operating rate which used to be 90% last year came down to 75% before the low prices started. Despite that, we had the inventory building up. So the inventory which was 10 days went up to 21 to 22 days. Today as we speak it has gone to 35 days. So issue is until the operating rate comes to a stage where demand and supply match or the trade war impact starts showing up and if the China demand picks up you can see an uptick. So sustainable improvement will only happen when the demand side improves. Right now, the demand side and supply side, there is still an imbalance. So to get the balance back, we require about less than 65% operating rate as we speak today, which has happened today because of the corona issue. But otherwise, in normal COVID, 75%. I understand. And with this, in the corona issue, I mean, is it the impact? I mean only theoretical as of now or we are seeing any tailwinds flowing in prices or any high frequency data which you are tracking? Corona, as we said, it is a benefit. Immediate term, you are seeing a positive. But ultimately what happens, because they are producing and not able to dispatch, inventory are going up. So when the market normalizes, again you will have an issue of lower prices. So I think it's only a phasing issue. You may have a short-term advantage, but long-term will leave an out. Understand. Or may get worse also. All right. This is very helpful. Thanks and all the best, sir. Thank you. The next question is from the line of Gaurav Ratiria from Morgan Stanley. Please go ahead. A couple of questions. Firstly, in China we have seen some disruption in production capacity at the various end-user industries of caustic soda like aluminum. Has there been any adjustment of the capacity of caustic soda there or do you think there can be a situation which can lead to surpluses from China market which is not there as of now from India perspective? The China threat continues to be there. I think it's a fair point you're talking about. However, In India particularly, we have the ADD on China at a fixed rate of about $40 per ton, which is there till the later third quarter of this current financial year. I don't see China impacting us as of now in the Indian context of price scenario. But to an extent that China has spare capacity, of course, I think at a fair point it does have. Okay. Secondly, sir, just wanted to get a color on what the exit EQ will look like compared to the average of the last quarter. Yes, again, you have to give a guidance which would not be possible at this point of time. But I think we made a statement earlier that we are seeing a kind of slowing down of the drop. So hopefully it should stabilize soon. Sure. Two last questions. Possible to quantify the benefit of reduction in pulp cost in the financials over the coming quarter and secondly, the 4,500 crores of CapEx from fiscal 21 onwards. What is the timeframe for that CapEx one should keep in mind? Thank you. So in terms of pulp, we tried to give some indicative indication through the gap that exists between the dollar cost So if you see on page 11, we've given that $60,500 per ton is the consumption cost and current prevailing cost is $640 per ton. And given that three-month lag that we talked about, depending on, you know, December, what we've purchased the inventory at, okay, that will be consumed somewhere towards the end of the March. So, end of the March, you may see, say, around, you know, 650 plus as a landed cost. And during the quarter, it might be what we purchased towards September and September, October, somewhere around that time. Thank you. And on the CAPEX, sir? Sorry, can you please repeat your question on capex? So you put 4,500 or something from fiscal 21 onwards. Is that for fiscal 21 or how should one keep in mind any time frame for that capex? Yeah, sure. So out of 4,566 and of course we will closely review this capex as we do that every year. But you can assume somewhere around 500 to 700 crore to be spilt over to FY22 and the balance will be in FY21. Because see, if you see the big capex, your capacity enhancing capex, which is VSF, VFI and chemicals, 2,795 crore, all those projects are actually pretty much completing in FY21 itself. So what you need to focus on is that that capex is going to get incurred in FY21. The balance, which is more modernization in nature, there is some flex that exists out there. So some of that will spill over to the following year. Thank you. Thank you. The next question is from the line of Naveen Sahadeo from Edelweiss. Please go ahead.

Perfect.

Hello. Yes, please. Hello. Yeah, so thank you for the opportunity. In your slide, you've mentioned the exit VHS price for the December quarter at about $1.26. Sorry if this is a repeat, but the current level is how much for the like-to-like variety? China, the market is closed now. This was the price before the Chinese New Year. So it has not opened after that. So there are more and more exports happening on China right now. Understood, so I understand as you explained that the spreads of the spinners or the yarn manufacturers as what are more important and that's where we have to like, you know, oblige them so that they survive. But just to get a sense, those spreads because this Corona and these issues are more January and February related issues. So any sense where are those threads? Have they worsened versus the December quarter? So that means obviously there is some improvement that has happened in VSS prices also. Is that safe to assume? Hopefully. That is sustainable, we don't know. But short term, yes. Okay. Okay. So fair. So I was just trying to get the same, but any indication because there is, first of all, there is capacity. When the China started, 10th of February, some places started. If it starts fast, things will normalize much faster. It's very difficult to predict at this point in time. We do not know what is happening there. So all the offices that are supposed to start today, they have started some skeleton stuff only. They are not allowing all the industries to start. They are prioritizing it. So we'll have to watch and see. Okay. And just a last question. Is there any trend at the global yarn prices? I know China is probably, you said those prices, I mean, you may not have those current spot prices, but is there any other indication of global yarn prices to get a sense how have they fared or China is the only thing we have to keep in mind? We don't monitor the global yarn parallel. I can't comment right now. It's too short a time. But it depends upon two silk pairs, Indonesia and China. So depending on how the, and it is ESF price plus delta become yarn price. So I think it all follows. Difficult to give a correlation at this point. Okay, understood. Thank you. Thank you very much. Just one clarification I would like to make on the previous question on CapEx. I just re-looked at the numbers. So F521 onwards, so F522 is more like 1750 and F521 will be the balance figure. Yeah. Thank you. The next question is from the line of Saqib Kapoor from Kapoor Company. Please go ahead. Thank you, sir, for the opportunity. Firstly, sir, as discussed also, sir, has there been any change in the pattern of consumption of caustic soda by the key aluminium player? Has there been any change which you are observing? Any specification has changed? No specification has changed but I think there is a trend which is there in terms of the epoxide which comes from Guinea where the consumption of plastic reduces marginally. But it is not yet very material in the country as of now to make any substantial impact. What has been the capacity addition in the nine months of this current fiscal? Given that number out, the capacity addition which has come up is approximately about 800 to 600. About 1,500 tons per day is what has come in the first nine months. Okay. And what has been the import quantity for the nine months? So it's about 250,000 tons, which has been the import quantity in the last nine months. Last nine months. And what was the figure for the last preceding year, sir? Last preceding year is not relevant because there was a BIS certification which was required. Okay. So those figures are not comparable as of today. now every country producing caustic soda has complied to it and import can happen from everywhere whoever takes the certification only he can apply import what I am trying to say is that whoever is the producer which can import they have taken that certification that is Now import can be received from any of the countries. There is no pending country who will apply for BIS and then they can also start dumping. That was the reason. BIS is never on a country, it's a producer. So all the relevant producers have taken their BIS. Have taken. Okay. How is the case for an anti-dumping could happen going forward? Does it make a strong case, sir? I think as of now, we are still reviewing it. We probably will get more clarity after another one or two quarters if there is any case at all. Very short point, sir. In the budget piece, the finance minister did mention about the stage guide disease part. coming effective on a much faster way. So all the safeguard is very different to then anti-dumping. So any color or any thought process you people have worked out, how can this safeguard duty, automatic application of safeguard duty can come into effect? I think at an industry level, we haven't yet discussed it at that length. But you have to look at for any of the duty structures to come in. We tend to look at today's results, whereas the decision happens in the past. So you have to always have a look at that view. What is happening today, you need sufficient evidence for any of them to work for it to go forward. So it takes time for any of these to actually materialize. Okay. Are the prices in the band of $320 for January? What prices are we talking about? Are they I'm talking about the customer side. You'll have to be a little bit more specific there. You were talking about 350. In that specification, if you could give, what is the price? At the moment, let me give you a band because it's very difficult to give you the exact prices. If you look at Northeast Asia export, the band is about from 250 to 280. at the freight, that's the local, and then it delivers, so it's somewhere around 350 by where it will reach. If you look at Southeast Asia, the band is about 290 to 320, at the duty, at the freight, and then the local freight will take it up over there. If you look at Mediterranean, or let's call it as Middle East, it's about 260 to 270. Europe and US don't send anything to India, so their prices are not relevant for us to monitor. And lastly, sir, you said that it will take 18 months, 18 to 24 months for this additional capacity that is in commercial production today to get absorbed. I am just doing a simple math of around 3% to 5% growth rate and these new capacities. What I also mentioned is the current industry is running at about 80% plus capacity utilization. And I think that's a fairly significant number which we don't see dipping going down. And in the value-added segment, sir, what has been the percentage for the nine months and what are we emphasizing for the next year? If you look at our value-added products are going at a double digit for these nine months. The last quarter has been an 18% growth for us. We expect to end the year with a double digit growth in the value-added products. And we will be covering almost all the products that our competitors are selling or we are also going for some import substitutes which our competitors are also not present. We are looking at projects which will have a little bit of substitution. Currently, we are also looking at in terms of filling up the gaps. So there are some assessment studies going on and some projects which are going on. In turnover, sir, can you give the last point? In turnover, can you give how much has been devalued for that contribution for the nine months and for this quarter? I would not have that number readily available with me. And then it's a basket. For chemical, we look at it more like a basket rather than getting into individual product categories. And for the raw material part, sir, can you give the color? How well are we going to control our cost if the prices remain in this band? I'm talking about the cost is sort of... I just mentioned that earlier that 65% to 70% of our cost is power. Correct. And in power, we all know how the government duty structure works, how much we can control or not control in public knowledge at this point in time. But 55% of our cost is actually controllable both as a combination of our own thermal power plant, group captive and renewable, which we are planning and have planned to inch it up to maybe 60% next year. And for the solid part? Salt part we've got about 20% coverage. We're looking at various business models to see how we can take it up to around 35%. And what does salt contribute to the raw material market? Salt at the moment would be about 10 to 12% at best. Under 10% and the price has come down but because it constitutes only about 8% so it doesn't really make much of a difference. I think what makes the difference is life giant has been repeating its power cost. Right, right. And the point in this Sabka Vikas, this legacy scheme, sir, it is mentioned here that I'll try to get the one-time expense of 133 crores. So, sir, what was the exact dispute amount? What is the benefit we have derived? One-time expense, we have booked for 133 crores. What was the absolute amount involved So just wanted to gauge how much haircut, if I can use the language, it's all due to the government development. So what can I, can I suggest that if you go through the details of Ultratech call as well as their presentation, I think they've given the amount of litigation that they have resolved. And in Nassim's case, it was, you know, we did not have many, you know, cases. But we did make use of the scheme. We had a cost of only about one crore that we had to give to the government to solve almost about 60 cases, constituting about 11, 12 crore. So we didn't have many cases in our contingent liability any which ways in case of indirect taxes. Any idea about how are we viewing our investment or further investment in our idea of the associate company? So we think the case is still subject we have to wait for the final Supreme Court judgment on this and on the basis of that what VIL decides as the next course of action when we come to know that then only we will be able to take any decision on this. That means we can put further cash if and when needed. It could be a supportive shareholder. If the debt is materialized, we can go for our share of paying it. What is the thought process behind it? It's early to have any thought process on this. I think in the previous calls, I have repeatedly mentioned the philosophy that we are following on VIL investment. So since then, nothing has changed and there's no further development. Excuse me, this is the operator. Mr. Kapoor, may we request you to come back in the queue for a follow-up, please? Thank you. The next question is from the line of Pratik Kumar from Antic Stock Broking. Please go ahead. Yeah. Hi, sir. Thanks for the follow-up. Sir, can you give the VFI segment revenue in EBITDA for the quarter? Yeah. So the revenue was 446 crore and EBITDA was 82 crore. That's including both half facility of Viraval as well as Centurion. Sorry, how much? 82. 446 crore revenue, 82 crore EBITDA. All right. And, sir, I think this was discussed in the previous question. So you had mentioned on page 15 of your presentation this ECU prices of 27,800 rupees for Q3. What was the exit prices for ECU for Q3? Q3 echo, like we've mentioned, was 27,805. That was for the quarter. So the exit price in December itself. So the price for December is somewhere in the range of around 27,500 odd is the approximately So, yeah, no, actually, yeah, so it was 28,500 roughly, so it had improved a little bit. Oh, it had improved, okay. And regarding the slide on pulp, so we have seen, this is slide number 11. The orange line represents what is the consumption factor, prices, what we have for our operations. So the price has, what we are consuming has already split from 67 to 60,000 this quarter on an average. So the impact of savings related to pulp are already there in our numbers. Is that correct? The market price is much lower right now. Pulse has been a declining price over the quarters. We have been having a lag because of the inventory and the previous quarter pricing. Today as we speak, the price in the Global market is $40 per ton. You have to add some import duty on that, add some local freight on that. So I think there is room for prices to go down. So I mean what this orange line suggests is our purchase price or our consumption price? So they should match. Right now your market price is lower than the consumption price. Orange line is the consumption price. I mean, consumption price which we have already, I mean, we would have purchased at some price and it would have fallen further. Somewhere these two have to merge. Then eventually get normalized and the prices become flat. Okay. And just regarding this, you mentioned about 1.3 million ton capacity. So this includes the capacity which got commissioned in December, which is 0.2 million ton as you said? No. This is 1.3 in Indonesia plus China last year. Another 250 got commissioned this year. 250 KT. So, it was in January. And regarding your capex, which I mean large capex, the number which you said 1750 crores is still over to FY22, which means 2700 will be spent in FY21. So, what is the, which quarter we should expect the VSS capacities to hit markets, new VSS capacity? We are saying the first line will come in Q3. First line will come in Q3, second will come in Q4. And regarding this closure of capacities in China, so yesterday or the weekend there was this news flow that the ban has been extended to 1st March. Is that correct? Or, I mean, as you said, they have started opening capacity. You see, they are finding the vulnerable areas. Some areas are open today. But for the namesake only. So they are saying that, okay, people can come to the office, pick up their laptops, etc., and go back and work from home. Some factories are allowing the local people to come and work. The upcountry guys can't come. People who have gone on holiday cannot come and work. They'll be quarantined. So there's a lot of things happening. So I think it is, they want to tell the world that we are starting. That's all. How much time will that take is all to be found out. Right. Thanks and all the best. Thank you. The next question is from the line of Gaurav Ratavia from Morgan Stanley. Please go ahead. Thanks for the follow-up, sir. A little bit of a hypothetical question. Given next year is a peak CapEx year for us, at the current profitability, do we hit the threshold mark of leverage ratios which are required to maintain the credit rating profile of the company or become closer to that mark? We'll be well within the mark. I don't think we'll have any issue in terms of credit rating because of the leverage that will go up due to this capex. Sir, can I ask a little differently? In other words, does it mean that room for making investment in group or associate companies will be limited given our priority will be to maintain a credit rating profile and At the current profitability, that room automatically becomes very less because our debt ratios will increase further. Yeah, I think you're right that our room does reduce and because we want to maintain the rating, there will be limited appetite to put money. Understood. Thank you so much. Thank you. Ladies and gentlemen, that was the last question on behalf of Grasim Industries Limited. That concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you. Thank you, everyone.