Grasim Industries Limited

Ladies and gentlemen, good day and welcome to the Q2NH1 FY21 earnings conference call of Grassum Industries Limited. We have with us today from the management, Mr. Dilip Kaur, Managing Director, Mr. Kalyan Ram, CEO, Global Chemicals and Group Business Head, Fertilizers and Insulators, Mr. Jayant Dua, Chief Executive Officer, Chemical Division, Mr. Ashish Adhukia, CFO. As a reminder, all participants' lines will be in 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 start and zero on your touch-tone phone. Please note this conference is being recorded. I now hand the conference over to Mr. Ashish Adhukia, CFO. Thank you, and over to you. Thank you. Good afternoon to all the participants. I'm pleased to mention that we've had a good start to this Diwali week with some few positive news. We've announced two important transactions over the last few weeks which is in line with our strategic objectives of one, enhancing focus on core business and two, Increased presence in chlorine derivatives, improving our WAPT contribution. In addition to both these announcements, our financial performance for Q2 witnessed a reversion to normalization from the sequential quarter. So let us start and dwell into the fertilizer transaction first. I think we've got a couple of slides in the presentation as well. It's probably slide 11 and 12. The board of directors of the company have approved the divestment of fertilizer business to Indian subsidiary of Indorama Corporation. Indogulf is one of the largest urea producer in India with a capacity of 1.2 million tons per annum. It is also one of the most energy and efficient plant in the country. We have a strong distribution network spanning across northern and eastern India, and it has a well-known brand called Shaktimaan. The decision to divest the fertilizer business is a strategic portfolio choice. Given the depth and scale of Grassim's core businesses, like fiber and chemicals and textiles, There was limited strategic rationale to stay invested in a non-core business. We ideally like to maintain exposure in businesses that are leading position in addressable market or that have strong growth potential. In addition, payment cycles for large receivables in case of fertilizer are long, which leads to low return on capital employed. Utilize the funds to evaluate growth opportunities in existing businesses of viscose and chemicals and textiles. The business will be transferred to the buyer for a cash consideration of rupees 2,649 crore. This is basically the enterprise value. This consideration reflects the strength and future potential of the fertilizer business. This value has been arrived at on the basis of working capital as on June 30th, 2020. The broadly subject to other conditions, if the working capital changes at closing, which is expected to be in nine to 12 months timeframe, the value will be adjusted to that extent. The second transaction, you know, is the one that we announced a fortnight back, which was a collaboration with Lubrizol. This collaboration is part of our long-term direction to bring in world-class technologies to India and additionally complements our growth strategy of improving our chlorine integration. Lubrizol is a market leader in CPVC globally and in India. Lubrizol would set up a state-of-the-art CPVC plant at Vilayat of approximately 100 kTPA capacity in two equal phases, along with the zero liquid discharge system. Grassium will provide land, utilities, and materials, primarily chlorine and hydrogen, to this plant. Gratium will operate and manage the plant operations for an annual commercial consideration. We expect the plant to be commissioned in the second half of FY23. While Lubrizol brings capital and technology, Gratium brings extensive manufacturing expertise. CPVC present will be transferred to Luprizol on an exclusive basis. Post-commissioning of both phases, we expect our chlorine integration on overall basis to improve by around 5%. Overall VAT EBITDA per ton of chlorine is also likely to improve given this transaction. Now, coming to results with the bounce-back in September quarter and some revival in the business sentiments, the Board of Directors has taken decision to continue with the chemicals project at Vilayat, Rehela, and Balbadhapuram, with the commissioning ranging from quarter four, FY21, to quarter one, FY22. Therefore, we have revised our capex spend to rupees 1,852 crore from rupees 1,615 crore that we had announced in the previous quarter. The capex spend amount stood at 279 crore in half one. of FY21, and the balance will be spent in the second half of FY21. On results, our financial performance witnessed a strong rebound in September 20 quarter, making us confident that the improvement in business fundamentals is here to stay. The capacity utilization of BSF business improved from 26 percent in June quarter to 88% in September quarter. Some of these figures are already there in the presentation, the initial slides. The capacity utilization of our caustic soda plant improved from 49% levels in June quarter to 80% levels in September quarter. The consolidated revenue and EBITDA for the quarter stood at 18,394 crore and 3,660 crore for quarter two. reporting a significant improvement both on quarter-on-quarter basis as well as on YOY basis. On a standalone basis, revenue improved to 3,438 crores from 1,940 crores in Q1. EBITDA also improved significantly to 680 crores in quarter two from negative 46 crore that we saw in quarter one. The sequential deleveraging in consolidated as well as standalone net debt has been on account of reduction in working capital and improvement in EBITDA. Our consolidated net debt stood at 17,295 crore, and standalone net debt stood at 2,325 crore. and 29 crore in quarter two. The net debt to EBITDA stood at a very healthy level of 1.46 times during the quarter on standalone basis. VSF demand witnessed a strong recovery in domestic and overseas market. The demand for grey fibre remained strong with supply falling short of demand. The share of domestic VSF sales have touched the pre-COVID levels. On page 16, the domestic VSF realization witnessed a sharp reversal from start with the demand revival in China. The VSF plant inventory in China fell to 16 days in September from the highs of 45 days in April. The capacity utilization for Chinese VSF plant improved to mid-70s in September from around mid-60s in April. The VFY capacity utilization averaged around 46% for quarter two from the low double-digit number in quarter one, with some demand revival from textile hubs in India. The VFY business generated a revenue of 228 crore and EBITDA of 14 crore in quarter two out of the viscose total EBITDA that you see in the presentation. The fixed cost savings in viscose has sustained. The fixed cost optimization measures led to savings of almost 116 crore in quarter two in comparison to average FY20 cost. Caustic soda operational performance was better in quarter two. The financial performance was driven by better utilization levels, easing of input costs, and strong WAC performance. However, in realization front, Overseas markets have been overwhelmed by excess caustic supply driven by chlorine demand in PVC and other derivatives. Caustic soda price CFR in Asia dipped below $250 level with domestic prices mirroring the weakness. The chemicals business reported an EBITDA of 187 crore in quarter two a significant increase from previous quarter. The caustic soda demand picked up on account of pickup and demand in textiles and paper segment. The chlorine value-added product demand remained upbeat during the quarter, driven by demand from health and hygiene, drinking water, and other industrial segments with EBITDA witnessing a double-digit sequential growth. The chlorine realization remained positive during quarter two and cushioned the fall in the eco-realization on back of easing caustic prices. On page 22, fertilizer business reported an EBITDA of Rs. 60 crore driven by lower fixed costs and better which is non-urea sales. Product business contributed around 32% of overall fertilizer EBITDA in the quarter. On efforts on the sustainability fronts are actually paying off. Grassland was ranked ninth in the list of ET futures case, seventh responsible business ranking on sustainability and CSR. In a very significant outcome in sustainability, BFF business received the number one ranking and has been accorded with dark green shirt in Canopy's Hot Button Report 2020. Our inherent financial strength, our operational excellence, and diverse product portfolio with cement, financial services, viscose, and chemicals We are well poised to sustain leadership across our businesses with rebound in the economic activity. I would now like to hand over to the operator for Q&A, and we've got Dilip, Kalyan, Jayant, and others on the call to answer your questions. 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 press star and 1 on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask a question, please press star followed by 1 on your touch-tone phone now.

We have a first question from the line of Sumangal Nivathia from Kotech Securities.

Please go ahead.

Yeah, good afternoon and thanks for the opportunity. Congratulations on the good recovery and also the divestment.

First question is on the divestment. So we're expecting nine months to complete that. How about the non-core assets? Can we expect to divest the insulator, the textile business also on account? to move further away from non-core and focus PSS chemicals? So there is no current plan to divest any other business. I think it's fair to say that from time to time, based on our strategic plans, we will evaluate both purchasing and sale of businesses. So currently for insulator, there is no such plan.

Understand. Ashish, with respect to Lubrizol, is it possible to share some more color?

Because it looks like it's more a transaction where we are locking in customers for long term. Because in the plant you shared that we are not going to invest anything from the drafting book. So is it possible to share how exactly will we benefit in terms of some financial aspects? Yeah. So let me give you a brief overview again, which I've kind of covered in the speech. But for the sake of repetition, it's important that I clarify this point. And then I will request Kalyan to add anything required. So our whole objective is that, A, chlorine should not become a bottleneck for overall production. caustic business. So the evacuation of chlorine is extremely important. And we need to make sure that while the objective of chlorine evacuation is met, at the same time we make money out of the chlorine derivatives that either we produce on our own or we produce along with a partner. So we make adequate return on the chlorine that we are trying to evacuate through chlorine derivatives. So with that objective, we had a discussion with Lubrizol, who's the leader in CPVC, and within the premise of VELIAT, we will set up a facility, the CapEx of which will be met by Lubrizol, And through the pipeline, we can supply chlorine to this facility. And we will also be able to supply hydrogen to this facility, which is also a requirement. And we will run the plant and we will basically on a fixed annual compensation for running the plant and the cost will be passed through. So that's the broad economics on the basis of which it will work. It will be included in the financials of the cost of chemical specific appropriately as per the accounting standards. Kalyan, is there something that you would like to add Yeah, so James will add a bit more. All I can say in terms for overall chloralkali strategy, globally, it's always chlorine-driven and caustic is more like a byproduct. And in India, it has been so far very caustic-driven and chlorine was there to evacuate. But at some stage, we believe that India will also be something very similar to international way of chlorine driving or chlor-driving with Caustic. And hence, we had very clear strategy of segmenting chlorine movement into three parts. One is our own derivatives production. Second is to have enough pipeline customers so that the tunnels won't move. And three is bring alliances in technologies or to enable that there is a lot of, you know, we cater to avoid import substitution. That would help substitute imports. Those were the three we were looking at, and this is part of that alliance. Jay, do you want to add a bit more? No, I think, Kalyan, it's all covered. The only thing which I will probably reemphasize is that one of our objectives is, over time, to get a much larger chlorine integration So that, particularly in India, we will see that both caustic and chlorine will run together, and you produce literally 0.9 for every ton of caustic produce. So we have to look at it as co-products and plan accordingly. And the way you described the three of them, I think this is the first step on the collaboration one.

Understood. Thanks for the elaborate answers. I have a few questions more, but I'll get back in the queue.

Thanks and all the best.

Thank you, sir. We have next question from the line of Gunjan Trithyani from JP Morgan. Please go ahead.

Yeah, hi. Thanks for taking my questions and congratulations on the divestment. Clearly, this is something which we have been looking forward to, so comes clearly as a pleasant surprise. On the core business Now, VSF, I mean, there's a significant shift in the commentary that I'm reading from what you said in the introductory comments and even what Lenzing seems to be suggesting. So is it fair to say that from a cycle perspective, you're feeling much better now and directionally we should continue to see the pricing improvement sustained? Or this is like, you know, you're coming after, you know, the recovery in China is coming after a gap. So there is an inventory reduction which happened from 45 days to 15 days and hence the pricing move is more shortage-led. And when the production normalizes, you may see the, you know, prices going sideways. If you can share how you're feeling about the cycle on the VSF.

Gunjan, the good thing about this recovery is While the inventory has come down, the OR has gone up. The plant capacity utilization has gone up. So that itself tells you that there is a healthy demand. So it is basically a demand-driven recovery. It is not supply-side recovery. So the China OR, it was around 67%, has gone to almost 80%. And despite that, the inventory has come down from 46, 45 days to now 12 days at this peak. Every day it is kind of holding there. So I think it's not a flash in the pan. And why we are saying it is a structural recovery, two things. The cotton discourse delta which I spoke to last time became even higher because I think what the world was expecting that the cotton prices might go down. But the cotton production has been a little less in U.S. And China is again buying a lot of cotton. A lot of speculative activity has come into cotton for various reasons. So after the, while the season has started, the cotton prices are going up, going down, have gone up by almost 2,000 RMB. So the difference between cotton and viscose became more than 4,000 RMB per ton. That is something at an all-time high. And whenever that happens, the shift from cotton to viscose starts. So what we understand is a lot of cotton spindles have converted to viscose. So that has led to this demand surge. India also same thing is happening. India will be exporting one of the largest volumes of cotton this year. They might do million ton of cotton export. And the NSP also, government is enforcing to make sure that they get better realization. So cotton prices in India also are likely to hold. And they were obviously, because of late rains, some cotton damage has been deported from Gujarat and other places. So we believe that yes, there is a On the ground, there is a shift because of the inter-fiber dynamics. The second big driver has been China and domestic demand. Good thing about this whole recovery has come from Chinese domestic demand recovery, not the export recovery. And exports are still low. So to my mind, that makes me feel that China might sustain because the government is looking to make sure that the domestic demand sustains. The delay could be if the second round of COVID happens in Europe and the US and the export demand gets impacted. So in India, recovery happened on the two grounds.

The domestic demand, where this may continue. And I think the government is doing the right thing. And the tech sellers also come under the 10th champion sector. So I think the Indian demand should sustain.

But the export demand might get impacted if the COVID cat is off. That's the only thing that I can think about. So we believe at least for next couple of months, things should sustain and then The next discontinuity will come in Jan, Feb, when we know how the COVID is taking shape, how the vaccine is developing, what happens after the new year. So we'll have to look at that. That's what we'll look at.

And there is no worry on the supply side, right?

No, there is enough capacity.

India, we are stressed for capacity. Not from the capacity, I mean from the additions perspective because that's intermittently an issue that you see Chinese adding. So is there any big capacity which is in the pipeline?

No, no, no. Right now there is no big capacity. The biggest one in the pipeline is our capacity. But that will be only India for India. So that is not going to impact the world as much as we think about it. Otherwise, there is a very minor 300-400,000 tons of capacity during the year, hopefully.

Okay, got it. And the second question would be on the caustic side. Now here, of course, the chlorine initiatives are really commendable and that's reflective also in the value-added products that you're talking about. But on the caustic prices, the pressure is still fairly high, right? I mean, How should we think about, you know, any normalization there? How significant is the supply overhang? And this supply overhang, if you can just clarify, is this just global or is there a domestic issue as well? I mean, do we see too much overcapacity in domestic market also?

So, Kunjan, this is Jayant. Let me take that question more from a domestic perspective and then we'll go to the international one.

From a domestic perspective, I think the capacity utilization like in which goes for all the manufacturers of caustics

has been good you know from the lows of 40s of q1 or 50s of q1 i think largely every player has now come to around 80 80 or 82 percent so clearly there is a demand uptake in india sites particularly i think the gap which was there in the textile sector in q1 has got covered up in q2 and also the paper demand has also ramped up substantially so I think from a capacity overhang, while new capacities have come in India over the last one, one and a half year, but at the rate at which the capacity utilization is growing for everybody and it sustains at 80% to 85%, I think that is not going to be the overhang in the crisis stabilization in India. I think India is predominantly impacted today on the east and the west coast of supplies coming from Southeast Asia, Northeast Asia, and Middle East. that is what and these are the largest markets of caustic consumption in east predominantly the alumina side and west is predominantly when you have Maharashtra and Gujarat on some of the textile side so currently the Indian prices are subdued and are actually in line with the global prices literally we expect that this will continue for some time however If the textile demand comes up in China, like Dilip was talking about and some of the other parts, when the caustic demand will go up over there, you could see stabilization on the Indian front also. But I think it's a little too early to comment on that. Overall, the caustic summary is demand is increasing. It's got healthy in India. There is pressure on the international prices, both from Northeast Asia, Southeast Asia, and Middle East. Now we have to wait and watch how demand picks up in some of these countries on the caustic side to see the normalization.

Okay, got it. I'll join back with you. Thank you so much.

Thank you. We have next question from the line of Amit Murarka from Otilal Oswal Financial Services. Please go ahead. Hi, good afternoon. Thanks for the opportunity.

Just first question on the fertilizer sale. So you say that the working capital adjustments will be done when the transaction is closing. So let's say there is a release of working capital either due to government receipts or all that. So does that mean that the cash receipt to you will be higher than the 2,600 odd crores that you have disclosed now?

Sure. So no, that's not correct. So suppose there is a... released from government while the business is in our hand. And the working capital, because as a result of that release, comes down. So because we've already got cash against that receivable from the government, therefore the buyer will not pay that much cash. So suppose, you know, hypothetically, if working capital is lowered by, say, 50 crores, Okay, because that has been paid by the government to us. So therefore, the realization which comes down by 50 crores. So we are going to be in that sense cash neutral from the purchase consideration point of view.

So in what scenario will the purchase concentration then change for the working capital?

So if they don't pay us, and the outstanding subsidy goes up by 50 crore, right? So if the government doesn't pay us, and we show in the books that capital has gone up by 50%, 50 crore because of outstanding receivable, then the buyer will pay us that 50%, 50 crore, sorry. And the purchase consideration goes up by 50.

Yes.

Okay, understood. Sure. And so you expect it to close in eight to nine months, right?

And with this, like, the entire fertilizer business is out, right, even the trading business and the NPK fertilizers that you have?

Absolutely. So we will see the existing fertilizer business will entirely be sold to them. The brands, distribution, all the products that we have, and we have customized fertilizer capacity of about 100 that will also go along with, it's all located in one place in Chukchi.

And second question is on the Lobisol, JV. So you say that it's a costless margin model.

So given that there is no CAPEX involved from your end, so that margin will be a fixed production-based margin or will it be some annual agreed amount that they will pay you?

It's a latter. It's an annual agreed amount.

Oh, okay. And any sense about the quantum that could come from there then?

No, I think we are not disclosing the amount. You know, whenever it completes, it will be part of the VAP, the WAP chemicals, WAP EBITDA.

And the working capital of running the business will be on you, right? Yes.

Yeah, so that's true, but, you know, it's a minor detail in the transaction.

Sure.

Thank you. And also on the VSF outlook that you're sharing, I mean, it seems like things have turned around very well now.

So could you, like, help us understand where are we right now on, let's say, on a spot basis on the

on a margin front versus, like, what has been disclosed in the 2Q results, I guess it should have improved substantially because the 2Q there was only a gradual recovery which would have now stabilized. We don't need to, like, I think we can give a trend and not really... Yeah, yeah, yeah. Just to give you a broad trend, as you rightly said, the bulk of the Q2 was a demand recovery story, so the volume went up. Toward the end of the quarter, from mid-September to now, the Chinese prices, which used to be around 8,800 RMB, have gone to 10,700. They're going to buy 25%. So the full impact of this price recovery will come in subsequent quarter. That's what I'm saying. So it happened toward the end of the quarter. And that has been holding. Our price is broadly flexing around this level. It's about $1.4 a kg kind of a thing in China. okay and and one one because one character that is also is getting accompanied with the rising input and the pulp prices have started going up not as not by the same level but some forming up is there the promotion states are going so one has to but overall there is a positive trend on pricing okay thanks i'll come back in the queue

Thank you, sir.

We have next question from the line of Chirag Surekha from DSP Mutual Fund. Please go ahead.

Sir, thank you. My questions are around the net debt. Amazing job done on working capital and they've really squeezed out the cycle and generated cash flows. So I just want to know, is it more one-off or sustainable? And in the second half, given the enhanced CapEx and the fact that the working capital cycle has already come down a lot, would you expect the net debt to increase somewhat? I must say the number still looks really strong. Thank you.

I think it all depends on the EBITDA that you generate. So let me just address the capex bit first before I go to working capital. So it depends on the EBITDA that you generate in the second half. And if you are able to meet the capex requirement, you know, substantially out of the EBITDA, then that is unlikely for, you know, debt to go up. So we will have to wait and see what happens to EBITDA. On the working capital front, you know, I think working capital, if there is readjustment in the cycle, okay, then obviously the new cycle takes over and therefore there will be no further big sums that you will be seeing from working capital coming in. I don't think we should assume that this kind of a release of cash flow from working capital will continue. It's tough to say, but this is more likely to be one-off because of the readjustments of the cycle. When things, you know, also due to COVID, there is some volatility, right? So if we go back to earlier payment terms, et cetera, all those kind of things, that's also a possibility when things normalize. So, you know, it's very difficult to give guidance on working capital.

Fair enough, sir. Thank you very much and happy to be talking to you also.

Thank you. We have next question from the line of Nirav Jumudia from Anvil Research. Please go ahead. Good afternoon, sir. Sir, I have a two-part question. Sir, in the last presentation, Q1 presentation, you have mentioned that our VAP EBITDA has improved by 82% on a quarter-on-quarter basis. So if you can just indicate the same or quantify the same for Q2, that would be helpful. So in case of VAP improvement, we have mentioned in our presentation that the chlorine consumption in VAP increased to 30%. So it is up 3% sequential. Correct. So I think in quarter one, of course, there was a significant decrease improvement uh because of the uh you know quarter one was characterized with the improve improvement in chlorine but sir you mentioned in your opening remarks that uh the growth in uh on a quarter on quarter basis for where it was in double digits so if you can just give some sense in terms of what can be that figure? So like last quarter, you mentioned about 82%. So some sense in terms of what was the improvement from Q1 to Q2?

Let me take that question in a different way.

Yeah, sure. Largely your first, the Q1 EBITDA was largely given in the business side pre-batch.

Correct. Because that is when the entire focus of the entire country was on hygiene, sanitation. Correct. So you saw a significant ramp up on the chlorine VAP site.

Now, if you look at Q2, it is a far more harmonized business because your caustic, which was subdued EBITDA in Q1, is actually now substantially up.

So while there is a delta of chlorine consumption, but your VAP EBITDA per se will not show an 82% jump because it had already reached a very high level in Q1. It has sequentially gone up around 5 or 7% up, and it's maintaining itself. So you're not going to get quarter-on-quarter ramp-up of that jump, because it's come to a sustained lesson, and now the larger part of the EBITDA is coming from the caustic side. Okay.

The double-digit, when we are saying double-digit increase on quarter-on-quarter basis, This is actually more than 20% increase. That's what I'm saying. It won't jump to 80. It will be now like normal regular business. Yes.

Okay. And so the second question is in VSF, on what parameters do we consider our products to be speciality? So like are there only one or two competitors only for that particular product or the emphasis is more on the product innovation to our R&D. So what are the parameters do we generally consider when we consider our products to be specialty? There are two or three parameters. One is the delta utilization.

So when I say a specialty, each one of them has a much higher premium over . In fact, we categorize based on the premiums.

They have a premium of almost $80 to $1 over the nominal response. And you're right. When such a good product has a premium, they have to be less producers. Not everyone can make modal. So in the world, only three people can make modal. So out of the 25 or 26 players, only three can make modal. Same way it applies to Excel. So one is the price. Second is, yes, the technology has to be very... and very controlled, so I know how to become important. So, yeah. Excel is something you have to have it. There's some specialty because four or five people in the world can make it. Technology is a big differentiator. So when I say I do X percentage of specialty, I have got a know-how which not everyone can.

Then comes even specialty on a specialty. But we are now going to that level. So, like non-woven is a specialty.

Now, we are developing non-woven for specific applications like fire retardant. Now, there the premium doubles. So, from a half a dollar premium, the product we have made can go four dollars. So, there are niche products. They can't be low volume. So, there are base products, intuition products which are specialty. Now, then there are niche products where premiums are very high but the consumptions are not so, so big, so fire retardant products, have these antimicrobials. So those are the kinds of products we're making. So I think our focus is to go more and more on these child teens and adult products. Correct. And it's a related question to this is like, if you can, if you can just also explain along with this, that how has been our process innovation developed over a period of time? So if we consider, let's say 2015 and 2020, So how the process innovation has really helped us in terms of reduction in part-time consumption of finished goods or power consumption part-time of finished goods. So if you can just explain something on that, that would be very helpful. So there are two. So there are two types, process and product. Correct. Product innovations are for these VATs. Correct. I told you I'll briefly cover. The process ones are the most core discourse part. Now the biggest innovation we have done, it has been a real value accretive. not many in the world can do like caustic convention is the second biggest cost for making viscose of pulp okay historically the cost convention used to be uh yeah we have been able to bring down significantly through a process where we are going to the basic chemistry why i am requiring so much caustic if you go by the sheer chemistry you require much less caustic But then there are physical considerations. So our innovations have built up what caustic does and like a validation. Caustic consumption has been a major focus of what we call it a low caustic process. The low caustic process. The second has been consumption. There has been a significant improvement in the pulp consumption pattern of this course. So again, better efficiency management conversion efficiencies and those kinds of things. Okay. So, then there are like an end of the world. You can optimize the various additives and chemicals that are required. So, there is a lot of work which has happened and as a business, we have unlocked a lot of cost in terms of five years on this innovation. The second part of innovation is developing the value-added products.

Okay. And I think that still gives

This is the same kind of viscose. We have gone into microviscose. Quality breaks up. Customer pays you that value for that. We are doing something on what we call like IPA. So you get better fibers and you get better quality of the product. And the consumer should pay more for you. So with the same product, we seek to give you better value creation. And third, creating products for new applications. With antimicrobial, with the environment platform, the lowest emissions per ton of product. So we are getting a huge premium for that product. It was a zero ton product about a year back. Today we are selling 100 tons per day of that product. The same risk cost made with more environment-friendly products. processes and inputs. And you better bring them for that. So that's how the whole has been. So product innovation, process innovation, and sustainability innovation. These are three legs for us. Okay. Thanks a lot for the opportunity, sir, and festival wishes to the entirety. Thank you so much. Thank you. We have next question from the line of Abhinav Bhandari from Nippon India Asset Management. Please go ahead. yeah thanks for the uh opportunity uh i just had two uh short questions one is on this uh low result collaboration what is the timeline for this 100 ktpa capacity to be starting commercial operation yeah so like i mentioned it will come in two phases uh and that will complete by age two of FY23. Jayant, any specific on which phase that... I think you're right, Ashish. The phase one will come up during the second half of 23, and once the phase one stabilizes, then the discussions for this way forward until the phase two will start. Sure. And the phase one would be what, half? Half of 50 KTP? Yeah, yeah, yeah. Okay, got it. And second question was on the fixed cost saving that we have seen specifically in the second quarter. And as you highlighted, versus the average quarterly rent rate on the VSF side, there's almost 116 odd crores, and on the caustic side, 50 plus odd crores. So this is expected to continue in the second half also? In the second... So see, I think... You know, fixed cost, like I've maintained, you have to see from point of view of two elements out there. One is large would be employee and there is repayment and then there are others as well, like admin, et cetera. So if you look at the two big categories, employees, So employees is likely to sustain till you reset and give further increments, et cetera. But we've also taken the number of employees, et cetera, as well. So there is likely to be, definitely the table has come down from previous levels. And that will certainly sustain. When it comes to repair maintenance, so you know, that can also be divided into what is definitely required for the upkeep maintenance of the plant. And then there is also, you know, improvement in plants and, you know, spares, et cetera, that are, you know, you postpone the decision where replacement is not so imperative. Okay, those may come back. So repair maintenance is something that may come back into the cost. Sure, sure. Got it. On the CAPEX side, the earlier big expansion program that we had, so you guided on the chemicals projects which would start on the CAPEX front. On the other part, I mean, given that the VSF prices are also better now, what are the pointers or what are the catalyst, you know, post which we'll be taking that decision? VSF in the last quarter itself, I think, you know, so amongst all the strategic projects, capex projects that we had planned, which were ongoing till FY20, We had to pause all the projects in quarter one due to COVID. And in quarter one, towards the end, then we decided that all the projects will remain paused other than VSF. So amongst the strategic projects, that was what was cleared by the board. Okay. VSF project continues to be... you know, being executed and will be executed by quarter towards probably end of quarter two in FY20, basically next year. Got it. Got it. Sure. Sure. That's pretty much. Thanks and best wishes. Thank you, sir. We have next question from the line of Bhavin Chhera from Inam Holdings. Please go ahead.

Yeah, good afternoon, sir.

Very good set of numbers and good to see the non-core fertilizer been divested. So first question on this fertilizer dividend, if I understand correctly, the subsidy receivable from government would be close to 1,100, 1,200 crores, which is the part of that working capital adjustment as on June 30th.

For June numbers, we don't guide, give guidance of working capital breakup, etc. If you look at the subsidy numbers to give you some guidance, overall for the year, the average outstanding is somewhere around 1200 crore for the year. It actually depends on when the closing happens. For to know where would it land. And the trend of subsidy is always that typically March and June quarter is the peak, and September and December quarter, they are at their lowest. So that trend we've always seen. March and June quarter to be the highs and September and December quarters to be the lows. So June quarter, by that logic, would be on a higher side and September and December quarter would be on a lower side.

Right. Just to understand, sir, EV on these deals, subsidies are as good as cash if you stop doing the business.

So that number has to be received someday, maybe over 12 to 15 months. So if I net off that number, roughly we are getting 13, 1400 crores on divesting the fertilizer business. Is that understanding correct? It's a business sale. So I think we should look at it from the point of view of what number has been ascribed for the business, which includes the working capital. So that's how we would look at this number.

Okay. My next question is on the VFF business.

Just to get clarity on this speciality, if my understanding of the capacity is correct, out of this 5,87,000, roughly currently 26%, 27% is the speciality, including the courage line and including the model capacity. yeah that's the number but we can go up to you see these are flexible lines in some for some specialties so i can i should we have made multi-purpose lines which can do not in all cases in some cases which can do a specialty and a commodity product also so the best case i can go is about 35 best case on current capacity would be 35 and uh what would be on the expanded number which should be ready by next year? Any incremental expansion is also happening? Yeah, the expansion also has the flexibility to make some specialties. So, we will maintain the ratio. Maintain the ratio. But you see, the good thing is, let me tell you, one is a product specialty, one is a packaging specialty. Sometimes, what you call a commodity may be a specialty, but it gives you good price. So we have to look at that, how you do your planning. So we design lines in such a way that they can do both in some cases. So you're saying 30% odd would be the number in terms of flexibility. And as of now, you are doing 15%. So we have a long way to grow. That again, look, last quarter was much higher. What happened in this quarter, the demand surge has been so high. for the gray fiber in India, which is a very, very high value. That's what I was telling you. It is far more attractive for me to sell in India than export a specialty to China. So a lot of my capacity on exports has been diverted to the gray. That's why. It is not that I don't have market. We are committed as Graphene to supply and feed the local market 100%. That's our commitment to this country. So we are deliberately cutting on some of those specialties and exports to the local market till my new capacity comes on stream. Had there been no COVID, my new capacity would have been on stream by now, and I would have been home.

Right. And if I see your CAPEX chart and the capacity chart which is coming in, your majority of the expansions are getting over by next year, quarter two, right?

Yeah.

Because you're saying FY22 and beyond also, but if I see the completion dates, most of the completion dates is around quarter two, FY22. It will be 1.5 chlorine and 0.8.

So is there anything previous projects would be pending beyond that date?

Yeah, so I think the, you know, BD Puram Phase 2, okay, that will be pending. So, Malpada Puram Phase 2.

How much is that capacity?

That's again, 50% is coming now, 50%. Yeah, so equally divided.

Okay. And my last one, sir, on the modal premium that you gave, you said roughly around 0.8 to $1.

That's an indicative number. Don't hold me for it. No, no. That keeps changing with the model.

Yeah, it keeps changing. But just to get, if my understanding is correct, the entire speciality portfolio normally gets between 0.8 or 0.7. No, no, no. And modal is over and above that.

No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no. And those niche specialties they were selling you.

And that you are saying is roughly around a dollar over grain?

That will depend. They can vary much more also. But they are very, very small quantities.

Okay. Thank you, sir. Thank you.

Thank you. We have next question from the line of Naveen Sahadio from Edelweiss Securities. Please go ahead. Yeah, thank you for the opportunity and nice to see a good recovery in the quarterly performance.

Just one question, only on your capex. Q4 presentation had mentioned the total capex outlay, you know, of beyond 20 again.

Beyond the 520, the total capex plan was a little under 5,000 odd crore rupees. And of course, there were some divisions for FY21.

I think the latest number, if I see it correctly, it's around 1800 odd, 1800, 1850 crore is what we plan to spend in FY21. Now, given... the capex for FY, I mean, you know, capex timeline for VSF is around Q2 for the bulk of the capacity to get commissioned. What kind of amount should the pencil learn or would you guide as total capex outflow in FY22?

Sorry, FY22, you're saying?

Yeah, 21, you've already said it's 1850. So I'm just referring to your Q4 FY20 presentation with a total capex of 5,000 crores.

Yeah, so I understand the question. I think, see, this number of 5,000 crore that is there in Q4, I think. Okay, we always look at from the point of view of what has been sanctioned by the board over a period of time and what is outstanding sanction that is there from the board, right? And from that outstanding sanction, what we give in the right side of the table is what has been spent and what is expected to be spent. And therefore, from the sanction, whatever is the balance amount is always beyond that year. So suppose in your examples, out of 5,000 that is yet balance sanction that is there, if I'm talking about 1852 we spent this year, then the balance will be spent over next two years roughly. However, we may decide that out of that sanctioned amount, some of the spend will not happen at all. So therefore, that's why this time, last two quarters, we've stuck to what we believe will be the spend for this year. rather than trying to give you a figure for 22 and 23 as well. And because of this whole situation of COVID, we had decided that any which ways we would look at the CapEx plans very closely and keep reviewing it. So once there is more clarity, if we can provide 22 and 23, or whatever, 22 onwards, we will try and give that and provide that. As of now, I think we would like to stick with the guidance that we have given for FY21.

Sure. No, because just out of the total 5,000-odd crore capex, a significant amount was towards modernization and maintenance. So given this test situation, I think that kind of capex can wait is that Yeah, absolutely.

That can wait. That could be dropped. Both can happen. So, yes. So, that is what the plan would be. But I think the point is to focus on the strategic capex, right? The capacity enhancing capex. Those capacity enhancing capex, we have given a full clarity on. You know, and the balance, modernization, capex, et cetera, can, you know, is something that is more under our control. So we will decide accordingly. Sure, sure. And just one question. I'm sorry if it's a repeat. But how much were in DSF volumes or either in value, how much were exports contribution in this quarter?

Yes.

Yeah, so exports from the previous quarter, as you have noticed, has come down. So in this course, it's 18% of sales that is in volume terms, 18% of sales in the volume terms that is there for, you know, in exports now. In the current quarter, in Q2, right? Yeah, in Q2, yeah. And that's like a steady, that's like a normalized stable number or? How should we look at it from a coming and showing quarter's point of view? Yeah, so quarter, you know, quarter one, like I said that we, in quarter one commentary, that because the domestic markets were closed, so therefore we resorted to the export market and that went as high as 38, 35, 38% if I recall. And this quarter, it has come back to the more normal levels of what we should expect going forward. Okay, thank you.

Thank you very much. Thank you, sir.

We have next question from the line of Sagar Parikh from OneUp Finance, this quarter. Yeah, good afternoon, sir, and thank you for taking my question. Most of my questions are answered. I just wanted to ask you one more thing. So basically, by the end of FY22, most of bulk of our capex would be over, and, you know, you would be throwing two moons of pre-cash by FY23 onwards. So any kind of thoughts on, you know, capital allocation in terms of how will he be spending the pre-cash? So, you know, tough to say at this stage. I don't think we have any, apart from the current CapEx program, we really don't have large CapEx other than modernization, et cetera, that will continue. But we keep evaluating various projects, various partnerships to invest capital in, which is likely to give us good ROCEs. Apart from that, you know, if you're referring to dividends slash buybacks, that will continue to be as per the policy. We'll have to take into account the profitability, any capex requirement or fund requirement that may be there before we decide to step that up. Okay, sure. And last question is from my side. How much was the volumes of non-woven dist water? Because I believe that non-woven demand would be pretty good with, you know, which goes into masks and coveralls, etc. So, also 15% RAP contribution in VSS. How much would be non-woven? And We don't give... Sorry, you had another question. Why don't you finish?

No, no. On an annual basis, can we expect like 10-15% of our volumes to come from non-woven segments?

So, specific numbers will be tough for us to give. I think 15% is WAP, which includes non-woven. Dilip, do you want to add any... No, no, no. I think... You see, understand this... And nonwoven is one of the specialties we have. And there are the nonwoven, right now, we were running short on the gray fiber capacity. That's why the nonwoven volumes came down. Going forward, as I told you, we have flexibility to make nonwoven as required. And nonwoven in India is not a large demand. It's a global demand. So you can service that from wherever you want. So I think the Indian market, you're fully feeding from local productions. It is only the export part of the non-worn which we are not, we will be selecting depending upon the supply demand situation because right now we are short on capacity. Right, so the premium on non-worn would be lower, right? Much lower. Non-worn is not that premium. It went a little high because of COVID, but now it is back to a very nominal premium. So that's why I differentiate there's a VAP and there's a specialty. Non-worn is a specialty, but it's not a real VAP in that respect. Okay. And on the bulk prices, it's gone up in tandem with VFF. So VFF is about $15, $60, $15, $70. So bulk prices will be about, what, about $10, $15, or $10, $15 higher than $600? Or how much is the bulk price right now? Bulk prices have gone up by about, yeah, around 10% is what you can say, totally, into 10%, yeah.

Yeah, so just to... I guess socket is the right? Socket is the right? Less than that, actually. Yeah.

Less than that. Two points I would like to just clarify out here. One is the pulp price that we are saying is a spot price, whereas we continue to get the advantage because of the, you know, 90 days that I talk about, right? 90 or less than 90 days, whatever.

Right.

And the second point I want to clarify that in the chart what we give from WAP, okay, that includes both WAP and speciality, 15%. So it's basically other than grade. Yeah, that I understand.

So just to explain to you, in the pulp case, last year in the falling market, you see, it depends. In a rising market, it hurts you.

a falling market it helps you so it depends how yeah i found this on the web so they find me in the rising market helps you check it out yeah that's right right so i think market helps you absolutely right that's why we are saying so even so spot prices may go up but our consumption price cannot go up right so how much would be procuring on a long term business then about more than 50 60 percent all all I don't think we can comment the number of that. Yeah, we can't comment on that number, but sorry, long term. So we have long term contracts and anyways, Part of our procurement is from our JVs itself. So volume contracts are there. The price is determined on the basis of spot plus certain formula that is there.

Okay. Great, sir. All the best. That is from my side and wish the entire team a very happy delivery. Thank you.

Thank you, sir. We have next question from the line of Pratik Kumar from Antic Stock Broking. Please go ahead. Thank you, sir. I have two short questions. Firstly, on this increase in domestic mix during this quarter in BFF, it's primarily a reflection of our constant focus on domestic demand and not because of fall in export demand rates. No, no, the domestic demand has picked up significantly, much ahead of export demand. See, export is a large market, so it can be serviced by various people. But domestic is our core market.

So we are working on the market to grow the demand, and demand has grown significantly.

Just to tell you, the domestic market has grown at about, in the last two years, at 14 to 15% CAGR compared to global of 5 to 7%. And has that domestic demand recovery, which will probably be the best in September versus the whole quarter, has that accelerated further? No, no. It has been month on month going, steadily, if you look at it. Right. So would that have accelerated further into October, November, right?

Now it has come to pre-COVID levels now. So now I think it will cut off.

Okay.

Demand has recovered to the old levels.

Okay.

And your cost optimization, you suggested that there's this large contribution of repairs and maintenance. Out of this 120 plus 50, 170, maybe 50% would be repairs and maintenance, something which we delay to next quarter? No, I think there is a little, there are two types of repairs and maintenance. Routine repair and replacement repair, specified repair. The routine repairs have not been delayed. Anything which will hurt the plant health or the safety and environment is not deferred at all. So that has been spent. It is the replacement expenditure which depends upon the life of the equipment. That every five years I want to change, every six years I want to change. Here we do a condition-based monitoring. And if the equipment is in good condition, we can defer by a couple of quarters. So it is that part. So that makes about 30 to 40% of the total R&M budget where we can take a discretionary view. Absolutely. And, you know, I think nowhere near 50%, it will be lower than that out of the total fixed cost, you know, so maybe about, you know, 25. Yeah, that's right. That's the kind of number, yeah. Yeah, would be the number, so. So that could come back remaining, could remain with the company in terms of saving. I think I want to reiterate the point that there are cost initiatives that have been taken by the company across both fixed cost and variable cost. and consumption norms, et cetera, you know, like Dilip talked about, caustic use, the pulp use, and all those things. So a lot of these cost savings will be sustainable, both on the fixed as well as the variable side. Repair maintenance is probably the only one where, of course, to make sure that the plant is kept maintained, that cost may go up. Meaning go back to what used to be the... And chlorine evacuation from that Lubrizol project is expected to have like more captive integration. So what is the current captive integration? And we are talking about this 5% increase on expanded capacity, which we are also adding like in chemical.

Yeah, yeah. This 5% increases on the expanded capacity. Current, I think in the presentation, we're saying that we put about a 30% captive.

Yeah, so this will be on the expanded capacity. Yeah, so 5% will be on the total 100 cases. And of this fertilizer sale, is there a tax impact on our earnings? I mean, would we have a tax impact on cash flows out of the 2680 crores which we get? No, absolutely. I think if we make money, we have to obviously pay taxes. So It's a slump sale of undertaking. So based on income tax provisions, et cetera, we will be paying taxes on this unless we can partly be able to set it off against any long-term laws, et cetera. So it will all be calculated on the basis of taxation, and then we'll arrive at the amount at closing. Because it will be closing, it will be in FY22, so it will depend on what we have as carry-forward losses, et cetera. in the capital gains category, if any. We may not have also. So I think all those calculations will go into determining what the tax would be. And last question on your... Sir, I'm sorry to interrupt. Please come back in a question. Thank you. Thank you. We have next question from the line of Gaurav Rathedia from Morgan Stanley. Please go ahead. Okay, congratulations on the great execution and thanks for taking my question. So firstly, a question related on capital allocation topic. Ashish, just want to understand what would be an ideal capital structure you would like to have in the medium term? And this is in context of the divestment of the fertilizer business, which will make us almost net debt free. So what should be the ideal capital structure? Would there be a thought of returning excess cash to the shareholders? So, see, I think if you go back to history and look at FY19 end, okay, and before that, FY19 end and before that, Grathen used to be net debt zero to, in fact, net cash company. With this, before we decide to invest in any project or anything of that sort, leaving that aside right now, the plan is for it to see if we can find high ROC opportunities within the core business. But assuming that that takes time, it will obviously go and reduce your net debt. And then in that case, we will be back to net debt zero situation. So I think, you know, Classim has a very strong balance sheet. It's AAA. It has always enjoyed that. It lends its strengths to its subsidiaries as well, due to which they are also AAA. So therefore, I think we would like to continue with that situation. And if we are taking, we will never use or cannot say never, but we will not use equity infusion into, we will never require equity infusion to fund any of the projects. So therefore, you know, if we need to raise debt to fund any project in the future, we we will always follow a very conservative approach of how much debt you take up. And that is reflected from our actions in the last two years where the debt has always been in a controlled way. And, you know, I want to also take the opportunity to, you know, make the point extremely clear that this sale has nothing to do with the debt that we have on Gratim. I think debt is at a very, very comfortable level in comparison to the EBITDA, in comparison to the overall consolidated investments, et cetera, that we have. So we are not at all concerned about that. And this has been done totally as a strategic call on the portfolio. And that's the reason behind doing that. Great, Ashish. Just to, if you could reiterate your priorities with respect to allocation of capital to group companies, that will always take a second or third approach before you look at the organic CapEx, right? Absolutely. That continues. That organic CapEx, which we have planned for the next two, three years, will always take precedence. You know, second would be if In financial services, it always requires equity infusion. If you don't want to get diluted there because you want to maintain consolidation status, we may decide at right price levels to put money there. Right now, there is absolutely no requirement out there and there is no intent to put money in other group companies. Just a couple of To be technically right, we are building solar business as a subsidiary, so there is fund requirement there. We put our equity portion. And, of course, the ongoing calls that may come on ABFRL rights issue that they have already done. We've made a couple of more calls that may come. We'll put that committed money out there. Great. Last question from me. On the chlorine VAP, do you have any target in mind of what percentage you want to take it up to over the next two years on your expanded capacity? Any such similar deals in the works right now? This is right now 30%. Do you think this can potentially go up to 40%, 50% over the next two years? Thank you. Kadam Dilip, would you like to comment? I think, you know, we continuously keep exploring the options on collaboration which will come up. There is the CAPEX plan. Clearly, there are some derivatives which have been given over there, particularly, you know, . overall i think we will be gradually inching up i don't expect it to reach 40 50 in the next two years but clearly i think in the next two odd years we will inch it up by a couple of you know maybe 400 or 500 the basis point of 34 35 percent just to add just to add the long term long term plan remains we don't want um chlorine to be sold as chlorine in the long run over the next many years, so over the five to ten year time frame. So all that we're doing is, as I said earlier, either we invest in value-added products or we have customers close by next to us and creating pipeline supplies, or we will have alliances like we announced on Dubrizol. And our interest is to, in the next five years, to get closer to 40%, 50%, and thereafter much closer to 70%, 80% in the coming, you know, thereafter beyond 2025. So that is the strategy. We'll be working on several projects. We've had several projects that are being discussed. So we'll continue to pursue that strategy.

Thank you. That's very helpful. Thank you.

We have next question from the line of Sanjay Parikh from Nippon India Asset Management. Please go ahead.

Yeah, thank you very much. You know, great comeback. Really congratulate the team, both chemical and VSF. Also, very clearly, you know, spelling out that, you know, not invest into investments into, you know, and the priority would be more core businesses and its expansion. Only my question is, and that's a suggestion also to Ashish and the board, that once we see the cash flow right now today, that is 2,300 crore, we get 2,600 crore in nine months, we would have accruals, and then we have capex. So by and large, next year, end of next year, I don't think we would end with more than 1,000 crore of debt. Now, today, you know, if you see last two and a half years, the returns on our stock has not been great. Today, just if you take a reasonable EBITDA assumption for your core business next year, on the today's prices of the... I'm sorry, sir.

We lost the line of Mr. Parikh. Why don't we take the next question and then have him come back and ask the question?

Sure, sir. Thank you. We have the next question from the line of Sakleet Kapoor from Kapoor Company. Please go ahead. Yes, sir. Thank you for the opportunity, sir.

Although there has been an uptake in the utilization levels, I'm talking about the chloroalkali segment, sir, but the prices have, the EU realizations have remained depressed, sir. So, sir, what are the factors that are creating hindrance in any uptake in the prices, sir, and what is the, any ADD has been imposed from any of the nations, sir? What is the update on that?

I think we took that question a little earlier. I'm very sorry, sir. There is a globally, this is not an Indian phenomenon of the prices of caustics depressed at this moment.

It's kind of a global phenomenon running across all over the place. The more impacted is the Northeast Asia and South East Asia, particularly Northeast Asia because of the high denial demand, which makes the touring prices attractive. and that being a primary product over there. So there is a large excessive caustic capacity which is flowing out of that place. And similarly, there is a Middle East also which is impacting the West Coast. So it's a global phenomenon. There is global oversupply at the moment. It will, and I think it's fair enough to say that we expect the situation to continue for some time over there. In terms of the ECU, I think if you look at from an ECU perspective, there are a couple of things which have gone positive. One is the fluorine, which was earlier negative, is now been trending to the last six months in the positive territory. The second is the cost savings, particularly for us, power is a very critical part. That has helped us maintain an echo which we currently have.

Going forward in terms of ADD, your last point was there was just a concept review which happened in Korea and China, which was reported there.

Because I think now in the final stages of going from the DGTR office to the finance ministry, we're waiting for the final outcome of that. But that verdict has gone back and extension has been given by DGTR. And then there is work in progress of data simulation happening all over the place to see what it, you know, we're discussing in Government of India with a couple of other places.

But, you know, that we won't talk about till we reach a stage of extension. I hope that that that takes care of your three parts of the question. Hello. Yeah. Sir, I'm audible now. Hello.

Hello.

Yeah, we can hear you.

Yes, sir. Yes, sir. Sir, I missed the last part of the DGPR what you were explaining that it is the Four months have been the imposition for a provisional duty has been done.

The review on Korea and China by the DGTR has gone, has been accepted.

Now the papers move to finance ministry for ultimate approval. We think that's the government process which has been gone. From DGTR perspective, it has been approved that the ADD on China and Korea will continue.

The other is work in progress. And as we move forward, we will discuss it later.

Thank you. We take the last question from the line of Sanjay Parikh from Nippon India Asset Management. Please go ahead.

Yeah, sorry, I got disconnected. So the point I was making is that, you know, we've got to have reasonable, I mean, the debt is not going to spike up if we take 12 months from now. And if we take a reasonably stable market next year, you know, we look at a very good, handsome EBITDA. So if you take the today's listed value, We are broadly at 65% to 70% discount. Now, in this scenario now, you know, when the cost of borrowing is so low, would you consider even at the cost of borrowing to do buyback and align the misalignment in such a large holding company discount? That's the suggestion I have.

No, sure. I think we have noted your suggestion. Like I said earlier, that it will depend on various factors on the basis of which board can decide. But certainly we have noted your suggestion on this one.

Yeah, I congratulate you for really selling off the fertilizer unit. and giving a very clear stance on capital allocation. That will really help long-term investors. Thank you very much. Thank you.

Thank you very much, sir. Ladies and gentlemen, that was the last question. I'd now like to hand the conference over to Mr. Ashish Adhukia, CFO, for closing comments. Over to you, sir. Thanks, everyone, for joining. We generally have the call immediately after results. As you know, we have many things to do So we thought that instead of eating up into your evening, we do a call today. So thanks for joining and wish you guys a great festive season ahead of us and happy Diwali. Thank you very much, sir. Ladies and gentlemen, on behalf of Classroom Industries Limited, that concludes this conference call. Thank you for joining with us and you may now disconnect your lines.

Thank you.