Grasim Industries Limited

Ladies and gentlemen, good day and welcome to Graphene Industries Limited Q3 FY24 earnings conference call. 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 telephone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit Panchmatia, Head, Investor Relations. Thank you and over to you, sir.

Yeah, thanks, Shashi.

Hi, good morning, everyone. Wish everyone on the call a happy 2024. Thank you for joining us today to discuss Glassim's third quarter financial results of financial year 2024. The financial statements and presentations are available on the exchanges and as well as on our websites. For safe harbour, kindly refer to our costary statements highlighted in the last part of our presentation. Our leadership team is present today on this call to discuss our results. We have with us Mr. S.K. Agarwal, Managing Director and Mr. Pawan Jain, Chief Financial Officer, Rassim Industries. Also joining the call with me Let me now welcome Mr. Pawan Jain for his opening remarks, post which we will open the floor for Q&A. Over to you, sir. Good morning everyone. First and foremost wishing you all a very happy and prosperous 2024 on behalf of GRASSI. It is always a pleasure to be with you for discussing our quarterly reserves. Looking at reflections, I am happy to share that we have ended 2023 and started 2024 on a satisfactory note across multiple trends. To start with the latest one, We have successfully completed our rights issue with an oversubscription of nearly two times. This reflects the support and belief of all our stakeholders who have and would participate in Grathen's growth journey. Let me now share three developments on the ongoing growth initiatives and projects. We have completed expansion of our specialty chemical capacity, which is epoxy polymers and curing agents. doubling to 246 kTPA versus 123 kTPA areas. This would enable us to meet our valued customers' growing demand and further solidify grassroots foothold in India's growing demand for specialty chemicals. Further, project implementation of world's largest single-site capacity for CPVC resin facility has also commenced in arrangement with Lubrizol at our village site. We are also progressing in line with regards to our 50,000 tons per annum capacity of ECS, which is expected to be completed by Q4 of next financial year. Post completion, all these initiatives would improve chlorine integration to around 70% from current level of about 63%. In Viscose, we continue with our depot-making activities at Nagda, Vilayat and Kharaj. The current installed capacity stands at 842,000 tons per annum. Our Viscose business is making new strides in the area of sustainability. The business has received first rank in Canopy's 2023 hot-button report with a rating of Dark Green Short. The business has implemented EU-backed technology at Kharaj, the second plant to achieve this feat. As pioneering circular solutions in fashion industry, the business has made first shipment of its fly-cell fibre produced with recycled cotton waste for use in textile value chain and the response has been win-promising with repeat orders. Our base business has started trial production at three plants which is Ludhiana, Heliar and Panipat. Brand architecture under Birla Opus is complete and we would be launching a full range of products in FY25. Birla Pivot has grossed Rs. 120 crore of monthly revenue run rate in December 2023. The private label Birla Pivot Times is gaining good response and is now launching private label in plywood and door categories. Moving on, would like to share key global trends having varying on our different businesses directly or indirectly. Given U.S. economy has entered calendar year 2024 on a stronger footing, which reported to 3 CY23 GDP of 3.3% against the estimates of 2% Federal Reserve in its latest years left the key policy rate untouched at 5.25 to 5.50%. The US Composite Purchasing Managers' Output Index has increased to 52.3 this month, the highest level since last June. In contrast, Eurozone and China are facing headwinds in their economies. Eurozone's manufacturing PMI showed that output contracted at a slower pace in January 2024, as the index grace rose to 46.6 from 44.4 in December 2023. Two major economies of Eurozone, Germany and France, reported slowdown in pace of growth in the manufacturing activity. China's official manufacturing PMI increased up a tad to 49.2 in January 2024, compared to 49 in December 2023. In efforts to support real estate sector that underpins consumption and household wealth, People's Bank of China announced 50 BPS cut against in past two years, effective from 5 February 2024. This is expected to inject about 1 trillion yuan in the banking system. Given such developments, IMS has also revised its global growth forecast 4,2024 to 3.1% from earlier forecast of 2.9% with improved outlook for US, China and India. However, the current rates see disruptions, which manage about 12-15% of world trade, including 30% of container traffic, appears to be adversely impacting the outlook on global trade. Adding to this uncertainty is super election year 24, which would see more than a third of the world population across 60 plus countries undergoing national elections. All these uncertainties pose challenges as also possibly new opportunities in 2024. Switching the context to Indian context, the first advanced estimates published by NSO in January 2024 shows real GDP to grow by 7.3% in FY24, better than revised growth estimate of multiple agencies like RBI around 7%, IMF forecast of 6 or 7%. Available high-sequence indicators like IIP, vehicle sales, growth in bank credit, real estate sales, GST collections, etc. appear to support NSO's growth estimates. VX-Graphim expects to resemble India growth story given our presence across sectors. Coming to our financial performance for the quarter under discussion, the consolidated revenue struck at highest levels of Rs. 31,965 crore, recording growth of 12% YOY. The TTM revenue, Trading Transmissions revenue, which is indicative of FY24 revenue, crossed milestone of Rs. 1.25 trillion. growing at CAGR of 14% over FY20. Consolidated EBITDA grew by 34% YOY to Rs. 5,150 crore. The TTM EBITDA is nearing milestone of Rs. 20,000 crore, hosting CAGR of over 9% since FY20. Conglomerate structure with diversified businesses has enabled consistent growth in revenue and profitability. Cement and financial services businesses under Ultratech and Azustralia Capital are on an accelerated growth journey, fulfilling the infrastructure and financial needs of our country. Our stand-alone performance continues to exhibit stability despite various global commodity cycles. Both our key businesses at stand-alone level, with scores and costs currently in down cycle, continue to remain profitable. Our established risk management mechanisms and post-leadership enable us to ride global price volatility optimally and deliver industry-superior performance. Stand-alone revenue for the quarter stood at Rs. 6,400 crore, recording a growth of 3% YOY. The revenue growth was largely driven by volume growth of 34% in ESF and 5% in cost-deferred business. However, the profitability was impacted with global weakness in chemical segment led by oversupplied market and sharp decline in realizations. For simplification, we have made some changes in our results presentation with regard to segmental disclosure. We have combined our textiles, insulators, paints, B2B, e-commerce, adjusted for inter-segment elimination and unallocated income under one head name, other businesses. Such categorization aligns the disclosure with our published results. Viscose business growth took strong on YOY basis, partially on the bank of markets, reverting to normalized levels post exceptionally weak Q3 FY23. Part of VFI volume, which finds its applications in Embroidery and Georgia and home furnishings, has lower demand pull during the quarter. The realizations were further impacted by cheaper imports from China. The sharp YOY decline in caustic prices appeared to bottom out at current levels of about $400 to $450 level. However, the market remains over-supplied due to large-capacity additions in FY23. Our change business, Viva Opus, is on trade for launch in the current quarter, with trial production already on F3 plants. namely Panipat, Ludhiana, and Jaya. We have already completed ground architecture under our 10th Grand Villa Opus. The sub-ground portfolio across multiple categories of luxury, premium, and economy segments and development work for design, package artwork, consumer communication, etc. is complete. The supply chain, logistics, and distribution network is also in place to support the launch-based strategy. we would offer complete range of high-performance superior products in the premium, mid-range and mass markets favorably placed across multiple price points. The dealer onboarding has already commenced and you would certainly hear out more from us over the calendar year 24. As highlighted in the last quarter, B2B e-commerce business under brand name of Bella Fever has already crossed monthly revenue run rate of Rs. 100 crore. The quarterly revenue run rate is now reaching Rs. 300 crore. Private labels under Zillow Private Times is getting good response. We have already initiated in-store branding initiatives also. And now widening our coverage for private labels, adding plywood and doors. The geographical front of Zillow Pivot has now extended to cover about 20 states. CapEx 4 partners to get Rs. 1,425 crore with 76% allocation to change business. We remain on track to achieve planned CapEx guidance of about Rs. 5,900 crore in SI24. We can take the questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1. on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have a first question from the line of pagers. Shah from Adventist Park. Please go ahead.

Hi. Thanks for the opportunity. A couple of questions on pagers. So you spoke about dealer onboarding which has started. Just wanted to know and if you are in position to share, is there any target that we are running with in terms of dealer onboarding for this year A?

And B, are these dealers existing paying dealers or are we getting new dealers in the ecosystem? So let me answer this question.

So obviously we have target for dealer onboarding for A, every month, every quarter.

So, that goes without saying. And, when we are onboarding, to begin with, we are largely onboarding existing tech dealers, but there could be also some who are new to the paint.

Sure. And, again, last question.

So, you have been very transparent on the expansion plan and also on the status of the expansion that we are doing in paints.

On the plant side, just wanted to know any similar update or details you can share on depot network that needs to be created around the plant in Uttara? So obviously, you know, the depot network goes along with.

So we have a aggressive target to set up depots by the end of this financial year. We are already signing up payments and visas and depots are already operational to take in some of the trial production.

And obviously, we also have a target for next financial year. So, we are in line with whatever we have set up.

As you would have also read in some reports which have come out is that our objective is to have a pan-India national distribution by the end of financial year. So, our network expansion and vision and execution is in line with that.

Great. Thanks and all the best for that and I will come back in the queue if needed.

Thank you.

Thank you. We have our next question from the line of Nirav Jumudia from Anvil Research. Please go ahead.

Yeah, good morning, sir. Thanks for the opportunity, sir. I have two questions, one on VSF and one on chemicals. Sir, based on our presentation, is it safe to conclude that our VSF EBITDA on a quarterly basis, based on Q1Q numbers is flat on a per kg basis and the fall in the numbers is predominantly because of the VFI? To some extent your analysis is in line but also like it's very dynamic so we cannot assume like selling price has come down in this quarter whereas raw material prices have also reduced and volumes have gone up so there are three levers operating in always in this equation. But yes, overall the VFI was little bit less in this quarter compared to previous quarter. So because the fall in profit is close to 62 crore, so 75 to 80% is a safe assumption to take for the fall in the VFI business out of this 52 crore score? Not exactly, you know, but yeah, there is a, see, EFI has been seeing some demand showdown in some particular segments as mentioned. Then there is a problem of some cheaper imports from China also. That is also interesting. But the numbers may not be exactly what you are trying to say. Got it, sir. And, sir, if you can just share your view on the premium on the value-added VSS vis-a-vis the gray VSS. So, if you can just share what sort of blended level premiums we used to or we are currently getting on over and above the gray VSS. So, this one ranges about 20% over the gray price. Okay. In general, but sometimes it is more depending on which product volume is more and there are many products in that category. Earlier we used to share that for excel it was close to 40-50% for modal it was slightly lesser and dopedad was even lesser. So what is the current broad range if you can share on these three products? So, I think I will not be able to give you that specific product price. But in general, cotton prices have come down. So, XL prices have also come down in line with cotton prices. So, it has reduced. And in general, Janna also, XL, YSL prices have come down in last full year. But it keeps on changing depending on the mix of products in the basket.

Got it, sir. The second question is on the chemical side. So, we have seen a sequential improvement there. So, last quarter you mentioned that we had a shutdown at the VAP plant.

So, this entire improvement in the profitability could be attributed to the swing in profits from the VAPs or had some improvement on the cost that happened on the caustic side and because of which the profitability has improved? So, I am going to take the question. Maybe I will also add a bit of color on the VFY and So, just going back to your VFY question, look, our VFY portfolio consists actually of three types of fibers. Okay. It's hand-wound, continuous spun, and they go in different segments ultimately in farming. Okay. They all have very different properties. Our full spun and continuous spun segments have been doing quite well, demand-enhancing, maintaining stations. The problem is essentially around the Potsdam yarn segments where certain areas of garments are not picking up or did not have the feasible pick up that we would normally have seen which affected that particular quarter's returns. And we had one operational disruption at the Ruppel yarn plant. Having said that, we see already going forward the situation becoming slightly more normal on the Potsdam yarn side. I think when you look at the drop in the GFI business, remember that it's a portfolio of the material. Some of that portfolio is still doing quite well. It's one specific part of the portfolio and an operational issue that we had in the Kalyan site. Question on chemicals. Of course, look, the The cost side has helped us. Coal prices have gone down, electricity prices have gone down, etc. But what has really helped us from two, three areas is, firstly, our utilization. Our utilization, which we have reported at about 88%, we believe is best in the beer group today. That's, of course, one big element. Secondly, our specialty part of our chemical business has come back. We have called out the revenue percentages, we don't call out the EBITDA numbers, but that is for sure a part which has done better. And as you correctly pointed out, we had some operational propagation within one of our chlorine derivative plants, which have not been fully resolved, but production on those chlorine derivatives has been better than before. Some work is still going on. So, a combination of factors. a better cost position on coal, power, oil, that's one. For sure better utilization, that's one of our peer group. Much better performance in our, the specialty part of our portfolio, the industrial side of it. And somewhat better performance in storage. Got it, sir. And last question, Mr. Dobli, if you can share your outlook on the epoxy business. So, what's the current industry size in India and on the liquid epoxy which we manufacture, how much value addition which we are currently doing on? Yes, so look, I would not want to answer the value addition question very directly. I will answer it indirectly. So, we, if you look at how typically these epoxy businesses create value and you know, the epoxy businesses range between let's say 8-12% in terms of EBITDA sales, we would be in some better quartile, top quartile of this industry. We sell our entire capacity out and we believe that we have high market share. So we are in the top quartile performer of this epoxy industry. We have basically the larger market share whether you look at composites, whether you look at coatings, whether you look at corrosion protection. And, you know, we have recently expanded our facility. We have another zero, where we have gone with a somewhat richer portfolio. So, we have now also added products like reactive diuretics, polyamide hardener, polyester hardener. So, we believe that we have the largest and also the biggest specialty portfolio, you know, in the Indian market on epoxy resins and hardener. Got it, sir. Got it. Thank you so much, sir, and wishing you all the best.

Thank you. Before we take the next question, we'd like to remind participants to press star and 1 to ask a question. The next question is from the line of Naveen Sade from ICICI Securities. Please go ahead.

Yeah, good morning, and thank you for the opportunity. Also, let me give my best wishes to the entire team for the upcoming formal launch of the paint business. So, couple of questions on the paints were that if you could just clarify what is the exact capacity that is coming up for launch and also then in the same breath if you could just also give details about how the timelines look for the

balance capacity okay so like we told earlier that the total capacity of the six manufacturing locations is about 1332 million meters currently trial production is on at three locations and each of these factories has a capacity of about 200 million litres. One of the factories also has a capacity of 30 million litres per format tank. So, the three factories under trial, cumulatively, have about 640 million litres of capacity. Obviously, how we utilize it and how it grows is a separate issue. On the second part, your question in terms of how it is planning to roll out.

So, We will roll out gradually, starting with the lost and some areas of south and gradually we will speed up to roll out nationally in a certain period of time which would be very, very ambitious. That's how we see the rollout plan and that's our take on the capacity which is being tried at the moment.

So, you will actually see products on the shelf in North and South markets.

Yeah, so we said that when we introduce, we will start with certain areas of North India and certain areas of South India. Yeah, the second question about the other plants, we will expect to start trying them next financial year. In the first quarter, Hopefully, the next one in the second quarter and the last one would be probably in the last quarter of next financial year.

Understood. This is helpful. My second question then was about the BASF segment. We were looking at some BASF driving points in China and please correct me if my reading is wrong, but I thought From mid of August or early September is when the prices in China bottomed out and there has been almost a very handsome 8-10% kind of a recovery in that market. But the presentation that you have shared does not really show any trend of pickup. It's actually more flattish to a marginal declining trend if I am reading that correctly. Of course, as you mentioned, when we exited, 1% lower than the quarter average. So, is there anything that we are missing here in the sense that are the prices you are saying are unlikely to see any, have not seen a recovery and hence the outlook remains subdued or there is some recovery that we can expect?

Thank you. So, the VHS prices in China have remained very narrow range bound. So if you see even quarter 3 of last year and quarter 3 of this financial year, there is hardly any change in the prices in China. China domestic prices. That is one part and China is the largest producer and the consuming country for ESF in the world. But export prices have reduced significantly during this last 12 months. Export prices have come down as much as almost 15% during this year this is 12 months so that is the picture on export is a smaller part for china and most of the producers because most of the producers sell major part of their output in their domestic markets does that answer your query yeah so just to confirm it's

you think export prices being weak is what impacting the realizations for us otherwise in china local prices purchase what prices in china could be on an uptrend or that's not correct so there is no clear this thing recently there was a higher prices but that was just before the chinese new year vacation so that is a tactic every year

or every long holiday period they will post higher prices but before that they will conclude the transactions for the holiday period so those prices are very nominal and real interest is seen only after the holidays open again for business so we should not read too much on the nominated prices but as of now the prices are just stable like not showing any big increase Except international prices, because of the air-speed prices, the shipping costs have gone up. So to that extent, the producers have adjusted the offers for export prices.

Understood. This is helpful. Thank you so much.

Thank you. We have a next question from the line of Rashi Chopra from Citigroup. Please go ahead.

Thank you. Just... On the VSS before I move on to pains, on your realisation, was there a decline sequentially?

Yes.

Would you like to quantify that?

About two percent. Okay, thank you.

And the loss, you know, we can make out the total loss coming from the Paints business and the B2B business, the e-commerce platform. So what was actually the Paints contribution to the EBITDA loss in this quarter, the expenses that you captured?

So I think we are not giving the specific numbers for these businesses. Possibly once we start reporting separate fragments next financial year, we will come to know. But As the business is increasing the size of manpower etc., the uncapitalized expenses which are being charged to P&L are also increasing. Once the plants complete their trials etc., then whatever is being capitalized will also come to P&L. That is the status. But yeah, quarter on quarter, the losses for banks businesses have increased. As also in B2B business.

Okay. Lastly, on your standalone balance sheet, what is the net debt EBITDA as of now, the standalone basis? And following the rights issue and with the commissioning of the, you know, the pain plans, etc., where do you expect this to be by, you know, by FY25?

Yeah. So, as of 31st December, we have said our net debt EBITDA is about 1.7. As on 31st December. Post that we have of course received part proceeds of rights issue that is about 1000 crore. Our complete, when we complete our payments, capex and other ongoing capex etc. We have given guidance that our net debt to EBITDA should be about 3 to 3.5 once we complete all the rights issue etc. But that will all depend upon the performance of the existing businesses as well.

Okay, and just sorry, lastly, on that, where do you, I mean, for the next few quarters or so, how do you expect the margins to move for both your ESF as well as the chemicals division?

I think the ESF businesses margins are stable. Chemicals is still the realizations are on decline. We feel while globally maybe the prices are bottomed out but India remains over supplied. I have a question. Yeah please. Yes so if you track chemicals and I am sure you track all the chemical industry. A lot of downstream demand actually is driven by agrochemicals.

And, sorry, just a second. There's some disturbance.

So, a lot of demand is actually driven by agrochem in India. And you must have noted from the transcripts of many of these agrochem companies which are driving the demand for basic chemicals. They are projecting that the work is behind them, right? And if we go by those reports, and I'm sure you guys are following those companies, then correspondingly, suppliers like us, you know, who provide plastic, chlorine, etc. into that industry will, of course, follow suit. The other area, of course, is the industrialization in the area of renewables, automotive, etc. So, the demand for epoxy doesn't continue. So, I think it's fair to say that we are probably At a situation where we are stable to gently start improving.

Sorry, stable to gently start improving, sir?

Yes. But I would strongly encourage you to follow also the larger agrochemical complex here because those would be a better way to get across for whatever assumption you want.

Right. All right. Thank you.

Thank you. The next question is from the line of Sumangal Nivatia from Kota Securities. Please go ahead.

Yeah, thank you for the chance. My first question is on ESF. You've partly answered, but I mean, overall, if you see operating rates, inventory in China, all are moving in the right direction, but we don't see a sustainable increase in realisation then again. So, if you could just share what is your outlook on prices and expectation in the next 6-9 months and can we assume that the margins for our division is kind of at the bottom and we should see some bit of an upgrade there?

I hope you are absolutely right that margins are at the bottom and they will improve and we also wish for that and so it is very difficult to predict very precisely or accurately because things are very volatile But there is no reason to be pessimistic and we hope that slowly things should start to steadily improve. But that will be very gradual. I don't expect it to be very sharp turnaround.

But I mean if you look at the operating rates 1390 and even inventory levels are quite low. I mean, have you seen these kind of leading towards better profitability and better pricing strength for the industry?

Yes. The operating rate and inventory levels do indicate that the industry profitability should improve. But then, sometime this, like I say, crisis has suddenly come out of nowhere. And that has affected the entire industry. export rates from China which is not just VSR but the entire textile even finished products also. So all these things have lot of implications on the profitability. So there is such things where your normal interpretation of high operating rate and low inventory is correct. And within VSR also now Liathl fiber is though from a very low base, but is increasing more rapidly. So, there are certain undercurrents from there also.

Understood. And is there any new supply which is getting added, new capacity in any of the regions by our competitors?

Not in the normal VSS side, but on the Liocel side, yes. Some capacities are being added. Some have been added and some are under construction to the extent of about 125,000 tons or so. But not new capacity on the traditional VSS side.

Okay, understood.

Second question is with respect to chlorine integration levels. there is a good friend, a graduate over the years. Is it possible to quantify what sort of benefits we get out of every, say, 1% increase in integration? I mean, just some come rule and what is our target for, say, over the next two years to increase it to what level?

Yeah, so, you know, you have to look at it in two ways, right? So, chlorine sales today in India is negative prices. You know, these negative prices are in the range of, let's say, 4000 right now. So that would be one input. And second is, depending upon the chlorine derivative itself, for example, you know, a stable bleaching powder will have a different contribution margin percentage if I take one extreme example, versus, let's say, the chloramic acid would typically have a different contribution margin percentage. It is not a very straightforward question. The first step in chlorine integration is to extinguish the loss of profit which happens through a negative chlorine price and then subsequently, depending upon the capacity and complexity of the molecule, there is a certain contribution for the particular product. You know, we have the largest chlorine derivative portfolio in India and we continue to grow our chlorine derivative portfolio. For example, you will see that this quarter we are going to be mechanically complete with our monochloroacetic acid plant in the eastern part of India. It's a small part, but there are not that many manufacturers of monochloroacetic acid. So that will have, of course, a nicer profitability profile than, for example, chlorine at this time. So I wish I could give you a typical 1% answer, but it's not really that strict. But I think the general rule is chlorine integration is the way to go about it.

Yeah, so you said minus 4000. So on an average, the derivatives, what would be the realization be?

Yeah, that's a huge diversity of product profiles there as I mentioned. Everything from stable bleaching powder to chloromethane that realization number will not give you any meaning for this time.

Okay, got it. Alright, thank you and all the best.

Thank you. Ladies and gentlemen, to ask a question, please press star and 1 on your phone now. The next question is from the line of Latika Chopra from J.P. Morgan.

Please go ahead. Ms. Vertica?

Yes, please go ahead. Hi, can you hear me? Yes. Okay, thank you. Thank you for the opportunity. I asked, you know, a few questions on your pain story and thanks for sharing, you know, a few slides on that in your presentation. The first one was I heard your comments on the dealer base rollout. I wanted to check, you know, the cities that you are targeting in north and south to begin with. Would you first focus on the larger cities or the plan is to go wider, you know, in the next few quarters, even in the smaller towns? That was the first part. And the second bit was, you know, if you could share some thoughts on your advertising plans. You know, you've talked about that advertising concepts have been finalized. But when do we see you? Would you wait to roll out whole of your product portfolio, STU portfolio to the course of FY25? Or you would probably likely target the peak summer or the peak festive season, you know, to go all out on the advertising front? Thank you.

Okay, so on the cities where they want to roll out first. So, you know, I wouldn't want to give exact details. But like we said that we want to roll out fast. So, we will probably cover them cities home.

Obviously, the first attack would be on the bigger city, bigger town. But because we have national ambition to go very fast.

So, like I was saying that obviously we will cover the bigger town first. But very soon, we will also go down, you know, down straight up. And like I said, we will start with North India and some parts of South India in this quarter.

So, you can see it's only about, you know, one and a half months left for tech. Certainly, on our advertising plan, so we have an all-round 360 plan. We have, you know, we will have below-the-line digital, above-the-line consumer promotions. All that will start rolling out.

and obviously they will follow a sequence but I don't think that we are trying to focus on the summers or anything like that because we want to roll out as fast as possible so our advertising and media trend will follow the distribution which will keep going on.

Any feedback or, you know, experience of what finishes that you launched? You know, it is available now in almost 60 cities. Any initial thoughts on, you know, how the product is faring? What are you learning from contractors, workers on this product? How is it placed, you know, versus competition? Any initial thoughts there?

Yes. So obviously it has been a good learning exercise and the sales team has also got practice of actually working in the market. The feedback is very positive. Firstly, it's only a limited range. So if you take a look at the imported wood finishes, we have not lost the full range. The full range will also follow through. But the feedback from contractors and painters is excellent. The product quality is excellent. The acceptance is very high. And obviously we've got some learnings in terms of What do we need to adjust for the main launch? So, we are taking all that into account.

Sure. And the last bit from my side was, you know, on paint, any thoughts on, you know, how are you looking at, you know, B2B versus B2C? B2C is loud and clear, I guess, but will B2B also be a meaningful part of focus for the company in the initial phase or?

No. So, both B2C and B2B will, you know, start parallel. So the institution business or the project business, as people call in the base business, is an absolute part of our portfolio. We also have products designed for that. And it will start in tandem with the retail business.

Sure. Thank you so much. Thank you. We have a next question from the line of Mudit Agarwal from Motilal Oswal Financial Services.

Please go ahead. Hi. Good morning, sir. Sir, my question is related to the tax expense during the quarter. The tax expenses are significantly low. So, is there any adjustment or could be the mandate going forward?

Sir, the Mudit, the tax for the quarter also has some right break of the provisions. So, on overall basis, you can assume that our effective tax rate would be about 14-15%. So, considering that whatever adjustment was required has been done in this process. Of course, it includes the write-back also, a small part which is based on presentation, etc. We have written back that provision. Manual basis, you can assume the tax rate to be around 40-15%.

Okay. And so, the last, second question is on the chemical business captive power plant capacity. How much is the captive power share as well as the renewable share in the chemical business?

Mudit, can you please mute your line when you are not speaking? There is background noise coming from your hand.

So, about half of our power is captive. About 13-14% is renewable and the rest comes from trade.

Okay, okay. Got it, sir. Thank you.

Thank you. We have a next question from the line of Ronald Sioni from Sher Khan. Please go ahead.

Yeah, good afternoon. I have one question with respect to the insulator business. Can you share the revenue and data number for insulator business?

No, what is your question? Can you please repeat?

Rahul, you are not very clear.

Now I am audible?

Yeah, yeah.

So, I wanted to ask about insulator business. Can you share the revenues and EBITDA numbers for insulator business?

You mean the ones we have consolidated now, right? Right, right. I have been asking you to deconsulate it again. First of all, I think it is a very small part of standalone exempt and if you look at the consolidated numbers, it is almost negligible. But let me share the number which you are looking at. So revenue for the quarter is about 111 crores in Q3 this year. EBITDA is marginally negative, very small number, minus 1 crore.

Thank you very much sir and in terms of cotton viscose and polymer differential whether it has reduced or you know it has a correlation with viscose demand or prices also.

Sorry I did not understand your question can you please repeat.

The differential between the prices of cotton viscose and polyester so that spread has reduced I think there is no difference, wide difference between this demand and prices because of this.

So, the prices reduced during the quarter, quarter on quarter and the polyester prices also reduced and all the fiber prices reduced during the quarter. But the viscose prices reduced much less than the reduction in the cotton prices. This one is a very complex inter-fiber dynamic of this thing. So, for example, international cotton prices reduced quarter on quarter by 4.6%. India prices also reduced by same amount, but Chinese prices reduced much more. Here on year basis, international cotton prices reduced by almost 10%. Indian cotton prices reduced by 15%. But China cotton prices increased by 10%. So it all depends on many other factors in addition to simple market dynamics. But mostly they move in the same direction. And this quarter the prices have reduced marginally for all the fibers.

Okay. Thank you very much. Thank you.

Thank you. We have our next question from the line of Nirav Himudia from Anvil Research. Please go ahead.

Thanks for the opportunity, sir. Sir, you mentioned that our chlorine realizations were 4 rupees negative this quarter. So, what was its last quarter? So, whether it has further worsened in Q3 or it was at the similar levels as compared to Q2? No, compared to Q2, it has worsened by about a couple of thousand rupees. And as I mentioned earlier, it is basically the slow pick-up in the agro-chem sector which has affected this in a big way. As I said, I think the chlorine pricing dynamic across the country is quite different. You know, so you get very different dynamics depending upon which region you are.

Correct, correct.

But yet, you know, it's agro-chem at a certain extent dies by the changes which drives chlorine pricing. So the improvement in profitability could be also attributed to our slag business because I think we have been producing slags out of our lye. So has that helped this quarter in terms of the stable ECU realizations on a sequential basis despite of chlorine worsening sequentially? Yes, so we are always optimizing between lye and slag. That is absolutely correct. And we see what is the best way that... you know, we can approach the market for maximum risk. Similarly, we focus a lot on utilization as well. So, you are right. We have been always optimizing between life depending upon the price data between the two forms of cost. Is it possible to share the capacity of NCA which we are going to commission very shortly because you mentioned in one of the discussions earlier. It's a small capacity to be very frank with you because you know for us it is very important to to set this plant up as a demonstration of going further into complex chemistries in our solar system but you can say the capacity it will be about you know seven uh got it sir got it uh sir out of our pipeline series sorry out of our total chlorine integration like 63 percent what would be the contribution through the pipeline because Earlier we used to share some figures of flooring going to up close to 85-86 thousand tons on a quarterly basis but I think that is now stopped so can you just give some sense in terms of? I think it is you know in the range of 12-14% depending upon how the customers fit the product. Okay, okay.

And so last question is on the maintenance capex for the chemical business as well as for the VSS business on on a yearly basis.

So, it will depend upon, I mean you cannot take a standard number for every year, but you can assume about 300 to 400 crore rupees There is maintenance capacity for each of the businesses. For each of the businesses? Yeah, we have a number of class locations here and we continue to invest in the cost optimization also. So, Pawanji, is it possible to share how much through the de-bottlenecking we will be adding the capacities on the BASF IT? I think you mentioned three sites where we are currently undergoing a de-bottlenecking. Is it possible to share what sort of capacity additions could happen out of this? Okay, so we have done small de-bottlenecking in our Liacel plant during this year. That will take our capacity from 31,000 to 44,000 tons per year. Okay. Then small de-bottlenecking we have done at our Kharaj plant for the And then in the course of this quarter as well as coming years, we will be also trying to further improve the productivity at all of the VSA plants also. Like the new lines that we'll add. Yeah. Because the plants have been now running for almost one and a half years, two years. So we are getting better performance slowly, slowly. So some capacity additions could happen there also through de-bottling. Without much capex. Got it, sir. Thank you, sir, and wishing you all the best.

Thank you. We have a next question from the line of Suryansh from BizX Enterprise LLC. Please go ahead.

Yeah, thanks for the opportunity. I was asking, my question was regarding Bedla Fever. So what are plans there and, like, Are we planning to move into B2C and opening retail firms? What are the plans there? Can you answer this one?

So, as already Iman spoke out earlier, we are extending the coverage in B2B only across country now covering almost 20 states. There is no plan of B2C as of now. Also, getting into private levels. So, Villa pivot tiles have been already launched. Flywood and doors are also in the process. We are in the process of launching. That is the status. Hope that answers.

That's fine. Thanks for my question. Thank you.

Thank you. We have a next question from the line of Lakshmi Narayanan KG from Tunga Investments. Please go ahead.

Thank you. If you are intrigued to see, do you see the industry-wide compression in terms of gross margins or operating margins for the next five years?

Whether the profit pool would actually shrink in terms of percentage? So, you know, when you say for the next five years, it is very difficult to answer.

Our objective is to, you know, in a reasonably acceptable short period of time, become the number two player and also become profitable as early as possible.

So, I think if we follow the principles, the answers will lie there. Now, Uncle, would you expand the dealer margins or would you actually sell at a cheaper price? How do you intend to do this?

So, you know, we are not disclosing anything on our pricing. I think when we launch at the market, you will come to know.

And the launch is dated for the next month?

So, you know, we have disclosed that we will launch it in this quarter.

So, it has to happen either in February or March. It's only a question of few weeks. Got it.

Thank you so much.

Thank you.

Thank you. Due to time constraints, this was the last question for today. On behalf of Grassy Industries, that concludes this conference. Thank you for joining us and even our disconnector lines.