Ladies and gentlemen, good day and welcome to Grasim Industries Q4 FY 2021 investor conference call. We have with us today from the management, Mr. Dilip Gaur, Managing Director, Mr. Kalyan Ram, CEO, Global Chemicals & Group Business Head, Fertilisers & Insulators, Mr. Jayant Dhobley, Chief Executive Officer, Chemical Division, Mr. Ashish Adukia, CFO. 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 touchtone phone. I would now like to hand the conference over to Mr. Ashish Adukia, CFO. Thank you, and over to you, sir. Thank you. Good afternoon to all the participants. I hope that you and your families are safe. The FY 2021 was a year of two halves. We started on a very grim note in quarter one with low operating rates across all our plants, which was followed actually by a solid recovery from quarter three onwards. In this quarter presentation, we would like to start the discussion with highlighting the qualities of viscose as a green fiber. What makes viscose the green fiber is based on three tenets, which are green product, green technology, and green ecosystem. These are highlighted in the presentation on page four, which has already been uploaded. We have listed down six powerful credentials of viscose, which makes it superior product on the sustainability front. Viscose is made from ethically 100% sourced wood and from sustainably managed forests. The land for viscose wood does not require added fertilizer or pesticides, therefore, there's no use of chemicals for growing its raw material. Viscose needs very less amount of water as compared to other natural fibers during its life cycle, which makes it low on water consumption. Viscose is also fully biodegradable in eight weeks. In comparison to that, the other fibers take much longer. Additionally, pre and post-consumer waste can be converted into fiber again, resulting in circularity. Grasim is one of the companies which has all the three generations of fiber under one roof, which are viscose, modal, and lyocell. Lyocell technology is a closed-loop technology with an exceptional recovery rate of key chemicals such as NMMO, which is recovered by more than 99.7%. Even the recovered water from the process is reused. We are currently implementing a closed-loop technology in all our viscose plants, which will lead to reduction in emissions to air and water, improve the working ambience, and also cut down on raw material consumptions. We also have unparalleled focus on adopting global standards and systems accepted and recognized globally. We have received Higg FEM 3.0 average scores for all our sites. We are committed to achieve stringent EU BAT norm for all our sites by December 2022. Key to create ecological value is to use less. On page six, you'll see how we have reduced use of water, caustic, and focused on reducing emissions. Moving on to the third tenet, which is a green ecosystem. It's about making an impact that goes beyond your own operations. The three pillars of green ecosystem are responsible sourcing and the supply chain, valuable partnerships, and social responsibility. We ensure that we source our wood pulp requirement for certified forestry that follows responsible practices. We work with our partners in the entire value chain to impart the importance of sustainability. We partner with TextileGenesis that provides end-to-end supply chain traceability for textile industry. We have also been making a positive impact to the society around us for many years. As a company, we have actively engaged with more than 1 million people across several states. Our CSR spends are focused on education, supporting 25,000+ students, health, sustainability livelihood supporting almost 14,000+ farmers, infrastructure development, and women empowerment. Our efforts towards sustainability has not gone unnoticed. Under responsible sourcing, VSF was ranked number one in Canopy's Hot Button Report 2020 with dark green shelf rating. The VSF business received the prestigious Innovation and Sustainable Supply Chain Award from United Nations Global Compact Network India in 2021. The business was given the award for its pioneering innovation relating to recycled and circular fiber made with pre-consumer fabric waste based on in-house technology. Let me now switch to the operational and financial performance of the company. The fertilizer business divestment process is expected to be completed by quarter two FY 2022 after receipt of NCLT approvals for the scheme of arrangements amongst other pending approvals. The reported financials has already classified it as discontinued operations. Grasim Premium Fabric Private Limited, the erstwhile Soktas India, which was a subsidiary of the company, has received the approval for merger with the appointed date of 1st April 2019. We are yet to file the final order with the ROC, but as substantial steps are already over, the financials of this subsidiary has been incorporated as part of textile segment of the company. In the fourth quarter, all our businesses witnessed all-round improvement in operational performance on back of strong consumer sentiments due to receding COVID cases. The financial performance of VSF epoxy textiles was much ahead of expectation in this quarter. The global textile fiber demand witnessed a sharp recovery in second half, led by spurt in consumer demand and restocking of the dry supply pipeline. The growing consumer preference for comfortable casual and value-for-money clothing has spurred demand for cellulosic fiber, and VSF has been key beneficiary of this shift. In India, VSF plants operated at full capacity for two successive quarters. The domestic demand grew by 9% YoY in quarter four. The share of value-added products in the overall sales mix also improved to 26% in quarter four as against 22% in quarter three. The VSF prices in China traded at their multi-year high in China. The VSF prices rose from RMB 12,800 in January to RMB 15,800 in March 2021. This was driven by strong consumer demand, restocking, and rise in cotton prices during the last 12 months. China's VSF inventory at plants declined significantly from 45 days in April to 13 days in March. The VSF business reported one of the highest EBITDA of INR 548 crore during quarter four. As part of VSF segment, the VFY business reported revenue of INR 465 crore and EBITDA of INR 77 crore in the quarter. The chloralkali capacity utilization touched 94% in quarter four from 89% in quarter three. The international caustic soda prices improved sequentially, led by temporary supply disruption in the later part of the quarter. In the chemical segment, the Advanced Materials business, that is epoxy business, witnessed sales volume growth driven by demand across segments, especially wind and auto segment. The sector witnessed demand outstripping the supply due to raw material constraint coupled with disruption at certain global manufacturers leading to exceptional performance. Our consolidated revenue for quarter four rose to INR 24,399, up 26% YoY, and the EBITDA and PAT was INR 5,142 crore and INR 1,715 crore respectively, jumping 62% and 14% YoY respectively. On the standalone basis, excluding the discontinued operations of fertilizer, our revenue and EBITDA for quarter four stood at INR 4,394 crore and INR 880 crore respectively. EBITDA reported an YoY improvement of 121%. The revenue and EBITDA from the discontinued operations of fertilizer for quarter four stood at INR 561 crore and INR 33 crore and has not been included in the published financials. On CapEx, you may please refer to page 14 of the investor presentation. The total CapEx spent for FY 2021 stood at INR 1,508 crore. The CapEx plan for FY 2022, excluding paints and fertilizer, is INR 2,604 crore, which includes the VSF expansion project at Vilayat with line one scheduled to be commissioned in quarter two of FY 2022 and line two to be commissioned in quarter three of FY 2022. The other CapEx includes Grasim's plans to invest towards increasing its Advanced Materials, i.e., epoxy business capacity by 125 KTPA. This will be done through a brownfield expansion at the existing location at Vilayat, Gujarat. This will include standard and specialty epoxy products along with curing agents. Being an industry leader, Grasim will continue to play a proactive role in growing and supporting the demand growth of epoxy. In the chlor-alkali business, Grasim plans to invest in 200 TPD caustic brownfield expansion at Vilayat. This will take the total capacity to 1,400 TPD at its Vilayat site and will primarily meet the customer's requirement in the country's western region, including that the requirement of VSF business, which will also be commissioning its expanded capacity. The expansion will be commissioned in 24 months post receipt of statutory clearances and approval. The expansion of chemicals VAP, which is in various different VAPs, will improve the overall integration to about 40% by FY 2025. This is excluding what we plan to sell to our customers through pipelines. We have successfully commissioned 182 megawatts of new capacity in our solar business during FY 2021, taking the total capacity of solar to 502 megawatts. I would like to remind you that the solar business is in our subsidiary. It's not a division, so it's not included in the CapEx slide that you're seeing. It's a subsidiary, so it's separately captured. In next two years, we are scheduled to add another 343 MW of new capacities. Our balance sheet has stayed strong despite headwinds in half one. At the end of the year, the consolidated net debt stands reduced to INR 8,831, a 58% reduction from March 2020 levels. At standalone level, the net debt reduced from INR 2,999 crore in March 2020, which included the debt of erstwhile Soktas, which has got merged now, to only INR 914 crore in March 2021. Based on our performance and comfortable liquidity position, the board of directors of Grasim has recommended a dividend of INR 5 per share for the year ended 31st March 2021, and in addition to that, a special dividend of INR 4 per share, taking the total dividend to INR 9 per share. The total outflow on account of the dividend would be INR 592 crore. In terms of outlook, we expect the second wave of COVID to impact the operational and financial performance during the lockdown due to the demand slowdown, we expect the recovery to happen as much as last year after the lockdown is over. With our inherent financial strength, operational excellence and diverse product portfolio of cement, financial services, viscose and chemicals, we've always demonstrated ability to be resilient and rebound quickly. Now I would like to hand it back to the operator for Q and A. Thank you very much. Ladies and gentlemen, we will now begin the question-and- answers session. Anyone who wishes to ask a question may press star and one 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 handset when asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Priyank Mahajan from Kotak. Please go ahead. Hi, this is Sumangal Nevatia from Kotak. Thanks for the opportunity and congratulations on a good set of numbers. First question is with respect to the VSF business, a very strong recovery, but starting April, we are seeing some softness in prices and also cost is expected to catch up as far as pulp is concerned. Is it possible to share some color both on prices and cost in Q1 2021? How is it moving? Also, what is the recent volume trends given the recent lockdown and restrictions in the country? Thanks. Yeah. Dilip can answer. Dilip, you can. Yeah. I could share the question properly. It is about you, [inaudible]. VSF. No. Dilip, the question is regarding the second wave of COVID, how it has impacted both price and volume? Yes. Something about pulp you wanted to know, right? Yeah, the pulp price because the cost is going up. Yes. Sorry. If you look at the quarter four, and as we did the quarter four, the demand was very strong. I think India witnessed the highest ever consumption of viscose per day in the March quarter. Until the lockdown was imposed, the going was pretty strong in the market. The prices of the global prices have been at the peak in the quarter four, but those prices were exceptionally high because of, there was underlying demand, but there was a lot of restock in the market. We expected some rebalancing of the prices to happen. To that extent, yes, there was some moderation in the pricing, but still the VSF pricing remained quite aggressive. That's important there. With the lockdown, as you know, a typical textile from fiber to garment, at least move across four to five states. Whenever there's a lockdown, the entire value chain gets stalled. To that extent, there has been a demand drop, I think the domestic demand has come down significantly because of lockdown. Particularly in South, Tamil Nadu is hit very badly. The April demand loss was about 35%, maybe even higher. What we are doing. The underlying sentiment remains very strong. When you talk to the value chain, they believe that the day lockdown is lifted, there will be an outstanding demand. They pick up very fast. The good news is the global market continues to remain very strong. People who have the export businesses are doing extremely well. The export businesses are going full circle. I think the U.S. economy is doing well. The U.S. retailers sales have done very well. The Asian sales are doing well. To my mind, I think once the road bump of lockdown get lower, the demand will come back to its healthy level. Yes, like all commodity, the pulp prices also have gone up, but there's an overdue. VSF has already, if you look at the VSF prices, they're gone up by 54% YoY. Pulp is now catching up. In our case, the advantage we had is, if you recall last year when the pulp prices were falling because our pricing is one quarter behind, we are always losing. Today, we will at least for two quarters we get a benefit. Our conversion cost of pulp is not going as fast as the market prices is going up. It's a very similar logic our business has. Yeah. Does that answer your question? Yes, Dilip, that covers it well. I think one more point, What has happened is that, of course, the spread of VSF over pulp has gone up significantly, and it is gone beyond even FY 2019 levels, which will normalize with the pulp prices also catching up. Okay. Is it fair to conclude that fourth quarter we've hit the peak in terms of profitability or in terms of margin, given the benefit of lead in our VSF prices versus pulp? Is that a fair assessment? I couldn't hear. Can you repeat your question? Line is little bad, yeah. Yeah. I think, Dilip, what Sumangal is asking is that, is it fair to conclude that quarter four was the peak for EBIT costs? Yes, obviously. You see, it was not only the demand growth, there was a restocking happening. The peak of that was a multi-year peak. That's it. Understood. Second question is with respect to the CapEx. Ashish, last year, fourth quarter, outstanding CapEx was somewhere around INR 5,000 crore. This year we spent INR 1,500 and the plan is another INR 2,500 odd in FY 2022. From a design CapEx around INR 1,000 odd crore is still pending, which will be spent in the following year. Is that the right understanding of the CapEx spend? No. Sumangal, I don't think you should read it that way. I think earlier we used to give the sanctioned amount, right, which was more of an outstanding CapEx, and then we used to show year-wise breakup. Okay? I think to give better guidance to the market because it was very difficult to give outlook of two years down the line what the CapEx would be. To give a better outlook, now we are giving one year outlook of CapEx, which is other than for paints, which is, and fertilizer is INR 2,600 crores. That's how you should be reading the chart. Don't calculate the balance amount and assume that would be the future amount. Okay. In terms of all our ongoing projects, will we be completing all the expenditures for those in this year itself? Yes. There will be some leftover? No. VSF 600 TPD, what I talked about, the two lines in Vilayat will complete in quarter two, quarter three. The chlor-alkali capacity expansion, which is ongoing in Vilayat, the current ongoing in Vilayat and Rewa and Bhadradri. There has been some delay in these capacities to come because of the COVID. Okay. The local situation in, for example, Bhadradri is not good, therefore we are having to push out the CapEx commissioning. There is some delay out there. In terms of Vilayat new 200 TPD, we are giving a guidance of 24 month after receiving the statutory approvals. Yeah, these are the broad timelines of the current plan that I talked about. Jayant, is there anything that you would like to add in that? Please feel free. No. The only thing I would add over here, Sumangal, is like our chlorovinyls, that will come up in Vilayat again in early H2. Rewa will come in early H2. Bhadradri phase one will come in early H2. As the 200 fresh expansions will take another 24 months. We have a fairly large set of projects which are going to be coming up in the chlor-alkali business this year, starting H2 early till the end of the year, getting commissioned. Understood. Thanks for the details. Just one small clarification. The CapEx slide mentioned ex of paint. Does it mean that this year there will not be any start of CapEx in the paint business, or it's still very early to share details on that business? Yeah, it's the latter. There will be CapEx in paints business. As you know that it's only about three, four months back that we discussed about entering into paints business. We are still formulating our strategy and CapEx plan as we're going along. We're looking at land acquisition, et cetera, for the locations of our plant. Right now, it's too early to say what the CapEx guidance for the year would be. Therefore, we are just maintaining the earlier guidance that was given right now, which is INR 5,000 crore over three years of CapEx. As we get more clarity, we will feed that to our investors. Got it. Thank you so much, and all the best. Thank you so much. Thank you. The next question is from the line of Piyush Chaudhry from Angel Research. Please go ahead. Good afternoon, sir. Sir, I have two questions. One is on VSF and then on chemicals. First on VSF. Sir, VSF prices, like in the presentation you have shown that the gray VSF prices have moved from almost $1.2 a kilo to almost now $2.2 a kilo. How does the premium move for the value-added or the specialty VSF? Because if I recall it correctly, in Q2 conference call, you mentioned that premium for Modal Excel is generally $1 premium to the gray VSF prices. Let's say gray VSF prices were $1.2 in Q2 and now at $2. How does the premium move for the specialty? Because what I find from the numbers is, I think the value-added premiums have slightly shrinked as compared to what we were earlier doing. Let's say in H1 FY 2021. If you can give us some sort of explanation here. A related question for specialty VSF is that how is the market for specialty VSF in India? How it is growing over the years, and if you can explain our market share in terms of the growth, what we have seen in the specialty VSF market in India. This is about VSF, sir. Thank you. Good question. I'll respond to first your premium part of it. If you recall our earlier conversations, I had told you that the premium always goes up when the base VSF price is less. Sir, your voice is slightly inaudible. Could you be slightly louder, sir? Can you hear me now? Yeah. Now it is okay. If you recall our two conversation on a couple of occasions, I have always maintained. Yeah That the premium goes up when the base VSF price goes down, because there is a band in which the premium price works. Okay. If you take a Modal price, there is a INR 18,000-INR 20,000 price. Correct. When your base price goes down, you see a premium going away right up to $1 plus last time. Correct. If you go three years back in history when the prices were again to $2. Yeah. The premium had gone down to $0.6. There is always a healthy premium with a band, $0.6-$1. Okay. When the base price has gone up, the premium has shrunk to that extent. Okay. The second point is, the other thing is the premium products are a mix of, there's a Modal, there is a dope dyed, there is a lyocell or Excel, and there is Eco. Different products have a different premium. You have to look at the each category. Okay. There's no flat premium across the board. Absolutely. The third is one product, which is the lyocell or Excel product. Here, there has been a bit of a structural change in the market. Okay. Because a lot of Chinese capacity has started being announced recently. They have not come on the ground, but has announced. Okay. China has been able to make not the quality of Excel or lyocell which perhaps we make or our European competition makes, but that is good enough for certain applications to go in the blend. Okay. That had lowered Because in anticipation of the very huge capacity announcement- Yeah Saw a temporary dip in the price of lyocell in Chinese market. Okay. Premium went down. Okay. One of the competition announced that, "I will launch a lyocell at just INR 2,000 premium to viscose. Okay. Without anything on the ground. Okay. It was a more sentimental response, but it is now recovering back. Okay. You did see a bit of transition on the premium part of it, right? Okay. The fact remains that in all these things, the premium market has been very strong. Okay. One of the big savior demand all along has been the demand for premium market. I think the Modal is doing pretty well. There's a huge surge in the market across the world. Part of the premium market which I had spoken to you about is called the Eco, the eco-friendly viscose. I think the brand has been very enthusiastic in receiving this brand. A lot of commodity viscose has been moved to Eco viscose. Okay. They can get a sustainable 20% premium. That is a good premium, but there is no difference in fiber. Okay. What you do is you make it via a process which is more energy efficient. You make it with [inaudible] and you give sustainability. Okay. That has been a very big change. I think to that extent, the whole textile world is shifting more and more to specialty fiber. That is good for the fiber business. Okay. I think we have seen our share of specialty is 100 out of 400 basis points. Yeah, correct. The good question, Indian market for specialty is moving significantly. We have got a CAGR of more than 20%. Okay. In fact, we had taken a very ambitious of going to the specialty market in India, which we have more than achieved. I think specialty in India is taking off pretty well, and we have got the market leadership now. Correct. We have got the market share. Correct. We see about 20%, 25% of the share. I think that's what I said. Okay. The second question is on the chemical side. If I see your quarter-on-quarter EBIT, I think it has not moved up much. One of the statement in the presentation is that caustic has seen some cost pressures, probably. The cost increase is mainly because of the power cost or any other reason? This is one, and a related question is if we see for the epoxy, what you have rightly mentioned in your opening remarks also. What we have seen is that the percentage increase in the prices of LER is more than probably all the raw materials put together, be it bisphenol or be it the epichlorohydrin. When we see the profitability, I think it has not moved up much on a quarter-on-quarter basis. If you can help us understand that is there any lag effect which would be visible in H1 of FY 2022, and if you can give some understanding about our expansion also, because I think we have announced an expansion by 125,000 tons for epoxy. Are we also planning some backward integration like some of the players in India have announced standalone capacities for epichlorohydrin. Are we also planning same sort of backward integration? Thank you. Jayant, would you like to come in for the cost side of this business? Yeah. I think the larger impact on a flattish kind of a situation on caustic is due to the international prices, which only started seeing a little bit of an uptick in the later part of March of the last quarter. On the commodity side, I think each one of us knows that the prices did go up. I think our power management, we did a good job in our activity. We were not impacted too much in the power cost until in the coal increases which happened. The results are more because of the caustic price movement rather than anything else on that particular front. I hope that answers your question. Yeah. I think ECU realizations were also higher on a quarter-on-quarter basis. Marginally higher compared to the earlier one, not significantly higher. Yeah. That's what I'm saying. The last part of the quarter, there was an uptick basically due to the winter storm in U.S., which led to a little bit of a demand supply situation, which did move the prices up. Correct. Okay. On the cost side, basically, there was some also repairs and maintenance, et cetera, of the plant, which increased the cost a bit more than quarter three in comparison to quarter three, which you have mentioned. Yeah. On the epoxy front, I will request Kalyan to come in. Yeah. I think there are a couple of questions out here. Epoxy, one is on the prices increase in realization had increased quite a bit. Okay. According to Viral, the margin is not reflective of that. Is it because the cost increased? Yeah. I'll take that, Ashish. Please go ahead. Epoxy as a business has always been an extremely steady business for us. We are a business where we are now more or less sold out on our epoxy capacities. What happened in the last six months has been more with bisphenol A. Globally, bisphenol A for various reasons, initially force majeure, and later on, a real serious shortage through supply chains, have not been very easily accessible. The demand has been picking up for the end products, whether it is just as resins or in terms of our own formulations we offer up to the formulations, the specialties as well as formulations. When bisphenol A became severely short, majority of epoxy players have actually not run their plants 100%. They could only run at, say, 90%, 85%, 95%. What we have done is we look at it as product, as a formulation, and as a solution. Within the raw materials that were accessed, because we had one of the better supply chains, we could get majority of our raw materials, which we had planned for, at least in the Vizag plant. We have used it for gaining the key customers and their requirements, mostly from both products as well as solutions. In a way, it's hypothetical whether a bisphenol A was low price or high price. It was not just available after a while. It's about getting access, whereas once you get access, you would definitely be able to pitch it at a much higher price. What we expect in the next one to two months, this might flip slightly. We expect, at least for the next month or so up to June, this quarter should still be fairly strong. Still, the raw materials are not available. When the raw materials are fully available by the second quarter, the prices might soften a bit, but still, we expect the market to be strong because at the end of the day, all of the downstream coatings, electricals, auto, wind, all are going strong. That's also one reason for us, we are sold out and we are looking at expansion. On integration side, if you can- Yeah. Very obvious. If you can think of it, we are the largest chloralkali player, we are the largest epoxy player, and we are a highly integrated across the board, and we are a chlorine derivative player. It's very obvious that we should be putting the largest ECH plant too. It is at an advanced consideration. It is being reviewed. It is being finalized. Maybe we will have something to tell you in a period of time, in a short period in future. Okay. Thanks a lot for answering the queries in detail. All the very best. Thank you. Thank you. The next question is from the line of Chirag Sureka from DSP Mutual Fund. Please go ahead. Hi, this is Vivek Ramakrishnan. I just wanted to know about the leverage policy, because your net debt has come down significantly, and the way I see it is even given your CapEx from funds from fertilizer sales and internal accruals, you'll be probably net debt negative or you'll be cash positive in the matter of a year or so. Could you please explain where would you like to take this? Thanks. Sure. I think, see, I would not like to comment on it being net cash by end of the year because we have certain CapEx plan. We've not yet discussed paints CapEx, but if you include paints CapEx, then it's possible that we will not be able to go back to the net cash position. Overall, if you look at the policy that we follow, is to stay AAA for Grasim. I think it's very important that we remain investment grade, both in the international as well as domestic market, because that's the leverage that I have in terms of my cost of debt and my ability to therefore undertake projects and implement projects. Our AAA balance sheet also helps our subsidiary like ABCL to get a good cost of debt as well. It improves the return for the equity holders because of their margins, NIM, et cetera, going up. Therefore, keeping that in mind, of keeping a strong investment-grade balance sheet, we don't like to go, definitely not beyond 3 times on a net debt basis, but that's really on the outer limit where I have to get worried and start doing things like selling non-core, et cetera, to make sure you come back. I don't anticipate our net debt to EBITDA ratio in the next five years going beyond 2 to 2.5 times, even with the implementation of our paints CapEx. Thank you, sir. That was very useful. Thank you. Thank you. The next question is from the line of Prateek Kumar from Antique Stock Broking. Please go ahead. Good evening. Thanks for the opportunity. My first question is on your CapEx. Last quarter, if we recall, while the numbers are not given very precisely, but you were sort of thinking of spending CapEx of around INR 2,500 for next two years, 2022, 2023. Now you are saying INR 2,600 for FY 2022. Just wanted to understand what is the new CapEx which is around just in this quarter, particularly on new expansion projects on epoxy and caustic and otherwise? Sure. Without giving the numbers, like I said, the new CapEx that is there is your Vilayat 200 TPD. Bisphenol there is no new CapEx. Let me first clarify that. Okay. In chemicals, we have taken Vilayat 200 TPD- This is going to be incremental. CapEx is going to be very small because this is a brownfield expansion, the infrastructure, utility, et cetera, is all there in Vapi. There is no question of a large CapEx out here. Okay. There are a couple of value-added products, which is the chlorine derivatives, which we have also included. We talked about chloromethane. Like that, there are few more that we have budgeted for. We are not disclosing right now for competitive reason of what those products are, but those are some of the products that is there in chemicals. I've talked about epoxy. While it is not a very large CapEx, but amongst the CapEx between chemicals and others, other than VSF, which is pending, that is probably one of the larger CapEx that is there for epoxy. Other than that, in VFY, we are considering, and right now we've budgeted for a small CSY expansion. You have three products out there, PSY, CSY, and SSY, and CSY and SSY are much better margin products in comparison to PSY. Over a period of time, we want to make the VFY product mix more oriented to the high-margin products. That's why the whole idea is to put up some capacity in CSY. That's broadly what the overall plan in CapEx is. Sure. Earlier we were looking at [inaudable], now that completes by when? Sorry, your voice was not very clear, so I missed what you asked. The caustic expansion, we were looking to have a caustic capacity to 1457 KTPA. Yes. That was expected by 2022. When do we expect that capacity? Yeah, sure. Thanks. That capacity, like Jayant mentioned, is likely to come in the early second half. It was supposed to have come in quarter one, quarter two, but it got delayed to the second half because of COVID. What you see out there in the chart, is additional 200 TPD, which was also another 73 KTPA, which will take 24 months. On VSF profitability, like the prices, based on our channel checks and industry interactions, like pricing look very high from Q on Q, it is sort of flow to profit, but cost also seems to have increased by 15% quarter-on-quarter. Has there been already impact of higher pulp during the quarter? Or is there some other cost which has hit the quarter? No, in VSF, there is no impact of high raw material cost in this quarter. Only one, sulfur price has gone up and coal price. Okay. Sulfur and coal has gone up. My apologies. Pulp, while the market has gone up by 30%, our transaction cost has gone up by 7%. Yeah. The real impact of the raw material cost increase due to pulp will come in only in quarter two, perhaps. Quarter two or three. Quarter two, end of Quarter three, yeah. Yeah. My last question on the Soktas amalgamation. Since when it has been amalgamated? Full FY 2021? Yeah. What you see in the financial is the entire year's financials of Soktas is included in the financials of textiles. What you see is 100% of Soktas. No, I mean it is for full FY 2020 and 2021. Yes, that's right. Even the comparable figure. Absolutely right. Okay. Sure. I'll get back. Thank you. Thank you. Thank you. you. The next question is from the line of Navin Sahadeo from Edelweiss. Please go ahead. Hello? Yes, Navin. Hello. Yeah, good evening, sir, and congrats for the good numbers. Just one question. Sorry if it's a repeat, it may be due to bad audio. What was the average pulp cost in Q4 and where are the prices currently? Q4, you want to know the market price? Yeah, because I believe largely we are integrated, if you could help us with our cost, as in what was our cost for Q4? Even if we are integrated, we are at arm's length pricing. We buy pulp from our subsidiary on arm's length basis. It's a market driven price. Understood. What was the price for average Q4? Q4 average pulp price of the China BHKP was $918 per ton. Right? Spot price as of quarter end was $1,100 per ton. Yeah. If I give you an indication, so that's the pulp spot price in quarter four, our consumption rate would be, because we are getting advantage of the earlier pulp prices and our contracts, et cetera, would be somewhere around 54,000 per metric ton. Okay. The consumption price. Understood. This will, as the time goes, like we said, it will go up? Correct. Both from a pricing point of view, because there is some cool off that has happened to the VSF prices also. I mean, though your presentation says that March exit prices are 13% higher over Q4. Thereafter, clearly there is some easing off that has happened, if not more, at least 1,000 RMB to the China prices and cost is also going up. Fair to assume that there can be a decent sort of a margin pressure in the coming one to two quarters, right? The other way to look at it is Q4 was exceptional margin quarter. It was not a normal margin. Yeah. Normally you see a good VSF business has a VSF to pulp delta of 0.9. That delta went up to almost 1.3, 1.4 in Q4. That was an abnormal quarter. I think what you will is compared to the healthy margin quarter. Fair. I was just looking at slightly longer term in the sense this current quarter margins were at 24% and historically a peak has been even higher upwards of 35%. Just from a longer term perspective, given, let's say, China is acting up towards some of the environmental concerns, so slightly broader question, and this is more from the feedback that even in metals we're seeing China acting towards these environmental concerns and hence shutting some factories. Is there anything that is happening on VSF front from a broader perspective which can see that margins can or prices can see up because this is what the range is. There are two things in VSF what is happening. The biggest question mark is on the cotton. See China makes cotton in Xinjiang region, which 85% of the China's cotton comes from there. That cotton has been banned by the U.S. and European brands because of the human rights violations and major sanctions are there. If that happens, it is happening already, and that's why there could be a run up in the cotton prices. The moment cotton prices go up, of course, gets the benefit. The one big upside is what happens to the Indian cotton issue with the China, because there is no way China can substitute the Indian production if they have to win the export market. If they don't do it, China's margin gets vacated and people benefit because of that. Either way, it will help the business. That's the upside. Now we have to see how it unfolds. We can't predict how it will unfold. That's a fair point. Right. Thank you. Cotton prices have gone up despite the fact that people thought it might come down because the cotton prices are pretty high, both the cotton yarn prices as also the cotton itself, and the export of cotton will happen midway in the time. That's the benefit. Okay. Thank you. Thank you. The next question is from the line of Satish Kumar from Antique Stock Broking. Please go ahead. Yeah. Thanks for the opportunity again. Given the very strong exit of caustic soda prices for March quarter, so our margins can be quite different in Q1, let's say, in for 2022 or they should be like range bound here as well because of higher cost? Well, Ashish, would you like to say? No, I think, difficult to give a guidance for quarter one. Yeah. I mean, generally, we had a very strong margins in caustic segment also in FY 2019 and let's say FY 2020 also first half. It started to fall in line with industry, I guess. With now the improving prices, I'm not sure if they're sustainable. Should we see margins of chemical segment improving going forward? Yeah. Maybe I'll take that, Ashish. Yeah, please go ahead. No. I think the assumption very clearly, even in terms of our aspiration for this year has been that it should be at least equal or higher than the previous year. Hence we are expecting or we are hopeful of it. Two or three things which are concerning us. Number one, in the first quarter, because of the second wave, we have some difficulty in certain segments for at least six weeks. The second concern we have is we were expecting certain projects to take off by end of first quarter, second quarter, and then that's coming towards the later part of the year, the second half, as Ashish mentioned. See, both will have a slight impact on the overall year ahead. What we are banking on is what was unexpected last year was the V-shaped recovery. If really the market recover as well as last year, I can probably imagine that we would at least partially recover this, but it is too early. As Ashish said, we can't really say it's going to be as good or better or worse. We're taking one quarter at a time. This quarter, I think we want to just see how May goes, and then June, how it recovers, and we'll take it from there. Thanks. Thank you. That was all. Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead. Yes, sir. Thank you for the opportunity. In continuation to as being remarked, sir, when the first wave of COVID hit, it was all of a global phenomenon. Now, as we see that the international markets have opened up and the utilization levels there industry-wise are coming to their pre-COVID levels. In terms of that scenario, sir, how well is this caustic market shaping up? Sir, what kind of imports have happened for the last year, and what would be the situation going forward this year, sir? Let me take that, Ashish. I think, yes, you are right. At the end of the day, when you look at Q4, you had in the winter storm coming up a robust global demand on caustic, including India. Practically all of us grew, and we did actually better than the Q4 of the preceding year on volume basis. At this point of time, I think caustic demand is actually linked with chlorine demand, and chlorine demand is largely globally linked with the vinyl demand, which is doing very well. Whereas vinyl production or PVC production in India is not there, and that's why the impact is significant over here. It's a localized wave 2 that is impacting the situation currently. Even like last year, if you looked at it from a removal of lockdowns to getting back to peak, it took about 60 days, the entire industry was up and running in late 80s as a capacity utilization. That is what I think Ashish and Kalyan have been alluding to, that if the situation changes, it'll change very fast because the inherent underlying demand continues to be there. Globally, we also expect that the demand will be robust. As regarding imports, I think the entire supply chain globally was disrupted, so we did see a marginally about 10%-15% less import compared to last year. That is also because the Q1 literally was a washout for the whole industry as large capacities were not up and running. We expect the imports to continue at the same pace as they were last year in the current scenario and largely to the eastern and the western part of the country, which is coming from your Japan side or Northeast Asia. Not too much expected on the import side. It will continue to be at the same pace as about 3.5 million tons annually, which came in earlier and coming now. Sir, on the anti-dumping part front, something was initiated earlier a few months ago. What is the update on that front? The update is, I think with the entire COVID situation, the investigation pace has slowed down. We've had a couple of meetings with the body, I think till the investigation is not over, we will not be able to comment. Sir, taking these factors into account, the price trends in the caustic market are likely to be subdued only because, sir, if the recovery in other chemical segment or other market have not led to recovery in caustic soda realization, what factors would lead to recovery? I think so it is still hovering around that $300 band, something in that vicinity. Yeah. It is hovering in India at about a shade less than $300 band as of now. Sir, to get out of this band, what would be the factors that will reverse this downtrend in the ECU realization that is there for, I think, the last two years sometime now? To your point, I think caustic is a basic chemical, so it goes into all the commodity applications. At this point of time, any capacity which comes in, it's like a step curve. When the prices are very high, a lot of capacity additions took place. We expect that lately the capacity utilization for industry has gone up, and also the recent trends in the last quarter, Q4, we did say that the prices of caustic have moved up slowly. We expect that trend to continue, but it is again a function of the larger clarity coming when this COVID wave 2 settles down and we start seeing the industries and the lockdowns opening up. It's very difficult at this point of time to say anything on that front. More so, the current capacity in India is about 20% higher than the current demand, 20%, 25% of the current demand. It's a combination of the lockdowns and the capacity, which is keeping the caustic price, I would not call it subdued. It's basically being at this point of time, it's not being able to keep pace as like it used to keep pace in the past. Sir, very small point. We are also coming up with new capacity. Not only Grasim, other players also. Someone has commissioned also, and people have lined up fresh capacity. Say six months, one year, two years down the line, including you. In that case, there has to be a demand push to keep up for these expanded capacities going forward and plants running at higher 90s. Otherwise, the fixed cost and the variable cost metrics will also dampen down the margins level. That assessment is correct, sir? No, I will not be able to comment upon what the others are doing. I think everybody understands and looks at the market situation, looks at their own customer base and capabilities, and then arrives at It's not that you can set up a caustic easily. It takes you about 24 to 36 months to put up a greenfield and about 24 months for a brownfield. All in all, we all believe that caustic has a great future being a basic chemical, and that's what is moving this industry forward. If you look at from our consumption scenario, our demand supply, we're just about not even yet at a 5 million ton capacity. The good part what is happening is the chlorine story, which is improving quarter-on-quarter, that is what is also now balancing the ECU, which was earlier mostly skewed towards caustic and chlorine as of now. I think there is potential in this business to go further, that's what is being led by the entire industry, including us. Right. For the chlorine derivative part, my concluding remark. For the chlorine derivative part, what percentage of our chlorine goes to the downstream and how much is in our market sale? As Ashish, I think he gave a figure. There are two parts we look at chlorine. One is the entire VAP story, which by 2025 we will be at 40%. There is a pipeline by which goes to a industry along with us or our ancillaries or whatever you call it. If I would take it for 2025, we will be somewhere around 65-ish odd%, 60%, 65%, which will be consumed by this particular mode, and the balance will go to the market. Yeah. Just to repeat, 40% VAP, another 25 would be pipeline, and the balance would be much of the same. That is for 2025, sir? Currently. Yeah. currently about 27% is VAP. 27%+ pipeline takes you to about 40%, and the balance 40, 45%, 50/55 goes to the market as a base. Right. One of your competitors are developing a product hydrazine hydrate. They are coming up with a capacity and as per their presentation and all, they will be the only player in the country. Have you looked into this product also and the demand scenario? What are the metrics in it? Like we've been saying quite earlier, because of competitive reasons, we don't want to get into a discussion what we are analyzing and studying. Let me assure you on one front, there are multiple products that we are analyzing, studying, and looking at. At appropriate time when we reach the comfort level is when we will get into announcements. Just to add a point. Sir, sorry to interrupt. Sir is only answering me. I have control. Just please allow sir to conclude. Yes, sir. Please conclude. I said I had to say that. Please interrupt me. It's very good to interrupt me. Hello? Yeah. I can add one last point, I think. Please. First of all, globally, there are no new chlor-alkali investments. They are just getting relocated. You might have heard there's been closures in U.S. and elsewhere. Each of the players in different countries are making choices. There's a huge amount of relocation going on from West to East. Globally, as the demand is going up globally, the new investments are not actually coming globally. They are only getting relocated. India is actually seeing a growth. Second, I think we don't invest on a next two year basis. We invest it based on next 30 years basis. We see, as Jayant said, a very strong growth option there, and we'll continue that. The last one is, we'll fundamentally see, unlike in the last 10 years, we'll fundamentally see chlorine making a lot more leading product compared to caustic in future, just like what happens globally. We will see more of that and more of chlorine derivatives and chlorine pricing, which is going to determine the ECU levels in future than before. We have seen all types of products. Again, when we look at derivatives, we look at derivatives where how much of chlorine intensity is going into these products. As Jayant said, I think we are doing a lot of calculation, but our scale is very large, unlike other competitors. When we look at it, we will have a much more focused conversations on selective chlorine derivatives than all of them. Thanks. Thank you, sir. Thank you for all the answers. All the best, sir, and stay safe. Thank you. Thank you. The next question is from the line of Amit Murarka from Motilal Oswal. Please go ahead. Yeah, hi, good evening. Most of the questions have been answered. Had one quick question on the timeline of the fertilizer business realization. I believe your guide for one year completion. That comes around September to December. Are you still confident of being able to receive the funds by then? The second question to that is it fair to say that the CapEx for the plants will only start after the realization of the funds from the fertilizer sale? The first question, you got it absolutely right. I think by September we'll be able to complete the process and receive the funds. On the second bit too, paints is irrespective of fertilizer. Right now the first dollars of paints will go into acquiring land. Which is already we are actively looking at, and we have started deploying that. Of course, I'm not talking about employee expenses and also that has already started. From the CapEx point of view, land will be the first one, which we've already started doing. Okay. Sure. That's all I have. Thank you. The next question is from the line of Bhavin Chheda from ENAM Holdings. Please go ahead. Yeah. Good evening, sir. What was the VSF top line and the EBITDA? I missed out from the presentation. Yeah. No, I had mentioned it in my speech. It is INR 465 crore of revenue and INR 77 crore of EBITDA. INR 77 crore of EBITDA. Okay. The other thing, I think the voice was not clear. I missed out because of the quarter one lockdown, how are your factories operating currently, both Chemical and VSF, and what would be the utilization level at both in the quarter one or current one? I check on the VSF? Yeah, please. I think VSF, all our factories are right now running full capacity except Harihar, because normally every year we take an annual shutdown for the pulp plant, which was supposed to be taken in the first week of June. That we advanced to this month of May. I think it's a good time to finish off all the shutdown so that when the demand comes back, we have full capacity available to us. That's the only thing we have done so far. Let's see how the lockdown continues, and then we'll review the normalcy once again. One more thing we have done is, like last year we did, as the lockdown happens, we focus more on export. There's a lot of exports we are doing from the Indian market right now so that our plants remain fully utilized. Export of fiber, as well as we have converted one line to non-woven in Kharach, and maybe one more line we convert. We start making again non-woven in Kharach. We will export in the Europe and U.S. market till the time the India normalizes. That's how we are making sure that the plant utilizes fully. Okay. Thank you, sir. Thank you. The next question is from the line of Niraj Jamodia from Ambit Capital. Please go ahead. Thanks for the opportunity again, sir. Sir, continuing with the earlier question, like you mentioned that we are going for more of the exports of the specialty VSF, what you mentioned about non-woven. Is it safe to assume that we are selling more of Modal and Excel in the domestic market and dope dyed and other value-added products are exported? The mix looks like more of Modal and Excel is sold here domestically, so the realizations are higher in the domestic market as compared to that of the export market for the specialty VSFs. You are right. See, Modal is sold in domestic market and exported both. Okay. About 30%-40% is sold in local market and balance are export. Okay. Lyocell, again, is sold in domestic market and export, but 30% domestic, 70% export. Okay. The domestic is at slightly better price because of the freight advantage what we have. Okay. Non-woven, the good thing what happened in non-woven is non-woven orders get into quarterly contracts. Okay. We have been able to sign highly high priced contracts because we negotiated them in the last quarter. Okay. That is a good advantage. I think the non-woven exports are going to be much better value than one would normally expect. Okay. Sir, if you can. Yes, sir. Continue. One point I would like to inform. We used to make our Livaeco, which I told you, the eco variant of our viscose fiber. We have now started manufacturing in Vilayat. Okay. With the new project that has just got commissioned. Okay. This is a big export from Grasim going forward, because Livaeco is huge demand by the global brands, which we started product about a year and a half back, and we have almost grown ninefold. Okay. That will start contributing now. Okay. Sir, in the presentation, you have given the exit prices for China VSF as well as the starting prices also. If you can tell us about our realizations for the gray VSF, some sense, some idea about how we have been. For Q4? Yes, sir, for Q4. For Grasim, sir. Yeah. Our realization is broadly in line with the China, slightly plus minus. The issue is, as I told you, China is an indicative price. Correct. Our pricing in the Indian market is driven by the local condition. Correct. How the value chain is doing. The buildup in the Indian market was slow. Correct. The Indian market didn't start moving in January, March it went up full capacity. Our price also went up gradually. Correct. March, my price was almost like a China price. Okay. The full catch-up happened in the month of March, correct? Yes, sir. Correct. Sir, and the last one- We don't change indicative price of product just because China is selling at some price. My realization has to be real according. Absolutely. Sir, the last and final query is on the epoxy. If you can give some sense of the percentage growth in our absolute EBITDA on a YoY basis. Let's say as compared to last year, last Q4 of FY 2020 and this Q4 of FY 2021, in what% terms our EBITDA has grown for the epoxy? Epoxy would be almost a big growth actually. If you look at QoQ, for example, okay? Yeah. Qo Q would be almost close to twice. Okay. It's almost double. Yeah. Q4 of last year was quite depressed because that was a quarter when you lost. Month almost. One week, sorry, of this one. You could assume that one and a half times compared to quarter three, one and a half to two times roughly, but much more in comparison to Q4 of last year. Got it. Thanks a lot, sir, and all the best. Yeah. Thank you. Thank you. That was the last question for today. I would now like to hand the conference over to Mr. Ashish Adukia, CFO, for closing comments. Over to you, sir. Thanks. I think we're all going through difficult times personally, so I hope everything is safe at your end. Please take care of yourself, stay safe, and of course, we will connect again in the next quarter. Thank you. Thank you. On behalf of Grasim Industries, this concludes this conference. Thank you all for joining. You may now disconnect your lines.