Ladies and gentlemen, good day, and welcome to Q1 FY 2022 Earnings Conference Call of Grasim Industries Limited. We have with us today from the management, Mr. Dilip Gaur, Managing Director. Mr. Jayant Dhobley, CEO of Global Chemicals and Group Business Head, Fertilizers and Insulators. Mr. Jayant Dua, Chief Executive Officer, Chemical Division, and Mr. Ashish Adukia, Chief Financial Officer. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Adukia, Chief Financial Officer. Thank you, and over to you, sir. Good afternoon, to all the participants. We are only a couple of days away from the start of the celebration of Independence Day, which is going to be the 75th Independence Day. It is a proud moment for us at Grasim as the company got incorporated 10 days after the independence. We will actually be celebrating alongside with the country, the start of the 25th anniversary of our existence as well. Going back to the performance, the first wave of COVID created a new learning experience for all of us. A challenge which was never faced and tested in the last 24 years. The second wave, which started in April of 2021, was even more severe. Our learnings from wave one helped us to counter the effect of second wave. For example, in VSF business, we switched our market mix in favor of export market to cushion our sales volume impact in the domestic markets. We also advanced our maintenance shutdown of one of our plants, the Harihar plant, to May 2021, from September 2021. Let me share with you some of the key highlights of the quarter. Let me start with ESG. As a first in India, our VSF site at Vilayat became EU BAT compliant. As part of this compliance, we successfully commissioned Carbon-disulphide Adsorption Plant, which is commonly called the CAP plant, and achieved the stringent level of sulfur to air emission norms stipulated by EU BAT references for the viscose manufacturing process. At Vilayat plant, the sulfur to air emission is expected to reduce by 85% by calendar year 2022. EU BAT is referred to as European Best Available Technology reference, it's one of the most stringent and comprehensive norm for VSF production. It is globally applicable, it sets out a strict range of consumption and emission limits. We'll be replicating that for our other VSF facilities as well. Another world leading initiative in ESG is that our Nagda VSF plant will be first to achieve zero liquid discharge in viscose industry globally. Decommissioning is expected to be completed by quarter two FY 2021. This year, we've shared our integrated annual report with all our investor, in this report, we have covered a lot of details on our ESG practices and initiatives. In this investor presentation, we have a snapshot of sustainability indicator performance for Grasim for FY 2021, also the environmental targets and performance against the targets for both the businesses. Our endeavor has been to improve the reporting standards on the ESG front. As a company, we are evaluating climate change risks and opportunities as per Task Force on Climate-related Financial Disclosures, the TCFD disclosures, and their recommendation. Outcomes of this study will be integrated with the long-term business strategy, risk management, and business planning. Let me cover the financial performance now. Our VSF brownfield project at Vilayat is progressing well and is scheduled to meet the commissioning timeline of quarter two and quarter three for the two phases that we have in this project this year itself. This project will bring down the cost of production for overall VSF business. This quarter, with retail being shut during the limited lockdowns, the sale of textile products suffered and led to an accumulation of inventory in the value chain. To cushion the impact of slowdown in the domestic textile sector, the company proactively increased the share of VSF exports to 31% in quarter one, FY 2022 from 11% in quarter four, FY 2021. Like I said, we also advanced the Harihar shutdown by few months to May 2021. The company is committed to increase the share of value added products in the overall sales mix. The share of VAP mix in the overall sales increased to 26% in quarter one from 22% in the entire financial year 2021. The VSF prices in China corrected in quarter one and have stabilized at the current level of about RMB 13,000. China's VSF inventory at plants increased to 24 days in June 2021 from 13 days in March 2021, leading to readjustment of production levels by the Chinese VSF players to take care of the inventory buildup and to lend stability to the prices. The net revenue from the VSF segment, including VFY, stood at INR 2,103 crore and EBITDA was at INR 488 crore. VFY volumes were also impacted due to weak demand conditions. The domestic fiber demand recovered swiftly post easing of the lockdown and is now nearing the pre-COVID levels. The revenue and EBITDA for VFY were INR 340 crore and INR 43 crore respectively in quarter one. In our chemicals business, international caustic soda prices maintained an upsurge in quarter one, driven by certain supply outages due to maintenance shutdown, and it was also backed by improving demand outlook. The rise in domestic caustic prices, however, was subdued owing to weak demand from textiles, organic chemicals, coupled with the excess supply situation. The caustic soda capacity utilization stood at about 85% in quarter one, which was higher than the industry average. During FY 2022, we expect significant commissioning of capacities at our chlor-alkali business. In quarter two of FY 2022, we expect commissioning of Rehla plant with a capacity of about 91 KTPA. As our strategy of increasing VAP, we'll be implementing the CMS plant at Rehla with a capacity of 55 KTPA in the same time frame. In the second half of FY 2022, we expect the commissioning of phase I of Rehla expansion and Balabhadrapuram facility, which has a capacity of 73 KTPA each. The advanced materials business, i.e., the epoxy business, reported its best ever performance in quarter one. This was driven by strong demand scenario and a better pricing environment, both globally and in India. The demand continues to be driven by the wind and auto segment. The key input costs like ECH and BPA witnessed a significant increase during the quarter, primarily due to supply constraints in those materials. The revenue and EBITDA for chemicals business was INR 1,436 crore and EBITDA was INR 275 crore. Our solar business, Aditya Birla Renewables Energy Limited, which is a wholly owned subsidiary of the company, we plan to commission about 38 MW of new capacity, which is group captive, in the first half of this year. Our consolidated revenue overall for quarter one rose to INR 19,919 crore, which was up 53% year-over-year. The consolidated EBITDA was at INR 4,736 crore, which was up 86% year-over-year. The PAT was up 6x on a year-on-year basis. On standalone basis, excluding the discontinued operations of fertilizer, our revenues for the quarter one stood at INR 3,763 crore. The revenue and EBITDA from the discontinued operations of fertilizer was INR 687 crore as revenue and INR 56 crore as the EBITDA. These are not included in the published results as part of the continuing business. The fertilizer business disinvestment process is on track, and we are expecting it to complete in quarter two of this year itself. Overall, on the debt side, the consolidated net debt stands reduced to INR 8,982 crore in quarter one, closer to the March 2021 levels. On a standalone basis, the net debt increased from INR 914 crore in March to INR 1,817 crore as at the end of June 2021. This was primarily on account of working capital change and some CapEx. If you look at the overall FY 2022, we are excited about the company mainly because some of our projects will be coming on stream. Of course, the benefit of those projects will be partly in this year and hopefully fully next year. This would help us in both bringing down the cost because these are low-cost new facilities and of course, increasing the volume. Over to you for questions now. Thank you. Thank you very much. We will now begin the question and answer session. Anyone you wishes to ask a question, may press star and one on the touch-tone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handset while asking a question. Anyone you would like to ask a question, please press star and one at this time. The first question is from the line of Navin Sahadeo from Edelweiss. Please go ahead. Good evening, respected management, and thank you for the opportunity. I have a couple of questions on the VSF front. Recently, VSF has been in the news. My first question there is, what is the current price of VSF in India and for a comparable grade, how does that compare to the landed parity? What I'm basically trying to refer is the removal of anti-dumping duty here, and in that context, just trying to understand what can be the potential impact of this duty going away. That's my first question. You want me to respond to this now? Yeah, please. I think we don't share the specific numbers, but of course, I think directly we'll be able to give the idea to Navin. As we speak, our local price right now is very competitive with our imported price because in fact it is a little better. That is not the case now only because for the last few quarters it has been like this. If you may recall, in this investor call I've always been maintaining that our domestic pricing is linked to many factors which are local. It depends upon the health of the local value chain, the price of imported yarn, which has no anti-dumping duty because that governs the fiber price, and the inter-fiber dynamic where the cotton price in India is different than the cotton price elsewhere. Based on these factors, as we speak, the current price is very competitive with the landed price imported and that has been the case for quite some time. I completely agree with you and historically also have seen it's been mixed. As you say, there are various factors at play, including the yarn prices and competing, the margins and stuff like that. I was also trying to just put in context here that since there was heavy lobbying by various associations, be it the Textile Industry Associations or the Spinners Association, to get this duty removed. From that context, since our new capacity is coming on board, while we are of course very competitive and I fully agree with you, as we speak, but is there a risk to the volume ramp-up because we are expanding volumes at a time when these end consumers, in a way, were demanding this sort of anti-dumping duty to go? Do you see some sort of a risk to the volume ramp-up because of this? Let's understand two things. There's a price and there's a demand. The demand for viscose is growing. In fact, as we have always been saying, the demand growth is exceedingly good and the Indian market is one of the fastest-growing markets in the world. We don't foresee any problem in terms of the demand part of it. The market, last four or five years, has been growing at 14% CAGR. Right? Right. The pricing, let's understand, anti-dumping duty becomes relevant. It is not an incentive. It is a penalty if somebody dumps. Anti-dumping is relevant when somebody is dumping. Otherwise, there is a global price dynamics and I think the industry is in a pretty healthy phase. We don't foresee any major impact as long as the dumping doesn't happen. If dumping happens, there are remedial measures available for that. Understood. Just one clarification, because typically imports happen more for the gray yarn fiber. When we say value-added products in our overall volume mix, that value-added products is the dyed yarn which is our specialty, which does not face much risk of imports. Is that a correct statement to make? Value-added products are dyed yarn, modal, lyocell. These are the value-added products, because not many guys make it. As I told you, modal, there are only two established players in the world, we and Lenzing, which is a Europe-based company. You know the Europeans have a fair bit good of pricing discipline. The second product is dope dyed. We are the world leaders. It's not possible. In terms of kind of color shades we make, nobody makes it that kind of a range. We have a distinctive positioning there. The third is lyocell. Again, you see the lyocell market, because the demand is outstripping the supply. That also again is not a major issue. Specialties are the direction strategy we have been sharing with you in all the calls. The idea is to move to more and more to the specialty portfolio. When we have shared with you that we want to be more than 40%-50% of the portfolio as to a specialty. Understood. Just one last question, if I may. Global prices for the quarter on an average basis have been, I think, definitely a little soft. We managed a realization increase, I think, largely with this huge surge in exports from 11% to 30%+. Of course, I believe prices in European countries and Turkey, et cetera, they're far higher, and that's clearly benefiting. My question is-- Yeah. What has happened is, if you see what has initiated the global pricing dynamics is the ocean freights. Correct. There has been a huge disruption, and there is no uniform case. There is a destination A to destination B, there's a different rate than from C to D. It depends upon if you choose your markets right, you will get better realizations. That's where a lot of optimization happens. From the same factory, one market may have a higher freight, other market may not have. In this difficult market, a lot of optimization has to be done in terms of your product and customer mix. Appreciate. My question basically was, when these exports come back, because domestic demand is now reviving, export comes back to its original normalized level of around 10%, 11%. With current prices being weak, this realization jump which we saw should get reversed in the current quarter. Is that a safe directional statement to make? The export never gives you more realization than domestic, because you always have the freight advantage. Okay. That is not the case. The realization jump which you are getting is because of the share of specialties has gone up. What happened that you had last quarter, the prices went up gradually. There was a carry forward benefit also of that. Now the prices have broadly stabilizing at around RMB 13,000, as Ashish mentioned to you. I think it's now holding there. Understood. That's really helpful. Thank you very much. Thank you. The next question is from the line of Pinakin Parekh from J.P. Morgan. Please go ahead. Thank you very much, sir. My first question is on the outlook for the VSF business, because at this point of time, while prices have stabilized, they have fallen. This would partially be offset by higher volumes in the VSF business in the second and third quarters. Is it fair to say that the current margins that we are seeing in the VSF business should be maintained over the next two, three quarters? Can the margins come off because of pricing pressure? Very difficult to predict on the pricing part of it. I would not like to guess on the pricing part of it. The trends which you see, the trends are showing that the demand is buoyant because the cotton prices are all-time high. If you recall, in the quarter four, we got a very big boost in the demand and pricing because the cotton and viscose gap went beyond RMB 4,000. Viscose prices started going up, the gap narrowed. Today, the gap has again widened to RMB 5,000. It is higher than what was in Q4. We believe, it's early days, but because with these kinds of gap, the shift from cotton to viscose should happen. If that happens, demand should grow much faster than what we are currently seeing. Understood. Sir, my second question is on the Chemicals business. The ECU realizations have picked up because of the improvement that we are seeing in caustic soda prices. Clearly, the global caustic soda price increase has not yet been reflected in Grasim's realizations because of the COVID second wave. Is it fair to say that over the next one-two quarters, as the domestic demand starts picking up, we should see overall the Chemicals business further improve from here, given where global prices are? Directionally, what you're saying is absolutely right. There is an oversupply situation, as Ashish mentioned, in the country. That will always play a little overhang. On a directional front, yes, you will see it's creeped up a little bit, the creeping trend will continue. Understood. Thank you very much, sir. Thank you. The next question is from the line of Nirav Jimudia from Anvil Research. Please go ahead. Good afternoon, sir. Sir, I have two questions. One is on VSF. Sir, I was just going through your presentations from FY 2018 to 2021, where approximately we have incurred something around INR 1,000 crores for modernization, maintenance, CapEx, et cetera. In some of the calls also, you mentioned that we have been successful in reducing our cost of production too. If you can just give us some understanding of this reduction in our cost of production internally to Grasim and excluding external costs like freight or raw material cost, that would be helpful, sir. Yeah. As you would appreciate, I cannot share the specific numbers with you. Sir, even if on a range basis, like let's say if it was on a base of 100 in 2018, what is it now currently? Something of that understanding, sir. Yeah. There are two or three big things we have done. If you remember, we added a lot of capacity through debottlenecking. Correct. More than 10% of the capacity we added through debottlenecking. In fact, 12%. You all know when you add capacity through debottlenecking, all you incur the variable cost, because the fixed cost is amortized over the existing capacity. You get a huge amount of benefit because of the additional volume which you have generated. That brings down the overall cost of production from the same factory. The second we did is a huge reorganization of manpower, which we shared with you last time, that we have restructured our old factories, and we saved more than 3,000-3,500 people we rationalized. Our fixed costs have come down significantly in the last three-four years. The number could be anywhere within $ 0.03-$ 0.05 kind of a thing. These are intrinsic to the operation. There is no variable cost saving in terms of this thing. Correct. The other thing we have done is we have done a lot of work on the variable cost side by reducing the caustic consumption. As I mentioned to you that our caustic consumption now is one of the lowest in the world. We have dropped them by almost about 15%-17% through basic research. A lot of R&D effort has gone into reducing the consumption of various chemicals and utilities. The third thing is a new plant which we are putting right now, which is coming on in the last on expansion. That plant has a cost which is significantly cheaper than my existing plants. Overall, we believe this plant alone will bring down our cost by more than $0.05-$0.06 across the Grasim base. All put together, they are very ambitious cost reductions we have done, I think, which is going to help us going forward. Correct. This 13,000 ton increase in the VSF capacity which we have seen in the latest presentation is also an outcome of this modernization capacity. That's right. Correct. Sir, the second question, like what you mentioned to the other participant that for lyocell, we are seeing the demand outstripping the supply. Our nearest competitor is putting up some 1 million ton plant, which will be commissioned by the end of 2021 and are expecting fully ramp up also by H2 of FY 2022. How do you see this development with respect to the global pricing as well as impact to Grasim? If you can give some understanding that whether we are also expanding on the lyocell capacity, that would be helpful. Yeah, see, the thing is that if you see the same competitor has said that the world can absorb 100,000 tons every year, 150,000 tons per year. There is a rising demand for lyocell. Where does that demand come from? As I always told you that the lyocell is a great replacement for cotton. Okay. Cotton costs are going up and up, and availability is becoming a constraint, which we have always been sharing with you, it is 25 million tons ±. If that is the case, more and more, China particularly is very short on cotton requirement versus demand, and they have to import. A lot of lyocell will go into substituting cotton. That can be a huge ocean because cotton is a 25 million ton base. Even if we replace 5%, we're talking 1.25 million tons every year. It is a market you need to develop. It is not a market available to you just to go and sell tomorrow. That's what we all are working. We are working in India, Chinese guys are working in China, other competitors are working in rest of the world. We believe there's a huge opportunity to substitute part of the cotton. Cotton will remain always, but the issue is we have to match the supply-demand. That's why there's room for everybody. There's room for viscose, there's room for lyocell, and there's room for cotton. Okay. safe to assume that we are also expanding in lyocell. Yeah. We are trying to focus more on the specialty end of lyocell going forward. There are two ends of lyocell like viscose. One is it can go for this cotton substitution, which is what we call a D100 grade. There's some special variant which can go into different applications, like nonwoven applications. Our idea is to go to more on the specialty part of lyocell. Okay. Sir, a small clarification on the epoxy statement which you mentioned. Sir, last time you told that in Q1, the profits have doubled on a quarter-on-quarter basis for epoxy. How has been the situation in Q1? Sorry, in Q4, the profits have doubled from Q3. What has been the situation in Q1? Yeah. Epoxy story in Q1 has actually continued. It's more or less same as quarter four, what we achieved in epoxy. Okay. That tailwind on the real continued. I think on a little bit outlook side, the raw material prices have still gone up because of supply constraint there. Now there'll be more stabilization, and we don't anticipate it going up further, but some pressure will come through the raw material prices. Okay. In percentage terms, if you can mention, like in this quarter, how much is the percentage increase in? In comparison to quarter four, it is more or less in the same line, the same number. Thanks a lot, sir, and I'll join back in the queue, if anyone. Sure. Thank you. The next question is from the line of Bhavin Chheda from Enam Holdings. Please go ahead. Yeah, good afternoon, sir. Overall good set of numbers and congrats on completing almost 75 years now on Independence Day, as you mentioned in the opening remarks. Sir, my three questions are, first is on the fertilizer deal. If you can give the fertilizer debt which is now included in the total debt number, and I believe the original divestment was at EV of INR 2,649 crores, if I'm right. By quarter two, the debt will be down by INR 2,500 crores? Sure. Do you want to complete? Maybe let me answer this question and then you can ask your other questions. On fertilizer, the number that we had given of INR 2,649, that was obviously subject to the working capital adjustment and certain CapEx adjustments. Okay. Those were the couple of adjustments that needed to be made. What has happened since the time that we have announced the deal, actually been releasing good amount of subsidy to the fertilizer player. Likewise, we've also got more than expected subsidy flow from the government. Almost the subsidy amount that was outstanding at the time when we announced to now, it has come down by almost INR 1,000 crore or so, that is subsidy receivable. As we've received that amount from government already, therefore the value realization from the buyer will be that much less, right? Sure. That itself brings down the number to. These are approximate numbers just directionally I want to give you a view. It comes down to about INR 1,600 crore or so, right? From INR 2,600 crore, if I've realized, INR 1,000 crore. Yeah. Then there'll of course be tax implication, et cetera, because it's a slump sale, so there will be capital gains tax. Given all those things, it'll go slightly lower than that number. If you look at the net debt, which is at INR 1,800 crore today, and if you realize between INR 1,000 crore and INR 1,600 crore, depending on the tax, et cetera, INR 1,200 crore -INR 1,600 crore or whatever. It will be very close to-- Zero debt. To get the net debt number. That's the number calculation for you. Yeah. Sure. Second was, quarter one has seen obviously the VSF inventory going up since the production volumes was much more than the sales volume. As you said, now the demand has picked up and the markets are opening up. Will we see this inventory getting cleared in quarter two? Ashish, you want to take this? Yeah, please. I think we can talk about quarter one, where actually there has been an inventory buildup. I think going forward, we can only guess. Dilip, you may just explain what happened in quarter one. The rationale for this time was the learning we got from the last lockdown. Last lockdown, we had curtailed our production to match the market demand. Yeah. That is when the pent-up demand came, we could not service, and there was a shortage. That happened across the industry. This time, what we did was that we believed that, look, there will be a pent-up demand because the underlyings are very strong. The European markets are very strong. The retailers in U.S. are very strong. The orders for spring-summer are going to be very good. We knew, and the whole value chain knew, that when the lockdown gets lifted, the demand will be almost vertically recovered. As a result of that, yes, we did produce. Barring Harihar, all the plants are running. We exported a lot of volume, so that way our performance is much better than what happened last time. Whatever has been there, I think it should get worked off over the quarter or maybe at best one more month beyond that. That's the plan. As Ashish said, we can't predict anything. Yeah, we will be back to normal inventory, I meant. Yeah. That's right. Yeah. Yeah. The last one, if you can update anything further on paint business, have you spent anything or planning to spend anything in FY 2022 and some plans there? Sure. To give you an update, see, there are three phases to putting up a capacity in paint. It starts with based on your business plan, where the locations of your plants are going to be, and therefore then going ahead and identifying the land for those plants. We have actually identified land parcels in most of our locations where we want to set up the plant. That's already done. Okay. The acquisition of land itself after identification takes about three, four, five months or so, because you have to discuss with state government, get their consent, et cetera, then sign the lease deed and all those things. We are actually in the process of doing that process, and we're doing all locations in parallel, so it's not that it's sequential. We'll be achieving all those locations together. After that, there will be EC, Environmental Clearance and requirement, et cetera, which can take three to four months or so. Right now, what we will look at in these two phases is mostly what will go towards land acquisition, the CapEx, right? Any number there? No, it's difficult to give any guidance on the number because in different regions, the land rates and everything is very different. The incentives given by government, et cetera, also different. It's tough to give one ballpark number for land. But land is more of a timeline factor rather than a big cost factor, right? Of course, we are also starting, we've appointed and we're starting the detail engineering part, so that as soon as the approval comes through, we are in the process. We can start ordering equipment, et cetera, for the facility. Which after that would take about, to put up the facility, about 18 months around. That's the timeline that we are looking at. Originally, sir, we were also looking at wherever we had excess land in our factories or in the Birla Group. Absolutely. Are you looking at new land or new factory location only? I thought that we would utilize some of that also. Yeah, there is a lot of thoughts that goes into land acquisition. I think more important is whether it meets business objectives or not, rather than it's just that if it is available with us, okay. I think the infrastructure that is available, the availability of utilities, et cetera, plus more importantly, it's the access to the market. How close are you to the market so that your logistics cost is optimized. We are looking at all those factors in identifying the land. I think each state is actually very receptive of us coming and setting up facilities in their state. As such, the incentives, et cetera, are also pretty good for us to consider new land parcels. Thanks a lot, sir. Yeah. Thank you. The next question is from the line of Prateek Kumar from Antique Stock Broking. Please go ahead. Hi, good evening everyone. Thanks for the opportunity. My first question is, so our presentation says in opening remarks as you said, sir, that the Chinese players have responded to the current situation by dropping the operating rates. Have they been like generally, I mean, on a quarter-basis, it's been a sharp drop. Have they been generally so accommodative in the past as well in responding? If you remember that they've been generally aggressively competing on prices. Is it a normal thing which we have seen in earlier periods as well? This is a change and we can only conjecture, but this is a change we have been seeing consistently in last six months. What has happened, the Chinese people, if you recall in the earlier discussion we told, Chinese people have been losing money in viscose for last 18-24 months because of their pricing policies. There is a publication every month, they give you the how much RMB per ton they have lost. If you look at 18 months publication, every month after month, they were losing money. I believe that China has tightened their liquidity system, the banking accountability and all kinds of issues. They are under pressure to now deliver positive results. That perhaps has changed the whole approach to the pricing policy. I've never seen dropping like we went down to as low as 69% OR. It was not the demand. It was basically to try to control the inventory because inventory decides the pricing. I hope this should continue because this we have been seeing for quite some time now. How come the inventory only went up? What happened, there's always a whiplash effect. If you remember Q4, when we discussed, there were two factors happened. There was the underlying demand for viscose and the pipeline restocking. There was a huge restocking which happened in Q4 because in the COVID time, people did not replenish the pipeline. To service the restocking, the plant capacities had gone up and the OR went up to 84%. When the inventory, the restocking got over, by the time it came back, that what we call the lag effect was there, and inventory went up. These sellers started cutting OR. What you are seeing, 25 days has now come down to 22 days as we speak now, with the OR going up to more than 76%-77%. The whole pattern has improved. There's always in our supply chain, there's a bullwhip effect. Change happens now, but you can see it after some time, and that lag is always there. The lag is getting corrected now. This drop in Chinese VSF prices has no relation with local government crackdown on commodity prices in the country? No, I think it was large. The Q4 prices we had told you were very unusual. $2.1, $2.2 is not a sustainable price. Today also, when we are saying price is low, it is $1.75-$1.8. That has been a standard good price for viscose historically. That has been the historical average, if you look at it. Today the only issue with them is the pulp price. Once the pulp price start moderating, they should be good. One question on recent rise in COVID cases globally. Have that any impact on export market? If you can refresh, what are the global VSF capacity additions in next two years, if any? See, the capacity addition, ours is the biggest addition. The biggest will be our addition, 210,000 or 220,000. Give and take, because there are a lot of unviable plants are closing down also. We believe in next 18 months, not more than 400,000 tons capacity will get added. There is very minimal capacity addition in the next two years for viscose. There could be more for lyocell. There are a lot of announcements that happened in China on the lyocell capacity addition. viscose, we don't foresee much capacity addition. What was the other question? Regarding any export market impact regarding the recent surge in cases globally. Till last month, everything was very hunky-dory. Everything was looking very good. Retail sales were good, the demand, the order booking has been good. The COVID thing has just started happening. We will have to watch and see. We don't believe that, because now people have learned to live with it. I think the business may not get affected as much as when it happened last time. Sorry, just one last question. On this ECU realization, which we have reported at INR 26,000, is the current quarter realization significantly higher from there? Is there any impact of negative chlorine realization also? Okay. See, chlorine demand has been subdued as compared to the caustic demand. Caustic demand from alumina and as Dilip was talking about from the VSF sector has been very robust. It has not so been in the case of textiles and organic chemicals. Chlorine demand, the largest thing for chlorine in India is a product what we call as CPW, chlorinated paraffin wax. That has materially got impacted across the country. In the textile demand offset is the dyes and the dychem industries. Chlorine is subdued, which has led to a pressure on pricing on chlorine as we speak. Caustic at the moment with a lag is creeping up. Sure, sir. Thank you. Thank you. The next question is from the line of Amit Murarka from Motilal Oswal. Please go ahead. Yeah. Hi. Good afternoon. Just on VSF. I just wanted to understand what would be the difference in realizations and margins for domestic sales and then export. I think, Dilip, his question is domestic versus exports realization and margin. See, in last quarter and this quarter, they're very close. Very close, yeah. Okay. both margins are-- It is much better. Like Turkey as a market, just to give you an example. The freight from other producing countries to Turkey is much higher than the freight from India, where the pricing is always down the landed price from the competition. We find that servicing Turkey market today from India is far more attractive than any other thing to do. Okay. In this quarter, obviously the mix was in favor of export because of the domestic situation. What do you think would be the sustainable level of domestic sales in the mix, particularly post-expansion of capacity? Your voice is breaking. I can't hear you. Dilip, I think his question is what will be the share of domestic after the expansion of capacity. Our projections are still, we believe if the market grows at the current projection rate, about 85%-90% will be domestic and 10%-15% will be export. There's enough room to play around. Okay. The 85%-90% target for domestic sales, that would be like three, four years down the line? Because the capacity expansion is happening. There's a lot of expansion happening in spinning capacity also. There are a lot of spinners who are investing as we speak. Those expansions have got slightly delayed because of COVID. Otherwise, there is a substantial increase in the spinning capacity as well happening in the country. They will require extra fiber. The specialty consumption going up is very high. Our specialty sales growth has become quite good. Third is with the ESG emphasis, the eco fiber consumption are also shooting up in India. Wherever Livaeco is going to grow well. All put together, I think the domestic market also is going to grow faster than we expect in past. Okay. Now, why I ask is because your capacity is expanding by almost 40%, and that is happening just around in 12-15 months. It will come in phase manner. You see, I'll commission the plant end of this month. It'll take about a month or so to stabilize. We will get six months for the line one and six months for the line two. Based on these projections, what I'm sharing with you is our internal projection. That's our estimate based on the current market demand. If it changes, the ratio can change. As I always tell you, in this business, volume is not a problem, because I think there is enough global market where you can sell. Yeah. Is it fair to say that maybe initially the share of exports will be higher and then later on maybe stabilize to that 85%-90% target then? As for the current projection, we still believe we should be able to maintain the share I'm telling you, but it's only prediction. I can't guarantee that. Sure. Also, when you talk about more spinning capacities coming on stream, we also keep reading that actually the imports of yarn has been rising consistently. How do you think the spinners are positioned to kind of compete with those yarn imports? The way it is happening right now, there seems to be a sweet spot. The current pricing is where the imported yarn is not viable. One advantage has been the high freight rates from China and other places. Today, at this price, even spinners are viable and the fiber prices also are okay. There's a good balance right now. Okay. Sure. I think these freight markets are going to be like this in foreseeable future. Right. Okay, great. Thank you. Thank you. The next question is from the line of Vipul Shah from Sumangal Investments. Please go ahead. Hi, sir. I just want to know what will be the share of speciality once entire expansion at Vilayat is completed in terms of volume percentage. As I mentioned to you that our expansion has a flexibility to make commodity and some specialties. We can always play around with our product mix. Our target, as I told you, irrespective of the expansion, we'll try to target 40% specialties in next two to three years. What type of value addition we are getting in specialty as compared to commodity, sir? It depends on different products. modal is our highest value addition. Then comes lyocell, then comes Livaeco, then comes nonwoven. Then comes dope dyed and then comes nonwoven. We've got this pecking order there. I can't share the delta exact number, but that's how it is. It varies from $0.20 to $1. It's basically, there is more stability at the value-added products pricing and grades that fluctuate. It's not a fixed delta also, right? Lastly, sir, will we be self-sufficient in pulp even after entire expansion program is completed at Vilayat? If you remember, our policy has been about half we do captively and half we source from our strategic partner. For the expansion, we already have lined up additional volume with our strategic partner. They have already expanded in South Africa. We have lined up the extra volume of pulp from our strategic partner at one of those favorable terms, which we normally follow. On a long-term contract, sir? Yeah, long-term contract. Yeah. We have volume link contract, sir. Okay, sir. All the best, and thank you. Thank you. Thank you. The next question is from the line of Muralidhara Reddy from Reddy and Family. Please go ahead. Sir, thank you for the opportunity. Actually, I have two questions. First one regarding operating profit margin or profitability for a standalone basis, not the consolidated basis. We used to be in the range of between 16% around 20%. It is now it's been declined for last two years or so, something like about 12%-13% kind of stuff. What are the initiatives that we are doing on a standalone basis to get back to the something like about 16%-17% kind of an OPM? Sure. I think I can give you an overall perspective. First of all, the prices have the realizations, corrections at some places has led to the margin coming down. Therefore, to take care of that, the two things that we do is that one is you bring down your cost overall, both the fixed cost as well as your variable cost. Variable cost, you bring it down by having better consumption norms like Dilip gave example of caustic consumption to produce VSF. Then in case of chemicals business, where power is the cost that forms 50% or so of the total cost. There you look at ways and means to bring down the power cost, which can be by adding captive capacity or by increasing the share of renewable capacity, which is actually today much cheaper than the conventional power. That's on the cost side. The other thing that we are trying to do is that to increase the VAP portfolio across both the businesses. In both the businesses, we want to target 40% share of VAP by 2025. That will give more stability and higher margin to the entire business. We are also looking at many different ways to reduce the quality leakages or whatever. For example, we want to increase beyond 40% of VAP in Chemicals. We want to increase the way we move chlorine. Rather than moving it by road, we want to move it by pipeline. That reduces the cost, and it has many different advantages. It has a positive contribution there. Your customer is close by you, straightaway supply to the customer as it is produced. There are many advantages that you have when you have pipeline movement of chlorine. Yeah. These are the measures that we are constantly It's a journey over a period of time, and it will continue to improve margin. Dilip, Jayant, you can feel free to add anything if I've missed. No, I think you've covered it, Ashish. Okay. Sir, my second question. This is little bit of. We are entering to the renewable space, and it's been pretty new one for us. Is there any kind of revenues and EBITDA that we are looking, not just for the next year, maybe for a five-year period of kind of stuff? Just kind of a plan. I know it's forward-looking, but just kind of a company strategic plan. Yeah. See, I think, it's not that it is new business for us. I think we've been very calibrated in growing that business because there is a lot of competition in that business, and constantly the tariffs are going down, and there is now you can see the module prices are going up. The players who have recently bid in one can face that issue of module prices going up, and thereby impacting their returns. Plus, I think you, the counterparty risk that exists out here, who you deal with, your state discoms, which state are you dealing with, all those things become extremely important. Therefore, we are quite careful on how we grow this business. We've gone slow rather than in comparison to some of the other players who have grown pretty aggressively. We are right now about 500 MW. We also have group captive business where the counterparty is Aditya Birla Group companies itself, like Hindalco and UltraTech and Grasim businesses itself. That's about 160 MW right now. That is constantly growing. We plan to reach 845 MW, like I'd mentioned, by FY 2023. This business, it's easy to calculate the revenues, EBITDA, and cash flows, depending on what you bid at. You'll get an idea of this business financials if you just back calculate the numbers. That's really what our plan currently is. We may look at some of the SECI projects, et cetera, as well, which are more secure projects, but of course, more aggressively bid projects. Okay. Thank you, sir. Wish you all the best for your initiatives. Thank you so much. Thank you. The next question from the line of Santosh from Treasure Hunt. Please go ahead. Good evening, sir. Thank you for the opportunity. Most of the questions have been already answered. I would like to know what is the CapEx so far done on paints business. I could read from some of the newspaper that Gujarat Chief Minister has announced that INR 1,000 crores has been invested. I would like to know on that line. Sure. The CapEx as of now has not been meaningful in paints because, like we've said, we've put a team in place, we've put a business plan, we're identifying land. Now is when we will start paying for land, et cetera, and that's when the CapEx will be slightly more visible. On the clarification, in UP, we are indeed that region, I would say, not necessarily UP. That region is one of the identified location where we could have a plant that cater to that region market demand. That's why we are looking at land and identify the land in that region. It's not that we have spent the amount that has been publicly stated. It's intention. If we put up a plant out there, then close to that number is what we may end up spending. It's not that we've spent that money or have entirely tied up the plan. Sir, when do you approximately expect to kickstart the production if everything goes well as per your plan? Yeah. No. We've not given that guidance. Like I said, if you look at land acquisitions approval and then 18 months thereafter, could be about 24 months or so, you may look at production starting. It's tough to say because we're still in the first stage of identifying land. Thank you, sir. Thank you. Ladies and gentlemen, this time's been changed. That was the last question. I now hand the conference over to the management for closing comments. Thanks for all the questions. I think we covered pretty much all the details that we wanted to cover on the call. Look forward to your participation in the next quarter. In the meantime, if you have any questions, clarifications, please feel free to reach out to us. You can reach out to Saket or to me, no problem at all. Thank you. Thank you. On behalf of Grasim Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.