Ladies and gentlemen, good day, and welcome to the Q2 FY 2022 earnings conference call of Grasim Industries Limited. We have with us today from the management, Mr. Dilip Gaur, Managing Director, Mr. Jayant Dua, CEO, 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 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 touch-tone 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. Yeah, thank you. Good evening to all of you. You know, I would also like to welcome Mr. H. K. Agarwal. He's our Managing Director (Designate) who's joining us and will be taking over from Dilip. So I would like to, first of all, thank everyone to join the call. In last one year, there has been a sea change in the business scenario. With the pace of vaccination picking up in the last few months, the economic activity has resumed its momentum, and so has the textiles products. The same is reflected in the sales volume of VSF, VFI, linen, as they have touched or rather surpassed the pre-pandemic level volumes. While demand increased across all sectors on back of economic recovery, the costs have also gone up. However, the cost increase has more than been offset by the realization improvement across all businesses. I'd like to share a few important highlights for quarter two. The company embarked on the capacity expansion program in its key businesses, and we are delighted to share with you that we've commissioned part of our expansion plans in VSF, Caustic Soda and chlorine VAP in October and November of 2021. These capacities are coming on stream at the right time of the business cycle. In our VSF business, we have commissioned the first line of 300 TPD in November 2021 and have achieved the benchmark quality. The second line of 300 TPD will be ready for commissioning in quarter three, which was the earlier plan as well. In the chlor-alkali business, 170 TPD at Rehla, which is Jharkhand, was commissioned in October 2021. As part of our VAP strategy, we have also commissioned 150 TPD of chloromethane plant at Vilayat, which was commissioned in November 2021. The commissioning of chlor-alkali plant at Vilayat and Balabhadrapuram is due in the second half. The total CapEx that was approved by the board to be spent for FY 2022 stood at INR 2,604 crore, which is excluding paints and fertilizer business. For the first half, the actual spend is about INR 905 crore. The balance spent for the second half, there is likely to be either savings or there could be some deferment to the next year. As of now, we're standing with the guidance of what has been approved by the board. In paints, the company has already acquired land at five locations as part of its pan-India footprint for paints manufacturing. These locations have been identified in the different regions of India on the basis of their proximity to key consumption hubs across the country. While the process of environmental clearance is underway for various project sites, the contract for basic engineering, detail engineering has been awarded. The civil work at these sites will commence only after receipt of EC. We have highlighted these developments in our investor presentation on page seven. You can see the locations that are there on the map. Let me now discuss the operational and financial performance of the company. The VSF business reported a strong operational and financial performance driven by demand momentum, better product mix, so the VAP is higher, as you can see in the presentation, and stable realization. The business reported higher sales volume during quarter two, boosted by textile demand. There was some buildup of inventory that was done, which was strategic inventory in June quarter, which was utilized in September quarter to utilize that high volume. The business has taken great strides in improving the share of value-added products in the overall sales mix, which has almost doubled YoY to 27%. In our VFI business, the demand recovery was driven by liquidation of inventory in the value chain and lower imports from China, et cetera. The Viscose business reported net revenue, including VFI, of INR 3,005 crore and EBITDA of INR 580 crore. The BFY business reported revenue and EBITDA of INR 513 crore and INR 66 crore respectively in quarter two, FY 2022. Now coming to caustic. The global caustic prices have been on recovery mode since the start of the year. In quarter two, the domestic caustic prices also started to witness a gradual recovery. This recovery from their multi-quarter lows was supported by a series of factors like recovery in demand, tightness in supply led by production losses and higher export sales, which was primarily driven by better exports realization. The caustic soda capacity utilization sequentially improved to 86%. The demand for textile and pulp and paper sectors contributed towards incremental caustic soda demand. The chlorine realization, which were on the positive territory, turned negative during the quarter. It was led by weak end products demand. The chlorine consumption in VAPS stood at 27% in quarter two, which is expected to increase with the commissioning of CMS facility in Vizag. The chlor-alkali business witnessed an improvement in operational performance and increase in ECU realization, which has continued subsequent to the quarter end as well. However, the rise in power costs and other input costs for VAPS impacted the EBITDA in quarter two. Within the chemical segments, the advanced materials, i.e., the Epoxy Resins business, continues to witness strong demand. It was supported by pickup in the pace of construction activity thrust for renewables and the thin inventory across the product segments that exists in the market. The revenue and EBITDA for chemicals business was INR 1,627 crore, and EBITDA was INR 232 crore for the quarter. Overall, the standalone performance for quarter two, FY 2022 was much stronger, with revenue up 67% to INR 4,933 crore and EBITDA up 144% to INR 1,504 crore on YoY basis, which is the increase I'm talking about. By the way, INR 1,504 crore is highest ever quarterly EBITDA for Grasim. Of course, that includes the dividend that we've received from UltraTech. The EBITDA for quarter two, FY 2022 includes dividend income of INR 641 crore. On like-for-like basis, excluding dividend income, the EBITDA is up 121% YOY. The revenue and EBITDA from the discontinued operations of fertilizer business for the quarter stood at INR 773 crore and EBITDA at INR 50 crore. This is not included in our published results as continuing business. We expect the disinvestment process of fertilizer to get completed by December of this year. Consolidated revenue for the quarter was up 26% to INR 22,564 crore, and EBITDA was up 19% to INR 4,282 crore. The consolidated net debt reduced and stood at INR 8,780 crore, and standalone debt again reduced from June, stood at INR 1,158 crore. One of the key items that helped in reduction of the debt was release of subsidy on account of urea from the government. The outstanding fertilizer subsidy has reduced to almost a level of INR 450 crore in quarter two, which used to be pre-COVID levels almost at levels of, you know, INR 1,000-INR 1,500 crore, you know, continuously. Lastly, given our constant best practices in ESG, we are pleased to announce that VSF business was ranked number one in Canopy Hot Button Report 2021 for the third consecutive year. Grasim also ranked overall seventh in India's top companies for sustainability and CSR 2021 by Economic Times Futurescape Sustainability Index Report. That's it from my side. Over to you for Q&A. Thank you very much. We will now begin the question and answer 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 question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue being assembled. The first question is from the line of Sanjeev Kumar Singh from Motilal Oswal Financial Services. Please go ahead. Good evening, sir. Thanks for the opportunity. In the paint business, though you have given the locations where the facilities will come, can you give us further timeline when do you expect this business to get commissioned, so around two years or 1.5 years? What is the timeline which you can give? Yes. Sanjeev, we are not giving any such guidance. I think you can possibly make an assessment from the fact that, in terms of sequencing of activities, after we acquire the land, we get the EC. EC can take up to, you know, anywhere three to six months, and thereafter, the commissioning of the plant will get done. Of course, while we get the EC, we are already, like I said, appointed the design team, engineering team, et cetera. There's a lot of parallel processing also that is going on out there. Secondly, sir, in terms of VSF, so definitely there have been some production cuts in China, and I believe that realization has also moved up. How is the scenario now? When do we expect Chinese production to get normalized? The China production cut was done largely because of the coal shortage. What had happened in China, they had stopped a large number of coal mines because of safety issues. There was a drought in some parts of China, so the hydropower had come down. China is trying to make up for the coal stop, but they're getting into winter. The first priority will be getting power for the individual consumers. We believe the OR will not come back in a hurry. The capacity cut will still be there. Secondly, the issue of freight and container is still there. From China, it's not easy to move things to India or the rest of the world. To that extent, I think the outlook still remains healthy. Cool. Thanks, sir. I will come back in the queue for further questions. Thank you. The next question is from the line of Navin Sahadeo from Edelweiss. Please go ahead. Yeah, good evening and thank you for the opportunity. Hello? Yes, we can hear you. Thank you so much. Thank you for the opportunity. My first question was regarding this VSF outlook. All the production cuts in China, per se, the way it led to, like, you know, other commodities, per se surging, that we have not seen in case of VSF, even as cotton prices continue to go up. Now, you said the outlook is still because the operating rates might stay low for some more time. From a slightly more timeframe or from a medium-term perspective, are we also suggesting that we are unlikely to see very strong margin expansions, so to say, in the VSF segment? You have to look at it. You're talking about Indian market and look in two respects. The Indian market recovery has been very good, so the demand is very healthy. With the festive season coming, the value chain, so the pull is very strong. So Indian demand is absolutely growing at a very fast pace, much better than what we had expected. So this is better than pre-COVID levels. The second point is, the China part of it, the prices have already recovered. If you look at China itself, what was the price in September, what was the price today, it has gone back to the earlier level of June, July. So there has been a recovery in VSF prices in China also. The third is, we can't predict what is gonna happen, but the gap between cotton and viscose has gone to CNY 9,000, the highest ever. It has to start, I mean, logically, it should reflect in the shift from cotton to viscose. Let's see how fast and when it happens. We can only go by the leading indicators. What the outcome will be, I can't tell you. The leading indicators are healthy. Sure. How much has been the price recovery in October, if you can just mention China prices? How much have they recovered? China prices have gone back from $1.77 to $1.95 to $2 kind of level. Okay. Similar to what they were in probably March, April. I'm giving you published prices. Yeah. Understood. Okay. Thank you. Second is about chemicals segment. I believe sequentially we have seen a margin decline as compared to the Q1 quarter. The segment per se, we have seen a margin decline. Is it only mainly, I mean, got to do largely to do with this chlorine realization turning negative? Or in general, like, you know, we've not been able to benefit from the high prices and got impacted by the rising costs. How should one really look at the chemical segment? Sure. See, you know, let me probably start, and then I'll request Jayant to step in. The increase in the ECU that you have seen is actually month-on-month. Every month there has been sequential increase. Okay? You've not got the benefit of the increase through and through in the quarter. Okay? The other factor is that, yes, there is a higher power cost, you know, because of coal, et cetera, that has led to margin coming down. Also, if you look at the VAP, okay, in VAP, you know, the input costs, you know, like aluminum, et cetera, that goes in, there's a cost increase there as well. That has also led to overall VAP a reduction in the margin. Jayant, would you like to just come in and give more color out here? No, I think you are correct. There are, you know, you've got three aspects running. One is the timing of the increase, which Ashish talked about, it's been sequential and caustic has been growing sequentially and also following the global trend, although there is a lag which happened with respect to India. Now the global prices went up very sharply because of, you know, couple of environmental events like you had the winter freeze followed by Ida as a hurricane, which led to shutdown of capacities and that led to spikes in prices. Now, no such thing happened in India, the capacity shut down. What increased is gradual and sequential and caustic. While chlorine which was trending positive has turned negative, that's the point you brought out. Third is the cost increase on coal literally which went up very sharply, so it affected our power cost. Power cost is about 65%-70% of our variable cost. Followed by, you know, the Tauktae and the other cyclone which hit the Indian west coast led to salt increase going up. The P4 demand, which is the phosphorus demand in fertilizer led to raw phosphate prices going up. What has happened is that we had a sudden spike of pricing coming all across. The increase in pricing on caustic was more sequential. I think going forward, you will start seeing, the way I look at it, as Ashish put it, you know, the lead indicators are all clearly that the positives will start happening at a faster pace because these price increases have now started either stabilizing or tapering down, whereas the sequential increases in the caustic side continue to happen. Correct. Are we also saying basically the margins per se going ahead or as we speak can definitely be much better than what we saw for this quarter? Because previous quarter we were at 19%, this quarter we are at 14%, and this is despite that global prices went up 20%-30%. Are we in a way directionally confident that this quarter or going ahead, we can see a much healthier margins in the chemical segment? That, that's exactly what I'm saying. The lead indicators are all pointing out the margins will be significantly healthier than what they were in Q2. Okay. Thank you. Just one last question, if I may, slip in. It's heartening to see the development on paints with locations identified and you updated already some time back. Just one question. Are we also open to make any acquisition? Or, I mean, it may have been asked in the past as well, but I'm just trying to get a sense that are we open to any sort of acquisitions, big or small here, or we would largely focus on building only our own capacities? Thanks. Yeah. We are fairly comfortable and confident of our organic plan. We won't look at any acquisitions. From the return perspective also, organic plan makes more sense. Understood. That's clear and very helpful. Thank you so much. Thank you. The next question is from the line of Pinakin from JP Morgan. Please go ahead. Yeah. Can you talk to us more about the seasonality in VSF in China? Where we are coming from is that what we are hearing on the ground is that the cement, steel, aluminum demand seems to have started improving over the last week or so. Inventories are falling, and the expectation is that as we get into the Lunar New Year, coal situation normalizes, and demand for at least the heavy commodities will pick up. Is there a similar seasonality that we can see in VSF, that as the power situation eases out, we can see VSF demand in China move up very sharply post CNY in January/February, which can potentially drive VSF prices higher? See, November, December, January is always a peak month for textiles, not only VSF. China has what they call 11.11 and 12.12, like Amazon does here. They've got online big sales. Yesterday they had 11.11 sale which has been exceedingly good. They will have 12.12. Three months are always seasonal highs for textiles because this is Chinese New Year. I think it's a general trend that the demand normally in this time of the year for VSF and all textiles is always very, very good on relative terms. This year it got impacted because of what has happened, right? In terms of... The demand. That That was supply, but there's enough capacity in China, so they had inventory. What got impacted, because of the power cuts, the downstream plant got shut, the yarns got shut, the weavers got shut, so they could not pick up the thing for a short time. That is all now recovering again. Understood. It was not a demand loss, it was a supply-driven constraint. Understood. That's very clear. Sir, you have any other questions? No, my question has been asked. Thank you. Thank you. The next question is from the line of Prateek Kumar from Antique Stock Broking. Please go ahead. Yeah. Good evening, sir. My first question is on the caustic segment. You mentioned that this is, and we've seen from industry trends also that the caustic prices have significantly moved up, post specifically in past fortnight or past month or so. Is there any demand destruction at this level in India or globally because of extraordinarily high prices? No. The demand at the moment is very robust globally. India has really put it on. Textile sector is at all-time high, and aluminum sector has also been moving well. There is no constraint in demand as of now. Caustic flake prices, which had an earlier high of around, I think, INR 45 per kg from whatever channel checks we do in, like, three to four years back. It's currently at INR 70-INR 80 per kg. Indian demand is as good as, like, let's say what it was at normalized prices at even at INR 70-INR 80. That's what you mean? You know, you see again, you know, we should not look at prices from a moment or a time because there is, you know, the whole business works on both spot and contractual. Sometimes we get a little bit, you know, swayed with looking at what's happening on a spot basis. But to your point, have the prices significantly gone up? The answer is clearly yes. We've seen some significant price increase, starting, you know, October-ish onwards. The demand at this point of time, irrespective of the prices, because it's a combination of both contractual and spot, continues to be robust. Particularly we did, like in past recent periods, in the past upcycle of chemical prices, we used to be at 30% margins, for a brief period. That is something which can be forecasted, like in at least such times when prices are so high. I mean, I don't know where they settle, but. See, you also have a commodity price increase, which is impacting you everywhere. I think it's a bit too early to do this forecasting, because you are at this point of time, the coal prices are significantly higher. We buy a lot of aluminum and hydras, which is high, rock is high, salt is high. I don't think so we can at this point of time give a guidance on what margins would be like. From a realization front, clearly, the situation is far better than what it was in Q2. Regarding this coal, because you have, say, you said 65% of your variable cost is coal cost. Have you also seen any moderation in national coal price in past fortnight? I think in recent last 15 days there has been a slight moderation. You see, you don't work on day-to-day basis on coal. You always have a complete, you know, anything between 30-45 days stock lined up because that's the way the business works, otherwise you can't run your thermal power plants. We're hoping the moderation will stay, will continue, and the next purchase cycle of coal will start giving us the cost reductions. Even the moderation which has happened is at a much higher significant level compared to what it was three months ago. Okay. One question on VSF. So despite a very stable realization, in fact, slightly positive on a quarter-over-quarter basis, our EBITDA per kg has probably dropped from INR 38-INR 39 in past two quarters to INR 33. So, in this segment also I think we have taken some price hikes since start of this month. So is this something which should help us take us back to INR 35-INR 40 range? Price hikes always have to, they follow a lag. The input prices went up in September, so I think the price has been taken. Yeah. It should be. We could make up the EBITDA because there's a huge volume growth, and that's something which we are missing out. There is a margin improvement and volume improvement as well. It is consistently happening. Right. Thanks, sir. I'll get back to you. Thank you. The next question is from the line of Nirav Jimudia from Anvil Research. Please go ahead. Good evening, sir. I have two questions on the VSF business. Last time in our interaction in the concall, you explained about the reduction in per ton consumption of raw material for the finished goods. My question is with respect to two VSF lines which are getting commissioned. One is commissioned and one is about to get commissioned. On a fully ramped up basis, whenever it will happen, if you can share your assessment about the reduction in the operating cost. Let's say if we compare on a scale of 100 currently, when it will be fully ramped up, what can be the reduction in the operating cost possible? If you can explain within context of three parameters, like one, probably we would require lesser employees at our plant because it is happening at a single location. Second, whenever we will import pulp, it would come probably in higher parcels so that it will help us in reduction in freight cost. Third would be if we are setting up some additional power plants, which will again help us to bring down our power cost. If you can explain this in context of these three parameters, that would be helpful, sir. This is my first question. Shall I take first one and then go to next one? Shall I respond to the first one? Yeah, yeah. First one if you can respond, sir, then I'll start with the second question. Nirav, I had told you that this expansion is a brownfield expansion. Correct. While our capacity is going up by 40%, our overheads have gone up by 10% only. The fixed costs are much lower. The employee part is absorbed there. You have a 10% growth in overhead, whereas your capacity goes up 40%. We'll have a fixed cost advantage, which is significant. Second, because this is a much bigger line. These are 300 tons per day lines compared to the about 125, 130 TPD lines earlier. The variable cost of production also is substantially low. I mean, I would not guess a precise number, but it can be about 8%-10% in terms of the variable cost reduction. Okay. Pulp and power, I think they won't be much different because we are getting in any case for our pulp. We buy on a plant business level. The ship sizes don't change because of that. Okay. Fair to assume that probably on a scale of 100, our variable cost will come down by 10%, which is like 90%, and then a further reduction in the fixed cost would also be possible whenever we will fully ramp up. No, no. You should not. No, not 10%. I think what you should, because you are talking only for this plant or for the average business? For the average business as a whole, for the company. Average business can't be 10%. Only this plant can be. The average will be about 5% to 8% to 10% maximum. Not even that. Okay. For the plant you mentioned, the initial remark stands for the plant, Vilayat Plant, correct? That 40% increase in the capacity and 10% increase in the- Vilayat Plant, not for the overall business. Okay. Okay. For that plant specifically. Okay. Got it, sir. Sir, my second question is, with respect to our specialty volumes. I think we have clocked best ever volumes so far as the specialty is concerned this quarter, as per the details what you have given in the presentation. If you can walk through what sort of capacity utilization we are currently working for our specialty business, one. Second is, out of all the varieties of specialty what we are currently producing and selling in the market, what you feel can lead us to the 40% target which we have set, for next four years so far as the specialty volume is concerned? This is my second question, sir. If you look at the numbers this quarter, my specialty is almost double, more than double what it was on a YoY basis. Absolutely. Right? On a QoQ basis also it is more than 33% or 34%. Correct. What has happened is we have been able to make a big breakthrough in the Indian market. One of the advantage is high cotton price is helping because the specialty like a Lyocell it helps shift it gives you the same property what cotton gives, but at the end of the day, you can sell more of your viscose product into that. Okay. Right? Capacity-wise, my Lyocell plant is 100% utilized, so I have no more capacity. If it continues, we'll have to. Right now what we are doing is we are creating more value. We are going for more value-added applications from the same capacity. Correct. Correct. I had told you on the Modal side we can convert lines from gray to Modal if required. It depend upon how the new plant stabilizes, how the Modal demand goes up. We can always create capacity. Right now we are using 100% existing capacity there also. Okay. We have flexibility there. Okay. Third, I told you was our ECU product. Yeah. What we have done now, our new plant has got a capability to produce. The entire capacity can produce Livaeco product. It'll depend how the market grows, I can supply more of it. I'm creating a huge capacity there. Our idea will be to convert as much of the branded players from a traditional viscose to a Livaeco. That's all. Got it. We have a plan in place. You see, specialty you have to build the demand and then put capacity. Yes, absolutely. So safe to assume that even Livaeco commands the same sort of premium that we currently get for Modal, or it is slightly lesser than that? I think Modal is my highest premium product right now. Correct. Okay. Modal, Lyocell, and then Livaeco. That's how it is. Livaeco is a much larger volume. In the fullness of time, its volume will be much larger. Got it. Sir, a last clarification on the chloromethane plant of 50,000 tons, which we have started. Predominantly it would be for MDC, right? No other product? Yeah. will be produced apart from MDC. No, it will be MDC, chloroform, and as well as your CTC, which is your standard chloromethane products. But the largest portion will be MDC. Got it, sir. Got it. Thanks a lot, sir. I'll join back in the queue refining, sir. Thank you. The next question is from the line of Saket Kapoor from Kapoor Company. Please go ahead. Yeah. Namaskar, sir, and thank you for the opportunity. Sir, when we look at your slide number 14, wherein we have given the exit of ECU for the September quarter, the caustic realizations are at INR 27,387, and the ECU stands at INR 26,200. Can you give the exit price for at least October just to gauge what the rise has been? It is understood that all contracts are not only on spot basis. That would give the color where the prices are trading today, sir? I would just leave it at that. The pricing has trended upwards in excess of double-digit growth, you know. Rather than getting into exit prices as October, because it's a hybrid of a lot of factors, I would not get into a guidance of that at this point in time. Okay. Not a guidance, sir. I was just looking at the market pricing. Yeah, the market pricing you can say it has gone up by, you know, at least about 10%-15% clearly at Barafi. Just to clarify, the graph that you're looking at, that's a quarterly average of prices. Yes. Yes. Yes. Yes. Not the exit of September. Yes, sir. Yeah. Okay. That was the reason why I was asking the exit price for September. you know, different parts of the country have different price mechanisms. At this point of time, you might have one part of the country doing much better than another part of the country because there is still imports which come through or whatever. Let's not try to get into exit prices at this point of time. I think next quarter we'll all be there. Right. The contribution from Epoxy, sir, what has been the contribution for this quarter? We don't give the specific numbers, but of course, Epoxy continues to contribute significantly in the chemical segment, and probably more than what it comes to EBITDA, more than 50% in this quarter. It's all a matter of time because now that the pricing of caustic picks up, that proportion can significantly change. Suffice to say that Epoxy continues to be a strong generator of EBITDA for us since the pickup that happened in Epoxy last year due to the demand, et cetera, that has taken place. The surge that has taken place. Sir, you did spoke about external factors due to which the caustic soda prices have moved up significantly. Are those factors reversed or what has been the trend that has supported? Since you have told that the demand is good, this pricing has been absorbed. The factors that have supported this jump, if I may, astronomical jump in the prices. Yeah. Are those factors evened out or they are still having effect on the market? No, the factors are clear. If you look at the plants in U.S. have started and are restarting again after Ida. There is further tightness. Again, when you look at it from an international market, you look at it that everybody covers themselves for the next 1 quarter or so. Your current quarters have been covered. I think now it will be mid-November onwards when we will start getting fresh queries for the next quarter. That will be, of course, leading indicator for us that how much of normalcy is going to be, you know, has been achieved. Clearly, China has more coal mines open up. More power is available. Again, it's a large production center. You know, again, caustic availability will increase. I think while caustic availability is increasing at this point of time, but also the demand is also at the moment showing the same robustness. Overall it seems to be a fairly well balanced situation as of today. Sir, small point. Globally, what has been the outage in the capacity, sir? If in a percentage term, if you could give an understanding that this was, I don't have the exact number, but clearly in China you could say that there was about 10%-15% outage because of power at different points of time. Particularly the Houston side and the Texas side in U.S., at least three or four large plants were shut down for about a month or 15 days to a month. They're all back up. Even China, we started seeing that the capacities have started coming back online. They're yet not at what the earlier run rates were, but they clearly have increased their run rates. Still the global prices have fallen. This is what you are confirming. Yeah. There is no relentlessness in demand also. As of now, when we last did a check in terms of global prices, the firmness continues. Last point is, sir, that you have also mentioned that the firmness in prices are more than what the inflation due to the raw material has been. There is going to be margin accretion on account of if these prices sustain. If these prices sustain, we definitely expect the margins to improve. Right, sir. On the availability of salt, also, sir, if you could give some understanding because I think so because of the cyclone in the western coast, the salt prices have also moved up. What is the status on the availability and how is this salt season looking, sir, going forward? How will you source them? Yeah. Any long-term contracts? We like, we have long-term contracts. We actually do more or less annual contracts in salt. Salt has been tight everywhere. It has gone tighter because in the last two consecutive years, the cyclone impact has pushed one season forward. The current season, which normally starts around 15 to end of October, we are expecting for it to start somewhere around early December. Say 15 November to 15 December, different salt fields will start producing. Once they start producing, I think then we'll get a reflection of what's going to happen for the next year. For the current financial year from a sourcing perspective, we are covered. What have been the increase, sir? I've missed the point. I said we have annual contracts, so we are covered. Okay. You know, the spot price. Can you give the color of what the increase could likely be, because of, It again, it depends upon what the next crop is like to tell us what will be the next year increases, because the crop has yet not come out. If it's a bumper crop, we don't expect an increase. If it's a short crop, then again there could be a 10% jump in prices or whatever. We really don't know today. That will be speculating. Yes. What is the out of the total requirement, how much is captive for us, sir? We hardly have very little captive. It's hardly about 5%-6% is captive for us. Rest is all also sold. What is the annual requirement? In tonnage terms. If we take the pricing also, sir, out of the total raw material cost, how much is the salt? 2%? No, no. Salt is approximately about 12%-14% of our cost. 12%-14% of total. Yeah. Thank you. Thank you for the answer. Anything else that you were telling something? No, nothing. I'm just saying it's, no nothing. Thank you. Thank you, sir. I'll come back to you, sir. Thank you. The next question is from the line of Sagar Parekh from Deep Financial Consultants. Please go ahead. Yeah, good evening, sir. Thank you for taking my question. My question was actually on the Caustic side. I mean, the entire world right now is talking about hydrogen, and I believe that hydrogen is one of our, you know, one of the key by-product manufacturing Caustic Soda. A, what is the current use of hydrogen and do we plan to, like, significantly scale this hydrogen business up? Just if you can throw some color on that. You see, hydrogen is a different chemistry, and it's not that we introduce large significant amount of hydrogen in a caustic product. It's one of the least amount which is produced, which is caustic. Actually as low as 0.03% of the total mix. Currently hydrogen for us is used internally, particularly for creating one of the largest uses is the virgin HCl, which only a caustic plant can produce. We also use it as fuel at some of our places, which gives us a green fuel for running couple of our boilers. We also do sell hydrogen in banks to people in the organic and the inorganic sector. These are the three ways. Going forward, yeah, that's one area we are also very clearly exploring in terms of what more we can do with hydrogen. As more and more technologies firm up, more hydrogen labs we will study and let's see what happens in times to come. Clearly hydrogen, yes, you're right, I think is the energy flavor going forward at this point of time. Sure. Ashish, one question to you. Just wanted some clarity on this tax litigation that has come up. You know, if you can just give some clarity on what is the next course of action for us and, you know, yeah. Yeah, sure. No, happy to give that clarification. This is in corollary to the earlier tax demand itself. Earlier demand was in the nature of dividend distribution tax. Right. On account of tax authorities saying that this was not a qualifying demerger. The demerger that happened of Aditya Birla Capital from Grasim, it was not a qualifying demerger under the Income Tax Act. Therefore, there is an implication of DDT. Now what they have done is that they've completed the assessment. Sorry, by the way, let me just complete that part. DDT matter is still at the tribunal level. They've heard the matter. They have to come out with their order. We'll see what order they come out with. Very difficult for us to make any judgment or statement out there. Now, what they have now done, the income tax authority has now completed the assessment of FY 2017. Based on that assessment, now they've come back and said that there is a capital gains tax because it's not a qualifying demerger, because you've transferred indirectly the Aditya Birla Capital shares that was held by Grasim to the shareholders of Grasim. Therefore, there's a capital gains tax of another INR 8,000 crore. Now what has come right now is a draft order of this demand. We have gone to, you know, DRP, which is Dispute Resolution Panel. They'll understand, read the order and, you know, we are awaiting the decision. We have made all our submission. We are waiting for decision from them. Only after they give their decision, if it is in our favor, great, the order will be quashed. It will never be issued. If it is against us, then we have an option to go to tribunal. This is where we are in the whole DDT and capital gains matter. Worst case then, both we would be liable to pay both the taxes. Worst case, I'm saying. See, I think the key point is that if it is a qualifying demerger, then there is no question of either of the demands standing on its legs. Sure. Okay. We have opportunity to go to tribunal after that, High Court, Supreme Court, et cetera. It's up to this matter right now. Okay, sure. Thanks Ashish for clarifying, and that's it from my side. Thank you. The next question is from the line of Bhavin Chheda from ENAM Holdings. Please go ahead. Yeah, good evening, sir. First one was on the recent VSF price hikes. Do they cover the cost escalation, which has happened till date? Because this quarter we saw a drop in margin, so the recent hikes would cover that cost. Broadly, yes. Okay. Second one was, if you can give us the pulp landed cost accounted in the quarter and current pulp prices? Yeah. We don't give the pulp cost specifically. Directionally, the pulp cost has remained at the levels that it has been, you know, which is $1,000 plus. Our, you know, we are consuming right now the inventory that we have, which continues to be at the high cost. The impact of the cost of the high pulp prices is actually we have witnessed in this quarter, which is much higher than the previous quarters. Just to add, the spot prices are softening, so maybe three or six months later you'll get the benefit. Okay. We'll start seeing the benefit from, say, quarter four onwards, regarding the declining pulp prices. Kind of. Yeah. Quarter four, quarter one. Sure. Sir, on the fertilizer divestment, which would happen by December, since the subsidy number has already come down, so now what's the final number of which we are expecting in December from fertilizer divestment? Yeah. See, again, I can give you directional answer. Say from, you know, INR 1,400-INR 1,500 crore of subsidy that used to be outstanding around the time when we announced the transaction. Now that is down to INR 450 crore. You have recovered almost INR 1,000 crore. Basically that much less working capital is there in the business. That, you know, 2,600 odd that we had announced as the enterprise value, you know, the working capital is less, so that, you know, it will be lower by INR 1,000 crore then, because we've already got that money from the government. Sure. Sir, last one. Has the chlorine realization turned positive or still it's negative? Continues to be negative as of now. Continue to be. Okay. Thanks a lot, sir. Thank you. The next question is from the line of Abhimanyu Kasliwal from Choice International. Please go ahead. Good evening, sir. Am I audible? Yes. Yes, you are. Okay. I'm from Choice International, sir. Most of my questions have been answered. I was hoping if specifically regarding Caustic Soda, if you could give some kind of outlook and on the next four to six months, I mean, I know it's a long period, but still a fourth quarter kind of guidance. Or not even a guidance, a rough estimate about what's happening in the market, if we can expect the current realizations to be maintained or if they might drop significantly because of, you know, the China capacity increasing. Because we understand the China capacity is increasing, but so is demand. Net-net, what would you expect? If you could give some kind of idea, I would be very grateful. See, I think, you know, you have covered a little bit of that. If there's any incremental view that you would like to give directionally, that can answer the question. No, I think what we are saying is we believe that this quarter the demand is robust. Price increases particularly have been robust. For the next quarter, I think it's a bit too early looking at how, you know, how this commodity operates in a short span of time to give any guidance for the next quarter at this point of time. Okay, sir. I do understand. Okay, go on, sir. Yeah, I'm saying demand-wise, it's the indicators are all positive towards that. Even the current quarter and the next quarter, demand will be positive. Okay, wonderful, sir. Thank you. You've been helpful. I'm obliged. Thank you. Thank you. Thank you. The next question is from the line of Prateek Kumar from Antique Stock Broking. Please go ahead. Sir, thanks for the opportunity again. I wanted to ask regarding this CapEx for paint business. We are like now almost four months remaining for the fiscal year. Why are we still not willing to give a CapEx number even for FY 2022, leave aside FY 2023? No. We've given the number, actual number already of INR 267 crore that we have spent, which has mainly gone on land, right? I think, you know, it really depends on the activities, right, that we undertake. If we see, for example, goes beyond March, okay, then the CapEx will be limited, because we can't do anything on the sites till ECs are obtained. It depends on activity, you know. It'll not be right for me to give that next quarter what I'll be spending because it's difficult to assess that. I think there'll be better visibility once you have the EC and when things are under your control of how you incur your CapEx. You know, that's why we gave a block number of INR 5,000 crore also initially. We always said that it can be within that three-year period rather than saying that that'll be for those three-year period. You know, as and when we will give better and more guidance, but we don't want to at the same time misguide you. Okay. In the asset segment, can you highlight on if there's any more industry capacities globally, or what are we looking at in terms of global new capacity additions? What, you want immediate time frame? The global new capacity additions. As I told you last time, there is no major capacity addition coming. There is a small addition that happened in Indonesia, about 50 KT. Next year, we are expecting another 140 KT there coming in Indonesia and China maybe about 100-200 KT. There's not a major expansion, but there are few projects being planned, so we do not know what shape they're gonna take. It's way too early to talk about that. Lyocell, so these are Lyocell additions or normal gray? The one I discussed on this call, but Lyocell there's quite a bit of capacity coming in. About 220,000 tons is coming in China. So Lyocell capacity, yeah, there's a lot of announcement that happened in China. The Lenzing plant is coming in Thailand. That will come by year-end and early next year. That's right. Viscose there is no major announcement, but some planning is happening, so we don't know how it shapes up. Last question. We used to earlier talk about this Liva tags, and we used to give some data around it. I guess that stopped during COVID because maybe we are not able to tag garments with Liva tags. That's going on and we are doing almost 4.5 crore tags. I think now it has become the routine. I think we are, as I always tell you, if Liva was a brand, it is the biggest apparel brand in the country. Nobody sells 4.5 crore garments. Liva tag is there in 4.5 crore garments, and they're going on very well. Now because of COVID, there was you did not see much of the branding effort on the in the media, which I think we are reviving now. If you would have seen, the Liva Miss Diva Universe contest was sponsored by Liva this time. Whoever is the shortlisted girl will go for Miss Universe contest. We are now kind of accelerating our media plans on Liva. Thanks for the feedback. We'd be happy to incorporate some such details in the presentation. There's a lot of buzz around this direct to consumer brands across the board, across the segments. Is this something which we also cater to, like, via Liva? We don't do direct to consumer. We do on the e-commerce. We have a big presence in e-commerce. We have a shopping shop on Myntra, and we are now dealing with all the four or five e-commerce companies. Because we are not a finished garment, we are fiber suppliers, so it is our customers who will do the D2C. What we have done is we have got all our vendors onto the e-commerce through our Liva site. Okay, sir. That's helpful. Thanks and all the best. Thank you. The next question is from the line of Ashok Shah from LFC Securities. Please go ahead. Thanks for taking my question. Sir, my question is regarding does Caustic Soda has got still anti-dumping duty, and what's the percentage? There is no anti-dumping duty on Caustic Soda as of today from India. Any format, there is no duty? No. Okay. Okay, sir. Thank you, sir. Thank you. Thank you. I now hand the conference over to Mr. Ashish Adukia for closing comments. Over to you, sir. Well, thanks a lot for very good quality questions. You know, some of those feedback I'll definitely take for our next quarter presentation as well. Thanks a lot and, you know, enjoy the coming holiday seasons and see you in the next quarter. Thank you. Ladies and gentlemen, on behalf of Grasim Industries Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.