Ladies and gentlemen, good day, and welcome to Q3 FY 2022 earnings conference call of Grasim Industries Limited. We have from the management Mr. H. K. Agarwal, Managing Director, Mr. Jayant Dhobley, CEO, Global Chemicals and Group Business Head, VSY and Insulators, Mr. Jayant Dua, Chief Executive Officer, Chemical Division, and Mr. Ashish Adukia, CFO. As a reminder, all participant lines will be in the listen-only mode. 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, CFO. Thank you, and over to you, sir. Yeah, thank you, and good afternoon to all the participants. FY 2022 till now has been a defining year for the company as the company accomplished 75- successful years of its incorporation. We are privileged to continue with legacy of our founding fathers of the company and thankful to our fellow colleagues, shareholders, customers, and all the other stakeholders who've been part of this wonderful journey. One of the pillars of our, you know, 75 years of existence has been resilience, and that has come about from our commitment to the growth. We have continuously invested in our capacity expansion, technology advancement, and process improvement in our core businesses. Today, when India Inc. is making new capital commitments, India is well. Grasim is well ahead of the curve as we had planned our capacity additions in core businesses ahead of time and now nearing completions. One of the important themes in this quarter is project commissioning. Starting with VSF Vilayat plant of 600 TPD VSF capacity at Vilayat, 300 TPD was commissioned in November 2021, and the balance 300 TPD has been commissioned just this week. The total VSF capacity has increased by 37% to 810 KTPA from 591 KTPA. With the growing domestic demand in VSF, we are confident of fast ramp-up of this capacity to make additional capacity available to our customers. In the Chlor-Alkali business, as of quarter three FY 2022, 91 KTPA caustic soda plant at Rourkela is fully commissioned and Balabhadrapuram phase I plant is partially commissioned with 26 KTPA. The total capacity will get augmented to 1,530 KTPA by quarter one of FY 2024 because there are a few more commissioning that will take place from 1,147 KTPA today. The Chlorine value-added plant, chloromethane plant of 55 KTPA at Vilayat was also commissioned in quarter three of FY 2022. The total CapEx amount budgeted for the entire year was INR 2,604 crore, and that was excluding Paints. For nine-month FY 2022, the actual amount spent stood at INR 1,476 crore. We will certainly close the year well within the budgeted CapEx amount. For the Paints business, we have received two environmental clearances for two parts of the plant. You know, the CapEx in those two sites will get accelerated. The CapEx spent amount is at INR 505 crore till now on Paints, which is towards mainly towards acquisition of land parcels. We completed disinvestment of Fertiliser business on 1st January. At the time of announcement of the transaction, which was more than a year back, the enterprise value for the disinvestment of Fertiliser was at INR 2,649 crore, which included the outstanding subsidy amount at that time, which was part of the working capital. The final consideration amount received by the company on 1st January 2022 was INR 1,860 crore, and this is after adjusting for subsidy already received from the government during the year and has been small adjustments on account of CapEx and working capital. With this sale, the company has turned net cash positive on standalone basis again after a gap of 12 quarters. Pro forma net debt adjusting the December end net debt with the proceeds of Fertiliser comes to -INR 432 crore. Sustainability has been another key area of focus for the company, and we have incurred more than INR 500 crore in the last five years, and this is in VSF, and they have earmarked a total amount of INR 1,000 crore towards achieving global standards. The VSF business has taken the target to achieve net zero carbon emissions across all its operations by 2020. Grasim participated for the first time in Carbon Disclosure Project, CDP, in 2021, and has received management band score B-. At Grasim, our commitment to improve the quality of ESG data reporting is increasingly being recognized by the external world. In another major achievement, the company has received Gold Shield Award for integrated reporting and excellence in financial reporting. These are two awards from the ICAI. Another theme emerging in the quarter was unprecedented rise in prices of crude and derivatives and coal, et cetera, which emanated from demand-supply imbalances, logistical challenges created by country-specific COVID restrictions, and these have continued unabated. The VSF business has witnessed almost INR 400 crore plus of cost escalation sequentially. Grasim's backward integrated model will provide relief at the time of such extreme volatility in the prices as the rise in caustic prices, for example, aids Chemicals Division's performance. There are business-wise initiatives like improvement in consumption norms, improvement in share of renewable energy, which will all benefit in the long run. I'll briefly touch upon the key performance, you know, operational and financial performance. The stronger operational performance of VSF has been induced by strong demand for textile products in India during Q3 FY 2022, despite state-specific restrictions. The domestic textiles value chain has been operating close to its peak capacity, which is led by demand uptick and is evident in the share of domestic sales, which increased to 91% this quarter from 84% in the last quarter. The share of value-added products in the overall VSF sales mix has increased to 29% on sequential basis from 27%. In terms of volume, the VAP volume has gone up from 41 KT to 46 KT, an increase of 11% QoQ and 46% YoY. Why volume becomes more important than value is mix or the percentages because the gray capacity has gone up due to relaxed expansions. VFY business also reported a strong operational and financial performance on sequential basis, driven by strong growth in demand and improvement in realization despite the cost pressures. The viscose business reported net revenue, including VFY, of INR 3,335 crore and EBITDA of INR 401 crore. The VFY business reported a revenue and EBITDA of INR 574 crore and INR 80 crore respectively. The international caustic prices witnessed an upward trend for the fourth straight quarter. The domestic caustic soda prices went up on back of domestic demand and higher international prices. The caustic soda capacity utilization touched multi-year high of 93% in Q3, up 7% sequentially. The ECU is at all-time high with revenue increase more than offsetting the cost increase due to power cost. VAP performance suffered from cost pressures and weak demand as well. The advanced materials, i.e., epoxy business, have also witnessed a YoY improvement in the operational and financial performance, driven by a better product mix on the back of strong demand from the wind segment. However, epoxy segment is witnessing some cost pressures which may impact margins going forward, mainly due to timing difference. The revenue and EBITDA for chemicals divisions stood at INR 2,338 crore and EBITDA of INR 528 crore respectively. The standalone performance overall for Grasim for Q3 was strong, with revenues up by 56% to INR 5,785 crore and PAT up 46% to INR 522 crore on a YoY basis. At the consolidated level, the same figures were that revenue was up 16% to INR 24,402 crore, and PAT up by 26% to INR 1,746 crore for the quarter on YoY basis. With this, I would like to hand over the call back to the operator to take it forward. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Anyone who has a question at this time may press star and one on your phone. We have the first question from the line of Navin Sahadeo from Edelweiss. Please go ahead. Yeah, thank you for the opportunity. Two questions here. One, in VSF, you mentioned operating rates in China At a decent high of 83%. Yet in December end, we have seen like, you know, prices coming down. On January, I don't think there is very good recovery. Is it all this attributable only to the Chinese New Year related sluggishness, or is there some more issues around it? You wanna go with your second question as well so that we can. Yeah. -Answer? Yeah, sure. Thank you. Thank you for this. My second question then was about the Paints business. Glad to hear we've already received environmental clearance for two plants. Would it then be appropriate to ask which locations are these, what capacities are these, and by when can the plant see the light of day? Thank you. Okay. Good afternoon, Navin. On your first question about VSF operating rate in China, it touched a high of 85% for some weeks, and now it has come down to 82% and even 81% after the Chinese New Year. Inventory has also started to move up. During the Chinese New Year, most of the VSF plants continued to operate while the spinners or the customers did not operate, so there was accumulation of inventory built up. This is a normal, phenomena in China because the Chinese New Year is every year phenomena and there is a typical buying behavior. Many spinners buy the VSF before the Chinese New Year because they expect that after the New Year, the prices are normally higher than before the Chinese New Year, so they try to hedge their cost before. It is just one week of post-Chinese New Year. Operators are still opening. The spinners have not yet fully resumed. The downstream is still not fully open. We have to see. Price going down is just a normal because inventory had gone up and there was a dull activity. We have to look for the clear trend now in coming weeks. I hope this clarifies your question. Yeah. Helpful. I'm just trying to, you know, understand given that cotton has been on a rise sustainably, but we haven't really seen that kind of a sustainable increase in VSF. I'm just trying to test, do we expect prices now to improve, or it's still, you think, difficult to really take a call on that? The prices should increase because cotton is all-time high. Now VSF staple fiber prices are also increasing on the back of higher crude prices. There is a historical correlation between VSF, PSF prices and cotton prices. Of course, the cotton and the VSF prices have diverged, and this kind of gap is unprecedented. That is because on cotton there are a lot of financial players also, and there is an expectation of more shortage in cotton. Whereas in VSF, the competition among Chinese players is a little bit more intense than we would like to see. That is the reason. We expect the prices to go up and to some extent cover the cost increase more than what it has been the case last quarter. Okay. Yeah, Navin. That's totally helpful. Yeah. Navin, your second question, the EC are received basically for our north-based plants, which is Panipat and Ludhiana. We should actually receive EC for others as well, soon because south-based plants we were the first ones that we had signed up with the state government. Correct. Congrats on that. I think I'm sure investors will then be very keen to also know that, since the EC has received, so definitely more color on this as to what is the CapEx outflow that we can look at and the timeline for these plant commissioning what capacity. I think that color will be really helpful. Thanks. Sure. No, point noted. I think we again early stages. I think land generally is a little bit always unknown how much time it'll take, when we should get EC. Now that we are also gaining more visibility on land and ECs, hopefully by next quarter we'll be able to give you more picture on the CapEx forecast and other stuff. Thank you. Thank you. Thank you so much. Thank you. The next question is in the line of Nirav Jimudia from Anvil Research. Please go ahead. Good afternoon, sir. Afternoon. Sir, my first question would be in terms of value-added VSF. I think we have reported best ever quarterly volumes in terms of the value-added volumes, like it is up 56% from the start of the year. My question is, sir, how much further we can take these volumes based on our current value-added capacity? If we can add further that how much more CapEx we need to incur in order to take our value-added volumes to 40%, which is our long-term goal. Nirav, the question is a very interesting question. We are running our VSF capacity almost to the full. We have the flexibility to convert some of our lines which produce gray to VSF, depending on the demand situation. We have been waiting for schools to reopen for uniform market to pick up so that we can make more bright fiber, which is one of the VSF. We are running our Excel plant, which is Lyocell category of VSF, to almost full, but we are also experimenting with increasing the capacity marginally. Livaeco is one product where capacity is not a constraint, but it depends on the seasonality of buying and getting more orders from them. By end of next year, we hope that we will increase the WAF volume significantly. Along with increasing the WAF volume, percentage-wise it may not increase because our gray capacity is increasing significantly, so the denominator is increasing, so that is a different thing. We are also increasing our realization on WAF products as much as we can. On both sides, you should expect better performance on that product category. Right. Sir, last time on the call you explained that, since we have done some sort of fungible capacity where we can improve our Livaeco production. With this, won't it shrink our premium of the margins what we get in the value-added VSF over the gray VSF? Because then we are already at the optimum level of utilization for the Lyocell or the Modal probably which you mentioned in your opening remarks. Yeah. We can convert one more line from gray to Modal, depending on the market situation. In India it will take time for market to catch up, but then for some time we may export more Modal out of India. This is always a matter of time for the demand to catch up. Capacity can be increased in one step, wherever we can. Is it like, increase capacity, then market increases, then we utilize the capacity fully, then we again find out ways to increase the capacity. Sometimes it can be very small increment, sometimes it has to be a little bit bigger step increment in capacity. Sir, like, if you can put some sort of CapEx numbers for improving our volumes of VAP to 40%, that would be helpful, sir. Not significant CapEx, except in Excel. Excel will need possibly more CapEx. Other VSFs we can increase the volume without much CapEx. Our focus will be to increase the VSF, other VSFs other than Excel. Got it, sir. Sir, my second question is on the VSF again. In the opening remarks you mentioned that VSF business has seen a cost increase of INR 400 crore sequentially. If you can attribute the increase in the power cost out of this INR 400 crore, because even on a sequential basis we have seen INR 350 crore increase in our power cost. Some sort of understanding there in terms of the increase in the cost from the VSF business. Out of INR 400 crore, roughly INR 120 crore is on the energy, power and steam together, like actually natural gas and coal, et cetera. Okay. Okay. See, I think to answer your question, I think you're probably talking about power cost increase at overall Grasim level. Yes. Correct, sir. Correct. Yeah, that is mainly on account of caustic because that's the power intensive plant business rather. True. VSF, you have to focus on the increase in the pulp cost and the caustic cost. That's the primary reasons for part of that INR 400 crore that you're seeing. That's an absolute number that we've given, INR 400 crore. Of course because of volume increase also there may be some variable cost increase. We're just comparing quarter and quarter to say there's a INR 400 crore plus increase in the variable cost. Sir, is it possible to share, like in terms of our increased capacities both for VSF as well as for the caustic division, how much currently we are based on captive requirements and probably some sort of capacities we are also adding in the renewables also. Let's say when we will be utilizing our both the capacities optimally, how much would be our power integration? If you can share. We have shared our renewable capacity share, right? Where we are going up to 10% with whatever group captive schemes, et cetera, that we are going to. That's roughly. About 40-50% is our captive power from what we See, on VSF, so we have less than 10% power. Yeah. Because we need steam and power in a certain ratio. The steam we cannot purchase from outside, but on Chlor-alkali side we have to have- 50%. Power from grid and renewable. Okay. Sir, if I can just squeeze in one last question based on the bookkeeping questions. It's like on the pulp JV we have reported the losses. Just a clarification that is this because we have produced some 25,000 tons or probably sold 25,000 tons of lesser volume sequentially because of which our profits are lesser. Because if I do some arithmetic calculation in terms of the realizations what we have reported, I think we would, if we adjust those less volume sold, we would have been in the profit from the pulp JV. Is that understanding correct? Yeah, your understanding is correct. We had some reliability issues in our plants in the last quarter. Okay. That resulted in lower production. Then when the plant doesn't produce, there are on the contrary, more expenses on maintenance and on some energy things. It become compounded, problem becomes compounded. Your understanding is right. If we had produced as fully as per the previous quarter, then we would have been in profit. Thank you so much for answering the questions in detail, sir. All the best, and I'll join back in the queue if any, sir. Thank you. Thank you, Nirav. The next question is the line of Chintan Chheda from Quest Investment Advisors. Please go ahead. Yeah. Hi. Thanks for the opportunity. Sir, my first question is related to Caustic Soda. So we are in a very good cycle of Caustic Soda right now, but the performance of ECU Division continues to get negatively impacted by chlorine. I just wanted to understand, like, what are the plans of the management to tackle this issue? I think, fair point. What normally happens if you look at the industry, chlorine becomes the kind of a bottleneck for caustic supply to increase because chlorine can't be transported. I mean, that's the first understanding we need to get. When the run rate of caustic and prices is good, everybody maximizes caustic production. Typically, chlorine gets into negative. That's been the historical record in India, because in India, the primary product is caustic, and the byproduct is chlorine, which is reversed in the global scenario because of PVC. What we are doing at this point of time, and you would have seen and you would have heard Ashish talking about the projects. One large chlorine derivative project CMS got commissioned in Vizag. You would have also seen the press note of this time, which talks about ECH, which is now gonna come up in 2025. There is a progressive work which is happening on chlorine integration in the business. It is going to be a couple of years before our current captive consumption, which is a chlorine of around 29%-30% will jump to around 45%-50%. That journey, I think, as we keep on adding more and more products in production and, you know, we'll keep scaling. But that's clearly a line of focus for us going forward. You're seeing the initial work on it come through in the CMS part. Okay. At suppose, say, 40% kind of utilization of chlorine, will that impact on the spreads will not be negative? Or, like, what can we just get to the sense on the margins basically, how can we just lead to our margin improvement? I think you need to look at chlorine. When I talk about chlorine captive consumption of 40%, that's the chlorine derivatives that we are talking about. Then there is HCL also, and then there is tonner sale which happens. Overall, if you look at a 93% capacity utilization, that means 93% of the chlorine produced is got evacuated in the plant. That's the thing. There are three or four ways you cut chlorine and look into it. What we control in our own production facility is today 31%, which will go to about 45% over the next three or four years. The margin impact on that will certainly be positive. But each derivative has a very different margin because the end user is different, chemistry is different. It's very difficult to say what the margin improvement would be on an overall basis. Each product is very, very different. It's not a range. It's not a straight line which you can do. Clearly, if you see from a negative tonnage sale of chlorine outside market sales, the margin accretion is positive. Okay. How much we sell through pipeline today? We have approximately on an enterprise basis about 15%, which is in the pipeline. We have our own consumption at about 30. HCL takes another about 12-15%, and about 35-40% goes through our tonnage sales. Okay, got that. Sir, my second question is again related to Caustic Soda. We are, along with you, there is couple of more players who are adding capacities, very soon, in India. How do you see this impact on the overall caustic cycle for the domestic market? Here you have to go a little bit into the history. If you look at the last about a 4Q history, India has been at a discount to CFR FCA for some time. In the month of January, which we'll talk about in the next quarter, is when they both have reports. This is a step curve. Any country which will add capacity, you know, in any such product will go through a 18-24 month cycle before it normalizes and it comes back. As capacities will come up in India, you will see going forward, logically excess capacity of production. But again, here the question comes back to your earlier chlorine consumption. It'll be the chlorine capacity utilization which will drive the caustic capacity and not the other way around. Okay. Probably in first half of FY 2023, when a lot of capacities come on stream, you could see a weaker second half in FY 2023. Is that can be the right logical assumption? I think we should not look that far ahead, particularly with the volatility. Caustic prices have been going through within a month from $900-$475. My take is, yes, fundamentally, every time a capacity comes in, it does create market pressure, but I wouldn't really look that far ahead at this point of time. Okay. Got that. Thanks for the answers. Thank you. you. Thank you, sir. 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 VSF pricing versus cotton. The way cotton has risen in terms of pricing. Has there been any demand destruction for cotton customers, and some of them have moved to us? I mean, maybe not to us, but to some of the other international players, because our export mix seems very less. Has there been any migration of cotton customers to VSF in global markets and maybe also in India? Yes,Prateek, it happens because when the delta is so much, it is natural for the textile people to start using more of VSF and optimize or reduce their cotton consumption. They do divert some spindles from cotton spinning to VSF spinning. Also at the fabric stage they can do more blending. All kind of levers are there in the hands of downstream. We are seeing very robust use of VSF in India and also globally. It's clearly happening. Now, how much? I will not be able to give you the size numbers, but it does happen and it is happening. The number of volume of VSF at 157,000 doesn't look very extraordinarily high versus. I mean, we are doing 140- 150 anyway earlier, like last year. With the added capacity also, you know, I mean in such environment, why industry is not able to sell much more, in terms of VSF? We were selling whatever we could produce, so that was our constraint. Now since we have already commissioned the additional capacity, so we expect to sell more. Now we have more material to sell, and we are able to sell increasingly higher volumes in India. That is our first preference, because then we don't have to incur high shipping cost. And now- Optimization in both businesses are 90%+. Yeah. Now we are at quarterly capacity of around 200,000 odd. From Q4 onwards, we should model number of volumes, leaving aside some external factors like COVID, impact. Number of quarter 180,000 or 170,000 should be doable on a quarterly basis. Yes. Our India VSF capacity. Your voice is very low, I think. Our Indian VSF capacity has, with the commissioning of new lines, has reached about 8.1 lakh tonnes. On quarterly basis we should expect fairly equal volume, say quarter one next year onwards. This quarter we will be stabilizing the new lines and there will be some teething challenges. From next quarter you should expect reasonably good increase in the volume in terms of our capacity. Okay. Just one more thing. Given we have capacity constraints and given our cost has increased so much from quarter-over-quarter, year-over-year, what stops us from taking more price hikes to offset our increase in cost? Because our profitability has halved almost in VSF segment over 2Q from around INR 40 per kg to INR 20 per kg. Is it import competition because we are largely selling in domestic? What prevents us from taking hikes which could offset cost? As anyway we are running at very high utilization. Yeah. There are two factors we keep in mind. If we increase the prices, yes, we can increase to some extent, but then there we are opening the risk of imports from China or from Indonesia, because after all, everybody can export even after paying the high shipping cost. We have to keep our prices in line with the possible landed cost of imports. We do charge premium for the domestic supply, just in time supply and all those things, but there has to be a reasonable level. If the difference is too wide, then we are taking a huge risk of imports. Second is, if we increase the price, then yarn cost will be high, and then there is a risk of VSF yarn imports coming. That is another limit which restricts our ability to increase the prices beyond a point. We have seen that even when yarn prices are very high, our prices are not so high, but yarn imports come and ultimately it eats into our demand in India. These are the two levers we have to always keep in mind. We try to maximize our prices as much as possible. Sure. Just to answer, what could be a premium to imports from various countries in terms of pricing in of VSF? Roughly about 3%. 2%-3%. I think lastly, last time also we had mentioned that there is a conversion of blended and this thing. You know, it's more or less converged now. Yeah. We try to charge a premium for our quality, for our services, for just in time thing and all those things, but we cannot be too greedy. Sure, sir. These were my questions. Thank you. Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead. Yeah, thank you for the opportunity. The first question, just continuing the previous question on our cost, VSF volumes. Now this year, assuming we'll be doing something around 630-640. Now 200 KT per quarter, we're looking at somewhere around 25%-30% volume growth, both in VSF and caustic. Is that the right understanding as a ballpark guidance for FY 2023 in terms of volume growth for both these businesses? No. It's very tough to give volume growth. I think it's easy to calculate when I said that, you know, we're running historically at 90+% capacity utilization, and we will run our new capacities at that. We should be able to. Understood. You know, the benefit that we have in caustic is that VSF have increased, right? Caustic will, new capacity has the capability to feed into that as well. Then on the eastern side, there is alumina capacity that has come on the back of strong aluminum prices. There is market out there. VSF, I'd say, you know, Mr. Agarwal has already spoken about. Understood. Basically in terms of ramp up beyond a couple of months, we don't really require a ramp-up period. That's the understanding I'm getting. Also, we won't face any market constraints to place this quantity of volume in the market. Is that the right understanding of the discussion? Yeah, you are right. Domestic market may take some time to catch up and, in the meantime, if there is any surplus, we can export. Of course, the netback may be slightly less because of high shipping costs. We do not expect a serious problem in producing and selling the entire volume. Got it. Second question is with respect to the CapEx. Now we are very close to concluding our existing phase of expansion. Now what sort of CapEx will be left over in FY 2023? And in terms of our Paints business also, next year, what sort of CapEx are we looking at? Sumangal, I think right time to discuss that would be in the next quarter, mostly when we would have finished our budgeting, et cetera. I think, for FY 2022, like I said, out of the balance CapEx that is there, comfortably we'll be able to finish, well within that, approved CapEx that we've mentioned on the slide set. Understood. Okay. Thank you so much and all the best. Thank you. Thank you. Thank you so much. The next question is on the line of Bharat Sheth from Quest Investment Advisors. Please go ahead. Hi, sir. I mean, a large part of the question has been answered, but structurally, if we have to look at, I mean, this VSF gray business. Looking at the kind of, I mean, convergence of import price and domestic price, VSF gray as well as VSF yarn, VFY. How one really understand that which will be the demand driver and how the global capacity is and what level is operating and there can be a say for incrementally the way cotton prices are increasing and U.S. is putting a pressure from import from China, which is a reflection of a high cotton yarn prices also. If you can give some color, that will be a great help from say, two- three years perspective. Sorry, Bharat, I think, you know, some of these questions, like you said, it's covered. Is there anything specific, because I think in terms of guidance, we don't give. Well, I'm talking industry per se. What's the specific question in industry? How much is, sir, global VSF demand? Is it increasing VSF as well as VFY? Simultaneously, how much capacity is available and operating at what level and further new capacity which is getting added? On a global basis, CY 2021 demand for VSF is estimated to be around 6 million tons. Correct. The capacity is estimated to be around 8.5 million tons. Okay. You can calculate the overhang or capacity by this one. Okay. Now, new capacities, there was some capacity addition in 2020. In 2021, not much. In 2022, there have been some announcements, but we have to watch how much of that comes on stream. The demand is expected to grow globally around 4%. In India, the demand is expected to grow at much higher rate because India is still not at the high maturity level in terms of VSF use. In India, we have added our capacity about 220,000 tons. You can now understand whatever color you want to give to the industry picture. How much, sir, import is currently in India, I mean. One is a VSF and second one VFY. So, uh- Yeah. In India, there is not much import. Yeah. Negligible. Yeah. Yeah. Not much import. Yarn is again an open commodity which happens. Statistics are available. Yarn is in the range of 80,000 tons per year. VSF imports are much lower than that. You have to look at yarn and fiber together. Correct. Yeah. Because, you know, depending on the prices, yarn can start coming in. He's asking for VSF. VSY. Oh, VSF is a different thing, I think, than you may- Yeah. And- VSF about, two-thirds of the Indian demand is met through imports. One-third is met essentially by the company. The value-added product that we are talking, so how is the impact for the industry? Value-added products are good for the industry because then Indian textile value chain becomes that much more high value-adding. It improves the industry structure and is a reflection of higher aspiration of Indian consumers. Okay. It's the last question on this Caustic Soda side. See, our capacity, we are increasing almost by, say, by till 25. Almost 50% from currently 10 lakh tonne- 15 lakh tonne. Correct understanding? Yeah, that's right. Okay. From 11.7 KTPA to 15-30. Yeah. How much will that be then again now, as you explained, that value-added will be 40% by that time in for Grasim. Tonnage tail and all, so how much that will be net and how much will be, where there could be a chance of a negative carry there? Let me kind of take a stab at your question. See, I think what we are talking about is increase in caustic, right? Yeah. The capacity increase. On a separate front, we are working on chlorine derivative also. Got it. In each of our locations that we are present in, we are working on chlorine derivatives. What we've given as a target in 2025 of you know 40%-45% roughly, whatever, is on account of this new derivative CapEx that we'll put up, which includes CMS, ECH, etc. Got it. That's really what the plan is. We are trying to put up both capacities in parallel so that, you know, whenever there is extra chlorine that is getting created, we have some project that is ongoing to absorb that part of that chlorine that is getting generated. At the end of the day, we want to avoid tonnage movement. Just to add one more reference point, and I'm not getting into data with you, the chlorine demand is growing at a faster rate as compared to the caustic demand. Got it. Clearly, you have a positive cycle there relatively. Okay. Because of this demand for PVC. From my side. There is no value-added product in Caustic, okay? Caustic is sold as Caustic. The value-added products are only in chlorine. Correct, sir. They serve two purposes. They serve chlorine evacuation, and they serve addition of value. Because chlorine, as you know, we sell in the trade market at low to negative. Currently our captive is how much in the pipeline that we are talking? That will also be, do we have a plan to increase those? We are continuously in talks with potential chlorine users who can then come and put their plants adjoining to our plants. They are subject to getting their EC land availability. There are lots of ifs and buts in that. That's a constant dialogue which goes on with prospective chlorine consumption players. By 2025- Sorry, sir. May sir. May I request you to repeat your name? Sorry. Thank you. Thank you. The next question is from the line of Yash Jain from Choice Institutional Equity Research. Please go ahead. Hello. Yeah, hi. Hi, Yash. Yes. Okay. Hi, sir. This is Abhimanyu Kasliwal from Choice Institutional Equity. Sir, most of my questions were answered. I wanted to ask regarding the CapEx, sir. If I heard correctly, INR 4,076 crore CapEx was budgeted for this year, and INR 2,604 crore was completed. Roughly INR 1,150 crores, up to INR 1,150 crores you can say is left for this quarter. I wanted to know, and this might be a very beginner question, but would this INR 1,476 crores include the INR 965 crores CapEx of, on cement? No, this is on a standalone basis. Okay. If I can guide you to the chart on page seven, we cover only standalone businesses of Grasim, which is VSF. You have the breakup of the balance CapEx of INR 1,128 into VSF, Chlor-alkali. When I say other businesses, it's basically epoxy, VFY, textiles, insulator, which is all part of Grasim. These are smaller businesses of Grasim. Understood, sir. Thank you. One more question, sir, then. Since we have roughly INR 1,100 crore that we are hoping to complete in by this quarter, are we seeing some kind of traction in that, or are we going to, say, be well below budget? What way do you see, sir? Yeah. This is the reflection of our ability to complete our projects at lower cost. Mm-hmm. We end the year with lesser amount than the spending that we have given. Okay, wonderful, sir. Thank you so much. Thank you. The next question is from the line of Nirav Jimudia from Anvil Research. Please go ahead. Sir, with respect to my earlier question, I had just one addition to that. You mentioned that we'll be adding the capacities substantially on the value-added VSF side. In your opening remarks, you also mentioned about the sustainability CapEx, what we have been doing on the VSF side. This would help us to bring down our cost of production. If you can relate this, some reduction in the cost of production with respect to the slightly lesser realizations in the value-added VAPs because that would be more towards, dope dyed and the other fibers what you mentioned. Some understanding of this is basically my question is to understand that, let's say if some premiums fall for the value-added VSF, how much we can compensate it through the reduction in the cost side? Normally these two things are not fully related. Yeah. Premium on VAPs is a function of market situation. That sometimes we are able to pass on the cost, but many times, like recently, the cost increase has been much more than we can pass on. Sometimes it may be that cost reduce and we don't have to pass on that cost reduction in the price. Okay. Increasing the production will not reduce the cost because we are anyway operating at almost 95% of almost full capacity. It will be a question of which product we produce. Yeah. A little bit of debottlenecking or increasing the production. Yes, there will be marginal reduction in the cost, but that will be small, not a very big thing. Just to supplement, you know, see, I think if I get the direction of your question. See, over a longer, or even medium-term horizon. The new capacities and the bottleneck capacities that are coming are all brownfield, right? Reliance is brownfield and the debottlenecks are in the same. You're not really incurring large CapEx to achieve those volumes. That's where the benefit of mitigating the cost increase or any changes in realization. That's the benefit that you get by constantly reducing. In fact, every year we come up with projects where we focus on reduction of cost overall for Grasim, including the VSF business through technology, et cetera. Now, on the sustainability front that you mentioned, see two things. One is sustainability expenditure that you do actually doesn't necessarily lead to only cost. You are able to get premium for your products from your customers because today customers are demanding that product, right? Because you have that background. Now, Livaeco is actually an example where you work on your process, your value chain, your product to create a sustainable, fully sustainable product. There you clearly get a premium over the grade. The way the premium has to be looked at is not necessarily percentage margin over premium. Generally, the prices of these specialty and VAP products is quite stable and the grade is what needs moved up and down. You have to look at the premiumization of VAP from that perspective. Got it, sir. Sir, like, since we have been demonstrating a lot of examples in terms of the process intensity intensification by almost like we have debottlenecked our capacities by 10% over last 6, 7 years. Is it fair to assume that once we utilize these capacities fully, VSF probably FY 2023 or FY 2024. That is a different topic. Let's say whenever we will exhaust those capacity, there is a further scope of some debottlenecking which would probably come at a very lesser CapEx cost. We've done that in the past and we'll continue to find ways and means to debottleneck and increase the capacities. Okay. Sir, second question is a bookkeeping question. Like you mentioned that the performance for the Epoxy this quarter has improved on a YoY basis. If you can quantify some percentages like how much it has improved on a YoY basis, that would be helpful, sir. We don't isolate epoxy and give that figure. At the end of the day, if you look at epoxy also it's in a way a derivative of chlorine, right? You make ECH and then goes into epoxy in that way. What has really happened in epoxy is that the raw material prices of ECH and BPA, et cetera, has been going up. Yeah. Okay. Some of it is getting consumed out of the inventory of the prices that we bought in the past. Therefore, the cost pressure is coming through because of timing differences, what I had mentioned in my opening remark. To pass on the price. Okay. Yeah. The, you know, inability to pass on that price at this stage. Okay, sir. Thank you for answering questions in detail, sir. Thanks a lot. Thank you. The next question is from the line of Prateek Kumar from Antique Stock Broking. Please go ahead. Hello. Yeah, thanks for the opportunity again. I have a couple of follow-up questions. On caustic, in caustic segment. This coal prices started to rise again, or have risen again after I think some softness which we saw in November, December. Are the pressure on caustic segment margins again expected to come back or Grasim Industries again is thinking of taking price hike or the price will support the margins in that segment? See, normally there is always a lag between the prices of coal to our consumption because there is a certain amount of inventory all of us do keep. You're right, the prices did come down, the prices have gone up again. I think at this point of time, we believe that the caustic prices have reached a point where, you know, they're kind of stable. The volatility in Indian market is coming down, although and so also in the global market. My belief is it's better to have a more stable pricing than a volatile pricing that we've seen over the last three or four months. I mean, being a very basic commodity, what has like particularly helped in stabilizing the price, as you suggest? Again, it's the demand supply. You see, you've got a very good demand coming from the textile sector, and you've got a very good demand coming from the aluminum sector, plus along with your soaps and detergent sector. All these sectors have been doing very high on their own demand cycle, which has led to the stability of demand. That's why you're seeing the run rates from 85%-95% across multiple players. One last question on VSF, inflation. So, what, I mean, is this the pulp inflation expected to peak or has it already peaked in third quarter? Or is it more inflation is remaining like sticky? Pulp prices of late have been more stable than other inputs like caustic or coal or sulfur or zinc. Pulp prices are not going to show much higher volatility in the coming quarters. That is our expectation. No, I meant what we booked, pulp prices have been softening as we have discussed earlier from earlier time, but what we have booked, in terms of our numbers. Should we start seeing that softening? The lag effect, that you know we've always talked about, so we get the benefit or the other way around, the impact of the prices, almost 4-6 months down the line because of Yeah, because of two factors. One, we follow the index of previous quarter for this quarter supplies from our suppliers. There is a long supply chain. It takes almost one and a half months for the pulp to arrive from the origin to destination. There is always some inventory. Yeah. There is a gap of almost 4-5 months from the time of index to our consumption. Yeah. That's what I was asking. Has the lower cost inventory started to show up in our numbers, or is it still like six months away? Because the price of pulp has been falling for some time. Yeah. We have already passed the peak for the time being, if you want the precise answer to your question. Yeah. Yeah. Yeah. Yeah. Peak is behind us. Yeah. Sure. Thank you, sir. Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I would now like to hand the conference over to the management for their closing comments. Thanks for everyone's participation on the call. We look forward to seeing you again in the next quarter. Please reach out to Saket for any clarifications, queries that you may have on the numbers. Thank you. Thank you, sir. Ladies and gentlemen, on behalf of Grasim Industries, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.