Ladies and gentlemen, good day, and welcome to Q2 FY 2024 earnings conference call of Grasim Industries Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit, Head Investor Relations from Grasim Industries Limited. Thank you, and over to you, sir. Yeah, thank you. Wish everyone on the call a very happy and prosperous Samvat 2080. Thank you for joining us today to discuss Grasim financial results for second quarter of financial year 2024. The financial statements and presentations are available on our website, as well as on the website of stock exchanges. For safe harbor, kindly refer to cautionary statement highlighted in the last slide on our side of our presentation. Our leadership team is present today on this call to discuss our results. We have with us Mr. H. K. Agarwal, Managing Director, and Mr. Pavan Jain, Chief Financial Officer, Grasim Industries. Also joining the call, we have our business leadership team. We have Mr. Jayant Dhobley from Chemicals, Specialty and Insulator Business, and Mr. Himanshu Kapania and Mr. Rakshit Hargave from Paints Business. I will now welcome Mr. Pavan Jain for his opening comments, post which we will open the floor for Q&A. Over to you, sir. Yeah, good morning. Hope you all had a joyful and sparkling Diwali celebrations. We from Grasim management wish everyone on the call a very happy and prosperous new Samvat. It is a pleasure to be with you all for this, for discussing our Quarter Two results, on this call. First, I will give some highlights on macro and business environment, and then we'll cover our financial performance for the quarter under discussion. Global economic activity and trade are witnessing slowdown, although unevenly across geographies and sectors. While in the U.S., economy is showing sign of resilience with tightness in labor market, better than expected Q3 GDP and stable domestic consumption, there exists tough economic scenario in Eurozone. It appears that China is again witnessing signs of slowdown. The latest reading of GDP shows that U.S. economic activity rose by 4.9%, while it is contracted by 0.1% in Germany and Eurozone, and is estimated to have contracted in Japan and U.K. as well. Tightening financial conditions in response to monetary actions to address still elevated inflation, persisting geopolitical tensions and growing geoeconomic fragmentation render the global outlook as fragile. In October, November 2023, U.S., Fed, ECB, BOE, BOJ and Bank of Canada has held the rate, and they have not announced any change. Fed's policy statement remained hawkish as it reiterated that future rate hikes cannot be ruled out if inflation continues to remain elevated. China's expected reopening boom based on export growth and consumption revival doesn't seem to have materialized on expected lines. As the macro global environment continues to remain volatile, weakness is seen in realizations of global commodity segments in which we operate, like viscose and chloralkali. On the domestic front, RBI's policy kept status quo on both fronts as well as on rates. Growth and inflation estimates were also retained at the same level of 6.5% and 5.4%, respectively, for financial year 2024. India witnessed below normal rainfall in 2023, after a span of over four years of normal and above normal rains, with a deficiency of 6% below LPA during this monsoon, though in the rain fed agriculture region, also called as monsoon core zone, the rainfall received was normal at 101% of LPA. During the quarter, most economic indicators showed signs of improvement. CPI inflation inched down. IIP saw an uptick in August 2023 and September 2023 after falling for two consecutive months. Sector-wise, both cement production and steel consumption recorded growth, while garments and chemicals witnessed negative growth, which could be largely attributed to lower growth in exports, as these sectors have significant export-led demand. The ongoing festival season, which also coincides with the harvest time in rural area, will be crucial. In the larger textile value chain, the pent-up demand seen in 2022, post lifting of the lockdowns, is witnessing normalizing trends in 2023. Additionally, the inventory trends are also normalizing, though focus of majority of the brands remain on reducing inventory and moderating buys. Coming to our financial performance for the quarter, the consolidated revenue grew by 10% YoY to INR 30,221 crore. Consolidated EBITDA grew by 14% YoY to INR 4,509 crore. The growth was driven by cement and financial services businesses, as both UltraTech Cement and Aditya Birla Capital posted robust results. At standalone level, revenue grew by 4% to INR 6,442 crore, and EBITDA grew by 21% YoY to INR 1,354 crore. The sales volume in standalone businesses, viscose and caustic soda, recorded growth of 24% and 3% respectively on YoY basis. The impact from global decline of prices, as well as the mismatch in demand supply, which resulted higher imports, had a direct impact on realizations for viscose and chloralkali businesses. In specialty chemicals, our epoxy business has recorded volume growth of 25% YoY, and the expanded capacity of epoxy is under commissioning and expected to be operational in Q3. We have announced our brand for paints business, which is Birla Opus, as mother brand. Sub-branding and go-to-market strategy are progressing as per internal estimates. Also, as stated earlier on commercial launch, happy to share that the company has received consent to operate for three of the plants, namely, Panipat, Ludhiana, and Cheyyar. Birla Pivot, which is B2B e-commerce business, was launched last quarter and it has crossed milestone of INR 100 crore in the quarter gone by, revenue of INR 100 crore, and now inching towards monthly run rate of INR 100 crore. As highlighted earlier, on private labels, we have launched Birla Pivot Tiles, ceramic tiles, and also exploring other categories like doors and plywood. The company is witnessing high, a healthy repeat rate from the direct buy, buyers in certain segments. In its transformational growth journey, Grasim is implementing its highest ever capital expenditure plan. As you would, you all would be aware that the board has approved fund raise of INR 4,000 crore by way of rights issue in the board meeting held on October 16, 2023. Proceeds from the rights issue will be used for ongoing CapEx and retiring, debts as well as for general corporate purposes. At this point, we would not be able to share more details about rights issue and request you to avoid questions specific on this. We will share additional details with all in the due course of time. We now open the floor 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 the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Navin Sahadeo from ICICI Securities. Please go ahead. Yeah. Good morning. Am I audible? Hello? Mr. Navin, your line has been unmuted. Please go ahead with your question. Yeah. Can you hear me? Hello? Hello. Mr. Navin, we are unable to hear you. Would I request you to unmute your line from your side, please? Hello, am I audible? Hello? Hello. Yes, sir, we can hear you now, so please go ahead. Okay. Yeah. So thank you for the opportunity, sir, and good to see VSF margins recovering on a QoQ basis. So my first question was on VSF, that despite the fall sequentially in the realization, margins have still improved a tad on a QoQ basis. Now, if my observation is correct, since August, I think there has been almost like a 8%-10% kind of a recovery in global VSF prices, especially China, if I'm not wrong. So does it mean that we can expect further margin improvement in Q3, or costs could, like, you know, come back with a lag and there could not be much further improvement? And just here on this, I would also like to request your view on more steady state margins for VSF. In the sense, if I look at last 20 years, FY 2003 to FY 2023, the EBITDA per kg is roughly INR 25-INR 26 in VSF. Can we take that as a steady state number? Or in the current scheme of things, like more like 20/21 is a fairly stated stable kind of a margin expectation over the medium term? Thank you. Good morning, Navin. Thank you for your detailed analysis on VSF profitability. So, international prices for VSF have remained under pressure in Q2 also, and currently. In China, there was some improvement in Q2, and prices they have not improved that much as you said, but they have been more steady. And of lately, as published information will show that the prices are inching down a bit. Having said that, the margin improvement in Q2 was though the prices came down, but volume increased significantly, so that gave operational leverage as well as the input prices also came down. Caustic soda was the main item, sulfur, coal, and oil to some extent. So these commodities now are very volatile. Caustic prices have started to stabilize and inch up. Coal prices have also started to inch up. So difficult to predict, really, whether margins will remain steady. We hope that margins remain steady, but then it is anybody's guess about so many volatile factors. So this is the situation. Helpful. And on my second question, the views basically about steady state margin. If I have, like I said, 20-year average, seem like INR 25 a kilo. So if I were to take a view next four, five years, because as you rightly said, commodities can be volatile in the interim, but if I were to take a slightly longest view, four, five years, is it fair to assume that 25 rupee a kilo can be an average profitability expectation, or you think because anti-dumping duty is no longer there and, you know? See, you people are more knowledgeable about how to build scenarios and how to build profitability. It is not fair for me to say that we all know the fact that anti-dumping duty is not there and what is the correct current situation. So you can build different scenarios. I will rather refrain from guiding you on which numbers, what, out of the two numbers you have said. But in the long run, yes, we also hope, and we aspire that the long-term average should hold. But difficult to tell you, like, whether it will turn out to be good in the next year, three, four years, as you said. So in the long run, yes, we all remain optimistic. Sure. Just one more question before I get back in the queue. The losses from the other new businesses, let me put it, because I think B2B business or paints business, they have been, I think, quite sticky since the past few quarters, rightfully so, they're new businesses. So I just wanted to understand because I believe EBITDA losses are more like INR 100-odd crore in the current quarter, maybe INR 115-120-odd crore from these new businesses, which were around INR 80-90 in the past one or two quarters. So would request a broad breakup of this. Is it more from the paints? Is it more from B2B? And then how should one look at these losses in the coming quarters? Thank you. So, Navin, of course, the new businesses have their initial costs which are being charged to P&L. So obviously, the higher part is from the paints business. B2B is not a significant number. So, I think once we reach a level where we need to separately disclose these numbers, we will report in our results. But as of now, I mean, the numbers are not very large. And yes, the higher part is from the paints business. Larger teams have been already hired in all the areas of the paints business. So the cost, which is not getting capitalized, is being charged to P&L. Understood, sir. Thank you. Thank you so much. I'll come back in queue for further questions. Thank you. Our next question is from the line of Nilesh Saha from Julius Baer. Please go ahead. Yes. Hi. Am I audible? Yes, sir, please go ahead. Okay, great, great. Hi. Hi, yeah, I think, yeah, you know, I just want to thank the team for sharing more granular information about, you know, about paints, right? Especially, you know, just in this call and even in the last one, right. My question is slightly more long-term, right? I think, yeah, you know, Grasim as a company serves two functions. First, that it is a holding company of various entities of the Birla Group. And second, it also has operating companies of its own, right? I'm just interested to understand how the management and the board thinks about capital allocation in the long term, because, you know, we have paints that is going on, but in the comments, you know, you mentioned also some other categories like tiles, plyboard, right? Does the management... You know, over time, you have seen also debt increase, and now you're doing the rights issue, right? I, I know that you, you would not comment on the rights issue right now, but structurally, do you have a, a view on, on, on what kind of, you know, sort of debt to equity you would like this company to be? And what kind of distributions would you like your shareholders to have, right, from both the operating and the investment verticals of Grasim, the company? Thank you. Yeah. So, see, first of all, let me try to explain how the company works in the sense that we have a standalone level, two core businesses, existing core businesses, which is our viscose and chemical businesses. And we have entered into two new businesses, which is, paints, decorative paints, and B2B e-commerce. And apart from that, we have other businesses like textiles and insulators, et cetera. So these are the standalone businesses. Right now, the large CapEx plan is for the paints business, but we are continuing to invest in our core businesses as well. The capacity expansions have been recently completed in viscose business and also in the chemical business, and chemical business still remaining some part of the capacity expansion CapEx will be completed in next financial year. So we are continuing to invest in the core businesses. We are investing in the paints business, large CapEx we have announced of INR 10,000 crore, part of which will be spent during current year and balance in the next financial year. In B2B e-commerce, there's no major CapEx. And as regards to your comment for the plywood and doors, et cetera, these are private label brands we are exploring. We have launched, ceramic tiles, private label, but we are not manufacturing. We are not setting up any manufacturing capacity in our B2B business. We will have our contracted manufacturing arrangements with the vendors who can meet our requirement of qualities and the delivery timelines, et cetera. These are private label brands- - contracted for manufacturing from outside companies. So that is the status. Regarding debt to equity, we have very large, very strong balance sheet against our net, net worth of more than INR 50,000 crore. Our debt levels are only INR 8,000 crore. And debt to EBITDA also, we have very healthy levels. We don't expect this to cross about 3.5, et cetera, even with the full CapEx of the paints business the next financial year. Hope that clarifies your point. Anything you want to comment on distribution? See, the meta point I'm asking, right, as management, I hope you guys also realize that, you know, Grasim, the company, is undervalued, right? And there are certain questions that investors have, you know, for the company to really get the valuation that I think you would also feel, right, that it, you know, that it should fairly trade at, and one of those are distribution, you know, more. So any thoughts on that, right, you know? So, valuation is, I mean, how the market perceives. But yes, there are large holding company discount we can see, as far as Grasim's valuation is concerned. I think the way we are operating, we are investing in our core businesses and the new businesses, as the share of the standalone numbers increase in the overall P&L of the company, the consolidated P&L of the company, we expect the valuation should be, that should be reflected in the valuation. Okay, sir. Thank you so much. Appreciate your, you know, your help here. Thanks. Thank you. Our next question is from the line of Sanjeev Kumar Singh from Motilal Oswal Financial Services. Please go ahead, sir. Good morning, sir. I have two questions. First, on the VSF business, so there have been an improvement in utilization in China. It's around 35%. Inventory levels are coming down. So which are the factors which you believe that is keeping the prices subdued in the international market? It is due to better cost. So can you comment something on the split for Chinese manufacturer, or is the demand in the value chain is really weak? And secondly, how do you expect the demand supply to be in the second half? Sanjeev, will you repeat your second comment? I could not hear it clearly. How do you expect the demand supply to be in the second half? Okay. So, the international demand for textiles, in general, has been subdued for last 4 or 6 quarters. And the international brands have been saddled with huge inventory for multiple reasons, and they have been trying to correct their inventories by purchasing less. So when the brands purchase less, then the entire value chain also has less activity to work on. And that has been going on for quite some time, but still the inventory levels remain elevated, mainly because the sales has not been as robust as it used to be. So that is the fact, and we all believe that it may take some more time. It is anybody's guess. Every time people say next two quarters, next two quarters, but then next 2 quarters, we still have been seeing the same situation. So, you know, say with confidence. So now new geopolitical factors keep on coming to our surprises. In China, the inventory levels have come down. I think that was because of the expectation of the demand in the holiday in China, et cetera. But now, again, we see that Chinese economy is showing some signs of slowdown. So we will have to wait for clear trend to emerge, what is really happening on the ground level in China. And the margins are impacted by or improved by the reduction in input prices in the last quarter. So that trend is now little bit uncertain in the same way, because some of the input prices have started to stabilize and but we have to see how the things come, because there are so many pulls and counter pulls working, so difficult to predict with very much confidence. Yeah. Thank you, sir. Second question is on VFY. So as I believe that there has been some anti-dumping duties on VFY, which has been maybe recently, and in the presentation also, you have mentioned about pressure on VFY prices due to competition from China. So what was the impact on margins, if you can comment, and has there been any improvement in the pricing scenario recently? Hi, this is Jayant Dhobley. There is only a DGTR step that has happened on the anti-dumping duty. It is not yet approved by subsequent ministries, so that is work in progress. As far as Chinese imports are concerned, as you can imagine, you know, domestic consumption in China is very low, and that is putting a lot of pressure on Chinese producers to export. And that, combined with, you know, as Mr. H. K. Agarwal was mentioning earlier, lower textile demand in India during the festivities, that is less than what was anticipated, has caused a downward pressure on the filament yarn prices. So to summarize, there is only a DGTR recommendation on AD, there is not yet a final decision. China, domestic consumption is low, India demand is low, and that is putting pressure on filament yarn prices. Thanks, sir. Thanks a lot for your clarification. Thank you. Our next question is from the line of Nirav Jimudia from Anvil Research. Please go ahead. Good morning, team. So sir, I have two questions. So one on the chemicals. Sir, in this quarter, our ECU was INR 32 a kg, and you mentioned that the chlorine demand was slightly weaker because the downstream of chlorine was not doing well. So if you can just help us walk through how much was chlorine negative this quarter, and what was it in Q1 of FY24? And along with it, if you can just clarify that, was there any change in the average power cost per unit this quarter for the caustic soda business? Because I could see that, if you just break it down in terms of the cost of production, there was slightly increase in our cost of production for the chemical business. Was there any change in the average cost of power this quarter? Actually, average cost of power has been favorable for us, so I can take that question straight away. Okay. The second is, we break out ECU, but we do not break out the components of ECU, in terms of what is our caustic and our chlorine price. So it's unlikely that I will tell you what exactly the chlorine number is. And look, we are different from many of our local competitors, right? You know, we are spread all over India. Yeah. Which means that we have different dynamics and different geographies, and, that makes our eco picture more, more balanced towards the Indian market than some of our competitors. So, so I think we are happy to give you only eco numbers at this stage. I think it's, of course, worthwhile noting that there are two main downstream industries of chloralkali. The first one is the caustic. From the caustic industry, is mostly at a global level, textiles, which, as you all know, has been soft, not only on the viscose side, but also on the cotton side, particularly on the cotton side, which is a bigger demand driver for us. And downstream of chlorine, you mostly get into products like agrochemicals, plasticizers, pharma intermediates, et cetera, et cetera, which are also currently, you know, not having a strong demand. You guys are tracking the chemical industry. You know how the agrochemical players are doing in this industry today. Yeah. And we are, of course, suppliers to this industry, right? So these are the two topics which are curtailing us on the demand side. Caustic as a power, as I mentioned earlier, is actually a favorable part for us. We have had a couple of operational issues in our chlorine derivative plants. ... which have resulted in some higher maintenance-related costs and stuff like that in this particular quarter, which may, which may point to, you know, why you're seeing certain cost numbers to be on the higher side. Got it. Sir, is it possible to quantify that one-time maintenance cost, which could not be repeated from next quarter? No, I would not get into that. No, I would not get into that. Got it. And sir, you mentioned that the specialty business, which is epoxy, you have seen close to 25% volume growth on a YoY basis. So, has that also helped in improving the absolute EBITDA also on a YoY basis? Or, the spreads have come down, and that has helped us to maintain the YoY EBITDA numbers for the epoxy business? Our Epoxy profitability growth has been in line with sales. Okay. So we could see 25% increase in the profitability also there? I will not answer further than what I just said. But sir, was this driven more by just a mix of specialty volumes, or it was because more of the commodity volumes were placed in this 25% volume growth? We classify our specialty business entirely as Epoxy, so this is the entire Epoxy volume. Okay. Okay. Sir, on the VSF side, we could see, Sorry to interrupt, sir. May we request you to join the question queue for follow-up questions, please? Yes, sure. As there are several participants waiting for their turn. Thank you. Our next question is from the line of Gaurav Nigam from Tunga Investments. Please go ahead, sir. Yeah, so thank you for taking my question. Sir, I have one question on the—to start with, on the paints business and a conceptual question. As this business is seeing very important decision makers, one is the consumers and second is the influencers, like dealers and contractors. When we think about Birla, of course, is the new paints brand coming into market. So the conceptual, what are the levers that the paint brand have to influence these two important stakeholders? So thank you for asking this question. You know, and I would want to give a slightly generic answer, that for influencing both the consumers and contractors, there are established practices in the market, and we will also look at to do some new things, which you will come to know when we launch. But obviously, we take both these consumer sets and these contractor influencer sets, very, very seriously, and we have a very defined plan in terms of how to address that. Got it. Okay, okay, okay. And sir, just a follow-up question on this. How should we think about the profit pool of the paint industry over the next two, three years? Well, if you take a look at, you know, whatever are the results are available in the public domain, but going ahead, you know, we will not be in a position to comment because it is a factor of various things, including input prices and all, on which we don't really have a view. Okay. Yeah, it is very difficult to comment about industry numbers. I think you have all the numbers available, of the listed companies. So, how it will pan out for next two, three years, it is very difficult to say. I, I think we would refrain from making any statement there. Got it. Got it, sir. And just, maybe last question on the sale. When we think about this paint industry, right, sir, we have both, one is a retail segment and one is the industrial segment. So when we are entering the segment, are we entering both or, we are targeting only one of the two segments? You know, we have maintained that we are entering into the decorative segment, and that holds good. Okay. Okay, sir. Thank you. Thank you for answering my question, sir. Thank you. Thank you. Our next question is from the line of Prateek Kumar from Jefferies. Please go ahead. Hello. Yeah, good morning, sir. My first question is, clarification on textile demand in India. So you had mentioned, like VSF demand benefited from strong festive demand, probably in textiles. But we-- for VFY, we are seeing that the demand is slow, and that has also hurt, the segment profitability and prices. So, so are these different segments which we serve, for both these products? Yeah, so this is Pavan Jain. I'll take this question. So as you know, VFY is a filament yarn, and within that, you have multiple categories: core spun, wool spun, continuous spun. The particular market, which has not been picking up really is the embroidered market, the, the, what you would call, you know, for occasions, right? Which is a very different segment than, for example, where staple fiber goes and then is subsequently spun into yarns. So the VFY demand issue is mostly related to ethnic wear, which is used in, in the, in occasions, right, you know, engagements, marriages, et cetera, et cetera. That is where the demand gap is. You know, the textile industry is not one monolithic whole, right? You know, within the textile industry, there are many segments, there are many price points, there are different consumer buying patterns. So, one specific niche in which we have usually a good exposure and opportunity that is ethnic wear for occasions. I hope that answers your question. Right. And this 24% volume growth in the segment of VSF this quarter, is it the industry growth also likewise, or we have gained some share from imports, which were like sort of getting dumped into Indian markets? Right in past few quarters? Yes, so there is definitely less imports on VSF during the quarter. That is there. But the industry in India, domestic textile utilization also had more activity, I think, in anticipation or in preparation for the festive season. Now, how much real sales happen at the market level, at consumer level, that data will come soon. But the textile utilization prepared for that expected festive sales. So we have to see how the things continue in the current quarter. So there was more consumption in quarter two. Okay. And regarding your new businesses, for paints, so, we are looking to start like three plants by Q4. So I mean, all these plants are expected to commission by March, or like, is like a staggered, like, commissioning? And as a result, also, is the product launch particularly also planned, like by March or like slightly earlier, in the paint segment? And in your B2B e-commerce segment, you said you're reaching now quarterly monthly run rate of INR 100 crore in revenue. Are there any specific like target for FY 2025 in terms of revenue, in first year, full year of operations? You know, I would like to reiterate again, what we shared in the last call, is that, we will be launching our paints in Q4, so which is in the period January, February, March. And also the three of our plants, which we have disclosed, also in the report that you have in Ludhiana, Panipat, and Cheyyar, they have got their CTO, so they are expected to become operational in Q4. And accordingly, it will happen. Yeah, so we are not saying which month, et cetera. We are saying in Q4, we will have all these three plants operational, and accordingly, we will also launch the product in the market, in the paints. And in B2B, what we are saying is, we are inching towards INR 100 crore monthly, not that we have reached that INR 100 crore monthly range. But any specific target in this segment also we have, like for FY 2025 as a full year of operations? No, I don't think we can share any numbers of the targets, et cetera, on this call. But of course, we have the, I mean, when the plan is approved, we all have all the data, when the business, decision is taken. But it will all depend upon how the, overall building material, category, works in the, in the overall country, and, how the people move from physical to digital, that, that will and, and that will help in understanding the numbers for the future. Sure. And one last question, if I may. I know this Aditya Birla Renewables is a subsidiary. So, I think I saw the capital employed has gone to INR 5,600 crore and rising rapidly quarter after quarter. So, what exactly we are doing in this, and what is the outlook on CapEx and how it is funded? The capital employed is increasing as we are implementing new projects. There are projects under implementation of about 1 GW, and we expect by next year, first quarter, all those capacities to be commissioned. Okay, and that is how the capital employed is increasing in the business. The results of which will be reflected in next financial year. Okay, and as far as the funding is concerned, we are having about 20%-25% from equity and balance from debts. It depends on each project or project to project. Sure. Thank you, sir. These are my questions for the day. Thank you. Next question is from the line of Lakshminarayanan from Tunga. Please go ahead. Yeah, thank you so much. A couple of questions. One is that you have launched the paint home consumer thing in cities. What has been the response so far? PaintCraft. PaintCraft, yeah. Okay. So, are you referring to PaintCraft? Yeah, the PaintCraft. Okay, okay. So PaintCraft is a test launch. And, you know, like we said last time, it is to test the SOP and the processes, and we have put this in eight cities, and the feedback is satisfactory. As you would know, we don't have our own products, so we are using products from the market, and it is of a pilot nature. Got it, got it. So when if you look at the paint industry, it's, you know, if I just add the listed company, it's around INR 53,000 crore is the approximate revenues, and they generate close to around INR 7,000 crore profit after tax, right? Now, with, you know, whether, you know, of course, you enhance the revenues of the industry pool or, and, or you intend to reduce the profitability? It's, it's both. I just want to understand your view. You know, our view is that we don't want to make any comments which are forward-looking in terms of what we are going to do. We will come to the market with our strategy, and then you will see how we perform, but no comments on this. ... Why will any player like to reduce the profitability of an industry? The line from Mr. Lakshminarayanan has dropped. May we move to the next participant? Our next question is from the line of Dheeraj Pathak from White Oak. Please go ahead. Yeah, thank you, sir. So what is the dividend distribution policy at the company level? Mr. Pathak, may we request you to use your handset, please? Yeah, I'm using the handset. Is it, is it audible now? Yes, sir. Thank you. Yeah, sorry about that. So what is the dividend distribution policy? So our dividend distribution policy is that we will have the distribution of about 25%-45% of the profits, net profit, distribution as dividend by the company. We have also stated that we will see that whatever we get from our subsidiaries as dividend, we at least that much we distribute to our shareholders in dividend. Okay. So you're better off with the stand-alone, 25%-45% of stand-alone net profits or the dividend amount received from the subsidiary? Not exactly higher off, but we are—what we are saying is the range is 25%-45%. Within that, we will see that at least we distribute whatever we get from our subsidiaries. Understood. Sir, second question is related to the renewables. So what has been the thought process for, like, when you are investing for 1 GW assets with this 25-75 equity-debt in mind, what sort of, you know, hurdle rate, payback period, whatever you thought through when you made this capital allocation decision, you know? Can you explain the thought process there? So, I mean, each project will have different returns, dynamics, et cetera. But we have our internal hurdle rates, et cetera, based on which we decide about the capital allocation. And most of, and some of the projects are for the group companies also, where we have different kind of risks associated than the projects for the public utilities kind of projects. So, it will vary. The returns will vary between, I mean, in, among the different projects. So that I understand. But at a portfolio level, so first of all, how much of this 1 GW is for group companies? And at a portfolio level, what returns have you underwritten on equity IRR basis? So it will depend upon, I mean, different products. It could be around, I think, anywhere between 13.5-15.5 kind of range. 13%-15% equity IRR. Okay, and how much of this 1 GW is committed to group companies? I will not be able to give you that number, but roughly, see, about maybe 35%-40% is for the group companies, rest is for the public utilities. Just an approximate number. Why 13%-15% made economic sense to you? Why was it a good hurdle rate? which is, I think, the weighted average cost for the business, considering the high level of debt. I think we have returns on equity better than that. Thank you. Mr. Pathak, may we request you to rejoin the question queue? Thank you. Our next question is from the line of Sanjay Kumar Ilangovan from iThought PMS. Please go ahead. Hi, sir. Thanks for the opportunity. Most questions answered, just one on chemicals. Wanted to understand, capital allocation plan going forward, given the volatility in the chemicals segment. Is the, the base product, chlor-alkali, is it still a focus segment? And how is the market expected to grow in the next five-seven years? Oh, you have asked a somewhat broad-ranging question. So look, the chlor-alkali market more or less grows in line with GDP, because it's such a basic material that is used across all industrial segments. You can always do a back-testing to see. You will see usually, depending on which particular year it is, it will be GDP plus or minus some range, but that, that order of magnitude. If you look at our capital allocation policy, what we have declared so far is we are continuing to invest in chlorine derivatives. We are running a epichlorohydrin project, which will be completed in calendar year 2025. We are continuing to focus also on smaller chlorine integration projects. Beyond that, I think it would be very difficult for me to make a broader statement on where we will allocate, capital next in the chloralkali value chain. Now, having said that, I think we have declared before, and I can reemphasize right now, is we are also in the process of, commissioning our, epoxy capacity in Vizag, which will actually, double our, current capacity from 123 KTPA to twice that size. So that's about as directional as I can be. But that capital is already invested. Yeah, and that capital is already invested. Okay, and the plant that's coming online in FY 2029, what is the CapEx amount? ... The ECH we have declared or for 20? Yeah, ECH- About forty. Yeah, ECH plant. About forty. The ECH will be bigger CapEx compared to the other chlorine derivatives, which is I think somewhere around INR 400 crore. INR 425 crore. INR 425 crore ECH plant, 50,000 tons per annum, which will get commissioned in FY twenty- 2026. FY 2026. FY twenty- 26, yes. Calendar year 2025. Calendar year 2025? Right. Okay. So outside of this INR 400 crore, so we don't have any visibility for further CapEx in this segment? Yeah. Normal, ongoing project for maintenance and- Yeah. That we do from time to time. All right. And any, at least in the planning stage, are we looking at more specialty chemicals? If so, what kind of products are we looking at? You know, as a country, we still import a lot of PVC resins. Yeah, so that's a, that's a question I can only partly answer, and that is, yes, we are looking at further expansion, including specialty chemicals. I will avoid to answer the very specific question that you asked of me. That is, that would be beyond the scope of a result call for this quarter. But I think it is expected. Which one? PVC, we are not getting into PVC. Yeah, so we are not entering into PVC because- Oh, yeah, that was the question. We have, we have no plan to enter PVC. Yeah. If that was the question. That is a very. All right. Long statement. Okay, thank you. I think what we can say is that we have entered into an agreement with Lubrizol, and Lubrizol is setting up a CPVC plant at our Vilayat chemical plant, which we already announced, that it is a 50,000-ton first phase, and the total capacity will be 100,000 tons CPVC plant. This is different from the normal PVC resin what- Yeah, yeah. Generally understood. If your question was, are there any plans of Grasim to get into polyvinyl chloride production? The answer is no. Okay. And from the CPVC resins, a power integration into pipes, is that a possibility or be even explored? So forward integration of CPVC, as you know, this is a project that we are doing together with Lubrizol. Lubrizol is doing the capital investment. I will refer you to their press announcement, which indicates what money they are putting in and forward integration of CPVC, essentially an extrusion. They are very clear in their press release, you can refer to that. Thank you. So may we request you to return to the question queue for follow-up questions, as there are several participants waiting for their turn. Our next question is from the line of Nirav Jimudia from Anvil Research. Please go ahead. Yeah, sir, thanks for the opportunity again. So I had a question on the VSF business. So this quarter, we have seen our specialty VSF volumes going up. So that was one. And secondly, if we see our result docket, there are two cost line items. So one is power. So if we see on a YoY basis from INR 1,202 crores, which has come down to INR 1,018 crores, and other expenditure, which was like INR 963 crores, has come down to INR 900 crores. So this increase in the VSF profitability, one, you mentioned that there was a benefit of the input cost, but was it also because that our specialty volumes were better and there was a decrease in the other expenditure and the power cost that has also helped us in improving the EBITDA this quarter? So which number you are referring to, Nirav? Can you please tell us from the- Yeah, so, so if we see our standalo ne result- Yeah. For this quarter, Yes. There's a power cost, power and fuel cost, which was INR 1,203 crore in September quarter last year. Yes, yes. This September quarter, it is INR 1,018 crore. Right. Other expenditure, which was INR 963 crore last quarter, last year, this quarter it is INR 900 crore. Right. Yes. If you can just help us explain that, was this decrease in the power and fuel cost and the other expenditure predominantly for the, VSF business, and that's why we have seen the improvement in the profitability, coupled with the fact that our specialty volumes have also gone up this quarter? So these numbers from Nirav, which you are referring to, these are combined numbers of all the businesses. Correct, correct. The two large businesses are, of course, the VSF and chemical business. The power cost is the key cost in chemical business, not as much as in VSF business. Okay. The power cost benefit is, I can say, largely in the chemical business. Correct. Of course, the coal prices have come down. That has helped in the reduction in the power cost, power and fuel cost. And also, we are having the larger part as a renewable energy business. That is also helping in reducing. But the main component of this is in the chemicals business and not in the VSF business. Okay, okay. And the other cost is, of course, again, all the businesses. I will not be able to give the exact mix like breakup, but I think there are many factors, like sometime special repairs, timing issues or some adjustments or something, but it is not something that will be meaningful or material to help you in your analysis. Got it, sir. Sir, on the second point of the premium, premium for the specialty VSF, as well as the volumes for the specialty VSF. Was the premiums maintained this quarter on a sequential basis, and with this increase in the volume, that has helped somewhat in improving the profitability? I don't know from where have you picked up this volume information? No, no, sir, we gave in the quarterly presentation, no, the breakup in terms of the gray VSF volumes and the specialty- Yeah, yeah, yes. Volumes. Yes. This quarter, our overall volumes have gone up. If you just do the math in terms of- Specialty volume has not gone significantly different from the previous quarter. It is gone up by 6,000, 6,000 tons, if I'm not wrong. Just a minute, let me just see. Yeah, we have, so the specialty percentage. So it was 18%- It is percentage of the total sales, it is not increase in the volume. Volume increase is just 2%-3%, Q1 to Q- 1%, 1%. Yeah. So- The profitability on the specialty VSF is better. The realization is almost 20% higher than the normal VSF realization. Okay. The profitability is somewhat better. We always work to develop and, grow the specialty part, for multiple reasons, including better profitability, better, product, et cetera. But there is not, that significant change as what you have understood. Correct. Because the last year- We can connect separately for- Yes, I'll come back separately on this. Just a last bit of clarification. Have we taken any sort of price hike for VSF this quarter? Last quarter, no. Okay. So it was same as of Q1, correct? No, Q2 prices came down. Okay, it actually came down for the gray side. Yes, yes. Okay, sir. Thank you so much for the clarification, sir. Wish you all the best. Yeah. Thank you. Our next question is from the line of Navin Sahadeo from ICICI Securities. Please go ahead. Thank you for the follow-up. So, two questions. One, I would just want to inquire about the working capital requirement for the B2B e-commerce. So when initially the announcement of Grasim foraying into B2B commerce was made, the CapEx allocation given was about INR 2,000 crore. And I understand that large part of it will be for working capital. And also heartening to know you are crossing the INR 100 crore per month kind of a revenue run rate. So at the current run rate, and of course it's growing, but I wanted to understand how much can we pencil in or, estimate a broad net working capital requirement on, of current run rate of INR 1,200 crore annualize revenue? So I don't think we can give you the exact number of working capital of the B2B as a business separately. But let me again repeat that we have not crossed INR 100 crore monthly revenue rate. We are inching towards that. What we are saying is that INR 100 crore for the quarter we have crossed Q2, and as we are moving from month to month, we are inching towards INR 100 crore of monthly revenue rate. Right. Okay, and for the working capital number, I think, the number is not readily available right now. We can, give you separately, Ankit can share if required. Sure. Just one last question on VSF, current utilization is running for the segment, it's fairly high, rather, near optimal full utilization. So wanted to understand if there is any CapEx plan that we can expect in terms of expansion for domestic VSF capacity, or there is a slightly different plan of maybe utilizing or leveraging on the group's global capacities and moving those volumes into India. Thanks. So we have scope to increase our production from our existing plants in India. We are working on various operational plans, how we can leverage maximum our plant capacities. So that is first. And immediately, there is no significant investment plan for the big investment, big increase in the capacity, but small debottlenecking, small things are a continuous process in Grasim, as you know. Hello? Thank you. That is the last question of our question and answer session. Due to time constraint, that was the last question. We thank Grasim management for the conference. On behalf of Grasim Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.