Bodal Chemicals Limited (524370) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Bodal Chemicals Limited Q3 FY '22 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as of the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that the conference is being recorded. I now hand the conference over to Mr. Ankit Patel, Thank you, and over to you, sir.

Thank you very much. Good evening, everybody. I hope everyone is safe and healthy. On behalf of Bodal Chemicals Limited, I extend a very warm welcome to everyone for joining us on our call today. On this call, we are joined by our CFO, Mr. Mayur Padhya; and SGA, our Investor Relations adviser. I hope everyone had an opportunity to go through the financial results and investor presentation, which has been uploaded on the stock exchange and on our company's website. To begin with, I will give you a quick overview on the recent developments in the chemical industry and our company, and then Mr. Padhya will walk you through the financial performance for the quarter. During the quarter, prices of basic raw materials went up significantly, led by a surge in coal prices and lower supply from China. Recently, challenges around the international supply chain eased to some extent in the quarter, but freight costs continue to remain higher than usual. China seems to have recovered from its power and coal crisis, relieving the pressure on the international raw material supply to some extent. The Indian textile sector is seeing a structural turnaround, and Indian players have benefited on account of Chinese supplies losing the market share. This, in turn, has elevated demand for the dyestuff in India. With over 3 decades of experience, Bodal Chemicals is India's largest integrated manufacturer of dyestuffs and dye intermediates. In the domestic market, our market shares total 13% for Dyestuff business, 20% for Dye Intermediate business. In the global market, our market share stood at 3% for Dyestuff and 6% for Dye Intermediate business. In today's environment, where Indian suppliers are emerging as preferred partners globally, we have been able to leverage our leadership position. We have meaningful capacity across various products to solve the demand of end user industries. Basic chemicals such as sulfuric acid, chlorosulfonic acid, oleum, beta naphthol, acetanilide and others, which are used as key raw materials in the production of dye intermediates, are part of our core product portfolio. We are expanding our product basket and including benzene derivatives and chlor alkali products, which have applications in pharma, agrochemicals, paper and other industries. We are moving forward with a very focused mindset and adding additional capacity across multiple products. The performance overview of the company. Consolidated total revenue for the 9 months FY '22 stood at INR 1,468 crores, which is the largest ever 9 months production for the company. This growth was primarily driven by a better product mix and a higher price realization. Rising end-user demand and structural demand shifts as a result of global supply side tightness have also helped Indian manufacturers like us to operate on a large scale. This trend is also visible in our Dyestuff business, where we are not only developing a positive client relationship but also solidifying our reputation as a quality manufacturer in the global market. We will now touch upon each business vertical and its recent developments. Dyestuff. Its end applications include textile, leather, paper and other dyestuff-consuming industries have been doing very well during the last few quarters. The Dyestuff business has grown significantly in 9 months FY '22, with revenue of INR 512 crores compared to INR 263 crores in the same period last year. All key products in the Dyestuff category have performed well as overall capacity utilization has moved northwards. With various sectorial tailwinds in the textile sector, the prospects for the Dyestuff business look bright going forward. Coming to the Dye Intermediates sector. Bodal is an integrated dyestuff manufacturer, and we produced 25 dye intermediate products, and over 40% of these intermediate capacities captively consumed, resulting in a significant cost advantage for our dyestuff products. Given the healthy prospect for dyestuff, we strategically intend to move up the value chain, increase our captive consumption of dye intermediates for dyestuff. Other than captive consumption, we also sell our dye intermediates in both domestic as well as global markets, and we enjoy a leading position in the domestic market. During the quarter, this segment also witnessed a healthy trend. Prices of dye intermediate products such as H-acid and vinyl sulphone surged during the quarter, reaching INR 270 per kg for vinyl sulfone and INR 470 per kg for H-acid. And the benefit of the same is reflected in quarter 3 FY '22 results. I'm glad to share that we have commercialized vinyl sulfone's capacity at our subsidiary, SPS Processors. Ramp up of this capacity will happen in coming quarters. Basic Chemicals division. We manufacture a range of basic chemicals like sulfuric acid, chlorosulfonic acid, oleums, beta naphthol and acetanilide, which again help in terms of vertical integration for dye intermediates and helping improving the profitability of the company. Close to half of the basic chemical capacity is captively consumed for dye intermediates production. Our overall Basic Chemicals segment contributed around 9% of our total revenue during this 9-month period. Chlor Alkali business. In Q1 FY '22, we acquired our Rajpura, Punjab unit from Mawana Sugars. This unit produces various chlor alkali products like caustic soda, stable bleaching powder, hydrochloric acid, sodium hypo, spent sulfuric acid, chlorine, hydrogen, et cetera. The Indian chlor alkali industry witnessed strong tailwinds for the quarter and healthy demand for caustic soda, our key product in this unit. Caustic soda prices were at an all-time high during October and continues to remain elevated. This unit works on very old technology, and we have earmarked CapEx for an upgrade which will help us increase the caustic soda capacity to 99,000 tonnes per annum from the current production of around 60,000 tonnes per annum. This is a new segment for our business, hence, year-on-year comparison is not possible. The Chlor Alkali business reported a robust performance in this 9-month FY '22 period with revenue of INR 180 crores, driven by a heavy volume uptick in soaring caustic soda prices. We are confident that demand for FMCG, textile, paper industries will be sustainable, and we will be reliable and preferred partner. At full capacity, we expect this unit to generate additional revenue of around INR 300 crores at optimum levels, with the EBITDA margins in the range of 20% to 22%. Benzene derivatives and sulfuric acid at Saykha. Our Saykha greenfield project is in progress, and we plan to have it commercialized by Q1 FY '24. Under benzene downstream products, we will be manufacturing products like MCB, PNCB, ONCB, MNCB, DNCB, PNA, 2,4-DNCB and MPDSA, which are used in pharma, dye intermediates, specialty chemicals and agrochemicals. We should be able to sell these products to our existing Basic Chemicals clientele and partly will be used for our captive purpose. The capacity of sulfuric acid and derivatives will be 3,40,000 tonnes per annum, which will include sulfuric acid, oleum 23% and 65%, liquid SO3, chlorosulfonic acid, liquid SO2, et cetera. We will set up a 4-step integrated product change, which will lead to cost efficiency, better productivity and higher margins for the company. We expect this project to generate additional revenues of around INR 550 crores at optimum utilization levels, with EBITDA margins in the range of 15% to 18%. 33% of our total business came from exports, hence, the increase in freight and transportation cost has increased our other expenses considerably. Some of the other developments. We are doing business in 45-plus countries and have a roster of 200-plus products. This diversification requires intense working capital resources for managing inventory of key raw materials and finished goods along with a large transit time for export markets. In event of supply chain tightness, we prefer to, given inventory, serve our customers requiring less time frame. We have established various trading and marketing subsidiaries to create a stock point and penetrate the new geographies and clients. Our Turkey subsidiary, Sener Boya, sales dispatches have improved meaningfully. Bodal China has also performed well and ended a 9-month period with a PAT of INR 2.4 crores. SPS also performed well with a significant growth in top line. In a medium- to long-term view, these subsidiaries will penetrate their respective region and will bring meaningful business to our company. Our top 3 strategic objectives would be to ramp up our existing capacity, commercialize our vinyl sulfone capacity at Kosi Unit, and complete the Rajpura project by Q3 FY '23 and Saykha by Q1 FY '24. We have been moving up the value chain and working towards diversifying the business from our core Dyestuff and Dye Intermediates business to other specialty chemical products like benzene derivatives and chlor alkali products. The world is recognizing India as the world's emerging second largest manufacturing hub and this will benefit all manufacturers, including chemical manufacturers. Many Indian chemical companies have benefited from the favorable opportunities in recent years. Furthermore, stringent restrictions and compliance have inherently redirected demand to organized players like us. Indian chemical companies like us are poised for growth owing to increasing preference for a sustainable partner. Thank you, and now I hand over the call to Mr. Mayur Padhya to walk you through the financial performance.

Good evening, everyone. Overall performance of the company has been healthy for the quarter gone by. Our operational facilities are running at the pre-COVID level now. This growth is driven by better price and product mix. As far as stand-alone performance is concerned, we did total revenue for Q3 FY '22 at INR 514 crore, a growth of 53% year-on-year guidance. EBITDA stood at INR 73 crores in Q3 FY '22, which is at the growth of 70% -- sorry, 90% year-on-year basis. Net profit for the quarter stood at INR 42 crores, a growth of 84% year-on-year basis. Our stand-alone performance for 9 months is as follows. Total revenue stood at INR 1,343 crores, growth of 82% year-on-year basis. EBITDA stood at INR 182 crores, a growth of 265% year-on-year basis. Net profit stood at INR 101 crore, growth of 462% year-on-year basis. Consolidated performance is as below. Total revenue stood at INR 568 crores for Q3 FY '22, growth of 52% year-on-year basis. EBITDA stood at INR 56 crores for Q3 FY '22, a growth of 23% year-on-year basis. Net profit for the quarter stood at INR 20 crores for Q3 FY '22, degrowth of 26%. Turkish lira has been volatile and has impacted our subsidiary, Sener Boya, and booked a foreign exchange loss of around INR 18.7 crores. Impact of the same has already been incorporated in consolidated financials. Our consolidated performance for 9 months FY '22 are as follows. Total revenue stood at INR 1,468 crore for 9-month FY '22 against INR 810 crores of 9 months FY '21. This included export of 33% and domestic sales of 67%. EBITDA stood at INR 162 crores in 9 months FY '22 against INR 56 crores of 9 months FY '21. Net profit for the 9 months FY '22 stood at INR 73 crores against INR 18 crore of 9 months FY '21. Nine months FY '22 performance of key subsidiaries were healthy. SPS posted revenue of INR 103 crores, a growth of 47% on a year-on-year basis. BCTPL subsidiary reported a revenue of INR 6 crores. Sener Boya has reported a total income of INR 70 crores, a growth of 26% on year-on-year basis. Total income from Chinese subsidiary was INR 32 crores, a growth of 175% on a year-on-year basis. Segment-wise performance on a consolidated basis for the 9 month FY '22 are as below. Dyestuff revenue stood at INR 513 crores, a growth of 96% on a year-on-year basis. Dye Intermediates revenue stood at INR 522 crores, a growth of 42% on a year-on-year basis. Basic Chemicals revenue stood at INR 133 crores, a growth of 59%. Chlor Alkali division and TCCA revenue stood at INR 180 crores and INR 24 crores respectively for 9 months FY '22. Total production volume on stand-alone basis for 9 months FY '22. Dyestuff reported 15,673 metric tons. Dye Intermediates reported 18,870 metric tons. Basic Chemicals reported 1,65,815 metric tons. Chlor Alkali stood at 58,203 metric tons, of which caustic soda stood at 42,738 metric tons. TCCA stood at INR 1,270 metric tons. With this, I conclude the presentation and open the floor for further question and answer. Thank you very much.

[Operator Instructions] First question is from the line of [ Aditya ] from [indiscernible].

Sir, first question is on the other expense part. So in other expense, how much is the freight cost in this quarter as compared to last quarter and in the similar quarter of the last financial year? Also, if you can highlight the quantum number of increase on Y-o-Y basis?

I don't have the exact number at present. But the freight cost, whatever is increasing, that we pass on to our customers. So whenever we quote to customer at that time, we consider the present freight price and add on that price to the quote. So for freight to increase, it's become part of our revenue. At the same time, it is expense also.

Okay. Sir, if you can tell me the average of the last 4, 5 quarters and how much would that number be above the average? Just a short ballpark, if you can give, like just want to understand how much increase is there in the exports in the freight part.

So it will be difficult for me to give such ballpark number. You can connect me separately, and I'll definitely answer your question.

Sure. Sure, sir. Sir, second is on the Sener Boya subsidiary. Sir, if you can explain how does the business happen here. I mean so do we just send the inventory to the subsidiary and if there is a currency depreciation, the impact we directly take it on the P&L? So how is the business which happens? Because in this quarter, we had seen an INR 18 crore of impairment. Just wanted to understand. So since it is a marketing subsidiary, so we just sell the inventory. And because of that currency fluctuations, do you have to direct it, so book it on the P&L? Or how is the thing which are happening here?

See, in Sener Boya, as you have mentioned, we supply high-strength dyestuff over there, and then distribute locally as well as do export to nearby countries. So when we started this business -- rather, when we acquired this company, 70%, 80%, at that time, volume was about 100 metric ton per month. We still -- we have increased. Though there is a COVID, we have it increased by about 150%. And last year, average volume was about 251 metric ton per month. Whenever there is increase in volume, there is additional requirement of working capital. At the same time, important to note is that over there, industry practice of credit period is much higher than what is prevailing in India. So earlier, it was about 8 to 12-month credit period was there. So because of that fund blockage, it's much, much higher. And at the same time, Sener Boya buy from India, from Bodal or from other suppliers on credit terms. So there is a credit of, say, about 5 to 6 months. So when Sener Boya import on credit basis, so it has opened credit in dollar terms. So when dollar versus lira fluctuation is there, so there is a loss. At the same time, when they sell to local and when they recover lira and use that fund for supply to importer, so that, that loss is there. At the same time, Sener Boya has taken a loan of about [ $4.1 million ] from Bodal. So because of accounting standard, we are required to pass the entry of M2M losses. So when we give them the loan, at that time, currency rate was different and then depreciation was there. So because of mainly loan and trade credit, which was opened with Sener Boya, this loss was there. Another thing for your earlier question, I would be able to find out the value of freight and handling charges. There is an increase of about INR 8 crores on quarter-on-quarter basis. So earlier, it was about INR 9 crore, which has moved to about INR 17 crores.

Yes, sir. Got it, sir. Sir, if you can highlight to this. In Sener Boya, you had said that so 100 TPM was the start and that will ramp up to around 250 TPM. So what is the current run rate now?

It is about in the same range, 250 to 275 metric tons per annum. So we are focusing at present to find out the solution for this ForEx loss, and then we will ramp up our sales over there. This is what we are presently focusing.

Okay. Got it. Sir, on the SPS Processors part, we are witnessing an increase in revenue, and that is definitely led by the vinyl sulfone plant operation. But on the bottom line, still, we are not able -- so we're not seeing the profit despite increasing of vinyl sulfone prices. I mean -- it was a good time when -- so when your plant is ramping up and the prices of vinyl sulfone are also going up. But still, that is not witnessed in the bottom line. So if you can highlight what is the reason for it. And what is the loss for this quarter from SPS Processors, if that figure you can give?

Yes, sure. Vinyl sulfone plant has started just in last week only. So last quarter's performance, vinyl sulfone's contribution was not there. Last year, we did better top line because some stock was lying at the quarter end 30th September, and at the same time, prices of finished good as well as raw material. See, at year -- before 6 months or so, adjusted prices were in the range of INR 370 to INR 400 or something like that, which has moved to near INR 485 to INR 500, so there is a jump in raw material as well as finished good prices. So that's why there is an increase in turnover and some stock which was lying at the quarter start that we could sell. That's why sales is there. And profitability will definitely start now because last week, we have started vinyl sulfone production. And if we may consider this month and next month for stabilization, then from April onwards, it will start giving effect as far as bottom line and the top line.

Okay. Got it, sir. Sir, on the demand side, if I get to also what you're telling that also the demand in the textiles has moved a bit and that has led to increased demand in the dyestuffs, and that change is linked to Dye Intermediates, so Dye Intermediates prices are also growing. So just want to know, is this a global phenomenon we are witnessing that demand has increased over the last quarter? This is particularly also linked to India only because of the China, all these factors, India has benefited. Or this is a global phenomenon where we are witnessing that demand is going up so this could sustain over the coming quarters? So what is your view on this, particularly on the demand side?

So in Dyestuff, it is always linked with the global demand because there is a parallel business that is there compared to the domestic business. So I would say that because I think globally, things came back very close to normal times, I think overall consumption and overall demand of almost everything has increased. And I think -- so similar, I think that is the reason why this good demand in the textile has come out. And so the demand domestically is all good, and it's also internationally, the demand is good in the textile dominating nations.

Okay. So this demand, are we factoring this to continue? Because what I'm trying to understand now considering that the crude has also moved to around $95 a barrel, how you see if suppose it crosses at a certain level, considering $100, would you start to see that demand destruction to take place? Or you see this to continue going ahead also, what demand we are witnessing right now?

We expect the demand to continue to be strong at least for another 2 to 3 quarters. Because even in this recent COVID wave, we can see that countries are getting back to more normal times and the governments, European governments, are not [ thinking of ] the restrictions, though there are cases. So I think now the threat of pandemic or threat of COVID has really changed in this last couple of months, where people are treating it like a normal illness, or at least much easier than previously -- maybe last year. So because of that, I think the normal life is going to be -- I don't think it will be affected like it did a couple of times in past few quarters. So that should really help the overall business practice where the demand should continue and there should not be any hurdles to do the business globally.

Okay. Sir, if I can squeeze in one last question.

[Operator Instructions] Next question is from the line of [ Tejas Shah ] from [ Unique Stock Growth ].

Yes. Now this Turkish lira loss, what we had last quarter. So is the currency fluctuation still going to damage it? Or how is the scenario right now?

At the close of the quarter, the U.S. dollar to Turkish lira was around TRY 13. Currently, lira is at around TRY 13.5. But we are -- we have already taken steps to avoid that in the future. There are -- what we are doing is , earlier, we used to sell it on credit terms from Bodal Chemicals India to Sener Boya Turkey, which we have stopped and plan to convert the entire business on an immediate payment basis, so that amount is not exposed to any ForEx risk. And locally, which the fund that we need to sell in -- domestically in Turkey and surrounding countries, where the credit period is quite long, we are taking local Turkish working capital loans. We've already got a couple of loans and we are taking more, and which we will be using to avoid, again, the funding that we used to do from India. So within a couple of months, we are planning that this problem will be -- permanently will be eliminated. But meanwhile, like you asked, the lira at the starting of the quarter was TRY 13 and in the current period, TRY 13.5.

Next question is from the line of [indiscernible] from [ Arya Securities ].

Sir, do you pass on the inflationary pressure to customers immediately or with a lag effect? Can you provide us with some insights on pricing strategy of our products?

Pricing strategy depends more on our supply-demand front because India and China compete in this space since many years. Dye Intermediates is where China is more dominating than India and has about 70%, 80% share. In Dyestuff, in reactive dyes, which is the majority of the production from India, there, India has about 50% of the market share globally and China has about 50%, China and other countries. So our product strategy and -- but China usually does not export dyestuff because we have -- again, we are the largest consumer of dyestuff in the world. But intermediates is what they export. And traditionally, they used to export a lot, and that is why dye intermediates space in India used to be very volatile in terms of margin. But last few years, because of these environmental issues in China, the aggressive growth has not come in China in the last about 5 to 6 years, and that is why the imports have been -- have come down, and that is why there's a little consistency in the margins of dye intermediates and dyestuff players in India. And this inflation effect, we are able to usually pass it on. For example, if our raw material prices go up or if our utility or if our energy sources prices go up, then it is the same effect for all. So usually, we are able to pass it on. And all these raw materials, again, also has a global scale supplies. For example, coal had gone up. So coal has gone up in India and China as well. And similarly, some of the raw materials we have, again, they are used in China or in other countries also. So because being this international supply chain, I think the effect, it happens everywhere, so everybody is able to pass it on.

Okay, sir. Sir, can you throw some light on the current scenario of Chlor Alkali business, like what are the current price trend of the product and how global sales are doing? Is there any major shortage in the global market?

There is definitely a shortage globally because last 4 months, there has been continuous export from Gujarat where the majority of chlor alkali players are. And that is a sign because usually caustic export doesn't happen from India. Usually, there used to be some imports actually coming from Middle East and some other countries. So the situation has reversed, so that is a sign while the supply-demand gap is definitely there globally. And energy prices are higher everywhere, including China, India, U.S. and Europe, and the main raw material cost for chlor alkali is energy, electricity. So that is one reason. And again, caustic goes into multiple sectors and where our overall manufacturing has gone up globally. So this is not one of the feedstocks, and that's why I think the prices are remaining strong. Also, there's another factor, which is the Olympic that is happening in Beijing at the moment. Because of that, some production have been affected in that region, so that also plays a key role. That is likely to have some effect for another month or 2, but even post-April, I definitely see the chlor alkali and caustic prices to remain strong for at least about one more year. It may not be in the range of around -- currently, it's INR 62 per kg, it went all the way up to INR 70 also in the last 2 months. But post-April, it may come down a little, but I feel that it will still remain in very strong margin levels.

Okay, sir. And sir, did you onboard any new customers recently? Can you highlight client concentration? Like, how much of top 5 or top 10 customers contribute to our total business?

So because we are present across 3 sectors, basically, basic chemicals caters to agrochemicals, pharmaceuticals, overall different chemical sectors. So there, we have a wide variety of buyers, like we supply to all the pharma -- leading pharma companies of India in Telangana, Uttar Pradesh and in [ Gujarat ] also. We also supply to all the leading agrochemical companies of India. We also supply to all the chemical companies also mainly in the Western part of the country. In Intermediates, our customers are dyestuff players where more sales happen domestically because there are many dyestuff manufacturers here. Also, there are some MNCs which are present like Huntsman, which is an MNC. That is an American company, but they have manufacturing plants in China, India, et cetera, so we supply to people like those. There are also some large players in far east countries like Korea and Taiwan, so we export to those countries. Because of the -- the changes in China's supply of intermediates, the situation has reversed in intermediates and there are some export opportunities of intermediates to China also. So again, it is a wide variety of customers domestically and internationally also. And in dyestuff, there are 2 models. One is B2B and B2C where, last 5 years, we have been concentrating on B2C model a lot. That is why we have continuously been opening depots and warehouses across India. We have appointed leaders and we have our own offices and depots also where we supply directly to the consumers. So we see a good growth there also. And acquisition of Sener Boya in Turkey was one of the reasons why we wanted to enter. Turkey is the largest market for textiles, so that is the reason why we bought a stake in that company to convert the business from B2B to B2C. So -- and again, dyestuff locally, dyestuff goes into MNC business also. There are many MNCs which buy from -- earlier, about 10 years ago, 5 years ago, they were very aggressive and they have a lot of share, but larger companies like Bodal has been taking that share away from large MNCs. So that transition has been happening since a few years. And so that is the current strategy.

[Operator Instructions] Next question is from the line of [indiscernible] from [indiscernible] Capital.

A couple of questions. On the caustic side, were you able to see the entire benefit of price rise in the last quarter? Or did you have outstanding quarter -- contracts that you had to service at [ listed ] prices?

So we are able to -- so there are definitely some long-term customers, like IOC is one of the customers in North India where we do contracts, that's where we do contracts. But our volumes of those long-term customers are very less, so even -- I mean, our average prices for this particular quarter and even at the moment have been very strong. So they have always been in the range of around INR 45, INR 46 per kg.

That was for the December quarter?

For the December quarter, it was between INR 40 and INR 45.

And we increased INR 45 to INR 40, is that right?

And currently, it's slightly higher.

Slightly higher. On average, basically until now for this quarter, right?

Yes.

Okay. And could you talk about the loss at the SPS Processors that we did last quarter, on quarter the quarter gone by?

Last quarter, SPS has reported INR 10 lakh of profit. There is no doubt, yes.

Sure. And what was the loss the quarter gone by, sir, before this?

Before this, I don't have the number. But yes, there was a loss in few crores in the September quarter.

Okay. And like you've said that dye intermediates, there are actually now export opportunities to China instead of them sending it to India. So would you say that -- and given the competitive intensity that you said has reduced, would you say that the margins that you do right now in dyestuffs and dye intermediates of about 13% to 15%, they are stable and we will see increase in -- volatility that you used to see in the last 10, 15 years in this space?

So we have been giving this guidance that our current business model is around 14%, 15% EBITDA because of our integration. I think if we are a stand-alone business of intermediates or dyestuff, it could be a little different, but intermediates could be a little higher. But altogether, it is around 14%, 15%, which we have done this year. And with the addition of this chlor alkali, which is traditionally higher on the EBITDA side, and also the sulfuric acid and benzene derivatives, what we are doing in Saykha, that is also about 80%, 20% EBITDA business, so it blended. What we are trying to do is for FY '25, when these orders will have a full effect, we want to end up around 17%, 18% blended EBITDA. But this is quite sustainable. About 14%, 15% for our existing business right now, I think, is very much sustainable.

Sure. And of this loss that you've had in Turkey subsidiary, sir, do we expect anything to happen this quarter as well, given where we stand today?

This quarter, so I'll give you the numbers of the December quarter. At the beginning of the quarter, the price of U.S. dollar to lira was, I think, TRY 8.8 and then ended at TRY 13. So this depreciation had a large effect. And currently, the quarter started at TRY 13. Currently, it is TRY 13.5. So if it remains around this, then I think there will be a very, very small effect. And going into the next quarter, I think we should be able to eliminate this particular issue. So only for this quarter, and I don't think it's going to be any substantial amount. Looking at it, already we are at mid-Feb, 1.5 months has already gone by, so another 1.5 months. So I think we are not looking at any big loss like we did in December quarter.

And as the prices of the dyes and dyestuff -- intermediates and the dyestuffs have increased, probably the spreads has also increased for all of these. Are they still strong as they were in the last quarter? Or have you seen them narrow down?

They are very, very much similar to the December quarter levels. They have slightly come down. But again, I think some of the raw materials also come down. You also had a issue in the coal prices, which has been slightly better. Some of the raw material also had shot up, which have corrected, so I think we should be at about similar margins which we did in December quarter.

And sir, on your non-caustic business, what's the capacity utilization the company is running at?

So in Dyestuff and Dye Intermediates, we usually do around 80%. In Intermediates, we do about 80% plus. Dyestuff, we usually do around 70%, which is good for us. Basic Chemicals, we always do around 90%, 90%, 95%. And Caustic, because it is an old plant and we are in the process of expanding and upgrading, it is still running -- at the available capacity, we are definitely running more than 90%.

But in the Dyestuffs and the Dye Intermediates, are you utilizing the entire capacity that you're -- that you can? Or is there still some shortage?

Yes, yes. I would -- so at 70%, 75% is the capacity available, I would say, because it is a dyestuff -- it is a [ batch dye ] process. Plus there are changes because there are many shapes and many different colors, so you have to change. So that also takes a lot of time. So traditionally, I would say 75% is a peak utilization on a long-term average. And in Intermediate, it is around 80%.

And that's also your -- something that you're doing already, right?

Yes, that we are doing already. Yes.

So basically, in your entire business, including caustic and whatever is available in caustic, you are doing 100% capacity utilization, right?

Yes, yes. In...

[indiscernible] SPS Processors, right?

Sorry?

And this -- only the SPS Processors part, which is to ramp up in [indiscernible]. Outside that, everything you're doing almost 100% capacity?

Yes, yes, yes. So in SPS, there is already one plant, and we are adding one more plant. So when we add this one more plant, there is a good synergy of cost. It's going to reduce the cost of the particular plant. That is one of the reasons why we set this plant. And that was one of the reasons why we acquired the stake in that company, because it has the required permissions to set up the second plant also. So both plants together, that is how all the large players have vinyl sulfone and the H-acid tanks together because they internally use each other's [ affluence ] on some of the byproducts which reduces the cost for both.

Right. So sir, all your incremental CapEx is basically coming on the caustic side when you're doing the modernization in the benzene side. There's nothing that we expect to do in the Dyestuff and Dye Intermediate from here on?

No. At the moment, no. At the moment...

Going forward also, you don't intend on increasing the Dyestuff -- dyes business, and you only want to do the Benzene business? What's the strategy like looking forward from there?

So in Dyestuff, we are still not the largest player in India and we are still smaller compared to some of the giants of the world, the Chinese players and all. So in Dyestuff, I think we definitely see an opportunity where there are some brownfield expansion possibility at our Baroda unit, which will be cheaper, much lower in the CapEx part. And also, I think we definitely have some space to increase some share. We are only using around 40%, 45% of our intermediates captively. So the long-term goal is definitely to increase our capital consumption and set up more dyestuff facilities. But at the moment, we have reached about 70% utilization, so I think that is a good number. But currently, our focus is more and more -- definitely more on the benzene derivatives and sulfuric acid and caustic. But dyestuff, I think naturally, it makes sense for us to keep growing in that space. As and when we acquire the B2B and B2C share, I think we should keep adding more capacities.

And any plans to do -- since there's not a lot of industry, right, about the area that you are in caustic. So any plans to do forward integration of chlorine and prime -- get as much chlorine consumed in-house? Any plans on that?