DCM Shriram Limited (DCMSHRIRAM) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the DCM Shriram Limited Q1 FY '21 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I now hand the conference over to Mr. Siddharth Rangnekar from CDR India. Thank you. And over to you, sir.

Thank you. Good afternoon, and thank you for joining us on DCM Shriram Limited's Q1 FY '20 (sic) [ FY '21 ] Earnings Conference Call. Today, we have with us Mr. Ajay Shriram, Chairman and Senior Managing Director; Mr. Vikram Shriram, Vice Chairman and Managing Director; Mr. Ajit Shriram, Joint Managing Director; Mr. K.K. Kaul, Whole-Time Director; Mr. J.K. Jain, CFO; and Mr. Amit Agarwal, CFO Designate of the company. We will begin the call with opening remarks from Mr. Ajay Shriram and Mr. Vikram Shriram, following which, we will have an interactive question-and-answer session. Before we begin, please note that some of the statements made on today's call could be forward-looking in nature. And a note to that effect has been included in the conference call invite circulated earlier. I would now like to invite Mr. Ajay Shriram to give us a brief overview on the company's performance and his views going forward. Over to you, sir.

Thank you, Siddharth. Good afternoon, ladies and gentlemen, and a very warm welcome to the company's earnings conference call. Businesses today are operating in a challenging economic environment because of COVID-19, which is unprecedented. The diversified and integrated portfolio of agri-related and Chloro-Vinyl businesses and continuous focus on costs helps us in managing our businesses better in such an environment. Our agri-related businesses have shown resilience to the effect of COVID-19 given its lower spread in rural India and better rabi season and normal monsoons. Additionally, the steps taken in our sugar business over the last 2, 3 years towards integration as well as exports has provided stability to its performance. Agri-related businesses have witnessed good growth over the same period -- compared to the same period last year. However, our Chloro-Vinyl segment witnessed twin impact from lower capacity utilization and lower prices. With the easing of the lockdown by the government, these businesses resumed operations in a phased manner and are currently operating at 70% and 85% for chemicals and plastics, respectively. The Fenesta business also has started picking up and is operating at about 65% of its capacity. These businesses recorded lower revenues and earnings during the quarter. Now I would like to share with you the business-wise development. First is sugar. Sugar season '19/'20 is expected to end with a total production of approximately 27 million tonnes and domestic sugar stocks at about 11 million tonnes, about 5 months consumption. This season, the total diversion of sugar through B-Heavy molasses for ethanol was 0.9 million tonnes versus 0.6 million tonnes in the last season and through exports is expected to be approximately 5.5 million tonnes vis-à-vis 3.8 million tonnes in the last season. This has helped in managing inventory levels. There is a requirement for continued support from government on sugar exports as well as B-Heavy molasses to ethanol to manage domestic sugar inventories. During the sugar season '19/'20, we diverted about 5.05 lakh quintals of sugar through B-Heavy molasses versus nil in the last season. Exports quota allotted to us is 22 lakh quintals, out of which we have exported 17.26 lakh quintals to June 20, and balance will be exported by September 20. Last season, we exported 9.22 lakh quintals of sugar. But for these measures, our working capital would have been higher by approximately INR 750 crores. During the quarter, we sold higher quantities of sugar at 21.32 lakh quintals versus 17 -- versus 12.07 lakh quintals in the same period last year, including exports of 5 lakh quintals versus 0.5 lakh quintals in the last quarter. Sugar inventory as on June 30, 2020, stood at 34.53 lakh quintals versus 41.19 lakh quintals last year. Ethanol sales were up at 286 lakh liters versus 129 lakh liters in the last quarter as a result of the new 200 kiloliters per day Ajbapur distillery. We must compliment the central and the state governments for their support to keep this business running throughout the lockdown. Chemicals. Chlor-alkali businesses was adversely impacted by multiple phases of lockdowns announced by the government during the quarter. We have ramped up capacity in a phased manner since April 2020. Given the demand scenario, we are operating at about 70% in our Bharuch facility and about 90% at our Kota facility. While the stable chlorine demand led to a rise in operating rates, recovery in domestic caustic demand has been slow, which has caused prices to remain under pressure. The concluding industries of pulp and paper and textiles are still operating at suboptimal levels, leading to lower demand. On the international front, the caustic soda exports have increased during the quarter, and prices have been stable in the range of about USD 250 to USD 280 FOB. We expect bulk of -- bulk to -- we expect demand to build back in the user industries gradually as the economy revives. We are making efforts to penetrate newer markets as well as enlarge our customer base to enhance production levels. We are finalizing our plans for chlorine downstream products. Impact of disruptions caused in demand-supply chain due to COVID-19 will determine the timing of these investments. Plastics. The domestic demand declined during Q1 financial year '21, impacted by lockdowns in the wake of COVID-19. The production was affected largely during April and May 2020. It has improved in a phased manner thereafter, and the current capacity utilization is approximately 85%. The PVC realizations were lower during Q1 financial year '21 due to a substantial decline in international prices. PVC prices started improving since June '20 with recovery in the international prices. International prices are currently at a level of approximately $860 per metric ton from a low of around USD 700 per metric ton in April, May 2020. Given lower operating rates globally, the prices are likely to remain supported. Commissioning of the new 66-megawatt power plant at Kota has significantly improved power efficiencies for Chloro-Vinyl at Kota. Fuel rates have also reduced over the sequential quarter. Agri inputs. This segment covers our Shriram Farm Solutions, Bioseed and fertilizer business. Agri inputs were classified as essential items during the COVID-19-related lockdowns. The company took proactive steps to ensure that the products reach markets well in time and there was no supply disruptions. All 3 categories of SFS businesses, that is seeds, specialty nutrition and crop-care chemicals, witnessed growth with an overall growth of 26% year-on-year in Q1 financial year '20. With normal monsoon and focus on research, the business expects to maintain the growth momentum. Bioseed India revenues showed a good 23% increment, driven by higher sales for corn and hybrid paddy. Our research activities have ensured a strong pipeline of products. Timely rainfall advanced the sowing activities and the timely sowing activities will certainly have a positive impact on the field. Our operations at Philippines have run in a steady state. The fertilizer sector has delivered normal volumes in Q1 financial year '21. As expected, the subsidy outstanding has built up to INR 660 crores given the impact of 19 (sic) [ COVID-19 ] on government financials and that is a serious matter of concern. Lower gas prices will help reduce the buildup to a limited extent. Fenesta. Fenesta has seen a negative impact owing to restrictions due to COVID-19 given that we offer premium solutions that are customized as per end user requirement. The business has started operating in 2020 and presently operating at approximately 65% capacity, which is better than our expectations. We envisage a gradual returns in this business. Our energies are focused on driving higher efficiencies and better synergies. COVID-19 has given us an opportunity to reimagine the way we operate and optimize our operations and costs. We are emphasizing on restoring normalcy in utilization levels across the impacted segments, even as we carry forward our efficiency and growth initiatives. Through the first quarter, we continued to report positive free cash flows, we are maintaining adequate liquidity and are working on further strengthening the same on a sustainable basis. Our balance sheet has strengthened further with reduced debt levels during the quarter. These steps will ensure that we sail through these tough times well as also continue our growth initiatives. With that, I would now like to request Vikram to take you through the discussions on our financial performance. Vikram, over to you.

Thank you. Good afternoon, ladies and gentlemen. I will now take you through the financial highlights for our Q1 FY '21 results. Net revenues during the quarter came in at INR 1,912 crores versus INR 1,902 crores during Q1 FY '20. The agri-related businesses, that is sugar, urea, Bioseed and Shriram Farm Solutions, recorded increase in revenues from INR 1,010 crores to INR 1,490 crores. All these businesses recorded volume growth over last year. Chloro-Vinyl and Fenesta segments reported drop in revenues from INR 846 crores to INR 387 crores this quarter. Their volumes dropped due to COVID-related disturbances contributed approximately INR 350 crores to the drop in revenues of Chloro-Vinyl and Fenesta. Chemicals operated at a capacity utilization of 51% for Q1 '21. It has reached about 70% now. Plastics recorded capacity utilization of around 44% for the quarter and is operating at 85% approximately now. Fenesta had nil sales during April '20 to early May '20 and has now reached approximately 65% of operating level. The prices for chemical businesses continue to decline. ECU realization is down 38% approximately year-on-year and 8% quarter-on-quarter. The price seems to be stable since June '20. PVC prices had a sharp drop in April and May '20, but have recovered in June and are holding at higher levels. PBDIT in Q1 '21 stood at INR 192 crores as against INR 374 crores in Q1 FY '20. The PBDIT was adversely impacted with low volumes due to COVID disturbances to the extent of approximately INR 110 crores and due to lower prices in the chlor-alkali segment by approximately INR 103 crores. Higher profits, driven by higher revenues from urea, Shriram Farm Solutions, and Bioseed businesses and returns from projects commissioned during FY '20, that is the 200-KLD Distillery and 66-megawatt power plant mitigated the above adverse effects partly. Planned reduction in fixed costs during the current year also provided part cushion during this quarter. On the balance sheet front, net debt stood at -- as on June 30, 2020, at INR 1,167 crores as against INR 1,623 crores as at March 31, 2020. The company took determined steps to export sugar to maximize ethanol sales even to distant locations to maximize collections and rationalize CapEx. These steps helped in positive free cash flows during the quarter and thereby reduced net debt. We plan to keep pursuing these initiatives going forward also. Realization of government dues is a matter of concern given the tight government finances. We are working through industry associations for recovery of these dues. The execution of the expansion projects is being planned in a phased manner, keeping in view our cash flows and market dynamics. We are keeping our full focus on our debt at safe levels and comfortable liquidity position at all times. That brings me to the end of the financial discussion, and we will be happy to take questions that you may have. Thank you.

[Operator Instructions] We have our first question from the line of Rohit Nagraj from Sunidhi Securities.

Yes. Sir, on the caustic chlorine front, you have mentioned that demand from paper and pulp and textiles has been relatively lower. Could you just give a sense of how has been the demand shaping up across other sectors?

If you look at the other sectors, which are basically on the aluminum side, on the soap side, they are actually picking up a little bit, which is a good thing. That's a positive direction, which is happening. In the last couple of weeks, we found that paper and pulp has also picked up a little bit. But I think textiles is a sector, which is unfortunately not picking up, and that is creating a problem.

Okay. And in terms of chlorine, you mentioned that we'll be probably going in for some chlorine downstream products. So any sense on that? And how much is the current chlorine utilization captively?

We are looking at various chlorine downstream products, but as Vikram has also mentioned, I've also mentioned, that considering the unfortunate situation for the last 4, 5 months of this corona crisis, we are revisiting our investment plans because we don't want to get into a debt situation. So we are revisiting that, and we are refocusing and studying various projects right now. So something will happen in due course of time. It's difficult to give a time frame for that. In terms of chlorine, our captive consumption is in Kota, it's fairly high because we make PVC. So that goes in over there. In Bharuch, we are using some chlorine into aluminum chloride. So that is going in there also. But the interesting part also in our Gujarat factory is approximately 36%, 37% of our chlorine production goes by direct pipeline supply to consumer industries. So we don't have to put it into tunnels. It goes directly to consumers who are within our periphery. So that goes by direct pipeline. So they are virtually like captive users, and there's a direct supply to them. And we are building on that further. So we are hoping that we get some more people and who will take chlorine directly. And of course, when our chlorine downstream comes in, then automatically more will go into that.

Right. Sir, last question on the projects and the CapEx for this particular year. So I think in the last con-call you had mentioned that the INR 1,000 crores of soda -- caustic soda expansion at Bharuch will be there. Apart from that, anything else? And what is the overall plan of CapEx for FY '21?

As we mentioned, we spend approximately INR 110 crores, INR 120 crores for normal CapEx upgradation of all our plants annually. So that will carry on because we are not compromising on safety or health of the equipment in any manner. But the other investments, which is for the power plant and the chlorine expansion, as we mentioned earlier, we are revisiting this because of the economic environment, because of the pricing because, as someone mentioned earlier, also, I think it came up that competition is coming in. So we're revisiting that, and we'll take a decision in due course of time.

[Operator Instructions] We have next question from the line of Pratik Tholiya from Elara Capital.

Sir, firstly, on the chlorine front, what could be the current chlorine prices or maybe during the quarter? Was it in the negative territory?

J.K.?

Yes. See the chlorine prices in Bharuch have been running positive throughout last year, and they continue to be positive. Of course, not very significant, it's roughly INR 1,000, INR 2,000 range positive. Kota has been running negative last year also and continues to be negative by equal number.

Okay. Okay. And sir, what would explain this -- in the chart that you have given in the presentation on the ECU realization and the CFR prices. Sir, if you see, during the quarter, the import prices were steady at around $298 to $295, but our domestic prices have come down from INR 23,000 to INR 20,000. So it's largely to do with the chlorine prices coming down? Or is it the overcapacity? Or how does the -- how do you explain this decline in the domestic prices more versus the export prices?

It essentially, Pratik, is reflecting that there is domestic surplus so which is leading to the price -- domestic prices of caustic soda being lower than the landed cost of imports.

Okay. So, if once this additional capacity...

Earlier, I mean, it used to be landed cost of imports equivalent, but because of some domestic surpluses right now, there is this discrepancy. And industry is tackling it by making aggressive efforts to export caustic soda, so that some parity is restored.

Sure. So by when can we expect -- I mean, do you expect this to happen in the next 1 or 2 quarters, the prices between import and domestic normalizes? Or...

It is difficult to say. It will be driven by like CMD mentioned what happens in the textile sectors and paper sector. So therefore, what happens to demand will drive this. Of course, the good thing is there is no new capacity coming in between now and last quarter. So it's largely dependent on demand only.

[Operator Instructions] We have next question from the line of Prateek Kumar from Antique Stock Broking.

Yes. Sir, my question is on this ECU realization. So this is just a follow-up of previous question. So you mentioned that the price has been under pressure. So the exit realization looks even lower than the average realization for the quarter. So the price have continued to trend down even in July after this June number of INR 20,800?

It has largely, Prateek, remained in the same range. There is commodities, there is movements of INR 1,000, INR 2,000, it remains in that range only. It hasn't broken out of range.

Okay. And sir, like you have mentioned about, I mean, like yourself slowing down on CapEx on chlorine and otherwise. So any feedback you would have for, like, industry like how like others or most of the capacities are now online for caustic in terms of domestic production?

No, you will recollect sometime back, Grasim also made a statement that their expansion plans -- also they're revisiting the timing. And I think because of this COVID crisis, which is impacting India and the world, and commodity prices are having negative impacts -- have been impacted negatively because of the availability of product and the consumer market is not picking up adequately. I think we'll take a decision in due course because the expansion plans are very much on the agenda. That's something we are keen to do and maintain our position as a major player in the Indian market. So we'll take a course -- we'll take a decision in due course of time.

And anything specific we are doing on cost front in this segment? Like...

Pardon me?

Anything specific, I mean, besides -- I mean, pricing is more of an industry phenomena. But anything on cost front, which we are doing to, I think, control cost or fixed cost?

Yes. That is something which actually, I think, as we mentioned earlier, that as the corona problem started, we had CFTs, cross-function teams, set up in all our businesses with the objective of revisiting our entire way of working, revisiting our organization, revisiting our purchasing studies, revisiting our suppliers and seeing how we can improve efficiencies across the board. And this has been a very interactive session with our suppliers and with our buyers, including our trade, et cetera, to see how we can have a sort of a benefit running across the board. Fortunately, coal prices came down, and energy is about 65% of the cost of production of chlor-alkali -- of caustic soda chlorine, yes, ECU. So with that, we've had an advantage of lower cost. Our efficiencies are running -- we are consciously always working to be world-class as far as our cost and efficiencies are concerned. And we are in that state at both our operations.

Also in Kota, we commissioned in Q4 last year a 66-megawatt power plant, which replaced our older power plant, so that will bring down our power cost for this year compared to last year.

We have next question from the line of Rohan Gupta from Edelweiss.

Sir, first question is on this plastics and PVC. So we have seen that though there is a decent demand from the pipe industry, except that muted in April, we have reached to 85% utilization in PVC, that's what you mentioned, right?

Yes.

So how is the demand scenario now? And do you see that there is a further possibility of any price increase, the prices have already gone up? And how do you see the utilization level going in next 2 to 3 quarters for PVC?

I think 2, 3 things have happened, which have been positive. One, the international prices also went up a little bit. So that has had a positive impact because you may be aware that India imports over 50% of its annual requirement of PVC, our domestic production is less than 50% of our annual requirement. So imports are very high. Some of the larger players have also had got committed export orders which they are fulfilling. So that has led to a situation in India, where, as you rightly said, the pipe industry is also moving better after the lockdown has been lifted. So it's difficult to say. I think, frankly, we just want to make a policy and a practical statement. Commodity prices, no one can predict. It depends so much on supply demand and the situation of the users, situation of the international market, situation of the logistics, all these things keep varying. Our attempt always is how do we maximize our realization for the benefit of the company. And rightly so, the prices have gone up a little bit over the last month or 2. And we sincerely hope to sustain. Our effort is on to see how we can explore newer markets, go a little further away from our domestic -- from our normal market. So we can run at a higher capacity than 85%. So that effort is on all the time.

And in caustic chlorine, sir, it is because of chlorine demand is under pressure right now, that's why our utilization has only ramped up to 65%? Or it's overall lower demand of caustic soda, which is impacting this business?

It is actually both. It is both. In fact, caustic is the one which created lot of problem due to which caustic prices fell very dramatically. And as you are aware, that ECU and caustic also had dropped a lot, but that's fortunately picking up a little bit right now. Caustic is also running a little plus/minus. But they both got affected, frankly, because if you look at it these 5, 6 industries we talked about, they impact both these industries. Chlorine direct supplies and all that is something which is a positive sign, where exports, at least of our chlorine buyers and value-added chemicals is moving and that's picking up. So that's also a positive situation. But both of them are impacted because of the supply-demand side.

And how do you see that this chlorine demand picking up and that can help us in ramping up the utilization level further? Or the problem is it's still likely to continue for some more time for the chlorine side?

I think it depends so much on the GDP growth of the economy of India. One has to look at that in an overall capacity because caustic chlorine, both are used in such a wide variety of user industries. As I mentioned earlier, textiles is having a tough time. Consumption there is low. Paper pulp is picking up, but not to the level of what they were earlier. So that's had its impact. But we do feel over the next 2 quarters -- 2 to 3 quarters, we should be in a much better position.

Rohan, textiles actually is a big user of chlorine as well as caustic soda. So it does impact both these sectors. I think it will be dependent how textile picks up for -- the further capacity utilization will depend on that also.

Right. Okay. And sir, third question, especially slightly on a long-term strategy of the company. So if a company like us, and which is already sitting on a solid balance sheet and with a sufficient cash flow generation, sir, you made a statement that you are being cautious right now on chlorine downstream expansion. Actually, sir, I was expecting and I wanted to hear a other way around the statement that you are turning more bullish and want to increase the investment probably in the current scenario because the chemical scenario in India continues to remain bullish irrespective of maybe 1 or 2 quarter impact of COVID. But a company like ours, which already sitting on a strong balance sheet and can also raise debt if required, sir, I just wanted to understand that why we are becoming a slightly more conservative in terms of putting CapEx and why not taking this as an opportunity to go ahead and make an aggressive investment, either in a chlorine downstream or even in an associated chemical industry? I mean I just wanted to hear your thought on that.

We actually -- as we mentioned earlier that we are aggressively looking at downstream development on the chlorine utilization front, organic and inorganic, both. And our teams are working. And whenever we get a good opportunity, we will definitely look at it in a much more serious way. We've discussed this matter at our senior management level as well as the Board level. And we just want to make sure that we are doing it at a time -- let's be honest, because the economy is under stress. So our approach is that we want a healthy balance sheet. At the same time, we have a good project. We will definitely invest in that. So there is activity going on.

Sir, when you mentioned that inorganic growth opportunities, so this will -- and you have been talking about it from almost quite some time now. So even in the current scenario, where we have seen that many businesses probably are going through a stress time, so do you see that the valuations and the expectations on the other side of the party has now reduced and the opportunities are much more now and number of opportunities are much more now and we can expect something materializing in next maybe a year or something?

Rohan, we are actually actively looking at it. We have teams working on it, and they are looking at exploring many opportunities. Difficult to say each one, and I think it's not fair to talk about companies that way. But in terms of overall, if it makes business sense, whatever the valuation, we will definitely look at it much more seriously.

Okay. And sir, just last thing. So sir, when you're looking inorganic, so is it like you will be more comfortable in the commodity chemicals, more in line of our business? Or you will be looking more specialty chemicals, where you have also been seriously looking at opportunities and now have also hired a person in that and to see the opportunities there? So inorganic, you will be seeing more in a specialty chemicals or in line with the commodity chemicals?

No, it is in specialty chemicals. That is where we are wanting to focus on. In terms of this, further downstream chemical utilization would be in specialty chemicals.

Okay. Will it be on your agrochemicals, pharma or textile chemicals and all?

There are things we are looking at because you're right, agro also utilizes, and there are so many other products, which also have combinations and the range is large. So we're looking at various options and alternatives.

Rohan, because the range is large, it is taking time to make up mind because it does require deeper analysis. So wait for some more time, I'm sure you will hear more.

We have next question from the line of Jyoti Amonkar from NMV Securities.

Actually, my question was on the sugar division. So the distillery that we have commissioned. So what is the operating days of our distillery as of now, the 350 klpd?

Yes. So basically, our -- the older distillery that we have commissioned, that has been running at roughly 330 days in the year, and the newer distillery has -- was commissioned in December, and that we're yet to see. But our target and aim is to fully optimize the utilization and aim to run 330 days in a year.

In this year, in FY '21?

In FY '21, the new tender is yet to come. So depending on the new tender, depending on the new tender's pricing in terms of B-Heavy ethanol, C ethanol, cane juice or syrup to be used for making ethanol, we're yet to finalize our structure. But our aim, obviously, will be to ensure that we move towards 100% utilization.

Okay. Okay. As of now, I think through the -- both the capacities included, it's approx. 60% capacity utilization somewhere?

I'm sorry?

In this -- combining both the capacities of 150 and the new 200, it's somewhere near 60% capacity utilization?

No, we are running our distillery at full capacity. Both of them.

Yes.

Right. Both of them?

Yes.

Okay. Okay. Fine. And one more question would be...

They are both at 100% utilization.

Hello?

It's 100% capacity utilization, Jyoti.

Okay. Got it. And on the sugar, the new 38,000, production is somewhere near 70 lakh quintals in like the last 2 years from when it is commissioned, right? So what production do we expect in the coming years, like in next 1 to 2 years? In the same range or it depends on the export we get and what our production would be for the next year?

There are 2 or 3 parameters over here once again. As I mentioned to you, depending on the ethanol -- B-Heavy ethanol pricing, the cane juice or syrup ethanol pricing, we will want to divert more sucrose into manufacture of ethanol and make less sugar comparatively, number one. Number two, depending on the government's export policy, we would like to maximize our exports. As mentioned earlier, the government wanted to export 6 million tonnes of sugar this year. And most likely, they will be able to export 5.5 million tonnes, out of which -- this -- out of this 5.5 million tonnes, we have -- we will be exporting 22 lakh quintals of sugar.

We have next question from the line of [ Saket Kapoor from Kapoor Company ].

Sir, firstly, sir, if you could explain [Foreign Language] give a more clarity on the reduction in power cost you -- with the replacement of the new power plant, that is mentioned at Kota, sir, there?

Correct.

And what would be the annual reduction, sir, in the power cost?

J.K., can you do that?

Yes.

J.K., we can't hear you.

As we reported in the past, [ Saket ], we are -- we have invested about INR 240 crores, and we do expect about 25% return on that investment on an annualized basis, so which means on an annualized basis, it should give us a benefit of roughly about INR 60 crore or so.

INR 60 crore is straightly going to the bottom line?

Yes.

Okay. That is big. And sir, just to get the sense of the global caustic soda market, sir, as earlier, people [Foreign Language] the producers have been looking for ADB going forward. And here, we are trying to export much of the quantity back into the -- outside India. So how does the position shape up? And what is the update on our petition for ADB, sir, and the WBs?

We're in touch with the government very closely as well as with NITI Aayog and the Alkali Manufacturer Association is actively talking about this with the Chemical Ministry as well as with the Commerce Ministry. So I think with government, we are on this. We sincerely hope something does happen on this situation the way it's going. But for every situation, you are aware, there are 2 sides of a coin. So there is a discussion from the other side saying, don't do it. We are pushing and saying, please look at it because of the impact on the industry, which is very severe. So it's moving at the same time by the industry also. But the good thing is the industry is also aggressively looking at exporting, and that will take care of some of the surplus in the country. So that will be a positive impact on the domestic prices, which is majority of the sale of any company. So that focus is there. The flakes prices also are better than live prices. So there's exports of flakes also which is happening, which is, again, a good value add, which is a future direction. So industry is looking at all alternatives and options to increase the ECU realization. And then...

Hello?

Yes.

Sir, at these prices also, sir, it is -- do they have incentives of exporting, I mean, just to dwell on the point?

Yes, yes. I think exports is not necessarily a financial decision only. It's also a strategic decision. So I think each company takes their own view, but companies are exporting and so are we. So I think that's the direction we decided to take.

Right, sir. And sir, taking into account, sir, the position which is there for the chemical sector and also, you talked about an inorganic opportunity in the specialty chemical. Is it related to the sugar sector itself, sir? Because there the derivatives are also being diverted to specialty ethoxylate and the nutraceuticals. Are we looking in that segment in any totality?

We, in fact, from the sugar industry point of view, we have rectified spirit to ethanol. That's a different chain altogether. That's a different value downstream product group altogether. So our chlorine one is different, and that is different. Our today focus is on the chlorine downstream. That's where we are looking at really.

Okay. And we did a JV also with the U.S. partner in the PVC compounding part. Any update on that front? Because what the numbers we have reported for last year, we didn't find anything material to it. Sir, anything which you want to share going forward?

So I think that business is a comparatively smaller business and the specialized products we are gutting for various markets. Part of it was for the auto industry and auto industry has been under stress. So that got impacted. But we have the other areas of electrical also and medical, et cetera. So there, the focus is strong. So it's a stable business, they are working to improve further, but it's not a large part of our portfolio.

And sir, very small understanding on the sugar, sir, I think that this year, I think, so the agri portfolio is more stable in terms of giving [Foreign Language] the way forward than the chemical segment. So sir, as you have earlier mentioned about a policy change in the way incentives were calculated, we did exported a large quantum. So what are the incentives, sir, which we are getting out of sugar export? And what is -- there was a policy change last year as per the sugarcane prices and the revenue one. So how have these affected and has accelerated the export of sugar?

No, the incentive policy, [ Saket ], is very clear now that every tonne of sugar that you export, government gets roughly about INR 10,800 per tonne as the incentive for taking care of various expenses. Earlier, it wasn't linked to export only. It was also linked to cane crush, et cetera, et cetera. So that's the major change that instead of relating it to cane crush is related direct to export now. And that is what has given a flip to export, like GMD mentioned, the export this year is expected to be almost 5.5 lakh -- million tonne, which is unprecedented. So the incentive scheme has worked in that sense.

And sir, lastly point about the seed portfolio also, sir. We have heard about the -- a new seed policy coming up from the government side, in which the custom production will be allowed and the registration and all and the patent part will go away. So you can receive customized seed and then we can work on the same and give the production to the producing country without any -- the patent being disturbed. So how -- what opportunity do we have in the seed portfolio? And sir, how the seasonality part, sir, plays in the seed -- in the Bioseed segment, sir?