DCM Shriram Limited (DCMSHRIRAM) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to DCM Shriram Limited Earnings Conference Call. [Operator Instructions] Please note that 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, Aman. Good afternoon and thank you for joining us on DCM Shriram Limited's Quarter 2 and H1 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; and Mr. K.K. Kaul, Whole Time Director. And also joining us is Mr. Amit Agarwal, CFO Designate of the company. We will begin the 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 warm welcome to the company's earnings conference call for the second quarter of financial year 2021. I hope and wish that you and your families are keeping safe, well and healthy. The company recorded a healthy improvement in its operation -- in its operating as well as financial performance in Q2 over Q1 of the financial year. In Q1, our Chloro-Vinyl and Fenesta businesses were significantly impacted by the COVID-19 pandemic-related lockdown leading to lower volumes. In Q2, the capacity utilizations have moved up to about 80% to 95% from about 40% to 50% in Q1, leading to a recovery in the company's performance. Our investments last year to reduce power costs helped in improving cost competitiveness. Our investments in the new distillery last year, along with high sugar exports, has led to higher volumes, earnings and lower working capital in the sugar business. In our agri input businesses, we completed the rationalization of bulk fertilizer trading business and sale of the loss-making international seed operations at 2 locations. This has helped in overall improvement in these businesses in the current year with growth in sales and better profitability. On the whole, we remain optimistic that we will deliver healthy performance in the coming months. Now I'd like to share with you the business-wide developments. First, I'll talk about sugar. India started the sugar season '19/'20 with 14.5 million tonnes of sugar stock, with supportive policy framework for sugar exports and promotion of ethanol using B-Heavy molasses. The industry is seeing better management of surplus production. Sugar stock is expected to be 10.6 million tonnes as on end of September 2020. In the next year, the sugar production is estimated at 50.5 million tonnes and consumption at 26 million tonnes. Continued government support in terms of sugar exports and ethanol from B-Heavy molasses remain essential to the health of the industry. In the sugar season '19/'20, we exported about 22 lakh quintals of sugar and diverted about 5 lakh quintals to ethanol using B-Heavy molasses. This has helped us in significant reduction of working capital. Our closing stock of sugar as on 30th September '20 is 14.7 lakh quintals versus 29.8 lakh quintals in the corresponding period last year. Chemicals. The capacity utilization for chlor-alkali industry has improved post easing of COVID-19-related lockdowns with increase in demand for chlorine as well as caustic soda. Demand recovery for caustic soda is slow, linked to improvement in capacity utilization in textile, paper and related industries, which is suboptimal as of now. International prices are low at -- for caustic soda at around $250 to $300. These 2 factors have led to subdued caustic soda prices. The exports of caustic soda from India are witnessing an increase and imports have declined. This is positive for the industry. In Q2, our capacity utilization levels have improved to 78% vis-à-vis 51% in Q1. These are near pre-COVID levels of approximately 81%. We expect demand to pick up in the coming quarters as economic activity further improves, which will be positive for both volumes as well as prices. We have started working on implementing the 120-megawatt new power plant in Gujarat, in SSE in Gujarat, in order to improve the cost efficiencies. The capacity expansion at Bharuch of chlor-alkali by 700 tonnes per day and flaker capacity by 500 tonnes per day is being recalibrated. Simultaneously, we are finalizing our chlorine downstream plans. Plastics. The domestic demand has recovered reasonably during Q2 financial year '21 versus Q1, which was impacted by the lockdown in wake of the COVID-19 pandemic. International prices have also risen continuously over the last 4 months and are currently at approximately USD 1,100 per metric tonne as a result of the global supply disruption. Imports in the country are down by approximately 30% year-on-year for H1 financial year '21. In Q2, our capacity utilization levels have improved to 94% vis-à-vis 44% in Q1. This is better than the pre-COVID-19 levels of 90%. Domestic PVC prices have shown a firm trend in line with international prices and are expected to remain at healthy levels. With the commissioning of our new 66-megawatt power facility at Kota in February '20, the Chloro-Vinyl operations are benefiting from better cost efficiencies. This is also enabling better capacity utilization in chlor-alkali by supporting margins given the low product prices. Agri inputs. This segment includes Shriram Farm Solutions, Bioseed and our fertilizer business. With normal monsoon during kharif season, agri inputs businesses have performed well, and this augurs well for rabi season as well. Shriram Farm Solutions business has witnessed about 30% increase in its value-added business verticals in Q2 as well as H1 with growth in all product categories. Rationalization of trading in bulk fertilizer businesses has improved earnings as well as brought a stronger focus on value-added verticals. The business was able to ensure no supply disruptions during the COVID-19 pandemic, and the sales promotion and marketing efforts were swiftly shifted to the digital media. Bioseed India's operations in Q2 financial year '21 showed a relative decline year-on-year, which is a timing difference because of early slowing in this kharif season. H1 sales performance is in line with last year, and PBDIT is better by 20%. International businesses in the Philippines has performed well in Q2 as well as H1 on the back of better corn and paddy sales. Sale of loss-making international operations in Indonesia and Vietnam helped improve profitability in this business. Fertilizer showed stable volumes, although revenues declined because of low gas prices, which is a pass-through. Gas prices declined from USD 11 MMBtu in Q2 financial year '20 to USD 6.9 MMBtu in current quarter. Our subsidy outstanding as at September 30, 2020, stood at INR 465 crores as compared to INR 358 crores in the same period last year and INR 642 crores as on March 31, 2020. Fenesta. We are seeing satisfactory gains in performance with easing of COVID-19-led lockdowns. Our order book position has shown a 9% improvement year-on-year with traction in the project segment. With emphasis on 3 simultaneous aspects of better range, reach and service, our brand is seeing better figures. Fenesta has gone digital and launched a 360-degree VR-enabled walk-through our Fenesta showrooms, showcasing the complete range. Digital marketing activity has increased significantly. With further progress in the economic activity, we anticipate better traction going forward. Here again, our operating rates have climbed to 81% during the quarter from 37% in Q1. With demand scenario improving in key business segments, we are closer to normalizing operations and utilization levels across all our businesses. COVID-19 has given us an opportunity to realign our operations and optimize our costs, and we are working towards it. We will continue to move in the strategic direction of financing scale, integration and optimizing costs across our diversified businesses to strengthen them on a sustainable profitable growth. With that, I will now request Vikram to walk you through the discussions on our financial performance. Vikram, over to you.

Thank you. Good afternoon, everyone. I will take you through the financial highlights of our Q2 and H1 FY '21 results. Net revenues during the quarter came in higher by 17% to INR 2,047 crores. The performance during the quarter was driven by strong growth in sugar business, led by higher volumes in ethanol and sugar, including exports; in Shriram Farm Solutions, led by higher volumes and margins across product categories of seeds, crop care chemicals and plant nutrition; and in plastics division, led by higher prices and volumes. Chloro-Vinyl and Fenesta businesses witnessed healthy recovery from the first quarter effect of the pandemic. Sugar business revenues grew 89% year-on-year. During the quarter, we sold higher quantities of sugar at 19.79 lakh quintals versus 11.36 lakh quintals in the same period last year, including exports of 5 lakh quintals versus nil in last quarter. Ethanol sales were up at 334 lakh liters versus 132 lakh liters in the last quarter as a result of the new 200 KLD Ajbapur Distillery commissioned in December '19. Chemical business revenues were lower by 17%. ECU prices were down by 24% year-on-year, which had a net impact of INR 58 crores on the revenues. Sequentially, revenues were up 50%, led by volumes, although ECUs were down 7%. Plastics business recorded better revenues year-on-year as well as quarter-on-quarter with better volumes and prices. Fenesta business revenues were 22% lower than the same period last year, but recorded a strong recovery of 132% from Q1 '21. Coming to PBDIT. Q2 FY '21 stood at INR 240 crores versus INR 243 crores during Q2 FY '20. Sequentially, PBDIT improved by 25%, led by recovery in Chloro-Vinyl and Fenesta businesses. Sugar PBDIT, excluding the onetime impact, stood at INR 85 crores versus INR 42 crores in Q2 last year. The business had to take a onetime impact of negative INR 27 crores an account of provision against government dues under the investment policy of UP state government announced in 2013, under which the company had made investments in the distillery and cogen. This unilateral withdrawal of benefits is being contested. PBDIT for the chemicals segment was down 41% year-on-year at INR 94 crores as a result of lower volumes and prices. However, sequentially, it has improved 54%. Plastics PBDIT was up year-on-year as well as Q-on-Q at INR 52 crores, driven by higher PVC prices and volumes. Lower costs resulting from new power plant at Kota also contributed to cost savings of INR 21 crores, which aided earnings. Let me now also share some highlights of the performance of H1 FY '21. Revenues were up 8% year-on-year at INR 3,959 crores, led by sugar business and Shriram Farm Solutions. PBDIT declined by 30% year-on-year to INR 432 crores as a result of lower earnings in chemicals and fertilizers division, primarily in Q1 FY '21 as a result of COVID-19-related lockdowns and nil productivity. In Q2, the business has improved, as explained earlier. Coming to the balance sheet side. With robust cash flows during the quarter, we have reduced outstanding net debt to INR 245 crores as of September 30th as compared to INR 1,167 crores in June '20 and INR 1,623 crore INR in March '20. We are maintaining sufficient liquidity to meet all our obligations and investment plans. Our balance sheet ratios are strong. Our return ratios are presently not reflecting the full potential given the impact of COVID-19, particularly in Q1. The execution of the expansion projects is being planned, keeping in view the market dynamics and uncertainties of COVID-19 that continue unabated. We are focusing on keeping our debt at sales levels and comfortable liquidity positions at all times. This 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] The first question is from the line of Rohit Nagraj from Sunidhi Securities.

Congrats on the recovered numbers on a sequential basis. Sir, my first question is in terms of the PVC segment. So we have seen a very sharp rise in international realizations over the past 3 months. So could you assign any specific reasons for the same? And whether these realizations are sustainable at least for the foreseeable future?

K.K., would you like to answer them? You're on mute. We can't hear you.

Yes, sure. The international demand supply is tightened. There were few plants internationally which have taken a shutdown. The consumption, particularly in PVC in the U.S. market, has gone up because of the real estate push there. And also the consumption in the Indian market had gone up. So it's that demand-supply tight situation, and as you would remember that we import almost 50% to 55% of our requirement from outside. So the international prices are going up, there's a tightness in the situation, so the Indian prices have also gone up in line with the international price. But regarding sustainability, it's very difficult. Our opinion for possibly unlikely to sustain because at these prices, many other downstream industries might make a shift from PVC to other compounds. And as the other shutdown plant start up, the prices are going to again come down to a reasonable level. So this really is not sustainable for long.

And sir, the second question is in terms of the chlor-alkali business. So how is the current situation? And how has been the improvement in demand over the last maybe 3 or 4 months? So maybe from June till September, has there been a consistent improvement or is it stable? And how has been the chlorine realization behavior?

As I mentioned earlier in my speech also that Q1, Q2, there's a lot of difference in terms of capacity utilization by all companies and that's because of the demand side. Actually, demand in many industries has grown well, but where there's still a lag and is not moving adequately is in areas like textiles and paper. These are 2 of them. In the last 3, 4 months, it has picked up compared to what it was 3 months back and 4 months back. But it's a slow climb. And I think unless and until some more normalization happens in terms of demand of paper. You see all schools, colleges, everything is closed. So that has a major impact on demand of paper. That is having a negative impact on demand of caustic soda. So this is all affecting the demand for caustic soda chlorine. Chlorine prices have been better. But the ECU-wise, if one takes the combined prices and realization companies get from caustic soda chlorine on the production basis of -- for 1 tonne caustic, you get 0.88 tonnes chlorine. So on that ECU basis, the prices are still lower, much lower than what we had in the last year or 2. But our expectation is that, let's say, in the last quarter of this year or early quarter next financial year, prices should be better when the demand will be more stable and consistent growth we are seeing, and it should be better a quarter or 2 down the line.

The next question is from the line of Madhav Marda from Fidelity Investments.

My question was on the sugar segment. Could you give us some sense around how the government policy is evolving, especially around ethanol sizes and sugar MSPs? Is there anything that we can expect there? And how the overall ethanol sort of contracting is going from the old sequence?

See, on the sugar front, I think the exports are moving well. And so far, we have exported 5.5 million tonnes, and we should be exporting -- and the government has given extension to export up to December of 2020. So we will be exporting the expected 6 million tonnes. As far as the ethanol is concerned, I think the progress has been good. And going forward, we expect the ethanol prices from all 3 raw materials, which is cane juice, B-Heavy molasses and C molasses to go up. So this will further divert [ those ] more into ethanol. So we are hopeful that in the next ethanol year, which is coming up, more ethanol will be manufactured in India. And also, the other factor which we are also expecting is that the transportation rates of ethanol from the distilleries to depots will be increased. So that will have a major flip because in areas, especially as far as Northeast and all that's concerned, Northeast of India, the ethanol consumption is near 0 because the transportation rates are very high in actuals and the reimbursement is lower. So once that -- once there's a parity on that front, we do anticipate the ethanol consumption to pick up in a much bigger way.

And what about the sugar prices? How are they trending right now? And any thoughts on the sugar MSP? I think the government had the ministry -- the group of ministers have approved the MSP at [ INR 33 ], but it's not been notified yet, what's happened there? If you could just update us, please.

I think, basically, yes, the group of ministers has proposed increase in MSP. But due to certain, I think, elections coming up and all that, there's a code of conduct in place at this point of time because of which we feel that it's not been taken up. And we do hope it's taken up as the code of conduct is finished.

Okay. Got it. And do you think this sugar MSP probably required by the broader industry, like some of the larger players like yourself, would be more efficient than do make a profit in the sugar business right now, but for the broader industry to ensure that scenario is that we paid every year, do you think that sugar MSP hike is required, especially with the 50%, 40% of the moves, which are more than inefficient?

See, as far as the sugar industry is concerned, if you look at the cane price, the cane price is 85%, 90% of the sugar price. Now no other industry is a raw material price as high as this. If you see internationally, the sugarcane price to sugar price is roughly 60%, 65%. So there is a definite need for the sugar price to be hiked. And going forward, I mean, ideally speaking, one should -- one would want the [indiscernible] committee formula, which also says 70% cane price, sugar price in the long run.

Okay. And maybe just one last question here for me, I'm asking this again. But in case of sugar prices remain at the current level of, say, INR 31, INR 32 per kg, will we again have scenario or situation developing next year? Or will that cycle come again? Or do you think industry is fine at these prices?

I think it's a little early to say because, I mean, if you see the cane arrears for current year are also at about INR 8,000 crores. So they have not been cleared yet. And the anticipation is that they'd only be cleared once the new season starts. So coming back to your earlier question regarding sugar prices being increased. I, think that's a prerequisite for clearing of cane arrears.

So you do expect -- yes.

Just to add, you mentioned the prices at INR 31, INR 32. Just to clarify, it's about INR 32.5 to INR 33 is the kind of price prevailing right now.

Okay. Okay. Okay. Do you think the MSP hike is needed by the industry this time? Are we okay? What's your thoughts about this one?

Sorry?

Do you all think the MSP hike is required from INR 31 to INR 33 for the sustained sort of profitability for the industry? Or we are okay at INR 32.5 to INR 33?

Yes. As I mentioned to you earlier, the percentage of sugarcane price to sugar price is abnormally higher in UP. I mean we are 85%, 90%, which is a very abnormal price in terms of the ratio as well as in the last 1 year, the power rates have been reduced dramatically by INR 2 a unit for power export from the sugar mills to the grid. So that had a major negative impact on the industry. So we do need to increase in the same the MSP.

Got it. And if there is time for one last question from my side. In terms of capital allocation, how does the company think for the next 2, 3 years? Where do we think we will be investing for growth?

So I'll just mention that we actually look at all our businesses, what is the CapEx requirement for the existing business, for maintaining their efficiencies, improving efficiencies and for safety, health and environment and for our growth plans. So I think that, judiciously, we will take a view as and when projects come on a year-to-year basis of how we want to look at our CapEx. But as we have mentioned earlier also, chemical downstream, we are working actively on that. That's an area which is on focus. We have invested recently in the last year or 2, a new distillery has come up, a 60-megawatt pipeline has come up, 120-megawatt plant is under implementation right now. We have a 700-tonne-a-day caustic soda plant under plans, run 500 tonnes per day of flaker plant under plans. So it's spread out across all our portfolios.

[Operator Instructions] The next question is from the line of Chirag Sureka from DSP Mutual Fund.

I just had a follow-up question on the CapEx plan. Different businesses of yours seem to have different cycles, but fertilizer has this issue of subsidy. Otherwise, your financial portion would have been far better. Sugar seems to be better managed from your narrative and the questions that came. And then your CapEx seems to be on reducing costs. It has worked out really well. And limited to -- in terms of future growth, could you guide us in terms of how much you'd spend per year in CapEx, so that you've maintained a certain set of financial ratios?

Amit, if we could just share last few -- last 2, 3 years, what has been our CapEx like?

Yes. So see, over the last 2 to 3 years, we have invested anywhere in the range of around INR 600 crores to INR 800 crores annually in the last 2 years is what our investments has been. This is below given what CMD mentioned. Given the COVID scenario, we have been cautious. And given our cash flows, we are capable of investing in that range going forward, maybe a little more as well. And as the CMD mentioned that we look at 1.5x as our debt-to-EBITDA, and that would drive our policy on investment.

Okay. So 1.5x would include the working capital debt? I mean, your debt-to-EBITDA, of course, moves like crazy because of the sugar business. So that will be as of March every year, right? The peak debt-to-EBITDA?

Yes. Yes.

That is the weighted average for the year.

The 1.5x?

Yes.

Okay. So March would be higher than basically...

Yes. Maybe 2 or something.

Okay. Sir, and also the next growth would come from the chemicals business. Would that be correct to say? I mean the big growth in terms of putting in money and expanding capacity?

Well, as we've mentioned in the past, and we've all mentioned today, that is an area which is more focused, and we've done a lot of studies on that. We'll take a decision at the opportune time and take it up to the Board depending on the economic environment around us. Because as we mentioned, we are not wanting to stretch or overstretch during the times of this pandemic problem. That's why we have restructured the time frame for our chlor-alkali expansion also and the caustic soda expansion, that's also being restretched. But every quarter-to-quarter, we will look at this and then take the appropriate decision.

The next question is from the line of Tejas Sheth from Nippon India AMC.

On the sugar industry per se or even for your company's operations, you see now this segment not having much volatility going ahead considering that MSP is in place and the ethanol pricing also improving. How do you see that over, let's say, little medium term, not very short term?

See, in the medium term, what is very important is that the government support for exports carry on, so that we're able to export the surplus sucrose out of India till the ethanol program builds up further. Our target of coming to ethanol 20% by 2013 needs to be preponed. So we do hope that in the next couple of years, we're able to increase our ethanol blending to 12% and then 15% subsequently. So once we're able to divert our sucrose into ethanol, then the industry will become a little more stable in the medium to long term.

Okay. But even today, it is quite stable than what it was like 2, 3 years ago.

Yes. I mean, yes, absolutely. The government has been very, very proactive on all fronts vis-à-vis the sugar industry and to ensure that the farmers are not pained, so that the cane arrears, which were at a peak 2 years ago, have really come down dramatically. And we do hope that the proactiveness of the government carries on and the industry becomes more stable.

Okay. Okay. Sir, at what level would you think to resume the chlor-alkali expansion? And what would be the factors, which will make you? Because last quarter also, I think I asked the same question probably, sir, in the next 3 months, we'll have the clarity. So I just wanted to understand that.

So as you mentioned earlier that because of the economic environment, because of the pressure on the chlor-alkali realizations, because of supply demand, that's why we pushed back our 700-tonne expansion. There are other people also who have done the same thing. Grasim has done the same thing. Though there are 2 plants which were under implementation and they commissioned in March this year to [ Make Money ] and [ Touch Chemicals ], they are the 2 plants commissioned this year, about 3.6 lakh tonnes. But the issue comes in is that there's no point is jumping in for the heck of it. We must have some market balance because the market has grown about 4% last year. And I think with the economy picking up, it should be better. So we'll take a call in the next quarter or 2.

Okay. And since the day of decision, how much time will it take to complete the whole plant because I think we were in middle of the execution?

Yes. The time frame for the chlor-alkali expansion will be about 12 to 13 months. That's the time line.

From the power plant resumption?

Yes. The power plant, which is already underway, that will be approximately 16 to 17 months.

Okay. Okay. Sir, just last question on the chlorine downstream products, by when the business plan will be ready because I think that also has kind of deferred a lot because I think we started that program in last February 2019. Where are we there on that -- on the business plan of that?

We -- actually, you're right. We actually keep looking and keep exploring what more we can do to add value to our commodity businesses. And that is the direction we've looked at. And that's how we've moved forward in terms of as a first stage how to use our molasses to come to a distillery. So we are now with a distillery capacity of 350,000 liters a day, which is a fairly healthy capacity. We have got into country liquor, which we've gotten to now, and that should start -- we should start having that product available in maybe January next year. So we are continuously looking at what more we can do to add value to these products. We -- as I said, that we keep discussing with our Board also, but we are not wanting to overstretch. And because of the corona problem which came up since March, that has made us restructure some of these investments. So we expect over the next quarter or 2, we'll be able to take a decision on these.

The next question is from the line of Gaurav Jhanwar from Systematix Shares.

I have a question in the sugar division. I just missed the opening remarks actually, so I'm just asking again. In the sugar division, like in sugar as well as in the distillery segment, we have done pretty good sales. But due to the some provisions, our PBDIT in the sugar division was lower as compared with the previous quarter. So I just want to know what was that provision? And if you can throw some light on it. My second question is on the subsidy front. Have you accounted the subsidy in this current quarter? And if we have not accounted in this current quarter, then probably shall we account in next quarter or in Q4? So that was my question.

Is this subsidy on sugar exports?

Yes, sir.

Yes. Okay. Amit?

So with respect to the INR 27 crores of provision that we have done with respect to the dues from the government on the investment policy, I'll just give you that brief. So this policy was with respect to the investments we had made in our distillery at Hariawan which we have set up somewhere in 2018, which was 150-kg distillery and a 34-megawatt cogen as a throughput. So we had made these 2 investments under the policy, which came in 2013. Now for a reason which is totally unrelated, wherein we have taken some benefits under 2018 cane payment policy, so wherein we were given a soft loan for payment of cane arrears. Government have said that since that benefit has been taken, they have said we can't take any benefit for any future claims under this policy. As we mentioned in the speech as well that these are 2 unrelated points and, therefore, we're contesting it. But however, for the conservative principle, we felt it's better than we should provide for this for now. And once the cloud clears on this, we will counter it accordingly again.

Okay. And regarding the sugar subsidy on export finance, sir?

Yes. So that's a regular thing about -- as and when we export, we will account for them. The sugar subsidy is about INR 1,048 per quintal, so we'll account for it. As and when we export, we account for it.

The next question is from the line of Anand Bhavnani from Unifi Capital.

I have 3 questions. One is on our chemicals division. In the opening remarks, you mentioned that the utilization rate has reached 78%, so -- and it was 81% before COVID. Is it fair to assume that in Q2, a lot of Q1 demand would have come in and hence the utilization level of 78% might not sustain going forward? Is that an apprehension about second half utilization level? Can you comment a bit on that?

Sure. No, no. I think it's actually -- now we are running at about 81%, and it's got quite stable. Yes, see, what happened is caustic soda is type of a product that you can't really store too much. So it is something where you have to be able to provide it when the demand is there and the consumption is there of that product to make whatever value-add product it goes into. So the good thing we feel is that the demand across the board is picking up. And it's -- I don't think one can say it is because of the pent-up demand of not having it in Q1, that Q2, demand has gone up. As I was saying, you can't really store it. Chlorine, you can't store more than a day or 2 consumption, 3, 4 days consumption on the outside. And caustic soda also, you can't store very much. So it is a demand pull which has actually helped in terms of the capacity utilizations going up further. What did come in a little bit in terms of impact is because of these 2 new factories which started in March, as I mentioned, [ Touch Chemicals ] and [ Make Money ]. Because of that, this 3.6 lakh tonnes capacity per year, that impacted the impact. But going forward, we think that this level of 80% plus/minus should carry on. I don't think that should come down.

Sure. And just a follow-up to that. How much time can one safely store caustic? Is it like a couple of months or 6 months?

Caustic and chlor-alkali as a product can be stored, but then they are -- see, caustic soda is a product where about 47% is caustic, the balance is water. So the volume required, the storage capacity required to store this product is very large. So most people don't store it more than maybe 5, 7 days. I don't think people go beyond that anywhere. And the system has got into place where -- I mean, like we, for instance, we supply to our consumers, I mean we supply every week in bulk. So they don't have to store too much. We are producing, we don't have to store too much. So I think it's the whole chain, which has sort of worked on. Otherwise, in terms of storage, one can store it. It does not deteriorate. It's not that if you store it, that the quality goes down. That's not the criteria. It's just the cost involved and the sort of infrastructure involved to store, which is the challenge.

Sure. Sir, my second question was on sugar. Now in the opening remarks and in answer to one of the participants, you mentioned that the dynamics are getting better. But if we were to compare your positioning with the rest of the sugar mills in other parts of the countries in Maharashtra, Tamil Nadu, do sugar mills which are exposed to Uttar Pradesh have any advantages, disadvantages? If you can give us a broad sense of the dynamics from the Uttar Pradesh perspective.

See, if you compare UP with -- between Maharashtra, Tamil Nadu and Uttar, the dynamics have changed dramatically over the last 3 or 4 years. In Maharashtra, the rainfall pattern last 2 or 3 years has been very erratic. Some years, there's been a drought. Some years, I mean, like for example, this year, the rainfall has been good. In Tamil Nadu, there's been a very huge problem in terms of drought for the last 3 or 4 years consecutively. And as far as UP is concerned, I think we've been fortunate to have regular rainfall as well as the major change that's taken place in the last 3 or 4 years have been a shift in a particular variety of cane that has come in called CO238 and that has brought in roughly 15%, 20% additional sucrose in the cane itself. So the dynamics of the UP industry has changed for the positive in the last 3 or 4 years.

This is regarding the weather and the yield. What about the farmers?

So the farmer is planting this particular variety on his own. So he's got an affirmative feel towards this cane variety.

Sure. And in terms of state and government policy with regards to the cost of acquisition and the price and volumes of sales, is there any particular advantage or disadvantage we have being based in UP?

So there are differences in state policies. For example, you're handling a transportation from the field to the mill in the -- I mean, western part of the country, Karnataka, Maharashtra, et cetera, is much more towards the actuals than what's there in UP. And UP, the deduction for transportation is much lower.

Sure. And with regards to our CapEx for PVC, PVC, you mentioned in the opening remarks that there's a lot of imports. Any plans for us as to expand capacity in that segment?

In the last about 8 months ago, we, in fact, put up another polymerizer already, which has increased our capacity now to 220 tonnes a day from about 180 tonnes a day. So this capacity expansion has already taken place. And somehow in an all-India basis, the imports is almost 50% of the India consumption because PVC demand is growing at about 8% -- 7%, 8% a year on quite a healthy pace. And we are, at the moment, not discussing or looking at any growth because we've just put up a new polymerizer, which gives us this additional capacity which we are looking at, which we are running now at a higher capacity.

And so utilization-wise, what would be the overall utilization in that segment, PVC for us?

PVC, our production level is about 94%.

Okay. So that's a high utilization, and we are not yet getting any further CapEx because CapEx will take a while for us to commercialize?

No. As I was saying. I was saying for PVC, we've not yet looked at any further expansion.

Yes. Any specific reason? We have enough cash flows coming in. We have demand that's out there. The utilization level is quite right.

All our products and trying to take a view on a judgment of where all we want to invest our money across the board. By God's grace, the price we are getting today has come up in the last 6 months. It's a very good price. But we've seen the same thing with caustic soda 2 years ago. When you come to a peak, you come down also, let's be real. You can't expect these prices to maintain by almost, what, 45% in the last 4 months. So I think we are taking a judgment call on a long-term basis in our investment plans.

And I would just also like to add that our PVC capacity is carbide based. Most of the PVC capacities globally are crude based. So for us to expand in a big way, we probably will have to look at a new route, so it will be a different thought and a much larger investment. So we will add it inevitably and take the call accordingly.

[Operator Instructions] The next question is from the line of from Pratik Tholiya from Elara Capital.

Sir, congratulations on a good set of numbers, considering that we are still not completely out of COVID. Despite that, the volumes that you have imported are quite encouraging. So actually, I had a similar question on the utilization on the caustic side. So with 81% that we have achieved in September, is this sustainable for the full year? Or you think there will be some moderation that is likely to happen? I'm saying that right now, utilization would have also come because imports are also lower, and some of the capacities may have not fully ramped up. So once the imports start and the capacity start ramping up, is it possible that you will, for the full year, maybe around 70%, 75% utilization in the caustic segment?

Our estimate is that we should be able to continue at about this level. If we take the last year, we actually -- though we did import about 3.6 lakh tonnes of caustic soda, we also exported about 1.7 or 1.8 lakh tonnes of caustic soda. So it moves both ways. So I think considering the way the demand is going and our expectation of the textile industry and the paper industry improving quarter-by-quarter, we expect us to continue running at about 80%, plus/minus.

Okay. That's very encouraging. Sir. And on the prices front, also, you think once the demand picks up, this 20,000 sort of ECU realization, this can go back to something on 24,000, 25,000 level?

Well, I'll be honest. In commodities, it's very, very difficult to give a prediction on prices, and I think it's not fair to give anything because it's a commodity. And it depends on supply-demand worldwide. Now India is in that position where it's worldwide. Our estimate is that we have reached the bottom. We have at least reached the bottom. So our feeling is the only way it will go now is a little up. But we know that, look, our own in commodities, your own efficiencies, your own sense of costs, all this play a very crucial role which we are focusing on in any case. And going forward, expect that there should be an inching up of prices, though. As I said earlier, also in the next couple of quarters, we should see some advantage coming compared to today.

Sure. Sure. So then on the exports, you said the exports are actually higher versus imports. Are we also [indiscernible] now our caustic and we're also trying to export our surpluses?

No, I'll just clarify. I mentioned that the imports were about 3.6, 3.7 lakh tonnes. Exports were 1.8, 1.7 lakh tonnes. So exports is less. But yes, we also did export. We also did export. And now what's happening is the industry is not only exporting flakes but also exporting lye in the liquid form. So industry is exporting both.

Okay. Got it. And just 1 more question on the sugar side. The INR 27 crores, you said that you are contesting. Sir, how confident you are that this will go in your favor and will be reversing this provision?

See, as Amit mentioned earlier, the 2 policies are completely different and for different purposes. So the 2015 policy is for investment promotion and the 2018 policy or the succeeding event was a cane price arrear clearance. So we are in conversation with the government, and we are hopeful that, I mean, this will be resolved soon.

Sure. Lastly, sir, can you just give me the volume numbers for the B-Heavy molasses ethanol that you would have sold in this quarter?

B-Heavy molasses that we sold? Sorry, ethanol that we sold?

Ethanol via the [ B-heavy ].

Yes. So for the last -- I can give you the number for the last 2 to 3, almost 3 quarters. We would have sold close to about 541 lakh liters of B-Heavy. So in this season, we've sold close to 541 lakh liters.

541 lakhs?

Yes.

In this season, '19, '20.

Yes. So from January to now, you can say.

January. But for the quarter specifically?

For the quarter, I don't have the exact numbers for the quarter. For B-heavy, I wouldn't have it right now. We can connect later, and I can give it to you.

Yes. I think we'll get that data and give it to you if you want. Please get in touch with Mr. Amit in our -- the CFO Designate, and Amit will be happy to give you the data.

The next question is from the line of [ Saket Kapoor ] from [ Kapoor & Co ].

Sir, how should one understand this fluctuations in the Bioseed and the fertilizer segment quarter-on-quarter. the turnover for Bioseed, the seasonality factor. And even on the PBT level, the numbers look far -- much better in the June quarter, whereas they are around INR 6 crores for this quarter in the Bioseed?

Bioseed is a seasonal business linked to kharif and bulk of the sales and a little bit in rabi. So this year, the sales, the monsoon was earlier, and the sales were advanced from second quarter to first quarter. That's how you see the total combined for the half year, marginally higher than last year. It was an advancing of the sales from July to June.

The next quarter should be on the better terms in terms of...

Slightly better, but Bioseed business is kharif-centric.

Okay. It is kharif-centric only. Right. Sir, congratulations also on the debt reductions which you have done and the impact being seen on the finance cost. So sir, going forward, what should we factor in, in terms of the absolute number for finance cost? This quarter has been at INR 26 crore. I think those are the lowest. So what is the likelihood, sir? How is this cost shaping up? And when is our rating review due, sir?

Saket, our rating was reviewed in June and where we -- I think we had mentioned in our release as well that we were -- rating by ICRA for the year was at AA. So that's the rating now. And with the CRISIL, we have a short-term rating. That will be due for review in December.

And the finance costs?

Yes. See, finance costs, the debt is lowest at the September levels, right because of the sugar sales as well as subsidy realizations in urea. And that starts rising with the increase in working capital, given the sugar season as well as the accumulation of urea, right? So my sense is that in Q3 also, you should see more or less a similar kind of number on interest cost, but it will go up in Q4.

Right. And what is our cost of fund currently, sir? Interest rate for the shorter-term loans we have?

For short term, see, we generally borrow on commercial paper. So our marginal cost would be around 3.75%.

Okay. And the long-term borrowing, sir?

Long-term is in the range of 6.5% to 7%.

Sir, just to sum up what the management has tried to guide. Is that only on the caustic front, where there is -- the realizations are down. Other than that, all sectors have more or less come -- came to the levels pre-COVID. So -- and PVC has supported because of this abnormal increase in prices. This is how we should be summing up the entire gamut of our business?

I think in the broad picture, yes, what you're saying is correct. But the uncertainty in commodities is there. Let's be real on that. And secondly also, on fertilizers, on weather and sugar, when stocks go up, then our working capital requirement goes up. We know that the government is tight of funds as their debt levels already -- compared to the budget, the government's debt levels are very, very high. So our apprehension is in the next 2 quarters, the fertilizer subsidy, which is paid to the farmer through the industry, that subsidy outstanding may go up more. So we don't know how that's going to impact in terms of our entire cash flow and, consequently, cost of funds. So these uncertainties are always there. But our focus is on operating our businesses efficiently and being a prime player, whatever we are working on. And we do expect that our Fenesta also should improve in the next couple of quarters compared to where we are. So you're right. Caustic is something where the prices are at the moment compared to last 2 years. Our estimate is that they've reached the rock bottom, and hopefully, they should go up marginally.

The next question is from the line of Karthik Sambhandham from Unifi Capital.

I have 3 questions. Firstly, on Shriram Farm Solutions, we have been able to do quite well here. Can you give us a broad sense of how do you see this business developing over the next 2, 3 years? What is a ballpark target? Where do you want to get this business to?

I think on the Shriram Farm Solutions, or SFS, as we call it, our focus has been on value-added products in 3 different verticals for the farmer. One, we are working very strongly on providing a different sets of seeds on Bioseed, but seeds portfolio, which is there very strong. Then as plant growth promoters, various types of plant and growth promoters which we are also selling very actively. And third is crop care chemicals. That's also moving very actively in the SFS verticals. The management there has focused, in the last few years, on having tie-ups with many companies to source better quality products, how to provide better service to our customers, how to provide technology and know-how to our customers to improve the farmers' profitability. That is what we are very focused on. That's the direction we want to take up very actively. We are continuously -- this business is continuously looking at new products, which can be inducted into the Indian market, new products, which are required. And India is such a large country our focus on SFS is more north at the moment. So their focus in terms of ensuring state-wise requirements is very high. They are focused very extensively on the digital platform to connect with farmers, share knowledge with farmers, technology sharing with farmers. And having now [ Kisan Dosti ] and conferences with farmers. So all these are a very positive direction. So they're continuously looking at what more to do and what new to do. They are also looking at various forms of agri technology and tying up with the companies who can provide agri technology to farmers in a more aggressive manner. That's also under plan of our SFS division. So they've got their plans very clearly articulated for the next couple of years. And we expect the business now of the value-added segments of business to go up well.

Sir, would there be any one-offs in H1 this year, like the PBDIT INR 39 crores versus INR 13 crores last year. So is this -- large swing was about INR 26-odd crores, is there any one-off?

We don't think so because the kharif season has been good across the board. And the focus on our seeds business, where we've got some research variety wheat seats, which have done very well. So that is something which has grown rapidly. And the team there is working with some other seed consultants outside India also to see what we can. Plus, their focus has been very strong on crop care chemicals, that has performed better. Plus on plant nutrients, that has performed better. So it's across the board. Of course, agriculture is a product where monsoon year-on-year can change, government policies can change. That can have an impact. But I think our basic groundwork and our foundation is fairly strong.

The next question is from the line of Prateek Kumar from Antique Stockbroking.

That gentleman mentioned, he had 3 questions.

Okay. I'm sorry, one moment.

I think Karthik mentioned he had 3 questions.

That was first question. Sir, second one was about our vision for this segment. In particular, like 3 years out, what kind of numbers can we do broadly, assuming monsoons are okay and business turns out to be as we expect. What kind of top line would you expect for this segment?

I think that would be difficult -- it will be difficult to give that right now because the business looks at what are the new products coming in, what are the new initiatives we are taking. So I think it's ongoing. It would be premature to think of any sort of figures right now.

And sir, lastly, for our policy, overall in sugar, again, the policy for this particular season, is it out? When do you expect it to be out? And any specific risk for our sugar segment from policy developments going forward?

Sorry, I missed your question.

So the government comes up with policy, the procurement price and so on and so forth, every sugar season about October, some policy tweaks. So any updates on government policy, state or central, for sugar season?

We've discussed this in the past also in this call as well. We do hope that the policy is favorable for the sugar industry, including the ethanol industry so that the cane arrear to the farmer is at the minimum level. So we're hopeful for a positive policy. And let's just -- and the government has been very proactive in the last 3 years, the last 4 years. So we are hopeful for a positive policy going forward.

I'm sorry. I think we have lost the line for Karthik. We will move to the next question from the line of Prateek Kumar from Antique Stockbroking.

I have a question regarding the chlorine segment. You mentioned that chlorine prices are better, while our overall ECU realization [indiscernible] reflecting...

I'm sorry, I didn't -- I couldn't catch what you were saying.

I was mentioning -- my question is regarding chlorine segment. So chlorine segment, you mentioned that the prices have been better, but our general ECU realization probably fall by around 7% this quarter versus Q1. So have chlorine prices improved Q-on-Q? Or both are falling? I mean [indiscernible] chlorine is positive, but has it fallen Q-on-Q as well? Versus Q1, I'm asking, not year-on-year.

Chlorine actually has inched up a little bit, which is a good thing, but caustic soda has fallen. So that's how the ECU realizations are at this low level right now, that 7%, which you are rightly saying. So chlorine has inched up a little bit.

Right. And can you elaborate on your chlorine downstream process work? And we will be taking up after 1, 2 quarters this caustic expansion. But I mean, how are we looking at the chlorine downstream process expansion?

There are 2, 3 areas we are trying to -- what we mentioned before, that we are studying various products which will add synergy and where we can get into supplying chlorine or other products also or steam or power or whatever to add value to the downstream products to actually benefit the company. So these studies, as we mentioned are on next couple of quarters, we expect to get much, much better clarity on where we are today. Simultaneously, we've also tied up with Gujarat operations with [ 5 or 6 ] industries around us for supplying chlorine by pipeline. So that pipeline supply is a long-term contract, where the requirement to chlorine comes from us. We are discussing with 1 or 2 more companies to supply chlorine, 1 or 2 companies we are talking to supplying steam. So we are looking at how we can add value and becomes a win-win for our business partners and for us by having a direct pipeline connectivity with some of our customers. So that is very much in the -- we've already done it to a large extent, and we want to grow that further. So that is something, which is very much on the horizon also.

And how much chlorine we use per captive downstream processes?

Our captive would be, I think, for PVC, K.K., how much chlorine would we be using for PVC?

Amit, you have the figure?

Yes. So for PVC, in Kota, we are using around 40% of the -- including generated Kota complex. And in Bharuch, it is less will be about 4%, 5%, which is used captive.

The next question is from the line of Divya Jain from ICICI Securities.

So I have a question on caustic side. So you have mentioned that the incremental capacity have come up from make money plus the Kutch Chemical. So how is the demand supply situation right now, considering the domestic consumption plus import minus exports. So what is the excess capacity available for -- from India side? And what kind of incremental demand do you foresee from textile as well as paper sector, which can absorb that incremental supply plus help us to improve some realization? So if you can guide on that front.

Compared to last year, our consumption in India grew for caustic soda by about 4%. It went up. Because of corona, this year, the first quarter has been pretty negative, pretty -- a big problem for all manufacturers and they're inching up now. So I think it's very difficult to say how it will move up because, as I mentioned earlier, also, it depends so much on the textile industry, paper industry and a couple of more. So I think it's going to go up. We think it will go up, but I think giving any percentage of figures will be inappropriate.

Right. But is there any figure like the excess capacity in the market, which can -- which has led us to realization pressure like around INR 20 per kg? So is there any figure to that? I mean, how would...

Whenever additional capacity is added, then automatically, if you were running earlier at 83%, 84% capacity utilization across the board in India, for some time, that 83%, 84% may come down by 2%, 3% because of additional capacity coming up from someone else. So that's a normal criteria for any commodity business in any country of the world. So we are going through the same thing.

[indiscernible] international prices of chlorine are also at a very low -- caustic are at a very low level, as was mentioned earlier, at $260, $270, which is a very, very low level because of a worldwide glut in caustic.

Okay. And just to answer your question, in terms of the total capacity in the country, about 4.6 million metric tonne. And out of that, about 360,000 got added only in March, which is about 1,000 tonnes per day. Consumption in the country is about 3.8%. So there is a gap. And 1,000 metric tonnes per day, which got added in March, has definitely created that pressure. And given the COVID where the demand has come down, I think that is further making the situation worse. And essentially, if you look at the paper, textile and dyes, which are the 3 segments where the capacity utilization currently is about 60% to 70% of pre-COVID level. And these form almost 35%, 40% total demand. So if that is operating at, let's say, 55% of the pre-COVID utilization, that will put pressure on the demand and given the excess supply. So I think those are the dynamics which should even out over a period of next 2 to 3 quarters, and then we should see better prices as well.

The next question is from the line of Pratiksha Daftari from Aequitas Investment Consultancy.

So I just wanted to know what is our vision and what is our focus on Fenesta business? Where do we see this business in, say, next 2 to 3 years? Midterm business?

I think in this business, our basic idea is to carry on expanding our product range, our innovations, our bending and marketing, our geographical reach and our service. So with the combination of these 4, we have, over the last 3, 4 years, maintained over 20% growth in profitability. And we carry on expanding product range, reach and service. So that is going to continue, and we will come back on track. We are coming by on track. And we hope to come back to a faster rate of growth and come back to normal, the 20%, 25% a year growth on bottom line. And that is in spite of the real estate sector being in a very depressed condition. Actually, our strength is with our retail sector where we sell to individual homeowners and individual owners. So almost 60% to 70% of our business is retail business, whereas 7, 8 years ago, it was the other way around. 25% was retail and 75% was institutional and developers.

And just -- would we need any investments in this -- investment in terms of CapEx or ending in this segment for sustained...

Yes, it does require but the nature of the business is such that the CapEx is in small bites. INR 10 crores, INR 15 crores, INR 20 crores maximum, between INR 10 crores and INR 20 crores every couple of years. And this is a net cash flow-positive -- there's negative capital employed. Because of the advances from customers because it's a customized tailor-made product, so we need to take advances before we make the window. The customer needs to pay for it, otherwise, the windows crack. So nature of the business is such that it is a negative capital employed business.

Right. And sir, if you could just elaborate a little about the reach we currently have for this business, which are the -- like areas where we would have a presence in this business?

We are present today in about 130 towns and cities of the country. And the plan is to go up to 150 to 160 by the end of the year. And this includes sales and service because we are the only provider in India who is an end-to-end solution provider. We measure the opening. We make the customized window for the opening, and we ship it to the customer and install it. So there is a service capability also at every location.

Next question is a follow-up question from the line of [ Saket Kapoor ] from [ Kapoor & Co ].

Yes. So just a continuation to the Fenesta part only, sir. If you look at our capacity, what kind of top line are we emphasizing going forward, depending upon the reach which we have developed as of now, and the segment having high potential the road map going forward?

I think it's very difficult to actually forecast what is happening because the real estate sector is very choppy. [indiscernible] are incremental. We are operating at 70% to 80%. We continuously debottleneck every year. We put in INR 10 crores, INR 12 crores, INR 15 crores for debottlenecking and increasing our capacities because we want to operate at 75% to 80%, so that we can take care of peaks also because there is peak in demand. And that's the nature of the business. But as I said, the aim is to grow the bottom line at 20% to 25%.

Right. And if we do any peer comparisons, sir, in this segment, the way we are doing the work from B2C currently, who should be the competitors in the space?

See the models that all our competitors follow is different. All our competitors follow a franchise model. So they supply profiles, and they don't take care of the fabrication nor installation. So there is no directly comparable competitor today in terms of the business model.

Okay. And in product, if we take where in the market we look for this product, Fenesta, the nearest one would be? Which brand or in the company which CapEx to the branded -- in the branded segment?

I think some of the German brands are there. NCL is there in Hyderabad. Aparna is there in Hyderabad. [indiscernible] is there. [indiscernible] is there. These are the foreign brands. VICA is there, but all of them are on the franchise model.

Franchise model. And on the pricing front, also, we are -- comparison when we take -- there can be a likewise comparison on the product as well as -- definitely on the pricing model?

Well, marginally, you see it may vary 5%, 10% with the names I'm taking, particularly the MMCs. [indiscernible] unfortunately, with the franchise model, what happens is that there are sort of different selling and servicing practices. So they show the customer a German profile and they supply a Chinese profile. Then the pricing is not comparable because that is what happens in a franchise model.

Okay. But then that will not lead into brand building, sir, if that is the way they do?

That is why we are getting orders from people who have used others in the past.

Correct. Right, sir. Sir, any update on the antidumping duty front, sir, on the caustic soda? And which markets are currently there in force?

I'm not aware. I don't know whether Amit or anyone. I think the industry has been trying to take up this antidumping duty from a couple of countries. But we'll have to check that out. We'll have to check that out.

Currently, sir, there is no ADD on any of the -- I think Iran was the one where there was an implementation, if I'm not mistaken.

There was something earlier, and there was also the system of the original provision of manufacturer, and there were some licensing agreements manufacturers had to have until about, I think, it was until about April or May, to have that, which expired, after which the prices came down. So I think that's something which we can check up. You can just get in touch with Amit, and he can give you further detail.

Right, sir. And the last point on the DBT front sir, you spoke that the season coming up and there will be more stress on the finances from the government front also from the fertilizer sector. So the DBT, it's coming into the play, the model being changed, gas prices being lower. Do you think, for fertilizer, is the same segment -- is it the same business environment as it used to be earlier? Or there will be a lot different way in terms of finances being managed for the fertilizer sector for this season?

No, to be honest, there is not much change because the DBT in fertilizer has not really come in. There is no system by which the government will give a fixed amount per acre or per hectare to the farmer. And the farmer has a freedom of choice to buy whatever fertilizer they want. That system is not there. Even today, the system is that they have what they call a POS machine, point-of-sale machine, with each retailer, and there are about 2.7, 2.8 lakh retailers in the country. Each sale that is registered goes into a data bank, is informed to the ministry, product manufacturer wise based on which that sale is recorded and we get a subsidy. So DBT actually in fertilizer has not come in. It is still basically -- the industry is providing the subsidy to the farmer, and the government is paying the industry. So there's no DBT really.

Right. And there was some payment also per ton given for cost efficiency from, if I'm not taking the changes in the policy, the urea one. Have that been implemented and the fund been released?

No. Are you talking about the government when they took a decision, which is pending in...

Energy efficiency parts are I think, so there was some payment due. Are you trying to get something?

I'll just bring the facts on the table. The government has said, because from 2002, '03, the government had not revised the fixed costs of all fertilizer plants. So they did, across the board, increase INR 350 per metric tonne. Our fixed cost increase for manufacturers effective for the last 4 years or so, 4 or 5 years. That has been approved. There is additionally INR 150 a tonne for plants which are over 30 years old. And we come in that category, and there are others also in the same categories. That has also been done. So we've got part payment for that. But we are still waiting for the balance payment on that.

Sir, that we are accounting for as of now? Or will we ad hoc payments?

I would just add here, so this is 350-plus 150. So that we've got the notification from the government. But however, it is yet to the filed for previous years. For the current year from April onwards, out of this 500, 350 has been notified, and we have been filing our claims on that basis. Okay. So on the revenue front, we have been booking this 350 for the 6-month for this financial year.

Next question is a follow-up question from the line of Tejas Sheth from Nippon India AMC.

Sir, on the do we have more room for any value addition CapEx in the sugar segment?

See, the sugar segment, as we mentioned earlier, I think our focus really will be on increasing our B-heavy ethanol this year. And we are also value-adding in the sense of going into the country liquor, manufacturing and sales and marketing of country liquor. That is the focus areas going forward.

Yes. So beyond that is what I was actually -- because that is already announced.

See, our team is continuously looking at other chemicals as well, but that's on the drawing board.

Okay. Okay. And any -- we exited the seed business in Vietnam. Are there any those of small loss-making businesses where we would be looking to exit in the coming year?

No, we've not. We took a strategic decision to divest Indonesia and Vietnam Seeds business, and we are not looking at anything else right now.

Okay. Okay. So sir, last question. On the chlor-alkali, if I just do the basic calculation of EBIT per tonne, I see the cost per tonne has come up substantially in this quarter. Is there anything which we -- on the cost management, which you have done, where the cost per tonne actually on the calculated basis is around INR 14,500 to INR 15,000 a tonne?

See, there is a -- there have been savings on account of power costs and also there have been savings on account of fixed costs. So we probably can look at how you're calculating it, but I think there have been these 2 major savings, which has led to a reduction in cost per tonne.

Okay. And this can be carried forward in when the -- even when the industry revives?

Yes. Most of [indiscernible] on fixed cost side, there might be some repair maintenance, which might have got shifted that far. Most of the fixed cost would be sustainable, the savings that we have done.

Okay. And lastly, what would be the cash CapEx for this year?

See, till now, I think our CapEx has been -- the cash CapEx has been close to about INR 100-odd crores approximately. I think depending on how things pan out, maybe INR 100 crores, INR 150 crores.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for their closing comments. Thank you, and over to you.

Ladies and gentlemen, thank you very much for your participation in the Q2 financial year '21 earnings conference call. We have gained from our strategic steps taken over the last few years. Our strong balance sheet allows us to keep investing in growth even during these tough times. We will continuously continue to -- continue our growth initiatives and efforts will be on to further strengthening efficiencies, augmenting capacities and looking at all forms of integration of our businesses. We expect that over the next few quarters as economic activity improves, the volumes and prices will improve further. We are confident of the sustained growth over the medium term. Once again, we'd like to thank you for taking the time out and joining us today, and we wish you all good health and safety to you and your families during the difficult COVID times. Thank you very much.

Thank you very much. Ladies and gentlemen, on behalf of the DCM Shriram Limited, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.