DCM Shriram Limited (DCMSHRIRAM) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the DCM Shriram Limited Q2 FY '22 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. Good evening, and thank you for joining us on DCM Shriram Limited's quarter 2 and H1 FY '22 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; and Mr. Amit Agarwal, CFO of the company. We will commence the opening remarks with 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 that has been 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. Thank you. Over to you, sir.

Thank you, Siddharth. Good afternoon, ladies and gentlemen, and thank you for joining us on our Q2 and H1 financial year '22 earnings conference call. I will take you through the business development. After that, Vikram will share with you the financial perspective. We are glad to report another quarter of robust performance. Our businesses are stable, and we are investing and growing them by adding scale, integration and cost competitiveness. Turning to our strong business model developed over the years, we continue to make healthy progress despite the challenging environment. Some of our businesses are facing challenges from a volatile, global business environment in terms of increasing commodity prices as well as increasing energy prices, which are having a positive as well as negative impact on our businesses. This is also bringing uncertainty to future economic environment and consumer behavior given the inflationary pressures. The capital expenditure programs announced over the last 12 months are expected to be commissioned as per schedule and will further help us maintain growth momentum with stronger businesses and reduced risk on account of volatility. With that, I would now like to walk you to our business-wise key developments. Sugar. India witnessed record exports of 7.1 million tonnes during sugar year '21 and diverted 2 million tonnes of sugar to ethanol using B-Heavy molasses, resulting in a stock of 8.5 million tonnes at the end of sugar season 2021 with lower inventory levels and firm international prices, domestic prices are good and are currently trading around INR 3,700 per quintal. Crushing for sugar season 2022 is expected to commence from end October and early estimates suggest production of about 31 million tonnes for the year, with a stable demand at about 26 million tonnes and estimated export of 6 million tonnes. Inventory at the end of sugar season '22 is likely to further reduce to about 7.5 million tonnes. The cane prices have risen for the coming season, with Government of India increasing FRP by INR 5 per quintal and Uttar Pradesh increasing SAP by INR 25 per quintal. This will put pressure on margins if the domestic sugar prices fall below ballpark INR 3,550 per quintal. For the sugar season ending 30th September '21, the sugar revenue was down by 14% because of lower monthly quota released by the government, which is a function of lower inventory levels. This season, no additional export quota was declared unlike sugar season '19/'20. Distillery revenue was up by 38% with the new distillery of 200 kiloliters per day, commissioned in December '19 at our Ajbapur unit. EBITDA margins of the business for the 2 seasons have been largely the same. Government is committed to a 20% ethanol blending target by 2025. Present season saw blending rates reaching approximately 8%. We also expect the revision in ethanol prices for next season in view of the increase in sugarcane and sugar prices. Work on putting up our grain-based 120 kiloliters per day distillery at Ajbapur is progressing as per scheduled. Chemicals. This is a supply chain -- there is a supply chain disruption at global level due to the impact of Hurricane Ida in the U.S., the recent Chinese government's dual controlled policy for energy consumption and intensity as well as closure of the fuel capacities in the U.S. Further, easing of pandemic restrictions and a declining infection rates is leading to increased demand. Both these factors are leading to a higher price realization as well as higher capacity utilization. India continues to push exports with caustic soda exports of Q2 financial year '22 at 56,737 metric tonnes, compared to 48,600 metric tonnes in Q2 of financial year '21, an increase of 17%. Therein Q2, high input cost of coal as well as salt have largely offset the gain from larger volumes and realization. However, in coming months, the gains from higher realizations may more than offset input cost pressures. Our downstream projects are expected to be commissioned on schedule and will facilitate better value add and provide hedge for volatility. The 120-megawatt captive power plant will add to earnings driven by cost efficiencies. The 700 tonnes per day chlor-alkali expansion, along with the 500 tonnes per day flaker will further increase our scale. Demand. PVC import prices continue to remain firm, with prices reaching USD 1,800 per metric tonne. Our PVC prices were over INR 1,50,000 per metric tonne in the month of September 2021, moving in line with international trends. Higher prices have more than offset the impact of higher input prices during the quarter. However, we are seeing a continuing increase in power costs, given the steep rise in coal prices. Agri Inputs. This segment covers Shriram Farm Solutions, Bioseed and the fertilizer businesses. For Bioseed and Shriram Farm Solutions Q2 is an off season. For H1, the disruption in the rural landscape going to higher impact of second wave in rural areas, coupled with an erratic monsoon depressed the performance of the agri businesses. Flooding in key cropping areas in India was another factor. Consequently, the revenues were impacted the Bioseed India operation in H1. Shriram Farm Solutions business was also marginally impacted. However, with adequate water availability, the Rabi season is expected to be closer to normal, and this bodes well to SFS for whom Rabi is the main season. Our emphasis remains on value-added inputs and research-based products, which will bring good growth to both these businesses. Fertilizer saw higher revenues, which were driven by higher gas pricing. Subsidy outstanding for the businesses -- for the business stood lower at INR 266 crores as of 30th September 2021 versus INR 465 crores as of 30th September 2020, which is a paradigm shift. The significant rise in gas prices, we expect the subsidy amount to increase till it gets multiplied. Fenesta. Fenesta reported a strong performance given base impact for the first wave last year and demand build up post the second wave since Q1 financial year '22. Order booking is higher by 63% year-on-year during Q2 financial year '22. The business is benefiting by way of increase in reach and diversity of product range. It is our earnest endeavor to drive continuous growth through enhanced capacity utilization while maintaining a sharp focus on delivering efficiencies. As the natural progression of our strategy, wherever prudent we are adding investments in downstream and value-added product lines, and capacity additions with a view to have an enhanced profitability footprint on a sustained basis. With this, I will now request Vikram to take the discussion forward. Vikram, over to you.

Thank you. Good evening, everyone. I will now take you through the financial highlights for the quarter. Net revenues grew 5% year-on-year to INR 2,145 crores versus INR 2,047 crores in Q2, financial year '21. I will now apprise you on the businesses that have significantly impact on revenue during the quarter. Revenues for Chlor-Vinyl segment was up 56% to INR 814 crores. Chemical business revenues were up 37% year-on-year at INR 483 crores in Q2, driven by both volumes and prices. PVC revenues were up 94% year-on-year at INR 332 crores, driven primarily by higher prices of products. With the recovery in demand post the second wave of COVID-19, our PVC sales volume saw an increase of 60% quarter-on-quarter. Fenesta revenues were up 46% year-on-year at INR 130 crores in the period. There was an improvement in retail as well as projects verticals. The Chlor-Vinyl and Fenesta businesses, Q2 last year were seeing a gradual improvement in demand post the COVID-19 induced strict lockdowns in April and May '20. Overall, sugar business revenues net of excise duty on country liquor, were down 29% year-on-year at INR 590 crores as a result of lower sugar volumes. Prices for sugar and ethanol were better. Fertilizer revenue stood higher by 34% at INR 293 crores consequent to higher gas prices, which in Q2 has gone up from USD 6.5 per million BTU to USD 13.7 per million BTU. Current prices are over USD 14. Higher rice batch price is a pass-through, but it impacts the subsidy outstanding. On profitability front in Q2 financial year '22, PBDIT improved by 30% year-on-year at INR 311 crores. Plastics PBDIT came in at INR 156 crores. Better prices were the key driver for the earnings. Chemicals PBDIT at INR 108 crores was led by higher volume and furnace in product prices. Key inputs more particularly power and fuel costs in Chloro-Vinyl business, came in significantly higher year-on-year as well as quarter-on-quarter. Overall, sugar business PBDIT came in lower at 42% year-on-year INR 33 crores mainly due to lower volumes in the business. Additionally, higher rate of purchase molasses also contributed to lower earnings. Bioseed came in at negative INR 14 crores. Performance was impacted by earnings from India and international operations due to lower volumes. For international businesses, it was only a timing difference. Moving into half 1, first half of financial year '22. Net revenues were higher by 4% year-on-year at INR 4,152 crores. Chlor-Vinyl revenues were up 68% at INR 1,413 crores, driven by volumes and prices. Fenesta revenues was up 79% at INR 239 crores, led by volumes. It is important to mention here that Chloro-Vinyl and Fenesta has a low base and half year financial year '21, given the impact of first wave of COVID-19 pandemic that year. Compared to half 1 financial year '20, Chlor-Vinyl grew 13%, led by PVC and carbide prices. Fenesta grew by 5% over half 1 financial year '20. Sugar segment revenues, net of excise duty on country liquor sales were lower by 32% year-on-year at INR 1,153 crores. This is being the result of lower sugar volumes, both in domestic markets and exports. On sugar basis, the revenues were down by about 14%. Revenues in the fertilizer business were 22% higher at INR 513 crores on account of higher gas prices. Volumes in Q1 were lower since the plant operated at low capacity due to a partial breakdown. The plant is stable now. Bioseed international revenues stood higher by 12% year-on-year at INR 75 crores, driven by higher corn and paddy sales. Bioseed India revenues were at INR 191 crores, down 21% year-on-year, owing to lower volumes given the impact of the pandemic and erratic monsoons. Coming to the PBDIT for the first half, we saw the same rising 42% year-on-year at INR 611 crores versus INR 482 crores for half year -- first half financial year '21. The reason for the improvements are in line with the explanation provided above. Coming to the balance sheet position, the company had surplus cash of INR 679 net of its debt as on 30th September '21 versus net debt of INR 242 crores as of 30th September 2020 and INR 180 crores on 31st March 2021. There is seasonality in capital employed, which is generally at the lowest level at the end of second quarter and then starts building up during the sugar season. Increasing in the CapEx also as well as build up on account to fertilizer subsidy will add to the buildup. ROCE came in at 23.3% for Q2 financial year '22 on trailing annualized basis versus 18% for FY '21 and 15.5% for Q2 financial year '21. During the quarter, the Board declared an interim dividend of 250%, amounting to INR 71.7 crores. On the whole, the company delivered an encouraging performance during the period under review. We have a strong financial position and will maintain adequate liquidity while continuing to implement CapEx and adding to growth of all our businesses. That brings me to the end of the financial discussion, and we will be happy to take questions that you may have. Thank you.

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We'll take our first question from the line of Ahmed from Unifi Capital.

Sir, if you look at the Q1 realization, it was about INR 24,300 and Q2 realization for the caustic business is about INR 24,900. So there is barely 2.5% improvement. But if you look at the import prices, they have moved from about 30,350 to about, $450. So can you please explain why there is these divergences between a realization and the import prices?

Amit?

Yes. I would see, if you see our results conditions, the prices have seen an uptake over the period, right? So if you look at June, the prices, import prices were about INR 376. And it is only now in September, we saw the pricing moving up to INR 450 and ultimately after September, they've gone up further. So even we have seen improvement in grain prices. So in June, our prices were about INR 23,800. And in September, our prices were about INR 26,600. So we are seeing gradual improvement in prices. And there is always a bit of a lag between the international prices and domestic prices.

How along the...

Please go ahead, Ahmed.

My question is, what will be the lag between the import price and the realization? Will it be 3 months or 2 months, 1-month? Can you please quantify?

See, it is very difficult to say what can be the lag, but yes, it can vary between maybe 15 days, 10 days to a month.

I'll just add, Ahmed, there will be a lag because normally, when we sell products, it's also on some of them on a contract basis for a month or 2 months or 3 months, depending on the relationship with the customer and how we work with them in the past also. So each deal has it's own nuances because we work long term with customers. So there can be a lag.

Okay. Sir. Okay, understood. Sir, if we refer to Page 16 of your presentation, there is a graph you have just provided the red line and the blue line, both have shown periodic convergence and divergence. Is that the pattern that we should expect in the future? And is it that the last quarter, there was some compression and in time, it's reasonable for us to expect some divergence again?

See, if you are looking at this graph on Page 16, see the trend last year is the same. As CMDs that are mentioned that there will be a lag depending on the kind of contracts we have because at times, we have contracts, which we would have made in September, so supplies in October. Now the October natural prices, as we speak today, they are over 700, but we will not be able to charge the same price for that customer with whom we entered into contract in September. So there will be -- and that will cause the charge not to move exactly in the same pattern. But yes, overall medium-term trend would largely be the same as is depicted in this chart as well.

Okay. Yes, that helps. So the last question on this. Could you clarify the time period of contracts that we normally enter?

So it generally would vary customer-to-customer, it's difficult to give exact number. But various the timing -- I mean, today, if I want to end this... [Technical Difficulty]

Sorry about that. Sir, you may go ahead.

Yes. So what I was saying was it will all depend, Ahmed, and it depends on the industry or the timing as to what will be the length of the contract. But generally, we would prefer a contract, which is 2 months, 3 months, 4 months, that kind of nature, generally.

Perfect. Okay. Understood. And sir, follow-up question will be based on your commentary where you mentioned that the improvement in realization will flow through the bottom line and it won't be observed by the cost. So can you please quantify how -- what is the impact of increasing the input cost, salt and coal and how will be the profitability move in caustic segment?

I'll just add, Amit, let me this. Ahmed, I want to mention that what we've seen compared to the first quarter, the coal price has gone up by about 30%. The price of salt has gone up substantially also. Now it was a monsoon also when the salt shortage takes place and then the prices pick a little more. So it's very difficult to give any correlation between the increase in the price of these products. Because the price of the inputs depends on the availability and you've seen worldwide, the price of coal for instance has gone through the roof. It's gone up because of the price of coal as well as the issue of nonavailability of ships and the trade costs, which have gone up from $9, $10 to $35, $40 trade cost. The finished product has had its impact due to different circumstances and reasons. That its very difficult to give a correlation of how they'll both function one vis-à-vis the other. And very often, it actually happens that they move independent.

Fine, fine. So sir, a simplify question. See, currently, I think spot prices of imports are about $500 per tonne for caustic. Now say in next 3 to 6 months, we reached that level of $500 a tonne in a realization. So the entire improvement in realization, will it be absorbed by the cost itself or some will be move to -- incremental will move to our bottom line?

I'll put it this way. As a company, we are always seeing how do we compete and be competitive in our cost of production. For the last 3, 4 months, we have very aggressively moved to use a lot more biomass as our import for our power plants compared to only coal. We have also started using a lot more ignite compared to what we use earlier, which is lower cost of energy. So we are continuously moving to see how we can improve or reduce our costs, improve efficiencies on an ongoing basis. A lot of it depends, you would have read 2 days ago, it started coming that the coal prices in China are coming down. Now what is the impact of that down the line, we don't know. But -- so it's a very volatile market. At the moment, our approach is, one, having adequate availability of the coal and biomass and lignite, et cetera. Because the shortage in India, which, again, because of the public power plants having shortage of coal, the availability and the supply to private sector has come down dramatically from Coal India and others. So we are ensuring having adequate availabilities, we can produce for and run as efficiently as possible. So these things are matching all the time and we are playing that game, and we are coming out fairly okay.

Okay, sir, understood. Sir, can you just quantify what percentage will be biomass and the alternative fuels?

This varies. We are already working on seeing how much we can take it up and it depends quota is separate, Gujarat is rate separate, availability is separate each power plant has a particular capability of how much they can take. So it varies a lot tremendously between 10% to 20%. So it depends a lot. Similarly, lignite. Because lignite has different -- unlike coal, the calorific value of lignite is lower. So that has its own nuances. So we're always playing around with what we can do to optimize the inputs of raw material into each boiler, so that we optimize that.

Okay. Understood. And sir, one more question on the Bioseed part. So we have about INR 450 crore -- INR 450 to INR 500 crores capital employed in the Bioseed business. What is your strategic perspective going forward on that segment?

Go ahead. Okay. Okay.

If you're talking about the expectations for Rabi -- it was a more than the normal rains, the expectations are that Rabi should be a good crop seasonal time. And therefore, although, we don't have a very significant portfolio in the Rabi. But in general, it should be a good field. And this also is the time for us to actually further promote our upcoming products, pipeline products. So this should also be -- to help us in the next Kharif in terms of the cotton.

Sir, I'm asking from 3-year perspective.

From a 3-year perspective?

Yes, yes.

We're quite hopeful, our pipeline is strong. Just this year, you possibly know that because of several conditions in the cotton crop didn't do well because of the illegal -- percentage of illegal sales happening all over more than 20% then, because of the erratic rapid monsoon and the Kharif period, the cotton was adversely affected. There were also no government subsidy program. So this year, Kharif was pretty bad. But yes, if the conditions are favorable, the rains are good, we have a very good pipeline.

So can we expect the losses in H2 to scale down in -- say in 3 to 4 years?

Surely, we hope even this year in cotton or some of our new products, which we have commercialized in the last 1 or 2, they are doing pretty well where we have been able to scale up. So we're quite hopeful, yes, the coming year should be good because our products -- coming up products are good. And the acceptance is good, that's what it is.

Okay, that's fine. And the last question from my side. Sir, if you see on sugar side of ethanol mix in Q1 of B-heavy was about INR 2.9 crore liter and C-heavy was about INR 0.3 crore liter. And in Q2, it was about 1.6 and 1.2, respectively. So what would be the optimal ethanol mix on an annual basis?

What we want to do actually, Ahmed, is to maximize our B-heavy ethanol -- B-heavy molasses to manufacture ethanol. So that's not endeavor, except for what we need to make for country liquor. Only that part we made from C-heavy. Otherwise, we want to divert maximum INR 2 crores to manufacturing ethanol and maximizing quantity. Just to give you a perspective, in H1, our ethanol production was up by roughly 3% compared to the previous year. And the sales volume of H1 was roughly 4% lower than the last year. That's because of this demand and supply and liquor we're tendering. But as I mentioned earlier, our endeavor is to maximize the B-heavy molasses to[ manufacture ethanol. And that's how we've seen the increase in the quantum by 3%, which is also aided by our new distillery in Ajbapur.

Thank you. We'll take the next question from the line of Rohit Nagraj from Emkay Global.

Yes. Congrats on a good set of numbers. So the first question is on -- yes, the first question is on chlor-alkali. So I understand that there has been some demand supply mismatch in the domestic market and the prices have gone up and probably players have resorted to more exports because better realizations. What is your sense on this? And on the coal cost front, what are the measures that we have taken to alleviate the pain from higher coal cost or nonavailability?

I think on the caustic soda side, frankly speaking, it's good to see that with the economy in India picking up, caustic soda demand is also picking up at the range of 5%, 6% a year, which has been the normal sort of growth of the chlor-alkali business in India. So that's the positive sign. International prices going up gives them little extra impetus of exporting so that there's a balance in the domestic market. So that is the approach of why one wants to look at the exports of caustic soda. So there's a balance between the pricing in the Indian market vis-a-vis demand, supply demand and also with the international prices are going up, that's an added impetus of doing exports now. The figures I gave you was to the last quarter. And this coming quarter, we don't know how it's going to evolve, but I think exports should also be there in the coming quarter also. On the issue of coal, I think the challenge is many. It is also first and foremost on availability, but that's the big challenge. The international prices have gone up dramatically. Even the auctions, which are held in India by Coal India, there, the prices have gone up dramatically. So that's why, as I mentioned a little earlier, we're looking at all types of fuel to feed into our boilers. Not only -- but all types of coal also which had different calorific values as well as using lignite as well as using biomass. So we are trying to optimize and see what we can get. The main challenge is getting the coal and having a stock. And due to the efforts of our purchase team, we have a stock of coal available. So we should run stable for the next coming months. And hopefully, if the coal prices also get a little more stable, we buy some more. So I think it's a stable situation, and we don't think we run short of coal going forward.

Sir, the second question is on PVC front. So we have seen interesting price hikes in global market as well as seeing it reflected in Indian market. So have you seen any kind of impact on the demand front because of these high prices? Or even on these prices, the demand base is still sustainable?

KK?

So the demand, as far as the PVC demand is concerned, it's definitely lower than what we were pre-COVID. Last year was a COVID again. So it's more than the last year, but it's definitely lower than the pre-COVID demand. It's actually better than last year H1 by almost 6%. The demand has gone under 6%. But the supply is also constrained supply is shorter than what we had last year.

Yes. just a follow-up on the supply front. Is it constrained because of the import front? Or there is any other reason?

Domestic production is maximum. I think it's slightly more than what was last year or the quarter, 3 quarter. but the imports have dropped from earlier this year, almost 1.6 lakh tonnes imports per month, which currently is about 1 lakh tonne. Supply pressures. Yes.

Our next question is from the line of Nirav Jimudia from Anvil Research.

I got 2 questions. Sir, one on the caustic soda business. So the last question -- last quarter, you have mentioned that out of our total PBDIT what we have reported, roughly around 24%, 25% was from derivatives, like value-added products. So if you can explain or if you can give us the same figure for this quarter out of this INR 86 crores, how much would be the contribution from value-added products?

Amit, please?

Yes. So that will be about the same number, 25%, 30% to be precise, 30% for this quarter.

30%. And sir, you have mentioned that we have been -- so I think in our portfolio, it's like aluminum chloride, hydrogen, SBP, these are the products what we manufacture. So safe to assume that majority of this contribution would be coming from hydrogen?

Yes.

And sir, if you can give the figure for last quarter last year, out of the INR 74 crores, what was the contribution from value-added products?

See, it is largely ballpark remain in this range of around 30%. As of now, it will remain at this range. So last year also grows in a similar range.

Okay. Sir, my second question is on power plants. So I think we have 2 plants, 1 at Bharuch and Kota. So -- how are we dependent on our captive source of power -- capital source of power. So is Bharuch plant are totally kept you in terms of our requirements of power? Or do we buy something from outside also. How is the situation placed between both the plants for caustic?

Just to add, in Bharuch, for instance, we are buying power from the Gujarat State Electricity Board, because the chlor-alkali capacity is higher. That's why we are putting up this 120-megawatt power plant, which should be commissioned, I think in another about 9 months' time. We are working on that. And that will give us the advantage of having captive power available. But we have the advantage right now for being -- we are buying over 40 megawatts of power from the State Electric Board of Gujarat. So that is giving us the flip over here. Similarly, in Kota also, we have a contract with the Rajasthan State Electricity Board to buy power as and when needed. And depending on the requirements, we keep buying from them also. So we want to keep the options open to buy from the state government, because our own power plants also have to take the shutdown, they also have to have the planned maintenance, et cetera, et cetera. So we buy from the state in both the places.

Got it. So if you can give us some mix in terms of out of, let's say, 100%, how much is are captive and how much do we buy from the grid in terms of percentage mix?

Amit, you have that figure.

Yes. So for Kota, we have 3% we are captive. So buy from grid is only option, as sir mentioned. Bharuch, we have about 80%, 85% CapEx and about 15%. We can source from -- we have to do some visibility to go with that capacity. But generally, Bharuch, we are operating at around 90% capacity utilization, 90%, 95%.

Yes.

And once the 120-megawatt case, then we are in a booking captive.

And that would take care of our additional expansion of 700 TPD 2.

Yes, yes. correct.

Yes.

Sir, and related last question on this is -- let's say, because what you mentioned that it also depends upon the calorific value of the coal and the fuel mix, what we use for our power plants. But a rough understanding in terms of, let's say, if coal cost goes up from, let's say, $100 to $150, how much increase in our unit cost happens on a rough understanding if you can give for, let's say, even for the imported coal that would help or even for the domestic coal that would help, sir?

No, I don't have this figure. I don't think Amit where we have the figure. But putting it roughly, it goes up the direct coal, those are there about 50% straightaway, because of that increase, it is about a 50% increase.

Okay. Same increase happens for our unit cost?

Yes, on a direct cost, correct.

Our next question is from the line of Pratik Tholiya from Systematix.

First -- on the power list front, again, you said there is even other than coal a lot of other inputs such as lignite. So we've already started, or we are still exploring on that front. And if you started, I just wanted to understand how much will the power cost in this hedge to come down? Or I mean, would it -- on a Y-o-Y basis, will it remain stable? Or we can expect that despite using lignite and all power cost still will remain higher versus last year?

I think it's very difficult to give a projection of how much the price will go up and down because coal prices are moving up and down. Lignite availability is tight. One has to get the clearance from the government and then get the approval from the government mine. So we are still working -- we are getting some -- We're getting some lignite's, but if you want to get some more. We are working on that even now for our requirements. So that's already been worked on. But I think it's very difficult to give a figure on what is going to be in the next quarter, because it's a very volatile situation. It's a very moving, moving figure, which keeps coming up for all the input required. I mean, for instance, because of the coal problem, the biomass prices have gone up. So that's having its own impact in terms of the costs. So it's a volatile thing. So I think it's very difficult to give a figure, I must say, Pratik.

And Pratik, I would just add that using biomass and lignite is not something new that we are doing. Will it be that earlier as well. It is that, so we are now trying to maximize that.

Sorry, go ahead.

No, no, that's fine.

Sir, just wanted to get some sense on directionally by maximizing usage of biomass and lignite, where can our power cost and versus last year for H2?

It's very dynamic, coal prices are rising every day and as you said, even biomass and lignite prices are rising. So everything is at historical high. So it's very difficult to give a number.

Okay. Got it. Sir, and do we say last quarter, we had 93% capacity utilization. If you could give the number for this quarter?

For which product?

PVC, even this quarter, it is that we are close to 95%, 100% stabilization.

Right. So sir, you alluded that demand-wise demand is looking good, and we are still actually below pre-COVID. So considering that things are improving from here. But we are already at peak utilization in that sense. So how should we look at it from the PVC business standpoint going forward, maybe next 6 -- 2 to 3 quarters?

Vikram, would you like to...

See in terms of -- we are already at the peak of the capacity utilization. So that there's not much improvement that we can expect. But as far as the prices are concerned, as we see them today Q3 looking at the conditions that led to this price increase, which was the supply constraint. So we expect the Q3 prices to be fall, it could be plus minus not what levels we have today, but they would still be fall. Q4 is very difficult to predict. Some of the things are changing very fast. It's very difficult to say what will happen in Q3. But yes, we are capable to produce at our own maximum capacity that next year.

And then on the longer term, if you could throw some light on PVC in terms of demand because considering that prices are good, and demand is also good. Are we looking at any capacity expansion in that front, because you are also at 100% utilization? So would that be a thought in the minds of the management to sort of put-up additional capacity on PVC?

PVC, keep on looking at these options, but India still has a constraint that we don't have the feedstocks. Feedstock required to make PVC either they have to import feedstocks or they have to [indiscernible]. So it's not a really easy choice. But yes, you keep our reviewing your options every now and then, so because the demand is there, as you rightly mentioned, we're still importing more than half of our consumption. So there is demand, but we have constraints on the supply side in terms of the appropriate feedstock availability in the country.

Understood. And then just last question on sugar. In the presentation, you mentioned that higher rate of purchase molasses and ethanol makes ample earnings. So if you could just quantify these 2 things, at what price molasses were purchased during the quarter? And what was the ethanol mix?

Amit.

Yes. So in terms of higher price of the C-heavy molasses of distillery will grapple ballpark number in the same day last year, we would have purchased the C-heavy molasses at around INR 350, INR 400 a liter. And this year, the prices are almost like in the range of INR 600 to INR 700 per liter. So that's the kind of change, which impacted the margins. In terms of ethanol mix essentially -- I don't know that number right now. It's about how much of B-heavy and C-heavy. So that will impact, but the major impact came from higher cost of C-heavy molasses, which impacted the margins.

INR 300 a liter?

Yes.

Okay. I mean, molasses you would have...

Quintal.

Quintal.

Yes.

Sorry, I didn't get that.

It'll be INR 300 per quintal.

Yes. Okay, understood. Right. Got it.

Our next question is from the line of Chintan Chheda from Quest Investments.

Sir, my question is related to the PVC business. So currently, so whatever is the constant regarding the supply, okay? So we see the factors which are leading to this particular constraints, right? They are more of a structural change or you can say more of a short-term phenomenon?

It is more of a short term in phenomenon. As there were a couple of hurricanes in the U.S. and then there were energy -- high energy prices in Europe, which led to some capacity is going out of their system. So they -- currently not containers, of course, demand and push also from the housing sectors led us. But structurally, I don't think there's anything that's going to be seen in a long time, but this appears to be a short time thing, which should get corrected as we go.

Okay. And sir, can you give me that breakup of your PVC and carbide contribution or EBITDA margins?

I think we have to look at the whole, the reason being that it's very dynamic as to whether we sell more of carbide or more of PVC flexible. Both of them are produced from carbide and it depends on what we are getting. Therefore, I think we should look at it as a whole.

We'll take the next question from the line of Falguni Datta from Jet Age Securities.

Sir, would it be possible to share the variable cost of power for Q2 versus Q1? For our captive coal-based plant?

I'll be honest with you, in our case, because we have different power plants, different boilers, different generating sets in Kota separately, in Bharuch separately variability is very large. So I think it is or I'll put it, honestly, on a normal basis, in a normal basis, when we -- unlike now when the coal and other prices have gone up to these deals, in a normal basis we are competitively better than buying the price at the base rate State Electricity Board. But at the moment, it's difficult to give that because the variability is so high everywhere.

Okay. But do you -- the way the current prices or in other words if you can just give a number with whatever mix that you've used like all purchase through SEB, like how much higher has the power cost been in Q2 for us versus Q1 on a percentage basis?

Amit, you having the percentage basis.

See, frankly, we don't quote our cost, right, on. As we mentioned that there is only a 30% to 35% increase in our power costs on a Y-o-Y basis.

Okay. And sir, one last question on sugar price, though, it's very difficult to give an outlook, but does that we are about to begin the season. So would it be fair to say that once the crushing begins, we could see a rupee per kg kind of correction in sugar prices from here on?

Falguni, it is very difficult to say. And as was mentioned earlier, the cane prices both at the central FRP level and the state SAP level have been increased. And we've been following up with the central government for increasing the minimum sugar selling price, MSP. And this follow-up, which has been happening for over a year now. Normally, this MSP change takes place with the FRP change. And also the ethanol price correction happens, post the cane price correction. So we are awaiting from the central government change -- an increase in both these prices of sugar as far as MSP is concerned. And ethanol pricing from all 3 products, which is cane juice, B-heavy molasses and C molasses. So we will wait for the same. So it's very difficult to say about the collection at this point of time. But what you're seeing here normally in the festive season, one does see a firming up by about a rupee or so, which is still about Diwali.

We'll take the next question from the line of Darshit Shah from Nirvana Capital.

Sir, my question is on the PVC side. Sir, our realization for the Q2 was somewhere around INR 1,31,000 per tonne. So -- and sir, what would be the current quarter run rate going on, if you can tell us?

KK, any idea how much?

It's currently, it's been very volatile. If you ask me yesterday it will be around 165, but they said it's very volatile. So one just can't tell you for a quarter, because the changes are very rapid.

Sure. And sir, if you look at our profitability in that segment Chloro-Vinyl, it's been 1 -- I mean, quite good at around 50% PBDIT margins what we have done this quarter. And even from Q2 levels, I assume the prices are up another 15% -- I mean 20% or so. So do you see that kind of profitability being sustained in this quarter as well, given the balancing in the prices?

As I said we expect the prices to be firm -- continue to be firm as we have seen in Q2 and Q3 also. So therefore, from a price perspective, yes, the profitability should be okay. But as we said, there is a cost push also and that also there are very violent changes in the prices. One, we are not sure how it's going to settle down because the price increase in coal has been very sharp. And the availability constraints are also varied, so that's also putting pressure. So it's very difficult to see. But on the pricing side, the evolution side, I can tell you because some of the fundamental changes that have happened, Q3 should be relatively firm as was Q2. But on the pricing side, I would hesitate to take a call because they have been very, very rapid changes, and some of them are very sudden.

And sir, my last question, again, is on this PVC changes that has happened and when we are hearing to management of a lot of pipe companies and all. So their view is basically that now the prices are probably as what you're doing is going to remain firm and whatever price we -- maybe probably showing pre-COVID data is a different future now. We're not going to see those kind of prices anytime soon. I would like to know your thoughts on this.

As I said, I mean, they are the better judge because they understand the market better. But yes, it possibly will never come to that pre-COVID level kind of a thing, but not to say at what we have today that's the understanding we have at this point of time.

And we hope they are right.

Yes. We can see some great profitability then.

But from a practical point of view, we've been in commodities for a long time, and we've seen commodities go up and they go down. So I think we just have to be careful and focused very strongly on our own competitiveness, our own customer service and our own business model. So I think that focus has to be very sharp.

We'll take the next question from the line of Sanket Shah an individual investor.

Congratulations, Mr. Shriram, on a very good quarter, mainly Chemical segment, and also congratulate you on the very favorable price movement of the chlor-alkali product. So Mr. Shriram, as we see the caustic prices are going up since last month. So can you please give us an idea on what is the spot price currently? And what is your view on the price dynamics going forward? I know it is very volatile and difficult to predict, but just wanted to know your sense on this.

I think the prices today in the domestic market are running in the range of, I think, 45,000 to 50,000. But that's the spot price. And I must be honest, I think from my understanding, most manufacturers have some contracts going forward which we can, because this is a product where you tie up with someone who is a long-term user. So I don't know each one's percentage what it is. Frankly, ours has also -- we've got some tie-ups, which are going up in any case. But you never know what's going to happen in the next 1 week or 10 days or 2 weeks or 3 weeks, because it depends on the international price also, how that moves and what's the situation here. But this is a price indication of what it is like today.

Correct. And can I get a sense of how much of our quantity is booked, say, on a fixed contract?

I don't have that this now because it varies a lot again from -- some of them are 1 week contract, some are 2 weeks, some are 1-month, some are 2 months. For instance, we had a contract with Vedanta, where we had a long-term contract with them linked on some parameters. So that's like a 12-month contract. So with the sort of market situation and the business philosophy of this company evolves. There's a lot of variability in that.

Okay. Okay. Sir, my next question is on the chlor-alkali derivative product. So can you just give us the sense that how much of revenue is coming from derivative product and how much revenue is coming from the company's main chlor-alkali product?

Derivative products will be chlorine linked, but aluminium products link. Amit?

Yes. So that will be around 15% to 20% of the total revenue from these products. Close to 15%.

Close to 15%. And in terms of profitability, how do they contribute?

In terms of EBITDA, it will be around 25% to 30% EBITDA coming from these products.

Okay. So when you say 25% to 30%, does it include hydrogen also in derivatives, or it is included in the chlor-alkali products?

No, hydrogen is separate in our case. So most of it is on contribute parameters.

Okay. Okay, fine. And sir, do we see any challenge in terms of input price for particularly the chlorine derivative products, mainly aluminum chloride?

I understand that you've seen -- you're aware what has happened to the price of aluminum over the last 6 months.

Right. Right.

Aluminum prices have shot through the roof. So there is definitely an impact on the input costs.

Our next question is from the line of Navneet Dayal, an individual investor.

I just wanted a summary of the projects that we've announced and when is the expected commercialization date? And my second question is, in your presentation, there was a comment that the strength of our balance sheet, we may announce future growth projects. So any initial thoughts on which vertical those will be announced? And when are we likely to hear on that?

I think the existing projects, which are -- Amit, you can brief on the existing projects, which we have right now. I'll then tackle the second one.

Right. The hydrogen peroxide and epichlorohydrine, these projects should come by March '23 is what the target is. The 120-megawatt power plant is expected by, maybe June, July of next year. And the 700 TPD project, along with 500 TPD flaker, that should come by March -- yes, that should also be coming by March '23.

And also are the grain-based distillery. Grain-based distillery.

Grain-based distillery should be coming by September '22 -- August-September '22.

Thank you so much.

Okay. That is what we have. And as of the second part of your question, as a group, we are always looking at seeing how we can add value, how we can take up something which is ancillary or value addition or expansion, whatever it is. So we are perpetually studying what's happening. Today, we've got almost INR 2,500 crores worth of investments in the pipeline. We are also very conscious that we don't want to stretch ourselves too much, because that we've seen the debt interest, which are never stops ticking. No weekends, no holidays, no Republic Day, no Independents Day holiday. It's there 24/7. So we want to be conscious with it also. But depending on our business performance, we've got projects online, we are perpetually studying. So it's difficult to give any more project commitments right now, but they are always under study.

Okay. Most of our interest would be in the Chemical division or we'd look across the various divisions?

We are happy to, and we are looking at the expansion in our chemicals business, in our agriculture business, in our Fenesta business, in our -- all businesses. Wherever there's a good business opportunity, we are open to it.

Okay. So given our earnings are likely to be given the prices currently, our earnings may continue to be good and so what are cash flows, maybe over the next 6 to 9 months, you may look to announce further projects. Is that a fair understanding?

I think it's too premature to give any commitment of any type, because it depends how the business environment operates. We look at it, and we will have to discuss with the Board what they also feel in terms of what we want to take forward.

Okay. Thank you so much. I look forward to your announcements and all the best.

Our next question is from the line of Saket Kapoor from Saket Company -- I'm sorry, Kapoor Company.

Sir, firstly, sir, if I correct me here, sir, you told the current prices for caustic soda are in the band of 45,000 to 50,000?

It's about 45,000 I believe. It's 40,000, 45,000. 45,000 [Foreign Language]

Sir, when we look at your presentation, wherein we have shown the EC. Wherein in the exit was 26,569 for the issue prices and $450 at September. So the rise has come post in this one 40 days or in these 20 days?

No, no, you have to look at it because what we've given figure is for the entire quarter. It's not given for 1-month. It's the whole quarter average. Amit?

In the presentation, we do give month-on-month number till September.

Page 16.

Pardon me?

Page #16, sir.

Yes. Yes, I'm aware in the graph, you're right. And majority of the increase, you're right, has come in last 20, 25 days.

Okay. So that the...

Where is that the prices of steel which have gone up from what I have shown there at $450. We do average for the month. So therefore, the increase started happening by end of September. And as we see the international price has gone up to $700, $750.

Okay. We are currently trading in the range of $700 to $750.

Yes.

Right, sir. Sir, and how has the chlorine network for us, is chlorine positive?

Yes. It's more or less positive.

Right, sir. And can you give me some more color about the -- how about the hydrogen peroxide prices being for this quarter and post September, how will the prices be?

See, we don't -- we haven't commissioned our hydrogen peroxide project, yes. So that's some as I said, it will come only worked about a year, 15 months.

Okay. And what have been the price trend sir, currently? How have hydrogen peroxide prices behaved? And if you could have...

I don't have the number.

Correct. Sir, your voice is cracking, Mr. Amit.

Is it better now?

Yes, please, sir, continue.

What I believe they have softened a little bit, the hydrogen peroxid prices, but I don't have the exact number.

Okay. And sir, can you attribute the factors, sir, which have really led to this from $450 to $750 or $700 increase, what factors have supported? And how strong is this rally in terms of the factors getting reversed in near future or in the medium-term future?

Yes, I'll just add that there have been some plant shutdowns in the U.S. that has happened. Then they had these cyclones and all that, which led to closure of plants. That made an impact. Some of the old technology plants, cyclone-based plants in Europe also have closed down over the last 5, 6 months. So all that led to a little reduction. And pursuant to the reduction in demand during the COVID time, demand is picking up a little bit now. That's led to a little full side again for these products. So that has given the little advantage of a full, which has led to a price increases now. But Amit Agarwal, what you mentioned earlier, simultaneously, there's been an input price -- input cost increase also. So we don't have the benefit of only a better realization. As we've talked earlier in the course of our conversation in the last half and hour, 45 minutes, that the input costs have also gone up, the way coal price has gone up or lignite or salt or all these things. So that has the impact also. So it's not only a one-way benefit.

Correct. Correct, sir. So sir, any color you can -- yes, please continue, sir.

Just to add one significant factor which has led to this surge in last 20, 25 days, also is the Chinese government dual control policy, which CMD has mentioned in his opening remarks. That also has led to spike in -- which essentially meant lower availability of the product and therefore, spike in prices.

Okay, sir. And sir, what is our current power mix sir, out of the total power and fuel, what is the mix? It is totally coal-based or cogeneration mix? And if you could give the split up in percentage terms?

Amit, you'll have to address that. I'm not saying about that.

We are fully coal-based. So I think if you're asking whether we have any...

Yes, sir, yes. Yes, yes. That was only my question. And if you could give some color, sir, how -- what have been our average cost, quarter-on-quarter sir since that has seen a huge escalation and what are the current prices? If you could get some sense of how the coal is going to impact us going forward also? But if you could give me the quarter-on-quarter coal prices difference in the June quarter -- sorry, and the September quarter. And how are we stacked up in terms of the power and fuel cost shaping up for the remaining next half, sir?

No, let me put it this way. If you look at the price 6 months ago of coal, it was $60, $70 a tonne. It went up to $200 a tonne. Freight has also gone up. So the price increase has been quite substantial. That has impacted the cost of power generation across the board. In the meantime, we've also worked aggressively on lignite and biomass and all these sort of things to offset some of the higher price increases. We are also looking at sourcing coal from different sources compared to what we did in the past. And going to the future, I must be honest with you, Saket, no one can come around and say to me, what is the for price going to be. It's very difficult to say. So the price, definitely a power has gone up. We talked about that earlier also. So it is a challenge. Our job is to make sure how we can ensure good efficiency of our power generation, have adequate raw materials, which we do have and continuously work on getting a lower price in energy. So we are working on biomass and lignite more aggressively also.

A very small point, sir, last point. What have been the import sir of caustic soda, if you could give for this quarter and also that would give some more color since we are still -- this is still an import product for the country, the demand is higher.

Caustic soda imports?

Yes, sir.

I'm not aware of that. Does anyone now what is the caustic soda imports?

Yes. During the quarter, the caustic soda imports are about 40,000 metric tonnes and the exports are about 60,000 metric tonnes during Q2.

During Q2. And sir, for this first half, I just want to comparative understanding of how the dynamics for the import and export part has played in terms of this slightly of being supportive?

I don't have the actual number right away. But the trend as we see is that exports are rising vis-à-vis same period last year. The trend of exports is rising.

Okay sir. And lastly, sir, what is the expected capacity additions are domestically that we are expecting in caustic soda getting onstream sales in 2 quarters down the line? For the industry, sir?

[indiscernible]

For the industry, what could be the capacity addition, sir, going forward?

Over the next 12 to 15 months, including our capacity. I think capacity difference would be in the range of around 900,000 metric tonnes over the next 12 to 15 months.

9 -- come again, sir?

Over the next 15 months, the capacity addition in domestic market will be grew to about 900,000 metric tonnes.

Okay. Okay, sir. And how -- and will that be compensating with the demand? Or will that create a surplus or a glut in the market? I'm just trying to make that sense.

All the business, that there will be a gap in either demand being more than supply and then it catches up or the other way around. I mean that -- so it's difficult to say whether it there is a -- whenever the capacity addition happens, it so happens that they'll come out together, and then it takes time to adopt. But overall, the business has been growing, the industry has been growing at about 5%, 6% year-on-year. So over the period then it catches up.

And I'll just add that it depends a lot on what is the international price of caustic soda. If the international price is still high, then exports will happen. So that will be an advantage for India.

Correct. Correct, sir. And lastly, sir, 2 points on the cash flow part, sir. Firstly, in cash flow, it is seen that we have booked loss of INR 13 crores on net financial loss on asset financial and liquid investments. If you could clarify on that, sir.

That is a that we have booked, because of the investments that we have. We haven't booked any loss.

Okay. [indiscernible] Okay, sir, that is a less amount. Right. Correct, sir.

Our next question is a follow-up from the line of Ahmed from Unifi Capital. There seems to be no response from this line. We'll take our next question is from Saket Shah, an individual investor.

So Mr. Shriram, I just wanted to know about our chlorine. So how much of our chlor-vinyl we are able to captively use in producing the chlorine derivatives? And how much we are selling it into market?

You have the figure, Amit?

Currently, our captive chlorine consumption, excluding hydrochloric acid -- excluding hydrochloric acid, is about 4% to 5% at Bharuch, and there our capacity is close to about 1,350 tonnes per day. And at Kota, there our capacity is close to about 500 tonnes per day, there almost 40% is priced captively. It has to sold in the market. And yes, that's where we are.

Okay. And about hydrogen, how much is going into hydrogen peroxide and how much we're selling into open market?

And just to add on chlorine, again, from Bharuch, almost 40% goes through the pipeline. So that's also more dedicated consumption.

Okay. And from Kota, any pipeline to ancillary?

Kota is -- pipeline is very limited. 40% of captive and that goes to the market.

Okay. Okay, fine. And on the follow-up to answer which Mr. Shriram has said that the current price -- power price is 45,000 to 50,000. So if I calculate the rough math -- rough calculate of the chlor-alkali production and sales for the quarter is 150,000. So INR 1,000 increase which translates into INR 15 crore EBITDA increase in our bottom line. I mean, plus or minus the coal price increase, like the cost increase. So is this right? So if I see 45,000 if I take the base because we assume that price remains the same. So can we see that will be almost INR 200 crore-plus for the next quarter?

I don't -- Saket, I don't think I'll try to take it that way because, as we mentioned, we also had contracts. What we talked about is spot price.

Understood.

That's different from contract price. And we are in the business in the long term. So we have relationships with our customers. So we have long-term relationships with them. So we have contracts with them also.

We'll take our next question from Ahmed from Unifi Capital. There seems to be no response. We'll take the next question from Saket Kapoor from Kapoor Company.

As you told that, there is a part of the sale through 2 weeks contract, something 1-month and so on. So there are then the cost escalation factors also built into the same?

No. No, no. Most of these contracts on a fixed price basis. You don't have a case. It could be 1 or 2, maybe we'll have a cost escalation. But if the cost savings it won't be a 2-week, 4-week contract, which has a cost escalation. If it is a 6-month contract, there will be some parameters of that nature. But it's not in the short-term fixed long-term commitment. These commitments are 4 weeks, 6 weeks, 8 weeks. There we don't have any input cost variability.

So sir, with the type of price hike in coal your input, the salt prices, do -- is it also feasible that there will be a dent on margins because of the fixed price contracts and the raw material prices moving up here as well?

Well, frankly, the way things are these unlikely because we do have contracts we are entering into now, which is going to go into the future, plus we have some spot sales. So it should be offset.

And just to add, we also maintained inventory of coal. So we need -- it's not that we are buying coal on contract.

Because the only reason -- yes, yes. The only reason is that the dent, which we have seen on our margins, if I may use terms in our P&L because of the power and fuel, this should get mitigated -- with this -- with the increase in the caustic soda prices going forward, that means at that time, the prices, the average prices were lower than what the cost inflation was. And now the prices have moved up substantially. So whatever dent in margins we have seen because of this power and fuel cost going up, that will get reversed in the next quarter if the prices sustained here?

So Saket, there are 2 parts to it. One, what CMD mentioned in his opening remarks that, that is something we would definitely expect that the increase in prices should more than offset the increase in the input costs. That is one. However, we also mentioned that there is significant volatility. There is one part of the expectation, the other part is volatility. That's where we are.

Okay, sir. And sir, about the salt prices, sir, what has been the trend, sir? And I think the salt prices are product for this are dependent on the domestic environment only. So there also, we have seen the prices moving up? Or how much is captive for us, sir, in terms of salt?

Salt prices have gone up substantially over the last 6 months because there are a lot of export of salt, which is also happening. And during monsoons, the rains also sometimes very severely with savability of salt. But now across the board, the salt prices up if are not mistaken, I think it's almost 60%, 70%. Amit, do you have the figure? How much salt price has gone up by?

Quarter-on-quarter, salt prices have gone up by about 20%, 25%.

Sorry, okay, 20%, 25%.

Sorry?

So salt prices have gone up by about 25%. Also, they were impacted because there were significant rains on the western side and some hurricanes, which led to salt being washed away and therefore, the prices went up significantly. But yes, otherwise, also -- because of exports and other reasons, the prices have been firming up solid.

Okay. And that has been factored in our numbers for this quarter? Or sir, we have a inventory advantage here also. But I want to understand whether the increase in salt prices have been factored in for this quarter numbers. Or how should we take that?

So Saket, as I mentioned that quarter-on-quarter means Q1 and Q2, there has been a 25% increase. So you're right, that has already been factored in. That is reflected in the results.

Okay, sir. And I have -- I'm understanding on the fertilizer segment, sir? Sir, we are only into the urea part of the story. So currently, sir, how is this segment looking like with the government policy. And with now other urea plants also getting on onstream, what kind of capacity addition in this segment is coming up in the next half, sir? If you could give some more color on the availability of urea domestic sir going forward? And how are we positioned in this segment?

Okay. Well, we still are importing the urea, so they continue still not so sufficient in production of urea. So even the next year also, even when all the plants which are under construction or which are likely to be commissioned in the next 2, 3 years, there's still the imports. And today, there are constraints on imports also because the import prices of urea have also gone up substantially. So therefore, as far as our production is concerned, we are not expanding anything, but our current capacities are operating at full. And we don't see any special issue or any demand issues affecting that.

And sir, there the major input is gases, as the raw material, mainly gas prices...

The same related input, yes. And it's the past. Gas prices have also gone up, but it's a pass-through.

Okay. So there could be a cause of subsidy building up going forward for this segment?

Yes, it can build up, but you would have seen that government is quite proactive in this and the phosphatic prices went up through the roof. They have increased their subsidy location. You would have heard it lot of it 2 weeks back. So we expect government would be supportive to this. Any increases and if the current provisions and subsidy budget are not sufficient, we hope government will definitely proactively act and make sure that the provisions are there. But yes, some increase in subsidy would happen because of the gas price.

And sir, sir, there were also some energy norms part of the story also wherein we were required to make some changes to get the benefit. Are they in line, sir?

They have been implemented already. So those norms have been implemented. Currently, we are working to those new norms.

Okay, sir . Sir, when we look at your -- this Farm Solution part, and the Bioseed part, what kind of holistic understanding should we take for the year as a whole? Because these are very erratic owners, and they are noncomparable on a quarter-on-quarter basis. So overall, as a whole, how are these 2-segment going to perform for the year as a whole, if you could give us some understanding? They have been flattish if we take the first half. So both on the Farm Solution and the Bioseed part?

KK [Foreign Language]?

Yes. Well, I think we expect that in the next -- the H2 should be a better season because the rainfall has been a mitigating fact, a little more than the normal. So that should definitely help unless there are more unseasonal rains is very difficult to -- we've seen some unseasonal things happening on the climate side. But otherwise, the Rabi period, this H2 should be definitely better than H1. You should be able to make up something that we lost in H1.

Okay. And sir, in Bioseed, sir, any new products or any new seed development or any new agriculture where we will be launching? Or is it the same...

We are launching on a very regular basis. So scaling them up takes time. So it takes almost 2 to 3 years to scale them up. If we have products in the pipeline, some of them, as I mentioned earlier, also -- some of them have done well. We are able to increase their sales. And some are in the process there. So we're quite hopeful about our products to be able to kind of give expectations that we have.

I think one thing here on the subject, I also want to just clarify regarding seasonal business as in sugar. We have -- on a quarter -- Q2 basis, we've shown much lower volume, et cetera. But on a sugar year basis, the revenue compared to last year was down 14%, and the profits were down roughly 10%. That's just to again talk about a seasonal business for the full year, which wasn't being able to clarify earlier.

Right -- And more will depend upon how the sugar prices and the government increasing them going forward. That will be much more determined about -- as you have told that ethanol prices are also the to be revised going forward if the FRP has to be factored in.

That's right. Okay.

Thank you for the improved presentation sir, at this time. I hope for the continuity sir and all the best.

Ladies and gentlemen, that was the last question. I hand over the floor back to the management for closing comments.

Thank you. Ladies and gentlemen, we thank you for your participation in our Q2 and H1 financial year '22 earnings conference call. We are investing close to about INR 2,500 in various projects that span from new value-added products, to capacity enhancements, to cost efficiency and latest manufacturing technologies. We will continue to make such investments that augur well for medium to long-term growth of the company. Once again, I would 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 family. And my warmest wishes to all of you for Diwali and the New Year. Thank you very much.

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