DCM Shriram Limited (DCMSHRIRAM) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the DCM Shriram Limited Q3 FY '23 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, Mr. Rangnekar.

Thank you. Good afternoon, and welcome to DCM Shriram Limited's Quarter 3 and 9 Months FY '23 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 shall commence with remarks from Mr. Ajay Shriram and Mr. Vikram Shriram. Members of the audience will get an opportunity to post your queries to the management following these comments during the 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. Over to you, sir.

Thank you, Siddharth. Good evening, everyone. Thank you for making the time to join us for our Q3 and 9-month financial year '23 earnings conference call. Before I start, I would like to wish all of you a very happy and healthy 2023. I will commence with perspectives on industry environment and the strategic imperatives for us. That will then be followed by Vikram, who will share the operating and financial performance of the group. Calendar year 2023 has commenced on a comparatively positive note, with factors impacting global growth which seems to be abating. China is reopening. The U.S. is seeing milder though persistent inflation and the EU experiencing warmer than normal winter. Central banks of leading economies are expected to continue to take interest rates upward at a lower pace. Recession may be around the corner although may not be as deep. However, the geopolitical risks continue, and the era of low energy and commodity prices may not come back in the near term. Given these factors, the operating business environment is expected to be challenging. Our businesses have been performing consistently through our economic uncertainties despite the pandemic-interrupted year. Our continuous investment in scale, integration, innovation and value creation have limited the negative impact of such volatile operating environments. All our businesses today are self-sustainable and are in investment mode. Our CapEx program of about INR 3,500 crores has now started fructifying the sugar expansion largely commissioned. The 120-megawatt power project is likely to be commissioned in this quarter and other projects are along with our almost on target and shall make us more resilient to implement events while positioning us attractively for value-creating growth. With this round of CapEx nearing completion, we are actively looking at opportunities related in adjacent businesses to foster future growth. While we are actively pursuing further growth, we are taking steps to ensure that it is backed by sustainability initiatives to increase use of green energy, resource conservation and circular economy. We already are 11x water positive, and 36% of the total energy consumed in our operations is green. With that, I would like to walk you through perspectives on our various businesses. Chemicals. Global capacity utilization in chlor-alkali is at a lower level, given higher energy costs and moderation in construction activities. No major capacities are getting added globally in the near term other than in India, which will keep the global demand -supply balance over the medium term. In domestic market, there is surplus led by capacity additions of nearly 1 million tons during this year. Despite these challenges, our plants are operating at over 90% capacity utilization. Domestic surplus, along with global demand pressure, is putting pressure on caustic soda prices. Import prices we trade to $650 per metric ton towards quarter end after crossing $700 per metric ton in October 2022. India stepped up exports with 9 months financial year '23 net exports at 2.06 lakh tons as against 0.02 lakh tons in the same period last year. As the energy prices have stayed elevated, we have dynamically moved to 40% grid power to migrate the impact. We are committed to bringing down the cost of power with our proposed new 120-megawatt power plant and 50-megawatt green power. Today, we are the highest hydrogen selling complex in India with daily volumes of approximately 2 lakh cubic meters. Overall, operating margins are reasonable, although they are off from the historic peaks. Plans to leverage other value-creating chemistries, including commissioning of our epichlorohydrin and hydrogen peroxide during the subsequent financial year, we catalyze the performance of the business and multiple revenue streams will make it more resilient. Vinyl. Recession shares and high inflation has led to negative demand sentiment in the construction and housing sectors globally and in turn has impacted the PVC demand and the global crisis. China continues to push its production into India and government decision on antidumping duties and customs duty on PVC are still awaited. PVC prices appear to have bottomed out. Domestic demand is strong and investments being stepped up in home construction, automotive and piped water segment. We have been able to reduce the cost of power at our Kota complex with significant jump in use of biomarks to 20% from 11% of the fuel mix, which is also helping reduce the carbon footprint. Even though Vinyl business margins are under pressure, they are expected to improve with the expected correction in prices. Sugar. Globally, sugar output and consumption have been balanced in the last couple of years with a surplus or deficit of 1 or 2 million tons. India has become an active participant in the global trade flows. Government has allocated a quota of 6 million metric tons for current year, which has been almost tied up -- which most of it has been almost tied up. With India production estimated at 36 million tons, industry is expecting additional export quotas. International sugar prices have been firm. Domestic sugar prices had not offset the increase in SAP in the last season. The UP sugar industry needs a balanced government policy for sugar export as well as cane juice-based ethanol to remove reasonable imbalances. We started crushing operations in November 2022, and the crop is looking good. Our domestic releases have been better this season, and we have tied up our entire export quota allotted to us with approximately 51% already executed. Our projects for sugar expansion at Ajbapur and conversion of Hariawan and Ajbapur plants with refined sugar and 120 kiloliters per day distillery has been successfully commissioned. Our grain-based 120-kiloliter per day distillery will also get commissioned shortly. The K2SO4 project to capture value from distillery ash is another project in secular economy and is running on track. Our agri businesses, input businesses comprise of Shriram Farm Solutions, bioseed and fertilizers. Shriram Farm solution has continued to make inroads in the wheat feed market with its leadership position. Our focus on such a research-backed offerings in seeds, as well as plant nutrition and crop care, together with stronger brand and distribution is working in our favor. Clients who produce water-soluble fertilizers and biologicals are on track and will be commissioned by Q4 financial year '24. Our manufacturing of biological-based agri input is our conscious choice to promote sustainable and organic farming. Bioseed have said well during the rabi season, with growth witnessed across corn, paddy and vegetable. The product pipeline is strong, and we believe that this business should turn around over a period of 1 or 2 years. The fertilizer business has seen a strong rise in prices on the back of higher gas prices. The gas prices went up by almost 90% to $24 per million Btu, and these are a pass-through. The government has favorably revised energy norms with effect from October 1, 2020. Subsidy outstanding as on December 31, 2022 stood at INR 461 crores as compared to INR 450 crores in the same period last year. The industry is comfortably placed on this account as the government of India has doubled overall subsidy budget to INR 2.2 lakh crores for this year. Fenesta continues to record strong growth. We have seen healthy volumes as well as margin gains. This business will grow aggressively through new product portfolios where we are already adding facade, a wider geographical presence in domestic and international markets, a better product range and higher service quality. Order bookings has sustained at a healthy level. We are making good progress across outlined initiatives on growth and sustainability. These programs will strengthen businesses in face of volatility in coming years as well as place us better on the value growth. Greater emphasis is being put on sustainability of businesses, driving further benefits as we will build scale in selected business. With that, I will now request Vikram to take forward the discussion with the views on the operating and financial performance. Vikram, over to you.

Thank you. Good afternoon, everyone. We will now go through the financial highlights of the results of Q3 and 9 months financial year '23. The net revenues net of excise duty in this quarter were up 19% year-on-year at INR 3,236 crores. The chlor-alkali business revenues were up 3% year-on-year at INR 757 crores. Capacity utilization levels were at 86% primarily due to maintenance shutdown in the month of December at Bharuch, which is now currently operating at over 90% after the shutdown. Vinyl revenues declined by 33% year-on-year at INR 204 crores on account of lower prices which are now recovering. PVC prices were down by 42% year-on-year, and carbide prices were down 32% year-on-year. Product volumes were better. Sugar business revenues net of excise duty were up 29% year-on-year at INR 728 crores on account of better sales volumes of sugar led by higher domestic releases and exports. Ethanol sales volumes were lower at 231 versus 267 lakh liters. In terms of production, sugar production was lower at 15.5 versus 17.4 lakh quintals since 42 lakh quintals of sugar cane price this year is on B-Heavy instead of C-Heavy molasses last year and therefore, more ethanol. Ethanol production was higher at 840 versus 733 lakh liters for this 9 months. In the agri inputs, all businesses reported strong revenues. SFS increased 15% year-on-year at INR 512 crores, witnessing better price realizations and product mix. Bioseed increased 34% year-on-year at INR 107 crores, mainly attributed to volume growth across verticals in rabi crops. Both India and international businesses reported growth of 42% and 18% year-on-year, respectively. Fertilizers saw a 78% year-on-year increase in revenues at INR 652 crores, driven by higher gas prices, which is a pass-through and higher volume. Natural gas prices for the quarter 3 financial year '23 were at $24 per million Btu, up almost 90%. Fenesta delivered revenues of INR 178 crores, an increase of 31% year-on-year, led by higher volumes, both in projects and retail segments. The order book increased 11% year-on-year. Coming to profitability in Q3 financial year '20, PBDIT stood at INR 588 crores, down by 4%. Chemicals PBDIT at INR 218 crores versus INR 286 crores during Q3 financial year '22, led by higher power costs despite marginally better yeast yields. Cost of production continued to remain elevated, especially in Bharuch, where we are dependent on imported coal. Vinyl PBDIT was at INR 19 crores versus INR 125 crores during the same period last year due to significantly lower realization. PVC and carbide prices have recovered since November '22, and costs have taken a breather with better fuel mix, wherein we have been able to utilize more of biomasses fuel for our power plants in Kota. Sugar business PBDIT stood at INR 108 crores, seeing a decline of 18% year-on-year, as sugar prices were marginally lower and increase in SAP last year has not been fully compensated in sugar prices. Higher volumes of sugar partially mitigated this impact. Agri inputs business reported better numbers for the reasons stated above and better margin. Also, the government revised energy norms and fertilizer business retrospectively, having a positive impact of INR 49 crores, and Bioseed business, which had inventory provisions last year were not there this year. Fenesta PBDIT at INR 40 crores registered a growth of 87% year-on-year, led by higher volumes and margins in both segments. Nine months financial year '23 net revenues net of excise duty were up 29% year-on-year at INR 1,827 crores, and PBDIT increased by 11% year-on-year to INR 1,354 crores. Growth was seen across most business segments other than Vinyl, with some businesses like Fenesta and Farm Solutions growing more aggressively. With healthy cash flows across our businesses, our debt levels remain at comfortable levels despite the continuing CapEx. The circular net of debt as on 31st December 2022 was at INR 101 crores versus net debt of INR 4 crores on 31st March '22. Return on capital employed for December '22 was higher at 34% versus 29% for December '21. The Board has recommended an interim dividend of 290% amounting to INR 90.5 crores in the recent Board meeting. Total dividend, including quarter 2 is 520% amounting to INR 162 crores. Despite the uncertain macro scenario and slight elevated cost, we have performed well. We aspire to grow aggressively, maintain a healthy balance sheet and strong cash flows. We will now take questions that you may have. Thank you.

[Operator Instructions] The first question is from the line of Ahmed Madha from Unifi Capital.

So first question is on the Farm Solutions business. We have executed very well in the current season. So can you throw some light on what has helped the margin expansion in this business from 21% to 28%? And most importantly, how sustainable is that going into the next season next year.?

I think the Farm Solutions business because of the sourcing of the seeds as well as from the point of view of having the spread of the market that they have been able to maintain their margins. They've also been through a little overall of the distribution network, which has also helped in terms of streamlining that a little bit. But a lot of this depends also on what is the competitive environment, what is the monsoon situation, what is supply and demand. So I think it's a mix of many parameters, which ultimately affects the margins which come in on any business for that matter, even in this business. But I think we have a good product. We have a good line. So I think you should be able to maintain our margins fairly okay.

Got it. Got it. On the sugar side, what is the quota for exports this season? And how much you have exported so far?

The quota for exports, what we got was 10.6 lakh quintals. We executed 50% of that. And when we are contracting the thing, we will export the entire thing by March.

Okay, got it. Got it. And with what realization?

Realization of around 3,900.

Okay. Got it. Got it. And on the ethanol side, it was written that there is some inventory of ethanol there. So is it fair to expect that we're able to clear the inventory in Q4?

Yes, because these are your timing differences, depending on how the tender has gone and what you have produced. This will get even out in next quarter.

Got it. Got it. And what was the mix of ethanol this quarter between direct use and B-Heavy, C-Heavy?

So largely it is through B-Heavy.

Okay. Got it. The third question on the caustic side. So there is some softening in the prices globally. And even if we look at from, say, October to November, there is a significant decline in the prices. And as of today in January, there is -- the prices are much lower than the realizations within Q3. So do you expect any further decline in profitability in caustic, or we'll see -- we'll be maintaining the margins because the cost -- coal prices have also declined? So how should we look forward in the caustic business?

I think there are 2 parameters which impact this. One is what is the international price of caustic soda. That has an impact because people are open to import anything what they want, whenever they want. I think the second thing the industry has done well is actually pushed exports of caustic soda. That has helped, as I mentioned earlier also, that there is a surplus of caustic, so new capacity is coming. So industry is aware of that. So industry is moving aggressively to export, and that is one way to balance out the availability in the domestic market. So I've been considering that there should be a balance, but ultimately, we have to realize the caustic soda is a commodity. It moves up and down. Compared to a year ago, the prices have come down. But a year ago, the prices are much higher than what they were 2 years ago. So I think these are commodities which move up and down, but I think the industry attempt is to keep it at the balance and not let it go down too much.

And Ahmed, I would just like to add that the level that we've seen both in caustic and in PVC, where for the last couple of quarters we saw margins as high as 40%. Now these are, I would say, abnormal margins. Normal margins are in the range of 25% to 30%. And I feel that we should be able to sustain those kind of margins. Yes, PVC today is a little lower. But on an average, we should be at around 25%.

Okay. Got it. Got it. And one more question on the numbers side is that the tax rate has been very high for the last few quarters. In the earlier call, you guided that from FY '24, our MAT credit will be utilized and will be moving to 25% in tax regime. So how should we look at the reported tax rate going forward. And how much MAT credit is still left on the books?

See the MAT credit that is left in the books currently is around INR 53 crores to which we should exhaust in the current financial year. Next year, we will have to see whether you move to the -- yes, so we'll have to see whether you move to the new tax regime or not. So we will retake the call on a regular basis. We review the position and then we decide. [indiscernible] Net-net, we want to see that the cash flow is low. So if you see currently, we are paying outflow is equal to MAT, we'll ensure that we keep it low.

[Operator Instructions] The next question is from the line of Riya from Aequitas Investments.

This is Pratiksha here from Aequitas. My first question was with the news about China opening up how do we see demand consumption play -- demand supply playing out for caustic and PVC? And mainly, we've been saying that there's a lot of China participation, increased participation from China. So how does that impact the supply side? If you could share your opinion on that.

I think briefly, with China opening up again, what's going to happen is that the trade with China is going to go up. As I mentioned earlier, the China PVC is they are dumping virtually PVC into India. So that we've taken out with the government separately to impose some duties so that will balance that part out. But I think the Chinese economy pick up then the demand overall, the many products will pick up, which will actually impact and make sure that India chance to export also goes up a little bit. So that's going to be an advantage for us.

And how has chlorine prices been for the whole of last quarter? And if you could highlight the prices in December and January so far?

Amit, could you share that?

Yes. So the chlorine prices are improving. So our Q3 was almost negative 10,000, and now they're improving. So yes, so we should see an improvement in January and February.

Okay, but it's still negative as now.

It is still negative.

Okay. And thirdly, we expect our ECH plant to be commissioned in first half of next year, FY '24. So how is the pricing on that front? And do we still expect what -- to be able to ramp this up as per our original plan?

No, at least...

Yes. Amit, go ahead. Amit, go ahead.

See you need to look at the investment from a medium to long-term perspective. The reason why we put a ECH is that we see the positive market growing and the positive derivative is growing and ECH is the key raw material to be positive, right. So yes, there is pressure on prices currently in ECH. But in the medium term, we do see the market picking up and it is going to be an attractive play. That is point number one. In terms of ramping up, see it takes time to ramp up an ECH plan because it has to be that -- the product has to be qualified with the users, which takes 1 to 2 months in domestic, maybe 3 months domestically and internationally, it can take anywhere between 9 months approximately. So the ramp-up will happen accordingly. So it will take some time to ramp up the project. So this was all factored in when we had planned this project.

Okay. My next question, this time we have said that we have some unsold inventory on ethanol front, significantly higher as compared to last year. So any particular reason why we have such a big inventory build up?

So there were timing differences, Pratiksha, because the way tender has been put up and where the supply has to be made. But net-net, it all gets squared out over a period of 1 to 2 quarters.

Okay. Understood. And lastly, on Fenesta front, I think 9 months, we've almost had margin improvement of 700 to 800 basis points. So are these margins sustainable or where do we see margins kind of -- what are sustainable margins for this business?

The sustainable margins will be a function of what kind of product mix that we are having and we are going to launch. But we have to be confident to maintain the EBITDA margins in the range of 15% to 20% because also as the scale is going up, it has its impact on EBITDA. So we do see that we should see those margins that range going forward.

Typically, with the expansion that we have in mind in this division, what is the growth rate that we target in the medium term? I mean, I'm just asking from a midterm perspective, not really for a couple of quarters or something.

See Fenesta should grow in the range of around 25-plus percentage year-on-year.

[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor & Company.

Indeed a very elaborate presentation, your opening commentary. It all serves the purpose for which the call has been led. So many thanks to the team for working for us analysts, investors and doing the lot for us in the type of input we get from the size of the company like DCM. So kudos to the team, firstly. Sir, if we take the CapEx part first, we are spending around INR 2,800 crores worth of projects are on track. And I think the total CapEx is INR 3,500 crores that we have envisaged. So how much have been spent for 9 months? What is the CapEx target for the coming years? And when is the entire thing will get consummated? And post that CapEx, how would be the revenue profile for various verticals?

Amit, you'll have to look at that.

So see, we have spent -- in chemicals we spent close to about INR 1,250-odd crores. And in sugar, as I said, it's almost complete. So the sugar CapEx was close to about INR 550 crores. We will spend close to about INR 500 crores already in sugar as well. So that's the kind of number that is already been spent. That's point number one. In terms of revenue, see as I mentioned a while back, the ramp-up will take time. So our capacity utilization in this first year should be in the Chemicals business, should be ballpark around 50%. And then it should get ramped up over year 2, year 3.

Sir, for the chemical, can you give breakup? Is the entire contribution to INR 1,250 crores towards the caustic part or provide the breakup of the sales.

Can you be a bit louder? I didn't get your question, please?

Sir, for INR 1,250 crores on the Chemical segment, please provide the split where have we spent the breakup if you could provide.

I don't have it right away, sorry, Saket. Maybe I will send it across to you. I don't have it right in front of me.

Sir, you -- Mr. Amit you spoke about the chlorine negative being lower than what the December averages where. So can you give some color in the vicinity what have -- from 10,000 negative, whether it is 6,000 or 9,000 any ballpark number?

It is below 5,000 now.

It's below 5,000 now.

Okay. And sir, I think the geographies also, there is variation. I think to North had -- does not command that much of a negative for chlorine as the West is. So you are giving the average for both Bharuch and -- both the regions, Kota and Bharuch, or this is -- how to take this number?

This is Bharuch. See Kota for almost 30%, 35% gets consumed in-house. So -- and that's a smaller complex. The larger complex is Bharuch. So I'm giving you Bharuch numbers.

Okay, right. Sir, if we take this Slide #16, sir. Yes, Slide #16 that the ECU realization mentioned here about the December is at 38,628. So -- and our averages for the December quarter was higher of 43,000. So there was a further correction that has happened -- that is a further negative of chlorine that is factored in here for the ECU being at 38,700 I mean 40,000 levels?

This is primarily because of live prices coming down.

Come again, sir.

This is primarily because of live prices coming down, caustic soda prices coming down.

Okay, sir. Sir, net of the realization, if we take the ECU realizing for, say, December onwards, they are below the 40,000 number, sir.

Yes. So they are around the December levels.

Okay. No, I was just pointing out to the 38,628 number. Sir, if you could explain from this 38,628 number, where are we, northwards or southwards?

So see in our kind of business, it's difficult to give you an exact number. As I said, it is refound plus/minus 1,000.

Correct, sir. And again, on Slide #17, as been mentioned that oversupply due to new capacities and lower demand, lower-than-expected exports. Sir, as you mentioned that there has been a good tick in the amount of export that has happened when a competitive number is there. So what are you trying to explain as when you mentioned lower-than-expected export.

Yes. So see, we had good exports in the first 2 quarters. However, in Q3, the exports have been less than what we expected for the growth that we expect it was much more. So this is more of a market condition. And what's happening is that with China opening up, I would say, it is opening up because China manufacturers caustic more in its northern provinces where the production did not take a hit, right? And they were actually increasing production and pushing their production in the European countries, right? And Southeast Asian countries and which led to lower-than-expected exports in Q3.

Sir, I missed your last statement.

I'm saying, in first 2 quarters, there were a good amount of exports in Q3, the quantum of exports from the country has been lower than what was expected, what we expected we can export as an industry. It was lower than that.

Okay. And what is the contracted volume, sir, earlier, I think so you were giving us some idea of how -- from the best what was the contracted volume for a quarter or 2 quarters ahead.

Numbers are mentioned in Slide #17 on industry overview section.

Okay, sir. I have to look at that. Sir, if we take the correlation or the vinyl and the caustic part, as mentioned that as the chlorine consumption improves, it could add to the ECU realization. So going ahead, do we see stabilization in both the caustic as well as the vinyl businesses and the volatility that one or the other has experienced over the last say 3 to 4 quarters is now subsiding. Is this a good assumption going ahead?

Saket it is difficult given the macro environment, both to the geopolitical environment, the COVID fears, there are some supply chain disruptions, the climate impact. I think it's very difficult to give you an estimate as to how things will pan out. Yes, there is a correlation at times that correlation doesn't work also if there are supply chain disruptions. So I think it's an open field. But yes, we do expect, as I've mentioned, we are operating at 90% capacity utilization. Both in our caustic as well as in our PVC. And we expect that we should continue to operate at those levels.

Sorry to interrupt, may we request Mr. Kapoor to please rejoin the queue. We have participants waiting for their turn. [Operator Instructions] The next question is from the line of Rohit Nagraj from Centrum Broking.

I joined the call a bit late, so probably I must have missed out this point. I just have one on PVC front. So we have...

Sorry to interrupt you Mr. Nagraj but your voice is not clear, sir.

Hello? Is it clear now?

Mr. Nagraj, your voice is breaking a lot. We are unable to hear you sir.

Yes, one second. Is this better?

Yes, please go ahead.

Yes. So the first question is on PVC. I might have missed the comment earlier during the initial remarks. So whether the Chinese supplies have been curtailed or the dumping has stopped as per our assessment?

No, that has not happened. Until about 6 months ago, there was antidumping duty, which is applicable on any product coming in, PVC coming in from China. Unfortunately, that antidumping duty time period expired. So industry has taken it up again with the ministry saying a $3 billion antidumping duty against China because they are dumping at a much lower price, than the international prices also, and that is affecting the Indian manufacturer. So this issue is in discussion with the government.

Sir, second question is on the epichlorohydrin. So we -- and there is another competitor who has already put up the capacity, we are also putting up the capacity, however, the domestic demand is maybe 60% of the total capacity. So what are our plans in terms of utilizing this incremental capacity? Are we looking at exports market? And have we thought about it, how are we going to utilize it?

Amit?

See, one, the total domestic demand is about 80 kilo tons per annum. And the capacities, you just talked about one capacity which has already come in and the capacity that we are putting up will add up to close to about 100 kilograms per annum. Now -- and but then historically, it's all been imports. So it takes time for import to get substituted. And till that time, yes, there will be a mix of exports as well. And we do have a cost advantage on ECH in terms of chlorine, which is either negative or negligible. So we will also look at both options of exports and domestic.

Right, fair enough. Sir, just 1 last clarification. Again, I might have missed out in the initial comments. On the caustic front, any particular user segments, which have seen a demand contraction for the caustic because of which the ECU has declined apart from, say, chlorine negative realizations?

No. I don't think that's happened. There is -- I don't think anyone has really reduced the demand. What has happened is that new capacity has come in, as was mentioned earlier also. So that has led to excess availability. So industry approach is how do we export more. So that the surplus in the Indian market moves out of India. So it focuses on that side. But it's good to see down the line that the consumption side of caustic will also go up. There is expected to be growth in the aluminum segment and a couple of other segments. That is the consumption of aluminum -- of caustic soda. It will go up over the next couple of years.

The next question is from the line of Rahul Veera from Abakkus.

Again, the first question to the previous participant, if 1 million ton incremental capacity gets added, it's almost like 20% of the current existing capacity.