GHCL Limited (GHCL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the GHCL Limited Q3 FY '25 Earnings Conference Call hosted by Emkay Global Financial Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Meet Vora from Emkay Global Financial Services. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. Thank you for joining us on GHCL's Q3 FY '25 Results Conference Call. I would like to welcome the management and thank them for giving us this opportunity to host them. We have with us today Mr. R.S. Jalan, Managing Director; Mr. Raman Chopra, CFO and Executive Director of Finance; Mr. Manu Jain, General Manager, Investor Relations and Finance. Before we begin this call, I would like to point out that some statements made in this call may be forward-looking, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I shall now hand over the call to the management for their opening remarks. Thank you, and over to you, sir.

Thank you, Meet. Thank you very much. Good afternoon, everyone. Welcome to the GHCL Earnings conference call for the third quarter ended 31st December 2024. Our results and the presentations are available on the stock exchange. Along with me, I have Raman, Executive Director and CFO; and Manu Jain in Finance and Investor Relations. Q3 has been a healthy operational performance as we delivered in a moderating external environment. Our business approach prioritizes the operational excellence across procurement, production and marketing. We have reported better production volume and have seen better cost control outcomes following our focus on efficiency. This has transpired into healthy financial performance in Q3. Let me share a brief perspective on the environment. In India, demand growth for soda ash has been better than the global markets. Concurrently, we have seen higher volume of cheaper imports coming into India. We expect the domestic demand and pricing scenario to be at bottom and demand should improve going forward due to the combination of following factors: MIP, Minimum Import Price on soda ash, which will provide price protection from unchecked cheaper import coming into India. The second, imposition of duty on import price of solar glass, boosting domestic production. And the third, growing push for renewable energy. Union Budget '25-'26 has increased allocation towards solar power sector. This shall benefit the demand of soda ash, which is an essential for manufacturing solar glass. In the external context, the Western economy faces suppressed demand for soda ash owing to the adverse consumption in spend and poor business sentiments. China has witnessed strong demand growth of 10% in 2023 and 19% in 11 months of 2024. This has now started to moderate. As a result, prices had been subdued. Through all of this, we continue to focus on our strength in order to deliver optimized performance. We are confident that the GHCL is well positioned for the future. And as the industry and economic activity picks up, our performance will further improve. On the growth initiative, our strategic projects are progressing well. We have received environmental clearances for the greenfield project. Work on this and our new salt field in Gujarat is underway. These projects will take around 3 years of completion. Commissioning of both our vacuum salt and the initial bromine project is as per plan. In 2026, it will get completed, which will diversify our product mix. These programs have been planned to strengthen our ability to deliver a healthy performance in all operating environments and to drive predictable momentum. As always, we are committed to driving shareholders' value through strategic action and consistent execution of our plan. Thank you for your continued support and confidence in GHCL. I will now invite Raman to provide further details on our financial performance.

Thank you, sir. Good evening, everyone, and a warm welcome to our earnings call for the third quarter ended 31st December 2024. We have reported strong results on the back of higher utilization, operational excellence and cost control measures. This has resulted in better margins, higher profitability and a strong and healthy balance sheet. Revenue for the quarter came in at around INR 807 crores, which is more or less the same as compared to INR 813 crores in the corresponding quarter of the last year and INR 810 crores compared to Q2 of this year. The operating revenue were impacted by cheaper imports into India. EBITDA for the quarter stood at INR 259 crores as compared to INR 165 crores in Q3 of FY '24 and INR 228 crores in Q2 of this year. For the quarter, EBITDA margin came in at 32% compared to 20.3% in Q3 of last year and 28.2% in Q2 of FY '25. Our margins increased due to higher production, operational efficiency, reduction in input costs, resulting in overall lower costs. PAT from continuing operations increased from INR 168 crores compared to INR 100 crores in corresponding quarter of last year and INR 155 crores in Q2 of this year. For 9-month period ended 31st December 2024, we generated INR 556 crores in cash profit after tax. Out of this, we have spent around INR 240 crores on CapEx, around INR 114 crores on dividend to the shareholders, around INR 82 crores towards the payment -- repayment of loans, while working capital released around INR 20 crores. We are a debt-free company with our cash and investments stood at around INR 1,036 crores and a net cash surplus of INR 920 crores as of -- as at the end of the quarter. With this, I conclude my comments and would now request the moderator to open the forum for questions and answers. Thank you.

[Operator Instructions] The first question comes from the line of Aditya Khetan from Smith Institutional Equities.

Sir, my first question was on to the soda ash side. As there is an imposition of MIP into the domestic soda ash market. Sir, if you can help us understand out of the total imports, how much imports like were below the MIP? And with this imposition, you think like the pricing itself will come up or the imports quantum also can go down?

Yes, Aditya, you had 2 questions. One is that whether the -- any import which was coming below the MIP price, number one. Number two, whether this will help to improve the price or that will improve the quantum of reduction into the import of the volume. See, at this point of a time, our understanding is that definitely, this MIP will help to kind of taper down the import volume. And this will be getting reflected in next maybe 1 or 2 months because some of the import, which has already been kind of contracted, some of the countries from where these volumes are coming cheaper than MIP prices will definitely get kind of reduced. I personally believe that improvement in the price may take a little longer time, but the volume benefit should start accruing going forward, maybe in a month or two.

And sir, how much proportion of the total imports were below the MIP earlier?

We don't have -- Aditya, at this point of time, we don't have a data that whether the volume was kind of below the MIP price, how much volume was there because these prices were very volatile. And therefore, it is very difficult to predict that how much volume was there below the MIP price. The benefit which we will be getting because of this MIP, the price will get stabilized now.

Sure, sir. Sir, on to the numbers, if you look, so this quarter, improvement in your gross margins and the EBITDA margins is largely led by the reduction in the raw material prices only. Any idea, sir, like which is the major raw material, like I believe salt is the major raw material? And if there are others like -- so which raw material has seen a big dip in this quarter?

See, Aditya, there are 2 or 3 reasons for this improvement in the margin. One is that if you look at quarter-on-quarter, I mean, as compared to the last quarter to this quarter, one is the volume of production has gone up. That's number one. Second is it's not the price of the raw material. This is all our operational efficiency, which we have been able to build. So it is not a question of price reduction in the raw materials, it's primarily because of the efficiency of the operation and the various measures which we have taken in improving our cost efficiency.

Okay. But sir, the volume jump is not reflected in the top line. I believe top line is subdued only when we look on Y-o-Y and on quarter-on-quarter basis. But the raw materials, definitely, like there is some change which has happened. Is it largely because the improvement in the product mix, you mean to say like the product mix towards sodium carbonate has improved bicarbonate and that is why it has improved?

No, Aditya. Like I said, if the volume of production goes up, obviously, the efficiency and the other measures which we have taken for improvement into the efficiency has led to the reduction in the cost. However, the volume, as you rightly said, volume quarter-to-quarter, small variation will be there and volume has not dropped also. So it's primarily because of the cost reduction measures, the margin has improved.

Got it. Just one last question on to the bromine business. Sir, we are maintaining from the salt -- so from the recently acquired salt parcel, that would be completely used for captive? And what is the outlook on to the bromine business for the next 2 years?

Yes, Aditya, at this point of time, we have the process of the new land, which has been allotted to us. The work has just started on the survey side, and it will take around 3 years of time to get completed that project. And this will primarily be used for our captive consumption. The number two, you said bromine outlook. See, bromine at this point of time, our bromine setup, which is a very small volume of approximately around 2,500 to 2,800 tonnes, which will start by September, October. We are in the process of marketing those products. And obviously, we will be selling to the -- mostly into the export market.

The next question comes from the line of Nasir Hussain from Fintech Research Advisors Private Limited.

I just have two questions. One is, could you help me with the EBITDA per tonne for this quarter and the capacity utilization?

See, Nasir, broadly we are almost 95%, 97% kind of utilization. And EBITDA per tonne, we don't have a specific number of EBITDA per tonne. We have given the numbers on the basis of -- on the percentage of EBITDA.

Okay. All right, sir. Another question is that since we are already maxing out our current capacity, when can we expect to further expansion? Or is there any plan for de-bottlenecking?

Yes. The plans are already there. Like I said, bromine project is there, the vacuum salt project is there. In terms of the Soda Ash also, we are trying to maximize the volume, if it's possible. The team is working on that. And hopefully, something will come out of that. And as soon as it comes out, we will report back to the [indiscernible].

The next question comes from the line of Saket Kapoor from Kapoor & Company.

Sir, in your presentation, you have alluded to the key drivers going ahead, growth drivers. If you could dwell more further into the same. What are the -- and how are they going to improve the EBITDA in the long run? Presentation page number 12, you have spoken about vacuum salt bromine project, the greenfield project and the raw salt production. If you could just spare a minute and explain the benefits which with the company and organization would derive going ahead in the near future?

See Saket ji, as you rightly said, vacuum salt and the bromine project. We have already explained in the earlier calls as well that these are the two value drivers, which are in the near future. Particularly, if you look at the vacuum salt, we are going to produce this vacuum salt from a waste energy. That means the conversion cost of that where the lot of energy is required will not be there. The margins are reasonably good in that. So far as the bromine project is concerned, that also work has started. That's also on the existing location, which is a kind of, I would say, trying to take gold out of the existing processes. So that project also will add to the kind of a good EBITDA margin or addition to the total value. Of course, the greenfield and the raw salt production is a slightly longer-term view. And that will happen in the next 3 years of time. And all put together, definitely, this will improve the margin of -- overall business margin will improve. How much? It will all depend on when it gets executed and how much kind of market situation at this time. All these things will get added. But definitely, this will give you a better basket of the product, and this will also add some additional margins of the business.

Sir, for vacuum salt and the bromine project just to conclude for this part. For vacuum salt, that will get commissioned for FY '25, '26 itself or both these projects also will be benefited in FY '26?

So this -- both the projects will get commissioned in '25, '26. One will be approximately around July and the second one, approximately in September.

July '25 and September '25?

Yes.

Perfect. Sir, and when -- you were mentioning about the efficiencies that have been factored into our numbers and the improved EBITDA. So firstly sir, these are the permanent efficiencies that we have built into the system or there's any one-off because we see our other income also contributing significantly on a Q-on-Q basis, which has gone up from INR 17 crores to INR 29 crores. So because I think the operation, yes?

You're right on that. Let me explain two points. One, like I said, the cost initiative, lot of work has been done. And you know that last couple of years, the way the management has worked on the cost efficiencies, that has definitely given a benefit on the overall our margins, okay? And that journey or the sustainability of those cost initiatives will be permanent in nature. In terms of the other income, as you rightly said, other income has two components. One is a, what you call -- one office in what you call -- in Mumbai we had, that we have sold, that had added to a 1% on the EBITDA margin. So that's one time. The second is treasury income, and that has also added. Treasury income will be more like a kind of -- it will continue for the time being till the new greenfield project comes in. So maybe you can say 1% of that other income, which is a onetime can be lower on this. But other cost initiatives will continue. How much of that will get translated into the margin and how the market dynamics will be there in the coming quarters, that we have to watch out. You know the volatility in the market overall. But our execution and our initiative on the efficiencies will continue.

Just to continue, Sir. For the Mumbai office, what have been -- how much have we realized? And what have been the gain?

There was a small offices, which I think around INR 8 crores to INR 9 crores kind of a number we have got what you call, benefit out of that, right, Raman?

Right.

Approximately around.

8 crores we have realized out of the sale?

No, no. 8 crores is the benefit we got, is the gain.

Okay. Sir, although it is evident that the cost efficiencies for which we are working particularly have started -- we have seen reaping benefits. But when we look at the power and fuel, water expenses line item, there is fluctuations in the same set. If our volumes have remained flat Q-on-Q, what explains this...

Saket Ji. Number has to be looked at from the production perspective. Production in this quarter has gone up.

So that is -- we are getting inventory currently then sir, because the volume, purchase -- the inventory side has gone up. That understanding is correct?

Yes.

Okay, sir. And lastly, sir you have...

Saket, sorry to interrupt you but can you leave the line?

I will join the queue again.

The next question comes from the line of Sangeeta from Cogito.

Sir, what I wanted to understand is that are greenfield soda ash project will, I think, commission in about 5 to 6 years, right? Is that correct?

No. It's 3 years.

Three years. Okay. And raw salt will be in 3 years also?

Yes.

Okay. So for the next 3 years, therefore, our volume growth drivers are going to be any de-bottlenecking that we do in our existing capacity plus the vacuum salt and the bromine projects. Right?

Yes.

So is there any indication you could give as to how much, let's leave the de-bottlenecking thing aside because that may be difficult to predict immediately, but how much is the vacuum salt and bromine likely to add to our EBITDA were to be commissioned fully?

See, our understanding at this point of a time is that bromine will give us approximately around 40% to 50% EBITDA margin, the revenue of the bromine. And the revenue will be in the range of around INR 60 crores. Broadly, I'm just giving, INR 50 crores to INR 60 crores kind of a number.

INR 50 crore to INR 60 crore per annum or for quarter?

No, no. Per annum. It is a small volume, 2,800 tonnes. We are talking about only for this existing 2,800 tonnes that we are planning to produce in the current year, '25, '26. Vacuum salt will give approximately around INR 100 crores, INR 120 crores once the fully operations are being established at around INR 100 crores, INR 120 crores. And the EBITDA will be in the range of 30% to 40% on this volume.

30% to 40%. Okay. So that means roughly we're looking at, say, maybe INR 35 crores to INR 40 crores coming in from the vacuum salt project and maybe about INR 20 crores, INR 25 crores coming in from the bromine project?

I think so, yes, broadly.

So that means our growth in our profit is really going to be dependent on the price increases that happened in the soda ash, right? Largely?

Yes Ma'am, yes.

Okay. And sir, compared to where we were a year ago and 2 years ago, if our prices of Soda Ash are say 100 today. What was the price a year ago? And what was it about 2 years ago?

See Sangeeta. If I can say, in terms of the Soda Ash, since you are talking about this a little bit over medium term, let me give you some perspective of how do we look at this business and how the margin has been over the period of last many years. First and foremost, EBITDA per tonne has been growing every year by year, except maybe in the last 1 or 2 years just because of the volatility in 2022, '23, because of that abnormal situation, the EBITDA percentage of the EBITDA per tonne was significantly higher. But if you look at FY '22 versus FY '24, we are significantly higher in terms of the absolute EBITDA and even in terms of the percentage of EBITDA also. In FY '22, our EBITDA was approximately around INR 740 crores, Roughly, I'm giving you the number. In FY 2025, INR 900 crores. And if you look at FY '21, it was INR 400, and roughly around I am giving you again numbers are fully around INR 500 crores. So INR 500 crores to INR 750 crores and then to INR 900 crores, that way the number, if I remove this FY '23, which was a normal period, this is the way the number has gone. I hope I'm clear on this.

Yes, yes. So sir, here, there was also some element of volume growth that you would have seen, right, in those period. My question is that now we are at about 90%, 95% capacity utilization. So whatever volume growth we get from here will be -- cannot be very large, right, because we're going to try to get back some brownfield expansion or efficiencies, et cetera. So it's likely to be, I am just guessing, maybe 2%, 3%, 4% or under 5%. So are key driver and given the fact that we have seen pricing pressure on Soda Ash also, would it be fair to say that our main driver will now be a recovery in soda ash prices?

Ma'am, there will be two possibilities, and there are 2 ways -- two points where the recoveries will happen. One, as you rightly said, recovery in the pricing of the Soda Ash, which likely should happen because the overall globally the way the pricing at this point of time is there, will not be a long-term sustainable prices. That's number one. But the second which is again very important, which is in our hand, which we have been driving for over a period of time, like you have seen in this quarter also, there was a kind of a significant cost optimization. And that will be the another area of kind of expanding your margin percent or the percentage of margin.

Right. Right, right. No, that I appreciate. And I think congratulations to your team that you've been doing this consistently year after year. So I do understand that. What I was trying to understand was that say from an external environment point of view, if say the volumes recover hugely in soda ash, we may not be able to participate completely because we are kind of maxed out on our capacity, right? So what benefits us from any improvement in the external environment is really the pricing?

Yes, very right.

Yes. Okay. And when prices go up, does that also lead to a commensurate increase in raw material prices?

No, these amounts are two interrelated things. Cost has a different, what we call, different equation and the pricing of soda ash has a different equation. So if I say there are two things like -- one of the understanding what we have is that today, the Chinese soda ash prices are below the cost of production of China. So this is a kind of understanding that the recovery in the Soda Ash prices should happen. And the benefit to us will definitely come; of course, in terms of the volume, it will not come, but in the overall margin, definitely this will happen.

Right. And sir, what about the imports from Turkey and [indiscernible]to remain sort of subdued, right? And that's where a lot of the imports were also happening. So how do you see the scenario from those markets?

See, our understanding at this point of the time is that at this point of time, the imports are happening in a major way. And as I mentioned in my opening remarks, this MIP definitely will put a kind of a roadblock on the larger volume. Of course, the volume will be coming in. But overall, the global Soda Ash prices because China is kind of a 40%, 45% of the volume, right? If China has kind of some recovery into the pricing, definitely, that will have an impact on the global pricing, and that will help us. .

The next question comes from the line of Gaurav from Capital Farming Consultants.

So just building on the last question that Ma'am was asking. So if we say that the current ongoing prices in the Chinese market is far below the cost of production. And as a supplier, as a manufacturer, you also feel that the ongoing prices are not sustainable in the medium to long term. So just a hypothetical question just to get a sense of the expectation. And as a producer, what do you think that the sustainable prices could be viz a viz the ongoing prices. That is my first question. If you can help?

So Gaurav. I don't think I'll be able to answer this question in a rightful manner because hypothetical question is, I would restrain to kind of answer that question. But like I said, hopefully, the things should start recovering because of the overall, one, scenario in India, as I mentioned, the demand growth likely in '25, '26 would be significantly higher because of the solar glass consumption will increase. So overall demand in India willing should increase significantly. And even in the globally in the Soda Ash are being sold at this point of a time below the cost in China, that should also lead to kind of some increase in the pricing but how much, I don't think we will be in a position to answer that.

So my second question is, since we -- most of our production is being sold in domestic market only, right? And now MIP in place, right? So based on your study, based on your study, how much more market share we can gain because now since you are saying that MIP being in place, probability of imports in our country would go down, right? And there will be -- there might be an opportunity that we might gain the market share. So what is our current market share and to what level it can go up?

Gaurav, as you rightly said, our volumes are not going to go up. And therefore, the market share cannot be increased. Market share will remain almost same.

Okay. Okay. So volume-wise, you are saying or market share-wise due to this MIP, no much benefit is expected to us, only benefit that we can expect is that increase in price, right?

Right. .

That's great. Last question from my side. Since we have expanded our capacity of sodium bicarbonate from 60,000 tonne per annum to 120,000 tonnes per annum in last financial year. So in current financial year reporting 9 months numbers, what would be the revenue contribution from sodium bicarbonate capacity in terms of percentage?

Like we said, our number will be likely to be around 100,000 this year in terms of the volume.

In terms of the volume or percentage of revenue share?

I don't have a ready number.

Yes, around 9%, 10%.

9% to 10%. .

Okay. The last one, just to understand, in the emerging applications, we have also mentioned that the battery manufacturing for electrical vehicles. But we have seen that most of the electrical vehicle batteries are around the lithium ion technology only, right. So any major development of research that is happening which gives us a promising maybe some way down the line 1 year, 2 year, 3 years down the line that which can boost consumption of soda ash in a significant manner? And any such things you have heard about and you would like to share with the investors and analysts on this call. Am I audible?

Yes you are audible, Gaurav.

Okay I'm not sure if I was able to convey to the management or management is on call.

Give me one moment? I'll have a check on that. Ladies and gentlemen, we have lost the line of the management. Please stay connected while I rejoin the management. Ladies and gentlemen, we have the management reconnected. Gaurav, if you can please ask your question once again.

Yes. sure. Sir, I was asking like in emerging applications, we have mentioned that Soda Ash is also being used in battery manufacturing for electrical vehicles, but most of the batteries used in electrical vehicles, specifically in India are around lithium-ion technology. So any major development or research that you have heard about -- which can boast significant consumption of soda ash in electrical batteries in maybe 1 year, 2 years, 3 years down the line.

See Gaurav two -- I would say that 2 things I would like to comment on this; One, this lithium ion major consumption will be globally. India, at this point of time, we don't see any major -- this thing, but however, this time, the Government of India in the budget, they did announce some incentive for the lithium ion battery. How does it pan out? We have to see that. But if the lithium ion battery's consumption globally improves significantly, that will also help in a better, whatever, demand-supply balance globally, and that will have an ultimately impact on the -- what you call the benefit to Indian producers as well.

The next question comes from the line of Jainam Ghelani from Svan Investments.

Sorry, I joined the call a bit late, so pardon me if my questions are repetitive. Sir, what was the volume sold during this quarter in terms of growth?

See, we normally don't give the number of the volumes sold. We only give the revenue. And...

Yes. But sir, in terms of the year-on-year, in terms of year-on-year, if you look at the -- our revenue per se, which was -- which we reported on most of that...

Yes, I'm saying, These numbers are almost flat, that's the point I'm trying to say. The revenue number are flat.

Yes, the numbers are flat in terms of quarter-on-quarter. So probably if you look on the year-on-year also, we are down by INR 27 crores, INR 30-odd crores. So can you help us understand whether this -- I mean, decline in the revenue by INR 30-odd crores is largely due to volume or it was because a bit of a realization.

Primarily because of realization. Primarily is the realization.

The volume has largely remained flat.

Yes.

Now with the MIP in place in the new segment of the Soda Ash consumables coming up in place, how do you see our volume growth going ahead from the current level?

So obviously, in this quarter, some improvement should happen, but it is yet to be kind of the impact of this MIP will take you maybe 1 or 2 months. And after that, definitely some improvements will happen in the volume. However, we have a limited volume. So therefore, this cannot be a very significant improvement in the volume.

But sir, with this back to 29% yield, 30% margin. Is this margin a sustainable margin for us now? Or we can see compression here as well?

See, depending upon the volatility, you know the volatility in the market. Our efforts are there on the -- what you call cost optimization that we are doing very nicely, and that generally will continue. Marginal, here and there, margin can happen on a quarter-to-quarter basis. But in the longer term, if you look at it, definitely, these margins should improve.

And sir, any update on the greenfield CapEx as to when do we expect it to commence operations?

We have started initial work on the CapEx after the environmental clearance has been received, and the things will progress now.

The next question comes from the line of [ Sanjana from FWC ].

Sir, tentatively, our completion date for the greenfield project is somewhere around February or March of 2028. Can you give us a CapEx schedule till then like what will be your annual CapEx number?

Sanjana, at this point of time, I will not have just ready answer on this. But in the overall, in 3 years of time, approximately the number will be -- and that will be largely in the '27 -- '26, '27 and '27,'28 the major portion, I would say 80% of volume will be -- the number will be coming from that -- is that right Raman? 80% will be coming from that, depends on that number. The number in the '25, '26 will be in the range of around INR 300 crores.

Okay. Okay. Understood. Sir, one more question I had on the MIP. Is the government exploring an extension for this -- for the MIP considering that it was announced for such a short period of time?

See, generally, what happened, they announced for a period of time, and then we have to apply for another extension, and generally, you get that extension.

Okay. So when do we have to apply to this extension?

After maybe 2, 3 months because this period is upto June. So we have to apply maybe in April, May.

The next question comes from the line of Vignesh Iyer from Sequent Investments.

I wanted to understand what percentage of limestone and salt have been backward integrated for the soda ash specifically as of now. What percentage is backward integrated and what percentage do we procure from outside?

See, if you look at the salt, it is around 30% we are backward integrated. And once this green -- the new land which has been allotted, that number will significantly go up. In terms of the limestone, I would say it is probably around maybe 20%, approximately around 20%, 25%.

Okay. And when would this new salt capacity start, and how much percentage of our older facility of Soda Ash 12 lakh tonnes would be catered to from the new capacity?

At this point of time, our understanding is that approximately around another around 30%, 35% of the current capacity will get freed up from the new salt field. And the balance will go to the new soda ash plant, which we are putting into this into the salt, in the Kutch area.

Okay. And for limestone, do we have a long-term contract to procure it? Or is it on a -- how is it having the arrangement with the supplier?

It generally happens on a year-to-year basis.

Ladies and gentlemen, we have the next question from the line of [ Khushwant Pahwa from KPAC ].

I have a couple of questions. The first is around cost optimization. I see margin improvements quarter-on-quarter happening because of cost optimization, and that's good to see. Just wanted to understand that if I keep the price fluctuation aside, purely from a cost optimization perspective, do you think we'll continue to see benefits flowing through in the quarters ahead? Or are we largely there in terms of the journey where we wanted to reach. So that's my first question, just some trajectory on what more on cost optimization we can see over the next 2 to 3 to 4 quarters.

See, first and foremost, Khushwant, giving a number will be very difficult because this is a...

I am not asking exact numbers, but I'm saying generally, are we there in terms of whatever the management aspiration was? Are we there largely or we are midway through -- just some perspective?

Khushwant, our aspiration changes every year. Once we achieve one milestone, we go to another milestone, and we keep on shifting our goal post on the higher side, and this journey will continue. And you must have seen in the last many quarters that, that has been delivered by the management, and that is where our strength is? And that strength we are leveraging to the maximum extent, and we'll continue to have that.

Understood. Sure. So you say that the current level of margins, keeping the price fluctuations aside, are maintainable?

It should be.

My second question is, I remember the last conference call, you had mentioned that as the expansionary monetary policy cycle starts, there should be some improvement in the prices that we should see. I'm not asking for any quantum, I don't want any specific guidance there. But in your experience, we have seen U.S. embark on the expansionary monetary policy cycle, there have been rate cuts. So in your opinion, typically, how much lag is there before we start seeing some improvements in pricing. And again, I don't want any numbers. I'm just saying in terms of time lines, what is your thought process broadly?

So Khushwant, as you know that the way the overall, the world is such a volatile scenario at this point of time. You have seen in a couple of policy decisions, which has happened in the recent past. After the leadership change into the U.S. How that will shape up into the global market, it is very, very kind of unpredictable at this point of time. But as I said, logically, it looks to be that once the demand scenario improves overall, and since the -- ultimately, the business makes sense only when you have a margin or you have a margin or your prices are not lower than -- prices are lower than the cost. Like in China, I said that the people are selling at this point of a time, lower than the cost. So this leads to kind of a belief that some improvement will happen. How much it will happen and when it will happen, it is very difficult at this point of a time to kind of guess on that.

Understood. Understood. If I can just ask one more question. In terms of our cost of production vis-a-vis China, how much -- purely from a cost of production perspective, how much does it vary in India vis-a-vis China? I mean do they have significant advantage over us in terms of the cost of production?

Khushwant, I'd like to put the two kind of a process of production; one is the natural soda ash, natural soda ash are in terms of the cost of production, they are cheaper, whereas the synthetic soda ash in China, particularly, there are two what you call, processes, one is the Hou process and one is the Solvay process. Hou process are costlier than the Solvay process at this point of time because there's slicing of the ammonium chloride which is a fertilizer, is much below. And therefore, the net soda ash cost is much higher. We as India vis-a-vis China, our costs are very significantly competitive in terms of China. That means we are not -- they don't have any major advantage in terms of the cost of production in the Solvay process.

The next question comes from the line of Saket Kapoor from Kapoor & Company.

Thank you, sir, once again for the opportunity. Sir, as mentioned in our presentation also and earlier alluded also that the global market for Soda Ash grows at a rate of 2.5% to 3%. That is generating an incremental demand of 2 million tonne -- metric tons per year. So sir currently, what kind of global -- capacity additions globally, are we looking into the various geographies, who are the major players?

Saket Ji, the new global capital has almost came in, like you know the Mongolia plant has come in. In China, another soda ash plant has also come in. We are not seeing a very significant amount of new investment coming in the near future. Of course, in the longer term, some of the plants has been announced in the U.S. And hopefully, I think that will kind of lead to some new export, but that will take a few years of time. So it is not likely to happen in 1 or 2 years.

And sir, your presentation also speaks about the capacity of getting reorganized in Europe. So there will be some capacity that can be off the table because of the high cost. So that -- it will be a balanced market going ahead or maybe a deficit market also, sir, if the demand outlook was...

Let's hope, Saket ji, that happens.

Okay. And sir, as you mentioned that MIP part being imposed on Soda Ash, there is also some duty protection for solar glasses, I think so, so that is also going to be -- there is some anti-dumping duty for textured, tempered coated and uncoated glasses from China and Vietnam was also imposed in the month of December for another 6 months there, this was...

Saket Ji, there are two developments have happened on this class. As you rightly said, there is anti-dumping duty on China and Vietnam, and that is very significantly higher, and that will definitely give a much better leeway to the solar producers in India. And that's the reason we see a good amount of growth in the '25, '26. And in terms of the earlier there was -- basic duty was removed on the import of solar glass that has been reimposed a few months back, and that will also -- overall solar glass environment in India has been significantly improved, and that will definitely improve the soda ash consumption going forward.

Okay. So just to conclude on the point of solar glass products, you earlier also alluded in 2024, also that a lot of capacity are in the anvil from the large corporate who are trying to set up big solar lines in the country. So where are these in terms of this incremental demand that was envisaged from them? Where are we in midst of their capacity coming up, thereby boosting the demand and then the ecosystem getting a boost in terms of pricing?

They are happening as per the plan, Saket Ji. And hopefully, you will see that the benefit of that will be coming in the next few years.

Okay. And lastly, so this INR 350 crore CapEx on the salt field work. So if you could just explain how -- this is because of the -- this is for the raw material security that you alluded earlier to and also for the bromine project or what is the significance of this INR 350 crores CapEx for the salt field? And when are you going to spend this money, sir? .

Saket Ji, this is for the new salt field, which we have been allotted. This amount is only for that and that will get spent over the period of the next 3 years.

And this will be catering to our requirement for salt or for the -- it is pertaining to which projects sir, the new one or the existing soda ash facility.

This salt will be consumed for both the locations.

Thank you once again, for elaborating and answering to our question, sir. So just to conclude, the EBITDA jump, which we have seen Q-on-Q, even excluding the other income impact, these numbers on the consistent environment and the factors that contributed to it are looking sustainable going ahead and quarter 4 being a very strong quarter in terms of demand and seasonally also a good quarter, a reasonable understanding the investors can take into account that these EBITDA numbers are sustainable at least for the near future?

Saket Ji, I had very clearly articulated this, that our -- we are working towards the cost optimization or on the efficiency improvement. In terms of the volatility in this current market scenario, it will be very difficult to predict what is the sustainable margin will be there in the going forward. And in the longer term, I have already said that things are looking better.

Thank you. Ladies and gentlemen, that was the last question, and we conclude the question-and-answer session. I now hand the conference over to the management for their closing comments.

Thank you very much. Thank you very much to all the shareholders and the participants into this call. We draw a lot of strength from our investors and our journey towards the cost optimization will continue. And we will ensure that our executions are being done in an appropriate way and create the value for our shareholders. That's the endeavor of the management and we will try and deliver on this day in, day out. Thank you very much for participation.

Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.