DCM Shriram Limited

Ajay Shriram

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Ajay Shriram

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CHEMICALS

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CHEMICALS

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CHEMICALS

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CHEMICALS

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SUGAR

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Vikram Shriram

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Vikram Shriram

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Vikram Shriram

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The current geo-political situation has led to environment remaining volatile.

— VINYL

Ladies and Gentlemen, if I look at the business environment today, it has become quite uncertain and fast changing, especially since the onset of Covid-19 and geo- political issues.

— AGRI INPUTS

Higher prices had a positive impact of Rs 437 crs on the revenues.

— Vikram Shriram

It's difficult to give you a number, but yes, what happens is in Q3, the cost of production will be higher, given the fact that recoveries to begin with are lower, and in Q4, and part of the Q1, which is let's say, April types, then the cost of production is lower, given that the recoveries are better.

— Amit Agarwal

Sir, it’s very difficult to estimate how much it is but industry reports that it’s pretty high, it was pretty high last year, and it's likely to increase this year also.

— K.K. Kaul

So, it is very difficult in commodities to comment on how it will pan out, but yes, one thing is sure that there is no capacity addition happening globally.

— Amit Agarwal

Q

had steady operations supported by higher product prices and demand. Chloro- Vinyl, Fenesta and Shriram Farm solutions businesses performed better, however Sugar and Bioseed India business had lower earnings. Our Capital expenditure plans in Chemicals and Sugar, aggregating to about 3,300 crores are progressing well and will be commissioned within next 12 months. These will drive augmentation in capacities, value-addition through forward integration, and cost optimization. There are cost increases led by increase in metals and cement prices, however, we have reconfigured the projects to ensure

CHEMICALS

Global industry has witnessed regional output imbalances over the past year resulting from factors like hurricane in US, dual control policy in China, and Covid 19. USA and China have seen healthy recoveries in the recent past however, there are some near term supply disruptions expected as a result of lower operating rates in the US and Covid-19 in China. Geo-political factors have driven the energy prices significantly higher and are expected to remain firm in near term. Q4 FY’22 saw the average import prices of Caustic Soda again going up over USD 700/ MT, post seeing some softening in Dec’

Q

My first question is for the chemicals division. So, just wanted to understand, are we expecting our new additional aluminum chloride capacity to come up in this quarter itself?

Ajay Shriram

No, additional capacity is about 850 tons a day and that is expected to come up in end of this financial year. Just to add to your question here is that we are putting up an additional power plant also, that power plant is expected to be commissioned in the second quarter of this financial year. What kind of cost escalations are we seeing in the total project costs for the chemical division? I think the presentation mentioned that we are seeing some costs going up there. That's right. The number that we've given, Rs.3,300 crore includes whatever escalations that we're anticipating, but if I gi

Q

My first question is regarding the CAPEX part. So, in press release we mentioned a number about Rs.3,300 crore. If I look at an old press release and the announcement the number is a little less than Rs.3,000 crore. So, is it fair to assume that the entire incremental CAPEX is because of the whatever inflation we are seeing in steel and cement?

Amit Agarwal

What you said is absolutely right that this is an increased number. So, this increase as I mentioned almost about 25% would be on account of increase in the commodity prices and around 10% would be on account of reconfiguration. I also mentioned, Rs.92 crore additionally which was approved by the board four days ago. That is not included in this total of Rs.3,300 crore. Any increase in capacity related to what we had earlier planned in any of the products? In case of caustic soda where we had planned 700 TPD and we had planned a 500 TPD flaker, now we are going with 600 TPD flaker and 850 TPD

Q

With reference to the earlier participant call, so I was just doing some of the math, so if we see the increased ECU realization which is like Rs.2.5 and if we multiply it by 1,55,000 tons of volume what we have reported, this translates to almost Rs.37 crore, but what we have reported sequentially in terms of improvement in PBIT is around Rs.82 crore. So, was this because of some of the profits getting added through the value-added products and if you can just explain those maths that would be helpful sir? If you see my revenue in chemicals which was Rs.738 crore and it went up to Rs.865 cror

Nirav Jimudia

Sir, if you can just break it down our PBIT between the pure caustic business as well as the value-added business? So, what you mentioned last quarter was like 10% of the PBIT was coming through our value added product. So, what was the mix this quarter? Nothing much has changed. The prices have remained more or less the same. My second question is on chlorine side. We are having a capacity of 1,350 TPD of caustic and now we are expanding it by almost 850. So, in combine, after the expansion, we'll be handling almost 2,000 TPD of chlorine after the caustic expansion. So, how do we use this chl

Q

So, I have some questions on the chemicals business. So, firstly, what is our reading of the overall caustic soda market currently, because on one hand, current realization seems to be fairly firm. But on the other hand, we also have this looming threat of a lot of capacity coming in over the next 12 to 15 months, as you correctly pointed out in your initial remarks. So, are we seeing probably the recent high prices as being peak or do we see further upsides in prices also possible as we move ahead? Second question is that, how do we see this extra capacity getting absorbed? So, are we seeing

Meherwan Kotwal

Just a follow up on this expansion. So, we will be coming with 850 TPD expansion in 1Q FY24. Will this entire expansion be one shot? Or will we be like commissioning the unit in phases? It will be actually commissioned in phases, means over a period of 2-3 months it will be commissioned. We are putting up the whole thing together. Sir, just couple of questions. What our unit cost of power will be for the current quarter? I think the unit cost of power is something which is flexible because of the international prices of coal. Coal prices have gone up which has created a lot of disturbance in t

Q

Sir, in our cotton seed business, can you share your view on the issue of illegal cotton seeds for this season?

K.K. Kaul

Sir, it’s very difficult to estimate how much it is but industry reports that it’s pretty high, it was pretty high last year, and it's likely to increase this year also. But the numbers I can’t put, yes, it's affecting the overall cottonseed business and it's growing, it's growing year-on-year, the illegal HT cotton cultivation is growing. But the good thing is that the cotton crop itself, the acreage is growing because of the good cotton prices and good commodity prices. So, there will be some effect of this illegal cotton, but that should be more or less overcome and even bettered by the lar

Q

As you were mentioning the ECU realizations post the March exit is up by Rs. 2,000, am I correct on that one?

Amit Agarwal

Approximately, yes. And it was in the vicinity of Rs. 49,000 for the month of March. Only for the month of March? If you could provide us, sir, for the month of March? I don’t have it upfront. For the average price, average is up by Rs. 2,000. Yes. And there has been increase in the cost part also, cost element for this quarter? Yes. As I mentioned, because we are only halfway into the quarter, you’ll have to see how it pans out, the situation is dynamic. I don't see costs coming down. They might remain same or increase marginally. And sir, how have been the chlorine spread currently, sir? And

Q

Just wanted to confirm one thing that you mentioned that for breakeven between sugar and ethanol based out of the juice, the number is Rs. 34.50? So, at current realization for sugar for Rs. 34.90, so we basically lost out on certain opportunity, right?

Amit Agarwal

Which is true, which is the call that one takes. It’s a call that one has to take at the beginning of the season that if you would like to hedge sugar at a particular price expecting whether it will go up or go down. So, we did hedge it at Rs. 34.50. Okay. Going ahead, the mix B-Heavy would be higher considering crushing has ended right now? Yes, the majority of ethanol would be B-Heavy based. Just one question on Fenesta, do we have any margin differential for project segment versus retail segment? Yes, retail segment will have higher margins vis-à-vis the project segment. Are we facing any i

Q

Just had a couple of questions on the PVC supply situation. So, firstly, if you could just comment on global PVC capacity addition. What can be expected in the next 2 to 3 years and if you could give a similar outlook for the domestic side? As far as global capacities are concerned, I don't have the numbers as of now, but we don’t see any significant capacity coming at least in the next year, but in terms of domestic capacities, some capacities have been announced, and when they are likely to come up, at least in next one year I don't see them coming up, maybe later.

Aasim Bharde

So, on the domestic front, basically it is status quo. So, I think even in the last quarter, most industry players have said that there have been announcements, but no work has happened. So, is that the same case right now? That's right. There have been announcements, but no work has happened. And on the recent PVC price weakness, could industry lockdowns in Shanghai and the other industrial zones there, could those have played a part? To an extent, yes, because the industry lockdown in China, there have been some pressures coming from the Chinese material coming in to India, but we are also s

Q

Just a request that in your slide, going forward if you could mention for the caustic and PVC the global capacities also and what kind of utilization levels the global players are running, so we would have a better further understanding of how the global markets for both the commodities have shaped up for the quarter.

Ajay Shriram

If you want, you can get in touch with our CFO and he can give you the data. Currently, what is the installed capacity in our country for caustic soda and the addition for this year and how have the average utilization levels been for the last year? The current capacity that we have in the country for chemicals is about 4.8 million metric tons, that is for the caustic soda capacity in the country and average utilization levels for the current financial year FY22 have been around 80% wherein the West has been around 90%. And the additions, which are going to happen for this year is around? That

Q

Ladies and gentlemen, thank you very much for supporting us and your continued presence on our Q4 and Financial Year 2022 Earnings Conference Call. We believe DCM Shriram will be poised towards realizing sustainable gains through well- executed CAPEX, improved efficiencies, and better integration. The endeavor will be to drive our growth with a strong balance sheet and robust cash flow generation. I would also like to take this opportunity to thank you for joining us again and also I would suggest please take care of yourselves and your family and follow all the precautionary advisory by the G

Management