DCM Shriram Ltd (DCMSHRIRAM) Q1 FY23 Earnings Concall Transcript

DCM Shriram Ltd.  (NSE:DCMSHRIRAM) Q1 FY23 Earnings Concall dated Jul. 25, 2022

Corporate Participants:

Siddharth Rangnekar — Moderator

Ajay Shriram — Chairman and Senior Managing Director

Vikram Shriram — Vice Chairman & Managing Director

Analysts:

Ahmed Madha — Unifi Capital — Analyst

Pratiksha Daftari — Aequitas Investment — Analyst

Anurag Patil — Roha Asset Managersq — Analyst

Unidentified Participant — — Analyst

Vighnesh Iyer — Sequent Investments — Analyst

Saket Kapoor — Kapoor and Company — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the DCM Shriram Limited Q1 FY ’23 Earnings Conference Call. As a reminder, all participant lines will be in a listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [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.

Siddharth Rangnekar — Moderator

Good afternoon and thank you for joining us on DCM Shriram Limited’s Quarter One FY ’23 earnings conference call.

Today, we have with us Mr. Ajay Shriram — Chairman and Senior Managing Director; Mr. Vikram Shriram — Vice Chairman & 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 comments from the management Mr. Ajay Shriram and Mr. Vikram Shriram. Members of the audience will get an opportunity to pose their queries to the management following these comments, during the interactive question-and-answer session.

Before we begin, please note that all the statements made on today’s call could be forward-looking in nature, and a note to that effect has been included in the conference call invite circulated earlier.

I would now like to invite Mr. Ajay Shriram to give us a brief overview on the company’s performance and his views going forward. Over to you, sir.

Ajay Shriram — Chairman and Senior Managing Director

Thank you, Siddharth. Good afternoon, ladies and gentlemen, and thank you for joining our first-quarter earnings conference call for financial year ’22-’23. I honestly hope that all of you are keeping safe and healthy. I will start with perspectives on industry dynamics and the associated specific imperatives for us. This will be followed by Vikram who will share information on the operating and financial performance of the business.

Our performance during the quarter has remained strong. The uncertainty in the economic environment that starts in 2020 with COVID-19 is continuing. Today, the world is witnessing historically high inflation. There are supply chain disruptions, and prices of core commodities are still at elevated levels. Interest rates are rising, currencies across the globe are at their lowest against the U.S. Dollar and there is an ongoing Russia, Ukraine conflict which adds to the uncertainty. However, our strong balance sheet, cash flows, and resilient and diversified businesses are well placed to manage the current economic environment. We are investing, close to INR3,500 crores in various projects primarily in chemicals and sugar businesses which are to be commissioned over the next 12 months. These projects will increase our scale, forward integration, and new product lines along with bringing cost savings. Some of these investments are directed towards creating the best out of waste, building [Indecipherable] capabilities, and reducing carbon footprint. We continuously strive toward making our operations more sustainable.

The company is 11 times water positive, and 34% of the total energy consumed in our operation is green. We are finalizing the sourcing of additional green power to the extent of about 50 megawatts at [Technical Issues] and chemicals in the [Indecipherable] complex in Gujarat. We are taking more steps to reduce cycle waste, optimize resources, as well as reduce our carbon footprint. I would now like to take you through the business-wise perspectives.

Chemical: Supply chains were disrupted in U.S. and China owing to unplanned outages and COVID-related restrictions respectively getting our first two [Phonetic] prices during the quarter. Net exports from India stood at 52,938 [Phonetic] metric tons in Q1 financial year, ’23 versus net imports of 3,360 metric tons in the same period last year. Average import prices that traded above $700 per metric ton during Q1, financing the ’23 are witnessing a decline now. However, being in the midst of geopolitical tensions, the input price is expected to be up strongly with energy prices staying higher. This situation can be expected to continue for some time. Margins in this business are expected to normalize over the next few quarters after significantly high levels over the last three quarters. Our capacity utilization during the quarter was 91%, recovery [Phonetic] of 84% last year. Moving [Technical Issues] has been under pressure during the quarter resulting in negative realization for chlorine. The chemicals business is investing approximately INR2,800 crores in various projects of caustic soda, chlorine, epichlorohydrin, hydrogen peroxide, aluminum chloride, and a 120 MW captive power plant. The latter two were done online in this year and the balance sheet was operational by Q1 financial year ’24. This adds significant value to the company.

Vinyl: China is witnessing a slowdown in construction activities and therefore is participating more in international trade with the expiry of anti-dumping duty on PVC imports from China from February ’22 onwards and the lowering of customs duty on PVC imports from 10% to 7.5% in mid-May ’22, the pricing correction on PVC market in India is there. Prices for PVC saw a dip, quarter on quarter. Copper prices have also witnessed a decline quarter-on-quarter. Energy costs are expected to be high due to the persisting geopolitical situation and could impact margins.

Sugar: Globally, the sugar balance sheet is expected to be bright in the current season and is likely in businesses [Technical Issues] in the coming season due to anticipation of high sugar diversion to ethanol derivatives [Phonetic] owing to the surge in FoodTech [Phonetic]. Taking cognizance of the above, we expect international sugar prices to remain firm and Indian mills in Western and South India should benefit from exports. Our ethanol performance was stable. The company [Technical Issues] based ethanol in large pieces [Phonetic]. However, returns were lower versus heavy-based ethanol. We will continue our efforts to make cane juice made ethanol white [Phonetic].

The UP sugar industry needs a balanced, government policy for sugar exports, as well as cane juice-based ethanol to remove recent imbalances in Maharashtra. This business is investing approximately INR550 crores in ethanol capacity, sugar refinery, crushing capacity of sugarcane, and potash fertilizer from distillery ASH. These projects will get commissioned in Q3 financial year, ’23, and will act as earnings in the next season.

I think the input business comprises Shriram Farm Solutions, Bioseed, and fertilizers. The monsoon played a critical role in the performance in these businesses. Delayed monsoon has impacted farmer sentiments, crop references, geographical imbalances in shopping patterns, and [Indecipherable]. During the first quarter despite the deficit monsoons, the performance of these businesses was stable. Shriram Farm Solutions is focusing on sales across verticals on crop care, specialty plant nutrition, and trees. It had a research center in Ludhiana, Punjab. During the quarter, the business started manufacturing crop care chemicals from a leased facility in Ahmedabad. It is also setting up the manufacturing of biofertilizers and water-soluble fertilizers through a 100% subsidiary. All this augurs well for growth in this business.

Bioseed: Bioseed is repositioning product strengths to farmers and enhancing its portfolio, the product pipeline is strong. The performance of India and business improved during the quarter. We believe that this business should cover up over a period of two years. Supplies and sales were higher for [Indecipherable] enhanced energy prices despite lower volumes. Volumes saw a 15% decline as a result of the maintenance shutdown that we took during Q1 financial year, ’23. Subsidy outstanding as on 30th June 2022 stood at INR462 crores compared to INR222 crores as of 30th June 2021.

Chemicals [Phonetic] continues to deliver good growth as a result of increased demand for its wide range of products and high-quality products. There is still a concerted effort to increase our range of products in UPVC, as well as the aluminum windows segment. We are setting up a new fabrication capacity in Bhubaneswar, Odisha which will be commissioned in Q2 financing ’23, and expanding the extrusion facility at Kota, Rajasthan to be commissioned in Q1, ’24. These steps will further help in accelerating the growth of this business. Our businesses are looking to invest in improving business efficiency and in growth. We have embarked on initiatives to broaden our footprint through value addition and capacity creation in high-growth categories. I will now request Vikram to share his perspectives on the financing highlight. Vikram over to you.

Vikram Shriram — Vice Chairman & Managing Director

Thank you. Thank you. Good evening, everyone. I will take you through the financial highlights for our quarter one FY ’23 results. During the quarter, net revenues came in at INR2,851 crores versus INR1,957 crores in Q1 financial year ’22 higher by 46% year-on-year. The volumes were up across Chloro-Vinyl, Sugar, and Fenesta businesses. Prices were up a chloro-vinyl, sugar, and fertilizers. Chloro-vinyl businesses revenue grew by 117% year-on-year to INR896 crores led by higher volumes and prices. Caustic volumes were up 13% year-on-year as ECU [Phonetic] prices came up and higher targeted 103% year-on-year. Other product prices across the categories were also up. Vinyl business too recorded a healthy growth of 31% year-on-year in revenues. Carbide sale volumes were up 135% year-on-year and PVC volumes were up 13% year-on-year. Carbide prices were up 18% year-on-year and PVC prices were up 3%. An increase in volumes in Chloro-Vinyl is also a result of demand being impacted during Q1, ’22 by the second wave of COVID-19 which has been restored this year.

In the sugar segment, volumes of sugar were up 20% driven primarily by higher domestic monthly releases. Domestic sugar prices also supported growth. Distillery revenues came in higher, driven by both volumes and prices. SFS revenues were marginally up 3% year-on-year with stability across the categories. Bio-seed revenues were up 9% year-on-year mainly led by domestic growth. India operations revenues were up 31% driven by cotton and corn. Government procurement picked up versus the previous harvest season which was impacted by COVID-19.

Fertilizer revenues were up 46% year-on-year due to higher realization resulting from higher gas prices, which is a pass-through. Prices were up 106% year-on-year. Volumes were lower by 15% due to the planned maintenance shutdown taken in Q1 financial year ’23. Gas prices averaged $22 INBTU [Phonetic] versus $10 per INBTU [Phonetic] in Q1 financial year, ’22. Fenesta’s business continued to record healthy numbers with revenues up by 54% led by both retail and project segments.

Coming to profitability in Q1 financial year ’23, PBDIT stood at INR464 crores higher by 55% year-on-year despite cost pressures. The performance was primarily supported by chemicals and Fenesta segments.

Chemicals PBDIT was up to 227% primarily led by higher product prices and higher volumes. Both power and solar prices continue to be high, which were more than offset by better product prices. PBDIT margins stood at around 41% versus 27% in the same period last year and 43% sequentially.

Fenesta PBDIT was up 168% led by higher volumes in both retail and project segments and better margins in retail segments. Vinyl PBDIT was down 21% despite higher realization since the input cost increases driven by energy prices could not be compensated by prices. PBDIT margins in vinyl stood at 29% versus 48% in the same period last year and 41% sequentially. Sugar PBDIT was down 48%, 49% year-on-year. Higher costs, driven by higher grain costs and lower recoveries impacted the profitability of sugar. Ethanol earnings were stable, and higher domestic sugar and ethanol prices, partly offset cost pressures during the quarter. The sugar earnings have seasonality and should be looked at on a full-year basis.

Bioseed PBDIT stood at INR20 crores versus INR27 crores due to lower volumes in Philippines operations. The India business PBDIT was up 35%. Fertilizer PBDIT came in at negative INR17 crores versus positive INR33 crores for Q1, ’22 due to lower volumes and higher energy consumption resulting from maintenance shutdown and higher fixed expenses. Last year there was a one-time gain of INR33 crores of urea prices pertaining to provisions relating to the previous year. We have reported healthy progress across our key segments and are also encouraged by the financial fitness of our balance sheet. Our debt levels remain at more than comfortable levels with net debt at INR8 crores versus INR32 crores at June 21. We are generating healthy cash flows and our ongoing projects will be funded by internal accruals and debts. Return on capital employed on June 22, came in higher at 37% versus 83% on June, 21.

On the whole, we look forward to delivering sustainable and healthy growth going forward. This brings me to the end of the financial discussion. And we will be happy to take questions that you may have. Thank you very much.

Questions and Answers:

Operator

Thank you, ladies and gentlemen we will now begin the question-and-answer session. [Operator Instructions] Ladies and gentlemen, we will wait for a moment. [Operator Instructions] We have the first question from the line of Ahmad Madha from Unifi Capital. Please go ahead.

Ahmed Madha — Unifi Capital — Analyst

Thank you for the opportunity, sir. My first is on the outlook of the sugar business. So, our FY ’22 was relatively poor in FY ’21 because of the lower export volumes as well as the domestic volume quota was relatively lower. So how do you see the next two fiscal years panning out with the new Green Bay distillery capacity coming up? And one more question on the sugar side is that given that we are increasing the share of refined sugar, how does it impact the realization and the profitability?

Vikram Shriram — Vice Chairman & Managing Director

Thank you. I missed — I partly missed the question in the beginning, because our volume was okay. Where you talking about volumes?

Ahmed Madha — Unifi Capital — Analyst

Yeah, FY ’22 volumes were lower than FY ’21. So how do you see FY ’23 volumes and then the question on the ethanol capacity and refined sugar business?

Vikram Shriram — Vice Chairman & Managing Director

Yes. So essentially last season in Central and East UP, Uttar Pradesh there were adverse weather conditions. First, with a long — long spell of drought and high heat, and then subsequently they were two spells of very heavy rainfall. So, this decreased yield, both in Central UP and also East UP, and also adversely affected the recoveries. So that was primarily the reason for lower sugar crush last year. This year, I think that the weather patterns have been relatively decent. And we do hope that our volume will increase significantly compared to the previous crush [Technical Issues].

On the ethanol front, as mentioned in the opening remarks. We are doing an expansion, which will be commissioned in Q3 FY ’23 and we were also very hopeful with this government’s renewed push on ethanol for also bringing forward the 20% blend to 2025 and the last year’s average blend was roughly 10% plus. We are hopeful that the coming year, the blend on and on an all-India basis will be about 11% plus. So, we are positive on the methanol front as well.

Ahmed Madha — Unifi Capital — Analyst

Last on the refined sugar bit if you can answer.

Vikram Shriram — Vice Chairman & Managing Director

Yes, so on the refined sugar. I think our percentage of refined sugar as a company was much lower than the other our peers and we’ve increased our refined sugar production to roughly 60% of capacity and we do hope to get a premium of between 70 to 80 paise per kilo on the refined sugar [Indecipherable] sugar.

Ahmed Madha — Unifi Capital — Analyst

Okay, got it, got it. The next question is on the PVC side and vinyl business as we call it. So Q4 realization was INR135 to INR140 then in the current quarter it was close to INR128 and INR130. Now what we see as of now is the prices are almost at INR110 or maybe below that, so how is your outlook on the PVC demand dynamics in the country and especially the increase in the imports of China? So, I know that you may not have the longer-term view, but how do you see going forward for the next couple of quarters?

Ajay Shriram — Chairman and Senior Managing Director

Yes, you’re right, PVC prices are seeing a very sharp decline. In fact, the decline started somewhere in May when the anti-dumping duty from imports in the month of February when the anti-dumping duty on imports China was removed, and thereafter in May, the customs duty was reduced further from 10% to 7.5%. But in the last two weeks or so the beginning of July, we have seen some very sharp decline in the prices and today prices are pretty low, obviously, the demand is still holding. But fortunately, we have a large extent of imports coming from China. The consumption in China has dropped because of real estate, PVC is a construction polymer. So, the real estate in China is badly and in turn, they are pushing large quantities into the markets in India, but we expect that this reaction of a sharp drop in prices as possibly a knee-jerk reaction. The fundamentals of the costs, I mean still change on a long-term basis, the exporters may not find it viable to export at these kinds of prices. So, the prices should look up then. That’s very difficult to predict at this point of time, but the consumption is still holding.

Ahmed Madha — Unifi Capital — Analyst

Cool. Thank you. Last bit on the CapEx spend. So, we have increased our CapEx from INR3300 crores to INR3500 crores. Now can you help us, basically a request if you can help us our CapEx product-wise in the segment wise in the capacity if possible? Yes sure. In one I think the increase is primarily because there was more CapEx is added like for Fenesta is extrusion plant, which will be about INR47 crores. So, I’m just explaining the INR2300 standard to INR2,500 first. Right. So, there are some CapEx, which got added, which led to this increase. But otherwise broadly in chemicals, we are investing, close to about INR2,800 to INR2,900 crores. In sugar investing close towards INR550 crores and the rest, I mean, chemicals, the larger projects that we have is, one is the power plant — captive power plant, which is 120 megawatt and then there is a caustic capacity which 850 TPD along with 600 TPD flaker [Phonetic], then we have epichlorohydrin which is about 52,000 tonnes per annum, and we have [Indecipherable], which is [Indecipherable] tonnes per annum. So these are the major projects.

In sugar, we have 120 Kv, multi-feed distillery. We have — we are expanding the crush capacity by about 3,000 from 38,000 will move up to 41,000 and then the refining capacity. So today out of the total crush total sugar manufacturer about 15% is refined which will move up towards 60% post this CapEx investment and we also have potash capacity were are either extracting potash from distillery ASH. So that’s another new investment, which is about 4,600 tons for us. So these are broadly the capacities and the CapEx. Okay. So what will be our peak net debt by the end of FY ’23 or whenever the CapEx gets completed?

Ajay Shriram — Chairman and Senior Managing Director

No, see it will depend on the cash flows, but I, my sense is, it will be around approximately net debt should be down to INR1500 crores by end of FY ’23.

Ahmed Madha — Unifi Capital — Analyst

Got it. And just a simple question, the chlorine use, so the current capacity of caustic and then incremental 850 TPD whatever chlorine you will get, I am assuming that there will be some extra chlorine left after we use for aluminum chloride and ECH, so have we planned anything going forward for FY ’25 on this front.

Ajay Shriram — Chairman and Senior Managing Director

So, see my current chlorine if I look at Bharuch and if I exclude hydrogen chloride — hydrochloric acid then my current consumption in Bharuch is about 5% captive and in Kota it is about 30% captive. In Bharuch, I also supply at current levels, almost 40% of my chlorine is through pipelines. Going forward this 40% broadly, we should be able to maintain which is through pipelines and this 4%, which is captive will move up to above 10% after the entire company gets expanded both on epichlorohydrin as well as 850 TBD. So that’s the current captive consumption but we are definitely are looking at some more investments in chlorine downstream to increase our captive conjunction, so those are being looked at.

Ahmed Madha — Unifi Capital — Analyst

Okay, fine. That’s it from my side. Thank you so much, sir.

Ajay Shriram — Chairman and Senior Managing Director

Thank you. Thank you.

Operator

Thank you. We have the next question from the line of Pratiksha Daftari from Aequitas Investment. Please go ahead.

Pratiksha Daftari — Aequitas Investment — Analyst

Thank you for the opportunity. My first question is on sugar division. If you could just give the details of cost of production for the whole season that we finished in this quarter and what would be the valuation of inventory at the end of 30th June?

Ajay Shriram — Chairman and Senior Managing Director

Yeah. So, for this year, Pratiksha our total crush was about 549 lakh quintals, so that comes to the production of about 54 [Indecipherable] quintals was our production and our inventory evaluation was at about 3,307.

Pratiksha Daftari — Aequitas Investment — Analyst

3,307, okay. And if you could just repeat the cost of production, I didn’t get it correct? Yes. So, the cost of production will be for the whole season, so the crush that you [Speech Overlap].

Ajay Shriram — Chairman and Senior Managing Director

For the whole season? The season has ended. So, for my — for us on a total production of about 54 to 55 lakh quintals, my cost of production was 3,307.

Pratiksha Daftari — Aequitas Investment — Analyst

Okay. Okay. Okay. And what was the [Indecipherable] for this season, vis-a-vis last year?

Ajay Shriram — Chairman and Senior Managing Director

What was the…

Pratiksha Daftari — Aequitas Investment — Analyst

Recoveries?

Ajay Shriram — Chairman and Senior Managing Director

Recovery was I think close to what [Indecipherable] on theory [Phonetic] basis.

Pratiksha Daftari — Aequitas Investment — Analyst

Okay. How does this compare to last year?

Ajay Shriram — Chairman and Senior Managing Director

So, it was — last year it was lower by about if I remember correctly about 0.4%.

Pratiksha Daftari — Aequitas Investment — Analyst

Okay, got it. And if you put — given the EBITDA outlook on Brazil supply this year and how does it compare to last year? If you could elaborate a bit on that?

Ajay Shriram — Chairman and Senior Managing Director

I didn’t get your question, Pratiksha. Kindly repeat that, please.

Pratiksha Daftari — Aequitas Investment — Analyst

Brazil crushing that is going on if you could have given some highlights on that?

Vikram Shriram — Vice Chairman & Managing Director

So, the Brazilian crop is going — undergoing stress and as mentioned in the opening remarks because of oil prices, a large part of the crop is being diverted to ethanol. So, the world actually seeing India as a supplier for the world market and as we saw last year or in the ongoing sugar season our exports are roughly 9.5 to 10 million tonnes, on an all-India basis and we do expect that in the next sugar year also the exports will be roughly 7.5 to 8.5 million tonnes from India.

Pratiksha Daftari — Aequitas Investment — Analyst

Okay. Alright. My question is on caustic. Sir, you mentioned that you expect margins to normalize in the next two quarters. So just wanted to understand your perspective on-demand scenario going ahead and whether do we expect any serious change in global supply in the next few quarters?

Ajay Shriram — Chairman and Senior Managing Director

You know, our estimate as I mentioned was that the prices last quarter were over $700. They are down by about 10% to 15% — 5% to 10%. They have come down, but I think we’re good thing has happened, I have given the figures of the exports from India and that has gone up quite a bit. So that has to be in some sort of a balance. The expectation is that the industry and companies like us also our exporting and that will keep the balance. So, we don’t expect the prices to go down more than 5% to 7%, I think over the next couple of quarters.

Pratiksha Daftari — Aequitas Investment — Analyst

Okay. And how about demand sir? Have you seen any slowdown in demand, especially from sectors like textile or paper?

Ajay Shriram — Chairman and Senior Managing Director

No. Fortunately, I think demand is quite robust. I think that way if you see the Indian economy is doing quite okay. So, demand is quite all right.

Pratiksha Daftari — Aequitas Investment — Analyst

And any change in global supply? At least expecting China supply to be increasing going ahead or anything specific in Europe.

Ajay Shriram — Chairman and Senior Managing Director

See the challenge always is, one is in Europe when we see that the energy prices are going up a lot. And that’s having a very major impact. So, we don’t know what’s going to be the outcome in the next couple of months, depending on energy availability from Russia and from other countries. In China, frankly, I think all of us know that the actual data availability is very low. We are seeing the entire country [Indecipherable], but as of now in terms of the caustic front, yes, they are exporting more. There is no doubt on that, but I think the export market is taken up in India, we would export also at a decent price. So, I think that is moving okay.

Pratiksha Daftari — Aequitas Investment — Analyst

Okay. Okay, all right, thank you.

Ajay Shriram — Chairman and Senior Managing Director

Thank you.

Operator

Thank you. We have in from the line of Anurag Patil from Roha Asset Managers. Please go ahead.

Anurag Patil — Roha Asset Managersq — Analyst

Thank you for the opportunity. Sir, on the Bioseed business, how do you see the Kyoto panning out because I guess some of the sales got postponed due to the delayed monsoon. Can you throw some light on that?

Vikram Shriram — Vice Chairman & Managing Director

Yes, because of the delayed monsoon the increase in the paddy and course crops has declined and it’s possible that we may see a decline in the sowing of paddy. We don’t know in some states, there is no longer any possibility of this being recovered, but in some states, there is still a possibility that some of it will be recovery, because of the recent rains that have happened in this case, particularly in UP and Bihar. But paddy overall possibly there could be a decline in acreage.

Anurag Patil — Roha Asset Managersq — Analyst

Sir, on the quarter side, how’s the acreage situation currently?

Vikram Shriram — Vice Chairman & Managing Director

Cotton has done well in terms of acreage. And I think the final figures, we should be seeing coming in the next month or so. As of now because of reasonably good rains in the cotton growing areas, particularly in South and Central, the acreage is pretty good. And because of the prices are also good and therefore cotton is fairly okay.

Anurag Patil — Roha Asset Managersq — Analyst

And sir in the cotton illegal activity, how is it going on currently? Means, have the volumes increased compared to organized players?

Vikram Shriram — Vice Chairman & Managing Director

Illegal cotton keeps on growing, but there is also a new trend that farmers are moving into the non-branded kind of cotton seeds. Cotton seeds apparently are also good in quality, but it is a significant shift to that from branded products to non-branded so illegal cotton continues to be a challenge for us.

Anurag Patil — Roha Asset Managersq — Analyst

Okay, sir. Thank you very much.

Ajay Shriram — Chairman and Senior Managing Director

Thank you.

Operator

Thank you. We have the next question from the line of Prateek Talya from Systematix [Phonetic]. Please go ahead.

Unidentified Participant — — Analyst

Yeah, hi, sir. Thanks for the opportunity. So just if you could also highlight on the acreages of and the crop quality of sugarcane because we see that UP especially has received below normal monsoon so far. So how is the cane condition and whether there can be any impact in terms of availability of cane or even the recoveries can go down because of quality of cane can suffer due to lack of monsoon?

Vikram Shriram — Vice Chairman & Managing Director

Are you talking about the entire UP.

Unidentified Participant — — Analyst

I’m talking about the entire UP and especially I think Eastern Central UP is down almost 50% in terms of rainfall. So, if you could just highlight on. Maybe your catchment area also if you can just highlight.

Vikram Shriram — Vice Chairman & Managing Director

As I mentioned earlier, I think last year we had very adverse weather conditions. In terms of a heat wave, and then a couple of instances are very, very heavily rainfalls. This year comparatively, it’s been relatively more steady and also the farmers have got feed-in-time and education efforts by the farmers in the factories are going on well, and we do hope that the yields will be as good as normal in the coming seasons.

Unidentified Participant — — Analyst

Okay. And sir, what would be the current ex-factory prices for sugar?

Vikram Shriram — Vice Chairman & Managing Director

In UP INR3500 per quintal.

Unidentified Participant — — Analyst

Okay. Okay. Sure. That’s it from my side. Sir. Thanks a lot.

Vikram Shriram — Vice Chairman & Managing Director

Thank you.

Operator

Thank you. We have the next question from the line of Vighnesh Iyer from Sequent Investments. Please go ahead.

Vighnesh Iyer — Sequent Investments — Analyst

Hello sir, I just want to know what is the capacity utilization for the caustic soda and related chemicals as well as the PVC? If you can give me percentage?

Ajay Shriram — Chairman and Senior Managing Director

So, as I mentioned in my opening remarks in the last quarter, our capacity utilization for our caustic soda plant was 91% compared to 84% in the corresponding quarter last year.

Vighnesh Iyer — Sequent Investments — Analyst

Okay. And like the — I mean the aluminum chloride and PVC resins if you could give me?

Ajay Shriram — Chairman and Senior Managing Director

For PVC, it was 90% capacity utilization in line with what we had in the same period last year. Aluminum chloride was almost 100%.

Vighnesh Iyer — Sequent Investments — Analyst

Okay. Okay. Also, sir. Could you tell me quarter-on-quarter, how much have we exported — I mean caustic soda? If you could give me a number to more or less to understand if there is an increase in exports, quarter-on-quarter as such if you could give me some data?

Ajay Shriram — Chairman and Senior Managing Director

Yeah, again as I mentioned, in the opening remarks that in the first quarter of this financial year, exports from India, were about 54,000 to 55,000 tons, and a corresponding quarter last year they were imports of about 3,500 tons. So actually, export was much higher, was all those 54,000 -55,000 tons. I give you the exact figure when I mentioned that, and even this month, and in future months, the industry expects exports to be in a fairly healthy range.

Vighnesh Iyer — Sequent Investments — Analyst

Okay. Okay. So, there is, there is traction from the export market as well as the domestic market for caustic soda, we can more or less infer that way. Right.

Ajay Shriram — Chairman and Senior Managing Director

Yeah, I think — thank you, as you might have seen fortunately that the export potential and the export growth while the industry is also quite stable, the industry is feeling quite confident that they will continue to export at a fairly healthy rate. And if that carries on, I think it’s going to be helping in balancing out.

Vighnesh Iyer — Sequent Investments — Analyst

Right, right. Great, thank you. That’s all from my side.

Ajay Shriram — Chairman and Senior Managing Director

Thank you.

Operator

Thank you, [Operator Instructions]. We have the next question from the line of Saket Kapoor from Kapoor and Company. Please go ahead.

Saket Kapoor — Kapoor and Company — Analyst

[Foreign Speech] and thank you for this opportunity. Sir, firstly on the contribution to be our last speaker on which we are looking at, I think the one million ton capacity additions caustic soda in a phased manner, especially in the western part for I think FY ’23. So taking that into account and currently the China factor, what will come — will be the demand factor that is more — It is more inclined to the demand or whether there would be an oversupply that we can anticipate going ahead with this — with capacity additions.

Ajay Shriram — Chairman and Senior Managing Director

You know the good thing is that I think the demand in India is also growing at a healthy pace and I think with the economy is having a GDP growth in the range, what it is 7% to 8%, I think that’s pretty good going and the demand in India is also moving quite well. Export markets are also open. You see with commodity businesses, you always find when new capacity come there maybe a couple of quarters of a little tightness because of excess capacity, but with good growth of 7% to 8%, this evens out. So, I don’t know [Phonetic]. And the second point is in any investment we make regularly now increasing our caustic [Phonetic] to 850 tonnes per day and [Technical Issues] by 600 tonnes per day, we are simultaneously looking at how to improve our efficiencies and reduce [Technical Issues]. So that is again an advantage we get with expansion. So it is — it is frankly in the long term, a win-win situation of expanding our capacity.

Saket Kapoor — Kapoor and Company — Analyst

Yes, sir. In the earlier remarks about vinyl prices going down Shriram sir did mention about that led to the China factor the lockdown in China and therefore leading into a large import or dumping by them. So, have we seen the same trend for the caustic soda prices also post June? I think in the presentation also you have mentioned prices trending lower. So, what the currently the trends for the EU, if you could throw some more light for [Technical Issues].

Vikram Shriram — Vice Chairman & Managing Director

Caustic soda, fortunately, we are not having that sort of pressure coming in from China. I think PVC as a solid is much easier to export and move around than it is for caustic soda. So, we’re not seeing that. In fact, India is a net exporter, which is a very good situation we are in, and we expect the exports to carry on. I don’t think it will be too bad. Yes, the prices have come down by 5% to 7% and then a commodity moving 10% [Indecipherable] is a very I think the industry has to because you can’t expect always going up or always going down, it doesn’t go that way. The important point is, are we competitive on world scale and that is something which we are. We are getting a lot of focus in that in our operations and our cost of production, our customer relationships, etcetera. So that is the strong point. In other words, we are expecting the next few quarters of caustic soda to be quite all right.

Saket Kapoor — Kapoor and Company — Analyst

Sir, which markets are we targeting in the export segment, sir? Which geographies?

Vikram Shriram — Vice Chairman & Managing Director

Pardon me, Saket, can you please [Speech Overlap]

Ajay Shriram — Chairman and Senior Managing Director

Where are the exports going to?

Vikram Shriram — Vice Chairman & Managing Director

So, exports are going into Southeast Asia. That’s one big market and also to some African countries.

Saket Kapoor — Kapoor and Company — Analyst

Okay, sir. If I correctly remember Japan, Iran had been net importers, had been importers to the country for India. So how are they positioned? What is the material movement from these two geographies, Japan and Iran?

Ajay Shriram — Chairman and Senior Managing Director

Yeah, you are right. Japan also is in fact Mitsubishi [Indecipherable] also to import into Japan. So that is moving from there. Iran I’m not sure.

Vikram Shriram — Vice Chairman & Managing Director

See Saket, Iran always was I would say would come to the market with certain in some pockets, they will come in export and-or the depressed market. It is never a consistent supply to India — globally it’s not a consistent supplier, so it’s more in pockets that they come and sell. So, I think and of late we haven’t seen them coming in, not in India.

Saket Kapoor — Kapoor and Company — Analyst

Okay. No. When we give the 50,000 figure of export, what quantity should we factor in from the imports from Japan in the country?

Ajay Shriram — Chairman and Senior Managing Director

No, I don’t think it is imported. I would rather say India’s, I think [Indecipherable] export from India.

Saket Kapoor — Kapoor and Company — Analyst

Okay. Okay. So, there is no import as of now from the Japanese continent.

Vikram Shriram — Vice Chairman & Managing Director

So, we have imports like in this quarter, our imports are about 11,000 in the country, the imports about 11,000 tons and exports were about 64,000 to 65,000 tonnes, net.

Saket Kapoor — Kapoor and Company — Analyst

Okay. Okay.

Vikram Shriram — Vice Chairman & Managing Director

Out of the 11,000, how much was thrown in Japan, I’m not aware of that.

Saket Kapoor — Kapoor and Company — Analyst

Okay. Coming to the value-added part of the story as you have told the chlorine has to be consummated in the value-added segment. So, with the increased caustic soda production from our side what — by what percentage will be chlorine consumption internally will go up, sir, and what percentage of value-added products, increase in product [Indecipherable] contemplating.

Vikram Shriram — Vice Chairman & Managing Director

So currently we are at around 4% captive consumption, excluding HCL. With the older capacity is coming up, including 850 TPD of caustic, we will go up to around 10% and as I mentioned, we also have 40% of our supplies going through pipelines to dedicated customers, for chlorine.

Saket Kapoor — Kapoor and Company — Analyst

And sir currently chlorine spreads are positive or negative for us for this quarter?

Ajay Shriram — Chairman and Senior Managing Director

They are negative.

Saket Kapoor — Kapoor and Company — Analyst

By what amount sir?

Ajay Shriram — Chairman and Senior Managing Director

In the range of around 4,000 to 5,000 negative.

Saket Kapoor — Kapoor and Company — Analyst

4,000 to 5,000 negative. Sir coming to the Bioseed segments. I think last quarter for the March, I think we spoke about this turnaround plan for the Bioseed segment for two years or three years down the line. So, what is stored for the Bioseed segment going ahead, sir. And what can we expect in terms of this business contributing to the total pie sir and profitability improving?

Ajay Shriram — Chairman and Senior Managing Director

Actually, in Q1, we have seen in terms of the turnaround from the early signs that’s happening. But obviously, one quarter can be completed, but the early signs in terms of acceptance of some of our new product pipeline, new products, and new geographies. That’s been good and we hope that we are able to differentiate this turnaround that started during the year, we should be able to turn it around as we had anticipated in the previous year when we talked about it.

Saket Kapoor — Kapoor and Company — Analyst

Sir, last year sir, it was a course correction exercise I think the slow-moving inventory part and all which was articulated by you, so this year that is not going to play out. So, this year, it does look better for us.

Ajay Shriram — Chairman and Senior Managing Director

Absolutely. They look much better.

Saket Kapoor — Kapoor and Company — Analyst

I’ll come in the queue.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Ahmed Madha from Unifi Capital. Please go ahead. Mr. Ahmed Madha your line has been unmuted. Please proceed.

Ahmed Madha — Unifi Capital — Analyst

Am I audible?

Operator

Yes. Please go ahead.

Ahmed Madha — Unifi Capital — Analyst

Yeah. I had a question about the PVC business. So currently we are manufacturing PVC via the calcium carbide group. Do you think is there any incentive to allocate capital to manufacture suspension PVC via [Indecipherable].

Ajay Shriram — Chairman and Senior Managing Director

Sorry, which route you said.

Vikram Shriram — Vice Chairman & Managing Director

We are in carbide.

Ajay Shriram — Chairman and Senior Managing Director

We are in the carbide route. You said which route? [Speech Overlap]

Ahmed Madha — Unifi Capital — Analyst

[Speech Overlap] do you think there is any incentive to allocate capital there?

Ajay Shriram — Chairman and Senior Managing Director

We will switch over to the chemical route.

Ahmed Madha — Unifi Capital — Analyst

Yeah, yeah, chemical route, yes.

Vikram Shriram — Vice Chairman & Managing Director

Currently, the margins between VCM and PVC and the customer are not very good. You need on average, it used to be $150, but it’s gone down below $150. So, we have been evaluating it quite a bit, but for us, we didn’t see any merit in following that VCM group.

Ahmed Madha — Unifi Capital — Analyst

As of now also we don’t see any merit?

Vikram Shriram — Vice Chairman & Managing Director

You see the economics are largely dependent on energy prices and if energy prices are high, the VCM, margin between VCM and PVC also goes down.

Ahmed Madha — Unifi Capital — Analyst

Okay, okay, fine. No issue. Thank you so much, sir.

Operator

Thank you. [Operator Instructions] As we have no further questions, I would like to hand the floor back to the management for closing comments. Please go ahead, sir.

Ajay Shriram — Chairman and Senior Managing Director

Thank you. Ladies and gentlemen thank you very much for your participation in our Q1 financial year ’23 earning conference call. We will continue to work on our strategic direction of growing our businesses using the scale, multiple revenue streams enhancing efficiencies, and achieving higher integration. We will also ensure that the balance sheet and cash flows remained strong. At the same time, we’re also conscious of our responsibility towards the environment, community welfare, and our employees who are our true assets of the company. We are focused on building sustained relationships with all our stakeholders.

Once again, thank you very much and we wish you safety and good health. Thank you.

Operator

Thank you, members, of the management. [Operator Closing Remarks]