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DCM Shriram Ltd
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Ladies and gentlemen, good day, and welcome to the DCM Shriram Limited Q1 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Siddharth Rangnekar from CDR India. Thank you, and over to you, sir.
Good afternoon, and thank you for joining us on DCM Shriram Limited's Quarter 1 FY '23 Earnings Conference Call. Today, we have with us Mr. Ajay Shriram, Chairman and Senior Managing Director; Mr. Vikram Shriram, Vice Chairman and Managing Director; Mr. Ajit Shriram, Joint Managing Director; Mr. K.K. Kaul, Whole Time Director; and Mr. Amit Agarwal, CFO of the company. We shall commence with comments from the management, including Mr. Ajay Shriram and Vikram Shriram. [Operator Instructions]
Before we begin, please note that some of the statements made on today's call could be forward-looking in nature, and a note to that effect has been included in the conference call invited 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.
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 earnestly 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 started in 2020 with COVID-19 is continuing. Today, the world is witnessing historically high inflation. There are supply chain disruptions, prices of core commodities are still at elevated levels, interest rates are rising, currencies across the globe are at the lows against the U.S. dollar, and there is the ongoing Russia-Ukraine conflict, which adds to the uncertainty. However, our strong balance sheet, cash flows and relieved and diversified businesses are well placed to manage the current economic environment.
We are investing close to INR 3,500 crores in various projects, primarily in Chemicals and Sugar business areas, which are to be commissioned over the next 12 months. These projects will increase our scale, forward integration, new product lines, along with bringing cost savings. Some of these investments are directed towards creating wealth out of waste, building through the capabilities and reducing carbon footprint. We continuously strive towards making our operations more sustainable. The company is 11x water positive, 34% of the total energy consumed in our operations is green. We are finalizing the sourcing of additional green power to the extent of about 50 megawatts at vinyl alkali and chemicals in Bharuch complex in Gujarat. We are taking more steps to reduce and recycle waste, optimize resources as well as reduce our carbon footprint.
I would now like to take you through the business-wise perspective. Chemicals. Supply chains were disrupted in U.S. and China, owing to unplanned outages and COVID-related restrictions, respectively, giving a thrust to prices during the quarter. Net exports from India stood at [ 52,938 ] metric tonnes in Q1 financial year '23 versus net imports of 3,360 metric tonnes in the same period last year. Average import prices have traded about $700 per metric tonne during the Q1 financial year '23 are witnessing a decline now. However, being in the midst of geopolitical tensions, the input price is expected to weigh 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 level over the last 3 quarters. Our capacity utilization during the quarter was 91%, vis-à-vis 84% last year.
Chlorine demand has been under pressure during the quarter, resulting in negative realization for chlorine. The Chemicals business is investing approximately INR 2,800 crores in various projects of caustic soda chlorine, epichlorohydrin, hydrogen peroxide, aluminum chloride and 120-megawatt captive power plant. The latter 2 will come online in this year and the balance will be operational by Q1 financial year '24. This will add significant value to the company.
Vinyl. China is witnessing a slowdown in construction activities and therefore, is participating more in international trade. With expiry of antidumping duty on previously imports from China, from February '22 onwards, and lowering of customs duty on PVC imports from 10% to 7.5% in mid-May '22, the pricing pressure on PVC market in India is there. Prices for PVC saw a dip quarter-on-quarter. Carbide prices have also witnessed a decline quarter-on-quarter. Energy costs are expected to be high due to the existing geopolitical situations and food impact margins.
Sugar. Globally, sugar balance sheet is expected to be tight in the Kharif season and slightly in deficit in the coming season, due to anticipation of higher sugar divergence to ethanol inventories owing to the surge in fuel tax. 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 piloted cane juice based ethanol in the last period. However, results were lower versus the B-Heavy based ethanol. We will continue our efforts to make cane juice based ethanol viable.
The UP sugar industry needs a balanced government policy for sugar exports as well as cane juice based ethanol to remove regional imbalances with Maharashtra. This business is investing approximately INR 550 crores in ethanol capacity, sugar refineries, crushing capacity of sugarcane and potash fertilizer from distillery ash. These targets will get commissioned in Q3 financial year '23 and will add to the earnings in the next few months.
Our Agri inputs business comprises of Shriram Farm Solutions, Bioseed and Fertilizer. The monsoon played a critical role in performance of these businesses. Delayed monsoon has impacted farmer sentiments, crop preferences, geographical imbalance in cropping patterns and acreages. During the first quarter, despite the benefit monsoons, the performance of these businesses was stable. Shriram Farm Solutions is focusing on research across these verticals on crop-care, specialty plant nutrition and seeds. It has its research center in Ludhiana, Punjab.
During the quarter, the business started manufacture of Crop Care Chemicals from a lease facility in Ahmedabad. It is also setting up a manufacturing of biofertilizers and water soluble fertilizers through a 100% subsidization. All this offers well for growth in this business.
Bioseed is repositioning its product strengths to farmers and enhancing its portfolio. The product pipeline is strong. The performance of India chemical business improved during the quarter. We believe that this business should turn around over a period of 2 years.
Fertilizer sales were higher on enhanced energy prices despite lower volumes. Volumes saw a 15% decline as a result of maintenance shutdown that we took during Q1 financial year '23. Subsidy outstanding as on 30th June 2022, stood at INR 462 crore compared to INR 222 crores as on 30th June 2021.
Fenesta 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 window segment. We are setting up a new fabrication capacity in Bhubaneswar, Orissa which will be commissioned in Q2 financial year '23 and expanding the extrusion facility at Kota, Rajasthan to be commissioned in Q1 financial year '24. These steps will further help in accelerating growth of this business.
Our businesses are looking to invest in improving business efficiency and in growth. We have a lot of 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 financial highlights. Vikram, over to you.
Thank you. Good evening, everyone. I will take you through the financial highlights for our quarter 1 FY '23 results. During the quarter, net revenues came in at INR 2,851 crores versus INR 1,957 crores in Q1 financial year '22, higher by 46% year-on-year. Volumes were up across chloro-vinyl, Sugar and Fenesta businesses. Prices were up for chloro-vinyl sugar, Fenesta and Fertilizers. Chloro-vinyl businesses revenue grew by 117% year-on-year to INR 896 crores, led by higher volumes and prices. Caustic volumes were up 13% year-on-year as ECU prices came up higher at 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-over-year. Carbide prices were up 18% year-on-year and PVC prices were up 3%. 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 were -- 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. Bioseed 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 previous Kharif season, which was impacted by COVID-19.
Fertilizer revenues were up 46% year-on-year due to higher realizations resulting from higher gas prices, which is a pass-through. Prices were up 106% year-on-year. Volumes were low by 15% due to the planned maintenance shutdown taken in Q1 financial year '23. Gas prices averaged USD 22 per MMBtu versus USD 10 per MMBtu in Q1 financial year '22. Fenesta 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 INR 464 crores, higher by 55% year-over-year despite cost pressures. The performance was primarily supported by Chemicals and Fenesta segments. Chemicals PBDIT was up 227%, primarily led by higher product prices and higher volumes. Both power and fuel prices continue to be high, which were more than offset by better product prices. PBDIT margin 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 cane costs and lower recoveries impacted profitability of sugar. Ethanol earnings were stable.
Higher domestic sugar and ethanol prices partly offset cost pressures during the quarter. The sugar earnings has seasonality and should be looked on a full year basis. Bioseed PBDIT stood at INR 20 crores versus INR 27 crores, due to lower volumes in Philippines operations. India business PBDIT was up 35%. Fertilizer PBDIT came in at negative INR 17 crores versus positive INR 33 crores for Q1 2022 due to lower volumes and higher energy consumption resulting from maintenance shutdowns and higher fixed expenses.
Last year, there was a onetime gain of INR 33 crores of urea prices pertaining to provisions relating to previous years. We have reported healthy progress across our key segments and are also encouraged with the financial fitness of our balance sheet. Our debt levels remain at more than comfortable levels with net debt at INR 8 crores versus INR 32 crores at June 21 -- June '21. We are generating healthy cash flows and our ongoing projects will be funded by internal approvals and debt. Return on capital employed on June '22 came in higher at 37% versus 23% for 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.
[Operator Instructions] We have the first question from the line of Ahmed Madha from Unifi Capital.
My first question is on the outlook of sugar business. So our FY '22 was relatively poorer than the 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 2 fiscal years panning out with the new grain-based distillery capacity coming up?
And one more question on the sugar side is that, even though we are increasing the share of refined sugar, how does it impact the realization of the profitability?
Thank you. I missed your -- I partly missed the question at the beginning because our volume wasn't okay. Were you talking about volumes?
Yes, so 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 the refined sugar business.
Yes. So essentially the last season in Central and East UP, Uttar Pradesh, there were adverse weather conditions. First, with a long spell of drought and high heat. And then subsequently, there were 2 spells of very heavy rainfall. So this decreased the 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 crushing period.
On the ethanol front, I had mentioned in the opening remarks, we are doing an expansion, which will be commissioned in Q3 FY '23. And we're also very hopeful with this government's renewed push on ethanol for also bringing forward the 20% blend to 2025. And last year's average blend was roughly 10% plus. We're hopeful that the coming year, the blend on an all India basis will be about 11% plus. So we're positive on the ethanol front as well.
Last one, the refined sugar bit, if you can answer.
Yes. So on the refined sugar, I think our percentage of refined sugar as a company was much lower than the other -- than 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 p to 80 p per kilo on the refined sugar, vis-à-vis normal and added sugar.
Okay. Got it. Got it. The next question is on the PVC side, the Vinyl business. So Q4 realization was close 135, 140, then in current quarter, it was close to 128, 130. Now what we see as of now is the prices are almost at INR 110 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?
Yes, you're right. PVC prices are seeing a very sharp decline. In fact, the decline started somewhere in May when they antidumping duty from imports in month of February when the anti-dumping duty on imports from China was removed. And thereafter in May, the custom duty was reduced further by -- some 10% to 7.5%. But in the last 2 weeks or so beginning of July, we have seen some very sharp decline in the prices. And today, prices are pretty low. But obviously, the demand is still holding. But fortunately, we have a large imports coming from China.
The consumption in China has dropped because of the real estate, PVC is a construction polymer. So the real estate in China is badly hit. And in turn, they are pushing large quantities into the markets in India. We expect that this reaction of sharp drop in prices is possibly a knee jerk reaction. The fundamentals of the costs haven't still changed. On a long-term basis, when the exporters may not find it viable to export at these kind of prices. So the prices should look up. Then -- and that's very difficult to predict at this point of time. But the consumptions are still holding.
Last bit on the CapEx trend, so we have increased the CapEx from INR 3,300 crores to INR 3,500 crores. Now can you help us -- basically a request, if you can help us break down our CapEx product-wise and the segment-wise in the capacity, if possible?
Yes, sure. See, in -- one, I think the increase is primarily because there were more CapExes added, like for Fenesta's, the extrusion plant, which will be about INR 47 crores. So finally the explaining sheet was INR 3,300 crores to INR 3,500 crores first, right? So there are some CapExes which got added which led to this increase. Otherwise, broadly in Chemicals, we are investing close to about INR 2,800 crores to INR 2,900 crores. In sugar, we are investing close to about INR 550 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 caustic capacity, which is 850 TPD, along with 600 TPD flicker. Then we have epichlorohydrine, which is about 52,000 tonnes per annum. And we have hydrogen peroxide, which is [indiscernible] per annum. So these are the major projects.
In sugar, we have a 120 KLD multi-feed distillery. We have -- we are expanding the crush capacity by about 3,000, so from 38,000, we move up to 41,000. And then the refining capacity, so today, out of my total crush, whatever sugar are manufactured, about 15% is refined, which will move up to about 60% post these CapEx investment. And we also have potash capacity, where we are extracting potash from distillery ash, so that's another new investment, which is about 4,600 tonnes per annum. So these are broadly the capacities and the CapExes.
Okay. So what will be our peak net debt by the end of FY '23 or whenever the CapEx gets completed?
See, it will depend on the cash flows. But my sense is it will be around -- approximately net debt should be around INR 1,500 crores by end of FY '23.
Got it. And just a simple question of the chlorine use. So with the current capacity of caustic and then incremental 850 TPD, whatever chlorine will get, I'm assuming that there will be some extra chlorine left after the use for aluminum chloride in ECH. So have we planned anything going forward for FY '25 on this front?
So see, my current chlorine consumption, if I look at Bharuch and if I exclude hydrochloric acid, then my current consumption in Bharuch is about 5% captive. And in Kota, it's 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 pipeline. And this 4%, which is captive, will move up to over 10% after the entire content gets expanded, both on epichlorohydrin as well as 850 TPD. So that's the current captive consumption. But we're definitely looking at some more investments in touring downstream to increase our captive consumption. So those are being looked at.
We have the next question from the line of Pratiksha Daftari from Aequitas Investment.
My first question on sugar division, if you could just give the details of cost to 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?
Yes. So for this year, Pratiksha, our total crush was about 549 lakh quintals. So that comes to -- so our production was close to about 54, 55 lakh quintals was our production. And our inventory valuation was at about 3,307.
3,307.
Yes.
And if you could repeat the cost of production? I didn't get it correct.
Yes. So cost of production, you're saying?
For the whole season, so the crush that we started at...
For the whole season, yes. So season has ended. So for my -- for us on a total production of about 54, 55 lakh quintals, my cost of production was [ INR 3,707 crore ].
Okay. Okay. Got it. And what would the yield for this season vis-à-vis last year?
What was the...
Recovery. Recovery.
Recovery was, I think, close to about 11.36 on CAV basis.
On BAV basis. Okay.
CAV.
Okay. CAV. How does this compare to last year?
It was -- basically last year, it was lower by about, if I remember correctly, about 0.4%.
Okay. Got it. And if you could give a little bit outlook on the Brazil supply this year. And how does it compare to last year? If you could elaborate a bit on that.
I didn't get your question, Pratiksha. If you kindly repeat that, please?
The Brazil crushing that is going on, if you could give some highlights on that.
So the revenue crop is going -- is undergoing stress. And as mentioned in the opening remarks, because of oil prices, a large part of the crop has been diverted to ethanol. So the world actually is seeing India as a supplier for -- I mean for the world market. And as we saw last year or -- in the ongoing sugar season, our exports are roughly 9.5 million 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.
Okay, all right. The next question is on caustic. So you mentioned that we expect margins to normalize in the next 2 quarters. So just wanted to understand your perspective on demand scenario going ahead and whether the -- do we expect any serious change in global supply in next few quarters?
Your estimate, as I mentioned was that the prices last quarter were about $700. They are down by about 10% to 15% -- 5% to 10%, they had come down. But I think the good thing has happened there is, given the figures of the exports from India, and that has gone up quite a bit. So that helps to bring some sort of a balance. The expectation is that the industry and companies like us also are exporting, and that will keep the balance. So we don't expect the pricing to go down more than 5%, 7%, I think, over the next couple of quarters.
Okay. And how about demand, sir, anything -- any slowdown in demand, especially from sectors like textile or paper?
No. Fortunately, I think demand is quite robust. I think that too if you see the Indian economy is doing quite okay. So demand is quite all right.
Okay. All right. And any changes in global supply? Are we expecting China supply to be increasing -- going ahead or anything specific in Europe?
See, the challenge always is one is in Europe, one seeing 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 the 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've seen the impact on PVC. But as of now, in terms of the caustic front, yes, they are exporting more, there's 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's moving okay.
[Operator Instructions] We have the next question from the line of Anurag [ Dinkar ] Patil from Roha Asset Managers.
Sir, in the Bioseed business, how do you see the Q2 panning out? Because I guess some of the sales got postponed due to delayed monsoon. Can you throw some light on that?
Yes, because of the delayed monsoon, the paddy -- the acreage under paddy and coarse crops has declined. And it's both possibly that we may see a decline in these -- in the sowing and paddy. We don't know in some states, it's -- there's no longer any possibility of this being recovered. But in some states, there's still possibility that some of it will be recovered because of the recent rains that happened in these states, particularly in UP and -- but paddy overall, possibly there could be a decline in the acreage.
And sir, on cotton side, how is the acreage situation currently?
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. But as of now because of a reasonably good rains in the cotton-growing areas, particularly, in south and center, the acreage is pretty good. And because of the prices are also good. And therefore, cotton is fairly okay.
And sir, in the cotton illegal activity, cost of corn, how is it going on currently? Have the volumes increase compared to organized mills?
Illegal cotton keeps on growing, but there is also a new trend that farmers are moving into the nonbranded kind of cottonseeds. The cottonseeds apparently are also good in quality, but there's a significant shift to that from the branded products to the nonbranded. Of course, the illegal cotton continues to be a challenge for us.
[Operator Instructions] We have the next question from the line of Pratik Tholiya from Systematix.
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 when the recoveries can go down because of quality of cane can suffer due to lack of monsoon?
Are you talking about the entire UP?
I'm talking about the entire UP, and especially I think East and 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.
As I mentioned earlier, I think last year, we had very adverse weather conditions in terms of the heatwave and then a couple of instances are very, very heavy rainfall. This year, comparatively, it's been relatively more steady. And also the farmers have got paid in time. And the irrigation efforts by the farmers and the factories are going on well. And we do hope that the yields will be as good as normal in the coming seasons.
Okay. And sir, what would be the current ex factory prices for sugar in...
Roughly INR 3,500 per quintal.
We have the next question from the line of Vignesh Iyer from Sequent Investments.
I just wanted to know what is the capacity utilization for caustic soda and related chemicals as well as the PVC, if you could give me percentage.
So as I have mentioned in my opening remarks, in the last quarter, our capacity utilization for our caustic soda plants was 91% compared to 84% in the corresponding quarter last year.
Okay. And like the -- I mean, the aluminum chloride and PVC resins, if you could me.
So for PVC, it was 90% capacity utilization in line with what we had in the same period last year. Aluminum chloride was almost 100%.
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. So more or less, to understand that there is an increase in export quarter-on-quarter assets. If you could give me some data.
Yes. Again, as I mentioned in the opening remarks, that in this first quarter of this financial year, exports from India were about 54,000, 55,000 tonnes. And corresponding quarter last year, they will import about 3,500 tonnes. So actually, the export was much high as well, it was almost 54,000, 55,000. I gave the exact figure when I mentioned that. And even this month and future months, the industry expects exports to be in a fairly healthy range.
Okay. Okay. So there is traction from export market as well as domestic market for caustic soda? We can more or less infer that way, right?
Yes. I think, frankly, as one has seen, fortunately, that the export potential and the export growth while the industry was also quite stable. The industry is feeling quite confident that they will continue export at a fairly healthy rate. And if that carries on, I think it's going to be helping in balancing out.
[Operator Instructions] We have the next question from the line of Saket Kapoor from Kapoor & Company.
Sir, firstly, on the continuation to the -- our last speaker only. Sir, we are looking I think so for 1 million-ton capacity addition in caustic soda, in phased manner, extremely western part for, I think, FY '23. So taking that into account and currently the China factor, what will come -- will it be the demand factor that is more -- it is more inclined to the demand or whether there will be an oversupply that we can anticipate going ahead with this average capacity addition?
The good thing is that I think the demand in India is also growing at a healthy pace. And I think the economy is having a GDP growth in the range what -- it is 7%, 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, we always find when new capacity comes, there may be a couple of quarters of a little tightness because of excess capacity. But with good growth of 7%, 8%, it's healing out. So I don't know.
And the second point is, in any investment we make, like we are doing now increasing our caustic by 850 tonnes per day and flakes by 600 tonnes per day, we are simultaneously looking at how to improve our efficiencies and reduce our cost. So that is again an advantage we get with expansion. So it is, frankly, in the long term a win-win situation of expanding our capacity.
Sir, in the earlier remark about Vinyl prices going down, Shriram sir did mentioned 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 for June? I think in the presentation also, we have mentioned about prices trending lower. So what's the currently the trend for the ECU, if you could throw some more light on it?
Caustic soda, fortunately, we are not having that of a pressure coming in from China. I think PVC has a solid, much easier to export and move around than what it is for caustic soda. So we are not seeing that impact. 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%, 7%. And in the commodity, moving 10% [Foreign Language] is a very -- I think industry has to expect that, because we can't expect always going up or always going down. It doesn't go that way.
The important point is are we competitive on a world scale. And that is something which we are. We are giving a lot of focus on that in our operations and our cost of production, our customer relationships, et cetera. So that is a strong point. And otherwise, we are expecting next few quarters of caustic soda to be quite all right.
Sir, which markets are we targeting in -- according to the export segment, sir, which Geographies?
Pardon me, Saket? Can you please...
Where is exports going?
So exports are going to Southeast Asia, that's one big market, and they're also going to some African countries.
Okay. Sir, if I correctly remember, Japan, Iran have been net importers -- have been importers to the country for India. So how are they positioned? What is the material movement from these 2 geographies, Japan and Iran?
Yes, you're right. Japan also is in fact, [distribution] impacts them also through import in to Japan. So that is moving from there. Iran, I mean...
Iran, off late, Iran, see [ Saket ] always was -- so it would come into the market with sudden -- in some pockets, they will come and export and probably depress the market. It's never a consistent supplier to India. Or globally, it's not a consistent supplier. So it's more in pockets that they come and sell. So I think -- and off late, we haven't seen them coming in, at least not in India.
Okay. When we give the 50,000 figure of export, what quantity should be factored in from the imports from Japan in the country?
No, no. I don't think it's imports. I think India is discussing the distribution in order to export from India.
Okay, okay. So there is no import as of now from the Japanese continent?
So we have imports. Like in this quarter, our imports were about 11,000 -- in the country, the imports were about 11,000 tonnes and exports were about 64,000, 65,000 tonnes.
Net, okay.
Out of the 11,000, how much was from Japan, I'm not aware of that.
Okay. Sir, coming to the value-added part of the story. As you have told the chlorine has to be consummated in the Vinyl 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 products -- if sir, we are contemplating?
So currently, we are at around 4% captive consumption, excluding with HCL. With the -- with all the capacities 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 on chlorine.
Okay. And sir, currently chlorine spreads are positive or negative for us for this quarter?
They are negative.
By what amount, sir?
In the range of around 4,000 to 5,000 negative.
4,000 to 5,000 negative. Sir coming to the Bioseed segment, sir, I think last quarter for the March, I think we spoke about this turnaround plant for the Bioseed segment for 2 years or 3 years down the line. So what is store in for the Bioseed segment going ahead, sir? And what can we expect in terms of this business contributing to the total price and profitability including?
Well, in Q1, we have seen that in terms of the turnaround the early signs that's happening. But obviously, one quarter can't be a complete representative. But the early signs in terms of the acceptance of some of our new product pipelines, new products and new geographies. That's been good. And we hope that we would definitely this turnaround has started. And during the year, we should be able to turn it around as we had anticipated in the previous year when we talk about it.
Sir, last year, sir, it was a course correction exercise, I think, to the slow-moving inventory part and all of which was articulated by you. So this year, that is not going to play out. So this year, COVID, it still looks better for us.
Absolutely, they will look much better.
[Operator Instructions] We have the next question from the line of Ahmed Madha from Unifi Capital.
Am I audible?
Yes.
So I had a question on the PVC business. So currently, we are manufacturing PVC via calcium carbide route, do you think is there any incentive to allocate capital to manufacture suspension PVC via VCM route?
Sorry, which route you said?
We are in carbide.
We are on the carbide route. You said which route?
In countries...
Do you think there is an incentive to allocate capital there?
To switch over to the chemical route?
VCM. VCM.
Yes, yes, chemical route. Yes, yes.
So currently, the margins between VCM and PVC and the current issues are not very good. You need -- on an average, it used to be $150, but it's gone down below $150. So we have been evaluating it quite a bit thus far, and for us, we didn't see any merit in following that VCM route.
So as of now also you don't see any merit?
See, the economics are largely dependent on energy price. The energy prices are high, the VCM -- margin between VCM and PVC also goes down.
[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.
Okay. Thank you. Ladies and gentlemen, thank you very much for your participation in our Q1 financial year '23 earnings conference call. We will continue to work on our strategic direction of growing our businesses using scale, multiple revenue streams, enhancing efficiencies and achieving higher integration. We will also ensure that the balance sheet and cash flows remain strong. At the same time, we are 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.
Thank you members of the management. Ladies and gentlemen, on behalf of DCM Shriram Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.