DCM Shriram Ltd

NSE:DCMSHRIRAM

Earnings Call Transcript 2024-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to DCM Shriram Limited Q1 FY '24 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.

[Siddharth Rangnekar, executive]

Thank you, Riaz. Good afternoon, and welcome to DCM Shriram Limited's quarter 1 FY '24 earnings conference call. Today we have with us Mr. Ajay Shriram, Chairman and Senior Managing Director; Mr. Vikram Shriram, Vice Chairman and Managing Director; Mr. Ajit Shriram, Joint Managing Director; Mr. K.K. Kaul, Whole-Time Director; and Mr. Amit Agarwal, CFO of the company. We shall commence with remarks from Mr. Ajay Shriram and Mr. Vikram Shriram. Members of the audience will get an opportunity to pose their queries to the management following these comments during the interactive question-and-answer session.Before we begin, please note that some of the statements made on today's call could be forward-looking in nature and a note to that effect has been included in the conference call invite that has been circulated earlier.I would now like to invite Mr. Ajay Shriram to give us a brief overview. Over to you, sir.

[Ajay Shriram, executive]

Thank you, Siddharth. Good afternoon, ladies and gentlemen. Thank you for joining us for our Q1 financial year '24 earnings conference call. I hope all of you are keeping safe and in good health. I will give the overview of the operating environment of our businesses and progress on our growth initiatives following which, Vikram will give a perspective on our business performance. The world economy continues to face headwinds and is yet to stabilize from the effects of the COVID-19 pandemic and extended Russia-Ukraine conflict. These factors have led to cascading a debt of high inflation, high interest and slow growth globally. These have severely impacted the supply chain balance. Climate change is further adding to uncertainties and it is a tough operating environment. Our Chemicals and Vinyl businesses facing challenges as a result of global disruption in demand, supply and costs.Our ongoing investments to optimize costs, enhance scale and integration will provide strength to the Chemicals business. Sugar business environment is stable and the recently concluded CapEx cycle will add to the earnings. Our Shriram Farm Solutions and Fenesta businesses are witnessing good growth and have become significant contributors to our earnings.Sustainability is key to our business performance and growth. We are cognizant of the impact of climate change and has taken steps to reduce our carbon footprint, improve resource utilization and conserve water. Out of the total direct energy consumed, 42% is green, and we are 12x water positive. The supply of up to 43 megawatts renewable power has started in this quarter. There are multiple initiatives being undertaken at the manufacturing plants to optimize energy, reduce waste generation as well as add value to waste. We also have a strong framework of social issues -- on social issues and governance. We have been ranked among top 7% global chemical companies as per the Sustainability Assessment by S&P Global based on Dow Jones Sustainability Index.With that, I would now like to walk you through our various businesses. Chemicals. The global supply outweighs demand in major consuming regions and more notably in India, given the significant capacity additions. There is demand slowdown in major economies, but for Europe and U.S. for the reasons stated earlier, which is impacting demand in India, especially in the textile and related industries as well as other downstream chemical industries. These factors have led to consistent fall in product prices globally and in India over the last 3 quarters. Our total demand and prices continue to be stable.The product costs have started coming down sequentially. However, the decline in finished product prices is sharper, leading to lower margin. We expect our cost structure to improve from third quarter and onwards, with benefits from further decline in coal prices, commissioning of our new 120-megawatt coal-based power plant and 43-megawatts of renewable power. We have started sourcing renewable power from June onwards and it is being ramped up. Our projects will start getting commissioned from second quarter onwards with 120-megawatt power plant. All other projects will get commissioned within the third quarter. Our team is putting in its best efforts to commission them as per stated timelines.Vinyl. Global demand for PVC is driven by the housing sector. High interest rates have led to slowdown in growth in this sector in most of the large economies. The capacity utilization of PVC plants worldwide have increased hence the supply has outweighed demand. China is the largest producer of PVC and has added capacity. However, the demand has not picked up, and they are dumping PVC into global markets. China is also the largest exporter to India because of the state advantage.The global prices have remained subdued, including in India, with imports about 55% of its requirements. We are improving our cost structure and have been able to reduce the energy costs with lower coal prices and significant increased use of biomass by our [Kota] contracts. Despite these efforts, our margins are subdued. Industry has made representation to the government with respect to reimposition of anti-dumping duty. However, we are yet to get a favorable response.Sugar. World sugar balance is expected to be marginally in deficit for sugar season '22-'23. The international prices are firm at around USD 690 per metric ton for white sugar. However, this has limited impact on domestic prices because of restrictions of exports and the domestic release mechanism. Domestic sugar production estimates a sugar season '22-'23 is at 32.8 million metric tons, and the seasoned end inventory level is expected to be 4.5 million metric tons. We concluded sugar operations in the month of May, with significantly higher sugarcane crush as well as better recovery versus the last year.Most of our sugar expansion projects were commissioned last year. The 260 kiloliters per day grain-based distillery was started in the current quarter. We will see the full year benefit of all expansions in the current financial year. The Central government recently increased the FRP of sugarcane to INR 315 for the upcoming season. However, the cane cost in Uttar Pradesh continues to be higher at the state-advised price of INR 350 per quintal. The increase industries that drive price happened by season '21-'22, which has not yet been fully compensated by increase in sugar and ethanol prices.Recently, FCI has stopped the supply of rice ethanol production. This will impact grain-based distillery operations across India. There is a need to have more rational and persistent government policy for sugar as well as ethanol, which supports the farmer, the industry as well as the consumer. The Board of Directors have approved a 12 tons per day Compressed Bio Gas project at Ajbapur unit with an investment of INR 131 crores to be commissioned by Q4 financial year '25. This will add to a green footprint along with value addition to [benchmark] a byproduct of the sugar operations.Fenesta Building Systems. The business has emerged as a notable contributor to our performance. We continue to record healthy growth on the back of enhanced distribution and wider product range. Our project segment continues to record good growth both in volumes and pricing. In addition to products in UPVC categories, we are growing in aluminum windows and in WPC and engineered wood doors. The expansion at the Kota extrusion plant and the fabrication unit for glass facade is expected to commence towards the end of this quarter.Shriram Farm Solutions. This is another business that has emerged as the local contributor to our performance. We are focusing on new technologies and our own research based products, which has already started contributing and will drive the growth of the business going forward. We started our own manufacturing of some of crop care chemicals last year and by Q4 2024, we will start manufacturing some of the plant nutrition products like water soluble fertilizers and biologicals at our factory at Kota. We are also entering into technology tie-ups to bring new and innovative products to the farmer.Fertilizer. The business is stable. Gas prices have come down, which implies lower turnover which is a pass-through and lower subsidy buildup. Subsequent payments from the government have been absolutely regular.Bioseed. The business is seeing better traction in India. The international business is stable. We are focusing on the pipeline for new products. We are also optimizing costs and will further improve performance in this segment.Ladies and gentlemen, our growth agenda is nearing completion. We shall harness the combined benefits of our strategic CapEx that were designed to give key segments of growth and value-creating impact. This CapEx will also augment our capability to better navigate the volatile industry dynamics. We will continue to invest in growth, driven by our cash flows and healthy balance sheet.I will now request Vikram to give you a perspective on our business performance. Vikram, over to you.

[Vikram Shriram, executive]

Thank you. Good evening, everyone. I will now take you through the business performance for Q1 financial year '24. Net revenues for Q1 '24 stood at INR 2,780 crores versus INR 2,851 crores in Q1 financial year '23, a decline of 2%, impacted by lower prices and volumes in Chloro-Vinyl segment. Sugar, Fenesta and Shriram Farm solutions led to growth for the quarter. EBIT for Q1 financial '24 was at INR 183 crores versus INR 464 crores in Q1 financial year '23, a decline of 60% driven by lower product prices of Chloro-Vinyl segments. The Chemicals business reported revenues of INR 536 crores, a decline of 40% year-on-year. ECU prices were lower by 41% and volumes of caustic soda were down by 9% year-on-year. Hydrogen volumes and prices are stable. PBDIT was INR 36 crores, down 90%. Input costs, especially energy prices have started coming down but are still at elevated levels versus last year. Vinyl business saw a decline in revenues by 32% year-on-year at INR 164 crores, impacted by decline in prices of PVC and carbide by 39% and 30%, respectively. However, volumes of PVC and carbide increased by 4% and 19%, respectively. PBDIT was negative INR 3 crores versus positive INR 70 crores last year. Costs have come down, but are not enough to mitigate the impact of lower prices.In the sugar business, revenues net of excise duty was at INR 958 crores, an increase of 55% year-on-year due to higher prices and volumes. Sugar volumes were up 41% year-on-year due to higher domestic releases and exports. Volumes of ethanol were 359 lakh liters versus 350 lakh liters last year. Sugar prices, both domestic and exports were also higher by 3% and 25%, respectively. Ethanol prices also were higher.PBDIT was higher at INR 88 crores as against INR 22 crores for the above [indiscernible]. The increase in sugar and ethanol prices are still not commensurate with the increase in sugarcane costs done in the last season. In terms of crush, we closed the season with a crush shop 652 lakh quintals versus 549 lakh quintals last season, attributed to better drop and commissioning of sugar expansion projects. Sugar recovery on C-heavy molasses operations is 11.44%, higher 19 basis points over last year. We diverted approximately 11 lakh quintals of sugar for ethanol production via PAT and [indiscernible].Fenesta Building Systems revenue increased by 15% year-on-year to INR 192 crores and PBDIT by 23% to INR 40 crores. Growth was driven by volumes and pricing in project categories. Retail and projects categories, both saw higher order bookings in the quarter with an overall increase of 13% year-on-year at INR 208 crores. Shriram Farm Solutions revenues increased by 8% year-on-year at INR 236 crores, supported by a strong performance in the category of seeds and crop protection. PBDIT for the quarter came in at INR 11 crores as against INR 18 crores last year on account of higher marketing expenses.The team is working on strengthening the Shriram brand and increasing the geographical expansion. Fertilizer revenues were higher by 18% year-on-year at INR 378 crores, and PBDIT was INR 23 crores versus negative INR 17 crores last year. Planned maintenance shutdown in the last year resulted in volumes for this quarter being higher -- this year be higher by 62% along with better efficiencies and lower maintenance costs. In Q1 financial year '24, prices were lower by 28% year-on-year on account of lower energy prices, which are a pass-through.The urea subsidy outstanding is at INR 83 crores versus INR 462 crores at the same time last year. Bioseed segment saw a revenue increase of 4% year-on-year at INR 213 crores and PBDIT was up 17% at INR 23 crores. This was primarily led by the domestic revenues, which increased by 5% year-on-year at INR 186 crores. The company's net debt has increased from INR 8 crores as of June 30, '22, to INR 926 crores as of June 30, '23. This is on account of the ongoing expansion projects amounting to INR 3,500 crores. Return on capital employed for June '23 came in lower at 21% as compared to 37% for June '22.On the whole, we will aspire to deliver a continuous and sustainable growth, keeping our balance sheet and cash flows healthy. This brings me to the end of my opening remarks. I would now like to request the moderator to please open the forum for question-and-answer session. Thank you.

[Operator]

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

[Ahmed Madha, analyst]

My first question is on the caustic business. So if I look at the way the prices were in March and if I look at the import prices, it was about a full $440 to $430 a ton. And it has fallen to about $390 $400 a ton, which is a fall of about 7-8 percentage. But if I look at earlier edition, which we reported in the presentation in March was worth 36,000, and in June, it is about 27,000, which is about 25% fall. So what explains this divergence between 7% fall and 25% fall?

[Ajay Shriram, executive]

In terms of the prices, actually speaking a year ago, the price was in the range of about $650. And in the month of July, international price came down to $310. That is the reason why there is this sharp drop in prices of the final product because the international prices have dropped dramatically and if we can import it. And are aware that there's a match between international price delivered and domestic prices.

[Ahmed Madha, analyst]

But the divergence isn't large, which doesn't explain the fall for the domestic realization.

[Ajay Shriram, executive]

No, I'm saying that prices have fallen and also what happened here is that capacities are coming up, as you are aware, within India. Due to that, when there is a pressure on chlorine, then chlorine has its own negative pricing. So that has an added impact on making the ECU, which is combined price of caustic and chlorine, even lower. So that is the market price at which will be selling now.

[Amit Agarwal, executive]

I will just like to add here. I just want to add Ahmed that here in the month of January, February, March, international prices were ranging from about $600 in January, and they came down to close to about $420, as you rightly mentioned in March. The average national prices were better, right? And therefore, our realization averaged around 37,000 in Q4. And now in Q1, the average intentional price has been around $420 and international prices have definitely further come down from about 37,000 and now they have come down to $310 in July. So international -- domestic prices have seen a little sharper fall. And that also, as CMD sir rightly mentioned, that the capacity that have come up in the country, that's also putting pressure.

[Ahmed Madha, analyst]

Okay. Got it. Noted. And on the cost side, over the last quarter, first our understanding was that there was some inventory which we had for the coal and that was depleted. And from Q1, we were supposed to have low-cost inventory. But I don't see a decline here costs. So what explains that thing?

[Amit Agarwal, executive]

So you look at sequentially, sequentially, my cost of production has come down by about 10%, right? However, the fall in prices has been much sharper -- so about falling prices has been about 20% between Q4 last year to Q1 this year. So that's the reason why we're not seeing an impact on the margins, but otherwise, costs have come down below 10%. And as we mentioned in the opening remarks, we should see a little more decline in Q2, but a major decline will then start coming from Q3 onwards.

[Ahmed Madha, analyst]

Noted. Okay. And in the PVC segment, do we still see the weakness which we saw in Q1 or is there any improvement which you are witnessing?

[Ajay Shriram, executive]

On the PVC front, India actually, last year, we had the most remunerated prices ever, which starts at INR 50,000 per metric ton around that. Then it dropped about INR 75,000 in the last few months and the international price also was over $780. Now it has gone up marginally. The international price has gone up to $800 to $810. But it's too early to say because China has also got back into manufacturing, but the economy is not picking up adequately for consumption, so they are dumping. So as I mentioned earlier, we are working with the government to see how to [indiscernible] antidumping duty coming in from China. So we hope that can happen over the next couple of months. That should help us in improving our prices a little bit. But there is especially because India imports about 55% of the PVC requirement. So we are linked to the international price.

[Amit Agarwal, executive]

And here again, just to add on the cost front, we are consistently improving quarter-on-quarter. And this quarter again, there will be improvement but the prices are not in our control.

[Operator]

Next question is from the line of Riya Mehta from Aequitas Investments.

[Riya Mehta, analyst]

My first question will be in terms of what are the current domestic ECUs in the month of July?

[Ajay Shriram, executive]

They are a little below INR 27,000.

[Riya Mehta, analyst]

And what will be the chlorine cost in this? Negative?

[Ajay Shriram, executive]

Chlorine we see ballpark around INR 4,000 negative.

[Riya Mehta, analyst]

INR 4,000 negative. Second one being do we were seeing some demand in exports for caustic last year also, we've seen some growth. So are we being continued growth there?

[Ajay Shriram, executive]

See, exports have grown, but I would say they are not to what we expected, given that, again, as mentioned in the opening remarks that globally, the supply has increased because of better capacity utilizations in Europe because we were exporting to Europe and many other countries [indiscernible] the market and even Europe has become an exporter of caustic. So there is an oversupply situation globally.

[Riya Mehta, analyst]

Okay. And in terms of supply and demand, we're seeing some come back in paper demand as well as other alumina, et cetera. Do you think that will make up for the loss of demand in textile or maybe the H2 demand would be better?

[Ajay Shriram, executive]

Sorry, can you repeat that, please?

[Riya Mehta, analyst]

We've seen some growth in demand in paper sector as well as alumina sector. So do we think that, that will offset the decline in textile and the capacity utilization will increase going forward?

[Ajay Shriram, executive]

I think we feel that a couple of quarters, there will be a little stress because even though you're right, textile is also stable, but paper is also going up, but new capacity additions are happening. So that creates its own stress. So this is something which is a matter of concern and international prices are low. So all that combined, I think there is going to be a stress for little while.

[Riya Mehta, analyst]

Okay. My second question is in terms of ECH. What are the current prices and are we still seeing some traction there? And when do we plan to commission our plant there?

[Ajay Shriram, executive]

See, ECH current prices are in the range of INR 102 to INR 103 per kg. And the crude leasing, which is a key raw material would be around INR 31 INR 32 a kg. So both of them have come down. And therefore, the margins, although they are lower in absolute terms, but the margin PBDITA margins will be in the range of around 18%-19%. And in terms of our commissioning, as mentioned, we will be commissioning the plants -- the ECH plant in Q3.

[Riya Mehta, analyst]

In Q3, okay. My second question is in terms of sugar. So kind of -- so we've been hearing that in UP, there is some problems relating to OMC offtake of ethanol. Are you facing something like that? And what are your view on that?

[Ajay Shriram, executive]

No. There is no issues in terms of OMC offtake of ethanol. They have to meet their targets. So there is -- I think there is enough gap between the tender and the contract.

[Riya Mehta, analyst]

Okay. Because we heard that there are some logistics issues at the end of the OMCs, and they are filled with ethanol, so they're not buying anything right now in Q2.

[Amit Agarwal, executive]

We are not. Yes I mean they can be temporary, but we have not faced that issue. Temporary issues can be there.

[Riya Mehta, analyst]

Okay. And in the grain-based facilities and there is no -- the government is not going to provide with open rice anymore. What will be the impact on the margin for this as compared to when we had planned in the planning stage?

[Amit Agarwal, executive]

So see, it's a little early right now to say, because we will look at one option is the FCI grain, the rice. The other opportunity to get from the market. Now there are a lot of factors. I don't think it's the right time to give you the impact on the margin, yes, some impact will be there, but how much is difficult to say because we would like to now procure it from the market, that is one. And I really don't know how long the FCI ban will stay. So there are multiple factors, too early right now.

[Riya Mehta, analyst]

Okay. And in terms of profitability post this nonavailability of FCI rice, will it be B-Heavy, then syrup and then grain? Am I right?

[Ajay Shriram, executive]

See, it's a little early to -- as Amit mentioned, it's a little early to talk about this because there are discussions going on with the government for grains, for ethanol. Otherwise, we will not be able to meet the -- started for ethanol lending percentage. So those discussions are on and we do hope that some kind of a main resolution comes up in the next few days.

[Amit Agarwal, executive]

I would also like to in you the total tender for a total contracted value for grain-based ethanol is 130 lakh liters and what has been supplied in now is only 60 lakh liters. So that itself be a gap. So that also has to be covered. Otherwise, there'll be less amount than what is contracted, less amount available.

[Riya Mehta, analyst]

Right. Great. And then in terms of Vinyl, my question is since we are working at currently negative EBIT levels. Until when will we -- till what price will we go and produce more of Vinyl?

[Amit Agarwal, executive]

See, we are actually making carbide and Vinyl. So we play between the two, whichever gets the better realization we come -- we're not going to stop production by any chance.

[Vikram Shriram, executive]

And anyway there is a contribution.

[Riya Mehta, analyst]

It's negative INR 7 crores EBIT or --

[Vikram Shriram, executive]

No, but there's a contribution there fixed cost before the EBIT.

[Riya Mehta, analyst]

Okay. And what will be the current loading utilization for us?

[Amit Agarwal, executive]

So chlorine utilization, the Bharuch plant where we have almost 60%, 70% of the capacity -- current capacity. There 40% we are supplying through pipeline and captive is about 4% to 5%, which will increase to 15% once all of the downstream plants come up. And so ballpark, you can assume that Bharuch will be close to about 50%, 55% captive or through pipelines. The Kota complex is almost 30%-35% captive.

[Operator]

[Operator Instructions] Next question is from the line of Pratik Tholiya from Systematix Group.

[Pratik Tholiya, analyst]

I just wanted to understand one thing. So typically, the understanding that we had a when prices come down and the cost is high. Many small and marginal players tend to rationalize their capacity in order to reduce the supply, which kind of supports the realizations and therefore, there is some balance that we see in the industry. Is anything of that sort of likely to happen, considering that the costs are still pretty much higher, like you mentioned, and the realizations are at INR 27,000. So anything like that, are we foreseeing?

[Ajay Shriram, executive]

No. No. That is something [indiscernible] and industries are trying to gain whatever they can make by phone, everyone is running at a reduced capacity. So it's already running at reduced capacity, but each one working on their own position in the market.

[Pratik Tholiya, analyst]

Okay. Okay. No, because many -- so we are basically macro integrated and we also have captive power. So we would be still better off in the cost curve versus some of the others who will be actually leading at current realization levels. So would they not be kind of curtailing the capacity?

[Ajay Shriram, executive]

So each one is working on whatever, what's out for them. And some people are working a little higher capacity utilization, some are working a little lower, depending on the cost of production, depending on the offtake within the radius of their factory, where the freight costs are also within control each company has to work out their own economics.

[Pratik Tholiya, analyst]

Sure, sir. Okay. And sir, secondly, could you just talk a little bit on this [CBG] plant that you're putting up, what sort of opportunity is available and this INR 130-odd crores that you're investing, what sort of IRRs are we targeting over here?

[Ajay Shriram, executive]

See, this is an opportunity. I mean this is a coming up sector, one because this is from biomass. And for us, it's like adding value to our byproduct. And the other thing is it's CBG, which is a cleaner fuel. So the opportunity is immense. We have just made our first beginning here. And in terms of returns, it will be in the range of around 18%, 19% return on investments. And probably, we do see that going forward, the technology will improve from the way it is right now. So that should further improve efficiencies and help returns further. So the sector will undergo a change. This is, I think, the starting.

[Pratik Tholiya, analyst]

Right. And so the raw material, you said will be basically press mud, which is a waste product in the sugar business.

[Ajay Shriram, executive]

Yes.

[Operator]

Next question is from the line of Rohit Nagraj from Centrum Broking.

[Rohit Nagraj, analyst]

Hello? Am I audible?

[Ajay Shriram, executive]

Yes, yes.

[Rohit Nagraj, analyst]

Sir, my first question is broadly from a medium-term strategy perspective. Now that most of our plants are likely to get commissioned in near future. From a capital allocation perspective, particularly talking from the chemicals business, what is the thought process from the management in terms of diversifying into any other streams of chemicals apart from the existing ones where we already are amongst the market leader and we have first-mover advantage in ECH, et cetera. So what's the broader thought process from a medium- to long-term perspective?

[Ajay Shriram, executive]

As a group, we keep exploring what are the opportunities available to us. We took up the initiation of expansion of our caustic soda plant, expanding our aluminum chloride and doubling that capacity at Bharuch, of adding ECH, adding H2O2, getting into studying various other areas of value add down these two chains at the moment. We have set up an R&D center in Vadodara, which is working on what more value addition can be done on ECS and H2O2, even chlorine, what more can we do down the line. So we completely keep exploring what are the options and alternatives open to us. So at the moment, we already have these projects online, but we are looking at more projects and at the appropriate time, the board will take a decision of investing further. And that's part of our strategy, we have to keep growing. We have decided to move on the value-added chain more. So that will happen in due course of time.

[Rohit Nagraj, analyst]

Sure, sir. That answers the question. Second question is you already talked about -- you've been talking with the government on the import of PVC from China and supposedly, the quality is also bad. So when is the likelihood that the government will take some action on this, given that it's been in the talks since fairly long time?

[Ajay Shriram, executive]

I know it's a big challenge, which I wish you when it will happen. But we are following up with the government. We are telling them in terms of the quotas and the [QR] issues, et cetera, et cetera, how to restrict it because it's not good in terms of the expense and the quality of the PVC. So industry is following up with the government very difficult to say, very difficult to say, Rohit by when it will happen.

[Operator]

Next follow-up question is from the line of Riya Mehta from Aequitas. [Operator Instructions] Next question is from the line of Pratiksha Daftari from Aequitas Investments.

[Pratiksha Daftari, analyst]

I just wanted to understand how much of our sugar volumes would be refined --

[Operator]

Pratiksha, sorry to interrupt you. May I request you to speak a little louder, please?

[Pratiksha Daftari, analyst]

Yes. Am I audible now?

[Ajay Shriram, executive]

Yes.

[Pratiksha Daftari, analyst]

Yes. I just wanted to understand that what is the contribution of refined sugar in volumes right now? And what is the realization for refined vis-a-vis the addition?

[Amit Agarwal, executive]

So Pratiksha around 60% of our total volumes now are under refined sugar. And the differential is anywhere ballpark around INR 70 between sulfated and non-sulfated sugar.

[Pratiksha Daftari, analyst]

INR 70?

[Amit Agarwal, executive]

Seven-zero, per quintal.

[Pratiksha Daftari, analyst]

All right. Understood. And what would be our conversion or sugar production right now? As in apart from cane cost of production, if I were to just split off the gains.

[Amit Agarwal, executive]

See the total cost, I mean, as of date, the inventory we hold, we are holding at about INR 3,150, INR 3,160 per quintal.

[Operator]

[Operator Instructions] Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

[Ajay Shriram, executive]

Thanks. Thank you, ladies and gentlemen, for your participation in today's call. We remain focused on pursuing our strategic direction on business growth through scale, diversifying revenue streams, optimizing costs and achieving greater integration. We are committed to maintaining a robust balance sheet and healthy cash flows. As a company, we are equally focused on environment and community welfare. We aim to forge stronger relationships with all our stakeholders. Once again, thank you for joining us on our Q1 earnings call. We wish that you stay safe and in good health. Thank you very much. Goodbye.

[Operator]

Thank you very much. On behalf of DCM Shriram Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.