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Gujarat Fluorochemicals Ltd
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Ladies and gentlemen, good day, and welcome to the Q1 FY '23 Gujarat Fluorochemicals Limited Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors Limited. Thank you, and over to you, sir.
Thanks, Michelle. Good afternoon, everyone, and a very warm welcome to DAM -- to Gujarat Fluorochemicals Q1 FY '23 Post Results Earnings Call hosted by DAM Capital Advisors Limited. I thank the Gujarat Fluoro management for giving us the opportunity for hosting the call.
I'll just announce the name at Gujarat Fluorochemicals management team, and we'll hand over the call for them to make the opening comments from there on. Representing the Gujarat management on the call today, we have Mr. Vivek Jain, Managing Director; Dr. Bir Kapoor Chief Executive Officer; Mr. V.K. Soni, Head projects and New Initiatives; Mr. Manoj Agrawal, Chief Financial Officer; Mr. Vibhu Agarwal, Head of Investor Relations. I hand over the call now to the Gujarat Fluorochemicals team to take it forward from here. Please go ahead, sir.
Thank you very much, Nitin. On behalf of Gujarat Fluorochemicals Limited, I would like to extend a very warm welcome to all of you. We are happy to inform that Board of Directors of Gujarat Fluorochemicals Limited has its Board meeting approved the financial results of the company for Q1 FY '23.
The financial results as well as the earnings presentations are uploaded on the website of the stock exchanges as well as on the website of the company. I will take you through this presentation initially. Then we can open the call for any questions that you all might have. Starting with the financial highlights at the consolidated level for the quarter ended 30 June 2022, consolidated revenue for the Q1 FY '23 was at INR 1,334 crores, up by 46% on year-on-year basis. Consolidated EBITDA for Q1 FY '23 was at INR 459 crores, up by 80% on year-on-year basis.
The EBITDA margin for Q1 FY '23 were at 34%, up 6 basis points from 28%. Consolidated PAT for Q1 FY '23 was at INR 303 crores, up 101% on year-on-year basis.
So this was considered performance at the company level. Now we'd like to take you through the detailed overview of the financial performance during the quarter for each business vertical.
Caustic soda revenue for Q1 FY '23 stood at INR 189 crores as compared to INR 88 crores in Q1 FY '22, up 115%. The chloromethanes revenue for Q1 FY '23 stood at INR 102 crores as compared to INR 94 crores in Q1 FY '22, up 9%.
Refrigerant revenue for Q1 FY '23 stood at INR 196 crores, which was INR 93 crores in Q1 FY '22, thus having a growth of 111%. The PTFE sales for Q1 FY '23 were at INR 379 crores as compared to INR 320 crores in Q1 FY '22, up 18%.
The new fluoropolymer sales were at INR 331 crores, up 124% as compared to INR 148 crores in the same quarter of previous year Q1 FY '22.
Speciality chemicals sales was up 38% from INR 86 crores to INR 119 crores when compared to the same quarter of the previous year Q1 FY '22. So this was the segmental performance of all the business verticals. As regards to ROCE and ROE, so ROCE is significantly improved from 24.46% to 35.3%. And ROEs improved from 20.1% to 27.70% as compared to FY '22.
On the debt front, the company is virtually debt-free, and the net debt-equity ratio stands at 0.29. On working capital cycle, our continuous efforts have resulted in further reduction of the working capital cycle from 120 days as on 31st March 2022 to 109 days as on 30 June 2022.
As regards to our expansions and CapEx, we continue to expand and commercialize additional capacities for new fluoropolymers and all our new projects and additional capacities, as announced earlier, are progressing especially.
So with all these initiatives, we'll offer a sustained business growth with higher margins and will lead to further improvement in the financial performance as seen in the last few quarters and will continue in future also. So that, ladies and gentlemen, is a walk through to the presentation. I would like to open this up for any questions that you might have and then we'll, as the management team, will try to answer all your questions. Thank you.
[Operator Instructions] The first question is from the line of Sanjesh Jain from ICICI Securities.
First of all, congratulations on a very strong set of numbers. I have a few questions. First, on the PTFE side, PTFE revenue has declined 16% sequentially. Now I know that you have mentioned in the presentation that there was a lower availability of TFE. Now what -- why was this issue with the TFE availability? I thought, we were also adding another TFE plant that is TFE 3, now what has caused the disruption in the TFE, if you can explain that?
Yes. So Sanjesh, as you know, as we have mentioned that there was -- we have started the R-125 production also in the last quarter. And while, yes, we have planned to start up the third TFE line also but that is something which has now come up. So there was some amount of disruption on availability of TFE during that period. But from July onwards, that plant is also in full production.
So our TFE selling is now up and running?
Sorry?
The TFE plant 3 is running now. It's operational.
Yes, it's running all right. So we are...
The second on the new fluoropolymer -- no, let me first complete this R-125. Now what was the sale of R-125 in terms of volume for the Q1 and for the full year what is the volume we are looking at?
So we don't provide now the quantitative break up of our segment revenues. We will not be able to be in a position to provide you this information.
But will it be fair to assume that incremental revenue in the webcast whatever has come in is largely the benefit of R-125 or there is also a normalization of R-22, which was lower in last quarter?
I think the assumption is right.
Got it. Got it. On the new fluoropolymers, sir, that looks like going all up. Can you help us explain what is driving the strong growth in new fluoropolymer, almost 90% sequential increase? Are 2 things here: one, which are the new capacities in the new fluoropolymer have we added? That's number one. Number two, what is the volume growth or which are the products which is driving the growth? I know you don't give the volume, but some qualitative assumptions, which are the product within the new fluoropolymers which is driving? And how has been the pricing in the new fluoropolymer? So this is on the new fluoropolymer.
Do you want to take it?
So yes, Sanjesh. So new fluoropolymers, actually, there has been all-round increase in -- whether it's in FKM, PVDF, PFA and to some extent, micropowders also. So there has been an all-round increase in all the new fluoropolymers. There has also been a price improvement, which has taken place in the last quarter. That also has contributed to the overall numbers going up. So both volume and prices have contributed to this increase in revenues.
And what is the facilities have we added for the new fluoropolymer in the last, say, a quarter or so?
So in the last quarter, as we mentioned, we were adding about 300-odd -- 400-odd tonnes of new fluoropolymers. And as we have mentioned that we expect to keep on adding more capacities during this financial year.
And what is the capacity utilization are we running in the new fluoropolymer?
So capacity utilization would almost be about 75%. And we are -- and since we are adding more capacity by the end of this financial year, we would expect that on the enhanced capacity, we'll be at about 75%, 80%. And the balance, the balance production will be made up during the next 2 quarters in the next financial year.
Got it. Got it. And what is the kind of capacity addition we expect to add beyond the 400 metric tons for this year in new fluoropolymers?
So that's an addition of about 400 additional tonnes.
So basically, this year, beyond this 400, we will add another 400 to 500, is that understanding right?
That is right. That is right.
So basically, we will add this 12,000 metric ton of capacity on the base of 8,000-odd metric ton we had last year, right? So we will reach 20,000 metric ton of capacity by end FY '23?
Yes, by and large. Yes, that's right.
And we expect to have a 75% utilization ballpark there in this capacity? Or what we are talking is only for the capacity which was there for last year?
No. By the time this new capacity is added by the end of this financial year. At that point of time, with the added capacity, we will be at about 75% capacity utilization.
Got it, sir. Got it. One last question on the cost side. Power cost has gone up significantly, now is this expected to come down? Are we seeing the coal prices coming down? How should we think about are we doing anything to control the power cost? Are there any measures we have taken to see that we can normalize the power cost?
Sanjesh, at this point of time, I don't think there's anything much that we can do because, as you know, coal still remains at a fairly high price of almost about $135 per metric ton. That is not going down. And of course, the grid pricing is also high. That also is not going to go down.
So I think for the time being, at least for the next 1 -- till the end of 2023 -- '23-'24, we don't expect much reduction in power costs. Beyond that, we are looking at the possibility and this is something which is -- I cannot share with you the details at this point of time. But we are working on a possibility which can help us in reducing power costs fairly significantly from the year '23-'24 -- in the year '23-'24, in fact. Not '23-'24, it's '24-'25.
So you're telling that new benefit which we are looking at power cost will start showing up from FY '25?
Yes. That's right, '24-'25.
'25, actually, Sanjesh.
The next question is from the line of Ketan Gandhi from Gandhi Securities.
Yes, sir. Sir, with regards to R-142B, last time, last presentation, we have said we are selling from this quarter. So this refrigerant gas has any component of R-142B, or we are using it for making PVDF?
Yes, by and large, we are using it for making PVDF and FKM. From this quarter onwards, we will start the exports of 142B to some select customers.
Sir, can you quantify? I mean how many tonnes per month or?
No. At this point of time, it can be difficult for us to quantify. But we will be exporting that -- exporting 142B as per our business plan and the excess availability over and above our own requirements of 142B, which, as you know, will keep on expanding because of our expanding production of FKM and PVDF.
So sir, is it safe to assume that whatever capacity of PVDF we have, we will be consuming R-142B for the captive use and balance quantity we will be selling to the export markings.
Right. That is right.
That's helpful, sir. And sir, regarding new energy business, regarding what is our, I mean, how we are geared up for LiPF6 and other products?
Yes. So for LiPF6, the battery salt, we'll be completing the project by end of this year. And early next year in January -- I mean, calendar year January, we'll be pushing out samples, and it takes about a few months, 3 months for validation. So we will start commercializing LiPF6 thereafter. So maybe in the first quarter next year.
Sir, we are planning for a domestic or export purpose or both purpose?
At the moment, as you know, domestic is a bit slow. So we will start with export and followed with the sales in the domestic area.
Is this only...
The idea that we will get the plant commercialized, the quality approved for battery purposes and after that, I think in the second half of '24 -- in the second half of calendar year '24, the demand from the domestic battery manufacturers will also come up as well as demand from European battery manufacturers.
Fair enough, sir. Sir, with regards to LiFSI, are we planning to manufacture ourselves? Because last research report has been saying that if you add higher portion of the LiFSI in the electrolyte, it gives a very good quality and it handles the density of the energy?
Yes, you're right. Actually, at the moment, the battery chemistry is predominantly LiPF6, but there are move towards adding LiFSI, and we are also gearing towards it by evaluating the technology, et cetera. And apart from that, there are other additives also which also we are evaluating. As we mentioned last time, we have a very integrated approach for the entire electrolyte arena.
Sure, sir. Sir, in solar back panel PVDF, how much capacity we are looking at in terms of square meter or...
See, we are looking at metric tons because square meter depends upon the thickness, the microns. So if the micron is less the square meter is more and vice versa. So we will start with about 700 metric tons in a year.
Great. And sir, Adani is building a new -- ANIL, that is Adani New Industries Limited, 20 gigawatts of hybrid wind and solar. And if we look at it, then there is an ample opportunity for us to tie up with them or supplying with them regarding this solar back panel, PVDF. And even they are looking at the more means production of using the electrolyte with either alkaline method or the PEM model. So what is your view on that, sir?
So actually, we have these 2 projects in new age. One is lithium salt, which we discussed. The second is the PEM, the proton exchange membrane which goes predominantly in the fuel cells and also into the electrolyzers.
So regarding your question of alkaline versus PEM, both will remain in force. And for like, for example, for transport sector, the fuel cells, it is predominantly PEM, whereas for the nonfuel cell sector for non-transport sector like for making ammonia, et cetera, it will be mostly alkaline cell. But the disadvantage or the advantage of PEM is that it can start very rapidly compared to longer term required to start alkaline.
So I mean, are we geared up to supply to Adani if need arises?
For yes, the PVDF, we will be -- we are talking to them and we have initiated the exercise. So we will certainly be supplying to them or whosoever else, which needs it in the domestic market. So that is 1 thing is sure. And as far as PEM is concerned, the project is still about 1.5 years away. We are in the process of developing the technology and we have the starting raw material for making those PN. So there is a full scheme R&D effort, which is going on also in conjunction with some of the GFL labs. And we hope that in about a year's time, we should be able to develop as the member and then thereafter, we'll commercialize it. But the demand for PA mandate is really going to start from about 2 years from now when electrolyzers and fuel cells, the production of those start increasing.
[Operator Instructions] The next question is from the line of Rohit Nagraj from Centrum Broking.
Congrats on a very strong set of numbers. Sir, just first question, given that the numbers have been phenomenal during the quarter. Can we expect that this is the base level at which we will be able to operate incrementally given that there are multiple capacity expansions which are happening and ongoing. And from a sequential basis on a quarter-to-quarter basis, are performance overall should be improving from Q2, Q3, Q4 onwards. Is that the base assumption that we can make?
Yes, you are asking too many questions about the future. In the future, as you know, it is not always very predictable. But yes, basically, since we are making additional investments on various fronts, we certainly expect the revenues and profitability to keep on improving.
Right. Got it, sir. Sir, second question is particularly on the spec chem. So what has changed during the quarter? And why there has been a serious increase in the performance on a sequential basis. Are there order backlogs, which have been executed during the quarter? And do you expect that this particular kind of performance is sustainable? Or there is any kind of seasonality which may affect incrementally?
So your question was related to speciality chemicals?
Specialty Chemicals, sir.
So I think you're partly right because -- the growth is seen because the last quarter was subdued for [indiscernible] reason because of the incidence. So there were some orders and also the new plants, the capacity that we had planned are at the various stages of commissioning. Those are yielding result now. So we expect this to continue.
All right. Sir, just one last clarification. On the wind power project. So last quarter, we had indicated that 20-megawatt is likely to be commissioned in July. If you can tell us what is the status for the same?
So Rohit, that will be commissioned during this quarter. There has been a delay of about 1 month, 1.5, but the commission activities are going on, and we are very hopeful that by the end of this quarter, those will be commissioned.
So some effect from the benefit from this wind power project will start trickling from Q3 onwards, is that the right assumption?
Yes, that's right.
The next question is from the line of Archit Joshi from B&K Securities.
Congrats on a good set of numbers. So my first question is on PTFE, if you can broadly highlight the structure of the industry at this point in time, if you are seeing any imbalances in the supply-demand equilibrium given that PTFE spreads continue to be quite strong? Any comments on that would be helpful.
See, the PTFE demand continues to be strong as far as we are concerned because as you know, over a period of time, we have spent a lot of time in energy and efforts to develop large amount -- large number of grades, which are required in different applications -- across different applications.
And as you know, we export -- almost about 75% of our PTFE is exported to Europe and U.S., where these applications are required. So what -- and there is a continued growth in these applications, where demand is coming in and a sufficient amount of capacity doesn't exist or supplies are not coming in from the established legacy suppliers, as a result of which, we have been able to fill our capacities. And we have moved more and more towards these grades, which are now required in Europe and U.S. in different demanding applications.
And this has also given us a certain amount of sort of, I would say, pricing power because we have been able to step in to meet the demand -- the shortage between demand and supply.
Sir, I was - what I was trying to understand is how sustainable is this the supply shortage situation that we are seeing. What's exactly happening on that front? Because we understand that a few months back, we had a whole lot of shutdowns in China from the [indiscernible]. Is that what is emanating into supply shortage? And how long would you think that this ends on given the fact that China is known to have the highest TFE capacity? So what's your virtue on that, sir?
Not really because, as I mentioned, we have spent time in energy and effort to develop a huge number of grades, which go into different applications. The Chinese are not present in most of the grades, at least in the Western markets.
So we don't see their presence there at all, even despite whatever supply disruption, which might be happening or production disruption might have been happening in China over these last 2, 3 years, but even prior to that, we have not seen Chinese participating in those kind of applications. And the demand for those applications and the demand from those applications is only growing.
Understood, sir. Sir, another question on the integrated approach that you spoke of a bit earlier on the LiPF6 front. We understand that we are making great progress on manufacturing the salt that is an LiPF6.
You also mentioned that there could be certain additives, but in your interactions with some of your customers, have you understood anything on this front that they're looking for a more packaged solution of an entire electrolyte, which also involves the solution, how is the supply chain placed on that front? Are customers only looking for a particular chemical or the entire pack so that they can integrate their operations efficiently?
Well, yes, customers would prefer if you can supply them everything, but that is unlikely to happen. I don't think any company will be in a position to supply all the various ingredients which are going to be required. So we have picked and chosen those, which we think will give us where we will have an advantage and where the requirements are going to be sufficiently large for us to participate in that market.
The second thing is that till now, most of this production is centered in China. And I think as we all know, there is a very, very strong move for a China Plus One strategy. So with all these battery plants which are slated to come up in U.S. and Europe, they would certainly -- and from interaction, which we've had with customers now and which are ongoing, there is a very strong interest for those potential customers to enter into some kind of a supply arrangement with us.
So we have seen a very strong market developing once the initial are -- the products are qualified fully and the battery capacity starts coming up, both in Europe, U.S. and India. It's probably going to happen almost at the same time from middle of calendar year 2024 onwards.
The next question is from the line of Enam Investments -- I'm sorry, the next question is from the line of Krunal Shah from Enam Investments.
Congratulations on a very great set of numbers. Two questions. One is, what are the key applications that are driving the demand for FKM currently?
What for?
FKM.
FKM.
Okay. So you see -- as you might know, FKM is largely used in the auto industry, and there is, of course, a very strong industrial segment also. We are seeing demand growth in both those 2 segments and across geographies, whether it's U.S., Europe, China, even China, Japan and, of course, in India. So we have -- so there is a strong demand growth. And of course, the automobiles are also becoming more compact and they have to be more environmental trend in the sense that the emissions have to be controlled more stringently.
This -- all this is also requiring a larger component of FKM in the cars. So as a result of all this, we are seeing a huge growth in demand. The other thing also which has happened, of course, is that we have developed, again, FKM, we have developed maybe about 20, 25 grades over the last few years, which are suitable for just about every application again in FKM. And that is the reason why we have been able to now diversify our customer base across geographies.
Another element, of course, which has come to our advantage is the fact that we are now vertically integrated, and we have our own raw material, which is the starting raw material 142B, which, again, up to now largely has been available from China, where there are disruptions on supplies and availability. And all these 3 factors were combined to give us a very, very strong healthy offtake from the consuming segment.
Are we exporting FKM to China also?
Yes. Some grades which we don't make. There are some grades which are required in batteries. And these are new grades which have been developed in order to make the batteries safer in use. So for the sealing requirements in those batteries, we have started now supplying certain high-end grades of FKM to China so, and we hope we are hoping that, that application will keep on growing because China is a huge battery production capability.
Great. Great. And one last question. You said that in PTFE, the legacy suppliers are currently short on supply or they are supplying lesser volumes. What are the key reasons for that, sir?
Well, the key reasons are they're not adding capacity because they have not added capacity because for a couple of reasons. One is environment because of very, very strict environment control, the costs the CapEx which are required for putting up capacities is very large.
Second, raw material availability is also a major issue there. So for these reasons, they have been -- they practically not increase any capacity in the last few years.
The next question is from the line of Rohan Gupta from Edelweiss.
Congratulations on such a solid set of numbers. Sir, couple of questions. First is on our PTFE limitation to meet our PTFE requirements. So you mentioned that our PTFE revenues in the current quarter has been lower than the Q4 and it is primarily because of the limited availability of TFE, which I understand that TFE has been moved to the value-added PTFE and other grades of PTFE, is that the right, sir?
And also, we have started production of R-125, which in our technology is from the TFE group.
Okay. So we are utilizing this TFE to R-125 and other grades of PTFE, I mean PVDF and probably FKM in all those?
No, no, the FKM, PVDF doesn't require TFE. That is made from VDF, another starting monomer, which is based from 142B.
Okay. So going in micropowders and other ways of PTFE, right?
Micropowder is going into PFA.
Okay. So sir, this TFE will see that will remain the limitation unless we increase the capacity of TFE and we keep on moving to R-125 and other...
Yes, so we have mentioned -- as we just mentioned, we have taken our third TFE in line -- third TFE plant in line. And from this quarter onwards, we should not face a problem of unavailability of TFE for the requirements in different product categories, including PTFE.
Okay. And sir, second question is on the solid realization which you have seen in the refrigerant gases. How do you see that the realization -- because what we hear that the realizations have started softening in selling quarter onwards on the current month onwards. So how do you see the realization across the...
I don't think there is going to be any impact on realization even in the next 2 quarters.
Okay. So they will be invalid.
Yes.
And sir just third I will -- and after that I'll come back in queue. Sir, you have seen that the solid demand coming from, sir, FKM and higher acceptability of the product. You have already mentioned that by end of the year, you will be almost reaching up to more than 75% utilization and you are across the chain of PTFE value-added. Do we have any already plants in place to meet the growing requirements of this FKM and other PTFE fluoropolymers, sir?
See, we are continuously expanding capacities. We are adding new capacity, additional capacities in FKM, which will keep on coming -- we will keep on getting into production in the next few quarters.
Sir, in terms of CapEx plans, if you can just mention that what you see that can be the investment or -- of entire fluoropolymers can including FKM and PVDF, given the solid demand scenario right now, how much do you think that there is the investment capability is there? And how much investment is this segment can absorb over the next 12 months?
So actually, we have given those numbers in the last presentation, but maybe we'll just amplify on that further -- for -- as we see it just now. So the year ended March '22, our gross capital was about INR 4,300 crore and every quarter this year, we plan to add about INR 300 crore, so about INR 1,150 crore in the whole year. In the last quarter up to June, we added INR 300 crore. And this INR 1,200 crore, the breakup is about -- broad breakup is about INR 400 crores for new fluoropolymers; about INR 300 crore in specialty, including battery chemicals; and in special chemicals like VDC, refrigerant gases, INR 300 crore; and wind energy and miscellaneous infrastructure about INR 150 crores. So this totals about INR 1,150 crore.
Okay. That is for the current year FY '23, you plan to do this, right?
Yes, please. And for next year, we have projected about INR 1,000 crore.
Right. That remains, sir, what it was earlier itself, so...
Yes. It could possibly go up by another INR 200 crores, INR 250 crores.
Okay. And sir on the batteries requirement from the EV side, you mentioned that definitely, we are on a -- we may expect some approvals coming in like for like from the customer by end of this year. If you can just mention that which are the players with whom we are competing in the international market, in the global market? Because we mentioned that the domestic demand from EV batteries remains be muted and your focus is more on exports.
So sir, when we are giving the trial runs and giving the product sampling to the customers, so we are the customers, we are suppliers, we are completing with and...
We are not in a position to disclose the customer's names , but these will be customers in China, Korea, Japan and some in Europe. We are also sending -- we are also -- we will also be sending sample quantities to the potential Indian battery manufacturers who will have the capability of testing and analyzing our quality and comparing it to what is their specified quality.
The next question is from the line of [indiscernible] from Nippon India Mutual Fund.
Sir, on the new-age polymers, fluoropolymers, you mentioned that there's a price uptick. So if you can just tell us that on quarter-on-quarter, what will be the price range increase across these products?
No, that's very, very difficult to estimate. That will all depend upon the demand-supply situation, which is prevalent at that time.
No. For Q1, I was asking Q4. Sir, Q1 over Q4, the pricing.
Q1 over Q4, it is in double-digit numbers, but I won't be able to give you an exact number at this point.
Okay. So sir, in this new-age fluoropolymers will mainly compete with European players, right, unlike in PTFE where we compete with China. So if the cost increase in the Europe for the energy is significant, we would continue to benefit on these higher realizers going ahead?
Well, we hope to. As I mentioned, it's more -- not from the point of view it's cost-push in Europe, but it was also from the point of view that availability of material is not there. And given the fact that we have now developed large number of rigs for various applications within FKM usage also, it's difficult for any -- it's difficult for more supplies coming in to displace us. So from that point of view, we feel that we have a fairly good position in the market. And as a result of which, we hope that we will be able to sustain our prices.
What 6%, 7% of the market share on volume comes?
FKM?
Yes.
By the time our new capacities come up maybe by the end of the year, it could well be about 10%, 10% of the world market.
World market. Okay. Sir, on the battery chemicals, how is the product approval cycle? I mean can we -- is it something which is very long or with the plant commissioning the sales can be made?
So in the chemicals, it could take 3 to 4 months after we start supplying commercial samples. And in polymers, it could well take about 6 to 8 months.
The next question is from the line of Dhruv Muchhal from HDFC Mutual Fund.
Sir, R-125 capacity is around 5,000 tons. Is that right?
Well, that's what I'd mentioned last time.
Okay. And sir, with this TFE expansion, Line 3, we should be -- is it fair to say the PTFE expansion plus the R-125 can run at decent capacity then?
Yes, absolutely. And of course, there are some other polymers, also which are made from TFE, like PFA and micropowders, which as and when the demand for that increase, we should be able to cater to that requirement, too.
All right. So the TFE expansion handles are upcoming expansion in PTFE plus the R-125 plus probably some of the other fluoropolymers?
Right.
Sure. And sir, this quarter, is it fair to assume from a PVDF and FKM, we were fairly integrated for R-142. I mean, the numbers reflect the R-142 benefit, the backward integration benefit?
Yes. Because we have stopped importing any further 142B.
So this is 142. Got it. And sir, lastly, can you give the capacity utilization for our PTFE for this quarter?
It's almost about 85%.
Sir, I thought this quarter would be a bit lower because you had diverted some volumes to...
Yes. So that's the reason why 85%. Otherwise, we have been running our PTFE capacity at close to about full capacity utilization about 100%, 90%, 95%.
Sure, sir. And sir, one small request is you have a lot of capacity additions happening across portfolio. So if it is possible, if you can give in your presentation, what are the capacities when are they likely to come? It will help us in our understanding and also in our modeling purpose.
We'll try and do it, but we are circumspect of putting in too much information in the public.
For example, the PTFE category, the fluoropolymers polymers category, overall number, how much is the quantum that is probably getting added, that will help us.
Maybe, we just informed that in the new fluoropolymers, our capacities by the end of this financial year, all combined, would be somewhere around 1,500 tonnes, which is up from about 700 tonnes, which was there till last year.
So we are adding almost about 800 tonnes in various new fluoropolymers. PTFE, of course, we are running, as I said, that we have been running at all close to 90%, 95%, we're using full capacity. And we are now in a -- we are working on the debottlecking our PTFE capacities by maybe about 20% to 25% in the next 6 months by the end of this financial year.
The next question is from the line of Viral Shah from Enam Holdings.
Congratulations on a very strong set of numbers. Sir, my first question is just a clarification. You said that you have expanded your TFE capacity. So what will the capacity now be after this expansion?
I'm not going to disclose the capacity numbers. But yes, this capacity -- I mean, there is a significant increase in TFE capacity.
Okay. Sir, secondly, on the numbers for your subsidiary, and I can derive numbers from subtracting the consol numbers minus the stand-alone numbers. It seems that the subsidiary profitability has meaningfully improved during the quarter. So is there something to read into it or what was the reason behind this? Hello?
Sir, we cannot hear you.
Can you hear me?
Yes, this is better.
Yes. So there's nothing much to read into this because whenever you sell through subsidiaries, there is a huge transit gap, the goods when it sits from India and ultimately retails there. Always there are some inventories which we keep for the demand for the serving to the customers there. So whenever there is a price increase or movement -- favorable price movements, that gets reflected into the sales from [indiscernible] but otherwise, they will have a normal trading margin, which will be there.
Okay. Okay. Okay. Sir, my third question was on caustic. You mentioned in the presentation that there was some price uptick that you saw during the quarter compared to the quarter 4. So would it be possible to share what was your realization for caustic in Q1? And how are you looking at that number going -- in the coming quarters?
Just one moment. So April, May, June, there has been a marginal increase in caustic soda prices.
So would that be around INR 50, INR 55 of realization or even higher?
No, it's around -- if you look at the consolidated ECU, it's about INR 50, INR 51.
INR 50, INR 51. Okay. Okay. And finally, my last question, sir, on wind power, sir. Sir, you did write that the 20 megawatts would likely be installed by Q2 end. Sir, is there any status on the remaining 100 megawatt which was to be installed?
As of now, the policy has not been announced by the state government and so far as captive wind is concerned. So we will have to wait until such time that announcement is made and you know that the policy is defined. But as we have mentioned earlier, by the end of this year, to the extent that there is -- on fulfilled obligations, now wind will return back the money to GFL.
And is there any timeline to when the money will be refunded?
By the end of this financial year.
Okay. Okay. Okay. And the same would hold true for corporate guarantees as well?
Largely. They are largely -- they will also slip off as we are raising funds also largely. That will enable them to reduce substantially the external debt, which will then result into fall off of corporate program.
The next question is from the line of [ Anand ], an individual investor.
Congratulations on a great set of numbers. If I were to look at Gujarat Fluoro from like last 10 years of business which used to be commodity has now.
[Technical Difficulty]
Hello? Hello?
Yes, sir.
Sorry, the voice went off.
Mr. [ Anand ], can you please repeat your question?
I think [ Anand ] can join back, you can ask for other...
Sir, I believe we have lost the line of Mr. [ Anand ] and in the meanwhile, we'll take the next participant, whose name is Vishal Biraia from Max Life Insurance.
Sir, the battery chemicals plant, was this to commission end of this calendar year, somewhere November '22, was the earlier guidance? And now is it delayed by about 6, 8 months?
No, no, no. It's not been delayed by 6, 8 months. We never said that. Said that it's going to be commissioned by the end of this calendar year, maybe give or take 1 or 2 months, which can always happen in large chemical plants of this sort.
So it's only that commercial production, it could well take about 5, 6 months thereafter because it takes 1 month or 2 months for plant -- even after the plant is commissioned for the stabilization and then we -- and then the process, which has to be followed to get the samples approved from different customers, which could take about 3-odd months, 3, 4 months.
Right. Right. Okay. And what the primary products that these petrochemical plants will make? One is the LiPF6, apart from that what will be the other products?
Basically, as I said, it is an integrated complex. We start with the lithium fluoride, PF5, LiPF6 and also go on to make the electrolyte. So these are the products.
Okay. Okay. And so once you commission the plant, you will send the products for -- to the customers where you would already be in touch with for a couple of years.
Yes, of course. Absolutely. Yes, yes.
Okay. And the last question is what will be the capacity of these plants? How many tonnes?
See, we're starting with the prototype capacity and as the capacity of EV vehicles grow in India and abroad, we will be augmenting the capacity.
So to start off with, we'll have a capacity of almost about 2,000 tonnes, which will perhaps be utilized in the next 2 years. And after that, as the battery capacity has come up in all the geographies, then we intend to substantially augment the capacity.
The next question is from the line of [ Anand ], an individual investor.
Congratulations on a great set of numbers, sir. My question is that if I were to look at the company in the last 10 years, we were basically into commodities at some point of time with caustic and chloromethane contributing to the largest amount, then we move to PTFE. And going ahead, and then, of course, fluoropolymers and speciality chemicals came in. Going ahead in next 2 years or 3 years, what do you think would be our key growth drivers? And how do you see a company's business in the next 2, 3 years in terms of product or...
The key growth drivers will both be chemicals and fluoropolymers. Chemicals, the various kind of chemicals which are going to be utilized in batteries, as we say. And this we see is going to be a huge growth driver for the company. And both in terms of revenues, in terms of CapEx, in terms of profitability. And of course, the polymers which go into batteries into hydrogen fuel cells and others. So those will be the drivers of future growth.
Sir, like just speaking, I guess, 2, 3 years, for example, like this year, looking at what our projections are for the caustic soda volume, roughly in 10 to 12 months, polymer can be a INR 2,000 crore business by the end of this year. So can we -- do we see similar kind of opportunity in LiPF6 and like, say, 2 years from now?
Yes, certainly. I think it's not larger, certainly similar kind of opportunities. I think it will probably be larger over the next 5 years in development to a fairly significant business.
That's absolutely. The second question that I have is that how is the sampling for PVDF used in battery going on? Have you started supplying for that? And last question on PVDF, what's the status of PVDF backfilling for solar project?
So as we mentioned last year, the grids were in the development. Some grades have been developed, which have now been sent to potential customers. And for us to get full feedback on the approval, it could take maybe about 2, 3, 4 months. And in case there is any gap, which still remains, that will then -- we will work towards filling that gap.
And hopefully, we should be able to then start commercial supplies of PVDF for the battery plates. It could take a process of about 4 months -- 4 to 5 months before we start commercial supply. But as of now, we have received favorable response -- grades, which are similar. We have been able to develop grades which are similar to what is available in the market. And we are very, very confident that in the next few months, we should have our first few approvals and which will allow us to start commercial supplies.
And on solar batteries, sir?
Sorry?
On solar batteries?
Solar batteries. For the PVDF film, which goes to the solar battery, the project is under commissioning and should be commercialized in the first quarter next financial year.
The next question is from the line of Hansal Thacker from Lalkar Securities.
Congratulations on a great set of numbers. Just a follow-up on a previous question. So I'm assuming that -- I mean, if the state policy is favorable to us, is there a possibility that we might absorb the entire wind energy capacity?
There is a possibility, but we'll have to watch and see -- let's see how and in what form the policy comes. And if it is something which is definitely going to yield very strong results, then we will certainly look at maybe enhancing, adding more capacities over and above what we are currently adding. But I think we'll have to wait and see what is the final shape of the policy.
Okay. The reason why I was asking is given the current state of the power and fuel costs, it may actually be advantageous, which is why I was inquiring.
That is very, very clear. That is very, very clear. There is a huge delta between renewal energy, power and fossil fuel-based power. That is quite clear. But we have to see what form the policy actually comes.
Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference over to the management for closing comments.
Yes, we'd like to thank you for your interest in the company. We look forward to your continued participation on the earnings update call. Thank you very much, once again.
Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.