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GHCL Ltd
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Ladies and gentlemen, good day, and welcome to the GHCL Limited Q3 FY '22 Earnings Conference Call hosted by Emkay Global Financial Services. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Rohit Nagraj from Emkay Global Financial Services. Thank you, and over to you, sir.
Thanks. Good evening, everyone, and I hope everyone is in good health. I would like to welcome the management team of GHCL and thank them for this opportunity. So we have with us today the senior management team of GHCL represented by Mr. R.S. Jalan, Managing Director; and Mr. Raman Chopra, CFO and Executive Director of Finance, along with the finance team. I shall now hand over the call to the management for their opening remarks. Over to you, sir.
Good evening, everyone, and warm welcome to the GHCL earnings call for the quarter ended December 31, 2021. Our CFO, Raman, along with Manu and Abhishek from the finance team the company needs today. Our results analyst presentation has been uploaded on the stock exchange and the company's website. Concerns related to COVID-19 pandemic are not yet over, and we would keep our guards up. However, the massive vaccination program in India has been effective against the pandemic, and the impact of Omicron variant is expected to be lower than the previous variants. Economy has revised, and we expect this positive development to continue going forward. Globally, soda ash trend is just strong. Demand has bounced back strongly as prices are firm. Supply has been constrained due to increase in the input costs and supply chain challenges. China has now become a net importer of soda ash. In the Indian market, overall demand scenario has improved. Demand for flat glass, container glass and solar glass is strong. Detergent segment was slightly sluggish, which is now recovering. Supply was impacted as import into India has reduced drastically. As a result of this demand-supply situation and the higher input cost, soda ash prices have gone up. We have been able to achieve higher realizations and better margins. We expect the positive trend to continue through 2022. In the spinning business, demand for yarn remains strong, supported particularly by the garment segment. As a result, spinning mills are able to pass the higher cotton prices with a healthy yarn expense. We have also benefited by our focus on customers, product market expansion and value-added products. On 6th of December 2021, we have announced the sale of home Textile business on a slump sale basis. This process is on track, and we expect the transition to complete on or before 1st April 2022. Post completion, we will be able to reallocate this capital to our core business with higher returns profile. Our earlier scheme of demerger has been withdrawn post the sale of home Textile business. We have filed a first scheme of demerger for chemical and spinning business. We expect this new scheme to be completed by around December 2022. We are committed to sustainable growth for our core businesses, Chemical and Textile. In the chemical business, key drivers will be greenfield expansion of soda ash capacity by 0.5 million tonnes, a new bulk chemicals at our greenfield location and specialty chemicals to double the sodium bicarbonate capacity to 120,000 metric tonnes by September 2022 and deep automating through plant balancing. We are also focused on augmenting backwards capabilities and digital journey through AI and IoT. The spinning business, we are adding 40,000 new spindles by June 2022, which will increase the volume by 20%. We plan to further add another 20% volume growth in the near future. We are also adding solar energy of 10 megawatts now and another 12 megawatts in the near future. With our existing wind energy of 25 megawatts, our total green energy footprint will enhance to 47 megawatts. This will lead to the cost competitiveness and better margin. Overall, we are well poised to capitalize various emerging opportunity across our businesses. I would now request Raman to share the quarterly financial performance. Over to you, Raman.
Thank you very much, sir. Good evening, everyone, and a very warm welcome to all of you in our Q3 earnings call for FY '22. I will share the financial highlights and segmental performance for the quarter ended 31st December 2021. The results of the home Textile business have been disclosed as profit from the discontinuing business. Accordingly, the figures for all the prior periods have also been reclassified and disclosed separately. So revenue for the Q3 FY '21 from the continuing business came in at INR 1,006 crores as compared to INR 709 crores in the corresponding quarter of last year. This is a growth of 42% on a year-on-year basis. On a sequential basis, the revenue increased by 25% from INR 805 crores in Q2 FY '22. EBITDA for the quarter stood at INR 251 crores, which is a significant increase of 38% from INR 183 crores in Q3 of FY '21 and by 47% from INR 171 crores in Q2 FY '22. This represents an EBITDA margin of 24.9% for the current quarter as compared to 25.6% in Q3 FY '21 and 21.2% in Q2 FY '22. Profit after tax for the quarter stood at INR 163 crores, inclusive of discontinued business of INR 10 crores, compared to INR 111 crores in Q3 FY '21 and INR 109 crores in Q2 FY '22. And this represents a jump of almost 48% compared to corresponding quarter of last year. This demonstrates a very strong performance across all the financial parameters due to strong beat in the underlying business. Let me now share the segmental perspective. In the Inorganic Chemicals segment, we have reported a revenue of INR 765 crores during the quarter, which is up by 45% as compared to INR 528 crores in the corresponding quarter of last year. EBITDA for the quarter stood at INR 182 crores versus INR 148 crores in Q3 FY '21, which translates into EBITDA margin of 23.8% for Q2 -- Q3 FY '22 as compared to 28% in Q3 FY '21. The reason for this strong performance in soda ash business is due to a combination of volume growth by 12% and also due to price increases undertaken in the last few months. This led to a better margin and increase in prices and more than offset by increase in input costs. The performance of Textiles business continues to be robust. As a result, revenue from the current quarter stood at INR 241 crores as compared to INR 180 crores in the corresponding quarter of last year and INR 233 crores in Q2 FY '22. This translates into a growth of 34% on a year-on-year basis and 3% on a sequential basis. EBITDA came in at INR 69 crores compared to INR 34 crores in Q3 FY '21 and INR 65 crores in last quarter. This translates to a record EBITDA margin of 28.4% compared to 18.8% in Q3 FY '21. This is also due to strong demand for the yarn and high spreads despite elevated cotton prices. We have been able to achieve better realization due to our focus on product basket expansion and value-added products. For the quarter, we generated INR 197 crores in cash profit after tax. Our gross debt stands -- at the December end stood at INR 618 crores compared to INR 768 crores at the end of FY '21. This represents a net debt to equity ratio of 0.2x only. With this, I conclude my comments and would now request the moderator to open the forum for question and answers. Thank you very much.
[Operator Instructions] The first question is from the of Resham Jain from DSP Investment Managers.
First of all, congratulations on the very good set of numbers. Am I audible?
Yes. Yes, Resham. You are audible.
Yes. So I have a couple of questions. So first is on the realization of soda ash. On an average versus Q2 to Q3, what has been an average increase in the realization of soda ash, if you can give a number?
Approximately around 5,000 -- 8,000, sorry, 6,000.
Okay. Okay. And in terms of the price which we have taken during Q3 ahead of -- because there will be average. So some of this will be visible in Q4 as well, right?
Yes, there's some -- like I have said in the past also that the full benefit of the price increase which we have taken will be visible only in Q4 '22.
Okay. Understood. And sir, just on the CapEx side, FY '22, what will be your cash CapEx in FY '23 as well, if you can share what will be that amount.
In CapEx, approximately around INR 400 crores will be in FY '22.
And '23, sir?
Approximately around INR 300 crores to INR 400 crores.
That's it. Because your greenfield will start from FY '23, right? Or...
No. Listen, the process will start in FY '23. However, that will take -- at least from now onwards, it will take 3 years. So real expenditure on the CapEx will start only after 2 years.
In '25, is it?
'24 onwards, if I can say so. CapEx will be in '24 onwards.
Okay. Sir, does this mean with this kind of CapEx and the current cash addition, will you -- on the balance sheet side, you will practically become like net cash because you will reduce your debt through the transaction which you have done?
Yes, Resham, you are right on that.
The next question is from the line of [ Umesh ] from Kotak.
First of all, congratulations on a great set of numbers. Sir, just wanted to understand, now we are seeing really strong prices of soda ash. And we are seeing benefit from both the front demand is really strong as well as the supply is kind of restricted. Can you give us some sense with regards to what's the capacity addition pipeline, which is there in the global front as well as in India?
See globally, we don't see any major Cap -- what we call CapEx or the capacity coming in the near future. At least in '22, we don't see any. In '23, some marginal expansion will take place in, one, in Saudi Arabia, we are looking at [ 100,000 ] to maybe 300,000 tonnes. So broadly, if I take all the global scenario in '23, probably will be in the range of around 500,000 to 700,000 tonnes, which will be nowhere near to the demand growth. So therefore, even '23 also we see a very strong year for soda ash demand supply situation.
Understood. So this is basically 500,000 to 700,000 tonnes of capacity will start in '23, and probably it will take about 18 to 20 months to operationalize. Is that correct understanding?
No. So I'm saying that maybe the new production may come in into 2023, maybe around 500,000 to 700,000 tonnes in 2022. However, the total demand, even if I pay 2% of the demand growth, which is a meager demand growth, it requires 1.2 million tonnes extra production. And on the other side, in China, there is a plant of 1.3 million has been just stopped. So overall, like I said, the way I look at it is also going to be stronger.
Understood. And what's the capacity addition happening in the -- on the India front?
No, India front, we are -- right now, we are not looking at them mainly. Maybe some of the competition may be marginal debottlenecking may happen, but that will also happen in '23 onwards only. In '22, we are not seeing any major -- any new capacity coming in.
The next question is from the line of Kaushal Shah from Dhanki Securities.
Sir, if you can throw some light on the spinning business. We were hearing that because of high cotton prices, there was a little pressure from the buyers. And there was some likely postponement even on the export front. So even the yarn manufacturers were a little shaky about placing orders for the new cotton and were waiting for a possible cut in import duty in the current budget. So any color on that, sir?
No, no, you're right. There are couple of things. I have been maintaining this in the past also. Currently, as Raman has said, the margin of 9 months period in this year, the margin of spinning business was 28%. And in a longer-term perspective, if you look at 28% is not a sustainable margin. So therefore, surely the margin pressure is going to be visible going forward. And probably a best mill could look at around 18% to 20% margin in this business. This is what we are also expecting in our business going forward. Of course, there are a lot of volatility in the situation, and we are also very careful about our cotton coverage and our selling of the yarn. And therefore, at this point of a time, for me to say that how the cotton scenario will be safer, will be difficult. But my understanding is cotton this year is not likely to be very significantly down than the current prices which are happening right now. Because overall, the crop size in India is around 7% lower than the last year. Demand from the garment segment is significantly higher. A lot of business from China is getting shifted to India. But because of that, the garment is really doing well on that. So therefore, the yarn demand is also good. So overall, the yarn demand is good. Cotton prices are very high. And even the global cotton prices are also very high. So I don't see any reduction in the cotton prices. Even if the duty of 11% which has been imposed last budget, even if that goes down, I don't see any major reduction in the cotton prices. I hope I'll be able to clarify your point.
Yes. So sir, just going forward for next, let's say, 1 year or so, do you expect us to move down to that number of around 20%? Or if we put our margins for the next 1 year or so, if not at 28%, maybe sustain at around 25% or so?
No, I think you're right on that. I should not expect margin more than 20%. And achieving 20% for the industry also will be a good number.
The next question is from the line of S. Ramesh from Nirmal Bang.
First, all well with you and your colleagues. So first thing is just to understand the demand prospects and demand supply balance. Can you explain where you see the growth potential in incremental demand? If you're looking at 2% growth, where do you see the incremental demand coming from for the global markets? And how do you see the demand supply in India because we understand that there is some additional capacities coming online from Rohit Surfactants, they are the big surfactants producer in the detergent market. So can you just [ view things in ] perspective?
See, if you look at from the India perspective, the weak surfactants capacity has already been a job by the market. And today, there is a tight situation because the imports had gone down to 50%. And we, in the near future, we are not seeing that the imports will go back to the normal level because globally there is a demand-supply mismatch. So surfactants capacity has been a job, and frankly speaking today, there is a shortage of supply in that scenario. In terms of the global scenario, if I can say 2 things. One, this 2% demand primarily comes from your glass and that bottle as well as the flat glass. And second, it also comes from the solar glass. So I think it's a very conservative number. If you look at last 10, 15 years of the numbers also, you will see that the demand growth will be more than 2%. So I've taken a very conservative number of -- even if the 2% demand growth is there, the total requirements increase will be roughly around 1.2 million, 1.3 million tonnes. So like I said -- sorry?
sir, pleas go ahead.
In India, I completely clearly seeing that 2022 is going to be a very robust demand, and supply restrictions will be there, and prices will remain firm. Prices can be firmer than what it is today. And globally also, I see, based on our understanding, the demand -- prices will be firmed and demand-supply situation will be in favor of the suppliers.
Sir, can you just confirm what is the current global production, based on whatever information you have in terms of the capacity utilization or the actual production? Is it around 60 million tonnes on a capacity of 71 million tonnes?
Yes, 71 million tonnes is the total capacity and generally is around 80%, 85% of the average utilization comes in the global arena. So you can calculate on that basis the number of the production.
The one last, sir. In terms of the swap ratio between the Textile division and your existing or Chemical business. Based on our understanding, the Chemical business seems to be a little more profitable. What is the rationale for the 1:1 swap ratio? Unless you are expecting the Textile business to be more profitable in the future? What are the kind of rationale for that?
What we are doing is we are doing a split -- vertical split. And every shareholder -- it's not swap ratio. It is -- every investor or every shareholder will get 1 share of Textile and 1 share of Chemical business will remain within. So it's not a swap ratio, it's basically a vertical split of the company.
The next question is from the line of Riddhesh Gandhi from Discovery Capital.
Congratulations on your numbers. Sir, with the amount of free cash flow we are generating, combined with our asset sale for our Textile business, what is -- we've been hearing with regards to the expansion and et cetera. But if you could maybe outline the plans for the utilization of the cash flow. What then is the plan then to return the excess capital to the shareholders through the dividends and buybacks? Because we are highly under-leveraged in terms of our balance sheet and any EBITDA we earn.
Riddhesh, you are 100% right. At this point of a time, we are highly underleveraged. And in 2023, like we will be net cash on the balance sheet. You're 100% right. The allocation of these resources is very important. And, yes, in a profitable manner, always a responsible manner. For us, it is very, very important because you have seen our journey last 10 years. So we want to be very responsible on our capital allocation, and we want to be very careful of going for any new investments. Having said that, a couple of things which are in our pipeline. One, greenfield project expansion. And you remember, we are very -- we've clearly articulated that we will never go more than a 1:1 debt to equity ratio. One of the largest CapEx which we are planning is the soda ash expansion, which is around INR 3,000 crores. That is number one. Second, sodium bicarbonate expansion we are doing. It's continuous investment into the spinning business because you have seen, historically, if you look at our margin, we have been phenomenally good in the spinning business. In last 3.5 years average is also around 18%. So we will continue to grow our business on the spinning, investment into the green energy, soda ash, backward integration. We have a lot of discussions going on, on the backward integration of the raw materials. You have seen that the salt prices have gone up. So we are looking at some investments to the salt so that future we can secure the salt in a much better way. Over and above, 2 of the world's experts are engaged on identifying some of the bulk chemical as well as chlorine and caustic soda based products. So these are the investments which we are exploring. And I can assure all the investors that we are very clear in our understanding that under-leveraging is often not a right thing. Responsible growth is very, very important. And you will see going forward that the growth will come into the business.
That's helpful. Sir, and the other question was with regards to we've been reading some actually press around sodium-ion technology, which could potentially replace the lithium-ion, et cetera. Is this also another area which we are looking at all? Or it's -- or is it not something you're looking at on the battery space?
We are, right now -- like I said, 2 of the experts we have engaged, and they are looking at all these possibilities, and we are in a very advanced stage of the discussion. And once that is highlighted, then only we will be able to comment at which area we are finally going.
The next question is from the line of Rohit Sinha from Sunidhi Securities.
Congratulations on a good set of numbers. Sir, some of my questions are already answered. So unlike on the power side, what -- we were talking about we are going to add solar capacity. So obviously, our power cost has been increased significantly in the last few quarters. So post completion of the solar capacity, what sort of you can say about margin improvement we could be expecting from this. And where we are actually looking at the power cost to be stabilized for us going forward?
Two things. One, Rohit, on that in the both the businesses, we have to handle separately. In soda ash, the major increase in the power cost is in the soda ash, which is primarily because of the very high energy prices, which is the coal prices or the coke prices. So this solar energy investment which we are not talking about is not related to the chemical business. And therefore, this cost reductions or the increase will entirely depend on the energy prices globally. Now having said that, the investment in the solar energy which we are talking about is only in the spinning business, where currently we are almost around -- I'll give some breakup number a little, but breakup of the number. Give me a second. Overall, we have almost around 47%, I'm talking about spinning -- I'm sorry, 42% of our current energy in the spinning is on the renewable energy. In addition to that, we are also looking at another 20 megawatts. If that happens, it will become 54%. That means after this 10 megawatts, which we have just recently approved, it will become 54%. In addition to that, we are almost around 12%. We are also securing the wind energy on a fixed price from the market on a long-term basis. Our plan is we will want to have 80% to 85% of the energy on a renewable basis. And that will free our energy cost inflater. I hope I've been able to answer your question on this.
Yes, sir. So that means our soda ash business more or less will remain linked with the global coal prices or coke prices?
Yes. In that only, small investment we are envisaging on the solar energy or the hybrid energy, but it will not be very significant. And therefore, that will surely be dependent on the global energy prices.
Okay. Okay. Fair enough. And secondly, on this spinning business, I think our spindle capacity is right now somewhere around 185,000, and 40,000 is what we are going to add. So potentially, I mean just to look at the number after adding this capacity, what's sort of peak revenue we would be expecting from this business?
See, my understanding, like I said just now, if you look at in this year, in this 12-month period of this year, the likely revenue from spinning business will be in the range of -- one second. Abhishek, can you tell me the numbers? Sorry, there are many paper in front of me. Abhishek, you are there on the call?
Yes, sir.
Can you tell the number of -- likely number of revenue from this spinning business?
Around INR 900 crores will be the spinning business, sir.
So INR 900 crores will be the spinning business revenue this year. Okay. Now we are adding another 20% next year, which will be completing by June 2022. So that will add another 20%. And in addition to that, we are also exploring the possibility of another investment into this. So gradually, our plan is that we should go to the level of around INR 1,500 crores to INR 2,000 crores in 2, 3 years of time.
Okay. Okay. And sir, in terms of price pass-on in this spinning business, how it works?
The spinning business is not that simple, if I can say so, because entirely depends on the demand-supply situation. Because you have seen that the margins, which in a typical day, used to be around 15% to 18% and gone to 28%. That means we have been able to pass more than the cost of the increase in the cost. Similarly, it can also go down. So therefore, I will not say that there is a clear linking between the passing of the cost to the consumer is that easy in this business. But yes, one thing also looks to me that spinning business for next few quarters or actually 1 or 2 years, I see a strong demand, and strong performance would be seen from the spinning business. But not to the extent of 28%. I said 20%, 22% kind of a margin should be expected out of that business.
The next question is from the line of Anish Jobalia from Banyan Capital Advisors.
In terms of the installed capacity of the total spindles in the industry, our GHCL's market share position, how would that be -- how should we look at that, sir?
That one, I don't think any percentage we can calculate easily because there are a large number of spinning investments are there across India. But yes, I can say that if you look at 100 spinning mills -- Raman, what was the number which we have just -- a couple of weeks before we have seen in terms of size? We will be roughly on 25, 30?
Yes. 25, 30 absolutely.
So we will be 1 out of the 25 top mills in India.
Okay. And in terms...
Yes. You're right. Even at top 15 -- top 15, 16, sir.
Top 15, 16. So that will mean we are the first 15, 16 spinning mills. Our capability will be -- can be captured there. But yes, the largest is 1 lakh [ spindles ]. And we have only to 2 lakhs spindles.
And sir, what is the percentage of revenues in the spinning between cotton and synthetic yarn, sir?
That number I don't have right now. We can -- offline, we can give it to you because we have a product market, which are multiple of this. So at this point of time, I don't have that number.
Okay, sir. Moving to the Chemicals side. Sir, we had a fantastic performance in terms of EBITDA per tonne. Sir, just want to understand in terms of the spot prices of the soda ash, if you could mention that versus what was the average that we realized in the last quarter? I mean back of the envelope calculation showed that it was close to 26,000, 27,000 28,000. And also if you could comment on is the cost per tonne increase that we were seeing until the last quarter, that has stabilized? And given that, how do we see the EBITDA per tonne panning out in the which quarter?
See, I can -- like I just said in the beginning of the call, the realization is up by around INR 6,000. And overall, EBITDA is also higher. However, going forward this number will be better than the base number, I can say to that extent, because the full benefit of the price increase we have taken in the month of November will also get reflected in the next -- and there are a lot of annual contracts or the 6 monthly contracts. From January, there are new contracts has been done on a revised price. So you will see a good increase in the realization next quarter. And surely, the EBITDA margin will also be better than what we have seen in this quarter.
Sir, really good to hear that. But has the cost inflation subsided or that continue what we saw in this quarter?
See, my understanding is that the cost -- at this point of time, it's very difficult to predict that it's stabilized because energy prices are very volatile. But I don't see too much of impact happening in the third quarter -- sorry, fourth quarter because those raw materials have been -- to a great extent, have been secured energy. But there could be some marginal impact because of the salt prices. But still the margins will be much better than the margins which we have seen in this quarter.
The next question is from the line of Saket Kapoor from Kapoor Company.
[Foreign Language] Firstly, thank you to the investor team for setting up -- for giving us a very revamped presentation this time. Am I audible, sir?
Yes, Saket.
Yes. I think there's an echo.
No, no, we can hear you loud and clear. There's no problem.
Yes. Sir, the first point is about this debottlenecking exercise that we are going through, and there would be an addition of, I think, 50,000 tonnes of soda ash. So that will happen in this quarter itself, the benefit will start flowing into our volumes? Or will it percolate to be next year?
It will happen in this quarter, Saket, in the fourth quarter, and some benefit has already accrued in the third quarter also. Just to share with the investors community that in the month of December, we had the highest production of 100,000 tonnes in the plant, which was the highest in the history of GHCL. And I'm sure that in the -- going forward also, we will be able to demonstrate those kind of performance. So overall, the benefit of the debottlenecking, some has already come into the third quarter, and full benefit will be coming in the fourth quarter.
Right, sir. And sir, you have spoken about the higher energy cost and then the impact from China. So barring these factors, what are the factors that are supporting these prices? And what, according to you, are the factors that will keep supporting them and the key risk to them reversing, sir?
In terms of the support, primarily the demand-supply gap globally. That is number one. Second, the supply chain cost of moving the material from one geography to another geography. These are the 2 factors which is supporting this demand and supply at better realization at a better price. Like I said, at this point of a time, in 2022 or 2023, we don't see too much of disruption happening in this. In terms of energy prices, like I said, that has been already been passed on to the customer. And hopefully, in the future also, we will be in position to pass on this cost, if any increase, to the customers. So hopefully, my understanding is '22 is going to be stronger.
Right, sir. And sir, another point was when we envisage this greenfield project, at that time the return ratios and the soda ash realization and today's realization, there is a key change in terms of the factors also supporting them with the solar panels demand coming up with flue gas, demand also going to nurture out going forward. So how does the return ratios change today for a new greenfield project? I mean to say, new players moving into the sector going forward. And sir, are we taking too long for this project to happen? Or is this a course that generally happens for these large projects?
Two things. It is -- like I said in the past also sometimes that it is not easy for a new entrant to come into this business because there's a lot of complexity in this business, raw material security. One project takes 5 to 7 years. And the new competition, which has come in RSPL, they took several years to complete this project. With a long gestation period in the beginning, it takes a lot of time to stabilize the plant. All those things are there. It is not very easy for some new players to come in very quickly into this business. That is number one. Second, in terms of the time line, since this kind of a project requires a lot of land, lot of approvals, long delivery period for the equipment. But generally, this kind of a project takes 5 years of time. Like you see in our case, almost 1.5 to 2 years we have already spent on acquisition of the land itself because we require 1,000 acres because of the land. Still, some portion of land -- still spending on some of the land side still to be transferred in our name. So -- and a lot of approvals required from the government. So keeping that in mind, I think we are on a perfect time line on implementation of this project.
Sir, if I come to Page #26 of your presentation, there is for the soda ash market outlook under the China nation. It is mentioned that the price is significantly moderated due to higher inventories. No impact on global prices as logistic costs are very high. So what has been the price trends in China? And if you could give the comparison between the Chinese prices, and today the landed prices for us, sir?
Two things, Saket. On one side, China scenario has changed in a few weeks. And again, it has changed the game. Today -- latest information today is the inventories had gone up, has gone down again. The advisory was at the 2 months, that prices was much above than the prices which we have been selling into the Indian market. We were almost around $500-plus. Moderated means it has got down to the level of where we are selling. So in terms of the landed cost of Chinese products in India, at this point of a time, I don't see the feasibility happening at all. Like I said, China is net importer at this point of time. So I don't see any possibility of a Chinese material coming into India. The logistic cost from China to India is more than $100 to $110. So Chinese product is absolutely not feasible to come into India.
Right, sir. And when you have spoken about this, we are well poised to capitalize on the emerging opportunities across our businesses for soda ash. We are looking for this flue gas and the solar panels. Are these the only 2 big opportunities that we are going to -- we should be able to a hold onto? Or are there any other segment also when we have used the phrase emerging opportunities?
See, sodium bicarbonate is being used in the flue gas segment. Okay? And that opportunity probably is gradually going to be exploded, if I can say so. Okay. But it will take some time. Recently, NTPC just started the trial because the COVID approached up. They have started the trial. And gradually, this will start happening. We are also looking at creating a separate team for making the sodium bicarbonate as a speciality chemical and a solution-based supply to the customers. But like I said, these are the emerging opportunities will take time, it will not happen in one day. In terms of the solar glass, solar glass demand had already expanded in India. Lot of new capacities coming into the solar glass, and that will have a direct benefit to the soda ash. So there -- it is -- the demand scenario of the soda ash will change, and that will help a better realization, better demand and better margins.
And last on...
Those opportunities that I said, Saket, we have said that one is the soda ash expansion. Sodium bicarbonate, we are doubling the capacity. We are also looking at caustic soda and chlorine-based solution, some bulk chemicals. There are a lot of opportunities we are looking at. But like, again, I'm repeating, we want to do the things in a more mature manner, more responsible manner. And we will not look at 1 or 2 years scenario. We will be looking at a longer-term scenario because the investment will be large, and we have to look at in the longer term, which will make sense for the GHCL. And we will remain within our core competency of chemicals and spinning.
Sir, on the ESG front, a lot of work I think have been done, and you have also spoken in your presentation and annual report also. So are we looking for any ESG ratings because now there are dedicated funds that are practically bound to invest in high scoring ESG companies. So how do -- where do GHCL stand on the same? And on your vision part also, if -- correct me, sir. Earlier, we have also came up with this idea of something like a market cap vision also for 2023, '24. So are we sticking to any point on that front? Because I think so this could be the best period for the soda ash players to achieve whatever visions we would have thought earlier, sir. If you could throw some light. And then my last one would be on Page #36.
See, on the 2 points which you said on ESG, yes, our focus is there on compliance. We have done a complete scanning by some of the experts on our various parameters of the ESG as well as on the compliance. We have also hired experts on our climate change. And like I said, ESG also, we are focused on that. When we would get listed on that, that's only we will be seeing once we have a particular stage of listing. But yes, [indiscernible] because we are very clear and very focused on that for the success of the business for a longer-term perspective, which is very important, that we should be on the ESG side or on the compliance side, we should be far above than the normal law requirements. So that's one thing. Second, your question was on -- what was the second question, Saket?
Market cap vision for 2023, '24. Earlier, we have envisaged something.
Yes. Saket, when we talk about the market capitalization, see, the 2 things which are required in the business. And if you do that rightly, automatically the sales and revenue will be rewarded to the company in terms of the market capitalization. So market capitalizing is the output of what we do. And there are 2 things which are important, and we are working on that. And you have seen in the over a period of last few years -- 4, 5 years, we have delivered what we have promised. We have delivered the performance more than what people have expected. That is one. Second is the growth. Like I said, we are focused on the growth in a very, very dedicated manner. The third, that overall creating and trust and respect for the organization and the compliance and the high standard of government. So this that one area you have seen. There also, we have scored over a period of time and our journey continues on that. So we will deliver on compliance. We will deliver on the performance, on the growth. And surely, the vision -- new people will achieve that vision of a company of creating a benchmark of market capitalization.
Sir, on last -- one point was also for this [Foreign Language] how are we planning, by what percentage would be captive going forward in terms of both salt, limestones and other variables? And the impact of the power and fuel on margins. This will wane away going forward with the price hike. And any price hike we have taken for this month, sir?
Two things. At this point of time in the month of January, we have not taken any price hike. On terms of the energy, like I said, energy is very volatile. It is very difficult at this point of time to say that how this will pan out. However, like I said, all this cost increase has been passed on, and our margins are better. In terms of backward integration or the security of raw materials, we are working on that. At this point of time, we have certain discussions which are happening, but nothing is on at this -- which -- concrete, which we can share with you. But yes, focus is there on that area.
Right, sir. And also for this greenfield projects, we hope to hear something more about it -- more concrete about it in the near future. And many people in the state of Gujarat are also moving into this ethanol story. So going forward, how do our management teams look our diversification for the ethanol part of the story also, sir? And on Page #36, we have spoken...
The next question is from the line of Andrey Purushottam from Cogito Advisors.
Mr. Jalan, Mr. Raman, first of all congratulations for a great set of performance which you have been putting in consistently. We have -- you have our investor appreciation.
Thank you very much. Thank you.
Sir, I missed out a few because I got disconnected from the call. But this is a bit of a follow-up question on the global supply-demand scenario. And I wanted you to comment specifically on whether, a, there is an export opportunity to China; b, what is the situation in terms of meeting demand from Southeast Asia? And what is the situation in Turkey with respect to supply and demand? If you could give us some additional flavor on this and how we -- how it affects our businesses?
See, in terms of -- I'll go last question first in the Turkey, what has happened because China was one of the big exporters to Southeast Asian market and in the Middle East market, and they have vacated that market. And that has been captured by the Turkish people. Second, in Europe also, the Turkish people have been able to capture some of the market. Because the demand growth is there, there's no new supply has come in inside European market as well. And because of their fully -- and they have exported some of the quantity to the China as well. Even the U.S. has also exported some of the quantity to the China as well. So in terms of the overall, if you look at the -- of course, some quantity of Turkey will continue to be coming into India. But we don't see -- like I said, we don't see any volume coming in from China. Some of the volume is coming from Russia and Iran also to India. And some of the volume -- there is -- some of the volume is coming from the U.S. also. But overall, this was around 1 million tonnage 2 years back or 900,000 tonnes. It is now almost 40% to 50% kind of a volume -- 50%. So because of this overall no new capacity is coming and demand is growing, there is a overall globally demand-supply situation, disbalance balance is because of a lot of exports and imports are not happening. In terms of your question about our possibility of export to Southeast Asia. It is volume -- smaller volume, we are doing it. We are doing to Bangladesh also. We are doing to Southeast Asia also. We are doing to Nepal also. And -- but our productions are -- in a way, is -- we have to first service to our domestic customers. And I only say that in the last 2, 3 months, we have been able to somehow make sure that our -- all the customers are being serviced in a manner so that they don't create any difficulty in the domestic space. So keeping that into mind, at this point of a time, I don't see any major export required should be done by the company to these markets because your production will be fully consumed by the domestic players -- domestic consumers. And that should continue into 2022. And like I said, even 2023 also, I see a similar kind of situation in 2023.
Sir, I was just curious, Turkey is so far logistically from China and Southeast Asia. How will they still manage to profitably export to them?
See, first of all, I'll let you know that Turkey has -- they don't have their own conjunction, okay? They have to export. Now they're to decide which one is more profitable to them and where they can get a better realization. Keeping that into mind, they are -- they cannot dump everything in one market. So they are distributing something to China, something to Southeast Asia and so on -- and Europe and things like that. Two years back, they were supplying about -- almost around 250,000 tonnes to India as well. So depending upon the realization, depending upon the strategic calls, they are distributing those products to the various markets.
Right. And just one final question, sir. Did you mention in the early part of the call that you were going to launch another basic chemical, which we have been in discussions? Is there any flavor you can give us on this on the nature of this chemical, by when, et cetera? Or it's too early to ask?
It's to early to ask, honestly because like I said, some of the experts are working on that. And we have a regular -- and probably next few months, we will be discussing with them. And after that, we'll take a call on that. And then once we take the call, we'll let you know.
[Operator Instructions] The next question is from the line of S. Ramesh from Nirmal Bang.
Generally, if you look at the demand from soda ash -- from solar glass, can you quantify the consumption now in India? And how you see the growth rate in the solar glass panels for the soda ash segment?
See, like I said, I see a very significant demand growth in the solar because a lot of new investments into the solar glass is coming in. And overall, if I can say, in the solar panel, the demand in the next 2 years is going to be more than double.
Sir, can we get some numbers in terms of what is the...
I don't have a number, Ramesh. Offline, I can give you the details. Similarly on the glass side also -- flat glass side also, like I said, overall demand of -- is very robust. And temporary, glass manufacturers are running at their full capacity, and new plants of the glass are also coming into the market. Keeping that into mind, my guess is around 6% to 7% minimum growth in the glass segment you can visualize going forward.
And second, if you look at sodium bicarbonate, on the flue gas business, sodium [ bicarbonate ] segment, can you give us some sense in terms of how what kind of growth we can expect there for your sodium bicarbonate business?
Sodium as bicarbonate I said to you that on one side, sodium bicarbonate, normal growth will be there, number one. But flue gas treatment is one of the potential area which we'll explore, if I use the right word. But it will take some time because across the globe, the people are using the sodium bicarbonate for flue gas treatment. However, India, it just started by NTPC. And we are also working on the solution-based offering to the customers. And that, yes, it will take some time. But surely, that will give a phenomenal growth in the sodium bicarbonate. And that will become a more likely specialty chemical, solution-based chemical. And we are doubling the capacity, which will happen in the next 9 months from now.
The next question is from the line of Chintan Chheda from Quest Investment Advisors.
Congrats on a great set of numbers. Sir, my first question is about exports. So is there any export that we have done during the quarter and what has been the volume?
Right now, I don't have a specific number, but it will not be very significant.
Okay. And secondly, sir, what is our power capacity as of date? And post demerger, how will this power capacity split up between your Textile and Chemical business?
See, power capacity for every unit is a separate power capacity. Like if you look at soda ash, it is 100% own generation of power in the soda ash plant, which is a captive generation. And spinning has their own power. Like I just said, we are largely on the green energy, where approximately our requirement is around INR 15 crore units. And out of that, like I said, around -- after this 12 megawatt will be around 54% will be our -- what you call, our own generation. So keeping that [indiscernible] service power. So these are all -- it has nothing to do with interdependence of any units with anyone.
Okay. So for soda ash, everything is coal based, right?
Yes. Everything is coal based, coal or lignite based.
And how much would be that capacity?
Raman, we have -- can you answer the question?
Around 40-megawatt is the current capacity. We'll be probably at -- bring our debottleneck and more will get added. So all in all, probably will reach around 45 megawatts.
And this is sufficient for 100% utilization of our soda ash plant, right?
Yes, yes. 100%.
Yes. Absolutely.
The next question is from the line of [ Arwen ], an individual investor.
Sir, just one question. If the shipping transport then normalizes, will import also normalize and it will go back to the normal import that we had earlier? Or there is some [ change ] where import will always be lower than what it was pre-COVID?
See, Arwen, two things I just want to highlight. Like I said just now, that overall there is a demand growth in the globe and that supply is -- no new supply is coming in. And that will definitely will reduce the import to India in spite of that if the supply chain cost comes down. That's number one. Second, yes, if -- in India also the demand growth will happen. So even if some volume growth or import increases, that also will not be -- will impact the overall supply or the better pricing from the Indian manufacturers. Overall, at least, like I said, we don't know for the longer period of time. But at least for '22, '23, we see a phenomenal and robust growth into the soda ash demand and overall, what you call, supply chain.
And sir, is it possible to indicate the various sources of imports in India? And I wanted the percentage. Percentage-wise, which is the largest source of imports?
Recently, I don't have a number, but I can give you the country-wise. Country, like I said, some of the quantities coming from Iran, some of the quantity is coming from Russia, some of the quantity is coming from Turkey, some of the quantity is coming from Europe, and some of the quantity is coming from the U.S. And approximately our estimation is this year, the volume will be in the range of around 400,000, 500,000, which is almost around 50% of the normal volume.
Generally, the largest contributor of imports pre-COVID, which country was the biggest source of India?
Turkey and U.S. Pre-COVID, it was Turkey and U.S.
And that could be around 50% probably or around ballpark?
I don't want to get in number -- I can give you off-line the number, the specific number. I don't want to get that number.
Ladies and gentlemen, due to time constraint, we take that as the last question. I now hand the conference over to the management for their closing comments. Over to you.
Thank you, Rohit. And overall, like I said, we are always going to work on 3 pillars: one, the growth, which, like I said, we are already working on various possibilities. Second, performance. And because one thing which is in our control is basically to improve our cost structure. A lot of work is being done on the cost inefficiencies, like I said, IoT and based technology. So our focus is always going to be more -- becoming more competitive, be it soda ash or be it spinning. In the Spinning, like I said, 2 things we are working: one is the value-added products; and the second, we are also working on volume growth there also and green energy. Everywhere, our focus is more -- to become more competitive and our growth journey. Your questions and your support is always help us to improve over a period of time. And we'll continue to do our journey and create our trust, and your respect will be much desirable to us. Thank you very much.
Thank you. Ladies and gentlemen, on behalf of Emkay Global Financial Services, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.