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GHCL Ltd
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Ladies and gentlemen, good day, and welcome to GHCL Limited Q4 FY '23 Conference Call. We have with us today Mr. R.S. Jalan, Managing Director; and Mr. Raman Chopra, CFO and Executive Director of Finance. [Operator Instructions] Please note that this call is being recorded.I now hand the conference over to Mr. Rohan Ohri from Emkay Global Financial Services Limited. Thank you, and over to you, sir.
Yes. Thank you, Steven. Good evening, everyone. I would like to welcome the management and thank them for this opportunity. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
Thank you, Rohan. Good afternoon, everyone. Welcome to GHCL earnings call for the quarter and year ended March 31, 2023. Our results and presentation has been uploaded on the stock exchanges and company's website. For this call, I'm accompanied by Raman, who is our CFO, along with Manu and Abhishek from our Investor Relations team.I'm pleased to announce that we have completed the demerger of GHCL Textiles effective 1 April. This will now create 2 separate sectors focused listed entities and shall benefit all our shareholders.Moving over to soda. The global markets are in balance. We expect that soda's demand will get a boost from environment-related sectors such as solar glass, lithium carbonate and sodium bicarbonate. Input costs, including the energy prices, have moderated and supply chain cost is below pre-COVID level. This has resulted in softening of soda prices and passing the benefit to consumers.In India, also, prices have softened, and we have taken a price cut of 3% to 4% in April. However with a reduction in input cost, impact on our margins shall be minimal. As intimated to stock exchange, we witnessed a line kiln breakdown at our plant. This had happened for the first time. We have taken preventative measures to identify every detection in future. We have made progress to contain the loss and production shall normalize by end of May.Coming to the textile, the sector continues to face headwinds, but demand has started to recover, and we believe that business sentiment will improve in next 1 or 2 quarters. Our plan has been fully operational and there is no major inventory buildup. We expect our margin will revert back to the average margin in the range of 17% to 20% in shorter period of time. These results are reported as discontinued operations due to the market.We continue to focus on implementation of various growth initiatives. We are making progress on the greenfield projects and basic engineering activity are now starting. We have announced a new vacuum salt project, which will expand our product market. We shall manufacture edible salt by harnessing the energy from soda ash. This project shall take approximately 18 months for completion. Salt kiln improvement and digitization projects are progressing well.I will now request Raman to share the financial performance.
Thank you, sir. Good evening, everyone, and a very warm welcome to our Q4 and year-end FY '23 earnings call. I will share the financial highlights.As you are aware, the demerger of our textiles has become effective from April 1, 2023, and the results of this business have been reported as discontinuing operations. Accordingly all assets and liabilities pertaining to spinning business have been transferred to GHCL Textiles Limited. The continuing operation now represents inorganic chemical business. For Q4 FY '23, revenue from continuing operations came in at INR 1,141 crores. This represents a growth of 8% on a year-on-year basis and 3% on a sequential basis. The main reason for this growth is a better realization over last year.EBITDA for the quarter stood at INR 370 crores from continuing operation, which is an increase of 10% from Q4 of last year. For the quarter, EBITDA margin came in at 32.5% as compared to 31.9% in Q4 of FY '22 and 33.6% in Q3. The reduction in margin on a sequential basis is due to lower production during fourth quarter.PAT for the quarter for continuing operations stood at INR 251 crores versus INR 200 crores in Q4 of last year and INR 254 crores in Q3 FY '23. For the full year and FY '23 PAT, including discontinued operations stood at INR 1,117 crores compared to INR 637 crores for FY '22. This is a substantial increase of 75% in PAT.Dividend for the year has been announced at INR 17.5 per share, which is the highest by the company. For the year '23, we generated a cash flow of around INR 1,400 crores, including balance proceeds from the sale of HT business. This was utilized towards a CapEx of INR 357 crores, working capital of around INR 267 crores, loan repayment of INR 342 crores and a dividend of INR 143 crores. At the year-end, we had a surplus of INR 525 crores at the entity level, which included liquid fund investments of around INR 365 crores and cash and cash equivalents of around INR 160 crores. At the year-end, our gross debt stood at INR 426 crores for both the businesses together, and there was a net cash surplus of around INR 99 crores for the company as a whole.With this, I conclude my comments, and will now request the moderator to open the forum for question and answer. Thank you.
[Operator Instructions] The first question is from the line of Jatin Damania from Kotak Securities.
So just want to check, now with the breakdown of the lime kiln that we have seen, what was the production loss that we had witnessed during the quarter?
Approximately around 40,000 tonnes.
Thirty-thousand. And when do we expect the lime kiln to come back on the stream?
First, let me clarify, this is not 30,000 tonnes, this is 40,000 tonnes. And second, the lime kiln, out of that, major portion has been already recovered. And by end of May, the full production will be there. So 90% of the problem has been solved. Remaining 10% problem will be solved during the next few days. So by end of May, we will have the full.
So sir, in terms of the volume, if you want to calculate 11.4 lakh tonnes of volume in this financial year. So more or less we will be closing FY '24 on the same number with a lower realization. Is it safe to assume that?
Sorry, can repeat your question again?
Sir, we closed this year, soda ash with 11.4 lakh tonnes. Now with the breakdown in the line kiln, we will be losing 2 months of production. Is it safe to assume that for FY '24 we will be closing around more or less on the same level of the volume?
I think so. I don't see any reason of the production -- the sales being lower than the number which we have achieved during this year.
Sir, one -- last 2 questions. One is on the -- your overview on the soda ash industry. I think that the demand is getting a boost from the solar glass, lithium bicarbonate and sodium bicarbonate. But the other end, we have also seen the prices have softened like 3% to 5% even you -- category you mentioned about the price that we took in month of April. So with the new capacity that is going to come in Inner Mongolia, where do we see our soda ash prices given the moderation in the input cost and increase in the overall supply in the months -- coming months?
Yes. I think this is a very valid and very important question. Let me give a slightly, picture of long term as well as the short term. If I look at slightly on the longer term, based on the global outlook, which has been presented in the last soda ask conference, there is a very bullish scenario coming in the next 5 years against 63 million of the total demand at this point of time, the projection is that demand will be 80 million. And if I take all the production, which has been announced or they're likely to come, it's still the global team feels that there is just going to be a shortage of around 4 million. So that means in the longer term, if you look at, there's a very bullish situation in the soda ash.Now let's come to the immediate in the next few quarters. If I go country by country, I think I'll be able to give a little better picture on that. If I go to China, in China, what is being said is that alone the solar investment or the solar demand will enhance the soda ash demand by around 6% to 7%. And if I take the normal increase, there is a very bullish situation in China. And all these Mongolian, the new capacity which is coming around 1.5 million tonnes during this year, will get a jog in China.Now coming back to U.S. U.S., there's a very balanced demand supply for their production as well as their supply to their natural markets. If I come to Europe, Europe situation has significantly changed over the period of last 1 or 2 quarters because of all the contracts which are there, of course, the demands are very good in Europe and supply is also fully -- s fully operational. The demand supply balance is there. However the prices have softened because of -- because their prices are always fixed with the gas price indexing. So because of that, the prices have softened and they have become competitive.Coming back to India, India demand of soda ash in all the sectors are doing good. And the growth into the solar investment and the normal glass and the detergent and every sector put together, we believe that 5% of the demand growth will happen in India as well. So keeping everything in -- and we don't see any major import coming in or more than the import, which has been coming in the past, will be coming to India. So therefore, if I look at in the total situation, on one side, demands are good. Some supply increase like in Inner Mongolia, you said, or some in the U.S. will happen. But keeping everything in the demand supply will be a balance.In terms of the pricing, pricing, as you rightly said, some softening has happened. And maybe some more softening can happen in the next few months. However, that will not -- because of the supply chain costs have gone down as well as the -- your raw material prices or the energy prices soften, I personally believe there will not be a very significant drop into the margin going forward. I hope I've been able to clarify.
Sir, last question from my end before I jump back the queue again. So this is more on the balance sheet. So now after the demerger, our balance sheet has strengthened, which was already there in last year, we have seen a sharp increase in the cash and cash outflow. And as a corporate, we have also done a good job in terms of increasing payout this year. But we were also discussing some of the buyback that the capital deployment that suppose -- the company was supposed to be announced in last quarter or after the demerger. So any guidelines on the capital allocation for FY '24, '25? And any sorts of corporate action that we can see?
Yes, let me give you this answer in a very safe manner, which we have said the philosophy that ultimately the cash which are generating will ultimately either go into the growth of the company or will get distributed to the shareholders of the company. Now only thing will be the timing of the things will happen in an appropriate time. But we are conscious about the reward to the shareholders and in the appropriate time those right decisions will be taken.
The next question we have is from the line of Saurabh Jain from HSBC.
Again, sir, can you provide more details around the new China capacity that is supposed to come? What can -- your understanding would be the timelines? And is it a phase-wide addition? What is the total size of the project? Any color on that will be very helpful.
The right product that this investment of Inner Mongolia will come in in a Phase-wide. And hopefully, this year, probably 1 million to 1.5 million tonnes of new capacity that we are hearing will come. But still, I would say that very clearly my understanding about this, that China in a longer-term period will not be a kind of a supplier to the world. Because 2 things will happen, in China itself the demand growth will take care of this new addition. Second, the focus on the environmental testing, they will be looking at some shifting of the plant or some closing of the unviable plant. So my understanding in the longer term, China, and this has been in the global soda ash conference also there was a discussion. China will not be a major supplier to the world.
But how big is this project? Phase I you explained would be coming this year, about 1.5. When do you expect this to commercialize? And are there -- when would the rest of the phases would be adding to the global capacity? Is it going to be next year? Or is it going to be spread over a longer term? How do you see that?
It will be longer term, Saurabh. It will be a longer term. It will be coming, like I said, 1 billion, 1.5 billion this year, basically some addition will be next year. There a lot of challenges also there. Water allocation can be a challenge to them. The transportation, because this is very far off, so transportation from [indiscernible] to the mainland will also be a big challenge. So even if they want, they cannot come in [indiscernible] it will be coming in the phased manner.And one more thing which is very interesting in China, this is happening. Earlier, if you remember, that China was more of a dumping the materials, the cost of the economics were not very important for them. Now the cultural change which we are seeing there is that they will moderate their production, but they would not like to sell at a cheaper price. So keeping that into mind, they will definitely come with phases on this Inner Mongolia.
But again, correct me if I'm wrong, this will be a natural soda ash process, right, compared to rest of the synthetic capacity on who process in China, largely who process.
Yes.
So would it also be right to understand that this pricing for this Mongolian project, which is based on natural process, the price would be much lower than what -- or the cost of production would be much lower for this Inner Mongolia compared to the rest of the products in China. And then they can -- so the incremental costs that you're talking about to bring to the cost line, will that be offset largely because the cost of production would be lower in the Inner Mongolian? They can very well then ship out these products out of China into the rest of the countries like India and Southeast Asia, where they are currently pushing in their synthetic [indiscernible]? Can that be a possibility?
No, no, Saurabh, if I can answer it. The natural soda ash is always going to be cheaper in terms of when it comes to the cost of products. Even if you take an example of U.S. or take an example of Turkey. Okay. There is a -- definitely their costs are much lower as compared to the synthetic process. Very right. However, the supply chain cost from the remote location where the plant exists to the sea coast, like this, if my memory is correct, this is around 3,000 kilometers away from the main port. The supply chain cost, after taking into account that supply chain cost, and if they want to expose to the consuming country like China or for that matter to Europe or some other countries. Definitely there will be -- the Indian or the local producer will obviously be competitive over there. And this historically has been seen in the [indiscernible] so like with U.S. or the Turkey. Turkey has the same cost of production. Now Turkey material coming in India, definitely India has a competitive advantage because of the supply chain cost of Turkish production from there to the port and port to India. So you can't say that because of this production, the price disruption will happen.
So what you're alluding to is that the cost of transportation would more than offset the lower cost of production for Inner Mongolia. Is that correct understanding?
Yes.
And the other question is that what kind of -- so already 4 months have passed on this year. How do you see the growth in the conventional segment demand for soda ash? And how do you see the full year demand for -- from the conventional levers that are there for the soda ash industry? Is it going to increase or stable or decline? What would be your view over there?
Definitely it will be positive. As I said in my opening remarks also that demand of the soda ash will grow by 4% to 5%. Our expectation is conservatively this demand growth will be around 5% because glass is in great, bottle glass are doing fantastically well. Even the rural demand into the lime, for the detergent has picked up. Even the textile which was struggling and there also the pickup has started happening. So therefore, overall, we are seeing a demand growth of around 5%.
This is the convention segment of the soda ash or the total soda ash we're talking about?
Largely this is a conventional segment. And then some addition may happen because of the -- of course, from demand of the soda ash has shifted towards the caustic because of the caustic prices are low. But keeping that also into account and the new investment, which is coming into the glass and solar, we believe that inevitably the demand of soda ash growth will be around 5%.
The next question is from the line of Sarvesh Gupta from Maximal Capital.
Sir, first question on the soda ash side is this year has been very, very different in terms of the margins, pricing and everything. And this was not the level of profitability that we saw in the previous years at all. So -- but now you are more or less saying that this is the new normal. So just from an understanding perspective, all the drivers, including glass, Chinese environmental-related problems. All these were always there, right? So what specifically has changed this year, which has created sort of a new normal in terms of the profitability of the soda ash industry, which you think is the -- what it is going to be more or less going forward? So that is one.And second is on the textile side. So even after adjusting the one-off, I think we are still coming to like 3%, 4% EBITDA margins. And you said something like 17%, 20%. So how soon do we see the margins reverting to the average sort of levels of 17% to 20%. And if you can throw some more light on the revenue drivers for that. And because of the demerger, if you can also show -- throw some more light on the management of that business. How has it been done in terms of the top management split between the 2 companies? And what will be the thing going forward for that business?
Very good. First and foremost, I don't think that the margin that you are talking about, you must be referring the margin from per tonne of soda ash. But if you look at in terms of the percentage, if you look at the 15-year [ CSP ] of soda ash and our data, you will find that the margin of around 30%, 32% has been within a very normal margin. So -- and currently, also, if you look at this year as well, the margin has been around same level. If you come to the, say, per tonne of soda ash, per tonne of soda ash, if you look at 10 years back, it must have been maybe some few INR 1,000. And every year this growth of around 9%, if my memory is correct. Per tonne of soda ash margin has been increasing at approximately around 9%, per tonne of soda ash. But -- and that is primarily because of -- because of the soda ash prices are going up. And I think I've said in the past also, soda ash prices in last 15 years has been continuously growing, except don't compare this last 2 years of the COVID period. At the time the [indiscernible] I would say that or prior to that COVID period, that still was slightly abnormal. Otherwise the margin has been in that range and the growth in the soda ash pricing as well as the per tonne of soda ash growth was happening.So my personal belief is these margins are required for the viability of the soda ash plant going forward also. And therefore I don't think there's a very abnormal situation on this margin or this is a [indiscernible] profitability of soda ash because if this margin.
So is it per tonne a better metric, sir, because you were alluding that now from April onwards because of the input cost going down, the ultimate price realization has impacted?
Prices are also going down -- prices are also going down. And therefore you should look at the margin like your cost is going down, the prices are also going down. The margin percentage in that same range should be there. That is number one.Second, I said to you that overall the demand supply situation because always the demand always ahead of the supply, which has been seen in the last many years. So therefore I personally believe this kind of a margin of -- should continue. Maybe a few percentage here and there could be there, but not very significant [indiscernible]. At least in the near future, I don't see that. And balance, we don't know in the longer run, in such a volatile market what will happen. But at least in the shorter term, I personally don't see any major region of any significant or any drop into the margin.Now coming back to your second question, which was on textile. See, as you existed after the one-off also, there's some -- if I remove that one-off, there is a margin in that business. And -- but my belief is that at least for 1 or 2 quarters, maybe this quarter as well as the second quarter could be challenging. However, things are that you will see an improvement in the margin this quarter than in the second quarter and so on. Maybe the 17%, 20% margin should be possible maybe fourth quarter of this year or maybe third quarter or fourth quarter of this year. But things are looking up in that zone. And the reason of this is primarily because of 2 reasons. One, last year, the comparison was there because on the one -- on one side, the cost of cotton was higher, whereas the yarn prices had dropped because the good mills, they had an inventory. In our case, also, you have seen that the inventory we had at the higher part, which we have taken a write-off or the one-off. But now the cotton prices have softened. And because of that, the yarn prices are stable now. And if the demand -- the way the demand growth is taking place, probably some improvement in the yarn prices will also happen. So this will lead to a margin expansion.And again, let me repeat this question, this thing which I had said, this industry is a very -- is a commodity industry, and therefore fluctuation in the margin will happen. If you look at the slightly longer-term view, like we have seen in the last 4, 5 years, you will see that our margins are in the range of around 15% to 18%.Now coming back to the third question which you spoke about the management. We have a very competent management there. We have a CEO of that business. We have a CFO in that business. Of course they have not been taken on the board at this point of a time, but we have a very competent management there. We have a company secretary. So there's a complete management team there. And surely we will support for some period of time till they get stabilized on the entire process.
And on the textile side, sir, the U.S. had a big inventory issue as such. So are we seeing any impact on our business because of the inventory being higher on the export market, specifically the U.S.?
No. I would say that inventories are now getting -- to some extent the inventory has got liquidated and therefore the new demands are getting generated. And for that one good thing is there, which is I think we have done in the last 3, 4 years. The great action, we have moved from a commodity space to the -- in every segment of the yarn. And because of that, in spite of in the past, if you look at last few quarters, you will see that many of the industry or existing industry, they have been running underutilized. Somebody was running at 60%, 70%. We have always run on full capacity of 99%, and we have not built the inventory. So our customer base and our product basket has been designed in a manner so that we have an advantage over the competition on the…
And excess capacity buildup in that business is not a threat for us as such because of this?
Excess capacity [indiscernible] always it happens. Whenever the times are good, some new capacity gets added. And whenever there is a bad time, the marginal capacity or the unviable capacity gets closed. So this is a very common phenomenon in that business. But good part in that business is now, earlier I was seeing because I have seen this business for a long period of time, small investments used to come in a big way. Now that is not happening. That's a good sign for that business, of this building business. Earlier somebody was putting 10,000 to 15,000. That is now not happening. Now only the larger capacities are coming. And because of that, some consolidations will happen going forward on that business.
The next question is from the line of [ Vasunath from New Berry Capitals ].
A question on the lithium carbonate. You have mentioned in the initial remarks also that you see a new market opening up because of the batteries and lithium carbonate. I would just like to know what sort of opportunity size it is and whether we have started communicating with any battery manufacturers? How would be the margins in this area? And whether we will participate in volume or value kind of things?
First and foremost, lithium carbonate has a huge potential. Of course -- will be more in China because this -- today also was a total 70% of the production of lithium carbonate gets produced in China. And this is also one of the driver of China becoming a -- not becoming a more exporter to the soda ash because there also the lithium carbonate, consumption of soda ash and the lithium carbonate could also multiply in the next few years. In India, some reserve have been found out; however, still not in a very significant manner. The lithium consumption or the soda ash consumption is not happening. Maybe going forward, that will happen. So therefore, at this point of time, I would not be able to say that, okay, some volume is -- volume is going in that segment or in the near future that volume will be going. But globally, the lithium carbonate will be a big driver of soda ash consumption.
So in India, you see the visibility after one odd year looking into the small kind of volumes would start?
Yes, you can say that, yes.
The next question is from the line of [ Vishal Jain from Techno Family Office ].
Just 2 questions regarding the demerger of the textile unit. One, by when we can expect the listing of the demerged company, the textile company? And secondly, the cost of acquisition, what would be the cost of acquisition? Would the company share any directives for that?
See, Vishal, if I look at in terms of the listing, hopefully, I think by this month end the listing should happen. I'm sure that you must have got the share of textile in your portfolio. And the process is on, and hopefully by this month end or maybe prior to that, the listing will happen.The second is that in terms of the costing, we are working on the costing and hopefully we will come back soon to the shareholders at what costing, in your balance sheet you have to take into account by transferring this cost from a joint investment [indiscernible]. But that number will be, I think, will be a good number.
So that also we can expect by another 10, 15 days?
Yes, yes, 100%.
The next question is from the line of Saket Kapoor from Kapoor Co.
Sir, if you take into account the additional volume that will be coming from Inner Mongolia. Your understanding is that it could be consumed by the Chinese market itself and that will be more close towards the solar requirement with the type of projects that we -- that China has envisaged over a period of time? This understanding is correct, that this material is not going to flow through other domicile?
I think this is what my understanding at this point of time.
And then, sir, secondly, taking into account, how is -- what is your understanding on the raw material basket and the power fuel cost shaping up? And what factors would be driving the sale? Your thoughts on that.
Power cost and the raw material costs are softening, and it has softened quite a bit. And hopefully, my personal belief is that this will remain softened. This will remain maybe at this level going forward also.
And on the salt front, sir, I think so that the improvement in this salt in part, when will -- will the company start reaping the benefit of the same? And for the current year that we will be also getting the benefit of the expanded capacity from RBC. So your thoughts, when will that flow into our numbers?
You see, so far at this RBC, since -- sorry, so far as this project is concerned, we will start seeing the benefit in this year, but not 100%, but gradually. But some benefit or good benefit will be seen this year itself. In terms of the RBC, maybe some benefits will be seen this year. Of course, the RBC market is slightly sluggish at this point of time. And therefore there may not be a very significant bottom line or addition this year. But in the longer run, as I have been saying that this flue gas treatment, some of the consumers of the flue gas treatment, their trial has been very, very successful. So we are clearly seeing in the near future, a lot of upside into the consumption of the flue gas -- for the bicarbonate consumption into the flue gas system. But it may take some time to really get a full benefit of the extension which we have done.
So as you mentioned, the demand is sluggish. So do you have, I think, so added 30,000 tonnes in the last quarter, I mean, our capacity has doubled from 30,000 to 60,000. So what kind of utilizing level…
Saket, at this point of the time, to give you a specific number will be difficult. But like I said, the market is sluggish, and our volume has increased from 60,000 to almost around 120,000 tonnes.
The CapEx number mentioned post the board meeting was INR 336 crores. So if you could elaborate where this money is going to be spent?
So obviously the money is going to be spent on the greenfield project and vacuum salt, which I've just mentioned in my speech, of my opening remarks, which is a new product basket. Investment will be there also. And regular like a green initiative we are doing, some investments will go into the green energy, those kind of a thing.
So there is no incremental volume for this year. We would be producing 1.2 million is taking into account also the effect of the breakdown. We can look forward for this year for a production of 1.2 million tonnes for the year as a whole?
See, our capacity is 1.2 million tonnes. And based on that, what we have been doing in the past and keeping into that breakdown. Let's see what numbers we achieve.
Sir, in your -- in the presentation also, sir, there was a mention about some losses because of surrender of leased land to GIDC to the tune of INR 17 crores. If you could explain the reason for the same?
See, we have been allotted from land, 2 type -- long term [indiscernible] with GIDC. And in 2013, the board has approved some of the land required by the GIDC, for that, what do you call it, [indiscernible] power plant. And that land, we have given back to the GIDC. And because of that, whatever the cost that the land had in our balance sheet, we have taken a write-off on that.
Sir, we are not going ahead with the proposal for which the land was acquired?
No, no, they needed this land, Saket, for the project, and therefore we had to give it to them. That was not -- this will not impact any of our growth plan or something because the land was a little away from our factory.
So we won't be compensated for that. This loss has to be taken by us even after [indiscernible] of the land.
Yes, yes, they will give me only the land, which -- only the value, which say as per the, what -- they have given it to us. And that we will be getting from that.
[Operator Instructions] The next question is from the line of Riya Mehta from Aequitas Investments.
My first question is in regards to the demand. So basically, I think the detergent demand is going [indiscernible] what are you -- do you think that the newer sectors of solar and other lithium carbonate is overcompensating for the loss of detergent?
No, Riya, I don't think there is a loss in the detergent segment's demand and the demand of the detergent section is good. And going forward, we believe that the normal growth in the detergent demand will continue. As you know, that urban or the rural population, the demand is now good there. And therefore, my personal belief is that the demand in the detergent will continue to be good.The demand of solar, where the new facility has been -- has come or some of them are likely to come in the next few months, which will add to the total demand of soda ash, which I have said, around the demand growth will be around 5%.
And in terms of China, we're seeing some demand slowdown over there. So basically the imports from China have increased in India. So what is the scenario right now for that? I don't personally -- I said that the demand in China is very good, particularly on their solar side as well as lithium carbonate side along with the regular consumption also. The overall demand in China is good. And overall, we don't see any major volume coming into India from China in the near feature.
And in terms of [indiscernible] do we see the realization going downwards in tandem with the decrease in raw material costs? And will we be able to maintain the margins of last year?
Riya, I've said that overall the prices are softening and the cost of production is also softening. Keeping that, everything to mind, there could be a kind of a -- there should not be any marginal or there should not be any major impact on the margin.
The next question is from the line of Rohit Nagraj from Centrum Broking.
Sir, my first question is on the vacuum salt project. So in terms of earlier administrative on the product line expansion in terms of prices, we have not been able to scale up this particular initiative. So on the vacuum salt project, what is the kind of philosophy that we are working on? Will it be a product which will be branded [indiscernible] or we'll be a third-party manufacturer for some other branded players? And how do we expect this to scale up over a period of, say, 3 to 5 years?
I think very interesting and very important question, Rohit. [Indiscernible] vacuum salt which we are producing is going to be consumed, the waste energy of our existing soda ash plant. So therefore this production will be very cost competitive, except the salt and set cost, all the energy will be kind of free on this entire process.And the second -- so therefore, this project is going to be definitely a good basket recently. At this point of the time, we are not looking at branding of this product. We are looking at this product to be sold in a bulk, as a bulk volume. In the longer term, probably we will see those opportunity of the B2C or the branding one, but at this point of the time, no.
Sir, my second question is just on the volume front. So in Q4, we had the adverse impact from the lime kiln breakdown of about 40,000 tonnes. What is the expected impact in Q1? And after this incident, what are the kind of preventative action that we are taking that such an incident doesn't occur with other lime kilns?
So Rohit, very rightly you said, first and foremost this has happened, this breakdown has happened in the first time in the history of GHCL for last 3 to 5 years. And we have taken this as a very serious -- seriously. A lot of preventative action has been taken. It's not 1 or 2 that we -- on that. I don't want at this point of the time to give you a technical answer of this, what infrared or kind of cameras and all, that -- anything we have done.Now in terms of the first quarter, I think as I said, to a great extent, the production has come to the normal in the month of May. And particularly a small gap is there, which will get covered by end of May. So therefore, by end of May, the full production will start. And hopefully in this month or in this quarter, probably 10,000 to 15,000 kind of a number will be there, which we have already announced into our stock exchange information also. And balance, next quarter onwards, it is a full production, full blast production.
The next question is from the line of Niraj Mansingka from White Pine Investment Management Private Limited.
Just 2 questions. One, what is the production of soda ash for the last quarter and the year?
Specific numbers, probably it will be difficult for us to give.
Can you give us the utilization for the quarter?
Like I said, this production is almost around 40,000 lower. Or in terms of the utilization, if I can give you some utilization percentage. Utilization percentage is approximately around 94%.
And for the year?
For the year as a whole?
Yes, sir.
It's almost around 100%.
And sir, what is the status of the greenfield capacity? There was some [indiscernible] any status update on that? And how -- and do you see the spending for that [indiscernible]?
Like I said, while the CapEx detail I was giving or even in my opening remark also, basic engineering has been awarded and the basic engineering work is getting started now. And hopefully the environmental clearance is also, all the formalities have been completed. So hopefully the environmental clearances also should get in the next few months. So I think this physical activity of all this basic engineering, detail engineering and all of those things could happen in the third or fourth quarter of this year.And in terms of the likely completion of the project, maybe some delay definitely will happen. But I think '25, '26, probably, we would see the production.I'm sorry, one clarification I want to give. I think the production, which I gave you the number was wrong. Number was 86%. I've given you the number of the sales. I'm sorry for that. And overall, our [indiscernible] full year is around 94%, not 100%. I'm sorry for this.
The next question is from the line of Tarang from Old Bridge Capital Management Private Limited.
I just wanted to check for the greenfield soda ash project, has there been an upward revision in terms of the outlay that we're looking at now?
I think so, some increase in the outlook did happen. But at this point of time, we don't have a full number at this point of time. But yes, some upward revision will happen because a couple of new thoughts which we are bringing into that. One, we are bringing is, how to build the carbon reduction or I would say the technology of the energy in a manner so that for a longer period of time, the carbon costs are getting reduced. Because you know that the carbon cost in the Europe is very, very high. So we are coming with a technology where the carbon footprint should be lower, slightly different technology, more efficient technology. And all these put together, probably some upside in the cost will be going up. But once we are ready with that, we will share with our investors about the whole project.
Is it in the ballpark of INR 4,500 crores to INR 4,500 crores?
At this point of time, it's difficult to talk about that number. Once we are ready with this numbers, we'll definitely share with you.
Second question was if you could give us the production volumes for FY '21 and FY '22 for soda ash?
We don't give a specific number. I'm sorry for that, Tarang. But like I said, we have -- we are -- this year, we are higher than the last year by 4%.
And what was the utilization last year, '22 and '21, capacity utilization?
Last year our capacity was 11 less. Okay. Last year our capacity was 11 less. And this year our capacity is 12 less, as you know. So utilization number will not be representing each year.
The next question is from Yogesh from Arihant Capital Markets Limited.
I have 2 questions. One question is, there has been some increase in other expenses on a quarter-on-quarter basis by about 6%. So what would be the driver for it on a quarter-to-quarter basis?
I think I will ask -- request Raman to answer your question.
Yes, this has taken into impact of land surrender. The capital loss on account of surrender of land to GIDC, impact is around INR 14.5 crores. So that precisely, if you eliminate that, the other expenses are lower than corresponding quarter.
And my last question is on the demand from lithium segment. So have we done any calculation what would be the impact on soda ash demand only from lithium industry? Any unit economics, how much soda ash is required for lithium battery? Anything on that front?
So yes, we have done on a global scale because, if my memory is correct, that figure is around 5 million to 6 million in the next 7 to 8 years.
So like 5 million to 6 million, so if demand is about 80 million, like 5 million to 6 million will come from lithium. Am I correct?
Currently at this point of time, I think it's around 1.5 million tonnes, and this will lead to something around more than 5 million tonnes in the next 5, 7 years.For the second, I will just give you a very specific number, which has been shared by the global -- I can give you the number. Just one second. Roughly around 6%. It's roughly around 5 million, which I said to you by 2030 and currently is roughly around 1.2 million, 1.3 million. So that kind of a number, you can see roughly around 4 million tonnes of extra demand will be coming in the next 4, 5 years or 6 years from lithium carbonate alone.
Around 4 million to 5 million from -- in the next 5 to 6 years from lithium carbonate.
Yes.
As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Well, thank you very much to all my shareholders. And like I have been always saying, this call definitely helps us to take the feedback from you people and to improve upon our performance on a period-to-period basis. And I think over the period of last 5, 7 years, we have been able to do a good job in terms of growing the business and growing the profitability. I remember that a couple of years back and now onwards, there's a significant change, which has happened into the business. On one side, the profitability has multiplied many folds. And the volume or the growth into the business of volume growth has also been happened. I think we are very few companies in India where our profitability or the profit after tax is more than INR 1,000 crores. We have achieved this year the INR 1,100 crores of profitability.With your support, we will continue to do the good improvement or the good work on the good side. And also continue to allocate our capital in a rightful manner, keeping into account the growth and rewarding the shareholders. And that will be our priority always. Corporate governance is going to be one of our major focus. And we will continue to do our journey on that also.Thank you, everyone.
On behalf of GHCL Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.