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Thank you. Good evening, everyone. I would like to welcome the management and thank them for giving us this opportunity. We have with us today Mr. R.S. Jalan, Managing Director; and Mr. Raman Chopra, CFO and Executive Director of Finance. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
Thank you, Ori, and good evening to all of you, and a warm welcome on today's earnings call for Q3 FY '21. Raman, our CFO; along with Manu and Abhishek, from the finance team, will accompany me for this call. The analyst presentation has been uploaded on the website of both the stock exchanges as well as on our company website. The economic contraction in H1 of this fiscal year is now changing and business activities are returning to normalcy very rapidly. We are witnessing recovery in the domestic demand back to pre-COVID levels in the most segments. It appears that pandemic is now entering into a decisive stage as vaccine doses are being administered in a phased manner. Update on global soda demand supply scenario is as follows. U.S. is still facing lag in demand, while EU has reported improved activity in the glass segment. Chinese manufacturers have moderated supply and are less aggressive in the export markets. Turkey remains the most aggressive exporter and has gained some market share in Southeast Asia and Middle East, at the expense of both China and U.S. In the domestic market, soda demand is reviving and capacity utilization for the Indian manufacturers has improved to around 90% to 95% level. Among user segments, detergent is least impacted, but there seems to be some lag in both rural and urban demand. Glass industry is witnessing revival with the flat glass segment, gaining on account of recovery in automobile and construction segments and also new duties on flat glass imports from Malaysia has boosted local manufacturing. Container glass is still lagging, mainly due to subdued demand from the liquor segment due to slowdown in tourism and hospitality sectors. Though food and pharma has been very strong, our production has now resumed the normalcy and is up 2 compared to last year. Anti-dumping duty on U.S. and Turkey has been rejected by GDPR in the final order. As a region, the prices of soda ash could soften by around 2% to 3% in near future. Also, we are witnessing uptrend in commodity and energy prices, which could have some adverse impact on margins. However, we expect this scenario to change due to economic revival, increase in demand and uptrend in commodity prices globally. Textile industry has seen a V-shaped recovery on strong order inflow from the U.S. and rest of the world. As a result, domestic industry is currently operating at almost full capacity, demand outlook for near future appears reasonably good due to continuation of work from home offices and a new stimulus in the U.S. In the spinning business, yarn demand is quite strong, mainly from the domestic home textile industry and also from low and medium value garments. Pricing uptrend in cotton and yarn is still strong due to this increased demand. We are well positioned to capture this royalty, which is also reflected in our performance for the quarter. However, we are cautious that long-term sustainability of this increased demand will be known in next few months. The process of demerger is on track. We have received the final clearances from both the stock exchange and SEBI under the bench has pronounced the scheme on January 22, 2021 has directed to convene the required meeting on April the first, 2021, which scheme proceedings is likely to be concluded latest by end of July or early August 2021. At GHCL, we are focused, agile and committed for sustainable inclusive growth for all our stakeholders. I would now request Raman to share our financial performance to you.
Thank you. Good evening, everyone, and a very warm welcome to all of you on our Q3 earnings call for FY 2021. I will share the financial highlights for the quarter ended December 31, 2020, and also discuss the segmental performance. Revenue for Q3 FY '21 came in at INR 809 crores as compared to INR 834 crores in the corresponding quarter of the last year. This is a marginal decline of around 3% year-to-year basis, largely due to softer pricing in the soda ash segment. On a sequential basis, revenue has increased by 4% from INR 779 crores in Q2 FY '21. EBITDA for the quarter stood at INR 204 crores, which is a significant increase of 15% from INR 177 crores in Q3 FY '20 and 26% from INR 162 crores in Q2 FY '21. This represents an EBITDA margin of 25.3% for the current quarter as compared to 21.2% in Q3 FY '20 and 20.8% in Q2 FY '21. The profit after tax for the quarter stood at INR 111 crores compared to INR 101 crores in Q3 FY '20 and INR 78 crores in Q2 FY '21. This is despite an increase in provision of tax as compared to the same quarter last year. Let me now share the segmental perspective. I'm glad to share that both our business segments have achieved normalcy, and our manufacturing units are operating at utilization levels higher than the pre pandemic levels. In the Inorganic Chemicals segment, we have reported a revenue of INR 528 crores during the quarter, which is down by 4% as compared to INR 549 crores during the corresponding quarter of the last year. EBITDA for the quarter stood at INR 148 crore as compared to INR 157 crores in Q3 FY '20, which translates into an EBITDA margin of 28% in Q3 FY '21 vis-à-vis 28.6% in Q3 of last year. The primary reason for this decline is softening in soda ash realization, which has been partially offset by higher volumes and better efficiencies. We have registered strong performance on a sequential basis due to revival and demand of end user industry. And accordingly, our segment revenue on the soda ash is up by 10% from INR 482 crores, while our EBITDA is up by 25% from INR 119 crores. The performance of our textile business has been robust, and revenue for the quarter stood at INR 280 crores as compared to INR 285 crore in the corresponding quarter of last year and INR 297 crores in Q2 of FY '21. EBITDA has come in at INR 56 crores as compared to INR 20 crores in Q3 of last year and INR 44 crores as compared to Q2 of this year, translating into a record EBITDA margin of 20.1% compared to 7% in last year and 14.7% in the previous quarter. This is due to strong performance across the home textile and spinning businesses. We generated a total of INR 306 INR in cash profit after tax during the year and were efficiently able to reduce our working capital requirement by almost INR 175 crore. This cash flow was utilized to lower our debt by INR 419 crores, and we have spent around INR 65 crores on the CapEx. Our gross debt stood at INR 821 crore at the end of the quarter, and net debt at INR 783 crore. With our strong focus, we have been able to reduce our finance costs by 22% compared to Q3 of the last year. This has been achieved through a combination of high-cost debt repayment and also reduction in interest rates. This concludes my comments, and I would now request the moderator to open the phone for any questions and answers. Thank you very much.
[Operator Instructions] Our first question is from the line of Sarvesh Gupta from Maximal Capital.
Sir, first thing, with regard to your opening comments on fall -- expected fall in the realization because of the removal of the duty as well as some increase in the commodity pricing. So net-net, if you can comment on how do you see margins going forward? And also, if you can comment on the higher margins for this quarter despite the Y-o-Y decrease in the pricing, which we have seen compared to the same quarter last year. We are slightly above on the utilization rate from 92% to 95%. But still, the EBITDA seems to be much more strong. So if you can comment on that. So that's my first question.
Let me clarify on this margin, the first question, which you asked. Like I said, overall, next quarter, January, March, we'll see a price drop around 2% to 3% because ensuing the headwind has not been accepted. Further, you know that the commodity prices of all energy has gone up, and that will also have some impact. Overall, what we believe is the margin could be dropped around 3% in the next quarter. However, as I said, in a slightly medium term to longer term, we see a robust demand and probably some improvement in the margin will happen going forward. I don't see beyond that a drop in the prices of soda ash. Now coming back to this quarter, which you asked, see, there are 2 things which has happened. One, this quarter, the overall, our cost percent has gone down because the commodity prices in the beginning of this quarter was lower. And because of that -- and even our utilization was also better. Overall, I think we have increased our production by around 17,000 tonnes as compared to broadly...
Around 22,000, around 9% improvement.
So our overall, our production has gone up as compared to the same quarter last year, and the cost was also on the lower side. And prices, there was no drop vis-à-vis last year. Of course, as compared to the last -- same quarter last year, 7% drop was there in the price, but we have been able to recover a major portion of that by -- as a result of a reduction in costs.
Understood. And apart from this anti-dumping duty, do you see any trend in the pricing, if you can comment on that because I think last few quarters, the price has been steadily falling. Even before the COVID, I think the prices were softening. So ex of this COVID now, how do you see the prices trending going forward?
The peak -- like I said, first of all, you are right that overall in last 4, 5 quarters or more than 4, 5 quarters, I would say, the peak volume first quarter 2020. The peak was there at the time and after that, there was a continuous drop in the prices from there. Our current situation was that, it is a kind of, what my view is the prices may further fall by 2% to 3%. But I don't see beyond that, the prices would go down. The second, like I said, anti-dumping duty has not been implemented. However, we are in the process of filing a first application of anti-dumping duty on some of the countries, including U.S. and probably, at this time, we may succeed. So overall, I don't see beyond the next quarter. After that, the prices should stop falling.
Sir, previously, we also had this large opportunity that we were talking about due to the FGD and NTPC plants and all that, which will potentially mean a lot of sodium bicarbonate utilization. So any updates on what is happening on that front? Because if that market would have grown, then at least, there could have been some tightness in the supply of soda ash itself in the market?
Your point is valid. You see, basically because through the entire trial of this sodium bicarbonate usage in the flu gas treatment has been postponed by the NTPC. Now recently, they have come back and they are looking for some tender on, on the sodium bicarbonate. So hopefully, now going forward, the trial on this sodium bicarbonate will happen, and that will definitely bring a good opportunity for the sodium bicarbonate.
The next question is from the line of Rohit Nagraj from Sunidhi Securities.
Congratulations on a good set of numbers on both the segments. Sir, the first question is on the soda ash. So you indicated about the rejection of ADD from U.S. and Turkey. So if you could please give a little more input on what was the reason? And currently, what is your status of duties across different countries? And what will be the next application time line if we were to file a fresh application. So if you could just give a little bit more understanding about the ADD.
Sorry. There is a disturbance coming from your line. I would request you to mute your line when the management answers your question.
Yes, yes, yes. My question is clear, sir?
Yes, I'm very clear on your question, and should I answer now?
Yes, sir, yes, sir, please. Thank you, sir.
Good. Very rightly you asked about the ADD situation. You see basically in the ADD application, which we filed, was primarily on -- primarily there were 2 countries, U.S. and Turkey. And what the authority had come out with the conclusion is, though there is a dumping. However, the injury margin, which is called the noninjurious price in a technical word, is not sufficient to put a antidumping duty. And there are primarily 2 reasons because at the time, the prices of import was better because always this investigation has been done on the previous period. So because of that, they did not find a difference, and they have not implemented. The second thing, they are not taken into one of our competitions data because they are using the entire production for their captive calculation. So these are the 2 reasons because of that, they are not considered. Now based on our recent calculation, we are hopeful that going forward, this number will justify the NIP as well. And so we are hopeful this will happen. In terms of the time line, of course, this takes time. Because after the filing of applications, the countries [indiscernible] investigations they will come because they are pending. Similarly finding, as you know, even in the past application also, they have recommended. So my understanding is it will take around 6 months to come with a preliminary finding. Now second, which are the countries we are including. See, after we file the first application. After that, there was an import surge from Russia and Iran. In the new application, we are filing Russia and Iran, along with the U.S. because the major report is coming from these 3 countries.
Sure. And sir, a concurrent question to this. Is there any ADD for any other countries as of now in effect?
No. Right now, we don't have any ADD on any other countries.
Okay. Sir, my second question is on the home textile segment. So in third quarter, we have seen that the revenues have come down. But the operating performance has improved dramatically. So a, what are the results? And b, is there any yardstick with which we can understand how the performance can be on a quarterly basis, maybe in terms of volumes or any other number. So for sodas, at least, we have the capacity utilization and volume number. For home textile, is there any such element with which you can calculate, maybe what would be the top line as well as EBITDA or EBIT margin?
Your question is very valid. Let me tell you my thoughts on this. Number one, this quarter-to-quarter variation in the top line will happen. It primarily depends on the shipment. Sometimes 1 shipment, which is a slightly larger volume, gets produced in 1 quarter and gets into the second quarter. And since our base in the home textile is not very big, this kind of a shipment sometimes impacts the overall revenue quarter-on-quarter basis. That is number one. Number two, why did this performance has been good because of the 2 reasons. One -- or 3 reasons, I would say that. First, we have really done a good amount of work on the cost. We have reduced a lot of cost, and that has really helped us to kind of become more competitive in our costing. That is number one. Second, we have done -- our plant has been done fully. So we did not have been able to explore the entire quantity, but we have done the third-party work. And because of that, our processing, we have been able to run 100% so that has also helped, though the revenue has not come out of that, but that has added that to the bottom line. That is number two. And number three, is the spinning. Overall, the spinning, the cotton prices have gone up. However, yarn prices has gone up more than the cotton prices. And as you know, the GHCL has a largest share in terms of the overall -- in the spinning has the largest share. So we have an advantage of that also into our numbers. So overall, these 3 reasons has given you a better performance in the spinning. Now going forward, how do you see that number? See, my understanding is, like I said, a few things I just want to highlight. The number -- or the margin pressure will be there on the home textile going forward, number one. Government was giving some export incentives, which has been kind of been withdrawn, one scheme has been withdrawn and our other scheme has been implemented, where the final percentage has not come. But I'm expecting around a 4% reduction into that export benefit. So that will directly hit the home textile industry in terms of their margin, number one. Number two, the cotton prices have gone up. The people have got an advantage in including us. We have got an advantage in the other quarters. But cotton prices had gone up and yarn prices had gone down -- gone up. So because of that yarn price has gone up, overall, home textile will also get an impact. To what extent the customer gets a price increase is a question mark in my mind. So like, I would say that I have been saying all along, this 20% margin is a margin not sustainable for a longer period of time. In a longer period of time, we should assume a margin of around 14% to 15% into this business. That, I think, is a reasonable and acceptable margin for this business. Quarter-to-quarter difference may happen. I hope I have been able to answer your question.
The next question is from the line of Andrey Purushottam from Cogito Advisors.
Mr. Jalan and Mr. Chopra, congratulations for executing great numbers given tough circumstances. My question has actually been partially answered, but in terms of an outlook going forward, if you were to model the 2 businesses, would I be right in saying that over the medium term, one should expect a certainly reasonable revenue growth in the soda ash business? And continued growth in the textile business, but at a profitability level, which is closer to the 14%, 15% rather than the 20%? Would that be the right way to model the future outlook for the next full year?
Well, you're 100% right, and I think you have very rightly summed it up, but let me try to give you some add-on what your thoughts. Number one, like someone the very likely the soda ash business is a very predictable business and where you can kind of visualize. Like I've given you that the soda ash prices may suffer down by 2% to 3%. I've given you the raw material prices also how that scenario looks like. Andrey, I've already said that my understanding is that the downturn on into the chemical business is at the peak at this point of time. But I presume that -- or I believe that beyond this, there will be a recovery. So I see better numbers for the chemicals business going forward, maybe next year, '21, '22, would be a better number. And this is just my prediction, you know that the market is so volatile, so uncertain, very difficult to kind of anticipate. But reasonably, I'm confident seems to do better for the next year. Barring, if the commodity prices further goes up, I'm not very -- what will happen because that. In textile, as you very rightly said, we can definitely assume improvement into -- see there are 2 things which we are doing. And this will definitely bring a better margin for us. One is value-added segment. The last 2, 3 years, we have been moving from a commodity space to the value-added segment space. And that journey is now showing us a result. And therefore, I personally believe that going forward. The spinning business will be giving a much better result because of the stability in that, even margin also stability will resume. Those customer segments are completely different. The second, in the home textile, I personally believe that our numbers may not be the same for this percentage ex home textile. But probably in the range of around 12% to 15% number should come in that number. Overall, a growth of around 10% with a margin of 14%, 15%. So reasonably we assume it on a medium-term basis.
Right. And sir, you mentioned a lot of cost-cutting that you've done in your soda ash business. Is it possible for you to tell us and share as to what you have done and what's the extent of the cost particularly?
See, the cost-cutting major focus was more on the textile side, and particularly in the home textile side.In the home textile side, we have kind of pruned down our manpower costs. We have bring a lot of efficiency into our fabric consumption, our utility costs, our third-party purchase of power, a lot of things power -- what we call, power saving in terms of bringing some experts from outside, all the things we have done into the home textile. And that has really definitely helped us in terms of overall bringing down the cost of the home textile. In spinning, our cost structure is very good. I don't see too much of opportunity into the spinning side. And soda ash, of course, not in the short term any major cost reductions. Barring some efficiency improvements and some rationalization in the cost, which is very minor, I would call it again. But long term, we are definitely doing a lot of work into the chemical business. We are moving on a digitization platform, which is in artificial intelligence and IoT. And we have just started kind of -- on the final stage of the discussions with a lot of experts. Like your Rockwell or the TCs and those people to bring digitization of our entire plant in a manner so that they will predict that how do you operate that plant. It will not be individual based, it will be a process based. So the journey -- of course, it is going to be a long journey. We are starting with 1 section of the soda ash plant. But that will definitely give us -- will give us a lot of advantage in terms of the cost efficiency.
The next question is from the line of Resham Jain from DSP Investment Managers.
Yes. Congratulations on the recovery. So I have 2 questions on each of the business and more from a medium-term perspective. So soda ash, we have this land acquisition, which is taking place. And I just wanted to understand where are we in that journey? And what are the time lines for the new expansion plan beyond the debottlenecking, which we have planned for FY '22? That's first, and similarly on the textile side also, as highlighted last time as well, because this business is getting demerged, till now, the capital allocation was not happening in this business to a great extent. But how are you going to look at this business? And are we going to allocate capital in this business going forward. So those are my 2 questions. And also, just a bookkeeping question on the gross debt breakup between the 2 businesses. Yes, that's it.
Thank you, Resham, and I think they are very, very valid questions, both questions are very, very valid from your side. First, let me answer the last question, which you said the debt breakup. Debt breakup is roughly around total INR 820 crore is the total debt, gross debt. Out of INR 500-plus is of the chemicals and roughly around INR 300 crores is home textile. Okay. That is number one. Second, you said in terms of the capital allocation on the on the chemical -- on the textile business, yes, you are right, we have not been allocating the capital on the fixed line business. Primarily because our performance was not good, and we wanted to kind of it -- first, make the operation more sustainable, more kind of at least justify the investment which we have made. Now like I said, I'm reasonably confident that probably the way that things are moving, we will be in a position to get a kind of a reasonable return on textile. So now we can consider the capital allocation on the textile as well. And more particularly we'll be more towards that spinning side because as I have been telling, spinning had always been performing very well as compared to the benchmark industry, and we have been consistently making a good margin on that. Our overall EBITDA percentage in that business will be roughly around 15% to 16% on an average. So taking that into mind, our capital allocation on the spinning side will be more robust going forward. In terms of your first question, I'm sorry, can you repeat the first question?
Greenfield.
Greenfield, yes. So listen, on the greenfield, like I have been always saying, our prime objective of the greenfield was to first do the leg work, which was a long drawn, less capital, big time-consuming, which is a land acquisition. Now almost 2 years, we have been able to acquire only 60%, 65% of the land at this point of the time. Because of the COVID, there was a slowdown in that land acquisition. Now there are a few points which are very critical, which has entered under discussion. Once that happens, then probably we will start doing the second step. In the meantime, we have prepared ourselves for all the environmental clearances and things like that. So probably, I would say that maybe next 6 months to 1 year time, we'll require to kind of get all the approvals and everything ready to propose. And at this point of time, my understanding it will be -- we will be ready to launch the greenfield projects after the years of time. Okay. Now depending upon how do we see the demand-supply situation? How -- after that, it will take 2 years' time, 2, 2.5 years' time. Okay. So we will decide at the time that to what extent we should we go for half [indiscernible] plant or should we so lesser than that, and we will decide at that time.
The other opportunity and expansion into?
No. One more thing that just has been highlighting RBC, we are expanding on the RBC. We are in the process of identifying that expansion of the RBC. So that probably will happen next time. And debottlenecking, as you say, already we are in the process. So in next 2 years, we will have 100,000 tonnes approximately extra at the brownfield expansion, which will give us at the end of it, another 10% growth it is. Also, we are looking at some backward integration also. See, as you know, that raw material, very critical for us in terms of the salt. Salt is a very, very important component of our cost. We are in the process of looking at some opportunity of backward integration of the salt, and that may also happen next year. So these are some of the things which are in the pipeline for growth or cost optimization. I did want to highlight just one thing. Last 15 years of the data justified that the return on the soda ash business, on EBITDA margin is in the range of around 28% to 30%. Probably '21, '22, '23, some improvement will happen in the margin, which is stopped in the last 1 year. Things will be better going forward.
Sir, just one follow-up. So this debottlenecking and backward integration are the 2 CapExes, which is going to happen in the next 18 months or so on the soda ash side?
Yes.
And how much CapEx will this incur, sir?
See, broadly, my understanding is total investment for 100,000 tonnes was roughly around INR 350 crores. Out of that, I think we have already spent around INR 100 crores...
Yes. INR 100 crores.
INR 100 crores.
All in all, INR 170 crores.
So INR 170 crores we have already put in okay. So by that, roughly, you can say roughly around INR 200 crores has to be spent on that, on this 100,000 tonnes. Plus, land acquisition costs or the environmental clearances, so around INR 50 crore of that, roughly around INR 300 crores. INR 250 crores will be the future investment for the additional. In addition to that RBC or backward integration of salt could be another number. Which number at this point of time will be backward integration on the possibility that we are looking at would be around in the range of around INR 100 crores and INR 130 crores.
The next question is from the line of Saket Kapoor from Kapoor Companies.
Firstly, for the import number, sir, for the 9 months and the comparative figure in case of soda ash, sir?
See, Saket, in terms of the number, if you look at the first 9 months of this year versus the last year, 9 months of last year. The number is approximately this 9 months is roughly around 750 -- sorry, 545,000 against last year of 7 lakhs 53,000. So drop of around 28%. However, if you look at the quarter-on-quarter basis, means the last quarter versus this quarter, it's almost at the same level.
Right, sir. And sir, as you have articulated clearly that the rejection has been there on the basis of the technical ground, but sir, then going forward, for the next quarter, we are going to see a dip in the overall gross margin in the soda ash business. That is what you are hinting towards since there is a price correction, and there is an incretion trend also?
Yes. That is what I said, Saket, during the month of January, March, there will be a margin drop will be there because of our [indiscernible]. However the best we are doing is after that in terms of the transition or in terms of the costs we are doing, but it is still going to be a drop...
Okay. Sir, and the utilization level, sir, we have hit the 95% mark. And we were supposed to come up with the 50,000 new capacity by March or April. So sir, looking forward, how are we prepared? Are we preponing it sometimes until March? Or will it happen in the first quarter itself?
So if you look at -- in terms of the expansion which we have done, if you look at the numbers, broadly, our numbers, we are -- as compared to the same quarter last year, we are significantly up in the volume. So the benefit of export, to some extent, has already been achieved during this quarter as well. Our production is up in this quarter is approximately around -- roughly around 9%? 9%. So that compared to the same quarter last year, the volume has gone up by around 9%.
Sir, I wanted to understand any additional capacity you have added during this period? Or it is the old capacity only that is getting utilized to the maximum.
Hold on, hold on. Like I said, that 50,000 tonnes, which we have been talking to be implemented, some benefit of that just started coming into this quarter.
Okay. And the full benefit will happen for the fourth quarter, fourth quarter is the largest quarter and the best quarter in terms of volume offtake?
It should happen, yes, it should happen.
Right, sir. Sir, you provided us with the split up of debt, sir. If you could give us the interest and the depreciation of what Raman said, that would be very helpful. For the 9 months, what have been the depreciation and the interest component if you split between the 2 verticals?
We'll just tell you.
For the 2 verticals interest, for 9 months, you want.
Yes, sir, you give whatever figure, 9 months would be better, then we can calculate.
Interest in the chemical business is INR 46 crore and the depreciation is INR 61 crore. And in the textile segment, the interest is INR 26 crores and depreciation is INR 39 crores. So all put together INR 100 crore depreciation and INR 72 crore interest in 9 months.
Right. Sir, you took this inventory loss also for the home textile in quarter 4. So sir, that is entirely written down or valuation we have taken hit, in other words, will happen to that INR 20 crore, I think so that write-down, which we have taken? That will -- any benefit I can come up with any improvement in the market conditions? Or is it totally written off?
I don't think that there will be any major improvement coming from that totally.
Right. And sir, on Page #27, sir, of our presentation, there is one domestic demand share component. Wherein -- sir, could you please explain these percentage terms, domestic demand share? What are you -- I could not make a understanding of the sales. The 13, 9, 13, 21 and 45 figures, domestic demand share, Page #27 of your investor presentation.
Abhishek will answer this.
I think this is the domestic demand share of the business.
The next question is from the line of Aditya Lalpuria from B&K Securities.
Sir, I've got 2 questions in the textile business. So as we all know that the raw material prices have increased significantly. And also, there has been a sharp increase in the freight prices. So how much of this burden is like passed on to the customer? That would be the first question. And second question would be on your -- on the demand scenario and your outlook on noncotton bed sheets?
See on the first point, which you said the nominal cost on products, it's going to be not easy to get a price increase from that, from the retailer in the U.S. Of course, everyone is trying. We are also trying. To what extent will we be successful, will have to be seen. Now question #2, you said about outlook on the side going forward. I've already said that my understanding is on a longer-term basis, you should assume a margin of around 14% to 15% in the textile business. Spinning next year, it should be a stable business going forward. I'm talking about '21, '22. And in the home textile, there will be some drop in the overall margin, primarily because of the 2 reasons, cotton prices going up, also yarn prices going up. And the second, there are some export incentives, which was given by the government, which will not be in January. These 2 will have an impact on the margin for the industry dropping the margin of the industry.
Actually, I wanted to know the demand scenario for noncotton bed sheets?
Actually, frankly speaking, we are not in the noncotton bed sheets because that is primarily being driven by the China. In India, there's a small -- very small presence of -- if you are talking about synthetic bedsheets. So India is not -- we are not majorly presenting into the cotton bedsheets. There is some talk is going on because the demand growth. I was talking to some customers yesterday, and they were talking about, and there's a good yarn demand recovery into the synthetic bedsheets. But unfortunately, in India, there is no major capacity on that.
The next question is from the line of Rohit Nagraj from Sunidhi Securities.
Yes. Sir, I just missed the point on the soda ash capacity. So currently, we have 11 lakh tonnes. And 15,000 tonnes is further added, you said, during this quarter?
Not this quarter. I said that some benefit of the work of the expansion we have done has been achieved during this year. And we are adding another 50,000. Some benefit of that will be coming because it happens on a gradual basis, some benefits will be coming, which has come in this year, 2021, and balance will be coming next year.
Okay. So currently, we are at 11 lakhs tonnes only in terms of maintained capacity, that's the capacity?
We talked about the production. And if I can say that the production is at this point of time, our production is in the range of around 11 lakhs tonnes.
Right, right. And the current capacity utilization in the month of January?
Sorry?
Current capacity utilization in the month of January. Last quarter, it was about 95%. So we are operating at the same level?
Yes, you can say that, yes, we are operating at the same level.
Okay. And just one more clarification. So last quarter, we had indicated that textile gross debt of about INR 410 crore and you just indicated that it is currently at around INR 300 crores. So effectively, we have repaid most of the textile debt. Is that understanding right?
Yes, I think so. I think we have been able to pay the bad debt of textile by INR 100 crores. What is happening, we have reduced the working capital also into the chemical business -- into the textile business. And that has also helped us to kind of reduce that, the debt of the textile.
[Operator Instructions] The next question is from the line of [ Arpit Jain from Sumari Capital Management ].
Many congratulations for the results, sir. Sir, I have 2 questions, sir. The first one, sir, you mentioned that right now, there is no ADD for the soda ash. The only thing that circular mentioned about some duty on the Turkey. So do you expect that there will be some ADD on the Turkey? And the second question, sir, is on the -- sir, you have been -- you mentioned that you are expecting a CapEx of around INR 250 crores and INR 100 crores on the backwards. So but the cash generation is at the rate of around INR 200 crores. So sir, what are the other uses that the management is looking to deploy the cash? Is it the debt reduction that is on the radar? Or we have some other things in the lineup also?
First question on the very valid question you asked, there was a lot of confusion on the antidumping duty on Turkey. See what has happened is the government has announced some antidumping duty on Turkey. But that is only on other manufacturers. There are 2 major manufacturers who are importing to India, and they are almost 100% of -- they are the only 2 players, let me put that way, okay, in Turkey. There's no duty on that. But there is a third category, which we have said, any other manufacturers. So -- and practically, there is no production coming from -- no imported coming from any other. So therefore, practical purpose, there is no duty. Of course, in a technical world, you can say there is duty on the Turkey. But in technical terms, there is no duty. That is number one. Second, you said our cash generation. Our cash generation is not INR 200 crores. Our cash generation is in the range of around INR 400 crores to INR 450 crores kind of a thing. Our cash generation after tax will be roughly around INR 450 crores, okay. So whatever the CapEx we are talking about is well within the -- our cash generation. And you know the debt we have already completely deleveraged. Our debt equity ratio is only 0.3, 0.33. Okay. So that's why we are very comfortable on the debt. And our focus will be more on slightly moving more towards the growth option.
The next question is from the line of [ S. Kapoor from J Baladi Securities ].
My question is, sir, regarding somewhat related to a bit board level question, but since our company is fully professionally managed. So this question is our honorable Chairman ourselves regarding our shareholder reporting policy. Sir, one thing I just heard you, and I've also analyzed your annual report and your balance sheet that our cash generating ability, operating profit is not less than INR 750 crores for the past 3 years. But as far as rewarding shareholders is concerned and to create a sustained enterprise value, I have one suggestion as well as I will ask your also view that what steps are you taking. One question which I have is that India is changing and if we are open to the mind of keeping up with the Tatas, why I say so sir, because our promoter shareholding is very less. It is almost equivalent to a majority shareholder. Promoter shareholding is in the range -- various companies you see whether it is Reliance or companies of your caliber. Reliance is a very big company, but what my point is that the promoters are holding nowhere less than 41% to 42% or 50% is the shareholding. But our promoters are for the last 15 or 16 years are holding in the range of 29%, 20 -- actually, it's 21%. So this was one question. Please share with what is their view as far as creating a sustaining enterprise value because on the other side, had a vision of has a reason of creating an enterprise value of INR 10,000 crores by, say, 2.30 or 2.25, how faster we can achieve. So please, if you can share your views, then I will ask his question.
[Operator Instructions]
Okay, sure. No. [ Saket ], there are 2 questions out of that, probably very difficult to answer the second question. But I will give you my view in terms of how are we thinking of creating a value for our all stakeholders? But first your question, the first question which you raised was rewarding the shareholders. I think you are a long-term investor, and you have seen that the company has already done 2 buybacks in the past. It is not that we are not rewarding the shareholders. Two good buyback has been implemented. And going forward, also, the policy of buybacks will continue. So we are very clear that we have to kind of reward ourselves. Point #1. Now coming back to the point #2, you said about the sign up. See, why do -- why are we doing this split of these 2 businesses. One of the reasons of the split is primarily to look at certain opportunities in both the businesses separately. Sometimes some merger and acquisition, some joint venture, all these things, they are looking at a specific company, which is in 1 segment. So one of the reasons of that also is how do we create a kind of a -- some joint ventures, some opportunities in the chemical space separately and for the textile space separately. Now in that process, who should be our partner and what value we should be bringing in from there has to be seen. Should we look at the product basket more or should we look at only the shareholders? I think shareholding is a 1 small portion of the growth of the company. The most important thing for the growth of the company is to look at how do you expand your product market. And for that, I think some strategic tie up with someone, which are the larger basket of the product will be more meaningful and more rewarding to the shareholders. And same thing applies to the home textile.
I appreciate, sir. Sir, can I ask my second question, sir, with your permission, sir?
Yes, sir.
Sir, it is regarding our view on research and development, which in the past also have asked, sir, that I see when I analyze your annual report with that of Tata Chemicals, they have -- if I'm allowed to use the word, they have a need, I will use to say, or our desire to focus on research and development. But sir, we are not focusing much on research and development. So any specific reason? And also, if you can give your view on solar sector, what is your view? Because I am seeing we are wasting all my shifts, that manufacturers in good industry, they are -- can you hear me, sir? Manufacturer -- manufacturers who are in Jute industry like style also duty of textile, they are deploying a huge capacity of solar energy. Solar panels, they're using it on their factory land they're using. And Gujarat is a state which is taking a large stride in it. So that's why in the past, I also asked because soda ash actually used to manufacture glass, glass is used in a solar panel. It is somewhat if the product is related, sir, if you can share it with it if I'm -- if I'm having a misconception of the entire thing, then kindly if you can correct me and share your views on it, sir?
No, very right. [ Saket ], you very rightly raised both these questions. And the first question, let me answer the last question first. See solar, definitely, we are looking at a possibility and some projects are under discussion at this point of the time. But however, that project we are looking at into the textile, which is more in the spinning side. As you know that we have made a very good investment into that wind energy a few years back, and that is really rewarding us into the spinning business. So similarly, we are looking at solar energy. We have put certain solar energy into the textile business, both in Madurai, as well as Jute in home textile, Vapi. We are looking at slightly major bigger investment into the solar energy, and that project is under discussion. That is number one. Second, you said about focus on research and development. We are definitely working on the research and development. There are some projects which are already in the pipeline. Although we must understand that our focus is more on our core competency, which is just soda ash, okay? At this point of time, we are not looking at any unrelated activities, which does not matching with our -- what you call our focus on core competency. But on the soda ash, definitely, there are a couple of projects, which are under the research and development. We are not talking about those projects, which -- because, of course, they are a very big concept project if I can say so. But we will be talking when we come to some stage where we can be happy to announce, not otherwise.
Okay. Okay. Sir, final question now. I will not ask any question. Final question. Regarding that suggestion, which I gave about talking with IT or some giant corporate because your valuation is very attractive, sir. At INR 2,000 crore, if I would have -- I would have invested, but I don't have that much amount of money because I'm getting a payback period of 4 years. So I can't invest in, sir, that why other market investors are not seeing this big opportunity, which I am seeing, maybe I'm somewhat wrong. That's why such players, because in my Kolkata where I'm getting ITC just purchased Sunrise company for INR 2,000 crores, which hardly has a turnover of what the turnover our company has. So are we looking for any big...
It looks like -- it looks like that you don't want the management to work, right? Because it is good that if someone is not coming forward, and you are looking from your interest, right? But look at the way the company is being operated. So wellness will come some time. You obviously have to have patience on the overall -- are you not happy with the way the management is [indiscernible].
I very appreciate, sir. Sir, even I mentioned, it is on record, sir. But from 2008, what you have done to the company because of your hard work. I appreciate that.
No, [ Saket ], please focus on our questions more on, how do we run the plant efficiently, how do we grow the business? Why...
That I have full faith on you. That I have full faith on you, that you will do it very well. And you and Raman, sir, will do it very well. That is not a matter of concern for me. But is the overall strategic investment where I was much more concerned, but that will create huge value for us in the times to come.
Oh no. Beyond this, it will be difficult for us to kind of comment on this.
Yes, I appreciate. I appreciate There are limitations. I appreciate, sir. I appreciate. I know that. Okay, sir. Sir, pleasure talking to you, sir. My good wishes are with you.
Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.
Thank you very much to all the participants. I have always been saying that we get a lot of value, a lot of thoughts, a lot of ideas from you people. And we are committed for this business. And we will do our best to make so that we continue to perform on your expected line. With this, thank you very much for your confidence and your support.
Thank you. On behalf[Audio Gap]