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Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to Grasim's Earnings Conference Call for Q3 FY '18. [Operator Instructions] As a reminder, this conference is being recorded on Wednesday, February 14, 2018. Hosting our call today are Mr. Dilip Gaur, our Managing Director; Mr. Sushil Agarwal, Group CFO, Aditya Birla Group and Whole Time Director of Grasim; and Mr. Raj Narayanan, Group Executive President and SBU Head, Chlor Alkali and Viscose Filament Yarn Business. [Operator Instructions] A replay of this call will also be available on our website. I now hand the conference over to Mr. Sushil Agarwal. Thank you, and over to you, sir.
Thank you. Good afternoon, and good evening to everyone. Thanks for joining us today. Our stand-alone business reported an outstanding performance for Q3 FY '18, with revenue and EBITDA up 75% and 34% on Y-o-Y basis. VSF sales volume reported a high single-digit growth on Y-o-Y basis, driven by strong domestic demand. In autumn/winter '17, the Liva tagged garments have doubled to 17.6 million, which is commendable, given Liva was launched only in 2015. The chemical business reported best-ever performance, and our [indiscernible] to grow the chlorine VAP products portfolio by launching new products. The viscose demand growth momentum continues to remain solid. Therefore, we are committing more capital to expand VSF and VFY capacity. We have embarked on a capacity expansion plan, which will increase our total capacity by 58% from the current level of 498 KTPA to 77 -- 788 KTPA. Our Board of Directors have approved a fresh capacity expansion plan with a total project cost of INR 3,533 crores. The company has committed a total CapEx of over INR 6,400 crores over the next 2 to 3 years at a stand-alone level. Grasim has the right to manage and operate VFY business of Century Textiles for a period of 15 years. The operation under Grasim commenced from February 1, '18. Our balance sheet and financial ratios are strong, Grasim is at AAA corporate and borrows at the finance rate from the market. We have a net cash surplus of INR 6 billion at a stand-alone level. Post CapEx spend of over INR 7 billion during the year and after absorbing [ seasonal ] debt of over 20 -- around 20 -- INR 200 crores. Our consolidated revenue grew up 78% Y-o-Y basis to INR 15,291 crores in quarter 3 FY '18. The share of stand-alone business in that consolidated revenue was maintained at 30% on a larger base, which reflects the strong performance of stand-alone businesses. Our consolidated EBITDA was up 44% Y-o-Y to INR 2,696 crores in Q3 FY '18. The chemicals business posted a healthy EBITDA growth. Let me now share the financial performance of our stand-alone businesses. The net revenue, EBITDA and PAT have demonstrated double-digit Y-o-Y increase. Revenues are up 75% to INR 4,428 crores and EBITDA and PAT rose by 54% and 43% to INR 920 crores and INR 474 crores, respectively. I have already covered the financial performance of the consolidated entity in my earlier slide. The only financial number I would like to draw your attention is to the PAT number, which has gone up by 22% to INR 1,125 crores before adjusting for minority shares and proportionate shares in profit and loss of JVs and associates and profit attributable to our participating policyholders of life insurance business. We expect the VSF demand in India to grow at a CAGR of around 8%, higher than the global demand growth of -- growth by 2%. The global demand at the end of current year '17 is estimated at 98 million tons per annum, which is expected to grow at 3% CAGR. The share of viscose in all our global fiber demand is estimated at 5%, which is expected to reach to 7% by year 2025. The VSF demand grew at a CAGR of 6%, double the rate of global fiber demand. The competing fibers like cotton VSF are expected to grow in the range of 1% to 2% for the comparable period. We think VSF is the best-placed fiber amongst all fiber, given its natural attributes like comfort, natural-based, breathability and many more. Let me take you through the price and the demand condition of VSF and competing fibers. The VSF price was supported by capacity shutdowns in China due to environmental-related concerns and low capacity utilization of around 80%. Global cotton prices are supported by higher demand for cotton and stock-to-use ratio not going up much. In India, cotton prices remain at a limited level due to [indiscernible]. The [indiscernible] in VSF prices are driven by strong crude oil as well as feedstock prices with regard to competing fiber. The India VSF sales volumes were up 9%, driven by strong domestic demand and the product mix improvement in favor of VAP products. The VAP sales have improved from 109 KT to 140 K tons in a period of 9 months, registering a CAGR growth of 14% for the comparable time period. The viscose reported [indiscernible] with the sharp rise in the import costs of caustic soda, sulfur and energy prices. On account of rising import costs, Q3 EBITDA were impacted by over INR 100 crores. The improvement in sales volume and realization largely offset the rising import costs. The VSF business initiated off linking pressure to fiber in early [indiscernible]. Under the brand, pressure to fiber initiative brand Liva, which was launched in 2015, with a proposition to brand the VSF business. The formation of [ LFEF ] partnership forum was a step in that direction for creating a consumer pull for our VSF business. Today, the Liva branded apparels are available for more than 220 cities in 30,000-plus outlets. In the recent autumn/winter '17 season, the number of Liva tagged garments doubled to 17.5 million from autumn/winter '16. The increase in caustic prices have led the supply related issues in China and Europe, with strong demand for consumer segments like alumina and textile. The old supply position in the chlorine industry continued in the current quarter, although there was a marginal price recovery. We expect an easing of the global caustic prices from the recent high level due to -- but will stay at a limited level. The price movement will also be influenced by capacity addition in China and India. In India, there are capacity additions under a division in northern and southern parts. The caustic soda volumes are up by 6% Y-o-Y, with capacity utilization at 94% is ahead of industrial rates of 84%. The business is focused on launching new products for improving the chlorine in-house consumption, which is at 27% currently. The rise in coal prices has led to escalation in the power cost. The business is focused on commissioning and stabilizing of the new brownfield capacity by end of March '18. In the Cement business, the overall cement volumes have grown by 33% Y-o-Y, led by an incline in affordable housing demand. The excess capacity utilization of required cement assets in Q3 '18 was around at 60%. The logistic cost portion was up by 6%, and energy cost portion was up by 21% on Y-o-Y basis. Infra, rural development, housing, Pradhan Mantri Awas Yojana seems to be the key driver for cement demand going forward. In the financial services business, we have registered a strong growth led by NBFC and asset management business. Aditya Birla Capital reported a revenue of INR 3,325 crores and EBITDA of INR 409 crores as per Indian GAAP. The company's results includes revenue of INR 2,850 crores and EBITDA of INR 267 crores as per IndAS. The NBFC lending book, which includes housing, lending, increased by 41% Y-o-Y to INR 46,522 crores. The total assets under management rose to highest ever level of INR 299,893 crores, up by 31% Y-o-Y in Q3 of the current year. Now, I'll request operator to open the session for question-and-answer.
[Operator Instructions] We have the first question from the line of Gunjan Prithyani from JPMorgan.
I just wanted to get your thoughts on this VSF expansion that you've announced. If you could throw some light as to -- this is in the commodity VSF or is it in the speciality? And what are the timelines? Because if I look at that CapEx, it's fairly sizable, we are looking at close to about INR 5,000 crores of CapEx for the VSF business in the next 3 years. And particularly at the time, when the Chinese also seemed to be adding a lot of capacity in the next 12 to 18 months. So what is your thought process around this big expansion in VSF?
I think the expansion, as you rightly said, is for what the [indiscernible] VSF and also is the flexibility to make [indiscernible]. So we will do -- so it will self-extend as it is [indiscernible] market. It is largely -- if you too -- as we have been speaking at previous calls, the Indian capacity is fully set and this investment is largely being done for the Indian market. And we foresee that the demand overtaking the supply very soon. In fact, we are [indiscernible] I mean, for full throttle. And the work we're doing in market development to Liva has caused our market to grow at the rate of 12% to 13% in the last 4 years. The Indian market is expected to grow at twice the global average. And further, for further because of this, the cotton stagnating the [indiscernible] gap is emerging. So the VSF share in the textile market in India is about 4% and global is at 6%, and we believe it can go to 7%. There's the inherent potential for the VSF to grow. Now, we have to invest ahead of time because all these investments take time. And that's the idea of investing now so that even if the capacity is coming in, [indiscernible] the capacity is always coming a step, and then they normalize. So I think by the time our volume comes on stream, we'll have adequate demand for the supply.
So this brownfield come onstream only by F '21? And the debottlenecking which was about 60,000 TP, is that -- when is that expected to...
That is happening this year. We've got the permission for the [indiscernible]. As we are waiting on environment clearance, the debottlenecking work has largely been completed. So for the last, we have got the environmental clearance now. And we're expecting for the current also, so about 133 tpd should come by.
[Operator Instructions]
Is Gunjan online?[Technical Difficulty]Yes, so we can -- so I was explaining on the rationale for putting up this investment. And as regards to specialty part of it, the whole plan is like fiscal year for going 2 big 300 tons per day line. The biggest line we have in the business is 180 tons per day. It will be at a much lower cost of production and a much better quality. So we are kind of upping that, the quality benchmark for the viscose fibers from the new project. And the idea is that we will run the commodity of the greatest cost on this line and can work some of the smaller line into speciality. But the specialty growth, we have decided it would be significantly higher. So we can work those lines onto the [indiscernible] speciality and then make on this line the [indiscernible] and the [greatest] cost.
Okay. And the debottlenecking, sorry I missed that. When does that comes onstream? You said in 130 can come immediately or...
My first way [indiscernible] you can say, that kind of thing. And then the remaining 30, 40 tons will come during the year, depending upon the environment clearance we get from the government. We have planned 150 tons per day.
Okay, okay, got it. And this besides yourself, there were also large commissionings that were expected from the largest players in China. What's the update on that? Do you have any sense of what kind of capacity is coming onstream in next 12 to 18 months in VSF? And also, your thoughts on resizing because it's clearly been under pressure, at least in the Chinese market over the recent past. So what's been the trend domestic versus the overseas?
Yes. So the Indian market is a little different than the Chinese market because it's a different value chain. Now China and Indonesia, the next one year, about 1 million tons of capacity is likely to come up. Some plants have started commissioning but they have to close down because of the environmental issues. So the plants have started but they had to -- they stopped. And therefore, the commissioning, some people had to defer the date of commissioning to February, March because in wintertime, the Chinese government has become very strict about the environmental performance of the new plants. So if you see the operating rates right now as we speak in China is about 78%. So about 1.2 million tons of capacity has come under pressure because of environmental performance. So for right now, the prices are holding. So we -- as we said last time, we do -- there may be some NPAT number on the Chinese prices but that doesn't impact the -- in India, the dynamics are different because I think it is driven by the demand/supply. And the yarn industry in India is doing exceedingly well. So while globally, our industry was not doing as well as the Indian yarn industry. So we have been seeing good prices by our own market in India compared to what is happening in China. Of late, the yarn market globally also has started looking up. So it's early days, let's see how it looks.
Okay, got it. Just last question from my side. On the capital allocation, now that I look at it, there is a significant amount of CapEx planned in the next 2 to 3 years. And you also have that Century deal, which we did recently. What is the possibility of investments in the underlying subs? Is there any -- is there something that we can expect because there's clearly Idea or QIP, which has been announced. Is that something Grasim could participate in?
So Gunjan, I think as of now, we, from a Grasim perspective, do not have any concrete plans from any of our underlying subsidies for us to kind of invest in that. In any case, if QIP is taking place for Idea, Grasim can participate respectively. That's my correct...
There's also a rights issue which was being talked about. I'm just trying to understand, if there were to be rights, would Grasim participate in that?
I think there are 2 issues. One, right now, there is no rights in discussion. So I think that's completely a theoretical question. And as I said earlier, in a normalized situation, I said okay, in case if rise has to come and if we have to maintain our ownership to the proportionate business, we will participate. But I don't think that's the situation today because if Idea is basing by we have QIP, we can't even participate. So I think that's completely theoretical at this stage.
Okay. I know investments even in the financial subsidiary would -- as you see it, would be needed at least in the next 12, 18 months horizon?
So we don't have anything, Gunjan. And I think, as we also look at the financial services piece, and they have their own growth plan which possibly, they'll be able to do it out of their own balance sheet. So there's nothing which is specifically aimed at a Grasim level.
The next question is from the line of Prateek Kumar from Antique Finance.
So my question is regarding VSF CapEx again. Sorry if I missed something that was talked about already in the past [indiscernible] part on the call. Sushil, capacity increasing from 498 to -- what is the quantum of increase which we are doing from this INR 4,000 crores of CapEx?
So we are looking at 498 KTPA to 788 KTPA.
I'm sorry, sir. You're not clearly audible.
So we're going from 498 KTPA to 798 KTPA -- 788 KTPA after taking into account the current expansion and the brownfield expenses and debottlenecking.
And this is expected by FY '20 end?
FY '21.
So I think the way you should see the part of the capacity of debottleneck will come in the next couple of months. And then there's one piece of debottlenecking, which is pending for environmental approval. We hope to get that environmental approval in next few months' time frame. So debottlenecking capacity should come into action sooner and the large -- the new CapEx, which we got approval today, which is INR 3,500 crores will come into action by FY '21.
So all of that, the remaining new capacity will be commissioned in FY '21 in 1 piece?
Yes, so 1 -- no, so I think there are -- let me repeat it. I'm saying part of the capacities will come in next 3 months.
Yes, I understood that part.
And the INR 3,500 crores approval which we took today will only come in FY '21.
Sure, sir. And sir, what is the -- now, what is the global VSF capacity and including all the expansion by yourself and global participants? How much is this expected to go up by in like, let's say, by FY '21?
As we said, there's [indiscernible] of new capacity likely to come onstream other than our expansion. Now, [indiscernible] how much I would [indiscernible] and the global capacity is about 5.9 million to 6 million tons, so about 15% capacity. It all will happen in the chemical industry, the capacity from the steps and the demand grows continually. So in 2 or 3 years' time, it will normalize.
And I think the only piece which I want to kind of repeat for the benefit, because although we keep talking about the global demand and global supply and capacities coming at a global level, I think it's important to kind of keep in mind what's happening in India because India in some form is likely different from what's happening in the global market. And partly what we also had reflected that there are lots of activity which we are doing to double up our domestic market. And we have been seeing results in the last 3, 4 years since we have taken up a special exercise to increase our domestic market. And Indian context, the demand/supply situation, it seems to suggest that over a period of time, that there are capacity needs which we have. And we don't want to kind of get into a situation where we lose leadership position and allow exports to come into the country.
Okay, okay then. And sir, regarding the pulp prices. So global, I mean, shutdown in Chinese market, have they also affected our grade pulp also, which is used for the VSF segment?
Pulp has largely been stable, I think. That is not [indiscernible] so I think there is enough capacity, so -- and it will depend upon how the paper industries are at the end of the day.
I did talk about input cost increases in the current quarter, INR 100 crores at the viscose business well, partially actually gets composited in other parts of our business, which is chemical. And partially, some chemical where we don't have it -- we source from external sites, sulfur and all, that prices have coming off since the last quarter ended.
Okay, sir. And one question on sir, ECU realization. Sir, what will be the ECU realization in Q3 and [this part] cost in Q4?
Yes, yes. So the caustic prices saw historical highs last quarter, but this is stabilizing and -- softening a little bit but stabilizing at a little higher level than what we saw in quarter 1 and quarter 2. So it's softening but stabilizing at a particular level. So ECU levels are directly reflected by the caustic prices because chlorine prices are by and large, stable like the -- by and large, stable.
Sir, can you quantify the ECU average realization or is it not possible on the call?
Yes. ECU realization at this point in time is difficult to quantify.
Next question is from the line of Amit Murarka from Deutsche Bank.
Just on -- regarding the VSF, VFY, last time, you tried to break up in terms of the financials as well as how much of the revenue and EBITDA was VSF and VFY. So can we get the same breakup this time?
Yes, one second.0.07 -- 405 in VSF and [indiscernible] is the VFY.
405 and 57.
And if I like, use that number then basically, I'm just kind of getting a slight dip in VSF margin than on a per term basis.
Yes, so which is what I said that broadly, I think in the current quarter, which we just announced the result, there has been an increase in input cost, which has impacted in some form, the profitability. So viscose alone is INR 92 crores. I talked about INR 400 crores, so that includes part of VFY business, but INR 92 crores itself is only on account of VSF.
Okay, fine. And the like, last time around, you have had some water issues for the [indiscernible] plant, and you mentioned that we are doing something about that to make sure that I mean...
Yes, this year, we do not have the sudden issue [indiscernible] the plant for the water plant.
Okay. So just to understand, has something has been...
Yes, we have -- when there's a dam level that goes, the monsoon was [indiscernible] building another [indiscernible] also.
Yes, that's what I was trying to understand. So in terms of your preparedness, the reservoir, by when can that be ready?
It won't be made ready before this monsoon, but I think it's ready by next monsoon. But we have done the measurement of all the water levels and the dam levels and open to the government, and I think there is enough water levels.
[Operator Instructions] The next question is from the line of Prateek Kumar from Antique Finance.
Sir, can we get individual VFY volumes also out of the total 1 category reported during the quarter?
Yes, we can give you the numbers off-line. If there's any other question you can...
Sir, 1 question on -- this is a follow-up of my previous question. We have been reading about the increase in paper grade pulp. So is it -- does it fall in line with your comment on the increase in input cost? Or is it -- I mean, there's something pending in terms of increase in pulp prices that we also may see in the future?
Come again. I couldn't understand you.
So there's been increase in paper grade pulp which has been reported by other companies. So can that have an impact on development grade pulp also for us?
No, the development pulp that once the factories, the pulp -- paper [indiscernible] from disruptions last year, which are coming back onstream right now. So I think that we believe the paper and pulp prices also will start moderating. And VSF grade pulp prices, different among the VSF prices. If those prices are not strong enough, the pulp prices won't go up. So we broadly believe until we are balanced for both VSF grade pulp and paper grade pulp today. We don't anticipate major increases.
And Prateek, as far as these volumes are concerned, yes, even the sales volume on Slide 27 of the investor presentation, show our VSF sales volume are at INR 133,000 crores and VFY is at 5,000 tons for the quarter.
The next question is from the line of Rajesh Lachhani from HSBC.
So my question is, can you give us some guidance on the effective capacity for FY '19 and FY '20 for VSF and caustic soda after all these debottlenecking activities are done?
So the caustic capacity will be 1.1 -- roughly 1.1 million tons for FY '19 and FY '20 as of now.
And on viscose, the debottlenecking which we talked about, around 55 KTPA would get added in the next couple of months.So roughly, I said, 3 KTPA will be the capacity, which will get added in the next few months. So by FY '19, this capacity will be fully available.
[indiscernible] comment, your voice was not clear.
So I'm saying on viscose, 55 KTPA of debottlenecking capacity will come into -- will come in the next few months' time frame. So you can assume that 55 KTPA will be added to the current capacity.
Understood. Meaning, it will come only in FY '21, the big capacity?
That's right.
And sir, just a follow-up on this. So once this entire capacity is operational, what could be the breakup of the value-added products in this capacity? So for example, we did around 145 value-added products this quarter, I think, so what would be after in FY '21 when all the capacity is up and running?
So one, we can give you the breakup meanwhile, but I think the way you should see is that there's going to be a flexibility at our end, depending on which was better. If there is a larger grade demand, we'll produce grade demand, great. Or if we have a Modal and there's a product -- there is more demand, then we can actually produce that. So we are keeping our flexibility on the capacity.
Understood. So capacity-wise, what would be the big breakup?
Like we told you, the [ 1 300 ] tpd line can do #1, so that's all the visibility I have, the new line which is coming. And then in Modal, we have what -- right now, one line is running on Modal. We can have 2 to 3 lines converted to Modal. So depending on how the market grows, we can have enough flexibility to...
Switch between.
The next question is from the line of Amit Murarka from Deutsche Bank.
So on the chlorine by-products, I believe there are plans to increase that usage, internal usage. Can you specify what those plans are? And your brief or broad plan [indiscernible]?
Yes. So right now, so Sushil said that our chlorine integration is about 28%. So going forward, when we'll touch this 1.1 million tons, our chlorine integration will still be at 28%, 29%. So on an increased capacity, the excess chlorine we have plans to use it in the chlorine derivative. There are 2 approaches we are taking. One, increase in the existing molecules of what we have. So we are expanding by debottlenecking capacity the previous plants and existing capacity. We are also bringing in 2 or 3 new products here for chlorine derivatives. So by these 2, we'll be able to maintain or increase our share even at the expanded capacity.
Yes, so I believe there was a phosphoric acid which was part of the plan. So has it now been commissioned and stabilized?
Yes, the phosphoric acid plant that we'll add will be commissioned by end of March '18.
Okay, and how much is that? Like, 50,000 or something, right?
So that's about 25,000 tons.
Are there any further plans to do phosphoric acid beyond that?
So we will have to commission it and this so we are both into technical and [ full process ], depending on how the market goes. But we have capacity to expand, we can debottleneck from the existing capacities both in Karwar and Vilayat.
The next question is from the line of Navin Sahadeo from Edelweiss.
Sir, you mentioned after expansion -- I mean, my question is related to VSF. So you also mentioned that after expansion, the total capacity will go to 788 KTPA. And currently, it stands at about 498 KTPA, right?
Yes, that's right.
So total addition is about 290 KTPA.
That's right.
So if you could just -- so the most recently announced CapEx, I mean, which you announced the first time, the INR 3,500 crores this year, that is for what capacity?
So actually, the [development struggle at our end] to explain this point actually is around 220 KTPA but what it does is it has the flexibility to produce different specialty products. That's where this capacity has to be seen in a context. So the broad breakup, which you should keep in mind is the 498 which is current capacity today, which will go up to 788. The broad breakup of that 788 would be: 220, which is the one which we just announced today; roughly 55 will come from debottlenecking; and roughly 60 KTPA will come from specialty. And again, that 220 has a few lines which has a flexibility to move between specialty and upgrade. That's how you should see it.
Fair, but I'm just comparing the actual CapEx given versus -- in Q2 versus Q3. Now in Q2, the -- and I'm just referring to the CapEx given in your presentation in Q2, which says VSF expansion was about INR 679 crores.
Yes.
And VSF expansion, the live [indiscernible] CapEx was about INR 115 crores.
That's right.
Now, what I'm simply doing is the most recent presentation of INR 4,325 crores, I deduct these 2 amounts, and I get the balance which is INR 3,523 crores.
That's right.
Right. So my question is that, when we are adding roughly -- and as you said, that for this 220 KTPA, I'm seeing the CapEx seems to be very on the much higher side as compared to this other expansion that you were talking about 'til the previous quarter of debottlenecking. So I'm just trying to understand, is there more CapEx allocation towards this particular CapEx, which is a positive in the longer term? Or how should we look at the...
No, no, no. I think the way you should read is debottlenecking obviously is very, very small CapEx which takes place. So I don't think you can compare that debottlenecking CapEx with the current line which we have announced today. And that you have to compare, maybe we can take you through the off-line on this issue. You should compare one with the international, the thing. And second, what we commissioned the last few years back on the Vilayat, that's how you should compare and see because this debottlenecking CapEx would not be the right measure to kind of compare that current expansion.
Very well, debottlenecking means we are only giving some balancing facilities. That is very important new plan to put out in that facility. But internal CapEx for [indiscernible] is far more cost effective than what we did last time.
And I think just to kind of add, even that -- because this is being done at Vilayat, where the existing land and some of our infrastructure is already on level. If we had to do that similar capacity at a greenfield level, that CapEx portion would have been very, very high. So what we can possibly do, since there are lots of questions on this issue, maybe I'll circulate a simple metric and chart for the benefit of most of you, to kind of have a better appreciation on what we are seeing.
Sure, sure. That helps. So my second question is about the margins that one can look for in the VSF segments. So this quarter, we did a grade of 21% but given that there are, like you said, capacity expansions happening in China, most recent commentary on global cotton suggests a much better production, which will lead to increase in global cotton stocks. So from that perspective, what kind of margins should we -- one assume from a sustainable basis, please?
Like I mentioned to you, despite a better cotton crop, the prices of cotton has not come down. Because you must understand, China so far has been liquidating their stock and making up for the demand. And can we stop the very soon come down with the 3 million to 4 million tons and they will start buying far more cotton than what they're currently buying from the global market. So cotton prices in the foreseeable future are going to remain firm. [indiscernible] prices went up by 17%, but the crude oil going up so prices are going to go up. So they have enough headroom for the VSF prices in terms of the [indiscernible] dynamics, right? The issue is how the new capacity and [plays out]. So that we'll have to see. But again, as we are selling in the Indian market, it is not influenced by the -- what is happening in China. China is a bulk commodity market. A lot of guys can't make the quality we make here. A lot of guys can't supply the product which we need here, and they have other concerns there. So you must -- so we believe the Indian market should remain healthy.
So 20% plus is a safe number to look at? I mean, just...
Very difficult to verify. I think they should remain healthy. I don't know our [indiscernible] input cost. Yes, that's a big, big concern of ours.
And I think you would have seen, if you backed that up for the December period of time, I think our utilization is not really kind of moving the way international Chinese prices moves all the time. I think we have been far more static. And second one, which we also made that [indiscernible] last few years post our Vilayat production has come in. And alongside whatever we have done to increase our domestic market and the specialty portfolio, the value-added portfolio, which we have kind of grown over a period of time. I think these are the few things will protect our margin in comparison with the Chinese players. Chinese are broadly commodity players. They don't have the kind of portfolio which we have. So I think we have to segregate slightly differently one from China to India, and their portfolio vis-Ã -vis our portfolio, their price trend vis-Ã -vis our price trend. And we can take you through some of these charts of the past, what actually has happened in India vis-Ã -vis China, to give you more comfort. Because it's very difficult to put number of margin, but it gives us the confidence that margins will remain healthy.
Just to add to it, even in a depressed Chinese market, the prices of the specialty, our margins have one -- doubled the last year. So we have been able to command a much higher premium for the specialty, both in India and domestic market.
The next question is from the line of Ashish Jain from Morgan Stanley.
Sir, I have 2 questions. So one is on this -- on Liva. When we had embarked on the Liva journey, we had also highlighted that a couple of years down the line, it will also translate into better pricing. So are we seeing that coming? Or are we still in a stage where the focus is more on getting the brand recognized [and the premium business will have upstaged] or something?
That's a very good question. Now I don't whether I shared with you. One thing which has definitely happened in the marketplace is our end users, the governmental and the [indiscernible] have started getting premium on Liva garments. So that they are realizing it. Now we are working on some technology to kind of put traces in our fiber. Once we're able to do that, then we [indiscernible] trying to get the premium because then, I have to kind of establish my supply chain right from pulp to the garment. And we will be putting a kind of a tracer in the fiber so that you can check that this garment is made from a Liva [fiber]. When that happens, hopefully, we could be able to come out with a premium. It's a work in progress, we'll [indiscernible].
Sir, if I may, I just had one more question on this. Are we -- our customers, would they be making the same garment with Liva and without Liva? Or there's nothing about that?
No, no. It is like quality we keep selling and so then, what happened on the -- when we continue the Liva tag? It's commanding a better premium, that's all. You don't cost your products from fiber up.
And just secondly, on something that was touched upon in a previous question. But historically, I thought our prices for VSF, at least directionally were in sync with China. Maybe with the lead or lag off in a couple of months here and there because some of our businesses is actually longer-term-contracted and all. But at least, to the extent I don't think there's been much divergence -- directional divergence...
It says in our policy historically, we don't try to -- we don't allow it to but likely, it will happen. The Chinese price as you see there, becomes so volatile within a month, they fluctuate 3 times. So what we should try to place that, the sigma or the [indiscernible] Chinese much had and what didn't happen in our case. And second, because of the specialty portfolio, the prices in our policy [increased]. Like this quarter, my realization is 15 cents to 17 cents more than Chinese. So that's the cause of the specialty portfolio's product mix.
Sir, I understand the impact of changing product mix, but I'm just saying on an apples-to-apples basis, is there a case that we can see a directional divergence versus what is happening on prices in China? Are we confident about that?
I can just -- if you see when there was this issue happening in India. You look at the Chinese prices, they're at the peak but we did not [indiscernible] the prices that much because the market has to be sustained. But our idea is automation is [indiscernible]
But I don't think you want to -- I don't think we should let you get any impression that it would -- Chinese market prices would not have any impact on Indian prices. I don't think that's the point we are making. The couple of points what we are saying that because in Indian market situation, we don't really kind of completely track or change pricing based on what China is doing on an immediate basis. So as I said, if they are changing prices 3 times, I don't think we will change prices 3 times. So that's one method which is loud and clear. Second, obviously, since the whole product portfolio is changing, which will have some implication on better utilization, which is second point. And third, because Indian domestic market will -- that of the idea of things which you are doing, which is leading for it, higher uses of viscose domestically, will give us a slightly better realization than the international realization. So that the 3 broad buckets which we are kind of -- so I don't think you should get any impression that Chinese prices will not have any impact on Indian prices. I don't think that's the point we are making.
Thank you, sir.[Technical Difficulty]Ladies and gentlemen, thank you for holding the line. [Operator Instructions]
I think that there was a calls from -- there's a question from Ashish.
Yes, sir. His line has been unmuted. Ashish Jain from Morgan Stanley.
So my question was just, so this is irrespective of specialty or is this more driven by specialty product mix that you have now?
I think what we'll do, Ashish, to make sure that we are all on the same page, maybe why don't I send you some mail on the subject by doing a chart, and then I can call you and maybe someone -- those who are interested to know a little more detail. Because what's happening is there are 3 different buckets which is there as a part of overall sanction. One was on debottlenecking side, one was on specialty side, and one was on a normal grade side. And then we are also asking for a flexibility between grade and specialty. So there is -- I just need to show you my table and I'll let you know that which part is coming on which date. And second, I think -- either whether you had asked or someone else also had asked, is percent cost, how does it compare? So that's another chart we'll -- and that I'll reflect that. And third point which is being asked is around the realization, how does it compare from Chinese point of view? And given the Chinese capacities are being coming into play, how do we see the realization going forward? These are the few broad questions which I have taken as a to-do. Why don't I pull a few charts around and send it back to you and then have a call?
Sure, sir. Thank you so much, that would be helpful.
[Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to the management for their closing comments.
Thanks for participating on the call. And I'm sorry there was a bit of a disconnection right on the way. And as we have said that there are few things we have to do at our end. We'll try and calculate that quickly and kind of connect with you separately. Thank you.
Thank you very much, members of the management. Ladies and gentlemen, on behalf of Grasim Industries, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.