Priyanka Daga from GMM Pfaudler Limited. Thank you and over to you, ma'am. Thank you, Kaizad. Good evening, ladies and gentlemen. A very warm welcome to you into the Q2 FY 2022 earnings call of GMM Pfaudler Limited. On this call, we will be referring to the earnings presentation that was uploaded on the stock exchange and last night and is also available on our website. Hope all of you had a chance to go through the same. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Please note the disclaimer mentioning these risks and uncertainties is on slide number two of the presentation that was shared last night. From the management, we have with us our Managing Director, Mr. Tarak Patel, our CFO, Mr. Manish Poddar, our CFO of International Business, Mr. Alexander Poempner, and our Company Secretary and Compliance Officer, Ms. Mittal Mehta. Referring to the agenda given on slide number three, we will start the presentation with an overview of the business from Mr. Patel. Over to you, Tarak. Thank you, Priyanka. Good afternoon, everybody. Let me start off by giving you an update on the business. The business continues to remain very positive both in India and internationally. India continues to improve both in terms of revenue and earnings. The China plus one strategy is working well. We see a lot of investment both in pharmaceutical and chemicals continuing the next few quarters. There's strong order intake across all our verticals. Both the GL, PP, and the Heavy Engineering business here in India has done really well in terms of the order intake. The global business, the Pfaudler International business, has also done very well this quarter. Investments also continue across developed markets both in Europe and in the U.S. We have a record order book across the U.S. and European market, which will give us a good visibility into the next few quarters. There has been no significant impact in our manufacturing operations because of the global pandemic. In terms of the integration update, the operational excellence programs are working well and gaining momentum, especially in Germany and in China. Value sourcing has already started from India. Components have been sourced from India. The first round of components have reached Germany, and the feedback is very positive. Lastly, on the cross-selling front, we've been able to win some large businesses both in Europe and U.S., where we bundle multiple products together to increase customer spend. The outlook remains very positive. We have a healthy order backlog across geographies. I'll talk a little bit more about that when we come to the numbers, but we have visibility at least for the next nine to 12 months in most locations. Order intake trends remain also very positive, so we are seeing investment continue in Europe and in the U.S. In India, of course, it's going quite strong. There have been some potential short-term problems regarding steel pricing, diesel input costs going up. However, we've been able to either price them in or pass them on to our clients. Obviously, energy costs in Europe in the short term have increased, and we plan to pass that on to our clients as well. In terms of other updates this quarter, we have a new India CEO, Aseem Joshi, who will be joining us on November 8. He brings a lot of experience. He's somebody who's worked both in India and in the U.S., and he will be a welcome addition to the management team here. As the size and scale and the complexity of our business has increased significantly over the last year or so, it's important to bring in the right people to help us continue this growth journey that we are on. We've also approved an employee stock option, which pretty much will mean about 0.35% dilution, which works out to about 51,600 shares. And the details of that I will speak about a little bit later. The last update was, again, a little bit more on the raw material energy prices, but I already spoke about that. Like I mentioned, we have seen increases across geographies. However, we've been able to price them or pass them on. Europe has seen an increase in energy costs, however, the Americas and India have been unaffected. China, there has been a short-term power supply restriction, and that has happened across China. However, it will not affect our forecast for this year. Both our revenue and margin forecast remain unchanged at this point. In terms of numbers, I will take you through the consolidated numbers. Revenue has grown from INR 551 crores previous quarter to about INR 647 crores this quarter. A big improvement, especially in the international business coming from the momentum, manufacturing momentum in Germany and in China. The EBITDA has also increased by 14% from INR 82 crores to INR 93 crores, and is at about 14.5% of our revenue. PAT has also increased from about INR 30 crores to INR 52.8 crores, which is about 8% of the revenues. What's really heartening, like I mentioned, is our order backlog. The current order backlog stands at about INR 1,800 crores. Like I mentioned, gives us good visibility into the next few quarters. On the consolidated balance sheet, I will hand over to my colleague, Manish. He will take you through the balance sheet and other. Go ahead. Thanks, Tarak. As you saw in the last slide that because of the, we have a strong result, overall group. If you see our acquisitions in past 18 months, whether it's Mavag, SEMCO or Pfaudler International, they have all shown good progress and, you know, have gelled well with the overall organization. The cash generation has been healthy, and overall we see a much stronger and a healthier balance sheet in September 2021 versus March 2021. If we go to the individual details on the first hyperlink of cash generation in the cash flow statement, we see that, on slide number 19, if you can please jump to slide number 19. While our PBT has been only INR 40 crores, the cash generation has been INR 138 crores, INR 137 crores out of because of the PPA adjustment which were non-cash, not hitting the P&L, however doesn't impact the cash flow generation. A 40 crore of PBT has led to converting into a cash generation of 138 crores. Similarly, the cash has later been invested, well invested into working capital out of efficient uses, and we come to that working capital slide later, to the extent of 53 crores. Routine CapEx of 12 crores has also been consumed out of the cash generation. The balance free cash flow generation generated during the H1 of 73 crores has been paid into interest, dividend and also we have paid a 42 crores of debt and lease payments. We have reduced our existing debt. For the balance we had to pay out 68 crores of cash. We borrowed only INR 61 crore, so INR 7 crore of money has been invested out of our own sources, internal accruals and balance, of course, is the addition to the cash flows, cash in hand. We go to the working capital slide, which is slide number working capital slide summary. Slide number 28, please. We see that on the left side, slide number 28, on the left side consolidated box we see, we had the opening inventory of INR 538 crore. The inventory has actually increased to INR 610 crore. Optically looks like that we have invested a lot of and, you know, the inventory has risen. If we see in the light of the backlog increase, three lines later, from INR 1,483 crore to INR 1,813 crore, we had to increase our inventories to make sure that there is, you know, hedging with regard to the commodity exposure, we minimize our commodity exposure. However, in the same breath, we're happy to say that the customer advances has also increased from INR 288 crore to INR 371 crore. So that would net mean that the investment in inventory has actually reduced from INR 251 crore to INR 239 crore. So that would give you a reflection of how we have been able to reduce the exposure on commodity as well as convert cash, you know, in this whole exercise. Similarly, when we talk about the receivables, while the sales have increased Q-O-Q by 17%, and still we have been able to reduce the total receivables from INR 310 crore to INR 293 crore, and therefore there is a reduction in the receivables as well. Overall, coming back to the consolidated balance sheet, we see a very stronger balance sheet. We can actually also go take this moment to go to the next slide 29. Yeah. Slide 29, you would see the ROCE, which was in FY 2019 and FY 2020 27%-28%, is now back to 26%. Remember, this is on a higher base of a $50 million debt that we have in the international business. That's but still we are very close to the numbers that we were earlier in 2007, 2019 and 2020. Actually, if you see the ROE has actually improved from 21.5%- 31.5% in a matter of 18 months. This is exactly what the Pfaudler business has done to us. This is and if you see on the left-hand side, the EPS on the same line from INR 49 has increased to INR 97 annualized basis. We have had a substantial addition to the EPS and the ROE out of the foreign Pfaudler business acquisition. We can now move on to the standalone, Tarak Patel. Yeah. I think standalone numbers are obviously very strong. India continues to remain and do quite well. I won't go into the standalone numbers. I think from the India standpoint, everything is quite positive, both in terms of revenue, profit, as well as the order backlog. You can now turn to page number 12. The income statement summary, which is just a kind of a macro view on the income statement, and Priyanka will quickly take you through that. Priyanka. Thank you, Tarak. If you refer to slide number 12, you would notice that on our consolidated reported results, our revenue increased 17% quarter-over-quarter, while our EBITDA increased around 161%. That is primarily because in the last quarter, we had a step-up inventory of around INR 45 crores, which is no more there. We are done with the step-up inventory, which Tarak had also mentioned in the quarter one call. We see that it's due to which our EBITDA has actually improved to now INR 94 crore. Further, the PPA sitting in the amortization cost in the amortization line item that is of around INR 18 crore will further reduce down to INR 6 crore in the coming quarter. This is again in line with the disclosures we had mentioned in our quarter four results and that has helped us improve our profits. In terms of the tax level, if you notice that our standalone, while our standalone generated a profit of around INR 29 crore, our international business has also yield a profit of around INR 29 crore, which is similar to our standalone performance. Thereby, thereby proving that the international business is as robust as our standalone business in terms of earnings and growth accretion. Moving on to the next slide, that is slide number 13, which gives a segmental overview of the business. We see that our revenue is pretty much diversified, with around 59% coming from technology and 26% coming from services. Our order intake is also reflective of the revenue generation right now, with 60% coming from technologies and 24% coming from services. Moving on to the integration update, I would like Tarak to take over the integration update. Yeah, thanks. Just to give you some of the updates across the globe. One is that the, as I mentioned to you, China and Germany, both factories started up not very long ago. Both of them are gaining momentum. They both have produced and shipped out a good amount of equipment in the first half of the year. We expect that to continue. Those German and China turnarounds are really helping the international business grow both in terms of revenue and profitability. The Vatva factory ramp up is ongoing. We should have full capacity there by Q4. The order backlog in HE remains very strong. Only yesterday we received another very large order, which is about INR 50 crores for the HE business. There's good amount of growth that will come from the HE business as well. We have new furnaces that are going to be commissioned in December, both in India and in Brazil. The India one obviously will be helping us to kind of improve and increase capacity here. The Brazil is low cost sourcing for the U.S. market, so that should also help us increase our capacity and grow our U.S. market share. We also have now finalized the global EU concept, and we expect to launch that in Q3 of FY 2022. We'll give you some numbers around that once the EU concept has been launched. In terms of value sourcing, we have, like I mentioned to you, the first phase of components have reached Europe. The feedback is positive. The second phase of components, we are working on that right now. We've also redeveloped European-grade raw materials here in India, which we now ship to the international facilities. We have seen a good amount of market share improvement in Europe and in the U.S., in markets like Spain and Russia and in the U.S. as well, where we've been able to win business because of our ability to source from India. Lastly, on the cross-selling front, Interseal is now up and running. We will have a launch, official launch by November. We've already received about eight orders, so we expect that business to also pick up in the coming quarter. Like I mentioned to you, a large order from the U.S., which consists of glass-lined, heavy engineering and mixing systems, as to our ability to cross-sell our products to our clients is something that we are working on. Last, we now have a centralized global opportunity management system. We have one single, you know, group that controls this. It really gives us a lot of visibility in terms of what is happening around the world. With that, I just wanna say that, you know, business remains very positive. We hope that the next couple of quarters we will see some of, some more improvement in terms of earnings due to the synergy that will come in. The backlog that we currently have gives us, a very robust outlook in terms of what this year is gonna finish at, as well as maybe a few quarters into the next financial year. With that, I'd like to now open up this call for questions. Happy to answer any questions that any of you might have. Thank you. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star then one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Reminder to the participants, anyone who wishes to ask a question may press star and one at this time. The first question is from the line of Amandeep Singh from Ambit Capital. Please go ahead. Thanks for the opportunity and detailed opening remarks. Firstly, on your domestic business, while GLE continued to lead the growth, say by 46% Y-O-Y growth in 1H FY 2022, we note that the growth in Heavy Engineering segment remains muted at 5% despite some COVID-led impact in the last quarter. Which would imply a bit lower pace. While, Tarak, we acknowledge that you have been receiving higher orders for the HE business over the past couple of quarters, can you help us with your thoughts here with respect to the scale and how the margin for the standalone business would pan out, with increasing share of, HE Europe? Yeah. The HE business is definitely a growth area for us, Amandeep. You know, now that this new factory will come online, we will have additional production capacity. In the first quarter, obviously, there's no significant reason why there was lower HE. You will see that picking up over time because some of these are long lead kind of orders. You know, some of them ship out over certain quarters. We believe that we can maintain a similar level of profitability, not only by you know, doing export business, but we also kind of pick and choose the orders and the material deals that we want to focus on, right? You know, having a good mix of carbon steel, stainless steel, exotic materials, having a good mix of domestic as well as export business. All these will kind of help us improve our HE profitability. I mean, the idea here is to not really compete with the local fabricators. It's kind of to be able to differentiate yourself when it comes to the thicknesses you can handle, the weights you can handle, the materials that you can handle. Vatva, because of the infrastructure that it has, gives us that edge over many of the other manufacturers, right? Like, our crane capacity is about 200 tons, which not many people have. The ability to roll 140 mm of, you know, steel, you know, that's something that we have. We have two sheet drilling machines there. That gives us definitely an edge. The kind of business and the kind of clients that we try to cater to are really looking at the top end of the spectrum. Sure, Tarak. That's really helpful. Just continuing on the domestic part. With upcoming GLE capacities across Karamsad and Hyderabad, can you give us some sense on what could be the potential for quarterly run rate of GLE segment post the stabilization of these furnaces? This new furnace in Hyderabad will come online in, let's say, end of December, early January. You have one quarter of additional capacity in Hyderabad. However, we are continuously working also on improving and increasing capacity in Karamsad. We have also placed an order for one more new furnace in Karamsad, and we expect to have 1 more order actually placed very soon. That will give us additional capacity. The Hyderabad facility, I think, has around 4 7 EVs is what they did in Q2. Yeah. This additional furnace, I don't know the exact number, but I think it's around 400 is what we had planned EVs from Hyderabad this financial year. Sure, Tarak. Lastly, on your international business. The order booking for the Pfaudler International continues to remain healthy over the last two quarters, which implies that there would be extension in some delivery timelines. In that context, while this remains a positive development, can you help us understand your strategy to ramp up execution, also considering the short-term impact of power supply in China? That would be my last question. Yeah. Ramp- up of capacity is happening. Like I mentioned to you, one new furnace in Brazil is being added on. That's something that will help capacity in Europe. In the U.S., sorry. In Europe, what we are working on is both getting our current factory up and running to a much higher kind of the capacity utilization. Germany is one such facility which we are ramping up. It's a brand new facility. China as well, the way that we are planning it is that keeping that, you know, when we have power shortages, we work on the fabrication aspect and then obviously have when the power is back, we will have the capacity and the furnace I mean, the reactors ready for the blast lining process as well. Overall, you know, we are okay, but I still think that we need to improve our operational excellence in some of these facilities so that with the same infrastructure, the same amount of resources, we increase the output. I think there is a good amount of, you know, you can see a good amount of improvement there by just looking at internal processes and trying to work on operational excellence. Sure. Thank you and all the best. Thank you. The next question is from the line of Sanjay Shah from KSA Securities. Please go ahead. Good evening to all. Sir, congrats on healthy numbers. My question was regarding we have done so well in this volatile world where we are facing from coal to shipping to raw material rise, and still we have pretty done very good on margin side. Tarak sir, can you help me to understand what is the scenario ahead on that side? Because we see still there is a lot of volatility on raw material and shipping freights and all. Are our old contracts we are unable to negotiate the price or we have old raw material lying at our place? And how do you see that future ahead? Yeah, Sanjay. We have, like you said, a combination of multiple things going and working in our favor. From a logistics standpoint, most of our contracts are Ex Works, so the logistics costs are never on our account. It's usually the customer will pay when the material is ready for shipment. We do, and like Manish had mentioned, we have invested in inventory. In terms of steel plates, which is obviously the one that has increased the most and is a big raw material for us, we have a good amount of inventory already available. For whatever new orders are being discussed or have come in, we've already priced those price increases into those orders as well. We don't see a significant impact or pretty much no impact on our earnings for the rest of the year. You know, we will try to kind of minimize if there's any impact, but we believe that we can maintain the same margin profile at least for the next six months or so. That's very exciting. Can you please highlight upon our, h ighlight upon Heavy Engineering proprietary products, how they are panning out, and also some comments on Vatva, how that things are doing over there. Vatva, like I mentioned to you, we've already started moving some business. We had planned to start that up later this year, but we actually decided, seeing the amount of business that we have got, to actually go ahead and ramp it up. We've also put a consultant there who's gonna help us ramp up the business. They're gonna be stationed there for about a year's time. They'll really help us transition and monitor that, the transition period and make sure that our shipment numbers are met. Like I mentioned to you, the HE backlog as it stands currently is- Backlog is INR 150 crore? INR 150 crores. It's also about INR 200 crores of HE backlog already on our books. It's been really an exciting time for the HE business. It's a good mix of heat exchangers, a good mix of stainless steel, carbon steel. What we've also seen in the proprietary business, we've actually had some shortages in capacity in Karamsad, so we've moved. We've actually, since we have five sheds in Vatva, one of them is now being given to the proprietary business to increase their throughput and increase their capacity as well. That's great. Thank you, Tarak. I wish you all a happy Diwali. Thank you. Thank you. Thank you very much. Thank you. The next question is from the line of Ronak Vora from AUM Fund Advisors. Please go ahead. Hi, sir. Congratulations on good set of numbers. I would like to ask, so the order backlog in your standalone book is flattish on Q-O-Q basis. What may be the reason for that? Sure. On a Q-O-Q basis, I think we were already, you know, quite full. We've kind of because, you know, in terms of shipment, obviously the last two quarters that we had seen are incredible order books. That's what we are now waiting to kind of reduce the backlog and then book new orders. This gives us a little bit of more flexibility to pick and choose the right business mix, the right business at the right margin, you know, kind of, the profitability that we would like to get. It's not a trend. It's not something to worry about, but it's just a part and parcel of the amount of backlog that we already had. The last two quarters has been significant in terms of order intake. Hence, this, because we can't now deliver in time, we would have to have it slowed down till we ship out some equipment and then again we come back to the normal kind of order intake as well. Okay. To like explain it in terms of days or months, what would be where. If I'm a customer, I give you an order, what would be your execution timeline? Suppose six months, nine months, what is the current whole scenario? It depends on the product that you're talking about. In glass-lined, about five to six months is our normal delivery timeline. For custom sizes, it could be a little bit longer. In HE right now, since we have the new Vatva facility, we can, depending on the size of the order and how long the materials will take, give you something in six to nine months. In the PP business, again, I would say about six months is the order backlog that we have. Okay. Secondly, on the Pfaudler International business, you know, can we consider that, you know, 10% EBITDA margin would be a base going forward? That's what we are hoping for, and that's what we had guided towards. I think Pfaudler International has turned around quicker than expectation, which is a great sign. This is not considering a lot of the synergies that have been and that will pan out over time. I think as a base, 10% EBITDA margin for the Pfaudler business is definitely something that's comfortable for us. You know, if the synergies start panning out, I think that can also see a slight improvement there. Okay. When we say that we have INR 370 crore of advances from customers, so is it like you get 20% of your order book as advance to confirm the orders? Can you just highlight? Yeah. Basically these are progressive payments that we receive. Once you have the agreement signed off, the contract team has executed, thereafter the drawings have been discussed, and then you have a milestone payment, 10%, 15%, 20%, depending on the terms of the individual order. Of course, subsequently, per milestone, you keep receiving progressive payments. Thank you, Mr. Vora. May we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Sandeep Tulsiyan from JM Financial. Please go ahead. Yeah. Very good evening, Tarak, and congratulations on great set of numbers. Hi, Sandeep. Thanks. Yeah. First question is pertaining to the strong order inflows that we reported, particularly in the international segment. If you can share more color which geographies these orders are coming in from, along with an update on the Asia Pac penetration strategy that you had described a couple of quarters back, if you can give us an update on that. Okay. I may take it. Alex from the international business. In fact we see it through all territories. We have strong order intake in Americas that we are really happy with. Tarak already mentioned that we also invest in Brazil to support the growth of the Americas business in the U.S. We also have a really good development in China, where we are happy with the supporting our growth plan and the new factory. Also Europe is currently doing great. In general summary, it's a good trend, and we are happy with the performance. Just to add to what Alex said, even for Mavag, you know, we have close to about $35-$36 million of Swiss francs of backlog, which is 18-24 months. They are in the process of finalizing another $6 million-$7 million worth of dryers as well. There is definitely a good momentum picking up in the international markets. Both the U.S. and European markets are after a long, long time seeing a good deal of investment. It's really heartening for us when we have factories that are full, and we are looking at investing in, you know, kind of increasing the capacity. I think this is something that Pfaudler has not done in many years. I mean, it's very. In terms of timing, it's really great for us that we are seeing it right now. Sure. Second question is, pertaining to Mavag. Specifically, we've seen a very sharp, ramp-up in the order book over there. Yes. Revenues have not grown if you compare it to both Q-O-Q as well as Y-O-Y. You had mentioned there would be a plan to outsource and get some of the fitments done from the India facility for that. Just a share update, how do you plan to ramp up given this? Would you be investing more in the local facility over there, or is there an alternate plan to cater to the strong demand that you're seeing in Mavag? You will see the second half of the year be a much stronger performance from Mavag, because I think a lot of the stuff that we are to ship out of India is in the process of being shipped, so they will obviously turn that around, and then you will see that revenue increase happening. There's no plan of increasing capacity in Europe. However, in India, like I mentioned, we actually have additional capacity now with the Vatva facility being available. We are gonna do some of the proprietary work from Karamsad go to Vatva, which then will create more room for Mavag-related activity. But you're right, we have to increase Mavag supply because as their business increases, automatically our business will continue to increase. Right. Lastly on any long-term growth guidance that you want to give. You had mentioned in previous calls that probably by a couple of quarters later you'll have some visibility on that. That's my last question. Yes. Yes. I think we are working on something. We have a global strategy meet, so we have about 45 of the key employees gonna meet in Dubai this December. This is the first global conference that we've planned. It gives an opportunity for all of us to interact and really build a long-term strategic plan, a three to five year plan for the business, look at things around M&A opportunities, look at things around profit. Once the meeting takes place, I think at least by Q4 we should have a document in place. In terms of guidance, we can then kind of give you some new set of numbers that we believe is achievable over the next three to four quarters. All right. Thank you so much for taking the questions. Thank you. Thank you. The next question is from the line of Ashit Kothi, Individual Investor. Please go ahead. Ashit Kothi, your line is in talk mode. Please go ahead with your question. Yeah. Good evening, sir. Wish you happy Diwali, and congratulations on the good numbers. Sir, would want to understand what has been overall China contribution to our turnovers. With the current power scenario out there, power shortage and other issues, how are we planning to use that as an opportunity or shifting of base from China to India? I think the current shipment has been around in the first half of the year, the China shipment. 5% of the total shipment. Of the international business, right? How much is that in- The total business. Yes. How much is that in rupees? 16 to 20. About $12 million of shipment has come from China so far, and we expect, you know, that number to at least double from half the year, that is pretty much half the target for the year. However, China does face a bit of, you know, energy issues, so they have to shut down their energy for let's say four days a week. We expect this to kind of improve from December and January. As of right now, from our local people in China, there has been no major disruptions because what they do is while the power is not available, they do the fabrication and the glassing, and then when the power is available, they have the vessels ready to go into the glassing factory. Obviously we won't be at full capacity. For this year's numbers and guidance that we have planned internally, we should be fine. We are not looking at shifting of operations or production. There have been certain orders which have come to India. Because of the capacity constraints in China, because they were booked out, we have manufactured some equipment, some orders. Other glass-lined equipment orders have come from India, which are under supply. That could always be an option. If there is more need and more of the demand coming from China, we can always look at not only India but any of the Pfaudler facilities to supply into China. Sir, apart from Glass-Lined business, the capital goods sector, how much more growth you are expecting? I think India continues to remain very strong. I think the investments will continue. I don't see any slowdown here. Internationally, obviously the markets are booming right now. There is, you know, local capacity being created, so at least the next, you know, 12-18 months looks very good. Obviously the idea is to not only ride the market growth, but we need to work on market share. Hopefully with the kind of, you know, the group that we have, the size and scale, and even the ability to source from anywhere in the world, we can really go out and go for those market share globally. Just think of it as exactly like how we have grown, I mean, Mavag from, you know, being a $6 million or $7 million such a tiny company, and today they're about $22 million-$23 million, the company. We've seen that grow about, you know, 3x-4x without using or increasing the infrastructure, without increasing a single person. But just by using and, you know, trying to move some of the fabrication non-core activities to a low-cost country. Even for Pfaudler, the capacity that's available, if it can be used for the value-added stuff and move the fabrication to India, we can see a good improvement there as well. What kind of growth, sir, percentage? In terms of guidance, we've already given the growth guidance INR 2,800 crores by 2024. I think that's a conservative number, and if you see the, you know, what we are tracking towards, I think we'll probably achieve something better than that. Thank you. We'll take the next question from the line of Rahul Dalal from Motilal Oswal. Please go ahead. Yeah. Hi. Congratulations on a good set of numbers. My first question is that, Tarak, how have you been spending your time between the international India business, operations strategy? Now that Mr. Joshi will be joining us, how would this change, if at all? I think, in terms of the, you know, actually going and meeting these people and trying to visit the facilities, I was lucky enough to have an opportunity. Last month, I was in Germany, where I visited the German facility. I saw the Interseal facility. I saw the NORMAG facility. I was also in Scotland, and I got to see the U.K. facility. A few months before that, I was in the U.S., so I got to see the Rochester facility as well. However, obviously, I would like to spend more time at these facilities. Because of the pandemic, that was something that was a bit difficult. Over time, I do plan to have a little bit more involvement and oversight in the international business. You know, although we have a CEO and CFO who are responsible for that, you know, once the team joins here in India, you know, there will be definitely opportunity for me to kind of, you know, try and meet these, spend more time at these factories and kind of look at some of the integration efforts as well as operational excellence efforts that are going on in these geographies. Right. Thanks. The second question is that, you know, given that there's a strong demand momentum and you touched on the INR 2,800 crores target, but what about anything on the margins? Besides, of course, you guys will meet and just kind of discuss your four to five year plan. On the earlier guidance, would there be any revisions? You know, the only thing that I can say is that, you know, we've given guidance of 16% by 2024. We are really at a group level at about the 14%-15% guidance. Sixteen percent looks very achievable, and that was not including synergies, right? On top of that, when we have synergies, I think you will see that improve as well. You have more revenue coming in as you grow and as the factories become more efficient, you would probably also see that improve. In terms of guidance, I don't wanna really give you a number right now. Like I mentioned, we will have this meeting. We will come back to the market with the story in terms of what we expected to do over the next three years, and maybe even in terms of profitability, what we believe will be possible. Sure. Thank you and all the best. Thank you. Thank you. The next question is from the line of Puneet, individual investor. Please go ahead. Hi, Tarak. Can you hear me? Yeah, I can hear you, Puneet. Go ahead, please. Tarak, hi. Greetings from Dubai, and Happy Diwali in advance. I think this number obviously has to be Diwali to us. Congratulations to see the numbers and the international business taking shape as it is. I have a question on the U.S. order that you mentioned. It would be really helpful to understand the numbers on that front. Clearly, you mentioned the last con call as well that this will flow in this year by the year-end, the last quarter. Any number on that front would be really helpful. Yeah. I think the value was around the INR 8 million-INR 9 million mark. I think that was one single order. We are actually also in discussions with the same client to kind of increase the supply. Hopefully we'll see some more, you know, kind of growth on that number. This is, it's quite interesting because, this is really a good example of how we could leverage the strength of the group. When the inquiry came, customer was quoting, and their timelines was close to something like 17-18 months. This was a fast-track project, and, we could do it from India. This entire order will now be manufactured here in India. The pricing is similar to Euro-European or US prices, so there's no kind of reduction in the pricing. As a group, you know, it is gonna be something that will be profitable, will be quite profitable. I think this also helps people kind of understand that there is so much more to the group now than, you know, just being a country-specific organization. Sourcing from different geographies, having low-cost facilities, I think that gives us an edge over competition. That's something that's definitely heartening. I think as more and more salespeople will start seeing this, I think you will see that market share improvement just be coming through areas. There will be a bunch of customers who were never buying from Pfaudler, but now suddenly this opens up a brand new market for us. Right, Tarak. My second question was actually an extension of the first one only, and which you clearly highlighted that now. Since it's just the integration has just started to happen right now, and I'm very hopeful that, going forward, not just in Americas, the other regions as well, since at the beginning itself you've, we've given a big order, this is just the start of things, and I'm sure, bigger plans are ahead for other geographies as well. Yeah. I think the few successes that we've had, and I think I mentioned this during my last con call, the budget that we had put in for the entire year for low cost sourcing or sourcing from India into European and U.S. market, the budget was made in the first three months, so we still have nine months left for any additional. That was how quickly we were able to kind of beat the budget. That just shows that there are opportunities available. Now that people have kind of you know seen that it's possible, I think this is gonna open up a wide and much more bigger kind of opportunity that will come to us. Very heartening to hear that. Tarak, thank you so much. Just on a lighter note, if you need any assistance from my side in Dubai for December booking, do let me know. Thank you so much. Thank you so much, and nice talking to you. Thank you. The next question is from the line of Sujan Kumar, Individual Investor. Please go ahead. Yes. Can you hear me? Yes. Yeah, go ahead, Sujan. Sir, I just have one doubt, sir. In your international business, I see a lot of spending on employees. I'm seeing this continuously from the second quarter. I see some drop from last quarter, but how it is going to reduce from future? That's my first question. You mean to say employee cost? Employee cost is much higher in the international business. That's your question? Yeah. It is almost 30% of your revenue in the last quarter, and it's 26% from the revenue. Yeah. Employee cost, you know, we need to understand this, that when you talk about the international business, it is heavily loaded towards the developed markets of Germany, Italy, U.K., Switzerland, and Americas, which is a high cost countries per se from an employee cost perspective. We know this on day one itself. As Tarak mentioned, there are two ways to do it. You want to cut down on cost, A, that's a shortcut measure to improve profitability. If you want to do it the hard way, the long-term way of increasing the health of the business, increasing the size of the business, like we did in Mavag, we just want to replicate that model. We have the same number of people, we have the same capacity, but we double fold or triple fold the business. That's the way to do it. Yes, it's harder. Yes, it will take not a few quarters, a few years. I think that's the more, healthier way of, creating value for the shareholders. Okay, sir. Thank you. My next question is regarding the borrowings. In your balance sheet, I see there is a significant improvement in the borrowings. In your opening remarks, I noticed that you have said some decrement, some repayment has been done. I didn't see that. Can you explain that? Right. Net, there has been an increase in the debt. However, what we mentioned in the cash flow slide was that the existing debt as on 31st March has been repaid to an extent of INR 42.5 crores, if I remember correctly, debt and lease payment. While the new acquisition of Vatva required us to invest something like INR 68 crores, however, we had taken a loan only of INR 61 crores. Net, if you take it up, there has been an increase in the debt levels on an overall basis, but the existing debt has been repaid and the fresh debt for Vatva acquisition has been taken up. That's why you see both the numbers. Okay. Thank you, sir. Thanks for the opportunity. Thank you. Thank you. The next question is from the line of Shrinivas from Rockfort Consultancy. Please go ahead. Yeah. Good afternoon, sir. My question is, you mentioned that order book and the performance in Germany and China is very good. What about other locations like Brazil, U.S., U.K., France, and Italy? You have not mentioned anything about them. I think the performance is great across the world. If you see, the international business has grown at double digits, which is faster than the market there. It's definitely heartening to see. It's not happening only because of Germany and China, but we just highlighted Germany and China because they have done increasingly well. Please remember that both Germany and China were loss-making last year, last financial year. This is now turning them around and making them profitable, as well as getting the momentum going. It's gonna have a double impact for us going from negative to positive. That's why they were highlighted. Across the U.S., we've seen fantastic, the performance there, both in terms of order intake and in terms of shipment. Brazil continues to do well, and that's why we are adding one more furnace in Brazil, so they can ramp up and ship out more equipment to Europe. China, like I mentioned already, has already done in half the year a very good start to the year. Across the board, businesses have done well. Orders remain very, very strong. We just wanted to highlight the two factories that have turned around most of all. That's why China and Germany. The performance of the international business as a whole has been very positive. Thank you. Thank you. The next question is from the line of Rohit Oza from Progressive Shares. Please go ahead. Hi, Tarak. Hope you continue to play like Rahul Dravid in this journey 2.0 on the second innings of GMM Pfaudler. Rahul is retired now, so I don't wanna retire too early, but yeah, I'll try and play like him. Okay. I have two questions and one vision statement. In terms of the subsidiaries that we have, the 16, how many of these are in autopilot mode? How many are in semi-automatic? And how many of these require absolute attention from the management perspective? I think of all the subsidies, I think being in a manufacturing business, you still need a lot of human intervention. I think that from a management standpoint, even though we have local general managers in each location, there is definitely oversight, review meetings, a lot of conversations. Now, with the integration project that we're working on, internally, we have reviews of phone calls where the entire group gets together and we start talking about a lot of things like operational excellence, cross-selling, you know, low cost sourcing. The entire company is actually working together, so a lot of people know what's going on across the board. It's not like each country is in a silo kind of doing its own thing. Everybody is part of a bigger kind of a team and a bigger kind of a goal that we all are trying to work towards. I think that's definitely a benefit. I think now this meeting in our global strategy meet will also be very helpful to get people working together, get them to know each other much better. I think that's a positive as well. I think at the end of the day, it's really the people of the company that's gonna take the company forward, right? If we can get that kind of culture that creates, you know, kind of teamwork and accountability and growth, I think then you can see really the next level of growth coming for Pfaudler. The brand name is there, the technology is there, the factories are there, so we really need to kind of get the culture going to really kind of drive the next level of growth for us. It is ESG plus culture for you. My second question is that you spoke about the global EU concept. Can you take us through that? How does it benefit us? EUs is something that we developed in India, and it worked very well for us. It's something where we base earlier it was just units, right? Units are not even- Okay. A very good way to measure your output. We kind of developed the EU concept, which really measures output by the amount of effort that goes into it, right? The good thing about the EU concept is always the more number of EUs, the higher the revenue. There's a direct proportional link to that. In terms of units, if you have 100 small units, that could be less revenue than 50 big units, right? This is something that, as a company, it's a great thing for us to measure our, the performance. Launching it internationally will help people, one, understand their capacity, and then two, at least kind of get some idea in terms of their revenue and shipment possibilities, right? Really just build a kind of a similar standard across the group so that every factory can be measured against each other. Okay. In terms of patenting any processes or products, your thoughts on that? Is anything in progress or in process? Sorry, can you please repeat that? Patenting any process. Okay. Process, Okay. Process, right? Asset recovery is one thing that we've been working on. We've had some successes, that's something that, hopefully as, you know, the world goes green and, you know, ESG becomes more important, more and more companies will kind of look at, you know, cleaning up or reusing their assets. That should be a good business for us. That's something that we're working on. As a company, we do a lot of systems business as well. There's a lot of technology in, you know, lube refining. There's a lot of technology in oleochemicals. There's a lot of technology in latex. We have a bunch of stuff that we're working on. These are all process-oriented. No. I was asking about patenting some of the processes or products. Oh, yes. I think Pfaudler has a lot of patents to its name already. We are also working on new types of glass that will eventually improve heat transfer and things like that. As and when we work on these technologies, we will end up patenting them. Okay. Sir, any vision on becoming a debt-free company once again? You know, a lot of people ask me this and, you know, we would eventually become a debt-free company, and I think I mentioned three to four years. I think this was last year. It's not really a problem, it's a good problem to have, is that debt is so cheap, cheaply available, right? It would be inefficient to not use debt. And, you know, that's exactly what we are looking at. Our debt ratios are so comfortable that there is no reason for us not to use debt. I know for Indian shareholders, you know, debt-free is always nice, but I would find it inefficient if I didn't use debt when it's available so cheaply. Rohit, just to extend that point, you know, our debt equity is 0.9, and the overall debt available to the company is at less than 4%. We have two options. We can enhance the share, the shareholder base by double, right? From say INR 3 crores-INR 6 crores of share capital is what we can do. But then that will reduce the ROE and the EPS to half. I'm sure none of us want that. Therefore, if somebody's putting 50% of the money at 4% because it's a no-brainer for us to do. As long as we are in comfortable zone with regard to our debt service, our debt to equity ratios, I think, it's a Yeah. From a visibility standpoint, the order book is there for the next, you know- Exactly. 12-18 months. There is no problem from that standpoint as well. I think right now debt has to be used efficiently, and I think it will only help us improve our ratios. Ronak Vora from AUM Fund Advisors. Please go ahead. Hi, sir. Can you just help me with in terms of growth for the current quarter, how much would be value-led growth and how much would be volume-led growth because of the you know increase in raw material prices? Can you just bifurcate between it? I think 90% would be volume-led. These are, you know, these increases cannot only come from price increases or price of passing on. Many of these orders were from the older orders they're getting shipped out now. The volume growth has come from, I said, like Germany and China, they have ramped up their manufacturing, so that's really ninety percent of that would be. Ronak, I think, we've got to give credit to our sales guys that in the increased, you know, consumer price of the metal prices and all that, we have been able to sustain profitability so that it still speaks for itself. That's definitely true that our profitability speaks for itself. Just to get a sense of view that how much more EUs did we sell and how much was due to the commodity inflation which we had passed on. That is what my Yes. Like I said, 90% would be volume-based. There will be some 10%, commodity pass on. The volume was led by facilities like Germany and China, who last year did not have much manufacturing because we just built these new facilities and the move was, you know, ongoing. Okay. Secondly, are we still looking further for any inorganic opportunities for our Heavy Engineering business, looking at that we have capacity constraints? Now, no. I think capacity now we have excess capacity. The order book is very strong. Now, once we get Vatva fully up and running, then I think we will have capacity at least for the next two to three years there. No, right now, we don't need additional space in Heavy Engineering business. Okay. Thank you. Thank you. The next question is from the line of Ashit Kothi, Individual Investor. Please go ahead. Sir, just would want to get a feel as to when exactly capital invested in acquiring international businesses would be back. I mean, say, return of capital. By financial year 2025 or 2026. Ashit, if you go to the slide number 29, we have mentioned the ROE and ROCE percentages. ROCE is at a 25.5% and ROE continues at 31.5%. By that you can actually you know determine the return period as well. Basically another three to four years, whatever invested to acquire will be free and back to us. You can't take it that way simply because the base is, you know, out of the share capital and the reserves that you have earned over the period of time. This is a completely new business. You know, it's a bit more complicated than that because if you didn't have 54% at this stage, you don't have that 100% as well. Yeah, if you call that, just take on the, so we are having the, you know, Pfaudler International EBITDA margins at 10%. Yeah, take that as a benchmark, and you can calculate the return period there. Okay, sir. Thanks a lot. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments. Yeah. Thank you everybody for joining the conference call, and you know, wish you all a safe and happy Diwali, and we will talk to you again in quarter three. Thank you very much. Thank you. Ladies and gentlemen, on behalf of GMM Pfaudler Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.