Good day, ladies and gentlemen, and welcome to the Q2 and H1 FY 2023 Earnings Conference Call of GMM Pfaudler Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Priyanka Daga from GMM Pfaudler Limited. Thank you, and over to you now. Thank you, Michelle. Good evening, ladies and gentlemen. A very warm welcome to all of you into the Quarter two FY 2023 earnings call of GMM Pfaudler Limited. The earnings presentation was uploaded on the stock exchange last evening and is also available on our website. Hope all of you had a chance to go through it. From the management we have with us our Managing Director, Mr. Tarak Patel, our CEO International Business, Mr. Thomas Kehl, our CEO of India Business, Mr. Aseem Joshi, our CFO of International Business, Mr. Alexander Pömpner, and our CFO of India Business, Mr. Manish Poddar. We will give you a brief overview of the performance of the company, after which we will get into the Q&A. Before we begin with the overview, a brief disclaimer. The speech which we have uploaded on the stock exchange and on our website, including our call discussions that will happen now, contains or may have certain forward-looking statements concerning our business prospects and profitability, which are subject to several risks and uncertainties, and the actual results could materially differ from those in such forward-looking statements. I will now hand over the call to Mr. Patel to provide an overview of the performance. Over to you, Tarak. Thank you, Priyanka, and good afternoon to everybody. We are happy to report a strong quarter with a revenue growth of close to 21% year-on-year. Our EBITDA margins have also improved 0.2%, and our order intake has also increased 6% year-on-year. As for the order backlog, it stands currently at INR 2,119 crores, which has visibility for the next 6-9 months as well. We continue to see a lot of traction both in the Chemical and Pharmaceutical spaces around the world, and we believe that both the International business and the India business will continue to do well, which will be driven by these two main industries. The International business has done really well this quarter, both in terms of revenue and profitability. Our European business, in spite of the higher energy costs, and the cost reduction measures that we have taken, has done quite well. We believe that looking into the future, the European business will kind of stabilize with energy prices now stabilizing and also kind of going down. We've also completed the acquisition of Hydro Air Research Italia. This is a company that we acquired a few months ago, but that acquisition is now complete. This company deals in membrane separation systems and opens up new investments as well. We've also completed the acquisition of the balance 46 percent in GMM International S.à r.l. As many of you know, GMM was the subsidiary of the company, and now is a subsidiary of GMM Pfaudler Limited, with 100 percent of the profits accruing from Q3 onwards. We also have reaffirmed our credit rating both by CRISIL and ICRA, AA-, and A1+, respectively. We also completed recently our first Investor/Analyst Day, which was held in September 2022. Now to give you a little bit more color on the numbers, both consolidated and the standalone, I would like to invite Manish Poddar, CFO of India Business, to take you through the numbers. Manish. Thank you, Tarak. Good evening, everyone. To start with the consolidated balance sheet, we see an NCI, the non-controlling interest has made it, that's because we just acquired the balance 46% of the Pfaudler International. Going forward, you'll see 100% of the profits accruing to us. Similarly, the debt has increased primarily on account of the debt required for this takeover. Pension liabilities have gone down substantially on account of rising interest rates, and therefore the present value of the liabilities, future liabilities going down. Moving on to the intangibles, there has been some addition on account of the Hydro-Air investment that we made in Italy. Similarly, let's talk about a few ratios. The net debt is INR 767 crore minus INR 300 crore, so say INR 467 crore. Net debt to equity stands at 0.7. EBITDA to net debt to EBITDA stands at 1.1. Moving on to capital. There's a slight increase in the working capital. Some debtors need to be recovered in the standalone business for India. There have been some increase in the working capital overall, primarily on account of heavy engineering taking larger share of the business. Moving on to the cash flows. There has been business cash generation of INR 231 crores and investment of INR 251 crores on the working capital and the CapEx. The balance has been primarily on account of repayments of the debts and the interest thereon. Moving on to dividend, the EPS, we have the annualized EPS will turn out to be something like INR 50 if we just analyze it for the H1 results. The ROE and ROCE have also improved substantially to 29.2% and 33%. That's it for me. Priyanka, you want to take it forward for... Thank you, Manish. Michelle, we can now open the line for questions. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may please press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use headsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Venkatesh Balasubramaniam from Axis Capital. Please go ahead. Yeah. Thanks for this opportunity. My first question is to Manish, more like a bookkeeping question. I believe that if you actually look at the numbers, second quarter numbers, your EBITDA is close to around INR 119 crores for the consolidated entity. The standalone entity has done INR 42 crores and Mavag and Pfaudler Inc. Has done INR 70 crores. So INR 42 and INR 70 adds up to INR 112. And there is another positive INR 7 crores. Is there anything else in the company that we are missing here? Because ideally, if you look at the numbers last year, usually when you added the numbers which you gave in your standalone EBITDA and your international EBITDA, you had to actually do some elimination of INR 6 or INR 7 crores to get the consolidated EBITDA. Since the first quarter of the current year, it's slightly different. When you add up your standalone numbers, which you put in your PPT, and the international numbers, you have to actually add a small number to get to the consolidated EBITDA. Can you please explain this? Yeah. Good catch, Venkatesh. Yes, that's true. That is primarily on account of this is pure accounting concept per se, you know. What happens is, when you export something from India to Germany. When you export from India to, say, Germany, or U.S. in this case, so you accrue to the profits in the standalone business in the earlier quarters. However, in the consolidation, you get the profits, the entire profits of standalone and International business once you sell it out from the group, which happened in Q2. Therefore, the shipments for which India shipped before Q2 and International business then moved out to the ultimate customer in Q2, the entire profits of standalone and consolidation accrue to this. That's where the INR 7 crore of positive is there. You may see this small number, positive or negative, depending upon which one, which quarter was higher or lower going forward as well. Okay. Understood. That is very clear. Now, I also remember that, Mr. Patel had given, some kind of, color after the first quarter result, where he said that, as of now, you are executing your orders with high-cost inventory of steel, and you are expecting that given steel prices have come down, second half of the year, your, margins should be better. Now, you've already got to 15.2% consolidated margins in the second quarter. Is it reasonable to assume that margins can go up even further from here in the second half? What exactly do you expect happens to the standalone numbers, because which have contracted, quite sharply on a year-over-year basis in the first half. Are you expecting that to improve, or you are expecting more of an improvement in the international part of the business? Sure. Venkatesh, I think YoY comparison for standalone may be a bit of a aberration simply because that was first two quarters of the year, FY 2022 were where we got the EUs, but we're still consuming the old CapEx. Now exactly that, the opposite has happened in these two quarters of this current financial year. That's why you see that huge difference between a 25% and a 16.5%-17% sort of a number. We expect this to get normalized in second half of the year. This 16.5%-17% should now Q3 and Q4, we should see perhaps improvement thereon on a standalone basis. International business has already enhanced its performance to something like 13%. We expect something like 12%-13% to continue for them as well. Okay. Just one last question, if I may. What would be a reasonable effective tax rate for the full year for the consolidated entity? Effective tax is something like 27%. If you're alluding to this quarter per se, there has been a deferred tax credit back, and there's a much lower percentage, but that's not true reflection on a sustained basis. On a sustained basis, something like 27% of an effective tax rate is. Okay. Thanks. Thanks for those inputs. I'll get back in the queue. Thank you. Sure. Thank you. We have the next question from the line of Utsav Mehta from Edelweiss AMC. Please go ahead. Hi, team. Thanks for taking my questions. Just, I'll just continue on the previous question. Does that mean that from what we reported in this quarter, the international margins should sort of normalize back towards 12%-13%, whereas India will pick up. Is that correct? Is my understanding correct? Yeah, that is correct. That International business is already I think improved considerably in recent past from 10%. No, I ask because it's at 15 right now. This quarter was I think around 15-ish. Sorry, not 15-ish. 15% is the consol number. Yeah. 15% is the consolidated number. International is 13%. India is at 16.5%. India you can expect 16.5% to go up and Pfaudler, the International business primarily, you may expect to 15%. Okay. Sorry, I get my confusion. I was adding back the INR 7 crores. No, you're right. What has also happened, you know, yeah, the INR 7 crore will, yeah, give you that differential basically. Okay. Sorry, you were saying something. No. I think, yeah, that INR 7 crores is going to give you that differential as well between the numbers, the eight years between, you know, the Indian business. That may or may not repeat in the coming quarters. Basically, that's. Yeah. You did it. Yeah. On a steady state, yeah. Yeah. Right. Okay. Fair enough. Tarak, I just wanted to check. It's been four quarters running the order book on an absolute basis. It's around INR 2,100-odd crores. If you could just provide some flavor in terms of where do you see this number go, and do you believe that, you know, what does it take for this to go to INR 2,300, INR 2,400, INR 2,500 crores? Is there enough in the market for this number to continue to go up? Right. I think on the order front, I think like I mentioned to you, I think we already had quite a sweet spot because the International business, I think having any more backlog means longer delivery time, so that would not be the right place to be at. I think where we could probably grow order intake is here in India. I've spoken about this in the last few conference calls where I've said that we have been very selective in terms of glass lining business, to a point that no to customers when the pricing did not meet our requirement. Having said that, we were also waiting for some of the larger projects to come through from our key clients, so that when those large projects do materialize, we have enough of the capacity for that. We've just started seeing a big large order intake happening in the glass-lined business here in India. I think, looking forward, you will see the India backlog increase, which is right now currently at maybe even for the glass-lined business around four months. But, you know, being around four to six months for them is just the right, you know, the sweet spot. I think we still have some capacity here in India to increase order intake. I think the glass-lined area here in India is gonna be a big driver for us in the next few quarters. If I'm not mistaken, the Karamsad furnace now we should be able to take on more in terms of the amount of orders we can do, correct? I was actually gonna say this in my opening remarks, and it completely slipped my mind. Yes, we have now commissioned the 80,000-liter furnace, which is, you know, India's biggest furnace, and obviously will cater to super large vessels, not only for India, but also for the International business. We've actually received an order for three 80,000-liter storage tanks. That's already in our books, and the fabrication has started. We're expecting another five 80,000 liters. Actually, the timing has been just before today, because as soon as this furnace came online, these orders have now come in. Yes, that will also help us improve both our shipment and the number of EU that we have that we can manufacture here in India. Fantastic. Just one last question. You know, apart from receivables in India, I've also noticed other financial assets, sort of increased by INR 50 crore over the last six months. Typically this tends to be unbilled revenue. I I just wanted to clarify what this number is. Yeah, you're right. Sir. Can you hear me though, sir? Yeah, I can hear you. I just wanted to ask the reason why receivables and unbilled revenue both have gone up. Receivables of course have gone up. Primarily there's some collection, you know, that we need to make and we, you know, we expect this to improve in coming quarter. That is one. The POC, you're right, the unbilled revenues have also scaled up, overall, in the business, both in India and International business. This is just to do with the scale at which we are operating or because in terms of number of days. I think there's some INR 90 crores of POC addition that has happened in this H1, and we expect this to maybe something like INR 30-INR 40 crores should improve in H2, but that beyond that should remain in the business. Okay. Okay, great. Thank you so much for your time and best of luck. Sure. Thank you. Ladies and gentlemen, in order to ensure that the management will be able to answer questions from all participants, please limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. We have the next question from the line of Tanay from Marcellus Investment Managers. Please go ahead. Hello. Am I audible? Yes, go ahead. Perhaps a chance at a number. Just a couple of quick questions. If I look at your standalone business, your other expenses just above the EBITDA, they have gone up by around INR 20 crores on a yearly basis. You know, could you kind of provide some color on that? Pardon? Can you please repeat, which number are you talking to? The expenses have increased. The number- Yeah, expenses have increased by INR 20 crore primarily on account of power and fuel, if you refer to really last year-over-year. Also the tools and spares, primarily because, you know, in heavy engineering, again, the combination of changes is taking an impact. Also there's some freight outwards because we had a larger export shipment. The freight output, particularly in this H1 has or Q2 actually has been also higher. Sir, this pension liabilities reduction on the consolidated level, that is purely because of interest rate payment. You haven't funded or like, you know, cash outflow to kind of get this number down. Am I right? Right. This is purely on account of the interest rate, you know, for the results. Okay. Thank you. Thank you. We have the next question from the line of Jason Soans from Ashika Stock Broking. Please go ahead. Sure, sir. Thanks for taking my question. If you could just give us some color on the demand outlook for GLE overall. You had earlier in the analyst day as well spoken about the slowdown in the pharma segment in terms of demand, order intake. Just a brief outlook, I would want to, you know, especially amid rising costs, you know, inflationary environment as well as whatever is happening in Europe. Just wanted to understand what's the demand outlook for pharma and chemical both in the end user segments. Yeah, Jason, this is Aseem Joshi. I'll take this question. Yeah. So, um- Sir, I'm sorry to interrupt. You're sounding distant. Can you please come closer and speak? Okay. Is this better? Yes, sir. Please proceed. Okay. Yeah. As far as, I'll start with India and, you know, maybe Thomas can add on the International business. As far as India is concerned, you know, Tarak mentioned earlier, we've been careful about selecting the right set of orders. You know, we've made sure that we fill our factory with the kind of orders that we like. Now, in recent times, we've started seeing a pickup of some of the large projects that we saw on the horizon, and they're starting to, you know, move forward. In fact, one of the big order that Tarak talked about, is one such project. There are several more that are on the horizon and, you know, we feel we're competitively placed on that. I think from a demand perspective, especially for larger projects, we are starting to see reasonably good movement. Of course, some of the smaller projects, the runway business, you know, that's still, you know, we still sort of at a sluggish pace. The large projects are picking up. Right? Thomas, would you like to address for the International business? Mr. Thomas Kehl, can you hear us? Yes. Maybe I'll kind of take that. Jason Soans, you're right. Like Aseem Joshi mentioned, pharma has been a bit slow. We have seen some kind of traction, mainly in the PLI schemes that have been launched, especially in penicillin here in India. Three large orders for penicillin manufacturing fermentation that we've got. Pharma has been much lower. We see the main drivers for us have been the chemical industry, both agro and specialty chem. The large projects that we speak about are also kind of for the specialty chemical kind of large projects, right? Also what we've done now recently is we supplied the first lot of our Mixion reactors to Europe. 24 equipment have been ordered in India, which will be stock and sold in the European facility and will be sold when our customers have a breakdown and a need, immediate need for a replacement. That's worked out quite well. Generally across the board, I think, chemicals will account for nearly 60% of our total glass-lined sales, and the pharmaceutical account for nearly about 25%-30%. Yeah, sure sir. Thanks for that. One more question, what I want to ask you is, I mean, we've seen pretty good traction in the International business. In terms of revenue growth and margin growth also, which is around 9%-10%, is now moved up to 12%-12.5%. This is in the face of, you know, an energy crisis already brewing in Europe. Just wanted to know, what are you doing differently so that, you know, to gain such a posture of performance? I'll maybe start off, and then if my German colleagues are online, they can kind of just build on that. We have taken some measures. In Germany itself, we have gone down to a four-day workweek, so we actually have less number of hours. I mean, with the same number of man-hours being used, so they work longer hours, but one day off. Additionally, the factory is closed, which obviously helps us reduce our consumption of gas and energy. In terms of pricing also, we've kind of built in all these material and energy increases into our pricing, and that's also helped us. Then on top of that, you know, we've added new businesses, small businesses through M&A, which are now showing a good amount of the turnaround and growth, and that's also helping improve profitability. The last thing that's also changed significantly is the services component, because the services component, because of the pandemic, was in a smaller, you know, in terms of the size, is smaller. Now we see a lot of factories opening up, and the services part of the business is actually growing. As you would know, services is definitely more profitable than the other businesses, right? Thomas, Alex, if you're on, if you wanna speak maybe a little bit about the energy situation in Germany. Yeah. This is Alex, not so sure if Thomas is in again. No, in fact, what you said, I could definitely echo this. With regard to the energy situation in Europe, I think finally we face an increase already since end of last calendar year. It became really strange from February, March, April onwards. Nevertheless, we currently are, even in this situation with this higher energy cost, able to increase the margin. It's partly due to the shift, just that we have a higher share of service business. But nevertheless, we were also already before focusing on some margin improvement, and this now drops through. It currently overcompensates the energy cost increases. Now that we're looking forward that the energy costs stabilize or even they reduced in the last week. We are confident that the outlook remains positive. Thank you. Sure. Thanks for that, sir. Just two more simple questions. Just wanted to know the ramp up and what about the ramp up in the Vatva facility. Now that GMM has taken over the remaining 46% stake, and this is gonna reflect on Q3. Are we not going to see any non-controlling interest? Just wanted to clarify. Yeah, exactly. I think currently 46% is- Yeah. NCI removed for non-controlling, now you see 100% accrual from Q3 onwards. We will not see any non-controlling interest, right, from Q3? Yes. For non-controlling interest has been eliminated. Yeah. 30th September, as on 30th September as well. In the balance sheet and first October onwards, the entire profits are grouped with the organization. Right. Sure. The profit of the Vatva Yeah. The same with Vatva program. Yeah. Yeah. Yeah. As far as Vatva is concerned, you know, we're very pleased with how the site has progressed. As you know, we've taken it over, you know, it's a little over 18 months ago, and since then, the ramp-up has been really to our expectations. The site is now full. We've had a number of orders that have already been executed and shipped from there. We've in fact broken the record in some cases about the size of the equipment that's been shipped. Overall, we're very pleased with the way it is progressing. Sure. Thanks. That's all from my side. Thank you, sir. Thank you. A reminder to all the participants, anyone who wishes to ask a question may please press star and one on their touch-tone phone. We have the next question from the line of Saket Reddy from Polasani Enterprises. Please go ahead. Hi, guys. Congratulations on the good results. There's one thing in the international balance sheet: pension liability. Can you explain how it is treated in the, you know, P&L? If it is treated in the P&L? Sure. If I start off and then maybe Alex you can jump in. Typically, these are unfunded pension liabilities, primarily in Germany. These are closed plans and no new employees are being added, or the existing employees' age is approximately 80 years. The accounting treatment is basically the difference in interest. As the interest rates rise, as you would, you'd imagine the present value of the future liabilities goes down, and that gain accrues to the OCI, the other comprehensive income. Then the balance sheet movement happens. Alex, you want to add something? No. Fully correct. In fact, what we see in the balance sheet is just that, actuarial assumptions and changes, and this is especially driven due to the change in the interest rate. As Manish already mentioned, the number of participants will reduce over time just because they pass away. The plan is closed, and now we just have changes due to the interest rates. From the cash perspective or the impact on the income statement, no, it's no further impact. Now you've I think in H1 you raised around 11% margin to the International business. You know, any further insights on the trajectory there? Want to do maybe meet teams or how is it looking? Yeah. I think the International business has already shown a strong recovery. I think both revenue growth has been significant and profit improvement as well. We are looking to fine-tune our product portfolio. There are definitely products that we need to bring up to the level in terms of profitability. We are working on those. We have put in a lot of effort over the last maybe few years, and we believe that some of the things that we have done will start, you know, showing results in the next few quarters. Again, the focus there is to really improve margins, is to really focus on services and grow that part of the business. Then obviously, our non-glass-lined business, right? Because that's where we can really grow. We have small market share. We have these small products which really can be global, can use the Pfaudler global network and be sold, and we are seeing a good amount of growth that will come from there as well. All in all, I think all the product lines have done well. We also now thanks to the new acquisitions we've made, have access to new industries, right? I did speak about some of this in the past, but we've kind of sold products now to, you know, meat companies that make plant-based meat. We sold products to, you know, the bioplastics. We've also made inroads in the metals and minerals. In terms of also power, we've had a large order here in India. All in all, I think in spite of the investment that's going on in our core industries, which is chemical and pharma, we are also trying to move into new industries that will help us kind of diversify and make sure that our growth is on track. Yeah. My last question on the services part. I look at your revenue breakup and, you know, also the order intake breakup. In the standalone business, services is, you know, pretty low compared to international. It's in low single digits, low to mid single digits. Whereas, you know, the International business is around 30% or 40%, if you look at revenue or order intake. Why such heavy divergence? Yeah. Considering services is a high margin product? Right. Saket, you're right. This is definitely an area of focus for us. You know, historically, the service customer behavior in Europe and the U.S. has been different relative to India in terms of you know the amount of service that they expect from the OEM. Having said that, we recognize that you know single digit service as a% of our business is low, and that's certainly an area of focus for us. In fact, just this quarter, we have made some changes to our organization and appointed a service leader in the India business, which is you know very similar to how the International business also runs it. I expect that with the focus that this individual will bring, we'll start to see an improvement here. In fact, we're already seeing it. It's really about, you know, the approach to our customers, the analysis of our install base, our service offerings, the appropriate pricing, et cetera. All of those actions are now underway. It's certainly an area of opportunity for us and, you know, we are working on it. Right. Just one last question on the shareholding. I think you've completed, you know, GMM International acquisition. Now, how would the, you know, shareholding structure look like? I think Patel family has 24%, and the rest of the promoters stake would be with DBAG. Is that correct? Okay. DBAG owns the balance 31% as of now, and it the balance is the shareholding. Just to add to that- I mean. Patel family has increased our stake. We were around 22 point something. Now we are at 24.2 through the preferential allotment that we recently did. Our stake has gone up. The balance is with the public, out of which I think 18%, if I'm not mistaken, Priyanka, maybe you can correct me if I'm wrong- Yeah. ...is with FPI, and we have mutual fund about 5%-6%, and then obviously, all the other institutions and public. Right. DBAG is, you know, committed to stay with you. Is that right? As of now. When we did this transaction, we have signed a contract and an agreement where we have a three-year lock-in, and they are committed to the business. Right. Yeah. That'll be it from my side. Thank you and all the best. Thank you very much. Thank you. We have a follow-up question from the line of Venkatesh Balasubramaniam from Axis Capital. Please go ahead. I had a couple of follow-up questions. Now, if I just look at the India business of glass-lined equipment, and I actually look at the business of one of your largest competitors here, HLE Glascoat. If you notice over the last one and a half to two years, when you've been busy in consummating the Pfaudler Inc. acquisition, HLE Glascoat has grown at a much faster pace than your glass-lined equipment in the India part. Have you been losing market share in India? And is this a cause of concern? Because I also observed that HLE Glascoat on average, their India business makes almost 400 basis points lower margins than you. Has your key competitor been cutting prices and picking up orders? And is this something that you worry about? This is the first question. Yeah. Let me address this. Look, I obviously can't comment on another business's performance. What I would say is, you know, glass-lined is obviously our largest business, and this is an area that we have been a leader in and we intend to remain a leader in. As we outlined earlier, you know, we've always been careful about the orders that we use to fill our factory with, and we'll continue to do that. We are quite satisfied with the performance of our glass-lined business. You know, our Hyderabad factory is also now ramped up nicely. We have used our capacity to satisfy the right kind of customer needs, including some of the export orders that we've started to, you know, ramp up on. Okay. What exactly is your capacity in terms of equivalent units currently in India? Yeah. With this new furnace. Sorry, your sound is. Sorry, yeah. Yeah. Yeah. With this new furnace that we have now commissioned, you know, we should be up to about 2,900-3,000 EUs per year. Okay. What kind of utilizations are you currently at? I think in terms of utilization, I think both the Karamsad and Hyderabad facility are close to 80%-90% utilization. Obviously, now with this new product that has just come in the Karamsad, obviously that number will drop. Yeah. We are at pretty much very high utilizations across all our plants in terms of glass-lined business, where we have very large backlogs. Okay. Now, just one last question from me. I think this question was asked. I'll just put it across in a slightly different way. Now, obviously, the continent of Europe is under severe stress. I mean, what with the war, inflation, energy prices going through the roof and the kind of news which we keep rereading in terms of end industry, a lot of industries shutting down, things like that. Now, are your customers basically in the chemical industries and the pharma industries having stress? And if they are under stress, how come it is not impacting your numbers? What exactly is the key driver for this very good growth? Because I think almost 39%-40% of your consolidated numbers comes from Europe. Some color on that would be very helpful. Yeah. I think some of the news that we get here, obviously, you know, maybe gets blown up a little bit, and I think there's also a lot of the posturing that happens. On the ground, what we are seeing today is that customers are finalizing new orders. New factories are being set up. Just, you know, to give you an example, I think one of our companies, the Swiss subsidiary, is actually finalizing an order with maybe Lonza, if I'm not mistaken, which is gonna be delivered two and a half years from now, right? People have that long-term visibility. People don't even need it, you know, immediately, and they're willing to wait. The order book that we have gives us a lot of the comfort, right? The next six months, nine months in different regions, we already have orders on hand and our focus really shifts to the execution, right? Are we seeing anything on the ground that tells us that, you know, things are gonna slow down, things are not looking that bright? I don't think we're seeing any of that right now. The opportunity levels, the interest levels, the inquiries that do continue to flow in are of pretty much the same level. The only thing that we probably see now is that the time it takes to finalize something is slightly longer than earlier. People may take a few months more. That's really the only difference that we see. Just coming back to India, again, like I mentioned, chemical has a lot of new projects. You know, obviously we work with a host of the chemical companies, and many of them are and have plans to expand further and invest more and more in terms of building new facilities. Obviously, being a major supplier to chemical, we will definitely benefit from that. Thank you a lot. All the very best for the future. Thank you. Thank you. The next question is from the line of Harshil from AUM Fund. Please go ahead. Hello. Yeah, Harshil, go ahead. Yeah. From what I'm hearing is in Germany, the government is aiding companies which are, you know, keeping their plants shut. Are we receiving any kind of incentives from the government? No, nothing right now. The government and what we hear, especially in Germany, there could be a bailout, the package. There could be a kind of a program where the government will step in and help some of the companies who are facing a lot of pricing issues and production issues. Nothing that we have seen. Like I mentioned earlier, and what Alex said as well, is that we're actually seeing the prices now stabilize. Energy costs have stabilized, and in the last few weeks have also come down. We are, you know, we kind of believe that we are actually past the highest level. Anything further improvement will only be, you know, will have a good impact on the rest of the year as well. What I wanted to understand is there any kind of government subsidy in our margins, which is why we are getting kind of, you know, 12%-13% margin? No, there's no subsidy. Okay. Thank you. Thank you. We have the next follow-up question from the line of Tanaya from Marcellus Investment Managers. Please go ahead. Last quarter, on the International business front, you had several new smaller businesses which are showing good traction apart from your last line that you painted. Could you just kind of get into a little bit more detail on that? Related to that, the next question, you know, you have tech services systems, technology for AC, you have been world number one for eight years. How do you see growth in systems specifically, not services that you went into detail about. Growth in the systems business and international front, which new businesses are, you know, kind of driving the traction? Right. I think maybe let me just kind of take you through what we have in our portfolio. Obviously, you know, we have two new acquisitions that we made. Hydro Air is obviously in membrane separation, the technologies. That business is about $8 million or so. We expect to kind of double all that, you know, at least double that business in the short term. Mm-hmm. They are doing a lot of nice and interesting work that will help us not only internationally but also here in India. They do a lot of work in bioplastics, in bio meats, proteins, EVs and things like that. It opens up a whole new industry segment for us. That's where we believe our growth will come from. Having said that, we already have a strong foothold in chemical and pharmaceuticals, so it's- Mm-hmm ... definitely a complementary product. The other product that has done exceedingly well is a product called Interseal, which is the, you know. Mm-hmm The sealing technology that we've launched here in India as well. We recently won a very large order, about $2 million worth of business with a large, German customer. In India also we are finding that there are a lot of interest, and we've also got orders, I think, if I'm not mistaken, around 20 seals or so have been sold in India. Mm-hmm. Again, a small business that was about $3 million is now creating around maybe $10 million-$11 million. We've grown that business in a very short period of time. Mm-hmm. Besides that, we also have some of smaller businesses. They are not brands per se, but these businesses are small, and they grow quite quickly. They're quite, they're profitable as well. You know, we have plans on growing those businesses as well- Mm-hmm. in terms of the system business, I think that has done quite well. I did mention to you in the last quarter call that we received our second acid recovery order here- Mm-hmm ...around INR 20 crore plus Mm-hmm From a power company, right? This power company they currently had sulfur that they actually it goes into the air, which they now want to convert into sulfuric acid. Mm-hmm. Got a large chunk of that project 'cause it's also kind of, it kind of brings into the glass-lined equipment space as well. The systems also remains an important part. That's where we really kind of move up the value chain. You know, since we offer process know-how and technology, we can definitely command much better margins. I think Aseem maybe want to add something to that. Yeah. Just on this last example that Tarak talked about the acid recovery, I'll add a little more color to it. This is a very interesting space because it's essentially a flue gas desulfurization application. Mm-hmm. Which is essentially the smoke coming out of smokestacks is cleaned through scrubbers. You know, it basically creates sulfuric acid, which is weak. That's where GMM Pfaudler comes in, and we actually- Mm-hmm help them concentrate that weak sulfuric acid into concentrated sulfuric acid, which can actually then be used. Mm-hmm. This is an interesting application. It has the potential to scale. Of course, you know, in India it's just starting off. We are pretty excited about the possibilities and what GMM Pfaudler has to offer. You know, Tarak's talked about some of the other businesses around the bio meat, you know, the plant-based meat, et cetera. That too is now new to GMM Pfaudler through the Hydro Air acquisition. Mm-hmm. You know, we see potential to scale that up reasonably quickly as well. All in all, we have a portfolio now where you know, we think we have a number of interesting bets that play on macro trends. You know, we believe we should take them forward. One sec. Tarak just wanna add something. Yeah. Just to build on that, I think we have some ideas in terms of how do we further enhance our the portfolio as well. Mm-hmm. You know, like mentioned to you, there's certain businesses that don't fit that well and new businesses that fit better. We are always looking at opportunities. I think that's gonna be the cornerstone of our growth strategy as well. I think M&A is gonna be a very important part of our growth strategy. Mm-hmm. We always have interest in increasing and improving our, the portfolio. Mm-hmm. Mm-hmm. Thank you very much, sir. I'm done. Thank you. Thank you. We have the next question from the line of Rohit from Progressive Share Brokers Private Limited. Please go ahead. Hi, Tarak. Two questions. First one is a follow-up. When you mentioned that there are certain businesses that don't fit the entire system that well, it reminds me of Edlon and its divestment. Any update on that? Right. Rohit, hi. Yes, Edlon was up for sale. The process is still ongoing. However, while this process has been ongoing, Edlon has done quite well. They have a large order backlog, and their profitability has also kind of improved significantly. We are still reviewing and still working on that. When we have an update on Edlon, we will definitely let you know. Okay. My second question is related to Mixion industrial paints and the developments that you are doing with AG and Mavag. If you can just take us through numbers in terms of revenue, million, net, and all. I think Mixion is a business that has seen significant growth and will continue to see a significant growth. It's a complementary product because it's mixing. It's used in the same industry that we cater to. We can use mixing in the glass-lined business as well. It's very complementary. We really like that business. It's quite profitable as well. Recently we've had major breakthroughs, like I mentioned, not only in the historic chemical and pharmaceutical industries, but we've got into fermentation, we've got into metals and minerals, we've got into paint. I think, you know, I can confidently say that today in India, we would probably be the biggest mixing player in the market, right? Mixion is definitely a focus area for us. You know, growing this business not only here in India but internationally as well. We do need to probably look at building the resources and capabilities. This business on a long-term view is something to be very excited about. Currently, in today's world, approximately what% of turnover is coming from Mixion? In India, I think last year we did about INR 60-odd crore of revenue. This year should be twice as much, right? We have a very large order backlog. The business is doubling in size, if not more. We wish to really grow this business and become a large player in this space. On the International front? International front, mixing is something that is quite small. We don't export a lot of these mixers. We have sold some to Europe and the U.S. Again, having a strong footprint in International business, we would probably need to have a little bit of local manufacturing as well. That's where probably an M&A opportunity if it were to come up would be very interesting for us. Yeah, mixing is something that definitely is on top of our minds right now. How do we grow this business and how do we become a relevant player in this market? Okay, Tarak. That helps quite a lot. Thank you. Thanks a lot. Thank you. Thank you. We have the next question from the line of K Ramesh Achal, an individual investor. Please go ahead. Hello. Please proceed. Yeah. There was a talk about relocation of your Hyderabad facility some two, three quarters back, and we haven't heard anything further. Can I know what's the position now? Yeah. The Hyderabad facility right now there is no plan on the relocation. The Hyderabad plant we just invested in, you know, just decommissioned a brand new furnace. We are also renovating some of the factory sheds. Our thought was that when Pharma City were to come up, we would then ask the government for land in Pharma City, so we could be close obviously to the industry that we cater to. As of now, there is no plan in place to move. When Pharma City were to be available, we would definitely like to look at that as an alternative production facility. Okay. Thanks, Tarak. Thank you. We have a follow-up question from the line of Jason Soans from Ashika Stock Broking. Please go ahead. Yes, sir. Thanks for giving me the opportunity again. Just wanted to know, you know, in terms of margins and standalone results, we have seen quite a sharp dip from 25% around margins last year. Now they're at around 16.4%. Just wanted to know from you, what are the reasons for the same? One would probably be the higher steel price and the higher cost of inventory which you've been holding. Some other reasons, in fact, some of the Vatva ramp up is, you know, you'll have lesser margins than glass-lined equipment obviously, so that the product mix also has an impact on that. Just wanted some color on that, the margin dip. Yeah. Aseem Joshi, do you want to take this? Yeah. Manish can take it first, and perhaps you can add. No, it's okay. Please. I think first of all, the basis for comparison this year I'm saying is a little unfortunate. Last year, this time we were really benefiting from the strong tailwinds, and we were achieving close to 25% EBITDA. That was quite abnormal. As Manish mentioned earlier, a year later now we are seeing the opposite effect of the high commodity prices affecting us. I think that's probably the biggest factor, the commodity prices that have let us down. Yes, you also identified the second factor around product mix. That's something that was not unexpected. As we've scaled up in some of the Equilloy kind of businesses, probably not as high margin as our traditional business. These are things that we are addressing, and we are confident that, you know, as we continue our sales strategy around being selective around orders, we will be able to get back on track. Manish gave an outlook for the rest of the year already, where we expect to see a continued improvement in margins in the standalone business. We feel pretty comfortable that we're on track to do that. Yes, Manish did give an outlook for the margins. In terms of margins, probably you'll be looking at an uplift from the standalone entity and probably international margins we can at least expect them to be steady state from here on? Yeah, I think that's broadly what we expect. Yeah, sure. Just one thing. Just in the presentation there is a statement mentioning backlog is net of POC. Just wanted some clarification on this POC concept, if possible. Sure, Jason. What happens is, Sorry. Sorry to interrupt. I mean, since I think we're out of time, but maybe you can take this up separately offline with him, because that concept itself will be kind of long and, you know, you'll have explained and. Sure, Jason, we can connect offline and. Sure. Take this. Sure, Tarak. Thanks. Thanks. Sure thing. Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to the management for closing comments. Thank you, Michelle. Thank you, Michelle. Thank you, everybody, for participating in our earnings call today, and we look forward to meet you again in the next quarter. Thank you and good night. Thank you. On behalf of GMM Pfaudler Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.