Ladies and gentlemen, good day and welcome to the Q1 FY 2024 earnings conference call for 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 call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Priyanka Daga. Thank you, and over to you, ma'am. Thank you, Leo. Good evening, ladies and gentlemen. A very warm welcome to all of you into the Q1 FY 2024 earnings call of GMM Pfaudler Limited. The earnings presentation was uploaded on the stock exchanges today 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 of International Business, Mr. Thomas Kehl; our CEO of India Business, Mr. Aseem Joshi; our CFO of International Business, Mr. Alexander Poempner; our CFO of India Business, Mr. Manish Poddar; and our Compliance Officer, Ms. Mittal Mehta. 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 presentation which we uploaded on the stock exchange and also on our website, including our call discussion that will happen now, contains or may have certain forward-looking statements regarding our business prospects and profitability, which are subject to several risks and uncertainties. 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. Good evening, everybody. We are happy to announce a strong, strong start to the year and remain on track to meet our FY 2025 guidance. Our business today is much more diverse and resilient than ever before, and we cater to an increased number of geographies and a wider range of products in our portfolio. We will continue to leverage our strength, that is, our market share, technology, the position, as well as our global sales and service network, to grow our business across regions. There is clearly a slowdown in the chemical industry, and because of this, our order intake remains subdued. However, our opportunity pipeline remains strong across all business platforms and geographies, and we expect some of this, the decision-making, which has been quite delayed for a few months, will come through in quarter 2. We have also seen good traction in our technologies and services business. However, our systems business is behind budget. Further, our new market segment that we have kind of now acquired through our acquisition, will also help us enter new market segments and will also help us in reducing our dependence on chemical and pharma segments in the long term. Our order backlog remains stable at INR 2,000 crores, which translates to about eight months of visibility in the international business and about six months of in the India business. In terms of financial performance, our consolidated revenue for the quarter, for the quarter grew by 23% to INR 912 crores, with an EBITDA of INR 132 crores, which is 35% higher than last year. Our current quarter's improvement in profitability was driven by the international business, largely due to strong execution, pricing improvement, as well as lower raw material and energy costs. Having said that, cost reduction measures continue across geographies. Operational excellence projects have been initiated at Mavag Switzerland and Mixel France, and on the manufacturing front, I'm also pleased to recall, pleased to announce that we have completed our first, the asset recovery, the project here in India. Our long-term strategy, growth strategy remains intact, and as management, we are continuously working on growing revenues and margins. Looking at the current performance, we will most likely surpass the FY 2025 revenue guidance of INR 3,700 crore, and we are on track to meet our EBITDA guidance of INR 630 crore. As FY 2025 is not too far away, and many of you have asked about our growth plans beyond FY 2025, what I can say as a general rule of thumb is that we as management are confident that we can achieve similar levels of growth going forward. As per our, as per our guidance document, which was from FY 2022 to FY 2025, we had planned to deliver about 15% CAGR growth in revenue and 25% CAGR growth in EBITDA. Beyond FY 2025, we expect the growth to continue in the range of 13%-15% and the EBITDA growth in the range of 18%-20%. The growth in revenue will come from newer geographies that we will now cater to. Our non-glass lines is... Our non-glass line, the portfolio is growing faster as our market share is lower in these products. Our services business continues to grow across geographies. Our India business will grow faster than our international business. We expect the India business revenue to increase at a CAGR of- Sorry. Our India Business will grow faster than our International Business. We expect the India Business revenue to increase at CAGR of 17%-18% and the EBITDA to grow at a CAGR of about 20%. I will now hand over the call to Manish, our CFO of the India Business, and he will take you through the performance in more detail. Thank you. Thank you, Tarak. Good evening, everyone. Pleased to share our first quarter results for FY 2024. As Tarak mentioned, at consolidated, our top line and EBITDA grew by 23% and 35% respectively on YOY basis. ...Our international business did perform very well, with significant improvement in EBITDA margins, driven mainly by strong execution, pricing improvements, and lower raw material and energy costs. Our higher share of services helped improve the margins. Our India business continued to perform well. However, there is a margin pressure due to increased competitive intensity and a general slowdown in the industrial segment. We also had lower shipment in Q1, which is a usual trend for, for any year, and a lower share of exports in this quarter also impacted margins. We have undertaken cost-saving initiatives and operational excellence programs across the organization, which should have a positive impact on margins going forward. Some of you have some of you have inquired about the CapEx plan. Would like to reiterate that for achieving FY 2025 guidance, we do not need any enhancement CapEx, other than the regular maintenance CapEx of around 2%-3% of the total revenue. Beyond FY 2025, to maintain growth trajectory, we would need enhancement CapEx. We would ensure that the additions are value creative, with total CapEx to be about 3%-5% of the total revenue, including the maintenance CapEx. With this, back to you, Priyanka. Thank you, Manish. Leo, you may now open the line for questions. Thank you. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask questions may press star and one on your touchtone 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 questions. Ladies and gentlemen, we will, question queue assembled. To ask questions, please press star and one on your touchtone telephone. The first question is from the line of Venkatesh Balasubramanian from AXIS Capital. Please go ahead. Yeah, is it possible to repeat your guidance beyond FY 2025? Did I get this correctly, revenue growth of 13%-15% and EBITDA growth of 18%-20%? Right. Again, Venkatesh, this is not guidance per se, it's a general rule of thumb. you know, we've been asked this question that 25 is pretty much, you know, gonna happen in the foreseeable future, and what kind of plans do we have after that? Yes, like I rightly said, in terms of, the consolidated revenue growth, it will be in the range of about 13%-15% CAGR, and the EBITDA growth will be in the range of 18%-20%. I think if you compare it to the vision document that we gave out, last August, it is at similar levels. You know, obviously, we have grown significantly in the last few years, and we've you know, already with the work that has happened in terms of the glass-line business, the restructuring that we've done in Europe, we expect this growth to continue in terms of revenue. On the EBITDA numbers, we are a little bit more conservative, because we've already seen significant improvement in the international business, and we, we probably feel that that has kind of tapered off. The 20% growth rate CAGR in the EBITDA growth is still possible. Okay. Okay, understood. This is like your internal target that, you say, beyond FY 25, this is what you would like aspire to do? Yeah. As management, this is what we would expect of ourselves. This is what we will aspire for, and this is what we will definitely work towards. Obviously, the market should be conducive, which we believe it will be. I think it's important for people to understand that some of these things are long-term initiatives. We've planted the seeds, but we do expect over the next few years that some of these initiatives that we are working on will start to take shape. At the same time, we've also kind of said that, listen, glass lining is a very important part of the business. We already are the market leaders, have high market share. That business can only grow so much, so we need to focus on new areas, which we have been doing. Hopefully now we have plans, and you have seen the acquisitions that we made, especially in the space of remixing, where we believe we can add significant growth as well. Okay, understood. The second question is on the standalone business margins, which are at around 14.4%. Last year, margins were subdued because I guess, you were sitting on an inventory of high-cost steel. Now, what we remember is in the fourth quarter result, it was mentioned that the high-cost inventory of steel has been exhausted, and hence, first quarter onwards, you should see a margin improvement. That has actually not played out. I understand that revenue growth at around 12% on the standalone is slightly muted, so you could have had negative operating leverage. Didn't you get any benefits of the, you know, what do you call it? Lower raw material cost, because even your GP margins, that is your raw material margins, has also contracted on a YOY basis from 50% to, like, 48% odd. Right. I think couple of things to kind of think about at an India margin level, and I'll add, I'll let Aseem also add to this. Generally speaking, India usually has a slower Q1. You know, obviously the Q4 is always the big month, the big quarter, and then Q1 is little bit subdued. Having said that, we could have had a little bit more shop, shipment as well, which could have impacted the margin positively. Like Manish said, the, the, the, the ratio of exports in this quarter's shipment was obviously lower than what we expect. Having said that, we are working on internal measures to improve margins. There is definitely some benefit that we will see in India because of lower steel price and energy costs. We were hoping to see them this quarter. At the same time, do keep in mind that there is competitive intensity that has increased. There has been, over the last maybe two quarters or so, a lot more, I would say, the competitive activity, where we have seen slight slowdown in terms of investment, especially, in the chemical sector. That has probably made the pricing strategies a little bit more aggressive. Having said that, we do believe that we are in a good position. We have had a good order intake in Q1, but we see that Q2 is slightly more encouraging as well, and we are being more aggressive. As you know, we are the market leaders, we are the choice when it comes to glass and equipment, and that's really where we have the right of first refusal, right? Having said that, we expect the India, the margins to kind of stabilize around the 15%-16%. That's what we are hoping for this year, and that's what we can expect. If there's further improvement in the market and there's further improvement in our, in our, the internal cost structure, maybe that will be a slightly, the higher number as well. Okay, understood. Now, a different question on your international business. The growth in your international business is, you know, quite surprisingly strong. Because, we were all believing that the international business is basically a mature economy. You should be growing at maybe single digit, at best double digit, but growing at almost 18%-20%, kind of like, what exactly is happening there? Is it because you have offshored manufacturing to India, you are being able to offer better prices and you're actually gaining market share outside India? Is that something which is playing out, or is it there is something else which is at play? Yes. That's playing out, but I would not say it is significant in terms of the improvement. I think the improvements have been years in the making. I think we have put in place a lot of initiatives, like I mentioned, especially in Germany, in Italy, in China. We built our service network across the world. We built our systems business as well. All in all, I think it's a many- it's multiple different things that are fired at the same time. In spite of the slowdown, even internationally, we've been able to have a very strong Q1. We have about 8-9 months of backlog, and on top of that, yes, we have been able to enter new markets, new geographies, with product made in India. We've also started the stock and sale program, which obviously, is something that we expect to kind of gain some traction over the last, in the next few months. We also now look at supplying some of stainless steel and physical components out of India, so we are working on that. That is a slow process. There's, you know, there's a lot of acceptance issues, there's a mindset issue that we have to work around. In, all in all, we've had a very good start, very, positive start, and we hope to build on that, going forward. Maybe, Thomas, you want to step in and- Yeah, this is Thomas Kehl speaking. I think one thing to mention is that our overall strategy of going into non-glass line application technology is playing out quite well. You remember, we made the requirement acquisition last year with a company in Italy, an Italian company for filtration, liquidization, separation, Howie. We acquired and closed the deal with our company in France, Mixel, for the mixing industry, and we created the joint venture for our reglassing business in the U.S. This is playing out and, and, and it's helping us increasing the order intake and diversifying our industries and lastly, really, helping us in the performance that we have demonstrated. Okay. Okay. Tarak, I had a question for you. You were supposed to buy another 1% of the company. This was supposed to happen by somewhere around April or so. Now, it is almost August. That 1% take purchase, which was supposed to happen at INR 1,700 price, that has actually not happened. Why is that? Why is there a delay in that particular thing happening? Yes, Venkatesh, it's a good question, and I'm glad you asked it, because I'm sure everybody else waiting in line will probably ask the same question. The only reason that has not happened is because of French FDI approval. I am still 100% committed to do the trade at INR 1,700 for 1%. It will get done, and most likely the timeline is sometime in September. I'm giving you the higher end of the timeline. If it happens before that, this will get done. There's no change in mindset. There's no change in agreement. This 1% will be bought by the Patel family at INR 1,700. Okay. One last one from my side. There is still a residual, there will still be 13% odd stake with the private equity fund, which they want to exit. What is that thought process behind that particular exit? Because the stock price obviously is stuck at levels below the previous levels where they sold shares. Are you open to they doing a sale below the 1,700 level? Or is it like you would want it to go to above 1,700 when that trade happens? Because it's become like a chicken and egg kind of a problem. It's a catch-22 situation, you know? Because there is that overhang of that block trade not happening, the stock is not going up. Right. Because it is below INR 1,700, the block trade is not happening. What exactly, can you throw some light on that? Firstly, I really can't comment on stock price and stock movements, so I would not say anything on that front. On the second part of the question, obviously, let me start off by saying that DBAG, the private equity company, is a responsible shareholder. They have supported us since 2014. They've been part of the journey. They made significant returns, for themselves, obviously, but they have also really enjoyed working with and building this company from. You know, I was just telling somebody yesterday, not so long ago, we had INR 500 crore of revenue. Today, we are tracking to INR 500 crore of EBITDA, right? This has happened in a matter of, what, 5, 6, 7 years, right? Significant transformation, and for an Indian company to have a global play like we do today, it's not something not to be proud of, right? I think that from that perspective, everybody involved in the business over the last so many years is proud of the performance. Having said that, there, there will be, at some point, a solution for this. We do understand there could be an overhang as well. Again, like I said, they will sell to the right investor, long-term marquee investor at the right time. You know, we will obviously try to do it, or they will try and do it as soon as possible so that the overhang is created, then we can focus on business and move forward in life, right? I think there's nothing more to say on this, and I think, there will be a best of all outcomes for everybody involved. Thank you, and all the very best. Thank you. The next question is from the line of Jonas Bhutta from Birla Mutual Fund. Please go ahead. Hi, Tarak and team. I hope I'm audible. Yes, Jonas, go ahead. Yeah. The question was on the order intake and the subsequent sort of flattish order book that we have. This is the fifth straight quarter where we've seen intake sort of trend downwards. We started Q1 of last year with INR 980 crore, and we're now with INR 770 crore. All through this while, we've maintained that the opportunity pipeline remains strong. If you can throw some light on whether, you know, conversions are now taking longer or, you know, competitive intensity is so high that we are losing market share. Can you talk about that, then I'll follow with some other questions. If you see our numbers and compare them with, any other company who is also, giving, numbers in the public space, you will see not only have we grown market share this quarter, but we will continue to probably grow market share. I don't think that's happening at all. We are being aggressive in the market. There is pricing pressure, but like I mentioned to you, we have a clear idea in terms of what we want to do. The idea across not only the India business but the international business as well, is that the order intake has to increase, and everybody in the company is working towards that. Having said that, you did make one more point comparing this quarter with some INR 900 odd crore of, I think, Q1 last year, maybe. I think the only thing, the caveat to that point was the quarter before that, it was about INR 400 odd crore, right? The average should be around INR 800-900, in my opinion. That's something that we should aim for. I think that maybe this quarter you will see some improvement there as well. There have been, there has been good order intake here, especially in the pipeline business here in India. We do expect some big orders to materialize as well in the systems business. The services, the services continue to do well. Maybe I'll have the team and Thomas also quickly jump in and tell you specifically what's happening in their regions. Aseem? Sure. Hi, hi, Jonas. I think Tarak covered most of it, but look, in India, we recognize there is a slowdown in the chemicals industry. For us, it's a matter of ensuring that the opportunities that do exist in chemicals, we capitalize on, which we are doing. Then double our efforts in the sort of segments outside of chemical and pharma. There, I'm happy to report, you know, we've been able to do pretty well in the first quarter in our heavy engineering business and mixing business. We've seen some good wins come through, I expect those will continue. Based on this, the, the, sort of, the approach we have taken, which is to diversify, we feel confident that, we'll be on track to meet our guidance numbers, as Tarak said earlier. Thomas? I think I can second that. Probably in the national business, yes, we have seen in the chemical industry, a little bit cooling down. The last two, three years were abnormally high and in a hot market. The quotations going out there and the decision-making processes are at normal rate now. They have been very fast in the last two years. Therefore, the order intake comes in slower. Our potential out there and quotations and the projects being open are still high. We are not losing more than in the past, so our market share is stable, and we probably even increase it over time. Again, we have made sure in our strategy that we ask for, work for diversification, and some of the business segments are even above our expectation. One is our add-on business with PTFE lining. We are asked in by the semiconductor industry. Our overall service business international is ahead of budget and order intake, providing extremely good mix for margin improvement and sustaining. In summary, yes, we still believe in making up to our guidance. Let me just add something here, Jonas, as well. I mean, you know, obviously, as management, we are conservative with the market generally. We'd be obviously want to kind of make sure that we have our initiatives in place in case the market were to continue to slow down. From what we've been hearing, what we've been speaking with owners, managing directors, promoters of chemical companies. Even though there is some short-term pain, I think we all believe that we've already seen the bottom, right? Things are already cooling off from in terms of the commodities as well. Now you will see maybe an uptick in terms of investment and demand picking up, right? Hopefully, it's not too long before we see some kind of turnaround. Like I said, a few large orders coming in, in the systems business, will definitely change the kind of outlook for us very, very quickly. Having said that, we all are, we're working hard, quite, we're committed to taking as much orders as possible, and we will be on that, till we are comfortable. I think from that perspective, I think, this year is something that we are quite confident that we can hit the numbers. I think from an order perspective as well, we will manage to do so. Understood, you know, appreciate the management's efforts to be sort of more feet on ground on, on an evolving, end market scenario. My second question was, you know, Thomas mentioned that, we've seen some- Can I, sorry, interrupt you for a second? Your line is not very clear. Do you mind logging back on and then coming back? Because you're, you're breaking up, and, you know, it's not very clear. If you don't mind logging back in and just coming in, we will, you know, we'll be happy to answer your questions as well. Is this better? Yeah, much better. Yeah, go ahead. You know, Thomas did mention that there was some good traction on the non-GLE side. If you can highlight what has been the growth in the non-GLE business this quarter? We've seen a very good margin traction on the international subsidiary side, which is effectively your consolidated minus standalone. What would you attribute that to the greater sales mix, which has been more in terms of non-GLE? You know, if you can just sort of guide us, help us decipher that. Yeah. Maybe Alex can take that. Alex, the question was that what has driven the improvement in margins internationally? Is it a product mix? Is it a kind of a specific region? The first question was? Traction on the non-GLE. Yeah, the non-GLE. Let me start, Alex, yeah. I would like to definitely mention two aspects. First, the mix that you already mentioned, the service business is really strong, and the service business is by far the highest margin business in international business. Secondly, please remember, we were asked nine months ago, last year, August, regarding the high energy costs, raw material costs in Europe, and you did not really see a negative impact on the international markets. However, we, of course, increased the prices, and now we have the benefit in, especially also the glass business, that we have with the reduced energy and raw material costs, we are now having invoiced orders, which we sold for the higher prices. We achieved the price increase and now benefit on top of this from a lower cost structure. Okay. In terms of other specific regions or any other subsidiary businesses that have done extremely well over this quarter, I think that will be good, I think. Okay. The, the other question is what Thomas already mentioned, that the Mavag business is a really strong unit now. It's, it's linked to the semiconductor business in the U.S., where you're probably aware of it's a push, it's an additional investment into this market. Mavag is really outperforming our expectations and also causes a significant uplift in, in margins. Also, as already mentioned, in the European entities, we see a margin improvement. It's Germany, it's Italy. As said, we have good priced orders shipped out of the door with a significant improved cost structure versus last year. It's generally everywhere where we see improvement. How much has GLE sales versus, you know, what's the sales growth between GLE and non-GLE at a consolidated level for us this quarter? At a console level, I don't probably have the numbers offhand, but that's something maybe Manish will reach out to you after and just provide that information, if you don't mind, Jonas. Sure. My last question was to Manish. The interest expense that's clocking about INR 20 crore a quarter for the last 3 quarters, you can break that up between, you know, the, the impact of the pension liability, if any, and the normal interest and bank charges costs. You know, at a INR 300 crore cross debt level, INR 20 crore a quarter sort of looks high. I'm sure there's the pension liability bit sitting there, so if you can help us, give us the breakup on that. Sure. Jonas, pension liabilities are impacted in OCI, not in the finance cost, so that line is different altogether. So that way, finance cost does not include any impact, positive or negative, on account of pension liability. Broadly, we have got at console level, INR 800 crore of debt at broadly eight, almost 7.8% interest cost. You can say broadly INR 64 crore to INR 60, INR 62, INR 64 crore of interest cost for this year. Rest is all on account of bank charges. There is a little bit of foreign expenses as well in, in case of some foreign situations. Of course, we get to mention of that INR 800 crore of debt, we do have something like close to INR 300 crore of cash as well. Net debt, obviously remains at something like INR 500 crores. That, that is the point. You know, a INR 20 crore run rate on, on, on, quarterly basis would add up to about INR 80 crore, while you are guiding for more like a INR 60-65 crore interest expense, so that seem, doesn't seem to add up. Also, even if you have a INR 300 crore cash balance, that should also throw up some bit of other income, which is in a way very insignificant if I see the quarterly run rate, except for Q4, that sort of spiked. Maybe I can take that offline, but yeah, this is something I want to leave you guys with. Sure, sure. That's a good point. We look at that because, because I think Manish also said when year-on-year number was 65, year-on-year number 65, where is the gap between 80 and 65? That's something maybe we can take offline then. Yeah, that's primarily on account of bank charges, and they correct it, but they're going to take off that. Jonas, I hope you have got the March 23 balance sheet, which will obviously have the much more details, and we can discuss. Maybe, Manish, good time now to also just give them some idea on some of the repayment and when our debt levels will come down to, yeah. We did, what? INR 430 crore of EBITDA last year. We back towards the INR 630 crore of EBITDA next year. Broadly, you know, this whole year, this whole three years of block, we can say it broadly will be at INR 1,500 crore of EBITDA. Maybe at 50%, we should be having free cash flows coming out to something close to INR 800 crore. Because, something like INR 300 crore will go out of on the taxes. Some INR 250 crore will go out on the interest repayment, and another INR 250 crore broadly on the working capital on the margin. Broadly, INR 800 crore goes out, INR 800 crore is what remains. Broadly, that's where the cash flow generation is there, so we should be comfortable, maybe in 24 months from now, from a debt perspective. Of course, what, what the board, you know, it will be up to the board, what they get, want to decide, whether, whether they want to pay dividends or, you know, whatever they want to pay, use the money for. Sure. Great. Thanks a lot. All the best. Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. Ladies and gentlemen, to ask questions, please press star and one on your touchtone telephone. The next question is from the line of Mudit Bhandari from IIFL Securities. Please go ahead. Yeah, hello. Am I audible? Yes, go ahead. Yeah, just one question from my side. You mentioned in the opening remarks that there were a slowdown in chemical sector in the industry. Firstly, whether it was on the domestic part or international part? Secondly, what are the specific, whether it is a particular thing that has happened led to the slowdown? What are the things that we should look in future to see if it is gaining any other particular event or any other thing? That's all from my side. Okay. I think first and foremost, I think it's important for people on this call to realize that, yes, the chemical segment is a cyclical segment. There is going to be cycles. We have obviously been in a cycle for the last maybe 4 to 5 years that has been on the uptick, that has been kind of improving every year. This was obviously something that had not happened maybe in the past, but it's been the last 5 years have been very, very strong in terms of chemical investment, both internationally and in India. Again, do keep in mind, the chemical business, both agrochemicals and specialty chemicals, is cyclical in nature, right? And that's one of the things that we, as management, we do realize, and hence we want to have diversification. That means if one year or two years, chemicals would slow down, we have something else that will make up for the shortfall. Today, the slowdown is generally across the industry, both in India and internationally. The reasons for the slowdown are, you know, I mean, at least from what I have read, seem to be overstocking for this. I mean, these guys have all bought these specialty agrochemicals. They've stocked them for many years. Because coming out of the pandemic, they didn't have line of sight, so now they have overstocking that's happened in Europe and the US. Until those get kind of sold off, new ordering cycle won't start. Also has led to Indian companies who were stocking inventory to dispose of their inventory at much lower prices, which is obviously impacting margins. The third thing that has also happened is that China, over the last couple of months, last quarter, has also dumped chemicals in the global market at a much lower price line. Again, that has caused weakness in demand. Lastly, I guess, on the positive side, at least on the commodity price perspective, we see some kind of stabilization now. I think the bottom has been hit. Might be the same for maybe a few weeks, months or something, but I think in the near term, we should see some kind of revival. Got it, sir. Thank you. Thank you. The next question is from the line of Jasmine Surana from VT Capital. Please go ahead. Hi, everyone. I had a few questions. First one was on the raw material side. Last fall and lately and some moments ago, you did mention that raw materials are stabilizing for you. I wanted to know on the gas prices, the steel prices, and the Lithium Carbonate prices currently. Sure. let me then break it up into international and India businesses. Maybe start with international this time, guys. steel prices and gas prices, you can give your comments and where do you see that panning out? Yeah. Steel prices have come back down to the levels that we had seen before, so it was the 1st quarter of last year. It came down now, and we are enjoying a little bit of windfall there, where we have acquired orders at a higher steel price calculation and now pay a little bit less for this opportunity, and it's not really impacting negatively our business right now. The gas price development in Germany or overall the energy price, the gas prices directly does not impact us, because in Europe or in Germany, we are not using gas for firing up our ovens and furnaces, it's, it's electrical power. The electrical power energy prices were peaking at the first quarter last year, the actions that have been taken by the government and are take, taking now shape in a positive way. The energy level prices are low, significantly below the first quarter of last year. They are more or less back to, to the times before the crisis. The negative impact has been absorbed, and in addition, we were able to put that through in our pricing to, to our customers and kept the margins at the levels where we, we wanted them. As far as India is concerned, I'll address steel and power. Steel, similar to the international business, steel is down as well, although not down to what it was, say, in late 2021, early 2022. It's come down and stabilized, at least we're not seeing the volatility anymore, but not down to where it used to be a couple of years back. Energy is down as well and stable as well. In both those areas, we're pretty comfortable that we have good line of sight into what those costs are going to be. All right. Thank you so much for that. Another question was on the stock and sale program. I wanted to understand whether we've entered any new geographies, whether we're getting any more revenues or any higher ASPs in the stock and sale program, and basically a little overview from your side on how the business is done this quarter? Yeah. I think importantly to say on stock and sale, we've seen some good traction. There's been, what, 24 vessels that were ordered. Out of which we've already stored 8. I was in, actually, in Germany. We were in Germany last week. We saw the Indian vessels in the German factory, so that program is ongoing. It's a new program for us. You know, we're obviously building stock based on our analysis of what kind of equipment will be required. There will be some trial and error here, but I think overall, the strategy makes sense. A client today in Europe, when he has a breakdown, will have to wait 8-9 months to get a new equipment. If we have something available that can be given to him in maybe 4 weeks time, that's a huge benefit, right? I think any customer in their right mind would prefer to have a factory up and running versus eight months of downtime. As a concept, I think this really makes a lot of sense. We have seen some traction. Can I say it's 100% a success? Not yet, but, you know, over the next few years, I do believe that this can become a important cornerstone of our strategy. Thank you so much for that. My last question is on the services and the systems segment. We see that on the order intake, we're seeing more share from services as compared to the system. Should we see this as a one-off, where most of our components are having a repair or a replacement value, or do we see this trend of higher services than systems to stabilize going forward? Yeah. I think a couple of things to keep in mind here. One is that we as management and as a company, have been focusing more of resources and money to our services business. We have, over the last maybe year or so, made an acquisition in the US, where we bought out a small competitor in the southern area of the US, where we will start doing services like relining and reglassing. We just opened up last week, a new service center in Brazil. We also have a new service center in Houston. We are now opening up a new service center in Switzerland and in China. In India, as well, we continuously want to build and add more service capabilities. We also believe as an organization that there's an opportunity, especially in India and China, where our service revenues are so small compared to the rest of the world, to really grow that part of our business. We will push to make services maybe a 15%-20% of our total revenues in India and in China. Keep in mind that India and China have a very large install base, nearly 40,000-50,000 reactors that we supplied over the last 10 odd years. These now equipment are aging, so at some point, these equipment will come in for servicing, for replacement, and so on and so forth, right? Lastly, keep in mind also that the mindset of customers is changing. What was acceptable maybe 5, 7 years ago in terms of quality and services, is not acceptable now. There are too many kind of rules and regulations, regular audits, approvals required. People are changing, and they will try and buy services and spare parts from the original equipment manufacturer. Hopefully, that means that our services business will continue to grow. We, as management, believe in this strategy and 100% that we want this to be a big part of our total business, and that is what we are aiming for. All right. Thank you so much for your time. Thank you. Thank you. The next question is from the line of Amar from AlfAccurate Advisors. Please go ahead. Amar from AlfAccurate Advisors, you may go ahead with the question. Hello? Yes, go ahead, please. basically, sir- I can't hear you, Amar. You'll have to raise your voice. Can't hear you. Amar, if you're on a hands-free, I request you to use the handset. Your voice is very faint. Hello? Yes, now, yes, go ahead. Yeah. Sir, I wanted to understand, like, you know, beyond 25, like, you know, we are confident about 15% kind of a CAGR for international business and 17% kind of a CAGR for India business. But then, you know, if I see your near-term guidance, we are pretty conservative even in 25 about our revenue growth. Are we seeing some serious kind of a slowdown in the overall business environment? No. When we gave the guidance of FY 2025, this was last year in August, there was no specific slowdown. It is still a significant growth that we, we, we have planned for, both in terms of revenue and margin. Obviously, obviously, maybe as management, we might be a little bit more conservative than others, but we do feel that the strategy for us to obviously, you know, be conservative, but then, you know, out, we perform the expectations, right? I think we did that already during our last guidance period, when we actually met the guidance number one year before what we had promised, right? Obviously, you know, that time the, the, the outlook and the industry were really booming. Today, there is a bit of a slow, slowdown, and that's why as management, sometimes we build the numbers more conservatively, because, you know, there is something that obviously is not in our hands, and there could be maybe six months, eight months of volatility, which obviously would impact growth for that specific year. Having said that, the outlook on the longer term, you know, the next up to 2025 and then three years, three to four years after that, we do believe that overall we can maintain these growth rates, right? Again, just to clarify again, I'm not sure what numbers you said, but when I told you my numbers again, after FY 25, 13%-15% growth in terms of revenue, CAGR growth in terms of revenue, and about 18%-20% growth in terms of EBITDA margins. At consolidated. At the consolidated, right. Like I said, I think the India business will grow faster, and we expect the India business to maybe be about 17%-18% or so. The EBITDA CAGR to be about 20%+. 20%. International 15%, you are saying 13%, 14%? No, 13, 15 consolid number, we said, consolid. Okay, okay. Secondly, sir, you know, in terms of your order intake, like, you know, if I see order intake, even an order book, as well as order intake, has been muted, like, you know, in this quarter, and we are sounding for a, a kind of, muted kind of environment, even in the chemical as well as in the, I mean, overall customer level. Just wanted to understand, like, you know, is that the deal closure is becoming delayed, or there are deals which are becoming, like, you know, canceling or people are delaying their expenditures? Yeah, look, it's, we see a lot of. The funnel is strong, right? There's a lot of stuff that we are in discussion with customers about, but it is taking longer. Often the decisions are being pushed out by a quarter or two. That's what we're seeing, primarily in, you know, for the glass line, as well as in the chemical space. Cancellations, not so much. Maybe you are seeing one cancellation. One big project was canceled this I mean, this year. Yeah. Everything else is either pushed out or finalized, and they move, I mean, they do finalize maybe a month or two later. I think the international business, I think, pretty much the same for you, Thomas, right? It's just pretty much the same. I have to say, in chemicals, the process of making decisions is a little slowed down. We are waiting for the project to be decided, but no projects are taken out or taken back. We have no cancellation. The, the, the funnel is strong and, and, and good filled with this good, good project. We are not losing projects more than we did in the past, so the market share is not decreasing. It's rather stable or it's slightly increasing anyway. Okay. Perfect, sir. Thank you. Thanks a lot for the opportunity. Thank you. Thank you. Thank you. The next question is from the line of Sarang Sanil from RW Investment Advisors. Please go ahead. Hi, good evening. Thank you for the opportunity. I have a couple of questions. My first question is, on the last few weeks, a couple of German specialty chemical companies have been cutting down their forecast for the year, citing high energy price and weak demand. Has there been any delay in decision-making, especially in the Europe region, lately, I mean, in the ongoing quarter? Yeah. I think the question was, Thomas, we've seen a lot of European and especially German chemical companies cutting guidance and things like that. Is that impacting business for you specifically in Germany? I think that was the question. Again, the overall chemical industry is slowing down a little bit. We see that. Midterm, long-term, we don't see any major impact on that. A couple of changes in some of the big chemical industries, like the BASF making announcement, moving towards China. With some of the products, those are products that are not necessarily being catered by, by, by, by our company and our products. The impact that we see is not really foreseeable. Not, not really there. Sure, sure. My second question would be, what would be the effective tax rate for the year? Since you had mentioned the previous call, that it would be in the range of 26%-29% for the year and this quarter, we saw that to be a little elevated. Are you still sticking to that 20%-21% range for the year? ... If overall on the year, there is no change in the tax guiding, but yeah, the quarterly fluctuations, depending on the deferred tax impact, will, will, you know, they, they continue to happen because of the so many geographies. Overall, we, we expect to maintain that value. Sure, sir. Sure, sir. Sure, sir. My last question is regarding Mavag. Is it possible to give the domestic market share of this technology? Sorry, did you say Mavag? Yes, sir. I think Mavag generally kind of participates in a business that we call filtration and drying. This is where anywhere where you separate a solid from a liquid, and then you dry it, right? In this space, there are multiple different technologies that we have, and Mavag is a brand name that has all these technologies. In terms of market share, it's very difficult to say. I think one of the two things that I can definitely make clear for you is there is a big market here in India for a product called Filter Dryer or ANFD, where there's a lot of competitive intensity. There's four or five different players, you know, and it's kind of very competitive, right? That's not where we participate. We do some stuff in ANFD, but only for very critical applications. Where we do focus in India is, 1, we supply components and parts to our Swiss subsidiary. So 80% of that manufacturing that happens within happens actually in India. Then we also focus on specific drying equipment like VCD, Vertical Cone Dryers, we do Spherical Dryers and other such equipment, right? The idea as a company is always to move towards highly technical technological advantage that you have, where you solve a customer's problem, either you are helping him reduce batch time or helping improve heat transfer or power consumption. Anytime you can make a difference for the customer, that's when you really move up in terms of value, and that's what the focus is on. We try and exit any business areas where there's too much competitive intensity and customers don't value technology. Mm. Okay, got it. Got it, sir. Thank you so much, and all the best. Thank you. Thank you. Before we take the next question, we'd like to inform participants that in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. We take the next question from the line of Shyam Maheshwari from Aditya Birla Mutual Fund. Please go ahead. Hey, hi, Parag and team. Am I audible? Yes, Shyam, go ahead. Yeah, hi. So just wanted to understand the outlook on our Chinese entity. You know, looking at the annual report, the Chinese entity has been a significant contributor of growth for the last couple of years in the international segment. With things now slowing down in China, what is the outlook that you're seeing there? Yeah, I'll start, and maybe Thomas can jump in. Again, on Chinese facilities, our new facility, getting it up to speed and ramping it up took some time. We started to move from the old factory to the new factory during COVID, so we lost some time. Definitely happy to report the momentum is there. The, the, the factory is completely now up and running, and, you know, it has performed very well. In fact, the largest vessel ever produced within our group, Pfaudler group, in all the years of history that we have, actually was produced by the Chinese facility only last month, 140,000 meter cube and 3 of them, I believe, right? Incredible improvement for the Chinese facility, and their order backlog also remains quite strong. Again, like you rightly said, there is definitely a slowdown in China. Again, the competitive in the intensity there is going to, you know, kind of, you know, increase over time, maybe for the short term, and then as the market turns, maybe then decrease, right? All in all, I think we're in a strong position. Keep in mind, our China business is very strong, very small, about $20 million of, of equipment that goes into China from the Chinese factory, so it's not a huge number. And I think China, for that kind of market size, we have a very large market. You know, the whole Chinese market could be about, you know, close to $1 billion. Out of which, let's say, our addressable market is about $200 million, which would still mean that there's a lot of potential for growth. I'll just hand it over to Thomas now. Maybe he'll give you an update on China as well. Yeah, I think Parag summarized it quite well, the, the story of the new plant that is up and running and gaining momentum. The quality levels are at the level that we expected and planned for. I think the capabilities of the China plant are well set for, for, for the future, with the new processes that we have implemented and new operation activities that we have implemented there. We are highly competitive in the segment that we are playing. We have a lot of projects going in the funnel that are not yet decided, and, and again, more or less the same story. The slowdown in the industry is there. However, the plant is quite busy because we have a strong backlog with good margins, and China is performing quite well. We believe that this blip in the demand in China is going to be over soon. It's just the bottom has been reached already, and momentum will come back on order intake. Understood. Understood. My second question was on the lines of services. You know, what are the steps that we are taking in order to increase this share of services in our overall revenues? Because let's say even if the outlook is a little muted on the glass lining side, if you can get some annuity side of revenue from services, that would be very helpful. What are some of the steps that we are taking to increase the share? Yeah, as a starting point, keep in mind, a very important relationship between new CapEx and services. When you see the CapEx cycle slow down, you will see the spend on services go up, right? That's always something that has happened. It usually means that if I'm not buying new equipment, I will make sure that the equipment that I have in my factory runs well and doesn't break down, right? You see that relationship, obviously. If the CapEx cycles were to slow down a little bit, you will see the services revenues increase. Like I mentioned before, there's multiple things we've done in both international as well as the India business, and maybe Jonathan, I think, can add a little bit more in terms of what specific actions have we taken to grow our services business. Any specific action that we have taken and started the journey a couple of years ago, we increased the number of service technicians, engineers on the ground from a little bit over 20 to 40 in 2017, and today, we are a little bit over 60 service technician engineers in the field. We have increased the number of service centers over time significantly. We started off with less than 6, now we have 12, and going to look for 14 and 16 service centers. With our M&A strategy, bringing in new technology, new cluster technologies, all those technologies always provide service opportunities as well, meaning that our array of service product is, is becoming bigger, and therefore, we believe that we have a good, good chance to win more service business and increase the share at high margins and and contribute to the overall performance quite significantly. Yeah, and I'll add for India, look, in India, we're just starting off on the services journey. It's been a very small portion of our business. Thankfully, we have the international business template to follow, as far as structuring the service organization is concerned. We've done a lot of things that they've already done, which is first, we carved out a separate organization that's focused on service, which did not exist in the past. We've also worked with the factories to ensure that we have enough stock of parts, replacement parts that are required for our customers. There is a lot of analytics one can do about your install base and figure out how to go after your, you know, install base and with service offerings. We're now engaged on that process. All in all, we're quite pleased with how that's coming along, and we expect to continue that journey for the next, you know, probably two to three years, and build up the service share of our revenue in India. Just to add to what both these gentlemen said, in terms of service personnel, today, we are by far the biggest in number of people, both internationally and India, that gives us a significant advantage. The idea of the management team here today is also to try to look at if there is other equipment within a chemical or a pharmaceutical plant that we could also cater to, right? Why stop only equipment made or manufactured by us? Why can we not also service other equipment? That's the next step, and over time, we will look at that and see if that is something that is possible as well. Thank you. The next question is from the line of Rohit Ohri from Progressive Shares. Please go ahead. Hi, Tarak Patel and team. Two or three questions. The first one being related to the services and the systems, that we're talking about. In terms of the large system orders, which we had done in China, somewhere around INR 50-52 crore, and asset recovery orders of some INR 22-23 crore, do we have any more of these orders? Are clients approaching us for these kind of big orders in future? There are three asset recovery plants that are under the commissioning now. There's one in China, there's one in South Korea, and there's one in India. These are the 3 that we're working on. We just commissioned our first asset recovery plant here in India. We had actually committed, or the agreement actually said that we have to give them 80% concentration, and we actually crossed that. We are now giving the client 81.6% concentration, right? Our first plant is up and running, gives us a great example of what we can do with the track record that we've created here in India, and hopefully, over time, we can build on that success and add more businesses. Yes, we have multiple opportunities again that we're working on, and over time, some of these will, you know, kind of hopefully, convert into actual orders. When you talk about the pie, for services systems, do you think the pie will shift more towards systems, or is it going to be only on the services that you're going to focus? You know, currently, I think 60% odd of our revenues come from glass-lined equipment. I think over time, and I, I'm not saying a time frame right now, but an ideal situation, one-third, one-third, one-third would be an ideal, because all these businesses have their own sets of pros and cons. You know, glass-lined is what we're known for, so we still need to focus on that and maintain market share. Systems is obviously a much more, I would say, volatile business. You could get five, six big orders in 1 month and then not have something for 6 months, right? Every business has its own nuance. We have to work around that. Over time, we just want to stabilize the business. You know, we want to make sure that we have a good amount of order intake. There'll always be ups and downs, but by this strategy of diversification, we kind of mitigate some of the risks associated with this, right? I think it's really a work in progress. We really don't have a specific number in terms of what the ratio should be, but we definitely want systems and services to be a much bigger part of the pie than they currently are. You're looking at, setting up a dedicated engineering center somewhere in India, which will probably cater the global business needs. Can you share some more insights on that, some numbers on that, and how much you intend to spend on that? Which geography are you looking at? Oh, good question. I mean, it's past 7:00 P.M. now, so you really started asking the really heavy questions now. At 7:05 P.M., just in time for when I need my first drink. No, I'm joking. Listen here, I think the concept of bringing engineering documentation, you know, calculation kind of resources to India is ongoing. Is it something that's going to be a game changer in the first year or two? I don't think so. Over time, as an organization, we are very much clear that we will have to do this. We will have to move a lot of the heavy lifting to India. I don't think we should really think of this as a short-term kind of a play. It's going to be more long term. It's not going to be a needle mover in terms of improving margin, significant margins today, but yes, three years, five years down the line, it could definitely well be. Also, keep in mind, there are mindset issues. You know, when we move stuff from Europe or the US to India, there's always that difficulty. It will take a bit of time, but I think as management, we are quite clear that we have to do this, and we are working on it. Thank you. The next question is from the line of Ambrish, who's an individual investor. Please go ahead. Yeah. Thank you. Congratulations, Tarak, for the fabulous results. I have two questions for Manish. One is, if you look at the profit before tax for June last year, it was around INR 83.4, versus June this year, it is around INR 85.8. That's roughly around 3% increase. The current tax charge has increased from INR 22 crore to INR 36 crore. If you can share some insights in terms of why the 70% increase in the current tax has happened? My second and last question is that if you look at the other expense line in the P&L, that's the third largest spend in the P&L after employee payouts and cost of raw material consumed. If you can share some insights on the top two or top three items which comprise of this other expense. One suggestion, probably you may want to think of, you know, calling it out separately in the P&L, one of the top two or top three items in the other expense on the face of the P&L, rather than probably merging it as, you know, one line item. Sure. Ambrish, this, the first question on the tax part. There were some tax, deferred tax adjustments in the international business because of which... And that, that has been happening for, you know, if you, if you notice past, 5 or 6 quarters, that is how it has been happening, in the international business because of so many geographies we are on. Over a, over a period of time, over a full year period, it would probably be just more like to like comparison, and that is where the effective tax rate in the earlier question of something like 27% comes into play. That's part one. Part two, on the other expenses, I think this is more like a, like a format sort of, so it's there. Point well taken, if you can, can, let's see, explore if you can accommodate a few more lines into this, would be. This all includes, your repairs and maintenance, your consumables, your factory, your travel, legal, professional, all those expenses in the world, the entire package. Maybe we, we can look at that and just see if there's any other line items that are significant, we could look at. Let's understand that, for sure. Thank you. Thank you, Manish. Thank you very much. That was the last question in queue. I would now like to hand the conference back to the management team for closing comments. Yes. Thank you, everybody. I just have one more kind of point to speak about. I was hoping that somebody would ask me about the M&A activity that we are planning. I have spoken about our mixing business. As you know very clearly, we have a very large mixing business in India today, 100 and odd, INR 150 crore worth of mixing, probably the number one mixing company here in India called Mixion. We recently acquired Mixel in France. It's about a $12 million-$13 million company and has a facility also in China. Now we have Mixion in India, Mixel in France and in China, and the last piece of the puzzle is actually having something in North America. I have spoken about this earlier as well. Just would like to reiterate that we are now in advanced stages of this acquisition. It's not a very large acquisition, but it will be perfect for us to complete the global footprint. Then, like I had mentioned in the past, we would launch a global brand and really aim to grow this business significantly over the next three to five years. Hopefully, in the next, maybe few months, we should have some kind of decision on this acquisition. At that point in time, we'll come back and speak to you more about it and what it means from a growth perspective, as well as what we are trying to create. Having said that, thank you very, very much for your time, and I look forward to interacting you again in the future. Thank you very much and have a good evening. Thank you very much. On behalf of GMM Pfaudler Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.