Ladies and gentlemen, good day, and welcome to Gravita India Limited Q2 FY 25 earnings conference call, hosted by Antique Stock Broking. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Jenish Karia from Antique Stock Broking. Thank you, and over to you, sir. Yes, thank you, Dale. Good morning, everyone, and thank you for joining the two Q FY 25 post-results conference call of Gravita India. I would like to thank the management for giving Antique Stock Broking the opportunity to host the call. From the management, we have Mr. Yogesh Malhotra, Director and CEO; Mr. Sunil Kansal, Director and CFO; and Executive Directors, Mr. Vijay Parekh and Naveen Sharma. Without further ado, I now hand over the call to management for their opening remarks. Afterwards, we shall open the call for Q&A. Thank you, and over to you, sir. Thank you, Mr. Jenish. Good afternoon, ladies and gentlemen, and welcome to our Q2 and H1 FY 2025 earnings call. I trust you have had the chance to go through the earnings presentation and financial results that we have uploaded on the stock exchanges. I am pleased to announce that Gravita has delivered outstanding performance in both financial and operational aspects during Q2 and H1 FY 2025. Before we dive into the results, I would like to discuss about some key strategic highlights and project updates. Gravita's wholly-owned subsidiary, Gravita Netherlands, has signed a memorandum of understanding to acquire a waste rubber recycling plant in Romania from an established local entity with a capacity of approximately 17,000 metric tons per annum. This acquisition will mark Gravita's first recycling facility in Europe. This aligns with the company's vision of diversification and expansion, aimed at replicating our recycling business across various geographies. The acquisition will be carried out by establishing a separate special purpose vehicle in Romania, where GNV will hold 80% equity along with management control, while the remaining equity will be held by local partners in Romania. The total investment for this transaction is estimated to be approximately INR 40 crores, with GNBV contributing around INR 32 crores, subject to comprehensive financial, environmental, and legal due diligence. GNV aims to grow its recycling business towards the European market by seizing new opportunities and establishing strategic partnerships that drive growth. The board of directors have approved raising funds of amount up to INR 1,000 crores. These funds, if required, will be raised for additional CapEx, M&A opportunities, debt reduction and other general corporate purposes. Our progress on setting up a pilot project of lithium-ion battery recycling and our first Indian rubber recycling plant in Mundra is going as per plan. We expect them to be operational in H1 FY 2026. Gravita is strategically advancing to achieve its short-term, mid-term, and long-term goals, set for FY 2027, FY 2034, and FY 2050, respectively, as detailed in its ESG roadmap. This comprehensive roadmap outlines the company's commitment to integrating ESG principles into its operations and decision-making processes. As Gravita progresses along this strategic path, it aims to position itself as a leader in sustainable practices within the industry, ultimately benefiting both the company and the communities in which it operates. The long-term vision will help to drive innovation, and strong governance practices will promote transparency, accountability, and ethical conduct within the organization. Coming to operational performance, on the capacity expansion front, Gravita is making steady progress towards its goal of increasing its capacity to over 5 lakh metric ton per annum by FY 2027. The company has strong investment plans of INR 600 crores, which includes CapEx for both existing as well as new verticals like lithium-ion, paper, rubber, and steel recycling. The CapEx done in H1 FY 2025 is around INR 30 crores, and we are expecting an additional investment of around 100 to 120 crores in capacity buildup in the H2. On the volumes front, we saw an overall growth of 8% in Q2 FY 2025. Volume for lead and aluminum showed an increase of 9% and 3% year-on-year to 42,101 tons and 3,515 tons, respectively. Volume for plastics stood at 3,000 tons. Due to strict government regulations under BWMR and EPR, the availability of domestic scrap is on the rise, leading to an increase in our sourcing of domestic scrap as well. In Q2 FY 2025, we experienced 140% growth in the domestic availability of scrap on a year-on-year basis. Coming to quarterly EBITDA per ton performance, EBITDA per ton of lead and aluminum increased significantly by 22% and 57% to INR 21,642 per ton and INR 18,386 respectively. The company was able to increase these margins by leveraging arbitrage opportunities between international and domestic markets. Moving to financial results for H1 FY 2025, consolidated revenue increased by 19% to INR 1,835 crores. Consolidated adjusted EBITDA increased to INR 192.72 crores, up 30% on year-on-year basis. EBITDA margins stood at 10.5%. Consolidated PAT showed significant increase of 27% to INR 139.33 crores. PAT margin increased to 7.6%. For H1 FY 2025 is standing strong at 25%, which is in line with company's target. Cash flow from operations has increased to INR 73 crores. Coming to financial results for the quarter, consolidated revenue for Q2 FY 2025 increased by 11% year on year to INR 927 crores. 47% of revenue came from value-added products, which is in line with our vision of achieving 50% revenues from this category by FY 2028. Consolidated adjusted EBITDA increased to INR 101 crore, up 27% and 11% on YOY and QoQ basis, respectively. EBITDA margin increased to 11%. Consolidated PAT showed significant increase of 24% year on year to INR 72 crores. There are more than 20 parties in the conference. In conclusion, Gravita is making significant progress towards its clear Vision 2028. Our strategic emphasis on expanding existing verticals while diversifying into new sectors such as lithium ion, steel and paper recycling aims to achieve a volume CAGR of over 25%, profitability growth exceeding 35%, and ROC of more than 25%. Additionally, we are dedicated to increasing our non-lead business share to over 30%, utilizing more than 30% renewable energy and reducing energy consumption by over 10%. Through our successful strategies, which include capacity expansion, diversification, both segment-wide and geographically, enhancing the share of value-added products to over 50%, and managing risk with back-to-back hedging, we have achieved strong and sustainable margins. With over thirty years of expertise in recycling, twelve cutting-edge eco-friendly facilities around the globe, a presence in over seventy countries, an integrated supply chain, strong CapEx plan, and compliance with stringent BWMR and EPR regulations, we are on track to realize our Vision 2028. That's all from my end. I would now request to open the floor for questions and answers. Thank you, and over to you, Mr. Deepu Dinesh. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Dixit from ICICI Securities. Please go ahead. Yeah, hi. Good afternoon, everyone, and thanks for the opportunity. I have a couple of questions. The first one is on the expected volume growth this year. So while you know, volume growth, if I look at for H1, it was around 12.5%. So what kind of volume growth can we expect for the full year? And what are the key avenues for this growth between lead, aluminum, and paper? Sorry, and plastics. The H1 growth rate so far is 17% year-on-year basis, and we are expecting the same. I mean, as we have given the guidance of around 25% CAGR growth in the next four years, it will be in the same vicinity of 25% this year also. There can be some slight difference of 2-3%, both downwards or upwards, because as you know, that the growth cannot be absolutely linear. So there may be some difference. And the growth projections for lead is around 17-20%. And for plastic and aluminum, it is going to be around 35-40% going forward. Okay. The second question is essentially around the aluminum. So in the last call, we indicated that we expect the listing of aluminum on MCX, ADC-12, I think, so that we can also hedge aluminum. So just wanted to get more sense on that and what could be the aluminum capacity utilization by end of the year? Okay, on the part of listing of aluminum contracts on MCX, so that, that is in process and all the approvals to MCX has been received from Finance Ministry, and we expect that in Q4, this contract should be listed, and on the part of capacity utilization, so this year, 2024-25, the utilization is around 35%, and going forward, in the H2, we expect it to slightly higher capacity utilization, because we are increasing the volumes, considering this upcoming, you know, hedging solution, so we are increasing the capacity utilization going beyond 50% for this year. Okay. So the sense that I get from both the answers is that H2 should be, you know, much stronger compared to H1, the on volumes front and with aluminum also helping. So, you know, we could see a distinctly better profitability in H2 compared to H1. So, profitability, again, as we mentioned, that would be in the same range. We expect 25% growth rate in volume terms and around 35% in profitability. This year, if you look at this quarter, as I mentioned in my speech also, that there was an upside in profitability. Although the volume grew by only 11%, the profitability went up, EBITDA margins were up by 27%. That was because of arbitrage opportunity. Otherwise, there is some difference, but it will be in the same tune. Okay, got it. Thank you, and all the best. Thank you. The next question is from the line of Chetan Thakur from Ask Investment Managers. Please go ahead. Hi, sir. Good afternoon. Just two questions. One is on the hedge gain that we've seen. What is the quantity against which this has been booked? Okay. So, what we do is, whatever volume we have, approximately 10-15%, we are doing like, if we are doing, 50,000 tons of volume, so approximately 10,000 tons we hedge through this mechanism. So whatever, hedge quantity is, approximately 10,000 tons to 12,000 tons. That's the... But it also changes on day-to-day basis, because it's fluctuate whenever, we do the sourcing, on the same day we hedge, we take a sales contract on a, on a LME, for the remaining quantity, which we are not able to hedge on the physical side. So, but that quantity changes, on day-to-day basis, but on an average you can take it, 10-12,000 tons. This INR 40 crore pertains to 12,000 tons for a quarter? The turnover is much higher. Yeah. It's so at any point in time, the total hedge quantity is around 10-12 thousand tons, but the turnover could be much higher because you do hedging on a daily basis against each and every contract. So the turnover could be, would be much higher than this 10-12 thousand. So then, sir, fair to assume that, say, so for this quarter, say, for example, we've got volumes of forty-two thousand, and you would be on an average doing ten thousand. But for the quarter as a whole, whatever gains or losses that we see is pertains to just this ten thousand, or it pertains then to the full forty thousand? It pertains to full 40,000. So, what happens is that once we sometimes when we have an order in hand, or on other side, we have a procurement in hand, then that gets canceled. But whenever there is a lag in between the purchase or the sale, during that time, we go and hedge it on the exchange and then reverse that deal once the lag is complete. Got it. The reason why I was asking was because we've actually seen lead prices go down on an average this quarter, while your realization, if I don't add the hedge gain, is also flattish. So just wanted to get a sense of why would that be happening as well? So generally what happens is that, I mean, whenever the prices of lead goes down, there is a higher profitability from the hedging gain. What happens is that when the prices are down, the vendors will not generally want to sell that raw material. So during that time, you will have to hedge that on the purchasing side. Whereas when the prices go up, you will have to hedge on the sales side. So that is why you will see a profitability from the hedging gain more when the fluctuation is higher. Understood. Understood. So 40 crore, 38 crore pertains to 40,000 tons that we've seen in this quarter, and that is how we should look at it. So that is approximately INR 10,000 a ton. That is the right way to look at it. So, it's higher this time because of variation or fluctuation was higher. If it remains same, then you will see a very little gain or loss in the hedging profitability- Understood. or hedging amount also. Understood. And- More to do with the volatility in the market than to anything else. Sure, and sustainably, we still maintain INR 19-INR 20 a kg for lead in terms of- INR 18-INR 19 per kg in lead. Perfect. So second question pertains to the fundraise. We are doing a thousand crore fundraise, given our CapEx, given our cash flow, just wanted to understand where do we need this additional thousand crores? So, as there are certain policy changes that are taking place, the recent one is this reverse charge mechanism that is going to come up. And also, we are looking at some opportunities in merger and acquisitions across globe. So we want ourselves to be ready as and when such an opportunity is there. So, that is why we've taken a mandate, but we'll raise the fund only as and when we have these opportunities in place. Got it. And sir, reverse charge would essentially, in your assessment, lead to what kind of opportunity opening up, for refining? ... So what will happen is that, as we mentioned that, this battery waste management rule or the extended producer responsibility helps in converting the unorganized sector into organized sector. The reverse charge mechanism will also fast-track this conversion from unorganized to organized, because currently in the unorganized sector, a lot of GST evasion is taking place. With this reverse charge mechanism, that will reduce, so that will fast-track this conversion. I will add on this. Basically, on reverse charge mechanism, when you buy material from unorganized or unregistered person from who doesn't have GST number, the tax can be paid by the buyer. This has been already introduced in metal scrap from chapter number seventy-two to eighty-one, while on the other scrap, the battery and all, it is expected soon. Apart from reverse charge, there is an additional TDS of GST, that is 2% has been introduced again on metal scrap. We expect the same in battery too, in time to come. It's already there on aluminum scrap and other metal scrap, ferrous and non-ferrous. This will bring some transparency and tax compliances, so there will be lot of material flow into formal sector from informal. So the advantage of GST which the unorganized had, today they will gradually start coming into the net. So even they would ideally either have to come on books very clearly, that in turn will increase their cost of doing business also. Yeah. And certain companies would want to then shift to more organized players. That is how we should approach this, saying that- Absolutely. Absolutely. These factors that will play out, so not only one person will gain, but even the organized guys will start to move into the formalized channel as well. Absolutely. So the entire formal sector will gain on this change, and Gravita being leader in this e-recycling business and have pan-India presence, so we would set to gain a little bit more than other companies who have only a single set of operation in unique location. Understood. And sir, one last question on particularly this quarter, when I look at the OP per ton. So we've got an advantage of better domestic scrap availability, and that in turn has led to this, improvement because of mix? Because the understanding was that ideally if we get imported and sell in domestic, that is also more profitable. So just wanted to get a sense on that. Yeah, definitely that is more profitable. And what has happened in this quarter is that we have diverted some of the material from our overseas locations into India to take advantage of this arbitrage opportunity. And that is why, if you see, the volume growth is not as much. I mean, it's not there, because- Mm-hmm. We have moved some of the material back into India from our overseas, and we have then so to take advantage of this arbitrage opportunity, and of course, the domestic scrap is more or less for tolling business most of the time, so it does not impact the EBITDA margins that much. Understood. And the last bit on the sales from Africa to Europe that had got impacted. So fair to assume now that has got stabilized and we found alternate buyers there, and those volumes are now back to normal? One of the reasons the volumes are not growing, although our production has grown in the last quarter, is because we are diverting some of this material into India. Also, because there is some advantage of arbitrage opportunities in India, so we have diverted some of the material from East Africa into India. Understood, sir. Understood. Okay, sir, thank you. As in, selling, selling it into Europe now. Got it, sir. Thank you so much for all these clarifications. All the best. Thank you. The next question is from the line of Kush Nahar from Electrum Portfolio Managers. Please go ahead. Hello, sir, thank you for the opportunity. So, sir, my first question was, what was the percentage of domestic scrap collection for our Indian plants for this quarter? So in this quarter, the battery scrap procurement is around 37%, and 63% is from the overseas scrap. Okay, sir, thank you. And then the second question was basically on the volume growth. So any particular headwind or any reason why we saw only an 8% volume growth this quarter? Although our actual will be better, but any particular logistic issue or demand issue that you are facing. Yeah, so as I mentioned earlier also, if you look at the overall production increase over last quarter, it is around 7%. But as I mentioned that because we are moving some of the material from our overseas location into India to take advantage of the arbitrage opportunity, it's not showing in the consolidated sales number, because that gets eliminated once we sell it from our own plants into India. So it's not getting reflected. But if you look at the bottom line number, you can see the growth there. Right. Okay. So just last question, if I can ask, any update on the paper recycling plant setup in Central America? So, I mean, paper recycling and steel recycling, it's going to take a little longer. You can expect it in FY 2027, but not before, I mean, any movement in this happening in FY 2027, not before that. Okay, sir. Thank you. Thank you. Thank you. The next question is from the line of Bharat Shah from Ask Investment Managers. Please go ahead. The one issue that you mentioned for fundraise, and you talked about reverse charge mechanism, I couldn't understand what is the correlation between the two? Sir, what we are saying is that there could be a change over, I mean, fast-track conversion from the unorganized sector to the organized sector. So that may probably fast track our CapEx investments in this year and the coming year. So because of that, we may have to put up capacities much faster than we earlier thought, and therefore, we may have to raise some funds for that also. Okay. So basically, the 1,000 crore potential fundraise is to deal with fast-tracking of CapEx and to avail of acquisition opportunity? Yes, sir. But this is an enabling provision, or it is definite raising right away that you are intending? Not definite raising right away. Because we are looking at some of these merger and acquisition opportunities, and as and when we have some clear picture about those opportunities also, then we will do that. Currently, we don't have. I mean, it may take a couple of months before we decide on this. For the present, it is an enabling provision, and it will be specifically linked to any definite acquisition or other opportunities that you concretize. Maybe, sir, it will take a couple of months to get that clear picture. If it happens before that, then I mean, so it all depends on when we get a clear picture about some of the merger and acquisition opportunities that we are looking at. As and when that happens, we will then do this. We are already evaluating few of the opportunities, so whenever we see that things are more clear on that, definitely we are going to take an action on this fundraise. So, then it is fair to say that the amount could be different than INR 1,000 crore? And second, whether it will happen or not happen, itself, could change depending upon whether we get any targets or otherwise. Absolutely, sir. Absolutely. So time variability, amount variability, and basically will be linked to the opportunity identification. Otherwise it may or may not happen, or it may happen at a later date or of a different amount. Yes, sir. You're absolutely right, sir. And please, given the fact that hedging is integral to our business, and given the fact that margins are modest, obviously we can't... And given the fact that supply chain issues are very important part of the business models, the hedging gains or any losses, ideally we should treat it as basically core integral income of the business, isn't it? Yes, sir, we do that. But, this new, Financial standards. Just, Ind AS. Yeah. Ind AS accounting doesn't, you know, allow us to consider it in EBITDA or operational income. So, for the purpose of Ind AS accounting, it is as good as other income or other expense in case of loss. So, in case of loss, it is already part of our operational income because it is considered as other expenses. But in case of income, it is considered as other income. So what we do is, we, when we present our presentation, so we consider it as operational income, in case of other income, it is then. So, we publish as, you know, EBITDA, adjusted EBITDA, considering that additional income from hedging as operational income. Right. In the last part, the four-year projections of the compounded growth, you said volume growth of 25%, and you didn't mention about the top line. So presumably, top line probably will grow at a what is the underlying presumption on that to be made on a four-year basis? I mean, why we talk about volume growth is because the metal prices fluctuate a lot. So the top line growth will depend on the metal prices at any point in time, so which is not in our control. So that is why we do not mention the top line growth in our projections. We only talk about the volume growth of each and every vertical there. So as I mentioned, that the lead would grow at around 17%-20%. The other commodities of plastic and aluminum by FY 2028 would grow at around 40%, 40%-45%. So the top line would depend on the prices of each of these commodities. No, absolutely. That makes highest sense. So essentially, when we are talking of 25% volume and 35% EBITDA, we are basically saying that inherently, we will manage those fluctuations as well as we have done so far, and that increase growth of the business to reflecting improving margins bit by bit. That's how those two numbers are correlated, right? Absolutely, sir. Absolutely. So there are some advantages of economies of scale that is going to kick in as we grow bigger. And of course, because we have plans to increase the value-added content from current around 45% average to 50-plus% in future. And then there would be some operational efficiencies also along the way, which will contribute to some increase in overall margins. One last bit, given the fact that our return on capital employed is held up and is continued to improve the same rate, more closer to 28-29%. It'd be fair to say that the interest cost and depreciation charge compounding would occur at a lower pace than what will occur on the EBITDA compounding? Yes, sir, to some extent you're right. But as we are doing new CapEx, so it, the depreciation may not come down, but definitely the interest cost will go down in future. No, I didn't mean absolute amount coming down. I said compounding of interest and depreciation charge would grow at a lesser pace than the growth that you're forecasting for volumes in the EBITDA. That was the statement I was making. Yes, sir, you are 100% right, because there will be the finance cost and the depreciation will not rise in proportion to the rise in the EBITDA. But you were saying that absolute amount itself may decline, is it, over a period of time? Absolute will not decline. Absolute will keep on increasing even slightly the finance cost also, considering that we are not using the fundraise for the debt reduction at this moment. So, considering the debt at the same level or slightly higher level, the absolute interest cost and the depreciation will keep on increasing, but not in the same ratio as the EBITDA will grow faster. EBITDA will grow faster slightly. Sir, as we grow, a lot of investment would be done in increasing the inventory cycle also. So therefore, the absolute number will not come down, but as a percentage it will come down slightly. Yeah, that's exactly what I meant. And, therefore, all of this should translate into steadily improving capital efficiency, isn't it? Because if our margins are rising, bit by bit, and scale is giving us an advantage of improvement on the overall efficiency, if working capital continues to remain managed in the same way, then obviously our return on capital employed would rise over this journey. Definitely what you're saying is right, sir, and also because we are going into new verticals of plastic, et cetera, and we expect these new commodities or new verticals to give us higher margin as compared to lead. So that would also contribute to some extent, but we also see some pressure coming on the raw material sourcing also as we go forward. So but overall, yes, there would be some slight increase in EBITDA margins going forward as well. Sure. Now, thank you very much. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your questions to two per participant. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead. Yeah, good afternoon, everyone, and thanks for this opportunity. My first question is on the plastic volumes. Now, if we consider, if we look at last four years, our volumes quarterly has been in the range of three to four thousand tons. So just want to understand, what is the constraint here? Is it a capacity constraint or is it the scrap constraint? I just want to understand this better. And going forward, what is our outlook and guidance on this? Yeah. So, I mean, we've been saying that plastic is a little tricky as compared to other businesses that we are doing because you will have to develop new products to meet the market demands. That is how the EPR works in plastics. And it is taking a little longer than we expected to develop new products that can cater to the requirement of our customers. But as and when we keep on stabilizing one product after another, we see a huge value addition in this business also. And the growth is also going to come exponentially once we stabilize the products. So till that time, probably you will see a similar numbers, maybe next quarter would also be in the similar line, but definitely we see some improvements in the way business is being done in plastic. So going forward, definitely there will be a huge growth as and when the products are stabilized. Mr. Yogi, sir, one question on this RCM. So on the ground, has the transaction started to happen as per the new policy, or it is still a few months away? So as Mr. Naveen just mentioned, that it has been announced on metal scrap. Unfortunately, battery scrap and plastic scrap has not come so far in this, and we are expecting it anytime. So hopefully, by this month or next month, we would get reverse charge mechanism also implemented on battery scrap. So once that happens, then definitely, we will see some movement. Okay, understood. Sir, with this, ... Sorry, did I cut you? No, no, no, please. Okay, just one last question. With this, environmental compensation now being introduced, one, are we seeing any change in behavior or more seriousness of the OEMs towards recycling? Any, anything visible in your interactions? Number one. And number two, with the EPR credit, being now priced, in the range of INR 5-INR 18, do we see this as a new potential, revenue stream for us in future, or it's more of a enabler of our existing recycling business? To answer your first question: definitely, there's a huge change in the attitude of brand producers or brand owners. And, we see. As you've seen, the domestic scrap availability has increased, and that is 100% because of this EPR regulations coming into place. And, this new, I mean, although we are not seeing this new scheme as a revenue scheme for for us, but definitely this will help us procure more material, more domestic material in future. So, although there may be some opportunities in this also, but currently, we are not considering this as a revenue or profit profit stream. Understood. And- Only we more, I mean, so we are able to pay higher prices for scrap in future to fight with the unorganized sector. So that's all. Okay. Okay, understood. And is it possible to share what is our mix of tolling in the existing domestic business? So until the time this reverse charge mechanism is in place, majority of it is going to be tolling only. Once this reverse charge mechanism comes into play, at that point in time, we would probably go into the market to start procuring on our own. Right now, if you look at it, probably 80% of the material is coming from tolling only, in domestic, sorry. Understood, and are we in touch with any new OEM empanelment? Are we looking at any potential in the future? Yes, we are on a regular basis in touch with all these OEMs, and hopefully, very soon we'll start tying up with some of the major OEMs, at least in battery. Okay. Okay. Just one last question for Sunil, sir. For our, I mean, M&A opportunities which we keep exploring, what is our focus? Is it existing verticals or is it new verticals? Any thought process which you can share, sir? Yes, we are open to any recycling business in any geography. But definitely, the first focus will be on our existing verticals, which is lead, aluminum, plastic and rubber. Because plastic and rubber, we are very small in this, so plastic and rubber definitely will be in focus. But we're open to lead also. But lead, we are not seeing any opportunity in India, but yes, we are open for any. But we are open to new verticals also. That's not also not restricted. So I would add here that, looking at the RCM, coming into play, we may look at some opportunity in India for lead also, to speed up the capacity extension. Okay. Understood, sir. Thank you very much, and all the very best to the team. Thank you. Thanks a lot. The next question is from the line of Jenish Karia from Antique Stock Broking. Please go ahead. Thank you for the opportunity. First is on the rubber recycling acquisition that we have done. What kind of revenue run rate we can expect next year onwards, and what kind of per kg margin we are expecting in the business? This capacity of this is around 1,500 tons. We are expecting to generate around 1,000, I mean, sort of 60%-70% capacity utilization will be there right from the beginning. But that is only a very small project, and we are planning to increase the capacity there. We'll increase the capacities. We'll put up more CapEx to... It's a very small acquisition currently, but more strategic than anything else, where we want to set up our own businesses in Europe. The moment we'll acquire this company, we will increase capacity in that company, and we'll also look at opportunities in other product categories as well, like plastic, battery and aluminum recycling in the same geography. Sure. So just from a rubber recycling point of view, since we are setting up plants in India also, what kind of per kg margins or percentage margins do we factor in for the business? Your voice is not clear. If you can repeat the question, please. Hello? Yes. Yeah, so I was just trying to understand what kind of per kg margins can rubber as a segment make, because we are planning to do expansions within India also. Basically, you know, we keep on mentioning that you cannot look at per kg or per, I mean, percentage margin, because it will vary from geography to geography. The best way to look at it is how much ROC it is going to generate. We expect the ROC upwards of 35% in rubber in overseas locations, and in India, around 25%. ... that's kind of helpful. Secondly, on the Sri Lanka entity buyback, so is it happening to provide an exit to the partner, or will Gravita Netherlands also participate in the buyback? We have not yet decided on that. It is under consideration, but, yes, so buyback is already announced, so, we'll decide on that. Okay, sure. And then, sir, lastly, last quarter we had mentioned around two thousand five hundred tons of material was in transit. So is there any container availability issues in the current quarter also, firstly? And secondly, we did not see the impact of the two thousand five hundred tons on the sequential volume. So sequentially, the volumes were up by around thousand, fifteen hundred tons only. So, can you just help us understand the gap between the same? Yeah. So basically, I mean, there is some issue, logistic issue that is continuously going for the last two to three quarters, but that is not very material. As far as the transit material we are talking about, generally, it does not get reflected in the consolidated statement. So as I mentioned, that the growth that you see is, I mean, you have to reduce the intercompany transactions in that. So therefore, although if you look at the bottom line, you can see growth happening there, but if you look at the top line, probably you will not see the growth. So that will not get reflected in the top-line numbers. Sure. Sure. No problem. That's helpful. Thank you, sir, and all the best for your coming quarters. Thanks a lot. Thank you. The next question is on the line of Aditi Loharuka from CDI Research. Please go ahead. Aditi- Hello. Your line has been unmuted. Yeah. Am I audible? Yes. Sir, can you just give me a sense of your bargaining power with both buyers, like suppliers and customers? So, it depends from geography to geography, wherever we are present. Currently, if you look at the procurement network that we have, we go to the last mile to small scrap dealers, and that increases our bargaining power with them. If we go and buy from aggregators, definitely that bargaining power is not there. As far as suppliers are concerned, generally, in value-added products, wherever we are dealing, we have a better bargaining power because quite a few people do this. But if we talk about commodity products like refined lead or some normal products, then definitely the buying power lies with the supplier. So it's different for different things. Okay. So, while I was going through the presentation, I came across the partner network that you have. I came across companies like Exide, KPT, Amara Raja. They are very large players. So, with them, like, why do they come to you for, like, selling their scrap and not go to SME? If the bargaining power is high. So their bargaining power is high, as I mentioned, but but at the same time, they need vendors who can provide them regularly. There has to be a trust from the vendors because their operations depend on material coming, the quality of the material, the quantities of the material, the consistency, et cetera. It all depends on the vendors they tie up with. And there are very few people who can do this. At the same time, there is another benefit that Gravita has, and that is our global network. Both in India as well as overseas, we have many plants, so we can take advantage of logistic costs also. We can supply to the customer from various plants, various operational facilities. All these help us in getting these big names as our customers. Okay. And sir, one more thing, like, we import most of our scrap. So why is it so, like, why can't we procure it domestically? So, see, basically there are two reasons. One is that imported scrap is cheaper. As I mentioned, that we have a network in some countries where we have our own scrap yards, so we import material from those scrap yards. So it's cheaper to us compared to the domestic scrap prices, and that is one of the reasons. The other reason is that till now, most of the domestic scrap are going to the unorganized sector because in India, there is a GST of 18% on scrap. But now with this new Battery Waste Management Rules and extended producer's responsibility, also the new policy of reverse charge mechanism, we have started getting more and more scrap in the Indian domestic market also. So if you look at our last few years, the domestic content has increased, and it will continue to increase in future also. Sir, but this is of late, right? But since like quite a few years, we have been importing, so... So the import is not growing as much as the domestic scrap is growing. So if you talk about three, four years back, 90% of our total production in India was dependent on imported scrap. Currently, it's around 60%. And we have grown around three times. In the last four years, we have grown three times. So you can see the amount of domestic scrap that we've started getting in India now. Okay. It, So it's nothing related to the availability of quantity? Sorry? Availability of quantity of scrap in the domestic market. What is the total amount of scrap in the domestic market that we get? Approximately sixteen. ... You mean our scrap market. So in this year, out of the 46 thousand tons that we've procured, in lead terms in India, around 14 thousand tons have come from domestic market only. Okay. And sir, one last question, can you- Ma'am, please rejoin the queue for further questions. Okay. Thank you. The next question is from the line of Aman Soni from Invest Analytics Advisory. Please go ahead. Hi. Am I audible? Yes, sir, you are. Good afternoon, sir. My question is on the lithium-ion battery recycling. So, just to understand a bit on regulations related to lithium-ion battery, I understand we are quite focused on it, but can you let me understand, as per the latest regulations, by when do you expect a significant portions of these batteries to come into the circular economy for recycling? And, what percentage of market share are we targeting with our pilot plant in this category, sir? That is my first question, sir. So in lithium-ion battery, the regulation is same as in lead- acid battery. It comes under the Battery Waste Management Rule only. So there is no difference, and it is already in place. The only issue with lithium-ion battery is that currently the lithium-ion battery that is coming into the market, the scrap that is coming into the market, is coming from these mobile batteries and laptop, et cetera. But the major volume will come when the EVs will start generating these lithium-ion batteries. So we have 2029, maybe from year 2030 also. So we are just setting up this plant to understand the technology, to understand the ecosystem, tie up with these vehicle manufacturers who are into EVs, so that as and when the scrap starts coming, we shall be ready for that. That is number one. And number two, we are also looking at some opportunities where we can import these EV scrap from some countries like Europe and U.S. So currently, we are not targeting the Indian market for this domestic battery scrap and computer scrap, computer battery scrap that is coming into the market. We are eyeing the EV battery segment, majorly. Understood, sir. And secondly, on the EPR regulations related to rPET recycling, that is, the bottle-to-bottle recycling in India, do you see any forthcoming regulations from Government of India in this regard? And are we looking to capitalize on the same? Because, as far as I understand, this segment is a margin accretive one, and few players in India are building up their capacity in this direction. So what's your comment on that, sir? Sir, there is going to be huge demand, as and when this starts, this will get implemented, this rPET. I mean, there is a 30% rPET content requirement in new bottle manufacturing. So the overall market demand will be very high, and that will ensure that the people who are doing recycling for yarn, et cetera, which will get marginalized. And more and more scrap will come into the bottle-to-bottle grade, because that is more profitable, and that is going to be more profitable because of this regulation. And there is enough space available in this segment, in addition to the two major players in this currently. So we see a lot of opportunities because unlike lead or aluminum, where you can put a plant in one region and then cater to that region, in plastic, you'll have to put multiple plants in various locations within the region also. So, setting up these many plants probably is not very easy for any one particular company. So there will be enough space for new entrants to come into this bottle-to-bottle grade manufacturing also. What is our things in this direction, sir? Like, for next two to three years, like, what kind of CapEx are we putting in? We are actively looking at an opportunity, but this, that recycling is not part of this Vision 2028, where we said that we will do 25% growth in volume terms. We have not considered that volumes in this Vision 2028. If anything comes, that will be in addition to this 25% growth rate, but we are definitely looking into a food grade bottle-to-bottle opportunity that is coming up in India. That's good. And lastly, sir, what is the guidance for remaining of the year, like, margins impacted in this quarter? So what is the guidance for rest of the year in terms of margins and top line growth? It's in line with our projections for the next four years. So there can be a slight, because this is never going to be. We have always maintained that this growth is never going to be linear. So there will be periods where you will see higher growth, some periods will see lower growth also. So it will, but it will remain in the same line, same range of around 20-23% to 27-28%. So this year could be 23% also, could be 27% also. But in the longer run, if you look at it, if you look at FY 2028, then definitely 25%, upwards of 25% volume growth is expected. Got it, sir. Thank you very much, sir. Bless you from all, my side. Thank you. Thank you. The next question is from the line of Amit Lahoti from Emkay Global Financial Services. Please go ahead. Thanks for taking my question. So given that you are maintaining an EBITDA per kg guidance of INR 18-19 per kg, and with the first two quarters higher than the trends, especially the Q2, are we expecting these levels to kind of decline and normalize in H2, or we can beat this guidance? No, actually, as I mentioned, that the sustainable number for lead is around INR 18-INR 19 per kg. Sometimes you get arbitrage opportunity as we got in Q2, and therefore, the numbers are a little on the higher side. Although in the longer run, if you talk about it, there would be some improvements. We can take it to around INR 19-INR 20 in the next two years. But if you look at the near future or next quarter or the quarter after that, the sustainable number would be INR 18-INR 19 only. Okay. So for this year, could it be on the higher side of, say, INR 19 per kg, or you still want to guide for a midpoint? Sorry, I couldn't hear your question. Yeah. So I'm asking, for this year, FY 2025, could it be on the higher end of the range of INR 19? Yes. Yes, it could be a little higher. There is an opportunity we have done in Q2. So if this opportunity remains there, then definitely we'll probably get a little higher than INR 18-INR 19. There is a possibility, yes. Sure. Thank you. Thank you. The next question is from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking. Please go ahead. Yeah, hi. Thanks for the opportunity. A couple of questions from my end. So one, if you can mention, what will be targeted EBITDA and ROC for the plastic business? You said it's on the higher range, but on the ROC front, if you were to compare with the existing business, is it higher? EBITDA, I understand it's higher, but then the capital deployment is also higher, right? The percentage-wise is higher. Although on absolute number, it is around INR 10-INR 11. But if you look at the percentage-wise, it's around INR 12-INR 14 or 14%, which is higher than lead. And ROC is also higher, but currently we are not running it at full capacity, so capacity utilization is not there. So therefore, you may see a similar ROC of around 25% in Indian operations. But going forward, as we improve the utilization and as we develop the product, the ROC is going to be much higher than lead or aluminum. So you are saying higher ROC is there in plastic recycling, rPET food grade, than the lead and the existing businesses, like aluminum and all those? So we are not currently in India in rPET. No, for the future. We can't comment on that. But yes, from our experiences in, bottle-to-bottle flakes overseas, we see, higher margins and higher EBITDA numbers in, rPET. Sir, I understand margins. On the ROC front, I'm asking. ROC also is higher. ROC is also higher. Okay, got it. And unlike your lead, you cannot hedge plastic? We are not comfortable about the Indian operations so far. We'll have to really look into it because CapEx has also changed over the years, and Indian market is a little different than overseas market. So we can't comment on the Indian market as far as bottle-to-bottle rPET is concerned, sir. Right. Got it. And also, unlike your lead, plastic has different grades, right? You mentioned that you're developing different products. So how do you hedge? What would be the hedging mechanism when it comes to plastic, or will it be like a open market sale- Generally- and we'll have to bear the risk of the commodity a lot? So generally, what happens is that in plastic, it's basically dealing directly with the OEMs, where you will be developing products based on their requirements. And then you can link that product price with these companies based on the prevalent prices, which currently are Reliance's prices for those grades of plastics. That is what we are developing. So there is a natural hedge here in plastic as we see it. No, if you can help me understand, how is it a natural hedge, sir? So what happens is that you buy plastic in India based on the prices of Reliance, and then you can sell this at the same prices, index prices to the end customers. Then there is a natural hedging in which you don't have to go to the exchange and get it hedged. Okay, you are trying to say you would be more of a facilitator. You will just have some cost plus margin mechanism in place or absolute margin in place. That is what you are trying to say? It's a combination. We'll take a delta, but what happens is that, when you buy scrap in India, generally the scrap is priced at a percentage of the Reliance's price of that particular grade. Okay. So what we do is that when we sell it into the market, we just talk to the customer that we'll sell you at a price of the same grade of plastic Reliance has, and there is a formulation based on that. Got it, and then, yeah. So there is no difference. Here also, the inventory level are also not going to be high because you're not importing the inventories, you're using the domestic plastic inventory. So the, I mean, so the overall cycle is not that big. So the requirement of plastic hedging is not that prevalent currently. Right. Just one last thing. I wanted some comfort on the corporate governance side. Although we have Walker Chandiok auditor in place, but the partner who's signing the documents also belongs to the similar community as that of promoters. So if you can throw some light on that, if they are related or what sort of relation, community relation do they have, or are they clearly independent of them? Can you come again, sir? We couldn't hear your question properly. No, I just wanted some comfort on the corporate governance. The auditor who's signing the documents, who's signing from the Walker Chandiok, belongs to the same community that of our promoters. So if you can give me some comfort on that. How many chartered accountant in this community are there? I mean, you might get it, and then you will realize there is just a GT, the company is GT, and there is no relation whatsoever with the owner or the promoter of the company. Got it. Fair enough. Yeah, that's it from my... Yeah, thank you. ... Thank you. A reminder to all participants, please limit yourself to one question per participant. The next question is from the line of Bhavin Pandey from Athena Investments. Please go ahead. Hi, good afternoon. Am I audible? Yes, you are audible, sir. Yeah, yeah. Thank you for the opportunity. So we could see that volumes have grown by 8%, and realizations seem to have gone higher, and you have a percent, specifically in the lead business, has been increasing sequentially on a YOY basis, and EBITDA group has been robust. So what is triggering the operating leverage? And secondly, again, I think you expanded on why volume- I'm sorry, the voice is not very clear. Can you come up again? Okay. Yeah. Am I clear now? Yeah, you're clear. Yeah. So just wanted to. So, the revenue growth, the 3% gap between volume and revenue, it was on account of realizations improvement. And secondly, what is changing the operating leverage? Because our EBITDA in past growth is extremely high compared to revenue growth. And secondly, I think you touched a bit on moving a transition from foreign markets to the domestic market. So what was that? Because I missed it in the initial commentary. So what happens is that Indian market follows a different price, and overseas or global markets follow a different price. So whenever there is a arbitrage between Indian prices and overseas prices, we move some of the products from overseas plants into India. And also when we import material from third parties also into India, rather than exporting it, we sell that material into India. So if you look at it, 70%, generally, of the Indian production, 40% is sold outside and 60% is sold in India. If you look at current year, we have sold 70% of the total production into India, which means that we've taken advantage of the arbitrage opportunity that lies between prices, global prices and Indian prices. And that is what has helped us increase the EBITDA margin. But this is not a sustainable additional margin. The sustainable margin is around INR 18-INR 19 only. Okay. And, sir, what explains the operating leverage apart? Because I assume it cannot be all realization, right? I didn't get it. Sir, EBITDA growth and PAT growth- Yeah. on a YOY basis. So, what explains the operating leverage in that? The operating leverage? EBITDA growth on a YOY basis. Mm-hmm. It's around 27%. Correct. And up, while revenue growth is 11%. So what explains the operating leverage bit here? That's what I wanted to understand. I mentioned that when you move some of your products into India- Okay. It does not get reflected in a double sales. So it will not get reflected in revenue numbers, but because it is the same company, but it will reflect on the profit margins. So that is why there is a difference between the, the top, of the revenue growth and the, EBITDA growth or the profitability growth. Some of the materials from our overseas companies, we have used it in India, so it gets canceled out in the consolidation. Okay, understood. Thanks a lot, sir, and good luck to you. Thanks a lot. Thank you. The next question is from the line of Parth Shah from Tara Capital Partners. Please go ahead. Mr. Shah, your line has been unmuted. Please go ahead with your question. Hello, am I audible? Yes, sir. Thanks for the opportunity. On the revenue, the volume growth part, I know you've explained it twice, but if you could just once more explain why the revenue, the volume growth is lower on account of the raw material being transferred from the overseas market, from the overseas countries to the domestic markets? Let me explain once again. What we do is normally we have a customer also in the international business. Whatever we manufacture internationally in overseas plants, we usually sell to international customers directly from those plants. But whenever the Indian prices, because the Indian prices is a different index, which is Indian index, and it does not follow same price because, like, international market goes with the LME, but Indian market goes differently. Sometimes during the year, when the Indian prices are higher than the international market, we discourage the direct selling from those overseas plants directly to the customers. We import the goods in the Indian market, and we slightly do some value addition in Indian plants and sell it in India to get better prices. Those times, that volume gets canceled, whatever we sell from overseas plants to Indian plants, that volume is not considered as sales volume, and but we get slightly better margins at that point of time. And but we have to compromise on the volume side, but we are better on the margin side. So that's the reason which happened in this quarter, where we are better on the margin, but we compromise on the volumes. Okay, got it. And the next question is, the peers have actually, reported better, significantly better volume numbers. So are we seeing any market share loss over here? Generally, as we mentioned, there is a new regulation of battery waste management rule, which is converting the scrap that was going into the unorganized sector to the organized sector. A lot of consolidation is happening, and the share of organized sector is increasing vis-à-vis the unorganized sector, and that is what is changing, what is increasing the overall scrap availability to us in India. Okay. Okay. Thank you. Is that clear? Yeah. Thank you. Mr. Shah, does that answer your question? Yes, yes, yes. Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of our Q&A session. I would now like to hand the conference over to the management for closing remarks. Thank you, everyone, for participating in this call. We trust that we have addressed all your queries during this session. However, if there are any remaining questions, please feel free to reach to our investor relations team at Go India Advisors. Once again, we extend our gratitude to all the participants for joining us today. Thank you, and have a great day. Thank you. On behalf of Antique Stock Broking, that concludes this conference. Thanks for joining us. You may now disconnect your lines.