Ladies and gentlemen, good day and welcome to the Gravita India Limited Q3 FY25 conference call hosted by Antique Stock Broking 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 any assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dinesh Karia from Antique Stock Broking Limited. Thank you, and over to you, sir. Yes, thank you, Alaric. Good afternoon, everyone, and thank you, everyone, for joining the Q3 FY25 post-results conference call of Gravita India. I would like to thank the management for giving Antique Stock Broking the opportunity to host this call. From the management, we have Mr. Yogesh Malhotra, Director and CEO. Mr. Sunil Kansal, Director and CFO. And Mr. Naveen Sharma, the Executive Director of the company. Without further ado, I now hand over the call to the management for their opening remarks, post which we shall open the call for Q&A. Thank you, and over to you, sir. Thank you, Mr. Dinesh. Good afternoon, ladies and gentlemen, and welcome to our Q3 and nine-month FY25 earnings call. I trust you have had the chance to go through the earnings presentation and financial results that were uploaded on the stock exchanges. I am delighted to share that Gravita has achieved outstanding financial and operational performance in Q3 and nine-month FY25. Before we dive into the results, I would like to discuss some key strategic highlights and project updates. Recyclers Ghana Limited, a step-down subsidiary of Gravita located in Ghana, West Africa, has commenced commercial production of recycled aluminum alloys at its new recycling facility with an annual capacity of approximately 4,000 metric tons per annum in phase one. The company plans to expand this capacity to 8,000 metric tons per annum in the near future. Gravita Netherlands BV has increased its stake from 52% to 100% in Navam Lanka Limited, a step-down subsidiary. Gravita has successfully raised INR 1,000 crore through QIP, which will be strategically utilized to support the company's growth initiatives, including capacity expansion and diversification into new verticals. This investment aligns with the company's vision of becoming a global leader in the recycling industry while delivering sustainable value to stakeholders. Out of the funds raised, INR 245 crore has been utilized for various purposes, including repayment of borrowings and working capital. We are making steady progress on establishing a pilot project for lithium-ion recycling and our first rubber recycling plant in Mundra, India. Both projects are on track and are expected to become operational in H1 FY26. Gravita is strategically progressing towards its ESG goals of FY27, FY34, and FY50, as outlined in its roadmap. By integrating ESG principles, the company aims to lead in sustainable practices, drive innovation, and uphold strong governance for long-term value creation and community benefit. Coming to the operational performance on the capacity expansion front, Gravita is steadily advancing towards its goal of exceeding 5 lakh metric tons per annum capacity by FY27. Currently, the company has a capacity of over 3 lakh metric tons per annum. In addition to this capacity expansion, the company is also exploring strategic M&A opportunities to fuel its growth plan. Despite the global economic slowdown, which has seen a large impact on the metal sector, on the volume front, we saw an overall growth of 33% in Q3 FY25. Volume for lead, plastic, aluminum showed an increase on both Q on Q and Y on Y basis. On year-on-year basis, the volume for lead, plastic, and aluminum increased by 27%, 33%, and 92% to 43,900 tons, 3,279 tons, and 6,264 tons, respectively. Strict government regulations under BWMR and EPR have led to an increase in domestic scrap availability, resulting in higher domestic scrap sourcing. In Q3 FY25, we experienced 50% growth in the domestic availability of scrap on a year-on-year basis. Moving to the financial results for nine-month FY25, consolidated revenue increased by 23% to ₹2,832 crores. Consolidated adjusted EBITDA increased to ₹295 crore, up 18%. EBITDA margin stood strong at 10.4%. Consolidated PAT showed a significant increase of 28% to ₹217 crores. PAT margin increased to 7.7%. 46% of the revenue came from value-added products, which is in line with our Vision 2028 of achieving 50% revenues from this category. Coming to financial results for the quarter, consolidated revenue for Q3 FY25 increased by 31% year-on-year and 7% Q on Q to INR 996 crores. Consolidated adjusted EBITDA increased to INR 102 crores, up 14% on a year-on-year basis. EBITDA margins stood strong at 10.3%. Consolidated PAT showed a significant increase to 29% year-on-year to INR 78 crores. PAT margin stood strong at 7.8%. In conclusion, Gravita is progressing strongly towards its Vision 2028 with a strategic focus on expanding existing verticals and entering new recycling verticals. Key targets include a volume figure of 25% plus, profitability growth of 35% plus, and ROIC over 25%, along with increasing the non-lead business share to 30% plus using 30% plus renewable energy and reducing energy consumption by 10%. With more than 30 years of experience, 12 eco-friendly facilities worldwide, and presence in over 70 countries, Gravita is well-positioned for growth. The company's ambitious CapEx and capacity expansion plans, adherence to stringent government regulations, global operations, and integrated supply chain provide a strong foundation. This growth is further supported by a commitment to operational excellence, a focus on high-margin value-added products, proactive risk management through hedging, an experienced management team, and strong stakeholder support. That's all from my end. I would now request to open the floor for questions and answers. Thank you, and over to you, moderator. Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Lahoti from Emkay Global Financial Services. Please go ahead. Thanks for taking my question. So the first is on margins. The EBITDA per kg continues to be towards the higher end of the guidance range. So is it fair to assume that in FY26 as well, you will be doing ₹19-₹20 of guidance? Yeah. So basically, EBITDA per ton for lead is going to be in the range of INR 18-INR 19, stable margin, considering the more scrap from the domestic market, which leads to slightly lower margins. But we will be compensating it from more business from the overseas market, which is a higher margin business, more value-added products, more volumes. So always going to compensate this dip in the margin because of more scrap from the domestic market. So overall, we will be in the range of INR 18-INR 19 per ton for lead. Sure. Then the second one on projects. Specifically, I am looking at Mundra. So if you could give some commissioning timeline in terms of commissioning for lead, aluminum, plastic, and rubber, respectively. And then how much we could be producing from Mundra alone in FY26? So Mundra should be close to approximately 72,000 tons from Mundra itself, approximately 6,000 tons per month. But all the other projects in Mundra, which we are doing expansion, so should be done by Q1 of next year. H1 of next year. Yeah. Probably H1 of next year, yeah. So which includes lithium-ion battery recycling and new rubber recycling unit in Mundra. So in addition to lead and plastic recycling in Mundra, we are going to increase these two verticals also in Mundra facility, which will contribute to further increasing capacity at Mundra plant. So all of these will commission in the first half of FY26. Is that correct? Yes. Yes. Yes. Just on Oman expansion, how is the current progress looking like? We have plans to go, and there are three projects overseas that currently we are looking at. One is Oman, of course, where we are also to fast track. We are also exploring and evaluating to acquire an existing plant in the Gulf region. Then there is this capacity expansion in Dominican Republic, where we are expecting a license to establish by H1 FY25-26. Then also Romania, where we have acquired a rubber recycling unit where FDA approval is already in place, and most likely the transaction would be complete by Q4. These are all the overseas expansion plans or new expansion plans or merger and acquisition opportunities that we are currently pursuing. Sure. And if I could squeeze in one more question, do we have any update on RCM in battery scrap? Yes. The battery scrap RCM got missed because of HSN code mentioned by Ministry of Finance. So they have included Chapter 70, 72 to 81, and the battery Chapter 85. That process has already been initiated, and letters have been sent. So hopefully, maybe post GST Council meeting, it should come in battery Chapter as well. Okay. Sure. Thank you, and all the best. Thank you. The next question is from the line of Amit Dixit from ICICI Securities. Please go ahead. Yeah. Good afternoon, everyone, and thanks for taking my question. First of all, congratulations for a good performance and return to 10% EBITDA margin. Three questions, if I may. The first one is on the utilization of QIP proceeds while you provided a little bit of shade that INR 245 crore has been used for repayment of borrowings and working capital. Going ahead, just wanted to get a little bit more color on this, whether it will be used for geographical expansion abroad. If you can highlight some of the commodities in which you would be interested, whether it is limited to steel and paper at the moment, that's what we understand. Could it be utilized for some kind of copper recycling opportunity? So just wanted a little bit more color on this. This is the first question. Yeah. Basically, as far as utilization QIP proceeds is concerned, so as we have already whatever objectives we have taken for the QIP, according to that, initially, we are going to repay the debt. Partly, we have already repaid. Remaining is to be repaid in the near future. And after which, we will be having some liquidity for using it in the working capital. So remaining amount will be utilized for the expansion, whatever business we are doing, additional business we are doing. So that will be utilized for the working capital. But on a longer period, when we see the opportunities for further expansion of this business, we are to take some debt again for acquiring some companies because we are already exploring some M&A opportunities in different geographies and different business verticals. So we can take again some debt and go back to acquire some companies for. And we will be doing some greenfield expansions also where we will be establishing some more units in different countries. We are already doing some projects, one in Dominican Republic. So that kind of projects will be there. But yes, not in copper, you mentioned. So copper we are not exploring at this moment. But yes, other like lithium-ion expansion, rubber recycling expansion, and lead and aluminum expansion. So all these three will be there. New vertical will be initially focusing on lithium-ion only at this moment. But yes, we are open to explore others also. So overall, in the next three years, there would be a total inflow, including this INR 1,000 crore of around INR 2,500 crore, which includes around INR 1,500 crore of internal cash generation also. So all these INR 2,500 crore, out of that, we would be using around INR 1,500 crore for these new expenses. INR 1,000 crore would be required in additional working capital that would be there. Okay. Very clear, sir. The second question is on the aluminum. So if you look at the aluminum volume, it has jumped up sharply compared to the last quarter or even on YoY. Have we seen some movement around the listing on MCX that we were thinking that we would be able to hedge aluminum with? Yeah. So it hasn't materialized so far because of some technical issue at MCX. The Government of India has also introduced. Actually, Government of India has introduced QCO, Quality Control Order. So that came in 2023. Later on, it got postponed, and recently, it has been implemented from 1st December 2024. So now, any brand which is not having BIS mark of aluminum alloy will not be able to deliver or sell domestically. So MCX wanted that once this is being implemented, then they will start this process. So since this has been implemented now, anytime they will be taking up this process of listing of this alloy and brand approval, maybe this quarter end. But this quarter, aluminum volume was slightly higher because there was some inventory which was piled up, and we were not able to sell because of the price fluctuations. So we sold in this quarter, and the run rate for aluminum is going to be around INR 4,000 till the time we have INR 4,000 tons per quarter. So till the time we have this hedging mechanism in place for aluminum. So we expect to grow at around 40% in aluminum in the next three to four years. So that growth is intact. That growth. Okay. Okay, sir. The third question is on the scrap procurement. If you can just break it in three buckets for this quarter, that how much scrap of your total usage of scrap was procured from domestic market? How much was from overseas market you kind of brought in the domestic market? And how much was procured in the overseas market for the overseas sale? If you can provide in these three buckets, in percentage, that would be very helpful. So around 35%-36% was overseas, which we sourced for overseas centers only. And out of the balance, 64%. 56% was imported scrap, and 44% was scrap in India. Okay, sir. Thank you so much, and all the best. Around 40% of the total scrap that we procured in India. Great. Got it. Thank you, and all the best. Which is around 50% higher than the Q3 last year. Okay. Thank you. The next question is from the line of Bhavin Pande from Athena Investments. Please go ahead. Congratulations on a wonderful set of numbers. My first question regarding scrap availability got answered. Second question, sir, how do we foresee the risk of capacity being set up by players from where we procure scrap? Sort of they are putting together their own captive arms for recycling. So how do we tackle this risk from a long horizon? The overall capacity in India that is going to increase because of this shift from unorganized to organized and this EPR regulation coming into place, also the RCM that has come up, we expect a 3x increase in the next two to three years from the current availability of battery scrap. There is enough scope for everyone to come into. The battery manufacturers are also putting up their own units. We believe that we will be able to manage, if not increase our market share in the domestic sector. Even if we keep the same market share, which is what we have projected in our estimations for the next year, that shift from unorganized to organized will be enough for us to meet our targets of 25% growth rate in the next three to four years. So because of our pan-India presence, we are having this logistical advantage of taking more scraps from the domestic market. So that is the reason we are very sure, even after all these companies establish their own capacities, we are very sure to get this volume growth from India. Okay. And sir, just one clarity on used cars. If we were procuring batteries from them and on account of this GST implementation on used cars from dealers, so would that have an impact on our business? So yeah, it is going to have an impact because more battery scrap would now start coming from that sector also. We already have tied up with most of these end-of-life vehicle facilities in India. And we are expecting, but it will take some time for that scrap to come. Generally, most of the old batteries actually come through replacement market, which is around 70%. This is only going to be a very small part of that overall in at least next three to four years. But beyond that, probably it will improve, and we will start getting more batteries from these sectors in probably more than five years from now. Actually, the new regulation on used car called End-of-Life Vehicle ELV Policy that will be effective from 1st April 2025. So as per that regulations, the used car will be going to RVSF, Registered Vehicle Scrapping Facilities. And these RVSF will supply the waste to the respective recyclers. Among them, battery is one of the scrap: battery, oil, tire, plastic, and e-waste. So as soon the ELV targets are being delivered, comes maybe next one, two, three years, so there will be more flow of such vehicle to RVSF and flow of battery to recycler. Okay. Okay. That was very helpful. And sir, just one bookkeeping, Mundra capacity would be? Current Mundra capacity is 72,000 tons, which we are expanding further. Okay. And it would go up to any number that you can give out? So close to 30,000 tons more, around 100,000 tons. 100,000. Okay. That was really helpful, sir, and good luck. Thank you very much. Thank you. The next question is from the line of Shweta Dixit from Systematix. Please go ahead. Hi. Good afternoon. Thank you for the opportunity. One question on the standalone financials. If we look at the EBITDA margins, that including the other income, that's dropped to 5.6% this quarter. And this number compares to around 8.1% in the same quarter last year. So was there anything what has actually driven this margin drop this quarter? And were there any seasonality or any one-off factors in place in the third quarter of FY24? So actually, generally, the Indian EBITDA margins are lower than the overall EBITDA margins of the company because the domestic scrap is a little expensive. And our sustainable EBITDA margins from Indian market is around ₹11-₹12 per kg. And we have maintained that EBITDA margins this year. But when we talk about last year, there were certain arbitrage opportunities which we made use of. And therefore, if you see historically, you see a higher EBITDA margins from Indian plants also. But going forward, you can expect an EBITDA margin of ₹18-₹19 per kg on a consolidated basis. We have always, I mean, mentioned that you have to look at the entire total EBITDA margins further rather than looking at Indian or domestic or overseas EBITDA margins separately. Because of our overall operations globally, we sometimes get this opportunity where we take advantage of arbitrage and bring our material from our overseas plants into India. That is why sometimes you will see higher revenue coming from India also, and sometimes you will see higher margins also in Indian context. But overall, margins would remain in the same region of around ₹18-₹19 per kg. Okay. So what's your outlook? Yes, I understood. Are you saying something? Hello. I was asking if I was clear or not? Yes, yes. I understood that. Another question would be what's your outlook with domestic policies and the procurement availability? Where does India? But if we exclude any arbitrage opportunities, the Indian domestic margins would be around INR 11-INR 12, and overseas would be around INR 28 per kg. So on a consolidated basis, you can expect INR 18-INR 19 per kg margins, which does not include any arbitrage opportunity that comes up. As and when those opportunities are there, you can expect an increase of EBITDA margins going forward. But in the longer-term period, if you ask me, because of increase in value-added content and also higher capacity utilization going forward, you can expect more value-added products. You can expect some slight increase of around INR 1 per kg in the next three to four years progressively. Okay. Hello. Sorry to interrupt, Shweta. Could you please come a little closer to the microphone and use your handset mode and speak a little louder? Yes, yes, sir. I am done. I'm done with my question. Thank you so much. Thank you. Thank you. The next question is from the line of Sani Vishe from Axis Securities. Please go ahead. Okay. Thanks for taking my question. So continuing on the question asked by the earlier participant, so if I'm understanding correct, when we say that despite a higher revenue growth, the EBITDA margin was not, EBITDA growth was not that significant because in the last quarter, we had higher arbitrage opportunities. Is that correct? Yeah, that is correct. Yeah. So we can expect similar margins as this quarter. This is more sustainable, at least for the near term. Yes. So going forward, as we mentioned that the sustainable margins in that would be around INR 18-INR 19. In aluminum, we can expect around INR 14 per kg and around INR 10 per kg in plastic. But this would improve a little bit going forward in the next three to four years where we would, as we are focusing more on value-added content and increasing capacity utilization, and more volumes would also increase the EBITDA margin numbers to some extent. But these are the sustainable numbers. Understood. And one other small question. What would be our current debt level and cash level? And where do we expect it to be by the end of the year? Yeah. So current debt level is around INR 340 crores. And so net debt is approximately INR 600 crores. So in the year end, we are expecting this debt to be close to almost to zero, negligible. And so we'll be continuing with the liquidity of around INR 300-INR 400 crores by the year end. Okay. That is all my side. Thank you. Thank you. The next question is from the line of Khush Nahar from Electrum Portfolio Managers. Please go ahead. Hi, sir. I'm audible? Yes. Yeah, yeah. Please. Yeah. Hi. Thank you for the opportunity. Sir, two, three questions from my side first. What was the percentage of domestic sourcing for our Indian operations this quarter? Overall, 44% of the total scrap that we processed in India is from domestic sources only. 56% is imported. Okay. And sir, what would be your utilization for the aluminum plants right now? Capacity utilization for aluminum is still at 46% for these nine months and approximately 48% for this quarter. Okay. And we see that increasing because I think hedging will start, if I understand correctly, from Q1 FY26 because of the delay? Yeah. Still, because we don't have the hedging mechanism in place at this moment, so we are still struggling for volumes in India. So as soon as we have that in one or two quarters, the hedging mechanism in place, so we'll scale up this more capacities in aluminum along with more capacity utilization also. But we are expecting that in Q1, we will have that hedging mechanism in India. So hopefully, by Q1, the volumes will you can see some increase in volumes. Okay. And sir, one last question. So just can you elaborate more? What gives us the confidence of growing at 35% in terms of profitability CAGR over the next three to four years? So what would be the growth drivers for these? Yeah. So basically, currently, we are into three product categories majorly. That is lead, aluminum, and plastic. So lead is actually the largest. It has the largest share of around 85%. And there is this new; it is getting some benefits because of EPR and reverse charge mechanism. Where earlier, we were not having any access to the local domestic scrap, which we have now started getting. And we can see an increase. If you see the last three years also, we have seen an increase in availability of domestic scrap. We see that going forward, it will only improve because of reverse charge mechanism also. Because of GST, we were not getting that scrap. Hello. Ladies and gentlemen, it looks like the management has got disconnected. Please stay online while I reconnect. Sorry. I think are we audible now? Yes. Yes, sir, you are. Let me just explain once more. I mean, we are getting more scrap in India because of this shift from unorganized to organized because of Battery Waste Management Rules and reverse charge mechanism. These policies have given us more scrap in the past two years, and we expect similar increase going forward also. Apart from lead, we are also aggressively increasing our capacities both in aluminum and plastic. Incidentally, plastic also comes under EPR regulation, and we see a huge opportunity in plastic also. We are also expanding overseas in all our locations. We are increasing our capacities, and we are also going to increase capacities in some new geographies. We are going to some new geographies also. In addition, we are also planning to go into new verticals of rubber and lithium-ion battery recycling. So all in all, we believe that all these new opportunities coming from regulations and we going into new verticals, we would be easily growing at around 25%. And because of this growth and going into new verticals, there will be economies of scale. There will be a reduction in working capital cycle because we would be sourcing more scrap in India. And our focus would be has already been on value-added content. So all of this will ensure that the profitability is higher than the growth in revenues. So we are very confident that going forward, 25% growth in volume terms and 30%-35% growth in profitability is not at all a problem. If you look at the past three, four years also, you would see a similar result where we have grown at around 22% in volumes, but on profitability terms, we have grown at a much higher rate. Right. Thank you so much for such a detailed answer. Just one last question. Apart from these three overseas recently acquired businesses, are we in talks with advanced stages for any other company in terms of acquisition, and what would be the size of these companies? So we are aggressively looking at opportunities to grow faster both in India and overseas in the segments that we are. We cannot disclose the exact companies that we are targeting right now, but we are scouting for these new opportunities both in India in lead aluminum and plastic and overseas also. But I mean, as we have mentioned that we are expecting around INR 800-900 crores in merger and acquisitions in the next three years. So you can expect us to go in and do more mergers and acquisitions in future. Okay, sir. Thank you. Thank you. The next question is from the line of Anurag Mantri from Oxbow Capital. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Just one thing on the lead volume growth. I mean, if I look at it on a Q2 basis, it seems to be largely in that 3%-4% kind of range in the last couple of quarters. So basically, I think we've been doing that 40, 44 kind of number basically every quarter. So from here, how do we see an inflection in growth? What factors do you think are required for us to see that? Is it basically this reverse charge mechanism regulation coming through in GST Council, or is it any new partnerships, etc.? What needs to change for the growth rate over here to be materially higher? So whenever we talk about the overall plan of around 25% plus growth rate, the target in lead is around 18%-20%, and it's higher in aluminum and plastic. We are expecting 40% growth rate in aluminum and around 70% growth rate in plastic going forward. So I think we are in line with that number, but generally, you would not see that growth coming in on a quarter-to-quarter basis because capacity increase do not happen in a straight-line matter. So as and when there will be a capacity increase, you will see a certain increase, and then you will see a period where there will be a little stagnation. But overall, you can expect around 18%-20% growth rate in lead in the next three to four years and 40% in aluminum and 60%-70% in plastic. But if you see the growth rate of lead in the last nine months, it is approximately 25%. So we are aligned to whatever vision we have for lead growth. We are aligned to that. As you said, I mean, the reason I was also asking is because I think in the nine months of last year, you also had that in the last quarter, the December quarter of last year, you also had the Red Sea issue. I mean, the base also been depressed. That's a fair point that I guess as the capacity increases, I think the base gets supported. If you look at from Q2 also, there is a 4% increase, which translates to around 20%, 18%-20% increase on a yearly basis, on an annual basis. Got it. No worries. Thank you, sir. Thank you. Yeah. Thank you. The next question is from the line of Siddharth Mehrotra from Kotak Mahindra Life Insurance. Please go ahead. Hi, sir. Good afternoon. And congratulations on the good set of numbers. Just a small bookkeeping question. Our capacity in the previous quarter was around 291,000 tons. Could you sort of just clarify what is our current capacity as on today? Yeah. Current capacity, including the rubber division, which we use part of that for internal consumption. The total capacity, including rubber, is 308,000 tons. Okay. So, of the total capacity addition, 291-308, I guess sort of 4,000 tons were added in your Ghana recycling plant, which is aluminum. The balance is rubber capacity addition for internal use. Is that correct? Yeah, so rubber is 12,000 tons, which is for internal consumption at this moment. Understood, sir. Understood, sir. Got it. Thanks for the clarification, sir. Just a small question on the sort of ramp-up we are projecting for plastics. So basically, what needs to sort of change in terms of the policy support for us to sort of achieve this 70% type of growth, which seems fairly aggressive? Yeah. Basically, I mean, there are two, three things. One, of course, is the EPR regulation coming into place, which has already started. The second thing is for RCM also to be applicable on plastic scrap, which is not currently there because there is, again, GST issues when you go and buy plastic scrap from the market. So apart from that, I think the current capacity we have is very small. And even without this RCM on plastic and only with the EPR regulations in place, we would be able to grow at around 60%-70%. But if RCM comes into place, then the growth can be much higher. But we have to increase our capacities in plastic. We are also looking, as we mentioned earlier, also we are looking at a PET recycling opportunity also in India that would include, I mean, the 70% growth includes that capacity increase in PET recycling. And we see on the ground that there is definite opportunity as far as plastic recycling is concerned because of this EPR regulation. There are more and more companies now looking for recycled plastic for their packaging material. But the issue in plastic is that it is much more complicated than recycling metals because earlier, nobody was using recycled material. So developing those products is taking a little longer time. But once you stabilize those products, then definitely the growth will, I mean, go exponentially high in plastic. So currently, we are working with some of these OEMs, but largely because the product development takes a longer time, you are seeing a stagnation in growth in plastic. But once those products get developed, then definitely you will see some surge in the growth rate. Got it, sir. Got it, sir. Just one small sort of follow-up on the reverse charge mechanism you sort of alluded to earlier. So sir, what is the current status of the reverse charge mechanism guidelines which had come in earlier, and how do we sort of expect any additions or modifications to them so as to benefit us in terms of policy? See, as of now, the reverse charge mechanism is applicable on six or seven commodities or the supplies which are made to the government or any agri products taken from the agri producers, wherein the tax has to be paid by the receiver. And in the same process, metal scrap has already been added after the GST Council meeting. So now, metal scrap, chapter number 70-81, will also come under RCM. In that case, what happens when you buy scrap from an unregistered person? You pay the tax first, deposit the tax within the same month, and then you claim the refund. If it is not there, if it is not mandatory, in that case, you buy the scrap from an unregistered person, but you need not to deposit the tax. You can. When you process and sell, that time, you can use other Input Tax Credit ITCs, not the one which you have to mandatorily pay. Once RCM is made mandatory, then first you have to pay tax, whatever ITC is available. Still, you have to pay that extra ITC. You cannot use old Input Tax Credit while selling the goods. So this is the difference. So what happens in current situation when the trader buys scrap from an unregistered person, and when they sell to recycler or next stage, they use ITC, which is available fraudulently in the market. So that prohibits us to buy from such traders. This is the difference. As Naveenji mentioned, that it is already there in certain metals, but lead-acid battery, because it comes in a different chapter, it was left out, but they are considering again, and in the next council meeting, they would incorporate. It is being said that battery scrap will surely come, and there are chances that plastic scrap, which comes under chapter 39, tire scrap, chapter 40, paper scrap, chapter 47, they will also be part of this. The major hurdle was in convincing the government that there should be an RCM in scrap. Now that major hurdle is past us, we've already convinced the government, and there is RCM on certain metals. Now extending it to other commodities would not be such a difficult task. Okay. So basically, it would sort of benefit us only when it comes fully through on the metal scrap side, which we took here. Right now, it's only on metals. Is that sort of understanding correct? It is a metal scrap. Unfortunately, they missed the battery scrap because it does not come under the same chapter as other metal scrap comes. It is in a different chapter. Therefore, they missed the battery scrap. But now they have realized this problem, and they are putting it back, and you will have to wait till the. Actually, lead scrap chapter is included, but battery scrap chapter is missed because major lead scrap is from batteries. So battery scrap chapter comes under machine chapter, electrical, electronic goods. So that's how it got missed. Okay, sir. Understood. Thank you. Thank you for the clarification. Thank you. Participants, please restrict yourself to two questions. If you have any further questions, you may rejoin the queue. The next question is from the line of Bharat Shah from ASK Investment Managers Limited. Please go ahead. Namaskar, Yogesh ji. Namaskar, sir. Over time, we made a lot of progress in a number of areas. I mean, we've expanded our manufacturing footprint and processing footprint both in India, internationally, handling the complex supply chain management issues. We have expanded verticals and gone into new areas and aiding more areas. Even the regulatory thrust overall is in support of the industry, given the fact that anything which is going to eliminate or reduce pollution is clearly beneficial activity. And unorganized to organized per se also affords a large opportunity. So everything overall looks to be kind of very conducive. But if you have to think of something which has to go wrong, if something were to go wrong, what could that possibly be? Sir, I mean, in the past, also things have gone wrong, and we try to then work on those issues and then try to protect ourselves from those things. But some of the issues, as we have global operations and we sell overseas markets also, then shipping costs can be one area where we have struggled in the past because of the Red Sea issue last year. And something similar if it comes up, then there can be these issues where you will have implications in terms of access to certain markets. And then you'll have to kind of suffer some temporary shortfalls in terms of revenues because you'll have to then divert those materials into some other geography. So that has happened in the past. But apart from that, if you talk about we are hedged in metals, especially lead, and we are looking at opportunities to hedge in aluminum because there is this cyclical metals generally. If you don't hedge, then it is very difficult because the transit time is higher. Then there are geopolitical issues also in certain areas because we are operating in many countries. Last year, we've seen some problems in Sri Lanka. Currently also, I mean, if you look at there is certain unrest in Mozambique. So in these geographies, there can be certain issues that can temporarily hamper your production in those geographies. But that is why we have kept a target internally that we will not increase capacities beyond 15% in any of the locations that we are in. Whenever there is a chance or there is an option where we have to grow beyond 15% in any geographies, we try to find a different geography to increase that capacity rather than increasing it in the same geography. There are various issues that we look into when we talk about problems. Fortunately for us, there is no currency risk because we are in Africa, so there is a huge currency risk also. But we don't have that currency risk because we deal only in dollars. We ship all our materials out of Africa, and we are not using anything in that country. There are many risks. I mean, there is a risk of government banning import of battery scrap into India also. That was earlier a major issue for us, but not anymore now because we have started getting domestic scrap also in India. If you look at it, around 40% of that scrap, 44% of the scrap that we processed this year was domestic. And we can easily increase it to a higher number. We only have restricted it because overseas scrap is more profitable currently. But even if they ban domestic import, then even then we can be very sustainable in India. And our profitability in overseas sector would increase because the prices of battery scrap would go down overseas because India is the largest importer of battery scrap currently. So there are many things that can go wrong, and we try to find solutions to all those things. So many of these issues, geopolitical disturbances, freight cost escalation or disruption, these are relatively more short-term issues. Structurally, anything that you're thinking can? So structurally, I mean, so one thing that we started focusing on diversification was because, I mean, there is this issue that can come from disruption. Suppose something goes wrong or new technology comes in and battery, I mean, lead-acid battery totally goes out of favor. So that can be one problem. And therefore, we have also now started planning to set up a lithium-ion battery recycling unit in Mundra. So that can be one that can have, and also we have set up a target to reduce our overall revenue that is coming from lead to around 70% in the next three years by focusing more on other commodities like aluminum and plastic. So that is also one of the issues that we see can happen in the future. So we have thoughtfully decided to diversify into other materials or commodities or verticals also. Therefore, it would be safer to presume you have indicated 30% of the business to come from new verticals or non-lead verticals. That percentage probably presumably will further grow over time. Yes, sir. Definitely, sir. This is assuming that we don't go into new verticals other than the current verticals of aluminum, plastic, and lead, whereas we are also focusing on other verticals of lithium-ion battery, steel, rubber, and paper in future. So definitely, it will come down. And also, this is based on the assumption that there is this EPR that is there on lead-acid battery, where now we would be growing faster in lead because of more scrap availability in the domestic region. So other verticals are growing, although other verticals are growing at 40% or 50% on a consolidated basis. Even then, you would only be going up to 30% because lead is also growing. But once that stagnation in lead comes, then the other verticals will grow much faster. And we would also go into new verticals of lithium-ion battery recycling and paper and steel. Definitely, in the next five years, six years, it can come down to as much as around 50%-55%. Nice. And one last question. When you refer to profit growth of about 25% compounded compared to the volume growth of 25% compounded, that profit you are referring to is operating profits, core business operating profits, or profit before tax or profit after tax? What is the definition of that operating profit compounded? When we're talking about both PAT and EBITDA numbers. Okay. It's in the same ratio. It's in the same ratio. So around 35% EBITDA increase in EBITDA margins and 35% increase in PAT margins also. Sure. Because there is not much of a financial leverage in any case in the business and relative level of depreciation lever. There will be slight increase in PAT margins because once the domestic scrap availability increases, then the overall working capital cycle would reduce to some extent. And therefore, you would see more increase. So around EBITDA would grow at around 33%-34%, whereas PAT would grow around 35%. Sure, and which means return on capital employed may actually grow higher if the working capital comes down. Yes, sir, so there would probably be a small dip initially, but the return on invested capital would always be higher than 25%, and then eventually, it will go up to 27%-28% in the next three and a half years. Okay. Thank you, Yogesh. Thank you, sir. Thank you. Thank you. Participants, please restrict yourself to two questions. If you have any further questions, you may rejoin the queue. The next question is from the line of Parikshit Kabra from PKD Advisors LLP. Please go ahead. Hi. Thank you for the opportunity. So earlier, also, someone raised a question. I just wanted to jump, double down on that question. Is that last year, December quarter was a soft quarter for us because of the Red Sea issues, etc., etc. So this quarter, growing at 33% on that base, is that something that we think we are going to be able to sustain 33% growth going forward, or do you think this is a one-off spike and we'll come back to about 14%-20% growth going forward? And you mentioned that the growth will come stepwise as the capacity comes. So when is the next big capacity going live? When should we expect that next big step? One quarter, two quarters, three quarters? When would that be? So when we talk about generally, we talk about a three-year period where we say that the overall increase in volume would be around 25% on an average. So we continue to give the same guidance. So 33%, definitely, there is some aberration because, as you mentioned, there was some last quarter was not last year, Q3 was not very good. So you can expect a 25% growth rate on a year-on-year basis for the next three years. So there could be quarters where there would be, I mean, we would not grow at around 25% or grow only at around 20%, 15% also. But other quarters, we would grow at around 35%-40%. So that would continue to happen in the future also. And the next capacity increase you're talking about, we are going to increase some capacity in Mundra very shortly. We have also acquired a rubber recycling unit in Romania where we are expecting to take it over in first quarter of sorry, last quarter of this year or first quarter of next year. So that, again, is going to give you some capacity increase. As we mentioned, that we are also looking at some other opportunities and merger and acquisitions. That will also happen, hopefully, in H1 next year. And then, of course, there are certain brownfield expansions that we will be continuously doing in all of our locations, including India and overseas. Got it. All right. Thank you. And there is a foreign currency translation reserves line item in the P&L. Could you just explain what that was? Yeah. So basically, because we are into various countries, so there is always some currency plus or minus every quarter. But overall, if you see, we are fully hedged on the back-to-back basis because whatever scrap we source, it is all in dollar terms. And when we sell the goods, it is also on the dollar terms. So eventually, if you see, we are not exposed to any currency risk. And so it is only the translation which happens on quarter-to-quarter basis that is reflecting in the P&L. And that we also consider in the operational profits because it's a part of the operational margin. So otherwise, we are not exposed to any risk or we are not having any risk of currency fluctuations in any country. That additional 15 crores that is coming in the consolidated profits, that is just an accounting entry. It is not an actual profit of 15 crores? Yes, yes. Correct. Okay. Thank you. Thanks a lot. Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead. Yeah. Hi, sir. Hello. Hello. Yeah. So, sir, can you talk about the Mundra capacity and lithium battery expansion plan? How is the unit metrics going ahead? And how is scalable in the next three, four years? So, Mundra capacity, as Sunilji mentioned earlier also, currently it's around 72,000 tons. We are going to take it to around 100,000 tons in lead. As far as lithium-ion battery capacity is concerned, actually in the initial phase it is only a pilot project because currently we are not considering any revenues coming from lithium-ion battery in the next three to four years. So it's only to understand the technology better, to tie up with companies to do their scrap. So it's only a pilot project currently. We are not considering anything. But later on, once scraps start coming into the Indian markets from EVs, we want to be ready by that time. So you can expect growth coming forward after this three to four years period, but not in the three to four period. Okay. But yeah, but when you talk about the lithium scrap availability in the global market, so can we import and recycle it in India or in the developed, say, so in the Africa market, we can have a plant there and recycle it? African market would not be possible because in Africa, you would not find EVs right now. But definitely, we are looking at opportunities where we can import scrap into India, recycle it. But I mean, currently, we are not considering any revenues from this. But definitely, we are looking at opportunities where if that is a possibility, we would go into that also. Okay. So in the future, because they part from all the vehicle lithium, we have also a solar system also where the use of lithium battery. So the overall population of lithium battery is also going to increase. So considering that, so can you also talk about how the profit margin of the lithium battery you have already worked on the prototype? So what is the margin difference from the ₹20, ₹18, ₹20 lead battery EBITDA per kg currently we have? So what are the margin difference or similar kind of margin will be there? No, no. So definitely, there would be higher margins in lithium-ion battery, but that is only a speculative thing because there is going to be huge entry barriers because the Capex is higher. You have to have tie-ups because these batteries would not be available to smaller players. So on theoretical basis, there would be higher margins. But currently, because the scrap is not available and whatever little scrap is there, it is very difficult to ascertain the profitability of lithium-ion battery. But definitely, once the scrap is available, it is going to be much more profitable than lead-acid battery is what our expectations. And last, the technology side, our learning curve and whatever, are we doing some tie-up or we are learning from ourselves? How is the understanding of the business currently? So both. We have our in-house division also that is working on the technology. We are also ready to tie up with some of the existing companies there. Generally, once we set up that plant, we are planning to have tie-ups, as I mentioned, to source material. And the only way you can source material probably would be also with a technology transfer. So both of these things will work hand in hand. But at the same time, we are also looking at our own internal technology. And even if we have tie-up with anybody for technology, there have to be some work done because currently, there are very few people who are doing end-to-end recycling in lithium-ion battery. So the technology is still under progress. So you have to have some internal R&D that can work on that. We have our own R&D division that is working for lithium-ion battery technology also. Thank you. Thank you so much. Thank you very much. Thank you. The next question is from the line of Amit Lahoti from Emkay Global Financial Services. Please go ahead. Thanks for the opportunity again. I wanted to follow up on your comment on debt going down to zero. So did we mean gross debt here or net debt? It is going to be gross debt becoming zero by March end as we have taken this QIP money. And one of the objectives was to repay the debt in a shorter term. So initially, we are planning to make the debt zero. But later on, as we mentioned, as we go for some M&A opportunities, which we are exploring currently, we will be taking some debt again in the next year. So that will be taking the debt and going for some capacity expansion and M&A opportunities. Okay. So you will still do the repayment of the existing debt, and then you will take on a new debt next year, if that is the right understanding? As and when required. As and when required, yes. Okay. And then the last question is an aluminum margin guidance of INR 14 per kg, but in the last two quarters, it was INR 18 to INR 21. So what were the factors that contributed to higher margins, and what could reverse when we get to sustainable margin of INR 14 per kg? So basically, aluminum, you will see these fluctuations till the time there is a hedging mechanism in place. In certain quarters, you will see higher margins as this quarter. And other times, you will see lower margins also because there is a transit time, and the LME changes during these time periods. So if you look at our last quarter, the margins were only ₹9 per kg last year, same quarter, because the LME went down, and we incurred some losses from the metal prices that time. If you talk about this quarter, we have incurred some additional profits coming because of LME going up. So on a sustainable basis, ₹14-₹15 is the margin that you can expect going forward. And you will see a linear I mean, you will see a sustainable ₹14-₹15 margin only once the hedging mechanism is in place. Till that time, you will see these fluctuations happening. Got it. Thank you so much. Thank you very much. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing comments. 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 out to our investor relations team. Once again, we extend our gratitude to all the participants for joining us today. Thank you, and have a great day. Thank you, ladies and gentlemen. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.