Welcome to the Ion Exchange (India) Limited Q2 FY 2023 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the investor relations of Ion Exchange (India) Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the second quarter and first half of FY 2023. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements when making any investment decisions.
The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now let me introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We have with us Mr. Aankur Patni, Executive Director. Mr. N.M. Ranadive, Group Chief Financial Officer. Mr. Vasant Naik, Executive Vice President of Finance, and Mr. Milind Puranik, Company Secretary. Without any further delay, I request Mr. Vasant Naik to start with his opening remarks. Thank you, and over to you, sir.
Thank you, Anuj. Good afternoon, everybody. It is a pleasure to welcome you to the earnings conference call for the second quarter and first half of FY 2023. Let me first take you through the financial performance of Q2 FY 2023 of our company on a consolidated basis. The operating income for the quarter was INR 4,476 million, an increase of around 18% year-on-year and 17% quarter-on-quarter. EBITDA reported was INR 533 million, an increase of around 34% year-on-year and 62% quarter-on-quarter. EBITDA margin stood at 31%. Net profit after tax reported was INR 387 million, an increase of around 42% year-on-year and 41% quarter-on-quarter. While the PAT margin percentage was 8.65%. For the first half of FY 2023, the operating income stood at INR 8,300, an increase of around 20% year-on-year. EBITDA stood at INR 862 million, an increase of around 14% year-on-year.
EBITDA margins were reported at 10.39%. PAT stood at INR 661 million, an increase of 11% year-on-year. PAT margins improved to 7.96%. Let me now take you through the quarterly segmental performance on a consolidated basis. In the engineering division, the revenue for the quarter was INR 2,577 million, an increase of around 17% year-on-year. EBIT for this segment was INR 182 million, an increase of 39% year-on-year. The company witnessed steady order flows both in domestic and international markets. Regarding Sri Lanka order, the execution remains affected due to the ongoing uncertainties in Sri Lanka. On the other hand, execution of the UP Jal Nigam project is progressing satisfactorily, and revenue has been recognized based on the work completion. The order book as of 30th September 2022 stood at approximately INR 1,458 crores, excluding Sri Lanka and UP Jal Nigam.
If we add these two to the order book, our total order book would be approximately INR 2,795 crores. Also we have a big pipeline of INR 8,025 crores. With this, we have a strong lead for the next two to three years from the engineering segment. We are all well-placed to undertake significantly increased rate of execution in the engineering course. Moving to the chemical segment, the revenue for the quarter recorded was INR 1.95 million, which increased around 18% year-on-year. EBIT was INR 377 million, which was an increase of 33% year-on-year. The sales in the domestic segment continued to record steady growth and export volumes remained sustained. This segment improved margins in spite of the impact of rising U.S. dollar rates on input prices. Lastly, in the consumer division segment, the revenue for the quarter was INR 455 million, an increase of around 29% year-on-year.
The loss for the quarter was around INR 5 million. Investment in infrastructure and new products are giving encouraging results, and we expect the segment to sustain its growth momentum. With this, we can now open the floor for questions and answer session.
Thank you. Ladies and gentlemen, we will now begin with the question- and- answer session. Anyone wishing to ask a question may please press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset 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 Pratik Kothari from Unique Portfolio Managers. Please go ahead.
Hi. Good afternoon, and thank you for the opportunity. My first question is on the engineering piece. If we compare ourselves with three years back, which is pre-COVID, our order book is substantially higher, 2x. When you look at the execution, it's very similar to the run rate that we used to have then. If you can just talk about our execution capabilities, what are we building to kind of shift to a higher trajectory in terms of the execution that we do on the engineering piece?
Good afternoon, Pratik. I think we are going to witness a substantially increased level of execution in the coming quarters. We have strengthened venture, including manpower, engineering, whatever is required to handle the execution. You will see the benefits of that in the coming quarters.
The investment or preparedness has already been done. Just that it's yet to reflect in on-ground execution.
That's right.
Fair enough. That's good to hear. Sir, for the last few quarters, we have been mentioning that we are almost on the verge of signing a large order, maybe in the international market or domestic market. That has not gone through. Usually, what are the reasons that this gets delayed or has some, because of the recessionary, etc., the narrative which is there out there. Has something shifted that decision-making is getting delayed? If you can just highlight something on those lines.
These are generally infrastructure and government contracts that we talk about.
There is extended decision-making mechanism, various government approvals and multiple departments verifying, re-verifying information and, as you can understand, in a typical government contract, a lot of diligence takes place. Further, there's a lot of effort which we put in to ensure that our risks are mitigated to the maximum extent possible, and the contract structuring itself takes some time. It is not generally possible to predict an exact timeline when the orders would eventually fructify. We are certainly at it, and hopefully we will be able to do something soon. Till that happens, we will not want to come out and announce anything specific.
No. Fair enough. There's no delay in terms of their interest or decision-making, etc. That intent doesn't change.
Intent does not change. However, the decision-making process itself is expected to be long. In government departments, whether it is a district level or it is a state level or it is at a central level, they take their own time, and they evaluate various aspects. Expected that the decision-making will take place.
Fair enough. Point taken. Thank you, sir, and all the best.
Thank you.
Thank you. The next question is on the line of Chetan Vora from Abacus Asset Management. Please go ahead.
Yeah. Good afternoon, sir. Sir, I wanted to understand on the engineering, the first half growth has been like 5% or 10%, at the start of the year, we were guiding out for overall growth of 30%. Chemical also has reported a revenue growth of 16% in the first half. Where do we stand in that scheme of things?
Chetan, your voice was very unclear, a little bit muffled.
Yeah. Is it clear now, sir?
Maybe a little bit-
Yeah, sure. Is it clear now, sir?
Still not clear. If you can be a little bit louder and more clearer.
Yeah. Is it fine now, sir?
This is better.
Yeah. What I was asking, at the start of the year, we had given that we are looking out for the revenue growth of nearly about 25%-30%. In the first half our engineering growth has been like 11%, and the chemical has grown by like 16%. Where do we stand in that scheme of things, sir?
We should substantially increase pace of execution in the coming quarters. We retain our expectation of the year-end revenues from engineering segment and overall numbers.
Which is 30%, right?
Yes. We should be looking at a growth of around 30%-35%, yes.
Okay. This is for the engineering or the overall?
We're talking overall.
Okay, fine. Great. Basically, it will be the back-ended thing. On the margin front also, sir, for the first half also, in the engineering, we saw a pressure on the RM, and because of it, the margins has been like 5%, while the chemicals margin has improved. How do we see situation going ahead?
Conservatively, we should maintain the full year margin percentage similar to what we have achieved in the past year.
Okay, fine. How do we see the, as the earlier question was also being asked, that the bid pipeline, which stands right now at nearly about INR 8,000 odd crore, how much of that will be in the advanced stage of talking? That was the first thing. The second thing was of the UP thing. The UP order has started getting executed, is under execution. How much of that would have got executed in this quarter?
UP execution this quarter. The total invoicing which has happened on UP during the six months is INR 76 crore.
Okay. My last-
In terms of the bid pipeline, which you asked for, roughly around 20%-30% would be at a relatively advanced stage.
Okay. The last question would be, what is the update on the Sri Lankan order, whether it is status quo or any work is going on?
Sri Lankan order, you are asking?
Yeah.
The pace of execution has come down to almost a standstill.
Okay.
We still remain hopeful that very shortly the conditions for execution of the contract will improve. We will go ahead with execution in consultation with the funding agencies.
Sri Lankan government.
Okay.
Only when we feel that the recoverability is not going to be a challenge and execution can at a desired pace, we will start again in earnest.
All right. How much is your receivable from them as of now?
Sorry, can you repeat that question? Not very clear.
How much we are supposed to receive from Sri Lankan business?
Okay. I think we've not really given out contract specific data. In general, we've been saying, is that we do not expect to have any credit risk in this job. We are not getting paid directly from the Sri Lankan government. This project is funded by Exim Bank. To that extent, credit risk is not something which is on top of the mind.
All right. Sir, last one. What's the update on the greenfield expansion? It was delayed because of the approval. What's the update on that? Thank you.
We have heard some positive developments in the very recent past. Our expectation is that we will get the environmental clearance that we were waiting for within this month. We expect to start commercial production in FY 2024, 2025.
Okay. Thank you, sir.
Thank you.
Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Yog Rajani from Kamya Ka Wealth Management. Please go ahead.
Hello. Hi. My first question is, what is the maximum revenue potential of the consumer product division facility, chemical division facility, and the membrane facility?
You're asking the maximum revenue potential?
Yes. From the current capacities that we have in the three divisions.
Consumer product division, we don't really have a significant capacity constraint. We can go to the order of 2x or 3x of where we stand without much of a strain. Likewise, our ability to increase revenues from our chemical division is pretty strong, as we are able to add modularity to the extent required, and which is product line specific. In case of resins, as we have been announcing, we are looking at a greenfield expansion there, which will increase capacity to double of where we are, our current capacities. There again, with that expansion being in place, we should be able to increase ours by more than twofolds. In terms of engineering, again, the capacity constraints are not all that significant because a lot of the execution takes place at site. It's not all made in the plant. There's a lot of manufacturing which happens at site.
Capacity constraints do not work as they would in a typically manufactured product.
Okay. I had another question. What is the total addressable market of the consumer product division, and what would our market share be in it? Out of the total market, what percentage of the total addressable market would be institutions?
What percentage of the addressable market?
Of the total market would be institutions for a consumer product division.
Institutions?
Yes.
What do you mean by institutions?
By large corporate players.
Okay. For consumer products, if you look at the home water equipments that we typically install in residences, that market itself is close to INR 10,000 crore plus kind of a number. There are other equipments which go into residences, which is things like softeners. The new product which we have introduced recently, which is alkaline water, these would add to that market number. As you would notice from the overall revenues which we have been declaring, our market share is in percentage terms, the opportunities remain quite big.
Okay. What EBITDA margins can we expect from this division over the next three years?
Segment is capable of generating extremely high levels of EBITDA margins. However, it's a question of scale. There is substantial amount of fixed costs which we incur in the segment. When we go past the threshold scale, the EBITDA margin additions will be substantial.
Okay. All right. I understand. Thank you so much for the clarifications.
Thank you. The next question is from the line of Pranay Roop Chatterjee from Burman Capital. Please go ahead.
Hi. Good afternoon to all. Am I audible?
Yes. Good afternoon.
Hi. My first question is pertaining to the engineering segment, and it's more from a medium-term perspective. If I look at your business mixes, let's say, five years from now and more from a tenders perspective, which you define as your bid pipeline. What sort of mix do you expect, let's say, between private and public entities? Do you see public entities giving you more business in the next five years? If you could also break up, on the private side, which are the sectors where you expect to show a stronger performance versus the others? Similarly, on the public side as well, which government programs would drive these incremental orders? Continuing on the mix side, also on the domestic versus international front, do you expect international to increase in share or domestic to have a stronger mix going forward?
Just trying to understand how your business would look from a mix perspective 3- 5 years from now.
As of now, the UP contract, which is one of the larger contracts, is a government contract. Similarly, Sri Lankan contract, we would classify under the government contracts. Typically, one large contract from the government side would tend to create a significant bias towards that segment. It's difficult to give you very exact or accurate predictions of how these things would pan out in future. Based on reasonable assumptions, I would expect that in a timeframe of 3- 5 years, the direct government contracts should be in the region of around 20%-35%, somewhere in that bracket.
If you could also elaborate on the domestic versus international front.
If we get a very large contract in the international market, something like Sri Lanka, which we have been talking about, that would tilt or skew the numbers slightly. Again, based on reasonable assumptions, I would expect the domestic to be somewhere in the 60%-65%.
Got it all clear. My second question is on competition side, also on the engineering segment. It's okay if you don't give an exact number, but a broad range as to what has been your bid-win rate in the past. Continuing on that, given your bid pipeline and the type of projects you bid for, how does the competitive environment in India look like? Specifically India. For example, do you see the number of international players increasing due to the recent uptick in tenders being given out? Also, how many firms are really there who are capable and eligible-
Hello.
Hello.
Pranay.
Yeah.
Sir, you may please continue with the question.
Yeah. Sorry, I think it got cut off. My question was on competition. If you could just help me with the bid-win rate in the past and also talk about the competitive environment, like if there are increasing number of international players recently coming in and bidding. Number two, how many players are at all there who are eligible and capable to bid for the same contracts?
As a thumb rule, we assume that our bid-win rate would be somewhere in the vicinity of 20%. International players in the market, they have been there for decades as of now. There are new players which come in, and there are players who exit almost every year. There is no significant uptick in terms of the competitive intensity.
Got it. If you could just, this is the last thing, how many players would there be, ballpark? Would it be 20, 30, 40, who are eligible and capable to bid for similar contracts? Just to get a sense on how crowded the market is.
It is a very distributed market in terms of the type of competition and type capabilities of various players. It's quite specific to sectors, segments of industry. It would be specific to geographies. As such, there are quite a large of players who operate in this market now.
Got it. Thanks a lot. I'll go back.
Thank you. The next question is on the line of Romil Jain from Electrum PMS. Please go ahead.
Hello. Thanks for the opportunity, sir, congrats on a good set of numbers. Sir, just want to understand, at the ROCE level, whether our exports business would be doing better or our domestic business would be doing better overall.
As a thumb rule, we would expect it to be almost the same, maybe with a slight bias towards the international sector.
Okay. Currently of the order book, how much is the export order book, and how much is the export bid pipeline?
Roughly 20% is exports.
Okay.
The bid pipeline, in total is around INR 8,000 odd crores, of which exports is roughly 30%.
Okay. Sir, in terms of Sri Lankan orders, the project, while I'll agree that we don't run a major credit risk there because of the Exim presence, can you just let us know how much, obviously, only a small part of the execution is now left. What kind of money have you already received on the project?
That's unfortunately not a number which we have been declaring in the past.
Okay. Sir, chemicals related business, I just want to understand who are the competitors in India for the chemical business?
To name two or three of the major players, you have Nalco, which is now Ecolab, and SNF is another one. These are the largest of the multinational players.
Okay, mostly international players are the competition in this sector.
No, there are domestic also. Thermax, for example, is also one of the players in the chemical space.
Okay, I think the scale is different for you and for Thermax. Sure. Okay, sir. Thanks a lot. All the best.
Thank you. The next question is on the line of Saket Kapoor from Kapoor & Co. Please go ahead.
Namaskar, Patni sir. Thank you for this opportunity. Yes, sir. In your presentation, under this engineering order book and pipeline, it is mentioned that engineering project is INR 1,458 crores, whereas outstanding for Sri Lanka is INR 256 crores. Is this the worth of contract pending to be executed for Sri Lanka?
That's right. INR 1,458 crores is excluding Sri Lanka and UP.
Yes. There's separate figure done mentioned.
INR 256 is the outstanding portion of Sri Lankan contract.
Okay. Sir, correct me here, sir, you mentioned that for the greenfield project, we are in the process of receiving the environment clearance within this month. We are expecting it for this month?
Yes, we are expecting to receive it this month.
Okay. Sir, could you give some more color on the size of the investment we are going to, what are the contours of this greenfield project, sir?
As I've been saying, we will be doubling the capacity of our resin manufacturing in phase 1. There, I think another, in phase 2, we'll be adding a similar capacity. The total cost, the CapEx on this, we are expecting to be upward of INR 200-INR 250 crores. The numbers we would be giving out at a later date. It will certainly be in excess of INR 200-INR 250 crores.
INR 200-INR 250 crores. The completion date would be FY 2024?
Yes, FY 2024, 2025, we expect to start commercial production.
Okay. What should be the turnover at optimum level that would be expected from this plant at phase 1?
As I said, we will be doubling our current resin capacities. At the bare minimum, it will be more than 2x.
What is the current resin sales for us for last year or for the first half?
Approximately 60% of our chemical segment revenue is from resins.
60% of chemical segment?
That's right.
Okay. Sir, now coming to the raw material part, sir, how has the raw material basket behaved, sir? We are finding that there is lot of price changes we are seeing in different commodities. How has the raw material prices being, and what's the outlook there, sir, going ahead?
While there was reduced volatility and downward trends in the raw material costs, however, there has been a sharp depreciation of US dollar, and that continues to have some bearing on the input costs. We are continuously monitoring the RM price trends and taking corrective action to mitigate impacts on the margins, if any at all.
Sir, can you elaborate on the key components which constitute, I think so the raw material would be especially contributing to the chemical segment only, the raw material basket as a cost of material consumed. If you could give the more granular details, what are the key components there?
For the chemical segment, the mix of raw materials are both petroleum-based and otherwise. For the engineering segment, you would have steel and wherever there is a significant civil contract, cement would be one of the key raw materials.
Correct, sir. Sir, we have also seen that the freight prices have corrected dramatically in some of the geographies or some of these locations. How has that impacted our business, the fall in the ocean freight prices?
That's a favorable impact, and we have been facing these logistic-related issues for quite some time now. There is certainly an improvement on that front, and this will benefit us.
Any part-
The line for the current participant has dropped off. We'll move on to the next question. That is from the line of Sunil Kothari from Unique PMS also. We would like to remind participants that you may press star and one to ask a question.
Hello.
Yes, Mr. Kothari, please proceed.
Yeah. Thanks, Mr. Patni. Thanks a lot, and congratulations for such a good work you people are doing. Sir, my question is basic. Sir, basically, as the industry grows and becomes highly profitable, like chemical industry is becoming, engineering also seems to be very lucrative for maybe at least next two, three, five years. Naturally, competition will be increasing. How we'll keep ourselves ahead of competition with profitable and really respectable profit and growth? What internally we'll be doing in both the division or what we are doing, so keeping competition little bit at bay.
As it stands today, I think our margins and control on various aspects of the business, I would believe we would be amongst the better in both engineering and chemical segment.
We'll continue to be proactive on all fronts. We are taking the continuous steps to improve our productivity, the manufacturing plant yields, and also trying to ensure that we take enough steps proactively our costs, including input costs, under control. With increased degree of vigilance placed on all fronts, both business commercial, we hope that we will be able to maintain the edge.
Sir, this is on in terms of profitability and cost, but in terms of product innovation, R&D, if you can talk something more on maybe chemical segment.
We have very strong R&D setup, with more than roughly around 100 member team on the front of R&D. There is a continuous effort to innovate on all fronts, work on existing product lines, as well as introducing new products. We are sure that on this particular front, we will certainly maintain our edge in the market.
Okay, great. Sir, the way you are explaining on greenfield expansion, what I understand is the current capacity of chemical resin segment is 100, then this new greenfield capacity will add another 100, and with second line of expansion, it will reach 200. So to combine capacity of resins will become three times, maybe over next three years, whatever time frame. Is it on the direct correlation? Okay.
That's correct.
Thank you. The next question is on the line. Shirom Kapur from Prabhudas Lilladher. Please go ahead.
Hi. Thanks for the opportunity. My first question will be: What is your growth outlook within each segment? Do you expect your chemical segment to grow faster than engineering or overall, are this 30% growth that you are guiding? What will be the segmental growth outlook that you see?
We should see a stronger growth in the engineering segment, and relatively lesser growth in the chemical segment. The order book which we carry for the engineering segment is very strong, so is the bid pipeline and expected wins. We should not only be having substantial revenue generation during the next two quarters, but we are hoping to carry forward a very strong order book into the next year. Chemical segment continues to and would continue to grow at a good pace, but in the next two quarters, it would be the engineering segment which would grow more.
Understood. Thanks. In terms of your export and domestic mix, could you give that also split that up within your segments, like how much of engineering, chemicals, and consumer products is export and how much is domestic? Would you be able to share that?
The exports are typically in our bid pipeline, roughly in the range of around 20%-30%. We have quite a strong component of exports as far as our chemicals are concerned, which I would expect to be retained as we go forward.
Okay. Lastly, I understand with this greenfield expansion. Two questions on that. One is, with the resin that you're doubling capacity for, is that your highest value add or highest margin product within chemicals? What is the focus there? Why is resin going to be the focus of expansion? Just to get an understanding of that. Secondly, other than this INR 200-INR 250 odd crore CapEx outlay that you're going to have for this, is there any other CapEx projections that you have in any other aspects of your business?
We are expecting that we should be having around INR 60-INR 70 crores of CapEx apart from this greenfield expansion that we have spoken about. In terms of profitability, you would have seen chemical segment does contribute significantly as a percentage revenue. Therefore, there is a good, strong rationale for improving our capabilities there. Further, there are market opportunities, especially Asian market, it is very substantial. Our overall market share, if I look at the international markets as a whole, is very small. Therefore, headroom for growth there is substantial.
Okay. Just to clarify that INR 60-INR 70
Mr.Shirom Kapur , sir, may I request that you return to the question queue, sir? There are participants waiting for their turn.
Sure. No worry. Thanks a lot.
Thank you so much.
Thank you.
The next question is from the line of Pratik Giri from Vasuki India. Please go ahead.
Hi, Mr. Patni. Mr. Patni, I was just going through your EBIT margin segmentally, and I can see both in engineering chemicals, the margins have been improving since last three, four years. Particularly in the engineering segment, do you see margin improvements from here also and in chemical space too? Or is it the peak as per your calculation?
No. We should see improvement from here on. By the end of the year, we should be maintaining the full year margins similar to what we have achieved in the past. In chemical segment, we should be achieving the margins which we had in FY 2021. We will certainly be seeing improvement from here.
You're saying, sir, in both the segments, we can see further improvement in EBIT margins.
That's right.
That's encouraging, sir.
This is on a full year basis.
Yeah. I understand, sir. Sir, second question on the CPD, on the consumer product segment. On one previous question, you mentioned that on a scale, we might see profits in the segment. Sir, at what scale you think that this segment will start giving us some money?
Based on current trends, we feel that by the end of the current year, we will be breaking even in the segment.
Sorry, we'll be?
Breaking even by the end of this financial year.
At EBITDA level, sir.
At EBIT level.
EBIT level. Quite encouraging, sir. Thank you, sir. That's from my side, sir.
Thank you.
Thank you. The next question is from the line of Ranvir Singh from Edelweiss Wealth. Please go ahead. Ranvir Singh, your line is unmuted. Please go ahead.
Yeah, hello.
Yeah, hello.
Pardon me.
Mr. Singh, please proceed with your question.
Yeah.
Sorry to interrupt, Mr. Singh, your audio is breaking up.
Is it still-
Sir, it's still the same Sir, we are unable to hear you clearly. We'll request you to come back.
You can proceed next. I'll dial in.
Thank you, sir. We'll move on to the next question. That is on the line of Kartik Iyer from Suyash Advisors. Please go ahead.
Sir, good afternoon. A couple of questions, one on the chemical resin segment. Are there really specific, say, proprietary products, for example, in this segment that you'll be launching with the expanded capacities? B, would you be tying up with somebody for a white label manufacturing kind of a contract, or would these all be under Ion Exchange's own brand?
We have quite a few products within our entire basket which are proprietary in nature.
The new capacity will look at a mix of products. It will not be a single product facility.
In terms of white labeling, that's not something which we do. We do offer our products to various players in the market, including competitors, but per se white labeling is not something which we have envisaged.
Given the substantial expansion that you're looking at, whom would you be displacing, sir, in the international market, and what specific advantages would we have versus them?
Sorry, your question was not very clear. Can you come again?
I was asking you, given that you would be displacing somebody because your expansion is substantial, A, whom would you be displacing, and B, what specific advantages would you have over them to be able to achieve that?
We have already got a substantial export presence in terms of our resins, and we have been competing with the market leaders in their favored geographies, which means we have been quite aggressive in the market and have been competing with them in the Americas and in the European markets.
We don't foresee any challenges in being able to deliver both the quality of the products as well as the services, if any are required. Per se, the market share which we have in the international market is very small, and therefore, as I've been saying, the headroom for growth is quite large.
I don't foresee any problem in expanding our presence further.
Right. In terms of raw material dependent on international markets, sir, some thoughts on that would help. I'm talking specifically on the chemical side.
Some of our raw material is imported, and we will continue to rely on at least some degree of imports.
Although we are making a sustained effort to reduce reliance on any single geography or vendor.
Who would be your primary source in terms of countries?
It varies, and it depends upon where we are able to get the best deal from.
As I said that there's a continuous effort to reduce reliance on any single vendor or geography.
Sure. If there is time, I would like to ask one question on the engineering segment, sir.
Question is wrapped.
Sure. Not a problem. I'll get back in the queue. Thank you.
Thank you. The next question is on the line of Ranvir Singh from Edelweiss Wealth. Please go ahead. Mr. Singh, please go ahead with your question. Mr. Ranvir Singh, we are unable to hear you.
Hello. Yeah. Am I audible now?
Yes, sir. Please proceed.
Okay. Yeah. I wanted to understand in engineering, and I just wanted to reconcile some numbers. Last quarter, we had total order book of INR 2,912. In this quarter, we have INR 2,795. An INR 117 crore reduction in overall order book. I assume that whatever reduction is should reflect in incremental sales here in engineering side. Is this understanding correct here?
That's right.
Incremental sales is INR 66 crore from Q1 to Q2, while our order book has contracted by INR 117 crore.
Yes.
There is additional order inflow also during the quarter.
Initial order inflow has been executed earlier, there has been no addition to order book. That's what you're saying?
No, there has been an additional order inflow. That order inflow-
Okay
If you do the math, it's around INR 120 crores.
Okay. Yeah, I think we'll understand it offline. Secondly, in balances side also, we see there is an inventory increase of some INR 50 odd crore. Is this related to chemical inventory?
This is largely engineering.
Okay. This is from engineering side. Okay, fine. In your presentation, you have mentioned there's a constraint in export in chemical side. What kind of constraints currently you are facing here?
I think we are talking about a demand constraint. Given the internal economic and geopolitical scenario, there is certainly an impact of that on demand coming, especially from Europe and Americas.
Okay, this is going to be better going forward?
Hopefully, yes. As the situation improves in these respective geographies, both on the economic as well as from a geopolitical scenario, we expect the demand from these markets to improve.
Okay. How second half would look like? In this, there was some constraint here in first half, can we expect second half to be better in engineering segment especially?
Second half will be substantially better. As we've been talking, the pace of execution of the various contracts which are in hand will be going up. Overall, as mentioned earlier, we are looking at revenue growth on a full year basis to be roughly around 30%-35%.
Okay. Fine. The last one, the CapEx INR 70 crore you mentioned for FY 2023, right?
The question was not very clear. Can you come again?
You mentioned CapEx of INR 70 crore, if I heard correctly. That was related to FY 2023?
That's right.
How much we have spent in first half?
Around INR 25 crores.
Okay. This is related to which segment?
This is largely engineering.
Okay. Largely engineering. Okay. Thanks a lot, and all the best. This is all from my side.
Thank you.
Thank you. The next question is on the line of Romil Jain from Electrum PMS. Please go ahead.
Hello. Sir, just one follow-up. What has been the order inflow so far in the year, and what is your annual target for this year?
Give me a moment.
Yeah, sure.
Full order inflow, and we're talking largely engineering here.
Yeah, sure.
this is around INR 528 crores for the first six months.
Okay. Any sense you can give us on a full year, what your target would be?
In the second half, we should have substantially more than what we had in the first half.
Okay. Sir, one question. I think we were also kind of doing some restructuring on the entire group level, right? The subsidies and all. One is, what is the progress of that, the treasury shares also? We have a substantial cash balance, and we are also getting good cash flows. What is the thought process? Of course, INR 200- INR 250 crores of CapEx is lined up for the chemicals business. Apart from that, do we see any allocation towards shareholders on the dividend side? Just want to understand these things.
The treasury shares which you speak about, these are the shares held by our trust. They are not meant for any transactions in the open market. They're very much a stable holding. In terms of the cash available with us, we are certainly looking to deploy it for capacitations, as you mentioned, and we're also evaluating other modes of inorganic growth.
Okay. Got it. Okay, sir. Thank you so much.
Thank you.
Thank you. The next question is on the line of Pranay Roop Chatterjee from Burman Capital. Please go ahead.
Hi. Good afternoon again. My question this time is on the chemical segment. You mentioned the INR 10,000 crore number sometime in the call, I couldn't catch it. If you just reiterate what would be the total market size for you on the export front. That is one. You are expanding capacity aggressively 2x to 3x. By when do you think you can fill up that capacity? I'll tell you why I'm asking this question. Firstly, your seller base is extremely diversified, and you continue to strive to do the same both geographically and sector-wise. The past annual growth rates have been quite volatile. If I just try to do a simple CAGR over the last five to 10 years, it's basically around 10%.
Going forward, what do you think will drive growth substantially higher than that 10% past CAGR, which will actually fill up that capacity?
The overall market size, when I look at resin on a global basis, is in excess of $2 billion. Therefore, headroom. That's why I've been talking about a substantial headroom being available there. The capacity which we are going to put in, we expect it will take roughly three years to reach optimum levels of utilization there. Per se, there is no dearth of opportunities, and I'm pretty sure that we will be able to fill up that capacity.
Got it. Thanks a lot. All the best.
Thank you. The next question is on the line of Shirom Kapur from Prabhudas Lilladher. Please go ahead.
Hi. Thanks for the opportunity for the follow-up. Just again, speaking about growth drivers, going forward, where do you see the substantial growth opportunities, especially in your engineering segment? Is it going to be largely public and government related contracts? Is it going to be increase of private companies as they try to ramp up their ESG efforts and environmental efforts? Where do you see majority of the growth happening going forward?
I think we are seeing opportunities evolve on almost all fronts. Firstly, both domestic and international markets. Secondly, in each of these markets, from all segments including industry, the public sectors, as well as from the government directly. Our effort is to make sure that the opportunities that we pick up do not put us to risk as far as our balance sheet or as our bottom lines are concerned. We continue to be relatively conservative when we pick up these new opportunities to make sure that we maintain not just the growth trajectory, but also maintain a healthy bottom line. There would not really be a constraint of opportunities available in the market. We need to apply our own filters from a commercial perspective and from a perspective of which areas we want to grow the most.
Understood. Thanks. I think you mentioned some numbers in terms of the full year target for your order inflows. Do you have that number available?
I think for the full year, we believe that we would be ending at roughly an all-time high, close to INR 3,000 crore number, which is unexecuted part of the orders. There is still two more quarters to go. There's always a little bit of an uncertainty in that. Based on what we are seeing as of date, we feel pretty confident that we will end at an all-time high order book.
Okay, understood. Thanks so much, and best of luck.
Thank you. Ladies and gentlemen, due to time constraint, that was our last question. I now hand the conference over to the management for the closing comments.
Thank you all for participating in this earnings con call. I hope we have been able to answer your query questions satisfactorily. If you have any further questions or would like to know more about the company, we will be happy to be of help. We are very thankful to all our investors who are stood by us and also have confidence in the company's growth plan and focus. With this, I wish everyone a great evening. Thank you very much.
Thank you. Ladies and gentlemen, on behalf of Ion Exchange (India) Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.