Ladies and gentlemen, good day and welcome to Q3 and 9 Months FY25 Conference Call of GMM Pfaudler Ltd. 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 this 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. Dhaval Rajput. Thank you, and over to you, sir.
Thank you, Neeru. Good evening, ladies and gentlemen. A very warm welcome to all of you into the Q3 FY25 earnings call of GMM Pfaudler Ltd. The earnings presentation was uploaded on the stock exchanges today and is also available on our website. Hope all of you had a chance to go through it.
From the management, we have with us our Managing Director, Mr. Tarak Patel, our CEO of International Business, Mr. Thomas Kehl, our CEO of India Business, Mr. Aseem Joshi, our CFO of International Business, Mr. Alexander Poempner, our CFO of India Business, Mr. Manish Poddar, and our Compliance Officer, Ms. Mittal Mehta. We will give you a brief overview of the performance of the company, after which we will get into the Q&A.
Before we begin with the overview, a brief disclaimer: the presentation that was uploaded on the stock exchanges and also on our website, including our call discussions that will happen now, contains or may have certain forward-looking statements regarding our business prospects and profitability, which are subject to several risks and uncertainties. The actual results could materially differ from those in such forward-looking statements. I will now hand over the call to Mr. Tarak Patel to provide an overview of the performance. Over to you, Tarak.
Thank you, Dhaval. Good evening, everybody. Let me just start with a quick recap of our financial performance. So our revenue for this quarter was stable at about INR 801 crores, and EBITDA was up 3% compared to the previous quarter. EBITDA margins improved slightly to 12% compared to 11.6% for the previous quarter.
What is happening is that our Q3 order intake was also quite strong at INR 798 crores, up 5% compared to the previous quarter a nd on a nine-month basis, our order intake is up 13% compared to the previous nine months. Order backlog stands at INR 1,740 crores, up 7% compared to December 31st, 2023. Our opportunity pipeline remains stable across geographies, and the product mix continues to evolve. In terms of the general market outlook, we still believe that the chemical industry, which forms a major part of our order intake, is a bit slow.
This is driven mainly by the slowdown in the agrochemical industries. However, we do hear now that there is some volume that has returned. Margins still remain under pressure, but the outlook remains a little bit more positive than it was six months ago. We do believe that over the next couple of quarters, we would see some investment coming back in the agrochemical space.
In specialty chemicals, we do believe also that this will continue to grow and invest. We have seen good traction in this space, and we believe that this will also continue to have a good amount of investment, which would then lead to investments that would turn into order intake for us. For the pharmaceutical industry, generally, it has been quite positive, both in India and internationally.
We've seen some traction in South India pharma, mainly in Hyderabad, where people have added significant new capacity to cater to either CDMO or the exports market. The future outlook, we still would like to be a little bit conservative. We do believe that the worst is behind us, but I think there are still a few more quarters before we see a full turnaround in both the chemical and pharmaceutical industries that we cater to.
As we look forward, I think one of the main learnings from management over the last couple of years has been that maybe as a company, we are too focused on chemical and pharma, and with the cyclicality that comes with these markets, diversification becomes an important part of our strategy.
Diversification not only from the point of view of new products, but also new industry segments that can bring double-digit growth back to what we aspire to have. We also have been working quite diligently on our cost structure. We have a couple of projects that we are working on here in India. Internationally also, as well, we have looked at rationalization of manufacturing footprint.
You will see some updates, and you will see some updates in the earnings presentation where we have rationalized DACH and capacity in Europe and in India, and I'll talk a little bit more about that as we go forward. With that, I would now like to hand it back to Dhaval, and then Dhaval, please kind of open it up for Q&A.
Thank you, Tarak. Neeru, you may now open the line for questions. Thank you.
Thank you very much. We'll 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, you will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. First question is from Jaiveer Shekhawat from Ambit Capital. Please go ahead.
Sure, sure. Thanks for taking my question. I` t's sort of heartening to see that your India business has seen an uptick in revenues and margins almost after like six quarters of consecutive decline. So my first question is on that. What's leading to that, an d have you actually seen any pickup on the GLE side of things, or is it largely your non-GLE business which is doing the heavy lifting here?
Yeah. Hi, Jaiveer. This is Aseem who takes your question. So yeah, we've been talking for the last couple of quarters about slowdown in our chemical business, which affected the core glass- lined product line that we serve. Now, the reversal, the increase in backlog and sort of increase in revenue margins has come on the back of two things. On e is the flattening of the decline in glass- lined. So we have sort of stabilized and starting to grow both volumes and pricing in glass-lined, but also the actions we've taken to improve our cost position in our business.
Furthermore, the backlog and our focus on diversification has resulted in an improved backlog in our non-glass-lined business, particularly in our mixing business, which is an area of focus for us, but also in terms of heavy engineering and solid-liquid separation product lines. So overall, we believe our strategy is working, and the worst is behind us, and we expect to continue to grow from here.
Sure. C ould you highlight what has been the kind of decline that you have seen in this quarter versus, say, last few quarters in the GLE side of things?
No, I said I did not say there's a decline in GLE. I said GLE had declined in the past. It is now starting to recover, both from a volume and pricing standpoint.
No, because my question is, if you see on a YoY basis, your standalone business is still down 8%. So I'm just trying to see because I'm sure it must be the GLE which has been sort of struggling as compared to your other businesses of mixing and then the other businesses there.
Exactly.
So I think a couple of things have happened in GLE in India. One, like Aseem said, volumes have improved. The last couple of quarters, we've had improvement in order intake in glass-lined. You would have seen maybe a year ago, we had two bad quarters where business was very slow, and that impacted the backlog and then obviously Q1 and Q2 of this financial year. But having said that, glass-lined orders, the volumes have increased as well as pricing has also improved a little bit.
Plus, what we also have done, and you must have seen, is that we have now moved all production to our Gujarat facility. There was no point having two facilities running at 60%. We said, "Let's move everything to one," and then you have better absorption of cost as well. So that's something that we will also see in the coming quarters where our cost structure in the glass-lined business is now a little bit more efficient than it was a few quarters ago.
Sure. O n your order intake, if I see the quarterly trends, on a YoY basis this quarter, there has only been about a growth of 6%-7% across both the India and international business versus about 18%-20% that we saw during the first half. So has there been moderation in your order intake because that sort of conflicts with your earlier opening commentary there o r is it largely because of the GLE side which continues to struggle?
No, I think order intake has been pretty stable. Again, it's not back to levels that we had maybe a couple of years ago. But from where we are, and again, keep in mind that we were a glass-lined-focused company where most of resources and bandwidth was focused towards getting glass-lined orders. W hen that orders dried up, we had to find new opportunities in non-glass-lined and non-chemical and pharma industries to get these orders.
Some of these will take a little bit longer, but we have seen good traction in heavy engineering where we made a lot of breakthrough in oil and gas, petrochemicals. We've seen a lot of improvement in mixing where we made a lot of breakthrough in metals and minerals. In Edlon, our US business, we've seen a lot of improvement there through the semiconductor industry.
Some of the diversification strategies that we had kind of put in place are now kind of bearing fruit. All in all, I would say that even though it might be a few crores or a few points lower than previous order intake, I think it's still stable and it kind of adds to the backlog.
Again, like you rightly said, order intake is something that we are being aggressive about to create backlog, and we are trying to create both glass-lined as well as non-glass-lined backlog. Now, if the glass-lined business were to turn and improve, those numbers will change quite quickly. As of now, like I said, I still feel there is maybe a couple of quarters before we see some of the new investments, especially in agrochemicals, that will come back.
Sure. My last question is on international business. On a sequential basis, we have seen a slight decline in revenues, and over the last year, we have seen a lot of announcements, especially from chemical giants, about capacity shutdowns. So how is the situation currently, and how do we get the confidence that the worst is behind us, especially for the international business, which is largely dependent on Europe?
I think on the international business, I think that you obviously will see a little bit of slowdown. It will continue a little bit longer than what we expect in India. What we are trying to do is rationalize manufacturing to make sure that we take the cost out. We have certain initiatives that we believe will add a lot of value.
One of those initiatives is our Poland strategy, which we have now executed the investment agreement. We plan to move manufacturing. We've already moved a few orders that have already been manufactured in Poland, and the quality levels have been fantastic. We expect that to kind of grow over the next few quarters. There's a clear push for us to move manufacturing from high-cost Western countries to lower-cost developing countries and maybe come to India as well.
We've also kind of rationalized our U.K. manufacturing footprint, and now we believe that having that no longer in the mix will also maybe improve efficiencies in Germany and Italy, a nd we hope that the glass-lined business, again, internationally also will improve over the next few quarters. Again, we're being aggressive in the market, but there is a general slowdown, and we have to be aware of that.
Surely, surely. All the best, and thank you so much.
Thank you.
Thank you very much. Next question is from Yash Goenka from Auriga Capital Advisors. Please go ahead.
Hi. Thank you for taking my question out of it.
Yes, you are. Just speak a little slowly. Your voice was a little muffled, but please go ahead.
Your standalone services revenue has shown a strong uptake. What is the impact of this uptake in the margins, if you can quantify a nd how do you see this going forward?
So let me talk about services sort of more broadly. You will recall from previous calls that services, growing the services business is a priority for us in India. Services is about 35%-40% of our international business, and in India, we aspire to grow that from the single digits that it currently is.
Now, to that end, we have made organizational changes and systematic changes within the business to improve our performance of services, a nd I believe that is beginning to yield results. Now, of course, this will take some time, but last quarter's performance was heartening, and I expect we should only continue to grow from there.
Specifically, I reckon getting numbers would be difficult to aspire at this stage, but as you know, services generally have been having a much better margin versus the original equipment. So this should help us on a sustainable basis. As the mix improves towards these services, the margin profile should improve.
Okay. I n your initial comments, you had commented about demand from pharma segment in Hyderabad region, but you've shut down the plant there, a nd you also said that you'll throw some light about it in the call ahead. So can you talk about it?
Yeah, let me add it. So yeah, correct. We have a small factory in Hyderabad. We opened up, I guess, a little over three years ago. We acquired. We acquired, sorry. We acquired from De Dietrich. Now, current demand for our glass-lined was such that it made sense to consolidate production in one factory in Gujarat with a larger factory. So while pharma in Hyderabad is stable, for us, from a production optimization and fixed cost sort of leverage standpoint, it made sense to consolidate in Gujarat, and that's what we've done.
Okay. Thank you.
Thank you. Next question is from Abhishek from Oaklane Capital. Please go ahead.
Hello.
Yeah, go ahead, please.
Yes. Thank you for taking my question. So I wanted to ask one question about the market presence of the Chinese players in the domestic market. So how big is that presence in GLE and non-GLE, both markets?
Okay, so I'll take it, Aseem, again. Look, in the glass-lined business, we really don't see a whole lot of Chinese competition in India. glass-lined equipment is sort of critical to our customers' process. It requires service and support, and therefore, all over the world, people generally buy from local manufacturers, and therefore, GMM Pfaudler has a local presence in manufacturing in every major manufacturing zone: U.S., Europe, India, and China, so we don't anticipate that to change significantly yet.
There's always a few examples of, if you pull the import data, you'll get a few examples of people buying glass-lined equipment. But generally, there's very few, and the experience of most people who have tried that has not been great, so glass-lined, I'll leave that story there. I think on other equipment, non-glass-lined, you'll occasionally see competition from China or other countries.
For example, in mixing, in specific applications, there are some Chinese competitors. But by and large, I think we're well- positioned at GMM Pfaudler with India manufacturing for almost all our products and with the benefit of application expertise and engineering expertise from the world over. So we feel like we're well positioned to take on competition wherever it comes from.
Okay. Thank you. I have one more question about the company's product differentiation in non-GLE segment. So what differentiation is the company providing in non-GLE segment products, and how does the company plan to gain the market share in non-GLE going forward?
That's a pretty broad. It's a pretty long conversation, to be honest, because we have a broad range of non-glass-lined products. I'll give you the sort of the 20,000-foot view, and of course, further conversation can be had. Look, in every product line that we have entered, our expectation is to have some technical differentiation with regards to our competition.
That's true in our mixing business. It's true in our filtration and drying business. It's true in our membrane business in Italy, and it's true in our sealing business in Germany, right? We have differentiated products, and it's up to us to sell that value. Now, there are some businesses where the differentiation may be a bit harder. For example, in heavy engineering, on a product basis itself, the differentiation may be harder. However, we differentiate there in terms of quality and delivery.
We have a near 100% delivery record, on-time delivery record in heavy engineering, which is something that customers put a lot of value on, right? So we have given a lot of thought to where we can differentiate a nd while it's product features, in many cases, there are other non-product features like quality delivery and, in some cases, cost that we can excel. So we feel we're well- positioned in each of these categories.
Yeah. But, so what are your plans to gain the market share going forward? So, are you planning to sell the products as a package?
No. So I think there's a couple of things that you should understand here. Some of these products go into completely different industries. So there is no synergy between chemical and pharma and oil and gas, and petrochemicals. So, for example, in oil and gas, we're talking to maybe a Reliance or an Adani. While in chemical, we're talking to Gharda, SRF, BASF a nd in pharma, we are talking to JB, right?
So each customer, each industry vertical has its own set of requirements. Yes, there are some kind of requirements that are cross or can be kind of cross between these different verticals. But generally, for each vertical that we operate in, the selling and the USP is kind of different.
So, for example, in heavy engineering, we're selling that, "Listen, we can handle 120 thick oil materials," or, "We can do titanium," or, "We can lift 200 tons of weight." So those are the differentiation. In glass-lined, in chemical, it could be the life of the equipment, the corrosion of the glass, and things like that, right?
So for every product that we have, and then maybe in filtration and drying, it could be the drying time versus somebody else's drying time. So if your batch time is 12 hours, I can make it 8 hours. So there are very different requirements for each industry segment, and we have to kind of cater to these specific needs, a nd that's why the focus for every industry is different.
Thank you. Abhishek, I'll request you to come back for the follow-up question, please. I request all the participants kindly restrict to two questions per participant, and you may press star and one to ask the question. Next question is from Sagar Shah from Spark. Please go ahead.
Hello everyone, a nd first of all, congratulations for at least a better set of earnings, actually. That's what we have seen in the last almost like more than five, six quarters. Now, I had a couple of questions. My first question was actually on the global international business, actually. On the international business, my question was on the stand-alone, we have done very well, almost 14% growth that we have clocked sequentially. But on the global business, still, we are falling back, actually.
W hat I wanted to know is that are we seeing a decline as far as the global glass-lined business is concerned, and that is being held by the non-GLE businesses? Is that a fair understanding even right now?
This is Alex. As stated before, there are some markets where, in fact, we have some headwinds over which we have little. This is especially China, a nd China, we have a strong glass-lined business. Therefore, we see it. It has an impact. However, we also have other units which are performing well, and this is especially the non-glass-lined business.
So we said we expect, as Tarak mentioned in the beginning, that the next quarter remain more or less as the last quarter. So there are some ups and downs, but the long trend, at least, we see a positive signal and going upwards again.
W hat the real concern was, in spite of having a very robust order book, order inflow of almost INR 1,600 crores in the first two quarters, still, we had on the consolidated front, our revenues were very flattish sequentially. So that is why I wanted to know what went wrong exactly.
So I don't think anything went wrong because some of these orders do take more than two months, three months, or one quarter to get shipped out. Some of the large orders that came in are systems orders, and those system orders take about a year's time to be shipped out. So again, like I've mentioned in my opening statement, the product mix continues to change.
W hen you think about orders, don't only think about glass-lined because then you're doing yourself a bit of a, it's not only glass-lined that drives this company. Glass-lined used to be a major part of this, but going forward, I think glass lining is a stable business. It is a market size that will not grow significantly more a nd our market share in glass-lined is 50%. The growth market share also is tough.
You need to consider now that a lot of the growth is going to come from the non-glass-lined businesses and the new verticals that we are entering into. Glass-lined remains important both from an OE perspective but also from a service perspective, and services continues to be an area where we continue to focus and grow.
So coming back to your question, we had large order intake of big system jobs in the U.S., especially maybe close to $60-$70 million, a nd that's something that will take time for it to kind of be executed and shipped out because these are long gestation periods. There's a lot of engineering, there's a lot of manufacturing, and a lot of support and service that goes into the startup of these large systems.
So that's something that will come. Again, like I said, this year the focus is to have a stable year and build a backlog so that next year is a strong foundation to start and then start from Q1 and have good execution throughout the year.
Okay. Sure. So my second question was regarding to the margins. In this quarter, sequentially, our margins improved actually by 300 based on the consolidated level, and even on the standalone, we did very well on the margins.
Now, what my question was that this is obviously because of the cost rationalization efforts that we have taken and maybe the better product mix. But going ahead, going by the order backlog that we have, going by the improved outlook as what Thomas Kehl said, that by Q1, our investments from the agrochemicals will also see some sort of traction. So our margin improvement journey will still continue in FY26 and our FY27, o r do you see these kind of margins are also the same in the next two years?
So I hope our margin improvement journey continues for really a longer, longer period of time. But again, I would just caution you to think about, as I said, things are looking better. Things are looking more positive. Some volumes are coming back. Prices are improving. But again, if you ask me, are we out of the woods yet? I would still be a little bit more conservative. I think it's a little bit of a wait-and-watch approach.
We are hearing positive signs, but really for it to translate into actual order intake may take a little bit longer than expected. You know very well, and I'm sure you've also kind of looked into a lot of chemical companies and pharma companies, and I'm sure their promoters are not announcing large CapEx plans now.
The Indian promoters like to see visibility when it comes to order intake or having clients kind of give them that assurance before they really invest in the next round, right? W hat we've been hearing from the big chemical companies and agrochemical companies is that they do believe that May, June of this year, they would start looking at new investment again.
Now, if that gets pushed back by two quarters or a few months, I don't know. But all in all, I think there is more positivity. T hat's really, I just hope that the market improves because this cycle has been a tough cycle for everybody. I think all companies are now looking to kind of reinvest and start their growth story again.
Sure, sir. Just last one from me, just a housekeeping question. What is out of our total revenues, how much is it from industrial mixing in this quarter and for nine months, FY25?
Mixing, I think margin is 10%-12% is the number that we are trending towards, and because it's a focus area, so definitely the percentage should improve over the years. This is consolidated.
Thank you very much.
All the best. All the best. Thank you.
Thank you. Thank you. Participants, you may press star and one to ask the question. Next question is from the line of Bhavesh from Intelsense Capital. Please go ahead.
Hello, sir. Thank you for the opportunity. My question, sir, is can you give end industry-wise maybe our top three or top five industries and the percentage in the revenue?
So I would say right now, about 70%-80% of our revenue comes from chemical and pharma. Maybe 70%, I would think now. I think those are the two key ones, a nd between chemical and pharma, it keeps switching. There was a time when chemicals—I mean, pharma was higher, but I think the last couple of years we've seen chemicals because of the agrochemical boom and the specialty chemical boom overtake pharma.
So those are the two key industries we cater to. I think the next big one would be oil and gas/petrochemicals here in India, and that's a growth trajectory for us. T hen with the mixing play that we have got in, we have a much wider range of industries that we cater to. In there, we have, let's say, metals and minerals as a key industry. We have wastewater.
We also have paint and the like also as well there, and then lastly, with Edlon, we have semiconductor as well, so quite a few ranges, but these are the big ones that you could kind of say that this is really where the growth is going to come from, and like I mentioned, chemical and pharma are a bit slow, and it's reducing.
Our exposure to these segments is reducing, and I would say maybe in the next couple of years, it would be down to even 50%, right, because the real growth is going to come from these other industries for two reasons. One, they are much bigger industries, and two, our market share in those industries is very, very small, right, so the ability to grow quickly and the ability to grow profitably is much, much higher in these new industries.
Okay. Okay. So the reason to ask that question is whatever CDMO boom, whatever GLP boom, whatever you are seeing in Hyderabad, and maybe it'll spread to other parts of India, b ut is that enough kind of to offset whatever toughness is there in agri market, and can we still grow healthy 20% kind, at least in domestic market?
On glass-lined?
Overall, overall.
I think chemical and pharma alone will not give you 20% growth. I don't think so. There is definitely products that we have that go into chemical and pharma, and we need to improve market share. But I don't think 20% growth is going to come from chemical and pharma alone.
We will have to look at new avenues such as oil and gas, petrochemical a nd that's why this year also, if you see a lot of the shortfall coming from pharma and chemical, especially agrochemical, when you have three customers that account for nearly INR 300-INR 400 crores of business that kind of just vanishes overnight, you need to replace that INR 300-INR 400 crores with something else a nd we managed to do that.
So in spite of the slowdown, we are still maintaining the same levels of revenue where other countries might not have been able to do so. This new revenue has come from new areas such as oil and gas, petrochemical, and the like, right? We've been kind of lucky. I think as management, we are quite clear that over time, we need to reduce our exposure to chemical and pharma, and at the same time, maybe put our resources and people and funds also to these kind of new growth areas.
Okay. Okay. That's clear, sir. Another question, sir, is do we, I mean, I don't know. Are you looking at biological reactors?
Speak a little louder, please.
Yeah. Hi. Am I audible now?
Yeah. Go ahead.
Yeah. My question is, sir, do you have technology or are you looking at biological space? I mean, I think the CapExes there are much larger, and I think that part of the industry, pharma industry, I think is going to change a lot in the next five years. So are you looking at biological reactors?
So yes. There's a lot of things that are always over the horizon in the industries we serve. Biological is one of them. We're certainly keeping abreast of the developments there. We are engaged with a number of our customers in things like peptides and providing equipment for that. We've done that globally in the past, and now as it comes to India, we're working with them on that as well.
So the short answer is yes, we are in tune with what our customers are asking for and we will continue to expand our product portfolio where gaps may exist because we acknowledge there will be some areas where new type of equipment will be required, and we will work to fill those gaps.
We have, I'll just add, this is probably the right time to add, we have inaugurated a test center in Karamsad, which is our Gujarat facility. This is a pretty significant investment for us. It mirrors a test center that we have in Europe and in North America, and it allows customers to come in and run trials of various sorts of reactions or filtration drying of acid management, things like that, of the wiped film evaporation, various products that we have.
They can run trials, and that helps customers gain confidence in their ability to get the outputs that they expect, right, before they make a significant investment. So that test center is now live. We have customer trials that have already started, and we expect this will help us continue to grow our business in India and actually overseas.
Okay. Okay. M y final question is, if I look at September balance sheet, our net debt is around INR 450 crore, I mean, INR 950 crore debt and INR 400 crore cash. But the net finance cost looks really high at around INR 70-INR 80 crore kind of. So is it, I mean, I don't know. Is it due to forex, or is there something else there?
Yeah. So our net debt, of course, is less than eight percent India and international combined, where it's something like 7.6% or something like that. So rest is all about the forex fluctuations, the positive and negative coming.
Okay. Okay. That's clear. Thank you. Thank you for answering my questions.
Thank you.
Thank you. Participants, you may press star and one to ask a question. Next question is from line of Shreya Banthia from Oaklane Capital. Please go ahead.
Hello. Yes, sir. Am I audible?
Sure. Can you speak through the handset, please?
Yeah. I'm on the handset itself.
Yeah. Go ahead, please.
Yes, sir. So you had mentioned that you would be increasing the share. You are focusing on increasing the share of the services business. So what kind of margin, steady-state margin going forward can we expect?
In the services business or generally across the country?
Yes, sir. Entire business. The overall margins, EBITDA margins, if you could give some color on that.
So again, I would just maybe kind of put it slightly differently. I think the margin profile for this year is about 11%-12%, and I think we would finish the year around there. I think we do want to improve margins for the next financial year. To put a number on it right now would be a bit difficult. Again, like I said, the markets need to start turning a little bit.
Volumes are increasing, but it would be premature for me to give you a number. The idea and the hope is to definitely improve EBITDA margin and EBITDA the whole, I mean, and also the volume of EBITDA for next year.
Yeah, a nd maybe I'll just add, I think look on as management, we are focused on managing our costs better and product mix, etc. I think we have made it through this conversation. You would have realized or recognized there's quite a few initiatives we have taken. That positions us well that when the markets come back, we are actually in a much stronger position to take advantage of that.
Yeah. Just maybe to reiterate for the group, some of the initiatives that will help us manage costs in India, obviously, two clear ones would be the closure of the Hyderabad facility and obviously, the change of product mix between glass-lined and heavy engineering. Glass-lined volume coming back with a little bit of product improvement will also help. Internationally, we have Poland, and we have now rationalized a UK manufacturing facility as well.
So those are some of the initiatives that will obviously help us in terms of improving costs. We also have a McKinsey project that's ongoing. We are at the final stage where obviously there will be some help also there operationally to reduce costs there.
Thank you, sir. Just a little clarity I needed. It's just that your voice was not clear. So since we are using a manufacturing facility at Hyderabad, so are we considering divesting the facility, or it's just on hold as of now?
No, so as of now, it's on hold. There is no decision on what we will do with this facility. As of right now, it just made a lot of sense to consolidate everything into one, so all your cost is in one facility, and you have better utilization as well, so it was driven only by a financial decision. If we find that there is more volume coming in or we find another product line that can be used or manufactured in Hyderabad, we would be happy to do so.
Okay. Thank you. Thank you. That would help us. I'll get back in with you.
I'll just add one last point to what Tarak said. We continue to maintain a robust presence in the South market. We have a sales office. We've had it for years. We have a service presence both in Hyderabad and in Visakhapatnam, and we have a warehouse that stocks a bunch of spare parts and systems that our customers need.
We are the market leader by a significant distance in glass-lined in Hyderabad. That will be something that we will definitely maintain.
Thank you, Shreya.
Yeah.
Next question is from Dhanami Dhabalia from Fair Asset Management . Please go ahead.
Yeah. Hi. I hope I'm audible. So my first question, and that's also my only question, I would like to kind of understand your thought process about consolidating manufacturing entities. So we've seen that you shut down the plant in Hyderabad. I would assume that since you have a lot of international plants, you may have a couple of, in the next couple of years, plans to consolidate the same.
So what's your views on consolidating international operations, trying to see if you can get a much better manufacturing footprint, much better cost control over other categories? What's your thought? I would like a one to two-year longer kind of view because I've also seen that you released a press release about signing a manufacturing facility in Poland, which seems to be one of the lower-cost manufacturing countries in Europe. So what's your entire thought process about consolidating international manufacturing operations?
Yeah. I think the vision is definitely to reduce manufacturing in high-cost countries, not only manufacturing, but even things like engineering and support and things like that. So we can definitely, and we are looking at lower-cost options. Do keep in mind for certain geographies, we still need to have a presence in those geographies, especially when it comes to glass-lined because these glass-lined vessels will need relining, they will need refurbishment, they will need support and service. So we need to have local furnaces.
Maybe we don't need to have as many as we do currently a nd over time, we will definitely look to ramp up India so that India can start supplying to the rest of the world. We also have Brazil and China low-cost manufacturing for glass-lined, and we continue to use and grow those businesses. So the real focus is to reduce manufacturing presence in high-cost countries like the U.S. and Western Europe.
Having said that, there is also we will still continue to have local teams in these geographies for support and service as well as for sales because front-ending, the customer who is local still needs to have a local contact that he can deal with, right? But at the end of the day, the vision of management, at least the way that we would like it to work, is that when you buy a GMM Pfaudler reactor anywhere in the world, you should not really worry where it is made, right?
At the end of the day, you get the right quality, you get the right price, and you get the right time frame in terms of delivery. You should not really worry where this reactor is made. That would be the eventual goal. Are we there yet? Not quite yet, but we are working towards that, and that's something that we will try to implement. Poland is the first start of this. Like I mentioned to you, we've already had two very successful orders being executed in Poland. We are now planning a third order also in Poland, which obviously is creating a lot of promise.
W ith things like this, once you have one or two good orders and they're executed in good quality and good time frame, people themselves will kind of be more favorable to this, and they will start outsourcing automatically, right? T hat's what we have seen. Maybe Alex, you want to jump in and add something on our global manufacturing?
Yeah. I could just add, and what Tarak said, that in fact, our operational footprint, we will improve. So this is a clear focus of us as a management. There will be some, let me say, more focus on center of excellence. Will there be more new manufacturing in India? Yes, this is the target.
Do we have to keep some sites in Europe and U.S. just to ensure proper services? Therefore, especially the focus on service business, maybe a little bit less on the new manufacturing. Yes, this is the target, and we are working there on a strategy and are confident that we achieve improvements there.
Got it. Got it. Thank you. Very clear. Just one more question. Earlier, you used to have a three, four-year plan laid out with what's the clear vision for GMM? I've not seen that happen over the past, at least a year, year and a half or so. So is that something which is still in the process? Is it something which you are kind of throwing it out to the investor community where you want to see GMM maybe two to three years down the line? Is there any timeline to that if you can touch a bit on it?
Yeah, so we were hoping to have something ready this year, but again, this year has been flattish. So, we hope to have something for you in the next financial year. We are working on something. We believe that we are nearly 60%-70% there in terms of just long-term strategy that we all have agreed upon. I think the smaller pieces of how we get it done over the next few quarters is something that we are still working on.
There's a meeting planned among the top management group next month. So yes, we are definitely working on something. As you know, the board, our investors, they obviously would like to have a clear idea in terms of what we are going to do. We would love to articulate our vision to the capital markets as well and then kind of execute that vision, right?
Unfortunately, the market didn't turn as early as we would have liked. We would have liked to do it this year, but we need to kind of. The idea today is to really focus on business, make sure that the year is stable. We are not losing market share. We're not losing money. T hen obviously, at the same time, we need to work on the strategic plan, which is in process a nd hopefully, again, I don't want to give you a time frame, but I'm confident that in the next financial year, we should definitely be able to articulate our vision to the outside world.
Got it. Thank you, Anvesh.
Thank you.
Thank you. Participants, you may press star and one to ask a question. Next question is from line of Vipul from Svan Investment . Please go ahead.
Yeah. Hi. Good evening, sir. Just wanted to check it out if you can give some sense on the heavy engineering business, specifically if I were to look from the order intake and order book perspective. I mean, currently, the order intake in the nine months is up 13% at INR 2,442. What would have been order inflow in the heavy engineering business and in the other businesses?
I f you can also throw some light in terms of the revenues, what has been the nine-month revenue in these businesses, and how has been the margin profile? A lso, how is the bid pipeline looking up at the current juncture a nd from the export point of view, we were also looking to explore the export market a nd where we stand at the current juncture, if you can give some sense about the heavy engineering business.
So, heavy engineering, before I think just talked about the business and what we are trying to do and what we cater to. I think heavy engineering has grown significantly. It will grow again this year. It was a much smaller part of our total revenue. This year, it will be a bigger part of it. We don't share numbers right now, nine months, but even if you look at the nine-month number, heavy engineering portion is definitely much more than it was in the previous nine months, right?
T he growth that we are getting from heavy engineering would probably be double-digit in any case, right? So that's the focus area for us a nd maybe I think you can speak a little bit more about the heavy engineering business and what our strategy is there.
Yeah. So first, to your point, in the materials that we have released for this stock exchange, you'll see the segmental overview, which gives you a sense for sort of how the makeup is around technology systems and services. Heavy engineering is part of the technology systems. Now, our strategy in heavy engineering is quite clear.
We want to focus on getting the right MOCs, which is sort of the right material of construction, focus on export orders, and focus on the right kind of equipment. So I'm pretty pleased with the direction in which we are going. This is a business that we've run for about three years, now a little over three years, and it's grown very well and is a significant part of the India business now. The next phase of our strategy will be to focus on exports for heavy engineering.
Using the Pfaudler network already, we have considerable exposure to the U.S., to some extent in the Middle East as well. But we are going to work to accelerate that to see how we can drive exports further in geographies close to India and also potentially to the U.S., given the likelihood of investment and manufacturing returning to the U.S., so heavy engineering will continue to be a focus area for us and a big growth driver, I think, in the next two to three years at least.
Okay. T hen just one bookkeeping question on the other income front in this quarter that appears to be at 25. If you can share the details about it, that would be really helpful. Other income this quarter. Yeah.
Other income is primarily on account of FX gain. So you have a Euro-Dollar , so Euro depreciated and so forth. So within the company there was a mark to market. So these are typical fluctuations which you will see in the debit side on the finance cost and other incomes of the trade.
Okay. Thank you. Thank you and wish you all the best.
Thank you.
Thank you. Next question is from Gopinath Reddy from Purnartha Investments. Please go ahead.
Hi. We have competitive advantage, our own niche when it comes to glass-lined business. What kind of know-how or advantage that we have in the new businesses that we are entering? Is it just our execution capabilities or anything else that we have already?
Yeah. So I think I addressed this in some extent in a prior question, but let me just summarize. Any new product line or business area that we've entered, we believe we have some differentiation. Typically, it's in product features or some aspect of our manufacturing capability that allows us to differentiate in the market.
For instance, in filtration and drying, we have proprietary designs and local innovation that's happening that is helping us differentiate and offer more advanced equipment to our customers than the standards that they get from other players in the market. In mixing, again, we have prior track record of serving various applications across the world, be it water, food, mining, minerals, chemicals, pharma, paint. The list is very, very long a nd that's an advantage we've gained because of the presence of Mixel and MixPro, which are acquired companies in our portfolio.
We see the benefit of that in India already. Similarly, in the international business, they are seeing the benefit of having India manufacturing. It really depends on each product, but we as management are certainly focused on ensuring that there is differentiation in each of our businesses.
I think just maybe to add to that, I think the question that you were asking, I think GMM Pfaudler the brand name that is associated with the company, people do come to us for solving problems that they have. They look up to us in terms of completing the project in a timely manner. A lso the financial stability that we have today. If we take a large project, it's not that we're going to run out of funds halfway through.
So the large heavy engineering projects with Reliance on the Adani of the world, they would obviously go after and go with respected professional companies, right? So we stand by our products, and we make sure that we deliver what we promise. I think that is something that also will help a lot of customers to kind of try some of the newer products that we are now entering into.
Okay. Thank you. That's it from my side.
Thank you.
Thank you. Next question is from Shreya Banthia from Oaklane Capital. Please go ahead.
So my next question was, I'm aware that we are not giving the breakup of our margins, our better margins segment-wise. But if you could give me a sense of are our non-glass lining and glass lining margins comparable and whether heavy engineering margins are a little on the higher side? Any sense on the margins? How should we look at it?
So it fluctuates, Shreya, but I would say as a group, our aim is to have a 15% margin profile across the businesses that we operate. Some cases in down cycle, it will be lower. Some cases, it will be higher. But that would be the general trend for you to kind of go ahead. I don't think we get into any product line with lower margins.
There could be some products within the portfolio that have higher margin profile, especially the services part of it. But for our technology product, which is basically things that we manufacture, equipment that we manufacture, I would say a 15% margin would be the average or higher.
So is it fair to assume that the heavy engineering margins are somewhere near the glass lining or the other equipment as well?
Yeah. I think they all are kind of similar. So you can do the math. If we are at a 12% margin, I would say margins across the board would be similar. Glass-lined, just today, because of the slowdown in the market and the competitive pressure that we have, has seen a reduction. But if you look at the good times, I would say all these businesses have a pretty strong margin profile.
Understood, sir. Understood. That was helpful, sir.
Thank you.
Thank you, sir.
Thank you very much. As a wrap-up of the questions, I'll now hand the conference over to the management for closing comments.
Thank you, Neeru. Thank you, everyone, for joining us today. It was a pleasure interacting with you, and we look forward to many such interactions during the course of the year. Take care and see you soon.
Thank you.
Thank you very much. On behalf of GMM Pfaudler Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.