Ladies and gentlemen, good day and welcome to Pondy Oxides and Chemicals Limited Q2 FY 2026 conference call. As a reminder, all participants' 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. Please note that this conference is being recorded. I now hand the conference over to Ms. Sana Kapoor from Go India Advisors. Thank you, and over to you.
Pondy Oxides and Chemicals Limited earnings call to discuss Q2 and H1 FY 2026 financial performance. We have on the call Mr. Ashish Bansal, Managing Director, Mr. K. Kumaravel, Director of Finance and Company Secretary, Mr. R.S. Vaidyanathan, Executive Director, Mr. Vijay Balakrishnan, Chief Financial Officer, and Mr. Pratik Gupta, Assistant Vice President - Operations. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request Mr. Ashish Bansal to take us through the company's business outlook and financial highlights, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.
Thank you, Sana. Good afternoon, everyone, and thank you for joining us for POCL's Q2 and H1 FY 2026 earnings call. I hope you've had an opportunity to go through our financial disclosures available on the exchanges. I will walk you through the key strategic updates, operational progress, and financial performance, followed by a question and answer session. I'm pleased to report that POCL has delivered its strongest ever quarterly and half-yearly performance, driven by disciplined execution and operational efficiency. On a half-year basis, revenue, EBITDA, and PAT increased by 22%, 83%, and 98% year-on-year respectively, supported by substantial growth in both production and sales volumes across our lead and copper businesses. Crossing the 8% EBITDA margin is a significant milestone in our journey of sustained value creation, reaffirming our focus on value-added products, process efficiencies, and profitability enhancement.
Before highlighting our operational and financial achievements, let me begin with a few key strategic developments shaping our growth trajectory. Capacity expansion updates. We are making steady progress on our capacity expansion roadmap. Our lead capacity expansion at Thervoykandigai Plant, the Phase 2 project of 72,000 metric tons at 36,000 metric tons per annum in each phase is well on track. Phase 1 began commercial production in Q1 FY 2026 and operated at 50% utilization during Q2 FY 2026, expected to ramp up to 70% in the coming quarters. Phase 2 is slated for commissioning in the second half of FY 2026 with an estimated CapEx of around INR 20 crores. During H1 FY 2026, POCL invested around INR 14 crores in capital expenditure and expects to deploy an additional INR 35 crores in the second half of the fiscal.
Coming to our operational performance, the half-yearly procurement mix of lead, plastics, and copper through imports is approximately 86%, 54%, and 100% respectively. There is a significant increase in production and sales of copper on both quarterly, year-on-year, and half-yearly basis. The production of lead has increased by 8% year-on-year to 50,475 metric tons on a half-yearly basis and 9% quarter-on-quarter to 26,308 metric tons. EBITDA per ton of lead increased significantly by 62% year-on-year to INR 19,970 per ton on a quarterly basis and 48% year-on-year to INR 18,910 per ton on a half-yearly basis. Moving to financial results for Q2 and H1 FY 2026.
I would like to reiterate that POCL has achieved its highest ever quarterly and half-yearly revenue, EBITDA, PAT, and margins. Revenue from operations has increased to INR 635 crores, up 6% quarter-on-quarter and 11% year-on-year on a quarterly basis. The revenue has increased to INR 1,231 crore, up 23% on a half-yearly basis. POCL experienced this substantial growth as a result of its increased production, sales, and realizations in both lead and copper. Exports contributed 61% of total revenue, reaffirming POCL's strong global footprint and customer trust. On a half-yearly basis, the percentage of value-added products in the lead segment stands at 70% approximately.
EBITDA increased significantly by 84% year-on-year to INR 55 crores and on a quarterly basis and INR 98 crore, up 83% year-on-year on a half-yearly basis. EBITDA margins exceeding the 8% mark represent a significant milestone in POCL's journey towards long-term sustainable value creation. PAT increased significantly by 105% year-on-year to INR 36 crores on a quarterly basis and by 98% year-on-year to INR 63 crore on a half-yearly basis. PAT margins increased to 5% plus, up from 3% plus in H1 FY 2025. POCL's balance sheet has strengthened, having achieved zero net debt and holding a net cash balance of INR 71 crores. On a consolidated basis also, POCL reported a strong financial performance.
Revenue from operations, EBITDA, and PAT increased by 21%, 82%, and 109% year on year on a half-yearly basis and by 11%, 85%, and 122% on a quarterly basis. In closing, POCL remains firmly aligned with its Target 2030 vision, backed by a clear roadmap focused on value creation and sustainable growth. We are rapidly enhancing our lead and copper capacity while building a presence across adjacent non-ferrous segments with ambitions of delivering 15%+ volume growth and 20%+ CAGR in revenue and profitability. This growth will be complemented by sustained margin expansion, driven by our focus on maintaining EBITDA margins above 8% and return on capital employed exceeding 20%. Our strategy is designed not only for scale but for resilience, with a deep emphasis on efficiencies in operation through innovation and modernization.
We aim to derive over 60% of our revenue from value-added products and are targeting a 20 %+ reduction in energy consumption, underscoring our commitment to operational efficiency and environmental stewardship. Supported by a clear strategic roadmap, strong financial health with a healthy net cash position, disciplined operations, a favorable regulatory environment, experienced leadership, and continued stakeholder support. POCL is strongly positioned for consistent long-term growth. That concludes my update, and I'd like to open the floor for questions. Thank you.
Thank you very much. We will now begin 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 Sagar Shah from Spark Capital. Please go ahead.
Yes, sir. Good evening, sir. First of all, congratulations to the entire team of POCL for delivering yet another great quarter actually, in terms of earnings. To begin with, sir, actually, my first question was regarding to our obviously much awaited question that is our gross margins. Gross margins in this particular quarter were also actually quite on the higher side actually. Gross margins were as high as 14.5% in this quarter, and this is a record high as compared to even last, you can say previous few financial quarters, as well as for years actually. What are the key reasons for the same? Because the margins are looking like they are purely led by lead segment. First of all, can you highlight what are the key reasons due to the sudden gross margins?
That's it, Sagar. Any other question?
Yeah. There are more two questions, sir. Okay. Sure. My second question, sir, was regarding to our H2 H1 performance, what I can see was predominantly led by margins actually. Is it safe to assume that our H2 performance will be led by higher lead volumes as well as the copper volumes which we have been actually guiding for. Also regarding the plastics one, that when are we starting with that ABS compounding and forward integration of copper products? The third question, sir, was regarding to what are the sustainable gross margins at least going ahead that we can safely assume, sir?
Yes. Coming to the margins part of it, Sagar, we have had a good run-up in our margins owing mainly like we earlier also said as the production from our new plant increases our operational efficiencies in our existing plants as well, which have improved, have given us quite a bit of headroom. Apart from that, also increased consistent sale of our value-added products. A mix of both these things has given us a good level in our margins. Apart in terms of Q1, Q2, in terms of volumes, yes, you're right, there's a marginal growth on volumes. In Q3, we are looking at the growth led by volumes and by margins on both ends. That is how we are looking for the Q3 and which looks pretty much in line.
Plastics currently like we informed, the shifting of our plastics unit from the leased premises to our own premise is underway at this point in time, which should get completed by we are targeting before this quarter. Maybe in December we will be starting a production from a new premises where we are shifting. That is our TKD location. At that point in time in Q4, we will be going ahead with our ABS and other compounding that we were discussing on. Copper, the volumes are pretty stable and on the incremental side. As indicated earlier in terms of value-added products in copper, they are underway and the construction of the plant is just starting right as we are speaking.
Okay, fine.
Yeah. In terms of gross margins, as you're seeing, we had given a comparative guidance of 7% +. We are pretty much confident that we will be able to maintain the current margins of 8% and higher, and that's how we are looking at it. In terms of long-term sustainability and our long-term margin goals, at the end of this financial year, we will be relooking at our numbers and we'll rework our gross margin numbers. As of now, we are pretty confident on 8% + margins.
8% +, sir, would be EBITDA, right? Not gross margins.
EBITDA. Sorry. EBITDA margins.
What are the sustainable gross margins, sir, can you renew? They've been quite volatile for us in Q1 and Q2. Obviously that will be product mix, I understand, but sustainable and broad range actually.
In similar levels, we are expecting our gross margins to be in the range of these 12%-14% of gross margins, what we're expecting.
Okay. Last one, sir, from my side, that we saw a very good offtake, actually, at least from the Diwali season, at least on the automobile front. Are you expecting that sort of vertical effect from the same demand from the lead battery volumes as well? Are you seeing the lead demand growing, at least due to this GST lead volume offtake that we are seeing in the automobile volumes?
Our contracts are pretty much stable across the year. Our capacities are already aligned with our sales contract, where we have options in terms of offtake. Typically, we are not very much affected. If you see, when there have been little lower offtakes, we have been able to do our volumes as guided. We work on long-term contracts. Our contracts are all in place in line with our capacities.
Okay. Fine, sir. Thank you so much, sir, and all the best for future calls.
Thank you. A reminder to all the participants that you may press star one to ask a question. The next question is from the line of Saransh Gupta from SVAN Investments.
Hello, am I audible?
Yes, please.
Thank you for the opportunity, and congratulations on a good set of numbers. I had two questions. First, as we saw that our EBITDA for ton for lead has gone up from 16.5 to somewhere close to 20. What will be a sustainable number to look at? Second one is that as our second phase of lead capacity is commissioning in second half, H2 of FY 2026. Post that, do we have any expansion planned, or how do we see the roadmap ending?
The second question was regarding the capacity. Can you repeat the second question, please?
Yeah. As our second phase of lead capacity is coming in H2. Going ahead, do we have any further CapEx planned, or are we expanding any other capacities as well? If yes, then by when can we expect this?
Coming to your first question on gross margin, we should be able to maintain a similar range on the gross margin levels, give or take a few rupees here and there. They look on an EBITDA basis, sorry. It looks pretty much achievable through this financial year. In terms of our H2 capacity, after the H2 capacity, alongside our copper capacity expansion is happening for our products, which will come in the beginning of the next financial year.
You are saying that we will be able to maintain the current EBITDA pattern that we are following right now?
Can you repeat? Your voice is breaking, sorry. Can you repeat the question again?
I just wanted to confirm that you are saying that we'll be able to continue with the current EBITDA pattern that we did for quarter two.
Yes, we will be able to.
Okay. Thank you so much, sir, and all the best.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Naman Parmar from Niveshaay Investments. Please go ahead.
Yeah, good afternoon, sir. Thank you so much for the opportunity, and congratulations on a wonderful number. Firstly, I wanted to understand on the what was the volume growth in the current quarter?
In the current quarter, the volume growth is about 9%.
About 9%?
9%. Normal.
Okay, 9%. Secondly, on what was the value-added product contribution on the lead side?
It's about approximately in the range of 70%. Seven, zero.
Okay, 70%. On the acquisition side, what the offtake means as we are acquiring ACE Green Recycling. What is the reason for that? You were guiding how the technology used to be changing on the lithium side. What's the take on the acquisition?
Basically, this is more of interest in terms of understanding the technology and R&D happening currently with ACE Green, wherein we are looking they are doing their R&D on all kinds of lithium-ion batteries, all chemistries. As and when their R&D is successful, we'll be looking at deploying them on a pilot scale. Once the pilot scales are successful, we will go in completely for commercial listing. Our guidance for lithium-ion, we are technically looking at somewhere around 2027 to be entering full-fledged into lithium-ion.
Okay.
So this is like a preliminary-
Okay. Means on 2027, maybe you will be going into lithium.
Yeah. On a commercial level. On R&D and pilot level, we will complete all our R&D and trial productions, everything much before that. This is a step into getting further to reach our target for 2027.
Understood. Yeah. That's right. Lastly, on the margin side, what will be the sustainable margin on the copper side, basically, as you have ramped up? Mostly the copper volume are mostly flat through the Q1, right? What will be the sustainable margin as you ramp up and what will be the volume guidance for the copper division for the full-year?
The Q1 margins, there has been increase in the Q1 and Q2 margins.
Yes.
Almost by 100 basis points. The ramp-up, what we're talking about right now for this financial year, the copper margins will be at similar levels what we have achieved this quarter. What we're talking about the ramp-up and other production part of it is for the products. On the product side, the margins will be on the higher side, which will come into more understanding.
What will be the guidance for the volume for the copper division?
In terms of numbers?
Yeah, in terms of numbers.
In terms of top line should be in the range of close to INR 400 crores.
INR 200 crores?
INR 400.
Oh, INR 400.
For this financial year.
Okay. Yeah.
We have already done approximately INR 172 crores. In the next two quarters, the balance should be achieved.
Okay. Yeah. Perfect. Wonderful. Thank you so much for answering my query.
Thank you, Naman.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Rishi Kothari from Pi Square Investments. Please go ahead.
Yeah. Thank you so much for the opportunity and conversation on good set of numbers. I had one question around margins. As you said, it's more of a contribution from our value-added product side. Right now we are pretty much on the EBITDA level of 8%. This is sustainable for next two, three quarters or next two, three years. Is it that or how exactly is it?
It is definitely sustainable.
Okay. That is purely from the value-added product side. Is there something else into the.
Value-added products added with our operational efficiencies and other couple of changes that have been made in terms of the process flows and couple of things in the process as well. It's amalgamated output of all the efforts made.
Okay. There's no sort of external factors, for example, reduction in the raw material price, any sort of that has affected us in terms of the margin front?
No, we run a complete hedge model. That put down does not impact in that manner. We do not see an impact profit model loss.
Okay. This sort of factor is slowly in our control in a way margin front?
Yes.
Okay. This margin, are we looking at increasing from here? Is this the maximum sustainable margin at least for next two, three quarters of 8% on?
On a lighter note, I would always say, [Non-English content], but we will do our best to achieve what we can.
Yeah. I get it. Okay. No issues. Apart from that, what sort of growth target are you looking for next two, three years? If at all you can give sort of percentage growth rate for top line as well as bottom line.
We are looking at in the range of 25% on the top line numbers. We have already given a guidance in our investor presentation and probably we can get it sent it across to you through our people as well.
Sure. Thank you so much for answering the questions. I'll join back with you. Hello?
Yes.
Rishi, are you there?
Yeah. Yes, I can now. I was put on hold. No issues. From my side, the questions are done. Thank you so much for answering all the questions and I'll join back with you and happy Diwali in advance.
Wish you the same.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Shweta Dikshit from Systematix Group. Please go ahead.
Good evening, sir. Thank you for the opportunity. Congratulations on the good set of numbers. Two questions. First one pertaining to the gross margins here. We saw a reversal in inventories and we had some gains last quarter which primarily reversed this quarter. Is this something which is expected to repeat in Q2 and Q4 and what is causing this? Since especially when we talk about copper scrap prices have surged towards the latter end of Q2. Whether that is going to negatively impact in Q2 or Q4. Firstly, on that, my only sense is to try to get a hang of 14% kind of gross margin. Because the raw material cost does not increase as much, so can we see that happening in Q2? Is there a spill-over that might happen into Q2?
That's the first question. The second question is on ACE Green Recycling partnership. Apart from the CapEx guidance that we already have, what kind of arrangement is this going to be? Is there going to be more CapEx investment towards this by the time we reach that stage where we are to get into commercial production? Accordingly, setting up the targets for ACE Green and setting up our own recycling facility for lithium ion, be it by 2027. What is likely to be the CapEx for the next two years?
Today, your first question, if I'm not wrong, was is there any carry forward margin from the first quarter towards second quarter, and will that be a repetitive quarter on quarter scenario. Am I right?
Yes, right.
Yeah. There was no margins spill over from quarter one to quarter two. There is no such scenario where the margins move from one quarter to the other quarter. Our margins, what we have achieved currently are sustainable numbers, and these are primarily driven not through any of these market movements or any specific eventuality in the market. Like I said earlier to Mr. Naman Parmar and others as well who spoke on the call, that these are through operational efficiencies and value-added products. In terms of ACE Green, I had given a detailed discussion just some time back to another investor. Just to highlight, we are right now in the R&D stage. Once the R&D is completed, only you understand what kind of technology or what kind of further requirements are there on the CapEx, which is far away right now, 2027.
We shall discuss this somewhere mid-2026, where we are completed with our R&D and others.
As of today, it is not ascertainable. CapEx for return on investment today is not very much-
Definitely when we go into another vertical, there will be a CapEx. Without CapEx, you cannot manufacture anything. Anything I've missed out on from my questions?
No, understood. Last question, if I may please. I joined a little late. Could you tell me what was the utilization at the new plant for the quarter? Absolute terms, what was the volume of lead that we sold from the new plant this quarter?
The utilization was a little in excess of 50%-55% from the new plant. The volume from the new plant for this quarter was approximately 5,000 tons. Approximately.
All right. Thank you so much. I will go on back with you.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Shivam Dave from MIV Investment. Please go ahead.
Yes. Hi, am I audible?
Yes, sir.
Yeah. I just wanted some clarity on a slight degrowth in your volumes for lead this quarter. What has led to that on the lead side?
There is no degrowth. There is an increase only. There is no degrowth on the lead volume. Quarter to quarter, there is an increase.
No, I mean on a YoY basis, 25,300 tons has come down to 24,878 tons.
Like we explained in that particular previous year quarter, there were these export shipments that certain vehicles where the ship schedules got moved into one particular quarter from the previous quarter. The sales was booked in that quarter, even though the shipment was made. Because the accounting policy is to take on ship on board date. That is how that particular quarter showed an increase in larger numbers which is not comparable.
Okay. You have guided for 1.2 lakh tons of sales for this year on lead side for the full-year, correct?
Yes. I equated that to specific top-line numbers.
Yeah, correct. Ideally then H2 should be much more heavier than what you've recorded in H1.
Yes. As new capacity come up, the sale volume will increase. Also, if you notice, our sales realization per ton also is higher. We are also taking a conscious call only to make those specific products or pick up those specific orders where our margins and realizations are high and are not only focusing on volumes.
I get that point, for achieving 1.2 lakh tons for this year, for H2 you should do 80,000 tons. Do you feel that you'll be able to go on that track?
Definitely we'll be able to go on that track. Like I again explained, these numbers also we are specific on taking what kind of orders that we need to take on specific volumes. We are confident on the volume, we are specific what products we will be taking. These are only margin-intensive.
Got it. What will be value-wise for this?
Approximately 70%.
Okay.
Approximately.
Thank you.
Thank you. Reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Dheeraj Ram from B&K Securities. Please go ahead.
Hi, sir. Thank you for taking up my question. I just wanted to know what is the EBITDA per ton for the lead sales from the new plant versus what is the EBITDA per ton for the lead sales from the old plant.
We generally work out on a blended basis. We will not be able to currently give you specifics of that because certain information are internal to our company. Overall margins, as we already guided, we have given, which are in excess, in over INR 19,000 per ton.
Okay, sir. What is the CapEx that you are expected to incur in H2 FY 2026 and what is after FY 2027?
Sorry, could you repeat that question? It was a little unclear.
Sir, what is the CapEx that you are expecting to incur in H2 FY 2026, and what is the CapEx that you expected in FY 2027?
In H2 on the lead side, it's approximately INR 20 crores, and in addition to that, another INR 35 crores approximately on the copper side.
Got it, sir. The last question is, what is the volume that you are expecting for lead in FY 2026?
Volumes for lead, is it?
Yes, sir.
Volumes for lead, the volume we are expecting close to 70,000 tons for the next two quarters put together.
Got it. Thank you.
Thank you.
Thank you. The next question is from the line of Shubham Kadhi from 3A Capital Services. Please go ahead.
Hello, am I audible?
Yes, please.
Sir, first of all, congratulations on a great set of numbers. I just had a couple of questions. First would be, what kind of peak utilization do you expect to achieve after the commissioning of the Phase 2 plant?
You're asking the combined utilization of the total capacity?
Yeah, of your total capacity. When would the ramp up, how long.
At that point in time. Sorry, please go ahead.
How long will it take us to ramp up the Phase 2 as well?
Yeah. At that point in time when the Phase 2 comes in, the combined utilization towards the year-end for that will be approximately in the range of 60%. For it to completely ramp up, I would say in the H1 of next financial year, the same thing will be ramped up.
Okay. What will be the peak utilization, combined peak utilization?
Combined peak utilization of the new plant, right, at 60%.
Yeah. Okay. At 60%.
For this financial year.
No, sir, next year. I'm talking of next year.
For next year we are targeting at 80%.
80%. Okay. My second question would be around the margin again. Okay, you said that we can sustain 8% EBITDA margin, but I wanted to ask if we can actually increase it to around 9%- 10%.
We will try our best to push it to that numbers. We are working on a couple of things, but 8% we can assure you will be maintained. Anything higher, we all will be happy together.
Also, sir, if I can squeeze in one more. Do you plan on any further CapEx on the copper segment apart from that that has already been done?
The second half of this year, about INR 35 crores CapEx will be made for copper further.
Okay. After that?
After that, in the next financial year, we will further be investing close to about in the range of INR 55 crore-INR 60 crore.
In the copper segment only?
In the copper segment alone, yeah.
Okay, what sort of turnover do we expect?
The combined target till the next financial year-end is somewhere approximately close to INR 100 crore-INR 110 crore for the copper segment, including this year and next year.
What sort of turnover do we expect from this INR 100 crore CapEx?
From this INR 100 crore CapEx, give me a moment, please. We expect close to about INR 900 crores-INR 950 crores, in the range of INR 900 crores-INR 1,000 crores top line.
The margin would be same as they are this year, right?
The copper segment margins will increase with this expansion.
Okay. By how much?
These will be value-added products. The individual segment-wise profitability on copper will increase.
If you can give a number for that, it would be good.
In due course, once the products are up and in the market, we will give those numbers, Kadhi.
Fair enough, sir. I wish you the very best and happy to be with you.
Thank you. Wish you the same.
The next question is from the line of Deekshant Boolchandani from DB Wealth. Please go ahead.
Hello, sir. Congratulations on the good numbers.
Thank you, sir.
First is, last year our strongest quarter was the Q2 quarter. You have explained that there were some export orders and that might affect the seasonality. Now that we are in a ramp-
No, I just corrected you there. It is not the export orders. What happens is sometimes the shipping schedule moves a little bit, hence the B/L for the first quarter end shipments were issued in the first week of second quarter, and that's when those invoicings moved to the second quarter. That's why you see a volume in the second quarter.
Got it. Sir, this year, what do you expect that seasonality-wise, which is going to be a good quarter for us just from volume basis? We don't control the commodity price. From a volume perspective, which quarter should now be a seasonally stronger quarter for us?
The way we have contracted our contracts is on incremental basis as our capacities are ticking in. We have already contracted on incremental basis quarter further than volumes. Keeping in mind our Phase 2 coming in and all those capacities and volumes coming in and ramp up happening.
You think that-
Each quarter on quarter there will be a growth in one. Yeah. The next two quarters will be higher than the first two quarters.
Of course. Got it, sir. Sir, secondly is, what is our hedging policy? How are we making sure that we are taking care of our downside risk?
Look, in terms of our raw material is hedged with the broker. We have appointed a direct London Metal Exchange broker. The commodity risk is hedged through LME. The forex risk is hedged through the banks. Wherever we have imports and exports. There is a natural hedge, and the natural hedge is maintained as the hedge book. There are multiple tools that are used to hedge, wherein we don't even keep our forex or our commodity risk open. Both sides are completely hedged.
Got it, sir.
If you look at this past year, the rupee has also been extremely volatile, and we have been able to hedge and maintain our margins very consistently.
Got it. Sir, philosophically, our business has been very strong in terms of making sure that we create new bases of EBITDA margins for us. You have always guided conservatively and always delivered, which as shareholders we appreciate a lot. Going forward with what you're thinking for lithium and the clear market opportunity, what kind of growth do you see in the next, let's not think of just FY 2027 because your ambitions are higher, sir. What are you thinking forward, FY 2028, FY 2029? Two or three years, what do you think that we can be?
Yeah. As a basic internal target that we have is a minimum of 20% is what we want to grow year-on-year, going forward. That is on a minimum level, what we thrive. Definitely with various verticals and opportunities coming in, specifically if you look at the recycling space, recycling space itself, anything and everything that we use today is going to come back tomorrow for recycling. It's not only lead or metals, everything. The market is hugely opening up for multiple vectors on recycling. In terms of our growth ambition, we look at a minimum of 20% growth year-on-year. We should definitely be able to have that target achieved.
Sir, last question from my side. Now that we are thinking of going in copper more aggressively, what about creating our own LME brand so that we are registered with LME so that our margins will be better, warranting will be easy. You have done that in the past and you're good at it. What are your thoughts here?
Yes, sir. Once you get into the product and then one by one, it's a little slow process, but definitely, slowly but surely we will do that.
Sir, wish you the best. I love the business that you are doing. Congratulations again.
Thank you. Thank you, sir.
Thank you. The next question is from the line of Kashyap Desai from Richbond Capital. Please go ahead.
Hi, Ashish. Excellent set of numbers once again. I just wanted to check, what is the status on the Phase 2 expansion that is supposed to come online right now? Basis that, how confident are you of achieving this 70,000 ton incremental lead volume in second half?
Phase 2 is underway, the refining and alloying part of Phase 2 is almost completed. Maybe just post this week or something, the trial runs will start on that. In terms of volumes, like I said, basically we have equated our volume versus our sales numbers in terms of top line. We have the opportunity to pick out certain higher value-added products where we have higher realizations. Even though we are targeting 70,000 tons this thing in terms of volume, which is very much achievable, also on the sideline, we are also looking at taking only products where the margins are little bit on the higher side than the regular non-value-added products. At the end of the day, our target on our top line will be definitely met and our volumes also will be incremental quarter-on-quarter.
Perfect. Once Phase 2 of this new capacity is stabilized and you're seeing the relatively better margins versus your older capacities, is there any game plan for the older capacities to be modernized in FY 2027, 2028?
That's already happening parallelly as we speak.
Perfect. Thank you. Thanks a lot, and wishing happy Diwali to everyone at POCL.
Thank you, Kashyap. Good day to you. Thanks.
Thank you. The next question is from the line of Jigar Jani from Nuvama PCG Research. Please go ahead.
Yeah. Thanks for taking the question, and congratulations on a great set of numbers once again.
Thank you.
Just two clarifications on the copper facility. This CapEx will be INR 35 crore. I think in the PPT it's mentioned INR 35 crore . Out of which, INR 20 crores, I believe, is for the TKD plant. In addition to this INR 35 crore, you'll be spending another INR 35 crores for the copper facility and another INR 55 crores-INR 60 crores in FY 2027. Is that understanding correct?
Hi, Jigar. This is Vijay. Overall for this year, we have guided about INR 50 crores, out of which already INR 50 crores we have spent. This typically one part of the 15 is for Phase 2. Balance for Phase 2 is minimal, which we have to spend. The balance INR 35 crores, what we are planning to spend on copper for this year. Next year, as we target here, it is about INR 50 crore-INR 55 crore additional investment will be done under copper in the next year.
Right. Sir, these facilities will come phase-wise, like 6,000 and 6,000 in parts. Can we expect some production in FY 2027 or most of the production from this copper facility at TKD will flow into FY 2028?
This will come product-wise, not phase-wise. It will come product-wise. The first product out the rollout, we will see definitely in the first half of FY 2027.
Okay, understood. This is 24,000 tons total annual.
We are targeting 12,000+ 12,000. By end of FY 2027, we should be having a capacity of 24,000 tons on this. This will be fed back in FY 2028.
Okay. The total CapEx will be INR 100 crores-INR 110 crores.
Yes, that's right.
Okay. Sir, any update on Mundra? What we are planning, any plan for that? You will update on that at the end of this fiscal year.
Yeah. By next quarter, we should be able to give you some updates on the Mundra thing, because right now we are completely concentrated on copper project and the project that we've taken up in the south. We are seeing very good opportunity being consolidated here. We have not made 100% firm, but we do have plans to set up a facility in Mundra as well.
Right. Sir, last question from my side is on the cash flow. We have seen some very heavy cash flow this first half, mainly because inventory has increased a lot from what I am comparing on the balance sheet. These inventory levels are sustainable or we will see a slight increase in inventory going ahead into second half?
Last year, if you see 31st March, our inventory levels were higher. As we said in our previous calls, it is typically we have accumulated inventory for our new plant. Now that the volumes are increasing and we are bringing up production, we feel this level of inventory will be sustainable going forward. INR 170 crores-INR 200 crores of inventory is something which we can have as a benchmark going forward. In the next year when the stock up happens, accordingly, according to our working capital, the inventory levels will be increased. We'll be able to maintain these cash flow from operating activities, these numbers.
Okay. That is great to hear, sir. Thank you so much for answering my questions. I'm happy Diwali to the team. Thank you.
Thank you. Wish you the same.
Thank you. A request to all the participants, please restrict yourselves to two questions. The next question is from the line of Abhijit Mitra from Aionios Alpha Investment Management. Please go ahead.
Yeah, thanks for taking my question. Couple of questions here. If we just compare your year-over-year, I think the increase in lead from, say, around INR 12,000 to INR 20,000, say, INR 8,000, that's almost a 350 basis point of expansion in margins. How much of this you feel is on account of your high value addition? How much of this is on account of operational improvements coming in, including volumes from your new plant?
Hi, Abhijit. This is Vijay here. I will put this increase in three diversification. The first thing is, last quarter as well as this quarter, our operational efficiencies have increased by 1.5%. Of the overall margin increase, 1.5% has come from operational increase. The value addition still remains at 70% + levels. There also we have got this 1.5%, which is typically about, in INR terms, it is INR 6 per kg. From 12 to 20 we have increased. Balance, the INR 1 is all about the fixed cost observed being higher volume. That has overall contributed to the EBITDA percentage increase.
Understood. Very clear. In second half, when you're talking about 70,000 tons of volume, your value addition would be what percentage? Can it be at 70% still, or it would sort of come down because volumes are definitely higher. How do you look at it?
That's exactly what I was explaining earlier to Mr. Kashyap Desai, saying that definitely we can look at those volumes, but we will be specifically picking up products which have higher margin levels, which are value-added products. We are focused to keeping our value-added products mix at about 70%. We will look at that.
Understood. That is very clear. Volume is not the priority here. In terms of maximizing volume versus value, how should an external participant look at? I understand that the range is very high, right? 25,000 you have done in this quarter. If you completely sacrifice value addition, you can go up to 35,000. If I have to sort of try to understand between our value versus volume mix as an external observer, how do I think about value maximize it?
Basically, if we push 100% towards the volume, it definitely hits out on the value-added product because when we push on volume, we start moving more commoditized. I will say to give it a similar weightage at 70% and 30%, I'll say incremental tonnage of 10,000. I will say as an optimum mix, it could be, I would say maybe a 5,000 increase. Which could be something like we are not looking at 70, maybe a 60, but definitely not too low.
Got it.
A marginal plus or minus. Yeah.
Got it. Very clear. Thank you. Thanks for the answers. Thanks. Wish you all the best and wish you a happy Diwali. Yeah.
Wishing you the same. Thank you.
Thank you. A reminder to all the participants, please restrict yourself for two questions. The next question is from the line of Meet from Anvil Shares. Please go ahead.
Am I audible?
Yes, sir. You are audible.
Congratulations on a great set of numbers. Sir, I just wanted to understand a macro view. Say, if I take a five to seven-year perspective, our lead revenue is approximately INR 2,000 crores if I consider for the full-year. Is it possible that, say, copper, plastic, aluminum, and lithium, they all could individually generate the same amount of revenue as lead? Say, over seven or eight years view.
In our seven to eight years view, I would rather put it that copper could generate even more revenues than lead.
Okay.
Other verticals could be equivalent to lead.
Okay, sir. Yes.
Also lead being there on an incremental basis, being higher than where it is currently.
Yeah. Sir, my second question was, I just wanted to understand that our 36,000 tons, it went live in Q1, our capacity was 168,000 tons. I just wanted to understand that Q2 should have been better, if I'm not wrong, if I compare YoY. Is my understanding correct?
Like I explained earlier, the YoY number on Q2 last year, to explain again, was due to the movement of shipment which was shipped in the last week of the first quarter and had to be accounted in the second week. Otherwise, the Q2 volumes this year and last year, this year's volume was still higher than previous year.
Again, I have to, Mr. Ashish. Again, volume alone is not a criteria. We want to maintain the profitable venture of value-added products. Achieving volume, achieving top line alone is not a main criteria. We want to increase the product market. Even though there is increase of 36,000 metric ton, we are not able to increase the absolute numbers.
It was my question. Thank you and all the very best for the future and a very happy Diwali to our team.
Thank you. Wish you the same.
Thank you. Reminder to all the participants, please restrict yourselves to two questions. The next question is from Prem Luniya from Astute Investment Management. Please go ahead.
Hello, sir. Congratulations on the results. Sir, I just wanted you to focus on the copper section. I am fairly new to the company, so I wanted to understand, right now we are at 6,000 tons. Can you just draw me a pipeline of how this capacity will be added in till the next year end, like the 24,000 tons?
I'm sorry, I lost you in between. Can you just repeat again? Sorry.
I wanted to understand how this capacity addition is going to happen in copper from 6,000 to 24,000, like the breakup, when it will come live. Also I wanted to know what were the volumes for copper in the first half and Q2.
Basically, currently we are at about approximately 6,000 on the recycling front, which we are increasing to 12,000 on the recycling front. The volume in terms of numbers for the Q1 and Q2 put together were approximately a little bit higher than 2,000 metric tons, about 2,200- 2,500 metric tons. We are targeting to be doing somewhere around 3,500-4,000 tons in the next two quarters on the copper. Going forward, 12,000 tons of value-added product in terms of products will be added in this year, which will be seen in the H1 of FY 2027.
Sure. Also, sir, I wanted to understand, like what I understand, copper is comparatively your, on percentage terms, your EBITDA is lower. Do you believe that this 8%+ EBITDA, once the copper revenue jumps in, on a consolidated level, we will be able to maintain this 8%+ EBITDA margin?
Segment-wise, like whatever copper is right now, as we keep adding products over a period of time, those margins usually for the product as in copper will be improving. It'll be on incremental improvement.
Sure. With the value-added products, the EBITDA margins will keep improving, is what you're saying?
Sure.
Got it. Thank you so much.
Thank you. The next question is from the line of Tanmay Jhaveri from Finterest Capital. Please go ahead.
Hi. Good evening, sir. Sir, my question was, in the last conference call, we mentioned that we'll also focus on the aluminum segment. Just wanted to know on that part.
The aluminum part, the trials are underway and some small volume sales has happened. We have not reported that as a separate segment since the business volume is still small.
Just to get a macro view for this, like aluminum recycling.
Sorry?
A macro view on the aluminum recycling part, like what kind of revenues can we expect going forward?
Our focus is not production aluminum, but as another product vertical, it will keep growing and could have small numbers in revenue, could be somewhere maybe about INR 80 crores-I NR 100 crores, and not too much currently. We're not focusing too much on the revenues.
Any specific reason for that? Sorry.
Currently in the domestic market or in the U.S. market, the aluminum alloys and stuff are not directly hedged. Here we find a risk in terms of margin profile to maintain a steady constant margin profile. We are not very focused on keeping that as a product where we have to run the risk on margins.
Okay. Got it. Yeah. Thank you so much, sir. Happy Diwali in advance.
Thank you. Wish you the same.
Thank you. A request to all the participants, please restrict yourselves to only one question. The next question is from the line of Sanket Gupta, an individual investor. Please go ahead.
Hello. Thank you for the opportunity. I have two questions. One regarding what is going on in the EPR implementation because there is delay in rPET EPR norms and what is going on in this industry. The second question is regarding the GST. What is GST in our industry, and is that reduced? In the last phone call, I think you mentioned about informal performance.
The EPR implementation has been done. Right now, even though the trades are happening, they are still not happening at a mature price level, and the whole system is still evolving. I feel probably it should take up another couple of months, about maybe this financial year or so where the whole evolution will happen. Recently also we had some discussions with the stakeholders who promised that their websites and their platforms will be more functional and better guidance on pricing and all of that will be done. We'll have to wait and watch on the EPR front how that takes up and pans out. As of now, we have not sold any EPR credits, and we are holding our EPR credits in our books. Once we have a decent, sustainable, good price numbers, then we will sell our EPR credits.
On GST type?
GST, the RCM was notified, but for a small amount. The reduction in GST numbers was not done for lead scrap and e-waste scrap, so it still remains at the full 18%.
Okay. Actually, the EPR is actually inevitable, but I think it will take time to evolve maybe.
It's on the evolution phase. We have to see how quickly it evolves and how quickly it stabilizes. It depends a lot because there's a lot of opposition, of course, from the primary manufacturers who have to maintain the EPR levels and all of those. The government is pretty keen that they need to have that in order.
Okay. Thank you.
Thank you.
Thank you. A reminder to all the participants, please restrict yourselves to only one question. The next question is from the line of Harindra Singh, an individual investor. Please go ahead.
Harindra Singh.
Harindra Singh, please go ahead with your question.
Good evening, sir. Am I audible?
Yes, please.
Good evening, sir. First of all, congratulations on great results. Sir, my question on the other expenses, sir. Sir, as I can see, sir, there is a significant growth in other expenses, sir. In last quarter, there is INR 20 crore, and on yearly basis that's INR 20 crore and last quarter INR 21 crore, sir. Sir, this quarter it is INR 29 crore, sir. Sir, there is approximately 40% or 50% growth, sorry, increase in other expenses, sir. Sir, would you put some color on this? What is the reason? Is this due to the capacity expansion or any other specific reason?
See, for H1 versus H2, I'll just touch upon these H1 and H2 numbers when it comes to. There has been a significant increase. See, we have to see that last year, if you see, there is not much of copper expansion. No. This year only we have expanded our copper and last year TKD was not there. All the general admin and other expenses, logistics, there is an increase in volume also. When you see contract wages, you have logistics, you have the present metal, you have all the general admin staff, so everything has increased. That is one of the main reasons for H1. The same thing for Q1 and Q2 that we are asking, right? There is an increase of about approximately INR 10 crore growth. That is because TKD plant last quarter, we have run in 50%-60% utilization.
That is the regular cost, like all the cost setup that has kicked in. Apart from that, there is a volume increase which has also been factored in. That is the main reason for increase in other expenditures.
Also as we go ahead with our capacity expansion, all of that, some more preparatory works and other expenses happen to get all in line and in action to get the whole volumes up. This is all a combined effect.
Adding one more point to Ashish. If you see as a percentage of sales on per kg basis, it will not be much difference. That's what I wanted to quote here.
Okay, sir. Thank you, sir, for giving me time, sir.
Thank you, Harindra.
Thank you. The next question is from the line of Aadesh from Spark Capital. Please go ahead.
Hello, am I audible?
Yes, sir.
Yes, sir, you are audible, sir.
Yeah. Thank you so much for the opportunity and congratulations to the entire team for such a great set of numbers. I have a couple of questions. First one was regarding the lead. As the volume part you have already explained, but I wanted to know, is there any new product on the value-added side in lead, or is there any change that we have seen which has led to such good numbers? Even on the copper side, when we were discussing that, I think we have already mentioned about it, but you said that the copper facility will be coming up in a phased manner as per the product. These products that we are developing in copper, are they in regards to any particular OEM or they will be general products for the entire market? These were the first two questions.
When it comes to lead alloys release, we already stated in the previous quarter that we had new alloys which are typically required on behalf of certain new customers. That is continuing. That is one of the main reasons why our margins have increased, and we have seen a good traction in terms of those products. Coming to copper. Right now, we are into plain recycling. As we already stated, we wanted to get into specific products, flat and extruded products, where we wanted to go first, then we wanted to slowly move on to next Phase 2, where there are high margins like foils. That is where we are focusing. Right now, we wanted to get into how our product portfolio will get built in.
Yeah, these new copper products, so they will be common generic for the entire market, right? They will not be for any specific OEM or itself.
Definitely OEM will be a part of the profile because those are consistent orders. Apart from that also after-market sales will definitely be there, including exports to various countries.
Okay, great. Just one data-keeping part that I wanted to know. Previously to one of the participants, you mentioned that about the Phase 1 absolute capacity utilization. If you can mention that number again, the lead capacity, the volumes that we did from Phase 1.
Okay. Approximately 55%-60% in the Phase 1.
That is the utilization. You also mentioned the absolute tonnage production that you did.
In the last quarter, the capacity was 9,000 tons on which we have done approximately 5,000 tons from this new plant.
Okay. Thank you.
Thank you.
Thank you. As there are no further questions, I would now like to hand the conference over to management for closing comments.
Thank you everyone for participating in this call, and we trust 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 at Go India Advisors. Once again, we extend our gratitude to all our participants for joining us today and wish all our investors a very happy Diwali and a prosperous new year. Thank you, and have a great day.
On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.