Ladies and gentlemen, good day and welcome to the Pondy Oxides and Chemicals Limited Q1 FY 2026 earnings conference call hosted by Go India Advisors. As a reminder, all participant lines will be in 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 over the call to Sakshi Narvekar from Go India. Thank you, and over to you.
Good afternoon, everyone, and welcome to Pondy Oxides and Chemicals Limited earnings call to discuss Q1 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, and Mr. Vijay Balakrishnan, Chief Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must therefore be viewed in conjunction with the risks that the company may faces. May I now request Mr. Ashish Bansal to take us through the company's business outlook and financial highlights, after which we will open the floor for Q&A. Thank you, and over to you, sir.
Thank you, Sakshi. Good afternoon, ladies and gentlemen, welcome to our Q1 FY 2026 earnings call. I trust you've had the opportunity to review the earnings presentation, press release, and financial results that were uploaded on the stock exchanges. I will guide you through the results, after which we will have a question and answer session. I'm delighted to announce that POCL has kicked off FY 2026 with its best-ever quarterly performance, driven by robust operational execution. On a year-over-year basis, revenue, EBITDA, and PAT have grown by 36%, 82%, and 90% respectively. We've achieved a record high EBITDA and PAT margins of over 7% and 4.5%, reflecting our increased emphasis on value-added products and enhanced operational efficiency. Before we delve into operational and financial highlights, I'd like to begin with key strategic updates. Capacity expansion update.
POCL is undertaking a two-phase expansion of its lead production capacity at the Thervoykandigai plant, adding a total of 72,000 tonnes per annum, 36,000 metric tons in each phase. Commercial production of phase I of 36,000 metric tons per annum commenced in Q1 FY 2026, with the plant operating at approximately 40%-45% capacity utilization during the quarter. This is expected to increase to around 70% in the upcoming quarters. Phase II of expansion is scheduled for commissioning in the second half of FY 2026, with an estimated capital expenditure of approximately INR 20 crores. POCL invested INR 8 crores in CapEx during Q1 FY 2026 and plans to invest an additional of INR 42 crores over the remaining nine months of FY 2026.
POCL is looking at setting up R&D facilities for the creation of value-added products, both for current portfolio and for feasible products, which will add overall value to the top and bottom line of the company. Coming to the operational performance, the yearly procurement mix of lead, plastics, and copper through imports is approximately 84%, 63%, and 100% respectively. Capacity utilization of copper more than doubled, leading to a significant increase in production and sales of copper. The production and sales of lead has increased significantly by 17% and 9%, to 24,167 metric tons and 22,530 metric tons on a year-on-year basis. EBITDA per tonne of lead increased significantly by 48% to INR 16,898 per tonne on a year-on-year basis.
Moving to our financial results for Q1 FY 2026, I would like to reiterate that POCL has achieved highest ever quarterly revenue, EBITDA, PAT, and margins. Revenue from operations has increased to INR 596 crores, up 36% and 15% on year-on-year and Q-on-Q basis. POCL experienced this substantial growth as a result of increased production, sales, and realizations in both lead and copper. The Q1 FY 2026 sales mix between domestic and exports markets stood at 44% domestic and 56% exports respectively. The percentage of value-added products in lead segment stands at 71%, compared to 50% and 58% on year-on-year, Q-on-Q basis. EBITDA increased significantly by 82% to INR 43 crores on a year-on-year basis. EBITDA margins exceeding the 7% mark represent a significant milestone in POCL's journey towards long-term sustainable value creation. This increase is due to increased sale of value-added products and operational efficiencies.
PAT increased by 90% to INR 28 crores on a year-on-year basis. PAT margins increased to 4.6%, up from 3.3% in Q1 FY25. On a consolidated basis also, POCL reported a strong financial performance. Revenue from operations, EBITDA, and PAT increased by 35%, 78%, 94% respectively year-on-year basis. In conclusion, POCL is firmly on track to achieve its long-term strategic objectives for 2030, with a clear roadmap centered on value creation and sustainable growth. We are aggressively scaling our lead production capabilities while expanding into adjacent non-ferrous verticals, targeting over 15% value growth, a revenue CAGR and profitability growth of 20%+. These gains will be accompanied by meaningful margin expansion, with a focus on achieving EBITDA margins above 8% and ROC greater than 20%. Our strategy is not only growth-oriented but also deeply aligned with sustainability imperatives.
We are working towards generating over 60% of revenue from higher margin Value-Added Products while targeting a 20%+ reduction in energy consumption, reinforcing a commitment to operational efficiency and environmental responsibility. With strong capacity expansion in progress, prudent capital deployment, operational excellence, regulatory tailwinds, and direction of a seasoned leadership team, POCL is well equipped for sustainable long-term value creation. Supported by the continued trust of our stakeholders, we remain confident in our journey towards a more innovative, responsible, and profitable future. That concludes my update, I'd now 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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rahil from Crown Capital. Please go ahead.
Hello. Can you hear me, sir?
Yes, you are clear.
Yes. Hi, good afternoon. Sir, just one question on these margins. By 2030, you're saying you're targeting 8% EBITDA margins, correct? Whereas in this Q1 itself, you achieved 7%. If I remember correctly, in the previous call, Q4 FY 2025, you had said FY 2026 you can expect 6% margins for the year. When you're already achieving 7%, first of all, will they continue for the next set of quarters? Why such a low target then for 2030?
Sir, definitely the margins will continue and remain over 7%. With the addition of value-added products and all of this as a blended margin, overall, we are looking at 8%. As we add on our more value-added products, maybe we will look at our margin profiles. As of now, the guidance that we have provided is around 8%.
Yes, you have given 8%. Sir, why just like 100 basis point improvement in the next three, four years? Can't it be more than that?
That could be a possibility. As of now, how we are looking at it with blended products and multiple portfolios coming in, we would like to look at it in this manner.
Okay. For this year, 7% overall is what we can definitely expect.
Yes. Will definitely continue. Yes.
Okay. I'll call back. Thank you. All the best.
Thank you. The next question is from the line of Sagar Shah from Spark Capital. Please go ahead.
First of all, congratulations to the management team of Pondy Oxides and for an amazing performance in Q1. To begin with, my first question, sir, was related to a follow-up question actually, as compared to the previous participant on the margins. I noticed the margins were quite actually led by the lead segment in this quarter as well. In the plastic segment, we are in a bit of EBIT loss and still copper, although the utilization has actually increased, almost doubled as you highlighted in the opening commentary, the lead margins have expanded. I wanted to understand two things behind that. Is the lead margins because of the drop in the lead prices that we saw in the preceding quarter, that's why are we seeing some sort of an inventory impact due to that?
Is it just purely operating leverage that we are actually carrying through in this quarter, that we are enjoying such healthy margins, and that too so early actually, just in the first quarter, the capacity has just started? That is my first question, sir.
Yeah. Thank you for your question. See, regarding the copper margins, as you said, the copper is a product that we've just started and as we are also looking at further other products, copper margins will continue to improve as we go on adding products. This is the initial part of the manufacturing. Hence, as you are aware, slowly the efficiencies will start coming in and the process will be also more efficient and the margin profile will improve. As far as lead is concerned, it is nothing to do with inventory overhang or anything because our inventories, our positions are all completely hedged and we work on a back-to-back model. The main increase in our margins is one, due to our operational efficiencies we have.
In the whole of last financial year, we had done a lot of modifications in our processes, used more efficient kind of systems, furnaces and all of those, lot of changes and additions have been done. Apart from that, also if you look at our sales profile, the value-added products that were sold in this first quarter was on a higher quantum. These are what contributed to the lead margins.
Okay. Fine, sir. You already highlighted that we are running at almost 40%-45% capacity utilization in this quarter as far as the new plant is concerned. Can you highlight what is the utilization of the existing capacity, which is at 132,000 tons that we already have? What was the utilization in that capacity, sir?
The existing plants are running in actually about close to 70%.
Okay.
Smelting capacity, smelting capacities are running at 90%+ and overall at 70%.
Okay, fine, sir. My next question was related to the copper. In relation to copper, actually, we were eyeing some forward integration products. We were actually eyeing some other value-added products for new clients, actually. Any update on the progress, actually, what are you eyeing in that segment? What kind of response have you got from your customers so that your copper segment can be enhanced and your contribution for lead to come down, which is your actual overall guidance. Any progress on that segment, sir?
The progress is continually happening, and as and when we have, we will definitely let all our shareholders know through a public announcement.
Okay. Fine, sir. I just have one or two data keeping questions. First of all, thank you for giving the segmentation of revenue as per the product wise. Secondly, I wanted to ask, what are the volume figures for copper plastics, and if any aluminum we have produced in this quarter?
Hi, Sagar. This is Vijay. With respect to lead, the volume for this quarter is about 22,530 metric tons.
Right.
Copper is about 1,107 metric tons, plastic is about 808 metric tons.
Plastic was, sir, 808 metric tons.
Okay. Any updates, sir, on the plastic segment? What is the reason behind that we are running an EBIT loss in that segment, and how do you see that segment going ahead in the rest of the year? Will we become profitable, and how are we exploring something in the new products there?
Yeah. Actually, in plastic segment, at present we are running in the leased premises. Now we are planning to move to our own premises where we have sufficient land bank and structures. We are planning to do some restructuring of moving. Most of this slight EBITDA positive, other administrative loss is causing the overall net loss. The rent, we want to stop it. Already we have given vacation notice. Probably from the next quarter onwards, substantial amount of rent will be saved, and we move to our own premises, then automatically that segment will come to the positive.
Okay. Fine, sir. Thank you so much.
So we are-
Yes, sir.
We are getting EBITDA margin on plastic. Because of this administrative overhead, net it is coming negative. Otherwise, it's EBITDA positive only.
Okay. Basically, that is just because of the overheads and the kind of admin expenses that your facing, but otherwise it's an EBIT positive business that you're going through.
Yes.
Okay, fine, sir. Thank you so much, and all the best, sir, for all your projects.
Thank you.
Thank you. The next question is from the line of Shweta Dikshit from Systematix Group. Please go ahead.
Hi, good afternoon. Thank you for your opportunity, and congratulations on a good set of numbers. My first question would be on the aluminum segment. Any update, since we were evaluating different product profile for aluminum. Any update on there? We were expecting to start generating revenues for it to contribute into profitability this year.
Yes. Hi, Shweta. Thank you. Yes, it is in progress, and we will have some numbers on the aluminum segment in this second quarter, and the work is in progress for the same as updated earlier. There's a slight delay on that, but in the second quarter, you'll start seeing the numbers.
Any update on the product that we were evaluating since we are moving away from the existing or the product profile also? Any color on what kind of aluminum products we're looking at now?
We'll keep you updated. They are linked products to our existing products. We'll keep you specifically updated on the product line as we complete the evaluations.
Understood. Honestly, now coming back to the existing business where we've made upwards of 7% margin profile, and considering that the new plant at TKD has achieved only 40%-45% capacity utilization, and that plant being more operationally efficient and reduced manpower cost and everything, and we are expecting 70%-75% capacity utilization in 2Q, and that will of course naturally reach peak utilization subsequently, why are we not guiding for margins higher than 7%? Is there any impact which we don't see coming in from the existing operations? I'm trying to understand this stable EBITDA margin level for the existing operations that we can see for the rest of the year. Why not higher than this?
Being a new plant, the product definitely is manufactured and commercial sales also has commenced from this plant. However, as you know, to scale up the complete capacity, there are little approvals and other formalities that are being done with our customers. As we speak now, we have quite a few approvals, and that is the reason why we are saying that we'll be ramping up from 40%-45% to 70%. Definitely, as spoken earlier, our margin guidance will be in the range of 7%+ on average for the whole year.
Last few questions on the bookkeeping side. What is the cash on your books as of now? What is the gross debt level now?
The cash at bank as of today is about INR 52 crores. This comprises of both the pre-IPO money which is pending to be utilized, as well as the warrant proceeds which we have received during this quarter. The overall debt in our books of accounts as of 30th June is about INR 122 crores. Yes. The net debt is less than INR 100 crores.
Okay. Could you repeat what's the CapEx number for the remaining nine months and what it was in the first quarter?
For the remaining nine months, we're looking at about INR 42 crores of CapEx approximately. We're already in the quarter one, we've already done our CapEx of about INR eight crores.
This is excluding our [civilized] integrated plant.
That is already done, approximately INR 75 crores, which was completed.
This INR 8 crore went towards phase II of TKD ?
Yes, partially towards phase II, yes.
Any update on Mundra, sir? Any plans for Mundra?
Once this plant is complete, we are also looking at a copper project and multiple other projects. In the next financial year, we'll be looking at the Mundra part of it.
Understood. Thank you.
Thank you.
Thank you.
Thank you. The next question is from the line of Sakshi Goenka from Sohum Asset Management. Please go ahead.
Hi, am I audible?
Yes, you are. Please.
Yes. Hi, sir. Congratulations for the great set of numbers. Just quickly, continuing on the previous participant's questions, I just wanted to understand out of the EBITDA per ton which we have posted for lead, INR 16,900 crores, you alluded that there were opportunistic value-added product sales and operating efficiencies coming through. What I am trying to understand is what could be a sustainable EBITDA per ton taking into account that the new plant is more efficient. We have generally done EBITDA in the INR 11,000 crores-INR 12,000 crores range. I believe that will see a step jump because of the new plant. Obviously, this quarter had some value-added gains. What could be a sustainable EBITDA per ton, sir? Any color around that?
Yes. As guided earlier during this call as well, Sakshi, our minimum levels that we are looking at for this year on aggregate basis will be in excess of 7%. Though this quarter we had 8%, as told, we've had some opportunity to have a good high share of value-added products. Definitely that is not going to drop in the next few quarters, on a conservative levels, we speak at 7% +.
Got it. Got it, sir. Sir, this year, obviously, next year, is there any scope for further efficiency gains, assuming that the new plant, as phase I will be operating at 70% this year and in second half we will see phase II coming. Will operating efficiencies continue into next year also? Can we see better margins next year?
The focus of the company always remains year on year to achieve higher operational efficiencies. Definitely the company is not going to be over-optimistic and start guiding towards higher numbers and try to make the market more acceptable towards that. As you've seen in the past as well, we've always been conservative in our numbers, and we continue to be. However, as you see 7% margin for this year guidance, we will continue to do, and we are continually working on our operational efficiencies, which definitely will reflect back onto numbers year on year.
Got it. Just quickly, our existing plant has smelting capacity of 90,000, from what I understand, and the two phases, that is about 72,000. That's roughly 160,000 tons of capacity. On this capacity, what can be the maximum capacity utilization in I just want to understand what can be a FY 2027 kind of volume if we operate at maximum capacity.
The current financial year, we are targeting at operating at about in excess of 120,000 tons of capacity, I mean.
Yes.
Yeah.
For example, I was talking about more like 2027 with both the plants in and our existing smelting capacity of 90 plus the two plants adding up to 72, so that's roughly 160. On 160, what can be a max capacity utilization? Can it be 90%?
See, generally we always aim for 90%, but however, 80%+ on the smelting side is a good capacity.
Okay, sir. Sure, sir. Thank you so much, sir.
Thank you.
Thank you. The next question is from the line of Jigar Jani from Nuvama PCG Research. Please go ahead.
Yeah. Hi, sir. Thanks for taking my question. Just two questions. Just a clarification. Your smelting capacity is 90,000 tons from lead, right?
In our existing two plants, our capacity is 90,000 tons, approximately 92,000, 93,000 tons. With the addition of our new plant, we will be adding in two phases, 36 + 36. Approximately it goes in over 150,000 tons.
Okay. On the first plant, you have already added that, which has come online?
Yes, the first one is already online, yes.
Okay. Sir, on this margin front, again, sorry about asking that again on this. What is the product that has been or can you just throw some more light on what are these value-added products that have given you better margins and realizations this quarter? Do you feel that these are sustainable levels of these value-added products? Because I believe some antimony lead alloys have seen some spikes for the last six months or so. Do you feel it is sustainable and whether it is these kind of lead alloys that have led to higher margins for us?
As we have also highlighted earlier, POCL is one of the largest specialized lead alloys manufacturer in India, and we continue to hold that position. We manufacture certain specific alloys for customers which have given us these margins. As you've rightly highlighted, antimony alloy. Antimony alloy has been already there at better margin levels over the last six to eight months. That is not the specific reason for this quarter's numbers going up. Rather, our other value-added specific alloys that we manufacture for certain international customers and domestic customer is what has given us the margin. Going forward as well, this will continue.
Okay. Understood, sir. Thank you so much for answering my question. Best of luck.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the queue. Thank you. The next question is from the line of Kush Gosrani from InCred Asset Management. Please go ahead.
Yeah, hi. Thank you for the opportunity and congratulations on the good set of numbers. My question most have been answered. Just one thing on the copper side, at peak utilization, what kind of revenues we can generate and what kind of EBITDA margins we will be able to do, assuming today's pricing.
With the current capacity that we have at the peak utilization, the revenues could be around INR 650 crores-INR 700 crores on copper in terms of approximately somewhere around 10,000-12,000 tons of capacity. Currently, as what we are doing right now, about 4%-4.5% levels of margin is what we are looking at, which will be enhanced as we add some forward integrated value-added products.
Got it, sir. Any update on the EPR flow through, where it is stuck, somewhere it was stuck. Any progress on that front?
EPR, already we registered, we started taking credit of lead that's on the plastics. We haven't sold any credits as of now, but we have them in our books.
Okay, got it. Any plans when you'll start selling or is the pricing not correct or not feasible as of now?
The market is not yet 100% mature and as the penalties start kicking in, is when the value of the EPRs would be better.
Sure. Got it. Thank you. I'll get back in the queue.
Thank you.
Thank you. The next question is from the line of Sidharth Malhotra from Kotak Securities. Please go ahead.
Thanks for the opportunity, sir, and congrats for this set of numbers. Sir, sorry to harp back again on the EBITDA margin question, but can you sort of just explain to us what exactly is this VAP share which we are selling around? It seems our fundamental margin profile has changed this quarter. If you see at the margins from almost five, 5.5%, we have almost jumped into 7%, which is an increase of more than 20%-25%. What changed in one quarter which led to this fantastic performance? Can you just sort of give us more coloring to it?
Yes, good question. Definitely, I'd love to answer this. See, the margin jump is not specific in this quarter, any specific change that has happened. We've indicated in the last couple of earning calls as well that we are in the process of increasing our efficiency. Increasing an efficiency is not an overnight process. The increase in efficiency could be due to various changes in processes. A lot of R&D is being done on that. Could be in terms of power efficiency, fuel efficiencies, how the furnaces operate, the overall structure, the overall layouts, and the whole product profile mix, how they're blended, what products need to be taken up more aggressively, what products need to be dropped.
It's a complete blend of all the working that has been done in the last two, three quarters that has been going on in our plants in a silent manner. As those projects got completed, you would have seen a little jump in the previous quarter, and you see also the whole numbers coming into play in this quarter. That is how we are extremely confident that the following quarters also will be in similar levels.
Okay. Yes, sir. Please continue.
Yeah. Apart from this, a certain percentage of our margins also come, as I indicated earlier, that we've concentrated more on value-added specific products. Those products we concentrated on and the sale on those value-added products also were increased.
Okay, sir. Just a follow-up. Say, for example, if your margin increase was say approximately 2%. What proportion of this total increase was due to, say, higher share of VAPs versus efficiency gains, sir?
About 1%-1.5% is based on efficiency that has been gained. I'm giving a slight range because I cannot put an exact specific point digit number. So 1%-1.5% is in terms of efficiencies and about 0.5%-1% in terms of the specific value-added products that we've been manufacturing.
Understood, sir. When it comes to also new capacities, this 36, 32 capacities, assuming that these capacities are yet to fully ramp up, obviously your fixed operating costs would not be totally absorbed. Fair to assume that some amount of margin expansion is definitely on the cards from these capacities as well, say by the end of the year, sir?
As basic thumb rule of economics, it would be fair to say that because fixed costs will get absorbed, that has to contribute back. I will leave it to that.
Okay, sir. Just one last question on this. Were there any sort of particular alloys which were not there in the base quarter, for example, which contributed to this 50-60 base improvement which you were referring to earlier?
Yes. There were some alloys that were under the development stage, which we started supplying in this first quarter. That has definitely helped us in margin expansions.
Sir, any chance you could give us more color on what these alloys are and who are the other people who manufacture?
We have NDA with our customers, so I don't think I might be able to give you too much information on that.
Okay, sir. Just who are these customers? Only sectors, not specific names. Is that important?
These are mainly international customers.
Okay, sir. Understood. Thank you. Thank you, sir, for everything. Thank you.
Thank you. 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. Firstly, on the lithium ion side, what is your update? In the previous quarter you were tending to shifting from lead to lithium ion.
I'm sorry. Could you repeat your question, please? I'm sorry.
Yeah. I was just asking about what's the update on the lithium ion side. You were telling us in the previous quarter that you are going to enter the lithium ion side acquisition. Any update on that side?
Yeah. Hi. We are currently in discussions with many of our technological partners in terms of identifying the chemistry because this industry is quite fast-moving. It started with NMC and LFP and LMFP, now there are a lot of technologies that are coming up now. We don't want to be in a hurry and do something and then later repent. We thought we'll wait and understand the industry quite well, once it matures to a level where Because the feedstock is very important, currently, only the LFP is the 70% of the market is using LFP as the technology now. Probably over a period of time in the next few months, we will settle down on a particular chemistry and a particular technology with a technological partner, then we'll go ahead on this. That's the thought we have currently. Yeah.
Okay. Yeah. Understood. Secondly, on the copper side, if we see in the current quarter, even at a very initial stage, you have done around 3.5% of the EBITDA margin. Right? You are guiding on a consolidated basis, you can do a 7% on a whole year basis. On a sustainable basis, how much margin is possible on the copper side? How the capacity ramp up will be going on? Just asking because if you see on the aluminum side, initially when you entered the aluminum side, it was a very good business, right? After a very high volatility on that side, it become very hard for us to increase the capacity utilization on the aluminum. It is not similar to that in copper also, where if the volatility increases there can be a margin recession also.
Sure. Let me explain to you. I'll go a little forward and then come back to your question. Coming to the aluminum part of it, I would like to explain that aluminum business was a business where you could not hedge your raw material and you could not concentrate and fix your margin from the product. If you see the metal part of it, any and every metal is volatile, and the maximum movement that happens on a metal is copper, because that is the most liquid metal on the whole index. It would not be right to say that once copper becomes volatile, the margins will go because copper has and always been the most volatile metal.
The only advantage over aluminum that we have in copper is copper is a product where your raw material versus your sales can be hedged in a proper sense, and you can safeguard your margins on the product. Going forward in copper, we are looking at growing our volumes and looking at the margin. In the current year, we look at a margin of close to 4%-4.5%. We are extremely confident on that. It will not be right to be comparing aluminum and copper as similar products.
Okay, understood. Lastly, on the capacity of the copper only, it was I think around 6,000. You are going to ramp up to 9,000 - 12,000. It will be live by how much?
I didn't get you, sir. It'll be live by? It will be live in which time? In second half or in FY 2027? In this year, we are looking at achieving the capacity to what we have, about existing capacity, 90% utilization. By next financial year, the additional capacity will also be live and will be utilized.
Okay. On the lead side, what's the optimum utilization can we achieve?
We can achieve a utilization of approximately 80%.
Okay, 80%. Yeah, okay. That's it. Thank you so much.
In a phased manner, yeah.
Yeah. Okay. Thank you, sir.
Thank you.
Thank you. Before we take the next question, I will request participants to limit your questions to two per participant, and you can rejoin the queue for follow-up questions. The next question is from the line of Sanjay Parekh from Sohum Asset Managers Private Limited. Please go ahead.
Yeah. Congratulations to the whole team.
Yeah.
My first question was, this is a very fragmented industry. Do you plan to do any acquisition?
Sir, sorry to interrupt you. Your voice is unclean, breaking. Could you please repeat the question, sir?
Okay. Now you can hear me?
Yes, perfectly, yeah.
Okay. Because the industry is fragmented, it is an unorganized sector. Would you look at consolidating through small acquisitions ahead? That's the first question. Second is, you clearly are in a growth phase. What is visible to us is more like INR 2,500-INR 2,600 crore turnover this year and then INR 3,500 crore in FY 2027, and then potentially going to INR 5,000 crore maybe over the next two years after that. In the growth phase, the question I have is, one is the supply side capacity creation. One is the current expansion and then the Mundra expansion. How do you think about it once you plan Mundra, when can you commission it?
The constraint, would that be a supply side or the sourcing of scrap when you, let's say, want to hit a scale of INR 5,000 crores, would sourcing of scrap be a challenge to you? The last question is, are there rules worldwide where there's a clampdown of export of scrap from their own country outside because they want their own environment norms to get better? That is a little bit your thoughts would help. These are my questions.
Hi, Sanjay sir, Vijay speaking. See, right now as we have already promised, we have started phase I. Next we wanted to start phase II, which is going to happen in the second quarter of this year. Once the phase II gets stabilized and the entire lead operation starts, then as we already planned, we will start the copper also. Copper everything, all the discussion phase and all is over, we will start the forward integration of copper in the last third quarter of this year. By FY 2027 first quarter, we'll start the operations in the copper. On a phased manner, first we wanted to focus on one vertical, complete it, stabilize it, let's make it on autopilot mode. We focus on copper. Once that also is a product for us, then for forward integration, we wanted to move on.
Slowly, once these two verticals are being done, then we'll start focusing on Mundra. Also as you rightly asked the question about small acquisitions, we are not looking at these small acquisitions of other companies because right now the kind of technology that we have installed in our plant is one of its kind in India, and I'll say probably one of its kind globally also with our new lead operations. None of the other plants do have that efficiency nor do have that kind of processes and machinery available. Definitely we are not going to take a step backwards to acquire any of these small companies who are not efficient in production and would not make sense for us to acquire a small company and reestablish the whole system and equipment.
Rather, we would be organically doing it internally, converting our existing plants going forward to make it more and more efficient.
Only we have the buy.
That makes no sense. That makes no damn sense. We have sufficient real estate in our kitty.
Perfect. As you get scale, the scrap sourcing and globally, are there any norms to restrict scrap sales from those countries?
Yeah. Definitely, as you're saying, there are talks about the same happening. Also you need to understand that globally, countries who are talking about these are again still talking in excess of a couple of years ahead when it will start. The point is they themselves also realize they do not have the capacities and capabilities to recycle those scraps within their own country. Their generations are way much higher than what they can consume internally. As of now, we do not look at it, and also as India is becoming a little more organized in terms of the way the disposals are happening, the domestic availability also is on an incremental side. By all of these put together, the whole thing has been weighed and balanced and seen.
See, there could be a little tightness in the supply, but again, it all depends on your procurement efficiencies, what is your kind of network where you can source the scrap and all of these put together. Further, also with our government becoming more and more tight in terms of disposal, so the domestic scrap which was going out to the unorganized sector is flowing back into the organized sector. All of this is balancing the supply side as well.
We do not see a big challenge as we scale up to maybe INR 3,500 crore and then INR 5,000 crore in sourcing of scrap. That will not be a big challenge.
Yeah. It's not just a single product. When we are scaling up, we are not scaling up only on a single product. We are not scaling up only on lead.
Yes
which is the last part of our portfolio. Copper is coming in, and there are a few other products that we are working on will also start coming in. The revenues are going to be a blend of all these products together.
Perfect. Great. This is very helpful. The last one. In the lithium ion, if at all you finalize on the technology piece, technology front, what would be the CapEx that you need to do for that?
It will be incremental CapEx because right now the volumes are so low. I mean, the CapEx right now, it's difficult for us to estimate the CapEx because there are multiple processing capabilities that are being looked upon. They can be high CapEx, low CapEx, but the idea is to see what kind of scrap generally is available in the market, and what is the technology that needs to be used. It'll be a little too early for us to estimate on the CapEx side at this point in time.
Fine. The last one. On this regulatory front, there are several tailwinds that when we met, you had explained to us, but how is the implementation in India? Is it enforced, BWMR or reverse GST or EPR? All these regulations, are they enforced now properly so that it helps us or it's still work in progress?
BWMR is being enforced, and the only part now that is out, I mean, the notifications are out. The only part that is left is the penalization part of it, which is, right now the industry stakeholders are opposing that because, of course, they do not want to get into the penalization part. Consciously, they are all completing their requirements that are needed for the BWMR year-on-year targets. They are already meeting before even the penalization happening. That part of it is going ahead. In terms of the reverse charge mechanism, it has been notified, but reverse charge mechanism currently has not had a great impact on the supply chain side. In fact, the GST reduction and a few other topics that are being taken up to the GST Council, that the industry is working on.
We see that in this year, pretty shortly within this calendar year, there should be a good change in that as well.
Great. No, best of luck and phenomenal results. Thank you very much.
Thank you.
Thank you.
Thank you. I will request participants to limit your questions to two per participant, please. The next question is from the line of Dibyansu Kumar from Craving Alpha Wealth Fund. Please go ahead.
Thank you for the opportunity. My first question is, with the growing adoption of electrical vehicles and increasing penetration of lithium-ion batteries, how important is the use of lead-based batteries in the EV ecosystem in today's time? Also, how does the POC view the future demand trend in this space?
Can I get your name again? I lost you in the beginning, sorry.
Sure. My name is Dibyansu from Craving Alpha Wealth Fund.
Yes. Regarding the usage of lead acid battery, as of now, the growth in terms of the lead acid battery segment is still in excess of 3% globally, and in India is still at about 6%. How we look at it is, I mean, it cannot be a overnight change in terms of lead acid battery to lithium battery because there are a lot of restrictions, concessions in terms of usage of lithium batteries in all of the system. If you look at the EV, right from your basic infrastructure of charging to disposal to even the whole chemistry, it is still in the phase where it is evolving. Right now, for the next about 8 to 10 years, lead acid batteries are definitely here to stay and going forward as well because it's a mature technology and pretty safe and techno commercially viable.
Okay. Thank you for the answer. Next question is, could you share an update on the lithium battery recycling facility planned for FY 2027, and what impact do you expect it to have on company's financial and performance over the time?
We have not yet finalized anything on the lithium ion. Like we said earlier, Mr. Vaidhyanathan expressed that we are looking at different technologies. We are working on it because the chemistry by itself, what's available, what's not available, what's happening is the market is still evolving. Once that is there is when we will take our decision. As of now, we do not have a concrete plan in establishing a setup.
Okay. Another question, the last question from my side is that, is company planning to position itself to benefit from China Plus One strategy in the current scenario? Have been any significant traction or inquiries from the battery manufacturers shifting away from Chinese suppliers?
I'm sorry, I didn't get you on that. Can you repeat that question?
My question is, does company positioning itself is to benefit from as an alternate to China for lead production and all, for lead sourcing and all? Hello?
Yes. Let me explain to you. I mean, India never imported lead metal from China because generally from China, lead does not get exported out and stays within the country due to their internal taxation or export tax laws or whatever. I mean, there is no impact specifically on that. Definitely, yes, a lot of consumers are moving away from China in a lot of aspects. The Southeast Asian demand is a little higher, except, I mean, with the companies or the buyers who have moved away from China. Okay. Thank you.
Thank you. The next question is from the line of Vaishnavi Gurung from Craving Alpha Wealth Fund. Please go ahead.
Hello. Congratulations on the good set of numbers, sir. My first question is a follow-up question on EBITDA margin again. It's a repeated question. However, the operational efficiency part is understandable. If you can give us a range of how much of lead prices is on EBITDA margins.
Can you please come back again?
Yeah. Hello.
Yeah.
My question is on the EBITDA margins part. Apart from the operational efficiency, what percentage of lead price impact is on EBITDA? If you can give us a range, how significant impact is on EBITDA margins by the lead prices?
Do you mean the basic lead price by itself?
Yes.
In terms of our margins, we run a completely hedged model. In terms of percentage, the impact is hardly any impact because our raw material versus our sales are completely hedged.
In fact, as Ashish said, through operational efficiency, 1%-1.5% increase in EBITDA margins. Apart from that, when you convert that into numbers, it is approximately INR 2.5 crore-INR 3 crore in terms of number terms. When it comes to the value-added product part, it is about 1%, which is typically INR 2 crore, which in total makes about INR 5 crore-INR 5.5 crore.
Okay.
Perfect.
Basically no significant impact by lead prices.
True. Yes. In terms of percentage numbers.
Okay. Thank you. Got it, sir. My second question is on the new capacity added. If you can give us an overall capacity utilization that you're expecting by FY 2026, and any plan of adding new capacities in FY 2027 and FY 2028.
We are targeting about 120,000 tons in the current financial year. On the lead side, currently, we are not looking at any further capacitation, but definitely, yes, on our other verticals like copper and the fresh verticals that are coming in, capacities will be added.
Sir, can you please repeat the number on FY 2026?
FY 2026, we are targeting at about 120,000 tons.
Okay. Sir, my third question is on the geographical breakdown of export revenues, if you can provide us with the same.
Sorry to interrupt you, Vaishnavi Gurung. I'll request you to join the queue for follow-up questions as there are several participants waiting for their turn.
Okay. Sure. Thank you.
Thank you. I will request participants to limit your questions to two per participant, please. The next question is from the line of Rahil from Crown Capital. Please go ahead.
Yes, hi. Is Rahil listening in?
Yeah. Yes, please. Hello, Rahil.
Yeah. Can you hear me, sir?
Yes, we can.
Yeah. Thank you again for this opportunity. Just two questions, quick ones. What is the overall value-added products contribution to the revenue? Can we achieve, given the current pricing and the market conditions, a 30% growth by FY 2026?
The current contribution of about 71% of the lead portfolio is a value-added product. 30% growth on overall, I didn't get your second question. Can you be more specific?
Yeah. On a consolidated basis, can we see a 30% + revenue growth for this year? Since the first quarter has been really good.
On an optimistic basis, we are looking at similar ranges, but it's a forward-looking statement, so we definitely are not committing. Definitely, we are looking at such numbers.
Okay. Something like that is definitely achievable, you're saying?
Yes.
Okay. Thank you. All the best.
Thank you.
Thank you. The next question is from line of Shivam Dave from MIB Investments Private Limited. Please go ahead.
Yeah. Hello. Am I audible?
Yes, please. You're audible.
Yeah. Congrats on a great set of numbers. Fairly new to the business. I have one basic question. How do we assess your profitability on an EBITDA level? Do we look at it on a margin basis, or do we look at it on a per kg basis?
We are looking at margin basis. Since all the investors are looking at EBITDA per ton levels, we are also coming out with EBITDA per kg or EBITDA per ton level. We generally look at margin at a percentage basis.
Okay. Given that all the products that you deal with are commoditized, in the sense that the prices fluctuate a lot, would it be better to look at it on a percentage basis because your margin guidance also like you've given out guidance on margins. That was the question.
Yeah. On a percentage basis, look at it because on an annual average, when you look at it, the overall pricing on basis ±, they get to that point. For us, our model is basically like we spoke earlier, it's a hedged model. We look at generally in terms of percentage. Since people like to know about rupees per ton, we also guide on those numbers.
Okay. Another question I had was on your value-added product mix. Today you are at 71%. If I had to look at it on per kg or margin basis, how much more differential can you get just by shifting to a value-added product? Assuming you're at 71%, what is the total number of VAP you can go to?
Technically, we had earlier guided, we are targeting about 60% + value-added products. We've been able to achieve 70% this year. Definitely 100% of the products can't be value-added. There are some base products as well. It's more of a package that customers also require. As of now, for this year, we will be looking at similar levels of 70% of value-added products. In the future, we will look into buying in our other portfolios, that's our copper portfolio and all of that, there is where we will look at more value-added products, which we are developing, and in the coming financial years, we will be able to explore that side of it.
Okay. Just one follow-on, if I could ask. Your lead volumes were growing 9% year-on-year. How do you expect this vertical to grow going forward?
So-
Just on volume.
Yeah, in terms of volume, we have guided about 120,000 tons is what we are looking at this year, and going forward, from the smelting side, reaching 150,000 tons capacity from the smelting side.
Okay. Thanks. Thank you.
Thank you.
Thank you. The next question is from the line of Bhavesh Chauhan as an individual investor. Please go ahead.
Sir, now that Amara Raja is also expanding its capacity from 50,000 to 150,000 tons, they will have their own clients supplying them scrap lead from their own batteries. Sir, in terms of our availability of raw scrap from domestic market, will it not be impacted?
Amara Raja as a company was earlier also collecting their scrap batteries, but was giving out as a tolling through their recycling partners. Now they will be using the same scrap themselves for their manufacturing. It's a balancing market. What they were consuming through others, now they'll be consuming through their own recycling process. That's how we are.
Okay. Sir, in case of shortage, if we import more than domestic, how it will impact our margins?
This is a balancing of the market basically. The market behave differently at different LME. Sometimes at the lower LME levels, the domestic market tends to become more expensive. At the higher LME levels, it is a little cheaper to have a domestic procurement. It has to be balanced out on an averaging basis through the year, and that needs to be hedged back to the exchange.
Is my understanding correct that overall, broadly, there is not much difference between imported scrap and domestic?
In terms of the quality of the battery, the types of batteries that each application has, so recoveries and the price is based on the kind of scrap that you import or that you buy domestically. It all finally comes back to the amount of recoveries that you can get out of each battery.
Yeah, I got it. Thanks a lot, and all the best.
Thank you.
Thank you. The next question is from the line of Shagun Jain. As an individual investor, please go ahead.
Hi. Congratulations for the fantastic results, sir. I wanted to understand what new products you're working on. Is there any thought on the new demand which has come up in the market on the rare earth minerals? There's a lot of talk of recycling of rare earth minerals also going on in the market. Can you please let us know your thoughts on the same? Thank you.
Yeah. We are working on couple of products. It would be a little early for us to explicitly speak about them, but definitely we are working on similar lines where the demands are creeping up.
Okay. Thank you. No more questions from my side, sir. Thank you.
Thank you. The next question is from the line of Gopinath Chenna from CBK. Please go ahead.
Congratulations on great set of numbers, sir. I have two questions. The first question is, if you compare the last revenue with year-over-year, we have around 40% of increase. How is the rest of year going to be?
In the lead, as we already told, it is about 120,000 tons we are expecting in terms of tonnage. In terms of value on overall basis, 30% is something which we are expecting on the value side. With a blender, both lead and copper put together.
Yeah, okay. That's great. The second question is, in earlier you have said that something like we are going to save some administration or lease cost. Is that how much amount we can consider?
It's approximately about INR 17 lakhs crore per month, which equates to INR 2 crores per year. To that extent, there will be an increase in EBITDA in the plastics division.
Yeah. Thanks. All the best, sir.
Thank you.
Thank you. Before we take the next question, please, a reminder to the participant, please limit your question to two. Should you have a follow-up question, we would request you to rejoin the queue. The next question is from the line of Sagar Shah from Spark Capital. Please go ahead.
Thank you once again for giving the opportunity. My first question was related to the reverse charging mechanism, actually. Sir, we were expecting that in this quarter, maybe in the next actually, the mechanism will be applicable on the lead and on the lead recycling, and there will be shift in market share due to from the unorganized to organized due to the imposition of such regulation. I know you have already answered, but I wanted to understand that what is your take on that, will the change in market share happen because of this quickly or this imposition will happen in year end FY 2026? And if it happens, what will be the effect of the same?
My second question was on the data keeping question, that out of the total scrap that we took for lead in this quarter, how much was imported and how much was domestic in percentage terms? Thank you. These were my two questions.
For the first question, the threshold limit, Government of India has not fixed any high, very low threshold they are deciding. In the metal industry or scrap industry, value is very much important. Small quantum if they fix and if they give RCM, it is of no use to the players like us. That will be equal to 10 tons of material, which is not enough. If they increase the threshold limit, then if they give RCM, that will be useful. That will not be useful for future. At present, for import it is 80%. 20% is domestic we are buying.
Adding to Mr. Kumaravel, when it comes to RCM, what happens is the buyer of the scrap has to remit duty on the seller's behalf to government. In that case, what happens is, even if it's an informal player, the moment he is supposed to pay duty on that respect, so that when he procures from some other person, it is his obligation, if he is a GST registered dealer, he has to pay duty on the seller's behalf and he has to remit. To that extent, the revenue leakage will come down to government.
Okay.
That's how it is going to transition. Most of the informal players will have to move to formal system and RCM because there is an onus of responsibility on the buyer to remit the duty. It is not on the seller.
Right.
The second, what Mr. Kumara was telling was, in terms of GST percentage, now if it is at 18%, the moment it is being brought down to 5%, then the cash incentivization will come down when it comes to informal players. Once that incentivization comes down, there is no benefit for the informal players to sell, so automatically everyone has to come to the formal system.
Okay. Fine. Do you believe that the informal system will be able to adapt to the formal system, sir, quickly?
Already that percentage has gone up from 20%-30% to now it is more than 60%. Informal sector is reduced now. It has moved to the formal sector. Over the period of time, that will be reduced further.
When there is a compression, there are no ways or there is marginally any benefit for them to remain informal. They will have to get back to the formal sector, and that shift should happen. It's happening slowly. Over the next two, three years, there will be a great shift in the market.
Okay. Sure. My second question, sir, was related to the scrap. How much was imported and how much was domestic in this quarter, sir?
It is 80% import and 20% domestic.
Approximate.
Approximate.
Okay. Fine, sir. Thank you so much.
Thank you. A reminder to the participant to limit your question to two. Please rejoin the queue for follow-up questions. The next question is from the line of Navneet Chadha from Triumph Services. Please go ahead.
Hi. Am I audible?
Yes, sir. You are.
Okay. First of all, I would like to congratulate to all and everyone at POCL for giving these fantastic results. Of course, good luck for the future. My second question would be, is POCL wanting or willing to expand in the overseas market, or are they going to acquire some assets out of India for their expansions?
Any more questions? Is that the only one?
No, this is the only question.
We are definitely looking at opportunities in the international markets, and we are exploring, but currently our focus is more towards India-centric operations. As you've seen in the past few quarters, we've been expanding domestically. The domestic demand and the demand coming from overseas market to ship out of India has been great, and India has been one of the global focus. Our current focus is more on India, but definitely alongside, we are looking at opportunities for international expansion, and that will continue. Once we have a good opportunity, we'll definitely look at it. Definitely we are not looking at the African market at all.
All right, sir. Very well noted. Thank you so much. That was the question.
Thank you, sir.
Thank you. The next question comes from the line of Shweta Dikshit from Systematix Group. Please go ahead.
Hi. Thank you again. Last question from my side. What would be the copper exit capacity at the end of FY 2026?
The copper capacity end of 2026?
Yeah, at the end of FY 2026.
The copper capacity end of 2026 will be about 12,000 tons. Currently, we are operating at approximately 6,000 tons, which is in the process of expansion as well.
When you say you're expecting to achieve 90% utilization, that's for 6,000 tons of capacity.
Correct.
In FY 2026?
Yes, please.
Okay. For FY 2027, where this number could be on a total capacity of 12,000 tons?
Again, at 90%, in excess of 90%.
Okay. Understood. Thank you very much.
Thank you. The next question comes from the line of Vaishnavi from Craving Alpha Wealth Fund. Please go ahead.
Hello. Thank you for taking my question again, sir. My question was regarding the geographical breakdown of export revenue, and which regions or countries are the primary sources of lead scrap for us, and does sourcing from Africa in particular offer any specific advantage?
I'll repeat your question. Are you asking our geographical breakup of sourcing and in specific Africa?
Sir, both, and plus our export revenue breakup.
Okay. When it comes to lead exports, our sales split is 65% exports and 35% domestic. When it comes to for this quarter, for copper, it is 93% domestic and 7% export. When specific to countries, see, for us, we import from different continents. If I were to say in terms of procurement, each continent contributes about 15%-20% of our overall procurement. From Middle East, from Europe, from U.S., from South America, we procure from different continents. In specific to Africa, the lowest procurement for us is from Africa, which is only below 5%.
Okay. Thank you, sir. Just again, I would like to repeat my question. I was asking for export revenue breakup. Not domestic versus exports, but just export revenues.
Approximately, in terms of numbers, is what you're looking at?
Yes. In terms of percentage.
In terms of percentage, about 65% is our export revenue. Correct.
Export revenues, in terms of lead, it is about INR 328 crores. Export.
Sorry to interrupt you, sir. I was asking for on geographic basis, like how much is from U.S. versus how much is from Europe.
Europe is below 5%. Southeast Asia would contribute to about 75%-78%, and the balance would be a part of it to the Middle East and other parts.
Understood. Sir, one last question from my end. As one of the fellow participants pointed out, do we foresee any near-term risk of clients establishing in-house lead recycling capability?
We do not see it because if you look at the global trend that has been there, many of the large battery makers have their own internal battery recycling capacities. Even to a lot of customers we are currently supplying as well have their internal battery recycling capacities for over a decade. That is a part of the whole industry as it is already there. That does not really pose a large risk to us.
Understood. Thank you, sir.
Thank you. The last question is from the line of Aadesh Gosalia from Spark Capital. Please go ahead.
Hello, sir. Am I audible?
Yes, very well. Yeah.
Congratulations, sir, on such a good set of numbers. I just had two questions. The first one was on the new alloys that you mentioned about supplying to the international customers. Do we have any kind of order visibility on those orders? We have already booked those orders currently. Like, guys, we are so confident about maintaining the higher margins. That was the question one. The second question was a follow-up on the previous participant. If I might have missed your point that, as you said that the exit capacity for copper would be around 12,000 metric tons for FY 2026. Where will this capacity come in, and will we see any revenue from this additional capacity in the current financial year?
Regarding your first question regarding the specialized alloys. Yes, we have a clear order visibility. See, we sign annual contracts, and starting this first quarter, we have signed the annual contract for these alloys as well, and we have a very clear visibility through the year for these alloys. As every year it gets renewed, what we've been doing historically, the same will be renewed.
Okay. Sir, any number or metric tons or something that you can share some info or numbers in that aspect? If it's possible for you, obviously.
It'll not make a very specific sense to you if I just say random in terms of tonnage or something, because these are measured very differently in various parameters. They are blends of different alloys, different packages, and how we do it. In terms of metric, tons will not really give you a clear idea on that.
Okay.
Coming back to your copper question, our current copper capacity is about 6,000 metric tons, and by the end of this financial, we'll be scaling up to about 12,000 metric tons. This year we'll achieve out of the 6,000 tons, we'll achieve about 90% and more. In the next year, on the 12,000 tons also we target to achieve a minimum of 90% and could be higher as our market grows, if we are able to ramp up much faster, it could be higher than 12,000 tons as well for the next financial year.
Okay. For FY 2026, you should only taken 6,000 tons as your capacity for the revenue. Like your revenue will be coming in from the 6,000 capacity only.
As of now, on the conservative levels, yes.
Okay. Thank you. That's it from my end.
Thank you.
Thank you. Ladies and gentlemen, we will take that as the last question. I now hand the conference over to the management for closing comments.
Thank you everyone for participating in this call. We trust that we have addressed all your queries during this session. However, if there are any remaining questions, please feel free to reach out to our investor relations team at Go India Advisors. Once again, we extend our gratitude to all the participants for joining us today and thank you and have a great day.
Thank you. Ladies and gentlemen, on behalf of Pondy Oxides and Chemicals Limited and also Go India Advisors, that concludes this conference. Thank you for joining us and you may now disconnect your lines.