Ladies and gentlemen, good day and welcome to Pondy Oxides and Chemicals Limited Q4 and FY 2025 earnings conference call hosted by Go India Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone 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.
Thank you, Steve. Good afternoon, everybody. Welcome to Pondy Oxides and Chemicals Limited earnings call to discuss Q4 and FY 2025 financial performance. We have on the call Mr. Ashish Bansal, Managing Director, Mr. K. Kumaravel, Director of Finance and Company Secretary, Mr. R.S. Vaidhyanathan, 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 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. Over to you, sir.
Thank you, Sana. Good afternoon, ladies and gentlemen. Welcome to our Q4 FY 2025 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. It gives me great pleasure to share that POCL has recorded its strongest performance to date in FY 2025, with all-time high revenue, EBITDA, and PAT driven by robust operational plan and execution. Before diving into the operational and financial highlights, I would like to share on key strategic updates.
In an effort to capitalize on growth opportunities in its current operations and to explore various avenues in other non-ferrous metals, POCL has successfully raised an aggregate of INR 175 crores through qualified institutional placement during the financial year ended 31st March 2025. Consequently, the company has utilized the proceeds of the issue in financing capital expenditure, working capital requirements, and other general corporate purposes. On the capacity expansion front, we are enhancing our lead production capacity by 72,000 metric tons per annum at our Thervoykandigai plant in two phases of 36,000 metric ton each. I'm pleased to share that the commercial production for phase I, with a lead capacity of 36,000 metric tons per annum, commenced in Q1 FY 2026 at the Thervoykandigai, Tamil Nadu plant, which is fully automated facility with integrated processes and improving overall operational efficiencies.
The total capital expenditure for phase I was INR 85 crores, and the same was funded through the proceeds of QIP and internal accruals. phase II expansion is expected to be commissioned by Q2 FY 2026. The CapEx estimated for phase II is about INR 20 crores approximately. During FY 2025, POCL undertook a capital expenditure of INR 94 crore with a strategic focus on strengthening its capacities on its core vertical, along with maintaining CapEx in other units. For FY 2026, we anticipate a CapEx of approximately INR 75 crores, primarily directed towards capacity expansion in different verticals of non-ferrous metals recycling. Credit rating upgrade. CRISIL Ratings Limited has upgraded the credit rating to CRISIL A / Stable from CRISIL A- / Stable, reflecting improved financial strength and stability. This upgrade underscores the company's strong operational performance, robust balance sheet, and growth outlook.
The board has announced highest-ever dividend at 70%, amounting to INR 3.5 per share, continuing a streak of over 29 years of consistent dividend payments. POCL is looking at setting up R&D facilities for certain 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, copper through imports is approximately 73%, 65%, and 100% respectively. The capacity utilization year-over-year of lead and other verticals has increased substantially on both yearly and quarterly basis. The production of lead has increased significantly by 30% to 94,115 metric tons on annual basis and by 21% year-over-year to 26,074 metric tons on quarterly basis.
There is a significant increase in production and sales of other verticals as well, which are plastics and copper, both on a yearly and quarterly basis. EBITDA per ton of lead increased 21% year-on-year to INR 13,848 per metric ton on quarterly basis and INR 13,225 per ton on annual basis. Now moving to the financial results for Q4 and FY 2025. I am pleased to share that over the past five years, we have consistently delivered a revenue CAGR at 11%, EBITDA CAGR at 22%, and PAT CAGR at 32%. Revenue from operations has increased to INR 2,028 crore on standalone basis, up by 33% year-on-year, and INR 517 crore, up by 45% on quarterly basis. POCL experienced this substantial growth because of increased production and sales in all verticals.
The FY 2025 sales mix between domestic and export markets stood at 34% and 66% respectively. EBITDA increased by 39% to INR 108 crore on annual basis and by 31% to INR 27 crore on quarterly basis. Q4 and FY 2025 EBITDA margins stood strong at 5%+. PAT increased to INR 65 crores, up by 65% year-on-year on annual basis, and INR 18 crore, up by 46% year-on-year on quarterly basis. On a consolidated basis also, POCL reported a strong financial performance. Revenue from operations increased by 33%, EBITDA increased by 44%, and PAT increased by 82% on annual basis, and by 44%, 35% and 39% on quarterly basis. Our balance sheet has grown stronger with notable reductions in net debt and improved net debt-to-equity ratio. The working capital days has been improved from 55 days in FY 2024 to 50 days in FY 2025.
In conclusion, POCL is strategically poised to realize its ambitious target towards 2030 with a sharp focus on expanding lead production and foraying into different verticals of non-ferrous metals. We are targeting over 15% volume growth, revenue, CAGR and profitability with growth of more than 20%, alongside meaningful improvements in margins, aiming for EBITDA margins above 8% and ROCE exceeding 20%. Our growth strategy is deeply aligned with our sustainability goals as we work towards generating over 60% of our revenue from value-added products and achieving 20% plus reduction in energy consumption to lower our carbon footprint. With robust capacity expansion underway, disciplined capital allocation, operational excellence, strict implementation of government regulation, and the guidance of an experienced leadership team, POCL is exceptionally well-poised and positioned for long-term success.
Backed by the continued trust and support of our stakeholders, we are confident in our journey towards building a more innovative, sustainable, and profitable future. That's all for me, and I would now request to open the floor for question and answer session. Thank you.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question 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 your 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 PWM. Please go ahead.
Thank you, sir. Thank you for the opportunity. First of all, congratulations to the entire team of POCL for delivering such robust results. I had some few questions regarding our earnings, actually. My first question was related to our CapEx guidance, actually. The CapEx guidance that you have given is around INR 75 crores for this particular year, FY 2026. In this year, we are going to spend around INR 20 crores as for our phase II expansion. For remaining INR 55 crores, you highlighted in your opening commentary that we'll be incurring in the other segments. Can you elaborate that in which segments are you expanding your capacity? That is my first question, sir.
Yes. Currently, INR 75 crores that we have guided, approximately about INR 20 crores, as you said, right, was in our lead vertical. That will be for our second phase of expansion post this first phase that we've already commenced production. The other two verticals that we'll be spending the CapEx will be for the copper vertical and for our plastics vertical.
Okay. The expansion will be on brownfield in nature in our existing plants, or are you expanding in the new plant at Tamil Nadu?
Uh-
What will be the additional capacity that you're building in?
Yeah, this will be at the new plant in TKD and also at our existing plant, which is currently operational.
Okay.
With this, we'll be improvising the product portfolio and also the efficiency of the existing plant. In copper, some product portfolio will be added, and for plastics, it'll be more on efficiencies and more production.
Okay. Currently we are holding around 9,000 tons per annum for plastics and around 6,000 tons for copper. What will be the new capacity, sir, for both of them?
Copper, we are looking at taking it to about 9,000-12,000 tons. Plastic, technically, will remain more or less in similar lines of the capacity, but will have little improved facilities in terms of increasing efficiency by adding certain equipments for better processing and attaining better quality products.
Okay, we'll be doubling our capacity in copper, sir, basically in this year.
9,000-12,000 tons.
Okay. Anything between 9,000-10,000 tons. Okay, fine, sir. My second question, sir, was related to our EBITDA, actually. In this, first of all, I wanted to have some breakup in terms of revenue from other segments in this quarter from copper and plastics and respective volume. That was a data keeping question, sir.
Yeah. From first quarter onwards, we are planning to give copper separately.
Okay
If it is necessary, we can consider, otherwise, we don't.
In terms of lead, Sagar. Hi, this is Vijay here.
Hello, sir.
In terms of lead, the overall revenue is about INR 1,942 crores. In copper it is about INR 55 crores, and in plastics it is about INR 31.5 crores.
Okay, fine, sir. Now, this question was related to inventory. Due to the inventory, I think we built very high inventory in this quarter, and that is why our operating cash flow was actually negative for the entire year. Because our closing inventory was at a record high. That is why our current assets actually moved quite higher. Was this directly related to the decline in lead prices, or any other reason related to that?
No, this was not in terms of decline in lead prices because we do not speculate on the pricing part of the raw material. This was more for the starting of our new lead plant. Certain amount of inventory was accumulated to have a smooth flow as we start the commercial production. This, I'll say more or less is a point in time figure now as our commercial production is started. In this quarter, all of this will be liquidated and we'll be back to our good inventory levels.
Okay. Fine, sir. Now my last question was related to our absolute EBITDA actually. Absolute EBITDA for the quarter stood by at around INR 27 crores. What my question was that the lead EBITDA pattern, the number that you have given in your investor presentation, that translates to an absolute EBITDA of INR 32 crores just for the lead division. Have we incurred EBITDA loss actually for copper and plastics in this particular quarter, sir?
No. Both copper and plastics are in positive
Okay
We are not incurring losses on those.
In terms of calculation of EBITDA, Sagar, we look the lead vertical as a standalone basis. Okay. Apart from this, we have administrative overhead that needs to be apportioned. The difference between what you say is that.
Okay. That is why the difference is coming.
Yes.
Okay. Fine, sir. I'll come back in the queue. I have few more questions. Thank you so much, and all the best.
Thank you.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question is from the line of Saransh Gupta from SVAN Investments. Please go ahead.
Good afternoon, sir, and thank you for the opportunity. Sir, just carry on to the earlier participant questions in terms of the working capital. You indicated that because of the commercial production that you started for the lead in the first last quarter, there was a sharp increase in the inventory for that particular year. On a net debt basis, if we assume that commercial production has started and you'll be starting a phase II in the month of September, how do we see our working capital days going ahead from 50 days that we reported in FY 2025?
Technically, as you're aware, the year before this it was 55, we've managed to bring this with our good inventory management and other factors to 50 days. Our current internal targets for this year is to get the inventory basically the turnaround days to about 45 days, which should be workable.
45 days. When we start the second phase in the month of September, that will also start with the trial production, and then subsequently in the month of October, November, we'll be having a commercial production, right?
Yes. You're right on that.
Now you indicated that you will be growing at 15% in terms of the volume for the lead, with 8% margin and over 20% of the return ratios. Can you help us in understanding the EBITDA pattern or EBITDA profitability differentiated between the new facility that has just started and the facility that we are already operating?
Hi, this is Vijay here. With respect to EBITDA, right now in terms of lead vertically, if you see it is coming about, last year it was about INR 13,225. With the new plant coming in, we are expecting our EBITDA in the range of INR 14,500-INR 15,000 in the new plant. On a blended basis, we can have an EBITDA margin in lead vertical, about INR 14,000-INR 14,500 on a blended basis going forward. On percentage basis, on overall, based on the improvement into the processing and other thing, only we can bring it to the percentage of EBITDA at a higher level.
Sir, now if you look on the overall number, excluding other income, the last year we did almost INR 104 crores of EBITDA. When you look at the numbers of FY 2025 with the lead sales of 90,000 tons, 95,500 and with an EBITDA of INR 14,325, the broad math comes to around INR 120 crores of EBITDA coming from the lead. The incremental INR 15 crores of the loss or the decline in the overall profitability when we compare with the lead and the other business. Can you help us in correcting this math in terms of the revenue coming or the EBITDA coming from your plastic, copper and the aluminum division, how it has moved?
We did a decent amount of sales in copper, where the EBITDA per metric ton is copper is about 5%- 5.5%. This is the range which we have got.
In plastics, yes, of course, if you see last year it was negative, but this year the EBITDA is positive, which turns around about INR 90,000 of EBITDA in the plastic division. This is the overall breakup of the entire EBITDA.
Math doesn't tie up because INR 120 crores of EBITDA is there. Plus, we are having a positive contribution coming from the plastic, and copper also contributed. The numbers don't match up to the reported numbers.
In the EBITDA, whatever I mentioned, that is as the vertical we see. We have head office apportion expenditure that needs to be apportioned in the overall vertical. That is not being done in the EBITDA level. That is why you are having the difference. The same difference what Mr. Sagar has pointed out on the quarter level basis, this is applicable for the full-year basis.
Sure. Last question, which is on your lead. Hello?
Yeah.
I got you. On the lead front, now the commercial production started in the month of April. How is the utilization? Are we able to do a decent amount of volume in the month of April, May from the new facility?
The commercial production did start, and now the sales volumes will start from the month of June onwards for this plant.
We'll see an incremental volume coming from the month of June. The Q1s will see a contribution coming from the new facility of the lead.
Yes.
Yeah.
New facility of the lead, and then incrementally it will be there for the next quarter you'll have the complete thing. At about I can say about 80%-90% in the next quarter.
In terms of the utilization in the plastic and the copper for the last year?
Last year, only in the last quarter there was a beginning of utilization. In this year, you will see the volumes on copper grow. In terms of plastics, the utilization was approximately 40%, and in copper, about 12%-13%.
Sure. That's all from my side. Thank you, and all the best.
Thank you.
Thank you. Participant who wish to ask a question may press star and one. Ladies and gentlemen if you wish to ask a question you may press star and one. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good afternoon. Thanks for the opportunity. My first question is with respect to sourcing of scrap. In the presentation, you mentioned it is 77% imports. I just wanted to know what has been the trend and what has been the changes in the procurement mix, given BWMR and EPR for lead-acid batteries.
Shiv, good afternoon. This is Ashish here. Basically, in the earlier years, we've had approximately 90% was our import procurement. In the last financial year, the import procurement has come down approximately to 73% odd. Incrementally, we are also increasing our footprint on the domestic procurement. In terms of EPR is currently still evolving. In terms of when you see the domestic procurement, a part of the procurement that we do from the larger OEs, when they give us the scrap, they adjust the EPR pricing in the same, and accordingly, they sell the scrap to us. There are certain direct purchases that we make from the market, and that is where the EPR credits come back to the company.
Understood. Generally, you said it is evolving with respect to BWMR and EPR. What has been your experience in the last one year versus there was some expectation of a significant increase in domestic scrap availability with these regulations. Looks like the enforcement or the evolution is quite slow. Just on a qualitative front, how has been the progress on the ground with respect to these policies?
Basically in the last year, there was an implementation, and it is not that it has been slow. It has been implemented and notified very well, and the larger stakeholders, all of them understand the importance of BWMR and these related acts. However, the smaller segment players are getting on board, but the implementation is continually on the incremental side, and the impact you can see as the domestic procurement, the domestic market of scrap is also getting realigned month after month.
Sir, what is the economics of domestic versus import? Is domestic sourcing more remunerative?
I'll put it this way. You cannot compare apple to apple in terms of domestic and import. In terms of domestic, one definite advantage is that the lead time when you receive the scrap is much lesser than port. There are opportunities when sometimes based, like when you do a contract against LME and all of those pricings work differently. Domestic scrap works more on the domestic local pricing, how the finished product is being sold. You cannot directly compare because also every scrap at the end of the day works basis the metal content and the recoveries and all other factors like the payment, other schedules, credit fee schedule, all of that.
Understood. Sir, just one or two more questions. Sir, with respect to a few of the OEMs like Amara Raja, they themselves are putting recycling plants. Any change in business dealings with them? Are we seeing business getting diverted away from these large OEMs to their own captive units?
Amara Raja started their production from their smelter in the last financial year itself, and I think they've been operating for quite a couple of months as of now. As we understand and we've discussed with them, in these few months, we have not seen any change in their procurement cycle, and the orders have been pretty stable. Going forward also, we do understand that their initial and primary target is where they collect their own batteries from their dealership, which they were collecting and currently giving out for tolling, which they would like to process within their plant, and also the scrap and other wastage that they generate within their plant. They are looking at approximately about 30%- 33%-35% they were using through their own recycling process, which they were giving outside for tolling.
Now that part of it, they would be doing it in their plant. The outright purchase that they were doing in the past, they would continue to do the same.
Understood. Just one last question on the volume. You've given a long-term guidance of 15% CAGR, but given we have these capacities coming up, should we expect a step increase this year and next year? Should we look at a CAGR growth basis for next two years, or given new capacity, we will see a step jump?
Sir, you will see a continual growth over the next three to five years on the CAGR with all of our verticals also coming in and our enhanced capacity on lead, apart from which from our copper and our plastics divisions as well. It'll be a continual rise year-on-year over the next three to five years.
Understood. Thank you, sir, and all the best.
Okay, sir.
Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Shweta Dikshit from Systematix Group. Please go ahead.
Hi, good afternoon. Thank you for the opportunity, and congratulations on a good set of numbers. Sir, I have two questions. One is if you could highlight any development in terms of expansion in the Mundra land acquisition that was there. So any plans for commencing operations or completing the ground there in terms of future expansion? And whether INR 75 crores of CapEx this year incorporates some component from Mundra as well? And my second question would be what's the development in the aluminum segment as of now? Since FY 2025, we did not record any performance for aluminum segment. So how is it going to be going forward?
Good afternoon, Shweta. Shweta, regarding the Mundra project, we were poised to start our implementation in the Q4 of FY 2026. Currently, we have moved that plan to the Q1 of FY 2027. Mundra investments will happen in the first quarter of next financial year. As far as aluminum segment is concerned, we have just recently started some production on our aluminum side as well with a little changed portfolio. You will be seeing in the first quarter of this year some smaller numbers and going forward a little bit incremental quarter after quarter financial year.
All right, thank you.
Thank you.
The next question is from the line of Sanjay Parekh from Sohum Asset Managers. Please go ahead.
Yeah, thank you. Congratulations on great set of numbers.
Thank you, sir.
Yeah. My first question is just on the reconciliation. I suppose you all give EBITDA means gross profit per ton, and on this whole year basis, it was coming around INR 120 crores. INR 15 crore is a common overhead that would take us to EBITDA broadly. That's the math, right?
Yes, sir. Correct. Exactly. This is what I was trying to say.
That is first. The second question is the contribution from copper. What my question was, what is the volume of copper this year? As it scales up, because value-wise, it will be very large, what would be the broad contribution in terms of EBITDA or gross profit, the way you all define, from copper in 2026 and 2027? The same from plastic, which has not contributed. As we scale up, what could be the contribution from plastic in 2026 and 2027 broadly? If you can guide us, that will help us.
Yes, sir. Good afternoon, sir. Ashish here. Regarding copper, last year's Q4 was the initial bit where it was being started and the volumes were low. The volume henceforth from this financial year, FY 2026, quarter-on-quarter will be incremental on copper. An approximate number that you're looking for this financial year would be approximately in the range of about INR 300 crores of top line from copper. On plastic side, we are looking at close to about INR 50 crores-INR 55 crores of top line.
What would that be in 2027?
In 2027, we are looking at about close to INR 650 crores-INR 700 crores on the copper side. Plastics would be just marginally incremental, say maybe about INR 60 crores-INR 70 crores.
Okay. copper would imply what volumes in 2026 and 2027?
In 2026, the copper volumes will imply approximately, we are talking about close to somewhere about close to 4,000 to 5,000 tons.
Okay. Then 2027?
We'll be doubling that.
Okay, great. Till now, because, see, lead, you said that you have a continuous process plant and you plan to scale up your EBITDA per ton, which should reflect hopefully this year and then slowly next year. You have an aspiration of 8% margin because of value addition. Do you see that in your journey on copper and plastic margins, where does that take us through? That's relatively new for us. Do you see any hiccups in terms of getting the margin that you seek and they meaningfully contribute? If you can guide us there, it'll help us.
Yes. From the lead side, as Mr. Vijay over the earlier question he guided, in terms of copper, we are looking at 8% margin as blended over the three segments. That is our lead, copper, and our plastics. Copper, in the initial first year, that's FY 2026 and FY 2027, we are looking at margins in similar levels of lead. As we move forward to more forward-integrated products, we are looking at higher margins, and as an average, we are looking at 8%. However, currently, plastics, because of our little lower volume, the margins have not been very significant. This financial year, we are looking at having margins on plastics also grow.
Sure. One more in your presentation, you said that you want to diversify in lithium-ion. If you can guide us more. You also said that you are looking at M&A. Given our balance sheet size, this would help us to understand what is our plan on diversification, what's our right to win. A little bit about both inorganic and diversification will help in lithium-ion.
Yeah. Hi, sir, this is Vaidyanathan here. Good afternoon. Sir, as far as the industry of lithium-ion is concerned, we see crux of changing technologies. It is fast moving from basically NMC to LFP and now to LMFP, which is a new chemistry, I'm sure you are aware. The recycling mostly we are seeing are in NMC-based technology. There are very few who see LFP as a core competency. We are now working for a technological solution which can address the majority of the market, basically, which is LFP and LMFP. What happens is, for a tropical climate like India, LFP is the most suited lithium-ion battery. For example, if you take Tata Nexon or any of these latest cars now coming up in electric vehicles, they are all using mostly LFP only.
What we are now looking at is a technological partner who is ready to help us with the solutions for all the chemistry that are available now. Whether it is LFP or, LMFP or NMC, whatever it is. We are not sure as to how do we take this forward. We are in discussions with a lot of technological companies to understand the know-how now, and basis which we will decide. Also the flow of lithium-ion batteries, in terms of raw material, is expected mostly from 2027, 2028. Therefore, we thought we'll take it up carefully.
Sure. Perfect. Last one from my side. We've done INR 105 crores and we've grown very well over last 10 years plus. As we transit to more like INR 250 crore, INR 300 crore company in terms of EBITDA, which may happen in two years. What are the, in terms of execution, in terms of risk management, in terms of we don't err on profitability, working capital management, also getting return ratios. A little bit of your thought of when you scale up to next level, what are the challenges you see and how do you plan to circumvent that? That's the last one from my side.
Sir, this is Vijay. With respect to the plans, whatever, as we mentioned, we have indicated the plans where we wanted to increase. For example, we have already suggested there will be an incremental percentage increase in growth for next two years. First and foremost is something which is a non-ferrous metal is our forte, and we are very specialized in that. That is why our full focus is on non-ferrous. Plastics as a byproduct, yes, of course, but more of concentration is of lead as well as copper. Coming to procurement side, as you know that we have about 270+
Dealers across the world. We import from about 70+ countries. The procurement network is very strong. Of course, we have on board Mr. Vaidyanathan also there. From these people, we will be able to procure the copper scrap as well. From the supply chain side, yes, of course, we are secured. From the sales side, if you see, of course, the sales was not at all a problem for us. We will be able to sell to our existing customer on a higher quantity, as well as we will onboard new customers. Next two years, we are focusing on domestic sales volumes also. I think the entire supply chain, once it is secured for us, execution should be very easy for us. That is how we are planning to execute.
To supplement Vijay, we have clear-cut risk management policies also we have in place, especially for procurement, back-to-back hedging mechanism is there. Our import team is very strong in doing that. Apart from that, forex hedging also, we are doing it very meticulously. Continuously, we are recruiting the professionals to handle all the divisions. We are taking care of the increase in the top line and other things. Parallelly, we are increasing the professionals to take care of all those areas.
One more point to add, sir. When it comes to funding, on a yearly basis, we'll have a cash accrual of INR 100+ crores as per the numbers what we are envisaging. With this amount and the amount of working capital facilities we'll have, we will not go for additional fundraising as well. With internal accruals and the existing facilities itself, we'll be able to ramp up the volumes.
Sure. Very reassuring. Thank you very much and best wishes to the team, and congratulations again.
Thank you.
Thank you, Sanjay sir.
The next question is from the line of Siddharth from Kotak Securities. Please go ahead.
Hi, sir. Congratulations on a good set of results. Sir, I just wanted to check, our finished goods capacity is 132,000 tons. Can you just please highlight what our smelting capacity is? In one of the last calls, you also mentioned that our smelting capacity is poised to increase.
Yes, Siddharth. Good afternoon. Currently our smelting capacity is in between 90,000 to 92,000 tons.
Going forward
Yes.
Are we planning to increase it? Because I was under the impression that we were increasing it with this new addition of capacities in phase I.
Yeah. I would like to complete what I was just saying.
Oh, sorry.
Currently our capacity is about 90,000 to 92,000 tons on smelting. With our expansion that we are currently doing in two phases, our smelting capacity will be increased by 72,000 tons. Which will take us to the range of 160,000 tons on our smelting capacity.
Okay. By when do we sort of anticipate the smelting capacities coming online? Would be phase I, phase II this year itself?
As guided in the earlier questions, our phase I has been operational in this first quarter. With this we have got on board 36,000 tons of our smelting capacity, additional over the 90,000, 92,000.
Okay, understood. Our capacity is around 126,000, 128,000 tons as we speak, right, sir?
Yes, you're right, please.
Understood, sir. Sir, a small second question. Sir, we've sort of guided that our EBITDA margins will go up significantly from around 5%, 5.5% to around 8% in, say, the next two or three odd years. Sir, can you tell me the levers which will allow us to do so? It seems that this is a fairly sharp jump, sir.
See, in terms of EBITDA, 8% we have mentioned, that is our target 2030. Of course it is not that we will wait that much of time to get there. In terms of lead, as I already said, right now we are at 5% levels. Through the new plant, we are expecting 1%-1.5% increase in the margins in that new plant. Apart from that, in the existing plants, we are planning to retrofit some of the technology, whatever we've used in TKD, so that there we can see a marginal increase of 0.5% in the new plant in terms of lead. Coming to copper, right now we are doing recycling of scrap, but we wanted to get into value-added products where we can see an incremental EBITDA margin rising from 5%-7% and more and more value-added product, the 7% will raise to 8%.
Coming to plastics, right now we are doing a plain PP, CP, but going forward, when we do the compounding, we can expect a EBITDA margin of 10% to 12%. Over a period of time, all these verticals on a blended basis will make us to achieve that 8% EBITDA margin levels.
Understood, sir. Just a small follow-up. On plastics, what are the current margins we sort of expect, say, in FY 2026 or 2027?
We can expect a margin of about 7%-8% this year.
7%-8%. You sort of expect it to go higher to around 10%-12% once the value addition steps are complete, right sir?
Yes.
Okay, sir. Understood, sir. Thanks a lot for your time. Best of luck, sir. Thank you.
Thank you.
The next question is from the line of Abhijit from Aionios Alpha Investment. Please go ahead.
Yeah. Hi, hope I'm audible.
Yes, Abhijit.
Yeah. Just to understand a bit more, can you highlight what kind of broad numbers, EBITDA loss that you would have reported or incurred on the aluminum business?
This year, we didn't do any aluminum, Abhijit.
There would be some fixed cost, which would be getting ascribed to it as in
That's some charge.
Sir, there's only the depreciation charge and only the basic maintenance cost of the plant. The maintenance cost would be marginal, about close to INR 60 lakhs-INR 72 lakhs in the whole year. Apart from which there'll be depreciation on the equipment.
Understood. It's very clear. If we have to take a guess on the EBITDA of lead post the fixed cost, what would that be? It would be around eleven and a half to INR 12,000 per ton, broadly?
Yes. After the apportioning of head office expenditure, it should be around that levels. What you said was correct.
Understood. Got it. Lastly, this increased inventory, does it carry any risk of inventory losses in the coming quarters, you think? Those things are sort of covered.
No, there are not any inventory losses because the same is being hedged back to back. Our inventory is also hedged along with our sales, against our sales and our orders.
Got it. Understood. If I may ask, what kind of sales visibility do you have now? I mean, would it still be close to three months or two months? What would that visibility be as of now?
Sir, we have a clear sales visibility for the complete financial year, the complete 12 months, because predominantly almost 90% of our sales, we tie along long-term contracts.
Understood. This would be with the new increased capacity that you would be referring, right?
Yes, that's right.
Got it. Great. Thanks, and wish you all the best.
Thanks, Abhijit.
Yeah.
The next question is from the line of Sakshi Goenka from Sohum Asset Managers. Please go ahead.
Hello.
Yes, ma'am, you're audible. Please go ahead.
Yes. Hi, thank you for the opportunity. Just a couple of questions. Could you tell us when will the forward integration on the copper segment be complete this year?
The forward integration on copper segment will be done about in the Q3 ending, Q4 beginning.
Okay.
This is going to be, again, in different phases because we'll do a first part of the forward integration and then move to more complicated products.
Sure. Just a bookkeeping question. Could you give us the realization per ton on lead? Wanted to ask, with our new capacities, is there any scope to value add and improve the realization of our lead?
We are working on a blended mix about targeting 60% of value-added products and 40% of our regular plain vanilla products. Definitely we would aspire to move that to about close to 70%, but we would like to guide it as trying to be over 60%.
Got it. Sir, just one last question. If I look at your gross margins historically, it has been in the range, in some quarters 9 and some quarters 13, and basically flip-flops between 10% to 12%, 13%. You mentioned that since we do back-to-back hedging, why are these quarterly variations in gross margins we see? Technically, if you're doing back-to-back hedging, gross margins, if I understand it correctly, should be quite tight, right? Just wanted to understand why the quarterly volatility in gross margins that we see.
Basically what happens, Sakshi, is that the metal content is hedged. Our main worry here is our price risk against the metal and the price risk against the Forex. However, whenever there's a market opportunity and if there is a timing or opportunity to give out more value-added product, we would translate that into a value-added product and make use of the market opportunity that's available. That is why you see that little bit of a variation plus minus in terms of the numbers. What we need to understand is that the main idea here is to completely offset your risk and not carry the risk forward. Hence, the hedging happens on the basic metal part of it, where the price movements are heavy and volatile, including the Forex part. We limit that.
We do not have a downside on our basic margins, but always aspire to push forward for a more value-added product combination whenever the market opportunity gives us, and we try to get that. That is why you see that little bit of movement in plus or minus in terms of margin percentage.
Got it, sir. This was very helpful. Thank you so much. Congrats for the good set.
Thank you, Sakshi. Good day.
The next question comes from the line of Naman Parmar from Niveshaay. Please go ahead.
Yeah, good afternoon, sir, and congratulations on great set of numbers. I just wanted to understand how the overall copper recycling industry is currently evolving, and how is the means it become more feasible for the copper recycling if the natural copper supply gets low, and how is the other players are performing?
Sir, I lost you in between. Could you please repeat your question?
Yeah. I just wanted to understand how the currently copper recycling industry is overall evolving. Means how the recycling become more feasible for you guys when copper prices usually go down in the current market, and how the other players are currently performing?
Basically, as you're aware, India by itself, the gross consumption, per capita consumption of copper year-on-year is incrementally going up in India. This comes with more of electrification, more of modernization, more of infrastructure development that's happening. Copper is poised to have a vertical growth across the country. Currently, India is definitely deficit on copper. Hence, a good opportunity does come in in terms of providing products that are out of recycled copper. Of course, as you're aware, the push on the recycle part also. In other players, basically, copper recyclers or copper as a segment was more concentrated towards the western belt of India and little bit towards the northern belt, and the amount of recyclers in South India were on the lower side.
This also gives us a little gap in the market because most of the material that was sold was either imported or domestically was moved from the western belt or the northern belt down south or more to the eastern side. Hence we see that gap as well in the market opportunity, and we would like to take up and cover that. Apart from that, lot of products could be tubes or lot of other products that were being imported. Now with all the push, most of the OE manufacturers are more keen on buying products that are domestically manufactured within India. All of these factors, when taken together, gives a very good opportunity in terms of copper.
Okay. In these all products, copper tubes and all that, so the recycle content would be, I think very low only, no? Around 15%-20%. There is any non-such spec?
Basically, your question, just correct me if I've understood right, that in the end product that's a tube or something, the recycle content would only be 10%-12%. Is that your question?
Yeah.
We cannot have a generalized rule in that manner. There could be products that are manufactured 100% out of recycled copper. There could be a blended product which could even have 50%, 60% of recycled content, 75% recycled content. It always depends on the end use or also depends on what product is being made or what quality of recycled copper they are introducing into the primary melt. Many factors would determine that.
Okay. Yeah, that's understood. Lastly, I just wanted to know how much percentage would be contribution from the lead and the other business, copper and plastic from FY 2026, FY 2027 onwards.
Currently, majority is from lead, and in FY 2026, we are looking at anywhere between 10%-20% coming from copper and other verticals.
Okay. Understood. Thank you so much for answering.
Thank you.
The next question is from the line of Kaustubh Shah from Valmoat PMS. Please go ahead.
Hi, sir. Thanks for the opportunity and congrats on a good set of numbers. Most of my questions have been answered. There are two more of higher level questions which I just wanted to understand. Obviously, our capacity is increasing and so is the competition is also increasing its capacity. Do you foresee a challenge in terms of procurement of the stock or the price of the stock as we move ahead in the future? That is my first question.
Basically, you're right. Definitely with increased capacity is the competition and the need to get more aggressive on procurement does happen. Also alongside the good part that has happened is the domestic market has also equally opened up and realignment of the whole scrap, the way it is handled and sold within the country is becoming more organized. That does give us a good leverage also to increase, which we have also done in the last financial year, the incremental side on domestic procurement as well. Both import and domestic procurement together is giving us a good edge to fulfill our requirements in terms of raw material.
Okay, sir. Fair enough. Second question was that, there's news article that now the shipping freights will increase given that the trade deals are almost kind of being done. Does that impact our cost in terms of, again, procurement because majority of our procurements are from the import.
Basically, most of our procurements are on CIF basis delivered to our port. Definitely, if exorbitantly shipping line freights increase, the cost of raw material might increase. The whole thing is, that would be a transitional period and the same would reflect back onto the sale price as well.
Okay, fair enough. Those are the two questions from my side, sir. Thank you and all the best.
Thank you. The next question is from the line of Rahil from Crown Capital. Please go ahead. Mr. Rahil, please go ahead with your question.
Yeah. I am audible?
Yes, sir, you are.
Yeah. Hi, sir. The first thing, just a follow through on the CAGR sort of outlook or guidance that is given, which is sort of long-term in nature. Considering that this year you're coming up with expansion with the new facility and all, is it fair to assume that the 15% volume growth and the 20% revenue CAGR can be much more in FY 2026 particularly?
Yeah, for this year, yes, definitely we'll be able to achieve. Over a period of time also, we have plans in executing the same. We'll be able to achieve with confidence. Definitely, we are confident in achieving that.
Yeah, for the current financial year, it is more compared to the overall five years average.
Yeah. This year it will definitely be more than the steady state number which you've given over the course of five years, correct? Because the new facility is coming in.
Yeah.
Yes.
Yeah. Same for the EBITDA margins then. Over the next three, four years, you envision to reach 8%. This year, with the lead capacity increasing, is 6% or more a fair number to assume? Is it possible to reach that?
Yeah, 6% is very reasonable.
On a blended level.
Yeah.
Okay, perfect. That's all I want to know. Thank you, and all the best.
Thank you.
Thank you.
Hello, Mr. Rahil, does that answer your question?
Yes. I was done. Thank you.
Yeah. The next question is from the line of Hemant, an individual investor. Please go ahead.
Sir, thank you for providing me the opportunity. My question is similar to the earlier participant. We have a revenue figure of 20% till FY 2030, I guess. Sir, what will be the revenue guidance for FY 2026?
For this year, we can expect an increase of about 30%-35% increase in our revenue.
30%?
Yeah, we can see in that range.
Almost standalone and 35% on consolidated basis, yes.
Sir, most of it will be from H2? I mean, what will be the split?
Yeah, from Q2 onwards.
From Q2 onwards. There should be a quarter-on-quarter growth because we have our commercial production from June also, right? Our first phase.
Yes. One part of this quarter, that is the last, that is June month will contribute, and from next quarter onwards, the complete three months will contribute. When you want to see the full effect of the numbers, you'll start seeing from Q2.
Yeah. This 30% growth is average for the whole financial year.
Sir, the Q1 numbers should be much better than Q4 because there will be some incremental capacity for it as well, right?
Q1 numbers.
Should be better than
Yeah.
Yes. Of the last Q4. Yes, you're right. Yes.
No, I'm talking about Q1, Q2.
Yeah, Q1 is definitely little better than the Q4 of previous financial year.
Okay, sir. Thank you, sir.
Thank you.
Thank you.
The next question is from the line of Sagar Shah from Spark PWM. Please go ahead.
Thank you so much for giving the opportunity again. I had just around a follow-up or two, three questions, sir. My first question was related to the CWIP. The CWIP stood tall at around INR 75 crores as at FY 2025. This cost work in progress is more on related to the phase I CapEx or the CapEx already going on, or is it something else, sir?
Yeah. Mainly on capital work in progress for TKD plant.
Okay. This is more related to phase II, sir?
No. phase I. phase I, we have not capitalized as on 31st March 2025. Out of INR 75 crore, around INR 55 crore belongs to this thing and balance INR 20 crore from the regular other CapEx.
Okay, fine, sir. Got your point. My second was related to the aluminum business. Aluminum business had its own concerns and what you have highlighted in the previous con calls also regarding the hedging, regarding the kind of volatility in the business. You just, I think, answered the previous participant's question that going ahead, you are looking to increase some volumes even in aluminum business. Have you found out any actual way to hedge your prices on the aluminum, or have you found out a way actually to bring out some profitability in this business?
Basically, we are not hedging the aluminum part of it. Rather, we are doing a back-to-back purchase against sales. This is not hedged in terms of market hedging, but more hedged in terms of purchase and sales.
Okay.
That's all we are managing and running that through the operating.
This is purely looks like a trading bet actually, because I think you must have observed the prices and going ahead, maybe you were keen on selling at higher prices. I think that's how you are eyeing this business.
No
Right? In this particular way.
No, not that way. The moment we are buying, we are selling it as well along with our margin and processing whatever cost additional, and then we'll be selling it at a future point in time.
Okay, fine, sir.
The point of purchase is separate.
Okay, fine, sir. My last question is related to the margin drivers. Going ahead in this particular for FY 2026 and also beyond, the margin drivers would be mostly of, I think, in the copper and the plastics business due to the high utilization. Do you think the operating leverage will play and that is why you are guiding for 6% EBITDA? Or is it just because of the newly commissioned lead plant?
It is both blended from copper, lead, and from plastics. More from lead and copper.
Okay. Fine, sir. Thank you so much, and all the best.
Thank you.
The next question is from the line of Siddharth from Kotak Securities. Please go ahead.
Hi, sir. Thanks for the opportunity again. Just a few questions as a follow-up. When we see that we have not really been able to scale aluminum division in the current format, when you say back-to-back purchase and sale, do you think there is any scope for increasing the utilizations and the volumes in this segment? If and when, say, an MCX hedging contract is online, or do you see that's not really playing out for yourselves?
On the aluminum side, we definitely don't see the MCX contract playing out for ourselves because that is more on the primary side of the metal. In terms of aluminum, we will not be able to give you a very strong guidance because we are in the process of incrementally trying the product. However, as your specific question in terms of the MCX hedging, no, that will not work for these products.
I'm sorry, sir. You said it was for pure aluminum. I was under the impression that there are discussions to start an aluminum alloy contract as well. Will that not help you?
It is still in discussion. Technically, as of now, I do not see the light on the other side of the tunnel on that contract. When it comes, then definitely it will be helpful.
Would you mind telling us why you do not seem very optimistic on this contract coming online? One of your peers is very optimistic on this particular point. I just wanted to understand why the divergence in point of view.
I did not say I'm not optimistic in this, but as of now, I do not see the light because the discussion, what we see and what we discuss with the exchange, we do not see as of now that translating because there are a lot of factors. Once the exchange comes up, definitely we would use the same and that will be helpful for us.
Understood, sir. Thanks a lot for this. Secondly, sir, on the Reverse Charge Mechanism, which was supposed to come online for battery scrap, has there been any progress on the same? We see that it's been a fair time coming. The industry participants are still hopeful, but on the ground it does not seem to be promulgated as of now. Sir, any updates on that particular point, sir?
Sir, regarding the RCM mechanism, in the coming GST Council, we are envisaging that that could be taken up more strongly on the GST reforms. We have to wait and see. Also, from the industry side, there has been a good push from all recycling industries, whether it be aluminum, lead, copper, all of us have definitely pushed on that. Let us wait and watch, and we are hopeful that it should happen.
Okay, sir. Thanks a lot for your time, sir. Best of luck. Thank you.
Thank you. Ladies and gentlemen, that was the last question for today's conference call. Yes, sir, there's a question. It's from the line of Shweta Dikshit from Systematix Group. Please go ahead.
Hi. Thank you for taking my question again. Sir, could you please reiterate what is the top-line growth you're expecting for FY 2026, in terms of volume or absolute top-line?
Shweta, as I already said, it is about 30%-35%. This is the minimum increase which we are anticipating. These numbers may well exceed the numbers what we have given.
Both value and volume.
Both value and volume. On a conservative basis, we are giving this number.
All right. Thank you.
Thank you. As there are no further questions, I would now like to hand the conference over to the management for their 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. Thank you and have a great day.
Thank you.
Thank you. Thank you all.
Thank you.
Thank you.
Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.