Good evening, ladies and gentlemen. Welcome to Q2 and H1 FY 2027 Earnings Conference Call of Ellenbarrie Industrial Gases Limited, hosted by Raadhi Capital. As a reminder, all the attendees will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. If you have any questions, please feel free to press the raise hand button. We will call you on in turn and unmute your line so you can speak. Important note: If you need to ask a question, please ensure Microsoft Teams has permission to access your microphone when you log in. Otherwise, you will not be able to unmute. Please note that this conference is being recorded.
Kindly also note that the audio of the earnings call is a corporate material of Ellenbarrie Industrial Gases Limited and cannot be copied, rebroadcasted, or attributed in the PR media without specific and written consent of the company. Please note that anything said on this call that reflects the outlook towards the future, which can be construed as a forward-looking statement, must be reviewed in conjunction with the risks that the company faces. A copy of the disclosure is available on the investor relations section of the website as well as on the stock exchanges. To give you an in-depth understanding of the company and answer all your queries, we have from the management side today, Mr. Padam Kumar Agarwala, Chairman and Managing Director, Mr. Varun Agarwal, Joint Managing Director, and Mr. K. Srinivas Prasad, Chief Financial Officer.
I now hand over the conference to Padam sir for his opening remarks. Thank you, and over to you, sir.
Thank you. Good afternoon, dear listeners, and thank you for joining us today for Ellenbarrie.
Sir, your voice is echoing. Srinivas ji, please unmute yourself. Yeah, please go ahead.
Yeah.
Yeah, it is working now?
Yes, better.
Am I audible and clear?
Yes, you are. Please go ahead.
Thank you. Good afternoon, and thank you for joining us today for Ellenbarrie Industrial Gases Limited's Q2 FY 2027 Earnings Call. We are pleased to report an important quarter marked by the commissioning of our new on-site plant in Durgapur and the award of a major BHEL contract for a large air separation unit in Odisha. These milestones expand our operating capabilities and position Ellenbarrie to participate in larger industrial opportunities. As we complete the first half of FY 2027, Ellenbarrie is moving from capacity creation to capacity monetization. With recent investments becoming operational, our priorities are to improve utilization, generate sustainable revenues, and deliver stronger returns on invested capital. Against this backdrop, I would like to highlight three structural trends that reinforce our confidence in the opportunity ahead. The first trend is the growth and gradual consolidation of the industrial gases industry.
Demand is expanding across major end markets, while customers increasingly value scale, reliability, technical expertise, and cost efficiency. These trends favor established players with strong manufacturing and distribution capabilities, and Ellenbarrie is well-positioned to strengthen its role in this evolving market. The second trend is the shift towards outsourcing gas production. Large industrial customers increasingly recognize the benefits of partnering with specialized suppliers instead of operating captive facilities. This supports long-term on-site contracts with greater revenue visibility, an area where Ellenbarrie's operating experience positions us well. The third trend. Sorry, we had some technical glitches. The third trend is the emerging opportunity in coal gasification. Its development will require significant oxygen capacity and large air separation units. Our recently awarded BHEL contract is an important first step demonstrating our ability to execute larger, more complex projects. Varun will discuss the contract and its operational implications in greater detail.
Together, these trends reinforce our confidence in the industry's long-term prospects and support our strategy of building a stronger, more diversified industrial gases business. Historically, we have built a strong presence in eastern and southern India. We are now expanding towards northern and central India to access new industrial clusters, diversify our customer base, and create a more balanced pan-India footprint. Looking ahead, we see significant opportunities across both our core gases operations and project engineering capabilities. Their commercial models differ, but they are complementary through our technical expertise, customer relationships, and execution capabilities. Ellenbarrie's expanding footprint, customer relationships, and engineering capabilities provide a strong foundation for long-term value creation. We remain focused on disciplined execution, operational efficiency, and sustainable growth. I would like to thank our employees, customers, business partners, and shareholders for their continued support and trust.
With that, I will hand over to Varun for the financial and operational review. Thank you.
Thank you, Chairman. Good afternoon, everyone. I will take you through our financial and operational performance for Q2 FY 2027, the key developments during the quarter, and our priorities for the remainder of the financial year. Coming to our quarterly financial performance, revenue from operations stood at INR 1,143 million compared to INR 892 million in Q2 of FY 2026. INR 987 million in Q1 FY 2027. This represents a growth of 28% year-on-year and 16% sequentially. Our longer-term guidance, however, remains of 20% growth in the core Gases business. EBITDA margin for the quarter was about 36% compared to 39% in Q1 FY 2027. There are nuances beyond the headline numbers, so I want to take time to explain this for clarity. Performance of the core Gases business was stronger than the consolidated margin may initially suggest.
The consolidated EBITDA increased from INR 387 million in Q1 to INR 407 million in Q2. The segment margins for the Gases business also increased from 38% in Q1 to 39% in Q2. However, for the company as a whole, the sequential decline in EBITDA margins from approximately 39% in Q1 to 36% in Q2 was driven by two main factors. First, the other expenses increased as a percentage of revenue largely due to higher transportation costs arising from increased diesel prices and some longer-distance deliveries. We expect this to normalize over the next couple of quarters. Second, the employee expenses were higher during the quarter due to the payment of annual increment arrears relating to previous quarter and further build-out of our project engineering team, which is like an investment into our future execution capabilities.
For the first half of FY 2027, revenue from operations stood at INR 2,130 million, representing a growth of 23% over H1 of FY 2026. Coming to our core Gases business, the revenue from Gases, related products, and services grew by approximately 27% year-on-year during the quarter. As explained earlier, the segment margin remained approximately 39%. An important milestone during the quarter was the successful commissioning of our new 325 tonnes per day on-site plant in Durgapur, West Bengal, in September 2026. The facility operates under a 15-year on-site gas supply agreement. The contract follows a take-or-pay structure and provides long-term revenue visibility. Commercial operations and revenue generation commenced in September 2026. As the plant became operational towards the end of the quarter, we expect to see the benefit of the full- quarter of operations beginning in this quarter, that is Q3 of FY 2027.
This is an important addition to our onsite portfolio and takes our total installed capacity for onsites to more than 1,000 tonnes per day. Another major development was the award of a INR 480 crore contract from BHEL towards the end of September. This contract involves the design, engineering, supply, erection, commissioning, and handover of a 1,200 tonnes per day cryogenic air separation unit in Odisha. This project will be executed over eight quarters, with commissioning expected in FY [2029]. This is a turnkey, which means we will construct and commission the facility and then hand it over to the customer. It is therefore different from a conventional onsite gas supply business where we own and operate the plant under a long-term contract. At 1,200 TPD, however, this will be the largest air separation unit we have undertaken to date.
It is an important endorsement of our engineering capabilities and positions us to pursue larger projects in the future. It also allows us to participate in India's emerging coal gasification opportunity. Coal gasification requires large volumes of oxygen, creating significant demand for large-scale air separation units as new projects are developed. The BHEL order strengthens our position in this market. Our immediate focus will be on disciplined engineering and procurement, timely execution, and achieving contractual milestones. Revenue recognition will follow actual project progress and applicable accounting requirements. Our previously announced CapEx plans of approximately INR 4,500 million or INR 450 crore for FY 2027 and 2028 remain on course.
For the remainder of FY 2027, our focus will remain on increasing utilization at Uluberia 2, stabilizing operations at our newly commissioned onsite facility in West Bengal, and progressing our planned merchant capacity additions in North and Central India. We will also advance the initial engineering of the BHEL project while maintaining close control over project execution, working capital, and cash flows. Overall, we enter the second half of FY 2027 with assets progressively moving towards higher utilization. Another onsite facility has begun generating revenue, and our engineers have secured a major new project. We believe the combination of higher utilization, recurring revenue from onsite operations, and execution of our engineering order book positions Ellenbarrie well for the next phase of growth. Our focus will remain on translating these developments into sustained revenue growth, healthy profitability, and stronger returns on our investments.
[audio distortion] With for joining us, and we can now open the floor for questions.
Thank you. We will now open the call for questions. Kindly raise your hand to ask a question. We will unmute your line. Please announce your name and organization name before you ask a question. As a reminder, we request all participants to restrict themselves to two questions and come back in the queue. We will wait for a minute. Okay, fine. We can start. The first question is from Mohammad Uzair. Mohammad, please go ahead. Unmute your line and go ahead.
Yeah. Hello. Am I audible?
Yes, you are.
Good evening. My name is Uzair Lari. I am from Aveksat Financial Advisory. Congratulations on good set of numbers. My first question is, sir, that in the investor presentation, you mentioned the dip in margin was mainly due to the increase in freight cost, and you also mentioned in the PPT itself that to mitigate it, we are planning to pass on the freight cost to the clients as well as increase the price. Are we going to do both or either one of them? Just to confirm.
Varun?
Sorry, I could not hear that question clearly. Could you please repeat?
Sure. In the investor presentation, you mentioned that the dip in margin was mainly due to the transportation cost, and you also mentioned that to mitigate it, we are planning to pass on the freight cost to the customers as well as to increase the price. Are we going to do both or either one of them? Just to confirm.
Yes, I think a part of the margin hit was due to the transportation cost, and we have long-term contracts with most of our customers where we are able to pass on the increase in our cost to the customer. This, as we mentioned, we expect this to normalize over the coming quarters.
Okay. My next question is, if you could quantify the percent of total cost out of which power contributes. For us, mainly raw material cost is power consumption. So, what is the percent of total cost which power consumption contributes to, if you could quantify it, just to get an idea?
I mean, if you look at financials in both Q1 and Q2, power was about 22% odd of revenue from sale of Gases.
Okay, understood. We also produce this ultra-high purity gases, right, sir?
That's right.
It is mainly produced through hydrogen electrolyzer, if I am correct. This hydrogen electrolyzer, do we have this on all of our plants or any specific plant only, the older one or the new one?
Yeah. Let me answer that. I think there is some stability issue with Varun ji's number. Electrolyzer is for a very small turnover of our total business. It is used for generating hydrogen. As a percentage, I am unable to comment on this, but it is a very minuscule of our total cost as well as total revenue.
To answer your question, we have hydrogen electrolyzer at our Uluberia unit close to Kolkata, from where we are making ultra-high purity oxygen. We also make ultra-high purity argon for spectrometry, et cetera. So that is being made in most of our plants.
The price realization in this is comparatively much higher, sir. Correct?
No, it's a different product altogether.
Okay. Understood.
It's a different product from the commercial oxygen or commercial argon. These are different products. I mean, there is extra effort for quality analysis, certification, and things like that. So naturally, those extra efforts have to be covered by much higher prices.
Understood. So we have this electrolyzer on both of the Uluberia plants? We have two plants there, correct? The old one and the new one which has been-
No, we have only on the one plant.
Okay.
The first one.
No, this unit is in our earlier plant.
Okay. Understood. Sir, what is the trend of argon prices these days?
Uzair?
Yes.
Please, this should be the last question. Maybe you can come back in the queue. There are many other participants waiting in the queue.
Sure. Sir, if you could share the argon price trend, like what has been the price of argon for the past quarter? That is all from my side. Thank you.
Look, while we do not want to comment on quarterly realized prices, what we have reiterated is that the long-term trend of argon demand remains intact, and argon is obviously a high-margin product for us. We see the long-term trend, because the demand is increasing at a faster pace than supply, the long-term price trend remains positive. Having said that, argon prices have remained healthy, I would say around the average realizations in the recent past. We are very constructive on this going forward as well.
Thank you so much for your answer, sir. Appreciate it.
Thank you. The next question is from Nilang Jain. Nilang, please unmute your line, go ahead and announce your organization name.
Yeah. Hi, thanks for the opportunity. Nilang here from GreenGen Family Office. Just wanting to understand, one is on the new EPC contract of the BHEL business. So what kind of margins can we realize over how long, and what would be the working capital requirement for such a contract? And would we continue to see such kind of contracts in the future as well as a strategy for the company? Because I am assuming that then the margin profile can change heavily for the overall consolidated basis.
Yeah, thanks for your question, Nilang. Absolutely right that I think overall margin profile will change because these EPC contracts will carry a lower margin than our core Gases business, and that is obviously on account of the fact that we are not really employing any long-term capital here. It is only working capital that is required. And that is why I think it is important to look at our segment margin for Gases, rather than the margin for the company as a whole.
Okay.
Obviously, we will-
So you will give segment and disclosures of margins and all?
[crosstalk]
Okay. So you will, in the future, give segmental-
Yeah. I mean, as a part of our. Yes, even now we have segmental reporting for the gases business and the, what we call project engineering.
Right.
This kind of project will come in the project engineering revenue. It's important that you highlighted this to also reiterate that in Q2, even though the margins of the company as a whole appear softer, but the margin of our core Gases business is actually increased compared to Q1. Yes, this kind of contract typically has a significantly lower margin, probably high- single- digits, low- double- digits kind of a margin profile. Having said that, obviously, it generates a strong absolute cash flow return and a high ROCE because there's zero long-term balance sheet risk. In that sense, it's quite, I would say, complementary to our core Gases business. Our focus will continue to remain on our core Gases business, though, because ultimately that is what drives the long-term recurring revenue. We will certain opportunities in this front which [audio distortion] execution capabilities.
This is actually one of those projects because it was in a very strategic sector which has a very, very long-term and significant addressable market. Even though this is an EPC contract, but it kind of opens up the room for us to gain long-term contracts where actually we own and operate the asset for other coal gasification projects. It's very important. It brings us into the league of companies which are able to execute and which have orders to execute plants with over 1,000 tonnes per day capacity.
Okay. Our larger aspirations, long-term aspirations will be to have a 1,000 TPD+ kind of an on-site project eventually in a similar space.
Sorry, Nilang, could you repeat that?
Our long-term aspirations can be to own an on-site project of 1,000 TPD+.
Absolutely, yes.
Once we have demonstrated the capabilities.
Yeah, because see, a lot of customers want that credential. These guys have set up plant which is of size, because above 1,000 tonnes per day size is typically only the industry leaders have typically been able to execute.
Right. Secondly, just about the current CapEx of the two bulk plants, like North and Central India. So what time of the next year do we see either of them going live, and how much time to ramp- up?
I mean, we typically assume about six to eight quarters for the ramp-up of merchant plant, and these plants to start contributing in the second half of the next financial year.
Okay. Both should come around the similar time? Hello?
Yes, I think both, we expect plants to come online in the second half of the next financial year.
Okay. I will join back the queue.
Thank you. The next question is from Dikshi Jain. Dikshi, please unmute your line and go ahead.
Audible?
No, we cannot hear you, Dikshi. Just increase the volume. Unmute your line, Dikshi.
Hello, am I audible now?
Yeah, you're much better.
Okay.
Please go ahead.
Sorry, can you repeat what time are we expecting the North India and the Central India plant to go live? I believe it was in the first half of FY 2028 mentioned earlier. Hello?
Yeah, Ms. Dikshi, you are right.
We expect-
That is true. Yeah, go ahead, Varun.
Go ahead, Srinivas. I was saying we expect revenue contribution to come in from H2, and we expect these plants to sort of come live around the middle of the year.
Okay. Also, in value, can you quantify how much was the total effect for employee expense for the project engineering division that we have had in this particular quarter?
Yeah, let me take this one. This was about INR 11 million for the quarter.
INR 1.1 crore. Okay.
Yeah.
How do we see the rest of the year panning out? Do you think that going back to normal from these power and freight costs will take another two quarters and will continue on the same margin lines for the rest of the year as well?
Yeah. You see, talking about freight costs, it is linked to diesel. That part will be a pass-through to the customers. But the other part. Yes.
So, that is what I am asking. My question was, how much delay is there in the pass-through usually? If the freight costs have been up for, say, three months, does it take another quarter for the pass-through to happen, and you see a margin dip for more or less two quarters?
I mean, practically what happens, there is a time lag, two to three months time lag between the cost increase and the pass-through.
Okay. Okay. Okay, thank you for taking these questions.
Am I audible? Hello?
Yeah, thank you for taking the questions. Thank you.
Yeah. Thank you, Dikshi. The next question is from Pritesh Chheda. Pritesh, please go ahead and unmute your line.
Yeah. Hi. Sir, just first clarifying on the capacity bridge and the utilization of the assets. What I happen to understand is that last year you guys started a 220 tonnes merchant plant, and now this year in H2 of FY 2027, there is this 320 tonnes on-site plant which is getting operational. First, until the capacity that you had until quarter two and whatever revenues we see, what kind of utilization is those capacities on? Once you operationalize the on-site plant, which has come in quarter three of FY 2027, what will be the revenue potential on the assets which have come until quarter three FY 2027? If you could tell us that part.
I think we broadly want to reiterate 20% sort of a revenue growth guidance on an annualized basis. We do not sort of provide plant-wise revenue breakup. But having said that, I would say, of course, there will be incremental revenue coming in from the on-site. There is also some amount of spare capacity available in our recently commissioned merchant capacity. Those are things which can add to the revenue of the company and phase of revenue growth obviously.
Sir, I am sorry, but-
Revenue that we are currently implementing. That is on the Gases segment side.
Pardon me, but for the last 35 minutes, your line is not clear at all.
Let me just check. Srinivas, you want to-
I'm sorry, but-
Answer it while I check?
Hello?
Is it better now, Pritesh?
Yeah, but sir, it is going midway, and that is happening for the last 35 minutes. So, in between, the words go jumbled up or mute. We hardly can comprehend what you say.
Let me just try to answer again. What we were saying was that there will be incremental revenue in H2 from the new on-site plant. There is also some spare capacity available in the recently commissioned merchant plant, Uluberia 2. We expect revenue growth to come in from these two units. However, we do not provide a plant-wise breakup.
No problem.
We expect 20% revenue growth on an annualized basis. The next phase of growth, the growth from these two units, meaning the spare capacity in recently commissioned merchant plant to year two, as well as the new on-site, will drive our revenue growth until the new merchant plants come online. On a longer-term basis, we expect a 20% CAGR on the revenue.
Okay. The Uluberia 2, which you are referring to, came last year, right? Hello?
Yeah, Pritesh ji, it is-
That came online in Q4 of last year.
Okay. The next two, and the INR 450 crore CapEx that you have mentioned, that is for the next two merchant plants for West and North, correct? Or Central and North, whichever you mentioned. Hello? Srinivas ji?
Yeah, Pritesh ji, there's some-
No problem, sir. You can answer this. It's okay.
Yeah.
Just, right?
Can you repeat the question?
Srinivas ji, can you just take it? I will just sort out the connection from my side.
Yeah, same problem this side also. Pritesh ji, can you repeat the question again?
The question is, the next two plants of INR 450 crore, which you are referring to, is the merchant plant for the North and the West, which is incrementally going to come next year?
Yes.
On all these plants put together, if you had to put a peak revenue, without asking when that peak revenue is coming, but what should be the peak revenue on full utilization or on optimum utilization?
It should be. You see, currently, we are looking at about, at current run- rate, it is about INR 400 crore. You can add the incremental revenue to this, plus full year utilization effect for the new two plants would be about INR 300 crore. It can go around INR 450 or INR 500 to INR 800.
Okay. The BHEL contract which you have got for EPC, what should be the net margin or an operating margin for this contract, and this INR 500 crore contract should be executed in how many months? Beginning which quarter will we start seeing the execution?
You must have referred to the press release we released on this topic.
Yes, I have.
Subject to that, I think it is about 24 months, and we received this award in September.
Then what should be the net margins of this?
Of course, margins and all, we cannot.
Okay.
Yes, sir.
Okay. And, sir, one more thing. Any reason why the merchant plants which were supposed to come this year, which is H2 FY 2027, have been postponed by one year and have moved to H2 FY 2028? So these merchant plants at the time of IPO were slated to come in FY 2027 end. Now they are coming in FY 2028 end. So any reason for that?
Land allotment, et cetera. These have been delayed rather mainly due to the land allotment by the respective state governments and the statutory approvals.
Okay. Once-
I think one or two quarters is normal for this kind of size approach.
There is an alternate governments do not work at the speed of industry and business. Whatever we factor in s ometimes goes out of hand.
The peak utilization that we are referring to at about INR 800 crore based on these all assets, we should, once the plant comes next year, so FY 2029 will be the year one of operations. FY 2030 will be the year two of operation. If one has to assume a peak, will it be FY 2030 or it can go beyond that? So two years or it takes beyond that for a merchant plant?
It is very difficult to comment right now. It all depends on market situations. That point in time, there are a lot of new industries coming up in that area, based on which we have taken an investment decision. We do not really know how much time it will take to load upfront. Industries have announced their plans. Upcoming industries have announced their plans. They may be in time, they may be delayed.
One issue-
Those things will be very difficult to project in advance.
Okay. Okay, sir. This was helpful, sir. Thank you very much.
Thank you.
Thank you. Next question is from Noel. Noel, please unmute your line and go ahead.
Yes, good evening. Can I be heard?
Yes, you can.
Yeah.
Yes. Yeah, I am sorry, but the audio kind of cut off in one point. What exactly is the quantum of the higher fuel costs and higher power costs and transportation costs? Do we at least have some kind of a thing on that?
Noel, let me clarify. Gas margins have gone up, okay? What has happened is we have protected our margins as such. But in the meanwhile, the costs have gone up to some extent, like your diesel price, which is sort of transportation costs. Of course, there is some cost associated with delivering the liquid to longer distances. Having said that, while our absolute margins have also have gone up, but if you look at the cost and revenue, though both simultaneously going up, it has an impact on the EBITDA margin compared to revenue. That need to be appreciated. Otherwise, power costs are going up because of increase in the volumes also.
Yes, but if you are talking about it on the pass-through that we are looking for, I mean, what is the rough percentage or some kind of a guide you can give on that? Maybe not a specific figure, but if you can give us a guide and some broad guide or something.
You can say more or less we will remain same as year-to-date percentage if you look at, if you Q1 and Q2 average, if you look at.
Okay. [Non-English content] . Okay, fine. Yeah, that is one thing. Second question which I had is, argon contribution in your gas mix is about 16% for this quarter. Previous quarter it is about 10% odd . In terms of this overall increase of about 600 basis points, I am not asking for something specific, but what exactly is the volumetric contribution? What is the pricing contribution, roughly?
Sorry, we lost you for some time.
Yes, argon has been a higher contribution compared to 1Q.
Yeah, I would say it is a combination of volume and price. I would say about half and half, broadly speaking. But volumes have also gone up as our capacities, the new Uluberia 2 capacity ramp-up has happened. That is also producing incremental argon. So as we ramp- up capacity utilization, [audio distortion] more argon available for us to sell.
Okay. I mean, I didn't hear anything. [Non-English content] . Yeah, I think I'll just I guess I'll have to just take it offline . Thank you.
Thank you. Next follow-up is from Nilang. Nilang, please go ahead and unmute yourself.
Yeah, thank you. Just wanted to understand on the East India onsite, which just got commissioned in the last quarter. For that, do we need to ramp- up anything or it's a fixed inflow every month here onwards? What kind of inflow is this and the money that we make on this?
That's a fixed amount that we make every month, and there's no ramp-up required there. As I mentioned, we don't-
[Non-English content] . Fine. No worries. Are we able to get any mix of these gases and sell it outside?
There will be some small quantity available for external sale, but that will be available as we ramp- up production. That again depends on how the customer ramp-up happens. But the bulk of the revenue will be from the long-term contract, which is of a take-or-pay nature.
Okay. Anything on the [storage] business, like those electronic gases for helium and all for semiconductor? Any thoughts on that? Are we looking to Since the competition was talking about this opportunity, are we pursuing anything on that front?
Nothing significant there on the helium side. Helium is primarily like a sort of a traded gas. We can't manufacture it in India. It's bought and sold. On the solar power, we do have a plan to sort of in a central India location to have solar gases available. Not quite electronic gases, but solar gases, which is also an addition to our portfolio. That sort of adds in terms of our capability to cater to the solar customers, and that's a portfolio of about four to five gases.
Okay. Lastly, this quarter we saw argon and others at about 16%. My understanding was argon is a larger margin driver for the overall consolidated EBITDA. Do we see these levels to continue, and how will it play out? At this level of argon and other gases, do we land up hitting 40%-42% EBITDA in the future?
Yeah, I think, again, long- term, we had sort of indicated that we'll have about a 40% margin for the Gases segment, which we are very close to at 39%. We had also indicated the contribution of argon will go up, which it has. I think we'll be, again, somewhere around the mid-teens, in the region of, let's say, 14%, 15%, 16%, that sort of range, and we expect this trend to continue. I think in H2, we will see the revenue contribution from the onsite, which will also meaningfully improve the margin profile, because onsite revenue typically has a higher margin profile than the bulk revenue.
Last question from my side would be, how is our conversation with our industry folks? How is the industry? Because we have a very diversified spread of industries. Just to capture the overall sentiment, a large part of our business is onsite, where I feel we are fairly covered. On the bulk side, how is the industry sentiment across those three, four key industries that we deal with?
I think, look, onsite is primarily steel, right? We do not really have any onsite plant for any industry other than steel. When you talk of the bulk or the merchant customers, then it is across a wide variety of industries. Obviously, after steel, the most important industry for us is pharma, where the conversations have been very encouraging with our customers. We see a lot of them enhancing their capacities, which will hopefully lead to higher volumes for us in the future. On the healthcare side, meaning supply to hospitals, it is a pretty stable and consistent growth. All in all, conversations are encouraging. There are certain cases where implementation of new CapEx by our customers as well is taking longer than originally envisaged, but I think things are moving in a positive direction.
Thank you. That is it from my side. Good luck.
Thank you, Nilang.
Thank you. The next question is from Darshil Jhaveri. Darshil, unmute your line and go ahead.
Hello. Hi. Thank you so much for taking my question, sir. Firstly, congratulations on a good set of results of FY 2027. Sir, I just wanted to know, with regards to our EPC, sir, it is a very big project for us, right? The execution usually in EPC is more towards the H2, right? Could we see some meaningful chunks of revenue coming in H2 for us for this project?
There is some problem with the network.
Hello? Can you hear me?
Yeah, that's it. Yes. To answer your question, I think this is an eight-quarter execution cycle. More of the revenue will obviously be booked in the second half of this project compared to the first half. You are absolutely correct about that. Quarters five to eight of this project is where you would see larger revenue than quarters one to four. Quarter one basically is Q3 of FY 2027, for reference purpose.
Okay. Because of this, optically, our consolidated margins might look a bit damp because we would be investing our costs. That's a fair way to look at it, sir?
Yes. I think the key number to look at, I think, on a sort of long-term recurring basis is the segment margin for Gases. Because this revenue will come in a separate segment, which is project engineering. You will have a clear indication of how much is [audio distortion] significantly lower than the segment margin for Gases. The revenue will be clearly bifurcated, so that I don't think there will be any confusion there even going forward. The sort of numbers as a whole, then yes, there will be a change in the-
I'm so sorry, sir. I think there's a huge network issue because I'm trying to decipher what you're trying to say, but I think I got the gist of it. Just also wanted to know, like in H1, we've overperformed the 20% thing. I think somewhere we are getting help from our value also. The value growth in our products. The 20% growth that we are saying is mostly volume. The value can be add-on and we can over-perform our 20% growth guidance. Is that a fair way to look at it?
Yes, I think most of the growth will come from volume. There will be value growth in the sense that, from greater contribution of argon, which has already sort of gone up from closer to 10% to mid-teens.
Okay. As a just last question from my end, sir, the CapEx that we are doing, will it have to mostly be funded via debt, or we are planning to raise some more capital for it, sir?
Currently we have cash on the books, and we will take on some debt as required at the project level. But at the moment, there is nothing imminent in terms of a capital raise.
Okay. Fair enough. I have just one more last question from my end, sir. The project execution, we have got a very prestigious order right now. Are we looking to do it in somewhere outside India also or something like that? Are some talks going on for that?
I think at the moment, our focus is on India. I think there is significant opportunities here. We are obviously still at a single-digit market share here, so a lot of room for growth here itself. But nothing imminent internationally at the moment.
Okay. Fair enough. That is it from my end. Thank you, sir.
Thank you.
Thank you. The next question is from Ashish Pareek. Ashish, please unmute yourself and go ahead. Ashish, please unmute your line. Ashish, maybe you can come in the queue. Next follow-up is from Dikshi. Dikshi, please go ahead. Dikshi, please unmute your line.
My questions have been answered. Thank you.
Okay. We'll try Ashish again. Ashish, please go ahead. Unmute your line. I think Ashish is not able to unmute his line. That was the last question for the day. Thank you once again for your time and participation. On behalf of Ellenbarrie Industrial Gases Limited, this concludes today's conference. For any questions, please feel free to write to us on the email IDs mentioned on the invite. We appreciate your engagement. You may now disconnect your lines.