Ladies and gentlemen, good day and welcome to the Gujarat Fluorochemicals Limited Q1 FY 2026 Post-Result Earnings Conference Call Hosted by Batlivala & Karani Securities India Pvt Ltd As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rohit Nagraj. Thank you, and over to you, sir.
Thanks, Subha. We thank the Gujarat Fluorochemicals Management for providing us the opportunity to host the company's Q1 FY 2026 Post-Result Earnings Conference call. From the management, we have today Dr. Bir Kapoor, CEO and Deputy Managing Director, and the senior members of the management team. Without taking further time, I would like to invite Dr. Bir Kapoor to share his opinion on post-result earnings conference. Over to you, sir.
Thanks, Rohit. Good afternoon, everyone, and a very warm welcome to all of you for GFL's Q1 FY 2026 Earnings Call. For this call, I have with me my colleagues, [Mr. Atul Jindal], our Group CFO, Mr. Manoj Agrawal, CFO of GFL, Mr. Kapil Malhotra, Business Head of Fluoropolymers, and Mr. Rajiv Rao, who is Business Head of our Battery Chemicals. The company announced its Q1 FY 2026 results at its board meeting held today. The results, along with earnings presentations, are already available on the stock exchange and on our website. I'll briefly highlight the key financials and then give you an update on our business operations and outlook. I'm pleased to share that from this quarter onward, we will commence reporting segmental data. From now onward, we'll start providing segmental numbers. Let me give you the chemical segment's update first.
The chemical segment reported a 9% year-on-year increase in revenue to INR 1,280 crore in Q1 FY 2026. EBITDA grew by 33% year-on-year to INR 354 crore, with EBITDA margin expanding by 495 basis points to 28%. Profit after tax for the quarter stood at INR 196 crore, marking a 69% year-on-year growth. Consolidated revenue from operations stood at INR 1,281 crore, reflecting a 5% year-on-year increase. EBITDA grew significantly by 31% to INR 344 crore, with margins improving around 500 basis points to 27%, up from 22% in Q1-FY 2025. Consolidated PAT also increased to INR 184 crore, marking a 70% year-on-year growth. This strong performance was primarily driven by sustained growth in our Fluoropolymer s business and an improved product mix.
The management is focused on working capital reduction, and thereby, the working capital has reduced from 188 days to 172 days in this quarter, and efforts are on to further reduce over the next few quarters. Let me now walk you through the performance of each business segment for this quarter. Our fluoro segment revenue has been rising steadily, and we have now surpassed our previous high to achieve the highest ever quarterly revenue. We expect this growth momentum to continue on account of growth in new polymer sales volumes driven by already approved qualifications for high-end applications in sectors like semicon, aerospace, and automobiles, among others. The capacity which we have added in the new Fluoropolymer segment over the past few years is expected to reach optimal utilization levels by the end of this financial year.
Additionally, we'll continue to invest in expanding our Fluoropolymer capacities to support future growth. Following initial validations and approvals, we are now witnessing strong traction in these segments as reflected in our current performance and outlook. Rising demand from key sectors such as automotive, semicon, and electric vehicles and energy storage systems is opening up significant growth opportunities for us. Based on current customer discussions and approvals, we are confident of achieving around 25% growth as guided earlier. In our fluorochemical business segment, we are excited to announce the start of commercial production of R32 in Q2 FY 2026, which is several quarters ahead of schedule. This has been achieved through strategic retrofitting and at minimal capital expenditure. We aim to ramp up our R32 capacity to 20,000 metric tons in phases by the end of this financial year. Further capacity additions plan will be formed up, looking at the market opportunity.
With this addition, we now offer a complete range of refrigerant products, including R22, R32, R125, and R410. The specialty chemical segment remains stable during the quarter and is expected to see steady improvement going forward. Our bulk chemical segment saw a slight decline in revenue during the quarter, mainly due to lower caustic soda prices and a planned CMS plant shutdown. We expect this segment to normalize in the coming quarters. Turning now to our battery chemical segment, this segment is emerging as a cornerstone of our future growth, further aided by the global demand for battery energy storage to support large-scale global developments in AI/ML workloads, global capability centers expansion, EV infrastructure, and renewable energy deployment, all of which are accelerating the adoption of battery storage systems.
A major catalyst is a recently introduced bill in the U.S., which expands subsidies beyond electric vehicles to include energy storage systems. The bill offers a substantial $45 per kW hour subsidy, covering approximately two-thirds of the battery cost, making large-scale battery production in the U.S. not just feasible but highly attractive. Importantly, the bill also introduces supply chain safeguards requiring up to 85% of inputs in the next few years to be sourced outside the prohibited foreign entity category over a period of time. Currently, the largest supply chain for battery material is originating in PSE category countries, therefore providing an excellent opportunity for our battery material business to present an alternate supply chain option to our customers. We are exceptionally well-positioned to lead this phase. Our existing capacities and initial approvals give us a strong foundation for global leadership.
Besides our electrolytes and salt plant commercialization, our LSC CAM plant has successfully completed pre-commissioning activities, and our LSC pilot plant is also now operational. We are actively developing customized drives tailored to customer specifications, reinforcing our commitment to innovation and responsiveness. This is a pivotal moment for our battery materials business, and we are confident in our ability to capture the opportunities ahead. Let me now touch upon the recent U.S. tariff announced on India, where an additional duty of 15% has been imposed, taking the total to 25% from 10% previously. The products, however, like PTFE and micropowder, and the majority of our battery materials, are exempt under the reciprocal duty list. The revised duty, however, applies to a few of our new Fluoropolymer s as these products are highly specialized with very few suppliers globally and having a long qualification cycle.
We believe it will not be easy to develop an alternate supply chain in short to medium terms. Therefore, we do not see any significant impact on our business. To summarize, the Fluoropolymer segments will benefit from incremental sales of high value-added products. Fluorochemicals will see significant increase in revenue driven by commencement of our R32 business, and our battery material business is poised for a significant ramp-up in the medium to long term. We remain confident of delivering sustained growth and creating long-term value for all our stakeholders. Thank you, and we are now open to the floor for questions.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. 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 on the line of [Rohan Syed] from Sumatra Asset Managers. Please go ahead.
Good evening, [Claudine], and thank you for giving me the opportunity. I have a couple of questions. First, on the Fluoropolymer revenue, it has already spiked high in this quarter. Is this a redress available, and what visibility do you see in the volumes for the rest of the quarter and the coming quarter?
Rohan, we have already stated that we expect the Fluoropolymer business to achieve a growth of 25%, and we see that happening probably by the time we complete the financial year. We expect this revenue growth to continue quarter by quarter.
Okay, got it. The second question is whether the customer approval pipeline has to finish integrate on the customer approval pipeline for the new high fluorinated polymer accessory for semiconductor certification.
Sure. I will request Mr. Malhotra to.
Yeah. Hi, Rohan. I had also mentioned in the previous calls that a couple of high-end applications, especially semiconductor, we have mentioned in our statement, aerospace, automobiles. We have also got a couple of high-end polymer approvals from the Western countries and also from Far East countries. The commercial business has started from these applications. With every software coming up, we expect these numbers to ramp up and the business to grow continuously and more approvals to come in consequently from other customers.
Okay. Okay. My last question is just understanding regarding that you have stated right now regarding our U.S. client. We are dealing with a specialty type of chemicals in the U.S. market. Therefore, we are not concentrated towards the support of the target client. Is my understanding right in this?
No, there are specific products which are nice.
Like R125 and R410.
Right. I don't think the refrigerant gases are part of that. The PTFE and micropowders are part of it, and the majority of the battery material are part of mixtures which come from the reciprocal duty list.
Okay. Okay. That's it for my time. Thank you for taking my question.
Thank you. I request each participant to ask two questions. The next question is on the line of [Sanjay Joon] from ICICI Securities. Please go ahead.
Yeah. Thank you. Good afternoon, sir. Thanks for taking my question. A couple from my side. First, on the R32, I'm helping to understand what is the capacity we added now by retrofitting the existing plant. We said in the opening remark that we are looking to scale up to this 30,000 metric tons by end of FY 2026. Is that right understanding, or you will wait for validation of this product and then you would want to expand and take a decision, or we have already started the work on expanding?
Not really. Thanks, Sanjay. Thanks for your question. First of all, no, we have already, since this is a retrofit, we have already done, we have already checked the materials, and, you know, it's already qualifying. We have also shipped our first shipment to our customers. The plan right now is not wait and then expand. Since we are retrofitting, it is done in phases. As I said, I had stated 20,000 tons by the end of this financial year, Sanjay, and then we'll decide on the further ramp-up plan based on looking at the market opportunities available to us.
Okay, by when are we expecting this existing plant? I don't know what capacity we have added to reach the optimal utilization, and what is the capacity with this first phase we have done?
It will not be appropriate for me to give the exact capacity now, but of course, it's in upward to 10,000 that we have indicated, and we'll slowly ramp it up going forward.
Can the remaining 20 will also come as a retrofit, or it will be a first plant?
Everything will come as a retrofit. Of course, it may require some amount of balancing equipment to be added, because always with retrofits, there are imbalances. When I said end of the year, that means we'll be adding some equipment to rebottleneck and ensure that we achieve that capacity that we're talking about.
When are we expecting to reach this? Of course, the first of 10,000 capacity to reach optimal utilization. Is this quarter possible? Q2?
I think capacity utilization, we'll probably share with you a little later, but we expect it to, looking at the market opportunity that is available to us, we expect that utilization to happen fast.
Got it. Got it. Actually, on the Fluoropolymer s, you said that we have a good visibility on order book, and you reiterated that that is up 25% for this year. First quarter wasn't 25%. What is giving us the confidence? There's an uncertainty of the rest of Paris, which is a very large market for us. I know PTFE doesn't get impacted, but Fluoropolymer does. What is giving us the confidence of this 25% growth?
I'll just make one comment, and then I'll hand it over to Kapil to add more. The first thing is, you know, since we have already been approved, and as you know, the Fluoropolymer s, these are very specialized products. After approval, the capacity, normally the orders start at a relatively small level and then keep building up. That is what is giving us confidence because we have a large number of approvals in place. Now, coming back to the capacity, this tariff situation, the U.S. is a large market for us, but if you look at the volumes, they are very large in case of PTFE and micropowders, which are on the exempt list. New polymers are indeed part of it, but there's a certain level of, you know, their stickiness to their business. I'll let Kapil add to that.
Yes, as Dr. Kapoor has mentioned, in the U.S., as PTFE and micropowders are exempted, however, all the new Fluoropolymer s, they command a very special application, as we have mentioned, a couple of application names also. The demand is inelastic of the prices majorly, and we expect that we should be able to, majorly, negotiate all the prices, as per the tariffs, slowly and steadily, and we should be able to continue the business. Our approvals, as I mentioned, are already on, and some of the other approvals will keep on happening, with every subsequent quarter. The ramp-up will keep on happening in the business as and when we keep on getting these approvals and also the commercial business keeps on increasing as we keep on getting more orders.
Just to add, Sanjay, the earlier 10% that we're talking about has already been passed on. Now we are looking at this delta of 15%.
Very clear. In just on the pricing of R32, with our 20,000 metric tons capacity coming in FY 2026, do you think prices slightly softened up, or do you still believe it will?
Mr. Sanjay, can you sound a little louder?
Yes, is it good now?
Yes, far better now.
Yeah. On the R32 pricing, it's been quite firm for a while now, but now the capacities have started slowing in. What is the expectation on the pricing? Because we have seen this in R125 also, right? The prices went up to $18 and cooled off to $5, something like that in R32. Again, do you see a risk of pricing normalizing at the levels, which were earlier shared, $3 or $4, or you still believe it's a sustainable pricing?
Yeah, of course, we expect the price to remain, you know, in the same range. We're not in what we're talking about, R125 was a different situation. The prices on R125 were based on duty in very specific countries. In this case, R32 fundamentals of where the R32 pricings are very different. The reason they're very different than 125, the reason primarily, of course, is if there's constraint on the supply side and the prices being high in one of the largest suppliers in the world. That's the reason the prices are high. We expect it to continue, but obviously, you know, it's very difficult to project, but we expect this to continue in this range.
Very clear, sir. Thank you, sir, and Kapil, answering all those questions. Best of luck for the coming quarters.
Thanks. Thanks.
Thank you.
Thank you. The next question is on the line of Ankur Periwal from Axis Capital. Please go ahead.
Yeah, right. Congratulations for a good shot of number, and thanks for the opportunity. Just, you know, a follow-up on the R32 bit. From an end-use market where you will be selling this, will this be largely focusing on the Indian market, or the proportion on the export side will be higher?
No, we'll be focusing, Ankur, on the global markets completely because, you know, this today, because you already had R125, but we have a now combination of R32, R125, which gives us an opportunity to penetrate deeper with R410 into market all across.
Sure. That's helpful. A second bit on the new Fluoropolymer s. You did highlight, you know, we going to almost optimal utilization by the end of this financial year. I recollect, you know, we had some expansion plans on the STP, the PVDF side, almost INR 300 crore. By when are we expecting this capacity to come on scene? If there are any further plans, given that we will be optimally utilized by the first financial year?
See, the capacity is in terms of the investment that we have made, is online. Okay. That's over the capacity that we are talking about because these investments were made quite some time back. Okay. As the qualifications have been received, we are getting more traction on orders and the volumes are going up. In terms of capacity utilization, we expect the optimal to reach by the end of this financial year. Did I answer your question, Ankur?
Yeah, just to clarification, once we reach optimal utilization number this year, I'm sure given the demand environment, there will be an incremental sort of market share gain that we'll be looking forward to. Does this INR 300 crore CapEx suffice for that, for your growth in 2027, or are we looking at something beyond that as well?
No, we'll be looking at more investments in this. I think we'll give you a better perspective probably a quarter from now. We have plans to expand and add capacity in the Fluoropolymer business as we are closing to the optimum capacity utilizations.
Okay. Great. That's helpful. Just lastly, because of the renewable plant there, there was a saving that we were expecting of around INR 150 crore. If you can share some thoughts on the timelines on when we can start seeing the benefits from that coming in.
Sure, I will request please to.
Sure.
Kapil, the investment has started. The concession is going on onsite. You must have noticed in one of our notes to the cross 41, that as a company, we invested close to INR 190 crore till date as an equity. The total plan is to be a partner in this 450 MW of renewable energy, and the saving will start accruing from Q3. Basically, it will come in stages. I think the first installation will happen in Q3. To that extent, the saving will start coming in. You should be aware that 50 MW is already operational. To that extent, the savings are already accounted for in our current P&L numbers.
Sure.
So.
I'm sorry if I could inquire.
Yeah, yeah.
Just a clarification. The full benefit stands at INR 150 crore. Let's say FY 2027, we'll see that full benefit?
That's right. FY 2027 will be the first year of full operation, so the full benefit will be available in that year. You're right.
Okay. Great. That's helpful. Thank you and all the best.
Thanks, Ankur. Thank you.
Thank you. The next question is from the line of [Arun Prasad from Amansa Staff]. Please go ahead.
Thanks for the opportunity to read in. I think earlier we had a guidance for our existing business in the BJA of 2012. In light of these developments with the Fluoropolymer segment, are we still fitting for this guidance? On a like-to-like basis with the red gas coming in, probably the like-to-disc guidance numbers would be higher, right? If you can guide on this, that would be helpful.
Yes, Arun. I think, if I recall correctly, I don't think we have given any guidance in the last quarter. Of course, we had mentioned all along that there'll be a 25% growth in that Fluoropolymer business. I don't think we have given INR 2,000-crore guidelines in the last quarter or so for that.
Not in the last quarter. It was mentioned before that it's kind of a medium-term target with the full potential of the Fluoropolymer volumes.
Of course, our target is to reach that level, but that guidance we had not given in the last quarter.
Right. Okay. At the current volume run rate, is there any possibility that we will be reaching the full potential in this quarter?
You mean for the Fluoropolymer ?
Fluoropolymer.
Yes, we said that we will reach the full potential by the end of this financial year.
Okay. On the exit of the legacy players, what is it you are seeing on the ground? Anything visibly which is shifting ground, and what kind of impact are you desiring on the pricing arrangements? A bit of color on this would be helpful. Could you come up again? You're mentioning the legacy players.
Exit one. Hello. Arun?
Hello, are you audible?
Yes. Can you come up again, please?
We are asking in the exit of the legacy player, post that we said that in the second half of the cycle in the calendar year, we should see a more impact on the volumes and as well as the pricing. Anything, any development on that front?
Yes, unless Mr. Malhotra takes that.
Some of the impact we have already started seeing in some of the products and segments, and we will continue to see that in subsequent quarters as and when the stock depletes of these legacy players. We keep on getting our approvals from the customers. The business is already on and the placements are already on, and the process is undergoing from quarter to quarter.
Okay. What kind of impacts do we have already, for example, in this quarter, in terms of a few of you?
Mr. Arun, I request you to rejoin the queue for the follow-up question as there are many participants left in the queue.
Thank you, Arun. Thank you.
Thank you. The next question is from the line of Lavanya from UBS. Please go ahead. There is no response. I'm taking the next participant who is Archit Joshi from Nuvama Wealth . Please go ahead.
Hi. Good evening, team, and thanks for the opportunity. It's the first question on the segment information that we have started providing from this quarter. I see that it's called roughly INR 5 crore in the previous quarter and INR 1 crore this quarter from EV products. An addendum to that, if I just take a look at our capital employed disclosure, our INR 1,658 crore worth of segment assets have largely remained unchanged on a quarter-on-quarter basis. We are expecting roughly INR 1,200 crore of CapEx infusion in the EV products business. Sir, first on the sales that we have done, sir, where is this exactly coming from? If you can elaborate a bit, that's what part of the EV product we've started selling.
If our INR 1,200 crore CapEx endeavor is still on track, when do we expect the assets to start getting these stocks in the next two quarters? That will be my first question. Thank you.
Thanks. Thanks, Archit. Our EV business, as I stated earlier, is we are looking at longer-term growth opportunities. In the short term, of course, now the sales that we're talking about are very, very small, and growth, in my view, is still not fickle then. We expect the sales from the EV business to start trickling in by the second half of this year, when the quarter is quite a little bit. Okay. We will start seeing more meaningful numbers, perhaps in FY 2027, okay? Which we will start seeing the full impact of the capacity that we have set up. Okay. Now, coming to your next question about your CWI here, I mean, this is, approximately, this is a very, we have been around INR 1,000 crore, I think, in GFL , which is approximately because we have various projects which are going on at multiple units.
This is a typical number that we see because as these projects get commissioned, you know, we take them, so we capitalize them. We do not see anything unusual with this INR 1,600 crore number because we have a large number of projects going on, particularly, of course, in EV, where a large number of projects are under construction and under commissioning.
Sir, sorry, still not kind of fully clear. I'm just into the presentation where you've given a divide that we invest INR 400 crore this year in GFL and INR 1,200 crore in EV. My question was largely pertaining to just getting a sense that, how are we seeing CapEx in the EV part? Basically, are we sticking with the INR 1,200 crore yearly capital?
I'm sorry. We have already indicated that we have invested close to INR 1,300 crore in EV till the last financial year. We are planning to add another INR 1,200 crore in this financial year going forward. It remains as per the plan. There is no change in the EV plan as of now.
Got it. Understood. One more question on the Fluoropolymer bridge. With, of course, knowing that the legacy player has exited and we have created a very solid performance in Fluoropolymer , the next leg of CapEx that you are planning, maybe this INR 400 crore number that's alluding to the presentation, any particular Fluoropolymer that we are targeting? Is it more PTFE-led capacity addition or SKM, SCP? Anything that you might want to give a broad directional kind of a guideline as to which, you know, within the product mix, which would be something that one should look out for in terms of growth prospects?
Yeah. Thanks, Archit. Let me, Mr. Kapil, take that.
Yeah, Arshid. Yeah. This investment is going to be across all the Fluoropolymer s, including PTFE and new Fluoropolymer s.
It's difficult for us to buy, Arshid, because we see a growth opportunity.
In every product which we have in our portfolio, it's going to be across all the products.
Sir, just an addendum to the previous one. I think we did have some plans within PVDF also to develop the solar grade. I think I recall from the previous notes about 2,500-odd tons of PVDF capacity addition. Is that all in place, and are we seeing any ramp-up in the solar grade PVDF? Where are we in that development, if you can?
I think that the 2,500 capacity addition that we had probably may have mentioned earlier because lately we have not been giving any details on the capacity. Coming back to this capacity of PVDF, this is largely for EV products, EV binders, and that capacity is in place. We are going through the final stages of qualifications now, and the PVDF binder being a material that goes into cathode, it requires a very long qualification process. In PVDF, we are at the very final stages of qualifications. In fact, we're going through the scaled-up trial right now, and we expect the qualification to be complete by the end of this calendar year.
Nothing on the solar part, right? This is all binders now. Maybe that's the paradigm in PVDF?
Most of it is for binder applications, which is EV or batteries.
Sure. Understood. Thank you, sir. Thanks. All the best. I'll come back and look here.
Thank you. The next question is from the line of Krishan Parwani from JM Financial. Please go ahead.
Yeah. Hi, sir. Thank you for taking my question. A couple from my side. First, I'm just looking at [Rohan's] question. What is left to decline in the other operating expenses during the quarter, which has resulted in the EBITDA margin expense?
Normally, the previous quarter was the quarter. We have normally a lot of provisions related to CSR, which often comes in in the last quarter as our balance. If you look back in the previous quarter, you'll see a plot here that this quarter is less in line with that.
Is this INR 211 crore range a sustainable range going ahead? Till the time our power expenses, probably the renewable thing comes in. I think that will capture the power expenses more than other expenses.
Of course, you know, there will be a natural increase in the expenses over time. Of course, when you say sustainable, it does not go back to 244. There will be some minor increases which will appear in the other expenses, but continue to be in the same range.
Got it. Secondly, on R32, on which existing capacities you have done the retrofitting, and when do you expect to fully deliver 20,000 ton capacity?
This has been done from one of our existing plants. As I said, we will reach 20,000 tons by the end of this financial year. The way we are planning is that it will not have much impact on any of our existing products that we have.
Basically, the plan that you have done the retrofitting was probably not contributing to our top line meaningfully, and that's why the loss in the top line would not be meaningful. Is that what you are indicating?
Hello, am I audible?
Sorry for the inconvenience. The line for the management has got disconnected. Give me a moment. I will join the management back.
[Welcome to Gujarat Fluorochemicals. Please hold for an operator. Welcome to Gujarat Fluorochemicals. Please hold for an operator.]
The management line is now connected. Mr. Krishan, you can ask your questions now.
Our product addition, we got disconnected. I think we're asking about the capacity utilizations and impact on the existing revenue. They said that there won't be any impact at all because there have been internal adjustment, rebottlenecking, and it will not have any impact on our existing products.
Got it. The second part of that was like, I understand that 20,000-ton capacity is coming up by FY 2026. I was asking more like when do you expect to fully utilize it, that 20,000 capacity of R32?
Looking at the market situation, we expect that to happen quickly. However, we cannot really say, but probably next few quarters after that.
Got it. Lastly, if I may, on the Fluoropolymer side, in order to achieve 25% year-over-year growth, guidance that is given, the sort of next minimum we asked about 28% year-over-year growth. Wanted to understand, would it be largely volume growth or how will it be?
Yeah, it will be largely driven by the volume. As we were already mentioning, we are under the process of pitching in for the legacy players and also the approvals coming from the other sectors. They are on the high-end grade. That is predominantly giving us the growth, and from there, we expect the volumes to grow up the way we had predicted.
Got it, sir. Thank you for answering my question. Wish you all the best.
Thank you. Thank you, Krishan.
Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead.
Thank you. Sir, on the battery chemical business, it is fair to say that there is a little bit of a pivot which is there from our end customer perspective from mobility to energy storage. From a demand supply perspective, are there very different dynamics for battery chemical supplies to mobility applications versus energy storage applications? Do we have a, I mean, are we better positioned in ESS versus mobility?
Yes, Nitin. I'll just add my comment and then hand it over to Rajiv. Yes, there is a positive impact on us because most of the mobility uses LFP chemistry predominantly. The ESS uses LFP chemistry. LFP chemistry typically has a higher salt consumption per gigawatt-hour compared to NMC. The expansion of LFP also gives us a much larger market segment for our LFP CAM product. In both ways, it's actually a positive development. Rajiv, would you like to add?
Yes, to your question, there is a movement towards, as far as lithium-ion usage is concerned, towards energy storage than it was perhaps six months ago. Due to growth in artificial intelligence and the data servers that are required to support it, there is a huge shift towards looking for stabilizing power supplies to such servers, which is driving consumption. This will drive consumption of energy storage solutions in the coming future.
Jobin.
That will drive the lithium-ion battery consumption in energy storage as well as mobility. As Dr. Bir Kapoor said, most of the energy storage uses LFP chemistry, which uses significantly higher amounts of the lithium salts. That will drive the increase in the addressable markets for lithium salts as well as for the LFP cathode activity.
The salt requirement is nothing, just the rule of thumb is almost double in case of LFPs per gigawatt-hour compared to NMC chemistry.
How is it comparative for the supply side position on this versus in mobility? I mean, are there more entrenched players in mobility versus in energy storage? We are in a better positioning or comparative footing versus mobility. Is there any case like that?
Yeah. When we look at the markets that we are focusing on, which is the U.S. market, India, and Europe, all these geographies are looking to diversify the supply chains and are very keen to find sources outside of China. When we look at our major products, both LiPF6 and LFP cathode active material, there are limited supplies available right now, both for mobility as well as for ESS applications. We have the advantage, that first-mover advantage, as in having been operating in this segment for the last one year or more and having operating plants, supplying samples, and getting validated. We have the advantage of having qualified our products at many such potential users in the markets that we are looking into.
Just to add one more point, Nitin, that one of the biggest upsides that we have now is because of this new bill, which actually now has included energy storage systems also as a part of the subsidy in U.S. manufacturing. Earlier, this $45 subsidy was not encompassing the battery manufacturing used for energy storage systems applications. Now, this subsidy is basically given to all the battery manufacturing, with the condition that the input materials or the direct costs attributed for making batteries in the U.S., 85% or up to 85% of that cost has to be outside the PSE, which is the prohibited foreign entity suppliers. As we are not part of that category, it gives us a significant advantage in catering to the customer and participate in the supply chain where there are relatively few suppliers.
Thank you so much.
Thank you. The next question is from the line of Meghna Agarwal from Mount Intra. Please go ahead.
Hello, this is [Posh India] . Are we audible?
Yes.
Yes. We're just asking, like, [Rohan], help us with the chemical breakdown. Can you help us with the EBITDA versus the CMS, Fluoropolymer s, and bulk chemicals?
Yeah, Meghna, we do not give segmental EBITDA margins or EBITDA within the stocks, and that we have not been providing.
Oh, thank you.
Thank you. The next question is from the line of Rohit Nagraj. Please go ahead.
Yeah. Thanks for the opportunity. The first question is slightly technical. We said in our opening remarks and later as well, that by FY 2026 end, we will be able to operate the 20,000 tons of R32 plant. Now, given that the storage requirements for ref gas are different than solids and liquids, how are we placed to store in case the demand is limited in the domestic market and in the export market? What is the kind of arrangement that we have made? A light question to that. Post FY 2026, if we were to increase the capacity further, we have done the remarkable job of retrofitting within a short period of time. If we were to go for fresh capacity, will we be able to adhere to the December 2026 deadline for the newer capacity? Thank you.
Yeah. Thanks. Thanks, Rohit. First of all, you know the capacity as far as the storage, etc., we have tremendous experience in distributors for a very long time, for almost 35-plus years. We have been, you know, the typical storage is in the storage tanks, the ISO tanks, or the small cylinders. Those are, of course, planned based on the market dynamics, demands. We are not concerned about, say, front that we'll be storing 20,000 tons and then cutting. It's not like that normally, right? We do not see as an issue. Now, coming back to the capacity expansion plans, beyond 20,000, we will, of course, look at how market opportunities unfold. Looking at the market opportunities, we may decide, but definitely, we will do it before whatever the stipulated target date that we have. We'll add all the capacities before that. Sure.
Thanks. Just second question, again, on the battery chemicals front. Given that our products will be at the last stage of validation, once validated and given that multiple customers are currently validating the product, will there be a quantum jump in FY 2026 in terms of the supplies? That would give us a better visibility as far as the battery chemicals revenues are concerned. Thank you.
Can you hear me, Rohit?
Yes, sir. Yes.
First of all, you know right now, whatever revenue that we'll take in, that will be a significant jump over where we are. However, I would like to speak more about FY 2027, when we expect to see, of course, a very large jump as these qualifications come in place. We'll start seeing the orders coming in from the capacity that we already have in place. In this year, of course, towards the second half, we'll start seeing the revenue starting to trickle in. The majority of it, we'll see the ramp-up in 2027 and then onwards.
Thanks for answering all the questions and all the best.
Thanks. Thanks, Rohit.
Thank you. The next question is from the line of Pratik Oza from Systematix. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. Just one question from myself. Are we evaluating all these value-type things specifically perhaps through JV and LTH? Can this look at what we've created, a quarter support team also helping optimizing our working capital?
I'm sorry. It's still not clear, Pratik. Could you repeat the question? It's not very clear.
Hi, Sara. Am I audible?
Sir, audible, but it wasn't clear. Could you repeat that, please?
Yeah, sure. What I was asking is, are we evaluating any manufacturing facilities, perhaps two JVs in the U.S.? I think it's because that would create a more resilient and a shorter supply chain and also maybe help in optimizing our working capital.
We are right now not looking at it, the U.S. or any JV like that. We are not looking at, definitely not, if you need to say, in Fluoropolymer . We are not looking at that at the moment.
Okay. Got it. Thank you, sir.
Moreover, Pratik, because we have a very integrated facility in India right now, at least in case of Fluoropolymer , where the cost and the entire processes have been optimized, we do not see that happening if we move far away from this integrated facility that we have.
Thank you. The next question is from the line of Lavanya from UBS. Please go ahead.
Thank you. Thank you for the questions, sir. Your questions earlier, most of my questions are answered. Just one.
Yes, please. Ms. Lavanya, can you make it louder?
Is it better now?
Better now. Thank you.
Yeah. So 20,000 tons for R32. Is this the additional capacity or overall capacity that it will be reaching by the end of this year?
Lavanya, this is the total capacity because we were so far not manufacturing R32. We are just starting. Our 20,000 will be our total capacity of R32 per year. That will be reaching by the end of this financial year.
Okay. Just a retrofit question. The earlier participant asked, this retrofit is not impacting the capacity of all other refrigerants that we have. Is that understanding right?
No, no. It will not impact any of our existing product lines in refrigerants or any other product.
Okay. Got that. On Fluoropolymer , the 25% growth rate guidance is factoring in the benefit that we are expecting with the exit of the player. Is that right?
Yeah. That's all being factored in, Lavanya, because there have been several factors which are contributing to this growth. One of them is what we stated, which is exit market opportunities created by exit of legacy players. Yes. Thank you.
Okay. Got it. Sorry. Thank you. Thank you so much.
Thank you. We will take that out as our last question. As there are no further questions from the participants, I now hand the conference over to Dr. Bir Kapoor for closing comments.
Thank you very much. Once again, I would like to thank you all for interest in Gujarat Fluorochemicals. Clearly, as I stated earlier, we are looking for a very solid growth in the Fluoropolymer business as we go along, which is our core. We also see a very strong opportunity that is emerging in our new business of battery materials. The large number of the factors which are all playing very positive for us. We are very well positioned today to play a leadership role in this segment. By the next quarter or so, we'll have most of our product would have our commercial scale facilities ready, going through qualifications. This presents a wonderful opportunity for our battery material business going forward. With this, I would like to thank you all for interest in Gujarat Fluorochemicals and look forward to connecting with you again in the next quarter. Thank you.
On behalf of Batlivala & Karani Securities India Pvt Ltd, that concludes this conference. Thank you for joining us, and you may take the next one.
Thank you.