Ladies and gentlemen, good day and welcome to the Q4 FY 2026 earnings conference call of Gujarat Fluorochemicals Limited, hosted by 360 ONE. As a reminder, all participant lines will be in the listen-only mode, there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I would now like to hand the conference over to Mr. Rohit Nagraj from 360 ONE. Thank you, over to you, sir.
Thanks, Pritisha. Good evening and welcome everyone for Gujarat Fluorochemicals Limited Q4 FY 2026 and FY 2026 conference call. We thank the management to provide us the opportunity to host the call. We have the management represented by Dr. Bir Kapoor, our CEO and Deputy Managing Director, along with the senior members of the management team. I would like to hand over the call to Dr. Bir Kapoor, sir, for his opening remarks. Over to you, sir. Thank you.
Thank you, Rohit. Good afternoon, everyone. A very warm welcome to all of you for GFL's Quarter Four FY 2026 earnings call. For this call, I have with me my colleagues, Mr. Akhil Jindal , who is Group CFO, Mr. Manoj Agrawal , who is CFO of GFL, Mr. Kapil Malhotra , Business Head of Fluoropolymer, and Mr. Rajiv Rao, who is the Business Head of Battery Materials. The company announced its quarter four FY 2026 and full-year results at its board meeting held today. The results, along with earnings presentation, 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 business operations and outlook. FY 2026 was marked by a highly volatile global operating environment. The first half of the year was impacted by uncertainty surrounding U.S. tariff policies and evolving global trade dynamics.
While the latter part witnessed heightened geopolitical tensions amidst the war in Middle East, dampening the macros and the business environment, which continue to disrupt global trade flows, impact logistics and supply chains, and contribute to elevated volatility across commodities and currency markets. Sharp movement in energy prices have also resulted in higher input and logistic costs across businesses. While we are seeing some signs of stabilization, the conditions continue to be volatile. Despite these headwinds, the company remained focused on disciplined execution, operational excellence, supply chain optimization, and stringent cost management across businesses, enabling us to navigate the evolving environment with agility and resilience.
Against this backdrop, our chemicals business delivered a commendable performance during quarter four, with revenue growing 11% year-on-year to INR 1,358 crore, EBITDA increasing 13% year-on-year to INR 353 crore, and PAT rising 5% year-on-year to INR 169 crore as compared to quarter four FY 2025. The performance was led by growth in fluoropolymer segment and the commencement of R32 production in March 2026, which marks an important milestone in our fluorochemicals growth journey. Continue on the growth journey, GFL has earmarked INR 3,150 crore of CapEx for FY 2027, of which INR 2,300 crore is for GFCL EV and INR 850 crore for GFL. Of INR 850 crore CapEx, approximately INR 150 crore will be spent on expanding our refrigerant gas and related infrastructure capacities. INR 222 crore will be spent on new high purity electronic specialty chemicals for semiconductor sector.
Another INR 250 crore will be spent on adding new fluoropolymers capacities. The remaining INR 230 crore will be spent on increasing capacities for backward integration, including the regular annual maintenance CapEx. The EV CapEx of INR 2,300 crore will be spent in increasing capacities across existing products, in addition to the CapEx for natural graphite active material. Natural graphite anode active material, I'm sorry. This CapEx is part of the overall CapEx of INR 6,000 crore that we have earmarked for GFCL EV. The fluoropolymer segment delivered a strong performance with revenues growing 19% year-on-year and 14% quarter-on-quarter to INR 848 crore in quarter four FY 2026. The growth was primarily driven by value-added products and higher volumes across key product categories. Our focus on high-value specialty grades, deeper customer engagement, and expanding global reach continued to support growth momentum during the quarter.
Looking ahead, we remain constructive on the long-term outlook for fluoropolymers, supported by increasing penetration across structurally growing sectors such as semiconductors, EVs, battery energy storage systems, and clean energy applications. In addition, global energy transition themes, including hydrogen, fuel cells, electrolyzers, and solar, are emerging as important long-term demand drivers for fluoropolymers. Given the increasing complexities and purity requirement in these applications, we believe the specialty fluoropolymers will continue to witness strong demand over the medium to long term. The earlier CapEx in this segment should achieve its optimum utilization level in the current financial year. We will be incurring further CapEx starting this year to continue on the growth journey in this segment. In the fluorochemical segment, production and sales of R32 commenced from March 2026, strengthening our refrigerant portfolio.
Despite weakness in the Middle East market month-on-month and an overall challenging global environment, segment delivered a stable performance. We will be incurring INR 150 crore of CapEx on increasing capacities of refrigerant gases in the current financial year. Increased production of R32 will provide major growth in this segment in the subsequent quarters. Demand for refrigerant is expected to remain healthy, supported by increasing penetration of residential air conditioning, commercial refrigeration, cold chain infrastructure, and surge in demand of cooling infrastructure for AI data centers across the globe. Within bulk chemicals, the demand outlook for caustic soda is expected to remain stable in FY 2027, while pricing is likely to remain range-bound due to domestic capacity additions and balanced supply demand dynamics. Similarly, the performance in chloromethane business is expected to remain range-bound in the near term amid moderate demand conditions and competitive market dynamics.
As we look at our battery materials business, we believe the segment is now at an important inflection point. The global energy transition continued to accelerate and the demand environment for advanced battery materials remains highly encouraging. The battery energy storage system opportunity, in particular, has strengthened significantly over the last few quarters. Increasing investment in AI and machine learning infrastructure, coupled with rising data center capacities, are driving the power requirements and creating structural demand for energy storage solutions globally. Against this backdrop, we are pleased to share that all the initial capacities planned under phase I have now been commissioned and contracted for. We have secured multi-anchor customers across all our battery material products, which provide confidence on utilization ramp-up and commercial scale-up over the coming quarters.
The LiPF6 salt has now received approval from most of the major global electrolyte players and commercial sales are scaling up in line with our plans. We have orders in place for FY 2027 and beyond. Production will be ramped up quarter- on- quarter. In cathode active material, samples from our plant have received initial approval, and final qualification is expected by the end of this year. End of the third quarter, I'm sorry. Commercial supply will commence, for which we have already off-take agreement for the entire capacity. As part of our next phase of growth, we are also setting up natural graphite anode active material facility.
With this addition, we will be able to address nearly 70% of the value of an LFP battery cell, positioning us as one of the most integrated battery materials platforms globally. To support this growth roadmap, we have planned a CapEx of approximately INR 2,300 crore for FY 2027 across the battery materials portfolio, largely focused on growth CapEx, including the anode active material project. To support this growth roadmap, we remain committed to our previously outlined guidelines of INR 6,000 crore cumulative CapEx by FY 2028 across the battery materials portfolio, with targeted asset turns of nearly 2X and EBITDA margins of over 25% plus. The full earnings potential of these investments expected to be realized by FY 2029 as the facilities progressively ramp up and achieve optimum utilization levels. While the macroeconomic environment remains challenging, the broader business landscape is gradually showing signs of improvement.
We remain focused on strong execution, prudent cost management, and disciplined scaling of our emerging growth platforms. We remain confident in our ability to deliver sustained growth and create long-term value for all our stakeholders. Thank you very much, and now I open the floor for questions.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to asked a question may press star and one on touchtone telephone. If you wish to remove yourself from the queue you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ankur Periwal from Axis Capital. Please go ahead.
Yeah, hi, sir. Thanks for the opportunity, and congratulations on this set of numbers. First question on the CapEx announcement, both on the battery side as well as on the standalone side. The fluoropolymer expansion, will this be on PTFE side or the new fluoropolymers? How do you see that? Just commensurate to that, the fluoropolymers growth for the full year that we are seeing, around 15% odd. How will you break this up between PTFE and new fluoropolymers?
That investment will be on new fluoropolymers. So far, we have not been giving any breakup of growth of respective fluoropolymers. However, all I can say at this point, Ankur, is that the capacity that we had set up a few years back are almost reaching its full capacity, optimum capacity utilization. Now is the time for us to add CapExes in new fluoropolymers segment right now. Okay.
Sure, sir. On the ref gas side, INR 150 odd crore expansion there. This is largely for the 20,000 ton capacity that we are looking at? Are there any further thoughts to expand that capacity further with respect to the quota that we have?
No, as of now, we have announced that we'll be going up to 20,000 tons in R32. It's related to that as of now.
Okay. By when are we expecting this 20,000 ton to be commissioned and production starting there?
The production has already started. As I said last time, that we have achieved over 10,000 ton capacity at the moment. Over a period of time, I think it will be ramped up to 20,000 tons.
Sure, sir. Just lastly on the battery chemical bit, good to see the CapEx seeing a ramp-up there. When we are saying from a product approvals perspective, a large part of things are already there. These are largely for the salt approval or even the other products, the value chain, et cetera. How is the progress there? On the technology side, any tie-up or it is largely homegrown for us there?
Ankur, we started with salt and electrolyte in the beginning, as we had indicated. Initially, obviously, our initial capacity was in the salt. Our capacity commissioning was in that area, so our approvals are all in the salt end of space. The second we added was cathode active material. That plant was commissioned recently, and we have prepared the sample, and our initial samples have already been qualified. Now it will go through the full qualification, and which we expect to get it by the end of this year, which is the third quarter of this financial year. Our supply will start after that, after we get the full qualification. In LiPF6, we have achieved the full qualification from a number of players and the supply is being ramped up.
LFP at the early stage, plant is already commissioned, as I said, and samples are made. We have optimized the product as per the customer need. Once the product is fully qualified, the supply will start and this entire plant is fully contracted.
Sure, Mr. Kapoor. That's helpful. Thank you, and I'll get back into the queue.
Thanks, Ankur. Thank you.
Thank you. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Thanks. I have a couple of questions. First, on the battery side, when we say that we are fully booked for the existing plant, are we talking about LiPF6? How much revenue potential when we say, because for us, we don't know the capacity, we don't know the CapEx you have put. How to think about FY 2027, FY 2028 revenue? When you say we have fully sold capacity, is it fair to assume that in FY 2027 that entire capacity will be sold to the customer?
Okay. What we have is that whatever capacity that we have in place now is contracted. Okay. This is true for LiPF6 as well as for LFP, which has been recently commissioned. Coming back to your question, Sanjesh, regarding revenue potential, I think we had guided earlier that once you put in a CapEx, there is a certain gestation period in terms of plant getting stabilized, getting the right quality, and then qualification. Subsequently, the revenue stream starts coming up. Product mix average, I had indicated two times the asset turnover.
I would follow the similar approach because it would be difficult for me to give the exact number. If you look at the way our investments are happening and the CapEx are being built in, over a period of time, after a certain gestation period, you would start seeing a two times revenue coming in.
Will FY 2027 be again a qualification year, or we intend to supply a material quantity in this year?
FY 2027 will be a material quantity for salt, which I have already indicated very clearly. Okay? Our initial investment was all in salt. Let me tell you initially, I think this I had explained in several calls earlier, that our initial phase of investment is building up that capacity, which is the smallest commercial scale capacity to achieve the quality level and get the approvals, and then subsequently we'll go through the ramp phase. Okay. Initial capacities in the salt has already been built. We are ramping up phase right now continuously. That salt, we already have a qualification. Salt, you will see a consistent growth in supply and the revenue coming in. LFP, this will happen a little later. As I said, that will probably happen after the third quarter of this year.
No, again, because we already put one third of the money, what we have thought about, which is almost INR 2,000 crores has already gone into the battery material. We are still left with INR 4,000 crores. Even if I just say thumb rule of 2x, this itself should potentially give us a INR 4,000 crores. Probably, we have utilities and all. Probably giving some discount to that, INR 3,000 crore revenue potential itself comes from the investment already done.
There's a gestation period. Again, I must say that this is a sort of a relatively long-term play, Sanjesh. It's not quarter- and- quarter kind of business. There is a gestation period for each plant because there's a long qualification period, almost could be nine months to a year. Okay. Once the plants are commissioned, quality and then the qualification, and then the revenue starts kicking in. The number that you're talking about will come eventually, yes.
Okay.
The capacity utilization is complete.
Got it. On this anode, I actually never heard about this. Suddenly why anode? Why each tech? I don't know. All across we talked about LiPF6, LFP, and additives and binders. Anode was a twist.
Not a twist. We have been adding product in our battery materials portfolio. This was one of the last bit. That too, because battery has typically three major component, cathode, anode, and electrolyte. We are present in cathode. Electrolyte, we are present salt, binders, and now anode. This, we are talking about a natural graphite anode. Okay. There are different kinds of anodes, synthetic as well as natural. I'm talking about natural right now.
Why anode?
There's, of course, certain synergy with our capability in natural graphite anode.
What capability? Can you help us understand that?
I'll hold on to that for now, but there are definitely synergies with our existing businesses.
Got it. One related question on battery before I go to the core business. In this quarter, we saw a sharp jump in the losses because the revenues are largely same as last quarter. If I look at the EBITDA loss, it appears to be significantly large. Why such a large cost addition in this quarter?
As we are capitalizing our assets, once we qualify, we reach the point where the assets are qualified, all the cost starts coming up right away, Sanjesh.
Okay
As the volumes are being ramped up. This will eventually ease off. Okay? It's a short-term thing because it's kind of a startup business.
Your depreciation number on the EV segment has really not gone up.
No, depreciation number, because as we capitalize, the depreciation number starts coming in.
It didn't come up.
As the plants and the product gets qualified and we commercialize it, this number gets up. Again, I'll request Manoj to answer. Manoj is here with me.
Hi, Sanjesh. You are specifically speaking about the segment of EV business?
Yes, he's talking about the minus EBITDA .
Essentially, we have capitalized the LiPF6 plant on 5th of January this quarter. Okay. Our operation has started. Before the operations, you are eligible for capitalization of all pre-operate expenses and trial production losses, everything. Once you start the operations, the accounting standard doesn't allow you to capitalize the expenses. All the expenses flow through a P&L, irrespective whether your sales and profit has happened or not, or your capitalization has happened or not. This has resulted in this. Earlier also, if you have seen some of the expenses which were always charged to P&L, which are around INR 20 crore or so, but this has gone up from INR 20 crore to INR 45 crore roughly. Out of that one, we have started including the buy side in the foreign currency, and that was unexpectedly one-time loss that will not recur in future.
M2M.
M2 M, we have all now covered it 100%. In GFL, we don't have to cover anything because we have got a natural hedge there. Here, because sales are ramping up, these were naked as on the balance sheet date. Unfortunately, the movement of U.S. dollar and INR was extreme due to Iran and U.S. war. Okay.
Got it. Very clear. Thanks.
Thank you.
Thanks, Sanjesh. Thank you.
The one on core business.
Please.
One of the core business. Thank you for the answer.
Please go ahead.
Prices going up in the fluoropolymer by one of the large competition. Have you taken the similar price increases? That's number one. Number two, on the volume and demand itself, generally what happens in an inflationary environment, destocking happens faster, and it also kicks in restocking, which we were struggling because BCT quantities of 3M and Solvay were still there in the system. I hope this entire phenomena should help you to get back the demand and approvals. Also in that scenario, how should we see FY 2027?
Sure. First, let me answer one quickly. Then I'll hand it over to Kapil for detailed answer. There has been a price increase. We have also taken a price increase, Sanjesh. Okay. Because if you look at it that we have been, in spite of increasing raw material and the logistic prices, we have been able to maintain our EBITDA margins and continue to show growth in our business. That of course, will happen with us also. For a detailed sort of FY 2027 outlook, I'll let Kapil answer. Kapil, please.
Hi, Sanjesh.
Hi, sir.
Good evening to you.
Good evening.
As Dr. Kapoor has mentioned, we are also seeing the demand growth in this year mentioned by the sectors which have been semiconductor and a couple of other growth sectors. Also, we have been mentioning in the past calls also that we are totally focusing on the value-added applications and value-added customers. This year, we expect to see a growth of around 15%-20% as compared to last year in our fluoropolymer products, which we are going ahead. That is why we are also intending a CapEx also because we are seeing that whatever CapExes are made last couple of years, we are almost at the complete utilization cycle of those products in this financial year. We are seeing a growth outlook for this year as well as for the next couple of years also. Growth coming from the sectors which we are mentioning.
15%-20% when we say it's volume growth, right?
Pricing itself has gone up by 15%. Correct.
Yeah, right. Obviously, that effects also start coming in. You'll see in the results when they are coming out. That also starts coming out. There are also been the cost push also from the back end also. That also gets out balanced out also. We are seeing the growth in the prices as well as in the growth in the volumes also.
Got it. One last on the refi-
Sorry to interrupt you, Mr. Jain. May we request you to please rejoin the queue. We have participants waiting for the turn. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, we would request you to please limit your question to two per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Arun Prasath from Avendus Spark. Please go ahead.
Yeah.
Thank you. Yeah. Sorry. Thanks for the opportunity. My first question is on the fluoropolymer business, generally chemicals business excluding EV. In the past we said our steady state target for the existing assets and capacity at a much higher level. Now we are saying that we have not even reached 80% of that level, but still we are saying that we are fully utilized, and we would like a CapEx. How should we look at this? Was it any expectation of ours didn't happen because we are not able to ramp up? What's happening around in this fluoropolymers and new fluoropolymer business?
Okay. Arun, first of all, we have never given ever a capacity utilization numbers earlier. All we are saying right now that the initial capacity that we had put up in fluoropolymers, we are seeing now that reaching a pretty much optimum utilization. The time has come for us to now put fresh set of investments in fluoropolymers because the growth that we are seeing is consistent. Now, you're asking that why it has taken some time, et cetera, because I've said many times that as we go into higher and higher grades of polymers, the qualification time becomes longer. Okay. Particularly now, for example, if you talk about some of the fluoropolymer which is getting into an application like semicon, so the gestation period or the qualification period is long. Today, I think we are in a much, much, much stronger position. Kapil, you want to add something?
Yes. Continuing on the same path. Obviously, when we are going into the high-value-added applications, talking about semiconductor, talking about hydrogen fuel cells, talking about the other applications, the approval cycles are definitely a bit longer. Now we are on the end where most of the approvals have come in. Commercial businesses have started doing well, and we are seeing that growth coming in. That is why we are very confident about the figures which I told. Going ahead in the new fluoropolymer business, especially PFA, FKM, and a couple of other products which we have added, we are seeing that the growth is continuing, and that is why CapEx is also being planned. We feel that by this financial year, we'll be almost to the maximum capacity utilization of these products.
No, actually, what I meant was not with respect to the product approval timelines. We understand that it's a fairly longer gestation period products. What I'm trying to ask is, this is the kind of EBITDA numbers for the fluoropolymer, at least in the chemical business. Is this a steady state number that we actually envisaged when we put up those plants two years ago? Is it something lower than what we envisaged?
I think, Arun, this has been in line with what we had thought because we had already given an indication of certain EBITDA margins and which we have been sustaining. I don't think there is any disconnect with respect to what we have thought through.
Understood. When we are adding capacities, is it across all the new fluoropolymers, or is it in some pockets? If you would like to call out few fluoropolymers where we are adding disproportionately.
Obviously, the margins are different depending upon the different grades. Some of the new polymer, which is very high-end, the margins are disproportionately higher, obviously, yes. When we talk about it, we talk about it as mix. Okay.
Okay. All right, sir. Second question on the EV. We say that all our capacities are contracted. Does it mean that is it something like a take or pay or after you are done with the qualification, is it a take or pay or is it more like a soft commitment?
I'm not really at liberty to give details of our contracts, Arun. These are all I can say, that these capacities and when we had put up, there are anchor customers, there are specs agreed on, there are pricing that has been agreed on, and these are some of the contract which is in writing. Okay? You want to add in? I would not be able to give details of the customer contract or any detail about the customers.
Sorry to interrupt. May I request Mr. Arun Prasath to please rejoin the queue. Thank you. The next question is from the line of Anshul Thakkar from Lalkar Securities Private Limited. Please go ahead.
Yeah. Good evening, Dr. Kapoor and the rest of the team. Firstly, accept my heartiest congratulations for such a good resilient performance on the chemical segment, especially from fluoropolymers against a rather challenging global backdrop. Very encouraging to see that we are aspiring to be at 70% of the EV battery value. Just one question I had, sir. Just trying to put the CapEx figures in perspective. The INR 800 crore planned CapEx for 2027, I understand INR 150 crores, as you mentioned, is towards the R32. Is the balance part of any specific polymer expansion or is it part of common infra? I'm trying to add the numbers up and taking cue from your comment that the cumulative CapEx figure remains at INR 6,000 crore.
Hello?
Sir, we are unable to hear you.
Can you hear me now?
Yes. Please go ahead.
Anshul , I think maybe there might be a mismatch in the numbers. The projected number that we have said is around INR 800 crores for GFL. Out of that, INR 150 crore is for ref gas, INR 220 crore for electronic specialty chemicals, which is primarily for SEMICON. We have fluoropolymers, we have said INR 250 crores. Is this clear? You had some question on the fluoropolymer CapEx, Anshul?
Yes, sir. I got my answer. I'm just trying to wonder how this totals into INR 6,000 crores of the unchanged CapEx figure. I guess it has something to do with the bifurcation of the CapEx of FY 2024, I'm guessing.
The INR 6,000 crore numbers that we had said when we started the journey in the new EV vertical or the EV business. At that time, almost couple of years back, we had said that our plan is to invest INR 6,000 crores in EV business over a period of 4-5 years. INR 2,300 crore for EV is part of that INR 6,000 that we had indicated earlier. Is that clear?
Got it, sir.
The GFL CapExes are separate because GFL CapExes are in the chemicals part of the mother company investments, and EV is now being separated out.
Excellent. Got it, sir. Crystal clear. Thank you so much.
Thank you so much.
Thank you so much.
Thank you. The next question is from the line of Archit Joshi from Nuvama Wealth . Please go ahead.
Hi, good evening, sir. Thanks for the opportunity. Just had one question, rather a clarification if you can give on the R32 capacity. We would be eventually at a 20,000 tonne capacity of R32, if I understand that correctly. Would we have any plans to add more capacity going into 2027, given that we have sufficient quota from the baseline of the HFC years, and there’s another year for us to make use of the timeline to add more capacities? On the same lines, how do we see the ramp-up of R32 capacities in FY 2027? Any elaboration over there? Thank you.
Thanks, Archit. First of all, we had said that we would be adding 20,000 tonne in R32. We are going through that process right now, and our capacities will soon reach 20,000. It hasn't reached yet. Regarding the subsequent addition, we have also made it very clear that we will be adding the full capacities and utilizing our quota or our allocated quantities. We have time, and we will take that call as we go along, looking at the market dynamics and the opportunities to utilize it, and looking at the product mix and what's the right product mix for refrigerants.
All right, sir. For that, we will have to wait till a few more quarters to understand how much capacity might get added and what the kind of quota that we are targeting, maybe in the next year.
Yes. Our quota numbers are very clear. We have internal estimates because there's a very well-defined guidelines for the quota. That number are very clear to us, and we are clear about adding capacities to reach that number.
This INR 220 odd crore CapEx, if I heard that correctly, for R32, this is for FY 2027, assuming that we would have that capacity towards the end of the year, or we are very close to commissioning that capacity.
Sorry, Archit, I think we mentioned INR 150 crores for-
INR 150. Sorry. Right.
It will happen very soon.
All right. By second half, would we have the full 20,000 ton available for sales? Would that be a right assumption?
Yes. Hopefully, yes. Sure.
Right. Sure, sir. Thank you. Thanks for answering my questions and all the best.
Thank you. Participants who wishes to ask a question, please press star and one. The next question is from the line of Tejas Arun Sonawane from Asian Market Securities . Please go ahead.
Yeah, good evening. Thank you for the opportunity. My first question is on the EV CapEx. Could you help us with how much has been the total CapEx so far on the EV side, and how much have we capitalized from that CapEx?
Approximately INR 1,900-INR 2,000 is what we have already invested so far, Tejas. The plan is to go for INR 2,300 next year, for this coming year. This is actually our ramp-up phase now. Okay. We have done what we have to do for learning, customers, qualifications, pretty much. Now this is the time where the serious investments that are committed CapEx are going to take place. With this, I think the subsequent financial year probably would see the similar order of CapEx to reach the INR 6,000 number.
This INR 2,000 crore is the amount which you have already commercialized. Would that be correct?
The CapEx that we have already invested, that cash flow-
Okay
Some part of it is capitalized, not the entire thing. As we are getting ramped up, as the plants are commissioned with whatever the intent of that CapEx is, and that's reached, we are capitalizing it.
Understood. Second on the Oman CapEx, which we indicated last quarter. With whatever has happened in the Middle East, what is the status of that project? Are we on track to go ahead with this CapEx?
No, we will go ahead with the CapEx, Tejas. There's no impact on Oman. If you look at the overall capacity, Oman has been overall one of the safest countries so far in the Middle East. There's no change in our CapEx plan, and we are going ahead with it.
Okay. One last question on the gross margin front. This quarter, we have seen that the gross margin has seen some decline. Could you help us understand what could be the reason behind the drop in gross margin?
It's not really declined. It's probably maybe half a percent point, very small number change. There's not a significant change, Tejas. It's pretty much flat overall.
Okay. That's helpful. That's all from my side. Thank you so much.
Okay. Thanks.
Yeah.
Thank you. The next question is from the line of Arun Prasath from Avendus Spark. Please go ahead.
Follow-up, sir. You were discussing about the contracts in the EV business, and you said it is contracted and sold out. Does it mean we should have some kind of a revenue visibility for this year? Isn't it at least for those products where we are done with the approvals and qualification cycle?
Yeah, I'll let Mr. Rajiv answer this. Rajiv, please go ahead.
We have, as mentioned earlier, our first investment of LiPF6 salt where our product has been fully qualified by most of the major electrolyte players. The commercial sales for that product has started now, and we should be expecting revenue for LiPF6 salt for all of FY 2027. As far as LFP is concerned, our initial samples have been approved, and the final qualification of that product is expected sometime in Q3 of this financial year, and the revenue for LFP CAM should start subsequent to that. Additionally, our binders have been fully qualified at major customers, and revenue for that should start in the next couple of quarters.
Okay. Understood, sir. We'll get back to you later. Thank you.
Thanks, Arun. Thank you.
Thank you. The next question is from the line of Darshita Shah from DSP Mutual Fund . Please go ahead.
Hi. Thank you so much for the opportunity. Just a question on the working capital. Inventory days have continued to move up. How do you think this will pan out? Do we have any plans to bring it back to the 90, 95 days that we used to have in FY 2022, FY 2023? First on that, second, as the battery business scales up, how should we see the working capital panning out?
Yes, Darshita. I'm requesting Mr. Manoj to take this. Please, Manoj.
Darshita, first of all, the numbers which you are referring to is at a higher base level. That year was the exceptional outlier year where our turnover was INR 6,300 crore because of the exceptional increase in the chemical prices. That was the first reason. Denominator effect, base effect was there, which has resulted in abnormally low working capital cycle of 120 days to 150 days. Far our distribution model is concerned, within the polymers, we stock at our Germany warehouse, we stock at our USA warehouse, and that remains. Almost we have to keep 30 days to 90 days inventory in our plant, 30 to 90 days inventory at warehouses, and the sea transit time also takes 30 to 60 days, depending on whether it's going to Germany or USA. That is the thing. Our average credit period span between 60 to 90 days.
Because we are fully integrated, a lot of creditors are not there in our system, so we don't get that credit benefit. Because of that, our average working capital cycle remains high. Further, being we are now stabilizing or started doing our EV business, building our EV business, we have to start procuring the inventories for our EV business, the raw material inventories, and we have started commercial production of LiPF6. That has also added. As we go along, we reach our full capacities and the turnover, automatically the denominator effect will come back and this will get reduced.
Okay.
Darshita, one of the reason is the kind of the business model that we have, where we have stock and sale and also the large dependence on the export market. Because of that, our working cycles of the days are long, but part of it is of course also related to capacity utilization. As our capacity builds up, we'll probably see these numbers going down.
Sir, if you could just explain as to why would we require a 30-90 day kind of an inventory at the warehouse in the U.S. and Germany as well. How does the offtake usually work? Why would we require such a high inventory day at the warehouse in the U.S. and Germany, like in those regions as well?
Yes.
Yeah. Hi, Darshita. Kapil Malhotra this side. See, first of all, the kind of business we are in, we also have to keep the insurance stock for certain marquee customers in both the European as well as the U.S. market because there they have the concept of just in time. We have agreement with them that we have to keep the stocks for them for two to three months as an insurance stock. That's one. The second important thing is if you understand now currently if you see the geopolitical scenario, the voyage time has increased from almost three to four weeks to almost seven to eight weeks. Our material in the stocks has actually helped us in converting the sales. Also we have to see to it that there is almost eight weeks which is taking in transit time to reach to these destinations.
That is why to ensure that our customers receive material, we have enough stocks with us to convert into sales. We have to have these working capital days with us for material in stock.
Okay.
Yeah.
All right. Okay. Thank you.
Thanks, Darshita. Thank you.
Thank you. Participants who wishes to ask a question, please press star and one. The next question is from the line of Rohit Nagraj from 360 ONE Capital. Please go ahead.
Thanks. First question is on R32. Given that we have commissioned the 10,000 tons of capacity, have we already started operating at optimal levels from March or will it be happening in subsequent months? Thank you.
No, it's already started operating from April onward, so it's already operating at the optimal capacities and it'll be ramped up as we go along.
Right. In terms of the customers, how are we looking at it? Is it domestic? Is it exports? Do we have any contracts in place for this 10,000 and the additional 10,000 that is coming in? Any anchor customers where we have at least a part of the volumes which are contracted for medium to long-term? Thank you.
Thanks, Rohit. Rohit, we have been in refrigerant business for a very long time. We are one of the legacy suppliers in this area, with lot of experience in export market as well. When we look at R32, it's both domestic as well as exports. In some cases we have contracts as well. We are quite confident that when we ramp up the capacity and go to 20,000 tons, we'll have no challenge at all, no issue at all in terms of selling that material. It's contracted as of now.
Got it. Sir, second question is on the fluoropolymers business. What is the kind of potential EBITDA that we are looking at whenever we reach the optimal or full utilization for the existing capacity? Thank you.
The thing is that we have still, Rohit, not reached the full capacity as I said earlier. As we are seeing the volume growth in fluoropolymers, the EBITDA will continue to grow. In fact, as we have seen earlier also, as more and more new fluoropolymers are added, which are high value add, we see our overall EBITDA going higher because of the higher margin products. We will see EBITDA growth as well along with the volume growth.
Right. Maybe just last bit on the battery chemicals front. Given that this quarter there has been some improvement in the revenues, do we see a significant or exponential improvement in revenues on a QoQ basis? By Q4 of FY 2027, there could be potential a three-digit number from the battery chemicals front, a high three-digit number from the battery chemicals front as an exit rate. Thank you.
Yes, Rohit, you're right. You'll see a growth going up quarter-on-quarter and the rise will be significant and we expect to reach, of course, the three-digit number by the end of this financial year in the last quarter. Yes.
Sure.
Yeah, absolutely.
That's it from my side.
Sure. Thank you.
That's it from my side, sir. Thank you.
Thank you.
All the best.
Thanks.
Thank you. Ladies and gentlemen, that was the last question for today. With that I now hand the conference over to management for closing comments.
Thank you very much. The strong growth driver for short-term to long-term are all in place, I think. Short to medium-term growth will be driven by the refrigerant and fluoropolymer segment and the medium to long-term growth journey is equally encouraging for us as the advanced battery materials business is scaling up and reaching up to the full potential in coming years. With this, I would like to thank you all for your interest in GFL and thank you very much for being part of this call.
Thank you. Ladies and gentlemen, on behalf of 360 ONE Capital, that concludes this conference. Thank you for joining us and you may now disconnect your lines.