ION EXCHANGE (INDIA) LTD (NSE: IONEXCHANG) Q3 2025 Earnings Call dated Jan. 27, 2025
Corporate Participants:
Vasant Naik — Group Chief Financial Officer
Aankur Patni — Vice Chairman
Milind Puranik — Company Secretary
Analysts:
Nupur Jainkunia — Analyst
Deepak Gopinath — Analyst
Mike Sell — Analyst
Jaythan Kritivora — Analyst
Pratik Kothari — Analyst
Aejas Lakhani — Analyst
Nishant Gupta — Analyst
Julian — Analyst
Rahil Shah — Analyst
Saket Kapoor — Analyst
Tej Patel — Analyst
Omkar Jagidar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Ion Exchange India Limited’s Q3 and Nine Months FY ’25 Earnings Conference Call hosted by Valorem Advisors. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. I now hand the conference over to Ms. Nupur Jainkunia from Valorem Advisors. Thank you, and over to you, ma’am.
Nupur Jainkunia — Analyst
Good afternoon, everyone, and a very warm welcome to you all. My name is Nupur Jainkunia from Valorem Advisors. We represent the Investor Relations of Ion Exchange India Limited. On behalf of the company and Valorem Advisors, I would like to thank you all for participating in the company’s earnings conference call for the 3rd-quarter and nine months ended of financial year 2025. Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management beliefs as well as assumptions made by information currently available to management. Audiences are cautioned not to place undue reliance on these forward-looking statements in making any investment decision. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today’s earnings call and hand it over to them for opening remarks. We have with us Mr. Aankur Patni, Vice-Chairman; Mr. Vasant Naik, Group’s Chief Financial Officer; Mr N.M. Ranadive, Group Head of Financial Planning and Risk Management; and Mr. Milind Puranik, Company Secretary of the company. Without any further delay, I request Mr. Vasant Naik to start with his opening remarks. Thank you, and over to you, sir.
Vasant Naik — Group Chief Financial Officer
Thank you. Thank you, Nupur. Good afternoon, everybody. It is a pleasure to welcome you all to the earnings conference call for the 3rd-quarter and nine months ended of financial year 2025. For the 3rd-quarter under review, on a consolidated basis, the company reported operating income of INR6,905 million, an increase of around 25% year-on-year. The EBITDA reported was INR754 million, an increase of around 7% year-on-year, while the margin stood at 10.92% and profit was INR496 million, increase of 5% year-on-year, while the PAT margin was around 7.18%. For the nine months ended for the financial year 2025, the company reported an operating income of INR19026 million, an increase of around 22% year-on-year. The EBITDA reported was INR2,080 million, representing an increase of around 16%, while the EBITDA margin stood at 10.93% with a net profit of INR1,450 million, an increase of 18% year-on-year, while the PAT margin was around 7.62%. Now let us take you through the quarterly segmental performance on a consolidated basis. In the Engineering division, the revenue for the quarter was INR4,4301 million, an increase of around 34% year-on-year. The EBIT for this segment was INR257 million, an increase of 7% year-on-year. The increase in turnover was largely due to the improved execution of some large EPC contracts. However, the execution of the UP Jal Nigam contract remained muted. The segment saw a modest order inflow during the quarter and the domestic inquiry bank remained steady. At the end-of-the Q3 of financial year ’25, the total order book for the Engineering division stood at INR3,405 crores. Coming to the Chemical segment, the revenue for the quarter was INR1,993 million, an increase of around 6% year-on-year. The EBIT was INR523 million, an increase of 6%, while the segment continued to show improvement in both turnover and margins. For the Consumer Product segment, the revenue for the quarter stood at INR772 million, which has increased by around 23% year-on-year. The losses for the quarter was INR29 million compared to a loss of INR15 million in the same-period of the previous year. This segment continues to witness consistent turnover growth driven by greater penetration and acceptance of the company’s product profile. With this, I conclude the opening remarks and we can now open the floor to the question-and-answer session.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wish to ask a question may press star and one on their touchstone telephone. If you wish to withdraw 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’ll wait for a moment while the question queue assembles. We have a first question from the line of Deepak from Sundaram Mutual Funds. Please go-ahead.
Deepak Gopinath
Yeah, thanks. Am I audible?
Operator
Yes, Sundaram. Go-ahead.
Deepak Gopinath
Yeah. So, sir, first on engineering. So this quarter, we had a good execution, which led to the 34% Y-o-Y sales growth in engineering, but our new order inflow was little muted as compared to previous quarter. So could you please highlight in an engineering project in both domestic as well as international market, from which sector are we witnessing more order inquiries? Is it the core sector like steel, power, oil and gas, which are typically larger size order or is it the smaller ticket size from various other sector? I just wanted to understand from where are we seeing more visibility and conversions?
Aankur Patni
Sure. On a global level, it is across-the-board, but yes, the inquiry book that we carry would be heavier on the core sectors. And even in terms of order conversions, it is across-the-board and the bigger ticket ones are — have not seen much of a traction during the current-period. That’s why you see that the order book per se has not built-up that much. But on the inquiry book, the concentration is across-the-board, but is also the core sector.
Deepak Gopinath
Okay. And sir, any update like, for example, any order inquiries we are getting for sunrise industry like data centers or semiconductor because there’s lot of traction which is happening there.
Aankur Patni
Yes, there are several under discussion on these sectors, the green hydrogen piece, the biotechnology piece, the semiconductors, the data centers, it all. And we are certainly expecting that in the course of the next few quarters, we will see a good flow of orders from this.
Deepak Gopinath
Okay. And sir, now coming to engineering margins. So this quarter, we — on Y-o-Y, we saw an 150 basis-point decrease in the EBIT margin. Could you please elaborate on that means are we sacrificing the margin to fuel growth or is it that the competition intensity is becoming higher or is it more to do with higher execution of that one owner’s order which we spoke about in the last quarter? What is happening there from margin front? And for the whole year as well as Q4 means what is the revenue and EBITDA guidance — margin guidance are we giving?
Aankur Patni
So there are two impacts, which I can talk about largely. One is to do with this contract which you just mentioned about. That continues to have an impact of roughly 150 basis-points to 200 basis-points and upwards on the overall engineering revenue. That’s depressing the margin quite a bit as also the mix of projects that keeps changing from year to year. In some years you have — the mix favors a slightly higher-margin, the other years the mix may favor a slightly lower-margin, but that impact is also there. But the primary reason for the depressed margin numbers is that it’s is contract
Deepak Gopinath
Okay. And sir, for this FY ’25 and let’s say, next year, what is our guidance in terms of Engineering division sales growth and margins.
Aankur Patni
Engineering should see 15% to 20% growth. And in terms of margin, unfortunately because of the way things have been and as far as we can see, we will be lower than the last year kind of the visibility that we have that overall dip should be in the region of roughly about 5 percentage point.
Deepak Gopinath
Okay. Okay. Got it. You are talking about FY ’25, right, versus FY ’24?
Aankur Patni
Yes.
Deepak Gopinath
Okay. Got it. And sir, coming to India Chemical division, so that Roha project of INR400 crore, could you please elaborate of that INR400 crore plant, how much was spent till December? I’ll ask Vasant to fill-in all that please.
Vasant Naik
Just upwards of 50% of the total project cost has been spent as of December.
Deepak Gopinath
Okay. And that is including both the actual capacity as well as backward integration, right
Vasant Naik
Yes. I mean the INR400 crores includes the backward integration part also. So
Deepak Gopinath
Okay. So sir, the timeline of that commercial production in Q1 of FY ’26, that remains intact, right?
Aankur Patni
Yes, we are expecting Q1 with the possibility of switching to Q2, but that thereaboves, not much more.
Deepak Gopinath
Okay. Okay. And sir, means at, let’s say, optimal utilization from this Roha plant, what could be our ROCE profile whenever that happens three or four years down the line?
Aankur Patni
The overall margins that we have been looking at from the Chemical division that you are — that visibility is very much available. And as we have been indicating the asset turnover that we expect is on a figure of INR275 crores, roughly 2.5 times.
Deepak Gopinath
Okay. Got it. And sir, two questions I have for Vasant sir. Sir, because now we indicated 50% a little over that has been spent for this Roha plant. And if I recall correctly, 20% was supposed to be financed through internal accrual and 80% was through debt, right? And since we have spent more than 50% and — but our interest outflow seems to be very flat. So what explains that? Is more of the capex has been funded through internal accrual rather than debt, which was initially envisaged?
Vasant Naik
No, it’s not the case. Our contribution for the total project remains at 20% of the project cost. But since the project is not yet commissioned, the interest expense is getting capitalized in the book. So as and when the commercial production starts, it will get reflected in the financials in the P&L.
Deepak Gopinath
Okay. Okay. And sir, one last question from my end. This one bookkeeping question. So I have noticed in several past years, the Q4, the tax-rate suddenly drops from, let’s say, 27% 28% to around 20% to 23%. Can you explain why that happens in Q4 of every quarter? I mean, this has been the trend since last three, four years.
Vasant Naik
Are you talking of the consolidated numbers or
Deepak Gopinath
The consolidated
Vasant Naik
See the consolidated numbers, the tax-rate per se, you cannot really take that because it is a summation of the tax — tax across the 21 subsidiaries and the group companies. It’s not a percentage of — so individual companies taxes get submitted. So it will not be a fair reflection to see at the totality level, the percentages.
Deepak Gopinath
Okay. So the reason for this drop-in tax-rate in Q4 of the last three, four years more to do with contribution from Indian operation and how should I look at it?
Vasant Naik
Yes, because generally in the 4th-quarter, the domestic companies show a much better a turnover as well as on the bottom-line. So maybe that can be one of the reasons that can be attributed to the distortion in the tax-rate?
Deepak Gopinath
Okay. Okay. Thank you so much, sir. Thank you for all the clarifications.
Operator
Thank you. We have our next question from the line of Mike Sell from Alquity. Please go-ahead.
Mike Sell
Good afternoon. Thank you for the call. And I have two questions. Could you please give us an update on the ongoing litigation by about the IWEF subsidiary. And I think there’s been some progress in the quarter. And secondly, the onerous contract, when do you think that will be completed? Thank you.
Aankur Patni
Let me first answer the second one. We are expecting this contract to run into likely look at substantially completing the invoicing in the first-half of the ’25, 26 years. As far as the litigation is concerned, I’ll ask Mr. Ranadive and Mr.Puranik to fill into that.
Milind Puranik
Yeah, the matter, which is a SEBI related matter, we have appealed the appeal the matter at securities apparent terribinal and SEBI has filed a reply in the matter and the matter is now listed for 10th February for hearing
Mike Sell
Do we think that there will be a resolution or this is something that could continue for some more years before we get to a satisfactory resolution?
Milind Puranik
If the judiciary accepts our stand, the matter will end there
Mike Sell
And are you optimistic about the outcome or it should be either way.
Milind Puranik
Yeah, we are always optimistic about the legal stand, but ultimately we are the judiciary has to apply his mind and take a decision.
Mike Sell
Thank you. And if it goes against you, you can appeal further.
Milind Puranik
Yes, there is an appeal available at the Supreme Court of India.
Mike Sell
Lovely. Thank you for your help. Congratulations. Bye-bye. Thank you.
Operator
Thank you. We have our next question from the line of Jaythan Kritivora from Abakkus Asset Manager. Please go-ahead.
Jaythan Kritivora
Yeah, good afternoon, sir. Sir, you guys mentioned that you told that legacy project, which is having a cost overrun will be getting completed by first-half of FY ’26. Is it right? Hello?
Aankur Patni
Yeah. Yes, yes. It’s going to spill into the next financial year and we expect the first-half to be the kind of period.
Jaythan Kritivora
Okay. Can you — can you quantify that what was the size of that project and how much that has been completed and what margins we have made on that project?
Aankur Patni
Okay. So as we’ve been mentioning, this is having a negative impact on the overall of the margins of the Engineering division. And there is still some bit left for this to be executed and that’s why spilling into the next year in terms of impact, we have not been giving the contract name and the other specifics of the contract, unfortunately.
Jaythan Kritivora
And would it be possible to highlight, okay, what went wrong in this project and when it was bidded and when we had got this project basically in which year and why it has faced such a cost over and wherein we have seen such the cost overrance.
Aankur Patni
This was to do with specifics of the site. Unfortunately we did encounter significant overruns, specifically on the civil side. And this is roughly 10%, please correct me if I’m going wrong on the period, but it’s around 1, 1.5 year-old contract.
Jaythan Kritivora
It is a domestic contract, yeah.
Aankur Patni
It is a domestic EPC contract.
Jaythan Kritivora
Okay. And can you can quantify why this UP project is getting — the execution is on a slow front wherein we had to complete — we were supposed to complete this JV project by the end of this year, right, if I’m not wrong?
Aankur Patni
Yes, the project is facing constraints in terms of funding from the government and as we would have — we had spoken about this in the last quarter’s call, that there was an expectation of improved funding and speed of execution on this contract. Unfortunately, the constraint on funds remain as a also relatively slow process of approvals and documentation, which is hampering the pace at which we are being able to invoice. So we still remain hopeful that it would pick-up in that pace soon as well, but that’s not something I am now being able to give you an accurate forecast of as to how quickly or how quickly the funding pace would improve and the other constraints will go away. Do however, hope that the second-half, which is second-half of this financial year, we will be able to invoice more than what we did in the first-half.
Jaythan Kritivora
So it will be quite low because second-half is anyways are of a good vis-a-vis the first-half seasonally. Would like to understand, if the project differs in execution, what happens if there is a cost escalation next year, whether we will be able to pass it out or we will have to absorb it.
Aankur Patni
So we have got extensions from the government and we continue to apply to the government for further extensions because of the way that the contract is getting extended The impact of an extended-stay certainly does — does have a play. We are not being able to build while we maintain the teams at sites and the infrastructure is being retained. So that impact certainly cannot — cannot be negated. However, the overall margins that we are on the contract remain within what we have been showing for this over the last couple of years.
Jaythan Kritivora
And on the engineering side, though this year, you are saying that the margins will be lower than FY ’24, so and you said 100 bps lower, right?
Aankur Patni
Yes, roughly that is how it looks.
Jaythan Kritivora
And on the — but on the execution, we are seeing that the momentum will be sustained on the execution side.
Aankur Patni
Yes, as I said, around 15% to 20% growth is what we are hoping to share.
Jaythan Kritivora
And what about the chemical side next year, whether that capacity increase will be helping it out or whether we will be growing in the same in the range of 12% 15% as what we have seen this year?
Aankur Patni
So we are looking at using up that additional capacity over a period of three to four years. And therefore, there would be an increased the rate at which this deployment of capacity will happen and its impact on our overall top-line. But as I said, we will not necessarily get the entire year’s benefit as the capacity gets commissioned in the first-quarter and with a slight chance of slipping a little bit into the second one.
Jaythan Kritivora
All right. And sir, we used to make the — on the margins on the engineering side on an annual basis in the range of like 9% to 10%, but since last two years, it has been 80-ish percent and this year it will be lower than 8%. How do we see this trajectory on the engineering side
Aankur Patni
There are a couple of things. One is to do with the kind of contracts that we get and the margins associated there with. And as we have been speaking about this one rope contract which has been depressing the overall margins. Besides that, in general, we do continue to get good contracts on the international market and those are at improved levels of margins as compared to what you see for the overall segment. As the ratios for these higher-margin contracts, both international and domestic improve in the future quarters, I’m quite hopeful that the margin percentages will improve.
Jaythan Kritivora
So next my last question from my side. The next you are seeing this on the project which is facing cost will be getting lower by first-half of next year. So how do we see the margin trajectory for the next year as a whole for the engineering side, but it will be better than FY ’24, it will be lower than what flat similar to FY ’25.
Aankur Patni
So hopefully, it will be better. However, I can’t give you very exact guidance at this point of time. I hope that I’ll be able to do that in the coming quarters. But my expectation is it will — it’s likely to be much better than what you have seen in the current year.
Jaythan Kritivora
Okay, sir. Thanks a lot, yeah. That’s it from my side.
Operator
Thank you. And we have our next question from the line of Pratik Kothari from Unique PMS. Please go-ahead.
Pratik Kothari
Yes, hi, good afternoon and thank you. Sir, first question again on the UP project. I mean, given the actual outcome is going much slower than what our anticipation was or what the earlier timeline that we were, I mean, anticipating. And I believe in past we were mentioning that we were kind of investing a lot in terms of manpower, etc., to kind of do this very quickly. So just one comment on — then why — I mean, shouldn’t this be hurting our margins as well? I mean, apart from that onerous contract. And also second, this expectation that, I mean, if we get all the approvals or invoicing in-line, I mean, we should be able to do this very quickly. So how easy or hard it will be for us to kind of ram the exhibition up very quickly if fast or required to.
Aankur Patni
As I responded to the previous question also, yes, the continued deployment of our resources and the revenues or the invoicing not happening at that pace is having an impact. But again, as I mentioned that our overall margins remain in-line with what we have been showing against this contract over the last few quarters. In terms of being able to ramp-up or you know, with the increased fund flow executed at a faster pace, we are very you know, able to do that the only unknown is when this ramp-up of funding would happen and how we would get all the documentation and approvals at a faster pace?
Pratik Kothari
All right. And so I understand this quarter maybe our order flow were a bit modest. But in terms of from a domestic order inquiry pipeline, the conversion, etc., I mean, any — do you see anything — any stark change in-kind of the conversation that you’re having with your end clients from the domestic angle?
Aankur Patni
So we are seeing a good flow of inquiries and higher-quality area of inquiries in terms of the execution profile as well as margin profile coming from international markets and we are — we remain very excited about the prospects in the near-term and the medium-term from the international markets. In terms of the domestic market, yes, I think the competitive intensity keeps varying from period-to-period. And we are hoping that soon enough, we should be able to get a few orders on the domestic front also.
Pratik Kothari
Thank you. All right. And sir, last question on the chemical. I mean, we have been at this sub at slightly under INR200 crores range for the last three, four quarters and we have a large capacity also, which will come in, say, in the next six, nine months. So just one in terms of demand, I mean our plan to ramp this up given in — even in our current capacity or current facility, we have some capacity which is left and then there is this additional one which is coming in a few months down the line. So just some thoughts, color on how do we plan to ramp it up?
Aankur Patni
Okay. So there are several conversations in-place with large consumers of the product and we are expecting that once the facility is ready to produce, we will sign several of these contracts, which ensure that the pace at which we occupy this capacity is relatively rapid. We are also hopeful that we are adapting the two plants to make sure that we take the best views of the facilities available and modify the product mix coming out of each facility to ensure that overall the maximization of revenue and profits can be achieved.
Pratik Kothari
Correct. So in terms of product approval or that customer kind of approving us as a company, that is all done and either taken care of. I mean, it’s just ramping-up of incremental volume that they would face with us.
Aankur Patni
So the product approvals and the — to ensure that we are able to meet their quantity as well as quality requirements, that’s a process which is in some cases done, in some cases underweight and we are therefore hoping that by the time we execute this project in-full and are ready for commercial commercialization, we will have several of these long-term arrangements in-place.
Pratik Kothari
Thank you.. Great. Thank you and all the best, sir. Thank you.
Operator
Thank you. We have our next question from the line of Aejas Lakhani from Unifi. Please go-ahead.
Aejas Lakhani
Yeah, Mr, Patni, I just want to understand the consumer segment. We’ve not spoken about this in the call. So can you please qualify where-is this growth really coming from? Is it coming from the commercial segments or the residential segments? And also while a lot of this is product sales, how much of the support revenues is built-out in this INR300 crore run-rate which we are at today from a revenue standpoint?
Aankur Patni
There is a good mix of commercial as well as residential from this overall revenue that you see a large or I would say a significant portion is coming from the residential market as the kind of products that we have been launching of late, they are targeted at slightly more premium segments, which are clients, apartment, owners, et-cetera. And in terms of the support or service revenue as a part of the overall thing, I would ask Vasant to share with you some guidance on it..
Vasant Naik
Yeah, in the Consumer Products segment, services portion will be in the region of around 20% to 25% range.
Aejas Lakhani
Okay. And is it fair to assume that the services portion has a significantly higher-margin, but today you’re choosing to redeploy the product margins as well as the services margin in-building out the business to your desired scale of INR500 crores before you start to show any EBITDA in that segment?
Aankur Patni
And yes, we are deploying the margins back and investing in various places, including people to ensure that we ramp-up at a faster pace?
Aejas Lakhani
Okay. And sir, any visibility that you can provide as to in terms of number of field force that you have put in-place, touch points that have been covered, which gives us the visibility to reach that INR500 crore number from the INR300 crore number today that you’re talking about?
Aankur Patni
We’ve not been sharing that data, but the pace at which we are on increasing our field force or our reach into the market in terms of distributors, channels, et-cetera is quite rapid and we would be several times of where we were maybe two or three years back the. So — and we will continue to increase the pace at which we are expanding because as you rightly mentioned, we are looking at a significantly higher revenue number than where we stand today.
Aejas Lakhani
Got it. Mr. Patni, next is on the overall margin outlook and I want to understand your reason for slightly better confidence for next year-on the margin front because as I stand it and what you have said in the call is the first-half will be a drag on account of the one-time large project which are hopefully to continue. The UP is continuing to drag resources and infrastructure. So there is a cost which we’re not getting compensated. And third is as the new Roha facility sort of comes up, there will be employee cost, opex cost that we’ll have to build ahead before the ramp-up really takes place. So our ability to really extract better margins for next year, could you — could you tell me where you get the confidence?
Aankur Patni
So the question was on engineering margins. And second, in terms of these low contract that we’ve been discussing as well as in case of UP project, the expectation is that we will be able to increase the pace at which we are invoicing these and that would give us for UP project, certainly the margins would flow as we execute the project. And for the other project, its relative percentage as a — in the pie of the overall engineering revenue would then come down. In any case, I’m not expecting this drag to continue right through the next year. So the remaining portion after this contract is exhausted would give us a higher-margin number compared to where we stand today. So that would hopefully be able to give us a slightly higher number than where we stand today. In terms of the overall company margin and the impact of Roha on in terms of interest and depreciation and all of that cost, that’s a of that’s to be expected, but we are also as we mentioned just a while back, looking to close several discussions with the large buyers so that our capacity utilization in the first year itself is reasonably good and we don’t end-up creating a massive negative impact of this depreciation and interest burden.
Aejas Lakhani
Thank you for that. It’s very clear. Mr. Patni, could you just speak a little bit about the Portuguese Maprill acquisition that you have done? It’s been some time. So could you just call-out that how is it playing out? I remember from the call-out then that it was primarily, you know, a channel to distribute to Europe. So have you made progress on that front? Could you just call-out a little more on that?
Aankur Patni
Yes, we’ve made progress. There are subsidiaries now being used as a base to push all our products, chemicals as well as engineering. The response that we seem to be getting from the European market is a preference to have a European company rather than coming out of any other location. So that seems to be giving us the advantage that we were hoping for. And the pace at which we were expecting the engineering side of business to pick-up from that subsidiary. There — there we are seeing a lot of good developments happening. Hopefully, we will be able to deliver a few engineering contracts from that subsidiary in the near-term. For the chemical piece, there was an inherent revenue in that subsidiary when we acquired it and we’ve been able to add volumes from our sales of resins as well as other chemicals during the period during the past few months. And we are also seeing substant — a significant number of discussions with the buyers in that region for further improving this volume. So, yes, the acquisition seems to be playing out reasonably okay. We would have hoped for even better, but then that’s — that’s something which we remain hopeful will play-out over the next few months.
Aejas Lakhani
Perfect. And Mr Patni, just finally, in the 4th-quarter, you had called out for an overall revenue growth of closer to 15%, which would imply about INR800 crores of execution in 4th-quarter, which is typically our seasonally the strongest quarter. So are we on course to achieving that?
Aankur Patni
For the company as a whole, we are looking at a 15% to 20% kind of a number.
Aejas Lakhani
Got it, sir. Thank you and all the best.
Aankur Patni
Thank you. Thank you.
Operator
Thank you. We have our next question from the line of Nishant Gupta from Minerva Global Capital. Please go-ahead.
Nishant Gupta
Great. Thank you for the opportunity, sir. My first question is in the chemical segment, who are your direct competitors?
Aankur Patni
Chemical segment for resins, we compete against the global majors like DuPont, tender is Ecolab and then we are also competing against domestic competition, specifically thermite, which is one of the larger manufacturers in India.
Nishant Gupta
Got it, sir. Thank you. Sir, for the build pipeline of INR8,648 crores, what would be our conversion ratio and the execution timeline for that
Aankur Patni
Please come again
Nishant Gupta
For the bid pipeline of INR8,648 crore, what could be the conversion ratio and a typical execution timeline of that,
Aankur Patni
We are — we normally expect a conversion of to 15% and thereabouts. In terms of the — once we get the order, the average period of the order book tends to be between two to three years.
Nishant Gupta
So got it, sir. Got it. Sir, one final question. The working capital days have been inching upwards. So what would be a moderate assumption going-forward? I mean that would be reasonable?
Aankur Patni
I think in terms of the working capital increase compared to a few years back and the has been the quantum of advance that we’ve been carrying from the customers and there were two few large contracts where there were significant amount of advances sitting in the books, which had made the working capital slightly lopsided. And as we see the days of the various asset groups within working capital. I think this is relatively more normalized than what it was a few years back.
Nishant Gupta
Got it, sir. Thank you, sir. And all the best.
Operator
Thank you. We have our next question from the line of Julian from Hamil JCN. Please go-ahead.
Julian
Hello, sir, am I audible?
Aankur Patni
Yes, you are. Hello.
Julian
Okay. I just have one question also on the working capital. I noticed that we on the segmental basis, engineering net asset is kind of flat, which means that on a Q-o-Q basis, assets is flat, liability is kind of flat, which implies that actually probably the working capital for the segment has not come down despite the fact that we are supposed to collect non-receivables for the UP project. Is this an accurate observation? If not, could you just help me understand maybe on the collection of receivables this quarter? Thank you.
Aankur Patni
I’ll ask Vasant to comment on that question.
Vasant Naik
In terms of the working capital days, what we have seen in the last two quarters, they are basically at roughly at the same level what we have been seeing. And specifically coming to the Engineering segment, the Engineering segment has grown by almost 36% on a year-on-year basis and that accounts for the increase in terms of the absolute number of the working capital, which is deployed in the business. And specifically to the UP contract, yes, there has been some delays in the collection from the UP contract that was referred to in our earlier con-call. But overall, the working capital days for the segment as a whole is largely stable at what we have seen in the September and the March levels?
Julian
Okay. And maybe just a follow-up on the UP project. You mentioned there have been some delays in the collection of the receivables. When would that be resolved? And as we subsequently build more projects on the UP side, are we expecting to face the same number of days for collection of the builds
Vasant Naik
If I understand the question, you are asking whether what is the possibility of recovery of the debtor from rupee project, that is what you referred to, right?
Julian
Yes, that’s the first part of the question.
Vasant Naik
Yeah. The expectation is that in next month, we should get some positive movement on the funding for this UP project. And consequentially, we do expect then the execution of this contract to pick-up in the coming months.
Julian
Okay, but if you were to the project in the coming months or will start building the, you know UP government for the execution of the project. Are we going to face the same issue in terms of the funds not being released to us afterwards? Any commentary around that.
Vasant Naik
We do hope that once the funding resumes, our expectation is the funding should then normalize. But as we have seen in the past also, it is very difficult to predict the funding from a government project. So we are also being cautious as far as the execution is concerned. So as and when the funding does improve, the execution will improve on this project
Julian
Okay, thank you so much
Operator
Thank you. We have our next question from the line of Rahil Shah from Crown Capital. Please go-ahead.
Rahil Shah
Hi, sir, good afternoon. So just one question overall for the company, if you can share or reiterate the guidance in terms of revenue and EBITDA margins for FY ’25 and FY ’26 and this order book that you have for around INR3,400 crores for the engineering as a whole? What’s the execution period over there? Thank you.
Aankur Patni
The execution period is between two — roughly around two years and slightly more in terms of the expected growth of revenues for the year, we are looking at between 15% to 20% growth. And in terms of the margins, as we spoke about, we are expecting to take a hit compared to last year-on the engineering margin percentages. But overall, for the company, I don’t think we will be able to reach the same levels in terms of percentage as we did last year. We will be slightly — we will be falling slightly short of it. So slightly short of the margins you mean, right? So the margin percentages, which we achieved last year, it will be slightly short of that,
Rahil Shah
Short of that. Okay. And so the 15% growth is overall for the company for next year as well. Are you targeting that
Aankur Patni
For, ’25, 15% to 20% is what we are looking at. For ’25, ’26, I’m not calling out a number as yet. And for the moment, I think you’ll have to look at our order books and the general trajectory of growth, but I will come out with a more clear report and guidance on it in the coming period.
Rahil Shah
Thank you. Right. Got it. Thank you and all the best.
Operator
Thank you. We have our next question from the line of Saket Kapoor from Kapoor & Co. Please go-ahead.
Saket Kapoor
Yeah, Namaskar, sir, and thank you for the opportunity. Sir, firstly, a clarification. You mentioned that the legacy order, which is dampening our margins, that spillover will happen till the first-quarter of the next financial year and the margin dent will be on a whole basis to the tune of 200 basis-points. This is what the conclusion is.
Aankur Patni
Yes, I was saying that the — this particular contract would spill-over into the next financial year for roughly the first-half of the next financial year. And the overall impact that we have seen of this on our engineering margins is to the tune of 15 to 200 basis-points slightly in that region and.
Saket Kapoor
And sir, out-of-the total revenue which we have booked for the engineering segment of INR417 crores, if we take the standalone numbers, what would be a ballpark number which would have constituted to the execution of the project which you are talking about
Aankur Patni
While we are not giving out the specifics of the contract and in detailed breakup of the constituents of the revenue, however, as I mentioned, the impact is of INR150 to 200 is on the overall engineering revenue, right. So what you see for the entire engineering segment 150 to 200 basis-points of that.
Saket Kapoor
Correct, sir. And sir, just to not happen more, but is this the project — is the consent project being installed right now and that is the reason it will take longer time or what is the reason why it will take another, I think so 3/4 to culminate or two quarters rather to culminate?
Aankur Patni
Well, one of the reasons is that we are trying to make sure that we do as much as-is possible to curtail the damage and no, it is not stalled. We are committed to delivering on the contract and completed but yes, we are trying whatever means available to us to make sure that if we can recover some of these costs, we will certainly make an attempt.
Saket Kapoor
Okay. And one more question and then for the UP project, sir, generally what we looked at whenever these size of projects are there, there are packages in which there are four, five packages which are distributed in order to reduce the client specification rigs also. So this particular project is also constituting other packages or are we just whole people managing the entire project?
Aankur Patni
This is — you’re asking for the UP project.
Saket Kapoor
Both one sir. This one which is — which is denting our margins and the UP project also.
Aankur Patni
So this is a large EPC, you know, green project which is being executed by the customer and we are delivering a part of that large project. Whereas for the UP contract, the government had given out for clusters of villages for which we had to deliver a certain project and which had — so DPR was created and certain BOMs were moved, the bill of material was made against it and we were supposed to deliver the material as well as the project. Of course, there have been — as the project gets executed, the ground level reality of UP may not necessarily be right according to what the DPR was and there are changes that we are seeing. But as such, for each village and the cluster, we are the ones who are delivering this entire piece. So there is no work is a subcontracted value.
Saket Kapoor
Okay. Because when we look at the, the unexecuted portion, it was INR751 crore and this quarter it is INR730, including the daily part, which you generally club in your investor presentation, that means there is hardly any execution that happened. Is that understanding correct for this quarter?
Aankur Patni
Let me ask Vasal to give you the numbers for the quarter.
Saket Kapoor
And for the nine months also, sir, what portion of the UP contract got executed?
Vasant Naik
For the quarter, we did INR33 crores and for the nine months, we did INR91 crores.
Saket Kapoor
Okay. And the pending portion is how much sir?
Vasant Naik
The pending portion is around INR719 crore,
Saket Kapoor
INR719 crore. And sir, for this quarter for March, what is the likelihood taking into account the — on a conservative basis? Yes, I’m concluding, my friend. Just follow-up on that.
Vasant Naik
This we have addressed, we have qualified by saying that this execution is dependent on the funding which we get from the UP government. Yeah. So our team is on-the-ground. So as and when the funding comes through, we do expect the increased traction to take this in the execution.
Saket Kapoor
We cannot have any ballpark number for this. All the best to the team, sir. We have hope for a — hope to have a good execution quarter, sir. Generally, fourth is the best quarter. And all the best to the team, sir. Thank you.
Aankur Patni
Thank you. Thank you.
Operator
Thank you. We have our next question from the line of Tej Patel from Niveshaay. Please go ahead.
Tej Patel
Thank you so much for the opportunity. I’m new to understanding the company. Just two quick questions. Number-one is, what portion of our engineering revenues generally comes from the industrial segment. And then within industrial also how much is LLD? And the follow-up question would be, if you could just provide a brief outlook on the same on the industrial segment, especially LLD. Has the traction increasing? Has the government taken any step probably, which is increasing the adoption in the. I’m on this perspective aspiration from the domestic point-of-view. Thank you.
Aankur Patni
Let me answer the last bit first. The effort of the government has certainly been to improve the level of effort which the industry or the government itself is making on the front of environment. ZLD is one of the technologies which the government is trying to push, but there are also several other ways in which government is trying to ensure that the environmental consciousness and of the industry goes up and the implementation of that and the monitoring of that has been improving over a period of time. You should expect that in times to come, the technologies, not just that will be others, which are focused towards improving the state-of-the environment, the state of water and wastewater as also the reuse of water from sources which were otherwise untapped. All of these would go up in coming times. In terms of in collective impact of all of this is on the ecosystem of companies like ours, we do expect that there is going to be increased flow of opportunities from the government sector, the municipal sector as well as from the residential commercial sector, which would all be required to go in for more-and-more stringent practices. So that’s as far as that side is concerned. The split of the inquiry book and the invoicing between government and the non-government, I’ll ask Vasant to pick it.
Vasant Naik
In terms of the split of the invoicing from the government with the orders in the total engineering segment, it will be in the region of around 10% because as we have mentioned, the execution of the UP contract has been muted in this year. And in terms of the government contract forming part of my total inquiry bank, it will be less than 5%.
Tej Patel
Got it, got it. In the non-government part, I mean, our major technology which we are deploying is currently LD.
Aankur Patni
No, LD is one of the components which we which we work on and obviously which is prescribed in some areas, but there are several, several more which are worked on generally is one of them.
Tej Patel
So would be. Is it correct to say I’m generally would be, let’s say, less than 10% for you as of now.
Aankur Patni
So it varies from contract to contract and segment to segment and it would also vary from period-to-period. So
Tej Patel
Got it. Got it. No. Thank you.
Operator
Thank you. We have our next question from the line of Omkar Jagidar, an Individual investor. Please go-ahead.
Omkar Jagidar
Sir. Thanks for taking my questions. I’m having three questions. Let me ask my two questions first. My first question is, as we are in the end-of-the financial year, what engineering business orders are we expecting in next 50 to 60 working days? This is the question number-one. And question number two, regarding chemical business, in the Q1 con-call also, you said we are operating 65% to 70% of the plant capacity and there is a headroom for chemical business. But consistently, we are doing INR200 crores of revenue consecutive 3/4. Why chemical revenue has stuck at INR200 crores because there is still room for the plant capacity. So any specific reason for that? And can we — are we expecting Roha plant from quarter one onwards, INR40 crores to INR50 crores revenue will come from quarter one or it will start from quarter two only?
Aankur Patni
The Roha revenues should start from the second-quarter, we still have to go through the final process of commissioning the plant. And once we have most of the things sorted-out, we can then release a date, it could very well be the first — the second part of the first-quarter or it could be the second-quarter. But in terms of the overall the chemical number of the chemical segment number, I can tell you that we are looking to close the year with roughly around 10% to 15% growth and that’s what we are expecting from the chemical segment as a whole.
Omkar Jagidar
Sir, growth whenever you say it’s always Y-o-Y growth, I agree with you. Last-time also I asked the same question. But overall that plant capacity, as of now we are utilizing 65% to 70%. Is there a room to increase that capacity or capacity utilization will be up to 70% only for the current chemical plant.
Aankur Patni
So capacity utilization can certainly go up and I have pointed out earlier also that we keep making modular adjustments to our capacities and that is what gives us a slightly different flavor to the mix and capacity each time that we would discuss this number. So therefore, we talk about the overall revenue numbers and growth rather than we only look at that capacity number. But yes, there is a headroom available there and which I have pointed out earlier also. As we expand capacity of the — of Noha, for example, we would also be repurposing some of the existing facilities to make sure that we get a very good mix of revenues from both the plants has also optimally use the capacities to generate both top-line as well as bottom-line. So some of the capacities that we have are product-centric. So in the entire plant, there will be several reactors, some of whom will be — some of them would be dedicated to certain types of products. And therefore, the capacity utilization gets dependent on a specific product-line rather than of the entire capacity as a whole. So that creates a different mix of capacity rather than overall of number which is homogeneous. So it’s not a homogeneous number that we talk about when we say 65% capacity.
Operator
Thank you. Ladies and gentlemen, this is all-the-time we have for today. I now hand the conference over to the management of Ion Exchange India Limited for closing comments. Over to you, sir.
Vasant Naik
Thank you all for participating in this earnings conference call. I hope we have been able to answer your questions satisfactorily. If you have any further questions or would like to know more about the company, please reach-out to our IR managers at Valorem Advisors. Thank you, and I wish everyone great evening.
Operator
Thank you, sir. On behalf of Ion Exchange India Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines