GMM Pfaudler Limited (NSE: GMMPFAUDLR) Q2 2025 Earnings Call dated Nov. 07, 2024
Corporate Participants:
Dhaval Rajput — General Manager Finance and Accounts
Manish Poddar — Chief Financial Officer, India Business
Tarak Patel — Managing Director
Thomas Kehl — Chief Executive Officer, International Business
Aseem Joshi — Chief Executive Officer, India Business
Analysts:
Sagar Shah — Analyst
Ganeshram Rajagopalan — Analyst
Rishab — Analyst
Rohit Ohri — Analyst
Ravi Mehta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day. And welcome to Q2 and H1 FY ’25 conference call of GMM Pfaudler Limited. [Operator Instructions]
I now hand the conference over to Mr Dhawal Rajput. Thank you, and over to you, sir.
Dhaval Rajput — General Manager Finance and Accounts
Thank you, Neha. Good evening, ladies and gentlemen, a very warm welcome to all of you into the Q2 FY25 earnings call of GMM Pfaudler Limited. The earnings presentation was uploaded on the stock exchanges today and is also available on our website. Hope all of you had a chance to go through it
From the management, we have with us our Managing Director, Mr. Tarak Patel; our CEO of International Business, Mr. Thomas Chen; our CEO of India business, Mr. Aseem Joshi; our CFO of International Business, Mr. Alexander Poempner; our CFO of India Business, Mr. Manish Poddar; and our Compliance Officer, Ms. Mittal Mehta. We will give you a brief overview of the performance of the company, after which we will get into the Q&A.
Before we begin with the overview, a brief disclaimer, the presentation that was uploaded on the stock exchanges and also available on our website including our all discussions that would happen now contains or may have certain forward-looking statements regarding our business prospects and profitability which are subject to several risks and uncertainties. The actual results could materially differ from those in such forward-looking statements.
I would now hand over the call to Mr Manish for that to provide an overview of the performance over to you Manish.
Manish Poddar — Chief Financial Officer, India Business
Thank you, Dhaval. Good evening. All sharing with you some insights on the quarterly performance on the consolidated basis. We recorded a revenue of 805 grows within a bit of margin of 11.6% for Q2 of 525. Our order intake stands at 762 crews for the quarter and backlog stands at 1,773 crew on a stand alone basis. We have had a revenue of 208 grows within a margin of 10.8% while the period is more steady and stable. We would like to highlight a few points on the balance sheet and the cash flow.
As you note, our backlog is at 1,773 road as of 30th, September versus 1,689 road as on 31st, March margin is high while our H2 revenue at 1,591 pros is much lower than the half year. The average of FY24 which block the revenue for the full year at 3,446 Pro. Now a healthier backlog with a muted revenue direct towards a higher shipment in the upcoming quarter. This is also visible in our balance sheet as possible. When we compare 30 September with the 31st March balance sheet, we observe our unbuilt revenue and inventory have gone up by 28 and 32 growth respectively. This highlights higher activity at the production flow. As a corollary, our customer advance receipts are also up by 30 growth.
On the other hand, our receivers are down by 21 crews due to correction focus which directs us to the cash flow statement. We have been steadily improving our cash flows. We have been steadily improving the FCF as a percentage to the business cash generation over the past three years. However, you would have observed for past three years, our H1 performance for the year has generally been lower on the FCF generation perspective this year. We have been able to generate 50% FCF as as per slide eight of the investor day, we expect to remain on a healthier cash flow generation site for H2 rate.
With that, we can open the call for the Q&A. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Sagar Shah from Spark Capital. Please go ahead.
Sagar Shah
Good evening, sir and congratulations for at least a stable set of numbers in this kind of environment. I have a couple of questions. So my first question was that sequentially, we we experienced a 3% growth in this quarter. But so even though margins were steady and oh yeah. And but going ahead, we guided for almost very healthier margins for this entire year 13% to 15%. So for my first question was on the revenue front that how are things shaping about at least on the global level right now?
Because we saw 3% sequential growth and going forward H2 has always been the, the has been the strongest for GM for the. So the kind of order intake that we have seen in this Q1 and Q2 and the kind of order backlog of around 773 crores going, go ahead. Can we expect a better H2 better growth in the H2? And if yes, then it will be led by with segments amongst the technologies.
Tarak Patel
Yeah, hi. So I think a couple of points that you brought up very important. So I think on a half yearly basis, order intake has improved by about 18% to 20% odd. That means we definitely have a strong, a few quarters of order intake, which is definitely a good thing. And that’s why we believe that the second half of the year can be a little bit stronger in terms of both revenue and margins. We have obviously businesses that have a much stronger backlog, especially businesses in India, like the HHI business has a backlog which probably will take us into Q2 or Q3 of next year. We have strong backlogs and mixing.
We have strong backlogs, obviously in some of the other non glass line technology where we have seen a shortfall and where we do see a little bit of stress is in the glass line business, especially when it comes to the chemical. And when I say chemical in the agrochemical sector where the investments have really dried up, right? And it does mean that there is probably a few more quarters of you know, I would say muted investment. I don’t see that turning around very quickly, we’ve spoken to a lot of our clients, customers, a lot of experts, industry experts as well, where we do believe that chemicals will turn, but I don’t think it’s going to happen very soon.
So we do need some time here. I think what’s important for us is that while we are at the bottom of the cycle, we work on internal kind of cost optimization. I think we’ve done a lot of good work around that. We currently have a major project going on here in India. We’ve taken some actions internationally as well to reduce cost. So we are looking internally and hopefully when the market turns, we will be able to drive some of the growth and improvement in both the revenue and margin.
Having said that, I think it’s also important to keep in mind that while we are being aggressive in the market to bring in orders, you know, there is obviously going to be some pricing pressure as well. However, having said that being the market leader, we are able to still get a little bit of premium over our competitors, right? So all in all, I think, you know, the numbers are stable, we expect these numbers to remain stable as well for the next few quarters. But we do believe the second half of the year will be a bit stronger than the first half.
Sagar Shah
Okay. Okay. So, but industrial in the amongst the in, in the entire revenue mix, what percentage of technology is but is particularly industrial mixing for H1 FY25.
Tarak Patel
The missing number for H1 2025. I don’t think we have it on. I think the breakup has been there is some break up given we check that number and come back to you. But in technology, if you want to kind of understand what’s happening in technology, you will find that the last line business obviously has seen a bit of a slow down while the other product lines are making up for the shortfall, right?
So mixing heavy engineering loan or these are, the three areas have seen significant growth in order intake and they’re doing quite well. 10% is the number that we have currently in terms of mixing and mixing is an area where we want to grow, right? So there’s a big push for us to kind of get into new industry segments. Mixing opens up petrochemical, oil and gas, food and beverage, lots of other new industries which are not currently under in a down cycle. So the focus is to really kind of maximize order intake and opportunities from the sector.
Sagar Shah
Okay. So basically, around 10% of the total revenues has come from mixing that you give the number?
Tarak Patel
Yes, approximately, yes.
Sagar Shah
Okay. Okay. Sure. My second question was related to your non glass lining technologies, nonla lining technologies as you said you are your subsidiaries at law meag have been doing very well. So, do, do you see at least in this year also the the the these subsidiaries is doing well? And can you specify or can you throw a number that at what can we expect? What kind of growth rates can we expect among these businesses? And which of the ones, do you think it will stand out either it will be a loan or meag or it will be norm or heavy engineering?
Tarak Patel
Yeah, so I think the few areas that will stand out where we will see double digit growth, I think we see is definitely one of these areas where we believe there are opportunities that a business will grow also at double digit rates. It’s profitable. We have a good backlog there, we want some large orders and we have a lot of opportunities open that we expect to finalize in the coming months. So that gives us a lot of visibility. I think long businesses are increasing. Well, they obviously like to know, cater to the semiconductor industry. So they are booked out for the year. We actually kind of bring a little bit of capital for them to increase capacity because the market is booming and the semiconductor space in the US is doing quite well.
So technology is doing quite well. In terms of the glass line business I think the Italian our glass line business is doing exceedingly well. They are you know, ahead of their of the budget us and China remain a little bit soft. China is definitely seeing some kind of slow down in terms of new investment. And in India, we have seen the glass line business actually pick up in the pharmaceutical sector in the last couple of months. We’ve seen some large projects in Pharma and there’s definitely more talk now in the Pharma space for new investment coming in. So that should drive some more glass line order intake as well.
Sagar Shah
Okay. Oh okay, sure. So just my last follow up question that the due to the revenue pick up that we’ll see in the H2 supporting by these businesses. So sequentially also in H2, we’ll see better margins or if you can guide us that what are, what are the margins that you are targeting for this year? And my last question was also on that, that in the after post this year in the next two years, as you just highlighted that in the initial commentary that we are a few quarters away before we see pick up in the investments. So at least on F 526 and F 527 can we expect a better, a better environment than the current year or still times are so uncertain that we cannot guide for that?
Tarak Patel
I think the chemical cycle will turn, it’s always happened. It’s always been cyclical. This is not something that’s new. A couple of years. We’ve already been in a down cycle. We probably expect a few more quarters, but I think definitely there will be a turning point. I think a couple of things will happen. One is that while we are in this down cycle and we’ve already done a lot of work to make sure that one, we have diversification. So we don’t only focus on chemical and pharma. So over the last few years, we have really started entering new industry segments and a lot of these new industry segments are giving us or making up for the shortfall that has been caused by the slowdown in the chemical sector.
So that’s been a really good learning for management and for us. And as we look to the future, we do believe that diversification is going to be a the pillar of our strategy to say that listen, tomorrow, we don’t want to have all our eggs in one market even though chemical and pharma is a big industry segment for us. We need to find new areas where we can grow faster and where we can grow margins as well. From our outlook here again, I mentioned today that it is new this year we expect to be flattish. We are in the peak of a down cycle.
So it is tough out there. I think all we can do as management is continue to be aggressive in the market. And the same time, look internally to reduce cost. I think we have done and we are in the middle of a major beta agreement kind of the project that we’re working on India. We looked at now starting our Poland operations as well as the first order of has been made in Poland already. So we expect that some of these initiatives eventually will help us reduce cost. And then if the market, like you said in 2026 or 2027 we definitely will have a lot of legs to grow both revenue and margin.
Sagar Shah
Okay. So can you guide us, sir, for at least what is the margin by?
Operator
I request you to come back for a follow-up, sir.
Sagar Shah
Okay. Sure, sure, sure. I’ll follow-up. Okay. Thank you.
Operator
Thank you. [Operator Instructions] Thank you. The next question is from the line of Ganeshram from Unifi Capital. Please go ahead.
Ganeshram Rajagopalan
Thank you for taking my question. So just to start the international segment that we were discussing, could you give us a sense of what’s happening in the major geographies that you’re present in red? Because we’re just looking at half year review revenues. First of 24 versus 25. And there’s a bit of a decline in the revenues there, right? And also we look at the backlog on a quarterly basis, there’s a bit of a decline happening over there.
So if you could just tell us, you know, in the major job is in the product lines that you’re working in what’s happening because we have the India piece together now and with the international piece trying to get a sense of where we could go from here. And do you think this is the bottom of this cycle that you’re experiencing? That’s just the first question.
Tarak Patel
Good questions. I think a lot of it is maybe crystal ball wining, but maybe I can ask Thomas to jump in the question was Thomas on the different geographies. Maybe you can talk for the US Europe and maybe China three major geographies and give them an idea in terms of what are you guys seeing? And you know, when do we expect those markets to kind of start fighting a little bit?
Thomas Kehl
Yes, happy to do so. Thank you. Start off with the Americas and the Americas. We do see consumption, we see projects coming in. We have quite a few quotations. The time of when a quotation becomes in order has been slowed down a little bit. That means that the market is somewhat hesitating the capacities that were created over the last three years after the pandemic kind of sufficient. And since all the supply chains in the chemicals industry in America, in Europe, but also in Asia has been disturbed for quite a while. There was a, let’s say an activity going on that the inventories have been backfilled and a lot of companies that their inventory is not yet worked off what they do now.
Therefore, they’re slowing down their productions and the need for new projects. In total pharmaceutical and chemical industries are still consuming and there’s the growth of the consumption over the years and the capacity that seems to be a little bit on the high side right now is going to be exhausted over the next couple of quarters and then the cycle will be over and turned into a positive. And that would be true for all three major regions. I have a monthly location.
Ganeshram Rajagopalan
Yeah. Understood. Understood. Right. So what gives you confidence? I just just continue on that line of thought, right. Typically we see there is circularity but what is sort of the signs that you look out for as management to say? Okay, fine. This might just be the bottom. Are you seeing it in terms of inquiries or how do you sort of decide that this is when the cycle is important garden and it’s starting to infect and you prepare accordingly for that because you’ve kept your costs quite under control. But right, as that optimism starts to return. I think you’ll have to adapt to that as well. Right. So, just trying to get your perspective on that.
Tarak Patel
Yeah, I think it’s a and again, a good question. I don’t think we can time the cycle perfectly. I think there will be a bit of lag between when things change and when we will see results. Because first, I think the first people that the cycle should turn for is our clients and then they should get back into the mindset of investment, right? So for chemical companies, for agrochemical companies, that mindset maybe is a few quarters away.
I think right now, people who invest it will just client sweat their assets before new investments go in and then they would need like visibility in terms of their clients asking for more product, right? So once that kind of gets built into the system, then that excitement that that interest level will start increasing, we will start seeing it maybe a few months later when the project gets sanctioned. And then obviously the opportunities will be sent to us in terms of, you know, how much investment and capex will come in.
For me, in the meantime, you know, obviously I’m saying that even though Agrochemical might be a bit slow, there’s still opportunities in chemicals in Pharma which has been positive, it is much better today than it was maybe six months, nine months ago, especially here in India, we think pharma obviously be a little bit more active, which is good. But generally, there will be a lag between when the cycle turns for the chemical agrochemical players. And then obviously a few months later, for us, when the interest levels and the inquiries will start improving.
Ganeshram Rajagopalan
Understood, sir, understood. And the, the second question I’ll have to put this on and join that. The queue is given, given the context that you’re in right now, right? I’m looking at the guidance details in Q1 that would imply we need to make about 3,600 crows in top line, even at the lower end, 5% top line growth and the 13.5% margin is about 490 crows, which means just if we compare the first half and second half last year to this year, we need to grow by about 10% and on a sequential 30% top line, right? So do you still feel confident with that guidance or do you think given how things are at the moment? We need to probably taper down our expectations a bit.
Tarak Patel
So I think the guidance was flattish guidance, right? So we said at the top line level, maybe 3% to 4%. I think that I think we are in kind of yeah, I think we are okay. On that margins. Obviously, there will be some margin made up in Q2, sorry Q3 and Q4. But I think, you know, obviously margins are under a bit of pressure. We hope to be at a similar level like last year, but probably there will be some amount of, you know, margin that we still have to be made. Let’s hope that the next couple of quarters, we are able to kind of improve margins, maybe my issue have.
Manish Poddar
So if you recall the condition, so if you break the previous financial year into H1 and H2 out of the 477 quote of a better, we, I think 27, closer to 72 closer in H1 and we did 205 or something in H2. So it was a sharp drop from H1 versus H2 and we have been continued in maintaining that almost the same number, similar number in the current half of the, of the financial year. Now, the, the challenge is how well are we able to recoup the large ground in H1 versus H2 last year into the second half of this year? So that is that is the something that we are absolutely, you know, seriously trying to get, get to that. The, the question is how much can we recover?
Ganeshram Rajagopalan
Understood, sir. Thank you. I’ll come back-in the queue. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Rishab [Phonetic] from Aquarius PMS. Please go ahead.
Rishab
Yes. Am I audible?
Tarak Patel
Yes, please go ahead.
Rishab
Yeah. Thanks for the opportunity. Just wanted to know your sense on when you say that the chemical cycle will turn around. So what are the tangible quantitative parameters that you know, you keep track tracking? So when I say that I want some quantitative
Parameters that you keep tracking when you say that the cycle will turn around?
Aseem Joshi
Okay. So this is the game I’ll talk about, you know, how we look at the market. And not sure if I can give you tangible specific quantitative parameters. But a lot of this is subjective, right? I mean, you have to recognize that market. You know, there’s a lot of sentiment also that to how to we look, we look at first of all the announcement that we hear from our customers, we look at, we of course, are in the market every day. So we are talking to a lot of decision makers in these companies.
That’s our first indicator of their plans. And usually we get a sense of what’s happening in the next three to six months. The second, of course, there’s a lot of databases that are available that talk about pricing of various commodities. And that’s also indicate as prices start to show up, you know, people start looking at more they’re more willing to put in category. And for the third aspect also of the margin profile of our customers because as they start showing up, you know, their confidence in putting more capital, so they fairly things.
But that’s the three areas that we look at from a to assess how these markets are going to work based on that assessment. You know, I talked about agrochemical being slow. That certainly the case and we anticipate that will remain the case for a couple more quarters of year. We continue to monitor and then, you know, take actions accordingly in the meantime. Just to reiterate, we are very heavily focused on ensuring that our cost position is appropriate for the market and that I expect to start helping us, you know, from a margin.
Rishab
Right. Right. No, that’s, that’s quite clear just to follow up on what you said. So you said about three things. One is announcements of the customers. One is the databases where you keep tracking the pricing of commodities and one is about the margins. So, so let’s say from 10 customers from where would you, where do you are actually seeing that the margins are coming back or, you know, the announcements or for the new capex that they are doing? That is that is seeing some uptrend so.
Tarak Patel
Just to is the only place we’re seeing capex in a big way. You know, there’s a lot of investment happening in and around Hyderabad now, large projects, peptides, things like that. So Pharma and I think because of pricing pressure, easing off in the US, Pharma has been a little bit back on investment, right. So AP I bulk drug Pharma is probably looking a bit stronger than they did maybe a year ago.
And I think for us also, like I said before, that chemical and Pharma is obviously, or let’s say maybe 34 years ago, maybe 90% of our total revenue was coming. But over the last 34 years, we’ve diversified and brought that down to maybe 60% right, where a lot of our non of where most of our growth and some of the shortfalls have been made up is coming from new industries that we started catering to, right? So it’s important for us to continue on this journey, both of our product as well as an industry diversification because at the end of the day, there will be cycles, some cycles will happen.
So we just need to make sure that management that eventually when one or two industries are slowing down, something else makes up for the shortfall. So that’s an important part of our strategy going forward. And this would also be into M&A in terms of looking at new industries which can give us a 34 years of continuous growth, double digit growth with good margins, right? So that’s something that we’re thinking about.
Rishab
All right. Thank you. Thank you and all the best.
Tarak Patel
Thank you.
Operator
Thank you. The next question is from the line of Rohit Ohri from Progressive Share PMS. Please go ahead.
Rohit Ohri
Hi team, a couple of questions from my side. The first one being, do we have a sort of an index or do we track a brand as well as cross selling? And if we do so, then can you share the numbers which were probably last year, same time?
Tarak Patel
So I think brand affinity, I’m not sure. But good question. I don’t know how we even calculate that. But in terms of cross selling, yes, we have cross selling numbers that we have kind of built into our models and our plans where every sales person will have some targets for cross selling and you know, they will get incentivized on cross selling. So that’s already kind of something that we work on quite well. But it’s important that cross selling happens within a specific industry.
We don’t go cross selling across industry. But within the chemical farmer, why can’t we sell the same customers buying a glass line? The filters are a mechanical seed, a recovery plant. So there are definitely opportunities there. Are we 100% kind of great and fantastic at cross setting? Probably not, there’s a lot of work to be done, but it’s something that’s part of our strategy and we do spend a lot of time trying to grow the cross setting aspect of our business.
Aseem Joshi
I have one quick point. I think as far as your first part of your question on brand affinity good, we do not currently measure it quantitatively. We have considered using a measure like NPS as a possible way to look at it. We haven’t gone down that path. But what we do have is regular feedback from customer on what’s going on and that generally there’s just the indication of you know, loyalty and you feel comfortable that you know, you’re in a good position on that.
Rohit Ohri
Okay. Tarak, you did mention about farm have been picking up and then there are some schemes which are coming up in India for some new 50 new plans coming up over the next 23 years with PL I my question was, can you share the behavioral changes of some of your clients? If at all, if you, if you can some sort of discussions that are happening or are there some new engagements or commitments since on the international level? Also, we are almost near the year ending. So they must be trying to create their own budgets for the next year. So any sort of discussions or behavioral changes that have recently noticed from these guys?
Tarak Patel
I think a couple of things maybe, I think one is that the need for more sophisticated equipment is definitely now something that people ask for, you know, it’s now because you’re now getting into much higher value production, better production, better quality is required. So I think that is something that people are more aware of now. Can I reduce you know, my batch times? Can I reduce my cost if I can make a product in, if I can write something in a 15 hours instead of 25 hours immediately, I have more capacity, right. So people are looking at a way to improve and become more efficient.
And that obviously is something that helps us and also more critical products, right? So the quality of the product becomes more and more important, especially when you’re exporting. And that’s why they need more sophisticated equipment. We also see a lot of work around these weight loss drugs, right? So no one order and things like that. You know, that is driving a lot of ancillary industries as well and some of these drugs will go off patent in 2026 and 27. And we accept that also to probably view some growth. Our CD mo business is going quite well in India.
And then like I said, peptide is becoming really huge across the globe, right. So we see a lot of investment in peptide. Some of it will happen in India is a tough process. It’s been done mainly in the US and Europe right now, but India could become a kind of a hub for peptide manufacturing as well. So Pharma generally is looking quite positive. And the need for highly sophisticated equipment is growing in Pharma. That’s where we play. We’ve had specific instances where we want you know, large orders with inter we’ve had German specifications in terms of last time we supplied in India because the end product or the end the customer was German and he was kind of the defining what equipment was to be used.
And he was using power equipment in Germany and the Indian manufacturer had to use also our GM M for equipment, right? So that’s happening. And I think in the in the non glass line technology, I think that is where people are really starting to think creatively you know, systems businesses. We’ve got some large orders in the systems over the last few quarters, close to $30 million to $40 million or $25 million which is more process driven, right? So how do we help improve the customers processes and make their life simpler? I think that’s where we will also play an important role.
Rohit Ohri
Is this is a part of the Living Lab initiative from UK decarbonization for the Pharma. Are you playing a role over there as well?
Tarak Patel
Sorry. Which, which sorry, what was that again? Living.
Rohit Ohri
Living Labs.
Tarak Patel
No. So I’m not sure what that is. No.
Rohit Ohri
Okay. My last question fall back in the queue. Any developments that you would like to share in terms of the FND filtration and drying businesses, Maybe with the light and medium duty top entry and your recent association which you did a bit about the page recently. But your recent association with Grab now, which opens door to quite a lot of business related commentation. If you could share some detail on that.
Aseem Joshi
Sorry. Could you repeat the last question, or recent association with who?
Rohit Ohri
Grabner?
Tarak Patel
I think that was a wine story from the wine producing thing.
Rohit Ohri
Yes.
Tarak Patel
Yes, yes, okay. So we may talk a little bit about that. But yes, go ahead, yes.
Aseem Joshi
Okay. So as far as filtration gri is concerned, I can talk about a couple of areas. Our strategy here has been to differentiate by focusing on more value added products, sort of more sophisticated products. Happy to say that it’s working out quite well and along the lines that we had expected. So we have launched 23 new products in the last two years, three new products in the last two years. And those are getting good traction in the Indian market. In fact, vertical chronicles are, which is the first one to be H1st, is also being looked at by European customers. With two being sold there already.
We will continue our innovation journey and we think that is the right way for us to grow. There is of course the low end of the market there, which is so by others, you know, there, I think is a low margin, somewhat commoditized space which, you know, we have to stay for the most part. The other aspect of tradition and drawing as I talk about is our expansion in the US market, which is really to answer. We had pointed this out as a part of our strategic initiatives a couple of years back and we transferred the senior executive there to drive that business. We’re happy to share that, that business is now well set.
We have about $4 million to $5 million you know, sort of the annual revenue that we already expect from that market and we continue to grow there. We’ve also built up our team in the US to serve that market, both from sales as well as from a operations perspective. And so it’s a good new stream of revenue and margin for us from the US. I think as far as VBR is concerned, which is the Italian. When recently I’ll invite Thomas to share to get.
Thomas Kehl
Thank you, Aseem. Like the in the company Graner is a vineyard. That is quite old in the north of Italy. Their wine philosophy is that they let their wine age 15 to 20 years before they even put it out to sell. And the ing the wine in wooden barrels or other media is somewhat risky if you do it for 1,520 years, don’t look at it. So they were looking for storage tank that gives them the cleanliness and, and, and the, the influences from outside, from any good or anything to let their wine age for 1,520 years before they fill it up into bottles and sell it.
And they have looked at a couple of, of, of technologies and found that the glass lines, steel tank is the perfect fit for them. And they have ordered a couple of tanks that will be delivered in a couple of weeks. The first batch of the second batch of the in the first quarter. And we see this is a good opportunity to take our existing technology and branch into new applications that we haven’t seen before in this case.
Rohit Ohri
Okay, thank you, Thomas. I’ll get back-in the queue. I have more questions. I’ll come back.
Operator
Thank you. The next question is from the line of Ravi Mehta from Deep Financial. Please go ahead.
Ravi Mehta
Yeah, hi. Thanks for this call. Just a question on the pricing. So when you said that, you know, we are at the peak of the down cycle, just wanted to understand how pricing has been in earlier down cycles. Vis a vis where it is now. Is it more bad? Some anecdotal thumb rule?
Tarak Patel
Yeah, I think Glass Line is bad. It is, it has been a area of concern. Definitely we’ve seen prices now stabilize a little bit and hopefully we can kind of reverse the trend and start kind of you know, increasing prices slowly. It’s always tough to, you know, increased price once you’ve already given the discount because, you know, most customers will have history and data available to say, hey, last order was this. And so why are you asking?
So unless you know, so we we will definitely try what we do try to do is obviously try and differentiate and say, okay, if we are going to give something that’s more, I guess better or technology that somebody else doesn’t have, then we can charge definitely a much higher price, right? But yeah, in general case in Glass Line, the, but the pricing has taken a hit. However, I think now we’ve come to a point where I think it has stabilized and I do see it probably improving over the next few quarters a little bit.
Ravi Mehta
Maybe like just to understand in the rough numbers, like say suppose a normalized pricing is 100 during down cycles, the prices hit 75 just an example. So is the current down cycle seeing a price you know, like 7,065 like just.
Tarak Patel
Yeah, so I would say the discount levels have increased by about 10% to 15%. A little bit more. In some cases, it would probably been a little bit more than that. But now we are at about a 10% to 15%.
Ravi Mehta
Okay. Okay. And one more question was on the order intake. So we had seen a good sequential uptake for last couple of quarters. And this quarter, the order intake was kind of lower on a sequential basis. So has there some slippage happened? Like you you know, closing of an order didn’t take place or anything which you would like to highlight?
Tarak Patel
No, so I think generally we were pretty happy with the order intake. Obviously, there are things that, you know, get pushed out by a few weeks here here and there, but there are large opportunities that we expect to finalize a big one and we expect them to kind of maybe come in Q3. But no, generally, I think it’s in line with our expectations. Maybe one or two orders were pushed out, but generally we weren’t able to close the majority of the of the orders that we have targeted.
Ravi Mehta
And any color on the mix of order intake vis a vis last couple of quarters because I thought the non ge was adding a lot to the order intake and order book. So just some color around that.
Tarak Patel
Yes it is. Definitely in India, I think GL order intake has actually improved this quarter significantly. So we have booked good glass line orders, which obviously means that for the next half of the year, we will have a pretty strong backlog. The nontech or the non glass line order in the especially heavy engineering mixing law have done exceedingly well. They have more than a year of backlog, I would think in most cases. So those are the areas definitely where some of the shortfall has been made up, right? So we expect that the A T business will grow double digit this year as well. They’re completely full up. And we are now also trying to extend and see if there’s any more kind of opportunities in that space that we can kind of you know, work for.
Ravi Mehta
Yeah. Good luck. Thank you.
Operator
Thank you. The next follow-up question is from the line of Sagar Shah from Spark Capital. Please go ahead.
Sagar Shah
Okay. Thank you for again giving me the opportunity. My first question was related to the India business. Just a follow up from the earlier participant’s question. So in this year, also, we love the group that we are anticipating would be largely domestic based. As you just highlighted, the heavy engineering business will grow in double digits of the glass lining business is showing production. So the as far as India business is concerned.
So the the the contribution, can we see at least higher margins going forward in H2 as compared to what we have clocked around 11% to 11.5% this in this H1. So is the, as the domestic business shows traction and the domestic business is a margin equity business for GM. And as far as you have guided before, so can we expect a higher margins of in two because of the domestic business coming up?
And secondly, in the next two years of what I wanted to ask, as far as the global business is concerned, You were about to hire an in international mixing business head also. So going ahead, I wanted the some sort of a more granular outlook on industrial mixing business. And how do you perceive now when the actually the global economy recovers in the likes of U us China actually, if they recover in F 26 and 27. So how do we see that business growing? Because as far as your numbers say it’s not growing right now, but I wanted the outlook going, right. So these are my two final questions.
Aseem Joshi
Okay. So I’ll take the domestic question. So we have indicated that this is going to be a flat year. And that’s how we anticipate. We continue to anticipate this year will be as far as the breakup is concerned, you know, last line because it serves the agrichemical and spec chem. And for industry it has been slow. We are, we are happy to see a reasonably good order intake last quarter in last line.
But of course, you know, there’s still some more time to go before the business returns to sort of the strong performance. We saw a couple of years ago that GAAP has been made up by a non glass line business. And, you know, that’s a part of our strategy of the equos. So the heavy engineering business is growing double digit as well as, you know, good growth in some of our other non last line businesses like filtration, drying, mixing and, and all as well as our systems.
So, but overall, the net effect of this is a slight issue as far as margins are concerned. We focus on our costs and I think those will help us improve to some extent. But, you know, it’ll be a while before we return to the, you know, the, you know, 17% to 18% of member that we were performing at a couple of years back. So we are well on our way. And as we mentioned, we’ve taken on a big digita improvement projects in India and I think that should pay off for us next year. And as far as the global mixing is concerned perhaps Thomas.
Tarak Patel
I’ll just maybe add something here on the mixing. We, yes. So you’re right. We have hired a head of mixing who’s been now with us for nearly six months. Last week we had the entire mixing group from across geographies. The Canadians, the Indians and the French sitting in the room 26 of them, defining their strategy and building their plan for the next three years in terms of both the go to market strategy, their projection as well as the investments that are required. That’s something that we will be discussing in the next few weeks. And we should be able to have a clear idea in terms of growth areas, geographies, industries that we will be catering to and maybe during the next board meeting, we can probably add the next investor call and earnings presentation. We can include maybe some kind of color or slide on the mixing. So bear with us for a few more months and we’ll come back to you on that.
Sagar Shah
Okay. Sure. Thank you, sir. All the best. Thank you.
Tarak Patel
Thank you.
Operator
Thank you. [Operator Instructions] The next follow-up question is from the line of Ganesh Ram from Unifi Capital. Please go ahead.
Ganeshram Rajagopalan
Thank you. I think it’s contextual to bring the job. I’m going to ask one a few on the near term and few on the longer term from here. Right? So just on the near term, when we talk about the competitive pressures that you’re facing, can you tell us how does this sort of shape in the conversations you have with clients? Right. These are products that safety and quality matter. So it why is there a pricing pressure? Right. And what is our wallet share typically in our customers? And are we seeing any protection or erosion in that sense because of this competitive pressure? That’s just the first part of it, please.
Tarak Patel
Yeah. So I think at the end of the day, the glass line business, you know, obviously there is technology, there’s always a glass lining is something that can kind of break off or chip off very easily. So life of equipment becomes very, very you know, important. Removing these large reactors from chemical plants is not so easy for repair or to send back to the vendors. So, you know, that’s a hassle as well. So quality is definitely important, but you do must keep in price that indian client or generally clients around the world, we usually have procurement departments who have the ability to get maybe multiple quotations, right?
So there will always be competition. The internal view might be that, you know, GM M Ford is the preferred vendor but they cannot be a very large price. GAAP, I cannot be at 100 somebody else is going to be at 75 or 50 right? The GAAP should be a little bit smaller. And you know, so that’s something that is part and parcel of the Indian market, generally the glo the global Glass Line market as well. So there’s always going to be competitive pressure, but there are customers who clearly have defined that when it comes to glass line, they will buy it from us because they used it and they’ve seen the quality difference between us and the other vendors, right. In some other cases for not so large customers, not so so particular customers, people might try other equipment.
You know, one off there could be, somebody comes in and buys something, but they would realize after a few years that yes, the equipment did not work as well or did not have the same life as maybe a GM M partner. So then it takes a couple of years, but then those customers will come back to us, right? But pricing is important and you know, the mindset, you know, people want to save money today but they don’t really look at the total cost, right? Because there’s cost of service got a replacement and the cost of removal. So it’s a little bit of short sightedness.
But at the end of the day, I think we clearly communicate to our customers that if you buy our equipment, you’re definitely getting a longer life versus a competitives equipment. Right? How much do they want to pay for it? That’s something that keeps changing and it changes between customer industry and regions as well. Right. But that’s normal. I think competitive landscape across most industries where there will always be a number two and number three. And you can’t be completely off. Right.
Unfortunately, we’re not in a business like NVIDIA and we can charge, you know, because we are the only supplier, but there are other suppliers and unfortunately there is competition and we have to deal with it. We have to get better in terms of convincing the customer that our is better and why they should pay a little bit more for it. Right? I think that is more important for us.
Ganeshram Rajagopalan
Understood, that’s very helpful. So internally, do you have any estimate of how your market share has tracked or your wallet share has tracked over the last few years?
Tarak Patel
Sorry, I didn’t get that last question. Can you repeat, please?
Ganeshram Rajagopalan
No. So I was asking, I just had answer and I was asking if you have an internal estimate as to how much your market share and vol share has evolved over the last few years.
Tarak Patel
So I think that the wallet share in our key accounts has definitely grown. We are also currently working on rebooted a key account management process where we will kind of have multiple touch points. But our key customers continue to buy. We continue to discuss, we talk about process technology, all that kind of stuff, right?
So wallet share in our key customers is growing and like, like I spoke about earlier, cross selling has become an important part because we have multiple products that go into the same customer, the same industry, which obviously means that when a customer is sitting with one of our sales people, he should be spoken to about all our products and not only one, right? So the idea to grow wallet share is a key strategy that we’ve had. And I’m sure that over the last maybe 56 years, if you look at the our wallet share in the key customer account, it would have grown significantly.
Ganeshram Rajagopalan
Understood, understood and just going on a tangent here. But what I’m asking is from where we are right now, right? Are there any pockets that concern you or do you think any incremental risk could build up? And then on the existing order book that we have, what’s the timeline for execution right ballpark?
Tarak Patel
Yeah, I would say that, you know, we are in a situation where, you know, obviously stuff out there. I think we are confident that the strategies and the work that we’re putting in now will have a positive impact at a point when the market also turns in the meantime, I think it’s important that as management, we realized that we had a lot of focus one on glass line. If you look our numbers maybe 10 years ago or eight years ago, you would see 90% of our revenues coming from glass line that has reduced significantly now and again, like I said, industry focus, right. We switched from chemical and Pharma and we are now in a much wider industry and that’s why today we can say that we will be flat even though there’s been a big slowdown in black line and in chemical and Pharma, right, because these other industries are making up for the short term.
I’ll be, I mean, at the bottom of the cycle, we probably are at the bottom of the cycle. How long is this bottom going to continue is probably a little bit longer, right? I don’t see the green shoots yet. I do see see some talk happening in terms of new investment coming in. Like I said in the pharmaceutical industry, we do see positivity, but chemical and agrochemical in particular seem to be a little bit more time before we see a complete turnaround, right? If you also, I’m sure you follow a lot of the chemical and agrochemical companies, many of them are now also not clear in terms of their you know, order intake, visibility and guidance as well, right?
So from that perspective, we are also kind of, you know, flying a little bit blind because we expect them to kind of know before it kind of translates into order for us. But we have to keep working on our internal cost structure, which we’re doing. And at the same time, look at opportunities which are not in chemical and pharma, which we’re trying to do. Right? So I think from that perspective, I think we are kind of, I’m confident that the work that has gone in will, will give results.
Timing is obviously something that, you know, obviously I can’t tell you exactly. Is it like six months, three months, nine months, you know, that’s something that obviously we will all have to take that journey, but it doesn’t look like it’s going to turn tomorrow. It’s going to be at least a couple of quarters before we see some traction, especially in agrochem. But by then hopefully, we’ve also diversified and we bring in orders from other sources which is making up for some of the short.
Ganeshram Rajagopalan
Understood and, and just that for the question on the order backlog, like how long would it take for us to execute this backlog?
Tarak Patel
So most of the stuff will go out this calendar year, there would be some spill over, but generally because we have capacity available today, We will definitely at least from an India perspective. Most of the stuff will go internationally. There are some large projects in the systems business which will obviously take a bit longer to execute because that’s the nature of that business.
But in India, about 90% of the backlog to be shipped out this quarter and we still have room to book more. So the stuff that gets booked now up until maybe November, December and that can still get shipped out this year, right? So there is that and plus services. So keep in mind that services will always be on top of this paypa mandate services will be on top of this and this comes in as a last minute, right? So it’s not something that gets built into the backlog.
Aseem Joshi
Especially relevant for the international business because there’s a significant portion of it.
Ganeshram Rajagopalan
Understood, understood, understood. And and then the last question, so please on the longer term.
Tarak Patel
Maybe you better place to tell us about the chemical sector, right? Because one of the things that we always also kind of ask investors and analysts, what are you hearing, hearing from customers and your investing companies from the chemical sector, right? Is there some light at the end of the tunnel or not? And I think maybe you probably would have a very similar view like I did, right?
Ganeshram Rajagopalan
Yeah, yeah, I mean, we can, I can try to connect with you off line and we can have a chat about that. And and another the last question I have, right? And you touched on it briefly in the last last answer, but the three year plan, right? So we’re expecting to see it, I think next quarter as as far as you said. But how is it shaping up and how do you see the company positioned, you know, 2,627. But this cycle, right? I think we’re diversifying as a business. You’re getting into different kinds of products. We’re in different geographies, right? So if this engine is running at full capacity, what is the potential that it could deliver? And how long do you think it’s going to take for us to get there and what’s being done to get us there?
Tarak Patel
Yeah, so many questions in one, I think give us some time, I think we have been planning of, we are working on a strategic plan. It’s dynamic right now because, you know, obviously things are changing quickly. We are also having some ideas in terms of diversification and things like that. I think from a numbers perspective, you know, we had built some numbers in up to 2027. We are reviewing those numbers, we have a strategy meeting that’s planned early next year as well. So give us some time on this. I think right now, we are working the most important stuff for us today is to be aggressive in the market to get orders in where we can cut costs.
Like the team mentioned, we’re doing a transformation project here in India, like Thomas has mentioned, we are looking at Poland and some kind of rationalizing rationalization and also internationally. So that work is ongoing. But on the numbers and the outlook, I think that will require some more time because it’s a very dynamic situation, uncertain situation. We will need a little bit more time on that. Maybe early next year is, you know, probably when we will probably have some more clarity on this.
Ganeshram Rajagopalan
Understood and, and, and the new hire management hires that you’ve done that. I saw a press release briefly before I joined the call. So how does that sort of fit into this strategy or is this more of an ongoing replacement?
Tarak Patel
No, so I think there is a definitely a new mindset, new perception that has been brought into our management team. I think we made a couple of important hires here in India ahead of manufacturing and head of sales. The project that is being run right now has seen a lot of traction because because of the new perspective that we brought in, we made some hires internationally as well. So that’s ongoing. We are strengthening areas, we recently hired a process ahead as well. So we have, you know, we’re trying to build process as a technology that we will sell along with our equipment.
So that’s becoming a part of our you know, our strategy. We are also opening up an engineering. We have already opened up an engineering center here in India where our international colleagues have hired engineers as well to do work for them for the international business. So all these things are ongoing and we expect them to kind of really help us, you know, at least during uncertain times, you know, keep the cost under control. But at the same time, if the market would return and the business are improving, then you will see significant and quicker improvement in terms of both revenue and market.
Ganeshram Rajagopalan
Thank you so much.
Operator
The last follow-up question is from the line of Rohit Ohri from Progressive Share PMS. Please go ahead.
Rohit Ohri
Thank you. So, my last two questions, is there being any spillover or is there any big order or some sort of a thing that has been not been shipped? And probably you see that happening in the second half?
Aseem Joshi
No, not, not really. I think most of the stuff that we have will be shipped out. And…
Manish Poddar
Sorry. Go ahead.
Aseem Joshi
Yeah, so really nothing, nothing something which is out of the blue and all that. So nothing concerning it’s absolutely routine business. So, you know, you are their capital project.
Manish Poddar
So you would expect 1,520 days, one month here and there coming out from the customer requirements as the case, maybe because they may be needing the equipment earlier or later versus the original plan. So that’s absolutely normal. So you think things are on track for that?
Rohit Ohri
Okay. So Manish, what gives us the confidence that we will probably try to reach the revenue turnover of last year. And another thing is that we see there’s a provision for inventory in the consolidated cash flow of some 13.7 cross if you can share, what exactly is that?
Manish Poddar
Sure. So the confidence that it gives us on the edge to number is basically a higher backlog versus when we started the year. So from that perspective, we expect that deliveries to happen. And as we see ourselves, the factories are more filled up, you know, from action, from an action perspective, if the shop load is more filled up. So therefore, as we speak at November, December, January, February, we should see that much more shipment going out. That would be that much more realizations and cash collections and all that.
So that’s perfectly, you know, it’s it’s an execution of the, of the, of the, of the backlog that comes into play as regarding inventory provision. So it is basically a compliance of the sop we have a restric policy with regard to if some product is not being used for a particular time slot, we have to make a provision, but, you know, it’s a metal. So it does not have a, does not really have a shelf life and all that. So as we use those metals and specifically, for those piece case is coming up, most of that does routinely come back into the field.
Rohit Ohri
Are these some strategic metals or something of high quality that we’re making provisions for?
Manish Poddar
No, no, nothing like that. Nothing like it’s just that you buy a particular product and you were left over with some inventory and get you know, utilize the world.
Aseem Joshi
And Rohit, I just want to ask such on one point. I think you asked a question about, one of your colleagues had asked a question about the living lab earlier, going to add color to that. So internally we call it as the CP Inc L project. So I apologize for not addressing it. Yes, we are involved in that project. NCL of India, of course, and actually can do lab and CP I as a center for process the UK. We have a collaboration with them along with leading innovative companies from the chemical Space.
And the idea is to set up the lab in NCL with an emphasis on figuring out ways to decarbonize the industry, the chemical companies, pharmaceutical companies and amongst the equipment providers, we’re the only one because they wanted in industry leaders to participate in that. We are participating actively in that. And you know, as, as we develop new solutions, of course, we’ll bring them, you know, the NTL will be announcing that.
Rohit Ohri
That’s great, Aseem. I think last question from my end Manish, if it is possible to kind of share the pyramid of the customer sizing in terms of the deals in terms of INR million. And Tara did mention some developments in Poland. Are you looking at consolidating some of the businesses and bringing everything in Poland? Is that something that you’re looking at?
Aseem Joshi
Poland becomes an opportunity? We already have India as a low cost sourcing hub, but we also wanted to have something in Europe because customers, some of the customers in Europe only accept European made equipment. So Poland is a nice option for us. Like I mentioned to you, we made the first set of two equipment for Mava Atri facility and the FA T was actually done a couple of days ago and the results were quite encouraging. So Poland becomes a important kind of strategic idea for us. And because it’s in eastern Europe, the cost structure there is significantly lower than Western Europe, right?
So I think that it’s good. Plus they have young engineers, young welders, both English speaking and available. So getting people there is also not so difficult. And that area where we are focused, you know, where we have our facilities is already an area where there’s a lot of multinational companies like Boeing and aircraft manufacturing and stuff. So engineers are available quite easily weather and the quality levels there are also quite good, right? So we don’t have that learning curve that we did have in the past with India. So Poland gives us an option, a very good option. And Poland is a strategy that we would hope to kind of build on over the next few years.
Manish Poddar
And I think on your previous question, with regard to the first part of the question, with regard to the customer mix that would keep changing as the KEX plans, you know, you know, practically ends up changing every year for us simply simply because of the KIC cycle that they the respective companies would have.
Tarak Patel
Yeah, and I think this year, I would like to add that the ticket sizes for heavy engineering are very different from last night. And last time project would be 56 rows. A heavy engineering project could be 50 grows 100 crows, right? So depends on what it is. The product makes also the size and the ticket size keeps changing. And like Manish said, the, if you look at the last three years, you would have a change in the TOP10 customers because projects and investments don’t continue. You know, every year. So one guy will put it up and maybe stop for two years. So that keeps changing.
Rohit Ohri
Okay. Thank you for answering my questions. The point on Poland was quite encouraging. Hopefully we get a better margins going forward in the next 23 years. Thank you for answering. Thanks a lot.
Tarak Patel
Thank you very much.
Operator
Thank you, ladies and gentlemen, we take this as the last question I now hand the conference over to the management from GMM Pfaudler Limited for closing comments.
Dhaval Rajput
Thank you, Neha. Thank you everyone for joining us today. It was a pleasure interacting with you and we look forward to many such interactions during the course of the year. Take care and see you soon.
Operator
[Operator Closing Remarks]