GMM Pfaudler Limited (GMMPFAUDLR) Q2 FY23 Earnings Concall Transcript

GMM Pfaudler Limited (NSE:GMMPFAUDLR) Q2 FY23 Earnings Concall dated Nov. 04, 2022

Corporate Participants:

Priyanka Daga — Deputy General Manager, Strategic Finance

Tarak Patel — Managing Director

Manish Poddar — Chief Financial Officer India Business

Thomas Kehl — Chief Executive Officer International Business

Alexander Pompner — Chief Financial Officer International Business

Aseem Joshi — Chief Executive Officer India Business

Analysts:

Rantala Subramanyam — Axis Capital — Analyst

Utsav Mehta — Edelweiss AMC — Analyst

Tanaya — Marcellus Investment Managers — Analyst

Jason Soans — Ashika Stock Broking — Analyst

Saket Reddy — lane Enterprises — Analyst

Venkatesh Balasubramaniam — Axis Capital — Analyst

Harshal — EU Han Fund — Analyst

Rohit — Progressive Shares — Analyst

Ramesh Achar — Individual Investor — Analyst

Presentation:

Operator

Good day, ladies and gentlemen, and welcome to the Q2 and H1 FY ’23 Earnings Conference Call of GMMPFUDLR Limited. The call will begin shortly. Once you have been connected to the earnings conference call of GMMPFAUDLR Limited. The call will begin shortly. Good day, ladies and gentlemen, and welcome to the Q2 and H1 FY ’20 Earnings Conference Call of GMM Forde Limited [Operator Instructions] [Operator Instructions]

I now hand the conference over to Ms. Priyanka Daga from GMM Forde Limited. Thank you, and over to you, ma’am.

Priyanka Daga — Deputy General Manager, Strategic Finance

Thank you, Michel. Good evening, ladies and gentlemen. A very warm welcome to all of you into the Q2 FY ’23 Earnings Call of GMM Forler Limited. The earnings representation was uploaded on the stock exchange last evening and is also available on our website. I hope all had a chance to go through it. From the management, we have with us our Managing Director, Mr. Tarak our International Business, Mr. Thomas Gill; our CEO of India business, Mr. Asim Joshi, our CFO of International Business, Mr. Alexander Pane; and IFO of business, Mr. Manish Put.

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 in which we have uploaded on the stock exchange and on our website, including our call discussions that will happen now contains or may have certain forward-looking statements concerning our business prospects and profitability, which are subject to several risks and [Indecipherable], and the actual results could materially differ from those in such forward-looking statements.

I will now hand over the call to Mr. Patel to provide an overview of the performance. Over to you, Garo.

Tarak Patel — Managing Director

Thank you, Priyanka, and good afternoon to everybody. We are happy to report a strong quarter with a revenue growth of close to 21% year-on-year. Our EBITDA margins have also improved 0.2 [Indecipherable] and our order intake has also increased 6% year-on-year. As for the order backlog, it currently at INR2,119 crores, which to visibility for the next six to nine months as well. We continue to see a lot of traction both in the chemical and pharmaceutical space around the world, and we believe that both the international business and the India business will continue to do well, which will be driven by these two main industries.

The international business can do well this quarter, both in terms of revenue and profitability. Our European business, in spite of the higher energy cost and the cost reduction measures that we have taken has done quite well. And we believe that looking into the future, the European business will kind of stabilize with energy prices now stabilizing and also kind of going down. We’ve also completed the acquisition of Hydro Air Research Italia. This is a company that we had acquired a few months ago. that acquisition is now complete.

This company deals in membrane separation system and opened up new industry trucks as well. We’ve also completed the acquisition of the balance 46% in GM International, as many of you know, GM was the subsidiary of the company and now the subsidy of GM and order, limited with 100% of the profits accruing from Q3 onwards. We also have reaffirmed our credit rating both by Crystal and ICRA, AA- and A1+, respectively. We also completed recently our first Investor/Analyst Day, which was held in September 2022.

Now to give you a little bit more color on the numbers, both consolidated and the stand-alone, I would like to invite Manish Podar, our CFO of the India business, to take you through the numbers. Manish?

Manish Poddar — Chief Financial Officer India Business

Thank you, Tarek. Good evening, everyone. So to start with the consolidated balance sheet. We see NCI, the noncontrolling interest has netted. That’s because we just acquired the balance 46% of deferral international. So going forward, you will see 100% of the profits accruing to us. Similarly, the debt has increased primarily on account of the debt that we’re acquiring this stake. Pension liabilities have gone down substantially on account of rising interest rates.

I mean, therefore, the present value of Teledesic liabilities going down. Moving on to the good lands, there have been some addition on account of the hydro investment that we made in Italy. Similarly, talking about a few ratios. The net debt is 767 in minus INR30 crores, so you say INR467 crores. And so net debt to equity stands at 0.7%. EBITDA to net debt to EBITDA stands at 1.1 %. Moving on to capital, there’s a slight increase in the working capital. Some debtors need to be recovered in the stand-alone business for India.

There have been some increases in the working capital overall, primarily on account of heavy engineering, taking larger share of the business. And then moving on to the cash flow, so there has been business cash generation of INR231 crores and investment of INR251 crores on the working capital and the capex and the balance has been primarily on account of repayments of the debt and the interest thereon. Moving on to divided the EPS. We have the annualized EPS return out to be something like INR50 if you analyze it for the H1 results, and the ROE and ROCE have also improved substantially to 29.2% and 33%.

That’s it for me. Bianca, you want to take it for?

Priyanka Daga — Deputy General Manager, Strategic Finance

Thank you, Manish. Michel, we can now open the line for questions.

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 Rantala Subramanyam from Axis Capital. Plese go ahead.

Rantala Subramanyam — Axis Capital — Analyst

Yeah, thanks for the opportunity. My first question is to Manish more like a bookkeeping question. I believe that if you actually look at the numbers, second quarter numbers, your EBITDA is close to around INR119 crores for the consolidated entity. The stand-alone entity has done INR42 crores and Mawag and Forler Inc. has done INR70 crores. So 42 and 70 adds up to 12.

Aseem Joshi — Chief Executive Officer India Business

And there is another positive so is there anything else in the company that we are missing here? Because ideally, if you look at the numbers last year, usually, when you added the numbers which you gave in your stand-alone EBITDA and your international EBITDA, you had to actually do some elimination of INR6 crores or INR7 crores to get the consolidated EBITDA. But since the first quarter of the current year, it’s slightly different. When you add up your stand-alone numbers which you put in your PPT and the international numbers, you can actually add a small number to get to the consolidated EBITDA. So, can you please explain this?

Tarak Patel — Managing Director

Yes. Good catch. Yes, that’s true. That is primarily on account of — it’s a pure accounting concept. So, what happens is when you expose something from India to Germany, so when you export from India to, say, Germany or U.S. in this case, so you accrue to the profits in the stand-alone business in earlier quarters. However, in the console, you get the profit for the entire profits of stand-alone and international business once you sell it out from the group which happened on Q2.

So therefore, the shipments for which India shipped before Q2 and international business then moved out to the ultimate customer in Q2, the entire profits of stand-alone and console accrued to this. So that’s where the INR7 crores of positive is there. You may see this small number positive or negative, depending upon which one, which quarter was higher or lower going forward as well.

Rantala Subramanyam — Axis Capital — Analyst

Okay. Understood. That is very clear. Now, I also remember that Mr. Patel had given some kind of color after the first quarter results, where we said that as of now, you are executing your orders with high-cost inventory of steel and you are expecting that given steel prices have come down, third, second half of the year, your margin should be better. Now you’ve already got to 15.2% consolidated margins in the second quarter.

So, is it reasonable to assume that you can still margins can go up even further from here? In the second half? And would this be more led by the, what exactly do you expect happens to the stand-alone numbers because which have contracted quite sharply on a Y-o-Y basis in the first half. So, are you expecting that to improve or you’re expecting more of an improvement in the international part of the business?

Tarak Patel — Managing Director

Sure. So, when so, I think Y-o-Y comparison for stand-alone maybe a bit of an aberration similarly because that was first two quarters of the year FY ’22, where we got the risk, but we’re still consuming the old plates. And now exactly that’s, the opposite has happened in these two quarters of this current financial year.

And that’s why you see that huge difference between the 25% and the 16.5%, 17% sort of a number. We expect this to get normalized in second half of the year. So, this 16.5%, 17% should now Q3 and Q4, we should see one or maybe improvement there on a stand-alone basis. International business may has already enhanced its performance to something like 13%. So, we expect something like 12%, 13% to continue for tend as well.

Rantala Subramanyam — Axis Capital — Analyst

Okay. Okay. Just one last question, if I may. What would be a reasonable effective tax rate for the full year for the consolidated entity?

Tarak Patel — Managing Director

Yes. So effective tax being something like 27%. If you’re alluding to this quarter per se, so there has been a deferred tax back and there’s a much lower percentage, but that’s not a true reflection on a sustained basis or on a sustained basis, something like 27% of an effective tax rate is.

Rantala Subramanyam — Axis Capital — Analyst

Okay. Thanks for those inputs, I’ll get back in the queue.

Operator

Thank you. We have the next question from the line of Utsav Mehta from Edelweiss AMC.

Utsav Mehta — Edelweiss AMC — Analyst

Hi team. Thanks for taking my questions. I’ll just continue on the previous question. So does that mean that from what we reported in this quarter, the international margins should sort of normalize back towards 12 that is India will pick up. Is that correct? Is my understanding correct?

Tarak Patel — Managing Director

Yes, that’s correct. That international business is already I think considerably in recent past from 10%.

Utsav Mehta — Edelweiss AMC — Analyst

No, I asked because it’s at 15% right now. This quarter was, I think, around 15-ish — sorry, not 15.

Tarak Patel — Managing Director

15 is the consol number? 15% is the consol number, international at 13%. India is at 16.5%. So, India, you can expect 16.5% to go up and PFI or the international business primarily you may expect to sustain.

Utsav Mehta — Edelweiss AMC — Analyst

Okay. Sorry, I get my confusion. I was adding back the INR7 crores. Sorry, I was adding that

Tarak Patel — Managing Director

No, you’re right. So, what has also happened yes, this INR7 crores will give you that differential

Utsav Mehta — Edelweiss AMC — Analyst

Okay. Sorry, you were saying something?

Tarak Patel — Managing Director

No. So I say, yes, that INR70 crores is going to give you the differential as well between the numbers, as the Indian business [Indecipherable]

Utsav Mehta — Edelweiss AMC — Analyst

That may or may not repeat in the coming quarters. Basically, that’s.

Tarak Patel — Managing Director

Yes. yes. On the steady state. Yes, right.

Utsav Mehta — Edelweiss AMC — Analyst

Okay. Fair enough. Tarek, I just wanted to check. So it’s been four quarters running the order book on an absolute business sales, it’s some INR2,100-odd crores. If you could just provide some flavor in terms of where do you see this number go? And do you believe that what does it take for this to go to INR230 crores, INR240 crores, INR250 crores. Is there enough in the market for this number to continue to go up?

Tarak Patel — Managing Director

Right. So, I think on the order front, I think like I mentioned to you, I think we already had quite a sweet spot for the international business. I think having any more backlog means longer the delivery time, so that would not put the right place to be at. But I think where we could probably grow order intake is in India. I’ve spoken about this in the last few conference calls where I’ve said that we have been very selective in terms of glass planning business to a percent Now to customers when the pricing did not meet our requirement.

And having said that, we were also waiting for some of the larger, the projects to come through from keep clients so that when those large projects do materialize, we have enough of the capacity for that. We’ve just started seeing a big, large order intake happening in the glass line business here in India. So, I think looking forward, you will see the India backlog increase, which is right now currently at maybe even for the Gatan business around four months but being around four to six months or just the right the sweet spot. So, I think we still have some capacity here in India to increase order intake. And I think the glass line area here in India is going to be a big driver for us in the next few quarters.

Utsav Mehta — Edelweiss AMC — Analyst

And if I’m not mistaken, the current furnace now should, we should be able to take on more in terms of the amount of orders we can do, correct?

Tarak Patel — Managing Director

Right. So, this, I was actually going to say this in my opening remarks and it completely slipped my mind. But yes, we have now commissioned the 80,000 retail for it, which is India is the biggest furnace and obviously, will cater to super large vessels, not only for India but also for the international business. We’ve actually received an order for 380,000-liter storage tanks that’s already in our books and the fabrication has started. We are expecting another five numbers, 80,000 liters. So as soon as this, actually the timing has been just the perfect as soon as this furnace came online, these orders have now come in. So yes, that will also help us improve both our shipment and the number of EUs that we have that we can manufacture here in India.

Rantala Subramanyam — Axis Capital — Analyst

Fantastic. And just one last question. apart from receivables in India have also noticed other financial assets sort of increase by INR50 crores over the last six months. Typically, this tends to be unbilled revenue, but I just wanted to clarify what this number is.

Tarak Patel — Managing Director

Yes, you’re ready. Yes, you’re right. Can you hear me, sir?

Utsav Mehta — Edelweiss AMC — Analyst

Yes, I can hear you. I just wanted to ask the reason why receivables and unbilled revenue both have gone up.

Tarak Patel — Managing Director

So receivables, of course, have gone up primarily. There’s some collection that we need to make and we expect this to improve in the coming quarter. That is one. But you see, you’re right, the unbilled revenues have also scaled up in the business, both in India and international business.

Utsav Mehta — Edelweiss AMC — Analyst

And this is just to do with the scale at which we are operating or because in terms of number of days expense.

Tarak Patel — Managing Director

I think there’s some INR90 crores of PUC addition that has happened this in this H1. And we expect this to maybe like 30, 40 should improve over in H2, but that beyond that should remain in the business

Utsav Mehta — Edelweiss AMC — Analyst

Okay. Okay. Great. Thank you so much for your time and best of luck.

Tarak Patel — Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Tanaya [Phonetic] from Marcellus Investment Managers. Please go ahead.

Tanaya — Marcellus Investment Managers — Analyst

Am I audible?

Tarak Patel — Managing Director

Yes, go is ahead.

Tanaya — Marcellus Investment Managers — Analyst

Okay. So a strong set of numbers. Just a couple of quick questions. So if I look at your stand-alone business, other expenses, just above the EBITDA, they have gone up by around INR20 crores on a yearly basis. Could you kind of provide some color on that?

Tarak Patel — Managing Director

Can you please repeat which number are you talking to? Because INR20 crores of other expenses has increased. Passes have increased by INR two crores. primarily on account of power and fuel, if you referred to vis-a-vis last year Y-o-Y. And also, the store space primarily because in heavy engineering drug in the combination of changes is taking an impact. And also, there’s some freight outputs because we had a larger export shipment. So, freight out would, particularly in this H1 has or Q2 actually has been also higher.

Tanaya — Marcellus Investment Managers — Analyst

Okay. And sir, this pension liabilities reduction on the control level that is purely because of urging up. You haven’t funded or there’s no cash outflow to kind of get this number down. Am I right?

Tarak Patel — Managing Director

Right. So this is purely on account of the interest results. Thank you.

Operator

We have the next question from the line of Jason Soans from Ashika Stock Broking.

Jason Soans — Ashika Stock Broking — Analyst

Sir, I just wanted. So if you could just give us some color on the demand outlook for GLE overall. So you had earlier in the Analyst Day as well as spoken about the slowdown in the Pharma segment in terms of demand order intake in terms of order intake. So just a brief outlook, I would want, especially in amid rising costs, inflationary environment as well as whatever is happening in Europe. Just wanted to understand what’s the demand kind of outlook for pharma and chemical both from the end user segments.

Tarak Patel — Managing Director

Jason, [Indecipherable]. I take the question.

Operator

So. Sir, I’m sorry to interrupt you sounding distant. Can you please come closer and speak?

Tarak Patel — Managing Director

Okay. Is this better?

Operator

Yes, sir. Please proceed.

Tarak Patel — Managing Director

Okay. Yes. So as far as I’ll start with India and maybe Thomas can add on the international business. As far as India is concerned, Tarek mentioned earlier, we’ve been careful about selecting the right set of orders. So we’ve made sure that we fill our factory with the kind of orders that we like. Now in recent times, we have started seeing a pickup of some of the large projects that we saw on the horizon, and they’re starting to move forward and in fact, one of the big orders that Taras talked about, the ATL is one such project.

There are several more that are on the horizon, and we feel we are competitively placed on that. So, I think from a demand perspective, especially for larger projects, we are starting to see reasonably good movement. Of course, some of the smaller projects, the run rate business that still, we’re still, it’s sort of still at a sluggish pace. Such projects are picking up, right? And Thomas, would you like to address for the international business?

Operator

Mr. Thomas, can you hear us?

Thomas Kehl — Chief Executive Officer International Business

So maybe I’ll kind of take that. So Jason, you’re right. So like Assi mentioned, Pharma has been a bit slow. But we have seen some kind of traction mainly in the PLI scheme that have been launched, especially in Penicillin here in India. So, three large orders for Penicillin manufacturing implementation that we’ve got. But pharma has been much, much lower. We see the main drivers for us have been the chemical industry both agro and specialty chem and the large project that we speak about are also kind of for the specialty chemical kind of large projects, right?

Also, what we’ve done now recently is we supplied the first lot of our stock and stale vessels to Europe. So, 24 equipment have been ordered in India, which will be stock and sold in the European facility, and will be sold when our customers have a breakdown and need immediate need for a replacement. So that’s worked out quite well. But generally, across the board, I think our chemicals will account for nearly 60% of our total glass line sales. and the pharmaceutic will account for nearly about 25% to 30%.

Jason Soans — Ashika Stock Broking — Analyst

Yes. Sure, sir. And one question what I would want to ask you is, I mean, we’re seeing pretty good traction in the grass business. So in terms of revenue growth and margin growth also, which is around 9%, 10% has now moved up to 2%, 2.5%. And this is in the face of an energy crisis already growing in Europe. So just wanted to know what you are doing different so that to gain such a positive performance. What are you doing differently, yeah?

Thomas Kehl — Chief Executive Officer International Business

Yes. So, I’ll maybe start off and then if my German colleagues are online, they can kind of just build on that, but we have taken some the measures. So in Germany itself, we have gone down to a 4-day work week. So, we actually have less number of hours. I mean there’s the same number of man hours being used, so they work longer hours, but one day is additionally the factories closed, which obviously helps us reduce our consumption of gas and energy. In terms of pricing also, we’ve kind of built in all these material and energy increases into our pricing.

And that’s also helped us. And therefore, that we’ve added new business, the small businesses through M&A, which are now showing a good amount of the turnaround and growth, and that’s also helping improve profitability. The last thing that’s also changed significantly is the services component because the services component because of the pandemic was in smaller, in terms of the price, the smaller. And now we see a lot of factories opening up and the services part of the business is actually growing. And as you would know, services is definitely more profitable than the other businesses, right? Thomas, Alex, if you’re on, if you want to speak maybe a little bit about the energy situation in Germany.

Alexander Pompner — Chief Financial Officer International Business

Yes. And this is Alex. I’m not fully sure if Thomas is in again. No, in fact, what you said, I could definitely acquisite, and with regard to the energy situation in Europe, I think finally, we face an increase already since end of last calendar year. It became really strange from February, March, April onwards. But nevertheless, we currently, we are even in this situation with this higher energy cost and able to increase the margin.

It’s partly due to the shift just that we have a higher share of service business — but nevertheless, we were also already before focusing on some margin improvement, and this now drops through. So it’s currently over contemplates that the energy cost increases. And now with looking forward, that the energy costs stabilize or even they reduced in the last weeks. So, we are confident that the outlook remains positive.

Jason Soans — Ashika Stock Broking — Analyst

Sure. Then just two more simple questions. Just wanted to know the ramp-up and what about the ramp-up in the Patwa facility. And now that your GM has taken over the remaining 46% stake and this is going to reflect from Q3. So, are we not going to see any noncontrolling interest? Just wanted to clarify.

Thomas Kehl — Chief Executive Officer International Business

Yes, exactly. So, I think currently, 46% is removed for noncontrolling and now you see 100% accrual from Q3 onwards.

Jason Soans — Ashika Stock Broking — Analyst

So we will not see any noncontrolling interest, right from Q2?

Thomas Kehl — Chief Executive Officer International Business

Yes, noncontrolling interest has been eliminated in September, as on 30th September as well. So, in the balance sheet and first October onwards the entire profits accrued to the reorganization.

Jason Soans — Ashika Stock Broking — Analyst

Right. Sure.

Thomas Kehl — Chief Executive Officer International Business

And You want to take up the.

Jason Soans — Ashika Stock Broking — Analyst

Yes.

Alexander Pompner — Chief Financial Officer International Business

Yes. And as far as Hathway is concerned, we’re very pleased with how the site has progressed. As you know, we have taken it over a little over 18 months ago, and since then the ramp-up has been really to our expectations. So, the site is now full. We’ve had a number of orders that have already been executed and shipped from there. We’ve, in fact, broken the record in some cases about the size of the equipment that’s been shipped. So overall, we’re very pleased with the way it is progressing.

Jason Soans — Ashika Stock Broking — Analyst

Sure. That’s all from my side. Thank you so much.

Operator

Thank you. Thank you. [Operator Instructions] We have the next question from the line of Saket Reddy from lane Enterprises.

Saket Reddy — lane Enterprises — Analyst

Hi. Congratulations on the good results. There’s one thing in the international balance sheet I, pension liabilities. Can you explain how is it treated in the P&L if it is react on the BN?

Tarak Patel — Managing Director

So start off and then maybe Alex can jump in. So typically, these are non-funded pension liabilities, primarily in Germany. And these are closed plans and no new employees are being added over the existing employees as approximately eight years. And the accounting treatment is basically the — as the interest rate rise as you would imagine, the present value of the future liability or and that gain accrues to the OCI, the other comprehensive income, and then the balance sheet movement happens.

Saket Reddy — lane Enterprises — Analyst

Do you want to add something —

Alexander Pompner — Chief Financial Officer International Business

Fully correct. In fact, what we see in the balance sheet is stuff that the assumption for the actual report and changes, and this is especially driven due to the change in the interest rates as Manish already mentioned, the participants, the number of participants will reduce over time just because they passed away. We — the plan is closed, and now we just have changes due to the interest rates from the cash perspective or the impact on the income statement or it’s no further impact.

Saket Reddy — lane Enterprises — Analyst

Okay. And now you’ve — I think in H1, you did around 11% margins in the international business. Any further impacts on the trajectory there? I want to do maybe mid-teens or how is it looking?

Alexander Pompner — Chief Financial Officer International Business

Yes. So I think the international business has already shown a strong recovery. I think both revenue growth has been significant and profit improvement as well. We are looking to fine-tune our product portfolio. There are definitely products that we need to bring up to the level in terms of profitability. We are working on those. We have put in a lot of effort over the last maybe a few years, and we believe that some of the things that we have done will start showing results in the next few quarters. So again, the focus area to really improve margins is to really focus on services and grow that part of the business. and then obviously, our non-glass line business, right?

Because that’s where we can really grow. We have small market share. We have the small products, which really can be global, can use the folder global network and we sold and we are seeing a good amount of growth that will come from there as well. But all in all, I think all the product lines have done well. We also now thanks to the new acquisitions we’ve made have access to new industries, right?

So I did speak about some of this in the past, but we’ve kind of sold products now to meet companies that make a plant-based meat, we sold products to the bio plastics. We’ve also made inroads in the metals and minerals in terms of also power. We’ve had a large order here in India. So all in all, I think in spite of the investment that’s going on in our core industry which is chemical and pharma, we are also trying to move into new industries that will help us kind of diversify and make sure that our growth is on track.

Saket Reddy — lane Enterprises — Analyst

Yes. And my last question on the services part. So if you look at your revenue breakup and also the order intake breakup in the stand-alone business, services is pretty low compared to international. So it’s in low single digits, low to mid-single digits, whereas the international business, it is around 30% or 40% if we look at revenue or order intake. So why is such a heavy divergence? [Indecipherable] enters the high-margin product?

Alexander Pompner — Chief Financial Officer International Business

Saket, you’re right. So this is definitely an area of focus for us. Historically, the service customer behavior in Europe and the U.S. has been different relative to India in terms of the kind of — the amount of service that they’ll expect from the OEM. Having said that, we recognize that single-digit service as a percent of our business is low, and that’s certainly an area of focus for us. In fact, just this quarter, we have made some changes to our organization and appointed a service leader in the India business, which is similar to how the international business also runs it.

And so I expect that with the focus that this individual will bring, we’ll start to see an improvement here. In fact, we’re already seeing it. And it’s really about the approach to our customers, the analysis of our installed base, our service offerings, the appropriate pricing, etc, all of those actions are now underway. So it’s certainly an area of opportunity for us, and we are working on it.

Saket Reddy — lane Enterprises — Analyst

Right. And just one last question on the shareholding. I think you’ve completed GMM international acquisition. So now how the shareholding structure look like? I think Patel family has 24% and the rest of promoters take would be with DBAG, is that correct?

Alexander Pompner — Chief Financial Officer International Business

Okay. To balance by 31% as of now and the balance is on the shareholding —

Saket Reddy — lane Enterprises — Analyst

[Indecipherable]

Alexander Pompner — Chief Financial Officer International Business

Family has increased our stake. We were around 22 point something. Now we are at 24.2% through the pref allotment that we recently did. So our stake has gone up. And the balance is with the public out of which I think 18% if I’m not mistaken, Priyanka, maybe you can correct if I’m wrong. He’s with SBI, and we have mutual funds about 5%, 6% and then obviously, all the other institutions and public.

Saket Reddy — lane Enterprises — Analyst

Right. And DBAG is committed to stay with you? Is that right?

Alexander Pompner — Chief Financial Officer International Business

Yes. So when we did this transaction, we have signed a contract and an agreement where they have a three year lock in, and they are committed to the business.

Saket Reddy — lane Enterprises — Analyst

Right. Yes. So that will be it from my side. So thank you and all the best. Thank you very much.

Operator

Thank you. We have a follow-up question from the line of Venkatesh Balasubramaniam from Axis Capital. Please go ahead.

Venkatesh Balasubramaniam — Axis Capital — Analyst

Yes, I had a couple of follow-up questions. Now if we if you just look at the India business of glass line equipment, and I actually look at the business of one of your largest competitors here, HL last court if you noticed over the last 1.5, two years, when you’ve been busy in consummating the quarter Inc. acquisition, actually Class Court has grown at a much faster pace than your glass line equipment in the India part.

So have you been losing market share in India? And is this a cause of concern? Because I also observed that actually glass coat on an average, that India business makes almost 400 basis points lower margins than you. So has your disk completed been cutting prices and picking up orders? And is this something that you worry about? This is the first question.

Tarak Patel — Managing Director

Yes. So let me address this. So look, I obviously can’t comment on other businesses performance. What I would say is we always are glass line is obviously our largest business, and this is an area that we have been a leader in and we intend to remain a leader in. As we outlined earlier, we are going to — we’ve always been careful about the orders that we use to fill our factory with, and we’ll continue to do that. So we are quite satisfied with the performance of our glass line business. Our hydrate factory is also now ramped up nicely. And so we have used our capacity to satisfy the right kind of customer needs, including some of the export orders that we have started to ramp up on.

Venkatesh Balasubramaniam — Axis Capital — Analyst

Okay. What exactly is your capacity in terms of equivalent units in India?

Alexander Pompner — Chief Financial Officer International Business

[Indecipherable]

Tarak Patel — Managing Director

Yes. With this new furnace that we have now commissioned, we should be up to about 2,900 to 3,000 EUs per year.

Venkatesh Balasubramaniam — Axis Capital — Analyst

Okay. And what kind of utilization are you currently at?

Tarak Patel — Managing Director

So I think in terms of utilization, I think both the Karamsad and Hadba facility are close to 80%, 90% utilization. Obviously, now with this new furnace that has just come into a obviously, that will drop. But yes, so we are at pretty much very high utilization across all our plants in terms of the gas and business, where we have very large backlogs.

Venkatesh Balasubramaniam — Axis Capital — Analyst

Now, just one last question from me. I think this question was asked. I just put it across in a slightly different way. Now obviously, the continent of Europe is under severe stress. I mean what with the war inflation energy prices going through the roof and the kind of news which we keep reading in terms of industries, a lot of industries shutting down things like that.

Now, are your customers basically in the chemical industries and the pharma industries, are they having any of these companies? Are they having stress? And if they are having, are under stress, how come it is not impacting your numbers? So, what exactly is the key driver for this very good growth? Because I think almost 39%, 40% of your consolidated numbers comes from Europe. So, some color on that would be very helpful.

Tarak Patel — Managing Director

Yes. So I think some of the news that we get here, obviously maybe gets blown up a little bit. And I think there’s also a lot of the fostering that happens. But on the ground, what we are seeing today is that customers are finalizing new orders. New factories are being set up. I’ll just to give you an example, I think one of our companies, the Swiss subsidiary is actually finalizing an order with maybe loans that I’m not mistaken, which is going to be delivered 2.5 years from now, right?

So, people have that lot of visibility. People don’t even need it immediately and they’re willing to wait. But the order book that we have gives us a lot of the comfort, right? So that the next six months, nine months in different regions, we already have orders on hand, and our focus really shifts to the execution, right? Are we seeing anything on the ground that tells us that things are going to slow down, things are not looking at right I don’t think we’re seeing any of that right now.

The opportunity levels, the interest levels, the inquiry do continue to flow in are of pretty much the same level. The only thing that we probably see now is that the is to finalize something is slightly longer than earlier. People may take a few months more. That’s really the only the difference that we see. And just coming back to India, again, like I mentioned, Chemical had a lot of new projects. Obviously, we work with a host of the chemical companies, and many of them are and have plans to expand further and invest more and more in terms of building new facilities. And obviously, being a major supplier to chemicals, we will definitely benefit from that.

Venkatesh Balasubramaniam — Axis Capital — Analyst

Thanks a lot. All the very best for the future.

Tarak Patel — Managing Director

Thank you.

Operator

Next question is from the line of Harshal [Phonetic] from EU Han Fund.

Tarak Patel — Managing Director

Yeah, Harshal, go ahead.

Harshal — EU Han Fund — Analyst

Yes. So, from what I’m hearing is in Germany, the government aiding companies which are keeping their plant shut. So, are we receiving any kind of incentive from the government?

Tarak Patel — Managing Director

No, nothing right now. But the government and what we hear, especially in Germany, there could be a bailout the package that could be kind of a program where the government will step in and help some of the companies who are facing a lot of pricing issues and production issues, but nothing that we have seen, like I mentioned earlier and what Alex said as well is that we’re actually seeing the prices now stabilize. Energy costs have stabilized and in the last few weeks have also come down. So, we kind of believe that we are actually past the highest levels. So, anything further improvement will only be, will have a good impact on the rest of the year as well.

Harshal — EU Han Fund — Analyst

Okay. Okay. What I wanted to understand is, is there any kind of government subsidy in our margins, which is why we are getting kind of 12%, 13% margin condition?

Tarak Patel — Managing Director

No, no, no.

Operator

We have the next follow-up question from the line of Tanaya from Marcellus Investment Managers.

Tanaya — Marcellus Investment Managers — Analyst

So you just said that on the international business front, you had several new smaller businesses, which are showing good traction apart from the last line equipment. Could you just kind of get into a little bit more detail on that? And related to that, the next question, you have tech services system technologies, obviously, you have been on number one created. How do you see growth in systems specifically, not services that you want in to retail about. But growth in the systems business and International Bank reached new businesses that are not kind of driving your traction.

Tarak Patel — Managing Director

Right. So I think maybe let me just kind of take you through what we have in our, the portfolio. So obviously, we have two new acquisitions that we made, Hydro Air is obviously in membrane separation, the technologies. That business is about $8 million or so. We expect to kind of double or that, it is double that business in the short term. So, they are doing a lot of nice and interesting work that will help us not only internationally, but also here in India. They do a lot of work in bioplastics, in bio meats, proteins, EVs and things like that.

So, it opens up a whole new industry segment for us. So that’s where we believe our growth will come from. Having said that, we already have a strong foothold in chemical and pharmaceutical. So, it’s definitely a complementary product. The other product that has done exceedingly well is a product called ESL, which is the sealing technology that we’ve launched here in India as well. They recently won a very large order, about $2 million worth of business with a large German customer.

And in India also, we are finding that there are a lot of interest, and we’ve also got orders, I think, not mistaken around the 20s or so has been sold in India. So again, a small business that was about $3 million is now trading around maybe $10 million, $11 million. So we’ve grown that business in a very short period of time. Besides that, we also have some smaller businesses. They are not brand per se, but these businesses are small and they grow quite quickly. They’re quite the profitable as well. So, we have plans on growing those businesses as well.

And in terms of the system business, I think that has done quite well. I did mention to you last, in the last quarter call that we received our second asset recovery or the year around INR20 crores plus from a power company, right? So, the power company, we currently have sulfur that they actually, it goes into the air, which they now would have converted into sulfuric acid, and a large chunk of that project because it’s also kind of, it kind of brings into the glass line equipment space as well. So, the systems also remains an important part. That’s where we really kind of move up the value chain. And since we offer process know-how and technology, we can definitely command much better margins. I think, Asit, maybe you want to add something to that?

Aseem Joshi — Chief Executive Officer India Business

Yes. So just on this last example that Tarek talked about the asset recovery. I’ll add a little more color to it. So, this is a very interesting space because it’s essentially a flue gas desulfurization application, which is essentially the smoke coming out of smokestacks is clean through scrubbers and it basically creates sulfuric acid which is weak. And then that’s where GMM Prouder comes in, and we actually help them concentrate that week sulfuric acid into concentrated sulfuric acid, which can actually then be used, so this is, it’s an interesting application.

It has the potential to scale cost in India, it’s just starting off. But we are pretty excited about the possibilities and what GMMs has to offer. Tarek talked about some of the other businesses around the bio meat, the plant-based meat, etc. That too is now new to GM Fader through the Hydroid acquisition. But we see potential to scale that up reasonably quickly as well. So, all in all, we have a portfolio now where we think we have a number of interesting bets specially on macro trends, and we believe we should take them forward. Tarek, just going to add something?

Tarak Patel — Managing Director

Yes. So just to build on that, I think we have some ideas in terms of how do we further enhance our, the portfolio as well. Like, I mentioned to you, there are certain businesses that don’t fit that well and new businesses that fit the better. So, we are always looking at opportunities. And I think that’s going to be the cornerstone of our growth strategy as well. I think M&A is going to be a very important part of our growth strategy, and we always have interest in increasing and improving our, the portfolio.

Tanaya — Marcellus Investment Managers — Analyst

Thank you. All the best.

Tarak Patel — Managing Director

Thank you.

Operator

Thank you. We have the next question from the line of Rohit [Phonetic] from Progressive Shares.

Rohit — Progressive Shares — Analyst

Hi Tarek, two questions. First one is a follow-up. When you mentioned that there are certain businesses we don’t fit the entire system that well. It’s a line of Elon and its divestment. So, any update on that?

Tarak Patel — Managing Director

Right. So ROI is high. Yes, Elon was up for sale. The process is still ongoing. However, while this process has been ongoing, Elon has done quite well. They have a large order backlog and their profitability has also kind of improved significantly. So, we are still reviewing and we’re still working on that. When we have an update on Eaton, we will definitely let you know.

Rohit — Progressive Shares — Analyst

Okay. My second question is related to mix on industrial paints and the developments that you are doing with AG as well as Mixion you can just take us through numbers in terms of million of roles.

Tarak Patel — Managing Director

I think Mixion is a business that has seen significant growth, and we’ll continue to see a significant growth. It’s a complementary product because it’s mixing. It’s used in the same industries that we cater to. We can use mixing in the glassine business as well. It’s very complementary. We really like that business. It’s quite profitable as well. And recently, we’ve had major breakthroughs, like I mentioned, not only in the historic chemical and pharmaceutical industries, but we’ve got into fermentation.

We’ve got into metros and minerals; we’ve got into paint. And I think I can continually say that today in India, we would probably be the biggest missing player in the market, right? So Mixion is definitely a focus area for us. growing this business not only here in India but internationally as well. And we do need to probably look at building the resources and capabilities, but this business on a long-term view is something to be very excited about.

Rohit — Progressive Shares — Analyst

Current in today’s world, currently, approximately what percent of turnover is coming from Mixion?

Tarak Patel — Managing Director

In India, I think last year, we did about INR60-odd crores of revenue this year should be twice as much, right? So, we have a very large order backlog. The business is doubling in size, if not more. And we wish to really grow this sickness and become a large player in this space.

Rohit — Progressive Shares — Analyst

And on the international front?

Tarak Patel — Managing Director

International front mixing is something that is quite small. We don’t export a lot of these mixes. We have sold some to Europe and the U.S. But again, having a strong footprint in international business, we would probably need to have a little bit of local manufacturing as well. and that’s where probably an M&A opportunity if it were to come up, would be very interesting for us. But yes, but missing is something that definitely is on top of our minds right now, how do we grow this business and how do we become a relevant player in this market.

Rohit — Progressive Shares — Analyst

That tells quite a lot. Thanks a lot.

Tarak Patel — Managing Director

Thanks Rohit.

Operator

Thank you. We have the next question from the line of Ki Ramesh Achar of Individual Investor.

Ramesh Achar — Individual Investor — Analyst

Hello.

Tarak Patel — Managing Director

Please proceed.

Ramesh Achar — Individual Investor — Analyst

Yes, there was a talk about relocation of your Hyderabad facility some two, three quarters back, and we haven’t heard anything further. Can I know, and what’s the position now?

Tarak Patel — Managing Director

Yes. So, the Hyderabad facility right now, there is no plan on a relocation, the Hyderabad plant, we’ve just invested in just the commission of brand new, the furnace. We are also renovating some of the factory shares. But our thought was that when Pharma City were to come up, we would then ask the government for land in pharma city, so we could be closed, obviously, to the industry that we cater to. As of now, there is no plan in place to move, and when pharmacy were to be available, we would definitely like to look at that as an alternative production facility.

Ramesh Achar — Individual Investor — Analyst

Okay. Thanks. That answers my question

Operator

Thank you. We have a follow-up question from the line of Jason Sung from Asiastar. Please go ahead.

Jason Soans — Ashika Stock Broking — Analyst

Yes so thanks for giving me the opportunity again. Just wanted to move into the margins in stand-alone results, we have seen quite a sharp dip from 25% around margins last year. Now they are at around 1.4%. Just wanted to know from you what were the reasons for the same one would probably be the higher steel prices and the higher cost of inventory which you’ve been holding. But some other reasons, is that from the ramp-up is you’ll have lesser margins than a JV equipment, obviously. So, the product mix also has an impact on that. Just wanted some color on that, the margin depth?

Tarak Patel — Managing Director

Yes, take this. take it first and you can, so I think, first of all, the basis for comparison is on little, unfortunately, last year, this time, we were really benefiting from the strong tailwinds, and we were achieving it was 25% EBITDA. That was quite abnormal. So really the, but, so, and as Manish mentioned earlier, a year later now, we are seeing the opposite effect of the high commodity prices affecting us. I think, so that’s probably the biggest factor, the commodity prices that have brought us down. Yes, you also identified the second factor around product mix.

That’s something that was not unexpected. So, as we’ve scaled up in some of the equine-like business is probably not as high margin as our traditional business. But these are things that we are addressing, and we are confident that as we continue our sales strategy around being selective around orders, we will be able to get back on track. Manish gave an outlook for the rest of the year already where we expect to see a continued improvement in margins in the stand-alone business. So, we feel pretty comfortable that we’re on track to do that.

Jason Soans — Ashika Stock Broking — Analyst

So yes, Manish did give an outlook for the margin. So, in terms of margins, probably we’ll be looking at the respect from the stand-alone entity and probably international margins, we can at least expect them to be steady, steady state from here on?

Tarak Patel — Managing Director

Yes, I think that’s broadly what we expect.

Jason Soans — Ashika Stock Broking — Analyst

Yes, sure. Just one thing. Just in the presentation, there is a statement mentioned in backlog is net of POC. Just wanted some clarification on the POC concept, if possible.

Tarak Patel — Managing Director

Just sorry to interrupt. I mean I think we are out of time, but maybe you can take this up separately off-line with it because that concept itself will be kind of long, and you’ll have explained it later.

Aseem Joshi — Chief Executive Officer India Business

Just if we can connect offline in the.

Jason Soans — Ashika Stock Broking — Analyst

Sure, sure. Thanks.

Operator

Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to the management for closing comments.

Tarak Patel — Managing Director

Thank you, Michelle. Thank you Thank you, Michelle. Thank you, everybody, for participating in our earnings call today. And we look forward to meet you again in the next quarter. Thank you, and good night.

Operator

[Operator Closing Remarks]