GMM Pfaudler Limited (NSE: GMMPFAUDLR) Q4 2025 Earnings Call dated May. 21, 2025
Corporate Participants:
Unidentified Speaker
Dhaval Rajput — General Manager
Alexander Poempner — Chief Financial Officer
Thomas Kehl — Chief Executive Officer International Business
Tarak Patel — Managing Director
Gregory Gelhaus — Chief Transformation Officer
Aseem Joshi — Chief Executive Officer India Business
Analysts:
Unidentified Participant
Jaiveer Shekhawat — Analyst
Sagar Shah — Analyst
Hardik Gandhi — Analyst
Rohit Ohri — Analyst
Meet Katrodiya — Analyst
Ronak Osthwal — Analyst
Rajiv Kalra — Analyst
Rohit Ohri — Analyst
Samyak Jain — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Q4 and FY25 conference call of GMM Fodler Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. I now hand the conference over to Mr. Dhawal Rajput. Thank you. And over to you sir.
Dhaval Rajput — General Manager
Thank you, Steve. Good evening ladies and gentlemen. A very warm welcome to all of you into the Q4FY25 earnings call of GMM Fordler 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. Taras Patel. Our CEO of International Business, Mr. Thomas Kell, our CEO of India Business, Mr. Asim Joshi, our CFO Mr. Alexander Pompner and our Compliance Officer Ms. Mittal Mehsa. We will give you a brief overview of the performance of the company after which we get into the Q and A.
Before we begin with the overview, a brief disclaimer. The presentation that was uploaded on the stock exchanges and also on our website including our call discussions that will 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. Tarek Patel to provide an overview of the performance. Over to you, Tarak.
Tarak Patel — Managing Director
Thank you Dhaval. Good evening everyone and thank you for joining us today. As we conclude the financial year. I’m pleased to share our performance highlights for FY25. GMM Fodler achieved consolidated revenues of 3199 crores, an EBITDA of 381 crores which is an 11.9% of EBITDA margin. Our order intake for FY25 was 3102 crores up 3% from previous year. Our current backlog on 04-01-2025 stands at 1,636 crores. We also generated strong cash flows of 318 crores in FY25 and improvement of nearly 100 crores over the previous year. In Q4 FY25 our revenue stood at 807 crores with an EBITDA of 93 crores at an 11.5% margin with a 9% growth in revenue and a 4% growth in EBITDA margin on a year on year basis, order intake for the quarter stood at 660 crores.
Our India business has a strong performance in Q4 with revenues of 252 crores and EBITDA of 44 crores. With an EBITDA margin of 17.4%. The India business has also seen significant improvement in H2FY25 due to increase in volume, favorable product mix and an ongoing EBITDA transformation program, the benefits of which will continue into FY20. All costs for this program have been taken in this financial year. Our India backlog stands at 549 crores which is higher by 20% on a year on year basis. Our global manufacturing footprint optimization continues. Our UK facility in Leven is on track for closure in Q2 FY26.
As you will see in this quarter, all costs accounted for this closure have already been taken in this financial year. We also shut down our Hyderabad facility this year and the cost of this closure was taken in Q3 of this financial year as well. The production from this facility has now moved to our facility in Gujarat. Our low cost manufacturing site in Poland has been established and we now plan to shift production and increase production at that site as well. I would also like to welcome Gregory Gelhouse as Chief Transformation Officer. As cto, Greg will lead the group’s transformation efforts and key strategic initiatives to drive business expansion, improve operational efficiencies and enhance collaborative and integration amongst the geographies and our locations.
Looking ahead, we are optimistic. However, the India business continues to do quite well and we are in a strong position to to deliver growth in both revenues and margins. Our international business has a good starting backlog. However, the current situation with us, the tariffs, also the uncertainty surrounding investments that may have some impact on our international business. In conclusion, I think this year has been a transition year for us. I think we are focused on improvement programs internally. As I mentioned, two sites have been shut down. We run a transformation program here in India and as the market seems to be turning a little bit, we hope that some of the new kind of volumes will help us also achieve some of the improvements for the next financial year.
With that I would like to hand over the call to Alex our CFO who will take you more through the balance sheet and some of the other financials and we will then after open this to questions as well. Thank you very much. Over to you Alex.
Alexander Poempner — Chief Financial Officer
Thanks a lot Taraq. Good evening everyone. Also from my side as I do not want to Say too much about the profit and loss there. Just to reiterate or say again that we have considered all the one time impacts due to the closure of Hyderabad as well as Leven already in this financial year. So we consider that we have done the homework to see the positive benefits in the next financial year. With regard to the balance sheet. The balance sheet we show a strong improvement. We have a really solid good balance sheet. Especially from the cash flow side. You see that the working capital and free cash flow generation have improved significantly in the fiscal year 25 as compared to the previous year.
We have repaid long term debt of around 116 crores resulting in an improved net debt to EBITDA metric of 0.5 times versus 0.8 times in the last financial year. The net debt to equity also improved to 0.2 times versus 0.4 times last year. As mentioned, this is especially driven by a good working capital improvement. And therefore on the cash flow front we have generated a free cash flow of around 318 crores during the year as compared to around 221 crores in the previous year. This results in an 80% conversion of the reported EBITDA of 381 crores.
This is again an improvement over the previous years where the free cash flow to EBITDA ratio was around 50%. This is so far everything from my side and I would like to hand over to Daval again.
Dhaval Rajput — General Manager
Thank you Alex. Steve, you may now open the line for questions.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handset while asking a question. Ladies and gentleman, we will wait for a moment while the question queue assembles. The first question is from the line of Jaivir Shikawat from Ambit Capital. Please go ahead.
Jaiveer Shekhawat
Sure. Thanks for taking my question. My first question is on India business. It’s encouraging to see the adjusted EBITDA margin trajectory there.
Tarak Patel
Hello. Hello.
operator
Yes sir, the current participant has been disconnected. We will move on to the next question.
Tarak Patel
Yeah, maybe they will come back. And just make sure that he comes back into the list please. Yeah.
operator
Yes.
Tarak Patel
Okay.
Unidentified Participant
The next question is on the line of Praveen Kumar from Acquitis Capital Advisors. Please go ahead.
Unidentified Participant
Yeah, hello. Thanks for taking my question. I had a question on the international business so in particular I was trying to compare the order intake in the international business in FY25 and I was comparing it to the previous three years. Right. So while doing that I noticed that, you know, the order intake for FY25 in the international business was almost not very different from what it was back in FY22. Right. It’s almost at the same level even after three years have passed. Number one. Right. And within that, if I further look at the services part of the order intake. Right. There is a drastic decrease in the services order intake in FY25 when I compare it to FY22 levels. Right. So wanted to get an understanding of this that a at an overall level for the international business, the order intake being stagnant on a three year basis. Right. Wanted to understand the causes for that and how do we see this going forward. And also in particular wanted to understand the services order intake of the international business, the fall compared to the levels of FY22.
And again, how do we see that going forward? Thank you.
Tarak Patel
Sure. So I think 2022 obviously was the time after Covid where things were booming. Our focus to grow service revenue continues. This year the service order intake has probably been below our expectations. But currently in terms of the pipeline and the focus, in terms of growing, our services business is on track. We do feel at some point, especially last year because of the slowdown, general slowdown in the industry, we both capital equipment in terms of new capex as well as services across our client base did reduce. We now have some kind of hope that maybe in the coming years these services revenues will increase.
The idea is to continue to be close to the customers and make sure that we don’t lose service business. And that’s something that across all our locations we are trying to obviously grow. The services business especially was lower in the US but we do expect some recovery to come at some point. But in India we have also seen a slight slowdown in services which is a general trend now across the world. However, for us service is a very important portion of our overall order intake and it continues to be a focus area for us to come back to the levels that we had in 2022.
Thomas, if you would like to add or esteem as well, I think you.
Thomas Kehl
Stated it right that the overall market is slowed down after 22nd in the make up time after the pandemic. And that is true also for the service jobs. Some of the bigger service jobs were a little bit on hold by customers looking at the current situation and the development. But those jobs are not going away, they are delayed. They will come to us later.
Unidentified Participant
Hello?
Tarak Patel
Yes, Go ahead.
Unidentified Participant
Yeah. So again, just to understand, I mean, to improve my understanding of the services part of the business, our perception was that that is linked to the base of, you know, the installed base of your clients. Right. And one reason for drastic reduction compared to three years ago could be that is it that lot of those installed base. There have been significant shutdowns in particular geographies, which has impacted otherwise, you know, one would expect that if those facilities are running, they would continue to require your services and there should be some service inflation in terms of the order intake and revenue.
So that’s the aspect I wanted to understand better.
Tarak Patel
I think by that logic, our India installed base is probably the highest in the world and we still have 7, 8% of service revenue. I think it’s just a mindset and it’s the uncertainty surrounding the current situation has that kind of driven some of these decisions. Maybe at a budget level for spare parts as well within companies, maybe that is something that companies have kind of tried to cut back on. But at some point in time when these equipment need to produce, you will have the service revenue picking up. Right now we haven’t seen any major shutdowns in the US or Europe.
I think it’s just kind of a trend where people did not want to spend money on services if they did not have to. But that at some point these equipment, like you said, are old equipment. They’ve been installed for quite a period of time. The services at some point should come back and we expect it to come back in the next financial year as well.
Unidentified Participant
Understood. And the assumption is also that since you have spread your service base further in terms of geographies during this time, that should also probably help you in terms of getting these revenues, I guess.
Tarak Patel
Yes, correct. So I think services again is a key focus area for us. And by the last couple of years we’ve kind of created smaller workshops and service centers across the globe just to better serve our customers. We have three or four service centers now here in India we’ve created like two or three service centers in the us a few in Europe as well. So services is definitely a push. At some point it will come back. We went through a lean period both in terms of capex for new equipment as well as service. We thought that during a cycle, a down cycle where capex slows down, the services would increase.
However, that was not the case. But I think as some of these capexes are coming back as well and some of the margins and volumes are increasing at our client site, we will see now some of these services also coming back.
Unidentified Participant
Thank you. That was very helpful.
Tarak Patel
Thank you.
operator
Thank you. The next question is from the line of Jaivir Shikhawat from Ambed Capital. Please go ahead.
Jaiveer Shekhawat
Hi. Thanks. And sorry it got dropped off earlier. My first question was on your EBITDA margin trajectory for your standalone business. So apart from these one off cost in relation to transformation, what further benefit do you expect from, I mean, after the excise is already done on your margins? That’ll be my first question.
Tarak Patel
Yeah, So I think the India Transformation program, which has run now for the, you know, nine months of the last previous year, that has given us improvement both in terms of our cost structure, but also in terms of operational excellence and, you know, areas in which we had not probably paid attention to. So that has put us in a very strong position, at least here in India, at our factory here in Gujarat. What has also happened in India is the closure of Hyderabad. So having that facility no longer available, the load of Hyderabad now moves into Gujarat, which now obviously has much better utilization as well.
We are now in a position where we will now even think of starting a third shift to address the volumes. We have a large glass line backlog as well. So I think India margins will continue in this range as well. 15, 16% should be achievable for next financial year. And maybe Asim can jump in now to talk a little bit more specifics about this transformation program and the other cost controls that we have worked on here in India.
Aseem Joshi
Sure. So while Tarek talked about the cost controls, I’ll cover a few other elements that were, that were part of this program and that should help us not just in FY26, but beyond. We’ve really focused on our capacity improvement. Obviously when you close down the factory and you need to consolidate as well. You have to be able to absorb. The capacity, especially when the demand comes back. And we’re very confident we’re in a position to do that in our Karamsu factory. Now, we’ve also enhanced the flexibility of our factory in that as we have additional product lines that are made in Karamsat, we have the ability to flex as demand varies. We feel we’re in a lot better position now, not just purely from a factory, sorry, from a financial and margin standpoint, but also from a flexibility standpoint. And those benefits will persist for incoming years.
Tarak Patel
Yeah. And maybe just to add in terms of outlook, we feel that there is more positivity today. The customers that we speak to in India have shown a lot more interest of investing now. Volumes have come back. Margins might still be under pressure, but that’s the first positive sign that at least volumes are coming back. Right. So we see that in terms of even the opportunity pipeline here in India has improved significantly. We also believe that some of the agrochemical players will start investing in maybe August, September timeframes as well. So all in all we have a positive view on India starting this year already with a smart a much bigger backlog than previous year.
Plus the first month especially April has been very strong in terms of order intake as well. So we are in a strong position in India for the financial year internationally as well. We’ve had a pretty good April in terms of order intake. We need more orders as well, which we are working on. But generally we are today in a much better position than we were 12 months ago. Right. So and the hard work like Aseem and Alex mentioned has already gone in during the down cycle and hopefully as volumes pick up and the market improves, we will be able to extract as much as possible from this increased volume as well.
Right. So that’s the overall picture here for India.
Jaiveer Shekhawat
Sure, that’s very helpful. I think the other question also was in relation to this. So what we have seen is your competitor has been able to recover back to their FY23 revenues from the GLE division in FY25. So what’s your estimate both for your standalone business and the international business as to when they reach back to your peak level revenues, which you might have also done in FY23 on the GLE side specifically.
Tarak Patel
So on the GLE side I think we are now at pretty much the similar levels as previously. Slightly lower than that. Obviously if you see our quarterly performance, it has been pretty stable. We like to kind of make sure that obviously even going forward we have stable quarters and we plan and we perform as per expectations. Obviously the volumes this quarter, even if you see the total revenue, is still not a significant improvement over previous quarter or even previous year. But in spite of the incremental volume not being there, we were still able to increase margin significantly.
So do keep in mind if the volumes increase over the next few quarters, you will definitely see even better kind of flow through because at the same revenue levels we are still now at a 500bps improvement here in India if you compare that to Q4 of the previous year. Right. So which is a positive for us and as volumes increase and they will increase, you will maybe see some better flow through as well. Sure.
Jaiveer Shekhawat
My last question is just on the order intake. So while I Understand that you have healthy backlog for the India business. I mean is it by choice that you are limiting the order intake there and also in the international business? I think we have not really seen order inflows there. Ideally every quarter it’s sort of reducing. And when do you think that should bottom out in your expectation? I think both India and the international. Business,
Tarak Patel
so I think on the order intake front, India, like I said, strong backlog, 20% higher. April has been a good month and I think for the international business also April has been a very strong month and that will reflect in obviously our backlog at the end of Q1. I think we will be in a better position to talk a little bit more about that when those orders are some of them are already in and some more expected and we are quite confident that we will be in a much stronger position at the end of Q1.
Jaiveer Shekhawat
Perfect. Thank you so much and all the best.
Tarak Patel
Thank you.
operator
The next question is from the line of Sagar Shah from Spark pwm. Please go ahead.
Sagar Shah
Good evening everyone and congrats to the entire team for posting some decent set of numbers. My first question was related to our global business, especially related to glass lining and some non glass lining technologies. So what we had perceived at the start of the year, obviously things didn’t turn out because of macroeconomic factors which are not in our hands. But specifically speaking on the industrial mixing and especially on the glass lining side, so globally looking at the order intake that the company is actually getting, the order intake is actually reducing, almost is reduced as compared to even the last year.
So is it something like are we some losing some market share specifically on the glass lining and the non glass line technologies or maybe specifically can you highlight what exactly is going on outside?
Tarak Patel
Sure, I’ll pass it on to Thomas.
Thomas Kehl
As you all know that the market conditions are not perfect and not as it has been a two year thesis ago. We know all the uncertainties in the industry and that shows in the order intake. We have a lot of projects and pipeline is still robust and big but the decision making processes are slow and hesitated and Therefore we are 100% sure that you’re not losing market share. The projects that are on hold will come sooner or later or it started a little bit already in April. April is a better month and we are very confident that the first quarter will show us the increased backdrop in order intake again.
Sagar Shah
Okay, fine sir, one thing to see.
Tarak Patel
I’ll just add one comment here. I think, I think you know there were a few units that we’ve been working on and because of the large backlog and the large order intake that they had, they had they struggled to also ship out some of these equipment. So some of that restructuring has also happened this year. These units are now much better placed in terms of receiving new orders and also shipping out these orders as well. Right. So there is a bit of capacity available. So we are aggressive when it comes to delivery and pricing. So hopefully in the next couple of months, including I mean what we booked in April already plus the next two months, we should be in a much stronger position by the end of Q1 as a company in terms of both order intake and backlog as well.
Sagar Shah
Got your point. So my second question was related to the Poland acquisition actually. So we are closing the UK operations as well as the Hyderabad operations in India and starting with the new acquisition at Poland. So can you highlight about the cost benefits that are likely to accrue by manufacturing there and specifically can you highlight about some how the cost structure will be different as compared to manufacturing in UK Visa vis manufacturing in Poland vis a vis India?
Tarak Patel
Okay, so there’s a slight misunderstanding here. UK was a glass line facility and and Poland is not a glass line facility. Poland is really a facility that will support our non glass line business. So it supports our Swiss entity Mavag and it supports our mixing business. So Mixel in France. Both Mixel and Mawag are in a higher cost western European region while Poland is in Eastern Europe and much cheaper for both engineering as well as manufacturing. Poland is a joint venture. We’ve already completed the first order from Mawag, our Swiss subsidiary. There were absolutely no quality issues and those equipment was supplied on time at a much lower cost structure than if they had to manufacture that in Switzerland as well.
In terms of the new orders going into Poland, there’s a large order that Miktil won recently. That entire order will be made in Poland. Poland and not in France. And if you had to ask me, you would see at least a 30% cost benefit between Western Europe and Poland. And that’s something that we could expect that between India, Poland and the other value sourcing sites that we have, we will find the right kind of situation to make sure that the customer gets the right product at the right price point and we will improve our margins because of this low cost structure that is available in the group.
Sagar Shah
Okay fine sir, my this I had just a data keeping question within technologies that can you highlight that how much was glass lining the revenue, the non glass link revenue and the rest is industrial Mixing. Can you highlight the confidence between these three amongst the technologies revenue?
Tarak Patel
Are you talking, are you talking on a global basis or an India?
Sagar Shah
Yeah, on a consolidated business, sir.
Tarak Patel
So I don’t think I have the data in front of me, but generally.
Alexander Poempner
Yes, we will currently we review our reporting and we will come back during this year. Thanks for your advice, for your comments.
Sagar Shah
Okay. Okay, fine. So just the last one from me. We had incurred other income loss actually in this quarter due to the foreign exchange fluctuations actually you highlighted in the document. So are we not hedging our exposures in the foreign exchange base since you have a lot of inter foreign currency exposures. So are we not hedging our operations over there?
Tarak Patel
So I think we have a natural hedge because we have Euro, euro, USD as well as. And then Alex, please let me say.
Alexander Poempner
Unfortunately some of the FX exposure you could not really hedge and we had once a few years ago already discussed. We have intercompany loans in place within the group which are between euro and USD denominated entities and there we face a book loss. However, this is something which you could not avoid if you have loans between entities in two different currencies.
Tarak Patel
But this could go both ways as well.
Alexander Poempner
This could go both ways. We also faced positive impact in prior quarters and you see, I think especially I would say one half years ago, we had also there a big positive impact.
Sagar Shah
Okay, okay, fine sir, I’ll come back. Thank you and all the best.
operator
The next question is from the line of Meet Kathrodia from New Shai. Please go ahead.
Meet Katrodiya
Yes sir. Thank you so much for the opportunity. So sir, you have given the view, your view on the order backlog for the appeal. Right. So I was asking from the point of view of what are you seeing in terms of demand which can come in the next month. So what are your forecasts for the. Are we seeing any bottoming out in chemical or pharma?
Tarak Patel
Yeah, so I can talk a little bit. I’ll talk about two different regions in India. The conversations that we are having with our clients and These are owners, CEOs, they are positive. Like I mentioned, all of them have said a similar statement that volumes have come back. Their plants which are running now at 45 cents are now running closer to 80%. So firstly that’s a positive sign. However, pricing is still under pressure which means that margins will continue to be under pressure. But I do believe that there will be some amount of investment in both chemicals and when I say chemicals, agrochemicals as well as specialty chemicals, specialty chemicals has continued and has been quite strong.
Agrochemicals have been weak and we do expect agrochemicals to return sometime later this year. Pharmaceuticals have continued to be very, very strong, especially hydro based pharmaceutical companies. The month of April saw us win a very large order. Not glass line, but glass line as well as non glass line here for Hyderabad. And that has been a big kind of positive for us as well. So pharma continues to be quite strong, especially companies that are now working with the GLP2 kind of manufacturers, peptides, etc. Things like that are really driving a lot of investments as well.
So pharma remains quite strong. The inquiry levels in pharma also continue. But what we are seeing that’s different from the past is some of these agrochemical players are now thinking of investments. Some of our big customers like PI SRF decades are now started talking in terms of when the next level or the next building or the next unit will be kind of green lighted and then the inquiries will start and then obviously the shipment will continue. So I do expect a recovery somewhere in the middle of this quarter. The good thing is that we have enough of Glassline backlog for the first half of the year and then we really need to worry about Glassline coming into the, into the third or fourth quarter and really helping us.
So if that agrochemical cycle turns in the middle of the year, that would bode very well for us for the second half of the year as well. In terms of global, I think chemical and pharma still continues to be below expectations. I think the uncertainty surrounding the tariff situation is obviously holding investment. However, some of these investments are being kind of discussed now. Some of these which have been pushed. Out are now kind of moving towards closure. But there are new areas where have emerged if pharma and chemical has slowed down. We have seen investments in other Europes, in Europe and the US in other areas as well, which has made up for some of the shortfall that we’ve seen in chemical and pharma. So the diversification strategy and our product going into some of these new segments has also kind of helped us make sure that the loss because of chemical pharma is not that intense.
Meet Katrodiya
Thank you so much for the detail answer. The last question is like if you. Can throw some, if any new player. Has come or existing player facing problem in the market. So, so how we are positioned as compared to existing players and even newcomers.
Tarak Patel
So I think we have a global manufacturing footprint. So even with the tariff situation that is currently being discussed, we have local manufacturing. So for example, if the U.S. tariff situation would create more investment in the U.S. we have a U.S. unit that can supply into the U.S. we also have Brazil where the tariff situation is not so bad and that can be used to supply into the US market. From a European perspective as well, we are strong. We’ve shut down one facility, so now we have two facilities. So better utilization as well from a blast line perspective.
And with Poland coming online, much better cost structure as well. India is today focused only on India. But as India has also grown, we are now looking at the surrounding areas, areas around Middle East, Southeast Asia to also go and sell some of our products into. Our heavy engineering business in India has done incredibly well this year and will continue to do very well next year as well. And the idea is to grow that business because that kind of caters into oil and gas, petrochemical power, nuclear, etc. Etc. Where obviously they are not constrained by the same kind of of growth issues that currently chemical and pharmaceuticals are facing.
Right. So diversification and having multiple product lines in areas that we don’t normally participate in will help us kind of make up for some of the shortfalls.
operator
Thank you. The next question is from the line of Samantha from Miraculous Investment Managers. Please go ahead.
Samyak Jain
Good evening, team. My first question is. So you did mention that you are closing the UK facility, so you intend to supply the resultant demand from India or from the other two European locations that you have presently.
Thomas Kehl
So we have closed down this site because of the last few years. We have increased, improved the process, the operations in the German plant and Italian plant significantly so that we can absorb the capacity that was in the air. So we took the advantage of the slowdown time to consolidate there and improve our cost position and be more competitive. And we also bring in product from India. This has been established two years ago and very successfully so that we can serve the market. Even if the market increases significantly, we have overall enough capacity to do so.
Tarak Patel
It’s not a very large market. So I don’t think that we’re going to expect significant growth in that market. But yet if the market were to need equipment, we are well placed to serve that market through two of our European sites and even with India. And if the trade agreement with India and the UK could be also beneficial, where the duties and taxation between India and the UK would also help us become more competitive as well.
Samyak Jain
Got it. And so are you still looking to rationalize your manufacturing facilities or. It’s largely done so.
Tarak Patel
I think that we are always looking to rationalize and to improve our manufacturing footprint. I think our Poland facility is a start in the right direction. But we do need to add capacity. Capacity and look at moving cost from. Expensive locations and high cost locations to Poland. We also feel that the availability of engineers welders are easier in some of these locations. So we will continue to invest in areas that will help us support our growth and the cost structure that we are looking forward to. And then obviously in India currently we have already a strong footprint. China and Brazil are also well taken care of. So there’s no real kind of additional investment that we need as a group. But if there is an opportunity to rationalize, we will continue to do so.
Samyak Jain
Understood. And last question is on the India Transformation program that for which we have incurred around 9.8 Cr in this quarter. So is all the expenditure related to this program largely done or we should expect some expenses to be incurred in next financial year as well?
Alexander Poempner
No, no, you could consider that everything is spent.
Tarak Patel
So the total number for the year is around 15 plus crores. That’s the full amount that was paid to the advisors who are running the transformation program. And on top of that the 5 crores we spent on closure of Hyderabad, that has all been taken in this financial year, 20 crores in total. None of those costs will carry forward into the next financial year.
Samyak Jain
Got it. Thank you so much and all the best.
Tarak Patel
Okay.
operator
The next question is from the line of Rona Kochwal from Aryan Capital Market. Please go ahead.
Ronak Osthwal
Thanks for the question. So my first question is while going through the financial statement in segment wise revenue technology segment reported lowest quarter the revenue in last 12 months. And the order intake is also not looking that great. So what are your plans to improve it?
Tarak Patel
Sorry, we could not hear you. Could you repeat the question please?
Ronak Osthwal
In technology segment, company reported the lowest revenue in last 12 quarters and the order intake is also not looking that great. What are your plans to improve?
Tarak Patel
Yeah, so order intake in technologies was obviously the result of a slowdown in the glass line business which was driven by a slowdown in the chemical and pharmaceutical sectors around the world.
In India, especially the agrochemical sector. Like I mentioned to you, India starts the year with a 20% higher backlog. So. So that is a favorable mix between heavy engineering, glass line and proprietary products. So obviously as you can see some of the glass line business has come back internationally as well. The services business has taken a hit in the last financial year. Again services is something that comes and fast moving so can be converted quite quickly. As Thomas mentioned that we have A very strong pipeline. Some of these orders have already come in in this financial year in the first quarter, and we expect again in the month of May and June to have a strong order intake.
The focus is on order intake to make sure that we have utilization and absorption for the next few quarters as well. So some of this has already come back and some of this is expected. But we are aggressive in the market and we are trying our best to win as much as possible. And where we can’t win in markets which are constrained by growth, we are trying to win in other areas as well. So heavy engineering mixing, even in India, we have broken into new markets like food and beverage, where we usually did not play.
So a lot of things going on. And then we have certain businesses which are completely outside chemical and pharma, like Edlon in the US which has done quite well and continued doing quite well. So we are just trying to see where is the growth going to come from and where exactly can we compensate for the loss of, of the glass line business that has happened over the last couple of years because of the slowdown in the chemical sector.
Ronak Osthwal
Okay, sir, what amount of growth are you seeing in the next two years?
Tarak Patel
So we haven’t seen both numbers as well, but you know, in terms of the backlog here in India, you know, it’s higher.
And India will grow. And internationally also we expect a small amount of growth, but we do expect to have a much better financial performance for the next financial year than we did this year.
Ronak Osthwal
Okay, sir, what is it? And sir, on international margin part, we have seen margin pressure in. So when are we looking to take back the margins? And in next year, what can be. Your.
Aseem Joshi
Margin pressure is for the Howard character.
Tarak Patel
Yeah. So margin pressure this quarter, of course, because of the lower utilization. If utilization comes back and the volumes come back, those margins will look a lot better. India margins, as you have seen in Q4, are already quite strong. We expect that to continue in that kind of range, which is significantly higher than previous year due to all the homework that has gone in. So margins will improve. I’m not here to give a kind of guidance right now because there’s still a lot of uncertainty, especially in the international business. And as time progresses, as the backlog improves, as we see order intake improve, which we think it will, and some of it has already come in by the end of Q1, we would be in a better position.
But I can say today that like I said, Compared to 12 months ago, I think we are in a better position and things are looking More positive.
Ronak Osthwal
Okay, thank you. That was my question.
operator
Thank you. The next question is from the line of Hardik Gandhi from HPMG Shares and securities. Please go ahead.
Hardik Gandhi
Hello. Am I audible?
Tarak Patel
Yes, go ahead.
Hardik Gandhi
Hi. So thank you for taking my question and just wanted to know on the Poland site, what kind of revenue are we expecting from that site and how fast we can ramp up? And what’s your plan looking for that as like that site for now?
Thomas Kehl
Well, the site in Poland is a small entity that was a couple of years a startup where we had 51% share acquired just recently. The current revenue will be quadrupled within the very first year due to the orders we are giving in there. The growth plan is to complete further buildings and increase capacity and in just a few years it will double again and come close to the 10 million within two to three years easily.
Hardik Gandhi
Okay, so you are saying we are expecting to quadruple the revenue at least in this year. So what is the number we are looking at this year?
Thomas Kehl
We will be close to US$5 million.
Tarak Patel
So just to give you an idea, I think they were as a standalone company but one and a half odd million and the recent order that we placed on them for our site in France is close to $4 million. Right. So that’s already a significant increase. Plus over the year we will add more. We need to ramp them up as soon as possible because you know, again it’s a great source for our two units in Europe and the momentum there and the need of those two unit and the quality levels that have come out of Poland have really been very good.
So I think as time progresses you will see more and more requirements being given to Poland. If we could ramp up faster we will, but of course all these things take time and we will try and ramp up as soon as possible.
Alexander Poempner
Just to be clear, Poland, the revenue, it’s in fact considered as an internal cost improvement play. So it will not be a full top line revenue improvement in story. So as said, we will use it as a manufacturing cup, especially for the Marbag and the French entity which then have or keep the external revenues but with significantly higher margins.
Hardik Gandhi
And what kind of margins are we expecting on a ballpark basis?
Alexander Poempner
Tarak said already before that we expect an improvement of 30% on the cost base. So I would keep it there so that you could do some calculations. We do not want to further comment as of now.
Hardik Gandhi
Understood sir. Thank you sir. All the best for the future.
operator
The next question is from the line of Vaibhav from Labrum Capital. Please Go ahead.
Unidentified Participant
Thank you for the opportunity. I think you mentioned that in pharma India volumes have been an outlook has been strong and international has been relatively weak. You know, with increasing talk about global supply chain diversification out of China. Are you seeing any early benefits of it in India or you know, outside India? That’s my first question. Secondly, related to that is, you know, or if you think it’s like sort of early days of see the impact for that trend happening and current volume trends in India pharma are largely being driven by the GLP1 tailwind.
Tarak Patel
I mean, the way I look at it, I know six months ago I would not say no to certain Glass line orders. Today I pick and choose what I want. Right. So from that perspective, volumes have increased. If I’m starting a third shift now as well, you know, the factory is also buzzing with these additional volumes. So the situation at a factory level is definitely much better. From what I speak with people that we have very strong relationship with owners and staff. Many of them have said that guys, hang in there, things are looking a lot better, investment will come.
But this is more of a general India story. I think that is being driven by some of the uncertainties with China, some of the production of China moving to India as well. I think India will be well placed to capture some of that production as well. And keep in mind the last couple of years, similar to us, many of the chemical players have also not invested. Right. So at some point something will turn and then you will see volumes pick up. The signs are very positive. The start of the year for India looks very, very good.
The inquiries in Glassline are quite strong, not only in Glassline, but across the other two verticals that we have in India, proprietary products and our heavy engineering business. Glassline probably was the weakest one, but Glassline has recovered in a nice way and all three product lines have a very strong backlog and a very strong outlook as well.
Unidentified Participant
All right, thank you.
operator
Thank you. The next question is on the line of Rajiv Kalra, an individual investor. Please go ahead.
Rajiv Kalra
Hi. Thanks for the opportunity. With the recent geopolitical development, it seems like a significant amount of capex is being planned by European countries, especially Germany. Now this will mainly be in the area of defense, infrastructure, energy, etc. Do we see any opportunities related to our businesses to capitalize on this capex growth in the Eurozone, especially given our strong presence in Europe and particularly in Germany. And related question to that is what percent of our revenues currently are attributed to Europe?
Tarak Patel
Yeah, so defense is Definitely an area where we do participate. We have seen traction, we have seen recent order intake in this space and that is definitely something new that has not happened in the past. How does it play out and pan out? I’m not sure but it seems that for European countries and the European Union, defence is one area that they do want to spend money in and we definitely have a play there because we are quite with our glass line equipment, our asset recovery system, quite capable of participating in that story as well.
So that is definitely an area that we are seeing traction in and we hope many of these orders in those spaces will start to materialize if they haven’t already. In terms of European size, you could just maybe look at the US or the Americas as 1/3 of revenue, Europe as 1/3 and Asia as 1/3. That’s really a ballpark figure. It might have fine tuned a little bit but generally that’s the rule of thumb that we are currently working on.
Rajiv Kalra
Great, thank you so much and all the best.
Tarak Patel
Thank you.
operator
The next question is from the line of Ravi Mehtaq from Vanak Financial. Please go ahead.
Unidentified Participant
Yeah, hi. Thanks for this call. So there was a regulation on FGD which got push to 2025 from 22 earlier. So should this benefit your systems vertical? Because I’m not able to see that in the order book or revenue so far. So some color on FGD when opportunity.
Aseem Joshi
Yeah, so I’ll take this one. So FGD flue gas desulfurization. You’re right, the regulation has been pushed out. Obviously that doesn’t help those projects to come forth. There are we are still engaged with a number of customers who are still deploying their FGD projects. So those are going forward. But with the regulation being pushed out I expect new projects may slow down until the regulations are closer until the deadlines go.
Unidentified Participant
So the older projects won’t want FGD unit. So you can help with your systems unit for the older ones as a retrofit.
Aseem Joshi
So there are projects for FGD that we’re executing. Those obviously will continue. As far as new FGD projects for listing units, our conversations with customers that are advanced, those are continuing but I do expect new conversations may get pushed out as customers potentially delay the capex that would go into the blue gas desulfurization units because regulations pushed up. I will just add quickly. Related point is FGD or various other technologies. GMM Pardler has realized that customers often would like to test their products do a proof of concept before they go. Into A large investment. And to that end we have now established a test center in our Gujarat facility. It was inaugurated last quarter by our managing director. And here we have the ability to offer customers the ability to try before they buy. They can do a lot of tests around the asset concentration, various other solutions including FGD kind of applications. So we are ready for and able to solve these requirements in India. I think that’s a big step forward for many of our customers.
Unidentified Participant
Thanks. Yeah, thanks Sandan.
operator
The next question is from the line of Rohit Ori from Progressive Shares. Please go ahead.
Rohit Ohri
Hi team. Three questions. First one, do you think that the cleanup of the balance sheet which is owing to the manufacturing footprint optimization process, which is ongoing, has that been completed or do you think there are some more subsidiary or step down subsidiaries that that you might want to close in near future?
Tarak Patel
So we have completed two of the site closures this year. On top of that we have restructured our Swiss unit as well. So that was also a tough unit that we had to clean up. And we have that production, the capacity there, the flow of the product has improved significantly. We brought in the right people to run the supply chain and the project and the engineering team team has also been kind of increased. So three units have been kind of, two have been closed and one has been restructured. We will continue to kind of move production into Poland over the next month and quarters as well.
I think in India we are well suited and well placed. China, we have to be there and we will continue to play in China. And obviously the US and Brazilian units work hand in hand to cater to the American markets as well. There is an opportunity probably somewhere in South America as well where we haven’t really had too much of success. But that could be an area especially for our mixing business where there’s a lot of mining and mining companies that would have requirement and mining for us as mixing has become a very important part of our mixing program.
We have had large orders coming in from Australia, even here in India and we will look at targeting some of these big mining companies where lithium extraction or heavy metals, all that kind of stuff that is coming out, we can probably participate in that growth story as well.
Rohit Ohri
Greg is appointed as cto. What are the key short term and long term goals which he’s assigned.
Tarak Patel
So I think you will hear more about this global transformation program that we are working on. We’ve had already a great amount of alignment between the management team and I think maybe from a softer aspect, I think over the Last year or 18 months we’ve really kind of come together as a group. Before that, when business was great, we were running India and International as two separate companies. But during the down cycle, we were really able to sit down and really agree and align on what the company should look at, look like five, seven, ten years from now.
Right. So a lot of work has gone into how we want to organize, what our strategies are going to be, what do we want to be known at in terms of our company and how are we going to bring growth back? Because you know that Glassline is a mature business, you know that we are already a market leader with 50% market share. The focus obviously in Glassline is to improve margins and rationalize manufacturing footprint to a point where the salesperson or the customer should have no say in where this product is made. It should be a supply chain kind of decision depending on what capacity is available within the group.
So that is the end state that we would like to be. The focus should really be on the other verticals, especially the non gas line verticals, the heavy engineering verticals and the systems verticals where growth is really under. Because those market sizes, those addressable markets, are much, much bigger than what Blackline is. So that is really the theme of the strategy that we are trying to put together. How do we organize to capture this opportunity? How do we organize to make sure that the people involved in these verticals make the right decision and drive the right behavior? All those things are going to be something that we have discussed and we will now start implementing.
And Greg’s role is going to run this formal transformation program because as a company, we can’t lose sight of the business because business and financial performance is very important. But at the same time, we need to transition. What has worked for us for the last 20 years may not work for us for the next 20 years. Right. So we have to kind of diversify, we have to be creative, we have to organize better, and we all need to be aligned with the same kind of thought process across the organization so that we create the right behavior amongst our people as well.
So that’s really the kind of transformation. It’s really a large transformation program that we’re going to do. As the market turns, we will see a lot of these benefits flowing through and we are prepared to put in the hard work to make sure that over the next year or so we have the program in place, we are motivated, the momentum is there. I think the expectation within the group is also there. The management team is completely aligned and we are ready to hit the ground running and that’s pretty much what Greg is going to run over the next 12 months.
And Greg is here. Maybe I’ll invite him to say a few words in his first conference call as well and introduce himself. Greg, you’ll have to come a little bit closer to the microphone as well so you can speak up. Yeah.
Gregory Gelhaus
Yes. Hi everyone. Greg Gelhouse here. Rohit, thanks for your question. As Tarek said, there is a tremendous. Opportunity within the group. It’s obviously been extremely successful over the past many, many years. The diversification program has already borne a lot of fruit. But there are opportunities to continue to. Improve and this is where a formal. Transformation program as Tarek has highlighted will really benefit the group. The senior management team is 100% aligned to drive that program and we’re looking forward to working together to achieve those aims. It is really forward looking. So we are looking to really make some significant improvements and help to drive that growth and, and bring that forward for the future. Thank you.
Rohit Ohri
Thank you. Greg. Tarat, My last question, you mentioned that you’re looking at starting the third shift at Karamsal. How much or what percentage is attributed to the shift in from Hyderabad and how much percentage attributed to probably the new orders or the green shoots that you see in the order book right now.
Tarak Patel
Yeah. So see by the time we decided to shut Hyderabad we didn’t have too much backlog there that came, came in. There was some but not significant. The real new backlog that is coming in Glasgow is really new orders that have come in. The new investment, the new capex that is going in. It’s not the Hyderabad load that is driving this new kind of starting of the third shift etc. Etc. It is real new volume that is being generated from the Indian market and this is without agrochemicals coming back. So this is still specialty and pharmaceutical and if agrochemicals were to come back at some point that would even kind of add to those volumes.
Rohit Ohri
Great. That was quite encouraging. Thanks for that Taru. Thank you team. Thanks a lot.
Tarak Patel
Thanks Roy.
operator
Thank you. We have a follow up question. It’s from the line of Samyak. Please go ahead.
Samyak Jain
Thank you for the opportunity again. So just wanted to understand that we are hearing a lot of traction from for the flow reactors from the chemical companies. Just wanted to understand how is GMM placed in the flow reactors and are we seeing any traction in that?
Aseem Joshi
So you just want to make sure you are asking about flow reactors, correct?
Samyak Jain
Correct. Yeah.
Aseem Joshi
So yeah, continuous chemistry is something that’s been sort of on the horizon for a long time in the chemicals space. You know, as GMM foudler, you know, we’ve been equipment manufacturers for batch chemistry also for a very long time. And we’ve been looking at continuous along the way as we have studied it, we recognize the potential of continuous chemistry and flow chemistry. We also know well the limitations thereof. So based on the studies we have done, we have embarked on a few initiatives at GM to make sure that as flow or continuous chemistry we are positioned to capture that.
And I’ll just touch on some of those first. We have an active collaboration with NCL along with other industry leaders, you know, chemical companies, pharmaceutical companies. We’re really the only capital good company in that alliance and that is at the forefront of development of flow chemistry in India and that’s in partnership with a UK agency as well. At the same time, within our teams we have strengthened our capability in flow chemistry. We have already a couple of projects, products, excuse me, that are available in flow chemistry and we’ll continue to expand that. So I think you can rest assured that when flow chemistry really picks up and hits its fine, GMM powder is ready to give solutions for customer.
Samyak Jain
Got it. Thank you so much.
operator
Thank you ladies and gentlemen. That was the last question.
Tarak Patel
Sorry, I think there’s one more question. You want to take that last one and then maybe we can close.
operator
Okay. Sir, it’s from the line of Rohit Ori from Progressive Shares. Please go ahead.
Rohit Ohri
Hi, thank you for the follow up questions related to the heavy engineering business. If you can take us through that. What sort of capacity is there at Watwa and do you think that there should be phase two of Watwa coming soon?
Aseem Joshi
Yeah. So you know, we believe we have plenty of room for growth in Watwa itself, certainly for the next couple of years. However, we do anticipate outgrowing that facility out in the future. So we’re actively working on those plans. The demand is very strong. We believe we have very strong systems in place now. In the past three years that we’ve been running the factory, we’ve seen very good ramp up as well as a very good margin expansion over the past three years. So we are looking to expand this in due course. We’ll share expansion plan.
Right now we have adequate space for probably the next two years at least.
Rohit Ohri
This elevated platform for the bullet train, it runs very close to our plant in Watua. Do you think that we can play some role via HE for the bulletin project, if any?
Tarak Patel
No, not really. I wish I could. I mean we could use if we could have a station next to our plant it would be very convenient but I think the station would be in the city of Ahmedabad. But you’re right, it runs very close to us. But unfortunately I think most of the work with that railway has been completed so yeah, it’s not an he play for us at all.
Rohit Ohri
Okay. Okay team. Thank you for answering. Thanks a lot.
Tarak Patel
Thank you.
operator
Thank you. Ladies and gentlemen. That was the last question for today’s conference call. I now hand the conference over to the management for their closing comments.
Dhaval Rajput
Thank you Steve. Thank you everyone for joining us today. It was pleasure interacting with you and we look forward to many such interactions during the course of the day. Take care and see you soon.
Tarak Patel
Thank you.
operator
Thank you on behalf of JGMM Fodler. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.