Gujarat Fluorochemicals Limited (NSE: FLUOROCHEM) Q3 2025 Earnings Call dated Jan. 29, 2025
Corporate Participants:
Bir Kapoor — Chief Executive Officer
Kapil Malhotra — Global Business Unit Head – Fluoropolymers
Manoj Agrawal — Chief Financial Officer
Akhil Jindal — Group Chief Financial Officer
Analysts:
Rohit Nagraj — Analyst
Sanjesh Jain — Analyst
Aatur Shah — Analyst
Ketan Gandhi — Analyst
Arun Prasath — Analyst
Dhruv Muchhal — Analyst
Archit Joshi — Analyst
Siddharth Gadekar — Analyst
Yash Shah — Analyst
Hansal Thacker — Analyst
Unidentified Participant
Deepak Sharma — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, good day and welcome to the Gujarat Fluorochemicals Limited 3Q FY ’25 Post-Result Earnings Conference Call hosted by B&K Securities. 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 0 on a touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Rohit Nagraj from B&K Securities. Thank you, and over to you, sir.
Rohit Nagraj — Analyst
Thank you. Thanks,. Good afternoon, everyone, and we welcome you to Gujarat Eurochemicals 3Q FY ’25 earnings conference call. We thank the management for providing us the opportunity to host the conference call. Today, we have with us Dr Bir Kapoor, CEO and Deputy Managing Director of Gujar Fluorochem, along with the senior members of the management team. I now hand over the call to Dr Bir Kapoor for his opening remarks, following which we can have a Q&A session. Over to you, sir.
Bir Kapoor — Chief Executive Officer
Thank you. Yes, thank you. Thank you very much. Good afternoon, everyone. A very warm welcome to all of you for GFL’s quarter three FY ’25 earnings call. For this call, I have with me my colleagues, Mr Akhil Jindar, who is Group CFO; and Mr Manoj Agarwal, who is CFO of GFL. I also have with me Mr Kapil Marhotra, Business Head of Fluoropolymers and Mr Rao, who is the Business Head of EV Chemicals. The company announced its quarter three FY ’25 results at its Board meeting held today. The results along with earnings presentations are already available on the stock exchange and on our website. I’ll briefly highlight the key financials and then give you an update on business operations and the outlook. For quarter three FY ’25, on consolidated basis, GFL reported revenue from operations at INR1,148 crores, which was up 16% on year-on-year basis. EBITDA stood at INR294 crores, up by 43% on year-on-year basis. The EBITDA margin for the quarter stood at 26%, up from 21% in-quarter three FY ’24. Consolidated PAT for quarter three FY ’25 was INR126 crores, registering a 58% increase on year-on-year basis. Overall improvement in financial was largely driven by a sustained improvement in the fluoropolymers vertical and better product mix driving higher margins. As we continue to deploy high capex, primarily in our battery materials business. Our profitability continues to be impacted by the associated higher depreciation and interest charges. However, we believe this will reverse once revenue contributions starts from this segment. Now let me briefly take you through the performance of each business segment for the quarter. Fluoropolymer volumes declined on quarter-on-quarter basis, primarily due to year-end holidays in key export market segments. While prices remained stable during the quarter, the commodity grade PTFE continued to face pricing pressures from low-cost suppliers from China. Looking ahead, the exit of a legacy player, combined with GFL’s successful development and qualification of higher-grade fluoropolymers, it is expected to drive a significant increase in revenues and profitability in coming quarters. Furthermore, industry dynamics in key sectors such as automotive, semiconductors and EVs present large-scale opportunities for value-added fluoropolymers. These developments are anticipated to translate into significantly higher revenues and margins for GFL in next financial year. Within segments, refrigerant gas prices, particularly for R22 improved during the quarter with further pickup expected going-forward. For our R125, which is primarily exported to US, Q3 is seasonally weak quarter, but both prices and volumes are expected to improve going-forward. With improvement in the market dynamics and a positive outlook for R32, we are going ahead with our capex for R32, which we had temporarily withheld. Specialty chemicals remained flat during the quarter, but are likely to see a pickup in volumes starting quarter-four FY ’25, driven by improving downstream demand. The bulk chemicals segment operated at full capacity during the quarter, reflecting strong operational efficiency. Caustic soda prices improved after remaining weak for the past five, six quarters, thereby improving the segment’s performance. MDC prices have improved during the quarter. However, it is expected to be muted in near-term because of additional capacities being commissioned in India. Let me now give you an update on the battery chemicals business. We caters to EV, which caters to EV and ESS segments. We continue to take rapid stride in this business to position ourselves as an emerging battery material supplier globally outside of China. The EV story continues to play-out as per our expectations and we see this segments emerging as a very large business for us. The demand for our products are going to be very robust, not only from the EV segments, but also from the rapidly-growing ESS segment, which is a very essential piece in the entire energy transition space, be it renewable energy or green hydrogen. The market is most promising with large-scale battery manufacturing capacities being set-up. Based on our ongoing interaction with our US customers, despite what we are hearing in the news, the US market is continuing with its ambitious capacity additions. The introduction of new models and ongoing technological advancements are likely to drive further growth. By 2025 it is projected that one in four cars sold-in US will be electric. Also the US market has evolved to a position where long-term vehicle ownership economics are gradually turning in favor of EVs. Europe 2 is marching ahead with its ambitious EV plans and the battery production capacity in this geography is expected to grow significantly, reaching almost 800 gigawatt-hours by 2030 with multiple gigafactories under-construction. While the global material story remains intact, the domestic market offers a wonderful opportunity, providing another large addressable market for our products. Recently, based on our estimates, the capacity which has been announced are in excess of 300 gigawatt-hours, providing providing an additional upside potential in the domestic markets for ESS and EV. As some of you may be knowing, just this week the Maharashtra government has announced setting up of a panel to explore the banning of petrol and diesel cars in Mumbai city area. Delhi government is also exploring transitioning all the last mile delivery logistics away from fossil fuels to EV by 2027. All these developments augur well for the growth in-demand for EV. GFCL EV has the first-mover advantage as a non-Chinese global supplier in the battery material space. Early qualifications of GFCL EV products at this stage, combined with high entry barriers put GFCL EV at a unique position to grow with its customers in this region. As our customers continue to invest large capacities or large capexes in EV and ESS, we remain committed on our battery material capex plans and expect a strong growth trajectory. We are committed to our cumulative capex plan of INR6,000 crores by FY ’28, as we had indicated earlier. At optimal utilization level, this business is expected to achieve around 2x asset turnover and approximately 25% EBITDA margins. GFL is well-positioned to capitalize on the opportunities across all segments. The fluoropolymer segment will benefit from the adoption of high value-added products, while fluorochemicals will see improved pricing and demand from Q4 FY ’25. The EV battery material business is expected to ramp-up significantly going-forward. We are confident of delivering sustained growth and create long-term value for all our stakeholders. Thank you very much. With this, I close and open the session for question-and-answer.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star N1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press t and two. The participants are requested to use handsets while asking a question. In order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one or two per participant. Should you have a follow-up question, we would request you to rejoin the queue. Ladies and gentlemen, we will wait for a moment while we — while the question queue assembles. The first question comes from the line of Sanjesh Jain from ICICI Securities. Please go-ahead.
Sanjesh Jain
Good afternoon, sir. Thanks for taking my question. I got a few of them. First on the fluoropolymer business. Has the 3M plant shut-down and you have said in the presentation that we have received the approvals or a verification for the value-added grade, which I believe would have been sold by the legacy player. In this context, when should we start seeing the material offtake of fluoropolymer growth coming in, will it be Q4 onwards or you think it will be more like a second-half of FY ’26? And second follow-up question on it is, India was expected to increase the consumption of FTM on the back of ethanol based vehicle, our ethanol supportive vehicles coming into the market which need SKM, has that phenomena started? This is first on the fluoropolymer business.
Bir Kapoor
Okay. Thanks, Sanjesh. Thanks for your question. The first question is about the plant shutdown. As we understand the plant is shut-down in December last year, which is December ’24. So that is already shut. We have already gone through the qualifications on various grades. We have received qualifications and we expect now that into commercial sales in-quarter four onwards. So it’s not very far away. We have been waiting for this a moment to be there and I think it’s now we will start seeing a ramp-up in our fluoropolymer sales, okay. The second question you had was about India ethanol blending. There is several grade which is going through the qualification. However, we are not seeing the impact of this in our number and we expect that growth to come in next few quarters. So that also is one of the reason for us to be so optimistic about fluoropolymers segment, Sanjesh.
Sanjesh Jain
Got it. And one on the — this international sales of FKM. We had 21,000 metric ton of PTFE and including PVDFE were what at 18,000 19,000 metric ton in the new fluoropolymer. Should we be reaching the peak utilization in FY ’26?
Bir Kapoor
Yeah. Yeah. I mean, I won’t comment on the number, but all I can tell you, Sanjesh, is that we expect our full capacity utilization to be there by the end of FY ’26 yes.
Sanjesh Jain
Got it. Got it. That means a very material — so what is — what is the expectation of revenue and EBITDA for FY ’26 in that case?
Bir Kapoor
We cannot provide the forward-looking statement, Sanjesh,
Sanjesh Jain
No, that’s fine. That’s fine. I understand that.
Bir Kapoor
Thanks.
Sanjesh Jain
See, the question on the refrigerant gas now, R22, we have put a pause. Now why there is a sudden change in the R32 capacity addition and what kind of capex and capacity addition are we looking at? And when should it come? Because we are already at a frag end of quota determination period by the time we come up with the plant. Does it really make sense because the quota we get and what we can sell thereafter will be a fraction of the plant capacity.
Bir Kapoor
Okay. You know, we had — remember, we talked about R32 earlier also and that kept our project on-hold. And partly because at that time, the market conditions and pricings were not really conducive to making investments, okay. We had quota at that time. We still have quota and we still have time. We still have time up to FY ’27. So it’s not the fag end-up and we can discuss it separately, but there is a significant potential in R32 and as the pricing have firmed up, as you may be knowing, so we are looking at investing in R32 now because we see a business potential going-forward. And our capacity plan, of course, will come into phases, but we are looking at almost setting up a capacity of 30,000 tons,
Sanjesh Jain
Okay.
Bir Kapoor
So — and we have time in terms of till we can utilize this quota. Metric tons from business perspective, it makes sense to invest because the pricing is right and the demand-supply situation today is conducive to making this investment and looking at a good returns.
Sanjesh Jain
You said 30,000 metric ton.
Bir Kapoor
Yes, up to 30,000.
Sanjesh Jain
And the first phase will come by what time-frame and how much?
Bir Kapoor
It will probably we had started this project earlier, so the lot of groundwork has already been done, Sanjesh. So we will probably take approximately by next year, by the end of maybe quarter-four of next financial year, we’ll probably be there.
Sanjesh Jain
That means March ’26, ’26,
Bir Kapoor
Correct.
Sanjesh Jain
Got it, got it. No. Because it’s been on and off for us, we have not been very confident with this business and we thought that
Bir Kapoor
Prices, Sanjesh, so you tell me what were the prices when we talked last-time and what is the prices today?
Sanjesh Jain
But some of your peers still went ahead, right?
Bir Kapoor
What’s that?
Sanjesh Jain
Some of our peers still went ahead.
Bir Kapoor
Of course, everyone have their own set of — and most importantly for us, we had several other priorities, Sanjesh. We were investing in chloropolymers at that time and then we had a cycle on EV. This is the time — I think now that for GFL, our investment in chloropolymers are not going to be there in the coming year. So it’s a — it’s mostly now where GFL would focus more on these area the opportunity which we had put on-hold earlier.
Sanjesh Jain
So what is the capex for this entire capacity?
Bir Kapoor
Entire capacity would be higher, but initially, as I said, it will be in the phases, so it will probably be at the order of INR150 crores,
Sanjesh Jain
INR150 crores
Bir Kapoor
Or say, yes.
Sanjesh Jain
Last question. US is looking to scrap the IRA subsidy on the EV and other things, which clearly suggest that the encouragement which government used to have on the EV side in the US market that appears to be tapering off and they are pushing for more oil drilling, which supports the ICE vehicle. We still believe that we will be able to do this INR6,000 crores of capex, what gives us that confidence?
Bir Kapoor
Okay. First of all, what gives us this confidence is our continuous interaction with our customers, which we have been engaging very closely in last several weeks. In fact, this announcement of a IRA subsidy may go away or the considerations, it was under consideration for — to be revoked. It’s been there for quite some time. It’s not new. So — and we have been talking to our customers and most of our customers plan in terms of their investment and setting up the capacities is still there. So based on their investment and their capacities, we fairly — we have a visibility that at least in next three to five years, the plans that we had given is going to be going to be intact,
Sanjesh Jain
Okay. But China,
Bir Kapoor
There might be some minor impact because of course, this subsidy, we’ll have to wait-and-see what happens to the policies because these — there are several policy which are intricately they are closely linked, okay. So if this goes away, then what else comes in, we’ll have to look at that and then look at the opportunity that it brings in
Sanjesh Jain
Got it. Got it. That’s it from my side. Thank you, sir. Thank you for giving all the opportunity and best of luck for the coming quarters.
Bir Kapoor
Thanks, Sandeesh. Thank you.
Operator
Thank you. The next question comes from the line of Atur from ICICI Prudential AMC. Please go-ahead.
Aatur Shah
Yeah, hi, sir. Thanks for the opportunity. Sir, just on R32, I mean,
Operator
I request you to use your handset, sir, Mr Atur.
Aatur Shah
Hello. Yeah, is it better now?
Operator
Yes, sir. Please go-ahead.
Aatur Shah
Yeah. Thanks for the opportunity. So just on R32, sir, I mean, I mean, I didn’t clearly understand that based on today’s — just because pricing has improved, what-if pricing drops after another six months, what happens to our capex decision? How can basically someone decide on current pricing and how should one think on that
Bir Kapoor
, yes, so what we are our position right now is the price of R32 going up is closely linked to certain quota reductions, okay. And there is a demand-supply situation and we expect it to continue. That’s what our projections are internally and that’s how we are taking the business decisions to invest in capex for this.
Aatur Shah
No, I mean, like you are not a new player in rough gas. I mean it goes through its own cycle, pricing, etc. I mean having clearly denied three months back and now suddenly setting up just because prices have gone up, doesn’t make — I mean,
Bir Kapoor
We had to put this on-hold, Atur, if you remember almost two years back because we had too many things on our and we had plan of investment, we had gone ahead to some extent and then put on-hold because of several other things.
Aatur Shah
So for example, if six months, three months, six months down the line pricing again dropped, you would still go-ahead with a 30,000 tonnes, right, that’s.
Bir Kapoor
So based on our sort of estimates, I think it’s unlikely that we will see — go back and see the number of $2.3,
Aatur Shah
Okay. Okay, fair. Thanks.
Operator
Thank you. Thank you thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one or two per participant. Should you have a follow-up question, we would request you to rejoin the queue. Thank. The next question comes from the line of Ketan Gandhi from Gandhi Securities. Please go-ahead.
Ketan Gandhi
Hi, sir. It’s regarding the follow-up on the previous investor. According to section 7 of the executive order, what they have freezed is the freeze of the fund for EV charging stations and nothing to do with the EV batteries or EV per se. And they are only talking about reduction in the IRA, let’s say, $1.5 thousand. And I believe that has to be done only amendment by the legislation or legislative action and it requires a lot of effort. So is my understanding correct in this and even that for target for new electric vehicle sales by 50% by 2030 35, it was only a guidance and that has been knocked down by the new president. So basically, it’s not neutral and with that respect what is your view on with respect to our company? I think we are neutral or still there is a issue in that
Bir Kapoor
Now when you say by neutral, you mean that if IRA revoked the overall there’ll be neutral impact on the market, is that your position or question?
Ketan Gandhi
No, basically doesn’t change anything because law-wise, they have done for battery charging station, one end. And second, they will remove the guidance.
Bir Kapoor
Of course, it’s not right for me to comment on other countries policies and their decisions. But what we typically go by the assessments are customers who are more closely associated with the policies of their governments, okay. And based on what we hear from them and what we interact with them, it seems some of those plans are intact. So maybe perhaps what you’re saying maybe, maybe correct.
Ketan Gandhi
And my second question is I think first week of January China has banned critical tech and mineral export for EV. I believe it will be much more beneficial for GFL EV batteries. Any view on that, sir?
Bir Kapoor
First of all, you know, any other companies or anyone who is looking for procuring technology, of course, may get difficult for us. But as we are concerned today, we have plant set-up. Our LFP plant will be set-up in another several few weeks, in fact, mechanical completion and then start-up by the end of this financial year. So we have most of our basic, I would say, building blocks for our EV chemical plants are in-place. So we are not that much concerned about that. Of course, if you go and read the fine prints of the of the restrictions, that is typically on materials which are a new developed or highly developed products, not on some of the product which is currently in the market. That’s what our understanding is.
Ketan Gandhi
So in short, if that is to come in picture and new plants were sets up in India also, GFL is going to be benefit because we are everything
Bir Kapoor
— we have a first-mover advantage. We are far ahead. We have almost all our basic modules of commercial modules of all the verticals we have already set-up.
Ketan Gandhi
Fair enough, sir. Sir, I have some more questions back-in the queue. Thank you.
Operator
Thank you. Thank you. The next question comes from the line of Arun Prasad with Avendus Spark. Please go-ahead.
Arun Prasath
Good evening. Thanks for taking the opportunity. Sir, my first question is on the R32 and related raw-material. So chloromethanes, I believe currently we are selling outside externally. So we will be post this plant R32 commissioning will be completely captively consuming or will be still exposed to the sales.
Bir Kapoor
It around it depends on course how we phase-in our capacities, but we are expecting at least 50% of our MDCs will be utilized in-house.
Arun Prasath
Okay. All right. So still will be 50% will be still
Bir Kapoor
MDC would be available for merchant sale.
Arun Prasath
Thank you. Sir, if we are going for taking advantage of the quota availability and then if you have a very long-term view on the R32 that it will be continuing to be higher. We don’t we go full-fledged and completely with plan to reduce only because either way, if you see, we are staying INR100 crores of capex. Two years before INR150 crores on our balance sheet on our cash-flow generating ability, it was — it was not a very big movement, okay. So is the capex was the only concern or something else has changed?
Operator
There’s a lot of disturbances and we request you to use your handset.
Bir Kapoor
There’s a lot of disturbances. It’s hard to hear, Arun, please.
Arun Prasath
All right, sir. Sorry. I hope now it’s very clear.
Bir Kapoor
It’s better, please.
Arun Prasath
Yes. So I was asking the capex alone is what was the reason why we had a change of heart because INR150 crores two years before or even now on our balance sheet, it’s not a very big mover, but given that the long-term of positive outlook on the R32 and however quota you know we can utilize, is there something else which has — which has made us doing the shift or it’s more about our consuming chloromethanes. How should we do it?
Bir Kapoor
It’s top — typically these business decisions are taken with several factors in mind. Of course, know, capex is one part. But of course with the pricing, the market scenario, the future of market scenarios, what the competition is doing, what is the situation in our — one of the largest suppliers in the world, what is the pricing there, what is the quota, what is their capacity to supply, all those factors get into these kind of decision-making. So I would not say that it was purely INR150 crore that was — that had held back. It’s multiple reasons. And today, we are seeing a business potentials and of course, we had quota at that time, we still have quota and we would like to utilize going ahead.
Operator
Thank you. MR. Just that you return to the question queue for follow-up questions as there are several participants waiting for their turn. Thank you, sir. Thank you. The next question comes from the line of Dhruv Muchar with HDFC AMC. Please go-ahead.
Dhruv Muchhal
Yes, sir. Thank you so much. Sir, in the presentation, you say that we are going ahead with the expansion of the salt production capacity. So if you can please help us what is the quantum that you’re trying — that you’re planning to put, say, in the next two, three years and the visibility probably that you have from your customers?
Bir Kapoor
Yeah., we have not given any capacities, but what we are doing, what we mean — what we meant when we said we are going for the expansion because we initially started set-up our salt plant, which is the minimum commercial-scale capacities to establish the proof-of-concept, the quality, everything. So everything is fine now. So we are adding multiples of that. And that is again based on the — our business requirements and the contracts that we have with our customers to supply in near-future. So it’s based on that now we have started work to expand.
Dhruv Muchhal
Got it. So if I understand it right, in the EV ecosystem, the first set of growth will probably come from the salt followed by probably the LFPs. And then as the domestic market ramps-up the electrolyte solution also. Is that a fair understanding? And because if you’re going ahead with the salt plant, is that you’re seeing a larger visibility from US customers?
Bir Kapoor
Yes. I think you’re right. Initially, we started with salt and of course continued with electrolyte. The electrolyte is mostly for domestic market and domestic markets we are seeing, but as in case of any new technology, new emerging industry, there is a — there is a hiccups to start-up and that’s what we are seeing at our customers end. And some of the plants you know have been shifted. So clearly, the salt and electrolyte, in my view probably will go almost annually and electrolyte for domestic markets,
Dhruv Muchhal
Okay. Sure.
Bir Kapoor
And of course, one point that I think you missed is the binder that will also be another one which will correct anyways.
Dhruv Muchhal
Sure. So the second question was on the FKM opportunity because of the ethanol blending program. Is it possible to give us some sense of the size that the India market can be for these kind of products? Products and you know-how soon can that ramp-up happen? So I believe it changes — the changes in the engines where the product gets used. So what can be the potential demand?
Bir Kapoor
Yes, I will. I will request our fluoropolymer business side, to take that question. Kapil, please. Can you take this?
Kapil Malhotra
Yeah. Hi, this side. Yeah. So for the ethanol blending, as Dr Kapoor said, that the qualifications for some of it, because you see, they are all pretty critical items. So qualifications have been done. And now we are just waiting for the OEMs and 1 to start placing the commercial orders. So we’ll start seeing the ramp-ups from the next quarter onwards and it will keep on happening for quarter-to-quarter probably for the whole financial year and when the market gets stabilized totally after that. Once they have consumed all the qualifications which have happened and a couple of other modifications which have happened.
Dhruv Muchhal
Yeah. But what is your sense of the overall demand in tonnage or probably tonnage would be a reasonable sense to — for us. So some sense of the demand potential is really high.
Bir Kapoor
See, it is going to be significantly higher from the current volumes, but right now to assess that demand is slightly tough because each vehicle will have his own grammage, so it’s very difficult to calculate.
Dhruv Muchhal
Okay, sure. Probably I’ll come back later from that. And sir, just last quick question is on the R32 expansion, given it will be about INR30,000. Would you need to also expand your AHF? And is that factored in your capex plans? Because I think your HF you also will require for your other programs, say, PTFE and a lot of other programs as there will be growth even there. So just some thoughts there, please, sir.
Bir Kapoor
Yes, we have a plan for AHF as well, Ru. Of course, sir, in next quarter, I think we will share our capex plan for the next year and then we’ll talk about it. But yes, you’re right. So eventually because we’ll have AHF requirements on several fronts. So looking at that, we’ll be adding AHF capacities as well. And then that’s not included in 150.
Dhruv Muchhal
That’s not includes. And what is the quantum in the Phase-1 that you’re planning to do for the R32? So 30 is the overall number. Phase-1 will be how much?
Bir Kapoor
Initially around 20,000 tonnes.
Kapil Malhotra
Okay, sure. Thank you so much. Thanks. That’s all. And sir, just sorry, one request is, sir, a lot of your businesses that you have stopped giving capacity numbers or volume numbers, it has become to become difficult to expect your growth forecast. For example, the capacity or the FKM capacity. So probably if there is some other better way to make it more transparent, it will be very helpful. That’s a request.
Bir Kapoor
One of the way that we have in — now started guiding just like we did do in EV is we give capexes and then the asset turnover number and indication of the margins because capacity numbers often, of course, you know, we provided in the past and — but unfortunately, sometime it’s also goes to certain areas where we do not want it to go.
Dhruv Muchhal
Sure. Thank you. Thanks. Thanks for that thank you.
Bir Kapoor
Thank you.
Operator
Thank you. The next question comes from the line of Archit Joshi with Nuvama Institutional Equities. Please go-ahead.
Archit Joshi
Thank you, sir for the opportunity. A lot of questions on R32. I have a couple of them. Sir, the capacity that you’ve planned, so 20 may be in the first phase and 10 in second. Basis the quota that we have, will all the capacity that will be putting up be available for our sales or there is a capping on that with respect to available capacity for sales.
Bir Kapoor
No, our intention is to utilize the quota that we have available with us,
Archit Joshi
Okay. So that would be 30,000 tons in totality.
Bir Kapoor
Yes, or whatever the number comes out to be. It’s around that.
Archit Joshi
Right, sure. Sir, second one, 30,000 tons in terms of capacity. I was just doing a few calculations. I think the total HFC market is roughly around 1 million tons and with the current quota reduction that we have seen, especially a lot of higher GWP gases are being reduced and more focus coming on R32 having a lower DGWP. This market roughly seems to be somewhere around 2.5 laks to 3 lakh tonnes and 30,000 tonnes seems to be almost 10% of that basis the calculation that I’ve done. And in the past, you must-have seen that IGAS had announced a 40,000 ton capacity in Abu Dhabi. That also seemed to be a fairly large number. Sir, what has been our internal calculation whilst deciding this 30,000 ton plant, is it fair to assume that it will be completely subsumed in the demand ecosystem?
Bir Kapoor
Yeah, in — I think we also expect the demand growth to come and going-forward. And this we are of course looking at globally because India is one of the few countries which has the capacity to expand and has quotas, okay. And we will have that you know propensity to add capacity till ’27. So I think when we look at our potential growth and the potential that is available globally, I think we think that this can probably be able to meet the, we’ll be able to meet the targets of demand?
Archit Joshi
Sure, sir. Thanks. Thanks for the clarification and all the best.
Operator
Thank you. The next question is from the line of Siddharth with Equirus. Please go-ahead.
Siddharth Gadekar
Sir, just one question on the. When we said that we will be able to utilize our entire capacity given the quotas, these quotas are mainly due to the 1.5 quota also that we have that we are assuming that we will be able to use for R32?
Bir Kapoor
Yes, correct because the quotas are for HFCs.
Siddharth Gadekar
Okay. Okay, got it. So basically, even if we produce lower than CY20, we will be able to produce the entire 30,000 ton in and beyond that, that is a fair understanding, right?
Kapil Malhotra
Correct. Correct. You’re right.
Siddharth Gadekar
Okay, sir. Thank you.
Operator
Thank you. The next question comes from the line of Yash Shah from TCG AMC. Please go-ahead.
Yash Shah
Hi, sir. Thank you for the opportunity. Sir, my first question is with regards to our EV business. We’ve mentioned in the last quarter that we’ve incurred capex of around INR1,000 crores and cumulatively, we’ll be incurring INR6,000 crores in FY ’28. Just wanted to understand your point-of-view of what kind of capacity utilization are we targeting on a year-by-year basis until FY ’28, assuming that we will be reaching peak utilization by FY ’30 of the — of the INR6,000 crores of capex which you will be incurring. So just wanted some kind of an idea on that part.
Bir Kapoor
So typically, of course, the capacity utilization number is another number which we cannot provide quarter-on-quarter and — but our understanding is that these businesses, particularly EV, is qualification-based. So there’s certain qualification time. So there’ll be certain time period in which the capacities get utilized, okay. Initially that time may be slightly higher and then subsequently, if I go closer to FY ’28 and beyond, that time would come shorten because our growth then or capacity additions gets closely linked to customers’ capacity addition because then our plant becomes a qualified plant for now as a part of their supply-chain. So initially, it can be anywhere probably, I would say, year to two year in terms of fully utilizing and then it will shorten up as we go to FY ’28. And in terms of I’ve already given you the approximate asset turnover ratio, which is two-factor of two?
Yash Shah
Okay. And just a continuation of the previous question. On the capex, which you are increasing of our salt plant, will it also be included in the INR6,000 crores or — and are we basically planning to reduce CapEx on some other of the EV business or how does it work?
Bir Kapoor
No, the — our intent of giving the statement about salt was — it’s not an additional capex. Our capex plan is still what we had indicated INR6,000 crores. However, so the statement — the intent was to say that we are now reached a point where we feel the capacity addition has to be done. So that was sort of a kind of a milestone. But whatever the capex that is involved is all part of what we have indicated. There is no additional capexes which are going to be done.
Yash Shah
Got it. Just last one question from my side. Sir, on the gross margin front, we’ve seen expansion on quarter-on-quarter basis. And you mentioned in your opening comments that we saw improvement in the product mix, whereas in the presentation, you said that there have been a lower-volume pickup in fluoropolymers business. So just wanted some clarification on that. In which particular segment did we see improvement in the product mix? And what has led to the improvement in gross margin?
Bir Kapoor
So let me tell you first is that the volume that we talked about is typically the seasonal impact because quarter three, if you go back and look, always been slightly lower because there is a holiday season in US almost a week to 10 days during Thanksgiving and Christmas and then similarly in Europe. So because of that, there is always a dip and then so it’s a seasonal impact. And when coming back to margin improvement, margin improvement is purely by-product mix as our overall fraction of our value-added products and the new polymers are increasing, the margins would keep on-going up.
Yash Shah
Got it. Got it, sir. Thank you. Thank you for answering all the questions.
Bir Kapoor
Okay. Thank you.
Operator
Thank you. A reminder to all participants, you may press and one to ask a question. Ladies and gentlemen, you may press TR and one to ask a question. The next question comes from the line of Arun Prasad with Avendus Spark. Please go-ahead.
Arun Prasath
Thanks for the follow-up opportunity. So sir, last year we used to guide about reduction in the power and fuel costs. Is it now fully reflected in our numbers or still there is a potential to reduce from this — from the current levels?
Bir Kapoor
And I’m sorry, I couldn’t get your question. What is this regarding reduction in power and power and reduction in
Arun Prasath
Power and fuel costs.
Bir Kapoor
Okay. Manoj, can you take that question?
Manoj Agrawal
Thank. Yes. This — with the — we are aggregating all our wind assets in our one platform, the power cost will reduce from the next financial year. And currently our power cost stood at around INR800 crores. So we expect a reduction of 10% to 12% 10% to 12% reduction, that is around INR100 croress
Arun Prasath
INR100 crores. So that we will completely see in ’26 at the current volumes?
Manoj Agrawal
Yeah, yeah.
Arun Prasath
So if the corresponding volume growth happens, what kind of a — so our — in the new set of procurement, what will be our weighted-average power cost, sir on a per union basis.
Kapil Malhotra
Yeah. So the — if I may answer the current prices are certainly higher because we are buying on the grid and other things. The power purchase agreement that we are — we have signed for the new energy — renewable energy is at INR4. So that would constitute more than 80% of our total requirement. So to that extent, the power — the weighted-average will be in the range of around INR4.5 rupees.
Arun Prasath
Okay, understood. And my second question is on the on the EV side. We have said that we have kind of stabilized the plant post of the plants. This will be at the very pilot stage or at or like at what stage because when the utilization goes up, we once again needs to prove the stabilization, stabilized operations. Is that the right understanding?
Bir Kapoor
No. All our plants are commercial-scale. There is no pilot-scale we are talking about, okay. And these are typically a modular plants. So this is the small commercial module and then this will be the repeated units. And these are fully commercial plants. There’s no pilot plants.
Operator
Thank you. MR. Arun Prasad, may we request that you return to the question queue for any follow-up questions. Thank you. Our next question comes from the line of Rohit Nagraj with B&K Securities. Please go-ahead, sir.
Rohit Nagraj
Yeah. Thanks for the opportunity. Sir, first question is, you mentioned that fluoropolymers optimal capacity utilization by end FY ’26 and probably you will give us what will be the capex for FY ’26 and FY ’27. How much gestation period will it take for the capex to fructify in case those capacities are being completely utilized in FY ’26? Thank you.
Bir Kapoor
Rohit, are you referring to fluoropolymers?
Rohit Nagraj
Yes, fluoropolymers. Right.
Bir Kapoor
Fluoropolymers, the capex has already been incurred. As you know, we have been saying and now the capacity utilization is going through. So we expect, as I said that by end-of-the next financial year, we will have the capacities, which is available to us fully utilized. So if you write-back and look at, you can say that how much time we have taken is probably year and a half to two years to have the capacities set-up and then utilized.
Rohit Nagraj
My apologies
Bir Kapoor
Answer your question.
Rohit Nagraj
Yeah, my apologies. My question was for the next leg of growth, if we were to put up capacity because those capacities will get consumed in next one year, what is the timeframe that we are looking at for either debottlenecking or adding the new capacity?
Bir Kapoor
See what happens is that I think this side indicated several earlier that typically our capexes are high for setting up the monomer plants, okay. And once we have monomal plants there, then adding capacities through reactors is normally an incremental capex. Those capexes are not very-high. So coming back to the to addition of — I think the future capacity additions will primarily be on reactors because both of the monomer that we have two value chains, one is a 142B and other is a TFE or R22 on TFE, both we have monomer capacities available. So going-forward, adding further capacities and reactors is incremental costs. Okay. Rohit, are you there? Is that okay?
Operator
The line for Mister Rohit has dropped. One moment, sir. So we move to the next question. The next question comes from the line of Hansal Thakkar from Lalkar Securities. Please go-ahead.
Hansal Thacker
Hi, Dr Kapoor and gentlemen, congratulations on an encouraging and a steady quarter. Sir, just a quick comment on the disclosure that the company made on the 27th of December, wherein we signed power purchase agreements at INR4 a unit. My understanding is that this could generate approximately INR400 crores to INR450 crores savings in power costs. So firstly, is that an accurate figure?
Bir Kapoor
Yeah, I’ll request to take.
Akhil Jindal
So 400 megawatt, obviously, it’s a renewal energy. So it can’t be compared with the thermal energy where the PLFs are 90% plus. This is a hybrid PLF, hybrid project. So the PLFs are in the range of between around 30% as a good estimate. So you can imagine when we are setting up a 400 megawatt, it’s roughly around 100, 130 megawatt as a — as a net genitable power to that extent, there would be savings.
Hansal Thacker
So if I take 30% PLF, then we are looking roughly. So 457 megawatts at 30 PLF is working out to around that figure only, right, sir, INR400 crore INR450 crores?
Akhil Jindal
No, because obviously, today also we have some renewable sources and everything. We have worked out the net saving, I think just as our first cut, it would be in the range of around INR150 crores per year, roughly.
Hansal Thacker
Okay. So the net saving is about INR150 crores a year.
Akhil Jindal
Yeah, all-in all, put together, yeah.
Hansal Thacker
Okay, okay. And for my second question, sir, I mean, much has been deliberated on this refrigerant gas. I just want to know that whether these price increases of gas actually reflect in this quarter or they’re likely to reflect in Q4 and thereafter?
Bir Kapoor
I think Q4 and thereafter is a marginal impact, not much of this quarter.
Hansal Thacker
Okay. So this quarter really does not show any major impact on the rough gas margins, but it will continue going-forward.
Bir Kapoor
Yes. Yes.
Hansal Thacker
Right. And sir, my last question, so taking from one question prior, so as we understand that China periodically plays around with these export controls, etc. And to some extent, would it be right to assume that going-forward, manufacturers will try to diversify their suppliers outside China? And to that effect, we might benefit from this?
Bir Kapoor
Yes, that’s one of the factor that has already been considered because I think India as a country of course has an advantage there.
Hansal Thacker
Great, great. All right, sir. Thank you so much for that clarification. All the best. Thank you.
Bir Kapoor
Thank you, Rohit. Thank you, Him. I’m sorry.
Operator
Thank you. The next question comes from the line of Shah from Goyam Private Limited. Please go-ahead.
Unidentified Participant
Yeah. Thank you for the opportunity. Sir. I have a question in the battery material side, like what is the capex plan for the next 12 to 18 months? Now will it be funded
Bir Kapoor
Next 12 to 18 months, I think we already — of course, as you know, we have already raised funds and that process of raising fund is already on.
Akhil Jindal
Just to add-on to what Dr Kapoor said, if you remember in the last quarter, we have — we have told everyone about the INR1,000 crore raise that we have already done. So that money is very much available for — for say our capex for the period of next 12 months. We are also in the advanced-stage of discussion with various large international sovereign funds. So hopefully, by the end of this quarter, we will be in a position to share concrete names and other things once we have completed the full exercise with them. But I can only tell you that most of this growth is only coming from equity. We are not borrowing anything at the EV level for any of these capex. And we are well-funded without really dependent upon the GFL cash flows to fund the CV for the foreseeable future. So to that extent, INR1,000 crore is in the bank plus the new discussion happening with the govern funds that would be good enough for us for our future programs.
Unidentified Participant
Okay. Okay. Got it. And thank you. You second question. So I think second question.
Operator
One moment, sir. MR., are you able to hear us?
Unidentified Participant
MR. Hello.
Operator
Yeah. Hello. Can you me? Yes, sir, go-ahead with your question. Your remarks. Please go-ahead.
Bir Kapoor
We can hear you.
Unidentified Participant
Given the IRA regulations, what kind of opportunities we see in the US market and what is the expected timeline for this growth?
Bir Kapoor
You know, of course, as we had said earlier that we are seeing it as a large opportunity it’s a very, very large market for us. And as an alternate supply-chain or a supply-chain which is alternate to China, I think we have a tremendous opportunity which is available to us, okay. And of course, IRA has created a tailwind. But fundamentally also we see that this opportunity is very, very large and the GFCLEV can play a very large role as a credible alternate supply-chain alternative.
Unidentified Participant
Okay. Okay. Thank you. That’s it.
Bir Kapoor
Thank you.
Operator
The next question comes from the line of Deepak Sharma, who is an investor. Please go-ahead, sir.
Deepak Sharma
Thanks for the opportunity. And my first question is, what is the long-term EBITDA margin, which is sustainable for the next one or two years.
Bir Kapoor
Thanks, Lipak. I think it’s a forward-looking statement, which, of course we cannot provide but whatever our expectation, et-cetera from our business, that EBITDA margin, etc., expectation we have already provided.
Deepak Sharma
Okay. Okay. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for the question-and-answer session. I now hand the conference over to the management for closing comments.
Bir Kapoor
Thank you yeah, first of all, I would like to thank you all of you for being part of this con-call. Clearly, as I said earlier in my opening statement that today, GFL, we are very well-positioned to capitalize various opportunities that are there in all segments, whether it’s fluoropolymers or refrigerants or battery material, which is an emerging business for us. So we look-forward to continue to interact and share our plan with you. So thank you very much for your interest and have a wonderful evening you.
Operator
On behalf of B&K Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.