HLE Glascoat Ltd (NSE: HLEGLAS) Q2 2025 Earnings Call dated Nov. 14, 2024
Corporate Participants:
Himanshu Khushalbhai Patel — Managing Director
Naveen Kandpal — Chief Financial Officer
Aalap Patel — Executive Director
Analysts:
Ronak Jain — Analyst
Veer Rajesh Vadera — Analyst
Vibhav Khandelwal — Analyst
Anupam Gupta — Analyst
Miraj Shah — Analyst
Rajeev Jain — Analyst
Arnav Sachdev — Analyst
Dinesh Naik — Analyst
Presentation:
Operator
Ladies and Gentlemen, good day and welcome to the Q2 and H1 FY ’25 Earnings Conference Call of HLE Glascoat 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. [Operator Instructions] Please note that the conference is being recorded.
I now hand the conference over to Mr. Ronak Jain from Orient Capital. Thank you. And over to you, sir.
Ronak Jain — Analyst
Hi. Good afternoon, everyone. Welcome to the Q2 and H1 FY ’25 earnings conference call of HLE Glascoat Limited. Today on this call we have Mr. Himanshu Patel, Managing Director; and Mr. Aalap Patel, Executive Director along with the other senior management team.
This conference call may contain forward-looking statements about the company which are based on beliefs, opinions and expectations as of today. Actual results may differ materially. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. A detailed Safe Harbor statement is given on page number two of the company’s investor presentation which has been uploaded on the stock exchange as well as company’s website.
With this, I hand over the call to Mr. Himanshu Patel for his opening remark. Over to you, sir.
Himanshu Khushalbhai Patel — Managing Director
Thank you. Good afternoon and warm welcome to all the participants. Thank you for joining us today to discuss HLE Glascoat Q2 and H1 financial year ’25 financials and operational performance. Today on the call we have Mr. Aalap Patel, Executive Director; Mr. Naveen Kandpal, CFO; and Mr. Nilesh Ganjwala, Senior Advisor to the company and Orient Capital, our Investor Relations partner. I hope everyone has had an opportunity to go through our financial results and the investor presentation which has been uploaded on the stock exchanges as well as on the company’s website.
The current global environment continues to pose challenges with evolving dynamics including regulatory changes, geopolitical tensions and commodity price fluctuations. Despite these headwinds, I am pleased to report that HLE Glascoat has delivered a strong performance across key metrics; revenue, operational efficiency, profitability and a significant uptick in our order book. While we have faced a few challenging quarters, our focus on strategic initiatives has allowed us to stay resilient and position ourselves for long-term growth. These include acquisition and expansion. Our acquisition of Kinam Engineering Industries has been transformative. As a leading manufacturer of heat exchangers and pressure vessels, Kinam’s integration is progressing well, with the third phase of integration underway. We have received stock exchange approval for scheme of amalgamation of Kinam Enterprise Private Limited with HLE Glascoat Limited and are now in the process of filing the application with NCLT.
The synergies are evident as demonstrated by a recent order win in the oil and gas sector, further unlocking opportunities in newer segments like paint, petrochemicals and more. Launch of THALETEC products. Our innovative THALETEC range has gained strong acceptance in the domestic market. This quarter we have seen encouraging order inflow. We believe this product line will continue to drive growth in India, contributing significantly to our overall performance in the coming quarters. Clean Energy Investment. We are excited to announce the joint venture with Clean Max Enviro Energy Private Limited by acquisition of 26% stake in Clean Max Anchorage Private Limited for a total investment up to INR3,036 crore. Clean Max Anchorage Private Limited will develop a captive solar and wind power facility in Gujarat with a solar capacity of 2.31 MWp and a wind capacity of 3.30 MW.
Order book and business outlook. As of September 2024, our consolidated order book stands at a robust, which is INR602 crore, representing sequential growth of 27%. While the chemical factor remains under pressure, we have observed turnaround in order booking and pricing this quarter. The order book now provides visibility for the next eight months in our international business and five months in the domestic market. We are also witnessing renewed momentum in our filtration, drying and equipment segment, particularly in the southern region, driven by a revival in the pharmaceutical sector. Meanwhile, our glass lined equipment business continues to deliver exceptional results, outperforming last year’s performance. Looking ahead, we remain cautiously optimistic about the coming quarters with a promising pipeline of opportunities across both domestic and international markets.
I will now hand over the call to our CFO, Mr. Naveen Kandpal who will take you through the financial performance for the quarter and the half year. Thank you. And over to you, Naveen.
Naveen Kandpal — Chief Financial Officer
Thank you, sir. Good afternoon to all the participants. I am pleased to share our financial results for the quarter and half year ended September 30, 2024. The company reported consolidated revenue from operations of approximately INR236 crores with a growth of 5% compared to Q2 FY ’24, EBITDA of INR35.4 crores, witnessing a growth of 19% year-on-year from Q2 FY ’25 and with the EBITDA margin of 15%, and PAT of around INR14 crores, a 33% year-on-year jump in correspondence to Q2 FY ’24 and a PAT margin of 6.1%.
On a sequential basis, we achieved a revenue growth of 3.8%, up from INR227 crores and a 50% increase in EBITDA and a significant 166.1% growth in PAT. For the half year ended our revenue grew by approximately 10%, rising from INR422 crores to INR463 crores. Our EBITDA grew 10% year-on-year and margin stood at 12.8%. In Q2 FY ’25, our filtration, drying and other segments — other equipment segments de-grew by 36% compared to Q2 FY ’24. We reported a revenue of INR65 crore in comparison to INR100 crore in the corresponding quarter. Likewise, in H1 FY ’25, our revenue dropped by 20% in this segment. Although, we de-grew in this segment, we were able to maintain the double-digit margin at 11%.
Meanwhile, our glass line equipment business generated about INR144 crore of sales compared to around INR122 crores last year, reflecting a growth of 18.4% with the EBIT of INR20 crores, growing by 124% in comparison to Q2 FY ’24. Sequentially, our revenue and EBIT grew by 8.4% and 224% in comparison to Q1 FY ’25 with a margin of 13.4% in Q2 FY ’25. Our new segment, heat transfer equipment showed a revenue growth of of 17%, contributing INR25 crores to our sales, up from INR21 crores in Q1 FY ’25. Talking on the debt, we are pleased to announce that we are on the track to reduce debt and we have repaid debt of INR35 crores. Our strong performance is all on the back of the improved receivables and better working capital management which has aided us in improving our operating cash flow.
In summary, despite challenges in some segments, our diversified portfolio, strategic focus and disciplined financial management have positioned us well for sustained growth. Now, I would request the moderator to kindly open the floor for questions and answers. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Now, our first question comes from Veer Rajesh Vadera from Niveshaay Investment Advisors. Please go ahead.
Veer Rajesh Vadera
Good afternoon. Am I audible?
Operator
Yes, sir. Please go ahead.
Veer Rajesh Vadera
So, my first question is, what is average selling price of glass lined equipment and as compared to other competitors? And the second question is what will be total addressable market for dryers and glass line equipment? And what is share of HLE Glascoat in that market?
Aalap Patel
Hello, good afternoon. So, the average selling price of a glass lined reactor is a function of a lot of different things. So size, configuration, etc. So for a typical reactor that a customer would configure and send us an RFQ for, we would be competing on similar price levels amongst the A category suppliers, let’s say. However, our push is constantly to include better technologies, especially now that we have access to technologies from THALETEC to create a differentiated product which will have obviously a higher selling price. As far as the total addressable markets for glass lined and filtration and drying goes, I think currently the market for glass lined equipment is around the INR1,000 crore mark and HLE has somewhere around 25% to 30% of that market. This is publicly the Indian market that I’m speaking about. For filtration and drying, I think the market size is similar, a little bit lower perhaps. And then HLE again has more than 50% of the market of the filtration and drying segment as well.
The total addressable market, however, for filtration and drying could potentially be much larger because we believe there are still a lot of users in the chemical and pharma space who don’t use modern filtration and drying equipment. So, they still use traditional equipment. And the markets where HLE is present, rather, sorry, the products, HLE is present which is noose filters and vacuum dryers, which are considered the, the newer state of the art equipment, they are still, they are still penetrated largely maybe let’s say in the top 20%, 25% of the users. So, there’s still a substantial user base who we do not use these advanced equipment. And you would still consider them a part of the addressable market because as they grow and as they modernize they would adopt the kind of filtration and drying equipment that actually manufactured.
Veer Rajesh Vadera
Thank you. Okay and what would be monetary term of selling price on an average of glass lined equipment?
Aalap Patel
Again it would be very difficult to give you a single number, but I think if I were to put an average selling price, maybe something in the INR20 lakh mark would be the average price of a glass lined equipment. Again, it’s a very general number. We manufacture a very wide range in terms of sizes and configurations.
Veer Rajesh Vadera
Okay. And I have one more question. What is current backlog within the order book and what is the typical timeline to fulfill these orders?
Aalap Patel
I’m sorry, could you please repeat your question?
Veer Rajesh Vadera
Am I audible?
Aalap Patel
Yes, you’re audible. Can you please repeat the question?
Veer Rajesh Vadera
So what is the current backlog within the order book and what is the timeline for fulfilling these orders?
Naveen Kandpal
Yeah. So, current order backlog is around INR600 crore and for India business it could be around five months and for international business it would be around eight months.
Veer Rajesh Vadera
And also I had one more question. Could you please break down your capex allocation for the upcoming year?
Naveen Kandpal
For upcoming year, as such, no capex project is planned. We will stick to the replacement capex only.
Veer Rajesh Vadera
Okay. Thank you.
Naveen Kandpal
Thanks.
Operator
Thank you. The next question comes from Vibhav Khandelwal from Laburnum Capital. Please go ahead.
Vibhav Khandelwal
Yeah, am I audible?
Naveen Kandpal
Yes.
Vibhav Khandelwal
Thank you, sir. Wanted to ask you, can you please tell us if the uptick that you’re seeing in the GLE segment, is it attributable to more of the chemical industry or the pharma industry? And also on the India and international flavor? It would be helpful if you just give some color on the cycle that we’re seeing on the chemical side since we were seeing some headwind over the past quarters.
Aalap Patel
Yes, the uptick, at least in this quarter has been predominantly driven by our pharma orders in the glass lined equipment business. While this is true for the consolidated number, I think the drivers for growth. For the India business were an equal mix of chemical and pharma whereas for the international business, the uptick was predominantly driven by our pharma orders. As far as the overall development in the industry is concerned, we are seeing that pharma is showing a stronger growth and we are seeing more interest from our pharma customers than we are seeing from the from the chemicals. So, while we are seeing some projects and inquiry pipeline building up in the chemical space, they are yet to convert into orders. However, in the pharma space we are both seeing strong inquiries and also order placement.
Vibhav Khandelwal
All right, this is helpful. Thank you. Also in the GLE segment, can you please give us a sense of what the sustainable EBITDA margins typically are? And you know, why are we seeing some delta between us and GMM?
Naveen Kandpal
I think the sustainable EBITDA margins in the GLE business range between 17% and 20%. In the longer term. The current margins are reflective of the slight downtick in the order book over the last two quarters. But I think in the longer run we believe that the sustainable EBITDA margin should be in the 17% to 20% range.
Vibhav Khandelwal
All right. And can you please give some flavor on why are the margins that we’re seeing, not, let’s say for this quarter or even the past quarter, but let’s say on a more overall level on the differential between our GLE margins versus that of GMM Pfaudler?
Himanshu Khushalbhai Patel
So, in all honesty, we don’t know what our GMM margins are on the pure GLE business because I believe they are not publicly reported.
Vibhav Khandelwal
All right. Okay. And one more question, sir, was, do we have a presence in China in terms of our equipment? If yes, it will be helpful if we give us some flavor on the competitive standing, given that there’s a lot of talk about incremental capacity coming in China, especially with the BASF capacity coming there. Additionally, if you could give us some flavor as to why a customer would choose us versus a local Chinese supplier for the equipment?
Aalap Patel
Yes. So, the answer to your first question is that we don’t currently have a presence in China. Neither do we have a manufacturing plant there nor do we sell any material quantity of our products there. I think the answer to the second question, which is what is the differentiating factor for HLE products. I think both in the glass lined and the filtration and drying space, over the last many, many years, we have strived to position ourselves as a solution provider rather than an equipment manufacturer.
Now, I know this sounds like a fairly cliched line, but if you really look at how our filter dryer business has evolved, it has evolved from making filter dryers for our own captive consumption maybe 30 years back. And that’s how the filter dryer business started. And we have continued to add features and innovate based on customer needs. And we have made a name in the market as people who would solve problems and innovate and give solutions to chemical engineering problems in general. And while this gave us a lot of success in the filtration and drying business, similar efforts were also made by THALETEC in the European market. So, we are also now able to infuse the same DNA into our global glass lining business.
Vibhav Khandelwal
Sir, my question was more on the China flavor. So, I wanted to ask, given that there were a lot of talk about and of incremental capacity, especially in chemicals coming in China, especially with the BASF setting up a 10 million capacity there. So, do we have any then plans to set up in China or service for suppliers, service versus capacity?
Aalap Patel
No, we don’t have…
Vibhav Khandelwal
Chinese market dynamics.
Aalap Patel
Yes. So, we don’t have a plan to venture into the Chinese market. Predominantly, the Chinese glass lined equipment market, especially, while this is true for the, for the entire process equipment market, but this stands especially true for glass lined equipment. So it’s a very, very fragmented market with something like 20, 30 different players within the Chinese glass and equipment market, all manufacturing a wide range of equipment and also sourcing from some vendors and not always manufacturing everything themselves. I think it’s a very different dynamic and it’s also a very, very crowded market. So, for us to make efforts to make any inroads into China is not a priority at the moment.
Vibhav Khandelwal
Understood. This is very helpful. Thank you so much and all the best.
Aalap Patel
Thank you.
Operator
Thank you. [Operator Instructions] The next question comes from Anupam Gupta from IIFL Securities. Please go ahead.
Anupam Gupta
Yeah, good afternoon, sir. So, the first question is basically on the THALETEC business. So, if I let’s say do the consolidated less standalone in terms of numbers and also remove Kinam from it, I’m probably looking at THALETEC doing close to about sort of INR9,500 crores sort of revenue with high sort of 19%, 20% margin. Is that right assumption there?
Aalap Patel
Yeah, yeah, that is correct. That is correct.
Anupam Gupta
So basically, THALETEC margins have improved pretty significantly whereas India margins have continued to be very weak. Right? That’s a right way to look at it.
Aalap Patel
That would be correct for the India glass lined business. That’s correct.
Anupam Gupta
Okay. So, what is driving the improvement in THALETEC margins?
Aalap Patel
So, the improvement in the THALETEC margin is predominantly driven if you have also observed by the uptick in the volume. So, the revenue has increased and it is also a function of the product mix. So, we had quite a bit of customized differentiated products which were a part of a project order which was sold in this product. The function of the product mix as well as the uptick in the volume.
Anupam Gupta
Okay. So, let’s say assuming if that was a sort of large one-off order, what would be a sustainable number for THALETEC in terms of revenue for this year and margins possibly?
Aalap Patel
So, over the last two quarters THALETEC has consistently done revenues in excess of INR90 crores in Indian rupee terms. We believe that this trend will broadly be sustained. The margins as we believe on a long term sustainable basis will be in between the 15% to 17% range for THALETEC standalone.
Anupam Gupta
Okay. And you talked about a few products of THALETEC being sold in India and you’re adopting their technology and products for sale into India and possibly for export. Can you just talk about that in a bit more detail?
Aalap Patel
Yes. So, we launched the THALETEC range of solutions in India about two quarters ago and over the last two quarters we have made significant effort in promoting these products as well as we have generated not just a strong interest. So, in terms of order pipeline, but also we have now close to 25-odd equipment which are either sold or currently under different stages of execution. So, we believe that this is a great start for a high technology value-added product, especially given the current market conditions. So, we are happy with the progress and it’s doing better than our expectations.
Anupam Gupta
Okay. And in terms of when you compare them to what is already available in India or from competitors, what are the extra features which you get with THALETEC, which is not available right now in India, specifically?
Aalap Patel
Yeah. So, I think we should look at this in two different ways. It’s not just about what is, I would say quality is not the differentiator for THALETEC. I think when it comes to quality, we really believe that having great quality is a matter of hygiene. Having great quality is not a differentiator. So, when we look at THALETEC, I think we should look at it in two different ways. One is what is available with THALETEC that others probably don’t have. And the other aspect is how do you, using whatever technology you have, how do you create a great solution for a customer that comes at the right price and deliver the right value.
So, all the THALETEC range of products are, especially the ones that we have brought to India in the initial phases are ones that tackle key problems with plagued glass lined reactors. Right? And these are around the efficiency of mixing. These revolve around heat transfer, these revolve around reliability, especially when you talk about very nasty, aggressive or dangerous processes. So, whatever value THALETEC products bring, they directly help the customer improve their reaction time, decrease downtime and as a result they help the customer in their overall cost of product.
Anupam Gupta
Understand. Okay. That is helpful. And one last question. What is the share of exports from India business as of now?
Naveen Kandpal
So, the share of export would be somewhere in the 5%, somewhere between 3% to 5% range. I think it varies from quarter to quarter but that’s actually the range.
Anupam Gupta
Sure. Okay. Okay, fine. That’s helpful. Thanks a lot, sir.
Operator
Thank you. [Operator Instructions] The next question comes from Miraj from Arihant Capital. Please go ahead.
Miraj Shah
Hi, good afternoon. Congratulations on our decent set of results. There is obviously a turnaround. Sir, I have a couple of questions. Firstly starting with the Kinam part, I wanted to understand, two parts over here. First is the operational efficiency that has been driven till now and what more do you expect in that? And second is the cross-selling opportunity. You briefly previously also spoken about it but I want to understand how the progress is over here. In the previous con call you have highlighted. But I just wanted to understand how things are moving and how long do we think that the cross-selling will take to fully operationalize? That’s my first question.
Aalap Patel
On the operational side, Kinam continues to be growing at an overall level both in terms of the order book as well as the capacity to handle larger orders. Very interestingly, in the last quarter, Kinam for the first time has made a breakthrough into the oil and gas industry. And we believe that, that could be a pathbreaker for the future and could really change the entire trajectory for Kinam going forward. So that’s something that’s already happened and we are all quite excited about that.
With respect to cross-selling opportunities, just like we were able to integrate our glass lined equipment business with the filtration and drying business, we believe the heat exchanger business is a very logical extension of the process equipment required by most of our user industries. And we are actively pursuing opportunities which enable us to kind of pitch for business at the project level rather than at the equipment level.
Miraj Shah
Understood. So, beyond oil and gas. Oil and gas is something that we ventured this quarter. Right? But beyond that also petrochemicals and paints is something that we’ve already completed or we are still planning that?
Aalap Patel
No, that’s something that is still work in progress. No, that is not an area where integration is completed. No. So, the answer to that is we will probably approach that over the coming quarters.
Miraj Shah
Understood. Perfect. Okay. So, something more to look forward to. Understood. Sir, with captive solar and wind power facility that we’ve, I think we’ve announced the JV with Clean Max. Roughly could you guide how much cost savings are we expecting from here and are we planning for any more deployment of such solar facilities in other plants?
Aalap Patel
Yeah, thank you for the question. So, as briefed by Himanshu we have entered into a joint venture agreement with one of the companies, Clean Max Enviro Private Limited. So as of now, since the terms and conditions are governed by NDA, we would not be able to disclose much detail, but as you may be aware that the payback period for such kind of projects is quite short. So, in our case also the payback period is short.
Miraj Shah
Understood. So, the payback period would be shorter. So, would be close to two years or shorter than that?
Aalap Patel
It is expected to be in that range. Yes, that’s correct.
Miraj Shah
Understood. And just one more question before I get back in the queue. For THALETEC products that were from Germany. If I were to look at how we’ve indoctrinated these in our Indian product range, how have we included that? Have we transitioned them completely 100% or are there still some products that we are planning to introduce going ahead, which are of THALETEC Germany in India?
Aalap Patel
Yes. So, THALETEC, by virtue of being a very innovative company, has a fairly large, I would say, range of innovations available. Right? And as a start, we are only introducing or rather we have only introduced in India, innovations that we feel that the Indian market immediately needs and things that would bring the most value to the customer. So, while THALETEC continues to innovate and we continue to launch new products, we already have an existing bank of innovations which are still available with us in the German entity, which we can continue to bring to India for the next few years.
Miraj Shah
So, there were some — so just to understand that there are some products still left to be inducted in the Indian market. Right?
Aalap Patel
Yes, yes, many.
Miraj Shah
Okay, understood. Perfect. I’ll just get back in the queue. Thank you.
Aalap Patel
Thank you.
Operator
Thank you. [Operator Instructions] The next question comes from Rajiv from RJ Investments. Please go ahead.
Rajeev Jain
Hello. Yeah, am I audible?
Operator
Yes, sir. Please go ahead.
Rajeev Jain
Yeah. So, my first question is the U.S. order market book currently is growing at a healthy pace. Now it stands at around $11 million — the EUR11 million. So, my question is how do you further plans to further penetrate this market and what are the key challenges do you foresee in scaling up the operations with now the new government formation?
Naveen Kandpal
So first, I’m not sure where the order book number comes from. I think the order book, while it is in that range, I think we — I think the exact number is not EUR11 million. Because while we continue to book orders as well as dispatch the ones that we booked a quarter or two ago. Having said that, I think for the U.S. we have a great opportunity. I think regardless of the political situation in the U.S., I think manufacturing continues to, especially for pharma products, continues to move to the U.S. and when these high-end molecules move to the U.S. I think high-end equipment is also needed and that is with our THALETEC range of products and with our filter dryer that is right up our rally.
So, we have innovative solutions which can help these companies deploy or rather bring these molecules to the market quickly. So, we are well equipped to handle this opportunity. And I think we also have the advantage of starting with a relatively low base. So, we are fairly new in the U.S. market and we are confident that with our great service and innovative products, we’ll be able to make inroads fairly quickly.
Rajeev Jain
So my next question is, sir, the filtration and the drying business seems to be facing some headwinds recently. So sir, could you provide some insights into what is the current state of the segments with now we could see some traction in pharma especially?
Naveen Kandpal
I think you are absolutely right. There has been some slack in the order booking a few quarters back. Fortunately, as Himanshu mentioned earlier, we are seeing a good uptick and encouraging demand coming in from the pharma industry and especially during the recent quarters. And this is reflected in a more healthier order book for the filtration and drying equipment currently. These orders will get executed over the next two or three quarters and I would think that the numbers for these coming quarters will reflect the uptick in the order book that we currently have. So yes, the last couple of quarters have been maybe a little slow by our own standards, but we believe we’ll catch up over the next few quarters.
Rajeev Jain
Sir, my another question is what are the current margins in this business? And sir, going forward, what do you consider as a sustainable margin? If you could provide us some color on this.
Naveen Kandpal
So, I think the filtration and drying business has historically reflected margins on the long-term basis of over 15% to 17%. We believe that sustainable margins are in the 16% to 18% range even with the current economics and dynamics, yes.
Rajeev Jain
Okay. Sir, my last question is sir, could you provide me the current market share we are holding in this segment?
Naveen Kandpal
There are no published numbers on the overall market, but we believe our market share would be between 50% to 60% in the domestic market.
Rajeev Jain
Okay, sir. Okay, sir. Thank you for the opportunity. My question has been answered. Thank you.
Operator
Thank you. The next question comes from Arnav Sachdev [Phonetic], Individual Investor. Please go ahead.
Arnav Sachdev
Hi, sir, congratulations on the results. I just had one question. The net interest has decreased by 9.4% year-on-year and the pre-provisioning operating profit is also down. So, what are the strategies that we’re implementing to get back from this trend?
Naveen Kandpal
Can I please request you to repeat the question, please?
Arnav Sachdev
Yeah, so the net interest has decreased by about 9.4% year-on-year and the pre-provisioning operating profit also has reduced. So, any strategies that we’re implementing to reverse this trend?
Naveen Kandpal
So, I think the interest reduction has been on a quarter-to-quarter basis. On a quarter-on-quarter basis the interest has reduced predominantly due to retirement of debt, repayment of debt, again, I think Himanshu mentioned earlier, we are consciously downsizing our debt position. We repaid almost about INR35 crores of bank loans during this period. So that is a conscious effort that is being made. And this repayment is predominantly happening out of operating and working capital efficiencies. This is really what we are consciously making an attempt towards.
Arnav Sachdev
Okay, sir. Thank you.
Operator
Thank you. [Operator Instructions] The next question comes from Dinesh Naik from Fine Advisor [Phonetic]. Please go ahead.
Dinesh Naik
Hello, sir. I had a couple of questions. First is could you provide more clarity on industry-wise revenue breakup? We’ve observed some volatility in revenue contributions. We’ve seen a 50/50 split usually between chemicals, pharma, but with traction in pharma and diversification into new sectors, I just wanted to understand how will you see this mix evolving over the next three to five years?
Naveen Kandpal
I think historically, if you have seen there is always a change on a quarter-to-quarter basis based on the order book and of course, the relative purchasing by the relevant industry segments. Historically, pharma has ranged from a low of 35% to a high of about 60% in our overall revenues. We believe that trend will retain and will of course, it’s a pretty wide range, but it will be within that range is what we expect. We are currently based on historical order book, our pharma share is at the lower range and as we indicated earlier, the pharma share in the overall revenue is expected to only go higher as we go into the next few quarters. Correspondingly, the share of agrochemicals and fine chemicals is likely to reduce somewhat as a percentage of aggregate revenue.
Dinesh Naik
Okay, got it. And let me commend you on reducing your debt by INR35 crores. If I remember correctly in your FY ’24 transcript, you had mentioned that your goal for the whole of FY ’25 was to reduce your debt in this ring, but I think we’ve achieved that in the first half only. So, what is the target for the year end? Where do we see your debt at the end of the year?
Naveen Kandpal
I think to answer it very simplistically, we did INR35 crores in half a year, so I would assume we should double it for the whole entire year.
Dinesh Naik
Okay, sir. And you projected interest cost and repayment schedule for the next fiscal year and so should we expect your profitability and cash flows to now improve given the lower interest outlay?
Naveen Kandpal
The lower interest will definitely result in better cash flows. So, better cash flows at least from a profitability perspective, yes. Of course, some of those cash flows will go into retiring the debt itself. So, on an overall basis, we believe the numbers will look better and the repayments will happen from operating and profit efficiencies.
Dinesh Naik
Great. And finally, last question is largely around your service segments. I think one of our key players is already establishing a strong presence in the service segment. So, how do we as a company plan to differentiate ourselves if we decide to formally enter that space? What’s our distribution or USP in this service segment?
Naveen Kandpal
I’m not entirely sure what service sector really implies. So, can I request you to just shed more light on what you would categorize as service sector?
Dinesh Naik
I think we are already offering service components as a service. Largely on that front only, what are USPs and how do we want to scale this vertical further?
Aalap Patel
So, service has inherently been a strength for HLE. We believe in being close to the customer and ensuring that the customer gets maximum value out of the equipment. And that could come out of either addressing issues when there is downtime or it could be providing service for optimization, so on and so forth. So, not only are we — so not only do we look at service from the point of view of after sales support, but it’s also an opportunity to increase the productivity of the equipment itself. So, while service has — so strictly speaking, service in the traditional sense, it contributes between 5% and 7% of our, or maybe roughly, let’s say closer to 7% of our sales.
I think a lot of our new products also serve the same purpose of optimizing the customer’s equipment after they are sold. So, we introduced new products in the automation space. We have introduced automated ANFDs. Now, there can also be retrofit packages of these automation. And this really helps drive productivity for the customer. Even if you look at THALETEC solutions. So, we are also offering retrofit packages of THALETEC solutions. So, these are also a part of the service orientation. So that’s our take on service. And you know, while strictly the after sales support forms about 7%, I think a lot of our new products are geared towards enhancing our engagement with the customer through service and optimization.
Dinesh Naik
Great, sir. And then where do you see this overall revenue mix from the current 7% in the upcoming years now?
Himanshu Khushalbhai Patel
I think, as Aalap was explaining, our service business is of two elements. One is pure service, which is more in the nature of after sales service and so on, which is currently at 7% and may probably at optimal level, go up to 10%. But we also have another element of service which is in terms of product upgradation and automation, which are also being delivered as packages, but which are reflected in the equipment business itself because they go as products rather than a service. But it does form part of the service element as far as our customers are concerned.
Dinesh Naik
Okay. Okay. Got it. Got it. Yeah. That would be all from my side. Thank you.
Operator
Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Himanshu Khushalbhai Patel
Yes, so thank you for all the participants for your keen interest in the company and taking part in this investor conference call for Q2 and H1 FY ’25. Once again, I express my sincere gratitude on behalf of the entire team of HLE Glascoat Limited. Thank you.
Operator
[Operator Closing Remarks]