ION EXCHANGE (INDIA) LTD (IONEXCHANG) Q1 FY23 Earnings Concall Transcript

ION EXCHANGE (INDIA) LTD (NSE: IONEXCHANG) Q1 FY23 Earnings Concall dated Aug. 04, 2022

Corporate Participants:

Anuj Sonpal — Investor Relations

Vasant Naik — Executive Vice President of Finance

N.M. Ranadive — CFO

Aankur Patni — Executive Director

Analysts:

Pratik Kothari — Unique Asset Management — Analyst

Kiran Sebastian — Franklin Templeton — Analyst

Chetan Bohra — Abakkus Asset Manager — Analyst

Santosh Kumar Kesari — Kesari Wealth — Analyst

Vikas Boyal — — Analyst

Anurag Patel — Roha Asset Managers — Analyst

Tushar Raghatate — Kamayakya Wealth Management Private Limited — Analyst

Saket Kapoor — Kapoor and Company — Analyst

Sunil Kothari — Unique Investments — Analyst

Hemal — — Analyst

Madhusudan Reddy — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Ion Exchange India Limited’s Q1 FY ’23 Earnings Conference Call. [Operator Instructions]. I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, Mr. Sonpal.

Anuj Sonpal — Investor Relations

Thank you. Good afternoon everyone and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Ion Exchange India Limited. On behalf of the company. I would like to thank you all for participating in the company’s earnings call for the First Quarter and Financial Year 2023. Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings call may be forward looking in nature. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated.

Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review. Now let me introduce you to the management participating with us in today’s earnings call. I hand it over to them for opening remarks. We have with us Mr. Aankur Patni, Executive Director, Mr. N.M. Ranadive, Group Chief Financial Officer, Mr. Vasant Naik, Executive Vice President of Finance and Mr. Milind Puranik, Company Secretary.

Without any further delay, I request Mr. Vasant Naik to start with his opening remarks. Thank you, and over to you, sir.

Vasant Naik — Executive Vice President of Finance

Thank you, Anuj. Good afternoon, everybody. It is a pleasure to welcome you to the earnings conference call for the first quarter financial year, 23. Let me first take you through the financial performance for first quarter of the current year. On a consolidated basis. Operating income for the quarter was INR3824 million an increase of around 22% year-on-year. Operating EBITDA reported was INR329 million, a decrease of around 8% year-on-year and EBITDA margin stood at around 8.6%.Net profit after tax reported was INR274 million, an increase of 18% year-on-year, while the PAT margin percentage was 7.17%, a decrease of 22 basis points on a year-on-year basis.

Let me now take you through the quarterly segmental performance on a consolidated basis. In the Engineering division the revenue for the quarter was INR2024 million, compared to INR1767 million during the same period last year, an increase of 15%. EBIT for this segment was INR81 million compared to INR92 million on a year-on-year basis. The company witnessed robust order flow, both in the domestic and international market. Regarding the steel order execution progress such a slow pace. Due to the current political uncertainties and the commodity shortages. On the execution of the UP Jal Nigam project is progressing satisfactorily and revenue has been recognized based on work completion.

Margins in the Engineering segment was impacted because the company has strengthened the infrastructure on the back of the increased order backlog to enable increased pace of execution in the subsequent quarters. Secondly, the rising input costs in the earlier quarter also affected the segment margin in the current quarter. Coming to the order book as on 30th June 2022 each stood at approximately INR1.29 crores excluding the Sri Lanka and the UP Jal Nigam model. And if you add both to the order book, the cumulative order book would be in the region of iron to INR2912 crores.

We also have a big pipeline of another INR8,000 crores. With this, we have a strong visibility revenue visibility for the next two, three years from the engineering segment. Moving to the chemical division. The revenue for the quarter Recorded was INR1458 million, which increased around 16% from INR1251 million on a year-on-year basis. The EBIT was INR313 million, which increased from INR273 million year-on-year. The sales in the domestic segment continued to record steady growth. While there was due to its volatility in the raw material cost. The sharp appreciation of the dollar kept the input costs under pressure. Coming to the consumer division segment, the revenue for the quarter was in INR505 million, an increase of around 115% on a year-on-year basis. The profit for the quarter was INR4 million compared to a loss of INR13 million in the last year. Steady volume improvements in the volumes driven by acceptance of our new product launches. Anyway this improvement in the financial performance. We expect the segment to sustain this growth momentum.

With this, we can now open the floor for the question-and-answer session.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Pratik Kothari from Unique Portfolio Managers. Please go ahead.

Pratik Kothari — Unique Asset Management — Analyst

Thank you. Good afternoon. Sir my first question is on the engineering part. And we have highlighted a point in our presentation that we invested some to strengthen our infrastructure for future orders. If you can just highlight where is it, what is it that we are strengthening and what is the outlook there.

Operator

Sir you are not audible.

Aankur Patni — Executive Director

Yes. Hi, Pratik. we had strengthened the design planning and execution teams as far as the infrastructure for Engineering is concerned there has also been upgradation of facilities, which has impacted expenditure side. These are the important factors which has led to margin decrease.

Pratik Kothari — Unique Asset Management — Analyst

My question was more from the internally, what have you prepared for because we see very healthy growth in order book, the pipeline that we have, your outlook seems very positive for the near future. So wanted to understand what is it that we have done to spend on this, I understand you take a hit for a quarter or two on your margin, but what have you done to strengthen this, which are those areas that we are improving on it?

Aankur Patni — Executive Director

That is what I highlighted Pratik, the strengthening is in the design, engineering and execution teams and also of the facilities, this is going to have a direct impact on the scale of operations As we look at the coming quarters. There is a substantial order book which we need to execute, we will need these teams to work in parallel and hence the requirement for improvement of this internal infrastructure.

Pratik Kothari — Unique Asset Management — Analyst

Okay, sir my second question is on the chemical, if you can highlight the capex plan that we had earlier announced any update on the same.

Aankur Patni — Executive Director

Yes, the capex plan stays on course except that we had a long period of vacancy of the approving authority for statutory clearance,. We now understand that the seat has been filled up, we should be receiving the due approvals in the near future. Currently, our expectation is that the plant will go into operation in FY23-24.

Pratik Kothari — Unique Asset Management — Analyst

Okay. So this will take about 12 odd months once we received the approval to put up the plant and operational level.

Aankur Patni — Executive Director

That’s right.

Pratik Kothari — Unique Asset Management — Analyst

Okay, fair enough. And the other debottlenecking that we are doing in our other chemical division.

Aankur Patni — Executive Director

That’s an ongoing process Pratik, and it continues. We have a lot of headroom for expanding our revenues.

Pratik Kothari — Unique Asset Management — Analyst

Fair enough and sir last clarification we were invoked to consolidate all of the various subsidiaries that we have as part of the parent company. Anything you would like to highlight there?

Aankur Patni — Executive Director

That consolidation of subsidiaries is also on course. We will start the formal process in the second half of the current year.

Pratik Kothari — Unique Asset Management — Analyst

Okay, great. Thank you, sir and all the best. Thank you.

Operator

The next question is from the line of Kiran Sebastian from Franklin Templeton. Please go ahead.

Kiran Sebastian — Franklin Templeton — Analyst

Thanks for the opportunity. My first question was on capex just wanted to be clear about this. So we are still awaiting the environment clearance right. Now is my understanding correct?

Aankur Patni — Executive Director

That’s right.

Kiran Sebastian — Franklin Templeton — Analyst

Right and the person who is supposed to give the clearance finally has been appointed that is the status

Aankur Patni — Executive Director

That’s right.

Kiran Sebastian — Franklin Templeton — Analyst

And there is a high chance that we will be getting the approval and then right away we can start the construction.

Aankur Patni — Executive Director

Again, correct.

Kiran Sebastian — Franklin Templeton — Analyst

Yes, and parallelly is there any plans to augment the capacity inorganically in case we get delayed with this capacity expansion?

Aankur Patni — Executive Director

As of now, our expectation is there will be no further delay. That is our understanding based on discussions. We are always on the lookout for opportunities inorganically, if we do get something which is very interesting, we will certainly evaluate that also.

Kiran Sebastian — Franklin Templeton — Analyst

Right and the second question is related to Sri Lanka. So I see that not much execution is happening there. So have we at least ringfenced the liabilities. So sometimes you see projects where execution gets delayed and you keep burning cash and you end up with a lot of losses? Can you just give me some color around risk management around this particular exposure?

Aankur Patni — Executive Director

We do not expect to have any credit risk in this job. We are not getting paid directly from the Sri Lankan Government and this project is funded by Exim Bank. To that extent, credit risk is not something which is on the top of the mind. Also, any overstay which is happening on site which is attributable to customer can be claimed by the company from the Water Board as per contractual conditions. So there again, as far as overstay cost is concerned, it would not impact. We remain hopeful that in a short period of time, we would get the necessary go ahead from Sri Lankan government and funding agencies to start execution at a faster pace

Kiran Sebastian — Franklin Templeton — Analyst

Got it. Thank you, sir.

Aankur Patni — Executive Director

Thanks.

Operator

The next question is from the line of Chetan Bohra from Abakkus Asset Manager. Please go ahead.

Chetan Bohra — Abakkus Asset Manager — Analyst

Yes. Good afternoon. Sir wanted to understand what will be the execution for UP during this quarter and what are the margins made on those. The execution for UP for the quarters.

Aankur Patni — Executive Director

During the quarter you asked?

Chetan Bohra — Abakkus Asset Manager — Analyst

Yes.

Operator

Sorry to interrupt, sir. Mr. Vora I would request you to use your handset to ask the question because…

Chetan Bohra — Abakkus Asset Manager — Analyst

Is it clear now?

Operator

Yes, please.

Chetan Bohra — Abakkus Asset Manager — Analyst

The execution of UP for the quarter, sir.

Pratik Kothari — Unique Asset Management — Analyst

Can I request Vasant if you have approximate number which we can suggest to them.

Operator

Ladies and gentlemen, we have lost the line of the management. Please stay connected while I reconnect them. The line of the management has been connected now. Please proceed with the conference.

Aankur Patni — Executive Director

Vasant can you share some approximate numbers for the up contract estimated revenue the second quarter.

Chetan Bohra — Abakkus Asset Manager — Analyst

And sir my next question was till the time we get the answer. The margins in engineering for the quarter has gone down to nearly about close to 6%. So how should we consider keeping ahead because for the full year we were guiding out anywhere between 10 to 11% margin. So, how should one see this quarter particularly. I understand we should not call it a quarterly performance, but would like to understand how the commodity pressures are and how should we see the margin trajectory going ahead for the engineering division.

Aankur Patni — Executive Director

Sure. Let me answer that for you. Can get back to you on expected numbers for you during this quarter.

Chetan Bohra — Abakkus Asset Manager — Analyst

All right.

Pratik Kothari — Unique Asset Management — Analyst

The margins for engineering segment as we discussed earlier, they have been impacted for primarily two or three reasons, one being that we have strengthened the infrastructure on the back of increased order backlog and expect increased pace of execution in the coming quarters

Chetan Bohra — Abakkus Asset Manager — Analyst

Okay.

Aankur Patni — Executive Director

So, this cost which is currently hitting us on the bottom line would no longer be so in the coming quarters because the corresponding revenues would also come in. The second is the rise in input costs in earlier quarters affected the segment margin in the current quarter because of the inventory which was carried over and also purchase orders placed during earlier quarters, which got delivered during Q1 and were used for the invoicing. In the coming quarters, we expect to see a significant improvement on the engineering revenue for FY23 as a whole.. We also have a very strong order book at this point of time and further witnessing a good inquiry bank. From this inquiry bank, our prospects of converting orders are also bright. So with all that outlook, we are certainly hoping for a very good growth compared to what we have seen in the previous year Both in terms of the invoicing as well as the order book. So the margin percentage on conservative basis should be similar to what we achieved in the past year

Chetan Bohra — Abakkus Asset Manager — Analyst

All right sir. Thank you and for the UP would it possible to do the details. Sir wanted to understand what was the execution for UP during the quarter and the margins made on both for the quarter?

Aankur Patni — Executive Director

Yes. Let me just check Vasant are you there in the call.

Vasant Naik — Executive Vice President of Finance

I’m there, but I just missed the question. We were disconnected. So what was the specifics of the question?

Operator

[Indecipherable] Could you please repeat the first question that you asked.

Chetan Bohra — Abakkus Asset Manager — Analyst

Yes, sure. Sir, wanted to understand what was the execution for UP during the quarter and the margins made on those for the quarter.

Vasant Naik — Executive Vice President of Finance

Yes. The extra business was around 27 crores. And regarding the margin profile, we don’t discuss the specifics of the contract in in the con call.

Chetan Bohra — Abakkus Asset Manager — Analyst

All right. So, I understand for Mr. Patni what he gave the answer to the next question that due to the strengthening of the infrastructure for the UP to gear up for the execution front, so the cost was front loaded and going forward, we will be seeing a healthy execution and accordingly the expenses will not be increasing in line with that and we would be seeing the operating leverage benefit. Is it right sir?

Aankur Patni — Executive Director

Yes, that is our expectation. That’s right.

Chetan Bohra — Abakkus Asset Manager — Analyst

All right. Sir. Certainly the other question was that during the quarter we have got other income nearly about in the standalone I am talking about close to 18 crores. Could you elaborate the details on that.

Aankur Patni — Executive Director

The other income primarily comprises of the interest income and also for this quarter because of the strengthening of the US dollar we have exchange gain of just around eight to nine crores.

Chetan Bohra — Abakkus Asset Manager — Analyst

Okay the Forex gain is 8 crores to 9 crores and the balances are the interest income basically.

Aankur Patni — Executive Director

That is right.

Chetan Bohra — Abakkus Asset Manager — Analyst

Okay, and then the chemical division performance was quite steady. So, how should we see the remaining part of the year in terms of the revenue growth and the Greenfield plant has been postponed to the next year. So, how should because we were operating in nearly the optimal capacity. So, that is why there will be a growth on the chemical division.

Aankur Patni — Executive Director

We will certainly see a good growth in the coming periods. We expect the growth trends which we have seen in the first quarter to continue for the year as a whole, we should see better full year margin as compared to what we have achieved in the past year. However, we still should make it contingent upon stability in commodity prices. As also resolution of the supply chain issues which is affecting the commodity market. So, with those small caveats in place we should be seeing better full year margin compared to last year.

Chetan Bohra — Abakkus Asset Manager — Analyst

All right sir, and largely the bid pipeline of over 8000 crores would it be possible to say how much percentage of the bid timeline we will be in the advanced stage of talking and the split between the domestic and whether it is in the domestic part of it or whether it is in overseas.

Aankur Patni — Executive Director

There is a mix of international as well as domestic opportunities in that bid pipeline. As far as the stage at which the discussions are, these are at varying stages of discussions. I would put roughly around 30% or so at relatively more advanced stage.

Chetan Bohra — Abakkus Asset Manager — Analyst

Okay, and sir capex for the year would be what continuing Greenfield plant is postponed to the expansion is postponed to the next year as and when we should have clearances. So, keeping that aside what will be the maintenance capex for the year

Aankur Patni — Executive Director

Vasant can you please elaborate on that?

Vasant Naik — Executive Vice President of Finance

Yes, our total capex will be in the region of around 60 crores and the major capex would be in our enhancement of membrane facility, and also the incremental capex, which we keep on doing in the chemical segment that will also be done.

Chetan Bohra — Abakkus Asset Manager — Analyst

Right, and sir lastly, what would be the mobilization advance received from the up government and are we paying any interest on that?

Vasant Naik — Executive Vice President of Finance

We are not paying interest on the mobilization advance. But regarding the quantum as I mentioned earlier for another question on the same contract, we do not discuss the specifics of the contract.

Chetan Bohra — Abakkus Asset Manager — Analyst

Okay. That’s fine. Thank you, sir.

Operator

The next question is from the line of Santosh Kumar Kesari from Kesari Wealth. Please go ahead.

Santosh Kumar Kesari — Kesari Wealth — Analyst

Good afternoon, sir. Am I audible?

Aankur Patni — Executive Director

Yes. Good afternoon.

Santosh Kumar Kesari — Kesari Wealth — Analyst

Yes. I had one question regarding all these projects that we have. Do you have any cost escalation clause built in, for example, rise in input costs? Did you receive any compensation from project owners? That is the first question.

Aankur Patni — Executive Director

Yes, and what’s your second one?

Santosh Kumar Kesari — Kesari Wealth — Analyst

Yes. The second one is about Sri Lanka project. As I understand from the previous participants question that there is some more going on. So, I wanted to ask that. Have you put any loss on that or an expected loss considering that this may not move for the year or so concerning the economic and political situation in Sri Lanka? So are we expecting any loss or have we booked any so far in the financials?

Aankur Patni — Executive Director

Let me answer the second one first. No, we do not expect any loss arising of it. As I explained, the overstay which is caused by the customer or because of the actions attributable to the customer is covered under the contract and we can claim for this stay. So those costs are not going to be a loss for us and the other risks attached to this are the credit risk, which, again, I explained that we do not have a direct exposure to the Sri Lankan Government and because of that credit risk is not there, we do not expect to have any loss on this.

Santosh Kumar Kesari — Kesari Wealth — Analyst

So do you have international body, for example, financial institution, which has given the contract to us.

Aankur Patni — Executive Director

No, this contract funding is through Exim Bank, that is why the credit risk is not there.

Santosh Kumar Kesari — Kesari Wealth — Analyst

Okay. So, we are sure that the project is going to be finish sooner or later.

Aankur Patni — Executive Director

We remain hopeful that very shortly the conditions for execution of the contract will improve. And then we will go ahead with execution in consultation with the funding agencies and Sri Lankan government only when we feel that the recoverability is not going to be a challenge and execution can proceed at a desired pace. As far as price variation is concerned, some contracts, especially with the government and PSUs, do have a price variation clause because of the way the price volatility has impacted margins of not just company like us, but across the globe and across industries, the customers have been quite considerate and we have managed to get pricing escalations from customers, even where a price variation clause did not formally exist in the contract.

Santosh Kumar Kesari — Kesari Wealth — Analyst

Okay. Thank you so much.

Aankur Patni — Executive Director

Thanks.

Operator

Thank you. The next question is from the line of Vikas Boyal, an individual investor, please go ahead.

Vikas Boyal — — Analyst

Thank you sir. Thank you for the opportunity. Sir my question is what type of Opportunities. We are looking for this Green hydrogen, because water is the key ingredient for this. What type of opportunities, we are looking in this field and how it can be for us.

Aankur Patni — Executive Director

This is an interesting opportunity for us and we are keenly working with all major players in India who are evaluating large scale infrastructure setup for green hydrogen. We would certainly be a part of almost all of these projects. You are right in saying that water is an important part of this entire process and we hope to be able to contribute to this particular industry in a big way.

Vikas Boyal — — Analyst

And sir, my next question is how hydrolife progressing? What is the progress electric to hydrolife.

Aankur Patni — Executive Director

The market acceptance of the product is very good and the revenue potential is very high. In coming times we should see much better numbers coming from this product compared to what we have done in the current quarter.

Vikas Boyal — — Analyst

Sir how much revenue percentage of consumer segment by this product.

Aankur Patni — Executive Director

I would not be able to disclose exact numbers. I am sorry for that. But it is a significant contributor. Apart from Hydrolife, there are other key product lines which also contribute significantly to the consumer product segment.

Vikas Boyal — — Analyst

And probably last question. Are you considering uniform particle size reducing our rising and plant?

Aankur Patni — Executive Director

Yes we do.

Vikas Boyal — — Analyst

Okay/ Thank you very much.

Aankur Patni — Executive Director

Thank you.

Operator

Thank you. The next question is from the line of Anurag Patel from Roha Asset Managers. Please go ahead.

Anurag Patel — Roha Asset Managers — Analyst

Thank you for the opportunity. Sir what would be the contribution from private sector in our current order book?

Aankur Patni — Executive Director

Let me see If I have that number handy. They would contribute roughly around 40% to 50%. Am I right Vasant on that?

Vasant Naik — Executive Vice President of Finance

Yes. I think I around 40% to 45% will be a right figure.

Anurag Patel — Roha Asset Managers — Analyst

Okay, chemicals, Greenfield capex, what is the total capex plan and how much we have spent till date. The total capex on that is expected to be in excess of 200 crores. At the moment, the execution of this new plant has not started as we highlighted a little bit earlier on the call, we are waiting for the environmental clearance to be formally signed. Only after that we will start working in earnest.

Aankur Patni — Executive Director

You mentioned correctly.

Anurag Patel — Roha Asset Managers — Analyst

Okay in terms of asset terms, can you expect around two times for this capex?

Aankur Patni — Executive Director

Yes. It will be two to three times it will take some time for us to reach the full capacity utilization, but when it does, it should be in that range of two to three times.

Anurag Patel — Roha Asset Managers — Analyst

Okay, one last question sir, any progress on our international orders, we were looking at some large orders we were working with.

Aankur Patni — Executive Director

We continue to work on those, the movement on that unfortunately there is nothing yet to report on it. Hopefully, we will have something to inform you in the near future. As of now nothing has materialized out of those.

Anurag Patel — Roha Asset Managers — Analyst

Okay sir. That is it from my side. Thank you very much.

Aankur Patni — Executive Director

Thank you.

Operator

Thank you. The next question is from the line of the Tushar Raghatate from Kamayakya Wealth Management Private Limited. Please go ahead.

Tushar Raghatate — Kamayakya Wealth Management Private Limited — Analyst

Good afternoon sir.

Aankur Patni — Executive Director

Good afternoon.

Tushar Raghatate — Kamayakya Wealth Management Private Limited — Analyst

Sir what would be your gross profit margin for you chemical business and can you expect the chemical business increase in terms of sharing going two years, three years down the line?

Aankur Patni — Executive Director

You are saying chemical business to increase in terms of share in the

Overall revenue?

Tushar Raghatate — Kamayakya Wealth Management Private Limited — Analyst

Yes, sir.

Aankur Patni — Executive Director

Let me answer and then we will ask Vasant to give you the chemical segment EBIT margins that we reported. But in terms of percentage share of chemicals in our overall revenue, we certainly expect the chemical segment volumes to improve substantially over a period of next two years, three years, but likewise, we also expect the engineering volumes to climb as we have been talking about the overall order book and the pace of execution of it. These orders should be improving in the coming quarters and in the years to come. So given both of these, I am not able to accurately give you a statement on how much the percentage variations would take place in each of these segments from quarter to quarter, but on an absolute level, we should certainly see improvement on both of these segments.

Tushar Raghatate — Kamayakya Wealth Management Private Limited — Analyst

Okay. Fair enough sir. Thank you.

Aankur Patni — Executive Director

Thank you.

Operator

[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.

Saket Kapoor — Kapoor and Company — Analyst

Namaskar sir. Thank you for this opportunity. Sir I joined a bit late. So pardon me for any repetition. Sir firstly on the consumer products division, so how is this segment going to contribute going ahead and are we able to make the key changes or are the COVID factors now behind us where in that has affected the profitability and of this segment earlier.

Aankur Patni — Executive Director

COVID has certainly impacted the consumer segment substantially, I do believe that the current working environment has helped us to put the COVID factors significantly behind us. The segment as a whole is doing very well. On revenue terms, you would have seen that compared to the first quarter of the previous year, we have grown by more than 100% and the outlook going forward is also very strong. We will continue to maintain the growth momentum. Individual products which we have launched in recent times are also doing very well. The market acceptance is very good and I expect these new products to start contributing in a bigger way in the coming times.

Saket Kapoor — Kapoor and Company — Analyst

Sir, what kind of margins, EBIT margins? What kind of sustainable margins can we look forward from this segment? I think on a top line, this time on a top line of 50 crores. We did PBT of 31 lakh. So what should be the normalized margin and a sustainable one on this and then I will come to the other two segments.

Aankur Patni — Executive Director

If you will evaluate the way consumer segment has moved in terms of its EBIT margin profile. It is a factor of the scale which we have been able to achieve for this segment. As scale of operation rises, you will see sequential improvements in the EBIT margins. The products are quite profitable and my expectation is that it will start contributing to a much bigger extent to the overall bottom line of the company in times to come.

Saket Kapoor — Kapoor and Company — Analyst

Okay. Any ballpark idea that you can give because These are only be at the breakeven points, which we are currently looking.

Aankur Patni — Executive Director

That is right, we are only looking at the breakeven point now. I would not really like to forecast the exact year end number; it is a factor of scale which we are able to achieve. But you will certainly see substantially better than what you are seeing now.

Saket Kapoor — Kapoor and Company — Analyst

Sir, just dwelling one more line since you are dwelling upon the utilization. So, what is the potential of the segments going right on the top line basis sir.

Aankur Patni — Executive Director

See consumer segment has a very large potential. Potentially the revenue could even more than double in the coming two years to three years time, but that is as far as potential is concerned. The market size is much more than that. Our market shares are in single digits at the moment.

Saket Kapoor — Kapoor and Company — Analyst

Okay. Dwelling into this, the engineering part. I missed your earlier commentary. So the factors that has led to the lower margins for the engineering segment for this quarter. They will be mitigating going ahead and for the full year as a whole what should be the normal margins in the engineering segment that one should look?

Aankur Patni — Executive Director

I did make a statement on this earlier. We will be able to certainly improve the margins significantly in the coming quarters. Conservatively, we should be able to maintain the full year margin percentage, similar to what we have achieved in the past year.

Saket Kapoor — Kapoor and Company — Analyst

Right sir and on the utilization level for the chemical segment if you have made any comment, what are currently our utilization levels and how was the raw material prices behave for the chemical segment.

Aankur Patni — Executive Director

Utilization level for the chemical segment is roughly in the range of 70% to 75% and you asked about.

Saket Kapoor — Kapoor and Company — Analyst

Do we see any uptake? Are these the optimum level?

Aankur Patni — Executive Director

So, there is a reasonable amount of headroom available, we would certainly be looking at higher utilizations in the coming period. As we have been mentioning over the past few calls, and we are eagerly awaiting the environmental clearance for our new Greenfield plant. Once those capacities come in, we will be hoping to increase the capacity utilization percentage in the new plant also quite rapidly. So certainly, we will be expecting a significant uptick from the current levels.

Saket Kapoor — Kapoor and Company — Analyst

Okay. And for the new plant environmental clearance, how much have been invested in the plant and the product profile is significantly different from what we are currently doing.

Aankur Patni — Executive Director

No the product profile is not going to be very different. Of course, there will be something new which will get added. But the overall product profile is similar to what we are doing currently. The plant is awaiting environment clearance so we have not really started in earnest to spend on that. Overall capex plan is in excess of 200 crores and we should be expecting that plant to go on stream in FY23-24.

Saket Kapoor — Kapoor and Company — Analyst

And how much have we invested sir and I will come in the queue for another two.

Aankur Patni — Executive Director

That is not a very significant amount as yet.

Saket Kapoor — Kapoor and Company — Analyst

But the total capex is of 200 crore that will happen only once we get the requisite clearances from the government authority.

Aankur Patni — Executive Director

Yes, it is significantly more than 200 crores.

Saket Kapoor — Kapoor and Company — Analyst

Okay and where it is located where the plant will be located?

Aankur Patni — Executive Director

It is going to be in Maharashtra.

Saket Kapoor — Kapoor and Company — Analyst

Okay. I will join the queue once again. Thank you for all the answers.

Operator

[Operator Instructions] The next question is from the line of Sunil Kothari from Unique Investments. Please go ahead.

Sunil Kothari — Unique Investments — Analyst

Hello.

Operator

Yes. Please proceed.

Sunil Kothari — Unique Investments — Analyst

Hello.

Operator

Yes, we can hear you. Mr. Kothari if you are speaking right now, we cannot hear you I would request you to rejoin the session.

Sunil Kothari — Unique Investments — Analyst

Sure.

Operator

The next question is from the line of Hemal, an individual investor. Please go ahead.

Hemal — — Analyst

Yes. Hi, thank you for taking the question. I appreciate it. Just very quick question on the chemical you said it was 70% to 75% utilization. I just wanted to know what is the last three to four year volume growth in our chemical business? Like if you have a CAGR or anything that you can give in volumes.

Aankur Patni — Executive Director

Let me check. Vasant do you have readily available number to give as far as volume growth CAGR over the last four years is concerned.

Vasant Naik — Executive Vice President of Finance

Last four years, I am sorry Ankur. I will not be having.

Aankur Patni — Executive Director

Okay. I can try to give you a ballpark but I maybe off by a few percentage points. So I will not hazard guess at the moment. You can get back through Valorem and we will be able to provide you that answer.

Hemal — — Analyst

Okay. So you believe like year-over-year, would it be at least last year to this year or do you believe there is a volume growth expected or this is all due to price realization.

Aankur Patni — Executive Director

Certainly over the last three or four years, we would have had volume growth, but I unfortunately do not have ready reference to that number and hence my hesitation in offering you a reply. But as I mentioned I will ask our Investor Relations Firm to get in touch with us and we will provide that.

Hemal — — Analyst

Okay, sir. Thank you. I really appreciate it. That’s all from my end. Thanks.

Operator

Thank you. The next question is on the line of Sunil Kothari from Unique Investments. Please go ahead.

Sunil Kothari — Unique Investments — Analyst

Yes, thanks for the opportunity. Are you getting my voice?

Aankur Patni — Executive Director

It’s good.

Sunil Kothari — Unique Investments — Analyst

Yes. Thanks for opportunity. Thank you sir. Very really hearty congratulation for such a good order book. After long we are having sizable order book, sizable deck for further inquiries. Sir my first query is now as expected after last two three years comparable of COVID situation and very difficult situation in commodity prices and volatility next two, three years seems to be reasonably hopefully better. So and you rightly only started investing in reasoning capability, execution capability. So, which are the major focus area which allow you to say generate substantially higher execution. engineering division.

Aankur Patni — Executive Director

I think the opportunities to grow on the engineering segment exists both domestically and internationally. We are now looking at an inquiry bank of more than 8000 crores. A significant portion of that is international. We are hopeful that we will be able to convert a good portion of this inquiry bank and hence the need to expand our overall infrastructure not just to execute the current order book, which we discussed was in the range of around 3000 crores, but also to prepare ourselves for the incoming order flow from the inquiries which are under discussion. So, we should be looking at a significant growth going forward, not just in the next couple of years, but the visibility which we seem to be building up is a good healthy engineering segment at least over the next four years to five years.

Sunil Kothari — Unique Investments — Analyst

Sir for that you will be getting more vendor based supply chain or internally will be increasing our capability.

Aankur Patni — Executive Director

We are improving our internal capabilities in line with what we would normally be expected to do. The vendor base enhancement would be in accordance with the requirements of individual contracts. In general, the portion of contract which we execute internally remains substantially the same and there are significant amount of bought-outs which we source optimally through a wide group of vendors. There is no real necessity to exceptionally re-evaluate that vendor base in general, but certainly we do that on a case to case basis depending upon the requirement of the contract.

Sunil Kothari — Unique Investments — Analyst

Okay. Sir on chemical front, I think it seems that we have really good varied customer base internationally also, we have already proven our capability and product acceptance and because of this delay, the environment clearance or whatever reason, we are not able to put new plants, but our existing capacity utilization is also low maybe 70 75%. So which are the roadblock for achieving 90% and 100% capacity before this new plant comes.

Aankur Patni — Executive Director

At the moment the there is a slight demand stress or pressure on the demand in the international markets. There is some degree of demand contraction or suppression or deferment, which we witnessed during the quarter in some of the markets, especially Europe and the Americas. Because of this, the volume growth may not have happened to the extent that we would have liked, but it is also a question of movement from quarter to quarter. The first quarter is typically a light quarter as you may know from the trends. The capacity utilization will rise up as we move towards the next quarter.

Sunil Kothari — Unique Investments — Analyst

Sir, my last question is looking at higher utilization and the revenue momentum trajectory what you are talking. Mr. Ranadive also mentioned about two years, three years, five years better engineering division. Overall trajectory of margin EBITA margin which currently we are achieving is 13%, 13.5% to 14% can it costs 2% plus. Would you really like to comment anything qualitatively on.

Aankur Patni — Executive Director

As I mentioned earlier, we are certainly hoping to equal or better the year end margins achieved on the engineering as well as the chemical segment. Certainly on the consumer product side, we are very hopeful that we will be in the black in this year. So, with all of this combined, I am very hopeful that we will improve the overall margin percentage.

Sunil Kothari — Unique Investments — Analyst

Great. Sir, wish you good luck. Thanks a lot.

Aankur Patni — Executive Director

Thank you so much.

Operator

Thank you. The next question is from the line of Madhusudan Reddy an individual investor. Please go ahead.

Madhusudan Reddy — — Analyst

Good afternoon sir. Thanks for the opportunity. Sir this is regarding strengthening of our human resource as you elaborated we have a very good growth path for the next five years. So, you are strengthening in your research space. My question is regarding the strengthening of your human resource base with regard to both senior management this thing as if I am thinking out. Finding young talent into our goal or our senior management team without affecting any of our philosophy or our conversation, your thoughts on this?

Aankur Patni — Executive Director

Thanks for that question Mr. Reddy. We have a culture at Ion exchange which is pro employees and as a testament to that, a large number of our senior management team has been with the company for more than 25-30 years. We continue to adhere to the policy of being extremely pro employee and value the contributions made by our experienced team both in terms of their managerial and technical capabilities. Having said that, the induction of young blood into the entire team is also necessary, which happens at various levels. Both at middle management, junior management levels, and sometimes at relatively, more senior management level also. We certainly do not and will not compromise on the overall values and principles and ethics which the company stands for.

Madhusudan Reddy — — Analyst

Thank you, sir.

Operator

The next question is from the line of the Tushar Raghatate from Kamayakya Wealth Management Private Limited, please go ahead.

Tushar Raghatate — Kamayakya Wealth Management Private Limited — Analyst

Sir just want to confirm about the CAPEX for the application. So, you are increasing the capacity of anion and cation raising by at 6000 metric ton each and the amount would be 400 crores. Is my understanding correct sir?

Aankur Patni — Executive Director

As I have been mentioning in this the figure is going to be well in excess of 200 crores and the capacity expansion would lead to doubling of our current capacities in the first phase.

Tushar Raghatate — Kamayakya Wealth Management Private Limited — Analyst

Okay. Sir, again, can you please just tell me like how many phases are in this expansion?

Aankur Patni — Executive Director

There will be two phases. That is what is currently planned.

Tushar Raghatate — Kamayakya Wealth Management Private Limited — Analyst

Okay fine sir.

Aankur Patni — Executive Director

So in the first phase we will double our capacity and thereafter in the second phase we will again add an equivalent capacity.

Tushar Raghatate — Kamayakya Wealth Management Private Limited — Analyst

Okay sir what would be our gross profit margin for chemical business?

Aankur Patni — Executive Director

Vasant can you indicate the EBIT margin for the chemical segment?

Tushar Raghatate — Kamayakya Wealth Management Private Limited — Analyst

No sir gross margin I want.

Vasant Naik — Executive Vice President of Finance

The segment EBIT margin is 22% for the chemical segment.

Tushar Raghatate — Kamayakya Wealth Management Private Limited — Analyst

Fair enough, sir. Thank you, sir.

Operator

Thank you. The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.

Saket Kapoor — Kapoor and Company — Analyst

Yes. Hello.

Aankur Patni — Executive Director

Yes. Please go ahead.

Saket Kapoor — Kapoor and Company — Analyst

Sir for the capacity addition in the chemical segment, the expanded capacity which we were augmenting currently, what is our current market share and for the industry as a whole, how much whether the product is imported currently or totally indigenous?

Aankur Patni — Executive Director

Our current market share in India for resins would be around 40%. There are imported resins available in the market and they have been so for large number of years. The capacity augmentation is targeted not just for India, but substantially for the international market. For the international market as a whole, our market share would be in single digits. So, there is a lot of headroom for expanding our volumes in the international market.

Saket Kapoor — Kapoor and Company — Analyst

And sir, how are sourcing our raw material, our dependability on the raw material Having said it would be much affected by that also, so if you could throw some more light on the same that requirement will also go up in proportion.

Aankur Patni — Executive Director

Certainly raw material requirements will go up in proportion to the volumes which we will manufacture.. These raw materials are sourced both domestically and internationally. The international component is quite widely sourced. We continuously strive to increase the geographic spread of our vendors to ensure that there is no individual geography which has a concentration or over-reliance on any individual vendor.

Saket Kapoor — Kapoor and Company — Analyst

And what would be the key raw material mix sir. In percentage terms, what are the key raw material for particular segment.

Aankur Patni — Executive Director

It is a wide group of raw materials. There are some which are petroleum based and there are some which are non-petroleum based. A significant percentage would be petroleum based.

Saket Kapoor — Kapoor and Company — Analyst

Correct sir. Lastly, as you mentioned that first quarter is generally a soft quarter in terms of the executive one, execution cycle or the engineering segment and as you mentioned that we would be aiming for engineering segment posting revenue is higher than what the last year be and the margins if not it will be equal to what last year was. So this understanding is correct sir for the engineering segment as a whole?

Aankur Patni — Executive Director

Yes. We will certainly be posting more than what we did last year, in fact significantly more. For the company as a whole, I would expect a 30% to 35% growth on top line.

Saket Kapoor — Kapoor and Company — Analyst

But last year on a console level it was 935 crores, we are looking at a growth of 35% on this number.

Aankur Patni — Executive Director

30% to 35% for the company as a whole, not just for the engineering segment.

Saket Kapoor — Kapoor and Company — Analyst

Okay, but if we if we could look for engineering as a segment, I think that is the major order contribution.

Aankur Patni — Executive Director

For engineering segment the growth should be more than 30% to 35%.

Saket Kapoor — Kapoor and Company — Analyst

More than 35%.

Aankur Patni — Executive Director

Yes.

Saket Kapoor — Kapoor and Company — Analyst

There will be lower growth for the chemical segment. My question was since you have already commented upon the consumer products growing significantly and that has been seen in the first quarter at 100% growth although last year was a COVID affected quarter so comparable are not there, but still we have grown and you guided you are looking for engineering to grow higher. So, there will be lower growth for the chemical segment in that way in that vicinity. Otherwise, this identify on an overall how will it match the number.

Aankur Patni — Executive Director

The engineering segments will go at a higher pace and as far as chemical segment is concerned, it will continue its growth momentum which is not as high as the engineering segment’s.

Saket Kapoor — Kapoor and Company — Analyst

Correct sir and on the Sri Lankan part of the story sir what would be the receivable number from them as on date and do that have any interest component also as the delay deal?

Aankur Patni — Executive Director

Vasant, can you answer that please?

Vasant Naik — Executive Vice President of Finance

The residual part of the contract which is remaining to be executed is just under 250 crores.

Saket Kapoor — Kapoor and Company — Analyst

And the receivable number from them out of the one which we have executed also. Have we received all the money or the money is retained by them.

Vasant Naik — Executive Vice President of Finance

I cannot give any specific details about the contract.

Aankur Patni — Executive Director

But in any case, the receivables if any are not from the Sri Lankan government, but it would be the money which would be coming from Exim and that is why there is no credit risk involved.

Operator

Thank you. As that was the last question for today. I would now like to hand the conference over to Mr. N M. Ranadive from Ion Exchange India limited for closing comments.

N.M. Ranadive — CFO

Thank you all for participating in this Earnings Con Call. I hope we are being able to answer your question satisfactorily. If you have any further questions or would like to know more about the company, we will be of happy to assist. We are very thankful to all our investors who stood by us and have also in confidence in the company’s growth plan and focus and with this I wish everyone a great evening. Thank you.

Operator

[Operator Closing Remarks]