Pondy Oxides and Chemicals Ltd (BSE: 532626) Q4 2025 Earnings Call dated May. 19, 2025
Corporate Participants:
Unidentified Speaker
Balakrishnan Vijay — Chief Financial Officer
K. Kumaravel — Director, Finance and Company Secretary
Ashish Bansal — Managing Director
Piyush Dhawan — President Commercial and Strategy
Analysts:
Unidentified Participant
Sana Kapoor — Analyst
Sagar Shah — Analyst
Saransh Gupta — Analyst
Sumangal Nevatia — Analyst
Shweta Dikshit — Analyst
Presentation:
Sumangal Nevatia — Analyst
SA. Sam. SA. SA.
operator
Ladies and gentlemen, you have been connected to the Pond D Oxides and Chemical conference call. Please stay connected, the call will begin shortly. Ladies and gentlemen, you have been connected to the Pondy Oxides and Chemicals Limited conference call. Please stay connected, the call will begin shortly. Thank you. Ladies and gentlemen, good day and welcome to Pondy oxides and Chemicals Limited Q4 and FY25 earnings conference call hosted by Goindia Advisors. 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 this conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Raghapur from GoIndia Advisors. Thank you. And over to you.
Sana Kapoor — Analyst
Thank you, Steve. Good afternoon everybody and welcome to Pondi oxides and Chemicals Limited earnings call to discuss Q4 and FY25 financial performance. We have on the call Mr. Ashish Bansal, Managing Director, Mr. K. Kumarawal, Director of Finance and Company Secretary, Mr. R.S. vaidyanathan, Executive Director and Mr. Vijay Balakrishnan, Chief Financial Officer. We must remind you that the discussion on today’s call may include certain forward looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request Mr. Ashish Vanzal to take us through the company’s business outlook and financial highlights subsequent to which we will open the floor for Q and A.
Thank you. And over to you sir.
Ashish Bansal — Managing Director
Thank you Sana. Good afternoon ladies and gentlemen and welcome to our Q4FY25 earnings call. I trust you’ve had the opportunity to review the earnings presentation, press release and financial results that were uploaded on the stock exchanges. I will guide you through the results after which we will have a question and answer session. It gives me great pleasure to share that POCL has recorded its strongest performance to date in FY25 with all time high revenue EBITDA and PAT driven by robust operational plan and execution. Before diving into the operational and financial highlights, I would like to share on key strategic updates.
In an effort to capitalize on growth opportunities in its current operations and to explore various avenues in other non ferrous metals, POCL has successfully raised an aggregate of Rupees 175 crores through qualified institutional placement during the financial year ended 31 March 2025. Consequently, the company has utilized the proceeds of the issue in financing capital expenditure, working capital requirements and other general corporate purposes. On the Capacity Expansion Front we are enhancing our lead production capacity by 72,000 metric tons per annum at our Terwai Kandigai plant in two phases of 36,000 metric tons each and I’m pleased to share that the commercial production for Phase 1 with the lead capacity of 36,000 metric tonnes per annum commenced in Q1 FY 2026 at the Teruai Kandigate Tamil Nadu plant which is fully automated facility with integrated processes and improving overall operational efficiencies.
The total capital expenditure for phase one was rupees 85 crores and the same was funded through the proceeds of QIP and internal accruals. Phase two expansion is expected to be commissioned by to FY26. The capex estimated for phase two is about rupees twenty crores approximately. During FY25 POCL undertook a capital expenditure of rupees ninety four crore with the strategic focus on strengthening its capacities on its core vertical along with maintenance CAPEX in other units. For FY26 we anticipate a CAPEX of approximately 75 crores primarily directed towards capacity expansion and in different verticals of non ferrous metals recycling Credit Rating Upgrade CRYSIL Rating Ltd.
Has upgraded the credit rating to Crysil A stable from Crysil A minus table reflecting improved financial strength and stability. This upgrade underscores the company’s strong operational performance, robust balance sheet and growth outlook. The Board has announced highest ever dividend at 70% amounting to rupees 3.5 per share, continuing a streak of over 29 years of consistent dividend payments. PSGL is looking at setting up R and D facilities for certain value added products both for current portfolio and for feasible products which will add overall value to the top and bottom line of the company. Now coming to the operational performance, the yearly procurement mix of lead, plastics, copper through imports is approximately 73, 65 and 100% respectively.
The capacity utilization year on year of lead and other verticals has increased substantially on on both yearly and quarterly basis. The production of lead has increased significantly by 30% to 94,115 metric ton on annual basis and by 21% year on year to 26,074 metric tons on quarterly basis. There is a significant increase in production and sales of other verticals as well which are plastics and copper both on a yearly and quarterly basis. EBITDA per ton of lead increased 21% year on year to 13,848 rupees per metric done on quarterly basis and INR 13,225 per ton on annual basis and now moving to the financial results for Q4 and FY25.
I am pleased to share that over the past five years we have consistently delivered revenue CAGR at 11%, EBITDA CAGR at 22% and patch CAGR at 32%. Revenue from operations has increased to rupees 20, 28 crore on standalone basis up by 33% year on year and rupees five hundred and seventeen crores up by 45% on quarterly basis. POCL experienced this substantial growth because of increased production and sales in all verticals. The FY25 sales mix between domestic and export markets stood at 34% and 66% respectively. EBITDA increased by 39% to rupees 108 crore on annual basis and by 31% to Rs.
27 crore on quarterly basis. Q4 and FY25 EBITDA margins stood strong at 5% plus PAT increased to rupees 65 crores up by 65% year on year on annual basis and rupees 18 crore up by 46% year on year on quarterly basis on a consolidated basis. Also, POCL reported a strong financial performance and revenue from operations increased by 33%. EBITDA increased by 44% and PAT increased by 82% on annual basis and by 44%, 35% and 39% on quarterly basis. Our balance sheet has grown stronger with notable reductions in debt in net debt and improved net debt to equity ratio.
The working capital days has been improved from 55 days in FY 2024 to 50 days in FY 2025. In conclusion, POCL is strategically poised to realize its ambitious target towards 2030 with a sharp focus on expanding lead production and foraying into different verticals of non ferrous metals. We are targeting over 15% volume growth, revenue CAGR and profitability with growth of more than 20% alongside meaningful improvements in margins. Aiming for ebitda margins above 8% in ROCE exceeding 20%. Our growth strategy is deeply aligned with our sustainability goals as we work towards generating over 60% of our revenue from value added products and achieving 20% plus reduction in energy consumption to lower our carbon footprint.
With robust capacity expansion underway, disciplined capital allocation, operational excellence, strict implementation of government regulation and the guidance of an experienced leadership team, POCL is exceptionally well poised and positioned for long term success. Backed by the continued trust and support of our stakeholders, we are confident in our journey towards building a more innovative, sustainable and profitable future. That’s all for me. And I would now request to open the floor for question and answer session.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one the attached tone telephone. If you wish to remove yourself from the question queue, you may press star. N2 participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shagar Shah from Spark pwm. Please go ahead.
Sagar Shah
Thank you sir. Thank you for the opportunity. First of all, congratulations to the entire team of VOCL for delivering such robust results. Now I had some few questions regarding our earnings. Actually now my first question was related to our CAPEX guidance. Actually the CAPEX guidance that you have given is around 75 crores for this particular year, FY26. So in this year we are going to spend around 20 crores. As for our phase two for our phase two expansion. So for remaining 55 crores you highlighted in your opening commentary that will be incurring in the other segments.
So can you elaborate that? In which segments are you going to actually elaborate? Are you expanding your capacity? That is my first question Sir.
Ashish Bansal
Yes. Currently 75 crores that we have guided approximately about 20 crores as you said, right. Was in our red vertical. That will be for our second phase of expansion. Post this first phase that you already commenced production. Then the other two verticals that we’ll be spending the CapEx will be for the copper vertical and for our plastics vertical.
Sagar Shah
Okay, so will be the expansion will be on brownfield in nature and our existing plants or are you expanding in in the new plant at Tamil Nadu what will be the additional capacity that you’re building in?
Ashish Bansal
Yeah, this will be at our new plant in TKD and also at our existing plant which is currently operational. And with this we’ll be improvising the product portfolio and also the, you know, the what you call the efficiency of the existing plant in copper some product portfolio will be added and for plastics it will be more on efficiencies and more production.
Sagar Shah
Okay, so, so currently we are holding around 9,000 tons per annum for plastics and around 6,000 tons for copper. So what will be the new capacity for both of them?
Ashish Bansal
So, so copper we are, we are looking at taking it about 9 to 12,000 tons. And plastic technically will remain more or less in similar lines of the capacity but will have little improved facilities in terms of, you know, increasing efficiency by adding certain equipments. For better processing and attaining better quality products.
Sagar Shah
Okay. So we’ll be doubling our capacity in copper. So basically in this year 9 to 12,000 tons. Okay. Anything between 9 to 10,000 tons. Okay fine sir. My second question, sir was related to our. About our ebitda. Actually in this. First of all I wanted to have some breakup in terms of revenue from other segments in this quarter. From copper and plastics and respect to volume. That was a data keeping question, sir.
Ashish Bansal
Yeah. From first quarter onwards we are planning to give copper separately. But plastic if it is necessary we can consider. Otherwise we do so in terms of lead Sagar High. This is Vijay here. So in terms of lead the overall revenue is about 1942 crores. In copper it is about 55 crores. And in plastics it is about 31.5 crores.
Sagar Shah
Okay fine, sir. Okay fine sir. Now my. This question was related to inventory. Due to the inventory I think we booked very high inventory in this quarter. And that is why our operating cash flow was actually negative for the entire year. Because our closing inventory was at a record high. And that is why our current assets actually moved quite higher. So was this directly related to the decline in lead prices? So. Or any is or any other reason related to that?
Ashish Bansal
No, this was not in terms of declining lead prices because we do not speculate on the pricing part of the raw material. This was more for the starting of a new lead plant. Certain amount of inventory was accumulated to have a smooth flow as we start the commercial production. And this I’ll say more or less is a point in time figure. Now as commercial production started in this quarter all of this will be liquidated. And we’ll be back to our good inventory level.
Sagar Shah
Okay. Okay, fine sir. So in this. In other the EBITDA I just. Now my last question was related to our ebitda. Absolute ebitda. Actually absolute EBITDA for the quarter stood by at around 27 crores. So what my question was that the. The lead EBITDA pattern, the number that you have given in your investor presentation that translates to an absolute debit of 30 crores just for the lead division. So have we incurred EBITDA loss actually for copper and plastics in this particular quarter?
Ashish Bansal
Sir?
Balakrishnan Vijay
No, no, no. The. Both copper and plastics are in positive and we are not incurring masses on those. So in terms of calculation of ebitda, Sagar, the. We. We look the vertical. Let. Let vertical as a standalone basis. Okay. So apart from this we have administrative overhead that needs to be apportioned. So the difference between what you Say, is that.
Sagar Shah
Okay? Okay. That. Okay. So that is why the, the, the difference is coming. Okay, fine, sir, Fine. Sir, I’ll, I’ll come back in the queue. I have some, a few more questions. Thank you so much and all the best.
Ashish Bansal
Thank you. Thank you.
operator
Thank you. Ladies and gentlemen. If you wish to ask a question, you may press star N1. The next question is from the line of Shahranj Gupta from Swan Investments. Please go ahead.
Saransh Gupta
Good afternoon, sir, and thank you for the opportunity. So just carry on to the earlier participant questions. In terms of the working capital, so you invent, you indicated that because of the commercial production that you started for the lead in the first last quarter, there was a sharp increase in the inventory for the, for that particular year. So on a network basis, if we assume that commercial production has started and we will be starting a phase two in month of September, how do we see our working capital days going ahead from 50 days that we reported in FY25?
Ashish Bansal
So technically, like as you remember last, the year before this was, it was 55 and we managed to bring this and with our good inventory management and other factors to 50 days. Our current internal targets for this year is to get the inventory level, basically the turnaround days to about 45 days, which should be workable.
Saransh Gupta
45 days. And when we start the second phase in month of September, that will also start with the trial production and then subsequently month of October, November, we will be having a commercial product.
Ashish Bansal
Yes, you’re right on that.
Saransh Gupta
And now you indicated that you will be growing at 15% in terms of the volume for the lead with 8% margin and over 20% of the return ratios. So can you help us in understanding the EBITDA per ton or EBITDA profitability differentiated between the new facility that have just started and the facility that we are already operating.
Balakrishnan Vijay
Hi, this is Vijay here. So with respect to EBITDA right now in terms of lead vertically, if you see it is coming about last year it was about 13,225 rupees. With the new plant coming in, we are expecting a EBITDA the range of 14,500 to 15,000 in the new plant. So on a consolidated, you know, on a blended basis, we can have an EBITDA margin in lead vertical about 14,000 to 14,500 on a blended basis going forward on percentage by this and overall, based on the improvement into the processing and other thing only, we can bring it to the percentage of EBITDA at the higher level.
Saransh Gupta
So sir, now if you look on the Overall number excluding other income the last year we did almost 104 crores of EBITDA. Now when you look at the number of FY25 with a lead sales of 90,000 ton 9500 and with an EBITDA of 13,000 2325 the broad math comes to around 120 crores of EBITDA coming from the lead. So the incremental 15 crores of the loss or the decline in the overall profitability when we compare with the lead and the other business. So can you help us help us in correcting this match in terms of the revenue coming or the EBITDA coming from your plastic, copper and the aluminum division how does it has moved?
Balakrishnan Vijay
So we did a decent amount of sales in copper where the EBITDA per metric known as copper is about 5 to 5.5%. This is the range which we have got. OK. In plastics. Yes. Of course if you see last year it was negative but this year the EBITDA is positive which turns around about 90 lakhs of EBITDA in the plastic division. So this is the overall breakup of the entire EBITDA.
Saransh Gupta
Math doesn’t tied up because 120 crores of EBITDA is there. So and plus we are having a positive contribution coming from the plastic and copper also contributed. So the numbers doesn’t match up to.
Ashish Bansal
The reported in the ebitda.
Balakrishnan Vijay
Whatever I mentioned. That is as a vertical VC we have to reduce our other. We have head office apportionment expenditure that needs to be apportioned in the overall verticals that we have. That that is not being done in the EBITDA level. So that is why you are having the difference the same. The difference what Mr. Sagar and Sagar has pointed on the pointed out on the quarterly level basis. This is applicable for the full year basis.
Saransh Gupta
Sure. So last question which is on your. Hello. Yeah, I got your answer on the lead front. Now the commercial production started in month of April. So how was the. I mean how is the utilization? Are we able to do a decent amount of volume in the month of April May from the new facility.
Ashish Bansal
So the commercial production did start and now the sales volumes will start from the month of June onwards for this plant.
Saransh Gupta
So we’ll see an incremental volume coming from the month of June. So the Q1 will see an incremental contribution coming from the new facility of the lead.
Ashish Bansal
Yes, new facility of the lead and then incrementally it will be there for the next quarter. You’ll have the complete at about, I can say about 80, 90% in the.
Saransh Gupta
Next quarter in terms of the utilization on the plastic and the copper for the last year.
Ashish Bansal
Last year was only in the last quarter there was a beginning of utilization. So in this year you will see the volumes on copper grow. In terms of plastics the utilization was approximately 40% and in copper about 12 to 13%.
Saransh Gupta
Sure sir, that’s all from my side. Thank you and all the best.
Ashish Bansal
Thank you sir.
operator
Thank you. Participants who wish to ask a question may press star and 1. Ladies and gentlemen, if you wish to ask a question you may press star and 1. The next question is from the line of Shubmonger Levetia from Kotak Securities. Please go ahead.
Sumangal Nevatia
Yeah, good afternoon, thanks for the opportunity. So my first question is with respect to sourcing of scrap. In the presentation you mentioned it is 77 imports. I just wanted to know what has been the trend and what has been the changes in the procurement mix given BWMR and EPR for lead acid batteries.
Ashish Bansal
So Shiv, good afternoon, this is Ashish here. So basically in the earlier years we’ve had about approximately 90% was our import procurement and in the last financial year the import procurement has come down approximately to 73 odd percentage. And equivalently we are also increasing our footprint on the domestic procurement in terms of epr. EPR is currently still evolving. So in terms of when you see the domestic procurement part of, I mean a part of the procurement that we do from the larger OEs, when they give us the scrap, they adjust the EPR pricing in the same and accordingly they sell the scrap to us.
There are certain direct purchases that we make from the market and that is where the EPR credits come back to the company.
Sumangal Nevatia
Understood, Understood. So generally with respect to, you said it is evolving with respect to BWMR and pr, what has been your experience in the last one year versus there was some expectation of a significant increase in domestic scrapper ability with these regulations, but looks like the enforcement or all the evolution is quite slow. So just on a qualitative front, how has been the progress on the ground with respect to these policies?
Ashish Bansal
So basically in the last year there was an implementation and it’s not that it’s been slow, it has been implemented and notified very well and the largest stakeholders, all of them understand the importance of BWMR and you know, these related acts and however the smaller segment players are getting on board. But implementation is continually on the incremental side and the impact you can see as the domestic procurement the domestic market of scrap is also getting realigned month after month.
Sumangal Nevatia
And so what is the economics of domestic versus import? Is domestic sourcing more remunerative?
Ashish Bansal
I’ll put it this way. I mean you cannot compare Apple to Apple in terms of domestic and import. But in terms of domestic, one definite advantage is that the lead time when you receive the scrap is much lesser than import. But there are opportunities when sometimes based when you do a contract against lme. And all of those pricings work differently. Domestic scrap works more on the domestic local pricing, how the finished product is being sold. So I mean you cannot directly compare because also every scrap at the end of the day, workspaces, the metal content and the recoveries and all other factors like the payment, your other schedules, delivery schedule, all of that.
Understood?
Sumangal Nevatia
Understood. So just one or two more questions. So with respect to a few of the OEMs like Amar Raja, they themselves are putting recycling plants. So any change in business dealings with them? Is it? Are we seeing business getting diverted away from these large OEMs to their own captive units?
Ashish Bansal
So Amaraja started their production from their smelter in the last financial year itself. And I think they’ve been operating for a couple of months as of now, as we understand and we’ve discussed with them, I mean in these few months we have not seen any change in their procurement cycle and the orders have been pretty stable. And going forward also we do understand that their initial and primary target is, is where they collect their own batteries from their dealership which they were collecting and currently giving out for tolling, which they would like to process within their plant and also the scrap and other wastage that they generate within their plant.
And they are looking at, you know, about which they were approximately about 30% to 33, 35% they were using through their own recycling process which they were giving outside for tolling. And now that part of it they would be doing it in their plant. But the outright purchase that they were doing in the past, they would continue to do the same. Understood.
Sumangal Nevatia
And just one last question. On the volume, you’ve given a long term guidance of 15% CAGR, but given we have these capacities coming up, should we expect a step increase this year and next year or should we look at a capital growth basis for next two years or given new capacity, we will see a step jump.
Ashish Bansal
You will see a continual growth over the next three to five years on the CAGR with our, you know, all other verticals also coming in and our enhanced capacity on lead. Apart from which from Our copper and our plastics divisions as well. So it will be a continual rise year on year over the next three to five years.
Sumangal Nevatia
Understood. Thank you, sir. And all the best.
Ashish Bansal
Okay, sir.
operator
Thank you. Participants who wish to ask a question may press star N1. The next question is from the line of Shweta Dixit from Systematic Group. Please go ahead.
Shweta Dikshit
Hi, good afternoon. Thank you for the opportunity and congratulations on a good set of numbers. I have two questions. One is if you could highlight any development in terms of expansion in the Mundra land acquisition that was there any plans of commencing operations or breaking the ground there in terms of future expansions and whether 75 crores of capex this year incorporates some component for Mumbra as well. And my second question would be your like what’s the development in the aluminium segment as of now since FY25 we did not register anything. We did not record any performance for aluminum segment.
So how is it going to be going forward?
Balakrishnan Vijay
Good afternoon. Shweta. Shweta. Regarding the project, we were poised to start our implementation in the Q4 of FY26. But currently we have moved that plant to the Q1 of FY27. So Mundra investments will happen in the first quarter of next financial year. As far as aluminium segment is concerned, we have just recently started some production on our aluminium side as well with a little changed portfolio. And you will be seeing some small in the first quarter of this year, some smaller numbers and going forward little bit incremental. You have quota of the quote financial year.
Shweta Dikshit
All right, thank you.
Ashish Bansal
Thank you.
operator
Ladies and gentlemen. If you wish to ask a question you may press star and 1. The next question is from the line of Sanjay Parikh from Soham Asset Managers. Please go ahead.
Unidentified Participant
Yeah, thank you. Congratulations on great set of numbers. My first question is just on the reconciliation. I suppose you all give EBITDA means gross profit per ton and on this whole year basis it was coming around 120 crores. So 15 crore is a common overhead that would take us to EBITDA broadly. That’s the math, right?
Balakrishnan Vijay
Yes, sir. Correct. Correct. Exactly. This is what I was trying to say.
Unidentified Participant
Okay, so that is first. Our second question is, you know, the contribution from copper. So what my question was what is the volume of copper this year and as it scales up because value wise it will be very large. What would be the broad contribution in terms of EBITDA or gross profit the way you all define from copper in 26 and 27 and the same from plastic which is not contributed. But as we Scale up. What could be the contribution from plastic in 26 and 27 broadly, if you can guide us, that will help us, you know.
Ashish Bansal
Yes, sir. Good afternoon, sir. Ashish. So regarding Copper, last year’s Q4 was the initial bit where it was, you know, being started and the volumes were low. So the volume henceforth from this financial FY26 quarter on quarter will be incremental on copper. An approximate number that you’re looking for this financial year would be approximately in the range of about 300 crores of top line. From copper and on plastic side we are looking at about close to about 50 to 55 crores of top line.
Unidentified Participant
And what would that be? 27.
Ashish Bansal
In 27 we are looking at about close to 650 to 700 crores on the copper side. And plastics would be just marginally incremental, say maybe about 60 to 70 crores.
Unidentified Participant
Okay, so copper would imply what volumes in 26 and 27?
Ashish Bansal
In 26 the copper volumes will imply approximately, we are talking about close to. So somewhere about close to 4,4000 to 5,000 tons.
Unidentified Participant
Okay.
Ashish Bansal
And then 27 we’ll be doubling that.
Unidentified Participant
Okay. Okay. And so now you know, because see led, you said that you have continuous process plant and you plan to scale up your EBITDA per turn which should reflect hopefully this year and then slowly next year you have an aspiration of 8% margin. So because of value addition. So do you see that in your journey on copper and plastic margins, where does that take us through? Because that’s relatively new for us. So do you see any hiccups in terms of getting the margin that you seek and they meaningfully contribute? If you can guide us there, it will help us, you know.
Ashish Bansal
Yes. From the lead side, as Mr. Vijay over the earlier question he guided in terms of copper, see we are looking at 8% margin as a blended over the three segments that is our lead copper and our plastics and copper we are looking in the initial first year, that’s FY26 and 27, we are looking at margins in similar levels of. And as we move forward to more forward integrated products, we are looking at higher margins and as an average we are looking at 8%. However, currently plastics, because of our little lower volume, the margins have not been very significant.
And this financial year we are looking at having margins on plastics also grow.
Unidentified Participant
Sure, sure, sure. And one more in your presentation, you know you said that you want to diversify in lithium ion. So if you can guide us more. And then you also said that you are looking At M and A. So I mean given a balance sheet size this will help us to understand how do we plan to. What is our plan of diversification? What’s the right to win? A little bit about both inorganic and diversification will help in which in IMs.
Unidentified Participant
Yeah, hi sir, this is Vaidyanathan here. Good afternoon. Sir. As far as the industry of lithiumion is concerned we see crux of changing technologies. It is fast moving from basically from NMC to LFP and now to LMFP which is a new chemistry. I am sure you are aware the recycling mostly we have seen are in NMC based technology. There are a very few who see LFP as a core competency. We are now working for a technological solution which can address the majority of the market basically which is LFP and lmfp. Because what happens is for a tropical climate like India LFP is the most suited lithium ion battery.
And for example if you take Tata Nixon or any of these latest cars now coming up in electric vehicles they are all using mostly LFP only. So what what we are now looking at is a technological partner who is ready to help us with the solutions for all the chemistry that are available now whether it is LFP or lff. I mean LFMP or nmc, whatever it is like we are not sure as to how do we take this forward. We are in discussions with a lot of technological companies to know the. To understand the know how now and basis which we will decide.
And also the flow of lithium ion batteries in terms of raw material is expected mostly from 2027, 2028. And therefore since I mean we thought we’ll take it up carefully.
Unidentified Participant
Sure, sure, sure. Perfect. And last one from my side, you know we are. We’ve done 105 crores and we’ve grown very well over last 10 years more 10 years plus now as we transit to more like you know 250300 crore company in terms of EBITDA which may happen in two years. So what are the. I mean in terms of execution, in terms of risk management, in terms of we don’t err on profitability, working capital management, also getting return ratios. A little bit of your thought of how when you scale up to next level what are the challenges you see and how do you plan to circumvent that? You know that’s the last one from my side.
Balakrishnan Vijay
Vijay. So with respect to the plants, whatever as we mentioned we have indicated the plans where we wanted to increase. For example we have already suggested there will be an incremental Percentage increase in growth for next two years. So first and foremost is something which is a non ferrous metal. It’s our forte and we are very specialized in that. So that is why our full focus is on non ferrous. So and plastics as a byproduct. Yes, of course. But more of concentration is of lead as well as copper. Now coming to procurement side. As you know that we have about 270 plus dealers across the world.
And we import from about 70 plus countries. The procurement network is very strong. And of course we have all on board. Mr. Vaidyanathan who also there. And from these people we are able to will be able to procure the copper scrap as well. So from the supply chain side. Yes, of course. We are, you know secured. And from lead from the sales side if you see. From the sales side, if you see. Of course the sales was not at all a problem for us. We will be able to sell to our existing customer on a higher quantity as well as we will onboard new customers.
And next two years we are focusing on domestic, you know, sales volume also. So I think the entire supply chain once it’s secured for us execution, you know should be very easy for us. So that is how, how we are planning to execute. To supplement Vijay. We have clear cut risk management policies also we have in place especially for procurement. Back to back hedging mechanism is there. Our import team is very strong in doing that. Apart from that forex hedging also we are doing it very meticulously. We continuously. We are recruiting the professionals to handle all the divisions.
So we are taking care of the increase in the top line and other things parallel we are increasing the professionals to take care of all those areas. So when. One more point to add sir. When it comes to funding so on a yearly basis we will have a cash accrual of 100 plus crores as per the numbers what we are envisaging. So with this amount and the amount of working capital facilities we will have we will not go for additional fundraising as well. With internal accruals and the existing the facilities itself will be able to ramp up the volumes.
Unidentified Participant
Sure, sure. Very, very assuring. Thank you very much and best wishes to the team and congratulations again.
Ashish Bansal
Thank you. Thank you.
operator
Sanjay. Sir, the next question is from the line of Siddharth from Kotak securities. Please go ahead.
Unidentified Participant
Hi sir. Congratulations on a good set of results. Sir, I just wanted to check. Our finished good capacity is 132,000 tonnes. Can you just please highlight what our smelting capacity is? Because in one of the last calls we also mentioned that our smelting capacity is poised to increase.
Ashish Bansal
Yes, Siddharth, good afternoon. See, currently our smelting capacity is about in between 90 to 92,000 tons.
Unidentified Participant
Yes, and are we planning to increase it? Because I was under the impression that we were increasing it with this new addition of capacities in phase one.
Ashish Bansal
Yeah, I would like to complete what I was just saying. So currently our capacity is about 90 to 92,000 tons on smelting. And with our expansion that we are currently doing in two phases, our smelting capacity will be increased by 70, 72,000 tons. So which will take us to the range of 1 60,000 tons on our smelting capacity.
Unidentified Participant
Okay, and by when do we sort of anticipate the smelting capacities coming online with the would be phase one, Phase two this year itself.
Ashish Bansal
As guided in the earlier questions, our phase one has been operational in this first quarter and with this we have got on board 36,000 tons of our smelting capacity capacity additional over the 1992,000.
Unidentified Participant
Okay, understood. So our capacity is around one hundred and twenty six, one hundred and twenty eight thousand tons as we speak.
Ashish Bansal
Right sir, yes, you’re right. Please.
Unidentified Participant
Understood. Sir, a small second question sir. We’ve sort of guided that our EBITDA margins will go up significantly from around five, five and a half percent to around 8% in say the next two or three odd years. So sir, can you tell me the levers which will allow us to do so? Because it seems that this is a fairly sharp jump through.
Balakrishnan Vijay
In terms of EBITDA 8%. We have mentioned that is our target 2030. But of course it is not that we will wait that much of time to get that. But in terms of lead, as I already said, right now we are at 5% levels through the new plant. We are expecting 1 to 1.5% increase on that. You know, my increase in the margins in that new plant. Apart from that, in the existing plants we are planning to retrofit some of the technology, whatever we used in TKD so that there we can see a marginal increase of 0.5% in the new plant.
In terms of lead now coming to copper, right now we are doing recycling of scrap. But we wanted to get into value added products where we can see incremental ebitda margin rising from 5 to 7 and more and more value added product. The 7 will raise to 8. And coming to plastics right now we are doing a plain ppcp. But going forward when you do that compounding we can expect the ebitda margin of 10 to 12%. So over a period of time, all these verticals went on a blended basis will take us, will make us to achieve that 8% EBITDA margin levels.
Unidentified Participant
Understood. So just a small follow up on plastics, what are the current margins? We sort of expect say in FY 26 or 27.
Balakrishnan Vijay
So we can expect a margin of about 7 to 8 percentage this year.
Unidentified Participant
7 to 8%. And you sort of expected to go higher to around 10 to 12% once the value addition steps are complete. Right sir.
Balakrishnan Vijay
Yes.
Unidentified Participant
Okay, sir. Understood, sir. Thanks a lot for your time. Best. Best of luck, sir. Thank you. Thank you.
operator
The next question is from the line of Abhijit from AONES Alpha Investment. Please go ahead.
Unidentified Participant
Yeah, I hope I’m audible. Yeah, just, just to understand the bit a bit more, can you highlight what kind of, you know, broad, of course, broad numbers with the loss that you would have reported or incurred on the aluminum business.
Balakrishnan Vijay
This year. We didn’t do any aluminium Abhijit, but.
Unidentified Participant
There would be some fixed cost which would be getting ascribed to it as in.
Ashish Bansal
Depreciation charge and only the basic maintenance cost of the plant. So, so the maintenance cost would be marginal about close to 60 to 72 lakhs in the whole year. Apart from which there will be depreciation on the equipment.
Unidentified Participant
Understood, Understood. It’s very clear. And you know, if you have to take a guess on the EBITDA of late post the fixed costs, what would that be? It would be around 11 and a half to 12,000 rupees per ton. Broadly after. Yes, after the apportioning of head office expenditure. It should be around that levels.
Sumangal Nevatia
What you said was Understood.
Ashish Bansal
Got it.
Unidentified Participant
And lastly, this increased inventory, you know, does it carry any risk of inventory losses in the coming quarter you feel, or those things?
Ashish Bansal
Because the same has been hedged back to back. So our inventory is also hedged along with our sales against our sales and our orders.
Unidentified Participant
Got it? Got it. Understood. Understood. And, and if I may ask, you know, what kind of sales visibility do you have now? I mean it would still be close to three months or you know, two months. What, what, what would that visibility be? As of now?
Ashish Bansal
We have a clear visibility for the complete financial year, the complete 12 months. Because predominantly almost 90% of our sales we. We tie along the long term contracts.
Unidentified Participant
Understood, Understood.
Ashish Bansal
This would be with the new increased.
Unidentified Participant
Capacity that you are.
Ashish Bansal
You would be referring, right? Yes, that’s right. Got it, got it.
Unidentified Participant
Great, thanks. And wish you all the Best.
operator
The next question is from the line of Shakshi Goenka from Soham Asset Managers. Please go ahead.
Ashish Bansal
Hello.
operator
Yes ma’ am, you’re audible. Please go ahead.
Unidentified Participant
Yes, hi. Thank you for the opportunity. Just a couple of questions. Could you tell us when will the forward integration on the copper segment be complete?
Ashish Bansal
This year the forward integration on copper segment will be completed, will be done about in the Q3 ending, Q4 beginning. But this is going to be in, you know, again in different phases because we’ll do a first part of the forward integration and then move to more complicated products. Sure, sure.
Unidentified Participant
And just a bookkeeping question. Could you give us realization per ton on lead and wanted to ask with our new capacities and is there any scope to value add and improve the realization of our lead?
Ashish Bansal
We are working on a blended mix about targeting 60% of value added products and 40% of our regular plain vanilla products. So definitely we would aspire to move that to about close to 70% but we would like to guide it as trying to be over 60%.
Unidentified Participant
Got it. And just one last question. If I look at your gross margins historically, so it has been in the range, you know, in some quarters nine and some quarters 13 and basically flip flops between 10 to 12, 13%. Now you mentioned that since we do back to back hedging, so why are these, you know, quarterly variations in gross margins we see technically, if they’re doing back to back hedging gross margins, if I understand it correctly, should be quite tight. Right. So just wanted to understand why the quarterly volatility in gross margins that we see.
Ashish Bansal
Yeah. So basically what happens, Sakshi, is that the metal content is hedged and our main worry here is our price risk against the metal and the price risk against the Forex. However, whenever there’s a market opportunity and if there is a timing or opportunity to give out more value added product, I would translate that. We would translate that into a value added product and, and make use of the market opportunity that’s available. So that is why you see that little bit of variation plus minus in terms of the numbers. But what we need to understand is that the main idea here is to completely offset your risk and not carry the risk forward.
Hence the hedging happens on the basic metal part of it where the price movements are heavy and volatile, including the Forex part. So we limit that we do not have a downside on our basic margins, but always aspire to push forward for a more value added product combination whenever the market opportunity gives us and we try to get that so that is why you see that little bit movement in plus or minus in terms of margin percentage.
Unidentified Participant
Got it sir, this was very helpful. Thank you so much and congrats for a good set.
Ashish Bansal
Thank you Sakshi. Good day.
operator
The next question comes from the line of Naman Parmar from Nivesha Investments. Please go ahead.
Unidentified Participant
Good afternoon sir and congratulations on great set of numbers. I just wanted to understand how the overall copper recycling industry is currently evolving and how is means it become more feasible for the copper recycling if the copper natural copper supply gets low and how is the other player are performing.
Ashish Bansal
I lost you in between. Could you please repeat your question?
Unidentified Participant
Yeah, so I just wanted to understand how the currently copper recycling industry is overall evolving means how the recycling become more feasible for you guys when usually go down in the current markets and how the other players are currently perform.
Ashish Bansal
So basically as you’re aware India by itself, the gross consumption, per capita consumption of copper year on year is incrementally going up in India. And this comes with more of electrification, more of modernization, more of infrastructure development that’s happening and copper is poised to have vertical growth across the country. And currently India is definitely deficit on copper. Hence a good opportunity does come in in terms of providing products that are recycled copper. And of course as you are aware the push on the recycled part also. So in other players basically copper was more copper recyclers or copper as a segment was more concentrated towards the western belt of India and little bit towards the northern belt.
And the amount of recyclers in south India were on the lower side. So this also gives us a little gap in the market because most of the material that was sold was either imported or domestically was moved from the western belt or the northern belt to down south or more to the eastern side. So hence we see that gap as well in the market opportunity and we would like to take up and cover that. Apart from that, lot of products could be tubes or a lot of other products that are being imported. Now with all the push, most of the OE manufacturers are more keen on buying products that are domestically manufactured, manufactured within India.
So all of these factors when taken together gives a very good opportunity in terms of copper.
Unidentified Participant
Okay, so in these all products, copper tubes and all that.
Ashish Bansal
So the recycle content would be I.
Unidentified Participant
Think very low, only around 15 to 20% or is there any, there is no any non such thing.
Ashish Bansal
Basically. Are you telling me that I asked your question? Just correct me if I if I’ve understood, right, that in the end product that’s a tube or something. The recycled content would only be 10 to 12%. Is that your question? Yeah.
Unidentified Participant
Yes.
Ashish Bansal
So we cannot generalize rule in that manner. There could be products that are manufactured 100% out of recycled copper. There could be a blended product which could even have 50, 60% of recycled content, 75% recycled content. So it always depends on the end use or also depends on what product is being made or what quality of recycled, you know, copper they are introducing into the primary melt. So many factors would determine that.
Unidentified Participant
Okay, yeah, that’s understanding. And lastly I just wanted to know how much percentage would be contribution from the lead and the other business, copper and plastic from FY26, FY27 onwards.
Ashish Bansal
So currently majority is from lead and in FY26 we are looking at anywhere between 10 to 20% coming from copper and other vertical.
Unidentified Participant
Okay. Okay, thank you so much for answering.
Ashish Bansal
Thank you.
operator
The next question is from the line of Koop Shah from Walford pms. Please go ahead.
Unidentified Participant
Hi sir. Thanks for the opportunity and congratulation. A good set of numbers. Most of my questions have been answered. There are two more of higher level questions which I just wanted to understand. Obviously our capacity is increasing and so is, you know, the competition is also increasing its capacity.
Ashish Bansal
So do you sports a challenge in.
Unidentified Participant
Terms of procurement of the stock or the price of the stock as we move in the future? That is my first question.
Ashish Bansal
Basically you’re right. Definitely. With increased capacities, the competition and the need to get more aggressive on procurement does happen. But also alongside the good part that has happened is the domestic market has also increased, equally opened up and realignment of the whole scrap, the way it is handled and sold within the country is becoming more organized. So that does give us a good leverage also to increase which we have also done in the last, in this financial, last financial year. The incremental side on domestic procurement as well. So both import and domestic procurement together is giving us a good edge to, you know, fulfill our requirements in terms of raw material.
Unidentified Participant
Okay, sir. And second question was that the newspaper article that now the freights, the shipping feeds will increase.
Saransh Gupta
Within that the trade deals are almost.
Unidentified Participant
Kind of being done.
Saransh Gupta
So does that impact our cost in.
Unidentified Participant
Terms of again procurement? Because majority of our procurements are, you know, from the import.
Ashish Bansal
Basically most of our procurements are on CIF basis delivered to our port. Definitely if exorbitantly shipping line freights increase, they will. The cost of raw material might increase. But the whole thing is this is a. That would be a transitional period and the same would Reflect back onto the sale price as well.
Unidentified Participant
Okay, those are the two questions from. Thank you and all the best.
operator
Thank you. The next question is from the line of Rahel from Crown Capital. Please go ahead.
Ashish Bansal
Mr. Rail, please go ahead with your question.
Unidentified Participant
Yeah, I am audible. Yes, sir, you are, yeah. Hi. Hi, sir. So the first thing, just a follow through on, you know that CAGR sort of outlook or guidance that is given which is sort of long term in nature. But considering that this year you coming up with expansion with the new facility and all. So is it fair to assume that the 15% volume growth and the 20% revenue CAGR can be much more in FY26 particularly?
Balakrishnan Vijay
Yeah, for this year. Yes, definitely we’ll achieve. We’ll be able to achieve and over a period of time also we have plans in executing the same. We’ll be able to achieve with. Definitely we are confident in achieving that for the current financial year is more compared to the overall five years average.
Unidentified Participant
Yeah. So this year it will definitely be more than, you know, the steady state number which we’ve given over the course of five years. Correct. Because the new facility is coming in.
Ashish Bansal
Yeah. Yes.
Unidentified Participant
Yeah. And same for the EBITDA margins then. So the next three, four years you envision to reach 8%. So this year with the lead capacity increasing, is 6% or more a fair number to assume. Is it possible to reach that? Yeah, 6% is very reasonable on a blended level.
Ashish Bansal
Yeah.
Unidentified Participant
Okay. Okay, perfect. That’s all I want to know. Thank you and always.
operator
Hello. Does that answer your question?
Unidentified Participant
Yes, yes, I was done. Thank you.
operator
The next question is from the line of Hemant, an individual investor. Please go ahead.
Ashish Bansal
Thank you for providing me the opportunity.
Unidentified Participant
My question is similar to the earlier participant.
Ashish Bansal
So we have a revenue figure of 20% till F FY30, I guess. But sir, what will be the revenue guidance for FY26?
Balakrishnan Vijay
So this year we can expect an increase of about 30 to 35% increase in our revenue. Yeah.
Ashish Bansal
We can see on a standalone and 35% consolidated basis.
Unidentified Participant
Yes.
Ashish Bansal
And sir, most of it will be from H2 or. I mean what will be the split? Yeah.
Balakrishnan Vijay
From Q2 onwards.
Ashish Bansal
From Q2 onwards. But there should be a. There should be an quarter. Quarter growth because we have our commercial production from June also. Right, the first phase. Yes, yes, there will be so one part of this quarter that is the last, that’s a June month will contribute and from next quarter onwards the complete three months will contribute. Hence when you want to see the full effect of the numbers, you start seeing from Q2.
Unidentified Participant
Yeah.
Balakrishnan Vijay
The 30% growth is average for the whole financial year.
Ashish Bansal
But sir, the Q1 number should be much better than Q4 because there will.
Unidentified Participant
Be some incremental capacity for it as well.
Ashish Bansal
Right? Q1 numbers should be better than.
Unidentified Participant
Yeah, yes.
Ashish Bansal
Of the last last four years. You’re right. Yes. I’m. I’m talking about Q1.
Unidentified Participant
Yeah.
Balakrishnan Vijay
Q1 is less definitely little better than the Q4 for previous financial year.
Unidentified Participant
Okay. Okay sir.
Sagar Shah
Okay.
Unidentified Participant
Thank you sir.
Ashish Bansal
Thank you.
operator
The next question is from the line of Sagar Shah from Spark pmw. Please go ahead.
Sagar Shah
Thank you so much for giving the opportunity. Again I had just around a follow up or two. Three questions. Sir, my first question was related to the CWIP. The CWIP stood tall at around 75 crores as at this as a type for 25. So this cost work in progress is more on related to the phase one Capex or the capex already going on or is it something else sir?
Balakrishnan Vijay
Yeah, yeah.
Ashish Bansal
Mainly.
Balakrishnan Vijay
Mainly on capital working progress for TKD plant.
Sagar Shah
Okay. Sir, this is more related to phase two sir.
Balakrishnan Vijay
No, no, no. Phase one. Phase one we are not capitalized as on 31st March 25th around 55 crore belongs to this thing and balance 20 crore from the regular our capex.
Sagar Shah
Okay. Okay fine sir, what your point now My second was related to the aluminum business. Aluminum business had its own concerns and what you have highlighted in the previous cons calls also regarding the hedging regarding the kind of volatility also in the business also. So you just I think answered the previous participants question that going ahead you are looking to increase some volumes even in aluminum business. So have you found out any actually a way to hedge your the prices on the aluminum or have you found out a way actually to bring out some profitability in this business?
Ashish Bansal
Basically we are not hedging the aluminium part of it. Rather we are doing a back to back purchase against sales. So this is not hedged in terms of market hedging but more hedged in terms of purchase and sales and running. That through the buffer inventory.
Sagar Shah
So this is purely looks like a trading bit actually because I think you are. You must have observed the prices and going ahead you would maybe you were keen on selling at higher prices. I think that’s how you are eyeing this business right? In this particular.
Ashish Bansal
No, not. Not that way. Well the moment we are buying we are selling it as well along with our margin and processing whatever cost additional and then we’ll be selling it at a future point in time.
Sagar Shah
Okay. Fine sir. So my last question is related to the margin drivers. The margin going in this particular for FY26 and also beyond the margin drivers would be mostly of I think in the copper and the plastics business due to the high utilization. Do you think the operating leverage will play and that is why you are guiding for 6% EBITDA or is it just because of the newly commissioned lead plant?
Ashish Bansal
It is both blended from copper lead and from plastics, more from lead and copper.
Sagar Shah
Okay, okay, fine sir, fine. Thank you so much and all the best.
operator
The next question is from the line of Siddharth from Kotak securities. Please go ahead.
Unidentified Participant
Hi sir, thanks for the opportunity. Again, just a few questions as a follow up. When we see that we have not really been able to scale aluminium division in the current format. When you say back to back purchase and sale, do you think there is any scope for, you know, increasing the utilizations and the volumes in this segment if and when say an MCX hedging contract is online or do you see that not really playing out for yourself.
Ashish Bansal
On the aluminium side? We definitely don’t see the NCX contract playing out for ourselves because that is more on the primary side of the metals. And in terms of aluminium we will not be able to give you a very strong guidance because we are in the process of incrementally trying the product. However, as your specific question in terms of the MCX engine that will not work for these products.
Unidentified Participant
I’m sorry sir, you said it was for pure aluminium. I was under the impression that there is there are discussions to start an aluminium alloy contract as well. Will that not help you?
Ashish Bansal
It’s still in discussion. I technically as of now I do not see the light on the other side of the tunnel on that contract. But when it comes then definitely it will be helpful.
Unidentified Participant
So would you mind telling us why you do not seem very optimistic on this contract coming online? Because one of your peers is very optimistic on this particular point. So I mean I just wanted to understand why the divergence in point of view.
Ashish Bansal
I did not say I’m not optimistic in this but as of now I do not see the light because the discussion, I mean what what we see and what we discuss with the exchange, we do not see as of now that translating because there are a lot of factors. So once the exchange comes up definitely we would use the same and that will be helpful for us.
Unidentified Participant
Understood sir, thanks. Thanks a lot for this. Secondly sir, on the reverse charge mechanism which was supposed to come online for batter scrap, has there been any progress from the same, because we see that it’s been a fair time coming. The industry participants are still hopeful but on the ground it does not seem to be promulgated as of now. So sir, any updates on that particular point? Sir.
Ashish Bansal
Regarding the RCM mechanism, I mean in the coming GST council, we are indicing that that could be taken up more strongly or on the GST reforms. So we have to wait and see. And also, I mean from the industry side, there has been a good push from all recycling industries, whether be it aluminium, lead, copper, all of us have definitely pushed on that. So let us wait and watch and we are hopeful that this should happen.
Unidentified Participant
Okay, sir, thanks. Thanks a lot for your time. Sir, best of luck. Thank you.
operator
Thank you. Ladies and gentlemen. That was the last question for today’s conference call. Yes, sir, there’s a question. It’s from the line of Shweta Dixit from Systematic Group. Please go ahead.
Shweta Dikshit
Hi. Thank you for taking my question again. So could you please reiterate what is the top line growth you’re expecting for FY26 or in terms of volume? Absolute top lines.
Balakrishnan Vijay
So Shweta, as I already said it is about 30 to 35%. No, this is the minimum increase which we are anticipating. Okay. You know this, this numbers may well exceed this. The numbers what we have given on a conservative basis. We are giving this number.
operator
Thank you. Has there are no further questions. I would now like to hand the conference over to the management for their closing comments.
Ashish Bansal
Thank you everyone for participating in this call. We trust that we have addressed all your queries during this session. However, if there are any remaining questions, please feel free to reach out to our investor relations team at Goindia Advisors. And once again we extend our gratitude to all the participants for joining us today. Thank you and have a great day.
Balakrishnan Vijay
Thank you. Thank you. Thank you all.
Ashish Bansal
Thank you.
operator
Thank you on behalf of Goindia Advisors. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.