Concord Enviro Systems Limited — Q2 FY26

Concord Enviro Systems Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=GLzprLAuSKA Published: 6 months ago

0:00 Ladies and gentlemen, good day and welcome to the Concord Envir Systems Limited Q2 and H1 FI26 conference call. 0:09 9 seconds 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 0:17 17 seconds concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on a touchstone phone. Please note this conference is going to be recorded. 0:28 28 seconds I now hand the conference over to Mr. Kal Kana. Thank you and over to you sir. 0:35 35 seconds Thanks and good morning to all the participants on the call and thanks for joining our Q2 and H1 FI26 earnings call of Concord Envirro Systems Limited. 0:45 45 seconds Please note that we have mailed out the results to everyone and you can see these on our website and also uploaded on our stock exchanges. 0:53 53 seconds In case you have not received it, you can write to us. We'll be happy to send it over. And before we proceed to the call, let me remind you that the discussions may contain some 1:01 1 minute, 1 second forward-looking statements and may invoke known or unknown risk, uncertainties, and factors. It must be con it must be viewed in conjunction 1:10 1 minute, 10 seconds with our business and could also cause future results of performance to vary significantly from what is expressed or implied. To take the results of this 1:19 1 minute, 19 seconds quarter and answer to all your questions, we have the management of Concord Envirro Systems Limited with us. 1:25 1 minute, 25 seconds Please welcome Mr. Mr. Priyaz Goyel Chairman and managing director Mr. Pra Goyel Executive Director Mr. Anish Goyel Group CFO Mr. Sudaran Kamat CFO and Mr. 1:36 1 minute, 36 seconds Abijit Galke head of strategy and M&A we'll be starting the call with a brief overview of the quarter and H1 past and 1:46 1 minute, 46 seconds then we'll follow it up with some question and answers now with that being said I'll transfer the call to Mr. Perhaps over. 1:54 1 minute, 54 seconds Thank you, Ka. Good morning, ladies and gentlemen. A very warm welcome to Concord Envirros Q2 and H1 FI26 earnings 2:03 2 minutes, 3 seconds call. Thank you for taking the time to join us today. Let me begin with a quick recap of our company before moving to 2:10 2 minutes, 10 seconds the highlights of the quarter and the half year. As you know, Encod Envirro has over three decades of experience in 2:18 2 minutes, 18 seconds water and wastewater management and has established itself as a technology-driven globally integrated solutions provider. Our focus continues 2:26 2 minutes, 26 seconds to be on zero liquid discharge and energy efficient technologies that help industries meet their water sustainability goals while optimizing cost. 2:36 2 minutes, 36 seconds Our business continues to operate across three key segments. systems and plant, consumables and spares and operation maintenance and digitization. 2:46 2 minutes, 46 seconds This covered the entire value chain from design and commissioning to life cycle management. 2:51 2 minutes, 51 seconds We have also fored into compressed biogas or CVG systems last year aligning with India's growing clean energy 2:59 2 minutes, 59 seconds agenda. In fact, our CBG projects are getting off the block in Q3 FI2. 3:05 3 minutes, 5 seconds Also, we have a strong and experienced team with us to lead the execution of these projects for CBG. 3:11 3 minutes, 11 seconds We serve a diverse client base across industries such as pharmaceuticals, chemicals, food and beverages, defense, 3:19 3 minutes, 19 seconds automobile, energy, steel and textiles, reflecting the vers versatility and scalability of our technology. 3:30 3 minutes, 30 seconds On the R&D front, our 31 member team continues to drive innovation in membrane design and system efficiency. 3:38 3 minutes, 38 seconds As of this quarter, we hold nine patents and 21 more applications are under process. Our solutions are developed 3:46 3 minutes, 46 seconds from first principles not assembled from offshore shelf components which is a key differentiator for us. We are pleased to 3:53 3 minutes, 53 seconds share some of the exciting technology advancements made during the year. We have successfully completed field trials 4:00 4 minutes of our oil fluid membrane and in parallel we are developing a new line of heat exchangers based on our evaporation 4:07 4 minutes, 7 seconds technology which use non-corrosive plastics in place of stainless steel thereby offering a cost effective and 4:14 4 minutes, 14 seconds durable alternative for a wide range of product applications. 4:19 4 minutes, 19 seconds Additionally, our team has formulated a proprietary chemical mix to reduce silica content in effluent streams, helping to lower both chemical consumption and flood generation cost. 4:29 4 minutes, 29 seconds We have also designed new process schematics for treating high strength acid and alkali waste water generated during solar panel manufacturing. Trials 4:38 4 minutes, 38 seconds for this solution are currently underway with one of the leading solar panel manufacturers in India and early results are very encouraging. 4:46 4 minutes, 46 seconds We are also expanding our innovation efforts beyond wastewater treatment into process separations and emerging sustainability areas such as solar 4:54 4 minutes, 54 seconds photovote, green hydrogen, carbon capture and semiconductors where we are partnering with leading industry players to co-develop next generation 5:02 5 minutes, 2 seconds technologies. In fact, we are close to signing our first solar PV order for retrofitting an existing Z&D system to 5:10 5 minutes, 10 seconds value add in terms of performance, opex reduction, energy savings, and eventually greenhouse gas emission reduction as a main target. Talking 5:19 5 minutes, 19 seconds about revenue from operations for Q2 FY26, it stood at 1,248.45 5:25 5 minutes, 25 seconds million compared to 1,618.94 million in Q2 FI25. 5:32 5 minutes, 32 seconds The year-on-year decline is optically due to it exceptionally strong Q2 FI25 which had a significant billing from our Mexico project back then. 5:44 5 minutes, 44 seconds Also on the project execution fund we have faced an unexpected delay in one of our Africa projects due to pending approvals from local authorities. This 5:53 5 minutes, 53 seconds has temporarily deferred execution and revenue recognition. Consequently, we are revising our FY26 revenue growth 6:00 6 minutes guidance from 18 to 20% to now around 12 to 15%. While this has impacted our short-term performance, we remain 6:09 6 minutes, 9 seconds confident that project execution would normalize in the coming quarters and contribute meaningfully to growth thereafter. As of September 30, 2025, 6:18 6 minutes, 18 seconds our order book stood at 5,354 million rupees. Segment wise about 53% of this pertains to zero liquid 6:26 6 minutes, 26 seconds discharge side project 15% to compressed bio gas systems and the rest coming from the operation and maintenance contracts 6:33 6 minutes, 33 seconds and spares and consumers. Additionally we are in advanced discussions for new projects worth approximately 2,700 6:41 6 minutes, 41 seconds crores with encouraging conversion prospect. 6:45 6 minutes, 45 seconds Our significant new product launch has been the raw fluid membrane or the product. This is a revolutionary new membrane system which can treat raw 6:53 6 minutes, 53 seconds epuids directly by membrane in tough applications such as paper, textile, food and beverage and several others. 7:01 7 minutes, 1 second Use of this membrane majorly simplifies the treatment and reuse process for our clients saving them energy chemicals 7:08 7 minutes, 8 seconds reducing sludge and more importantly reducing the use of valuable real estate. With increased penetration of the RM product, we will have a 7:17 7 minutes, 17 seconds significant competitive advantage in the marketplace. 7:21 7 minutes, 21 seconds We also recently participated in the IPAT uh event, water event in Mumbai this year and we are glad to share that 7:28 7 minutes, 28 seconds we received an overwhelming response uh at this event. Looking ahead, we remain encouraged by strong structural 7:35 7 minutes, 35 seconds tailwind, rising regulatory focus on wastewater discharge, increasing importance of water security, and growing ESG commitments by global 7:44 7 minutes, 44 seconds corporations. These trends reinforce our long-term growth potential and leadership in sustainable water solutions. 7:52 7 minutes, 52 seconds With that, I'd now like to hand over to Mr. Pra go, executive director, to walk you through the financial performance for Q2 and H1 FI26. Thank you. 8:02 8 minutes, 2 seconds Thank you, Pas. Uh good morning everyone. Uh as stated earlier, our revenue for the quarter stood at 12 1,248 million. Uh this is up 22% from 8:11 8 minutes, 11 seconds the sub uh previous quarter. Uh but it was down 23% year one year. Uh as Pas mentioned, this was primarily due to the 8:18 8 minutes, 18 seconds large building that we had in Q2 FI25 for the Mexico project uh which uh did not uh contribute this year as uh some of the export projects were Q H2 heavy. 8:29 8 minutes, 29 seconds Additionally, uh the EITA without other incomes stood at 77 million compared to a loss of 9 million in the first quarter 8:36 8 minutes, 36 seconds and 273 million in Q2 FI25. Uh the year-on-year decline in absolute terms reflects both higher employee costs. Uh 8:44 8 minutes, 44 seconds this is mainly due to ongoing leadership and business expansion with the CBG and carbon initiatives for the business and the elevated base from last year's 8:53 8 minutes, 53 seconds export order. uh this obviously is in conjunction with the delay of the Africa project which is uh impacting some of it. So we do also want to revise our 9:00 9 minutes AIDA guidance. We expect about a 1% uh down from the AIDA targets that we had set for the year. Uh PAT after 9:08 9 minutes, 8 seconds discontinued operations stood at 45 million uh compared to 51 million in Q1 and 189 million in Q2 FI25. for H1 uh 9:17 9 minutes, 17 seconds FI26 uh revenue stood at 2272 million uh EIDA at 68 million and PAT after discontinued operations at 86 9:26 9 minutes, 26 seconds million. Uh this is compared to 129 million for the same period last year. 9:30 9 minutes, 30 seconds While the near-term performance reflects the impact of the Africa project delay, uh our order v visibility remains very strong. We are confident that the 9:38 9 minutes, 38 seconds strategic investments we're making in talent, technology and execution will will enable us deliver sustainable long-term value. With that we now open the floor for questions. 9:51 9 minutes, 51 seconds Thank you very much sir. We will now begin the question and answer session. 9:56 9 minutes, 56 seconds Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you 10:04 10 minutes, 4 seconds may press star and two. Participants are requested to use handsets while asking a question. 10:11 10 minutes, 11 seconds [clears throat] 10:11 10 minutes, 11 seconds Ladies and gentlemen, we will wait for a moment while the question queue assembles. 10:19 10 minutes, 19 seconds The first question is from the line of Balas Subramanium from Arhand Capital. Please go ahead. 10:26 10 minutes, 26 seconds Good morning sir. Uh thank you so much for the opportunity. On the margin side a beta margin have been compressed in H1 nearly 3% compared to 11.6% in last H1. 10:38 10 minutes, 38 seconds I think in this H1 is basically uh like uh lower based uh and having that lower fixed higher fixed lower fixed cost 10:47 10 minutes, 47 seconds absorptions I think in H2 maybe 60 to 65% kind of weightage will be there that whether we can able to uh achieve double 10:56 10 minutes, 56 seconds digit margins in H2 and we can able to maintain nearly 14 to 16% kind of margin in overall in FA26. 11:06 11 minutes, 6 seconds Uh hi thanks for your question. Yes, I think uh we're quite confident uh you know as I said I think it's about a 1% hit in EIDA what we expect. So you know 11:13 11 minutes, 13 seconds we should be in that uh you know I think the earlier guidance was about 16 to 17%. So we should be between the 15 to 16% given the projections. uh and as you 11:22 11 minutes, 22 seconds said uh you know the H2 um order execution that we have uh for based on the order book that we currently have and some of the orders we expect to 11:30 11 minutes, 30 seconds close in in Q3 uh you know we we should be in that 12 to 15% sort of a uh revenue growth range. So that's the 11:39 11 minutes, 39 seconds maximum impact that we see. So we we are confident that uh we will hit the uh you know the margins uh and the top line 11:46 11 minutes, 46 seconds that we are now kind of uh giving out because uh these are backed by orders and the and pretty much in the advanced stages of of execution. 11:56 11 minutes, 56 seconds Okay sir. So CPG CPG projects starting from in Q3 and what is the current timeline for revenue recognitions uh 12:04 12 minutes, 4 seconds from your initial CPG projects and with a target of 3 to five industrial projects per year maybe 100 crore kind 12:11 12 minutes, 11 seconds of potential what is the scalability and margin profile of this segment compared to your core business you wanted to talk about the CBG. 12:23 12 minutes, 23 seconds Yes sir. Yes sir. Yes. 12:29 12 minutes, 29 seconds Yes. Yeah. Yeah. So, uh yeah. Uh the uh we have pencled in about a 45 plus CR uh 12:36 12 minutes, 36 seconds top line in the next two quarters. So in terms of execution of two of the three uh industrial projects um in terms of 12:45 12 minutes, 45 seconds the um kind of industrial pipeline for CBG we're seeing a lot of um exciting 12:54 12 minutes, 54 seconds kind of openings which are coming across wherein you know the the industry already has uh access to captive waste 13:02 13 minutes, 2 seconds which has been one of the major uh kind of uh factors which has been aing in this industry. So that is going to bring us a 13:11 13 minutes, 11 seconds lot of security in these projects. So the the pipeline remains strong. In terms of the margin profile, uh we see it uh being relatively similar in terms 13:20 13 minutes, 20 seconds of a bit contribution to our uh Yeah. And just on the large projects as 13:28 13 minutes, 28 seconds you had uh asked. So yeah, generally we have about you know half a dozen uh larger projects that we would execute 13:35 13 minutes, 35 seconds during the year. Uh so currently uh for this year you know we had a projection Africa which uh out of which one of them 13:43 13 minutes, 43 seconds has faced a little bit of a delay in terms of the civil startup approvals. Uh so because of that uh it looks like the 13:50 13 minutes, 50 seconds civils will only get away get underway in the in in Q4 and which may impact revenue ignition in this uh in this 13:57 13 minutes, 57 seconds financial year. So that's the reason why uh the revenue recognition is has been revised. uh uh barring that uh the other large projects that we are currently executing are are on track. 14:09 14 minutes, 9 seconds Okay. From the order book side uh order book remains flat nearly 535 cr 14:16 14 minutes, 16 seconds and how how this order book usabilities and what is the inquiries especially in domestic and production marketers and uh 14:23 14 minutes, 23 seconds you mentioned about the African project has been uh shifting to next year financial year 27 and uh what kind of uh 14:31 14 minutes, 31 seconds inquiry levels especially we are getting the north Africa and middle east levels and uh is there any uh shift to USD 14:39 14 minutes, 39 seconds denominator contracts impacting uh your competitive positioning in these regions. And secondly uh you mention 14:46 14 minutes, 46 seconds about uh uh L1 uh no better in uh 400 million order in nuclear sector and uh 14:54 14 minutes, 54 seconds 400 million 400 million nuclear sector order nuclear Yeah. Yeah. Sorry. Yes. 15:01 15 minutes, 1 second Yeah. So uh what has been your conversion rate from year one into the final awarded year? Is there any timeline uh for this such process in the government or PSU sector? 15:13 15 minutes, 13 seconds Right. Right. Uh yeah. So I'll I'll just start with your um Yeah. So just let me start with the nuclear bit. Uh so this 15:21 15 minutes, 21 seconds is a this is a seawater dalination tender that we have. Um you know we are L1 in that tender and it's generally about a two-month process for the 15:29 15 minutes, 29 seconds government to kind of convert that into an order. So we are currently expecting uh this to to you know or it to 15:37 15 minutes, 37 seconds materialize end of November early December and uh execution period about will be about uh 8 to 9 months uh for 15:44 15 minutes, 44 seconds this particular project. So yes on the desalination side you know there is a lot of focus uh both from industry and governments to uh tap sea water along 15:53 15 minutes, 53 seconds the coast for the industrial requirement. uh and you know again in conjunction with the projects that we have competed for divis laboratories um 16:01 16 minutes, 1 second for sterling and Wilson for a project for where they were you know building a solar power plant uh and they wanted water for vincing so we definitely are 16:09 16 minutes, 9 seconds consolidating our position around cell market especially for these uh small to mid midsize uh requirement 16:16 16 minutes, 16 seconds um just in terms of uh sorry you also talked about the pipeline so I would like to say that you know I think India is seeing a very strong focus uh in 16:24 16 minutes, 24 seconds terms of uh growth and and and the inquiry pipeline that we're getting from large corporates uh for investing in water recycling is is is very very 16:33 16 minutes, 33 seconds strong. Uh I think uh you know the relationships that we've had with uh the large corporates uh especially people like Tata Motors, Tartast Steel uh you 16:41 16 minutes, 41 seconds know we we reaping those benefits uh today and uh I think you know we continue to uh focus on on these 16:48 16 minutes, 48 seconds inquiries. uh so uh also if you're aware that India is kind of launching certain recycling obligations to large water 16:56 16 minutes, 56 seconds consumers so that will also kind of you know help the business in the oncoming years. So the inquiry pipeline uh in India remains quite strong. Now 17:04 17 minutes, 4 seconds internationally we continue to focus on key markets like Mexico, South Africa where uh you know the the local um the 17:13 17 minutes, 13 seconds local governance or the local standards that the countries are implementing in terms of wastewater discharge have been becoming more and more stringent and the 17:21 17 minutes, 21 seconds implementation of this is being kind of now being focused on by these countries. 17:26 17 minutes, 26 seconds So for example, Mexico will go by FI by March 27, they have obligations for a lot of the industries to meet the new 17:33 17 minutes, 33 seconds standards. So as a result of that in in in Mexico itself, we're talking to some of the large alcov companies, the the food and beverage sector, something like 17:42 17 minutes, 42 seconds yeast to be expecting a large order as well. So uh there is a lot of discussion happening in in in markets like Mexico. 17:50 17 minutes, 50 seconds uh Africa is another area where you know there is a lot of development happening and a lot of green capital flowing in there which then requires uh companies 17:58 17 minutes, 58 seconds to follow uh you know good practices in terms of their zero liquid discharge so that continues to see strong focus as well. 18:06 18 minutes, 6 seconds Okay sir. 18:06 18 minutes, 6 seconds So my last question the 7.5 uh TPT carbon capture projects I think it's a key proof of concept and what is a 18:15 18 minutes, 15 seconds targeted uh commercial in this business in terms of sale of systems carbon credit sharing and services side and 18:23 18 minutes, 23 seconds what are the key regulatory or technological milestones that would trigger a broader roll out uh beyond FI27. 18:33 18 minutes, 33 seconds Yeah so uh thank you for that question. 18:35 18 minutes, 35 seconds And uh it's very interesting focus area for us and the uh deployment of the first commercial pilot is going well and in Q4 we should be stabilizing that 18:43 18 minutes, 43 seconds pilot. Consequently we expect kind of revenue to come in in H2 of uh uh kind of 27 from there on. uh the pipeline 18:53 18 minutes, 53 seconds again there is very interesting across a wide range of industries driven largely not only by regulatory but also by kind 19:00 19 minutes of more voluntary uh requirements from export-driven markets and also local clients looking to switch over uh uh to 19:08 19 minutes, 8 seconds uh uh to eventually greener solution. So uh we we do expect on the on the technology side there have been uh good 19:17 19 minutes, 17 seconds uh improvements in terms of ratios uh for the biological uh system that we uh 19:24 19 minutes, 24 seconds that we are uh kind of deploying. So uh yes we uh request you all to be uh please stay tuned uh to get uh more updates on this in the coming quarters. 19:34 19 minutes, 34 seconds Thank you. Got it sir. Thank you. Thank you. 19:41 19 minutes, 41 seconds The next question is from the line of Kunal Ochi Ramani from Alpha Alternators. Please go ahead. 19:51 19 minutes, 51 seconds So my question is on business side. 19:54 19 minutes, 54 seconds There are lot of com countries those are making membranes rof UF and MF 20:01 20 minutes, 1 second uh countries like US, Japan, Korea, China, Germany and when we talk about desalination or any other process. So 20:10 20 minutes, 10 seconds there has been disconnect with the market and uh we want to understand the technology you guys have which is uh 20:21 20 minutes, 21 seconds what we claim is little different or what is the mode we have? What is the core competency we have that we exist in 20:28 20 minutes, 28 seconds broader markets like uh Mexico or even India? What is our core competency in this business? 20:37 20 minutes, 37 seconds Yeah, thank you for the question sir. uh our core competency and our motility in these in these businesses are are twofold. Uh firstly coming out of our 20:46 20 minutes, 46 seconds product and our IP pack product which is um solutions such as uh differential 20:53 20 minutes, 53 seconds membrane different uh plent frame type systems which we manufacture. So it's it's coming out of the hardware let's 21:00 21 minutes say uh number one and number two it's coming out of our um knowledge of these 21:08 21 minutes, 8 seconds industrial waste water the application development that we make uh understanding what contributes to the 21:16 21 minutes, 16 seconds pollutant load in the waste water what kind of solutions need to be made so we have through decades of piloting and R&D 21:24 21 minutes, 24 seconds on this subject we have a huge body of uh knowledge and expertise in these areas. So these are two things which 21:32 21 minutes, 32 seconds contribute u to really building a very strong uh kind of uh you can almost say a pull 21:39 21 minutes, 39 seconds from from key clientele in understanding that these are the kind of solution that they need and is what is driving kind of 21:46 21 minutes, 46 seconds global uh value seekers in terms of recycling and liquid discharge to kind of uh move to pong to provide them solutions. 21:56 21 minutes, 56 seconds So can this is the experience we have with the clients I understand but can we quantify in the sense of efficiency how 22:03 22 minutes, 3 seconds are you placed with the global players versus the global players are we any better in terms of efficiency or cost 22:10 22 minutes, 10 seconds like we've said we are cheaper 10 15% cheaper to global guys but simultaneously are we more efficient why 22:18 22 minutes, 18 seconds would any customer choose us just to understand on business front yeah sure so uh I just maybe take 22:26 22 minutes, 26 seconds another minute to to bring you back to the fact that uh India has been one of the leaders in zero liquid discharge and recycling. So if you look at the global 22:35 22 minutes, 35 seconds marketplace uh um you know on a global scale India is the leader and the kind of technology and uh experience that we 22:43 22 minutes, 43 seconds have in in reusing their liquidity starts to be very honest is not there on a global on the global side and as a 22:51 22 minutes, 51 seconds result of that experience and that head start which we have in India and companies such as ours uh we are able to provide um in in in certain cases a very 23:00 23 minutes massive uh uh advantage antage to the client in terms of operating cost where we where the where the technology that 23:08 23 minutes, 8 seconds we provide can lead to up to a 50% operating cost advantage in in in many cases and in zero liquid disaster the 23:16 23 minutes, 16 seconds kind of the life cycle operating cost or the annual operating cost is the key driver for any customer in the decision making it's not just the capex where 23:25 23 minutes, 25 seconds obviously given our lower uh cost ways coming out of India we are competitive compared to noble players on capex but more importantly on operating cost. 23:34 23 minutes, 34 seconds That's where the customers try to do the life cycle cost analysis and then say hey this is a significant saving and that turns out to be the key decision 23:43 23 minutes, 43 seconds making factor for them in choosing a partner 23:49 23 minutes, 49 seconds in terms of efficiency are we any better miles ahead 23:57 23 minutes, 57 seconds can we quantify because desalination needs some 99% more of efficient 24:06 24 minutes, 6 seconds Yeah, I'm talking in general about zero to foot discharge, but yes, in terms of desalination, for example, I can say that uh if you compare the recent auto 24:14 24 minutes, 14 seconds that we've had, uh our uh captive power uh requirement has been at least 12 to 24:22 24 minutes, 22 seconds 18% lower than uh what the other bids are our customer. 24:29 24 minutes, 29 seconds Thank you so much. This answers my question. 24:36 24 minutes, 36 seconds Thank you. The next question is from the line of Sonia Wikar from the Lal and Docha PMS. Please go ahead. 24:47 24 minutes, 47 seconds Hello sir, thank you for the opportunity. Uh so firstly I want to understand what is the size of this uh African project which saw delay in 24:55 24 minutes, 55 seconds approval and uh secondly you have revised your FI26 guidance lower. Uh so you expect this uh uh you expect this 25:04 25 minutes, 4 seconds approval to come in FI27 for that African project. So what is your guidance for FI27? 25:12 25 minutes, 12 seconds Uh thanks son. Uh so the size of the project was about $6.7 million. 25:18 25 minutes, 18 seconds uh and uh it was broken up into a bit of local civil works and supply of equipment. Um at the current moment we 25:25 25 minutes, 25 seconds expect the approvals to come into Q4 of our financial year here. Uh so we expect to start civils uh somewhere in that uh 25:33 25 minutes, 33 seconds in in that quarter. uh so there will be you know let's say a minor revenue recognition coming into this quarter maybe to the extent of about a million 25:41 25 minutes, 41 seconds dollars and uh the balance about 5.7 million is what we expect to uh go next year uh I mean in terms of uh execute 25:50 25 minutes, 50 seconds next year so uh we've I mean see we not kind of worked out uh detailed numbers we we go through a budgeting exercise 25:58 25 minutes, 58 seconds closer to December so we don't have a a finite FI budget but I think in in conjunction with the growth aspects. We 26:06 26 minutes, 6 seconds see generally year growth. We we are kind of still looking at 18 20%. There's nothing which has uh you know changed 26:13 26 minutes, 13 seconds our uh forecast for for growth. It was just the export orders as we always have said that we have uh longer visibility 26:21 26 minutes, 21 seconds for these because these are generally executed over periods of uh 10 to 12 months uh sometimes even longer. So just from our export pipeline uh which we 26:29 26 minutes, 29 seconds have uh sorry export order book at the current moment uh you know this has kind of seen a little bit of a slippage uh so it should help us in exceeding some 26:38 26 minutes, 38 seconds targets in FI uh 27 but I think it's too early to for me to give you a guidance uh on that once we have our internal meetings and numbers we can probably 26:47 26 minutes, 47 seconds give us more and I think uh probably in the Q3 uh earnings call you know since we'll have completed our budgeting 26:54 26 minutes, 54 seconds activities we'll probably be more uh you know probably correct on the numbers. Okay. Thank you sir. 27:02 27 minutes, 2 seconds Yeah. 27:05 27 minutes, 5 seconds Thank you. Participants who wish to ask a question may press star and one on the touchstone telephone. The next question 27:14 27 minutes, 14 seconds is from the line of kunal oirammani from alpha alternatives. Please go ahead. 27:21 27 minutes, 21 seconds Also I wanted to understand thank you for taking me back in the queue but uh regarding CBG product project what is 27:28 27 minutes, 28 seconds the competency again here we have uh because lot of players in the market are doing I understand we have a capable team but in terms of uh are we getting 27:38 27 minutes, 38 seconds the raw material cheaper to make the or what is the competency and what will be the margins what will be the asset 27:46 27 minutes, 46 seconds turns we are expecting in terms of what we are investing and what we are Thanks. 27:52 27 minutes, 52 seconds Sure canal. Thank you for the question again. So yeah I I think in terms of competency uh other than the team other than the fact that we've been we've been 28:01 28 minutes, 1 second delivering uh biogas projects for the last three decades this focus that we have on industrial waste panel is 28:08 28 minutes, 8 seconds basically to say that we are focusing on areas where the industry is itself generating organic waste which today is 28:17 28 minutes, 17 seconds being sent for external disposal and in many cases that disposal comes at a cost. So you can say there is a 28:24 28 minutes, 24 seconds negative first for waste. So we are not relying on any feed stock for the CPG plant or the biogas plant coming from 28:33 28 minutes, 33 seconds any external source. It is an internally generated waste today which is in in complete control of of the company. 28:39 28 minutes, 39 seconds Right. So so that that is the uh main focus of our PBG product. 28:47 28 minutes, 47 seconds And in terms of margin should we be in terms of margin I mentioned earlier yeah compared 28:54 28 minutes, 54 seconds to I would say rangebound in terms of the similar kind of profile to our core 29:01 29 minutes, 1 second business I would say in terms of our SNP or our vari call you said that uh dash you aspired 29:11 29 minutes, 11 seconds to continue at 20 20% growth and uh current year might be a shift of revenue to next year but as I understand there's 29:19 29 minutes, 19 seconds no order loss or uh revised expectations in terms of numbers so it was kind of hinted that we should reach a,000 cr top 29:28 29 minutes, 28 seconds line but it was not explicitly guided in FI2 call and current capacity should do a revenue of 1300400 crores so do we 29:37 29 minutes, 37 seconds still stand at the same guidance 20% growth and somewhere reaching the current capacity utilization by FI 28 or 29 Right. 29:46 29 minutes, 46 seconds Yeah. I think long-term um you know that is what we are looking at. So uh I think even from the capacity expansion perspective yeah I mean uh with the new 29:55 29 minutes, 55 seconds investments that we'll be putting in from the proceeds that we raised in the IPO you know getting up to 13400 crores not a problem and the long-term guidance remains at 20%. We see the business growing very strongly um over the years. 30:08 30 minutes, 8 seconds And thirdly sir you said some 20 odd crores is available for further tech and licensing deals in last con. I just 30:15 30 minutes, 15 seconds wanted to understand what are this licensing deals and how will this benefit us are there's any any uh things on table and when should we expect this? 30:26 30 minutes, 26 seconds So we have yeah there are a couple of uh u advanced stages uh that we are so in in the 30:33 30 minutes, 33 seconds current quarter we we expect to kind of deploy some of these funds. The uh focus remains more on technology licensing uh 30:42 30 minutes, 42 seconds more value add in terms of uh in terms of solutions which which bring in not only technology but also some ability to 30:50 30 minutes, 50 seconds do some uh uh some contract manufacturing as well. 30:57 30 minutes, 57 seconds And how should this benefit us? 31:02 31 minutes, 2 seconds The benefits will be mainly in terms of uh applications in terms of uh the you know competitiveness of our solutions as 31:10 31 minutes, 10 seconds I as I mentioned uh it be able to open up new sector uh in terms of industrial waste water use and zero liquid 31:18 31 minutes, 18 seconds discharge and Turkey like I said also add some topline in terms of contract manufacturing as a license 31:27 31 minutes, 27 seconds couple of bookkeeping questions. uh so shar is 9% tax rate. So what should be our effective tax rate for next couple 31:34 31 minutes, 34 seconds of years and secondly like we had we've had uh forex losses in terms of peso and 31:40 31 minutes, 40 seconds USD hedging. So do will we expect any forex losses or this has been contained from now on 31:48 31 minutes, 48 seconds in next two three years? Yeah, I I think uh we've done two things uh in terms of forex losses. At least whatever we have an exposure on the books currently. 31:57 31 minutes, 57 seconds We've tried to contain as much as possible. Uh so whatever hedging and everything that was possible to be done and a system set up to monitor that has 32:05 32 minutes, 5 seconds been put in place. Um um I think this year because the peso has appreciated 32:11 32 minutes, 11 seconds against the USD there is uh uh been a significant gain uh in in our um forex 32:20 32 minutes, 20 seconds loss. So the forex losses we we had last year we've almost overcome them. Uh so obviously whatever was the real forex loss that we had last year is was 32:28 32 minutes, 28 seconds accounted last year but at least whatever was the unrealized uh has kind of got reversed and uh and changed. Uh 32:35 32 minutes, 35 seconds the long-term policy from a group perspective uh what we've done also is that we have switched our order currency mainly to US dollars. So wherever we are 32:44 32 minutes, 44 seconds taking new orders uh the exposure for supply of equipment uh which is done from our India and charger entities uh 32:51 32 minutes, 51 seconds is all going to be dollar denominated and uh only the you know the local works in terms of the installation in case 32:59 32 minutes, 59 seconds it's a EPC then the civil uh that will continue to be in the local currency which will obviously then not impact us on the forex margins. uh so that's the 33:07 33 minutes, 7 seconds plan going forward and I think even if you look at uh the projects in Africa etc uh we follow the similar model so yes uh we don't expect anything large we 33:15 33 minutes, 15 seconds just need to manage the USD INRI risk uh that we would uh be you know we would be we would be having as an organization uh 33:24 33 minutes, 24 seconds sorry your first question the first part of that question was uh I'm I'm sorry tax rates yes sorry so in UAE the 9% 33:34 33 minutes, 34 seconds corporate tax is for entities ities which are doing business. So, so one you know just to clarify we are free zone establishment. So in UAE what they have 33:42 33 minutes, 42 seconds said is that if you're free fe free fe 33:44 33 minutes, 44 seconds free fe free fe free fe free fe free fe free fe free fe free fe free zone establishment you're eligible for tax only if you're doing work in the mainland. So if I'm selling from a fee 33:50 33 minutes, 50 seconds zone into uh into Dubai or into UAE then I'm subject to tax for all uh revenue 33:57 33 minutes, 57 seconds where I am exporting uh goods outside the country uh the tax rate is not applicable to us. So we continue to 34:04 34 minutes, 4 seconds enjoy a a tax-free uh benefit in the UAE. This is as of the laws at the current moment. Uh so uh you know given 34:12 34 minutes, 12 seconds that our profits are split equally between the two jurisdictions, we expect the average uh tax rate to be between 34:18 34 minutes, 18 seconds the 12 and 14% sort of a uh sort of a range and obviously keep 34:26 34 minutes, 26 seconds fluctuating as projects keep moving right. So depending on where the larger order base is coming from, 34:33 34 minutes, 33 seconds this should be the larger uh 12 to 18% tax rate for next uh couple of years. I assume it it looks like by the by the by the 34:42 34 minutes, 42 seconds you know the the segment wise revenue in terms of exports and what we're doing in India I would say between 12 and 14 generally would be the the tax rate the 34:50 34 minutes, 50 seconds effective tax rate for and also I understand that we've moved all the contracts to USD but what is the policy of hedging? Do we book the 34:58 34 minutes, 58 seconds hedging rates at the at the day of booking the orders or how does it work? 35:04 35 minutes, 4 seconds No, we so I see there is always an order execution cycle and the payment cycle depending on that. So we can only book the hedge once we have a sort of a 35:12 35 minutes, 12 seconds crystallized uh cash flow from those projects. Basically when we have uh invoices where we can actually have the final date on payment uh that's when we 35:21 35 minutes, 21 seconds can typically hedge it becomes very difficult and expensive to hedge a project upfront at the time of getting the order because cash flows might move 35:28 35 minutes, 28 seconds uh depending on the on the project cycle. So yeah it is basically done once the payment is uh available and 35:36 35 minutes, 36 seconds confirmed. So on that basis then we start doing that. We also obviously have a lot of imports in USD. So on the import side we typically hedge uh 35:45 35 minutes, 45 seconds everything that uh you know we have a liability that has to be paid for once the orders are in. Thank you sir. This was very helpful. 35:54 35 minutes, 54 seconds Thank you and all the best. Thanks. 35:59 35 minutes, 59 seconds Thank you. Participants who wish to ask a question may press star and one on the touchstone telephone. The next question 36:06 36 minutes, 6 seconds is from the line of Adita Aurora from P4 Capital. Please go ahead. 36:13 36 minutes, 13 seconds Uh good morning uh Kas and Trader just a follow on question um how are you seeing this consumables spare parts and on&m 36:21 36 minutes, 21 seconds business uh growth which in the last 6 months and for the next 6 months and and even going forward that's one part of 36:30 36 minutes, 30 seconds the question and second was uh you know if we split the revenue for FI 26 and 27 say first let's start with 26 u are you 36:40 36 minutes, 40 seconds seeing ZD or system in business largely flagged this year versus the previous year. 36:50 36 minutes, 50 seconds Okay. Thanks thanks for for the question. So I'll just answer the first part of it. So so see on the O andM I would say uh you know a lot of the large 36:58 36 minutes, 58 seconds projects that we done last year especially like Mexico you know they went into O andM gradually from Q2. So 37:05 37 minutes, 5 seconds you know Q3 and Q4 we will see that uh O andM getting pretty much uh solidized all all the plants will be working there. So that will obviously boost up 37:13 37 minutes, 13 seconds revenues even in India some of the large projects that we've done uh are currently in commissioning and handover phases. So you know we see some growth 37:20 37 minutes, 20 seconds in Q in Q in H2 uh from our O andM business um and that's how we kind of forecasting the overall growth for the 37:28 37 minutes, 28 seconds year. uh trading in spares remains uh strong uh you know we've been uh also given that uh you know for the Mexico 37:37 37 minutes, 37 seconds projects there will be some spares that the clients will procure from us for their ongoing maintenance etc. So we see that to be quite strong as well. Uh the 37:46 37 minutes, 46 seconds third party ONM business also is doing well. We've got some good traction there. So I think last quarter we had spoken about a a project that we' got from a large EPC player. Uh so that kind 37:55 37 minutes, 55 seconds of you know we're consolidating that position. We hoping uh to get more contracts uh from that same uh player for other projects as well. So that the 38:04 38 minutes, 4 seconds onm and spares is obviously a a big focus area. We want it to kind of grow to 40 45% of revenues. uh as we always say it's it's kind of the best 38:13 38 minutes, 13 seconds contribution uh to the bottom line as well and and gives us a lot of insights into plant workings. Uh in terms of the 38:20 38 minutes, 20 seconds uh revenue forecast for the current year uh see I think uh you know obviously the export business was lumpy last year as well because we had this large order 38:28 38 minutes, 28 seconds from Mexico. So if you look at what's happening is that the Indian business segment has been uh growing u the exports will probably shrink as compared 38:37 38 minutes, 37 seconds to what we had last year. So given that we should be at about a 14 38:43 38 minutes, 43 seconds 14 to 15% sort of a growth for the full year basis on the uh systems and plants business. 38:52 38 minutes, 52 seconds Yeah. And the I mean so yeah I mean we generally see that kind of growth coming in from uh from each of the segments. So I I I don't see a flattish kind of a 39:00 39 minutes thing but you will see a shift between exports and domestic. 39:07 39 minutes, 7 seconds Got it. Okay. Thanks. 39:12 39 minutes, 12 seconds Thank you. The next question is from the line of Benit Ma from Ashika group. Please go ahead. 39:21 39 minutes, 21 seconds Sir, I have follow-up question is on uh basically outlook. So with new R&D processes coming and uh new CPG project 39:29 39 minutes, 29 seconds coming. So 26 you have you have said that 14 to 15%. But uh what about 27 39:37 39 minutes, 37 seconds like what do we expect in 2728 going down the line like uh what will be the growth rate in CBG projects and if the 39:46 39 minutes, 46 seconds starting range of CBG products projects margin is 14 to 15% how when it gets on full scale how how can you leverage it 39:54 39 minutes, 54 seconds more further like will it go more 100 basis 200 basis points ahead and what will the implications of that new R&D 40:02 40 minutes, 2 seconds projects you have taken which will also boost margin. So what will be your margins going what are your targets for margins going forward? 40:12 40 minutes, 12 seconds Uh yeah sure uh so I I sorry just answering your questions in part so I think uh just on the uh growth profile 40:20 40 minutes, 20 seconds so you know as I said earlier as well I think see overall we don't see any change uh we do see 20% sort of a growth 40:28 40 minutes, 28 seconds rates that that we should be able to achieve uh you know going forward. So while we have not done our exact uh 40:34 40 minutes, 34 seconds budgets yet for FI27 uh I think the general guidance and the sentiment in the country and given the kind of inquiries that we have uh you know the 40:42 40 minutes, 42 seconds the growth targets for us remain uh in that segment uh in terms of the uh 40:49 40 minutes, 49 seconds margin profile especially for CBG uh see we've been doing a lot of the bio gas projects even the Mexico project a large bio gas project right now also we've bid 40:57 40 minutes, 57 seconds for a large bio gas project uh in uh um for waste water in in South Africa. So 41:04 41 minutes, 4 seconds there is uh a lot of projects that we do for uh bio gas. Now uh tuning that to CBG the core technology is the same. You 41:13 41 minutes, 13 seconds you know you still need the same tanks, the same systems uh to set up a CBG plant as well because the biogas piece is almost similar. Uh and then you need 41:20 41 minutes, 20 seconds some specialized equipments like compressors etc to to concentrate that gas and clean the gas. That's where CBG gets a little different from the industrial biogas uh projects. So uh you 41:30 41 minutes, 30 seconds know I think starting off we we definitely seeing that uh you know because we'll have a core team which will be running the CBG project there will be some local site works that will 41:38 41 minutes, 38 seconds be required. So we you know we kind of expecting a 14 to 15% sort of a margin uh it it see it will increase as we keep 41:46 41 minutes, 46 seconds doing more projects the more scale that we get more multiple projects running together so I think we can definitely increase uh our project base there. As I 41:55 41 minutes, 55 seconds said for any business that we like to run, we generally like to target about 18 20% uh sort of fida numbers over longer term. So you know we like to 42:02 42 minutes, 2 seconds enter the businesses if we see that uh being scalable and possible to to get up to those numbers. So that that continues to remain our target. Uh but yes as we 42:11 42 minutes, 11 seconds scale up we will uh continue to you know look at how what's the best numbers that we can get. It's it's also uh market 42:17 42 minutes, 17 seconds dependent as Bar said you know this is a solution that we're giving to a lot of industrial clients who have captive waste. So you know it's it's it's about 42:26 42 minutes, 26 seconds getting the uh the project economics uh right for them so that they can you know invest in these projects and actually get a return from their waste. 42:39 42 minutes, 39 seconds I'm sorry did I miss any part of your question? 42:41 42 minutes, 41 seconds No no that was part of it. Yeah. Thank you. Okay, thank you. 42:47 42 minutes, 47 seconds Thank you. Participants who wish to ask a question may press star and one. 43:02 43 minutes, 2 seconds As there are no further questions from the participants, I now hand the conference over to the management for the closing comments. 43:20 43 minutes, 20 seconds Uh thank you everyone for your time on the call today uh and and the questions. 43:24 43 minutes, 24 seconds Uh we look forward to connecting again in the Q3 call. Thank you 43:36 43 minutes, 36 seconds on behalf of Concord Envirro Systems Limited. That concludes this conference. 43:41 43 minutes, 41 seconds Thank you for joining us. You may now disconnect your lines.