Carborundum Universal Limited (CARBORUNIV) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Carbohundrum Universal Q4F526 earnings conference call hosted by Equator Securities Private Limited. As a reminder, all participant lines will be in the lesson only more, and there will be an opportunity for you to ask questions after the presentation complete. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchdown. Please know that this conference is being recorded. I now have the conference over to Mr. Harshit Patel from Equator Securities. Thank you, and over to you, Mr. Patel.

Thank you. Hello. Good morning to everyone. We welcome you to Carborendrum Universal 4Q F526 and Full Year F526 Earning Conference Call. We have with us from the management, Mr. Sridharan Rangarajan, Managing Director, and Mr. G. Chandramarajan, Advisor and Head of Investor Relations. I would now request the management to give their opening remarks on how the fourth quarter as well as full F526 went by and provide some outlook for the future. Over to you, sir.

Good morning. I am Chandram Oli. Let us start the proceeding with a disclaimer. During this call, we make certain statements which reflect our outlook for the future or which could be considered as a forward-looking statement. These statements are based on management's current expectations and are associated with uncertainties, and risks are more fully detailed in our annual report which may cause the actual result to differ. Hence, these statements must be reviewed in conjunction with the risks that the company faces. Thank you.

Thank you.

Good morning to all of you, and a very warm welcome to our fourth quarter and full year earnings call for the financial year FI26. I trust you and your family members are safe and healthy. We will begin this call by providing an overview of the company's performance for the full year FI26 and Q4 FI26, followed by an outlook for FI27. We also plan to share some glimpses of our aspiration 2013 later in the call. To start with, stand-alone sales. On a full year basis, stand-alone sales in FI26 was 3,024 crores compared to 2,784 crores in FI25. This is a growth of 8.6%. It may be noted that the company has crossed the mark of 3,000 crores in stand-alone revenue this year. Growth at standalone level was driven by the electro-mineral segment, which grew by 11.1%, recording a sales of 906 crores compared to 815 crores last year. Ceramic segment grew from 939 crores last year to 1,000 crores in this year. This is a growth of 6.5%. Abrasives increased from sales of 1,195 crores in FI 25 to 1,270 crores in FI 26, marking a growth of 6.2%. Across the standalone segment, growth rebounded strongly over H2, and particularly in Q4 FI 26. Sandalone sales increased from 1,410 crores in H1 Fi26 to 1,614 crores in H2 Fi26, reflecting a strong sequential growth of 14.4%. On a year-on-year basis, H2 Fi26 grew by around 14.1% compared to 1,415 crores in H2 Fi25. You may note that H1-FI26 was only marginally higher by about 3%. Standalone abrasive grew from 594 crores in H1-FI26 to 675 crores in H2-FI26, which is a growth of 13.7% on a sequential basis. On a year-on-year basis, abrasive grew 15.6% compared to the last year's same period. Ceramic increased from 466 crores in H1 Fi26 to 534 crores in H2 Fi26, marking a sequential growth of 14.5%. Year-on-year, it grew by 8% in H2 Fi26 and 4.9% in H1 Fi26. Electro-minerals from 425 crores in H1 Fi26 to 480 crores. 1 crore in H2-FI26, an increase of 13.2% sequentially, and on a year-on-year basis, the segment delivered a strong growth of 15.5% in H2-FI26 and 6.5% in H1-FI26. Overall, the growth in H2-FI26 was broad-based across all segments. With abrasives, ceramics, electro-minerals, all contributing double-digit sequential growth, leading to a strong performance in comparison with H2FI-25, as well as in comparison to H1FI-26. In Q4 F826, stand-alone recorded at... 845 crores compared to 769 crores in Q2FI26, reflecting a sequential growth of 9.9 percent, compared to 686 crores Q2FI26, sales grew by 23.1 percent. In that period, the braces grew from 323 crores in Q3-FI26 to 353 crores in Q4-FI26, marking an increase of 9.3% sequentially, and compared to Q4-FI25, it recorded a strong growth of 21.5%. Ceramic increased from 255 crores in Q3-FI26 to 279 crores. In Q4-FI26, marking an increase of 9.2% sequentially, and compared to Q4-FI25, it grew by 21.7%. Electromineral rose from 229 crores in Q3-FI26 to 252 crores in Q4-FI26, marking a growth of 9.7% sequentially, and compared to Q4-FI25, it grew by 22.3%. Standalone profit after tax, FI26 PAT was 216 crores compared to FI25 PAT of 322 crores, reflecting a growth of 29.4% year-on-year. The PAT of FI26 includes a dividend from one of the subsidies about 76 crores. H1-FI26 PAT stood at 209th course compared to H1 PAT of H2 Fi 26 pack was 207 crores compared to the H2 Fi 25 pack of 142 crores, a strong growth of 45.9%. Q4 FI26 PAT came in at 122 crores, compared to Q4 FI25 PAT of 61 crores, resulting in doubling of profit in this quarter. Now, I move to the consolidated results. Consolidated sales on a full-year basis was above 5,149 crores in FI26. This marks a growth of 6.5% over the sale of 4,000. Thank you. From 2,159 crores to 2,271 crores, consolidated electrominerals grew by 3.7% going from 1,574 crores to 1,632 crores. The mutual consolidated electrominerals growth reflects the higher base in Fi25 due to VAW. You will note that VAW was sanctioned in January 2025. So in Fi25, VAW had a normal sale of three quarters. In Q4, FI26 consolidated sales for 1,383 cores compared to 1,199 cores. This is a growth of 15.4%. Growth in Q4 was driven by abrasive, which grew by 13.4%. Ceramic, which grew by 18.6%. Electromanual, which grew by 14.6% over Q425. Compared to Q3 26, which recorded a sales of 1,273 crores, sales in Q4 grew by 8.7%. During the last call, I said that consolidated sales would go by 5.5 to 6.5%. Against this, we have recorded a growth of 6.5%. Now I will cover the consolidated profit. Consolidated PBT before exceptions in FY26. Consolidated profit before exceptional items and taxes stood at 416 crores compared to 572 crores in the previous year, reflecting a drop of 27.2% year-on-year. A majority of this decline was on account of VAW, almost about 87 crores, FASCAR, almost about 22 crores, AUCO, 19 crores, RODIUS. About 46 crores. I will cover all these in detail later. Exceptional items, Foscar and Avoco. In FI26, exceptional items amounting to 135 crores have been recorded in consolidated financial statement. In FI25, there was an amount of 104 crores for the provisions relating to the foreign currency deposits and receivable outside of CUME Group. Following the imposition of sanctions in January 2025. During the financial year, CUME International Limited, the holding company of AUCO, approved to initiate the closure of AUCO through a voluntary winding up process under the applicable laws in Germany, considering the continued interperformance of the subsidiary with the mounting losses and its inability to turn around in view of the prevailing market conditions. So, exceptional items relating to this closure amounts to 119 crores. Fasca Zuconia Private Limited is a subsidiary of CUME International Limited. The CUME holds a 51% stake in FASCAS. FASCAS has not been able to achieve sustainable profits since 2013, despite several strategic and operational research initiatives undertaken in the past. Further, the escalation in electricity and other input costs in South Africa, coupled with the intensifying global competition and foreign exchange fluctuations, has rendered the business commercially unviable. Turnaround initiatives have been adversely impacted by the prevailing market conditions. Marking continuation of operations unsustainable. Accordingly, the Board of Oscar Zirconia, based on the recommendations of the management, have concluded that there is no realistic alternative to carry on the operation and will be seeking requisite approvals in this process. Accordingly, the consolidated FI26 financials include the impact of 16 crores relating to the write-down of various assets to the realist stable value. I will cover the profit before interest and tax. Standalone PBIT at standalone level, the business reported a total PBIT of 525 crores in FI 26 as compared to rupees 425 crores in FI 25, reflecting a strong growth of 23.4%. Segment results of 491 crores in FI 26 is marginally higher than the results of 418 crores in FI 25. At segment level, electro-minerals delivered a strong performance, increasing from 63 crores to 83 crores, registering a robust growth of 31.1%. Abrasive PBIT was 195 crores in FI-26 compared to 193 crores in FI-25, registering a marginal growth of about 0.9%. Ceramics declined from 233 goes to 214 goes, affecting a drop of... 8%. We will cover this later in the call. Consolidated PBAT. Consolidated PBAT was 404 crores in FI26 compared to 541 crores in FI25. This marks a decline of 25.3%. The drop is due to VAW, FOSCA, AUCO, and RODIUS. As I explained earlier, I will cover this later in detail. I'll go to the segmental performance, abrasive segmental performance, consolidated abrasives, consolidated abrasives recorded at sales of 2,271 crores in a 526. As compared to 2,159 crores in FI 25, registering a growth of 5.1%. On a quarterly basis, sales of 610 crores in Q4 26 grew by 13.4%, compared to 538 crores in Q4 FI 25. On a sequential basis, sales grew from 516 crores in Q3 FI 26 to 610 crores in Q4 FI 26, reflecting a growth of 7.2%. Consolidated abrasive sales growth was driven by growth in standalone segment, Rodeus abrasives, AUCO abrasives, CUME America, and Sterling abrasives. During our last call, I communicated sales growth of 4% to 5% in consolidated abrasives. We can expect we are now at a growth of 5.1%. It covers standalone abrasive, standalone abrasive level, abrasive is recorded at a full-year performance of 1,270 crores as compared to 1,195 crores, reflecting a growth of 6.2%. On a half-yearly basis, H-126 stood at 594 crores against 611 crores in H-125, registering a decline of 2.8%. However, in H-2 showed a strong recovery, increasing to 675 crores from 585 crores in H-2 FI-25, reflecting a growth of 15.6%. The overall performance improved from 594 course to... So, overall, the full-year growth was driven by a strong rebound in the second half. You would note that the business faced issues such as inventory correction from the dealer channel and seasonal range, which delayed construction activity in some markets. Tepid demand and industrial segment and a short period of caution in the northern markets following Pelgham attack. We undertook a range of go-to-market initiatives, including market expansion activities, such as dealer appointment, new product in production, rebranding of established products in newer geographies, onboarding of key potential OEMs as customers, and a host of other initiatives. Besides this, implementation of GST rate rationalization and the rebound In festival season, demand provided a growth impetus. I'll move to Rudeus Abrasives. Rudeus Abrasives, the sales in FI26 was 61 million euro compared to sales of euro 67 million in FI25. This marks a decline of 8.8%. Q1 FI26, Rudeus made a transition to a new third-party logistics partner. Considering the long-term operational efficiencies, this transition resulted in loss of sales of about Euro 5 million. We communicated this earlier with you. While operations assumed to normalcy by Q2FI26, the loss sales in Q1FI26 could not be regained over the rest of the years. So overall, I think they delivered sales of 61 million compared to 67 million. We expect sales in FI27 to grow by 5% in FI27, and the loss, the PAT loss in FI26 was 2.6 million compared to 0.2 million in FI25. We expect FI26, the PAT, to be a very smaller loss. AVUCO braces. AVUCO recorded a sales of 10.5 million in FI26 compared to sales of 10.1 million in FI25. This is a growth of 4.6% in euro terms. The loss before exceptional and tax increased from 6.6 million euro to 7.7 million euro in FI26's margin increase of 15.8%. Losses were higher in AVUCO on account of various factors. We, anyhow, we have decided to wind down the company as following the legal process as given by the respective countries. Abrasive PBIT in the standalone abrasive FI26 required a marginal growth of 0.9% year over year. Looking at the half-year dynamics, there was a strong sequential recovery with H2 Fi 26 growing by approximately 31.3% over H1 26. While there was a significant gain in the momentum over H2 due to reasons explained earlier, the impact of lower volumes in H1 and the resultant lower cost absorption offset the profitability gains in H2. Standard on PBAT margin percentage decreased from 16.1% in FI25 to 15.3% and 81 BIFs dropped. This decline was mostly in account of the lower volume in H1 FI26. With the consolidated level, PBIT margin dropped by 36.2%, going from 151 crores to 97 crores, higher losses at RDS, Avoco, Contributed to this decline. You know, Rodeus lost 45 crores versus nearly 0.44 crores in FI24, and Avoco 75 crores of loss versus 58 crores of loss last year. At the consultory level, PBIT percentage of abrasive segment dropped from 7% to 4.3%. During the last call, I said PBIT margin of abrasive would be 4.4% to 4.5%. We are now at 4.3%. EMD segmental performance. Consolidated Electrum Innsil. Consolidated Electrum Innsil recorded sales of 1,632 crores in a 526 compared to sales of 1,574 crores in a 525. This marks a growth of 3.7%. The growth at Consolidable is entirely on account of lower sales at VAW Russia, which declined by 22% in INR terms in the incremental segment. VAW Russia, in ruble terms, VAW recorded sales of almost 6 billion rubles compared to 9.4 billion rubles in FI25. This marks a decline of 35.3%. Sales in abrasive segment in VAW was about 14% lower compared to FI25. Sales in ceramic segment was lower by 31% compared to FI25. Profit before exceptional items and tax of the entity declined from $1.7 billion in FI25 to $1.617 million in FI26. Lower sales and profits are on account of the sanctions imposed by the U.S.A. despite the volume being considerably lower, the business continues to be profitable at its current level of operation. Standard Electron Minerals Electro-mineral recorded a full-year performance of 906 crores in Fi26 as compared to 815 crores in Fi25, reflecting a strong growth of 11.1%. On a half-yearly basis, H-126 stood at 425 crores against 399 crores in H-125, registering a growth of 6.5%. H.2.526 increased to 4.81 crores. From 416 crores, reflecting a stronger growth of 15.5%. Sequentially, the performance improved from 425 crores to 481 crores, with a growth of 13.2%. Overall, the full year growth was driven by a stronger growth in exports. Exports grew by 100% from FI25 to FI26, and currently contributed to little over 33% of the total sales, compared to 11% of the sales in FI25. Exports were driven by leveraging business' existing relationship with many global OEMs across abrasives and refractories. Introduction of treated grains coupled with anti-dumping duties against Chinese grains by the EU all helped to achieve this. Fosca Zirconia Private Limited sales at Fosca Zirconia recorded R465 million compared to R415 million in FI25. This marks a growth of 11.2% in RAND terms. The loss after tax increase ran 27 million in FI25 to 77 million in FI26. In terms of loss before exceptional and tax increase from 37 crores in FI25 to 77 crores, the volatility in Zucon Sand price drop in Z450. Price and an appreciation of the rand against the U.S. dollar impacted the bottom line, and hence the loss was increased. So we decided to find that this is not viable anymore to continue. Electro-Mineral PBIT, consolidated PBIT in a full year. This is recorded at 91 crores in FI26 compared to 177 crores in FI25. A majority of this drop was on account of the sales drop due to sanctions at VAW and on account of the higher losses at Fosca, Zirconia. Standard Electro-Minerals PBIT grew by 31.1% at 82 crores compared to 63 crores. During the last call, I gave a cadence of 1% to 2% of the sales growth in consolidated electro minerals. We are at 3.7% now. In the last call, I said PBIT margin could be 4.5%, 5.5%. We are at about 5.6%. Consolidated ceramic. Consolidated ceramic sales of full year was 1,268 crores compared to sales of 1,160 crores in FI25, which marks a growth of 9.3%. Growth was driven by standalone business, which grew from 939 crores to 1,000 crores in FI 26. I'll cover in detail the ceramics. I'll first cover the ceramics portion of the business. Our ceramics segment consists of industrial ceramics, which is 57% of the ceramics segment, and refractors, which is 43% of the ceramics segment. Industrial ceramics full-year sales stood at 516 crores in FI 26 compared to 528 crores in FI 25, reflecting a growth of 7.8%. Sales in H2 grew by about 10.7%. Industrial ceramic is broadly divided into three segments, flour ceramics, engineered ceramics, and metallized ceramics. Ware ceramics, which constitutes roughly 30% of the business, offers ware assistance products, and engineered ceramics, which constitutes about roughly, again, one-third of the business. It has a suite of customized engineered ceramics such as three-channel spark plugs, rings, x-ray, image-intensified tubes, etc. Metallized cylinders are used in vacuum interruptors in the power transmission and distribution industry that constitute another one-third of the business. The standalone valve ceramic business, which de-grew by 9%, sells to three broad geographical segments. It sells products to Kimi Australia, Kimi America, and India. While Australia grew by roughly about 13%, India also grew well by 12%, the export to America de-grew by 40%. Within the wire protection business, sales in Australian subsidiary grew by 13%, driven by strong orders with the OEMs. Domestic business grew by 12%, and engineering ceramic segment grew by 30%, driven by the SOFC segment, which is seeing a strong demand in the AI-driven data center segment. Metallized cylinder business grew by 9%, this segment which typically grows to about 14% was impacted by a Product-related challenge that cropped up in, production-related challenge that cropped up in H1, but got addressed by Q4. This was resolved by Q4. Operations are back to normal, hence there's a fall in growth to 9%. I'll cover refractories now. Full-year refractories consist of two broad segments, refractories and anti-corrosive products. Refractories constitute 77%, anti-corrosives constitute 23% segments stood at 437 crores compared to 418 crores, refracting a growth of 4.7%. The refractory business dropped by 4.3% compared to H1FI25, and this was aided by a strong return of deferred projects, especially in the glass segment. And orders in anti-corrosive and structural composting business have been... Well sustained over the year. They grew very well last year. Sales driven by fertilized industry and structural composites, business demand was strong in various sectors. During the last call, we gave a sales growth of 13 to 14 percent in ceramics. We achieved 9.3 percent growth in ceramics. We'll move to CAPEX. Consolidated CAPEX was 309 crores, of which standalone constituted 235 crores. We communicated CAPEX estimate of 350 crores during our last calls. I'll provide a brief about what CAPEX we did last year. In FI26, we commissioned the first module of exclusive facility for the manufacturing of advanced ceramic components for semiconductor wafer fabrication equipment with a CAPEX outlay of The facility comprised of an end-to-end capability from preparation of high purity powders to precision machining and cleaning will cater key global OEMs like applied materials. Serial supplies of qualified products will commence in FI27 with the line utilization gradually improving. Further expansions in line with the development roadmap and long-term strategy is very much there. In the first year of serial production, NFI 26, the focus would be on assimilating technologies and establishing a stronger system. A gradual ramp-up in NFI 26, the focus supplies to the key customer applied materials will be on. In aerospace and defense segment, we have commissioned a new facility with an outlay of 49 crores to produce advanced ceramics for ballistic production of vehicle and personnel. The business is expected to scale up. High in 2030, gradually. Further ramping up will happen around that time. In this segment, we have secured STENAC-4 qualification of vehicle armor, and for personal protection of ceramic qualified, BIS threat level 5 and 6, equivalent to NIJ 3 plus and 4 levels. We are awaiting SCOMET approval, which will enable us to expand the business. The next major program is the gradation of existing white-fused alumina for this, from 2 MVA to 4.5 MVA, which will increase the existing capacities substantially. CapEx outlay for this is about 2 to 3 cores, including the installation of 110 kV substation to meet the future power requirements of the plant. The incremental capacity will have a maximum revenue potential of 95 crores for the full utilization. We have increased the treatment facility as well. This is a capex outlay of 30 crores. This capex is a maximum potential revenue of about 120 crores. Additionally, pilot facility was established for the manufacturing of ceramic powders for solid oxide fuel cells. The facility will leverage the technology tie-up we had with CGCRI. During the year, the business also entered into an agreement with a leading industry expert for the transfer technology towards manufacturing of aluminum nitrate and silicon nitrate powders. The next major growth project is the commissioning of thin wheel capacity at Huzur using the assets that we bought from DroneCo. Total capex outlay is 83 crores, and... Can produce 46 million thin wheels with a peak revenue of about 120 crores. FCF, free cash flow on a full-year basis at a consolidated level is 56.6% to pack, compared to last year, 16.1%. Standard-on level, the FCF to pack was 46.5% compared to 14% last year. Debt equity ratio is 0.08. Now, I'll go to the guidance. At the consolidated level, we expect the sales to grow approximately 4% to 4.5% in FI27. However, if we exclude the revenue contributed from Fosca, Zirconia, and Kumiya Vuko, which accounts to 343 growth in FI26 sales, and compare it with our business plan, comparable growth would be 11% to 12%. Consolidated abrasive sales are expected to grow by 5.5% to 6%. However, if we exclude the revenue from AUCO, which is about 108 crores, in FI26, sales growth would be 11% to 12%. Consolidated ceramic growth is expected to be in the range of 15% to 15.5%. Consolidated electro-mineral sales are expected to decline by 6.57% on account of the closure of Fosca Zirconia, which accounted for 235 grows in FI-26. However, if we exclude the revenue contribution from Fosca Zirconia in FI-26 and compare it with what we are planning to do in FI-27, the growth would be 8% to 9%. Consolidated abrasive margins are expected to be around 9.5 to 10%. The reported margin in FI26 is 4.3%. However, if we exclude the comparable margin, if we exclude AUCO losses, it would be 7.9%. So basically, it will grow from 7.9% to 9.5% to 10%. Consolidated ceramic margin would be 20.5 to 21%. The reported margin is 20.2%. Consolidated electromineral margin could be 9% to 9.5%. In Fi26, the reported margin is 5.6%. However, if we exclude the loss of Oscar's zirconia and compare it, the Fi26 margin would be 9.1%. So basically, from 9.1, it would be 9.9% to 9.5%. We expect to do a capex of about 400 crores in FI-27. The key capex program for FI-26 include expansion of advanced ceramics for power electronics, including substrate, metallized tubes, rings, braced assemblies, expansion of bronchized alumina, an addition of integrated furnace facility for thermal spray powders and zirconia furnace and grain processing facility. We also intend to do 110 kV substation and tunnel clean for refractories. These are the major projects which should account for about 400 kVs of CAPEX. Now, I would quickly cover our Aspiration 2030. The company launched is Aspiration 2030, and FI26 is the first year. The aspiration is built on seven key building blocks, building a high-performance organization, ambitious growth for the current businesses, focusing on innovation, exploring new opportunities for the growth, achieving manufacturing excellence, strengthening sales and marketing excellence, and supporting all this through digital and ESG initiatives. Progress is regularly tracked to structured reviews. In abrasive business, the company has a clear market strategy across the segments in its expanding dealer networks, strengthening relationships with existing partners. The focus is also gaining on the new customers and increasing business with the current ones. The company is strengthening its presence in the areas where it has currently low presence. It has also growing sourcing of business. Sourcing business and has set up a new vertical for this, a clear roadmap for the new products to be introduced with the well-supported investment in R&D team and capability and process building in R&D team. The thin wheel capacity based on assets acquired through Dranko has been discussed earlier. To stay competitive against the low-priced products, especially from China, the company has launched a cost optimization program. The cross-significant SKUs and strengthen the coordination between sales, product development, and quality teams using digital tools. In the electro-mineral business, the capacity is being expanded by upgrading furnaces. The company is also increasing its capacity in valuated products in alumnus and diversifying raw material sourcing. Exports are a key priority and already form a significant share of the business. Electro-mineral, I would like you to look at it in three broad categories. Core, our range of fused alumina products, including BFA, WFA, and silicon carbide products, constitute our core product portfolio. We have expansion plans in both WFA and BFA, while the core products will continue to form the bulk of our product basket, which share is expected to. Current level of 85%, it will come down to 55% to 60% by 2030, as other product categories would scale up. Treated products, treated products which include products that undergo heat treatment and coating are relatively high-performing in nature. As discussed earlier, we are undertaking a related capex initiative in this area. We aim to increase the share of treated grains from 5% to 6%. At the current level, nearly 20% by 2030. Speciality products. The business currently manufactures alumina zirconia products scattering through applications in abrasive, refractories, metal matrix, composites, and related industries. We also produce some zirconmulite grains. We have expansion plans for both alumina zirconia as well as ziromul. In addition, as part of the LTS initiative, we plan to start production of calcium, cibler, zirconia, and monoclinic zirconia. Collectively, this suite of zirconia-based products will form a specialty products portfolio, whose share is expected to increase from 8% currently to 18% to 20% by 2030. At the same time, the company is investing in new technologies and products such as SOFC powders and nitrates, which are expected to drive future growth. In FY26, we have commissioned a pilot lab facility with a spray pyrolysis technology to prepare powders for SOFC and SOEZ cathodes. This was done based on the technology transfer from CGCRI. Going forward, we will focus on capacity creation and securing anchor customers. There has been good progress on Nitrite's side as well, with a leading technology consultant being onboarded in this year. Apart from this, business has achieved 5N purity on HPSIC and will be working on securing customers for the same over FI27. The Technology Route for Success and Purity of HPSIC has also been initiated and the business is currently working on a pilot-scale manufacturing facility for the same. Besides this, we are working on establishing application for graphing in bioplastics, coating, concrete, and rubber. All these areas, such as thermal spray borders, electrolytes, or ceramic borders for SOC, SOEC, nitrides, HVSIC, graphene, are collectively called transformational products. We expect transformational products to contribute around 10% by 2030, compared to the current level, practically very little. Growth in this segment is expected to be gradual, as these are advanced materials catering to the emerging sector. We believe we need to create a good base in the transformational product in the aspiration period, and create a new leg of growth beyond 2013. Ceramics, when we come to industrial ceramics segment, we can view it as core and emerging businesses, where metallized cylinders... Vacuum interrupters, sorry, metalized cylinders for vacuum interrupters, engineering ceramics for diverse applications could fall under the core business, emerging business and compass components for semiconductor wafer equipment, aerospace and defense electronic substrates. In the core segment, the business plan is to increase metallized cylinder capacity substantially from the current level. Additionally, the business would expand production facility to meet the growing demand in SOFC segment. In the emerging segment, the company is entering into high growth areas like semiconductor through newly commissioned plant, which manufactures components that go into wafer fabric equipment. Products have been approved by key customers for serial production. Work is also underway to build capabilities in advanced electronic components through global major tech partners. Additionally, the business is entering to AMB and DBC, active metal braced products and direct bonded copper products, substrates and braced assemblies for power electronics. A qualification program has been drawn, and both these critical product segments and prototype development submissions will be completed this year. In the refractory business, the growth will be based on both fired and monolithic business. The fired and refractory portion of the business, we are increasing the capacity by 75%. Additional capacity will focus on moonlight. We are also progressing on our plans to increase our monolithic capacities. We will gradually ramp up our capacity in composite business as well in carbon, bricks, floor coating, advanced structural composites. While we do this host of initiatives at the business, we are also done. Good work in terms of the support functions. CIMI is a manufacturing excellence program, which works on an integrated manufacturing excellence framework, improvements in quality, cost, delivery, and operational efficiency across businesses. This program is... Delivered to entire cost savings in the first year through automation, digitally enabled QAQC and throughput improvement in key assets beyond savings in the MX focuses on institutionalizing a culture of manufacturing excellence and the support of the Manufacturing Excellence Academy, which runs the program for both management and non-management stock. The company is also strengthening sales capabilities through CRM implementation and the Sales Excellence Academy, which aim to drive more data-backed approach to sales. Digital initiatives are further enhancing manufacturing and planning systems, including the rollout of manufacturing execution system, MES, across identified plans and implement the SNOP software. Safety and sustainability remain central to the company's long-term strategy. Through a structured EHS excellence for MS, the company is advancing its goal to near-zero emission, water positivity, and improved material circularity. The FI 2030 targets include increasing renewable energy use to 50 percent, Reducing emission intensity by 25% and lowering energy intensity by 20% from FY2025 levels. Progress is supported by renewable energy adoption, cleaner fuels, waste heat recovery, energy efficiency initiatives. The company has also made significant progress in zero harm journey, recording a substantial reduction in LTIFR through risk management and behavioral safety programs. People capability development remains a key enabler of growth under a program called FACE to Perform, F-A-C-E-D, to Perform. The framework consists of focus on the factory, which is the first major initiative, acquisition of talent, rewarding career path, employee experience, and development of talent. We aim to do a high-performance organization, leadership development initiatives, include the next 100 programs, or helping. So, I would like to summarize that we continue to drive the focused execution across functions with multiple initiatives. The progress achieved in the first year of execution is really giving us confidence. We have delivered, you know, the top line as well as the bottom line as per our internal targets, and the progress from the functional level also has gone well. So with this, I would like to open up for Q&A. I know it is a long opening remark, but I thought it is needed.

Thank you very much. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question, you press R&1 on the touch on telephone. If you wish to remove yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and 1 to ask the question. The first question is from the line of Jonas Bhuta from Aditya Barla Mutual Fund. Please, go ahead.

Good morning, everyone. Thank you for the opportunity. Firstly, I just want to congratulate the management and taking a timely decision on the divestiture of the call. I had two questions, both sort of relating to your high growth or emerging segment. Firstly, if you can touch upon the SOFC segment, there we've seen the client. Thank you. This business becomes like a 10-2.

The customer provides going up to, say, 2028, like that. So, we have to build the capacities using that as a clue, plus the intermediary guideline that they always give for the next one year. So, this is how we are looking at, and we feel that given what the customer is embarked upon and the kind of growth that they are facing, We feel a very strong growth possibility in this segment, and we have grown well last year, and we expect to grow well in the coming years as well.

What would your wallet share with the client be?

We wouldn't like to share such details at this call. We have, as I said, that we feel that we are an important supplier to the customer.

And any guidelines on how big can this business be three years out, sir, for you? Not a number, but at least a percent. Can it be meaningful in terms of, like, greater than 10% of sales?

Definitely, it will be a meaningful share that we will have. And, as we said, that the engineer segment itself, you know, is currently... One-third of the business that substantially would grow up is our...

The question was on the new K-Pix that you've done for applied materials. If you can delve a bit on what exactly will that help you get for applied materials, where is this product used particularly?

And this is an initial investment, as I said. We expect that this investment... Four times higher. And we also expect the revenue potential also is substantial in this industry.

Got it.

Next question is from the land of Harshit Patel, from Equal Securities. Please go ahead.

Thank you very much for the opportunity. Firstly, on abrasive, China has removed the export rebate on abrasive products from 9% to 0% effective from April onwards. Has the domestic market pricing improved because of this, or we have been able to garner a little bit better market share in the last one or two?

So, it's a very recent phenomenon at this point in time. A lot of people will have inventory through the imported materials, all that is happening, but we believe that this is good for the domestic industry, and it will help us to grow. Of course, the growth in H2 is about 15% is very encouraging. A lot of that could be due to, you know, this factor as well. But I think overall, we see a rebound and our work in terms of all the areas, whether it is GTM initiatives, new products that we introduce, bringing cost down of our products. All these combined efforts of Our strategy is playing out. I mean, this we have been doing over the last 18 to 24 months is now playing out.

Understood. Just a follow-up to that, given that we posted such a strong growth in the fourth quarter, if you could explain your growth in terms of how industrial market did, how precision did, how retail abrasives did, and what would be the outlook on these three sub-segments going ahead?

I think I gave a broad outlook in terms of... Segmental sales, that's what we are looking at. But we feel that stand-alone, we grow 6.2% this year. We believe that we can grow in the range of about 12% next year.

Thank you. My second question is on standalone electro-minerals. What has been the contribution of volumes and higher pricing in the 22% YOY growth that we posted for fourth quarter? And even the full year growth at 11% was reasonably healthy. Also, you could comment on the Chinese imports intensity, whether it has increased or decreased in recent times in that electro-minerals business based out of India.

So the Chinese intensity continues to be there. There's no kind of coming down of it. But we started focusing more on the treated products, export segments, and that is the focus that we are looking at. And that gave us this growth that we posted in the full year as well as in the Q4. The predominant growth has come from volume, where price is probably you can treat it as flat or some small percentage.

Understood, sir. Thank you very much for answering my questions. I'll come back in the chat. Right.

Thank you.

Thank you. Next question is from the line of Ravi Saminathan from Aventus Park. Please go ahead.

Hi, sir. Thanks for taking my question. My first question is with respect to the FY30 vision, 2030 vision, any revenue target or growth target that we have and any margin targets that we have for these?

Thank you for asking this question. We have not been sharing a guidance. We have started sharing only a one-year guidance and also giving a program that we are looking at going for the Aspiration 2030. We believe that it would energize and bring the growth substantially from now onwards. And we have kind of addressed some of the issues that we are facing in terms of loss-making subsidies, so we should see a rebound.

Got it, sir.

And with respect to the ceramics and refractories business, if you can once again highlight, you had mentioned numbers in terms of bifurcation between ceramics and refractories. If you can call it out once again, and what kind of growth that we should think of in each of these individual sub-segments we can get.

I think I gave an elaborate one, but I'll just give a broad outlook to you, is that we feel that 57% of the ceramic is industrial ceramic, and 43% is the refractory business. The growth that we are looking at in terms of Just a second. In the growth overall in ceramic segment that we are looking at, this year we achieved 6.5%. We expect next year would be in the range of about 14%. I'm not sharing the individual data of the refractory and the industrial ceramic, but they would broadly form part of around this range, 14%.

Thanks for taking my question. Just wanted to understand how has been the exports across the segments. I think you mentioned something 11, 33%. I missed that. So it's possible for you to give us some color in terms of exports within ceramics and abrasives and what is the kind of outlook there?

Uh, I say, ahem, that... They said that we have reached a 33% share in the current business, over 300 crores of export in the electrical business. That's what I shared.

How has been the export in ceramics and abrasives, if you can get the break-up and what's the outlook there also?

Ceramic is the biggest portion of the ceramic. Over 80% of the business is all exports, and that is doing fine. I mean, basically, whatever is the growth that I talked about on industrial ceramic predominantly comes from those areas. A very small portion of the abrasive business is the export. It's less than 10% is the export.

Understood, sir.

My second question on Rodius, I think you guided about 5% top-line growth and kind of break-even or some very small loss. So what exactly are we affecting? The growth seems to be still kind of mid-single digit, but we are expecting the break-even. And so where exactly the improvements will happen, and if you could elaborate more in terms of how business volumes are happening and what will lead to the turnaround this year.

So, if you see the last year, the big reason for the drop-ins...

Can you please unmute, please?

Yes, yes, sorry.

I'm sorry, sir. Yeah, go ahead.

Right. Last year, we had almost 5 million euro impact in terms of the logistics change, and that really affected the top-line change, and we feel that they have been growing in the range of about 6 to 7 percent, and we feel that that growth should happen, and second is that because of this Loss of sale, as well as the margin impact due to this loss of sale, along with the logistics costs on the shift, these things would come down, and hence we feel that we should get back to a small loss or a break-even. The third reason is that we are also now working on a program with the Brodius team in terms of how do we... Accelerate the profitability as a special program. So these are the reasons why we think that we should get here.

Understood, sir. Thank you. Thank you. Thank you.

Thank you. The next question is from the line of Harshit Patel. Please go ahead. Ah, shit. Harshit, you may ask a question. There is no response in the line of Harsha Patel. The next question is on the line of Akshay Thakur from Helios Capital Management. Please go ahead.

Hi, sir. Thank you for such an elaborate call. So, my question is specific to the, hello, can you hear me? Yes, yes.

We are hearing you.

Please. My question is pertaining to the stationary armor within your defense and also CFRP products for aerospace. Currently, there is a lot of ecosystem being developed for aerospace and for aeronautics for this defense as well. Almost 100% of that would be imported. So, how do you see this? Like, in terms of commercialization, where are we placed? Are the certifications right? Are we negotiating with the OEMs, or where are we placed on that?

So, I think you kind of very clearly described this. So, step one is to have the certifications in place, which we are definitely doing it. I described the certifications that we already got. So, pretty much we are in good shape as far as certification is concerned. We are working with... We have a few anchor customers at this stage. We also have the ability to work with them because they would be the front-ending in terms of what they would finally supply. We are only a product supplier to this case. Hence, this is how we are planning to move in this model.

Thank you, sir. That was helpful. My second question is, so it's been a long time that we are facing the war situation in Russian subsidiary. So, like, all this time, are we able to figure out any alternative strategy? Like, India also imports a lot of silicon carbide. So, are there any alternative strategy? If there is, what type of lower realization would SIC get in other economies?

It's difficult to create a capacity, and the cost will be, you know, pretty high. So it's going to be very difficult to recreate anything like that. But at the same time, Russia is not in a position to export products, which is what we are currently going through. So, practically, we need to wait for the sanctions to be lifted, which gives us an ability to. Go beyond Russia. So at this stage, we don't have an alternate.

Thank you, sir. One more question. Can you just throw some light on the subsidiary you have, PLUS? How is it doing?

PLUS is doing fine.

In terms of profitability?

Yeah, they made profit, and it's a very small profit. They are doing fine.

Okay, thank you, sir. That will be all.

Yes.

The next question is from the line of Chintan from Pico Capital Private Limited. Please go ahead.

Thank you so much for taking my question. So, sir, one of the questions that I had was that, as you said, the ceramics business is around 80% exposed for us, and most of our peers will be global, and they spend a lot on R&D. So, how do you see our business and our R&D evolve over the next few years, and what are the key areas that we'll be focusing on?

Yeah, I think that's a great question. We spend roughly about 1% as R&D, and I think this needs to go up, and we expect that we should at least start spending 2% to 3% level. We are working in terms of strengthening our R&D team across the individual BUs. And we're also strengthening the new product development process coupled with, you know, software-enabled processes so that we kind of make sure that we do the right thing in terms of new product, getting the right input from the market, customers, and the users. So all these factors are now being put part of this R&D process. So strengthening the R&D, building the capability, putting process, we need to accelerate the spend both in terms of CapEx as well as in terms of OPEX.

All right, sir, and the second question I had was more on the ceramics side. So, basically, a lot of applications in EV require ceramics. So, are we working on any products or programs with any OEMs or tier 1s where our ceramics are getting used on the EV space, and how do you see it evolving over the next three to five years, basically?

Yes, we do work. I think this is part of the engineer's ceramics that I described. That's why we feel quite a bit in terms of that segment's growth. So, we are working with Tier 1 suppliers to OEMs. That is how we... So, engineer ceramics will be a key focus area for us, which would bring a substantial share of our business. Yes, like that, what you talked about in terms of SOFC, EVs, as well as... Image intensified tubes, all these products group would fall under that, and we feel that the growth rate would be substantial, and we also feel that the share of business will go up, and that is how we are creating this capacity. We are also trying to create, as I said, that... You know, ceramic substrate capacity for electronics is, we are creating, we are working on that. Technology transfer agreement is done. Now the capacity augmentation would happen in FI 27 on that. All right, sir. Thank you so much for taking my questions.

Thank you.

The next question is from the line of Preet Jain from Nivesh Investment Advisors. Please go ahead.

Thank you, sir, for taking my portion. Congratulations on your setup number. Sir, my first question is on the semiconductor side. The semiconductor opportunity seems to be a massive long-term driver. So, can you get between structural ceramics for fair equipment and HPSIC for vapors? And could you map out the current qualification cycle timelines with global OEM? And given the strict purity requirement, when do you expect this segment to cross the threshold into material revenue generation for us?

Well, good. A lot of loaded comments, and you are asking the right question. Particularly on the ceramic for the wafer fabric equipment, in the case that we have built the capacity, the material qualification process is pretty long. It would take about four to six years. We have crossed that, and that is how we have created the capacity at this stage. We have, you know, samples tested. Now we are in the, you know, development phase is completed, and now we will start supplying to them the serial production will start. So you're right, it takes a long time, and that's how we took a long time to get here. We will now... Complete phase one and then expand to phase two quickly. And when can we expect material revenue generation from that?

And my second question is, given the massive power distribution and grid infrastructure capex happening domestically, how quickly we can de-bottle like our current metalized cylinder capacity? And furthermore, are we seeing traction in penetrating the export market to compete against Japanese players like Kiyosira and NGK?

Sure.

We have, in fact, our metallized cylinder, the biggest portion is only exports, so definitely we are competing with the names that you are mentioning, and we are doing it well, and the expansion would happen in the next 18 months, 24 months, in a phased manner. I mean, it could consist of three phases, but it could happen in that fashion.

So, do we have the capacity till 1.5 years next to supply this?

Yes, yes, definitely. We are one of the, you know, number two worldwide players in this field, and we feel that we have headroom, plus we also creating the newer capacities in this, debartlenecking and creating the capacities.

Okay, and sir, another question is, You are supplying to one of the largest SOFC manufacturers in the world. So, basically, our current realization, according to our revenue, states are 13 to 15 lakhs per megawatt of diploid. And given that SOFC manufacturer has expanded its capacity from 1 gigawatt to 2 gigawatt, can I get to know what are your revenue estimations regarding that SOFC product? And given that 5-7 year replacement cycle of that FOFC cell, can we also expect revenue from the replacement demand?

I think a lot of that has got sub-elements of it. You are getting headline information, but we feel that definitely the gigawatts of additions that each of them would add would definitely help us. Our demand also would go up. As I said in the earlier question, we feel that... The growth rate in this segment is going to be substantially high. We are parallelly gearing up because we are also feeling that we need to work in terms of creating this capacity ahead of time, which is what we are working on this. I think you are right. Step one is to, this growth would, you know, Seem to be going up because of the AI-related data center demand, etc. So definitely, it's a clear sign of growth in that segment. And the SOFC is a clear market leader in a clean energy segment, which definitely helps us quite a lot.

Okay. If time permits, can I ask one more question?

Yes, please.

Thank you. Thank you for giving me the opportunity. Sir, basically, China has reduced its export rebate in April 2026 from 9 to 13% on their abrasive products. So, are we seeing any current traction of abrasive sales growth volume improving in current month or in last month due to this policy?

So, I did comment on this, Preet, a little bit in the earlier question. I think it just happened, you know, we are in the month of May. So, it's just a lot of inventory would be there in this, you know, the system that should get, you know, also completed. I feel that definitely it is a good sign. It helps the domestic market to grow faster. We have grown 15% in H2. Okay. Okay, sir. Thank you, sir. Thank you, thank you.

The next question is from the line of Sajjal Kapoor from Anti-Fragile Thinking. Please go ahead.

Yeah, thank you for the opportunity. Just a couple of questions on the R&D side of things in the business. What percentage of your recent R&D and innovation projects were deliberately stopped or pivoted or, you know, redesigned because customer or market learning? Invalidated the original assumption. That's my first question.

That's a great question. If I just quickly look around our R&D at four BUs, I haven't... We experience any such program that we stopped or customers' request change type of a situation. Definitely not, but we have experienced cases where, you know, you need to put a particular application, but, you know, you require some more work to make sure that the application really is capable of using our product. That type of thing happens.

No, understood.

Thank you.

So, how will Kumi ensure its investments in silicon carbide, advanced ceramics, and other high-tech materials become high-rosi, scalable businesses rather than technologically strong but capital inefficient platforms?

I'm not sure I get you a question. Why would you think it's a capital inefficient platform?

No. So, I mean, do you have internal benchmark? So, we are doing a lot of advanced R&D, and in the annual reports, we are almost confidently saying that post-2030, Kumi will emerge as a very different-looking business because of the initiatives that we are doing across many things. And so I can name maybe... The most futuristic opportunity, to my mind, is something like semiconductor-linked materials, EV, but even things like electro-minerals, silicon carbide. You know, we have got most strategic capability around that. Difficulty is also very high. So, what is the kind of, I see, ultimately, from an investor perspective, it's about, you know, how scalable the business can be and what will be the steady-state ROCE it will generate. That will determine, the outcome will determine the shareholder wealth creation. So I was coming from that perspective.

No, I think these are definitely looked at part of our threshold to evaluate any such opportunity. Clearly, the dimension that you are looking at market size and opportunity, growth rate, and, you know, the ROC that we would get in a steady state. We feel that these areas that we just listed in terms of ceramics for semiconductors, ceramic for electronics, you know, high purity silicon carbide, ceramics for aerospace and defense, all these areas we feel that are good areas to work on and invest, and that's how our programs are on. So CUME is capable of funding itself. If you really look at it, we spent this year 310 crores plus capex, and we have zero debt, net zero debt at this point, and substantially very good FCF. So we are able to fund these type of programs, and kind of practically, we think that we would spend 400 crores next year as well. And a year before, we did spend about 250 cores plus.

No, no. Helpful. Thank you so much. That answers all my questions. Thank you. Wish you all the best. Thank you.

Thank you, Mr. Kapoor. The next question is from the line of Rachna Kukreja from SINPL Limited. Please go ahead.

Thanks for the opportunity. Sir, could you please help me understand the performance of our aggressive business for our JVs like Wendt? See, the business for aggressive there is been declining in terms of growth as well as segmental profit margins. If you could give some color on the Wendt's performance, it would be very helpful. Hello?

So, I am afraid I'll be able to comment on that. This is another listed company. I would encourage you to stay in touch with the management. They would be able to provide that. But I think their shortfalls are coming because of the machine building the segments, and super abrasive is doing fine. I would limit my conversation to this level.

Thank you.

We take the last question from Pravesh Kochar from Four Lion Capital. Please go ahead.

Hi, thank you for taking the question. First one on ceramics, I think last call you mentioned we'll end up doing 13-14% growth in that segment. And then the guide for next year also is at 15-15.5 and we have ended the year at close to 9. So, just want to understand what's the The gap between those two. Second, again, on the ceramic SOF3 side, Do we supply only the ceramic plates, et cetera, or are we also in the electrolytes for that particular business? Thank you.

Okay. All right. Two great questions. I think, why did we miss? I think that's the only area we missed our guideline. It's largely because of deferred projects, which I think is substantially the one-line reason for why did we miss our guideline. And why do we think that we can meet 15 is the backlog and the focus from our customer gives us that confidence. We are not currently into electrolytes, but you are asking a very deep question. We have the capability, because of our electro-mineral business, we have the capability of Manufacturing electrolytes, that's the technology we had worked with CGCRA, and as I mentioned, we had a small pilot scale plant we established to manufacture that, which is what we just shared in the call as well. So, this is, we have a small capability there. We need to now expand that. At this point in time, it's more a pilot scale.

On the overall segment, my question was, earlier we used to anticipate 16 to 18 percent kind of growth, right, in the ceramic segment. So, I was assuming because of the deferred projects, the next couple of years would be... In that range, right, given this year some projects were deferred into next year. So just trying to understand if structurally there is more competition that you are seeing or the overall market itself is kind of slow enough.

I don't see, I mean, it's not because of structurally something is changing. I feel that it's more projects plus. A lot of it would depend also on how we do business in America in terms of the ceramic side of the business. So these are factors that we have kept in mind when I told 14 to 15 percent.

Thank you so much, and all the rest. Thank you.

Thank you. That was the last question. I would now like to hand the conference over to the management for closing comments.

Right. So, first of all, I thank you all for patiently hearing us. But I just want to summarize. We have done fairly well in FI26. We have addressed all the major issues in terms of loss-making substrates. The loan contributed a loss of over 100 crores to 120 crores. So the first year of our five-year journey, we have done fairly well. CME has created a good base over the last 24 months for this aspiration. CME has made a significant capacity and capability investment in FI26. You see three years, 280 crores, 310 crores. Next year, we would plan to spend about 400 crores. All of them are in capacity or capability building, so that would give a strong... CUME has achieved a good free cash flow after meeting all CapEx investment. It's a good sign, and CUME is net debt-free. CUME has drawn a good aspiration in 2030. It's well-resourced, both in capacity and capability. It's built a good, strong execution rhythm. Above all, it has a good leadership and a strong team exhibiting BFAS behaviors, which consists of bold and timely decision-making. Embracing the change with solution-driven mindset, fairness to all stakeholders, accountability in decision-making and execution, and standing up for each other. So thank you all for hearing us during this call. Look forward to meeting you in the next call soon. Thank you. Bye.

Thank you so much, sir. With that, we conclude this conference call. Thank you for joining us. And even now, disconnect your lines.