Carborundum Universal Limited (CARBORUNIV) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Carburendum Universal Q1F527 Earnings Conference Call, hosted by TAM Capital Advisors Ltd. 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 comes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Kunal Shah from Dam Capital Advices Limited. Thank you and over to you, sir.

Yeah, good afternoon, everyone. Welcome to D1QF27 Earnings Call of Carparendam University Ltd. From the management side, today we have Mr. Rangarajan, the Managing Director, and Mr. Chandramooli, the Advisor. At this point, I would like to hand over the call to the management for their opening remarks, post which we can take up the Q&A. Thanks, Anubha, sir.

Good morning. I am Chandramooli. Let us start the proceeding with the disclaimer. During this call, we may 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 first quarter earnings call. I hope you and your family members are safe and doing well. We'll begin the call by providing an overview of the performance, and then we will take up your questions. To begin with, I'll start with the standalone performance. In Q1-FI27, standalone sales were 846 crores, compared to 698 crores in Q1-FI26, which is a growth of 21.2%. Growth at standalone level was broad-based and driven by all three segments. The electro-mineral segment grew by 33%. Ceramic segments grew by 15.2%. Thank you. An abrasive segment grew by 14.7%. On a sequential basis, standalone sales was 846 crores compared to 845 crores, so almost flat. Sequential growth was driven by EMD, which grew by 12.2%, but the ceramic segments declined. Marking a decline of 1.6% and abrasive also declined about 6.9%. Both are due to seasonality of the business. Standard on profit after tax in Q1 FI27, standard on pack was 88 crores compared to 77 crores in Q1 FI26 without the impact of one-time dividend of Rs. 68 crores. This marks a growth of 14.3% on a like-to-like basis. On a sequential basis, PAD declined by 28.3% from 120 crores in Q4-FI26 to 88 crores in Q1-FI27. Profit of Q426 included a dividend income of subsidies and GVs of $30.5 crores compared to a dividend income of $14.5 crores in Q1FI27. Besides this, it also reflects the seasonality of the business. Consolidated sales were 1,411 crores compared to 1,207 crores. In Q1 FI 26, this is a growth of 16.9%. On a sequential basis, the consolidated sales grew by 2%, from 1,383 crores to 1,411 crores. Consolidated profit after tax in Q1 FI 27, consolidated pat was 76 crores, compared to 62 crores in Q1 FI 26. Which is a growth of 23.4%. Sequentially, the company reported a PAT of 76 crores in Q1 FI27, compared to your loss of aging crores in Q4 FI26. If you remember, consolidated PAT in Q426 included exceptional items, costs of about 135 crores. In Q1-FI-27, segment results of standalone increased by 24.1% from 106 crores in Q1-FI-26 to 132 crores. Electro-minerals PBIT increased from 7 crores to 39 crores, while ceramics and abrasive PBIT declined marginally to 59 crores and 34 crores, respectively. Standard on PBIT was 115 crores in Q1-FI27, compared to 98 crores in Q1-FI26, excluding the one-time dividend of 68 crores in Q1-FI26. On a sequential basis, segment results dropped by 9% from 145 crores to 132 crores, as higher EBIT in EMD, and ceramic was offset by decline in abrasives. Electro-minerals PBAT increased from 28 crores to 39 crores. Ceramics PBAT increased from 57 crores to 59 crores, while abrasive PBAT declined from 60 crores to 34 crores. Segment result in PBITF consolidated I will cover now. In Q1-FI27, segment result was 133 crores compared to 89 crores in Q1-FI26 and 112 crores in Q4-FI26. In Q1-FI26, consolidated PBITF was 114 crores compared to 81 crores in Q1-FI26. Marking a growth of 40.9%. On a sequential basis, consolidated VBIT increased by 11.6% from 102 crores in Q4-FI26 to 114 crores in Q1-FI27. Now, I will cover the segment performance. We will take our first abrasive segment. Consolidated abrasives in Q1FI27, Consolidated abrasives says, We are 610 crores compared to 508 crores in Q1 FI26, which is a growth of 20.1%. On a sequential basis, sales remain flat at 610 crores. In Q1 standalone abrasives, in Q1 FI27 abrasive sales were 328 crores compared to 286 crores in Q1 FI26. This is a growth of 14.7%. Growth was driven both from domestic as well as export. On a sequential basis, sales declined by 6.9% from Rs. 353 crores in Q4 FI 26 to 328 crores in Q1 FI 27. On a quarter-on-quarter basis, all segments contributed to the growth. Growth were predominantly volume-driven and very small price increase. I'll now cover the Rodeus appraisals. In Q1 FI27, Rodeus sales were 15.6 million ERO compared to ERO 13.2 million ERO in Q1 FI26, which is a growth of 18%. In Q1 FI26, sales had been impacted by an operational Transformation of logistics or warehouse facility in the company. On a sequential basis, sales increased by 1.1% from 15.5 million euro in Q4 FI26 to 15.6 million in Q1 FI27. Growth was more pronounced in INR terms on account of the depreciation of INR against euro. In INR terms, Q127 sales was 172 crores compared to 128 crores in Q126, marking a growth of 33.9%, and on a sequential basis, sales increased by 4.3% from 165 crores to 172 crores. In Q1 FI27, Rody has reported a loss after tax of 0.7 million compared to loss after tax of Euro 1.6 million in Q126, representing an improvement of 0.9 million. In Q426, Rodius recorded a pack of 0.44 million. During the last call, we said Rodius could grow by 5% in FI27 and that there could be a small loss at the pack level. We maintained the same cadence. Now I'll move to Kimi Awuko Basics. In Q1-FI27, Awuko continued to operate to meet some of the fulfilling the existing orders that they have taken from the customers. Sales were 2.89 million compared to 2.6 million in Q1-FI26. The growth of 11.1%. On a sequential basis, sales increased by 9.9% from EUR 2.63 million in Q4-FI26 to EUR 2.89 million in Q1-FI27. In Q1-FI27, Avoco reported a loss after tax of 1.69 million compared to a loss of 0.9 million in Q1-FI26. On a sequential basis, the laws of tax excluding exceptional items from Euro 2.63 million in Q426 to 1.69 million in Q1-FI27. In FY26, Q4, Kumi International Limited, the holding company of AUCO, had approved to initiate The closure of the company through a voluntary winding up process under the applicable laws in Germany. Following this, exceptional items amounting to Rs. 119 crores were recognized in the consolidated P&L of CIMI in Q4 26. We are trying our best to complete the process in a quarter or so. We will update you when we meet in the next quarter. I will cover the abrasives PBIT of standalone and consolidate it. At consolidated level, Q1-FI27 PBIT was 440 crores compared to 11 crores in Q1-FI26 and 32 crores in Q4-F26. PBIT for the quarter ended June 30, 2026 included a gain of 25 crores from Selling of Braze is limited, a subsidiary of the company, arising from the transfer of leasehold rights of immobile property and related buildings. At the standalone level in Q1 FI27, PBIT was Rs. 34 crores compared to Rs. 37 crores in Q1 FI26. PBAT margin declined from 13.1% to 10.4%. On a sequential basis, PBIT declined from 60 crores in Q4 FI26 to 34 crores in Q1 FI27, while PBIT margin declined from 17.1 to 10.4%. Last year, full year, the PBIT margin of abrasive standalone was 15.3%. Considering this, there's a drop of, say, 15 crores to 16 crores of PBIT. In this quarter, the U.S.-Iran conflict started in end Feb 26. There was a truce in between, giving hope of normalization. April saw a nominal cost push. May onwards, we began to see significant cost push. The overall cost push is around 16 crores. Besides this, raw material cost push, Normal inflationary cost push on the other costs were there. These were offset by the normal price increase realization that we had. Compared to Q4, the drop in PBIT is due to volume drop and cost push. Normally, Q1 is a lower quarter compared to Q4 due to seasonality. The volume drop impact is around 8 to 9 crores. This, along with the cost push, are the reasons for the drop in PV80. I will cover now the EMD segmental performance. Consolidated Electrum Indus. Consolidated Electrum Indus sales were 473 crores, compared to 405 crores in Q1 FI26, which is a growth of 16.8%. Growth was driven by Standard Electrum Indus, which saw strong demand. Both domestic and export. On a sequential basis, sales increased by 10.7% from 427 crores to 473 crores. Standalone Electro Minerals. In Q1 Fi27, sales were 282 crores compared to 212 crores in Q1 Fi26, marking a growth of 33%. On a sequential basis, sales increased by 12.2% from 252 crores, 282 crores in Q1-FI27. Growth was largely volume-driven, predominantly export-centric. VAW Russia, sales of VAW Russia was about ruble 1.58 billion compared to 1.84 billion in Q1-FI26, marking a drop of 14.1%. Thank you. In INR terms, Q1FI27 sales were 201 crores compared to 195 crores in Q1FI26, marking a growth of 3.1%. On a sequential basis, sales increased by 24.1% from ruble 1.27 billion in Q426 to 1.58 billion in Q1FI27. In INA terms, on a sequential basis, sales increased by 34.4% from 149 crores to 101 crores. In Q1, PAT was 52.1 million rubles compared to 71.5 million rubles in Q1-26.

I'll move to now Fasca Zuconia.

In Q1 Fi 27, FASCA recorded a sales of 107 million compared to 121 million in Q1-FI26, marking a decline of 11.7%. On a sequential basis, sales declined by 14.7% from RAND 125 million in Q4-26 to RAND 107 million in Q1-27. FASKAR, a 51% subsidiary of CUME International Cyprus, was determined Commercially unviable due to sustained loss, rising input costs, and marketing pressures. Accordingly, in FI26Q4, the consolidated FI26 financials included Rs.16 pros of a third write-down of various assets of Fosca's zirconium. We are evaluating all options, and we expect to reach a solution in a quarter, and when we meet, In the next quarter, I'll update you the progress that we are making. Electro-minerals PBIT, both standalone and consolidated. In Q1-FI27, standalone electro-minerals PBIT was 39 crores compared to 7 crores in Q1-FI26. On a sequential basis, PBIT increased by 40.3% from 28 crores to 39 crores in Q1-FI27. Consolidated electro-minerals PBIT was 22 crores in Q1-Fi27 compared to 4 crores in Q1-Fi26. Consolidated PBIT of Q1-Fi27 had an impact of loss of 17 crores from Pascal's zirconia, which I just explained. On a sequential basis, consolidated PBIT increased by 14.9% from 19 crores to 22 crores. Now move to ceramics. In Q1-FI27, consolidated ceramic sales were 349 crores compared to 300 crores in Q1-FI26, which is a growth of 16.5%. On a sequential basis, ceramic segment sales decreased marginally from 351 crores to 349 crores. I'll cover the stand-alone ceramics now. Stand-alone ceramics sales were 274 crores in Q1 FI27, compared to 238 crores in Q1 FI26,

which is a growth of 15.2%.

Quarter-on-quarter, growth was driven by industrial ceramics, as well as the refractories business. On a sequential basis, standard on ceramics sales. Declined by 1.6%. While industrial ceramics grew well, refractories had a sequential drop. Refractories' business is project-based, and besides this, Q1 in general is a lower quarter in refractories' business. We'll now cover the ceramics PBIT. Q1FI27 consolidated ceramics PBIT was 74 pros. Compared to 75 crores in Q1 FI26, remaining broadly flat. At Sandron, PBIT was 59 crores, compared to 62 crores in Q1 FI26. PBIT of IEC remained flat despite the top line going up. The reasons are cost increase in fuel, alumina, unabsorbed costs in new lines of semiconductor and aerospace and defense capacities. We expect this to improve over the next few quarters. We feel we'll be at higher end of the cadence of the full year. On a sequential basis, consolidated ceramic PBIT increased by 19.1% from 63 cores in Q426 to 74 cores in Q127. Standalone ceramics PBIT increased by 3.5% from 57 cores to 59 cores. Well, ICPB-80 grew up well. This was offset by the lower PB-80 in refractories due to volume drop in line with the C-stallity. Consolidated capex in Q1-FI27 was 53 crores, compared to 64 crores in Q1-26. We gave a cadence of 400 crores for the full year of FI27, and we keep the same cadence. Consolidated debt-equity ratio is at 0.05. Unlockable expenses. Standalone unlockable expense of Q1FI27 was 17 crores compared to unlockable income of 60 crores and unlockable income of 11 crores in Q4FI26. The variance was primarily due to the dividend income received from SR3 in the comparative periods and the foreign exchange loss of 3.3 crores in the current year as against the foreign exchange gain in the comparative period. On a consolidated basis, unallocable expenses for Q1 FI 27 stood at 19 crores compared to 7.6 crores in Q1 26 and 9.8 crores in Q4 26. Increase was mainly attributed to foreign exchange loss in the current quarter compared to the foreign exchange gain in the comparative periods, as well as the lower interest income during the current quarter. I'll quickly touch upon the guidance that we shared last time. Consolidated sales, I communicated earlier that the consolidated sales could grow approximately 4 to 5 percent, 4 to 4.5 percent in Q1, sorry, in FI27. However, if we exclude the revenue contribution from Fuskal Zirconia and Avuko, which accounted for 343 cores in FI26, And compared with our business plan, the comparable growth will be 11% to 12%. This is what we communicated. Given our current order load and forecast from customers, the growth could be 15% without the sales from Fasker and Aukko in both the periods. Consolidated abrasive sales, I gave a cadence of 5.5% to 6%. However, if we exclude, The revenue from AUCO, which is about 108 crores. The sales growth will be 11 to 12%. I retain the same cadence. Consolidated ceramic sales, I earlier communicated. Growth could be in the range of 15 to 15.5 percent. We feel that this could go up to 23 to 25 percent. Consolidated electro-mineral sales, the consolidated self-mineral sales, a communicative sales decline of 6,500 to 7 percent on account of the closure of Fosca zirconia, which accounted for an up to 135 crores in FI26. However, if we exclude the revenue contribution from FASCA and compare it with what we are planning to do in FI27, the growth would be 8-9%. This could be 9-10%. We retain the same cadence. Consolidated abrasive margin were expected to be around 9.5% to 10% in FI26. The reported margin was 4.3%. However, if you exclude the OCO loss, the comparable margin for FI26 would be 7.9%. So we retained the earlier guidance. Consolidated ceramic margin were expected to be 20.5% to 21%. We maintain our same guidance here. Consolidate electro-mineral margin were expected to be 9 to 9.5 percent. In Fi26, the reported margin was 5.6 percent. However, if we exclude the loss of Oscar zirconia and compare it, the Fi26 margin would be 9.1 percent. We retain the same cadence. We retain our capex cadence of about 400 quarts in Fi27. So, to sum it, I would say that we are doing well in all the four businesses in standalone, and the program related to the closure of the two businesses are well on track, and probably we will update you in next one quarter. All the long-term strategy programs are being pursued in full. In SFRD, CAPEX programs are going ahead as per plan. So that's a broad summary, I would say, and now we will open up for Q&A.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 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. We take the first question from the line of Ravi. From Evendus Park, please proceed.

Hi, sir. Thanks for taking my question. My first question is with respect to the standalone abrasive business. We have seen methane kind of growth. If you could give a flavor of how much would have been the value growth volume? And directionally, from a business perspective, how is the traction going on across each of the major sub-segments which are there? Are we seeing market share gains from Chinese players, given the fact that there were some changes in Chinese incentive numbers which were given from April 1st onwards? So, if you can give a broad flavor on directionally how to do that.

Thank you, Ravi, for asking these questions. As I said, the growth is predominantly volume-driven. We had a very small price growth, and the import competition from China, we just started seeing some easing out, but we need to really wait and see because there's a lot of Moving factors like, you know, our exchange rate also is not helpful. So there are multiple forces playing. So we need to figure out what exactly is the reason for that. Is it withdrawal of the export benefit from China? Being unfavorable, etc., but overall we see that it is a positive trend from our side.

And the second question. Obviously, there are a lot of attributes.

We see the growth optimism in all segments other than the rare segment, which is going to be a normal growth. I mean, it's definitely this quarter we have seen after several quarters the growth in rare ceramics as well. As we rightly said, the metallized cylinders, engineered ceramics, all segments are seeing increased growth momentum, and hence we revised the game.

Okay, and the growth in NetSense Engineering is coming from the domestic market or exports?

It is predominantly export. Our business itself is predominantly export-driven, as you know. But those players who are international players having business in India also will form part of that trend.

God is very hard. Thanks a lot.

Thank you.

Yes, sir. Yes.

Can you please continue?

Yeah, sure. The next participant is from the line of Harshit Patel from Equarius Securities. Please proceed.

Thank you very much for the opportunity. My first question is on ceramics. You have mentioned three key elements for our future ceramics business. The components for semiconductor, wafer fabrication equipment, aerospace and defense applications, and electronic substrates. Could you give some color on how FI27 and FI28 would look like in terms of revenue recognition from this segment? Because I believe major part of qualification as well as trials, I think we have already concluded.

Yeah, so, thank you. Thank you, sir. So, there is a three broad segment, and I think of this metallized substrate business, we are in the process of setting up the facility with one anchor customer with technology tie-up. This program is right now on. So, we should see this coming up in FI. Twenty-seven, completing this whole program, and then the revenues would start coming in from twenty-eight onwards. As far as the semiconductor wafer fab equipment components is concerned, I think we started supplying based on the qualification so far what we have got. This year, it's going to be a very, very small part of the business. FI-27 will be small. FI-28, it will start picking up. I earlier communicated it will peak in FI-2030. This is how we are expecting this. Aerospace and defense also will be slightly better in this year, but again, the whole program will start. Kicking in 28 onwards, because we are going through various sets of our own qualification, as well as working with anchor customers in terms of being part of their own product. So, hence, this whole program will be spanning out like that.

Understood. Sir, is it right to understand that our whole guidance upgrade from 15% to 16% of ceramics revenue growth in FY27 from 23% to 25%? This entire upgrade is coming from the SOFC ceramics? At least the major part of that, would that be the right understanding?

It will be a combination of... Engineering Ceramics, Metallized Cylinder, and as well as this, OFC Ceramics.

Understood. So my second question is on electrominerals. What are our plans for zirconia-based products, the calcium stabilized zirconia and the monoclelic zirconia? Will we make these products in India once we have divested foscore zirconia? Also, if you could share the progress on the divestment of foscore as well.

So, the Fosker, as we discussed in the last call, we found that it is no more viable for us to run the business. So, we wanted to explore options of how do we proceed further. So, we had a long discussion with our partners who are major players in South Africa Fosker. And, based on that, we now have a couple of options that are there in front of us, that we would start exploring and trying to close this by Q2, that is our next one more quarter. That's what is the current state is that I can say. And as far as the programs that you are describing about what we will do, I think... Maybe it will be a comprehensive update that I will provide once we complete this process, so that it will have all elements of what we are planning to do.

Understood. Just a small follow-up on electrominerals. This time, the standalone revenue grew a massive 33% worldwide. Could you provide some broad mix between pricing, mix, and holdings for this particular product?

So, it's again, a big trend is, a big portion of it is volume, because it's, and there's some amount of mix, which is also helping us, because the treated product growth is on the higher side. So, that also will give the margin growth. But it's more driven as a product mix rather than as a price realization. So, I would say some and substance of this is... Volume driven, very, very little or no price increase. Mix is contributing to this.

So sir, if there is not too much of a price increase in the electro-minerals market, then why were our margins so much in pressure for the abrasive segment? I understand that the energy related and other increased costs as well were pretty much up, but did it have a major portion coming out of higher electro-minerals prices for our abrasive segment? That is my last question.

Good. Very good question. And I think of the cost of goods sold, somewhere between 80 to 85 percent will be grains and other related stuff. And that did not grow much, meaning we had a cost grow of, let's call it, 3 to 5 percent, which is predominantly offset by our own normal price increase. But the rest of the stuff, which is all predominantly oil-based one, could be resins and related products. That grew up significantly in the month of May and June, particularly after this, you know, the broker truce fell. And then again heightened conflict started. Really the market went up. And you all will know that the prices of oil went up during that time, you know, particularly in the month of May, it reached $117, and then it slightly came down to $107. So, those periods truly cost. So, a combination of this plus the fuel cost, which is again a significant portion, really contributed to the cost impact and abrasives.

Thank you very much for answering my question and all the very best.

Thank you.

Thank you. We take the next question from the line of Amit Anwani from PL Capital. Please proceed.

Hi, sir. Thank you for taking my question. So, first question on VAW. Now, it's almost one and a half year that the sanction is into effect on VAW. So, I wanted to understand strategically how one should think of VAW in the medium to long term. And second, if you could touch upon the performance of VAW for this quarter. And earlier, I think the sales was mostly localized, so what's the utilization and update on sales? Any changes or any update you would like to give on VAW?

Good. Thank you, Amit, for asking these questions. Thank you. Change in the way the Russian business is happening. It is predominantly, you know, domestic-centric business, and they continue to focus only on that, and so that will change since then. You were asking about what is our view on this business. I think, you know, we have shared this in the earlier calls also when you asked a similar question last time. I think from our point of view, it is too difficult to predict what would happen in this geopolitical conflict. Our aim is to stay put, make sure that we comply with all laws, make sure that we comply with the local rules and regulations and serve the domestic market and stay above the water. And then see what happens to this. Fortunately, you know, these people with even a tough condition, they are trying their best and doing it. So that's what I would say at this point in time. It's tough times, but we need to kind of stay put.

Second question, sir, on solid oxide fuel cells. Last time you updated about the opportunities there. I just wanted to understand, can we expect a very strong growth, if possible, for you to highlight the contribution and growth which can come from SOSC this year in the ceramics business?

Yeah, I think when we earlier shared the guidance, which was for the ceramics business, and now, right now, we said that we will make slightly up. You know, the reason for making it up is a combination of the business growth that we are expecting from solid oxide fuel cells. Ceramics, similarly metallized cylinders, and as well as the engineered ceramics. So that is what it represents, and we are not sharing any individual details of how much of each of these business constitute.

So lastly, on the guidance, comparable guidance of 11 to 12%, just wanted to understand how much volume growth we are affecting here, and would there be, as you highlighted about the cost push, would there be any further scope of price increase? So wanted to understand volume versus price, what you're looking for for the full year in your guidance.

Yeah, so right now I think it is fully, we are looking at a normal price increases and predominantly a volume driven growth. It's going to be tough for us to guess how long this war and what is the kind of impact it does. Every day it changes, you know. When you go to sleep yesterday, it was different. Today morning, it is different, where they are saying that, you know, no more, you know, we are not going to continue. So, it's going to be very tough, and it's going to be tough for us to say that based on which we will start putting up price, etc., is also going to be tough. So, we will take it one quarter at a time, and then we'll have to handle it. So, I'm not sure we will have any better model at this stage to start looking at this beyond at this point in time. So, the sum and substance of the answer is it's predominantly volume-driven growth. Mix could help. Volume is the predominant part. Small price, which normally that's what we would factor in.

Thank you.

Thank you. We take the next question from the line of Varun Jain from Dollar Capital. Please proceed.

Hi, good morning, sir. Most of my questions have been taken up. So, just, if we exclude the 251 million sterling gain, the consolidated abrasive EBIT margin is close to 2.5% versus the guidance of 9-10%. So, any comments on that?

So, my comment was largely based on... The fact that the losses of AUCO is not there, so I still feel the same way, you know, if you exclude that, we are still fine with that, because we still have the losses even in this quarter, and hence you are looking at it that way. But I still hold what I said.

And sir, of the 400 CR capex, any breakdown of how much is going where for 27?

We gave a detailed listing last time in our earnings call, but I'll quickly cover that. It includes expansion in advanced ceramics for power electronics, including substrates, metalized tubes, rings, brazed assemblies, expansion of brown fused alumina, addition Thank you.

My question was, how much will be allocated to the various projects?

So, we wouldn't be able to share project-wise details, Varun. I think this is a broad guideline we can share.

No problem. Sir, and has QME received the SCOMET approval, which is required for ballistic ceramics?

We have set of approvals which are required as per the industry standards. And those industry standards we have got already. And both domestic as well as the international standard. And most of the customers expect us to be having those standards that we should have. So that is what is required and we are going by that. Some of these are all like NIJ 3, 4 levels, you know, similarly in terms of the BIS threat level 4 and 5. These are the basic standards that we meet, that your product should meet, and that's what we have basically tested ourselves in laboratories outside of India.

Got it. Okay, this last one. So, on a console basis, an allocated expenses rose to close to 190 million for the quarter. So, what is the quarterly rendered we should incorporate? And for this quarter, was there some spike due to some one-off or something?

I covered in my... Earlier remark about what is that we are covering in Unallocated. Basically, this quarter, 19 crores is mainly attributable to the foreign exchange laws, whereas it was a gain in the last comparable period. So that is the basic reason for that.

Okay, got it. Thank you and all the best.

Thank you. We take the next question from the line of Sajal Kapoor from Anti-Fragile Thinking. Please proceed.

Yeah, thank you for the opportunity. I am just trying to understand the broad capital allocation mindset of the group. How do you distinguish a temporary setback worth persisting from a signal to change course or even exit? Thank you.

So, good conceptual question. I think the examples of what we took call in terms of AUCO and Fosker is an example where we feel that it is not a temporary setback. We have given enough and more time for it to... And at that point, we took a call saying that, look, you know, it's no more an asset that we should own, and perhaps we should find the right owner for that asset. So that's practically an example that I can share. But temporarily, many businesses go through that, you know, these type of... Cycles within our own business itself. Even though it is called for business, each business has got sub-elements of it, and we continuously monitor and take a call. You know, is it going to come back? We always wait, you know, at least four to eight quarters to see whether these are temporary trends or are they fundamentally things are changing. Then we take a call whether it is. The right one to continue or not.

That's very helpful. Thank you for sharing that. And my second question is, you know, in areas like semiconductors, aerospace, and defense, where Kumi has no material operating history to draw on, how do you make decisions before pattern recognition is available?

Again, a good question. So, we are not getting into semiconductor fab equipment manufacturing. We are going to get into supplying of ceramics used in the semiconductor fab equipments. We have been manufacturing ceramics over 40-50 years. And we have gained many expertise as well as patterns and know-hows in this field. And then we work through anchor customers to prove ourselves. And the product, when they kind of go through a qualification and they feel we have the capability, etc., that is when we start working on an investment. So it is, we are not going kind of... Just without any experience. Both the fields we have a very core experience and based on which we get into the next step out. It's more a adjacency that we get into it.

Understood. Thank you so much for answering both questions. Thank you.

Thank you. Before we proceed, in order to ensure that the management is able to address questions from all the participants, please limit your questions to two per participant. We take the next question from the line of Akshay Dhakul from Helios Capital. Please proceed.

Hello, sir. Thanks for taking my question. Sir, all metallized cylinders, we are the world's second largest producers. How much of the current growth and capex is driven by the global SS regulator phase out, which is pushing the switchgear from gas insulator to vacuum interruptors? So, is that a structural trigger for medium term? And how do you see the demand runway for this?

Yeah, I think the demand trend, what we are seeing, definitely, you know, in terms of generation and distribution, coupled with the technology choices which are changing, is a trend which is going to last for some time. And so, definitely, this is based on that.

Okay, sir. And so my second question is, in terms of tech developments, how do you see the silicon carbide products LLC acquisition helping the overall portfolio? And within these three segments, like ceramics, abrasives, and electrominerals, the application of this, can you quantify the same in which and how is it going to help us?

Yeah, so... As a company, largely for the NBSIC refractories, wherever there is going to be a wear as well as impact-based application is required, definitely this product stands out far better compared to the traditional alumina-based product, and that's where the role of ASVP comes. And they have been doing well, both in terms of helping us, securing certain critical businesses. We also feel that the other objective of them is to see how do we get an anchor into Americas using them as a key business focal point. That is work in progress. We are progressing well towards that direction.

Okay, thank you, sir. One last question on my part, sir. With respect to CRPF composites, we are currently making that products for drones. Do we have the capability or any plans for commercial aerospace applications?

Not yet. That takes time. I think right now we have this capability, and we will look into it based on our opportunity as well as the capital allocation.

Thank you so much. Thanks for answering my questions.

Thank you. We take the next question from the line of Karthik Koholi from Kotak Institutional Equities. Please proceed.

Yeah, this is Aditya from Kotak Institutional Equities. I'll just go ahead with my questions and thanks for the opportunity. The first part of what I wanted to get a sense of is stand-alone EMT and the strong revenue growth that is coming in. Um, if this, uh... Could you give us a sense of how much is exports in this segment? At this time, last year, the salience had gone up. Just trying to get a sense of how much is exports, and should we be looking at this number because the stand-alone says if there's any interplay with intersegmentals and the growth is lower, would be useful to get your comments on both these things.

So, the intersegmentals are always removed, Aditya, so that won't come into play. As far as the export saliency of this business is definitely has gone up. You know, what we used to be roughly in the range of about kind of 20 percent, we moved to last year to kind of... Forty percent, and now we are in that trajectory at this point in time. So last year, 35 percent, and we are getting into 40 percent trajectory.

Okay, just a question over here. As we see through another report, you talk about, or let's say we sense that in Europe, there is a move away from China, and in electro-minerals, there could be benefits that come in your way, as let's say. Entities from outside, including tuning get insights, is this opportunity already starting to pan out and can it add materially to your EMT growth from there on?

I'm sorry, you are not audible, and the question is not clear. Could you be please slow and repeat the question?

Am I audible to you right now?

Right now, better.

Thanks. Thanks for the patience over here. So, what I was asking was a rigid question that in the EMD side and the exports are growing. Is it starting to benefit from, let's say, Europe and the duties being put on Chinese imports, specifically on the alumina side? Can that be a meaningful driver of your export portfolio? And that's the third question.

Yeah, so the export growth of EMD is a consequence of long sustained effort that we have been making and reaching out to all the global players in Europe. And it goes through a qualification process, establishing ourselves, so it takes time. And so that now with the coupled, this opportunity definitely helps us, and we are definitely making use of it. We are also working similar effort in U.S. as well as in Asia.

Thanks. The second question from my side would be on the semiconductor side of things. Now we understand that ceramics for equipment is something that you're already working on. In the annual report, you also talk about two other things. The first one being you having now a path towards fix and purity on the powder side. And then you're working on certain substrates and materials and having tire smarts. And so this will again link to Temicon. Could you give us a sense of how to think through these two different aspects, which are an add-on to your current base ecosystem business?

So, we have been communicating this for quite some time. As we said earlier, we have established a 5N purity level, and we now need to move to the 6N purity level. It is enough to have 5N purity level to get into some of the SIC-based semiconductor products, but it is always good to have the 6N purity, for which we now have kind of worked on certain options, And then we have kind of... Feel that comfortable that we should go ahead with that, and that's what annual report clearly says that. As far as the metalized substrate, that program we have been telling in the last few calls, even in the earlier question that I said, This will be a program where... Technology tie-up is on. Anchor customer is on. We are in the process of setting up the capability at this point in time, and we should start seeing these benefits in FI28 onwards.

Is there a thought for us also doing something inorganic on either of these three ventures? Let's say you start with the powder, go to the vapor stage, and eat the silicon carbide side. Is it something that the company thinks too?

So right now, our focus is that we should be a raw material supplier, and so we stay focused on that. Thank you, and all the very best to do. Thank you, Aditya.

Thank you. We take the next question from the line of Pravesh Kochars from 4Line Capital. Please proceed.

Hi, thank you for taking my question. A quick one on the refractory segment. I think you mentioned there is some volatility in terms of... And at the same time, I think last time we guided, we are expanding capacities over there. So just some color on, you know, longer-term opportunity that you are seeing versus the near-term headwinds in that segment.

Thank you. I think it's... Even in this quarter, we have comfortably grown. There's absolutely no issues. I was just saying, compared to Q4, it's a seasonality. Always Q4 is a higher quarter in the factory business. Whatever we said, they communicated earlier in terms of our capacity expansion programs, very much on, and we don't see any issues in that.

Thank you.

Thank you.

Thank you. We take the next question from the line of Akshay Thakul from Helios Capital. Please limit your questions to one for participants.

Thank you. Thanks for taking my question again, sir. Sir, my question is with respect to the JV we have, Muragappa Morgan Thermal Ceramics Limited, sir. The annual report mentions that we are serving thermal, fire, and EV applications. Can you throw some light on the EV applications part?

So, we saw the... The thermal surge application, and we are covering some of the leading autoplayers at this point in time, and to the products that Morgan has got.

Okay, sir. Any specific product, like the substrates or anything?

No, it's a thermal paper which helps to address the search of...

Thank you. Thank you so much, sir.

Thank you. Ladies and gentlemen, we take that as the last question for the day and would now like to hand the conference over to the management for closing comments. Over to you, sir.

Yeah, so thank you for all of your participation. I just like to... I'll summarize that we had a good growth both in terms of standalone and consolidated. You know, we've grown in all the three segments well. All the programs that we said we will do in terms of our long-term strategy. Thank you very much, everyone, and welcome to the call, and welcome to the call, and welcome to the call, and welcome to the call. At this point in time, I see that we are tracking to our trajectory and we are going well. We have slightly, you know, the growth rate that we have targeted and communicated last quarter, we have slightly going up at this point in time. As we share more and probably in the next quarter, we will have more clarity and we will share a better update at this point in time. So that's a broad summary. I would like to leave it with you. Thank you.

Thank you. On behalf of Dam Capital Advices Limited, that concludes this conference, thank you for joining us and you may now disconnect your lines.