Gujarat Fluorochemicals Limited (FLUOROCHEM) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Gujarat Chlorochemicals Ltd. Q1 FY27 Earnings Conference Call, hosted by 361 Capital Market Private Ltd. As a reminder, all participants' lines will be in listen only more, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal as an operator by pressing star from zero on your touchstone post. Please note that this conference is being recorded. I now hand over the conference to Mr. Rohit Nagraj from 361 Capital, Private Limited. Thank you. And over to you, sir.

Thanks, Pari. We thank Gujarat Fluorochemicals Management for providing us the opportunity to hold their 1QFI27 conference call. We have with us Dr. Deer Kapoor, CEO and Deputy Managing Director, along with the senior members of the management team from Gujarat Chlorochemicals. I would like to hand over the call now to Dr. Deer, sir, for his opening remarks, post which we will have Q&A session. Thanks, and over to you, sir.

Thanks, Rohit. Good afternoon, everyone, and a very warm welcome to all of you for GFL's Quarter 1 FY27 earnings call. For this call, I have with me my colleagues, Mr. Manoj Agrawal, who is CFO of GFR, Mr. Kapil Maghotra, who is business head of fluoropolymers, and Mr. Ajeev Rao, who is the business head of Crabtree Materials. The company announces Quarter 1 FY27 results at the board meeting held today. The results, along with the earning presentations, are already available on the stock exchanges and on our website. I'll briefly take you through the key financial highlights, followed by an update on our business performance, demand environment, and outlook. The global business environment remains challenging, with ongoing supply chain disruptions, commodity price volatility, And an increasingly complex operating landscape. At the same time, the businesses are adapting to these evolving conditions, creating both challenges and opportunities. Despite these specific market-specific challenges, GFL has delivered a strong start to FY27. Healthy demand across key product categories, disciplined execution, and improving operating leverage enabled us to deliver broad-based growth across our core chemical businesses. On a year-on-year basis, revenue from our chemical segments increased 23% to Rs. 1,574 crore, compared to Rs. 1,281 crores in Q1 F526. Chemical segment EBITDA grew 29% to 458 crore from rupees 354 crore. While segment-back increased 33% to 161 crore. This performance was primarily driven by strong growth in fluoropolymers and fluorochemical businesses. At the consolidated level, revenue from operations grew 24% year-on-year to $1,588 crore, EBITDA increased 24% to $428 crore, while consolidated PACT stood at $219 crore, representing 19% growth over the same period last year. Our performance was even stronger on a sequential basis. Within the chemical segment, revenue grew 16% quarter-on-quarter to Rs. 1574 crore, while EBITDA increased 30% to Rs. 458 crores. Habitat margin improved from 26% in Q4 FY26 to 19%. In quarter one FY27, reflecting the benefits of higher volumes and improved product mix and operating leverage. Segment pack increased 56% sequentially to rupees 261 crore, with pack margins expanding from 12% to 17%. At the consolidated level, Thank you. We also continue to make progress on key return and efficiency matrices across the quarter, during the quarter, I'm sorry. ROC improved by 258 basis point to 16.6% in quarter one, FY27, compared to 14% in FY26, while ROE improved by 301 basis point. To 15.18% from 12.17% in FY26. Our focus on working capital efficiency has also yielded strong results, with working capital days reducing by 43 days to 149 days as of quarter 1 FY27, compared to 192 days as of quarter 4 FY26. These improvements reflect not only the segment strength of our operating performance, but also our continued focus on capital efficiency, cash generation, and disciplined execution across the organization. Let me now take you through the performance and outlook of our key businesses. Starting with fluoropolymers, we continue to see encouraging demand trend across the portfolio. The expansion of new-age applications is creating attractive growth opportunities, particularly in areas such as semiconductors, data centers, electronics, automotive, green hydrogen, and advanced industrial applications. We are also seeing a gradual improvement in product mix. Supported by increasing contributions from higher-value grades. Reflecting these trends, fluoropolymer revenue grew 15% year-on-year and 8% sequentially during the quarter. This growth achieved despite a challenging global environment. The business delivered an exceptionally strong quarter. Revenue increased 52% on year-on-year, and 44% quarter-on-quarter, driven primarily by R32 refrigerant sales, along with healthy growth across our refrigerant portfolio. As previously communicated, we are expanding our R32 capacity. This expansion will enhance our ability to participate in growing global R32 market and support future demand growth. In Fassel, we continue to expand our refrigerant portfolio. Our 134A project remains on track and is expected to be commissioned in this financial year. Combined with our integrated manufacturing capabilities, established global marketing network, and long-standing customer relationships, this will further strengthen our ability to serve growing refrigerant demand across both domestic, International Markets. will enable us to leverage A steady performance during the quarter, with revenue increasing 11% year-on-year and 1% sequentially, primarily driven by improved realizations. Moving on to battery materials, we continue to make steady progress in building a differentiated and integrated platform. In LIPS Exalt, We are advancing both capacity expansion and customer commercialization efforts with leading global electrolyte manufacturers. In electrolytes, qualification activities and sample development with Indian cell manufacturers are also progressing well, supported by customer audits and plant visits. LFP cathode active materials and PVDF binders. Our focus remains on product consistency, customer qualification, and commercial scale-up. While these businesses are at different stage of qualification and commercialization, we remain encouraged by the long-term opportunity driven by growing EV adoption, Increasing deployment of battery energy storage system and the ongoing localization of battery supply chain. As we look ahead, FY27 is shaping up to be an important year in GFL's growth journey. Microchemical and fluoropolymer businesses continue to generate healthy growth and strong cash flows, while battery materials provide multiple avenues for the next phase of growth for GFL. Thank you. We are confident in the underlying fundamentals of our business. With a diversified portfolio, integrated manufacturing capabilities, strong customer relationships, and exposure to multiple long-term growth themes, we believe GFL is well-positioned to deliver sustainable growth and create long-term value for all stakeholders. With that, I would like to thank all our stakeholders, customers, employees, and partners for their continued support. We will now open the floor for questions. Thank you.

Thank you. Now, begin with 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. The first question is from the line of Sanjesh from ICSA Security. Please proceed with your question.

Thank you. Good evening, sir. A couple of questions from my side. First, on the fluoropolymer, a 15% growth is good, but I think there was a price increase also in the segment by some of our Chinese peers. Have we seen those price increases being taken by GFR as well? And what would be the blended price increase, if at all we have taken?

Yes, Sanjeej, thank you for your question.

I'm requesting Kapil to answer this question. Kapil, please.

Sanjeej, thanks for your question. See, first of all, we have been also making this commentary from last few quarters that we are trying to move the value added chain into the fluoropolymer products. And hence we do not have much of a competition with Chinese people. And so our moving to the high-valued chain has given us these additional revenues and profits which we are talking about. So Chinese were much, anyway, on a different scale of prices. So that doesn't, we don't We will compete with them in those segments.

But I think the price increase, what has gone into commodity, equivalent doesn't show in specialty because the margins or probably the prices are already better in those segments. That's the way to look at it.

Yeah, Sanjeev, this is going to reflect in the subsequent quarters.

There is, no, no, so I am not getting it. So, is there a price increase or there is no price increase?

Look, there has been a margin price increase to come back with whatever input prices have taken place, but however, whatever price increase is small we have taken, it's going to reflect, and the value added product which we have taken, where we are going for newer applications, that will start reflecting in subsequent quarters also.

Got it, got it. The second on the capacity expansion, which we also spoke in the previous quarter on the fluoropolymer side, Kapil, where are the opportunities we are seeing within the fluoropolymer, and what are the capacities are we looking at, probably product-wise, in this new way of growth in the fluoropolymer side?

So, Sanjesh, coming back to the opportunities, if you recall, we have always been saying that there are emerging opportunities from the sunrise sectors, whether these are batteries or semi-con. So, we'll be adding capacity going forward, mostly in new set of fluoropolymers, which we have categorized it earlier. So, we will continue to add capacity, but specific, which we will focus on, I think I would like to keep that confidential from our standpoint, but there is a tremendous growth opportunity there, Sanjish. Okay. And as I had said it earlier also, that we had put the capacity on new fluoropolymers, which is almost to the point of now getting fully utilized. So, we will be making investments in adding more capacities in these fluoropolymers, which will be catering to these new opportunities. Okay. So, clearly, wherever we will be adding, it will all be at a very high-end product range.

So, earlier we were targeting the 20% kind of growth. So, that's... That's now visible for this year and the year after this?

Absolutely visible. Absolutely.

Got it. Second, on the ref gas side, now when is this R134 expected to get commercialized, and what is the revenue size we are looking at with this expanded base of capacity in the refrigerant gas for us?

Sanjesh, we are expecting to have this capacity by the end of the financial year. In fact, we are targeting earlier than that. We have not yet announced capacities yet, okay, because as you know, we'll have, because we have a represent multiple products. It's a bouquet. And depending upon the product mix, We'll probably be going to the market, but we have not announced the capacity yet, and probably next few quarters we'll share that.

One last on the battery chemical side. Where are we exactly in the cycle of commercial supplies? Because right now what we see is a 20-30 crores of revenue while the capacity what we have put appears to be a much larger capacity. So when are we looking or expecting a step-up jump in the revenue from the battery chemical side and what are the segments which will contribute to this growth?

So, let me take step by step. What we have always stated is that initially we build certain capacities for qualifications, and then subsequently capacity addition is done to grow. And if we talk about the significant growth, we probably will be seeing toward the end of this financial year and FY28. Okay, we'll see a significant fraction. Because the capacity that we have added, if you look at our glass block, which has been capitalized, is still not that very large. Okay, while we are making investment in terms of building capacity, but the capacity which has come on ground and which are actually being commercialized is still, because there's a long gestation period in building and setting up capacities. So, to answer your question, we will see a ramp up. In fact, unfortunately, the numbers this quarter also we had dispatches, but because some of them are not reflecting in our revenue numbers, because those are all CIF terms, so they will probably reflect in the next quarter. And so the journey will continue. You will see significant growth quarter by quarter. In the revenue as we go along, clearly the first and the foremost in this is growth in LIPS 6, which we started very early, if you recall, and that's now has almost finished qualification. It's going through its growth phase. The second one is LFP and PVDF. PVDF is very close to getting finalized its qualification. We'll see a revenue coming from it. And, finally, the cathode-active material, I think that we'll probably see maybe towards the end of this financial year. But the full potential, if you're talking about the investment that we are making, it will start reflecting from FY28 onwards. Because there is almost one and a half year, I can say, in stabilization and getting the qualification done. This is the nature of this industry.

And will that same apply for the incremental 2300 rows of K-Tex, or that ramp-up will be faster because the qualification round is over?

That is expected to be faster, Sanjish, because once we have qualified, so the initial plan is for qualification, stabilization, establishing our, you know, supply chain and credibility with the customer, and then the next phase is… Because the batteries... You know, market itself has a strong growth potential. Okay. And initially we were talking globally and, you know, we are talking about reaching almost 1,800 gigawatt hour by 2030. But now when we look at our domestic market itself, domestic market also we are, because of the, driven by, primarily by this, is almost looking at So, we are seeing a huge market potential, which I think we will capture as we go along, primarily in 28-29. And, of course, that will be much faster than the rate that we have seen now so far.

Got it. Clear, sir. Thanks. Thanks for answering all those questions, and best of luck for the coming quarters.

Thanks, Sanjeev. Thank you.

Thank you, sir.

Thank you. Ladies and gentlemen, in order to ensure that management is able to address questions from the participant in this conference, please restrict your question to two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. The next question is from the line of Arun from Evendus Park. Please proceed with your question.

Thank you for the opportunity. Good evening to everyone.

Certainly, first question is on the 134A plant announcement. Earlier in the call, you said that capacity has not been announced, but in our late June filing, we have indicated we are going to add on 134A capacity. Can you just clarify this point, please?

Arun, capacity we have not announced yet, but we will have, whatever our plans are, we will have this capacity by this financial year. That's what we have stated. And that's what I think we said in our, you know, the release also, the press release, what we communicated earlier. So 134A, we are setting up the capacity. And just to, I think we have said this last time also, that with these we will probably be utilizing our entire entitlement quota. R32, R34A, R32, R125. So we have a very large bouquet of products that we'll have by the end of this financial year to offer to our customers.

What is the reason for entering R34A so late in our journey into the UHSS?

No, the decision is the strong market opportunity that it pays. And I think as you know, refrigerants, towards the end of their cycle, it becomes a valuable So we see an opportunity in getting into 134A for multiple reasons, and of course these are some of them are strategic reasons which I cannot share, but we think it's a wonderful opportunity to be there. It's a space where the supply in the future would be restricted. We do not see several other supplies coming in, and demand will continue to be there. It's a robust demand, and the alternate to 134A are HFOs, which are a very high price point. So we see a strong market potential and opportunity for us to be there.

So, thank you all.

We lost around 10 seconds. Could you repeat your question, please?

Right, sir. I was talking about the fluoropolymer business. Now that we are very close to our utilization levels, and so until we get our new capacities in place, probably in a year or so, our growth in this segment will be largely dependent only on the pricing-related actions that we will be taking. So we should not expect any volume growth or any mixed change-led growth.

I'll request Kapil to take this, Arun.

Please, Kapil.

See, Arun, it's a combination of both, the price realizations as well as, you know, some of the deep water lagging

which we keep on doing to, you know, enhance our capacities to match the market requirements.

So that keeps on happening in these products, which is happening now also. Any timeline for capacity deep water lagging? It keeps on happening, you know, every second quarter we keep on de-bottling-legging. Whenever we see that we are reaching our capacity utilization, then we balance our capacities accordingly to the market economy. It's a continuous process.

One bookkeeping question to Manoj, we are seeing the difference between style and style is increasing on a sequential basis. It's not a given segment of the growth.

Arun, could you, again, your voice is breaking. Could you come up again? Manoj is here. Other questions for Manoj, please.

Yeah, the difference between the standalone and console is increasing much higher than the EV segment top-line growth. Is there anything else that is contributing to this increase?

No, see, standalone and console also reflects our GFL EV, GFL USA, LLC, and GFL GmbH, where we do all our polymer business that are routed through Germany subsidiary and the US subsidiary. So that business doesn't reflect in the standalone, whereas in the console business it comes. That is also the reason, not only the EV.

Okay, but why in the last two quarters there is increasing, Azhar, especially if it is coming from only fluoropolymer business?

Last quarter, this quarter, some of the CIF consignments were there, and GIT earlier, which were booked in Germany and LLC, instead of that, we have booked in standalone itself, reversed in the standalone itself. So the gap between standalone and console is higher on account of that. Thank you very much. Thank you.

Thank you. Thank you. The next question is from the line of 3JL from MusicShare. Please proceed with your question.

Hello.

Hello. Hello. Am I audible?

Yes, please continue. Yes, sir. You are audible.

Congratulations, sir. Audible, please. So, basically, sir, I wanted to know on your R32 side expansion, so, are you planning for any additional HF expansion on your side or HF expansion on your side or because R32 has immense demand and your competitors are also increasing the capacity for R32. So, are you planning for any additional R32 or additional backward integration HF plant?

Yeah, I think we mentioned that last time as well, that we will be adding AHF capacities, because as we are adding capacities in R32 as well as 134A, it will require significant AHF for these refrigerants, and AHF is also required for our other products as well. So, we will be adding capacity, and we have already announced that, I think, that capacity that we will be adding.

By what time that will be live?

It will be in different phases. The first set of capacities will be there probably by the end of this year, the third quarter, and then subsequently, every quarter, there will be some capacity will be added, because it will be matched with our refrigerant capacity being added.

And you will not sell HF or AHF outside, you will only use for internal purpose only.

Right now, our aim is to look at the captive, okay, because that's our purpose at the moment.

Okay, and one more question on the quota side. So, the base players which are there will definitely get quota, but will the new players get quota or will we only gain quota? Can you give some clarity on that side? So, the existing players which have produced R22 will get quota, or will new players also be able to get quota from us, or they will also be able to participate. As R32 has massive demand and supply is currently limited if new players are not given quota, because any new capacity is not coming.

So, of course, I cannot comment on who will get quota or not, because that's a decision which is not resting with us. But all we can say that, you know, the past precedents indicate that this is given based on the baseline. There is a formula which is there. So, from our side, we know what is our entitlement and our expansion plan. It is based on that we will be utilizing at least whatever our entitlement is based on the GWP number that we have. And the formula you are already aware of. Yes, yes. Correct. There were two components to it. So I cannot really comment on who in the nuclear will get quota or not because that's a decision which is resting with somewhere else. However, from our side, we are... Already adding capacities based on what we think is our entitlement, based on the past Okay.

Thank you.

Thank you for answering my questions.

Thank you. The next question is from the line of Obgar from Odilalus for Financial Services Ltd. Please proceed with your question.

Yeah. Hi, sir. I had a question on CapEx.

So, out of the CVP of 1900 Crone,

how much is expected to get capitalized in FY27?

I think we'll probably, we expect, right now our work block is around 836, and because the capitalization happens, there are two triggers to it, okay, the first trigger, of course, is when we start the plant, and second is when the plant is giving its product based on what the intent is for it to produce, which means it gets the right quality or so, okay. So, while mechanical completion of the plant is in our hand, the quality sterilization often varies from plant to plant, but we expect by the end of this year, these numbers to be around 1,200 crores.

So, this will be a secret among what you are talking about.

Which amount, I'm sorry?

A capital working progress, 200 crores.

Right, right, right.

So this will be inclusive of this 3,000 crores of capex also, right? Which will be incurred in effort to this amount.

That will be added further, Oankar. Because, see, we have a plan of adding total, what we have announced is 6,000 crores. So today, there are certain CapEx, which we have already capitalized, which is reflecting in our gross block. Then we have CWIP, and then we have a plan to add more CapExes, as I had announced, you know, in the last quarter call, in the next two years. So this year, our CapEx spending plan in EV is 2,300 crores. And in our chemical business, it's approximately 800 crores. That's what we had said earlier. And we are holding on to that CapEx plan as of now.

And what will be capitalization for these two CapEx?

Capitalization for these two will come later on because we also have CWIP from at this point in the earlier years, which will get capitalized going forward in this year. Because the capex spending and capitalization, there is a lag, as I indicated earlier. Okay.

Okay. Thank you.

Thank you.

The next question is from the line of Tejus from NSEC Human Resources Service Limited. Please proceed with your question.

Good evening. Thank you for the opportunity. Firstly, we had indicated about an apex of close to 216 million in Oman for setting up a battery materials project. So just wanted to understand what is the status of this project.

Yeah, the Oman project right now, we have put on hold. Okay, and we are, in fact, what we are doing is that those capexes now, we are bringing it to India and planning to add those capacities in India. And there are multiple reasons for it. There have been certain, of course, geopolitical reasons. Which was causing certain delays in our project, and in view of that, we decided to move those capacities to India so that we can move faster and meet the customer commitment that we have given. So, Oman, I think, project, of course, will come back to it, but as of now, we have put that on hold.

Got it. But related to the command project, there was a funding of close to 1200 crores, which was also expected to come from OIA. So with now the project shifting to India, does this funding round also get sort of cancelled?

Yes, at least the funding that was from a sovereign fund that we had said earlier, specific to the Oman project, that was approved for that particular project. So when we bring it to India, we will have to look at the separate funding, and we have those things in place. So I think we will, but those funding will not be taken for the Oman project. Those are again also on hold. Those are already approved, and we have it, but since we have relocated the project as of now to India, those, at least the funding that was approved for the Oman project would not be available for the India project. Got it.

So, does it, shifting of your Oman Capex to India, does it also is on account of the battery components, PLI, which is expected to sort of come through for these battery chemicals?

Yeah, multiple reasons. Of course, there is a, the overall environment in India for the battery industry is looking much better now than what it was last year or a year before. Part of the reason is driven by the domestic, as I said earlier, is the projection for the domestic market, which is driven by the best. And there are other push, which is coming from the policy side, is also making this market opportunity very attractive for us to be in.

Understood. One last question on the U.S. fluoropolymer side. Last quote, as we had indicated, a case of close to 250 per hour for, you know, these de-bottlinging activities. So within the U.S. fluoropolymer space, could you just highlight which products are we seeing, you know, higher traction and where we are planning to expand capacities on?

Yes, I think I'll request a couple for the fluoropolymer capacity. I think you want to add one? So, in fluoropolymers, obviously, our growth opportunity was primarily in the new fluoropolymers, which I think I said earlier also. So, we'll continue to focus on these opportunities. When we say debottlenecking, those are related to some very specific grades and products. Where we see certain more growth opportunity. But the focus going forward continues to be the new fluoropolymers.

Understood. Now, I just wanted to know, within the newest chloropolymers, which all products, PVDF, FKM, PFA, amongst these products which we have under newest chloropolymers, where are we seeing the highest factor and where are we expanding on the capacity side? I just wanted on the product-specific side.

You know, obviously, PVDF is driven by the battery requirements. You know, PFA, FKM, they're all driven by... The requirement that we are seeing from the semi-consector.

So, as we have mentioned that some of the new sunrise sectors, we are talking about some expansions are coming up in semiconductors in India and also in part of the world. We are also seeing green hydrogen also coming up pretty nicely now. The pilot projects have started coming up with commercial projects to follow. And then also in the data centers also, we have seen some of our fluoropolymers getting approved and some commercial business coming now with us. Future business is also going to come as the project get approved. So we are focusing on those products which are going to get aligned with these sunrise sectors, as Dr. Kapoor is mentioning. So our products will keep on getting added as and when we keep on getting the traction from these sectors. And based on that, we will do our capexes and the bottlenecking.

Understood. That's all from my side. Thank you, sir.

Thank you.

Thank you.

Thank you. The next question is from the line of Narsha Chaudhary from Aditya Bhiria MS. Please proceed with your question.

Yeah, hi. Thank you for the opportunity and congrats to the team for decent set of numbers. Follow-up on the Oman, this funding as we have now shifted the plan from Oman to India. And that fund would not come. So, would it trigger fundraising or internally we can manage this investment?

Thanks, Nasha. We are already, you know, our fundraise process is on, and we are raising as we are going along in terms of our fund requirement. Clearly, the fund in Oman was raised with a very specific to Oman project. Now, coming back to India, we will, I think, continue to raise funding for these projects, but as of now, we do not see that as any constraint to put up the project or add capacity.

Okay, and for additional deployment of roughly 4,000 crore rupees in the battery chemical, how much land would require, and how much do we have, and how much we need to buy more?

So, while moving Oman project, the first phase of the project, we have land available in our existing... The HB plant, which we call Jolva plant. So we have all the, you know, elements are in place. We have the required approvals and clearances to execute these projects, availability of the land infrastructure and the site infrastructure support to execute it. We are also adding one more site, again in the HB area. Which will probably be utilized. So land, we do not see as a constraint going forward, because our immediate expansions will be done in the Hedge B site, and subsequently, we'll be adding more sites, one more site in the Hedge area to take care of our expansion, which will be in FY27 toward the end and 28.

And last, on the anode-active material we announced last quarter, I wanted to understand what would be the size of capex for this particular product, and what is the synergy we have on this versus our base business?

I think, Rasha, we have not given any capex which is product-specific for the right reasons. So, for ANOD, we have not announced a CAPEX or specific CAPEX that we talk about because it's something which is, I believe, it's confidential in a way because it's something which is confidential information for us.

All right. Thank you so much. All the best to the people.

Thank you. The next question is from the line of Siddharth from Comic Mall. Please proceed with your question.

Next question is from the line of Arun Prasad from Avendos Park.

Please proceed with your question.

Thank you for the follow-up question. So, my question. We have planned. So, now that we have planned, are we selling it primarily in the domestic markets or export markets? And going forward also, what will be the combination of spot and contracts? Any clue on this?

Arun, could you come again, please, because again we lost in between your question. So your question is specific to refrigerant or battery materials?

Sorry, I'll just repeat. For some reason, the connectivity is not so good today. The primary question was on the R32. Now that we have started the plant, are we selling it primarily in the domestic market or are we exporting also? Second, what is the nature of the sale with the spot or contract and how you think this will shape up when the new plant also comes up?

So, again, this R32 is for the global market, because, you know, we have a long legacy and experience in marketing these refrigerant products across the globe. So, when we are looking at R32 as a product, we are looking not only at domestic market, but international market as well. Now, coming back to what kind of, you know, whether it's a long-term contract. So it's a combination of both, and it would be difficult for me to give the percentage, but ask me to probably, I can say, probably 40-50% could be a long-term contract, and then the remaining one would be on spot.

Since it is largely for our global markets and the sales in Domestia will be limited, does it also mean we will not be gaining any consumption quota in whatever we are selling in 2026?

I think the quota is based on the production capacities, which we already discussed earlier. It has two components. One is based on the baseline, and then the actual production between 24, 25, 26, these three years. So I do not understand your question regarding the consumption quota. It's all of the production. And that quota applies to us, whether we are selling in the domestic market or exporting it.

My understanding is that producers are entitled for production quota, and whatever you sell in the domestic market that gives you consumption quota, is it any different?

Yeah, I think I'm not really clear about it, Arun. Let me check and come back to you on this. You can connect with Pallavi on this. We'll clarify. I'm a little bit confused about the consumption quota right now, because my understanding is for the manufacturing and the production quota. And that's what we always talk about, which is based on certain formula and the GWP basis.

So, we'll connect later. Thank you very much. All the best. Thanks. Thanks, Sarvan.

Thank you. The next question is from the line of Dhruv from HDFC-ANC. Please proceed with your question.

Yes, sir. Thank you so much. Can you say, what was your R32 utilization this quarter?

It's almost fully utilized with the capacity that we have, Dhruv.

So, 10,000 tons almost fully utilized for the quarter.

I think because, you know, as we are adding capacities, so, but whatever capacity we have currently is fully utilized there.

Given that you are exporting timely, will there be a lot of difference, because now we don't get the data, is there a lot of difference between the domestic pricing and the export pricing? I'm just trying to understand how should I think of the numbers.

Normally, we don't comment on the pricing, but in this particular case, I can say they're very close. Okay.

And, sir, last question. Your polymer business has grown by about 15%, so there was a question earlier, but is it possible to split it between volume, pricing, and mix?

It's difficult to give, Dhruv, but I think it's... I don't think we can share. We have never shared the very specific like that, but primarily this is driven by, as I said, two things, higher grades, which is new fluoropolymer volumes, and in some cases, within the existing products that we have. Some of them we are going for the higher and higher rate to get a better value. So I would not call it a price. I would call it the value. So where we go up the value chain in terms of the product mix.

So more of mix and some of volume. Thank you, sir. Thank you so much. Thank you.

Thank you. The next question is from the line of Meek from JM Financial. Please proceed with your question.

Hi, sir. Thanks for the opportunity. First question was on R-130 for today. So are we putting up this plant as a greenfield or a brownfield expansion? And also, how are you planning to source a trichloro-euclein? Because I believe it is a fairly restricted product globally. So, are we planning to backward integrate into that as well?

So, it's a brownfield expansion, 134A. It's in one of our existing sites, which is producing refrigerants. As far as the TCE is concerned, we are not planning to go backward integration right now. And we'll be importing it from outside India. And we have identified suppliers, and we do not see that as a constraint going forward.

Okay, so TC import from China is at this point of time being freely done into India?

Yes, it will be imported from outside India.

Sure, sir. And, sir, second question, sir, just wanted to understand how do we structure our fluoropolymer contracts? Because in 1Q, despite surfer prices going up by around 3-4 times and floor spa prices also going up, we have not taken any price hikes in our core fluoropolymers portfolio. So does that mean that margins in 1Q in fluoropolymers would be lower than what we have seen previously? And because of mix only, we have seen this improvement.

Neet, whenever we have some formula-based understanding with our customers, prime customers, so whenever such things happen, we always have those formulas which are there to protect us. So that is why you must have seen the results also of the last quarter, that we have been able to protect our margins.

Okay, so we would have taken formula-based price hikes as far as the raw material price increase is concerned.

Yeah, so we have been able to manage the price, whatever cost increases were there, through other formula-based pricing or with an understanding with our customers to mitigate our risks accordingly.

Okay. Understood. Sure. Thanks. Okay. Thank you.

Thank you. The next question is from the line of Ankur Perival from Actos Capital. Please proceed from your question.

Yeah, hi, sir. Thanks for the opportunity. Sorry, I joined the call a bit late, so pardon if there is a repetition. First, on the fluoropolymers growth, you know, there is, were there any price hike that we took? I'm not asking about magnitude, but have we taken a price hike, or let's say probably it's more Q2 onwards that there will be a price hike, you know, impact coming in?

The thing is that... Whomever thought it was? Typically, what we do is, you know, when there is a volatility in certain prices, as Kapil was explaining, we typically tend to pass on that price increase to our customer. Okay. These are essentially to address some of the input costs. Okay. Whether, for example, when the... When the oil prices went up and, you know, there are certain raw materials that we have, for example, like methanol and sulfur, which went up. So, those price corrections normally we take. Those are small corrections, and that's a common practice we continue to do. And there were volatility, as you know, in March 26 onwards. So, those corrections that we have taken. However... I would like to emphasize here that those are the corrections typically done to ensure our margins and maintain our target margin that we have. Now, a lot of the growth that we are seeing right now on fluoropolymers that we have indicated, you know, 15 to 20 percent annually, is driven by two things. Okay, let's understand. One, if the product makes. That we change, go for the higher and higher grade product. And second is adding volume from our existing new fluoropolymers, which we expect to get fully utilized very soon. However, a lot of it is coming because there is a regular growth. Because when we make a particular grade, it gets qualified and then slowly the volume ramps up. So what you see today... It's a combination of the two. Price height, when we talk about, because of the inputs, is marginal, okay, because that's just to cover what the input costs are, okay, and the value that, and the product that we make are all high-end materials, okay, where the input costs are there, but there is a lot

And also one thing, as we have been mentioning, that these high-end grades and high-end products Obviously, the approval process is slightly longer from the niche applications, and now we are in a cycle where we are constantly having these approvals from our customers globally. So, every quarter we keep on adding those approvals, and every quarter we keep on adding those commercial volumes also, as and when we keep on getting the approvals. And that's how we balance our capacities, and that is how we balance our margins also in the growth.

Sure, sir. That's very clear. And just from an approval perspective, as you said, large part of all these approvals should be in place within this financial year so that when the new capacity comes in, there could be a quicker ramp up there. Will that be a right understanding?

Yes, you are absolutely on the dot. We are in the midst of getting approvals, and yes, by the end of this financial year, most of the approval will be in place, and commercially also we will be taking the volumes further up in the second half of this financial year.

Sure, because there is no follow-up approval because it's a newer site or, you know, new production, so you don't need a follow-up approval for these people up there. Just terrifying that.

No, it's just a follow-up of whatever approvals we have got, and then the capacity additions to just take the volume further up as the demand keeps on ramping up.

Great. And the second bit on R32, I know you answered that question partially. A combination of long-term and spot sales is what we are doing right now, probably more on the export side. For the incremental additional capacity that will be coming in, will that be also similarly largely contractual, or how are you looking at it? And amongst the global markets, which geographies are we focusing on, if you can help on that? Thanks.

So it's a combination of the both, because as we get more and more materials, we are looking at marketing it across the globe. So I think it goes into different geographies. We are not particularly focusing R32 for any specific geography. But all I would like to add is that R32 from our perspective... Also goes in combination to 410, because we are one of the few players who has 125 and R32 both available. So we are in a very unique position, Ankur, to not only sell R32 as it is, but also as 410 blend. So it's a combination of the two. Sure, sir.

That's it from my side. Thank you. Thank you.

Thank you. The next question is from the line of Rohit Nagraj from 361 Capital. Please proceed with your question, sir.

Thanks for the opportunity and congrats on good set of numbers. So, first question on the battery chemicals, given the scale-up that we are expecting, are we on track in terms of getting that three-digit revenue number by Q4 and significant scale-up in FY28? Thank you.

Yes, Rohit, we are on track and meeting our targets, what you said. Three digits in quarter four. And significant ramp-up in the following financial year. Thanks, Rohit. Yes.

Sure. Second on R32, once the additional capacity is commissioned, again, based on our contracts in terms of domestic as well as exports, do we expect full utilization during calendar year 27 for the incremental 20, I mean, total 20,000 tons of R32 capacity? Thanks.

Yeah, we expect full utilization. Based on our understanding of the market, as and when we have the capacities, we are looking at able to market it. Right.

And one last question on fluoropolymers. Given that 3M had exited last year and AGC has also indicated that they want to shut down the UK facility, are we experiencing the impact of 3M now? And if the AGC facility goes off stream, will we see additional, you know, demand for our products given that the void created by them should be taken by the incumbents? Thank you.

Yes, Kappal, please. Yeah, Roy, so 3M is now an event of the past now. So in the last two years, we have more or less taken the full impact of whatever 3M exit happened. And so whatever growth we are seeing in the higher-valuated chain, a couple of reasons are because of that also. So, because they vacated the high-end market, so we are entering into that high-end market because they vacated that space. Now, coming to AGC, that announcement has just come yet. So, we are, we have started getting some... Queries and inquiries from the customers who are using their material. And again, the good part is that more or less whatever they were making, we have the grades available with us. So our qualification process also started with the customers who were their customers. So that also traction we will see, not immediately, but probably quarter or two down the line.

Perfect, sir. Thanks a lot and all the best.

Thank you.

Thank you. Ladies and gentlemen, that was the last question from the participants. I now hand over the conference to management for your closing comments. Over to you, sir. Thank you.

Thank you very much. I would like to thank you all for your continued patronage. And as we have been guiding in the past, the capex we have incurred over the past couple of years have now started to contribute to our financials meaningfully. And we expect to grow further from here on. Fluoropolymers have done well and expected to grow, as we had said earlier, you know, 17 to 20 percents annually going forward as well. Again, primarily on volume as well as the high-value products. Fluorochemical segment has emerged as a very strong contributor to our financial and is expected to contribute meaningfully to our Profitability going forward. Advanced battery material segment, after a very rigorous qualification and approval process, will now start to contribute to our financials and growth. This segment will see sticky growth over the next few years, driven by demand explosion and our global positioning in this segment. I can say with confidence, We are very well placed to witness strong growth going forward, and with this, I would like to thank you all for your interest in GFL. Thank you.

Thank you. On behalf of 361 Capital Market Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.