Gravita India Limited (GRAVITA) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Gravita India Ltd. Q2-FI27 Earnings Conference Call, hosted by Antique Stop Broking Ltd. As a reminder, all participants' line will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahavar from Antique Stock Broking Limited. Thank you and over to you, sir.

Thanks, moderator. Warm welcome to all the participants on the 2QFI27 Earnings Call of Gravita India. We are with us, leadership team, represented by Mr. Yogesh Marotha, whole-time director and CEO, Mr. Sunil Kansal, whole-time director and CFO, Mr. Naveen Sharma, We are

pleased to share that Gravita has delivered resilient performance in Q2 and H1FY27, navigating and evolving global environment and supply chain challenges, while continuing to execute its long-term growth strategy. H1FY27, our revenue, EBITDA, and PAT grew by 40%, 29%, and 10% respectively, supported by an improved product mix, operational efficiencies, and contribution from our diversified recycling businesses. While geopolitical developments and logistic disruptions have impacted the availability and movement of recyclable materials, we have been actively working to diversify our sourcing geographies and strengthen our procurement network, alongside sourcing from India and other international markets. We are expanding our presence in developed economies by establishing additional scrap procurement yards. These initiatives are aimed at improving sourcing resilience, reducing dependence on individual geographies, and supporting better utilization of our expanded manufacturing capacities over the longer term. Our performance reflects the strength of our diversified recycling platform and our ability to adapt to challenging market conditions while remaining focused on profitability, operational excellence, and disciplined capital allocation. Going forward, we will continue to strengthen our core businesses, expand our presence across products and geographies, and increase the contribution of value-erated products as we progress towards Vision 2030. Before discussing our financial performance in detail, let me first walk you through the key strategic developments during the quarter that continue to strengthen our growth trajectory. Our strategic expansion in copper recycling continues to progress well, The initiatives across Mundra and Mandvi designed to strengthen integration across the copper value chain. At Mundra, we have announced plans to add 59,200 metric tons per annum of copper recycling capacity with an estimated investment of approximately Rs. 64 crores to be funded through internal accruals. The capacity is expected to be commissioned in phases by March 2029. This expansion will support raw material sourcing for our proposed Mandvi plant and further strengthen integration across our copper recycling operations, enabling us to cater to growing demand in domestic and international markets. At Mandvi, Gujarat, work is progressing on our 29,400 metric ton per annum copper recycling facility with an estimated investment of approximately Rs. 160 crores. The project remains on track for commissioning within the next 12 months, as previously guided. Funded through internal accruals, the facility will strengthen backward integration, expand our value-added product portfolio, and support long-term profitable growth. We have approved an additional investment of approximately 94.42 crores to subscribe to the rights issue of Rashtri Metal Industries Ltd. against a total rights issue of approximately 94.81 crores. The proceeds will support RMIL's strategic initiatives and general corporate purposes, further strengthening our presence in the copper and copper alloy segment. We remain very optimistic on lithium-ion battery recycling space, a segment poised to grow alongside the rapid rise in electric vehicles. As battery feedstock availability increases, we will scale toward higher value recovery and processing, positioning this business as a key contributor to Gavita's future growth. Expansion strategy, we have embarked total capital expenditure of Rs. 1680 crores through F529. Of this, Rs. 815 crores will be allocated towards strengthening and expanding our existing businesses with the balance directly towards entering new recycling verticals including lithium-ion battery and copper. The 57th GST Council has recommended bringing electrical and electronic waste scrap under the reverse-charge mechanism for procurement from unregistered suppliers. This will exponentially enhance our domestic procurements and fast-track the shift from formal to informal. We are also strengthening our international sourcing capabilities. The board has approved the incorporation of a wholly owned subsidiary in the United States, proposed to be named Gravita Recyclers USA Inc. With an initial capital of U.S. dollar 50,000, the proposed entity will focus on setting up scrap procurement network in the U.S. and other neighboring countries. It is expected to support our international procurement network, broaden sourcing options, and improve supply chain across our recycling businesses. Reinforcing financial stability, RML has received an ICRA stable AA rating for its long-term facilities and an ICRA A1 plus rating for its short-term facilities, underscoring its strong credit profile. Operational performance during Q2 and H1 F527 reflected the contribution of our expanded manufacturing base, improved operating efficiencies, and continued focus on product mix. Total volumes increased by 3% year-on-year to 52,199 metric ton per annum in Q2 F527. While the availability and movement of scrap continued to influence operating levels in certain businesses, we remain focused on optimizing production, maintaining profitability, and improving the utilization of our manufacturing facilities. And sales also recorded sequential growth during Q2 FY27. Value-added products contributed 64% of total sales in H1 FY27, reflecting continued progress in improving the product mix. The plastic segment continued its strong growth momentum in Q2-F527 driven by sustained demand and improved operational performance. The copper segment operated at 50% capacity utilization during H1-F527, increasing by 12% following our strategic entry into copper through RMIA. We are focused on improving operational integration, leveraging procurement and manufacturing synergies, and progressively scaling the business. As capacity utilization improves and our planned recycling infrastructure comes on steam, we expect copper to become an increasingly important contributor to our consolidated performance. In terms of profitability, EBITDA per tonne for the lead, aluminium, plastic, and copper segments stood at Rs. 22,620, Rs. 22,664, Rs. 10,334, and Rs. 84,671 respectively during Q2 FY27. Moving to the consolidated financial performance for Q2F527, the revenue grew by 38% year-on-year to Rs. 1427 crores, supported by the contribution from our diversified businesses, higher capacity utilization across key segments and continued operational efficiencies. Value-added products contributed 64% of consolidated revenue during the period, marking further progress towards our Vision 2030 target, and deriving approximately 60% plus of revenue from value-added offerings. RML contributed Rs. 420 crores to consolidated revenue during Q2 FY27, with an EBITDA margin of 8.5%. Its contribution strengthens our presence in the copper and copper alloy segment and further diversifies our revenue base beyond our traditional recycling businesses. Adjusted EBITDA increased 28% year-on-year to Rs. 143.37 crores, with EBITDA margin remaining healthy at over 10%, consolidated PAT grew 6% year-on-year to Rs. 102 crores, While Pat, margin remained over 7%. We are confident in our ability to deliver on Vision 2030 and sustain our long-term growth trajectory. Our priorities remain clear, strengthening our leadership in core recycling businesses, expanding into high-growth verticals, increasing the contribution of value-added products, and building a more resilient international sourcing network. With a strong pipeline of capacity additions, deeper integration across the corporate value chain, the development of lithium-ion battery recycling capabilities, and continued emphasis on operational excellence and capital discipline, we believe Gravita is well positioned to capitalize on the growing global circular economy opportunity and create sustainable long-term value for our stakeholders. That's all from my end, and I would now request the moderator to open the floor for questions and answers. Thank you and over to you, Mr. Moderator.

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 the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use answers 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 Amit Dikshit from GS. Please go ahead.

Yeah, hi. Good afternoon, everyone, and thanks for the opportunity. First of all, congratulations for a good set of numbers in a very testing, operating environment. Two questions from my side. The first one is on the West Asia crisis and the impact that we have on, you know, sourcing of scrap or maybe the exports. So, what kind of impact do you see? Has it reduced compared to the last quarter, since we might have taken some steps to navigate that? And how we are, you know, thinking of navigating it or mitigating some of that impact?

Thank you. We have expanded our procurement network not earlier. We will start coming in Q3, but there may be some delay in those materials reaching to us in our factory, but the bookings have started in last quarter itself. That even in the domestic market, if you see, the reverse charge mechanism has, although it's not been notified, but it has come through for a battery. We have seen a good reaction to that in the domestic market, and we hope that in Q3, Q4, and domestic market also, because now the disparity between the unorganized sector and the organized sector is not there. So we are very confident that we'll turn around this issue in the next, there will be some...

So, the second question is essentially on lead volumes. So, if I look at lead volumes, I mean, for Q2, it is lowest since last several quarters, 11% down YOY, QOQ. So, just wanted to understand if this is a one-time blip that we are seeing or there is some, you know, in short term, we might see lead volumes at these low levels.

No, so, as I mentioned that these, even when you...

So much and all the best.

Thank you. The next question is from the line of Shreya Masalia from Aashika. Please go ahead. Yes, Ms. Shreya. Hello.

Yes, please go ahead. Yeah, yeah. Thanks for letting me ask the question. So, my first question has already been answered like on the graph. My second question was on the vista pattern. So, you know, this quarter, the EBITDA per term of quarter for the copper has gone substantially high, like around 80,000 above. So, just wanted to ask, like, what is the sustainable amount of EBITDA per term on copper terms?

Well, yeah, definitely the copper EBITDA has gone up, partially because of, we have, you know, changed the raw material mix, changed the sales mix also, And to some extent, the economies of scale have also helped us because the capacity utilization have improved in copper. So, it has partially come from that. And also, we got some order of high-value products in this quarter. So, that also contributed to some extent to the higher EBITDA. In copper, we expect that for the next few quarters, you will have a sustainable Okay.

So, I saw that your candle and profit has fallen sharply, like around 60%. But at the same time, the console has gone up by 6%. So, like, from where is the usually the revenue coming in?

So, it's partially from RMI, the copper business, and also from our overseas subsidiaries.

Okay. I understand. You got it. Thank you.

Thank you. The next question is from the liner Vikas Singh from ICICI Securities. Please go ahead.

Good afternoon, sir, and thank you for the opportunity. Sir, just wanted to understand, while FY27 seems to be a little bit low on the volume due to geopolitical issues, How should we, but our capital has been intact, so how should we look at the volume growth going forward? And also, U.S. subsidiary which we have created, basically, for I believe it was scrap sourcing. If you could give us some more highlight that whether we would be a kind of act as an accumulator there, or we would buy some dump yards, basically, to become the source material for ourselves. What are our thought processes on those?

So definitely whatever we are going to source in the US is going to be raw material for us. The generation of copper scrap happens mostly in the developed nations. So therefore, if we want to run, and we have always believed that to be successful in the recycling business, you have to have control over the sourcing. So that is why we believe in not buying from, you know, aggregators. We want to put up our own scraps wherever we are, so that it gives us a delta while buying from the aggregators. So we are putting up, going to put up yards in US, so that we can control sourcing and go to the last mile for sourcing. And that product will import into India and then do the recycling in India.

Can I tell you, what percentage of our overall material is sourced from US and how it would shape up after use?

In lead, we are hardly getting anything from U.S. so far, although we started doing some bookings in this last quarter. But in copper, even now, most of the scrap that comes to India comes from U.S. for us also. But the biggest difference is that it comes through aggregators. And so there is a huge difference in pricing once you source from small scrap yard owners and then consolidate it and bring it to India compared to what you do it with the aggregators. So the idea is to not depend on the aggregators and then start doing sourcing on your own, which we've been doing successfully in other geographies. So, first of all, there are two issues in RML. One is that, you know, you need to de-bottleneck the manufacturing process because the overall capacity is based on the overall capacities of all the finished goods. But there are certain bottlenecks within the systems for which you need to have additional capex done. You need to install new plants and machinery so as to increase the utility. So that will take some time. We've already ordered some machines. We are already doing, I mean, to improve, increasing the operational, you know, utilization. So it will take maybe 2 to 3 quarters to improve it to around 65 to 70 percent. But beyond that, if we want to go, then we have to do CAPEX to increase the overall capacity of the system.

I am sorry to interrupt you, sir.

This could be 75 percent. This is the last, sir. Yeah, 65 to 70 percent.

No, sir. That's all from my side and thank all the rest of you.

Thank you. The next question is from the line of Netra Deshfandes from Mirai Asset. Please go ahead.

Yeah, thanks for the opportunity. Good afternoon, sir. And congratulations for the great set of numbers, especially for copper EBITDA per ton. That is extremely drunk, Dr. RML. So my first question pertaining with the lead volume. And yeah, with the lead volume fell around 12, 11 percent in this. Due to this craft availability or any weaker demand or any other deliberately shift which is towards the value-added products, Like, not only specifying with any other core business, and what would be the volume growth which is expecting for the H2, SY27 or SY27?

I mean, primarily because of the raw material availability, if you look at the EBITDA numbers, if you look at the valued products, so we start seeing that.

So, and what about this CAPEX for the 585 growth that has already spent in H1? So, the target for that would be for the next contract, which is the remaining about enable for the product.

So, overall, KPES, we are pretty much in line with the 2030 plan. So, there could be, you know, it's around 1680 crores till FY29. So, we are right on track in this.

So, we already spent approximately 600 odd crores, 680 crores of plan, and we are on track of increasing the capacity also. Currently, we are at approximately 480,000 tons, which we are taking it to 800,000 tons by spending this amount. So, we are on track on both the sides.

Okay, okay. Got it. And, sir, what about the copper operation for the Gujarat? Like, copper scrap has been secured for the Mandi startup or any other plants? How many tons of copper scrap that have contracted over you?

So, ma'am, copper scrap, as I mentioned earlier, also is not an issue. We can always source the scrap from the developed nations through aggregators. So, that is not an issue. So, the moment the manari plant get, you know, start operations, we will start procuring that material. The value would not come by. Actual value will only come when we set up our own yards in these developed nations. So, we are expecting to start the company in U.S. in this quarter itself, but it will take us time to set up our own yards and gradually we'll probably in the next one to two years we'll, you know.

And what is the scalability of this recently incorporated newly-holed subsidiary of Gravita Recycle USA that recently...

No, we've just incorporated the subsidiary right now. We have, we have, there is no operation right now there in the US. It has only, we have just, you know, set up the...

Actually, the US company is just a sourcing arm for us. Basically, it will be sourcing scrap from US, and it will be shipping the scrap to Indian plant to fit for copper and as well as battery scrap also. So, it is not going to generate the revenue directly, but yes, it will help us to reduce the...

Okay, so there must be a scrapyard. So, what will be the CapEx? Any other investments like inside the...

So, CapEx is not substantial, because mostly these facilities will be on lease model. All the scrapyards will be on the lease model. Only the working capital will be needed, And whenever we start these operations, we will take the working capital and we start sourcing the scrap and shipping it to India.

Okay. Okay. Got it, sir. Got it. Thanks. Thank you, sir. And all the best for the future.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two per participant. Should you have follow-up questions, please rejoin the queue. The next question is from the line of Sagar Shah from Spark PWM. Please go ahead.

Yes, thank you for the opportunity. And first of all, big congratulations to the management for posting at least a sustainable set of numbers in this kind of uncertain environment. Now, my first question has already been answered. I mean, it's about the lead volumes of dieselization that we saw. That was the predominant problem that happened in Q1 and was also continued in Q2. So now, effectively, you have diversified. You are diversifying, actually. You are sourcing, actually, and that is why you have set up a subsidiary in USA. And also the RCA mechanism that came in India. So, now I wanted to understand some quantitative numbers that what is your, sir, import versus domestic scrap ratio actually in this quarter, and going forward, what you actually envisage, how much percentage of scrap are you envisaging from abroad and how much from India? That is my first question, sir.

Domestic procurement is going to give us much more volume compared to international volume. So around 50%, 40% to 50% would come from the domestic sourcing only, and balance 50% to 60% would come from overseas.

Okay, so within the lead, sir, within the lead segment, do you expect at least our sales, something like sales mix also to improve, actually, within the domestic and exports?

Sir, actually, we don't discriminate between domestic and export. It's basically wherever we are getting better realization, we sell in that market. So, if the margins are better in Indian market, then we'll sell in Indian market, otherwise we'll export it.

Okay, okay, okay, fine.

So, dynamic decision in some cases, you will see that exports is better in other quarters, you will see, you know, domestic sales is better.

Okay, got your point. So, that's a technical decision that the management takes. Based on the operating environment, actually, it is prevailing. So, my second question was related to Copper. Copper, again, in this quarter, first of all, congratulations for very healthy performance, actually, in this segment, for even growth in even volumes and also in terms of your segment margins also. So, within copper, I wanted to understand the product mix. You highlighted one of the earlier participants' questions, actually, that you have changed the customer mix and you have changed the product mix as well. So, I wanted to understand that the product mix hasn't been shifted to the phase 2 of copper integration already in the RMI. I mean, have you moved on to, from traditional copper rods to, have you moved on to copper busbars or copper wires, or have you done that? Can you elaborate on that segment so that we can have an idea that what actually trajectory the company is looking as far as copper is concerned?

Sir, in copper, we have always been selling utilization also. We have done some rejig in the sourcing also. So, wherever possible, wherever we can use, putting a lot of scrap from U.S. approved because of that.

Okay, fine. And just lastly, on the copper front only, are we hedging our copper position, sir?

Just last one.

The next question

is from the line of Prolin Nandu from Edelweiss Public Alternatives. Please go ahead.

Yeah, I think my question is on the sourcing, right? You mentioned sourcing as a moat, right? So, just wanted to understand both for the copper and if you can separately answer for lead as well as copper, as to what is the advantage that one has having a local sourcing yard or some kind of an ecosystem in the country from which we are sourcing, right? Right. And on the lead side, right, we already have some infrastructure in some of the countries. But despite that, you know, in such uncertain times, we have faced challenge. So just wanted to understand, you know, what is the kind of mode that we want to develop over the period of time on sourcing for lead as well as copper? And what kind of a mix one should think about domestic as well as international craft sourcing? And from the countries that you are importing, having a yard there or collection center there, how does it help? And are there any regulatory headwinds which might prevent importing from some of the countries where we are operating, maybe Europe or some other countries that we are importing from? So, slightly more qualitative texture from you as to how do you see sourcing as a key mode for our business?

Sir, basically, in a recycling business where scrap is concerned, I think the biggest contributor to profitability is your strength in sourcing itself. So when we say that we set up our own yards, it's simply because it gives you better margins as compared to people who buy it from aggregators. So you know, you can consider this like a reverse FMCG kind of a process. In an FMCG generally, what happens is that the company that can sell its goods to the last retail shop, the distribution network is best. They are the people who succeed in FMCG. Similarly, in scrap business, if you can collect at the source itself, it will give you advantage over people who are buying it from aggregators who collect from these sources and then keep it consolidated and then give it to the highest bidder. So we bypass that, and that has always been our strength, and that is why if you see the EBITDA numbers that we give vis-a-vis the competition has always been very high. And that would continue to happen. And to answer your question because of the problem, why has it affected us? So the answer to that is that there is only a limited supply of material in a particular territory. So if in some of the territories, the restriction you can't now sell it from those territories, then definitely in the short term, it will impact you. But slowly you will develop new geographies, and also because the logistic cost will go up from those territories too. It's not making sense. Now with copper...

Clicking on this, right, are there any regulatory risks that you see which will restrict the risk for setting up a yarn, yard? And secondly, you know, when you say you want to go directly to the source, how deep you want to go, right? Because ultimately you are setting up a yarn, you are not setting up a collection, a kind of an infrastructure in these countries, right? In a way. So, how deep we want to go when you are saying that, you know, we want to set up a local collection, you know, infrastructure in these countries. And, you know, there are multiple ways in which one can source even in these countries, right? Aggregator is one to go directly to the source, like, you know, some of these metal traders, right, is another source. So, you know, can you just tell us across these different sources, why is it that, you know, I understand the cost and the quality part, but there are some competitors of ours who do not have a setup and they are still, you know, operating while at a lower margin, but they are still operating. So, you know, amongst the multiple routes in these countries.

We cannot go to each and every household to collect the scrap. Scrap yards in countries like, let's take an example of U.S. only because Africa is totally different. So, in U.S. generally there are, you know, various tiers of yards. So, you can say that tier 1, tier 2, tier 3, consolidating yard in major cities. And then we'll start collecting from these tier 3, tier 4 yards, have tie-ups with them, So that all their material we can pick up, we will have long term contracts with them, we will give them financial, so that most of the material comes to it at the right price. If you buy from aggregators compared to if you use your own scrapyard, generally it will give you around 2-3% additional margin after taking care of all the expenses that you incur, you know, in operating those scrapyards. So that is a major contributor to margin in our case. Copper, it doesn't matter. The margins remain there. So that is what we are planning to do in the developed nations. So as far as regulatory headwinds are concerned, I think it's basically the tailwinds that are there. They don't export it from Europe. So they are very imported in India.

Yeah, so rather than, you know, stopping the, because it's

deficit in those metals in scrap form, and then process it here, and then so that India can be self-dependent on these metals.

So rather, regulatory is all positive for this.

Thank you so much for answering the question in detail. Thank you so much.

Thank you. The next question is from the line of Khush Nahar from Electrum PMS. Please go ahead.

Yeah, thank you for the opportunity.

So was it with the hedging income for the second quarter?

8.39 crores was our operational income, and 8.61 crores was the other non-operational income.

Right, sir.

And lastly, on the lead volume, so it's always been just a month for Q3, but we are seeing some green shoot signs in terms of RM sourcing.

I mentioned, yes, so we are seeing some encouraging signs in India operations, India procurement operations also, although the notification is yet to come, But we have seen that on the ground, people have started offering scraps to us, which were earlier they were not offering us. So there has been some positive change there. And also internationally, because we have shifted some of the material, we have developed some of the geographies from where we have now started procuring material for India. So that will also start coming from the quarter itself. So we see some upside in that businesses from this quarter itself.

Right, sir. Thank you.

Thank you. The next question is from the line of Bhavya Gandhi from Bajaj Alternative Investment Management. Please go ahead.

Yeah, hi. Thanks for the opportunity. Couple of questions. One is regarding the RM sourcing from US. Obviously, the cost of raw material in US would be at a higher cost. That is the reason that we were not going to US and we were taking RM from countries like Africa and Middle East and stuff like that. So, just wanted to understand, because of the supply currents, by changing the sourcing to countries like US, will the overall EBITDA per kg take a hit on a longer-term basis with respect to lead? That is one. And would you delay the CAPEX for lead because the overall utilization is still at a lower level? So, do you plan to postpone the CAPEX by any chance? Will that be a possibility? Just wanted to understand.

Copper, aluminum, and battery scrap in Africa. So, overall profitability would increase rather than, I mean, so earlier not buying it was simply because we were, we had to buy it from aggregators if we wanted to buy it. So, therefore, it was not making sense. But once you start buying, putting up your own scrapyards and start collecting from, you know, I mean, it's not that we will stop buying from Africa. We will keep buying from Africa. And we will keep on increasing capacities if it is required to increase the capacity so long as battery scrap is available. So the only constraint in future is going to be the scrap availability. So long as scrap is available and it is profitable and it meets the ROC requirements, then we will keep on buying more and more scrap and keep on increasing our capacities. We will not, you know, delay the capacity increase till the time we have sight on the import of scrap. Only when we see that there is no scrap availability in future would we kind of delay or stop CAPEX in future. And we see for the next three, four years there is enough availability both in India domestically as well as overseas. So we would not slow down on our CAPEX.

Also on the BWMR part, which will see a major uptick in FY29, that is where the seven-year timeline ends. If you can throw some light, will it be like a hawkistic RM sourcing over there and revenue for you as well?

So, I think, you know, the major problem also it was coupled because of this happened was that because so there was a huge pressure on the domestic scrap. It was getting an 18% additional margin because it took around 3 to 5 years for the entire recycling sector to convert from unorganized to organized.

No, my question was regarding FY29 particularly, where the BWMR 7-year window ends and for the compliance angle for the battery manufacturers. So, just wanted to understand, will there be a hockey stick or a sort of demand for recycling in the FY29?

No, not only F529. What I am saying is that because of this, you know, this new reverse charge mechanism, the shift will take place from this year itself, is what we are expecting. Because, you know, the only hindrance in that was because a lot of that battery was going to the unorganized sector. Now with this extended, sorry, now this with the reverse charge mechanism, we will be able to match the prices that the unorganized sector is giving to the, you know, scrap dealers. And therefore, we will be able to, most of the organized sector will be able

You are asking that the targets has to be completed within the window. So, once this window visits the producers, but those who are waiting that prices of EPR will go down, they are deferring their purchases. So, once this window of 7 years closes, then there will be certainly a surge in demand, and no doubt there will be a credit demand will go for EPR, and the band is around 5 rupees 40 pesa kg to 18 rupees. So, the market will decide, get the EPR prices. So, on that side also, there are a lot of development happening. Central Pollution Control Board is planning to keep these.

That is really helpful. Yeah, that's it from my end. Thank you.

Thank you. The next question is from the line of Patanjali Srinivasan from Sundaram Mutual Funds. Please go ahead.

Hi, sir. Thank you for the opportunity. I have a couple of questions. So, firstly, with respect to lead, what do you expect to be a growth rate for you in terms of volumes going forward? I know that you are having a challenge right now with respect to sourcing material, but going forward, what would you expect the growth rate to be?

In perspective of the past two quarters being not so good, we believe that going forward, the lead would grow at around 18 to 20% for the next three years in volume terms. So there may be quarters where we would not fully grow by around 18%, but by the end of these three years, the overall growth would be around 18% CAGR.

With respect to copper, I think you margin saw a fair bit of increase this quarter versus the previous quarter. What would be a sustainable level of margin for us in this business?

For the short term, this is around 65 to 70 rupees per kg are the sustainable margin. But in long term, once we set up our own recycling, you know, subsidiary, and therefore, once we, you know, make it fully operational in the next three years, the margins would be around,

So, if I look at last quarter number and this quarter number, I think it's more from 55 to 85, but you're giving 70 as the number. Was there like an inventory loss or something last quarter which we have caught up on this quarter? Is that the correct understanding for this quarter's number?

No, actually, as I mentioned that we started using some imported scrap, raw material for the products were imported, and also we, you know, got some good orders for some higher margin sales. This is not something similar to lead because here we are making some specialised products. So in some quarters you get some good orders for some value added products. So last quarter was one of those quarters where we could get around 65 to 75 rupees per ton which was not there in the Q1. The margins were a little lower. But going forward around 65 to 70 rupees Thank you.

The next question is from the line of Sahil Bambade from Monarch. Please go ahead.

Yeah. Hi, sir. Thank you for the opportunity. Most of my questions were already answered by you, but I actually wanted to get your perspective on the India's Aluminium Recycling Industry. But in the context of this new proposed European regulations on these scrap exports, so basically with the EU looking to restrict this certain waste and scrap exports to the non-OECD countries like India, how significant do you think this impact could be on the India's aluminum scrap availability and procurement cost? So this is my first question. And my second question is regarding Gravita itself. So, roughly what proportion of your gravitas, aluminium scrap, is currently sourced from Europe, and how easily could you replace that supply with scrap from, let's say, other regions, US or any other Africa, and if this proposed restriction comes into effect. So, that's my two questions.

So, your first question, that EUWSR guidelines, so India has already written to be part of, with the ministry,

The next question

is from the line of Dheeraj Ram from 361 Capital. Please go ahead.

Sir, could you please let me know if we are setting up our tire recycling facilities in our existing plants so that we can use TPO internally, and then maybe chances of selling RCD outside. Could you let me know when this is going to start?

Yeah, so as far as using our TPO and internal usage, for all of our African plants, we are already doing it. In India, actually, so in future, we may think of setting up the tire plant, but currently, we are more focused on the existing lithium-ion battery and copper business. So we have kind of put it on a back burner right now. But definitely, in the scheme of In the next three years, we are definitely going to set up this tire recycling plant in India also. But initially, I think, right now, our focus is on copper and setting up our own yards in the U.S. and consolidating the existing verticals of lead, aluminum, and plastics.

Understood. And during this rise of crude prices, and TPO is substantially cheaper to crude, won't it be operationally efficient to have TPO internally like how we have in Africa?

So, I think the government has regulation of, now they are restricting the import of scrap tires in India for TPO. So, you can't set up a plant in India to make TPO from imported tires or imported scrap. So, therefore, and if you start using Indian scrap, again, there is this GST issue that is prevailing. So, we, in any case, don't buy local scrap in India. So for us, setting up the plant was not to set up it for TPO, but for other uses of rubber, which we are postponing for right now. But we are looking at alternative fuels, always we are looking at alternative fuels. Currently also we are using TPO also, as well as we are using other kind of sustainable fuels also. And going forward, we are also planning to set up our own gasification plants, which will run on all kinds of coals and, you know, other materials, etc. So, in terms of both help us in lowering down the cost of fuel also, as well as in our, you know, carbon emissions also. Got it.

Last question is, you've seen lithium-ion is somewhere near future. When do you see lithium-ion actually going to come and contribute to the top line, and how do we see the procurement of this?

So, lithium-ion, I believe that in the past few quarters, you might have seen that the EV vehicle population have gone up, and more and more people are now buying EVs. We believe that average life would be around 6-7 years for these batteries. So, but of course, some of the material will start coming a little earlier. So, I think in the next 4-5 years, we can see some volumes coming from lithium-ion batteries on a conservative, but it can start coming a little earlier also. So, and, but, of course, in our vision 2030, we have not taken any revenue or any inputs from lithium ion battery revenue for our target for 2030. If it comes, it will be only additional to whatever is the target.

Thank you, sir.

Thank you. That was the last question for today. I now hand the conference over to the management for closing remarks.

Thank you, everyone, for participating in this call and for your continued interest in Gravita. We trust that we have addressed your queries during the session. Should you have any further questions, please feel free to reach out to our investor relations team. Once again, thank you for your time and participation. Have a great day.

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