Xpro India Limited (XPROINDIA) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Expro India Limited Q2 and H1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mood, 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 touchstone phone. Please note that this conference is being recorded. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of the future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. C. Bhaskar, Managing Director from Expro India Limited. Thank you, and over to you, sir.

Thank you, Vidhi. Good morning, friends. I extend a very warm welcome to all participants to this Q2 and H1 financial year 2027 earnings call of Expro India Limited. Many of us would have interacted in the past. Nonetheless, I introduce myself once again as C. Bhaskar, Managing Director of Expro India Limited. Today on this call, I have with me Shri Girish Behl. Our Managing Director, Designate, and Chief Executive Officer. Shri Vinay Kumar Agrawal, our President Finance and Chief Financial Officer. Shri Himanshu Bakshi, our Group Technical Counsel. Shri Kamal Sevda, our Company Secretary. MUFG in time, whom many of you will remember as Orient Capital earlier. It's our investment relations partner and is, as always, coordinating this session. We are continuing the practice commenced a few years ago of hosting this conference call for the benefit of our investor community and for keeping investors, analysts, familiar and updated about our results and key developments at our units. Many of you have already had the opportunity to meet us on earlier calls at the AGM or in occasional investor meets. I shall not dwell on reintroducing our company. I must add that we are transparent in our approach, but must state that all discussions here will be within boundaries reasonably imposed by our strategic and competitive position and, of course, legal requirements as may be applicable. As you are all aware, Expro India Limited is a diversified, multi-locational company primarily focused on polymer processing with extremely strong governance standards. The company is family-led and is a professionally managed arm of one of India's largest and most reputed industrial houses, the Builders. EXPRO itself currently has manufacturing facilities at Greater Noida in UP, Ranjangao in Maharashtra, and Barjora in West Bengal, besides a subsidiary in the United Arab Emirates at Rasul Khaima. Our operating units Have built up special skills and competencies in the specialized field of co-exclusion with application in the manufacture of oriented films, multi-layer plastic sheets, and multi-layer cast plastic films. Thermoforming supports downstream processing of sheets. Pro specializes in advanced materials and is India's leading manufacturer of polypropene dielectric capacitor films. These precision engineered ultra-thin films range from the ultra-film range of 2 micron and up to 16 micron in thickness and form the core of capacitors used in EV inventors, solar systems, wind turbines, and industrial drives. Also, India's largest supplier of sheets and liners to the refrigerator industry. Driven by technical precision, quality, and development strength, besides customer qualification cycles and support, Expro has faced well the global competition without tariff protection to become the premier supplier in this part of the world. Our results for the quarter and half year ended September 30, 2026 have already been uploaded on stock exchange portals, and you may have had the opportunity to also go through our press release and presentation that we have uploaded to the exchange site and also on our own website. With the new dielectric film line at Barjora Operational, the company entered 2627 with materially expanded capacity and a stronger platform for volume and export growth. The new line has doubled our nameplate capacity in India to 8,000 metric tons of dielectric films a year. Commercial ramp-up of the line is now underway, and its full impact will be reflected commensurately as we go forward. With regard to dielectric capacitive films, as most of you are aware, the company operates in a product and process space that is fundamentally different from BOPP for conventional uses. Polypropylene dielectric film. Mainly for capacitive applications, it's a specification intensive and precision driven, and the industry is limited globally amongst a select number of producers. Building credible scale and reputation in this space requires technical capabilities. And consistent product quality attributes that our BIAX operations have developed systematically, earning a strong standing among discerning clients while maintaining a first-mover domestic producer advantage. Interestingly, the demand backdrop here is structural, not cyclical. Publication, renewable energy build-out, grid modernization, data centers, electric mobility, and traction systems all place a direct and growing premium on film durability and dielectric performance with long-term capital development cycles that consistently reinforce end-use demand. Our films go into capacitors used in EV inverters, solar and wind installations. Grid equipment, railways, and data centers. So, all of these are good for us. Product development is directed deliberately at the highest value end, ultra-thin, hazy, and semi-rub films for power capacitors, EV systems, and railway applications. These are also high entry barrier segments, which are technically demanding, relation-driven, and margin-supported. During the quarter, we strengthened our position and our recorded market share in both segments of dielectric films, that is, plain films and easy films. Dielectric film export nearly doubled over last year. New customers and applications are being onboarded for the new capacity, while management continues to focus on driving volume growth and enhancing margins, while pricing has to remain dynamic and flexible to retain market traction in a frequently volatile scenario, even at the risk of occasional impact on margins. Capacity additions are sharpening the company's trajectory. The new dialectic film, as I just mentioned, was commissioned in March, meaningfully expanded domestic capacity while extending reach into premium performance critical variants, including ultra-thin gauges, where differentiation is sharpest. Coming to the new line, production on the new line grew by 35% over the last quarter. Film from this line is already being supplied commercially to customers in India and overseas, and a number of other customers are going through the approval process. Capacitor-like steps of 1,000 to 2,000 hours are also going on at some customers' end. These things take the routine time in our industry, and how quickly approval turns into volumes will depend on some of these results. Till then, the operating costs, depreciation, and finite costs of the new capacity continue to weigh on profitability. We continue to put a lot of effort into research and development. We have developed a new range of ultra-thin films on the new line, and the 3.5 micron film has already been approved by some key customers. Our R&D team is also working on several other development projects, and we will share more on this as and when we go along. I am also happy to say and share that EXPRO this year has already received three awards from ELSINA, the Electronics Industries Association of India, for excellence in quality, excellence in research and development, and environment protection and sustainable development, all indicating a good recognition of the work being done by our teams. In all areas. In the COEX-related businesses, COEX-shoot sheets and thermoform refrigerator liners are manufactured on multiple lines, available with the COEX division at Ruljan Gaon and Greater Noida. Our products are usually custom-made to customer needs and based on various foreign polymers, including ABS, polystyrene, and polypropylene. Being an established supplier to most leading brands in the refrigerator sector, volumes are directly correlated to the consumer and market conditions. The Indian refrigerator production grew about 8% in Q2 over last year, which is better than the 4% we saw in Q1. On the other hand, our sheet and liner's volume We grew by 26% in Q2 over last year, well ahead of the market, with both Greater Noida and Ranjanao units performing well, indicating clearly that we continue to gain market share. Revenue growth came from higher volumes and also from higher selling prices as the steep increases in polymer costs were passed on. Cast films are facing competitive pressure, and here our focus is on release films and new product development on one of the cast film lines, which we have substantially revamped. Now coming to the Q2 performance. Revenue from operations during the quarter was at Rs. 176.69 crore against 119.91 crores in the corresponding previous year, reflecting a growth of 47.4%. Operating PBIDT before other income and forex differences. It was at Rs. 16.4 crores against 10.68 crores, up 53%, actually higher than the revenue growth. TBD for the quarter was Rs. 12.79 crores against 7.6 crores in the corresponding previous quarter. Profit after tax was Rs. 9.52 crores against Rs. 5.86 crores, reflecting an increase of 62%. In this quarter, Dielectric Films recorded revenue growth of 64% over the corresponding quarter last year, while the Sheets and Cast Film Business recorded growth of 41% over the corresponding quarter last year. Coming to the first six months of the financial year, or the half-year performance, the company reaffirmed its operational resilience in the volatile business environment marked by supply chain worries, rising costs, geopolitical tensions, underscoring the efficacy of our operational strategies and the competitive trends. Production volume rose 14% to 19,218 tons from 16,795 tons. Net revenues were 351.11 crores, up 32.6% from the INR 264.81 crores in the corresponding previous period. This comes from higher volumes in refrigerator sheets and liners, and from selling price adjustments as polymer prices remain volatile. Total exports were higher at 17.09 crores against 9.39 crores. You will see that we are well on the track of exceeding a turnover of 700 crores. If this market sustains itself the way it is during the year, which would be a new high. Profitability improved overall, supported by higher revenues and a significantly lower forex impact, even as competitive pricing, input cost volatility, and higher depreciation and finance costs continued two-way. CBDT before non-operating forex defenses was $36.7 crores against $30.27 crores in the previous corresponding period. The Forex loss. It was 32 lakhs only, of which 78 lakhs were unrealized resulting from accounting standard requirements. This translated in the overall to a PBT of rupees 26.51 crores against 13.63 crores in the corresponding previous period. I must reiterate that there is no outstanding long-term borrowing for existing operations. However, we had, from a financial perspective, particularly interest savings that would accrue in future years, gone in for supplier credit in the nature of ECB for financing the new line at Barjora. We have already commenced repayments, and a few installments have already been made. During the half-year, repayment of non-current borrowings amounted to Rs. 6.65 crores. Total borrowings stood at Rs. 106.7 crores as on September 30, 2026, against Rs. 111.81 crores as of March 31, 2026, while the net debt-to-equity remained negligible. With a return on equity of 5.3% and return on capital of 7.2% for the half-year. A dividend of INR2 per equity share for the financial year 202526, as approved by shareholders at the AGM of July 20, 2026, was paid on July 28, 2026. The paid-up equity capital of the company stands at Rs. 23.7 crores. With a net worth of Rs. 729.39 crores. The paid-up equity capital remained unchanged during the half-year. All the capital raised earlier through preferential issues and QIP has been or is being deployed for stated purposes, with Rs. 64.29 crores held in bank deposits of the company and its subsidiaries pending utilization. Deployments are also monitored independently as required. A quick update on the status of Capacity Edition. As already mentioned, the Capacity and Barjora has been in commercial operation since end-March 2026. The project in UAE is broadly on track. Geopolitical conditions in West Asia remain fluid, with the ongoing regional conflict contributing to heightened uncertainty, elevated costs, and intermittent disruptions to trade and transport, with risks amplified whenever hostilities persist in. However, all our key equipment is at site and has been installed. We have already commenced commissioning of utility equipment, electricity, gas, water, all fundamental utilities are at site, and all signals go on that front. I would also add that there has been no disturbance of any significance in the Al Gale area where our site is located, and project execution has not been hampered. Due to any local disturbances on account of the war-like situation. Parring unforeseen circumstances, commercial operations are expected later during this financial year. Management, of course, continues to monitor geopolitical developments to take appropriate risk mitigation measures. Bearing in mind also the safety of our suppliers and our staff. The subsidiary's accounts mainly reflect preoperative expenses, capital advances, and the use of foreign supplier credit for capital expenditure. In accordance with applicable accounting standards, The company recorded a total loss of, the subsidiary company recorded a total loss of AED 1.73 million during the half year, reflecting only guarantee lease and other accumulated costs recognized as expenses for the project under implementation. We are already working on the market for the UAE line, which will be our third dialectic film line, and we are confident of placing its volumes. Our exports were up 82% in the first half, and we have gained share both in India and in exports, even in a soft market. Film from the new Bajora line is already going to customers in India and overseas. And we are now in the approval process with some of the leading global capacitive manufacturers. These relationships will also help us when the third line starts. Customers in advanced applications are also looking for qualified and reliable suppliers, and our additional manufacturing unit will only help us serve them better. With the demand we see coming from electrification, renewable energy, grid modernization, and data centers, and in addition to certain cap film capacities in advanced markets aging, we are confident that this capacity will serve the growing demand across the globe. With this, I would like to open the floor to questions, and I will also request Ganesh and Vinay to be available to answer appropriate questions. Thank you.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the 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 Dibarshi Dave from Ash V Holdings. Please go ahead.

Hello, thank you for the opportunity. So, my question is, I would like to get a guidance of the sustainable EBITDA margin for the entire business. When you start selling the value-added products, and what would be the revenue per metric and realization for export business, particularly in speciality symptoms? So I would like to know about that. Besides that, my second question would be, the Bergewell line 2 has already been commissioned, and it has started its production. So when the revenue can be expected to get reflected in the top line? So that's my question.

Your particular question about a guidance for a long-term EBITDA is probably outside the purview of this call. However, and you have also said about a sustainable EBITDA for the entire business. I assume you are looking at the business, as we always suggest, as separately for the dielectric film businesses, which is high EBITDA business, and the co-extruded sheets and films businesses, which is a low EBITDA business. The guidance for the co-estruded business is something which we have stated and we can happily continue to place on record. It's in the 5% to 7% EBITDA range, and it is expected to sustain in that range. We don't see a dramatic increase or a dramatic decrease based on current indicative trends. That is one. Of course, you see slightly when price increases happen only on account of rate pass-through of raw material prices, there is an apparent reduction in EBITDA while the value addition remains flat. But that's only an accounting indicator. Going into the capacitance businesses, You are absolutely right in that we are moving into the high-value-added films, which are thinner. Now, I am refraining from giving a value-add. Indicator or an EBITDA indicator here, excepting to say that in this segment, the EBITDA for the different types of films varies between something like on the lower side 35% and going up to something like 55% on the conventional thicknesses that we are working at. As we move into thinner films, obviously there would be increase in the EBITDA. Just to give you an indicator, since you had also asked a price idea, you know, just take, for example, that the modal price of film is around 470, 480 rupees a kilo. If I were to take, for example, the 3.5 micron film that has our film, which has been approved, let me give you this price indicator. I'm actually not free to indicate the exact price, but as a price indicator, it's a little over 600 rupees a kilo. Now, if one moves down towards, say, 3 micron, as it would be the next level, it would be near 900 rupees a kilo. So, you would see that the EBITDA margins would increase in that scale. And as I told you and mentioned earlier, our 3.5 micron film has already been approved commercially and is being supplied to some customers in India at this point. Does that sort of answer your question?

Yes, yes. Thank you for answering that. And in addition to that, I would like to know the working capital days, like for these, as you have entered into the speciality firm. So the working capital days will be a bit higher or will it be same for COEX and YX division? Will it be same or for YX division is going to be a bit higher? So that's what I wanted to understand.

And take that as typically same, right? The difference is twofold. In the very, very specialized business, all sales are on LCs. While the credit may change, you are totally secured, right? In the refrigerator business, there could be some exposures on credit. However, they are all solid parties because, you know, the guys who make refrigerators are big guys. The difference on the working day cycle today is a temporary disruption because of the global uncertainties on shipping. All producers are tending to stop more raw material whenever they are able to lay their hands on it. So today you have an issue because of shipping. If normally, let's say one month's stock was, I'm just taking a random number, if one month's stock was enough, today you will find that if I can buy and stock for three months, I would, because we don't know what's going to happen to shipping over the next couple of weeks. And that is entirely driven by our booths and the, and I think you people are all very aware of the shipping uncertainties prevailing today. Not unique to our industry, but to every industry.

Okay, got it, got it. And last question would be what kind of turnover that you are expecting from the capital that you have, you know, put in, I mean, against the capex, what kind of net sales you are expecting out of it? And another question is, there are two new players who are coming up in this capacitor films or so what is your take on it? Like, is it going to how we are viewing that competition in near future?

I got your question. Let me give you the answer to the turnover, and then I will request Gidesh to answer on the other players who are coming in. Now, turnover depends on price, depends on product mix, which is a highly sensitive question. However, just to give you an idea of what turnover we expect from that line, I think in the last call, Grish had stated specifically that we expect during the fourth quarter this year to be operating the new line at between 70 to 80 percent of its rated capacity. That should give you a fair indication of where we would be on that line.

Grish, would you like to add on the competition? Yes, on competition, we have competition and some new competition has entered and is also expected to enter more. Yes, the market is growing, so there is a space for other people to come and play. And, of course, if you have noted in our remarks, we mentioned because this is a business where... Technical expertise, patience, and skill, all those, the combination of all matters. Whosoever joins this business, of course, they have to have the patience to at least get into the long qualification cycles.

That's all from my end. If I have, I will join back to you. Thank you.

Moderator for the next question, please.

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 Tej Patil from Nivshare Investment Advisors. Please go ahead.

Yes, hello, am I audible?

Yes, sir.

Perfect. Thank you so much for the opportunity. Sorry, I might have missed the number that you have spoken in the introduction, but can you please help me with the value and volume mix for YX and COX this quarter and Q1 also if that's possible. That would be helpful.

In any case, our annual report contains these numbers, and at this stage, we... Even in our...

Sorry.

Can you hear me?

Yeah, yes, yes.

So, last year, our breakup of...

Sir, I'm talking about Q1, Q2. I'm talking about Q1, Q2 of this year. I get it. At 526, we know the numbers, but I'm talking about Q1 and Q2.

Correct. So, our last year numbers are there in the annual report, and this year, the growth that what we have recorded that we have already shared. So, this is what the information we can share at this stage.

Okay, but then let's say if I wanted to understand the ramp up from the second line, you know, what utilization did we achieve on Q2? Because sir said, you know, we have achieved some 35-40% of volume growth compared to last quarter on the new line. But the question is, there was hardly any number coming from Q2 or let's say production happened in Q1 from the new line. They just wanted to understand the utilization of second line in Q2, and that would be very helpful from our end to understand the mix, at least for Q2, if you could provide the mix between CoX and YX.

Let me explain to you from a market perspective and a supply perspective, this we ourselves look at it as the total capacity available with us. So your question can be directed towards understanding two things. One, what is the total market? In which case you need to understand how is the market growing? The two lines combined because our customers once approved, we supply them from either of the lines. Your question could be directed to understanding, is the new line performing at all? Now, to answer that concern, I think we had earlier made a categorical statement that production on the new line was higher by so much during this quarter over the previous quarter. So, as far as it goes, the new line is producing well. Market has accepted the outputs of the new line better, especially in thinner films, which is what it is designed for. And as I told you, we have already supplied down till 3.5 micron from that line, although we ourselves have produced even down to 3 micron, which we have not yet sent out commercially into the market. So, you have two questions, one. I read your query as two queries, what is it, is the line,

but sir, is it possible to provide a number, I mean, of course, directionally, you, I mean, everything you just want to, yeah.

No, no, I understand. I am unable to see how a line breakup, because that would actually be on production convenience, would be material.

Okay. Answer, Rob. I'll tell you what will happen.

One second. In course of time, and we have reasons for saying that. I mentioned that the new line quality or the new line output is good. Remember, it's a new line. It will always look, it will always produce shinier looking stuff for some time. I'm using the word shinier in English and not in any way connected to a film quality. We do not want a situation where the markets tell us We want product only from line A or line B. We would be supplying a product, made to a particular specification, produced on the line of maximum convenience to the production team.

No, of course, sir, I get it.

For you, it's like saying if I walk into an UDP and I order a Zosa, he makes it wherever he likes. I don't tell him make it on an

A banner or a B banner. I understand. That's why my question was more from the, you know, ramping up perspective, because, you know, your approvals, you said, you know, let's say, a lot of customers have already approved, right? So, I'm assuming the second line would also, you know, let's say, start moving towards the, yeah.

Question is towards, is there ramping up happening, A, and B, is there a product quality acceptance? I'm telling you, yes, product quality is. And taken well by the market. The production on that line on Q2 was higher by 35% over the previous quarter.

Okay, no problem. No problem, sir. First, I got it. And in terms of... Hello?

Yeah, yeah, please.

Yeah, in terms of, sir, your, let's say, the raw material prices have moved significantly in the past two quarters. And yeah, so the question was, you know, when I look at your gross margins, when let's say the contribution is coming in from second line as well, my understanding is, I'm just trying to understand, were we able to, let's say, pass on the full incremental cost that happened due to increase in raw material to our customers? Do you think, let's say, we were still not able to fully pass on the cost and which might happen in, let's say, the upcoming quarters? I just wanted to understand on that part as

That is a little complex query because raw material prices have gone up, correspondingly shipping has gone up, so the effective landed cost will have a double impact, the petrol impact and the shipping impact. A, this is to some extent utilized. Why our stock holding? Because of the fact that we follow a weighted average principle of raw material distribution, which is normal and required for this product. Yes, we have been getting some of our price increases. So I will not say that there are no price increases and no pass-through. But the Pass-On has been... I will say not full yet, and the effects will continue. The reason for that is, after the first, when there was the first so-called war impact starting from February, March, I'm using the word war loosely because I don't know is there a war or no war. But after that first increase, we went into increases. And surprisingly, there was a steep fall in prices after that also, which you might have seen also happen to crude. Crude went up, crude come down. So the prices also are yo-yoing. So when that yo-yoing impact happened, it's a little tougher to get the price increase before people say wait for the next dip. So, we are taking a balance of these factors in going through the price increase, but yes, To answer your question, full neutralization is far, and that is something we are constantly working on. I mean, so if your question is, is there a hidden price increase possible? I will only say it's not hidden. It has to happen.

Okay, okay, understood, understood. And sir, how confident are we to, you know, start dry runs on the UAE line at the start of June?

Sorry, I missed your question.

How confident are we to, you know, start dry runs at the UAE line? And, you know, if you could help me understand the timeline as well, you know, by when you can probably say, you know, by the start of the end, we were probably planning to, you know, start dry runs. And I just wanted one. Yeah.

I'll tell you, already certain pieces of equipment, elements of equipment have been commissioned or in the process, literally in the last 7-10 days. For example, boilers have been fired, fillers are commissioned, some of the ancillary equipment

utilities are one by one getting commissioned.

The core issue is when do we commission, when do we start dry runs on the main equipment. The main equipment is fully installed. We are waiting for the Germans to come back, meaning it's a different team. The team that did the installation has finished their work and gone. And now there's a team which does the check-up. The electricals are done, then the software is done. Then there's a check-up team which is due any time soon, and they should do it. After that, we will start dry-run. Dry-runs will start section by section. As of today, we do not see any significant delay in those dry runs happening. Having said that, I will say, like anybody else, we are also waiting and watching. I think you must have read that flights into Dubai from, by say, Lufthansa or Singapore Airlines or some airlines have been disrupted, etc. Those disruptions are something we can't predict, but otherwise we are moving on track, or pretty close to track.

So January is the month, right, when we will probably start with the dry runs?

Sorry, boss?

January would be the month when we will be starting with the dry runs, right?

Maybe some elements we start in December.

Okay, super.

See, dry runs, you don't have to be commissioning 100% of equipment. For example, I'm taking an example not relevant, not stating dates on it. Say, for example, if the winder engineer comes in tomorrow, we start dry runs on the winder tomorrow. You know, because there are specialists for each of the segments. So depending on which segment guy comes in first, we will start. And they are independent of each other because dry runs happen not in the operating sequence, but equipment by equipment.

Got it. Got it. Superb. Sir, last question is on minor. Sorry to interrupt you, sir.

If you have follow-up questions, please rejoin.

Just last question. Just last question, if possible, please. I will then rejoin. Sir, you know, there's a good demand for Hazy Films in India as well. But what I understand is, you know, since we were capacity constant earlier, we're probably not able to meet, let's say, a decent chunk of the market. But let's say with the second line coming in, which could probably, you know, take some road from line one, just wanted to get your views on, you know, how fast and, you know, can we capture this easy film market and, you know, are there incremental buyers and demand for easy films? Just wanted to get your view on this.

Let me give you a non-quantitative answer, then I'll request Girish to answer. But we are already... From these lines, don't ask me new line, old line, because that's not relevant. We have already substantially increased our sales in the AZFM segment to India, replacing, I think, import. Substantially. I mean, as that market goes, that market is say 1,800 to 2,000 tons per year. So out of that, I think we started doing a good bit already, even in the last quarter we have done. Girish may like, if he thinks it's non-competitive, he may share that number.

I think your question is right. We are focused on Hazy Film, and Hazy Films form an integral part of our... We are on track, and I think we are gaining market share as we had planned.

Okay, okay, no problem. Superb, sir. Thank you so much. I will rejoin. Thank you.

A reminder to all the participants to please ask two questions for participants. Should you have follow-up questions, please rejoin the queue. The next question is from the line of Urwa Javeri from Ionic Wealth. Please go ahead.

Hello, sir. Good morning, sir. Thanks for the opportunity, sir. Sir, you know, I just wanted to ask you on raw material front. In Q1 calendar year 26, the PP region crisis shot up. And in Q2, it was, it was down by 20%. And sir, a commentary from Boruj suggests that they expect it to increase again. Sir, sir, how are we navigating this? Like, should we be stocking up our RM or our RM prices are contract-based? And how does this impact our realization? Is our entire raw material procured from Boruj only?

See, I think you, the indication which what you are mentioning here is given by Baruch on various grades that they manufacture. We also buy from them, and our grades, what we buy are speciality grades. Yes, PP prices have gone up. In between, they have started to come. They were indication of coming down, and again, ETA is coming up again. So, this question was partly answered in the previous set of questions. In this year, yes, we have taken a few price increase, and given if the raw material remains the way it is behaving, of course, there will be more price increase that probably we'll have to take.

All right, sir. Sir, another question which I wanted to ask was, sir, basically, in the sub-3 micron film, sir, where the demand is coming from and any ongoing discussion for sub-3 micron films as well?

I can say only the yes. There are ongoing developments on product and market both are happening as a continuous activity.

Alright, sir. And sir, just one question from my end, sir. Sir, that basically, who do we give our base frames to? Like, for example, we are giving it to metallizing players. So, sir, why don't we do metallizing ourselves? Like, it's a high margin business plus, you know, it's a forward integration step, right? So, sir, are we planning to have metallizing in, you know, in our future units as well? Or what's the scenario over there?

I think what we are doing is part of our strategy, what we are working on, and whatever we have said in the past, all those strategies and directions remain consistent, and I don't wish to comment anything further on this particular topic.

All right, sir. Thank you.

Thank you. The next question is from the line of Vishal Prasad from Raj Mahal Capital. Please go ahead.

Thank you, and thank you for arranging the call, half-yearly call, Bhaskyaji. So, we have always, and Bhaskyaji, you always mentioned that we are a transparent company within the boundaries of our competitive position, and I appreciate that. But when I see lacking is a more open communication on the starting struggles, and when we see us... We are reasonably improving our margins. We used to be a company delivering 15% margin probably three years back. And then we are getting into these new lines. So if you could talk about when we can expect the margins to improve and see a significant jump. It is not a commitment from your side, but what you see today will be really helpful for us to understand where the business is going.

You're asking about, my reading of your question is, you're asking about when the scale-up of the new line is expected to happen, because that scale-up is happening in a high-margin business of ours. So we have indicated in the last quarter that we should be operating at about 80% utilization level in the last quarter of this year. So we are still maintaining the same guidance.

No, that's what you mentioned earlier in the call today as well. So my question is not on sales, but it is on margins. When we can see significant improvement in the margins? Is it last quarter of this year or is it next year? If you can comment on that, because if you see the margin, it has decreased by 1%, but it has decreased from last quarter as well. It is at 8-9%. When we talk about significant improvement, we probably are looking at 25% consolidated margin probably one or two years down the line. So there is a journey there. And if we could communicate on when we can see the changes, like when we can reach 15% or 14%, that can show us a path.

We would actually, you will appreciate, not like to comment on a very specific number when it will be achieved. However, as an indication, let me tell you, and this is something we have said earlier, I think, A, as far as Q2 goes, we had even in the last call said that Q2 performance, even as per our own strategic work, would be the same as Q1, which is more or less where it was. However, there's another statement that we have made often, and I think I'm... I would have said it ad nauseum myself, is that there are two directions on which we have to move and which we are moving on these new capacities. One is a volume ramp-up and one is a value ramp-up. They are independent of each other, but both need to happen before we realize the full value. So step one is volume ramp-up. In the global turmoil that's happening with shipping, etc., volume ramp-up is our first target. So, when volume ramp-up happens, and which, as Girishji just said, we should be operating at a particular level by the fourth quarter, you would see impact one, stage one, which would be some impact coming from just sheer volume growth. It will move, it will translate further as the value ramp-up happens, which is also happening simultaneously. So, both effects are happening. Value ramp-up takes a little longer because there is a major acceptance issue, development issue, which is going into it. So, those stand as it is, and I'm not saying these are 40-year journeys. These are few quarter journeys that take place for the value enhancement. That said, I can tell you two things, the new line. Is also EBITDA positive in the last month, as a stage 1? In the last time, I had said that the Marshan line or the new Bajora line had itself given us a total loss of something like 7 crores in the first quarter. That has itself moved due to its own performance, improved by something like 3 crores. So you can see even these small trends are moving. And as I mentioned in the last month, that line was EBITDA positive. So, the direction is absolutely what we said it is, and I'm only refraining from giving an indicator that, you know, that in Q4, 2.0, so much, we will make this EBITDA. We are not trying to say that. I think at the guideline, I think we have indicated what our position is.

Right. So second question is the nameplate capacity of the new line that we have put in. So it is 4000 MT. And so is there a thickness that we consider while calculating the capacity? Because we have given a range from 16 microns down to less than 2 microns. Best total output go down significantly as we move from thick to thin films since thin films weigh much less per unit area.

I've understood your question. Let me answer it. I'm not cutting your question, but since I got the gist, I thought we'll save some time for somebody else's question also. You see, it's like this. This line is designed as a 2 to 5 micron line. Okay? So, that will answer your first question. And its capacity is based on a line designed for 2 to 5 micron. Having said that, let me go on to also say, I agree with your point that when you go thinner and thinner, there is a steep fall in capacity. However, if you were to produce 2 micron on a 9 micron line, there would be a particular level of output fall. When you produce 2 micron on a 2 to 5 micron line, that percentage of production fall would be far lesser.

Okay. And, sir, last question, you had mentioned that we are looking at line 4 and line 5. So, are we still positive, and probably we can hear something in the next one, yeah?

We are not just positive. We are doing our internal work on it. Yes, some of our internal work has been tempered a little bit by the global crisis right now.

Okay.

Well, it's like this. I think reasonably you will agree, now on the flippant side, not on a formal side, either this Middle East situation has to resolve itself, or the world will go in a different way, because you will get no oils from anywhere. So we are expecting that one way or the other, there will be a resolution.

I'm sorry to interrupt you, sir, if you have follow-up questions.

That's, we still can't imagine a world without electricity, which is our primary driver.

So, whenever we order, it will take three years for the machines to come, or it will take less time this time?

I can tell you that packaging businesses have been down, and where packaging businesses go down, equipment suppliers can speeden up a little bit. But yes, I doubt you would, I mean, a line can come in, see, we will save time on designing, we will save time on some of the basics of understanding your specs that you want, so that actually saves a year-ish. But yes, I'm sure manufacturing commissioning will still take two years. It cannot be less than two years today.

And do we need to raise equity for that?

Thank you. Some miracle happens and there's some line available somewhere. I mean, all, some organic, inorganic, organic, they're open to any kind of growth.

Yes, so do we need to raise equity for the next apex or we are okay?

Sorry, I couldn't hear you. So it's a little muffled.

So do we need to raise equity for new lines or we'll be able to manage it internally?

We do not anticipate raising equity for the system itself. You know, there could be, supposing we do it in a subsidiary, supposing we do it in a subsidiary, surely we would need to fund the subsidiary. Subsidiary may raise, but then we would be investing in the subsidiary. We do not today see a capital raise.

And subsidiary will remain at the same shareholding pattern that is there today?

Sorry, sir. Somehow, your line is a little muffled. Would you just repeat that?

So, subsidiary will remain at the same shareholding that is there today, or we need to dilute more and sell it to our partners?

I'll tell you something. If we capitalize it some more, then surely the co-investor today will come in with a similar number. So, we do not see a dilution. But who can tell about the future? Maybe five years down the line, we decide to list it. I mean, anything is possible. So, I am not commenting on the anything is possible situation. Today, we do not see diuting and bringing in another investor into that unit.

I think that is all. Thank you so much.

Thank you. Thank you so much.

Thank you. A request to all the participants. Please ask two questions. Should you have follow-up questions, please rejoin the queue. The next question is from the line of Anand Kumar from Diarrhea Investments. Please go ahead.

Am I audible, sir? Yes, you are. First of all, welcome, Girishji. I hope you will be much more lenient than Bhaskarji all these years in answering our queries. So, Bhaskarji, I would like to ask my question in Hindi. Please. And you also have indicated that you will reach the Q4 in the Q4. So, sir, the capacity of the Q4 is about 900 tons in your line 2. In these 950 tons or 900 tons, how much is the share of export and the share of domestic? Because when you are confident that you will reach 80%, I assume that you will have many orders in hand or you will have agreements.

The majority of that volume will be going into domestic market. This is what I can state to your question.

Inferences would like to be the next percentage. Yes, that's okay sir, but since the ultra-thin will go from this line, it will also make a change from that line.

But we will not comment on that, because as I told someone earlier, we will decide on the production convenience of which line we will make. Now the ultra-thin will naturally become less compared to the overall volume. Over the next day, till it is fully absorbed.

Over the next day, Is this what can be the ultra-thin rate of 900 times in the Q4? Q3, I think it will be a little bit of a go-numper.

It's a, I'll tell you something. Ultra-thin is picking up for many applications now. So, there are new applications, such as data centers, such as non-conventional energy, such as EVs, all are thin. So, they are thin. So, that share will grow. But I can assure that it will never happen in the last five years, that it will not happen in the last five years, that it will not happen in the last five years. It will be mixed and that will be a trend. It will increase and it is happening already.

Sir, last question from my answer. We had a newsletter from the Chinese counter, I think it came from JDL or Ningo. Thank you very much. They are looking at India as a very potential market. So, you will be able to compete with the Chinese competitors with that price. Because they have clearly stated that India is a very big market for them.

You need to understand, obviously, since we are looking at export, we are exporting so as the Chinese. So, we are competing them in any case today. And we are on strong footing to at least we can compete them in India and abroad.

Are in JDL any capacity additions that you see in China happening here? Because JDL has put up one line and they have said that they will come up with another two lines. Any update on that you have?

The market is growing, and many people are expanding capacity. So, I am not fully updated on what is JDL status today, whatever my status is three months ago. Yes, few people have added capacity, and if the market growth is there, a few people will keep on adding capacity. So, as such, this business lies on the ability to execute and give a product which works. So, we are standing well against our European competitors and Chinese competitors, and we will be able to compete with them.

And sir, can we take for the rest of the year the modal price of around $480 and $500, sir?

Sorry, I did not get your question properly.

You told that the modal price is still going to be around $480 and $470. Q4, the whole year, what you think of the orders in your hand, do you think that you will maintain that for the year total?

We don't want to go so specific into Q4 guidance at this stage. But, yes, I think in the previous questions, if you have followed, yes, there is a raw material increase coming through, and there will be next price increases also. So, but the world is highly volatile. We don't want to comment specifically on Q-perfection.

I would like to say something else, sir. You will again say that I will hide the information, but I will tell you a price idea right now, so how will I negotiate with a client? So, I do not want to comment on a price level for that reason also.

Okay, sir. All right. Thank you so much. Thank you.

Thank you. Due to interest of time, that was the last question for today. I now hand the conference over to the management for closing remarks.

Thank you very much, and thank you all the friends who joined the call. I think some of you we have met for the first time. Many of you we are meeting again. We are happy to meet you in any case at any time. I am sure many of you have some more questions, and we would be happy to meet with you and discuss them. As and when the opportunity arises, needless to say, within the restrictions of what can be put into the public domain. Despite the volatile business environment prevailing, we are confident of the direction in which we are moving. Our strategic plan remains unchanged compared to anything we would have discussed over the last few years. Our expanded capacity, broader product range, and strong customer relationships position us well for long-term growth in the sectors that we are operating in. Most important, at Expro, we are committed to delivering a superior quality product with exceptional service, exceeding customer expectations to maintain the leadership in our chosen segments. I would once again like to welcome Girish Bair. I think he has been introduced to all of you, and next quarter's call, he will be running as MD. We'll all be available to guide him to whatever guidance you would like to seek. Having said that, if you have any further queries, please contact the company secretary or investor relations partners or any of us for further clarification. Most important, I would like to wish each one of you and your families a very, very happy Diwali, and please convey our festive greetings to all your near and dear. Thank you.

Thank you, sir. On behalf of Expro India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.