Gujarat Fluorochemicals Limited (FLUOROCHEM) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q4FI26 Earnings Conference Call of Gujarat Florochemicals Limited, hosted by 361 Capital. As a reminder, all participant lines will be in the lesson-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 start and zero on your touchstone phone. I would now like to hand the conference over to Mr. Rohit Nagraj from 361 Capitals. Thank you, and over to you, sir.

Thanks, Ritaja. Good evening and welcome, everyone, for Gujarat Fluorochemicals Ltd. Q4FI26 and FI26 conference call. We thank the management to provide us the opportunity to host the call. We have the management represented by Dr. Bir Kapoor, CEO and Deputy Managing Director, along with the senior members of the management team. Now, I would like to hand over the call to Dr. Bir Kapoor, sir, for his opening statement. Over to you, sir. Thank you.

Thank you, Rohit. Good afternoon, everyone. Very warm welcome to all of you for GFL's. Quarter 4 F by 26 earnings call. For this call, I have with me my colleagues, Mr. Akhil Jindal, who is Group CFO, Mr. Manoj Agrawal, who is CFO of GFL, Mr. Kapil Malhotra, Business Head of Fluoropolymer, and Mr. Ajeeb Rao, who is the Business Head of Battery Materials. The company announced its Quadra 4 FY26 and full-year results at its board meeting held today. The results, along with earnings presentation, are already available on the Stock Exchange and on our website. I'll briefly highlight the key financials and then give you an update on business operations and outlook. FY26 was marked by a highly volatile global operating environment. The first half of the year was impacted by uncertainty surrounding U.S. tariff policies and evolving global trade dynamics, while the latter part witnessed heightened geopolitical tensions amidst the war in the Middle East, dampening the macros and the business environment. Which continue to disrupt global trade flows, impact logistics and supply chains, and contribute to elevated volatility across commodities and currency markets. Sharp movement in energy prices have also resulted in higher input and logistic costs across businesses. While we are seeing some signs of stabilization, the conditions continue to be volatile. Despite these headwinds, the company remained focused on disciplined execution, operational excellence, supply chain optimization, And stringent cost management across businesses, enabling us to navigate the evolving environment with agility and resilience. Against this backdrop, our chemicals business delivered a commendable performance during quarter four with revenue growing 11% year on year to rupees 1,358 crore. EBITDA increasing 13% year-on-year to Rs. 353 crore, and PAC rising 5% year-on-year to Rs. 169 crore as compared to Q4-4 FY25. The performance was led by growth in fluorocolomer segment and the commencement of R32 production in March 2026. Which marks an important milestone in our fluorochemicals growth journey. Continue on the growth journey. GFL has earmarked rupees 3,150 crores of capets for FY27, of which rupees 2,300 is for GFCLEV and rupees 850 crores for GFL. Of rupees 850 crores, capex, approximately rupees 150 crores will be spent on expanding our refrigerant gas and related infrastructure capacities. Rupees 222 crores will be spent on new high-purity electronic speciality chemicals or semiconductor sector. Another Rs. 250 crore will be spent on adding new fluoropolymer capacities, and the remaining 230 crores will be spent on increasing capacities for backward integration, including the regular annual maintenance capix. The EV capex of rupees 300 crore, 2,300 crore, will be spent in increasing capacities across existing products in addition to the capex for natural graphite active material, natural graphite anode active material, I'm sorry. And this capex is part of the overall capex of 6,000 crore that we have earmarked for GFC Alemo. The fluoropolymer segment delivered a strong performance with revenues growing 19% year-on-year and 14% quarter-on-quarter to the piece 848 crore in quarter 4 FY26. The growth was primarily driven by value-added products. and higher volumes across e-product categories. Our focus on high-value speciality grades, deeper customer engagement, and expanding global reach continue to support growth momentum during the quarter. Looking ahead, we remain constructive on the long-term outlook for fluoropolymers, Supported by increasing penetration across structurally growing sectors such as semiconductors, EVs, battery energy storage systems, and clean energy applications. In addition, global energy transition themes, including hydrogen, fuel cells, electrolyzers, and solar, are emerging as important long-term demand drivers. For fluoropolymers, given the increasing complexities and purity requirement in these applications, we believe a speciality in fluoropolymers will continue to witness strong demand over the medium to long term. The earlier capex is this segment. Should achieve its optimum utilization level in the current financial year, we will be incurring further capex starting this year to continue on the growth journey in this segment. In the fluorochemical segment, production and sales of R32 commence from March 2026. Sensing our refrigerant portfolio, despite weakness in the Middle East market on March and an overall challenging global environment, segment delivered a stable performance. We will be incurring Rs. 150 crore of CapEx on increasing capacities of refrigerant gases in the current financial year. Increased production of R32 will provide major growth in this segment in the subsequent quarters. Demand for refrigerant is expected to remain healthy, supported by increasing penetration of residential air conditioning, commercial refrigeration, cold chain infrastructure, and surge in demand of cooling infrastructure. And outlook for caustic soda is expected to remain stable. Anything is likely to remain range-bound due to domestic capacity additions and balanced supply-demand dynamics. Similarly, the performance in chloro... This is expected to remain range-bound in the near term amid moderate demand conditions and competitive market dynamics. As we look at our battery materials business, we believe the segment is now at an important inflection point. The global energy transition continues to accelerate, and the demand environment for advanced battery materials remains highly encouraging. The battery energy storage system opportunity, in particular, has strengthened significantly over the last few quarters. Increasing investment in AI and machine learning infrastructure, coupled with rising data center capacities, are driving the power requirements and creating structural demand for energy storage solutions globally. Against this backdrop, we are pleased to share that all the initial capacities planned under Phase 1 have now been commissioned and contracted for. We have secured multi-anchor customers across all our battery material products. which provides confidence on utilization ramp-up and commercial scale-up over the coming quarters. LITS-6 salt has now received approval from most of the major global electrolyte players, and commercial sales are scaling up in line with our plans. We have ordered this in place for FY27 and beyond. Accordingly, production will be ramped up quarter and quarter. In cathode-active materials, samples from our plant have received initial approval, and final qualification is expected by the end of this year, end of the third quarter, I'm sorry. Thereafter, commercial supply will commence, for which we have already optic agreement for the entire capacity. As part of our next phase of growth, we are also setting up natural graphite anode-active material facility. With this addition, we will be able to address nearly 70% of the value of an LSB battery cell, positioning us as one of the most integrated battery materials platforms globally. To support this growth roadmap, we have planned a capex of approximately 2,300 crores for FI27 across the battery materials portfolio, largely focused on Growth CAPEX, including the anode active material project. To support this growth roadmap, we have planned, I'm sorry, we remain committed to our previously outlined guidelines of 6,000 crore cumulative CAPEX by FY28 across the battery materials portfolio with targeted asset terms of nearly 2x. and EBITDA margins of over 25% plus. The full earnings potential of these investments is expected to be realized by FY29 as the facilities progressively ramp up and achieve optimum utilization levels. While the macroeconomic environment remains challenging, the broader business landscape is gradually showing signs of improvement. We remain focused on strong execution, prudent cost management, and disciplined scaling of our emerging growth platforms. Remain confident in our ability to deliver, sustain growth, and create long-term value for all our stakeholders. Thank you very much, and now I open the floor for questions.

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 touch-tone 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 Ankur Perival from Access Capital. Please go ahead.

Yeah, hi, sir. Thanks for the opportunity and congratulations on this set of numbers. First question on the CAPEX announcement, you know, both on the battery side as well as on the standalone side. The fluoropolymer expansion, will this be on PTFE side or the new fluoropolymers? How do you see that? And just, you know, commensurate to that, the fluoropolymers growth for the full year that we are seeing, around 15 odd percent. How will you break this up between PTFE and new fluoropolymers?

So the investment will be on new fluoropolymers, and so far we have not been given any breakup of growth of respective fluoropolymers. However, all I can say at this point, Ankur, is that the capacity that we had set up a few years back are almost reaching its full capacity, optimum capacity utilization, and... Now is the time for us to add capexes in new fluoropolymers segment right now.

Sure, sir. On the risk case side, 150 odd crores, you know, expansion there. This is largely for the 20,000 ton, you know, capacity that we are looking at? Or are there any further thoughts to expand that capacity further with respect to the quota that we have?

No, it's mostly as of now, we have announced that we'll be going up to 20,000 ton in R32. So it's related to that as of now.

Okay, and by when are we expecting this 20k ton to be commissioned and, you know, production starting there?

The production has already started. As I said last time that we have achieved over 10,000 ton capacity at the moment. And over a period of time, I think it will be ramped up to 20,000 tons.

Sure, sir. And just lastly, on the battery chemical bit, you know, good to see the capex, seeing a ramp up there. When we are saying from a, you know, product approvals perspective, large part of things are already there. These are largely for the salt approval, or even the other, you know, products, the value chain, etc. How's the progress there? And on the technology side, any tie up or it is largely, you know, homegrown for us there?

Ankur, we started with salt and electrolyte in the beginning, as we had indicated. So, initially, obviously, our initial capacity was in the salt. Our capacity commissioning was in that area, so our approvals are all in the salt in this phase. The second we added was cathode active material. So, that plant was commissioned recently. And we have prepared the sample, and our initial sample has already been qualified. So now it will go through the full qualification, and which we expect to get it by the end of this year, which is the third quarter of this financial year. And then our supply will start after that, after we get the full qualification. So in LIPF 6, we have achieved the full qualification from number of players. And the supply is being ramped up. LFP at the early stage, plant is already commissioned, as I said, and samples are made. We have optimized the product as per the customer need. And once the product is fully qualified, the supply will start and this entire plant is fully contracted.

Sure, Mr. Kapoor. That's helpful. Thank you, and I'll get back into the queue. Thanks, Ankur. Thank you.

Thank you. The next question is from the line of Sanjay Jens from ICICI Securities. Please go ahead.

Thanks. Thanks, B, sir. I have a couple of questions. First, on the battery side, when we say that we are fully booked for the existing plant, are we talking about LIPF6 and how much revenue potential when we say because for us, We don't know the capacity, we don't know the capex you have put. So, how to think about FI27, FI28 revenue, and when you say we have fully sold capacity, is it fair to assume that in FI27 that entire capacity will be sold to the customer?

Okay, you know, what we have is that whatever capacity that we have in place now, Okay, this is true for LIPS6 as well as for LFP, which has been recently commissioned. Now, coming back to your questions and just regarding revenue potential, and I think we had guided earlier that, you know, once you put in a capex, there's a certain gestation period in terms of plant getting stabilized, getting the right quality, and then qualification. And subsequently, the revenue stream starts coming up, and product mix average had indicated two times the asset turnover. I would follow the similar approach because it would be difficult for me to give the exact number in terms of the, but if you look at the way our investments are happening and the capexes are being built in. Over a period of time, after a certain gestation period, we would start seeing a two-times revenue coming in.

So will FI27 be a more, again, a qualification year, or we intend to supply a material quantity in this year?

F by 27 will be a material quantity for salt, which I have already indicated very clearly, because our initial investment was all in salt, salt plants are all. See, let me tell you, initially, I think this I had explained in several calls earlier, that our initial phase of investment is building up the capacity, which is the smallest commercial scale capacity. To achieve the quality level and get the approvals, and then subsequently we'll go through the ramp phase. Okay. So initial capacities in the salt has already been built. We are ramping up phase right now continuously. So the salt, we already have a qualification. So salt, you will see a consistent growth in supply and the revenue coming in. LFP, this will happen a little later. As I said, that will probably happen at the end of the, after the third quarter of this year.

No, again, because we have already put one third of the money what we have thought about, which is almost 2,000 crores has already gone into the battery material. And we are still left with 4,000. Even if I just say thumb rule of 2x, this itself should potentially give us a 4,000. Probably we have utilities and all. So probably giving some discount to that. A 3,000 crore revenue potential itself comes from the investment already done.

There's a gestation period. Again, I must say that this is a sort of a relatively long-term play suggestion. It's not quarter and quarter kind of business. There is a gestation period for each plant because there is a long qualification period, almost could be nine months to a year. So once the plants are commissioned, qualification for the quality and then the qualification, and then the revenue starts taking in, and the number that you are talking about will come eventually, yes, but then when the capacity utilization is complete.

And on this anode, I've never heard about this, you know, suddenly, why anode, tech, I don't know, because all across we talked about LIPF6, LFP, and additives, and binders, you know, anode was a twist.

Not a twist. It's one of our, you know, we have been adding product in our battery material portfolio, and this was kind of one of the last. Bit, that too, because, you know, battery has typically three major components, cathode, anode, and electrolyte. We are present in cathode, electrolyte, we are present in salt, binders, and now anode. And this we are talking about a natural graphite anode. Okay, there are different kinds of anodes, synthetic as well as natural. I'm talking about natural right now. And there's, of course, certain synergy with our capability in natural graphite anode.

What capability can you, can you help us understand that?

It would be, I'll hold on to that for now, but there are definitely synergies with our existing businesses.

Got it, got it. One related question on battery before I go to the co-business. In this quarter, we saw a sharp jump in the losses because the revenues are largely same as last quarter. Well, if I look at the EBITDA loss, it appears to be significantly large. Now, why such a large cost addition in this quarter?

As we are capitalizing our assets, once we qualify, we reach the point where the assets are qualified. All the cost starts coming up right away, Sanjish, and as the volumes are being ramped up. So this will eventually ease off. It's a short-term thing because it's kind of a start-up business.

Because your depreciation number on the EV segment has really not gone up.

No, depreciation number, because as we capitalize, the depreciation number starts coming in. So as the plants and the product gets qualified and we commercialize it, The number gets up. And again, I will request Manoj to answer. Manoj is here with me.

Hi, Anjish. So, you are specifically speaking about the segment of EV business?

Yes, he is talking about the minus 68.

Okay. So, essentially, we have capitalized the LIPF6 plant on 5th of January this quarter. Okay. So, our operation has started. So, before the operations, you are eligible for capitalization of all pre-operative expenses and trial production losses, everything. Once we start the operations, the accounting standard doesn't allow you to capitalize the expenses. So all the expenses flow through P&L, irrespective whether your sales ramp up has happened or not or your capitalization has happened or not. So, this has resulted in this. So, earlier also, if you have seen, some of the expenses which were always charged to P&L is around 20 crore rupees or so, but this has gone up to from 20 crores to 45 crores roughly. Out of that, one, we have started utilizing the buy-off trade in the foreign currency, and that was the unexpectedly one-time loss that will not recur in future because we have now... M2M, and we have all now covered it 100%. In GFL, we don't have to cover anything because we have got a natural health there. Here, because sales are ramping up, this was naked as on the balance sheet rate, and unfortunately, the movement of dollar and INR was extreme due to Iran and U.S. war. Okay?

Got it. Got it. Very good. Thanks. Thank you. Thanks, Sanjeev.

Thank you.

No, no, one on core business. Thank you for the answer. So, one of the core businesses is going up in the fluoropolymer by one of the large competition. Have we taken the similar price increases? That's number one. Number two, on the volume and demand itself, generally what happens in an inflationary environment, restocking happens faster, and it also kicks in restocking, which we were struggling because BCP quantities of 3M and Solve was still there in the system. I hope this entire phenomenon should help you to get back the demand and approvals and also in that scenario, how should we see FI27?

Sure. First, let me answer one quickly, and then I'll hand it over to Kapil for a neutral answer. There has been a price increase. We have also taken a price increase, Sanjesh. Okay. And because if you look at it, that we have been, in spite of increasing raw material and the logistic prices, we have been able to maintain our EBITDA margins and continue to.

So, as Dr. Kapoor has mentioned, we are also seeing the demand growth in this year, mentioned But the sectors which have been semiconductor and a couple of other growth sectors plus also we have been mentioning in the past calls also that we are totally focusing on the value-added applications and value-added customers. So this year, we expect to see a growth of around 15 to 20 percent as compared to the last year in our fluoropolymer products, which we are going at. And that is why we are also entailing a capex also, because we are seeing that whatever capexes were made last couple of years, we are almost at the complete utilization cycle of those products in this financial year. So, we are seeing a growth outlook for this year as well as for the next couple of years also. But growth coming from the sector which we are mentioning.

So, 15 to 20 percent when we say it's volume growth, right? Pricing, I think, pricing itself has gone up by 15 percent.

Yeah, right. So obviously, you know, that effects also start coming in. You will see in the, you know, results when they are coming out. So that also, you know, starts coming out. Whatever, you know, but there are also being the cost push also from the back end also. So that also gets out, balanced out also. So, but we are seeing the growth in the prices as well as in the growth in the volumes also.

You got it, you got it. One last in the rift, yes.

Sorry to interrupt your message, and may we request you to please rejoin the queue. We have participants waiting for the turn. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, we would request you to please limit your question to two per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Arun Prashad from Evenders Park.

Please go ahead.

Yeah, thank you.

Sorry, thanks for the opportunity. So, my first question is on the flow polymer business, generally chemicals business excluding EV. So, in the past, we said our steady state targets for the existing assets and capacity at a much higher level, but now we are saying that we have not even reached 80% of that level, but still, we are seeing that we are fully utilized, and we would like to get back. So, how should we look at this? Was it any expectation of ours? Didn't happen because we are not able to ramp up, or what's happening around in this chloropolymers and new chloropolymer business?

Okay. Arun, first of all, we have never given ever a capacity utilization numbers earlier. All we are saying right now that the initial capacity that we had put up in fluoropolymers, we are seeing now that reaching up pretty much reaching an optimum. And the time has come for us to now put a fresh set of investments in fluoropolymers because the growth that we are seeing is consistent. Now you are asking that why it has taken some time, et cetera, because I have said many times that there is a – as we go into higher and higher grades of polymers, the qualification time becomes – And particularly now, for example, if you talk about some of the fluoropolymer, which is getting into an application like Semicon, so the gestation period or the qualification period is long. But today, I think we are in a much, much, much stronger position. And Kapil, you want to add something?

Yes, continuing on the same path. Obviously, when we are going into the high-valuated applications, talking about semiconductor, talking about hydrogen fuel cells, talking about the other applications, the approval cycles are definitely a bit longer. But now we are on the end where most of the approvals have come in, commercial businesses have started doing well, and we are seeing that growth coming in. That is why we are very confident about the figures which I told. And going ahead in the new fluoropolymer business, especially PFA, FKM, and a couple of other products which we have added, we are seeing that the growth is continuing, and that is why a capex is also being planned. We feel that by this financial aid, we will be almost... Thank you.

No, actually, what I meant was not with respect to the product approval timelines, but we understand that, you know, it's a fairly longer registration period product. But what I am trying to ask is that this is a kind of EBITDA numbers for the fluoroportment, at least in the chemical business. Is this a steady-state number that we actually envisaged when we put up those plants? Two years ago, or is it something like lower than what we envisaged?

No, I think, I think, Arun, this has been in line with what we had thought because we had already, you know, given an indication of certain EBITDA margins and which we have been sustaining. So I don't think there is any disconnect with respect to what we have thought. Understood.

And when we are adding capacities, is it across all the new fluoropolymers, or is it in some pockets, if you would like to call out a few fluoropolymers, where we are adding disproportionately?

Obviously, there are, you know, the margins are different depending upon the different grades. So, some of the new polymer, which is very high-end, the margins are disproportionately higher, obviously, yes. So when we talk about it, we talk about it as mix.

All right. Second question on the EV, we say that all of our capacities are contracted. Does it mean that, is it something like a take-or-pay, or after you are done with the qualification, is it a take-or-pay, or is it more like a soft commitment?

I'm not really at liberty to give details of our contracts.

Arun?

However, these are all I can say that these capacities and, you know, when we had put up, there are anchor customers, there are specs agreed on, there are pricing that has been agreed on, and these are some of the contract which is in writing. I would not be able to give details of the customer contract or in detail about the customers.

Sorry, Jain Chahap, may we request Mr. Arun Prashad to please rejoin the queue. Thank you. The next question is from the line of Hanfil Thakkar from Ralkar Securities Private Limited. Please go ahead.

Good evening, Dr. Kapoor and the rest of the team. I mean firstly, accept my heartiest congratulations for You know, such a good resilient performance on the chemical segment, especially from photopolymers against a rather challenging global backdrop. Also, very encouraging to see that we are aspiring to be at 70% of the EV battery value. Just one question I had, sir, just trying to put the CapEx figures in perspective. The 800 crore planned capex for 27, I understand 150 crores, as you mentioned, is towards the R32. So is the balance part of any specific polymer expansion or is it part of common infra? Because I'm trying to add the numbers up and, you know, taking cue from your comment that, you know, the cumulative capex figure remains at 6,000 crore.

Sir, we are unable to hear you.

Can you hear me now?

Yes, please go ahead.

Okay. So, Hansal, I think maybe there might be a mismatch in the numbers. The projected number that we have said is around 800 crores for GFL. Okay. Out of that, 150 crores is for RevGas, 220 crores for electronic speciality chemicals, Which is primarily for semicon. And we have fluoropolymers, we have said 250 crores. Is this great? You had some question on the fluoropolymer CAPEX, Hansal?

Yes, sir. Yes. So, I got my answer. I'm just trying to wonder how this totals into 6,000 crores of the unchanged CAPEX figure, but I guess it has something to do with the bifurcation of the CAPEX of FY24, I'm guessing.

So, the 6,000 crore numbers that we had said when we started the journey in the new... EV vertical or the EV business. At that time, almost a couple of years back, we had said that our plan is to invest 6,000 crores in EV business over a period of four to five years. So I was, so 2,300 crore for EV is part of that 6,000 that we had indicated earlier. Is that clear? And now the GFL capexes are separate, because GFL capexes are in the chemicals part of the mother company investments, and EV is now being separated out.

Excellent. Excellent. Got it, sir. Crystal clear. Thank you so much. Thank you.

Thank you. The next question is from the line of Hrchid Joshi from Nuwama Vilt. Please go ahead.

Good evening, sir. Thanks for the opportunity. Just had one question, rather a clarification, if you can give on the R32 capacity, we would be eventually at a 20,000 ton capacity of R32, if I understand that correctly. Do we, would we have any plans to add more capacity going into 2027, given that we have sufficient and quota from the baseline of the HCFC years. And there's another year for us to make use of the timeline to add more capacities. And on the same lines, how do we see the ramp-up of R32 capacities in F27? Any elaboration over there? Thank you.

Thanks, Arshad. First of all, we had said that we would be adding 20,000 ton in R32. So we are going through that process right now. And our capacities will soon reach 20,000. It hasn't reached yet. And regarding the subsequent addition, we have also made it very clear that we will be adding the full capacities and utilizing our quota or our allocated quantities. We have time, and we will take that call as we go along. Looking at the market dynamics and the opportunities to utilize it, and looking at the product mix and what's the right product mix for refrigerants.

All right. So for that, we will have to wait till a few more quarters to understand how much capacity might get added and what the kind of quota that we are targeting maybe in the next year.

Yes, our quota numbers are very clear. We have internal estimates because there are very well-defined guidelines for the quota. So that number is very clear to us and we are clear about adding capacities to reach that number.

Got it. And this 220-odd crore capex, if I heard that correctly, or R32, this is for F27, assuming that we would have that capacity towards the end of the year, or we are very close to commissioning that capacity?

Sorry, Archit, I think we mentioned 150 crore for... 150, sorry. Right, right. So it will happen very soon, very soon.

All right, so by second half, would we have the full 20,000 tonne available for sales? Would that be a right assumption?

Yes, hopefully, yes, sure.

Sure, sir, thank you.

Thanks for answering my questions and all the best.

Thank you.

Participants who wish us to ask a question, please press star and 1. The next question is from the line of Tejas, Arun Sonavnev from Asian Market Securities. Please go ahead.

Yeah, good evening.

Thank you for the opportunity. My first question is on the EV capex. Could you help us with how much has been the total capex so far on the EV side and

how much have we capitalized from that capex? So approximately 1900

to 2000 is what we have already invested so far. The plan is to go for 2300 next year or this coming year. And so this is actually is our ramp up phase now. Okay, we have done what we have to do for learning, customers, qualifications, pretty much, you know, now this is the time.

Okay, so this 2,000 crores is the amount which you have already commercialized. Would that be correct?

The CapEx that we have already invested, that cash flow, some part of it is capitalized, not the entire thing. As we are getting ramped up, as the plants are commissioned with the intended, you know, with whatever the intent of the CapEx is, and that's reached, we are capitalizing it.

Understood. And second, on the Oman Capex, which we indicated last quarter, with whatever has happened in the Middle East, what is the status of that project?

Are we on track to go ahead with this Capex?

No, we will go ahead with the CapEx, Achit, because, Tejas, I'm sorry, there are no, we have not, no impact on Oman if you look at the overall capacities. Oman has been. Overall, one of the safest countries so far in the Middle East. And so there's no change in our capex plan, and we are going ahead with it.

Okay. One last question on the gross margin front. This quarter, we have seen that the gross margin has seen some decline.

Could you help us understand what could be the reason we under dropped gross margin?

It's not really decline. It's probably what, maybe half percent point, very small number change. It's not a significant change, Regis. It's pretty much flat overall. Okay, that's helpful. That's also my side.

Thank you. Okay, thanks.

Thank you. The next question is from the line of Arun Prashad from Evendus Park. Please go ahead.

We were discussing about the contracts in the EV business and you said it is contracted and sold out. Does it mean we should have some kind of a revenue visibility for this year, isn't it, at least for those products where we are done with the approvals and qualifications cycle?

Yeah, I'll let Mr. Rajiv answer this. Please, go ahead.

Yeah, so we have, as mentioned earlier, a first investment of LIPF6 salt, where the plants are, our product has been fully qualified by most of the major electrolyte players. So the commercial sales for that product has started now, and we should be expecting revenue for LIPF6 salt for all of SI27. As far as LSP is concerned, our initial samples have been approved, and the final qualification of that product is expected sometime in Q3 of this financial year, and the revenue for LSP CAM should start subsequent to that. Additionally, our binders have been fully qualified at major And revenue for that should start in the next couple of quarters.

We'll get back to you later. Thank you. Thanks, Sarun. Thank you.

Thank you. The next question is from the line of Darshita Shah from DSP Mutual Fund. Please go ahead.

Yeah, hi. Thank you, sir, for the opportunity. Just a question on the working capital. In many days, we've continued to move up. A, how do you think of... This will pan out, or do we have any plans to, you know, bring it back to the 90-95 days that we used to have in FI 22-23? First on that, and second, as the battery business scales up, how should we see the working capital panning out?

Yes, Darshita, I am requesting Mr. Manoj to take this.

Please, Manoj.

Darshita, first of all, the numbers which we are referring to is at a higher base level. That year was an exceptional outlayer year, where our turnover was 6,300 crores, because the exceptional increase in the chemical prices. That was the first reason. So, denominator effect, base effect was there, which has resulted in to have normally low working capital cycle of 120 days to 150 days. So far our distribution model is concerned, we deal in the polymers, we stock at our Germany warehouse, we stock at our USA warehouse, and that remains so. Almost we have to keep 30 days inventory, 30 days to 90 days inventory in our plant, 30 to 90 days inventory at warehouses, and the C transit time also takes 30 to 60 days, depending on whether it's going to Germany or USA. So, that is the thing. And our average credit period is also spanned between 60 to 90 days. And because we are fully integrated, a lot of creditors are not there in our system, so we don't get that credit benefit. And because of that, our average working capital cycle remains high. Further, being we are now stabilizing or started doing our EV business, building our EV business, we have to start procuring the inventories for our EV business, the raw material inventories, and we have started commercial production of LRG F6 that has also added. So as we go along, we reach our full capacities and the turnover, automatically the denominator effect will come back and this will get reduced.

So, Darshita, one of the reasons is the kind of business model that we have, where we have stock and sale and also the large dependence on the export market. Because of that, our working cycles of the days are long, but part of it is, of course, is also related to capacity utilization. As our capacity builds up, you'll probably see these numbers going down.

Sorry, if you could just explain as to why would we require a 30 to 90 day kind of an inventory at the warehouse in the US and Germany as well? I mean, how does the offtake usually work? I mean, why would we require such a high inventory day at the warehouse in the US and Germany, like in those regions as well?

Hi, Drashita Kapil Malhotra. First of all, the kind of business we are in, we also have to keep the insurance stock for certain market customers in both the European as well as the U.S. market, because there they have the concept of just-in-time. So we have agreement with them where we have to keep the stock for them. For two to three months as an insurance stock, that's one. The second important thing is if you understand now currently, if you see the geopolitical scenario, the voyage time has increased from almost three to four weeks to almost seven to eight weeks. So our material in the stocks has actually helped us in converting the sales. And also we have to say to it that there is almost eight weeks which is taking in transit time to reach to these destinations. So that is why, to ensure that our customers receive material, we have enough stock with us to convert into sales, we have to have these working capital days with us, the material Okay.

Yes.

All right. Okay. Thank you.

Thanks, Dr. Shiva. Thank you.

Thank you. Participants who wishes to ask a question, please press star and 1.

The next question is from the line of Rohit Nagaraj from 361 Capital.

Please go ahead.

Thanks. First question is on R32. So given that we have commissioned the 10,000 tons of capacity, have we already started operating at optimal levels from March or will it be happening in subsequent months? Thank you.

It's already started operating from April onwards, so it's already operating at the optimal capacities, and it will be ramped up as we go along.

Right. And in terms of the customers, how are we looking at it? Is it domestic? Is it exports? And do we have any contracts in place for this 10,000 and the additional 10,000 that is coming in? Any anchor customers where we have at least a part of the volumes which are contracted for a medium to long term? Thank you.

Thanks, Rohit. Rohit, we have been in refrigerant business for a very long time. You know, we have one of the legacy suppliers in this area with a lot of experience in export market as well. So when we look at R32, it's both domestic as well as exports. And in some cases, we have contracts as well. So we are quite confident that when the capacity is, when we ramp up the capacity and go to 20,000 tons, we'll have no challenge at all, no issue at all in terms of selling that material. It's contracted as of now.

Got it. And the second question is on the fluoropolymers business. What is the kind of potential EBITDA that we are looking at whenever we reach the optimal or full utilization for the existing capacity?

Thank you.

So the thing is that we have still, Rohit, not reached the full capacity, as I said earlier. So as we are seeing the volume growth in fluoropolymers, the EBITDA will continue to grow. In fact, as we have seen earlier also, as more and more new fluoropolymers are added, which are high-value-add, we see our overall EBITDA going higher because of the higher margin products. So, we will see a bit of growth as well, along with the volume growth.

Right, and let's just last a bit on the battery chemicals front. So, given that this quarter there has been some improvement in the revenues, do we see a significant or exponential improvement in revenues on a QOQ basis? And by Q4 of FY27, there could be potential three-digit number from the battery chemical strength, a high three-digit number from the battery chemical strength as an exit rate. Thank you.

Yes, Rohit, you're right. You'll see a growth going up quarter and quarter, and the rise would be significant, and we expect to reach, of course, a three-digit number by the end of this financial year, in the last quarter. Yes.

Sure. That's it from my side. Sure. Thank you. That's it from my side, sir. Thank you. And on the next.

Ladies and gentlemen, that was the last question for today. With that, I now hand the conference over to management for a closing comment.

Yeah, thank you very much. The strong growth driver for short-term to long-term are all in place, I think. And short-to-medium-term growth will be driven by the refrigerant and fluoropolymer segment, and the medium-to-long-term growth journey is equally encouraging for us. As the Advanced Battery Materials business is scaling up and reaching up to the full potential in coming years. With this, I would like to thank you all for your interest in GFL, and thank you very much for being part of this call.

Thank you. Ladies and gentlemen, on behalf of 361 Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.