ION Exchange (India) (NSE:IONEXCHANG) Q2 2026 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to the ION Exchange India Limited Q2 H1 FY twenty twenty seven Earnings Conference Call hosted by Valorum Advisors. As a reminder, all participant lines will be in a listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Purwang Jain from Valorum Advisors. Thank you, and over to you. Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Purangy Chen from Validum Advisors. We represent the Investor Relations of ION Exchange (India) Limited.

0:47 On behalf of the company and Validum Advisors, I would like to thank you all for participating in the company's earnings conference call for the second quarter and first half of the Year twenty twenty seven. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's call may be forward looking in nature. Such forward looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decision. The purpose of today's reclassification of reporting segments and earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review.

1:40 Let me now introduce you to the management participating with us in today's call and hand it over to them for their opening remarks. We have with us, Mr. Amkur Patni, Vice Chairman Mr. Inderneel Khan, Managing Director and CEO Mr. Vasan Nayan, Group Chief Financial Officer and Ms. Nikesha Sulankhy, Company Secretary. Without any further delay, I request Mr. Vasan Nayan to start with his opening remarks. Thank you, over to you, sir. Thank you, Purwangi. Good afternoon everybody. It is a pleasure to welcome you to the earnings conference call for the second quarter and first half of the financial year 2027. Let me begin with an overview of the company's consolidated financial performance.

2:28 During the second quarter, on a consolidated basis, the company reported operating income of 6,747 million, decline of approximately 8% year on year. The EBITDA stood at a loss of INR $848,000,000, while the net loss after tax for the quarter was INR $828,000,000. The financial performance for the quarter was significantly impacted by changes in the estimated cost to complete of certain legacy projects within the Treatment Solutions segment. For the first half of FY twenty twenty seven, the company reported operating income of 13,752 million, registering a year on year growth of just under 4%. EBITDA stood at a loss of INR $530,000,000, while the net loss after tax for the period was INR $797,000,000.

3:17 Let me now briefly update you on our order book and pipeline. As of 09/30/2026, our engineering project order book stood at approximately million excluding the outstanding order of INR100 million from the Sri Lanka project and INR2630 million under the U. P. Jaldingham order. Our total order book stood at approximately million. In addition to our existing order book, our bid pipeline now stands at million as of September end. During the quarter, the order inflow stood at INR8130 million, driven primarily by the medium sized opportunities and a prestigious international contract from Hyundai Engineering and Construction Company Limited valued at 52,830,000.

4:15 This is for the supply of filtration units in The Middle East with a better margin profile. Our overall inquiry bank continues to remain steady, and we remain focused on converting these opportunities into orders and executing our existing backlog as per the planned schedule. Now let us go through the quarterly segmental performance on a consolidated basis. Starting with the Treatment Solutions, the segment reported revenue of INR $1,498,000,000 during the second quarter of the current year compared with million in the corresponding quarter last year. The average stood at a loss of INR1215 million compared with a loss of INR122 million in Q2 of FY twenty five-twenty six. For the first half of FY twenty twenty seven, revenue stood at INR 3,597 million compared with INR 4 and thousand $797,000,000 in the corresponding period last year, while EBIT stood at a loss of INR $1,389,000,000.

5:15 As mentioned earlier, the segment performance was significantly impacted by changes in the estimated cost to complete of certain legacy projects. Additionally, the execution of some high value contracts is scheduled for the second half, while certain dispatches to the GCELIC region have now been deferred to the second half due to the ongoing Middle East crisis. Looking ahead, considering our strong order backlog and planned execution schedules, we expect an improvement in turnover during the second half accompanied by a better margin profile. Moving to the Industrial Products segment, the segment delivered strong growth during the quarter. Revenue increased by approximately 35% year on year to INR1360 60,000,000 compared with INR 1,009 million in Q2 of FY 'twenty six.

6:02 EBIT also improved to INR 86,000,000 for INR from INR 74,000,000 in the previous year. For the first half of FY twenty twenty seven, revenue grew by approximately 25 year on year to INR2411 million, while the EBIT increased to INR210 million as against INR124 million in the corresponding period last year. The segment continues to witness steady order inflows and we expect the growth momentum to continue in the coming quarters. Coming to the Lifecycle Services, the segment recorded sequential growth during the quarter while maintaining stable margins. Revenue stood at INR706 million compared with INR770 million in Q2 of FY 'twenty six, while EBIT was INR59 million.

6:48 For the first half of FY 'twenty seven, revenue increased to INR1422 million as against INR $1,329,000,000 in the previous year and the average stood at INR 130,000,000. Coming to the moving to the Specialty Chemicals, the segment recorded an improvement in turnover both sequentially and year on year. Revenue for Q2 FY 'twenty seven increased by approximately 17% year on year to INR 2,546 million compared with INR 2,181 million in the corresponding quarter last year, and the EBIT stood at INR $225,000,000. For the first half of FY 'twenty seven, revenue grew by approximately 19 year on year to INR 4,843 million compared with INR 4,070 million in first half of FY 'twenty six.

7:34 Average stood at INR $448,000,000. The margins in this segment continue to remain under pressure due to the input cost inflation arising from the higher RM cost due to the West Asia crisis, along with the facility cost associated with our Roa plant. We have taken steps for passing on the cost increases to the customers, and it is now getting increased success, which will reflect an improved margins in the coming months. Our offtake from our resin manufacturing facility at Doha is gradually picking up, and we expect the facility to contribute to the segment growth in the coming months. Coming to the Consumer Products segment, it continues to deliver strong volume growth during the quarter with revenue increasing by approximately 30% year on year to 1,005 million compared with INR $771,000,000 in Q2 of FY 'twenty six. Average stood at a loss of INR 41,000,000 compared with a loss of INR 23,000,000 in the corresponding quarter last year.

8:35 For the first half of FY 'twenty seven, revenue grew by approximately 32% year on year to INR 2,129 million compared with INR $1,613,000,000 in first half of FY 'twenty six, with an EBIT loss at INR 45,000,000. We are continuing to invest in this business with the objective of scaling up operations and building a significantly larger revenue base. Beyond our core segments, our advanced digital solution offerings are receiving an encouraging response, and we believe this business can contribute positively to our services segment in the coming months. With this, I conclude the opening remarks, and we can now open the floor to the Q and A. Thank you very much. We will now begin the question and answer session.

9:26 Session. We'll take our first question from the line of Prathamesh Sawan from Abacus Investment Manager. Go ahead. Hi. Thank you. Best of greetings to the team, sir. My first question is on the Specialty Chemicals segment. So sir, what percentage of our margin deterioration can be attributed to the raw material? And what percent to the new facility ramp? Last quarter, you mentioned six percentage was because of the new facility.

10:11 So any segregation and you have said that you are trying to pass the cost. So what kind of margins can we expect in the second half? Yes. Coming to the impact of the Roha facility on the segment, it was around 7% at the segment level for this quarter. And as far as the West Asia crisis and the associated increase in input costs, which we could not pass on, it is also in the region of 7% to 8%. And some couple of percent can be attributable to the exchange gain, which was at a higher level in the previous year and that similar level is not there in the current year. So overall, around 18% can be attributed to these three main factors.

11:00 Okay. Okay. And how much of the price increases can help you reduce the gap? So we are currently in the process of discussions with customers. We are seeing good traction and acceptance in the domestic markets. But in international markets, we compete with global players from all locations and that is where it's a process that we are going through. We also are keeping in mind the utilization of the new Rohan facility. So it's a combined action being taken to look at the volume required and the price gain to ensure that we are able to ramp up as per our required expected rates in Roha. So that is work in process, a quick answer.

11:49 We are seeing expected gains in the domestic market, international market, it's a work in progress. Okay, okay. And then my second question with respect to your Treatment Solutions business. So, we are expecting this higher value orders in the second half. So, what percent of these orders again will be going towards Middle East, which have a risk of further delay because of its geopolitical tensions? So there are two parts on the Treatment Solution, the expected revenue. One is our current existing backlog that we have been working through. And we believe we have a significantly higher level of confidence on those numbers coming through for us. On the new order that we have received from that my colleague, Vasant Narayak, spoke about. We're also looking at seeing if we can get some of that revenue also in this financial year. So that also is a work in progress. Currently, we believe that orders expected to go to the Middle East region.

13:02 We have reason to believe that, that will go ahead as per our plan. Okay, okay. And sir, any light on the INR 9,100 crore bid pipeline that you have? Can you give any color on from what segments are we seeing this? So largely, it is on the industrial side, both in domestic as well as in the international markets. The focus primarily is on the refining segment is about 40% of that backlog comes from refining and about 15% each from power and steel. Okay. Thank you, sir. Best of your greetings.

13:49 Thank you. Ladies and gentlemen, we've lost the management connection. Request you to stay connected, please. Ladies and gentlemen, please stay connected. We are trying to connect the management team. Thank you.

15:16 Thank you, ladies and gentlemen. We have the management team back on the call. Next question is from the line of Prateek Kothari from Unique BMS. Go ahead. Hi, good afternoon. So just to confirm again this performance in Treatment Solutions, this is just delaying dispatch to GCC, I mean nothing else? I mean, if you can quantify that. Yeah. No. No. As we have been saying, if you have been following us, Kotaragi, in the past, we have we've been talking about some legacy contracts where we expected some cost overruns. What you find in this quarter is that we have got a very good estimate of what that number those numbers are, And we have considered that entire impact of the overrun in this quarter's financial numbers.

16:20 So with that, we believe that the risk on the legacy contracts on from a cost overrun and profitability impact standpoint that we have been talking for close to about eight quarters in our calls, we have reached the bottom of the barrel as far as that is concerned. And this is the time that we took it because we now have a very good visibility and understanding and also a clear path going forward. So that is one of the major reasons why this quarter's performance on Treatment Solutions have been impacted. And this has actually contributed about 90% of the quarter's PBT impact.

17:13 But the order is yet to be executed. What you're saying is for the incremental execution, so one, if you can confirm our earlier plan was to complete this execution this financial year. So one, if we are on track and two, there are no more incremental losses that we'll see. Everything has been recorded, INR100 odd crores of that this quarter itself. Yes. So first of all, the project is about more than 90% complete. However, as we have said in the past that we expect this legacy contract to spill over into the next financial year. However, we have got a very good visibility of the impact. And now with this cost overrun impact that we have taken in the quarter, we believe and we expect that there are no further adverse impact that we expect on this contract for the remaining quarters of execution that is left.

18:10 Okay. So what does margin then normalize to from H2 or next year on the engineering or the treatment part of things? So we should be able to get back to our average margin on the treatment solutions. If you are aware, right, that from this particular financial year, we have recast our segments to cover Treatment Solutions separately. So this is purely the projects business of the company. So we expect that the Q1 margins that we have got, we will maintain that and maybe there are some upsides that we will be able to offer in the second half of the year. So you used to do 67% margins two, three years back, this is Treatment Solutions specific?

18:57 No, no. What we used to do in 6% to 7% margin was for the Engineering business at that point in time. But Engineering business has now been split up into Treatment Solutions, into Industrial Products and to a Lifecycle Services business. As you would see that both the Industrial Products and the Lifecycle Services business are in double digit profitability even in this in the half yearly performance that my colleague, Bhattani, just talked about. So the Equipment Solutions is the net of that 6%, 7% number, of the Industrial Products and the Services double digit profitability. If you had done that segmentation two, three years back, that number would have been in low single digit. No, sorry. Sorry, sorry to interrupt, but when we gave this breakup out, right, we did a call saying that we are breaking this in two different I think this was the last con call.

19:52 Had given a five year history of Treatment Solutions. And if you see in FY 2022, did a 12% margin on Treatment Solutions, which came down to 7%, then 5%, then three over a period of time. This is slide 33 of that presentation which you have put up. We understood in Treatment Solutions alone also 6%, seven or even 12% EBIT margins. Yes. So that as we had said, so thank you for clarifying. So that double digit, I think we are some time away, but we should be able to get to higher single digits in the balance part of the year. That is our Okay. And lastly on revenue, right, so this kind of explains the profitability of Treatment Solutions, but even the revenue is half. So what happened here?

20:38 So on the revenue side, this is the financial impact of it. I'll let call in Vasanth to explain the revenue impact on this contract. Yes, there are a few reasons why the revenue is down. One is, of course, for the order backlog, what we have, we have planned some high volume execution is planned as per the contractual terms in the second half. Second is, we also mentioned the Middle East crisis, certain dispatches got deferred. That is another reason why the revenue is down. And third is because some of the revenue, which we have done on contracts, the same have been reversed under the accounting standard to match the cost and the revenue. So a combination of all these three factors have contributed to the overall reduction in the Treatment Solution revenue in the first half. But having said that, based on the order backlog, the planned execution and the new Hyundai contract which we are planning to execute, we should be at the full at the end of the year, close to the full year levels what we showed in the previous year.

21:50 Okay. And lastly, I mean, obviously, the raw material, etcetera, has gone up materially in chemicals, but has that stabilized? I mean we intended to kind of breakeven at RoHA say by Q4. Does that look feasible? Did not see what we had said in the past was that the Roha capacity utilization will grow 25 every year. This is the first year. So we were looking at getting to 25% of the Roha capacity utilization. I think as of now and on top of that, we had some of the headwinds of the West Asia crisis and the food cost going up. So we are working through that and we believe we are seeing some recovery starting, but it's early days.

22:40 And as the West Asia crisis stabilizes, which we are hoping on the geopolitical situation, we believe that the input costs will stabilize or soften a bit and we will be able to pick up more volume in both the domestic and more specifically in the export markets. Okay, great. Thank you and all the best. Thank you. Next question is from the line of Deepak from Sundara Mutual Fund. Please go ahead. Yes. Thank you for the opportunity. Am I audible? Yes. Hi, sir. Sir, two, three points. One on the engineering. So you did call out that Hyundai order. So if I recall correctly, that was an INR500 crore order, which was supposed to get executed in the span of eighteen months, right? So just wanted to know what kind of revenue contribution one can expect in, let's say, this fiscal year? And since it's an higher execution of only eighteen months, think most will trickle down to next year. So just want some color on what sort of revenue one can expect from this Sundai order in FY 2027?

23:51 So we don't give any specific call out for specific contracts, but we are working closely with the customer. The project is moving progressing satisfactorily and we expect to get a portion of that revenue in this financial year also. Again, ultimately, everything depends upon how the overall project moves. But based on the progress that we have made over the last couple of months, including ordering critical items, we believe we will see, as per our estimate, a decent amount of the revenue from that order. At this point in time, it will not be possible for us to share anything more specific on a single contract.

24:40 Okay, okay. But on a net basis, as Vasant said pointed out, you are confident that let's say in FY 2026, you did somewhere around crore excluding the inter segment revenue in the engineering division that is something which we can hope to do this year also since the execution in H2 will be higher? Yes. So we expect this to go back to that level as of now. First half has been softer as my colleague, Watan, said. So we are expecting some ramp up and we should come close to that number based on what we see now. I think at the end of the next quarter, we will be able to give you a more clearer outlook of where we possibly will end by the end of the year.

25:29 Got it. And sir, one question on Chemicals. So this quarter we have seen good growth of 17% on a Y o Y basis on the top line. So just wanted to know of this 17%, how much would be volume driven and how much let's say increase in the ASPs on a blended level? We haven't got as much increase in price as we have liked to get in that process is on and we expect this we're still not happy with where we are on the overall revenue growth on the Chemicals segment, because there is still more that we showed yet and also the new Grohawk plant that is now progressively being more available to us. So we expect more focus and efforts on driving both volume and price in the chemical segment going forward.

26:27 Okay. So then would it be fair to assume that let's say 10% to 12% to grab in volume and remaining price led? At this point in time, yes, you can kind we don't would not want to give you that breakup right now. What we'd want to say is we expect a higher trajectory going forward subject to obviously the geopolitical crisis not getting any worse and input costs are getting any adversely affected. But there is more on price that we want to get in the market. And clearly, we also see some volume, especially on the export side that we can expect to pick up going forward. Okay. And sir, how is the situation at the logistics front? Because a lot of companies are pointing out that there is a lot of congestion at the port, right, because of whatever is happening at the geopolitical level.

27:19 Is that situation worsening as of now? Or let's say, as of the last two, three months, is it a bit improving for us? Because a large part of our chemicals is also diverted towards exports, hence I'm asking that. Yes. So I think what you said is correct. We also are seeing that kind of a challenge, especially towards Europe and Africa. We are seeing those shipping lines not being as predictable and consistent as it was in the past. So we are also working through that. And if some of those would have actually been better, you possibly would have been able to share better numbers as well. So that continues to be a challenge and a headwind for us as with others who are shipping in those to those geographies.

28:12 Okay. And sir, lastly, we were talking about this backward integration for our Roha plant. Just wanted to confirm that the complete backward integration is done and running or still there is some delay in that? So we are in the final for the final segment on the commissioning of some of the sub parts of that plant is going on. Otherwise, the plant is working, performing, delivering and generating producing as per our expectations. Okay. So the actual production of the chemicals is commissioned, but the backward integration is still left I feel, that's what I could get from what you are saying?

28:57 It should be over within this financial year. Okay. So it's almost like a couple of quarter delay then? Yeah. It's kind of a more of optimization, you know, it's the chemical plants to get the right process system optimization. So that's the that's what we are going through. So we believe and then the stabilization has been post optimization. So we are in that same number. Okay. Okay. Thank you very much, sir. All the best. Thank you. We'll take our next question from the line of Homiar Irani, an independent investor. Please go ahead. Yes. I would like to know about your chemical business.

29:42 Now I think it's more than one point five years since the Roa plant started. I mean your utilization seems to be very low. Have all the audit checks of international clients been charged or still to be charged? And how long will that take? Second question is, will your margin improve after finish the backward integration in your Roa plant? And how much your margin will improve, right? And these two questions, I'll come back later if I have one more question. So the plant was commissioned on 09/30/2025. So with this half year exact same time that we are reporting the quarter numbers for one year back. So the plant is in operation for about a year and we are seeing the as per expected lines of the production side. The challenge, however, is on the input cost because some of the input cost for this plant has been impacted severely by the West Asia crisis.

30:51 And that has impacted definitely profitability that my colleague, Vasanth, spoke about in the opening phase. Also, as you pass on some of that input cost to the customers, that also has an adverse impact on the volume. So that is the reason why we are not able to give our shareholders the full benefit of the volume growth that we are seeing from Roha. At the same time, on the backward integration, your assessment is right. We believe that once the backward integration is fully complete, we should be able to get some more favorable impact on the bottom line, which we should be able to show in the future profitability of this segment as we get along.

31:44 So the input cost that you were talking about, part of that input cost will be absorbed through the backward integration. Since your purchase isn't from abroad, your backward integration will make up for some of the end quote. Is that right? Yes, that is partly the correct answer. Some of that will we will be able to reduce sort of backward utilization, yes. What about trying to source some of the input domestically? There are no domestic players. I mean, if it's oil based chemicals, we have quite a few oil companies in India, including Reliance.

32:34 So I can assure you, sir, that our supply chain team is looking at all possibilities. And we are pretty much in the same situation as far as this commodity chemicals are concerned and wherever those can be procured domestically are getting done and wherever we need to go site Indian import, are doing that. Okay. And what about the audit checks that needed to be done on your Roa plant? You said that the utilization is not 100% because you have to do quite a few audit checks from international bodies and that's when the real exports will begin. So what about those? And will the export margins be higher? So we as we had informed earlier that the required certification for the Roha plant has been obtained and we shared that in the last quarter results.

33:33 Apart from that, some customers have their specific certification requirements, which is on a case to case opportunity basis, we keep doing that. So as we have and we are seeing a decent traction and response from our customers on the Roha plant. And I think in some time to come, we will even start a formal customer visits once the plant is stabilized completely. So we believe the volume and the response will pick up even more favorably in the times and months to come. And the cost margins will be faster compared to the domestic margin? It's difficult to say, sir, it is not that way. It also depends on what is that product that you're offering. So sometimes what you said is right and sometimes contrary to the common belief, there are certain products where we actually get a better margin profile in the domestic market.

34:37 And what about the margin for your filters and other product business? The filters business industrial product includes filters, right? Yes, it includes... And the membrane, membrane business. Yes. So all of that is captured in our Industrial Products portfolio. As you will see that, that business has shown a very strong tailwind of growth, including double digit profitability. And as we have said in our previous calls that the product segments, the chemical segment and the services segment make up 60% of the company's future growth, and that is a segment that we are further focusing to grow, to bring more repeatable, predictable revenue, both and profitability for the company.

35:30 And also our solutions advanced solutions on the digital side, those initiatives are also progressing very positively. And we believe that, that will also give us some differentiated capability on the aftermarket side, which will provide some strong tailwind of growth to our services business, which is something that we are looking forward to. So when you say the retail side, you have your own software team? Yes, yes, very much. It's a we have our own digital business for customer applications as well as for our own and this is a business that we have been investing in for the last eighteen months And we've now commercialized products and they have been offered both in India and overseas.

36:23 And we are seeing very good response, initial response. And this will be one of the big focus areas of the company going forward. And what about the ultra pure treatment projects? I mean, what is the sales on that? I mean, do you have the technology ready for ultra pure water that uses semiconductor, etcetera? Yes. I would encourage you sir to take a look at our investor corner in the website. And our website also is getting in a newly launched website, new loop of site will be available post the New Year in Diwali. And please take a look at the website and the investor corner, you'll find that we have uploaded the latest presentation of the company's overview and offerings as of August 10.

37:12 That will give you a very, very good view of our solutions offerings in core segment, in the advanced segment and in the emerging segment. The ultra pure water portfolio falls in the advanced segment, which is catered towards the solar and semiconductor segments. We have already done quite a few projects of big capability capacity and top customers, both India and international for the solar segment. We continue to pursue opportunities in the Sunrise Semiconductor segment. We have the technology and the required partnerships in place and we are pursuing opportunities which are commercially attractive for us in that space. We have the technology available with us.

38:00 And what is the status of your technology tie up with that membrane manufacturer that international membrane manufacturer that you recently had announced? So you're referring to the collaboration that we have with the German global manufacturing called Man and Human. So that is progressing as per plan. And that will be manufactured in the brownfield expansion that's coming up next to our current facility in Goa. The plant should be up by the end of this financial year. The technology transfer is progressing as per expected lines and we believe that we should be able to pick up volumes on this product line both in India and global from the next financial year.

38:53 And what will be the margins for that particular membrane and your revenue from that plant? Globally, the membrane market is extremely big. And we will be and in the membrane side, we have the full portfolio of offerings right from brackish water reverse osmosis membranes, sea water reverse osmosis membranes, plus ultra filtration membranes, both polyethersulfone and polyglide dichloride plus nano filtration and we also have with this new technology membrane bioreactor, bioreactors, both flat sheet and hollow fiber as well as we are offering hot sanitizable ROM membranes. We have the entire range of membranes right from sheet manufacturing to rolling and we believe that with this technology tie up that has strengthened us both in the domestically as well as international market, we are beginning to see some good traction, picking up orders in The Middle East, in Asia Pacific, as well as in Africa and The U. S. Also there is work happening to see how we can tap into those markets.

40:10 So we expect significant growth to come in the future on the main side of the business both from India, which is a large market and the world market is humongous. So that is a problem. And the margin? Margins are very attractive. Operating margins. Are attractive and they will be the margins will be when the business stabilizes, the margins will be better than the current margin profile of Industrial Products segment. However, we have to keep in mind that we are a new entrant breaking into that segment and we have to be aggressive commercial to be able to win over customers. But over the longer term of the business, the margin profile will be better in the Industrial Products side than the current margin profile.

41:04 And when will your Consumer Products division become breakeven? So our plan as we have said in the past quarterly updates that we expect the Consumer Products division to breakeven in this financial year. And as of now, while this first half has been slightly on the negative side, but we expect that the division should breakeven by the end of this financial year. That is our current position. And what is your goal, top line goal for your Consumer Products division? And do you also export those Consumer Products? Our GEL is a massively big market. We are one of the leaders in the software segment and we see significant headroom for growth in the RO and the U.

42:05 Product lines. So for us, I think we're only limited by how much do they invest back into the business in terms of marketing expenditure to increase our reach, especially in Tier two, Tier three cities and other segments. We've also reached out to our adjacent neighboring markets. We already are offering our products in Nepal. We're also looking at other SARCs and this is where to start with. And then over time, we would also expect to go beyond India or SARC region both towards the neighboring regions of APAC and Middle East, but that is sometime in the future. So how does your consumer products compare to products from Kent, etcetera? We would like to say that we are the only vertically integrated company in the water, home water, consumer water segment range.

43:03 All the technologies that are required, whether you talk about RO, you talk about resins for demyelination, all of that are manufactured in house. In fact, we also supply to some companies which are competitors in the consumer products range. So we are the only vertically integrated company and that is our unique differentiator. We are the market leader in the softener segment. We have a very, very growing service franchise in the consumer products range, which is actually helping us improve our profitability profile and also improve customer satisfaction. We have significant expectations of growth driven by the growth in India. This is a totally a consumer focused product line.

43:55 And we expect significant possibilities and growth in this product line in the future. Agree with you, but I Thank you, have Sameer. I request you to rejoin the queue, please, as we are participating for the time. Thank you. Okay. Next question is from the line of Gaurav Patel, an individual investor. Sir, my question is regarding our treatment solution revenue. So it's fall to INR1500 crores from approximately INR3000 CR a year ago. So and to what like how much of this book is from Jaljivan Mission and government water supply works? And how much of this drop in Jaljivan Mission slowdown?

44:41 So the Algebra Mission is a very small part, than 10% of the overall number. We are seeing some traction beginning to come in on the Algebra Mission contracts. We believe that the second half will be stronger because our contracts are in the state of Uttar Pradesh and we are seeing some traction coming from the Gelgi one Mission contracts in that state. And some fund flow is also happening, which has been widely published in the newspapers as well. We are seeing those funds trickling into our projects also. We expect that fund flow to pick up as the weeks and the months go by. The rest of it, more than 90% of the backlog of the revenues coming from the industrial range.

45:27 We have, as my colleague, Watan said, have a strong backlog of about INR 3,000 crores on the industrial order book. And it was slightly muted in the first half because of the geopolitical crisis that we faced both in first quarter more and little bit in the second quarter. We expect significant volume uptick in the second half of the year, and we should come close towards the last year's Treatment Solutions revenue numbers by the end of this year, which would mean some very heavy lifting are expected to happen, heavy invoicing expected to happen in both the third and the fourth quarters. But the long term fundamental of the business remains strong. We have become very selective in picking up the right contracts.

46:13 We don't want to end up in a situation of where the legacy contracts, the significant impact that we have here. And we have a successful the Hyundai contract that we picked up is in the right sweet spot for us. And those are the kind of opportunities that we want to pursue going forward as well. And sir, my second question is regarding like how much of our receivables is due from a state agency and Jaljeevan Mission project? And if it is, then what are the agencies? And what has been collected since September also? As far as the dues from the government agencies, what you are referring, we have only won this major contract of the UP Jalanigam, which is presently in our order book.

47:02 And receivables will be less than around 10% of the total receivables. And in terms of our exposures, as we have called out in the earlier concourse, we are calibrating our dispatches in proportion to the funds what we are receiving. There has been some improvement in the second quarter in terms of the fund flow. But the overall exposure, there is not much of change than what it was in the month of March. So it remains at the same level. Next question is from the line of Ankit Maheshwari from Oxnos Capital. I have two bookkeeping questions. Number one, on the cash flow statement, we have reported operating cash flow of about INR 40 crores this half year.

47:59 But that is completely impacted by the increase in other current liabilities of INR 120 crores. So my question is what contributes to the rise, sharp rise in other current liabilities? The other current liabilities, there are two broad elements in that. One is the annual revenue, which has increased. As I mentioned, our sales also were impacted because of the increase in the annual revenue during the quarter that is around $2.50 crores. And second is the customer advance which has increased by almost around INR 50 crores and that is around just under INR 300 crores as of the September levels. So these two main elements have contributed to the other current. Okay, understood. And my second question is on the CWIP.

48:48 So this INR240 crores that is sitting on our balance sheet, could you sort of tell us where this money has been spent on what projects and what are the commissioning dates of said projects? A large part of the CWIP will be pertaining to the RoHA facility. As we mentioned, the backward integration plant is presently under commissioning, and we expect that to be completed by the year end. So a large part of that is towards that facility. Apart from that, we are doing some modular expansion in our Ankleshwar plant at a smaller level as well as we are doing expansion of our membrane UF facility in Goa. So these three main categories of CVPal comprising in the total balance as of September.

49:39 Understood. So just as a follow-up with the CWIP, we also have to do some investments for the Oman project? Oman project is part of a JV in Oman, so that will not form part of our stand alone books. So as part of the console, it will definitely come and that element of CVIP will start building up as we approach the year end as the retrofit and the other modification activity starts in that overseas entity. Understood. Okay. Thank you. That's it from me. Thank you. Next question is from the line of ION KAN, an individual investor. Please go ahead. Hello. Yes, we can hear you. Please go ahead.

50:27 Yes. So my first question is how much of your raw material is imported? And what was the impact of rupee movement and freight on your Q2 cost? And do you hold inventory at higher cost prices that will flow through in H2? In terms of the import component, a large part of the component will be primarily in the chemical segment, where we do a lot of imports of chemicals. So the input cost increases, what we have seen because of the West Asia crisis, that has impacted the chemical segment. And as far as the holding of inventory is concerned, that inventory will be at the current cost only, what we have imported because we don't try to have a very large inventory because of the wide fluctuations what we are seeing in the input raw materials.

51:22 So it will be largely at the level of what we have imported in the second quarter only. Got it. Last question is what is the size of the order book? I mean, how much is Jaljeevan? And what is the expected margin on new order book, new order intakes which you're taking as compared to the old orders, which is already there or which is pending? So the Jaljivan Mission order book is less than 10% of the current book of INR 3,000 crores. The last large order that we picked up, Hyundai that we talked about is at a fairly favorable profitability. We don't disclose individual order book profitability profiles.

52:11 So the favorable level and that is an effort that we expect to make. We also have made significant investments in our international operations. We have now CEOs in place for Americas Region, for Europe CEO is joining early January. We have CEOs in place for our Asia Pacific and Middle East markets, who are running those countries in those regions. And all of those markets are seeing good traction of opportunity build up. We're already seeing some wins coming in, in some markets in Middle East as well as in Africa and we expect that trend to continue, which should help us build a strong healthy backlog not only in India, but also in overseas markets of our focus areas.

53:06 Thank you. Ladies and gentlemen, that was the last question for today. I now hand over the call to management for closing comments. Over to you, sir. Thank you all for participating in the earnings conference call. I hope we have been able to answer your questions satisfactorily. If you have further questions or would like to know more about the company, please reach out to our Investor Relations Manager at Valorum Advisors. Thank you. Thank you. On behalf of Valorum Advisors, that concludes this conference. Thank you all for joining us today. You may now disconnect your lines.