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Ladies and gentlemen, good day, and welcome to the Ion Exchange (India) Limited Q1 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, Mr. Sonpal.
Thanks, Michelle. Good afternoon, everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Ion Exchange (India) Limited.
On behalf of the company, I would like to thank you all for participating in the company's earnings call for the first quarter and financial year ended 2024. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings 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 beliefs as well as assumptions made by and information currently available to management.
Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review.
Let me now introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We firstly have with us Mr. Aankur Patni, Executive Director; Mr. Vasant Naik, Group Chief Financial Officer; Mr. N. M. Ranadive, Group Head of Financial Planning and Risk Management; and Mr. Milind Puranik, Company Secretary. Without any further delay, I request Mr. Vasant Naik to start with his opening remarks. Thank you and over to you, sir.
Thank you, Anuj. Good afternoon, everybody. It is a pleasure to welcome you to the earnings conference call for the first quarter of the financial year 2024. For Q1 of financial year '24, on a consolidated basis, the company reported an operating income of INR 4,792 million, an increase of 25% year-on-year. EBITDA was reported at INR 489 million, representing an increase of around 49% year-on-year. And the EBITDA margin stood at 10.2% and net profit was INR 333 million, an increase of 22% year-on-year, while the PAT margin was in the region of 6.95%.
For the Engineering division, the revenue for the quarter was INR 2,871 million, an increase of 42% year-on-year. The EBIT for this segment was INR 149 million, an increase of around 84% year-on-year. The segment continues to witness steady order flow and a robust inquiry bank. The execution of the UP Jal Nigam project is progressing satisfactorily and revenues have been recognized based on work completion.
Regarding the Sri Lanka order, the discussions continue amongst all the stakeholders and we remain hopeful of the project closure in the current financial year 2024. Our total order book now stands at INR 33.5 billion with a big book pipeline of around INR 86 billion.
Coming to the Chemicals segment, the revenue for this quarter was INR 1,461 million, which was roughly at the same level as the previous year. The EBIT stood at INR 366 million and increased by around 17% on a year-on-year basis. The segment continued to sustain the margin improvements amidst the backdrop of stability in the input cost and improved volumes of higher-margin product lines.
In the Consumer segment, the revenue for the quarter was INR 603 million, an increase of around 20% year-on-year. This segment continues to record healthy volume growth reflecting increased penetration and product acceptance.
In some other highlights, the company has completed the process of acquisition of 100% capital of the [indiscernible] Mapril in Portugal. This acquisition will improve the reach of the company's products in the European market. Also, the company's merger applications in respect of 3 of its Indian subsidiary companies with the parent holding company have been filed with the competent authorities and the same are under process.
With this, I conclude the opening remarks and we can now open the floor to the question-and-answer session.
[Operator Instructions] We have the first question from the line of Chetan Vora from Abacus Asset Managers.
Sir, I would like to understand your commentary on the Engineering segment. What was the execution of UP this quarter? And how should it progress going ahead? And by when it has to be completed? First question was that. On the Chemicals, though, there was no revenue growth, but margin seems to be on a up trend. So I would like to understand your insights on that, sir, both in Engineering and the Chemicals.
Sure. Last -- a chance to give you the update on how much we have invoiced for UP and what's the last invoicing for the Engineering segment.
Yes. For the current quarter, the UP invoicing is around INR 39 crores.
INR 39 crores?
Yes.
Which was last quarter, it was close to INR 90 crores, if I'm not wrong?
In the June quarter of last year, it was around INR 27 crores.
Yes. I was asking about the March quarter. March quarter...
March quarter was around INR 70 crores.
So March quarter was INR 70 crores. Okay. And by when we will have to complete this?
We are expected to complete substantially the entire project by early next financial year.
So is it fair to assume that [indiscernible] could your order book of UP, about INR 925 crores, half of that will come into this year?
Well, we are looking at improving our execution during the coming quarters and we are certainly hopeful that we will do a good amount of invoicing in the current year and the balance will get executed in the next year.
Okay. And for the full year, what kind of visibility we are seeing on the Engineering front, sir?
So for the full year, can you come again with that question?
I was asking for the full year for the Engineering segment, what kind of growth visibility we are looking at?
The overall growth you're asking, right?
Yes, right, right.
Right. So we are expecting that we should be doing a reasonable amount of growth and the momentum of growth that we have seen until now should continue. Execution will pick pace in the next few quarters. So on very broad terms, we hope to grow by roughly around 30% to 35%. That's our estimate as of now. We will update it as we go forward.
Right. And what was the order inflow for the quarter, sir, on the Engineering, sir?
Vasant, can you fill me up on that?
So order inflow was around INR 187 crores.
Okay. And the bid pipeline, which is now close to INR 2,500-odd crores [indiscernible] close to INR 8,600 crores. How much of that we are expecting to get it converted?
Well, that's a bit of an unknown quantity, Chetan, but we normally see that overall conversion rates are roughly around 20%. And we think that the trend will more or less continue.
All right, sir. Because last time, when we are talking about we are expecting some, a few, 1, 2 large deals on the overseas front. Just would like to understand the progress on that front, sir.
No further change on that, Chetan. We remain hopeful and keep following up on that. And while there are some incremental progress, but nothing has come through as yet.
All right. And sir, lastly, on the Chemicals front, there was a -- the revenue growth was flattish and the margin improvement was quite positive. I would like to understand your comment on the part. How should one see this Chemicals segment, sir?
Well, we do expect to see a growth, overall growth of around 10% to 15% in the current year for the Chemicals segment. As far as the margin is concerned, while we have seen some improvements in margin, we think that it should roughly be a incremental percentage of its improvement over the last full year's numbers.
Okay. Okay. And sir, what's the update on the greenfield expansion?
You mean the Roha project?
Right, right.
Right. So we have started execution on the Roha project. And the first quarter has seen CapEx going to that particular facility. We are expecting to commence the operations from that plant in FY '25, '26.
Okay. And what will be the project cost?
The total CapEx is in the region of around INR 400 crores.
Okay. Right. And this will be totally funded by internal accruals?
No, we are funding it partly with internal accruals and we are going in for external financing for this.
And what will be the component for that?
What would be the...?
Component of the external funding?
Vasant, can you fill me up on that, please?
We are roughly looking at 80-20. 80 is the external funding.
So maybe you're saying INR 300 crores of -- INR 300 crores to INR 330 crores of debt?
That's right, over a period of 2 years of the project execution.
All right. And sir, lastly, the other income, which was last year INR 18 crores. This year it has come down to INR 10 crores. Can you elaborate the nature of that? The last year INR 18 crores was on account of what, and INR 10 crores is what?
Well, the dip which you are seeing is primarily on account of foreign exchange variations. So last year, we had a substantial amount of foreign exchange gain under that head. This year, the foreign exchange has moved the other way and there are some foreign exchange losses, which do not get accounted under other income.
[Operator Instructions] We have the next question from the line of Mahesh Bendre from LIC Mutual Fund.
Sir, the Chemicals business was flat on Y-o-Y basis. So what could be the reason, sir?
Normally, in the first quarter, we do see that the numbers are almost always softer than all the other quarters. We will see a pickup in the coming quarters as we are expecting improvements to come through from the international market as well as from the municipal projects.
Sure. And sir, if I heard correctly, we are expecting 30%, 35% growth in the Engineering business and 10% to 15% of growth in Chemicals business for the current year?
That's right.
Okay. And sir, last question. When do you think the Roha project will get on? I mean start delivering, I mean the products?
We are expecting that the Roha project will be operational in FY '25, '26.
Okay. So it will actually get reflected in FY '26 numbers.
That's right.
The next question is from the line of Akshat Mehta from Sameeksha Capital.
So I just wanted to understand 1 thing that in this quarter as well, you've seen some [indiscernible] margins in Engineering segment. So I understand that we are increasing capabilities and manpower and that is why you can see that there's a big jump in your employee expenses.
By when -- can you throw some color on till when do we expect this number to remain elevated and then the margins to kind of normalize in the Engineering segment?
Well, this is a phenomena which repeats itself almost every year. And you would have seen that almost always the first quarter tends to have a lower margin. Compared to the first quarter of the previous year, I think there is a corresponding -- there's a little bit of an improvement in the margin profile. And we are expecting that as the year progresses and the execution of the various orders picks up, we will see a corresponding improvement in the margins.
Any color, sir, on what margin are we expecting for the full year?
It should be somewhat in the range of what we saw for the full year last year, maybe slight improvement, but we will comment more extensively on that as the year progresses.
Also secondly, sir, on the UP project, [ can you provide answers on ] -- I just want to understand, are there any challenges that you're facing on execution of the project? Because still now, the execution has been very slow and you're expecting it to pick up in the next 3, 4 quarters. So any challenges that we're facing in terms of execution there?
Well, UP project has -- the invoicing has been slower than what we would have wanted and there the delays which we are facing are procedural in nature. But we will overcome that shortly and we certainly hope to do so, increase the invoicing substantially over the coming periods.
Okay, sir. Can you give a sense on the working capital numbers for the end of quarter 1, if you can share that? Because last year, you said that in the end of quarter 4, there was a big jump in our receivables then you said that is because you've done billing, a lot of billings, at the end of the year. So has that come down? If you can share some color or numbers on that?
Vasant, can you come and help me?
So the working capital is largely in the same level as what we said in terms of number of days, what we saw in March end. Because as the Engineering invoicing increases, there will be a slight increase in the working capital levels.
Okay. But has that come down from quarter 4 levels? because last year was a big jump in the receivables compared to previous year.
There has been a reduction in the receivables also, but there has been a reduction in the other liabilities also. So in terms of number of days, I would say it is at the same level as March.
Okay. Can you give some sense on how your order book is split between industrial, municipal and the domestic, international at the moment?
International will be roughly around just under 20%.
Mr. Mehta, are you done with your questions? Do you have any further questions?
So I asked industrial [indiscernible].
Not very clear, Akshat, can you come clearly on that part of the question?
Order book breakup between municipal and industrial projects as well.
Okay. Industrial side is roughly 65% because of -- we're carrying substantial amount of UP project and the Sri Lankan project.
We take the next question from the line of Koushik Mohan from Ashika Stock Broking.
I hope I'm audible and congratulations for the numbers. Sir, my question...
May we require you to kindly use your handset, please, to get a clear audio.
I'm audible now?
Yes, sir, please proceed.
Yes. Congratulations for the numbers, sir. My question is basically on the Chemicals sector. Sir, on Y-o-Y, you have been on the same growth and when we look at on the quarter-on-quarter, it hasn't been growing, but the margin has been expanded. So have you -- are you expecting the same kind of margin expansion? And what kind of numbers that we'll be closing this year or any ballpark number that you have?
We responded to a previous question that we are expecting to see roughly around 10% to 15% growth by the end of the year. As far as margins are concerned, yes, we continuously aspire to improve the overall profitability and we do through various measures, including improving the product mix. We do hope that we will be able to continue the improvements in the future also.
Sir, any specific number of growth that you are thinking on the Chemicals side that you would be closing the year with, any growth number?
I told you right in the beginning that we are looking at around 10% to 15% growth in the current year.
Okay. How about the Consumer Products, sir?
Consumer Products is doing pretty well in terms of growth. We are investing substantially to make sure that it scales into the next level of growth. And we are very hopeful that we will see very robust growth on that segment.
And how about becoming a bit, a bit positive in 1 year or any targets, sir?
That's the hope. And as of now, I do expect that by the end of the year, we should be in the positive.
The next question is from the line of Pratik Kothari from Unique Portfolio Managers.
Sir, my first question on the Engineering side, I mean we are seeing one of the highest order book that our company has in the history. And it seems that our plate is full in terms of execution that we have to do over the next maybe 2 or 3 years. So in terms of when you're bidding for a new order, does it change anything in terms of the kind of projects that you are looking for, the kind of contract terms, the kind of work, et cetera?
No. Actually, we are working on quite a few interesting and exciting prospects as far as new orders and contracts are concerned. So we hope that we will continue to scale past the previous numbers of the order book.
And I do expect that by the end of the year, we would be in a stronger position as compared to today. We continuously invest in our capabilities to reposition ourselves for future growth. And therefore, the challenges of growth can be better addressed through better people, better systems, better infrastructure, and that's where our orientation is as of now, to ensure that the growth continues.
Correct. And sir, regarding your comment on the margins. So last year, because you are investing a lot to kind of do this accelerated execution that we are supposed to do this year, our margins were subdued than what they were historically. So once this execution comes in, shouldn't the margins revert back to, say, maybe an FY '20 or '21 level?
The margins will certainly become better than what you are seeing today as the quarters progress and I would wait for another quarter or so before I give you a very more accurate projections on what exactly the numbers that can be expected. But I would certainly expect it to be better than what you are seeing it today.
Correct. Okay. And sir, on the Chemicals side, I mean you have spoken about volumes increasing on the export side, et cetera. So just to get a sense in terms of on a broad basket level, how would have the realizations moved if the prices were INR 100 at the peak, where would that have settled now?
You're talking about realizations?
Correct. Yes.
Well, we -- the 1 strategy that the company has been adopting over the past few years is to increase the overall product mix. And that is helping us to improve the overall realization levels and also the margins. We will continue to aspire to do that. So yes, the realizations, if you factor in this change in product mix, is improving.
The reason I asked this is because, say, for the last 2 years, we have been in this INR 150 crores a quarter range on the Chemicals side. So if our realization and product mix has been improving all the while, that implies that maybe that volumes are not what it was maybe in even 2 years back. And this is in context of we putting up such a large capacity in the near future.
Well, we will continue to work on improving our overall product profile and certainly also look at substantial improvements in volume.
The new project which is coming in would have benefits not only in terms of the efficiency of production and the kind of products that we can manufacture, but also it would help us to improve our cost profile, which would further improve our competitiveness in the international market.
Right. And sir, last question on this Portugal acquisition, which we did, if you can highlight. Do they give us some entry to new clients? Or is there some new products which they do?
It's a new market primarily and that was the core target, that we are looking at establishing marketing and manufacturing base in Europe. And a European entity certainly provides us far better access into markets in and around the European region. We are also having a few new kinds of products, which that particular entity was already manufacturing.
So yes, a slight expansion in our product profile, but the significant advantage that we hope to have from this is expansion of our reach and ability to service the customers.
The next question is from the line of [ Mahesh Agrawal ] from Agrawal Family Office.
Can you hear me?
Yes.
Congrats again on a good set of numbers. The first thing, just wanted to understand on the EPC side, if you look on consol versus stand-alone, the consol revenues are higher than stand-alone, but the EBIT on consol is lower than stand-alone. Is that just some accounting thing? Or are there actually something going on in some of the subsidiaries, where there was losses in the EPC segments?
So in the Engineering segment, there are a couple of subsidiaries, the Indian subsidiaries, which typically start generating positive members after a certain scale is reached. That would happen towards the later part of the year. As of now, there are a couple which were showing negative margins.
Understood. Got it. And last year, if I remember, we discussed the market opportunity in terms of setting up wastewater treatment plants, both on the municipal, industrial side were seeming quite strong. It seems -- is it -- does it seem like that has slowed down a bit this year in terms of the order inflow and also the market outlook? Because based on the number of orders we were getting sort of last year, larger orders, it seems this year, things might be a bit cooler.
We are looking at quite a few prospects which I certainly hope that we will be able to get. And so on the industrial front, in general, we are not really seeing any slowdown, anything remarkable there.
As far as the municipal side is concerned, there are state-specific trends which would be seen. Our aspiration is not to get into all in sundry in the municipal market. And I have been repeating it very often, that we would like to remain very choosy as to which contracts we pick up and under what circumstances.
Makes sense. Got it. And then my second question is about Mapril, the Portugal subsidy that we've been -- we sort of acquired last quarter. I was trying to take a look at the website and it seems the business is a mix of distribution and manufacturing, if I understood correctly. So could you help us sort of understand what is the distribution proportion? And then what is the manufacturing? And then maybe also if you can share some numbers? And sort of, if I remember correctly, I think the revenue was around INR 70 crores, INR 80 crores of that company, that you once shared.
Yes, the revenue of that entity is roughly in the range of EUR 10 million and we are hoping to expand that revenue. We are going to make sure that we reach out to their existing customers as well as to improve the reach using the advantage of our branding and our products. So as the -- as we delve into the company's operations a little bit more and capitalize and leverage its capabilities, I'm sure these numbers would rise substantially.
Understood. So the 10% to 15% that you're sharing on the Chemicals growth, is that including the INR 80 crores that will now fold into our Chemicals segment or that will be on top of that?
No, that would be additional.
Understood. And then, sorry, just the nature of that business, what is the -- how much of it is distribution versus manufacturing? And then kind of in manufacturing, what are the products largely that they are into?
The product profile is close to what we have. There are a few additional process chemicals which we manufacture which go into textile industry, which go into paper industry and some other related industries.
Apart from that, they were also doing water treatment chemicals -- and we, as I mentioned, that we will be expanding that product range by supplying from our [ IE ] operations.
Got it. So is that full INR 80 crores manufacturing for them?
No, no. It's not entirely manufacturing, but there is a significant amount included there.
Understood. Got it. And then lastly, if I could just ask you on the Chemicals segment. If you can just kind of share the perspective on sort of how the resins, water treatment, specialty chemicals categories are doing both domestically and globally? Because it does seem like maybe there also we are seeing some cooldown this year versus last year?
Well, it's a very wide bucket of chemicals that we do and very broadly, it can be divided into water treatment chemicals and process chemicals. Within the water treatment chemical bucket, there are many products, and it would -- you can certainly go to our website and check it out.
There is quite a detailed listing of the kind of products and applications. Besides the pure-play water treatment chemicals, we also do process chemicals, which go into for example, the paper industry, the textile industries, ceramics, oil and gas, sugar industry.
So there are multiple industries where the chemistry of the products which we manufacture allows us to cater not only to water, but also to some of the process requirements.
Likewise, the resins which we manufacture can be applied for the sake of water treatment, but also in other applications including pharma, which we have been talking about in the past.
The next question is from the line of Sanjay Kumar from ithoughtpms.
Sir, LANXESS has talked about Lehman Brothers-like situation due to demand weakness. Does this apply to Lewatit brand of LANXESS, which is, I think, our direct competitor?
You said LANXESS has talked about -- I missed a couple of words in between.
Lehman Brothers-like situation, a recession kind of situation.
Lehman Brothers-like situation, okay.
Due to demand weakness.
Well, I can't comment on that, whether a Lehman Brothers-like situation is on the horizon. But yes, on a very broad level, the markets in North America and Europe have certainly been constrained because of the overall economic and geopolitical scenario.
We have remained hopeful that the situation would start to come back to normal soon. And if and when that happens, the market should start showing signs of recovery pretty soon.
Okay. Okay. So our capacity wouldn't be coming online at the wrong time. So you think by FY '26, demand would have recovered. If that's the case, if the global players see a downturn, can you look at acquiring any other companies that will be impacted by this demand weakness? Mapril looks like a good acquisition, but any other company at a larger scale, maybe?
Well, we remain open to such opportunities. And in fact, are quite actively on the lookout. If and when something comes at the right value and is a good fit, we certainly evaluate that.
Okay. Perfect. Second, on the raw materials backward integration. So the top raw material Roha seems to be starting, which I think we buy from [indiscernible] that. So which chemical are we -- or which raw material are we putting the backward integration for? Is it sulfuric acid or -- I'm not familiar with the names, so if you can help us with the name of the raw material for which we will be putting in backward integration.
Well, I can't give out that detail to you right now, but it -- the additional facility that we are creating in Roha would certainly help on multiple fronts, including improving our cost profile. And we will certainly come out with more details at an appropriate time. But unfortunately, I would not be able to disclose those details right now.
Okay. Okay. Can you not be cost competitive just with scale? Or do we need this raw material backward integration to compete with the global players? Right now, what would be the differential, sir, between us and say, for example, LANXESS?
We will be at a substantially better position and I -- as of now, based on our current understanding, we will probably be one of the first who would come up with the innovation that we are talking about.
Perfect. Finally, on the Engineering piece. U.S. is spending on industrialization, you even earlier spoke about it. Are we planning to look at U.S.? Do we have a team there?
Yes, U.S. is a market which we're currently at. But largely, it's our chemicals which are supplied to the North American market. And we have some feet on the ground there and we will expand our presence as and when we feel that it provides us adequate opportunity for the engineering space as well.
Okay. So the bid pipeline of INR 8,600 crores, can you give the geography-wise breakup for this detail?
No, we don't give out a very detailed breakup of the geography. I can tell you that the major markets that we look at are the Middle East, that's Asia, Middle East, Asia, and we talk about Southeast -- South and Southeast Asia, along with Africa. That would be the biggest of the markets.
We take the next question from the line of [ Rohas Naik from Creta ].
Congratulations on a good set of numbers. I have 1 question that is really related to the consumer business. We have reached a INR 60 crores kind of number now. So how do you see this business getting scaled up, say, in the next 2, 3 years? What is our plan in this business?
We hope to grow in multiples during the next 2 to 3 years. We have been able to grow at a good pace in the recent quarters. And our expectation is that the growth momentum will be pretty good in the current year and year to come as well.
And what kind of number, margins one can expect actually or margin improvements as we scale up?
As of now, the segment is in growth mode and there's a lot investment which is being put in to continuously scale up the operations further. Whatever the business is being able to generate on a gross level is being reinvested in the business.
Therefore, you are seeing a continuous trend of increasing overheads, but the bottom line, which is not coming out positive. But I do hope that very shortly, we will reach a stage where we would be in the black. And thereafter, the growth in margins should be at a very good pace, because on a gross level, the products make very good margin.
Okay. One question on the Chemicals side. I think you have been quite hopeful about the technology that you have got in the chemical set for the new plant, which according to you, can reduce your overheads and cost of production substantially. So is this something -- does it have some patented kind of technology or what -- if I can ask, what is it actually?
We can't give out the details of technology, unfortunately. But as and when we come out, when the plant is constructed and we start reaching out into the market, we will certainly offer more details. It is more to do with as we were speaking some time back, some nature of backward integration. And it's an innovative approach, which, as I said, I think there is nobody else who is doing it.
So it's a unique kind of technology we are talking right now.
That's right.
And this current upturn that we are seeing on the Engineering side, how long do you think this -- next year? What is the kind of visibility you have 3 years, 4 years in terms of sustaining this 35%, 30% growth rate? Because you are the best judge of the market conditions, that's why I'm asking.
Well, my guess is that we should be doing very well on a sustained basis over long term. The market opportunities, both on the infrastructure type of jobs, as well as for the industrial type of jobs, are quite good. We, as a country, we are in a phase of deliberate expansion of manufacturing capabilities. And even on the international front, there are multiple countries and [indiscernible] which are evolving towards a much higher level of maturity as far as the manufacturing and industrial practices are concerned.
I would certainly expect that we will be able to see a lot of growth in coming years. We continue to invest substantially in our capabilities. We have been adding manpower and changing manpower at very senior level. And in coming times, we would see changes at the senior-most level also. So we are certainly preparing to position ourselves for our greater good in the future.
Great. And the last question, if I can. It's about the margins, because as you are saying, we are heading towards breaking even in the Chemicals side. When you're talking about growing the Engineering by about 30%, 35% and getting a good operating leverage out of it. And also consumer business, as you said, it will spring back and will move towards a neutral position soon. So given all this, is your guidance regarding margins of 13%, 14%, is it -- can we call it a bit conservative? Or what is it?
Well, till we reach a stage where we can very definitely talk about the improvements from the levels which we have discussed, I would like to remain conservative. It's easy to start talking about bigger numbers, but it's better to deliver those numbers rather than just talk about it.
The next question is from the line of Saket Kapoor from Kapoor Company.
Sir, on this innovation part of the [indiscernible], if you could, well, something more -- I missed your comment, you did mention twice. When we are speaking about this innovative product and the innovation part [indiscernible] technologies. What are we trying to explain involved here?
Well, I talked about 2 things. One is that I would not be able to share too much detail about it, because obviously, we don't want to start mentioning things which could put us at a competitive disadvantage.
The other aspect was that we are looking at innovation across the board. We are looking at a better product profile, which provides more value addition as well as which we can offer at better terms and margins. We are also looking at the needs and requirements of customers across the board for both Engineering and Chemicals segment, which allows us to keep innovating our products so that we can meet their requirements better. This is happening not just in the Indian market. We are also doing it in the international markets on a continuous basis.
Apart from both Engineering and Chemicals segment, there is a lot of innovation happening in the consumer segment. We are launching new products almost every quarter. And the response from the customer is extremely good. That is also 1 of the reasons why you're seeing the top line of the consumer segment improve substantially.
Sir, in the -- although you mentioned that for the year, when we've been closing the year, we will be in a position that we will be having the highest order booking. That is what you are anticipating, as for the bid pipeline also. So have our hit ratio improved significant, now is it improving significantly? I think it was 10% to 15% of the orders we bid for. What gives you the confidence? If you could give us some more color. And then my last question on the UP project.
Well, we are hoping to end the year at a higher order book than what we currently are at. And our traditional hit ratio or conversion ratio would be in the region of around 15% -- 15% to 20%. That's the anticipation going forward. We are looking at quite a few prospects which are close to finalization and very hopeful that we will be able to declare much better order book in the coming quarters.
So when we look especially mentioned about the UP and the [indiscernible] Jal Nigam, the outstanding order book is INR 925 crores. So sir, if you could give some more color, firstly, what is the exact scope of work here? And what was the total size of the project? And how is the execution scale currently? And are there more such orders in the pipeline in the ecosystem or the UP government has done with the tendering of this here?
Well, there are quite a few such contracts, which have been given out by the UP government, as it strives to achieve its target of reaching out to each and every household with tap water. We are servicing 1 part of that entire project.
As far as the overall project size and how much we have done and how much we have still to do, I'll ask Vasant to come in and fill in that data.
P
Okay, sir. And still, sir, they are in the tendering process? I mean my understanding was for the Jal Nigam scheme, but as you mentioned, is the tendering process? And I have also read about 1 -- another company in the [ OSC ] space having EPC vertical. They were awarded an order of INR 5,000 crores current connecting, I think, to 5,000 villages. You are also -- I think you are very well aware. So just wanted to understand the size, the landscape of still, the scope of work left there.
And also how is the execution in the entire ecosystem picking up? Because as you told that you have got a part of the project. So the entire ecosystem needs to move to reach some milestone and hence, the payments and other terms get fulfilled for EPC players. So and how...
The payments for these contracts are quite widely spread because it's not 1 single connection that you are providing. Each and every village or community that is reached out to is covered under a different project report and has its independent project execution cycle.
Hence, it's not just 1 payment milestone that you adhere to. Each of these effectively act as individual payment schedules. And we are getting paid according to what we have been invoicing over a period of time. The overall project scope constitutes -- you have to basically ensure that the water which is available is, is either you source the water or if the source is provided, then you use that water, then you treat it and thereafter, you store and distribute it. That's broadly in [ what Ion has done ] and that's what is the scope of the project. And each of these communities or villages that we are addressing is -- would go on parallelly, depending upon when the government releases the project report and when it approves the individual execution cycles.
We'll take the next question from the line of [ Devang Patel ] from [indiscernible] Capital.
Sir, I wanted to understand what kind of order inflows are we targeting for this fiscal year? And we've seen earlier, we got a few lumpy orders on the industrial side. So again, are we looking at those kind of lumpy orders? And the next set of large orders, will they be higher in size than our previous orders?
I would resist from giving you very exact numbers here, but on very broad terms, respond on a few of the questions. Yes, we are expecting sizable orders. Some of them would be quite large. Whether they would be larger than the ones which we have previously received, well it remains to be seen because they have not yet been awarded and we are still in discussions. They could be. Together, we will look at a substantial number of such very large orders, probably the numbers would not be very large, and we are looking at a few of them. There would be many more medium-sized and smaller orders which are currently under discussion, which would also materialize.
Overall, we should be, as I mentioned earlier, ending -- we hope to end the year at an order book which is higher than what we have seen earlier.
Sir, and if you could help us with what is our medium-term growth aspiration in the Engineering segment?
We did mention that we are hopeful to reach -- to achieve around 30% to 35% growth in the current year and over an extended period of time, based on the overall economic environment and industrial growth, which we are expecting in India and also in a good part of the developing world, I would expect that the momentum of capital addition, which will sustain itself over the foreseeable 10 years or 15 years. And hence, it provides us good opportunity to continue growing at a good pace.
Okay. Sir, and in the Chemicals segment, based on our current capacity before the greenfield plant comes in, what is the peak revenue we can achieve?
Sorry, I couldn't hear your question very clearly.
In our Chemicals business, what is the peak revenue we can achieve from current capacities?
Well, we are going at roughly around 70% capacity utilization at the moment and I would expect that using the existing capacities, we should be able to add another 50% quite easily. However, the growth that we are expecting once the new resin facility becomes fully operational, will probably be top growth because we will start reaching out the market with improved product profile as well as cost profile, which may be more competitive than what it is today.
We take the next question from the line of [ Dipen Shah ], an individual investor.
Congratulations on a good set of numbers. Most of the questions have been answered. Just a slightly longer-term question. On the Engineering side, what would be the newer areas which we could be targeting over the next 3 to 5 years? And probably any visibility which you have on any one of them? Last year or maybe a couple of quarters back, we have spoken about the hydrogen space. But any other areas which you think are potential candidates for us to target?
Well, we keep evaluating every single new industry which comes up or if there is a substantial change in the dynamics of any particular industry. As we are looking at aspirational India, which wants to manufacture more and more of the -- of its products domestically, I do expect that many more industries would go towards higher capacities and utilizations. And there will be some more industries which are traditionally not based out of the country, which should be looking at establishing base and expanding base in India. So we'll continue to look at these. All industries which require high precision or high quality generally would have a requirement of very high quality of water and will provide opportunity for us to service them. Even if the sizes are not very large, but the values do tend to be interesting because of the quality requirements.
Like we saw in the case of electronics or we saw in the case of hydrogen or we saw in the case of solar power. In each one of these industries, when they do come in with substantial capacities, they offer us very interesting market opportunities. And our capabilities ensure that we are in a good position to try and capitalize on these opportunities as and when they come.
Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Mr. N. M. Ranadive from Ion Exchange (India) Limited for closing comments. Over to you, sir.
Thank you all for participating in this earnings con call. I hope we have been able to answer your questions satisfactorily. If you have any further questions or would like to know more about the company, we will be happy to be of assistance. We are very thankful to all our investors who stood by us and also had confidence in the company's growth plan and focus. And with this, I wish everyone a great evening. Thank you.
Thank you, sir. Thank you, members of the management. Ladies and gentlemen, on behalf of Ion Exchange (India) Limited, that concludes this conference. We thank you for joining us and you may now disconnect your lines. Thank you.