Ion Exchange (India) Ltd

NSE:IONEXCHANG

Earnings Call Analysis

Ion Exchange India Reports Strong Q1 FY25 Performance

Ion Exchange India Limited reported significant gains in the first quarter of FY25. Operating income rose by 18% year-on-year to INR 5,676 million, with EBITDA increasing 31% to INR 641 million, reflecting an 11.29% margin. The net profit jumped 35% to INR 448 million. Engineering division revenue grew by 13% to INR 3,235 million, and Chemicals segment revenue surged 36% to INR 1,994 million. Despite a loss in the Consumer Division, new product acceptability is rising. Guidance indicates consistent growth, with an emphasis on executing substantial international contracts and expanding market reach【4:0†source】【4:1†source】【4:2†source】.

Solid Growth Performance

In the first quarter of FY '25, the company reported an impressive consolidated operating income of INR 5,676 million, marking an 18% year-on-year increase. This growth was complemented by a notable EBITDA of INR 641 million, which reflects a 31% year-on-year improvement. The EBITDA margin stood at 11.29%, while the net profit reached INR 448 million, up around 35% year-on-year, resulting in a net profit margin of 7.89%. These figures showcase the company's strong financial trajectory, driven by performance across multiple segments.

Segment Breakdown: Engineering, Chemicals, and Consumer Divisions

The Engineering division generated revenue of INR 3,235 million, growing 13% year-on-year, with EBIT up 26% at INR 188 million. The order book for this division was robust, totaling INR 3,394 crores, with domestic inquiries and steady order inflows indicating a positive outlook for execution in future quarters. In the Chemicals sector, revenue surged by 36% to INR 1,994 million, with EBIT matching this growth. The long-term prospects appear promising, as the company anticipates consistent revenue growth in this segment. However, the Consumer Division faced challenges, reporting revenue of INR 660 million with a loss of INR 34 million, although new product launches are gaining market traction.

Future Guidance and Growth Drivers

The management provided guidance for overall revenue growth of 15% to 20% for the Engineering segment, and a similar 15% growth is expected in the Chemicals sector. Noteworthy is the management's expectation of improved execution of the UP contract, which is projected to be substantially completed by the end of FY '25. Cost improvements are also anticipated as completion of legacy projects progresses, suggesting better gross margins moving forward.

Investment and Capacity Expansion

The company announced a significant INR 400 crore investment in its Roha facility aimed at increasing capacity and efficiency, with commercial operations expected to commence in the next financial year. The management expects revenue multiples of 2 to 3 times from this investment over the next 3 to 4 years. Furthermore, ongoing capacity utilization in chemical plants is currently at 65-70%, indicating further growth potential.

Market Positioning and Competitive Landscape

Specific strategies are being employed to capitalize on the increasing demand in the water and wastewater treatment sectors, bolstered by government policies focused on improving water quality and sanitation. The firm is also focusing on building customer confidence in international markets, particularly in North America and Europe, which presents strategic opportunities for substantial revenue growth.

Management Transitions and Strategic Planning

A significant management transition is set for October 2024, with planned changes intended for smooth succession in the company's leadership. This proactive step aims to enhance professional management and ensure continuous growth, positioning the company well for its future endeavors.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Ion Exchange India Limited Q1 FY '25 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, Mr. Sonpal.

[Anuj Sonpal, analyst]

Thank you. 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 and Valorem Advisors, I would like to thank you all for participating in the company's earnings conference call for the first quarter of financial year 2025.

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 con 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 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.

[Vasant Naik, executive]

Thank you, Anuj. Good afternoon, everybody. It is a pleasure to welcome you all to the earnings conference call for the first quarter of FY '25.

For the quarter under review, on a consolidated basis, the company reported operating income of INR 5,676 million, an increase of around 18% year-on-year. The EBITDA reported was INR 641 million, representing an increase of 31% year-on-year. And the margin -- EBITDA margin stood at 11.29% with a net profit of INR 448 million, an increase of around 35% year-on-year, while the PAT margin was in the region of around 7.89%.

Let me now take you through the quarterly segmental performance on a consolidated basis. In the Engineering division, the revenue for the quarter was INR 3,235 million, an increase of 13% year-on-year. The EBIT for this segment was INR 188 million, representing an increase of 26% year-on-year.

The segment witnessed steady order inflows of capital of medium-sized jobs during the quarter. The domestic inquiry bank remains robust, and we are hopeful that the finalization of some large value opportunity would accelerate in the next few months.

The Engineering segment recorded improved turnover on a year-on-year basis, largely due to the execution of some of the international contracts. We expect the pace of execution of the larger EPC jobs to increase in the coming quarters. At the end of Q1 FY '25, a total order book for the Engineering division stood at INR 3,394 crores.

Coming to the Chemicals segment. The revenue for the quarter was INR 1,994 million, an increase of 36% year-on-year. The EBIT was INR 498 million, an increase of 36% year-on-year. The segment recorded improved revenue year-on-year, while maintaining steady margins.

Lastly, the Consumer Division segment. The revenue for the quarter was INR 660 million, an increase of 9% year-on-year. The loss for the quarter was INR 34 million versus INR 15 million in the same period of the previous year. The segment has shown revenue growth on a year-on-year basis. Our new product launches are gaining acceptability in the market.

We can now open the floor to the Q&A session.

[Operator]

[Operator Instructions] The first question is from the line of Chetan Vora from Abakkus Asset Manager.

[Chetan Vora, analyst]

Sir, on the Engineering side, I was looking at the UP order book. On the Q-o-Q, the order book has just gone by INR 17 crores. So how do we see the order execution for the year, which is close to the order book [ as ] of now is INR 800 crores or INR 813 crores, which we were earlier guiding out to be completed by FY '25?

[Aankur Patni, executive]

The order book position remains good and we are expecting good order flows in the [ ensuing ] months and quarters, that would ensure that even while we continue to execute orders will support future growth continuously. As far as the [indiscernible] period to be concerned, we are expecting that during the subsequent quarters, to the execution and invest will improve compared to where we are today.

The next quarter and thereafter, we should be seeing improved execution of the UP contract in specific, which had a slight impact of the elections and the related cash flows, which we expect will gradually get removed as the months move. And therefore, as I said, that second half is expected to be significantly better than the first half.

[Chetan Vora, analyst]

Right. But do we foresee that UP orders will be getting executed now by the end of this year?

[Aankur Patni, executive]

UP contract would get substantially executed by the end of this year. However, it is also a function of the funds which get released for the contract for completing the remaining portion. And the second element is, of course, the approvals which get received from the government. But we are very hopeful that by the end of this year, a substantial portion will get completed.

[Chetan Vora, analyst]

Sir, on the profitability, the previous quarter, despite a large chunk of revenue of INR 500 crores, we had reported a margin of 9.6%. And then you had told us that there was some legacy projects which got written because of that, that were cost overrun, and we expect a similar thing to continue in quarter 1 of this year. But looking at the margin, the margin looks to be quite steady on a Y-o-Y level. So rather the cost of spin was seen in this quarter it is now we are largely done?

[Aankur Patni, executive]

There was a cost spillover. And as I had mentioned that, that contract, which has had an adverse impact on the overall engineering margins, that contract is not yet executed fully. And therefore, that overhang of its impact would continue in the next quarter also, and it will taper out after that.

But in terms of the Y-o-Y stability, that's something which is also a function of the other contracts that we are executing which have supported a decent margin level. And therefore, in spite of a slight adverse impact coming in from these 1 or 2 issues, it has -- we have managed to maintain those levels.

[Chetan Vora, analyst]

And by when we expect these -- the legacy project that completed, by what time frame from here on?

[Aankur Patni, executive]

So as I said, I would expect that the next quarter would continue to face this particular projects impact and only thereafter, it will start to taper out. By the end of the third and fourth quarter, most of the contract will get fully executed.

[Chetan Vora, analyst]

All right. And sir, on the Chemical front, the revenue growth was 15% and with a good sort of profitability, how should we see this vertical, sir, for the cap -- with respect to Chemicals for the full year?

[Aankur Patni, executive]

Chemical business continues to do reasonably well, and we are expecting the growth momentum to continue as you have seen in the first quarter. Likewise, the margin also remains at a reasonably robust level.

As we have been mentioning in the past also that if the input price scenario, the foreign exchange scenario and the overall supply dynamics do change in a very material way, we should be able to maintain these margin levels.

[Chetan Vora, analyst]

Sir, lastly, from my end, we are expecting -- we are -- in our presentation, we have always mentioned and in our -- at the start of the con calls, we have always mentioned that we are looking to -- we are working on one of -- a few of the large deals, which will be getting certified in the coming quarters. But it is now since many quarters, we have been seeing the same statement. By when, do you know where we can see a median like -- we could be getting a deal like UP, sir?

[Aankur Patni, executive]

As I have been mentioning in the past few quarters, the reason that we are not including those numbers in our overall inquiry book as well as we're not specifically commenting on those anymore is because of the uncertainty about when they will get executed or the [ classification ] of those into our order book would happen.

We remain quite hopeful because there is a positive movement happening on at least a couple of them. And it's a question of when that thing finally converts into something which we are able to announce. So as soon as we are able to do so, we will certainly make it on the exchange.

[Operator]

The next question is from the line of Sunil Kothari from Unique PMS.

[Sunil Kothari, analyst]

Sir, my first question is regarding the management change we are proposing by 1st October '24. Mainly, you are becoming now Non-Executive or Non-Independent Director. So what is the reason?

Because I mean, what I found since last many years, we are actually -- you are actively participating and the way you've grown the company profitability, with the way you are interacting with the investor community also. What will change and what are the reason? If you can little bit explain qualitatively, that will be really helpful.

[Aankur Patni, executive]

When we have -- we had appointed a CEO last year, and of which also we had made an announcement on the exchange, including various forums with the investors. That will complete about a year's time in September. And this is a very planned move on part of -- on the 4 people from the promoter group that we need to hand over the operating functions of the company to successional management.

And as announced, the CEO would be taking over the role of the MD, and as far as myself, along with Mr. Dinesh Sharma, both of us will become Non-Executive, Non-Independent Directors designated as Vice Chairman, both of us.

And also the current CMD, he would be relinquishing the post of Managing Director. We will continue to obviously remain associated. We will be actively involved in trying to help the company to grow further and in whatever way support its future operations.

As far as the investor community is concerned, I will certainly be available and I'll remain engaged in the way that we have been in the past many quarters. It is probably in the interest of the investors and also for the sake of continuity of the organization as a whole and for professional improvement in its management and growth that we have taken this call.

And hopefully, it will usher in a [ mention ] of growth and also ensure that we continue to expand the professional profile of the company.

[Sunil Kothari, analyst]

Great to hear, sir. And one more question on, sir, the way we developed this Chemical segment, resins, chemical membranes and -- in a very challenging time of the -- across the Chemical segment of the country and interest, we've done really well. We maintained profitability, which is very respectable and very high also.

I would like to know from you, because you always mentioned about our capability, R&D, new products, new projects. If you can talk a little bit more on how you see next 3, 5 years. What I understand is now the U.S. also is slowly coming back to some normalized demand, and we are very keen and prepared to penetrate on a high scale to back those market. So how prepared we are on this segment, what we see for next 2, 3 years?

[Aankur Patni, executive]

We've always been positive about the Chemical segment as a whole and certainly because it drives profitability to a greater extent in terms of margin percentages. And that's the reason that we have initiated all the capacity expansion moves, both for resins and for other chemicals, which to a large extent, are also targeted at the international market, which the relative improvements in the European and the North American markets our exports overall of chemicals have improved, and we'll continue to see improvement as the quarters move ahead.

That's our scope and also the indication from the [ dealers ]. We continue to invest substantially on innovations and R&D. And that's the reason also that the product portfolio continues to undergo a change, and we are moving towards more and more value-added products to ensure not just profitability, but also a competitive edge.

In terms of how we are being able to penetrate the markets in North America and Europe, the strategy which we have been following over the past few quarters and past few years has been to increasingly create customer confidence and trust and also ensure that we are able to fulfill their expectations while maintaining competitive edge and profitability.

This process has yielded good results. And I'm sure that with increased bouquet of products that we offer for these specific markets and the relationships and partnerships that we are continuously forging, we would be able to quickly take full advantage of the increased capacity, fully create a much bigger revenue pie coming from the international market.

[Operator]

[Operator Instructions] The next question is from the line of Tushar Raghatate from Kamakia Wealth Management.

[Tushar Raghatate, analyst]

I just wanted to understand in our Chemical segment, what sort of peak revenue can we garner for FY '25?

[Aankur Patni, executive]

We have been guiding for an overall growth of roughly 15% for the Chemicals segment. That's the revenue growth that we have been guiding till now. If there is a change in this as the quarters progress, we will again advise on the call.

[Tushar Raghatate, analyst]

Sir, in terms of CapEx for the Chemical segment, when can we see the revenue contribution happening, from which year or quarter?

[Aankur Patni, executive]

The current CapEx, which is now at a good stage of execution at Roha, we are expecting the commercial start of that operation to happen in the next financial year and it will take roughly 3 to 4 years for it to reach optimum capacity utilization.

[Tushar Raghatate, analyst]

And sir, in terms of Saudi Arabia and UAE opportunity, when can we see a good sizable order coming from there?

[Aankur Patni, executive]

We are already seeing good improvements on the ground in terms of our customer interactions, relationships and also increased flow of opportunities from that market. We are -- we have started to see order inflows also from that market. I would expect that in the couple of years that geography will start giving us substantial revenues.

[Tushar Raghatate, analyst]

So in terms of our Engineering business, any particular segment we are targeting maybe reverse osmosis or desalination or any specific medium.

[Aankur Patni, executive]

Engineering opportunities in that geography are quite a few, and it's not as such specific to a particular technology, and we are trying to make sure that our presence is quite broad-based. We would be looking at desalination opportunities and, indeed, any other opportunity of sizable or medium-sized scale, we are sure that with our manufacturing setup there, the time and scale of opportunities there would be not restricted to a particular size or sector or technology but we would be able to garner much wider scope of business.

[Operator]

[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor Company.

[Saket Kapoor, analyst]

Sir, firstly, about the Engineering segment. You alluded to the fact of some thing -- problems with the UP project and also which are legacy projects. Could you dwell slightly more into -- where are we in terms of execution phase for the UP project. And it was only the elections that was the reason for lower execution, or what is the residual value, if you could give some understanding.

[Aankur Patni, executive]

Sure. I'll request Vasant to share some of the numbers attached with the project, the current status as well as the residual values.

[Vasant Naik, executive]

Yes. Regarding the UP project, the current residual value is around INR 817 crores, which as was mentioned earlier, we are planning to execute a significant part by the end of the current year.

[Saket Kapoor, analyst]

Current calendar year?

[Vasant Naik, executive]

Current financial year, I would say.

[Saket Kapoor, analyst]

Current financial year. And what were the key reason, sir? Or -- and can you quantify what the value of the contracted value that we got executed out of this INR 315 crores that pertains to the UP project.

[Vasant Naik, executive]

For the current quarter, the UP contract execution was around INR 26 crores.

[Saket Kapoor, analyst]

INR 26 crores.

[Vasant Naik, executive]

That's right.

[Saket Kapoor, analyst]

And a number for March, just to compare the pace.

[Vasant Naik, executive]

It was around INR 78 crores.

[Saket Kapoor, analyst]

It slowed down a lot. And what were the key reasons you alluded to.

[Vasant Naik, executive]

This was already explained earlier in the call as well in the last con call that because of the election season being on and the uncertainties surrounding the whole process. There was a slowdown in the overall execution and the funding for the project, which we, as we explained, is expected to improve as the quarter moves on.

From the second half onwards, we expect that significant increase will take place in the execution of this project.

[Saket Kapoor, analyst]

Okay. And what was the value of the legacy project that affected the margin for this quarter?

[Vasant Naik, executive]

Specific project-wise details we don't give other than for the large projects. So this -- unfortunately, I will not be able to share.

[Saket Kapoor, analyst]

Okay. Now sir, coming to the Consumer Product division. I think so, a lot has been spoken about our thrust on growing this segment for a profitable journey. So where are we in midst of reaching that critical mass, when the segment will start to be EBITDA positive also. If you could give us some targets or the way forward for the segment for this financial year. We closed the top line INR 254 crore for last financial year. What should we look in terms of growth? And how profitable can be or whether -- when can we returned to profitability.

[Aankur Patni, executive]

We have been calling out the consumer segment growth prospects, and we remain excited about the growth which the segment is being able to achieve along with the acceptance of the various new products that we have been launching.

The focus, which we have maintained over the last few quarters and as we spoke a little bit in more detail during the last con call was to ensure that we achieve a much larger scale of operations. And therefore, without immediately focusing on achieving EBITDA positivity, the primary focus for the time being is to reinvest whatever surpluses are being generated by the business into further growth, and expansion of the theme, expansion of infrastructure and whatever it takes for the operations to achieve a much larger scale.

Hence, the primary focus on EBITDA for the moment is not there. The primary focus is very much to expand the scale of business. And hopefully, if we are being able to achieve our overall growth pursuits, we would quickly reach a scale where EBITDA positivity happens on account of the scale by itself.

The margins at the gross level remain very good. The product margins are comparable to the best which exists in the other segments also. It's only that we are investing substantially in overheads and expansion of its capabilities in manpower, the infrastructure. That is what pulls down the EBIT-level profitability in the segment.

[Saket Kapoor, analyst]

And for the year as a whole, sir, what kind of growth...

[Operator]

Mr. Saket, may we request you to return to the question queue for a follow up as there are several participants waiting for their turn.

The next question is from the line of [ Dheeraj Ram from Ashika Stockbroking ].

[Unknown Analyst]

Congratulations for a good set of numbers. So post budget, what we expect is the Water Treatment segment to improve its execution and order inflow. So in this regard, we have seen many companies entering into water treatment business such as WABAG, Welspun Corp, VPRPL, [ Seven seas made in India Limited ]. So how do you see -- how do you position yourselves in this particular market? And how do you plan to grow from here for the next 2 years.

[Aankur Patni, executive]

Well, the numbers which have been shared by various ministries and industry forums and indeed, the policy actions which are being driven by the central government, the state governments and governments at even lower levels, are very positive for the water and wastewater industry in general.

I do expect that the investments or policy directions will not just be limited to a large degree of infrastructure or civil-oriented construction, but also increasingly towards higher technology interventions, which ensured that companies like us would have an even larger play. We are only hearing from the government their intention to [ course ] of action on improving the quality of water, not just the supply, looking at tackling specific contaminants which affect pockets of our country.

They are also talking about increased technology interventions at a very distributed level to ensure the reach of high-quality sanitation, high-quality wastewater treatment, to recycle, to reach remote parts of our country and specifically the rural areas. Along with this, the increased focus on making our rivers clean, augmenting the quality of our groundwater.

There are several such initiatives by the government which would have an impact on technology companies like us to a large extent, than when the investments are focused on -- in construction and infrastructure creation only. I do expect the future, therefore, to be quite interesting.

[Unknown Analyst]

And one more question on what do you expect the return on investment of the Roha plant that you're currently working on?

[Aankur Patni, executive]

I can tell you that we are looking at roughly a 3-year to 4-year period when we reach optimum capacity. And we are also looking at as we have explained several times during the last few con calls, that out of the INR 400 crore-odd investment, roughly around INR 125 crores is targeted towards specific technology intervention, which has other benefits beyond capacity augmentation. And the balance to [ 75 ], on that, we should be achieving turnover or revenue multiple of roughly 2 to 3x.

So that's for you to do the math. So our margin levels are not barring unforeseen or exceptional circumstances, margin leverage should stay in the ballpark of where we are.

[Unknown Analyst]

And one last question. What is the bidding criteria in this EPC segment? What does one seem to go for bidding process? Is it the bank guarantee? Or is it the order book or something like that?

[Aankur Patni, executive]

Bidding criterias vary slightly from customer to customer, but they would certainly look at your technical abilities as also your financial capabilities, bank guarantees and all that come at a much later stage. But primarily, they would look at your technical capability or financial capability and also what we have done in the past.

[Operator]

The next question is from the line of Aejas Lakhani from Unifi Capital.

[Aejas Lakhani, analyst]

Sir, my questions are 2. The first one is you have stated that there's a growth guidance of about 15%. If I were to break that up segmentally and assume the rates of growth that consumer is seeing in line with historicals. And given that Roha has -- is still a year away, and given that the Chemicals segment operating utilization capacities are fairly high, is it fair to sort of derive that the growth is largely going to be driven by Engineering. That's question number one.

And a subset of that is because you mentioned that a bunch of UP will get completed this year and ex of UP even you have a fairly good order book. So that was question one. And question number 2 is, how should we think about your operating margins for the year.

[Aankur Patni, executive]

Right. So for Engineering segment also the indication that we had given when we did our last call. And as of today, that is what we are stating during the current call also is a 15% to 20% top line growth. We also indicated, we have been indicating that we should be moving towards the margin levels which we achieved in the financial year '22, '23, and therefore, upwards from what we ended for '23, '24.

So we are very much hopeful that we will reach towards that level. And hopefully, we would be able to give you a more firm number as we move through the year.

[Aejas Lakhani, analyst]

And Mr. Patni, just a quick follow-up on that. So you mentioned 15% to 20% growth on the Engineering side. Today in the chemical plants, what kind of capacities are we operating at?

[Aankur Patni, executive]

That's roughly in the 65% to 70% range.

[Aejas Lakhani, analyst]

And sir, would that mean that you still have your ability to extract -- the revenue is still available in those facilities? Or is it that the next leg of growth is severely dependent on Roha and Roha coming on stream?

[Aankur Patni, executive]

No, there is headroom available there. But of course, the aspiration is not just to look at that headroom, but to grow at a faster pace in years to come. And Roha and the other capacity utilization on the chemical front would aid that.

[Aejas Lakhani, analyst]

And sir, could you just expand on that one statement you made that out of the INR 400 crores investment in Roha, INR 120 crores is going into enhancements. So what does that really mean? How does that impact business? If you could just expand a little bit on that, sir?

[Aankur Patni, executive]

That INR 120 crores is into the technology, a new area which would improve the overall profitability and there are other advantages also which ensue from that. And we should be able to declare it a little bit more openly once the things come on stream. At the moment, we are being a little bit what should I say, we are keeping it a little bit under wraps till the plant becomes operational.

[Operator]

The next question is from the line of Pratik Kothari from Unique PMS.

[Pratik Kothari, analyst]

Sir, first question, you did mention that we are closer to a couple of contracts, I mean the larger orders we have finalized, is it domestic or international?

[Aankur Patni, executive]

The ones that we have been talking about, they are international.

[Pratik Kothari, analyst]

Correct. But I mean I understand the time line of this usually is very uncertain and nothing that we can predict. But just again, from an international side, sir, how do you -- I mean ex of this so that we are close to, I mean, how are we looking at in terms of finalization, in terms of inquiry. I mean, earlier, we were hoping for much more from Southeast Asia, Africa, Middle East. Can you just talk a bit more on that?

[Aankur Patni, executive]

The target markets for large engineering orders remain the same, which is the Middle East, Africa and Southeast Asia. And beyond these very large projects, we are getting a steady stream of inquiries as well as orders from that same region.

And therefore, there's an increasing pace at which we are being able to capitalize on these opportunities. We are quite sure that with all the initiatives that we are taking in these respective regions, the overall order flow -- and it's not just engineering but also for the other segments, overall order flow from these regions is going to improve.

[Pratik Kothari, analyst]

And sir, anything which is progressing on Sri Lankan order?

[Aankur Patni, executive]

Sri Lanka, the pace at which we have been doing further invoicing or execution remains extremely [ muted ]. As we have been sharing, it is a function of the funds which get released by either the Sri Lankan authorities or with the intervention of [ Eximo ] or Government of India.

We have seen a few infusion of funds and that specifically has come from the Sri Lankan government who have, over the past few months, released significant sums of money under the current circumstances. And to that extent, we have also been able to invoice small portions. The remaining contract, which still remains to be invoiced is not very substantial. It's somewhere around 10% to 12%.

And as soon as we get significant commitments or clarity on further fund flows, we should be able to close out the balance on executed portion at a very quick pace, which can easily happen within the current financial year.

But then again, we have to be quite clear about how the various fund arrangements are being made and whether we can then be certain about closing the contract.

[Pratik Kothari, analyst]

And sir, last a year or 2 back, we had announced this expansion in Odisha. So any further [ heavy plans ], what do we intend to do there?

[Aankur Patni, executive]

As of now, there is no further details to share with all of you. But as I had indicated earlier also, we'll certainly come back to all of you and make an announcement once there is further developments on that front. Our intention is very much to expand capacity for the other chemicals, doing some backward integrations in line with what we are aspiring to do in the domestic and certainly the international market. That's what that particular investment is targeted.

Once it reaches [indiscernible] details to share with the investor community, we will do so.

[Operator]

[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor Company.

[Saket Kapoor, analyst]

Sir, can you give some more color on our recent acquisitions, the foreign company which we acquired since when we look at the consolidation in the Chemicals segment and also for the Engineering part, for the Engineering segment, the profitability is lower. And for the Chemicals segment, the profitability has improved.

So if you could just give us an understanding of what changes between stand-alone and the control [ number ] in terms of profitability. Sir, am I there online? Hello?

[Operator]

Yes, Saket. You are there.

[Vasant Naik, executive]

In terms of the Engineering segment, the reduction in the margin from a stand-alone to the consolidated is largely on account of some of the losses which we have made in a couple of our Engineering subsidiaries. Typically, these subsidiaries once the scale increases generally in the second half of the year, the profitabilities should improve. But that largely explains the delta between the stand-alone numbers and the consolidated of the Engineering segment.

As far as the Chemical segment is concerned, the top line increase as well as the margin improvement is largely because of the consolidation of the subsidiary, Mapril, which was acquired in June of '23, in the last week of June '23. So in the current year, we have consolidated 90 days of full quarter numbers. While in the previous year, it was only a 1 week number. And that is largely the reason for the change in the Chemical segment, top line as well as the profitability.

[Saket Kapoor, analyst]

And what are we looking, sir, in terms of Mapril contribution growth aspect for this year and what are the utilization levels there?

[Vasant Naik, executive]

We should see the growth, what we have seen in the stand-alone segment of the Chemicals, a 15% growth in the Mapril turnover also in the current year.

[Saket Kapoor, analyst]

But when we look at our bid pipeline...

[Operator]

Mr. Saket, may I request you...

[Saket Kapoor, analyst]

Ma'am, just I would like to conclude, ma'am, so that I can -- only last point, please?

[Operator]

Okay.

[Saket Kapoor, analyst]

Sir, when we look at the base pipeline of, say, INR 8,000 crores and the type of business execution we have done in terms of the UP project, can you give some color in the same way. What would be the value of projects that we are bidding. My understanding is what kind of repeat orders or the same set of business we can cater to as we are doing it for the UP Jal Nigam?

[Aankur Patni, executive]

I think our overall inclination is to do more and more jobs in the segments where we make a higher degree of profitability, one, and where our risk perception is lower. While our ability to do contracts of the nature of UP or Sri Lanka or any one of these remains quite high, it's always a -- whether we do it or not is a function of whether we get a contract structure and overall comfort for taking up an order of that kind, whereas a lot of the orders that we are trying to pick up both internationally and domestic would tend to be in areas, in sectors and with the margin profile, where we feel a little bit better covered in terms of risk.

So it's less a question of our ability to multiply in terms of capability, more a question of the specific areas where we want to grow and consequential impact on our bottom line and balance sheets.

[Saket Kapoor, analyst]

Yes, sir, that is correct. My question was whether there are more orders in the pipeline or in your -- in the bid pipeline of similar nature of the one for the UP Jal Nigam project, which we are [ ready to take ], my question.

[Aankur Patni, executive]

In the inquiry bank, there is that -- there's nothing of that nature. But the opportunities exist, and we are evaluating it, but they are not a part of the inquiry bank.

[Operator]

The next question is from the line of Dheeraj Ram from Ashika Stockbroking.

[Unknown Analyst]

Sir, we were into this demineralization segment? And could you please let me know what is the market size of this segment in India globally?

[Aankur Patni, executive]

We are not into demineralization segment only. I mean that's a small subset of the activities that we do. And there are several other technology areas where we are actively present and which are, in fact, part of almost all large projects that we do, which includes things like membranes, which include things to do with much more prior process like a pretreatment. And you can get more details about the various technology areas where we operate from our website, which elaborates in quite a lot of detail about the various technologies and products where we deal with.

[Unknown Analyst]

Got it, sir. Yes. I've understood that demineralization is a subset of a particular project. So what is the...

[Aankur Patni, executive]

It is a subsidiary of the old technology [ plate ]. Demineralization is one of the technologies where we operate, but there are several others. That's what I was trying to tell you.

[Unknown Analyst]

Got it. Got it. And what is the O&M revenue that we are currently doing?

[Aankur Patni, executive]

So the service and spares revenue is roughly around 20% of our Engineering revenue, but I'll ask Vasant to look at the numbers and [ come back ].

[Vasant Naik, executive]

That is largely in line with what you have mentioned. Around 20% of our Engineering segment revenue will come from the services and spares.

[Operator]

As there are no further questions, I would now like to hand over the conference to Mr. N. M. Ranadive from Ion Exchange Limited for closing comments.

[N. M. Ranadive, executive]

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 the company, we will be happy to be of assistance. So 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.

[Operator]

On behalf of Ion Exchange Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.