Ion Exchange (India) Ltd
NSE:IONEXCHANG
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Ladies and gentlemen, good day, and welcome to the Ion Exchange India Limited Q2 and H1 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, sir.
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, I would like to thank you all for participating in the company's earnings conference call for the second quarter and first half 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 would 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, Vice Chairman; 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 all to the earnings conference call for the second quarter and first half of financial year 2025.
For the second quarter under review on a consolidated basis, the company reported an operating income of INR 6,445 million, an increase of around 21% year-on-year. The EBITDA reported was INR 682 million, representing an increase of around 13% year-on-year. The EBITDA margin stood at 10.5% and net profit was INR 506 million, an increase of 19% year-on-year, while the PAT margin was around 7.85%.
For the first half of financial year 2025, the company reported operating income of INR 12,120 million, an increase of around 20% year-on-year. EBITDA reported was INR 1,326 million, an increase of around 21% year-on-year. The EBITDA margin stood at 10.94% and net profit was INR 954 million, an increase of around 26% year-on-year. while the PAT margin was around 7.87%.
Going through the quarterly segmental performance on a consolidated basis. In the Engineering division, the revenue for the quarter was INR 3,949 million, an increase of 26% year-on-year. The EBIT for this segment was INR 235 million, an increase of 21% year-on-year. The increase in turnover was largely due to the improved execution of several large EPC contracts, and this momentum is expected to continue in the ensuing quarters. The segment saw an improvement in order flow during the quarter. The domestic enquiry bank remains robust, and we are hopeful for the finalization of some large value opportunities in the next few months.
At the end of the quarter 2 financial year '25, the total order book for the Engineering division stood at INR 3,580 crores.
Moving to the Chemicals division. The revenue for the quarter was INR 1,968 million, an increase of around 12% year-on-year. The EBIT was INR 522 million, an increase of 23% year-on-year. The segment continues to record improvement in both turnover and margins. The expansion of the Roha plant for the Resin manufacturing is in advanced stage, and we expect the commercial production to commence in the first quarter of FY '25-'26.
For the Consumer Product division, the revenue for the quarter was INR 691 million, an increase of 20% year-on-year. The losses for the quarter was INR 35 million as against INR 3 million loss in the same period of the previous year. This segment is experiencing consistent growth driven by greater market penetration and acceptance of the company's products. Our margins remained negative due to the ongoing investments in the infrastructure.
Anuj, now we can take the question and answer.
[Operator Instructions] The first question is from the line of Pratik Kothari from Unique PMS.
Sir, first question on the Chemicals segment. I mean this Roha commercialization, like you mentioned is 6, 9 months away. So if you can talk about on ground, what are -- I mean, what are the preparations that we have made in terms of kind of ramping it up in terms of clients, et cetera. So if you can talk about the preparation for the same.
Pratik, we have been working on it for quite some time now, and there is continuous effort to make sure that once the plant gets launched, we would have a few customers who would be having long-term contracts with us. As also, our teams on the ground have been working to establish a relationship with several other distribution channels, of course, various geographies globally. And we are quite confident that in a period of 3 to 4 years, as we have been talking about, we would be able to fill this new plant capacity.
Correct. So currently, I believe in terms of reasons our capacity utilization hovers between 65%, 70%. So given that we already have capacity available. So I mean, why doesn't this ramp up? Is it -- are these different products that we are trying at Roha, different customer segments?
We have been looking at our current facilities, and we have been working with different kinds of product mix, which is why you don't really see that the nameplate capacity being achieved. Because the nameplate capacity is based on a particular kind of product mix, whereas the actual mix which we try to work on is based on the -- both the bottom line and the top line in consideration. When we go in for this new facility, there would be a slight change in the way that we approach some of the product segments, the volumes where volumes are high.
So for the current product mix that we have, fair to assume that our current capacity is optimally utilized, the recent one?
Yes. We are using our current capacity quite well, Pratik. There would be an upside of 5% to 7% or 5% to 10% there depending upon how we change the product mix. Of course, there are certain product lines within that capacity where we are still in the process of ramping up the volumes. But on an overall basis, I would say that there is a space of maybe 5% to 10% there.
Correct. Fair enough. And sir, I mean, on the Engineering part, I think after a while, we have seen this ramp up, which all of us have been waiting for. So just some comments what is going right. And I believe our expectations were that going forward, H2 or maybe next year was supposed to be much, much better than what we have seen over the last 3, 4, 5 quarters. So some comments there if you can.
H2 would be better than what we have seen till now. Yes, that's our expectation. The revenue growth would happen, the executions of various contract is certainly on the rise. In the coming years also, we would expect the improvements to continue as we also hope that our order book will continue to fill up in the second half and the months thereafter. We are -- as we've been telling you for the past 2 quarters about our impact, which one particular project has been having on our bottom line, comparing that one adverse impact overall, we are quite happy with the way that the revenue buildup is happening. We will probably expect roughly between 15% to 20% growth during the current year on a full year basis. And in terms of our enquiry bank and in terms of the various projects that we aspire to gain, the movement is pretty good there.
The next question is from the line of Eshwar from ithought PMS.
Am I audible?
Yes, sir. You are audible. Please go ahead.
The question I had has already been answered. But there's just one clarity I wanted. EMS Limited, which are the peer, they released their results a couple of days ago and they have a margin of about 25% to 30%. How have they achieved that high margins than our -- what is the difference between us and [indiscernible]? I just want to ask clarity on that.
I'm sorry, your voice is not very clear, and we cannot make out the full content of your question.
Sir, can you hear me now?
There seems to be some kind of an echo that -- it's not very clear.
Can you hear me now, sir?
Yes. We can hear.
Sir, the question I had was, I've been interested in your company. I was tracking your company for a long time, but I'm new to the space, wastewater management. There's just one clarity I wanted. EMS released their earnings a couple of days ago, and they have a margin of about 25% to 30% in the Engineering business. How have they achieved such high margins? As they are our peers, they are in the same segment as ours. How -- like what are we doing different? Can you please comment on that?
I think, it's not fair for us to comment on what they are doing and how they have achieved their margins. What I can say is that on a very broad level, that the business or the space, the kind of customers that they deal with, and the nature of business which they are specifically in is slightly different from what we do. However, I am not privy and I am not fully aware of the content of the specific project and how their margins have grown.
[Operator Instructions] The next question is from the line of Omkar, an individual investor.
Am I audible?
Yes. You're audible.
Sir, I personally feel the water sector is in sweet spot and future is looking very bright for water sector. So what is the reason for which we are not getting very big orders? We got a couple of orders last quarter. INR 160 crores and INR 180 crores. But that value is still lesser. So my question is, how much more orders are we expecting or? At least give us some guidance or visibility for our business for next -- or this specifically for this financial year?
And my second question a little bit regards to specifically for insiders selling -- that Mahabir Patni and Bimal Jain, both are selling their shares in each quarter. Any specific reason for that? Because despite being a future for this business is very bright. What is [Foreign Language] insiders are selling the Ion Exchange shares?
Let me answer to your first part of your question first. The company's enquiry bank, you must have been tracking is, it continues to be quite strong, and we guide from quarter-to-quarter that our average conversion from the enquiry bank into the order book is roughly around 15% to 20%.
We are seeing a very healthy prospect in the future. And we do hope that the enquiry bank as well as order book would both continue to prosper in times to come. So certainly, the future would be significantly better in terms of the revenues that we expect to gain from the business.
The Water and the Wastewater segment being in the right spot, not just in India but globally, is very much something which we believe in. And that's why the guidance that we have been continuously giving to our investors has been quite positive.
As far as the sale by the two individuals that you mentioned, that's individual decision. They have been investors in the company. They have been invested in the company, and they have been part of the promoter group and management in various ways. That's been for a long time. And while I cannot comment on their individual reasons for the sale, I do understand that they are making a very small portion of their shareholding is what they are selling during the period that you mentioned. And I would expect that it would be to monetize some of their holdings.
Okay, sir. And one small question. Sir, UP outstanding order is around INR 750 crores. Can we expect at least INR 150 crores quarterly run rate as we are entering into H2? As every con call, we are saying UP contracts would get substantially executed by the end of this financial year. So what is the exit run rate? Can we expect in UP contracts specifically?
Well, the UP contract had the expectation of substantially more invoicing during the quarter which has just gone, which is the second quarter. And we do expect that in the coming quarters, the rate at which we are invoicing would improve significantly. However, since the execution of the contract is quite dependent upon the flow of funds which are allocated and approved for our contract as well as the various approvals that we received from the government. And that's not unfortunately a very predictable thing, while we will certainly aspire to do as much as we can. We do not -- we are not in a position to tell you exactly how much we would be executing during each of the months which follow.
Sir, reason behind this in quarter 1, because of election period, we have not done the much execution. And quarter 2, if I'm not wrong, we have done INR 60 crores. So I'm just asking, is it possible to do at least INR 100 crores per quarter? Just a rough number. I understand what you are saying. It's subject to the realization of the funds and everything. But can we expect H2 will be better for UP contract? Can I say in other words, H2 will be much better than H1 for UP contracts basically?
Yes. H2 will be significantly greater than the first half.
The next question is from the line of Pratik Kothari from Unique PMS.
Sir, a few clarifications. One, on Sri Lanka, any update progress there?
Well, Sri Lanka, as we have been commenting for quite some time on this, there is a very slow progress on that contract and further invoicing or execution is dependent on the funds which get allocated to the contract, whether through the intervention of Government of India or by the Sri Lankan government themselves.
We've had some infusion of funds, which is coming primarily from the Sri Lankan government. And consequent upon that, we have been invoicing some small values, but there is roughly around 10% or so of the invoicing, which still remains to be made. We can only say that there is a significant degree of uncertainty about when the funds will get allocated to it and how much. But as and when the flow of funds becomes good, we would be able to close the remaining portion of their contract at a very good pace.
Correct. And then we had some exposure there in terms of what we had executed and yet to be received. I think, a year or 2 years back. Is that all settled or even that is still pending?
No, there is -- as I said, there is only some amount of funds which are being allocated to the current contract, and that also was by government of Sri Lanka. So while we are quite confident about recovering the amount, but there is still some outstanding which is there.
All right. Fair enough. And sir, if you can -- so one is this Roha, the Resin plant expansion that we're doing. Anything on the membrane or the other chemical products that -- any projects that is currently undergoing or in under plan?
We've just expanded capacity on our membrane facilities. And we are planning to expand that further. We will make an announcement once those plants take full shape. As far as chemicals, we have been announcing for some time that we would be setting up facilities in Odisha. And as of now, those are plants which are still being developed further.
Okay. And sir, last one, are we disclosing margins or this one-off order impact that we have in our Engineering business, which is kind of suppressing our overall margins? Are we disclosing what impact that is?
Well, we've not really spoken about specific numbers, but I can tell you that the impact of this on our Engineering segment margins is upward or significantly upward of 150 basis points.
Okay. That's material. Fair enough. Okay. And sir, last, on the UP, you did speak about this fund flow government approach. Do you see a change in their priority of what needs to be done? Because we saw some large ticket orders which have put out, it seems the pace has absolutely -- is very different from what we were expecting earlier. So in terms of when you speak to them...
Yes, we have been -- since we have teams deployed on the ground, and we were hoping for a faster pace of execution right through. And we have been in discussion and dialogue with the government to try and see ways and means of expediting the execution. These dialogues continue, but one of -- or two of the very crucial impediments to faster execution is approvals, which come from various parts of the bureaucracy and also the fund flow, which is allocated to the contract.
We have disclosed earlier election period, there was a little bit of a hiccup. Those things seem to have now been sorted. The execution during October was much better than what it was in previous period. So we hope that the pace would be significantly better in the second half, and we would be able to at least show much better numbers.
The next question is from the line of Vikas Goel, an individual investor.
Sir, my question is regarding your Membrane division. What is total contribution in our Engineering segment for the Membranes? And what is current capacity utilization of our current capacity in terms of membrane production?
Well, membranes -- the revenue from the Membrane division is not very significant as a part of our overall revenue numbers, but we are running at roughly 60% to 65% capacity level. As we mentioned on the call earlier that we have expanded capacity recently. So the initial capacity what we had, we are close to around 95% utilization of that, 90% to 95%. And we are rapidly moving towards increased capacity utilization for the expanded portion also. Further, as I also mentioned earlier that we are evaluating further expansion of the facility. So the outlook for the future is extremely good.
Sir, my second question is regarding your Hydrolife in Consumer segments. Can you throw some light on prospects of this business of Hydrolife?
We are seeing very good customer response to the product. And we do expect that in the coming period, this is going to become one of our star products for the Consumer segment. It is -- there is a lot of market building, which is where the investments are currently being made. And I'm sure that with growing awareness about the various benefits which that project offers, the future numbers would be significantly higher than what they are.
And sir, my last question is regarding the Smiconductor business. Are we getting some traction in this sector? Have we report any new orders in this quarter for any semiconductor industry?
We are working with quite a few of the prospects in the industry. As you would be knowing that there are several which are being planned and are at various stages of implementation execution. So we are certainly looking at the sector with a lot of interest and several contracts are under discussion.
Sir, my last question, please, if you can answer. Sir, the quality of water in solar cell manufacturing and in semiconductor industry, what do you think, it is same or -- which industry is more generating maybe with respect to water, pure water, is it solar or is it semiconductor industry, sir?
The requirement of water by from each industry is very specific. So they would define the quality, which they are expecting both on the input side as well as the way that the waste gets generated. Semiconductor industry because we are looking at a very high precision and very high purity. Therefore, the quality of water needs to be extremely good. So each of these would have their specific requirements as to how they want the purity of water to be there. But semiconductors would probably have higher specification.
The next question is from the line of Jolyon from Amiral Gestion.
Two questions. First one, on the working capital noted that receivables and inventory have actually increased maybe from FY '24. Maybe any commentary on that? And where do we expect inventory and receivables to end up end of the year? That's my first question.
Vasant, can I request you to give a commentary on working capital and receivables?
Yes, you mentioned about the receivables level. Actually, our EPC segment revenue is steadily increasing. That's why we are largely seeing an increase in the number of days of the receivables for the current year. And we do expect, as the Engineering EPC invoicing picks up pace in the coming quarters, we may be seeing these levels at the year-end also.
And just to clarify, when you say this level as in, the absolute same level or the same number of like receivable days or inventory days. Could you clarify that, please?
You can take the number of days, because the fourth quarter generally is the higher level of invoicing. So it will be appropriate if you take number of days.
Okay. Got it. And I guess my second question is on the leadership transition. I noticed that CEO transition into the MD in October, I think there was a press release. So maybe you can give a bit of background on the new MD and maybe what we should expect in terms of any potential changes to the organization or the way it works? Yes. That's my second question.
Mr. Indraneel Dutt was -- has been appointed CEO of the company last year. And in a natural progression, he has been appointed as MD this year. And the two promoter families which have been involved in the business for a number of decades now. And the four members from the two promoter families, they continue to remain involved in the business and they continue to be on the Board. However, in the interest of longevity and to bring a little bit of a separation between the promoter holding and the operational management of the company, it was felt that we should bring in professional MD and professional management into the picture. And that's how Mr. Dutt has been inducted as the Managing Director.
The rest of the organization continues to function as it was. And we do expect that the company will continue to grow at a significant pace in coming times. We will be inducting more and more high-quality management professionals across the company to ensure that any gaps, if any, in any geography or any business, which requires to be filled in order to fulfill our long-term aspirations of global leadership in this space, we would be taking those steps in times to come. But per se, there is no defined change in the style of management or in its approach.
Okay. So just a quick follow-up. I mean, the transition may be happened only for 1.5 months. But do we foresee any kind of like change in the strategic vision of Ion Exchange or the way that we might conduct business, at least from the new MD's perspective. Yes, just last thing on that.
Well, we are looking at more aggressive growth in times to come. The aspiration of the company is to multiply the top line as well as bottom line several times over in the coming 5 to 7 years. So you will certainly see a slightly more or a higher pace of outgrowth. And we will see a higher degree of action on the international markets, but that is and that's a strategy which we have been advocating for quite a few quarters and years now. We will be looking at international markets for future growth.
The next question is from the line of Samir from AUM Fund Advisors.
Am I audible?
Yes, you are.
Yes. Sir, I have two questions. One is on the Chemicals business. This new facility at Roha, if you can just tell us what is the total CapEx that will be spent by the time this plant comes up? And what sort of fixed asset turnovers can we expect? Will margins continue to remain on the new products as well at the 25% EBIT level that you have? And by when would you intend to hit peak capacity from the new plant?
Well, we are expecting the plant to deliver somewhere around 2, 2.5 asset turn. The total CapEx, which is on the primary production facility is roughly INR 275 crores. And we've been declaring over the last few calls about how the CapEx is going to be made there in an additional facility, which is targeted to give us value additions on several other fronts, which would aid the efficiency of production and several other matters.
And unfortunately, we are not able to offer you a lot of technical details around that part of investment because it's one of the first times that something like this is being done anywhere, and we would like to keep the public information on that limited at this stage. Hence, for the purpose of asset turn calculation, we state INR 275 crores and the projected number, as we just mentioned, is around 2.5x. That's over a period of roughly 4 years.
In terms of the margin profile, we do hope that the current margins can be maintained over at least the coming few months. It is dependent upon the movement of raw material prices, the foreign exchange fluctuation, the geopolitical scenario, the stability on various other fronts. So therefore, to give you a very definitive answer over a longer period of time is difficult. But if things remain as they are, the margins are quite sustainable. And for the new facility, we do expect to get a little bit of an advantage on the cost front. Therefore, we might get a benefit of that in the bottom line as well.
Sir, would it be fair to sort of conclude that based on a INR 275 crores CapEx in a 4-year time frame, you could effectively look to double your Chemicals business, which is currently at about an INR 800 crores per annum run rate, while maintaining margins. Of course, it's subject to several vagaries, but you should be able to double your Chemicals business in 4 years at pretty much the same current margins, subject, of course, to product mix and all of the factors that you mentioned.
Yes, that's what -- that the number would add up to, and because it's not just the Resin business that we are talking about. So we are seeing growth on the other fronts also, yes.
Right. And my second question, sir, has been on -- is on the Consumer business. Now while we say that this business is growing, it's on a very, very small base. And we've seen over the last 4 or 6 quarters, at least that this business on a very small base, the growth in percentage terms should have been much larger, where it is not the case. So what are the issues that you're facing, because we consistently see small losses from this business and the sales ramp-up is not what one would expect given that the other competitor -- listed competitor is now showing very decent numbers on the purifier side. So can you just talk a little bit about if you're facing any issues, what those issues are in that business? How long will this marginal or small losses from this business keep happening every quarter?
We are expecting the business to grow by roughly around 30% level in -- by the end of the current year. And the size of the business, yes, it is in the range of around 10%, 11% of our revenues at the moment. And it has been at roughly that level for quite a while. But we do see that the current trends are quite favorable, and we are aspiring to reach a figure of INR 500 crores in the near future.
So the entire effort at the moment is not so much EBITDA focus. It is more geared to reach a scale, which is more meaningful for that business and for the company. And that's why a lot of the gross margins which the company -- which that part of the division is being able to generate, we are redeploying in the consumer business in developing infrastructure for future growth.
So sir, could you just elaborate a little bit? I mean, are you increasing distribution, distributors? Are you going into new geographies? Is there new product introduction? How are you going to achieve a INR 500 crore turnover in this particular business?
So all of -- we are investing and developing capabilities on all the fronts that you just mentioned and maybe a little bit more. Because as we grow from a level which was significantly lesser than where we stand today, we would need to build on all of these fronts and continue to provide outstanding products and services better than the industry -- what the rest of the industry is doing.
With that aspiration, there's a lot of investment going on. And in the minds of our team, certainly, the figure of INR 500 crores is not all that distant. You would, as I see, roughly a 30% growth by the end of this year. And then we'll be building on a slightly larger base.
The next question is from the line of Romil Jain from Electrum PMS.
Congratulations on a good set of numbers. Am I audible?
Yes, you are audible.
Okay, okay. My question is, one, on the order inflow. So can you just help me with the order inflow in H1? And what do you expect for the whole year?
Sure. Vasant, can you please elaborate on the order inflow?
Yes. The order inflow for the first half was around INR 726 crores.
Okay. And normally H2 being better, what kind of inflows you are expecting on an annualized basis?
It's very difficult to predict exactly in what orders we will end up winning, because there are a few large ticket contracts, which are in a discussion. And hopefully, we will be able to keep those go as anticipated and in our favor, then we should be able to outperform the previous year's second half.
Okay. And just as an observation, I think last few quarters, we've seen the order book in a range bound. So do you -- because there's a lot of work going on globally also and we are a lot of stuff on the water space. So there doesn't seem to be a lot of incremental order inflow that is kind of coming through. So can you give some idea of how the international order book within our space is performing, how aggressive we are? And can this -- so the bid pipeline has remained in this INR 8,000 crore kind of a band and similar as the order book. So can you just give some flavor on that side?
The order book is also a function of the contracts which are getting executed, because that portion of the order book would keep coming out of it. So if you see a higher quantum of revenues which are being booked, it would require that much more of order inflow to keep the levels at the same place.
While we have seen marginal growth in the overall quantum, but the quarter-to-quarter order intake, just to give you an example, the Q2 of this year, we've got around INR 570 crores or INR 580 crores of inflow of orders, which is significantly higher than the Q2 of the previous year, which was, I think, at around INR 290 crores level. So almost double of what we delivered in Q2 of last year.
Okay. And secondly, on the Chemical side. So this Chemical roughly with the capacity coming in, I think our overall kind of revenue should double in coming years. And I think we were also contemplating further expansion in this segment. So post this, when are we expecting to start that work? And if you can give some idea again on the present situation in the chemicals in terms of competition volatility, if there is any on the Chemical side?
As the margins would indicate, we are faring quite well against overall competitive intensity. If the global market and the Indian markets both would have several players who are active in the space of water treatment chemicals, and India has several of the global majors present in the space for several decades. Hence, when we look at a sustained profitability or an uptrend in the overall margin profile, that would indicate that we've been doing something right.
And a few of the things which we have outlined in the past that our ability to keep the realization -- sustained realization at their levels to ensure an uptrend in margins is a significant indicator of our competitive ability. So that's one side of the story.
The consumable business in India has been growing at a decent pace. It's not a number which is anywhere close to the numbers that you see on the engineering front. The growth also would be in roughly around the single digit or barely past the 10% level in most of the large ticket consumable chemicals.
So in that scenario, when you are doing a 15%, 16% growth year-on-year would require both winning some extra customers and also substantial international growth. Our strategy is to maximize our international business in times to come because that gives us a much bigger headroom for giving double of the turnover, as you just mentioned, in a short period of time.
Okay. Sir, just one clarification on Chemicals. I think we had acquired MAPRIL last year. So are the current quarter chemical numbers on a like-to-like basis, the 12% growth, just to clarify?
For the current quarter, yes, it is like-to-like. For the half, it is not like-to-like. Because in the previous year, we had just a few weeks in the first quarter for MAPRIL.
Okay. So Q2 and Q2 last year is comparable right now?
Yes.
Okay. Just one suggestion, I mean, a request. If you can give some more granular details in the presentation, it would be very helpful to assess the business, maybe more data on your international order, so the order book breakup between some segments and also some geographical breakup and some order inflow data. So those things, if you could give, it would be really helpful, sir. That's all from my side.
The next question is from the line of Saket Kapoor from Kapoor & Co.
Sir, what goes into the consolidation part in the Engineering segment? These are the foreign order execution that we are executing, because herein also the -- these are orders with no margins or very, very low margins, sir. If you take the quarterly number of INR 369 crores and INR 394 crores, that is the stand-alone number of INR 369 crores and INR 394 crores of consol number.
So what you are saying is that...
What goes into the consolidation first? Yes. And the margin contracts when we go for consolidation, yes.
Right. So we have several subsidiaries, not just international, but Indian also. And some of these are involved in providing support to the main business through manufacturing, through services and through other elements of the business, where the margin additions may not be that significant. That is one of the primary reasons why you don't see a big jump on the bottom line.
The international businesses at various points of time, we have explained that they are growing a lot. And some of these operations have turned profitable and they have started to do well. And there are others which we are still in the process of growing, and therefore, the investments in this have to be borne for a slightly longer period of time. So that's broadly why the consolidation is not that much of margin accretive.
And when we look at the -- for the Chemicals segment, it is the MAPRIL acquisition only that contributes to the top line and bottom line?
MAPRIL is a significant addition which you see there. And there are some other additions also, but MAPRIL is the most substantial one.
And sir, for the UP project part and also the trust of the government on this given scheme, do you find that there is a change in the -- or the focus has slightly diverted with release of fund also becoming a key point of observation for almost every EPC company. So what is the feedback as such? When we hear other people, they are saying that the center funds are not been disbursed. The state portion has been disbursed. So what is the feedback we people are getting? I'm talking especially about the UP project also. So what are the key bottlenecks? And how do you think -- how do you see things shaping up?
Well, elections were a major hiccup. And we know that at the time of elections, a lot of the state machinery is bound to come to a much slower pace, if not a complete halt. And that was one of the primary reasons why the first quarter and a large portion of the second quarter, we faced issues on various fronts, including fund allocation.
The fund allocations have improved in October, for example, and during a part of September. And we do hope that we will see more of this happening in the coming period of time so that we can carry out our execution at a faster pace.
If you are asking me about our national view on the subject, then it is very dependent upon which specific state or geography that we are talking about. And yes, it involves not just the central, but also the state and the various areas where they are allocating or deploying funds. But -- on a very general level, there is an improvement in the current month.
Okay. So what we can conclude is that, the aberration in the UP project execution was because of the monsoon factor also and also because of allocation of funds. But that things are now coming to more normalization from October onwards. That should be the conclusion as of now?
Yes. October is significantly better. Yes.
The next question is from the line of Omkar, an individual investor.
Sir, what is the exit run rate can we expect in Chemical business for quarter 3 and quarter 4? Because in last -- both the quarters, quarter 1 and quarter 2, the exit run rate in Chemical business was INR 200 crores. And you are saying we are at a 70% of the capacity utilization. So what is the exit run rate can we expect in quarter 3 and quarter 4? As you said last time also, there is still room for the Chemicals business to improve?
I don't think I got your question completely. You said exit run rate?
Yes. Per quarter, you are doing INR 200 crores of revenue in Chemicals business. So my question is, what is the revenue are you expecting in Chemicals business in quarter 3, quarter 4? Are the Chemicals business will be also better than quarter 1, quarter 2 because we are at 70% of the capital utilization for the plant for Chemicals?
So for the year as a whole, we are expecting to close on a stand-alone basis at roughly around 15%. And on a consolidated basis, a growth of roughly between 12% to 14%.
Okay. But my question is, sir, can we do better than INR 200 crores? As of now, in both the quarters, we have done INR 200 crores of Chemicals business. So my question is, can we do better INR 10 crores, INR 20 crores, INR 30 crores per quarter, more than INR 200 crores?
We hope that we will be able to better that at INR 199 crores, INR 197 crores, whatever we have done.
Understood. And sir, as far as margin is concerned, we are at around 11% from both the quarters. And we said we'll go back to that good trajectory where we are doing 12%, 13% or 14% in '22, '23. So what is the -- and you said specifically as the quarter progresses, we can guide you more. So what is the margin can we expect for the entire business, Consumer, Chemicals plus Engineering. Current margin -- operating profit margin is at 11%. So what is the margin can we expect? Can we reach 12%, 12.5% in quarter 3, quarter 4 specifically because now it already we are -- H1 is over, and we are last 4 months of this financial year?
You are asking about the company as a whole, right?
Yes, yes. Operating profit margin, which is that we are at subdued around 11%. Last time, we were at 11.3%. This time, it's around 10.8%. So average, you can say we are at 11% for H1 for entire business. So can we expect our operating profit margin can go to 12% or 12.5% because in last con call also, you said, from here on, the margin will definitely improve, because that one of the contract was giving you the trouble and where the margin was going down. So I'm specifically asking operating profit margin for the full business -- entire business.
Unfortunately, the contract which you mentioned is still not executed, and we do expect that substantial pain from that would continue and it could have a bearing not just on the Engineering margins, but it would be substantially visible in the overall margins of the company. So with that factor in, we hope that we will be able to maintain the margin percentage at around the last year's level.
So the improvement that we were hoping to bring, because of operating leverage on higher revenues and all of that, unfortunately, that one contract is having a very significant bearing. And therefore, we are likely to be at around the last year's margin percentage.
The next question is from the line of Sunil Kothari from Unique PMS.
Aankur sir, just one question. Nothing to do with this current year trajectory. I would like to understand, looking at last past 2, 3, 4 years, our experience in this Engineering segment, water-related projects, our experience with Sri Lanka and our experience with UP. For next 3 years, which are the areas where you will be focusing more on the business to grow? Which are the areas where you would like to improve by not taking some projects which is troubling us? So which are the things which you'll be focusing on? And how you see next 3 years international and domestic opportunities for Water segment -- Engineering segment?
Thank you, Sunil. I think you've got it spot on. And the focus which we have is very much for the future. And in spite of very tight discipline that we maintain the nature of the work which is EPC and specifically when you enter the Municipal Infrastructure segment, there are unfortunately uncertainties which do bring in new learnings.
We are hoping that we will be doing significantly more business in the international market. Our experience in recent times has been pretty good. The orders that we are picking up from the international market are also extremely good, both from a top line as well as bottom line perspective. So that's clearly one area of growth that we are witnessing and we will continue to work more towards.
The other area is to look at some of the sunrise industries that is semiconductor space, the solar space, the biosimilars, the biotechnology space and a lot of the medium to large segment industries which require -- or which are more aware and which require higher quality of water. So those are areas of interest for us.
We are also looking at very select government projects and certainly looking at larger sizes of individual contracts, which are concentrated in the nature of their execution. With all the learnings that we've had in the recent times, I'm sure that we would be able to translate it into higher quality of contracts and bottom line. But we are not going to completely step away from the Infrastructure segment. It was never our focus, but we remain committed to delivering at least 2 or 3 large contracts from that space as well, while international business and industrial business continues to be our strength area.
Thank you, sir. Ladies and gentlemen, due to time constraint, that was the last question for today's conference call.
I now hand the conference over to Mr. N. M. Ranadive, for their closing comments.
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 would 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.
On behalf of Ion Exchange India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.