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Earnings Call Analysis
Q3-2024 Analysis
Ion Exchange (India) Ltd
For the third quarter of the fiscal year, the company reported a consolidated operating income of INR 5,539 million, marking an uplift of 8% from the previous year. Impressively, the EBITDA also rose by 13% to INR 706 million, however, there was a slight 1% dip in net profit at INR 472 million. Bringing the spotlight on margins, the EBITDA stood firm at 12.75%, while the net profit margin was observed at 8.52%. When considering the nine-month performance, the operating income jumped to around 17% year-on-year, with EBITDA and net profit margins of 11.48% and 7.85%, respectively.
The Engineering division, with a slight revenue decrease, is eager to boost performance with expectations of rapid job execution, including a significant U.P. Jal Nigam order. Conversely, the Chemicals division showcased a remarkable year-on-year revenue growth of 23.5% with EBIT increasing by 30%, reflecting a strong margin performance despite overall industry pressures.
Looking ahead, the company remains optimistic, projecting a robust year-end revenue growth of roughly 20%. Margins are expected to stay on par with the previous financial year, painting a promising financial landscape for the company.
While the company has witnessed a trifling slowdown in finalization rates due to economic and geopolitical influences, there's an anticipation of a stronger order flow in the near term, especially with new semiconductor capacity opportunities already realizing orders and more expected in future quarters.
Despite procedural delays, particularly with a large U.P. order, the company successfully increased the invoicing pace and anticipates substantial pickup in engineering invoicing in the last quarter. With an order inflow of INR 142 crores this quarter, they expect to render commendable year-end numbers.
The company has strategically invested in capital expenditure projects like the resin greenfield expansion at Roha, foreseeing commercial production to commence from FY '25-'26. This aligns with the impressive performance and growth in the Chemicals segment, which has risen significantly relative to industry norms.
Leveraging government and industry initiatives, the company is exploring the waste-to-energy market. Following its pioneering project with Akshaya Patra, the company expects to secure more of such sizeable projects in the foreseeable future, diversifying its portfolio and revenue streams.
The forecast for the current financial year includes an approximate 25% revenue growth in the Engineering segment and about 10% for the Chemical segment on a consolidated basis. This forecast is poised to be influenced by the recent acquisition of Mapril, which will contribute to the overall Chemicals segment performance.
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Ladies and gentlemen, good day, and welcome to Ion Exchange (India) Limited Q3 and 9 months 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, 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 call for the third quarter and 9 months ended of financial year 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 have with us Mr. Aankur Patni, Executive Director; Mr. N. M. Ranadive, Group Head of Financial Planning and Risk Management; Mr. Vasant Naik, Group Chief Financial Officer; 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 third quarter and the 9 months of the financial year 2024.
For the third quarter of the current financial year, on a consolidated basis, the company reported an operating income of INR 5,539 million, an increase of 8% on a year-on-year. EBITDA was reported at INR 706 million, representing an increase of 13% year-on-year.
EBITDA margins stood at 12.75%, and the net profit was INR 472 million, representing a minor decrease of 1% year-on-year, while the PAT margins stood at 8.52%. For 9 months financial year '24, on a consolidated basis, the company reported an operating income of INR 15,660 million, an increase of around 17% year-on-year.
EBITDA was reported at INR 1,798 million, an increase of 21% year-on-year, while the EBITDA margins stood at 11.48%, and the net profit was INR 1,229 million, an increase of 8% year-on-year; and the PAT margins stood at 7.85%.
Coming to the segmental analysis, in the Engineering division, the revenue for the quarter was INR 3,212 million, a minor decrease of 1.5% on a year-on-year basis. The EBIT for this segment was INR 240 million, decreased by 22.5% year-on-year. The segment witnessed satisfactory order flow of medium-sized jobs. The inquiry bank remained robust; however, we experienced some delays in finalizations of some large value opportunities. The Engineering segment recorded sequential improvement in turnover. The execution of the large EPC jobs, including the U.P. Jal Nigam order is expected to accelerate in the ensuing quarters.
Coming to the Chemicals division segment. The revenue for the third quarter stood at INR 1,872 million, an increase of 23.5% year-on-year; and EBIT stood at around INR 493 million, an increase by around 30% on the year-on-year. The Chemicals segment recorded improved volumes, while maintaining healthy margins.
In the third segment, the Consumer division segment, the revenue for the quarter was INR 630 million, an increase of around 38% year-on-year. The segment has sustained the growth witnessed in the past few quarters.
We can now open the floor for the Q&A session.
[Operator Instructions] First question is from the line of Noel Vaz from Union Asset Management.
Yes. Could we have an idea of what kind of -- what is the margin outlook for FY '24-'25 as well as any growth outlook? Yes. That is my first question.
Sir, we're not able to hear you.
Hello? Can I be heard now? Hello?
Yes, sir, you're audible.
Yes. What is the margin and growth outlook for FY '24-'25? Yes. That's all from my side.
The margin and growth outlook for the current financial year is, as we have been indicating in the previous calls, we are expecting that we would be able to maintain margins compared to what we achieved in the previous financial year. As far as revenue growth is concerned, we are expecting year-end growth of roughly around 20%.
Yes. Also -- so actually, just looking at the order book, now order book and bid pipeline, if we just compare, I know this is not necessarily the best way of looking at it, but if we look at 3Q versus 2Q, there doesn't seem to have been much growth. Is this -- I mean, what is the particular reason for this?
I'm sorry, we're not able to hear you very clearly. Can you be a little bit louder, please?
Yes. Sorry about that. So the thing is, if we look at the 3Q order book and the 3Q bid pipeline versus the 2Q order book and pipeline, this seems kind of flattish. So is there any particular reason for this?
We have had, in recent periods, slight slowing down of the finalizations that we have been expecting. Some of the inquiries which we were expecting to get finalized during the period, they seem to be shifting because of the current environment, both domestic and international, and we are now expecting that some of these may flow over into the next financial year also.
So yes, there seems to be a little bit of a slowdown. And also, a couple of opportunities which we were hoping to convert, we have not been able to because of the terms at which these were finalized and we have had to let them go. So those 2 reasons account for this.
Okay. This is just on our overall kind of outlook of the different segments. So in the upcoming -- there's a lot of upcoming semiconductor capacity, which is expected to come through. Are we well placed to take advantage of that opportunity?
Yes, we are quite well placed. We are actively working on a few of such opportunities.
Okay. And by when could we potentially see some kind of move on this front? Or...
We have already got a couple of orders on that front, and we should be seeing more of these flowing through the order book in the coming quarters.
Next question is from the line of Richa Chowdhary from Electron PMS.
If you could just help me understand why was the execution in Engineering segment weak this quarter? And if you could just help me with the numbers, what order inflow did we see during this quarter and 9 months? And if you could just give some guidance on FY '24, how much orders are we expecting to close this year?
Okay. Engineering, we had some constraints on the invoicing front. One of the large orders, which is the U.P. order, the procedural issues, which we have hinted at in the past, that while we have been able to increase the pace of invoicing, but still not requit enough.
There was a large invoicing in the previous year's third quarter on the international markets, which this time we were not able to match that similar invoicing from large contract. However, for the full year, as we had mentioned earlier, we do expect that the last quarter, the engineering invoicing will pick up substantially. And for the year as a whole, we should be able to deliver good numbers.
Sir, what was the order inflow this quarter that we saw?
Vasant, can you please share the numbers there?
Order inflow was, for this quarter, INR 142 crores.
It was INR 142 crores. Okay. And if you could just give me a little update on the Chemical CapEx that we are seeing? What are the timelines and the revenue potential that we have seen in the first and the second phase?
Vasant, can you highlight the CapEx and then I will share...
As we have mentioned in the earlier con-calls, the CapEx for the resin greenfield expansion at Roha, we are expecting the commercial production to start from FY '25-'26.
The next question is from the line of Sunil M. Kothari from Unique PMS.
Sir, Chemicals segment has grown, after long, very respectably, and our margin is also very good. Looking at overall chemical industry scenario, we hear from a lot of companies about slowdown and demand not growing up. So what we have done differently and what is changing for us?
Well, we have managed to, I think, take a few steps in a timely manner. One was to improve our overall product profile, the efficiencies and throughputs of our various chemical manufacturing facilities, and further to ensure that we managed our costs as best as we could have during turbulent times. During times when the input prices are relatively more stable, we do enjoy slightly better ability to control our margins, and which is what you have been seeing over the past few quarters.
Sir, my question is regarding more about this volume growth, revenue growth, mainly what domestic or international? And how sustainable is this size of growth, because we have grown really well during this quarter, particularly chemical?
I think we should be able to grow well on the international front specifically. As we have been pointing out in the past, a lot of our planned CapEx is targeted towards the international market, and our current market shares in global market is quite low, giving us a substantial headroom for growth. We are in discussions with a number of international buyers for these chemical products of ours and these are progressing quite well. As and when the new capacities come up, we are quite sure that we will be able to ramp up the volumes at a good pace. So we should be able to sustain growth going forward. Margins, as I mentioned, have been good. We have been able to improve the product mix sequentially, and that has helped us to improve our margin profile.
Great to hear that. Sir, one thing is about this -- on our website, there is a Media segment, some chemical -- this waste to energy segment, we have also entered, and we have executed one project for Akshaya Patra and one under implementation at petrochemical complex, which is a very big project. So this seems to be a new opportunity and area. If you can little bit elaborate and explain what exactly we are planning to do and what is the size of opportunity?
Sure. Waste to energy is one of the areas where there's a lot of effort being put by the government and industry alike to effectively convert the waste into usable energy, and this happens through various routes, including production of gases, which are there, thereafter converted into energy. We've been working on this area for some time.
Akshaya Patra, as you mentioned, was one of the first projects which we undertook to demonstrate the technology. We are working on a few of these opportunities and hope we will be able to convert at least 1 or 2 of the large ones in the near future.
This large one must be, what, INR 50 crores, INR 100 crores size of business or smaller one?
So there are various sizes available and a lot of discussions going around on this topic. And we would want to start executing medium-sized ones and then thereafter get into really large ones.
Okay. Very fair, sir. And sir, last point I would like to understand, so you rightly said some projects of [Technical Difficulty].
Sir, your voice is not audible.
Are you getting my voice now?
Yes, sir.
Sir, my last question is around this [Technical Difficulty]
Mr. Kothari, we're not able to hear you clearly. Could you please return back to queue?
Sure.
Next question is from the line of Mr. Mohit Kumar from ICICI Securities.
My question is on this, like can you just throw some color on the pipeline and the segment which you're looking at, especially the Engineering segment? And why there is a delay in conversion? Is this something due to election and we expect this conversion to happen in this fiscal? Or do you expect that most of the projects will get postponed to the next fiscal?
Let me first tell you about the conversions in recent period, and then I will ask Vasant to give you the numbers on the bid pipeline. In the recent period, we are seeing some kind of a slowdown in finalization of open inquiries and offers. And this would be on account of the current economic and political scenario, both domestically and internationally.
Domestically, you are very well aware of the impending elections and other political developments. Internationally also, because of the rapidly evolving economic scenario, and there are political developments -- geopolitical developments in various parts of the world, so different inquiries get affected by different things. But we have seen some degree of slowdown both in the international inquiries and offers as well as in the domestic ones.
We are hopeful that some of these large ones that we are pursuing, we would be able to close relatively quickly, but it's now not certain that some of the ones which we were hoping to convert during the current year, whether those will actually get closed during the year. So some of these would slip into the next financial year.
Vasant, can you give numbers with regard to the inquiry pipeline?
The inquiry pipeline as of December end was around INR 8,526 crores.
Understood. Sir, which other countries are of our interest to us? I'm talking outside India.
We are quite active in the Middle East, Southeast, as well as in Africa. These are the prominent markets where we work as far as the engineering business is concerned.
Next question is from the line of Krisha Kansara from Molecule Venture PMS. Krisha Kansara, we're not able to hear you.
The next question is from the line of Angad Katdare from Sameeksha Capital.
My first question is on the guidance for Engineering segment and Chemicals segment for FY '24 and '25. If you could throw some light on it? Sorry, I missed it earlier.
For the current financial year, we are saying that for the Engineering segment, we should be growing at roughly around 25%. And for the Chemicals segment, on a consolidated basis, we should be growing at roughly around 10% or thereabouts.
Okay. And how much will the recent acquisition, Mapril, will contribute to overall Chemicals segment?
We would be getting the benefit of roughly 3 quarters by the end of the financial year. Ranadive, can you spell the numbers on an approximate basis?
Approximately it will be INR 75 crores to INR 80 crores.
And can you throw some light on the margins from Mapril?
You are asking for margins for the Chemicals segment, right?
Yes, the guidance, as well as from the acquisition.
For the Chemicals segment as a whole, on a consolidated basis, we should be delivering margins similar to what we delivered for the full financial year '22-'23. On the 3 quarter performance, we are seeing a level which is quite similar to what we achieved in the last year, and that gives us the confidence that we will be able to maintain the overall margins.
That's great to hear, sir. If I could just chip in 1 last question from my side. What will be the peak sales on the current capacity in the Chemicals segment? And how much will the additional capacity add to the peak sales, the Roha CapEx? So current capacity and the additional Roha. That would be helpful, sir.
See, at this point of time, we are doing roughly -- we are going at roughly 70% capacity utilization. And roughly 60% of that is contributed by the resins business. The Roha capacity expansion is for resins only, and it will double the current capacity. So that's how the numbers stack.
The next question is from the line of Mahesh Agarwal from Agarwal Family Office.
First question was just to get an update on, again, Mapril, the Portugal subsidy. And specifically, just wanted to understand more around, is that purely a trading business or does that also have any manufacturing capabilities, either in Portugal or anywhere around Europe? And then also related to that, I'm guessing those numbers have now started reflecting on a consolidated basis for us. Is that partly the reason why we have seen a boost in the chemical numbers this quarter? That would be my first question, please.
The Mapril acquisition we did primarily for reaching into the European market and also to establish a manufacturing base in Europe. It has manufacturing facilities in Portugal, which is on the chemical side of the business. We are getting advantage of this business, as I mentioned earlier. By the end of this financial year, we should be consolidating roughly 3 quarters into our numbers. It has contributed to the growth of chemical business during the period and it is part of the reason the stand-alone business has also grown during the third quarter reasonably well. So we should be expecting to benefit both from the international and domestic markets in the coming quarters.
And would the margin profile of this business and specifically the Chemicals part be similar to the margin profile that we have for our Indian chemical manufacturing?
They are not the same kind of chemicals. They are different kind of chemicals. But on an overall basis, we are seeing that Mapril has been able to add well to our current bottom line. Going forward, as I had mentioned, on a consolidated basis, we would be able to maintain the overall margins for the year as a whole. So that would give you some idea.
Understood. And any plans for expansion over there? Or do we have sufficient capacity in that company right now for our demands?
We are improving the facilities there in order that we are able to cater to a wider range of products. So some degree of augmentation is going on. While they have decent capacity in place, but we would be improving and upbuilding it as required.
Understood. And sir, my second question is related to China. I've asked this before as well, but as their economy continues to worsen across different industries, companies, we are hearing a lot of stories of them desperately dumping products at 2%, 3%, 4% EBITDA margin, whatever it is, to breakeven. Are we seeing any kind of that behavior across the resins or the membranes or any of the other chemical components either globally or in India?
Yes, we are seeing a degree of price desperation, if I may call it, but we've been able to handle it and counter it quite well. For our chemical business, quality is an important criteria. And not all customers look at chemical supplies only on a price basis, and that gives us a lot of strength in our international markets. However, the influence of reduced pricing available by the Chinese suppliers does have a bearing on negotiations which we have. But again, as you would have seen that we've been able to manage our margins quite well, so we are hoping that we will be able to continue this in the future also.
Understood. And if I may ask 1 more question, just regarding the GPCL Consulting investment. So that seems to be a relatively small company, like INR 7 crores-or-so revenue, and it's partly owned by RITES, EXIM Bank, and a few other companies. What is our thinking when we are investing in this company? Are we trying to become -- like trying to make it a completely owned subsidiary? And what is the value-add? Because they operate in a bunch of different sectors as well it seems, not just in the water sector.
That's a strategic investment on our part. As you rightly observed, EXIM is one of the key contributors there. It's not really an operational investment, but we are supporting the initiatives of various bodies, including EXIM, in order to facilitate business in the international markets.
The next question is from the line of Chirag from Intellect Stock Broking. Mr. Chirag, we're not able to hear you.
Next question is from the line of Sunil M. Kothari from Unique PMS.
Sir, my question is related to the competition which you seem to be feeling increasing in Engineering segment. So how you see the scenario maybe over a year or 2? Maybe near term fine, but you would be proposing to capture the lower profit margin business or will stick to whatever choices are there?
The opportunity size, I think, will continue to be very good. As we come out of the current year, my belief is that we will see increase in CapEx in our economy, and that would create a much larger pie. We even continue to be careful about what type of businesses that we pick up and at what commercial terms. Apart from the domestic market, I think an important consideration for us is the opportunity which we have in the international market, and we are pursuing some very interesting opportunities in the global markets. So on the whole, I'm very sure that we would have a very good bit of business coming in from Indian as well as the international markets going forward. Yes, the current quarter has been less than what we had otherwise expected, but this should improve in the coming quarters.
Right. Sir, last question is, because looking at some lower execution of U.P. project and some delay in execution, it seems that next year our execution should be far better. So would you like to try to guide us about the Engineering segment growth next year, '24-'25?
Yes, it does look that we will be carrying through a substantial size of order book into the next year. And for U.P. contract, as you mentioned, we should be carrying through a good quantum. We would want to ensure that the invoicing level picks up or continues to pick up sequentially. Apart from just that, the other large contract that we have, as well as the new contracts which we are hoping to win during the coming quarters, the overall trend of invoicing should improve going forward, but it's actually a little bit early to start giving guidance out for the next year as a whole. So I'm just giving you a generic outlook, and hopefully, over the course of the next 2 or 3 quarters, I would be able to give you much more color.
Next question is from the line of [ Amit Vani ], an individual investor.
Sir, I don't know if I heard you correctly. Did you say that we will do a 10% revenue growth for the year in Chemicals business?
Yes, you heard that right. We are targeting to grow by roughly around 10% on a consolidated basis.
So how much would that translate into organic growth, if you don't mind? Because the 9 month number is flat in the Chemicals business. So what kind of organic growth are we looking at in Q4?
So on a stand-alone basis, we would be growing by roughly around 5%. And on a consol basis, roughly by around 12%, if that answers your question.
The next question is from the line of Krisha Kansara from Molecule Venture PMS.
Sir, my question is regarding Chemicals division. So in this quarter, we saw that the Chemicals segment grew by around 30%. So if you could just break this growth into 3 parts, let's say, how much was led by volumes, how much was due to pricing, and how much was due to the inclusion of Mapril in our consolidated statements? That would be helpful, sir.
For getting a sense of what's coming from Mapril, as we mentioned a little while back, we are roughly expecting around INR 80 crores top line addition by the end of the financial year from that operation. In terms of volume versus price growth, those are the kind of details that we don't really furnish on the call. But I can give you a broad sense that during the last few months or recent few months, we have seen a degree of price correction on the downward side. So our customers have benefited from slightly lower pricing from us, and the growth which you see is in spite of that.
Okay. So the growth is volume-led. And sir, this INR 80 crore top line is for the whole FY '24, right, like last 2 quarters, basically?
Yes. INR 80 crores top line addition, which I mentioned, is for the financial year as a whole and we started consolidating after the first quarter. So that's what.
[Operator Instructions] Next question is from the line of Mahesh Agarwal from Agarwal Family Office.
I just wanted to double-click on the China issue. Specifically, if we look at the domestic Indian market, are there any import duties or antidumping duties in place right now? Because something the government has been very proactive about is protecting some of the critical industries, specifically related to China dumping. And China, in the resin market, I believe, is 40% to 50% of the global supply. So are there any of those policies already in place to protect local manufacturing from that? And if not, is there any ongoing dialogue or discussion with the government around those?
We have -- from the government, the initiatives have been to promote the Make in India concept. And in the various government tenders, there is a definite direction given to the procurement teams to favor products manufactured in India. So there's a definite advantage which accrues on account of that.
The antidumping duties or otherwise would feature on very specific cases. In general, we don't see antidumping duties coming into the products which we deal with. But as I mentioned, we are getting benefits from the government on those accounts.
Understood. And what would be the reason why you don't see antidumping duties? Because that's 1 thing the government has been very proactive about for a lot of other products and industries. So is there something about the nature of our products or industries that it would not make sense for the government to do so?
Yes, to an extent, because the kind of pricing that we are seeing from them, which is on landed basis, I would believe that the government probably feels that they don't need to intervene at this point, but we keep a keen eye on these matters. And we do bring it up to the government when we feel it is important.
Understood. And what would be, if you can give a rough sense of, the difference in landed prices between, say, a desperate China price versus our price in India? And then also what the price differential would be when we sell abroad?
That's a very broad market scope that we are looking at. So difficult to generalize this. But yes, we do see when they get desperate, then the price differences can become significant to start making an impact in the customer's mind. But for Chemicals, as I mentioned, it's not just the pricing. For a lot of our key customers, it goes way beyond pricing. And its quality, the service that you provide and other things. So pricing is not always the only criteria.
Understood. And then how long would generally our -- obviously, I'm sure this will vary as well, the contracts on the Chemicals side, are they more on just a purchase order to purchase order basis? Or is there also some form of a longer-term contract with customers on the chemical side?
So there are a lot of customers who would give out a 1- to 3-year contract. We would be taking care of their facilities with the help of our chemicals and there would be a few where they would be procuring the chemical products on specifications. But yet, we would probably be applying to some of these customers for many years at a stretch. So even though it is from purchase to purchase, but we do manage to hold the customer [ for you ].
Understood. And then on the EPC side, I just wanted to get your thoughts around what you all are seeing in terms of the landscape of projects which are out there, both on the private sector and then specifically on the public sector as well? The reason I'm asking that is the government has been pushing out a lot of tenders around water-related projects, both in municipal, wastewater, irrigation, and historically, that's not an area I know that you guys have been too keen to focus on. We focus more on the private side. But what is the opportunity set now looking like both on the private and public side? And is there a change in mindset for us to maybe start focusing more on some of the public tenders as well?
We've been looking at some of the opportunities from the government sector for some time now, but we remain very cautious about which opportunities we would want to work aggressively on and to what extent we are able to mitigate the risks which we perceive. And it's an evolution that we are ourselves going through in terms of where we put our filters on a commercial front. So we still are light on the government sector and relatively heavier on the private sector.
The way we define private sector includes the Navratna companies from the government. So the PHUs like, for example, an NTPC or Indian Oil, they would be a part of our private sector basket, and we go after these opportunities quite aggressively.
Understood. Got it. For instance, I believe there's a desalination project now coming up for Mumbai or Navi Mumbai. Would that be something that would fit the profile of projects you would be interested in?
Well, we take a balanced approach towards such an opportunity. And while we are interested in participating in it, but the mechanisms of participation may be different from direct EPC contract.
So the RO membrane supply would probably go from us, I'm guessing, given our market share there, even if it's not the EPC aspect?
Right. So I mean we look at different ways of participating in some of these opportunities. Unfortunately, I can't share more details on the call. But yes, we would participate in one form or the other.
Next question is from the line of Ayush Agarwal, an individual investor.
[Technical Difficulty] we're seeing increase in the margins in this sector...
Sir, we're not able to hear you clearly.
Can you hear me now?
Yes, sir.
Right. So I was saying that on your Consumer Products segment, we are seeing increased losses from quarter-to-quarter. Are you facing any challenges in [ reining in ] the profitability?
At the moment, the focus is on ramping up the overall revenues of that segment, and we are investing quite a lot on the manpower as well as increased expenditure on marketing. And that's the reason that you are seeing the volumes grow up of that business, but it has also contributed negatively to the bottom line. So if we had maintained the business levels at earlier levels, and we had also not focused on increasing the infrastructure for future growth, we might have seen better profitability.
Understood. And recently, I read that PCBL is looking at entering the water treatment segment. I believe they bought out some major private company, which is involved in water treatment chemicals. So how do you stand in comparison to them at this stage?
Which company did you mention?
Phillips Carbon Black. They had recently acquired...
Well, there are always new entrants who look into getting into the market in one form or the other. And it's not a monopolistic market in any case. There are several domestic as well as global majors present in this space. As we have been mentioning in the past, for example, in our resin business, we continue to enjoy more than 40% market share in the country. So competition is a part of the playing field.
Got it. And my last question is regarding your increase in deferred taxes. Like I was looking at the balance sheet and I believe your deferred taxes have doubled from the previous quarter. Could you give us some more information on what taxes have been deferred?
Vasant, can you comment on that, please?
This is as per the income tax provision. So these are basically arising out of the timing differences. So this will be [ whited out ] in the coming quarter. So we don't expect the effective tax rate to materially change.
Ladies and gentlemen, that was the last question of the day. I now hand the conference over to Mr. N. M. Ranadive from Ion Exchange (India) Limited for closing comments.
Good evening. 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 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.