Carborundum Universal Limited (CARBORUNIV.NS) Q1 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '26 Earnings Conference Call of Carborundum Universal Limited hosted by Equity Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harshit Patel from Equirus Securities. Thank you, and over to you, sir.

Hello. Good afternoon, everyone. On behalf of Equirus Securities, I welcome you all to the first quarter FY '26 earnings conference call of Carborundum Universal. We have with us from the management, Mr. Sridharan Rangarajan, Managing Director; Mr. Sushil Bendale, Chief Financial Officer; and Mr. G. Chandramouli, Advisor. I would like to hand over to Mr. Sridharan Rangarajan, Managing Director for the opening remarks and post that, we will open the floor for Q&A. Over to you, sir.

Good afternoon. I'm Chandramouli. As a practice, let me read out the disclaimer before getting to the call. During the call, we may make certain statements, which reflect our outlook for the future or which could be construed as forward-looking statements. These statements are based on current -- management's current expectations and are associated with uncertainties and risks are more fully detailed in our annual report, which may cause the actual results to differ. Hence, these statements must be reviewed in conjunction with the risks that the company faces. Thank you.

So good afternoon to all of you, and a warm welcome to our first quarter earnings call. I will give an overview, and then we will open up for question and answer. To start with consolidated sales for the quarter was INR 1,207 crores in comparison to INR 1,184 crores Q1 FY '25, which is a 1.9% growth compared to the same period last year, and 0.6% compared to Q4 FY '25 of INR 199 crores. Standalone sales was INR 698 crores compared to INR 664 crores in Q1 FY '25. This represents a growth of 5.2% and in comparison to Q4 FY '25 that represents a growth of 1.7%. In Q1 FY '26 consolidated PAT declined by 45.2% compared to Q1 FY, that is from INR 113 crores in Q1 FY '25 to INR 62 crores in Q1 FY '26. This is due to the lower volumes in VAW, which we have explained in the last call itself, and Rhodius and Domestic businesses, I will explain all of this in detail a little later. In Q1 FY '26, standalone PAT of INR 145 crores grew by 55.4% from INR 93 crores in Q1 FY '25. The increase is due to a onetime dividend from SEDCO which is about INR 68 crores. Now I'll cover the consolidated performance. As stated earlier, the consolidated sales for the quarter was INR 1,207 crores with a growth of 1.9% compared to Q1 FY '25 and compared to Q4 FY '25, it is 0.6% growth. Softer growth at consolidated level was mainly on account of Rhodius. Rhodius as such is making a change in their logistics partner, which caused a substantial drop in volume. I'll cover that in the Rhodius section separately. And the drop in volumes at VAW, which we have earlier explained in our Q4 last year's call itself, and they are actually trending as per the business plan and they are fine as -- I mean, at a lower level, of course, they are at lower level, but they are trending as per the business plan. You would note that the Ceramics segment grew by 11.1% and Electro Minerals by 6.3%, while Abrasives declined by 8%. Consolidated PAT for the quarter was INR 62 crores. This in comparison to Q1 FY '25 PAT of INR 113 crores is lower by INR 51 crores. The lower profit is due to higher losses in VAW in comparison to the last year's Q1. If you would recall that in January 2024, we had sanction and that is what we had this challenges coming forth. This coupled with the drop in profit in Rhodius the standalone businesses put together accounts for this difference. Roughly, you can say INR 18 crores, INR 18 crores, INR 18 crores broadly. Consolidated PAT for the quarter of INR 52 crores in comparison to Q4 FY '25 PAT of INR 29 crores grew by INR 33 crores. This is predominantly due to the reversal of deferred tax credit in AWUKO in Q4 '25. If you remember that we had reversed the deferred tax asset that what we claimed so far in Q4 FY '25. Stand-alone business in Q1 FY '26, stand-alone sales was INR 698 crores, which is a growth of 5.2% compared to INR 664 crores Q1 FY '25. This was contributed by growth in Electro Minerals at 12.3% and Ceramics at 10% and stand-alone Abrasive business degrew by 5.5%. Stand-alone profit after tax for the quarter was INR 145 crores as against INR 93 crores in Q1 FY '25. This is higher by INR 52 crores compared to INR 61 crores in Q4 FY '25, PAT of Q1 FY '26 is higher by INR 84 crores. I think this -- both this is due to the one-off dividend of INR 68 crores from SEDCO . Now I will cover the segmental performance. To start with in Abrasives, consolidated Abrasives sales in Q1 FY '26 was INR 508 crores. This in comparison to Q1 FY '25 sales of INR 552 crores has declined by INR 44 crores, that is an 8% decline. Rhodius Abrasives declined by INR 26 crores and stand-alone declined by INR [indiscernible] crores, together this fall. Consolidated sales in Q1 FY '26 at INR 508 crores in comparison to INR 538 crores in Q4 FY '25 showed a decline of INR 30.5 crores. This is mainly coming from Rhodius Abrasives. At stand-alone Abrasives sales for Q1 FY '26 was INR 286 crores. Last year, Q1 FY '25 sales was INR 303 crores, resulting in a decline of INR 17 crores, which is 5.5%. Precision segment grew well. We are seeing softer demand in the channels due to the inventory correction. And as far as Rhodius is concerned, Rhodius recorded a net sales of EUR 13.2 million in this quarter compared to EUR 17.3 million during the Q1 FY '25. It is a 23% decline in sales. Rhodius has shifted its logistics partner in Q1 FY '26 for better efficiency. This resulted in a significant disruption of operation. This resulted in nonfulfillment of orders on hand, resulting in lower sales. We expect the stability of operation to come by end of August, we expect this would impact the full year sales as well. We expect the remaining 3 quarters sales would be in line with the last year's sales. Rhodius incurred a loss after tax of EUR 1.6 million in this quarter against the PAT of EUR 0.3 million in Q1 FY '25. This was mainly due to the loss of sales arising out of the logistics issues. AWUKO achieved a sales of EUR 2.6 million this quarter in comparison to EUR 3 million in Q1 FY '25. The last before tax are at the same level as that of Q1 FY '25. Now I will cover the PBIT performance of the Abrasives business segment. Consolidated Abrasive PBIT was INR 11 crores. In Q1 FY '25, it was INR 55 crores and in Q4 FY '25, it was INR 34 crores. The drop of INR 44 crores in Q1 FY '26 compared to Q1 FY '25 is due to Rhodius amounting to INR 26 crores mainly due to loss of sales. Standalone drop of about INR 16 crores. Consolidated PBIT of Q1 FY '26 was lower by INR 22 crores in comparison to PBIT of INR 34 crores in Q4 FY '25. This is mainly due to Rhodius Abrasives and standalone Abrasives. I will move to the next segment now, Electro Minerals. Consolidated sales in Q1 FY '26 was INR 405 crores, showing a growth of 6.3% compared to Q1 FY '25 of INR 381 crores. Standalone business showed a good growth of 12.3% compared to Q1 FY '25. The performance of VAW was lower due to the sanctions imposed in Q4 FY '25. However, consolidated sales in Q1 FY '26 was at INR 405 crores was higher by INR 30 crores compared to INR 375 crores of Q4 FY '25. This is mainly due to better performance in standalone slightly better performance in VAW, et cetera. Stand-alone Electro Minieral sales for Q1 FY '26 was INR 212 crores with a growth of 12.3% compared to Q1 FY '25 of INR 189 crores. Standalone sales in Q1 FY '26 at INR 212 crores was higher by INR 7 crores when compared to INR 206 crores in Q4 FY '25. This was on account of increase in volume as well as price. Standalone Electro Minerals saw good growth from export as well as domestic. VAW sales for Q1 FY '26 was RUB 1.84 billion which is a 25% decline from RUB 2.46 billion in Q1 FY '25. Sales for Q1 FY '26 was RUB 1.84 billion, which is flat compared to RUB 1.83 billion in Q4 FY '25. In Q1 FY '26 in ruble terms, the profit after tax was RUB 72 million as compared to RUB 287 million in Q1 FY '25 and RUB 110 million in Q4 FY '25. Sales for Q1 FY '26 was INR 56 crores compared to -- which is a 3.7% increase as compared to Q1 FY '25 of INR 54 crores and INR 6 crores higher than INR 50 crores in Q4 FY '25. In Q1 FY '26, [indiscernible] incurred a loss before tax of INR 8 crores as compared to INR 5 crores in Q1 FY '25 and INR 7 crores in FY '25. Now I'll cover the PBIT of Electro and the segment consolidated EMD PBIT for Q1 FY '26 was INR 4 crores. In Q1 FY '25, the PBIT was INR 43 crores. The drop of INR 39 crores in Q1 FY '23 to Q1 FY '25 is due to VAW amounting to INR 27 crores, standalone business amounting to INR 9 crores and plus there are more grops, INR 3 crores. Consolidated PBIT of INR 4.4 crores in Q1 FY '26 was lower by INR 2.6 crores in comparison to PBIT of INR 9 crores in Q4 FY '25. Ceramics consolidated sales in Q1 FY '26 was INR 300 crores, showing a growth of 11.1% compared to Q1 FY '25 of INR 270 crores. Stand-alone business showed good growth of 10% compared to Q1 FY '25. Consolidated sales in Q1 FY '26 at INR 300 crores was higher by INR 3 crores compared to INR 270 crores in Q4 FY '25. Standalone Ceramics sales for Q1 FY '26 was at INR 238 crores with a growth of 10% compared to Q1 FY '25 of INR 217 crores was higher by INR 9 crores when compared to INR 229 crores sales in Q4 FY '25. This was on account of increase in volume, price in Industrial Ceramic business, Metallized Ceramic, Engineered Ceramics drove the growth and refractory [indiscernible] corrosion-resistant grew as well. Now turning to the PBIT performance of Ceramic segment. Consolidated Ceramic PBIT for Q1 FY '26 was INR 75 crores with a growth of 16% compared to INR 65 crores of Q1 FY '25 compared to INR 74 crores in Q5 FY '25 with PBIT grew by 1.3%. Standalone Ceramic PBIT for Q1 FY '26 was INR 62 crores with a growth of 25.4% compared to INR 49 crores of Q1 FY '25 in comparison to Q4 FY '25 of INR 56 crores, the PBIT grew by 13%. I'll request Sushil to cover the PBIT margin, debt position, CapEx, cash flow and the ROCE.

The PBIT margin for the consolidated was at 6.7% for the quarter compared to 8% in Q4 of FY '25 and 12.6% in Q1 of FY '25. For the quarter, stand-alone PBIT margin was at 23.8% compared to 11.8% in Q4 of FY '25 and 18% in Q1 FY '25. This also includes the one-off dividend income from SEDCO. Abrasives for the quarter, consolidated Abrasives margin declined from 10% in Q1 of FY '25 to 2.2% in Q1 FY '26 due to a drop in volumes at Rhodius and the stand-alone business. Standalone margins dropped from 17.6% to 13.1%. The drop in margin was mainly due to drop in volume and increase of freight and fixed cost. The consolidated margin declined by 398 basis points compared to Q4 of FY '25. Standalone margins declined from 16.2% in Q4 of FY '25 to 13.1% in Q1 of FY '26. Electro Minerals. For the quarter, consolidated Electro Minerals margin declined from 11.4% in Q1 of FY '25 to 1.1% in Q1 of FY '26. The decline was mainly attributable to the lower volumes in VAW coupled with lower realization. Standalone margins dropped from 8.5% to 3.3%. This is mainly due to higher input costs. The consolidated margin declined by 132 basis points compared to Q4 of FY '25. Standalone margins improved from 2.8% in Q4 of FY '25 to 3.3% in Q1 of FY '26. Now Ceramics. For the quarter, consolidated Ceramics margins improved from 24% in Q1 of FY '25 to 25% in Q1 FY '26. The standalone margins improved from 22.7% to 25.9%. The consolidated margins increased by 10 basis points compared to Q4 of FY '25. Standalone margins improved from 23.9% in Q4 of FY '25 to 25.9% in Q1 FY '26. Now I'll talk about the debt position. There was no debt in our standalone books and total debt at the consolidated basis was at INR 172 crores at the end of Q1 FY '26 compared to INR 120 crores at the end of Q4 FY '25 and INR 112 crores at the end of Q1 FY '25. The debt-to-equity ratio was at 0.05 at the consolidated level. In Q1 FY '26, our CapEx investment was INR 64 crores against INR 63 crores in Q1 FY '25 at a consolidated level. Free cash flows in Q1 of FY '26 at a consolidated level, 98% to PAT compared to 37% in Q1 of FY '25. At a standalone basis in Q1 FY '26, free cash flow to PAT was 104% compared to 47% in Q1 of FY '25. Now for ROCE, for Q1 of FY '26, the ROCE at a consolidated level is 8.1% compared to 16.9% during Q1 of FY '25. And at a standalone level, it was at 24.6% compared to 20% in Q1 of FY '25. For consolidated segments, ROCE in Q1 FY '26 for Abrasives decreased from 15.5% in Q1 of FY '25 to 2.8% this quarter, Ceramics has decreased from 41.5% to 37.8% and Electro Minerals has decreased from 17.8% to 1.8%. For our standalone businesses, ROCE in Q1 of FY '26 for Abrasives has decreased from 45.4% to 26.3% this quarter and Ceramics has improved from 44.5% to 47.2%, and Electro Minerals has decreased from 22.3% to 8.4%. Now the unallocable expenses net of income, at the standalone alone level, unallocable expenses in Q1 of FY '26 was an income of INR 60 crores. If you exclude onetime dividend from SEDCO of INR 58 crores, this would be an expense of INR 7.3 crores. In Q1 of FY '25, the unallocable income was INR 72 lakhs, and the difference is due to lower dividend in few companies in Q1 FY '26. In Q4 of FY '25, the unallocable expense was INR 26 crores due to seasonality in dividend receipts. Now I request Mr. Sridharan to take you through the next section related to the future outlook.

Thank you. So just to summarize, I think Ceramics sales, we communicated a sales growth of 16% to 18% last time at the full year level at consolidated and we hold our guidance for the consolidated Ceramics segment. EMD sales, we gave a guidance of 1% to 2% growth in Electro Mineral Division in last call, we retain the same guidance. Abrasives sales in our last call, we communicated 5% to 6% for the year. This could be about 4% to 5%, considering the lower sales in Rhodius in Q1 FY '26. So overall, last time we said 6% to 7%, we are now looking at 5.5% to 6.5%. Consolidated margin in the Ceramics section last called we communicated PBIT margin of 23.5% to 23.7% on a full year basis, we maintain the same. EMD in the last call, we said 6.5% to 7.5% on a full year basis, we currently look at 4.5% to 5.5%. Abrasives, last time we said the PBIT margin could be 8% to 8.5% on a full year basis. Currently, we are looking at 6% to 6.5%. We said that last time, the overall consolidated PBIT margin could be a drop of 100 to 150 basis points compared to FY '25 basis of 11.2%. Now we are looking at 250 to 300 basis point drop compared to that level. Just to summarize, I think one, Rhodius, the transfer of logistics issue is quite an expected one and we did not consider in our forecast. There is a complete crash in terms of software breakdown, physical movement of goods were impacted. So now we are trying to address this. We expect end of August all this will be addressed. We expect that rest of the quarters, the sales will be in line with the last year. In EMD standalone, the margins drop due to higher alumina costs which I think is now passed on because the inventory, whatever we had was completely liquidated. We are back to normal and that should get us back to the proper margin what we were gaining. Besides these two, I think the major challenge for us is embrace this local India drop, which also we feel that will get back from Q2 onwards. So with that, I would -- of course, you have seen that our free cash flow is in good shape, delivered 100-plus percentage in stand-alone, very healthy free cash flow in consolidated. Balance sheet is quite strong. We have done all our programs as far as the long-term strategy is concerned, we're tracking very well. So those are in good shape. We will address these the one-off blips that we will come back strongly in the coming quarters. Thank you.

[Operator Instructions] The first question is from the line of Bhavin Vithlani from SBI Fund Management.

Sir, three questions. So first is on VAW. So could you help us understand the way forward given that now we almost have 6 months since the sanctions? What is your thought process in mitigating and how do we get back to normal levels and when in your view?

Okay. You said three questions or I'll answer one by one?

Okay. I'll outline. Second is in the Domestic Abrasives segment, if you could give us a bit more color on where are we seeing slowdown given that we have three segments that you outlined. One is the retail, another is industrial, and third is the precision, where exactly is the impact? Optically, it looks the precision is it, and hence, the margins have got lowered. So more color here will be helpful. Third is, if you could just help us understand on the German subsidiaries, what is the one-off that was there in the quarter? How do you see these two Rhodius and AWUKO on the balance a 9-year month period and the full year basis, excluding this? I mean, what should be the revenue and profitability in the balance 9 months period? These are my three questions, sir.

Correct. So as far as VAW is concerned, I think we broadly guided last time that we expect the volumes should be lower 25% to 30%, in the last call we have that guided that. This time also, they are lower by about 25% compared to the same period last year. We are restricted to selling only inside Russia. We are continuing to do that. They are profitable within that set of the business. But the future depends on how the settlement as far as Russia, Ukraine is concerned will turn out. And based on that, developments will happen. I don't want to hazard a guess given that multiple forces are at play. As far as Abrasives segment is concerned, you're right, there are three broad segments. We have Precision, we have Industrial, and we also have Retail. The challenge that currently we are facing is on the Retail side. And as I was telling that there is a reasonable growth in the rest of the segment, which is what is making us confident about it. This is quite a few major distributors have to focus on the stock clearance and that is what caused this decline in sales. As far as the German subsidiary, Rhodius, is concerned, as I told that this quarter, we had lost about EUR 4 million compared to the same period last year. We expect that the similar -- the remaining three quarters, we will be in line with the last year sales. What we have lost, we will not be able to recover. Meaning, this order will serve that is a thing. But since there's a significant delay has happened, we expect that we will not be able to recover. But of course, we are trying our best to see how do we serve this order as well as be able to serve the future orders. The issue is largely in terms of the change of software cost a significant delay, which is one major reason. So the pick and pack we were not able to perform. We could not physically move the inventory from the previous warehouse to the new warehouse. Even in the new warehouse, we were not able to have a proper locations. These are outsourced warehouses. So this caused quite a bit of a challenge. It's getting addressed. We expect end of this month, we will completely address this issue.

Sure. Sir, just one more question, a bookkeeping question. Employee expenses for the consolidated is up by 24% and if I look the subsidiary piece, which is minus the stand-alone, they are up by little over 30%. So if you could just help us understand that?

Sure. I will get back to you with the answer to you. Can we move on to the other question. In the meantime, we will try to find the answer.

The next question is from the line of Ravi Swaminathan from Avendus Spark.

My first question is with respect to the standalone Electro Minerals business. The margins are kind of still on the compressed side. You had mentioned that it was because of raw material prices going up, and now we are passing it on. But earlier, you had mentioned that there was also competition from Chinese players in -- especially in alumina, et cetera. What is the status with respect to the competition from Chinese players in this particular category? That is my first question. And with respect to the second one, in terms of the other option value kind of products like high purity silicon carbide and supply of ceramic to emerging product categories like EVs, et cetera, what is the status of that?

Okay. So thank you, Mr. Ravi Swaminathan. So first of all, as far as the Electro Minerals is concerned, the alumina price, literally went up in the 6 months, it doubled. It went up as high as about $800. And then it fell down to $350 per tonne. And the inventories that we -- and the fall is in the matter of 3 to 4 months. So the inventory that we held because we bought this at a higher price had to be liquidated, and that is what is causing us this problem that we have in Q1. The price pressure continues to be there. We don't see there's anything new, but that is continuing -- one continuing aspect. As far as the high-purity silicon carbide program, it is progressing well on track, and we are progressing on some of this qualification process. We are progressing on track. As I guided, it won't be a major sales for this year, and we are not looking at an immediate short-term type of revenue arising from that.

And with respect to Ceramics sales for EVs and semiconductor industry, is there -- is that a big driver of growth, likely to be a big driver of growth over the next 1, 2 years or 3 years?

Right. So you are right. I think that's a good driver of the growth, and that is also one of the reason why we have a very good growth in Ceramics segment at this point in time.

Okay. And within Ceramics and Refractories, one last question. With respect to base ceramics, the technical ceramics, metallized cylinder and refractories, if you can break up the growth, how it was in the overall 10% growth that we have seen this quarter, which is growing faster, which is seeing better traction, if you can deliver, even kind of a broad commentary or color on it, that will be great?

Yes. I think we are seeing our Engineered Ceramics business, Metalized Ceramics business are growing well. We are also seeing Monolithic business going well, quite decent. And we're also seeing our Corrosion-Resistance business doing well. There are a few softness in terms of wherever projects are getting executed. That is where there are some delays in that. That is why some of the expected projects, there is some delay. Otherwise, the business overall are doing well.

Project will be which end user industry, sir?

It's -- we typically serve many industries, carbon black, cement, steel. The refractory products goes into many industry. So that happens to diversified industries.

The next question is from the line of Harshit Patel from Equirus Securities.

Sir, firstly, on the U.S. tariffs, what would be the impact on our Abrasives and Ceramics exports because we export quite substantial amount to the North American base? Could there be a substantial impact on our supplies to that clean energy customer in the U.S. from where we have started seeing some pickup from CY '25 onwards?

Yes. So thank you, Harshit. See, we see this -- so far, it is evolving. I won't call it we have any conclusive answers on this. And as you would know that the world itself is just grappling with this. We do not know what is the final outcome going to be. So -- but what I can see is that broadly, it is a function of few things which I want to lay out here is, are there equivalents available getting manufactured in U.S.? Are there equivalents available from other countries? And how fast the process of qualification is going to take place and also suitability for the manufacturer to adopt to the new supplier and a function of what is the differential duty versus what we can absorb? And the ability of three parties to share this difference, whether it is the customer or intermediary manufacturer in U.S. and the customer -- the supplier from India. So these are the parties who are going to deal with this. Plus, of course, there are other factors like what the Indian government is going to provide their support, all that factor. So I would say, at this stage, we do not have any immediate threat or any issues that we foresee. We have made reasonable examination of all these factors that I laid out. But I would like to get to a full picture to understand what exactly would be the impact in all this. We seem to be in a decent position.

Understood. Sir, my second question is on the CapEx. What are our CapEx plans for the next two years, FY '26 as well as FY '27 across all three of our major segments? I think You have highlighted doing some CapEx for fused alumina-based products, in Electro Minerals, supplying to the semiconductor OEM equipment from Ceramics, doing bullet-proof armour as well as vehicle armour related products. So if you could highlight all the areas and quantum across all 3 major segments that will be very helpful?

Yes. So we don't normally provide that kind of guidance. I think if I remember, it is about INR 350 crores was the CapEx program that we guided last year -- last call that we will spend for this year. So that we are sticking to the same one and all the programs are in line with that.

The next question is from the line of Mohit Kumar from ICIC Securities.

So only one question I have on the standalone Abrasives, is the industry not growing? Is it the demand or competition? And any color on that will be helpful there.

See, I would say Industry is growing. I don't think there's a decline in the industry. Definitely, there is growth in industry. Of course, you have the other published player, you are very much aware about that what is the kind of results that we are getting in that, more or less comparable. There are minor variations here and there. I feel the industry is growing. And as I have laid out in the last call also, we feel that there are segments where today, products getting imported and coming into India is growing substantially high. So definitely, overall growth in the Abrasives sector is growing. We have a specific challenge of our major distributors or particularly stock clearance and their own credit locks, those mechanisms. But other than that, I won't say that the challenge is industry led.

[Operator Instructions] The next question is from the line of Bhoomika Nair from DAM Capital.

So my first question is on VAW. It's been a tough quarter. You spoke about the 25%, 30% kind of decline. But if I look at the revenue numbers, the consol minus stand alone, it seems fairly stable. Can you explain why we're seeing the revenues being stable? And if you can call out the VAW loss during the quarter?

Sorry, what was the last part of the question?

The loss at VAW, sir, at Russia?

Yes, yes. So I think your question is that consol minus standalone is stable is what to our observation, if I understood you correctly.

In EMD, yes, in EMD.

Yes. Right. So I think that you are very good in your observation because I think there, we source product from VAW and then use that product, which got stopped. So what happened, the elimination of -- so we actually show the sales outside only to the customer. That is what is the total sales that we do. So since that has stopped, hence, we -- the elimination has come down, you see a flat number. That is what you have observed, which is the right observations. But per se, the sales of VAW has come down, which is in line with what we have guided. The second question you asked is the margin on the EMD, right?

Yes, yes.

So EMD losses -- just hold on. Sorry, you continue your question. I will gather and come back. Sorry.

Okay, sir. I mean, if you can get back to me on what is the quarterly revenue and profit at VAW that would help. Second is in terms of...

We shared that. Just give me a second.

Sure, sir. In the meanwhile, we were looking to commission an HPSiC plant later this year...

Sorry, VAW sales was RUB 1.84 billion in Q1 FY '26, compared to RUB 2.46 billion in same period last year, Q1 FY '26. So that was a number that we shared. Yes, in ruble terms, the profit after tax was RUB 72 million as compared to RUB 287 million and RUB 110 million in Q4 FY '25. These are the numbers we read. Yes, please go ahead, Bhoomika.

[Operator Instructions] The next question is from the line of Bhoomika Nair from DAM Capital.

Yes, sir. You can hear me?

Yes, we can hear you. I don't know where we got dropped, but I was just telling that -- you were able to get it or shall I...

Yes. I got that, sir. I got that. My question was on HPSiC. We had this pilot plant to be operational at the end of the calendar year. What is the status of that? And how are we seeing the progress in terms of the client offtake and things like that?

We are very much on target as far as the HPSiC pilot plant is concerned. As I told in the previous question also, our samples that we are working with various clients have been seeded. They're in the process of testing, very much on target. And I just want to repeat the same thing I told in the earlier answer. We do not expect any huge sales arising from HPSiC business in this year or in the near-term future.

Okay, sir. So the next question is on the Rhodius segment, part of the business which you call, there were some logistics-related challenges which impacted the ability to kind of drive revenues, and we expect that from September onwards, it will kind of normalize. Now if I take a step back, it's been about 3 to -- 3, 4 years since you've taken over Rhodius. If you can just help us understand what has been the benefit? How are we seeing the profitability and the revenues kind of grow out there? There is a PPA impact, which I do understand, but how do we see the turnaround at the consol level for the international subsidiaries for Abrasives? If you can just explain a little bit out there?

So I just want to lay out here is that since the time we acquired without PPA, we have been making continuous profit, right? And this year, with this exception of the EUR 4 million loss, we expect a loss, right? So that is -- and we expect that the remainder of the three quarters, we will be same as last year in terms of the top line. But we will not be able to recover this lost volume. Hence, we will have a loss for this year. We expect that the -- last year, we had -- without PPA, we were profit in the last 3 years that whatever we have been operating. And this year, we could be in the range of roughly about EUR 2 million type of a loss.

Sure, sir. And how is the demand outlook? And how are you seeing this kind of improve into FY '27, '28, if you can just talk about that?

I do not have a crystal ball, but it all depends. It's very tough to predict that far...

And I was just trying to understand how the demand in general is panning out? What are you hearing on ground? That is where I was coming from.

So I mean, it's same as what everyone of us hears. I think we need to wait for some more stability to emerge in terms of this multiple things that's floating around. So we'll wait for some more time sense to provide details.

Sure. And lastly, if I may ask, what is our overall U.S. exposure, right? We understand that it is difficult to gauge what will be the actual outcome and will not be much...

On console sales, roughly about 8 to 10 percentage of our sales is U.S.-based.

The next question is from the line of Aditya from Kotak Securities.

The first question I had was on the Abrasives segment, not focusing on where the market is and where the competition is, but if CUMI as the company has pursued certain steps that they would want to take to improve their competitive positioning on the retail side of things and outside, could you give us a sense of the progress that has been made over there and when do we -- when should we start expecting benefits coming out of the same for us?

So we have rolled out the programs in terms of our Abrasives growth. We are seeing the benefit of it and we are working towards each of these dimensions that we said we will work. As I said, this quarter is an issue relating to some of these inventory corrections in the dealer side of it. But otherwise, our ability to cover newer states which we have -- so far, our market share is definitely progressing well. We've started right on us there. NPD programs are firing well. So that is also well on track. In some of this go-to-market work in terms of our agility, ability to work and getting better productivity, that is also on track well. So we think that the programs are on track. It is -- on the ground, we are seeing the efforts type of our -- these are like, for example, the number of calls that each one makes, the number of productive calls each one makes, the coverages that each one makes, all that tracking whatever we are seeing are progressing well. And probably, we will start seeing the results soon.

Okay. Is there a need to do a similar kind of maybe benchmarking study or reassess our competitive positioning on the standalone Electro Minerals side, where obviously, there is an element of Chinese competition, but do you envisage any amount of work that needs to be done to get that segment back on track from a competitive positioning perspective?

Honestly, our competitive position in terms of the India EMD position is really reasonable. That is why we have in the LTS program, how do we go beyond aluminas and what all the programs which we have laid out in the last call is positioned towards that, and we are very much on track, and we are progressing towards that.

Okay. The last question I had was more on Bronco, which is essentially assets that you want to recommission inside the country. My sense is about INR 200 crores, INR 250 crores is something that can be achieved as incremental sales from the Abrasives business. What could be the time line of the same and how could we see the contribution gearing up to these kinds of revenue levels from that asset?

Sorry, I'm not aware that I guided that kind of a sale, but the program of Bronco [indiscernible] is very much on. We are on the ground, the equipments have come. They are in the process of assembling it. So those program is very much in time for execution dates. So as per program, whatever we said we will do, we are going ahead with that.

Could you clarify what is the capacity or the revenue number at full capacity that can come from that kind of acquisition and obviously the part of liquidity?

So it is not an acquisition. It is an asset purchase, where we had --it is roughly about INR 80 million to INR 100 million worth of wheels we will be able to manufacture. That is our capacity.

And the sales number that can come from there would be roughly EUR 80 million to EUR 100 million?

We have not told anything like that at this point. As soon as the commissions at that time, we will start sharing that.

That was the last question for the day. I now hand the conference over to the management for the closing comments. Over to you, sir.

So thank you all for your participation. I just want to reiterate the facts that CUMI is well on track as far as strategy that it wants to implement, whatever we have laid out in the last call. Every program is being pursued right on us. We have a specific challenge in terms of Rhodius, which completely was unexpected. Warehouse move impacted us in a huge way about EUR 3 million, EUR 4 million. The inventory -- high cost inventory that EMD holding is getting liquidated. In fact, it's completely done so that margin pressure that what we have seen in EMD would go away. We see that the sales pressure that we have seen in Abrasives, particularly on the -- some of the distributor sales due to the stock clearance we would not push that we would be able to get back. So on the whole, I would say that we are very much on track and progressing in terms of our long-term strategy well. Our balance sheet is quite strong. Cash flows are really good. The focus on free cash flow is really good at this point. So we will continue to update you as we meet in the next quarter. Thank you.

Thank you. On behalf of Equirus Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.