GMM Pfaudler Limited (505255) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the GMM Pfaudler Limited Q4 and Full Year FY '20 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Diwakar Pingle from Christensen IR. Thank you. And over to you, Mr. Pingle.

Thank you, Nirav. Good morning to all the participants on this call. Before we proceed to the call, let me remind you that the discussion may contain forward-looking [Audio Gap] unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risks that could cause future results performance or achievement to differ significantly from what is expressed or implied by such forward-looking statements. Please note that we mailed the results, the press release and also the outcome of the Board meeting and the same are available in the company's website. In case you have not received the same, you can write to us and we'll be happy to send the same over to you. To take us through the results and answer your questions today, we have the top management of GMM Pfaudler represented by Tarak Patel, Managing Director; Ashok Pillai, the Chief Operating Officer; and Jugal Sahu, the Chief Financial Officer. We will start the call with a brief overview of the year and the quarter gone past and then dive into the Q&A session. With that said, I'll now hand over the call to Tarak Patel. Over to you, Tarak.

Thank you, Diwakar. Good morning, everybody. I hope everybody is safe and healthy. Let me give you a quick update on our yearly performance as well as quarterly performance. On a yearly basis, on a consolidated revenue, we were -- actually, we improved consolidated revenues by about 18% compared to previous year. So we had good strong revenue growth across all our business lines, including heavy engineering as well. And as a stand-alone basis, we grew about 23% over the previous year. We did about INR 418 crore at GMM Pfaudler stand-alone. And this year, we closed at about INR 516 crores. As you know and most of you have seen already, the quarter 4 numbers are below expectations. This is due to the fact that, obviously, we had about 12 to 15 days of shutdown because of the coronavirus crisis. Our supply chains were affected. Our ability to ship out ready equipment was also affected, and we lost close to about INR 300 million or INR 30 crores of revenue because of that. All in all, we were tracking towards the target that we had internally planned. However, this unprecedented situation actually affected us. And being a manufacturing company, March ending is always a very strong month for us and this was affected. On a quarterly basis, let me give you some idea -- sorry, before I go to the quarter, let me just finish the stand-alone. So on a stand-alone basis, as I mentioned, the revenue grew by 23%. And our profitability, our EBITDA increased by 52% year-on-year. So all in all, obviously, a good year for us. But having said that, we were tracking to actually better performance. And then, unfortunately, because of the situation, we were not able to maximize the shipment in the last 10, 12 days of the month. Coming to the quarter performance, as many of you know, we still managed to maintain our revenue growth. So our growth was actually down, but the revenue numbers were not far behind. The revenue was down by about 6% and the profitability was -- the EBITDA margins, however, improved by about 19%. Mavag also did okay. We had -- Mavag also lost a couple of days and also some shipment from GMM Pfaudler, which was supposed to be sent to Mavag, was not allowed to be shipped, but however, both GMM Pfaudler and Mavag are starting the year with a very strong backlog. Many of you have asked us to share backlog numbers, and this is the first year that we will be starting to share our backlog numbers. So I'm happy to report on a GMM Pfaudler basis, we have an opening backlog on April 1 of INR 350 crores, which is about 40% higher than previous year. Mavag itself also has an opening backlog of about CHF 12 million, which is the same amount of production and revenues that they had built for the previous year. So we expect Mavag also to improve considerably this year. The last month or so also has been very strong for order book. The industries that we serve, mainly the chemical and pharmaceutical industries, have been insulated by this crisis. We have seen a lot of traction as well as interest in new projects, new products. Many customers are now asking us to prepone deliveries. We also believe that the China slowdown and people are now looking to find alternative to China. I think that will have a positive impact on both of the chemical and pharmaceutical industry as well. We have been hearing that a lot of Indian pharmaceutical companies have been dependent on intermediates and supply chain from China. Many of these companies will now look at building capabilities in India itself, so their dependence for China will reduce. As many of you would know also, we have also received an in-principle approval from the Board of Directors to set up a second facility in Hyderabad. Most of our -- the customers in the pharma space are local around Hyderabad and the Vizag area. With Pharma City coming up there, it is important for us to be there before the investment starts. We are already in advanced talks with the Telangana government. They have actually rolled out the red carpet for us. They are quite excited by the fact that we have a German multinational company coming there. And they are actually having the Telangana Formation Day in the first week of June, where they will announce this partnership as well. We also have 2 new furnaces coming into our glass line facility sometime in July. We expect that to be commissioned in a month's time. So around August, September, we should have that up and running. That would also increase our -- the output for the year. So basically, for the year, I would say that we have 70% visibility in terms of orders for the targets that we have internally set for ourselves. Now the focus is going to shift on execution. As many of you know and have seen in the past, we have a very strong track record about execution. One more heartening point is that our factories have been able to ramp up quite quickly. Even though we lost about 15, 20 days in April, most of our workers are local. They are from the surrounding villages. We don't depend heavily on migrant labor. So many of these workers, even though many of them have been working for so many years, did make a lot of effort, and we actually were running our factory much before many other factories started. Today, we have about 600 people already at our factories in 2 shifts. We have taken all safety precautions. And we believe that things are now returning to normal. Our supply chains as well have returned to normal. And I believe that even though Q1 will be a little bit subdued, I believe Q2, Q3 and Q4 can make up for the shortfalls. And in terms of top line growth, we are expecting at least a minimum of 15% revenue growth year-on-year. We will focus on improving profitability as well. But we have been a little bit conservative there because there will be new expenses that we probably have not considered because of coronavirus. But having said that, we are quite bullish, and we expect to continue with our growth story going forward. So with that, I think I'll open it up to Q&A session, and I'll be happy to answer -- and the rest of team will be happy to answer any of the questions that you may have.

[Operator Instructions] The first question is from the line of [ HR Gala ] from Finvest Advisors.

Tarak, congratulations for really a great set of numbers and a very promising outlook that you are giving for the company. Just a couple of questions. Sudarshan, how much revenue have we accounted in our results, consol results and in which segment it is included?

Okay. So yes, Mr. Gala. So the Sudarshan numbers have been categorized under the mixing segment, so it falls under the proprietary products. And together with both GMM and the Sudarshan mixing segment, it's around INR 55 crores to INR 60 crores.

INR 55 crores to INR 60 crores?

Right.

Okay. That's the total amount, I think?

Yes. That's the total, yes.

No, no. I mean, INR 55 crores to INR 60 crores, that is out of INR 186 crores, which we have reported under proprietary products, right?

Yes. Should be around that. Jugal, can you just correct me if I wrong, about INR 50 crores to INR 55 crores would be the right number for the mixing segment, right?

Correct. Correct.

Okay. Fine. Yes. Yes. My second question pertains to -- you already given the revenue visibility for FY '21, now on field, are you seeing actual movement in the API segment and those who are manufacturing intermediate and specialty chemicals to take up some sizable CapEx, which will, again, we will be feeding that because of this Chinese factor, which you described?

Yes, Mr. Gala. So I believe that pharmaceutical who has been very quiet, and normally pharmaceutical accounts were nearly 50%, 55% of our total glass line revenue. However, the last maybe 18 to 24 months, we've seen that fall to about 30%, 35% because chemical has been really driving our growth. However, having said that, most of the CEOs we are speaking to, most of the owners we are speaking to: Laurus Labs, Aurobindo, Divis and even some chemical companies, they all are looking at setting up some intermediate facilities because people realize that there is so much dependence on China and when the supply chain stopped, they were put under a lot of pressure. Not that these people cannot make these intermediates, the cost structure in China is very different. But hence, now with Pharma City coming up -- and what we've heard is the Government of India, the Central Government has approved 3 clusters for API and intermediate manufacturing. And the first one that's supposed to come through and we announced is the Pharma City in Hyderabad. And one of the options that we've been presented with by the local government there is to set up a facility in Pharma City even though nobody else has been allocated land, they are talking to us and even offered us a small plot of land in Pharma City. So we are right in the middle of the action if and when we decide to ramp that up and start that facility.

Okay. What kind of CapEx we will have on that Hyderabad city plant when we come up?

So that will be about INR 50 crores, and that will be paid by our internal accruals. As many of you know, we are sitting on cash. We are debt-free. And setting up for plant in the short term would cost us about INR 50 crores, land would be about INR 15 crores to INR 20 crores and the rest would be plant and machinery.

Sir, the line for the participant dropped. We move on to the next participant. [Operator Instructions] Next question is from the line of [ Ankit Gupta from Bamboo Capital. ]

Tarak, if you can talk about what kind of opportunity do you see from the pharma segment emerging? And especially when we have a land available at our existing plant and we are already expanding by putting 2 new furnaces, so what was the need for setting up of a plant at Hyderabad Pharma City, if you can briefly talk about that? And what kind of incremental demand do you see from there -- from the pharma segment?

Right. So good question there. So currently, our backlog in glass line is more than about 1,000 equivalent units. That's something that is not the desirable. We need to bring that down to about 600, 500 units, so we can turn around these equipments quickly for our customers. One of the other benefits for us is the transportation costs. Whenever we ship anything from Gujarat down to Hyderabad to Vizag, that's an additional cost for us, which our competitors don't have to face. Plus we have 2 local competitors in Hyderabad, not very big, but being closer to our customers is something that we have thought of doing for quite some time. And actually, on announcing this, we got a lot of goodwill generated from a lot of local customers saying that you should have done this maybe 2 or 3 years ago. However, better late than never. And as I think being there, being closer, being able to understand the market and being right in the heart of the action, I think that's something that we believe is going to be important. Now the growth that we envisage from this facility when Pharma City comes up in the next maybe 1.5 years, 2 years, 2.5 years, that is going to be sizable. So all these companies cannot move old equipment here. They will scrap their old plants and the kind of land that they have been allocated, and I believe it's close to 14,000 acres of land has been allocated for Pharma City. So there are going to be mega plants being set up there, and that growth itself is going to be significant. Plus, if the growth were to slow down, then obviously, market share is something that we can go after. We are still losing business because we can't ship in time, a lot of customers who want to give us the business, but are forced to go to our competitors, that's something that we can go after. And the furnaces that we have added in Gujarat right now are going to improve productivity and output as well. But I'm saying this, with that investment, plus this Hyderabad facility, and please also understand that Hyderabad, we can also look at manufacturing other products. So even though we will start with glass line, we are -- there's a lot of other issues, smaller products that we can make there. And having a setup in Hyderabad will definitely help us in the long run.

Sure. So any ballpark number that you can give us about the opportunity which can emerge from the pharma segment over the next 2, 3 years or based on your interaction with the industry leaders, the pharma company?

So in terms of numbers, maybe it's a little bit early for me to say. Maybe Ashok, if you have some thoughts on this, you can add something here, please?

On the numbers that will go to the Hyderabad company?

Yes. So he's saying that basically, what do you think the investment from pharmaceutical would be that would -- I mean, how would the market growth be for glass line equipment in the next 2 to 3 years?

I mean if you look at the fact that many other companies are expanding even today. And the whole Pharma City is coming where all the major companies have significant interest expressed in land that most [indiscernible], we expect to be a very, very high level of investments, which primarily will be for API, and all of that will lead to requirement of glass line products. So we are seeing the requirements in the existing plants, where they're expanding like in [indiscernible] they're putting up a new plant. But we're also [ expecting ] the Pharmacy City to come up in a big way. It is right now very early to say the number of equipment that comes in because even the pharma companies themselves have not expressed and have not been allocated land. So those details are yet to come. But the potential is there. The urgency and the drive from both the state government as well as the central government is very strongly felt. And so the opportunity and the timing is right at this point of time.

The next question is from the line of Ravi Naredi from Naredi Investments.

Tarakji, any margin prediction will you tell for the financial year '21?

Yes, Raviji. We are planning to -- the way that we are looking at it, we want to maintain the same margin levels that we have for this year. We do expect some increase in cost and expenses because of coronavirus. But we are guiding that we will at least maintain or improve slightly on the current margin levels that we have currently.

Okay. Okay. And sir, was -- in media, so many news are coming from China to -- shifting to India. Any such thing, will you want to comment something [Foreign Language] that is happening rather...

Right. So I think that we all are hearing about people looking for alternatives to China. Even in the Pfaudler network when we speak to the other Pfaudler factories, a lot of European companies and American companies are also moving some production out of China and India because they really felt when India stopped exporting hydrochloroquine (sic) [ hydroxychloroquine ] and paracetamol and things like that, they were actually caught unguarded. So they actually felt that we need to move something back. In the same manner, a lot of companies are now looking at India with more interest as an alternative to China. I think there is a lot of, how do you say, negative kind of thoughts about China. People are going to look at other opportunities. However, having said that, we need to ramp up and get producing because like you all know, we've been under lockdown now for 7, 8 weeks, and many factories have been closed. Luckily for us, we've been able to start up and manage at a local because we being in small town, but many of the bigger factories are still shut and still kind of getting back to up and running. So if we don't start producing now, even if people want to come to India, they will not be able to and they'll be forced to go back to China. So as a country, I think we need to be aware that we need to start producing as soon as possible, so that we can cater to the interest that the world is now looking at India for?

[Operator Instructions] The next question is from the line of Kirthi Jain from Sundaram Mutual Fund.

Sir, with regard to heavy engineering, how is our backlog? And we had earlier planned for growing heavy engineering at a faster pace, so was there a significant difference in the dispatches felt in the heavy engineering side?

Right. So yes. So again, last 10 days of the month, we had some very nice orders in heavy engineering that we could not ship out very large orders. They were actually for the Middle East through the Pfaudler network. So that was something that was lost out. However, we'll ship that out in the first quarter of this year. So that will give us a little bit of benefit. But having said that, I'm very happy to report, this is the first year that we have an order backlog, which is in line with what we want. If you all remember, last year, we had a low shipment in Q1 and Q2, and it was difficult to make up. But today, we are happy to report that heavy engineering has a strong backlog, and we will meet the target numbers that we are planning. When I talked about the INR 350 crore backlog that we had on April 1, that was nicely divided between glass line, heavy engineering and proprietary products. It was evenly distributed. So it gives us visibility in most product lines for at least 3 quarters, in some cases, even the pushing into Q4. So now the focus, like I mentioned, is on execution, ramping up quickly and making sure we ship out as much as possible and then slowly start picking up some new orders, which will help us meet the revenue targets for Q4, some parts of Q3 and Q4.

And sir, with regard to your opening statement in Mavag, you had highlighted that we have the full year order book, that was the thing you highlighted, sir?

Yes. So we have a very good start from Mavag. We have a very strong order book, and they are actually booked out for the year. If they execute, which -- all their orders, they will have a significant growth over previous year. And just to give you an idea, European activities have not been affected by any lockdowns. Mavag has not lost a single day of production. However, they've lost some shipment that is coming from GMM Pfaudler. But from that point of view, they have not had any lockdown or downtime at the factory. So yes, Mavag is expected to do well. I think Jugal can add, we closed this year at about maybe 12.5 million or so, we would at least expect at least a 20% growth from there, if not more.

Next question is from the line of Amandeep Singh from AMBIT Capital.

Firstly, can you help us understand whether you are still on track to reach INR 13 billion revenue by FY '25, as mentioned in your strategic plan, UDAAN? And further on asset recovery, do you -- you have been highlighting about materialization of a couple of orders in this segment in near future. Sir, any update on the same?

Sure. So the UDAAN plan is not changing at all. The numbers for FY '21 will change slightly, but nothing significant. But we -- with the new furnaces coming in, with the new factory that we're going to set up in Hyderabad, there are some other opportunities that we are looking at. We believe that the 1,300 mark is something that is quite achievable, and there's no change on that. Regarding the -- sorry, what is the second question was?

Sir, it was on asset recovery.

Asset recovery.

Yes. So on asset recovery, yes, we have made some tractions. We are very close now. However, because of the lockdown, people have not put pen to paper, but I believe by the time we have the next call, we should have our first order in our hands.

The next question is from the line of Rohit Ohri from Progressive Shares.

Good to know that you started looking at market share, and that's what champions actually do. I'm quite glad with that. Well, knowing that the containers and the equipments, which are like slightly larger size, we've done one of these projects last year. So are there any large ticket-size orders which tend to fetch higher margins, which you would like to mention because you've already spoken about Aurobindo, Divis and Laurus? So any time line as to any [indiscernible] that you have?

Yes. Rohit, so yes, so we do have big-ticket orders. We have very large customers who place most of their orders with us, people who are still expanding are companies like PI Industries in the chemical space. Like I mentioned, the Divis Lab is somebody who only buys from us. Dr. Reddy's as well. Aarti is somebody only buys from us. So yes, we have received orders from these companies in the last maybe month, 1.5 months. People are planning for the future. I know specifically that PI itself is planning for also further expansions in the foreseeable future. Companies like SRF have also started talking to us for the next -- the order. These are not yet materialized. So the visibility is definitely there. We are not seeing any kind of slowdown in terms of inquiries. Maybe the finalization is taking a little bit longer, but a lot of people are trying to use this crisis as an opportunity, Indian companies and Indian entrepreneurs are good at making most of opportunities. And I think we can come out quite strong if we play our cards right. So I think the demand will continue. And I think that both chemical and pharma will continue to invest. I'm sure many of you have also invested in the chemical space. And I think currently, it's one of the few industries that has actually done very, very well.

Next question is from the line of Kaushal Shah from Dhanki Securities.

Tarak, can you share some thoughts about the competitive scenario in the GLE industry? We've heard some news about the possibility of one company 1 Tier [ DDPS, ] if I have to mention, the possibility of it kind of getting closed down or not accepting orders. So has the competitive landscape kind of become easier for us and therefore, are we looking at a slightly better demand scenario in the forthcoming future? And the second question was on the greenfield plant. So the CapEx for that, will it be staggered? Or how are we planning to do it? I mean is it likely that we are going to spend the entire INR 50 crores in the current year FY '21 or it will be staggered over 2 years?

Right. Thank you. So on the DDPS front, as far as we know that they've been losing market share consistently since they bought Nile India in 2008 or '09. And the latest information that we have is very similar to yours, they have stopped accepting orders. I think they've been making losses at their Indian, Hyderabad facility for quite a few years now, and they finally decided to exit India. I don't know what the current status is. However, have actually picked up some of the people who have left them, and they are now going to help us set up a new facility. So from a manpower standpoint, we have actually got some good people who will be ready to run our new plant and at least take that project forward. In terms of the spend that you spoke about, INR 50 crores most likely will all not be spent this year, maybe some of the money for the land upfront will be spent depending on when we finalize that. Hopefully, I'm targeting the next couple of months for that, but maybe there will be some spillover definitely into next year as well.

Next question is from the line of Dhaval Shah (sic) [ Dhavan Shah ] from ICICI Securities.

So you mentioned somewhat around INR 350-odd crore the order backlog for the entire segment -- entire business. So can you share the Y-o-Y numbers? How is the order book in glass line equipment, heavy engineering and products in terms of the Y-o-Y growth if you can mention and the breakup also, if you can mention among these 3 segments? And you also mentioned somewhat around INR 30-odd crore the deferral revenue, so can you share it among 3 segments, how much is it deferred between all these 3? And we also have seen some operating margin improvement in the glass line equipment during this quarter to around 26-odd percent, so what led to such an improvement in the segment this quarter? If you can share thoughts on that?

Yes. So like I mentioned, I don't want to go into the breakups right now, but INR 253 crores was our opening backlog last year. Today, it's about INR 351 crores. We've also booked another maybe INR 60 crores, INR 70 crores of orders since the start of the lockdown since April 1. The only area where I would like to give you some visibility is last year when we started, we had about INR 28 crores, INR 29 crores of [ HE ] backlog. Today, we have close to about INR 86 crores, INR 87 crores of HE backlog, right? So you can see, like I was mentioning earlier, how we're having an important starting backlog for HE. It's so important to have a good year. So there's a significant improvement there. And your second question was, sorry, what was it, again?

Margin -- this INR 30 crore one is the deferral of this INR 30 crore revenue. And the second one is on the...

Yes. Right. Yes, I think again -- yes. So I mean you must understand -- yes. So I remember what you said now. So you must understand that manufacturing industry in the past -- okay, we've tried to stabilize this as much as possible, so we don't have big ups and downs between quarters, but March ending and Q4 is usually kind of a mega month for manufacturing industry. So I would just be -- I mean, I don't know the exact details, but I think all in all, all product lines would see a similar kind of reduction because many equipments that get ready and tested have come for final inspection in the last 10, 15 days. That's how it's done. So I would not say there's one specific product that did not get shipped out, but there was one large order in heavy engineering that definitely did not get shipped out that we know about.

Next question is from the line of Dhruv Bhatia from BOI AXA Mutual Fund.

Just the first question on -- you talked about the inquiries that you've seen in the pharma segment. Can you just talk about a little bit on the chemical side also? In the last couple of months or quarters, have you seen any increased inquiries from the chemical segment as well?

Right. So yes. So as I mentioned, we did receive a sizable order from PI Industries recently. We are now discussing with SRF who have floated a new inquiry and want to finalize it very soon. We have another large customer in South India called Deccan Chemicals. They are also in the midst of finalizing a new order. People like Aarti have also finalized -- I believe Transpek is coming up. Meghmani is putting up an Epicerol plant. And besides that, Ashok, any other chemical companies that you want to speak about?

DCM Shriram is putting up again another Epicerol plant. That's the other one that is -- then there are smaller agrochemical companies that are putting up big master plants, doubling the capacity. So there's quite a bit of activity taking place in the chemical and agrochemical space.

Sure. And [Audio Gap] utilization because of the social distancing norms, will you -- will it hamper your capacity utilization for the entire year?

We would hope not. Even though social distancing is already implemented in our factory, but you have to understand that these are big manufacturing plants with very high ceilings. A lot of space for workers to socially distance each other. So we are not really -- there is no space limitation that has any constraints on our manufacturing process. So I think from that standpoint, not really. The only area that where we are seeing a little bit of difficulty and what we had difficulty with was obviously getting the local permission to start up. And then two, obviously, supply chains. But both have seemed to have been kind of revised now. People are coming in. And I think like most companies, we have to learn to live with COVID. There's no 2 ways around it. So I think that's something that we are working on. Hopefully, the open-air factories that we have, plus the heat in Gujarat now is close to 48, 49 degrees. So if there is any science that says that, yes, this virus cannot live for very long in such high temperatures, that would definitely be helpful for us.

Next question is from the line of [ Harshit Katani ] from JM Financial Limited.

Tarak, so on the capacity addition front, the 500 EUs that you are planning to add is coming up entirely at Hyderabad?

No. So let me just give you some background on EUs, Harshit. So we had about 2,000 units or EUs that we shipped out this year. Our current capacity, if everything went as per plan, would be somewhere around 2,300 to 2,400, depending slightly on the size. With the 2 new furnaces coming in, in August and September, we could probably add another 400 to 500 EUs in an entire year. But obviously, this year, we will have only half of that. So about 2,700, 2,800 would be our actual capacity at GMM Karamsad. And then you would add another 500-or-so EUs, about INR 60 crores to INR 70 crores worth of revenue in the first year of operation at the Hyderabad facility.

Okay. So the INR 50 crores doesn't include the investment of the gas furnaces, right?

No. So the INR 50 crores is not inclusive of gas furnaces. The gas furnaces, which are coming in Karamsad have already been approved and paid for. The new INR 50 crores will go for new furnaces, plant and machinery, cranes, factory shed and land at Hyderabad. But it's comprehensive, meaning INR 50 crores means that the INR 50 crores investment will generate about INR 60 crores to INR 70 crores worth of output in the first financial year of operations.

Next question is from the line of [ Shiva Kumar from Rockford Advisors ].

My question is, we have 3 gas furnaces and 3 electric furnaces, are we using all of this?

Right. So right now, we are mainly using our gas furnaces and one electric furnaces. But once we bring in our -- and commission our 2 new gas furnaces, then all our dependence on electric furnaces will stop. And as you know, that gas is definitely more economical than electricity. So that should help us improve some kind of profitability as well.

And second question is, recently, Gujarat government has amended labor loss and increased working hours to 12 hours per day. Are we able to utilize our labor optimally?

Yes. So we are working with the labor unions. I mean, the unions have been very supportive. People want to get back. Even for our new facility, many of our glass lining experts who were willing to take a team of people down to train people. So we have very good people who work for us. Our unions and our workers are very supportive. So I'm sure we can find common ground where we can find the right balance between safety and productivity, and we are in discussions with them to get as much output as possible.

The next question is from the line of [ Ronak Vora from OHM Advisors ].

With the INR 50 crore CapEx that are planning in Hyderabad, what will be the maximum revenue that we can generate?

So about INR 100 crores is something that we are targeting. There will be start-up difficulties and things like that. But as we see the demand grow, the way that we will design this plant is that we can keep adding small, small, small equipment that will obviously improve productivity. But with about INR 50 crores of investment, about INR 75 crores to INR 100 crores of revenue is something that should not be difficult.

So basically, a 2x fixed asset turnover, right?

Right. Yes. Jugal, is that correct?

Yes, correct.

The next question is from the line of Jason Soans from Monarch Networth Capital.

Most of my questions have been answered. But just to want to know, sir, that I mean, our company is basically dependent on the CapEx cycle for our end-user industry, such as specialty and pharmaceuticals. So whatever -- I mean, is there a thumb rule by any chance of whatever CapEx, so for example, say, Aarti or anyone like PI or a pharma major puts in, is it a thumb rule that a certain portion or a certain percentage goes to glass line equipment or something like that, we can work with?

Yes. So it really depends. But generally, if you don't consider, let's say, civil costs and land costs, if you're just looking at plant and equipment and peripheral kind of piping and wiring and automation and stuff, I would say anywhere between 20% to 30% could be equipment that they could buy from GMM product. This does not include only glass line, it could include like drying, filtration, heating and cooling and stuff like that. So besides that, plants really don't have a lot of other kind of equipment. They have some boilers and some utilities and things like that. But the equipment does form the major part of any kind of new CapEx. Some chemicals companies are more dependent on glass line because they work with certain chemicals. Some companies can use stainless steel and other metals because they don't have a specific set of the chemicals, but more often than not chemicals, agrochemicals and most pharma, they will require glass line equipment.

Next question is from the line of [ Sriram Rajaram from Ratnatraya Capital ].

Sir, just -- so the Pharma City is coming up. I mean, what is the status -- current status? And if you could provide some time line of the project, it would be useful.

Right. So Pharma City is something that is still some years away. I would think we had actually visited them. The roads are being built. The land acquisition for most of the land have been completed. However, the idea is not to cater to Pharma City today. The idea is to be ready that when we start -- when Pharma City starts, we have established production facility in Hyderabad, which can cater to the demand. There is enough demand right now even without Pharma City for us to generate INR 75 crores to INR 100 crores of revenue from the local Hyderabad market.

But has the land allotment completed? Or is it still in progress in the Pharma City?

No, I think that the land allotment, people have made their bids. So companies have put down how much land they need. Land allotment maybe has not been discussed and finalized yet. But like I mentioned to you, somebody was mentioning to me from the government, that the Government of India has approved 3 clusters for pharmaceutical and API manufacturing, the first one being Pharma City. So everything is working, and it's under progress. We are now just expecting clearances. And I think that once everything settles down, I think we will see some movement here because, as you know, that we have to reduce our dependence on China, and people will probably fast track these projects.

[indiscernible] take about 1.5 years to come, right?

I would say 1.5 to 2 years. But in the meantime, there is definitely enough business in Hyderabad alone to take care of the factory that we are putting up.

Next question is from the line of Dhaval Shah from Girik Capital.

Sir, a couple of questions. So first, you mentioned you want to bring down the delivery time to 500, 600 units, I mean, for the backlog. So that would mean how many months of delivery time?

Yes. So ideally, Dhaval, about a 4- to 5-month period is something customers can live with. And sometimes in terms of urgencies as well, we can cater to those urgencies. Sometimes there are mishaps and fires in plants where customers need large reactors, large quantity of reactors very quickly. Right now, if you go and tell somebody that, listen, you need to wait 9 months, that's something that we are not very happy doing. So our first focus is to reduce our backlog and make sure that deliveries are down. Once deliveries come down to a respectable level, there's nobody else in terms of competition who can handle the kind of volume that we can handle. So definitely, price premium is something that we can also expect as well as more customers giving us business. Like I'd mentioned earlier, people are wanting to buy from us. Unfortunately, we have to turn them down because we don't have a capacity right now. Even though if they're willing to pay the price, they are kind of forced to go to somebody else because the time lines are rather long. But having said that, all our competitors are also quite busy. I think they also have a strong backlog. So I don't think there's any one specific player who can give quick delivery right now. If anybody is probably GMM because we have 2 new furnaces coming in. And if we can ramp up our production much faster than our competitors, then there is definitely some upside to be taken there. One thing that I've heard also from our competitors, and I mean, I'm not sure about this, but is that their employees because they have not been working with them for very long and not being as loyal as our guys have played -- made it a little bit harder for them to start up because like the government had told most laborers and people that you can sit at home and you'll still get paid, and you will not lose your jobs. So our guys being loyal and being worked -- having worked with us for so many years, did make a lot of effort to start the factory up as soon as possible. They've been coming actually from the first week of April, actually April 6 or 7, with the glass lining departments have been running. And slowly, slowly, we've ramped up to a point where today we have about nearly back to our full capacity, where many of our competitors have not even managed to start up. So hopefully, that will help us in the long term. Hopefully, that will help us. We put in a decent Q1 and then the amount of catch-up that we have to pay for the next few quarters will be reduced.

Next question is from the line of Alok Ranjan from L&T Investment Management.

Sir, my question is, first, on the margin mix. So currently, we have, as you mentioned that the pharma mix has slightly decreased compared to the previous year. Right now, it's somewhere around 30%, 35%. Going forward, like we are putting up capacity in Hyderabad and where there has been a bit improvement in the pharma segment based on the approvals that have come. How does the margin difference between the chemical -- supplying glass equipment to a chemical company compared to pharma, maybe the sizes are different. So can you just clarify in that part?

Right. So just 2 or 3 points here. One is that when we build the Hyderabad facility, we will make sure that we don't build a footprint that is not necessary. So like you rightly mentioned, the sizing requirement in pharma is much, much smaller. And once you have smaller furnaces, you will require smaller cranes. You'll lead a smaller manipulator, you'll need a smaller footprint. So all in all, the cost will be reduced. Even though if some customers would want some large equipment, we can still ship those from Hyderabad -- from our -- the Gujarat facility. Having said that, both of these sectors, the premiums, I would, again, say, depend on customers and requirements. Definitely, what's happening in pharma is there's a definite change of mindset. And I've mentioned this a few times. Nobody wants to save INR 10 lakhs, INR 15 lakhs on an order of a few crores. I think that point has definitely gone. The second-generation that has come in has seen world-class factories. Most of these customers now have international clients, they send their people down for inspections regularly. So I think building world-class plants with top-quality equipment has now become a standard in India. It's no longer the L1 or the lowest cost. And with such critical equipment like Glass Line, that if you have a fall or a breakage means your entire factory shuts down, I think people are not willing to take that risk anymore. Secondly, FDA has also climbed out. So the quality of the glass, the quality of the equipment becomes much, much more significant. And again, when people are now replacing old plants, 10-year, 15-year old plants, they are now putting up really world-class facilities with the best practices, the best type of equipment. So I don't see a lot of the customers being driven by price. I think most customers are now driven by quality, brand and service and support. Similarly, for chemical, I think it's important to note, the chemical -- the reaction in a chemical company is definitely more severe. Pharma is consumed by human beings. So the reactions definitely don't require as much acid, heat, chemicals, gases, chlorination, stuff like that, while chemical is definitely more severe and the quality levels required for chemical are probably more stringent. Plus the sizes increased drastically. So as a size of a glass line reactor increases, the chance of failure also increases significantly. So again, in the chemical space, again, we have created kind of a niche for ourselves, where, again, the big players, the strong players like PIs, Deccans, SRFs, UPLs, they would generally, 90% of the times buy from GMM Pfaudler. It's not really a decision on cost. It's more a decision on quality. Maybe Ashok, you want to add something here?

No, I think you have covered most of it. The fact that companies now rely more on quality and brand is evident from the way that the whole size of the supply chain of those pharma companies deals with Glass Lined Equipment because the pain that they had felt during FDA approvals were so immune and the support that we gave some of the companies who asked for it at that time has stood in good stead for us, and we realized that the backup in terms of both knowledge as well as in terms of service and support capabilities far exceeds what the other companies can do. So I think that's really what's going to be the differentiator and driver as we go along. And the fact that we have a new facility in Hyderabad will extend our wings in terms of driving a better footprint, right where the customer center of gravity is and therefore, does allow us to take much better market share than what we have even today.

Got it, sir. Sir, my second question is related to the order book that we have close to around INR 350 crores. We have seen good traction in agro and pharma. But apart from that, there are several chemicals which are used in other segments like auto, polymers, aerospace. Those sectors have not -- are not expected to do well in the recent time. So is it some kind of exposure we have from those companies where we can see some order delay or something?

Yes, there could be some amount of reduction, but all the new businesses we are dealing with are mainly for export. And the consumption in the export market still continues to be strong. And now with the slowdown in China, some of that production will have to move in India because people are looking at alternatives. So maybe there might be a reduction in internal Indian consumption. But globally, I think the kind of move away from China would then result in more products and more buying from India.

Next question is from the line of [ HR Gala ] from Finvest Advisors.

Tarak, I just wanted a clarification. In Hyderabad, are we planning 2 facilities?

No, just 1 in the Pharma City, it's only the Pharma City what we are talking about.

No. So we have seen multiple land parcels. They have offered Pharma City to us, which was quite nice to hear. They've also -- they offered us some land in Genome Valley. So for us, location is not very important because wherever we are, we will be maybe an hour, 1.5 hour away from our customers, and in Vizag maybe an overnight drive. So location in and around Hyderabad doesn't matter. The only thing to keep in mind is that we cannot build anything within the city, the limits that is inside the Outer Ring Road because that is the government policies with NGT and things like that. But we will -- we are now working on visiting these land parcels now that things have opened up and trying to find the best one. Pharma City looks very attractive, but then we also need to see what is the other infrastructure that is available. How are the roads, how the electric -- the connection, how easy is it for workers to stay there or come there, how easy is for our employees to travel there. So we will take a call depending on what is the best solution.

The next question is from the line of Vidrum Mehta from Aditya Birla Capital.

I just wanted to understand what is the replace -- what is the replacement order of the total INR 350 crores of the order book we have? And secondly, because we lost some of the days in Q1, how do we plan to recoup the overall FY '21 numbers because our utilizations are already at 90%-plus?

Right. So the couple of points here is that in terms of recouping the production, obviously, once we are ramping up, we do have and we have made some improvements in the processes, plus the 2 new furnaces coming in. And like I mentioned to you last year, we didn't have business in the HE segment. So this year, even though we've lost 20 days, there's lots of work in progress that has been created. There's lot of work that has already been done. So we will use heavy engineering as one area that we can probably show significant improvement. And your second question was, sorry, what was that?

Of the total order book which we have of INR 350-odd crores, what would be the replacement order, that is replacement of old equipments and what are the fresh orders?

Yes. So I think most of these orders, about 90% and Ashok, please, correct me if I'm wrong, are new projects that are being put up. Replacement business for us is still something that does not account for a lot of business, but we have seen old plants. We are now coming to a time where Hyderabad, when it started 15, 17, 20 years ago, these plants have now reached their age. So there could be some further kind of positive investment opportunities where these old plants are converted to new plants. We have seen that specifically with the case of DRL in Hyderabad. We have seen that recently in Sun Pharma, in their facility in Halol as well, where they have scrapped old plants because they're just too old, and they've just put in new equipment and build really new world-class facilities. So replacement demand should pick up. Having said that, India is not a big market of replacement. They would rather use, use, use and then junk and then just buy a whole new project at the same time.

[Operator Instructions] We will be extending the call for another 15 minutes. [Operator Instructions] The next question is from the line of Anupam Agarwal from Lucky Investment Managers.

My question mainly is to Jugal sir, is on the consolidated balance sheet, sir, if you can just give a sense of what the loans and others and other current assets are because the figure has risen quite substantially from about INR 35 crores to INR 77 crores?

Yes. Loan is about INR 11 crores.

So it has gone from INR 8 crores to INR 17 crores. So basically, I'm talking about the bottom 3 figures in your consolidated balance sheet under current assets.

One second, I need to check that.

No. Why do you check that? Let me just add that we have been debt-free. Only this last quarter, we took INR 10 crores of loan from HSBC and we put it into FD, just in case things were not going to improve for the conceivable future, we just wanted to keep some safety buffer with us. And that was it. There's no other specific loan that we have. Maybe Jugal can add some light on that.

No other borrowings as such. Which one you're talking about? Because we have INR 11 crores of borrowing, which is INR 10 crores we've taken from HSBC and INR 1 crores is our overdraft balance with SBI.

So basically, the difference is mainly the loan, and that is in the bank deposits?

Yes, it's in FD. We took a loan of INR 10 crores, just to make sure that if there were -- this crisis were to continue for the foreseeable future, we would have some -- and we got it at good rates as well. So it's not something that is a huge cost to us. And once we have some visibility with cash flows, we will then just return it.

Next question is from the line of Sunil Jain from Nirmal Bang.

Yes. Congratulations on new plant. Sir, my point was like you are continuously struggling with expanding capacity and all. Hello?

Yes, yes.

Yes.

Yes. And the capacity expansion, again, is of a size of 400, 500 vessels. So don't you think is there plan for a bigger one? Or is there any scope for further expansion in this particular location immediately?

So I think -- Sunil, I think 2 expansions are coming up, which I think are significant. We have 2 new furnaces coming in Gujarat plus this new plant, which will pretty much give us another 1,000 vessels capacity. So I think it's important that we wait and watch and see the demand because, again, expanding and then not having the business and then going after market share to fill your factories at low price, then your margins will take a hit. So I think we are a little bit conservative. We like to wait and watch. But at the same time, we are aware that there is an opportunity, and we will try and cater to it. But I think these 2 investments that we are making, the 2 new furnaces which are coming in Hyderabad plant will put us in good standing, at least for the next 1.5 years where we'll have some time to review and see how the market behaves before taking the next action in terms of expansion.

Next question is from the line of Tanush Mehta from Dalal & Broacha.

Sir, I had a few questions. First one is regarding -- hello?

Yes, go ahead.

Yes, go ahead.

Yes. First one is regarding, sir, what was our exports during the year? And what's the outlook for the next year? Secondly, if you could share us your revenue contribution industry-wise in total? And your market share in GLE for the full year?

Okay. So in terms of export business, our export numbers were around the 10% to 12% on -- across all our business lines. Most of it does come from heavy engineering. We do see the current backlog as well being quite -- there are some nice export orders. The Pfaudler network, like I mentioned to you, has taken a lot of interest to our heavy engineering product line. So that's something they are pushing all across the world. We are also now having a specific kind of initiative where we are trying to grow our export business in heavy engineering and proprietary products. So that's something that we are working on. Sorry, and the other 2 was what?

Sir, we will move on to the next participant. [Operator Instructions] Next question is from the line of Karthi Keyan from Suyash Advisors.

I was actually on the same question. Can you talk a bit more about your Pfaudler network and also about how orders get affected? I mean, whether there is any component of imports and trading in the portfolio? Or is it entirely locally manufactured?

Right. So Pfaudler and us have improved our relationship quite significantly since DBAG, the parent organization, the private equity fund has come in. They've brought in their own CEO and CFO and a lot of new people who we get along very well with. We are working together for many, many projects where Pfaudler International is packaging a lot of different products from all its product lines and giving customers the options based on price, on cost and even a lot of sourcing from India. So that relationship is growing. In the same way, they have also shared with us a lot of technology, like you know that the acid recovery technology, the ceiling technology that Pfaudler has acquired recently, has been shared with India, and we are making a good amount of tractions as well. Just quickly, I just remembered that on the last question, there was some question in terms of the Industry segment, so just to mention on that, 60% -- 55% comes from Chemical, which includes agrochemical and specialty, about 35% comes from basically pharmaceuticals and the balance comes from, let's say, oil and gas, petrochemical, fertilizer and dyes and paint stuff. But otherwise, I think the relationship with Pfaudler continues to grow. We are looking at more and more opportunities of working together across the world. There's an opportunity for GMM to even cater to Southeast Asia now. And I think both Pfaudler and GMM together can definitely form a very strong partnership.

Next question is from the line of Salil Desai from Marcellus Investment Managers.

Sir, again, on this Hyderabad plant, you mentioned that you're still probably looking at some other land parcels. So it's not a done deal? Or -- and secondly, are there any M&A opportunities available instead of doing a greenfield plant?

Yes. So there was an M&A opportunity available there. However, it didn't work out. And then we kind of realized that, that M&A opportunity was also not in the best kind of -- in terms of what was available, it wasn't very well planned in terms of flow nor were there a lot of opportunities to really expand and scale up from there. So then we felt that building a new factory for maybe slightly a lower price than buying that facility would probably make more sense. So that's why we decided to go for the Hyderabad facility. In terms of the land, we had actually come close to finalizing something and then this crisis hit us. We have met with the Chief Secretary there, Mr. Jayesh Ranjan, who has been very, very helpful. Like I mentioned that they also had a big initiative of bringing in German companies. They also wanted to start a flight from Frankfurt to Hyderabad. So being a German multinational, GMM Pfaudler was very well placed for this opportunity. So they've actually rolled out the red carpet. They've given us a lot of options that many other companies don't get. And like I mentioned that they are having a Telangana Formation Day in the first week of June, where they are going to probably have some -- have the management of GMM Pfaudler, maybe even the management of Pfaudler, to do a little bit of a launch in terms of what their plans are in terms of bringing companies to Hyderabad. So I don't see it as a problem. We have to find the right location and the right piece of land, but I'm quite confident that we can close that very, very quickly.

Next question is from the line of Ashwani Sharma from Anand Rathi Shares and Stock Brokers.

Sir, my question is that on the GLE, our intend has been 25%, 30% revenue growth. How confident or what is your outlook going ahead? What kind of a run rate we can see next year or maybe after that?

So Glass Lined is something that keeps surprising us. Even though we believe that at some point, it will slow down, but it keeps surprising us. Now with the new movement of manufacturing from China to India, maybe that will be something that will again drive growth. And like I mentioned, that if we have capacity available and the market was a bit slow, then market share is something that we can go after. So all in all, I'm also -- again, for this year, like I mentioned, a 15% growth over previous year across all our product lines should be achievable. Glass Lined definitely is something that we have most confidence in and most comfort in manufacturing. And if there's an opportunity to grow faster in that market, then we will definitely take that opportunity.

Next question is from the line of Rakesh Roy from Indsec Securities.

Sir, my first question regarding, sir, when will this Hyderabad plant start, sir?

We would at least target a 9 to 12 months from now. 9 months in a very optimistic scenario. But I am probably thinking that by the time we finalize the land maybe some time by July-August, if we can. And then maybe 7, 8 months from there, we could probably have the first reactor leave the facility.

Next question is from the line of [ Manish S ] from Fiducia Capital Advisors.

Yes. Hello?

Yes. Hi, Manish.

Sir, the line for the participant dropped. We move on to the next participant. Next question is from the line of Dhwanil Desai from Turtle Capital.

Tarak, just one question. So I think we are -- as a whole industry, we are in a very sweet spot and a lot of CapEx happening for our end-use sector. So I understand the graph going up in terms of revenue and margin growth. But do you foresee a possibility where -- when this CapEx takes time to kind of get utilized, and there will be a lean period or a silence period and there is not enough replacement demand, so we falling off the place in terms of revenue and margins? From management perspective, do you consider this scenario? And what are we doing to take care of any such eventualities?

Right, Dhwanil. So I think good question there. I think one of the areas where we are focused on, which is the Indian market is dependent on lot of other external factors. If you believe in the Indian story, I'm sure India will continue to grow. I think with the right kind of governance, we still have at least the next 10 years of good time still ahead of us, maybe even more. But at the same time, we would like to diversify out of chemical and pharmaceutical. That's why we moved into heavy engineering. So that gives us access to new industry segments like oil and gas, petrochemical, fertilizer. We are also looking very, very actively to export markets. So if India were to slow down for a couple of quarters, then the export markets could make up for the shortfall. And then lastly, we are also working with Pfaudler to see if there are any other M&A opportunities which gives us a little bit of more penetration in new regions and new geographies. That is something if we can tie up and base some of our output in these new regions, then that would give us some kind of comfort that if India were to slow down, then we obviously still have these other regions where we can make up for the shortfall. But yes, that's something that we think about quite often. I don't see any of these demand falling off the cliff for the foreseeable future. Medicine and chemicals are something that the world does require. Glass Lined Equipment, the technology has been around for more than 100 years. So there's no other new technology that is going to replace it. And the way that we are seeing the market behave and compared to many other industries which I believe will be in a lot of trouble because of the current crisis, chemical and pharma will kind of shine through this bad time. So I don't see that. But yes, as a risk, it's something on the top of our head. We are trying to mitigate that risk by either looking at new regions through Pfaudler or even through direct M&A opportunities as well as diversing our product portfolio.

Next question is from the line of [ Akash ] from [indiscernible] Mutual Fund.

I wanted to understand, why is it that your cash flow from operations on a consolidated basis has been more or less flattish over the last 5-odd years in spite of the revenue doubling? And the second is on the ROE bit. Could you talk about where can this trajectory shape up over the next 2 to 3 years?

Yes. So maybe Jugal can take that, but I think we have been investing most of the cash from operations back into growing the business. But maybe, Jugal, you can spend some time on that, please?

Yes. So cash generated from business is actually putting back to inventories, receivables and we also keep investing on CapEx. You see continuously last 5 years, we have been mainly investing about INR 20,000 crores -- INR 20-odd crores every year.

This is pre-CapEx, operating cash flow from operations [Technical Difficulty] CapEx.

Right. So most of the cash is going into the trade receivables, inventory. Our inventories have gone up. 5 years back, if you look at, it was INR 40 crores, INR 45 crores. Today, it's about INR 150 crores. Similarly, receivables, it was INR 25 crores, now it is about INR 70 crores, INR 80 crores. So the money is being invested to grow business.

Next question is from the line of [ D.A. Laxman ], an individual investor.

Sir, why is there a steep decline in heavy engineering in this quarter, sir?

Sorry to interrupt you. You are not audible.

Can you speak up, Mr. Laxman? We can't hear you, please. Can you speak up?

Yes. Can I know why there is a steep decline in heavy engineering space in this quarter, sir?

Sorry, I could not hear you. But if you're asking about heavy engineering in this quarter?

Yes, yes. Why is there a steep decline, sir?

Yes. Because, again, the heavy engineering this quarter, again, because of the shipments that were held up, we were not able to complete the jobs. And obviously, if the revenues are not there, then the absorption rates will drop, and hence, the profitability will reduce. But that is not -- it's not a trend or it's not about anything in the business. It's just about not having the ability to ship out the equipment and complete the manufacturing in the last 10, 15 days of the month.

Next question is from the line of [ Bhavinesh Shah ], an individual investor.

Sir, can you please guide us on how long will it take to reduce the backlog or you can give us any time line on that?

So it depends now that we have started manufacturing activities in a staggered manner. We are ramping up and we want to, at least for next month, June, we are targeting at least 200 EUs, which is like basically back to normal. So hopefully that can continue, and there are no further lockdowns, which I believe that now I don't think industries can deal with more lockdown, so that is something we will have to go through. But I believe that in the next couple of months, at least by the end of Q2, we should have our backlog down to a more respectable level. Plus, with the new furnaces coming in, in August, September, that will help us as well.

Next question is from the line of Sumit Jain from ASK Investment Managers.

Tarak, I wanted to know about how the year has been for the industry in terms of number of units, our market share and which were the other players and in terms of their number of units sold, et cetera?

So I don't have that data. Sumit, unfortunately, those numbers are not out yet. We are usually the first people who come out with numbers. But like I mentioned to you, I'm sure their Q4 numbers are not going to be very strong. I think the Q1 numbers will also be affected. We have been lucky enough to ramp up, but I know local competitors in Hyderabad who had tough, tough time getting employees back to work. Being in a big city also, there's been a more intense lockdown, plus I think they depend quite heavily on migrant labor as well. So I'm not really sure, but I think any manufacturing company, if you understand the markets, 10, 12 days of production loss is quite significant. I think as an industry, in general, you will see now the Q4 numbers probably coming out are not that great. You'll probably see Q1 will probably be a little bit worse off in most industry segments. Luckily for us, one of the things to consider is there are not many good opportunities available in terms of good companies and good industry segments. So as investors, you also need to be aware about, yes, some of the real-life difficulties, but at the same time, the outlook and visibility for the industry segments that we cater to, right? So it's a combination, but all in all, I mean, I would not say today that we are in a bad situation. I would not -- I'm kind of excited that, yes, there is opportunities coming. Yes, we've lost some time, we've lost some, but now the option is about how quickly can you ramp up, how quickly can you get back to normal and take advantage of the opportunities that are available.

Next question is from the line of from [ Shivakumar from Rockfort Advisors ].

Even though your fundamentals are so strong, not many institutional participation is there. So are you considering any bonus shares so that there can be increase in the floating stock or [indiscernible] for the institutional investors?

Right. So we had considered both bonus splits, bonuses and split. We talk about it quite a lot. We would have thought that at the end of a 5-year strategic plan, which ended on March 31, 2020, we would have liked to give back to shareholders. However, the situation, obviously, right now is not conducive to take any decisions on this matter. The focus is to maintain business continuity, to conserve cash as well as make sure that we come out of this crisis without much difficulty. But at the same time, we completely understand what you're saying. There is definitely both the promoter groups, which is the Patel family and DBAG realizes that owning 75% is something that probably will deter a lot of investors coming in, a lot of financial investors coming in. We are definitely looking at ways of reducing -- of increasing the free float. So we bring more robustness to the stock price, more volumes as well. So that's something that we are considering and we are talking about. No decision on the matter has been taken place yet, but we are aware of the fact that the market would like more free float and more volume so that we bring in a whole different set of investors. But having said that, you must have seen or I don't know if you can see or no, but our institutional investors have increased over time. And the volumes also, since we listed on the NSE, have also increased. I don't know if many of you know, but we are now also part of the MSCI index from June onwards. So hopefully, that will also increase the visibility in the international markets.

Next question is from the line of Jason Soans From Monarch Networth Capital.

Thanks. My questions have been answered.

Next question is from the line of Rakesh Roy from Indsec Securities.

My question is, sir, what is the CapEx for FY '21 whole year?

So currently, we have only CapEx plans of about INR 10 crores on the new furnaces that are coming in. Plus, we have normal maintenance CapEx of about INR 15 crores to INR 20 crores. The exact CapEx, even though we have -- we are thinking about INR 50 crores for Hyderabad, the final number will be decided once we finalize the land, but I don't expect it to be more. And all of that CapEx, like I mentioned earlier, will not come in this FY '21, some will spill over into FY '22.

Next question is from the line of [ Saurabh Ginodia ] from PhillipCapital.

I just wanted to understand whether there is any further levers to increase the gross margin either by improving the mix or by increasing price, given the robust order book?

Sure. I mean pricing is something that we always try to improve upon. But again, we have to find the right balance. There is a market. There are competitors. And at the end of the day, we have very strong relationships with our customers. So taking advantage is something that we don't like to do. But at the same time, we are always looking at internal ways of reducing costs as well. There will be some benefits coming out of the reduced -- the reduction in travel, SG&A cost, power and fuel costs, things like that will help definitely. But definitely, when it comes to competition, being a financially stable company, having the ability to finance some of the orders as well, maybe we can extract a little bit more margin from the customers.

Next question is from the line of Abhishek Vora from AMBIT Investment.

I hope everyone in the GMM family is healthy and safe.

Yes. Thanks, Abhishek.

Yes. My question will be kind of a repetition. You mentioned that the heavy engineering has suffered an operating loss, which is primarily due to the shipment that could not happen from -- so I wanted to ask whether the shipment could not happen that this because of the Mavag plant or it is the Indian side of it?

No, this is -- heavy engineering has nothing to do with Mavag. It's only to do with the local business as well as the business that we do with Pfaudler. There was one large order which was ready, but could not be shipped. This was for the Middle East, and it was an order received through the Pfaudler network. Hence, we could not complete some shipments because the last 10, 15 days, all the logistics were stopped. So having said that, so if we had made the additional revenue, then the numbers would have looked more attractive.

All right. Understood. I just wanted to confirm that this is different from the case that you mentioned [Audio Gap] different from the Pfaudler network could not be done. These are the 2 separate cases, right?

No. It's the same case. So heavy engineering was an order received directly through the Pfaudler network for a customer in the Middle East. So there was this shipment, plus a few other local shipments that could not be completed because of the last 15 days of lockdown.

Next question is from the line of Jyoti Roy from Angel Broking.

Congratulations on a good set of numbers. My question is...

Sir, sorry to interrupt you. Your voice is breaking.

Yes. Am I audible now?

Yes.

Yes.

Yes. So congratulations on a pretty decent set of numbers given the circumstances. So my question is predominantly, again, I think someone has spoken about this. Now 55% of your revenues come from chemical, both basic and agrochemicals. So my question is, is there a possibility of some deferment in CapEx on the basic chemicals side, given that these are not essential commodities and a significant portion of it is dependent upon other sectors like automobile, aerospace, maybe paint, consumer durable, infrastructure constructions. So is there a possibility of deferment of CapEx from this side of the business on basic chemical and whether the orders from agrochemical and pharma space would be more than able to make up for this deferment in possible CapEx from the basic chemical and oil and gas and other segments?

Yes. I would think so. Yes, I would think so. You're right. There could be some shortfalls in some of these consumer chemicals, like you mentioned, automotive, construction and things like that. But again, when we were really looking at our specialty and agrochemical focus, very little of that went into these consumer chemicals, like paint and construction chemicals. It was mainly agrochemical and specialty chemicals. So I really don't see a drastic reduction there. If anything, I would see an improved kind of traction because a lot of the other products that were not being made in India now will be looked at, opportunities will come to India saying that China is somebody that we don't want to deal with, hence, can we look at moving some more molecules and products to you. And that's what we are seeing, and that's what we are hearing from some of the industry leaders that there's a lot of interest in dealing with Indian companies now.

Ladies and gentlemen, we'll take the last question from the line of Apurva Shah from PhillipCapital India Private Limited.

Sir, it's good to hear encouraging commentary for most of the segment. My only apprehension is towards the crude prices. So do you feel this current crude prices and looking at the like foreseeable future, that can impact any particular segment or maybe the Heavy Engineering segment?

Yes, that could happen because, as you know, oil and gas is something that's dependent on crude prices. However, saying that our exposure to oil and gas is minimal. Most of the orders that we have in heavy engineering also are really going to chemicals, specialty chemicals, fertilizer and maybe some petrochemical, oil and gas. But in that terms, we have not got any cancellations, nor have we got any kind of instructions from our customers to hold or slow down their orders. I think what orders have already been placed will probably go through, maybe the new investments will probably slow down a little bit.

That will be the last question for today. I will now hand the conference over to Mr. Tarak Patel for closing comments.

Yes. So thank you very much, everybody, for your questions. It's nice to see so many of you participate. And I remember when we started, we had like 40, 42 people. And today, I believe we have about 350 people who've logged on for this call. So thank you very much for that. I mean, again, we are trying to give you a very transparent picture in terms of what we believe the outlook is. Q4 was something that we did not expect. And hence, the guidance was obviously not in line with the actual numbers that came out because something like a global pandemic is not something that we had planned for. Q1 is something that we are working hard to get back on track. There will be a little bit of subduedness to that Q1 numbers, but I believe that the team at the factory has done an incredible job. We are motivating them. The morale levels are very high within the companies. We paid all salaries. We paid all the performance incentives for previous year. People are very happy to go back to work and people are willing to give a lot more to make up for the lost time. So I think a company like ours is in a good position to leverage this opportunity. As long as the market continues to be conducive and as long as the virus does not account for any more lockdowns, I think we are in a good situation. And hopefully, I can come back to you all with better results in the few -- in the next few quarters. But like I mentioned, the heartening part about our business is that we have visibility for nearly 70% of our revenue target, which is significant considering what the situation around the world is. Our focus is now on execution, which we are planning to put all our strength behind and then whatever additional orders need to be booked, I am sure we will manage that. So thank you, everybody, and look forward to talking to you again next quarter.

Thank you very much. On behalf of GMM Pfaudler Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.