GMM Pfaudler Limited (505255) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q3 and 9 Months FY '25 Conference Call of GMM Pfaudler Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Dhaval Rajput. Thank you, and over to you, sir.

Thank you, Nirav. Good evening, ladies and gentlemen. A very warm welcome to all of you into the Q3 FY '25 earnings call of GMM Power Limited. The earnings presentation was uploaded on the stock exchanges today and is also available on our website. Hope all of you had a chance to go through it. From the management, we have with us our Managing Director, Mr. Tarak Patel; our CEO of International Business, Mr. Thomas Kehl; our CEO of India Business, Mr. Aseem Joshi; our CFO of International Business, Mr. Alexander Poempner; our CFO of India business, Mr. Manish Poddar; and our Compliance Officer, Ms. Mittal Mehta. We will give you a brief overview of the performance of the company, after which we will get into the Q&A. Before we begin with the overview, a brief disclaimer. The presentation that was uploaded on the stock exchanges and also on our website, including our call discussions that will happen now, contains or may have certain forward-looking statements regarding our business prospects and profitability, which are subject to several risks and uncertainties. The actual results could materially differ from those in such forward-looking statements. I would now hand over the call to Mr. Tarak Patel to provide an overview of the performance. Over to you, Tarak.

Thank you, Dhaval. Good evening, everybody. Let me just start with a quick recap of our financial performance. So our revenue for this quarter was stable at about INR 801 crores, and EBITDA was up 3% compared to the previous quarter. EBITDA margins improved slightly to 12% compared to 11.6% for the previous quarter. What is happening is that our Q3 order intake was also quite strong at INR 798 crores, up 5% compared to the previous quarter. And on a 9-month basis, our order intake is up 14% compared to the previous 9 months. Order backlog stands at INR 1,740 crores, up 7% compared to December 31, 2023. Our opportunity pipeline remains stable across geographies and the product mix continues to evolve. In terms of the general market outlook, we still believe that the chemical industry, which forms a major part of our order intake is a bit slow. This is driven mainly by the slowdown in the agrochemical industries. However, we do hear now that there is some volumes that have returned. Margins still remain under pressure, but the outlook remains a little bit more positive than it was 6 months ago. We do believe that over the next couple of quarters, we would see some investment coming back in the agrochemical space. In Specialty Chemicals, we do believe also that this will continue to grow and invest. We have seen good traction in this space, and we believe that this will also continue to have a good amount of investment, which would then lead to investments that would turn into order intake for us. For the pharmaceutical industries, generally, it has been quite positive, both in India and internationally. We've seen some traction in South India pharma, mainly in Hyderabad, where people have added significant new capacity to cater to either CDMO or the exports market. The future outlook, we still would like to be a little bit conservative. We do believe that the worst is behind us, but I think there is still a few more quarters before we see a full turnaround in both the chemical and pharmaceutical industries that we cater to. As we look forward, I think one of the main learnings from management over the last couple of years has been that maybe as a company, we are too focused on chemical and pharma. And with the cyclicality that comes with these markets, diversification becomes an important part of our strategy, diversification not only from the point of view of new products, but also new industry segments that can bring double-digit growth back to what we aspire to have. We also have been working quite diligently on our cost structure. We have a couple of projects that we are working on here in India. Internationally also as well, we have looked at rationalization of manufacturing footprint. You will see some update, and you will see some update in the earnings presentation where we have rationalized glass line capacity in Europe and in India, and I'll talk a little bit more about that as we go forward. With that, I would now like to hand it back to Dhaval and then Dhaval, please kind of open it up for Q&A.

Thank you, Tarak, you may now open the line for questions. Thank you.

Thank you very much we will now begin the question-and-answer session. [Operator Instructions] First question is from line of Jaiveer Shekhawat from AMBIT Capital.

It's sort of heartening to see that your India business has seen an uptick in revenues and margins almost after like 6 quarters of consecutive decline. So my first question is on that. What's leading to that? And have you actually seen any pickup on the jelly side of things? Or is it largely on non-Gey business, which is doing the heavy lifting here?

Jaiveer, this is Aseem. I'll take your question. So yes, we've been talking for the last couple of quarters about slowdown in our chemicals business and which affected the core glass line product line that we serve. Now the reversal of the increase in backlog and increase in revenue margins has come on the back of 2 things. One is the flattening of the decline in glass line. So we have sort of stabilized and starting to grow both volumes and pricing in glass line, but also the actions we have taken to improve our cost position in our business. Furthermore, the backlog and our focus on diversification has resulted in an improved backlog in our non-glass line business, particularly in our mixing business, which is an area of focus for us, but also in some of our heavy engineering and solid liquid separation product lines. So overall, we believe our strategy is working and the worst is behind us, and we expect to continue to grow from here.

Sure. And could you highlight what has been the kind of decline that you have seen in this quarter versus, say, last few quarters on the GLE side of things?

No, I said we -- I did not say there's a decline in GLE. I said GLE has declined in the past. It is now starting to recover, both from a volume and pricing standpoint. Because my question is, if you see on a Y-o-Y basis, your stand-alone business is still down 8%. So I'm just trying to see because I'm sure it must be the GLE, which has been sort of struggling as compared to your other businesses of mixing and then the other businesses.

Exactly. So I think a couple of things have happened in GLE in India. One, like Aseem said, volumes have improved. So last couple of quarters, we've had improvement in order intake in Glass line. You would have seen maybe a year ago, we had 2 bad quarters where business was very slow and that impacted the backlog and then obviously, Q1 and Q2 of this financial year. But having said that, Glass line orders, the volumes have increased as well as pricing has also improved a little bit. Plus what we also have done, and you must have seen is that we have now moved all production to our, the Gujarat facility. There was no point having 2 facilities running at 60%. We said let's move everything to 1, and then you have better absorption of cost as well. So that's something that we will also see in the coming quarters where our cost structure in the Glass line business is now a little bit more efficient than it was a few quarters ago.

Sure. And on your order intake, if I see the quarterly trends on a Y-o-Y basis this quarter, there has only been about a growth of 6 to 7 percentage across both the India and international business versus about 18% to 20% that we saw during the first half. So has there been moderation in your order intake because that sort of conflicts with your earlier opening commentary there? Or is it largely because of the GLE side, which continues to struggle?

No, I think order intake has been pretty stable. Again, it's not back to levels that we had maybe a couple of years ago. But from where we are -- and again, keep in mind that we were a glass line-focused company where most of resources and bandwidth was focused towards getting glass line orders. And when that orders dried up, we had to find new opportunities in non-glass line and nonchemical and pharma industries to get these orders. Some of these will take a little bit longer, but we have seen good traction in heavy engineering, where we made a lot of breakthrough in oil and gas, petrochemicals. We've seen a lot of improvement in mixing where we made a lot of breakthrough in metals and minerals. In Evlon, our U.S. business, we've seen a lot of improvement there through the semiconductor industry. So some of the diversification strategies that we had kind of put in place are now kind of bearing fruit. And all in all, I would say that even though it might be a few crores or a few points lower than previous order intake, I think it's still stable and it kind of adds to the backlog. But again, like you rightly said, order intake is something that we are being aggressive about to create backlog, and we are trying to create both glass line as well as non-glass line backlog. Now if the glass line business were to turn and improve, those numbers will change quite quickly. But as of now, like I said, I still feel there is maybe a couple of quarters before we see some of the new investments, especially in agro, the chemicals that will come back.

Sure. My last question is on the international business. On a sequential basis, we have seen a slight decline in revenues. And over the last year, we have seen a lot of announcements, especially from chemical dams about capacity shutdowns. So how is the situation currently? And how do we get the confidence that the worst is behind us, especially for the international business, which is largely dependent on Europe?

So I think on the international business, I think that you obviously will see a little bit of slowdown. It will continue a little bit longer than what we expect in India. What we are trying to do is rationalize manufacturing to make sure that we take the cost out. We have certain initiatives that we believe will add a lot of value. One of those initiatives is our strategy, which we have now executed the investment agreement. So we plan to move manufacturing. We've already moved a few orders have already been manufactured in Poland and the quality levels have been fantastic, and we expect that to kind of grow over the next few quarters. But there's a clear push for us to move manufacturing from high-cost Western countries to lower cost European countries and maybe come to India as well. We've also kind of rationalized our U.K. manufacturing footprint. And now we believe that having that no longer in the mix will also maybe improve efficiencies in Germany and Italy. And we hope that the glass line business again internationally also will improve over the next few quarters. Again, we're being aggressive in the market, but there is a general slowdown, and we have to be aware of that.

Next question is from the line of Yash Goenka from Aura Capital Advisors.

Okay. Your stand-alone services revenue have shown a strong uptick. What is the impact of this uptick in the margins, if you can quantify? And how do you see this going forward?

So let me talk about services sort of more broadly. You would have -- you will recall from previous calls that services -- growing the services business is a priority for us in India. Services is about 35%, 40% of our international business. And in India, we aspire to grow that from the single digits that is current year. Now to that end, we have made organizational changes and systematic changes within the business to improve our performance of services. And I believe that is beginning to yield results. Now of course, this will take some time, but last quarter performance was heartening, and I expect we should only continue to grow from there. [indiscernible]. Specifically, I think numbers will be difficult to aspire at this stage. But as you know, services generally has been having a much better margin versus the original equipment. So this should help us on a sustainable basis as the mix improves towards the services, the margin profile should improve.

Okay. And in your initial comments, you had commented about demand from pharma segment in Hyderabad region, but you've shut down the plant there. So -- and you also said that you will throw some light about it in the call ahead. So can you talk about it? Yes, let me add. So yes, correct. We had a small -- we have a small factory in Hyderabad that we've opened up, I guess, about 3 -- a little over 3 years ago. Sorry. We had acquired from [indiscernible]. Now current demand on -- for Tobi glass line was such that it made sense to consolidate production in one factory. In Gujarat, we have a larger factory. So while pharma in Hyderabad is stable for us from a production optimization and fixed cost sort of leverage standpoint, it made sense to consolidate in Gujarat and that's [indiscernible].

Next question is from the line of Abhishek from Oakland Capital.

So I wanted to ask one question about the market presence of the Chinese players in the domestic market. So how big is that presence in GLE and non-GLE both markets?

Okay. So I'll take it, Abhishek. This is Aseem again. Look, in the glass line business, we really don't see a whole lot of Chinese competition in India. Glass line equipment is sort of critical to a customer's process. It requires service and support. And therefore, all over the world, people generally buy from local manufacturers. And therefore, GMM Pfaudler has a local presence in manufacturing in every major manufacturing zone, so U.S., Europe, India and China. So we don't anticipate that to change significantly. Yes, there's always a few examples of -- if you pull the import data, you'll get a few examples of people pulling -- buying glass line equipment. But generally, there's very few and the experience of most people who have tried that has not been great. So glass line, I'll leave that story there. I think on other equipment, non-glass line, you'll occasionally see competition from China or other countries. For example, in mixing in specific applications, there are some Chinese competitors. But by and large, I think we are well positioned as GMM Pfaudler with India manufacturing for all our products -- for almost all our products and with the benefit of application expertise and engineering expertise from the world over. So we feel like we are well positioned to take on competition wherever it comes.

Okay. And I have one more question about the company's product differentiation in non-GLE segment. So what differentiation company is providing in non-GLE segment products? And how does the company plans to gain the market share in non-GL going forward.

So that's a pretty broad -- it's a very long conversation to be honest, because we have a broad range of non-glass line products. So I'll give you the sort of 20,000-foot view and of course, a further conversation can be had. Look, in every product line that we have entered, our expectation is to have some technical differentiation with regards to our competition. So that's true in our mixing business. It's true in our filtration and drying business, it's true in our membrane business in Italy and it's true in our sealing business in Germany, right? We have differentiated products, and it's up to us to sell that value. Now there are some businesses where the differentiation may be a bit harder. So for example, in heavy engineering, on a product basis itself, the differentiation may be harder. However, we differentiate there in terms of quality and delivery. We have a near 100% delivery record, on-time delivery record in heavy engineering, which is something that customers put a lot of value on, right? So we have given a lot of thought to where we can differentiate. And while it's product features in many cases, there are other non-product features like quality, delivery and in some cases, cost that where we can. So we feel we are well positioned in each of these.

Yes. But so what are your plans to gain the market share going forward? So are you planning to sell the products as a package?

No. So I think there's a couple of things that you should understand here. Some of these products go into completely different industries. So there is no synergy between chemical and pharma and oil and gas and petrochemical. So for example, in oil and gas, we are talking to maybe a Reliance or Adani, while in chemical, we are talking to Garda, SRF, Decade and in pharma, we are talking to [indiscernible] , right? So each customer and each industry vertical has its own set of requirements. Yes, there are some kind of requirements that are cross or can be kind of cross between these different verticals. But generally for each vertical that we operate in, the selling and the USP is kind of different. So for example, in heavy engineering, we are selling that listen, we can handle 120 mm thick materials, or we can do titanium or we can lift 200 tons of weight. So those are the differentiation. In glass line in chemical, it could be the life of the equipment, the corrosion of the glass and things like that, right? So for every product that we have and then maybe in filtration and $0.10, it could be the drying time versus somebody else's drying time. So if your batch time is 12 hours, I can make it 8 hours. So there are very different requirements for each industry segment, and we have to kind of cater to the specific needs. And that's why the focus for every industry is different.

[Operator Instructions] Next question is from the line of Sagar Shah from Spark.

First of all, congratulations for at least a better set of earnings actually than what we have seen in the last almost like more than 5, 6 quarters. Now I had a couple of questions. My first question was actually on the global international business actually. On the international business, my question was on the standalone, we have done very well, almost 14% growth that we have clocked sequentially. But on the global business, still we are falling back actually. And so what I wanted to know that are we seeing a decline as far as the global glass lining business is concerned and that is being held by the non-GLE businesses? Is that a fair understanding even right now?

This is Alex. We have some -- as stated before, there are some markets where, in fact, we have some headwinds, or which are light. This is especially China. And in China, we have a strong glass line business. Therefore, we see it, it has an impact. However, we also have other units which are performing well, and this is especially the non-glass line business. So we said we expect, as Tarak mentioned in the beginning, that the next quarter remain more or less as the last were. So there are some ups and downs, but the long trend, at least we see a positive signal and going upwards again.

Because what the real concern was in spite of having a very robust order book, order inflow of almost INR 1,600 crores in the first 2 quarters, still we had -- on the consolidated front, our revenues were very flattish sequentially. So that is why I wanted to know that what went wrong exactly?

So I don't think anything went wrong because some of these orders do take more than 2 months, 3 months or one quarter to get shipped out. Some of the large orders that came in are systems orders, and those system orders take about a year's time to be shipped out. So again, like I've mentioned in my opening statement, the product mix continues to change. And when you think about orders, don't only think about glass line because then you're doing yourself a bit of it's not only glass line that drives this company. Glass line used to be a major part of this. But going forward, I think glass lining is a stable business. It is a market size that will not grow significantly more, and our market share in glass line is 50% to grow market share also is tough. You need to consider now that a lot of the growth is going to come from the non-glass line businesses and the new verticals that we are entering into. Glass line remains important, both from an OE perspective, but also from a service perspective and services continues to be an area where we continue to focus and grow. So coming back to your question, we had large order intake of big system jobs in the U.S., especially, maybe close to $60 million, $70 million. And that's something that will take time for it to kind of be executed and shipped out because these are long gestation periods. There's a lot of engineering, there's a lot of manufacturing and a lot of support and service that goes into the start-up of these large systems. So that's something that will come. And again, like I said, this year, the focus is to have a stable year and build the backlog so that next year is a strong foundation to start and then start from Q1 and have good execution throughout the year.

So my second question was regarding to the margins. In this quarter, sequentially, our margins improved actually by 300 bps on the consolidated level and even on the standalone, we did very well on the margins. Now what my question was that this is obviously because of the cost rationalization efforts that we have taken and maybe the better product mix. But going ahead, going by the order backlog that we have, going by the improved outlook as what Thomas sir said that by Q1 our investments from the agrochemicals will also see some sort of traction. So our margin improvement journey will still continue in FY '26 and FY '27? Or you see these kind of margins are also the same in the next 2 years?

So I hope our margin improvement story continues for really a longer, longer period of time. But again, I would just caution you to think about, as I said, things are looking better. Things are looking more positive. Some volumes are coming back. Prices are improving. But again, if you ask me, are we out of the woods yet, I would still be a little bit more conservative. I think it's a little bit of a wait-and-watch approach. We are hearing positive signs, but really for it to translate into actual order intake may take a little bit longer than expected. You know very well, and I'm sure you also kind of look into a lot of chemical companies and pharma companies, and I'm sure their promoters are not announcing large CapEx plans now. Indian promoters like to see visibility when it comes to order intake or having clients kind of give them that assurance before they really invest in the next round, right? And what we've been hearing from the big chemical companies and agrochemical companies that they do believe that May, June of this year, they would start looking at new investment again. Now if that gets pushed back by 2 quarters or a few months, I don't know. But all-in-all, I think there is more positivity. And that's really -- I just hope that the market improves because the cycle has been a tough cycle for everybody. And I think all companies are now looking to kind of reinvest and start their growth story again.

Sure, sir. Just last one from my, just a data keeping question. What is out of our total revenues, how much is it from industrial mixing in this quarter and for 9 months FY '25?

Mixing, I think Manish 10% to 12% is the number that we are trending towards. And because it's a focus area, so definitely percentage should improve over [indiscernible].

Next question is from the line of Rupesh from Intelsense Capital.

My question, sir, is, can you give end industry-wise, maybe our Top 3 or top 5 industries and the percentage in the revenue?

So I would say right now, about 70% to 80% of our revenue comes from chemical and pharma. maybe 70%, I would say now. I think those are the 2 key ones. And between chemical and pharma keep switching. Those a time when chemicals, I mean, pharma was higher. But I think the last couple of years, we've seen chemicals because of the agrochemical boom and the specialty chemical boom overtake pharma. So those are the 2 key industries we cater to. I think the next big one would be oil and gas/petrochemicals here in India, and that's a growth trajectory for us. And then with the mixing play that we have got in, we have a much wider range of industries that we cater to. And there, we have, let's say, metals and minerals as a key industry. We have wastewater. We also have paint and the like also as well there. And then lastly, with Elon, we have semiconductor as well. So quite a few range, but these are the big ones that you could kind of say that this is really where the growth is going to come from. And like I mentioned, chemical and pharma and it's reducing our exposure to these segments is reducing. And I would say maybe in the next couple of years, it would be down to 50%, right? Because the real growth is going to come from these other industries for 2 reasons. One, they are much bigger industries and 2, our market share in those industries is very, very small, right? So the ability to grow quickly and the ability to grow profitably is much, much higher in these new industries.

Okay. Okay. So sir, the reason to ask that question is whatever CDMO boom, whatever GLP boom, whatever you are seeing in Hyderabad, then maybe it will spread to other parts of India. But is that enough kind of to offset whatever toughness is there in agri market? And can we still grow a healthy 20% kind at least in domestic market?

On glass line?

Overall...

So I think chemical and pharma alone will not give you 20% growth. I don't think so. There is definitely products that we have that go into chemical and pharma, and we need to improve market share, but I don't think 20% growth is going to come from chemical and pharma alone. We will have to look at new avenues such as oil and gas, petrochemical. And that's why this year also, if you see a lot of the shortfall coming from pharma and chemicals, especially agrochemicals when you have 3 customers that account for nearly INR 300 crores, INR 400 crores of business that kind of just vanishes overnight, you need to replace that INR 300 crores, INR 400 crores with something else. And we've managed to do that. So in spite of the slowdown, we are still maintaining the same levels of revenue where other companies might not have been able to do so. And this new revenue has come from new areas such as oil and gas, petrochemical and the like, right? So we've been kind of lucky. And I think as management, we are quite clear that over time, we need to reduce our exposure to chemical and pharma and at the same time, maybe put our resources and people and funds also to these kind of new growth areas.

Okay. Okay. That's clear, sir. Another question, sir, is do we -- I mean, I don't know, are you looking at biologics...

Little louder, please?

Am I audible now? My question is, sir, do you have technology or are you looking at biological space? I mean that -- I think the CapEx is there are much larger. And I think that part of the industry, pharma industry, I think, is going to change a lot in the next 5 years. So are we looking at biological reactors?

So yes, there's a lot of things that are always over the horizon in the industries we serve. Biologicals is one of them. We're certainly keeping abreast of the development there. We are engaged with a number of our customers in things like peptides and providing equipment for that. We've done that globally in the past and now in India, we're working with them on that as well. So the short answer is yes, we are in tune with what our customers are asking for. And we continue to expand our product portfolio where gaps may exist. We acknowledge some areas where new type of equipment will be required, and we will work to fill those gaps. We have -- this is probably the right time to add we have inaugurated a test center in [Bad], which is our Gujarat facility. This is a pretty significant investment for us. It mirrors the test center that we have in Europe and in North America. And it allows customers to come in and run trials of various sorts of reaction of filtration drying of asset management, things like that, of vin evaporation, various products that we have. They can run trials. And that helps customers gain confidence in their ability to get the outputs that they expect before they make a significant investment -- so that center is now live. We have customer trials that have already started, and we expect this will help us continue to grow our business in India and actually overseas.

Okay. Okay. And sir, my final question is, if I look at September balance sheet, our net debt is around INR 450 crores, I mean, INR 950 crore debt and INR 400 crores cash. But the net finance cost looks really high at around INR 70 crores, INR 80 crores kind of. So is it -- I mean, I don't know, is it due to ForEx? Or is there something else there?

Yes. So our net debt is less than 8% India and International combined, where something like 7.6 something like that. So rest is all about [indiscernible].

Next question is from the line of Shreya from Oakland Capital. the handset, please?

Yes, sir. So you had mentioned that you would be increasing the share -- you are focusing on increasing the share of the services business. So what kind of margin, steady-state margin going forward can we expect?

In the services business or generally...

The entire business, the overall margins, EBITDA margins, if you are -- if you could give some color on that?

So again, I would just maybe kind of put it slightly differently. I think the margin profile for this year is about 11% to 12%, and I think we would finish the year around there. I think we do want to improve margins for the next financial year. To put a number on it right now would be a bit difficult. Again, like I said, the markets need to start turning a little bit. volumes are increasing, but it will be premature for me to give you a number. The idea and the hope is to definitely improve EBITDA margin and EBITDA as the whole, I mean and also the volume of EBITDA for next year. Yes.

And maybe I'll just add. I think, look, on -- as management, we are focused on managing our costs better and product mix, et cetera. I think we have made through this conversation, you would have realized or recognized there's quite a few initiatives we have taken that will position us well when the markets come back, we're actually in a much stronger position to take advantage of that.

Yes. And just maybe to just reiterate for the group, some of the initiatives that will help us manage cost. I think in India, obviously, 2 clear ones would be the closure of the Hyderabad facility and obviously, the change of product mix between glass line and heavy engineering. Glass line volumes coming back with a little bit of price improvement will also help. Internationally, we have fallen, and we have now rationalized the U.K. manufacturing facility as well. So those are some of the initiatives that will obviously help us in terms of improving cost. We also have a McKinsey project that's ongoing just at the final stage where obviously there will be some help also there operationally to reduce cost there.

Just a little clarity I needed. your voice was not clear. So since we are using a manufacturing facility at Hyderabad, so are we considering divesting the facility or it's just on hold as of now?

No. So as of now, it's on hold. There is no decision on what we will do with this facility. As of right now, it just made a lot of sense to consolidate everything into one. So all your cost is in one facility, and you have better utilization as well. So it was driven only by a financial decision. If we find that there is more volume coming in or we find another product line that can be used or manufactured in Hyderabad, we would be happy to do so.

I'll just add one last point to what Tarak said. We continue to maintain a robust presence in the South market. We have a sales office we've had it for years. We have a service presence both in Hyderabad and in Vizag, and we have a warehouse that stops a bunch of spare parts and systems that our customers need. And we are the market leader by a significant distance in grafting in Hyderabad. So that will be something that we will definitely maintain.

Next question is from Raman from F Asset Management.

so my first question and that's my only question. I would like to kind of understand your thought process about consolidating manufacturing entity. So we've seen that you shut down the plant in Hyderabad. I would assume that since you have a lot of international plants, you may have a couple in the next couple of years, plans to consolidate the same. So what's your views on consolidating international operations, trying to see if you can get a much better manufacturing footprint, much better cost control other categories. What's your thought and I would like a 1 to 2-year longer kind of view because I've also seen that you released a press release about signing manufacturing facility in Poland, which seems to be one of the lower cost manufacturing countries in Europe. So what's your entire thought process about consolidating international manufacturing operations?

Yes. I think the vision is definitely to reduce manufacturing in high-cost countries, not only manufacturing, but even things like engineering and support and things like that. So we can definitely, and we are looking at lower cost options. Do keep in mind, for certain geographies, we still need to have a presence in those geographies, especially when it comes to glass line because these glass line vessels will need relining, they will need refurbishment, they will need support and service. So we need to have local furnaces. Maybe we don't need to have as many as we do currently. And over time, we will definitely look to ramp up India so that India can start supplying to the rest of the world. We also have Brazil and China low-cost manufacturing for glass line, and we continue to use and grow those businesses. So the real focus is to reduce manufacturing presence in high-cost countries like the U.S. and Western Europe. Having said that, we will still continue to have local teams in these geographies for support and service as well as for sales because front ending, the customer who is local still needs to have a local contact that he can deal with, right? But at the end of the day, the vision of management, at least the way that we would like it to work is that when you buy a GMF for the reactor anywhere in the world, you should not really worry where it is made, right? At the end of the day, you get the right quality, you get the right price, and you get the right time frame in terms of delivery, you should not really worry where this reactor is made. And that would be the eventual goal. Are we there yet? Not quite yet, but we are working towards that, and that's something that we will try to implement. Poland is the first start of this. Like I mentioned to you, we've already had 2 very successful orders being executed in Poland. We are now planning a third order also in Poland, which obviously is creating a lot of promise. And with things like this, once you have 1 or 2 good orders and they executed in good quality and good time frame, people themselves will kind of be more favorable to this, and they will start outsourcing automatically, right? And that's what we are seeing. Maybe, Alex, do you want to jump in and add something on our global manufacturing.

I could just add and what Tarak said that, in fact, our operational footprint, we will improve. So this is a clear focus of us as a management. And there will be some, let me say, more focus on center of excellence. Will there be more new manufacturing in India? Yes, this is a target. Do we have to keep some sites in Europe and U.S. just to ensure proper services. therefore, especially the focus on service business, maybe a little bit less on the new manufacturing. Yes, this is a target, and we are working there on the strategy and are confident that we achieve improvements there.

Got it. Got it. Very clear. Just one more question. Earlier you used to have like a 3-, 4-year plan laid out with what the clear vision for GM. I've not seen that happen over the past at least 1 year, 1.5 years or so. So is that something which is still in the process? Is it something which you are kind of throw it out to the investor community where you want to see maybe 3 years down the line? Is there any time line to that, if you can touch a bit on it?

Yes. So we were hoping to have something ready this year. But again, this year has been flattish. So we hope to have something for you in the next financial year. We are working on something. We believe that we are nearly 60%, 70% there in terms of just long-term strategy that we all have agreed upon. I think the smaller pieces of how we get it done over the next few quarters is something that we are still working on. There's a meeting planned among the top management group next month. So yes, we are definitely working on something. As you know, the Board, our investors, they obviously would like to have a clear idea in terms of what we are going to do. We would love to articulate our vision to the capital markets as well and then kind of execute that vision, right? Unfortunately, the market didn't turn as early as we would have liked. We would have liked to do it this year, but we need to kind of the idea today is to really focus on business, make sure that the year is stable. We are not losing market share. We're not losing money. And then obviously, at the same time, we need to work on the strategic plan, which is in process. And hopefully, again, I don't want to give you a time frame, but I'm confident that in the next financial year, we should definitely be able to articulate our vision to the outside world.

Next question is from the line of Deepak Mehta from Swan Investments.

Just wanted to check it out, if you can give some sense on the heavy engineering business, specifically, if I was to look from the order intake and order book perspective, I mean, currently, the order intake in the 9 months is up 13% at INR 242 crores. What would have been order inflow in the heavy engineering business and in the other businesses? And if you can also throw some light in terms of the revenues, what has been the 9-month revenue in this business and how has been the margin profile? And also how is the bid pipeline is looking up at the current juncture? And from the export point of time, we were also looking to explore export market and where we stand at the current -- if you can give some sense about the heavy engineering.

So heavy engineering before Aseem just talked about the business and what we are trying to do and what we cater to. I think heavy engineering has grown significantly. It will grow again this year. It was a much smaller part of our total revenue. This year will be a bigger part of it. We don't share numbers right now 9 months. But even if you look at the 9-month numbers, heavy engineering portion is definitely much more than it was in the previous 9 months, right? And the growth that we are getting from heavy engineering would probably be double digit in any case, right? So that's a focus area for us. And maybe Aseem can speak a little bit more about the heavy engineering business and what our strategy is there.

Yes. So first, to your point, in the materials that we have released to the stock exchanges, you'll see the segmental overview, which gives you a sense for sort of how the breakup is around Technology Systems and Services. Heavy Engineering is part of the technology. Now -- our strategy in heavy engineering is quite clear. We want to focus on getting the right MOCs, which is sort of the right material of construction, focus on export orders and focus on the right kind of equipment. So I'm pretty pleased with the direction in which we are going. This is a business that we've run for about 3 years now, a little over 3 years, and it's grown very well, and it's a significant part of the India business now. The next phase of our strategy will be to focus on exports for heavy engineering. Using the Pfaudler network already, we have considerable exposure to the U.S., to some extent in the Middle East as well. But we are going to work to accelerate that to see how we can drive exports further in geographies close to India and also potentially to the U.S. given the likelihood of investment in manufacturing returning to the U.S. So engineering will continue to be a focus area for us and a big growth driver, I think, in the next 2 to 3 years at least.

Okay. And then just one bookkeeping question on the other income front in this quarter, that appears to be at INR 25 crores. If you can share the details about it, that would be...

Income gain you have a euro dollar depreciated was a mark-to-market. So these are typical fluctuations which you see in the side on the finance cost and other income.

Next question is from the line of Gopinath Reddy from PNR Investments.

We have competitive advantage, our own niche when it comes to glass line business. What kind of a know-how or advantage that we have in the new businesses that we are entering? Is it just our execution capabilities or anything else that we have already?

Yes. So I think I addressed this in some extent in a prior question, but let me just summarize. Any new product line or business area that we've entered, we believe we have some differentiation. Typically, it's in product features or some aspect of our manufacturing capability that allows us to differentiate in the market. For instance, in filtration and drying, we have proprietary designs and local innovation that's happening that is helping us differentiate and offer more advanced equipment to our customers and the standards that they get from other players in the market. In mixing, again, we have prior track record of serving various applications across the world, be it water, food, mining, minerals, chemicals, pharma, paint, the list is very, very long. And that's an advantage we have gained because of the presence of Mix and MX Pro with the acquired company in our portfolio, right? And we see the benefit of that in India already. And similarly, in the international business, they are seeing the benefit of having India manufacturing right. So again, it really depends on each product, but we, as management, are certainly focused on ensuring that there is differentiation in each of our business.

I think just maybe to add to that, I think the question that you were asking, I think GMM for the brand name that is associated with the company, people do come to us for solving problems that they have. They look up to us in terms of completing the project in a timely manner and also the financial stability that we have today. If you take a large project, it's not that we're going to run out of funds halfway through. So the large heavy engineering project with the Reliance and Adani of the world, they would obviously go after and go with respected professional companies, right? So we stand by our products, and we make sure that we deliver what we promise. I think that is something that also will help a lot of customers to kind of try some of the newer products that we are now entering into.

The next question is from the line of Shreya from Oakland Capital.

Sir, my next question was, I'm aware that we are not giving the breakup of our margins, EBITDA margins segment-wise. But if you could give me a sense of our non-glass lining and glass lining margins comparable and whether heavy engineering margins are a little on the higher side. Any sense on the margins, how should we look at it?

So it fluctuates, Shreya, but I would say as a group, our aim is to have a 15% margin profile across the businesses that we operate. Some cases in down cycle, it will be lower, some cases it will be higher, but that would be the general trend for you to kind of go. I don't think we get into any product line with lower margins. There could be some products within the portfolio that have higher margin profile, especially the services part of it. But for our technology's product, which is basically things that we manufacture, equipment that we manufacture, I would say a 15% margin would be the average or...

So is it fair to assume that the heavy engineering margins are somewhere near the glass lining or the other equipment as well?

Yes, I think they all are kind of similar. So you can do the math -- if we are at a 12% margin, I would say margins across the board will be similar. Glass line just today, because of the slowdown in the market and the competitive pressure that we have has seen a reduction. But if you look at the good times, I would say all these businesses have a pretty strong margin profile.

As there are no further questions, I'll now hand the conference over to the management for closing comments.

Thank you, Nirav. Thank you, everyone, for joining us today. It was a pleasure interacting with you, and we look forward to many such interactions during the course of the year. Take care and see you soon. Thank you.

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