HLE Glascoat Limited (HLEGLAS.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the HLE Glascoat Limited Q2 and H1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Vidhi Vasa. Thank you, and over to you, ma'am.

Good afternoon, everyone. Welcome to the Q2 and H1 FY '26 Earnings Conference Call of HLE Glascoat Limited. Today on this call, we have Mr. Aalap Patel, Executive Director; Mr. Harsh Patel, Executive Director; Mr. Naveen Kandpal, Chief Financial Officer; and Mr. Nilesh Ganjwala, Senior Adviser. This conference call may contain some forward-looking statements about the company, which are based on beliefs, opinions and expectations as of today. Actual results may differ materially. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. A detailed safe harbor statement is given on the company's investor presentation, which has been uploaded on the stock exchange as well as company's website. With this, I hand over the call to Mr. Aalap Patel for the opening remarks. Over to you, sir.

Thank you. Good afternoon, and a warm welcome to all participants. Thank you for joining us today to discuss the financial and operational performance of HLE Glascoat for quarter 2 and H1 FY '26. I hope everyone has had an opportunity to go through our financial results and the investor presentation, which have been uploaded on the stock exchanges as well as on the company's website. We appreciate your continued interest and support as we share our performance highlights and business updates. We are pleased to report that FY '26 continues to progress well with Q2 delivering healthy growth across key metrics. The strong performance during the quarter reflects robust demand, operational discipline and consistent execution across our businesses. HLE Glascoat remains a leading manufacturer of specialized processing equipment serving critical applications primarily across the chemical and pharmaceutical industries. We operate in high barrier to entry segment, supported by a diversified order book, strong clientele and modern manufacturing facilities of international standards. Our sustained performance is a testament to the trust placed in us by our customers and the continuous efforts of our teams to uphold excellent innovation and reliability in every project we execute. The quarter marked an important milestone for HLE Glascoat as we completed the acquisition of the Omeras Global business through our wholly owned step-down subsidiary, HLE Surface Technologies GmbH, along with the shares of Omerastore GmbH. I would also like to highlight that the acquisition of Omeras business was entirely funded through internal accruals without any external borrowings. This reflects the inherent financial strength of the company and our prudent approach towards expansion, while ensuring that the balance sheet remains robust even as we pursue strategic growth opportunities. This strategic acquisition marks our entry into the glass fused steel products and panels business, opening significant global opportunities in sectors such as biogas digester systems, large storage tanks and architectural facade solutions. This addition meaningfully expands our product portfolio, diversifies our revenue streams and positions us to participate in emerging growth sectors globally while leveraging our engineering expertise and brand strength. Further, we are pleased to inform you that the scheme of amalgamation of Kinam Enterprise Private Limited with HLE Glascoat Limited has been approved by the Honorable NCLT, Ahmedabad Bench, effective 7th August 2023, being the appointed date. This consolidation marks the completion of the formalities towards achieving the 70% ownership of the Kinam business as intended. Our order book remains robust at around INR 722 crores as on 30th September 2025, providing strong revenue visibility for the coming quarters. We continue to witness steady inquiries across all business segments, reflecting the strength of our offerings and growing market acceptance. The Thaletec range of glass lined products continues to receive encouraging responses from reputed customers across India, reaffirming the value and quality of our solutions. We are also observing encouraging demand trends in our end user industries with increased capital expenditure, spending and favorable market sentiment driving new project inquiries and repeat business. As we onboard new customers and they begin using our advanced engineered and tailored products, we are able to demonstrate our technical capabilities and reliability, which in turn leads to repeat orders and expanded relationships. Our comprehensive product portfolio enables us to offer end-to-end solutions, making HLE a one-stop partner for many of our clients' diverse process equipment needs. This approach of introducing, proving and scaling continues to drive our customer engagement model successfully. I will now hand over the call to our CFO, Mr. Naveen Kandpal, who will take you through the financial performance for the quarter and the half year. Thank you, and over to you, Naveen.

Thank you, sir. Good afternoon to all the participants. I am pleased to share our financial results for the quarter and half year ended September 30, 2025. The company reported consolidated revenue from operations of approximately INR 351 crores with a growth of 48.8% compared to Q2 FY '25. EBITDA of INR 40 crores, witnessing a growth of 13.2% year-on-year from Q2 FY '25 with an EBITDA margin of 11.4%. The company earned profit after tax of around INR 14 crores with a PAT margin of 4%. For H1 FY '26, our revenue grew by approximately 37.1%, rising from INR 463 crores to INR 635 crores. Our EBITDA for H1 FY '26 stood at INR 80 crores against INR 59 crores, thus registering a growth of 35.3% year-on-year and EBITDA margin stood at 12.6%. In Q2 FY '26, our filtration, drying and other equipment segments grew by 111.1% compared to Q2 FY '25. We reported a revenue of INR 137 crores in comparison to INR 65 crores in the corresponding quarter. Likewise, for H1 FY '26, our revenue increased by 88.5% in this segment. Meanwhile, our glass line equipment business generated about INR 157 crores of sales in Q2 FY '26 compared to around INR 144 crores last year same quarter, reflecting a growth of 8.9%. The heat transfer equipment segment showed a revenue growth of 124.8%, contributing INR 56 crores to our sales for Q2 FY '26, up from INR 25 crores in Q2 FY '25. Likewise, for H1 FY '26, our revenue increased by 105.5% in this segment. During the quarter, margins were impacted because of higher material costs caused by certain high-value orders which were accepted in the previous quarters at very competitive prices. Initial losses incurred at the newly acquired business at HLE Surface Technologies GmbH Germany. These are factors which have led to this transient impact on the margins for this quarter. The long-term outlook remains encouraging. Our debt reduction strategy for the full year remains unchanged from what we had outlined in the previous earnings con call. We continue to prioritize efficient working capital management, disciplined capital allocation and internal accrual funding to further strengthen our balance sheet. The focus remains on improving leverage ratios, reducing finance costs and maintaining adequate liquidity to support our growth plans while ensuring financial prudence and long-term sustainability. Thank you. We now look forward to taking your questions.

[Operator Instructions] The first question is from the line of Dhaval Shah from Girik Capital.

My question is on the glass lined reactor segment. So first of all, we have -- overall, the working capital has improved very well. The receivable days are back to the -- the FY '22 levels. While you mentioned some orders were taken at a competitive pricing. So does it mean that we have bottomed out in terms of the pricing pressure in the industry? And going forward, we should see a healthy recovery in the margins for the glass lined segment. That's the first question. Second question is on heat transfer equipment division. So this year, we are executing a very large order, which is giving us a very strong revenue growth. Going forward, with this one large signature order which we are doing for oil and gas, how does it open up our entry into the larger segment for heat exchangers and compete with likes of Anup and other players in the industry? And third will be overall, what will be your outlook for the reactor segment given [ spec chem ] is doing well, companies are announcing CapEx. But in Q2, so far, what commentary we have heard regarding agrochemical, things are not looking that great yet. Chinese pressure is still there. So in light of this, how would be your overall glass lined reactor volumes you expect to do? These are my 3 questions.

Thank you for your questions. On the glass lined reactor margins, one of the reasons why the margins look a little diminished is predominantly also because of the initial losses that we've incurred at the new acquisition, which is Omerastore -- Omeras and Omerastore business. As you are aware, we had indicated that this is a business which is going to take about 2 or 3 quarters to build and stabilize. And those losses have also been reflected in the glass lined business segment. So almost about INR 3.6 crores of loss -- EBIT losses have been accounted for during this period, which are adjusted against the glass lined segment. So that probably explains the main reason why the glass line margins overall look a little -- I say little. The margins otherwise continue to be stable. The India business still is building its way up. As we had mentioned in the last call, we believe the -- looking at the visibility of the order book for the India glass lined business, numbers will look much better over the coming quarters is our confidence and expectation. That's where we are on the glass lined business. On the heat transfer equipment, yes, you're right. We have had a large oil and gas order, which we had talked about earlier. This order has very largely already been dispatched and this now adds to our track record in the oil and gas segment. We are actively in conversations to get similar and even larger orders in this segment, both in India and offshore. This is a business that takes a little longer time in terms of the lead time for getting orders. But the initial response is very, very positive. And we believe that we should become a strong player in this segment over the next year or 2. We would like to give us that much time to stabilize against the existing players in the market, some of whom you mentioned. For the overall outlook of the business, I would request Harsh Bhai to kindly respond.

Yes. So I think you rightly mentioned that the pharmaceutical -- so API industry is doing well. We have good orders from the API segment in the last couple of quarters. The spec chem industry, while not back -- fully back on track, I would say, is also doing better. And I would agree that the agrochemical is still under pressure. The overall sentiment in the market; however, is encouraging, except that after August, because of the situation that is panning out in the U.S. with regards to tariff on India. Some decisions or some players have been going slow in terms of capital investment. But other than that, the situation is encouraging overall, except for agrochemicals, as you mentioned.

Got it. And sir, with the kind of investments MNC Pharma are announcing in U.S., also some in Europe. So how does it help Thaletec? Have we seen traction like you see Pfizer, Eli Lilly and Novo and all of them are -- AstraZeneca, all are investing large amount of money in the U.S., also Europe and some in India. So how does it help Thaletec -- definitely, we would be looking at the large opportunities and by now might have got some business as well. So can you throw some light on that?

Yes. So yes, that's a good question. So yes, some of the players have announced or rather all of the big players have announced large investments in U.S. and also some in Europe. However, so far, only a few of the so many announcements are really going off the paper. But overall, Thaletec is very well positioned in the U.S. As you know that we have now been renewing our efforts in U.S. in the last 2, 2.5 years, in the U.S. market. And we have a track record now, much bigger track record, I would say, than last time. And that also with the -- with a very good company, one of the leading companies in the U.S. So that keeps -- puts us in a very good position. We have also expanded our team, and we are also in the process of adding a few more service people in the U.S. So we are, from Thaletec point of view, very well positioned to capitalize on all these opportunities that we hope will come about.

Got it. And sir, last question on the glass lined margin. So if we add up -- still we covered around 5% EBIT, if you add up the loss, INR 3 crores, INR 4 crores loss of Omeras. So if I were to understand by when do you think we'll be able to be back at low -- like a near double-digit kind of margin which we used to do before. So any thoughts on that?

I think yes, as we had mentioned the last time, I think the EBITDA margins are currently in the 8% to 9%. EBIT margins are in about 5% or 6% level for the glass lined business other than Omeras and Omerastore. We expect to be in double digit for the entire glass lined business as a whole by quarter 4.

By quarter 4. EBIT level, EBIT level double digit?

At EBIT level, double digit, that's correct.

Okay. Maybe early double digit like in the March quarter...

I think it is unlikely to be high double digits in a hurry. Obviously, these businesses take a little time. We are -- the Thaletec business is nice and stable. It's the India glass lined business, which needs to be built up, built up from a perspective of getting it back to high utilization levels, which looks very positive from the current order book and the order book visibility. So I think from that perspective, we are very confident that quarter 4, we should have double digit on an overall basis.

The next question is from the line of Ajay from NIVESHAAY.

Sir, is it possible to give the breakup of the order book across segments or even like maybe our subsidiaries or is it possible to give that breakup? And also just one clarification. This is consolidated order book, which also includes the Omeras order book?

So this is the consolidated order book. And the Omeras order book currently, as we said, is a very marginal order book, which is about hardly about $4 million, $4.5 million -- EUR 4.5 million, sorry. But that is an order book which is obviously built up and that's where all our efforts are. To give you a split of every order book, maybe we can share it with you separately. Of course, we have the splits with us. But suffice to say, the order book for the overall India business is a little over 5 months currently, which is very healthy. And for the Thaletec Germany and Thaletec U.S. business, it is in excess of 9 months, which is again very, very healthy.

Got it. Okay, sir. And like in the previous con call which we had like after the Omeras acquisition, the Omeras order book -- Omerastore order book was around EUR 7 million. So given the current 4, 5 minutes, so we have started to execute that order book, is it?

So in the first 45 days of operations, we have already delivered goods worth EUR 1.8 million. A small segment of the -- a small portion of the orders, we have actually canceled because we found them nonviable. So that's about EUR 0.5 million or something like that is what we've given up. And this was in line with our due diligence that we had conducted. So this is absolutely in sync with our overall plans.

Got it. And sir, we also had a pipeline -- a healthy pipeline of over, I guess, EUR 28 million for the Omerastore and so just wanted to ask 2 things on this, like given the 45 days of maybe execution which we have had at Omerastore are we facing any challenges? Or is it how we have envisaged things to go or things as per plan. So I wanted to ask one thing on how has been the execution over there? And the other on Omeras, like are we seeing any conversion of that pipeline? Yes, that's it.

So like you mentioned Omeras, at Omeras and Omerastore, we had a very healthy visibility of inquiries, which was in the tune of EUR 28 million 45 days ago, and that has only grown by a couple of millions as we speak today. However, in terms of conversion, we are still awaiting conversion of these inquiries into orders, partly because there are some fairly large projects in there. So whenever they convert, they will convert in one go. But also a lot of relationship building is currently going on with these customers as new management, which has just taken charge of the organization. So intense discussions, meetings with the customers are going on to kind of reintroduce ourselves and establish our credibility there. So the pipeline of inquiries is still healthy. But as you can imagine, for a brand-new business segment, there is some time which is required upfront to start converting these into orders. But the pipeline is still healthy, healthier, in fact.

Got it. And sir, one question is on -- again on the glass lined segment. Sir, I mean we have this acquisition at Omeras, which has impacted the margin, but even the stand-alone margins look a little bit impacted. And in the glass lined segment, majority of that comes through Thaletec, India, I guess, roughly doing around INR 30 crores, INR 40 crores quarterly. Majority of our stand-alone sales is the filter and dryer equipment. And with the steel prices being currently at like 5-year low, I just wanted to understand more on this segment, like I mean, what sort of other raw material like high-cost raw material, which we are mentioning in the con call opening remarks, which impacted this margin? And on the glass lined equipment, so other players like to name them, maybe standard glass, which is again into glass line and majorly serves the pharma market has been doing, I mean, north of 20% to 25% EBITDA margins. So one understanding which I wanted to ask from you is like the glass lined equipment, which maybe goes into the pharma sector has higher margins or it depends on order to order with maybe a spec chem player which may affect this margin? And what are our plans to build the Indian glass lined equipment business because we also have plans to introduce the Thaletec products to India. But I mean, if I look at our overall glass lined segment, I mean, given our quality of execution and everything. The segment still looks like we have a lot of room to improve over here. So I just wanted to know your thoughts on each of these, like on the glass lined segment. If you can maybe answer that in detail, that will help us understand.

Okay. So on the composition of glass lined sales, the India sales in the glass lined business is well in excess of INR 55 crores. It's close to INR 57 crores. And the India glass lined business is growing and on a quarter-on-quarter basis, we have grown at over 20%. So as I said, the Indian glass lined business looks to be on the right positive trajectory as we speak. The material cost impact that we discussed was not so much from a perspective of higher cost of material, but it was from a more competitive pricing that we had offered on some of these large projects that we have won in the past. And these projects are won across segments. So it's part of rebuilding glass lined business on one side from a volume perspective and also simultaneously getting business for the filtration, drying and other reactor businesses. So we have very large orders that we've taken from extremely reputed players and, of course, long-standing customers. And where I think consciously a decision was taken that this is in the best interest of building the entire business for the future. So -- and that's exactly what we've done. So the material cost increase is not due to increase in the cost of material, it is due to the pricing that we have taken. And that's exactly what I think Naveen Ji mentioned in his opening remarks.

Got it. And sir, just one thing on the same question, like the pharma glass lined equipment has higher margin because peers set to do north of that kind of margins, 20% to 25% EBIT margin. So does it also has to do anything with the regionality like because maybe we are present in the -- maybe the Eastern region on the Hyderabad belt where a lot of pharma companies are putting up that CapEx that gives them that regional advantage? Or maybe if you can help us understand the functioning of the industry a little bit...

So we are also very active in the pharma business. We are also active in the pharma business in the Western part of India as well as in the southern part of India. So we are quite conversant with the margins that are prevalent in this industry. The margins in the pharma industry might be somewhat better, but not dramatically so. And I think this is borne out by our historical performance and maybe the historical performance of some of our competitors. You mentioned a certain competitor and their margins, really, it's very difficult for us to comment on the performance of a competitor because I don't know what they are doing, and it would be difficult for us to comment on that.

Understood, sir. And sir, one final question on the Kinam. Sir, you mentioned that maybe we should look at it more of maybe 1, 2 years' time when we can maybe grow this into a larger entity. But already in last fiscal year, we did close to, I guess, INR 120 crores, INR 130 crores and this half year itself, we have crossed, I guess, INR 93 crores -- INR 93 crores, INR 95 crores. But this also includes that large one, oil and gas order. So I just wanted to ask more on the pipeline which we have for Kinam.

So the Kinam order book as of today -- as of September, sorry, is in excess of INR 100 crores. So again, Kinam order book also looks very positive. And this year is likely to see a substantial increase in top line and bottom line from the heat exchanger business.

But just on the pipeline, I was asking the current order book that gives a lot of confidence on Kinam. But anything on the pipeline which we are maybe in the advanced stages of conversion of that pipeline? Or will it be some kind of lumpiness which you should expect going forward in Kinam? So maybe on that, if you can maybe help us understand or comment anything?

Yes. So on the pipeline, see, as I think we mentioned earlier, have now created a track record on the petrochemical industry. So we are working with other companies also to bag similar orders. But right now, there is no real order book in that segment, but that whole segment is looking very encouraging based on what we have already executed. So the order book is largely from the traditional business that Kinam has been -- had been having. But as [ Nilesh ] bhai earlier explained, we are looking at this oil and gas/petrochemical business on a much longer-term horizon, and we are investing -- when I say investing not really money, but time and for certifications and all that is needed, and it will come about in the long run.

Maybe if I can squeeze in one more. On the Omeras EUR 1.5 million or EUR 2 million which we have executed, what sort of margins have we gotten there? Because from the details which we have given in the last presentation for Omeras, like the gross margins were quite healthy in the range of maybe 50%, 55%, but because of [indiscernible] execution period and labor expenses, the EBITDA margins were roughly around 4% to 5% kind of range. So I just wanted to know on that part for the Omerastore from our current execution, I mean, what sort of margins are we currently doing? Maybe if you can share that? And if not, like going forward, what sort of margin should we again expect there? It would be in the range what Thaletec was doing? Or should we expect that to be much better?

The margins are in line with what you said. We are having gross margins in the 50% kind of a range. So it is only about building the volumes to an optimal level at which level we should see healthy double-digit margins.

Healthy double-digit EBIT margins?

Yes, that's correct.

The next question is from the line of Vibhav Khandelwal from Laburnum Capital.

Just wanted to understand again on the glass lined business, right? We see that the growth has come down in this quarter, especially. What would be the reason you mentioned that you want to increase volumes and margins are a little low [indiscernible]. But in terms of top line growth, could you comment on what exactly is your outlook for the year and what exactly happened in this quarter and your outlook here for the [ JV ] business?

I think the JV business has shown growth in this quarter. I don't know -- you are saying there is no growth, but the JV business is showing growth on the top line even during this quarter, even quarter-on-quarter -- on a year-on-year basis.

It is showing maybe I just -- so what I want to understand is that if you look at the F&B business, the kind of growth that it is showing, similarly, how do we -- how should we sort of look at these results? How should we look at the sort of operating performance for both the segments? My understanding would be that broadly it's the same sort of industry. So the sort of performance -- top line performance would be similar, but there's some variation in it. So how does it happen? Is it because of competition? Or if you could sort of guide through that?

Yes. I think it's a mix of multiple things. I think we need to understand that in the filtration drying business, we are both the pioneers and the market leaders. So we also have a substantial technology, should I say, niche or differentiation with respect to the competition there. And hence, our growth in filtration drying reflects that. In the glass lined business, we are in the process of establishing our technology superiority and -- which is where we are seeing a substantial growth in both the inquiries as well as the order book pipeline. It is slightly a business of patience. As you know, we have been working very diligently to introduce the Thaletec technology products into the Indian market. We are looking -- we are seeing extremely good, should I say, traction on those kind of businesses. And this is something that is going to convert into growth, market share and margins, but it will take some time.

Understood. This is helpful. Okay. All right. But also what I wanted to understand is that you talked about the margins and [indiscernible] volumes -- to build up the volumes, you had a pricing decision. What I wanted to understand is that we saw at least in the past couple of quarters, the commentary and generally, the operating comments have increased in terms of the superior growth. But at least in the last year, the environment wasn't as great, but the margins were still sort of very high. So we would sort of expect that in sort of an up cycle when the overall demand is very healthy, the margins would be much better for [ GL. ] So are you seeing an uptick in competition like in this quarter, the last quarter -- in this quarter?

I think I would agree with you to the extent that, yes, the overall traction has improved. Margin improvement normally, as you are aware, reflects with a lag for the obvious reason that while orders booked today reflect in my profit and loss account typically 2 or 3 quarters down the line because we account for our sales only on dispatch. So typically, from the time you get an order to the time that it reflects on the P&L account is typically anywhere between 5 to 7 months kind of a lag. So the better margins that we are currently in a position to negotiate will reflect in the P&L only in quarter 4, which is exactly what I had indicated in my earlier answer. So you are right, I agree with you. Margins are looking up. But for it to reflect on the P&L account will be always with a little bit of a time lag.

And would you be able to offer any guidance in terms of growth and margins in addition to you offered some guidance in the previous conference call. But any update both the Omeras acquisition and the current demand and supply situation on a consolidated basis, how do you think FY '26 and FY '27 might be shaping up?

I think on the Omeras business, we do not have a guidance for this particular year, except to say that by the end of the year, we should be at breakeven or above because as we said, we will need about 2 to 3 quarters to stabilize and grow this business. Again, Omeras order book always comes with a much longer execution time line. Some of the larger orders that Aalap bhai spoke about have execution periods in excess of 1 year, 1.5 years. So typically, while we may have a great order book, the numbers will flow through in a slightly extended period of time. So we are very hopeful of getting to breakeven and above by the end of the year, which is where we are very confident of. There are multiple steps initiated for that purpose. On the business other than Omeras, I think our second half of the year should see improved EBITDA margins. We are expecting EBITDA margins for the overall business at about between -- roughly about 16%, which will be far more healthier than what we have declared in the first half. And the first half of this year, of course, has been substantially better than what it was during the first half last year. And this will probably be on the back of a better number, better top line as well simply because historically, again, over the last 2 decades, you would have seen that the second half roughly constitutes between 55% and 60% of our revenues. So we expect a similar trend to play out this year as well.

Anything for FY '27? I was asking if you would like to offer any guidance for FY '27?

No, I don't think we have a guidance for FY '27 at this point of time.

Suffice to say, I think we are very confident and we are preparing for growth going forward. Because FY '27, we are expecting Omeras to start contributing in a big way in addition to the other engines also firing away.

The next question is from the line of Vivek Patel from Ficom Family Office.

Firstly, why has the GLE segment's revenue and margin slowed down? And how can you counter this slowdown, which could actually be structural due to the size of the addressable market? And just beyond that, where are we seeing any large opportunities or scope for growth as both filtration and drying and the GLE segment has witnessed muted growth since FY '23. It will be helpful if you could share these in detail.

So as we have said a couple of times during this con call, the GLE margin expansion or rather rebuilding of the GLE margins for us is largely a question of rebuilding the volumes and getting the capacity utilization up. As Nilesh bhai also said, we have already started rebuilding the volumes and usually, the margins trail that by a quarter or 2. So really, for us, other than that, the key lever for further driving up the GLE business margin is the introduction and adoption of better and highly differentiated products, the way we do in filtration and drying. And for that, we are aggressively marketing and selling Thaletec products and solutions. However, the process of adoption of this better technology is, as you may understand, not overnight, and it happens as customers use new products, better products, see the benefits and then decide to use that as they go forward. So this process is very much underway. And as this process also continues, it would -- it should further add to recovery of margins in the glass lined business.

And what about opportunities for other areas, like heat exchanger, for example, or filtration?

Can you please elaborate what do you mean when you say other areas?

You spoke about expansion of GLE, the other 2 areas that we have, filtration and drying, which we [indiscernible] what is the scope of growth for both...

[indiscernible] If you look at the numbers our last year 12 months numbers on the top line at about INR 314 crores, these are the 12 months numbers. [indiscernible].

[indiscernible]?

I repeat my answer. The filtration and drying revenue for the whole of FY '25 was at about INR 314 crores. For the first 6 months of this financial year, the revenue from filtration and drying is already at INR 252 crores, which is -- if you were to just annual numbers on an equated basis, still represents almost a 60% growth in business. So that is obviously phenomenal. At the EBIT level, our EBIT for the year, last year from the filtration drying business was at about INR 36 crores, INR 37 crores. We've already crossed INR 35 crores in the first half. So obviously, even at the profitability level filtration and drying business is obviously doing extremely well. So we are well on track to hit all-time records both in the revenue as well as on the profitability side in the filtration and drying business. Coming to the heat exchanger business, the heat transfer business, our aggregate revenue for [ FY '24 ] was at about INR 122 crores last year. We are close to a little under INR 100 crores already in the first 6 months. So obviously, again, we are looking at growth in excess of 40% on an annualized basis in this one single segment. And similar is the story with the EBIT from this segment. So we are obviously seeing very good growth happening both in the heat transfer as well as in the filtration and drying business.

Secondly, in the Q4 FY '24 con call, it was mentioned that the expected peak revenues [indiscernible] Kinam were INR 450 crores and INR 300 crores, respectively, without any major CapEx. Where are we in that journey to achieve this peak revenue and margins? And what was the same for both in this quarter? And also, I believe there were some setbacks over here. Kinam, for instance, in FY '25, the expected revenue was pushed to FY '26. If you could throw some light on that?

Kinam, of course, FY '25 was the first year post our acquisition, first completed year. So we don't have comparable numbers for the previous year in that situation. However, in the Kinam business, the last year, there was a substantial focus on building capabilities for larger things going forward. And that was also something that we mentioned with respect to building capabilities and also including some new equipment installation required to build capacities for oil and gas execution. So that was something. Kinam remains on track for growth. I think the number of, say, maximum revenue is still at that level, and we can -- we would be in a position to achieve that in a year or 2 is where we see. Thaletec, of course, Thaletec, the growth is going to be driven more by the market. The comment on the capacity was from perspective to say that it's unlikely to require very large CapEx for maybe 2 or 3 more years to come because we already have substantial capacity. And even at capacity levels of 60% utilization where we are currently at in Thaletec, we are remarkably profitable. So it works in our favor in that sense.

So peak revenue for Thaletec can also be achieved in 2 or 3 years?

Yes, Thaletec will probably -- because Thaletec is going to be driven more by the demand dynamics as we see demand improving, which we are seeing and also by our recent foray into the U.S. market, which will obviously supplement the capacity utilization of Germany. It is only going to look better going forward.

And are there any plans to venture into more complicated and large size of [indiscernible] exchanges, say, in the range of 150 to 200-plus tonnes like another listed peer of ours. And what are the licenses actually required to increase our capability and eligibility for serving oil and gas and other oil and gas and petrochemical projects?

So it's a very large market with an equally diverse end use. So there is -- it will be difficult for me to list out a couple of licenses that are good enough to address all of these. I think it's more a question of creating a focus area in terms of the application industry or size of equipment and then focusing on those particular licenses, clearances, certifications and so on. So having already executed many of these orders, just the large -- one of those large ones being repeatedly highlighted in the call, we have the required licenses to at least start bidding for some of these orders, which we already have. And as we do, we will obviously see some success and then we have to continuously build on that success.