Ion Exchange (India) Limited (500214) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the ION Exchange (India) Limited's Q3 FY '20 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you.

Thank you, Steven. Good afternoon, everyone, and a warm welcome to you all. My name is Anuj Sonpal. We represent the Investor Relations of ION Exchange (India) Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the third quarter of financial year 2020. Before we begin, I would like to mention a short cautionary statement, as always. Some of the statements made in today's earnings con call may be forward looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. I would now like to introduce you to the management participating with us in today's earnings con call. We have with us Mr. N. M. Ranadive, Executive Vice President of Finance; Mr. Vasant Naik, Senior Vice President of Finance; and Mr. Milind Puranik, Company Secretary. I now request Mr. Vasant Naik to give his opening remarks. Thank you, and over to you, sir.

Thank you, Anuj, and good afternoon, everybody. It is a pleasure to welcome you to this third quarter and 9 monthly earnings con call for the year 2020. I will briefly recap the third quarter performance of our company on a consolidated basis. The operating income for the quarter was INR 3,982 million. This has grown by approximately 54% on a year-to-year basis. Operating EBITDA reported was INR 392 million, which has grown by about 110% on a year-on-year basis. And the EBITDA margins as a percentage stood at 9.84%, which is a 260 basis points increase year-on-year. The net profit after tax reported was INR 263 million, which has grown by 233% on a year-on-year basis. The PAT margin was 6.6%, which has grown by 354 basis points on a year-on-year basis. Going through the quarterly segmental performance on a consolidated basis, in the Engineering division, the turnover was INR 2,555 million as against INR 1,330 million for the corresponding period last year, which has witnessed a growth of almost 92%. The EBIT was INR 200 million as against last year's INR 53 million, a growth of 277%. The increase in the sales and the profitability is on the back of the healthy order backlog. The Sri Lanka order execution is proceeding satisfactorily, and the revenue recognition for the quarter is based on the work in progress. In the Chemicals division, the revenue recorded was INR 1,233 million as against INR 1,123 million for the corresponding period last year, which has witnessed a growth of 10% on a year-on-year basis. The reported EBIT for this segment was INR 178 million as compared to INR 121 million in Q3 of FY '19, a growth of 47%. In the Consumer Product division, the turnover for the quarter was reported INR 323 million as compared to INR 327 million in the corresponding quarter of the previous year. The loss for the quarter was INR 8 million as against INR 4 million in the third quarter of the corresponding year. Higher volumes has resulted in the growth in the top line on a year-to-year basis in this quarter. The company expects improved performance in the issuing quarters with the increase in volumes. Now coming to the 9-month performance on a consolidated basis, the operating income for the 9 months was INR 11,287 million, a growth of approximately 55% on a year-on-year basis. Operating EBITDA was INR 952 million, which has grown by 103% on a year-on-year basis. And the margins as a percentage stood at 8.43%, a growth of 202 basis point year-on-year. The net profit after tax was INR 653 million, a growth of 118% on year-on-year, and the PAT margin as a percentage stood at 5.79%, which has grown by 170 basis points against the corresponding period last year. In terms of the segmental performance, on a consolidated basis in the Engineering division, the turnover increased by INR 7,188 million as against INR 3,881 million for the corresponding period of last year, a growth of 85%. The EBIT margin was INR 507 million as against last year's INR 251 million, a growth of 102%. The Chemicals division, the revenue recorded was INR 3,587 million as against INR 3,030 million with a growth of 18% on a year-on-year basis. And the reported EBIT for this segment was INR 509 million as compared to INR 330 million in the corresponding quarter of last year, a growth of approximately 54%. In the Consumer Products division, the turnover reported was INR 934 million as against INR 824 million, a growth of around 13%. And loss for the 9 months was INR 42 million as against INR 21 million for the previous year. Now I hand over the mic back to Mr. Anuj Sonpal.

We can now open the question-and-answer session.

[Operator Instructions] The first question is from the line of Mitul Mehta from Lucky Investment Managers.

Can you hear me, sir? Can you hear me?

Yes, yes, yes.

Yes. Sir, basically, my questions are pertaining to the Chemicals division. Just wanted to get some more understanding on the resin manufacturing capacity currently that we are operating. And what is the road map over next 3 to 5 years? If you can enumerate, it will be very helpful. I also want to know as to how big the industry in India is? How much is imported? How much is domestically sourced? And -- hello?

Hello?

Yes. So if you can just help us to understand it.

First, quick, regarding the capacity utilization, resin capacity utilization is close to 90%.

Okay.

The -- see, if you look, the global opportunity size in resins is very, very large number in comparison to size of business which we currently execute. It would run in more than $1 billion. We're continuously adding new value-added resins to our product basket. This would keep allowing us to participate in more and more of these opportunities, both in India and globally. So it's an ever-expanding market size in that respect, which would run up to more than $1 billion. And -- okay?

Yes. Yes, sir, what I wanted to understand is that we currently running at about 90% capacity utilization, and so we are more or less at peak. Is it possible to do some debottlenecking and grow the resin manufacturing business in the ensuing quarter? Or do we have to put up a new greenfield manufacturing plant, which I believe that we have got nod from the Orissa government? So can you help us to understand that?

Yes, in terms of the capacity utilization of 90%, which we just mentioned, now that is based on the -- we have been increasing the resin capacities on a modular basis for the last couple of years. So this capacity is not a static. It is -- 90% is on the increased capacity. Now coming -- with regard to the -- how we intend to proceed with respect to increasing the capacities in the future? I mean, in the last con call also we have said that we are also looking at an opportunity of greenfield project, but those discussions and reviews are still at the initial stages. And as and when we decide and firm up on the decision, we will be communicating accordingly to all the stakeholders.

But on the existing infrastructure of the resin capacity, how much can we grow?

Look, as I said, we will have -- during the year, also, we have undertaken the modular expansion, and we expect the new capacities to go onstream in the current -- in the fourth quarter. So that should take care of some of the debottling requirement, what you have just mentioned. And going ahead, as I said, we are evaluating whether to set up a greenfield project based on the requirements in the market and the various other factors, and then we'll communicate it as and when we firm up on the decision.

So locally, sir, who are the players in resins? And how big are they in terms of size? So most of the competition are typically in INR 300 crore to INR 500 crore sort of sales?

The total local market of resin is in the region of INR 300 crores to INR 400 crores. And some of the major competitors are Thermax is there, and Octal is there, and LANXESS is there, but they're more into the overseas market, though they have a plant in India.

So we are largely exporting?

No. We have a domestic sale also, but our growth also is largely now in the recent past is there in the exports. We service the local market as well as the export market.

Okay. And sir, coming on your Engineering business, we are currently in the midst of executing the Sri Lankan order. So x of Sri Lankan order, if you can help us to understand the growth in the order book as well as growth in sales? And once this Sri Lankan order gets executed fully by next year, are we confident of adding similar size of order to our order book by getting orders internationally? If you can just throw light.

See, excluding Sri Lanka, the current order book is INR 766 crores. And during this quarter, we have added new orders worth INR 155 crores. During the year we have added, most of the orders in Engineering are from Sri Lanka.

Okay. And if you could, can also give us some sense on your order pipeline?

Order pipe -- see, order -- the current inquiry book is close to INR 5,000 crores.

And what is our bid-to-win ratio typically, historically?

Typically, 20%.

So by when this INR 1,000 crore incremental orders will be added to our order book?

Maybe in the next 2, 3 quarters, they will get added.

Okay. And sir, my last question is, we -- in our previous conference call, we have been saying that we are also winning some large international orders, which will be as big as Sri Lanka, so any thought on there or any progress? Because we yet not seen any of those orders materializing.

No. See, we have already pointed out in the past also, these large orders have their own gestation period, and it is difficult to accurately predict the time frame in which these people will -- these orders will get materialized. And hence, we are not in a position to make any announcement for these things. We are confident something will definitely come with significant new large orders.

Okay. And so as far as the Chemicals business goes, we can comfortably grow at 15% to 18% in times to come?

Yes. I think that we have witnessed in the first 3 quarters also. And we are confident that the double-digit growth we will be able to maintain.

Sir, my last question if you allow me, what is the total capital employed, including the working capital in the Chemicals business?

The total capital employed, actually, that is there in the segment, if you can just refer. But in any case, since you have asked, it is around INR 143 crores.

But this also includes the working capital?

Yes. Yes. The working capital plus the CapEx.

Sorry, sir, I can't hear you.

The working capital as well as the fixed assets, which are employed in the company -- in the segment.

Sir, actually, I can't hear your voice.

It is working capital plus fixed assets.

Is the total capital employed.

Total capital employed in the Chemicals business.

The next question is from the line of [ Nilesh Soni ] from IndiaNivesh.

Sir, I have certain bookkeeping question. Sir, can you, please say -- maybe come out with the revenue booked in the -- from the Sri Lankan order for the quarter?

Sri Lanka revenue book during the quarter is INR 109 crores -- INR 110 crores.

Okay. And sir, if excluding the large order for the Engineering segment, can you please give us the Y-o-Y growth for the 9-month FY '20, excluding the large orders?

Large, excluding the Sri Lankan order?

Yes, Sri Lanka and Vedanta order.

Vedanta, generally, we are not giving specifics of the Vedanta order. But yes, excluding Sri Lanka, our Engineering segment has grown by 41% on a year-on-year basis.

This is for 9 months, right, sir?

It's for the 9 months.

Nine months.

Sir, why, sir? Means, any specific risk can you come out with -- can you give us the reason? Means, what were the...

See, if you see the order backlog, what we have seen over the past few quarters compared to the last year, we have been carrying a higher order backlog and the improved pace of the execution of the Engineering orders that has contributed to the higher turnover in the segment.

Okay, sir. And sir, can you please, given the 9-month order inflow versus 9 month -- for the FY '20 and FY '19 order inflow?

Nine-month order inflow is around INR 350 crores.

And sir, what would it be for FY '19 for the same 9 months?

Same 9 months last year was INR 733 crores. Because it was -- Cairn order over there.

Sir, can you please repeat the amount? I -- the voice...

The current 9 months order inflow is INR 350 crores as against the last year's 9-month order inflow of INR 733 crores, which included the large order of Cairn Energy for INR 370 crores.

Okay. INR 320 crores. And sir, one more, if I can squeeze in. Sir, 9 month -- for the 9 month FY '20, can you give us the breakup between the resin and the Chemicals segment -- for the resin and Chemicals -- in this Chemicals segment?

Actually, in the Chemicals segment, resin will constitute approximately 60% of the total turnover -- in the Chemicals segment.

Okay. Resin would be 60%. Okay. And sir, last question. Can you please give me the receivable and the cash balance as of today?

The total cash, including all the bank balances and the temporary deposits, is around INR 357 crores.

INR 357 crores. And sir, receivable?

Receivable position is around INR 440 crores.

INR 440 crores. And sir, the last, other current liabilities or the advance from the customer? If you can help here.

It is around INR 230 crores.

Sir, this is other current -- total other current liabilities or advance from customers?

Telling you only about the advance from customers, it's around INR 230 crores.

The next question is from the line of Deepak Poddar from Sapphire Capital.

Okay. Sir, I just wanted understand, like, we have been growing more than 50%, 55%, 60% for last 2, 3 quarters, now given your capacity, what constraint do you have in terms of 90% utilization level? And even the order book, do you expect this kind of trajectory to continue going into fourth quarter and FY '21?

Fourth quarter, yes.

Okay, okay. And FY '21?

'21, the guidance we will give by the end of this year.

The next question is from the line of Kaushal Dedhia from Standard Charter Bank.

Firstly, sir, congratulations to you on a very good set of numbers. I just have one question on the Sri Lankan order. Wanted to understand how much of the Sri Lankan order is pending as on date?

See, cumulatively, we have booked close to INR 600 crores of revenue. Another INR 600 crores revenues, invoicing is pending.

Okay. And sir, this order is expected to be completed on time? I think the scheduled this thing is May 2020, if I'm not wrong.

Major portion will get completed within the contractual date of May 2020. However, the contract will get extended by few months based on the mutual agreement with the water board.

The next question is from the line of Sunil Kothari from Unique Investment Consultancy.

Congratulations for good numbers. Sir, when have booked roughly, I think, INR 250 crore, INR 255 crore for Sri Lanka, our target was INR 500 crore. So is there any change in schedule implementation? Or you feel any -- I mean, is there any delay or -- any thoughts on Sri Lankan order?

See, we already booked during the current 9 months, INR 253 crores, and we expect at least another -- booking of another INR 200 crores by fourth quarter -- in the fourth quarter. And as I explained before, the major portion will get completed within the contractual date of May 2020. However, contract will get extended by a few months with a mutual understanding with the water board.

Okay. Sir, second point is, you've given is INR 155 crore in current quarter, right?

Current quarter, INR 110 crores.

Order inflow is INR 110 crores?

No. Order inflow is the only thing invoicing.

No. Sorry, what I'm asking is current quarter inflow in Engineering segment?

INR 155 crores.

INR 155 crores. And that's including membrane or only Engineering?

No, no, no...

It's Engineering.

Okay. And sir, can you give me membrane's business size if possible within 9 months or how it is growing? Some thoughts on -- because that is a very promising and growing business, so any experience? Because we have started, I think, just very recently. So how is the response domestically exports and development?

Yes. Regarding membrane, we are seeing steady sequential improvement in the offtake from this facility. We have spent considerable time in getting the product stabilized in the market, and based on the customer feedback, the product acceptance is very encouraging. We expect the improvement in volume to continue in the coming quarters. In terms of the capacity, it is in the region presently, utilization of around 40% to 45%, and we expect to reach 50% by the year-end. And in terms of the opportunity, the opportunity side is pretty large because it is not only the domestic opportunity which we are talking to the global opportunity. And we are looking as the products get stabilized, to ramp up the production and also looking to invest further maybe in the next year to further augment the capacity to take care of the export demand.

Okay. And sir, what is the revenue contribution during first 9 months from membrane?

Sorry, I can't -- we can't hear you properly.

Mr. Kothari, can you move to a better reception area, please?

Yes. What is the revenue contribution from membrane during first 9 months?

We are not giving specific numbers, but in terms of the capacity utilization, as I just mentioned, it is around 40% to 45%.

Okay, okay. Sir, my last question is, I think somebody also tried to understand and ask is, during last -- before 9 months or a year, we were expecting some good orders, bigger orders from international market also. So I'm not asking why it is not coming or it will come, but is there any change in environment or competitive situation, maybe better or maybe worse? Some qualitative comments toward in basic opportunity regarding this type of projects, which we have done in Sri Lanka?

No. Opportunities are still there, and we are pursuing it. There is no change in our guidance.

So it is -- the delay is because -- maybe because of...

So as we have explained before also, it takes -- they have a longer gestation period. It is not definitely -- we can't predict the -- when this will get finalized.

Right. And sir, my last question is on domestic opportunities this municipal sewage -- this cleaning water, this project and all these things. What has the -- our thought process...

Can you come near the mic? Your voice is -- we are not able to understand your questions.

Hello? Sir, my question is on domestic opportunity on the sewage treatment plant and all these things, which we were evaluating since long from municipal corporation and all, sir. So are we getting any realistic contract or maybe inquiries and tendering? Or you said that talk of opportunity, and there is nothing is happening domestically in terms of water treatment?

No. See, coming -- see, there's a -- potential in this market is very huge, and we are also evaluating these opportunities. But as explained before also, we are evaluating those opportunities which are commercially viable. Even currently also for the effluent treatment water -- waste water treatment recycle, our order book is close to 30%.

Right. So sir, I'm trying to understand your comment on these big municipal projects?

We are in touch with the progressive municipal corporations. Because, as told before in earlier con calls also, we are very particular about the commercials of the -- any project. So either we'll go as a EPC contractor, or we may be part of the -- some concession agreement.

The next question is from the line of Santosh Yellapu from IndiaNivesh.

Also congratulations for a good set of numbers. Sir, first I -- first question, I would like to understand the Sri Lankan order. Sir, at the time of changing -- signing the agreement with the Sri Lankan Water Board, the organization there and now getting an extension of this order, the key terms, is there any change in the key terms that could lead to any liabilities for us? Any sort of -- just again, I'm asking this question just because we are seeing a scenario where the project is getting delayed?

Coming back to your question, there are no changes in the key terms as such. And the project is getting delayed not because of the -- us, but there are other reasons which can be attributed to the major as well as to the water boards -- some government authorities where the permissions were delayed. Hence, we are -- we don't anticipate any loss or any cost overrun because of the extension of the contract.

Okay, okay. Sir, also, as going back to one of the speakers had asked a question, we said that, that the global market for resins is more than $1 billion. Given the current booking of our offerings, what is the addressable market for us within that $1 billion?

See, worldwide, globally, we are not a very big player as such. The [Technical Difficulty]

Hello?

Hello?

Yes, yes, sir.

[Foreign Language], see, globally, we are not a very big player when it comes to the global market.

So just to add to what Mr. Ranadive is saying, globally, we're a very small player, so whatever capacity additions we are presently doing and we anticipate to do in the future, that will really take -- I mean, the market is not the limitation here.

Okay, okay, okay. Got it, sir. Sir, one question. What is the reason for the change in the stand-alone consol revenues in the Chemicals segment that we reported during the quarter? Do we have any subsidiaries that caters to the Chemicals segment out of India?

Yes.

Which subsidiary would that be, sir? Thailand -- Malaysia one or any other one?

Subsidiaries will be doing the -- both Engineering as well as Chemicals business.

Which one, sir?

All -- most of the subsidiaries will do the business of the Chemicals as well as the Engineering.

No, sir. No, what I'm trying to understand is, do we have any manufacturing plant?

Manufacturing, no.

No. Okay. That's what I was trying to understand. Okay. That is one. And sir, lastly, if you look at the long-term trends, the consolidated Chemicals segment margins have had to during 16%, 17% -- wherein 16%, 17% kind of range, and now they've fallen down to 13%, 14%. I'm talking about the consol level. So has there been any shifting? Or what could be the reasons for that? And where do we see these margins going forward? I'm referring to segment margins, consol level, sir.

Yes, but I think, largely, the consol level segment are also driven by how we perform in the individual stand-alone segment. And if you see in terms of the stand-alone segment, the Chemical margin as a percentage on a Q-on-Q and also now year-to-date basis, they have shown a sequential increase. I mean, if I just see the December quarter number, it is around 16%. So as we show the improvement in the stand-alone numbers, the margin percentage will automatically get translated in the consolidated numbers. So we are expecting that the margin improvement, what we have seen in the current 9 months, that should continue in the coming quarters also.

Okay. And last question, sir. In the last con call, sir, had mentioned that there are 1 or 2 orders which are getting finalized, and we can expect them to be awarded soon, if I recall correctly. So what is the status of those 1 or 2 orders? And if you could just give some color on the pipeline of tenders that we are participating into? What is the nature of the clients? Any -- from any specific geography? Or is it private clients or government clients? Or specifically from any particular industry that we are targeting? If you could just give some color on these aspects that should be very insightful.

We are -- as told you in the past also, we are negotiating for large infrastructure orders, both internationally as well as domestically. And it is very difficult to predict the exact time lines in which this will be -- will get materialized.

Sir, it's fine. I'm not asking for any time lines, I'm just trying to get some color. Is it -- when you say -- is it fair to assume that we're talking to more of private players and less of government...

More for private -- more of the government or government-backed projects.

The next question is from the line of [ Rishi Surana ], an individual investor.

I had one question that -- first, you've given the order inflow number as INR 155 crores for the quarter, so what will be the invoice revenue for the quarter in the Engineering segment?

Can you come again? What will be the invoiceable out of this INR 155 crores? That is what you're asking?

No, no. What is the invoice number for the quarter? Invoice.

Invoice number.

I think that is the -- if you're talking of the Engineering segment, I think it is around INR 244 crores.

INR 244 crores. Okay.

Quarter.

So -- okay, sir. Second question will be on the order book, sir, you had mentioned in the last call that you were expecting some government and infrastructure orders, which would actually skew your numbers. So just wanted to get a sense like how is the progress over there? Because I understand that you cannot give a time line to it. But if you can give some understanding as to you how are you moving ahead in this segment of government and infrastructure segment, basically?

See, the -- here, again, progress is good and satisfactory to our satisfaction. And again, we cannot commit anything by when this will get materialized. But we are hopeful they'll get material in 1 or 2 quarters. And once materialized, we'll have a good order inflow coming in our way.

Okay, okay. Sir, last question. Can you give me our target for FY '20 as to what will be the revenue? Would it be around INR 16 crores or INR 1,800 crores like for the total business -- for total company as a whole?

We don't give that any guidance for the year. But what we can only say is looking at the 9 monthly figures we have shown the growth, we expect the growth to continue in the fourth quarter also.

The next question is from the line of [ Nilay Sairam ], an individual investor.

Yes. Congratulations on a very good set of numbers. So recently, I mean, in the last quarter, we've been seeing some selling of the company shares by the trust which hold the shares and some directly buying from the promoters or directors. So can you just help us understand the shareholding structure?

See, basically, these shares are part of the employee share-based benefit schemes. And SEBI is regulating these schemes and provided certain regulations. So we have taken steps to regularize these schemes under the new SEBI guidelines. That is all we have done.

Okay. So can we expect, like, all the shares sell by the trust will be completely transferred to the promoters in their names directly...

No. That is what will be decided from time to time, what the further action will be there.

Okay. Sure. Also, so when ION Exchange was set up in India from [ DEV Limited ], we saw that some loan was given to ION Exchange to purchase these shares. So do these loans still exist? Or have they been paid back?

Some of the loans still are outstanding.

Very minor, but.

Yes. And some of the loans have been repaid.

Okay, okay, sir. So yes, another thing I wanted to understand was, you've been saying that the consumer division will break even in some time. Is that still the case? Or what's the plan? Because we have been planning also some projects, large-scale projects for villages. How is that coming?

No. We are sure that with the focus on the specific market segment and the products, we should be able to grow the consumer segment profitably. And we're confident that in -- very soon we'll be coming close to the breakeven point.

Next question is from the line of Santosh Yellapu from IndiaNivesh.

Just a couple of questions, sir. If I look into the -- again, the segmental numbers, sir, there you see that the consumer division segment, does any subsidiary sell these products because there is a difference in the numbers for consol and stand-alone again there also?

Yes. In fact, all our subsidiaries, which are formed, they primarily cater to the products which are manufactured by ION Exchange. So yes, some of the subsidiaries will have -- will be dealing in the consumer products.

No, no, sir. I think, for -- I'll be more specific, Consumer segment revenues, both in the stand-alone and the consol has been INR 32.3 crores, whereas in the consol, it is a loss of point -- it's INR 8 million -- almost negative INR 8 million, loss of INR 8 million, whereas for standalone, it is INR 16 million. Why is there a difference? The -- if there is no subsidiary transaction happening, then it should have been same as what it is in the stand-alone, right, sir? I'm just trying to reconcile what is the reason for this difference in the stand-alone, consol segmental...

So numbers of Consumer Products, the margins are INR 4.2 crores negative, and if we see in terms of the consolidated numbers, they are INR 4.19 crores. So that's not much of change, right?

I'll take it off-line, sir.

Yes, sure.

I'll take it off-line. That is one. And sir, also one small follow-up question on the advance part. Advance from customer has declined despite an increase in order inflows, is it that the new orders that we're winning are very small orders which tend to have either low or 0 margins kind of a thing? Or is there -- is something that I'm not reading correctly here?

No, it's -- as the large orders get executed, especially the Sri Lanka execution takes place, I think the advance will keep on reducing for that order. So that will impact overall the total advance from customers.

The next question is from the line of [ Raj Mohan ], an individual investor.

Congratulations on continuing to report great numbers.

Thank you.

Though you have expressed phenomenal optimism, what -- with the opportunity size in the past, do you feel the -- on the ground playing out of order flow, which had been a bit slower, has turned a little more favorable in terms of green shoots that you're seeing with the core sector growth showing some signs of bottoming out? Do you see more -- in a sense, do you see more velocity in large order movements on the ground?

Can you come back to your question a bit clearly?

Yes. What I was concisely wanting to know is, do you see any green shoots in the economy, what -- with the latest GDP numbers and the core sector numbers showing some signs of picking up? And in that sense, do you see more velocity in the large order movements for your industry on the ground?

See, coming back to question, see, economy has not picked up as expected, and we still expect GDP numbers -- subdued GDP numbers for the entire year. The core sector industries are also not doing great. And therefore, the current opportunity pie from this sector is substantially lesser than what we would have normally expected under normal circumstances, where a larger portion of our business is coming from the relatively smaller- and medium-sized industries. That's the current profile of the business. And then we -- in international orders also, it is more or less the same story. But we are hopeful that, with the government initiatives and the government spending, the growth in the economy to pick up from the next year onwards. And this works well for our Engineering business, as our Engineering business largely depends on the new projects being launched. Also, we see large opportunities from the various governments and the infrastructure segments, which we are pursuing domestic and international market. If -- even if one of them comes in a particular quarter, then probably numbers will skew in the favor of the larger sector.

Yes. So as of now, we are not seeing any major green shoots is what I take away from your answer. And coming to a point of large opportunities in the international market in government and infrastructure space, are these from the developing world? That is one. And though you mentioned about uncertainty in such long gestation order conversions, are we any closer to consummating any such order in the next, say, 2 quarters or this calendar?

Yes, some of our orders, yes, we are very close. In...

Okay. And largely, are they in the -- from the developing world or they're across?

Yes, developing world.

Okay. You have mentioned an inquiry bank of INR 5,000 crores. Do you have an objective assessment of how the inquiry bank as such has grown year-on-year, with the sort of increased awareness of order confirmation?

So typically, inquiry bank would be in the region of INR 5,000 crores to INR 6,000 crores year-on-year.

You're not seeing any growth in that inquiry bank happening year-on-year with the larger awareness on ESGE, a larger awareness on water conservation and stuff like that? You're not seeing any material improvement in the inquiry bank?

See, the inquiry bank largely has remained at the same level of around INR 5,000 crores to INR 6,000 crores, but what we are really seeing is the shift away from -- in the inquiry bank towards the waste and the effluent treatment aspect of the water treatment plants. So that is where we are seeing the shift. So I mean, if you talk of the total inquiry bank, may be at the same level. But in terms of the composition of the inquiry bank, it is more into the waste, and the 0 discharge opportunity is what we are seeing.

Okay. That's helpful. Finally, with government projects under stream, both at the central and the state level, do you see pressure on municipal corporation budgets, too, and thereby, some short- to medium-term challenges on order bagging for you?

Yes, we are -- I explained earlier also, any municipal order or even the government orders, we are participating only if the commercials are in our favor. We don't want to make a commitment, long-term commitments for the order which are not with the favorable commercial terms.

Okay, sir. And one final thing, you had indicated to growing by double digits for the next 2 years or something, though you don't give any specific guidance, based on what you're seeing in terms of order book, are you comfortable with that kind of a rate of growth?

We don't give any guidance as such for the order book as well as for the revenue.

The next question is from the line of [ Rishi Surana ], an individual investor.

Sir, if I look at your 9 months number of order inflow versus invoice book, it seems like that the order inflow is a little lower than the way you're invoicing orders. So how do we see the growth -- once the Sri Lankan order gets over, how do you see the growth of the company? Because it seems like that the invoicing is far faster than the way the orders are coming. So if you can just highlight on that.

See, opportunities continues to be big for us in the ensuing years also, and bid pipeline which we are pursuing should be good enough to keep this number sustained and also ensure future growth. As pointed earlier, large orders always take a longer gestation period and difficult to accurately predict when these orders will get materialized.

Okay, okay. And sir, last question on the Chemicals front. You said that the resin facility after the debottlenecking and everything, so there you're operating at approx 90% capacity utilization. So until and unless your new CapEx comes up, so you -- mostly so, if I get a guess then from the next year, your chemicals revenue should be mostly stagnant, right? Because -- since you do not have any CapEx coming up on chemicals? Or is my understanding wrong here?

No. Our CapEx, say, the ongoing thing which we do in this segment, so next year also, we have a CapEx plan of around INR 50 crores to INR 60 crores. And this is apart from the greenfield opportunity what I just informed earlier in the con call, which we are evaluating for the resin expansion. But even if we don't do the greenfield expansion, our modular CapEx will continue for this segment for the next year.

The next question is from the line of [ Kanwal Preet ], an individual investor.

Sir, I'm not sure if you've answered this in past. I missed front part of this con call. But wanting to understand the Sri Lankan order [indiscernible] and you are now in the [indiscernible]. It's a fairly large order, so in that sense, I wanted to understand the market. Do customers look for a certain eligibility criteria now since you've crossed a certain order size? Does that make it easier for you to compete for larger orders? And if that is the case, are the orders which you have bid for, are they of similar range to the Sri Lankan order? Or does the order size vary significantly in this market?

The opportunities what we are looking at there, in terms of the order size will be -- couple of them will be similar to what we had done for the Sri Lanka order of around -- just under INR 200 million. And in terms of the scope of the project, finally, the Sri Lanka order was also into the water treatment and the water supply project. So the inquires what we are looking into are also quite similar to what we have executed in the past in Sri Lanka and as well as in the other geographies.

Coming to your first question, definitely, it will enhance our prequalifications.

Okay. Right. Sir, and could you give me a sense if there is such an eligibility criteria in the market now that you are sort of executed order of this size? To what upper limit -- if there is an upper limit for order bid? Or is that an open-to-all market?

Eligibility criteria will differ from order to order.

Okay, okay. Right. Sir, the other question I had was when the Sri Lankan order came in, what was the capacity building measure which you took? If you could highlight that, especially in terms of your HR, in terms of your employee strength, if there were homegrown leaders who are now executing this order? Or is this on a consultancy basis? And how do you see them playing a bigger role as part of your company once the Sri Lankan order is done?

See, in terms of the capacities, per se, this is not something like a Chemicals segment where you need to build in the manufacturing capacities, per se. So as you have pointed out, we have built in our expertise in more at the back-end in terms of our design team or in terms of the project execution team. That is where our capacity has been built in for handling this type of project. And taking this experience forward of this team, and this team can be deployed for other projects as and when we get it and as and when this Sri Lanka order gets completed. So it's more on the manpower side, where we have built in the capacity and in terms of our design and engineering back-end, where we have strengthened the team. That is where our capacities have really gone in for this project.

Okay. Right. Sir, and the head of the Sri Lankan order, the execution, was he with you prior to the order win? Or have you increased your employee strength to meet the order execution?

See, some amount of employee strength which we have taken in Sri Lanka are the local employees to help us support in the execution of the project, per se. But some of the team has been deployed from India from our offices, so they are part and parcel of the ION Exchange team only, which are deployed in Sri Lanka. But we have taken the local support also to help us in the execution. Which -- they are basically contractual employees. So as the project gets over, the local team, their contract will get over. That's how it is.

Right. Sir, and what about the leadership, the management, the top-level head of the order -- of the project, is he -- were they with ION Exchange from the beginning?

Yes, considering the Sri Lanka order size, I mean, this project is monitored by the -- at the top level by the ION Exchange (India) team only.

As there are no further questions, I now hand the conference over to Mr. N. M. Ranadive for closing comments.

Thank you all for participating in this earnings con call. I hope we have been able to answer your questions satisfactorily. If you have any further questions or would like to know more about the company, we would be happy to be of assistance. We are very thankful to all our investors who stood by us and also had confidence in the company's growth plan and focus. And with this, I wish everyone, great evening. Thank you.

Thank you. Ladies and gentlemen, on behalf of ION Exchange (India) Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.