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

Ladies and gentlemen, good day, and welcome to the Ion Exchange (India) Limited Q4 FY '21 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Ion Exchange (India) Limited. On behalf of the company, I would like to thank you all, and welcome you all for participating in the company's earnings conference call for the fourth quarter and financial year ended 2021. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today's earnings conference 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. Now I would like to introduce you to the management participating with us in today's earnings call. We have with us Mr. Aankur Patni, Executive Director; Mr. N.M. Ranadive, Executive Vice President of Finance; Mr. Vasant Naik, Senior Vice President of Finance; and Mr. Milind Puranik, Company Secretary. Without any further delay, I request Mr. Vasant Naik to give his opening remarks. Thank you, and over to you, sir.

Thank you, Anuj. Good afternoon, everybody. It is a pleasure to welcome you to the earnings conference call for the fourth quarter and the financial year of 2021. Firstly, I hope that everyone is keeping safe and well. Now let me take you through the fourth quarter financial performance of our company on a consolidated basis. The operating income for the quarter was INR 4,452 million, an increase of approximately 27% year-on-year. Operating EBITDA reported was INR 857 million, an increase of 118% year-on-year. And the margin percentage stood at 19.25%, an improvement of 806 basis points. Net profit after tax reported was INR 705 million, an increase of 144% year-on-year, while the PAT margins percentage was 15.84%, an improvement of 761 basis points on a year-on-year basis. As evident from the numbers above, the company witnessed steady sequential improvement in the financial performance. There has been an improved opportunity flow from the international markets. However, on account of the resurgence of the second wave of COVID-19, besides dampening the economic recovery, it has also posed challenges for execution, including disruptions in logistics for material movement. I will now take you through the quarterly segmental performance on a consolidated basis. In the Engineering division, the revenue for the quarter was INR 2,910 million, an improvement of 32% compared to the preceding quarter -- compared to the quarter 4 of last year. The EBIT was INR 557 million, which increased by 111% on a year-on-year basis. The flow of order during the quarter was steady. While execution of the Sri Lanka project improved during the quarter, frequent COVID-related restrictions in the country continued to pose execution challenges. Order execution of other ongoing engineering orders picked up pace in this quarter, resulting in improved sales and margins. In the Chemicals division, the revenue for the quarter reported was INR 1,298 million, an increase of 18% on a year-on-year basis. The EBIT was INR 389 million, an increase of 74%. The sales and despatches showed continued improvement in this quarter and the margins in this business improved due to the higher turnover coupled with the operational efficiencies. Lastly, in the Consumer division segment, the revenue for the quarter was INR 377 million, an increase of about 17% on a year-on-year basis. The loss for the quarter reduced to INR 14 million versus a loss of INR 28 million for the same period in the previous financial year. Although volumes have shown an improvement in this quarter, it was constrained due to certain segments continuing to remain affected due to the restrained economic resumption in key consumer sectors and aftereffects of the COVID lockdown measures and continued social restrictions. Talking for the financial performance for the financial year 2021 on a consolidated basis. The operating income was INR 14,495 million, decreased marginally by around 2% on a year-on-year basis. The operating EBITDA reported was INR 2,023 million, an increase of about 50% on a year-on-year. And the margin percentage stood at 13.96%, a growth of 487 basis points. Net profit after tax reported was INR 1,433 million, an increase by 52% on a year-on-year. And the margin percentage was 9.89%, an improvement by 352 basis points. And now talking about the consolidated segmental performance for the full year 2021. The Engineering division turnover was INR 9,407 million, which witnessed a marginal increase of just under 1% on a year-on-year basis. The EBIT was INR 995 million, an increase of 29% on a year-on-year. The Chemical division, revenues of INR 4,396 million, a decrease of 6% on a year-on-year, while the EBIT for this segment was INR 1,062 million, an increase of 45% on a year-on-year. The Consumer Products segment turnover for financial year '21 was reported at INR 1,084 million, a decline of 14% compared to the previous financial year, and loss for the segment was INR 37 million against INR 70 million last year. And before I hand over the floor for the question and answers, would like to just inform you that sometimes -- just some time back, we have informed that stock exchange, and we are happy to inform you that the company has received a letter of award and contract under the Jal Jeevan Mission for the rural water drinking supply to 1,000 villages in 2 districts of Uttar Pradesh, that is Varanasi and Aligarh. The value of these 2 projects is approximately around INR 1,000 crores, and the specific value will be determined after the approval of the detailed project report. The project is to be construed and constructed and commissioned within 21 months from the date of the signing of the contract. And with this announcement, I would hand over the mic back to Anuj for starting the question-and-answer.

[Operator Instructions] The first question is from the line of Chetan Vora from Abakkus.

Great set of numbers. Sir, I wanted to ask you that what has led to the sharp margin improvement both in Engineering and the Chemical segment for the quarter. And going forward, how do we see FY '22 to pan out in terms of whether this margin improvement is sustainable in nature? Or is there any one-off component in that, sir?

Thank you very much. We -- the numbers which you see on a year-to-year basis, we see that we are very much sustainable on the margin percentage front. Various factors have led to the improvements as compared to the previous year. We have seen increased degree of utilization in terms of our clinical setup, and there is improved efficiencies and throughputs, which we have got especially for our Chemicals segment, which has led to significantly improved margin levels there. We also benefited from a transient raw material price movement, which was slightly favorable towards us for some part of the year. That's as far as the Chemicals segment is concerned. The Engineering segment has benefited from an overall improvement in scale, and we have also benefited because of the various contracts, which were under execution, especially during the last quarter. The favorable margin profile in these contracts has helped us to ratchet up the overall margins. We have seen margin improvements across all the subcategories within this segment for the service business, for the membrane business, for the small-sized engineering contracts, both standard equipments and otherwise, as well as for the larger-sized orders, including Sri Lanka. There is also an advantage which occurs because of the higher percentage of Sri Lanka revenues as a percentage of the Engineering segment revenues. So that's how the margins stack up. And as I said in the beginning, we do believe that we will be able to sustain these margins overall for the year. As you all -- and a lot of people that have been following the company are quite aware, that we do see the relations in revenues and margins as we move from the first quarter towards the last quarter. And invariably, the last quarter tends to be the heaviest in terms of both revenue and margins. We expect this trend to continue and, hence, there would be some variations during the course of the year in terms of the margin profile.

But on an annualized basis, for the FY '21, we did nearly about 10% on Engineering and 25% on Chemicals. Whether those will be like sustainable? I understand the quarter 4 margins cannot be extrapolated. But on an annualized number, including the June -- subpar June numbers. So what should be the trajectory? Just wanted to understand because, so far in the history of the company, these are by far the superior margins.

You're right. And we do feel that on an annualized basis, we would be able to sustain these margins.

Okay. So the second question was...

The visibility which we have -- I mean, I would put the caveat to that statement. The current visibility we have, obviously, on the Engineering contract is not very long. And I can only say with respect to what we are being able to realize for the current year FY '21, '22. And we'll certainly be able to sustain these margins for this year.

All right. Sir, the second question was that we had announced a CapEx of INR 100 crores on the Chemicals towards the greenfield. Can you give some more color on that? By when the plant will be getting up and running and what is the capacity? You had said that you will be coming out with more details during the quarter 4 con call.

That's right. We have had a review of that project. And compared to what we had declared earlier, we are expecting to set up a plant of a higher capacity and the CapEx would go up compared to what we had announced earlier. We will be announcing revised numbers in the coming quarter. As of now, the bookings to establish the details are still in process. But as a trend, I can indicate to you that the CapEx would be higher than the INR 100 crore figure.

Okay. Okay. And the last one from my end, the order what you announced just a few minutes back of INR 1,000 crores. Whether if you try to assume that, that contract would help, on that way we would be able to make the double-digit margins?

Yes. We should be in a position to do so.

The next question is from the line of Pritesh Chheda from Lucky Investment Managers.

Yes. Sir, first, on the Chemicals margin, you mentioned that increased utilization and throughput, the top line for the full year has declined. Is there a volume expansion then which has come through for which you're commenting on utilization and throughput? And what would be the gross margin expansion within this EBITDA margin expansion? And how much of it is sustainable on the annual basis? Because one of the reasons that you mentioned was also benefiting [ Ion ].

That's right. So we are benefiting on all accounts. We are seeing benefits on account of efficiency improvement. Regarding improvements which you see at the EBIT level is largely contributed by improvements at the gross margin level. Obviously, we have seen significantly improved capacity utilizations as we have moved through the year, and the last quarter was much better than the previous quarters. That's where we have seen the biggest impacts in terms of operating leverage. And again, as I said, we would be able to sustain this going forward.

What is the asset utilization in Chemicals business that you have?

Overall, we would be roughly at around 70% for the year.

And my last question is on the Engineering side. When I look at your order backlog, which was reported at the end of -- in the presentation at about INR 50 crores. It's is quite similar to what it was last year as well. Now with this new order that we have got, I don't know the contours of that order because there is O&M angle as well. So do you think that considering the flattish backlog which you had last year, is it a tough case that we will grow in top line on the Engineering side in FY '22?

Yes, we should grow on the top line on the Engineering side. In the numbers which we have declared for this 2 contract, they are not inclusive of the O&M component. The details of each of -- as you would have read and heard from the opening comments, there is a significant number of detailed project reports, which will need to be drafted and specifics of each contract, the sizes and the quantum of O&Ms revenues which will accrue later, they are to be determined during the course of the year. So we should see a higher number, certainly in terms of top line.

Can you comment what should be the growth rate in Engineering? Hello?

May I request the participants to please stay connected as the line from Mr. Patni was disconnected. Thank you for patiently waiting. We have Mr. Patni reconnected. Sir, you can go ahead, please.

Sir, I was asking on what should be in the top line growth in Engineering over the next 2 years? And this INR 1,000 crores, what I see in the press release, does it mean that INR 1,000 crores of the project has to be executed over the next 2 years?

Yes. The average execution period for each of the DPRs which are roughly around 1,000 villages, which need to be covered with these contracts. Can you hear me?

Yes. I can hear you. I was just asking that, it's a INR 1,000 crore value of 2 projects, this is pure the construction part, right?

This is the construction part.

Okay. And would be executed over the next 21 months?

Yes. So there are quite a few details. Each of the villages would be executed over a period of 21 months. Overall contract period would therefore still a little bit beyond that as and when each individual DPR gets approved, the execution period starts there from.

And when does the execution start for this project?

As I said, it is 1,000 villages and each village has got a separate DPR. And therefore, each village as it starts to get executed, it could take roughly around 21 to 24 months. And it would happen over a period of time. I would expect that the overall contract period or execution period for this contract would be longer than 2 years.

And sir, lastly, usually, you don't take government contracts because of the working capital cycle. What in your opinion should be the net working capital cycle in this project? And is there advance which is there on this project?

Yes. There's goodwill advance on the projects. And as these are distributed over multiple villages and DPRs, as we just discussed, the working capital involvement would also get staggered. And the realizations would, therefore, not be such a big challenge.

The next question is from the line of [ Sharath ] from [Arjuna Share services].

I have a question on the Engineering order book side. Do we see more in the orders book from Jal Jeevan Mission side going forward? And we also actually participating in this campaign? Is my understanding correct?

Yes. Your understanding is partially correct. We are not pursuing this at all places and -- in all possible contracts and tenders. As we have maintained earlier, we are being very selective in which areas and which geographies we want to pursue. And we do expect to get more orders under the scheme.

So earlier, do we executed similar products in other name or other category for the same kind of construction work?

The Sri Lanka contract that we are executing is in a similar nature, and it's the overall scope of construction and execution in the Sri Lanka contract is actually much wider. This does not pose a challenge to the company, either in terms of technology or in terms of other capabilities.

Okay. So sir, in margin front like, export order generally, we were more towards -- so is there any such risk you see in executing domestic EPC contracts?

We've been very careful on that front. And only after very careful evaluation, we have decided to work on this particular contract. And we do expect that we would get reasonably good margins on this contract.

[Operator Instructions] The next question is from the line of Sunil Singhania from Abakkus.

Congratulations. Sir, on this UP order, you mentioned that you're going to do the work for some 1,000 towns and villages and therefore it might extend beyond 21 months, the execution. But is it also possible that this INR 1,000 crore order might also become bigger as you do the work, because it's almost 1,000 towns and villages?

That's right. This is a conservative estimate that we have put forth as we complete the DPRs, the sizes of individual contracts would have a tendency to go up, depending upon the natures of frequent process involved. And that evaluation of what would be the specifics of the various contracts would only happen over a period of time. Hence, we have put forth and be conservative.

And sir, when do we start execution on this?

So we will be starting the execution on the DPRs really shortly. We have already shift the ground running in terms of these contracts. So the initial gestation period for the first of these executions is not going to be very long.

And sir, one last question from my side. Now globally, people are talking about spending by government on infrastructure. Even in India, the same is the case. We have a lot of schemes going on. And now private CapEx is also sort of starting to look -- plus, obviously, clean water and environment has become now a big sort of a mainstream issue. Are you seeing green shoots in terms of inquiries? And can we expect the order book to significantly go up as we move ahead?

Yes, very much. We are seeing a lot of traction in the domestic as well as international markets. The opportunity flow has gone up quite a bit as we have hit this calendar year. The international markets have responded to the reduction in the overall level of pandemic. And I do expect that the Indian market would follow through. For a very brief period over the last couple of months, we did see a slight pause and we have again started to see resumption of whatever activities were paused or deferred. We have not really seen any cancellation of project-based inquiries during this period. So I'm very hopeful that the coming year would be much better in terms of order book.

The next question is from the line of Saurabh Shah from AUM Advisors.

Congratulations on excellent results. Sir, first question was on each of the segments. If you could tell us over a 3-year period, what kind of growth do you see on revenues on the Engineering segment, on the Chemical -- and on the Chemical segment, sir? You're adding capacity as well. So what kind of growth should we expect? Understand it cannot be EBIT, but what kind of numbers would you put on the growth?

Very difficult to give you a projection over a longer period of time. We would certainly be expecting the 20% and above kind of a growth during this year on an overall basis. And I would be very hopeful of the sustained growth level at a similar or higher level over a longer period of time. But that's more risky projection to make because the situation is always evolving. Based on the current scenario and the uptick which we are seeing in the opportunity flow, I would as harder guess and say that our revenue growth should be in the region of 20% plus.

And sir, the Chemicals sir, what are you seeing, are you seeing a change in the growth from the export market carried off. How do we -- how should we see that segment? Do you have any specific advantages which lets you increase the growth in the overseas market with a higher requirement, more legrooms for your tighter enforcement of these water discharge regulations and those things?

We are seeing very good response from the international market for our various Chemical products. The international foray has been led by the resins product line. And we're expanding that into more product lines as we go forward. We continue to receive good response on these fronts. The advantage which we carry is based both on our ability to provide good product, high technology and high quality, as well as being able to provide it at a price point which is acceptable to the customers. And last but not the least, providing a very good after-sales support. So we do expect that the benefits will continue over medium to long term, and we would be able to continuously escalate our presence in the international markets.

Lastly, trying to get some more color on that. What kind of technology change do you expect? Or the expected increase in R&D investments is substantial or on the same basis as the past, it's more incremental to get these kind of opportunities to grow?

We will continue to spend on R&D and our intent is to invest more and more on improving our overall product line and product profile. I would not be able to really comment on exact quantums which we envisage, but just a direction that we do expect overall growth in our spends on R&D. This is not just to take care of the current product line as you hinted, but we are also working on improving the overall scope of the products, which we are able to deliver. Recently, we would start the membrane side of business, and that's also picking up very well. We do expect to add more of these product lines, which are oriented towards newer kind of opportunities.

Sir, any need to make an acquisition for -- as you said, there's membrane or other more next-level technologies from the international markets or anywhere else, and these are achievable, disproportionate investment in this.

We continue to look at opportunities. And if and when we do get something which fits the bracket of our requirement as well as it comes at good terms, we will certainly evaluate.

Sir, last question from my side again on the same point. Sir, any end industries that we expect to become a much larger portion for us, like pharmaceuticals, chemicals, any such interesting industries which is becoming more important than the larger proportion of our revenue on the Chemicals side?

The Chemicals portfolio addresses quite a wide range of industries. And I say on a traditional -- from a traditional standpoint, it has been the heavy industry segment, which is industries like power or steel or petrochemicals, which have enjoyed the lion's share of this business. We are continuing to see that as we go forward. The intent which we have is to increase the presence of those value-added products, which go into specific sectors and very specific applications. However, these are spread out over a very wide bunch of industry sectors, including pharmaceutical, food and beverage, textiles, et cetera. So I'm not very sure how the bias towards a particular industry sector is going to change in the coming time. It's a continuous process of variation.

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

Congratulations for such good numbers, and I think congratulations to your team also for such a wonderful improvement in balance sheet, ROE and working capital.

Thank you so much.

Sir, my question is largely, if you can throw, sir, just your qualitative comments on the change in our view on taking domestic government projects. I think we are a little bit cautious previously, but now we -- this is the -- first very big and hopefully a good order. So what has changed? I mean this is -- and how this opportunity seems to be sustainable? Hello?

We do request the participants to please stay connected as the line from Mr. Patni got disconnected. [Technical Difficulty] Thank you for patiently waiting. We have Mr. Patni reconnected.

Sir, I was trying to understand if our view has changed on taking domestic and government projects. And what has changed if you can qualitatively talk something more on this?

We've always been very selective on this, and we continue to be. And as far as I can project at this stage, this trend will not change in the future. This is a very carefully selected opportunity, which we feel meets the risk criteria which we have set for ourselves. And we don't foresee a challenge on the execution and the collections and the margins are fitting our appetite. Hence, we have gone through with accepting this opportunity. In future also, we would be keeping similar criteria. And again, the opportunities that we would follow through would be limited. As you're all aware that we are pursuing quite a few of government opportunities in the international markets. And they are of a profile like the Sri Lankan contracts which you are all well aware of, where we have tried to keep a very high standard of risk mitigation wherever and whatever is visible. This trend is unlikely to change in the future.

Great, sir. And sir, my second question is, we being a very cautious but conservative management, looking at the opportunity in water chemical and the way we are getting better and better margin and our written profile, should we expedite our investment gain more investment in the Chemicals segment? Or are we planning those? If you can throw some light, because since last some time, we are talking about big greenfield project, but we are not aware about how much investment we are going to make. What's your thought process? If you can say some more -- throw some more light on this?

We are quite actively working on the new project. As I have mentioned to a previous caller. We are relooking at the capacities, which we want to set up. There has been upward revision towards the originally planned capacity, and there is some degree of technical innovation also which is being brought in. Hence, there is a slight delay and we work on the overall CapEx plan, but we would be undertaking this very shortly. And we would see that this capacity would come on stream somewhere around the end of the FY '23.

Right, sir. And my last question is around -- this we have many subsidiaries locally, also domestically. And you are saying that we are consolidating those with a listed entity. Any progress or any update which you want to say?

Yes, we are working towards such a consolidation. But because of the unfortunate state of pandemic that we were all in, there was a slight delay or disruption in this process because of the inability to move papers and files and processes fast enough. But we would be again taking this up in arms, and we should be announcing a few of these initiatives in the coming quarter.

The next question is from the line of Mukul Agrawal from Param Capital.

Yes. Sir, my question is regarding this INR 1,000 crore UP contract. So in the stock exchange notice, you have mentioned that you'll be preparing DPR. And based on DPR, the exact amount of the project cost will be determined. Hence, this is a government contract. So have we got it in competitive bidding? Or due to our expertise, we have been awarded this contract? One. And second is, who will be funding this project? Either state government will be funding or central government will be funding? Or how does it work?

This contract is under the post-ownership position, which is run by the center. And in the process of bidding for the contract involved preselection of certain bidders based on technical-level crits. And thereafter, it was a competitive bidding, which allocated the contract to the winning bidder, and it was not just one bidder in the whole business.

So there is no risk of -- since if -- a post DPR, if the contract, say, the cost escalates to what is estimated, there is no risk of getting canceled or reaching by the government?

No. This is quite a fair process, which the government has adapted in this case. That's our view of the government. As the DPRs get finalized, the scope of each village and the scheme of treatment which would be deployed would get determined, and the cost of executing those projects would get firmed up. We don't see any risk or challenge associated with this so far.

The next question is from the line of Rajesh Kothari from AlfAccurate.

Sir, my first question is in the chemical business. If I look at last 3 years' revenue, it is very quite flattish revenue for around INR 400 crores, INR 430 crores. But if I look at PBIT, it has almost doubled in absolute terms as well as from a margin perspective. You mentioned that one of the reason is price increase. But generally, price increase also was reflected in the corresponding increase in the revenue, which is not the case. So I would like to know what is the key reason for improvement in profitability? Is it a product mix? Is it a change in application? Is it the cost competitiveness? Can you explain what is the reason for this?

We've undertaken some capacity expansion and other improvements on the capital side over the course of the last 2, 3 years. Secondly, there will be a change in the profile of the products and margins associated with our product mix. And there's also been, as I have mentioned earlier, improvement in the overall efficiency and throughput of the various plants and equipments involved, which has given us advantage in the margins. The favorable price movements, which have happened, has to do with the raw material side of the cost, and that has helped us to some extent in terms of increasing our margins. So for a host of reasons, not just a single one.

And how do you see the margins in the Chemicals segment? Do you see further improvement in your product mix? How do you see these margins?

Further improvement is an ongoing process. That's our intent, an intent that we would continue to try and improve the overall profile of our products. It's difficult to predict it over a longer period of time. As we see it today, we should be in a good position to maintain the profile as you see currently for the year as a whole.

So basically, what you're saying is the product mix has changed. So can you give a little bit more color into this that, what do you mean by this. Can you classify, for example, the low margin versus high-margin business kind of application, which would have changed in the last 3 years due to some drop in these?

That's not something which I would like to discuss on the call. But there have been a few other clients, which we have added, which are giving us better margins. And there are some others which we have dropped, which were not doing so well on the margin front. We hope that we will continue to do that as we move forward. And we would be able to call out specific product lines and applications where we are not making any good money to our liking and keep adding product lines and products where the margin profiles are better.

The next question is from the line of Renjith Sivaram from ICICI Securities.

Just on specific numbers, am I audible or -- is the voice coming? Hello?

It's very garbled. I'm sorry. We're not able to understand, clearly.

Can you hear me now? Is it fine?

Slightly better.

Yes, sir. On your comps you had mentioned there are around INR 6,000 crores of rise with this pipeline. So which are the major do you think [ associated partners], who are Vizag, IOCL Panipat, Aligarh, these are some of the refinery oil and gas projects in the pipeline. So these included in that bid pipeline or is it excluding that?

The bid pipeline would include projects from the Refinery segment, where on the inquiry pipeline wherever we are interested. This particular figure of INR 6,000 crores also includes the contract which we just announced, which would now move away from the inquiry pipeline into the order book.

So of the remaining INR 5,000 crores which are the large of that projects if you can, where you think -- largely pertaining with revenues or is it the mix of oil and gas, the orders that you have already the won.

There are very few in the Municipal segment, which are included in that inquiry pipeline. There would be a slight concentration of sizes when it comes to the heavy industry, which would include the steel sector and the power sector as well as the petrol refinery sector. But as such, it's quite a widely distributed inquiry book.

I see. And sir, is there any chance for us to participate with [indiscernible]

I'm sorry, it was not very clear. I couldn't understand.

Hello. Is there any chance for us participating in Chennai desal with a partner or you don't want to look at desal at this point in time?

So we are quite happy to participate in -- I mean, in fact, we have been participating in a lot of desalination projects in the Industrial segment. However, when it comes to the Municipal segment, there are various other challenges, as you would know, that one needs to overcome. And we would participate only if we feel that we are being able to overcome those challenges.

Okay. Okay. And sir, if you can make -- how was the competition from land for the usage, that you have won? Is there any dealings with the state government or is it completely within one economic and the central team? There is no relation or there so dealings with any state government in this project?

One would need to operate and execute it on the ground. And hence, there is involvement with the state government and the district-level administration. That's where the projects get identified and the DPRs get created and approved. But in terms of the overall control in monitoring and the cash flow of these projects, these get centralized into the Jal Shakti ministry.

[Operator Instructions] The next question is from the line of Faisal Hawa from H.G. Hawa & Co.

Yes. So am I right in making a statement that this whole whatever you're EPC and this business should see very little competitive intensity going forward because mostly the players are not that organized? And you have survived decades of almost getting no orders. So our company is now really very well placed to really get a large portion of these orders. That's one. Second is, how do you see the IRCTC opportunity playing out? Because in their annual report, they clearly say that they want to set up at least 7 to 8 more plants. Is there some way that we could participate in that too because that appears like a monopoly bottle suppliers all over India to railway stations?

Let me address the second question. Hello?

May I request the participants to please stay connected as the lines of the management got disconnected. [Technical Difficulty] We have Mr. Patni reconnected. Sir, you can go ahead, please.

Sorry, I was responding to your question on IRCTC. We have been actively working with the railways for quite a few years, and we've enjoyed a significant proportion of the business in the past. We will continue to engage and participate in these opportunities and very hopeful that we will have a good share of this opportunity. On the overall question of competitiveness within the EPC space, I wouldn't say that the intensity is low or that we are one of the very few. This is -- this space sees a lot of participants and both the new and the old ones keep giving a reasonably high degree of competition. EPC per se is not a very profitable business, if you look at the global trend, and one has to be very careful in making sure that in the heat of the competition, you don't end up compromising the bottom line. So in spite of the high quantum of opportunity that you see, we will be extremely conservative and make sure that we are only participating in case the opportunity meets all the criteria with respect to cash flow, margins and the other filters that we put. So in summary, the competition is not low, and I don't expect it to really soften in the near future right now.

Sir, and we have been very conservative in taking orders and on who we deal with also. So don't you feel that UP is a very tough wall to face first half?

We have evaluated the scenario at the ground level as well as the overall commercially contractual profile. As it would stand today, we feel that we've taken adequate precautions to cover the visible risks and do hope that this contract would turn out to be a good one for us.

The next question is from the line of [ Pankaj Kapoor ] from [ Kapoor & Company ].

Sir, if we take the consumer product part of the story, sir, what are the reasons that attributes the losses in the segment? And what steps are we taking to reverse the trend? What is the product profile there? So there has been a decent revenue, how do you explain this?

The consumer segment is one of the most dependent out of the basket of products and solutions that we have. This segment is the most dependent on a face-to-face customer connect, and which we all know there were several challenges during the course of last year. And we continue to see some challenges even during this current quarter. That's one of the primary reasons why you saw a muted performance from the segment. Some of the sectors which this segment addresses includes the hospitality segment, which is the hotels and resorts and restaurants. It also includes the education and the real estate sector. All of these have been hit pretty badly by the pandemic. And my expectation for the current year is that we should see a reasonably good growth coming from this segment as well. While we will not be able to achieve a turnaround in terms of the bottom line in the last year, I am very hopeful that this year, we will see that won't happen.

What is the potential, sir, if you -- just continuing to the first question on this. What is the potential of this segment going forward if -- when the normalcy is there in the system? What kind of margins can we expect and the product profile, if you can elaborate, sir?

It's a very wide basket of products, which we offer in this particular segment. It includes the home water solution, which is the typical RO, which you would put in your kitchen. It also includes apartment level or a flat level treatment equipment, like a softener or a sand filter or a high-end removal renewal. It also offers products to the rural market, which includes products for handling toxic materials like arsenic and fluoride, which affects our villages quite a bit. It deals with sewage treatment plants for residential and commercial systems. I think the product line is kind of pretty widespread. And we are quite hopeful that as the scale of operations picks up in this particular segment, it will be able to deliver very good bottom line numbers. But the numbers become extremely dependent on the overall scale as it carries a high overhead burden. So until and unless the productivity rates go up, the bottom line does not do justice to the overall potential.

The second question pertains to this raw material basket, sir. What constitutes the major raw materials? I think in the Chemicals segment also and for the EPC part also. And the inflationary trends that are prevailing all across the board, how are we insulated if you could give the mix on the basket part?

You see that the product profile that we have would indicate that the raw material mix is also pretty wide. I can give you a directional answer to the question, which you put rather than getting into any specifics. Steel and cement prices would certainly have an impact on our Engineering business. The petrochemical prices and other commodity price movements on the chemical front would have an impact on our Chemical segment also. So in the current scenario, which we are all aware of, the steep increases and variations in prices that are being seen across various commodities, that would end up having some impact on the margins. And we normally try and insulate ourselves by way of various contractual measures and also try to make sure that we are able to pass on these cost increases to the customers. This, however, does not happen immediately. There tends to be a small lag which could be in the range of around a month or 1.5 months, depending upon individual contracts and customers. Similar thing should be stated about the chemical business where the wide variation, which we have seen during the course of the last 4 to 5 months, certainly has a direct impact on the costs of our various products. We have been reasonably successful in passing on these cost increases to our customers, again, as I said, with a small lag.

And lastly, sir, if I may, on the Sri Lankan order part, as you have told, there is a similarity between the order which you have executed or is in the order to be executed at Sri Lanka. What has been the size of the order sir? And how long you have been there in Sri Lanka? And if you could give the mix of your domestic and the international business in the EPC segment and the order book. That's all, sir.

I think you asked quite a few questions in that small sentence. I'm not sure that I'll be able to answer all of them. If I understood it right, you were trying to ask about the status of the Sri Lanka order execution. That was one of the questions which you put. Sri Lankan order execution is going reasonably well. We are approximately 75% of the contract is completed. They have also seen a resurgence of COVID infections and, hence, the country continues to impose restrictions of various kinds. The contract, obviously, gets a little bit impacted, and we are expecting -- compared to our last announcement, we are expecting a little bit more of a delay. But as such, the execution continues to go well, and we are getting excellent support from the Sri Lankan authorities as well as other partners, which we have for this execution. You asked about the split of business between domestic and international. Vasant, can you provide a directional number on that?

In terms of the international business, it is roughly in the region of around 50% of the total revenue in the Engineering segment, the export revenue.

[Operator Instructions] The next question is from the line of Inderjeet Chakrabarti, an individual investor.

I take this opportunity to congratulate you for the excellent set of numbers. I just have one question, which is that, you had said a while ago that the company is pursuing some more large opportunities in the international market. Now my question is that what is the possibility in the next 1-year, the company winning any other large order like this INR 1,000 crore?

We are quite hopeful that we would be able to announce at least 1 or 2 such orders. But as such, it is very difficult to project the exact time line when these opportunities mature. I can tell you that we are at a advanced stage of discussion on quite a few of such opportunities. And hopeful that we would be able to see at least 1 or 2 of these materialize during the course of the year.

The next question is from the line of Anil Kumar Sharma, an individual investor.

Congrats for the great numbers. I have one question. Last con call, you have mentioned that in the year of good stock, our company is not listed on NSE. So if we get it listed on NSE, it will be a great advantage to the shareholder and the investors. So is there any process 100%?

Yes. There is a process underway to get the company listed on NSE. Milind, can you throw a brief light on this?

We are in the process of listing our shares on NSE. But due to the current epidemic, we are unable to move. There's a restrain on movement of legal documents, which is a requirement for coordination with the NSE. So now as soon as the epidemic or the streamlined process is on, we will again coordinate with NSE and try to expedite the process.

So in this front, at least half year, we are hopeful?

Sorry?

In this half year, at least in this half year -- by 30th September, it will be done, I think, sir? Is it possible?

Yes. We're trying to do it as soon as possible. But because of this uncertainty, we are unable to commit any date.

Okay. All right. Congrats on the number. Sir, one more question, I have. Only one question. Do you think that this type of repetition in this last quarter repetition can be there in the coming -- this current quarter? Or there will be some in the same?

Sorry, I was not very clear about the question.

Sir, our current quarter results -- last quarter, fourth quarter results are excellent. And what do you think in the current quarter, which is going on, there is some pandemic effect is there? Or can we expect the same number?

Normally, if you look at past few years' trends, in the fourth quarter, which we have is always one of the heaviest quarters. I don't expect that trend to change. In the current quarter, we did get impacted by the pandemic, the various restrictions as were visible across the country, both in terms of the social interaction, the movement of manpower, the logistic challenges which came in. So all of these did have an impact during the course of the current quarter, which is April to June '21.

Thank you. That was the last question. I would now like to hand the conference over to Mr. N. M. Ranadive from Ion Exchange (India) Limited for closing comments.

Good evening. 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, please reach out to our Investor Relations managers at Valorem Advisors. Thank you, and have a wonderful evening.

Thank you. On behalf of Ion Exchange (India) Limited, that concludes the conference. Thank you for joining us, and you may now disconnect your lines.