Ion Exchange (India) Limited ($500214)

Ladies and gentlemen, good day, and welcome to Ion Exchange India Limited Q4 and FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Good afternoon, everyone, and a very warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Ion Exchange India Limited. On behalf of the company and Valorem Advisors, I would like to thank you all for participating in the company's earnings conference call for the fourth quarter and financial year 2026. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings 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 belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decision. The purpose of today's earnings call is purely to bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Aankur Patni, Vice Chairman; Mr. Indraneel Dutt, Managing Director and CEO; Mr. Vasant Naik, Group Chief Financial Officer; and Ms. Nikisha Solanki, Company Secretary. Without any further delay, I request Mr. Vasant Naik to start with his opening remarks. Thank you, and over to you, sir.

Thank you, Purvangi. Good afternoon, everybody. It is a pleasure to welcome you all to the earnings conference call for the fourth quarter and financial year 2026. For the fourth quarter under review, on a consolidated basis, the company reported an operating income of INR 8,633 million, an increase of around 3% year-on-year. The EBITDA stood at INR 199 million and EBITDA margin stood at 2.31%, and net profit was INR 243 million and the PAT margin was at 2.81%. For the financial year 2026, the company reported operating income of INR 29,148 million, an increase of around 7% year-on-year. EBITDA stood at INR 2,102 million, down 29% year-on-year. The EBITDA margin stood at 7.21% and the net profit was INR 1,432 million, whilst the PAT margin was at 4.91%. Now let me take you through the quarterly segmental performance on a consolidated basis. In the Engineering segment, the revenue for the quarter stood at INR 5,539 million, which is flat on a year-on-year basis. The segment EBIT was INR 215 million. The inquiry pipeline continues to remain healthy with both quarter-on-quarter and year-on-year growth in order inflows, driven primarily by the medium-sized opportunities across sectors. During the quarter, planned dispatches of certain high-value engineering contracts to the GCC geographies were impacted due to disruptions arising from the West Asia crisis. However, we have since received customer clearances to proceed with the execution post the end of the quarter. The closure of the Sri Lanka project continues to progress as planned, and we expect to complete the project by the end of the second quarter of the financial year 2027. During the quarter, we achieved an important milestone with the successful commissioning of the raw water treatment plant for the IOCL Panipat Refinery project, which is the largest water treatment package awarded in India. We have also entered into a technology transfer and manufacturing collaboration with MANN+HUMMEL, a global leader in filtration technology, for the manufacture of ultra-filtration membranes, and transfer of membrane bio-reactor technology to India. This partnership further strengthens our membrane portfolio and enhances our technology offering. As at March 31, the engineering order book stood at INR 26,433 million, providing healthy revenue visibility going forward. Coming to the Chemicals segment. The revenue for the quarter was INR 2,297 million, an increase by around 3% year-on-year, while the EBIT stood at INR 334 million. The business continues to record sequential and year-on-year improvement in turnover. However, the turnover was impacted primarily in March '26 due to logistic disruption from the West Asia crisis. In addition, the profitability during the quarter was also affected by input cost increases as well as the Roha facility cost. We have initiated appropriate pricing action to pass on the cost increases to the customers. We have also successfully completed during the quarter the commissioning of all the manufacturing lines at Roha. Further, the facility has since received post the end of the March quarter certification from WQA, Water Quality Association, which is a globally retesting agency for the resins which are manufactured at Roha. The certification is expected to enhance access to international markets and support future growth. We have also secured strategic contracts with key customers, which augurs well for the business growth and strengthens our position in the market. For the Consumer Products division, the revenue for the quarter stood at INR 1,047 million, an increase by 34% year-on-year. The loss for the quarter was INR 46 million compared to a loss of INR 52 million in the same period of the previous year. This segment continues to witness healthy volume growth, supported by expanding market reach and increasing product acceptance. The company continues to invest in the business to build a significantly higher and more scalable revenue platform. Coming to our international operations and our group companies. Execution of the 20-year DBOOT contract valued at OMR 73.46 million, which was awarded by the Petroleum Development Oman, to our subsidiary company, Ion Exchange LLC, Oman, this is progressing as per the schedule. We have also entered into a project joint venture with a local partner in Malawi for the execution of a water treatment package valued at USD 18.1 million. This contract has been awarded by the Northern Region Water Board Malawi. In parallel, we continue to strengthen our international footprint and are exporting our presence across overseas market with a focused strategy to grow our business and deepen customer engagement in key geographies. With this, I conclude the opening remarks, and we can now open the floor to Q&A. Back to you, Purvangi.

[Operator Instructions] Our first question comes from the line of Kishore Kumar with Unifi Capital.

I have a couple of questions.

Mr. Kumar, you may please proceed with the question.

Am I audible?

Mr. Kumar, you may please proceed ahead with the question.

Am I audible now, sir?

As there is a response from Mr. Kumar, we'll move forward to the next participant. Our next question comes from the line of [indiscernible] with Unique PMS.

Am I audible?

The next question comes from the line of Harsh Shah with Advisors.

Can you hear me?

Yes, we can hear you. Please go ahead.

Yes. So can you highlight the importance, the strategic significance of the MANN+HUMMEL JV? And what will it do us in terms of capabilities, geographical reach and client prequalifications?

Yes. So this is Indraneel Dutt. I'll take the question. So the MANN+HUMMEL partnership and collaboration is a very, very important milestone for the future success and growth of the company. As we have talked with the past that along with resins and water treatment, specialty chemicals, which is in the Chemicals segment, the membrane technology and product line is one of the biggest strategic growth levers of the company for the future. Looking at the overall outlook of the membrane growth potential in the world, which stands at almost at 10% plus, the overall membrane market is growing. It's a very broad market for the company and we are the only company which has an almost comprehensive range of membrane products starting from reverse osmosis membranes to ultra-filtration membranes and nano filtration intense. This partnership with MANN+HUMMEL was made with the intention of further expanding the membrane portfolio to have the latest technologies of ultra-filtration PBDF type flagship membranes and to get the NBR technology for which MANN+HUMMEL is famous. So that is now, with this partnership and the work that we do, it will make Ion Exchange membrane portfolio totally complete and will give us access to the best technological area where we had to develop one. And with that, we should be able to exploit the total potential of the global membrane market in the years to come.

And can you also highlight the geographical reach and how you propose to reach out to clients about the new product that you're going to develop?

So already, the membrane products are beginning to get distributed in our markets in Middle East as well as in the Asia Pacific geographies. In the near future, we plan to take some of this product also to the Africa and the Europe markets. As and when the membrane products could develop with MANN+HUMMEL and with the technology, those products will also be added to the portfolio of membrane offerings in the global market as well.

Okay. And sir, can you also elaborate on the acquisition of Mapril and what does this acquisition do for us in terms of capacity building on geographical expansion?

So this acquisition by the company of Mapril was done in 2023 middle, and that gives the company a strategic foothold in the South Europe market, specifically in the Iberian Peninsula of Portugal and Spain. This company is based in Porto, on the west of Portugal, and allows us to be a local company and tap the potential of the market for the entire range of water treatment products and solutions in that geography. The company since the acquisition has been fully integrated into the Ion Exchange Group, and now the company is expanding its presence and increasing its business in the Iberian region of Portugal and Spain. And we expect to see further growth and success of the company's expansion with the help of the Mapril acquisition.

Our next question comes from the line of Kishore Kumar with Unifi.

Sir, I have a question on this Oman project that we won in last quarter.

Kishore, you may please proceed it with the question.

Can you hear me? Hello? Am I audible? Sir, can you hear me? Can i go ahead with the question?

Hello, can you hear me?

I can hear you. Can you hear me? Can I ask my question?

Yes, yes.

Sir, my question is on the Oman project that we won in last quarter. So since it's a build-operate transfer project and we are executing in a JV, what is the upfront CapEx that we need to incur? And is there any brand that will be coming from the customers which can actually ease out the CapEx requirement?

So this project with Petroleum Development Oman is being executed to our joint venture partner in Oman, which is in Ion Exchange Oman. And the CapEx build-out is about USD 40 million over the span of next 2 years, which will be funded with a debt and an equity structure. .

And what is our contribution to the debt, sir, in this actually out of the $40 million? And what would be the partners' contribution?

It's a 50-50 joint venture between Ion Exchange. Ion Exchange is 51%. It's a consolidated joint venture of the company. And based on those lines, the equity distribution will happen.

Okay, okay. And my second question is on Roha plant. Now we have commissioned it fully. Are we in line with our previous guidance to achieve the 25%, 30% of capacity utilization? And how are we proceeding on the customer acquisition front as well?

So our guidance has been in the past that we will work towards 25% capacity utilization of the Roha plant in the first full year of operation. We continue to remain in line with those expectations. While there are some short-term headwinds in respect to the West Asia crisis, where some of the critical raw materials used for these products, namely styrene and oleum have gone up. But we believe that those risks could be mitigated, and we should be able to meet our earlier guidance from a planned capacity utilization standpoint for this financial year.

And just a follow-up on this, sir. Since the input cost prices have gone up materially, do you think that PBT breakeven is possible this year? Or it will actually defer it 1 or 2 quarters?

So we are doing our best, trying our best to see that we can get there. As we all know, the West Asia crisis continues to be very, very dynamic. But as we are just in the first couple of months of this new financial year, we are still endeavoring our best to see that we can achieve that objective.

Okay, okay. Got it, sir. Sir, I have a question on the Engineering segment as well. How is the legacy project execution been going on? We actually guided that it will spill into FY '27 as well. How are we pushing there? Do you think there will be a margin drag because of this in FY '27 as well?

So as we have given in the earlier guidance and updates, the project continues to move at the expected pace. A significant part of the project execution has already been done. However, as we have said earlier, the balance of the project will be executed in this financial year. We continue to work on the site and with the customer in line with the earlier given timelines.

And any comments on the margins, sir, on Engineering segment?

So on the margins for the Engineering segment, we have seen some headwinds in terms of the deferral of some engineering export shipments, approximately about INR 60 crores. Because of the West Asia crisis, some shipments were scheduled to be sent to the GCC countries which had to get deferred. And also as a result of which, our local shipments in the last quarter of the financial year had gone up versus the global revenue percentages, which has given us some headwind to the overall margin of the Engineering segment.

Our next question comes from the line of Nirmal with Unique PMS.

My first question is on the increase is on the EPC business. Sir, we've seen some slow growth in the business.

Nirmal, I'm sorry to interrupt you, but your voice is breaking. If you can just say clearly, please.

So my first question is on the EPC business. So you mentioned that we had some slowdown because of some GCC delivery difference. But apart from there, are there any challenges that you see because of what we are seeing, some issue on the growth side of things? .

No. I think predominantly, those were the two headwinds I talked about. Apart from that, our order is has been quite healthy. In fact, it has been 40% more than the last full financial year, and we expect a majority of those projects to get executed in this financial year and the next. So apart from those two headwinds which we called out, we don't anticipate any other major challenges in Engineering segment.

Okay, sir. And my second question, sir, is on the Chemicals business. So we've seen some impact on profitability. And again, you mentioned one was the input price pressure on the second half to Roha. So if you could comment on the profitability ex of Roha, interest and depreciation, so how are we seeing the outlook there, and if we can maintain our historic level or it will be better.

So as I said, the two headwinds that we received was obviously on the Roha interest depreciation costs for the year as well as some impact of the West Asia crisis, due to which our revenues in the month of February and March was impacted. We expect some of those lost revenue to come back to us in this financial year. So there has been, I think, I would say, 1/4 of the impact of the overall segment can be attributed to ex Roha causes. So whatever delta that you see, 1/4 of that you could attribute to the non-Roha reasons, which is what I talked about.

Okay, sir. And sir, just last question on the legacy projects. So that completes by second or third quarter of this year?

We should be able to close it in this financial year. As you know, project work on the sites are dynamic in nature. So at this point in time, the guidance we can offer is a little out in this financial year. And there are two legacy projects. One is the one that we talked about just now. And also, we also have the UP projects, which will continue to progress as the funds flow in for those projects.

[Operator Instructions] Our next question comes from the line of Tiraj with InCred Equity.

Am I audible?

Yes, you are.

Okay. Sir, I wanted to get some clarity on the margin that have been in the chemicals segment. So like you said, 25% of the [indiscernible] is due to a expansion. But apart from that, can you clarify what's the bifurcation between the Middle East logistics issue and due to the price increases?

So see, I think I'll clarify. I said that out of the 4% drop in the margin in the segment, 3/4 of that is because of the Roha expenses. Only 1/4 of that was because of the Middle East crisis that happened, for which some revenue specifically for our resins business was deferred out because of logistics challenges. We expect that to come back in this financial year.

Sir, I mean, out of the 10% margin decrease that has happened in the Chemicals segment because the margins are coming from 25% to 15%. So 10%, 7.5% is due to the Roha expense?

The Roha impact will be just under 7% for the quarter, and what Mr. Indraneel was explaining was the overall impact for the full year.

Okay. So let's say like 7.5%, it's a very high number. Did you not capitalize that cost, which was [indiscernible]? I think the expense that can make margins so securely.

No. I think we have also mentioned in our earlier calls, the entire utility buildings and the associated infrastructure were capitalized in the month of September '25, while the manufacturing lines got progressively capitalized during the year with a major capitalization taking place in March of '26. That is why there is a big delta in the bottom line for the Roha.

Yes, sir. But if we capitalized it, there shouldn't have been any impact on the EBITDA side, right? Or is this just that there's no change in the EBITDA, it's mainly the EBIT that have been suffering?

That is what I'm saying. I'm talking of the segment margin, which is basically the EBIT margin. So for the quarter, it was just under 7%. And for the full year, it was around 3%.

Okay. Sure. And coming on to the next question. In the Engineering segment also, we suffered a lot of like margin contraction. So is most of that -- like almost all of that is contributed due to the Middle East operations only?

No. I mean there were a variety of factors which was explained in the earlier question also. Apart from the Middle East crisis, because of the deferral in some of our export shipments, we also had the impact of the legacy project which is continuing and which is expected to continue for some part of the year going forward. And also the UP project, which is there, that also is a factor which is impacting the margins. So there's a combination of factors, which has overall impacted the Engineering segment.

[Operator Instructions] Our next question comes from the line of Deepak with Sundaram Mutual Fund.

Am I audible?

Yes, you are. Please go ahead.

Sir, I just want to double-click on this Roha resins plant. Sir, have we fully commissioned the 42,600 cubic meter capacity along with full backward integration?

So we have commissioned the plant, but there is one backward integration that is underway, but that does not as the production of the plant. It will help us improve our profitability. Otherwise, the plant is fully commissioned. As we have said in the past, a significant part of the plant will be used -- production will be used for exports in the global market. specifically in the U.S. in the drinking water segment, for which a particular certification from the Water Quality Association of the U.S. for the National Sanitation Federation is required. That has been obtained. And hence, we expect the revenue from the Roha plant to start picking up from this financial year onwards.

Okay. And sir, you have spoken about some strategic contracts which you have won with some key customer in Chemicals division. I just wanted to clarify, was it related to Roha plant? Or was it related to the overall Chemicals segment? Why I ask that question is because the majority of your capacity addition is coming through the Roha plant. So hence, I'm asking that question.

So that particular comment was linked to our other portfolio product lines and offerings in the Chemicals segment which is into water treatment, specialty and chemicals. So in that segment, we have made that particular remark. As far as while the capacity addition of the company or the CapEx spend of the company has been predominantly in Roha, as we have said in the past, this capacity addition is essentially for the export market, which is where our teams are working on with our global customers to get more of their volume. And we are confident in doing that as we go forward.

Okay, okay. And sir, one last question. You have highlighted about the RM inflation and logistics disruption also. With this backdrop, what is our sales and margin outlook for '27 in both Chemicals and Engineering division? And how much CapEx are we planning to spend in FY '27? And by the end of FY '27, what would be our gross debt position?

So at this point in time, we will not be able to offer you any specific guidance. This is in line with our traditional outlook providing practices, which we will try and do somewhere in the second half of the financial year. This is way too early for us to be able to answer those questions, also more in keeping in mind the West Asia crisis and the dynamics of the situation that we all see are changing by the day. We would like to defer answering this particular question. We can throw more light in the second half of the year.

Okay. And sir, any highlight on the CapEx, at least like what kind of CapEx are we planning to do in FY '27? And since you highlighted that we'll be spending some more on that Oman project also, so just on CapEx number and gross debt position, let's say, by the end of FY '27, if Vasant could answer, that would be very helpful.

At this juncture, the CapEx, what we have envisaged is more into the maintenance and routine CapEx, which is in the region of around INR 30 crores INR 40 crores. As Mr. Indraneel mentioned, as we move forward during the year, we will share with you any new major CapEx which we have in mind. But that will be in the later -- during the quarters. And in terms of the gross debt, presently it is in the region of INR 384 crores. At the moment, we are not envisaging any major CapEx unless we go for any plant expansion, which we will inform in due course as and when the plans get crystallized.

[Operator Instructions] Next question comes from the line of harsh Shah with Advisors.

Yes. Just to carry forward from the previous participant. Sir, can you just give the -- so you told that the maintenance and routine CapEx for FY '27 will be INR 30 crores to INR 40 crores and gross debt around INR 384 crores. So what are our current capacities which will get completed across different products? You can give a brief idea about it, that would be helpful.

So as we said, that our current objective is to utilize the Roha CapEx and the Roha capacity that we have set up. We are mindful of the return on capital employed for the Roha project, and that is what the focus of the company is on. In addition to that, as Vasant had explained, we have the obligation of the necessary CapEx for the PD Oman concession projects that we'll be doing, plus the routine maintenance CapEx at this point in time. We do have some ongoing work in our membrane and in our standard plants and products area, which we continue to pursue well within the range that Vasant talked about. So right now, that is what we are focusing on. As we work on growing the revenues from the Roha segment, we continue to evaluate other CapEx opportunities for further expansion. However, we will come back with those information at an appropriate time. For now, our focus is to see how we can improve the return on the capital deployed in Roha.

The next question comes from the line of Saket Kapoor with Kapoor & Co.

[Foreign Language]. I hope I'm audible.

Yes, sir. Please go ahead.

Sir, firstly, on the UP Jal Jeevan Mission project, what percentage of the same has been executed? And if you could just explain to us how have the receivable movement being from March ending to until date? Hello? Shall I need to repeat?

No, no. I think we heard the question. So I would say about 30% to 40% of the core is still pending to be executed. The pace of execution remains slow. As we said, it is dependent on the cash inflow to these projects. And currently, the focus is on closing out the projects which are almost finished. That is where the fund disbursement is happening. We continue to execute those projects to the extent of collections received so that we can manage our working capital, and we are phasing the progress based on the receipt of funds.

So how have been the recable, that the closing balance for March and the closing balance today, how much have been received out of the outstanding we had from this?

We do not typically share any such details, sir. But what we can say is post the announcement from the government on the continuation of the Jal Jeevan Mission scheme we have seen allocation of funds to the scheme from the center to the state, and we have seen some start of funds flowing in the month of March and a little again in this current financial year, which was is definitely better than what we saw in the last financial year on an average in the whole. So we are hopeful that more funds will start flowing in. And as we see more funds coming in, we will also increase the pace of the balance execution.

And sir, secondly, on the Consumer Products division. I think our revenues have gone up for this financial year. So if you could just share the strategy or the outlook for the segment and when can we expect this to start contributing profitability to the company. If you could just throw some more light.

So we are consistent with our earlier guidance on the Consumer Products division. As we had said in the earlier calls, we continue to invest for growth in this segment, and our efforts are showing results because this particular segment of the company has grown 34% year-on-year. If you read our financials for this segment in comparison to the past year, you will find that our overall profitability or the losses have reduced in this particular segment. The outlook for this segment continuous to be positive, and we expect to grow further on a similar trajectory or slightly lower because the phase has also increased for this current financial year. And we are also expecting better bottom line performance so that we can at least break even or have a moderate, very small, low single-digit profit in this business line. So all efforts are continuing to drive further top line growth as well as improve the operational profitability and performance of the division so that we can break even and turn positive, profitable in this financial year.

Only to add a point, sir. You did mention about your [ short money ] but. You are not able to give us a guidance in terms of margin definitely. But for the core segment of Chemicals, how is the operating environment currently? And how is our utilization level for the current ensuing quarter, wherein we are in 2/3 into it today. so if you could just give us some understanding on the business operating environment on the Chemicals segment.

So again, as in the past, we have said the Chemicals segment continues to be extremely dynamic. This is a segment where the company has been reporting significantly higher profitability compared to the rest of the company. We have gone up to the high 20s from a profitability standpoint. And when asked whether we can continue to sustain or increase that, we have always continued to say, it's a very dynamic environment. A lot of input parameters drive profitability, and we have to keep a very, very close watch on all these parameters to ensure sustained profitability performance. In the last quarter, because of the unexpected events into the West Asia crisis, we had a significant headwind on the raw material costs in this segment, which took us a bit of time to start passing it back to customers. As a result, we have seen some temporary softening of the profitability in this segment. The teams are working with our customers to see how we can pass on some of the raw material input cost back to the customers through pricing changes. And we expect to some of those measures, the overall profitability will improve. At the same time, we are also [ building ] our supply chain by opening up manufacturing centers in other parts of the world close to our markets. We are happy to say that our manufacturing plant in Dammam, Saudi Arabia for the Middle East market has now started commercial production. And we hope to cater to more customers locally from their facility, and we continue to work on that strategy in other parts of the world as well.

I'll just add a little bit to that, Indraneel, since the gentleman asked for an outlook for the segment. The long-term outlook for the segment remains extremely positive for us. And that's the reason why we have invested so heavily into that segment. We do feel that we have not even scratched the surface when it comes to the international markets. While West Asia or otherwise, some temporary headwinds do exist, but the long-term story remains as bright as it was. And I don't think that that's something which we are worried about.

So to conclude, sir, the worst in the margin trajectory is behind us as the March earnings we have reported for the segment, or the headwinds which we faced are still negating our profitability for the quarter also. If you could just give me -- give us some thought process on the same.

So I would say that we have been able to mitigate the headwinds we have received, and we expect to see the outcome coming forward. Having said that, as I've always said about this segment, the situation is very dynamic. And at this point in time, other than this, it will be difficult to comment any further.

Next question comes from the line of Kishore Kumar with Unifi Capital.

Sir, my question is on the Roha facility. I think we started this investment back in '21/'22, and we implemented over a period of 2, 3 years now. So when you are actually guiding for 255 of utilization in the coming years, what kind of customers are we actually targeting to get into? Do we already have some kind of offtake arrangement with them? Because when we actually started the implementation, you would have already got in touch with those customers. Are they new customers or existing customers? How do you see this actually be trending out in the come quarters?

So this Roha facility was set up, as we have said, to cater to our sports market. And the reason to set up our brand-new facility over and over our existing facility in Ankleshwar was to cater to more demand that we were receiving than what the capacity of the company was. So many of our existing customers both in India and abroad,have been asking for more demand and more volume. We expect that the Roha plant will be able to cater to that. And we would like to progressively increase our share of business with the customers soon now with the Roha capability and capacity that we have. However, it is to be noted that these products all go into the production in the customers' processes, and to be included, there is period of introduction cycle time that one has to expect. And our teams are working with our customers across the various geographies to see that we can cater to more of the demand from the Roha facility.

Are these customers traders or end users?

So it's a combination of OEMs as well as end users that we cater to.

Okay, okay. Sir, my second question is a bookkeeping question. So if I look at the other income for the last quarter, Q4, there's a significant increase in the numbers. Is there any one-off there? Or is it a ForEx gain that we are actually accounting in the other income?

In the fourth quarter, there is primarily two elements which has got included. One is the ForEx gain on exports, which we have accounted in this quarter. And also, we have claims in terms of our EPC contracts which were recognized during the quarter. That also is forming part of the other income.

Can you quantify, sir, actually if possible?

We'll not be able to quantify. But we can say the major chunk is comprising of these two elements in the..

Okay, okay. And also on the order value that we actually quoted in the presentation, it's not including the Oman project that we actually got in Q4, isn't it? Any reason for excluding it, sir?

The order inflow and order backlog, what we are disclosing is primarily for a stand-alone entity that Ion Exchange. We do not include the subsidiary or any associate order flow or backlog in the numbers.

Our next question comes from the line of Deepak with Sundaram Mutual Fund.

Am I audible?

Yes, you are. Please go ahead.

Sir, I just want to double check on the Chemicals. So you highlighted that due to some of these logistical issues, there were some delay in dispatches, hence, Chemicals revenue has seen a minor decline Q-o-Q. Just wanted to know what was the revenue loss which happened in Q4 in Chemicals division because of these issues?

We do not give any specific numbers, per se, on the revenue loss, what we have incurred on account of the West Asia crisis. But we have -- and that crisis continues so we are expecting that impact to continue in this also until the time the logistics and the shipping lines resume. So let us wait and see. We'll be able to share more details maybe at the end of the first quarter.

Okay, okay. And sir, one question I had on Engineering. So this new alliance or tech transfer of MANN+HUMMEL membranes, just wanted to understand, who are we competing here? I mean, are we trying to dislodge any existing competitor through our connection and we'll be supplying this to the clients? Or is it entirely new product which is currently not being used in India, and you're trying to push it forward because of some better technological advancement versus what has been currently used? And what can be the main primary application? Is it more towards power and steel? Or which kind of standard or substandard systems which this membrane will be going into?

So first of all, these are not new products. These products have been present in the market. However, I said that the membrane market is growing at a rate of 10% plus globally, which is one of the fastest-growing segments in the water and wastewater treatment space. This particular initiative was done to complete our already existing membrane portfolio to make us one of the widest portfolio offers in the world. In the membrane space, we compete with the global technology leaders like Dow or DuPont, Hydranautics, Toray, Veolia as well as NanoH2O. These are all global players. We compete against them and we will compete against them in India as well as in all other global markets. The applications for these membrane are many. It is required for recycle reuse. It is required for wastewater treatment. It is required for desalination. It is required for brackish water. So there are many applications for these membranes across the entire range of reverse osmosis, ultra-filtration, nano filtration and has wide ranging applications, membranes and higher exchange technologies, both of which the company has the two best frozen technology platforms on which to water treatment and wastewater treatment solutions work. So we are confident to leverage the MANN+HUMMEL partnership and the new technology absorption to be able to cater to the global market, both with existing and new customers.

Okay. And sir, what is our -- since you have highlighted about some of the competitor, what is our pitch here then? Is it that since we will be manufacturing in our existing facility so we have certain cost advantage?

So yes, as I said, all the names that you heard are either U.S. or Japanese. So we are one of the only few companies except the Chinese who make those products. So this is clearly a huge investment and reinforcement of the Make in India dream of the government. This is also our answer of an Indian mission with a global vision. So we expect significant increase in our revenues in our growth, in our presence not only in the domestic but also in the international markets.

Okay. Got it, got it. And sir, on the Engineering front, since you have mentioned about the large contract win, are we expecting any revenue to flow through in FY '27 in that project? Sir, since it's a longer project, I understand that. But are we anticipating any revenue booking in FY '27?

Yes. We are expecting some revenue from that project. If you remember, this is actually a good concession we have received. So the revenues will come in terms of O&M revenue A part of the revenue will start coming in slowly from this financial year. However, I would like to remind you that this revenue will come into our joint venture company in Oman and we'll recognize as part of our consolidated revenue earnings. So you will see at the end of this financial year, that there will be a delta growth in our revenues in the Oman joint venture.

Our next question comes from the line of [indiscernible].

I want to again get back on the Engineering segment. Sir, I think most of the issues with the margin compression in this segment was due to the Middle East operations. Is that correct?

No, what we said is we had a headwind or a challenge in the last quarter because of West Asia crisis. The other challenges were because of the continuing legacy project and the slow progress of the UP project.

Okay. And I think UP was around, I think, INR 300 cr project was remaining. How much have we executed in this quarter?

So as we said, quarter specific numbers, we'll only be able to share at the end of this particular quarter. As I said, the inflows, the project execution pace is dependent on the inflows that we receive from the government and the customer. Those inflows have started showing a positive trend upwards, especially after the last budget where the government reaffirmed its commitment to the scheme and extended the scheme for the next 4 years. Since then, we are seeing the fund flow slowly improving. And we hope that, that continues, and then we will also be able to speed up the execution of the balance part of the project. But that will not get over in this financial year. It will at least take the next financial year to complete the project. And more so, the government has extended the project officially for the next 4 years.

But aren't you expecting this project, the UP project to get over before like the UP elections?

No, that was the original plan. But as we have all seen, that the fund flow to the project was stopped and the fund flow has all started from the last month after the reaffirmation of funds to the project by the government in the last budget.

Okay. And can you just give me a bifurcation like how much of the Engineering segment revenue was of this legacy project? Was it 30%, 40%, 50%, so more like the severity. Can you do that number, if it's possible?

What exactly bifurcation you're asking?

I mean the percentage of projects in the Engineering segment, like as related to your legacy projects or your Middle East projects that had an impact on the margins.

No, I'm sorry. We don't disclose those specific numbers on the call. .

We just told you that the impact of the West Asia crisis on the Engineering projects, especially West Asia crisis was INR 60 crores that we already announced in the opening statement. And the others are in continuation with the same ratio as we had in the last few quarters, both of the legacy projects as well as the UP project. That pace has remained consistent over the last couple of years.

Operator Instructions] As there are no further questions from the participants, I would like to hand the conference over to the management for closing remarks. Thank you, and over to you, team.

Thank you all for participating in this earnings conference call. I hope we've been able to answer your questions satisfactorily. If you have any further questions, I would like to know more about the company, please reach out to our Investor Relations managers Valorem Advisors. Thank you, and have a good day.

Thank you, ma'am. 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.