Ion Exchange (India) Limited (IONEXCHANG.NS) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ion Exchange (India) Limited Q2 and H1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded. I now hand the conference over to Mr. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Good afternoon, everyone, and a 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 second quarter and first half of the 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 uncertainty 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 decisions. The purpose of today's earnings call is purely to educate and 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 delay, I request Mr. Vasant Naik to start with his opening remarks. Thank you, and over to you, sir.

Thank you, [indiscernible]. Good afternoon, everybody. It is a pleasure to welcome you all to the earnings conference call for the second quarter and first half of financial year 2026. For the second quarter under review on a control dated basis, the operations normalized with the completion of migration to the SAP environment. And the company reported operating income of INR 7,339 million, an increase of around 14% year-on-year. The EBITDA stood at INR 685 million, which is largely on the same line year-on-year. The EBITDA margin stood at 9.33% and net profit was INR 499 million, but declined slightly by 1.4% year-on-year while the PAT margin was 6.8%. For the first half of financial year 2026, the company reported operating income of INR 3,171 million, an increase of 9% year-on-year. The EBITDA stood at INR [ 131 million ], down 1% year-on-year. Net EBITDA margin stood at 9.95%, and net profit was INR 984 million, an increase of 3% year-on-year, while the PAT margin was around 7.47%. Now let me take you through the quarterly segment performance on a consolidated basis. In the Engineering division, the revenue for the quarter was INR 4,562 million, an increase of 16% year-on-year. The segment EBIT was INR 224 million decline of 5% year-on-year. The inquiry bank has remained steady, and we witnessed a sequential increase in order flow during the quarter, driven primarily by medium-sized opportunities. We also secured a few orders in [indiscernible] and high-purity water projects within the solar and pharmaceutical segments and continue to actively pursue additional opportunities in these areas. Our Services division recorded strong growth during the quarter, supported by the acquisition of several high-value long-term O&M contracts. Execution activity picked up pace during the quarter in the Industrial segment resulting in both sequential and year-on-year improvement in turnaround. Our execution of the UP Jal Nigam order remained muted during the quarter. Regarding the Sri Lanka project with the resumption of funding by the customer and with their satisfaction with the company's ongoing progress of work, we are now expediting the completion of the contract. Margins during the quarter were impacted primarily by elevated infrastructure costs. These were planned investments to support higher future volumes as well as the continuing effect of a legacy project that has improved the margins for the period. During the quarter, we also entered into a strategic partnership with manned human water and memory solutions for manufacture of hollow fiber of filtration and membrane viral reactor [indiscernible] in India. This will be under a co-branding arrangements between the Hydromem brand and [indiscernible]. Leveraging [indiscernible] global program membrane technology, we will produce this advanced membrane locally at our state-of-the-art manufacturing facility thereby reducing the import dependent and enhancing cost efficiency and competitiveness in the water treatment project across India. The company also continued to invest in its standard system engineering facilities to expand the range of innovative off-the-shelf engineering products. The current order book stood at INR 27,110 million with an order inflow of INR 4,700 million during the quarter. Coming to the Chemicals segment, the revenue for the quarter was INR 2,184 million and increased by around 11% year-on-year. The EBIT stood at INR 591 million, increase of 13% year-on-year. The segment recorded both sequential and year-on-year improvement in turnover during the quarter while maintaining its margin profile, reflecting consistent operational performance. We're also pleased to share that the company has commenced the stage-wise commissioning and commercialization of its greenfield manufacturing plant at Roha Maharashtra from the last week of September 2025. This important milestone further strengthens our manufacturing capabilities and underscores our commitment to delivering high-quality Indian high and exchange region to the customers across the globe. For the Consumer Products division, the revenue for the quarter stood at INR 858 million, which increased by around 24% year-on-year. The loss for the quarter was $27 million as against a loss of $35 million in the same period of the previous year. The segment continues to record healthy volume growth. We have maintained our leadership position in the softness segment while steadily expanding our market share in other segments through the implementation of Focus and aggressive marketing strategies. With this, we can start with the Q&A session.

[Operator Instructions] The first question is from the line of [ Ketan Hora ] from Bankers Asset Management.

Sir, [indiscernible] front, we saw the execution picking about 18% growth rate. But where is the margins were like all-time [indiscernible] 4.8%, how should we understand these 2 situations, I think the execution has improved, but the margins have been like going lower and lower and these margins to like never heard of?

Thank you for your question. This Indraneel Dutt speaking. So your observation is varied. So let me answer what parts of the question. I think on the revenues, as you know, as we reported in the first quarter that results that we are in the process of implementing the SAP system. And as a result, our first quarter performance was muted on account of that implementation. And the engineering business, obviously, big lowest late in our pending order backlog, and we were able to bring forward execution in the second quarter. So that is why you see a decent growth there. In terms of the margins, I think this has been consistent with what we have been calling out in the past few quarter calls, where we have already highlighted about the challenges in 1 or 2 of the projects that we are into execution. And we had informed that the stakeholders there that we expect to continue for some more time. So that is why you will see a muted bottom line here. Also maybe worth mentioning that last year, we had a [indiscernible] international projects, again, clearly timing based, which had a better profit mix, and that is the reason why you see a temporary, I would say, downturn on the profitability side. And we continue to work on the execution of this value order. There are also other orders that are coming in with an improved profitability mix. So we hope that going forward, it will start slowly normalizing. [indiscernible] but will continue to till we close up this pending projects in the engineering segment.

So for 2 parts to [indiscernible]. So till the time, can you just quantify how much percentage of the legacy projects are yet to be executed. If not the amount -- but can you tell us in the percentage in terms what percentage of the lease orders are still to be executed? And till then whether we will be seeing the margins [indiscernible] 5%?

Having said that again, we will not give any details on any specific projects or so, era balance spending execution over on the margin levels. But we have mentioned in the past that we explained the execution of these other projects to continue till the end of this financial year. We're still working on to that assessment from our side. This project execution continues. We are making good progress. But for whatever reasons, the headwinds on the margin continues. At the same time, we would have seen we have picked up a decent flow of orders that are coming in this quarter, which has been with favorable profitability profile. So we believe as those products are get into execution, the overall situation will start getting better. But beyond this at this point in time, we want to be able to offer you anything more specific information.

Sir, as you had mentioned last quarter that by quarter 2, so you will be able to in a position to see how the full year looks like. So for the FY '26, what should be the revenue trajectory and the margin profile for the engineering front?

So we expect the first half first half performance to continue broadly in the second half. I think on the engineering side, that will be our call right now because some of the projects that we are getting in now by the time we start getting revenue from them. It will be towards the end of the fourth quarter or the early next quarter. So we'll hold what has been the first half or [indiscernible] well steady progress in project execution. We have improved billing this quarter from the allowing EPC contracts, but UP continues to be slow due to funding issues.

[indiscernible], again, the , I would say, quite in a contract covering the quarter 1, there was a revenue decline, whereas the margins from 9% because of some one-off things in the quarter, the margins are down [ 2.5% ]. So for the full year, whether we should consider that for the FY '25 margins will be maintained or it will be lower than that. And for the revenue also, the first quarter was negative and the first half revenue growth has been 7%. So whether what should be the ballpark guidance. I understand that you don't view the guidance, but a range I would ask.

Yes. So I would say that first quarter was had some special causes. But I think those normalized out in the second quarter. So as in the first half, profile that you see of both revenue and margins, we expect that to broadly continue in the second half of the year for the Engineering segment.

Right. Okay. And by the year-end, we are quite pretty confident that the legacy projects should be done and dusted.

As of now, I don't have the dusting part but we're trying to see how much we can get them over the like interest to get that closed off. And that project execution is going well, everyone at the top leadership team involved closely. So we still go right now where we are on that project and the progress that the project are making.

Right. And coming to the chemicals front, now the greenfield plant, [indiscernible] planted has got commissioned. So we should expect logically or the revenue growth trajectory to pick up, right?

Logically, directionally, yes. We have given our outlook on the [indiscernible] plant, and we have said that this plant will progressively get commissioned and we had also called -- said that we're expecting the plant commissioning to happen before the end of the first half. And we're happy to say that in September in the last -- the end of September, we were able to commission the plant. So the plant is now into commercial production. And slowly, it is ramping up on its commissioning we have already said that we expect this plan to fully ramp up to the full scale over the course of the next 3 or 4 years. The gradual ramp up is that we are planning. That process continues very much. And we expect that in the first 3 months of the plant production, we could be able to use at least 25%, if not more of its volume. So right now, the [indiscernible] plant commissioning and gradual asking on production continues very much as per planned.

So in terms of the growth for the full year for the chemicals, how should one see because the first half has been like 2% growth?

So first half was impacted, as we said, to the SAP implementation. So we've kind of recovered partly in the second quarter. As you know, in the Chemicals segment, whatever is lost steel is a consumer license. So you don't get that back. But we delivered good 9% plus year-on-year growth in the second quarter. We expect to continue that profile for the balance of the year across our chemical and resin businesses. And I think the outlook is good. And at this point in time, and we believe we can continue this trajectory of growth for the balance of the year.

And then what about the other profitable difference because chemicals? This quarter margins were like all-time high of close to 29%.

Yes. So this is something that is very dynamic. We have talked about in the past. It's a function of the market pricing as well as the raw material, which again is very volatile and we keep track of commodity prices as well as on the exchange rate. At the same time, it depends also upon the product mix that we get from both our resin and the chemical businesses. So as of now, I think we think we would be able to hold on. This is -- I think the engineering one is easier to call because you at least have the backlog in place. There's a little bit of volatility on the chemical side. So I would hesitate to say that we will maintain these levels. But our efforts in the past has been an overriding the company has be broadly successful in holding on to these levels of margin performance. But it's still a way [indiscernible] situation, and I would just be conservative and cautious that we continue to watch out for the market scenarios and try to do our best to ensure we are able to continue giving the same rate of returns on the business.

All right, sir. And how much in total we would have incurred [indiscernible]? Yes, this is my last question. How much we would have incurred for the [indiscernible] plant in total?

We have indicated in the past that our total CapEx on the [indiscernible] plant is in the region of INR 425 crores [ monthly ]. So we are in the region of that level as of now.

The next question is from the line of Ruchit Agrawal from Unifi Mutual Fund.

Sir, a question on the consumer product business. Last 2 quarters, we've shown good growth in the segment. Can you help us understand what are the levers driving this segment? And what is the kind of breakeven time line that we're looking at? And also if you would reiterate the time line on the INR 500 crore guidance for the segment.

Thank you for the questions. So for the Consumer Products division, I think it's a very, very big market that we are paying. And we believe that there is enough for us to still go and get share from the market. We have strong confidence in our portfolio some of which are market leaders in their own areas. And I think has been, I would say, a consistent journey of gaining more customer share, executing well, servicing customers will our service contracts also are increasing quarter-on-quarter. And I think it's also we are investing in our brand promotions, we possibly hear us on some of the channels and some of our product funding advertisements that we have launched. So all of that, I think, is resonating with our customer base. We continue to also launch products in the healthier side of the spectrum with alkaline water, hydrogen water. Those also are showing good response from the market. We're also expanding geographically enabling markets like [indiscernible] again, I think we're seeing positive encouraging response and acceptance. So it's a massive market. We are still a very small player, and I think there is enough fair room for us to grow the teams to very strong, very [indiscernible]. The products [ gold ] coming out with new product lines. And I think we see continued growth. The segment is growing. On your question on when we go to [ INR 500 crores ], we typically do not give any guidance on such figures. But this is one of the strong performing businesses in the portfolio because driven by consumer demand consumer growth, and I think we see that continuing for us in the future.

And sir, anything on the breakeven time line for the segment?

See, the team is working towards growing this business. I don't think it's as much as a breakeven question here. I think we are deploying all the money generated back into the business in terms of gaining share, promotional activities, we are getting into more channels to market, e-tailers. We are on large stores. So I think for us, it's all about gaining share. and increasing our market percent. So I don't think there's really a big concern on this from a breakeven standpoint. We are investing, reinvesting back. We could say we make profit out of that business, but some of the impact of the company [indiscernible] to reinvest the profit back into the business to grow the business further.

Sir, a question on the Engineering segment. We've seen the 2 projects in UP and Sri Lanka contribute about 10% to 12% of our revenues this quarter. And as you mentioned that it had impacted margins as well. Can you brief us more on that as to how they have impacted the margins and a little bit more color on how the elevated infra costs have come through for the quarter?

So see, we don't give any specific -- I'd like to give specific views on how a specific project has moved. So I think Sri Lanka is a good story for us. We have reached more than 90% of the execution of that project. We continue to see good flow coming in on the project. And I think we are close to close to ours finishing off the balance of the project as [indiscernible] amount of goodwill. By the way, the [indiscernible] been executed. I think we are on track with respect to our receivables and collections and all of that. So that's, I think, definitely, one of our, I would say, marketing projects that the company has done and helps us to gain strong confidence in international countries. In terms of UP, we continue to be mobilized in the respective locations where we are doing these jobs. The fund flow, as we have mentioned in the past, has been slower than expectation. However, we continue to execute on those projects. We do have an outstanding that we are also consciously managing. And we believe that these projects will pick up in the quarters to come. So I think UP, the status remains broadly similar to our last quarter's conversation. Apart from that, there are other projects that we continue to go to some of them in [indiscernible] of concluding and there are new projects, as we said, about [ INR 70 crores ] worth of order we have closed in the last quarter that we will get into the execution mode in some time.

And question on the [indiscernible]. When can we expect the balance capacity to commission?

So as we said that this is a phased scale up of the plant. It's a massive plant, and it will also get driven by the market demand. As of now, our plan is to scale this up completely ordering 3 to 4 years. Right now, we're in the process of commissioning -- opening up more streams and lines, and that continues. Again, it's a function of market demand, but our current -- our base plan is to scale it up fully over a 3- to 4-year period.

The next question is from the line of Deepak from Sundaram Mutual Fund.

Sir, first question is in our strategy partnership, which you have mentioned in the presentation of mining mill volume membrane. So could you just elaborate on this opportunity because we are talking about producing it locally so it's in form of import subscription for us. So I just wanted to understand what was the, let's say, quantum of the import of this [ man and human ] membrane solutions for components in India, let's say, in FY '25? And how well are they penetrated in, let's say, Indian water treatment solutions? And what are the primary applications which this goes into?

So this particular collaboration is happening on the membrane product line, which is a part of our engineering segment. Our company has been actively investing in the membrane portfolio. And we currently have product lines in reverse osmosis or [ ARO ], both in brackish water, seawater. Following this membrane, we have offerings in ultrafiltration membranes, more technologies of [indiscernible]. We have [indiscernible] separation membrane that we offered in the marketplace. So this is -- this particular collaboration is an effort to further expand and compete to the full range of membrane offerings in the global market. Along with our reverse osmosis, nanofiltration and ultrafiltration membranes, what this technology partnership gives us access to top of the line technologies in the area of membrane bioreactor, which is largely used in wastewater applications as well as in [indiscernible] RO, which is used in the pharma, biopharma applications. and also gives us some additional technology in the India [indiscernible] penetration range. Now in the [indiscernible] filtration range, and we have already been present in the market, but this is a technology that definitely allows us to compete with the very best in the world. And this partnership will allow us to get to be the sole partner for management mills in the domestic market. It also allows us to take this technology to the rest of the world as well in the markets that we play in. It also allows management to use our state-of-the-art manufacturing facilities to manufacture these membranes and other ranges for their global consumption. So we see this to be a win-win situation of 2 globally well-known reputed brands coming together, leveraging the technology, leveraging the low-cost country presence in India or Ion exchange is a segment that the company is investing into and this will help both these companies expand their respective global presence.

Okay. And sir, would this investment to manufacture this? Would it be under a JV route means? And how much CapEx would be required? And how much do we plan to spend, let's say, in the next 2 to 3 years? And what is the revenue potential from this venture?

So this is not going to be a JV route. This is more of a technology licensing that we are doing with [indiscernible]. This is manufactured in iron exchanges manufacturing plants that are in the [indiscernible]. And we have already shared earlier that apart from resins, the other product technology where the company has been investing over the past several years is [indiscernible] technology, which we see to be a huge area of growth in the future for the company. because of demand in wastewater, demand in desalination, that is there not only in the country but also across the world and the market that we focus on supply into. So this is very much a part of our strategy. This is not going to be a -- so we're technology sharing where we will leverage that technology and the knowledge combined with our current knowledge of the technology and mean those products cater to the Indian market exclusively for [indiscernible] and also take this technology and the products for Ion Exchange customers globally and also offer manual manufacturing locations where they can manufacture this membrane so also cater to their global markets. So overall, it is very much going to be investment driven by ion exchange, but gives both the companies having in prior proposition.

Okay. And sir, then there could be some royalty payment for using that technology? And separately, do we need an incremental, let's say, what is the CapEx intensity, let's say, even though if we have to do this on own facility? Is there any incremental CapEx which is required to do this?

So yes, so on the question of royalty, there's part of standard technology licensing agreements. So nothing very specific or material to mention here. On the CapEx investments, I think there are already -- there have been already plans with the company on growing and investing in this segment. And this particular collaboration segments into our current investment and good plans for the [indiscernible] product line. So there is nothing substantively different that we will be doing. It just gives us access to [indiscernible] technology. And accelerates the process of offering that to the market. The company was well in one way to develop the initial partly has already been done, but it just accurate our ability to take it to market with quite a bit faster than possibly was originally [indiscernible].

Okay. Okay. And sir, one question on chemical front since now we are doing this commercialization of Roha plant in [indiscernible]. Sorry, if I missed it out there. I just wanted to know what is our revenue guidance for the chemicals segment, including the Roha and its overall chemical for FY '26 and '27?

So I just answered we typically do not give a specific guidance on a partial location. But we're looking at about [ between 59% to 10% ] of year-on-year growth for the year, and we'll try to see that we maintain the favorable profitability mix that we have been able to continue in this particular segment given the dynamics of the various input factors into question.

Okay. And sir, one last question to [indiscernible]. So sir, this half, if I look at your cash flow statement, we have spent around INR 160-odd crores, right? And this was almost half of what we spent in FY '25. And assuming that most of our CapEx for Roha plant was already consumed by FY '25 as the commercial asset was expected in Q1 of FY '26. I just wanted to understand in where have we spent to this INR 150 crores in this half and what is the full year CapEx guidance and where it will be spent?

The half year CapEx spend was in the region, I think, of around INR 160 crores for the half year, out of which roughly INR 120 crores would have been in the Roha plant. And the balance CapEx largely in our existing manufacturing engineering facilities, what we have also mentioned during the operational highlight in our standard plant facilities as well as come out in the membrane and in our Chemical segment facilities. As far as our total CapEx expectation for the year, excluding the Roha plant, it should be in the region of around INR 80 crores to INR 100 crores, roughly.

Okay. And because of this, let's say, even our gross debt has gone up from INR 200-odd crores to INR 400-odd crores in this September closing quarter. So what peak debt level are we looking at, let's say, by FY '26 and...

We should be having another INR 50 crores to INR 60 -- INR 50 crores roughly addition is the [ gross level ] from the current.

The next question is from the line of [indiscernible].

So in the note store account, we have highlighted this cost of material consumed includes great expense on some contracts. What is the residual legacy costs that we are calling out the onerous contract? Or is it something else?

This is part of the accounting standard requirement of disclosing the costs, which are directly attributable to the contract, engineering contracts under execution. So these are basically direct costs on the engineering EPC contracts, which are reclassified to COGS from the expenditure side on the operational expenses side. This will be largely in the retail of bank guarantee charges, LC charges, the PMC charges, which are directly identified to the contracts. And this is a standard [ loan ] which is followed across all EPC companies.

Perfect. And just -- I mean even if we conclude this onerous contract by end of FY '26? And then -- but even then we wouldn't be back on margin track next year, right? I mean given UP assuming that ramps up, I mean it's a question of when. But if it does -- that I believe would be at a lower margin.

So we continue to see very aggressive item in the marketplace as far as large projects are concerned. We have been fairly selective in the kind of projects we pick up. However, it will give us fact that the -- across the industry, there's very severe competition. So we have our new projects that we have won have been very selective. We believe there will be a better margin profile. But I mean, this is our efforts clearly is to improve the margin profile of engineering business from where they are. I think as we execute taking execution of those projects in the first quarter of the next financial year, we'll get later. We can give a better guidance on how we see the next few quarters coming out. As of now, the teams are focused to see that we close out some of these balanced legacy projects and trying to protect our margins to the best extent possible.

Right. Sir, my question was ex of this [indiscernible] risk and legacy projects. I mean we earlier you stood at 10%, 11% EBIT margin for the full year. I mean, is the environment still similar or like you said, with increased competition, that doesn't seem like it?

See, there are multiple factors at play the mix of the projects matters, the kind of industrial that you picking those projects, industrial versus infrastructure domestic versus exports. So there are multiple factors that come into play. Our effort is to see that we get towards high single-digit of profitability on the engineering side. Having said that, considering the aggressive pricing you see we are working towards improving the profitability on the chemical side. So while we want to contain the profitability impact on the engineering, we continue to double down on areas like products, like chemicals, like services to see we can get a better margin mix. Specifically on projects, which is a part of the indurating segment, that is driven by the nature of the projects that is in the engineering order book as I said, driven by how much of domestic orders we have in the order bank versus international, industrial versus infrastructure. All of those players don't want converts and wastewater, all of those play a role to be able to decide. So the composition and the profile of the profitability, what I'm trying to say, will vary or varies based on the mix of the order bank.

Fair enough. Point taken. And in Chemicals, so Mr. [indiscernible] had called out a couple of years back that of this INR 400-odd crores, you are investing some [ INR 8,000 ] crores, specific on some tech upgradation, which was a thing happening for the first time in the company in India and the comment then was once the plant commercializes will kind of share more details. So now that it is if you can -- what was that take that we were investing in and just some details around that?

Yes. So I think you have a good memory, we possibly would have talked about that. And as we execute commission the plant, I think, hopefully, by the -- there's a little bit of that is still pending. But I think by the year-end, we should be able to demystify a little bit of the -- it's one of the unique capabilities for a plant of this time. And we'll definitely be very happy to share more details. But I think by the end of the year when that is fully commissioned, as we said, while we commercially producing from the Roha plant, the entire plant commissioning will take a little time. This particular part of the project is towards the end of the commissioning phase, which we expect to be over in the fourth quarter. So once that happens, I think -- and at the earnings call for the full quarter, and Mr. [indiscernible] is on the call, I'm sure he'll be very happy to talk about those unique best in the world feature that we will be introduced in the rollout.

Fair. I'll ask them again. And last 2 question, sir. The increased depreciation and interest because of the Roha capitalization, which we did in September from Q3 onwards annualized or quarterly whatever?

Are you asking for the -- I mean, can you come again on the question?

Yes, the increased interest cost and depreciation that will hit our P&L given the large commissioning that we did.

Should be -- I mean our total CapEx is in the region of INR 425 crores. So -- and our loan is around 80% of that, which attract interest in the region of 9.5% [ pro rata ] depreciation impact will come in the quarter going forward. And I mean because the commissioning also is being done gradually. So for the balance half of the year, it will be not with the full impact, but the next year on the [indiscernible] impact will come.

Which would be how much next year?

Next will be at least in the region of depreciation, which should be at least in the region of around INR 30 crores a year.

The next question is from the line of [ Raghu Manihani ] from Kamaya Wealth Management.

So sir, I just wanted to get an understanding on what has been the capacity utilization on the chemical front, given our additional Roha [indiscernible] plant capacity expansion. What has been the utilization of the overall year?

I think in -- we have seen the strong demand in this particular segment. I think across both our businesses, we see good capacity utilization. I think the reason for the company to go invest in this state-of-the-art new resin plant was an even mix down capacity in our current plant. As we scale up, I think we are in for once. We are in supply-constrained market with respect to us. So I think we -- as we scale up, we see good demand picking up for our supplies. And the same applies to our chemical business as well.

Sir, will you be able to give what has been the utilization of the new added capacity [indiscernible]?

So we are selling whatever we are making. So we'll continue to sell whatever we need. So it's about -- also need to be understood that a plant of this nature it's not like flipping a button and it's a chemical process plant. It because to be optimized, you have to get the right quality. These are export products that we are shipping out to customers, discussing global majors. So a lot of that requires a lot of preparation and ensuring that quality is best in class in the water. So the scale-up has to be done in the right way, using our technology and IP knowledge to ensure that we can give our customers across the world, the quality that we've committed and they deserve. So hence, the scale-up is gradual [indiscernible], intentionally gradual. And whatever scale up we are doing, we also are keeping in line that we are able to liquidate that inventory. So that's how we are scaling up, and that is why -- it's a deliberate phased capacity enhancement that we are doing in the plant. And as I said, right now, whatever we are manufacturing from both our plants are getting consumed in the market.

[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor & Company.

Sir, if we look at the capital work in progress closing balance that INR 200 crores, so all these are pertaining to the Roha facility only? Or since we have capitalized on the project, if you could just clarify once again. What does this INR 200 crore balance attribute [indiscernible]?

Look, we have capitalized the Roha plant partially to the extent we have been able to commercialize the streams. So balance of the plant is still lying in the capital work in progress and a large part of the capital working program [indiscernible], which you just mentioned, is related to the replant only. And that should get capitalized over the next few months and before the year-end, we should have the entire plant as capitalized.

Okay. And with respect to the bid pipeline, I think some number was mentioned in the presentation and just making it about the order book bid pipeline. Can you give some color on our win ratio? And by when will these bid pipelines get converted? So for the end of the year or for the H2, what kind of order wins are we looking forward for the engineering segment?

So our current bid pipeline stands at approximately INR 911 crores. The iterative opportunities altered from the private sector and the public [indiscernible]. The government and the infrastructure segment is a small part of this pipeline. In the last quarter, that closed as we already announced the order inflow from engineering projects has been INR 470 crores. So this has been better than our first quarter hopefully because a lot of bets driven by time lines. We expect that our 15% to 20% win rate on this project and what we try to go for. As we have said already earlier, we are very selective in terms of subprojects pick up also driven by [indiscernible] that we are trying to close. We continue to pursue opportunities in India and abroad, there are multiple projects, both small and large beats are under negotiation and discussions both in India and abroad. And as and when they are all driven by time lines, and we have customer requirements of closing [indiscernible]. Anything material closes, we'll be happy to share that with the investor community. We -- again, the engine business continues to see good growth from seeing growth. There are opportunities everywhere in good water wastewater desalination alternate, high-purity water that we continue to look at across both domestic as well as international markets. And there are other emerging in forging sector, which also are coming up in some of the electronics, semiconductors, solar, data centers. That's also something that we would want to foresee going forward. So to answer your question, INR 470 crores last quarter, orders booked INR 1,011 crores of active order bank at about 15%, 20% of win ratio. And we continue to see strong demand and opportunities that we are pursuing, both in India and abroad.

Okay. And this order should be closing -- the 9,000 books should close by March '26, sir, since the bids are opened by now, that could be the opportunity?

So they will stand close [indiscernible] over to next year. We expect some all of the final more actively working in all these areas to bring more opportunities into the funnel is a continuous process. If you look, our engineering order bank has remained in that INR 8,000 crore, INR 9,000 crores for the past several years. And we offer banks. So we continue to track and in fact, some of these markets, we want to see if we can grow it off for [indiscernible] as well.

Okay. And one small point regarding our 1 acquisition of [indiscernible], I think foreign subsidiary company we have acquired. How has been the performance of the same and I think so they were carrying some debt also on the books of the company. So how have the debt repayment being with respect to the same?

So we currently in the overall performance, I think, has been has been good and as per expectations as per the original acquisition plan that was made in the white paper that we had put in is at that point in time. We have had some great on the books, and we continue to work towards bring them off. And the teams are now fully trained on our product lines. We are leveraging their local presence by -- and their relationships locally to promote the high exchange product portfolio, facing that to be the [indiscernible] year of operations and looking at both Portugal, Spain and neighboring markets. And we continue to look at their business to be being more for the company's growth in the overall continues.

Okay. Any revenue number you can share, sir, I joined the queue now.

We don't have a specific subsidiary numbers, I think that... So right now, we don't manufacture there. It's largely products coming from our existing manufacturing facilities. But going forward, yes, we have plans of some strategic manufacturing, leveraging the infrastructure and the location there. Right now, no, but in the future, yes.

The next question is from the line of [indiscernible] Kumar from Unifi Capital.

My question is on the plant commissioning. Sorry if you answered this already, the [indiscernible] around 10% of the expansion. When are we planning to commission the remaining -- like can we expect the remain to be commissioned by end of this year, gradually?

So yes, I think our plan is to get the commissioning of the plant done by this financial year. But as I said, the full scale of production of this plant is in [indiscernible] over the next 3 to 4 years. Before commissioning of the plant is concerned, including the unit technology that we are trying to unveil should get down at end of this financial year. That's what we're targeting for. It could be a plus/minus 1 month, but that's the target to the end of the [indiscernible].

Got it. And for the capacity that is already commissioned, what is the year-end exit capacity utilization that we are targeting? As I said, for the capacity that we now -- that we finally reduce we expecting all that we produce in a user, but [indiscernible]. As I said, we will get to full capacity over the next 3 to 4 years. Again, partly also driven by the global demand as well. But as of now, our financials and [indiscernible] production that we have made for the business growth is to go a full capacity over the next 3 to 4 years. This plant potentially can -- is 3x of the current plant. It's a massive plan that we have set up, and we we'll take it up in phases. There are part expansions that is already built into the plant. So all of that we expect to happen over the next 3 to 4-year period.

Understood. And my follow question is on the capitalization that we have done in Q1 -- sorry, H1, we have done [indiscernible] of capital that is set moving to gross lot. And you already around INR 200 crores there in the [indiscernible] now. But what we will commission 10% at plant? Am I missing something you're actually...

No. We have commissioned 10% of the manufacturing plant and machinery, but the other utilities and the admin block and the other service centers they have been fully completed. So that has also bought capitalized. Another reason why you -- why is the 10% manufacturing capacity capitalization, but the overall value of the capitalization is much higher.

The next question is from the line of Sunil from Uniquestion BMS.

So being a little long-term investor repeatedly hard on management actively by Mr. [indiscernible], Mr. Patni. What I understand is this segment of engineering, which during the last 10 years moved from 2% to 10% margin going back to around 4%, 5%. We are a very engineering-driven company technology-driven company. And so we don't take very low margin and some projects which are not having any skill at [indiscernible]. So what lessons we learned during last 2 years? And when you see will be going back to those respectable margin of maybe double digit for Engineering segment? That's my first question.

So thank you, sir. It looks like you have been really long associated with the company and [indiscernible] questions are valid. And the company, as I said, have taken lessons from a couple of those legacy projects, which is why you see us becoming very selective in the kind of orders we pick up. And I'm happy to share that I think some of the projects you picked up in the last quarter, I think definitely a lot more comfortable for a profitability mix standpoint for us. You also rightly said, sir, that we actually are a technology company and engineering in a lot of these segments, but [indiscernible], it services. We continue -- and the membrane technology collaboration we talked about is actually in as part of the products business. That's a business that we are heavily investing in. It's a significantly higher potential in the marketplace. We are looking at -- significantly trying to drive growth on the services side, which you believe is very important because it allows us to get our animated revenue stream offer valuated services to our customers. We're also working on our digital offerings that we have mentioned in our annual report, and we believe those will complement our services business. And we also want to be in projects more in solutions offering solutions, which are more in technology-intensive areas like ultrapure water, high purity water desalination, wastewater. So our focus is to move more towards more products, more services, more high-tech solutions, which we believe should help us improves the overall margin profile of this engineering segment. That is what we are working with.

Great. And just last point, sir, basically, when we just thought about this new project raising INR 400 crore investment, our thought process was very clear that the global market is ready for accepting our products and will be definitely able to sell whatever we will be able to produce and which you are talking about next 3, 4 years will be utilizing. My question is looking at the -- this tariff and all these matters, do you feel we'll have to rethink our thought process or we are confident about our progress?

So right now, again, a good question, sir, but I think what you would like to state is that feel that our argostrategy is very much relevant as of now. While the [indiscernible] situation is extremely dynamic and one can never credit what will happen. But at this point in time, all we'd like to say is that the current tariff policies that are there today in the various focus marks of the world continue to give us confidence that our investment in this world-class plant was justified and maybe in time for us really for the market demand [indiscernible].

Thanks for this very detailed replay. And please convey my regards to Mr. Patni.

Mr. Patni is on the line, he's listening to you, and he's acknowledging your best [indiscernible].

Due to time constraints, that was the last question for today. I now hand the conference over to the management for the closing comments. Over to you, sir.

Thank you all for participating in this earnings conference call. I hope we have 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 Manager at Valorem Advisors. Thank you.

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