Jain Resource Recycling Limited (JAINREC) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Jain Resource Recycling Limited Q2 FY '26 Earnings Conference Call hosted by ICICI Securities Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on date of this call. These statements are not the guarantee of future performance of the company, and it may involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Mr. Vikash Singh from ICICI Securities Limited for opening remarks. Thank you, and over to you, Vikash.

Good morning, everyone. Welcome to the very first Jain Resources Recycling Limited Q2 Results Conference Call. From the management side, we have with us Mr. Kamlesh Jain, Chairman and Managing Director; Mr. Mayank Pareek, Joint Managing Director; Mr. Hemant Jain, Director and CFO. Without taking any much time, I'll hand it over to Mr. Kamlesh for his opening remarks. Over to you, sir.

Thank you very much, and a very good morning to all of you. Wishing everyone a very happy Diwali and a prosperous New Year. Welcome to the quarter 2 FY '26 Earnings Conference Call of Jain Resources Recycling Limited. This is Kamlesh Jain, Chairman and Managing Director of the company. Joining me on the call today are my colleagues, Mr. Mayank Pareek, Joint Managing Director; Mr. Sanchit Jain, Additional Director; Mr. Hemant Jain, Executive Director and CFO; and other senior members of our team, along with our Investor Relations advisers, Strategic Growth Advisors. We truly appreciate your time and interest in joining us today to discuss our performance for the quarter ended September 30, 2025. First and foremost, I would like to sincerely thank all of our investors for the overwhelming response and the trust they have shown in Jain Resources Recycling Limited. We were successfully listed on both the NSE and BSE on October 1, 2025, following the IPO of INR 1,250 crores, comprising a fresh issue of INR 500 crores, and offer for sale, OFS of INR 750 crores. The net proceeds from this fresh issue will be utilized as follows. Approximately INR 375 crores will be used to prepay, or repay certain outstanding borrowings, which will be lead to interest cost saving, while the remaining funds will be allocated towards general corporate purpose, including business expansion, working capital requirement and all other operational needs. This marks our first earnings call post listing. I would like to begin by sharing a brief overview of our company and journey so far. Our company, Jain Resources Recycling Limited is a part of Jain Metal Group, which carries a proud legacy spanning over 7 decades. The group was founded in 1953 as Jain Metal Rolling Mills initially focusing on rolling of glass and copper, gradually expanding into aluminum and steel. Between 2025 and 2013, the group was timely engaged in trading activities before taking a strategic decision to transition from trading to manufacturing, a move that marked the beginning of our transformation into integrated nonferrous recycling enterprise. Over the years, we have achieved several key milestones in our journey. Entity was reconstituted as a partnership firm in 1993 and subsequently converted into a private limited company on February 25, 2022, under the Companies Act 2013. We commenced our manufacturing operation in 2013 with the establishment of a lead refining unit, which laid the foundation for our entry to large-scale recycling. Building on this base, we expanded into copper cable recycling in 2018. Soon after we embarked upon plastic recycling with a view to recycling in-house plastic scrap generated from lead acid batteries by recycling and cable scrap recycling. We diversified into aluminum recycling through the formation of our subsidiary, Jain Green Technologies Private Limited in 2022. Realizing the opportunity even in extracting tin metal present in lead scrap, we installed state-of-the-art vacuum furnace technology and started producing tin in 2025. Today, we have built a robust and diversified recycling platform capable of processing multiple nonferrous metal at a single integrated location. Our strong global sourcing network, combined with an unwavering focus on quality, efficiency and sustainability continues to be cornerstone of the long-term growth and value creation. A key milestone in our journey came in 2023 when our lead ingot was registered as an LME brand, London Metal Exchange. This achievement provides us with the distinct global advantage, enabling access to a wider customer base, ensuring our product meets international quality benchmarks and meeting our pricing with the globally recognized LME reference price. From a modest beginning as a rolling mill in 1953, today we have evolved into a global recycling enterprise, a journey built on vision, resilience and relentless focus on sustainability. Over the decades, our focus on innovation, quality and the profitable growth has enabled us to build a business that not only creates value, but also contribute meaningfully to a circular economy. With that, I will now hand over to Mr. Mayank Pareek, Joint MD, who will take you through the detailed overview of our business operations, product mix and strategic road map. Over to you, Mayank.

Thank you, Kamlesh Jain. Let me now walk you through an overview of our business segments, operational footprint and future growth plans. So to begin with, I will start with the product verticals. Currently, we operate across 5 product verticals. The major 3 namely copper, lead and aluminum and the ancillary 2 namely plastic and tin, which together form the foundation of our diversified nonferrous metal portfolio. Copper and copper ingots account for approximately 46% of our total revenue where we command a 3.4% market share in India. We produce ready-to-made copper, copper ingots and copper billets which are used as feedstock for various applications such as electrical conduction, chemical, pigments, automotive components, high-quality copper cathode making, et cetera. Lead and lead alloy ingots contribute around 48% of our total revenue with a strong 8.6% market share, underscoring our leadership in this segment. Our lead ingot registered with the London Metal Exchange is also recognized under the brand name Jain 9998 as a registered brand of refined lead by the multi-commodity exchange MCX in India. Refined lead ingots and lead alloy ingots are predominantly consumed in lead acid batteries. They also find their applications in radiation, shielding products, cable sheathing, ammunitions, pigments with stabilizers and modifiers for plastics and aerospace. Coming to aluminum and aluminum alloys, this segment represents somewhere around 4% of our total revenue with a 0.5% market share in India. Owing to their high strength to density ratio, aluminum alloys are widely used in automotive industry to make the vehicle aerodynamic. Similarly, owing to properties like good castability, machinability, corrosion resistance, aluminum alloys are also used in domestic appliances, [ mobile sets, ] et cetera. Melting of aluminum has considerable cost of fuel and melt loss associated with it. Hence, the concept of supply of molten aluminum in hot molten form is increasingly taking. By virtue of our recycling process, we also recover 2 valuable byproducts, tin and plastic. While their revenue contribution is relatively small, these segments hold significant importance from a clean recycling and environmental responsibility standpoint. Our plastic recycling division primarily processes in-house generated PVC and polypropylene scrap. PVC regrind that we obtain from cable recycling typically contains multiple impurities, rendering it unusable in its raw form. Selling such low-grade scrap in the open market could result in unethical disposal practices such as burning or landfilling, et cetera. To address this, we have developed an in-house process to recycle the PVC regrind into high-quality PVC granule. Similarly, polypropylene chip scrap derived from lead acid battery breaking often carries traces of lead and sulfuric acid. Improper handling by unorganized recyclers can cause serious environmental and health hazards. Hence, we recycle this scrap internally to produce RoHS-compliant PPCP granules ensuring safe and responsible recycling. Our tin recovery process, though contributing a modest share to the total revenue adds meaningful value to profitability as the expected tin commands a significant value enhancement due to its high quality and industrial demand. In addition, we are also engaged in trading of nonferrous metals and other commodities, which contribute somewhere around 2% to our total revenue. In 2023, we acquired a 70% stake in Jain Ikon Global Ventures, JIGV, which is in UAE, making it a subsidiary of Jain Resource Recycling Limited to set up a gold refining facility in Sharjah. Operations began in August 2024, focusing on gold and silver refining. However, due to low margins, high operating costs, working capital constraints and sector volatility against the backdrop of stringent AML [ Substitutes. ] JIGV's precious metal refining operations were discontinued effective from April 17, 2025. Our presence across these verticals demonstrates a well-balanced product mix and underscores our strong market position in what continues to be a highly fragmented metals recycling industry. This diversified portfolio not only supports revenue stability, but also strategically positions us to capitalize on emerging opportunities across the nonferrous recycling segment. Raw material sourcing is a significant part of the business, and I will throw light here. We have established a diversified and resilient global procurement network spanning across multiple geographies. Over the last 3 fiscals, the Jain Metal Group has sourced recyclable raw materials from more than 120 countries, reflecting the depth and reach of our global sourcing ecosystem. Our recycling operations are vertically integrated, covering end-to-end processes from procurement to production of refined metal products. We source materials both domestically and internationally with approximately 61% of our raw materials imported and the remaining 39% sourced locally. This balanced approach helps us to optimize cost efficiency, ensure supply continuity and maintain consistent quality across all product categories. Now I would like to throw light on the recycling facilities. We have strategically located our 4 recycling facilities within SIPCOT Industrial Estate in Gummidipoondi, near Chennai in Tamil Nadu, which is one of the South India's key industrial hubs. Our facilities are situated along the Chennai, Kolkata Highway, offering excellent connectivity to Chennai, Ennore and Katupalli ports. The Chennai port being one of the principal gateways to the East Coast of India serves as a crucial logistics channel for both imports and exports to and from China and other Southeast Asian countries, including Singapore, Taiwan, South Korea and Japan. This strategic location offers multiple advantages. It enables efficient sourcing of recyclable raw materials from global suppliers, while also facilitating cost-effective export of finished products to major international markets. Proximity to multiple ports significantly reduces transportation time and freight costs, providing a distinct competitive edge over peers operating in more inland and landlocked locations. Moreover, the strong industrial ecosystem and logistics infrastructure around SIPCOT Chennai ensures seamless coordination between the production, port handling and custom delivery. This helps us maintain a steady and reliable supply chain, optimize logistics and support faster turnaround of shipments, all of which contribute to better cost efficiency and working capital management. Each facility is equipped with recycling and refining capabilities designed to handle multiple non-ferrous metals. Facility 1 primarily handles copper scrap. Facility 2 processes predominantly lead scrap and also copper scrap. Facility 3 focuses on aluminum scrap and is managed through our subsidiary, Jain Green Technologies Private Limited, which we call JGTPL. JGTPL also operates at Hosur segregation facility, cleaning contaminated aluminum chips mixed with iron through magnetic separation, ensuring high-quality recovery. As of October 30, 2025, our operations have demonstrated strong production performance while maintaining high standards of efficiency, quality and sustainability. Our Chennai-based location thus plays a pivotal role in strengthening our export competitiveness, particularly across Southeast Asia, and reinforces our position as a cost efficient globally connected recycling enterprise. Coming to customers and market, we serve a diverse range of industries, including lead acid batteries, electrical and electronics, pigments and automotive. Our client portfolio comprises prominent domestic companies such as Vedanta Limited or Sterlite Copper, Amaraja Batteries Limited, HBL Batteries, Luminous Power Technologies and Yash Resources Recycling, Chloride Metals as well as global customers, including [indiscernible] Mitsubishi Corporation RtM Japan, Nissan Trading Company, et cetera. Our customer base spans more than 20 countries with export contribution of over 63% in first half of financial year '26. Our top 5 markets India, Singapore, China and South Korea account for nearly 94% of the revenue. Customer count has significantly grown, supported by high retention rates, reflecting the strength of our long-term relationships. Revenue concentration remains healthy with top 10 customers contributing 58% of total revenues. As a customer-focused organization, we maintain stringent multistage quality controls from raw material inspection to in-process checks and final micro structure and spectrometer analysis. Notably, we are one of only two recycling companies in India to have our lead ingots registered as a brand by London Metal Exchange, reflecting global quality recognition. Commodity price risk management and unique proposition. I would like to walk you through our approach to commodity price risk management and the hedging strategies that we have employed to protect our financial performance. Our business is inherently linked to the movement of base metal prices on London Metal Exchange. To mitigate this volatility, we deploy a robust hedging mechanism covering both procurement of raw input and sales of finished products. For procurement, we typically take short positions in LME futures, while for finished products, we take corresponding long positions. These contracts generally aligned to a 90-day delivery cycle, enable us to lock in sales prices and protect margins. Our operational processes are engineered to extract the highest possible purity levels. The quality of our recycled products closely match that of products produced directly from ore. This enhances our product acceptance in global markets. Our branded lead products are LME recognized, offering global visibility and the ability to deliver directly to LME registered warehouses for seamless derivative settlements. This strategy ensures stable financial performance, real-time risk management and strong resilience against fluctuations in global metal prices. Looking ahead, our strategic focus is on forward integration and new recycling domains underpinned by sustainability. We are planning to expand our horizon into copper cathode, copper wire rod and copper busbar manufacturing using finished products from our recycling facilities as feedstock, with electrolytic refining producing high-quality copper cathodes and wire rods. The project is being executed through our wholly owned subsidiary, Jain Green Technologies Private Limited. To support this, we have acquired a 6.58 acre land parcel in SIPCOT Industrial Estate Gummidipoondi for this development. The total CapEx for Phase 1 is estimated to be INR 95 crores, which will be entirely funded through internal accruals with INR 45 crores already spent to date. As of September 2025, construction progress stands at around 70%, and the project continues to advance as planned. We expect operations to commence in quarter 1 of financial year 2027. The plant will have a capacity of 9,000 metric tonnes per annum and all critical machinery has already been ordered with deliveries expected to begin in the latter half of quarter 3 financial year '26. Additionally, the facility will include an in-house rooftop solar power plant, enabling us to produce green copper cathode, further strengthening our commitment to sustainability and clean energy. Additionally, we have entered into a joint venture agreement with Texas-based C&Y Group Investment Incorporation, part of the renowned C&Y Global Group, one of the North America's largest exporters of nonferrous metals with an annual export volume of around 2.5 lakh tonnes and presence across 10 scrap yards in the United States. The JV will establish a INR 60 crore copper scrap recycling plant in Ahmedabad, focusing on recycling end-of-the-life materials such as cables, motors, alternators, starters. Jain Resource Recycling will hold a 55% stake and manage operations while C&Y Group with a 45% stake will source raw material scrap from the United States. This partnership marks another important step in our journey to build a global integrated recycling ecosystem in India. Our growth strategy emphasizes expanding recycling capacity and diversifying operations through new recycling verticals, including joint venture, international scrap yard acquisition, automotive tyre recycling, e-waste processing and solar panel recycling. With a diversified product portfolio, strong customer relationships and strategic initiatives in forward integration and niche recycling, we are well positioned to capture emerging domestic and international opportunities. Coming to sustainability and ESG. I would like to touch upon a few important pillars of our business, which are sustainability and ESG principles. At Jain Resource Recycling, we continue to invest in advanced technologies and systems that help us optimize our recycling processes and minimize waste. Our focus remains on reducing our environmental footprint while creating a positive and lasting impact within the communities we serve. The reality is that as long as the human race exists, waste will continue to be generated in one form or the other. What truly matters is how responsibly we choose to deal with it. Someone must take ownership of converting this inevitable waste into a resource and at Jain Resource Recycling, we have embraced that responsibility through sustainable, compliant and future-ready recycling practices. We strictly comply with the environmental regulations, ensuring safe handling and disposal of hazardous materials through specialized third-party services. We also remain deeply committed to contributing to broader societal goal of promoting equity and long-term economic well-being through responsible recycling practices and inclusive growth. In alignment with India's evolving policy framework, the government has introduced mandates on the rate of recycled content for key nonferrous metals, a policy development that strongly reinforces our business model and the importance of organized recycling. In copper, minimum recycled content has been mandated to be 5% from 2028, increasing to 10% in 2029, and further to 20% by 2021 (sic) [ 2031. ] Similarly, in aluminum, the mandated minimum recycled content is 5% starting from 2028, rising to 10% in 2029, and continuing through 2031. Additionally, our -- under the Extended Producer Responsibility regime, imports of nonferrous metals -- the domestic sourcing of nonferrous metal will be eligible for EPR points starting from 1st April 2026, further incentivizing compliant recycling operations. Together, the EPR and RRC mandates are expected to accelerate formal recycling in India, improve material recovery rates and open up significant growth opportunities for organized recyclers like us. In conclusion, our unwavering commitment to ESG principles, operational excellence and innovation continues to drive our journey, ensuring sustainable value creation for all stakeholders while contributing positively to society and the environment. With that, I would like to conclude my remarks and hand over the proceeding to my colleague, Mr. Hemant Jain, Executive Director and CFO, who will take you through the detailed financial performance. Over to you, Hemant.

Sir, Hemant sir line has dropped from the call. I am already connecting him. Ladies and gentlemen, we have Hemant Jain connected with us. Hemant sir, please proceed.

Yes. Thank you Mayank sir, and sorry for this call got disconnected abruptly. So good afternoon to everyone, and I'll quickly walk you through the key numbers, after which we'll open the floor for your questions. I'm pleased to share that our company has concluded the first half of FY '26 with robust growth, delivering strong performance across the key business segments and financial metrics. We have reported a healthy growth in terms of revenue, EBITDA margin and the PAT margin, underscoring the strength of our operations and the resilience of our business model. So now I'll come to the consolidated financial performance for the Q2 of financial year '26. The top revenue from the operations stood at around INR 2,114 crores compared to INR 1,392 crores in Q2 of FY '25, which reflects a strong 52% growth on a year-on-year basis, while the EBITDA stood at around INR 160 crores, compared to INR 88 crores in Q2 of FY '25, reflecting a strong 82% year-on-year growth, while the EBITDA margin stood at around 7.6%. Profit for the period stood at around INR 99 crores, compared to INR 53 crores in Q2 of FY '25, reflecting an 88% on year-on-year growth, while the PAT margin stood at around 4.7%. Now I'll just give you the brief with respect to the consolidated financial performance of first half for the financial year '26, where the top revenue from operations stood at around INR 3,663 crores, compared to INR 2,889 crores in H1 of FY '25, reflecting a healthy 27% growth on year-on-year basis. The revenue from the repeat customer is around 88% and EBITDA stood at around INR 250 crores compared to INR 182 crores of H1 FY '25, reflecting a strong performance of around 37% on year-on-year growth, while the EBITDA margin stood at around 6.8%. The profit for the period stood at around INR 155 crores, compared to INR 112 crores in H1 financial year '25, which also reflects around 38% year-on-year growth, while the PAT margin stood at around 4.2%. Now I'll take through you the segmental performance and the revenue mix for the first half of financial year '26, where the copper and copper alloy ingots contributes around 46% of the total revenue, and the lead products contribute around 48% of the total revenue, while the aluminum and aluminum products contribute around 4%, while the other segments contribute 2% of the total revenue. The first half of FY '26 revenue mix between domestic and export markets stood at around 37% comes out of -- from domestic, and 63% comes from the exports, respectively. With that, I would like to conclude my remarks and hand over the proceedings to Mr. Kamlesh Jain, the Chairman and the Managing Director, who will share his closing thoughts before we open the floor for the questions. Over to you, Kamlesh, sir.

Thank you, Hemant. To summarize, the first half of FY '26 has been a milestone period for Jain Resources Recycling Limited, marked by our successful listing and strong operational performance, and continued progress across all the business verticals. Our financial results clearly reflect the strength of our integrated recycling model, discipline, execution and focus on value creation. We remain steadfast in our strategy of expanding capacities, deepening our presence across nonferrous recycling segments, advancing our journey of forward integration into copper cathodes, wire rods and busbar. Alongside, we continue to explore our new avenues such as acquiring strategic scrap yards, tyre recycling, e-waste processing and solar panel recycling, each aligned with our vision of building a circular and sustainable future. In this regard, during the quarter, we entered into a strategic joint venture with C&Y Group Investments Incorporation, USA, to establish the copper scrap recycling plant in Ahmedabad. This partnership brings together JRR's operational expertise and CY's strong global sourcing capabilities, further strengthening our leadership in the nonferrous recycling space and reinforcing our global integration strategies. Our emphasis on technology, compliance and ESG principles continue to drive operational excellence and long-term competitiveness. As India advances towards greater formalization of recycling sector through initiatives like Extended Producer Responsibility, EPR, and mandated recycled content norms, we believe the environment is increasingly favorable for organized and compliant players like us. With our diversified portfolio, strong customer relationships and future-ready business model, we are confident of sustaining our growth momentum and delivering continuous value to all the stakeholders. With that, we would like -- we'll be happy to take your questions.

[Operator Instructions] The first question comes from the line of Amit Lahoti from Emkay Global Financial Services Limited.

Congratulations on the successful listing. So my first question is on operating performance for Q2, where we have 36% growth in revenue from the last quarter. So if you could quantify how much of it came from volume growth, how much from prices? And if there is any inventory liquidation as well?

So partly I will answer these all that -- the most of the sales are coming from volume growth. We have a hedging mechanism back to back. So the LME price goes up and down, doesn't much affect. But I still like Hemant to address this question. Hemant, can you reply this?

Yes. So with respect to the -- can you repeat again the same question, please?

Yes. So if you could quantify how much of the revenue growth of 36% sequentially came from volumes growth, how much from prices and if there is any inventory liquidation?

Okay. So coming to one by one, with respect to the prices, as already Kamlesh sir has explained, we are completely hedged and all the metals we work on a hedging mechanism. So there is no such volume growth from the price movement. Secondly, from the quantity perspective, as you can see, the lead performance has grown around 47%, while the copper has grown by around 14% to 15%. So this growth has come from that. And with respect to the inventory liquidation, we have actually -- the working capital cycle has gone up in this quarter as compared to the last year. So there is no such revenue coming up from the inventory liquidation.

Okay. And there's a big movement in working capital. If I look at all the key items, inventory, receivables and payables, they've all gone up in this quarter. So any specific reason for this? Or we expect this to unwind in the coming quarters, if that is the expectation?

Yes, I agree. The working capital cycle has gone up from 38 days to around 52 majorly because of the high inventory days. And as you know, our major source of purchase is through imports. So globally, there are a lot of disturbance like supply chain disturbance in the shipping line. Then there was an investigation of copper imports by U.S., which was done in Feb 2025. Because of that, the inventory -- number of inventory days has gone up in this quarter. Even the debtors has increased, but we have tried to manage the same by -- if you can see my working capital cycle where we have increased our creditors days also. And we expect this normalization starting from the end of December, and we'll again come back to the old level of inventory days -- working capital cycle of around 40, 42 days by the end of the last -- maybe in the middle of the last quarter of FY '26, somewhere in the Feb of '26.

Basically, Hemant is saying that the shipments of the metal has come together. So the quarter 1, there was a slow shipment from the U.S. But quarter 2 was a large shipment started arriving from the U.S. and that's why the inflow of the metal started in the bulk, but now it will get settled down and it will go normalize in the next few days.

Okay. And then my second question is if you could provide guidance for volumes and margins by segment, what is the sustainable level? And what is the level that we are looking for, say, FY '26 by segment?

Hemant, you would like to...

Actually, in this case, the copper is the segment is -- I definitely expect copper to lead and higher than any other commodity in our manufacturing business. And already, the copper cathode plant and the wire rod plant is going to start from the next year -- beginning of the next year around February. So copper will lead the segment wise and it will grow faster than the other commodities.

Okay. But in terms of EBITDA per tonne for lead, we have done INR 18,920 per tonne. And for copper, we have done INR 51,000. So can we expect them to sustain? Or is there going to be some variability in the...

No, it will be -- it doesn't sustain also. And in the copper case, EBITDA per tonne will go up also because of the new plant. The new plant what we are going to manufacture copper cathode, wire rod and basically value addition plant, and it is not adding top line. It is adding more bottom line. And that's why EBITDA per tonne in the copper will go up. I expect to go up in some next year. I can't give you exact number, but I expect to go up.

We take the next question from the line of [ Vivek Gautam from GS ] Investment.

Yes, am I audible?

Yes.

Congratulations on a good set of numbers and good listing, sir. So basically, I just wanted to understand about this -- we have been growing at the rate of 40% for the last few years. Are these growth rates sustainable? And so -- and what is the opportunity size for us in the future? And what are our differentiating factors versus competition? Is the sourcing capabilities one of our differentiating factor or USP worldwide? And lastly, on C&Y tie-up, which you have done, if you can highlight your points.

So as I said in the earlier interview also that recycling is not a choice. It's a compulsion, and we have to recycle to live this life on this planet. So the recycling will keep growing and there will be more and more recycling as human race exist in this world, as Mayank said earlier. This will keep coming. And India has unique strength and USPs in recycling. Compared to all the countries in the world, India is far, far ahead in recycling. That's why Indian companies will grow in recycling as you have seen the performance of other companies also. So I don't think any problem will come and what we are growing 40% CAGR in the last so many years. I expect the growth momentum to continue also. And as the data has in last first half, you must have noticed that the growth is more than that. There's no problem. But C&Y. Yes, C&Y is one of the largest exporter in U.S.A. from North America, and they have global sourcing capabilities, and they've been supplying to us also. And now they join us for putting a plant near the Mundra port, which is where [indiscernible] is going to take place. And we expect next year the production to go online, and it will be a good addition in our copper revenue. And right now, I cannot disclose more than that, but I'm sure that you will see the strong results in next year.

Sir, our margins are slightly on the lower side versus competition. What would be the reason for that? And can we hope for the higher margin in time next months or so?

Different companies have different models and different geography conditions. So you cannot compare like apple-to-apple. If you compare apple-to-apple, then our peers, there are some peers that are out of India and they have different models and some peers -- and since we are in copper recycling and we don't have any peers in copper, our 70% is very different from the peers. That circumstances we cannot be compared with the other peers. And our models and our margins are sustainable long term. And it is going to definitely go up in the future because of the expansion and diversification and the value-added product what we are going to manufacture. So right now, what we're seeing, it will definitely sustain and it will go up only.

And lastly, there was some news about the U.S. government and the recyclers in U.S., especially in aluminum, asking about U.S. government to place a ban on export of aluminum scrap? How big is this threat to us? And how big is the U.S. as a sourcing destination for us for different materials?

Even I also read that article. But basically, U.S. do not have sufficient capacities to recycle so much of tonnage of aluminum, which is generated in the U.S., they have to export. And second point is we are buying globally from 120 countries. So we're not like depending on U.S. Of course, U.S. is one of the major supplier to us, but we buy globally, and I don't see any threat for our raw material requirement. And aluminum is a very minor sale for us. So overall sale is the copper and lead is the main metals. And there are other markets for us to source the scrap and recycle material. So I don't think much. And this is only just the initial talk, but U.S. don't have that much of capabilities to recycle so much aluminum and they have to export only.

No such restriction on copper and lead from U.S.?

Yes but then I would like to add here, the proposal is to ban the export of UBC, although it is at a very primitive stage, but that is for used beverage can in scrap or which we do not use. Our products do not use this scrap.

And no such restriction on copper and lead, sir?

Nothing, so far nothing.

The next question comes from the line of Dhiraj Ram from B&K Securities. Since there is no response, we will move on to the next question, which is from the line of Naman Parmar from Investments.

Wish you a very warm and prosperous Happy Diwali and Happy New Year. So firstly, on the lead side, I just wanted to understand, currently, you have done around 9.6% of margin, right? So what is the percentage of the value-added products and which value-added products are mostly going to other than the lead acid battery requirements?

So we basically made -- we make only lead ingot in the lead segment, and we do not make any value-added product in the lead side. So our base finished goods is 99.97% lead ingots, which are base raw material for the battery manufacturers. And we also recycle the battery box and plastic granules, and we make the compound and we supply the plastics for the plastic box manufacturers. So far, we do lead, and there are not much value-added products in the lead side.

Okay. So then how the -- we are able to make a very high margin on the lead side compared to the competitors? And how sustainable can we do this particular margin going forward?

There was earlier question, the other gentleman asked me that why it's a low margin in the business. And now -- and good to hear that you're saying it's high margin. It's not a point of high margin or low margin. It's a point of the margins are, I mean, at par with the peers in the market, and this is who are doing recycling in India. And I don't find that the margins are sustainable. It's already rock bottom margins and it's a scalable business. So the business of recycling, as and when we more and more recycle, more and more we do production, the cost of production goes down because the variable expenses are also linked to the production. And that's why when the cost goes down, the margin should sustain. And we are expanding every year 30%, 40% capacities. In that circumstances, the margin will sustain and the cost of -- the scale of production will benefit us in getting the better margin.

Okay. So has the industry is now -- if you see on the battery side, the technology is shifting very fastly from lead to lithium and lithium to sodium. So what's your outlook for the lead in the future? Like there will be a very good requirement for the recycling for next 2, 3 years or you see to come to any new technology for the recycling like lithium or anything else?

First of all, lead acid battery is not going to go anywhere. The lead acid battery will remain -- will be used by all the cars, motorbike or the other automobiles because every lithium recycling -- I mean, every lithium car company require a lead acid battery also to start the car, for headlights and for inside all the lights they require only lead acid battery. Lithium batteries use only to replace the typical engine of the petrol and diesel. So it is not that the lead acid battery is going to go anywhere. They will remain in the automobiles. They will not go anywhere. This is first. Second, for lithium recycling, lithium recycling plant, we do have a strategy to -- in future. But right now, the raw material is not sufficient enough to start a plant and because the life of lithium recycling is very long. It's 8 years sometimes and we use more than recycle. So right now, because of scarcity of raw material, we are not planning, but we may plan in the future.

Okay. Understood. Secondly, on the copper side, as the -- if we compare this with the other segment, it has currently a low margin, around 4.5% to 5%. But as you mentioned that as value-added products will kick in, you are expecting a very good margin. But if you can elaborate how maximum the margin can flow from step 1 to copper cathode to busbar, so it will be very helpful.

So we are going to value this product of copper, and that's from the copper cathodes and then we are making copper wire rods and then we are making copper busbar and then we are going to do some fittings. So every stage of this product will add at least 0.75% to 1.5% margin on different products with different applications. I cannot give exact number, but I, of course, expect EBITDA margin to go up by at least 3% to 4% in copper segment alone. And that will have the complete chain and will have the impact on EBITDA in a positive manner in a big way next year.

Means from 5% to maximum, it can go to 8%, right? It's around the range.

So actually, now what you are seeing is overall margin of all the metals, including copper, lead, tin, plastic and all. Copper segment alone margin will be added up in this, but it will not impact lead and other metals. It will impact only copper.

Okay. And lastly, on the -- how maximum the capacity utilization you can reach and how you are expecting to utilize optimum utilization in the next couple of years?

Right now, we are going to be more than 100%. Right now, this is very high. And we are doing very good because every year, we always keep some grace capacity in our production planning. So we are right now utilizing more than 100%, and I don't think any problem will come for full capacity utilization in the months to come. And we are always expanding to our present capacities also. So it will have this -- without any problem, I don't think any problem should come for capacity utilization.

Okay. And any volume growth guidance...

Naman, I would request you to please join the queue. [Operator Instructions] We take the next question from the line of Praful Kumar from Dymon Asia.

Sir, many congratulations on very strong earnings. Sir, broadly 2 things I want to understand. In terms of sustainability, you have a significant edge in sourcing. So broadly, how the pipeline looks from the sourcing side for the next, say, 2 to 4 quarters? Is the Q2 performance more sustainable in terms of growth? And second would be on CapEx post the IPO and the new projects you are working on, what kind of CapEx and asset turn are you looking at in the business?

First part I'll reply here. Our sourcing -- we are increasing our sourcing country by country. And as we have told earlier also, we are 120-plus country now. And every year, we add some countries and deep sourcing capabilities and domestic sourcing also increased a lot now. And our domestic sourcing actually gone up very high in this current year and because of the better compliance of GST [indiscernible] organized now. Can you put your mute actually? Can you mute yourself because a lot of disturbance. Yes. So I was saying that our domestic sourcing has gone up very high, and I expect to go more and more domestic sourcing. And that circumstances, we don't have any shortage of raw material for next year, at least I'm very sure about that. Coming back to the point of the CapEx, I would like Mr. Mayank Pareek to take this question.

So on the CapEx, one thing is about continuous expansion in the existing business because as a strategy, whenever we exceed the capacity utilization above 80%, we add new capacities in the existing verticals so that we keep a healthy gap between the capacity installed and capacity utilized. On that account, we expect year-on-year capital expenditure of INR 20 crores to INR 30 crores per annum. Then we are working on the project of value-added products for copper and the Phase 1 consists of a plant with a capacity of 9,000 tonnes per annum, which has a capital expenditure of INR 95 crores of Indian rupees. And once this is done, then with a time lag of 2, 3 months after it is commissioned, we would go in for a replica of this project to double the capacity and the CapEx would be another INR 50 crores. Then Ahmedabad, the JV was announced. And here, we would be spending some INR 30 crores from DRR side. Then we are working on many projects, the tire recycling and solar panel recycling, waste recycling and other things. The studies are at advanced stage. And if they materialize, then maybe over the next 2, 3 years subject to be concluding and putting up these projects -- another capital expenditure of INR 100 crores could be estimated. So that's a summary of the CapEx -- estimated CapEx.

Praful, does that answer all your questions?

Yes. Yes. Sir, just last thing on margins. Did you guide over the next, say, 12, 18 months, how the margin profile will look given the new projects coming up?

We have already discussed this earlier also about the margins and I already explained in the previous questions about the guidance and the future. So I think you have...

I'll go with the transcript.

We take the next question from the line of Deepthi Rajulapati from Axis AMC.

I just wanted to check you on....

Deepthi, I do apologize to interrupt you. Your audio is not coming through clearly.

Am I audible now?

Yes, please go ahead.

I just wanted to check on the time lines of this JV. When will the plant commission and the CapEx includes land costs?

Mayank, would you like to take this question?

Line has been disconnected...

I will reply -- so your question was time frame. So time line is -- we have just finalized the place and now and maybe after licenses and the machine installation, 6 months to 9 months, we will start the production there. And the plant will get stabilized maximum 9 to 12 months, 6 to 9 months of production will come. And the -- what was the second part of the question?