Pondy Oxides And Chemicals Limited (532626) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Pondy Oxides and Chemicals Limited Q1 FY '26 Earnings Conference Call hosted by Go India Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand over the call to Sakshi Narvekar from Go India. Thank you, and over to you.

Good afternoon, everyone, and welcome to Pondy Oxides and Chemicals Limited earnings call to discuss Q1 FY '26 financial performance. We have on the call Mr. Ashish Bansal, Managing Director; Mr. K. Kumaravel, Director of Finance and Company Secretary; Mr. R. S. Vaidhyanathan, Executive Director; and Mr. Vijay Balakrishnan, Chief Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must therefore be viewed in conjunction with the risks that the company may face. May I now request Mr. Ashish Bansal to take us through the company's business outlook and financial highlights, after which we will open the floor for Q&A. Thank you, and over to you.

Thank you, Sana (sic) [ Sakshi ]. Good afternoon, ladies and gentlemen, and welcome to our Q1 FY '26 earnings call. I trust you've had the opportunity to review the earnings presentation, press release and financial results that were uploaded on the stock exchanges. I will guide you through the results, after which we will have a question-and-answer session. I'm delighted to announce that POCL has kicked off FY '26 with its best ever quarterly performance, driven by robust operational execution. On a year-on-year over basis, revenue, EBITDA and PAT have grown by 36%, 82% and 90%, respectively. We record high EBITDA and PAT margins of over 7% and 4.5%, reflecting our increased emphasis on value-added products and enhanced operational efficiency. Before we dwell into operational and financial highlights, I'd like to begin with key strategic updates. Capacity expansion update. POCL is undertaking a 2-phase expansion of its lead production capacity at the Thervoykandigai plant, adding a total of 72,000 tonnes per annum, 36,000 metric tons in each phase. Commercial production of Phase 1 of 36,000 metric tons per annum commenced in Q1 FY '26 with the plant operating at approximately 40% to 45% capacity utilization during the quarter. This is expected to increase to around 70% in the upcoming quarters. Phase 2 of expansion is scheduled for commissioning in the second half of FY '26 with an estimated capital expenditure of approximately INR 20 crores. POCL invested INR 8 crores in CapEx during Q1 FY '26 and plans to invest an additional of INR 42 crores over the remaining 9 months of FY '26. POCL is looking at setting up R&D facilities for the creation of value-added products, both for current portfolio and for feasible products, which will add overall value to the top and bottom line of the company. Coming to the operational performance, the yearly procurement mix of lead, plastics and copper through imports is approximately 84%, 53% and 100%, respectively. Capacity utilization of copper more than doubled, leading to a significant increase in production and sales of copper. The production in sales of lead has increased significantly by 17% and 9% to 24,167 metric tons and 22,530 metric tons on a year-on-year basis. EBITDA per tonne of lead increased significantly by 48% to INR 16,898 per tonne on a year-on-year basis. Moving to our financial results for Q1 FY '26. I would like to reiterate that POCL has achieved highest ever quarterly revenue, EBITDA, PAT and margins. Revenue from operations has increased to INR 596 crores, up 36% and 15% on year-on-year and Q-on-Q basis. POCL experienced this substantial growth, as a result of increased production, sales and realizations in both lead and copper. The Q1 FY '26 sales mix between domestic and exports markets stood at 44% domestic and 56% exports, respectively. The percentage of value-added products in lead segment stands at 71% compared to 50% and 58% on a year-on-year, Q-on-Q basis. EBITDA increased significantly by 82% to INR 43 crores on a year-on-year basis. EBITDA margins exceeding the 7% mark represent a significant milestone in journey towards long-term sustainable value creation. This increase is due to increased sale of value-added products and operational efficiencies. PAT increased by 90% to INR 28 crores on a year-on-year basis. PAT margins increased to 4.6%, up from 3.3% in Q1 FY '25. On a consolidated basis, also POCL reported a strong financial performance. Revenue from operations, EBITDA and PAT increased by 35%, 78%, and 94%, respectively, year-on-year basis. In conclusion, POCL is firmly on track to achieve its long-term strategic objectives for 2030 with a clear road map centered on value creation and sustainable growth. We are aggressively scaling our net production capabilities, while expanding adjacent non-ferrous verticals, targeting over 15% value growth, revenue CAGR and profitability growth of 20% plus. These gains will be accompanied by meaningful margin expansion with a focus on achieving EBITDA margins above 8% and ROCE greater than 20%. Our strategy is not only growth-oriented, but also deeply aligned with sustainability imperatives. We are working towards generating over 60% of revenue from higher-margin value-added products, while targeting a 20% plus reduction in energy consumption, reinforcing our commitment to operational efficiency and environmental responsibility. With strong capacity expansion and progress, prudent capital deployment, operational excellence, regulatory tailwinds and direction of a seasoned leadership team, POCL is well equipped for sustainable long-term value creation. Supported by the continued trust of our stakeholders, we remain confident in our journey towards a more innovative, responsible and profitable future. That concludes my update. And I'd now like to open the floor for questions. Thank you.

[Operator Instructions] The first question is from the line of [ Rahil from Crown Capital ].

Can you hear me, sir?

Yes, you're clear.

Sir just one question on these margins. So by 2030, you're saying you're targeting 8% EBITDA margins, correct? Whereas in this quarter 1 itself, you achieved 7%. And if I remember correctly, in the previous call, quarter 4, FY '25, you had said FY '26, you can expect 6% margins for the year. So when you're already achieving 7%, first of all, will they continue for the next couple of quarters? And why such a low target then for 2030?

Definitely, the margins will continue and remain over 7%. And with the addition of value-added products and all of this as a blended margin overall, we are looking at 8%. We add on our more value-added products, maybe we will look at our margin profiles. But as of now, the guidance that we have provided is around 8%.

Yes, you have given 8%. but so why just like a 100 basis point improvement in the next 3, 4 years? Can't it be more than that?

There could be a possibility. But as of now [Technical Difficulty] with blended products and multiple portfolios coming in, we would like to look at it in this manner.

Okay. But for this year, 7% overall for the full year, we can definitely expect?

Yes, we will definitely continue again.

The next question is from the line of Sagar Shah from Spark Capital.

First of all, congrats to the management team of Pondy Oxides and for an amazing performance in Q1. To begin with, first -- my first question, sir, was related to a follow-up question actually compared to the previous participant on the margins. The margins were, I noticed the margins were quite actually led by the lead segment in this quarter as well because in the plastics segment, we are an EBIT loss and still copper, although the utilization has actually increased almost doubled as you highlighted in the opening commentary, but the lead margin have expanded. So I wanted to understand 2 things behind that. Is the lead margins because of the drop in the lead prices that we saw in the preceding quarter. So that's why are we seeing some sort of an inventory impact due to that or maybe purely operating leverage that we are actually that we are enjoying such a healthy margins and [Technical Difficulty] actually just in the first quarter, the capacity has just started. So that is my first question, sir.

Thank you for your question. See, regarding the copper margins, as you said, the copper is a product that we've just started. And as we are also looking at further other products, copper margins will continue to improve, as we go on adding products, and this is the initial part of the manufacturing. Hence, as you are aware, slowly, the efficiencies will start coming in and the process will be also more efficient and the margins will -- margin profile will improve. As far as lead is concerned, it has nothing to do with the inventory overhang or anything because our inventories, our positions are all completely hedged and we work on a back-to-back [Technical Difficulty] in margins is one due to our operational efficiencies. We have -- in the whole of last financial year, we had done a lot of modifications in our processes, use more efficient kind of systems, furnaces and all of those, a lot of changes and additions have been done. Apart from that, also, if you look at our profile, the value-added products that was sold in this first quarter was on a higher quantum. So these are what contributed to the net margins.

Okay. Okay. Fine, sir. So can you -- you already highlighted that we are running at almost 42% capacity utilization in this quarter as far as the new plant is concerned. But can you highlight what is the utilization of the existing capacity, which is at 132,000 tonnes that we already have? What was the utilization in that segment -- in that capacity, sir?

So the existing plants are running at in excess of about close to 70%. As far as the smelting capacity, smelting capacities are running at 90% plus and overall at 70%.

Okay. Fine, sir. So my next question was related to the copper. In relation to copper, actually, we were having some forward integration products, we were actually having some other value-added products for new clients actually. So any update on the progress actually that what are you eyeing that segment? What kind of response have you got from your customers so that your copper segment can be enhanced and your contribution for lead to come down, which is your actually overall guidance. So any progress on that segment, sir?

The progress is continually happening. And as and when we have, we will let all our shareholders know through a public announcement.

Okay. Okay. Fine, sir. So I just have 1 or 2 data keeping questions. First of all, thank you for keeping -- for giving the segmentation of revenue as per the product-wise. And secondly, I wanted to ask what are the volume figures for copper, plastics and if any aluminum we have produced in this quarter?

Sagar, this is Vijay. So with respect to lead, the volume for this quarter is about 22,530 metric tons. Copper is about 1,107 metric tons and plastics is about 808 metric tons.

Plastics was 808 metric tons. Okay. And any update, sir, on the plastics segment that [Technical Difficulty] reason behind that we are running an EBIT loss in that segment? And how do you see that segment going ahead in the rest of the year become profitable? And how are we exploring something in the new products there?

Yes. Actually, plastics segment, we are -- at present, we are running in the leased premises. Now we are planning to move to our own premises, where we have sufficient land bank and structures. We are planning to do some restructuring of moving -- most of this EBITDA and slight EBITDA positive. Other administrative loss is causing the overall net loss. The rent we want to stop it. Already, we have given vacation notice. So probably from the next quarter onwards, that rent -- substantial amount of rent will be saved and we move to our own premises automatically that segment will come to the positive. Though, we are getting EBITDA margin on plastics because of this administrative overhead, lead it is coming negative. Otherwise, it's EBITDA positive only.

Okay. So basically, that is just because of the overheads and the kind of admin expenses that you are facing. But otherwise, it's an EBITDA positive business that you pull through.

Yes.

The next question is from the line of Shweta Dikshit from Systematix Group.

Congratulations on a good set of numbers. My first question would be on the Aluminum segment. Any update since we were evaluating different product profile for aluminum. So any update on there because we were expecting to start generating for it to contribute into profitability this year?

Yes. Hi, Shweta. Thank you. Yes, it is in progress on the aluminum segment in this second quarter, and the work is in progress for the same as updated [Technical Difficulty].

Any update on the products that we were evaluating since we are moving away from the existing or the product side also. So any color on the -- what kind of aluminum products we're looking at now?

We'll keep you updated. They are linked products to our existing products, and we'll keep you specifically updated on the product as we complete the evaluation, yes.

And so now coming back to the existing business, where we've made upwards of 7% margin profile and considering that the new plant at TKD has achieved only 40% to 45% capacity utilization and plant being more operationally efficient and reduce manpower cost and everything. And we are expecting 70%, 75% capacity utilization in 2Q and that will, of course, naturally reach peak utilization subsequently. And why are we not guiding for margins higher than 7%? Or is there any impact, which we don't see coming in from the existing operations? I'm trying to understand this stable EBITDA margin level for the existing operations that we can see for the rest of the year? And why not higher than this...

See being a new plant, the product definitely is manufactured and commercial sales also has commenced from this plant. But however, as you know, to scale up the complete capacity, there are little approvals and other formalities that are being done with our customers. And as we speak now, we have quite a few approvals, and that is the reason why we are saying that we'll be ramping up from 40%, 45% to 70%. And definitely, for -- as spoken earlier, our margin guidance will be in the range of...

Understood. And lastly, a question on the bookkeeping side. What is the cash on your books as of now? And what is the net -- what is the gross debt level now?

So the cash at bank as of today is about INR 52 crores. This comprises of both the QIP money, which is pending to be utilized as well as the warrant proceeds, which we have received during this quarter. The overall debt in our books of accounts, as of 30th June is about INR 122 crores. So net deb -- yes. It is less than net debt is less than INR 100 crores.

And could you repeat what the CapEx plan for the CapEx number for the remaining 9 months and what it was in the first quarter?

For the remaining 9 months, we're looking at about INR 42 crores of CapEx approximately. And we've already -- in the quarter 1, we've already done a CapEx of about INR 8 crores.

This is excluding our Thervoykandigai plant capitalization.

That was already done of approximately INR 75 crores, which was completed.

So this INR 8 crores went towards Phase 2 of TKD?

Yes, partially towards Phase 2, yes.

And any update on Mundra, sir?

As we discussed earlier, once this plant is complete, we are also looking at our copper project and multiple other projects. And in the next financial year, we'll be looking at the Mundra project.

The next question is from the line of Sakshi Goenka from Sohum Asset Management.

Congratulations for the great set of numbers. Just quickly continuing on the previous participant's question, sir, just wanted to understand out of the EBITDA per tonne, which we have for lead INR 16,900 you alluded that there were opportunistic value-added product sales and operating efficiencies coming through. If I exclude what could be -- what could be a sustainable EBITDA per tonne taking into account that the new plant is more efficient. We have generally done EBITDA in the INR 11,000 to INR 12,000 range. I believe that will see a step jump because of the new plant. But obviously, this quarter had some value-added name, but what could be a sustainable EBITDA per tonne, sir? Any color around that?

Yes. So as guided earlier during this call as well, Sakshi, our minimum levels that we are looking at for this year on an average basis will be in excess of 7%. Though this quarter, we've had 8% as told, we've had some opportunity to have a good high share of value-added products. But definitely, that is not going to drop in the next few quarters. And on a conservative level, we speak at 7% plus.

Got it. Got it. So -- and sir, this year, obviously, next year, is there any scope for further efficiency gains, assuming that the new plant, our Phase 1 will be operating at 70% this year. And in second half, we will see Phase 2 coming. So will operating efficiencies continue into next year also? So can we see better margins next year?

The focus of the company always remains year-on-year to achieve higher operational efficiencies. But definitely, the company is not going to be overoptimistic and start guiding towards higher numbers and try to make the market more acceptable towards that. So as you've seen in the past as well, we've always been [Technical Difficulty] conservative guidance, we will continue to do, and we are continually working on our operational efficiencies, which definitely will reflect back on to numbers year-on-year.

And sir, just quickly, existing plant has smelting capacity [Technical Difficulty] the 2 phases, that is about 72,000 roughly 160,000 tonnes of capacity [Technical Difficulty]. I just want to understand what can be FY '27 kind of volumes if we operate at maximum capacity?

This -- the current financial year, we are targeting at operating at about in excess of 120,000 tonnes of capacity, I mean. [Technical Difficulty]

Yes. I was talking about more like '27 with both the plants in and our existing smelting capacity of 90 plus the 2 plants adding up to 72, so that's roughly 160. So what can -- on 160, what can be a max capacity utilization? Can it be 90%?

See generally, we always aim for 90%. But however, 80% plus on the smelting side is a good capacity.

The next question is from the line of [ Jigar Jani from Nuvama PCG Research ]

Just 2 questions. Just a clarification. So your smelting capacity is 90,000 tonnes from that, right?

In our existing 2 plants, our capacity is 90,000 tonnes, approximately 92,000 tonnes, 93,000 tonnes. And with the addition of our new plant, we will be adding in 2 phases, 360 tonnes plus 360 tonnes goes in over 160,000 tonnes.

Okay. Okay. So on the first plant, which is -- you have already added that, which has come online?

Yes. The first is already online, yes.

Okay. And sir, on this margin front, again, sorry about harping on this. What is the products that have seen or what -- can you just throw some more light on what are these value-added products that have given you better margins and realizations this quarter? And do you feel that these are sustainable levels of these value-added products? Because I believe antimony lead alloys have seen some spikes over the last 6 months or so. So do you feel it is sustainable and whether it is these kind of lead alloys that have led to higher margins for us.

So as we have also highlighted earlier, POCL is one of the largest specialized alloys -- lead alloys manufacturer in India, and we continue to hold that position. And we manufacture certain specific alloys for customers, which have given us these margins. And as you rightly highlighted antimony alloy, antimony alloy has been at a better margin levels over the last 6 to 8 months. So that is not the specific reason for this quarter, the quarter's numbers going up, but rather our other value-added specific alloys that we manufacture for certain international customers and domestic customers is what has given us a margin. And going forward as well, this will continue.

[Operator Instructions] The next question is from the line of Khush Gosrani from InCred Asset Management.

Congratulations on the good set of numbers. My question most have been answered. Just one thing on the copper side, at peak utilization, what kind of revenues we can generate? And what kind of EBITDA margins we will be able to do, assuming today's pricing?

So with the current capacity that we have at the peak utilization, it could be -- the revenues could be around INR 650 crores to INR 700 crores on copper in terms of approximately somewhere around 10,000 tonnes, 12,000 tonnes of capacity. And currently, I mean, as what we are doing right now [Technical Difficulty] levels of margin is what we are looking at, which will be enhanced as we add some forward integrated value-added products.

Got it, sir. Got it. And any update on the EPR flow-through where it is stuck somewhere it was stuck. So any progress on that front?

EPR already we registered -- we started taking credit of as well lead, as well as plastics.

Okay. Got it. Got it. So any plans when you start selling? Or is the pricing not correct or feasible right now?

The market is not yet 100% mature. And as the penalties start kicking in is when the value of the EPRs would be better.

The next question is from the line of Siddharth Malhotra from Kotak Securities.

Congrats for a good set of numbers. Sir, sorry to harp back again on the EBITDA margin question. But can you sort of just explain to us what exactly is this VAP share, which we are selling about? Because it seems our fundamental margin profile has -- I mean, if you see at the margins from 5%, 5.5%, we are almost jumping to 7%. We're seeing an increase of more than 20%, 25%. I mean what changed in 1 quarter which led to this fantastic performance. So can you just sort of give us more color into?

Yes. Good question. Definitely, I'd love to answer this. The margin jump is not specifically in this quarter, any specific change that has happened. We've indicated in the last couple of earnings calls that we are in the process of increasing our efficiency. So increasing in efficiency is not an overnight process. The increase in efficiency could be due to various changes in processes. So a lot of R&D is being done on that in terms -- could be in terms of power efficiency, fuel efficiencies, how the furnaces operate, the overall structure, the overall layouts and the whole product profile mix, how they are blended, how -- what products need to be taken up more aggressively, what products need to be done. So it's a complete blend of all the working that has been done in the last 2, 3 quarters that has been going on in our plants in a silent manner. And as those projects got completed, you would have seen a little jump in the previous quarter, and you see the -- also the whole numbers coming into play in this quarter. And that is how we are extremely confident that the following quarters also will be in similar levels.

Okay. Then you also, sir. Yes, sir, please continue.

Yes. And apart from this, a certain percentage of our margins also come, as I indicated earlier, that we have concentrated more on value-added specific products. So those products were concentrated on and the sale on those value-added products also were increased.

Okay, sir. Just a follow-up, say, for example, if your margin increase was, say, approximately 2%, what proportion of this total increase was due to, say, higher share of VAP versus efficiency gains, sir?

So about 1% to 1.5% is based on efficiency that has been gained, about close to -- in the range. Yes, I'm giving you a slight range because I cannot put an exact specific point digit number. So 1% to 1.5% is in terms of efficiencies and about 0.5% to 1% in terms of the specialized specific value-added products that we've been manufacturing.

Understood, sir. And when it comes to our new capacities, this 36 KTPA capacities, assuming that these capacities are yet to fully ramp up. So obviously, your operating -- fixed operating costs would not be totally absorbed. So fair to assume that some amount of margin expansion is definitely on the cards from these capacities as well, say, by the end of the year, sir?

As basic thumb rule of economics, it would be fair to say that because fixed costs will get absorbed, so that has to contribute back. but I will leave it to that.

Okay, sir. Okay, sir. Just one last question on this, sir. Any particular sort of -- were there any sort of particular alloys, which were not there in the base quarter, for example, which contributed to this 50, 60 bps improvement, which you were referring to earlier?

Yes, there are some alloys that are under the development stage, which we started supplying in this first quarter, and that has definitely helped us in margin expansions.

Sir, any chance you could give us more color on what these alloys are, who are the other people who manufacture?

Yes. We have NDA with our customers, so I don't think I might be able to give you too much of information on that.

Okay, sir. Just who are these customers only sectors, not specific names, if that is possible, sir?

Yes. These are mainly international customers.

The next question is from the line of Naman Parmar from Niveshaay Investments.

So firstly, on the lithium-ion side, what is your update? Because in previous quarter, you were telling to shifting towards from lead to lithium ion.

Sorry, I lost you. Could you repeat your question, please? I'm sorry.

Yes. So I was just asking about what's the update on the lithium ion side you were telling in previous quarter that you are going to under the lithium-ion side acquisition -- so any update on that, sir?

So we are currently in discussion with many of our technological partners in terms of identifying the chemistry because there is -- this industry is quite fast moving. I'm sure -- I mean, it started with NMC and LFP and LMFP and now there are a lot of technologies that are coming up now, and we really wanted to -- we don't want to be in a hurry and do something and then later repent. So we thought we'll wait and understand the industry quite well. And once it matures to a level where -- because the feedstock is very important. And currently, the only the LFP is the 70% of the market is using LFP as the technology now. So probably over a period of time in the next few months, we will settle down on a particular chemistry and a particular technology with a technological partner, then we will go ahead on this. That's the thought we have currently, yes.

Okay. Understood. And secondly, on the copper side, if we see in the current quarter, even at a very initial stage, you had done around 3.5% of the EBITDA margin, right? And you are guiding on a consol basis, you can do a 7% on a whole year basis. But on a sustainable basis, how much margin is possible on the copper side? And how the capacity ramp-up will be going on? Because just asking because if you see on the aluminum side, initially when you entered the aluminum side, it was a very good business, right? But after a very high volatility on that side, it becomes very hard for us to increase the capacity utilization on the aluminum. So it is not similar to that in copper also that if the volatility increases there, there can be a margin pressure also.

Let me explain to you. Coming -- I'll go a little forward and then come back with your question. Coming to the aluminum part of it, I would like to explain that aluminum business was a business, where you could not hedge your raw material and you could not concentrate and fix your margin from the product. If you see the metal part of it, any and every metal is volatile and the maximum movement that happens on a metal is copper because that is the main -- the most liquid metal on the whole index. So it would not be right to say that once copper becomes volatile, the margins will go up because copper has and always been the most volatile metal. But the only advantage over aluminum that we have in copper is copper is a product, where your raw material versus your sales can be hedged in a proper sense and you can safeguard your margins on the product. And going forward, in copper, we are looking at growing our volumes and looking at a margin. In the current year, we're looking at a margin of about close to 4% to 4.5% and we are extremely confident on that. So it will not be right to be comparing aluminum and copper as similar products.

Okay. Understood. And lastly, on the capacity of the copper only, it was, I think, around 6,000. You are going to ramp up to 9,000 to 12,000. So is it will be live by how much.

I didn't get you, sir. It will be live by.

It will live in which time in second half or in FY '27?

So in this year, we are looking at achieving the capacity is what we have, about existing capacity, 90% utilization. And by next financial year, we'll -- the additional capacity will also be live and will be utilized.

Okay. And on the lead side, what the optimum utilization can we achieve?

We can achieve an utilization of approximately 80%.

Okay. 80%.

But will be implemented in a phased manner.

[Operator Instructions] The next question is from the line of Sanjay Parekh from Sohum Asset Managers Private Limited.

Congratulations to the team on very solid performance. So my first question was this is a fairly fragmented industry. So do you plan to do any acquisition?

Sorry to interrupt you. Your voice is unclear and breaking. Could you please repeat the question, sir?

Okay. So now you can hear me?

Yes, that's clear.

Okay. So because the industry is fragmented, the unorganized sector, so would you look at consolidating through acquisitions, small, small acquisitions ahead? That's the first question. Second is, you clearly are in a growth phase. So while what is visible to us is more like INR 2,500 crores, INR 2,600 crores turnover this year and then INR 3,500 crores in '27 and then potentially going to INR 5,000 crores maybe over next 2 years after that. So in the growth phase, the question I have is, one is the supply side capacity creation. So one is the expansion -- current expansion and then the Mundra expansion. So how do you think about it once you plan Mundra, when can you commission it? So the constraint, would that be a supply side or the sourcing of scrap when you, let's say, you want to hit a scale of INR 5,000 crores, would sourcing of scrap be a challenge to you. And the last question is, are there rules world over where there are -- there's a clamp down of export of scrap from their own country outside because they want their own environment norms to get better. So that is a little bit your thoughts would help. So these are my questions.

Hi, Sanjay sir, Vijay from -- Vijay speaking. So see, right now, as we have already promised, we have started Phase 1. So next, we wanted to start Phase 2, which is going to happen in the second quarter of this year. Once the Phase 2 gets stabilized and the entire lead operation starts, then as we already planned, we will start the copper also. Copper, everything, all the discussion phase and all over. And we will start putting the -- we will start the forward integration of copper in the last third quarter of this year. And by FY 2027 first quarter, we'll start the operations in the copper. So on a phased manner, first, we wanted to focus on one vertical, complete it, stabilize it, let make it on autopilot mode, then we focus on copper. Once that also is a product for us, then for forward integration, we wanted to move on. And slowly, once these 2 verticals are being done, then we will start focusing on Mundra. So...

And also, as you rightly asked the question about small acquisitions, we are not looking at these small acquisitions of other companies because right now, the kind of technology that we have installed in our plant is one of its kind in India, and I'll say probably one of its kind globally also with our new lead operations. And none of the other plants will have -- do have that efficiency nor do have that kind of processes and machinery available. So definitely, we are not going to take a step backwards to acquire any of these small companies, who are not efficient in production and would not make sense for us to acquire a small company and reestablish the whole system and equipment. Rather, we would be organically doing it internally, converting our existing plants going forward to make it more and more efficient.

We have to buy.

That makes no sense.

Makes no sense. We have sufficient real estate in our kitty.

Perfect. Perfect. Perfect. And on the -- as you get scale, the scrap sourcing and globally, are there any norms to restrict scrap sales from those countries?

Yes. Definitely, I'm just saying there are talks about the same happening. But also, we need to understand that globally, countries who are talking about these are again still talking in excess of a couple of years ahead when they would start. But the point is they themselves also realize they do not have the capacities and capabilities to recycle those scrap within their own country. Their generations are much, way, much higher than what they can consume internally. So as of now, we do not look at it. And also as India is becoming a little more organized in terms of the way the disposals are happening, the domestic availability also is on an incremental side. So I mean, all of these put together, I mean, the whole thing has been weighed and balanced and seen. So we do not -- see, there could be a little tightness in the supply. But again, it all depends on your procurement efficiencies, where -- what is your kind of network where you can source the scrap and all of these put together. Further also with our government becoming more and more tight in terms of disposal, so the domestic scrap, which was going out to the unorganized sector is flowing back into the organized sector. All of this is balancing the supply side as well.

So we do not see a big challenge as we scale up to maybe INR 3,500 crores and INR 5,000 crores in sourcing of scrap. That will not be a big challenge.

Yes. So it's not just a single product. When we are scaling up, we're not scaling up only on a single product. We are not scaling up only on lead. Lead definitely is a large part of our portfolio. Copper is coming in, and there are a few other products that we are working on will also start coming in. So it's going to be -- the revenues are going to be a blend of all these products together.

Perfect. No, no, great. This is very, very helpful. The last one, in the lithium ion, if at all you finalize on the technology piece, technology front, what would be the CapEx that you need to do for that?