Standard Glass Lining Technology Limited (SETL) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Standard Glass Lining Technologies Limited Q2 and H1 FY '26 Earnings Conference Call hosted by Go India Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Monali Jain from Go India Advisors. Thank you, and over to you, ma'am.

Thank you, Shilpa. Good evening, everyone, and welcome to Q2 and H1 FY '26 Earnings Call of Standard Glass Lining Technology Limited. We have on the call Mr. Nageswara Rao Kandula, Managing Director; Mr. Ramakrishna Kandula, Executive Director; Mr. Venkata Mohan Rao Katragadda, Executive Director; and Mr. Anjaneyulu Pathuri, Chief Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company may face. I will now request Mr. Nages to take us through the financials and the business update, subsequent to which we can open the floor for questions-and-answers. Thank you, and over to you, sir.

Thank you, Monali. Thank you for -- to our investors. Dear shareholders, investors and well-wishers. It gives me immense happiness and deep gratitude to address you all on the occasion of our Q2 FY '26 results. This quarter marks a defining chapter in our journey, a transformation not just in scale but in identity. Over the past decade, Standard Glass Lining Technology Limited has [indiscernible] for beyond its origins as an independent equipment manufacturer. We began with a single product line, glass lined reactors serving a niche segment of the process industry. Today, through relentless innovation, strategic acquisition and customer-driven diversification, we have become a multidisciplinary precision engineering company, delivering complete concept to commissioning solutions across pharmaceutical, chemical, biotechnology, food and beverages and process industries. It is in this spirit of progress that we are pleased to announce our intention to seek shareholders' approval to change our name from Standard Glass Lining Technology Limited to Standard Engineering Technology Limited, a name that truly captures the full breadth of our engineering [indiscernible] from design, fabrication and automation, installation, commissioning and validation. For our customers, this transformation means a single trusted partner for every stage of their project. One company accountable for performance, precision and on-time delivery. For our investors to meet a stronger, more diversified business model, enhanced scalability and sustainable long-term value creation. And for our employees, it represents kind of building one of India's truly world-class engineering organization. Our business performance this quarter continued to refine our commitment to customers and shareholders. Despite global challenges and shipments rescheduled from Q2, Q3, Q4, we have remained resilient demonstrating robust growth and operational excellence. With every passing quarter, our company is evolving from specialized equipment manufacturing into complete engineering solution powerhouse serving the pharmaceutical, chemical, biotechnology, food and beverages and process industries worldwide. This year has been extraordinary for us, not only in number but in vision, direction and purpose. A few highlights I will share with you now. Acquisition of Scigenics Private Limited strengthened our presence in bioprocess and fermentation systems, opening new doors in the fast-growing biotechnology sector. Proposed acquisition of CPC Engineering Private Limited with integrated process design, mechanical, civil, HVAC, electrical and instrumentation expertise enabling to deliver concept to commissioning targeted solution under one roof. Our proposed new identity, Standard Engineering Technology Limited, reflects our journey from a single product company to multidisciplinary precision engineering enterprise with unmatched in-house capabilities from design to water price. These milestones are not just strategic expansions, but transformative steps towards realizing our long-term vision to become the most trusted engineering partner to our customers. We have built something unique in today's industrial world a company that can design, engineer, precision, manufacturing, automate, install, commission and validate complex projects with complete in-house control. Together, we are building -- our glass lining business continue to shine globally. The selective glass-lined heat exchangers developed with our Japanese partner, GL HAKKO, have been technological breakthrough receiving overwhelming appreciation from the customers. Our newly introduced connectivity, glass and stain-free glass technologies have redefined performance and safety standards in pharma and chemical process sites. We are proud to say that to our knowledge, there is no other company in the world with this unique combination of multidisciplinary skills and integrated engineering systems, even with the deferred export worth INR 42.5 crores shifting to later quarters, we achieved total income INR 366 crores, EBITDA INR 69 crores and PAT INR 42 crores in the first half of '26, strong testament to our stability and execution strength. This foundation gives a full confidence that second half FY '26 will be one of the best in our company history. Behind every success story, Standard stands our people, engineers, technicians, designers, sales team, partners and customers who trust us every single day, their passion and commitment are the driving force behind every reactor, every exchanger, every system we build. To our customers, you are our inspiration; to our employees, you are our strength; to our investors, you are our backbone and belief. As we enter the second half FY '26, we are fully geared to accelerate exports commission, new facilities and complete the C2C acquisition. With this integration, our company will truly represent concept to complete engineering Made in India trusted by the world. This is just a beginning for our growth. We will continue to innovate, diversify, delivering sustainable value with humility, discipline and a deep sense of responsibility to every stakeholder. I want to express my heartfelt gratitude to all shareholders, Board members, global partners, employees and customers who believed in our dream. Together, we are building not just missions, but trust, technology and tomorrow. Thank you for being part of this extraordinary journey.

[Operator Instructions] is from the line of Koushik Mohan from Ashika Group.

Congratulations for the name change. Sir, I just wanted to understand on the costing of C2C Engineering acquisition and what exactly this brings to our table? [Technical Difficulty]

Participants, please stay connected while I reconnect the management. We have a question from Koushik Mohan. Please go ahead with your question.

Congratulations for the name change. Sir, my first question is on what is the costing that we incurred for acquiring C2C Engineering and what exactly this brings to our table?

Total, we are acquiring 51%, and we are paying INR 12.25 crores.

Okay. Sir, in the export pipeline, we have mentioned that Q3 and Q4 will look subsequently better. And some of the revenue has been deferred from the Q1 and Q2 to Q3 and Q4. This also happened in last year also, right? How much was last year that got deferred to this year? And in this year, how much money that H1 got deferred to H2?

Last year has been deferred INR 35 crores. So this year, deferred to INR 45 crores.

Okay. So INR 45 crores will be on the top line, which will be coming in H2, sir? Is my understanding right?

Yes, yes, H2. Correct. You're right.

Okay. Sir, and how much of the margin is already -- because when looking at the margin, our margins will slightly come less, right? I just wanted to understand, is this in the next -- already we have incurred the cost, but the dispatch has not happened, that is the reason our margin has gone down. Is my understanding right?

Yes, correct. You are right. Absolutely you are right.

H2 is going to cover this.

Perfect, sir. So we are sitting as the run rate has been told in the previous con-calls, right, sir?

Yes.

Next question is from [ Raman K.V. ] from Sequent Investments.

Sir, congratulations on good set of numbers. I just want to understand that during the quarter, there has been -- the current quarter, Q2, the EBITDA margin declined from 17% to 16% on a quarter-on-quarter basis. And on a year-on-year basis, it declined from 20% to 16%. So what's the major reason for this decline?

This quarter is only H1 to H2 shifted the export. This is declared. Next H2, we are going to -- almost equipment is ready, then due to customer clearances and unforeseen, then H2, we are going to finish this export, then again, our margins is going to sustain, good.

And sir, why was this shipment deferred to H2? Was it a strategic decision or something?

Not strategic, the customer -- some customer inspections are delayed.

Some customers?

Customer inspections, equipment inspections are delayed. International customers inspections are delayed.

And sir, any further light with respect to the greenfield CapEx expansion? When will it be completed and when will it start contributing towards our top line?

Already Unit 5, we started. That is a new unit, and we now almost all 6 months back started now that unit is operational full fledged. And one more unit we are going to start, that is -- maybe it will take another 16 to 18 months to finish that unit.

Understood. Sir, if we consider the onetime shipment delay, this quarter should given us a revenue of around INR 220 crores. So can we expect the INR 220 crores as a steady-state run rate now for the second half, every quarter?

20% to 25% growth possibility this year, we are going to touch this.

Okay. 20% to 25%.

Yes. Between.

Next question is from [ Rohan Mehta ] from [ FICOM Family Office ].

Yes. So could you explain in detail how technically different your products are versus the peers in the space of GLE, glass line equipments, and also filtration and heavy engineering? And what I'm trying to understand is, sir, how are we able to get higher margins and better asset turnover compared to peers?

So sir, we are -- that's the reason, sir. We are actually name also -- proposed name also, we are Standard Engineering Technology Limited. We are -- glass lining is one of the product lines. But 80% -- suppose many times, many stages I explained our company. Our company suppose INR 100 CapEx is there, 80% we are in-house, we are manufacturing. We are manufacturing, installation, commissioning, that is everything we are doing. Recently, that's the reason, next part, what happened earlier, customer design, sir, otherwise, third-party consultant design, we are executing projects. That's -- we have some gaps we identified. That's the reason today we are going to acquire C2C. C2C is the 40 years old company, 130 employees, they can -- they design many, many global companies. And now we have engineering, basic engineering, detailed engineering and complete concept and equipment manufacturing, supply, commissioning. A to Z equipment, almost all 80% variety of equipment we are manufacturing for pharma and chemical. So they are manufacturing, some other companies are there. They are our competitors, but there are 2, 3 variety of products they are manufacturing. Today, we are almost 91 variety of products we are manufacturing and we are supplying and commissioning also. We are not only supplier. We are a complete solution provider. So after C2C acquisition, this company becoming a complete precision engineering company. And we do design, we execute the projects. We run the up to water trial we are doing to client. So complete solution. This is differentiation of the our -- whatever mentioned your competitors versus our company. And margins also because of we are providing complete solution. Whenever you provide the complete solution to clients, you always will get better price. It's not only comparing with equipment to equipment and solution versus equipment. We are providing solution. And also second point, we are still 80% we are getting business from pharma. So pharma is still ready to pay good equipment, cGMP equipment, we are manufacturing, high compliance equipment we are manufacturing. So we always get premium price from clients. And also, we are unique products we there shell and tube heat exchanger we launched it, we started selling and some various other niche products we have in our hand. Others don't have that products.

Right, sir. Sir, on the heat exchanger, I wanted a clarification. So in the previous call, you had mentioned that Standard Glass was the first one to launch shell and tube heat exchanger in India and this was in association...

Sir, it's a small traction, sir.

Yes, yes, sir. This was an association with Asahi Glass and GL HAKKO. So while I was looking through other companies, it also seems like Anup Engineering is also in the shell and tube heat exchanger segment. So could you just explain me what the difference in the product or application is?

Sir, Anup Engineering are other 100 -- many companies are manufacturing, that is metal heat exchangers, sir, metal, stainless steel, high alloy, carbon steel heat exchangers. The heat exchangers, Anup engineering, whatever manufacturing, we are also manufacturing. Our Metal division, S2 Engineering, manufacturing same heat exchangers. But we are coming to shell and tube glass lining, tube inside glass lining, corrosive-resistent glass lining heat exchangers we are manufacturing. Corrosive technology, corrosive-resistent technology we are using. That is different heat exchanger. There, Anup is manufacturing that is metal heat exchangers. Here, glass lining, metal heat exchanger manufacturing inside glass lining, we do. That is a unique technology in the world.

Got it. Got it. That was helpful. And my last question...

Sir, one more explanation. And glass lining reactor required shell and tube glass lining heat exchanger. Stainless steel reactor, stainless steel heat exchangers like the metal heat exchangers, many manufacturers are there in the world or India. But glass lining shell and tube heat exchanger, we are unique. That is we claim.

Okay, sir. Okay, sir. And my last question is on the planned INR 200 crore greenfield CapEx. So I wanted to understand what is the specific product focus of this facility? And when it comes to your time line to reach INR 3,000 crores in revenue, what sort of time line or financial year are you looking at to achieve the INR 3,000 crore target?

Year-on-year, we are going to grow very strong fundamentals. And minimum this year also, we are going to grow 22%, 25% growth. Same way we are going to continue. And coming years, we are adding many, many new products, new equipments. And also the shell and tube heat exchanger is going to a big role to play in our sales. And also heavy engineering equipments we are going to manufacturing for petrochemicals, other areas. And other MNCs are approaching, but now today, our capacity plan -- many times I explained our plant capacity, 60-tonne crane capacity, 60-mm thick, now that new plant, we are going to use 100-mm thick, 100-tonne crane capacity and oil and gas equipment and other areas also -- other customers also, heavy engineering customers also approaching and some new technologies are coming, that area also we are going to enter. We are discussing with many global clients.

Next question is from [ Mohit Chandnani ] from Value Life Advisors.

Sir, I wanted to understand the order breakup for different segments.

Sir, segment-wise, glass lining is part is our revenue 35% glass lining, rest of metal equipments.

No, sir, I wanted to understand the order book for the same.

Order book also same. Today -- we're not really disclosing our order book. But today, we have almost some INR 800 crores -- INR 750 crores, INR 800 crores order book in this, sir. Generally, we are not announcing this is order book, that is, but generally we -- okay, you were asking [indiscernible].

Also, sir, what's the time line for this order book?

This is various different, different projects are there, sir, this is difference. Some projects is 6 months, some projects 8 months, some projects -- some orders in 4 weeks, 8 weeks, 6 weeks based on customer requirements, different difference is there.

Understood. And also your reaction systems and storage separation system has been flattish Y-on-Y and Q-on-Q and while plant and engineering services has been growing. So can you please explain that?

Plant and engineering services means we are providing solutions now. Companies slowly become a reaction system, independent equipment sales versus we are providing -- that is also reaction system also part of that plant and engineering solutions. That is the reason Plant and Engineering Solutions is increasing the revenue. But reactor also including there that part.

Got it, sir. And is there any EBITDA margin difference or gross margin difference in solutions versus direct products?

Solutions always give better margins, sir.

So any delta over product versus solutions?

Difference is -- slight difference is there. The product versus solution is always get -- solution is always get premium price.

[Operator Instructions] Next question is from Prateek Bhandari from AART Ventures.

Sir, I wanted to understand, are we still maintaining the guidance that we given for the exports for the full year in the range of 12% to 15%?

This year, we are going to maybe -- yes, 12% to 13%, yes, possibility is there.

How much, sir?

12% to 13% possibility is there, sir.

Because if I see the first half, I mean, specifically this quarter, there has been a deferment, as you stated, in the second half due to which there was only 2.5% of exports.

Yes.

And also if you could give a breakup as to where we are exporting in terms of geographies?

Yes, yes.

Can you give the geographical split of our exports?

Geography exports majority is Europe and U.S. majority and the third one is Russia.

Okay. Okay. And in terms of the end user demand, other than pharma, how we are seeing the demand for the chemicals and the other sectors?

Yes, chemical is also improving, sir. Now recently, we added 2 big clients. Earlier, they are not with Standard Glass, but they now turned up into -- we got very big orders from 2 agrochemicals clients. Picking up slowly. Not much 4 years back, but slowly picking up agrochemicals requirements also.

All right. And for the pharma, the demand is intact.

Pharma, yes, I can say big guys demand is intact, but still small customers are facing challenges.

Okay. Okay. And if you can just tell the quantum of the acquisition cost of C2C, please? I missed that part.

C2C, we are acquiring 51%, sir. We are paying INR 12.25 crores.

Sorry, how much?

INR 12.25 crores.

1.25?

No, INR 12.25 crores. This is engineering company. They have 130 employees. This is complete intellectual. We are going to provide intellectual to pharma and chemical food and any industry wants to design project, we are now capable to design and execution, everything, now end-to-end. That's the reason, sir, many engineering companies are there worldwide, they don't have equipment manufacturing. Many equipment -- independent equipment manufacturers are there, they don't have engineering companies, they don't have commissioning, water trial capacity companies. We have complete manufacturing, engineering, execution up to water trial. That's the reason we are becoming a unique precision engineering company. That's the reason our name changed, every time glass lining -- glass lining is also growing very well. I think coming 2 years, we are going to become the largest glass lining equipment manufacturer because we are launching 2 [indiscernible]. One is shell and tube glass lining. [indiscernible] already started selling some -- this last H1, we sold almost 45 numbers. From Japan, we imported and sold. And coming this H2, we are going to sell another 60 to 80 numbers because of capacity. But next year, April onwards, we are building the capacity plant and Japan also we are expanding. So maybe 200 to 300 heat exchangers. That is the reason, next glass lining also very fast growing. But still other areas are also growing very fast. That's the reason now company name also proposing is Standard Engineering Technology. We are becoming a complete engineering -- precision engineering company.

Got it. And if you can just give the -- provide the breakup in terms of order book. You mentioned that we have -- we are sitting on an order book of approximately INR 800 crores as on date.

Yes.

If you can give the split between the segments as to the different line of businesses that we are having in terms of reaction systems and plant and engineering and storage?

Yes, glass -- the same, 30% is the -- maybe 30% is glass lining and another 30% is the metal division and 40% maybe, approximately, I don't have exact figures, 40% maybe plant and engineering.

Okay. And just one last question. What has been the capacity utilization rates?

Capacity, after Unit 5 added and now capacity almost 70% -- 60%, 70%. Again, we are bringing automation and everything technology. That once automation comes, then capacity going to same existing facilities. I told you some little bit we have started investment. This then we can increase up to -- we can happily if it goes to top line INR 2,000 crores.

So this 70% is for the glass lining or for the metal?

No, sir. The glass lining still we are utilizing 50% only utilization. And heat exchanger, we are building one more exclusive facility. And metal division, I'm talking about 70% we are saying.

Next question is from Yash Upadhyay from IIFL Capital.

Yes. So in the last quarter, you guided that IPP exports will pick up from Q2. Have you seen any improvement in that?

Q2 -- actually, the customer inspections postponed, that's the reason that shifted to Q3, Q4.

Okay. So this 2.5% includes the IPP exports?

No, that does not include IPP. That is postponed to Q3.

Okay. It has been delayed by another quarter. And this -- the Unit 5 that you mentioned, which has been commissioned, so what is the capacity utilization for that is 60% till now?

Yes.

Next question is from Mr. Vishal from Trinetra Asset Management.

I have a couple of questions. First, like compared to your peers like HLE and GMM, where does Standard Glass stand today in terms of win rates, average delivery lead time and pricing power? Have you gained or lost any share in pharma or chemical segment like past 12 months? Or what is the measurable [indiscernible] are you holding as a competitor?

Market share, we don't know, but we are -- we have full order book and also day 1 onwards, the Standard Glass is strong in pharma sector. And earlier also 82%, we are agrochemicals, but still agrochemicals last 6 months, we added 2, 3 big clients to our basket. And the market share, we don't know, but we have full order books.

So we can say like you have strong [indiscernible] than your competitors [indiscernible].

Pharma and order book also increased. That is evident. Pharma industry is picking up.

Okay. And second question, like by '28, where do you see in terms of your revenue scale, like your margins and your capacity utilization? Have you ever set your internal targets? And which 2, 3 execution level will be the key driver to get it?

20%, 25% we'll grow, sir. This will be year-on-year that is we are targeting.

Triggers will be we are launching -- maybe -- we are putting our best efforts, and we are bringing many, many products, and we are adding many, many new unique things, C2C acquisition now. Whatever you mentioned that companies are not now today, we are not our competitors day 1 onwards, I'm saying. This company slowly become a unique company. And now today, we do engineering and manufacturing and commissioning everything. It's not a 1 or 2 products. Full basket we have.

Okay. And any used CapEx are in our road map or not?

And, yes, that is new land is acquired and the government permission delayed, but maybe next week, we are hoping next week, we are going to be seeing new facility permissions. Once permissions come, new CapEx, we are going to do INR 120 crores to INR 150 crores in new facility in 36 acres. That is we are building at a time 6 lakh square feet, very big facility. And crane capacity also 60 tonnes to 100 tonnes crane capacity. And the fabrication capability is also 60 mm to 100 mm we are increasing.

Next question is from Vineet from Toro Wealth Managers.

Sir, my question is with respect to the shell and tube heat exchangers, the capacity of which we are coming up in January. Sir, my question is how confident are we to utilize the 3,600 unit capacity for the next year that we are building up for them?

No, we are -- every month, we are selling 150 reactors. Each reactor is required 2 heat exchangers. Based on that, we calculate it.

Okay. Sir, the INR 2,000 crore market size calculated by you, right, for this heat exchanger was derived based on what?

INR 2,000 crores means, sir, we are now glass lining business is almost all INR 1,200 crores Indian market. Every month almost all -- including all manufacture 600, 700 reactors are producing and 700 reactors, each requires 2 heat exchangers and also existing reactors also require a lot of glass lining heat exchangers. Based on that, we calculated.

Sir, I mean, the capacity that we are building up for this new technology that we have, right, of 300 units per month. And as you mentioned in the con-call that we are the sole supplier of this technology in India and the market size calculated by you is INR 2,000 crore for this technology, right? So how will we alone cater to this demand in the next financial year, when we will have the capacity?

Yes, we are -- first phase -- the market size is that much is there. How much we are going to capture, we need to see. That's the reason first initial phase, we are building our facility per month 300 heat exchanger capacity.

Okay. But this capacity won't fulfill the INR 2,000 crore market size. This is what you are saying?

No, no, no. Just we started...

Okay. And what is the average selling price, sir, of the heat exchangers?

I think the average, heat exchangers INR 10 lakhs is there, INR 15 lakhs, INR 20 lakhs, INR 30 lakhs, INR 40 lakhs, 50 lakhs. The average price based on size, it will going to price change.

Okay. And sir, existing product that is going in the market, that is the graphite one, right? What is the cost of that? And how much premium is our product to that one?

Graphite heat exchanger suppose INR 100, this is INR 200. Life is -- graphite heat exchanger life is 2 years, this heat exchanger life is 15 years. And also that is particle -- complete particle, this is complete particle free. And that graphite heat exchanger generates particle. Customers don't want use graphite. But unfortunately, they don't have options, that's the reason they are using. But coming to higher heat exchanger versus glass lining heat exchanger prices have same.

Okay. Sir, do we have any interest or the order book for this heat exchanger for the coming year?

Currently, we are not accepting the order of heat exchangers because of whatever capacity is there, that capacity must be booked for up to March. So after March, we are going to -- once we started manufacturing here, we are going to start accepting the heat exchangers orders.

[Operator Instructions] Next question is from Shubham from Perpetual Capital Advisors.

Just one clarification, sir. The CapEx part that you explained, the few capacity expansions that you are doing in various verticals. Can you please repeat that? I just missed that part.

CapEx, 36 acres, we are going to build this 6 lakh square feet that is due to some permissions delayed, that's the reason construction is delayed. We are going to invest INR 120 crores, INR 130 crores first phase. That is 6 lakh square feet are going to do the construction. And capacity today, existing plants only 60 mm 650-tonne space capacity. New facility we are going to add 106 fabrication and precision fabrication and 100 tonne paint capacity we are going to build for many sectors.

Okay. And when this capacity will utilize?

Sorry?

When this capacity will utilized?

It will take another 14 to 18 months.

And sir, what kind of revenue are we expecting from this capacity once it is commissioned?

We are building existing facilities. We are adding some CapEx in the existing facilities. With the existing facilities, we can reach up to INR 2,000 crores. And that is -- that new facility also capacity we are going to create another INR 2,000 crores.

[Operator Instructions] Next question is from [ Abhijith ], an investor.

Congratulations on a good set of numbers. I'd like to ask the question with regards to the presentation where you're mentioning that you want to make it a complete engineering company with all synergies in different, different platforms like biotech, food and paint sector, et cetera. When can we expect this? What is the -- I'm sure the management must have thought about the idea or a vision statement, when -- what year they're going to be considered as a high-end precision engineering company?

Today, sir, we are already precision equipment only manufacturing. And we are the -- became the largest vacuum supplier in the market also. At the same time, we have acquired the biotechnology area, Scigenics. Scigenics is the 40 years old company, bioprocess and fermenting, last 40 years, they are manufacturing. Now we are become a -- we are going to enter into that area. And food and beverage, partially we are doing. Now after this acquisition, this C2C, they have multidisciplinaries and they are -- they can design food industry, beverages industry and biotechnology industry. So we are already -- the independent equipment we are manufacturing. Once this company coming into platform, so we become a complete engineering company to these sectors.

Okay. And what about your new product for the glass lining? You said your order book is full up to March. But I remember in the last con-call, you said that a lot more capacity is going to be added in the quarter 3, quarter 4 for these orders to be executed? Or do you mean that you will get deliveries from your partner in Japan and then start selling? I just wanted some clarity...

No. That's the reason, sir, now we are -- Japan plant has limited capacity. That's the reason heat exchangers already up to March, we fully booked. That's the reason we are -- monthly some -- we are getting some from Japan and we are executing. We supplied many clients. Clients -- one good news is all -- wherever we installed, all clients are very happy. They expressed their -- sending mails and they need more heat exchangers, but the thing is we fully booked. So next April onwards, we can produce based on our customer demand. That's the reason we are exclusively, we are constructing one unit for heat exchangers. Same time, Japan also some -- because some parts -- critical parts we are going to produce in Japan. So there also, they are increasing their capacity. April onwards -- next year, first quarter onwards, these results will start.

So April onwards, you're expecting the 300 this thing equipment...

Sorry, plant capacity we are creating. Slowly, we can -- based on demand, we can produce.

Next question is from [ Raman ] from [ Sequent Investments ].

Sir, this is a follow-up on the previous participant. You said you will be setting up a new manufacturing line for this glass lining equipment next year. What will be the incremental cost? And as of now, we are doing only assembly, like basically, we are manufacturing the glass lining equipment in Japan and getting it here and assembling and then dispatching. What's the margin now in the assembling of glass lining equipment versus once you start your manufacturing in-house from quarter 1 of next year?

Currently, the margin is okay, okay. And once the heat exchanger is started assembly in India, margins are going to -- I'm expecting at a minimum PAT going to 15%, 18% in heat exchangers.

And sir, what will be the incremental CapEx for setting up your own this unit out here?

Unit 2, we are doing CapEx another maybe some Japanese company investing in Japan only. We are not taking that -- India, we are going to investment another INR 10 crores to INR 15 crores. Because already we have some existing furnaces, equipment and assembly, that machinery we are going to shift to a new unit.

We have a follow-up question from [ Mohit Chandnani ] from [ Value Life Advisors ].

Sir, I wanted to understand the products versus solutions business. Is the working capital cycle different in both?

Solution working capital, it will increase because it will take integration and everything. Milestone basis, we will get the payment.

So can you give us a quantum of the difference in product versus solutions?

Not much significant, slightly difference, sir, not much difference.

Any number on that side?

Particularly, I don't have a number, but not much difference, but a little bit slightly difference is there, please.

So the incremental EBITDA that we make and the incremental working capital that comes in, so is it ROC accretive or...

I think there is an increase...

Sorry, sir, I didn't get your answer.

No, no, sir. Ask me again, sir.

So you say you make more margins on the solutions business, but you also employ more working capital. So is it ROCE dilutive or ROCE accretive, the solutions ViaSat-3 products business?

ROC going to increase, sir.

Okay. Got it. And in the glass lining shell and tube heat exchanger, you say the life is 15 years while graphite life is 2 years. So I wanted to understand, do you give a...

2 to 3 years.

Sorry?

2 to 3 years, 4 years, that's all, sir, max to max.

Okay. Got it. So for these 15 years, do you give a warranty or how is it?

Warranty, we will give only 1 year, sir.

And even for graphite, the warranty is 1 year?

Graphite 1 year, they will give. They also give 1 year only. But based on Japanese user experience, and we installed only just 6 months back only, we installed in India. But based on customer, they are using last 15, 10 -- I think 12 years, the last 12 years, the Japanese customers are using these heat exchangers.

Got it. Understood. And the demand for these heat exchangers since it is expensive is more from the pharma side?

Pharma and chemical also, sir. SRF we installed maybe. Now SRF order in pipeline we are going to deliver H2.

Got it. Understood. And can you throw some light on how the pharma and chemical demand -- CapEx demand is shaping up in India right now?

Pharma demand is increasing, but big clients are doing, sir, CapEx. Small clients still struggling. I saw personally, the small, medium -- below medium customers are not doing any CapEx. Our growth all top big clients -- due to big clients only, we are growing very fast. But once this turns up into small clients also start the CapEx, then going to be blockbuster demand. But last 2 years, 3 years situation is same. Big clients are doing continued CapEx and the big clients are announced or whatever we have clients, they announced very, very big CapEx coming 2, 3 years. And small clients still facing cash flow issues and a lot of things because of due to price issues, their product -- end-user product price issues. And for agrochemicals also slightly increasing demand. We got good orders from 2 big clients from agrochemicals.

Understood, sir. And when you say big clients and small clients, so pharma versus chemical, how do...

Pharma only big clients versus small clients, I told. All re pharma clients.

Okay. And when you say big clients and small clients, so how is your revenue concentration looking for top 5 clients in pharma?

Top 5 means, sir, above INR 2,000 crores to INR 3,000 crores, INR 2,000 crores revenue companies are sustaining and they are doing well. They are getting good orders. They are doing continued CapEx. And below INR 500 crores, INR 300 crores -- earlier, they are doing -- every year, they are adding 10 reactors, 12 reactors without marketing our order book also fully. But nowadays, that INR 500 crores below revenue companies, they are not adding any CapEx.

Sorry, sir, maybe my question didn't come across correct, but my question was -- so I wanted to understand your revenue concentration from top 5 clients.

Top 5 clients. Top 10 is, I think, 45%.

Next question is from [ Rahil ] from [ Sapphire Capital ].

Yes. Sir, I want to understand on the margins trajectory, EBITDA margins going ahead. You've done sort of 18.5% or 18.8% in H1, correct? Will this be -- will this sustain in the coming second half or you expect increase in margins? And also given your growth guidance...

Definitely, it will sustain. Growth also very good. Definitely, it will sustain. Export also going to happen in H2. So margin is going to slightly going to increase.

So -- but now that you are focusing more on solutions, so next year, what sort of incremental like margins can we expect, EBITDA margins? Any range you have like penciled in or projected internally, something you can achieve?

Slightly it is going to increase. But number-wise, I can't predict now, but it's slightly going to -- our margins are going to sustain because we are a unique company, we are providing complete solution to clients. The client wants complete solution, not a supplier, just not a supplier.

Okay. So it's fair to say that current level is sustainable and it won't go down from there, but only upwards?

Yes.

We have a follow-up question from Koushik Mohan from Ashika Group.

Yes. Sir, I just wanted to understand, this year, if we are doing INR 750 crores on the top line, that means that if I assume 25% growth rate, then we should be almost doing around INR 930 crores to INR 950 crores in the next year. Is my understanding right on that part?

Correct. So 25% if we do; if I do 25%, yes.

Perfect. Sir, and with the capacity that we are putting up right, new factory, that coming into existence, our asset utilization will be very low. So with the new factory coming up and for looking at the newer growth rate, can we expect FY '28 to have a very good growth rate? Is my understanding right over there also?

Yes, yes, correct. That facility once come, then we are going to add other areas.

Okay. So there will be like a J-curve in the growth rate will be in FY '28, that means?

No. Now also we are growing. '28 onwards, maybe more growth that is we are expecting.

That was the last question for the day. I would now like to hand over to management for closing comments.

Thank you all. Thank you, participants.

On behalf of Go India Advisors, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.