Ion Exchange (India) Limited (500214) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ion Exchange India Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors.

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Ion Exchange India Limited. On behalf of the company and Valorem Advisors, I would like to thank you all for participating in the company's special conference call on reclassification of reporting segments. Please note that the management would take questions on the reclassification of reporting segments from 2:00 p.m. to 3:00 p.m., and then the Q1 FY '27 earnings call will start at 3:00 p.m. to 4:00 p.m. In case the question-and-answer session on the reclassification of reporting segments concludes earlier, we will subsequently move into quarterly earnings. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decision. The purpose of today's reclassification of reporting segments and earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today's call and hand it over to them for their opening remarks. We have with us Mr. Aankur Patni, Vice Chairman; Mr. Indraneel Dutt, Managing Director and CEO; Mr. Vasant Naik, Group Chief Financial Officer; and Ms. Nikisha Solanki, Company Secretary. Without any delay, I request Mr. Indraneel Dutt to start with his remarks on classification of segments. Thank you, and over to you, sir.

Thank you, ma'am. Good afternoon, everyone, and thank you for joining us today. On behalf of our Vice Chairman, Mr. Aankur Patni, and the entire management team on the call, I extend a warm welcome to everyone participating today. As was mentioned, today's introduction has been structured into 2 parts because of the reclassification that has happened, which is an extraordinary event. The first session for the first 1 hour, we would like to talk about the rationale and the strategic imperative behind the reclassification. And we already uploaded a presentation for the reclassification, which I'm sure all of you would have got a chance to take a look at. And we will spend the 1 hour from 2:00 to 3:00 to take you through some of the pages of this presentation that has been uploaded. And then we will be happy to take any questions that you may have regarding that presentation. And that hopefully will conclude the first segment of our conversation. From 3:00, we will follow it up with a regular 1Q '27 earnings conference call, where we'll discuss our operational financial performance under the revised reporting framework for the quarter just concluded, which is first quarter of fiscal '27. So that's the broad direction in which we will follow. So I will request each one of you to refer to the presentation that has been uploaded. And I will kind of cover it very briefly, giving an overview. And once that is done, and that itself will explain a lot of the questions that you may have. Any further follow-up questions, we'll be very happy to take an answer for you, okay? So I refer to the overview first page where we've given the company snapshot where the company is into 62 years of operation in 50-plus countries. We have one of the largest service networks in the Asia Pacific region, about 200,000-plus worldwide installations, including 3,000-plus core industry projects with world-class manufacturing facilities and assembly hubs in many parts of the world, totally committed to sustainability across continents. The company's vision is to be the leader in our business, which is so vital to people's lives and the environment. As the next page will show our total portfolio of water and environment management solutions, cuts across the entire water cycle, right from pretreatment to water treatment, which is both Ion Exchange resin as well as membrane technology based. We also are into industrial wastewater treatment, recycle and zero liquid discharge. We also have applications for our products like special resins, absorbents, membranes, chemicals for various applications. We also are into sewage treatment, tertiary treatment slush treatment, and we also have our offerings on the drinking water side with our ZeroB consumer products portfolio. The next page captures the core offerings of the company. It is broadly categorized into 12 parts. This is, again, I think, one of the first times we are showing our company in this way. This is also very unique because we believe that we are one of the very few companies, if not the only one in the world who has under their umbrella, Ion Exchange resins, membranes as well as specialty chemicals. We also offer standard systems and plants, home water solutions and digital solutions, and we are applying those products or offerings into water treatment, ultra-pure high-purity water, wastewater treatment as well as zero liquid discharge and services. The next page, we've covered our capabilities. We talked about all of them. So across the product offerings, we are pretty much present in every aspect of water and wastewater treatment and solutions. And then the next 3 pages of the presentation covers our solutions offerings. And again, I would say in our solutions, we span across one of the widest portfolio of offerings across our original core solutions, which covers our pretreatment, water treatment technologies, condensed polishing, wastewater recycle, reuse sewage treatment zero liquid discharge and home water, which typically has been the base and the core foundations of solutions that the company has been offering for the last 60-plus years. Over the last few years, the company has moved into the advanced solution portfolio where we offer our solutions in seawater desalination. We have seen those projects we have done in various parts of the world, including in Morocco in the last couple of years. We've also got into ultra-pure water. A lot of questions have been asked in the past on our ultra-pure water solutions that we've offered in solar and also in semiconductor Mohali quite some time back. And then our solutions on the pharma side in high-purity water. We've also got into technologies on advanced oxidation for wastewater treatment, for produced water treatment and our new applications in applied Ion Exchange and wellness solutions of hydrogen water and alkaline water on the wellness range for the ZeroB product line. In addition to that, the company is currently working on emerging solutions, which are the latest areas of focus on water, wastewater treatment and resource recovery across the world. whether it comes in brand valorization in lithium extraction, in destroying forever chemicals and PFAS, not only in terms of PFAS treatment plus also absorption and destruction using various technologies, including foam fractionation. The company has also gotten into new energy solutions, which is into high water for electrolyzers for green hydrogen applications and also offering integrated electrolyzer and BOP solutions. The company is also geared up to offer solutions in semiconductor as well as for data centers with cooling water treatment solutions, high-efficiency RO and softening systems and also looking at technologies like direct liquid cooling. And then the all-encompassing area that the company is working on digital solutions and portfolio, where we are trying to offer IoT-enabled smart products and offerings and allowing our customers and our access to both be monitored, connected, analyzed as well as optimized for predictive future monitoring. In terms of our global presence, we are present in serving 50-plus countries. 30% of the company's revenue come from our international markets. We have 14 global manufacturing assembly and assembly facilities with 200,000-plus installations. The next page talks about all our project locations. So it just shows that apart from India, the company is present in many markets across Middle East, Asia Pacific and in various parts of Africa. We've also given a quick glimpse of our manufacturing facilities. You could see all our facilities, both in India as well as overseas in those subsequent slides, whether it is our resin manufacturing plant in Ankleshwar, the new plant, this is our first visuals of the new plant. We talked about Roha quite a bit, but this shows the -- a glimpse of the resin plant that has come up in Roha in Maharashtra. It also shows our membrane manufacturing center of excellence in Goa, our specialty chemicals plant in Patancheru in Hyderabad which is a mother facility for specialty chemicals. And then we also have our blending facilities in Saudi Arabia in Daman, which is operational as well as in Mapril in Portugal. Our standard plants are there in Hosur, in Verna Goa, in Wada, Maharashtra, and we have large assembly centers. One of them is in Palaspe in Maharashtra and smaller assembly centers in Sharjah, in South Africa, in Indonesia and Bangladesh. Innovation is at the core of the company. The R&D facility of the company was founded in 1965 with 50-plus patents till date and 100-plus products launched. This is India's one of the oldest water-focused research center and working across all technologies of water treatment and wastewater treatment, including resins, chemicals, membranes and focus for offering sustainable solutions for industries and communities. We've also given a glimpse of some of our marquee clients. Most of them are India focused. We have another similar page for outside India, which is typically not put up in this deck. And then a glimpse in the presentation about our human capital. We have a team of about 3,500-plus professionals with competencies and capabilities spread across 15-plus countries with competencies in EPC and projects, about 650-plus people, in products and manufacturing over 600-plus people. In consumer and retail, which is our B2B product line, we have about 1,400-plus people and then services and chemicals and corporate functions make up the rest. In the next section, we have tried to talk about some of the investments that the company has been doing over the past 6 to 7 years. And that is one of the rationale which has led to this reclassification of our reporting numbers. We've all been talking about the Roha facility, which we shown a picture earlier, is another part of the plant, where the capacity expansion for our flagship business, the Ion Exchange resins has increased by 5x through the setting up of the Roha plant, which is currently commissioned and going through stabilization and ongoing production increase. It expands our conventional resin capacity to support future growth. It will help us increase our share of the global market from current to at least by 4x to get to double-digit numbers. This also establishes India's first nonsolvent resin manufacturing facility, which is again doing other solvent-based resin manufacturing, again, a first of its kind in India and one of the more sought-after product lines globally. And it also is working towards establishing an integrated spent acid recovery plant, which will be a global first and will help us become a more circular-driven sustainable company. So clearly, Roha gives us technology leadership, circular manufacturing, a 5x capacity expansion and future-ready operations. This, along with our existing plant in Ankleshwar, positions the company greatly. And this is some -- this is, I think, one of the biggest investments that the company has made, and we are going to very soon see the full results of Roha shaping up over the next few years as we have been talking about in past investor calls. The second area where we are building scale is on pharma resins. This is again happening in Ankleshwar. Our pharma resin factory is FDA approved and the capacity expansion plan is 6x. And there also, it will help us expand our product portfolio with the new acid cat and the acrylic resin grades. The enhanced FDA-approved manufacturing facility helps us deliver products globally to our customers for the pharma customers. And also this improves and gives us a much more repeatable strengthened res future-ready process and product line with pharma resins, which is currently within our resin product line overall. This helps us expand our portfolio of offerings, increases the capacity by 6x, helps in import substitution in India, where we can supply to many of the Indian pharma customers and also allows us to be the third player only in the world who can cater to this kind of resin applications in the global market. The other area that the company has been expanding significantly is on building scale in membrane manufacturing in Goa, where we are putting the entire comprehensive range of membranes right from reverse osmosis, ultrafiltration, nanofiltration and MBR membranes in production. The company also got into a tie-up to get this full range with MANN and HUMMEL for our ultrafiltration PVDF technology. And overall, the plan is to have a 3x business growth over the years. And with this kind of a range that we are building in membranes in Goa facilities, our second plant is coming up. We'll be the only manufacturer in India to have the full range of integrated membrane facilities in the country with our own casting and coating lines with our hollow fiber technologies on U.S. and with our strategic partnerships with MANN and HUMMEL. The company is also building scale on the standard systems portfolio and all the 3 factories across Hosur, Goa and Wada have had investments being made, where capacities have been expanded multiple times. Both our membrane business and the standard plants business is a part of the industrial products portfolio. So that shows that the -- on the industrial products side, apart from consumer products, the company has been slowly increasing scale and building capacity and expanding the portfolio. And we believe that both the Standard Systems business as well as the membranes entire product portfolio will help us significantly ramp up our industrial products range, which has so far been clubbed within the Engineering segment of the company. The other area that the company has been working on is on building scale in services, where we -- having had already 200-plus operation maintenance contracts, we have a significant reach. As I said in the beginning, we have one of the largest service network in the Asia Pacific region. We have 30,000-plus customers served with a pan-India presence. And also, we are moving towards more of [indiscernible] rental and water as a service solutions. So all of this will help us offer a comprehensive wing-to-wing service offerings in the water and the wastewater segment, both in India and overseas. Case in point was the order that the company won in Oman with Petroleum Development Oman, which was a comprehensive 20-year O&M contract concession that the company will be executing. And that is how we are trying to build the service portfolio significantly across geographies, across the offerings and across the solutions given. The last part of building scale, you have witnessed that is through our ZeroB Home Water Solutions range, where we have been growing at a significant rate of 30-odd percent, 30% plus. We have been expanding with our product portfolios from filters to purifiers to lab water purifiers to water softeners to on-the-go purifiers, heat pumps. So the range keeps on growing across 700-plus cities being covered, 2,000-plus engineers and a pan-India presence. And we have also expanded into adjacent markets like Nepal. We also are exploring how we can expand into neighboring markets like Sri Lanka and Bangladesh. So with all of this, our current reporting was into engineering, chemicals and consumer products. And in the past, we have talked mostly about our engineering business. But what you'll find is in the new reporting system, the engineering segment has been broken up into treatment solutions, industrial products and lifecycle services. All of these 3 are very important for us. In the presentation, you saw that across the treatment solutions range right from core solutions, we have moved on to advanced solutions and also getting into emerging solutions of resource recovery, lithium extraction, new energy, all of these are very important. And the company is already positioning itself to be able to get a significant share of those business from both Indian as well as global markets. We talked about how we are expanding and how we've invested in our product portfolio across membranes and standard plants, and that is where we'll be able to show you progress for the Industrial Products segment going forward as a stand-alone segment. We also talked about how we are building our scale in services across geographies, across the portfolio, across technologies. And that is why we wanted to share our Lifecycle Services business segment and report that separately for you. Our Chemicals segment continues with Specialty Chemicals. The composition remains the same of industrial resins, pharma resins and Specialty Chemicals. Water treatment and specialty chemicals and also process chemicals and the Consumer Products segment remains the same. Only the institutional product line has moved out of the consumer segment to our industrial products. So that's the classification we have done, again, emphasizing the fact that the company is much more beyond chemicals, consumer products and engineering that beyond EPC and projects, the company is moving, pivoting more towards treatment solutions, advanced treatment solutions, emerging treatment solutions into membranes, standard plants and products and also into life cycle services, offering the most comprehensive range of life cycle services. So this is how the current and the new reporting segments are structured. This page, for those of you who can refer to our presentation, will give you a very good clarity of how we were reporting the businesses earlier and how we are starting to report the company from this financial quarter. And the next page covers a little bit more of the reporting segment is again a classification of what we have talked about in the past few pages. So it just again shows all of the readers and those on the call how the treatment solutions, industrial products lifecycle services, Specialty Chemicals and the consumer products offerings are stacked up. The next few pages just talk about how the breakup of the businesses has been. And again, some of this, we can even cover as part of the Q&A, but you will see that our Treatment Solutions business has grown significantly year-over-year. If you look at the CAGR over the last 4 years, the Treatment Solutions business has grown at a rate of 23%. This just shows our continued focus on this segment, that kind of our mothership. That's the strategy for us to get into projects and then we execute through services, we execute through specialty chemicals, which are all required to run those plants. We execute through membranes. Here, the EBIT has gone the other way, and we have discussed about this at length in many of our investor calls where as we have talked about some legacy projects, we talked about the UP project where the profitability has taken a hit, which is what you typically see in the bigger treatment solutions. On the Industrial Products, again, you will see it's a 9% CAGR, a little bit of softening in the last year. Otherwise, the numbers would have looked far better. There was some impact because of the West Asia crisis. We could not keep up on the same rate of growth. And again, a little bit of softening due to some investments in the last year, but there also the CAGR had grown for the last 4 years, slight dip in the current year, which we expect to overcome in the current financial year. On Lifecycle Services, I think a good story, 10% growth in revenue over the last few years, now that we are reporting these numbers segments separately, but a very, very positive, healthy 21% growth in CAGR over the year of the last 4 years. Specialty Chemicals and the consumer products, those 2 segments are the same as we reported in the past. So nothing new to talk about, except the fact that both Specialty Chemicals has recorded double-digit growth in both the top line revenue as well as on the profitability EBIT. while consumer products has been a very strong growth story. However, the profitability has been down, and we have talked about how our plan is to come back and breakeven in this financial year. So with that, I come to the end of the overall presentation. I wanted to give a voice over the pages that you would have seen, and we'll be happy to take any questions that you may have around the reclassification beyond what I talked about just now on the call.

[Operator Instructions] The first question comes from the line of [ Subi Gupta ] Trinitas Asset Managers.

So my first question is regarding the Portugal market. After our acquisition there, how is that market sort of progressing? And what is the market scope that we see? Also, if you could just comment on the margins that we would be getting from those market, that specific market?

Sorry, if you could repeat, ma'am, which particular market segment you're talking about?

Portugal, Portugal, Spain and Portugal, we had this acquisition. So we were going to expand in Europe. So just wanted to understand margins and scope of expansion there.

So that business was acquired about 3 years back. And I think we have completed the integration of that product line. And I think we have got our teams well trained on Ion Exchange products and solutions offering. We see good potential of growth for all our resins, chemicals membranes portfolio. We also have participated in pursuits on the solutions side of the business, and we have got also a project that we are executing right now. Clearly, there is more potential than what we have mined so far, and the team continues to work to see that the full potential of growth and opportunities that exist in the South Europe, Iberian market as well as in the North African market, which can be catered to also from that entity are fully leveraged. The company continues to see significant upsell opportunities from that acquisition for ion exchange, and we continue to work towards that, and we believe that the success from those countries, those geographies in the next 2 to 3 years will be significantly more.

Sir, if you could just quantify the margins in terms of like what is the incremental margin that you would get from there? Is it similar to our profile here? Or will there be a difference?

So we typically, ma'am don't talk about specific margins for particular geography, but I would say that, that, again, varies segment to segment. We talked about the 5 segments. The 4 of the 5 segments are present there, not the home consumer products business. That varies segment to segment. But overall, the margins will be similar, if not better, than what we see in India.

The next question comes from the line of Pratik Kothari with Unique PMS.

Sir, my first question regarding this reclassification. If you can just go through what led to this? I mean, why this reclassification, any corporate action per se that you expect on this? Just thoughts behind doing this?

So it's just that the Engineering segment was not reporting the full -- giving the full color of what was inside engineering. And it was, to a certain extent, construed as projects business, but we had a very robust products business within it. We had a very growing services business within it. And then our pivot towards more solutions and advanced emerging solutions offerings. So that is what we wanted to show separately because at a consol level, what we were able to share with you was a combination of these 3 segments that were reported as engineering. Now I think our -- those interested in the company will be able to see all these 3 aspects of the company in terms of the growth of lifecycle services as repeatable revenues, life cycle revenues, the growth of our industrial products portfolio beyond the consumer products that we have been reporting and then the growth and performance of our Treatment Solutions business.

Any thoughts on kind of listing this separately? I mean, 3 different divisions that we have or any activity in there? I mean, any such thought?

Right now, there is none. Right now, I think the objective is only to offer more transparency to share with you the investments because we have only talked about investments largely made in Roha, but there have been investments made in other parts of the company. And we want to share with you very openly and transparently the growth that we anticipate and expect to see in these segments that we have not talked about. We believe that with this reclassification, about 60% of the company will comprise of products, chemicals and services and the treatment solutions will be about approximately about 40% of the company. So a lot of work, a lot of investment a lot of management bandwidth has been spent over the last 5 to 6 years in growing the products, the specialty chemicals and the services portfolio of the company that we feel are now substantive enough to stand on their own feet and be reported separately as individual segments to our investors, while continuing to maintain our focus on treatment solutions as new technologies emerge, we want to be on the forefront of treatment solutions as well. But right now, to answer your question, there's no separate corporate action plan. It is more at offering more transparency and more perspective and color of how the company is performing across these segments.

Sir, one clarification on this Roha slide, which is, I think, Slide 23. We have said 5x capacity expansion. So is this for one specific product? Because our understanding was we are doubling the resin capacity. So this -- if you can clarify this 5x number?

This is a global number, okay? So we are talking about actually becoming a bigger global player in the market. And this again, our broader numbers, you could look at based on how you define the global resin market. But what we're trying to say is we expect through the Roha plant and the ongoing Ankleshwar plant that we are aspiring to take 10% of the global resin volume, which I think is a fairly big aspiration from that perspective.

No, the point taken, sorry, but coming back on this. So last year, we had called out about INR 500 crores of resin revenue in our chemical business, roughly, give or take. So when we say 5x capacity expansion, what does that mean?

No. So that means when I said that this is not just for Roha, this is for Roha Ankleshwar together for the entire resin business, we believe that with all debottlenecking done and the final capacity that we may get, we will end up with the total resin capacity across both the plants will be 5x together of what we had in the early -- in the past.

So just to reconfirm, so INR 500 crores of resin revenue that we did last year, what we are saying is post this debottleneck in Roha, we can do INR 2,500 crores?

No, no. So that was for the entire Chemicals segment. Our Chemicals segment includes the specialty chemicals business also.

No, correct. So last year, Specialty Chemicals, we reported about INR 900 crores of revenue, give or take, INR 500 crores of that was resins, INR 400 crores was water chemicals. So what is it?

We have not given a segment breakup like that. But what we are saying is that this together, this gives us a significant capacity expansion post debottlenecking to be able to go after that market.

I'll take this offline if required. And second, on this quarterly results, do we come back on the queue or should I ask that now for the...

We'll come back. That will be once this particular segment is over, then we will start that segment.

The next question comes from the line of [ Rahul ] with [indiscernible] Augmont.

My question is more regarding the rebranding of the Chemicals division to Specialty Chemicals. So with this Roha plant targeting utilization ramp-up, are the resins produced here moving up the value chain? And like are they pharmaceutical-grade resins or the ultra-pure water resins for the semiconductor and EMS sectors? And what would be the ballpark margin profile for them? And what's the time line for securing these high-margin certifications required for these new lines? That's...

Yes. So in a way, I think your assessment is correct at a broad level. As you all know that the reason for the Roha plant was that we were capacity constrained in the first existing mother plant of Ankleshwar. And as a result of which now with Roha coming in, that gives us a lot of additional volume by which we can not only take care of our core bread and butter business that we have a significant high global demand, but this will also allow us to delve into more specialty resins for special purpose applications. You mentioned a few of them. There are other applications as well that the company would like to go after, which are typically more higher margin and coming out with higher quality and higher specification grade product lines. Also, at the same time, this will allow us to -- the expansion in the pharma product line also will give us more specialty grade resin product lines on the -- from pharma application standpoint. So across the board, we are moving more towards high-end specialty application grade while continuing to keep the bread and butter core volume intact. And that is why we felt that it was possibly time that we classify our chemicals away from commodities to more specialized application offerings.

So what's the ballpark margin number that we can expect in the medium term from this business? And how much revenue as a percentage of the consolidated revenue can we expect in the next 2 to 3 years from this segment?

Right now, we are not in a position to give you a breakup. I think those will become evident as the quarters unfold, and you will see the performance and the percentages as the Roha plant comes up, as we move more standard volume to Roha, as we move more specialty volume to Ankleshwar, those will become evident. And at that time, we can cover it with more specifics. Right now, it's a bit premature to talk about those percentages at this point in time.

Right. And we've also separated Industrial Products from Treatment Solutions. So does that mean that the Industrial Products segment will scale independently? Like do we expect to become an OEM supplier to other EPC contractors who might be competing with our Treatment Solutions division?

We already are, but we believe that it can be more. As I said, we have significant investments made on the standard plants and systems. We today have 4 manufacturing locations of scale, and they are small assembly locations. As I said, our second membrane expansion plant is coming up in an adjacent plot in Goa. That will manufacture the UF range of products, the MBR range of products. So clearly, we see that this segment, there's enough traction, enough activity, enough revenues, which is kind of now helping us set this up as a separate stand-alone segment vertical. And we definitely believe that this has a very, very high promising future. We believe that the products portfolio will grow in revenues, both in India and outside. Our overseas teams are significantly getting strengthened to take these product lines outside India as well. And that is where the company continues to focus on building a strong industrial products portfolio, a strong specialty chemicals portfolio and a strong services portfolio while continuing to look for higher-end advanced and emerging solutions in wastewater and water treatment.

The next question comes from the line of [indiscernible] with [ Kamana Holdings. ]

So it kind of ties up with your nonsolvent capacity increase in your Specialty Chemicals business, but I'll just frame it in another way. A lot of companies are coming up who are trying to create resins for water treatment, which does not -- which are not polymer-based. They're more carbon-based and other material based because they say that the polymer-based resins pollute or worsen the water and other aspects. And they say that the countries like Europe are thinking of banning these type of resins in a whole. So what is your -- I mean, given that ion exchange has a large exposure to polymer-based resins, what's your response to that? And is this company also diversifying out into other based resins?

So Ion Exchange resin is, as I said, is one of our first businesses. We continue to see a significant amount of demand and requirement for those resins in the market. What you're referring to is the overall concern globally, especially more in developed markets like the U.S. and Europe around how to deal with residual chemicals, especially very tough to treat chemicals, which refuse to go away and don't get destroyed. And that's why we kind of get into this forever chemicals or PFAS category. There, our company is already working. I had talked about this in our emerging solutions portfolio, where in terms of both absorption through resins and also destruction of those chemicals, we are coming out with technologies which will help us do that. And there are very few companies in the world who can offer that in the market, and we would like to be one of them. Apart from that, we don't right now see a significant threat to our polymer-based resin business. Having said that, we continue to look at various basic chemistry of seeing how these applications can be met. But we believe that with the focus that we are putting in on destroying, absorbing and destroying PFAS assurance, we'll be able to cater to a lot of the concerns that today developed markets in U.S. and Europe have around this for our chemicals.

Okay. So what you're saying is that you are -- the company is actively also working towards creating a portfolio of nonpolymer based on a portfolio that that tackles this issue of creating residual impact?

Yes, I would say the second. I would say that we are working to solve that problem of forever chemicals, which is extremely big. If you look at markets and just Google PFAS and look at markets in Europe and U.S.A., it's an extremely big problem. And we believe we have some part of the solution. We are putting the rest of the solution in place so that we can offer this to our customers. So that -- I think the second way you framed my response is aligned to our thinking.

Okay. And just last question. So on your treatment solutions business, your profitability -- even in this presentation you put out, your profitability CAGR over 5 years has been pretty discouraging. Your EBIT has fallen from INR 60 crores to INR 27 crores. I agree you've grown top line at a healthy double-digit revenue. But I'm just trying to understand what are the -- what's the landscape now as in what's happening? Why has this performance been so bad on the profitability front for 5 years now? And how do we plan to move this back towards higher profitability? Is that the plan even? Or are we focusing on other areas in this segment will continue to show weak profitability?

So it's a mix of both. And we have always called out in past meets and calls that this segment is currently facing headwinds due to some large value legacy projects that we are continuing to execute and finish. I think we have borne a brunt of that pain of those projects as is evident in these numbers. but they will -- they are kind of in the final stages. I would not say final, but they are, I think, with a significant part of the work already done. And so some of the numbers that you see are reflective of those. Having said that, we continue to look at ways of how we can improve the solutions business profitability, a, in terms of picking -- being selective and picking up projects which are definitely much better risk profile, much better execution predictability in terms of improving and strengthening our solutions business, from -- further from a competency standpoint in walking away from difficult projects being a lot more selective. And that's what the experience has taught us. You have seen us pick up projects of different nature, whether it is the Oman concession of 20 years we picked up or the recently announced win that we had from a multinational customer for a project in the Middle East. So those are the profile of projects that we would like to get. So that is what we are trying to work on to improve the overall while continuing to maintain the growth trajectory. The focus on the treatment Solutions business will not go away. We are working towards finding the right sweet spot for our projects. What you also see us do in this presentation is to see how we try to move away from commoditized solutions towards more advanced and emerging solutions where there is value for technology, there is a need in the market, unmet need in the market is how as a technology company, we want to offer solutions that are not available across the board and hence, will come with a little bit of that much of premium. At the same time, we continue to build on our other portfolio of products chemicals and services. So that's the broad company response in terms of the headwind that we currently see on the solutions business, but a lot of work is happening. Unfortunately, some of these projects are large projects. You can't step away from it like you typically do on maybe a product deal, and that is where we have to grind it out, which we are currently doing. But as you see our growth happening on our industrial products portfolio, our consumer products portfolio, our services portfolio, our specialty chemicals portfolio, those are a lot less risky part of the company. And that's what we want to double down. At the same time, work towards more higher-end emerging advanced solutions that the world needs on water and wastewater solutions.

The next question comes from the line of [indiscernible] with IMS.

My question today is, I just wanted to ask about the North America business, the Americas and North America business and especially with the recent appointment of the CEO, Mr. Sanjay Sapra and also on the Water Quality Association certification. So just want -- my question specifically is, has this certification already started contributing to the revenue in the current quarter? And if so, if the management could kindly quantify this revenue contribution? And also looking ahead, how do we see the certification driving incremental revenue over the next 2 and 3 quarters?

So good observation and good question. And while this discussion is primarily on the segment classification, but it's kind of related to one of the segments. So we'll try to give a perspective. So the appointment that you talked about referred to is a part of our ongoing strategy to become more local in global markets. We've already -- while we kind of highlighted the appointment of our North Americas leader, we've also -- our Americas leader rather. We've also appointed a leader for our Asia Pacific business. We appointed a leader for our Middle East, Africa business, and we are in the process of appointing a leader for our Europe business. So it's not an Americas effort alone. It's part of a very concerted effort to take the company global and below these leaders have country leaders so that we can go after the potential market opportunities in the respective countries. This plays well with the investments that the company has planned and has made, specifically with respect to the investments in our resins business, in with the Roha plant, with our membranes business that is being made and also with our standard plant business because all of these product lines and offerings will be sold in most of these markets across the world, including the Americas market. These markets also require our products to have local certifications to be able to meet the requirements of customers in those local markets as per local stat regulations. and the WQA certification is a state in that regard for our resins business. For us to be able to sell in the Americas market, the WQA certification is a must, and that is what the company has gone and done. So yes, with the WQA certification, with our Roha plant commissioned, with our leadership team in place in some of these global markets, we will see an uptick on the businesses based on which premise, the investment was approved. So this is as per the norms agreed and the progressive growth plan we've already given in past calls. So we expect the growth to happen on those lines in those markets for the businesses that we are investing in.

Right. I highly appreciate the detailed answer, but just if you could just give a quantification in terms of has the WQA certification contributed to the current quarter revenue? And if so, what is the contribution? And also the growth you see with the WQA certification and how aggressively are we targeting North Americas -- sorry, the Americas? And what is the growth in the quarters to come?

So the question on this current quarter we will take in the call for the quarter. As I said, we would not be in a position to give a quantification, but we expect a significant part of our Roha plant capacity utilization to come from overseas markets and specifically the North American market. So there's a significant assumption that -- not a majority, but a significant part of the Roha volume will be used to cater to the North American market growth.

The next question comes from the line of Deepak with Sundaram Mutual Funds.

Sir, I just want to double click on that pharma resin, which we spoke about at the Ankleshwar location. So when we talk about 6x capacity expansion, is this the expansion which has already taken place? Or you mean to say that from here on, we'll be expanding 6x in the next couple of years?

So it's in the process. It is not as big as the Roha plant that we had to set up. It's in the process. The pharma resins are not measured by volume, but value. And we believe that we have the necessary actions being put in place to get this up and done in the next 12 months.

Okay. Sir, would it be possible to quantify like what we quantify in terms of Roha plant maybe in cubic meter, what is it currently for this pharma resin and what it will be? And how much CapEx we'll be incurring in the next 12 months to expand this capacity by 6x?

So we typically have not given a breakup. If you look at our past commentaries around the breakup of the industrial and the pharma resins. It's an FDA-approved plant, but it is the capacity we are trying to grow. The CapEx is manageable. It's not so much the CapEx -- CapEx as to the knowledge and the technical know-how that helps us unlock that potential and the value. And we believe that we are on course to get that done in the next 12 months.

And sir, the asset turn would be...

Sorry?

And sir, the asset turn would be similar to what we see in the Roha plant at around, I think, 2 to 2.5x?

It will be quite more than that because it's a little bit of an asset-light investment more on technology know-how and IP.

Okay. Okay. And sir, would it be possible to call out as of FY '26, what was our revenue contribution from the pharma resins?

No, we don't do that. As and when the segment grows, as you see -- and our entire effort of the reclassification is to become more transparent and share more insights of the company to you. As and when we find that this segment becomes big enough to be able to stand on its own and report, we will do that. But right now, this will continue to be classified under the Specialty Chemicals segment.

Okay. And sir, one last point. So I noticed in your presentation, you had given a breakup of all the 3 segments, but somehow I'm not able to reconcile that with the actual reported number, which was earlier. So it would be helpful if you can provide the actual number plus the intersegment, which could be related to all 3 segments so that at least I'm able to match with the past number as provided.

We will provide that to Valorem. Yes, through Valorem, you will be able to get.

The next question comes from the line of [ Sagar Parekh ] with Renaissance Asset Managers.

My question was on this water treatment solution basically. So I was just looking at your presentation, and I'm new to this company. So maybe my questions would be basic. But I wanted to understand on -- you have written ultra-pure water and high-purity water as your -- as your solution that you offer. So do you all also have the capability to service the semiconductor industry, which is upcoming in India for the ultra-pure and high-purity water?

Yes, yes. So ultrapure is more for solar and semiconductor and batteries and high-purity water is a term that we associate more with pharma, biopharma, life sciences, biotech companies. And yes, we have the capability to offer ultrapure water solutions to semiconductor companies. We have participated in some of the bids that have happened in the projects in the past couple of past, I would say, year plus. And we continue to pursue. We've got good strength. In fact, we have picked up a small project of semiconductor application. It's still not in the public domain, we picked up a small project with our -- with a partner. So we're very much in that space. And this is all new space for the company. The company had done our ultrapure water project for Semiconductor Limited Mohali, SCL Mohali quite about 30 years back. So a lot of that knowledge resided in the company. But however, with the advancements in chip manufacturing, we've had to upgrade the technology of ours, work with a partner, and I believe we have the best technology to offer for our customers in India and abroad.

So in terms of size, for example, let's say, the start plant has come up, which is a INR 90,000 crore kind of CapEx. So within that, what would be the opportunity size for us that we can cater to?

Yes, it's a very specific one. I wouldn't want to -- and again, that varies plant to plant. All I can tell you is that the semiconductor fabs are extremely dirty industries. So a, they require very, very high-quality source water. Now that again depends on the kind of water you get. If you get municipality water, that will be one investment requirement. If you get sewage water as again, some of these industries have been talked about to get, then to treat that and to make it ultrapure water will be another investment level. And then the wastewater that comes from these fabs also we need to get treated. And even those require very large treatment facilities. In fact, the investments required to treat process water from the fab is bigger than what you need for setting up ultra-pure water plant. So significantly water gun, significant water degraders and all these fabs will require a significant amount of their plant CapEx to go into water and wastewater treatment.

And this business would be order book driven, this entire treatment solutions business?