Q1 2027 Pondy Oxides and Chemicals Ltd Earnings Call
Speaker #1: Ladies and gentlemen, you have been connected to the Pondy Oxides and Chemicals Ltd. Q1 FY27 earnings call. Our next conference call will begin shortly. Please stay connected.
Speaker #1: Ladies and gentlemen, you have been connected to the Pondy Oxides and Chemicals Ltd. Q1 FY27 earnings call. Our next conference call will begin shortly. Please stay connected.
Speaker #1: Ladies and gentlemen, you have been connected to the Pondy Oxides and Chemicals Ltd. Q1 FY27 earnings call. Our next conference call will begin shortly. Please stay connected.
Speaker #1: Ladies and gentlemen, you have been connected to the Pondy Oxides and Chemicals Ltd. Q1 FY27 earnings call. Our next conference call will begin shortly. Please stay connected.
Speaker #1: Ladies and gentlemen, you have been connected to the Pondy Oxides and Chemicals Ltd. Q1 FY27 conference call. Please stay connected. The call will begin shortly, as there is a technical issue from the management end.
Speaker #1: Ladies and gentlemen, you are connected to the Pondy Oxides and Chemicals Ltd. Q1 FY27 earnings call. Our next conference call will begin shortly. Please stay connected.
Speaker #1: Ladies and gentlemen, good day and welcome to the Pondy Oxides and Chemicals Ltd. Q1 FY27 earnings conference call, hosted by GoIndia Advisors. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Speaker #1: Should you need assistance regarding the conference calls, please signal an operator by pressing star and zero on your touch-tone phone. Please note that this call is being recorded.
Speaker #1: Aina Handa: Conference, over to Ms. Sana Kapoor from GoIndia Advisors. Thank you, and over to you, ma'am.
Speaker #2: Thank you, Shruti. Good afternoon, everyone, and welcome to Pondy Oxides and Chemicals Ltd.'s earnings call to discuss Q1 FY27 financial performance. Today, we are joined by Mr. Ashish Bansal, Chairman and Managing Director.
Speaker #2: Mr. K. Kumaravel, Director of Finance and Company Secretary; Mr. R. S. Vaidyanathan, Executive Director; Mr. Vijay Balakrishnan, Chief Financial Officer; and Mr. Prateek Gupta, Associate Vice President, Operations.
Speaker #2: 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 faces.
Speaker #2: We now request Mr. Ashish Bansal to take us through the company's business outlook and financial highlights, subsequent to which we will open the floor for Q&A.
Speaker #2: Thank you, and over to you, sir.
Speaker #3: Thank you, Sana. Good afternoon, everyone, and thank you for joining us for POCL's Q1 FY27 earnings call. I hope you've had the opportunity to go through our financial disclosures available on the exchanges.
Speaker #3: I'll walk you through the key strategic updates, operational progress, and financial performance, followed by a Q&A session. We have started FY27 on a strong footing with Q1 FY27 revenue, EBITDA, and PAT growing by 56.3% and 32% year-on-year, respectively.
Speaker #3: I'm pleased to share that our copper vertical continued its strong momentum in Q1 FY27, achieving the highest-ever quarterly production and sales, with both volumes increasing by more than three times on a year-on-year basis.
Speaker #3: These results reflect the strength of our integrated business model, our focus on value-added products, and our commitment to delivering sustainable and profitable growth. Before turning to the financial performance, I would like to highlight the key strategic initiatives that have supported our strong start to the year and are strengthening the foundation of POCL's long-term growth and value creation.
Speaker #3: Our copper expansion project continues to make encouraging progress. We are establishing a 36,000 metric ton per annum copper cathode facility at our Theravad Kandigarh plant in Tamil Nadu.
Speaker #3: With a total investment of approximately INR 200 crore, fully funded through our internal accruals, we have already incurred around INR 25 crore towards the project. Execution remains on schedule, with major equipment orders finalized and key construction activities underway.
Speaker #3: The first phase of 18,000 metric tons per annum is on track for commissioning by December 2026, with trial runs expected in Q4 FY27, while Phase Two is targeted for commissioning by Q3 FY28.
Speaker #3: This project marks a key milestone in strengthening our non-ferrous portfolio and expanding our value-added copper vertical. The facility will leverage integrated pyro-refining and electro-refining technologies to produce LME-grade copper cathodes, further enhancing our vertical integration capabilities.
Speaker #3: Upon commissioning, the project is expected to improve our product mix and enhance margins, driving profitability through value-added copper products. It will also create operational synergies, support import substitution, increase the use of recycled copper, and further reinforce our commitment to sustainability and long-term value creation.
Speaker #3: The incremental 6,000 metric tons per annum copper recycling capacity, commissioned in Q4 FY26, has ramped up well and is expected to achieve capacity utilization of approximately 75% through FY2027.
Speaker #3: These investments will strengthen our copper vertical, enhance value addition, and support our long-term growth strategy. CRISIL has upgraded POCL's outlook to A Positive from A Stable, while reaffirming its credit rating, recognizing its strong balance sheet and sustained financial performance.
Speaker #3: Building on these strategic developments, our operational financial performance in Q1 FY2027 reflected the resilience of our business and disciplined execution across the organization. While lead production and sales volumes moderated during the quarter, there were conscious strategic decisions to prioritize value-added products amid supply chain disruption and production constraints.
Speaker #3: That enabled us to achieve our highest ever lead EBITDA per ton of INR 21,595. Copper production and sales volumes increased by more than 3x year-on-year in Q1 FY27, supported by the ongoing ramp-up of the additional capacity.
Speaker #3: The segment delivered strong profitability, with copper EBITDA per ton rising 66% year-on-year to ₹48,488. Copper is expected to contribute approximately 45% of our overall revenue in FY27.
Speaker #3: As capacity ramp-up progresses, coming to financial performance for Q1 FY27, revenue growth remained robust during Q1 FY27, with revenue increasing to INR 931 crore, representing 56% year-on-year growth.
Speaker #3: The overall sales mix between domestic and export markets stood at 55% and 45%, respectively. And between the lead and copper verticals, the export mix stood at 55% and 25%, respectively.
Speaker #3: Within the lead vertical, value-added products accounted for 85% of the segment revenue, reinforcing our strategic focus on increasing the share of higher-margin products.
Speaker #3: EBITDA and PAT increased by 30% and 32% on a year-on-year basis to INR 56 crore and INR 36 crore, respectively. In Q1 FY27, EBITDA and PAT margins remained strong at 6% and 3.9%.
Speaker #3: In Q1 FY27, on a consolidated basis, the same momentum continued with revenue, EBITDA, and PAT increasing by 55%, 33%, and 43% year-on-year, respectively, given the higher volumes, improved product mix, and enhanced operational efficiencies.
Speaker #3: As we move forward, we remain confident in our long-term growth journey. Our target 2030 roadmap is focused on delivering over 15% volume growth, 20%+ CAGR in revenue and profitability, EBITDA margins above 8%, ROC exceeding 20%, and deriving over 60% of our revenue from value-added products.
Speaker #3: The ramp-up of expanded lead capacity is ongoing, copper capacity additions are increasing contribution from value-added products, forward integration initiatives, and our continued focus on operational excellence and sustainability position us well to deliver profitable growth, enhance shareholder returns, and create long-term value for all our stakeholders.
Speaker #3: Thank you for your continued trust and support. I would now like to open the floor for questions. Over to you.
Speaker #2: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.
Speaker #2: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets, etc., while asking questions.
Speaker #2: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Veeraj Ram from 361 Capital.
Speaker #2: Please proceed.
Speaker #4: Hi, sir. Thank you for taking up the question. Sir, you had guided in the last quarter for around 125,000 tons to 130,000 tons of lead volume sales for FY27.
Speaker #4: So, based on the current quarter's run rate, do you expect another maybe 1.1 lakh tons of sales for the next three quarters, or do we see any revision of this?
Speaker #3: Good afternoon, Veeraj. As you're aware, the whole supply chain issues were, I mean, through the quarter they were a little constrained.
Speaker #3: And that is the main reason. We hope to achieve and catch up to the volumes, but we'll have to see how the whole supply chain pans out over the next one or two months.
Speaker #3: And we are confident, at least, we will be able to close up to the numbers that we had committed over the last quarter.
Speaker #4: Okay. And since you're importing the majority of copper scrap, but copper has seen very good growth while there's only a problem in lead in the industry.
Speaker #4: Could you briefly explain why this issue is only being faced in lead recycling and not in copper?
Speaker #3: I mean, it is more of the regional placement. So, of course, we are also importing copper, but the copper material is coming across from a few other locations as well, and copper has just started.
Speaker #3: So when you look at the volume growth, you look at multifold growth, wherein lead already being at very high volumes, you see that differential not showing as much.
Speaker #3: So, I mean, it is more of a locational advantage—a little bit—and a little bit to do with the supply chain from the kind of countries that the copper scrap was imported from.
Speaker #4: Okay, got it. And do you see any difficulties or challenges being relaxed as of now, or do we see this increasing going forward?
Speaker #3: As of now, the status quo—and I’m not too sure—but I don’t think it looks like it should increase more. But as of now, it’s a little early to comment on the same.
Speaker #4: Okay. And last question, sir. What is our capacity utilization for our new 72,000-ton TKD plant of lead? And what is the one for the 6,000 tons of new copper plant that you commenced last quarter?
Speaker #3: On the TKD new capacity, because here we mainly do more of our pure lead products, the capacity utilization is below 50%. As you're aware, we concentrated more this quarter on having lower volumes to keep up the margins, focusing more on the value-added part.
Speaker #3: So, almost 85% of our production has been from value-added products. Hence, the new facility's capacity utilization has been a little low, whereas the other unit's has been a little higher.
Speaker #3: In terms of copper, almost 75% of the capacity is being utilized on the additional capacity added.
Speaker #4: So, just a follow-up: this 75% that you're mentioning is on the new capacity that commenced in copper, correct?
Speaker #3: Yes, including the old and the new, 75% overall is new.
Speaker #4: Okay, overall. Okay. Thank you, sir.
Speaker #3: Thank you.
Speaker #2: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question.
Speaker #2: The next question is from the line of Sagar Shah from Spark Capital. Please proceed.
Speaker #3: Yeah. First of all,
Speaker #4: thank you for the opportunity. Sir, my first question was just a follow-up on the previous participants on the lead utilization. I understand that the lead utilization is low because of the because of the difficulty in getting the scrap as well as as well as in sales, actually.
Speaker #4: But I wanted to understand, is there a softness in demand as well? Because we are not exposed to the Middle East. We are more focused on exporting to European countries.
Speaker #4: So, is there a demand slowdown in the Western part as well, similar to what we have seen in the Middle Eastern region?
Speaker #3: Basically, first of all, our exports are not to the European countries—they are predominantly more to Southeast Asia and the likes. And in terms of what you call demand softening, no, there’s no demand softening, but there have only been supply chain delays, because of which the issues have been volumes have been lower and all of those.
Speaker #4: Okay, so is it that—when do you see the demand on track, at least in H2, or will this softness in demand continue in FY27 for lead?
Speaker #3: Like I said, there is no softness in demand. The gap is a gap in supply because of delays in shipments and supply chain disruptions.
Speaker #3: But overall, the demand is intact.
Speaker #4: Okay. Okay. Fine, sir. My second question is related to our cost pressures. The other expenses were up 16% year over year and 44% sequentially.
Speaker #4: So, is this only because of this increase in the freight forwarding costs, and the increase in the logistics cost, or is there something else also in this one?
Speaker #3: The logistics is a very—I mean, it's a small part of increase, which is a part of it, definitely, yes. But that does not contribute to the major part.
Speaker #3: The major part is contributed by the fuel prices and a couple of additives' prices that have shot up in the last three months.
Speaker #4: Hello?
Speaker #2: Thank you. The next question is from the line of Naman Parmar. You may proceed, sir.
Speaker #4: Yeah, thank you so much for the opportunity. So firstly, I wanted to understand — in the current quarter, you have attained the highest ever realization and EBITDA per ton on the lead side.
Speaker #4: So what will you be guiding for the lead EBITDA per ton and the realization going forward? Was it a one-time only?
Speaker #3: See, this quarter, as Vijay said, our value-added mix was about 85%. So, as we said in the past, whenever we do more of value-added, the EBITDA range will be around 19,000 to 21,000.
Speaker #3: So, since the predominant portion of this lead volume comprises value-added products, we achieve this volume. But moving forward, when the volumes increase, we will be able to retain the sustained EBITDA level of about ₹18,000 to ₹20,000 per metric ton.
Speaker #3: That is a sustainable level of EBITDA that will be maintained.
Speaker #4: When you say 17 to 18, you will be sustaining EBITDA?
Speaker #3: That is the number that we have got—₹18,000 to ₹20,000 per metric ton EBITDA levels. That is a sustainable level which we can attain moving forward.
Speaker #4: Okay. Got it.
Speaker #3: Secondly, on the copper side, planned, how is the CAPEX going on and what would be the outlook? Like, will it be starting your 18,000 metric ton?
Speaker #3: It was expected to start in September, right? So, how is the CAPEX going on that side? Correct me if I'm wrong.
Speaker #3: Your question is: What is the CAPEX that's already been done on the copper part? And, if as you are thinking, it's the September month, will it start in September?
Speaker #3: Is my question correct? Is my understanding accurate?
Speaker #4: Yes, yes. Yes, yes.
Speaker #3: So currently, all the machine orders are in place and they're almost ready for inspection. We have spent approximately ₹25 crores out of this amount.
Speaker #3: And the further part of spending will happen in this quarter. Our commitment for starting the trial production was December 2026 and not September 2026.
Speaker #3: The machine installations are scheduled for around October to November 2026. Trial productions are expected to happen in December, and everything is on track.
Speaker #4: Okay. Got it. And lastly, if you can give the what volume you are expecting on the both the lead side and the aluminum lead and the copper in for the 27 and 28.
Speaker #3: We'll revert with those volume guidance figures shortly in the future. Yes, always.
Speaker #4: Okay, yeah. Thank you so much.
Speaker #3: Thank you.
Speaker #2: Thank you. Before we proceed to the next question, we would like to remind participants that you may press star and one (*) to ask a question.
Speaker #2: Participants who wish to ask a question may please press star and one at this time. The next question is from the line of Kush from DOG CMS.
Speaker #2: Please proceed.
Speaker #4: Yeah, hi. Thanks for the opportunity. I just wanted to understand, how much of the sourcing is coming from the Middle Eastern trade routes? Because it is not just you—the whole industry has highlighted the supply chain issues.
Speaker #4: So that would be helpful.
Speaker #3: So, our Middle Eastern procurement is well below 5%. But the issue, more than the Middle Eastern procurement, is the supply chain in terms of the shipping route that is through the Hormuz and all of those, which are getting delayed.
Speaker #3: So that is the main issue, and because of that, the whole delay is happening.
Speaker #4: Sure. And if these delays persist because of the X, Y, Z reasons, how are we trying to mitigate them?
Speaker #3: We are looking at alternative sourcing, as we have, and we have already started working on it with our Southeast Asian, South American, and other regional suppliers.
Speaker #3: And we are trying to push for more supplies from these regions.
Speaker #4: Okay. But then, would that be at the same pricing that you are buying at right now, or could it be at the higher end?
Speaker #3: See, technically, it should be at a similar pricing, but it all depends again on the inward freight costs and all of those. So we'll have to see as the material starts being offered.
Speaker #4: Got it, sir. And in terms of the plastics and aluminum division, where are we in terms of the ramp-up, etc.?
Speaker #4: over there?
Speaker #3: So, the plastic division for this quarter has turned profitable. We have achieved about ₹15 lakhs in terms of net profit. So, we did about ₹810 lakhs approximately.
Speaker #3: And we are preparing to do value additions in the quarters to come. With respect to aluminum, we are doing a small quantum—about 200 metric tons. That is the production right now in terms of both these verticals.
Speaker #4: Got it, sir. And one last question—for the full year, what should be the expected value addition or value-added mix for lead? Because this quarter was extremely high at 85.
Speaker #4: I'm sure as things improve, it would come down. So, what would be the sustainable mix of value-added for lead?
Speaker #3: Yes. Annually, we are looking at around 65 to 70 percent on the value-added mix. Last year, it was about 63 percent. And this year, we are expecting and targeting around 65 to 70 percent.
Speaker #4: Sure. much it would be?
Speaker #3: 85%.
Speaker #4: No, no, no. Last year, same.
Speaker #3: We're talking about, so last year—it was about 55%, approximately.
Speaker #4: Oh, okay, okay. So it's a huge change. Got it, got it. Thank you so much. Thank you.
Speaker #3: Thank you.
Speaker #2: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question.
Speaker #2: To ask a question, please press star and one now. The next question is from the line of Pawan Kumar from Global Consultant Resource. Please proceed.
Speaker #3: Sir, thank you for the opportunity. Most of my questions have already been answered, so one last question is on the CAPEX side.
Speaker #3: The guidance that you have alluded to was ₹175 crore for the Pondy 27, which you have already disclosed in the investor presentation. So, out of this ₹175 crore, can you please break down how much is the board CAPEX and the maintenance CAPEX out of this?
Speaker #3: The current ₹25 crore is for the fresh CAPEX that has already been spent. Out of approximately that ₹175 crore, the maintenance CAPEX will be in the range of ₹20–25 crore, and the balance, from ₹140 to ₹150 crore, will be for the copper new plant addition.
Speaker #3: Okay, sir. Okay, sir. Thank you, sir. That's all from my side, sir. And best of luck for the future.
Speaker #2: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question.
Speaker #2: The next question is from the line of Aditya from Raya Assets. Please proceed.
Speaker #4: Hi. Am I audible, sir?
Speaker #3: Yes.
Speaker #4: Thank you. Thank you for the opportunity, sir. I just wanted to understand on copper—as we are ramping up our copper capacities, from a sourcing point of view, how should we think about copper scrap security?
Speaker #4: I mean, we are seeing that global supply is tightening, especially on the copper side as well, and more and more countries are looking to keep more of the scrap within their boundaries.
Speaker #4: So are we seeing any kind of sourcing problems, especially on the copper side, going forward? And what is our take on that?
Speaker #3: So, currently, most of our copper sourcing is from imports, and it's a little more diversified across different countries than where we are doing our lead predominantly.
Speaker #3: But we are also looking at copper from domestic sourcing, which would contribute about 25 to 30 percent going forward, a lot of which we have also started looking at currently.
Speaker #3: I mean, it has to be I mean, the sourcing model for scrap going forward will have to be extremely dynamic in terms of being able to quickly switch over to domestic and versus imports.
Speaker #3: So it has to be a dynamic function of the whole process. And as we go forward, we'll have to keep making it stronger.
Speaker #4: Got it, sir. Very helpful. Just on the lead side, we understand that it's not a demand issue right now, but mainly a sourcing issue. We are facing supply chain challenges because of the Middle East crisis.
Speaker #4: But if this crisis persists, say, for months, how are we planning to, I mean, source our scrap on the lead part? Because again, our lead imports are quite high.
Speaker #3: See, when we say sourcing, it is more about the shipping delays and all of that, which are happening. Already, we have started looking into other regions, like the Southeast Asian region, and a little more on the domestic part of it.
Speaker #3: And going forward, I mean, those the specific shipping routes routes will have to be avoided so because of which there could be the sailing time would be a little longer.
Speaker #3: And maybe a little impact on the pricing in terms of raw material overall. But I mean, it will find its balance in due course.
Speaker #3: I mean, it's not going to be perennial.
Speaker #4: Got it. Just one small follow-up on that. I mean, does that lead to working capital—sorry.
Speaker #3: See, whenever there's a war, post-war the scrap generation is also multifold due to all the calamities that happen during the war.
Speaker #4: Thank you, sir. Just a quick follow-up on that. I mean, with routes being elongated, does that stretch our working capital also? I mean, do we see our working capital being stretched, at least for the next one or two quarters?
Speaker #3: No, our working capital is not stretched if you look at our current numbers. Our payment cycle is when the material arrives closer to the port; that's about a week before the arrival of the material.
Speaker #3: So that still stays in place, so that has not really impacted our working capital cycle.
Speaker #4: Thank you, sir. That's very helpful. Thank you.
Speaker #3: Thank you.
Speaker #2: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question.
Speaker #2: The next question is from the line of Jigar Jani from Newama. Please proceed.
Speaker #4: Yeah, hi. Thanks for taking my question, and congratulations on the great numbers with the copper environment. My first question is on the copper EBITDA per ton.
Speaker #4: If I recall rightly, I think last quarter you had guided for 35,000 to 40,000 on a normalized basis. Before the value addition kicks in, this quarter again, we have surpassed last quarter's EBITDA per ton in copper.
Speaker #4: So, what kind of guidance would you like to provide before value addition for the copper EBITDA per ton for the full year?
Speaker #3: Thank you, sir. You’re exactly right. We had guided at 35,000 to 40,000, but with our increased capacity right now from the addition of 6,000, we are able to get a little more efficiency back into our operations.
Speaker #3: And translate that into the, I mean, into the sales pricing. And also, because of a good amount of volumes, we are able to compress a little bit on our working capital cycle. In terms of overall cost, on that basis, we were able to bring it down by a couple of basis points.
Speaker #3: And in addition to that, currently in this quarter, we also had a little run-up due to the demand situation in terms of availability. So we were able to get a little more premium on the selling side.
Speaker #3: On copper. But nevertheless, looking forward, margins on this— I mean, we should be able to do in excess of 40,000, which is mainly driven through the efficiency we've achieved through our increased capacities and some machine additions and all of those.
Speaker #3: So, we can safely guide that above 40,000 would be for the part which was earlier 35,000 to 40,000.
Speaker #4: Okay. And sir, on volumes also, I think we had guided 12,000 tons for copper. Again, in the first quarter, we have done about 4,000. We are already at 75% utilization.
Speaker #4: So, can we expect some more ramp-up in this, or should we expect that around 4,000 to 4,500 should be the run rate until the new capacity kicks in?
Speaker #3: Yeah. So we will have our new capacity kicking in during the last quarter. So definitely, in the last quarter, we will have the benefit of the new capacity coming in as well.
Speaker #3: Till then, we will be pushing hard on the existing capacity—whatever we have—and see what maximum we can do.
Speaker #4: Understood, sir. And sir, lastly, just a question on copper. So, right now, when we say copper cathodes, up to what stage do we do the scrap processing?
Speaker #4: Do we just do the inverts, or do we do the anodes also as of now? Just wanted to understand where.
Speaker #3: Anode is a part of the new project that's coming up. So from the scrap processing to anode, and anode to cathode, will be a part of the new process that comes.
Speaker #3: Currently, we are doing the basic pre-processing in terms of shredding, chopping, and sorting, and a small amount of melting as well into some re-melted, I mean, kind of ingot or a pellet.
Speaker #3: But the majority is in the pre-pellet condition, pre-melt.
Speaker #4: So, when we target Q3 FY27, 18,000 tons, that will be till cathode and not till anode. Is the understanding correct?
Speaker #3: The installed capacity that we are establishing for 18,000 tons will be till the end product cathode.
Speaker #4: Understood. And sir, lastly, are there any plans that you have formalized on forward integration from copper cathode into big bars, wire rods, or any value-added products that you're looking at as of now?
Speaker #3: We are in the process of finalizing; but right now, we don't have a confirmed product that we will be announcing. As we get closer to our final production stages on the cathode, we will come out and announce our further plans for forward integration.
Speaker #4: Sure. And lastly, any update on lithium iron or are we still at the pilot stages there?
Speaker #3: Sir, Mr. Whybee will speak a little more on the lithium iron. Yeah. Hi. Since the industry is still evolving, we are still contemplating and working with some strategic technical partners.
Speaker #3: We were predominantly in India. Only the LFP chemistry is available, and wherein the recovery extraction is about 1.5% to 2%. The rest—the iron itself, I mean, phosphate—is not of much demand and not of much value.
Speaker #3: So we are just monitoring the entire feedstock arrival and the other challenges, like the evolving technology and other stuff. So once we kind of convince ourselves in terms of what to do and how to go about it, we will surely let all of you know about it.
Speaker #4: Sure. Okay. Thank you so much, and best of luck for the future. Thank you.
Speaker #2: Thank you. To ask a question, please press star and one now. The next question is from the line of Saaransh Gupta from Swan Investment. Please go ahead.
Speaker #1: Yeah. Thank you for the opportunity. I hope I am...
Speaker #3: Yes, you are.
Speaker #1: Yeah. Sir, I wanted to first understand—in this quarter, our value-added mix was 85%, and that is the historical high, I believe.
Speaker #1: So was this due to the supply constraints or is did a custom did our customers was this because of our customer demand?
Speaker #3: So basically, when we had some supply constraints, we did discuss with our customers. We spoke to them and insisted, because there are customers who take the value-added products and are specifically dependent on specific suppliers for value-added products.
Speaker #3: So, we requested them if they could take the basic pure lead and other products from elsewhere and take the value-added products from us. We were able to convert those into the order.
Speaker #3: So if you see, basically, our value-added products have been sold as they were in terms of volume. But since the pure lead volume did come down, so the percentage is at 85%.
Speaker #1: Understood, sir. Just a follow-up on that. Assuming a similar situation continues in this quarter as well, do our customers have the bandwidth to accept more value-added mix, value-added products in the lead segment?
Speaker #3: I mean, I don't get the question. Do you mean bandwidth to accept more, in that sense?
Speaker #1: Sir, like in this quarter, we did 85% of value-added, which helped us achieve an EBITDA of 21,000, 500 something. So do we have do our customers have the do our customers have the requirement of additional value-added products in this quarter as well, or because I believe that yearly, there is a certain demand that has to be met for value-added and post that, we can supply only alloys to them.
Speaker #1: Hello? Hello?
Speaker #2: Hello, sir. Ladies and gentlemen, please stay connected. The management's line has been disconnected. Ladies and gentlemen, we have the management connected. Sir, you may proceed.
Speaker #3: Yes, please.
Speaker #1: Hello.
Speaker #2: Sir, aren't you able to continue with your question?
Speaker #1: Yes, sir. Sir, I just wanted to understand, like, how conveniently we can shift our value-added mix that helps us attain higher EBITDA per ton. As in your answer, you said that this was a one-time event and that because of supply chain issues, you requested your customers to take higher value-added products.
Speaker #3: No, no, no. Again, I'll again explain the same thing to you. We did not request your customers to take higher volume of value-added products.
Speaker #3: We requested our customers to take the basic pure lead product from any other supplier because that's easier to procure, whereas value-added products are supplier-specific.
Speaker #3: So, when our volumes of pure lead dropped, in totality, if you see the percentage, it was 85%. So that's why we concentrated on ensuring that we didn't drop the volume of the value-added products from where it was, and rather dropped the volume of the lower profitability product, and, you know, continued with whatever best we could do with the amount of raw material that was available at that point in time.
Speaker #1: Understood, sir. And just, sir, just one last question. In the last on-call, I guess there was some receivables around 110, 15 crores that we had to receive in April.
Speaker #1: So, what's the status on that? And how?
Speaker #3: That is that is received that is received then it's supposed pain that it was received on April 5th itself. During the con call, it was told the negative cash flow was due to there was a vessel delay which moved supposed to be around the last week of this thing and moved to April 1st, 2nd.
Speaker #3: Hence, we received that payment on April 5th, and that's what caused the cash flow to be negative. But that was received on April 5th.
Speaker #1: Understood. Sir, at the end of the quarter, what is our working capital cycle?
Speaker #3: Currently, we are at 46 days.
Speaker #1: And great.
Speaker #3: Versus 53 days earlier.
Speaker #1: Great. Understood, sir. Thank you so much, and...
Speaker #3: It was a positive cash flow as well, yeah.
Speaker #1: Yeah. Thank you, sir. Thank you so much.
Speaker #3: Thank you.
Speaker #2: Thank you. The next question is from the line of Dave from iThoughtPMS. Please proceed.
Speaker #4: Yeah. Thank you for the opportunity, sir. Sir, I understand that by the end of this financial year, we will have 12,000 metric tons of copper recycling.
Speaker #4: 36,000 metric tons of copper cathode. So, how much of this will we use as captive recycled copper for the copper cathode? And the balance amount—where will we be sourcing our copper pre-melt from?
Speaker #4: Because I wanted to understand, in different scenarios, what could be our margins and what could be the EBITDA per ton—like when we are producing copper cathode from our own pre-melt and when we are doing copper cathode by sourcing it from outside.
Speaker #3: Oh, thank you. So by the end of this financial year, we will have an installed capacity of 18,000 metric tons of cathode, and by Q3 of next financial year, we'll have the balance 18,000 on stream.
Speaker #3: We will be using almost close to 70–80 percent of our, you know, in-house recycled material. Or, you know, basically the idea of using in-house will be that the lower grade will be used for our production, and the higher grade will be sold off as it is, because on the higher grade of scrap, as much value addition will not make sense.
Speaker #3: So, you know, that kind of processing costs everything. So, that will be sold as of. Apart from that, we have tied up for sourcing of various other kinds of copper scrap that will be used for this melt.
Speaker #3: The blend what we had guided was a blended margin margin profile on this should be in the range of around 60, 65,000. As of now, we still hold the same unless until we start and, of course, as we start and we go go through a couple of months, efficiencies will definitely kick in.
Speaker #3: So, we are sure that we will be able to increase the number on that. But a bare minimum of 60,000 to 65,000 per ton will be achieved on this.
Speaker #3: Cathode part.
Speaker #4: Got it. Got it. So, sir, since we have, like, higher copper cathode facility, are we also, like, planning to increase our copper recycling facility for the backward integration?
Speaker #4: Around 12,000.
Speaker #3: Oh, yeah, we most probably will, but we will look at it at that point in time, based on the raw material mix that we wish to push in for our production.
Speaker #4: Got it, sir. Got it. Sir, the next question was on the lead side. Sir, given the disruption that we have seen in the current quarter on lead, but still our sourcing mix was, like, 97% for international.
Speaker #4: Is there any specific reason why we didn't go for more domestic sourcing, despite the disruption in the international channels?
Speaker #3: Yes. The domestic pricing, because the domestic market understood that there is a delay, meant the price delta was so high that if we had gone in for more domestic sourcing, our overall profitability in terms of per kg EBITDA would have drastically dropped.
Speaker #3: So, it did not really make too much sense to push to go for domestic sourcing and wipe out the profitability as well.
Speaker #4: Okay. Got it, sir. Thank you so much. All the best for the next quarter.
Speaker #3: Thank you.
Speaker #2: Thank you. Ladies and gentlemen, in order to ensure that management is able to address questions from all participants in the conference, please limit your questions to two per participant.
Speaker #2: In order to ensure that management is able to address questions from all participants in the conference, please limit your questions to two per participant.
Speaker #2: The next question is from the line of Darshal Zaveri, from Crown Capital. Please proceed.
Speaker #4: Hello, thank you. Good evening, and thank you for taking my question. Firstly, congratulations on your good performance in a very challenging environment, sir. I just wanted to mention that a lot of my questions have already been answered.
Speaker #4: So just on the lead side, sir, like, are we still seeing that, you know, big supply chain issue right now happening? Will it hamper our Q2 as well?
Speaker #4: Because the war doesn't seem to be getting over anytime soon. And even if it does, the shipping lines might not, you know, come to full force right away.
Speaker #4: So what would be your, you know, outlook and view on the current Q2 happening? And as well as, like, if we, you know, we have to hit our, you know, guidance of nearly one, you know, one 120, 120,000.
Speaker #4: So then, we would have to do it sizably in, you know, H2. So, do we have enough capacity for that, sir?
Speaker #3: See, in terms of capacity, yes, we have the capacity to do that. And in terms of whether it will continue for Q2, you know, I would love to be optimistic that it should not continue for Q2.
Speaker #3: The first month has been a little better than the last three months. But hoping that things will be better. But I mean, we have to only wait and watch how things pan out on the supply disruption side as of now.
Speaker #3: I mean, we might not be able to give you an extremely concrete answer right now. Maybe another month down the line, we might have more concrete answers.
Speaker #3: But at this moment, we stay as optimistic that it should end.
Speaker #4: Oh, okay. Okay. Fair. Fair enough, sir. And I just wanted to know, like, in FY28, when our full, you know, the new cathode capacity comes in, so what kind of volume FY28?
Speaker #4: A rough range will also do, sir.
Speaker #3: I... I didn't get your question. We'll be expecting a—so in copper, like, FY28, from the 18,000, what would be the capacity utilization ramp-up that we can see, sir?
Speaker #4: In FY28, I mean, we are confident we'll be able to utilize over 80, 90 percent of the capacity of 36,000 metric tons. Okay. Of 36,000, we will be able to do, yeah.
Speaker #4: Okay. Yeah. That's it from my side, sir. Thank you so much, sir.
Speaker #3: Thank you.
Speaker #2: Thank you. The next question is from the line of Swaraj, an investor. Please proceed.
Speaker #4: Hello. Hello.
Speaker #3: Yes, please. You're audible, yes.
Speaker #4: I am audible. Sir, thank you for a good set of results. Sir, मेरा सवाल ये था, जैसे हमारे कॉपर की अब जो रेवेन्यू में परसेंटेज है, वो लेड से ज्यादा हो चुका है। तो जैसे कि जब तक हमारा कैथोड लाइव नहीं आता, जैसे कि आप कह रहे हैं दिसंबर में वो आएगा, तो हमारे जो दो क्वार्टर होंगे, उनमें हमें जो बेटा मार्जिन है, वो थोड़ा कम ही अस्यूम करके चलना चाहिए? थोड़ा सा हिट लेके चलें?
Speaker #3: किस चीज़ में? मार्जिन में हिट क्यों होगा? इनको एब्सोल्यूट क्वांटम पे मार्जिन विल बी मच हायर, राइट?
Speaker #4: नहीं, जैसे अभी इस क्वार्टर में हमारा कॉपर का जो परसेंटेज है, वो बढ़ा है एकदम से। तो थोड़ा सा बेटा, मार्जिन्स पे थोड़ा-थोड़ा सा डीग्रो हुआ है।
Speaker #3: आप इसको वैल्यू में देख रहे हैं या परसेंटेज में देख रहे हैं?
Speaker #4: हाँ, नहीं, सर, बेटा, मार्जिन, सर।
Speaker #3: कह रहे हैं बेटा, मार्जिन। आप इसको वैल्यू में देख रहे हैं या परसेंटेज में देख रहे हैं?
Speaker #4: सर, परसेंटेज में।
Speaker #3: So, you will be happier if it is 9 percent, but it's still, for example, ₹50 crore versus if it is ₹70 crore, but it is only 8 percent. So, you are saying you will be happier if it is 9 percent and ₹50 crore. I'm just trying to understand.
Speaker #4: ओके। थैंक यू, सर।
Speaker #3: So, so absolutely, absolute quantum numbers—it will be much higher because per ton realization on copper margins will be at cathode level, will be in the range of about 65,000 versus let’s say being at 21,000. So accordingly, I mean, if you look at percentage, it might, it will be slightly lower, but in terms of absolute quantum, it will be much higher.
Speaker #4: जी। और सर, जो हम अपना 8% का EBITDA मार्जिन का टारगेट ले चल रहे हैं, तो वह ग्रेजुएली कब तक 8% हम अचीव कर सकते हैं?
Speaker #3: We will be able to have a blended 8 percent by 2030 is what we have given as the target. But we are confident we will achieve much before that.
Speaker #4: Okay. Thank you so much. That's it from me. Thank you.
Speaker #2: The next question is from the line of Akash Somaya, from Alco Quantum Solutions. Please proceed.
Speaker #3: Thank you so much. And great set of numbers in this environment where peers couldn't perform. I just had a question. Now, once your entire copper capacity comes on stream next year, we should be able to do around 28,000 odd tons.
Speaker #3: Now, this is going to be a mix of cathode, which is going to do 60,000 plus, and your base copper recycling. So how should we look at the EBITDA per ton in FY28 for this 28-odd-thousand-tons blended EBITDA per ton?
Speaker #4: In FY28, we will have the complete capacity of 36,000 metric tons of cathode by itself. So we should be able to do in excess of 30,000 tons of cathode by itself.
Speaker #4: And most of our recycling material that we generate—almost about 70 to 80 percent—will be internally consumed in the cathode plant, and only about 20 percent of it would be sold to the outside market.
Speaker #4: As of now, in the initial feasibility stage, we are guiding on the cathode side—approximately ₹60,000 to ₹65,000 per metric ton on the cathode.
Speaker #4: And recycling in excess of 40,000.
Speaker #3: And what will be the recycling volumes?
Speaker #4: As of now, we are adding a volume of 12,000 tons, so definitely that will be fully utilized.
Speaker #3: So even in FY28, we can assume 12,000 of copper recycling and around 30,000 of copper cathode.
Speaker #4: Yeah. I mean, technically, the 12,000 should be higher by FY28. But as of now, until we install the capacity, I would not commit that the 12,000 would be higher.
Speaker #4: But in copper cathode, capacity will be 36,000. And we are saying that comfortably we will be producing and selling over 30,000.
Speaker #4: So, I'm only still taking a delta of 20 percent and, speaking, that we'll be at 30,000 tons and above.
Speaker #3: Understood. Sorry, I’m slightly confused. As of today, our copper recycling capacity is 12,000, correct? And you don’t have cathode yet—you’re going to commission it in December.
Speaker #3: And in FY28, when your cathode, you do 30,000 volumes, what will be your volumes of your base business, which is 12,000 today?
Speaker #4: The capacity—it's not the volume, if you can give me.
Speaker #3: So, like I said, as of now, it's 12,000. Unless we add more capacity—which we most likely might add—so until I add, I will not be able to commit.
Speaker #3: But we will definitely look into the kind of raw material available, and according to that, we will have our processing lines come into place.
Speaker #3: Understood. And have you still—have you decided on your...
Speaker #2: Sorry to interrupt, Mr. Akash. Maybe it requires you to join the question.
Speaker #3: Okay, no worries. Thank you so much.
Speaker #2: Thank you.
Speaker #3: Okay.
Speaker #2: The next question is from the line of Helen Desai, an investor. Please proceed.
Speaker #4: Yeah. So, the copper recycling that we have is 12,000. And by the end of complete expansion, we will have a cathode capacity of 36,000 tons.
Speaker #4: Now, the 60 to 65 thousand per ton EBITDA that we are talking about, will that be on the 36,000-ton capacity, or will it be on 36,000 tons of cathode plus 12,000 tons of recycling?
Speaker #4: Adding up to 48,000 tons. So will it be on 48,000 tons, or will it be on 36,000 tons?
Speaker #3: I think, sometime back, very precisely the same thing I explained, but nevertheless, I'll explain this once more. So, basically, as I explained earlier to another gentleman who asked a similar question, the blended margin guidance on the cathode will be approximately 60,000 to 65,000. But definitely, that should go up once the efficiencies come in.
Speaker #3: And whatever we sell the recycled product directly without processing into the cathode plant will be in the it will be above 40,000 per ton.
Speaker #3: And 80 percent of our recycled material, which is approximately somewhere around 8,000 or 9,000 tons, we will be utilizing in our cathode plant.
Speaker #3: And the balance, about 25,000 or 22,000—whatever we consume—will be from other scrap that we will be importing. So when you take a blended total of these two, it will be in the range of 60,000 to 65,000.
Speaker #3: And what is sold outside—that will be an addition of 40,000 plus.
Speaker #4: Okay.
Speaker #3: Yeah.
Speaker #2: Thank you. The next question is from the line of Aniket Gadda, an investor. Please proceed.
Speaker #5: Hi.
Speaker #2: Mr. Aniket, your line has been unmuted, but we are not able to hear you.
Speaker #5: I'm audible right now?
Speaker #2: Yes, sir.
Speaker #3: If you can speak a little louder, it would be better. It's not too audible.
Speaker #5: Okay, so I just wanted to ask a couple of questions. Firstly, our EBITDA per ton for the lead business has been the highest that's been reported.
Speaker #5: And 45 percent of our lead business is in the domestic market. So, has the implementation of EPR credit and battery waste management rules contributed in any way to improving realization, margins, or customer preference, or has there been a negligible impact?
Speaker #3: No, but in the investor presentation, they mentioned that this quarter, the majority is imports. So, the question of EPR credit on domestic purchases is very minimal for this quarter.
Speaker #3: Probably in the second quarter, we're looking to it. If the domestic procurement improves, then we can have the benefit of EPR in the second quarter.
Speaker #5: And so if that happens, what kind of impact would it have on the margins?
Speaker #3: Margin—that will be compensated through the price of the stock, if you like.
Speaker #4: Yeah. So basically, you know, when you buy a domestic raw material, people start factoring in the EPR pricing and all of that. And the raw material prices automatically get somewhat readjusted a little bit based on those factors.
Speaker #4: So the margin, it just is basic idea of EPR—it just makes it more viable for you to procure domestically and process. And that's how it helps.
Speaker #4: Maybe there could be a few basis points here and there better margins, but it all depends on demand supply in terms of availability of material, the pricing, and all of those.
Speaker #4: Currently, the domestic market pricing is higher, even after looking into all the EPR benefits and everything. And hence, we did not really push for domestic procurement.
Speaker #4: And this quarter, it seems like prices are a little better. So we have already started looking into domestic procurement.
Speaker #5: So, secondly, we had some EPR credits available for us, which we did not monetize. Have we monetized them, or are we looking for...
Speaker #3: Yes, we have not yet monetized that as well. We still have it in our credit.
Speaker #5: I'll ask one pop-up cathode plant. Will we on the same unit where the current copper production is happening? Currently, or different sites?
Speaker #3: This will be a different site. It's a new site where the copper cathode plant is being installed. This is in Tamil Nadu. The current copper recycling plant is in Andhra Pradesh.
Speaker #5: That's it from me. Thank you for answering my questions.
Speaker #3: Thank you. Thank you.
Speaker #2: Thank you. The next question is from the line of Meet, from Anvil. Please proceed.
Speaker #6: Hi, am I audible? Hello? Yeah. So my question was, for the current copper products, I wanted to know our end-user industry. And post the copper cathode coming on stream, will the end-user industry be the same, or will it differ?
Speaker #6: Like, currently, for lead, it is predominantly autos. So I just wanted to understand for the copper product.
Speaker #3: So currently, we supply to a lot of wire rod makers, basically the secondary wire rod makers, and a few other household wire manufacturers. The higher grade of copper scrap we supply to a few of the busbar and other product manufacturers.
Speaker #3: Once we have a cathode, the cathode can be supplied to the industries which require the highest purity, and the highest form could be your industrial cables to your high-end electrical applications.
Speaker #3: To foils, to your requirements for your PCB boards and all of those kinds of uses where extreme purity is critical. So, okay.
Speaker #6: Yeah. And sorry for repeating the question if it seems like I am, but I have a doubt. For the 36,000 tons, our 12,000 tons of scrap recycling will also be used?
Speaker #6: So the volume in FY28 will be like, it will be 36 plus 12, or is 36 inclusive of the 12,000 tons?
Speaker #3: As Ashish already explained—and again, just to repeat—for this 36,000 tons, out of 12,000 tons, they are planning to use 8,000 tons for captive consumption.
Speaker #3: The balance of 4,000 tons is then added to the 36,000 tons. So, notionally, sales realization is for 40,000 tons per annum— not 48,000 metric tons. So, basically, that blend could change a little bit, plus or minus, depending on how much internal recycled material is going to be used for the cathode.
Speaker #3: As if extremely high-purity scrap might not be required to repurify and manufacture new cathodes. So those could be sold off at a good value, I mean, a good value and price.
Speaker #3: So, the lower grades will be utilized internally. The higher grades could be sold off externally.
Speaker #6: Okay. Okay. Thank you.
Speaker #3: Thank you.
Speaker #2: Thank you. The next question is from the line of Nakul Gupta. You may proceed with your question.
Speaker #4: Hello. Good evening, everyone. I have a major question: What is the production output for the months of May to July? If you can quantify for each particular month, that would be great.
Speaker #3: May to July, or April to July?
Speaker #4: April to June, or April to July if you want the July numbers also.
Speaker #3: We have given the quarterly numbers. I don't think it will be possible right away. Maybe we can get back to you with the exact monthly numbers.
Speaker #4: Actually, I want to get a point whether there is an upward trend in production, or if it is just stable—whether the numbers are stable as they are in the April month.
Speaker #4: So can you just help me out with this? The numbers are in an upward trend or not?
Speaker #3: So as the what do you call the supply issues, I mean, the shipping issues will increase a little bit towards the month of May.
Speaker #3: And for the initial part of June, the production numbers were a little low in May and June. In April, the numbers were good and consistent on the higher side.
Speaker #3: So, on average, on the blended side, overall for the quarter, the number in terms of lead was a little lower.
Speaker #4: Okay, so another question I want to ask is, one of your competitors, Market Leader, has about 10% degrowth in lead volume. But when we see ours, it is about 25%.
Speaker #4: So, what is the rationale for why we have degrown at a much faster pace as compared to the competitor?
Speaker #3: I won't be able to specifically comment on the competitor, but regarding our reasons, we have already given you reasons as to why the volumes were lower.
Speaker #4: Okay, sir. Okay, sir. Thank you so much.
Speaker #3: Thank you.
Speaker #2: Thank you. That was the last question for today. I would now like to hand the conference over to the management for their closing comments.
Speaker #2: Over to you.
Speaker #3: Thank you, everyone, for joining us today and for your continued interest in POCL. I would like to thank our board of directors for their guidance, our employees for their dedication, our customers for their continued trust, and the investors for their unwavering confidence in the company.
Speaker #3: If you have any further questions, please feel free to reach out to our Investor Relations team at GoIndia Advisors. We appreciate your participation and continued support.
Speaker #3: Thank you, and have a great day. Thank you.
