The percentage would be a similar sort of percentage because the base in FY '24 was lower. But then as you move into FY '26, etcetera, you will have a much higher base, so the percentage will fall off. Ramesh Iyer: And also, we look at more profitability -- so we'll have to see how the export market pans out in the second half of the year. And wherever the more returns are there, that's where we'll focus our volumes. Moderator: Next question is from the line of Naman Parmar from Niveshaay Investments. Naman Parmar: Yes. So firstly, I wanted to understand any new product on the pipeline on the transformer oil or oil division like data center air cooling, like that? Kushal Desai: So we have developed a bunch of products and tested it in the labs and within our facilities for data center cooling, but we haven't yet been able to get a site to be able to do field trial and field testing. And it's not just the oil, but it's the full system. That means there are many levels which require to be aligned in order to do that. However, on the transformer oil side, we have developed and launched a synthetic transformer oil. And so that's a very high-performance transformer oil, better biodegradability, a very high flash point without sacrificing the cooling characteristics and the insulation characteristics of the oil as well as the life of the oil. It's significantly more expensive. It's almost 3.5 to 4x the price of a mineral oil. But it will find its way into special needs and special applications. Naman Parmar: So it will find its application majorly in renewable or in both the transformers?

In renewables, the Indian railways are looking at it as they build -- they use traction transformers which requires higher insulation characteristics as well as a higher operating temperature. Plus in renewables, it will find its way into offshore either wind or solar on water, where in case there is a spillage, you need better biodegradability. So we've developed the product. We've got it approved at a few places and have started now commercially bidding on business. Naman Parmar: Okay. And secondly, on the margin side, you have correctly said that the export has been decreasing over domestic in all the segments, so it has impacted your margin. But also on the raw material side, if you see aluminum, copper and all that prices may have increased in the quarter 2, so which has also impacted your margin. So what do you expect in the coming quarters, it will be sustainably -- you will be able to stabilize the margin? Or how much your contract used to have a price escalation clause? Ramesh Iyer Aluminum and copper does not affect us much in the cable business because we run a 100% hedge book. We do MTO. So the moment we get an order, we do a back-to-back hedging. So to the extent of aluminum and copper prices going up and down, we have a hedged position. So that does not affect materially our P&L. The margins are down, yes. But as explained, export volumes are down. And exports have higher margins than the domestic margins. So as domestic mix is higher in the first half of the year, so we saw EBITDA margin shrinking a bit. But as you see export volume again increasing sequentially and hopefully, in the second half of the year, the export volumes will be better than the first half, we can see margins going up again to what it used to be earlier.

Next question is from the line of Ankur from Future Investments Private Limited. Ankur: My first question is, what is the total global conductoring and reconductoring market opportunities here annually? And what is APAR's market share in this total opportunity size? And do you see this opportunity size changing when we consider the net zero scenario? That's my question. Kushal Desai: So on the reconductoring side, essentially in the world, every non-HTLS and high-performance conductor is something that is potential to get changed and reconductored. And different countries depending on how aggressive they are with wanting to deal with change and less conservative, ready to take a calculated position in terms of moving forward with technology, and you will see the pace vary. And honestly, India has been doing extremely well. If you see even right from right-of-way, the Modi government has done an incredible job of coordinating with the states right down to the taluka level for right-of-way and for working through all these things. That's why our transmission line right-of-ways are in the 3, 4 years maximum versus the U.S., which is 10-plus. Europe is even beyond that. So we see the reconductoring as a philosophy is something that every old conductor will get reconductored because right-of-way is a problem not only in India, but in most parts of the world. And the world is continuing to see increased urbanization. So it's not that there is a huge flight of population out of urban clusters into rural areas. And with electric cars and electric infrastructure, including trains and other things picking up, appliances, the demand for electricity is going to continue to grow. So that is what will drive this whole reconductoring. If countries like India come up with a national reconductoring policy, it will facilitate a significantly faster transition taking place. So I hope that answers your question, Ankur. Ankur: Yes. I just wanted to understand what we will be the total annual opportunity size will be? And what will be APAR's market share in this? Kushal Desai: It's difficult to put a number on the total annual opportunity because usually a utility weighs various factors, including the amount of resources they have available to be able to actually spend on this reconductoring. We've seen most of the utilities that have actually implemented it, has benefited immensely from the reconductoring because you got more power than we can transmit and the incremental cost of revenue versus incremental cost of Capex is also in their favor. Ankur: Actually, I was more -- like understand -- I want to understand the total opportunity in terms of conductoring and reconductoring. Kushal Desai: I don't think anybody can guess that because the total opportunity, you can add up all the transmission lines that are there in the world, and they end up -- that is the opportunity as well. Ramesh Iyer: There is no source of information for that. There's no organized source that gives this information in terms of total reconductoring, how much it is there. Ankur: Okay. Got it. My second question was on the -- there were paper which was released by the U.S. Department of Energy on the national transmission planning study, and they recommend actually large-scale transmission lines, both intra- and inter-regional in the U.S. Do you see this reflecting on round in the conversations with large utilities in U.S. or in other parts of the world as well ? Chaitanya Desai: It will pan out over a period of time. But as was mentioned, in the U.S. and certain countries like in Europe, it takes a little longer to get all the approvals. So there are certain delays before the projects actually get implemented. Kushal Desai: So the cycle time there, as I mentioned, is over 10 years in the U.S. In Europe, it's even longer than that. So there are several lines where the permitting and approval process is going on. The moment the approvals fall in place, you will immediately have the RFQs and quotes coming up and the line execution taking place. But it's a question of -- it's a long process, 10 years is not a short period. So difficult to predict exactly when that approval will come in place. But our expectation is that over the next few quarters, you'll start seeing an increase happening of this. There's a lot of renewable energy that needs to be transmitted today, it runs in tens of gigawatts. It's not a small amount in the U.S. So there is a lot of pressure that these developers are also putting on getting these clearance. Ankur: As you said, they're taking 10 years -- It will take 10 years to get approvals for a transmission line. So are they considering these high-performance conductors like the premium conductors that we have? Chaitanya Desai: In the U.S., there is a certain portion of the market, which is currently on a high-efficiency type conductors, that is there. And those are going actually on new lines. So there is a lot of discussion going on with the authorities there that why not utilize the current lines to do a reconductoring. But generally, in the transmission segment, the engineers are more conservative. So they take a little longer to adapt to new technologies or new way of working. So in the U.S., a little more time may go in actually converting the market to reconductoring. In India, we may see a little faster movement like we have been seeing because of the urbanizationorganization and also because of the renewable energy, which is happening at a very fast pace. Moderator: Next question is from the line of Bobby Jay from Falcon. Bobby Jay: First of all, congratulations on your excellent execution over the past 2 years and what was essentially a cyclical company has shown structural kind of growth. But at some point, the cycle will turn. So where do you think India is in terms of its infrastructure upgrade, the power transmission infrastructure upgrade? Are we 20% done, 30%, 50%? Any thoughts on this? Kushal Desai: So actually, there is -- as we've been talking through the call, there are 2 areas where fundamentally, you see the infrastructure going. There's one where the addition of new infrastructure to evacuate -- we have a 500 gigawatt plan. India is -- has just crossed 200 gigawatts of renewable energy. There's a lot of renewable energy that's being executed right now, et cetera, all of it needs evacuation. And there is a whole lot of debottlenecking that is going to happen, leading to urban centers of reconductoring. So we don't see this being cyclical actually. The cycle is going to be a decadal cycle. It's not going to run in quarters and a couple of years. It's a really huge transition that's happening. And this will only continue for a long period of time. And in fact -- in India being actually better than most of the countries. I think after China, India is the second fastest in approvals and erecting transmission lines in the world. Bobby Jay: Right. So in terms of conductors, who is your closest competitor? Chaitanya Desai: In India, it's Sterlite Power. Bobby Jay: Right. And how close are they? I mean, in terms of your product range, quality and technology, are they very close or they're quite distant? Chaitanya Desai: I think they are privately owned, so they don't declare their figures, but from our general information, they are roughly half our size of volume. And they are not having the full range of the products that we make, especially on the copper side. Bobby Jay: Right. So when you talk about all these projects you're bidding for, right, reconductoring and all the others, you must be bidding against several others. Are they foreign multinationals? Or what kind of companies are they come up against? Chaitanya Desai: No. In India, we don't see the multinational companies here. It's mostly the domestic players. Bobby Jay: Well, in that case, is that a clear field if you're saying that you're far ahead of the second biggest? Chaitanya Desai: In India, most of the business goes on a L1 basis. So price is an important criteria in the decision-making of the utility. So in that sense, although we have higher economies of scale, not necessarily we get any pricing power over the competition. Bobby Jay: I understand. And do you see any change...

Capability is higher than -- if you look at the amount of projects that we've done in reconductoring as well as supply of AL-59, any of these new formats, we actually have experience and background, which is far higher than others, even including Sterlite. So I think in that sense, we are well positioned. But as Chaitanya has mentioned, finally, it goes through a bidding process, there's a technical bid. Once you clear the technical, then it's based on whoever is the lowest price. But you keep in mind that you can't have infinite capacity to execute these projects because it requires specialized manpower, it requires specialized equipment. And we do have the largest capacity to not only produce the conductors, but to also execute the reconductoring. So I think in that sense, from a competitive standpoint, we do have a good position. Bobby Jay: Understood. And do you see any chance of the Chinese coming in? Are they not cost competitive or they're simply not allowed? Chaitanya Desai: So even in the past when they were allowed, the Chinese are not so competitive in India. There are certain custom duties and import barriers. But even currently, the situation is not allowing for foreign companies to bid for the Indian projects. There is a Make in India program, it's allowing only the Indian players to bid for it. Kushal Desai: So you can have a Chinese company that produces in India that can bid on that, but there is no significant cable or conductor producer from China who's located here. On the contrary in transformers, you do have TBEA and TBEA actually is running full today on the transformer capacity. Moderator: Next question is from the line of Sagar Dhawan from Valuequest.

Just a question on the domestic cable side. I wanted to get more color on the domestic growth that we're seeing in the cables business. So we had high market share in -- I think in wind and solar cables, we're traditionally been strong there. So how to understand this growth? Is it that the market for these products has grown? Or are we gaining more headway into newer products within cables ex of solar and wind? Kushal Desai: So there are certain verticals which are growing faster than others. So the ones for -- that are growing -- that have shown relatively good growth is solar, solar cables. Wind is actually going to now start showing signs of higher growth from the second half of the year onwards. Given the number of projects that have been awarded and the increased capacity that's coming in from the various wind companies. The Indian railways has been continuing to grow. And we've been focusing on some segments like data centers and other areas where there is inherent growth taking place given the current data center boom, that's happening -- largely being driven from the fact that Indian data has to be maintained on Indian shores. So what we've done as APAR is we've taken the sunrise sectors and ensured that we have the right products, in fact, the best quality and the highest performance products to meet the growing environment. So we see the solar side growing, the wind side going, railway is growing, data center cables growing, all of these, we will see multiyear growth because a lot of capacity is being added in these areas. Sagar Dhawan: Got it. And what is the quarterly run rate on the LDC, B2C cable side on the revenues? Kushal Desai: Sorry, we couldn't...

Yes, sure. So I'm trying to understand the current revenue run rate on the B2C cables for us. Kushal Desai: Okay, the B2C side. . Ramesh Iyer: Yes. So B2C cable last year, we did a total turnover of about INR275 crores. And it's growing strongly this year as well. In the first half of the year also, we saw good growth of upwards of 35 to 40 percentage growth this year. And the momentum looks very strong for this year as well for us. Sagar Dhawan: Sure. And 1 last question from my side. I think in the footnotes, you announced the possibility of entering into energy storage business. So if you could just shed some light into what would be our scope there and what are the products you're looking to add? Yes. Kushal Desai: Well, actually, we just amended the articles to allow us to look at that as a future line of business. So it's something that at a very early stage for us. We're just trying to explore. So one fine day, you will see that as the solar and wind capacity grows, storage is becoming a very important aspect. So not only will you have that with the solar farms and wind farms, but also rooftop generation and various other forms that are used by industries and other commercial establishments, they will also start looking at having to store energy. So normally, this renewable energy, particularly solar is generated at a time when the tariff is the lowest. So when India comes in also with tariffs depending on the demand, then you start having these technologies starting -- storage technology starting to play a very big role. So it's something that we are just at a very early stage. We are obviously looking at different options and opportunities. So that's where that the board note came from.

Next question is from the line of Shaun Tan from Abrdn. Shaun Tan: I have 2 questions, please. First question is on capacity expansion plans. I was wondering if APAR would still be continuing your announced CapEx capacity expansion given the seemingly weaker-than-expected volume? Ramesh Iyer: Yes, the capacity expansion happens. It's a continuous process for us. And as we see volume growth happening in all the 3 divisions, we increase the capacity. In fact, we work a year behind to see that we have enough capacity as and when the demand comes. Kushal Desai: But here, Shaun, I think your comment was that whether they're going ahead with capacity expansion, given that the conductor business volume year-on-year was -- quarter-on-quarter was a bit flattish. But keep in mind what we've said earlier in this earnings call. And as you move up from ACSR to AL-59 and these sort of products, the tonnage reduces and the value goes up. So we are going ahead with all our capacity expansion plans. There is no change in that at all. And we are quite optimistic that as that capacity comes on, it will be in line with what we expect as increased demand. Shaun Tan: Okay. My second question is on conductor EBITDA per tonne realization of margin. I was wondering if you could talk about how we think about the trend of that going forward given the lower exports and higher premiumization that we are seeing and the competition from local players like Diamond? Ramesh Iyer: Yes. So this conducted EBITDA is dependent on the domestic export volume as well also. Within domestic, we have the premium conductors, we have the conventional conductors and now with more AL-59, we have a higher end of the conventional conductors also. So given that our premium conductors in this quarter has been over 40 percentage to about 42 percentage. And selling up more superior and premium products is helping us to retain the margins of about INR37,000 to INR38,000 per tonne. However, we also see competition is also very aggressive in overseas and exports volume is dropping. So we continue to keep a guidance of INR28,500 as we have been doing that earlier. However, we see tailwinds coming in, in few markets and in few products, which have higher margins, and we are able to have an edge over competition. To that extent, the margins are higher, but we continue with our guidance of INR28,500 for the future as well. Moderator: Next question is from the line of Himanshu Upadhyay from BugleRock PMS. Himanshu Upadhyay: Yes. I had a question on this. We made a comment in our Analyst Day -- Investor Day, that CTC is almost 25% of the value of transformer. So is this segment much larger than transformer oil? Is 4 to 5x? And how is the profitability of this business? And in U.S. also, where we are seeing a lot of shortages for the transformers, do you think this can be a large segment for exports? And how competitive is the market for the CTC or copper transposed conductors for transformer? Kushal Desai: So in any transformer, the ratio is something that holds good, where it is 5x the value that's used in our transformer because the entire core is made out of this copper. The demand for that has remained quite strong. There are 2 types. There is CTC and there's PICC. PICC is a paper insulated conductor. And CTC is a pure copper that is processed differently and it has the inherent advantage of faster winding as well as lower losses. So -- however, the Capex involved in building a CTC plant is quite high. So it's not something that anyone and everyone can throw in of a large capacity. So APAR has been steadily increasing its CTC capacity. From the original volume that we had, we've already doubled it. And we are going in for doubling it one more time with that capacity coming on stream in January. So our expectation is that it will all get sold out. However, you need a large infrastructure to build it, not only cost-wise, but even in terms of space, building, etcetera, etcetera. And it's very customized. So each transformer manufacturer gives you a very customized design to wind and make. So -- yes, the U.S. and export markets are in place. We are looking first at export markets which are more geographically closer to us, like the Middle East, etcetera. And in the U.S. market for us to actually penetrate this, we first need to get closer to the customer and have a sales force on the ground to get after it. We've been short of capacity at the moment. So we've just been focusing on the domestic market at this stage. But yes, as the transformer capacity goes up around the world, the CTC requirement will also go up proportionately… Himanshu Upadhyay: Sorry, can you repeat? Kushal Desai: I'm saying, there is an opportunity in the U.S. market, but we have not explored fully so far.

And 1 more thing. We have stated that about legislative changes have been there. So for more than 400 amps, CTC will be used. So are those legislative changes across the globe? Or is it just for in India when... Kushal Desai: This is something that has been mandated by Central Electricity Authority of India guidelines. And it's a guideline. So usually CEA issues guidelines and then it's the utilities that ends up adopting those guidelines. So it's a guideline for India. Himanshu Upadhyay: Okay. And globally, so is CTC a large market versus PICC, which is paper insulated? Or -- some thoughts on that. Kushal Desai: PICC has been the default product, which has been running for very long. There is a transition happening with PICC being replaced by CTCs. There are many transformer companies that are even using it for less than 400 amps. Many of the renewable energy guys are also preferring CTC because the transformers can be wound also faster and the consistency is much higher. So in solar and wind, when you -- each set of panels has -- so you just keep repeating the same designs. Same thing in the case of a windmills. So that's how the demand for this is increasing because it's faster to wind, the quality of the winding is better and the losses are lower. Himanshu Upadhyay: Okay. And the price-wise, any big difference between PICC and CTC? Kushal Desai: So CTC is more expensive than PICC. But usually, you can justify that because of the lower losses and the higher reliability. Moderator: Next question is from the line of Aditya from Securities Investments Manager.

Sir, I had a question on your transformer oil segment. So what we understand is there is a demand-supply mismatch for transformers. So do you foresee a similar situation happening for the transformer oil segment as well, both in domestic and global market? Kushal Desai: So there is no shortage of transformer oil as such. But certain high-end grades, which are these naphthenic grades, which go into higher voltage power transformers, et cetera, there the demand is very strong and the supply is not increasing commensurately. So there is really your ability on the customer side of having approvals and on the procurement side being able to access the refineries and the supply chain. So as far as APAR is concerned, we are stronger than our competition in both these areas. That's how we've been able to kind of grow faster than most of our peers. Aditya: Understood. And if I look at the previous decade and compare it to this decade in the transformer oil segment, do we witness higher pricing, which we are getting for our transformer oil and lubricant business considering the overall demand scenario? Kushal Desai: So the transformer oil profitability has been -- is higher than some of the other categories. And that's why as you see the -- as the transformer oil volume goes up, the overall average has also been moving up. Aditya: Understood. Understood, sir. And now, sir, in the export market, we are seeing very strong growth in the transformer oil segment. So just wanted to understand how are you able to compete against global MNC players who would have local manufacturing facilities? Kushal Desai: So in many countries where we export and have significant market share, they don't have good transformer oil manufacturers. So when you look across the Middle East, there's nobody else who does the sort of naphthenic transformer oil. When you got into countries like Vietnam, Indonesia, Australia, there is no local manufacturers there. And these are the countries where APAR has a very strong position. Even a country like Turkey doesn't have a local transformer oil manufacturing. . Moderator: Ladies and gentlemen, we will take this as a last question for the day. I would now like to hand the conference over to Mr. Kushal Desai for closing comments. Kushal Desai: I'd like to take this opportunity to thank everyone who's been on this earnings call for taking out the time. This is the festive season and Diwali holiday kind of begin from tomorrow onwards. Again, I'd like to wish all of you a happy Diwali and a prosperous New Year. We are quite confident that this energy transition is here to stay. And as it unfolds, it's not a quarterly sort of game. It's going to run over multiple years and, in fact, maybe decades. And it's our position that we would like to be at the forefront of this whole transition, or as I call, revolution taking place. So thank you once again for all your time. And greetings for a happy Diwali. Moderator: On behalf of APAR Industries Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.