Thank you. We will now begin the question-and-answer session. First question is from the line of Ravi Swaminathan from Avendus Spark. Please go ahead.

Sir, thanks for taking my question. My first question is with respect to the Ceramics and Refractory segment. You had talked about reasonably good growth coming in for the Engineered Ceramics and Wear Ceramics, etcetera. If you could give more granular details as to which are the sectors which are driving the growth for these sub-segments as of now. There was one large customer from whom business was impacted, how is the path to recovery over there? If you can talk about these 2 segments and also refractories, what is driving growth there? How is the demand from certain sectors like glass, carton black, steel, etcetera? If you can talk about that, that would be great.

Yes. Thank you for your question. So to start with, I would say, the customer that we had impact of slower growth is picking up, and it is the trajectory of what we communicated is very much on track. So that is in control. And as we communicated, we said that calendar year '25, which is what they would focus on, the pickup will be much more. But right now, their trajectory is very much on track. We are traveling as per earlier communicated, no issues. As far as the growth in ceramics and refractories, all the normal sectors that we are addressing have witnessed a growth, and we are seeing robust demand for each of them whether it is cement, steel, carbon black, chemical industries, power distribution. All these sectors we have seen good demand, both in India as well as overseas which is what is driving the performance of them. So to sum it up, I think the demand drivers are largely coming from various industries that we serve.

And the metallized cylinder segment should we kind of think of it as growing like a 15% CAGR kind of segment. I mean mid-teen kind of growth sustainable over 2 years, 3 years?

So, I think we guided the ceramic business growth as I summed up around 12% to 15% growth. I would expect a similar type of growth continue because see it's a mix of various products or segments which are there, whether it is wear, m etallized, engineered, fired refractories, mono, prodorite business. So all put together is a basket of this. So I would assume that, that kind of a trajectory of growth should be expected.

Understood. And my last question is with respect to the competition in Abr asives and Electrominerals that you had talked about in the past two quarters, three quarters, especially Chinese competition and in Abrasives competition from paint companies, etc. How do you see that panning out, is it same level, has it intensified, or has it come off?

So as far as the compet ition, let's focus on Electrominerals first is that I think as far as Foskor Zirconia is concerned, the competition from Chinese is severe and the pricing pressure is very much on. So that is what is pulling their sales also down as well as the impact on their margins. As far as India is concerned, I think we see that so far we are able to pass on the cost increase that we are getting to the market. And we will have to wait and see how the second half would span from the Chinese competition. We expect they would also face a similar cost pressure because it's a global pressure that everyone is facing. So obviously, there would be their reactions to that also. But nevertheless, it is difficult to gauge how the Chinese w ould react, b ut we are working cautiously in terms of explaining things to our customers. They understand where the cost drivers are coming from, and they are in a position to pass on the cost increase that we are getting and as far as the Abrasives, paint is a very small sector as I was also alluding to is a very speciali sed small sector that they were focusing on compared to the whole range of abrasive products. I think that is continuing and probably with kind of many pressure s the paint industry is going through, the focus is on their core industry than I would say focusing on the Abrasives at this point in time.

Understood sir. Thanks a lot.

Thank you very much for the opportunity. Sir my first question is on our Abrasive subsidiaries. So why was the performance at CUMI America weak in the second quarter of FY '25. If I remember correctly, the performance was weak in first quarter of FY '25 as well, as the sales had declined both Y -o-Y as well as Q -o-Q? And similarly, for the Sterling Abrasives as well now the performance has been weak for the two consecutive quarters. Anything sp ecific you would like to highlight on both these?

Could you repeat the second question on Sterling.

Yes. Similarly, the Sterling Abrasives performance has also been pretty weak for the two consecutive quarters. On one hand, the agro processing market is doing fairly well, going by the commentary of other peers operating in the same segment. So anything specific you would like to highlight on both sales as well as margins here?

Right. That's a good c ommentary from you, Harshit. I think as far as Sterling is concerned, I think they were impacted largely from one particular product segment called cone polishe rs, which removes the husk from the rice and paddy that is what is their business. And because of a government policy change which expects certain percentage of rice to be returned post - dehusking process that cannot be maintained which was probably very high and cannot be maintained by any millers at this point in time. So the millers have stopped pretty much at least on the two states which is Punjab and Haryana. This has stopped and that is the result of slowdown, and which is what has cost Sterling Abrasives business slowdown which I think p robably will get corrected post policy changes, etc., would happen. As far as CUMI America is concerned I think , see, they had a very good business. Even at this point in time, they are doing well. Largely, the dependence on one customer which is have shifted their facility from US to Latin America, and it will take a year for them to stabilise because they had quite a lot of inventory at this point in time which is going to be currently consumed. If I remove that customer and start looking at , their growth is really good. So there will be a blip which I th ink we very well understand it will get back. We have invested in people in U.S.A three new headcounts were added. It's a focused market. I think it will come back very nicely. We are confident of getting it back.

Understood. Sure. Sir, my second question is on AWUKO and RHODIUS. So, what is the end user industry mix for both these companies , as what percentage of sales are derived from automobile, construction, general engineering, retail, etcetera over there?

So as far as AWUKO is concerned it is leather and wood are the two major industry segment that they serve. There is also a few other small segment, but this is the two one. As far as RHODIUS is concerned, it serves a wide range of industries including cons truction, infrastructure related to this. This is largely a thin wheel, and thin wheel has got a wider application in very many industries. These are the industries they serve.

No, not very high.

Understood. Sir, just a small question, if I can squeeze in, you have decreased your capex guidance by close to INR 50 crores from earlier INR- 350 crores to INR 300 crores. So is this just a postponement of the capex or some capex structurally we are not going to do at all. So if you can give some clarity.

It’s a t iming difference, no postponement. It's because of some starting delays, some t iming differences, I'm just giving that guidance. Otherwise, it will be very much on whatever we plan. We will spend on each of these critical capex.

Understood. Thank you very much sir for answering my questions and all the best.

Thank you. The next question is from the line of Bhoomika Nair from DAM Capital Advisors. Please go ahead.

Yes. Sir, just a couple of clarifications . Let me start with Electro minerals. Now while Foskor has seen a weaker -than-anticipated performance, but if I look at it on a standalone basis , last two, three quarters was weak, and we started seeing some improvement in the current quarter. And if I remember earlier you had mentioned that there was some dumping by the Chinese guys both out here and SiC prices had also fallen, which was impacting VAW. So, if you can just comment on that, while the pain seems to sustain in Foskor, there seems to be some improvement on standalone as also in VAW, if you can just throw some light on that aspect?

So, I think as far as India domestic pricing pressure and competition from China is concerned, no change. It is the same. If you look at it, I think our pickup in margin is largely volume, plus also a mix, which helped us to pick up this margin, which is 8.5% moving to 10.3%. We expect the cost pressure, which is largely coming out of the alumina prices going up is impacting most of the Electromineral products , which are white and brown fused has gone through at this point in time. And to that extent, I would say we will see this pricing pressure. We are trying our best to pass on in the market. But China competition is bit unpredictable. The logics of why would they price differently, God alone knows at this point in time. Because when you have a global alumina cost increase, which is very well known, everyone can read and comment about that, but at this point in time, this is what we have seen. As far as the SiC competition from China is very mild. I wouldn't put it the way that what we are seeing here in India.

Sir, also in terms of within EMD we were looking at high performance materials, and we are setting up the HPSIC plant. If you can just comment on that, where are we in terms of t he construction, when does the plant get commissioned? How can we see scale up of that plant over the next few years, while it will get operational soon, but most of a scale-up perspective because it's a smaller project right now. What is the feedback that you're getting from the market? How quickly can you scale it up? Will it be a long-term process to scale it up? Or can we kind of scale it up much faster? So, some thoughts on that, sir.

So, first of all, the project is very much on track as far as the HPSIC is concerned. And we talked about December '25, where we said we will have the full utili sation that will start happening as far as this project is concerned. We expect it could be much earlier than that, but I think let's still maintain the same guideline as what we told. As you rightly observed, this is a small project. We expect establishing the products to start with, this is what we are currently trying to do. We have seeded this. We have sent some of the products to a few geographies where we are getting reasonably good feedback and we will wait to share with you more as we progress on that. So far so good. I think it looks interesting at this point in time.

Okay. And what about the other areas, like say, graphe ne or graphite or anything else to materially talk about any progress? Or maybe if you can talk about how large can this whole specialty piece become over the next two, three years? Any thoughts on that?

Yes, I think that's what I mea nt in my closing remarks . We would be sharing some of these details in the next six months, as we are working on the long-term strategy on each of these areas that you talked about, plus a few more areas that we have listed as well. We will share that. At this point in time, I'm not in a position to share this.

Sure. Sir, on Ceramics, how should we look at in terms of the margin profile? And year two, we are working on a lot of technical ceramic aspect of the entire business. So how is that share kind of scaling up, if you can throw some light on in terms of what was technical ceramics as a percentage of the segment revenues and what it is today and what it can possibly get to so that we understand how the margins might scale up. And if you can also talk about the MET cylinders capacity, where are we in terms of utilisation? Any plans to further expand capacity up there?

Right. So I think as far as the programs in ceramics side is concerned, all of them have hit the ground. We have construction, which is on the full swing, whether it is a ceramic for semiconductors, ceramic for defence is very much on, and we are progressi ng as per schedule. We have also looked at a few other areas within ceramics. We expect ceramics margins could go up based on these types of newer opportunities, but I'm not in a position to share what kind of a growth, etcetera. But I would say the curren t profile of margins that we are seeing should continue, should improve, as we start bringing these newer one, which is what I said that step 1 for this year is delivering the INR 5,100 crores to INR 5,200 crores is what our current trajectory. And in six months' time, maybe we will share a brief profile of what are all the initiatives that we are looking at in each of these segments what we plan to do. So that, we will be able to share and maybe to give some more colour to this type of growth and margins, etcetera, and where these growths will come from. As far as the Metallized Cylinders capacity is concerned, I think we are very well operating capacity. We should be in the range of about 80% plus capacity utili sation. And I feel that we may be in a posit ion to increase depending on debottlenecking, etcetera. I think we are very much on track.

The next question is from the line of Bhavin Vithlani from SBI Mutual Fund.

Yes. Could you just help us with the ceramics breakup between refractories, the one which are supplying to SOFC and the growth that we have seen in the first half how the mix has changed, which is you're highlighting some mix change has led to margin upside? That's my first question.

So Bhavin, generally, we are not sharing the mix of ceramic and refractory within the Ceramics segment as well as the individual sub-segments in the various elements of it, but what I can share is that some of the products that we are looking at in terms of compared to last year versus this year, the share of Engineered Ceramics has picked up compared to the last year, which is why one of the margin pickup has happened. Similarly, I would say few other sub-segments involved in that. Like for example, it could be fired refractory's share has also picked up. So, these are individual things which probably contributes to margin pick up, if I can share with you.

Sure. Just a follow-up on the ceramics, globally when we look through the commentary of the larger grid equipment manufacturers like Siemens, ABB and Hitachi, they are delivering 20 - plus percent growth in an industry which is used to 2% regularly. And CUMI, I understand, has a significant market position in the Ceramics for the switchgear application. Could you just help us understand the kind of growth.

It is also more than 20%.

Okay. What would be our capacity utili sation in this segment? Are we looking at expansion in this segment?

So I was just answering this to Bhoomika, we are in the range of about 80% plus. We can improve our capacity utilisation through debottlenecking, can help us. We are not constrained at this stage by capacity as far as growth is concerned.

Okay. And the Greenfield expansion, I mean, expansion that we are looking in the Ceramic segment, is the Metalli zed Cylinder part of it? Or the expansion is largely into the other applications like defence, as you highlighted?

So the expansion is more on the Engineered Ceramic side, which is one for supplying to semiconductor fab equipments. That is the first area of expansion. The second is in the protection of vehicles, that is defence vehicles as well as which is armour as well as the body. That is the second area of expansion. Third would be some substrate -based expansion, which I have not mentioned in my capex program but this is not on the ground. It will come in future, but I think these are the areas of our expansions.

Sure. On the subsidiaries of Abrasives, especially the German ones, you highlighted that auto is not a larger end user industry. But auto has a ripple effect on the broader economy. The kind of targets that you had set while we had acquired of getting to 11% EBIT level, would you believe that they are getting pushed out? And what is the effort that we are looking at in terms of greater level of supply of raw material and also expans ion within the Europe for these 2 entities for us to achieve that 11% EBIT target?

So as far as the RHODIUS is concerned, we feel that it is still possible, and we are progressing to what we have been alluding to. I don't see any issu es on that. Where we are seeing issue, which is on AWUKO, which we have not given any guidance like what we just said. But in general, I'm answering, yes, AWUKO is a concern for us, where we said we could grow at least EUR8 million to EUR10 million in this year. The growth is only EUR 2 million this is where I said that for the next 2 quarters, we are feeling that this is possible to achieve. But beyond that, we would take 6 months to get back in terms of what programs that we will have on AWUKO to get back to the both growth and profitability.

Sure. Just lastly, on the Russia piece, I actually missed the numbers. If you could just help us give the data on what was the revenue and the profits in Rouble terms for the Russian entity?

I did not share the revenue when I covered, but I did cover the profitability, I will share that. So they delivered profit after tax of RUB 486 million in Q2 FY '25 against RUB 413 million for the same period last year. And H1 basi s, they deli vered RUB 753 million compared to RUB 836 million same period last year.

Yes, thank you so much. These were my questions.

Thank you. The next question is from the line of Saif Sohrab Gujar from ICICI PRUDENTIAL AMC. Please go ahead.

My question is just on the cash flows and balance sheet. 1H FY '25 had a lower cash flow conversion. If you look at in current assets, inventory has a substantial increase as well as if you look at other financial assets and other current assets, they have seen an increase. Any specifics you can highlight and which segments, say, Abrasives or Ceramics is causing this?

No. I think you've observed very diligently, I would say. I think cash flow , free cash flow is a concern, and we will get back correcting some of these areas. So the building pattern, which is Q2, most of what we have done is highest in Electrominerals, highest in Ceramics, highest in as a Company and hence, the receivables or the working capital growth is on the higher side, which is what you have seen here. We will get back to normalcy in H2. So we will get to normal FCF targets that we are looking at in a full year basis. But H1, yes, we have missed the FCF target, yes.

Specifically on inventories, if you can highlight, there also there is an increase. So is it a n inventory-led, RM-led phenomenon or more finished goods only? Similarly, you highlighted for trade receivables, right?

It is mostly it's a raw material -led phenomenon where some of the materials inventory have piled up, largely because we wanted to have this as a preparation for the H2 and we are also expecting some price increases in aluminas, et cetera. So we also have o rdered some of these materials in advance. So those are the reason for the inventory pileup.

Thank you and all the best.

Thank you. The next question is from the line of Jasdeep from Clockvine Capital. Please go ahead.

Sir, how have exports done in the first half? What are the product segments and geographies which are driving exports?

So exports have done well, both for Electro minerals as well as for Ceramics. Abrasives had a small challenge. I w ould not put any colour to this at this point. The geographies are largely Europe and America.

Got it, sir. And sir, what are your plans for integrated Indian manufacturing with your European acquisition? Have you been able to see new product segments manufactured into your European business? And how has been the experience so far?

So we have worked on a one particular product line what RHODIUS used to outsource from other manufacturers, where we are able to manufacture to the quality standards and the cost expectation, which is what we have now established. That's one product line that we are able to do that. We will look at scaling up, etcetera. as we progress on that. Then I think another area of cooperation is we shared tha t DRONCO capacity getting relocated to India, which is 1 of the key programs, which will incorporate some of the technologies used in RHODIUS, would be adopted here for that line. So that will come, but that is FY '27 type of completion as far as the project is concerned.

Sir, in this 1 product segment, where you have started manufacturing in India for RHODIUS, what has been the cost reduction that you have achieved? In the sense that if RHODIUS was earlier buying the same product at, let's say, INR100, now what is the price right now at which they're buying from the Indian operations?

So right now, I can share that we are able to meet their cost expectations.

So broadly, what you're trying to say is that you are supplying to them at the same price as they were sourcing earlier?

No, I said that their cost expectations.

Thank you. That's all for my side.

Thank you. The last question is from the line of Aditya Mongia from Kotak Securities. Please go ahead.

My first question was more on the competitive angle perspective. I wanted to get a sense of across your segments, where is Chinese competition versus where it was pre -COVID. I understand that there was a period when you would have benefited. I'm just trying to get a sense of versus pre -COVID period, where is Chinese competition at this point of time across your segments?

So Chinese competition is there everywhere and in every product line. You can't single out in one area. It is there everywhere, right? Whether it is Electrominerals or Abrasives, whether it is India or South Africa and all these product groups and the countries have been witnessing the Chinese competition. Now to your question in terms of pre-COVID versus COVID, or during the COVID versus the now. I think the dynamics, I would say, what are all the things that is changing at this point in time is, I mean, look, I'm not an expert on China, but I'm just sharing what I learned is there is a demand lull in China, which makes them to sell or export to other countries and perhaps the – their cost has no basis at this point in time, we do not know. We only feel that I hope they don't sell at a cash loss, which might also happen is what we are hearing at this point. So there is, to some extent, these type of phenomenon which most of the industries and I'm telling clearly, this is not just our industry, it is many industries are facing from China. So this is what I would say at this point in time, I can broadly share.

Understood. The second question that I had was more on high -purity silicon carbide and applications on the semiconductor side. When you think through what you want to do in that segment, what are the ke y kind of imponderables? Is electric vehicles, the key application and and in that context the share of 800 -volt charging systems becoming more prominent in the single biggest driver. I just wanted to get a sense of how do you think through your relevance in that segment? What are the key demand drivers? And second part of the question was how would CUMI's product compared to that of competition? If you could comment on these two aspects here.

Yes. So I think , today, the semiconductor products are made either out of silicon or silicon carbide, and the devices made out of each of them have their own play. Of course, there's also - - gallium nitrate is another product. Similar to gallium nitride, few other products are also available. And each of them are playing in, depending on the temperature as well as the switch, they are getting adopted to the type of material that we would use. Plus, the other factor is the cost. What we are seeing is that and which is a global phenomenon that is happening is SiC is preferred choice of these semiconductor devices because of the high temperature application that some of this you just mentioned in your question, hence, the preference to SiC-based devices, hence, the requirement of high-purity silicon carbide. So this is the logic of demand growth. As far as our product is concerned, we are competitive and at high-end level, and we have seeded some of these applications to the select manufacturers of these devices in their own application. So looks like it is performing and hence, we've started seeding these trial orders at this stage. So that is probably the best at this stage I can share.

Maybe just a last question on this part and that will be all from my side. Typically, Ceramics have had a profile of larger overseas kind of share of business versus domestic. Do you believe the same would hold true for silicon carbide as well? And in that context, can it become a business that is sizable maybe 3% or more of your entire consol top line? Can that be a possibility for the next 2, 3 years?

So to start with, silicon carbide is the biggest overseas business of us. Our capacity in Russia is about 80,000 tons to 85,000 tons, whereas our capacity in India is about 10,000 tons. So we have a significant overseas share as far as the silicon carbide is concerned. Perhaps your question, if I have to assume that it is on high -purity silicon carbide? High-purity silicon carbide is a basic venture at this point in time, very small. And most of these capacities could be consumed outside of India.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Ms. Bhoomika Nair from DAM Capital for closing comments.

Yes. I will just like to thank everyone and particularly the management for giving us the opportunity to host the call. Thank you very much sir, and wish you all the very best.

Thank you. I think thank you for your patience hearing. I would like to summarize one small comment, is that we are trying to deliver INR 5,100 crores to INR 5,200 crores. We expect the PAT to be around INR 500 crores. Capex program would be INR 300 crores, will be a debt-free company. We would have also prepare d a strategic program by then in the next 6 months. So we've created a good delivering the current. We will also prepare a good future in which we'll share at an appropriate time. Thank you.

On behalf of DAM Capital Advisors Limited, that concludes this conference. Thanks for joining us, and you may now disconnect your lines.