Thank you very much. We will now begin the question and answer session. The first question is from the line of Ravi Swaminathan from Spark Capital.

My first question is with respect to the standalone segments of Abrasives and Ceramics and Refractories. The growth were subdued during this quarter. So if you can give a bit more granularity in terms of quality of growth in Abrasives in the retail side and industrial supply side. Similarly, for Ceramics and Refractories between the Wear Ceramics, Metallized Cylinder and Refractories, how the individual subcategories were growing, that will be great, sir?

Thank you. I think -- so the growth in the standalone segment, particularly Electrominerals was about 6 .5%, Ceramics 4.9% and Abrasives degrew at 2.8%. But the growth sequentially in Abrasives at 7.5% is encouraging. We expect that trend to continue for the second half. And that's the broad outlook that we have. And as far as the Ceramics is concerned, the H2 will be strong, largely because of the way the order books were built and some of the projects requirement are coming along. So we expect that H2 will be heavily loaded compared to the H1. So hence, we feel that the growth compared to the H1 versus H2 will be different and Electrominerals will continue the trajectory that we have been committing. That should continue. That's what broadly guiding to.

Yes. So Metallized Cylinders and Engineered Ceramics have performed over 20%. And I think there were challenges basically on the Wear Ceramics side. Both Wear and some of the Refractory side, the project-based dependence, there's a delay, which should pick up in the next quarter and we should see overall growth. At H1 level, we are at about 11% growth. We expect that, that would pick up.

Okay. And which sectors would be -- Wear Ceramics would be catering to where this delay? Is it like steel, cement...

So it is steel, cement, glass, all these sectors, there are some project delays.

Understood. And similar flavour on Abrasives side, retail vis -a-vis industrial supply, how it is doing? Any flavour on that?

So I think industrial and precision are doing fine. Retail is a bit subdued, but the encouragin g thing is that the inventories at the dealer level have really come down, which sees that Q3 and Q4, we should see a pickup. The lot of festival pickup helped to move their inventory level. So that is something is encouraging to look at Q3 and Q4.

Got it, sir. And my final question with respect to the Electrominerals business, you had highlighted that there is a bit of Chinese competition in aluminium oxide and how it is panning out. So is there increased competition which is there or is it maintaining? Any views on that?

It is maintaining and no difference that we see at this point.

The next question is from the line of Harshit Patel from Equirus Securities.

Sir, my first question is on stan dalone Ceramics. I think the margins over there have been the weakest we have seen in last 4 years, about 20% or so. You have highlighted adverse product mix as one of the reasons. What could be the other factors over here? Also, we had expected a strong revenue growth as clean energy sales to the U.S.-based customers are reviving. However, we have posted only flattish sales. So if you could explain, co -relate these things, that will be very helpful?

So I think product mix and the other one is the top line. There's base level fixed cost absorption needs to happen. So since there's a top line is a bit soft. So that's why we expect the H2, we could pick up. I mean, we will bounce back better in the H2 and that should start showing the mar gin pickup. And that's why even in the overall margin guidance, I still maintained what was earlier said.

Right. Just a follow -up to that, sir. But sir, when our Metallized Cylinders and Engineered Ceramics are doing so well, which are obvio usly the higher-margin businesses for us vis -a-vis the Wear Ceramics and Refractories, shouldn't the product mix be good for us? Should that not be an accretive product mix?

It does and that is why it is helping us a bit. But if you look at the wear plus the Fired Refractories business, they are not bad. Their ma rgins are also very encouraging. But the volumes that they hold to the total business when it is not growing, it does have the impact of the mix. And that's why we used the word mix.

Understood. Sir, my second question is on the subsidiary level Electrominerals business. Here, the sales seem to be very strong despite the continued sanctions on VAW. Margins have also improved on a sequential basis. So how have we achieved this improvement in the first place?

No. So I think if I look at Abrasives, we have done fairly well outside, of course, there's a domestic Abrasives pickup, equally F oskor Zirconia top line pickup. These two are helping us in terms of our overall pick up. But you have also a fall of almost INR83 crores in the top line as far as VAW is concerned. But the eliminations, the intercompany eliminations are lower compared to the last year because we no more source from VAW. So that benefit also accrues to us. So that is how the overall we are in better shape as far as Electrominerals is concerned.

Sir, just lastly, a book-keeping question on our others segment, wherein we combine the results of PLUSS, SEDCO as well as the IT business. Here, we have posted the positive PBIT after consecutive losses of 14 quarters. Anything you could highlight here?

I think I don't want to track individually t hese smaller businesses, but I think all of them are doing fine. So all of them have fired well, and that is the basic reason for that.

The next question is from the line of Amit Anwani from PL Capital.

First question on VAW again. So obviously, you have highlighted that there would be 25% reduction in volumes. I wanted to understand any development which has happened on sanctions. And in case of sanction continuing, what kind of volumes are we expecting any strategy or any hope of s anction getting lifted? How should one think of this business slightly medium term?

Look, I think this is a very tough area to guess because this is a geopolitical question. I would like to stay away from that. I think you are as good as mine or more than mine in terms of knowing the geopolitical situation as everyone reads instantaneously, as everyone treats. I feel that our focus at this point in time is to stay within the ambit of what we can do and that I think is what we will stay. What is helping us is a debt -free company and also highly focused way of running the business helps us to stay afloat and we hope sooner some better prospects would come.

Sir, on the 2 subsidiaries, AWUKO and RHODIUS, I would love to understand are we on track for breakeven and when are they happening? And second, with respect to what is driving the demand? I understand there's a lot of sales there is global in nature. So just wanted to understand what is the situation on demand side for these subsidiaries? There's some improvement which has happened and we are expecting H2 to be slightly better. So updates on that?

Sure. So I think the RHODIUS drop in Q1 is a one -off event largely driven by the way the logistics was handled, but they are out of that and they are back to normal and the demand, I would say, it is good and it is continuing the way we are planning as far as RHODIUS is concerned. As I said that we continue to look at RHODIUS as a good company, would get back to the profitability even after PPA soon. That is what we are broadly looking at. As far as AWUKO is concerned, we feel that getting to about roughly about EUR12 million to EUR14 million top line for this year is the first milestone that we should hit. So far, it looks like the trajectory is towards that. And then at the end of the year, we will again update you in terms of how we are looking beyond that. So by and large, both are traveling as per what we were looking at.

Sure, sir. Lastly, sir, on the new product development. Last time I recollect you highlighted the high-performance SiC pilot plant is on track, though we do not expect the volumes in F Y '26, FY '27. So any update on that? And apart from that, we're seeing a lot of activities happening on semiconductor, CG Semi installed the plant and even L&T is talking about it. So -- and we also talked about some ceramic-based products for semiconductor. So just wanted to understand with respect to product developments, what one should look at in near to medium term, which can materialise in 2, 3 years?

Sure. So semiconductor, basically ceramics for semiconductor fab equipment is what our focus area. And that facility is coming up very much in line. And we expect these would start benefiting in the next year onwards, which is what our earlier guidance also. So that would continue. And the defence program, aerospace and defence program investment is also very much on track. The investment on HP SiC is also very much on track, all the programs that we broadly talked about. As far as our long-term strategy is concerned, everything is pretty much on track. That's why you see a strong capex spend, which is very much in line with our spend as well. In fact, the INR160-odd crores is probably the highest at this point in time. So we are progressing based on our long-term trajectory.

Sir, are we seeing any contribution coming in from these projects in the next 2 years or it will be beyond years?

So as far as the semiconductor, we expect that it would start contributing from next year and then aerospace and defence, partly next year, but mostly year after. And then as far as the HP SiC, we said 2 years, we need to wait because these are all seeding time, which is what we are currently doing.

The next question is from the line of Rupesh Uttvani from Nayan M Vala Securities Private Limited.

I just would like to know that over the past 2 -3 quarters, if I am to look at your other expenses, they are on a standalone basis, they have grown on a higher trajectory, which has been affecting your overall margins. So if you could maybe just shed some l ight on what is causing that increase, that would be really helpful?

I think other expenses, what you call as unallocable at the consol level is very much comparable at H1 to H1 level and standalone level, there is a marginal increase of about INR10 crores. So I see that it is very much in line. We don't see abnormality, except there are some dividend income movement, which is like we also disclosed that close to some INR68 crores plus is the dividend that we had kind of one-off dividend, other than that, I think if you exclude that, I mean, as we exclude we see that it is very much in line.

Okay, sir. And I just wanted to confirm that you had said that -- in this call, you had said that VAW is not exporting raw materials to the Indian subsidiary for, let's say, from the Electrominerals perspective. So I mean, would that affect our margins anyway in the Abrasives or any other segment?

I don't think we had any link to the -- our domestic Abrasives business. We never sourced for our domestic Abrasives business and has no connection to that. And we are not sourcing. I mean that stopped here.

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

Sir, the question number one is with respect to your comment to the earlier where I also was observing a 35% increase in capital expenditure. If you could help us what is the planned outlay for the current financial year and the next? And if you could also give us a breakup between the key projects that we are planning this capital expenditure?

Yes. So Bhavin, I think we did guide INR350 crores of capex at the full year level is w hat our guidance is and we have spent about INR160-odd crores now. Second half, we will have the rest and this is as per our long -term strategy program that what we have worked on. So it is very much in line. Individual project details will be difficult t o share, but these are coming for, let's say, semiconductor facilities, facilities for aerospace and defence, investment in HP SiC facility, investment in thin wheel relocation. All these are the programs that we are working on.

Sir, pardon me for hopping this. What would be the total planned outlay for the semiconductor for the aerospace, defence, Ceramics and HP SiC over a 2 to 3-year basis, the total planned outlay for getting the project up and running in the Phase 1 of our plan?

So Bhavin, I think it is a reasonable facility and based on our expected returns and the top line is the normal way that we evaluate and put. Individually, we are unable to share how much is this, etc. But be rest assured that it is based on anchor customers' programs that we have in place to support that, and that is how we are making these investments.

Sure. My other question is on the Electrominerals and when I look at the subsidiaries performance, which is stan dalone minus consolidated, the revenue run rate that I see for the quarter is about INR186 crores and prior to the sanction, it used to be about INR190 crores to INR200 crores. So it's not very different despite the sanctions. VAW i s a continuous process business, so could you help us understand, is the impact that we are seeing is largely the realisation where we've been able to push out the volumes, maybe at a lower margins? And in this quarter also, we've seen a remarkable improvement on the profitabili ty front. I mean, if I look at the EBIT of the division where it was negative in the previous quarters, about INR2 crores, INR3 crores and it is about INR13 crores positive. So the effort that we are putting, it will be helpful to understand and what transpired such an improvement despite the sanctions?

So first of all, sanction does affect. It is not that it is not affected. So it's told that at H1 level, we have an INR83 crores of impact on the Electrominerals business. So it does af fect. But what helps us is the standalone growth, growth in Foskor is helping us to a large extent to offset this. So that is what I would say rather than anything else. And obviously, that helps us also to some extent a margin stabilisation. And so I think had VAW performed at its normal level, we would have enjoyed a far better results than this. I hope to see that day soon.

Sure. And if you could -- I mean if possible, what would be the plan assuming the sanctions go on for years? What is the plan of action for the Company to get to alternative markets, alternative customers?

See, I think -- I'm sure this is very difficult to even work through a simulated experience of answering this question because it's very tough. From our side, we have an approach where focus highly on what VAW can do with the limitations what they have. So that's number one. Make sure that we run this in a way which is within the framework of what is possible, highly focused on cash conser vation, making sure that they have reasonable margins and able to survive. At the same time, thinking beyond how can we do beyond this is a very, very difficult task, Bhavin. We have limitations of what we can do. So definitely, and as a group, we will not do what is not possible.

Sure. Sir, my last question is on the Abrasives front. As we've highlighted, there are 3 broad segments, retail, industrial and precision. Retail is where the pressure was. But I also understand is that within the precision and the industrial, automotive as a sector has a greater salience. And as we are seeing pickup in the automotive production, I mean if you could just give us an outlook in terms of do we see rate of growth for the standalone Abrasives improving , because yesterday, our competitor also reported and they reported kind of a 6% growth. So your outlook over the next 3, 4 quarters, given the automotive pickup and how you are seeing will be helpful?

I think as I said that our own reading is that the H2 for the Abrasives going to be better. First of all, if you look at Q2 versus Q1, we are seeing a pickup in terms of growth and we have grown about 7.5% plus and we expect Q3 and Q4 will be better on a few things. One, our own retail network, the kind of inventories with them is kind of far more thinner at this point in time because of what they had experienced in the last quarter. So the benefit of G ST plus the festival growth, etc., we should see this coming up in Q3 and Q4. So I wou ld say that our expectation for us is definitely better in H2.

I joined the call a little late. So pardon me if my question is repetitive. Sir, my question is largely on recent developments at Wendt. So post exit of 3M, we are primarily the de facto promoters in the company. And in the past, we have seen transfer of talent from them to CUMI as well. And recently, we have seen exit of top leadership as well from them. So question is what is our play here now with the entity? And what is our aspiration and expectations from that company? And what will help us achieve those?

So thanks for this question. I would stick to commentary on the performance of CUMI here and I'm sure you appreciate our constraints on that. We should talk about CUMI, and I encourage you to focus on CUMI.

The next question is from the line of Aditya Mongia from Kotak Securities.

I just wanted to check with you, sir. So standalone business started to kind of grow over the last 3, 4 years at mid -to-high single-digit more towards mid and high. I'm talking overall business. Could you give us a sense of what needs to change to accelerate the growth to higher levels? That's the first question and linked up to that is of the INR350 crores that you are spending in, is the split a lot more towards existing businesses or is it a lot more towards new lines of work?

Sorry, your second question is not audible. Could you be clear on that?

Sure. What I was asking was that in that INR350 crores of capex, is it more inclined towards existing lines of work or is there a fairly meaningful share of new lines of work?

Okay, good. So I think what needs to happen to have a higher growth is the first question as far as standalone business is concerned. So I think this is the program that we have for a 5 -year horizon from now till FY '30 is where the LTS work that we have prepared ourselves. I think each of this business have come up with a set of actions, which would take the growth from the current level to a higher growth rate. We feel that each of them are definitely working towards that. I think we broadly shared last time around tha t. I think the Abrasives is largely going to focus on sharpening the go -to-market, introducing newer products through the NPD program. Similarly, we also have a program of how do we source and scale. And these are the programs and of course, there are specific geographies today we are not present or have our market share is lower. So how do I make use of those. So these are the opportunities that we should see and pursue this. In the Electrominerals, we said that scaling up in alumina more towards the treated grinds, whether it is heat treated or silent treated or sol-gel-treated, blue-treated, zirconia-treated grinds, thereby increasing our alumina portfolio. At the same time, focus on the value -added products through additions of zirconia, zirmul, stabilized zirconia, etc ., and getting into new areas like thermal spray powders, etc. These are the programs as far as Electrominerals is concerned. As far as Industrial Ceramics is concerned, our focus is largely in terms of how do we serve in newer areas like semiconductor, electronics, aerospace and defence and how do we prepare ourselves for that, which is what is the program that each of them are working and in terms of the Refractory, it is mostly to scale up on the monolithic refractories. Just broadly summarizing it. So these are the programs which will help us to accelerate the growth. What you have observed as there is a pickup, but will it pick up further. So the answer is yes, and these are th e programs that we would work on. Of the INR350 crores, are you investing in new areas? And if so, how much? I would say a majority of this investment goes into newer areas is what I would share with you.

The next question is from the line of Mohit Pandey from Citi.

Sir, first question is on Metallized Cylinders. So I believe you mentioned in this quarter, there has been 20% growth. So just wanted to understand what are the capacity utilizations there now? And are there any expansio n plans here? The end market does look like growing quite smartly here. That would be question number one.

Yes. I think you are right. I think the end market is growing very strong. And I shared over 20% growth, which is what we are t elling. And we are also parallelly looking at how do we prepare ourselves for an accelerated growth and so clearly, we have a program to address that.

All right, sir. Sir, secondly, on the aerospace and defence ceramics. Is it possible to share more color around your offerings here where exactly which sub segments are they likely to find applications in? And have you already entered into any partnerships with any defence customers for R&D for them or how are you thinking about this?

Good. So the 2 broad areas that we work on is basically vehicle protection and body protection. These are the 2 broad areas that we are working on and so our strength is to prepare ourselves and supply the ceramics needed for that, for which we have some collaboration with DRDO and CGCRI, which are very much in place and the capabilities are very much there. The third area is certification in terms of various international certification in terms of the penetration. So those are also fairly we have got about 4 different levels of certifications that we have got for our products and we are working with some of the leading suppliers for aerospace and defence in India. And definitely, these are the 4 broad kind of ind icators that I can share. This is how we are working on.

Okay. Sir, just to clarify, so this is not just domestic opportunity. This is possibly international because I understand you said about some certification? Is that fair?

No, certification is required even to supply to the domestic market. And hence -- because that's basically -- you need to make yourself qualified to supply, and that's the basic threshold. So that is what we are doing. Our focus is domestic to start with.

Okay, okay. Yes. Sir, and last question is more near term. So Ceramics, you mentioned in H2, you're looking at on standalone Ceramics a pickup. If you could give more color around whether this is based on certain order backlog that you already have or what should drive this pickup in H2 in Ceramics standalone?

Right. This is based on the order backlog and the project execution time from the customers. So those are the basis for the estimation.

The last question is from the line of Anupam Goswami from SUD Life.

Sir, my first question is on the Ceramics. How do we look at it in a little long-term growth? We had good run until now and its kind of supporting the other segments. So from here onwards, even beyond, let's say, '26, FY '27, '28, how is the market turning up for us? How is the newer product doing? And how do you see the growth sustaining?

In the Ceramics, I think I was just talking a little bit earlier, the growth trajectories are -- so there is an existing set of business and their own growth trajectory, which is basically either Engineered Ceramic products or Metallized Cylinders and the wear products. That's the growth engines. The second is the newer investments that we are making, which is basically in terms of semiconductor, electronics, aerospace and defence. So that will help us to accelerate the growth currently what we have. So these will be the 2 b road engines and which would drive the future growth of Ceramics.

So until now we had about 20%, 22% sort of growth in Ceramics. Can we take this number going forward? Do we have that conviction here?

So we have been guided individually, but we have shared a broad guidance 2 calls back in terms of what we are looking at in the long-term trajectory. I think those should help you to make your projection, but we are quite upbeat about what we are trying to do.

Okay. Sir, last on the new areas. Where do you see the revenues coming in? And how much of a contribution we can see from that? What is the scale of we can look at?

I think we broadly guided at the overall company level, 2 times in this period of the next 5 years. That's what we have broadly guided. So individually, we haven't shared any guidance but programs, we did share about that.

That was the last question. Ladies and gentlemen, I now hand over the conference over t o the management for the closing comments.

Good. I think thank you all for participating. I would summarize, number one is what we have been guiding for this year, we are very much on track. Capex program is very much on track. Balance sheet is strong and the trajectory that we all looked at for the LTS 2030, we are progressing well towards that. So I would say that in terms of some of the specific items like issues on VAW, we need some resolution at the geopolitical level, which will help us to take this forward. But other than that, we are very much on track in rest of the programs that what we are looking at. So thank you and all the very best.

On behalf of Kotak Securities, thank you for joining us. You may now disconnect your lines.