Thank you very much. The first question is from the line of Harshit Patel from Equirus Securities. Please go ahead.

Sir, my first question is on VAW. I missed the sales and profit number that you provided in the rouble terms. Could you please repeat on that, please?

Yes. I think VAW on a full year basis, VAW made a sale of 9.4 billion against 9.7 billion, and they delivered a profit after tax excluding exceptional items of INR119 crores and you should net off INR90 crores of impact on this. So INR119 crores minus INR90 crores would be profit after tax post this onetime adjustment. If you exclude the onetime adjustment, it is INR119 crores against INR149 crores of FY '24.

Understood. Sure. Sir, on this Q4 margins, which are very weak and you explained that our volumes were drastically down in the fourth quarter, so is this weak margin performance just because of the operating deleverage due to lower volumes? Or are there any other one-offs? So what I'm trying to understand is that where the gross margins impact over there at VAW?

Yes. So Harshit, I think, this is exclusively coming out of the volume drop. And as I said, it is 25% to 30% volumes are down in Q4 and we have factored in the similar volume drop for the full year next year as well. So that is what I communicated. So it's a pure volume drop.

Understood. Sir, my second question is...

And the one-offs relating to VAW were earlier communicated in Q3 itself.

Perfect. Understood, sir. Sir, my second question is on Ceramics. With the normalization of supplies to a large U.S. -based clean energy customer, we thought that the standalone revenue growth would be in high double digits in the fourth quarter. However, it has not happened so. So was it due to delayed ramp-up at this particular customer? Or was there any other reason for the same?

No, I think the ramp -up with the customer is happening as communicated, no challenge at all. Just to give you a perspective, the entire Ceramics segment let's look at it in 3 broad areas. 65 percentage of the business grew at about 18%. 23 percentage of th e business, which is Wear Ceramics were flat. And then 12 percentage of the business degrew at 36%. That is how the overall mix you are seeing about 6% to 7%, right? Now that camouflages the real growth what is happening. The 12% is a business, which is highly project-driven business and there are delays in projects, which really caused this degrowth. So it has nothing to do with the high-margin Ceramic business and whatever we have communicated is very much in line. We feel this project-led growth would come back next year.

Understood. Sir, what are the 65% and this 23% parts, could you explain these 2?

These consist of Engineered Ceramics, Metallized Cylinders. Those are the components and also the fired refractories, all that put together is a component that consists of 65%.

Okay. And 23% will be the Wear Ceramics business. Would that be right understanding?

That's what I told.

Perfect. Sure. Sir, just lastly, from my side, the standalone EMD margins have contracted sharply both on Y-o-Y and Q-o-Q basis. So could you please explain the reasons for the same? There is also a steep jump in the standalone other expenses. So are these 2 things related to each other?

No. So I think in the EMD margin, the way I would like to look at it is that we practically passed on the cost increase of alumina to the extent of, say, 85% to 90% cost push. The rest we could not push because of the pricing pressure coming from China. So that is what you are seeing in the margin drop.

The next question is from the line of Mohit Kumar from ICICI Securities.

So my first question is how is the capex and implied expenses expect to incur to achieve the strategic objectives which have laid out for the next 5 years?

So thank you, Mohit. We are not sharing this at this stage, the capex program. I would have loved to share it at this stage. But next year capex I have shared with you broadly. So that is what at this point. But as I said, we have a clear program to deliver this 2 times top line growth. So we feel that we have enough programs to deliver this and should not have an impact -- should not have an issue for us.

Is it possible to share the R&D capex, which you incurred last year?

Don't have readily and probably at a later point we will share with you.

Understood, sir. My second question is on the Abrasives. How is the competition shaping up? Are you seeing the easing out of the competition because you're saying at the same time, you'd guided for the market share? So how do you think you'll achieve highe r growth and higher market share in the next 5 years, given the competition there?

So I broadly described the program that we would increase the market share. Right now, we are looking at the market into 4 broad categories. There's a first category like ourselves and Norton, that's local manufacturing players. The second category is largely people who either manufacture here or import and then sell in their brand name. These are good brands that they are selling. Then the third category is the non-abrasives companies who import for their own industrial use, right, direct import from that and the fourth category is basically the international players, which they import and then sell in their brand. So we feel that we have enou gh room in these 3 other category to take a share and that we can grow in the market and the growth strategy largely the broad strategy is that, one, is wherever there are product gaps where we have identified product gaps and that are going to be met both out of the new product to be developed and introduced or source where required. And the second one is strengthening the go-to-market. There are certain states where we are not present or we have a very, very low market share where we would like to expand the market share. Plus, the customer, certain Class A and Class B customers, they would like to improve our wallet share that we work with them. So based on these 2 broad and there are some elements to this approach, but that's how we are looking at. The R&D spend, I’ll get back to you.

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

My question pertains to your remark about the strategic plan and you highlighted that we'll be focusing on aerospace, defence vehicles and I think defence electronics also investing in manufacturing facilities and collaborating there. So if possible for yo u to share more details, what kind of product, any target we have in this space and will it be high -value product, export or domestic market? Any more colour on this, please?

I would broadly touch upon this. One is it's basically both vehicle and body armour are the 2 spaces that we would work because that is where the ceramic has got a play. So that is all we are looking at and that's why I said that we will be focused on that . It would be based out of either alumina or a ZTA or reaction bonded silicon carbide or boron carbide. These are the materials that we would be using and the product outcome would be either a body armour or a vehicle armour.

Sure, sir. Sir, second question, again on VAW. So you said FY '26 also will be hit by a decline of 30%-33% on VAW and impacting the PAT by almost INR100 crores for FY '26 as well. Wanted to understand how one should look for VAW? Are we in a wait -and-watch that these things, which are dependent on external controls, will be better off? Or is there any strategic thinking, which has gone into VAW while devising the 3- to 5-year plan for us?

So I think since the time of the sanction in January, early January 2025, right, so we are almost, say, kind of 4, 5 months since the sanction has happened, there are a lot of developments, which are very positive, right. There are multiple ceasefires has happened between Ukraine and Russia. There are open comments made by both the governments that they would like to end this conflict and then reach a settlement. There is also a lot of facilitation being offered by various countries across the globe and every other country has expressed that this should end. So we hope, I think there will be a logical conclusion sooner than later. I'm not an expert on the geopolitical happening, but we positively look forward to that.

Right. So finally, on the Chinese impact, which we have discussed throughout last year also that there has been a pricing pressure and we try to device distribution strategies across segments where it was impacted, including the low-end abrasives and alumina and we talked about at least 5 to 6 quarters for things to be better off. Are we under similar notings or have the things further deteriorated or improved from the Chinese dumping side?

See, again, the time we talked versus the time we are now talking, there are many things that has happened. The global trade itself is undergoing a reset. So obviously, it is better to wait and watch in how this whole thing will develop. We expect that the competition from China will continue to be tough and they will have upper hand in terms of the bringing down the cost, ability to compete in terms of prices, which no one can match. So those issues will continue is what our current thinking is and obviously, we are preparing ourselves to work against that.

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

Sir, my first question is on the 5 -year outline that we have shared. Sir, please correct me if I'm wrong, but as I can understand, the incremental growth as per your current position will be from incremental domestic investments. Is that understanding correct?

Right. That's correct.

Okay, okay. And sir, I just wanted to hear your thoughts on the turnaround strategy for AWUKO and RHODIUS, especially in line of the stimulus that is being announced by the economy there on the infra side? Is AWUKO and RHODIUS likely to have a second order impact here?

So as far as the RHODIUS is concerned, as I said and communicated in the call also, they are profitable after you exclude the PPA, which is our own write -off that we are trying to do that, right? So it is profitable and it is the growth trajectory. There's no issue on the RHODIUS side. What we are facing is on the AWUKO side. We feel that the growth opportunity, which you are talking about, the second order benefit that would come, we feel that this will help them. Definitely, this is what we are also l ooking forward to. So there would be a betterment is what we are looking at.

Okay. But for this year's guidance, so clearly, it's too short term. So you're not building in any impact because I heard you said it was largely driven by domestics. Okay, okay. So that's clear, sir. Sir, secondly, on Ceramics, if you can please confirm that for the margins, your guidance is a drop of 100 to 125 basis points. Is that right, sir for FY '26?

Yes, 100 to 120 basis points.

Okay. And sir, what would drive this, please?

Okay, Sir, and across the 3 businesses -- or maybe across Abrasives and Ceramics, as per you r current assessment, over the next 5 years, there is clearly a much higher growth. Would that be Ceramics? And what would that mean for our margin for Ceramics?

Mohit Pandey So I'm not sharing any margin guidance on the future. But broadly, I explained our overall trajectory, we are looking at doubling it. Second is that programs that what would drive the growth is what we have shared. I would like to stick to that. Sure, s ir. Sir, one last question. On the minerals, specialty minerals, greater push towards specialty minerals, Sir, if you could please, if it is possible to elaborate what is different this time because I understand for the past several years, there has been an ambition to increase sales for specialty minerals in the overall business. So what's the right to win now, given that, if I understand correctly, we've already been trying this in this area for quite some time?

Absolutely. Great question. And I think thanks for asking. Three different things. One is within alumina, we are increasing the treated grain and export of alumina is going to go up. That's the first vector, this is different. Second is increasing the zirconia portfolio, this is the second vector of difference because our right to win is very high because we have established operation in South Africa plus we are also having a small operation here. So with this, we want to increase the portfolio. As I said, it's just not only all varieties of zirconia, whether it's alumina zirconia, stabilized zirconia or monoclinic Zirconia and zirconia for thermal spray powder. So it's entire range. That's the second difference. The third difference is focus on thermal spray powders using oxides. That is the third difference where we have established our capability and we are trying to ramp up with a few anchor customers that we have. The fourth area that we would like to focus, which is on 2, 3 different materials. One is the HPSiC and the thermal spray powders for solid oxide fuel cells and alumina nitrates, which is both silicon nitrate as well as aluminum nitrate. The last alone would take about 3-4 years before the real benefit of this would start coming. The first 3, where we have established the right to grow, and that is how we are planning to grow. These are the difference between the earlier program and this program.

The next question is from the line of Nidhi Shah from ICICI Securities.

So my question is mainly around employee expenses. We see employee expenses have kind of shot up this year and I understand that some of this bit is from ESOP. So how much is ESOP, how much is not? And then what can we expect in FY '26 in terms of employee expenses?

So broad guideline is that employee expense as a percentage is still very much comparable range only. So there is no change into this. These are minor blips that happens on a year-on-year basis. They're not significant. So since you are making a forecast, I would encourage you to look at it that way.

All right. And could you provide the ESOP number that was for this year in the employee expenses?

Not much, Madam. But anyhow when annual report comes, we will have a lot of details on the ESOP.

Sir, I have 2 questions. First on your 5-year plan, so we aim to double sales. So does it assume any inorganic initiatives? And if yes, then probably in which areas or what would be the focus on that, first question. Second question, I just would like to know have we probably started realizing any gross leveraging benefits on acquisitions with RHO DIUS and AWUKO? Maybe geography wise in terms of leveraging sales and distribution and also on the product wise.

So the numbers that we looked at and shared does not have any acquisition as part of this number. And as far as RHODIUS, clearly, we are looking at lot of synergy arising and in fact, the thin wheel facility that we are setting up will be using the technology of RHODIUS and that would help us deliver quality products and at the cost that the market would like to have. So this is the synergy, I would say, as an example from RHODIUS at this point.

And would you be able to like the challenging what we face from China in terms of largely on the pricing front, will this probably technology help us to address that and that is how we are probably looking at?

Yes. So we have looked at what is the imported costs and what is also this technology would bring plus we worked on a cost model where we should still be competitive if some dumping happens from China, we should be able to counter that.

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

I had a question from my side. The way you have split the Ceramics business in terms of components and growth, could you do the same for the Abrasives and EMD standalone portions in terms of what is being impacted by China and what is not. It would be good to know the relevance of Chinese competition in terms of revenue share impacted and the real impact being seen given whatever is happening right now in last 1 year.

So as far as Abrasives is concerned, I don't think we have any -- I mean, that's a universal growth that we are having. I'm sure you would have looked at other published results in the space. So we both are traveling, give or take, about 4% growth. And so the way I look at it is that almost, say, 50%-plus market is gett ing imported into India. Of that, 60% comes from China, and the rest is coming from other countries. So that constitution, we have not seen any big difference compared to the earlier position. And that's why I felt that you continue to have this challenge and then you are looking at that. So we're countering that, two things. One is come up with your own new product to be delivered or source for the time being and then develop the product as you become ready today and launch this. So we have now looked at a whole lot of sourcing strategy to counter this and that's the program that we are looking at. As far as the Electrominerals is concerned, I think where we are having a challenge is the entire the alumina space is where the challenge that we will have, which is all we talked about so far in the earlier calls also. My guess is that the entire alumina space could be about 30% to 35% of our business should be in that range.

Yes. We are not sharing anything like that. I've given a broad next year growth. I've given my expectation in terms of that. So I would like to stick to this, Aditya.

Okay. The second part on this would be then that the Electro minerals segment at a standalone level margins were low. As we see through the next year, how should we think through them? As you've been able to pass on 85-90% and this alumina division is a sizable part of that business. So how do you think through whether there is scope of further pushing the pricing up? Or should we be assuming low single-digit margins in that portfolio?

So overall, I guided that the EBIT margin on the aluminas will come down by 500 to 600 basis points compared to this year, 12.5%. And I feel that it would take care of some portion passing on benefit -- cost push also. I feel that in the initial Q1, we will continue to have this pressure in India and then we will slowly start getting this better in Q2 onwards. So that's how I'm looking at.

And would there be a strategy that we can follow the way we are doing in other areas wherein we'll be in a better positioning in the alumina space from here on? Or is it just dependent on -- yes. So what's the strategy over there? How soon can it like benefit us here?

Right. I just discussed the strategies is supplying more treated grains in alumina, which help us to have ability to counter this. This is what is our strategy. I enlisted all the types of treated gains and we are very much on it. In the next 1 year, we should be able to start launching these products and going in that trajectory.

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

So I have 3 questions. First, if I look at the Abrasives business on a standalone basis where 11 quarters we are seeing low single -digit growth and there were three couple of quarters in the early part of calendar year 2024 where we were seeing some acceleration, but we have now seen deceleration back. So if you could help us understand breaking it into 2 parts. One is what part is the slowdown in the end market? And I understand Abrasives is over -indexed to commercial vehicles and that segment of the market has slowed down? And second i s what we are seeing is acceleration in the thermal power manufacturing, especially when we look at BHEL order book, et cetera. So if you could help us understand the underlying market slowdown. And second, what part of the market is impacted by the Chinese competition? And that part, we understand has should have been anniversarized. So that is my first question to understand the stand-alone Abrasives better.

So the industrial distribution is growing at about high single digit, right? And we see that, that's a very positive one. Retail is growing at about mid -single digits. The challenge is largely in the precision side, where the industrial growth -led precision side is where the challenge is. And I think you have pointed out some of the industrie s and you have clearly articulated that. So that is where we see this deceleration is happening. So as the industry picks up, we feel that this momentum will start picking up. That's how I read this.

Great. The second question is on Russian piece. And when we see this quarter, revenues declined by about 16-odd percent, but you've seen a sharp drop in the margins. In this, if you could help because this is a continuous process industry. So slowing down or stopping of production is difficult. So we would have been forced to sell in Russian market. So if you could just help us understand the kind of pricing pressure that would have happened and the kind of volumes impact that was there in the Russian piece because of forced selling into the home market and exports kind of getting impacted due to the sanctions?

So honestly, there is no forced selling. We feel we are currently not able to sell. Hence, we are not producing. So hence, as a result of that, unabsorbed costs because you carry a lot of cost of this full manufacturing process. That is what is getting impacted and as I said, it is not 16%. It is about almost 25% to 30% volume drop in Q4. We expect a similar drop for the next year as well. So there is no, I would say, because of that, we are trying to push this into the market, hence, the price falls, et cetera. It is largely we are not able to sell. Hence, we are not able to produce, hence , we have an issue in terms of the profitability.

I understand. The last question is on the Ceramics piece. So if you could just give us where we had seen a slowdown last year in some of the specialized piece, which was going to which we're selling to the hydrogen cells. How has that market now shaping up given that when we look at your end customer, they are seeing increased order booking. Second is especially on the metallized piece where transmission and distribution as a segment world over we are seeing very strong growth. So on that, if you could give us an outlook in terms of what we are seeing in the specialized piece and what it does to the growth outlook for the next year in the standalone Ceramics piece?

No, no, great observation. So I think, as I said that 65 percentage of the Ceramics segment has grown about 18%. This includes the sectors that you talked about and so they are growing, including Metallized Cylinders are growing well. So definitely, you are right in your observation. As I said, the 23 percentage of the business is flat, and hence, the average is coming down. That is what I earlier also told.

So just a follow -up here. This piece is basically the refractories piece, which is slowing down due to the underlying steel production demand?

No, it's a Wear side of the Ceramic business, which is what is flat.

Ladies and gentlemen, that was the last question for today's conference call. I now hand the conference over to Ms. Bhoomika Nair for closing comments.

Yes, I would just like to thank all the participants and also the management for giving us an opportunity to host the call. Thank you very much, sir, and appreciate it. Any closing comments from your side?

As I said, I think just to give a brief closing comment is that this year, there are 2 extraordinary factors. One is largely driven by Russia sanction, which eventually has got 2 types of impact. One is a provisioning impact, which we feel that once this s anction gets lifted it will reverse back. The other one is the volume drop as a consequence of that, which happened in Q4. The second major challenge that we faced is the reversal of the deferred tax credit in AWUKO. So if you take these 2 factors, whi ch is the substantial portion of the difference that accounted for, we feel that the business is doing fine and we have spent a good amount of capex this year. We have also spent 18 months of time in creating a good structured, long -term strategy. We've communicated the broad direction in which we are trying to travel. We've also broadly looked at considering the current global trade-related issues and the geopolitical issues. We feel that what we are looking at as the next year, we communicated, we said that we'll have a 6% to 7% growth and we also broadly communicated PBIT margin, how it would pan out. We feel highly focused on our execution in terms of the long -term strategy. So we will see improvement, strength to strength every quarter. Thank you fo r your support and thank you for your patient hearing.

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