GMM Pfaudler (NSE:GMMPFAUDLR) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Q1 FY 'twenty seven Earnings Conference Call for GMM Pfaudler Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to mister Raveen Kanabar from GMM Pfaudler Limited. Thank you, and over to you, sir. Thank you, Alwit. Good afternoon, ladies and gentlemen. A very warm welcome to all of you into the q one FY twenty seven earnings call of GMM Pfaudler Limited.

0:47 The earnings presentation was uploaded on the stock exchanges yesterday and is also available on our website. So all of you had a chance to go through it. Including our call decisions that will happen now, contains or may have several forward looking statements regarding our business prospects and profitability, which are subject to several risks and uncertainties.

1:34 The actual results could materially differ from those in such forward looking statements. Turn Mr. Bharat Patel to provide you with a brief overview of the performance of the company. Over to you, Bharat. Thank you, Ravi. Good afternoon, everyone, and thank you for joining us today to discuss our financial performance for the June quarter ended and equally important, the strategic transformation that is underway across our organization. The past few years, we successfully transferred ourselves from being a leading Indian engineering company into one of the world's largest process equipment platforms to the acquisition of the global Pfaudler business and a series of complementary technology acquisitions.

2:21 With that foundation firmly established, the next phase of our journey. This phase is about GMM Pfaudler taking a decisive step in its growth journey by evolving into a single, globally integrated organization. Our customers operate worldwide and increasingly expect the same advanced technology, consistent quality and support wherever they are located. To meet their expectations and accelerate our ambitions, we are organizing our business into four distinct global divisions, each with a clear accountability and a sharp focus on the industries that they serve. Over the last year, we have undertaken one of the most significant organizational transformations in our history.

3:11 Historically, our businesses operate through geographical structures with India and international businesses functioning independently. While this approach was appropriate immediately after the acquisition, as it allowed the business to stabilize and the customer relationships to continue, it was never intended to be the long term operating model. Today, we have evolved beyond that stage. We have reorganized the company into four distinct global divisions, replacing the traditional geographic structure. These divisions are CRT, Corrosion Resistance Technologies PPT, Process Performance Technologies HET, Heavy Engineering Technologies PST, process systems technologies.

4:02 Each division under dedicated leadership with clear accountability for technology development, product strategy, customer engagement, and operational excellence. This is far more than an organizational change. It represents a fundamental shift in the way we go to market. Instead of managing similar businesses independently across the different regions, we are now bringing together global expertise under one technology platform. This enables us to leverage engineering knowledge across geographies, accelerate product innovation, improve customer responsiveness, strengthen and allocate capital more effectively.

4:48 Most importantly, it creates a single global organization with common objectives rather than multiple regional organization pursuing independent priorities. As I said earlier, our customers increasingly operate globally. They expect partners who can provide consistent technology solutions across markets. Our new operating model positions us much better to meet these expectations. The journey will take time, but we believe it creates a much stronger foundation for sustainable long term value creation. It also helps our capital market stakeholders to better monitor the underlying business drivers across each of our business divisions, providing greater clarity on our overall business.

5:38 In line with this vision, we have further strengthened our leadership team by establishing clearly defined roles and responsibilities across our businesses. Mr. Gregory Gelhaus has been appointed as Group Chief Executive Officer and will lead the cultural and organizational transformation required to build a truly global organization. This leadership structure will help institutionalize a global mindset, strengthen accountability, and align performance across the organization. It will also enable us to build a robust leadership pipeline, establish effective succession planning, and create global centers of excellence supported by shared service capabilities. Ultimately, our strategy is to extend leadership across our process technology businesses, expanding customer relationships to broader the portfolio and driving operational excellence across each division.

6:38 By capitalizing on growth opportunities more effectively with unified global to deliver sustainable, profitable and create long term value for all our stakeholders. The new global structure allows each division to focus on its own strategic priorities while unlocking meaningful value across the group. As we move forward, you should increasingly view the geographically managed organization, but as a global technology company with integrated capabilities, deep domain expertise, and a clear road map for long term value creation. With that, let me now hand over the call to Greg. Thanks, Tarek.

7:23 As Tarek rightly mentioned, this is a transformational year for GMM. With the four new divisions, our focus is to bring the full strength of each technology to every market, deepen relationships with existing customers and winning new ones, diversify and expand beyond traditional chemical and pharmaceutical markets and enter a broader range of high growth end markets. With this new structure, decisions are made once and globally. We respond more quickly with the same high standard delivery wherever customers operate. Our focus also remains on cost, whereby each vertical rationalizes its cost structure and global footprint to drive lasting efficiencies in even more competitive cost base.

8:13 Hence, we see this as a very positive change, and I look forward to driving our progress in the months and years ahead. I would like to touch upon our quarterly performance. We closed the quarter with a record order backlog of 2,250 stores, representing an increase of approximately 20% year on year, supported by a healthy order intake of over INR $100.07 crores during the quarter. It is important to view this backlog in the right context. Nearly 30% of the order intake in Q1 last year comprised of multiyear projects, whereas the current order book is largely made up of projects with execution cycles of ten to twelve months.

9:02 As a result, a substantial portion of both our operating backlog and the order secured this quarter is expected to be executed within FY 'twenty seven, providing strong revenue visibility and confidence in our execution outlook. Now let me take you through our division wise performance. CRT, Corrosion Resistant Technologies. Our CRT division reported revenues of $4.66 crores, representing a growth of 10% year on year. Order intake during the quarter stood at INR $50.02 crores, representing a growth of 23% year on year. CRT continues to maintain its leadership position as a pipeline equipment with the industry's largest installed base.

9:56 The business also benefits from a large aftermarket and service franchise, providing recurring revenues and healthy customer engagement. Demand from the core pharmaceutical and chemical industries remained stable during the quarter. Now for PPT, Performance Process Performance Technologies. The division reported revenue of INR $2.55 crores, growing 23% year on year. Order intake stood at INR $3.67 crores, growing 64 year on year. PPT platform across mixing, filtration and drying and sealing technologies. The division continues to benefit from expanding customer adoption across pharmaceuticals, food and beverage and other process industries, while growing capabilities continue to strengthen our market position.

10:52 HET, Heavy Engineering Technologies. The HET division reported revenue of INR 74 crores, which is flat year on year. Order intake during the quarter stood at INR 58 crores, which is increasing more than 700% year on year. AGT continued its position in manufacturing large critical process equipment catering to energy, petrochemical and industrial applications. We also remain well positioned to benefit from the increasing investments across defense, nuclear, fertilizer and other infrastructure led sectors over the medium term. Now PST, Process System Technologies. Our PST division reported revenue of INR 131 crores, registering a growth of 46% year on year.

11:45 Order intake during the quarter stood at INR 80 crores, whereas the order intake for Q1 FY 'twenty six was INR $3.63 crores, which was represented by one large defense order. The division focuses on engineered process systems and skids for high specification applications. It continues to benefit from opportunities across semiconductor manufacturing, defense and pharmaceutical sectors, where customers increasingly seek integrated process solutions. To sum up, GMM is entering a fundamentally different phase of its journey. The last few years were about building a global platform.

12:30 The next few years will be about extracting greater value from that platform. We believe that our new technology led organization, disciplined balance sheet approach and focus on earnings quality will position GMM Pfaudler for stronger and more sustainable value creation in the years ahead. Let me invite Alex, our Group CFO, to take you through our financial performance. Thank you, Greg. Good afternoon, everyone. As highlighted by Tare and Greg, this quarter marked an important milestone in our reporting journey. In line with our new organization structure, the business to our four global technology divisions.

13:16 This reporting framework better reflects how we manage the business internally and provide investors with a true transparency into the underlying performance of each technology platform. Coming to financial performance. During the quarter, the company recorded a total order intake of 1,007 crores, which is flat year on year. Consolidated revenue for the quarter stood at INR $9.25 crores, registering a growth of 16% on a year on year basis. EBITDA for the quarter stood at crores. On a year on year basis, EBITDA was lower by 7%, primarily reflecting continued pricing pressure and evolving business mix and investments towards strengthening our global organization structure.

14:12 However, in a quarter on quarter basis, EBITDA improved by 25%. Profit after tax for the quarter stood at crores, which more than doubled year on year. Our consolidated order backlog stood at INR2.9 crores, increasing 20% year on year and 4% quarter on quarter, providing healthy revenue visibility for the coming quarters. We have realized that while there is confidence in our long term strategy, many of you would like to get greater clarity on how the acquisitions made over the past three years after translating into shareholder value. Therefore, I would like to address some of these questions today.

15:03 On acquisitions, we look at our group structure today. There are multiple acquisitions done across different countries countries and naturally it is huge as the organization has become too complex. I would like to reassure everyone that these acquisitions were never undertaken simply to increase scale size of the company. Each acquisition was made with a clearly defined strategic objective, either to add new technology, expand into an adjacent process solution, strengthen our engineering capabilities or provide access to new industries and customers. Collectively, these acquisitions us from a predominantly glass line equipment company into a diversified global process technologies platform.

16:00 More importantly, the acquisitions phase is now largely behind us. Our focus has shifted to integrate these businesses. The organizational restructuring that we announced is the direct outcome of this transition. Instead of operating acquired businesses independently or through regional structures, we have reorganized ourselves into four global technology divisions. This allows every technology worldwide to operate under one leadership team, creating significantly greater accountability, technology focus and customer alignment. The objective is straightforward: one technology, one strategy, one global organization.

16:51 It's how we intend to unlock the full value of our acquisitions. Regarding integration and synergies, another important question to receive is whether the acquisitions are actually creating synergies. Immediately after acquiring the global health care business, our priority was business continuity. During that period, we intentionally allowed regional organization to continue operating independently while preserving customer relationships, leadership teams and operational stability. Now that integration has matured, we are entering the next phase. Our new organization enabled us to leverage common engineering expertise across regions, improved cross selling between technologies, aligned product development globally and optimized manufacturing resources.

17:49 This is very much the best to increasingly emerge over the coming years. Our focus is on integrating these technologies, customers and capabilities. Another question was with regard to our debt structure. And therefore, you have sought greater clarity on our balance sheet. The acquisition of the global Pfaudler business was transformational in nature and required leverage. However, our capital allocation philosophy has always remained disciplined. Over the last few years, we have consistently worked towards reducing leverage while continuing to invest selectively in high return businesses and strategic capabilities.

18:38 Importantly, many of our subsequent acquisitions have been relatively small, technology driven transactions rather than large transformational acquisitions. Positions have largely been funded through internal accruals and prudent financing structures while maintaining balance sheet discipline. Going forward, our priorities remain clear: continue strengthening the balance sheet, improve maintain disciplined capital allocation, pursue only high strategic opportunities that strengthen our technology We pleased sheet to and will a repay an amount of approximately EUR7 million of debt by the end of Q2 in this financial year.

19:48 With many of our large strategic acquisitions now behind us, our focus is to strengthen the balance sheet. Our improving cash generation and disciplined working capital management are expected to adequately support our operating requirements while enabling faster deleveraging. At the same time, we are also evaluating refinancing opportunities, stock cost and debt maturity profile. Overall, we believe we are moving in the right direction and expect to see a gradual but meaningful improvement in our leverage matrix over the coming quarters. Another important question we get is EBIT benefits translating or flowing down to the PAT level.

20:36 This is an area where we widely expect improvement. Following the acquisition of the global business, we inherited a large international organizational structure comprising multiple legal entities across several countries. While this structure provided global reach, it also resulted in additional financing costs, overlapping administrative structures and a more complex tax and corporate framework. As a result, the conversion from EBIT to P and T has not reflected the full operating strength of the business. Addressing this has become one of our key management priorities. We are already simplifying our global structure, rationalizing legal entities where appropriate, streamlining reporting clients and optimizing the corporate architecture.

21:30 These initiatives are expected to improve financial efficiency over time by improving our structure and enhancing EBIT to PLT conversion. This is not a 0.25 initiative. It is a multi quarter value creation program that will strengthen the quality of our earnings. Overall, while certain end markets continue to remain dynamic, our diversified technology portfolio, balanced order book and strong global presence positions us well to capture future growth opportunities. As our integration initiatives continue to progress, we remain focused on improving operational efficiency, strengthening the cash generation and enhancing the overall quality of earnings.

22:19 With that, I would like to hand over to Thank you. We will now begin with the question and answer session. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Sameer Thakul with Ambit Capital.

23:09 So my first question is, are there any signs of recovery in traditional end markets like chemical and pharma? And has the competitive intensity begun to ease over here? Also, if you can comment on regional commentary by end markets, that would be useful. Yeah. Hi. So, yes, I know traditional markets in India, I'll start with India, and maybe Greg can speak a little bit about the international business, but we do see a significant improvement in the pharma business here in India. So we are seeing a lot of action in pharma, in Hyderabad, GMM. So that's driving a lot of investments, and that's helping us build backlog in our local Indian graphite business. And we expect also that this will continue. So definitely compared to about twelve months ago, there is a positive shift in terms of the glass line business here in India and with the more inquiries, more opportunities, and faster kinds of conversion from opportunities to actual orders. Right? So q one was strong and q two also was strong from a last time perspective.

24:21 Talking now about... So this will impact our PRT business, obviously. As from a PPT perspective, which also cater to our traditional market where we have our businesses like filtration, mixing, membrane separation and healing, those are also linked to pharmaceutical here in India. So there we're seeing a lot of positive traction as well. So pharma is doing quite well. Chemicals, unfortunately, India has still remained flat. There are a few projects here and there, but nothing significant structurally has changed over the last few years. However, new year that volumes are back for most of our clients and customers. And obviously, that would maybe lead to more investment in the next few quarters, right. So from an India perspective, our traditional markets are definitely better off right now than they were about twelve months ago. Greg, over to you for the international market. Sure. Thanks, Tarek. So international, I think it's it's similar trends to what you've heard from Tarek, similar situation we see from the pharma sector internationally.

25:25 Do see a number of opportunities. It is improving there, and we see that both particularly when we look at Europe and in Americas. So again, as Todd said, that's our traditional glass line business, but also our PPT division where we see definitely improved opportunities in the pharmaceutical sector. I think chemical is the same as what you heard in India. Chemicals remains a challenge. We don't see a strong change in this quarter that we just finished. Particularly in Europe, it remains very challenging from the chemical sector. So I would say all in all, what you've heard from Target myself in terms of pharmaceutical, it's consistent globally as well as in the chemical sector.

26:20 Okay. That's helpful. I have one more question. I think there is some decline in margins for Indian business, the stand alone business. So any reason for that and how should we think about it going forward? Yeah. So looking at the India business and maybe I'll have Ankit also step in a little bit here. Here we have obviously a very large component of growth, which has come from our HEP business. As you know, our HEP business is an India related business. It came from oil and gas petrochemical, And now we have obviously broken into nuclear and we're getting into power sector as well. Right? So a lot of growth opportunities with a strong backlog and an even stronger opportunity pipeline, which we believe will help us obviously build backlog for the next few quarters and maybe even years. So that's a strong area of growth for us and, obviously, that comes with large projects. And, again, the strategy has been to, obviously, get into certain kind of industry, you know, create PDRs. We have recently been approved by e... EIL for duplex, duplex, and even air cool heat exchanger.

27:34 We have recently broken into power. Last year, we both have... We both think of the nuclear segment and obviously nuclear power of merchandise are all segments that we are going grow. On top of that, HEP also take us to the Middle East market, which is the oil and gas Middle East market, and we've seen some traction there as well that some of these geographies are reordering after obviously the recent kind of event there. So we've seen orders coming from Abu Dhabi and some other areas of The Middle East, right. So that business in the past business, but again, that business is also maybe slightly different in terms of the processes, margin profile, and how long it takes. Right? So you will see some time of, I would say, a change when the product mix in India changes between the three businesses.

28:20 However, having said that, I think the improvement program in terms of margins across all our businesses out of India is ongoing. You know, obviously, the idea is to bring it back to a stable level with the market improving pricing will also improve. So we see the better utilization, you know, with better revenue, we will see some of this getting absorbed. Right? So all in all, with the backlog that we have, the order book that we had in q one and also some of the order book that has come in Q2, we are quite confident that India will be on the strong part of growth. So I think that will continue. And I think, obviously, recovery of margins is expected and improving over the next few quarters. Yeah. Just in addition to what topic makes it, we are also investing in cost.

29:09 As as you would have heard, we have invested in the new organization. So we are investing in people, and that's why you see a dip in margin. But these are good investments happening for the users, you will see an upward trajectory going forward. Okay. Thank you. So we should expect sequential improvement, further improvement in margins going forward. That's right. Is that right? Yes. What we said the outlook and we kind of mentioned, we don't want to specify anything like one or right now in terms of what is the final expectation. But obviously, to previous year, we definitely expect improvement across all our businesses, and we are working hard to get down costs and improve margins. Okay. That's helpful. If I can squeeze in one more, just... Obviously, it's organized less structured. There's a very good state.

30:02 But if you can just explain what were the bottlenecks before this change? Any examples of that, that would be helpful. So I think we we will be taking both of them. I will speak maybe from the past. I think the regional structure prevented maybe businesses to work together and work closer together. People were incentivized after regional numbers and regional kind of targets today. The entire vertical has the same target. So every single person in that vertical, let's say, for GMT, if that person is sitting in The US, in Europe, or in India, they have the same target for profitability. Right? So it is everybody's best interest. Everybody's clear and aligned in terms of what their KPIs, you know, they are exactly the KPIs. Right?

30:47 So a common KPI, everybody's aligned. And if they they want to extract maximum value, they will then think of opportunities like, you know, explore our buying stuff from India or low cost country, you're putting together multiple different options in terms of our clients to win more business. Right? So the drive and the incentive program now aligns everybody within the decision. And that's, I think, is gonna be a big change. But geographically, they were all kind of independent entity and will work or kind of based on local geographic kinds of KPIs rather than global KPIs. And Greg? Yeah. Maybe to add to that, I think what what we see now in the new structure is, as as far as we have a a globally aligned team by technology division, which enables, was addressed in the beginning remarks, faster decision making, but also, as Tom said, aligned around KPIs and strategic priorities for the division. So as we move forward, as our customers are demanding, as we said in our opening remarks, they want us to be able to serve them anywhere around the world, and we're better able to do that now quicker and more efficiently in the new structure. So that... That's a difference from the the the organizational setup in the past, and we believe it's gonna help us significantly moving forward. And just one more point to this is that we have brought in also the right talent to run these verticals. So some have been internal, some have been external.

32:19 In the case of AGT, obviously, the strategy of a heavy engineering vertical is very different from a top line CRT vertical. Right? So this allows verticals to really focus on their own strategy, their own kind of operational excellence. Everybody is not... Did not be taken under the same brush. Right? So it gives verticals enough of opportunity to create and build their own strategy. Right? And I think that's very, very important. So I think that's an additional benefit of this organization change that we have done. Okay. Thank you very much. That was very helpful. That was all from my side. All the best. Thank you. Participants in the interest of time and fairness to others, please restrict yourselves to two questions.

33:06 For any more questions, you may rejoin the queue. The next question comes from the line of Praveen Kumar with Equitas Capital Advisors. Congratulations on a decent set of numbers and more importantly for taking first steps to improve the disclosure. Good on that part. I had a couple of questions. One was on the if you can give us some clarity on the margin profile and the ROCEs of these four divisions which are broken out into? And also associated with that, if you could give us a sense of which of these segments do you think are closer to steady state margins today and which are kind of away from that? And also if you can give us some sense of how do we track that the divisions which are away from that steady state aspirational margins, how do we keep a track of when they are closer to that, what is their aspiration margin on this? Thank you. That's my first question.

34:05 So I think on a margin perspective, let me obviously as a company, we obviously have always said like a 15% EBITDA margin for the company is something that we aspire to. That should be something in our business and our kind of area where we operate and the technology we have, that's something that we should have and then obviously we pick from there. Right? So currently, the businesses and the verticals that now we have created somewhat kind of have around that kind of margin profile. There's obviously different initiatives within those verticals to improve margins over time. But I would say that they will be around that range. Obviously, there are, you know, businesses which are more like systems business. It's a longer, higher gestation, more value added because we gave profit guarantee that could be a higher margin versus maybe just a stand alone equipment. Right? That's not always the case.

34:58 And, generally, I think as a margin profile, I think over time, we will be able to not probably build some more pieces. But for right now, I think it's important that they are around the same. And the idea over these few years is to grow margin, grow revenue. Some of them will obviously need investment because we need to add people. We need to add organizations because they are high growth verticals. So that is also coming. Right? So don't have specific time of of, you know, I can't differentiate them very drastically. And then maybe, Greg, Alex, you would like to update something on the verticals by margin. No. I think you've covered it, Tariq. I think it's... You know, the goal is for us. As as Tariq said, we have we have management teams specifically focused on each technology division that we have now. They have a part of their goal is to drive top line performance, but equally, if not more importantly, bottom line performance. So we have a number of initiatives to improve our financial performance for each of the divisions and, of course, for the company overall. So we will continue to drive that, and we have different opportunities in different divisions to improve performance, and we'll keep focusing on that.

36:16 I'm sorry. Sorry. I didn't finish. Yes. I'm sorry. I think we're just saying something. Go ahead. I could chat with people. That's what what was said. So we will improve the margins. We have, of course, some units which already are significantly higher margins. You would also see the announcement that we've made of the latest acquisitions. So we will work on this and of course, as I mentioned, we mentioned the 15% EBITDA margin that's the minimum target. Understood. My second question was, again, on the margin trajectory. You're talking about in the past, you have talked about that aspirationally, margin should exceed 15% or higher in the medium term. Right? So I just wanted to understand from... Standing from where we are today from from current levels, what kind of cadence of margin should... Margin improvement should we expect? I understand that this is not a company where we should be looking at a quarterly margin size, you know, proof of anything.

37:15 But how do... How should we... Or what time frame do you think we can get to those aspiration margins of 15% and beyond? And what kind of cadence can we expect in this? And what would be the likely triggers apart from mix change? So I think directionally, we are moving in the right direction. I think we have multiple different initiatives to improve revenue, to grow revenue, and we improve margins. Right? So let's leave it at that. There is definitely opportunities. We know these opportunities. We know that where we have high cost. We know where we don't think so well. So there are opportunities across the group across regions. Right? So there are multiple things ongoing. We're working on debt. We're working on restructuring. There's a lot of opportunity that we're working on. Right? So we are going the right direction. I think let's focus on then. Let's maybe build some kind of momentum with order intake in q two and then we meet again next quarter, maybe hopefully we'll have a much clearer picture in terms of where we're going to end up and what the future holds.

38:18 Maybe just to add one, we already have several units which achieve these margins or even higher margins. What we currently is suffering on is that we have one, two, three units, which are really underperforming and which dragging the margin down. So we are focusing on this, and we discussed that we mentioned it. We have measures in place. We will improve this unit, and you will directly see an uplift in EBITDA margin for the full group. Tarek, while I appreciate your response, the reason we're looking for... I was looking for more of a cadence of margins is because, see, as you yourself, you you and your team referred to, the investment in employees, etcetera, is already showing up in the numbers, right, because employee costs are up significantly, both standalone as well as consult. Right? So we we are already seeing the costs up up front.

39:11 So it would be useful to actually get a sense over what time frame are we even... I understand there are multiple triggers for this margin improvement, but it would be useful to get some sense that over what time frame should we expect that. Yeah. I I get what you're saying. I... You know, like I'm saying, there's a lot of initiatives that we're working on. The time frame, again, we are not somebody who's gonna wait around. We're a long period of time. We are actually a lot of the changes along with the global transformation. We have a stronger team today. We have now a confident CEO, a four CEO who are driving cost and strategy within those organizations, you know, and making tough calls where they need to make that call. Right? So that's happening. Alex and Ankit are working on financial kind of areas to improve stuff. Right? They're structuring, borrowing, etcetera, even in cash management. Right? So we are working across the group business. It's looking a little bit better again.

40:07 You know, let us kind of build some time of consistency. Let us give a few quarters of consistent results, and then we can sit down and talk about margins. And then I think you guys will also have a clear idea in terms of what we're trying to do. So let's put this out. The the the work is going in, and as Alex said, there is improvement possible, and we will improve, and that's on it. So I think that would give us the direction in terms of our margins over the next few quarters and years. Thank you. The next question comes from the line of Sagar Shah with Spark PWM.

40:55 Please go ahead. Yes. First of all, thank you for the opportunity, and thank you to management of GMM Pfaudler who actually first disclosed the segmental results actually as what Street was asking for. Now my first question, sir, was related to the follow-up on the previous participant's question. You highlighted that there was some uptick in the employee expenditure. You are realigning the entire sales team for different segments now actually that you have highlighted in this quarter. Now, apart from the sales teams, I wanted to know from Tarek as well as Greg actually that what exactly are we doing to strategize actually our sales team to strategize our operations even geographically, so that actually we acquire greater market share in the segments actually that we have actually highlighted in this particular presentation.

41:57 Apart from the sales teams, what exactly measures are we taking to actually acquire greater market share also in that that in intern will actually will be margin enhancer in the medium to long term margin? That is our first question. So I think before I hand over to Greg, I think a couple of things that I would just want to highlight. Obviously, Greg has been part of the company now for a year and he's run the global transformation program. So he's aware of the business. He has a very close understanding of the business. He's been involved in multiple different initiatives over the last twelve months. So he's perfectly placed to really kind of look into improvements across the globe, both on the revenue side and from the cost side. He also comes from a background where he has done restructuring in earlier days as part of other lifestyle and consulting.

42:51 So he has done this before, and he knows what he probably expected and what we need to do. Right? And lastly, I think it's also important that we understand that Greg is part of the family, so he has been in the game. Right? So the two of us together, obviously, as, you know, our family members control about shared shared holding of the company, and it is our best interest to obviously price along the long term initiative to create stakeholder value for all stakeholders, right, and shareholders. So with that, maybe, Greg, if you can maybe say a few words on the transformation and then, obviously, the area that we worked on and we'll be working on. Sure. So thanks, Doug. So I think to the point that that was mentioned, I mean, around the transformation, a part of the the clear role of of... From the sales side is to increase market share.

43:43 No doubt that's part of our transformation program. I do believe, and we believe that the new organizational structure, as was mentioned in the opening remarks, helps us to move quicker globally for opportunities that we see across the world. We have a greater ability now to share knowledge, to be able to work closer as global teams, to be able to seize opportunities that we see in the market to win new orders and, of course, ultimately, with market share. So part of that is required, obviously, changes in the way we work, changes in the way we go to market, which we've been implementing already, and we're seeing good progress there. We are seeing and I would point out that it is progress that we were making across within each division, but also because our customers will require, as an example, sometimes glass line equipment, filtration and drying, mixing equipment altogether for a certain order that they're looking at, a certain opportunity, we're able to work closer together also across divisions. So we have a we have a very strong focus on improving our market share, and we're we're focused on that. And and I believe that our new structure is going to help us with that. And just a side note on this is it just that it's quite interesting because when we created these four verticals, we were not expecting cross selling to be

45:13 one of the driving initiatives. Right? We were separating people out, and we actually find that our cross selling has actually improved when we now have created this in vertical. So sometimes you get benefits that you don't expect, and this is just one interesting case of how we got something that wasn't really planned. Right? So, again, it's a very different way of how we have done done things. This is how we've done things since hundred and forty years. Right? Pfaudler has been a very old company and obviously, Pfaudler and then GMM has been very regional. The way we've operated always been very regional. Right? So this is a foundational change, a structural change that hopefully over the next will give us a very strong foundation to create business growth and margin improvement over the next few years. Does that answer your question, sir? Okay.

46:02 Yeah. My second question was related to your data keeping question. So you highlighted the strategic measures actually that... So you will take as a... The operational side. So I know this was not a sequential map mapping was something like the sequential mapping journey that we are looking for. We it's a long term journey. But for fi twenty seven and then fi twenty eight. So at least that that is up to twelve to twenty four months. So based on the debt reduction program based on the strategic measures, what are the target EBITDA margins actually that the company is highlighting? And secondly, what is currently as on March 26, that debt that the company holds on its balance sheet?

46:53 It's the long term as well as the short term debt, it can consider it's around $8.35 crores in rupee terms. So what is the actually targeted debt levels that we are on to the end of this year as well as FY '28? So that is my second question related to data. That's it. Thanks, man. Maybe I'll take it. Starting with the debt, we will repay roughly 3,000,000 year ago this quarter. And we were working on a refinancing. Sorry. Didn't apologize. We sent it based in this quarter, and we're working on a refinancing alternative, and we're really... We can further down our debt.

47:38 And we don't want to comment on the debt figure as of the end of this financial year. But as you see, we are working on this, and we will further reduce over the coming quarters. Okay. So what is the date that we are on actually? And I and about the margins also my question was? Yeah. So I'm thinking about outlook on margins. I think we've kind of expressed ourselves also to maybe you want to give this how we're to look at margins and how we're going to talk about margin to speak. Yes. So from a margin perspective, the objective is to continue to grow margins. As Tarik mentioned earlier also, our objective is to deliver quarter on quarter, see how things are. We see positive shoots in different businesses.

48:30 And as we have already stated, 15% is something we need to go there. So quarter on quarter, we feel this how we are tracking against it. And, yeah, and and and all all numbers look good at this point of time to to hit those kind of numbers. Thank you. The next question comes from the line of with Alpha Accurate Advisors. Please go ahead. Yeah. Thanks for the opportunity, sir. So my question is on the order inflows for the CRT and PPT segment. You mentioned that you are seeing the green shoots in the domestic pharma sector, and that's why we have seen some order inflow growth for this quarter. So if you can share some thoughts on that whether that was one time, like the lumpy order? Or is it like the structural variable you are seeing in the domestic pharma, which can be seen for at least next three quarters also for CRT? And then for PPT, what led to such order inflow growth during this quarter? And is it sustainable or not during the next three quarters?

49:41 So I think maybe ask the question to you because you have a better understanding of pharma. But no, I mean, on a serious note, we haven't seen this kind of improvement for quite some time. Our glass and business has now gone through a really tough time over the last few years, I would say. And this time, the green shoots again, like we said, look positive. We see some in India, definitely, quite positive with this whole pharma play. CDMO and the big Hyderabad players are expanding. So API is looking good. We've also seen good pharma inflow of plasma business in The US. So The US, obviously, you know, The US, you know, story around mister Gong and the investment that was signed to bring in pharma jobs to The US.

50:32 Some of that is actually paying out quite nicely. So we have received some large orders from The US recently. So China has also come back with good orders in blast line and GRP, which we thought China had excess capacity, but I believe that some of the new investments is going to the improving order of organic growth again. So that's driving some growth and bringing back in glass line. Europe, structurally, still remains a bit slow. However, we have won some large glass line orders in Europe in the recent months as well. And the focus is also to push our service business, grow our service business. Maybe there you might have been a meaningful market share over the last few quarters and they could be doing it back services, drop time services again. Right? So CRT looking good globally, growth still looks a bit tough, but the other geographies are looking a lot more positive.

51:25 Greg, do want to add something to that? No, I think you covered it. I think going back to the question around pharma, we do see and as we answered earlier, we do see some positive signals in the pharma sector and we're seeing that in terms of the orders that we're winning, but also the opportunities that we see in front of us. Yes, one more point here, Hari, I mean, it's a very important fact point is ties. Right? So we are seeing significant that that investment. So we we have already supplied last year a very large order for peptide, you know, equipment, and we've also received two large orders from Hyperbar for complete systems around this around that price. Right? So that type is another area that we're seeing a lot of investment coming in and I think with the equipment, we are quite well positioned to do that that type offering as well.

52:14 Understood. And what about the people? This quarter, think we're missing significant order inflow growth. So what led to such a growth? Is it like just from the domestic market or there is some room of order? Sorry. What specific thing were you asking? What do you want? Sorry. I'm giving you that. Hello? Tal, please repeat your question. So my question is, for PPT, we have seen the significant order inflow growth during this quarter. So what led to such jump for first quarter? And then is it like the order inflow came from the domestic business only or there was some export order also which led to such a growth? No. It's also a combination of multiple things for businesses that have come across geographies.

53:08 You know, India last quarter was decent, was good. But, you know, I hope that India this quarter will do obviously a little bit better. Things are looking good. So order intake was good globally, and we expect order intake to continue also. The systems order as well. We had a very large order of close to a 30 odd units or a large system, so that was in there. So now the backlog really is kind of more robust. We have a lot more equipment in there, CRT, PPT, and EGT as well. Right?

54:07 And that's the good part. And if q two remains strong, which we expect it to be, then that gives us revenue visibility and then pretty much we get this year done and dusted. Right? So the focus, again, is to be aggressive. The way that we have been organized ourselves should help us serve our customers better, meet all our alignments in terms of all the people who work within those verticals that are right now to go after their business, good margin business and cut costs. So I think we're going in right direction if the market sustains, and I hope it does. We should be in a decent position. Again, like you said, also, sometimes it could be a one off, two off quarter kind of an investment. We hope it's scalable. Thank you. The next question comes from the line of Roshab with Praveen Ratinal Wealth. Please go ahead.

54:55 Yeah. Am I audible? Yes, sir. Yes. Thanks for the opportunity. And first of all, congratulations to the GMM Pfaudler team on not just improving the disclosures to the market, but also finally going towards the disciplined capital allocation. So big congratulations on that. I have three questions. The first one is on the order book. So you did allude to the fact that in the last year, 30% of the orders were large tenure orders. And you did say that in the current year, the order book, it is how much percentage of that of orders are executable within the next ten to twelve months?

55:42 That's my first question. The second question is on the borrowings. So we have mentioned the fact that we'll be repaying around 7,000,000 of debt. And we currently have around INR $8.35 crores of INR debt. So I assume it's closer to EUR 75,000,000, 76,000,000 if I convert it into euros. So you have said that you will be repaying that debt in the next twelve to eighteen months. But can you specify a number and a time line in which how much debt will be repaid? That is my second question. And my third question is on the tax rate. So going forward, what is the kind of steady state tax rate should we work with? Thank you.

56:31 Okay. Regarding the debt, correct, we will pay now EUR 7,000,000, and then we will restructure our debt position and further reduce it. And this will take an extension to the the time frame and twelve to eighteen months. But as said, we're continuously going down now in the future. Regarding the tax rate, I would work with the tax rate of around 30%, let's say, maybe slightly below in the long term. We still require some time to get this stabilized. It partly depends on our current debt profile and our organizational structure.

57:21 We... With this change in the box structure, but especially also in the debt structure, we will bring our tax rates down to this level which I just mentioned. Let's use around 30%, maybe slightly lower. And maybe to go back to the first sorry, go ahead. Just one follow-up to that. So you did mention that you'll be bringing down the debt. But can you at least specify a number that what is the kind of debt is that you will be comfortable with in the next twelve months or next eighteen months? That's part one. And 30% tax rate that you're talking about, when can we see that coming? So what should be the FY 'twenty seven and 'twenty eight tax rate number that you should be working with?

58:12 I will not mention our debt target figure out for end of this year. And, however, regarding the timing of the tax rate to bring it down, we indicated eighteen to twenty four months. And the the debt, the refinancing, and the reorganization has to be completed first, and then we will then... Can go down to this lower and reasonable tax rate. But as such, it takes us eighteen to twenty four months to really fully get it stabilized. So in eighteen to twenty four months, how much of debt will be repaid? Can you can you So please on the debt... Yeah. So on the debt, you know, we have... We we start with the 7,000,000. We are working on it. We are looking at different options. So give us some time again. The idea is to make it a much better structure, but we can't forget debt alone because we have to look at our global structure, which is now twenty four twenty five entity or something. We need to clean that up.

59:12 So when the debt is refinanced, we put into the right jurisdiction in the right structure. We don't want any fluctuation on currency and stuff. So if there are two or three things needs to be done, they're work out, but they're they're working on it. Hopefully, we can get some of this done before what we have kind of get to a speed as we're working on it. So just give us some time on this. When we meet again for q two, we should have more clarity. And then hopefully, year, we will this year around q two of... You know, sometime around that, we are hoping that we can have an investor day as well. So my day, you'll have all the details very clearly mentioned, and you can track that also, but we can need some time to get the exact kind of time frame and the amounts, you know, sorted out. So we're working on it and we'll come next.

59:59 Right, sir. Right, sir. Once again, congratulations. Just you missed out my part on the order book. So how much of the order book is executed between ten to twelve months? Yes. As I mentioned in my opening remarks, it's the large majority of that. So significantly of the roughly 1,000 crore order intake that we had, significant amount of that is executable in the next ten to twelve months. So as we mentioned as I mentioned earlier, if you look at Q1 in the prior year, 30% of that was multiyear projects, which would not all occur in the next ten to twelve months, where what we see in this recent quarter is very different. The next question comes from the line of Ravi Mehta with Oneop.

1:00:51 Yes. Hi. Thanks for this call. Just a couple of questions. One is on the employee, is there any one off severance cost in Q1? No. No. Okay. And the investment that you're speaking, is this going to further go up or this can be like a run rate basis or there are still some more senior level additions pending? You cover employee cost. Right? So the idea is to bring down employee cost over time. Obviously, there have been certain new hires as we move into the new structure, which are required. We need, you know, global category of HR, finance, IT, but we also have ideas to move a lot of that to India, the GEC model, GMM, stuff like that. So we can look at options there.

1:01:44 And then we also have opportunities to kind of put people in front of our clients. So I mean, I guess that some of these verticals need to grow. So we will invest in sales people, sales organizations as well. But as a concept, we are looking at noncritical activity being consolidated into real cost geographies, you know, things like engineering, drawings, things that don't require to be done. That can be something. And we already started with that. Right? We have a GEC center now. I'll give you a degree center that has about 12 people for one of our entities. That's another push. We have two with India coming up as low cost to everything where we really need to utilize these both entities to make sure that we have a much better cost structure.

1:02:33 Keep in mind, we also renew people in The UK the prior year. And last year, Germany, we had a reduction of workforce, factory workforce, which obviously will... You'll see some of that kind of thing through also in the next few quarters. So we can take that benefit as well. We will cost control all these measures in operational excellence that should play out as well. And with the higher volumes, hopefully, we'll have better absorption and, the utilization of our factories as well. Thank you. The next question comes from the line of Simran Kumari with Magnolia Financial Services. Please go ahead. Hi, sir. Good afternoon. My question is related to interest cost.

1:03:20 Like, what is the interest cost for FY '27 and FY twenty eight? And my second question is regarding the order intake. As we can see, this quarter, the order intake is broadly comparable to the corresponding period last year. So could you please elaborate on the expected order intake trajectory for the remainder of the system? Okay. I'll start with the interest cost. The interest cost we have on average 6% to 7%. Of course, it's especially the the debt that is in the international business, which is USD denominated or euro denominated. They are based on the softball base rate and the euro based rate, but it's also hedged. So for your modeling, I would assume 6% to 7%.

1:04:16 And the other question was regarding to order intake? Yes. So on the order intake, as I mentioned in my opening remarks, we yes, you're correct that we've had when you look at order intake this quarter versus the prior year same quarter, it's roughly the same. But as I mentioned, we see a very different profile of order intake this quarter, where we see that the large majority of those projects that we won in Q1 are... Have execution cycles of ten to twelve months. So as a result, you'll see that the the lion's share of that is orders where we can see strong revenue visibility over that period given those orders that we've won. So it's different from the prior year, as I mentioned, because 30% of that order intake was on orders that were for multiyear projects, and therefore, that revenue was not going to come necessarily in the next ten or twelve months.

1:05:18 Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Mr. Raveen Ganabar for the closing remarks. Thank you, Andre. Thank you, everyone, for joining us today. It was a pleasure interacting with all of you, and we look forward to many such interactions during the course of the year. Take care, and see you soon, everyone. Thank you, sir. Ladies and gentlemen, on behalf of GMM Pfaudler Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.