GMM Pfaudler Limited — Q1 FY27 earnings call

Ladies and gentlemen, good day and welcome to the Q1 FY27 earnings conference call for GMM Fodler 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. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now handle

the conference over to Mr. Raveen Kanabar from GMM Pfaudler Limited. Thank you and over to you, sir.

Thank you Harik, Good Afternoon Ladies.

and a very warm welcome to all of you into the Q1 FY27 earnings call of GMS Powder Limited. The earnings presentation was uploaded on the stock exchange yesterday and is also available on our website. Hope all of you had a chance to be

go through it.

Today we have with us our Managing Director, Mr. Parag Patel.

Okay, our group CEO with the

Dragon Castle and Group C.

CFO Mr. Alexander Kolb sir, our Deputy CFO Mr. Ankit Nayar, our company faculty Mr. Mishra Mehta. We will give you a brief overview of the performance of the company. After this we will get into the final head. Before we begin with the overview, a brief disclaimer. The presentation which was uploaded on the stock exchanges and and also on our website, including our call decisions that will happen now, contains or may have certain forward looking statements regarding our business prospects and profitability which are subject to several .

and answer their questions. The actual results would materially differ from those in such forward-looking statements. I will now hand over the call to Mr. Tarak Patel to provide you with a brief overview of the performance of the company. Over to you, Tarak.

Thank you, Raveen. 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 for GMM Fodler, we successfully transferred ourselves from being a leading Indian engineering company into one of the world's largest process equipment platforms through the acquisition of the global Fodler business and a series of complementary technology acquisitions.

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,

of 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.

In the last year, we have undertaken one of the most significant organizational transformations in our history. 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. 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. Most importantly, it creates a single global organization with common objectives rather than multiple regional organizations 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 models, the positions are much better.

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.

In line with this vision, we have further strengthened our leadership team by establishing clearly defined roles and responsibilities across our businesses. Mr. Gregory Gelhauz 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

It's leadership across our process technology businesses, expanding customer relationships to broader the portfolio and driving operational excellence across each division.

By capitalizing on growth opportunities more effectively with unified global offspring.

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 context.

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 Tariq. As Tariq 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 and markets. With this new structure,

Our 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 and even more competitive cost base. Hence, we see this as a very positive change and I look forward to deriving our progress in the months and years ahead.

to touch upon our quarterly performance. We closed the quarter with a record order backlog of 2200.

India representing an increase of approximately 20% year-on-year, supported by a healthy order intake of over 1007 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 multi-year projects, whereas the current order book is largely made up of projects with execution cycles of 10 to 12 months. As a result, a substantial portion of both our operating backlog and the order secured this quarter is ex-

It's to be executed within FY27, 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 466 crores, representing a growth of 10% year-on-year. Order intake during the quarter stood at 500.

₹202 crores, representing a growth of 23% year-on-year. CRT continues to maintain its leadership position as

equipment with the industry's largest installed base. 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 remains stable during the quarter.

Now for PPT, performance, process performance technologies, the division reported revenue of 255 crores growing 23% year-on-year. Order intake stood at 367 crores growing 64% year-on-year. PPT

Teal 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.

HET, heavy engineering technologies, the HET division reported revenue of 74 crores, which is flat year on year. Order intake during the quarter stood at 58 crores, which is increasing more than 700% year on year. HET in 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 131 crores, registering a growth of 46% year-on-year. Order intake during the quarter stood at 80 crores, whereas the order intake for Q1 FY26 was 363 crores, which was represented by one large defense order. The division focuses on engineered process systems and skids for high specification.

specification applications. It continues to benefit from opportunities across semiconductor and 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. The next few years will be about extracting greater value.

from that platform. We believe that our new technology led organization, discipline balance sheet approach and focus on earnings quality will position GMM Fowler for stronger and more sustainable value creation in the years ahead.

Invite Alex, our group CFO, to take you through our financial performance.

Thank you, Greg. Good afternoon, everyone. As highlighted by Tiger and Greg, this quarter marks an important milestone in our reporting journey.

In line with our new organization structure, putting the business through our four global technology divisions.

This reporting framework better reflects how we manage the business internally and provides investors with improved transparency into the underlying performance of each technology platform.

Coming to financial performance. During the quarter, the company recorded a total order intake of ₹1007 crores, which is flat year on year.

Consolidated revenue for the quarter stood at 925 crores, registering a growth of 16% on a year-on-year basis.

EBITDA for the quarter stood at 94 crores.

On a year-on-year basis, EBITDA was lower by 7%. Primarily reflecting continued pricing pressure, an evolving business mix, and investments towards strengthening our global organization structure. However, in a quarter-on-quarter basis, EBITDA improved by 25%.

Profit after tax for the quarter stood at 22 crores, which more than doubles year on year.

Our consolidated order backlog stood at 2.9 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 3 years after translating into shareholder value.

Therefore, I would like to address some of these questions today.

On acquisitions, we look at our group structure today. There are multiple acquisitions done across different countries, and naturally, it is huge as 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 are from a freely glass line equipment company into a diversified global process technologies platform.

More importantly, the acquisition 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 re-urbanized 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.

That'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 Paula business,

Our priority was business continuity.

During that period, we intentionally allowed regional organizations 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 enables us to leverage common engineering expertise across regions, improve cross planning between technologies, align product development globally and optimize manufacturing resources. This is where we

to increasingly emerge over the coming years.

Our focus is on integrating these technologies, customers, and capabilities.

Another question with regard to our debt structure, and therefore, you have sought greater clarity on our balance sheet.

The acquisition of the global Faulner 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.

Importantly, many of our subsequent acquisitions have been relatively small, technology driven transactions rather than large transformational acquisitions.

Physicians have largely been funded through internal accruals and prudence financing structures while maintaining balance sheet disciplines.

Going forward, our priorities remain clear. Continue strengthening the balance sheet.

In fruit.

Maintain distribution capital allocation.

Pursue only high strategic opportunities that strengthen our technology portfolio.

Growth and financial prudence will continue to go hand in hand.

As we mentioned in our previous earnings call, we intend to repay some debt at the group level. And will repay an amount of approximately 7 million euros of debt by the end of Q2 in this financial year.

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 delivery.

At the same time, we are also evaluating refinancing opportunities.

Proper cost and depth 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, is this benefits translating or flowing down to the PIT level?

This is an area where we where we really 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 PAT 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 lines, and optimizing the corporate architecture.

These initiatives are expected to improve financial efficiency over time by improving our structure and enhancing EBIT to PLC progression.

This is not a one quarter 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, audible, and strong global present positions are 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.

With that,

I would like to hand over to Ravi.

Type of questions. Thank you.

Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone.

If you wish to remove yourself from the question queue, you may press star and two.

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 Thakur with Ambit Capital. Please go ahead.

Hi, thanks. So my first question is, are there any signs of recovery in traditional end markets like chemical and pharma? And has competitive intensity begun to ease over here? Also, if you can comment on regional commentary by end markets, that would be useful. Thank you.

Yeah, hi. Um, so yes, in our 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, GDMO. Uh, so that's driving a lot of investments and that's helping us build backlogs in our local Indian Rafi business. And uh, we expect also that this will continue.

So definitely compared to about 12 months ago, there is a positive shift in terms of the glass line business here in India and the more inquiries, more opportunities and faster kind of conversion from opportunities to actual orders, right? So Q1 was strong and Q2 also looks strong from a glass line perspective. Talking now about, so this is the impact of CRT business obviously and from a PTC perspective which also caters to our traditional business.

the market where we have our businesses like filtration, mixing, membrane separation, and healing, those are also linked to pharmaceuticals here in India. So there we are seeing a lot of also 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, we we do hear that volumes are back for most of our client and customer.

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 12 months ago. Very overwhelming for the international market, sure.

Thanks, thanks Tard. So internationally, I think it it's a similar trend to what you've heard from Tard, similar situation we see from the pharmaceutical sector internationally. It's it we do see a number of opportunities that it is improving there and and we see that both particularly when we look at Europe and and in Americas. So again, as Tard said, that's our traditional glass line business, but also our PPT division where we we see

definitely improved.

Opportunities in the pharmaceutical sector. I think chemicals are the same as what you heard in India. Chemicals remain a challenge. Uh, we don't see a strong change in this quarter that we just finished. Uh, 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 pharmaceuticals is consistent globally as well as in the chemical sector.

okay, thank you. That's helpful. I have one more question as I think there is some decline in margins for Indian business, the standalone 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 HEC business. As you know our HEC business is an India led business. It caters to 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 there the strategy has been to obviously get into certain kind of industry, you know, create PDRs. We have recently been approved by EIL for duplex, duplex and even air cooled heat exchangers. We have recently broken into power, large

before we go to the nuclear segment and you know obviously nuclear power fertilizer all segments that we are going to grow. On top of that HET also caters to the Middle East market which is the oil and gas Middle East market and we've seen some traction there as well and some of these geography reordering after obviously the recent kind of event there. So we've seen all this and some other areas of the Middle East, right? So so that business is a fast growing business but again that business

business is also maybe slightly different in terms of the processes, margin profile and how long it takes, right? So, you will see some kind of, I would say, a change when the product in India changes between the three businesses. 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, so I think it will also improve. So we see the very

utilization, uh, you know, better revenue, we will see some of this getting absorbed, right? So all in all, uh, with the backlog that we have, the order books that we have in Q1 and also some of the order books that are coming Q2, we are quite confident that India will be on the strong path of growth. So I think that will continue and, uh, I think, uh, you know, obviously recovery of margins is expected and increasing over the next few quarters.

Yeah, just in addition to what target metric, we are also investing in cost. as as you would have heard, we have invested in the new organization. So we are investing in people and that's why see a dip in margin, but these are good invest good investments happening for the future, so you'll see an upper trajectory going forward.

Okay, thank you. So we should expect sequential improvement, further improvement in margins going forward. That's right.

That writing.

So I think, yeah, what we said the outlook and we kind of mentioned we don't want to specify anything right one or right now in terms of what is the final expectation but obviously compared to previous year we definitely expect improvement across all our businesses and we are working hard to bring down costs and into mergers.

Okay, thank you. that's helpful. If I can squeeze in one more just obviously this organizational structure is a very good step. but if you can just explain what were the bottlenecks before this stage, any examples of that, that would be helpful.

So I think we maybe we think both of them. I only speak maybe from the past. I think the regional structure prevented maybe uh businesses to work together and work closer together. Uh people were inspected 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 CRT, 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 bet.

best interest. Everybody's clear and aligned in terms of what their KPIs, you know, they are exactly the KPIs, right? So a common KPI, so everybody's aligned and if they want to extract maximum value, they will then think of opportunities like, you know, export our fine stuff from India, a low cost country, they're putting together multiple different options in terms of our clients to win more business, right? So the drive in the incentive program now aligns everybody within the decision and that I think

It's going to be a big change by geographically. They were all under independent entities and were more kind of based on local geographic kind of KPI as well.

than global KPIs. And then maybe to add to that, I think what we see now in the new structure is, as Tark said, we have a globally aligned team by Technology Vision, which enables, as was addressed in the beginning remarks, faster decision making, but also, as Tark said, aligned around KPIs and strategic priorities for the division. So as we move forward, as our customers are demanding,

I think 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 organizational setup in the past and we believe it's going to 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, in the case of HET, obviously in the strategy of a heavy engineering vertical, it's very different from a graph line CRT vertical, right? So this allows verticals to really focus on their own strategies, their own kind of operational excellence. Everybody is not, it will not be pitted under the same brush, right? So it gives verticals enough of a .

to create and build their own strategy, right? And I think that's very, very important. Uh, so I think that's an additional benefit of this organization change that we've 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. For any more questions, you may rejoin the queue.

The next question comes from the line of Praveen Kumar with Acquitaz Capital Advisors. Please go ahead.

Yeah, hi. Thanks for the opportunity and 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 roses of these four divisions which you've broken it down 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, you know, the the the divisions which are away from that steady state aspiration margins. How do we keep a track of when they are closer to that what is your aspiration margin on this. Thank you, that's my first question.

So I think on a margin perspective, let me obviously as a company, you know, we obviously have always said like a 15% if it's a margin for the company is something that we aspire to work with, right? That should be something in our business and our kind of area where we operate and the technologies we have, that's something that we should have and then obviously we build from there, right? So currently the businesses and the verticals that now we have created somewhat kind of have allowed 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 is a longer, higher gestation, lower value add because we gave profits guarantee. So we have higher margin versus maybe just a standalone equipment, right? That's not always the case. and generally I think as a margin profile, I think over time we will be able to more probably build some more key things.

because right now I think it's important that they are allowed to say 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 will also come in, right? So don't have specific time or you know, I can't differentiate them very drastically. And then maybe grab Alice News or something on the verticals by March.

Click.

Well, I think you covered it, Tark. I think it's, you know, the goal is for us, as Tark 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

We need to drive that and we have different opportunities in different divisions to improve performance and we'll keep focusing on that.

Yeah, I know that you are in the room.

Thank you

I'm sorry.

Sorry, I didn't finish. Sorry, I was just saying something. I could just repeat what I said. So, will it boost the margins?

We have of course some units which already have significantly higher margins. You could also see the announcement that we made of the latest acquisitions. So and we work on

And of course, as I mentioned, we mentioned the 15% EV target margin as the minimum target in growth risk.

Understood. Uh, my second question was again on the margin trajectory. Uh, you're talking about, uh, you know, in the past you have talked about that aspirationally margin should exceed 15% or higher in the medium term, right? So just wanted to understand from standing from where we are today 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 margins as, you know, proof of anything, 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 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 costs, we know where we don't move things 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 opportunities.

that we're working on, right? So, uh, we are going in the right direction. I think let's focus on then, let's maybe pin in some kind of momentum with order intake in Q2 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.

Maybe just to export. We already have several units which receive these margins or even higher margins. What we currently 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 it, we mentioned it. We have measured in place, we will improve this unit and you will directly see an uplift and a margin for the full group.

Uh, Tarik, 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 and your team referred to, the investment in employees, etcetera, it's already showing up in the numbers, right? Because employee costs are up significantly, both standalone as well as console, right? So, we we are already seeing the costs up upfront. 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

That over what time frame should we expect that?

Yeah, I I agree with what you're saying. You know, like I'm saying, there's a lot of initiatives that we're working on. Uh, design frame again, we are not somebody who's going to wait around for a long period of time. We are actioning on a lot of these changes along with the global transformation. We have a stronger team today. We have now accountable CEOs, four CEOs who are driving cost and strategy within those organizations, uh, you know, and making tough calls where they need to make tough calls, right? So that's happening. Uh, Alex and uh,

and working on financial kind of areas to improve like structuring etcetera eventually cash management, right? So we are working across the group business is looking a little bit better again. you know, let us kind of based on 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 to the the work is going on.

and as as Alex said, there is improvement possible and we will improve and that's on way. So I think that will give us a clear direction.

in terms of our margins over the next few half quarter of a year.

Thank you. A reminder to all participants, please restrict yourselves to two questions and for any more questions, you may rejoin the queue. The next question comes from the line of Sagar Shah with Spark PWM. Please go ahead.

Yeah, first of all thank you for the opportunity and thank you to the management of JMM Fodler who actually first and disclosed the segmental results actually as what entire strict 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 optic in the employee expenditure you were 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 Tarak 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. Apart from the

So, sales teams, what exactly measures are we taking to actually acquire greater market share also in that, that in turn will actually be a margin enhancer in the medium to long term actually. That is my 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, you know, 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 12 months. So he's perfectly placed to really kind of look into improvements across the globe, both from the revenue side and from the cost side.

So comes from a background where he has done restructuring in his earlier days as part of other master and consulting. So he has done this before and he knows what they 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 seen in the game, right? So the two of us together obviously as you know, family members control the shareholding of the company and it is the company that is running the company.

our best interest to see drive some of these long-term initiatives to create stakeholder value for all stakeholders, right? And shareholders. So, with that maybe if you can maybe say a few words on the transformation and then obviously the areas that we've worked on and will be working on.

and share it with others.

Sure, so thanks, Doug. So I I think, to the point that that was mentioned, I mean, around the transformation, part of the the clear goal of of from the sales side is to increase market share. No doubt that's part of our our transformation program. I do believe and and we believe that the 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.

Uh, we have a greater ability now to share knowledge, to be able to work closer as global teams, to be able to see these opportunities that we see in the market, to win new orders and of course ultimately win market share. So part of that is it's required obviously changes in the way we work, changes in the way we go to market, which we've been implementing already. Uh, 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 all together for for a certain order that they look at a certain opportunity. We're able to work closer to get closer together also across divisions. So, we have a we have a very strong focus on including our market share and we're we're

Focused on that and and I believe that our infrastructure is going to help us with that.

And just to say more on this, which is just, it's quite interesting because when we created these four verticals, we were not expecting cross-selling to be 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 for, right? So again, it's a very different way of how we have done things. This is how we have done things.

We've done things in 140 years, right? Fodder has been a very old company and obviously Fodder and then GM has been very regional. The way we've operated has 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.

That's a concept. Okay. Okay.

Okay, okay. Yeah, my second.

One question was related to your data keeping question. So you highlighted the strategic measures actually that so you will take as on the operational side. So I know this was not a sequential map mapping something like sequential mapping journey that we are looking for. It's a long-term journey. But for FY27 and then FY28, so at least that that is up to 12 to

24 months. So, based on the 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 the currently as on March 26 that the debt that the company holds on its balance sheet. It's the long-term as well as the short-term debt considered around 835 crores in rupee terms. So, what is the actually targeted debt levels that we have?

I mean till the end of this year as well as FY28. So that is my second question related to data key question. That's it.

Thanks and maybe I take it down into debt. We will, um, we pay roughly 3 million year rule this quarter. And we will working on the refinancing center basis this quarter. Um, and we working on the refinancing and settleship and we further down our debt. And if you don't want to comment on that,

I think that is of the end of this financial year. But as you see, we are working on this and we will further review it over the coming quarters.

Okay, so what is the debt that we are eyeing actually in a

More than margins also my question is.

World.

Yeah, so I'm looking at outlook on margins. I think we kind of expressed ourselves also to maybe you want to give just how we're going to look at margins and how we are going to talk about margin to speed.

Yeah, so from a margins perspective, the objective is to continue to grow margins. As Tariq mentioned earlier also, our objective is to deliver quarter on quarter, see how things are. We see positive shoots in different businesses. And as our as we have already stated 50% is something we need to go there. So quarter on quarter we've seen this how we are tracking against it and yeah, and and and all all the best.

need was look good as is on the flight to to hit those kind of numbers.

Thank you. The next question comes from the line of Dhawan Shah 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, you know, the green shoots in the domestic pharma sector and that's why, you know, we have seen some order inflows for this quarter. So if you can share, you know, some thoughts on that, whether that was, you know, one time like the lumpy order or is it like the structural revival 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?

So I should really 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. Last time, our last time business has now gone through a really tough time over the last 2 years, I would say. And this time the green shoots again, like we said, look positive. We see some in India definitely are quite positive with this whole Pharma play, CDMO and the team.

Hyderabad is clear are expanding so API is looking good. We've also seen good pharma inflow of graph and business in the US. So the US obviously you know the US story around Mr. Trump and the investment that was signed to bring in pharma jobs to the US. Some of that is actually playing out quite nicely. So we have received some large orders from the US recently. China has also come back with good orders in graph line.

and GRT which we thought China had excess capacity, but I believe that some of the investments is going closer to the Mongolian border for chemicals again. So that's driving some growth and building back some glass line. Europe structurally still remains a bit slow. However, we have won some large glass pan oils in Europe in the recent months as well. And the focus is also to push our service business, grow our service business. Maybe there we might have been and needing lots of market share really.

last few quarters and the economic period and impact services last time services again, right? So CRT looking good globally, Europe still looks a bit tough, but CRT geography are looking a lot more positive. Greg, do you want to add something to that?

Well, 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 some positive signals in the Pharma sector and and we're seeing that in terms of the orders that we're winning, but also the opportunities that we see in Pharma.

Yeah, one more point here, sorry, I missed it. It's a very important point is test dries, right? So we have seen significant test dry investments. So we we have already supplied last year a very large order for test dry, you know, equipment and we've also received two large orders from Hyderabad for complete systems around this around test dry, right? So test dry is another area that we are seeing a lot of investment coming in and I think good equipment. We are quite well positioned to grow test dry already as well.

Understood. And what about the people? This quarter I think we're seeing 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?

So you have your first part is what's the

So the big thing that you ask is what you want. Sorry, I have a little bit of a slip there.

Hello

Hello Hello

Please repeat your question.

So my question is, you know, for PPT we have seen, you know, the significant order inflow growth during this quarter. So what led to, you know, 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?

sort of combination of multiple things, the businesses that have come across geography. 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. Brazil also has done quite well. Our mixing business has done well with large orders. So again, that equipment and large systems, right? So when you compare, I think when you look at us, you look at

two or three metrics. So first thing you should look at on April 1st, previous year versus this year, what are the backlogs and what's right. So looking back to us already 30% higher, right? If you consider last year, we had in that backlog a very large the systems order as well. We had a very large order of close to 30 odd million for 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.

and as well, right? and that's the good part and if Q2 remains strong, which we expect it to be, then that gives us revenue visibility and then pretty much we get this year done and done with it, right? So the focus again is to be aggressive, the way that we have reorganized ourselves should help us serve our customers better, make all our alignments in terms of all the people who are pretty much vertical aligned now to go after in the business, good margin business and cut costs. so

I think we're going in the 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 sustains.

Thank you. The next question comes from the line of Rishabh with Praveen Ratinal Wealth. Please go ahead.

No, yeah, am I audible?

Yes, sure.

Yeah, thanks for the opportunity and first of all congratulations to the GMM formula team on not just improving the disclosures to the market but also finally going towards the discipline 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.

orders. And you did say that, um, in the current year, the order book, it is, uh, how much percentage of that of orders are, um, executable within the next 10 to 12 months? That's my first question. Uh, the second question is on the borrowings. So we have mentioned the fact that we'll be repaying around 7 million euros of debt, and we currently have around 835 crores of INR debt. So,

I assume it's closer to 75, 76 million euros if I convert it into euros. So you have said that you will be repaying that debt in the next 12 to 18 months. But can you specify a number and a timeline 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. Thank you.

Okay. regarding the that correction we we pay now seven million euros. and then we will restructure our debt position and further reduce it. And this will take a the time frame and turn to 18 months. but as said will continuously going down now in the future. regarding the tax rate.

I would work with a tax rate of around 30%, let's say maybe strike it 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. Um, we with this change, um, in the org 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.

belongs 30%, maybe slightly lower.

And maybe to go back to the first circular.

to go back to the show.

So just just one 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'll be comfortable with in the next 12 months or next 18 months? That's part one and 30% tax rate that you're talking about, when can we see that coming? So what what should be the FY27 and 28 tax rate number that you should be working with?

I I will not mention now a debt target figure for end of this year. However, regarding the timing of the tax rate to bring it down, we indicated 18 to 24 months. The the debt, the refinancing and the reorganization has to be completed first. And then we will can go down to this lower and reasonable tax rate. But as said, it takes us 18 to 24 months.

24 months to really get it stabilized.

So in 18 to 24 months, how much of debt will be repaid? Can you at least tell me?

So these are all the things we have to look at the debt. You know, we are we start with the 7 million. We are working on it. Uh, we are looking at different options. So give us some time in the end. The idea is to make it a much better structure, but we can't look at debt alone because we have to look at our global structure, which is now 24, 25 entities or something. We need to clean that up. So when the debt is refinanced, we put it in the right jurisdiction, in the right structure. We don't want any fluctuation of

But two or three things need to be done. They're working on it. Hopefully, we can get some of this done before what we have time to test to speed and we're working on it. So just give us some time on this. When we meet again for Q2, we should have the priority and then hopefully this year, either this year around Q2 or sometime around that, we are hoping that we can have an investor day as well. So by then you'll have all the details very clearly mentioned and you can track that also, but we still need some time to get to the end.

the exact kind of time frames and the amounts, you know, sorted out. So we're working on it and we'll come back to you.

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 executable between 10 to 12 months?

Yeah, as I mentioned in my opening remarks, it's it's the large majority of that. So significantly of the of the roughly 10,000 crore order intake that we had, significant amount of that is executable in the next 10 to 12 months. So as we mentioned, as I mentioned earlier, if you look at Q1 in the prior year, 30% of that was multi-year projects which would not all occur in the next 10 to 12 months where what what what what happened is that the the the the the the the the the the the the the the the the the the the the the the the the

we see in this recent quarter is very different.

Thank you. The next question comes from the line of Ravi Mehta with one up. Please go ahead.

Yeah, hi, thanks for this call. Uh, just a couple of questions. Uh, 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 talk about employee cost, right? So the idea is to bring down employee costs over time. Obviously, there have been certain new hires as we move into the new structure which are required. We need, you know, global kind of HR, finance, IT, but we also have ideas to move a lot of that to India, the GST model, GX, stuff like that. So we can look at options there. And then we also have opportunities to kind of put people in.

in front of our clients. So I think I get 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 non-critical activities 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've already started with that, right? We have a GC center now, a government engineering center that has

about 12 people or a lot of entities that's another push. we have told that India coming up with low cost liabilities where we really need to utilize these both entities to make sure that we have a much better cost structure. keep in mind we also reduce people in the UK the prior year and last year Germany we had reduction of workforce factory workforce which obviously will you'll see some of that kind of play through also in the next few quarters so we see there is that benefit as well.

Uh, we need cost control, uh, the measures in operation and excellence that should play out as well. And with a higher volume, hopefully we'll have better absorption and, uh, you know, better utilization of our factories as well.

Thank you. The next question comes from the line of Simran Kumari with Narnolia Financial Services. Please go ahead.

Hi sir, good afternoon. My question is related to interest cost, like what will be the interest cost for FY27 and FY28. And my second question is regarding the order intake. As we can see this quarter, the order intake is broadly comparable to the first 14 period last week. So could you please elaborate on the expected order intake trajectory for the remainder of the session. Thank you.

Okay, I'll start with the interest cost. So the interest cost we have on average is 6 to 7%.

Um, of course, it's especially the debt that is in the international business, which is USD denominated or Euro denominated, they are based on the soft power base rate and the Euro base rate, but it's also hedged. So for your modeling, I would assume 6 to 7%.

And the other question would be regarding the order of intake.

Yeah.

Yes, on the order intake, as I mentioned in my opening remarks, you know, we we yes, you're you're correct that we've had uh 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 uh we see that uh the large majority of those projects that we wanted to run are have execution cycles of 10, 12 months. So,

As a result, you'll see that the large 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 multi-year projects and therefore that revenue was not going to come necessarily in the next 10 or 12 months.

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 Kanabar for the closing remarks.

Thank you everyone. 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 Fodler Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.