Thanks, Rutuja. Good evening and welcome, everyone, for Gujarat Fluorochemicals Limited Q4 FY '26 and FY '26 conference call.

We thank the management to provide us the opportunity to host the call. We have the management represented by Dr.

Bir Kapoor, CEO and Deputy Managing Director, along with the senior members of the management team. Now, I would like to hand over the call to Dr.

Bir Kapoor, sir, for his opening remarks. Over to you, sir.

Thank you.

Thank you, Rohit. Good afternoon, everyone.

A very warm welcome to all of you for GFL's Quarter 4 FY '26 earnings call. For this call, I have with my with me my colleagues: Mr.

Akhil Jindal, who is Group CFO; Mr. Manoj Agrawal, who is CFO of GFL; Mr.

Kapil Malhotra, Business Head of Fluoropolymers; and Mr. Rajiv Rao, who is the Business Head of Battery Materials.

The company announced its Quarter 4 FY '26 and full-year results at its board meeting held today. The results, along with earnings presentation, are already available on the stock exchange and on our website.

I'll briefly highlight the key financials and then give you an update on business operations and outlook. FY '26 was marked by a highly volatile global operating environment.

The first half of the year was impacted by uncertainty surrounding US tariff policies and evolving global trade dynamics, while the latter part witnessed heightened geopolitical tensions amidst the war in Middle East, dampening the macros and the business environment, which continued to disrupt global trade flows, impact logistics and supply chains, and contribute to elevated volatility across commodities and currency markets. Sharp movement in energy prices have also resulted in higher input and logistic costs across businesses.

While we are seeing some signs of stabilization, the condition continued to be volatile. Despite these headwinds, the company remained focused on disciplined execution, operational excellence, supply chain optimization, and stringent cost management across businesses, enabling us to navigate the evolving environment with agility and resilience.

Against this backdrop, our chemicals business delivered a commendable performance during Quarter 4 with revenue growing 11% year on year to ₹1,358 crore, EBITDA increasing 13% year on year to ₹353 crore, and PAT rising 5% year on year to ₹169 crore as compared to Quarter 4 FY '25. The performance was led by growth in fluoropolymers segment and the commencement of R-32 production in March 2026, which marks an important milestone in our fluorochemicals growth journey.

Continuing on the growth journey, GFL has earmarked ₹3,150 crores of capex for FY '27, of which ₹2,300 is for GFCL EV and ₹850 crore for GFL. Of ₹850 crore capex, approximately ₹150 crore will be spent on expanding our refrigerant gas and related infrastructure capacities.

₹222 crores will be spent on new high-purity electronic specialty chemicals for semiconductor sector. Another ₹250 crore will be spent on adding new fluoropolymers capacities, and the remaining ₹230 crores will be spent on increasing capacities for backward integration, including the regular annual maintenance capex.

The EV capex of ₹2,300 crore will be spent in increasing capacities across existing products in addition to the capex for natural graphite active material natural graphite anode active material, I'm sorry. This capex is part of the overall capex of ₹6,000 crore that we have earmarked for GFCL EV.

The fluoropolymer segment delivered a strong performance with revenues growing 19% year on year and 14% quarter on quarter to ₹848 crore in Quarter 4 FY '26. The growth was primarily driven by value-added products and higher volumes across key product categories.

Our focus on high-value specialty grades, deeper customer engagement, and expanding global reach continued to support growth momentum during the quarter. Looking ahead, we remain constructive on the long-term outlook for fluoropolymers supported by increasing penetration across structurally growing sectors such as semiconductors, EVs, battery energy storage systems, and clean energy applications.

In addition, global energy transition themes including hydrogen, fuel cells, electrolyzers, and solar are emerging as important long-term demand drivers for fluoropolymers. Given the increasing complexities and purity requirement in these applications, we believe specialty fluoropolymers will continue to witness strong demand over the medium to long term.

The earlier capex in this segment should achieve its optimum utilization level in the current financial year. We will be incurring further capex starting this year to continue on the growth journey in this segment.

In the fluorochemicals segment, production and sales of R-32 commenced from March 2026, strengthening our refrigerant portfolio. Despite weakness in the Middle East market and an overall challenging global environment, segment delivered a stable performance.

We will be incurring ₹150 crore of capex on increasing capacities of refrigerant gases in the current financial year. Increased production of R-32 will provide major growth in this segment in the subsequent quarters.

Demand for refrigerant is expected to remain healthy supported by increasing penetration of residential air conditioning, commercial refrigeration, cold chain infrastructure, and surge in demand of cooling infrastructure for AI data centers across the globe. Within bulk chemicals, the demand outlook for caustic soda is expected to remain stable in FY '27, while pricing is likely to remain range-bound due to domestic capacity additions and balanced supply-demand dynamics.

Similarly, the performance in chloromethane business is expected to remain range-bound in the near term amid moderate demand conditions and competitive market dynamics. As we look at our battery materials business, we believe the segment is now at an important inflection point.

The global energy transition continued to accelerate, and the demand environment for advanced battery materials remains highly encouraging. The battery energy storage system opportunity in particular has strengthened significantly over the last few quarters.

Increasing investment in AI and machine learning infrastructure coupled with rising data center capacities are driving the power requirements and creating structural demand for energy storage solutions globally. Against this backdrop, we are pleased to share that all the initial capacities planned under Phase 1 have now been commissioned and contracted for.

We have secured marquee anchor customers across all our battery material products, which provide confidence on utilization ramp-up and commercial scale-up over the coming quarters. The LiPF6 salt has now received approval from most of the major global electrolyte players, and commercial sales are scaling up in line with our plans.

We have orders in place for FY '27 and beyond. Accordingly, production will be ramped up quarter on quarter.

In cathode active materials, samples from our plant have received initial approval, and final qualification is expected by the end of this year end of the third quarter, I'm sorry. Thereafter, commercial supply will commence, for which we have already offtake agreement for the entire capacity.

As part of our next phase of growth, we are also setting up natural graphite anode active material facility. With this addition, we will be able to address nearly 70% of the value of an LFP battery cell, positioning us as one of the most integrated battery materials platforms globally.

To support this growth roadmap, we have planned a capex of approximately ₹2,300 crores for FY '27 across the battery materials portfolio, largely focused on growth capex including the anode active material project. We remain committed to our previously outlined guidelines of ₹6,000 crore cumulative capex by FY '28 across the battery materials portfolio with targeted asset turns of nearly 2x and EBITDA margins of over 25% plus.

The full earnings potential of these investments is expected to be realized by FY '29 as the facilities progressively ramp up and achieve optimum utilization levels. While the macroeconomic environment remains challenging, the broader business landscape is gradually showing signs of improvement.

We remain focused on strong execution, prudent cost management, and disciplined scaling of our emerging growth platforms. We remain confident in our ability to deliver sustained growth and create long-term value for all our stakeholders.

Thank you very much, and now I open the floor for questions.

Yeah. Hi, sir.

Thanks for the opportunity, and congratulations on decent set of numbers. First question on the capex announcement, both on the battery side as well as on the standalone side.

The fluoropolymer expansion, will this be on PTFE side or the new fluoropolymers? How do you see that?

Just commensurate to that, the fluoropolymers growth for the full year that we are seeing around 15-odd percent, how will you break this up between PTFE and new fluoropolymers?

The investment will be on new fluoropolymers. Far, we have not been giving any breakup of growth of respective fluoropolymers.

However, all I can say at this point, Ankur, is that the capacities that we had set up few years back are almost reaching its optimum capacity utilization. Now is the time for us to add capexes in new fluoropolymers segment right now.

Sure, sir. On the ref gas side, ₹150-odd crores expansion there, this is largely for the 20,000-ton capacity that you're looking at?

Or are there any further thoughts to expand that capacity further with respect to the quota that we have?

No, it's mostly as of now we have announced that we'll be going up to 20,000 ton in R-32, it's related to that as of now.

Okay. By when are we expecting this 20k ton to be commissioned and production starting there?

The production has already started, as I had said last time that we have achieved over 10,000-ton capacity at the moment. Over a period of time, I think it will be ramped up to 20,000 tons.

Sure, sir. Just lastly on the battery chemical bit, good to see the capex seeing a ramp-up there.

When we are saying from a product approvals perspective, large part of things are already there. These are largely for the salt approval or even the other products, the value chain, etc.?

How is the progress there? On the technology side, any tie-up or it is largely homegrown for us there?

Ankur, we started with salt and electrolyte in the beginning as we had indicated. Initially, obviously, that our initial capacity were in the salt, our capacity commissioning was in that area.

Our approvals are all in the salt at this stage. The second we added was cathode active material.

That plant was commissioned recently, and we have prepared the sample, and our initial samples have already been qualified. Now it will go through the full qualification and which we expect to get it by the end of this year, which is the third quarter of this financial year.

Then our supply will start after that, after we get the full qualification. In LiPF6, we have achieved the full qualification from number of players, and the supply is being ramped up.

LFP, at the early stage, plant is already commissioned, as I said, and samples are made. We have optimized the product as per the customer need.

Once the product is fully qualified, the supply will start, and this entire plant is fully contracted.

Sure, Mr. Kapoor.

That's helpful. Thank you, and I'll get back into the queue.

Thanks, Ankur. Thank you.

Thanks. Thanks, Bir sir.

I have a couple of questions. First on the battery side, when we say that we are fully booked for the existing plant, are we talking about LiPF6?

How much revenue potential when we say? Because for us, we don't know the capacity, we don't know the capex you have put.

How to think about FY '27, FY '28 revenue? When you say we have fully sold capacity, is it fair to assume that in FY '27 that entire capacity will be sold to the customer?

Okay. What we have is that whatever capacity that we have in place now is contracted.

Okay? This is true for LiPF6 as well as for LFP, which has been recently commissioned.

Now, coming back to your question, Sanjesh, regarding revenue potential and I think we had guided earlier that once we put in a capex, there's a certain gestation period in terms of plant getting stabilized, getting the right quality, and then qualification. Subsequently, the revenues stream starts coming up.

Product mix average, I had indicated two times the asset turnover. I would follow the similar approach because it would be difficult for me to give the exact number.

If you look at the way our investments are happening and the capexes are being built in, over a period of time after certain gestation period, you would start seeing a two times revenue coming in.

Will FY '27 be again a qualification year or we intend to supply a material quantity in this year?

FY '27 will be a material quantity for salt, which I have already indicated very clearly, okay? Because our initial investments was all in salt.

See, let me tell you initially, I think this I had explained in several calls earlier that our initial phase of investment is building up the capacity, which is the smallest commercial scale capacity to achieve the quality level and get the approvals. Then subsequently, we go through the ramp phase, okay?

Initial capacities in the salt has already been built. We are ramping-up phase right now continuously.

The salts, we already have a qualification. Salt, you will see a consistent growth in supply and the revenue coming in.

LFP, this will happen a little later, as I said that it'll probably happen after the third quarter of this year.

No, again, because we have already put 1/3 of the money what we have thought about, which is almost 2,000 crores has already gone into the battery material, and we are still left with 4,000. Even if I just say thumb rule of 2x, this itself should potentially give us a 4,000, probably we have utilities and all, probably giving some discount to that, a 3,000 crore revenue potential itself comes from the investment already done.

There's a gestation period. Again, I must say that this is a sort of a relatively long-term play, Sanjesh.

It's not quarter-on-quarter kind of business. There is a gestation period for each plant because there's a long qualification period, almost could be 9 months to a year, okay?

Once the plants are commissioned, first the quality and then the qualification, and then the revenue starts taking in. The number that you're talking about will come eventually, yes,

but then when

the capacity utilization is complete.

Got it. Got it.

On this anode, we never heard about this. Now suddenly why anode?

What's the tech? I don't know, because all across we talked about LiPF6, LFP and additives and binders.

Now anode was a twist.

Not a twist. We have been adding product in our battery materials portfolio.

This was kind of one of the last bit because battery has typically three major components: cathode, anode, and electrolyte. We are present in cathode, electrolyte we are present, salt, binders, and now anode.

This we are talking about a natural graphite anode, okay? There are different kinds of anode, synthetic as well as natural.

I'm talking about natural right now.

Okay?

There's, of course, certain synergy with our capability in natural graphite anode. Now

what capability? Can you help us understand that?

I'll hold on to that for now, but there are definitely synergies with our existing businesses. Got it.

Got it. One related question on battery before I go to the core business.

In this quarter, we saw a sharp jump in the losses, because the revenues are largely same as last quarter. If I look at the EBITDA loss, it appears to be a significantly large.

Now why such a large cost addition in this quarter? See,

as we are capitalizing our assets, once we reach the point where the assets are qualified, all the costs start coming up right away, Sanjesh,

and

as the volumes are being ramped up. This will eventually ease off, okay?

It's a short-term thing because kind of a start-up business. Because

your depreciation number on the EV segment has really not gone up, it's just...

No, because as we capitalize, the depreciation number starts coming in. As the plants and the product gets qualified and we commercialize it, these numbers get up.

Again, I'll request Manoj to answer. Manoj is here with me.

Manoj?

Hi, Sanjesh. You are specifically speaking about the segment of EV business?

Yes, he's talking about the -58. Okay.

Essentially, we have capitalized the LiPF6 plant on 5th of January this quarter, okay? Our operations have started.

Before the operations, you are eligible for capitalization of all pre-operative expenses and trial production losses, everything. Once you start the operations, the accounting standards doesn't allow you to capitalize the expenses.

All the expenses flows through P&L irrespective whether your sales ramp-up has happened or not or your capitalization has happened or not. This has resulted in this.

Earlier also, if you have seen, some of the expenses which were always charged to P&L, which were around ₹20 crore or so, but this has gone up from ₹20 crores to ₹45 crores roughly. Out of that, one we have started utilizing the buyers credit in the foreign currency, and that was unexpectedly one-time loss that will not recur in future

because

we have no MTM and we have now covered it 100%. In GFL, we don't have to cover anything because we have got a natural hedge there.

Here, because sales are ramping up, this were naked as on the balance sheet date, and unfortunately, that movement of dollar and INR was extreme due to Iran and US war, okay?

Got it. Got it.

Very clear. Thanks.

Thanks for...

Thank you.

Thanks, Sanjesh. Thank you.

No, no. One on core business.

Please.

One on the core business. Thank you for the answer.

One on the core business,

prices going up in the fluoropolymer by one of the large competition. Have we taken the similar price increases?

That's number one. Number two, on the volume and demand itself, generally what happens in an inflationary environment, destocking happens faster, and it also kicks in restocking, which we were struggling because BCP quantities of 3M and Solvay was still there in the system.

I hope this entire phenomena should help you to get back the demand and approvals. Also in that scenario, how should we see FY '27?

Sure. First, let me answer one quickly, and then I'll hand it over to Kapil for detailed answer.

There has been a price increase. We have also taken a price increase, Sanjesh, okay?

Because if you look at it that in spite of increasing raw material and the logistic prices, we have been able to maintain our EBITDA margins and continue to show growth in our business. That's, of course, has happened with us also.

For FY '27 outlook, I'll let Kapil answer. Kapil, please.

Hi, Sanjesh.

Hi, sir.

Good evening to you.

Yeah.

As Dr. Kapoor has mentioned, we are also seeing the demand growth in this year mentioned by the sectors which have been semiconductor and a couple of other growth sectors plus also we have been mentioning in the past calls also that we are totally focusing on the value-added applications and value-added customers.

For this year, we expect to see a growth of around 15% to 20% as compared to the last year in our fluoropolymer products which we're going ahead, and that is why we are also entailing a capex also because we're seeing that whatever capexes were made last couple of years, we're almost at the complete utilization cycle of those products in this financial year. We are seeing a growth outlook for this year as well as for the next couple of years also, growth coming from the sectors which we are mentioning.

So 15% to 20% when we say, it's volume growth, right? I think

pricing itself has gone up by 15%.

Right. Obviously, that effects also start coming in.

You will see in the results when they are coming out. That also starts coming out whatever.

There are also been the cost push also from the back end also, so that also gets balanced out also. We are seeing the growth in the prices as well as in the growth in the volumes also.

Got it. One last on the ref gas on R...

Thanks for this opportunity. Sir, my first question is on the fluoropolymer business, generally chemicals business excluding EV.

In the past, we said our steady-state targets for the existing assets and capacity at a much higher level, but now we are saying that we have not even reached 80% of that level, but still we are seeing that we are fully utilized and we would like to add capex. How should we look at this?

Was it any expectation of ours didn't happen because we are not able to ramp up or what's happening around in this fluoropolymers and new fluoropolymer business?

Okay. Arun, first of all, we have never given ever a capacity utilization numbers earlier.

All we are saying right now that the initial capacities that we had put up in new fluoropolymers, we are seeing now that pretty much reaching an optimum utilization. The time has come for us to now put fresh set of investment in fluoropolymers because the growth that we are seeing is consistent.

Now, you're asking that why it has taken some time, etc., because I had said many times that as we go into higher and higher grades of polymers, the qualification time becomes longer, okay? Particularly now, for example, if you talk about some of the fluoropolymer which is getting into an application like semicon, the gestation period or the qualification period is long.

Today, I think we're in a much, much, much stronger position. Kapil, you want to add something?

Just continuing on the same path. Obviously, when we are going into the high value-added applications, talking about semiconductor, talking about hydrogen fuel cells, talking about the other applications, the approval cycles are definitely a bit longer.

Now we have on the end where most of the approvals have come in. Commercial businesses have started doing well, and we are seeing that growth coming in.

That is why we are very confident about the figures which I told. Going ahead in the new fluoropolymer business, especially PFA, FKM, and a couple of other products which we have added, we are seeing that the growth is continuing, and that is why our capex is also being planned.

As we feel that by this financial year-end, we'll be almost to the maximum capacity utilization of these products.

No, actually, what I meant was not with respect to the product approval timelines, that we understand that it's a fairly longer gestation period products. What I am trying to ask is, is this a kind of a EBITDA numbers for the fluoropoly and at least in the chemical business, is this a steady-state number that we actually envisaged when we put up those plants two years ago?

Or is it something lower than what we envisaged? No,

I think, Arun, this has been in line with what we had thought because we had already given an indication of certain EBITDA margins and which we have been sustaining. I don't think there is any disconnect with respect to what we have thought through.

Understood. When we are adding capacities, is it across all the new fluoropolymers or is it in some pockets, if you would like to call out few fluoropolymers where we are adding disproportionately?

Obviously, the margins are different depending upon the different grades. Some of the new polymer, which is very high-end, the margins are disproportionately higher, obviously, yes.

When we talk about it, we talk about it as mix, okay?

Okay. All right, sir.

Second question on the EV. You say is that all of our capacities are contracted.

Does it mean that is it something like a take-or-pay or after you are done with the qualification, is it a take-or-pay or is it more like a soft commitments?

I'm not really at liberty to give details of our contracts, Arun. However, these are all I can say that these capacities and when we had put up, there are anchor customers, there are specs agreed on, there are pricing that has been agreed on, and these are some of the contract which is in writing, okay?

You want to add in? I would not be able to give details of the customer contract or any detail about the customers.

Yeah. Good evening, Dr.

Kapoor and rest of the team. Firstly, accept my heartiest congratulations for such a good, resilient performance on the chemical segment, especially from fluoropolymers, against a rather challenging global backdrop.

Also very encouraging to see that we are aspiring to be at 70% of the EV battery value. Just one question I had, sir.

Just trying to put the capex figures in perspective. The 800 crore planned capex for '27, I understand 150 crores, as you mentioned, is towards the R-32.

Is the balance part of any specific polymer expansion or is it part of common infra? Because I'm trying to add the numbers up and taking cue from your comment that the cumulative capex figure remains at 6,000 crore.

Hello?

Can you hear me now?

Anshul, I think maybe there might be a mismatch in the numbers. The projected number that we have said is around ₹800 crores for GFL, okay?

Out of that, ₹150 crore is for ref gas, ₹220 crore for electronic specialty chemicals, which is primarily for semicon, and we have fluoropolymers, we have said ₹250 crores. Is this clear?

You had some question on the fluoropolymer capex, Anshul?

Yes, sir. Yes, I got my answer.

I'm just trying to wonder how this totals into 6,000 crores of the unchanged capex figure. I guess it has something to do with the bifurcation of the capex of FY '24, I'm guessing.

The 6,000 crore numbers that we had said when we started the journey in the new EV vertical or the EV business, at that time, almost a couple of years back, we had said that our plan is to invest 6,000 crores in EV business over a period of 4 to 5 years. So 2,300 crore for EV is part of that 6,000 that we had indicated earlier.

Is that clear?

Now

the GFL capexes are separate, because GFL capexes are in the chemicals part is the mother company investments, and EV is now being separated out.

Excellent, excellent. Got it, sir.

Crystal clear. Thank you so much.

Hansal,

thank you so much.

Hi. Good evening, sir.

Thanks for the opportunity. Just had one question, rather a clarification, if you can give on the R-32 capacity.

We would be eventually at a 20,000-ton capacity of R-32, if I understand that correctly. Would we have any plans to add more capacity going into 2027, given that we have sufficient quota from the baseline of the HCFC years, and there's another year for us to make use of the timeline to add more capacities?

On the same lines, how do we see the ramp-up of R-32 capacities in F '27? Any elaboration over there?

Thank you.

Thanks, Archit. We had said that we would be adding 20,000 ton in R-32, okay?

We are going through that process right now, and our capacities will soon reach 20,000. It hasn't reached yet.

Regarding the subsequent addition, we have also made it very clear that we will be adding the full capacities and utilizing our quota or our allocated quantities. We have time, and we will take that call as we go along looking at the market dynamics and the opportunities to utilize it and looking at the product mix and what's the right product mix for refrigerants.

All right, sir. For that, we will have to wait till a few more quarters to understand how much capacity might get added and what's the kind of quota that we're targeting maybe in the next year?

Yes, our quota numbers are very clear. We have internal estimates, because there's a very well-defined guidelines for the quota.

That numbers are very clear to us, and we are clear about adding capacities to reach that number.

Got it. Just 220-odd-crore capex, if I heard that correctly, for R-32, this is for FY '27, assuming that we would have that capacity towards the end of the year or we are very close to commissioning that capacity?

Sorry, Archit. I think we mentioned 150 crores for

ref gas. 150.

Sorry. Right, right.

It will happen in very soon, very soon.

All right. By second half, would we have the full 20,000 ton available for sales?

Would that be a right assumption?

Yes, hopefully. Yes, sure.

Right. Sure, sir.

Thank you. Thanks for answering my questions, and all the best.

Yeah. Good evening, and thank you for the opportunity.

My first question is on the EV capex. Could you help us with how much has been the total capex so far on the EV side, and how much have we capitalized from that capex?

Approximately ₹1,900 to 2,000 is what we have already invested so far, Tejas. The plan is to go for 2,300 next year or this coming year.

This is actually is our ramp-up phase now, okay? We have done what we have to do for learning, customers, qualifications, pretty much.

Now this is the time where the serious investments of that our committed capexes are going to take place. With this, I think the subsequent financial year probably would see the similar order of capex to reach the 6,000 number.

Okay.

This ₹2,000 crore is the amount which you already commercialized. Would that be correct?

The capex that we have already invested, that cash flow,

and that

some part of it is capitalized, not the entire thing. As we are getting ramped up, as the plants are commissioned with whatever the intent of that capex is, as that's reached, we are capitalizing it.

Understood. Second, on the Oman capex, which we indicated last quarter, with whatever has happened in the Middle East, what is the status of that project?

We're on track to go ahead with this capex?

No, we will go ahead with the capex, Tejas. There's no impact on Oman.

If you look at the overall capacity, Oman has been overall one of the safest countries so far in the Middle East. There's no change in our capex plan, and we're going ahead with it.

Okay. One last question on the gross margin front.

This quarter, we have seen that the gross margin has seen some decline. Could you help us understand what could be the reason behind the drop in gross margin?

It's not really decline. It's probably what, maybe 0.5% point, very small number, Tejas.

It's not a significant change, Tejas. It's pretty much flat overall.

Okay. That's helpful.

That's all from my side. Thank you so much.

Okay. Thanks.

Yeah.

follow-up, sir. We were discussing about the contracts in the EV business, and you said it's contracted and sold out.

Does it mean we should have some kind of a revenue visibility for this year, isn't it, at least for those products where we are done with the approvals and qualification cycle?

I'll let Mr. Rajiv answer this.

Rajiv, please go ahead. Yeah.

We have, as mentioned earlier, our first investment of LiPF6 salt, where our product has been fully qualified by most of the major electrolyte players. The commercial sales for that product has started now, and we should be expecting revenue for LiPF6 salt for all of FY '27.

As far as LFP is concerned, our initial samples have been approved, and the final qualification of that product is expected sometime in Q3 of this financial year, and the revenue for LFP CAM should start subsequent to that. Additionally, our binders have been fully qualified at major customers, and revenue for that should start in the next couple of quarters.

Okay. Understood, sir.

We'll get back to you later. Thank you.

Thanks, Arun. Thank you.

Hi. Thank you, sir, for the opportunity.

Just a question on the working capital. Our inventory days have continued to move up.

A, how do you think this will pan out or do we have any plans to bring it back to the 90, 95 days that we used to have in FY '22, '23? First on that.

Second, as the battery business scales up, how should we see the working capital panning out?

Yes, Darshita. I'm requesting Mr.

Manoj to take this. Manoj, please.

Hi,

Darshita. The numbers which you are referring to is at a higher base level.

That year was the exceptional outlier year where our turnover was ₹6,300 crores because exceptional increase in the chemical prices. That was first reason, denominator effect base effect was there, which has resulted into abnormally low working capital cycle of 120 days to 150 days.

Far our distribution model is concerned, how we deal in the polymers, we stock at our Germany warehouse, we stock at our USA warehouse, and that remains so. Almost we have to keep 30 days inventory 30 days to 90 days inventory in our plant, 30 to 90 days inventory at warehouses, and the sea transit time also takes 30 to 60 days, depending on whether it's going to Germany or USA.

That is the thing. Our average credit period is also span between 60 to 90 days.

Our because we are fully integrated, a lot of creditors are not there in our system, we don't get that credit benefit. Because of that, our average working capital cycle remains high.

Further, being we are now stabilizing the or started doing our EV business, building up our EV business, we have to start procuring the inventories for our EV business, the raw material inventories, and we have started commercial production of LiPF6, that has also added. As we go along, we reach our full capacities and the turnover, automatically that denominator effect will come back, and this will get reduced.

Darshita, the one of the reason is the kind of the business model that we have where we have stock and sale, and also the large dependence on the export market. Because of that, our working cycles or the days are long.

Part of it is, of course, is also related to capacity utilization. As our capacity builds up, you'll probably see these numbers going down.

Sir, if you could just explain as to why would we require a 30- to 90-day kind of an inventory at the warehouse in the US and Germany as well? How does the offtake usually work?

Why would we require such a high inventory day at the warehouse in the US and Germany, in those regions as well?

Yes.

Yeah. Hi, Darshita.

Kapil Malhotra this side. See, first of all, the kind of business we are in, we also have to keep the insurance stock for certain marquee customers in both the European as well as the US market, because there they have the concept of just-in-time.

We have agreement with them where we have to keep the stock for them for 2 to 3 months as an insurance stock. That's one.

The second important thing is, if you understand now currently, if you see the geopolitical scenario, the voyage time has increased from almost 3 to 4 weeks to almost 7 to 8 weeks. Our material in the stocks has actually helped us in converting the sales.

Also we have to see to it that there is almost 8 weeks which is taking in transit time to reach to these destinations. That is why to ensure that our customers receive material, we have enough stocks with us to convert into sales, we have to have these working capital days with us with material in stock.

Okay.

Yeah.

All right. Okay.

Thank you.

Thanks, Darshita. Thank you.

Thanks. First question is on R-32.

Given that we have commissioned the 10,000 tons of capacity, have we already started operating at optimal levels from March or will it be happening in subsequent months? Thank you.

No, it's already started operating from April onwards, it's already operating at the optimal capacities, and it'll be ramped up as we go along.

Right. In terms of the customers, how are we looking at it?

Is it domestic, is it exports, and do we have any contracts in place for this 10,000 and the additional 10,000 that is coming in, any anchor customers where we have at least a part of the volumes which are contracted for a medium to long term? Thank you.

Thanks, Rohit. Rohit, we have been in refrigerant business for a very long time.

We have one of the legacy suppliers in this area with a lot of experience in export market as well. When we look at R-32, it's both domestic as well as exports.

In some cases, we have contracts as well. We are quite confident that when we ramp up the capacity and go to 20,000 ton, we'll have no challenge at all, no issue at all in terms of selling that material.

It's contracted as of now.

Got it. Sir, second question is on the fluoropolymers business.

What is the kind of potential EBITDA that we are looking at whenever we reach the optimal or full utilization for the existing capacities? Thank you.

The thing is that we have still, Rohit, not reached the full capacity, as I said earlier. As we are seeing the volume growth in fluoropolymers, the EBITDA will continue to grow.

In fact, as we have seen earlier also, as more and more new fluoropolymers are added, which are high value-add, we see our overall EBITDA going higher because of the higher margin products. We will see EBITDA growth as well along with the volume growth.

Right. Just last bit on the battery chemicals front.

Given that this quarter there has been some improvement in the revenues, do we see a significant or exponential improvement in revenues on a Q-o-Q basis, and by Q4 of FY '27, there could be potentially a three-digit number from the battery chemicals front, a high three-digit number from the battery chemicals front as an exit rate? Thank you.

Yes, Rohit, you're right. We would we'll you'll see a growth going up quarter-on-quarter, and the rise would be significant.

We expect to reach, of course, the three-digit number by the end of this quarter by the end of this financial year in the last quarter. Yes.

Sure. That's it from my side.

Absolutely.

Sure. Thank you.

That's it from my side, sir. Thank you,

and

all the best.

Thanks.

Thank you very much. The strong growth driver for short-term to long-term are all in place, I think.

Short- to medium-term growth will be driven by the refrigerant and fluoropolymer segment, and the medium- to long-term growth journey is equally encouraging for us as the advanced battery materials business is scaling up and reaching up to the full potential in coming years. With this, I would like to thank you all for your interest in GFL, and thank you very much for being part of this call.