GRAVITA — earnings call

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Prepared remarks

Moderator · Conference Operator

MR. SABRI HAZARIKA – EMKAY GLOBAL FINANCIAL SERVICES Gravita India Limited July 25, 2023

Ladies and gentlemen, good day, and welcome to Gravita India Limited Q1 FY '24 Earnings Conference Call hosted by Emkay Global Financial Services.

We have with us today Mr. Yogesh Malhotra, Whole-Time Director and CEO; and Mr. Sunil Kansal, Chief Financial Officer.

As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions at the end of today's presentation.

Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone.

Please note that this conference is being recorded.

I would now like to hand the conference over to Mr. Sabri Hazarika from Emkay Global Financial Services.

Thank you, and over to you, sir.

Sabri Hazarika

Thank you.

So good afternoon, ladies and gentlemen.

On behalf of Emkay Global, I welcome

Moderator · Conference Operator

Thank you.

The next question is from the line of Hemant, an individual investor.

Please go ahead.

Hemant

Sir, thank you for providing me the opportunity.

As part of one of our earlier calls, we are supposed to actually, we have the target of doubling our revenue over the next three years.

So I hope it doesn't include the revenue from the existing verticals, right?

Sorry, from the new vertical.

It only includes the revenue from the existing verticals.

And the revenue from the new verticals will be over and above the revenue after doubling it, right?

Moderator · Conference Operator

Thank you.

The next question is from the line of Harshit Shah, an individual investor.

Please go ahead.

Harshit Shah

In the last quarter, we have seen a promoted transferring shares through bulk yields to some investors.

So, do we see any more such transactions in the future?

Second thing, in the last con call, we also said that we will be doing some QIP.

Can you share the timeline of it?

Moderator · Conference Operator

Thank you.

The next question is from the line of Rohit Bahirwani from Vijit Global Securities.

Please go ahead.

Rohit Bahirwani

Thank you for giving me the opportunity.

My question is, if we see the interest cost, it has increased from INR10 crores to INR13 crores since last quarter.

So, I want to just know how much additional borrowings can we assume going forward, including both capex and working capital?

Moderator · Conference Operator

Thank you.

The next question is from the line of Devang Shah from AC Mehta Investment.

Please go ahead.

Devang Shah

Hi, good evening, sir.

Congratulations for a good set of numbers.

Moderator · Conference Operator

Thank you.

The next question is from the line of Shrinjana Mittal from Ratnatraya Capital.

Please go ahead.

Shrinjana Mittal

Hi.

Thank you for the opportunity, sir.

Just a follow-up on the earlier question which was asked.

So, on this scrap collection, you mentioned that since we imported more scrap because scrap is cheaper, we imported more and hence the domestic collection was less.

Is that correct?

Yogesh Malhotra

Sorry, can you come?

Shrinjana Mittal

So, I was saying that domestic collection was less in this quarter.

You mentioned because that was because overseas scrap was cheaper.

So, you imported more than what is collected domestically.

So, I just wanted to understand what is the difference between the landed cost versus the domestic scrap?

Like just an approximate percentage wise, what would have been the difference?

Yogesh Malhotra

5% to 7% difference would be there.

But the thing is that it is a little difficult to compare both these because then you have to see where we are selling it and to the customers that we are selling it because Indian scrap mostly is a tolling business where the margins are fixed.

Whereas, when we import scrap and we sell it in India, then the margins increase because then you -- I mean the EBITDA margins are much higher in those cases.

So, it is not an apple to apple comparison.

Shrinjana Mittal

Okay.

So, if I am understanding it right, because of value-add, the margin difference would be there between what is sold -- what is imported and then sold and versus what is -- but in terms of working capital, the working capital is lower in the tolling business.

So, when you make these decisions, you look at it in terms of margins -- the sold margins or the dosage wise, how -- what is the impact?

Yogesh Malhotra

So, the basic idea is to get the highest ROC.

So, if we are getting higher ROC by importing that scrap, even though the working capital cycle is higher, but the profitability is higher in that case, then we will go for imported scrap.

But if the ROC is higher in the tolling business, then we go for the tolling business.

So, that is one criteria that we have kept.

But it is not that we will convert Gravita India Limited July 25, 2023 100% of tolling business into.

So, we can only play 10% to 15% only here and there.

More than that is not possible.

Moderator · Conference Operator

Thank you.

The next question is from the line of Rahul Bhangadia from Lucky Investment Managers.

Please go ahead.

Rahul Bhangadia

Thank you for taking my question again.

You know, there was a previous question on the interest expense going up.

It is the highest in about four quarters now.

Could you just give us a sense of what is your debt number right now?

And what should we look forward to in that particular item?

Yogesh Malhotra

So, current debt number is approximately INR375 crores.

And earlier net debt I am talking about.

And the number, if you compare it with the March numbers, it is INR314 crores.

So, it is increased by approximately INR60 odd crores in this quarter.

And so, reasons we have discussed that there is a slightly, because we have recently started the new capacities in Mundra and Chittoor.

So, we imported certain scraps in anticipation of this capacity.

So, recently we have started this capacity.

And the plants are under ramping up.

So, gradually it will reduce to the normal level.

Rahul Bhangadia

Okay.

And so, the other thing that you mentioned was this INR10 crores exceptional income in Q4. Just wanted to understand how would that get reported in the segmental numbers.

Last time there was a turnkey project top line of about INR11 crores in March quarter.

This quarter you also have again a INR15 crores, INR14.6 crores number.

So, where does that exceptional INR10 crores sit in this -- which was there in last quarter and…

Yogesh Malhotra

So, INR10 crores income was related to the tax.

It was basically recognition of the mat.

So, it reflected in the tax itself.

Rahul Bhangadia

Okay.

Last quarter you were saying it will sit in the…

Yogesh Malhotra

Q4 it was.

INR10 crores of mat recognition.

So, that was reflected in the -- not in the EBITDA.

It is only in the…

Rahul Bhangadia

Okay.

It was only on the tax side you are saying.

Yogesh Malhotra

On the tax side, yes.

So, the tax number was lower by INR10 crores.

Moderator · Conference Operator

Thank you.

The next question is from the line of Vikash from Acorn Tree Group.

Please go ahead.

Vikash

Thank you.

One thing is our one of the customer is there is Amara Raja.

And they also one of the early on subsidy is the Amara Raja circular solution is there which is also a recycling business area.

Whether any kind of the impact has come in our lead recycling?

Moderator · Conference Operator

Hello.

Mr. Hassan, does that answer your question?

As there is no response from the current participant, we move on to the next question from the line of Vikas Mistry from Moonshoot Ventures.

Please go ahead.

Vikas Mistry

Thank you for giving the opportunity.

Sir, actually our sourcing is the main mode and how we are trying to build our mode in that regard.

And from the perspective that what is the concentration of institutional clients specifically Amara Raja in case if they are trying to set their own manufacturing?

That's my first question.

Moderator · Conference Operator

Thank you.

The next question is from the line of Ashit Koti an individual investor.

Please go ahead.

Ashit Koti

My question is, sir, with regards to recycling if you are talking about sourcing of material from industrial users also and assuming that batteries, which you are procuring from secondary market that is four-wheelers, two-wheelers or passenger vehicles or commercial vehicles.

Region-wise if you have to consider, major concentration is from which area where do you procure more and from there in that place itself you have a plant or again or else you have to transport it back to your plant in Jaipur?

Moderator · Conference Operator

Thank you.

The next question is from the line of Mohammed Hassan from Fairdeal.

Please go ahead.

Mohammed Hassan

Thank you for the opportunity.

Sir, since I am new to the sector, I just want to know about the new government rules about the recycling waste thing like, e-waste management thing?

Moderator · Conference Operator

Thank you very much.

Ladies and gentlemen, that was the last question for today.

I would now like to hand the conference back to the management for their closing comments.

Over to you members of the management for any closing remarks.

Thank you very much.

On behalf of Emkay Global Financial Services, we conclude today's conference.

Thank you all for joining.

You may now disconnect your lines.

Questions and answers

Yogesh Malhotra

Thank you, Mr. Sabri.

Good afternoon, ladies and gentlemen, and welcome to our Q1 FY '24 Earnings Call.

I believe you have had an opportunity to review the earnings presentation and financial results that were uploaded on the stock exchanges.

Before opening the floor for questions, I will provide a brief overview on the major highlights of the quarter.

I'm delighted to share that Gravita India has delivered strong performance in Q1 FY '24.

Before we delve into the results, we would like to share some strategic highlights and project updates.

I'm pleased to announce that pure Lead of 99.98% purity and above produced by our Phagi, Jaipur plant has been empaneled as an approved Lead brand deliverable against the MCX let futures contract.

Pure Lead manufactured by the Chittoor plant of the company is already at MCX empaneled product.

This will provide Gravita with an additional platform for hedging, better inventory management and price transparency in the domestic market.

I would also like to highlight the fact that MCX maintains a global and stringent quality approach, which is at par with the international exchanges.

This reaffirms the fact that the products manufactured at Gravita's plants adhere to global standards, thereby ensuring excellence in every aspect of production.

Gravita has expanded its existing capacity of battery recycling unit security at Chittoor, Andhra Pradesh.

The capacity has been increased by 26,440 metric tonne per annum to 64,640 metric tonne per annum.

The capex undertaken stands at around INR21 crores.

It is funded through internal accruals.

Additionally, it's worth noting that this plant leverages the potential of domestic scrap, which is abundantly available from permanent telecom players, UPS, OEMs, IT, IPS as well as waste scrap from the automobile sector in their respective markets.

Gravita India Limited July 25, 2023 Gravita has also secured contracts to efficiently collect pan-India scrap enabling the company to serve OEM customers in South India and facilitate exports via the nearby Chennai port, thereby optimizing logistical costs.

With this expanded capacity, the company aims to fortify its position in the South Indian market, including the Southeast Asian market as well.

Gravita Tanzania Limited a step-down subsidiary of Gravita Securities in Tanzania East Africa has started commercial production and recycling of waste rubber.

It has an annual capacity of around 3,000 metric tonne per annum in Phase I, which is expected to go up to 6,000 metric tonne per annum in Phase 2.

The capex incurred for Phase 1 is INR3.86 crores, again funded through internal accruals.

This newly established recycling facility will not only result in cost reduction but also contribute to decrease the carbon footprint.

The process of rubber recycling produces pyrolysis oil, which will be utilized by the company for in-house consumption as an alternative energy source in recycling battery and aluminium scrap.

This move aligns with the company's commitment to sustainable practices and environmentally friendly operations.

Let's now discuss the operational performance.

Coming to capacity expansion.

As of 24th July 2023, Gravita has grown by 22% from March 2023 and expanded its total capacity to 2.78 lakh metric tonne per annum.

We are confident that we will reach 4.25 lakh metric tonne per annum capacity by financial year '26, which will include both existing as well as new verticals.

The company has witnessed a volume growth of 18% in Q1 FY '24 on a year-on-year basis.

Lead volume increased by 18%, aluminium volumes grew by 63% on a year-on-year basis to 29,287 tons and 5,396 tons, respectively.

We are maintaining a healthy order book of more than 60,000 metric tons per annum.

A reminder of our capex plans, Gravita is committed to expanding its capacity and hence is expecting to incur a capex of more than INR650 crores by financial year '26 for its existing as well as new verticals.

Capex expected existing and new verticals is approximately INR400 crores and INR250 crores, respectively.

Moving on to Q1 financial year '24 financial results.

At consolidated level, revenue for the quarter increased by 21% to INR703 crores on a year-on-year basis and showed a drop of 6%.

On a Q-on-Q basis, 49% of the revenue in Q1 FY '24 came from value-added products, aligning to have a vision of achieving 50% revenues from this category.

On a year-on-year basis, adjusted EBITDA increased by 24% to INR80 crores.

EBITDA margins improved 11.4% and the company continued to maintain strong margins.

Delta reported a consolidated PAT of INR52 crores with a 22% growth year-on-year.

PAT margins remained steady at 7.4%.

Overall, the company performed significantly well on a year- on-year basis, but faced a slight drop on Q-on-Q basis.

This can be attributed to a drop in aluminium and plastic prices.

Gravita India Limited July 25, 2023 Additionally, the disruption caused by the Biparjoy cyclone had a significant impact on the operation of a major lead plant in Mundra leading to adverse effects on volume growth and margins.

Furthermore, the recent launch of our 2 new aluminium plants has been in stabilization phase and is yet to operate at full capacity.

At stand-alone level, revenue stood at INR654 crores, showing an increase of 6% on a year-on- year basis.

EBITDA for this quarter stood at INR60 crores, demonstrating a significant improvement from quarter 1 of last year.

EBITDA margin stood strong at 9%.

Similarly, PAT showed a significant increase of 136% on a year-on-year basis to INR38.72 crores.

PAT margin stood strong at 6%.

I would like to emphasize once again that we have steadfastly progressing towards our ambitious Vision 2027, which involves diversifying into new verticals, achieving robust financial growth and expanding our business in non-lead segments.

Moreover, we have full confidence that by year financial year '26, we will successfully reduce our net working capital cycle from 83 days as of March 2023 to 65 days, thereby significantly enhancing our operational efficiency.

That's all from my end.

I would now request to open the floor for questions and answers.

Thank you, and over to you, Sabri.

Moderator · Conference Operator

Thank you very much.

The first question is from the line of Rahul Bhangadia from Lucky Investment Managers. .

Rahul Bhangadia

Sir, first question is, could you give us a rough sense or your approximation of how much volume would you have lost because of disruption in the operations in Mundra?

Yogesh Malhotra

The volume, we loss is approximately 10 to 12 days, which is approximately 1,500 tons for this -- because of this Biparjoy impact.

Rahul Bhangadia

Okay.

Okay.

That is about 1,500 tons.

Okay.

Second question was you had a one-off in the form of piece of being kind of reversed or something like that, that have got into the other income, INR11 crores?

Yogesh Malhotra

Yes.

So basically, we made a provision earlier in the form of impact of this employee benefit scheme, which we brought.

But later, we realized that we don't need this provision because we have already dismantled -- we are in the process of dismantling the trust and giving the benefits of this scheme slightly earlier to what it is planned.

So -- but now we have taken a provision of giving that benefit in the employee benefits.

So if you see the benefit -- employee benefit expenses is slightly higher on this side.

So on the one side, it is a provision reversal, which is showing in the in other income.

But on the other side, the impact is that we have taken a provision of incentives, which we are going to give to the employees so against that benefit, which we are losing.

So it is a compensation.

So we are considering this reversal as a part of the operational because the other impact is coming in the employee benefit expenses.

So for us, we have taken it in the adjusted EBITDA because it's operational part of the business.

Gravita India Limited July 25, 2023

Rahul Bhangadia

So this INR11 crores income that you've accounted for in the other income part of it, how much would you have put in the employee benefit expenses or in any other expenses in this quarter itself?

Yogesh Malhotra

Yes.

So approximately INR8 crores we have already considered in the employee benefit of expenses of this quarter.

Rahul Bhangadia

Okay.

INR11 crores against INR8 crores, net INR3 crores is what you got in but benefited to that extent essentially.

Yogesh Malhotra

Yes.

Correct.

Correct.

Correct.

Rahul Bhangadia

And that is why we have put it even this INR11 crores in the operational part because corresponding cost you have also recognized there.

Yogesh Malhotra

Yes, yes, yes.

Moderator · Conference Operator

The next question is from the line of Gaurav Gandhi from Glorytail Capital.

Gaurav Gandhi

Congratulations on the good set of numbers.

My first question is, sir, how do you collect scraps in India?

I mean do we have any contracts with the company handling municipal waste?

And also, do we have any large symptoms in the cities for collection of household spreads?

Do we have any kind of such centres collection for collecting scraps?

Yogesh Malhotra

In fact, in case of domestic collection, our collection plan exists in three ways.

One is we are having a PAN India contract with Amara Raja Batteries from which we are collecting the batteries from on PAN India basis.

Secondly, we are also very closely working with some of the PROs.

Those are collecting the battery, e-waste, plastic and many other commodities as a waste.

And out of those wastes, we are collecting the plastic and lead scraps from those companies like Sambhav Karo and other companies.

Third thing is that we are also having our contracts with the IT companies like TCS, like Accenture and other companies from which we are collecting the batteries on PAN India basis, whether those offices are located in affluent or in domestic tariff areas.

Thirdly, we are also collecting the batteries from institutions like Jindal Group, Aditya Birla Group, Adani Group.

So, from the different locations of the factory plants, factory locations, we are collecting these batteries.

Gaurav Gandhi

Do you think these municipal waste management companies like Antony Waste Handling and all can we benefit from these companies also?

Yogesh Malhotra

No. No. Because this municipal waste doesn't collect these batteries because these batteries will be largely either will be auctioned or it will be sold through different, different locations.

No one will hand over these batteries to the municipal for municipal waste.

Gravita India Limited July 25, 2023

Gaurav Gandhi

Okay.

Okay.

And my second question is to get more clarity on this EPR topic.

As per EPR policy, if the producer gets responsible for recycling, does it mean that, for example, you know, if whatever Exide batteries or Amara Raja sales, they are responsible to collect and, you know, recycle all the batteries?

And if yes, what happens to, let's say, if the Exide batteries are collected by us?

I mean, do we hand over that scrap to them or how will it work?

Yogesh Malhotra

Yes, you are correct that as per EPR policy, they have to either collect back or recycle themselves or take in, buy, recycle lead or they have to take EPR certificates.

Like even it is applied to the import of new batteries also.

They have been given certain targets to collect the battery over a period of time.

So that's how this will, EPR will process and there will be penalty if the EPR is not done and they can even create recycling partner under EPR.

As we mentioned earlier, we are already partnered to Amara Raja.

Gaurav Gandhi

Sir, in that case, will it impact our margins if we partner with them in future, you know, will it impact our margins?

Yogesh Malhotra

So, basically, this is going to work as a tolling arrangement, which is currently in place.

So, of course, if you talk about EBITDA margins, that will be lower, but there will be no working capital requirement in such a case.

So, therefore, the overall ROC will be better in this case, which we are already doing.

So, if you look at it, most of the domestic procurement that we are doing is through this arrangement only.

So, overall, even though the EBITDA margins would be a little lower, the overall profitability or the ROC would be much higher as compared to when we buy it from domestic market.

Moderator · Conference Operator

Thank you.

The next question is from the line of Gunjan Kabra from Niveshaay.

Please go ahead.

Gunjan Kabra

Sir, firstly thank you so much for the opportunity.

Sir, I wanted to understand how this margin scenario work in plastic and aluminium section because they remain quite volatile.

Like this quarter, it was around 4% for aluminium whereas it was and previously it was.

So how does that scenario work in aluminium and plastic?

What kind of stable margins can we expect in this segment?

And if I wanted to understand the mechanism effect?

Yogesh Malhotra

So margin in case of, operational margin in case of plastic and aluminium is like in case of plastic, it is INR10 per kg but EBITDA margin for INR10 per kg.

And in case of aluminium, it is mostly business outside India where we sold slightly cheaper.

So margin is in the range of INR17 per kg, INR18 per kg EBITDA margin.

But there is a slightly fluctuating margin because in case of plastic and aluminium, we are not hedged fully.

So we work on a model where we keep on buying the scrap and we keep on selling the finished goods against that.

So we keep the stable inventory.

But sometimes when the market prices are going down or going up, so that time the margins are according to the inventory gain or inventory losses, the margin is going up or down.

So that is the reason because we are not fully hedged in this model and there is no mechanism also available of hedging this plastic and aluminium.

But going forward, we are looking for a mechanism for aluminium specifically.

We are entering into an arrangement where MCX is Gravita India Limited July 25, 2023 going to be available as a platform because we are dealing with aluminium alloys.

So on MCX, there will be a platform for dealing or hedging or giving the deliveries also for aluminium alloys in future.

So we are working on that.

So hopefully that arrangement is going to be developed by the MCX with the Ministry of Finance.

So they are arranging that.

So after this, there will be stable margins on the aluminium side.

But still we are finding a solution for plastic also similarly where we can hedge the margins for the future.

Gunjan Kabra

Okay, got it.

So the second question I had is that you have already spoken about the total capacity expansion that you plan to do it over the years.

But I wanted to know that from today and what is the expansion that is happening in, apart from lead and other metals, I mean I wanted to understand rubber, what is the expansion plan from FY ‘23 to ‘26, how much is the incremental capacity for rubber, then plastic and aluminium and if any other expansion also you plan into this segment, in any other segment?

Yogesh Malhotra

So basically, the total capacity which the expansion we are doing in case of lead is approximately from 300,000.

Okay, so the capacity of by FY 2026, the capacity of lead which is currently 225,000, we are taking it to around 300,000 tons.

And in case of aluminium, it is currently 30,000 tons, which we are taking it to 48,000 tons.

And in case of plastic, it is currently 22,000 tons, which we are taking to 65,000 tons.

So these are the capacity expansions which we are planning for the existing verticals.

And there is another vertical which we are talking about is rubber recycling.

So because since we are not considering the capacity of rubber in our overall capacity expansion, because rubber is currently being consumed, the output of rubber is being consumed for the recycling of the lead and aluminium.

So there will be capacity expansion in the rubber also because we are in the replication mode.

We started from Ghana, now we are replicating the rubber recycling in Ghana, Senegal, Mozambique, Tanzania, all the African locations.

So there will be expansion of rubber, but we are not considering that part of the capacity expansion.

Moderator · Conference Operator

Thank you.

Next question is from the line of Satadru Chakraborty from Chakraborty Family Office.

Please go ahead.

Satadru Chakraborty

Hello.

Congratulations on a good set of numbers.

My first question is really around the hedging mechanism.

I think you briefly touched on certain aspects of it.

If I sort of understand from your presentation, the back-to-back fiscal inventory is fully hedged.

But my question is really in the future, for instance, when you have rubber, plastics, paper, there is no forward contract that you can do in LME or any other exchange, for example, the Chicago Board of Trade.

So these will be really OTC contracts that you do on a one-on-one basis.

So any thoughts around how do you want to play this hedging mechanism game going forward?

Yogesh Malhotra

So I think it's very clear that on lead we are already hedged, which is around 80%, and we are already in discussions with MCX to start incorporating ADC-12, which is the major alloy that we make, to incorporate it in their delivery mechanism.

So these two in the future will be taken Gravita India Limited July 25, 2023 care of.

But apart from that, I think in other verticals like plastics, etcetera, although there is no mechanism currently available where we can hedge it on exchanges, but definitely we have tie- ups with OEMs where we sell them forward contracts.

So whatever deliveries I'm going to give to any OEMs in July, the prices would be M-1 basis.

So whatever I'm collecting today, more and more of that material would go in the next month.

So that is where you are probably doing natural hedging, which we call it.

The mechanism for that is already in place.

So going forward, wherever there is no possibility of hedging through exchanges, we would incorporate this mechanism more and more.

Satadru Chakraborty

Okay.

And just one sort of follow-up on – so it is fair to say that you mentioned aluminium, that you will potentially start to hedge this more.

So it is more so it is fair to say that the EBITDA per metric ton will not be continuously dropping as we have seen for the last couple of quarters, right?

The second question I had was really on the turnkey projects piece.

So I think this segment is performing brilliantly.

I just wanted to hear from you what your outlook is on this, any margin revenue guidance you can give.

And I also wanted to understand really very importantly, what is the market positioning that Gravita has?

Is there no other integrated player who can provide, let's say, integrated turnkey solutions?

Or do you have other, let's say, outside India players who can do that?

Because I'm not sure that I understand the market structure fully well for this kind of service.

Yogesh Malhotra

So basically, how we see our turnkey solution division is basically as a support to our overall expansion plan.

So even though you may not see the overall revenues or gross margins coming from this because sometimes around 80% to 90% of the total revenue that we do is internal only.

In terms of where we are placed, actually, if you look at it, I mean, there are either European companies that are into this who are providing these solutions globally.

And then in lead and aluminium, generally, otherwise, there are no companies available which can make or produce sustainable, environmental-friendly equipment’s.

So we are the only solution provider in the developing countries who can provide this solution, which is viable, even if you make a smaller plant.

So generally, if you go for a bigger plant where you are recycling, for example, for inlet, around 5,000 to 10,000 tons per month, then there are various options available from European companies.

But if you are anywhere in the range of 1,000 to 2,000 tons per month, there are very few options available, and that is where Gravita is placed.

But we don't see it only through that lens.

As I mentioned earlier, for us, it's an in-house research centre where we keep on improving our efficiencies, our yield, in terms of making it more environmental-friendly.

So that is the major part we are in this.

Satadru Chakraborty

Understood.

So you don't suspect that you will provide this solution to any other competitor, and then that's what cannibalizes your sales?

I was just trying to ask… Gravita India Limited July 25, 2023

Yogesh Malhotra

No, no. We constantly do this.

We supply material to anybody who wants to go into lead or aluminium recycling.

So far, we have sold more than 60 turnkey solutions across the globe, and we have a handsome margin of around 25% to 30% in the volume that we do externally.

Moderator · Conference Operator

Thank you.

The next question is from the line of Khush from Electrum Portfolio Managers.

Please go ahead.

Khush

Thank you for the opportunity.

So I have two questions.

One was, any reason for the tax rate being higher in this quarter at 14%?

And second, the domestic stock collection this quarter has been around 30% as of presentation, while in the previous quarters, it has been in the range of 40% to 45%?

Yogesh Malhotra

So your first question related to tax, because this quarter, Indian businesses were more profitable as compared to what it was earlier.

So proportionately, the tax rate in India is slightly higher than the average tax rate in the overseas business.

So because of this, the average tax of previous year is approximately 11%, against which this quarter, we ended up at 14%.

So because of the slightly proportionately higher profitability and higher PBT in India.

So that's the reason for the tax.

And the second question was about the domestic scrap availability, right?

Khush

Yes.

Yogesh Malhotra

So part of the reason is that, and why we did better in India as compared to the other parts of the globe, is that Indian market was giving better premiums over overseas businesses.

So we imported a lot of batteries because overseas scrap was cheaper as compared to Indian scrap during these times.

So we imported more overseas scraps to increase the profitability and reduce the Indian scrap.

So there are opportunities of arbitrage available time to time for us, where there is a difference between Indian scrap.

Sometimes Indian scrap is cheaper.

In those months or those quarters, we buy more Indian scrap.

Whereas when the overseas market is slower, then we buy from overseas market also.

And in sales, it's vice versa.

Because Indian markets were good.

So therefore, if you look at our performance of Indian entities, they have shown better results.

We have sold more value-added products.

And we've done more revenue in India as compared to overseas.

So we have shifted a lot of scrap, even from our own entities into India, so that we can take advantage of that arbitrage.

So we've taken advantage of arbitrage both on the sales front as well as on the procurement front.

Khush

Okay.

And just one last question.

So we as a company remain on the guidance of 25% growth in volume terms for the next three years.

Just want to confirm that?