Ladies and gentlemen, good day, welcome to the APL Apollo Tubes Q3 FY 2023 Conference Call, hosted by Asian Markets Securities Private Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and include risks and uncertainties that are difficult to predict. Actual results may differ from such expectations, projections, et cetera, whether expressed or implied. Participants are requested to exercise caution while referring to such statements or remarks. As a reminder, all participants on lines will be in the listen only mode, and there will be opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suraj Sonalkar, Asian Markets Securities. Thank you. Over to you. It appears the line with Mr. Suraj has been disconnected. Mr. Amit, would you like to take the handover? Yeah. Thanks. Ladies and gentlemen, welcome join for joining the call. The management is represented by Mr. Sanjay Gupta, CMD, Mr. Deepak Goyal, CFO, CEO Mr. Arun Agarwal and Anubhav Gupta, Chief Strategy Officer. Thanks management team for giving us opportunity to host the call. After opening remarks by management, we shall have Q&A. Please take over, sir. Thanks, Amit. Thanks, Asian Markets Securities for hosting us. Thanks to all the participants who have joined on our Q3 FY 2023 earnings call. I welcome you all. I'm very glad to share that APL Apollo Tubes has reported highest ever quarterly sales volume, EBITDA and net profit in last quarter, Q3 FY 2023. At the same time, I'm also glad to share that we are testing our peak capacity now consistently by doing monthly volume of above 220,000 tons per month. We are in process of expanding some capacity in our existing plants through debottlenecking, apart from all the expansion which is happening in Raipur and Dubai and Kolkata. We have further expanded our expansion plans beyond four million tons, which we will talk going forward. Coming to some of the highlights in the last quarter, number one is the Raipur update. All three complexes are now fully operational. We can tell you that one million ton of Raipur capacity is on stream now. The current run rate is 30% utilization as per current month rate. Last year, we did 46,000 ton, which was around 25% utilization rate. You know, you must have seen that the Q3 EBITDA per ton in Raipur was around INR 3,000 per ton with 25% utilization. As the utilization levels inch up further, the margin spreads will inch to the expected levels beyond INR 5,000 per ton. In terms of product launch from Raipur, we launched two products. One is 500 square in the heavy structural segment, and second is coated products for the roofing application. Now that Raipur plant is coming on stream, we are becoming equally aggressive in the market creation for these products because these are highly innovative and being launched for the first time in India or globally. Coming to the heavy structural side, we have now some more reputed projects where the work has started on tubular construction, which is in line with our aggressive plans to create market for our heavy structural tubes. In yesterday budget, there were two segments where government was quite aggressive in terms of increased allocation for funds, which are railways and water infrastructure. Again, I can tell you that we had already identified these segments earlier and we were focusing on these segments, both railways and water infrastructure for the last six months. Today, we have got 10 railway stations where our design team is working to make, to convert the design on tubes, for 10 upcoming railway stations out of 25 such railway stations which have been awarded. There are 100 more which are coming over the next two to three years. In the water infrastructure segment, we have successfully demonstrated a sample of a tubular structure in Uttar Pradesh, where almost 200,000 liters of water over a tank storage on a 20 meter height staging has been demonstrated. If the government approves that, it could throw a huge opportunity for our heavy structural segment. The third update I want to give you is the super value-added products where we are again focusing very aggressively. We are always inspired by our global peers who make EBITDA of INR 16,000 per ton outside India versus APL Apollo's current EBITDA of INR 4,500-INR 5,000 per ton. We always aspire to achieve a higher spread. To achieve this, we are now focusing to increase sale of super value-added products in our portfolio, which can fetch us the net selling realization of INR 80,000 per ton with EBITDA margin of 20%+. This implies EBITDA spread of INR 18,000-INR 20,000 per ton on some of the products. Of course, the Raipur products are capable of producing these spreads. Also within APL Apollo, where we have monopoly in the structural and chemical side, we are trying to promote such products. I can tell you that in January, the momentum was pretty good for such products. The fourth update I want to highlight is our partnership with the Shankara Building. Our association with Shankara continues to yield greater results for the group. Our sales volume through Shankara channel is up 170% YOY in the first nine months of FY 2023. Now that the Raipur products are coming online, we are now more confident that Shankara will become our stronger partner to promote and to push our value-added products through its platform. Coming to the quarterly results updates. One concern investors had shown last quarter when our EBITDA spreads were below INR 4,000 per ton. We were pretty sure that we will bounce back sharply in Q3, we did that with the EBITDA spread of INR 4,500 in the third quarter. This was on the back of two reasons. One was, of course, the channel destocking stopped after the global commodity prices stabilized from month of September, October. Of course, the Raipur plant, which had negative operating leverage in Q2, now it turns into positive operating leverage with INR 3,000 per ton EBITDA. Going forward, with the Raipur plant ramping up, the EBITDA spreads should improve further versus what we are seeing in Q3. Coming to operating cash flow, the performance remains strong with INR 6 billion of operating cash flow, which was equivalent to 85% of nine months EBITDA. The working capital remained in single digits. Now it's been the eleventh quarter where we have been able to maintain our working capital in single digits. Now this has become the practice for us, which remains best in the building material sector. Out of the operating cash flow of INR 6 billion, we spent INR 5 billion on CapEx, and rest INR 1 billion was spent on dividend payments and investment in Shankara. Free cash flow was still negative. Going forward with Raipur CapEx coming to end, we will have a good amount of free cash flow generation, which will improve, which will make our debt zero, and there'll be cash surplus on the balance sheet. Our nine months ROC was 29%, which is slightly lower than FY 2022, but this was because of investment of INR 8 billion, which is sitting in books for the Raipur, which is yet to yield results. If we exclude Raipur, our ROC is above 37%. We are confident that we will be hitting 35% ROC as the Raipur plant ramps up over the next one to two years. Coming on the guidance and future plans. We maintain our FY 2023 sales volume of above 2.2 million tons with four million ton hitting in FY 2025. The capacity, however, should be around 4.5 to five million tons by FY 2024, which will be coming from Dubai, Kolkata, debottlenecking at existing APL plants and Raipur becoming fully operationalized. Any CapEx which should be there of around INR 5 million-INR 6 million, this will be fully funded from internal cash flows. This gives us volume visibility beyond FY 2025, wherein we'll be hitting five million tons sales volume by FY 2026. That's it from our side, and we'll be happy to take questions. Thank you so much. Do we begin the Q&A session, sir? Yes. Go ahead, please. Participants who wish to ask a question may press star and one on your touchtone 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'll wait for a moment while the question queue assembles. We have the first question on the line of Garvit Goyal from Nvest Research. Please go ahead. Hello. Good evening, sir. Yeah, please go ahead. Am I audible? Right. Okay. Basically, in yesterday's results you also mentioned that a lot of emphasis is on the infra side. Basically, I wish to know your view how APL Apollo as a company is going to be benefited out of this increased capital outlay along with the new airports and the air connectivity and stuff. How do you think your entire product basket or the new value-added products that you are bringing in specifically, that will cater to these CapEx plans, sir? If you look at the current sales mix of APL Apollo, right, 50% of sales come from the residential segment, 25% comes from the commercial/institutional segment, and 25% comes from the infrastructure segment, right? Which is airports and railway stations, bullet trains, metro stations, et cetera. Right. If you decode yesterday's budget, right, there was a lot of impetus on transportation infrastructure, right? Which includes road base and railways. Now in railways, we have high-speed railway bullet trains, where our tubes are used anyways, right? Now what we are trying to do is we are trying to increase the application in infrastructure by converting the structural design on tubes. I did mention about railway stations, right? India has the Indian government has awarded around 50 railway stations in the last one year at different cities, and 100 more yet to come. Right now we have already approached the contractors and the architects who got those railway stations, and today we are designing almost 10-15 railway stations. Right? We are able to demonstrate, we are able to prove that by using tubular construction, they can reduce the time, and they can also reduce some costs. Right. One railway station we should start in next two-three months. This is that there will be like new orders coming from different contractors doing railway stations. In airports, you look at any new airport which has come up in last five years, any tube which you see, Apollo will be at least 60%-70% of that market share. Right? Any new airport comes, all the roofings, all the ceilings are all on tubular truss. Apollo has been supplying material, whether it is Bangalore, Hyderabad, Delhi, any new airport which has come up in last five years. Another focus area was water infrastructure, right? Lot of government state governments are focusing on sanitation and drinking water distribution. For that, they require water tanks of up to 2 lakh-3 lakh liters at a height of 20-25 meter staging. This requires very strong structure, right? RCC, which is conventionally used, it takes around four to five months for creating a structure. Versus like what we could demonstrate in Uttar Pradesh last month was a three-day job. Right? It's a prefabricated tubular structure which comes on site, and by using 10 people, 10 laborers, you can erect a structure in three days. Right. We have already shown some photographs on our Twitter account. I'll request you to visit that. All this impetus on infrastructure is going to help APL Apollo in long term. Given that 25%-30% of our portfolio right now is coming directly from infrastructure. We are pretty bullish on what Indian government has been doing so far and what it intends to do over the next two to three years. Okay. That was very much deep. Secondly, sir, basically from the Raipur products you are entering into, and one slide it was included in your presentation, that was hinting about the realizations at global level, and you also mentioned in your speech about that. How do you think this Raipur facility, basically, I want to get a overview picture, how you think the overall realization is likely to increase or likely to shape up in next two to three years on account of these super value-added products you mentioned, sir? See, I mean, if you look at our product portfolio again, right, there are like three segments, which are like value-added for us. One is heavy structural, where we make EBITDA of INR 7,000-INR 7,500 per ton consistently. Second segment is Apollo Z, which is pre-galvanized tubes. There also we make EBITDA spread of INR 6,000-INR 7,000 per ton consistently. Now Raipur products are extension of these products, right? Heavy structural, what we are doing currently is 300 square. Right? Now, 300 square gives us INR 7,000 per ton. Just imagine 5,000 square, which is coming from Raipur. It's the only product available in India, third mill globally, right? The EBITDA spread has to be higher than INR 7,000 per ton what we are making today, right? It's for more high-rise, more complex structures, right? There we can command better premium. Second is Apollo Z, which is like zinc-coated tubes, right? In Raipur, we are coming up with products like, which are combination of zinc and aluminum. We call them Alu-Zinc, right? It's again a premium product, more premium product than Apollo Z. In Apollo Z we are making INR 7,000 per ton spread, in Alu-Zinc we have to make superior margins, right? Again, I mean, being done for the first time in the world, not only in India. We already have a strong foundation of product portfolio, where we are making INR 7,000 per ton EBITDA spreads consistently. With more innovation, right, and monopolistic products, the EBITDA spread should be higher. That's what we say that, I mean, we should also have some products in the portfolio which should give us like 15%-20% EBITDA margin, INR 15,000 per ton EBITDA spread. Okay. Sir, you mentioned these INR 7 thousand, INR 6 thousand EBITDA, just for clarification, these are for the super value-added products. INR 6,000-INR 7,000 we are already making. You have the table in our presentation, where there are these products, where we have been making, such margins for last 4-5 years now. Okay. Will you tell me please, what will be the product mix or what is the share of total revenue of these products, sir? Right now, the value-added products, contribute around 65% to our portfolio, right, and 35% are general. With the super value-adds coming up, the general products, will go down to 25%-30%. 25%- 30%. Okay. Okay, that's all from my side, sir. Thank you very much and all the best. Thank you. We have the next question from the line of Rahul Agarwal from InCred Capital. Please go ahead. Yeah, hi. Thank you, and good evening. Good to see some recovery in the overall and Raipur margins. I had three questions. Firstly, on the raw material to Sanjay Ji. APL, in my sense, is already the largest customer of HRC in India, and now you would need another 1.5 million tons for Raipur. Any thoughts on this in terms of, you know, discussion with suppliers? Could there be a problem in sourcing HRC enough, or is this question irrelevant? That's the first question. Good evening, Rahul. Rahul, we have already tie-up of almost 2.5 million ton with our steel plants, sir. I think next year we are targeting for a volume of three million ton. We need 20-25% more material. I don't think this is a big issue because lot of capacity is coming in India in the next few quarters. Like one line is coming of five million ton in five million ton in JSPL. One line is coming in five million ton for in Bellary with JSW. MBC is also going to start with a capacity of three million ton. Tata Steel is also increasing a capacity of two million ton. Essar is also. MNL is also increasing their capacity by two million ton. I think almost 20 million ton capacity is coming against today. Right now, today capacity is 50 million ton in one year time, in the next three, four quarter. I don't think the raw material supply is a issue for us. Got it, sir. Sir, secondly, on the Raipur, just two questions there. ramp up of that volume for fourth quarter and next year, could you help some direction? When does the balance 500,000 ton comes on stream? Yeah. next year we are targeting for Raipur for almost 0.6 million tons. for Q4 we are targeting more than 1 lakh tons. we are targeting Got it. From APL, we are targeting 2.4 million ton from APL and 0.6 million ton from Raipur and maybe 0.1 million ton from Dubai and 0.1 million ton from Kolkata. Total we are targeting our business plan of next year is 3.2 million ton. Got it, sir. Anubhav, when does the 500,000 tons balance start at Raipur? Next year, Rahul. FY 2025. Okay. Okay. Capacity already started, Rahul. The problem is this is all new type of products, we are taking very good margins. We don't want to spoil the margin because if you see our track record, up to Corona, we are only focusing for the volume. Every year we are taking growth 30%, 40%. After Corona, we are congested. Last two years, you see our growth is almost zero. Our EBITDA margin go almost double. Next one year, this year we are to 100% focusing on our growth of volume. Like we likely be to close at 2.3 million ton this year, against 1.6 million ton or 1.7 million ton last year. This year our focusing will be a focus on growth. Next year again we came back onto the margin. When you go for the growth, you have to some sacrifice the margin. When you can manage your margin. How can we increase our margin from INR 5,000 to INR 6,000 per ton? Got it, sir. Lastly, on the general structures, you know, profitability, the margins there has been very volatile. Where does this number settle down? This is, this margin is dependent on the secondary market. Like the December, February is good. February like HRC coil price are going to up. Maybe this is our just a volume portfolio. We are focusing on our. Like, right now we have a almost order book of 500 meter. order book. IS also. I think it this take 15, 20 days to IS. EBITDA margin almost INR 20,000 per ton. EBITDA margin INR 15,000. solar product. EBITDA margin INR 12,000 per ton. Raipur. We were not able to do anything. Now our Raipur plant has started. We are totally focusing how do we change the Raipur margin from INR 3,000-INR 4,000 to INR 7,000-INR 8,000 per ton. Thank you so much for answering my question. Sir, best wishes for 2023. Thank you, Rahul. Thank you. We have the next question on the line of Sumit Jain from ASK Investments. Please go ahead. Sumit, can you hear us? Sorry. What will be the fixed cost in Raipur plant? When you say 25% utilization, what kind of capacity will come on stream? That calculation leads us to 8 lakh ton capacity that would have been operational. Sumit, Raipur fixed cost is almost close to INR 5 crore per month. Okay. INR 60 crores per annum, okay. Yeah. So when we say that, like, you know, we did 46,000 ton in Q3, right? EBITDA spread was around INR 3,000 per ton, so on a capacity of one million ton, right? That's around like 25% utilization. Those rates are already going up month-on-month. Like for Q4, we expect around 100,000 ton, so which will be 40% utilization rate, right? The EBITDA spread should be further inching up from INR 3,000 per ton to, like, above INR 4,000 per ton levels. Right. you just spoke about these three new lines. These will be your super value-added product lines. Raipur will be super value added, the three divisions basically, right? Yes. Plus there are some products what we identified from existing Apollo portfolio, right? Where, where, we see that, if we are able to create market and incentivize our distributors, right, there we could get extra margin. Just to understand, anything above 2,000 is value-added, and then what threshold when it crosses you call it super value? INR 15,000 per ton is. No, no. General is INR 2,000, okay? Value-add is INR 4,000, and super value-add is INR 15,000, per ton basis. Okay. Sanjay, you just spoke about division one, I mean, the two new divisions in Raipur. The residential, basically the wider and thinner sheets. There one can expect close to 12,000 INR per ton kind of, OP. Solar, ducting et cetera, 15,000 INR per ton, right? Yeah. The, we are targeting around the some of products our... Sorry, Sumit. The some of our project is close to INR 15,000 per ton. Some of our product is close to INR 12,000, some is INR 7,000-INR 8,000, some is INR 4,000-INR 5,000 per ton. We are not manufacturing anything less than INR 4,000 per ton, less than in the Raipur plant. I think we can achieve with a average of about INR 8,000 per ton in Raipur plant. Sumit, what happens is that within the roofing, sheet segment, right, there are multiple SKUs, right? There are multiple colors, there are multiple sizes. In some sizes we may get INR 12,000-INR 13,000 per ton. In some sizes we may get INR 6,000-INR 7,000 per ton. On an average, Raipur, the target is to hit above INR 7,000 per ton. Right. The capping that you spoke about for moving from 4-4.5 million tons in FY 2024 in terms of capacity, how much capacity will come in Dubai and how much would be in Kolkata? Sumit, right now the IPL is our aiming is IPL for 3.2 million ton. After 100% we, when we finish our bottlenecking of the plants. 1.2 for Raipur, ADPL. 0.3 million ton for Dubai. 0.2, 0.3 million ton for Kolkata. Right. Right. So to sell roughly 3 lakh tons of higher dia, which is the third line or third division in Raipur, how much square footage in terms of construction, that is needed to be basically tapped into? In Raipur total our construction area is almost close to 20 lakh sq ft. No, three. Yeah. 3 lakh tons to make it much. Building, how, what square foot is of building? Sumit, the math says around 6 kg per sq ft, right? To sell three, to sell 300,000 tons, we will need 180 million sq ft. 180 million sq ft to be built, which equals around 150 buildings of half a million square foot each. Okay, okay. Sure. Thank you. Thank you. Thank you. We have the next question on the line of Madhav Marda from Fidelity. Please go ahead. Hi, sir. Good evening. Thank you so much for your time once again. Just wanted to understand, given that, you know, it's good to see that you're announcing more debottlenecking at our existing facility. Is it that we are seeing more for like new applications such as this, water tanks, becoming a new end market for us, which is helping us expand capacity at existing locations? Are we gaining share from competitors? What is helping us sort of, you know, giving that positivity to add more capacity, which is obviously good to see. I think, Madhav, it is a mix of both, right? One is that, yes, we are gaining market share. secondary market scenario is also favorable for primary, right? We are deepening our distribution system, right? Our products like Chaukhats and blanks, there the sales are going up as those products were launched just before COVID. For one to two years we were not able to market those products as per like, you know, the aggressive plan. Now the markets have opened up, a lot of promotional activities have started, right? Yes, new applications, where we are again working very hard to replace structural steel tubes, right, against wooden structures, against angles and channels, right, against rebars, against concrete. Yes. All these factors are playing role here, right? The reason that why the nine-month sales have been so strong and we have been hitting 220,000 ton of monthly volume. I mean, now it's the time we believe that whatever we can squeeze in our existing assets, right, through debottlenecking, et cetera, we think that 3.2 million ton from 2.6 million ton at 10 plants, right? We have got 46 mills, right? This much of debottlenecking is possible. Understood. Our EBITDA per ton, outlook for FY 2024, 2025 stays in that roughly INR 5,000 range as Raipur kicks in. Is that or how should we think about margins growing here? Yeah. I mean, for first nine months we are at around INR 4,200, right? Next year our target is INR 5,000 per ton. Like we said that next year the focus will be on margin recovery. If assuming that Raipur is able to deliver INR 6,000-INR 8,000 per ton, right, almost one million ton of sales will be coming from there. Incremental sales through debottlenecking capacity, right? That will also be more margin accretive. I guess as a group, we want our EBITDA spread to hit INR 6,000 per ton. This happens in FY 2025. FY 2026, I mean, difficult to say. but, I mean... Right. INR 5,000 per ton is minimum. Like, you know, we will be doing with all the sales volume targets what we highlighted. Got it. Just last question from my side. Our CapEx outlook for FY 2024, have you already got the budget in place? How much we'll be spending for CapEx? For five million ton capacity we need around INR 400 crores of CapEx. Wow. That's it. That's. Yeah. Okay. Yeah. that. Understood. That should be equal to like, our 30% of this year EBITDA, nine months, 40% of nine months EBITDA. This is obviously because it's debottlenecking, so we don't need to invest too much to expand capacity, basically. Yes. Because we are only with two plants, new plants, Dubai and Kolkata. Otherwise, all the debottlenecking we are going to do. Understood. Okay. Thank you so much. Thank you. Thank you. We have the next question on the line of Akshay from Canara Robeco Mutual Fund. Please go ahead. Yes, sir. Thank you for the opportunity. I just wanted to understand this EBITDA per ton movement. If I see Q2 FY 2023, EBITDA per ton was around INR 38-. Akshay, your audio is a bit low. If you could kindly go off this speakerphone and come closer to the mic. Hello? Yeah, this is better. Yeah. If I see the EBITDA per ton in Q2 was INR 3,850. In the presentation you had mentioned that INR 300 was because of the adverse product mix, INR 100 was the Raipur hit, and then INR 300 were the incremental sweetness that you had to pass it on to the channel. In Q3, if I assume that INR 300 of sweetness that we had to pass that was out, and even we were turning profitable in Raipur, that was around INR 400. 3,800 plus 400, that is 4,200. At least the product mix sequentially has not improved that much. What explains that incremental INR 300 EBITDA that the company has done in Q3? That incremental INR 250, INR 300 is the demand pull. When the channel started restocking. There is good demand scenario and APL Apollo being the largest player. There is, like, you know, some short supply in the market. Then you try to increase the pricing. That also explains the dominant power of APL Apollo being the market leader, that when market trends are favorable, we can command premium. That INR 200-INR 250 per ton of effect was due to favorable market conditions. Okay. That was across products, right? That was across products. Okay. How do you see the demand shaping, I mean, in Q4? I mean, do we... Hello? Q3, Q4 we are targeting almost close to 7 lakh ton of volume. Okay, sir. Already we have done in month of January 2.5 lakh tons. Okay. Yeah, that's it from my side. Thank you. Thank you. We have the next line of Lavanya T from UBS. Please go ahead. Hi, sir. Thanks for the opportunity. I just wanted to understand this, the new opportunities like the water infrastructure and all. For all of these products, the design is being done by APL or the contractors or the subcontractors are increasing their ability in this space. Again, it could be either of the ways. Right. One is that obviously Apollo takes the initiative, right? No contractor will be willing to spend time and energy on designing anything on something new, right? APL Apollo design team takes the initiative, right? Where we offer the design for free of cost to the contractors. If they feel that yes, there is a saving, then they go ahead. Second is that we may help the consultants or contractors or their design team, in-house design teams, wherein our team goes and sits with them, and then we can jointly design it, right? It could be either of the ways, but initiative is always taken by APL Apollo. Okay. Okay, got it. I just wanted to check this because if the contractors in-built, they start building this ability, that will be much more helpful for APL to serve more number of buildings. Like, just you have highlighted, like our target, we need 150 buildings of 0.5 sq ft. I just wanted to check that on. Mm-hmm. Mm-hmm. I just missed your point on, 18,000-20,000, the super valued products. What is the share that you are looking at of these products in next, like FY 2024, FY 2025? At least, 10%. These are largely the products which are being served from Dadri and few in the existing portfolio of APL. Out of five, out of four million in FY 2025, yes, at least half million ton should be coming. Okay. Upward of INR 18,000 per ton, yes. Got it. Thank you. Thank you so much for the opportunity. All the best. Thank you. We have the next question on the line of Anupam Gupta from IIFL Securities. Please go ahead. Hi sir, I have a few questions. Firstly, on this quarter, we see that the realizations per se are up close to about INR five and a half thousand, INR six thousand per ton. Obviously the HRC prices were down to on an average basis. What drove this higher realizations for us? Anupam, so one is that yes, NSR is up 5,000 per ton. If you look at the raw material price also for us it was 62,000 per ton versus 57,000 per ton. Even raw material price for us is up by INR 5,000 per ton. Yeah, I understand that. What drove that difference? Otherwise we see HRC prices on average are down during the quarter versus the previous quarter. If you look at the average, right, you can't take from like 31st October to 31st December, right? That's not the right criteria. You need to take the average, right? Steel companies, they go they lower their prices, like, you know, like, you know, on month-wise basis. So the average buying or average selling is what you see in our numbers. Okay. That would be for the steel companies also, the NSR. Actually, steel companies have reported a decline in NSR except one company, but broadly, yeah, so that's why the difference was. That's why the question, of course, was coming. That average JSW or Tata have reported a decline in for their NSR. Anupam, they have a lot of product mix. Okay. Understand, sir. second question is on the capacity Say, Like, if you say. This month we have done in APL 2.6 की जगह हमने 2.25 किया है. 2.25 into 12. 2.7 million ton की sir हमने January में run rate निकाला है. अगर आपको Raipur का market मिल गया तो जो हमारी 500 square की mill है जिसका अभी हम recurring capacity 15,000 ton मांग कर चल रहे हैं. This mill can produce 25,000 ton, 30,000 ton easily. Okay, okay understand sir. Second thing इसमें आपने बोला कि you have one million ton is what is commissioned at this point of time and balance आपका FY 2025 में आएगा. Is that what I heard you right? नहीं, नहीं. हमारा रायपुर सारा commission होगा. सिर्फ हमारा narrow ये Galvalume line commission होना रहेगा. उसके अलावा हमारा रायपुर सारा commission होकर start हो चुका है. कुछ जो government के IAS की formalities होती हैं कि हमने stamp prism उनको बना के दिया है. Slowly, slowly we are getting the certification from the departments. हमारा plant ramp up होता जाएगा। मैं आपको बार-बार अभी बोला कि मैं बहुत conservative बात कर रहा हूं क्योंकि मेरे को raw materials भी देखना है कि मेरे पास raw material का कितना arrangement है। मेरे को EBITDA wise अपने raw material को भी distribute करना है। I think so कि first six months raw material का यह उतना easy availability नहीं रहना चाहिए। हम उसके हिसाब से अपना business plan बना रहे हैं। Second half में raw material बहुत easy हो जाएगा। हमारा जो business plan है first half में हम close to जाएंगे 1.6 million, 1.4, 1.5, 1.6 के आसपास। Second half में maybe हम two million ton भी कर सकते हैं। उसको अभी commit करना थोड़ा सा मुश्किल है क्योंकि market volatility is too high. एकदम से market scenario change होता है तो हम बहुत conservative बातें कर रहे हैं कि हम जो भी बातें करें उसको हम पूरा कर सकें. Like you have देखा होगा इस साल में हमने शुरू में 2.2 million tons-2.4 million tons बोला था. We are still targeting कि हम 2.4 million tons को hit कर दें. 2.3 million tons तो हम पक्का है कि हम hit कर ही देंगे. Okay, okay sure sir. और sir second एक और question इसमें यह था कि of that 1.2 million ton आप जो बोल रहे हैं रायपुर में उसमें what is the breakup between let's say the tubes, the sheets and the other value added, the super value added products which you are saying in terms of volume? Tubes इसमें almost होगा 8 lakh ton के आसपास. Thickness from 0.23mm-40 mm thickness and 10 square-1000 square dia. Okay. The roofing sheets and solar sheets and bla, bla जो others है वो 0.4 million ton होगा. Okay, okay understand. sir one question if you look at this quarter आपके general structures में you have already exceeded one million tons of run rate. आपने 264,000 tons का volume किया general structures में which is almost equal into what your capacity is. वहां पे what is the plan incrementally? Will you add more capacity in general structures or will you let go of that market share or not? No, no. We are not going to increase the capacity in this sector. Now we are only focusing on the value added product. Right now हमने छोटे-छोटे कुछ अपने materials को job work कराना शुरू किया है। अभी हमने एक unit Murbad में लिया है job work के लिए almost 50,000 ton per annum के हिसाब से। जैसे-जैसे requirement बढ़ेगी हम बाहर से job work कराएंगे। हम अपना fund allocation fix में इसके लिए नहीं करेंगे। Okay. ideally the way to look at it is कि आगे थोड़ा सा उस segment में profitability should be on the lower side even though you will not lose market share. नहीं I think अब उसमें भी profitability अपना थोड़ा next quarter से increase करेंगे. Okay, okay understand. Just one last question sir if you can give the CapEx total plan for FY 2023, 2024 and 2025. The total absolute number. For five million tons I require INR 400 crore ±5%. FY 2023 if our EBITDA margins are good in this year then maybe we go in one year for this CapEx. If slightly business is sluggish then we go for two- year CapEx plan for this dependent on the cash flow. Basically, आप बोल रहे हैं कि four million to five million tons जाने के लिए INR 400 crore चाहिए। 4 million tons के लिए थोड़ा पैसा लगना बाकी है। Total INR 400 crore आपको चाहिए five million tons को achieve करने के लिए। Okay, okay. Understand sir. Thanks a lot. Thank you. We have the next question on line from Pallav Agarwal from Antique Stock Broking. Please go ahead. Yeah, hello this is Pallav Agarwal. Sir my question was on you know if I look at this quarter number the purchase of stock in trade I mean absolute number has gone up. Is this I think part of the job work that you were mentioning कि you are probably getting the lower end products converted from outside and purchasing them? नहीं Pallavi जी if you see the month of October and November market is on the downward trend. Sales are very low. तो वहां पर इस साल we have a committed with the steel plants कि हमको इतना material लेना ही होगा and with the long term associate हमको उनके pressure में कभी ज्यादा माल भी खाना पड़ता था। That time we exit the material from through the trading route. सब हमारा जो excess material unwanted sizes था उसको मैं trading route से निकाला था तो इस quarter में वापस control हो जाएगा because trading is not our portfolio. Okay. ये जो आपका trading volume है वो अपना जो 600,000 ton है उसमें include है या उसमें नहीं include है because- नहीं उसमें हम trading कभी include नहीं करते हैं। Maybe that's why आपका vendor realization इसलिए higher लग रहा है क्योंकि you know वो trade वो volume में नहीं है but revenues में आ रहा है. I am guessing that's why you know the disconnect Revenue में आ रहा है. Revenue में आ रहा है. Revenue में आएगा ना sales में तो आएगा ही नहीं. इसके पीछे आता है एक conversion है, एक चीज है तो item की separate आती है. उसको फिर अलग अलग क्यों नहीं बेचते हो? नहीं वो allowed नहीं है as per India. अच्छा allowed नहीं है as per India. हां maybe इसीलिए आपका realization ज्यादा आ रहा है because you know वो trading revenue ऊपर आ रहा है but volume में नहीं आ रहा है That's why its realization pattern is going हां exactly वो ही disconnect है आपका बढ़ रहा है बाकी लोगों का काम हो रहा है तो you know तो वो disconnect है sir. दूसरा, yeah I got that so if you can just give us you know अगर आप वो adjust करके सब कुछ आप add कर दें if you give us some idea of the traded volumes then maybe you know the actual वो एक बार देना पड़ेगा sir इसके. भला we will come back to you on this. Sure sir. इसमें आपको नीका है कि मालिक से देंगे ज्यादा नहीं होगा 大 概 30,000 ton के आसपास होना चाहिए उतना ही आ रहा है sir probably अगर आप you know INR 100 crores को अगर divide by. Number तो मतलब नहीं आ रहा है जो मेरे को एक idea है मोटा मोटी तो मैं 30,000 tons के आसपास होना चाहिए मेरे हिसाब से. ठीक है ठीक है That I will take offline just also on you know this coated products you know if I look at JSW Steel coated products का performance you know वो पहले तो बहुत अच्छा कर रहा था you know maybe about 6-7 quarters back but जब से steel prices have been going down you know they have been taking a lot of NRV losses net inventory provision losses to last 14 quarters they are actually reporting a loss. I understand that's a totally different segment and you know but so just you know little if we हम लोग भी you know ultimately going to coated products that is what our focus area is. If you can just explain that why we are different you know compared to them you know so that will help. ऐसा steel products का देखो अपना एक systems होता है वो अपने system के साथ चलते हैं जब उनको pressure होता है तो maybe वो export route से सब route से भी सस्ता मंदा करके माल निकाल देते हैं। उनको तो mainly HRC coil पर उनका focus होता है कि उनका profit HRC coil से हो जाए। हमारा bread and butter तो सारा QB है। जब हमको loss तो पीछे सबको ही लग रहा था but हमको जब loss लग रहा था तो भी take a stand कि हम loss में माल नहीं बेचेंगे। हम अपनी rate पर ही माल बेचेंगे चाहे we compromise with the volume. Shuru mein aapne dekha hoga hamara volume toota bhi tha uske baad mein market ne accept aur hamara koi market mein replacement nahi tha isliye hamara maal hamare prices par bikna shuru ho gaya jiska reflection Q4 mein maybe hamare profit mein bhi aayega ki Q4 mein hamara profit badhna chahiye achha khaasa. Sure sir. Sir also just you know I mean in the general structure आपने बोला आप outsourcing वगैरह करा रहे हो, does it not make sense to probably maybe you know acquire a smaller scrap based patra based player to cater to that क्योंकि आपका फिर you know cost भी कम हो जाए maybe the spreads over there? देखो आज Apollo एक brand है people faith on the brand Apollo. कोई बच्चा भी घर से pipe घर में कुछ लगाना हो तो सीधा बोलता है कि Apollo का pipe जाकर ले आओ। आप किसी भी fabricator पास चले जाओ तो fabricator quote you two prices one is Apollo Apollo grade का price ये है और second ये बाकी secondary और आला आला फला फला सब उसमें आता है वो है। हमारा एक अपना एक goodwill बन चुका है जो बहुत मेहनत से बनी है There is a almost कहते हैं ना 20 years exercise we can't go in the patra and I don't believe in the patra material because the patra material is a timing for time for timing है। HRC coil का आज अगर आप steel products का cost of production देखो तो वो INR 42,000 के आसपास में है but they are taking more EBITDA margins so उनका material महंगा हो जाता है। If you see the patra costing patra is close to INR 52,000-INR 53,000 per ton. जब patra और HRC के costing में INR 10,000 का fark hai this is a matter of time ki patra kitna din India में survive karta hai. I don't think ki patra is going to survive more than one year or six months. Last quarter mein patra ekdam khatam tha. Humne hamara volume jo growth ho raha hai humne January mein 2.55 lakh tons ka kaam kiya hai isliye kya hai ki hamare paas hum kaam toh 3 lakh tons ka bhi kar lete but we have no raw material. Hamare paas jitna raw material chahiye tha humne sara bech aaya I am not I do not believe in the patra material and this is not a long term business. This is only one opportunity business. आज HRC coil अगर ऊपर होगा तो Patra चलेगा अगर HRC coil नीचे आ जाएगा तो Patra खत्म हो जाएगा। Sure sir fair enough. Sir lastly just on you know I mean ये Jal Jeevan Mission में you know is there you know our focus area is increasing or because are some of the government tenders very at very attractive margins you know compared to normal distribution business? बस किसी भी tender business में कभी कोई margin नहीं होता है। सिर्फ चोरी चकाली का काम होता है। कभी हम tender business में नहीं जाते हैं। हम आप अगर आप हमारा cost of production देखोगे तो India में lowest है। हमको कोई fund का problem नहीं है। हमको किसी capacity का problem नहीं है। अगर margin होता तो फिर हम जल निगम या कोई भी mission क्यों छोड़ते? Why we don't do? Right वहां payment terms ही as you said थोड़ा payment terms also are. Payment terms है माल कम भेज दिया पैसा खिला के माल pass करा लिया ये सब चोरी चकाली का business है. अच्छा अच्छा. हां मैं कह रहा हूं हमारा organization इन सब चीज में believe नहीं करता है. We are stay away from this type of businesses. Sure sir thank you so much for answering all the questions and all the best. Thank you. We have the next question from the line of Mitul Shah from Reliance Securities. Please go ahead. Thank you for the opportunity, congratulations for a very strong performance on operating margins. The first question is again on the EBITDA per ton for general structure, as you already highlighted in detail. There is a big jump of nearly INR 900 per ton on Q1 to business despite volume being low. I want to understand, out of this INR 900, how much would be related to the pricing and how much is the raw material coming down? Because you also highlighted that raw material in general has gone up. Is it like that more than 900 we have covered from pricing only? No, no. Rightly, I am earlier saying Hindi. Hamara market do part pe bata hua hai. One is with the primary one is with the secondary. Jaise maine pehle bhi bataya ki secondary market pressure mein hai. Uske karan se hamara pehle hum jis tarham we are selling 75 to secondary ka price hota tha 55. Now this gap is come down to INR 3,000-INR 4,000 ton. Gap jese se kam hota hai hamara margin segment mein bachta chala jata hai. Kyunki we are able to sell material on our prices. Okay, sir. Primary it is pricing power. Second question is on this railway modernization and airport related, where we have mentioned nearly 25%-30% is coming from this infrastructure segment. For these nine months, how much would have been roughly from this railway modernization? This railway, see, I mean there are regular, there is regular business which keeps on coming, which has been coming for last many years. What I highlighted was this new opportunity where these railway stations are being redeveloped, right. 50 railway stations have been awarded in last six months to 12 months. The work will start for them. Right now they are in all the approval stage, right. The actual work will start from FY 2024. Right. That's when you see our volume contribution will be coming from next year. This year, nine months, whatever has happened, this is on regular business where our tubes are being used anyways. Now we are, what we are saying is the whole railway station should be developed on tubes and maybe three months down the line, we will be able to share with you, the railway station, which is going to be constructed 100% on tubes in South India. On that, follow-up is that how much would be per railway station in terms of either quantity or revenue potential? Typically a railway station has three structures. Okay. One is called a concourse building. Concourse building is the, the building which is coming above the railway tracks, right. There the railway is using it for shopping area, for office space, etc., etc. That is on an average, say 400,000 sq ft-500,000 sq ft. There could be additional office blocks. Right. Now they in some cases it is there, in some cases it is not there. There is a foot overbridge, FOBs. Right. They are mainly on steel. That we are promoting on tubes. Third is the canopy for railway station, for railway tracks. Put together like, one railway station could generate a tube demand of around 3,000 tons. Okay. Sir lastly, on this margin side, again, this being a kind of a government projects only. Directionally, how one should look at margin from these projects, railway or airport? Again, this is part of our heavy structural tubes, Mitul, right? Where we have been generating INR 7,000 per ton EBITDA spread, right, for many quarters now. That's the minimum you can take. As these structures are complex where our 500 square, 1,000 square products will be used, there the margin will be in double digits. Sir, in airport as we stated that nearly 60%-65% is Apollo's share, APL Apollo. Similarly any number for railway based on past one or two years? Railway whatever, see railway stations, are yet to start, like I said, but the metro stations, right, the Cochin Metro, the Delhi Metro, the Mumbai Metro, wherever tubes have been used, Apollo market share will be at least 60%-70%. Thank you and all the best. Thank you. Participants are requested to kindly restrict your questions to two per person. We have the next question on the line of Rahul Jain from Systematix. Please go ahead. Yeah. Hi. Thanks for taking my question. Sir, on the last year you were very bit strong on the tubular steel segment, you know, where hospitals and we had identified many such segments. What is the progress on that and what kind, what and where is this classified in our product classification segment in terms of volume? Rahul, so that comes under our heavy structural segment, one. Second, with the proof of concept of Delhi's six hospitals, right, last year. Now we have got approved, we have got approval with India's largest private hospital chain, which is coming up with its five new greenfield projects. One hospital work has already started in Mumbai. Maybe like one month down the line, we can send you over the site, and you can have look with your own eyes. Then, there is a housing project from Military Engineer Services, which is arm of Indian military. They are doing a housing project in New Delhi, right? It's all tubular. One month down the line you can come and have a look, right. Now we have got buildings in Kathmandu, which is a new convention center which is coming up. One, two months down the line, the work will start there. There is a university campus in Greater Noida, which is now being constructed over tubes. There has been good success for us in promotion of tubular construction, right? With these new segments coming from railway stations and water tanks, et cetera, this we believe, I mean, whatever the plans we had set for ourselves, we're going to achieve those. Yeah. Thanks. That was very elaborate. Also, we are given a number of 220 KT. What kind of conversion do we expect? Do we also get any kind of a service fee for giving the kind of ideation and things like that? No. Right now we are offering the design fee of cost. Right. Right. Right. Sir also on Apollo Mart, any progress on that? Are they going to, you know, integrate it with Shankara or is it looking at that incrementally? Could you give plans on that? Rahul, we are very happy with the current arrangement with Shankara, right? Like I already told you, the sales are up 170% in the first nine months. We see more growth coming in the coming quarters, based on new products from Raipur, right? Nothing on that front. Apollo Mart, I mean, we are still evaluating because the business is low margin, right? High working capital intensive. We will be very prudent to allocate any capital at that front, right? Because Apollo, we have learned hard to come to like 35%-40% kind of ROC level. Anything which we do new, right, it has to match those expectations, right? Unless it does that, we are not going to go ahead. It is still under evaluation mode. Right. That was very elaborate. Thanks. Thank you. We have the next question on the line of Sumit Jain from ASK Investments. Please go ahead. Just to, you know, get me cash flow, you know. Sir your audio is not very clear. Could you kindly go off to speaker phone? Yeah. Is it good now? It's still coming a little hazy. If you'll come much more closer to the microphone. Basically, I'm looking for cash flow bridge, right? INR 25 crores is what the negative figure is. In Shankara you would have invested INR 75 crores, buying the promoter stake, and then after that, there were preferential allotment. How much went in 2022? Right. INR 75 crore went in FY 2022 and the warrant 25% money is this INR 25 crore. Okay. The next tranche will be going when? 18 months from the deal in, March, so September this year. September this year. Yeah. Just to get this match right, perhaps we'll require far higher volume in terms of square footage for higher dia mill, basically Raipur third line. At 6 kgs per sq ft, probably that number works out to three times what you spoke, 180 million sq ft. That was my mistake. That was miscalculation. Yeah. It should be. Close to 500 million sq ft. Yes. INR 5 crore sq ft. 500 million sq ft. 50 million sq ft, yes. 50 crore sq ft. 50 million, 50 million, 5 crore sq ft. And- It's simple. Just divide, 3 lakh tons into 1,000 kgs divided by 6. Right. Right. Perfect. Sure. Thanks. Thank you. We have the next question on the line of Alisha Mahawla from Envision Capital. Please go ahead. Hi, sir. Good evening. Thank you for the opportunity. Just wanted to know, is there any inventory gain or loss in this quarter? No, Alisha. Very, like, you know, maybe like INR 10-INR 20 per ton. That's about it. Previous quarter, Q2? See, I mean, we have been highlighting that, we work on very limited inventory levels. I mean, steel prices, like in nine months are down by INR 20,000 a ton, right? If you go with that math, I mean, inventory losses would have been. INR 300 crore. Massive, right? There is no such booking, right. Our business is clear that we hold minimum inventory levels, right? Turnaround time is 20-25 days. Any sharp increase or decrease in steel prices shouldn't impact us more than like INR 40-INR 50 per ton. Okay. Sure. Just wanted to know when is the Dubai and Kolkata capacity coming on stream? Dubai I think. Like we have already guided that, 100 K should come in FY 2024, right? Dubai will start up to July and Kolkata up to December. Right. This mid-year Dubai will start and end of the year Kolkata will start. We will have like four, five months of Dubai plant operational and two, three months of Kolkata plant operational. In FY 20 24 I'm talking. Sir just one last question. What products will we be making in Dubai and Kolkata? Dubai, the total capacity is 300,000 tons. In Kolkata, the total capacity will be around 200,000 tons. The products will mirror like what APL Apollo right now is doing. Okay. Sure. Thank you. Thank you. That was the last question. I would now like to hand it over to the management for closing comments. Thanks, thanks everyone for joining us. It was a real pleasure to be here. We hope we have been able to address all questions except from IT Broking, which we will take up post this call. Thank you so much. Have a good day. Bye. Thank you. On behalf of Asian Markets Securities Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.