Ladies and gentlemen, good day and welcome to the APL Apollo Tubes Limited Q4 FY 2023 results conference call hosted by Equirus Securities. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aman Agarwal from Equirus Securities. Thank you, and over to you, sir. Yeah. Thanks, Gavin. Good evening, everyone. On behalf of Equirus Securities, I welcome you to the 4Q FY 2023 earnings conference call of APL Apollo Tubes. From the management side, we have with us Mr. Sanjay Gupta, Chairman and Managing Director, Mr. Deepak Goyal, who is the Chief Financial Officer, and Mr. Anubhav Gupta, who is the Chief Strategy Officer. Not wasting much time, I would straightaway like to hand over the call to the management team for their opening remarks. Over to you, sir. Thanks, Aman. Thanks for hosting us for our quarterly earnings call. Good evening, everyone. We welcome you all on our FY23 earnings call. Sorry to start this a bit late this time. Some of the directors had travel plans. FY23 we just closed. It was like a rollercoaster ride with steel prices falling from INR 65,000 per ton to INR 55,000 per ton, and then eventually settling between INR 55,000-INR 60,000 a ton. This decline was triggered after the global meltdown of commodity prices started in May 2022. It impacted building material space and APL Apollo Tubes as well with the channel destocking and some margin pressure due to a push sales strategy when our channel partners go for destocking. We are pretty glad to share that we ended FY 2023 on a high note as our sales volume recovered very sharply with 30% growth from after two continuous years of COVID-led disruption, FY 2021 and FY 2022. At the same time, the company's capacity increased to 3.6 million tons as we are talking right now, from 2.6 million tons, post commencement of the new Raipur plant, which is our biggest ever plant. Some of the highlights we like to share are for FY 2023, the volume growth was 30% to almost 2.3 million tons. Out of this, Raipur plant contributed around 6%. The total volume from Raipur plant was 137,000 tons for full year, which was, which now is ramping up pretty fast. The EBITDA per ton is lower for FY 2023 versus last year because of channel destocking, which led to some push sales strategy. Of course, Raipur plant was being stabilized, so there were some costs which got loaded up front. Despite lower EBITDA per ton, the EBITDA growth was 8% to INR 10.2 billion. It was supported by a strong volume growth. The PAT growth was 4% to INR 6.4 billion due to high depreciation as the new Raipur plant started in FY23. All of the depreciation was accounted towards the second half of FY23. The working capital days remained in single digit at four days despite the inventory days going up as we started the Raipur plant. The debtor days came further down and we continue to sustain at a single digit working capital cycle. Operating cash flows were pretty solid as well, with INR 9.7 billion of OCF in FY23. It was almost 95% of our EBITDA. The cash flow generation remains pretty strong. Because of the strong cash flow generation, the CapEx we did last year was INR 8.4 billion. Out of this, 80% was for Raipur and now Raipur CapEx for one million ton is pretty much done. This led to slight increase in our net debt to INR 2.4 billion versus INR 2.0 billion last year. As the CapEx intensity is slowing down, this will be coming off over the next two, three quarters. Encouraged by strong operating cash flows, we are glad to share that the board has approved a dividend of INR five per share, right, which is a payout of 20%+, 20%+. For company, this is one of the best payout ratios. We are glad that the solid cash flow generation is resulting in a shareholder reward, at the same time. The ROC was 29%. The ROE was 24%. This was slightly lower YOY, but because of our heavy investments into Raipur plant, which has just started and this year as we expect good ramp-up and good profitability from Raipur, the ROEs and ROCs will inch upward of 35%. Eventually they will hit 40% once we have the full ramp-up from Raipur. Coming to some of the other Updates. One is the volume trends in Raipur. You would see that we started ramping up plant from Q1 FY2023 onwards by the time of Q4 we did 73,000 tons in volume, which was if you annualize it was at 30% utilization. The EBITDA per ton trends are also encouraging upward of INR 4,000-INR 4,500 per ton from Raipur. The last two, three months, we launched our 500 square diameter mill and also the color-coated products mainly for roofing and wall cladding. These two complexes are stabilizing and giving us incremental volume. Because these are two new products, the market creation efforts are ongoing in an aggressive manner. Whether it is for high dia tubes for steel building solutions or it is for color-coated products for roofing, housing and industrial applications. There also we are focusing aggressively on the market creation by pushing our products to influencers and our distributors. Lastly on some of the business decisions what we take which we took early FY 2023 was to invest some stake in our distributor Shankara. I'm glad to share that the volume contribution from that client has increased by 180% in FY 2023 versus FY 2022. This led to very strong relationship between the two organizations with our supply to them, and they going aggressively on the market share gains within Southern India. This relationship turned out to be a very win-win kind of thing for each of us. We are looking forward to further strengthen it as we have aggressive plans over the next two- three years over that platform. Coming on the guidance and future plans, our capacity expansion in Dubai, in East India and new incremental capacity in Raipur, plus some debottlenecking, will take us to around five million tons by FY2025, which is part of our vision 2025. For that we need a CapEx of INR five billion-six billion, which will be funded from internal cash flows over the next 18 months. By FY26 we'll target to utilize this capacity. In next two years, we stick to our sales volume target of 3.8 million tons -4 million tons by FY 2025 with operational capacity of five million tons. More or less we are sticking to our guidelines, our guidance, which we have been communicating over the last 15 months-18 months. That's it from our side, Aman. We can now have the Q&A session. Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rahul Agarwal from InCred Capital. Please go ahead. Yeah. Hi, good evening. Thank you for the opportunity. Congratulations on consistently meeting the stated targets and good to see a higher dividend payout as well. First question, Sanjay Ji, was more on, you know, the competitive landscape. You know, we hear from certain regional channel checks that Tata Structura and JSW Steel both have, you know, kinda ramped up their capacity in structural tubes, and JSW Steel has actually started, you know, manufacturing that. Few regional player also we hear are, you know, picking up quite a decent amount of volumes on a monthly basis. I just wanted to know your thoughts, you know, because what is happening is, there is a competition now building up for APL Apollo, which was absent for many years, and we had a very clear runway of growth. Just your thoughts on, you know, is it really real and what do you expect going into next two years, three years? That's my first question. Thank you, Rahul. Rahul, I also hear and read in the position of Tata Steel, right now they have a capacity of 1 million ton and they are want to go to 4 million ton by 2030. I have no plan with Tata Steel in which sector Tata is going to want to go for four million ton in the next six, seven years. I mean, if we go for four million ton in the like right now is in the structural tube 0.2 million ton. If we calculate to have the capacity for structural tube 0.2 million - 1 million ton or 1.5 million ton, this is not a big threat for us, as well as Tata Ji responsible player in the market. He never destroy the market, so we are don't worry about the Tata Steel. JSW just taken a plant called Bhushan Power & Steel in Orissa. They're little bit a capacity of tube also in the parental plant. We have a no such as information from the market what they are planning in the conversion with JSW. We have no worry because when there is a healthy JSW or Tata Steel or SSAB, they are healthy players. I'm not worried about if anybody comes, so I'll not worry about it. They are not a market destroyer. As business players, if these people increase their capacity a little, so my cost is in control, my everything is in control. I have a good valuation product with me. I have branding in the market. I have a good distribution network. First of all, I will not have any problem with the business. I'm not worried at all. Market is also growing very fastly in the tube business. What we are producing, we are seeing. There is good autonomy where maybe everyone will survive. It is not a big matter for us. Time to time, if there is a healthy competition, you will never. You don't have to be afraid of it, you have to learn from it. Time to time we take the corrective action and go forward. As of. I don't see today any big threat. Got it, sir. Understand. Second question was, you know, how has been April and May so far? How are the HRC prices behaving? Obviously your target of 3 million tons -3.2 million tons at INR 5,000 EBITDA next year, basically needs like INR 7 lakh, INR 7.25 lakhs quarterly run rate. How are we placed on that? How is the market behaving? As per we made the business plan for three million tons for this year. In the first half, we are thinking we go for about 13 lakh tons, maybe 14 lakh tons, maybe 12.5 lakh tons -14 lakh tons, anywhere between. In the second half, because in our ADPL, one more machine is yet to be started. It's just in the last point of commissioning. I'll be thinking in June it will be completed. There are three complexes there in ADPL. One complex we have called HSU complex. Second complex we have called wider complex. Third complex we have called narrow section complex. Our narrow complex started first, but unfortunately one machine got stuck in it, because of which that complex of ours is not able to perform. HSU complex and wider complex is running fine. HSU complex is gradually being developed. It will be a totally new product, 500 square, depending on 500 square. That HSU complex has now reached a run rate of 7,000 tons -8,000 tons. Wider complex of ours has reached a run rate of 15,000-20,000 tons. Our narrow section complex is running at a run rate of 3,000 tons -4,000 tons. As the machines get sterilized in June and July, it's just shoot up the ramp up to 30,000 ton straight forward. This is our old market for the east. We don't have that much of a problem because the products we have, we have already created a lot of market for them. We are thinking in the next half, we are going for 15 lakh-16 lakh ton anywhere, and we cross the target. At the point of steel prices, again, from the month of April, steel prices are going down, but not like last year. Last year gap of from INR 75,000 to INR 55,000 or INR 50,000 this time. This year is slightly slowed down, like INR 1,000, INR 2,000. This is not a big chapter, but no doubt, big chapter, but not a big chapter. You can manage it. Got it, sir. Got it. Thank you so much for answering. I'll come back again. Thank you. Thank you, Rahul. Thank you. The next question is from the line of Invest Research. Please go ahead. Hello. Am I audible, sir? Yes, you are audible, sir. Please go ahead. Okay. Yes, sir. Sir, you mentioned. State your name and go ahead with your question, sir. I'm CA Garvit Goyal from Nvest Research, sir. Go ahead. My first question is on the your volume target. Like you mentioned, 30 lakh kind of volume in FY 2024 target, which is more than 30% growth in volumes, right? If we take your guided EBITDA per ton for INR 5,000, it gives us the EBITDA growth of approximately 50%. Can you elaborate on what are the projects in line for completion in FY 2024, which makes you believe in this? I'm asking this because run rate for January was, I think it was 250,000, as you mentioned in earlier call. Considering your overall Q4 volumes, it seems that monthly volumes declined in Feb and March, despite being good time for construction. Kindly put some color on that, sir. See, our products are sold through distribution channel, okay? We are not dependent on a lumpy project, B2B business where we have a strong order book. If you look at our inventory, that is like almost 30 days, which is right from the sourcing of raw material to the processing and dispatching, right? We never had the order book visibility in our business plan, okay? Our job is to number one, innovate a product. Number two, create the market for that. Number three, to distribute it efficiently, so that it is profitable for us and our channel partners at the same time. If you look at my FY 2024 business plan, yes, we are targeting 30% volume growth, same like we did in FY 2023, right? If you look at my five-year, 10-year volume CAGR, we are pretty much confident that this kind of run rate momentum is possible, right? Which we are fully confident about it. Last year, I mean, just to add to it, when steel prices crashed from INR 75,000 per ton to INR 50,000 per ton, even in that, I mean, that was, I would say worst year for the steel industry. Even then, we could manage a 30% volume growth. This year should be like more or less stable scenario for global commodities. This momentum is also backed by all our innovation work what we have done in Raipur plant, right? Like we mentioned that there are two products which are already being established in the market, whether it is high dia tubes, rendered of 7,000 ton monthly -8,000 ton monthly. Whether it is roofing products, the coated products that also renders at 15,000 tons -20,000 tons. With our more thicker sheets, thicker color-coated sheets, which will start in one months -two months, right? That is only going to add to the momentum. The overall industry is also expanding, right? It's not that only Apollo is growing, right? We are growing, but we are also getting good support from industry. You will also see that it has never been the case that Q4 must have been the seasonally strong quarter for us, right? I mean, we try to make our business nine years. It is more skewed towards second half, but then December quarter could be good, March quarter could be good for us. Okay. Understood, sir. Sir, mainly, actually my question was from the EBITDA per ton side, right? Despite showing 30%. Yes, you heard us right. I mean, in FY2023, our EBITDA per ton was INR 4,500, right? This was despite the fact that we weathered or we faced the raw material decline pressure right from INR 75,000 per ton levels to INR 50,000 per ton level. Plus, we were stabilizing our Raipur plant. These two factors depressed EBITDA spreads, right? This year, FY2024, if even if we are able to achieve Q4 FY23 EBITDA levels, yes, we are talking about good jump in EBITDA, more than our volume growth. Your assessment is right, and we are confident of that. Okay. Understood, sir. Sir, what will be the targeted value-added plus percentage to your total volume in FY 2024? FY2023 it was slightly lower, right, versus FY2022. This will go back to 60% + levels and eventually to 75%, right? When we have a fully commissioned five million ton capacity because all new incremental capacity, whether it was Raipur which got commissioned or the new capacity which is coming, majority is value-added products. FY2020, FY2024, we would be improving our sales mix with value-added product contributing 60% + and eventually to 75% when we hit our five million ton capacity in three years. No. Actually, I was asking what was the reason for this downfall in the VAP percentage? Overall volumes were growing, so why is this value-added plus percentage going down? If you look at last three years, FY 2021 and FY 2022, my general product category, it actually declined in absolute terms. The steel prices were high, so the affordability for my general products deteriorated. That's why there was some shift towards the scrap steel or inferior products, right, in our industry. Now that the prices went down, right, the affordability improved and there was recovery in our general products. That led to some deterioration in sales mix, but we are not too much bothered about it, given the fact that Raipur is stabilizing well and Raipur is all high value-added products. Understood, sir. Sir, one last question on the cash flow side. Actually, if you see on the result PDF and the presentation, I think the figures are slightly different for cash flow from operating activities. Right. What happens is that, I mean, there is a reclassification. You are comparing FY 2022 versus FY 23? No, no. No, no. It's not comparison. Actually, for FY 2023, your cash flow from operating activities that given in your presentation and versus that given in your PDF, result PDF. That is, I think, slightly different. In result PDF it is INR 690 CR and in presentation it is INR 946 CR. No, no. That is just the, that is just some of the, like, you know, in presentation we try to give cash flow in how, in the manner how investors like to analyze, right? The result PDF is as per the accounting norms. If you look at the lines, right? It is just that some lines we have taken up and some down. There is no change in the numbers. It is just reclassification of some lines. What is your cash flow from operations for entire year? One minute please. Okay. There is some difference because in the financial statements, if the FDR is more than one years, we are showing the other financial assets. It's amounting around INR 250 crores. In the cash flow is the presentations we taken is a bank balance. That's why you are focusing on this difference. So- That's why there is a difference. Just to add to it. If you look at our other, financial current assets, out of that INR 2.6 billion, INR 260 crores is in FD, right? Which our auditors, because it was more than one year, 355 days. Auditors suggested that it should be part of, other current assets, not, in the cash balance, right? We adjusted that, INR 260 crore of FD, for that. Understood. There is a note mentioned in the presentation for you and viewers. Okay. Okay. Understood, sir. Thank you very much, sir. That is from my side and all the best. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. For follow-up questions, you may rejoin the queue. The next question comes from the line of Dhruv from Ambit Capital. Please go ahead. Thank you so much for taking my question, sir. I had two questions. One was that if you look at the fourth quarter presentation in terms of the EBITDA split you give per section. We're seeing a sharp jump in the general products, you know, EBITDA per ton, which is if you look at it from a four-quarter perspective, is also the highest. I just wanted to understand what has changed, sir, and if you should consider this as the new normal. Dhruv, see, I mean, this general product sales, right, and margins, they are very much sentiment driven, right? That's why they are, I mean, you will see the EBITDA per ton moving from INR 1,500 per ton to INR 2,500 per ton, right? In Q4 if you see, because overall affordability of these general products versus inferior products, right, when the volume trends are good, we are able to get better margins on that. It's a function of that. Okay. We wouldn't say that 2,600 per ton has been established for the general category. If this segment doesn't grow, right, then there will be some pressure on that. If you look at the contribution of this, right, to my overall EBITDA, that's not that high, right? We just let it be driven by the market sentiments. We go month on month, not even quarter by quarter in this. All right. Correct. The second question was on your, you know, UAE expansion. Just wanted to understand that what is the kind of volume that you are expecting from there in terms of exports? You know, in your INR four million guidance that you have given, you know, what's the contribution that you are expecting from there? In general, if you could just talk about the market opportunity there, how large it can be. Thanks. Dhruv, I mean, if you look at our last four, five years of growth, right? It has been heavily driven from the domestic market, right? There was always the opportunity for us to go aggressively in the international markets, right? Given the fact that today APL Apollo is among top three steel tube producers globally, right? This is one segment which we have been ignoring. Now we decided that we have to cater to it, right? Given the fact we have excess capacities, right? Given the fact we are able to hire best talents in the industry. Okay. We have a good expansion, good volume maximization strategy from the export market. Dubai, plays an important part because, sitting in India and having access to expensive raw materials, you would understand, it doesn't make us price competitive when we are competing with Chinese or Turkish steel tube producers globally. Okay? If we had to grow this segment, by 2x, 3x, which we have, in our business plan, we needed access to the cheap raw material. Cheap raw material nearest port, what we could find out was Dubai, right? In terms of the real estate, land, what we are developing in terms of the talent which is available and in terms of accessibility for my existing team, right? We are setting up a 300,000 ton plant in Dubai, which will be starting by Q4 of FY 2024. Right? I mean, if you look at my overall export sales, they were around 60,000 tons last year, out of like 2.2 million ton -2.3 million ton sales volume. This year, we target to take it up beyond 100,000 tons. Okay? And with Dubai capacity coming online, we will be targeting 200,000 tons -300,000 tons over the next 3 years -4 years. Okay. Great. Thanks a lot and all the best ahead. Thank you. Thank you. The next question is from the line of Akshay Chheda from Canara Robeco Mutual Fund. Please go ahead. Yes, sir. Sir, two questions. First is, sir, if you see the EBITDA per ton for this quarter, that is around expansion of around INR 500. If we see that the product mix had deteriorated sequentially and even the raw material was also largely stable. Sir, how do you what do you attribute these INR 400-INR 500 expansion to? Is it better pricing, or how do we see this, sir? Two reasons. One is my incremental volume coming from Raipur. In nine months, Raipur EBITDA per ton was bit low. In Q4, as we did 73,000 ton volume, my EBITDA per ton improved in Raipur, and that contributed to my overall EBITDA at company level. One. Second, because the channel destocking stopped right after the raw material prices stabilized. That also led us to improve our margins. When there is natural pull in the industry, we take out the discounts which we normally offer to our clients. That led to improvement in the margin. Given the fact that steel prices are not going to go down by again INR 25,000 per ton, which they did in FY 2023, we should be able to maintain these spreads for FY 2024. What would you guide for FY 2024 on the back, say, the product mix will improve. What would you guide? Would you continue with 5,000 in FY 2025, or would you revise your guidance? For FY 2024, we are confident of 5,000 per ton ± INR 100 per ton. Okay. Eventually, with my 5 million ton of business plan, we should be around 5,500-6,500 per ton. I mean, that's the broad range. Got it. Thank you. Thank you. The next question is from the line of Pujan Shah from Congruence Advisors. Please go ahead. Hi, sir. One of my question would be, as you have shown in the presentation on competitive sheet, in that we are seeing that the Welspun Corp Ltd. is making a EBITDA margin of 19% with having 80% of building material infrastructure sales. I'm not able to understand that the chart what is being presented, because in that thing, SSAB has also been making 60%, but the EBITDA margin is 40%. Can you explain that? Even the manufacturing capacity, we have been the highest, revenue, we have been the almost highest, second highest. How this has been evolved? Why we are being with low EBITDA margin? Are they, having a value-added product, like the contribution of value-added product will be more or, like, something like that? There are two reasons that why we why we put this up, right? One is to show to our investors that this is the aspiration, right? This is possible in steel tube industry, which normally is looked as the commoditized or just a steel processing industry, right? Globally, when we when we look at players in players in in Japan, in U.S., in Europe, right? They are making these fancy mid-teens EBITDA margins. Okay? One purpose is that. Second is to tell our investors that we are highly focused towards the building material and infrastructure space, right, which is related to construction. All our innovation, all our product SKU range is focused towards this segment, right? The fact of the matter that why the margins are, like, almost two times more than what there are in India. In India, in the structural steel tubes, our spreads are the highest, right? What we find out, what we could analyze is that in the construction sector, these companies are selling the high dia, high thickness tubes for many years, right? They have almost 40, 50, 60% of their volume coming from high dia, high thickness, right? Apollo started its journey into high dia, high thickness in 2018 when when we put up our first 300 square dia mill, right? It took us a good three, four years to create the market for that, right? Now we are selling, like, more than 100,000 tons a year, right? What then, the next leg was to get into 500 square diameter mill because we wanted to give the complete SKU range to the contractors, to the designers, to the structural engineers to design the structures using tubes. Now, after 500 square, as it is ramping up, the next product line, what we are adding this year is 1,000 by 1,000 Mms, right? 1,000 square Mm dia mill. That will give us further further expansion of SKU range, right. What we believe is that after this SKU profile, right, the volume uptick in big section, in super big section will be much more quick versus what it has been over the last three, four years. Once we reach at those levels, even you will see that our margins will. Start inching up towards double digits and henceforth. Sanjayji, please add to it. Shall I? Okay. Sir, what I see in the, my last two years, just before the COVID, is that I personally go to the industry of Zekelman Industries in Chicago. I visit three plants of the Zekelman Industries. There my, the product, my percentage of the selling is almost 75% is the bigger sections. I had tubes and circular tubes. Almost 10%, less than we have 10%. This my economy of European or I don't visit the European companies, I visit Japanese companies, I visit Zekelman very nearly. They are developing nations. Their product range is higher diameter, almost 75%-80%. Using this reason, I started my work here. I put the first time we take 12 DFT machines, one of sort. I put 200 square, three lines. One, two, three. Yeah, three line of 200 square, then 300 square, now 500 square. In India, the architects and engineers I am meeting, when they make the design... Kal, kal bhi, I just came in the afternoon from a marriage. There were a lot of builder lobbies. They make the design. They talk to, "Sir, we don't get the material." There is no availability. They will be again come back to RCC or the PEB designs. The engineers and architects say, "Sir, when there is no material, why are you making the design?" Slowly, slowly these things are getting created here. It takes time. When the Indian market will also develop in this, I have studied a lot of companies and types there. Almost the margins there, Indian margins are even better there in the whole industry. I also can't understood why should in India margins. So far I have understood only two reasons. There is no scope for secondary material. Number two, there the higher diameter, higher thickness materials' market share is very high. I hope if these two things happen in India, then I will also take it from you that my margin should also be INR 10,000. I can't say it right now. I am also working on this very deeply. I also worried about this pipe. If you just talk about pipe, if you look at it in the American industry or Indian industry, tiles, paint and other items, then almost the Indian company's margins are higher. Right now I have no answer. There is no secondary market there, and the big sections, big diameter's market share is high there. Apart from this, I have no answer. I have no answer. Thanks. Okay, sir. That was a very elaborative answer. Just one, that, the Dubai, total tons, how many would be the tons in Q4 FY 2024? Just a tonnage specific. Q4 the tonnage Dubai 10, about 10,000 ton. 10,000 tons. Okay. Okay. Thank you. Thank you, sir. Sanjay sir, thank you, sir. 10,000 ton per month. Quarterly 30,000 ton. INR 30,000. Okay. Okay. Thank you. The next question is from the line of Aditya Bhilare from Axis Securities. Please go ahead. Thank you. sir, can you just revisit on your sales volume guidance for FY2024, 2025, and if possible for 2026? If you can quantify the splits with respect to individual plants, and how much is from existing, how much from Raipur, Dubai and Kolkata? Right. Our vision 2025 is five million tons. This means by FY 2026 we plan to exhaust this capacity and convert this into sales volume, actual sales volume. That's three-year sales volume target. Now coming to FY 2024, we are seeing 2.8 million tons -3 million tons. FY 2025, 3.8 million tons -4 million tons, and FY 2026, 4.5 million ton -5 million ton. That's how we try to break it up. Here Dubai plant is 300,000 tons. New plant in Ethiopia will be 200,000 tons. There will be incremental capacity in Raipur over 1 million tons of around 300,000 tons. Right. Then there will be some capacity expansion, brownfield expansion within the existing 10 plants ex-Raipur that will give us additional capacity of 300,000-400,000 tons, right? That's the broader math for 5 million tons. Perfect. Thank you. That's, that's useful. The next one is, just if you can, once again reiterate, CapEx guidance for 2024, 2025? Right now we are at 3.6 million tons capacity, right? To reach to 5 million tons, we may not require more than INR 500-600 crores, right? This we should be spending over the next 12-18 months, and this will be 100% funded from the internal cash flows. Okay, perfect. Sir, one last question. Now, recently there were reports of fall in steel prices, with steel prices falling in China. Are we seeing any signs of destocking from traders in anticipation of further fall in steel prices? Is the spot demand robust enough and we are confident that the demand will stay strong and the kind of volatility we have seen in FY23, that kind of stocking, destocking cycles may not get repeated in FY24? See, I mean, if you look at our trend over the last 5-10 years, okay, steel is a very volatile commodity, right? We are managing this quite efficiently right over the years. The point here is that INR 1,000, INR 2,000, INR 3,000 per ton decline or increase, it's a very normal industry practice, right? Apollo's team, Apollo's plants, Apollo's system and similarly our distributors, retailers and further channel partners, right? They are equipped to manage this INR 2,000-3,000 per ton kind of volatility, right? It does impact, right, for a few days in terms of destocking because if, if one understands that yes, there could be some decline in the prices, so they do hold on to their purchases, right. There are two factors worth playing to. One is that the secondary demand should be strong given the fact that construction is doing well in India right now. The secondary sales will remain good. The demand from the end consumer, whether he's a household owner or a contractor or a developer, right. If those trends are good, then material keeps on flowing. Right. Second is that normally for our distributors, they work with 25, 30 days of inventory. When they want to destock, they may reduce it by four, five days, right. This is a general industry practice, which may hit the volume for a few days or weeks, but not beyond that. To answer to the question, yes, right now trends are a bit on low side, it will it is impacting some volume, but not to the extent that we have to change our business plan or something. Understood. Perfect. Thank you, sir. Thank you. The next question is from the line of Aman Agarwal from Equirus Securities. Please go ahead. Thanks for the opportunity. First, just wanted a clarification on, recently saw an open offer made for SG Finserve promoters. Just wanted to get management strategy. Is there an intention to raise the stake in SG Finserve or was this more from a compliance perspective? It was just from the compliance perspective because it being NBFC, it is guided by the RBI norms and RBI approval came late, right? It is just for the compliance purpose, nothing else. That company is well funded by the investors, right? There is no plan of changing shareholding structure as of now. Got it. No further investment to be made in that company. Got it. Secondly, on the new product, just wanted a comparative on, you know, first with respect to the high diameter tubes, 500 by 500, and second, the color-coated tubes. Which product category do you see, you know, getting better traction or faster traction for APL Apollo? See, I mean, we are equally bullish on all the segments, right? Because whatever CapEx of INR 1,000 crore plus we have put in Raipur, that is with the vision that all three products will fire for us, right, in the same at the same pace, right? Today, right now, the coated products are giving us the maximum volume. Right? The high dia, high thickness tubes we have very strong visibility from our potential clients, right? It's just that the conversion takes a bit of time. Right now the pipeline is very strong where some projects we are talking about more than 30,000-40,000 tons of consumption of our products in single project, right? It may take, like, you know, 1 or 2 quarters to reflect into P&L, right? Given the pipelines, we are very bullish that this product, which is high dia, high thickness, will do really well. Thirdly, the thicker color-coated products, right, they are, we have already developed the market last year, right? Now we are doing further processing, right? That will complete in next 2 months. Once it hits the production, right, even that volume ramp up will be very quick. Because we have already done very hard work last year to develop market for that. I would say that all products should fire for us over the next three to four months, right? Great. No further questions. Right now the focus is on 500 square, right, because this is first of its kind mill in India. Globally, this would be only 3rd, 4th mill, right? So our technical team has done a really wonderful job to make this happen. Given the fact, there was like restrictions from traveling from Europe slash China. As the line is stabilized, market is there, we should be ramping it up pretty quickly. And from June, July onwards, the thicker coated sheet will fire at the same time. From what we understand there is an existing market for these color-coded products. If you can throw some light on that, what's the total existing market size and who are the key players that are operating here? I mean, the coated products which you see in my sales volume, this is an adjacent product for me. Okay. Because in housing or in industrial Apollo's Tubes are already being used. Okay. For roofing structure. What I'm providing is the sheet. What we are now supplying is the sheet, right. Which goes over our structure. Right. Being an adjacent product, it's the same distributor whom I'm selling to. It's my same retailer whom my distributor will sell to, and then the fabricator who is going to install it, and the same end construction site. Boss is my ultimately we are putting a new type of concept. I think we come out with the month of October or December 3rd quarter. We have to give our consumer a permanent solution of wall. कुछ हमारी इस यहां Raipur कुछ 1-2 line हमारी फंसी हुई है। Like our thicker coated में 1 machine अभी चालू होनी बाकी हो गई रह गई है, जिस पर हम उसको हम खुल के marketing नहीं कर पा रहे। इसी तरह ये coated 2 and thicker 6 में and vital में भी हम आ रहे हैं। 1 machine लगा हुआ है, जिससे हम 1 पूरे wall बनाने का solutions हम customer को दे सकें। ये 2-3 line हमारी और thicker वाली line तो हमारी June में चालू हो जानी चाहिए। June नहीं तो July में तो पक्का चालू हो जाएगी। ये wall solution वाली line हमारी October, December quarter में चालू होगी। तब इसका concept और clear हो जाएगा। Right now हमको जो option मिल रहा है, उसके through हम अपना खर्चे निकाल के काम कर रहे हैं। Understood, sir. Sir, lastly, on a broader level, from what do you think can be an inflection point in terms of profitability or maybe the industry size, ERW industry size, where the large steel manufacturers can start to look more aggressively towards making a meaningful entry into this segment? I understand there is an already a meaningful entry, but we have not seen much of capacity addition from there and in past two years. Boss, you have to understood one point. What I'm just earlier telling. Our difficulty is two points. One is secondary market. One is there is no market in India for the bigger sector in the big way. We are working the both way. Secondary market three, four days I'm just in the JSP plant Angul with Naveen Jindal. Unka HR coil ka plant I think October or November mein chalu hone ja raha hai with a capacity of 5 million tons. JSW Ballari mein December or January mein 5 million tons ka plant hamara HR coil ka chalu hone ja raha hai. NMDC Steel ka already government ne wo intent of letter mangwa liya hai. Some of few steel producer usko intent bhi kiya usko lene ke liye. MNS and Tata bhi apni capacity ko ramp up kar raha hai. Aaj today structural steel ka market total India ka almost 8-9 million tons ka ho chuka hai. Right now, APL Apollo is 3 million tons. Primary steel market is 1 million tons secondary almost close to 4 million tons is market ka size ho chuka hai. Jaise jaise HR coil ka proportion Hindustan mein badhega. I don't look a vision, good vision for the secondary steel. Wo market wahan se itna bada khali hoga ki I don't think nobody can supply the material in the primary steel other than Apollo. Baaki koi bhi company thoda bahut mujhe capacity badha sakta hai, 1 lakh tons, 2 lakh tons. Minimum tons mein sirf Apollo capacity badha sakta hai overnight. I'm very bullish. This is time se ki hum kitna time isko humko survive karna padta hai. Us time mein mera bikta hai. As a promoter base, as a company visionary base, mera bikta INR 4,000 rehne jaata, INR 4,500 rehta, INR 5,000 hota, INR 6,000 hota. Not worry. Main koi cash loss mein nahi hu. I have a vision. Vision is not for 1 quarter, 2 quarters, 1 year. I have a vision for 2, 3, 5 years vision. I'm looking forward to the Indian economy $3 trillion se $10 trillion hoga to India mein steel proportion jo hai aaj 130 million tons hai wahan se 300 million tons tak pohchega. How much tube demand is in India? For us time ko dekhne kya hai, I have to survive. Mere ko zinda rehne ka hai. Main aisa koi galti nahi kar baithu ki aaj ye company ye kar raha hai, wo company wo kar raha hai. Usse darr ke main aisa kaam kar lu ki us time ko dekhne ke liye mera company nahi bache. I'm just safeguarding my company and time to time taking the correct decision to reach the goal. Number two, biggest section jo hai market creation mein bahut jyada kaam kar raha hai. Is time almost 200 people ka hamara team daily basis par architects and fabricators and government agencies with market development mein laga hua hai. Like abhi humne three railway station ka humne design karl ke aapne dekha hoga tender float hua hai. Ye Ahmedabad Railway Station, Delhi Railway Station and Mumbai Railway Station. Almost three railway station mein 200,000 ton pipe ka tube lagna hai. Isi tarah abhi humne tank par kaafi kaam kiya hai. Abhi UP government ne almost 60,000 tanks ka order place ye tender diya hua hai. Usme humne 1 tank successfully unko tube par bana ke de diya hai. 1 tank mein almost 16 ton pipe lag raha hai. Agar wo 60,000 tanks ka order tube par convert hota to it creates a 1 million ton market. Similarly, Assam government, I mean, 10,000 tank order per month are working. Lot of government agencies, lot of builders, lot of infrastructure projects are working with us. I'm looking at today, tomorrow this thing will happen and this is not new in India. Already America, China, all these places it is happening. I'm waiting for the time. I have patience. With that patience my EBITDA margin is 5%, 45%, 55%, 6,000%. Today we have to also survive. We are working on numbers. My big vision is that when all this comes together in the market, this secondary market from here, as the steel capacity increases. Our steel plants are currently earning EBITDA of INR 20,000 per ton. If they get INR 20,000 per ton of EBITDA, think about it, in 3-4 years, how much steel capacity will be created in India? Just tonight I'm sitting with some guys who are saying that JSW, Jindal Steel is also setting up a 4 lakh ton mill. If 20,000 ton, if pipe has EBITDA of INR 3,000, INR 4,000, INR 5,000, how many people are getting attracted? When steel has EBITDA of INR 50,000, EBITDA of INR 20,000, how many people will get attracted? You think how much capacity will come to India? Who is the beneficial for this capacity? No doubt Apollo is the beneficial for this capacity. I'm not worried about Tata's work, putting a pipe mill. JSW's work, putting a pipe mill. I'm waiting for my right time to when the India will earn how much steel capacity they make. I'm just waiting for the time. Thank you. Thanks a lot, sir, for the detailed explanation. Thank you. Thank you. The next question is from the line of Amruta from Wealth Managers India Private Limited. Please go ahead. Yeah, hi. Thank you for the opportunity. My question is now, the current capacity is 3.6 million metric tons, right? If you could give us the breakup of, like, the capacity for the application-wise, that will be helpful. Right. Amruta, if you look at my sales volume, for FY 2023, it is around 50% housing, and 25% commercial and 25% infrastructure, right? That's the broader application mix, right, for our products. This 3.6 million ton capacity versus 2.3 million ton volume, in this, the housing and commercial segment will be a bit higher because of introduction of our coated products, that's more used in residential and light fabrication jobs. More or less we'll stick to like 55% housing, right, 25% commercial and 20% infrastructure. what could be the split of capacity between the structure as in heavy, super heavy, light, general, Apollo Build and Apollo Galv? Right. We can share this data with you, right, over like one-to-one interaction. I don't have it handy right now. Okay. Second question is regarding the debt position. As in right now the debt is INR 2.5 billion. We are going to do CapEx of increasing the capacity to 5 million tons. From what could be the, like when can we expect the company to become net cash positive? Right. Amruta, if you see, I mean, this year, FY2023, we did INR 10 billion of EBITDA, right, and almost INR 9.5 billion operating cash flow. Okay. This operating cash flow of INR 9.5 billion was FY2023. Given that we have, I mean, we have strong growth plans both in profitability and volume, right? This operating cash flow should improve, right, assuming the fact that our working capital days will remain where it is, right? Having like incremental operating cash flows in FY2024 and my residual CapEx to reach to 5 million tons is less than INR 6 billion today, INR 600 crores. Okay. This could be funded from like, you know, operating cash flows, what we're going to generate over 4 to 6 months, because that's a timeline when we will complete this expansion to 5 million tons. Eventually, we should be debt free, right, by FY 24 end, or early FY 25. Mm-hmm. Hope, this is clear, Amruta. Yes. Thank you. Thank you very much. Right. moderator, can we have the last question, please? Yes. The last question will be from the line of Shashank Agrawal from Aarjavin. Please go ahead. Shashank Agrawal, the line for you has been unmuted. Please go ahead with your question. As there is no response, we'll take the next question from the line of Mitul Shah from Reliance Securities. Please go ahead. Yes, sir. Thank you for the opportunity. Sir, I have 2 question. One is on the railway side, railway modernization related, which we discussed in past 1 or 2 call. Was at a primary stage at that time. Any further update or are we getting any sizable orders on that side? Right. Mitul, I'm very glad to share with you that one railway station in South India, it got approved, our tubular design got approved, right, last week. Right. The contractor will release the order, right, within this month. Okay. At the same time today, we are in touch with at least 20 contractors, who have won the orders already, right? Single contractor is working on at least four or five railway stations. The railway station which I'm talking about, the one which we closed already, right, the same contractor is working on one more station in South India. Right. We are working with 1 contractor who has won 5 stations in North and West India. Right. This is like so this is like a trend where the contractors have understood that if they go on tubular design, they are saving a lot of money, right? With this South India station, the construction getting started over the next 1, 2 months, this is going to open massive doors for us. Apart from that, there are, like, 3 mega stations which Sanjay Ji spoke about in Bombay, Ahmedabad, and Delhi. Delhi and Ahmedabad stations, where the bidders were L&T and Afcons, their bids were higher than the government budgets, right? They are, so government is again working to kind of lower the scope of these redevelopments so that it comes under the government budget. Mumbai is going as per the plan, right? We are already talking to the contractors where we are submitting the tubular design. Right? Given the fact that there are going to be 1,500 new railway stations under redevelopment in India over the 5 years, right, I mean, this opportunity is mammoth in size. Sir, in terms of any value or tonnage or anything per railway station you can share, and what duration this contract should be spread over? Right. I'm sure, like, you know this data point we have told you that in a high-rise building, the tube consumption, steel tube consumption is 5-6 kgs per sq ft. In railway stations where the dead load is high and there is vibration metrics which need to take control, right, the tonnage is above 10 kg per sq ft for a railway station design. Per station, how much in value terms roughly as of current prices? It will vary from the size of the railway station. When we talk about 1,500 stations, there could be like a very small station in a small district of Uttar Pradesh. We talk about New Delhi Railway Station, right, with INR 7,000 crore budget. There, the tube consumption will be minimum 40,000 tons, right, versus a small district where the minimum tonnage will be 500-600 tons. Minimum will be 500 tons and maximum it will go to 40,000 tons. Second question on your EBITDA per ton for FY 2024, wherein going forward as new Raipur is ramping up most of this product category in the range of INR 6,000-INR 9,000 per ton kind of products are increasing in terms of contribution. Even in terms of volume, whatever we have done in this quarter, if you annualize, we are guiding even higher for next full year. There is already operating leverage you are indicating. This INR 5,000 per ton kind of indication plus or minus INR 100-INR 200 seems to be too low. What is restricting us from guiding better margins, maybe INR 5,500-INR 6,000 kind of number? Based on logic, it should be quite high. Is there anything we are missing out on that for FY 2024 and 2025? There are two things. I mean, even Raipur, if we do 500,000, 600,000 tons, right, in Raipur, the utilization will be 50%-60%. Given the fact, the incremental 300,000 ton is coming, so the capacity by end of FY 2024 in Raipur will be 1.3 million tons. On that we are doing 500,000, 600,000 tons. We are still, like, below 50%, right? The real Raipur you will see in FY 2025, or maybe Q4 of FY 2024, right, when you see the real Raipur EBITDA being visible. Right? Second, the fact is that, I mean, the INR 5,000 per ton again, it is as for our business line, this number is quite impressive because at the same time we need to ramp up our volume, right. From 2.3 million tons, we are targeting 3.0 million tons, right. There could be like few months where there could be like some volatility in the steel prices and there might be some channel destocking, so we have to be ready for that. Right. That's why I mean with whatever question you may say, right, we are guiding for INR 5,000 per ton. But if sentiments are good if macro tailwinds are there there could be a higher number. So let's hope for the best and maybe we could have some joker in the pack when we talk after 12 months. Sir, thank you for the detailed explanation and all the best, sir. Thanks once again. Thanks everyone for joining the call. Sanjay Ji you want to. Yeah I want to share my views with my channel partners or my investors, stakeholders in the company. First of all I thank you all of you to believe on us. Maybe we are late by one or two quarters and for you for some patience. I am very very thankful. हमारी और मेरी management की पूरी कोशिश होगी कि we never let you down. I want to share my vision with you. First of all we are now in the process of making a organization. As you some people know or some people don't know. I don't know. In the first of April we totally revert on our organization and we boost up a lot of junior people in our organization to senior post. Right now Deepak Goyal is our CEO. एक वो process में थोड़ा सा careful है कि जब we are going the process of making a organization to we have to very careful कि सब नीचे के लड़के हमारे group के ऊपर आए हैं तो मैं थोड़ा सा careful चल रहा हूं. Number two I have a vision for India 3 trillion to 10 trillion story 3 to 10. मेरे हिसाब से जो ये all the steelmakers or all the economists say कि ये 2030 में 200 million tons की तो ये बात तो steel of 300 million tons की 300 million tons की steelmaking की बात कर रहे हैं. Hindustan 300 million tons steel की making बनाता है आज structural tube की market India में almost 6% के आसपास है primary और secondary को मिलाते हैं. 130 million tons के Indian market is close to 8 million tons. ये market किसी भी आप अगर international standard से देखोगे 10%-12% के आसपास है. मैं उसको U.S. side को भी number को calculate कर दूं, ये market 10 million 10% की market होती है. 2013 300 million tons पर 10% से 30 million tons की special tube की marketing होनी चाहिए. Right now we have a total capacity of 8 million tons. इसमें कहा 1, 2 million tons, 3 million tons की capacities आ रही है नहीं आ रही है. I am not worried because I was working with Tata Steel, JSW very closely and very we are बहुत work कर रहा हूं. हमारा सबका एक ही बात होगा how we can increase the market. This is beneficiary for all of us. Tube में these are margin of INR 3,000, INR 4,000, INR 5,000 till the margin है. मैं जो इन लोगों से बात कर रहा हूं steel में margin आज India में किसी भी steel company का INR 15,000-20,000/ton से नीचे नहीं है. अगर आज ये लोग market making और steel making पर जाएंगे. अगर इनका EBITDA margin INR 1,000-2,000/ton से कम भी हो जाता तो कोई फर्क नहीं पड़ता. 300 million ton पर EBITDA margin INR 15,000 हो, INR 12,000 हो, INR 20,000 be it ratio. आज भी कल ये सब लोग understood करेंगे. This is a सब rumors कि आज Tata Steel ये करेगा, JSW ये करेगा. This is a rumors in the market. ये छोटे छोटे dealers ये सब ज्यादा rumors press करते हैं to compete और डराने के लिए। ये चीज डरने के लिए नहीं है। ये चीज काफी hopeful है for the industry. मेरा एक ही vision है कि when 2030 में Hindustan की market 3 million tons पर पहुंचेगी तो in tube market structure tube market is almost close to 30 million tons पर पहुंचेगी। How can Apollo go to 10 million tons for vision 2030? I am working on this. 2030 में मैं 10 million tons की बात कैसे करूंगा। Who is capable for going 10 million tons or 15 million tons or 5 million tons से ऊपर की market पर जाएगा। I am working on this. I am not matter 1 quarter 2 quarters numbers ऊपर है नीचे है 1 year number नीचे ऊपर I am not matter. My first vision था मेरा 2025 vision 5 million tons. I am almost closing to ठीक है मेरा 5 million tons 2026 हो जाएगा 2027 हो जाएगा। हो सकता है 2024 में ही 5 million tons पूरा कर दें। दूसरा vision है मेरा how can I go to 10 million tons in 2030 without APL को फंसाए। Without debt press में आए। Without balance sheet को heavy किए बिना मैं कैसे 10 million tons जाऊं। How I create the market for Indian 30 trillion million tons का steel tube का market मैं कैसे create करूं। I am working on this. क्या और क्या क्या इस market को नया नया product चाहिए। Customer की क्या क्या requirement है। I am working on this. I am very hopeful. Maybe मैं थोड़ा late हो सकता हूं। मेरे को इतना पक्का विश्वास है आप लोगों को मैं विश्वास दिला सकता हूं as a stakeholder कि मैं failure नहीं होऊँगा। Maybe मैं थोड़ा late हो सकते हैं। क्योंकि मैं size बहुत बढ़ाऊंगा तो एक एक decision बहुत सोच समझ के step उठाना पड़ता है। वो एक काम है हमारे यहां हाथी जब चलता है तो उठने में भी time लगाता है और बैठने में भी time लगाता है। मेरे साथ बहुत लोगों की life अपने साथ stake में आ चुकी है। Almost company has 200,000 shareholders with me. Almost 4,000 employees with me. अगर हम one employee को 4,000 से 4 से multiply करें तो 16,000 families directly मेरे साथ involved हैं। Transporters आज unknown है। I mean no count है their. मेरी responsibility बहुत ज्यादा बन जाती है कि मेरे को सब चीजों का ध्यान रख के एक-एक step उठाना है. This I can assure you this I can believe मैं आपको विश्वास दिला सकता हूं कि मेरी पूरी कोशिश होगी और हम glance पर कोई गलत काम नहीं करेंगे. गलती कर सकते हैं. हमारी intention कभी गलत नहीं होगी काम करने की. मेरे ऊपर responsibility बहुत ज्यादा है सब पर care करने के लिए. आप लोगों का trust नहीं तोले उसके लिए भी मेरे ऊपर I have a lot of responsibility. Don't worry. I am trying to level first कि मैं अपना 5 million ton का एक vision complete करूं. उसके बाद we go for the 10 million ton vision. वो अगले 1 साल में सब समझ के I have shared this my vision to you. This is no want to worry. When JSW and Tata Steel कोई भी tube business लाते this is very grateful to increase this market. This is a positive signal. जब लोग tube industry को नहीं समझते थे at least everybody is talking about tube industry. This is a big win for Apollo. Thank you. Thank you very much. Thank you. On behalf of Equirus Securities that concludes this conference. Thank you for joining us. You may now disconnect your lines.