Ladies and gentlemen, good day, and welcome to APL Apollo Tubes Limited Q1 FY 2025 earnings conference call, hosted by Ambit Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask question after the presentation concludes. Should you need assistance during the conference call, 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. Kumar Saumya from Ambit Capital. Thank you, and over to you, sir. Thank you, Yusuf. Good afternoon, everyone. Welcome to the first quarter FY 2025 post-season conference call of APL Apollo Tubes. From the management, we have with us Mr. Sanjay Gupta, Chairman and Managing Director, Mr. Deepak Goyal, Director of Operations, Mr. Anubhav Gupta, Chief Strategy Officer, and Mr. Chetan Khandelwal, Chief Financial Officer. Now, I'll hand over the call to the management for an opening remark, post which we will open the floor for Q&A. Over to you, sir. Thanks, Kumar, and thanks to Ambit Capital for hosting APL Apollo Tubes for its quarter one FY 2025 earnings call. And thanks to all the participants who have joined to attend this call. I welcome everyone and wish you a pleasant day. What a start to the year for our company with the steel prices in the reversal mode after a gap of four years. If you remember, we have been talking about this all the time, that in India, the steel price inflation environment has to reverse. The prices has to come at par with the global steel prices. It got triggered in the last 4-5 months with the commencement of new upstream steel capacity, which hit the markets since December of 2023, and in the anticipation of new capacity, which is going to hit the market over the next 2-3 years. As we are talking, steel prices are already down by INR 3,000 per ton from the recent highs, and if we compare it with last year, they are down by almost 700 or 1,000 rupees a ton. This benefits APL Apollo in two ways. Number one is that our company is India's largest steel buyer, so all the incremental capacity which is coming in the market gives APL Apollo a better negotiation power in front of the steel suppliers. Plus, as you all know that our finished goods replace the conventional inefficient construction products like secondary scrap steel, wooden structures, aluminum, rebars, cement and concrete, steel angles and channels, long steel products. With the lower input raw material cost, the affordability for our product as well as the acceptance for our product improved significantly. We are glad to share that environment of deflationary steel prices is already here and is visible pretty strong for the next years as new capacity keeps on coming in. At the same time, the falling steel environment brings its own challenges like industry destocking, heavy discounting in the short term, and minor inventory write-downs as well. So we are geared, we have geared ourselves to play on a strategy, short-term pain and long-term gain. Our assumption is that steel prices can further go down by INR 3,000-4,000 a ton, and whatever fall has to happen, it will happen by Q2. We see all the pain from July to September months, after which second half should be pretty solid. Anyway, our current focus is to maintain the sales volume momentum, which we gained in quarter one with 721,000 ton sales volume. We are not overly concerned on margin expansion in the short term because we know that we have a lot of operating leverage benefits that will start coming into play as we increase our utilization levels. Coming to quarter one performance, I think what looks a bit weaker is our EBITDA spreads. Now, the reported EBITDA of INR 4,183 per ton could have been slightly higher by INR 150 per ton. It didn't happen because we booked a notional expense on account of ESOP policy in Q1. Plus, we spent some extra money on a brand campaign because we wanted to launch a few products. So that's non-recurring in nature. One data point we would like to highlight is the expansion in our gross margin spreads. It improved INR 335 per ton on year-over-year basis and INR 442 per ton on quarter-over-quarter basis. This does reflect that because our new products from Raipur and Jebel Ali plants are giving us better product mix. That's why our growth margin is expanding, although it is not visible in the EBITDA spreads yet because of operating leverage that is yet to play out. Just to point out, our slide number 19 in the presentation, which shows the potential profitability and ROC profile, which our company can achieve with 100% utilization levels. We have mentioned a consolidated EBITDA of INR 5,000 per ton. Please understand that we have not lowered our guidance. It is just the demonstration that at even at INR 5,000 per ton, what kind of ROC our company can generate at a sustainable rate. Now, please allow me to share the progress in our Raipur and Dubai plants. In Raipur, we have four products capacity, with a capacity of almost 1.1 million ton. Out of these, two are highly innovative and two are value-added products. Now, coming to the heavy structural segment, where the utilization levels are around 58%. For roofing sheet, our utilization levels are around 89%. For super light structurals, our utilization rate is 52%. And for coated thicker sheet, our utilization level is 48%. On overall basis, the Raipur plant is running at 61% utilization rate. Just to highlight again that 1.1 million ton of capacity is our sellable capacity, not the nameplate capacity. That's how we rate capacity for each of our plants and at the company level as well. Dubai has four lines which are capable of manufacturing products starting 15 mm by 15 mm till 300 mm by 300 mm. Two lines got commissioned last year, and two lines got commissioned just in the last 3 weeks. So ramp up is pretty strong as we speak now. With the total current capacity of 300,000 ton, the utilization level for Dubai in quarter one was around 30%. But since the two new mills just got commissioned, so utilization levels will improve significantly over the next few quarters. Now, if you look at the overall levers for our sales volume in the coming quarters, there are three which we can see through. Number one is the stability in input raw material prices, which will bring an element of restocking in the channel, which will boost our volumes. Number two is that we shall be taking market share from the secondary scrap steel, because now the pricing gap between our product and scrap steel pipe is like 5%, which used to be 20% in the last 15 months. So we will definitely take market share from this segment, which has become an equal size industry compared to our addressable HR quality industry. Third is that, post monsoons and budget allocations, the construction sector should start doing well in India from both the government and private side. So we expect that Q2, despite these challenges, should be better than Q1, and second half should be significantly better than the first half. And based on these factors, we are confident that we should be doing 3.2 million ton of sales volume for FY 2025, which is in line with our guidance for this year. As far as the margin is concerned, Q2 should remain under pressure as there is a lot of uncertainty still in the steel upstream sector, how the prices are going to settle down. The dealers, the channel partners, the distributors, the retailers, they are still afraid of stopping the material. So we need to stick to our strategy of discounting and gaining the volumes. And we don't know how deep steel pipe correction could go from these levels. So we will see if there are any minor inventory write-downs also in quarter two. But whatever has to happen, we believe that Q2 will bottom out, which will give a very clean slate for growth to our company from October month onwards. And anyways, the levers for our margin expansion are many. Like, number 1, the better product mix, as our gross margin spreads are increasing quarter on quarter anyways. Number 2 is operating leverage gains, with better utilization level in Raipur and Dubai plants. Number 3 is better pricing for our general products, as the price gap between scrap steel and our product is reducing. So we may have better pricing as well in the standard products. Number 4 is the better negotiation power to buy steel from the steel mills in the country. Number 5 is lower brand spends for the rest of FY 2025, whatever major spends we finished in Q1. Number six is our own continuous drive to keep on working on cost rationalization, be it power, steel wastage, consumables, freight, et cetera. Day in, day out, we are trying to work on these cost elements and bring them down. Lastly, if you look at our working capital for Q1, it's at three days, so there is a slight increase in the net debt position for the company. However, we should remain near net debt zero position throughout FY 2025, with surplus cash being visible on balance sheet from FY 2026 onwards. Just to complete that our expansion plan for 5 million ton capacity in the next 12-15 months is on track. We are going to add 3 new plants now, small plants, which is part of our regional penetration strategy. One is Siliguri to cater to east market, which we have highlighted. And the two new plants, one in Gorakhpur and one in Ahmedabad also, we have planned to bring them online. Gorakhpur, just to cater to the eastern UP market and Bihar and Odisha belt, which can be catered well through that geography. Ahmedabad is. Gujarat is a very good market for us. Right now, we are servicing that market mainly from our north plants and Raipur plant. So to benefit for the freight, it makes sense to have a small plant in Ahmedabad as well. So the CapEx is in line with like INR 500-600 crores, what we had guided last time, that is required to take us to 5 million ton. We may not be adding new mills, all the new mills for these plants. A lot of these plants will be achieved with shifting of existing mills from current plants to these new plants. So, I guess, four quarters down the line, we will be sitting on 5 million ton sellable capacity, which we target utilize by FY 2027. And the current capacity, sellable capacity, which is available with us, is 4.5 million tons anyway. So idea is to do 3 million-3.2 million ton this year and 25% growth next year, and post that, to achieve 5 million ton by FY 2027. That's all from our side. Happy to take questions now. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Amit Dixit from ICICI Securities. Please go ahead. Yeah, hi. Good afternoon, everyone, and thanks for taking my question. Congratulations for a good set of numbers under a very challenging quarter. My first question is essentially on the if I look at other expenses, while you have explained in your opening comments that there were certain non-recurring items over there, so other expenses and employee costs both have gone up significantly. Now, if you could quantify these non-recurring items that possibly we could take out in our forecast going ahead, that would be very helpful. So Amit, the nature of other expenses, some expenses are, non-recurring and some are recurring as well. So I'll explain in detail. Number one is that, employee costs, if you see in, Q4, was, was around INR 64 crore. Sorry, Q1, Q4 last year was around, 70 crores, right? Which right now is 80 crores, right? So, so, so 5 crore, in fact, is, for ESOP. 4-5 crore is on account of ESOP, which is notional in nature. And, of course, 7-8% increment, we, we had in the company. So I, so for the rest of the quarter, you should, build in 75 crores, per quarter, okay? Then the other expense, which is higher and it is recurring in nature, is the freight cost per ton. Freight, if you see, has gone up because from Raipur, we are selling value-added products like roofing sheet and thicker coated sheet. So here, because of the volume is lower for the truckload, the freight cost per ton goes up. But then, you get paid from your customers as well, right? So outward freight cost is always paid for. So that's another impact. Third is power and fuel also went up, because in Raipur, we are still not on renewable power yet. We have signed up with the solar power producers. So we will start getting the benefits when the plant will be ready. It will take around 9 months, and then the power cost will come down. So that will settle down in FY 2026, for sure. But for rest of FY 2025, it will remain elevated. And then lastly, which needs to be highlighted is the brand spends. Q1 was a bit heavy. We paid for the ad shoot and Siliguri brand campaign, which we undertook. So in the next 9 months, it will be significantly lower than what we had in Q1. And lastly, there are also some charges which we are getting, which we are giving outsourcing for outsourcing jobs, right? Because we have developed a specialty tube for solar structures for the largest solar power producer in the country. And we have to get it coated, right, from outside. So those charges also come into other expenses. But of course, we do get our markup for that. That's why our NSR is going up. Mr. Amit, does that answer your question? Hello, Mr. Amit, can you hear us? Yeah, that does answer my question. I'm moving on to my second question now. Hello. Go ahead, please. Yeah. So the second question is, you have mentioned that there are two plants that you are thinking of, Gorakhpur and Ahmedabad. Gorakhpur, a particularly interesting location, and you mentioned about Siliguri as well, if I'm not mistaken. So just wanted to understand the configuration of these plants, whether they will be also on DFT, and what kind of products do we intend to produce from these plants? And since you are shifting some of the capacity lines to capacity, so how will the capacity go up to 5 million tons? Just wanted to understand that. So, Amit, see, I mean, we want to cater to both the markets, like if you take, say, Gorakhpur and Ahmedabad. So, structural steel tubes, right, you know, we cater to two segments. One is, square and rectangular. Second is circular, right? Of course, circular and, square and rectangular are, are a major proportion of our sales volume. So, any mill which is going to produce square and rectangular, it has to be DFT for us, right? And for circular, we must install the conventional one. Okay? Each of these plants will be having capacity of 200,000 tons initially, right? And, some of the mills from our Bangalore plant and Raipur plant, we will move to these locations. And two mills, three mills, we will order new as well, right? So it's a mix of everything. The objective to achieve here are two. Number one, local penetration, regional penetration, better servicing. And second is to lower the freight costs. In terms of product, will you be producing everything, whatever, I mean, square tubes? Is there a thought process to produce sheets also? Because that region might have the color-coated engaged sheets that you will be producing, right, sir? No. So these are tube plants, Amit. We are yet to decide on strategy for expanding capacity for roofing sheets or thicker coated sheets. But in our grand plan of 10 million ton, right, these products don't have too much contribution. Okay. Thanks a lot. That's very helpful, and all the best. Thank you. Thank you. Next question is from the line of CA Garvit Goyal from Nvest Analytic Advisors LLP. Please go ahead. Hi, am I audible? Yes, you are. Good afternoon, sir. Just one question on the EBITDA quarter, like, you guided for 3.2 million tons volume. What is the EBITDA quarter guidance for this year? So, see, I mean, Q1, as you can see, is around INR 4,200. Q2, we are not yet certain, right? It will depend on how the upstream steel prices behave. But our endeavor will be to at least match what we did last year, if not improve that. I think during October investor call, we will have a better idea of EBITDA quarter. Thank you very much. All the best for the future. Thank you. Next question is from the line of Gagandeep from Nvest Analytic Advisors LLP. Please go ahead. Mr. Gagandeep, your line is unmuted. Please go ahead. Sir, my question is already answered. Thank you. Next question is from the line of Sneha from Nuvama. Please go ahead. Hi. Good afternoon, sir, and thanks a lot for the opportunity. Would it be possible for you to give the breakup of capacity by FY 2025 till the time we reach 5 million tons? Where all we'll be having capacity, and, you know, what all will be the capacity, since you'll be making some shifts from other plants to new plants like Gorakhpur and Ahmedabad, like you mentioned? ... So Sneha, we have given a product-wise capacity in our presentation. There is this slide of decommoditizing product portfolio. You will find the 5 million ton of the total capacity. It is on slide eight. Do we have plant-wise capacity also by accident, sir, there? Of course, but we don't share that, Sneha. Understood. Secondly, a more broader question, Anubhav. How are we planning to address the gap between secondary and primary steel? From a couple of quarters, we've been seeing that, you know, one of the reasons for our volumes not being that great, especially with general products, is that the gap, you know, widens between the secondary and primary steel. Of course, it's narrowed down currently to about INR 3-4 odd rupees. But generally, historically, we've been seeing this to be a major reason, you know, for our volumes not doing that great. How are we addressing this, this issue, and what's the confidence of strong volume growth in H2, given we don't have an outlook right now between the primary and the secondary steel price gap? So Sneha, you need to look our product portfolio in two categories. One is standard general commodity, which is 35%-40% of my portfolio. The rest is value-added and super value-added products. Okay. So my value-added and super value-added products, they have no threat from scrap steel tubes, right? Because scrap steel tubes are incapable of addressing that application, what our products are doing, right? So the competition which we face from scrap steel tube is general, right? And this is one segment, if you look from FY 2020, we have not been able to grow this segment, right. From FY 2020, if you see, my general sales used to be like 0.9 million tons. Last year, we did 1.1 million tons. So there is hardly any growth, right, in general segment. And this is because of availability of low-grade scrap steel tube product, which is available in the market, where the manufacturers and the dealers are taking benefit of price gap, right? And why this happened over the last five years is because HR coil prices in India, they have been on the inflationary mode, which was triggered by Corona, right, in 2020. Then in 2022, Russian-Ukraine war, which triggered further the steel prices to go up globally. HR Coil, which used to be INR 35,000-40,000 per ton commodity before Corona, it went up to like INR 65,000-70,000 per ton by mid of 2022, right? But the cost of production for scrap steel that remains stagnant. So that's why the gap, right? Which used to be like before Corona also, the gap used to be INR 5 per kg, but it shot up to INR 20 per kg. And that's where these small steel melters in Raipur belt, in Mandi Gobindgarh belt, in Chennai belt, they popped up because there was this arbitrage, right? But we were of the view that this steel price inflation is not sustainable, okay? And we are seeing that being reversed already. The second factor you need to understand is the cost of production for blast furnace steel versus cost of production for scrap steel. So you can check with any steel expert in the country that the cost of production for blast furnace steel is lower than the cost of production for scrap steel, right? So blast furnace steel manufacturers have the window, okay, to still lower the prices. But scrap steel producers they don't have the window available to lower the prices, right? So whenever... Like I said, that the gap is already down to INR 3,000-4,000 a ton, right? And it can further go down by September as the new capacity in upstream steel sector keeps on hitting the market. So we are fairly confident that HR coil will substitute the scrap steel tube. And then we are also taking initiatives like making the consumer aware about the poor quality of scrap steel, what they are using, right? Because ultimately, structural steel, whether it is for handrails, for fencing, for doors, et cetera, right, if it is not of a very good quality, there is always a chance of an accident, right? So we are making the consumer aware. Secondly, the level of pollution which these small melting shops, they pollute the environment, that's also very, very hazardous, right? And the government, given the fact that we are pro-climate, we are taking all the steps to improve the environment in the country. So, I guess at some point, they may also take this step to halt this highly polluting industry. So yes, I mean, we are fairly confident that as HR coil prices remain stable around INR 45,000-INR 48,000 per ton, we have a very good chance to take the market share back from scrap steel segment. ... Understood, Anup. Thanks, thanks a lot, and all the best. Thank you. Next question is from the line of Kunal Kothari from Centrum Broking. Please go ahead. Yeah, thank you for the opportunity. My specific question is regard to the Apollo Tricoat. As we see on a year-on-year basis, the volume are stagnant, but on the margin front, it is down significantly, and the trend that we are seeing in this particular segment for last year, three years, it, it's just a downward slope. So can you just make me understand what is happening in this particular segment? Why we are seeing such a, you know, huge downward slope which is happening continuously? No, actually, you need to tell me the product segment now because Tricoat products got divided into two categories. One is light and second is rustproof. So which segment are you referring to? Rustproof, rustproof. Okay. So yes, rustproof is our zinc-coated pipes, which are mainly sold in the coastal markets, right? There, the standard black pipe doesn't work because of the moisture in the environment. So the fabricators need coated products, right? So that's where we sell our rustproof. Now, this segment, if you see, it has a pressure of aggressive sales growth, because right now, the market is constrained towards coastal markets only, right? Although we are making a drive to expand this market in non-coastal markets as well. But it's a long gone process. And Sanjay, you want to add to this? Growth. Okay, yeah. So yes, I guess I mean, as the market expands for this product beyond coastal markets, we will see the growth going to, like, 15-20% levels. But right now, we are able to take the growth whatever is whatever the coastal markets are growing at a natural rate. I understand, but, any specific reason that we used to have margin INR 7,000-8,000, then last year was around INR 6,000-6,500, now it is below INR 5,000 per ton, like, it's, you know, are we losing the competition to other players in this in the rustproof segment? What is the core reason for such a steep decline? Okay. So if you look at, if you compare it with the margins, which were, like, 2-3 years back, INR 7,000-INR 8,000 per ton, at that point of time, what was happening was that in India, after COVID, the Indian steel producers, they started exporting coated coils, okay, in international markets. So that brought the short supply situation in India, right? It benefited Apollo because we had our in-house galvanization plants, okay? We used to buy bare HR coils and galvanize those coils and then converting those coils into coated tubes. When there was a shortage of galvanized coil in the country, our competitors were buying expensive coils from the market, and then they were converting the tubes, right? So we had a very good arbitrage for 3-4 quarters in that segment, and we have highlighted that in our investor calls earlier as well. Now, that situation got course corrected. Right now, the galvanized coil prices have come down in India, and the arbitrage, the benefit what Apollo has in for having the in-house galvanization unit. So that's now at fair at parity with our competitors. And of course, yes, competitors have also put up the galvanization mill, right? So yes, I mean, it's a competitive market, but we are maintaining our market share of 55-70%. If you do some channel checks in strong coastal markets like Kerala, Bangalore belt, Goa belt, right, we continue to have a lion market share there. But yes, I mean, to grow aggressively in this segment, we need to create this market beyond the coastal markets, which we are working on. Okay. Thanks. Second question is in regard to our overall capacity. You mentioned that currently we have around 4.5 million ton, right? So, firstly, like, from previous call, what I remember is that it, we were at 3.8 million ton. So this, around 0.6 million ton, where it has been added? And additional, point five million ton, you are going to catch up, in next 12 months, so where it is going to come? Right. So, this is across the categories, right? Actually, the data point of 3.8 million ton in presentation is old one, right? Right now, we are almost near 4.5 million tons, and it is across the categories. We can share the updated product-wise list to you separately. Okay, sure. Thanks a lot. That's all from my side. Thank you. Next question is from the line of Aditya Welekar from Axis Securities. Please go ahead. Yeah, thanks for the opportunity. So my question is with respect to EBITDA per ton shaping up for FY 2026, how do you see that? And this is in context of our value-added product share. So how do you see our VAP share increasing in FY 2026, in the context of any market creation, any visibility on the ground that you see that the VAP share will increase and that will aid our EBITDA per ton going forward? So definitely, if you look at our VAP share from Dubai and Raipur plants, right? As those plants are ramping up, we have been giving the data point of utilization levels, which you would appreciate that quarter-on-quarter utilization levels are going up. And our gross spread per ton is also improving quarter-on-quarter. So we are continuously working to create the market for innovative products from Raipur, whether it is for the heavy structural pipes or the thicker coated sheet, which are like the two most innovative products from Raipur. And Dubai also, with introduction of sizes up to 300 by 300 mm, the mill commissioned last week only, we are seeing a very good order inflow for that mill in particular. So yes, I mean, this 65% of our portfolio, that's our crown, right? And we continue to work to improve the sales in this segment. Will it be fair to assume EBITDA per ton reaching near INR 5,000 per ton in FY 2026? So see, I mean, if you look at the sheet, right, where we have mentioned, like, how we can reach 5,000 per ton, right? It's a question of, like, you know, how my plants are utilized and what kind of operating leverage benefits I get, right? But if market becomes stable, right, in Q2, which we expect, right, Q3, Q4, we start doing 800,000 ton, 850,000 ton kind of quarterly volume, then yes, APL is capable of throwing 5,000 per ton EBITDA during those quarters. Why FY 2026? Understood. My second question with respect to the Net Debt. So, I mean, what I understand is that, the Working Capital should come down because the steel prices have gone down, and that should not be the reason for increase in the Net Debt. Is it correct, or is there anything else which I'm missing here? So, so see, I mean, I mean, last quarter, our working capital day was 0, now it is 3, right? So it's a very minor movement, right? There are multiple factors like you have to collect payments from your clients, some of the projects where there is, like, 4, 5-day delay. That's all, right? And, secondly, to answer your question on inventory, yes. So we will, you will see that devaluation in inventory going forward because prices have fallen recently, right? So, so on the balance sheet, it is on average basis. So as we close September balance sheet, you will see... You should see—we should see some devaluation in the inventory levels. Okay, and that should drive our net debt down to zero level again? Like I said, INR 1.5 billion on our balance sheet size of, like INR 50 billion, it's almost zero. And we will stick to net zero balance sheet for the rest of FY 2025. Yes, I mean, but it should be near zero. Yeah. Thanks. Thanks a lot. That answers my question. Thank you. Next question is from the line of Kunal Vora from White Whale Partners. Please go ahead. Mr. Vora, your line is unmuted. Please go ahead. Hi, this is Hardik Doshi. I just wanted to check, you know, in your recent presentation, it shows that in FY 2024, the structural steel size for the scrap steel is about 4.5 million, and in the previous, in 2023, it was 3.6 million. So is it correct that the scrap steel has grown by 25% in FY 2024? You'll have to repeat the question. Sorry. Yeah. So in your recent presentation, when you're talking about the structural steel tube market, right? You're talking, it's 9,000,000 tons, out of which 4,500,000 is scrap steel-based tubes. The same presentation, you know, previously indicated that it was 3,600,000 in FY 2023. So it seems like, the scrap steel-based tubes has grown by about 25%. So I just wanted to check if that is actually the case. Yeah, that is right. As I mentioned earlier, the growth in the structural steel tube segment got taken up by the steel producers because of this arbitrage they had. Yes. Yeah. Okay. So now going forward, you are expecting by 2013, before 4.5 million to kind of de-grow to 4 million, and The logic says, the logic says it should, because outside India there is no country where you have this product available. It's only on government behest or I don't know, whose behest that this industry is surviving and thriving as of now. But when the blast furnace steel prices are lower than scrap steel prices, then why should this industry do well? And the logic says it should not. Okay. The second question I had is, when you mentioned that the spread has now come off to 5%, is that as of now, as it stands? And is there any seasonality related to monsoons for the spread or there is no connection between that? For which product? For the scrap steel versus your HR coil. The differential has come down to 5%. I believe that's what you mentioned, right? No, because the new capacity in HR coil, the new capacity in blast furnace steel has come online since December of 2023. Yeah, so- And started its HR Coil mill. NMDC Steel mill started its HR Coil mill. JSW started its mill in Bellary. Now, in next six months, their Dolvi plant will start, Tata Steel's Kalinganagar plant will start. Jindal Steel & Power will start its second plant, right? Mm-hmm. ArcelorMittal Nippon Steel will start its HR coil mill, if not this year, next year. So we have very strong visibility for the next two years that India will keep on witnessing steel price, steel capacity expansion. See, from 2018 till 2023, what we have heard, India's steel capacity is 120 million ton, 120 million ton, 120 million ton, 120 million ton, 120 million ton. It has not increased. What has happened is the consolidation of the sector. Essar Steel got acquired, Bhushan Power got acquired, Bhushan Steel got acquired, Monnet Ispat & Energy got acquired. Lot of mills, which got sick, they got acquired, they got consolidated, right? And it takes five years for any greenfield plant to come online. JSW, which was expanding from 2018, Tata Steel, which was expanding from 2018, so those plants are now coming online. So from December 2023 till December 2025, HR coil capacity from blast furnace should increase by 50% in the country, right? And when cost of production flow for blast furnace steel is lower than cost of production for scrap steel, then why should scrap steel be sold? Number one. Number two, when scrap steel production is such highly polluting industry, why it should survive? Number three, when it is such a poor quality product, why government should allow this to survive, right? So logic says that this segment should not be growing, right, going forward. Let's see. Okay, got it. My last question is, you know, within the organized space, you know, your competitors have announced a lot of expansion plans as well. So how do we plan to kind of keep up our differentiation, market share, and do we command a pricing premium to our competition, and how do we plan to sustain that? It's a good question. It will be good for every one of us if you could highlight what kind of players you're talking about who are expanding the capacity, so that we can answer the question accordingly. Because all these steel pipe producers, right, no one is as unique as Apollo in terms of focus on the structural steel tube segment, and that too, from HR coil. So we need to see that if you're talking about someone who is good in API pipes, oil and gas pipes, water transportation pipes or in scrap steel pipes, then he's not my competitor. My competitor is a manufacturer who is using blast furnace steel from top pipe producers in India, and he's making structural steel tubes, right? Where we command, if not 90, at least 75% market share. Of course, that's our gut feeling. We can't put this in writing, but if you talk to 200 of our top customers, top dealers, we get this sense. Okay. I mean, I was talking about guys like JTL, you know, and a few of these other guys that were, have announced. Right. So, so again, JTL is a scrap steel tube producer. Recently, they acquired a steel melting unit called Nabha something, right? So, so again, I mean, the point I'm trying to make is that they may do well in their segment, and we wish everyone good luck. But, but you need to see that what expansion they are doing in HR coil tube segment and in structural, not water transportation, not oil and gas, not automotive precision tubes, but structural steel tubes. Okay, got it. Thanks so much. Thank you. Next question is from the line of Mayank Bhandari from Asian Markets Securities. Please go ahead. Thanks for the opportunity. Sir, my first question is on the number you have given on slide number 19. APL's Q1 FY 2025 working capital goes from -INR 25 crore to INR 46,456 crore at full utilization. Can you explain that much of jump? Yeah. Yeah, yeah. So even this, we have taken conservative, that for APL, we have taken 5 days of net working capital, and for new plant, we have taken around 7, 8 days, 10 days of combined working capital. So again, these are conservative numbers, okay, not in line with, not in line with, what we are at today. Similarly, like we get relative EBITDA number as well of INR 5,000 per ton. So, so yes, I mean, this is just to demonstrate, even at conservative numbers, what we are going to achieve. So yes, I mean, as per current, run rate of working capital, the working capital requirement will decline significantly. So, the newer projects, so working capital requirement is lower? Of course, yes. Apart from Dubai, Dubai has, of course, higher working capital compared to India, but our Raipur plant should be more or less similar to what APL Apollo is. Also from the Dubai plant, what is the visibility on the export ramp-up, whether it's from the Indian plant? Right. So the idea to go to Dubai and put up the plant is to expand in the Middle East market, plus the international markets of US, Europe, et cetera, right? The strategy here is first we wanted to install and commission all the four mills, which happened like just two weeks ago. In fact, just a week back, our fourth mill was commissioned last week only. And now the sales team is all out in the market, right, booking orders for those mills, promoting the product because this 300 by 300 dia size, we are the only company in Dubai which is offering this size, right? So, ramp up will happen, ramp up will happen. Our strategy is that, by FY 2027, right, we should be able to utilize all 300,000 ton available capacity to achieve our sales volume. Okay. And sir, if I were to look at the presentation and in the applications on slide number 45, you have given certain ongoing inquiries, and it says that 220,000 tons of heavy structural steel tubes are required for about 42 million sq ft visibility. Just to understand it better, if I derive a per sq ft number of almost, what, 50 kg per sq ft, would be a correct metric to understand this? 5 kg per sq ft. Yeah, 5 kg per sq ft. Hello, am I audible? Yeah, that's right. 5 kg per sq ft. So I mean, just to, this is 5 kg per sq ft for, let's say, high end of application, which is, data center, aviation. What would be, it would be for a different segment? Would it be different to? Yes. So it depends on the load of the structure, right? For data center, the consumption could be as big as 20 kg per sq ft. For a plain vanilla warehouse, the consumption could be 1.5 kg per sq ft. But on an average, the high-rise building of, say, 5-storey, 10-storey, the consumption comes out to be 5 kg per sq ft. This is the average- Sorry to interrupt, Mr. Bhandari. May we please request you to rejoin the queue for any follow-up questions? Okay, thank you. Thank you. Next question is from the line of Abhinav from Standard Chartered Bank. Please go ahead. Hi, sir. Just wanted the break-up for APL Apollo billing for sales volumes and EBITDA in Q1. See, I mean, we cannot give you the absolute number, but we have told you the capacity available and the utilization level, so please calculate based on that. So 194,000 volume you have given for Raipur and Dubai. So Raipur would be how much out of that volume? Ninety percent. Okay. And, the utilization that we are calculating, is it on 1.1 million or 1.5 million tons that- 1.1. 1.1 for Raipur and 0.3 for Dubai. Okay. And the INR 500 crore-INR 600 crore CapEx that you mentioned for the 3 plants, what is the amount which has already been incurred, the expense? 500 is the receivable CapEx. INR 500 crore is the receivable CapEx. We have, as of now, we have made payment, like, you know, we're in process of payment, making payment for Siliguri land and Gorakhpur land, right? Once land is in our possession, then the CapEx for plant and building, et cetera, will go. So put together, we must have spent around INR 200 crore-INR 250 crore for these plants. Okay. And, in, previous quarter presentation, you had given a break-up for the market share for the next, eight years as well. So, just wanted to know the player two and three that we are mentioning here, 10% market share for ancillary business and for oil and gas-focused businesses, who are the competitors, which have 10% each? Player two and player three. We'll take this offline, please. Okay. Sure. Sure. Thank you. Thank you. Ladies and gentlemen, we will take our last question from the line of Shailesh Raja from B&K Securities. Please go ahead. Yeah, thanks for the opportunity. I have two questions to ask. First is on what was our total outsourcing cost in FY 2024? In future, any plans for shifting these outsourcing items to in-house and trying to bring down the costs? Like in cold rolled product, we were buying it from steel companies, and now we are having separate line for the lower width, which brought down our cost significantly. So in similar line, is there any scope for us to bring down the cost and having it in-house? So, Shailesh, as of now, we are not doing any outsourcing job for finished goods, okay? It is zero today, because we are yet to utilize our own capacity, so there is no point of going on outsourcing model as of now. Once we hit our own 5 million ton capacity utilization, then we will see if it makes sense to go more asset-light and look for outsourcing jobs. But I think that is still 1-2 years from ahead of us from today, right? Unless we sell 300,000, 350, 400,000 ton for 2-3 consecutive months, right, we are not looking for any outsourcing job. Okay. In color-coated sheet, we do aluminum coating and do color coating also. Both these processes are currently outsourced, right? Sorry, say it again. In color-coated sheet, we do aluminum coating and also do color coating, so both these processes are currently outsourced? No, no, it's all in-house. And it's not aluminum, it's aluminum zinc, Aluzinc. Yeah. Aluminum zinc. Yeah, it's all in-house. It's all. So the outsourcing, what we did, let me rehash that. The other expense, which I mentioned, was the well one is a tube order. Is a tube order, right? It's a 12-meter tube, which goes for a solar structure, right? And we have to do for the galvanization. So our own zinc baths, own zinc tanks, what we can maximum do is 8 meters, right? So above 8 meters, we send it to small units near our plant for outsourcing jobs. So this is only for that product. There is no other job work which we do or any segment or any client. It's only, it's specifically for that solar structure order. Okay. Okay. Got it. My second question, could you please talk about the exports business opportunity for the high dia tube? So 300 mm, 300, 500 mm, 500. Global key players are making INR 15 EBITDA, and considering our cost competitiveness, larger capacity, and we have presence in wide product size range from 300 mm, 300 to 1000 mm, 1000. So what is our plan to increase the volumes for the high dia tubes in the overseas market? Right. So for this, the game plan is that first we install 300 by 300 in Dubai, which started last week only, right? Now, the whole world knows that in Dubai, we have this mill, right? We have already started booking orders for this segment, right? Now, with 300, 300, we are also selling 500 by... We are also promoting 500 and 500 from India. Right, so as a combo, 300, 300 from Dubai, local and 500, 500 from India, now our customers know that that we have this segment. So yes, it has a strong potential, if you ask us, okay? It needs promotion, it needs awareness, okay, which we are currently working on. I think, I mean, if this 300 mill we are able to utilize it, like, you know, completely, better or sooner than expected, so I mean, if market requires, we may install 500 square in Dubai as well, right? So I guess opportunity is there, right? Almost 40 million ton of steel pipes are traded ex-India and China, right, globally. Okay? So as of plan, we first went ahead with 300,000 ton capacity, right? Which is like around 3-4% market share. So I guess, as we see the ramp up from Dubai, we will keep on installing higher value-added products, including high dia pipe mills, right? But let's see how the existing mill performs, how the existing plant performs. Once we have green shoots visible, we will not stay behind from putting up the capacities. Okay. In tonnage terms, how much we are doing in exports? I'm sorry? In tonnage terms, how much we are doing in exports? It's around 100,000 tons. Okay. Okay. So any target we have in next 2, 3 years? So it'll be combination of, like, what we do from Dubai and India. So Dubai, we have to ramp up to 300,000 ton anyway, right? And India, let's see, one hundred thousand remains the same or, some cannibalization will also take place. So, so let's see. Okay. Okay. Thanks. Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for the closing comments. Thank you, everyone. Again, special thanks to Ambit for hosting us, and look forward to see you for next conference call. Thank you so much. Have a nice day. Thank you. On behalf of Ambit Capital, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.