Ladies and gentlemen, good day and welcome to the APAR Industries Limited earnings conference call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Nihar from SGA. Thank you and over to you, sir. Good afternoon, ladies and gentlemen. I welcome you to the second quarter FY 2023 earnings call for APAR Industries Limited. From the management side, we have Mr. Kushal Desai, Chairman and Managing Director, Mr. Chaitanya Desai, Managing Director, and the CFO, Mr. Ramesh Iyer. I would now pass on the mic to Mr. Kushal Desai. Yeah. Thank you, Nihar. Good afternoon, everyone, and I'd like to take this opportunity to wish all of you Happy Diwali and good wishes for the rest of the year. Let me start off with an overview of our performance and follow that up with a short industry update. Then we can get into details on the segmental performance of the three major businesses, and post that, we can open up the floor to questions. During Q2 FY 2023, the consolidated revenue came in at INR 3,235 crores, up 43% year-on-year, which was largely driven by volume growth. There was a certain amount of increase that happened in commodity prices, especially oil-related products, and a substantial growth in the export business. Export revenues grew by 85% year-on-year, contributing to 47% of the overall company's revenues compared to 36% a year ago. EBITDA is also up 82% year-on-year to INR 237 crores at a margin of 7.3%. PAT came in at INR 103 crores, so that's 80% higher than the previous year. It is at 3.2% versus 2.5% in the year ago period. In short, Q2 witnessed a fairly strong performance. If you look at the H1 revenues and the H1 profit after tax, it's at an historical high. The H1 consolidated revenue came in at INR 6,328 crores, so that's up 55% year-on-year. Export revenue grew by 65%. In both cases, this was led by the cables and conductor divisions. The EBITDA for the half year is up 77% year-on-year, and we could attribute this to premiumization of products and better product mix. A good geographic mix with exports kicking in to a much higher extent and a better client profile. Now, coming to each of the individual divisions. Sorry, I'll cover first just an industry brief. In September 2022, actually, power demand grew to about 126.9 billion units, so that's about 11% higher than the period previous year. There is a growth of about 10% in the western region, 3% in the southern region. Residential and industrial consumptions were key factors that spurred this demand growth. The peak demand grew by 11% to approximately 200 GW. Generation increased by 12% year-on-year, while the peak deficit reduced to about 0.5% compared to 0.7% in August. The renewables came in at around 13% of the overall generation. The thermal plant load factors improved by almost 6.3% and came at 60.5%. We expect over the next few years, India's power sector to be one of the key beneficiaries of a significant amount of CapEx as well as reforms. Whereas electricity has now reached to even the remotest of villages, there is still an issue in terms of the quality of power that is being delivered there. In addition to this, India targets to have 50% of its generation coming from non-conventional energy sources, including solar and wind, by 2030. This is a delta of nearly 37% because we are at 13% today, with a target of going up to 50%. The outstanding dues of electricity distribution companies towards Gencos remains at over INR 1 lakh crore, which is still a little bit of a worry. The government has converted the total outstanding dues of discoms towards Gencos into an equated monthly installment plan. The defaulter utilities have been barred from trading at power exchanges under the Electricity (Late Payment Surcharge and Related Matters) Order, which was notified by the ministry in June 2022. This should help improve discipline among the distribution utility. India's power consumption grew 1.64% to 114.64 billion units in October compared to the year-ago period. The National Grid Transmission system has added transmission lines of 171,149 circuit kilometers since 2014-15, and a transmission capacity of approximately 604,000 MVA since that period of 2014-2015. As presented, the installed capacity of the National Grid is 404 GW, with a peak demand of around 216 GW. Now coming to the individual business highlights. The conductor business' revenue in Q2 FY 2023 grew 33% year-on-year to reach INR 1,439 crores. This had a much better mix in terms of clients as well as significant increase in exports. The export revenue grew by 97% year-on-year, contributing to 46% of the division's overall revenues. The premium products contributed to 44% of that revenue mix. EBITDA per metric ton post Forex adjustment came in at INR 39,108 per ton, which is at a historic high. As I mentioned, the two main factors is an improved mix of premium products. There was also a lower cost of logistics, steel and aluminum premiums. Some of the hits which we had a year-ago period have actually reversed, and that has also helped boost the bottom line. New order inflow came in at INR 1,468 crores, which is up 67% year-on-year. If you look at the half year picture for the conductor division, revenues came in at INR 2,987 crores, that's up 70% year-on-year with higher volumes. The volumes are up 29% year-on-year, and the EBITDA per metric ton for the half year period came in at 29,786. That's 87% higher than in the previous year. The total order book is at INR 4,065 crores, with 55% of that share coming from premium products. Overall, the conductor division has had an excellent quarter as well as a very good half year. Coming to the oil division, Q2 FY 2023 revenues came in at INR 1,176 crores, which is up 31% year-on-year. This was driven by higher base oil prices. The volumes remained flat compared to the previous period. Export contributed towards 47% of revenues. EBITDA post-Forex adjustment came in at INR 4,550 per KL. The lubricants revenue was INR 207 crores with a volume of 16,595 KL. If you look at the half year FY 2023, the oil revenue is up 30% year-on-year at INR 2,244 crores. Again, the volumes remain flat in H1 compared to the previous period. EBITDA for Forex is at INR 7,154 per KL, and this was largely because of a much higher margin in the first quarter. Going into Q3 FY 2023, we see some major challenges on the inventory cost versus market realizations for this division. The strength of the U.S. dollar versus other currencies has not only affected cost in our case, but also the ability of various customers and countries to be able to import products. We've also seen a demand compression taking place across all segments in the market, not only in India but also globally. Our sense is that the stability in the market will take some time until the fourth quarter of FY 2023 at the earliest. On the other hand, in second quarter FY 2023, the cable revenue grew by 79% year-on-year to reach INR 762 crore, with a significant increase coming in our elastomeric products as well as exports. A strategic focus on exports continues to deliver rich dividends. It contributed towards 50% of the sales in Q2 versus 29% a year ago. The elastomeric cable revenue is up 55%, year-on-year. We see robust business in the renewable energy space, the railways, defense, and the trend of all these segments also seems to be in the upward direction in the future. We have two pieces of major equipment getting commissioned in this quarter. We have our fourth electron beam machine, which should get commissioned in Q3. We also have a CCV line which is dedicated to produce higher voltage elastomeric cables, which largely go into windmill installations and some of the higher end oil drilling and mining applications. This is likely to also be commissioned in Q3. If you take the EBITDA post-Forex, it came in at INR 70 crores, which is about 9.2% of revenues. That's up 5.1% compared to the same period in the previous year. If you look at the overall first half, cable revenues are up 70% year-on-year at INR 1,399 crores on the back of increase in the last mile and export business. The overall export business contributed towards 47% of sales in H1. The EBITDA post Forex came in at 8.5% versus 5.1% in the previous period. The business is set to hit a target of approximately INR 3,000 crores in revenues for the year. Overall, we believe that the current geopolitical and macro environment is providing a better platform for our industry and specifically for a company like APAR. Funds are being infused in infrastructure, both in India and overseas. There is a strong push towards renewable energy. Due to these reasons, we are quite optimistic on our business growth over the next few years to come. The main growth drivers will remain a further improvement in premiumization and a product mix. The clients and the geographic mix with exports playing an increasingly important role as growth in the infrastructure spending globally takes place and the world is adjusting towards the new ESG norms. I would also like to specifically mention that there is both an updated corporate presentation with significantly more detail on the company profile and performance that has already been uploaded on our website. Our second ESG report, which is a fairly intense effort at providing a very comprehensive picture of our ESG status and movement in the company, has also been loaded on our corporate website, and I would encourage and request you all to please go through the same. I'm sure it will provide insight and status into the company and the direction in which it's headed in the future. With this, I'd like to come to the end of my comments. Thank you everyone for joining this call. Can we now open up the floor to questions, please? Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Thank you. We take the first question from the line of Mr. Maulik Patel from Equirus Securities. Please go ahead, sir. Thanks for the opportunity. Congratulations on good set of numbers. A few questions. In the past conf call you mentioned that transformer oil, which did a very heavy lifting for the whole company in the previous couple of years will be a muted one. It seems that it's going to be more like on a consolidation phase. Also the margin, which you said that it will come down because there was some abnormal event in the previous quarter, so margin has come down. I mean, is there going to be more pain in margin or is it like more steady margin where we have reached on the transformer oil? Actually, the real impact of the inventory cost versus, you know, market prices is going to actually hit in Q3. Okay. That's why I mentioned in my opening remarks that Q3 is where you will see, you know, a big impact in this. I'd sort of outlined a few of the key reasons for the same, where there has been a demand compression. There's an expectation in the market that, you know, prices are going to fall. Mm-hmm. Whereas actually that is not happening. Customers have reinventorized and in many cases, you know, instead of finalizing longer term contracts, you know, even for a month or three months. Mm-hmm. The negotiations are happening almost by every load or a container, you know, or a week for that matter. The situation is a little bit disturbed. I think it'll play itself out. Also in the short term when something like this happen and there's panic in the market, contract prices, you know, lag spot prices. Whereas spot prices, you know, you end up you know traders and some of the players who are shorter term in terms of their deliveries, they tend to gain. There is this one phase of Q3 where you know I expect major drop in the profitability of the oil division. Then as we get into Q4, I think it'll start stabilizing. Got it. The volumes have remained flat also partly because we've chosen it to be that way. Where, you know- Right. You see that profitability is declining and, you know, so you stay away from some of the business which is actually a drag. I think my concern would not be on volumes as much as on ensuring that, you know, the margins, the unit margins are restored. Got it. For conductor, I think it's continuous surprise. You have given this time a number with a discount of, you know, forex, the interest component, but still at this INR 27,000 per ton, even if I adjust, the forex and interest component, isn't it on a higher side? Or, I mean, because you have been historically giving the guidance that it will be in the range of around INR 17,000-INR 20,000 per ton, but it's a surprise. Are we moving on a new normal profitability or is this again, there are so many moving variables in the business, so for the quarter or two it's on a good business. Revenue mix is in favor of having a high profitability margin product. Is this like the two, three quarters of high margin and then it will come down? I think the margin profile is gradually on a steady state basis also going up. Okay. You know, we once upon a time had INR 12,500 as a guidance. We lifted it to INR 17,500. Sure. We are now, you know, on a wicket where we can see, you know, INR 21,000-INR 22,000 per ton, you know, being a long term sort of profitability that's pretty much in place. Mm-hmm. There are a few factors that have helped us in this case. One is that, you know, the premium product sales has been actually continuing to grow, and we see that it'll further grow in the next six months and in the years to come. Mm-hmm. We've also had quite a lot of export business that has been going out of India. The profitability around that also has been a bit more favorable. Mm-hmm. We have had three factors which I had mentioned in the opening remarks, which have. They were headwinds for us a year ago. Now they are tailwinds in this period. Mm-hmm. Premium on aluminum has come down. The logistics costs also have reduced. They're not back to what they were pre-COVID levels, but they have corrected quite substantially from the peak levels that they were at. Also steel prices have corrected downward. You know, the steel is remaining at a lower level, you know, as one goes forward. There have been a few tailwinds, but our expectation is that the conductor business is going to be on a very solid wicket over the next for the second half as well as for the next year or two to come. Got it. In fact, a lot of the work which happened in the years pre-COVID are now really starting to pay dividends. Also your investment in the value-added products are now reflecting into this margin also. It's because you invested a lot in the pre-COVID also, but then you couldn't grab during the COVID time. That's also going to be- Between the Americas right across North, South America, where a lot of investment is going in on the infrastructure side. That's why I think, you know, we expect that demand will continue to remain strong. Okay. On cable side, can you just share the one number that how much of your revenue we have from this Anushakti product for the quarter? What has been the growth in that product compared to the, let's say, previous quarter or the previous year? We are running at 100% growth, you know, year-on-year. Okay. I think that, but you know, the base is lower. Okay. That number will continue to grow. We expect to hit our light duty cable revenues this year between INR 180 crore and INR 200 crore. Sure. Which was around 123 last year, right? Last year it was. 120. Yeah. About 120, but it had quite a lot of solar cables and other things in it. Here the mix has moved also towards the 90 m, which is the retail pack. Okay. Our distribution continues to increase. Mm-hmm. You know, as our coverage of states increases. We've also started increasing our advertising presence, you know, state by state, depending on the distribution that has been put in place. We've already gone on the air. ATL spending has started in Kerala where we have a good distribution setup. This is a space where I think, you know, we will grow considerably over the next 24-36 months. You'll see big lot of investment going in and a lot of growth happening. Okay. Just one balance sheet number. Out of the total payable that we have at the end of the first quarter of 2023, how much of that is acceptance? We have around INR 4,700 crores was the payable, but how much is an acceptance out of that? Interest-bearing LC outstanding is about INR 3,400 crore. INR 3,400 crore. Okay, great. Thank you. Okay, great. Thank you, Maulik. Thank you. Thank you, sir. We take the next question from the line of Mr. Mihir Manohar from Carnelian Asset Management. Please go ahead. Yeah. Thanks for giving the opportunity and congratulations on a good set of numbers. Sir, firstly I wanted to understand the profitability on the conductor side. You know, the profitability has been quite strong, I mean INR 32,000 per metric ton. So I just wanted to get, you know, we understand that the share of premium products is going up. But just wanted to understand from a business angle, I mean, are we start comparing to, you know, how should we consider the normal profitability, when the raw material prices would cool off? Is there a permanent nature in change of business? That is what I wanted to understand. Second question was on the, you know, was on the inventory side. I mean the oil or especially the oil division that you mentioned. Just wanted to understand, I mean, what is the inventory that we are carrying currently on the books, and what is the difference in the market price versus the carrying cost, which is there on the books? To answer the. Yeah. On the conductor thing, there are two reasons that is happening from the market point of view. One is that, as we talked about, the share of premium products has been going up, and even in this quarter, we're witnessing higher premium products compared to the conventional conductors, which is what's leading to higher margins. In addition to that, even within the conventional conductors, the export mix is going up. We have seen that the proportion of exports in the conventional conductors has been much higher in quarter two. These two factors have actually led to an increase in the EBITDA numbers. In addition to that, as Mr. Kushal Desai was mentioning, we have been getting favorable costs and logistics, steels, as well as low aluminum premium. A combination of all these things is where we have seen the EBITDA post Forex to be about INR 39,000 per metric ton in quarter two. Thank you. The second question that you had was on the inventory on the oil side. Actually, the price is still evolving in the sense that, you know, it's right now at a level which is lower than what it should be relative to the cost of the inventory. You know, there's obviously a conscious action to sort of raise the price level. If you just go pretty much on a per KL basis, you're looking at around maybe INR 2,500-INR 3,000 per KL on an average, where, you know, the price mismatch is taking place. Our sense is that as you get into the fourth quarter, because keep in mind that diesel or gas oil is still at very good price levels. Refineries will start moving their product mix more towards diesel and reduce base oil production as base oil remains low. In that case, what happens is spot cargos start disappearing. People like us who are on contract, we end up actually getting material, and the spot players actually get a bit scarce. That's why my sense is that in the fourth quarter it will stabilize, and thereafter it will move in the opposite direction. Diesel remains, you know, strong. We have every reason to believe that diesel consumption worldwide has remained pretty strong. With the Russian sanctions getting harsher as you get into 2023, you know, that's the way it probably will be as you get into the next year. Got you. We see this more as a one quarter sort of effect, you know, as opposed to something that will carry forward. Sure, the pricing is matching to the tune of INR 2,000-INR 3,000? Yeah, approximately. Sure. Just lastly, on the conductor side, I mean, sir, you mentioned that share of premium products is going up. You know, last time we were expecting some 17,000 kind of a normal number. I mean, with business profitability improving, how should we see a normalized range scenario? If you could just throw some light on the applications of this premium conductor which are there? Yeah, that was the last question. How should we consider normalized profitability for the conductor business? You know, our order book also has been going up. If you see this quarter, 44% of the revenues came from premium products. The order book is 55%, so it's clearly moving, you know, in a positive direction. The premium products are all high efficiency conductors, HTLS conductors, you know. We are also doing copper for the railways, OPGW, which is for carrying the base data load across the country. Then we have specialty rods, and then we have the CTC which goes into transformers. That's the bunch of. We've also launched a new product range, which is, you know, busbars, which are again copper-based products. As we see over the next couple of years the railway demand coming off, then CTC and busbars, which are also copper products, should start picking up. If you look at a longer term, you know, we believe that now the sustainable EBITDA can be at least in that INR 21,000-INR 22,000 per metric ton range. You may have shorter periods where, you know, it will be higher where there are tailwinds. If you take a longer period of time going forward, we expect, you know, at least we will hit those numbers. Sure. Yeah. Thank you. That's it from my side. Thank you very much. Thank you very much, sir. We take the next question from the line of Mr. Nemish Shah from Emkay Investment Managers Limited. Please go ahead, sir. Yeah. Thanks for the opportunity, and congratulations for a great set of numbers. I again also had a question on the order book on the conductor side. If you could just help us understand, like you mentioned, the 55% of the order book now is premium products. What geographies or if you could just help us, is it largely export-led or domestic-led? What will be the breakup on that front? And which geography specifically you are seeing the demand coming from? Yeah, it is primarily domestic market, and also there is some component of export, and the export is spread out to various countries. Concentration is in the Americas, largely. North, South. And, uh- Export. Export, yeah. The premium products, as Chaitanya mentioned, are mostly domestic. It's in South Asia, so India, Bangladesh, you know, in South Asia region. Yeah. Yeah. The export is concentrated in the Americas, as I mentioned earlier. Okay. Just to understand a bit further, so these order books are. Is it largely new CapEx driven or is it. What are the type of orders? Like, is it new investments in the infrastructure side or is it replacement of conductors? If you could just help us understand that. The export part is largely new lines, so it's infrastructure-driven. The domestic part is a mix of both, you know. The new infrastructure spend as well as some component of the replacement. Okay. Understood. Yeah, and just one data point, if you could just share the debt figures for the group. Yeah. Long-term debt is about INR 184 crore. Short-term current portion is about INR 150 odd crore. We have cash in hand about INR 350 crores. Okay. Yeah, I'll join back in queue. Thank you. Thank you very much, sir. We take the next question from the line of Mr. Rajesh Kothari from AlfAccurate Advisors. Please go ahead, sir. Yeah, hi. Thanks for providing me the opportunity. Congrats for good set of number. Just trying to get a little bit further into the previous participant question. What are basically if you can give little bit more insight into how sustainable this new order inflow, how do you see that? Is there any way to track that? How basically from the competitive landscape, you know, what are the competition when we do exports, how it gets driven? Do they have tariffs on the imports from other countries compared to India? If yes, what are the tariffs? Some little bit more detail on that would be useful. I mentioned about this geopolitical considerations. In many of these countries there is a clear move to look at suppliers ex-China. That is helping. The sustainability of the infrastructure spend looks quite solid. The U.S. has just passed a major set of bills around infrastructure. All countries, including India, have made certain commitments in COP26 in terms of, you know, taking forward renewable energy and reducing the carbon footprint. Our expectation is that demand will remain strong over the next several years as this, you know, unfolds. Right. We don't see this as a like a short-term phenomenon. In some segments like OPGW, as data is a new oil, you know, there is more and more. Every new line that's coming up, the earth wire is actually now an OPGW with a fiber core, and that's the backbone of carrying data. As you move towards 5G, you require more OPGW lines because of the quality and the quantity of data both that need to be fed. I see. On Chinese product currently, do they have any import tariffs? Yes, they have the tariffs in the United States are at 35%. Okay. Do they- There are still many countries where the tariffs for Chinese products have not changed, but the buyer doesn't want to have all their eggs in a Chinese basket or doesn't want to buy products from Chinese players. If you basically, you know, put your industry, the segment in which you are present, any basically statistics where how much basically China exports to the world and, you know, what is India's share, what is China's share, the top five companies from China? There is no published report for that. Okay. You know that. This basic category, I'm sure. I mean, because the U.S. published the monthly data of their exports and imports. This category must be coming under them, right? From there, you know- Yeah, yeah. It's not at a granular level. They're very broad category. For example, the U.S. imports $20 billion worth of cables a year, which just gives you an idea in terms of the category of cables. There is no breakup available of, you know, which country and which type of cable as far as, you know, as far as we know. It's mostly data that has been picked up from being in touch with EPC players, with infrastructure investors, et cetera. Understood. Just last question from my side. Since in the raw material headwinds, whether it's tailwinds, do impact your business, do you enter into long-term contracts or it is like a spot as soon as you get the order you lock the, you know, all raw material? How it works? Both the cable and the conductor side, as far as metal is concerned, we run a completely hedged book where the moment an order comes, you know, the metal is immediately booked so that there's no speculation on the metal. There are certain commodities where like steel and polymer, et cetera, there is no hedgeable situation. We typically don't price for very long period, you know, wherever there's no hedging. In terms of the oil business, we have 75% of our purchase that is under long-term contract. Understood. Basically therefore these tailwinds what you talked about, particularly the premium on aluminum and steel price correction, do you think this tailwind can also further add from here on to your EBITDA per ton and total? You know these are not hedgeable. You have an MJP and, you know, a premium which is over and above LME, and that captures logistics cost and warehousing costs. Since both of them are sort of declining, the overall premium has also come down. It's not something that can recur. It had gone up to a certain level. Now it's come down to a more manageable level. The same thing with logistics. You know, there are certain DDP contracts were in place. We saw the other side of the problem, when suddenly the freight rates went up. Now when the freight rates have come down, we are seeing some benefit which is coming on account of that. Understood. When you remove all of these factors and on a steady-state basis you go, we feel that we can be at that INR 21,000-INR 22,000 per metric ton EBITDA on the conductor business with the product mix that we are looking at today. You mean EBITDA, which is right now INR 20,000. You are talking that number, right? No, EBITDA. Which is roughly 39,000. The first half was at INR 29 thousand. Okay. You are seeing 21,000-22,000. Okay. Yeah. Why the decline you are seeing? Because we just explained to you that there are certain, factors which have been tailwinds that have added to this. You know, so a little bit of fluctuation will always happen. The longer term, situation, you know, when you look at it over a year, you know, four quarters, six quarters, that's the steady state that we can expect. Understood. Great, sir. Thank you, sir. Wish you all the best. All right. Thank you. Thank you very much. We take the next question from the line of Mr. Vignesh Iyer from Sequent Investments. Please go ahead, sir. Congratulations, sir, on good set of numbers. I just wanted to know, so we have done around in conductors division, we have done around 66,000 volume, I mean, 66,000 metric tons for the first half. Can we expect still to do around like 1.3 lakh-1.4 lakh tons for the entire year? Yeah. The target is to do about 140,000 tons. Okay. Second half volume will be higher than in the first half. Okay. We are still on track as we had thought about it in the first quarter mandate. We are online with it. 140,000 tons for the year. 66,000 tons is what we've done in the first half. The second half we expect to do closer to 75,000 tons. Okay. As one of the gentlemen asked you a question on The thing that may happen is that, you know, you may have, in some cases the volume going up, you know, the EBITDA per ton may be a bit lower, but that's the reason why, you know, the steady state, you know, 21,000, because a little bit of it moves up and down with the mix of the product also. So looking at, we have about 75,000 tons, which we, expect to execute in the second half of the year. Okay. As I said, like, two points on the EBITDA side of the conductor division. First, if I'm not wrong, the current quarter two the premium mix is around 44% and your order book premium mix is around 55%. I expect that the 75,000 tons that will get executed might have more of a premium share of the product, right? Can we see that additional EBITDA per ton kicking in? Yeah. As we explained, there are some multiple reasons that accounted for this Q2 EBITDA. One, we saw this premium share going up. Secondly, you see that, even within the conventional thing, the export mix is going up. As I explained, there's a logistics steel cost. Yeah. Cost. No, no. Adjusted for the aluminum and logistics part, keeping that aside, can we see that a bit of upside because of the premium mix? Solely because of premium mix. Yeah. If everything continues, we see a similar kind of momentum that we saw in H1, but it'll also depend on the macro environment and how the external costs are there. Also as you see, the interest costs are likely to go up. If the interest cost goes up, it will also have an impact on the EBITDA numbers and the EBITDA numbers. Okay. You know, because you know, these businesses, see, what we need to understand is that there are two layers that are there ahead of us who actually call the shots. One is the developer of the ultimate infrastructure. The second one is a set of EPC players that are involved, you know, in terms of actually putting up lines and building this infrastructure. Mm-hmm. All of these things don't sit in our hands, you know. There are some movements that happen back and forth. What we can explain here is that, you know, as the premium products keep increasing, the baseline of your EBITDA will also keep on moving up. As we were Right. Right. Computing at 17,500, we are now almost INR 3,000-INR 4,000 a ton higher, you know, on a steady-state basis, given the mix that's in place. You'll always find some positive noise. There could be some quarters where there's negative noise, but the median line will keep rising as the premium product category grows. That, that's the point which I just wanted to make, you know. Right. I got it. Right. On the cable division side, sir, are we now seeing a new, you know, I mean, you have more or less revised your target. If I'm not wrong, you had given a target of around INR 2,600 crore sales for the entire year. In the management commentary right now you gave it could be even around INR 3,000 crores. Keeping that in mind, can we say that we may, you know, end up clocking around INR 750-800 crores every quarter? Absolutely. Our expectation is to do INR 3,000 crore, you know, for the full year. It'll be little over INR 1,500 crore in the second half. Okay. We have the order books and things, you know, to kind of support visibility. Oh, right. Not all of it is order books, but visibility. Right. Our cable division is quite big and, you know, lot of products involved in it. We're catering to different division as well. Do you think it is the right time when we start giving the mix of business under cable as to what comes from elastomeric, what comes from what caters to specifically to the defense or what comes from the export for renewable or et cetera? Because we are looking at a division which is growing quite fast, so it would give us a better idea as to which part of the business is expanding and how much. You know, one thing that we do need to be cognizant of is that a lot of cable business in the B2B space undergoes competitive bidding or negotiation. There's only a certain level of granularity which we would like to have, you know, in the public domain. Because buyers use that information also. They probably go through reports. Mm. carefully than any analyst does before they negotiate. You know, there's only a certain amount, you know, beyond that we draw a line. You know, we don't have a plan of actually crossing it right now. Okay. The point here is that again, if you look at the mix of products which the cable division is doing, we are investing more and more on that elastomeric renewable energy side. We put a fourth E-beam in place. It goes towards Anushakti wire, it goes towards solar cables, et cetera. We put the TPV line in place, which is going to be dedicated largely towards windmills and the cabling that goes into- Right. Right. Into windmills. Mm. That whole segment is, you know, going to grow. The windmill side, with this new addition coming in also enables us to go and start exporting the product. All the major windmill players in the world are pretty much present in India. Right. We've established. You know, we have over 70% market share in the Indian market on windmills. With this investment going in, we've got global approvals from many of these players, which I had mentioned in a call maybe six months ago. Right. that will also start playing out. That segment will definitely grow. Okay. The whole elastomeric side. Also, the Anushakti wire business will grow as we roll out, you know, the wire and cable, through our distribution setup. Okay. Just, one final question on my side. I just want to know, so, considering this windmill cable export, I just want to know which part of the world you are getting more traction from, like from Europe or U.S. as such. If you could just give us an idea. We haven't started exporting yet in a big way. Currently, whatever exports have been going out, they've been going both to Europe and the U.S. It depends because there are certain players who are much stronger in the Americas, which is General Electric, Nordex, et cetera. There are other players like Siemens Gamesa and et cetera, who are stronger in Europe. Right. Because Going to both places. You know, when you start something new, as in the export going out, it's not easy to sort of predict the trajectory. Our sense is that business will start going to all of these major players who are also present in the Indian market. Actually, my question was more from the side of, who is showing interest, you know, at least the preliminary talks at the rate. Because Europe is, sort of, facing, crisis because of the conventional way of, energy, right? So they might be more reluctant, more interested actually to shift to the non-conventional. You are absolutely right. There is definitely a crisis in Europe, both in availability of power as well as manpower. Both the powers are an issue at this stage. We've got approval from the two largest, which is Vestas and Siemens Gamesa in Europe. We also have approvals in place from Nordex and General Electric. GE is the largest now windmill producer in the world. We have approvals from all of these four players and a few other smaller ones. Our sense is that, you know, this line is getting commissioned in this quarter. In FY 2024, you'll start seeing volumes going out to these players. In the northern hemisphere, there is a lot of wind capacity coming in, just given that they have lesser number of sunshine days. Okay. Got it. Yeah, I will join back in a few. Thank you, sir. Thank you very much. We'll take the next question from the line of Mr. Sachin Shah from Congruence Advisers. Please go ahead, sir. Hello. My first question will be, as we have talked in the previous quarter, that we have been on defense, we are focusing INR 80-100 crores of the revenue. Currently, is the trajectory any better revenue conversion from defense? And could you just give us the split between the railways division, how much order is being from railways, specifically mix of conductors and cables, if you can give the split? you know, we don't want to get into too much of detail in terms of each of the subsegments, but on the two are going in in different trajectories. The cable side is going into locomotives as well as coaches, you know, and there's this whole Vande Bharat. You will see increasing requirements happening on the cable side. We have two channels. One is direct supply to the coach factories. The other one is through the harness manufacturers, of which one we are also a harness manufacturer, but there are like 20 odd. The volume is growing there as the locomotives and coaches are being added. On the other hand, if you see, the conductor side, there's the railway electrification project has progressed now at a very advanced stage of its completion. We will see over the next year and a half or so the volume starting to fall off. Unless they start upgrading some of the electric lines to higher speed lines. You know that part of the program is being talked about, but the exact details and numbers still need to come out. There you will have to upgrade the lines to copper alloys as opposed to copper. Okay. Sir, for the defense, we are eyeing any specific better contribution from INR 800 crore? We are right now at that level of about INR 80-odd crores. We've been continuing to build, they are looking at higher and higher indigenous content. Our expectation is that over the next few years, that volume also will grow. Yeah, because. The defense business can be a little lumpy in the sense that, you know, once a ship is done, in the last trimester of the ship's delivery, the cabling work starts. Most of it is going into the Indian Navy because that's where, you know, it's very instrument heavy and the sizes are quite large. Right, right. My expectation is it'll grow. I don't know to what extent it'll grow from, you know, the current level, but it's in that positive direction. Okay. Got it, sir. My second question would be on the cable EBITDA margin. On our trajectory side we have said that we would be around 8%-9%, and currently we are at 9%. Are we seeing a better improvement going forward for the EBITDA margin in cable side because there is a strong demand in the, specifically in the industrial and consumption in new household and all that? You know the stronger demand is there for the specialty cable and there is a good demand which is there. Or I say that there is premiumization happening in the house wires and building wires, where because of the GST impact and various other things, branded goods are selling more as opposed to, you know, lesser players who don't carry brands. The overall volumes are not growing at some, you know, very high level yet. There is an overcapacity in the general power cable side. The results which APAR has shown has fundamentally come on the power cable side from focusing on exports. The domestic market still remains very competitive on the standard power cable. Now, having said that, if you ask specifically what our guidance is on the margins, we are at about 8.5% for the first half. We expect to do the full year at about between 9% and 9.5%. Okay. Sir, we have initiated the B2C lubricant which we wanted to get into that space. What are the, like, current situation and how you are eyeing for that thing specifically? Retail part, B2C part of the oil and lubricants. The oil and lubricants, you know, the B2C part is actually reasonably established because it's been around for over a decade. We continue to you know to grow by introducing new products and winning new distribution. It's a steady growth. There's no meteoric growth that you will see on that front. On the other hand, the B2C growth in the wire and cable side will be at a much much higher pace. The total rupees that will be involved also will be much much higher than in the oil lubricants, because the addressable market is much larger. If you see the total cable market of around INR 60,000 crore, 50% of it is coming from your light duty cables and building wire. It's a INR 30,000 crore, you know, sort of market which is out there. We have, as I mentioned, you know, we will be about INR 180 crore-INR 200 crore on that LDC this year. The last year was about INR 120 crore. Right. Following year we should have a similar sort of growth percentage. Okay. Got it. Thank you, sir. Yeah. Thank you very much. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. We take the next question from the line of Mr. Amit Anwani from Prabhudas Lilladher. Please go ahead, sir. Hi. Thanks for taking my question. My question is, sir, with respect to, you know, the recent parliamentary committee, which announced that there are plans of, you know, setting up renewable energy zones for 66 GW and I think additional 185 GW by 2030. Any thoughts, what kind of market it can create for us? What kind of products? Any assessment, if you would have done? You know, fundamentally the products of ours which go into this is, you know, when solar grows then there are two sets of cables which go in. One is for the solar panel wire and the other one is from, you know, the electric panels into the network. Sorry, excuse me. It linearly will grow with the addition of, you know, the solar capacity. Similarly, in the case of windmill, you have a certain amount of cabling that goes inside the windmill. That also is linear to the kind of windmills that are getting executed. And then you have evacuation from the windmill installation into the grid. In both cases, the grid portion will determine or the conductor demand will come up, you know, for that. I'm not sure whether we will be able to meet that target by 2030 because we are at 13% and to go to 50% on an increased base, in a span of, you know, 17 years is a huge ask. Sorry, seven years is a huge ask. I'm not sure at what timeframe it'll get executed, but one thing is I can guarantee is that the demand for our products will remain for quite a while to come. This is just in India. It's also happening all over globally, all over the world. Right. That is one of the primary reasons that I mentioned also in my closing paragraph that we expect demand to continue for a while because as countries try to meet their COP26 and now COP27 is coming up. You know, there are new commitments and increased commitments which are coming in from the various national leaders around the world. As that gets executed, I think our infrastructure is in a pretty good position. Right. My next question is on the cables business that you mentioned. I think we are on the verge of achieving INR 3,000 crore. Any outlook you would like to give for FY 2024-2025 on the cable sales and how the margin trajectory will look like? Yes. As we explained that this year, FY 2023, we're likely to cross about INR 3,000 crores. Given that, the developments happening on the overseas global front as well as in India, we expect about 20-25% growth happening on an annual basis. Okay. My last question on the conductor side, just for my understanding, if you could just explain how big is the conductor market globally in value terms in India? The global market share for the conductor is about 1.5 million metric tons. In India? Globally. Okay. India, sir? INR 150 thousand. About 150,000 tons. Okay. Thank you, sir. Thanks. Thank you, sir. We take the next question from the line of Mr. Pratik Shah from Equitas. Please go ahead, sir. Hello. Thanks for the opportunity. Just two questions. How do we see this new line that we are commissioning in Q3? What would be the ramp-up plan for this year? What kind of ramp can we expect to the full of next year? Our sense is that actually the line should get loaded within a span of, you know, 12-18 months. If you know, the initial shipments to some of the customers, especially in Europe, go through well, then it could even get accelerated sooner than that because there is a serious, at least at the moment, an energy as well as a manpower crisis in Europe. I can only tell you that that line is coming in at the right time. You know, if the initial product that goes on the line is well accepted, then its ramp-up can be pretty fast. Otherwise our plan was to get it fully loaded in a 12-month to 18-month timeframe. Okay. What would be the full revenue potential of both these lines put together at current price? Around INR 250 crores approximately. When we say that we improve our guidance for CapEx revenue to INR 3,000 crore, there isn't much contribution that we're expecting from this line right now, right? Because- One second. You know, the INR 250 crore is from just the CCV line. The fourth E-beam, then, you know, there's a whole mix of products that will run through the E-beam, including solar cables. Right. This year there wouldn't be very substantial contribution from these lines, right? Yeah. You have some contribution coming in Q4, but it'll be quite small compared to the total, INR 3,000 crores. We have baked in those numbers also in this total of INR 3,000 crore and the next year numbers that I just mentioned about. Okay. My second question is on interest cost. I understand that we started factoring in our product pricing and our EBITDA numbers reflect that. Still, just if I were to look at, you know, our interest cost, if you could elaborate a bit on Forex fluctuations and interest costs going ahead. As you see, the SOFR has been increasing on a steady basis, and also Forex has been almost increasing continuously. These two will have an impact going forward. The current quarter still does not factor the full impact of this increase, especially from a SOFR rate point of view, because we have LCs that keeps on building over a month-on-month basis. Yes, this is one area that we've seen increase. Fortunately, the commodity costs are on a lower side, especially the aluminum and copper. That is helping us to reduce the impact of the increase in SOFR and foreign exchange rates. There is Sir, working cap requirement is expected to remain low? It depends on the commodity prices. On aluminum and copper, since the rates are much lower, the requirement will be there. On oil front, it will be higher. The volume is much higher. Yes, if the volumes, as you see, are going higher, the overall impact will be high. It's actually a mixed bucket of many factors that will determine whether it will be how significant each proportion would account for. You see interest rate going up, Forex going up, that will be requiring more working capital. The volumes are going up, it will be high. But the commodity prices comes down, then to that extent it will be lower. Okay. If you could just tell me, in the conductor division, the order book, how much would be export contribution from export and contribution from AGC conductors? Export would be about 50% of the total pending order book. Okay. AGC? It's around 35%. Yeah, about 35%. Okay. All right. Thank you. Thank you very much. We take the next question from the line of Mr. Vikram Sharma from Niveshaay. Please go ahead, sir. Hello. Yeah, hi, sir. Thanks for the opportunity. Sir, what is overall renewable energy contribution in overall business of the company? We have quoted this as part of our slide in the corporate presentation. It's about 4%-5% for the company as a whole. Sir, one, you mentioned about the busbar product. What is it and what is opportunity size in this product? Actually, busbars go into a whole lot of electrical installation. The market size is fairly large, runs into several thousand crores INR. There are a number of players in this. It's a product which can go complementary with some of the cables that we have, as well as some of the other products which we are going to sell. Okay. It's fundamentally, as the railway business comes off, some of the infrastructure with some minimal investment is being redirected towards this product. Okay. It's not going to be a flagship product like how you would have HTLS and now, you know, you're getting OPGW and things. This is a good addition to the basket. Okay. Thank you. Thank you very much. We take the next question from the line of Mr. Pawan Nahar, individual investor. Please go ahead, sir. Thank you, gentlemen. Once again, congratulations. I want to, you know, for simplification sake, I want to focus on EBITDA after interest. Right? Last time we had discussed that that is the better way to communicate. Before I get there, I just... We've done INR 55 EPS in the first half. There are positives for two segments. One segment will have impact with basically inventory effect, which I would imagine is not generally more than one month. Am I right? No, I think it will probably, it'll affect the quarter, you know. Sure. You'll have an overall effect in the quarter. Kushal bhaiya, my simple question first to start with is H1, INR 55 EPS. H2, can it be similar, higher, lower? As things stand today, and of course things can change. It should be in the similar range. It could be a little bit lower depending on, you know, what the impact is on the oil side. On the cable and conductor side, it'll actually be a bit higher. It's a question of, you know, how much the other two will be able to offset whatever this Q3 problem we have. If you look at it, broadly, it should be in the same range. Okay. The oil thing actually could even end up in a gain because it's only the inventory, right? Who knows? Who knows? We'll leave it at that. I mean, for now, we'll leave it at that. Q, the Q3 is quite clear that, you know, there is a challenge. Right. As we've seen, you know, after going through a difficult period, sometimes the rebounds are, you know, they surprise on the positive side. Correct. keeping my fingers crossed for Q4 and, you know, into FY 2024. Okay. We'll stay with broadly 55 again for the second half, right? Okay, the next question was on the EBITDA after interest. Should I call it EBIT as a better metric to look ahead because it simplifies a lot of things for outsiders like us. Yeah. That's the reason we started reporting that from this quarter onwards, call it EBITDA. Yeah, I was surprised. I was hoping you all would guide the conversation into that, but never mind. What I want to ask is what would be, let's say in the conductor business, we've done INR 20,000 as the EBIT number, INR 20,240 or something for the EBIT, right? What would be our guidance for the full year in terms of EBIT? We've just mentioned our guidance on EBITDA, that's E-B-I-T-D-A to be about INR 20,000-INR 22,000 per metric ton. Now, depending on how the external environment pans out, if this kind of EBITDA is achieved, our EBITDA would be in the range of INR 7,000-INR 8,000 per metric ton. Uh, seven thousand to eight thousand. INR 7,000-INR 8,000 per metric ton. Higher interest costs would be there. EBITDA would be 7,000-8,000. Hello? Hello? Yeah. It will be a reduction of INR 7,000-INR 8,000 per metric ton. Yeah. From the EBITDA. 2022 will become 14,000. Yes. Right? Okay. What about the, you know, for the cables business, we've done about EBIT of 7%, you know, what we've given. Yeah. The cable business, we are showing, telling a guidance of about 9%. The EBITDA would be in the range of 6.5%-7%. Right. 7% is what it is in the first half. Can we then assume similar in the second half? Yeah. Okay. The third is on the oil business. Here we've done. I want to ask both the volume number and the EBIT number. We've done about, EBIT number is about INR 6,000 round figure for the first half. Yes, it is lower in the second quarter. For the full year, what kind of a number we should expect? You know, the first half, Pawan had been INR 7,000, INR 150. That is the- The EBITDA is around INR 6,000 you said. Yeah, INR 5,980. It's a little I wouldn't want to hazard a guess because I don't know how bad this Q3 is going to be. Q4 will go back to a EBITDA of closer to INR 5,500, kind of level. The gap between the two is in the range of about INR 1,500 odd. That is the thing. The interest component will be around that much, INR 1,500 odd per year. Okay. How much inventory do we have right now where, you know, you think will impact the Q3 numbers? How many months generally? Sorry. It's about two months of carry. You see, what happens is that, you know, we follow SAP where it's weighted average cost. There is that historical effect, you know, where it drags on a little bit because every parcel that comes in averages down the cost. Fundamentally it'll hit this Q3. As you get into Q4, I think it should got itself levelized because most of this would have got sold out. Let's leave Q3, you know. What is the new number we should assume for EBIT, right? INR 6,000 is first half. I'm not saying, you know, FY 2023. Generally speaking, what is the number to assume for EBIT in the oil business? That only is something I'm not ready to commit because I don't know what the situation is. You know, when you go into a war, you don't know how much you're gonna lose. This quarter is the one where there is a hangover. There's irrational behavior coming from players. It's difficult to tell. If you take the overall for the company as a whole, you know that guidance is pretty much in place, which would be that, you know, the second half would be something relatively close to the first half, including the issue that you would see on the in the oil business in the Q3. Kushal, I'm not asking oil. Understood. Oil business, I'm not asking you for FY 2023. What I'm asking is, let's say FY 2024, once the, you know, oil price is normalized, whatever happens, what should be the normal EBIT number to take? Earlier we used to guide INR 6,000 as EBITDA, and you are saying INR 1,500 as the oil cost, interest cost. Yeah. We were guiding 5,500. Right. The interest right now is at close to around INR 1,500. With the increase in the SOFR and, you know, some of these rates, if that's not passed on, another maybe INR 200 odd rupees is something that one could look at. About, let's say, INR 4,000 is possible as an EBIT number. Yes. Not for this year. When things normalize, not for this year. Exactly. Exactly. Okay. Got it. What about volumes for this year in the oil business? We've done 230K round figure. Can we assume 460K for the full year or higher? Yeah. In that, it'll be in that range. Yes. Basically to conclude, we are on track with our ROE number of 18%-20%, probably even higher. Yeah. Yeah. Yeah. That's our ambition, but we need to work out the math. Yeah. It's, fundamentally, it's moving in that direction. Yeah. Because 55 first half, 55 second half, 110, it is more than 20% or close to 20%. Yeah. Thank you so much. Wish you all the best. Thank you. Okay. All right. Thank you, Pawan. Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing comments. Thank you everyone for patiently hearing us through the opening remarks and the Q&A on this earnings call. Just in terms of closing remarks, you know, even though we see a short-term issue in our oil business, overall, you know, we are quite optimistic in terms of the way this business will unfold, not only in the second half, but also in FY 2024 and some of the years to come. The fundamental drivers to the business remain intact and are actually accelerating, which is, i.e., the infrastructure that's going into the electrical space. With that, I'd like to close the call and thank you very much for your time. Thank you very much. On behalf of APAR Industries Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.