AIA Engineering Ltd

NSE:AIAENG

Earnings Call Analysis

Revenue dip and strategic expansions amid logistics hurdles

AIA Engineering faced a revenue drop this quarter due to significant logistics challenges and tonnage decreases. Production was 68,000 tonnes, translating to a revenue of INR 1,004 crores, EBITDA of INR 372.32 crores, and profit after tax of INR 259.58 crores. Shipping delays and container shortages impacted sales by about 7,000-8,000 tonnes. Despite this, the company announced a INR 65 crore investment in a new composite mill liner production facility, expected to add 20,000 tonnes of capacity by year-end. Additionally, a INR 500 crore buyback was approved. Revenue growth will depend on resolving logistics issues and the success of new capacity expansions.

Production Challenges and Revenue Impact

This quarter, AIA Engineering faced significant challenges in production and logistics, leading to an optical top-line shrinkage. Tonnage production dropped from 74,000 tonnes in Q1 of last year to 60,592 tonnes this quarter. The major reasons include a shortage of containers and increased shipping costs, resulting from geopolitical issues and a strained global supply chain. These issues caused delays in shipments, with about 4,000 to 5,000 tonnes of orders being deferred to the next quarter. Despite these setbacks, the company reported a revenue of INR 1,004 crores, an EBITDA of INR 372.32 crores, and a profit after tax of INR 259.58 crores.

Segment Performance and Working Capital

AIA Engineering's mining and non-mining segments experienced reduced tonnage this quarter. Mining tonnage decreased from 45,000 tonnes to 37,000 tonnes, while non-mining fell from 26,500 to 24,000 tonnes. The working capital saw a slight increase due to higher receivables and stock levels, which is attributed to timing adjustments and the deferred shipments. Receivables increased from 66 to 77 days, raw materials from 31 to 52 days, and stock from 69 to 79 days.

Strategic Investments and Expansion

The company is making strategic investments to overcome current challenges and ensure long-term growth. AIA Engineering announced a brownfield expansion in their GIDC Kerala factory, which will add 20,000 tonnes of capacity for mill liners. This expansion will cost INR 65 crores and is expected to be commissioned by the end of the year. Additionally, the board approved a buyback of INR 500 crores. The planned capital expenditure for the year includes INR 35 crores for captive power, INR 150 crores for the first phase of grinding media, and INR 65 crores for the mill liner composite facility.

Logistics and Operational Challenges

The company continues to grapple with severe logistics issues, primarily due to container shortages and increased freight costs. For instance, shipping costs to Latin America have surged from $100 to $400 per tonne. These logistics challenges extend the supply chain timeline from 30-40 days to 2-3 months, contributing to the lower tonnage and deferred orders this quarter. Despite these issues, AIA Engineering remains committed to its strategic goals and mine conversions, albeit with cautious optimism about future volumes.

Opportunities and Market Position

AIA Engineering is optimistic about its prospects in the mining sector, specifically in copper, gold, and iron mining. While the company is already a significant player in gold and iron, it is ramping up its presence in the copper sector. The addressable market for mining products is over 2 million tonnes annually, and the company is working hard to convert more customers from forged to high chrome grinding media. Despite current logistics challenges, the long-term opportunity remains robust.

Future Outlook and Customer Solutions

Looking ahead, AIA Engineering is focused on providing comprehensive solutions to its customers, integrating grinding media and mill liners. The company aims to bring significant operational benefits, such as increased throughput, reduced power consumption, and overall cost efficiency. These solutions are crucial for their customers, particularly in high-value mining operations. While the logistics situation remains unpredictable, the company's strategic investments and customer-centric approach position it well for future growth.

Earnings Call Transcript 2025-Q1

[Operator]

Good evening, ladies and gentlemen. Thank you for standing by. This is Dorvin, the moderator for your call today. Welcome to the post results conference call of AIA Engineering Limited. We have with us today the management team of AIA Engineering Limited. [Operator Instructions]

I would now like to turn the conference over to the AIA Engineering management team. Please go ahead, sir.

[Kunal Shah, executive]

Thank you. Good afternoon, good evening to everyone on the call. Thank you for joining us. I hope you've got a chance to look at our numbers. I have Sanjay bhai here with me. This is Kunal. As usual, I'll do our number recap, we'll get into -- Sanjay bhai will sum up the quarter in discussion, and then we'll move on to Q&A.

Starting off, this was a quarter where there is a shrinkage -- optical top line shrinkage in terms of tonnages for the quarter. We were at 60,592 tonnes as compared to 74,000 odd tonnes in Q1 of last year and 71,000 odd tonnes in Q4 of sequential last quarter. And I'll explain some of the macro issues there. Total production was 68,000 tonnes and that translated into a revenue of INR 1,000 crores -- INR 1,004 crores. An EBITDA of INR 372.32 crores and a profit after tax of INR 259.58 crores. So from a margin standpoint, this quarter has been great. From a number standpoint, there is a deficit in terms of tonnages for reasons I'll explain.

Moving on for our other income. Total other income stood at INR 82 crores, of which INR 15 crores -- INR 15.23 crores was export benefits and about INR 73 crores was treasury -- INR 72.96 crores and INR 9 crores as part of foreign exchange -- ForEx gain and for a total of INR 82 crores. Working capital has been a little higher. Receivables have moved from 66 to 77. I think it is just our timing adjustment because we had lower sales, reflecting a higher number of absolute receivables. Otherwise, it's at par with regular. Raw material has moved from 31 to 52 days, and stock has moved from 69 to 79. So overall, a slight increase in working capital. All -- which is generally seasonally adjusted, nothing macro to look at. Of course, there is an extra stock, and that is also linked to our questions on the tonnage. So I'll answer that.

From a number standpoint, with did 60,592 tonnes, of which 30 -- almost 37,000 tonnes came from mining and 24,000 tonnes came from the non-mining side. If I were to compare sequentially, there is a -- mining has come off from about 45,000 tonnes to 37,000 tonnes and non-mining from 26,500 tonnes to about 23,800 tonnes. So both these segments have seen a reduction. One of the major reasons is -- so there are 2 parts to the tonnage answer. If I look at sequence of 71,000 tonnes in Q4 to 60,500 tonnes, that's approximately about 10,000, 11,000 tonne reduction. This saw about 4,000 to 5,000 tonnes of orders that just will get shipped next quarter. That's an annual order that move. Over the last 2 to 3 years, it was generally being invoiced in the first quarter. I think it will happen in the second quarter. So that is one transfer.

The second is the non-mining, which is about 3,000, 4,000 tonnes is just the cyclicality of work, nothing that's structural. I think that you see ups and downs in different quarters in terms of when the order was placed, what is started and what is getting invoiced. But there is an additional 2,000, 3,000 tonnes, which is all clustered for want of containers. So we are in a heavy -- this quarter has been difficult on not just higher shipping costs, but also unavailability of containers. And what that leads to is has increased transit side reflected in a higher SG and delay of supply. So one of our supplies to the Americas, we were without containers, what we wanted in June is coming to us in the end of October. So -- and there are a variety of reasons I'm sure all of you are aware about of just serious container shortage. A large part of that linked to the whole America, China trade and the Trump administration or new administration duty strategy that China possibly is following. Hopefully, all of that will ease up.

But as we speak, our business remains a little in that uncertain domain as far as customers are concerned because pricing is gone haywire and container availability is an issue. And that while the 4,000, 5,000 tonnes -- 2,000, 3,000 tonnes of shrinkage this year on the container account will get -- will mostly be made good the rest of the year. But customers all of a sudden have gone back to what we saw post COVID, which is on a wait and watch as far as new conversions are concerned. They want to be sure that while they are looking at main streams predictable and the current shipping regime does not allow for that. And the time line of the supply chain remains predictable, which also is a challenge. So I think these are the 2 macro reasons why the numbers -- the tonnages this quarter seems are a little less.

Moving forward, well, we are happy to announce our brownfield expansion which is one of our factories in GIDC Kerala, where we are adding composite mill rubber and composite liner ability or the ability to produce liners in that -- with that material. Now as you all -- and we've discussed the mill-lining strategy where our endeavor is not just to improve there, which most of the incumbents are attempting to do with the customer. Our endeavor is to improve throughput, reduce power consumption and bring a whole host of operational benefit for the customer. That requires us to work on the design. And while we are -- we've been in the market now actively for the last few years, we realize that this ability to offer rubber and composite becomes even more important for us to be pursued as a full suite, a company offering the whole full suite of products. So we are very excited about it.

This CapEx has required us to spend about INR 65 crores. We expect this facility to be commissioned towards the end of this year, so it should not take a lot of time because it's been done in an existing facility that we have. We expect about 20,000 tonnes of additional capacity in this configuration to be available to us. Of course, mill liner sales and penetration and all of that, we've discussed at length in the past few quarters, we remain excited about that space. With the new facility that we have for metal liners and now with the composite rubber offering, I think we -- our positioning as far as the customer is significantly -- we expect it to be significantly different. And of course, our ability to bring this proportionate benefit for the customer. So that is the highlight for this quarter in terms of things we've done.

We've also done a buyback -- board approved a buyback of INR 500 crores. So that should be getting through in the next few days -- next few weeks. Our net cash stands at about INR 250 crores -- INR 3,500 crores, sorry, that will get adjusted for the buyback cash and the dividend that has to flow out from that. Last part is about CapEx, the plan for capital outlay this year. We are doing about INR 35 crores on captive power. There's INR 65 crores on the mill liner composite facility and money that we have to spend after the first phase of the grinding media, which is about INR 150 crores. So total, as we speak, our outlay remains at about INR 250 crores, and we'll keep updating as things evolve from here.

So with that said, I'll request Sanjay bhai for a quick update and we get into Q&A from there.

[Sanjay Majmudar, executive]

Good evening, everyone. Just a very quick additional couple of points which I thought I want to elucidate and clarify. So yes, there is a definite challenge that we are facing in this quarter entirely and to a very large extent, relating to logistics issues. As Kunal explained, containers that availability has become an extremely challenging process now. The whole problem because of various geopolitical issues, but more necessarily because of the Red Sea crisis. So just to give an analogy, the freight cost for sending a container from here to, say, Latin America, which was about $100, has gone up now to $400 per tonne and more importantly, the container availability is just not there with the result at around 5,000, 6,000 tonnes of orders, which were supposed to be shipped this quarter could not be shipped. Having said that, now the whole supply chain time has also extended that what we used to do in 30, 40 days is now taking more than 2, 2.5 to even 3 months. So that's indeed a challenge which we are trying to circumvent.

The other part is a little bit of cyclical nature of some businesses. Having said that, on a positive note, we remain extremely bullish and committed on all our mine conversion. So there's no question of any customer not being there or any of those processes being interrupted. It's just that the absolute uncertainty makes us a little worried about what exactly is going to happen in terms of all these logistics issues. So it's a very major problem apart from the cost. Can you please appreciate we work on cost plus that means freight is complete pass-through. And that is the reason why we explained some of the customers are also a little apprehensive about the absorbability of this entire facet akin to post COVID -- 1 year post COVID situation, which we have realized that it is not as simple as we were earlier thinking and it may take a little more time. That is the first part.

But having said that, our focus, our conversions, our opportunity, everything remains the same. So this is just an aberration. Let us see as we move ahead the container in the second quarter, hopefully, we should get more clarity how things are moving, and that is one aspect. On this rubber and composite liners that we talked about, I want to clarify 2 things. One, it is so to say an extension of my metal liner capability and the focus remains the same. We don't think there is anybody else today who can offer same or similar solution. The composite plus rubber is more to complete the whole line of offering which a customer requires. The focus remains the same, that is to offer unique process benefits, which nobody, no competitor has that capability or design or ability to offer. So the focus remains niche. It is a material of composition that changes to complete the offering suite.

And because you can't tell a customer that now I will not -- he wants for his SAG mill as well as ball mills. So this is order to ensure that we become comprehensive and we give the same focus and same solution in all these materials that this capability has been added. It's a quick brownfield expansion. We expect it to be over in the next 3, 4 months. And that should see us making a much more comprehensive solution provider, niche area only and not made to kind of product. That's what I just wanted to highlight.

So I think this is -- let's put the house open for Q&A. Moderator?

[Operator]

[Operator Instructions]

The first question is from the line of Bhoomika Nair from DAM Capital.

[Bhoomika Nair, analyst]

You elaborated on the reasons for the miss in terms of the lower volumes during the quarter. Now given this challenge in terms of the logistics aspect let's say, why we may be competitive on a plant-wise or on a production cost perspective. But is the logistics cost driving or the time that it is taking from what you said, elaborated is taking now 2, 3 months versus earlier a few weeks. Does that -- is that what is driving a little lower conversion than what we had expected? And thereby, what we are looking at a 30,000 incremental volumes on an annual basis could be at risk?

[Sanjay Majmudar, executive]

Well, Bhoomika, you are, in a way, right, that yes, it is a serious concern. And I'll be very honest, the targeted volume growth year-over-year as the target and the opportunity remains the same. But in all honesty, we want to wait and watch at least for one more quarter before we give you a clear volume guidance at test for this year. This is a very honest position in which we are today. So it's a short-term problem. But yes, indeed, it is a problem. It's wrong to say that no, there is no problem.

Conversion may, again, let me explain. Conversion from an acceptability of the solution is not an issue. But the whole problem of logistics is far more worrisome than what it appeared in the initial phases. And as we go deep years indeed and please appreciate the problems globally are accentuating in terms of the geopolitical tensions. Now Iran is a new factor. There are so many issues. But having said that, it could be a short-term problem. Let us be clear, our target for -- and the opportunity for incremental volume growth remains. Having said that, what could be the exact number we are looking at this quarter, we are not able to tell you at least till the end of the second quarter. Let's -- we want to wait and watch for a few more months.

[Bhoomika Nair, analyst]

Right. So sir, is there a possibility of us to kind of invest much more in terms of warehousing capacities or to absorb some bit of the logistics cost, which is...

[Sanjay Majmudar, executive]

Bhoomika, I'll be very honest. We are not going to hazard any guess. We are seriously evaluating various options. So please give us some more time, and we'll come back to you, maybe a couple of months. That's all. Warehousing alone may or may not be a solution. We are working at it. All I can share is that we are consciously working at this as perhaps a long-term problem rather than only a short-term problem. That's all I can say at this point in time.

[Bhoomika Nair, analyst]

Understood. Sir, the second question was about our foray into this whole rubber and composite mill lining. I fully understand it's a whole suite of products that we are offering, which will help in terms of faster conversion. But in terms of, say, from other peer set, how competitive will it be in terms of cost aspect, if you can elaborate a little more on that aspect.

[Kunal Shah, executive]

So for all these solutions, actually, the whole cost and pricing becomes more because the benefits we are offering are in a very, very different way. So I don't think it's going to be a price discussion at all. I think the conversion is going to be linked to the offering or the sales cycle is going to link to their comfort and confidence and ability to be the willingness to trial a solution. How urgent is that pain area that we're attempting to solve, right? It will be a combination of those things and surely not price.

[Sanjay Majmudar, executive]

So if I put it a little differently, I don't think any competition can offer a directly comparable product or a solution. You get my point? So if it is not comparable, there's no question of price discussion. Material competitor could be offering. There are many people who can offer composite and rubber, but not the design and not the solution.

[Bhoomika Nair, analyst]

Understood. So what we are seeing is that we're going to defer not in terms of the -- what you're trying to say, if I understood correctly, it's not that there aren't other offerings of rubber and composite in the market...

[Sanjay Majmudar, executive]

Metal, maybe -- there are people [Foreign Language] But our offering was on a different pedestal. The same philosophy applies to rubber and composites as well.

[Bhoomika Nair, analyst]

Okay, which is on the increased throughput power consumption...

[Sanjay Majmudar, executive]

Significant efficiency-related solution, efficiency improvement, cost -- massive cost reduction due to improved throughputs or reduced or increased efficiency.

[Bhoomika Nair, analyst]

Okay. Fair point. Any update on the various litigations, which is ongoing and particularly the latest one on the U.S. Any update on that aspect?

[Kunal Shah, executive]

Not really. It's a 9-month project. As you know, U.S. is -- in a way, subdued is where it's a closed room process where we submit data. So we are fully cooperating and making sure giving all information as required. You know that Brazil, the dumping is already terminated. Countervailing duty part, which is 6.5%. That's under the sunset review, and we hope to hear in the next 2 months on the outcome of that -- 2 to 3 months.

[Bhoomika Nair, analyst]

U.S. [indiscernible] supply the volumes as in...

[Kunal Shah, executive]

Yes, yes, yes.

[Operator]

The next question is from the line of Tarang Agrawal from Old Bridge Capital.

[Tarang Agrawal, analyst]

Just wanted to double check on your opening commentary. You said about 3,000 to 4,000 tonnes of volumes for deferred because of -- it's just a shift from one quarter to the other quarter. And a similar number was impacted because of lack of container availability. Correct?

[Kunal Shah, executive]

Yes. So one order, which is about 4,000 tonnes has moved to the next quarter. So -- but that is just billing. I was just trying to make a difference between what was a timing issue versus what is container and backlog. So about 3,000 tonnes is container in backlog, and that's a timing issue between -- it's a consequence of containers being delayed and about 4,000 tonnes is an order that got -- that's just getting invoiced this quarter.

[Tarang Agrawal, analyst]

Got it. And now that almost 1.5 months into the second quarter, how are things currently? I mean we understand. We've been reading about it, and it doesn't seem like on the ground situation is improved.

[Sanjay Majmudar, executive]

No perceived real improvement. I will be very honest.

[Kunal Shah, executive]

Yes. See what happens in such things as you know, where they say a hurricane is going to come and all milk and bread gets wiped out of shell. Everybody is trying to get more containers than what they need. In fact, it worsens for a period even if nothing changes on the ground. So today, I think it is a very, very uncertain period right now.

[Sanjay Majmudar, executive]

Yes, because we were discussing. The containers that we were booking for August -- June came in August. August is now September end or October first week. So [Foreign Language].

[Tarang Agrawal, analyst]

Got it. Got it.

[Sanjay Majmudar, executive]

The whole thing is the whole -- when a related issue was there, the whole supply chain got discussed. This is a similar situation due to this Red Sea.

[Operator]

The next question is from the line of Ashutosh Tiwari from Equirus.

[Ashutosh Tiwari, analyst]

So firstly, this delay is -- I hope, is not impacting the production at the customer level as of now.

[Sanjay Majmudar, executive]

Not much, not really. Because we do have adequate -- see what happens if you see my finished good stock, it has moved up. This is because the transit time has gone up, correct? If you look at my own production, we have done 68,000, 69,000 tonnes. So orders, production, everything is there even at our end and their end. But the only problem is because you are not able to exactly commit on the supply time. There is a little bit of pullback. I mean rather push back and people are -- we are just evaluating the way customers value. I don't think any customer we have any serious issue. Some customers are continuing. New customer conversion process is little slow but nothing has stopped anywhere. It's just that things are uncertain. That's all.

[Ashutosh Tiwari, analyst]

Because, see, I think I understand I can understand that it will delay in conversion because this thing, but if some customer production gets impacted, then probably it can have a bigger implication that people may not look at because of the uncertainty on that. So as of now, that's not a case. It's just that things are getting delayed, but it's certainly reaches the time and probably we have enough stock at warehouses to manage those things. That is not a challenge.

[Sanjay Majmudar, executive]

Correct.

[Ashutosh Tiwari, analyst]

Okay. And second thing for the rubber and composite liners, if this is in-house developed or we have some tie-up?

[Sanjay Majmudar, executive]

No, it's all in-house developed.

[Ashutosh Tiwari, analyst]

And once the plant becomes ready, then will go to customers for trials and all or something has already started at small scale?

[Sanjay Majmudar, executive]

We have done trial work with very small investment. We've done our own pilot project to see how it works. We've done more than 6 to 8 trials, and we remain -- I think it's a very interesting offering to fill out the whole suite of products.

[Ashutosh Tiwari, analyst]

Okay. And lastly, this quarter, the selling price realization that we got would have benefited from higher steepened mix because that has castings as well are higher priced. Is this correct?

[Sanjay Majmudar, executive]

Overall -- as you've seen the numbers, the product mix is better, where there is higher casting, this higher-priced product. And you are right, that is reflected in the higher selling price, yes, higher realization.

[Operator]

The next question is from the line of Anupam Gupta from IIFL Securities.

[Anupam Gupta, analyst]

Sir, 2 questions. Firstly, on this middle liner thing. So when you say 20,000 tonnes of incremental capacity, will that use castings from your existing plant or how will it work? Because INR 65 crores CapEx seems to be a bit small for this sort of capacity?

[Kunal Shah, executive]

No, it is an additional capacity. It is where we are adjusting mill. That's why it's a brownfield, right, where melting capacity is available, some from an existing where we are able to do balancing equipment for melting and the rubber part is being added additional.

[Anupam Gupta, analyst]

Okay. Understood. And second question relates to the big option which is there. So 2 parts to it. One is you said conversion is slow. Have you seen Magneto taking advantage of this account?

[Kunal Shah, executive]

No, they are -- as far as the chrome capacity is concerned, as we understand, they are capacity constrained. They are fully utilized for the last few years. So there is only so much that they are able to do. The container issue that is there adds to our requirement to put more on the -- in transit, so that customer doesn't suffer, right? If we prevail during COVID, it means a little more finished goods for us. It puts a little bit of a additional timing pressure for new convergence, more than existing -- I think it's not so much of an issue.

[Anupam Gupta, analyst]

Right. And when you said earlier that huge -- this seems to be more of a structural issue now, given the number of times that has happened in the last 4, 5 years that obviously, there has to be some options which you're looking at. So the ideal would be either you investing outside or having a partner somewhere who are manufacturing closer to the customer, right? So that should be the right way to look at it?

[Sanjay Majmudar, executive]

Anupam give us some time. We will come out with clarity. You are right, we are evaluating various options, but that's all. I mean at this point in time, let's put it at that, yes, we are evaluating -- seriously we are evaluating.

[Kunal Shah, executive]

And listen, how often will the Red Sea thing continue? The world is in a state of flux, right? So we have to make sure that we are not doing decision-making in response to something that could have been short-lived in a longer time span journey, right? And then you're stuck with -- then you are stuck with a structural flaw, if you do something to deal with something that was short term, right? It's happened, again, doesn't mean it's long term.

[Anupam Gupta, analyst]

Right. Yes, sir, the question obviously was coming from because you have a very well entrenched position in India in terms of manufacturing the overall ecosystem, you have set up pretty well for yourself. So that's why the question was, and you have always said that you do not want to be outside India given the sort of advantage, which is there.

[Kunal Shah, executive]

Why we say never say never. The point is that [Audio Gap] negative event like this turns up logistics in this case. I think we do a hard introspection on what could be other measures that we can look at. I think we are doing an internal review on that, but India may, will and likely continue to be where -- I mean, that is where we are -- that is where our current position is, right? So no change on that as we speak. If there is anything else, we will see. For now it is to [Audio Gap]

[Operator]

The next question is from the line of Priyankar Biswas from BNP Paribas.

[Priyankar Biswas, analyst]

So first of all, speaking on a relatively long-term basis. So you had duties in Canada and Brazil. So kind of now removed on that front. So what should be the volume trajectory from these geographies, let's say, keeping aside this Red Sea issue. So what sort of volume trajectory can we expect? And what is exactly the status of Canada right now?

[Sanjay Majmudar, executive]

So of course, as Kunal explained, Canada has -- investigations have commenced.

[Kunal Shah, executive]

Canada is finished. U.S.

[Sanjay Majmudar, executive]

Yes, U.S. has commenced. Canada is finished. I'm sorry.

[Kunal Shah, executive]

So Canada has a -- the way the duty structure is there, I think they have a certain duty component or a minimum price that we have to sell and we are comfortable with that. I don't think there was any -- we don't believe really there was a case for a dumping scenario, but there is a -- it's a whole process that every country goes through. It sometimes to protect its own local industry, sometimes on the behest of the local incumbent. There are various aspects of it, right? It's not a very, very 100% objective process. I think we are fairly satisfied with the outcome. There was review runs for all that we have submitted. And we are in the market and we will try and be an active participant and that shall happen in due course. I don't think that is a deterrent in that sense for us. Our objective has always been to be selling at a fair price, and that's not changed. And if that does not change, our opportunity in the market does not change. So as far as Canada is concerned, the market is available to us, and we will make efforts to, like I said, to be an active participant over there. That's ongoing.

[Sanjay Majmudar, executive]

Similarly on Brazil, that's come to an end.

[Kunal Shah, executive]

Exactly. As far as long term, your question was that I think while these countries are important, we have always maintained that there is a large opportunity globally, at least 15 countries. Every country has its own set of challenges for the new entrant to come in. And that's what leads to time. That's what we have seen. But we are excited because there is a solution which has disproportionate benefits feeding into something that is really active problems or the pain area for the customer, right?

And as we've discussed for copper mines and gold mines, where we can increase throughput, we can improve recovery, our solutions that find a lot of interest. And based on that, we remain optimistic that our opportunities not just in Canada, Brazil, which we are hopeful of participating in, but also in all these other geographies that remain where there is not just a chrome supplier, but also a large forged opportunity for us to service. So I think nothing changes, no duty per se changes that proposition. These are short-term things that keep happening and we adjust to that looking at the longer-term lens.

[Priyankar Biswas, analyst]

Well, sir. So just harping back on that, since you highlighted about copper and gold, what sort of penetration are we there in copper specifically? Because Chile and Peru happens to be the largest geographies there. So what is our -- how far are we succeeding over there?

[Sanjay Majmudar, executive]

So of course, we have now -- so between copper, gold and iron, these remain the 3 ores or metals of absolute focus. From an opportunity standpoint, all the 3 are very exciting for us. At this point in time, I think before 1 year or 2 years, I would say we were just about beginning to enter copper. Now we are a serious player in quite a few copper mines, and we are working very hard on some very, very large mines. I can only share this much. Gold, of course, we are there with all leading mines, and we will continue our allocation, same is the case with iron. So between the 3, we -- I would not say we are equal, but we are slightly heavyweight right now on gold and iron, a little lower on copper, but we are catching up very soon. So over a longer period, all the 3 would be more or less equally driving our growth. That is what we perceive.

[Priyankar Biswas, analyst]

Okay. Understood, sir. So essentially, what you are saying is that right now, you are ramping up on copper. So you're heavy on gold. So essentially like going forward, like when the Red Sea situation dissolves, so based on that, maybe 25, 30 Kt annual volumes could be achieved under those circumstances based on higher penetration.

[Sanjay Majmudar, executive]

Absolutely.

[Priyankar Biswas, analyst]

Okay. And just one last question from my side. Just for sake of investor clarity, if you can. Like for a mine, let's say, when you are now offering your integrated solutions like mill liners plus the grinding media because you're offering it as an integrated solution nowadays. So can you just give some examples of savings that the customer can get in, let's say, absolute dollar terms. So essentially, like if the switch over from, let's say, forged media to grinding media and get mill liners from, there would be some additional cost aspect, but how much you are saving with respect to that, maybe some example.

[Kunal Shah, executive]

Yes. So I think, first of all, we've done some case studies in this year's annual report, and you will see that once that gets published. But benefits -- first of all, there's no extra cost. Please understand these are consumables that nevertheless buying. They're buying this whole primary tertiary secondary -- primary, secondary tertiary ball mills, grinding media mills. They're buying grinding media linings, which are being worn-out and replaced. So if they already have an OpEx budget. What we are saying is if you buy from us, there will be disproportionate benefit that we bring to the pre ore process to the grinding process.

So now if it's a spend of $10 million to $15 million a year for a mine, if it's only were benefits, it could be 20%, 30%, 40%. So that can vary from, let's say, $2 million to $5 million, right? Now if you add power saving on it. That could be a few million dollars. There is recovery improvement, that's another few million dollars. If it's throughput, that can be tens of millions of dollars because there is absolute contribution of additional product being ground. So for a copper customer, that can vary from -- on the lower side, if it's only where to -- from 5,7 -- to $5 million on the higher side to maybe $150 million a year. And his input cost does not change, which is still -- you still have to buy these consumables. So depending on how the depth of the solution and what levers are we adding or what the opportunity exists at the customer side, that determines the value addition for the customer.

[Priyankar Biswas, analyst]

That's great. We actually look forward to maybe the case studies in the annual report that you mentioned.

[Operator]

The next question is from the line of Chirag Muchhala from Centrum Broking.

[Chirag Muchhala, analyst]

Just a few clarifications on the mill liner part. So the earlier capacity that we had of 50,000 metric tonne in this new plant of 20,000, so this would not be fungible, correct?

[Kunal Shah, executive]

No. So it is because it is -- that's why it's a brownfield where we've already got melting facilities, which we'll be using plus we are augmenting the capacity. So totally amounts in our setup, there will be additional 20,000 tonnes of this rubber or this composite product. The rubber part is a new factory. The composite part is partially there partially from an existing facility. So you'll have to look at it now in totality and not just as one vertical separate plant.

[Chirag Muchhala, analyst]

Okay. And as far as our segmental reporting is concerned, this entire mill liner has booked in mining segment, right? Or any parties also present in others?

[Kunal Shah, executive]

Correct. It is a mining product, no?

[Chirag Muchhala, analyst]

Okay. Okay, sir. And lastly, on the Brazil clarification. So basically, now since that sunset review has ended. So it would be a zero duty, correct? And have we re-approach customers and how things look like. So if you can share some data as to before the duty was levied what was our volumes and currently, what are our volumes, let's say, in last year?

[Kunal Shah, executive]

So the duty has 2 components -- had 2 components in Brazil. One is what's called the dumping duty and the other is what's called the countervailing duty. Basically, any benefits that you get on exports, they are reimbursed back. That becomes sort of a duty that's called countervailing duty or CVD. So 11.8% has reduced to 6.5% because 6.3% was the dumping duty. And that's terminated. So there's not going to be any sunset review or a future risk for now. That comes out of a sunset review. Even if it was 2% or 3%, it comes up for review after 5 years. Now the whole -- that application is terminated. As far as countervailing duty is concerned, which is at 6.5%. Sunset review is going on, and it will be whatever the outcome of that is. I would not hazard a guess on that just now. But that will -- there'll be a new number on it once that investigation is concluded, right?

So 11.8% as it stands, reduced -- it is reduced to 6.5% and whatever further it will get changed to. So that is the first part. Second is Brazil is an important market. While we are -- while the existing market that we lost because of the duty is now what we will pursue. But in the meantime, there are there is -- we've also done work on the forged conversion and on back of that, we see a bigger volume coming from the market. Going forward, in next 12 months, it will be surely of course, of 20,000 tonnes is what we expect in the market.

[Chirag Muchhala, analyst]

Okay. And sir, just last question on this rubber composite mill liners. So how large would the addressable end user market is? Suppose if they don't want to convert from rubber to metallic, et cetera, and only focus on rubber, then what is the addressable opportunity we are looking at?

[Kunal Shah, executive]

It is a few times larger than our capacity. We -- I mean, for us, we are working with the captive consumer base that we have that we want to work with, where we know we have disproportionate solution. So I mean, we are not launching -- which is where we have not done a 50,000 tonnes or a larger capacity because this is what we believe is a great start and allows us to go out to enough customers to offer this solution.

[Sanjay Majmudar, executive]

But you can say at least the 300,000 tonnes could be addressable market, total between all of our products.

[Kunal Shah, executive]

But rubber [indiscernible] or rubber component could be open to the market, 1,000 tonnes.

[Sanjay Majmudar, executive]

Yes.

[Kunal Shah, executive]

It is just a number. We haven't done much more because we are not looking to convert all of it to our solution, right? So today, we are looking at a subset that we want to target through this.

[Operator]

The next question comes from the line of Jyoti Singh from Nuvama.

[Unknown Analyst]

I just wanted to get a sense on how is the increase in gold price? Was it benefiting AIA? Also, if you can share the revenue bifurcation under mining, like how much is drawn from gold, iron ore and copper individually?

[Sanjay Majmudar, executive]

So let me, first -- let me make it clear. We don't give this bifurcation for several reasons. We have never given that. But to a previous question, I did answer that all the 3 are equally important. And more or less, over a longer period, the rates could be equal in terms of the opportunity as well as sales. This is what our target is. Though today, the weight of copper could be a little lesser than gold and iron, correct? So this is one. Now more importantly, we have been quite clear that upward or downward price movement of that particular commodity or metal is not driving for demand or the addressable market opportunity that we are looking at. So today, just on a very conservative side and just to make my position clear, our entire focus is conversion of all these mines from usage of fold or other type of liner solutions to our high chrome or if I talk of liner high chrome plus composite solutions that we are offering.

Now the penetration today of high chrome solutions in these markets is about 20%, 25% of the addressable market of 1.5 million to 2 million tonnes, if I just talk of these 3 focused metals, correct meaning thereby that I'm working on that 70-odd percent opportunity for conversion of those mines from their conventional fold or other related solutions to my solution. So even if the prices of gold doesn't move or they move up, if their CapEx cycles are aggressive or not? Aggressive. Of course, in a given scenario, when the market scenario is robust and very buoyant, logically, people will be more open to spend more on these type of my solutions. But as Kunal explained earlier also, there is no CapEx requirement as such. It's just the OpEx part that we are substituting.

So our price movement upward or downward of the finished metal is not really what works to propel a demand or to increase our conversion rate, but it is just this opportunity plus it's a very, very tough situation that you have to work very hard, it takes 1, 1.5, 2 years for us to convert a mine. There is tremendous working back and forth, our engineers, their engineers. So it's a very intense and very engaging exercise. It's not that I just walk in, show something and they buy. So that makes it tough, but also it creates a very, very strong entry barrier. So that once the client is onboarded, generally, we keep on supplying for years together and we keep on increasing our allocation. So this is where we are.

[Operator]

The next question is from the line of Uttham Kumar from Avendus Spark.

[Uttham Kumar R., analyst]

So firstly, I mean 2 parts on my first question. So just from a long-term perspective, I want to understand on the demand scenario. Which geographies are we continuing to see an increased traction with regards to mining activity, I mean which could result us in a better demand for our products. That is number one. And the second part of the question is, could you give more color with regards to how many sites or which the sites or a number of sites where we are currently doing trials, trying to penetrate in the interest of product offerings and which are -- and of these sites where we are doing all these trials, there are the -- some could be at the mid-stage or the fag end of the trials stage, which could convert or give us more confidence is because to be surpassing the 3 lakh tonnes of targets which we used to talk about and sustaining above the levels.

[Sanjay Majmudar, executive]

I think we need to quickly -- of course, given the fact this is a common platform and for many of us and this could be a repetition, but I'll try to very quickly address your questions. So your first was the market demand supply scenario. So as I explained, if we talk of cement, it is roughly about 300,000-odd tonnes. And ex-China is about 180,000 tonnes. We have a 35%, 37% market share across the world. In India, we have a 95%, 97% market share. And our total supply including India, is about 75,000 to 80,000 tonnes, and that market is completely converted globally into high chrome. So the growth in cement is directly proposed -- in proportion with the growth in the cement capacities and it is, therefore, a very, very moderate tepid growth. This is point number one.

The bigger opportunity is mining where the market is more than 3 million tonnes annually. Addressable market, if I just look at the 3 metals where I'm focused, could be 2 million tonnes or a little more than that. Out of that, today, hardly 25-odd percent is serviced by high chrome solution players like me, Nagato and a few other players on the liner segment and a few other local players. However, we too are the predominant ones. Rest all are the forged grinding media, suppliers like Molycop, et cetera. And this is where we are working very hard to convert. We believe we have excellent solutions. It is just that we keep on facing all these issues which many of them are beyond our control, we being a global company.

So if I talk of a number of customers or the number of countries where I'm present; in cement, it is more than 125 countries across the world. In mining, as we speak more than 30, 35 countries, several locations, so each mining site is my customer. So we would have 100-plus mining sites across the 35-odd countries but focus obviously is North America, Latin America, Africa, Australia, CIS. And then Philippines and a few other Far East Asian countries. So this is the mix. Europe doesn't figure much in mining, just if you want to -- want me to elaborate. But wherever this mining occurs today, I'm present, and I'm working on several new sites as we speak for conversion.

[Uttham Kumar R., analyst]

Got it, sir. Sir, secondly, with regards to the brownfield CapEx which you talked about 20,000 mill liner capacity. Is there any -- I mean, are these realizations similar to what we have in the existing portfolio? Or is it tad bit lower? Or could you give us some color with regards to what can be the revenue capability of this 20,000 tonnes? And over the next year, how should we look at the capacity utilization levels for this particular thing.

[Kunal Shah, executive]

I think this is just enhancing our product profile, this is Kunal. For now, pricing, all of that, I think we are still to be in the market to figure out what's the best way. But more likely than not, pricing is not going to be a conversation breaker, right? But realization may not be vastly different. So for now, you may consider similar levels.

[Sanjay Majmudar, executive]

Average realization levels.

[Kunal Shah, executive]

Exactly.

[Operator]

The next question is from the line of Vijay Kumar from TrustLine PMS.

[Vijay Kumar, analyst]

I would like to know about the status of your 75% subsidiary, which is Welcast Limited. You recently tried de-risking. Is there any update? Are you planning to increase the sourcing from there? Or is it the process of merging, any update on the that status of that company?

[Sanjay Majmudar, executive]

Yes. As we speak, yes, we attempted for delisting, but somehow it did not succeed. So as it stands now, it is status quo. We haven't taken any other calls. So there is nothing on that front as we speak as of now.

[Vijay Kumar, analyst]

Is there any sourcing? Or is it not going to be any more sourcing from that subsidiary or how is that...

[Sanjay Majmudar, executive]

It continues. Of course, at a little reduced level, but it definitely continues. You would have seen, even Welcast results we published a few days back. So we continue to do the minimalistic kind of volume from Welcast facility, and that will continue till any other corporate decision in this regard is taken.

[Vijay Kumar, analyst]

Sir. You can look at ICICI and ICICI securities kind of a merger, which will eventually get the company delisted.

[Sanjay Majmudar, executive]

Very honestly, some banks have indicated and drawn our attention, but we are evaluating. So we can't say anything till we have a clarity on the course that we want to take.

[Operator]

[Operator Instructions]

[Kunal Shah, executive]

I think if you have run out of questions, we can wrap up. Operator?

[Operator]

Yes. Sir, we do not have any questions in the queue at this time.

[Kunal Shah, executive]

Lovely, then let's -- we can look to wrap up. Okay. As usual, Sanjay bhai and I are available to take questions offline and look forward to connecting with you at the end of the second quarter. Take care, and have a good evening. Thanks.

[Sanjay Majmudar, executive]

Thank you.

[Operator]

Ladies and gentlemen, this concludes your conference for today. We thank you for your participation and for using Chorus Call Conferencing Services. You may please disconnect your lines now. Thank you. Have a great evening.