AIA Engineering Ltd

NSE:AIAENG

Earnings Call Analysis

AIA Engineering Faces Revenue Challenges Amidst Cyclical Market Dynamics

In the latest earnings call, AIA Engineering reported flat sales of 60,330 tonnes for the quarter, slightly up from 60,000 tonnes in the previous quarter, but down from 77,000 tonnes a year earlier. Revenue stood at INR 1,030 crores, with EBITDA at INR 366 crores, reflecting a decline from INR 444 crores last year. The company anticipates a 10% overall drop in sales volume for the year, possibly achieving about 255,000 to 260,000 tonnes. Despite cyclical market pressures, management remains optimistic about future growth opportunities and ongoing projects, indicating a robust margin outlook.

Quarterly Performance Overview

In the recent earnings call, AIA Engineering Limited reported flat sales of 60,330 tonnes, which generated revenue of INR 1,030 crores, slightly up from INR 1,004 crores in the previous quarter but down from INR 1,273 crores in the same quarter of the previous year. This decline is attributed primarily to the reduction in demand from key mining clients.

Key Financial Metrics

The company's EBITDA stood at INR 366 crores, comparable to the previous quarter's INR 372 crores, though showing a decrease from INR 444 crores year-over-year. Net cash was reported at INR 3,212 crores after accounting for a small debt of INR 120 crores. The company plans to spend around INR 250 crores on capital expenditures, including investments in renewable power and a new rubber liner plant.

Challenges in Sales and Production

AIA Engineering is facing a cyclical yet pronounced decrease in mining sales, dropping from 52,000 tonnes in the same quarter last year to 39,800 tonnes this quarter. Management attributed the current situation to supply chain issues and destocking behavior among significant customers, which altogether has led to an estimated 30,000 tonne production impact this quarter. Projected sales for the full year are expected to be 10% less than the previous year's total sales, estimating around 255,000 to 260,000 tonnes for the year.

Outlook and Guidance

While management expressed optimism about future growth opportunities, they cautioned investors that current market conditions may lead to reduced revenue for the year. Long-term demand appears stable, but shorter-term challenges remain, with the outlook for the next fiscal year yet to be defined. No guidance was given on potential revenue increases until greater clarity is achieved in the upcoming quarters.

Investments and Expansion Plans

Despite the current performance, AIA is committed to pursuing growth and is investing in adding a modular capacity of 36,000 tonnes. This investment reflects their strategy to enhance their market presence and offerings. The company remains focused on the mining sector, which constitutes approximately 70% of their market.

Market Conditions and Competitive Landscape

The management acknowledged potential competitive pressures, particularly with China's aggressively priced products in the market. However, they emphasized that key long-term contracts and market positioning strategies should mitigate these pressures. The perception of increased competition has not yet resulted in a significant loss of market share, as the company maintains a robust market presence.

Conclusion

AIA Engineering's current earnings call reflects a complex interplay of market challenges, cyclical demand fluctuations, and strategic initiatives aimed at sustaining long-term growth. With tough times brought on by customer destocking and external market conditions, management's focus remains on stabilizing operations and maintaining financial health through prudent management of resources and continued investment in capacity.

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the AIA Engineering Limited Post Results Conference Call. This is Sagar. I'll be the moderator for your call today. We have with us 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]

Yes. Thank you so much. First of all, a very warm welcome to all of you on the conference call for AIA to review our second quarter numbers. As usual, I also have Sanjay bhai often with us. He is in transit and possibly with us for another 15 minutes. So please pardon him and us that he may have to drop off early. And sincere apologies of pre pooling this, again, because of this transit issues. And as we know, a lot of people came back to us saying either they are already on holiday or getting on to holiday and we thought it's best to prepone it and accommodate everyone.

Quickly, I'll run through the highlights for this quarter and then a small commentary, and then we'll get into Q&A. This quarter continues to be flat in line with the first quarter of this year at 60,000 tonnes, 60,330 tonnes, representing sales of INR 1,030 crores, slightly above INR 1,004 crores in the first quarter of this year and compared to 77,000 tonnes and [ INR 1,273 crores ]of revenue that we've done in the second quarter of last year.

If I'm moving on our other operating in terms of the export benefit portion comes from [ 28.93 ] -- sorry, comes to 13.7%, which is in line with our exports for this period. Our ForEx and treasury income is at INR 90 crores and thereby leading to an EBITDA of INR 366 crores, almost comparable to INR 372 crores of EBITDA in the first quarter and down from INR 444 crores that we did in the second quarter last year.

Our [indiscernible] INR 256 crores, INR 56.2, again, almost in line with the first quarter of this year, which was at [ 259.58 ] and down from INR 323 crores in the second quarter of last year. We have the note approval, which mentions the recap of our other income, which is treasury foreign exchange and export benefits. Happy to share more detail orders required. From a working capital standpoint, this year, we are at about 115 days of total working capital, which includes raw materials at 55%, work in progress and finished goods at 76 days and receivable at 74 days. And then there is credit deals that will get reduced from that.

So that is working capital is in line and our [indiscernible] data represents the lower volume of production and sales that we have seen compared to the previous period. Coming on to an important slide on the breakup of our segment-wise sales. As you will see that our mining sales [indiscernible] of India is at 39,800 slightly up from 36,700 from the first quarter, but down from 52,000 tonnes in the second quarter of last year, non-mining is almost flat and in line with what we have done -- full year should be in line with what we've done last year. So the half year number now is at 120,922 compared to 151,000 tonnes that we've done in half year last year with 2 quarters of 60,000 tonnes of sales that we've done.

Some other housekeeping numbers. Our net cash is at INR 3,212 crores, which is after the buyback payout that has been done. There is a small debt of about INR 120 crores and the net cash figure is after that. All our other operating metrics are comparable. We plan for CapEx of about INR 250 crores, which includes our investments, equity investment in renewable power, the rubber liner plant that we are setting up and 36,000 tonne expansion for [indiscernible] media. So that -- all of that comes from our INR 250 crores, and we'll continue to spend that over this year and both our speeds over the year after that.

So with that said, I will move on to the commentary for the quarter and the big question on the slower sales in this quarter and last I think what we are seeing now is our 3 larger fees, and I'll have Sanjay bhai expand on that a little more. But the key things are that we are seeing some slowdown at some mining customers where our offtake just looks to be a little lower. What we thought will be caught up in second and third quarter looks to be a little more systemic and structural more than 3 or 4 large customers are going through a destocking process.

So material that was supposed to be invoiced and shipped out is being deferred to later quarters and maybe destocking cycle is something that we may have to face with more customers and just supply chain issues that have mocked us for last few quarters in the resi consequence the shipping rates not only went up, but containers were not available. We are seeing some pushback from customers on saying there is strategic uncertainty on account of the supply chain and wants some more time before they go back with business with us.

So all put together, it's a 30,000 tonne impact for this quarter. But overall, we did 292,000 tonnes last year, it looks to be a 10% lower revenue volume, either way you slice it for this full year. So closer to 255,000 to 60,000 tonne mark for the full year. And there are -- there is a conversation on growth and new customer addition. We are -- and we maintain this last many quarters about all the efforts that we have the business that the management is putting into augment our presence to sharpen our offering and increase the value add that we offer to the customers.

We are extremely confident, optimistic about things but at the same time, conversion is just taking time and it is causing us as much rest about the time that it is taking and there is no change in that conversion cycle time frame that looks to be coming up. We will continue to put in all our efforts, and we hope that important conversions from [indiscernible] to chrome come a long shot, and we'll be happy to share progress on that as that happens.

We'll have Sanjay bhai chime in with his thoughts on this, and then we can go on to Q&A. Sanjay bhai?

[Operator]

Sorry to interrupt sir, the line for Sunesis disconnected. I'm just reconnecting this line.

Okay.

[Kunal Shah, executive]

When we joined, I think I'll just present a few questions from investors on the overall market sentiment and this unusual lower tonnage that we have seen in the last 2 quarters. It's a first for us over last more than 18 years that we've been listed, there hasn't been a quarter where we have seen this. We do recognize that things don't -- there is this classical situation where more than one thing go against you just outside your control. And maybe this is one such year. We are hoping that we [indiscernible] sharper and stronger out of it, but it is a year that looks like there will be some reduced revenue for the year.

Did you -- is Sanjay bhai is on call? .

[Operator]

Yes, sir. His line is connected.

[Kunal Shah, executive]

Have just finished there, if you want to add to .

[Sanjay Majmudar, executive]

Yes, good afternoon to all of you, and happy dial in advance. So as we explained and as Kunal elaborated, there are 3, 4 very distinctly, I would say, a bit unusual circumstances or factors that we are facing. Perhaps after a very long period of time. So one, there is a distinct impact of reduction in offtake by customers who have placed their orders. But they are not following up with POs simply either because of perhaps destocking? Or perhaps they are waiting for the price to correct, thanks to the freight still being pretty high, thanks to the supply change.

And we are not -- I don't see this as a structural reduction, but we are more analyzing it and understanding this to be more cyclical rather than structural in nature. So one fundamental issue is that while our efforts for conversion continue, it is this reduction or a little less order intake that we are receiving from the customers who are generally [indiscernible] POs are generally coming in very regularly is what is bothering us a little bit.

Having said that, 2, 3 things on the positive side. So we have in fact, started our supplies though a bit slower to Canada. Similarly, we are working very aggressively on several mines, supply chain challenges and freight issues are definitely concerning us, but we feel that perhaps freight seems to be going down a little bit. And in the coming quarter, it should look a little better. But as we distinctly beat the maths and understood the situation, on a very realistic note, we see a reduction in sales to the extent of maybe 20,000, 25,000, 30,000 tonnes this year, which, as I elaborated is cyclical in nature, nothing structural. We are very hopeful that all the conversions on which we are focused, several mines we are currently working. It might happen that we may be able to catch up, but it's very early in the day to make any gas and it is rather safe to say that there could be a little decline about 5% to 10% in the overall sales this year. Having said that, margins continue to remain robust, everything else opportunity-wise, everything else remains to be robust.

So we are keeping our fingers crossed and hoping for the best. Secondly, it is early in the day to [indiscernible] a guess about how the next year is going to look like. So if 1 or 2 large contracts that on which we are working, they [indiscernible], things can vary significantly change. So we are hoping for the best. But on a conservative note, we don't want to give any guidance about next year until maybe we reach the 3 -- quarter 3 results, and we have a little clarity on the new initiatives that we are working the regular uptakes [indiscernible]. For whom we are already there onboarded through long-term contracts. So I think with this Kunal, let's go on to the Q&A.

[Kunal Shah, executive]

Okay. Thanks, Sanjay bhai. And if you do drop-off, please Sanjay bhai it's okay. Yes.

[Sanjay Majmudar, executive]

Yes, yes. Actually, I'm just boarding the flight, so it could be a little challenged actually. But I'm there on the call until -- till at least on a few minutes, yes. .

[Kunal Shah, executive]

Operator, we can move on to the Q&A please.

[Operator]

[Operator Instructions] The first question comes from Bhoomika Nair from Dan Capital.

[Bhoomika Nair, analyst]

Heard your commentary on the volume kind of challenge that you're seeing in this year. So just want to understand that -- is it that the conversions are taking longer, we had added actually the mining liner facility as well? So how is -- at least that should have seen some growth and if you can also comment how the U.S. market is panning out whether volumes are steady there? Or have they fall in post the ongoing litigation out there. If you can just give some more color where exactly are you seeing the drop in any specific kind of a thing, which is more platinum mine ore or something we had and that can help us understand a little more. Because if I look at it, if you're looking at something like 260,000, 270,000 kind of volumes for the full year, almost over a 4-year period, we've not really seen growth.

[indiscernible], I understand it's too early to give guidance for next year, then logically, the next year, should we come back to the 320, 330 kind of a number, which is still just be 20,000, 30,000 kind of incremental volumes over '24 or do you find that, that would be a big challenge as of today to even provide that kind of visibility?

[Kunal Shah, executive]

Yes. I try to [indiscernible] you for your questions. And you've got a few questions rolled into it, so I'll try and address each one by one. Let me start by a question on U.S., right? I think the matter, as you know, every jurisdiction takes quite seriously, and we are only allowed to say so much on public platforms, while the matter is subjudice. But our business there broadly continues as is. I mean there are nuances there, but I mean we are -- you've seen the disclosure that we made about the interim CVD that has been applied. And so we continue to cooperate work, depend and to make sure we put out the most relevant information promptly. So U.S. continues as is, and we are doing everything that we can for that something.

[Bhoomika Nair, analyst]

Volumes there in the U.S. market are intact, and we have not seen any kind of a decline. Would that understanding be correct? .

[Kunal Shah, executive]

Yes, broadly, yes. Is the volume looks to be okay. I mean, like I said, I will be constrained in speaking much about it. But the business continues its steady business for us, which has been developed over many years, and that continues at this. So moving on to the next question that you had, which is about the core. So the offtake I think there are -- all these -- there is 2 pillars of the issue that we are seeing. One is the logistics and the supply chain just the anxiety or the discomfort customers would have around that uncertainty, right? So that is 1 pillar and that on an open that's going along. And the other is around the what's happening in the customer is.

I think there are more times where there's just general -- it's a little optical commentary that you would hear from mining companies suggest things are okay and things look to be okay. But we are just seeing a soft conversation. Now whether that is temporary, whether it goes a little longer tenure, it's still too early to call that one out. But -- and that's -- 1 of the consequences for that is just the destocking conversation. They're just saying that, okay, we've got more stuff. We just not buy for next 2 quarters or the next 1 quarter or maybe next 3 quarters and continue the conversation forward.

Now that destocking generally does not happen unless they're looking at a little softer outlook, right? But we are too small of comps in the real to have any view beyond this. But we are just seeing software that the customers in and that's resulting in the situation. So that is one aspect. And the second pillar that I said, which is the supply chain is just real right in our case where any new customers coming on board or customers who have been having a conversation or just bought it for a period wants a little more comfort on the whole supply chain issues, right?

If they are all like Sanjay bhai mentioned it looks that the worst is behind us, right? What happens with the [indiscernible] rates are the whole China container thing came along, right? The global geopolitical space is a very funny situation where it's impossible for any company to have a certain view about which way to go with it is. So we are staying in place, right? We are there. We are making sure we are giving all comfort. We are not defaulted or delay on any delivery, right? We added more stock last quarter to make sure that no customer is impacted. But it is a conversation and there is some consequence on us for now.

You asked about the mining liners. I think it remains a continued as flat. We've not been able to add what we were looking to add this year from that space. And variety of factors. The irony is that we are becoming the more confident we get about the consequences that we can participate in as the customers and the more the irony about it, that it's just taking longer. And there's nothing else I can say to -- I'll lay that question, but it's all business as usual right now. It's just this interim stage. It looks like. But that volume the 292,000 tonnes, the 10% lower volume this year compared to last [indiscernible] year, looks to be a reality for now. What happens next year, I would just take a quarter or 2, this is our early sign of mining companies feeling a little less excited about the future. These are things that we don't know today. This is just a temporary housekeeping action. But we are seeing more than one ore type and more than one geography face that. So it may not be -- we cannot dismiss it. Yet, it is not something that we can say for sure that it's an issue.

[Sanjay Majmudar, executive]

So just to Kunal add. Bhoomika, I don't think it, as I said in the opening remarks, I don't think it is over specific or it is structural. But more cyclical, let's hope for the best, how it goes. We are keeping our fingers crossed. As I said, we are working on several opportunities that run into more than 6-digit opportunity you see. So it's not that we have stopped working on those opportunities. But it's just very unfortunate that the volume uptake from the customers have not happened the way we want or we had anticipated, and we cannot force them to buy, as you know. So we have to just see how it goes. But I think we're still very, very optimistic about the medium to long-term prospects. That's all I can say at this point in time.

[Bhoomika Nair, analyst]

So maybe if we can get some comfort around what is the kind of new customer interaction while the conversion might be happening a little slower because one part is the existing customers kind of destocking, so which is where there is a decline in terms of volume, but then that will be partly offset again some kind of new customer additions in conversions that are happening there.

[Sanjay Majmudar, executive]

Bumi, I indicated that we are working on several opportunities, which can sum up beyond the 6-digit easily opportunity. As you know, we don't share more details, we cannot. We are under confidentiality for our own protection of our own interest. And I mean that's all I can say at this point in time. So nothing -- no work has stopped.

Obviously, as we say, U.S. is also turning out to be quite reasonable as we have already disclosed, Canada indicated we have started doing some suppliers. So let's see let's wait for the third and the fourth quarter. We are quite working very hard. We will not like to face this kind of situation. But we have to accept the reality this is what it is.

[Bhoomika Nair, analyst]

So in that spend, are we looking to kind of go a little slow on an expansion given utilization levels are kind of dipped a little bit. Any thoughts on that to kind of [indiscernible] .

[Sanjay Majmudar, executive]

No, nothing, nothing, nothing. See our expansion will take its own pace. We are already working on further 36,000 tonnes beyond [ 460 ]. And this will and CapEx plans are still INR 250 crores to INR 260 crores. There is no letdown. So I anticipated something long term or medium term, I would have stopped my CapEx, but no. That is not the case. Clearly not the case. .

[Kunal Shah, executive]

Also, Bhoomika, we've already scaled down at the 80,000 became [ 36 ] and [ 36 ] is also modular. So in that sense, we will take a call, it's not money committed 1 way it's field and it is modular. So I mean, if we see that the next quarter also remains same, I mean we can always scale that down further. But like Sanjay bhai said, in any case, it's not a material amount, large amount that we and engage was scaling down the 80 to 36, which we have already done, and which is -- again, which is a start stop for us to see if you want to further delay that.

[Operator]

[Operator Instructions] The next question comes from Priyankar Biswas from BNP Paribas.

[Priyankar Biswas, analyst]

So my first question is like as you were highlighting that there has been a destocking engine at this moment, So is my understanding correct that we have not lost any customers as such. It's just a cyclical thing. So there has been no existing customer loss at least whatever we had.

[Sanjay Majmudar, executive]

So let me correct here a little bit. What we say that we are trying to understand the circumstances under which the offtake has reduced. Okay. So one factor could be destocking. Yes. In a few cases, we clearly know the customer is capturing larger stocks and therefore, is low on placing the order. But honestly, that's not the only reason. There could be multiple reasons. I think another reason worth considering is the fact that because of the supply chain and the freight challenges, our pricing has become a little less attractive because we do generally add everything. Correct. So some people would have anticipated that you since prices are going down. I mean the rates are going down, let's wait for a while and then we will place the order. We have enough material. There is a possibility that -- all these factors can reverse quickly than what we anticipate.

But at this point in time, we have started conservatively to wait and watch and see how things pan out.

[Priyankar Biswas, analyst]

So if I put it this way, like what I understand that at least what I can understand from my interactions in the storage market, especially in China. So there has been excess capacity, and we have been flooding the market with very cheap material at this point and supplying finance also in some of the mining geographies. Is it also one of the reasons that the differential between the [indiscernible] has become quite high in certain places, and that's why there is a reluctance to convert.

[Sanjay Majmudar, executive]

I don't can, Kunal if you can throw some light on this.

[Kunal Shah, executive]

The fourth question is I don't think that in the scheme of things that we're saying there's a 2 million-plus market [indiscernible] is very less presence already, even if I go from 15% to 20%, that's still our 100,000, 200,000 additional crew markets. I don't think that is a material factor were for anything happening in the fourth market influences. I mean that's a one-way street as far we are seeing it. Just on the order of the cost differential is less but we are adding 98% of value in terms of throughputs and other things, right? The recovery some process and all of that. And [indiscernible] the whole premise on which we are building the grown opportunity is on all the other benefits that come offers along force. Any additional lower cost of or does not change that in the value proposition.

I think that is the growth portion that we are talking of. the earlier question that you had is what is happening and what earlier participant was asking is it is a combination of all of these things. There could be a customer or 2 that is there are very few other players in the space. So there could have been situations with the order has moved from year-to-date. But it is a combination of all of these things. It will not be fair to say one way is that has led to the situation.

[Priyankar Biswas, analyst]

And if you can share like, which [indiscernible] are impacted because as you said that U.S. is not that impacted and Canada you have resumed. So I'm wondering where exactly [indiscernible]

[Kunal Shah, executive]

[indiscernible] It's still there at it's still there as a free or presence there is still yet to come through. I think we will not want to get into more details, like Sanjay bhai explained it. There are plenty of nuances here in our business, and it will be difficult to really get granular beyond this.

[Priyankar Biswas, analyst]

Just last question from my side. because we used to be quite a meaningful player in Brazilian iron ore earlier. And what I understand is we have continued discussions in Lat Am copper, particularly Peru and Chile those progress. So what are our progress in these 2 areas at the moment? Because [indiscernible] are now gone. So how are we focusing? And how does the market?

[Kunal Shah, executive]

There's only the CVD portion, as they call it, there's one portion that's still active. The dumping has been -- the duty has been terminated in Brazil. So again, South America aims to be a large [indiscernible] one of the largest ports markets. And as you know, copper is one of the largest commodities in that region, and it's absolutely a market of interest, and all our work is fitting in with that opportunity. So there is absolutely 0 hesitation in saying that we have a solution that brings disproportionate benefits to the clients. Correct. Especially in a context where their costs are going up, they want have the [indiscernible], the throughputs are going down. We believe that our product fits in. It is a little frustrating for the time that is required to do that. But that's an effort that will atomerathe investment the company has to make in terms of resources and just continuing to keep up with the customer. So South America, to answer your question remains absolutely the market of interest and there's no change in that [indiscernible].

[Sanjay Majmudar, executive]

Strong efforts are continued in those markets for conversion, given the efforts right now.

[Priyankar Biswas, analyst]

So whatever Brazil iron ore because we used to be quite strong, like with Vale and others. So how is it looking? I mean we were very strong [indiscernible]. So how is it looking there?

[Kunal Shah, executive]

Priyankar again, granular question in 1 market and 1 customer may not be whole story, right. So I think we'll just refer back to requesting not to get too granular, but nothing's changed. It is business as usual as far as we are concerned. There's no structural situation that we are looking at that probably changes [indiscernible].

[Priyankar Biswas, analyst]

And just 1 more in. So in the other expenses, I see that the other slide item that is there. is on the higher side despite lower production in this quarter. So any expenses that may have gone up? I mean just for me understand.

[Operator]

Sorry the line for the chairperson is disconnected. Sir please stay connected while I reconnect the line. Ladies and gentlemen, we have the line for the chairperson reconnected. Sir please go ahead.

[Kunal Shah, executive]

Yes, the other expenses includes our professional and legal expenses and a lot of our legal trade depends costs in this 2 quarters. There was a lot of work for Brazilian U.S. has happened in those milestones was in this quarter. So that is where it's appearing that way.

[Sanjay Majmudar, executive]

And frieght still continues to be a major component, freight.

[Kunal Shah, executive]

Is balancing, nothing that is worth nothing.

[Operator]

[Operator Instructions]

[Kunal Shah, executive]

If you have no further questions, I think we can wrap up the call.

[Operator]

Yes, as there are no further questions, I now hand the conference over to the management for the closing comments. Please go ahead, sir.

[Kunal Shah, executive]

Thank you, everyone. I do realize there may be more questions that you may have around.

[Operator]

Really sorry to interrupt, sir. We have a last-minute registration from Mr. [indiscernible] ICICI Mutual Fund.

[Unknown Analyst]

Sorry, I joined a bit late, so pardon I'm being [indiscernible]. So just a question around because the supply chain issue, we had seen this in COVID now, right? At what point do we actually go back to the [indiscernible] work to think about any expansion out of India?

[Sanjay Majmudar, executive]

So I'll be very candid with you. This is something which we, at the Board level, are very seriously debating over last couple of quarters. Even in today's Board meeting, we had extensive discussions, some technical presentations. I will only say at this point in time that we are looking at it quite seriously. But it's not so easy to take a call on this.

[Kunal Shah, executive]

But I think the fundamental point is that our thesis remains for what we are doing out of India and everything else that we're doing. There will always be a conversation and discussion on whether -- what mitigation measures exist, and we will consider them plant outside India may or may not be in consideration, but it is like what you said is that we have to be in the marketplace, and we have to make sure we work on a strategy that [indiscernible] to our advantage. So I think if and when that becomes a serious concentration, we'll be very happy to look us. But for now, our focus continues to with all that we are doing. Like I said with the previous participant, the point is that it is business as usual. I mean we've had a little unusual lower offtake with a few customers and things that we discussed first Otherwise, nothing really that requires urgent efforts or actions on top of that.

[Operator]

Sir, we have 2 more questions.

[Kunal Shah, executive]

Please go ahead.

[Operator]

The next question comes from Ashish Kejriwal from Nuvama.

[Ashish Kejriwal, analyst]

Sir, my question is in one of the answers, you said that maybe because of customers may be thinking that there could be some reduction in prices. And because of that fact, maybe they have reduced the volume. So my question is do we think that if we can reduce prices or take some hit on the margin, we'll be able to increase volumes or it will not be the case.

[Kunal Shah, executive]

We mean towards the freight cost, I don't think Again, I'll go back to a macro point is that RPC does not rely on cost, right? When my solution can offer -- can solve the problem of a hedge grade [indiscernible] worsening or where I can improve throughput into the system and produce more metal. This cost becomes incidental, right? It is not something that is a strategic conversation with the customer. What we were referring to was that 1 of the pillars of question right now is the whole uncertainty around our shipping situation, which is unavailability of containers and shipping cost and customers would sometimes get on the [indiscernible] is that there is some amount of uncertainty should I just wait [indiscernible] it out and get still things stabilize a bit.

[Sanjay Majmudar, executive]

I think that's that's whether -- there was no question of renegotiating on the pricing. Yes.

[Ashish Kejriwal, analyst]

No, sir, I was just looking at for new customers.

[Kunal Shah, executive]

Sorry to finish the question. Lower pricing is not the answer. It is not a price conversation explain that in that -- it is not where a customer is saying, "I need a discount or a lower price. There is much more effort and engagement that is required at all times with the customer to make sure he gets us significant disproportionate benefit and all these other things that we bring to the table.

[Ashish Kejriwal, analyst]

Understood. So sir, secondly, obviously, this is the case which we have been highlighting so many years. But if you look at the numbers for last 6 years, actually, our sales volume in the mining segment is more or less segment. So is it that we are not -- we are taking much more time to convert or.

[Kunal Shah, executive]

I appreciate or at. What I was saying is that it's a little unfair to just paint the canvas with 1 brush stroke [indiscernible] do know second.

[Sanjay Majmudar, executive]

Kunal, let me be a little more clear on this. So Ashish you are right that volumes look stagnant, but please consider over last 5 years, we have actually lost more than 50,000 tonnes and then gauge them through new customer acquisitions, correct? So there was an anti-dumping scenario first, starting with Brazil and Canada, then South Africa in a different context, but nevertheless, So you lost more than 50,000 tonnes still the volumes not only held but ensured a 5%, 6%, 7%, 8%, 10% growth, which means that my conversion continue to happen, then came this geopolitical tension than the whole world going into a tailspin and the shipping freight going through the roof 5x twice in last 3, 4 years, please understand the challenges. And the fact my opportunity is -- and then we have continuously upgraded in terms of our capabilities. So we're talking about a [indiscernible]. If they're talking of fantastic mining liner solution. We are also talking of a cost reduction, which as Kunal explained [indiscernible] therefore important. But does it undermine my opportunity? Does it reduce my opportunity from a 2 million -- or 1.5 million to 2 million to maybe or 500,000 tonnes clearly know what happens, yes, conversion is not exactly happening the way we think multiple challenges continue every new day there's a new challenge. But the strength of our solution is so materially powerful that there are 70 people globally working in various geographies in continuous interaction duly supported by another 100 people from India. You see it's a massive exercise. I don't think 1 or 2 soft quarters will change the whole course of the company. But at the same time, being realistic is what we thought we should convey to investors very transparently that if my own clarity is not perfect, how can I tell you, A, B or C, and that is exactly what we are conveying that does not mean that now my market is undermined or I am now facing an opportunity which is not exactly what I was talking about 6 months ago.

So you have actually gained the market and now there are chances that we will regain the market that are lost. But we continue to face new challenges but we are undeterred absolutely undeterred about it.

[Ashish Kejriwal, analyst]

Understood, sir. I think that's very appreciative that you have commented that. The thing is that now, obviously, conversion is a slow business also moving business. But in this time, are we placing a resistance from the customers to convert or because of which China is aggressively because they have excess production. So China is excessively marketing it. And the gap between our product and the conventional product is so huge that people don't want to change. Are we seeing such kind of infection or not right now?

[Kunal Shah, executive]

Not clearly, China, and we've discussed China as on a strategic note that it is more of a commodity product supply. I think the -- thesis for AI across our both verticals and product lines is the value that we bring in terms of designs and solutions that we offer as a package. And China always had large internal market and low technology products. So it's not something that is new today. And there were always for any product that they have a larger market, they always have over capacity. So it's been there for last 15 years. So broadly, nothing changes on China. Nothing has changed between 5 years ago.

[Ashish Kejriwal, analyst]

So sir, last question, okay, short term, maybe some hiccups are there. But do we [indiscernible] that in next 5 years, our number can double from here.

[Sanjay Majmudar, executive]

I definitely think so. Kunal, I'm sorry, I will have to I have to drop. Thank you, everyone, and all the very best. Thank you.

[Operator]

The next question comes from Parikshit Gupta from Fair Value Capital.

[Unknown Analyst]

Am I audible?

[Kunal Shah, executive]

Yes, yes, yes.

[Unknown Analyst]

And just as a context, I am new to this company and segment. So please pardon my lack of information. I just have one structural question. I understand that the grinding media is the largest business segment for the company along with expansion plans already undertaken. So I understand that you are already mindful of the rate of growth of the requirement of grinding media. Would it be possible for you to please articulate if this growth will come mostly from the mining sector, which contributes to, I think, about 70% of the business or if you could touch upon the other segments.

[Kunal Shah, executive]

Will come -- all of it is expected from the mining sector, not mostly all of it.

[Unknown Analyst]

Just a follow-up on this, please. Considering the cement manufacturers expansion, along with consolidation in the industry, especially in the southern parts of it.

[Kunal Shah, executive]

This is a global business for us. India happens to be an important market but in the global sensor thing, yes, India is a larger market. And we will be natural beneficiaries of any growth that comes along. But we are not -- we are also introducing newer solutions with higher [indiscernible], et cetera. So in the scheme of things, the growth in cement in India per se may not be a material game changer on a overall volume, but we will surely add volume. We're just not talking and estimating that these are sometimes longer gestation projects. And estimating saying wait fall what calendar year or fiscal year, what volume will come, it's difficult to estimate.

[Operator]

As there are no further questions, I would now like to hand the conference over to the management for closing comments.

[Kunal Shah, executive]

As you say, thank you so much, it's been -- it's not been a regular quarter over the last 2 quarters. And I understand many of you may have still more follow-up questions. I hope we can [indiscernible] Sanjay bhai on the weekend coming up, but I'm available off-line and both of us obviously will be available for next week onwards. So please feel free to call us, and we'll try our best to help you get a better sense on this. I wish you all a very happy Diwali and good evening. Thank you.

[Operator]

Thank you very much. Ladies and gentlemen, this concludes your conference call 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.