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Good day, ladies and gentlemen. Thank you for standing by. This is Margaret, 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. Thank you, and over to you.
Hi, thank you so much. Very warm good afternoon to everyone on the call. This is Kunal, we'll have Sanjay bhai join us in a little bit. I hope you all got a chance to look at the numbers. We were a little delayed in uploading the summary sheet, which has more color on the final details of the numbers, but -- so I'll walk you through some of the key highlights, and as usual, we'll go to Q&A, thereafter. We have done tonnages of 59,200 this quarter, and which brings the full quarter sales to 185,000 tonnes. Top line is INR 700 crores. Our EBITDA is INR 194 crores, and which brings a profit after tax to INR 129 crores. So a good quarter. If I were to stack it up, against the last 2 quarters, our sales were 64, 61 and then we are at 59. But our production for these 3 quarters were at 69,800, first quarter, 72,000 tonnes in the second quarter and we were at about 75,000 tonnes, 74,600. So we are very happy to report that we have done the highest ever production this quarter at 74,600 tonnes for a total production for 9 months at 216,000 tonnes. And even assuming another 17 -- 65, 70,000 tonnes in the fourth quarter, we should be about 280,000, 285,000 tonnes of production for the full year, which compares to 229,000 tonnes in the full year last year. There is a fair bit of inventory that has been produced out of the Delta between our production and sales. This is predominantly against orders and where you expect, it's a question of timing. And over next 2 months, we'll see a fair bit of this inventory normalize in terms of sales. So 185,000 tonnes of sales for 9 months and 216,000 as production. We've got orders on hand, where in supplies were to start over last 6 months. And customers -- because of their stock situation have -- while, we've produced, built, shipped and kept it in a storage location for the customer. Invoicing is expected and started in many instances, will start in many others. So while tonnages for the third quarter at 69,200, maybe a little less than where we would have expected that to be. We would have expected tonnage's invoicing to have been at around 70,000 tonnes and -- but that 10,000 we'll shift over next 2 quarters. Than the Delta between production and sales will move into invoicing over next 2 quarters. So with that, had some fruit full year. I think, we expect 185,000 till now and approx 65,000, say, in the fourth quarter. We should be at 260,000 tonnes of sales, which is up from 228,000 tonnes in '17, '18. So it's about a 32,000 tonne addition -- about a 22,000 tonne addition, 10% addition, less than what we would have expected. But last 2 quarters, 2 and 3, is where we saw this orders accumulating in terms of awaiting invoicing, but that should normalize over next 2 quarters. Moving on from other incomes standpoint, our total other income from export benefits the operating income is INR 26 crores, while about INR 28.92 crores is our income from other non-export benefits, which is predominantly our major income. We also have INR 4 crores forex gain. As you all know, rupee had depreciated up from 73 levels, down to 70, 71 area and that's the foreign -- the gain is limited, because of that. So few other data points. That increase in stock had also led to an increase in total inventory, so our total stock is at INR 590 crores about 75 days plus, up from about 60, that we normally see. Raw material continues at similar levels about 35, 40 days. Receivables, we had an exceptional collection in December. And lower sales in December, both put together as we've seen some reduction in debtors but that will normalize in the March quarter. Debtors stand at 71, but they'll normalize at 82 on average, while stock will normalize too from 75 plus to about 60. Breaking up our tonnage for the quarter of about 60,000 tonnes [ within ] 40,000 from mining and about 19,000 tonnes from our cement utility and aggregate businesses. So the 9-month sales for mining stand at about 120,000 tonnes and that's up from about 100,000 tonnes in 9 months last year. So the fair bit of increase from the mining. All our growth has come from mining as we know. And while our other non-mining business has grown from 61,000 tonnes to about 65,000. So 9-month basis growth of 162,000 to 185,000 broadly. Few other figures, we've done total CapEx of about INR 156 crores, which includes some amount that we spent towards wind turbines. About INR 130 crores is towards our ongoing Capex plan. And about INR 20 crores is what we paid off towards the wind turbines. So as we -- you'll see in the note, we've got -- we've already installed 4 wind turbines of 2.1 megawatt and additional 4, which we bought are under execution, and over next quarter, we expect those to be going online. From a production capacity enhancement program, as you all know, we are at 340,000 tonnes. We are in, from a -- we are adding 100,000 tonnes of grinding media capacity to take it to 440. The first phase of 50,000 tonnes is expected now. We are already in the final stages of commissioning the plant. As you all know, we were delayed in -- because of the failure of one of our -- of the molding line supplier, which is the key equipment for our product, for our manufacturing line. And on account of that there was a serious delay, and unfortunately, we had to live with it, because our whole plant was designed around it. But finally, that's up and about and we expect, while we are -- our target is March, but we expect between April and May to be sharing the news around, commissioning that 50-some tonnes. And as previously stated, next phase of 50, thereafter, should take anywhere between 12 and 15 months, depending on now what's going on with the molding line decision. So by June, July of 2020 is where we should have the other, the additional 50,000 in place. And that's well in line with the capacity requirements. We should not be facing problem from that standpoint. So our mining liner plant, we have started the procurement process. And while our target is March 2020, may be, within a quarter or plus and minus of that, we should be through with that program. We'll share more details as we form up -- as you all know, we design our own plants. We do a significant part of engineering of those plants on our own. These are custom-made plants. We use global wind or ecosystem to source a lot of these equipments and trying to do a lot of automation within that. And so we have to allow for a quarter plus to accommodate any delays or time it takes for funding of some of these intricacies. I think, moving on, order book of INR 668 crores, our forex continues at 50% up to half year. So -- and we are mostly hedged approximately between 71 and 72, which is by and large current market levels for the rupee. Lastly, the most important question on tonnages, and Sanjay bhai, who's just stepped in. So I'll request him to share some color on how we look at -- what's going on with tonnages rest of the year and the next year and we'll open it up for Q&A. Thanks.
Thank you, very much. And a very warm welcome, and a good afternoon to all of you. The key takeaways, which I want to share with you is the fact that you would have observed that in Q3 and Q2, our production has been in the ranges of 72,000 to 73,000 tonnes and above. So we did about 74,690 metric tonnes of production in Q3. And in Q2, the production was 72,262. So the accumulative production for 3 quarters is 216-odd thousands 216,700 tonnes. So the point I'm trying to make is that if you compare this with the sales, you will see that in Q3, the sales were about 59,000 tonnes, as against sales of about 61,000 tonnes. So cumulatively, if you look at the production and sales, there is a lag. Two things I want to say. Our 100% production is against orders. So the point I'm trying to make is that we have already received a very good portion of the orders as for the target and going by the current run rate, we will end up the year with the production of over 270,000, 275,000 tonnes. However, by the sales run rate, if I look at, assuming that there'll be a run rate of 60,000, 65,000 tonnes in Q4, my sales would be about 250,000-odd tonnes, plus minus, say, 5000 tonnes. The lag between production and sales is explainable on 2 factors. So first, as I said, we have orders on hand, which means that the order intake has happened the way we have targeted. And therefore, there is absolutely no problem from that standpoint. The only difficulty that we have come across is that there is a bit of a timing difference in the sense that a customer has cleared the order but he is either having a lag effect of his carryover old inventory that he is still carrying on hand and, therefore, he is delaying his offtake a little bit, point number one. And he is asking us to stock at his local stock point so that there is a significant build-up of finished good inventory against firm orders. But there is a time lag between the dispatches and the production. And we believe that that is just a matter of timing difference, which is going to be normalized progressively from the last quarter of current fiscal year as well as in the coming quarter. So clearly, from an order book build-up standpoint, we are on track of 270, 280-odd thousand tonnes. And that is where the production figure will stand at the end of the year. But the sales and the production lag is a timing difference where the dispatches will actually happen the way the customer wants the dispatches to happen after taking care of his destocking and other factors, which -- or his earlier commitments with his previous supplier, which he would now want to transit and that -- therefore, a matter of timing difference. So there is nothing structural or nothing adverse to be looked at . And we believe that, as we said, our annual additional order intake and a volume growth of 40,000, 50,000 tonnes per year, that what you will see, strictly from a dispatch point of view, maybe this year we will not be able to meet the target, but as I explained from a production standpoint, we are bang on. And therefore, from an order intake standpoint we are bang on.And therefore, going forward, we just see this normalizing over the next 1 or 2 quarters. And these should be -- things are looking otherwise very comfortable, both from the EEMS standpoint as well as the down processes and other initiatives that we have taken and the aggressive stance that we have taken is taking the market share. I think, with this, I'll explain, I'll refer the moderator to -- one more clarification I want to make on the Capex. Those of you who might have looked at my presentation, the CapEx already incurred till December is about INR 156 crores. Earlier, we were targeting to incur a CapEx of about INR 300 crores in this fiscal year, but because of certain delays on the equipment side, we see that we will end up this year with the CapEx of around INR 230-odd crores and significant amount of CapEx more than INR 400 crores or round about that should be incurred in the next fiscal, and there would be a spillover of at least INR 50 crores, INR 75 crores to FY 2021. But that is just again, a matter of timing and the delays that happen in these type of projects. There is nothing planned to defer or delay the CapEx. I think, moderator, you may please throw the house open for Q&A.
[Operator Instructions] The first question is from the line of Bhalchandra Shinde from Anand Rathi..
Sir, regarding the volumes, as you mentioned, it was a pretty bit justifiable, but is it fair to assume that for the 2 years, we will meet our target of 80,000 tonnes incremental volumes? Or there also might be some...
No. I think so. This is fair to assume.
And, sir, regarding EEM Solutions...
Hold on. You mean to say as the annual run rate or you want to say aggregate?
Aggregate, aggregate?
Aggregate, from a production and an order intake standpoint, no problem. Maybe, dispatches, there could be a 10,000, 15,000 tonnes of lag. You can't control the dispatch process the way you want, actually. But see, more important as I explain, since we are producing only against orders. I have produced more against orders than it is stock currently at our various godowns across the globe, near to the customer base, he is bound to take. It is very much possible that in coming quarters, these orders can go up. But for me, I don't have that clear predicted -- I can't predict. What I can safely predict is that if next year, at least even from a dispatch standpoint of 40,000, 50,000 tonnes incremental tonnage. So if I add 30,000 or 20,000, 25,000 of this year and 40,000 50,000 of next year, it can be 70,000 75,000. It may not be 80,000. You get my point? But we don't know. I can't do that any better.
Okay, okay. And sir, regarding the pass-through of the commodity cost. Is it been fully done, or it's still there?
No. Raw material prices have been stable for these 2 quarters. So I would imagine that it's getting more stabilized now.
Okay. And sir, regarding EE Mill Solutions, last quarter you mentioned that we have received 1 order of 5,000 tonnes. Are we expecting any further orders? Are we...
Definitely. Yes. See for -- so that order is going get installed around May and June of this year. And there are many new projects in the pipeline, which are based around that basically. Right? We don't want to go ahead of ourselves before me make at least one fee -- one established fee drive.
Okay. And we are not gaining any volumes on these lines in our existing guidance, right?
No, we're not separately factoring those. I mean, like various things happen when we are actually dealing with real-life situations, like what we discussed, in terms of timing difference. So it's difficult for us to add up each separate item like that. But we expect these also to play into those tailwinds.
The next question is from the line of Ashutosh Tiwari from Equirus.
Firstly, you mentioned about this increasing inventory, is it related to the new customers or this is also -- our current customers also?
[Operator Instructions]
So I have seen that they're just increasing the inventory levels, is it related to the new customers additions or is it related to old customers as well? Did...
50%, 60% would be related to new customers.
Okay. And sir, what's the update on Barrick order that we got earlier. Is it now we are acquiring full quantity or there is a delay in that as well?
It is going, from this quarter. So with October of -- with October onwards, we will obtain this target to full -- from fourth quarters, we expect full supply under that contract.
Okay. And secondly on the USD/INR reside in the current quarter?
Would be about 60 -- INR 70. INR 70 point?INR 71.27, INR 71.
Almost similar to the current levels?
Right.
And sir, lastly, if I look at the order book position that you provided at quarter end, this -- and it fell from Q2 to -- sorry, Q1 to Q2, and is currently around the slight increase in Q3. So is -- can we reach something over there or this is not so material change already?
Not really. Because we are not accounting for the longer tenure contracts in an order book, because under that contract they actually release monthly, quarterly or 6 monthly orders, and you'll see account that is the order book. I mean, I know for the last 7, 8 years, order book has been between INR 400 crores and INR 600 crores.
That's what I'm asking. Okay. And one more question on this depreciation increase in this quarter, is it related to the windmill commissioning?
Yes.
Yes. Yes.
Windmill and some building parts.
Windmill and some other building parts.
And this windmill is like, we -- and how do you depreciate it, in SLM only or this is first year high depreciation?
No, no. There's a high depreciation to income tax and from our book standpoint, it is a straight line prescribe.
22 Years.
22 years, straight-line, for the book depreciation.
The next question is from the line of Ravi Swaminathan from Spark Capital.
Sir, just wanted to know, will there be any impact on volumes related to the Vale downburst which has happened recently?
Yes. Thanks for reading that. I think, many other people would also have questions on that. So first of all, we don't -- we've not heard anything from Vale in terms of any interruptions. But this is such a large human tragedy, where creative people -- please, respect that in that part of the world, a human life has far more serious consequences than you can imagine, and this is where -- they're in a significant shock. So we are not pushing them on a daily basis. But we are -- we -- as we said we have continued receiving normal orders as we did last quarter. If there is any impact on under whatever has happened, it may take sometime for us to know as well. So but as of now, it's business as usual.
Got it sir. Got it. And say -- sir, one number question, so basically, other costs have increased by 34%, this quarter. So is it, I mean, for the past 3 quarters, it has increased at a pace which is slightly above top line?
You mean the other expenses?
Yes,yes. Other expenses. So is it like...
One was a INR 8 crores recast in the second quarter. Second quarter costs have been higher by about INR 8 crores. When the rupee had weakened there are some FCDR. When we merge our foreign assets into the Indian balance sheet. So that amount was a loss, which was -- what was a gain, which was taken over there about INR 8 crores. But it's -- so if you remove that, then second quarter and third quarter are mostly comparable. But broadly, there has been increase on the line items of freight and power. There is some increase in power tariff. Over last 6 months, there have been 2 tariff changes that have been -- that have come through in Gujarat. And there is some cost increase on account of that. And the rest is it just general increase in freight that everyone is seeing on the freight index. And both of them have blown into some amount of expense increase.
Got it, sir. And this wind turbine, how much power cost saving can it give, sir, so -- I mean?
Look, we -- it gives up 20% IRR, so we will invest INR 100 crores, we receive INR 20 crores each year on it. If you want, I can get you the mathematics for both 2.1 megawatt turbine each, and we have 8 such, if we can create about 60 lakh units, and each unit is about INR 6 of saving for us. And there are some expenses. So on that broad math, each turbine would be INR 6 into 60 lakh, so INR 3.5 crore saving each year.
See the postpaid IRR for this project is about 16% to 17%.
Got it, sir. Got it, got it. And finally on the tax rate, wasn't there a changing state tax rate for this year, next year?
I think, 31% is what we can assume.
The next question is from the line of Bhoomika Nair from IDFC Securities.
Sir, just on this whole volume thing. While you've kind of explained that there is some gap that is coming up because customers are not really picking up the volumes. I just wanted to understand if there is also a little bit of higher inventory that is being built out by the clients given that we're supplying to more and more mines? And, which is why or structurally as you supply to more number of mines this gap will kind of...
You are absolutely right that -- and that's the working capital that we've seen over the time we've been doing this business. So one is, when you go to a new customer, you need some critical stock for that. But of the 31,000 tonnes Delta, we would imagine at least 23,000, 25,000 tonnes or 22,000, 23,000 tonnes is what should have rolled out, right. It's where it's just below, either in transit or is awaiting clearance for the customer to start invoicing the fee.
Okay, so this kind of gap will not, kind of, sustain going forward. It is more of an aberration of 1 or 2 quarters, you would think?
Yes. Yes. So it's a normal business. Of course, when you add a client, then of course, lot will appear with extra inventory but they'll be transit and then they will start rolling from the third month onward, right?
Right, right. Yes. So because earlier we could not have...
No, no, no. In going forward, I think, 30,000 tonnes is a significant one. At least 10,000 to 13,000 tonnes should have been build now in the 9 months to date basically.
Okay. So the timing, maybe, we might not be able to predict the timing, which is why we are not giving a firm thing whether it will be picked up in Q4 or in Q1, but over the next couple of quarters...
Over these 2 quarters -- and the reason I'm saying next 2 quarters, because it takes time to ramp up as well, once they start. And they have to start. I mean, it's a question of time. So it's nothing that -- there's no structural change in the narrative.
Bhoomika, what is ratifying is, as I explained, we have orders, which is all signed, actual orders on hand, it's just taking a little bit of time because that customer wants some more time to clear his existing inventory or his existing commitment. And that's what the difference. It's bound to grow. This is bound to grow.
Right. And because also what is happening is the guidance was for an extra 40,000 to 50,000 tonnes in the current year and from -- going from 230,000, 250,000, we have broadly at about 20,000 incremental volume. And sir, which is a fairly sharp cut in the guidance and just saying that...
No, no. We are seeing that with correspond to increasing stock, right? There is production and we don't produce. We are not producing material more in anticipation of the sale, right? These are orders where they were clearance to produce and sell. And so there is a timing issue with this quarter, there's nothing in it, it's unfortunate. That's always take care off.
Okay, so it will kind of make up a little bit and you'll get that incremental volumes coming through then in FY '19...
Exactly.
Okay. Okay. Get it. The other thing was in terms of volume, while you mentioned, there isn't much thing from their side in terms of how the volumes will scale up. But they've announced a certain number of mines and the names of the mines, in terms of where the shutdown has happened. Any of those particular mines that we are supplying to which can potentially get impacted?
Not really. I don't think so, no.
Okay. Okay. And the last thing, I just wanted to clarify on this win on the wind turbines. These commissions in the 9-month period, 4 of them, right?
Yes.
Yes, Correct.
Okay. And because the tax rate for the current quarter was significantly lower, that about 24%...
That was because, we have this long-term investment, so before it crosses the 3-year mark , we provide full tax on it, but then when it crosses that mark, then, there is a adjustment in current tax on account of that. So some part of lower taxes on account of investments that cross the 3-year mark. We saw that in, I think, third quarter, last year also if you look at it, where the tax has gone down to 17%, 18% or whatever. So when there is a lumpy listing that comes in, there is a little bit of a skew. Full year should still be at 31%.
The next question is from the line of Sandeep Tulsiyan from JM Financial.
Sir, my first question is on the realizations. I think, over the past few quarters our realizations have consistently been increasing and they are at the peak of about INR 118 a kg on a blended basis. So how much of it is sustainable, or generally is there a pass-through, which customer gets expect and you expect just to normalize? Or is it more of a mix thing, which will sustain, if you could just get some color on that?
Well I think, yes, it's about -- it's higher. But I think, it's also an attribution to a little higher commodity cycle pricing that we are seeing over a period of time and a function of product mix. So I think -- I believe, it should be sustainable.
Okay. And secondly, sir, if you could also give us some view on your volume guidance for next year, like you've guided of...
So we maintained fee, as we said, and it's the 40,000, 50,000 tonnes annual incremental volume growth is what we are comfortable with. But this point in time, we are seeing that actually translated. So from our internal standpoint, we have got those orders the way we wanted. It's just unfortunate that some of those orders, which we thought will also be dispatched during Q3, Q4, is slightly getting pushed to next year. So over next couple of quarters, we expect so that logical fall-outs should be that the dispatches in the coming quarter should be higher than what I produced or at least, equal to what I produce, and that is what is likely to happen. So we don't see any problem in that volume guidance of 40,000 to 50,000 tonnes that still remains our target. Yes, if you strictly say the previous question, which Bhoomika asked, she is technically right, that from a sales standpoint, it is not translated but from a business standpoint, which is more important, because a businessman, once it comes to us, it never goes away. And that is the nature and characteristic of our business. From a business standpoint, we've gained that volume. Unfortunately, the sales will follow in the coming quarter. That's the only thing that is an aberration.
Understood. Sir, I -- just coming back to the same point what you are also mentioning, if i just slightly stretch out your difference between production and sales over -- and I add up, like over the past 2 years, the kind of the inventory that has been built-up, it also a pretty large number of 52,000 tonnes. If I add up for last 2, 2.5 years the difference between production and sales. So I mean, how are we looking at it? Should we plan a much large production going forward and...
Last year we produced 229, we sold to 228.
Yes. No, in the year prior to that, if you look at the number, we produced [indiscernible] that was 19,000...
Like Bhoomika was asking before, there is stock that we have to build out as continuous stock when you take on a new large mine. You understand? Like for example, if I am selling 2,000 tonnes to a mine in a month or a region, 2,000 tonnes is what we expect on the ground. Another 2,000 tonnes for -- that's a minimum could be in transit. And another 2,000 tonnes could be what is awaiting in India to go out and get on a boat, right? So there's at least 2 month of that product stock that becomes a stock and get reinvoiced subsequently, right? So there is some amount of stock that gets carried at all times as we grow, right? That's our working capital cycle. So for periods before that, it's largely been in line with whatever is the Delta and what has gone towards that permanent stock, right? The stock, even if you're not adding for a customer, you're not doing stocking, just a transit which continues to get in it, right? So if we remove that today it's only 30,000 tonnes for this year. And off that 22,000, 23,000 would be something that's likely to be -- it's saving -- only 7,000, 8,000 tonnes would be something likely to continue. The rest is something that has to get flushed out over next 2 quarters.
And then, there is an incremental receipt, like this is an inherent business model. So if you compare this situation before 2 years or 3 years, I don't remember the exact statistic. But the number of stock points that we have added over last 2 years would be significant. So [Foreign Language] I was talking about 10, 12 stock points, today I am talking of actually 15 to 20, worldwide. What does that mean? It means, every new customer or a cluster of customers I add, I have to ensure that once we get the normal order book cycle built-in, his regular products have to be dispatched more or less just in time. And that is why we build the stocks based on his annual requirements and the orders that we are getting, correct? So as you add number of mines, you add more geographies, you add more stock points, overall stock will go up. What we are trying to say that this difference of 30,000 tonnes, at this point in time, should come down maybe to 10,000, 15,000 tonnes. You get my point? There'll be always a stock built up, because it is a function of growing continuously aggregating and growing sales volumes over a period of time will get accumulated at a higher level. It's a business model. I can't afford to have 10 manufacturing locations. You get my point?
Got it. No, sir, my only point was that so -- essentially what I'm understanding is, you are maintaining, because volumes have also gone up, you are essentially having the same 2, 2.5 in inventory, which is slightly higher because you've more sites now, and...
More sites and some of the customers after having given orders and given schedules, orders and delivery schedules. They wanted me, I can't name the customers, I'm prevented from doing it, from our confidentiality. They have given me an orders, they will say we want this much despatched in this quarter, this much in this quarter. Accordingly, we have produced, built and they have reduced -- they have not taken their offtake. They have requested us to please give hold on for some more time, we will take it a little later. I can't fight with them.
Okay. So the production level will continue at this -- the same what we're doing 70,000 plus?
Yes, yes.
Understood.Understood. Sir, just if also you could give some more color on the competitive scenario now in some of your key international markets, that would really help.
See from a competition standpoint, from a high chrome standpoint, if I look at our core grinding media and other large casting business, we really continue to remain the same 2-key player scenario ourselves and Magotteaux, correct? Now, there are many other forged players like a Molycorp or a Maxol or many other players cometal, who are currently supplying forged grinding media and other products, mainly grinding media is the main product that goes into the mining business. And our core model is to take away those -- convert those customers into high chrome on 3 key pillars. One is, of course, the cost saving, because of average are significantly lower. But as we have elaborated, that alone does not work. So the second plank on which we are working very strongly is on the benefit that we can bring on table in terms of down-process advantages, like reduced cost of other consumables and increase the recovery rate. And the third major plank on, which we have worked and successfully now working is the energy efficiency plus improved though-puts, through the EEMS mining liner solution that we are now offering. So on the back of these 3 strong pillars, we believe that we have a significant opportunity of converting a sizeable portion of the requirement, which is currently met through forged into high chrome. This is the core and that remains unchanged.
No. Sir, my question was more from the perspective that has a new player suddenly disrupted market or you see any significant pricing scenario?
Not really, no, no, no. absolutely business as usual. No absolutely business as usual. No nothing to report on that front.
The next question is from the line of [ Sameer Chadha ] from [ Rama ] International.
I just wanted to understand, if our installed capacity is 340,000, what is the max production we can reach at any point?
90%, I think, is possible.
90% is possible, all right. And out of this, what is the lining -- mining lier's capacity?
Currently, it's about 15,000 to 20,000 tonnes, but we are adding another 50,000.
The next question is from the line of Amber Singhania from Asian Markets Securities.
I just wanted to understand on the sale inventory part, when you say that the clients had given the order with their schedule, but now they are slightly deferring it, is it something that they're seeing some slowdown at their end on the production and their market side? What exactly could be the reason from their end to push it?
They have got stock in their end, which is where they are seeing we'll take a few more months to consume inventory, to start consuming from our stock -- our product.
But it's not something that they are seeing a slowdown at their end and nothing like that right?
No, no, no. Not really.
Okay. Secondly, just a clarification, I wanted to know on the capacity expansion, with the mining liners, the total capacity will go up to 490,000 or it will remain at 430,000 only?
490,000.
490,000.
490,000, right.
Yes. Yes.
And also if you can just give the debt end cash numbers as on the quarter end.
INR 151 crores is debt and the total gross cash is INR 1,348 crores.
INR 1,348 crores.
Just let me reach to it. Hang on. Hang on. Hang on. It is cash figure.[Audio Gap]
We're slightly confused whether the gross or net. We will just come back to you, because we have not reported this cash figure in this quarter.
INR 1,301 crores, gross cash. INR 1,301 crores, it is gross cash.
INR 1,301 crores?
Yes. INR 151 crores in net so INR 1,150 crores is a gross -- is our net cash.
[Operator Instructions] The next question is from the line of Ashutosh Tiwari from Equirus.
Just one more question on this. So over the last 2 years, media growth obvious come from gold. So even going ahead, and when the trend of what we're doing with miners, is it like gold will be the main driver, where you're headed as well?
Gold, no, actually for us all mineral types are important. Gold is -- has -- is a lower hanging fruit, simply because simply we're looking at a lot of engagement points with the customer with increasing through-put, increasing -- sorry, fractional recovery, reduction of cyanide consumption. Now we are talking about optimizing the mill. What we are trying to do with EEMS is applicable across all types. So we're looking at a very important iron ore customer in India, for example for doing those trials, whereas, increasing through-put over 20%, 25%. So and then also platinum is important in South America -- in South Africa. So gold, copper, iron ore, all remain equally strategic and important for us. We expect growth to come from all 3.
Okay. And secondly, so Iron ore, it is mainly used in palette plant, right?
Correct, correct, correct.
Okay. So only if when the palette plant gets better, you'll be -- you can see an impact, basically?
If it is a direct glass furnace, obviously there's no grinding required.
[Operator Instructions] The next question is from the line of Kunal Sheth from B&K Securities.
I just wanted to know if you can give us some sense on how should we look at margins over the next 2 years. Do you think there is any scope for margin going up or because you know we've been adding new clients and we are early stages of -- their mine process, their margin could be under pressure?
Yes. I'll be very honest with you, we have been repeating it again and again that we ourselves are not looking at margins. What is very important for us is that we have to be in maximum number of mines. We have to focus on this key areas of maximum conversion and maximum market share. Yes, it's a fact that our margins have been pretty steady. I think, a better way to look at it is, let's assume that we don't see something horribly going wrong down below the current develop operating margin. There is a good amount of margin expansion possibility, but over next 2 years, we are not really focused on margin expansion. Margin expansion will happen on its own. Once I have a significantly higher volume of sales and therefore more numbers of mines coming under my hold. We know for sure, that our solutions are very potent and our the kind of returns that we can give, return on investment, on transition, et cetera, and the kind of benefits that we really bring on table, I think we have all the wherewithals in our armament to become a potent player. That's all.
[Operator Instructions] The next question is from the line of [ Tarun Agarwal ] from [ Old Bridge Capital ].
Just to confirm, what is the closing stock as on 31st December?
Closing stock, I mean, we're not disclosing those figures. Please pardon our inability to share that with you and so in that granularity really.
[Operator Instructions] The next question is from the line of Amber Singhania from Asian Market Securities.
Could you give just one clarity, because I wanted to know, you mentioned about 1 case going on with you and the Magotteaux report. Is there any updates on the sale, what exactly is the status now? And what are the likelihood of the dates and timings and when we can see...
Sure, sure. Thanks for asking that question and for the benefit of all, we don't have any update. We expect to hear -- so the -- that suit is divided in 2 parts: first is, we are contacting the jurisdiction of the location outside of India, which is in London for arbitration. So that, first the jurisdiction part is going to be heard out. And we expect to hear back by March. And thereafter, the main matter should be heard. So we -- the processes looks to be a little long-drawn from here on. We'll share timelines once we ourselves have a better handle on it.
It's going to take fairly long time. Fairly long.
It should be at least 12 to 15 months from now.
Okay. And secondly with the recent tie-up with the new technology, do we see that this case problem will grow out on that? Is this tie-up is the similar kind of product, which we -- for this the case every site?
No, no, no. I think there is no tie-ups in it. This is the -- the case is a very different related to our settlements in 2000 from Magotteaux. The EEMS, I believe, you referring to our EEMS. Yes, which is a very -- it's not comparable, right. It's a royalty-based arrangement to start to it. So that's independent, it's a different product. It is mining liners that we are discussing with that.
It has absolutely nothing to do with the previous, the other case that you are referring to.
Okay. And secondly, if you can give some color about the kind of realization and profitability, the mining liners products...
With respect to current -- the profitability should be similar to our current product line.
And there also would be also similar or it could be...
No. Realization, we have casting and casting, generally, have higher realization. So the realizing should be higher than the weighted average used currently fee for a full product range.
Okay. Just trying to understand with this incremental 50,000 tonnes of banking capacity, what kind of incremental revenues you can add up...
Full utilization, we can see INR 500 crores to INR 600 crores of sales from that plant.
Okay. And this is a grinding media of 50,000 is around INR 118 [indiscernible]?
That grinding media could be INR 400 crores, I would imagine.
[Operator Instructions]
I think, we're done with the question. So thank you, everyone for joining on the call. Sanjay and I, remain available for any questions that you may have, other we'll look forward to connecting again for the fourth quarter. Thank you, have a good evening.
Thank you. Ladies and gentlemen, this concludes the 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, and have a great evening.