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Good evening, ladies and gentlemen. Thank you for standing by. This is Vikram the moderator of 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 AIA Engineering management team. Over to you, sir.
Yes. Thank you so much. A warm welcome to everyone. Thank you for joining on the call. We don't have a lot of updates on this -- for this quarter. I think, by and large, a lot of things remain comparable and similar to the last quarter. And world continues as is between when we spoke last and now. I'll be happy to walk you through a snapshot of what we did this quarter, a few highlights from a business standpoint, updates on our projects and things going forward, and we'll open up to Q&A thereafter. We're happy to report sales of 65,000 tonnes this quarter, taking the total sales for 9 months to 186,925 tonnes, almost 187,000 tonnes, which is at par with what we did 9 months last year, which is 185,000 tonnes. We produced 200,538 tonnes versus 194,361 tonnes in 9 months last year, of which 73,000 tonnes -- 730,680 tonnes was production this quarter. We've done sales per kilo is at about INR 105, and that's taken us to a revenue to sales of INR 687 crore on a consolidated basis, in line with third quarter last year, which was a INR 670 crore. Our EBITDA is at INR 221 crore, which was at INR 218.84 crore for the third quarter last year and INR 215 crore sequential second quarter of this year, with profit after tax at INR 159 crore, which is comparable to INR 156 crore in the third quarter last year and INR 143.97 crore in the sequential second quarter this year. So like I said, all these 3 quarters are broadly comparable, third quarter last year, second quarter sequentially in this year and third quarter this year. In our operating -- other operating income, we -- there is no any MEIS benefit, which is capped at, which was -- which is capped at INR 2 crores for the period September to December, and which is where there is a lower other operating income in this quarter, the third quarter as compared to sequential and third quarter last year. Moving on, there is one note in our results, wherein we've regrouped a few items from our stores consumption, which were appearing in other manufacturing expenses to raw material. The reason is on review of those items, they are material line items that form part of a bond that gets consumed when we sell our product. And for better recognizing cost of goods sold or cost of raw material consumed, we've regrouped those that there's a note on their account. Just to make it comparable. The materiality is not large, but it's just a line item that we thought to bring to everyone's attention. From an other income standpoint, our treasury income is at INR 22.58 crore for the quarter. And for the full year, that INR 79.60 crore that's comparable to INR 72.80 crore in the 9 months last year. We had some amount of NPM gains on our longer tenure investments in the first quarter and which was reflected also in that figure for 9 months. Our other income -- our foreign exchange, there's a gain of about INR 26.85 crore in the third quarter. A large part of that comes from cross-currency gains between Indian rupee and Australian dollar, Canadian dollar, ZAR, other currencies than U.S. dollars that we sell in. And those cross currencies, while Indian rupee appreciated this quarter, we had some amount of hedges, which bore a realized gain, and then there were other unrealized and realized gains on the cross currency. So the total other income, which is treasury and foreign exchange comes to INR 49.43 crore for the third quarter. We've added to raw materials. Raw material prices were completely awry last month onwards or 6 weeks -- from last 6 weeks, and we've seen a steep increase in scrap and ferrochromium prices. Some of them, it's just like we are seeing shortages in most raw materials or commodities or input materials across the world as world supply chain cranks up, we believe these are short-term movements, and we are seeing some amounts of scrap coming back to reasonable levels, and we're hoping ferrochrome follows suit as well. So it's not a -- we do not think it's a structural increase. It is just short term. A lot of that will come in the -- as it averages out in our inventory, it will come in the last quarter of this year, which is January, March and April, June. And so we accumulated stock in anticipation. And so there's an increase in raw material stock from INR 108 crores -- about INR 110 crores to INR 144 crores end of December 2020. Finished goods stock, there's a slight increase, that's again, in line with our sales. And receivable days are at about 18%. So our total working capital days is about 120, 125 at par with what we are generally -- we are -- that we do. A little bit more on tonnages. We've done 43,397 tonnes in the third quarter in mining this year. And the total for 3 -- 9 months comes to 131,000 tonnes, and that compares with 122,000 tonnes in 9 months last year. So mining, we are happy to report growth in -- on a 9-month basis. And fundamentally, also reflecting the fact that while the world markets shuts, mining operations largely continued unaffected on an ongoing basis. Our tonnage other than mining was at 21,000. And total for the 9 months is at 55,700 tonnes versus 62,900 tonnes, almost 63,000 tonnes last year, third -- 9 months last year. So there's a shortfall of about 8,000 tonnes, 9,000 tonnes in non-mining tonnage. And that's -- a good part of that is the first quarter lockdown in India, where our non-mining business in India and to a small extent outside of India got affected. So from a capacity standpoint, we continue to be at 390,000 tonnes. And our mill lining project is on track. It was expected to be commissioned by March, but there have been delays in -- we've bought equipment from European OEMs and there's delay in some of their travel-related installation plans. And I think the current target is May, but most likely by June. So we expect the commissioning of the mill lining plant by June of this year, which is first half of this calendar year. We've got INR 1,850 crores of net cash, INR 1,833 crores, which is almost at par with INR 1,847 crores end of September. So end of December, net cash is INR 1,833 crores. Our gross cash is INR 2,000 crores, INR 2,001 crores -- INR 2,019 crores and the debt of INR 185 crores with a net cash position of about INR 1,833 crores From a business standpoint, we've seen -- we've informed the stock exchanges about the action in Canada, where they are investigating the pricing of supplies that we've done to Canada in the period October 2019 to September 2020. And we are fully cooperating with that process, and the matter is sub judice. So we may not be able to disclose more than the fact that we're doing our best to make sure that fair representation or an accurate representation is being made of where we stand in vis-a-vis the market. Our grinding media expansion as it paused after COVID continues with status quo at this time. We will revisit what happens to that expansion in the next fiscal year, and we'll announce timelines and CapEx and so on as we decide on that capacity expanding details. This year, we have spent about INR 88 crores on CapEx And more than -- the budget for this quarter, since the large part of our mining line was spent or payables will hit this quarter between INR 130 crores to INR 150 crores. So we should round the year a bit between INR 200 crores and INR 230 crores of CapEx. And we'll know the final figures when we review March numbers. I think that's, by and large, all from my side. From a business standpoint, we -- there is very little travel that's possible between countries, especially for sales efforts. So we remain hamstrung by our inability -- by the inability of our engineers to travel and discuss solutions. So we're engaging a lot with our clients as far as possible through remote and digital means. But given the fact that we're making -- we are offering things that require engagement with not just decision makers, but also maintenance and other engineers and personnel at the mining plants, physical engagement and visits are very important to discuss and engage on technical solutions. And to that extent, we see that this quarter and next we may still see a reduced ability to that extent and will impact our growth or conversion efforts. Nevertheless, we'll make the most possible from whatever we can do with digital means. I think that's, by and large, an update from my side. Sanjay bhai, if you want to add a few things, and we can get on to Q&A.
Good afternoon, everyone. Thank you, Kunal. I think you have covered most of it. Just a couple of things from my side, as Kunal explained, structurally, there is absolutely no change in our business direction, efforts, growth target initiatives. The down process initiative continues with tremendous focus unfortunately restrained with the traveling restrictions that we are facing. At India level, mercifully, since COVID-19 seems to be very much under control as we speak touch wood, but globally, travel restrictions fear, North America, Europe, Latin America is very, very difficult to travel. From an opportunity standpoint, the opportunity remains the same. As Kunal explained, we are trying our level best to do whatever we can. We're trying to train our people, keep our forces ready, try to engage the clients as much as possible remotely. But the fact remains that predominantly the developmental efforts have -- development of new mines, new conversions are still suffering. We were hopeful that by Q3, situation should be clearer. I think by Q4 end, we feel that with the vaccination now getting momentum everywhere in the world, if travel starts from Q1 of next year, things should start accelerating. But as we speak, our efforts are on to try to optimize by best possible way. And structurally and fundamentally, the opportunity landscape remains the same. In fact, we are feeling more and more confident given the extraordinary results that we are getting on some DP-related endeavors and some other endeavors that we are on to. But as I said, severely constrained. So it will take a little bit of time to translate into growth through new conversion volumes, point number one. Point number two, short-term headwinds. Kunal did speak about extremely sharp increase in the raw material prices, particularly ferrochrome and scrap over the last 1 month. We believe it should be cyclical and it should pass away, but we'll have to wait and see whether structurally we are required to make price adjustment in the near term. But that's something that we have to see. MEIS although the new RoDTEP has been -- the government has declared the scheme. The rates have not been declared and therefore we have to wait and watch. But overall, I think nothing further to report beyond the fact, as I explained in brief, and with detailed elaborate presentation made by Kunal. So over to the Q&A for ...
I'll just add, since Sanjay bhai mentioned the headwinds, shipping rates are also awry as everyone knows. And the rupee is at a level that's a little bit strengthened, but strengthening beyond the level that we thought it'd be good. So I mean that those are things that ...
But those are near terms. So one must not get...
Reverse to mean is the [indiscernible]
Yes. Yes. Over to you, moderator, for the Q&A.
[Operator Instructions] We have the first question from the line of Sujit (sic) [ Sumit ] Jain from ASK Investment Managers.
Complements on a decent set of numbers. The quarter has been challenging, as you explained. We have discussed in the past the challenges in the business, including the increasing productionism. And as you've spoken about Canada, I just have 2 quick questions on that. What is the duty currently that is there in Brazil, is it still the same? What is the outlook there? Because we are losing 20,000, 25,000 tonnes kind of volume per annum there. Is there a duty that Canada is imposing? What is the effort that the company can take in these geographies to actually talk to various government authorities and to switch this situation, so that this volume can come back? And one last quick question is that we have still been able to grow 1-odd percent in terms of 9-month volume. Our competition is located in all these locations, whereas we export from India. If you can give some sense how their volumes have played out in these 9 months.
Thank you, Sujit (sic) [ Sumit ] bhai. There are too many questions rolled into one quick question. All right. I'll try and attempt each one, one by one. So Brazil is at 11.8% duty. The customer there bought from us even at interim duty of 36%. So I don't think it is really a question of duty. Like we've been talking about there is -- we've been asked to not speak about customers on a public forum and which is why I restrain from using means or other things. But I mean there are other reasons why we believe that the volumes not coming to us, and it may not be linked to just the duty percent. Most customers prefer to have 2 vendors. Dependent on 1 vendor in any business for any company is not the right -- it's not the most effective means. And we have seen more often than not that such dependencies ultimately come to roost. So which is where I think that volume should come back. When does it come back is the question. So more than the duty, I think it is other efforts that we need to make and see how do we recoup that. We remain optimist, I remain optimist about getting some volume back from that market.
And is there hope in FY '22? Is there a hope in FY '22 we can get some of that back?
I mean, see, we are in the business, right? I mean our job is to be optimistic about it. And we believe that because it's -- we're not standing in queue with 5 vendors, right, along with 5 vendors. I mean for any customer to go out and say that we'll buy only from 1 vendor, that just doesn't make sense. So difficult to opine. This is just my personal view. I mean there is no data points to suggest whether '22 it will come or '23 or this year, calendar '21. But we are making our efforts to try and do the best we can. And if that doesn't happen, there is enough other market for us to grow. So I mean we are not getting hung up about trying to get that particular business. This is -- volume can sometimes go, right? I mean we generally keep whatever business we get for a long, long time. I mean sometimes there are exceptions to that, and we hope that we can correct that soon. From a Canada standpoint, there is no duty as we speak. There is a likelihood of a interim duty like they had in Brazil, there could be a higher figure. But we don't know what that figure -- what ultimately can -- will be applied. Sometimes between middle of March to end of April, in that window, there's an estimate for interim duty to come in and sometime in June, or by middle of July, you'll have the final assessment done on whether a duty is to be levied on it. And we are making all efforts, cooperating with the department there and making sure that the outcome is representative of all our -- of what we're trying to do with the market. So the matter being sub judiced, we may not be able to discuss more. Your question is that what else can we do in such markets? I mean there is -- that's a question that has, I mean, difficult to answer. My big picture answer is when you're talking about 2 million tonne market that is not located in 1 or 2 countries, right? I mean the beauty of what we're trying to do is that market spread across 20, 25 countries and at least 10 or 12 large mining producing countries. So these are things that we'll have to take in our stride, right? As we grow, there will be things that stall our growth or stall our progress. So I think as long as our -- efficacy of a solution is there, as long as there is value that we add to the customer that is disproportionate to the cost that you are spending on us, I think the market and the opportunity for us will remain. So whether a negative outcome on one of these things may put us back by a year at best, or 6 months at best. But our future is not linked to just 1 market or a few customers. So that's the way we look at it, saying yes, it has -- we'll have to keep moving, marching forward.
And you have sent more competition volumes, man.
They do report. Competition you mean Magotteaux?
Yes.
Yes, yes.
They report data with their non high-chrome grinding media as well. I think their volumes are at par or a little lower than what they did in the previous period. I don't recall the exact numbers or maybe there's a slight growth. But I think we have ...
Your understanding of HCG and volumes.
No, they don't report that. So it will be difficult to say exactly what the figure would have been.
We have next question from the line of Ravi Swaminathan from Spark Capital.
Sir, just wanted to dwell up on the input cost increase a bit more. You had talked about it in length. Assume that the input costs remain at the same level, so what could be the potential price increase that we might need to take on a blended basis to kind of offset it? That is first. And my second question is with international freight skyrocketing, and we are trying to reach far off places like Latin America, et cetera. With competitors having their own facility in those countries, will it kind of slightly impact our competitiveness a bit in the medium term? So this is the second question. And my last question is with respect to that mentioned that you had made on cement demand recovery from the cement sector, so I mean this is the first time I believe you had mentioned a recovery from the cement side. So what kind of growth can we look at in the cement side? So these are my questions.
Thank you, Ravi. So I think raw -- like I said, raw material and shipping costs are both responding to an abrupt increase in demand. And that is true for supply chains across industries, right? You're seeing a lot of carmakers reducing production because chip availability is not there and chip pricing having gone up because of that. I think most supply chains are getting restored. I don't think shipping is in short supply. It's just that it was taken out of play because of the drastic cut in demand. And it's just the time it takes for things to crank up. We expect a lot of that things to reverse back to mean soon. That's our view today. So it'll be a little premature to go out and factor saying here is the price increase, here is what is required. As you have seen over many years, over many cycles, if there is a price increase, the business has enough strength to recover or pass through some of those costs. So really, we are not -- we would like the volatility to end before saying that if that space -- if any of those cost structures become a little longer tenure, then we will pass them through. So clearly, we will be not sitting on those price increases. There'll a period for that pass-through and we'll have to live with it. So that applies to raw material and shipping. Your third question was about cement. I did not say it's a recovery. We've just been -- in the first quarter, cement, at least in India, were clearly curtailed because of lockdown. And a few cement plants outside of India. I'm just saying we're seeing a recovery, but some of those are coming back in action. I mean, growth is something that I mean in cement segment is whatever comes -- whatever growth will happen it will come our way. I don't think we are really nitpicking the number of what that growth could be in cement, right? Most of our growth today is centered around mining, what happens to the mining sector. And cement is largely -- whatever happens with the market we'll stay and float with it.
We have the next question from the line of Renjith Sivaram from ICICI Securities.
Congrats on good set of numbers given the overall headwind. Sir, one thing I just wanted to get a quick outlook on that you have indicated by next first half we should start our mill liner facility. So what kind of utilization are you looking at? And given these travel restrictions, will there be a challenge in terms of filling those factories? How do you see that? When will you see the real revenue start to kick in from that mill liner or is there any challenges there? If you can quickly update us on that mill liner facility and your outlook on that?
Yes. Thanks, Renjith. So I think a fair question. We never plan for this to be utilized in 1 year or 2 -- we've always projected this to take 4 years before reaching optimal utilization. So even at 10,000 or 15,000 tonnes in the first year was -- would have been our normal target. I think we shouldn't be too far away from that from the -- for the first 12 months after it gets commissioned, I mean, we would hope to do not much, but at least that volume that we've anyways planned for it.
Okay. So by FY '22, we should start to see kind of utilization being ...
We just have to see some production from that plant. What levels, of course, is dependent on a lot of variables. But I mean we have anyway not set a very high target, saying we have to use it 50% in the first year, right? So I mean it'll happen in that line that in that 4-year period, we'll see scale up happening in that plant. Maybe a few quarters here and there, but nothing -- we don't expect it to be significantly -- I mean, to not be commissioned for 12 months, for example.
And you have done INR 88 crores of CapEx till date and you're -- I think you were targeting INR 250 crores. That means INR 170 crore in Q4. So is that a number which is achievable or you feel like ...
Wind turbines so that should be released this month in by March, latest by April, but we hope to do it by March. And at least INR 130 crores, INR 140 crores of mill lining plant. A lot of payables and other things are due this quarter. So we expect to do a large chunk of what we just said in this quarter. Some may spill, so there could be a spillover between here and we're talking broadly in the next 3, 4 months, that chunk of money that we estimate to use.
Okay. And sir, last one, on the price increases which we are planning, because we are already 1.5 months into the fourth quarter. So how do you see this realization panning out because the commodity prices are up? So when do you plan to take these decisions and [indiscernible] whatever you can share in terms of the price realization [indiscernible].
Pricing is a constant conversation with the customer. But how do you deal with pricing when prices are very erratic, right? When prices are going up, we started all the conversations. But by the time it can crystallize, we're seeing some level of retrenchment back towards mean prices. So I mean, as prices stabilize, it's a natural conversation that will come up. Raw material is never sitting as cost, any increases or decreases do not sit on our profit and loss. It's a pass-through and pass-through takes a few quarters. So if this stays, I mean this will be a natural conversation on a pass-through. But the point is that they went up and when we're seeing some amount of easing at least in scrap, we hope that ferrochrome corrects as well. It's little too early to opine right now, but it will happen in its due course. We're just waiting to watch which way it goes. If things -- if prices were to correct 20%, 25%, we don't want to go out and engage in those conversations. But that will happen naturally in any case.
[Operator Instructions] We have the next question from the line of Bhoomika Nair from DAM Capital.
Yes, sir. Sir, just wanted to understand, you said about new client conversion as travel is getting restricted, does that mean that as we move into FY '22, the new client conversion gets restricted and growth, to some extent, for FY '20 to gets impacted?
So Bhoomika, your point is valid, but very honestly, we are trying to make a lot of assumptions. We are -- so first assumption is that by March or maybe first quarter, lot of vaccination would have happened. And therefore -- we ourselves, as we speak, we are not allowing our people to travel unless and until the vaccination program really makes people comfortable. Same is the problem with the clients also. However, I think it would be not incorrect to guess that assuming that things normalize by Q1 next year, we should be able to accelerate the pace of development, which is practically been stagnated for a major part of the current year, current fiscal FY 2021. Nevertheless, as Kunal explained, there are a lot of efforts we are trying to make offline to see that at least that tempo continues. But real fructification will happen only next year. Very honestly, difficult to hazard a guess today, except for a very positive hope that by Q1 next year, we should have a much better clarity.
So in case we've started travel, say, from Q2, Q3 onwards. Then would it be fair to say that we should be back to our growth trajectory and we should -- given that we've already engaged on an offline manner, that second half growth comes back and we're able to convert quickly? Or does it...
Bhoomika, I'm preempting your question. Your question is that what will happen to next year volume. Am I right?
Right. Yes, sir.
So just to be very honest, while our endeavor will be to see that we can be back to momentum. It is very difficult for us to give you any indication as of now. Of course, the target -- the opportunity landscape, if you see, with the -- given the efforts that we have already put in and the efforts, particularly the excellent results that we are getting just prior to pre-COVID. And then the fact that there is a stagnation in that effort. Once those momentum is picked again, those incremental volume is bound to come. However, having said that, it is extremely difficult for me to give you a very convincing answer that yes, this much volume growth is bound to happen next year. You get my point?So please wait for a while. I don't want to hazard -- we don't want to hazard a guess. What we are trying, we are -- as you can see, we are trying our level best to ensure that the current levels are maintained and our existing customers are all very -- kept well satisfied. Having said that, I'm very clear that once things are normal, we will try our level best to accelerate. But how much? What? How much? Which year? Which quarter? As of now, we don't want to hazard a guess.
Sure. Sure. And so -- but obviously, sir, I understand that FY '22 is a challenge in terms of hazarding a guess, whether it's what kind of a growth and when it comes back. But fair to say that then it should come back with a fairly strong number in terms of -- in FY '23, by when things would be absolutely normal and things would be back on track in a bewitched manner plus the line -- mill liner would be operational, et cetera.
Bhoomika, strategically, as I said, assuming that by June of this year, this calendar year, if we see everything back to normal, then another 6 to 9 months, and we should be on track for getting a regular conversion cycle in place. So if that assumption holds good, I don't see any reason why we should not be on a growth track as per our long-term plan from '22, '23. However, having said that, I don't want even to say -- make any statement today, even about '21, '22. Let us wait. Let us not assume that, yes, it is going to happen, or no, it is not going to happen. Let us just wait.
Got it. Sir, on Canada, are we supplying? While, obviously, June is when we will see the outcome and whatever due course beyond that, but till June will we be supplying volumes there? Or does that -- has the volume stopped?
The interim duties are expected end of March. So that depends on what the outcome of that interim duty is. If that amount is there, if it's a sizable amount, then obviously, because that's a cost for the customer, right? So that I think that once the interim duty is announced, we'll know a little better on how to deal with further supply there.
And in terms of -- while we're not taking price hikes right now given that there's been a sharp jump in, hopefully, it kind of settles down at some level, but do we have inventory for the next 1 or 2 months to kind of take care of the sharp hike?
Yes, we've got -- this is what I explain, no? There's an increase in raw materials. But I mean ferrochrome still not come down, right? Scrap is a bit, but situation is volatile on a day-to-day basis, Bhoomika. So really, I don't -- let's not draw a conclusion out of it in which -- in terms of the supply chain wheels cranking up. I think by end of March, we'll have a better idea on whether things are price increases are sticking on, are they reversing to the mean. We have stocked a little bit of stock, but may not be enough to last a really long period, right? I mean that's -- we can only stock so much.
We have next question from the line of Ashutosh Tiwari from Equirus Securities.
So firstly, on this Canada thing because interim duty will probably be announced in Feb if it comes through. So are we seeing a trend where customers are really stocking before the duty or there is no such thing?
So customers -- I mean, the conversations are going on, what happens to supply in the event that the duty is there. I think there will be an interruption in supply for a small period.
No. No, sir. My question is that, let's say, if there's any chance of duty coming through in Feb, I mean maybe customers can prepone buying to avoid the duty when it comes through. So is that trend visible in January and all, if you know about it?
We don't have any time for that, Ashutosh. I mean it takes 45 to 50 days. The transit process is long, right, the clearance and everything and so on.
Okay. Okay. I got it. And secondly, on this, obviously, if you have to initiate a new discussion with the client, obviously, then basically travel is very important. But in terms of engagements which are there earlier and which we are now doing virtually, is there like in last 9 months, have you got orders basically based on where agreements was going on early -- from earlier?
Existing customers.
It's only existing customers.
Existing customers, Ashutosh. Without any interruption.
No. No, I'm saying that, like say, if we started with the customer engagement in terms of trial and all so is that convergence of trial to actual I mean the permanent customer is that -- has that happened over the last 9 months or that is also not happening?
Not really. Not really. It goes through a lot of process, there's interaction and engagement, there's interest. But even to close matter requires interaction. I mean that -- it's just the customers are hesitant in just doing a virtual conclusion on the issue.
And sir, lastly, what was the USD-INR rate for the quarter? I missed if you had said earlier.
It's around INR 73 -- I don't have the exact figure in front of me, but around INR 73. I'll come back to that.
We have next question from the line of [ Pratik Agarwal ] from ITI Mutual Fund.
Just one basic question that I have is that in your mining volumes, is it possible to give a breakup into gold, silver or copper? Which are the drivers for your volume? And just in the long-term scenario, any 1 or 2 major drivers for your volume growth So basically, the context is from where I'm coming from is that domestically, you have around 25%, 30% of sales, and the government is going for PLI scheme, which will be boosting up electronic manufacturing that requires gold and copper wiring. So just overall, if you can help me understand which of the metals are a better driver for you in the long run. Just a comparative understanding not -- maybe not exact numbers, but comparative understanding and a basic breakup of gold, silver, copper in your mining volumes.
One small correction: There's nothing really about silver. It is gold, copper, iron and platinum. That's the 4 major ores that drive our business. Platinum is a very small concentrated I would say insignificant over a medium- to long-term volumes, so we mainly talk of gold, copper and iron. While we don't share the exact details for obvious reasons, it's a matter of our internal strategy, but very broadly, All the 3 are equally important for us. So it's not that we are only focusing on 1 or 2 but yes, from a medium- to long-term strategy, we believe that between these 3 key ores, at least about a couple of million tonnes of opportunity exists, 1.5 million to 2 million tonnes, out of which still about 15%, 20% all is converted. So there is a significant headroom for conversion. The challenges, as we have told you in the past on several occasions are many. A, it is an extremely long and arduous process. It involves tremendous engagement at the client side for a very, very significant portion of the process time. So it might take 1 year, 1.5 years for us to convert, so to say, a customer from a conventional that is to say in most of the cases, forged media or any other type of liner designed into our grinding media, which is HCM, high-chrome grinding media, and our liners, which are again, very, very specialized design liners based on the technology that we have with that American company now as we speak. So over this opportunity landscape, our efforts are focused on 2 or 3 key drivers. One is that if as compared to forged, the high chrome -- that is the chrome factor is extremely evident so they're pure cost savings on conversion because of significant drop in wear rates and therefore significant drop in consumption. That is one major driver in which we started. Now as we have spoken over the last 3, 4 years, we have also developed 2 very strong weapons, so to say, in our armory. So one is the DP advantage or the down process time advantage, which technically improve the recoveries. And therefore, it also reduces the consumption of certain toxic reagents like cyanide, et cetera, which makes the process a little more environmental friendly. Initially, we had a lot of problems in circumventing or overcoming the difficulties of validating our claims, but over the last couple of years, we have made extremely good progress in terms of training our people, creating that required infrastructure worldwide to attack on this as an opportunity. And naturally, as a natural fallout, copper and gold seem to be a little more prone to demonstrate the benefit. However, iron equally is good. So it will be incorrect to say that the focus is only on copper and gold as a driver from a DP standpoint. And then as we have spoken, it is the special mill lining design, as energy-efficient mill solutions tie-up that we have done with that American company, which significantly increases the throughput, reduces the power cost, make the whole grinding circuit sufficient. So these are the key 3 drivers, the cost, the efficiencies of grinding circuits through our mill lining designs and the DP advantage with which we were in the pre-COVID completely geared to take this conversion to the normal regular level of growth. And that remains as we speak. So I think between these 3 ores, there's a very big opportunity, a lot of headroom available. It would be unfair to say that only 1 or 2 drive, all the 3 drives. It all depends on the type of the mine. Each mine is separate, each mining conditions are separate. So multifarious factors, which will then make us decide which one to concentrate on.
[Operator Instructions] We have next question from the line of Ashwani Sharma from Anand Rathi.
Congratulations to the team for the good set of numbers. Firstly, just to see our quarterly trend, I think fourth quarter has been strong based on volume growth. So you did have newbuild to the near term [indiscernible] and the other. So I just wanted to say can there be flat volumes on a full year basis or you expect some low single-digit growth in FY '21?
FY '21, I think we should scramble to last year's volumes. Maybe a little bit of plus/minus 5,000.
Okay. And secondly, sir, if you can tell us on Canada, what has been -- how much Canada contributed it items in terms of volumes for our exports for the last few years?
Sorry, we couldn't get you. So can you repeat your last question?
How much Canada contributes to our export volumes?
We do about 25,000 tonnes to Canada.
We have next question from the line of Amber Singhania from AMSEC.
Just one question from my side on the mill liner side, the new capacities which we are putting up. If you can just give some color about the realization part on this kind of product, sir. What kind of EBITDA generally these kind of products command? And what kind of tonnage we can expect on an annual basis from this product once it starts in FY '22? So can you expect around 15,000, 20,000 kind of tonnage in the first year itself? I understand you had mentioned earlier, that it'll get fully utilized in 4-year time. But incrementally, what kind of tonnage we can expect in year 1, 2 and so on?
I think it will be difficult to tell you what will happen every year. So I think we'll stick with the original response that we plan to go to optimal utilization in 4 years' time. From a selling price standpoint, I think again, there are different alloys that it gets made in. But it is in line with what the rest of the other non-grinding media business that we have. So there is no -- the pricing is not significantly or materially different from the rest of the business. And margins, I think, across products, we don't have a -- they are -- the process of making a mill liner is far longer. The cost is more. We've to make custom design, we need to make wooden patterns. And then there is the production cycle that could be anywhere between 4 to 6 weeks or 8 weeks. So net-net, we make a little more margin. But obviously, the cost and the work to do it is also more, right? So I think margin on a gross level would be comparable to the rest of the business.
And on the realization part, what I understood earlier was the realization is far higher at around INR 250-odd for these kind of things...
No. No, it is not so high. It's situated between -- it's not so high. It'll be lower than that.
And secondly, just I missed the CapEx part. After mill liner, we are going ahead with the grinding media capacity expansion, right? Or that is on hold at present?
So after COVID hit, we've put a pause on that expansion. I think that we'll -- the Board is going to revisit what to do with it in next financial year. So I think the plan is on. Question is when do we do it. And as soon as things stabilize, as you know, we've been -- because of the restraints on travel or constrained on travel, we are -- as that stabilizes with us, we'll make sure that our expansion is also put back on track.
So what sort of CapEx we should factor in that case?
For the grinding media?
Yes, for the overall cost in FY '22.
So grinding media, we should be about INR 250 crores. This fiscal -- the budget was INR 250 crores, it will go a little lower than that. And so whatever is deficit will fall into next year. Our maintenance CapEx is approximately INR 50 crores and plus whatever we spend on the grinding media plant. So that will be the -- broadly the outlay in next 18 to 24 months.
But I think next year, the whole INR 250 crores -- so this year, as Kunal explained, we will be closer to INR 220 crores, INR 230 crores. Let us see, what is the last quarter. Next year, I think anywhere between around INR 200 crores, that's INR 150 crores to INR 200 crores is what. But that, again, will depend on the decision about the second phase of grinding with the expansion that we will take.
Okay. Fine. And lastly, Sanjay bhai, if I may squeeze in one question. There's a lot of focus towards now from the government side towards Atmanirbhar Bharat as well as pushing towards export-oriented units and all. We do have more than 80%, 85% of the business coming in from the exports per se. Do you see any scope for our kind of products or our kind of companies wherein you we can get something incremental from the government incentives which are on the offering or on the planning, sir? Is there anything you can expect in the future from government side?
No, no. In fact, we, as a matter of policy, want to be completely agnostic. And we are always positioned as a global company. And we're looking at whole world as the markets rather than -- so if as a fallout of Atmanirbhar Bharat, if the steel production goes up and if the pelletizing goes up, and if the -- so it might have a marginal impact of -- or if cement goes up. So we are doing some 18,000-odd thousand tonnes in cement in India. So it might go up to maybe another couple of thousand tonnes. So my point is mining may go up to maybe about another 4,000 -- few thousand tonnes here and there. The crux is that globally, if you look at the bigger scheme of things, there's a 2.5 million to 3 million tonne opportunity worldwide, whichever is the level of penetration. We are that way, very, very insignificant. And globally, if you look at cement, around 70,000-odd tonnes of supply that continue, including 18,000, 20-000 thousand tonnes in India and 45,000, 50,000 tonnes outside India. That also is not likely to really grow or grow at a very, very snail pace. So I don't think Atmanirbhar can really make a big impact nor anything relating to government can actually -- it's frankly not forming part of any of our strategy at all.
We have next question from the line of Anupam Gupta from IIFL.
I had a few questions. So firstly, on Canada, just to clarify, right now, the volumes are ongoing, right, 25,000 tonnes annually that run rate continues in this quarter as well, right?
Correct.
And then the -- let's say, when the duty comes in March and April, if it comes. So broadly, you'll see a quarter or 2 quarters sort of a disruption to supply if that happens?
Correct.
Okay. Secondly, on the margins...
So what duty comes. So today I mentioned to hazard a guess is actually not correct. But yes, as a potential negative fallout, yes, disruption is possible.
Right, right. Understand. Secondly, sir, on RoDTEP what are -- what is your sense on how much of that will be permanently lost and how much will come through in RoDTEP as per your discussion going forward?
I wish Sanjay knew Ms. Sitharaman, then he could have answered that.
No. The fact of the matter is that government has not yet come out with any rates. So it's all a matter of hope. [Foreign Language] At least let's try to be as close to ...
We made our submission in terms of what is that non [indiscernible] component of different taxes that we are paying. And -- but that has to be backed in to the budget that the government has, right? So basically, it's just anybody's guess today.
Okay. Okay. Go. So -- and till that happens, the current quarter run rate is what should be the number that should continue, I believe.
That is exactly. That is the -- exactly. So there is no MEIS this quarter. No, there is INR 2 crores. Yes, yes.
INR 2 crores per quarter.
Right. Right. Okay. And just lastly, on margin. ..
Correction. INR 2 crores per quarter.
It was up to December -- from September to December from this -- so what you have seen in this quarter it will reduce by about INR 1.70 crores, what was third quarter contribution.
Okay. Okay. Okay. Understand. And sir, lastly, on margin. So keep the raw material inflation at one side. But just from the mix perspective, is there a benefit which you have seen in the last 2 quarters because of the non-mining going slightly faster than mining? Because if you see this quarter, mining has grown by 5%, non-mining volumes have grown by 14%. So is that the reason why your margins have also been supported and that should normalize a bit? Is that correct?
Not really, not really, not really. It's far more complex than that. No, no, no. I think it's a combination of a lot of factors and...
So we can't control that. It's not easy to control that.
We can't draw any conclusion to simplify that much.
We have next question from the line of Sujit sic [ Sumit ] Jain from ASK Investment Managers.
You said is that there will be first interim duty and then there will be a final duty. If I -- if we remember it correctly, Brazil, the interim duty was higher and final duty was lower, correct?
So Brazil, the interim duty was, I think, 36%. And then the final duty was around 11.8% or something, yes, much lower.
Okay. And of course, nobody can guess as to what will happen in Canada. But typically, you see that kind of thing can happen in Canada as well?
It is a sub judice matter, sir. So I mean, we've been advised to just -- difficult to share information beyond that.
Just to add one very quick thing. You see, we are a global company, as Kunal explained. We supply in mining 30, 40 countries, cement is 120 countries. This is -- this one or the other way, somewhere, something is bound to happen. From a very, very broader perspective as a matter of global derisking, the more broader your spread, this kind of short-term hiccups, we can easily take them in our stride. So I think beyond a point, we should not overtly worry about it.
Any other country where you see this kind of protectionism is spreading beyond these 2?
Antidumping? No.
Okay. And then coming back to Brazil, as you've explained, the duty is not a problem because the customer has stayed as high as 36%. So then where is the problem lying? Because if you can get that 20,000, 25,000 tonne volume back, then FY '22, you'll grow at a nice rate.
I agree, sir. But 1 plus 1 sometimes is not 2. I mean, we -- there's a large part of the volume generally that we keep. There are things that we cannot be sharing on a public platform. I mean, that's just a natural sales cycle, right? And all -- like I told you before, like Sanjay bhai explained, the market is far larger. We have to be ready that some part of the business goes. And that's a continuous churn that will happen, right? So we are not, I think, getting bogged down by that one event. Like I told you, we are hopeful that some part of that business should come back in what form, shape. I mean, see, customers are free to change their view about things, to change how they place allocations. Some customers want to place half the volume to -- if there are 2 -- compared 2 vendors, they'll place half and half to each. Some people will say I'll go full to 1 customer. And that also changes over a period of time. So all we are saying is don't read into it beyond the fact that we've lost some volume. There was also other issues related to that customer. It's a big picture, it is not a straightforward, something that the volume got lost, and you have to get it back. We are making our efforts. There's no reason why we should not get a decent volume on it. We'll just have to keep making efforts to try and recover some part of it.
And one last quick question. Does it make sense to have minimal sales marketing teams abroad? This company has obviously operated and at very good margins, having client locations and as well as staff traveling from here to there for business development. But looking at COVID, looking at some of the government actions, does it not make sense at least for key geographies like, let's say, for example, a bigger market like South Africa, Brazil, Australia, you could keep some staff there? And then, therefore, this issue...
No. No, staff is already there Sujit (sic) [ Sumit ] bhai. I think -- we cannot do this business sitting out of this office here. We have local presence ...
I'm asking local presence there of marketing engineers?
Marketing in local, we have people in Brazil who are taking care of that business or most geographies that we operate out of.
And you are saying they are not allowed to travel locally as well currently.
Exactly. Customers are not -- so what happens is either we've got people in that country or we've got people in a cluster, whereby they service a few countries nearby, right? What's happening is that these people are scared to travel, they've got restrictions in those local countries and customers are not having their staff at the plant side. Most customers are operating with skeletal staff, okay? So it's a combination of all of that. Even if there was a -- someone who's saying I'll travel, take the risk, but the customer also needs to be ready to come meet you on the plant side, right?
Yes. Yes.
So as soon as all of that will ease and start off at the same time. And that's when will that -- when will the world get vaccinated and things start improving, is something that we are very, very keenly watching and following, hoping that it eases up soon.
Sure. So all the best to you, and we are hopeful that this is a very entrepreneurial company, and you'll be able to resolve Brazil because some time has passed, and that will put us back on the track.
We'll try our test for it.
Thank you, sir. As there are no further questions from the participants, I would now like to hand the conference over to the AIA Engineering management team. Sir, over to you.
Thank you so much, everyone, for joining. Sanjay bhai and I are available for any questions, follow-up questions. And otherwise, we look forward to seeing you after the fourth quarter. Thank you, and have a great day.
Thank you very much, sir.