AIA Engineering Ltd
NSE:AIAENG
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
3 315.25
4 813.35
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
You don't have any saved screeners yet
Good evening, ladies and gentlemen. Thank you for standing by. This is Saanvi, 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 AIA Engineering management team. Please go ahead, sir.
Yes. Thank you so much. Good evening to everyone, and thank you for joining our call. Sanjay and I are here. I'm happy to take this call for the third quarter of this year, for the period ending December 2021.I will just quickly run, we have no major updates for this quarter. All our commentary remains in par with what we've done the previous last 2 quarters. I think the major highlights remain around headwinds with the supply chain-linked interruptions with containerized cargo. I think sea trade continues to be hampered and continuous interruptions in terms of global developments are keeping that trade-related pricing afloat and buoyant. It could be a quarter or 2 more before we may get relief on that account. I think the last lockdown in China on account of COVID has again brought back the situation to where it was. It had started improving, but the lockdowns on many ports have ensured that cargo is still sitting either in ships, awaiting clearances or in their ports. And it has led to jams in the second, third order.So shipping, continuous -- sea freight continues to be a headwind, not just from a cost standpoint, but also we had to reorganize our supply chain. Customers want more visibility, more stock on the ground on one side. And on the other side, when we're going in and offering a solution to replace a forged incumbent, that extra cost is becoming a challenge as far as our conversation is concerned.Nevertheless, our work around down process benefits, our development with mill linings, they continue at a great pace. And hopefully, as things settle down, we would have good news to share.In terms of -- we are very excited in terms of where the global mining industry is. Metals, like copper have a structural tailwind behind them in terms of their end-use in lots of applications around electrical vehicles and the distribution around it. And it looks like that new capacity is tough to combine. Our solutions that help miners recover more copper as well as produce and/or process more ore through our solutions of mill lining look to be a great fit with that industry situation. But that comes with the caveat around the shipping rates.The other headwind that we had over the last 3 quarters was around the galloping raw material costs. They finally seem to have stabilized, of course, at a very high rate. And again, that's in sync with the global commodity, the way they have moved. So we've been -- and the whole pass-through process has been the biggest effort as far as our sales team is concerned, and I'm happy to report that we've been able to pass through a sizable amount of these cost increases. Cost increase on account of commodity price increase; also, cost increase on account of shipping, both of that -- both of those have to come through. This quarter, we saw some amount of that come through. We hope this continues in next quarter or 2 also.From a headline number standpoint, we sold 58,000 tonnes. It was below our expectation of about 65,000, 67,000 tonnes, but we added about 15,000, 17,000 tonnes to stock on account of these longer transit times and the clearances at different ports. So a lot of our cargo is actually sitting as stranded inventory, and hopefully, that'll -- some will convert into sales next year.But for next month, 9 months, we are at par with what we did. We did about -- we'll be doing about 186,000 tonnes for 9 months, and that -- 187,000 tonnes, and that compares with a similar amount we've done in 9 months last year. This is after losing 23,000 tonnes of volume that we'd done last 9 months to our customers in South Africa and Canada. So unfortunate that event happened. But in real-time, we would have been otherwise happy to have reported at least a 25,000 tonne growth in 9 months compared to the previous 9 months.You all must have had a chance to look at our numbers, but I'll still run through a quick snapshot. Our pass-throughs every quarter are reflected in our realization per kilo, if you will -- what was INR 105 for the full fiscal year '21 was INR 121 in end of -- for the quarter -- for the first quarter. That went up to INR 126 in the second quarter, and that's INR 143 a kilo in the third quarter. So that reflects the increase in raw -- the pass-throughs. From INR 105 to INR 143, there's almost 40%, 45% pass-through in absolute terms. But when our cost -- raw material was 45 to sales. So almost 100% pass-through in raw material has come through in last 2, 3 quarters.Ferro chrome continues to be high, that's at about INR 115 to INR 120 price range versus about INR 60, INR 70 for the full year '21, INR 70, INR 75. And likewise, scrap is again at an all-time high, around INR 40 a kilo, up from INR 25, INR 30 in the previous fiscal year. So we're happy that our teams have come through and the whole proposition of pass-through has been -- has not been a difficult conversation.So top line, so we produced 67,000 -- sorry, 75,700 tonnes, and we sold 58,000 tonnes. Our top line, our revenue figure is at INR 833 crores, and that's also reflecting the increased realization. Our other operating income, which is drawback is at INR 15 crores. We've lost about equivalent amount on MEIS. We would have earned approximately INR 15 crores, INR 17 crores on MEIS, which is not there in our income at this time.Other nonoperating income includes ForEx gain of about INR 13 crores and our treasury income, the balance of about INR 28 crores of treasury income. The rest of the numbers, I think, are in line. Sequential, if you compare to second quarter, our raw material after adjusting for inventory to sales, has gone down from 45% to 38%. And that's reflecting the pass-throughs that have come in. I think, in the other expense, we've got about INR 15 crores, INR 20 crores of additional freight that we've incurred compared to the sequential second quarter. I think that was -- that's what took away additional 2%, 3% that could have accrued to us this quarter. Hopefully, those pass-throughs will come through in the next few quarters.So our EBITDA is at 23.99%, about 1.5% more than the previous quarter. And profit after tax is INR 138 crores and similar to what we did in the second quarter, and INR 425 crores for the full year. Some more of...
Nine months.
Nine months, sorry, INR 425 crores for 9 months profit after tax. From a CapEx standpoint, we'll continue to do about INR 200 crores is what we have budgeted for this year. The actual amount may be a little lower than that, but that can spill over. Broadly, the CapEx for next year, we're estimating at about INR 200 crores, INR 50 crores for the Mill Liner project, money that has to be put into capitalization. And the plant is expected to come on board, which -- March has moved to April. So we expect to commission or start the trials for the plant in April 2022 this year.We plan to add hybrid wind-solar power plant -- captive power plant, over 5.4 megawatts. That should be about INR 40 crores of investment. And we're budgeting about INR 100 crores for land and other general CapEx. So broadly, about INR 200 crores of CapEx for next year.Our net cash -- our total cash is about INR 1,988 crores, INR 1,988 crores. We've got borrowing of INR 125 crores with a net cash figure of INR 1,862 crores. That's down from INR 2,019, INR 2,019 crores end of March. A large part of that besides dividend and fixed asset investment, there is an addition of about INR 375 crores of working capital, a material part of that coming in terms of transit stock that I talked about earlier. So -- and the customers' need for more stock on ground. I think the current working capital reflects the situation. We -- it may not go up materially from here, but we've used INR 375 crores in working capital in these 9 months. And to that extent, our net cash balance remains at INR 1,862 crores.I think, that brings me to a -- from a numbers standpoint, that's -- I think, those are the material figures. From a business standpoint, I think, besides the sea -- ocean freight situation, we are much more comfortable with the raw material cost increase and the pass-throughs that have come through. We are building our organization in terms of the developing -- the market that we are strongly looking at, which is the Americas, and Africa and Australia.We continue to make investments in resources and leaders to make sure that we can cater to this growth that we are anticipating once the seas -- the ocean freight situation normalizes. Like I was explaining before, we continue to remain excited about our capabilities for down process benefits as far as chrome is concerned -- chrome grinding media is concerned, and Mill Lining solution, whereby we can improve throughputs and power consumption. And that's the same commentary that we had made in the previous quarter. We'll be happy to take questions.
Thank you. Ladies and gentlemen...
Very quickly, I had a couple of points which are very relevant according to the internal strategy, just a bit, where the company is working. So first, as Kunal explained, the redeeming feature is that a significant amount of pass-through is happening, both for the raw material as well as for the freight costs. So the operating -- pure operating EBITDA is -- all of you guys there, if you exclude other income, it's slightly better in Q3 at around 19% plus as compared to a little lower figure in the previous quarter.Second important feature. While as we speak last month, at -- this is December, was looking a little grim, globally, because of the Omicron effect. But as we speak, as on today, things look to be much more relaxed. Even worldwide, while initial knee-jerk was that some of the travel restrictions or some of the countries reacted negatively, but I think most of the countries have now understood that the effect of Omicron is more temporary or not really serious, and therefore, things should not be shut down. So hopefully, even in India, we see the reported number of cases going down dramatically in the key metros. So hopefully, this should pass much more quickly than what was initially looking to be a threat, and that's a very great relief.Directionally, we are bang on in terms of all the developmental efforts. And the fact that notwithstanding losing about 23,000 tonnes between Canada and South Africa, we're still more or less at par. [ And that ] shows that there are gains in all critical important countries which are under focus. And therefore, directionally, our medium- to long-term goals, focus, opportunity profile, everything remains the same. So I think it's just a matter of, maybe, a few more months and we should be on a much more firmer wicket in terms of how quickly we can start converting the customers, so as to give a consistent significant volume growth year-over-year.I think with this, moderator, you can open the house for Q&A.
[Operator Instructions] First question is from the line of Ravi Swaminathan from Spark Capital.
First question is with respect to the volume, so 9-month volumes have kind of been flattish for this first 9 months compared to last year's. You had to [ double ] some amount of developmental efforts that we are talking -- taking across the globe.So if you can give some more clarity on kind of are they coming out of new mines that are getting opened? New customers getting added? Or there is a possibility of existing customers giving higher volumes? And what kind of volumes we can increase, we can expect over the next -- in the next fiscal year or probably over a 2- to 3-year basis? It will be greatly great, sir.
So Ravi, next fiscal year is difficult to give a guidance on, simply because it may take at least 2 quarters for the freights to normalize, right? And there is nothing that we can do about it. But -- and so let's talk about fiscal '24 onwards. I think adding 25,000, 30,000, 35,000 tonnes a year, should be possible. All our efforts are geared towards that. So -- and that's a combination of everything. And we've discussed this enough, how it takes time. It's not right for us to say these 4 mines will give us so much because -- so we are doing much more, hoping that at least 25,000, 30,000, 35,000 tonnes of customers convert.
And just to add to what Kunal said, even we are not saying next is not going to happen. What we are saying is that we'll be able to give you a little better predictive...
So despite the worst 9 months, Ravi, we've grown 23,000 tonnes over 187,000 tonnes of volume, right, by just -- we lost that market for reasons outside our control. It is South Africa and Canada, right?
Next year, can happen...
So question is not on next year. We are very focused on growth in fiscal '23. To give our guidance is a tough one. I mean, we are not able to go out wholeheartedly simply because we know there's headwinds in terms of lower hanging fruit types of tonnage. Also, we can -- may take a little longer to convert, given the cost difference right now with the sea freight.
Got it. And that 23,000-odd tonnes, is it like a temporary loss or it can come back to...
23,000 tonnes is Canada and South Africa, the duties that came in.
Yes, so basically, I mean, is it going to be kind of a medium-term lost opportunity, organic come-back stage 2, 3 years from now?
There's a lot of variables that play over there. I mean, both markets also have a fee freight issue today. So we will address those as things as the sea freight situation improves.
Got it, sir. Got it. And in terms of margins, so basically, I mean, at one end, input costs have gone up, we are trying to pass on to customers, and both in trades have also gone up. So our margins are more in the range of 18% to 19%. Can it go back to, say, more than 20% in the next 2 years? So basically -- or is it likely to remain in the range as 18% [ premium ]?
So Ravi, there's enough history for you to model this, but we will continue with the parented response of 20%, 22% is comfort margin, and we hope to be there. It's difficult to say that when we are in the cycle of lag pass-through cycle, right? So it happened in the past, we would hope it'll happen going forward as well.
The next question is from the line of Ashutosh Tiwari from Equirus Securities.
So firstly, on this margin part, I think this quarter -- I think we should not look at the percentage margin because it's in almost like 40% realization growth, because of the if you look at percentile margin. So if you look at, probably, even INR 105 is making 25% margin, it may turn [ INR 5,000 ] per tonne. Now, let's say, even 18%, 19%, we are making almost, like, 27,000 tonnes. So I'm really surprised at this margin performance in this quarter if you look at EBITDA per tonne basis. So my question is that, is there any element of, basically, pass-through previous quarter as well in this quarter? Or this is just normalized pricing for the quarter?
No, no, there is a pass-through from the previous quarter. And the price variation formula works, pegged to -- with a lag.
No, no, no. So my question is, like, is there any pass-through which was retrospective basis also effective there? Like in the previous quarter regarding...
No, no, no. We are saying any credits we accrued -- no, no, no. This is current period, current pricing.
Okay. So if the full passthrough has not happened, and also in this quarter, volume was lower because of this whole, you said, stocking has happened. So when the volumes improved and the pass-through have been further, there is a possibility of margin growing further from here. Is that correct assessment?
We'll see the -- exactly, the pass-through cycle is in the process. We'll see over the next 2 quarters, but that's -- directionally, that's where it's headed.
So there are multiple customers where different price points, different formulas for pricing and passing through -- so it's not...
And also, different components. The freight pass-through -- the increase in freight for this quarter was not something that was budgeted, right? So -- exactly. So it's not just raw material. Power costs have gone up. Other costs have also gone up. So it's not just a 1-to-1 commodity price increase. The other costs that are also required to be passed through. So that's the effort to try and pass through as much as we can.
No, what I am thinking that despite all that non-pass-through, still the profitability, further, which is very high when compared to what we've done historically. So I'm really surprised with that. It's a very good number in mining this [ stuff ].Secondly, in terms of volumes that we have garnered in this year, 9 months. Like you said, the 23,000 has gone from Canada and South Africa. So which members are contributing to this growth this year, which are the critical...
Sorry, Ashutosh. One, more clarification regarding your margin. You see, we have always maintained that it's also a function of the product mix in a given particular quarter. So between the castings and grinding media, the product mix is more tilted towards bigger castings, then the profitability are part on -- could become higher arithmetically. You will not read everything based on just 1 quarter.That, I'm very clear. Otherwise -- but you're right. See, there are 2 things. One is the capability that both in grinding media as well as in castings, whether we have been able to pass through all the costs more -- I mean, most of the cases, therefore, the answer is yes. This particular quarter, again, castings versus grinding media, there was a little more stating in favor of castings. So -- but next quarter, again, there could be a little more testing in favor of grinding media. So maybe our an annual kind of -- around 9-month kind of averaging would give you a little better idea. That's all I wanted to add.
No, got it. That's okay. I think yes, full pass-through has not happened. So -- but on that context, we actually fall in the [ seamen ] allocated volumes versus last year. It is a bigger fall than what you saw in mining. So what day is it? Because the freight elemental stock, which is stuck at port or this is -- what are the reason negative? We saw...
No, no, no. This stock is awaiting boats. It is on the ship, but it's trends shift and it's taking longer. Or the customers looking for more stock on the ground. It's a combination of all of that.
Okay. Okay. And sir, my second question was that on this volume side, and this is what we added. Any color I can provide which vendors we have added more in this year like that 20-tonnes next...
So added the gold, copper and iron. All 3.
Okay. And -- all -- and on this corporate brand, and also, we heard, I think, a new strategy or focus for America market. So can you throw further more color on what is happening in, say, a country like Chile? How we are faring basically, or what we will do differently to increase share over there?
I think we don't want to speak too much publicly about our strategy there. I think it's for us to actually go out and work on some of that. It's a little also premature because shipping rates are against us for those markets today, right? So allow us some time to talk about it while we firm up and convert some customers in those regions.
Okay. And lastly, on the liner side, the plant will come up by March. So we should see the macro impact from there only FY '24?
Sorry, your voice broke, Ashutosh. Can you repeat?
I was saying that the liner plant has come up by March and April this year, so maximum, having even ventured as you only in FY '24?
Exactly, exactly. No. We should get some volume out of that new plant. We're already doing mill lining, in some of our existing plants, which will move to the new plant, get it up and about. Hopefully, we are able to take some volume. The mill lining conversation is linked to travel. And if people are able to travel, I think the sea freight is not as much a deterrent in the mill lining bit. But it's a question of selling the solution. Now that the plant is up and about, I think we should be -- we'll be starting our efforts, hoping travel is a little more freer in the next 2 months.
The next question is from the line of Senthil Kamaraj from ithought.
Firstly is on the medium-term time, like 3 to 5 years, what kind of volume growth that the company is saying? Like, you have said, like, FY '24 will be adding. So if you then take 3, 5 years, and you can give the growth aspirations that the company's targeting?
I think if you talk of a 3- to 5-year horizon, I think volumes should be comfortably at least double than what we are currently having.
Great. And any particular mineral you're targeting?
No, no, this is the vision. And this is the efforts with which directionally, people are working. And that is the opportunity, and that is the confidence. So these are all the factors to be taken in a broader sense.
Okay. And second question is on the capital allocation side. So as you mentioned, we have a net cash close to around INR 2,000 crores. So going forward on the dividend payout, say, can we see a much higher payout ratio going forward? Or is the company going to focus much on the growth side?
So currently, the focus continues to be on the growth, dividend payout or returning surplus cash in one or the other way has always been a question that we have faced. I think internally, we have taken a call -- the management has taken a call that until we 350,000 tonnes volumes and a little bit of more consistent growth visibility, we should have a little more comfort in keeping or carrying higher amounts of cash either for -- in case if we come across any opportunity or in case if we have to do some aggressive CapEx or suddenly, there is a little more demand in working capital.So all these 3 factors, I think it is for another 1 year. Say, till '23, '24, a more aggressive payout is not something which is on cards, to be very honest with you. At least '22 to '23 end. So we will take a call after 6 to 12 months. And then we can and we will become aggressive if required. That's not a problem. Current payout is 20%, we maintain that.
The next question is from the line of Sandeep Tulsiyan from JM Financial.
Sir, my first question is pertaining to this 36% increase in realizations, gone from INR 105 to INR 143. If we were to break the same, say, to price pass-through as well as mix change, because you said you're doing more castings or volumes in some of the countries which had lower realizations, where sales have gone off, right, how much would withe...
Sandeep, majority of our raw material price is pass-through. What Sanjay was trying to answer was with the context that it -- it's -- don't look at it sequentially quarter-to-quarter. So even for 9 months, our realized is INR 129, right? So the move from INR 105 to INR 129 is more reflective of the raw material increase than just looking at 1 quarter. That's all he was clarifying. Portion of the increase is raw material.
So the [ INR 30 ] increase, majority would be price pass-through as we have taken, right?
Volume and freight.
Raw material and freight.
And freight, got it. Second question was on freight cost. You highlighted there's a INR 20 crore increase on a sequential basis. And last quarter, you had guided about somewhere about between INR 90 crores to INR 95 crores. So is it such a big dump that about INR 110 crores in this quarter is the trade cost because then, that's -- is that number correct?
Correct. INR 110 crores?
No, no, 1 second. Sandeep, 1 second. You wanted only that was...
97% for the quarter.
For the quarter, no?
For the quarter.
So, INR 110 it is. This is correct. So you're right. Thereabouts.
Okay. Okay. And third question was on this Canada and South Africa volumes. So you had earlier guided us that last year, we did combined volumes of about 23,000, 24,000 tonnes in these 2 geographies. We did some small volumes in this year also because demand volumes are still on. So if you can guide what will be the like-for-like number that we can do with from these 2 geographies in this year. And given now you would have had some conversations with Brazil also, what we saw initially. There was a dip and then some volumes came, started coming up from that geography. What is your sense where this number can stabilize through FY '23, '24 on an annual basis?
FY '23, I don't think we'll see -- maybe -- because it's linked to freight, sea freight as well, right? Canada has -- in addition to duty, there's a sea freight that's just large for the volume that we are looking to sell in that market. I think FY '23 may not be much. FY '24, at least, we'll attempt to get back 30% of the volume. That will be our attempt for it towards the later part of FY -- second half of FY '23 and FY '24.
Got it. Also, another question is on -- you made a comment during your opening remarks that the customer conversion cost has gone up to some extent.
Customer conversion costs, I didn't understand. I'm...
You were trying to pitch a new product to our customers...
Because of the freight costs. The delta is higher, not because of the freight cost, yes. The cost is -- when get raw materials, right? On 100, the normalized rate was 10. If it's become 30 or 40, it's become a material part of my costs now, right? And something that looks to be transient. The world has not seen sustained sea freight levels at current pricing for a long time. So it is not a supply-demand issue. It is a supply chain issue and the interruption that we are having in supply chain, and we are hoping that, that should correct.I mean, we are nevertheless working so that -- because we believe our value addition is actually more than the incremental cost of freight. But when you're having a conversation, it's just in the dividend, right? The incumbent is that much less cheap, not just the price between chrome and iron, but also the differential of the sea freight that we'll have to pay now in the current price regime.
Understood. And last question is on the growth. Of course, we lost the ability in these 2 geographies, but we are still flat on a Y-o-Y basis. So which are the major countries where you are seeing higher growth, which are compensated for the volume loss in these 2 [ geographies ]?
So Americas has done well. Somebody asked us about Chile. We've started doing volume in Chile. This full year, we should do reasonable volume for copper mines over there. We're doing Australia, South Africa. Sorry, Africa is a continent that is interesting for us. So all of it, a little bit of cement pick that was there. Last year was a little bit of a dip. So a combination, actually. There's no one country or type that's led to the increase.
And lastly, just on locating on the -- that seems to have come off significantly. So what should be the assumption that we should by?
Tax will grow and wait to be a profitable tax.
The next question is from the line of Priyankar Biswas from Nomura.
My first question is regarding to the mill liners. So can you just tell me the first part is like of the INR 250 crores that was budgeted for the mill liner expansion, so how much would we have already spent in this?
So we've spent already about INR 150 crores, about INR 140 crores to INR 150 crores. I don't have a figure on the top of the head. We still have INR 50 crores to go from here on until we commission the plant.
Okay. So it's almost, like, done?
We will commission this...
Yes, please?
To get installed, right? So the part of the plant where we can start trials will happen in April, but the spend may continue beyond that.
So here is a related question. Like, it seems one of your Indian peers in the mill lining segment. So they have kind of highlighted that composite mill liners are gaining a lot of traction and market share versus middle mill liners due to some technological developments. So what is our value proposition here that from, let's say, FY '23 or even onwards, so in the next 3, 4 years that we should be able to sell our volumes and maybe, reach a 60%, 70% capacity utilization?
No, no. So in 4 years, reaching 80%, 90% is a clear plan. There's no question of it. First point, right? As in we believe that there's -- the point is that we've been working on a metal rubber composite, polymer composite for more than 5, 7 years, okay? So I mean, there are places where that composite can work. I don't think it's a proprietary technology that's not unavailable.But the point is different, because the point is where does an improvement in the metal come, it can totally help you with the wear rate, right? What does the composite do? It will help reduce the wear rate. We are not playing on that pitch at all, right? What we are saying is if you move to our design, metal liner will improve throughputs by 20%. If you're a plant producing 1 million tonnes, would you be interested in producing 0.2 million tonnes more or reduce cost, which is equal to INR 110 or INR 120 of that additional contribution you can make?
So our value proposition is mill optimization, right?
Exactly. We are doing a design intervention with the mill lining on the metal side, where we can improve throughput by 15%, 20%, we can save power by 15%, 20% and to an extent, increase, improve recovery because of the grind size distribution and all that improves.But forget that, just the throughput improvement. Why throughput improvement is important? On a technical basis, is because how else does a plant improve its throughput? If it wants to produce more, it has to set up a new line. With our mill linings, you can give them a 15%, 10%, 20% more throughput, which is -- mine more metal to that extent.There is no choice available to increase that today in the existing scheme of things as a mining company, right? So one is to be able to produce more. Second is to be able to add more contribution. Third is to reduce cost on account of power. The combination of all these 3 is 50x or 100x more than a potential wear cost benefit that a metal-to-composite can bring. And metal-to-composite is an incidental thing. Like I said, we've been working our proposal on a composite that was made 7 years back to our client.So it's not a large wage that everybody is talking about it. If there is a niche area where there could be an opportunity for it, we'll see. I mean, that's incidental to our -- to where we are at, which is a design-led intervention.
And Kunal, my second question, see, your production numbers are significantly higher than the sales. So, like, assuming some bit of normalization in, let's say, the trade situation that we have. So would it be, like, fairly reasonable to assume that in the last quarter, we may do something north of INR 75, INR 80? I mean, is it possible?
That is so difficult. I mean, we are working with so many variables, Priyankar. What we'll do in April is unknown. I mean, there are plenty of things in front of us. I think we should do well. But what number it is, I think we would not want to hazard a guess on it. It does not matter if INR 5,000. It's INR 65 or INR 75, does not change this whole commentary that we have about our business, right?
Yes, yes. But if you do something like 75%, you are actually growing. I mean, Y-o-Y, despite losing some volumes in Canada.
That is cosmetic, right? Growing 2% is not where we've invested all this effort on. We want to grow by 50,000 tonnes. Those are not [Foreign Language]. We can claim we've grown, but that does not move the needle, no?So whatever it is in the next quarter, I think directionally, sea freight normalizes is a big inflection for us to start our growth journey. I think that's how we look at it. Next quarter at 70,000 or 65,000, 75,000 notwithstanding, no?
The next question is from the line of Aditya Khandelwal from Securities Investment Managers.
I recently started tracking your company. So pardon me if my questions are a little basic. I just wanted to understand if it is possible for forged to enter any field, enter hydraulic hypermarket? Or is there some technology that you have or the way you produce that we -- that you -- you obviously went, out of auto players, play at current level? Is it possible for media peers to enter?
No, no. So okay. I mean, you asked a very fundamental question. So let me just clarify one thing. See, what we are doing today, essentially, we are now directly focused on converting customers away from forged grinding media to our high chrome grinding media. That's the entire core of our focus.So it's very obvious that what we are doing, a forging player cannot do. One, what we are doing is technically, we are manufacturing alloys, which is a casting process. All we have is, therefore, a foundry technology. Whereas a forging guy doesn't produce alloy, he uses 100% pure metal despite his...Hello?Which is then a hardened -- hello? Am I audible? Hello?
Yes, you are audible.
There were some mix up. So technically, whatever we are doing is completely different than what a forging guy is doing. We have not seen any other forging player even coming close to the solution that we are offering through a combination of either as Kunal explained, the mill lining based approach or another very important approach is the DP or the down process benefit that we believe, that our high-chrome media can offer, through reduction in the cost of this very expensive reagents like cyanide, et cetera, and improving the recovery.Improvement of recovery, particularly in metals like gold and copper plays a very significant role. And therefore, we believe that eventually, initial resistance is always there, but eventually, the customers, they do see the significant benefit that we offer on the table, and they start converting that process in that. Absolutely on 1 or 2 quarters, here and there, doesn't matter because it's not directional. It's just a temporary blip, but we believe that there is a huge market, at least a 2 million to 2.5 million tonne opportunity.And between the 2 ores that is copper and gold and plus, of course, iron, it's a very, very significant opportunity. And we think that the customers have started seeing the great benefit due to the combination of all the factors and conversion has already started to happen, and it will gain pace as we go forward.
Just a follow-up to that. I understand there are benefits of converting from forged to high, no? I just wanted to understand the production. Is there any difference in the production manufacturing of high-chrome and forged [indiscernible] at hypothetically...
Yes. It's completely different. They just happen to be the similar spherical metal ball. At the end of the day, the production processes are completely different, not comparable. One is using impact to force it into a shape, other is actually using scrap and liquid metal and then getting into a -- it's a cast product versus a forged product for the other -- incumbent.
Okay. Okay, sir, got it. One more question. Can you just give me a ballpark figure of the percentage of sales from grinding media, milling and then casting, just a ballpark figure? And what's the trend been like over the last 4, 5 years?
What is the -- what is the percentage? I mean, we've not been sharing that or disclosing that particular number. It's got other connotations with that. So you'll have to treat it as a mix right now. 187,000 tonnes that we've done, all our high chrome products for us. We're just sharing of the more grinding -- other than grinding media, realization could be different. That's all.
And what's been the trend like? And what's been the trend -- just, can you just give me a trend like, if there has been an increase in sales of mill and...
So in end of -- it is -- you don't have our product. You may have sequential, quarterly, plus and minus. But over a few years, if you look at it, it's comparable. The mix is not changing drastically.
Okay. And just one more question. In your annual report, there is consumption of stores and spares, which forms almost 8% to 10% of your costs. So what are these, added into your scrap steel and paragon prices only?
No, stores and spares are all production consumables. When you do make mold, for example, you have sand that gets used, right? So these are production consumables, and then there are these maintenance parts that gets used. So a combination of 2 gets accounted under stores and spares.
Okay, so they're not related to scrap steel and...
Raw material is under raw material. No, stores and spares is not raw material. I think that's not more than 5%. I would not imagine it's 8% to 10%.
The next question is from the line of Aashna Manaktala from ICICI Securities.
Sir, my question is related to the -- as you mentioned in the -- starting that inventory buildup has been happening largely due to the supply chain challenges that you've been facing. So is this a trend that we should be looking at going forward?
Not really. So this is specific to this quarter. I mean, until now, things look okay. But with the Omicron, with the Chinese situation coming in, we saw some interruption where it's just taking longer. I don't think this can be generalized. We may not add much more stock now. I mean, this is already a stretched supply chain. We would be surprised if it goes beyond this. For now, you can consider current working capital levels.
Okay, sir. And sir, I also wanted to understand one thing, like, in other income for stand-alone, it has gone up significantly in this quarter. And stand-alone PBT is higher than the control PBT. So would you be able to explain the reason for that?
This quarter includes dividends. See, stand-alone company, we have a step down fully, wholly owned subsidiary outside of India called Vega, Middle East, which is -- which distributes all our products outside of India. So that company passed on dividend to us, the parent company, which is AIA. So in a stand-alone AIA, that appears as a dividend income. That's why the other income looks disproportionately higher. But that normalizes when you look at the consolidated number. That gets knocked off.
Okay. So that entirely is the dividend from...
Yes.
I have one more. In terms of the volume, especially the non-mining volumes for this risk on a quarterly basis, it is trending slightly downwards. So again, is that something we should be looking into as the trend?
Not really. Not really. It's just incidental to this quarter.
Okay. So you have guided around 80,000 metric tons for the entire year in the previous call. So would you...
Yes. That would continue, yes.
The next question is from the line of Abhishek Vora from Ambit Capital.
My first question would be on the volume growth that you have guided 2 to 5 years, which are expected to double. I wanted to know what steps the company is taking? I understand, apart from the market forces and the copper, to do drills. But if you could just talk on what we, as a company, are taking steps there, that would be helpful.
Yes. So I mean, we -- to the extent of duplicating ourselves for the rest of the audience, the grinding media market is in excess of 2 million tonnes in the incumbent type, which is a port training media, right? And we believe we have a superior product, which is the chrome product. It's akin to our normal rubber tire versus a radial tire, right? There's 4G versus a 3G.This is a better technology product, which has inherent benefits along with -- that has come along with it, for a certain section of the application. If we are total chrome is under 400,000, 450,000 tonnes, there's at least another 1.5 million, 2 million tonnes that's using chrome. We believe there's another at least 0.5 million tonnes that can be converted to chrome. And we believe we are in the right place in terms of available capacity, et cetera, to take advantage of that opportunity.And where chrome brings all these benefits of being able to improve recovery of copper and gold, reduce toxic reagents consumption, and combine that with our mill lining solution, where we can offer a complete integrated offering to the customer, where they're not just buying parts, they're buying the solution. What is the solution? Being able to improve throughput, reduce power consumption, reduce wear cost of our parts, improved recovery of the ore -- the metals from the ore. So that step up from being a part supplier to a solution provider. That's where we are focused on, and we hope that at least another 0.5 million tonnes should get migrated to chrome. That's the bet that we are making. And at least half of that should come to us then.
Sure. Now Kunal, I understand the opportunity is huge here.
So that's -- from an effort standpoint, we're making sure that we are talking to as many customers as we can, right? And we've discussed this before that customers are conservative. They are not really keen to change status quo. So that's the whole journey where we're going to customers. Explaining them about the solution, talking about work that we've done with other clients, right? All these benefits that we better accrue to them. We do 265,000, our competitor does at least another 300,000 tonnes in the chrome space.Chrome was not existing 30 years back or 25 years back, right? So all that we've done, all that AIA has done over these many years, has come on account of exactly what we are required to do going forward, which is approaching a customer, demonstrating a solution, doing trials, doing proof of concepts, right, and ultimately, getting into a commercial sale thereafter. So that same process continues.We're talking -- we're doing a lot of work in terms of developing the market in Australia, Africa and Americas. That's where a large part of our market resides. And right from getting the right people on the ground, reaching out and creating relationships with customers, getting trial opportunities and so on and so forth.
Sure, sure. I get this. My second question was linked to this part where you said that we are trying to convert the clients. My question is what is actually holding the customers back? I understand the initial upfront cost is higher, but later on, the efficiencies are high. But apart from the upfront cost, if you could mention what is the ongoing feedback, what's holding them that...
It's a very, very complex ecosystem mining company runs, right? They're all in rural setup. They're away from city centers. They're used to a certain way of doing -- they're just a very conservative bunch. They're used to a status quo, right? Mining is not in a -- it's not a sunrise sector. A lot of work has been already done. So there is a lot of anxiety when a customer talks to us about, really, whether we'll develop all these efficiencies that we talk about. They're not used to a part supplier going and talking about a solution, right? It's like saying I'm a tire supplier. If you buy my tire, I'll optimize your engine, right? That's not generally expected.And that is where it starts from this general conservatism that whether all these benefits will accrue. What if I go and change something, something negative happens, right? We're talking about improving throughputs by 10%. What if it worsened by 5%. So at some point in time, it's that fear that of changing the status quo. And it's not a homogenous customer. If I'm an importer -- I'm selling financial to a U.S. financial sector, it's a [ homogenous ] crowd I'm selling to, right? I'm, like, optimized for that geography, for that culture, for that spoken instruction, et cetera. In our case, it's across the world and across ore types, right? So people are different, their expectations are different.But across the board, we run into a conservative mindset. And that works well for us, right? Because whatever we take is a sticky business. We've gone through every single imaginable tragedy in our business. And yet, we've come through, right? All these price pass-throughs have come through. And that's -- the point is our business is sticky. So it takes time, but it's sticky after that. It's sticky because of the same conservative nature help us to keep the business thereafter.
The next question is from the line of [ Pratik Karwa ] from ITI Mutual Fund.
Just one question regarding your comment on doubling of the volumes, which you had just answered. But just to extend a little further on that. Doubling in 5 years is equivalent to kind of 15% CAGR growth. As I remember, 2, 3 calls back, you had mentioned that on a regular basis, organically, 6%, 7% or 7%, 8% is the growth number, volume number that you can do very, very easily. So just to reconcile these 2 pieces of information that 7%, 8% growth versus 15% growth and 15% to double up, like, an earlier comment was 7%, 8%. So just asking whether it includes something else which I'm missing.
No, no, no. So first of all, Mr. [ Karwa ], I must clarify, I was very clear. Somebody asked me a question, where do you see after 5 years, where can you go? So just to give the idea that there is indeed an opportunity on which the company is working very hard. We said if it's a vision statement, then in 5 years, I should double.Now that does not mean that there will be a CAGR which you will calculate. And so we -- I made it clear that it is not a guidance. But look at it from a broader perspective that if I am saying that the market is about 2 million to 2.5 million tonnes, and mining is growing. And our entire focus is on these 3 or 4 roads, more particularly the 3 years, where the opportunity itself between the 3 is more than 1.5 million or 2 million tonnes, where the level of penetration is hardly 10%, 15%, 20% today. And we believe that the solution that we have is that they have extraordinary capability of conversion. That was a directional statement I made to ensure that people continue to get the same sense with which company remains excited and we are working hard.So again, I repeat, there is no such guidance that I want to give. I'm saying that is the opportunity. I'm saying that's a vision. And therefore, there is no question of reconciliation. The figure of 25,000, 30,000, 40,000 tonnes annual normalized, incremental volume is the minimum volume growth, which we believe, we should achieve once the macroeconomic and the supply chain system becomes a little more predictable and a little more normal.And that is why we said that for next year, we don't want to give any guidance, but we will wait and watch and supposing after this year or maybe in the first quarter, situation looks better and the way we want the things to move, they start moving, we can give a specific guidance.So there is -- please, sir, don't try to reconcile. That's all I'm going to say.
As there are no more questions, I would now like to hand over the conference to AIA Engineering management team for closing comments.
Thank you. Thank you. Thank you, everyone. I hope you all are safe. And as usual, Sanjay and I are available for any offline calls. Thank you. Have a great evening. Bye.
Thank you. Ladies and gentlemen, this concludes your conference for today. We thank you for your participation and for using Chorus Call conferencing services. You may please disconnect your lines now. Thank you, and have a great evening.