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APL Apollo Tubes Ltd
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Ladies and gentlemen, good day, and welcome to the Q1 FY '23 Earnings Conference Call of APL Apollo Tubes Limited, hosted by Spark Capital Advisors India Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Sundar from Spark Capital. Thank you and over to you, sir.
Thank you, Jacob. Hello, everyone. On behalf of Spark Capital, we welcome you to APL Apollo's 1Q FY '23 earnings call. From the management side today, we have with us Mr. Sanjay Gupta, Chairman and Managing Director; Mr. Deepak Goyal, Chief Financial Officer; Mr. Arun Agarwal, Chief Operating Officer; and Mr. Anubhav Gupta, the Chief Strategy Officer.
Thank you and over to you, sir, for your opening remarks.
Thanks, Sundar. Thanks, Spark Capital, for hosting us for our Q1 FY '23 earnings call. I welcome everyone on this call. Thank you for dropping by.
Q1 FY '23 was a mixed quarter, with volume falling short of expectations. The uncertainty for business environment remained very high, as you do see volatility in global commodity prices. And steel was no different product, which collapsed 13% in Q1 and then further 10% in month of July.
The volume for our company was a bit way off because there was massive destocking which happened in the channel. As the prices are falling, our channel partners, our distributors, our clients, they were -- they had started to destock and they started working on minimum inventory levels.
We believe that, almost 60,000 tons of sales volume was lost last quarter. However, we expect this to recover in coming quarters when the prices will stabilize and the channels will start restocking. We had demonstrated the similar performance in second half of FY '22, when the Q3 volumes suffered due to destocking, but Q4 we came out with highest ever numbers of 552,000 ton of sales volume.
Despite low sales volume, our performance in terms of profitability was quite good. And one of the worst quarters for the steel sector, when the prices collapsed so much, we could maintain the lower range of our EBITDA per ton guidance which is INR 4,500 per ton. In the long term, we believe the deferred correction is very good, as a gap for a low-grade tube versus our tube is narrowing down and moreover our products are competing or taking market share from conventional construction products like, both the TMT bar or rebar and light structural. So our competitiveness will improve and this will help us increase our volumes aggressively in the coming months.
In terms of the cash flow generation, the operating cash flow was quite strong. However, the CapEx commitments of up to INR 1.7 billion resulted in increase in some debt levels. Also, the inventory levels also went up given the loss of sales volume and some inventory buildup in our Raipur plant, which we just started and these inventory levels also should start coming down and debt levels also will narrow down.
The other highlights on Q1 was that the value added product portfolio sales mix remains around 60% to 65% and they should keep on improving as the Raipur plant kicks in and the contribution from that plant will improve our overall sales volume mix.
The benefits from Shankara association are already visible. The sales ramp up, as we had expected, is on track and they should give us the desired ROIs which we had anticipated. The CapEx on our Raipur plant also is on track and with almost 70%, 75% of CapEx being done and slowly and gradually more and more lines are starting as each month passes by. We expect Raipur plant to become operational from 3Q FY '23. And the balance residual CapEx should also be completed over the next 2 to 3 months, which again will be funded from internal cash flows.
Now the main point here is the efforts towards market creation for Raipur plant products has started in a big way, because the products from Raipur plant are highly innovative in nature. They are being launched in India for the very first time. So it is very important that the market creation had to start at right time, which we did. So whether it is color coated products or it is heavy structural tubes, we have started approaching the influencers in a big way, whether it's architects community or structural consultants or steel construction contractors, which are called PV vendors. We are having series of seminars in the cities where we are inviting all these influencers to educate them and talk about our products. And I'm glad to share that the feedback, the initial response is quite encouraging. People are appreciating the fact that these products are innovative, and they will definitely going to solve lot of industry problems, which the construction industry is facing today.
Our efforts towards creation of market for heavy structural tubes are also paying off, as there has already been a proof-of-concept in form of the Delhi hospital projects, of which the structures for all the hospitals are completed. Very recently, we got order for our 15-story commercial tower in NCR region as well. So the ongoing inquiries for 50 odd projects, which amounts to 200,000 tons of heavy structural tubes is there in pipeline. And as we had guided that, we will keep on revolutionizing the construction space in India in coming months.
We saw pretty much on Q1 performance, our long-term business strategy remains intact, which revolves around CapEx for value-added products, innovation, market creation and ESG. We maintain our FY' 25 sales volume guidance of 4 million ton. This confidence comes from the fact that the Raipur facility is coming on track and acceptability for its product is also there among the end consumers. Our distributors are excited at the same time. At the same time, we are adding new distributors for these specialized products. So the existing capacity of 2.6 million tons should see a ramp-up, as sales volumes should grow at 10% to 15% and then incremental sales will come from Raipur. So we are confident that 30% volume CAGR over FY' 22 is achievable till FY' 25.
With this, we'd like to open the floor for Q&A. Thank you so much.
[Operator Instructions] The first question is from the line of Rahul Agarwal from Incred Capital.
Sir, 3 quick questions. Firstly, on the outlook on that HRC, how is the channel behaving now? Where is the price today? And what do you expect to happen over the next 3, 6 months in terms of restocking?
Sanjay Gupta this side. Today price is almost close to INR 57, I think close to INR 57. And I think when we're looking at the international market as well as the local markets, maybe there is another gap of INR 3, INR 4 rupees to come down. This maybe come down to 52 or 53 odd rupees in the next 1 or 2 months. I think there is the bottom out.
So would we say that the restocking basically start sometime end September and it's not really happening in July, August, is that fair to say?
No, sale is already good in the month of July because the whole sector is without stocks. We are sitting without stocks. And which companies are holding the stocks, they are good sales. Like, in the month of July, our sales is on track in spite of the -- our prices are high, because we have inventory in our house. We are not dropping our prices in the market as per the raw material prices, but sale is going to -- sale is happening. We are right on track in the month of July. I think so the [Foreign Language] in the month of August and September. We are right on track.
So actually -- actual [Foreign Language]. I can say we have the order of volume 24 hours in our hand. But in the evening, our sales is completed. [Foreign Language] Nobody want to keep the stock. [Foreign Language] So we have been taking the benefit of those -- our services.
Sir, next question was on the overall outlook for the full year. So we are about 2.3 million tons is what we targeted. Raipur obviously, it looks like, second half will be very bulky in favor of Raipur volume. [Foreign Language] So how is your visibility, sir?
Whatever our guidelines is intact [Foreign Language] still we are continuing to fulfil our target. There is some margin percent maybe happen in the first half and maybe be recovered in the second half.
And lastly, Tricoat EBITDA per ton, it was about INR 9,200 for the quarter. Why was it high? Like -- because every other segment dropped in terms of EBITDA per ton. Any specific reason there? That's my last question.
So Rahul, this was because of better sales mix in our Tricoat in Q1, right. Tricoat has a limited product, so 3 segments dominate the sales volume. In few of the quarters when the high value -- super high value-added product sales are higher, then the EBITDA per ton looks higher or -- and when the quarter -- when the volume for high value-added products are low, then the margin will look low. So, yes. So that's the reason, nothing much to read into it.
Got it. So it should basically retract back to its normal long-term average, right?
Yes. Right. Which we have been guiding between INR 7,000 to INR 8,000 per ton.
The next question is from the line of Ankush Agarwal from Surge Capital.
Arun, just a quick question on the sales channel. Is it hardened products that you're selling to hospitals and all that stuff. So would it be fair to assume that we will selling indirectly and we'll pay order-by-order kind of sales channels for this product?
So, it depends. If the contractor is ready to pay on cash or on spot payment, we send directly. Or if he is insisting for credit, then we can get our channel partners who come in. We don't take exposure to contractors for credit.
Okay. But sir just -- I believe, this would be more of a customized product in terms of specification. So over the long run, would it be fair to assume that a large chunk of this business will be coming directly to us rather than to our distribution partners?
So I guess, right now we are in process of creating the market, right, wherein we are directly trying to approach the contractors, the builders, the developers, the architects. So here our interaction with those influencers is one-on-one. So for initial orders, they could be like direct orders coming to us. But once this concept picks up, the trends pickup, then our distributors, they will deal with the developer directly. But for initial kick in, we have to get in and get the market going.
The next question is from the line of Vikash Singh with PhillipCapital.
Sir, I just want to understand, we are targeting 32% CAGR growth in our volumes. During that period, what is the market size growth which we are envisaging? And by '25, what kind of market share we are targeting?
We have told this to this market. Today this market is almost close to 7 million ton. Out of 3 million ton is today from the primary steel, and 4 million ton from the secondary steel. And in the past 1 year, 1.5 years, the prices between the primary and secondary is almost close to INR 15,000 to INR 20,000 ton gap. Now gap netted down to INR 4, INR 5 kg. So the market is coming from the secondary to primary. So I think these markets should -- first it takes from the secondary -- is part from the secondary sale or the secondary material also is come to 4 million ton and per annum this market is growing at the rate of 15%, 16% I think so. So up to 2025, this market should be 6 million ton, close to 6 million ton for the primary steel.
And out of that 3 million ton increment, we are targeting 2.3 million for ourselves, so effectively growing faster than rest of the lot. So is that a correct understanding?
Yes.
So effectively, we would be 70%, 75% of the -- our structural steel market share, which is 55% right now, can go up to 70%, 75%. That's what we are…
We are targeting to 65% to 70%. And plus, there could be some new additions in the market segments, right? So I'm sure 0.5 million to 1 million ton could be the totally new market, which will be created, because of our innovative products. So out of 7 to 8 million ton buy, we should be 4 million ton plus.
Understood. Sir my second question, have we taken any inventory write-downs or hit during the quarter? And if yes, at what HRC rate we have booked that inventory write-down?
This time we had no inventory write-down. Whatever we are taking the raw material, we are selling at our raw material prices, the materials. We pass the prices to customer. So like we just highlight inventory in our house, so we are keeping our prices according to market, and we have no problem to sell our material.
So are you implying that even after the export duty came in and HRC prices, which went INR 7,000, INR 8,000, at that day you would have been keeping some inventory, but you have not lowered your prices for the remaining inventory and still you're able to sell those product?
Yes. Firstly, prices not gone down in these 3 months INR 7,000, INR 8,000, prices are gone down by INR 17,000, INR 18,000 per ton.
No. I'm just talking about immediately after the export duty implementation.
I'm also talking about the month of -- the prices in the month of April is INR 73,000 and the closing price of July is INR 57,000.
Sir, just one last question. Are we still following the same kind of the process where we buy roughly about our entire requirement at the beginning of the month in terms of HRC and later on produce and sell? Or now it's more spread over the entire month? So how are the procuring of raw material at this point of time?
So I guess the better way to address this is that our raw material inventory cycle is 15 days, right. It's not like, if I'm producing and selling 170,000 ton of tube every month. That doesn't mean that 170,000 ton of tube will come on day 1, right? It's a gradual -- it's an ongoing process, right? Every day 5,000 ton of steel comes, I make it, process it and sell it, right? So it's not like that we get all the raw material in the beginning of the month. It's an ongoing process. Every day the trucks come from our steel producer, partners and reach our plants.
So what I effectively means is, the pricing still sticks on the start of the month and that is applicable for the entire month in terms of raw material procurement or now that has also become dynamic?
No, right now the pricing of the raw material deciding the last of the month. Earlier, when -- the market is growing in the [Technical Difficulty] then pricing is decided in the first -- when the market is in the downside, [indiscernible], then the price are decided on 31st. Like today, we don't know the July prices.
Okay. So this change has happened from which month, sir? This price deciding from the beginning of the month to ending of the month, this changes happened from which month?
From month of May. Month of May.
[Operator Instructions] The next question is from the line of Akash Pawar from Sahasrar Capital.
Sir, in last con call you mentioned something about primary steel capacity coming up in India. So if that comes on stream, how will that impact our margins?
So, see, I mean it's not going to impact our margin. How it's going to impact the steel sector is that if there is a more capacity coming in, the pricing which has been on the upside for many, many quarters, we have witnessed, so that should mellow down, right? The capacities have been delayed, not only in India, but globally, because of lockdown restrictions, what we have seen for the last 3 years.
Now that capacities are coming back online, the supply/demand mismatch which was there should normalize. And it is going to be very good for our business if there is enough steel in the market available. The pricing of the steel will be normal. And anyways, we have our own product basket of 1,500 SKU through which we sell various products, right. Every product has its own margin. So our conversion margins, our EBITDA spreads should not be impacted due to whatever steel capacity is coming in or out.
Ideally, it should increase. I mean, because our discounting power, our negotiating power should improve as there is more steel in the market.
Okay. And sir, second one was let's say, steel prices comes down to like INR 40 or INR 45 per kg. So what impact will that have on our EBITDA per ton?
When the steel price has come down to INR 40, INR 45 kg, so maybe our channel is not taking the material. We have to push the material in the channel. So may be margin is just by 1% or 2%. But for the long-term, this is [ going to be good for us ].
Okay, sir. How come? Can you please elaborate?
Right now, [Foreign Language] This total market is 7 million ton. [Foreign Language] other than Apollo, nobody has the capacity to subject to be the market more than 20,000, 30,000 ton per month. [Foreign Language] I have the money, I have the raw material, I have the capacity, I have the market. My problem [Foreign Language] I can do anything.
The next question is from the line of Bhavin Pande from Trust Plutus Family Office.
So I have just one question. This quarter, we witnessed substantial decline in sales as compared to previous quarter and but the numbers were great on year-on-year comparison. So I'm just wondering like how do we look at these patterns in terms of by steel price gets correct and there is destocking happening? So for us to look at the business, like how do we look at these, like how long does it take for corrections to reflect in the seed and stocking by the distribution partners?
It's not just our industry. There are many other industries in the building material segment, where one single raw material forms bulk of the value in that product. And wherever this is happening, the global commodity prices are coming down. So each and every industry behaves in the similar fashion. Normally, what we have seen is, and we are also talking to our friends in other building material category, this phenomena is normally 2 to 2 months, right? Maximum like 4 to 8 weeks.
If the prices are on and countering consistently for 1, 2 months, right, so the destocking will be there for same time. But at the same time, one should not forget that there is underlying demand for these products as well, right? For example, a distributor normally works on 25 to 30 days inventory, in a normal environment. Now when he's destocking his inventory would go to around 18 to 20 days, right? He can't take his inventory level below 10, 5 days because otherwise he will not be able to serve his retailers. So his business will collapse, right?
So normally, what we see is that inventory days come down from 25-30 to 15-20 in period of destocking. And when it's restocking from 15-20 days, it will take inventory to back to 25-30 days, right? So this normally takes place in 1 to 2 months. That's the kind of disruption which comes up. But whenever the prices stabilize, then…
There's extra demand for them.
Right. Because steel, if I have to use steel for my industrial shed, for my housing tower, for my commercial tower, for my mall building, I have to use steel, right? There is no alternative. So I may delay my project by 1, 2 months. But then eventually I have to finish that project, right? So demand will always come back, always.
So given the recent correction in steel and commodity prices, are we expecting the rest of 2, 3 quarters to sort of pick up for the volumes that we lost in Q1?
Definitely, yes. And same phenomena happened in second half of FY' 22. In Q3 FY' 22, our sales volume went down to 405,000 tons, right? And in Q4, we achieved 552,000 tons, right? So for the second half, we finished at 0.96 million tons, right? So same way first half we also believe that 1 million to 1.1 million ton our initial sales guidance, we should definitely meet.
The next question is from the line of Kunal Kothari with Centrum Broking Limited.
Sir, during the quarter, we are seeing falling steel price because of destocking happening in the market. And henceforth, the Tricoat business is seeing the net working capital going to negative 11 days. Then why is that the consol level has been flat at [indiscernible]. Kindly just throw life on that.
See Tricoat is a very small business in the overall scheme of things, right. It's around 10% to 15% of the total volume and in terms of the total balance sheet size. And it only has 2 plants, okay? So those plants run very efficiently. The inventory levels or whether it -- days as well, because the products are highly innovative from TRICOAT. So the payment terms are even better there, right? So I guess, I mean, yes, it is around negative 10 days.
But that's only because the operations are small and it's only 2 plants to manage, right? So that's why it is super-efficient for Apollo managing below 10 days at our size of INR 13,000, INR 14,000 crore turnover and the balance sheet size. It's a limited product. And so yes, I mean, we are very happy with our net working capital cycle, how we have been able to bring it down with our very hard work of 2 years. So yes, I mean I don't think there is so much to lead into Tricoat's net WC versus Group's net WC.
So for ex of Tricoat, does our business net working capital increased in the quarter or is it the same?
We have given this in our presentation. On 31st March, it was around 7, 8. Today it is 8 to 9 days. It's mentioned in our presentation. So only 1 to 2 days of increase in net WC.
The next question is from the line of Rahul Jain from Systematix.
So can you give some more color on the product profile that we will see from the Raipur plant? Will it meet our existing products that we have or it will be very different? Can you give some more color on this?
For Raipur, there are 3 product categories, all 3 are -- out of these 3 product categories, 1 per category is of where we are launching the product for the first time in the world, okay, which is color-coated products, color coated tubes. The second product category is the heavy structural tube, 500 square diameter. That, we'll be the first ones to do in India. Globally there are 2, 3 companies which do that. But in India, we are the first one. And then there is another third category, which is color coated sheets. So that's an established market and we'll be competing against the existing players. So the first 2 product categories are totally innovative and we will be producing and selling them for the very first time.
So in terms of our margin profile, should we see that it will be remaining where we are today, or we can see some 15% 20% increase?
For Raipur project, we believe that the EBITDA per ton should be INR 6,000 to INR 8,000 per ton, right? And our existing margin range is INR 4,500 to INR 5,000 per ton.
And then you got good acceptability for these products or it's like in the works?
So we have started the exercise to create the market, right? There is a very strong base, which APL Apollo provide in terms of the distribution network, in terms of the retailer reach out, in terms of the influential reach out. Okay, so it's not in terms of the brand, right? So today, we have to get 100 architects under one roof. It's not a difficult task, right, because the brand Apollo speaks for itself, okay?
So I guess, I mean -- and we have been creating new market for our products historically. Our 20% volume CAGR is all because of new product, which we have been keep on innovating, whether it is, Chaukhat tube or window frame tube or octagonal tube or electrical tube or oval shaped tube, D shaped tube, handrail shaped tube, right? All these are innovative products for which we have created markets.
So our marketing team, our sales team, both have very strong in hand experience of creating a market for our products. And at the same time, we are hiring new people in the marketing and sales as well to be able to sell these products efficiently.
So what I actually have seen is that in terms of those other similar types, so they have taken a lot of inventory write-down and things like that. But because of our low 7-day kind of, we did not, and we have such kind. And this won't happen in the future also, right? That is how we should look at it, right?
Yes. I mean back to efficiency is what we have achieved, right, to be able to turnaround the HR coil which comes to our plant and produce that into 1,500 different SKUs and sell it to our 800 distributors, right? This whole turnaround time is like 20 to 30 days. So that's the learning. That's our learning curve of running our operations. And that's helping us today in all these volatile environment.
The next question is from the line of [ Unnati Narang ] from YellowJersey Investment Advisors.
Can you please provide us with the update on the merger of Apollo Tricoat?
So we had our last hearing in mid-July, okay, for the merger with the court. We had provided all the relevant data, information to the court. And we were expecting that it should be through. But there was new date, which is -- then we applied for the earlier date. So now the next hearing is in first week of August, right? And hopefully, it should be through. There is nothing pending from our side. Once it is true from 30 to 60 days, the shareholders should get the swap shares. There is a process which will start after the court order comes in. But we are very, very hopeful that the next hearing in the first week of August should be the last one.
The next question is from the line of Bharat Shah from ASK Investment Managers Limited.
Significant engagement in a very choppy and difficult raw material environment, very commendable performance. I didn't take question actually on APL Apollo, but I wanted to understand the acquisition of Moongipa Securities which has occurred. Therefore, detailed rationale and thinking and kind of bidding on our business?
[Foreign Language], this is a new NBFC company, which is coming for the screening bill discounting system. [Foreign Language] we are going to do the steel in the steel sector. The steel sector, the steel sector is almost 9 lakh [Foreign Language]. So I just think we have to, this is totally risk-free zone. [Foreign Language]. So we have started this new venture.
But can you give some more detail as to what it will mean for APL Apollo?
Bharat-bhai, if you suggest us, we can talk on this on the other platform? Or if you want speaking in this platform, I can talk on this platform also. Whatever you suggest, we are ready.
No, at least if you can give kind of a broad outline or the rationale, and details we can discuss separately for sure.
[Foreign Language] so total, we want to make it INR 500 crore, INR 600 crore, INR 700 crore book size for this company. [Foreign Language] so they can disburse loans. But we are just totally focused in the steel sector discounting bill system. We are not going other than the steel sector, in the real estate or fear forming, and not in any other business. This company is totally focused on the steel sector, financing rediscounting system. [Foreign Language] Because we have a very good number of data with us in the last 35 years. So we can use this data and do this business. Probably we are not going [Foreign Language]
Sir, essentially it will mean once certificate is operational, APL Apollo receivables will probably become close to 0. And therefore, we will be able to crunch working capital further down close to -- barring inventory of the raw material. [Foreign Language]
[Foreign Language]
Bharat-bhai, I mean as on 31st March balance sheet, the debtor days what APL Apollo had was 3, 4 days, that's it, right? It's eligible even today.
Got it. So then how will -- I suppose APL Apollo has nothing to do per se with these. It will be some members of the family, which will be part of these. And related to the group thing, is there any intake on APL Apollo because of this?
It's a completely separate venture by the family. APL Apollo has no role to play here, okay? Family decided to get into NBFC business right in the steel sector itself. There is a big opportunity which is INR 7 trillion, INR 8 trillion of steel sector, the products exchange hangs. And out of this, INR 1 trillion to INR 2 trillion is worth the pocket which this NBFC company will address you, right?
APL Apollo, some of the clients may take this facility, which may be buying product from Apollo. But then, Apollo distributors deal into lot of other products. Right not just Apollo. They sell TMT bar, they sell light structural, angles and channels. They sell welding rod et cetera, et cetera. Right.
So, so the distributor, the client could be of APL Apollo, but it's not to fund Apollo receivables because Apollo receivables are anyways 0 today.
So essentially, from the point of view of APL Apollo, if at all impact is positive or neutral, but it is per se other institution for APL Apollo operation?
I think this company sooner, we will have to appeal Apollo to increase their sales, because in the last 2 years exercise, we left lot of customer due to credit. Banks are not funding them, Apollo is not giving them credit. So these customers because Apollo guideline is very clear [Foreign Language] the balance are not strong [Foreign Language]
So it will become a customer acquisition tool, where credit risk is passed on to the new entity, while APL Apollo will be able to expand the sales footprint?
Yes, because a very Apollo [Foreign Language] this is to me that new venture, new team, new office is dependent on this or that itself, not related with anything Apollo.
The next question is from the line of Anupam Gupta from IIFL.
Yes, Sanjayji, the question is basically related to the heavy structural steel capacity that is coming in. So [Foreign Language] and you have highlighted quite a few advantages, which tubes brings to the table versus RPC or I beam kind of steels. In your marketing, [Foreign Language] and how have you tried to address that?
[Foreign Language]. So right now, we are making 300 square up to 12 mm thickness. Or now, our new plant is coming with the 500 square up to 20 mm thickness. But sure, [indiscernible] a lot of people are wanting up to 1,000 square, up to 30 mm thickness. [Foreign Language] So we had made some arrangement in the Faridabad to give this material to them with the [Foreign Language].
Now we are also in the process of investing some more money for going 1,000 square lines. So once our Raipur line started in the month of September -- August or September, then we are going forward [Foreign Language] People are very excited. People are very demanding. But unfortunately, we are unable to supply the material.
Okay. But in terms of design perspective and structural safety perspective, there is no major resistance you have seen from RPC…
[Foreign Language] too much excited. It makes a lot of -- we have working on almost 70 -- 50-odd projects there. You can talk with any customer. We are so excited. Like I just let you know one thing, yesterday I had meeting with one of the contactor [Foreign Language].
200 KL.
200 KL [Foreign Language]. So people are too much excited. [Foreign Language]
Okay. And second question, sir. Assuming that acceptability is very strong and you have a [Foreign Language] so will you at some point of time think of having more such plants in north and south or do you think Raipur [Foreign Language]?
[Foreign Language] Once I cross 3 million tons, then I think about this.
The next question is from the line of [ Aditya Welekar ] from Axis Securities.
So just for an understanding perspective, sir, the spread between primary and secondary steel. So we know that the primary steel prices have come down because of the host of the factors. But the secondary steel, the prices of the secondary steel, have they increased because of the energy prices, thermal coal prices? So what are the factors playing out there?
I don't think the secondary steel is increased, primarily come down. [Foreign Language] So right now in Raipur, ingot is close to INR 48, INR 49 kg. [Foreign Language] So they are close to ex Raipur, INR 57, INR 58 ex Raipur. [Foreign Language] prices close to INR 60,000 or INR 61,000 per ton. Right now, we are filling our tube. Discounting everything, around INR 65 kg per ton. So there is a gap of INR 4 kg, which is good enough for us to capture the market.
The next question is from the line of Mudit Jain from Hem Securities.
Congratulations for good set of numbers. Sir, my question was, sir, as you mentioned that we have not reduced the prices despite sharp correction. But despite that, our EBITDA margins have come down from March quarter. What is the reason for that, if you can explain?
[Foreign Language] Because we have the old raw material in our house, so we don't reduce the price.
Okay, sir. [Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
Okay. And current levels are INR 57?
Yes.
The next question is from the line of Varun Jain from Edelweiss.
Sir, you had indicated that other than Raipur, you will have a capacity expansion of 3 lakh tonne in Dubai and 2 lakh tonne in Kolkata. So can you give us any update on that? And secondly, we had an app called Aalishaan, which you had said that it had 45,000 or so download. So -- and we wanted to build a B2B building materials platform for steel products. So any update on that would be very helpful.
Dubai, we identified the land. We have done the agreement with Dubai relative authority. Now we'll also give the contract for the building to local contractor. The process is starting. In present, we are in the phase of taking the land. We're just identifying the land. [Foreign Language] Dubai, we have done everything. [Foreign Language]
So Aalishaan app was launched to cater to the B2C demand for success. Today, we have around 55,000 downloads, right? And almost 25,000 fabricators are enrolled here. The idea is that the end consumer who has been using our tubes anyways, they should know that with our Tubes they can get their home decor products made and we have made the mirror fabricator available to your home in almost 150 cities.
So idea is to promote Apollo brand and to have larger mind share in the consumer. So that's the objective and this app is not for B2B platform. For B2B platform, we are having discussions internally. Probably it wouldn't be the sales force and probably in next quarter call, we'll have some better concrete plan to discuss for B2B trading platform.
The next question is from the line of Pinakin Parekh from JPMorgan.
[Foreign Language] Because Tata Steel, JSW [Foreign Language] have you started booking large import orders? Because in the [Foreign Language] keen to reduce prices very sharply.
No, boss. We are not keen for this. But just need approval, some little bit import because of -- for export. But after the given the taxes on the import, may be prices are not workable with. But also, we have a very good relationship with Tata Steel and the JSW Steel or other steel suppliers. They are in problem because of their raw materials too high in the current situation. We do not want to create any problem because of Apollo to them, because we have a long-term relationship with all the steel suppliers. We are cooperating with them and we are not, [Foreign Language] do not one who import. [Foreign Language] they also corporate us, so we have a very good relationship, we are not yet clear of import.
The next question is from the line of [ Akash ] from Canara Robeco Mutual Fund.
So, sir, thank you for the opportunity. Sir, just demand side [Foreign Language] because if you see, one of the building material product category -- companies, they tell you too that there could be a possibility of a slowdown in the demand because of the increase in the interest rate, etc. So I mean, just on demand side, if you can put some color? I mean what gives us confidence that we could still do 2.3, 2.4 type of number?
We are looking the demand from the 3 sectors. Right one from the -- we want to take back our sales from this sales in the last 2 years growth go through the secondary. The secondary material, it [Foreign Language] Yes, I can give you example like the Tamil Nadu market. You can see this 84,000 ton per annum, [ 1.56% ]. Right now in this month, I already see sales in this market in the 26 days, 12,000 ton. So almost, I go back to 1.5 lakh tonnes [Foreign Language].
Okay. [Foreign Language]
[Foreign Language]
[Foreign Language].
[Foreign Language]
[Foreign Language]
[Foreign Language]
That was the last question. I would now like to hand the conference over to Mr. Anubhav Gupta for closing comments.
Thanks, everyone, for joining us and thanks to Spark Capital, once again for hosting us for the call. Thank you so much. Have a nice day. Bye.
Thank you.
Thank you. On behalf of Spark Capital Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.